New Delhi: Output of core industries grew at an eight-month low of 1.9 per cent in September, down from 5.8 per cent in August, indicating overall industrial production will be subdued. This could have repercussions on the gross domestic product for the second quarter.
Official data showed on Friday infrastructure industries had slowed down the most since January when production grew 1.6 per cent. Output had grown by nine per cent in September last year, muting the sector’s performance last month.
“This is largely because of the high base effect. As the effect subsides from October, core sector growth will rise for the remaining part of 2014-15,” said Devendra Pant, chief economist with Indian Ratings.
Infrastructure industries’ production grew four per cent in the first half of 2014-15, lower than 5 per cent in the same period of the prior year.
Production of crude oil, natural gas, refineries and fertilisers contracted for a second month in September as output of coal, cement, steel and electricity rose. The growth was, however, lower in September than in August.
Electricity generation, which has been propping up industrial data, grew 3.8 per cent in September, less than a third of the 12.6 per cent in August. Cement production grew 3.2 per cent in September, against 10.3 per cent in the previous month, while the output of steel grew four per cent, against 9.1 per cent. Growth in coal production was a respectable 7.2 per cent but even this was lower than the 13.4 per cent in August.
Over a third of the Index of Industrial Production (IIP) comprises output of infrastructure industries. Industrial production rose just 0.4 per cent and 0.5 per cent in July and August, respectively. If it grows at below one per cent, September will be the third consecutive month of manufacturing weakness.
(Source: Business Standard November 1, 2014)
APPOINTMENT OF 8 PSU BANK HEADS EXPECTED BY NOV-END
New Delhi: The finance ministry said on Friday that the government will, by November-end, appoint chairman and managing directors of eight Public Sector Banks (PSB), where it had scrapped selections made by the UPA government.
The ministry also said it will soon take to the union cabinet level a proposal for a R10,000 crore fund for recapitalisation of public sector banks (PSBs) in addition to the R11,200 crore announced in the Budget 2014-15 to help them meet global capital adequacy or Basel III norms. Besides, the ministry said the government will from next fiscal give more autonomy to PSBs in selecting statutory auditors.
Addressing mediapersons, Department of financial services secretary GS Sandhu said panel led by RBI Governor Raghuram Rajan, and comprising Sandhu himself alongwith four external experts will on November 13 and 14 conduct interviews of eligible candidates for the post of CMDs of eight PSBs. He added that the aim is to hand over appointment letters to the selected candidates by November-end.
Sandhu said before the final decision is taken, each of the eligible candidates will have to appear before three sub-committees comprising two members each from a panel of six members (including DFS secretary, RBI deputy governor, and four experts). They will be assessed including on the basis of their performance in the last 10 years, Sandhu said.
(Source: Financial Express November 1, 2014)
FINANCE MINISTRY REJIGS TEAM, NEW CHIEFS FOR APEX BODIES
New Delhi: The finance ministry, which has started preparations for the annual budget for 2015-16, has got a new team of officials at the helm with a new secretary in the Department of Economic Affairs and new chiefs for the the apex policy making bodies for direct and indirect taxes.
On Friday afternoon, senior civil servant Rajiv Mehrishi took charge as the secretary in DEA, the department that makes the union budget, after Arivnd Mayaram demited office to accept new assignment as secretary in the Ministry of Minority Affairs, said an official statement.
The Central Board of Direct Taxes (CBDT) will have a new chairperson from Monday—Anita Kapoor, who is currently a member in the the top policy making body for direct taxes. K V Chowdary, who retired as Chairman of CBDT on Friday has been appointed as an advisor to the Special Investigation Team probing into the black money issue. Kaushal Srivastava, member in Central Board of Excise and Customs (CBEC), will succeed J M Shanti Sundharam, who retired on Friday as the Board’s Chairperson.
The government relieved Subash C Garg, an officer on special duty in DEA from his duties to take up his new assignment as Executive Director of World Bank.
(Source: Financial Express November 1, 2014)
FISCAL DEFICIT REACHES 83% OF BUDGET ESTIMATES IN H1 FY15
New Delhi: A day after the government announced austerity measures on the non-Plan expenditure side, official data on Friday showed the Centre’s fiscal deficit has surged to 82.6 per cent of the Budget Estimate (BE) in the first half of the current financial year, against 76 per cent in the corresponding period of the previous financial year.
Data showed the government failed to mop up as much revenue as was planned at the time of the Budget, though it successfully reined in expenditure. The government attributed the trend to high refunds, admitting that indirect tax collection target is a challenge though direct tax mop-up pegged in BE would be met.
The Budget had estimated fiscal deficit to be Rs 5.31 lakh crore or 4.1 per cent of GDP (gross domestic product) in 2014-15. However, it stood at around Rs 4.39 lakh crore in April-September period.
The deficit had stood at 76 per cent of BE in the year-ago period, even then the government was able to rein it in much below than the target of 4.8 per cent of GDP at around 4.5 per cent. But, for that plan expenditure was pruned by over 18 per cent or over Rs 1 lakh crore.
The target this year stands at controlling fiscal deficit at 4.1 per cent of GDP, which seems a far cry at least now.
Total receipts stood at Rs 4.23 lakh crore, constituting 33.1 per cent of BE at around Rs 12.64 lakh crore. At this point, revenues (as portion of BE) were bit higher at 35.4 per cent in FY14.
All segments of receipts — tax, non-tax, non-debt capital — were lower as proportion of BE in the first half of the current financial year than the corresponding period of the previous year.
Tax receipts stood at around Rs 3.23 lakh crore, accounting for 33.1 per cent of BE at approximately Rs 9.77 lakh crore against 34.8 per cent a year ago.
Finance Minister Arun Jaitley told reporters, “We will be very close to achieving FY15 direct tax target, but indirect tax could be a challenge.”
He said fiscal deficit is showing an upward trend because of high tax refund. As much as Rs 1.20 lakh crore of refunds were given on both direct and indirect taxes, he revealed.
The second set of advance payments fall due on September 15 and in that respect lower tax mop-up could be a cause of concern.
Non-tax revenues at around Rs 95,000 crore constituted 45 per cent of the target at Rs 2.12 lakh crore against around 48 per cent in a year-ago period.
Non-debt capital receipts were just over Rs 5,000 crore, meeting just over seven per cent of BE at Rs 74,000 crore. At this point of time, these funds constituted over 10 per cent of BE in the previous financial year. Most of these funds at over Rs 58,000 crore are to come from various direct and indirect disinvestments, none of which has materialised so far.
“With tax revenue growth under-performing, the budgeted target in the first half of FY15, revenue buoyancy will crucially hinge upon the success of the telecom auction and disinvestment offerings in the remainder of this financial year,” said Aditi Nayar, senior economist with ICRA.
On the other hand, expenditure was managed better and contained at Rs 8.62 lakh crore, which meant 48 per cent of BE at around Rs 17.95 lakh crore. At this point of time, expenditure stood at 48.6 per cent of BE.
While plan expenditure was a bit higher (around Rs 2.46 lakh crore) at 42.8 per cent of BE (Rs 5.75 lakh crore) against 42.5 per cent in the first half of 2013-14, non-plan expenditure was bit lower (around Rs 6.16 lakh crore) at 50.5 per cent of BE (around Rs 12.20 lakh crore) against 51.6 per cent.
On Thursday, the government had announced 10 per cent cut in non-plan expenditure, a practice being followed since global financial crisis erupted in 2008-09.
“In addition to the measures, savings related to the budgetary allocation for food subsidy and fuel subsidies would ease the pressure on non-Plan revenue expenditure side in the second half,” Nayar said.
She said even as fiscal deficit reached nearly 83 per cent of BE in the first half, a sharp slippage relative to the target of 4.1 per cent of GDP is unlikely in 2014-15. If the government manages to rein in fiscal deficit even at 4.2 per cent of GDP, it would meet the fiscal consolidation target, through it would slightly breach the BE.
Revenue deficit, which many analysts give much more importance than fiscal deficit as this part of excess expenditure does not create assets, stood at 91.2 per cent of BE against around 85 per cent in the first half of 2013-14.
(Source: Business Standard November 1, 2014)
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