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Volume IX |
Issue II March 1 ,2010
Information Technology Solutions
News letter of finance cell , Master of International Business
Your Finance Vocab
Exotic Currency Mean? A foreign exchange term for a thinly traded currency. Exotic currencies are illiquid, lack market depth and trade at low volumes. Trading an exotic currency can be expensive, as the bid-ask spread is usually large.
Ankit Anuratn Mansi Kamal Sunita
What Does Spot Next Mean? A term used in foreign-currency trading. "Spot next" denotes the delivery of purchased currency on a day after the spot date. Spot-next contracts come in many lengths, such as spot one week, which implies delivery of the currency one week following the trade date.
What Does Cable Mean? Slang used among forex traders referring to the exchange rate between the U.S. dollar and the British pound sterling. Because it is the norm in forex for most major currencies to be quoted against the U.S. dollar on a regular basis, "cable" is a commonly used term. What Does Zero Uptick Mean? A transaction executed at the same price as the trade immediately preceding it, but at a price higher than the transaction before that. For example, if shares are bought and sold at $47, followed by $48 and $48, the last trade at $48 is considered to be a zero uptick. This distinction can be important for short sellers trying to avoid shorting an ascending stock. Also known as a zero-plus tick. What Does Demo Account Mean? A trading account that allows an investor to review and test the features of a trading platform before funding the account or placing trades. A demo account is typically "funded" with simulated money, which allows the investor to conduct fictitious trades in order to become familiar with the ins and outs of the platform.
What Does Indicative Quote Mean? In forex trading, a currency quote that is provided by a market maker to a trading party but that is not firm. In other words, when a market maker provides an indicative quote to a trader, the market maker is not obligated to trade the given currency pair at the price or the quantity stated in the quote. Contrast this to a firm quote, in which a market maker guarantees a specified bid or ask price to a trader up to the maximum quantity specified in the quote.
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What Does Nominal Quotation Mean? A quote generated by a futures exchange or broker for contracts that have not traded for a specific period of time.
pip Pip or "percentage in point," refers to the very last digit of a currency price.
As an illustrative example, take EUR/USD at 1.2635. If the sell price were to increase to 1.2636 we have a one pip increase. Should the EUR/USD sell price move from 1.2635 up to 1.2735, we say EUR/USD increased 100 pips. ? Whipsaw A condition in a highly volatile market characterized by a sharp price movement quickly followed by a sharp reversal
? Short Selling To sell an instrument without actually owning it in hopes that the price will decline so it can be bought back in the future at a profit.
Put-call-forward exchange parity (PCFP) theory
A relationship between a call option and a put option established through the forward market. The theory holds that the option of buying the domestic currency with a foreign currency at a certain price X is equivalent to the option of selling the foreign currency with the domestic currency at the same price X. Therefore, the call option in the domestic currency becomes the put option in the other, and vice versa
CARRY TRADE AND TRADING IN FOREX and Futures Trad
Trading foreign currency has advantages over equities and futures trading. The global, around-the-clock nature of the Forex market gives traders the unique advantage of reacting to news and worldwide developments as they happen. Exchanging currencies in real time, on the largest trading market in the world, allows Forex traders to manage their trades as global events affecting the Forex market occur. Quite often, equities and futures traders must wait until their markets open for business before they can see how world events affect their investments and trading. With currency trading, Forex traders frequently manage their investments without having to wait for a market to open. Forex Trading Typical Leverage Liquidity 200:1 Daily Volume: $3 Trillion Equities Trading 2:1 Limited Liquidity Futures Trading 15:1 Limited Liquidity
Commissions No Commissions Commissions Commissions and Exchange and Exchange Fees Fees Trading Activity 24 Hour Active Market 7 7 Hours/Limited Hours/Limited After Hours After Hours
The carry trade is a popular trading strategy used in the FX market. It guarantees traders at least some return on their medium and longer term positions. In the Carry Trade, speculators buy high interest currencies and sell currencies with low interest rates. These positions ensure that each trading day rollover-interest will be posted to the trader's account. Thus the Carry Trade has the potential to significantly enhance a trader's return.
Carry Trade Example Below is a chart illustrating a typical example where the carry trade strategy could have been best applied. The chart shows a steady increase of the GBP/JPY pair in 2005 and 2006, spawned, among other things, by carry traders going long to obtain the interest rate differential.
A carry trader who took advantage of the interest rate differential in the GBP/JPY would have had the following profit, had he/she bought one standard lot of the GBP/JPY at about the same time last year, and decided to sell a year later.
Setting Up The Carry Trade To become a successful carry trader, understanding the role that interest rates play in the FX market is a crucial task. A country offering high interest rates will attract more capital as investors seek to capitalize higher returns. As interest rates rise, investment will follow, which can in turn increase the value
of the currency. Carry trader's main focus becomes the expectation on the direction of a country's interest rate, to ensure their high rate of return.
Generally, traders seek to buy countries with high interest rates, and seek to short currencies who offer low interest rates. The carry trade works best under certain market conditions, and the selection of the currency pair can make the difference between a losing and a profitable trade. When selecting the currency pair, traders want to observe two things. On the one hand, the trader wants to make sure he is buying the currency that has the higher interest rate and is selling the currency that has a lower interest rate in comparison. On the other hand, the trader also wants to view the health of the economy for the currency pair to ensure the market will move to his/her favor. Essentially, the trader will be buying a currency with a stronger economy and selling the currency with a weaker economy. Some currency pairs that are usually selected to apply the carry trade strategy are: GBP/JPY, GBP/CHF, AUD/JPY, EUR/JPY, CAD/JPY, and USD/JPY. Flexibility to trade Forex market is characterized by high liquidity and high flexibility and as such traders get the freedom to make choices as per their wishes. They are not bound by the whims of the markets.
So, when you try to determine the best time to trade the forex market this information would prove very useful. Trades have almost always the same relative frequency and till the forex market remains open, the probability of finding a trade whenever you look is almost the same. This is all about volume of trade. It is determined by the number of markets that are open and the number of times each of these markets overlap with each other. Keeping in mind the forex volume is extremely essential. It is generally seen that the volume of transactions remains high all through the day but when does it peak? The answer is when the Asian markets with Australia and New Zealand, the European markets and the US markets open simultaneously. And this is the best time to trade the forex market. Market times Let's have a look of the timings of some of these markets. New York Market : 8 am – 4 pm EST London Market : 2 am - 12 noon EST Great Britain Market : 3 am – 11 am EST Tokyo Market : 8 pm – 4 am EST Australian Market : 7 pm – 3 pm EST Just have a look at the above schedule carefully. What do you see? Yes, there are tow times when two of the major markets overlap during the trading hours-between 2 am and 4 am EST (Asian/Europe) and between 8 am to 12 pm EST (European/N. American). This is the time you have to target to make profits, the best time to trade the forex markets.
Forex Tips and Tricks for Beginners
Stepping onto the forex arena for the first time might feel a bit daunting, but keep these currency trading tips in mind and you'll soon find yourself running with the pack.
Casinos are for gamblers. The forex markets are for traders who are interested in the investment, not the big win. Study and analysis will prove a far better ally than long odds or luck. Practice makes perfect. Before you start throwing your money into an account, practice with one or more of a variety of demo accounts. This the most critical of all forex tips for the new trader. Get good at analyzing and actual trading before you start plunking down our own funds. Find a good broker. Do your homework and find a broker that fits your trading style and philosophy and offers the features and services you want. Don't buck the trend. Trends mean that more of the same is up ahead. Keeping with a trend will help you continue to make a profit. Generally, when the trend is up don't sell; when the trend is down, don't buy. Check your emotions at the door. Forex is about methodical analysis of the market trends, not about searching for the next hot trade. The trader who lets his or her emotions take control is the one who will watch profit drop and losses skyrocket. Overwhelmed traders make mistakes. If you find the data sitting in front of you is too much to handle, stand up, walk out and take a break. Then, back up a few steps and go to a place in the process where you feel comfortable. Stay there for a while, and take babysteps when you're ready to move up. Guarantees are like unicorns and leprechauns – they don't exist in this world. If someone tries to tell you that they have forex secrets, like a system, trick or bot that guarantees a profit, you have only one thing to do: Run away – far, far away. Patience really is a virtue. Of all currency trading strategies, this last tip is one of the most important. Don't expect to make your money all at once. Build it slowly over a large spread, by using consistent money management, and you'll be able to weather almost any forex storm.
The History of FOREX Trading
The origin of FOREX trading traces its history to centuries ago. Different currencies and the need to exchange them had existed since the Babylonians. They are credited with the first use of paper notes and receipts. Speculation hardly ever happened, and certainly the enormous speculative activity in the market today would have been frowned upon.
In those days, the values of goods were expressed in terms of other goods (also called as the Barter System). The obvious limitations of such a system encouraged establishing more generally accepted mediums of exchange. It was important that a common base of value could be established. In some economies, items such as teeth, feathers even stones served this purpose, but soon various metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value. Trade was carried among people of Africa, Asia etc through this system.
Coins were initially minted from the preferred metal and in stable political regimes, the introduction of a paper form of governmental I.O.U. during the middle Ages also gained acceptance. This type of I.O.U. was introduced more successfully through force than through persuasion and is now the basis of today’s modern currencies. Before the First World War, most Central banks supported their currencies with convertibility to gold. However, the gold exchange standard had its weaknesses of boom-bust patterns. As an economy strengthened, it would import a great deal from out of the country until it ran down its gold reserves required to support its money; as a result, the money supply would diminish, interest rates escalate and economic activity slowed to the point of recession. Ultimately, prices of commodities had hit bottom, appearing attractive to other nations, who would sprint into buying fury that injected the economy with gold until it increased its money supply, drive down interest rates and restore wealth into the economy.. However, for this type of gold exchange, there was not necessarily a Centrals bank need for full coverage of the government's currency reserves. This did not occur very often, however when a group mindset fostered this disastrous notion of converting back to gold in mass, panic resulted in so-called "Run on banks " The combination of a greater supply of paper money without the gold to cover led to devastating inflation and resulting political instability. The Great Depression and the removal of the gold standard in 1931 created a serious lull in FOREX market activity. From 1931 until 1973, the FOREX market went through a series of changes. These changes greatly affected the global economies at the time and speculation in the FOREX markets during these times was little.
In order to protect local national interests, increased foreign exchange controls were introduced to prevent market forces from punishing monetary irresponsibility.
Near the end of World War II, the Bretton Woods agreement was reached on the initiative of
the USA in July 1944. The conference held in Bretton Woods, New Hampshire rejected John Maynard Keynes suggestion for a new world reserve currency in favor of a system built on the US Dollar. International institutions such as the IMF, The World Bank and GATT were created in the same period as the emerging victors of WWII searched for a way to avoid the destabilizing monetary crises leading to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that reinstated The Gold Standard partly, fixing the USD at $35.00 per ounce of Gold and fixing the other main currencies to the dollar, initially intended to be on a permanent basis.
The Bretton Woods system came under increasing pressure as national economies moved in different directions during the 1960’s. A number of realignments held the system alive for a long time but eventually Bretton Woods collapsed in the early 1970’s following president Nixon's suspension of the gold convertibility in August 1971. The dollar was not any longer suited as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits.
The last few decades have seen foreign exchange trading develop into the world’s largest global market. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjust foreign exchange rates according to their perceived values.
The European Economic Community introduced a new system of fixed exchange rates in 1979, the European Monetary System. The quest continued in Europe for currency stability with the 1991 signing of The Maastricht treaty. This was to not only fix exchange rates but also actually replace many of them with the Euro in 2002. London was, and remains the principal offshore market. In the 1980s, it became the key center in the Eurodollar market when British banks began lending dollars as an alternative to pounds in order to maintain their leading position in global finance.
In Asia, the lack of sustainability of fixed foreign exchange rates has gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates in particular in South America also looking very vulnerable.
While commercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have discovered a new playground. The FOREX exchange market initially worked under the central banks and the governmental institutions but later on it accommodated the various institutions, at present it also includes the dot com booms and the World Wide Web. The size of the FOREX market now dwarfs any other investment market. The foreign exchange market is the largest financial market in the world. Approximately 1.9 trillion dollars are traded daily in the foreign exchange market. It is estimated that more than USD 1,200 Billion are traded every day. It can be said easily that FOREX market is a lucrative opportunity for the modern day savvy investor. By: Ankit Singh (MIB 2010-12)
Q.1 Which Indian was honoured with the crystal award of World Economic Forum in 2011 for his work related to welfare of children? Q.2 Who has taken charge as the fourth deputy governor general of RBI? Q.3 Who has been appointed as SEBI’s next chairman ? Q.4 Regulators in which country have okayed the agreement between Yahoo Japan and Google Inc.), which enables the former to use Google technology to power its search services in the country?
Q.5 Who is appointed as the first woman secretary general of SAARC?
Q.6 Which product has just been given protection by the European Union? Q.7 What has Apple Inc this week refused to reveal on the grounds that it would give competitors an "unfair advantage"? a)The names of its suppliers in China b)How much profit it makes on each application download c)Leadership succession plans d)The price of the new iPad2 a)Arbroathsmokies b)Cornish pasties c)Danish pastries d)Cheddar cheese Q.8 Which business is to make a total payout of £500m to 300,000 customers after admitting a promotional error? a)Thomas Cook b)Rentokil c)Burger King d)Halifax Bank
Q.9Name the multinational that has agreed to buy Turkish firm MeyIcki for £1.3 billion a)Diageo b)Accenture c)Avensys d)Aviva Q.10 Thai company SSI has agreed to spend £291m buying? a) Tata's steel mill at Redcar b) The Williams F1 team and factory c) The media rights for the 2011 Royal Wedding d)Juventus FC from President Gadaffi
Contributed By Sunita Arora MIB 1st year
Forex Market In India
Introduction Forex (Foreign Exchange) is the international financial market used for trade of world currencies. It is a place where various currencies are traded. Foreign exchange or forex means a market place where one currency is traded for another. The major players of this market are banks, financial institution, large companies, financial brokers and individuals. In the recent years forex trading has gained tremendous popularity. These are unique by its large volume, extreme liquidity, 24 hour trading availability and various types of options available. The most important characteristic of forex is the impact on various currencies by the change in one currency rates. Any economic activity in world affects the forex market immediately. Forex Market and India Indian forex market is small when compared with other developed countries. However, with the multinationals coming up and new government policies, the path of expansion of Forex in India is picking up. India's share in world forex market has shown growth of 0.9% in 2010 and is expected to grow further1. It is among the fastest growing Forex market in the world. It has been observed that the recent growth rates of forex markets in developed countries are much lowercompared with developing countries. Countries like UK and US in the recent years have shown the lowest change in contribution of foreign exchange. The trends in Forex Trading like derivative markets, options, swapping, and hedging are picking up in India. The overall approach to the management of India’s foreign exchange reserves takes into account the changing composition of the balance of payments and endeavors to reflect the liquidity risks associated with different types of flows and
As per the latest data available at nriinvestindia.com
other requirements. As capital inflows during 2007-08 were far in excess of the normal absorptive capacity of the economy, there was substantial accretion to foreign exchange reserves by US $ 110.5 billion. The foreign exchange reserves declined by US $ 23.4 billion from US $ 309.7 billion as at end-March 2008 to US $ 286.3 billion by end-September 2008 largely reflecting valuation effects. Excluding valuation effects, the decline was US $ 2.5 billion. Between October 2008 and January 16, 2009 foreign exchange reserves declined by US $ 34.1 billion to US $ 252.2 billion, including valuation effects. However, India’s current level of foreign exchange reserves remains comfortable.
Forex watch window on nseindia.com
Factors The factors which influence the forex market in India are government policies and rules, tax structure, inflation rates, RBI rates and interest rates, foreign trade policies, World Bank interest rates and economic growth and health.
Determinants of exchange rate in India In a floating exchange rate mechanism, foreign exchange rate is determined much in the same way as the price of any commodity in a free market economy. Appreciation or depreciation of the domestic currency thus depends on the supply of foreign exchange reserves, liquidity conditions in the economy as determined by money supply, central bank’s policy intentions and differences in the interest yield on dated securities of the concerned economies. The determinants of exchange rate are: · The Bank Rate · Interest Yield Differentials · Liquidity · External Shocks
Currency Futures Trading in India
There has always been a big debate about whether forex trading is legal or illegal in India. It is very much legal to trade FX in India if one is doing it through the NSE. Earlier, there were markets for nondeliverable forward trading offshore with the RBI monitoring domestic forward trading in currency. But currency futures were banned until the RBI decided to go ahead with the idea after Indian rupee futures began trading on the Dubai Gold and Commodities Exchange (DGCX). Now forex traders are easily trading US dollar against the rupee online.
The RBI green signal led to the start of the first currency futures trading at the
National Stock Exchange (NSE) in India launched by the then Finance Minister, P Chidambaram. He spoke about developing the bond and derivatives market with interest rate futures in and secure credit derivatives market. As it got launched on August 29, 2008, interest was up and running with nearly 11 banks and 300 trading members registering and transacting nearly 70,000 contracts in a single day, with great fluctuations in the Indian forex rates. East India Securities conducted the first trade and among the banks, HDFC was the first to transact business. Of the total business done on that day, transactions by banks accounted for 40% of the total trade. The Reserve bank of India (RBI), satisfied with the proceedings went on to allow currency futures trading at the selected exchanges across India. Later, a plan was drawn up for setting up a futures market for currency with the help of RBI and the capital market monitoring organization, Securities and Exchange Board of India (SEBI). It was the NSE that first allowed trading in futures although applications were sent in by the Bombay Stock Exchange (BSE) & MCX or the Multi Commodity Exchange. Primarily, the step to open up futures trading in currency was taken to provide companies with increasing flexibility and infuse more liquidity into the market.
Rules and Regulations Indian forex market is regulated by FEMA (Foreign Exchange Management Act), 1999. It controls, regulates and manages the activities of forex market in India. All the queries, petitions come under it. RBI Advisory on Overseas Forex Trading through Electronic / Internet Trading Portals RBI has very severe laws if one trades INR against any other currency without prior permission from RBI. A trader needs to have a forex trading lisence from RBI. RBI regulations state that remittance in any form towards overseas foreign exchange trading through electronic/internet trading portals is not permitted under the Foreign Exchange Management Act (FEMA), 1999. It also states that the
existing regulations under FEMA, 1999 do not permit Indian residents to trade in foreign exchange in domestic / overseas markets. However, Indian residents are permitted to trade in currency futures and options contracts, traded on the stock exchanges recognized by the Securities and Exchange Board of India (SEBI) in India, subject to the conditions specified by RBI from time to time. Not only this, RBInotices advertisements issued by electronic / internet portals offering trading or investing in foreign exchange with guaranteed high returns. This is needed as many companies even engage agents who personally contact gullible people to undertake forex trading and investment schemes and entice them with promises of disproportionate or exorbitant returns.Hence, RBI cautions general public not to invest money for such unauthorized transactions. To sumup The emerging growth of forex trades in India has proved the upcoming power and will India will soon be seen asan investment hub. The scope of forex market is very huge in India as it is in its initial stage. New developments are in row and very soon Indian market would emerge as a high potential foreign exchange market place. By: Mansi Gupta (MIB 2010-12)
Bart Becht Bart Becht's Education University of Chicago MBA, Business 1980 – 1982 Erasmus Universiteit Rotterdam MBA, Business 1977 – 1980 RSM Erasmus University MBA, Business 1977 – 1980 9
Chief Executive Officer, Executive Director, Chairman of Executive Committee and Member of Nomination Committee, Reckitt Benckiser Group plc Age Total Annual Compensation 53 4,510,000 GBp As of Fiscal Year 2009
Bart Becht serves as the Chief Executive Officer of Reckitt Benckiser Group PLC since December 1999. Mr. Becht served as the Chief Executive Officer of Reckitt Benckiser Pakistan Limited. He served as Chief Executive Officer of Benckiser N.V. since September 1997 and as a Member of its Management Board since August 1997 He joined Benckiser N.V. in 1988 and served as General Manager in Canada, the UK, France and Italy. He served as the Chief Executive of Benckiser Detergents. Mr. Becht has been an Executive Director of Reckitt Benckiser Group PLC since December 1999. He served as a Director of Prudential PLC from May 2002 to August 31, 2004. He was a Director of Grocery Manufacturers Association.
Becht, who is married and has three children, gives many of the shares he is awarded to a charitable trust that donates primarily to humanitarian causes. A frequent flyer as a result of Reckitt's global business, his home is a mansion overlooking the Sunningdale golf course in Berkshire.
He's acquired a reputation of being obsessed with cleaning and of course, running a tight ship at Reckitt Benckiser. But CEO, Bart Becht says he doesn't have a passion for cleaning, but what he does have is a keen interest in talking to consumers and picking up tips that help him in his business . In markets like India, Reckitt has introduced power brands like Veet, Easy Off Bang and Air Wick in the last five years. Why has the company taken so long to introduce these brands? The timing depends on how ready the consumer is and what it takes to bring products to them. Building categories requires consumer insights like how people use the products, what their habits are and how it fits into their routine. We cannot say that just because we have a brand in North America, we want to introduce that in India. It's got to fit in the routine. So with Vanish stain remover, the product performance needs to be slightly different because in some geographies the stains are very tough. For instance turmeric is used in India and it's difficult to remove. The same is the case with air fresheners. Sandalwood would not be popular in the US but it is accepted in India. Rivals like P&G and HUL are talking about acquiring the next billion consumers from emerging markets. Which spectrum of consumers are you looking at? Our products in general start on top of the pyramid especially in developing markets. Even in developed markets we are geared towards higher income groups. That's logical because we are creating new categories and they tend to be more expensive because they offer better solutions. In India, we started with urban and have gradually moved into rural markets. Harpic is a classic example, where we started with very few outlets but today we have a massive amount of distribution even outside urban areas. It's true even for markets like Brazil where with brands like Vanish we are gradually acquiring rural consumers and moving down the pyramid. But we are not starting at the bottom, we start at the top. Compiled by Anuratn MIB 1 st year ( Interview from ET)
UNION BUDGET 2011-12: HIGHLIGHTS
Following are the highlights of the budget: TAXES * Standard rate of excise duty held at 10 percent; no change in CENVAT rates * Personal income tax exemption limit raised to Rs 180,000 from Rs 160,000 for individual tax payers *For senior citizens, the qualifying age reduced to 60 years and exemption limit raised to Rs 2.50 lakh. *Citizens over 80 years to have exemption limit of Rs 5 lakh. * To reduce surcharge on domestic companies to 5 percent from 7.5 percent. * A new revised income tax return form 'Sugam' to be introduced for small tax papers. * To raise minimum alternate tax to 18.5 percent from 18 percent * Direct tax proposals to cause 115 billion rupees in revenue loss * Service tax rate kept at 10 percent *Customs and excise proposals to result in net revenue gain of 73 billion rupees * Iron ore export duty raised to 20 percent *Nominal one per cent central excise duty on 130 items entering the tax net. Basic food and fuel and precious stones, gold and silver jewellery will be exempted. *Peak rate of customs duty maintained at 10 per cent in view of the global economic situation. *Basic customs duty on agricultural machinery reduced to 4.5 per cent from 5 per cent. *Service tax widened to cover hotel accommodation above Rs 1,000 per day, A/C restaurants serving liquor, some category of hospitals, diagnostic tests. *Service tax on air travel increased by Rs 50 for domestic travel and Rs 250 for international travel in economy class. On higher classes, it will be ten per cent flat. * Electronic filing of TDS returns at source stabilised; simplified forms to be introduced for small taxpayers. * Works of art exempt from customs when imported for exhibition in state-run institutions; this now extended to private institutions. SUBSIDIES * Subsidy bill in 2011-12 seen at 1.44 trillion rupees * Food subsidy bill in 2011-12 seen at 605.7 billion rupees * Revised food subsidy bill for 2010-11 at 606 billion rupees * Fertiliser subsidy bill in 2011-12 seen at 500 billion rupees * Revised fertiliser subsidy bill for 2010-11 at 550 billion rupees * Petroleum subsidy bill in 2011-12 seen at 236.4 billion rupees * Revised petroleum subsidy bill in 2010-11 at 384 billion rupees * State-run oil retailers to be provided with 200 billion rupee cash subsidy in 2011-12 FISCAL DEFICIT * Fiscal deficit seen at 5.1 percent of GDP in 2010-11 * Fiscal deficit seen at 4.6 percent of GDP in 2011-12 * Fiscal deficit seen at 3.5 percent of GDP in 2013-14
SPENDING * Total expenditure in 2011-12 seen at 12.58 trillion rupees * Plan expenditure seen at 4.41 trillion rupees in 2011-12, up 18.3 percent. REVENUE * Gross tax receipts seen at 9.32 trillion rupees in 2011-12 * Non-tax revenue seen at 1.25 trillion rupees in 2011-12 * Corporate tax receipts seen at 3.6 trillion rupees in 2011-12 * Tax-to-GDP ratio seen at 10.4 percent in 2011-12; seen at 10.8 percent in 2012-13 * Customs revenue seen at 1.52 trillion rupees in 2011-12 * Factory gate duties seen at 1.64 trillion rupees in 2011-12 *Service tax receipts seen at 820 billion rupees in 2011-12 * Revenue gain from indirect tax proposals seen at 113 billion rupees in 2011-12 * Service tax proposals to result in net revenue gain of 40 billion rupees in 2011-12 GROWTH, INFLATION EXPECTATIONS * Economy expected to grow at 9 percent in 2012, plus or minus 0.25 percent * Inflation seen lower in the financial year 2011-12 DISINVESTMENT * Disinvestment in 2011-12 seen at 400 billion rupees * Government committed to retaining 51 percent stake in public sector enterprises. BORROWING * Net market borrowing for 2011-12 seen at 3.43 trillion rupees, down from 3.45 trillion rupees in 2010-11 * Gross market borrowing for 2011-12 seen at 4.17 trillion rupees * Revised gross market borrowing for 2010-11 at 4.47 trillion rupees POLICY REFORMS * To create infrastructure debt funds * FDI policy being liberalised. * To boost infrastructure development with tax-free bonds of 300 billion rupees * Food security bill to be introduced this year * To permit SEBI registered mutual funds to access subscriptions from foreign investments * Raised foreign institutional investor limit in 5-year corporate bonds for investment in infrastructure by $20 billion * Setting up independent debt management office; Public debt bill to be introduced in parliament soon * Bills on insurance, pension funds, banking to be introduced. *Constitution Amendment Bill for introduction of GST regime in this session. *New Companies Bill to be introduced in current session
SECTOR SPENDING * To allocate more than 1.64 trillion rupees to defence sector in 2011-12 * Corpus of rural infrastructure development fund raised to 180 billion rupees in 2011-12 * To provide 201.5 billion rupees capital infusion in state-run banks in 2011-12 * To allocate 520.5 billion rupees for the education sector. Rs.21,000 crore for Sarva Shiksha Abhiyan. * To raise health sector allocation to 267.6 billion rupees * Rs.500 crore more for national skill development fund. * Rs.54 crore each for AMU (Aligarh Muslim University) centres at Murshidabad and Mallapuram. * Rs.58,000 crore for Bharat Nirman; increase of Rs.10,000 crore. * Mahatma Gandhi National Rural Employment Guarantee Scheme wage rates linked to consumer price index; will rise from existing Rs.100 per day. * Increased outlay on social sector schemes. * Infrastructure critical for development; 23 percent higher allocation in 2011-12. AGRICULTURE * Removal of supply bottlenecks in the food sector will be in focus in 2011-12 * Agriculture growth key to development: Green Revolution waiting to happen in eastern region. * To raise target of credit flow to agriculture sector to 4.75 trillion rupees * Gives 3 percent interest subsidy to farmers in 2011-12 * Cold storage chains to be given infrastructure status * Capitalisation of National Bank for Agriculture and Rural Development (NABARD) of 30 billion rupees in a phased manner * To provide 3 billion rupees for 60,000 hectares under palm oil plantation * Actively considering new fertiliser policy for urea * Food storage capacity to be augmented - 15 more mega food parks to be set up in 201112; of 30 sanctioned in previous fiscal, 15 set up. * Comprehensive policy on further developing PPP (public-private-partnership) model. * Farmers need access to affordable credit. * Moving to improve nutritional security. * Necessary to accelerate production of fodder. ON THE STATE OF THE ECONOMY * "Fiscal consolidation has been impressive. This year has also seen significant progress in those critical institutional reforms that will pave the way for double digit growth in the near future." * "At times the biggest reforms are not the ones that make headlines, but the ones concerned with details of governance which affect the everyday life of aam aadmi (common man). In preparing this year's budget, I have been deeply conscious of this fact." * Food inflation remains a concern * Current account deficit situation poses some concern * Must ensure that private investment is sustained * "The economy has shown remarkable resilience." * Setting tone for newer, vibrant economy. * Economy back to pre-crisis trajectory.
ON GOVERNANCE * "Certain events in the past few months may have created an impression of drift in governance and a gap in public accountability ... such an impression is misplaced." * Corruption is a problem, must fight it collectively MORE *Govt to move towards direct transfer of cash subsidy for kerosene, LPG and fertilisers. *Financial Sector Legislative Reforms Commission, to be headed by former Supreme Court judge B Srikrishna, to complete its work in 24 months; to overhaul financial regulations. * Five-fold strategy against black money; 13 new double taxation avoidance agreements; foreign tax division of CTBT strengthened; strength of Enforcement Directorate increased three-fold. * Bill to be introduced to review Indian Stamp Act. * New coins carrying new rupee symbol to be issued. * Anganwadi workers salary raised from Rs.1,500 to Rs.3,000. * Mortgage risk guarantee fund to be created for economically weaker sections. * Housing loan limit for priority sector lending raised to Rs.25 lakh.
Ans: A. R. Rehman Ans: AnandSinha Ans: U K Sinha Ans: FathimathDhiyanaSaeed Ans: Japan Ans: Cornish pasties Ans: Leadeship succession plans Ans: Halifax Bank Ans: Diageo Ans: Tata’s steel mill at Redcar
Credit Suisse Analysts Say Nasdaq May Bid for TMX, CBOE Holdings Nasdaq OMX Group Inc. may bid for TMX Group Inc. to block London Stock Exchange Group Plc’s agreement to buy the Toronto bourse, or pursue a deal with CBOE Holdings Inc., according to Credit Suisse Group AG. Volvo to Invest Up to $11 Billion in Next Five Years to Tap Luxury Demand Volvo Cars, the Swedish automaker acquired by Zhejiang Geely Holding Group Co., plans to invest as much as $11 billion worldwide over the next five years to tap rising demand in markets including China. Econ survey sees FY12 GDP growth at 9 pct The Economic Survy by India's finance ministry on Friday gave a series of economic forecasts and recommendations, ahead of the annual budget that Finance Minister Pranab Mukherjee will present on Feb. 28. Budget may lay ground for FDI in multi-brand retail The government is likely to indicate a road map for allowing foreign direct investment (FDI) in multi-brand retail in the Union Budget 2011 , which according to two policy-makers, will tame surging food prices and help farmers realise better prices for their produce. Oil surges to near $120, then eases on Saudi assurance Oil surged to 2-1/2-year highs near $120 a barrel on Thursday as the revolt in Libya choked exports, then eased as Saudi Arabia assured European refiners the kingdom could step in to fill any supply shortfalls. GM in first full-year profit since 2004 General Motors said it was girding for shifting consumer demand in the wake of the run-up in fuel prices as it reported its first annual profit since 2004. Pfizer Teams With India Brewmaster in Return to $14 Billion Insulin Market Biocon Ltd. founder KiranMazumdar- Shaw learned the intricacies of enzymes while studying how to make beer. Now Pfizer Inc., the world’s largest drugmaker, is tapping that knowledge to revive its insulin business. TCS appointed tech partner to Garmin-Cervelo TCS' portfolio of sports partnerships includes tie-ups with Formula 1 racing team Ferrari and marathons in major cities worldwide including Boston, Chicago, Mumbai and New York.
About 20 bidders circle AstraZeneca unit About 20 bidders are readying offers for all or parts of Astra Tech, the dental and medical devices unit that AstraZeneca Plc (AZN.L) hopes could fetch $2 billion, people familiar with the matter said. Aston Martin co-owner plans $1.7 bln in asset sales Kuwait's Investment Dar, owner of half of luxury carmaker Aston Martin, proposed asset sales of about $1.69 billion over three years to creditors to restructure its debt pile, banking sources said Wednesday. NYSE expects full antitrust inquiry into D Börse merger Exchanges consider it could take up to a year for European competition regulators to decide whether to clear their proposed tie-up. ICICI, HDFC Bank hike lending rates by up to 50 bps ICICI, HDFC Bank hike lending rates by up to 50 bps. The rate hike by the two follows a similar move by others, including the largest bank SBI, following tightening of monetary policy by RBI. Saudi, Indian firms sign mega deal; more in line Saudi Arabia's Al Qahtani Sons Group signed a joint venture agreement with Indian firm SledgeHammer Oil Tools to build one of the largest manufacturing plants for oilfield and drilling equipment in the Gulf nation. India's trade deficit may become unsustainable The Indian government flagged "serious concern" over a trade deficit that could jump nearly 2.5 times to $278.5 bn in three years and may cause an unsustainable current account deficit. Egypt Sells $1.1 Billion Bills, First Sale Since Mubarak Ouster Egypt sold 6.5 billion Egyptian pounds ($1.1 billion) of treasury bills in the North African country’s first auction after the resignation of Hosni Mubarak. The yields held around the highest levels in two years. Retail Sales Probably Rose in January as Promotions Enticed U.S. Shoppers Retail sales probably climbed in January as shoppers took advantage of post-holiday promotions before winter storms covered much of the U.S., a sign the economy is on the mend, economists said before a report this week. Treasury Yields Reach Highs on Better Economic Growth, U.S. Debt Auctions Treasuries fell, with 10-year notes touching the highest yield since April, as the U.S. sold $72 billion of debt amid data showing the economy is gaining steam.
China denies rumors of losing $450 bn in Fannie, Freddie debt China's foreign exchange regulator has refuted media reports that the country may lose up to $ 450 billion by holding bonds of Fannie Mae and Freddie Mac, the US mortgage giants, which according to speculation may be phased out by the US government. Indian power cos may shift focus to African continent for coal After scouting for coal in Indonesia and Australia, Indian power companies may now shift their focus to countries like South Africa and Botswana for sourcing the raw material needed to feed their thermal projects. SAIL FPO in March, investment banks asked to give undertakings The government today said state-run SAIL''s proposed Rs 8,000-crore follow-on public offer, which has got delayed due to issues with merchant bankers, will now hit the capital markets in March. Ankit Singh (MIB 2010-12)
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