The world economy has slipped into a state of stagflation, says Reddy.
In an earlier analysis for the period till April 26, it had been found that of the 365 items in the WPI, the index for as many as 166 items had not been revised for more than four months. The latest analysis as of June 21 shows that the index for around 55 of these 166 items has been revised. In effect, only one-third of the items have seen an index revision. During this period, headline inflation has moved from 8.27 per cent to 11.63 per cent.
The move aimed at blunting Finance Ministry, RBI's opposition to monthly reporting.
The average number of workers a business unit employs is declining for both urban and rural areas.
The Foreign Investment Promotion Board, the nodal body for approving foreign direct investment in the country, has given its nod to a proposal from Germany-based Deutsche Bank to buy a 5 per cent stake in the Delhi Stock Exchange.
The panel has also decided to increase the weight of manufactured items and the fuel group in the new index. Accordingly, the new WPI series, with a revised base year of 2004-05, will see the weight of manufactured items go up to around 65 per cent from 63.75 per cent in the present series.
A high-level committee on External Commercial Borrowings chaired by Finance Secretary D Subbarao is expected to take a final view on the matter this week. The committee comprises officials of the ministry of finance and the Reserve Bank of India. A high-level committee on External Commercial Borrowings chaired by Finance Secretary D Subbarao is expected to take a final view on the matter this week.
This lack of regular and detailed disclosure by companies or respondents lies at the core of the problem, one that has gained ground in recent weeks.
A nation-wide housing price index may be a reality soon. The National Housing Bank, in collaboration with the National Council of Applied Economic Research, is close to finalising the methodology to be adopted for the index, named NHB Residex.
The Reserve Bank of India is expected to do a balancing act by further liberalising limits on the foreign exchange outflow to tackle the capital inflow and its impact on inflation. The central bank was likely to raise the limit on corporate investment abroad and the ceiling on individual remittances overseas. RBI has liberalised limits on the overseas investment by companies from 200% to 400% of their networth. Liberalisation is proposed since India has good forex situation.
There may not be any legal obstacles to the State Bank of Saurashtra's merger with the State Bank of India but it is the United Progressive Alliance's political compulsions that are holding back the deal, which is expected to pave the way for merger of the other six SBI associates with the parent. In response to the law ministry's objections, the RBI has told the government that the Centre could go ahead with the merger without any immediate legal glitches.
The initiative could help a large number of the alleged FERA violators get away with just financial penalties instead of criminal charges. The government's advisory, informed sources said, will not apply to all the cases as the RBI will decide on a case-to-case basis.
The International Monetary Fund has reduced India's contribution to world gross domestic product in purchasing power parity terms to 4.6 per cent in 2007 from the earlier estimate of 6.4 per cent.
The Insurance Regulatory and Development Authority (Irda) may allow up to 25 per cent investment to a single group of companies as part of the group exposure norms for unit-linked insurance plans (Ulips).While in the normal course, the regulator is likely to cap the investment of such polices at 20 per cent, the ceiling can be relaxed by another 5 per cent with prior approval of the board through what is called discretionary limits.
Exchangeable bonds are instruments that allow a holding company or the parent company of a group to raise funds from the overseas market for use by any of the group companies. The bonds will then be converted into shares of the company for which funds were raised. RBI has sent a cautionary note to the government stating that the rules for exchangeable bonds will have to be aligned with the norms for external commercial borrowings.
Even as the government grapples with a surge in prices, a three-year old initiative to recast the index that measures wholesale prices is not getting anywhere fast. The revised index is likely to take at least another year to implement and may spill over into the tenure of the next government.
The duty cuts and export restrictions imposed by the government to control inflation may only have a marginal impact, economists have said. The long-term solution, they say, is to boost agricultural production to enable the sector to ride out of the current slump.
"If the tax holiday is withdrawn, STPIs will lose the level-playing field vis-a-vis special economic zones. We have recommended that the government either withdraw the tax holiday to SEZs or continue the incentive to IT companies," an official with knowledge of the deliberations told Business Standard. STPIs enjoy direct tax exemption under sections 10A and 10B of the Income-Tax Act, 1961. The benefits are scheduled to expire on March 31, 2009.
India will finally sign an investment treaty - the Bilateral Investment Promotion and Protection Agreement (BIPA) - with Myanmar in the first week of April. The pact is going to be of critical interest to a host of oil majors looking at investments in the resource-rich country.According to sources, the treaty will be signed with the approval of Prime Minister Manmohan Singh. The Cabinet ratification, they say, will come later.
The government has initiated a comprehensive review of external commercial borrowings (ECB) policy. While the details are yet to be thrashed out, the government and the Reserve Bank of India are set to raise the ceiling for the current financial year from $22 billion to $28-30 billion. Sources said the move was prompted due to a breach in the existing ceiling.
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