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04. NEWSMAKERS |
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Prime
Minister Singh sets up new target for growth |
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Prime
Minister Manmohan Singh while speaking to Indian business leaders
at the India Economic Summit, has raised India's economic growth
by suggesting that the country, already among the fastest growing
economies of the world, should aim at an "eminently feasible"
10 per cent GDP growth in two to three years.
The PM's assertion on growth came at the end of three days of
deliberations involving business and government leaders on the
possibility of India attaining growth of 8per cent and more.
"Our economy has been growing at an unprecedented rate,"
the PM said.
"Following an 8 per cent growth on the rebound in 2003-04,
we grew by almost 7per cent last year and are likely to grow
by about 7.5per cent this year."
"This is impressive in itself," Singh said. "It
is certainly within the realm of possibility that an appropriate
combination of policies can raise this beyond 8% easily."
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The Prime Minister said 10% GDP
growth is totally possible "if we have the expected increase
in our savings rate arising out of a young workforce, if we manage
to make a quantum leap in the growth rate of agriculture, if investment
in infrastructure provides a fresh impetus to industry and if services
continue with their impressive performance".
On the external front, India is actively engaged with the world economy.
In addition to the proactive role at the WTO, Singh said, India is
also pursuing regional trading arrangements. "We have concluded
FTAs in Saarc and with Singapore and Thailand. We are on the threshold
of entering into one with Asean next month," he said. "I
am certain that in the next few years, we may see the rise of a major
free trade area in Asia covering all major Asian economies including
China, Japan and South Korea and possibly extending to Australia and
New Zealand," Singh said. |
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Indian
exports cross US$ 50 billion
India's exports crossed US$ 50 billion in the first seven months of
the current year, even as exports registered a 27.5 per cent growth
during October 2005 at US$ 8 billion compared with US$ 6.3 billion
in the previous year period.
Imports continued to grow at a faster pace, widening the trade deficit
for the first seven months of '05-06 to $23.5bn as against $14.18bn
in the corresponding period last fiscal. Buoyed by the impressive
growth, commerce minister Kamal Nath today said exports this fiscal
are likely to touch $100bn as against the target of $92bn. Exports
stood at about $75bn during '04-05.
India's exports during April-October '05-06 grew 22% to $51.5bn as
compared with $42.2bn during the same period last fiscal.
Imports grew 31.6% during October '05 to $11.4bn from $8.6bn in the
same month in '04. The imports during April-October '05-06 are valued
at $75bn, representing an increase of 33% over $56.4bn a year ago.
Oil imports rose 44.5% during April-October '05-06 to $24.9bn from
$17.2bn in the corresponding period last year. Non-oil imports increased
28% during the seven-month period at $50.1bn ($39.1bn).
The exports in October grew 28 per cent from a year earlier as manufacturers
rushed to meet Christmas orders from the key US and European Union
markets. Exports in October crossed $8 billion compared with $6.3
billion in the same month last year, the commerce ministry said in
a statement. India's exports between April and October, the first
7 months of the fiscal year to March 2006, rose 22 per cent to $51
billion. The country's imports during the period were valued at $75
billion, it said.
India a choice destination for R&D
India has emerged as the choicest destination for multinational companies
(MNCs) starting or relocating their research & development (R&D)
centres over the past two years. China comes next, though it continues
to be the leading destination for MNCs relocating their manufacturing
operations.
These are some of the underlying trends that emerge from the Ernst
& Young Transfer Pricing 2005 global survey that polled 348 multinational
parent companies and 128 subsidiary corporations in 22 countries.
Around 10 percent of the respondents reported either new or relocated
R&D operations in the past two years. Of this, 27 percent identified
India as the leading relocation destination for R&D, followed
by China with 17 percent.
India's emergence as the leading R&D location has increased transfer- |
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pricing complexities for
MNCs, said Srinivasa Rao, international tax partner, Ernst & Young.
Transfer pricing is described as the price charged by one MNC to an
associated enterprise for an intentional transaction relating to the
supply of goods and services. The law mandates that income accruing
from such a transaction should be computed having regard to the arms
length price. Tax authorities in India have completed one round of
transfer pricing audit of MNCs - these companies were audited for
their compliance with the arm's length principle on their international
transactions - valued at over Rs 5 crore - during '01-02 (or assessment
year '02-03).
Migrating Workforce an asset: Survey
According to a new World Bank study, Developing countries, including
India, are benefiting enormously from the migration of their workforce
and the resulting foreign exchange remittances.In fact, India is among
the biggest beneficiary of this trend, World Bank's Global Economic
Prospects (GEP) for 2006, the central theme of which is migration
and remittances, has reported. Officially recorded remittances worldwide
exceeded $232 billion in 2005, with India receiving almost 10% of
the amount ($21.7 billion).
China came second with $21.3 billion, followed by Mexico ($18.1 billion),
France ($12.7 billion), and the Philippines ($11.6 billion). The GEP
authors say remittances sent through informal channels could add at
least 50% to the official estimate, making remittances the largest
source of external capital in many developing countries.
International migration can generate welfare gains for migrants and
their families, as well as their origin and destination countries,
if policies to better manage the flow of migrants and facilitate the
transfer of remittances are pursued, the GEP report for 2006 said.
Remittances account for the largest proportion of gross domestic product
in smaller countries such as Tonga (31%), Moldova (27.1%), Lesotho
(25.8%), Haiti (24.8%), according to the report.
While remittances have long been thought to be among India's financial
lifelines, the extent of money flow from migrating workers detailed
in the World Bank report is quite startling.
NRI remittances is nearly four times more than FDI in India, estimated
at around $ 5 billion last year. Overall, developing countries received
$167 billion, more than twice the level of development aid from all
sources.
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‘Indian
banks doing well’
The Indian banking sector compares well with the global benchmarks,
thanks to prudential supervision and the measures undertaken by the
Reserve Bank of India and the Government.
In its report on Trends and Progresses of Banking in India 2004-05,
the RBI has compared the Indian scheduled commercial banks (SCBs)
to banks in other countries on various financial and soundness indicators.
These parameters include funding volatility ratio, return on assets,
net interest margin, cost-income ratio, non - performing loans ratio
and capital adequacy ratio. The return on total assets (RoA) of banks,
defined as ratio of net profit to total assets, was 0.9 per cent for
SCBs in India in 2004-05, as compared to the global RoA of between
-1.2 per cent and 6.2 per cent, said the RBI in its report.
54 % Increase in Internet Bank users
With the number of Indians surfing the web making a whopping jump
of 54 per cent during the current financial year, e-commerce in India
is expected to almost double by the next financial year from the current
US$ 254 million. A survey conducted by the Internet and Mobile Association
Of India (IAMAI) has found an increase of 54 per cent in Internet
user base from 25 million users in 2004-05 to 38.5 million users in
the current financial year. Further, it forecast that from the current
base of 38.5 million, number of Internet users will hit 100 million
by 2007-08.
"India's i-population stands at 38.5 million and is all set to
cross the 100 million by 2007-08. Currently, the total e-commerce
market in India is estimated at Rs 1,180 crores (2005-2006) by 2006-2007,
online commerce is estimated to grow to 2,300 crores," the survey
said.
It found that cyber cafes have grown for the last five years at 45
per cent year-over-year. The number of cyber cafes, from 18,000 in
2001, has touched 105,350 in the current year.
The survey attributed this explosive growth in user base to the introduction
of broadband policy. It also gave credit to the IT and telecom ministry's
pursuit of introducing personal computers under Rs 10,000 in association
with hardware manufacturers and also the reduction in license fees.
Reduction in license fees and revenue sharing agreement from 15 per
cent to 6 per cent has enabled various players to come together to
address the broadband growing demand, and their efforts will make
Internet a household feature, it said. |
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