Economy
Urban Indian consumer outlook improves in December 2013 by 0.4 points, says Zyfin Research

The Consumer Outlook Index, which reflects current and future spending plans, employment and inflation outlook of urban Indian consumers has registered a score of 40.2 for the month of December 2013, an uptick of 0.4 points compared to the previous month, according to a release by ZyFin Research

The Consumer Outlook Index, which reflects current and future spending plans, employment and inflation outlook of urban Indian consumers has registered a score of 40.2 for the month of December 2013, an uptick of 0.4 points compared to the previous month, according to a release by ZyFin Research.

 

ZyFin Research’s Consumer Outlook Index is India’s monthly barometer of consumer sentiment. The index is based on a monthly survey of 4000 consumers across 18 cities. The Index reflects consumers’ current and future spending plans, employment and inflation outlook.

 

Key highlights of the ZyFin consumer outlook index for December 2013 are as follows:

 

(a) The Consumer Outlook Index has been trending up for two consecutive months. In December there was a month on month uptick of 0.4 points and a rise of 1.2 points from an all-time low of 39.0 that was witnessed in October 2013.
 

(b) The Inflation Sentiment Index rose by 0.3 points from the last month to 24.3. This is the second month in a row that the index has risen after having registered its lowest score of 22.7 in October 2013. A steady improvement in general price sentiment has been instrumental in improving anticipations around inflation during the month, despite the current level continuing to suggest heavy pessimism.
 

(c) Amid a steadily improving borrowing comfort level, the Spending Sentiment Index moved up by 2.0 points to score 32.9 in December 2013.
 

(d) Consumers in metro cities such as Mumbai, Bengaluru and Hyderabad are the most optimistic in terms of consumer outlook. Some of these consumers have kept their spending plans on hold until improvement in overall economic conditions.
 

(e) Region-wise, consumers in the Southern and Western states remain the most optimistic, while those in the Eastern states are most pessimistic. Employment sentiments are the strongest among consumers in the South while consumers in the Western states are most optimistic about easing of general price levels.

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Fiscal deficit surges to 94% of budgeted target in April-November FY2014

Fiscal stress has been building up due to weak revenue collection amid a slowing economy, lacklustre asset sales and elevated spending, says Nomura in a research note

The government’s fiscal deficit in the first eight months (April-November) of FY14 reached 93.9% of the full-year budgeted target compared with 80.4% in the same period last year. Fiscal year-to-date (FYTD), net tax revenue growth remained muted at 7.2% year-on-year (versus the budget target of 19.1%), while expenditure growth at 17.7% year-on-year was higher than the budgeted target of 16.5%. In November 2013, government spending grew at 12.5% year-on-year, lower than 32.2% year-on-year in October 2013, whereas net tax revenues grew at 11% year-on-year versus 23.4% year-on-year in October 2013. These statistics are given in a research note by Nomura and the key data are given in the following table:

 


According to Nomura, fiscal stress has been building up due to weak revenue collection amid a slowing economy, lacklustre asset sales and elevated spending. The government looks likely to miss its revenue target owing to weaker-than-budgeted GDP growth, lower-than-anticipated collection under the service tax amnesty scheme up to November.

 

According to Nomura analysts, “Our fiscal run rate monitor suggests that the run rate on the fiscal deficit remains high as the government is yet to cut back on expenditure even as tax revenue growth remains much weaker than expected.” This is shown in the following figure:

 


The research note remarks, in such a scenario, the government faces the Hobson’s choice of either sharply paring back on spending in the next four months to enable it to meet its fiscal deficit target of 4.8% of GDP in FY14 (but at the expense of hurting growth) or supporting growth by continuing to spend but missing its fiscal deficit target, inviting the ire of rating agencies and investors and damaging its own credibility. It expects the government partly to cut spending and partly to delay payments until the next fiscal year in order to meet the fiscal deficit target, which would hurt GDP growth in H1 2014.

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COMMENTS

Yerram Raju Behara

3 years ago

Government's credibility is already at the low end. With the next few months to distribute their pre-election free bites, and with 'trust deficit' already looming large on UPA regime, the government would risk higher fiscal deficit. They should be now sure that they would not be the choice of the majority at the next bourses. They would not mind handing over empty treasury to the next government! The risk is for them and fun would be for the opposition benches. Political economy is in for a serious toss with no clue as to where and to what extent the free bites have to go. Unless we have a strong government at the Centre capable of pushing economic and financial reform agenda, it may be difficult to see India on the growth turnpike.

Maharashtra cabinet partially accepts Adarsh Commission report

Maharashtra cabinet has decided to accept the recommendations of the report, though only partially

Maharashtra government that was 'forced' to re-consider the judicial panel report on Adarsh housing society scam, on Thursday partially accepted the report and decided to form a committee to decide upon further action.

 

Last week, Rahul Gandhi, the vice-president of Congress while asking Maharashtra chief minister Prithviraj Chavan to re-consider the Adarsh report, had said that he did not agree with the state government's decision to reject the judicial commission's report.

 

Last month, the Maharashtra government rejected the report of the judicial commission of inquiry on the Adarsh housing society scam that indicted several politicians including three former chief ministers for blatant violations of statutory provisions. The report of the two-member commission headed by retired high court judge JA Patil came down heavily on those in authority describing the scam as a bad precedent.

 

The report of the two-member commission indicted several politicians including four former chief ministers — Ashok Chavan, late Vilasrao Deshmukh, Sushilkumar Shinde and Shivajirao Nilangekar Patil — for blatant violations of statutory provisions. Several bureaucrats were also indicted in the report.

 

While accepting the report in parts, Chavan-led Congress government accepted quid pro quo allegations against former chief minister Ashok Chavan. On the other hand, it gave clean chit to former chief ministers, Sushilkumar Shinde and late Vilasrao Deshmukh and ministers , Sunil Tatkare and Rajesh Tope.

 

The state government has decided to send cancellation notice to 25 flat owners from the Adarsh Society and said, the Central Bureau of Investigation (CBI) would prosecute those holding benami flats in the building.

 

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