India's economic troubles self-inflicted, says Report

No significant reform has been passed during the current government's second term observed the report from Capital Economics


Singapore: India's economic troubles are mostly self-inflicted, resulting from policy paralysis and opposition to reforms -- a situation that is unlikely to change before the general elections in 2014, says PTI quoting a report.

"That (situation) is unlikely to change until the 2014 general elections at the earliest," said the report -- Emerging Asia Economics Update - What's Gone Wrong in India? -- by Capital Economics, a global macro-economic research consultancy.

The report expressed doubts over reforms even post-2014.

It noted that India's economic performance deteriorated sharply as GDP growth slowed to 9-year low of 5.3% in the first quarter of this year.

"We believe that growth dropped to well below 5% in Q1 on an annualised basis," it said.

A major contributor to the slowdown was the big drop in investment, which slumped to (-)1.9%, year-on-year during the latest three quarters from double-digit levels in late 2010.

Expectations of growth have also been scaled back.

The latest consensus forecasts were for 6.3% growth this year, down from 7.8% at the beginning of the year, said the consultancy monitoring global economies from its offices in Singapore, London and Toronto.

"As growth has slowed, India's twin deficits have increased. The central government budget deficit increased to 5.9% of GDP last fiscal year and the current account deficit widened to 3.7% of GDP," it noted.

Foreign reserves remain quite high, at $292 billion, but have fallen by $30 billion since August 2011.

Although wholesale price inflation has declined, it too was high, at 7.5% year-on-year.

The report said India's problems can't be blamed on the weak external environment.

While export growth has declined to 4% year-on- year in the first four months of this year, from 38% in 2011, India's economy remained far less open than most emerging Asian economies, which have not slowed as much as India.

"Given that these explanations are unconvincing, it appears that weak governance, although not new, is the most plausible explanation for the slowdown," the report said.

No significant reform has been passed during the current government's second term, which began in 2009, observed Capital Economics.

"Repeated promises to liberalise FDI in the retail, insurance and airline sectors have come to nothing. Nor has the government honoured pledges to pass legislation facilitating land acquisition and investment in mining," it said.


Karbonn eyes revenues of Rs3,500 crore by FY14

The mobile handset maker will invest Rs195 crore in product development and marketing expenses during current financial year and Rs250 crore in next financial year


New Delhi: Mobile device maker Karbonn on Thursday said it will invest Rs445 crore in brand promotion and product development in the next two years, and expects its revenues to touch Rs3,500 crore by 2013-14, reports PTI.

"We are extending our portfolio to target customers of high socio-economic class. We will continue as 'value for money' brand. Our estimate is that we should have Rs2,500 crore in revenues this fiscal and Rs3,500 crore in FY14," Pradeep Jain, managing director, Karbonn Mobile told reporters.

The company will invest Rs195 crore in product development and marketing expenses during the ongoing financial year and Rs250 crore in next financial year.

"Last year we invested Rs150 crore which has shown the result. We grew faster than other Indian brands. We are expanding service centres. Presently, there are over 650 service centres and by FY14 we will have 1,000 centres," Shashin Devsare, executive director, Karbonn Mobile  said.

The company is looking to 15% market share by end of FY14 from 6% it has in FY12.

The company today launched its first tablet on Google' Android platform with 1.2 Ghz processor for Rs6,990 and unveiled three new smartphones on Google Android's Gingerbread platform in the price range of Rs5,790 to Rs9,490.

Internet on the tablet unveiled by the company can be operated using wi-fi service or 3G dongles.

The company's high-end smartphone has 1 Ghz processor, 5 megpixel camera and a front camera to support video calling facility.

"We are planning to launch four new smartphone and three new tablets in next three months. Karbonn will be first Indian company to launch smartphone of Google's Icecream Sandwich platform which is next version of Android after Gingerbread," Devsare said.

The company will launch 9.7 inch screen size tablet in September on Google's Jelly Bean platform.

In the smart device range, Karbonn will provide push mail service and instant messenger of its own.

"These services will be free for first year. We have tied up with foreign vendor for this who has customised this application to suit our customer's need," Devsare said.


Postal department’s deficit falls to 10 year low while revenues rises 13%

The Postal department’s FY revenues increased 13% due to higher contribution from financial services, however, its deficit fell to a 10 year low


New Delhi: Mirroring signs of revival, the Department of Posts (DoP) has registered the highest decline in deficit in more than 10 years at Rs550.73 crore in 2011-12 on the back of increase in revenues, mainly from financial services, reports PTI.

Total revenues of the department in 2011-12 rose by 13.62% to Rs7,910.51 crore while expenditure stood at Rs13,705.4 crore, leaving a deficit of Rs5,794.89 crore.

In the previous fiscal, DoP had revenues of Rs6,962.33 crore and expenditure of Rs13,307.95 crore, reflecting a gap of Rs6,345.62 crore.

 DoP's deficit had jumped over 80% to Rs6,641.30 crore in 2009-10 from Rs3,593.09 crore in 2008-09 due to implementation of the Sixth Pay Commission's recommendations.

“In the last one year we have developed an integrated strategy to make India Post, commercially and socially relevant. The financial performance of the last year indicates that we have succeeded to an extent. But a lot more need to be done,” Minister for Communications and IT Kapil Sibal told PTI.

According to the Financial Performance report prepared by Department of Posts for 2011-2012, revenues from financial services grew by 20.8% at Rs4,304.07 crore in 2011-12 compared to Rs3,562.77 crore in FY'11.

Revenue from postal operations grew by 6.08% to Rs3,606.44 crore in 2011-12 from Rs3,399.56 crore it registered in FY'11.

Sibal said that he is expecting revenue of DoP to grow by 20% in the current financial year.

“This financial year we are targeting revenue increase of plus 20%. I am happy that India Post is moving in the right direction. Now we need to increase our speed,” he said.

DoP has appointed Boston Consulting Group to prepare an appropriate business structure for the emerging and premium services of India Post.

The postal department has floated expression of interest to appoint a consultant for preparing detailed project report (DPR) of its ambitious Post Bank projects and this report is expected to be finalised by end of this calendar year.

“The Post Bank project will rejuvenate financial services offered through post offices,” Sibal said.

DoP has already announced to set-up 1000 ATMs across country as part of its financial services.

Sibal has also asked DoP introduce premium logistics services in select 80 to 90 cities within six months to tap the expanding e-commerce market in the country and enhance its revenue by 15%.

In its ongoing transformation process, the department entered into a partnership with state-run telecom company BSNL to provide money order service using mobile phones for which it expects to start pilot project by September 2012.


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