Tech group to revisit poverty estimates in two weeks

“The government has decided to set up a technical group to revisit the methodology for estimation of poverty and identification of poor,” minister of state for planning Ashwani Kumar said

New Delhi: A technical group to revisit the norms to estimate poverty will be set up within the next two weeks, the Lok Sabha was informed, reports PTI.

 The Planning Commission’s new poverty estimates announced last month had created uproar in Parliament leading to demands for removal of the panel’s deputy chairman Montek Singh Ahluwalia.

“Government has since decided to set up a technical group to revisit the methodology for estimation of poverty and identification of poor taking into account multiple dimensions and indicators of poverty so that the poor and deprived households can obtain the benefit of different government programmes and schemes,” minister of state for planning Ashwani Kumar said during Question Hour.

“The technical group will be in place in the next two weeks,” he said replying to supplementaries.

 The poverty ratio in the country had come down from 37.2% in 2004-05 to 29.8% in 2009-10, Mr Kumar said prompting members to strongly oppose the statement.

 Shailendra Kumar (SP) accused the government of making “false claims” and demanded a Joint Parliamentary Committee to finalise the poverty estimates.

 Anant Geete (Shiv Sena) criticised the government for the “faulty” methodology for arriving at the poverty estimates.

“It will be incorrect to say that we have lied. Figures do not lie. We have given the same figures to the Supreme Court,” the minister said.

Speaker Meira Kumar asked the minister to keep in mind the concerns and anxiety of the entire House when the Technical Committee revisits the issue of poverty estimates.

“I hope that when the Technical Committee is revisiting the issue, the concerns and anxiety of the entire House for eradication of poverty, be kept in mind if and when it is implemented,” she said.

 Ashwani Kumar said the Planning Commission estimates poverty on the basis of survey data of the National Sample Survey Organisation (NSSO) on household consumer expenditure.

 He said the Planning Commission has been coming out with poverty estimates since 1977 based on a methodology that tabulates the expenditure of about one lakh households.

“Since the households have different number of members, the NSSO for purpose of comparison divides the household expenditure by the number of members to arrive at the monthly per capita consumption expenditure,” Mr Kumar said.

The Suresh Tendulkar Committee proposed to validate the poverty lines by checking the adequacy of actual private expenditure on food, education and health by comparing them with normative expenditures consistent with nutritional, educational and health outcomes.

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S&P cuts India's outlook to negative, warns of downgrade

The lowering of the outlook by S&P from stable (BBB+) to negative (BBB-) is expected to make external commercial borrowings expensive for Indian Inc

New Delhi:  Global agency Standard and Poor’s (S&P) lowered India’s rating outlook to negative and warned of a downgrade in two years if there is no improvement in the fiscal situation and the political climate continues to worsen, reports PTI.

The lowering of outlook from stable (BBB+) to negative (BBB-) is expected to make external commercial borrowings (ECBs) expensive for Indian Inc. It may also have implications for the capital market.

“The outlook revision reflects our view of at least a one-in-three likelihood of a downgrade if the external position continues to deteriorate, growth prospects diminish or progress on fiscal reforms remains slow in a weakened political setting,” said S&P’s credit analyst Takahira Ogawa in a statement.

BBB- is the lowest investment grade rating.

Commenting on the rating action, Jagannadham Thunuguntla, strategist and head of research at SMC Global Securities, said “Indian (new) sovereign rating is just one step away from junk bond status...Somehow I feel the dream of India growth story is coming to an end.”

The negative outlook, the rating agency further said, signals likelihood of the downgrade of India’s sovereign within the next 24 months. “A downgrade is likely if the country’s economic growth prospects are dim, its external position deteriorates, its political climate worsens, or fiscal reforms slow,” it said.

The lowering of rating outlook comes despite the finance ministry pitching for an upgrade at the recent round of meetings between the officials and representatives of the S&P.

S&P said India’s real GDP (gross domestic product) per capita growth will likely remain moderately strong at 5.3% in 2012-13, compared with about 6% on average over the prior five years.

“India’s favourable demography and the increasing middle- class population will undergird its medium-term growth prospects, which in turn will support the sovereign ratings,” Mr Ogawa said.

India’s favourable long-term growth prospects and high level of foreign exchange reserves support the ratings, the agency said. On the other hand, India’s large fiscal deficits and debt, as well as its lower middle-income economy, constrain the ratings, it added.

“High fiscal deficits and a heavy debt burden remain the most significant constraints on the sovereign ratings on India. We expect only modest progress in fiscal and public sector reforms, given the political cycle—with the next elections to be held by May 2014—and the current political gridlock,” S&P said.

Such reforms include reducing fuel and fertiliser subsidies, introducing goods and services tax (GST), and easing of restrictions on foreign ownership of various sectors such as banking, insurance, and retail sectors, it said.

On the other hand, S&P said the ratings “could stabilise again if the government implements initiatives to reduce structural fiscal deficits and to improve its investment climate.”

Fiscal measures could include an increase in domestic prices and a more efficient use of fuel and fertiliser subsidies, or an early implementation of the GST.

Reacting to the rating action, a senior finance ministry official said India’s growth rate is intact and robust and it is not going to have any major impact on the country.

“We are not overtly concerned about revision. Other nations make India look good,” the official added.

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Union Bank, Corporation Bank cut lending rate

Union Bank of India has revised base rate or minimum lending rate by 15 basis points to 10.50% from 10.65%. The revised rates will be effective from 1st May

New Delhi: A day after country’s largest lender SBI trimmed its fixed deposit rates, two more lenders—Union Bank of India and Corporation Bank—slashed benchmark lending rate by 0.15%, making loans cheaper, reports PTI.

The bank has revised base rate or minimum lending rate by 15 basis points to 10.50% from 10.65%, Union Bank of India said in a filing on the BSE.

Base rate is the benchmark rate below which a bank cannot lend.

Another state-owned lender Corporation Bank has also reduced the base rate by similar percentage points to 10.50%.

The revised rates of both the banks will be effective from 1 May 2012.

Following the Reserve Bank of India’s (RBI) decision to cut key interest rate by 0.5% to 8% in its annual credit policy last week, several banks including ICICI Bank, IDBI Bank and Punjab National Bank have reduced both lending and deposit rates.

State Bank of India (SBI), along with five more banks, has already announced revision in their interest rates.

SBI trimmed interest rates on fixed deposits by up to 1% across various maturities. There was upward revision of 0.25% in case of fixed deposits of 180 days.

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