Indian Economy - News & Discussion Oct 12 2013

[Suraj]

Asset sale plans:
10% stake sale in Coal India to raise Rs 24,000 cr

The government on Wednesday decided to go for the biggest share sale ever by offloading up to 10 per cent stake in Coal India, which will fetch it up to Rs 24,000 crore at current market prices.

The government will sell 315.8 million shares, or 5 per cent stake, through an offer for sale, with an option to sell the same number of shares as a greenshoe option, Coal India said in a regulatory filing.

The disinvestment will help the government meet half of the Rs 43,425-crore revenue target from stake sales in the public sector, if the entire 10 per cent goes through.

At Wednesday’s closing price of Rs 384.05 a share, a 10 per cent stake sale in the world’s largest coal producer will raise Rs 24,257 crore.

Reserve price of 2,100-MHz spectrum stands at Rs 3,705 cr

The Union Cabinet on Wednesday approved a reserve price of Rs 3,705 crore per MHz for the auction of 2,100-MHz telecom spectrum from March 4, as recommended by the Telecom Commission. Auction of spectrum in the 800, 900, 1,800 and 2,100-MHz bands is expected to fetch the government Rs 90,000-100,000 crore.

The price approved by the Cabinet is about 35 per cent higher than what the Telecom Regulatory Authority of India (Trai) had recommended (Rs 2,720 crore for the 2,100-MHz band). Earlier, it had rejected the regulator’s suggestion of auctioning 20 MHz in this band and, instead, decided to offer a fourth of the amount in the coming auction. This has peeved telecom companies, which complain the move will lead to cut-throat competition and high spectrum prices.

Announcing the decision, Communications Minister Ravi Shankar Prasad said the auction would be “fair and transparent”.

“The reserve price is Rs 3,705 crore per MHz for 2,100-MHz spectrum. We have taken into account the market potential of this band…Spectrum trading and sharing norms are being finalised and will be notified soon. There is a campaign going around that there is spectrum deficit. But there is no deficit; whatever is available is being released,” he added.

[Vamsee]

Build the foundation of the country and ‘Make in India’ will follow by Yashwant Sinha

What does ‘Make India’ imply? We need to install the following:
- Smart, diversified and profitable agriculture.
- Water for all our fields.
- Thousands of kilometres of national highways, with four-, six- and even eight-lane highways at places.
- Lakhs of kilometres of rural roads and bridges.
- Scores of new ports and hundreds of new airports.
- Lakhs of megawatts of electricity.
- Miles of dedicated rail freight corridors and passenger connectivity.
- Linking rivers wherever feasible.
- Supply of clean drinking water to every household.
- Millions of houses and commercial real estate.
- Schools, colleges, skills development centres, engineering and medical colleges and hospitals.
- Abolition of slums.
- Conservation of old forests and planting of new forests.
- New smart cities.
- Cleaner rivers.
- Sanitation and millions of toilets.
- A modern and integrated transport system.
- A digitised India.
- A mobile phone in every Indian’s hand…
…and a million other things.

[Prem]

http://www.bloomberg.com/news/articles/ ... than-china
Why India Will Keep Growing Faster Than China

he economic growth race between India and China started in the late 1940s, around the time India gained independence and adopted democracy and China turned to communism. Given the sheer size of their populations, each has the potential to dominate the global economy but until recently, it's been no contest: In 2013, China's per capita gross domestic product was 4.5 times larger than India's.The latest forecast suggests that the tide may be turning in India's favor, possibly for good. The World Bank anticipates (PDF) that, by 2017, India will be growing faster than China:This is a short-term forecast based on some very specific circumstances. India, for example, now has a credible central banker doing sensible things like tackling inflation. The country's popular new government is finally building infrastructure and cutting the red tape that held the economy back for so many years. If India keeps it up, the World Bank expects its economy to grow 7 percent in 2017, up from 5.5 percent in 2014. Meanwhile, the forecast calls for growth in China (PDF) to slow as its government reduces spending, tightens credit, and unwinds its housing bubble. The bank expects China's growth to fall from 7.4 percent in 2o14 to a modest 6.9 percent in 2017.
There are reasons to believe that the slowdown isn't a temporary blip and that, over the long term, India's economy will ultimately overtake China's. At the moment, both countries are growing so quickly because they're catching up to richer economies. They are shaking off the effects of market isolation, under-educated populations, limited access to technology, poor infrastructure, and regulations that stifled business development. Eventually, when these economies catch up, adding machines won't increase productivity. It's impossible to predict exactly how long this will take. Writing in the Financial Times, Martin Wolf predicts that China and India's fast-growth convergence phase will run at least an additional 20 years. At that point, they—like the current powerhouse economies in the developed world—would be lucky to grow more than a steady 3 percent per year.Once that happens, growth will depend on demographics and each country's ability to innovate. India has a better outlook on both fronts. Its population is growing; China's is shrinking. It's harder to predict which country will be better at innovation. Signs point to India because democracies, with their secure property rights and general stability, tend to be better at fostering successful entrepreneurship. China's authoritarian capitalism is a new model, and it's not clear whether it can produce the sort of environment in which people take chances, form businesses, and invent things.
India still faces many hurdles. It needs to build lots of infrastructure, improve access to quality education, and remove the bureaucracy that has existed for years under many vested interests. This is an area in which China's more authoritarian system has an edge. Its leaders have greater liberty to make hard choices and smooth out rough patches. China's may prove to be a better model for catch-up growth. But managing a thriving, mature economy requires entrepreneurship and innovation. So far, India has the edge.

[ramana]

What about a small electric car with solar powered battery charger at home. Say 3-6 kw solar panels on the home roof in all new homes and small electric car (A little bigger than a Nano).
Will have multiple benefits
- Reduces oil imports
- Foreign exchange drain
- Reduces pollution which causes respiratory diseases in India.

[Vamsee]

What about a small electric car with solar powered battery charger at home. Say 3-6 kw solar panels on the home roof in all new homes and small electric car (A little bigger than a Nano).
Will have multiple benefits
- Reduces oil imports
- Foreign exchange drain
- Reduces pollution which causes respiratory diseases in India.

ramana garu,

1) The best way to tackle would be to build Metros(to cover most of the city) in all the cities above 1 million population
2) encourage more & more urbanization by building new cities
3) Electricity to agriculture so that diesel pumpsets are retired
4) Electic stoves for cooking

Once we move most of the transport to train based system (which runs on electricity) & interconnect rivers and use them, our dependence on oil will plummet
The only major reason to use gas would be for fertilizer/urea production.

It is very much doable and GoI must encourage/prod in that direction. Energy Independence is true independence

Regards,
Vamsee

[member_22733]

It should be a national priority of any Indian government to reduce paying oil ransom to oil jeehardies. A national push for non-conventional energy-dense sources is a must.

Otherwise we are indirectly funding the Saudi Barbarians from spreading hatred against our own people, quite a large self-goal if you ask me.

[member_28722]

Rain water harvesting and Solid waste management in cities are areas which need a thrust from government before we move towards urbanization.
The former will reduce water consumption in major cities leaving water at its source and also improves ground water levels.
Solid waste management is a must, you just need to visit Mumbai to see the nightmare that garbage is making. Unfortunately its majorly impacted by corruption.

[Singha]

I think biggest priority should be to develop rings of new colonies and office parks / commercial areas around existing big cities and decongest current areas atleast to the extent hordes of newcomers do not pile on to the old areas.

plan properly. if the roads cannot support N=n+1 office parks, do not give permit and instead send them to another more outlying area. ORR in bangalore clearly cannot support even the current load yet more and more are coming up as Govt is unable to build the next ring road and develop new areas......

scale the roads to meet predicted office and residential space construction over next 20 yrs. china has done that with massive roads in greenfield areas. the old 80-100 ft tamasha will not do.

need proper underpasses or bridges and huge service roads to get in and out of office parks, not the current tamasha. Massa is a bad model here, massa office parks have 10 times less people than we do. we need an entirely new model to handle office parks with 50,000 people like RMZ ecospace or Manyata and most coming by bus , bike or car.....no one has a model, we need to invent our own in terms of accessing such facilities. right now it can take around 30 mins just to enter and leave these parks in office hrs.

plan for water also, unless water tanker is the new mode of survival for the budding superpawa.

[SaiK]

building foundations should be built to collect filtered rain water, that resupplies the well or bore well. and there is no simple technique to keep cities clean. it is a 360* drive.

[Vamsee]

The cat is finally out of the bag

Finance Minister Arun Jaitley's efforts to meet the fiscal deficit target of 4.1% of GDP for the financial year to March have received an unexpected boost, with the revision in the base year for national accounts calculations to 2011-12 from 2004-05 expected to increase the absolute size of national income and thereby provide more cushion to the government. India Ratings expects fiscal deficit for 2013-14 to drop to 4.3% of GDP from 4.6% estimated initially once the new numbers are announced

The lower inflation and the lower than anticipated growth has put downward pressure on the national income, but the revision in the base year could more than make up for this potential decline."Fiscal deficit according to the revised GDP in FY14 is likely to decline to 4.3% of GDP from 4.6% (earlier estimate), while current account deficit could decline to 1.6% from 1.7%," India Ratings said in the note.

Now we know why Arun Jaitley is so confident of hitting Fiscal Deficit number

[Suraj]

Disinvestment and spectrum auction proceeds will also reduce the deficit, in addition to an enlarged GDP from the base year revision.

[Pratyush]

Generate bio gas from human waste in large urban spaces, you take care of piped natural gas requirements, for house holds. Which in turn will reduce subsidies burden. Along with reductions in imports.

This will have the potential of saving 1000 of crs in terms of PNG / LPG bills. Money that can be used for other activities.

[Singha]

http://www.hindustantimes.com/business- ... 11473.aspx

In a move that will likely soothe investors’ frayed nerves, the government on Wednesday decided not to appeal a Bombay High Court ruling in favour of Vodafone in a Rs. 3,200-crore tax dispute over a share transaction involving a local subsidiary.

IT minister Ravi Shankar Prasad said the government wants to avoid “fruitless litigation”.

The decision would have implications for companies such as Dutch oil major Shell, which had got a favourable ruling in a similar case from the Bombay High Court.

Vodafone is also involved in a separate arbitration to settle a long-rung “retrospective tax” dispute of `11,200 crore imposed for its acquisition of Hutchison’s mobile assets in India in 2007.

The income tax department had placed a Rs. 3,200 crore demand on Vodafone charging one of its local arms — Vodafone India Services Private Ltd — of under-pricing share sales to its parent.

In October, the Bombay High Court ruled that Vodafone was not liable to pay tax on this “transfer pricing” case.

Transfer pricing is the value at which companies trade products, services or assets among various arms in different countries.

According to tax avoidance rules, these transactions need be carried out on an “arm’s length” basis — in a manner that it involves an unrelated company.

Prasad said finance minister Arun Jaitley has held discussions with officials of the Central Board of Direct Taxes, Attorney General, Solicitor General and it was found that the Bombay High Court opinion was right.

Vodafone’s repeated run-ins with taxmen had stoked fears about India’s high-handedness in dealing with foreign investors.

In 2012, the government changed laws to impose taxes on older corporate deals such as Vodafone’s acquisition of Hutchison Whampoa’s telecom assets in India. While the Centre has said India will not bring on fresh cases of retrospective taxes, there is still some anxiety among multinational corporations.

“The Cabinet decision will set at rest the uncertainty prevailing in the minds of foreign investors and taxpayers in respect of possible transfer pricing adjustments in India, and thereby improve the investment climate,” Prasad said. On Monday, Prime Minister Narendra Modi promised a predictable tax system and an end to red-tape to make India a favoured investment destination in meetings with top industrialists alongside US President Barack Obama.

“We welcome the Indian government’s decision not to appeal the Bombay High Court ruling. Stability and predictability in tax matters are important for long-term investors,” a Vodafone group spokesperson said.

[RamaY]

What about a small electric car with solar powered battery charger at home. Say 3-6 kw solar panels on the home roof in all new homes and small electric car (A little bigger than a Nano).
Will have multiple benefits
- Reduces oil imports
- Foreign exchange drain
- Reduces pollution which causes respiratory diseases in India.

A "Made In India" electric car within $10k budget

[SaiK]

^increases CO2 levels by burning coal and lignite in thermal power plants
- should also include a swap battery solution, where you run one set of battery packs at home charging up with solar/power source, and the other set on the car.
- distributors and gas station support for a battery use plan, where they can swap any charged batteries available on the plan
-- a design to support such use

[Uttam]

Disinvestment and spectrum auction proceeds will also reduce the deficit, in addition to an enlarged GDP from the base year revision.

But most of the proceeds from spectrum sales will come in the following fiscal year, isn't it? Unless the GOI accounting is on an accrual basis?

[Suraj]

R Jagannathan covered this yesterday. Paraphrasing: GoI has set the spectrum sale reserve price at Rs.3705/Mhz . There is upto 20MHz on offer, 5MHz now, and 15Mhz later once defence ministry clears the remaining spectrum. Total earnings are expected to be Rs.80,000-100,000 crore. The first is being auctioned on March 1 , and is expected to net ~Rs.25000 cr, which will accrue in this fiscal with the remaining in the next fiscal. The March 1 auction is expected to be competitive since many telcos are about to run out of their previous spectrum allocation slots this year and have to bid on the offerings this time. Since the fiscal year runs through March 30, the first auction will add to current fiscal year. GoI is clearly dealing with this matter in a very organized and planned manner. They can't help the general price of coal , but even in the case of Coal India, the disinvestment is being done efficiently.

[panduranghari]

Disinvestment and spectrum auction proceeds will also reduce the deficit, in addition to an enlarged GDP from the base year revision.

What about nationalised banks recapitalisation? That could throw spanner into the wheels. There are about 5% NPA's on the balance sheets. If Sahara and Kingfisher are made an example of, there will be a lot of hope.

[Uttam]

R Jagannathan covered this yesterday. Paraphrasing: GoI has set the spectrum sale reserve price at Rs.3705/Mhz . There is upto 20MHz on offer, 5MHz now, and 15Mhz later once defence ministry clears the remaining spectrum. Total earnings are expected to be Rs.80,000-100,000 crore. The first is being auctioned on March 1 , and is expected to net ~Rs.25000 cr, which will accrue in this fiscal with the remaining in the next fiscal. The March 1 auction is expected to be competitive since many telcos are about to run out of their previous spectrum allocation slots this year and have to bid on the offerings this time. Since the fiscal year runs through March 30, the first auction will add to current fiscal year. GoI is clearly dealing with this matter in a very organized and planned manner. They can't help the general price of coal , but even in the case of Coal India, the disinvestment is being done efficiently.

Thanks. After seeing one scandal after another, this government's dealing with sale of natural resources is really a breath of fresh air.

In addition to disinvestment of Coal India, the government should encourage some private sector oversight with people from the coal consuming industry taking seats on the board of directors. I hear there is a lot of hera-feri in product substitution that happens at Coal India. Coal of one grade is shown and an inferior grade is loaded and sent to the industry.

[Suraj]

Boss log, please trawl the news yourself for answers to questions to contemporary economic matters, and post here. I've been setting an example by posting news daily to drive renewed discussion on this thread like the old days, but I can't answer everyone's questions all the time.

[nawabs]

Law Commission for dedicated courts for commercial disputes

http://www.thehindubusinessline.com/eco ... yndication

Report suggests 5 commercial divisions and 3-4 district-level commercial courts.



The Commission has recommended setting up five commercial divisions – Delhi, Mumbai, Kolkata, Chennai and Himachal Pradesh – besides three-four district level Commercial Courts preferably in major industrial and commercial hubs is all the States.

Simultaneously, a Commercial Appellate Division will also need to be constituted in all the States, which will hear the appeals against the orders and decree passed by the Commercial Division or Commercial Courts.

An appeal can be made against the Appellate Division in the Supreme Court only as ‘leave by the court’ and not as ‘right to appeal.’

The Chief Justices of the concerned High Courts will nominate sitting judges, having expertise and experience in commercial disputes, to the Commercial Division and Appellate Division preferably for a period of two years. Commercial Courts will be manned by specially trained judges appointed by the High Courts.

Commenting on frequent adjournments, the commission has suggested a time frame for disposal of suits. Defendants will be given maximum 120 days to file written statements while judgments need to be delivered within 90 days from conclusion of arguments.

There is a new concept of ‘costs to follow event’ – claim payment will be based on original cost – proposed in the report.

The Commission said that commercial disputes should be defined broadly to mean disputes arising out of ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, joint ventures & partnership agreements, IPR and insurance besides others.

At present, commercial suits are filed as civil suits in various courts. A dispute involving higher value is taken to five High Courts (Delhi, Bombay, Madras, Calcutta and Himachal Pradesh) with original civil jurisdictions. Combined with frequent adjournment and lack of experience in handling such matters, the disputes take a long time to be resolved.

[Suraj]

On the Coal India disinvestment:
Floor price for Coal India mega issue fixed at ₹358

The Centre has fixed a bid price of ₹358 for the shares it will sell in Coal India (CIL). On Friday, the Government will dilute 5 per cent of its stake — 31.58 crore shares — in the public sector undertaking and may offer an additional 5 per cent through a ‘greenshoe option’.

At this floor price, the Government can get up to ₹22,500 crore (if the greenshoe option is exercised).

The price is at a 4.6 per cent discount to CIL scrip’s Thursday closing price of ₹375.15 apiece on the BSE.

CIL’s share sale is not just the largest offer so far, but also the first one to reserve as much as 20 per cent of the shares on sale for retail investors. They will also get a 5 per cent discount. SEBI prescribes a minimum 10 per cent reservation for retail investors.

Out of over 63.16 crore shares (including the greenshoe option), retail investors can get up to 12.63 crore shares.

Retail investors may also get a tax benefit through the Rajiv Gandhi Equity Savings Scheme as CIL, being a Maharatna, qualifies for it.

However, the maximum deduction available for tax benefit under the scheme is ₹25,000 and, for this, an investor will need to put in ₹50,000.

At the floor price of ₹358, a retail investor with ₹2 lakh will be able to bid for 558 shares. The bids can be placed during the regular trading time between 9-15 a.m. and 3-30 p.m.on BSE and NSE.

Assuming they go for around ₹390, GoI will make around ₹25,000 crore from this.

FDI into India surged 26% in 2014 despite financial risks: UNCTAD

Foreign direct investment inflows to India increased by about 26 per cent to $35 billion in 2014, despite macroeconomic uncertainties and financial risks, according to a United Nations report on global investments.

Global FDI inflows, however, declined by 8 per cent to $1.26 trillion due to fragility of the global economy, policy uncertainty and geopolitical risks, the latest 'Global Investment Monitor’ report released by United Nations Conference on Trade and Development on Thursday said.

China became the largest recipient of FDI in the world in 2014 with inflows of $128 billion (3 per cent growth), which was nearly four times more than India.

The United States fell to the third largest host country with FDI inflows of $86 billion, which was almost a third of their 2013 level, the report said.

“Flows were heavily influenced by economic uncertainty and geopolitical risks including regional conflicts, and by the $ 130 billion mega-buy-back of shares by Verizon (the US) from Vodafone (the UK) which significantly reduced the equity component of FDI inflows to the US,” the report said.

Interestingly, among the top five FDI recipients in the world, four are developing economies which include Hong Kong ($111 billion), Singapore ($ 81 billion) and Brazil ($62 billion).

For 2015, the report said that trends in global FDI flows were uncertain. “The fragility of the world economy, with growth tempered by hesitant consumer demand, volatility in currency markets and geopolitical instability will act as a deterrent for investors,” it said.

[Hari Seldon]

Here's fuel for thought.

Something that brings together 'make in India' and 'ease of doing business' and 'investment' and all those hallowed priorities GOI has set up publicly and loudly.

Mass exodus: Tech startups may shift overseas as young ventures face regulatory hurdles in India (ET)

A software product industry think tank estimates that as many as 75% of new technology startup firms, ranging from data analytics, mobility and security to cloud that intend to raise seed or venture capital will be domiciled outside the country.

"If we also raise next round of funding, we would also be pushed to move base to Singapore," Shivakumar Ganesan, co-founder of cloud telephony startup Exotel, said at an event in Bengaluru. Competitor Knowlarity has already moved to Singapore.

Considering we are in India, selling and building in India, I don't see why I should be breaking my head to move to Singapore, Hong Kong or other such places," said Ganesan.

Ganesan will be part of a wave of entrepreneurs looking to relocate their tech startups in countries such as Singapore, the UK and the US as the regulatory environment in India makes it difficult for raising funds, mergers & acquisitions and tax-related issues." Yes, there is an exodus taking place. In 2015, it is projected that three of four new technology startups that focus on the global market and plan to raise seed or venture capital will be domiciled outside India," said Sharad Sharma, co-founder of iSPIRT (Indian Software Product Industry Roundtable), a think tank. "This is like the 18th century East India Company invasion. The enormous value that is being created in tech industry is leaving our shores."

What 'regulatory' environment and issues these may be, I have to wonder.

[nawabs]

Central Board of Direct Taxes asks officials not to pursue Vodafone-type tax cases

http://www.financialexpress.com/article ... ocialMedia

Cairn Energy, Shell and IBM are among at least a dozen companies fighting transfer pricing cases in India.

Seeking to reassure global investors and reduce tax litigations, the Central Board of Direct Taxes (CBDT) has sent out instructions to all its divisions to adhere to the spirit of the Bombay High Court judgement in the Rs 3,200-crore Vodafone tax case in favour of the company.

Yesterday, the Cabinet had decided not to appeal against the court ruling which had set aside the tax demand on Vodafone.

“In view of the acceptance of the (Vodafone) judgement, it is directed that the ratio decidendi (or the reasoning) of the judgement must be adhered to by the field officers in all cases where this issue is involved,” CBDT said in the communication.

Scottish explorer Cairn Energy faces a potential tax demand on an alleged Rs 24,500 crore of capital gains it made when in 2006 it transferred all its India assets to a new company, Cairn India, and got it listed on stock exchanges. However, no tax demand has been raised so far.

But the tax department had however barred it from selling its residual 9.8 per cent stake in Cairn India during pendency of the case.

The CBDT instruction stated that the Bombay High Court that held that the premium on share issue in case of Vodafone was on account of a capital account transaction and does not give rise to income and hence, not liable to transfer pricing adjustment.

The communication was sent to all Principal Chief Commissioners of Income Tax (CCsIT), Directorates General of Income Tax and CCsIT.

[Prem]

Foreign direct investment inflows to India increased by about 26 per cent to $35 billion in 2014, despite macroeconomic uncertainties and financial risks, according to a United Nations report on global investments.Global FDI inflows, however, declined by 8 per cent to $1.26 trillion due to fragility of the global economy, policy uncertainty and geopolitical risks, the latest 'Global Investment Monitor’ report released by United Nations Conference on Trade and Development on Thursday said.China became the largest recipient of FDI in the world in 2014 with inflows of $128 billion (3 per cent growth), which was nearly four times more than India.The United States fell to the third largest host country with FDI inflows of $86 billion, which was almost a third of their 2013 level, the report said.Interestingly, among the top five FDI recipients in the world, four are developing economies which include Hong Kong ($111 billion), Singapore ($ 81 billion) and Brazil ($62 billion).

Indian should be able to soak and absorb at least 25% of the total FDI, starting with 75% of of Brazil, Singapore portion.

[Austin]

Full Report : http://unctad.org/en/PublicationsLibrar ... 5d1_en.pdf

FDI inflows to India surged, increasing by about 26% to an estimated US$35 billion despite macroeconomic uncertainties and financial risks
.

[Paul]

They will pull out the money as soon as Rupee weakens too 64 or so.

[Vamsee]

As expected, the base year is changed from 2004/05 to 2011/12

Government revises up 2013/14 GDP growth to 6.9 per cent

The new measurement of gross domestic product (GDP) includes under-represented and informal economic sectors as well as items such as smart phones and LED television sets.

What about duck eggs?

[Vamsee]

CIL mega share sale sails through; government to get Rs 22,600 crore

Over-subscribed by 1.07 times, the share sale got bids worth Rs 24,210 crore. This is the biggest share sale by any private or public sector company here and exceeds the previous record of over Rs 15,000 crore made by CIL itself in 2010.

However, the retail investor portion remained under-subscribed at 44 per cent. 12.63 crore shares reserved for these investors could get bids only for less than half the size (5.56 crore).

Quick question. Will the retail portion which was not subscribed be allotted to institutions who oversubscribed? Can we conclude that the entire 10% is sold?

If yes then half the disinvestment target for this fiscal is achieved in one shot

[Vipul]

Base year revision impact: FY14 GDP at 6.9%, FY13 at 5.1%

The central statistics office (CSO) has come out with a new series of national accounts with 2011-12 as base year for computing economic growth rate. This will increase the size of economy which in turn will help in lowering of fiscal deficit, computed as a proportion of the Gross Domestic Product (GDP). Post the revision, FY14 GDP growth stands at 6.9 percent (from 4.7 percent) and FY13 at 5.1 percent. This changes are done once in five years to keep pace with the changes in the economy.

From now on, CSO will measure growth by gross value-added at basic prices, instead of by GDP at factor cost. The government has projected fiscal deficit target of stands at 4.1 percent of GDP for the current financial year.

Soumya Kanti Ghosh, Chief Economic Advisor, SBI , feels there would be a material difference in numbers because a new methodology has been adopted. “They have covered more sectors, more amount of financial intermediation, revision of labour activities, then also looked into the organized sector and the unorganized sector activity so the problem of this ASI data coming two years later, and therefore inserting the GDP data, the numbers at first instance will look much better because the size of the economy as been an issue,” he said.

Former CSO Pronob Sen said the new numbers are as per market prices. “Basically it means that in 2013-14 for various reasons, the subsidy element had probably dropped quite sharply and since the subsidy is deducted, lowering of the subsidy pushes up the figure. So it’s basically getting the data on the subsidy.” According to Sen, it’s not just a scientific calculation. “What has happened when we moved to the new base year is we’ve actually got better data. Basically if you look for instance in the corporate sector, we were earlier going with the RBI forecast and which were based on 2500 corporates. This time around we are using the MCA21data base which is five lakh companies as compared to 2500. So the quality of data has improved,” he added.

Gaurav Kapur of Royal Bank of Scotland, feels with the new numbers at market prices and with a much richer corporate data one is getting a better estimate of the overall GDP – which is the goal at the end of the day for any exercise, when one looks at statistics. “As it is a change in the base year would have mean slightly higher GDP growth because of the change in prices. However, the fact that you are capturing more data and especially in an economy the size of India it is crucial that we capture scientifically as much as possible and an accurately as possible I would say it is a good first start,” he added.

[deejay]

^^^ So where does that take our overall economy size to?

Edited and added:
Is it around 1.65 Trillion USD?

[Suraj]

Read the last page.

More on the topic. GoI is finally ditching the GDP at factor cost calculations and reporting the growth dates of GDP at market prices instead. Multiple sets of GDP figures makes for confusion, and this should finally settle that.
Economic growth of FY14 revised to 6.9% by base year change

The gross domestic product rose 4.9 per cent in 2012-13 against 4.5 per cent estimated earlier and 6.6 per cent in 2013-14 against 4.9 per cent given earlier, according to new set of numbers released today by the Ministry of Statistics and Programme Implementation.

If one takes GDP at market prices, then India's economic growth would be substantially higher at 5.1 per cent in 2012-13 and 6.9 per cent for 2013-14.

There is a caveat as well. Henceforth, the government said gross domestic product would include indirect taxes, technically called GDP at market prices instead of GDP at factor cost, exclusive of indirect taxes, which has been taken for calculating economic growth so far. This may put India at par with international standards but will rejig the entire figures of growth numbers calculated so far.

If that is the practice adopted now, India will actually take over China in terms of growth in the next couple of years, if the International Monetary Fund and the World Bank estimates turn out to be true. India's economy is estimated to grow by 6.5 per cent in 2016-17 against China's 6.3 per cent in 2016 and both the growth rates are estimated at GDP at market prices by the Fund. The Bank projected India's economic growth rate at 7 per cent against China's 6.9 per cent.

Within GDP, share of manufacturing rose from 12.9 per cent in the old base to 18 per cent in new series for 2013-14. The government wants to increase the share from 16 per cent to 25 per cent in a decade. It would get some boost through this statistical illusion.

While share of services will come down from around 58 per cent to 51 per cent, that of agriculture will remain almost stagnant at 18 per cent.

Size of the economy shrank to Rs 88 lakh crore from Rs 90 lakh crore for 2011-12 and Rs 99.88 lakh crore from Rs 101 lakh crore for 2012-13. The economy's size remained same for 2013-14 to Rs 113 lakh crore, which is little less than $ 2 trillion.

Official CSO/MOSPI Press Release

[nawabs]

Centre plans social security net for unorganised sector workers

http://www.thehindubusinessline.com/eco ... yndication

The move extends crores of workers spread across the country, even in the remotest parts, via smart card Identity cards. This card named You Win would provide all the facilities such as cash, hospital and pension benefits, Bandaru Dattatreya, Union Labour Minister said.

Addressing a press conference here today, he said this move requires support of the State Governments for its effective implementation. Thus far 12 States have given their consent and efforts are underway to convince other States to take up this initiative. The campaign is likely to be launched within couple of months by the Prime Minister Narendra Modi.

[pankajs]

http://economictimes.indiatimes.com/ind ... 069893.cms
Investor commitments received for 1.3 lakh MW renewable energy: Piyush Goyal

MUMBAI: Even before the first-ever meet for attracting investment in renewable energy sector starts, the country has received commitments to create 1.30 lakh MW generation capacity, Power Minister Piyush Goyal said today.
....
Goyal added that the government is working closely with domestic and international partners to achieve its target of 1 lakh MW of solar capacity and 40,000 MW of wind power in the next five years.

[nawabs]

Do away with 777 obsolete Acts: PMO panel

http://www.business-standard.com/articl ... 623_1.html


Maharashtra govt forms committee to push labour reforms

http://www.business-standard.com/articl ... 415_1.html


We are getting information from more robust sources: T C A Anant

Interview with Chief Stastician, Govt of India

http://www.business-standard.com/articl ... 022_1.html

[Suraj]

Jayanthi Natarajan's explosive revelations serve as great opportunity to review and undo the environmental clearance blockages, and GoI jumps at the chance:
After Natarajan's charge, Govt to review UPA green clearances

Finance Minister Arun Jaitley said the outbursts by the former Environment Minister against the Congress Vice President showed that the UPA government was a practitioner of "sadistic" economy and "crony capitalism".

"I hope the Environment ministry now will go into each of these permissions which were granted and not granted and make sure that these are expeditiously dealt with only as per law and no other consideration," Jaitley told reporters.

Natarajan's letter to Sonia Gandhi "conclusively establishes" that it was not the statutory or mandatory considerations which weighed with the Congress but only "whims" of the leaders, the Finance Minister charged.

The Finance Minister was reacting to Natarajan's letter to the Congress President alleging that she had received specific requests from Rahul Gandhi on environmental clearances and consequently had rejected big ticket projects.

Terming Natarajan's charge of specific requests on green clearances as a "serious issue", Environment Minister Prakash Javadekar said he would review the files where allegations of extraneous influence have been mentioned.

"The revelations made by Jayanthi Natarajan in her letter to Sonia Gandhi, which have become public today, are a matter of great concern and is a serious issue," he said.

He said as environment minister, it is his duty to review those specific files where extraneous influence has been alleged as per the letter.

"I will definitely review those files and see what are the facts," Javadekar said.

Jaitley said during UPA's regime, the growth rate was radically going down and one of the prime reasons for that was delay in approvals being granted to projects.

Despite the weak market on Friday, GoI was able to offload the full 5%+5% stake in Coal India for a total gain of Rs.22400cr or $3.9 billion. Impressive considering the short lead time for this stake sale.
Coal India 10% stake sale fully subscribed; Govt garners Rs 22,400 cr

The government on Friday successfully offloaded 10% stake in Coal India to raise around Rs 22,400 crore in India’s biggest-ever equity offering. The 631-million-share offer for sale (OFS) saw a total of 675 million bids at an indicative price of Rs 358.5 a share slightly higher than the floor price of Rs 358 set by the government.

Meanwhile, shares of Coal India traded in the secondary market extended their fall to close at Rs 360.85, down over 6% from Wednesday when the government announced its share sale plan.

Investment bankers handling the issue said the Coal India offering saw demand from a host of institutional investors including banks, mutual funds, foreign investors and insurance companies.

According to sources, insurance giant Life Insurance Corporation (LIC) was the biggest investor, with investment of around Rs 8,000 crore . Other state-owned institutions, including General Insurance Corporation (GIC) and State Bank of India (SBI), put in another Rs 1,000 crore worth of applications.

Participation from government-owned institutions was less compared to some of the past disinvestments, however, the Coal India share sale may not have received full subscription without their investments.

Bids worth over Rs 2,000 crore were received from small investors (those investing up to Rs 2 lakh), however, the retail portion was subscribed around 44%. The unsubscribed shares in the retail category will be allotted to non-retail investors, the demand from whom was 1.23 times more than the shares on offer.

[Vipul]

^^^^^ Jayanthi Natarajan sat on 350 files that had clearances.

[deejay]

Flipkart has raised new funding:

http://www.forbes.com/sites/saritharai/ ... -commerce/

India's Flipkart Raises $1 Billion, Among The Largest In Single Funding Round In Global E-Commerce


India’s biggest online retailer Flipkart has raised $1 billion in fresh capital from new as well as existing investors with a goal to become the “mobile e-commerce company of the future.” The amount is the single largest round by any Indian internet company and is among the largest in a single funding round for any e-commerce company globally, the company said. It puts the company in the league of companies such as Facebook and Uber whose funding rounds have equaled or surpassed $1 billion.

The announcement on the latest round of funding came on Tuesday. The valuation of the company is a matter of much speculation and has been put at $5 billion, but one report in the Economic Times newspaper said it could be as high as $7 billion.

Flipkart said it has 22 million registered users and handles 5 million shipments every month. Some months ago, Flipkart had announced that it was India’s first online retailer to hit $1 billion in gross merchandise value. “These numbers were unheard of a few years back and we are excited about the scale we have managed to achieve. But what is even more exciting is the huge opportunity that we still see before us,” the company said in a media release.

The latest round of capital came from Singapore’s sovereign wealth fund, GIC, as well as existing investors including Tiger Global Management, Naspers, Accel Partners and Morgan Stanley Investment Management.

Co-founders Sachin Bansal and Binny Bansal (they are not related) said the capital would be used to make long-term strategic investments in India, especially in mobile technology. India currently has 243 million internet users but the user base is galloping as users with smart phones capable of accessing the internet proliferate rapidly. India will have over half-a-billion mobile internet users by 2020, Flipkart estimates.

“We believe the internet will improve the quality of life for millions of Indians, and e-commerce is going to play a huge role in this change. The focus at Flipkart is to continue to make shopping online simpler and more accessible through the use of technology,” the founders said in a statement.

Flipkart wants to enable every Indian to either shop or sell online and believes that the power of the mobile internet is going to help it achieve the goal, the founders said.

The company’s founders told the media on Tuesday that they want to be India’s first $100-billion company in five years.

Flipkart offers 15 million products across over 70 categories and was founded by the Bansals, former classmates who quit Amazon.com to launch the startup. Their firm now competes against Amazon.com, a recent entrant into India that is ramping up aggressively.

The founders have previously said that they are in no hurry to make an initial public offering of Flipkart shares.

[RoyG]

Luyens' Spice claims that Arun Shourie will take over as FM. Rajdeep and Sagarika are probably the account owners.

If this is true, Modi will do it after the grand budget presentation this month.

It also means that Modi is ready to undertake large scale divestment and structural reform.

[A_Gupta]

Please, eggspurts, explain the GDP revisions.
http://www.livemint.com/Opinion/zOT4VxZ ... nomic.html