Chidambaram confident of restricting fiscal deficit to 4.8%

 
Unperturbed by the rise in the fiscal deficit, Finance Minister P Chidambaram on Thursday exuded confidence that it would remain within the target of 4.8 per cent of GDP in the current financial year.

"We will maintain the fiscal deficit at 4.8 per cent.

That is the red line that will not be breached. I am confident that it will not be breached," he said at a press conference.

The minister was responding to a question about the possibility of the fiscal deficit rising after it touched 94 per cent of the budget estimate at the end of November.

Chidambaram said government finances will improve in December and the fiscal deficit will decline.

Advance tax receipts came in December and the General Financial Rules, which restrict expenditure, will come into play, he said, adding that they would have a positive bearing on the fiscal deficit.

The government has proposed narrowing the fiscal deficit to 4.8 per cent in the current financial year and 3 per cent in 2016-17. It was at 4.9 per cent in 2012-13.

The government, however, will have a tough task in restricting the fiscal deficit in view of poor revenue realisation and tardy progress of the disinvestment programme.

There are indications that the government would go in for a massive cut of about Rs 1 lakh crore in plan expenditure to contain the fiscal deficit.

The government has so far received Rs 3,000 crore from disinvestment as against the budget target of Rs 40,000 crore.

India's fiscal deficit touched Rs 5,09,557 crore during April-November, or 93.9 per cent of the annual target, the Controller General of Accounts (CGA) said on December 31. The gap was 80.4 per cent of the budget estimate at the end of November in 2012-13.

The target for the fiscal deficit -- the gap between expenditure and reveune -- was set at Rs 5,42,499 crore for this financial year.

FinMin initiates exercise for interim budget

 
Gearing up for the presentation of interim budget, the Finance Ministry has asked different central government departments to come up with their demands by January 10.

The third and final batch of Supplementary Demands for Grants for 2013-2014 (excluding Railways) is proposed to be presented to Parliament in the forthcoming Budget Session.

Since the general elections are scheduled to be held by May 2014, the government would be presenting a vote-on-account or interim budget instead of the regular full fledged Budget ahead of the scheduled date of February 28.

The regular Budget is likely to be presented by the new government sometime in July.

The Finance Ministry, in a communication to different ministries, said: "under no circumstances should the RE (revised estimate) ceilings be breached".

While seeking supplementary grants, the ministries have been asked to ensure that the expenditure for 2013-2014 has to be contained within the RE level.

"Instructions relating to 33 per cent and 15 per cent expenditure ceilings in the last quarter and last month respectively of the financial year may be scrupulously followed," it added.

Through the Second Batch of Supplementary Demands for Grants, the government had got Parliament's nod for Rs 18,594.27 crore additional spending in the current fiscal to meet expenditure, mainly towards petroleum and fertiliser subsidies.

The Finance Ministry further said while processing proposals for Supplementary Grants, the Grant controlling authority must invariably identify savings available within the Grant so that the infructuous or inflated Supplementary Demands are weeded out and the eventuality of surrender after obtaining Supplementary Grant is avoided.

Further, it said, supplementary demand should be sought for the minimum necessary amount but it should be sufficient to cover any foreseeable excess.

In order to ensure that this fine balance is met, it would be necessary to keep the expenditure under close watch on a daily basis and promptly inform the Finance Ministry if there is a significant variation requiring correction in the proposals.

"We will try our best to accommodate requests for changes keeping in view the tight schedule of printing of Supplementary Demands, which happens to overlap with the work of preparation of annual Budget documents," the Ministry added.

Rupee falls to one-month low against dollar

 
In step with local stocks, the rupee surrendered initial gains and declined 36 paise to a one-month low of 62.26 against the dollar Thursday amid demand from importers as the US currency strengthened overseas.

At the interbank foreign exchange market, the rupee started on a stable note from the previous close of 61.90 and climbed to the day's high of 61.74 as local stocks advanced.

However, the local currency fell sharply to a low of 62.28 after a drop in the domestic equity market amid weak European cues and a decline in manufacturing data in December.

The rupee closed at 62.26, a fall of 36 paise or 0.58 per cent, adding to Wednesday's 10-paise loss. The currency is at the lowest closing level since it reached 62.36 on December 3.

"Negative closing in the local stock markets and strengthening dollar index led to weakness in the rupee. Other than this, a large petrochemical company is said to have bought dollars from the market, which put pressure on the rupee," said Abhishek Goenka, CEO of India Forex Advisors.

The HSBC India Manufacturing Purchasing Managers' Index, a measure of factory production, dropped to 50.7 in December from 51.3 in November. A reading above 50 indicates growth.

The benchmark 30-share S&P BSE Sensex tumbled 252.15 points, or 1.19 per cent, erasing the day's gains. Foreign institutional investors bought shares worth a net Rs 10.16 crore yesterday, according to provisional data.

The dollar index, which measures the US currency against six major global rivals, was up 0.15 per cent ahead of US manufacturing data.

"After a strong opening, the rupee decreased and closed on a weaker note against the dollar, taking cues from negative local equities," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India). "The dollar index...is trading strong."

Forward dollar premiums dropped further on continued receipts by exporters.

The benchmark six-month forward dollar premium payable in June tumbled to 248-1/2 to 250-1/2 paise from 256-258 paise on Wednesday and far-forward contracts maturing in December plunged to 488-490 paise from 495-497 paise.

The RBI fixed the reference rate for the dollar at 61.9020 and for the euro at 85.1556.

The rupee remained weak and ended at 102.97 against the pound from the overnight close of 102.30 and moved down further to 85.21 per euro from 85.08. It also fell to 59.07 per 100 Japanese yen from 58.81.

Sensex falls below 21k level to two-week low

 
A sudden gust of profit-booking after mid-session due to weak European cues triggered by fall in China's manufacturing index, washed out initial gains, pulling the benchmark S&P BSE Sensex down by a whopping 252 points to close below 21K-mark at two-week low of 20,888.33.

Recently favoured second-line counters also suffered heavy losses on profit-booking by wary retail investors. As a result, the S&P BSE-Midcap and S&P BSE-Smallcap indices ended down by 1.77 per cent  and 2.03 per cent , underperforming the sensex.

Selling was seen mostly across-the-board as 11 out of 12 sectoral indices closed in the red between 0.42 per cent and 3.07 per cent, with realty, capital goods, power, banking, FMCG, consumer durable, refinery and metal segments suffering the most while only IT index closed in positive terrain on the back of rise in Infosys, TCS and Wipro due to fall in the rupee value and improvement in US economy.

The BSE 30-share barometer resumed better and rallied further to nearly three-week high of 21,331.32, showing a rise of over 190 points due to better Asian trends.

However, it surrendered all of its early gains after mid-session as European markets too washed out initial rise and showed a weak trend in late afternoon deals, falling back to settle at two-week low of 20,888.33, exhibiting a drop of 252.15 points or 1.19 pct.

Similarly, the NSE 50-issue CNX Nifty also tumbled by 80.50 points or 1.28 pct to 6,221.15.

Marginal fall in India's manufacturing sector in December also weighed on the market. The HSBC India Manufacturing Purchasing Managers' Index (PMI) -a measure of factory production- dropped slightly from 51.3 in November to 50.7 in December, despite manufacturing sector activity expanded for the second consecutive month. A PMI reading of above 50 differentiates growth from contraction.

Asian stocks ended mixed after gauges of manufacturing in China declined. Indices from China, South Korea closed in the red while from Hong Kong, Singapore and Taiwan ended with minor gains and Japan market was closed on Thursday.

European markets capitulated their early gains and were trading lower in late morning deals. The CAC was down by 0.73 pct, the DAX by 0.63 pct and the FTSE by 0.41 pct.

Mr. Jignesh Chaudhary, Head Of Research, Veracity Broking Services said,"Indian markets today closed in Red due to selling pressure and profit booking in the blue chip shares, after trading strong for the better part of the day. There were more shares which declined led by biggies like L&T, NTPC, ITC and other Oil and banking sector stocks. A weak Rupee which reacted sharply to the poor manufacturing PMI data also put pressure in the market during its closing hours."

In all, 25 out of 30 sensex-based scrips closed with losses while others finished with gains. Major losers were BHEL 3.42 pct, Tata Power 3.27 pct, Coal India 3.05 pct, L&T 3.04 pct, Bharti Airtel 2.81 pct, ONGC 2.38 pct, Cipla 2.19 pct, NTPC 2.17 pct, ITC 2.08 pct, Icici Bank 2.03 pct, HUL 1.58 pct, RIL 1.50 pct, Axis Bank 1.47 pct, Tata Steel 1.31 pct, Gail India 1.31 pct, SBI 1.29 pct, HDFC Bank 1.23 pct, M&M 1.22 pct and SSLT 1.09 pct.

Among the S&P BSE sectoral indices Realty dropped by 3.07 pct followed by CG 2.84 pct, Power 2.09 pct, Bankex 1.82 pct, FMCG 1.74 pct, CD 1.73 pct, Oil&Gas 1.72 pct and Metal 1.49 pct.

The market breadth turned negative 1,564 stocks declined, 1,038 stocks gained while 129 stocks ruled steady. Total turnover rose to Rs 2,636.11 crs from Rs 1,441.17 crore on Wednesday.

DoT draws awake 6 belongings of annual range payment collision

 
The Department of Telecom (DoT) is possible to set sooner than inter-ministerial panel Telecom Commission six poles apart scenarios based on possible returns collision for the exchequer that are connected to changes in yearly fee to be compensated by companies on band tradition.

The DoT committee, which examined TRAI's recommendations, avowed that behind "deliberating on the substance (uniform spectrum usage charge) in entirety, a returns impartial SUC rate may be determined," sources said.

Levied per annum by the government as a fraction of profits earned by portable operators from telecom services, SUC varies from 3-8 per cent.

The Telecom Regulatory Authority of India (TRAI) has recommended implementing a standardized SUC of 3 per cent from April 1, 2014 and keeping the greater perimeter of SUC at 5 percent.

The uniform SUC, if implemented as apiece recommendations through by Telecom rigid influence of India, will supply break for mobile operators such as Airtel, Vodafone and Idea, but will amplify rates for broadband wireless access (BWA) spectrum holders as well as Reliance Jio Infocomm Ltd (RJIL).

The scenarios proposed to be located earlier than TC contain recognition of charging 3 per cent SUC recommended by Telecom Regulatory Authority of India opening with the obtain of airwaves in the imminent Dutch auction. It is of the observation that in this crate there should be no modify in existing slab tempo if telecom companies procure extra range.

Further, the higher chunk rate beneath this situation is 5 per cent and SUC for BWA gamut is raised to 3 per cent from existing 1 per cent, the DoT board is learnt to have said.

If this choice is accepted by government then returns from six licences that are dying in 2014 will be abridged to Rs 226 crore from Rs 426 crore that they remunerated in 2011-12 beneath the obtainable rates.

In extra circumstances, the DoT team has suggested levying 3 per cent SUC on band creature put for public sale and location up the better boundary at 6 per cent devoid of increasing SUC appropriate on BWA airwaves.

Under this choice, the SUC on BWA will be amplified to 3 per cent from one per cent at here on any additional gaining of such airwaves, sources said.

If this goes from side to side, the monetary allegation would stay put similar on the 6 licences dying in 2014. though, proceeds accruing to the government by rising charges on BWA band have not been probable up till now.

The third choice worked, a negligible alteration of the next situation is setting up the greater limit at 5 per cent.

In the fourth choice, the team has not compulsory custody SUC at 3 per cent, BWA band SUC at 1 per cent and with additional kind of gamut at 3 per cent.

In the fifth situation, the working group has not compulsory levying 3 per cent SUC for impartial auctioned band, a fee of 1 per cent for BWA if not mutual with extra airwaves.

In the sixth situation, the working group has not compulsory charging SUC at 5 per cent on every one field together with that acquired from beginning to finish public sale.

Sources said the here returns at 6 per cent SUC chunk rate is Rs 1,370 crore, CAGR is 8.29 per cent.

"Next time SUC at 5 per cent is consequently Rs 1,403 core other than applying least amount SUC beneath third choice would guide to companies pay SUC of Rs 1,370 crore. Depending on the licence period and tempo of increase, the age necessary to fetch SUC at arranged pace to present stage will differ," sources said.

Though, sources said that every  one the options haggard up by the DoT can have lawful implications which are life form examined.

While GSM dramatis personae like Airtel, Vodafone, Idea Cellular and Uninor have been severe execution of standardized SUC, RJIL has different any such budge.

RJIL has contrasting changes in obtainable SUC rates and said "any station facto departure in public sale regulations which extends too much profit to current operators will not situate official inspection".