Other Briefings
Rahul Gandhi Poster Boy for Resilient India
Dec. 23 – With the Indian National Congress Party having won three out of five state elections leading up to the national polls in May 2009, Rahul Gandhi, 38, the son of late Prime Minister Rajiv Gandhi and Congress Party leader Sonia Gandhi is being touted as the poster boy for a strong, resilient India.
Desperatly trying to improve their image for the elections, Rahul Gandhi is being viewed as the Congress Party's trump card, hoping to turn public opinion away from the economic downturn and terrorist attacks that have recently marred the country and secure them another tenure. Being gradually grommed by his mother for a leadership position within the congress since 2004, the party hopes he can help them win votes from the younger, intellectual, aspirational class who are increasingly making their voice heard.
Indian Telecom Industry to Remain Strong
Dec. 22 – The telecom industry might be one of the few Indian sectors to buck the trend of global economic downturn. In light of increased liberalization in the sector and allowing foreign players to bid for 3G licenses in India, Industry insiders expect the sector to receive increased attention from foreign investors next year, significantly increasing FDI in the sector.
The telecommunication industry attracted about US$2billion in FDI during April to September this year, which is a significant jump from US$1.2 billion during the last calendar year, the Economic Times said.
n 2005, the India's commerce minister increased the FDI cap in the telecom sector from 49 percent to 74 percent for most services. As the industry grows and attracts more new players, domestic companies will be looking to foreign players attarct to invest in them.
Banks Expected to Cut Rates on All Home Loans
Dec. 19 – In order to boost the domestic real estate market, the government has asked banks to lower home loan rates for existing borrowers while paring rates for new borrowers. State run Indian banks have already cut home loan rates when the RBI slashed its key lending rate by 250 basis points earlier this year. Private Banks however are yet to cut home loan rates.
Real estate prices in large cities such as Mumbai and the National Capital Region around New Delhi have doubled in the past three years, reducing affordability. Demand for new homes further dropped last October when interest rates rose to a seven-year high as the central bank targeted accelerating inflation. Abating the sliding sector, the central bank subsequently cut home loan rates three times to 6.5 percent from 9 percent to cool the market.
WB Grants India US$14 Billion to Withstand Economic Crisis
Dec. 16 – Owning to the capital markets drying up, a lack of long term financing ability and an expected rise in banks non-performing assets, the world bank has decided to lend India's state-run banks US$14 billion over three years. The biggest loan yet to India, the world bank said a majority of the loan will focus on areas most affected by the global financial crisis, including state-owned and housing banks, small- and medium-sized enterprises and infrastructure. The loan will also increase assistance especially in infrastructure to seven of India's poorest states as well as poorer regions in middle income states.
Economic Growth to Slow Below 7.5 percent in 2008/09
Dec. 11- As the ADB and World bank dropped their estimates of Asia's GDP growth for 2009 to 5.8 percent and 5.3 percent respectively, India's central bank also said its 2008/09 GDP growth estimate of 7.5-8 percent would be lowered. The Indian economy posted a growth of 7.8 percent in the first half of the current fiscal down from 9.3 percent during the same time a year ago.
In a bid to boost the economy, the government slashed key interest rates by 1 percentage point last Saturday and announced an additional US$4billion spending package for battered sectors such as auto, manufacturing and real estate.
Government Announces Fiscal Stimulus Package of US$4.1 billion
Dec. 8 – The government of India on Sunday announced a fiscal stimulus package that was even better than expected. The stimulus package increased planned expenditure by Rs 20,000 crore (US$4.1billion), a cut of 4 percent in excise duties across the board and interest rate cuts on loans for infrastructure and exports. The increased planned expenditure means that the Indian government would be spending Rs 300,000 crore (US$60 billion) under plan and non-plan expenditure in the next four months of the current fiscal. This includes Rs 280,000 crore (US$56 billion), provided in the budget but not spent so far. The fiscal stimulus package as promised also boosts the small and medium scale industries, textiles and infrastructure.
IRDA Plans to Increase Corpus of Terror Insurance Pool
Dec. 5 – In light of India being the target of several terror attacks in the recent past, the Insurance Regulatory and Development Authority (IRDA) has said that they are considering increasing the corpus of the common terror insurance pool, upgrading insurance products and changing the rate of premia.
Created post the attack on the World Trade Centre in 2001 the pool has a corpus of over Rs 1,000 crore (US$200 million), and allows an insurer to withdraw to the extent of Rs 750 crore (US$150 million) per location. The insurance regulator is now seriously considering increasing this corpus due to increased vulnerability.
India Readies a US$15 Billion Stimulus Package
Dec. 3 – Prime Minister and Finance Minister Manmohan Singh, Commerce and industry minister Kamal Nath, RBI governor D Subba Rao and planning commission deputy chairman Montek Singh Ahluwalia met over the last few days to discuss a Rs 750 billion (US$15 billion) stimulus package for India.
Sources told the Times of India, that of the US$15 billion approximately, US$10 billion of forex reserves would be utilized for funding infrastructure projects, lines of credit to banks and allowing non-banking financial companies (NBFCs) to access foreign loans. Separate packages are also expected to be allocated for the textiles and real estate sectors.
