It was a new beginning for
corporate India post the
downturn. Developed nations like
US and UK were still recovering
from one of the worst
recessions. But, India seems to
be looking forward.
Government ’s timely intervention
helped India pass the stress test.
This year, the focus has been to
maintain the growth momentum.
The planning commission
pegged India ’s GDP at 9% for the
current financial year. Now it was
Finance Minister Pranab
Mukherjee ’s plan to lay the
foundation in his budget.
Budget 2010
Government’s focus on aam
aadmi continued. The highlight
of the budget was the widening
of Income Tax slab, giving the
taxpayers some extra money to
spend. The much pending Direct
Tax Code and GST were
postponed and are expected to
be implemented from April 2011.
For corporate India, there was
nothing big to cheer about. The
Unique ID project was set up and
the government appointed
former Infosys CEO Nandan
Nilenkani to lead it. The Finance
Minister allocated Rs 1900cr fund
for UID.
Price rise and RBI
The next task for the government
was to battle inflation. With
double-digit inflation, RBI had a
task on its hand. It hiked key
policy rates along with the cash
reserve ratio (CRR) by 25 basis
points each in its annual
monetary policy review meet on
April 20. However this move
didn ’t impact the interest rates,
as banks refrained from hiking
home loan rates. Food inflation
for the month of May 2010 was
at 10.16%. RBI ’s monetary
review for the first quarter is on
July 27 and experts believe that
the Central Bank might may hike
key rates to tame inflation.
Recovery
India Inc is smiling. It ended the
fiscal with a bang recording the
highest earnings growth in more
than three years for the March
quarter. With good profits, hiring
activity is at a two-year high.
Salary hikes and bonus were
back on card. Manpower Inc, said
42% of Indian employers expect
to expand their workforce in the
third quarter, citing a survey of
5,371 companies. Hiring in IT/
ITeS and insurance sectors has
seen maximum movement with
the index moving up by 13 per
cent and 15 per cent.
3G is finally here
After years of delay, third
generation bidding rounds
culminated in a final aggregate
pan-Indian 3G licence value of $
3.6 billion. For the government it
was a reason to cheer as it cut
fiscal deficit to nearly 4.9 per cent
from 5.5 per cent of GDP
projected in the Budget. No
single operator managed to bag
all 22 circles on offer. The
broadband wireless auction
brought in some more cash into
the kitty, swelling the
government exchequer to Rs.38,
543.31 crore.
Sebi-IRDA face-off
It can be termed as a battle
between regulators. In April,
market regulator Security
Exchange Board of India (SEBI)
banned issue of all new ULIPs
from 14 insurance companies
stating that they have not
registered their product with
SEBI, so they can ’t issue new
ULIPs. However, after almost two
months of turf war between the
two regulators, the government
passed an ordinance that
granted full regulatory control of
the Unit Linked Insurance
Product (ULIP) market to IRDA.
Read Deepak Shenoy’s column on
whether you should stay
invested or exit from ULIPs.
India: The next auto hub
‘Small things have their own
peculiar charm’. This seems to be
true for carmakers in India as
leading automakers plan to enter
the small car segment. For Tatas,
the journey from Singur to
Sanand seemed to have paid off
with its production facility for
Nano being inaugurated. Car
sales zoomed to a ten-year high
in May as rising incomes and a
rapidly expanding economy
offset the impact of price
increases. But the car that
fulfilled the middle class dream
would no longer be
manufactured. India’s first small
car, the Maruti 800 was phased
out from April due to the new
emission norms.
Ambani Saga ends
After five years of a bitter feud
and holding government energy
policy hostage that even
discouraged foreign investment
in oil and gas, the Ambani
brothers called a truce on May
23, 2010 by ending a non-
competition agreement that was
the source of acrimony between
them. The new pact not only sent
RIL shares soaring, it soothed the
investors ’ nerves as public
welcomed the verdict and the
Ambanis ’ move.
On May 7, 2010, a three-judge
bench of the Supreme Court
headed by Chief Justice K G
Balakrishnan gave a verdict that
the Ambani family MoU dividing
KG-D6 gas between the brothers’
group firms was not binding,
legally or technically. He asked
both the parties to renegotiate
and sort out their differences but
within the government ’s gas
utilization policy. This was seen
as a veritable win for Mukesh
and RIL over brother Anil.
Mittal’s African dream comes
true
After two failed attempts to enter
the South African market, Sunil
Bharti Mittal was successful the
third time. In the largest telecom
takeover by any Indian firm,
Bharti Airtel signed a deal with
Kuwait-based Zain Telecom to
buy its African business for $10.7
billion (about Rs 48,000 crore).
The acquisition, the second
largest by an Indian entity after
Tatas ’ Corus deal, would make
Sunil Mittal-led Bharti the world’s
seventh largest mobile operator
with a total subscriber base of
about 179 million. It would have
estimated revenues of $13 billion.
Fuel Deregulation
In a hugely debated step, the
government deregulated fuel
prices under the
recommendations by the Kirit
Parekh Committee. Petrol prices
will no longer be subsidized,
although diesel, kerosene and
LPG will continue to be
subsidized, albeit at a slightly
lower level. Few analysts feel that
the step might further increase
the inflation. However in spite of
stiff opposition from its allies and
BJP, the Prime Minsiter said the
decision was a much-needed
reform.
Choppy Markets
Robust economy and corporate
earnings drove the Sensex to a
ten-week high on June 26. The
midcap and small cap companies
have outperformed the blue-chip
companies in the fiscal so far. But
overall theSensex has been
hovering around 17,000 this
year. Market analysts predict the
Sensex to see an earnings
growth of 25-30% this fiscal.
Gold prices didn’t ease much and
reached another high of $1260/
ounce.
No comments:
Post a Comment