With the Budget barely a week away, the Prime Minister's Economic Advisory Council on Monday made a case for withdrawing some of the tax incentives to the industry to put the economy back on track for fiscal consolidation.
While bankers and experts expect the lending rate to fall by about one percentage point in the near-term, the Prime Minister's Economic Advisory Council has strongly pitched for rate cut by the RBI in its monetary policy review later in the month.
The Prime Minister's Economic Advisory Council has scaled down its growth projection for the Indian economy for 2007-08 to 8.9 per cent from 9 per cent on account of slow expansion in manufacturing and energy generation. Dr C Rangarajan, head of the group of economists released the review of the economy of 2007-08 and said that the economic growth of India would be hovering around 8.5 per cent during 2008-09.
The business model of the microfinance sector must change, emphasised C Rangarajan, chairman of the Economic Advisory Council to the Prime Minister, saying that the microfinance movement must have as its ultimate goal the desire to help the poor and enable them to come out of poverty.
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).
Slower growth in the developed world is expected to impact emerging economies like India by reducing demand for their exports in rich country markets.
In an interview with Business Standard's Sapna Dogra Singh and John Samuel Raja D, C Rangarajan says there are some encouraging signs in the economy, but the real recovery will come only in 2010-11.
"By 2025, world will be a bi-polar society wherein China will be the most influential country and by 2035, India would become the third largest economy, making the world tri-polar," he said.
The prime minister's Economic Advisory Council had said inflation would be at 7-8 per cent by the year-end, compared with 10.55 per cent in June.
The Food Security Act as proposed by the UPA government assures rice/wheat at Rs 3 a kg to BPL families as a matter of legal right.
To rein in prices, the RBI could tweak in policy rates to either suck out money supply or make borrowings costlier.
Committee of secretaries is working on the formula and it is understood that EAC is also being asked to go through the formula.
The Prime Minister's Economic Advisory Council said on Monday that India's GDP growth will slow down to 8.2 per cent in the current fiscal. Its earlier growth projection was at 9 per cent.
C Rangarajan, chairman of the Prime Minister's Economic Advisory Council, on Thursday said he expects the Indian economy to grow by 8.5 per cent in FY'12 on the back of services sector and industry expansion, though he hinted that agriculture might not be a big contributor.
The Prime Minister's Economic Advisory Council on Wednesday favoured further increase in petroleum prices in line with the global trend.
Although the economy did well during the second quarter (July-September) recording a growth of 7.9 per cent, the output of agriculture and allied sector slipped to below 1 per cent.
The gross domestic product grew by 6.1 per cent in the first quarter of 2009-10 and the year may end with 6.5 per cent.
The private demand is still not picking up and the funds under market stabilisation scheme are also maturing.
C Rangarajan, chairman of the economic advisory council to the prime minister, has called for revisiting subsidies, dividend distribution tax and tax exemptions.
Chidambaram to meet ministries' financial advisors, PM's economic council.
The govt. has set up a panel to review the investments and savings in the Indian economy. The panel will review financial savings and suggest improvements.
Last week, the India Meteorological Department downgraded its monsoon forecast to 'below normal'. This has led to fears whether it would affect agricultural output and bring down India's growth in the current fiscal. The agriculture sector contributes around 17 per cent to the gross domestic product and employs around 60 per cent of the nation's total workforce.
India's CAD had touched a record high of 4.2 per cent of GDP in 2011-12, on the back of a wider trade gap and lower capital inflows.
Petroleum ministry rejects conclusions of two reports ahead of EGoM.
Inflation has come down to nine-month low of 6.84 per cent for the first week of December from a high of 12.91 (provisional) per cent in August following a series of fiscal and monetary measures taken by the government and the apex bank. Besides, the oil prices also fell, easing the rate of price rise.
The Prime Minister's Economic Advisory Council member G Govinda Rao on Thursday said the Reserve Bank can raise the key rates ahead of its April 20 annual monetary policy to tame the high headline inflation.
The Reserve Bank of India has forecast the economy to grow by 6 per cent with an upward bias.
India lags behind many nations in managing exchange rates, including China and Singapore.
The divestment of HPCL and BPCL may be delayed by at least three years because of "existing hurdles", prime minister's economic advisory council committee member and BJP national executive member Jagdish Shetigar said on Thursday.
The Economic Advisory Council to the Prime Minister, of which he is chairman, has quickly sought to distance itself and the government from Dr Debroy's views.
The paper projects that there will be zero unemployment in 2009 if the economy grows at 9.1 per cent and the labour force continues to grow at 2.93 per cent.
Using the same methodology as the EAC-PM study, the fastest-growing religious population is, in fact, the Buddhists. The Buddhist population increased by over 1,600 per cent between 1950 and 2015.
A group of ministers, constituted to look into pricing and utilization of natural gas produced from new fields like the KG-D6 of Reliance Industries, is likely to hold its first meeting on August 27.
Muslims' share in the reservation will keep on increasing also because of "conversion and infiltration because they are having a secular cover from them (the Congress)", he added.
But the finance ministry has justified the action saying laws can be amended retrospectively through 'validating legislation,' which is legally permissible.
The net FDI for 2006-07 would be around $9 billion, up from $4.7 billion last year, the Prime Minister's Economic Advisory Council said in its update on the country's balance of payments outlook for this fiscal.
"For some more time inflation can increase. It could touch 13 per cent, but by December it will start declining and is likely to moderate to 8-9 per cent by March 2009," said outgoing chairman of the PMEAC C Rangarajan while releasing the Economic Outlook for 2008-09.
