At the end of the 10 months ending January, the fiscal deficit was Rs4,34,933 crore or 105.4% of the target, the Controller General of Accounts (CGA) said on Wednesday. The government had pegged the fiscal deficit for 2011-12 at 4.6% of the GDP or Rs412,817 crore
New Delhi: The government’s fiscal deficit target for the current year has been breached in January and with the numbers for two months still to come, the gap between expenditure and revenue may widen further, reports PTI.
At the end of the 10 months ending January, the fiscal deficit was Rs4,34,933 crore or 105.4% of the target, the Controller General of Accounts (CGA) said on Wednesday.
The government had pegged the fiscal deficit for 2011-12 at 4.6% of the gross domestic product (GDP) or Rs412,817 crore.
“It is known the fiscal deficit will exceed the target, not a surprise at all. Rather it could increase by one percentage point of the target, which is not a good sign at all,” said Govinda Rao, member of the Prime Minister’s Economic Advisory Council.
The fiscal deficit was 58.3% of the budget estimates at the end of ten months during 2010-11.
The rise in fiscal deficit is mainly on account of high subsidy bill, increasing crude oil prices, low tax collection and poor realisation from sale of government equity in state-owned companies.
However, the likely Rs12,500 crore earning from Thursday’s stake sale in oil-major ONGC could bring some relief for the government.
Besides, the lower economic growth could further deteriorate the fiscal situation as deficit is measured as a percentage of GDP.
The economic growth during the current fiscal is expected to be 6.9% as against the original estimate of about 9%.
Finance minister Pranab Mukherjee in his budget for 2012-13 to be presented on 16th March is expected to announce steps to contain the fiscal deficit.
As per the CGA data, tax collection during April-January 2011-12 was Rs458,567 crore or 69.5% of the Budget Estimates (BE). The mop-up during the same period last fiscal was 92% of the BE.
Similarly, the non-tax revenue collection totalled only Rs90,566 crore or 72.2% of BE. It was 136.6% of BE last fiscal.
Against the total income of Rs567,101 crore during April-January, the government’s expenditure was Rs10,02,034 crore.
As per the CGA data, revenue deficit during the period was Rs3,34,383 crore or 108% of BE. During the same period last year, the revenue deficit was 56.3%.
Once our politicians become healthy they will automatically become good human beings. They would empathise with the suffering majority to understand their sorrow and try to ameliorate their curse. Greed, anger, arrogance, corruption, and even unhealthy competition will all disappear from the political scenario
“Recall a recent time when someone was strongly critical of your opinions (perhaps your political or religious beliefs). Now, put yourself in their shoes—with compassion. Try to understand and appreciate their point-of-view not to change your own opinions, but to celebrate all our human differences - in peace”— Jonathan Lockwood Huie
Aravind Kejrival has stirred a hornet’s nest in his speech recently calling Indian parliamentarians all kinds of names. Of course, he didn’t say that ALL of them are bad. His very words were (in Hindi) that there are… people sitting inside there. I did not think that it meant all of them are… In fact, he put his face into the beehive with all the bees inside including the queen bee! He will, of course, be very badly stung and might have to be in the hospital cell soon when he arrives in their court to be punished for his sin. Kejrival must be hoping to have the justice of Lord Jesus Christ: “Let him throw the first stone who has not sinned.” Kejrival would come out unscathed if that happens. When I heard Kejrival’s speech accidentally on the idiot box I thought the Hindi language he used was more stinging than the English version of the speech.
Interestingly, all parties in parliament were in agreement that Kejrival had sinned, a unanimity which is seen only during the voting for enhancing MPs’ salaries and/or perks. Poor Kejrival has not had true education in politics where one learns to speak the truth rarely and speak the untruth all the time with sugar coating to make “a lie look respectful, murder decent, and should even be able to solidify pure air and promise a bridge where there is no river at all”—the last happened a week ago in the UP election drama. Our politicians daily improve and become good, gooder, and goodest, to use newspeak in politicking.
The next step would be to summon Kejrival to the House to be punished. Let us, for a minute, think about this whole drama. Agreed that Kejrival was immature and had erred, the educated human’s response would be to forgive him for the first offence to show to the world that the parliamentarians are more mature and better educated than the rest of us outside the parliament. After all God gives, gives and then, forgives. Man, on the contrary, gets, gets and then forgets. Parliamentarians should all be more Godly than the rest of us. If they send him to jail, they would be lowering themselves in the eyes of the public. Then there would be no difference between them and Kejrival who, in the first place, should not have said what he said that day. When one is in public service (I doubt if any of the parliamentarians thinks that s/he is in public service) one has to be acting justly, skilfully and magnanimously under all circumstances of war and peace; even in the present election war of unbridled one upmanship.
This story is unlikely to go on the above scripted lines. Looking at some of our leaders on the TV with their arrogance, haughtiness, insolence, disdain, anger, bad mannerisms, and contempt for all that is decent and ethical; one wonders if any of them is educated at all. They are, of course, literate, some of them having gone to great universities both in India and/or abroad. But that does not necessarily make them educated. True education is humility and equanimity. Neither of these two is in their dictionary. Their body language on the TV is, to say the least, offensive. One cannot expect any justice from such people for the common man. They are very, very clever, though. How cleverly they camouflaged their vote bank politics of reservations and quotas for minorities despite the Election Commission questioning their timing which, in effect, had a larger audience than a local election meeting. Now, the whole country’s voters are assured that quotas are certain for the minorities. The concerned party has browbeaten even the Election Commission. This single stage-managed drama shows how clever our politicians are in achieving their ends. Even apparently decent politicians seem to fall a pray to this trickery at times of need!
One truth I can disclose here with my experience, which cannot be held against me for contempt, unlike in the case of Kejrival, is the following. Many of our politicians are on long laundry lists of prescription drugs for various ailments. Although I had been writing for almost half a century that our modern medical reductionist chemical drugs are not a panacea but could be dangerous if used indiscriminately, no one listened to me. Now I have solid backing of the American establishment in that Dr Sanjay Gupta, the medical spokesperson of the CNN TV, was on the air recently showing that “every 19 minutes one American dies of prescription drugs!” The largest CADD study of Type II diabetes, the common variety that adults suffer from, kills more people when they take too many drugs to lower their blood sugar. The safe bet, the study showed, was to control one’s diabetes with sensible diet and exercise! The study also showed that tight control of blood sugar increases vascular complications! The famous HOT study showed that very tight control of blood pressure with powerful drugs only increases mortality and morbidity. The last straw on the camel’s back is the finding that people who take sleeping pills regularly have higher than normal chance of dying in sleep. Some pain-killers could bring on even a heart attack after a lapse of five years, in addition to having many other serious side effects!
Health is now defined as “Enthusiasm to work and enthusiasm to be compassionate.” If one applies this definition, how many of our parliamentarians are healthy? Many of the readers might not know that a coronary bypass surgery, a fashionable thing for all those who can afford it, results in cognitive brain damage of nearly 97% in the immediate post-operative period which is known to settle down to about 47% permanent damage in the long run! Are you now worried about the decisions some of them take in very responsible positions? When Godfrey Hounsfield in the early 1970s discovered the CAT scan machine at the EMI Laboratories in England there was a demand in the UK for routine CAT scanning of the brains of all parliamentarians there to see how many of them have significant brain degeneration not to be entrusted with the serious role of decision making for the country. However, that demand soon fizzled out! Now we could even do the fMRI—functional MRI— which would tell us how their brains work!
I have found a solution to make our leaders tranquil and healthy to be able to discharge their duties to the satisfaction of all of us. Even if they do have any illnesses they could be set right by simple low-tech remedial measures like yoga, praanaayama, sensible diet, exercise, herbal drugs and energy therapy. We need corrective surgery and trauma management from modern hi-tech medical establishment in addition, as more and more politicians could be targeted by terrorists in the future. All our politicians need regular lessons on the new Wellness Concept that I had developed some years ago. Wellness concept is to try and keep the well segment of the population healthy always by health promotion. I have a feeling that when once the politicians become healthy by the new definition, given above, they will automatically become good human beings. They would empathise with the suffering majority to understand their sorrow and try to ameliorate their curse. Greed, anger, arrogance, corruption, and even unhealthy competition will all disappear from the political scenario. Real democracy would be ushered in then in place of the present demonocracy that we have today. If we continue to go on the path that we are on today, a day will not be too far when life for the common man would be almost impossible.
Corruption has infiltrated into every aspect of a common man’s life. When the babus realize that their bosses are corrupt they would be doubly corrupt and bold to do anything and everything to make it big. Let us put our heads together to get India on its feet again. Rudyard Kipling was in India for eight years. After he went back he wrote this poem “If”. Leaders in any field in society would do well to keep Kipling’s “If” on their study table to draw inspiration from it. Politicians should be able to keep their heads when all others have lost theirs and blame it on the politicians. Politicians should be able to walk with the King (Queen) but still keep their common touch. They could mix with the crowd but should keep their virtue. But, more than all that, if a politician wants to inherit this earth s/he should be able to fill the “unforgiving minute with sixty seconds’ worth of distance run.” I am sure healthy politicians would forgive Kejrival instead of pettifogging about it. They should draw the final curtain on this unfortunate sordid drama. It is time for us to introspect to clean our own house first. Happiness comes with giving and not getting.
"Success" isn't about money or fame. Success is living a life you feel proud of”—Anon
(Professor Dr BM Hegde, a Padma Bhushan awardee in 2010, is an MD, PhD, FRCP (London, Edinburgh, Glasgow & Dublin), FACC and FAMS. He is also the editor-in-chief of the Journal of the Science of Healing Outcomes, chairman of the State Health Society’s Expert Committee, Govt of Bihar, Patna. He is former vice-chancellor of Manipal University at Mangalore and former professor for cardiology of the Middlesex Hospital Medical School, University of London. Prof Dr Hegde can be contacted at [email protected])
The market is trying to look beyond the bad patch of December
The latest Moneylife research has revealed that recent quarterly earnings of corporate India have been poor, in relation to last year. While the revenues increased by 25%, operating profit and net profit declined by 2% and 9%, respectively. These are hardly impressive figures and yet the stock market has zoomed up by 14% this year in anticipation of improving profits.
We analysed, in detail, a total of 49 sectors and 1,241 companies. We noticed that out of 49 sectors, 37 sectors reported net losses while only 12 reported marginally higher profits. Despite stronger topline growth in the December quarter over last year’s quarter, mainly supported by a weaker rupee and exports, margins continued to decelerate.
The graph below illustrates how the 49 sectors fared during the December 2012 quarter:
Not surprisingly, the worst hit sectors were the ones which were highly regulated by the government—namely airlines and sugar. Sectors like consumer durables, hotels, pharmaceuticals, telecom and textiles fared badly, as well. Some sectors like banking, software & information technology and refineries fared well in a challenging economic environment.
The airline sector comprised three listed carriers: Jet Airways, Kingfisher Airlines and SpiceJet. Out of these three, Kingfisher reported the worst figures, operating loss of Rs432 crore, out of the loss of Rs488 crore incurred by the industry. Higher operating costs and oil prices were the culprits, apart from sheer mis-management. The other two airlines fared better, but were still in the red.
The sad state of affairs pertaining to sugar companies continued, with three-quarters of our sugar universe of 25 companies reporting losses while 18 of them reported lower sales compared to the December 2010 quarter. The UP government had fixed a State Advised Price of Rs245 per quintal, which is high, considering the input costs of the sugar mills at around Rs350 per quintal.
Consumer durables, one of the indicators of consumer spending, reported a meagre increase in sales of 3%. Higher inventories and overheads led to a decline in profits. The retail sector reported lower sales (4%) and operating profits (4%). Auto companies, representing another area of significant consumer activity, reported a 2% decrease in operating profits and a 13% decline in bottomline.
Funnily, banking seems to have done well despite stagnant credit offtake and worsening asset quality. Revenues and net profits were higher by 31% and 7%, respectively. However higher deposit rates squeezed margins. The second generation (2G scam) is expected to affect banks. According to Moody’s, banks have an exposure of over Rs10,000 crore to the telecom companies which were granted 2G licence in 2008. Dhanalakshmi Bank was the only one to report a loss in our entire banking universe.
The telecom services sector reported marginal increase in sales by 10% while reporting a loss of 74% due to higher interest and depreciation charge pertaining to 3G spectrum fees, while higher sales was due to a tariff hike. Out of the six companies in our universe, only three made profits namely Bharti Airtel, Idea Cellular and Tata Communications. Bharti Airtel contributed to nearly half of the industry’s topline at Rs10,500 crore.
Lower sales, increased construction costs and higher interest cost impacted debt-saddled real estate firms. The sector reported lower sales of 12% and a decline of 40% in net profit. The building materials sector (including items such as tiles), which derives demand from real estate, reported lower quarterly profits (down 30%). The cement sector reported a surprising 83% increase in net profit due to higher offtake. However, the engineering, procurement and construction (EPC) sector reported a marginal decline in net profits of 5% year-on-year.
The software and information technology sector has been largely aided by a weaker rupee. The rupee declined by 7.35% between October and December 2011. The sector reported increased sales (29%), operating profits (25%) and net profits (20%). This was largely because market leaders Tata Consultancy Services and Infosys together increased their net profit by Rs1,710 crore which has helped boost the industry total by 20% to Rs8,399 crore.
Refineries reported a marked increase in sales by 42% year-on-year resulting in an increase in net profit to the tune of 12% year-on-year. The total profit in this universe was Rs8,853 crore despite losses of Rs3,986 crore by Essar Oil. Indian Oil Corporation, Hindustan Petroleum Corporation, Bharat Petroleum Corporation and Reliance Industries collectively contributed to 90% of the industry’s sales.
To summarise the December 2011 quarterly earnings, much of the results weren’t satisfactory but were expected. Much of this can be attributed to challenging economic conditions including global economic turmoil arising from Euro region, high interest rates, persistent inflation which have eroded consumers’ purchasing power and lack of policy initiative by the government. The market is expecting a rebound of 15% in profits in 2012. The market rally can be entirely attributed to this expectation.