India to grow at 5.3% in current fiscal: Ficci

Ahead of the Economic Survey, industry body Ficci today lowered its GDP growth forecast for the current fiscal, pegging India’s economic expansion rate at 5.3 percent compared to its 5.5 percent previous estimate.

This is mainly due to bleak prospects for performance of the agriculture sector due to sub-par monsoon forecast. “FICCI’s latest Economic Outlook Survey puts across the GDP growth estimate for the year 2014-15 at 5.3 percent, with a minimum and a maximum range of 4.9 percent and 5.8 percent,” a statement said.

The survey forecasts fiscal deficit to GDP ratio at 4.5 percent in 2014-15, breaching the target of 4.1 percent set in the interim budget. The survey pegs industrial growth for 2014-15 at 3.1 percent and agriculture growth at 2.1 percent.

Further, services sector growth is expected at 7 percent, marginally higher than 6.8 percent recorded in 2013-14. On the inflation front, participating economists expect prices to remain beyond the comfort zone, expecting the El Nino effect to fuel inflationary pressure going ahead, Ficci said.

On dealing with the price situation, the economists felt that the government has little choice but to strengthen supply side infrastructure and pointed out the immediate need to ease distortions in supply of food articles from farm to market.

Elaborating on the measures to boost economic growth, the survey respondents asked for a clear roadmap for roll out of Goods and Services Tax and review of the Direct Tax Code with a view to widen the tax base and rationalising exemptions.

It also asked the government to chart out a path to contain subsidies and switch the focus from non-plan to plan expenditure, while putting across a roadmap for disinvestment. Besides, it recommended firming up the growth in the manufacturing sector to aid employment generation and to boost infrastructure spending, along with faster implementation of stuck projects.

Diesel subsidy to fall 25% this fiscal to Rs 1 tln: Fitch

Global ratings agency Fitch today said the regular increase in diesel price to align it with market will lead to a 25 percent fall in fuel under-recoveries this fiscal at about Rs 1 trillion (Rs 1 lakh crore).

“The decline in the under-recoveries which is the difference between the market price and the price set by the government will be led by a drop in under-recoveries for diesel, due to the gradual increase,” it said.

The price of diesel has increased at average Rs 4.1 per litre in the first quarter of the fiscal against Rs 8.5 last fiscal. The rating agency said the only risk to this assumption is sharp rise in the global oil prices. The agency said production in Iraq, the second largest producer of crude after Saudi Arabia, will be affected if the ongoing unrest spreads to southern part of the country. Iraq is also the second largest source of crude for India.

This apart, the key developments to watch out for are the policies adopted by the new government and any increase in the share of under-recoveries that upstream companies may have to bear, it said. In the run-up to the budget to be presented by Finance Minister Arun Jaitley the day after, analysts have been saying fuel subsidies are on the way down but subsidies on fertilisers and food need to be watched out for.

The rating agency said the government is unlikely to go in for a hike in cooking gas and kerosene prices, fearing stoking inflation. Reinstatement of subsidy transfers through the direct benefit transfer, halted in March, will also reduce the under-recoveries of oil marketing firms and reduce subsidy burden on explorers.

Highlights of Gowda’s maiden Railway Budget 2014

trainThe first Railway Budget of National Democratic Alliance, which was elected to power in May 2014 for the second time, was presented by Sadananda Gowda on Tuesday.

In its previous term i.e, between 1999 and 2004, the railways portfolio was given to NDA allies but this time it is held by BJP man Gowda. Here are the highlights of the Rail Budget:

Reform Measures

Proposal to restructure Railway

Board Aim to become the largest freight carrier in the world

To complete all ongoing projects

Trains, Fare & Tracks

FY15 passenger fare revenue pegged at Rs 44,600 crore

To introduce 6 AC, 27 Express trains in

FY15 First bullet trains to run between Mumbai and Ahmedabad sector

Mumbai to get 864 additional state-of-the-art

EMUs in 2 years Allocated Rs 100 crore for high-speed rail network

To increase speed of some trains to 160-200 km/hr


To have diamond quadrilateral network for high-speed trains

Rs 5,116 crore earmarked for projects in Northeast this Fiscal

Propose Railways modernising via PPP projects

To allot Rs 1,780 crore to eliminate unmanned level crossings

Lifts, escalators via PPP route at all major stations

Railways needs Rs 50,000 cr every year for 10 years

CCTV in all stations to monitor cleanliness Proposal to st up food courts at stations

To recruit 4,000 Women

RPF constables To encourage corporate houses to adopt stations

To talk to industry to attract investment under PPP, BOT modes

Modi Railway Budget 2014: Safety, high-speed trains & world-class stations on agenda

Facing its first challenge, the Narendra Modi government will present its first Railway Budget on Tuesday. High-speed trains, world-class stations and safe journeys are likely to be the government’s top priorities.

The high-profile Golden Quadri-lateral Rail Network-linking the four metro cities-might be important highlights of the Budget. Running semi-high-speed trains on select routes might be an item of immediate implementation. Railway minister Sadanand Gowda made waves even before he presented his maiden budget with a 14 percent hike in passenger fares across the country.

However, the government has put the blame on its predecessor UPA government for the rail price hike. “The earlier government made this plan of tackling the losses but they did not implement it. This was even calculated in the earlier budget and consulted with the former PM . Just that they stayed the order. So, now how can they come out and say that this government is doing something wrong,” Gowda questioned.

The government is also facing pressure from allies who are forcing a partial rollback but the freight fare hike of 6.5 percent remains unchanged. According to experts, the first big challenge for the railways is to ensure that a constant increase in freight fares does not take the loads off tracks. “Freights are becoming expensive.

There has to be a balance between freight and passenger fares and get dedicated freight corridor in place soon,” Former Chairman of Railway Board JP Batra said. There is also a collective voice that railways must control staff strength based on activity costs and needs and decentralise managerial control to railway zones and divisions.

Experts also feel that there is a need to allocate budget for adequate asset renewal for safety needs. “There is a need to review the role of railway board, it’s archaic,” former additional member railway board Sumant Chak said. With two major accidents within a month of the new government taking over, safety continues to be a major grey area.

Passenger safety is caught between clash of technology, clash of interests and political lethargy. Systems like anti collision devices are also in a limbo. Railway has spent Rs 50 crores to develop anti-collision devices since 2006. In December 2013, the former railway ministry told Parliament that a new improved software version had been developed by Konkan Railway which was under evaluation.

Samsung Electronics operating profits down by 24 %

Samsung Electronics reported a 24 per cent fall in operating profits from a year ago in the second quarter, due to a strong Korean won and slowing sales of smartphones.

The South Korean electronics giant said in preliminary results that second quarter operating profit would be Krw7.2tn, versus estimates at Krw 8.1tn.

A year ago, operating profits were Krw 9.53tn in the second quarter.

Sales totalled Krw52tn, just missing estimates at Krw53.2tn.

Samsung cited price competition, weaker demand for 3G products, and a lengthening replacement cycle for smartphones.

The Korean won has appreciated more than 12 per cent from a year ago and repeatedly hit six year highs in the second quarter.

From Samsung:

The earnings forecast is the result of the strong Korean currency throughout the second quarter as it appreciated against the dollar, euro and most emerging market currencies.

The company also witnessed a slowdown in the overall smartphone market growth and saw increased competition in the Chinese and some European markets. And this led to higher inventories for the medium- and low-end smartphones.

Full details on second quarter earnings, including net profit figures and a look at each division, will be released in August.

As for its outlook, Samsung said “the coming release of its new smartphone lineup” should help its third quarter, and it doesn’t expect any major marketing expenses.

Analysts at JPMorgan, who recommend investors “overweight” the stock, said last month that their own checks on inventories suggested weaker-than-expected shipments of smartphones and tablets.

As smartphone sizes get bigger, small-screen low-end tablet PCs are also seeing inventory pileups in the channel. As a result, [Samsung’s] tablet PC shipments are likely to decline another 30% in 2Q14, to less than 10M units.

But the JPMorgan analysts said Samsung’s DRAM business (memory chips) should remain robust.