Companies & Sectors
After 43-day strike, UP jewellers open shop

UP Sarrafa Association leader Ravindra Nath Rastogi said all shops and showrooms would remain open till April 24, the deadline set by the central government to study their demands

 

Jewellery shops across Uttar Pradesh opened on Wednesday after remaining shut for 43 days as part of a nation-wide strike against the imposition of excise duty.
 
UP Sarrafa Association leader Ravindra Nath Rastogi said all shops and showrooms would remain open till April 24, the deadline set by the central government to study their demands. 
 
Pradeep Kumar Agarwal, general secretary of the Lucknow Sarrafa 
Association, warned that if Finance Minister Arun Jaitley refused to roll back the decision, they will strike work again from April 25.
 
The jewellers say they are ready to pay additional 1 percent tax on VAT instead of excise duty.
 
They are also opposed to maintaining extra registers detailing each item, paying additional tax on remake of old jewellery and inspection of manufacturing retail units.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

 

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Rupee's link with exports is weak: Ind-Ra
While the Indian rupee can act as an enabler for export revival, it is unlikely to be a primary driver, says the ratings agency
 
India Ratings and Research (Ind-Ra) says the country's export performance is likely to stay weak in FY2017 as global economies face headwinds to their growth prospects. While the rupee can act as an enabler for export revival, it is unlikely to be a primary driver. Ind-Ra says it expects the rupee to weaken and trade at an average of 67.5 per US dollar.
 
"A revival in global consumption will be the key for improvement in India’s export trajectory. Evidence of the impact of the exchange rate on exports’ performance does not suggest strong linkages. Consequently, benefits of the weak exchange rate are unlikely to have a desired impact. With global outlook subdued, the recovery of Indian exports is likely to be protracted," the ratings agency said in a note.
 
Ind-Ra said it believes the government’s focus on infrastructure investment is likely to enhance India’s export competitiveness compared to its peers.
 
The ongoing slowdown in India’s merchandise exports over the year has drawn focus of stakeholders, in a bid to support the trade dynamics. It is in this context, that the rupee’s relative strength compared to its peers is believed to be at the centre of a raging debate, on the impact it has on India’s competitiveness in the global market. 
 
The Bank of International Settlements’ measure of India’s real effective exchange rate (REER) stands at 104.34 as of January 2016 (indicating over 4% of scope for further depreciation), while most peers are running significantly weaker exchange rates, the ratings agency said.
 
 
Ind-Ra said evidence of the links between trade performance and currency movement has been weak, in the sample of countries it analyses. Barring the recent past, an appreciating rupee has been accompanied with robust export growth, while weaker exchange rates have not necessarily translated into an export push, it added.
 
According to the ratings agency, the primary drivers of exports are India’s established competence in key areas – namely refining, precious metals, pharmaceuticals and transportation equipment, which has enabled the country to hold on to its share in the global market. 
 
"Additionally, consumption trends in the trading nations have a significant bearing on export performance. In such an event, outlook of major developed economies is likely to determine demand for Indian goods. The concentration of Indian exports is mainly to US, Europe and the Middle East. While the former two are battling with fragile growth impulses and deflationary pressure, the collapse in oil prices has impacted demand from the Middle East. The revival of India’s exports is unlikely in the near term, as the growth outlook for developed economies remains lacklustre," Ind-Ra said.
 
 
Exports from sectors like petroleum refining, chemicals and pharmaceuticals have, unarguably, witnessed subdued growth and even fallen in some cases in the last year. Global deflationary pressures and tepid demand have eroded headline export growth however, the ratings agency says, a look at the volume growth suggests that headwinds to India’s exports are pronounced on account of price pressures and not necessarily in quantity.
 
 
"In this context, India’s calibrated stance to diversify both the export composition and destination has enabled overall export performance to stay supported," it added. 
 
 
Ind-Ra feels that the key challenge for India will be to maintain its overall competitiveness, at a time when other emerging markets (EMs) and China may pose a bigger competition. It says, "India majorly exports intermediate goods, thus moving up the value chain could be an alternative. A more near term and multi-linked benefit is likely in the form of infrastructural development. It may enable the private sector to enhance their cost competitiveness on a global platform, while providing an impetus to domestic growth as well. In this context, the introduction of Goods and Services Tax (GST) is yet another policy measure that seeks to rationalise existing tax structures and harmonise costs for major firms, domestically."

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Farm GDP may hit 7%-8% on the back of a good monsoon
During 2003 and 2010, agriculture GDP had expanded by an average of 8.5% following years of poor rainfall, points out a report
 
With the India Meteorological Department (IMD) prediction of an above normal monsoon, the agricultural gross domestic product (GDP) is most likely to witness a robust performance in current fiscal and may even touch 7%-8% mark, says State Bank of India (SBI) in its Ecowrap report.
 
SBI in the report says, "We have only one concern though. India’s dry regions tend to start running short of water at this time of year - but this year’s drought is particularly severe (10 of the country’s 29 states) because poor monsoons across much of the country in both 2014 and 2015 have left dams and reservoirs with unusually low water levels. The Government has taken a number of steps, like sending a water train, to relieve a parched region but we believe there are three industry categories namely, food products and beverages, textiles and paper and paper products will get affected most from this water crisis. Our internal estimate suggests that these three industry segments may push down IIP-Manufacturing growth by around 50-70 basis points (bps).
 
 
Parts of Maharashtra are reeling under drought-like conditions with key Indian reservoirs at a decadal low. A normal monsoon this year will boost agricultural productivity as well as farm income. Because of deficient monsoon rains in last two years, the country’s foodgrains production declined to 252 million tonne and 253 million tonne in 2014-15 and 2015-16 respectively from a record production of 265 million tonne in 2013-14, the report added. 
 
After two successive years of below normal monsoon, the IMD has forecasted that this year’s monsoon will be around 106% of long period average (LPA). Interesting to note that since 1999 (when IMD predicted 108% rainfall), this is the highest ever rainfall projection by IMD. Several agencies from around the world, including the IMD, have hinted that this year monsoon could be better than previous years. The key reason being a waning El Nino: a meteorological phenomenon associated with the heating up of the Central Pacific and frequently responsible for drying up monsoon rains in India.
 
This time, even the private forecaster Skymet also predicted that the south-west monsoon is likely to remain ‘above normal’ at 105% of LPA, with a model error of ± 4%. In a month-wise prediction, Skymet stated that during June and July, the monsoon would be 90% and 105% of LPA while for the months of August and September, the cumulative rainfall would be 108% and 115% of LPA, respectively.
 
 
There is 94% probability that monsoon will be normal to excess this year. By and large, there will be fair distribution of monsoon across the country. But North-East India and South-East India, particularly Tamil Nadu, may get slightly less than normal rainfall. Though there is no need of worry regarding below normal rainfall in North East India, this is a slight concern for Tamil Nadu as it holds a share of about 7% of total rice production in the country. Drought-hit Marathwada is also likely to receive ‘good’ rainfall. 
 
Since 1950, there have been 23 El Nino years and 22 La Nina years. This year is expected to be La Nina year and research suggests that monsoon rainfall over the country, as a whole was deficient or below normal during 65% of the El Nino years. However, during 71% of the years followed by El Nino years, monsoon was normal and above (=96 % of LPA). The latest forecast from the Monsoon Mission Coupled Climate Model indicates that El Nino conditions to weaken to moderate to weak levels during the first half of the monsoon season and El Niño -Southern Oscillation (ENSO) neutral conditions likely to get established thereafter.
 
An analysis of monsoon forecast (1st and 2nd stage) since 2008, indicates that only once IMD has increased its second stage forecast (2014), else the forecast was remained same or slightly less than the first. Even after a maximum decline of 3 percentage points in second stage forecast, which will be released in June 2016, going by historical trends, this year monsoon would still be dubbed as ‘normal’.
 
SBI in the Ecowrap report said, "We believe that the agricultural GDP is most likely to witness a robust performance in current fiscal and may even touch 7%-8% mark because of the IMD projections. This is given that there are instances where agri-GDP has in fact expanded in years of deficient rainfall (in 2003, and 2010 agri-GDP expanded by an average of 8.5% following years of poor rainfall). This may pull up GDP by as much as 50bps."
 
"We maintain that over a point of time as pulse prices decelerate, the pace of price increase will come down. This will mean we will be working on possibly a negative contribution of pulse prices in headline consumer price index (CPI), as a significant base effect will be involved, as we move progressively towards the second half of current fiscal. This will mean the Reserve Bank of India (RBI) will have more firepower to cut rates possibly by up to 50bps. Also, with central India being the home to pulses forecast, it received adequate rainfall in FY2017, and this will only strengthen our case," it concluded.

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