ECONOMIC SCENE

 
Exports from EPZs up by 28 per cent

The exports from the seven Export Processing Zones (EPZs) of the country have registered a growth of nearly 27.7 per cent during the year 1999-2000 recording export figures of Rs.6707.44 crore as against exports of Rs. 5254.48 crore during the year 1998-99. The exports from these EPZs as a percentage of the total exports from the country have also gone up to 4.12 per cent from 3.71 per cent in the year. 

The seven EPZs presently in the country are : 

  • Kandla FTZ (Gujarat), 
  • Santacruz Electronics EPZ, Mumbai (Maharashtra), 
  • Noida EPZ (UP), 
  • Madras EPZ (Tamil Nadu), 
  • Cochin EPZ (Kerala), 
  • Falta EPZ, Calcutta (West Bengal) and 
  • Vizag EPZ, Vishakhapatnam (Andhra Pradesh). 
Apparel exports increase 14% during January-June

Apparel exports have posted a cumulative growth of 14.19 per cent in value terms to touch $ 3.2 billion for the first half of the calendar year.

Apparel exports to US  have touched $ 1.1 billion for the first six months of the current calendar year ending June as against EU destination which has shown a slump.

CMIE predicts buoyant industrial growth rate

Sustained growth in the industrial and service sectors along with improved agricultural production, will help India post a slightly faster growth rate in 2000/01, the Centre for Monitoring Indian Economy (CMIE) said on 10.07.2000.

It estimated India’s GDP would grow seven percent this year compared with 6.4 per cent in 1999/2000 (April-March).

The CMIE said agricultural growth this year would be higher 4.5 per cent compared  with 1.3 per cent in 1999, while growth in the industry and service sectors would be almost as buoyant as last year.

Average annual inflation rate, based on wholesale prices, is expected to be around 7.0 per cent in 2000-01 compared to 3.2 per cent last year.

The software industry projects its exports in 2000-01 will surge 58 per cent to $ 6.3 billion. CMIE expected net invisible export earnings, which included software earnings and non-resident remittances, to rise to $ 14.0 billion in 2000-01 from $ 12.9 billion last year.

Trade deficit rises to $ 3 bn in April-June

India’s exports notched a growth of 27.65 per cent in April-June 2000 over the same period last year. However, trade deficit during the same period shot up to nearly $ 3 billion, largely due to the 27.25 per cent growth in imports.

In terms of dollar, exports during April-June 2000 were estimated at $ 10194.34 million against $ 7986.28 million during April-June 1999.

Imports in the same period increased to $13177.09 million from $ 10355.66 million last year.

India, China fastest growing countries : BIS

Bank of International Settlements (BIS)  has observed that India and China are reforming their financial and economic systems, though the progress has been slow and much depends on the ability of the authorities to carry forward their agenda. India has been identified as one of the fastest growing countries in Asia together with China even though interest rates were high during the fiscal 1999-2000, according to the 70th annual report of the Bank for International Settlements. As per the BIS report, India has mainly benefited from a pickup in industrial output and a fast growing information technology sector.

Rising rural production and incomes have also contributed to growth but higher oil prices have worsened the trade balance for the country.   

India moves up 4 notches on human development index

India has moved up four notches to the 128th rank on the Human Development Index (HDI) in 2000, according to the Human Development Report released on June 29, 2000 by the United Nations Development Programme. The country’s HDI improved marginally to 0.563 in 2000 from 0.545 last year. The increase in the ranking is mainly attributed to the rise in per capita gross domestic product, in terms of purchasing power parity  to $ 2,077 compared to $ 1,670.

Exports up 27%

Exports from the country achieved a 27 per cent growth, for the first time in a decade, during the first quarter of the current fiscal, Union Commerce Secretary, Shri Prabir Sengupta, said on 29.08.2000. Shri Sengupta said the Centre was hopeful of achieving the export growth target of 18 per cent this year, which was 11.5 per cent in the previous year. A number of steps to sustain export growth, like simplification of export licence procedures and greater interaction with exporters have been undertaken by the Centre, he said.

Tax on e-commerce, agriculture sectors mooted

The Reserve Bank of India (RBI) has suggested levying tax on the agriculture sector and the emerging e-commerce sector.

It also said that tax exemptions and concessions extended to different sectors of the economy need to be revised and rationalised to bring more buoyancy in the tax system.

The RBI has also called for reforms and re-orientation of levies such as stamp duties, registration fees, etc.

It has suggested that these taxes be made as user-friendly as possible so that they do not impede the volume of transactions and reduce, in the process, the total revenue from these sources.

External debt rises 0.8% at $98,435 million

India’s overall external debt at the end of March 31, 2000, was higher by 0.8 per cent from 
$ 97,666 million to $98,435 million over year-earlier levels, but its share of short-term debt fell in the same period.  The short term debt declined to 4.1% of total external debt at end March 2000 from 4.4% last year.
 
Gross deficit of Centre, States up to 9.9 per cent

The combined gross fiscal deficit (GFD) of Centre and states increased to 9.9 per cent of gross domestic product (GDP) to Rs. 1,93,471 crore for 1999-2000 against the budget estimate of 7.4 per cent of GDP (Rs. 1,48,581 crore). The deficit was 8.9 per cent of GDP (Rs. 156,928 crore) in the previous fiscal.

According to RBI, GDP is estimated at 8.6 per cent against an estimate of 9.9 per cent in 1999-2000, revenue deficit is at 5.6 per cent (6.7 per cent) and primary deficit is pegged at 2.9 per cent (4.2 per cent). The improvement in the indicators is expected to be realised partly through larger revenue mobilisation proposed both in the budgets of the Centre and states, and partly through the containment in the growth of expenditure. 

Revenue receipts are projected to grow by 10.3 per cent reflecting improvement in direct tax collections, while non-tax receipts are budgeted to decline by 12.8 per cent.

The combined revenue and capital receipts are budgeted to grow at 6.6 per cent compared with 19.3 per cent in 1999-2000, while the combined expenditure is budgeted to rise by 5.6 per cent in 2000-2001 as against 20.4 per cent in the previous year.

Govt. to follow US banking model

The Government proposes to follow Universal Banking model of the United States which provides for insurance companies, mutual funds, developmental financial institutions (DFIs) and non-banking financial companies (NBFCs) to enter retail banking or vice versa.

These “universal banks” -when they come into existence - are expected to be developed and be regulated by a single larger regulatory authority, as in the case of the US. This is against multiple monitoring agencies existing in India now and the United Kingdom as well.

The concept of universal banking will come up for discussion between Finance Minister Yashwant Sinha and his counterpart US Treasury Secretary Larry Sommers on September 6 in Washington, D.C.

In India, ICICI has already put on drawing board a “dream project” to convert itself into a universal bank which would gain momentum after Sinha-Sommers meet. The only other financial institution that has sought to become a universal bank is the Exim Bank. Both the ICICI and Exim Bank proposals are being examined by the RBI and finance ministry pending finalization of norms for such diversified banks.