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.
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"If the tax holiday is withdrawn, STPIs will lose the level-playing field vis-a-vis special economic zones.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.
The project is aimed at meeting the manpower requirements of India's rapidly growing economy, which currently faces a huge skill deficit at all levels of the job chain. The mission, which is expected to start functioning in four to five months from now, will be chaired by Prime Minister Manmohan Singh who will head an "apex committee" with Planning Commission Deputy Chairman Montek Singh Ahluwalia as the vice-chairman.
While the economy has been averaging an annual growth rate of around 8.7 per cent for the last five years, the unorganised manufacturing sector is slowing down.
Some large companies said the measure would broaden and deepen the equity cult in the country, but feel that a blanket 25 per cent minimum public shareholding norm should not be applied indiscriminately to all companies. The ministry had floated the paper on February 1 and asked for public comments by the month-end. The minimum public shareholding limit now is 10 per cent.
Even as the debate over off-Budget liabilities continues, former finance ministry bureaucrats and leading economists say it's time the government went beyond the targets in the Fiscal Responsibility and Budget Management Act.
Many financial sector reforms suggested by the Percy Mistry Committee may not figure in Budget 2008-09.
The Reserve Bank of India has told parliamentarians that it is concerned over the stock market exposure of various non-banking financial companies (NBFCs) promoted by leading banks in the country.
"This is the result of tighter fiscal discipline imposed by the fiscal responsibility framework ... and an optimistic revenue outlook driven by the buoyancy in revenue collections during the last three years of the 10th Plan," the 11th Plan document points out.
Weights of the fuel group are set to rise in the revised Wholesale Price Index.
The committee on financial inclusion, headed by C Rangarajan, the chairman of Prime Minister's Economic Advisory Council, has recommended that the profits transferred to their reserves by such banks should be exempted from tax till the banks achieve the standard capital adequacy ratio (CAR).
The finance ministry is expected to announce the abolition of tax deducted at source (TDS) on corporate bonds in Budget 2008-09, official sources told Business Standard.
The International Monetary Fund says India will clock growth of 8.4 per cent in the coming year.
The Reserve Bank of India's observation that developmental expenditure in better-off states like Gujarat, Maharashtra and Goa is declining as a percentage of gross state domestic product (GSDP), whereas such expenditure is rising in underdeveloped states like Bihar and Jharkhand, has invited criticism from analysts.
Government funds spent on productive asset creation through programmes and schemes are termed "Plan" expenditure, while "non-Plan" is a generic term that refers to all expenditure (including establishment and maintenance activities) of the government not included in the Plan.
A relatively slow performance by the industrial sector and a high base effect may slow down gross domestic product (GDP) growth in the second quarter (July-September) of fiscal 2007-08 to below 9 per cent, feel analysts.
In order to provide greater leeway to central government departments and ministries to finalise centrally-funded projects, the Department of Expenditure under the finance ministry has increased the financial limits of projects requiring approval from various cost-approving bodies.
Faced with huge cost overruns due to a delay in building the rural roads under Bharat Nirman, the Planning Commission is now looking at alternative ways to fund the ambitious rural development project of the United Progressive Alliance (UPA) government.The rural road project, christened the Pradhan Mantri Gram Sadak Yojana (PMGSY), has seen tardy performance on the target of constructing 146,185 km of rural roads by 2009.
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