Economy & Nation Exclusive
No immediate cut in interest rates, says Nomura

The RBI is not expected to cut the repo rate in June 2012 even as headline inflation is likely to remain high in the coming months, the current account deficit remains elevated, and because fuel price hikes are still impending, says Nomura

WPI (wholesale price index) inflation rose above expectations to 7.2% y-o-y (year-on-year) in April 2012 from 6.9% y-o-y in March 2012, due to an increase in food prices. Excluding vegetables, where the prices rose 26% m-o-m (month-on-month), WPI inflation fell to 5.2% from 6% in March 2012. Core inflation (WPI manufactured ex-food) remained at 4.7% y-o-y in April 2012. This is in spite of the hike in excise duties. Demand-side pressures still remain weak.

According to Nomura, a global financial services company, the Reserve Bank of India (RBI) is not expected to cut the repo rate in June, as headline inflation is likely to remain high in the coming months, the current account deficit remains elevated and because fuel price hikes are still impending.

The subdued core inflation reading of today's economic conditions, along with the weak industrial production data and lower oil prices can justify an interest rate cut, says Nomura. However, while high food prices are a supply-side shock, they cannot be ignored, feels Nomura. It will push CPI (consumer price index) inflation into double digits and keep household inflation expectations elevated. Combined with a rising current account deficit and the government yet to hike fuel prices, the RBI is expected to keep repo rates unchanged in June 2012. Rate cuts are the next logical step, but they are likely in Q3 (July-September 2012).


Real GDP growth to recover at 7.6% in FY13: CMIE

CMIE said India's GDP is expected to recover to 7.6% in the current fiscal due to an expected good monsoon and easing of supply constraints

Mumbai: India's real gross domestic product (GDP) is expected to recover to 7.6% in the current fiscal, on the back of an expected good monsoon and easing of supply constraints, economic think-tank, Centre for Monitoring Indian Economy (CMIE) forecast in its latest report.

"As supply constraints ease, growth in real economy is expected to recover to 7.6% in FY13," CMIE said in its monthly review of domestic economy. The GDP is estimated to have slowed to 6.8% in the previous fiscal (FY 12), it said.

According to a PTI report, CMIE said the inflation is expected to ease to 6.7% in FY13 from 8.8% in FY12. Interest rates have also eased after RBI's 50 basis points policy rate cut.

The industrial sector growth is projected to accelerate to 6.8% in FY13 from 4.1% in the preceding year. Services sector growth is also expected to maintain its trend growth of over nine%, it said.

CMIE said that assuming normal rainfall, farm sector output is projected to rise by 2.4% in FY13. This would be the fourth straight year of increase in farm income though growth is expected to moderate after a seven% rise in FY11.

The Indian Meteorological Department (IMD) forecast normal rainfall at 1% below the long period average (LPA) during the 2012 South-west monsoon season. If accurate, this would be the third successive year of normal rainfall. Monsoon rainfall during 2010 and 2011 had remained over 2% of the LPA.


CBI to file cases against over 20 IT tribunal members

The investigating agency has gathered sufficient evidence against these members for allegedly conspiring with private persons to pass favourable orders

New Delhi: The Central Bureau of Investigation (CBI) is likely to register cases against more than 20 members of different benches of Income Tax Appellate Tribunal (ITAT) for alleged corruption and collusion while dealing with various cases, reports PTI.

Official sources said that the investigating agency has gathered sufficient evidence against these members for allegedly "conspiring with private persons to pass favourable orders".

The ITAT is a quasi-judicial body and has benches at Mumbai, Delhi, Agra, Ahmedabad, Allahabad, Amritsar, Bangalore, Chandigarh, Chennai, Indore, Nagpur, Patna among others.

The two-member bench is selected by a board chaired by a sitting judge of the Supreme Court.

"The CBI has received evidence on alleged irregularities being done by ITAT members. Over 50 orders passed by these members are being scrutinised by the agency. The orders clearly indicate criminal collusion and corruption," a source claimed.

He said the names of some noted chartered accountancy firms have also come up during the preliminary investigation.

"Some fresh cases may be registered against ITAT members and personnel of the chartered firms," the source added, refusing to divulge more information.

The CBI, on 13 May 2008 registered a case against Jugal Kishore, an ITAT member from Kolkata, for allegedly accepting a bribe of Rs30 lakh from an accounting firm to deliver favourable orders to its client.

A charge sheet has been filed by CBI in January this year before a Kolkata special court against Mr Kishore and five other persons including the owner of accounting firm (SK Tulsiyan and Company), SK Tulsiyan, Sashi Tulsiyan, Ravi Tulsiyan besides middle men Subhash Chand Barjatiya and Nishant Jain.

The agency had alleged that Mr Kishore demanded bribe of Rs30 lakh from the accounting firm for undue favours extended to them in Income Tax matters of various parties before the Tribunal.

"The Tulsiyans were acting as a tout to Shri Jugal Kishore and were the middlemen and prepared orders on behalf of the members of ITAT, Kolkata and manipulated orders," a CBI spokesperson had alleged.

The most glaring case is that of the tribunal's Kolkata bench as many as 12 of its orders were recovered from Mr Tulsiyan's hard discs before these were delivered, the CBI had alleged.

The CBI during searches conducted at Mr Kishore's residence recovered Rs28 lakh of alleged bribe money and the remaining Rs2 lakh was found in a brief case with Mr Jain and Mr Barjatiya.

Later, during the searches at the offices of the accounting firm, the CBI had claimed to have recovered nearly 14 computer discs carrying over 70 pre-dated judgements which were delivered in various benches of the tribunal.



Ex IRS Officer

5 years ago

A most refreshing news, though too late and too little considering the enormity of the extent of corruption and, that too, openly. Right from the application stage the process starts and the amount paid to procure a seat on the Bench is recovered within just a month of joining the job!
At least 70% sitting and 90% ex-members deserve this honour!


C Jyoti

In Reply to Ex IRS Officer 5 years ago

Ex IRS Officer is right in what he writes about this corrupt body. These people operate through agents, called CAs/Advocates and all openly. A particular member is known to prefer publicly representation by professionals appointed at that member's instance from the place of the said member's origin to ensure that the firm of practitioners the person worked for is safely in business and the person's share in the loot remains safe! Another man with an interst in a chain of restaurants openly solicits for particular CAs/Advocates, while constitution of benches is itself a million crore exercise as much as the postings and transfers in the ITAT! CBI actually can never fathom the extent of corruption in the ITAT.

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