“We expect growth to be higher in 2013 than in 2012, partly because at some point in time we might start easing the interest rate cycle,” RBI governor D Subbarao told the online edition of Wall Street Journal in an interview last week
Mumbai: India’s economic growth in 2012-13 is likely to be higher than this fiscal’s as the Reserve Bank of India (RBI) might resort to interest rate cut “at some point in time”, reports PTI quoting the central bank’s governor D Subbarao.
“We expect growth to be higher in 2013 than in 2012, partly because at some point in time we might start easing the interest rate cycle,” he told the online edition of Wall Street Journal in an interview last week.
He expects a number of factors, including market sentiment that inhibits investment, to improve by then.
In its bid to tame inflation, the RBI has hiked interest rate (repo rate) by 375 basis points since March 2010.
“...we give guidance in our quarterly policy statements in October and again in January, which is to say that the tightening has peaked, and from here onwards, it’s that we’ve got to come down, that we have to start easing,” he said.
While the RBI will put out a formal projection on India’s economic growth for 2012-13 in April, the prime minister’s economic advisory panel on Wednesday pegged it at 7.5%-8.5%.
As per the advance estimates of the CSO, the GDP growth in the current fiscal is likely to slip to 6.9% from 8.4% a year ago.
On fiscal consolidation and subsidies, Mr Subbarao said only discretionary expenditure that the government can make in the short-term is on subsidies.
“And there is, I believe, quite a strong case for making adjustments on subsidies even from the anti-poverty perspective,” he said, adding finance minister Pranab Mukherjee in his 16th March Budget is likely to indicate a roadmap for containing the fiscal deficit.
“If there is subsidy in LPG, it’s a subsidy that’s not going to the poor. It’s a subsidy that’s going to people who can afford LPG, which is certainly not the poor.
“Power subsidies are given by state governments according to people who have land, whereas the landless, who are poorer, don’t get any subsidy at all,” he added.
Mr Subbarao also made a case for compression of government expenditure in addition to tax increases to build the fiscal adjustment.
On the global petroleum prices, he said India needs to reduce its dependence on oil imports and “one way to do that is to deregulate petroleum product prices”.
To a query how much China weigh on India’s economic analysis, Mr Subbarao said “I think Chinese economic management, particularly their economic policies should be part of our reckoning more than it is now”.
Welcoming the government notification allowing direct import of ATF, industry bodies CII and FICCI said the move would help the cash-strapped airlines to reduce costs
New Delhi: In a move aimed at helping the debt-laden airlines bring down their costs, the government on Wednesday formally allowed the local airlines to import jet fuel directly, reports PTI.
The airlines would be allowed to import aviation turbine fuel (ATF) under the so-called open-general license (OGL), enabling them to avoid sales taxes of between 12% and 23% that are levied by state governments.
“...Indian carriers who are interested to avail the opportunity to import ATF directly without going through state trading enterprises route may apply to the Directorate General of Foreign Trade (DGFT),” an official statement said.
Jet fuel in India exceeds the global average by more than 50% mostly due to local taxes. Some estimates suggest that direct imports could cut fuel costs by up to 20%, but also require new spending in terms of putting up storage and logistics infrastructure.
Carriers, led by Kingfisher Airlines, had demanded the right to direct import of fuel, which accounts for about half of their operating costs.
Airlines, almost all of which are losing money, currently buy ATF from local refiners like Indian Oil Corporation. Though jet fuel is priced at parity with international rates, the actual price for airlines is higher because of state sales tax.
Industry sources, however, said that importing the fuel will pose its own challenges like storages and logistics involved in moving the product from sea ports to consumptions points at airports.
The airlines would have to form tie-ups with the suppliers having infrastructure to import ATF directly for their use.
Sales tax on the fuel varies between 4% and 30% from state to state.
Welcoming the government notification allowing direct import of ATF, industry bodies CII and FICCI said the move would help the cash-strapped airlines to reduce costs.
“This decision would help airlines to reduce costs on account of ATF which constitutes around 45% of their operating costs,” CII director general Chandrajit Banerjee said in a statement.
“It would lead to huge saving on fuel cost which is almost 60% of the overall cost,” Ficci secretary general Rajiv Kumar said.
However, Mr Banerjee said transportation and storage infrastructure for supply of ATF would be a critical challenge for airlines.
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