ECONOMY AFFAIRS FEBRUARY 2011
- Reliance Industries Ltd. On 21 February announced the sale of 30 per cent stake in its 23 blocks, including the giant KG-D6 gas fields, to British Petroleum of U.K.for $7.20 billion. It can be termed as one of the biggest foreign direct investments (FDI) in the energy sector; the deal was signed in London between RIL Chairman and Managing Director Mukesh Ambani and BP CEO Bob Dudley, BP. The payments and combined investment could amount to $20 billion, one of the largest FDIs in the country.
- Steel Authority of India on 21 February said it planned to put up four 3-million tonne manufacturing facilities — one each in Indonesia, Mongolia, South Africa and Oman — at a cumulative investment of $12 billion. C. S. Verma is the SAIL chairman.
- The Amara Raja Group of companies has announced the setting up of a ‘Digital World City' at an investment of Rs.250 crore in the next 12-18 months on a 500-acre site in Chittoor district, A.P allotted by the State Government. The Group Chairman Ramachandra N. Galla, said the Digital City was being planned as the most attractive destination for companies in electronics and related sectors and would become the country's largest integrated electronics manufacturing park.
- Leading telecom service provider Bharti Airtel along with 16 other global telecoms on 23 February launched the Europe India Gateway (EIG) cable system that will enhance diversity and capacity between Europe and India. Bharti Airtel said the 15,000-km-long cable project has received investment of around $700 million and has a capacity to transmit 3.84 terabits per second.
- Panasonic India is setting up the country's first Eco Idea factory at village Dadri-Toi in Jhajjar district of Haryana. Panasonic India president Daizo Ito said Panasonic aimed to be the world's No. 1 ‘green innovation' company in the electronics industry by 2018 when it completed its centenary.
- According to the Financial Services Group City report-India is expected to be the world’s largest economy by 2050, surpassing China and the U.S.
- Optimistic of commissioning First Phase of its proposed 6 million tones per annum steel project by March 2012 in Orissa, Jindal Steel and Power (JSPL) said it would set up the biggest steel Plant in Orissa. JSPL Executive Vice-Chairman and Managing Director Naveen Jindal told that “The capacity of the proposed 6 million tones plant will be expanded to 20 million tones in the next 10 years,”
- Union finance minister Pranab Mukherjee has released commemorative coins of the denominations of Rs.150 and Rs.5, at a function, organised to mark the completion of the year-long celebrations of ‘150 years of Income Tax’ The reverse faces of the Rs. 150 and Rs. 5 coins, minted to commemorate ‘Income Tax — 150 years of Building India,' bear the portrait of ‘Chanakya and Lotus with Honeybee' at the centre representing his famous lines, “..... Ideally, governments should collect taxes like a honeybee, which sucks just the right amount of honey from the flower so that both can survive...” The left and right peripheries of the coins are flanked with the words: “Income Tax — 150 years of Building India” in both Hindi and English. The Rs. 150 coin is not only unique for its denomination but also for its size and metal composition. The 44-mm circular coin is made of 50 per cent silver.
- Union finance minister Pranab Mukherjee tabled the economic survey 2010-11 in the parliament. The highlights are-
- Robust growth and steady fiscal consolidations have been the hallmark of the Indian economy in the year 2010-11 so far.
- The growth rate has been 8.6 percent in 2010-11 and is expected to be around 9 percent in the next fiscal year.
- The growth has been broad based with a rebound in the Agriculture sector which is expected to grow around 5.4 per cent.
- Manufacturing and Services sector have registered impressive gains. Savings and investment are looking up while exports are rising.
- Food inflation, higher commodity prices and volatility in global commodity markets have been a cause of concern underscoring the need of fiscal consolidation and stronger reserves.
- In order to check food inflation, it has suggested, the Government should improve the delivery mechanisms by strengthening the institutions and addressing corruption.
- The Survey has observed that a rise in savings and investments and pick up in private consumption has resulted in 9.7 per cent growth of GDP at market prices (constant) in 2010-11.
- Savings rate has gone up to 33.7 percent while the investment rate is up to 36.5 percent of GDP in 2009-10.
- The Survey points out that the agriculture sector growth in the first four years of the 11th Plan (2007-12) is estimated at 2.87 per cent.
- The food grain production went up to 232.1 billion tones from 218.1 billion tones in 2009-10.
- With a relatively good monsoon the agriculture-sector is expected to grow at 5.4 per cent during 2010-11.
- The rising food inflation and the critical role of agriculture underline the need for a larger investment in agriculture enrooted to the second green revolution.
- The Survey reports that the industrial output growth rate was 8.6 per cent while the manufacturing sector registered a growth rate of 9.1 per cent in 2010-11.
- During April-November 2010 telecom, crude oil production, civil aviation sectors performed well while the power generation, cement and fertilizer production, railway freight traffic and cargo handling at major ports have grown at comparatively lower rates.
- Six core industries registered a growth of 5.3 per cent (provisional) in April-December, 2010 as against 4.7 per cent during the same period in 2009-10.
- Economic Survey 2010-11 has highlighted the increasing role of infrastructure services which have been deepening rapidly with rising investments.
- The telecommunications sector has done exceedingly well as the tele density has increased from 20.74 per cent in 2004 to 143.95 per cent in 2010 in urban areas.
- While in the rural areas it has gone up from 1.57 per cent in 2004 to 30.18 per cent in 2010.
- Lauding the role of services sector as the potential growth engine, the Survey has called for the policies to promote further opportunities in new areas in global demand such as accounting, legal, tourism, education, financial and other services beyond the IT and business process sectors.
- The Survey points out that the exports in April-December 2010 went up by 29.5 per cent while the imports during the same period registered a growth rate of 19 per cent.
- The trade gap narrowed down to US $ 82.01 ban in the same period. Balance of payment situation has improved due to surge in capital flows and rise in foreign exchange reserves which have been accompanied by rupee appreciation.
- During current fiscal foreign exchange reserves increased by US $ 18.2bn from US $ 279.4 ban in end April 2010 to US $ 297.3 ban in end December 2010.
- The expenditure on Social sector programs has been stepped up by 5 percent point of GDP over the past five years.
- The Survey points out that Gross Fiscal Deficit are 4.8% of GDP in 2010-11 as against 6.3 percent of GDP in the previous year.
- The Revenue deficit in the current financial year has been 3.5 percent of GDP as against 5.1 percent in the previous year.
- A call for reforms in the university and higher education and correcting the demand supply mismatch in the job market has been made in the report.
- The Economic Survey sums up by stating that the real GDP growth is expected to reach the 9 per cent mark in 2011-12 and the next two decades may well see the economy growing faster than it has done any time in the past.
- Finance Minister of Andhra Pradesh, Anam Rama Narayana Reddy submitted Budget 2011-12 in AP Assembly on 23 February. This is first Budget for Anam Ramanarayana Reddy as a Finance Minister of the State. It is estimated that this year Budget will cross Rs. 1.2 lakh crores. Following are the highlights of Andhra Pradesh Budget 2011-12:
1. Annual Budget Plan for 2011-12: Rs 1,28,542 Crores
2. Planned Expenditure: Rs. 47,558 Crores
3. Non- Planned Expenditure: Rs. 80,984 Crores
4. Estimation of Revenue Surplus: Rs. 3826 Crores
5. Estimation of Fiscal Deficit: Rs. 17602 Crores
6. GDP Forecast: 8.5 percent
7. Growth of Industry: 9.61 percent
8. Irrigation Projects / Sector: Rs. 15000 Crores 9. Jalayagnam: Rs. 15000 Crores
10. Higher Education: Rs. 3337 Crores
- Japan's gross domestic product fell an annualised 1.1 per cent in the fourth quarter in 2010, marking the first decline in five quarters due to a drop in exports, diminishing government stimulus programmes and weak consumer consumption, said the sources on 14 February .According to the data, Japan has now lost its position as the world's second largest economy to China.
- The World Bank has stated in its latest report that India can generate 68,000 MW of power, costing less than Rs.6 a unit from renewable energy sources, a step that can address the country's energy security concerns.
- Union Petroleum and Natural Gas Minister Jaipal Reddy on 15 February, dedicated to the nation India's largest naphtha cracker plant at Indian Oil Corporation's (IOCs) Panipat Complex, Haryana.The complex has been commissioned in 46 months, which compares with the global standard for similar capacity plants and is ahead of average time taken in setting up similar units in India. With the completion of this petrochemicals complex, IOC has crossed a major milestone in realising its aspiration to emerge as an integrated and diversified company.
- Rajiv Gandhi International Airport (RGIA) ,Hyderabad has retained its number one position and has been ranked amongst the top airports in its category in the world for the second year in a row in the latest ASQ (Airport Service Quality) rankings of the Airports Council International (ACI).Besides RGIA, Delhi's Indira Gandhi International Airport (IGIA), has been ranked fourth.Both the airports are operated by the GMR group-led consortia. IGIA's ranking was in the group of 25-40 mppa (million passengers per annum). This niche league features the world's best airports like Incheon-Seoul; Changi-Singapore and Shanghai Pudong-China.The awards will be presented on April 7, 2011 during ACI conference at the ACI Asia Pacific Regional Conference and Exhibition to be held at New Delhi. As many as 153 airports across the globe, including six Indian airports participated in the ASQ survey in 2010.
- World's largest truck maker Daimler AG, which is setting up astate-of-the-art commercial vehicle facility at Oragadam near Chennai, will roll out the BharatBenz brand of trucks in 2012.Daimler will launch a range of Bharat Benz trucks from 6 to 49 tonnes, catering to different applications.
- India on 18 February adopted the New Consumer Price Index (CPI)that will reflect the actual movement of prices at the micro-level. As per the new series, the CPI has increased to 106 in January from a base of 100 in 2010 (inflation of 6 per cent).The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, has introduced the new series of consumer price indices for all-India, and States and union territories separately for rural, urban and combined for the purpose of intra temporal price comparison with effect from January, 2011, with 2010 as the base year.
- G20 Finance Ministers meeting in Paris on 19 February reached a compromise deal to correct global economic imbalances and expressed concern over excessive commodity price volatility impacting the world food security.Pranab Mukherji attended the meeting from India.
- Japan's gross domestic product fell an annualised 1.1 per cent in the fourth quarter in 2010, marking the first decline in five quarters due to a drop in exports, diminishing government stimulus programmes and weak consumer consumption, said the sources on 14 February .According to the data, Japan has now lost its position as the world's second largest economy to China.
- The World Bank has stated in its latest report that India can generate 68,000 MW of power, costing less than Rs.6 a unit from renewable energy sources, a step that can address the country's energy security concerns.
- Union Petroleum and Natural Gas Minister Jaipal Reddy on 15 February, dedicated to the nation India's largest naphtha cracker plant at Indian Oil Corporation's (IOCs) Panipat Complex, Haryana.The complex has been commissioned in 46 months, which compares with the global standard for similar capacity plants and is ahead of average time taken in setting up similar units in India. With the completion of this petrochemicals complex, IOC has crossed a major milestone in realising its aspiration to emerge as an integrated and diversified company.
- Rajiv Gandhi International Airport (RGIA) ,Hyderabad has retained its number one position and has been ranked amongst the top airports in its category in the world for the second year in a row in the latest ASQ (Airport Service Quality) rankings of the Airports Council International (ACI).Besides RGIA, Delhi's Indira Gandhi International Airport (IGIA), has been ranked fourth. Both the airports are operated by the GMR group-led consortia. IGIA's ranking was in the group of 25-40 mppa (million passengers per annum). This niche league features the world's best airports like Incheon-Seoul; Changi-Singapore and Shanghai Pudong-China.The awards will be presented on April 7, 2011 during ACI conference at the ACI Asia Pacific Regional Conference and Exhibition to be held at New Delhi. As many as 153 airports across the globe, including six Indian airports participated in the ASQ survey in 2010.
- World's largest truck maker Daimler AG, which is setting up a state-of-the-art commercial vehicle facility at Oragadam near Chennai, will roll out the BharatBenz brand of trucks in 2012.Daimler will launch a range of Bharat Benz trucks from 6 to 49 tonnes, catering to different applications.
- India on 18 February adopted the New Consumer Price Index (CPI)that will reflect the actual movement of prices at the micro-level. As per the new series, the CPI has increased to 106 in January from a base of 100 in 2010 (inflation of 6 per cent).The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, has introduced the new series of consumer price indices for all-India, and States and union territories separately for rural, urban and combined for the purpose of intra temporal price comparison with effect from January, 2011, with 2010 as the base year.
- G20 Finance Ministers meeting in Paris on 19 February reached a compromise deal to correct global economic imbalances and expressed concern over excessive commodity price volatility impacting the world food security.Pranab Mukherji attended the meeting from India.
- India on 2nd February inked a revised tax treaty with norway for exchange of information to check tax evasion and prevent the flow of black money between the two countries. This new DTAA (Double Taxation Avoidance Agreement) will replace the existing double taxation avoidance convention (DTAC) that was signed between the two countries on decemeber 31, 1986.
- The National Association of software & service companies (NASSCOM) on 2nd February said, the Indian IT-BPO sector was estimated to grow 19% in the current financial year to reach $ 76 billion in revenues. Exports would continue to be the main stay of the industry with estimated growth of 18.7% to $ 59 billion revenue, while the domestic market is estimated to grow 16% to aggregate Rs 78,700 Cr in 2010-11. Direct employment is expected to reach nearly 25.40 lakh, an addition of 2.40 lakh employees in 2010-11.
- In a major breakthrough that put an end to more than a month of uncertainty. India and Iran on 3rd February arrived at a settlement and agreed to use EURO to pay for Iranian crude oil through a German bank named EIH Bank
- A ban on sale of Ayurvedic and other Herbal medicine will take effect across Europe from may 1st, following a E.U. directive, introduced as a response to growing concern over adverse effects of such alternative medicines.
- India's GDP (gross domestic product) growth stands revised upwards to 8 percent for 2009-10 from the 7.4 per cent expansion estimated earlier for the fiscal, mainly on the strength of better showing by sectors such as manufacturing and services.
- The Per capita income at 2004-05 prices is estimated at Rs 33,731 for 2009-10, up from 31,801 in 2008-09, showing an increase of 6.1% Per capita income at current prices rose 14.5% to Rs 46,492 in 2009-10 compared to Rs 40,605 crore in the previous fiscal. National income or the size of the economy rose 16.1% at current prices to Rs 60,95,230 crore compared to Rs 52,49,163 crore in 2008-09.
- United India Insurance Company has won the "Skoch Financial Inclusion Award -2010". Company Managing Director G.Srinivasan received the Award from K.C.Chakrabarthy, Deputy Governor Reserve Bank of India at Chennai
- Food inflation rose to 17.05 per cent for the week ended January 22, from 15.57 per cent in the previous week, driven by higher prices of vegetable, fruits and eggs.
- India's foreign exchange reserves fell marginally to $ 299.172 billion during the week ended from $ 299.395 billion in the previous week, said by Reserve bank of India.
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