tax holiday

Finance Minister P.Chidambaram extended by a year a tax holiday scheme for export-driven software companies as he outlined some changes to the federal budget for 2008-09. The scheme for facilities based in technology parks was set to expire in March 2009

The central bank has kept the repo rate and reverse repo rate unchanged at 7.75 per cent and 6 per cent, respectively. It has also held the Bank Rate steady at 6.0 per cent. In the Annual Policy Statement for 2008-09, Governor YV Reddy has given high priority to price stability, anchoring inflation expectations and orderly conditions in financial markets. This while sustaining the growth momentum. RBI aims to bring down inflation to around 5.5 per cent in 2008-09, bringing it close to 5.0 per cent as soon as possible. Going forward, the resolve is to condition policy and perceptions for inflation in the range of 4.0-4.5 per cent, so that an inflation rate of around 3.0 per cent becomes a medium-term objective. The central bank has projected GDP growth for 2008-09 in the range of 8.0- 8.5 per cent

India is confident that steps taken to reverse rising prices will moderate inflation, but the world community has not done enough to address problems of costly food and fuel, the prime minister said on Tuesday. Widely watched wholesale price inflation has in recent weeks accelerated to above an annual 7 per cent, its highest levels in more than three years, due in large part to fast rising global prices of key commodities. This has added to policy headaches facing both the central bank and the government, which faces a string of state elections this year and federal polls scheduled for 2009. "The government is fully alive to the challenge and has taken several steps to reverse the recent spurt in prices. I am confident that we will be able to moderate the prices rise," Manmohan Singh told a gathering of top Indian businessmen.

1. The banking sector worldwide is going through its worst crisis since the Great Depression. And Indian banks haven’t managed to stay immune from the global travails. At the same time, rising inflation and a slowdown in domestic credit offtake are also posing a serious threat to the domestic banking industry

The NDA's agitation on price rise issue rocked Parliament on Thursday with both the Houses being adjourned for two hours as opposition disrupted proceedings over UPA government's "failure" to contain inflation.In the Lok Sabha, trouble started during the Question Hour itself when members of BJP and its allies, who had formed a human chain outside the Parliament complex to protest over the issue, trooped in the House shouting slogans denouncing the government.

Agitation on price rise issue rocked Parliament on Thursday with both the Houses being adjourned for two hours as opposition disrupted proceedings over UPA government's "failure" to contain inflation.In the Lok Sabha, trouble started during the Question Hour itself when members of BJP and its allies, who had formed a human chain outside the Parliament complex to protest over the issue, trooped in the House shouting slogans denouncing the government

SENSEX AND INFLATION

Commodity futures trading is not the main cause for price rise and inflation in the economy, according to the Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia.
“I don’t support the notion that futures market creates inflation. We should not look at banning futures trading as this market plays an extremely important role in price discovery. Banning futures trading will be contrary to real economic rationale,” Mr Ahluwalia told reporters on the sidelines of an IIEF-NIPFP policy roundtable on ‘Taxation of Transactions’ here today.
This stance is at variance with that of the Left and other parties that had demanded a blanket ban on futures trading in essential commodities as it was inflationary.
Under commodity futures trading, participants trade on futures contracts to hedge their risks against adverse price movements. A futures contract is an agreement between two parties to buy and sell a specified quantity of an asset at a future date at an agreed price.
On the draft recommendations of the Abhijit Sen Panel, which is studying the entire issue, Mr Ahluwalia said that he had not seen the draft report as yet, but noted that the Panel was set to recommend that the existing ban on futures trading in certain items should not be lifted. “I am told they are going to say that don’t lift what has been banned.”
The Abhijit Sen Panel is also understood to have noted that prices in certain commodities have gone up, despite a ban on their futures, on account of surge in their global prices.
Mr Ahluwalia said that he wants to see if the Panel report has commented on whether the futures market is being manipulated or not. “In the long term, we have to ensure that our futures market is well regulated.

(Business Line dt. 23 April, 2008)

CONSUMER PRICE INDEX ( RURAL)

The UPA’s “commitment” to rural India notwithstanding, no progress has been made on compiling the Consumer Price Index (Rural). This index is a crucial indicator measuring the impact of price rise in rural India, which has been bearing the brunt of the increasing cost of essential commodities. Despite showing concern over the spiralling prices, the government has made little effort to gauge the real extent of the hit that rural India has taken. In fact, the government has pleaded that it doesn’t have the manpower to compile the index. The UPA, however, will be ready with the new urban consumer price index by May next year. This new index would give a more accurate and harmonised picture of prices in towns and cities. The CPI (Rural) was supposed to have been ready by December 2007. Four months past the deadline, the country’s chief statistician told a parliamentary panel that “no progress could be achieved on compilation of CPI (Rural) due to absence of manpower resources.” This index was to provide a more accurate measure of the average price of consumer goods and services in rural India. It would replace the existing Consumer Price Index for Agricultural and Rural Workers. The parliamentary standing committee on finance headed by BJP leader Ananth Kumar has criticised the government’s tardiness. “Such non-performance reflects poorly on the functioning of the ministry (ministry of statistics and programme implementation). There is always scope for re-distribution of manpower to attend to important work.” In the absence of an index which provides an accurate picture prices change at the level of the consumer, India continues to use the wholesale price index (WPI) to measure inflation. This at a time when most other countries use consumer price indices to ascertain price changes. The WPI can at best only measure headline inflation, and as such it doesn’t provide an accurate estimate of the price rise that consumers face at the retail level. The current WPI is even less representative of the economy as it bases its measurement on just 435 items. For the last three years, the government has been working on an initiative to recast WPI. The reworked index will have a base year of 2004-05, extend to 2,000 products and weightages for constituent items will be reworked.

( Economic Times dated 21 April, 2008 )

WORKSHOP ON IT'S ROLL IN AGRICULTURE

Workshop on IT’s role in farming

Application of information technology in agriculture will be the focus of a workshop to be held at Nalanda Auditorium in Kozhikode on April 9. Representatives of local bodies and experts in the field will attend the workshop.

The concept of application of IT for the benefit of farmers has been developed by Akshaya. Akshaya centres will provide information to farmers on new developments in agriculture, including financial help available to them. A web portal has been developed to help farmers market their products.