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Railway Budget 2009-2010-Railways beat downturn, to remain on growth track

Indian Railways will stay on growth track in 2009-10 projecting cash surplus of Rs 18,847 crore after cutting most of the passenger fares, even as economic slowdown affected its freight business.

Even as its industrial customers face a crippling slowdown, the Railways expects to earn gross traffic receipts of Rs 93,159 crore in 2009-10, exceeding the revised estimates for the current fiscal by Rs 10,766 crore. Passenger fares for second class (above Rs 50) as also for the luxury trains have been reduced by two per cent.

The pace of expansion is affected by the global downturn impacting the Indian business, but the balance-sheet of the country’s largest transporter remains robust.

Expenses (operating ratio) would a tad higher at 89.9 per cent because of increased salary bill after implementation of the Sixth Pay Commission in the next financial year as compared to 88 per cent in the current fiscal.

As the rest of the economy is grappling with business setbacks, the Railways would pay a higher dividend of Rs 5304 crore to its owners — the government.

“…Railways have kept the human aspect as the central focus and achieved an extraordinary feat without puttany extra burden on the common man or the employees,” Railway Minister Lalu Prasad said while presenting the interim Budget in Parliament today.


February 13, 2009 Posted by | Business, Economy, Indian Economy, News | , , , | Leave a comment

Rupee Strengthens as India May Step Up Efforts to Boost Growth

India’s rupee strengthened the most in more than two weeks on speculation the government and the central bank will announce more measures next week to revive economic growth.

India is preparing to unveil an interim budget on Feb. 16, which may include steps aimed at countering the slump in industrial production and exports. The Reserve Bank of India may cut interest rates further after the budget, according to Suresh Tendulkar, chairman of the prime minister’s Economic Advisory Council. The government unveiled two stimulus packages and the central bank cut its key rate four times since Oct. 20.

“The rupee is stronger as the market expects additional measures to boost growth to be announced next week,” said Sudarshan Bhatt, chief currency trader at state-owned Corporation Bank in Mumbai. “Such measures look inevitable after yesterday’s industrial output report. The central bank may cut rates and help restructure loans of companies.”

The rupee climbed 0.3 percent to 48.685 per dollar at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. That is the biggest gain since Jan. 27. The currency was little changed from its Feb. 6 close of 48.695.

Eight of the 10 most-active Asian currencies outside of Japan advanced today.

The rupee may trade between 48.50 and 49.25 in the coming days, according to Bhatt. The median estimate of 25 strategists and economists surveyed by Bloomberg is for the rupee to weaken to 49.00 by the end of March.

Stocks Gain

Offshore contracts indicate traders bet the rupee will trade at 48.83 to the dollar in a month, compared with expectations for a rate of 49.03 yesterday. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the local currency.

The MSCI Asia Pacific Index of shares advanced 0.9 percent today and the benchmark Bombay Stock Exchange Sensitive Index climbed 1.8 percent.

“The rupee may appreciate further if stocks too show a positive trend from here,” Corporation Bank’s Bhatt said. “Asian stock gains and broad dollar weakness are contributing to the rupee’s strength.”

The ICE’s Dollar Index, which tracks the greenback against the euro, the yen, the pound, the Canadian dollar, the franc and Sweden’s krona, fell 0.7 percent to 85.92 today.

Industrial production fell 2 percent in December, the most since 1993, after a revised 1.7 percent gain in November, the government said yesterday. India expects the $1.2 trillion economy will expand 7.1 percent in the fiscal year to March, the slowest pace in six years.

Record Low

The rupee will weaken almost 10 percent to a record low of 54 to the dollar by the end of the year as the worldwide credit crisis curbs foreign direct investment, HSBC Holdings Plc said.

The rupee may also extend last year’s 19 percent slide as employers cut jobs overseas amid a global recession, reducing remittances from Indian workers abroad, Richard Yetsenga, HSBC’s Hong Kong-based strategist, wrote in a research report today. The U.K. bank revised its rupee forecast from 45, HSBC’s Singapore-based economist Robert Prior-Wandesforde, who co-wrote the report, confirmed in a phone call.

“We expect the slower moving remittance and FDI flows to now start to show the strain,” wrote Yetsenga. “Our estimates suggest FDI into Asia could fall to roughly zero this year. While that may be overly pessimistic, the fall in FDI should certainly be spectacular for global reasons.”

Overseas direct investment in India averaged $3.1 billion a month in 2008, compared with $1.3 billion in the previous year, government data show.

“The boom in FDI is long overdue, but cannot last, given the state of corporate finances globally,” Yetsenga wrote.

Renault SA, France’s second-largest carmaker, may abandon a factory project in the southern Indian city of Chennai, Chief Financial Officer Thierry Moulonguet said yesterday. The French company said it is reducing capital investment by 20 percent.

February 13, 2009 Posted by | Economy, Indian Economy, News | , , | Leave a comment

Terror, security top concern: President

Terror and security concerns dominated President Pratibha Patil’s address to Parliament on Thursday with the post 26/11 situation
running across the pages as the government’s biggest challenge.

Paying tribute to India’s pluralism, tolerance and peaceful coexistence, she said such principles had been “tested by fire” through the series of terror attacks in the past year.

“The spirit of ordinary people rising together as one overcame the challenge to our nation from terrorist violence,” the President said addressing members of both Houses.

The 27-page speech, which presented the UPA government’s achievements on different fronts, however, reflected its underlying concerns about the terror strikes across the country, ultra-Left violence and insurgency in the North-East.

The impressive voter turnout in Jammu and Kashmir during the recent assembly elections, Patil said, was a “resounding affirmation of their faith in democracy and a rejection of terrorism and violence”.

Looking beyond the borders, she took note of the “plight of civilians” caught in the crossfire between the LTTE guerrillas and Lankan forces. Airing the government’s proposal, she said that the Lankan government and LTTE should immediately come to the negotiating table.

Referring to India’s “demographic dividends” with an overwhelming majority of the population living below the age of 40, the President promised that by 2022 — 75th anniversary of Independence — the country would account for a fourth of the global work force.

She termed the successful launch of Chandrayan-1 as evidence of India’s scientific prowess. With the new emphasis on cleaner energy, six nuclear power units with a total capacity of 3,160 MWe are in advanced stages of construction, she said.

The growth of the civil aviation sector has been reflected in the rise of the air passengers — from 5.7 crore in 2004 to around 11 crore in 2008. Patil said that by 2010, the government aims to provide 50 crore telephone connections.

In a reference to the attacks on art and literature in the name of culture, the President recalled the liberal tradition of the social reformers and said, “The bedrock of our culture is a celebration of freedom of thought and expression and any attempt to force a closing of the Indian mind goes against the very ethos of being Indian.”

Patil recalled the members of security forces killed in encounters with terrorists, Naxalites and insurgents, and paid a special tribute to those felled by terror bullets in the Mumbai terror attacks.

Surveying the situation in the N-E, Naxalite-infested areas and Jammu and Kashmir, Patil said that along with modernisation of armed forces socio-economic development was also part of the strategy to meet the challenges.

February 13, 2009 Posted by | Politics, Terror | , , , | Leave a comment