Retail Inflation shot up to Double Digit Mark at 10.32 percent in April 2012

As per official data at the retail level released, retail inflation shot up to the double digit mark at 10.32 percent in April 2012 on account of substantial increase in vegetable, edible oils and milk prices. The retail inflation data showed that the surge in prices of vegetables was the greatest at 24.55 per cent in April year-on-year. Vegetables were followed by edible oils, the prices of which soared by 17.63 per cent while milk products were next in line with a 14.94 per cent increase in prices in April 2012. As for the protein-rich items such as eggs, meat and fish, the year-on-year increase in prices were at 9.95 per cent. Prices of cereals however went
up by a much smaller mar gin of 3.94 per cent during the month. Sugar turned dearer by 4.32 per cent in April a t the retail level while pulses became costlier 6.03 per cent as compared to the same month of 2011. Overall prices of food and beverages grew by 10.18 per cent in April. Food inflation based on wholesale price entered into double digit for the first time in six months. Food inflation grew to 10.49 per cent in April 2012 based on the wholesale price Clothing, bedding and footwear became costlier by 11.95 per cent and prices of fuel and light grew by 11.40 per cent. According to the CPI data, inflation rates for rural and urban areas were estimated at 9.86 per cent and 11.10 per cent, respectively, for April while the revised figures for the two segments for March was pegged at 8.70 per cent and 10.30 per cent, respectively. Inflation based on Consumer Price Index (CPI) in the urban areas surged by 11.10 per cent in April year-on-year, while in rural  area it grew by 9.86 per cent.

Indian Rupee plunged to its Historic Low of 54.56 Against the U.S. Dollar

Indian Rupee plunged to its historic low mark of 54.56 against the U.S. dollar on 16 May 2012. At the Interbank Foreign Exchange market, the rupee opened sharply lower at 54.06 and plunged to all time low of 54.56, surpassing the previous all-time low of 54.30 recorded in December 2011. It finally closed at 54.50. A falling rupee will adversely affect the economy by raising the cost of imports, which in turn will hike the price of important items in the economy. The f alling rupee is largely attributed to the factors like swelling trade deficit, which widened to over 10.9 per cent of gross domestic product in the fiscal years 2011-12, and grim economic outlook. Rupee was not the only currency which fell down amidst the global pressure but many of the major currencies witnessed the same fate as the dollar was viewed by the investors as the safest bet. While Euro hit its four-month low mark, dollar geared up for its highest level since September 2010. C Rangrajan, the prime minister’s economic advisory council chairman advocated the use of India’s foreign exchange reserves to keep in check the consistent depreciation of the rupee against the dollar. India has a total of nearly 290 billion dollar as its foreign exchange reserves.

Petrol Prices Raised by 7.54 Rupees a Liter

The state-owned oil marketing companies increased the price of Petrol by 7.54 rupees a litre to 73.18 rupees with effect from midnight 23 May 2012. The price of diesel, LPG and kerosene was, however, left unchanged. It is the highest onetime hike in petrol prices ever as the previous instances of price hike saw price going up by maximum of 5 rupees. The oil marketing companies had twice increased the petrol prices by 5 rupees, the first
on 15 May 2011, when the rate in Delhi was increased from 58.37 rupees to 63.37 rupees; and second on 24 May 2008, when it was hiked up to 50.56 rupees. With the current increase in the petrol prices, it will
cost 78.57 rupees a litre in Mumbai, against previous 70.66 rupees. In Kolkata, the rate will go up by 7.85 rupees to 77.88 rupees. In Chennai, it will be 77.53 rupees, up by 7.98 rupees. The oil marketing companies had recorded the collective loss of 138541 crore rupees in revenue during the fiscal year 2011-12. This year, the loss is expected to touch the figure of 193880 crore rupees. During 2011- 12, petrol prices were revised five
times in order to bring domestic prices in line with those in the international market. The rates were raised on three occasions and lowered on two.

Directorate General of Hydrocarbons (DGH) Drafted Policy on Exploitation of Shale Gas

The Directorate General of Hydrocarbons (DGH) drafted a safe as well as encouraging policy on exploitation of shale gas that is seen as the new hope for fuelling India’s burgeoning appetite for hydrocarbons. DGF drafted the policy in the wake of the CAG’s strictures against the DGH and the Petroleum Ministry on violations in the KG-D6 contract. The draft policy does not permit cost recovery and hence profit sharing — the two
features that came under criticism by the CAG in its audit report. However it banks on production linked payment (PLP) as the Centre’s share from the discovery. The draft stated that the PLP would be a fixed percentage of revenue receipts from the shale gas or shale oil sold from the contract area, net of royalty on a monthly basis. Royalty would be in line with what is prescribed in the Oilfields (Regulation & Development) act. The PLP quoted at the time of the bidding for blocks assumes significance as it would carry the maximum 60 per cent weight for deciding the award of the block. The total investment quoted for completing the promised minimum work programme would get 40 per cent weightage. As a f iscal incentive, the contractor will be exempt from PLP payment for the first five years from the start of commercial production or from the date of entering the development and production phase, whichever is earlier. The maximum period of PLP exemption would be 10 years from the date of signing of the contract and will not be extended under any circumstance since it is an incentive for faster development. As per the policy, the explorer will be given the freedom to market shale gas within India on an arm’s length basis, with shale oil marketing following the prevailing norms of the New Exploration Licensing Policy. The other incentive proposed in the draft is customs duty exemption on the import of goods and materials for exploration and exploitation of shale gas or oil. The blocks are to be awarded through open international competitive bidding with up to 100 per cent equity participation by foreign companies. The operating firm in a consortium would be the one which has minimum 25 per cent equity. The contract would be for 30 years with the first five years kept for exploration, appraisal and evaluation of the prospect and its feasibility.

E-Challan and Receipt (ECR) facility launched by (EPFO)

Union minister of labour and employment Mallikarjun Kharge inaugurated the E-Challan and Receipt (ECR) facility on 1 May 2012 to bring transparency and accessibility for employers in depositing monthly Employees’
Provident Fund or EPF contributions of their workers. Employers under the ECR service would have to register their organisations online and generate challans for making monthly deposits. They can use these challan
for either electronically or physically depositing the Provident Fund or PF contributions to the bank. After the bank confirms the deposit, the concerned regional office’s system would be automatically notified and individual members’ accounts would get updated. The claim settlement process would become much easier as under the new initiative, employee details will be added and updated electronically. Also the need of annual accounts
preparation at the end of the year can be done away with under this system.

Goa topped the List of States with Highest Per Capita Income

Goa topped the list of the states with highest per capita income in the country with a total per capita income of 192652 rupees. Delhi with a total per capita income of 1.75 lakh rupees in 2011-12 secured second spot in the list, followed by Haryana with per capita income of 109227 rupees. The national average was estimated at 38005 rupees in 2011-12 against 35993 rupees in 2010-11. The estimates WERE prepared as per methodology prescribed by the Central Statistical Organisation on the basis of provisional data provided by it and other government sources.

Small Industries Development Bank of India (Amendment) Bill, 2012 tabled in the Lok Sabha

The Union government on 22 May 2012 tabled the Small Industries Development Bank of India (Amendment) Bill, 2012 in the Lok Sabha, allowing sectors including floriculture, tourism, restaurants, and the entertainment
industry to access loans from the bank. The SIDBI (Amendment) Bill tabled by Finance Minister Pranab Mukherjee

• Empowers SIDBI to confiscate the mortgaged property or right to transfer by way of lease or sale in case enterprise makes a default in repayment of any loan or advances.

• The bill envisages the widening of the scope of industrial concerns as well as aims a t conferring more powers upon the board of  directors of bank to decide investment limit for these industrial concerns. It was believed that an amendment would re place definition and expression of industrial concern in small sector with industrial concern or micro enterprise or small enterprise or medium enterprise in the SIDBI Act 1989. The board of directors would be empowered to unanimously resolve to decide the investment limit for the purpose of industrial concern. The change in definition as stated in the bill will thus help businesses such as convention centres, travel and transport, tourist service agencies, guidance and counselling services to tourists, financial assistance by way of venture capital, risk capital factoring and discounting , construction and  development of roads to take loans and advances from the bank.

Morgan Stanley cut down Growth Forecast for India to 6.3 Per Cent

New York based global financial services firm Morgan Stanley cut down India’s economic growth forecast for financial year 2012-13 to 6.3 percent. The firm revised the India’s 2012 economic growth forecast to 6.3 percent from prior 6.9 percent; 2013 forecast to 6.8 percent from earlier 7.5 percent. On a financial year basis, Morgan Stanley pegged India’s growth in the fiscal year 2012-13 at 6.3 percent and 2013-14 at 6.9 percent. The reduced growth projection owes to rising fiscal deficit and an expansionary policy of supporting consumption while private investment remains sluggish. Declining rupee and persistent inflation also combined to slow down the growth of Indian economy. Morgan Stanley also expected RBI to reduce repo rate by an additional 100 basis points by March 2013, after 50 basis points  which came into effect in April 2012.

IMF lowered India’s Growth Projection for 2012 to 6.9 Per Cent

The International Monetary Fund (IMF) on 27 April 2012 lowered India’s growth projection to 6.9 per cent for 2012. The multilateral agency in January projected Indian economy to grow to by 7 per cent for 2012. The
slashed growth projection is broadly attributed to the country’s poor performance on the front of economic reforms and slowing investment. The IMF, however, maintained India’s growth estimate for 2013 at 7.3 per cent. As per the IMF, the national economy grew by 7.1 per cent last year. The IMF’s growth projection is an indication for the government to expedite the process of economic reforms which has long been victim of the country’s internal political clutter. Many of the important reforms are still in the pipeline which needed to be approved as soon as possible. Government should make sure that it is taking adequate majors to boost up the sentiment of investors, who are increasingly getting disenchanted of the future prospects of Indian Economy. Standard and Poor’s on 25 April 2012 slashed the credit rating outlook for India from stable to negative.

Commerce Ministry relaxed the Conditions for Sugar Exports

The Commerce Ministry, on 16 May 2012, relaxed conditions for sugar exports by raising the quota to 25000 tonnes from 10000 tonnes. Both the Food Ministry and the Directorate General of Foreign Trade (DGFT) issued separate notifications related to the decision. Exports were permitted as the country’s sugar output is expected to touch 26 million tonnes in 2011- 12, higher than the annual demand of 21.5-22 million tonnes. The
notification comes following the Food Ministry’s formal order issued on 15 May 2012 allowing sugar export without any quantitative restrictions.

Chit Funds under the Chit Fund Act of 1982 in Six States

The Union government decided to include Chit funds, an informal pooling of funds from individuals for lending under the Chit Fund Act of 1982 in six states including Gujarat and Ker ala. The decision was meant to help people access the dispute settlement mechanism. Nagaland, Haryana, Tripura, and Arunachal Pradesh are the other states to come under the Act, providing a cushion for small savers who are at the mercy of local
operators. Of the six states brought under the central ruling, only Kerala operated under the Kerala Chit Act of 1975. The other five states had no laws to regulate chit fund operators. Registered chit funds have to follow rules laid down by the Reserve Bank of India. Industry sources say the le gislation will force several unregistered chit funds to shut shop across the country. Given that the chit funds are not managed professionally, investors face difficulty in getting disputes resolved. As per the estimates projected by the chit fund industry, over 12000 registered chit funds manage in excess of Rs 35000 crore a year. The share of unregistered funds is possibly 80- 90 times more than registered funds. The move is expected to bring about level playing field among registered and unregistered chit fund operators and make c hit funds a safer product for investors. A chit scheme
generally has a pre-determined value and duration. Each scheme admits a particular number of members (generally equal to the duration of the scheme), who contribute a certain sum of money every month (or everyday) to the ‘pot’. The ‘pot’ is then auctioned out every month. The person bidding lowest sum gets the bid amount. The initiative to bring chit fund operators under registration is being considered a positive move as it will set systems and processes in the chit fund industry. If chit funds are registered and bound under a central Act, it will improve (legal) the recourse mechanism for investors.

Competition Commission of India constituted Eminent Persons Advisory Group

The Competition Commission of India (CCI) formed an Eminent Persons Advisory Group (EPAG) on 7 May 2012. The group is constituted to provide CCI inputs and advice on issues impacting markets and competition, among others. The group comprise Infosys founder N.R. Narayana Murthy , former Comptroller and Auditor General V.N. Kaul, former Deputy Governor of Reserve Bank of India Rakesh Mohan, Biocon Chairman and MD Kiran Mazumdar-Shaw, former Director, of IIMAhmedabad Bakul Dholakia, former Chairman of CERC S.L Rao, former Vice-Chancellor of NLSIU, Bangalore N.L Mitra. The group will hold its maiden meeting
on July 2012. The Group will have interaction/meetings with the Commission two to three times a year.

RBI directed Indian Banks to maintain Tier I Capital of at least 7% of their

capital adequacy norms, called Basel III, by March 2018. Indian banks will have to maintain Tier I capital, or core capital, of at least 7 per cent of their risk weighted assets on an ongoing basis. The objective is to strengthen risk management mechanism. As per the guidelines specified by the central bank, commercial banks will have to maintain their total capital adequacy ratio at 9 percent, higher than the minimum recommended
requirement of 8 percent under the Basel III norms. It was decided that scheduled commercial banks (excluding LABs and RRBs) operating in India will have to maintain a minimum total capital (MTC) of 9 percent of total risk weighted assets (RWAs) as against a MTC of 8 percent of RWAs as prescribed in Basel III rules text of  the BCBS (Basel Committee on Banking Supervision). Also, banks were directed to keep a capital conservation buffer of 2.50 percent. It essentially means that banks will have to set aside more capital as buffer to avoid a 2008-like crisis again. On failing to set aside the mentioned capital, the banks will not be able to pay dividend and bonus. The RBI tightened the norms to monitor banks’ investments, inter-connectedness and cross-holdings in the financial sector services whic h are beyond the active regulatory purview of the central bank. Basel III requires banks to have a higher share of core capital – which is equity and reserves. Banks will thus require additional Rs 1-1.5 lakh crore over the next six years for doing the same level of business. The implementation of the capital adequacy guidelines based on the Basel III capital regulations will begin on 1 January 2013. Banks are to attain a minimum Tier I capital ratio of 4.5 per cent by January 2013, 5.5 per cent by January 2014, and 6 per cent by January 2015. The new capital regulations will be fully implemented by 31 March 2018.  Under the existing Basel II framework, banks are required to maintain Tier I capital of at least 6
per cent of their risk weighted assets. Under Basel III, Tier I capital will predominantly consist of common equity, defined as paid-up equity capital, share premium, surpluses arising from sale of assets, other disclosed free reserves, and balance in the profit and loss account at the end of the financial year.

Following Revised Production Estimates Cotton Advisory Board, Centre allowed further Cotton Export

The Union government in the meeting of informal group of ministers chaired by Finance Minister Pranab Mukherjee on 30 April 2012 decided to allow further cotton exports in the 2011-12 marketing year ending September 2012 following the upward revision of production estimate. The government had in March 2012 lifted the ban on exports but had decided not to issue fresh registration of cer tificates (RCs). It only allowed shipments for which RCs were already issued before the ban was imposed on 5 March 2012. India exported 113 lakh bales so far in the current cotton season. Prior to the imposition of the ban the government had issued RCs for about 130 lakh bales. The decision was based on revised production estimates of the Cotton Advisory Board as well as the Agriculture Ministry. As per the decision, there would not be any quantitative restrictions on registration. The Cotton Advisory Board (CAB) had in April 2012 revised production estimates upwards to 347 lakh bales from 345 lakh bales for the 2011- 12 season. It also revised domestic consumption estimates downwards to about 250 lakh bales from 260 lakh bales earlier. The Agriculture Ministry too revised upwards cotton output to 352 lakh bales from 340.8 lakh bales.

Supreme Court extended the Timeline for 2G Spectrum Auction

The Supreme Court of India on 24 April 2012 turned down the union government’s plea to grant 400 days to complete fresh distribution of 2G spectrum licences. The court, however, extended the deadline for the auction of licences from 2 June 2012 to 31 August 2012 considering that technically it was not possible to analyse the auction by June 1. The court had on 2 February 2012 ruled that all the 122 licences allocatted to eight operators under the first come first serve policy in January 2008 during the A Raja regime be quashed early June and asked the government to reconduct the licence distribution through an open bidding process. A Supreme Court bench of Justices G S Singvhi and K S Radhakrishnan also held that existing licences will remain operational till 7 September 2012. Attorney General G E Vahanvati appeared in the court from the  government’s, he argued that the government needed 400 days to conduct fresh auctions and that the time given by the apex court was too short. The bench maintained that its 2 February 2012 order cancelling 122 licences, allocated during the tenure of A Raja, would remain operational. The apex court also warned private telecom companies against filing petitions  questioning its 2 February 2012 ver dict. The bench said it would
impose exemplary costs if they continued to do so. It’s a wastage of precious public time and money, the court held. The bench was hearing the Union Government’s application, seeking clarification of its direction in the 2 February 2012 judgement which had fixed 2 June 2012 as the deadline, when the 122 2G spectrum licenses, issued in 2008, would stand quashed. The Union government had on 1 March 2012 moved the apex court stating it would impact over 69 million mobile users as the auction process for spectrum will take at least 400 days. The Centre had informed the  court that the auction process has commenced but it would takearound 400 days for it to be completed.

Union Government decided to dole out 38500 Crore Rupees to Public Sector Oil Companies

The Union Government decided to provide 38500 crore rupees as additional cash subsidy to public sector oil companies to compensate their loss incurred in fiscal year 2011-12. The cash subsidy would be an additional
payout for the companies including Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) which had received 45000 crore rupees from the government during the first nine months of 2011-12 financial year. The three firms had recorded a total loss of 138541 crore rupees in 2011-12 on selling diesel, domestic LPG and kerosene at government controlled rates that were way lower than market price. Together with the additional payout agreed, the government will make up 60% or 83500 crore rupees of the total revenue loss.

India’s Consumer Price Inflation Figure surged to 10.36 %

India’s consumer price inflation (CPI) surged to 10.36 per cent in the month of April 2012. The CPI figure for the month of February and March stood at 9.47 percent and 8.22 percent respectively. The rising figure is
largely driven by a rise in prices of vegetables, eggs and fish products. Inflation as measured by India’s benchmark wholesale price index (WPI) rose to 7.23 percent in April 2012 as prices of food, fuel and manufacturing items went up considerably. The Reserve Bank of India, which unlike other central banks uses mainly the wholesale price index for monitoring inflation, slashed policy rates by a steeperthan- expected 50 basis points last
month to boost a sagging economy. The unrelenting inflation has left the RBI with very little room to further slash the credit rates. The central bank had cut down the policy rates by 50 basis points in its quarterly review of monetary policy in April 2012. The move was aimed at giving a boost to the flaccid state of economy. The annual consumer price index (CPI) was brought out into the practice in February 2012. It measures retail prices of major food groups, fuel, clothing, housing and education across rural and urban India.

Inflation Figure for April 2012 surged to 7.23 Per Cent

India’s overall inflation for the month of April 2012 swelled to 7.23 per cent. The rising figure owes to higher prices of food items, manufactured goods and fuels. The Wholesale Price Index (WPI) was at 6.89 percent in March 2012. The inflation figure for February was also revised to 7.36 per cent from 6.95 per cent earlier. The inflation in overall food items accelerated by 10.48 per cent as prices of vegetables jumped by 60.97 per
cent, milk rose by 15.51 per cent and the cost of eggs, meat and fish surged by 17.54 per cent. The rising inflation figure poses a great challenge before the RBI, which has been under consistent pressure to cut down the policy rates to accelerate the shrinking growth. The persistent high inflation, however, provides RBI with very little space to take any bold step on rate cut. Practically, the RBI could not go for policy rates cut until the inflation does not come below the comfort level.

Indian Export Figure grew by 3.2 per cent in April 2012

The Indian export registered a moderate g rowth of 3.2 per cent in April 2012 at 24.5 billion dollar. The lower export growth rate largely reflects the declining demand of goods globally. The import over the same period of time also plunged which translated into reduced trade deficit at 13.2 billion dollar. As per the provisional figures released by the Commerce Secretary, Rahul Khullar, exports in April, the first month of the fiscal 2012-13 amounted to 24.5 billion dollar. Imports for the month grew by 3.8 per cent to 37.9 billion dollar. The lowering export figure is largely attributed to the serious demand problems and constraints in the Western markets, particularly in Europe, which is passing though its worst economic crisis.

RBI raised Interest Rate Ceiling on NRI Deposits in Foreign Currencies

The Reser ve Bank of India (RBI) raised the interest rate ceiling on NRI deposits in foreign currencies by up to 3%. The interest rate ceiling on Foreign Currency Non-Resident FCNR (B) deposits of banks was raised from 125 basis points (bps) (1.25%) above the corresponding LIBOR or swap rates to 200 bps for maturity period of  one year to less than three years, and to 300 bps for maturity period of three to five years. The RBI’s
measure was aimed at checking flight of foreign currency in the wake of continued fall in the value of the Indian rupee. The Indian banks will from now on be able to offer higher interest rates on NRI deposits in foreign currency. The central bank deregulated interest rates on export finance, a development that would help exporters to freely raise money in foreign currency without any limit on interest ceilings. The measures  adopted by the central bank are aimed at arresting the declining value of the Indian rupee which closed at Rs53.47 against a dollar. For one-year, LIBOR (London Inter-Bank Offered Rate) stood at 1.0472%. LIBOR is world’s most widely used benchmark for short term interest rates. Reserve Bank of India also decided to allow banks to determine their interest rates on export credit in foreign currency with effect from 5 May 2012.

Standard & Poor’s cut India’s Credit Rating Outlook to Negative

Standard & Poor’s downgraded credit rating outlook for India to negative from stable on 25 April 2012. The cut in credit rating is the reflection of India’s widening fiscal and current account deficits. The negative outlook
jeopardises India’s long-term rating of BBB-, the lowest investment grade rating, and sent Indian bonds, stocks and the rupee lower. India has no sovereign global bond issues,  but a downgrade would increase borrowing costs for local companies and make it harder to refinance debt, and may have a further chilling effect on foreign investor confidence in the country in general. India’s fiscal deficit widened to 5.9% of gross domestic product in the fiscal year 2011-12, starkly higher than the government’s target of 4.6%. The country is performing equally bad on the front of foreign institutional investment as it witnessed a sharp decline in the FII over the past few months. India has drawn nearly 171.8 million dollar FII so far in April 2012 against more than 5 billion dollar in February 2012.

Inter-Ministerial Group to maximise Coal, Shale Gas exploitation

The Union government constituted an Inter- Ministerial Group (IMG) for developing a coordinated approach for optimal exploitation of coal bed methane (CBM) , underground coal gasification and  shale gas. The IMG is to be headed by Planning Commission Member B K Chaturvedi and includes petroleum secretary GC Chaturvedi, coal secretary Alok Per ti, ONGC CMD Sudhir Vasudeva, Coal India chairman S Narsing Rao and
Reliance Industries CEO P M S Prasad. The IMG was entrusted the responsibility of recommending a coordinated approach by oil, gas, and coal companies to work together for maximising exploration of hydrocarbon resource potential. ONGC and Coal India have been entrusted the responsibility of providing support on the technical details. The initiative to appoint the committee was taken amidst reports that oil ministry found a wide
variation in CBM prices offered by Reliance Industries and Essar. Essar has discovered the price for its Raniganj (East) CBM at $4.2 per mmBtu, while RIL has pegged it in t h e range of over $11 a mm Btu for its two blocks in Madhya Pradesh, oil -ministry sources said . The oil rich states get 10 per cent royalty and 13 per cent value added tax from CBM while the Centre nets 12.5 per cent production-linked payment and 2 per cent central sales tax.

State-owned Oil Companies Reduced Jet Fuel Prices by Rs 312 per kilolitre

State-owned oil companies for the second time in the month of April reduced jet fuel prices by a marginal Rs 312 per kilolitre or kl on 30 April 2012. The price of aviation turbine fuel (ATF), or jet fuel, in the reduction was announced in the wake of a Rs 169.3 per kl cut in rates effected from 16 April 2012. The reductions are however overshadowed by the steep increases effected in March and early April 2012. ATF rates were increased by 3.2 per cent on 1 March 2012, Rs 1298.88 Per KL on 16 March 2012 and by another 2.8 per cent on 1 April 2012. Prior to being increased thrice in the months of March and April, jet fuel was priced at Rs 62,557.12 per kl. Delhi was reduced by Rs 311.74 per kl, or 0.46 per cent, to Rs 67319.71. In Mumbai, jet fuel is to cost Rs 68,306.21 per kl as against Rs 68630.93 per kl now. Jet fuel constitutes over 40 per cent of an airline’s operating cost and the marginal reduction in prices introduced on 30 April 2012 is expected to take the burden off the cash-strapped airlines. The three fuel retailers — IOC, Hindustan Petroleum and Bharat Petroleum revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.

Standard & Poor’s cut India’s Credit Rating Outlook to Negative

Standard & Poor’s downgraded credit rating outlook for India to negative from stable on 25 April 2012. The cut in credit rating is the reflection of India’s widening fiscal and current account deficits. The negative outlook
jeopardises India’s long-term rating of BBB-, the lowest investment grade rating, and sent Indian bonds, stocks and the rupee lower. India has no sovereign global bond issues, but a downgrade would increase borrowing costs for local companies and make it harder to refinance debt, and may have a further chilling effect on foreign investor confidence in the country in general. India’s fiscal deficit widened to 5.9% of gross domestic product in the fiscal year 2011-12, starkly higher than the government’s target of 4.6%. The country is performing equally bad on the front of foreign institutional investment as it  witnessed a sharp decline in the FII over the past  few months. India has drawn nearly 171.8 million dollar FII so far in April 2012 against more than 5 billion dollar in February 2012.