The 3G mobile licence bonanza is expected to generate over Rs 40,000 crore for the central exchequer this year, as a result of which the fiscal deficit may stand at 1.75 per cent of GDP in 2008-09, lower than the 2.5 per cent projected in the Budget. "The important thing, from a public finance perspective, is to remember that this is a one-time inflow and we should treat it as such," said Finance Secretary Subbarao.
The government allows the oil companies to sell only a quarter of the total quantum of bonds they hold at any time during a quarter, so as to ensure that the market is not flooded with oil bonds. It has not yet decided on how the subsidy burden will be shared across stakeholders, how much of the subsidy from the government account will be given in cash and how much in the form of bonds, says an official.
Top steel producers like SAIL, Tata Steel, JSW and Essar have decided to maintain status quo on steel prices even as the three-month price freeze ends today. Industry sources said they have decided to keep prices on hold as of now since inflation is ruling at a 13-year high of 11.98 per cent and any increase would aggravate the situation.
With state-owned oil marketing companies strapped for cash on account of selling products at subsidised rates, the Oil Ministry last week approached the Finance Ministry seeking oil bonds in advance for the second and third quarters of the current fiscal 2008-09.
The government may defer the implementation of the sixth Pay Commission award by a year or even two to reduce the fiscal burden of the recommendations that proposed a 28 per cent across-the-board salary increase for an estimated 4.5 million central government employees. The report of the commission headed by Justice BN Srikrishna was submitted to the government on March 24 this year, nearly a fortnight before its 18-month tenure was to end.
Companies may maintain status quo on low monsoon demand, capacity addition.
A committee of secretaries is considering a Rs 4,000-crore (Rs 40 billion) market intervention fund to provide states interest-free loans to augment foodgrain and edible oil availability, among other items. The money will enable states to intervene in the market by buying and distributing essential items to economically weaker families that are eligible for government assistance.
The finance ministry wants the central bank to permit corporate houses to use FCEBs for import of capital goods. The ministry said RBI's proposal to limit the use of the instrument only for financing overseas acquisitions by Indian companies is "too restrictive."
However, portability services, which were earlier expected to be launched by the end of the year in the four metros -- Delhi, Mumbai, Kolkata and Chennai -- as well as Tamil Nadu, have now been delayed till February or March 2009 (the DoT has said that it will start operations six months after the licence is granted).
ITC, Godrej Agrovet, DCM Shriram and other companies expanding in rural areas may eclipse the growth of their urban counterparts, including Reliance Fresh and the Future Group-owned Food Bazaar chain, helped by higher farm income that is spurring a boom in sales of fast moving consumer goods, consumer durables and apparel.
The introduction of 10 per cent mandatory blending of ethanol with petrol is unlikely to happen from this October, as decided by the Cabinet Committee on Economic Affairs in October 2007.
Storm clouds of a different kind are gathering on the macro-economic horizon and they have nothing to do with surging global crude oil prices. The monsoon has played truant across large parts of India, with western and southern India reeling under the impact of deficient and scanty rainfall
Swan Telecom, which has received licences to operate mobile phone services in 13 out of the 22 telecom circles in India, is in talks with foreign companies for diluting 26 per cent of its equity for around $470 million.
Officials in the finance ministry are not happy with credit rating agency Fitch's revision of India's local currency outlook to negative from stable. Officials say Fitch's conclusion that the central government's fiscal deficit will rise to 4.5 per cent of gross domestic product in 2008-09, as against 2.8 per cent in the previous fiscal, is wrong.
Soon after the trust vote in Parliament on July 22, the finance ministry hopes to push through a series of non-legislative reforms, chief among them disinvestment of minority stakes in around 10 central public sector undertakings by listing them on the stock market.
In a yet another bailout that will go down well with the political class, the government has proposed one-time assistance to state government and private universities and colleges that do not get any financial assistance from the University Grants Commission, the country's higher education standards regulator, which also funds institutions.
Against the background of growing political uncertainty, the Centre is planning two Ordinances to fast-track the creation of eight new Indian Institutes of Technology and 16 central universities.
The United Progressive Alliance plans to take advantage of the exit of the Left from its governing partnership to move swiftly on next-generation reforms like 100 per cent foreign direct investment in telecom services.
For the first time, the government is considering the merits of a tariff policy to contain prices that could include allowing external agencies to import commodities and cultivating some essential crops overseas. An inter-departmental team from the ministries of finance, food and consumer affairs and commerce has been asked to work out a strategy to this effect.The finance ministry's department of economic affairs has submitted its views and a final paper is under preparation
For many years now, the Congress and its allies have not had any noteworthy representation from the area. The loan-waiver package may not improve things in the next general elections in 2009, Business Standard found out in an extensive tour of the area. Most farmers said they did not find it worthwhile to go to a bank for loan because the process was too cumbersome.
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