Economic Growth Rate for 2010-2011 to 8.4 %

The Union government on 31 January 2012 revised the economic growth rate for 2010-2011 financial year to 8.4 percent in comparison to the previous estimate of 8.5 percent. The Indian economy grew 8.4% in 2010- 11, lower than the previous estimate of 8.5%, on the back of strong farm sector and services sector growth. The Indian economy, Asia’s third-largest slowed in recent quarters due to the impact of the global slowdown, high inflation and high interest rates. Policymakers estimated growth in 2011-12 to be close to 7%. 8.4% expansion in the gross domestic product (GDP) during 2010- 11 was achieved due to high growth in transport, storage and communication (14.7%), financing, insurance, real estate and business services (10.4%), trade, hotels and restaurants (9%) and construction (8%). At constant prices, the primary sector- agriculture, forestry and fishing, showed a high growth of 7% during 2010-11 as against 1% during the year 2009-10. The growth rate of secondary sector stood at 7.2% and that of the service sector is 9.3% during 2010-11.

Gross Domestic Product (GDP)

Gross Domestic Product (GDP) at factor cost at constant (2004-05) prices in 2010-11 was estimated at Rs. 4885954 crore as against Rs. 4507637 crore in 2009-10 registering a growth of 8.4 per cent during the year which is same as in the year 2009-10. At current prices, GDP in 2010-11 was estimated at Rs. 7157412 crore as against Rs. 6091485 crore in 2009-10, showing an increase of 17.5 per cent during the year.

Gross National Income

The Gross National Income registered a growth of 7.9 per cent in 2010-11 over 2009-10. India's per capita income grew by 15.6 per cent to Rs.53331 in 2010-11, crossing theRs.50000-mark for the first time. In real terms based on 2004-05 prices, the per capita income grew by a slower 6.4 per cent to Rs.35993 in 2010-11 as compared to Rs.33843 in 2009-10. In Terms of Foreign Fund flows January 2012 is the Best Month since November 2010 As per data published by the market regulator SEBI on 27 January 2012, net FII buying crossed the $2-billion mark in January 2012 making January the best month in terms of foreign fund flows since November 2010. FIIs had recorded a net outflow of $358 million in 2011. Inflows in January 2012 is in sharp contrast to over $1 billion outflow in January 2011. The surge in inflows also helped strengthen the Indian rupee which closed above the 49-level after nearly 10 weeks. January’s inflow figure, however was less than a third of the monthly inflow record set in October 2010, when $6.4 billion was pumped in by foreign fund managers. In October 2010 the figures were further pumped through the hugely successful Coal India IPO. SEBI’s data showed a net FII inflow of $1779 million. Institutional trading data on the BSE showed net inflow figure on 27 january at Rs 1240 crore, which translates to $252 million. The aggregate of the two is slightly over the $2 billion mark.

Mobile Phone Companies to Share 2G spectrum Only

The apex decision-making body of the communications ministry, the Telecom Commission decided to allow mobile phone companies to share spectrum. The Commission has however limited this facility to 2G airwaves alone. Second generation (2G) spectrum is largely used for offering vanilla voice services. The telecommnication companies cannot therefore share 3G spectrums. Incumbents such as Bharti Airtel, Vodafone, Aircel and Idea Cellular took the government to court, after the telecom department asked these companies to terminate their 3G roaming deals. These companies had hoped the Commission’s policy changes had hoped that policy changes permitting the sharing of airwaves, would put an end to this controversy. The companies had signed up 3G customers across the country riding on bilateral roaming agreements that allow these firms to use each other’s airwaves and offer high-end data services even in regions where they do not have 3G spectrum. The Commission also decided to introduce slew of riders to govern spectrum sharing.

The riders are as follows:

• Only those operators that have airwaves in a particular region can share it. Spectrum can be shared only between two spectrum holders. A non-licensee or licensee who has not been assigned spectrum as yet cannot be party to spectrum trading.

• Two companies can share airwaves only if their combined holdings do not exceed the limits prescribed in the M&A norms. The Telecom Commission had recently approved sector regulator TRAI’s recommendation that during mergers, the combined entity be allowed to have up to 25% of the total airwaves in the region.

• Spectrum sharing deals will also have to be renewed every five years.

• When operators share spectrum, both companies will have to pay usage charges on the total airwaves held jointly. Currently, operators share between 2% and 6% of their annual revenues based on the quantity of airwaves they hold.

• The telcos sharing spectrum must pay the government the commercial value of the airwaves it is using. It essentially means, an operator that has 4.4 MHz of airwaves, and is sharing radio frequencies with another telco that has the same amount, must pay current prices for additional 4.4 units of spectrum it is using.

Growth Rate of Eight Core Industries fell to 3.1% in December 2011 from 6.3% in December 2010

According to the data released by the Commerce and Industry Ministry on 30 January 2012, the growth rate of eight core industries slowed down to 3.1 per cent in December 2011 from 6.3 per cent in December 2010. These eight sectors had recorded a 6.8 per cent growth in November 2011. The decline in core sector activity was due to a fall in the production of crude oil and natural gas. The eight core sectors have a combined weight of 37.9 per cent in the Index of Industrial Production (IIP). The sectors that showed poor performance in December 2011 due to a fall in output include crude oil, natural gas, petroleum refinery products and steel, while those which fared better include coal, fertiliser, cement and electricity. The growth of these eight sectors during April-December 2011 was 4.4 per cent against 5.7 per cent during the corresponding period in 2010.

C R Sundaramurti Committee Recommendation

Government-appointed C R Sundaramurti Committee submitted its report to finance minister Pranab Mukherjee. The report suggested a complete overhaul of government accounting norms in order to enforce transparency and better monitor public spending. The proposed accounting classification structure will provide a foundation for a more robust public financial management which could be used for enforcing more transparency and effectiveness of Public delivery channels of the government. The accounting classification of receipts and disbursements is prescribed under the Constitution and is maintained by the Controller General of Accounts (CGA) on the advice of the Comptroller and Auditor General of India (CAG).

Recommendations

The committee in its report recommended rationalisation and reorganisation of the existing account classification of list of major and minor heads of accounts (LMMHA) of centre and states. The panel also proposed a multidimensional classification framework which has seven mutually exclusive segments with their own individual hierarchical structures. The revised accounting classification codes which are being perceived as a milestone in the area of accounting reforms were proposed to be implemented with effect from financial year 2013-2014. The proposed classification structure provides for capturing expenditure on special thrust area of government policy objectives such as development of women, schedule castes, schedule tribes, below poverty line population. The Committee is of the opinion that the recommendations/suggestions framed by it would help in the effective management tools. It would help national and sub-national governments for better planning, allocation and application of resources, and more effective monitoring of public spending. The panel has also carried out standardisation of coding of all such entities which are recipient of public fund, as channels of public delivery. The measure is likely to facilitate tracking of flow of funds under a government programme or scheme from one level of governance to another level of administrative entities.

PFRDA changed the Incentive Structure to boost NPS

The poor performance of National Pension System, or NPS led the Pension Fund Regulatory and Development Authority (PFRDA) to change the incentive structure for the distributorsfrom a fixed sum to a percentage of the investment amount. So far the points of presence or the distributors used to get a flat Rs 20 as initial subscription charge and Rs 20 for any subsequent investment. PFRDA’s measure is poised to serve two purpose- bringing about a more equitable incentive structure and incentivizing the distributors to push NPS.The regulator proposed to lay down criteria for pension fund managers and grant licences to anyone who qualifies. The NPS has seven fund managers overseeing assets of Rs 10000 crore. NPS was primarily targeted at the unorganized sector, which does not have any form of social security. However, so far only about 1 million people out of a workforce of about 400 million in the unorganized sector have joined NPS. Floated for civil servants in 2004, the NPS was opened to all citizens in May 2009 to provide a pension option to 360 million informal sector workers bereft of any old-age income security.

G.N. Bajpai committee Recommendation

The pension regulator on the basis of the recommendation of the G.N. Bajpai committee constituted by PFRDA to review NPS, fixed the incentive at 0.25% of the subscription amount. The committee had suggested 0.50% of the investment, subject to a minimum of Rs 20 and maximum of Rs 50000. As per PFRDA’s measures announceds, a distributor will get a flat Rs 100 on initial subscription and 0.25% of the initial subscription amount. Every year on subsequent investments, the point of presence will be entitled to 0.25% of that amount. The minimum that a point of presence can charge is Rs 20 and the maximum Rs 25000. Bajpai committee had observed that the earlier structure of the pension system was amounting to the poor subsidizing the rich—a person investing Rs 6000 and a person investing Rs 1 lakh were both paying Rs 20. Also the fixed sum was acting as a deterrent to sell NPS amid better commissions-yielding products such as insurance policies.

CRR Decreased to 5.5 percent

The Reserve Bank of India (RBI) on 24 January 2012 cut the cash reserve ratio (CRR) by 50 basis points from 6 per cent to 5.5 per cent with effect from 28 January 2012. RBI thus released Rs.32000 crore to banks through a half percentage point cut in the cash reserve ratio. Home loans and other loans to individuals and businesses will become cheaper with the cut in CRR.The RBI also kept the repo rate unchanged at 8.50 per cent for the second consecutive time after raising it 13 times between March 2010 and October 2011. It lowered its growth forecast to 7% from 7.6% earlier. The cut marked RBI’s first reduction in CRR since January 2009 when it had released funds to stimulate demand in the wake of the Lehman Brothers crisis. As a consequence, for the first time in over two months, the rupee touched the 49-mark against the dollar in intra-day trade. The central bank decided to reverse a two-year policy of interest rate hikes because of decelerating growth although inflation continued to remain a concern. RBI was prompted to ease liquidity because of a structural shortfall which was forcing banks to borrow anywhere between Rs.1.25 lakh to Rs.1.5 lakh from RBI in January. The RBI's action is seen as an attempt to strike a balance between risks to growth and inflation

Gems & Jewellery Exports Dipped 15%

According to the report by Gems and Jewellery Export Promotion Council (GJEPC) released in January 2012, gems and jewellery exports fell into the negative zone - down 15% yearon- year to $3 billion in December 2011. The sharp fall wa attributed to poor d e m a n d from Europe and the US. The major export markets include the UAE & Hong Kong. The exports had stood at $3.5 billion in the December 2010. the overseas shipments in May 2011 had logged in 33% growth, touching the peak in 2011-12 fiscal. During the April-December period of 2011-12, gems and jewellery exports grew 11.65 per cent to $32.1 billion, compared to the the April-December period of 2010-11. However, despite the drop in December, the country’s gem and jewelry exports still grew in the second half, reaching $32.1 billion – 11.65% higher than in the corresponding half of 2010. To reduce dependence on traditional markets, the exporters are exploring new markets like Latin America, Africa and Russia. India mainly imports gold and rough diamonds in large quantities and re-exports value-added items like jewellery.

Centre for Monitoring India n Economy’s Review

Centre for Monitoring Indian Economy (CMIE) estimated Corporate India’s sales to grow 21.6% in 2011-12. However, profits are expected to fall by 7.2% in the financial year 2011-12. Excluding petroleum product companies, India Inc is expected to see a 19% growth in salesin March 2012 quarter. As per the review, sales of the manufacturing sector are expected to have expanded by 20.7% and that of the non-financial services sector by 18.2. Income of the financial service have grown by a strong 32% due to high interest rates and healthy credit growth. CMIE however expects corporate sales to drop to 16.8% in the March 2012 quarter due to a sharp drop in expansion of petroleum products. Profits fell 13.2% in the first half of 2011-12 due to steep rise in raw material and fuel prices, high interest rates and delay in payment of cash subsidy to the oil marketing companies (OMCs) by the government. Also, a sharp depreciation in rupee since September 2011 brought mark-to-market (MTM) losses to firms and thus further pulled down profits. In a situation where high input costs and interest rates continue to haunt Indian companies, the corporate affairs ministry provided some relief by allowing capitalisation of MTM losses on long-term loans taken for the acquisition of fixed asset till March 2020. The exemption was earlier available only till March 2012 and only to companies which had opted for it in 2008-09. In spite of this, corporate India is expected to report substantial amount of forex losses in the December 2011 quarter since major chunk of the forex liabilities of corporate India are short-term, CMIE noted. Forex, however, expected to rise by 9.9% in the January-March quarter riding on the back of robust 40.2% rise in net profits of the banking industry. The net profits in the banking industry was attributed to lower provisions and low base.

Tourism Sector Committee to Extend Visa -on-Arrival Facility

Inter-ministerial coordination committee for tourism sector Headed by Principal Secretary to the PM Pulok Chatterjee in its meeting on 19 January 2012 decided to extend Visa-on-Arrival facility to Goa, Hyderabad, Kochi and Bangaluru airports to help double the foreign tourist arrivals. Currently, Visaon- Arrival is extended to 11 countries including Japan, Philippines, Singapore, New Zealand, Vietnam and Finland.The Visa-on-Arrival facility is now available at four international airports at Delhi, Mumbai, Kolkata and Chennai. There were 6.29 million foreign tourists in 2011, out of whom 12761 had availed the scheme. Upgraded road connectivity to all major tourist circuits, including Gangtok and Leh, eco tourism and reaching out to schools to promote tourism related vocational schools were amongst the decisions taken by the committee. It was also decided that a subcommittee consisting of Member Secretary, Planning Commission, Culture Secretary, Secretary (Environment and Forests), Secretary (Rural Development) and Secretary (Tourism) will identify the potential of tourism in rural, eco and cultural sectors in the country and submit its report within four weeks. It was observed that tourism ought to be seen as development, should be pro-poor and focus on employment creation. Emphasis was on the need to give tourism a major fillip during the 12th Plan so as to more than double the number of foreign tourists arriving in India and further encourage domestic tourism. A co-ordination committee consisting of Joint Secretaries of MHA, MEA and Tourism Ministry was constituted to resolve day-today visa related complaints. The Ministry of Environment and Forest were asked to finalise its eco-tourism policy at the earliest possible after analysing the feedback it received from different quarters. In order to facilitate connectivity, which is crucial for tourism, it was decided that Ministry of Defence (Border Road Organisation) will expedite ongoing work at Gangtok and Leh roads which are tentatively scheduled to be completed by 2014 and 2015 respectively.

Highlights of the Meeting

• Extend Visa-on-Arrival facility to Goa, Hyderabad, Kochi and Bangaluru airports

• Sub-committee to identify the potential of tourism in rural, eco and cultural sectors in the country

• Co-ordination committee consisting of Joint Secretaries of MHA, MEA and Tourism Ministry constituted to resolve day-to-day visa related complaints

• Ministry of Environment and Forest asked to finalise its ecotourism policy

• Culture Ministry asked to adopt a pro-active tourism policy which should promote museums, cultural and heritage sites

• Ministry of Defence (Border Road Organisation) will expedite ongoing work at Gangtok and Leh roads

TRAI ordered to Block Bulk International SMS

The Telecom Regulatory Authority of India on 20 January 2012 asked telecom companies to block bulk international SMS. TRAI’s move is aimed at giving mobile subscribers further relief from pesky messages. The new regulations on unsolicited telemarketing calls and SMS were not being properly followed, the TRAI stated that there were several incidences of promotional SMS being routed through the servers located at international destinations and delivered to customers registered for not receiving telemarketing calls. TRAI observed that generally such SMSes originated from locations within Germany, Sweden, Nauru, Fiji, Cambodia, Bosnia, Albania, Grenada, the United Kingdom, Jersey, Sint Maarten, Tonga, Vanuatu, Namibia, Panama, and Antigua and Barbuda. These SMSes contain the headers which are alphanumeric or starting with +91 or numbers with international codes. The regulator thus oredered all telecom companies to ensure thatno international SMS containing an alphabet header or alphanumeric header or +91 as the originating country code is delivered through their networks. Also, if any source or number from outside the country generates more than 200 SMSes an hour with a similar signature, these could not be delivered through the network.

RBI Permitted Banks to Allow Hedging in Commodities

The Reserve Bank of India in January 2012 allowed banks to grant permission to listed and unlisted companies to hedge price risk in commodities other than precious metals in international exchanges. The move is aimed at helping the companies limit losses from volatility. Currently, banks need RBI’s approval to give permission to companies to hedge. The banks were asked to submit an annual report to the RBI as on 31 March every year giving the names of the corporates to whom they have granted permission for commodity hedging and the name of the commodity hedged. Before permitting the corporates to undertake hedge transactions, the companies are required to submit a brief description of the hedging strategy proposed, including, instruments proposed to be used for hedging, the names of the commodity exchanges and brokers through whom the risk is proposed to be hedged and the credit lines proposed to be availed. The name and address of the regulatory authority in the country concerned may also be given. Size/ average tenure of exposure and/or total turnover in a year, together with expected peak positions thereof and the basis of calculation can also be included.

India n Rupee Rose by 6.6%

The Indian rupee rose to a two month high and shares climbed on 18 January 2012 as a result of revival of US dollar flows and also because of the undervalued shares which lost more than 35% in US dollar terms in 2011. The currency rose 1.2% to close at 50.70 to the dollar. It is up 6% in 2012 and 6.6% from its life low of 54.30 touched on 15 December 2011. There have been inflows from FIIs, both debt & equity. Also, emerging markets are currently poised to cut interest rates after China’s 8.9% economic growth in the fourth quarter, the slowest in 10 quarters. The rupee could gain further since demand for dollars may subside following the doubling of duty on precious metals imports. The Indian rupee, which was the worst performer in Asia in 2011, is presently turning out to be the best in 2012 due to measures by the Reserve Bank of India. The Indian rupee is found to be doing well despite imports still outstripping exports which many say could return to haunt the currency. The benchmark Sensex rose 1.7%, the least among major markets with Hong Kong, Shanghai, Korea and Singapore gaining more. It has risen 6% since January 2, making it the best-performing index in Asia.

Consumer Price Index Down by 0.44 %

As per data released by the government on 18 January 2012, cheaper food items, including fruit and vegetables, pulled down the Consumer Price Index (CPI) by 0.44 per cent month-on-month in December 2011. The consumer indices include five major groups-food, beverages and tobacco; fuel and light; housing; clothing, bedding and footwear; and miscellaneous items.The fall was attributed to cheaper vegetables which saw a dip of 15.01 per cent month-onmonth to 98.5 points. The fruit index also fell by 3.78 per cent to 122.2 points. The CPI, based on retail prices, stood at 113.9 points in December compared to 114.4 points in November. At the all- India level, the CPI for food, beverages and tobacco declined by 1.31 per cent to 112.8 points in December from 114.3 points in November. The index for condiments and spices went down by 0.64 per cent to 123.9 points. Indices for cereals and pulses on the other hand remained stable at 107.2 points and 102.5 points. However, CPI for clothing, bedding and footwear stood higher at 122.2 points on an all-India basis, against 121.5 points in November. Prices in the 'fuel and light' segment also rose by 0.33 per cent in December vis-a-vis the previous month, with the index inching up to 120 points from 119.6 points in November.

Rs.20 crore for a National level Unified Licence

The Telecom Regulatory Authority of India (TRAI) on 16 January 2012 proposed a fee of Rs.20 crore for a national-level unified licence under the new regime, which suggests that there will be only four types of licence in future as against many currently available across the communication sector.

Telecom regulator 's draft guidelines for the new unified licensing

The draft guidelines proposed three levels of unified licence — at national level, service area level and district level. The entry fee for different types of unified licence is to be Rs.20 crore for national level, Rs.2 crore for each Metro and Acategory, Rs.1 crore for each B category, Rs.50 lakh for each C category service areas levels and Rs.15 lakh for each district level unified licence. Telecom service providers at present hold Unified Access Service Licence (UASL), which authorises them to provide mobile, fixed line, Internet and long-distance calls and other telcom services. The UASL is given to companies with 4.4 Mhz spectrum bundled with it. TRAI however, recommended that the new licence regime will not have spectrum bundled with it and the operators will have to bid for the spectrum separately. The regulator also proposed to have no restriction on the number of players in a service area. Licence shall be issued on non exclusive basis, without any restriction on the number of entrants in a licence area. TRAI proposed that the applicant company will have to pay one time nonrefundable entry fee before signing the license agreement. The Department of Telecommunications (DoT) also issued standalone licences separately, like the one for offering Internet services that are generally known by the nature of the service being offered.

Import Duty on Gold & Silver

The Union government nearly doubled the import duty on gold and silver by changing the customs and excise duty structure on precious metals. The measure was adopted by the government to arrest the widening current account deficit. The Finance Ministry by adopting this stand has moved to a model where customs and excise will be charged on the value of the metal instead of a flat charge, and will vary with varying prices of the metal in the market. Following the government’s decision, gold will now attract an import duty on 2 per cent of its value on each day as against the earlier flat levy of Rs 300 per 10 grams. Silver will be charged 6 per cent of its value on each day from the earlier Rs 1,500 per kilogram. Excise on gold will be charged at 1.5 per cent of its value on each day as against Rs 200 per 10 grams, and for silver it will be 4 per cent as against Rs 1000 per kg. Platinum and diamond would also cost more.

India's Exports Recorded a Growth of 6.7 %

India's exports recorded a subdued growth of 6.7 per cent year-on-year in December 2011 on account of poor demand in Europe and the US. The growth in exports in December 2011 though not robust was higher than November 2011. Overseas shipments in Novemeber 2011 had grown by just 3.8 per cent. Though growth during the month under review was not robust, it was higher than in November, when overseas shipments grew by just 3.8 per cent. Imports on the other hand grew at a faster pace of 19.8 per cent year-onyear to $37.8 billion in December 2011 thereby translating into a trade deficit of $12.8 billion. During the April- December period of 2011, exports aggregated to $217.6 billion, a year-onyear growth of 25.8 per cent as a result of the export growth witnessed in the early months of 2011. From a peak of 82 per cent in July, export growth slipped to 44.25 per cent in August, 36.36 per cent in September and 10.8 per cent in October 2011.

Rules to Direct Investment in Stocks by Foreign Investors

Market regulator SEBI on 13 January 2012 unveiled rules for direct investment in stocks by foreign investors, including individuals. SEBI's guideline was issued seeking to put curbs on opaque structures to prevent routing of funds by resident Indians. The Union government on 1 January 2012 decided to allow foreign resident investors to invest directly in the Indian equities market, in a move aimed at boosting capital inflows, reducing market volatility and deepening the markets. SEBI’s guidelines were issued following this announcement by the government. SEBI noted that qualified foreign investor (QFIs) can buy up to 5% of the paid-up capital of a company, with the overall limit capped at 10% in a company. Entities having opaque structures, where details of the ultimate beneficiary are not accessible or where the beneficial owners are ring fenced from each other, will not be allowed to open demat account as qualified foreign investor, or QFI. The regulator mentioned that the investors will need to take delivery of shares they purchase on the local bourses. Sebi specified that QFI’s will have to invest in demat form through Sebi-registered depository participants (DPs) who will have to fulfill the Know Your Customer (KYC) norms. QFIs were barred from issuing offshore derivatives instruments or participatory notes and will also have to give a declaration to this effect to the DP. The Sebi circular however does not mention whether these investors can trade in India’s futures and options segment. DPs will have to ensure that the same set of end beneficial owners is not allowed to open more than one demat account as QFI. Also, Foreign investors, who wish to invest directly in Indian shares, will also have to obtain a separate permanent account number or PAN. The QFI shall transact in Indian equity shares only on the basis of taking and giving delivery of shares purchased or sold and it shall not issue offshore derivatives instruments/ participatory notes. The DP will have to provide on a daily basis, QFI wise, ISIN wise and company wise buy/ sell information and any other transaction or any related information to their respective depositories on the day of transaction. The stock exchanges shall provide the details of paid up equity capital of all the listed companies to the depositories once in six months, periodically and also provide information regarding change in paid up equity capital in any listed company immediately.

RBI Issued Guidelines on Compensation in Private & Foreign Banks

The Reserve Bank of India (RBI) on 13 January 2012 issued guidelines on compensation of wholetime directors, chief executive officers and other risk takers in private and foreign banks. The central bank’s directions are aimed at preventing greed from destabilising the institution. The guiderlines include provisions to clawback pay if transactions fail years after origination.The guidelines based on the recommendations of the International Financial Stability Board did not prescribe any quantitative limit on absolute pay. The guidelines however deal with the structure of pay which in the past favoured excessive risk-taking. guaranteed bonus has been banned. Risk management staff will have more of fixed component than the rest.

The RBI Guidelines

The norms provided also include capping the variable component of the compensation at 70% of the fixed pay in a year. The compensation practices, especially of large financial institutions, were one of the important factors which contributed to the recent global financial crisis. It was observed that employees were too often rewarded for increasing the short-term profit without adequate recognition of the risks and long-term consequences that their activities posed to the organisations.As per the guidelines issued, banks are permitted to exclude the Employees Stock Option Plan from variable pay. The variable pay would have to be deferred over a period of three years. Compensation payable under deferral arrangements should vest no faster than on a pro-rata basis. In the event of negative contributions, bank board would have the option to clawback this deferred compensation. Banks will now be permitted to offer joining bonus only in case of new hires and will be limited to first year. They will not be allowed to grant severance pay other than accrued benefits like gratuity and pension, except in cases where it is mandatory by any statute. Foreign banks operating in India will be required to submit a declaration to RBI annually from their head offices to the effect that their compensation structure in India, including that of CEO’s, is in conformity with the FSB principles and standards. Private sector and foreign banks are also required to obtain regulatory approvals for remuneration of CEOs and wholetime directors.

Industrial Production Bounced Back wit h a Growth of 5.9 per cent in November 2011

As per the Index of Industrial Production (IIP) data, industrial production bounced back with a growth of 5.9 per cent in November 2011, marking a five-month high in a reversal from the negative trend witnessed in October 2011. The Index of Industrial Production in 2011 was noted to be very volatile. With this, the IIP growth during the April-November period of 201112 stood at 3.8 per cent as compared to 8.4 per cent in the same period of 2010-11. The industrial production had registered a 6.4% expansion in November 2010. Output had grown 7.8 percent in the 2010/11 fiscal year that ended in March, slower than 10.5 percent clocked in the 2009-10 fiscal. Growth in the manufacturing sector, constituting over 75 per cent of the index, went up by 6.6 per cent in November as compared to of 6.5 per cent in November 2010. Electricity also saw a robust growth of 14.6 per cent during the month under review as compared to 4.6 per cent in November 2011. Production of consumer goods witnessed a healthy 13.1 per cent increase as compared to a mere 0.7 per cent growth in November 2010. Infrastructure sector output,which contributes nearly 38 percent to industrial production, grew 6.8 percent in November 2011.

PMO Directed Cash-rich PSUs to Invest Around Rs.1.76 lakh crore for Stimulus

PMO Direct ed Cas h-rich PSUs to Invest Around Rs.1.76 lakh crore for Stimulus The Prime Minister's Office on 11 January 2012 directed cash-rich public sector undertakings (PSUs) to invest around Rs.1.76 lakh crore, including Rs.1.41 lakh crore domestically to act as a stimulus in the next fiscal (2012- 13). At a meeting chaired by Prime Minister's Principal Secretary Pulok Chatterjee, 17 companies with cash and bank balances in excess of Rs.1000 crore were identified to undertake these investments primarily in the infrastructure sector. The PSUs will invest Rs.1.41 lakh crore domestically in 2012-13 and Rs.35009 crore overseas. The Principal Secretary observed that the PSU investment could provide stimulus to the economy and asked the companies to draw up credible investment programmes and implement those with an objective to achieve the maximum benefit for the companies themselves as well as the national economy. Among the companies, ONGC is projected to invest the maximum amount of Rs.53526 crore- Rs.33,065 crore in the domestic market and Rs.20,461 crore overseas. NTPC will invest Rs.20,995 crore domestically and Power Grid Corporation of India is to invest Rs.20000 crore.

Department of Industrial Policy and Promotion notified 100% FD I in Single-brand Retail

The Department of Industrial Policy and Promotion (DIPP) ON 10 January 2012 notified the rules allowing 100% foreign direct investment (FDI) in single-brand retail. Currently 51% FDI is permitted in this segment of retailing which was opened to foreign players almost six years ago. Removal of the investment cap will help global fashion brands, especially from Italy and France, to venture alone in the growing Indian market. Shares of retail giants Kishore Biyani-led Future Group firm Pantaloon Retail (India) surged by 10% to an early high of Rs 161.40, while Provogue (India) zoomed up by 14.22% to Rs 28.10 on the BSE following the announcement by the government. In a similar fashion, Koutons Retail gained 12.52%, Shopper's Stop rose by 9.38%, Tata Group retail venture Trent Ltd advanced by 5.50% and Vishal Retail jumped by 4.98%. The decision to increase FDI in singlebrand retail was taken by Cabinet on 24 November 2011 along with the decision to open the gates for overseas investment in multi-brand retail. The government was however forced to put FDI in multi-brand retail on hold in the face of opposition by several political parties, including UPA ally Trinamool Congress. In respect of proposals involving FDI beyond 51%, the mandatory sourcing of at least 30% would have to be done from the domestic small and cottage industries which have a maximum investment in plant and machinery of USD 1 million (about Rs 5 crore).

Moody’s upgraded Short -term Country Ceiling on Foreign Currency Bank Deposit from NP to Prime

The Finance Ministry announced on 10 January 2012 that rating agency Moody’s Investor Services upgrade the short-term country ceiling on foreign currency bank deposit increasing from NP (not prime) to Prime (P-3). Upgradation suggested acceptable ability to repay short-term obligations. Prime falls under the investment grade, while not prime is a speculative grade. The upgradation will improve flows from foreign institutional investors and flows from non-resident Indians will also accelerate. In December 2011, Moody’s upgraded the credit rating of Indian government’s bonds from speculative to investment grade. The rating agency had also upgraded the long-term government bond denominated in domestic currency from Ba1 to Baa3. The long-term country ceiling on foreign currency bank deposit was also upgraded from Ba1 to Baa3. The move was expected to encourage FIIs to increase their exposure in gilts and help companies raise funds from abroad at competitive rates.

FD I into India went up by 56%

Foreign direct investment (FDI) into India went up by 56% to $2.53 billion in November 2011, indicating an improvement in investor sentiment. In September and October 2011, the inflows were down by 16.5% and 50% year-on-year respectively. During the April-November period, the FDI was up by 62.81% from $14.02 billion in 2010. Cumulative flows for the April-November period stood at of $22.83 billion, surpassing $19.43 billion achieved in the full financial year 2010-11. The country had received $1.62 billion overseas investment in November 2010. In 2010-11, FDI into equity had dipped 25% to $19.43 billion, from $25.6 billion in 2009-10. In 2008-09, FDI stood at $27.3 billion. Analysts opined that if the upw trend in FDI continued, the FDI in the current financial year 2011-12 will cross $30 billion. The develoment is to have a positive effect on rupee in the foreign exchange market. The selling pressures in the stock market from the foreign institutional investors and rising trade deficit had led the rupee to decline by about 15% since August 2011. Sectors which attracted the maximum funds include services, construction activities, power,computers and hardware, telecom and housing and real estate. Mauritius, Singapore, the US, the UK, the Netherlands, Japan, Germany and the UAE are major sources of FDI for India. The Moody's upgraded India's short-term foreign currency rating from speculative to investment grade.

Union Government to incentivise Unlisted PSUs to Help them come up with Initial Share Offerings

The Union government decided to incentivise the unlisted PSUs to help them come up with initial share offerings in the stock market in 2012- 13. Currently, there are about 50 PSUs which are listed and their shares are actively traded in the stock market. There are about 50 more of such government-owned firms which are eligible but unlisted for various reasons. The government already decided that unlisted PSUs with no accumulated losses and having earned net profit in three preceding years should come out with initial public offerings (IPOs) even as the state holding would not come below 51%. One of the options to incentivise the PSUs for IPOs is to put this task in the memorandum of understanding (MoU) which an individual enterprise signs with its administrative ministry. Under the MoU system, annual targets are set for the PSUs and CEOs get personal appraisal points if the tasks are achieved. While about 50 PSUs including Hindustan Aeronautics Ltd and Heavy Engineering Corporation Ltd which can be listed on stock exchanges did not opt for the same.The government had set a target of raising Rs 40,000 crore through stake sale in PSUs in thecurrent fiscal. In the three remaining months befor the fiscal year 2011-12 comes to end, the Finance Ministry is working on several methods including share buyback by cash-rich PSUs. The Ministry has been able to receive Rs 1145 crore through disinvestment in Power Finance Corporation.

21 Commodity Exchanges in India rose 66%

As per the Forward Markets Commission data released on 9 January 2012 that the turnover of the 21 commodity exchanges in India increased by 66% to Rs 137.22 lakh crore till December 2011 in the current fiscal (2011-12). The turnover of these exchanges had stood at Rs 82.70 lakh crore in December 2010. The maximum trade was seen in gold, silver, guar seed, crude oil, soya oil and chana. According to FMC data, the turnover in the bullion segment rose more than twofold to Rs 80.36 lakh crore during the April-December period of the 2011- 12 fiscal from Rs 37.54 lakh crore in the corresponding period in 2010. The maximum turnover of . 12,40,500 crore was posted by MCX inDecember 2011 followed by NCDEX (Rs 179490 crore), NMCE (Rs 27826 crore), ICEX (Rs 23,655 crore) and ACE (. 12,713 crore).

ADB Loan to Finance Road Projects in Naxal - hit Areas Cleared

The Union government in January 2012 cleared an external loan to finance part of the programme launched by the Ministry of Rural Development in left wing extremism-affected villages. The clearance is for a loan of $500 million from the Asian Development Bank (ADB) to speed up construction of rural roads. Union Ministry of Rural Development (MoRD) issued directions for negotiating and early signing of the loan, which his Ministry to gather resources to give thrust to the Pradhan Mantri Gram Sadak Yojana (PMGSY). The ADB, which has already extended a loan of $800 million was petitioned with a fresh proposal for rural connectivity investment programme to construct or upgrade 7000 km of roads connecting eligible habitations in Maoist-affected States of Bihar, Chhattisgarh, Madhya Pradesh, Odisha, West Bengal, besides Assam where too the PMGSY has progressed with little to cheer. The demand for the loan was made in the backdrop of the MoRD's multiwinged programmes in the left wing extremism-affected areas, under which Central forces assist execution of welfare and development schemes to wean the local people from the path of naxalism. The MoRD has been providing incentives and assistance to the local people, particularly tribals, to reduce poverty and ensure economic growth of the region. Rural connectivity is considered pivotal to the success of this stratagem. As per the programme proposed by the MoRD, the Union government will supplement with a contribution of $127.6 million, in addition to the $5000 million to finance the project that includes setting up of training and research centres pertaining to rural roads. The programmewas supposed to have covered all habitations with a population of 500 people (250 people in the case of tribal and hilly areas) by 2007. Provision of rural connectivity to habitations of 500 people in general areas and 250 people in tribal areas need to be worked upon on pririty basis.

IRDA Introduced Uniform Asset-liability Management Norms for Insurers

Insurance regulator IRDA on 4 January 2012 introduced uniform asset-liability management norms for market players to ensure their solvency. Insurance Regulatory and Development Authority (IRDA) announced a broadly-defined uniform framework for reporting asset liability management activities adopted by life and non-life insurance companies. The regulator also asked firms to undertake stress tests to ascertain their ability to meet financial obligations in the event of a crisis. IRDA has issued these guidelines to bring about uniformity in the ALM norms being followed by both life and non-life insurance companies.

IRDA Guidelines

The IRDA guidelines require the ALM (asset liability management) policy to be approved by the board of the insurer. Such board-approved policy is to be submitted to the IRDA within 90 days. While approving the ALM policy, the board is to take into account the asset-liability relationships, the insurer's overall risk tolerance, risk and return needs, solvency positions and liquidity requirements. The guidelines also make it mandatory for the board to frequently review the ALM policy of the insurer. Any change in the policy must be reported to the regulator. Under the uniform framework, insurers have to put in place an effective mechanism to monitor and manage their asset-liability positions. The objective is to ensure that their investment activities and assets positions are in sync with their liabilities, risk profiles and solvency positions. The guidelines, which would come into effect from 1 April 2012, make it mandatory for insurance companies to prepare an ALM policy as well as get it approved by the Insurance Regulatory and Development Authority (IRDA) by end of March 2012. The insurers are also required to develop and implement controls and reporting systems for the ALM policies that are appropriate for their businesses and to the risk to which they are exposed. They would have to put in place effective procedures for monitoring and managing their assetliability positions to ensure that their investment activities and asset positions are appropriate to their liability, risk profiles and solvency positions.

Benefits of ALM Policy

The Asset-Liability Management (ALM) norms are critical for the sound management of the finances of the insurers that invest to meet their future cash flow needs and capital requirements. The ALM policy will enable the insurers to understand the risks they are exposed to and develop ALM policies to manage them effectively. The ALM can be used to measure the interest rate risk faced by insurers.

No Floating Interest Rates on Small Savings Scheme

The Finace Ministry on 4 January 2012 clarified that the rates applicable on small savings instruments schemes would be announced on April 1 each year and the rate would remain valid till the maturity of the scheme. The Ministry stated that barring the Public Provident Fund (PPF), the rates of interest on all small savings schemes will remain fixed throughout the tenure of investment. To clear the confusion over the returns on investment in small savings schemes, the Finance Ministry pointed out that the rate prevailing at the time of investments will remain fixed and unchanged till the maturity of the investment. Any revisions in interest rates in the subsequent years would only be applicable to the investments made in the relevant period. However, the rate of interest for the 15-year PPF scheme would not remain fixed for the entire period as the interest accruals in the PPF account each year would vary, depending on the interest rate announced for that particular year. For PPF, the interest rate fixed every year will be applicable to all PPF accounts. The government had hiked the interest rates on small savings deposits schemes of various maturities with effect from 1 December 2011 to chanel the outflow of funds from small savings schemes administered by the National Small Savings Fund (NSSF) in view of the investor preference for bank term deposits. The clarification from the Finance Ministry came in the face of fears that the revision of interest rates on small savings schemes from 1 December 2011, are floating rates and that the rates will undergo change in sync with fluctuations in yields on government securities. It had also hiked the interest rates on PPF deposits from 8 per cent to 8.6 per cent while raising the ceiling on annual contributions to the fund to Rs.1 lakh from Rs.70000. Interest rates on Post Office Savings Accounts rose to 4 per cent from 3.5 per cent. Similarly, interest rates on deposits of various maturities of one year, two years and five years too were raised from December. The sale of Kisan Vikas Patra (KVP) has been discontinued from November 30, 2011. The maturity period of Monthly Investment Schemes (MIS) and National Savings Certificates (NSCs) been reduced from six years to five years.

RBI Decided to Ease Liquidity by Buying Back Gilts

The Reserve Bank of India on 3 January 2011 decided to conduct an open market operation (OMO) to inject more liquidity into the system. The RBI will buy up to Rs 12000 crore of government bonds via open market operations on 6 January 2012, including the 10-year paper which till recently was the benchmark paper. The central bank has decided to ease liquidity by buying back gilts for an amount of R10,000 crore in the backdrop of banks accessing the Reserve Bank of India (RBI)’s borrowing window for more than R1 lakh crore each day. RBI announced an auction for R10,000 crore worth of bonds, otherwise known as open market operation (OMO). The OMO announcement came after the market trading hours. the Reserve Bank of India decided to conduct open market operations consistent with the stance of the monetary policy and based on the current assessment of prevailing and evolving liquidity conditions. Banks have been borrowing in excess of R 1 lakh crore a day from the RBI's liquidity adjustment facility (LAF) or repo window. The liquidity deficit in the system in recent weeks has been way beyond the limit of 1% of the net liabilities of the system, or around Rs 55000 crore.

SEBI Allowed Auctioning of Securities

The capital market regulator SEBI on 3 January 2012 allowed auctioning of securities through stock exchanges and introduced a new method for institutional placement of stocks. The move was directed to kick-start government's divesment programme as well as help promoters of companies to sell a part of their holdings. As per the auctioning route, a special window can be used by promoter stakeholders to sell at least 1% of the paid-up capital of a company. It is similar to the blockdeal mechanism for secondary stock market transactions, but with lesser restrictions. The auction method can be only used by promoters of top 100 companies based on average market capitalisation for sale of their stakes.

Institutional Placement Programme (IPP)

Under the institutional placement programme (IPP), shares can be sold only to qualified institutional buyers. Exchanges will provide a separate window for the offer for sale of shares which will co-exist with the normal trading hours. promoter or promoter group of companies however will not be allowed to bid for the shares. Allotment will be done either on price priority or clearing price basis proportionately and would be overseen by the exchanges. SEBI’s measure is considered to be very progressive step towards creating an organised and effective mechanism that will not only facilitate fund raising but also assist companies to comply with the listing norms in a non-disruptive manner. There shall be at least 10 allottees in every IPP issuance. No single investor shall receive allotment for more than 25% of the offer size. For the purpose of compliance with public holding norms, SEBI had earlier directed all such promoter shareholders to dilute their equity stake to 75% or below by June 2013 through public offering of shares. The companies’ were also barred from using the qualified institutional placement ( QIP) route for diluting promoters' shares. However, the new institutional placement route can be used for either fresh issue of shares or dilution by the promoters through an offer for sale. The IPP method can be used to increase public holding by 10% and could be offered to only qualified institutional buyers with 25% being reserved for mutual funds and insurance companies. Under the IPP, companies will have to announce the ratio of buy-back, as is done in the case of rights issues and fix a record date for determination of entitlements as per shareholding on record date. Besides improving efficiency, the revised buy-back process is expected to give a fair deal to all shareholders.

Report on Bill to Amend For war d Contracts Regulation Act 1952

The Parliamentary Standing Committee submitted its report on a bill to amend the Forward Contracts Regulation Act 1952. Parliamentary Standing Committee on consumer affairs, food and public distribution, chaired by Congress MP Vilas Baburao Muttemwar, submitted its report on the FCRA (Amendment) Bill 2010 to Parliament on 22 December 2011.The current department-related standing committee (DRSC), set up in 2009, was asked by the Lok Sabha speaker in December 2010 to prepare a report on the bill and submit it to the Lok Sabha Secretariat. The committee in its report recommended a doubling of the maximum penalty for trading rule violations to Rs 50 lakh. The standing committee report suggested raising the upper limit on penalties for offences like insider trading to Rs 50 lakh from Rs 25 lakh stipulated in the Forward Contracts Regulation Act (FCRA) Amendment Bill 2010. Insider trading involves using unpublished price sensitive information for personal gain. The bill seeks to empower commodity futures market regulator Forward Markets Commission on par with its securities markets counterpart. It is seen as the single-most important reform in the eight-year-old commodity exchange market.

The Report

The report recommended that options be introduced for the benefit of stakeholders. The inclusion of the clause was one of the reasons why the bill in its earlier avatar during the UPA I regime faced resistance. Those who had opposed the bill then especially the Left parties argued that options would increase speculation in commodities. The report suggested that options will actually make it easier for farmers and smaller users to participate in the derivatives market as trading lot sizes will be lower than in futures contracts, where the minimum traded quantity for most farm products is 10 tonne. investing in an option also tends to minimise losses as only the premium to buy (call option) or sell (put option) is forgone in the event of prices moving adversely. a futures position taken by a trader is on the other hand marked to market daily. Marking to market involves daily settlement of the difference between the prior agreed price and the daily futures price. It can thus lead to huge losses alongside supernormal profits.

Implementation of Levy on Rail way Freight Service deferred

The implementation of levy on railway freight service was put off once again in the backdrop of high inflation. The levy is now likely to come into force from 1 April instead of 1 January as announced earlier. The levy on transport of goods by rail was deferred for the sixth time. Finance Minister Pranab Mukherjee in the 2010-11 Union Budget had brought transport of goods by railway under the service tax net from 1 April 2010. However, the proposal was vehemently opposed by Railway Ministry fearing adverse impact on goods movement, forcing the government to defer it repeatedly. Railway Ministry is of the opinion that any levy on freight service would adversely impact the industry. Movement of coal and cement among others goods would become costlier with the imposition of service tax.

Government approved RIL’s $1.529 billion Investment Plan

The Union government on 3 January 2012 approved Reliance Industries' (RIL) $1.529 billion investment plan for developing four satellite fields in the flagging KG-D6 block. RIL’s investment plan will boost falling output in the Krishna-Godavari Basin KG-D6 block. The investment proposal was signed by the three partners in the block- RIL, UK's BP Plc and Niko Resources of Canada and the representative of DGH. The KG-D6 block oversight committee, which includes officials from the Oil Ministry and its technical arm, the Directorate General of Hydrocarbons (DGH), met for the third time in three months on 3 January to finally approve the proposal. The MC approval, which is the final approval an operator needs before beginning work, put a cap on the cost of developing the four fields that surround the currently producing Dhirubhai-1 and 3 (D-1 & D-3) fields in the KG-D6 block. The cost cannot vary by more than 15%. The MC had at its two previous meetings in November and December 2011 refused to approve the field development plan (FDP) for the Dhirubhai-2, 6, 19 and 22 (D-2, D-6, D-19 and D-22) fields after the government representative raised certain objections. RIL agreed to cap spending on the four fields at $1.529 billion, plus or minus 15%.

Export Duty raised on Iron Ore Exports to 30 %

The Union government raised the ad valorem duty (export duty) on iron ore exports to 30 per cent from 20 per cent. The decision is expected to step up finances of cash-strapped government by around Rs 8500-9000 crore. The Federation of Indian Mineral Industries, the apex body of miners however complained that Indian ore would no longer be competitive internationally. The increase in export tax could lower the profit margin of Sesa Goa Ltd., India's largest iron-ore exporter by volume. Steel Minister Virbhadra Singh always wanted more restrictions on exports. Based on his ministry’s inputs, Finance Minister Pranab Mukherjee had earlier imposed a 20 per cent duty on exporting the domestically mined mineral. Shipments from the South Asian country decreased 28% between April and November to 40 million tons, according to the Federation of Indian Mineral Industries. Volumes were hit by a mining ban in the southern state of Karnataka, a freeze on sale of old stocks in western Goa state and transport bottlenecks in the eastern state of Orissa. India exported 97.64 million tons iron ore in 2012. Prior to the export tax change, industry officials had estimated exports in 2011-12 to be between 60 million and 65 million tons because of mining-related issues. As a result of high export tax and railway freight, India's iron-ore exports is not likely to exceed 50 million tons in 2011-12. The Supreme Court had in early 2011 banned mining in the major iron-ore producing districts of Karnataka to prevent illegal mining and environmental damage. In Goa, moves to reduce environmental impact and illegal mining affected production. The two states account for around 70% of India's iron-ore exports.

CIL approved the Switching Over to Gross Caloric Value-bas ed Pricing Mechanism

State-owned Coal India (CIL) announced on 2 January 2012 that its board approved in a meeting held on 30 December 2011 the switching over to internationally-accepted Gross Caloric Value-based pricing mechanism. The new system is based on the recommendations of the Integrated Energy Policy Committee and the Expert Committee on Road Map for coal sector reforms. The board approved switching over of non-coking coal pricing from Useful Heat Value based grading system to Gross Caloric Value (GCV) based classification with effect from 1 January 2012. GCV measures the amount of heat released by carbon and hydrogen in coal when it is heated and is an internationally accepted pricing mechanism. the UHV mechanism was followed in India Howeverbecause of the high-ash content in Indian coal. The UHV took into account the heat trapped in ash. In Indian coal, GCV is 25% higher than UHV. The Coal Ministry mentioned that the pricing of coal on GCV-based mechanism was not likely to lead to any significant change in pricing. The new system will incentivise improvement in quality, resulting in better quality of coal to consumers and commensurate revenue realisation for coal firms.

RBI Study sought Cap on Borrowings by NBFC’s from Banks

Reserve Bank of India (RBI) raised red flags over the high dependability of non-banking finance companies (NBFCs) on the banking system because the apex bank feels that the higher dependence would mean systemic vulnerability in the context that NBFCs are involved in higher risk activities vis-à-vis the banking system. The higher borrowings of NBFCs from the banking system tend to raise concerns about their liquidity position. More so, if such reliance happens to increase further. The banking system’s exposure to NBFCs-D (deposit taking) was observed to have considerably increased over the years. The concerns to be further accentuated in case the banks’ own liquidity position becomes tight at the time of crisis or even at crisis like situation. The consolidated balance sheets of NBFCs (both the categories i.e. deposit taking and non-deposit taking and systemically important companies) revealed that more than 68 per cent of the consolidated balance sheet constitutes borrowings. 30 per cent resources of the total 68% are borrowed from banks and financial institutions as at the end of March 2011. Borrowings by way of debentures issued by the NBFCs constituted around 33 per cent and of which a sizeable portion is subscribed by the banking system.

India’s Exports recorded Slowest in Two Years

As per the to Commerce Ministry data released on 2 January 2012, India’s exports recorded their slowest pace of growth in 1two years at 3.8 per cent in November 2011 as a result of the global slowdown. Moderation in demand in developed markets also impacted export. The growth rate was the lowest since October 2009, when exported had contracted by 6.6 per cent. The commerce ministry had overestimated exports by over $9 billion due to software upgrade and punching errors that prompted a revision of data revision for the previous eight months. The data on engineering exports was inflated by around $15 billion, while export of gems and jewellery and petroleum products was underestimated by $12 billion.

Export

Exports grew 3.87% to $22.3 billion in November, 2011, compared to $21.49 billion in November 2010. exports for the current fiscal is expected to be around $280 billion, below the $300 billion target for 2011-12 due to global economic slowdown. The country's overseas shipments had amounted to $21.48 billion in November 2010. According to export body Fieo Director General Ajay Sahai, further decine in export will push export growth ina negetive zone. From 82 per cent in July, export growth slipped to 44.25 per cent in August, 36.36 per cent in September and 10.8 per cent in October. In the eight-month April-November period, exports aggregated to $192.69 billion, a year-on-year growth of 24.55 per cent. Experts opined that the country's exports growth during the entire fiscal would stand at about 20 per cent.

Import

Imports were up 24.5% at 35.92 billion in November 2011. In November, 2010, imports aggregated $28.84 billion. Oil imports grew by 32.28 per cent to USD 10.3 billion in November 2011 while non-oil imports rose by 21.69 per cent to $25.6 billion vis-a-vis the year-ago period. Between April and November oil imports stood at $94.1billion, an increase of 42.67% compared to $65.97 billion in November 2011. Non-oil imports, a key gauge of economic activity, rose 25.46% to $ 215.41 billion during the April- November period.

Trade Deficit

Imports grew at a faster rate of 24.5 per cent year-on-year to $35.9 billion in November 2011 which in the process translated into a trade deficit of $13.6 billion. Between April-November exports grew 33.2% to $192.7 billion while imports also rose 30.2% to $ 309.53 billion. The trade deficit during the eight months of the fiscal year therefore stood at $116.8 billion.

PMI released by HSBC

The HSBC Purchasing Managers' Index ( PMI) - a headline index designed to measure the overall performance of the manufacturing sector - registered 54.2 in December, up from 51.0 in November. The PMI was released by the banking major HSBC on 2 January 2012. The index indicated the strongest improvement in business conditions since June 2011. New orders from overseas clients also grew at a faster pace than November 2011, the second consecutive expansion after shrinking for four months. India’s manufacturing activity was at a a sixmonth high in December 2011 on account of an increase in factory output and new orders from domestic and international firms. The HSBC Markit India Manufacturing PMI jumped to 54.2 from 51.0 in November, its biggest monthly rise since April, 2009. The index stayed above the 50 mark that separates growth from contraction for 33 months now. The PMI or Purchasing Managers’ Index dipped to 50.4 in September 2011. Data released by the government had showed a 5.1 per cent contraction in the IIP numbers in October 2011, its slowest since March, 2009. The successive rate hikes by the RBI and weak macroeconomic conditions domestically and globally were blamed for the contraction. The official industrial output data showed factory output plunged 5.1% in October, raising worries about the health of the manufacturing sector. This was the first fall in industrial output in nearly two years. Manufacturing sector employment also increased slightly during December 2011, ending a period of job losses that had set in during August 2011. Costs went up on higher prices of raw materials and fuel on the input front, adding with higher demand. The demand from clients allowed manufacturing companies toincrease output prices at an accelerated pace to pass on the costs.