ECONOMIC SCENE


CMIE pares economic growth rate to 5.8%  

The Centre for Monitoring Indian Economy (CMIE) has revised downwards its estimate of economic growth for the fiscal 2000-01 from 7.0 percent to 5.8 percent.  

It has revised its inflation forecast by one percentage point to 8 per cent. CMIE has revised down its estimates for growth in all the sectors - agricultural, industrial as well as services. The estimates for agricultural growth was cut down from 4.5 per cent to 1.5 per cent, and that  for industrial growth from 7.5 per cent to 5.9 per cent. The services sector growth was revised downward from 8.5 per cent to 8.1 per cent.

GDP growth in the first quarter of the current fiscal was 5.8 per cent in comparison to a 6.9 per cent growth in the corresponding period of the last fiscal. 

Direct tax kitty swells 69% in 5 months

The revenue mop-up from direct taxes in the first five months of the current fiscal touched Rs. 15,100 crore, registering a 69 per cent growth. During the same period last year, direct tax collections amounted to Rs. 8,960 crore. Corporate tax collection during April-August this year stood at Rs. 5,700 crore as compared to Rs. 2,860 crore in the same period last year, registering a growth of 99 per cent. Income-Tax collection till August 31 this year has been Rs. 9,280 crore as against Rs. 6,310 crore collected during April-August last year, a growth of 47 per cent. Direct tax collection this year clearly indicated the optimism prevailing in the economy. The direct tax realisation till now was mainly on account of tax deduction at source and advance tax.

FDI proposals worth Rs. 2,416 crore approved

The government on 8.9.2k approved 76 foreign direct investment proposals worth Rs. 2,416 crore including Grasim Industries proposal to raise Rs. 1,917 crore overseas to part finance a LNG and power project.

The union commerce and industry minister, Shri Murasoli Maran cleared proposals covering various sectors such as power, banking, automobiles, computer software, telecommunications consumer goods, LPG terminals and NBFC activities. The other proposals cleared are that of Bharti Televentures, Microsoft Corporation India Ltd. Reebok, SSKI Investor Services and Itochu Corporation, Bharti Televentures has been allowed to increase its paid up capital by Rs. 61.57 crore for promotion of activities relating to telecom sector. Another proposal of Bharti Global for induction of additional foreign collaborators, involving a fresh FDI flow of Rs. 3.97 crore for manufacturing and marketing of telecommunication equipment was also approved.

The government also cleared the application of Microsoft India and Reebok India’s proposals for amendment in the existing foreign collaboration approvals. No fresh inflow is involved in both these proposals. Ontario-based Engineering Power Systems Ltd. has been allowed to set up small power plants with 100 per cent FDI of Rs. 66 crore.

$ 64.9 m World Bank loan for technical education

World Bank (WB) has agreed to extend $ 64.9 million for India’s $ 80.1 million technical education projects in backward and geographically remote states.   The $ 64.9 million (about Rs. 300 crore), 35 year interest free credit would be provided by WB’s soft lending arm International Development Association (IDA). The project supports two existing and six new polytechnic centres in eight states, it added.

Minimum of Industrial Growth on Poverty Alleviation

Growth of manufacturing industries can have a significant impact on poverty alleviation, but only in a fully liberalised regime. The highest poverty alleviating impact for rural household groups comes through the growth of ‘food-grains’, followed by the growth of ‘other agriculture’ sectors. Growth in ‘education’ and ‘other service’ sectors follows closely in reducing poverty levels, according to a National Council of Applied Economic Research (NCAER) study. In a study on the impact of sectoral growth on poverty in rural India, NCAER has concluded that growth in the mining and quarrying sector, followed by ‘capital goods’ and ‘electricity, gas and water-supply’ sectors has the least poverty alleviating effects on rural households, across all the market regimes considered.

Forex earnings from tourism outstrips FDI

Foreign exchange earnings from tourism in the last decade have outstripped total foreign direct investment in different industrial sectors in India by $ 10 billion,  a study by Hotel Association of India (HAI) has showed.  While foreign exchange earned from tourism during 1990-91 to 1999-2000 have touched $ 24.13 billion, total FDI inflow in various industries were only $ 14.18 billion indicating the potential that tourism has. 

Steel exports up 23%

Steel exports from India jumped 23 per cent to 4.7 lakh tonnes in the first three months of 1999-2000. Indian Steel exports to the US have increased by 275 per cent to 6.6 lakh tonnes from 1.76 lakh tonnes in the first six months of 1999 calendar.  The rise in exports as shown in the table below has been despite the antidumping measures taken by the US & European union :
 

YEAR
1994-95
1995-96
1996-97
1997-98
1998-1999
1999-00
Pig Iron 4.66 5.03 4.51 7.85 2.76 2.90
Steel Semis 3.99 3.91 3.00 5.03 1.74 3.28
Finished Steel 8.73 12.75 16.22 18.80 17.71 26.70
Total Steel 12.72 16.66 19.22 23.83 19.45 29.98
Steel Exports 12.72 16.66 19.22 23.83 19.45 29.98

Indian Insurance market potential, the largest in the World 

The Minister of State for Finance, Shri Balasaheb Vikhe Patil has said that the government is committed to reforms in the insurance sector in order to provide consumer satisfaction. While addressing a Seminar on “Insurance@IT - New Paradigms” organised by the Associated Chambers of Commerce and Industry (ASSOCHAM), in New Delhi on 29.8.2k he also said that the insurance industry in India is in transition from a state controlled monopoly to a relatively open market condition.  Shri Patil said that the reforms initiated by the government aim at insuring for the consumers the benefits of service, product and price.

Speaking on the vast potential the country offers in the insurance sector, the Minister said that about 312 million middle class consumers in India have enough financial resources to purchase insurance products like pension, health care, accident benefit, life property and auto insurance.  “Only 2.5 per cent of this insurable population, however, has been extended insurance coverage in any form. The potential premium income is estimated at around US $ 80 billion’. The existing companies have tapped only 10 per cent of this vast market, therefore, he said Indian insurance market is the largest market in the world. 

Non-oil imports post negative growth; oil imports soar

Nearly 110 per cent of the total imports valued at $4297.01 million in July 2000 have been accounted for by imports of petroleum and petroleum products. On the other hand, non-oil imports have recorded a minus 2 per cent growth. The imports during July this year have recorded a 20.12 per cent growth over those valued at $ 3577.35 million in July last year. 

Total oil imports at $5461.03 million are higher by 98.25 per cent than those valued at $2754.58 million in the previous corresponding period. The non-oil imports however, have risen by only 6.95 percent from $ 11317.16 million to $12103.60 million. Officials say that the value of exports at $3554.01 million during July is by far the highest in any single month of the current fiscal so far. It is also about 4 per cent higher than a previous level of $3325.71 million achieved in June. The cumulative growth recorded in April-July 2000 is 25.43 per cent over the same period last year. In this period, exports increased from $11041.88 million to $ 13849.91 million. 

Engineering exports jump 20.4% in Q1

Engineering exports have registered a 20.4 per cent increase during the first quarter of the current fiscal. The growth rate during June was 31.29 per cent. Between April and June 2000, India exported engineering goods worth $974 million compared to $809 million during the same period last year. Chairman of the Engineering Export Promotion Council (EEPC) Shri J.S. Bhasin said in a statement that all major sectors like capital goods consumer durables and prime steel had registered double digit growth during the first three months of the current fiscal. The trade promotion council has requested the government to announce DEPB rates for all items not covered in the current list. The list recommended by EEPC includes capital goods and machinery.