Reacting to a slower-than-expected May industrial output growth at 11.5%, finance secretary Ashok Chawla said the manufacturing sector would continue to see average growth and should grow in double digits in the current fiscal
The government today said the manufacturing sector is unlikely to grow at an abnormally high rate as there are capacity constraints, reports PTI.
"Nobody should expect that the industrial manufacturing sector will continue to grow at abnormally high number for a long time to come. There are capacity constraints…," finance secretary Ashok Chawla told reporters in New Delhi.
Reacting to a slower-than-expected May industrial output growth at 11.5%, Mr Chawla said the manufacturing sector would continue to see average growth trend now and should grow in double digits in the current fiscal.
This is the eighth straight month of the industrial output clocking a double digit growth.
The manufacturing output, which constitutes around 80% of the index of industrial production (IIP), grew 12.3% in May against 1.8% in same month last year, official data released today said.
"Whatever output lag was there in the economy has been filled and the manufacturing sector is now showing the kind of average secular growth which continues to be good and would be favourable for the economy," he said.
Industrial output rose 10.4% in fiscal 2009-10, faster than the 2.8% recorded in the previous year.
The government might consider the millers' demand to export after major festivals like Diwali, as consumption of sugar is generally higher during the festive season
Sugar mills may not be allowed to fulfil their export obligation of nearly 10 lakh tonnes till Diwali in November, as the food ministry is hesitant to permit shipments fearing a price rise during the festive season, reports PTI.
"Some of the millers have approached us demanding export release order. But at the moment, we cannot allow... as the sugarcane availability and production estimate for the next season is yet to be firmed up," a senior food ministry official said.
The government might consider the millers' demand to export after major festivals like Diwali, the official said, adding that consumption of sugar is generally higher during the festive season.
Mills had imported 20.75 lakh tonnes of sugar in 2004-05 crop year (October-September) under the Advance Licence Scheme (ALS) as there was a shortfall in production then. Mills are required to export an equal quantity by March 2011.
Out of total imported sugar, export obligation of 9.67 lakh tonnes is yet to be fulfilled. Mills cannot export the sweetener without the release order from the ministry.
Sugar mills situated in southern India are mainly demanding that they should be allowed to fulfil their export obligation as there is a good demand from Southeast Asia. They have an obligation of about 6-7 lakh tonnes.
The official said that the government does not want to take any chance by allowing export of sugar as prices of the sweetener have moderated only recently, owing to an improved domestic output to 18.5 million tonnes for 2009-10 from the earlier estimate of around 16 million tonnes.
Retail sugar prices, which touched nearly Rs50 a kg in Delhi in mid-January, have come down to Rs30 per kg now.
In December last year, the Cabinet Committee on Economic Affairs (CCEA) had decided to extend the deadline to meet the export obligation till March 2011, considering the low production of sweetener during the current season ending September.
It also gave an option to the millers to pay customs duty as applicable during the relevant period and get exempted from the export obligation.
The recent surge in account opening activity is largely attributed to capital market-bound PSUs getting demat accounts opened for their employees to help ensure the success of their forthcoming public offers
New investors seem to be rushing to the stock market, at least on paper, as more than 20 lakh people have got themselves a trading account in the past one year, reports PTI.
The total number of demat accounts, mandatory for investors to trade in stocks in the country, has crossed 1.7 crore mark this week, up from about 1.5 crore a year ago.
However, a large proportion of the account holders are non-active investors and retail investors with failing interest in public offers and mutual funds (MFs) — once their favourite investment instruments.
The recent months' surge in account opening activity is largely being attributed to capital market-bound public sector undertakings (PSUs) getting demat accounts opened for their employees to help ensure the success of their forthcoming public offers.
As per the data available with the two depositories, Central Depository Securities Ltd (CDSL) and National Securities Depository Ltd (NSDL), which are entrusted with the job of opening and managing demat accounts in the country, the total number of valid investor accounts currently stands at over 1,70,00,000, against nearly 1,50,00,000 a year ago.
This does not include nearly five lakh frozen accounts, where necessary documentation like PAN (Permanent Account Number) is not available and trading in not permitted.
CDSL has about 67.7 lakh investor accounts and over 1.02 lakh accounts are with NSDL. Between them, CDSL added nearly 11 lakh accounts and NSDL over nine lakh in the past one year.
Asked about the rising numbers of demand accounts, brokerage and investment banking firm SMC Capitals' equity head Jagannadham Thunuguntla said: "State-run firms are trying hard to open demand accounts for their employees to ensure greater retail participation in their public offering that is a welcome move."
However, in most cases, these account holders do not trade frequently in the market and remain inactive, he said.
Besides, on an average, about two lakh demat accounts are being opened each month, whereas the mobile customer base is increasing much faster (at a rate of about two crore per month), Mr Thunuguntla noted.
Industry experts also point out that the initial public offer (IPO) market and mutual funds have lost its charm for retail investors.
The mutual fund industry is estimated to have seen exit of over four lakh investors in the three months between March and May 2010, while most of the recent public offers saw dismal retail participation.
"Of late, it is getting difficult to attract retail investors into markets, as most of the recent public issues are trading below their issue prices," Mr Thunuguntla said, adding that secondary market was also not seeing any huge participation from retail investors.
Some brokerage houses, however, believe that the retail investors might prefer to trade directly in secondary market, rather than through mutual funds or opting for primary markets, as non-serious investors, coming from a few IPO-bound PSUs, cannot account for all 20 lakh new investors.
However, they believe it could be a dangerous trend, as new investors might not have the expertise to trade in the secondary market without the counsel of portfolio managers.
But, returns have not been great at equity mutual funds in recent months, although the stock market benchmark indices have moved up considerably, and this might have led to investors' exit from funds and a direct entry into stocks, a senior official at a leading brokerage house said.
About 4.07 lakh investors are estimated to have closed their mutual fund accounts, as determined by the change in the number of mutual fund folios, between March-May 2010, largely driven by redemption in equity-focused MF schemes, as per the latest data available with industry body AMFI.
The industry, including market watchdog Securities and Exchange Board of India (SEBI), is looking at ways to draw more investors to the mutual funds as also to the primary and secondary stock markets.
Experts believe that MF schemes need to be simpler and attractive to get the investors, while public offers, including those by PSUs, require to be made better priced.
"Higher pricing of IPOs block the entry of retail investors for issues. Investors' confidence is very low towards the IPOs as they are continuously losing their money," CNI Research chairman and managing director Kishore P Ostwal said, adding that small investors have lost faith after losing money even in some big ticket IPOs like Reliance Power.
"A heavy discount of 35% for retail investors helped the state-run NMDC public offer, but no business house wants to give returns to retail buyers by offering lower price bands," he added.
"There is still appetite for quality public issues at reasonable valuations. The firms bringing public issues have to be extra careful about their valuations and price bands, till the time investors' faith is restored," Mr Thunuguntla said.
Criticising the over-pricing of the public issues, top banker Deepak Parekh, who also heads a key SEBI committee on primary markets, recently said that IPOs were being over-priced and nothing was being left on table for investors.
"...Investors are not fools and why should they invest in the market today and lose the money tomorrow," Parekh said, and ridiculed the companies managing to get a few thousand investors despite expensive ad campaigns on TV, newspapers and hoardings.