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Reacting to the fiscal package and RBI monetary action, Ravi Ramu, Director – Finance, Puravankara Projects, said the 1% cut in the repo rate would help in lowering interest rates. “The fact that we are going to be allowed to access worldwide money for these townships is fabulous news.”...
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Seeking to reverse the recessionary trend, the government on Friday gave the economy a second stimulus by enabling the industry to borrow more from abroad and FIIs to invest more in the country, besides stepping up public spending.
The package, the last for the current financial year and announced in tandem with rate cuts by RBI, aims at providing much higher and cheaper funds in the economy along with additional expenditure by the Centre and the State to push demand in the country.
While allowing states to access market for borrowing about Rs 30,000 crore (Rs 300 billion) to meet additional expenditure, the package provides for liberalisation of External Commercial Borrowing norms and raising FII investment limit in rupee-denominated instruments to $15 billion from $6 billion now.
Focusing on countering the recessionary trends, the package also withdrew exemptions on countervailing duties on cement, TMT bars and structurals that were originally given to contain inflation.
Announcing the package, Deputy Chairman of Planning Commission Montek Singh Ahluwalia said special attention was being paid to housing sector, macro and micro industries and infrastructure sectors through a series of measures including provision for higher credit and greater liquidity for the non-banking financial companies.
With inflation down to manageable limits, the focus has clearly shifted to reviving industrial growth which took a beating under the impact of the credit crunch spawned by the global slowdown.
The government will allow development of integrated townships, access to ECBs with a view to giving a boost to the housing and construction sectors, which are especially facing severe pressure.
As a key measure to revive the economy, the package will facilitate funding of pending highways and port projects of about Rs 25,000 crore (Rs 250 billion).
The India Infrastructure Finance Company Limited (IIFCL) is being enabled to access additional Rs 30,000 crore (Rs 300 billion) by tax-free bonds to finance additional projects worth Rs 75,000 crore (Rs 750 billion) over the next 18 months.
The IIFCL bonds would be issued soon for raising first tranche of funds. Troubled exporters received a reprieve in the form of higher rates for tax refunds and a commitment that the flagship reimbursement DEPB scheme would be extended up to December 2009, the government said.
Specific sectors like knitted fabrics, bicycles, agricultural hand tools and some categories of yarn would get duty draw backs at enhanced rates.
The commercial vehicle manufacturers, who have been hit hard due to decline in sales, are expected to see demand revival with accelerated depreciation of 50 per cent on vehicles purchased between January-March this year.
Non-banking finance companies (NBFCs), which are generally active in funding commercial vehicles would be provided a line of credit by the public sector banks.
Boost for realty sector
In an effort to boost the cash- starved realty sector, the government on Friday allowed the developers of integrated townships to borrow funds from overseas and also asked states to release land for low- and middle-income housing schemes.
"GoI will work with state governments to encourage them to release land for low- and middle-income housing schemes," the government said. The announcement forms part of its second stimulus package to minimise the impact of global financial crisis.
Besides, the government also relaxed norms on external commercial borrowing (ECB) for dealing with the problem of liquidity crunch faced by the developer community. The government said "all-in-cost" ceilings on ECB would be removed by RBI.
"To facilitate access to funds for the housing sector, The `development of integrated township` would be permitted as an eligible end-use of ECB, under the approval route of RBI," the government said.
Earlier, as part of the first stimulus package announced last month, the public sector banks lowered home loans up to Rs 20 lakh and the government recognised the housing sector as an important employment generating field.
The demand in residential segment has declined in the last six months on account of high interest rates on housing loans and steep rise in property prices in the last 2-3 years.
In recent months, though some realty developers announced housing projects for mid-income section of the society, due to high land costs, many projects could not take off.
rediff...........
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Zeenews Bureau
New Delhi, Jan 02: The second stimulus package announced by the government, on the back of a slew of measures brought out by the government, to prevent the economy from slipping into a severe slowdown in 2009, though welcome, is not bold enough to spur demand in the economy and rejuvenate business activity by creating an environment conducive to growth.
“Doubtless, the stimulus package is targeted at sectors such as metals, realty, SMEs as well as exports which have seen a precipitous fall in demand in recent times. The RBI’s decision to cut CRR by 50 basis points and reduce repo and reverse repo rates by 100 basis points would also go a long way to infuse liquidity in the system. The move to liberalise the policy of ECB, a boost to corporate bond market as also enhancing the guarantee cover under the Credit Guarantee Scheme to SMEs from 50 per cent to 85 per cent are all steps in the right direction.” said Satish Bagrodia, President PHD Chamber.
“However, despite this, the Government could have done much more to boost sagging growth and restore business confidence. The allocation of Rs 30,000 crore for infrastructure is insufficient given the urgency to ensure that money flows into sectors such as roads, airports, power plants and ports which would boost demand and have a multiplier effect on the economy. Industry was also looking for a reduction in the total tax burden to induce demand and a further reduction in CRR to 4.5 per cent. Concessions to exporters by way of timely export credit and increase in duty drawback rates, across the board, would have gone a long way to tide over the current uncertain situation especially as inflation is down to single digits and crude prices have fallen to below $50 per barrel.” added Bagrodia.
Economic impact of Indo-Pak tensions
“The current tensions between India and Pakistan are unlikely to have any major impact on the Indian economy. If at all, it may slow down the upward trend in our bilateral trade, but since we do not have any other levels of economic cooperation by way of joint ventures or investments, the negative impact will not be significant”, Bagrodia said.
“Because of the global import compression, this is the right time for the neighbouring countries to cooperate more intensely than before, with bilateral trade in more commodities”, added Mr. Bagrodia.
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How much impact the package can make in the coming days.. do u see great rally ahead......
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Ashok Leyland direct beneficiary of the stimulus package
States, as a one time measure upto 30.06.2009, will be provided assistance under the JNNURM for the purchase of buses for their urban transport systems. A scheme towards this end will be announced shortly.
...
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Govt announces Rs 20K cr fiscal stimulus pkg
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MMB Messenger
The government has announced the second fiscal stimulus package amounting to Rs 20,000 crore. 
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The government has announced the second fiscal stimulus package amounting to Rs 20,000 crore....
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i would say, manufacturer have to reduce there product rate drastically, also banks have to reduce lending rate other wise there will be serious crisis for both. customer will not purchase because money is available. they will buy only if product price comes down drastically. we are coping US policy blindly which will lead us to hell. this policy will only help rich, who will take full advantage of it, what about poor?...
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RBI cuts CRR by 50 bps; repo, reverse repo by 100 bps
Posted by : MMB Messenger
The Reserve Bank of India (RBI) has cut the cash reserve ratio by 50 basis points (bps) and both the repo and reverse repo rates by 100 bps.
The repo rate, after the cut, now stands at 4% from 4.5% earlier.
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The Reserve Bank of India (RBI) has cut the cash reserve ratio by 50 basis points (bps) and both the repo and reverse repo rates by 100 bps.
The repo rate, after the cut, now stands at 4% from 4.5% earlier....
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2nd Fiscal package has been announced quite before although it is happening today. So the recent market rally was due to that. Market has already factored in the fiscal package benefits. I think we will start sliding down once the package has been signed.
10K is a good level to book profit. I think we would test Oct lows in next 1-1.5 months, also rally due to some good results have been factored into the market already. So now bad results have to be factored in....
In reply to:
Govt may announce 2nd fiscal pakage today: Sources
Posted by : MMB Messenger
The government might announce the second fiscal package today after the market closes by around 6 pm, reports CNBC-TV18, quoting NewsWire18. The package may primarily focus on labour intensive export sectors.
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Hi, since you are so good at providing lengthy reports that seems to esacape the 4000 character limits imposed by moderator here, I am wondering if you would be able to cut and paste by far the BEST explanation of the financial credit crisis that happened in the US and spread all over the world. I will whole heartedly recommend this to every one to read. The exam will be on next Friday at 9 PM!!
The link ot the article is::
worlwide web dot rgm dot com / articles / CondeNast dot html. All spaces to be removed of course.
Thank tou so much....
In reply to:
Inflation can come down to 4%....
Posted by : sambala
HOPE SEEN IN INTERVENTION
With central banks cutting interest rates and governments pumping money into the system, some see better signs for 2009.
"I think we`ll move ahead a bit in the new year and then stabilize for a while. Global policymakers are doing their utmost to ensure the recession doesn`t degenerate into a deflationary malaise," said Mike Lenhoff, chief strategist at Brewin Dolphin.
World governments have started pumping more than $1 trillion into their economies, and more is expected in 2009.
In the latest bailout, the International Monetary Fund said on Wednesday it had agreed on a $2.5 billion emergency loan package with Belarus.
The U.S. Federal Reserve on Tuesday built on efforts to cut mortgage costs, setting a goal of buying $500 billion of mortgage-backed securities by mid-2009.
China`s central bank reaffirmed on Wednesday that it would implement a moderately loose monetary policy as it seeks to reinvigorate its once fast-growing economy. [nLV504083]
Indonesia`s president promised further fiscal stimulus to help Southeast Asia`s biggest economy.
Global credit markets are showing signs of improvement, but banks remain reluctant to lend.
Government stimulus plans, corporate bailouts and rate cuts take time to be felt and their benefits are hotly debated. Nonetheless, mounting job losses are raising fears of social unrest in some countries, and piling pressure on governments to act quickly, even if it means huge deficits and debts.
Investors are now looking to January, when Barack Obama will be sworn in as U.S. president on January 20. He is expected to unveil a government spending programme which sources say could range from $675 billion to $775 billion over two years.
The new year will also mark attempts by policymakers to overhaul outdated regulatory systems to avert future crises.
U.S. Treasury Secretary Henry Paulson said the government had to battle the financial crisis without the tools needed to do the job, the Financial Times reported.
"We`re dealing with something that is really historic and we haven`t had a playbook," he said.
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Outlook for 2009-10
1. The next general election, which must be held by May 2009, is almost certain to return another coalition government. The ruling Indian National Congress party faces an uphill struggle to win re-election.
The government is not in a strong position to respond to the impact of the global financial crisis with supplementary fiscal measures, as fiscal policy is already relatively loose.
2. The global financial crisis has triggered a complete reversal of monetary policy. After a 100-basis-point interest rate cut on October 20th, the Economist Intelligence Unit expects further rate cuts in 2009.
3. Global deleveraging and moves to reduce risk exposure will hit India hard, and we forecast real GDP growth of 6.2% in fiscal year 2008/09 (April-March) and 6.1% in 2009/10.
4. Despite the reversal of the commodity price boom, India will remain highly vulnerable to upward inflationary pressures in 2009.
5. The rupee will regain some of its recent losses against the US dollar during the forecast period, but will still show a year-on-year depreciation of 7.8% in 2009, averaging Rs47:US$1 in that year....
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i have buy nifty 2800 put @ 60.20 y\\\\`day its now at 56 what shd i do exit pr hold...
In reply to:
Govt may announce 2nd fiscal pakage today: Sources
Posted by : MMB Messenger
The government might announce the second fiscal package today after the market closes by around 6 pm, reports CNBC-TV18, quoting NewsWire18. The package may primarily focus on labour intensive export sectors.
Tracked by: 0 Boarder
The government might announce the second fiscal package today after the market closes by around 6 pm, reports CNBC-TV18, quoting NewsWire18. The package may primarily focus on labour intensive export sectors. ...
Tracked by: 0 Boarder
HOPE SEEN IN INTERVENTION
With central banks cutting interest rates and governments pumping money into the system, some see better signs for 2009.
"I think we`ll move ahead a bit in the new year and then stabilize for a while. Global policymakers are doing their utmost to ensure the recession doesn`t degenerate into a deflationary malaise," said Mike Lenhoff, chief strategist at Brewin Dolphin.
World governments have started pumping more than $1 trillion into their economies, and more is expected in 2009.
In the latest bailout, the International Monetary Fund said on Wednesday it had agreed on a $2.5 billion emergency loan package with Belarus.
The U.S. Federal Reserve on Tuesday built on efforts to cut mortgage costs, setting a goal of buying $500 billion of mortgage-backed securities by mid-2009.
China`s central bank reaffirmed on Wednesday that it would implement a moderately loose monetary policy as it seeks to reinvigorate its once fast-growing economy. [nLV504083]
Indonesia`s president promised further fiscal stimulus to help Southeast Asia`s biggest economy.
Global credit markets are showing signs of improvement, but banks remain reluctant to lend.
Government stimulus plans, corporate bailouts and rate cuts take time to be felt and their benefits are hotly debated. Nonetheless, mounting job losses are raising fears of social unrest in some countries, and piling pressure on governments to act quickly, even if it means huge deficits and debts.
Investors are now looking to January, when Barack Obama will be sworn in as U.S. president on January 20. He is expected to unveil a government spending programme which sources say could range from $675 billion to $775 billion over two years.
The new year will also mark attempts by policymakers to overhaul outdated regulatory systems to avert future crises.
U.S. Treasury Secretary Henry Paulson said the government had to battle the financial crisis without the tools needed to do the job, the Financial Times reported.
"We`re dealing with something that is really historic and we haven`t had a playbook," he said. ...
In reply to:
Inflation can come down to 4%....
Posted by : sambala
More economic pain seen in 2009, but some hope toO
SINGAPORE/NEW YORK: Many investors said good riddance on Wednesday to one of the worst years on record and prayed that government rescue plans will pull the global economy out of its fierce tailspin later in the new year.
More pain is expected in the near-term as bleak economic reports roll in, flagging more bankruptcies, bad debts and layoffs through at least early 2009, and more sleepless nights for everyone from central bankers to consumers struggling to pay off mortgages and credit card bills.
The biggest financial crisis in 80 years, sparked by a U.S. mortgage meltdown, made this year one of the worst ever for investors as recession stalked the global economy.
"It has been a shocking year, hardly anything was spared in the market carnage," said Michael Heffernan, senior client adviser and strategist at Austock Group in Australia.
The slump wiped out nearly $14 trillion in market value, according to the benchmark MSCI world index of larger companies.
"If there`s any optimism, it`s on the basis that stock markets recover in recessions," said Justin Urquhart Stewart, director at Seven Investment Management.
"Now we have the real recession, rather than the phony recession. Last year we were so optimistic, that we were fooling ourselves. It`s now gone too far the other way. We`ve discounted a huge amount of bad news."
Full-year losses on major world stock indexes ranged from 31 percent in London to 65 percent in Shanghai.
CRISIS VICTIMS
The crisis of 2008 has radically changed the financial landscape, bringing down U.S. investment banks Bear Stearns and Lehman Brothers, saddling other banks with huge losses and freezing the credit system that keeps world business humming.
Victims of the crisis are still piling up, with announcements almost daily of fresh company losses, more layoffs, and slumping prices for assets from cars to homes.
LyondellBasell, the world`s third-largest petrochemical firm, said it is considering filing for Chapter 11 bankruptcy protection as it tries to restructure debt.
Next Monday, members of the U.S. House Financial Services committee will take their first close look at the alleged $50 billion fraud by Wall Street financier Bernard Madoff, whose burned investors ranged from bearish "Dr. Doom" economist Henry Kaufman to actor Kevin Bacon.
Madoff faced a deadline on Wednesday to tell regulators how much he is worth and where his money and other assets are.
Oil surged to $44.60 a barrel on Wednesday but was still down 54 percent in 2008, hit by the economic slowdown. Oil has plummeted since a high in July above $147.
Gold was one of the few commodities to end higher on the year as economic turmoil burnished its lure as a haven for investors scampering away from risk.
Economic reports on Wednesday were mixed.
A larger than expected fall in new U.S. jobless claims reported on Wednesday was attributed to seasonal factors. A yearlong U.S. recession has already destroyed 2.7 million jobs, pushing unemployment up to 6.7 percent, with many economists expecting it to rise above 8 percent in 2009.
Separate reports on business activity in New York City and Milwaukee showed no sign of recovery, while 30-year fixed mortgage rates eased for the ninth week as official efforts to bolster the housing market appeared to gain traction.
Continued...
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More economic pain seen in 2009, but some hope toO
SINGAPORE/NEW YORK: Many investors said good riddance on Wednesday to one of the worst years on record and prayed that government rescue plans will pull the global economy out of its fierce tailspin later in the new year.
More pain is expected in the near-term as bleak economic reports roll in, flagging more bankruptcies, bad debts and layoffs through at least early 2009, and more sleepless nights for everyone from central bankers to consumers struggling to pay off mortgages and credit card bills.
The biggest financial crisis in 80 years, sparked by a U.S. mortgage meltdown, made this year one of the worst ever for investors as recession stalked the global economy.
"It has been a shocking year, hardly anything was spared in the market carnage," said Michael Heffernan, senior client adviser and strategist at Austock Group in Australia.
The slump wiped out nearly $14 trillion in market value, according to the benchmark MSCI world index of larger companies.
"If there`s any optimism, it`s on the basis that stock markets recover in recessions," said Justin Urquhart Stewart, director at Seven Investment Management.
"Now we have the real recession, rather than the phony recession. Last year we were so optimistic, that we were fooling ourselves. It`s now gone too far the other way. We`ve discounted a huge amount of bad news."
Full-year losses on major world stock indexes ranged from 31 percent in London to 65 percent in Shanghai.
CRISIS VICTIMS
The crisis of 2008 has radically changed the financial landscape, bringing down U.S. investment banks Bear Stearns and Lehman Brothers, saddling other banks with huge losses and freezing the credit system that keeps world business humming.
Victims of the crisis are still piling up, with announcements almost daily of fresh company losses, more layoffs, and slumping prices for assets from cars to homes.
LyondellBasell, the world`s third-largest petrochemical firm, said it is considering filing for Chapter 11 bankruptcy protection as it tries to restructure debt.
Next Monday, members of the U.S. House Financial Services committee will take their first close look at the alleged $50 billion fraud by Wall Street financier Bernard Madoff, whose burned investors ranged from bearish "Dr. Doom" economist Henry Kaufman to actor Kevin Bacon.
Madoff faced a deadline on Wednesday to tell regulators how much he is worth and where his money and other assets are.
Oil surged to $44.60 a barrel on Wednesday but was still down 54 percent in 2008, hit by the economic slowdown. Oil has plummeted since a high in July above $147.
Gold was one of the few commodities to end higher on the year as economic turmoil burnished its lure as a haven for investors scampering away from risk.
Economic reports on Wednesday were mixed.
A larger than expected fall in new U.S. jobless claims reported on Wednesday was attributed to seasonal factors. A yearlong U.S. recession has already destroyed 2.7 million jobs, pushing unemployment up to 6.7 percent, with many economists expecting it to rise above 8 percent in 2009.
Separate reports on business activity in New York City and Milwaukee showed no sign of recovery, while 30-year fixed mortgage rates eased for the ninth week as official efforts to bolster the housing market appeared to gain traction.
Continued......
In reply to:
Inflation can come down to 4%....
Posted by : sambala
Exports dip 10% in Nov to $11.5 billion
NEW DELHI: India’s exports declined for the second month in a row by 9.9% to $11.5 bn in November 2008 from $12.7 bn in the same month previous fiscal. Imports grew by 6.1% to $21.5 bn from $20.32 bn in the year ago period, taking the trade deficit to $10 bn.
Exports had contracted by 12.1% in October, showing a negative trend for the first time in the last five years. For the April-November period, the country’s cumulative exports grew by 19.4% to $119.30 bn. Growth for the first half of the fiscal year 2008-09 was 30.9%.
Imports between April and November (2008-09) went up by 33% to $203.64 bn. The trade deficit for the period mounted to $84.34 bn as against $53.19 bn in the same period of 2007-08.
“Manufacturing sectors like leather, textile, gems and jewellery have been hit hard because of demand slump in the US and Europe,” Federation of Indian Export Organisations president A Sakthivel said.
Indian exporters have run into difficult times, especially since October, with the US and some European countries slipping into full-blown recession, a senior official in the commerce and industry ministry said.
Concerns have been raised at large-scale job losses in several export-oriented industries such as textiles, handicrafts, and gems and jewellery.
Oil imports during November 2008 were valued at $7.254 bn, which was 11.9% higher than oil imports valued at $6.483 bn in the corresponding period last year. Oil imports during April-November 2008 were valued at $74.114 bn, which was 55.7% higher than the oil imports of $47.597 bn in the corresponding period last year.
Non-oil imports during November 2008 were estimated at $14.318 million, a 3.4% higher than non-oil imports of $13.846 bn in November 2007. Non-oil imports during April-November 2008 were amounted to $129.528 bn, which was 22.8% higher than the level of such imports valued at $105.511 bn in April-November 2007.
India’s economic growth has slowed to 7.8 % in the first half of the current fiscal as compared to 9.3% in the April-September, 2007-08.
Merchandise exports constitute about 15% of India’s economy. The government, which unveiled an over Rs 30,000 crore stimulus package last month to boost consumption, is likely to announce more measures to help exporters this week.
