General Affairs
Governments That Imposed GST Never Returned To Power, Says Shiv Sena
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MUMBAI: Even as the Maharashtra legislature has unanimously ratified the Goods and Services Tax (GST) Bill, the Shiv Sena today sought to warn the government that those who have tried to levy the taxation system could never return to power again.
"One harsh reality is that countries that had accepted the GST, had to repeal it subsequently as the taxation system had failed. Also, governments that have imposed this form of taxation have never come to power again as they have miserably lost elections," said an editorial in Shiv Sena mouthpiece 'Saamana'.
The ruling alliance partner in the state said along with it, leaders of other political parties too have expressed apprehensions about the autonomy of the Brihanmumbai Municipal Corporation (BMC) after the GST comes into effect.
"BMC will suffer an annual revenue loss of around Rs. 7,000-8,000 crore. This may cause a financial imbalance to Mumbai and the city, which generates the maximum revenue for the country, may become dependent on the centre for money," it said.
The Shiv Sena questioned whether imposing GST was "another attempt" by the centre to make Mumbai "financially dependent on it".
"These apprehensions cannot just be thwarted off by mere words. Though the Chief Minister has assured that there would be no revenue loss to the state exchequer, the BMC will not have to depend on the centre or, there will no loss of autonomy to the BMC. As far as Mumbai is concerned, we have to be extra careful," it said.
The state government on Monday unanimously ratified the GST Constitutional Amendment Bill, joining a clutch of states which have already approved the legislation that will pave the way for roll-out of a single and unified tax system in the country.
"One harsh reality is that countries that had accepted the GST, had to repeal it subsequently as the taxation system had failed. Also, governments that have imposed this form of taxation have never come to power again as they have miserably lost elections," said an editorial in Shiv Sena mouthpiece 'Saamana'.
The ruling alliance partner in the state said along with it, leaders of other political parties too have expressed apprehensions about the autonomy of the Brihanmumbai Municipal Corporation (BMC) after the GST comes into effect.
"BMC will suffer an annual revenue loss of around Rs. 7,000-8,000 crore. This may cause a financial imbalance to Mumbai and the city, which generates the maximum revenue for the country, may become dependent on the centre for money," it said.
"These apprehensions cannot just be thwarted off by mere words. Though the Chief Minister has assured that there would be no revenue loss to the state exchequer, the BMC will not have to depend on the centre or, there will no loss of autonomy to the BMC. As far as Mumbai is concerned, we have to be extra careful," it said.
The state government on Monday unanimously ratified the GST Constitutional Amendment Bill, joining a clutch of states which have already approved the legislation that will pave the way for roll-out of a single and unified tax system in the country.
John Kerry Meets PM Narendra Modi In Delhi
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NEW DELHI: US Secretary of State John Kerry called on Prime Minister Narendra Modi in Delhi today.
"Capping off an important visit, Secretary of State @JohnKerry calls on PM @narendramodi," External Affairs Ministry spokesperson Vikas Swarup tweeted along with pictures of the two leaders.
John Kerry met PM Modi at 7 Race Course Road in Delhi in the afternoon.
Earlier in the day, John Kerry addressed students at the Indian Institute of Technology, Delhi.
On Tuesday, John Kerry co-chaired the Second India-US Strategic and Commercial Dialogue with External Affairs Minister Sushma Swaraj.
Minister for State for Commerce and Industry Nirmala Sitharaman and US Secretary for Commerce Penny Pritzker also attended the Dialogue.
The India-US Strategic Dialogue was upgraded to Strategic and Commercial Dialogue last year at the initiative of PM Modi and US President Barack Obama.
"Capping off an important visit, Secretary of State @JohnKerry calls on PM @narendramodi," External Affairs Ministry spokesperson Vikas Swarup tweeted along with pictures of the two leaders.
John Kerry met PM Modi at 7 Race Course Road in Delhi in the afternoon.
Earlier in the day, John Kerry addressed students at the Indian Institute of Technology, Delhi.
Minister for State for Commerce and Industry Nirmala Sitharaman and US Secretary for Commerce Penny Pritzker also attended the Dialogue.
The India-US Strategic Dialogue was upgraded to Strategic and Commercial Dialogue last year at the initiative of PM Modi and US President Barack Obama.
Samajwadi Party May Promise Free Mobiles To Students In Its Manifesto
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LUCKNOW, UTTAR PRADESH: After free laptops to students, the ruling Samajwadi Party is mulling giving mobile phones to students and might include it in the party's manifesto for the 2017 Uttar Pradesh Assembly polls.
Chief Minister Akhilesh Yadav hinted at the possibility today while addressing a programme in Lucknow.
"We have fulfilled our promise (made in 2012 Assembly manifesto) of providing free laptops to students. In the days to come, it is possible that for the poor, government might decide to give some facilities. If we have to give mobile to common man, we Samajwadis will also think in this regard and might include it in our manifesto," he said.
Claiming that people were "waiting" for the Samajwadi Party manifesto, Akhilesh Yadav said, "a lot is promised in other manifestos, but nothing is done".
"Samajwadis will think of something which we can give to next generation or something through which they can get more information about the government and share their expectations.
The cities are becoming smart and through mobile applications people are getting information," he said.
The Samajwadi Party government had in its 2012 manifesto promised to provide free laptops to meritorious students and it also benefitted the party politically with the party getting absolute majority in the state.
Akhilesh Yadav said Uttar Pradesh would become "hub of mobile manufacturing" in near future and majority of factories would come up in Noida and nearby areas.
On the issue of corruption, Akhilesh Yadav said it was a matter of concern to reduce corruption at all levels and if daily working is associated with latest technology, it could bring transparency.
Chief Minister Akhilesh Yadav hinted at the possibility today while addressing a programme in Lucknow.
"We have fulfilled our promise (made in 2012 Assembly manifesto) of providing free laptops to students. In the days to come, it is possible that for the poor, government might decide to give some facilities. If we have to give mobile to common man, we Samajwadis will also think in this regard and might include it in our manifesto," he said.
Claiming that people were "waiting" for the Samajwadi Party manifesto, Akhilesh Yadav said, "a lot is promised in other manifestos, but nothing is done".
"Samajwadis will think of something which we can give to next generation or something through which they can get more information about the government and share their expectations.
The Samajwadi Party government had in its 2012 manifesto promised to provide free laptops to meritorious students and it also benefitted the party politically with the party getting absolute majority in the state.
Akhilesh Yadav said Uttar Pradesh would become "hub of mobile manufacturing" in near future and majority of factories would come up in Noida and nearby areas.
On the issue of corruption, Akhilesh Yadav said it was a matter of concern to reduce corruption at all levels and if daily working is associated with latest technology, it could bring transparency.
On PM's Orders, BJP Assigns Each Rajya Sabha MP A Constituency Lost In 2014
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NEW DELHI: The BJP's 52 lawmakers in the Rajya Sabha or House of Elders don't have constituencies to nurture, but BJP Chief Amit Shah has just found them some.
In another idea straight out of the Prime Minister Narendra Modi handbook for MPs, Mr Shah has told the Elders that they can no more stay away from the sweat and grime of electoral politics that their colleagues in the Lok Sabha go through to win their seats.
So they too will "work in a constituency" - they will each adopt one constituency that the party lost in 2014, and work to win it in 2019. This includes the 12 BJP members of Rajya Sabha who are ministers, they were informed at a special meeting addressed by the party president.
They will be expected to bolster the efforts of the local BJP candidate and take on the winner from a rival party who won the seat and their performance will be assessed - the results of the 2019 Lok Sabha elections will be considered when they are up for re-nomination to the Rajya Sabha.
"The party president said each member should take up one constituency lost in 2014 and work for the party organisation. They will handle the twin task of expanding the party base and its ideology," said Union Minister Prakash Javadekar.
The lawmakers can spend the Members of Parliament Local Area Development Scheme or MPLADs funds allotted to them in the constituency they adopt. The BJP believes this will optimise use of both human resource and the MP funds.
Lawmakers from both houses get 5 crores as MPLAD funds. While Lok Sabha members are expected to spend this money to develop their parliamentary constituencies, Rajya Sabha members represent entire states and so allocate funds to institutions and other work in those states.
"The whole exercise is to hold Rajya Sabha members accountable like Lok Sabha members are," said a BJP leader.
PM Modi, who has introduced several novel ways to ensure that party leaders demonstrate work on ground in their constituencies, will also address the MPs.
He had reminded the BJP's Lok Sabha MPs during this month's monsoon session that they had not been filing report cards on work done in constituencies regularly.
In another idea straight out of the Prime Minister Narendra Modi handbook for MPs, Mr Shah has told the Elders that they can no more stay away from the sweat and grime of electoral politics that their colleagues in the Lok Sabha go through to win their seats.
They will be expected to bolster the efforts of the local BJP candidate and take on the winner from a rival party who won the seat and their performance will be assessed - the results of the 2019 Lok Sabha elections will be considered when they are up for re-nomination to the Rajya Sabha.
"The party president said each member should take up one constituency lost in 2014 and work for the party organisation. They will handle the twin task of expanding the party base and its ideology," said Union Minister Prakash Javadekar.
The lawmakers can spend the Members of Parliament Local Area Development Scheme or MPLADs funds allotted to them in the constituency they adopt. The BJP believes this will optimise use of both human resource and the MP funds.
Lawmakers from both houses get 5 crores as MPLAD funds. While Lok Sabha members are expected to spend this money to develop their parliamentary constituencies, Rajya Sabha members represent entire states and so allocate funds to institutions and other work in those states.
"The whole exercise is to hold Rajya Sabha members accountable like Lok Sabha members are," said a BJP leader.
PM Modi, who has introduced several novel ways to ensure that party leaders demonstrate work on ground in their constituencies, will also address the MPs.
He had reminded the BJP's Lok Sabha MPs during this month's monsoon session that they had not been filing report cards on work done in constituencies regularly.
Pakistan Has To Do More To Clear Terror Sanctuaries, Says John Kerry
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NEW DELHI: The United States today said that Pakistan has to do more work towards clearing the terror sanctuaries and push harder against "indigenous groups" operating from its soil that are affecting ties with India and Afghanistan's peace and stability.
US Secretary of State John Kerry, who is on a three-day visit to India, said that he has discussed with Pakistani Prime Minister Nawaz Sharif the issue of taking stronger action against groups such as the Haqqani network and Lashkar-e-Taiba.
Addressing a session at IIT-Delhi, he said terror groups like Daesh, Al Qaeda, LeT and Jaish-e-Mohammed can't be fought by a single nation alone.
"We are working on it. I have been working on this issue very hard. I have had many engagements with Nawaz Sharif. We have been talking on the sanctuaries in the western part of the country, how to deal more effectively with the Haqqani network and the LeT."
"It is clear that Pakistan has work to do in order to push harder against its indigenous groups that are engaged in terrorist activities. They must work with us to help clear sanctuary of bad actors who are affecting not only India- Pakistan relationship but also our ability to achieve peace and stability in Afghanistan," Mr Kerry said.
US Secretary of State John Kerry, who is on a three-day visit to India, said that he has discussed with Pakistani Prime Minister Nawaz Sharif the issue of taking stronger action against groups such as the Haqqani network and Lashkar-e-Taiba.
Addressing a session at IIT-Delhi, he said terror groups like Daesh, Al Qaeda, LeT and Jaish-e-Mohammed can't be fought by a single nation alone.
"We are working on it. I have been working on this issue very hard. I have had many engagements with Nawaz Sharif. We have been talking on the sanctuaries in the western part of the country, how to deal more effectively with the Haqqani network and the LeT."
"It is clear that Pakistan has work to do in order to push harder against its indigenous groups that are engaged in terrorist activities. They must work with us to help clear sanctuary of bad actors who are affecting not only India- Pakistan relationship but also our ability to achieve peace and stability in Afghanistan," Mr Kerry said.
Business Affairs
Market morning brief: Six things to know to start your trading day
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As expected, the gross domestic product (GDP) growth fell sharply in the June quarter, but the big picture is it is seen going north in the coming quarters, thanks to recent government measures. Globally, an over 3 per cent fall in oil prices dented markets, while at home, the Annual General Meeting of Reliance Industries due at 11 AM will hog the limelight.
Below is the wrap-up of this and more updates that will make or mar the market in Thursday's session:
- Economy lost sheen in Q1: Economic growth slowed sharply in the June quarter, putting the government's target further out of reach and raising concerns that the country will create too few jobs for a burgeoning workforce. Figures released by the Statistics Office on Wednesday showed GDP grew by 7.1 per cent in the June quarter, the weakest in five quarters and down from 7.9 per cent in the preceding three months.
- Year-end Sensex target at 28,800: Global financial services major Citigroup has maintained year-end Sensex target at 28,800 amid expected rise in interest rates by the US Federal Reserve. The US-based firm also said it expects "domestic fundamentals (corporate earnings) to drive markets in the medium term and would use any consolidation post-Fed as an opportunity to buy".
- RIL AGM: Annual General Meeting (AGM) of Reliance Industries is the major talking points of the day, where RIL Chief Mukesh Ambani is expected to give an update on Reliance Jio's 4G launch and signal culmination of the $42-billion capex cycle it had earmarked for its other businesses three years ago.
- Oil prices sink below $45 overnight: Brent crude futures sank below $45 per barrel overnight, but added 0.2 per cent to $47.00 today. US crude added 0.3 per cent to $44.83 after shedding 3.6 per cent on Wednesday.
- Global markets sink: Taking lead from lower closing on the Wall Street, Asian shares dipped in today's session as markets waited to see if US employment data could put the Federal Reserve on track to hike interest rates.
- US private employer data upbeat: A payrolls processor on Wednesday showed US private employers added 177,000 jobs in August, above economists' forecasts and supporting expectations for Friday's closely watched US payrolls report to be strong. An upbeat payrolls report would support the view that further US rate hikes may be on the cards, after Fed officials sounded a hawkish note at a meeting last weekend.
As expected, the gross domestic product (GDP) growth fell sharply in the June quarter, but the big picture is it is seen going north in the coming quarters, thanks to recent government measures. Globally, an over 3 per cent fall in oil prices dented markets, while at home, the Annual General Meeting of Reliance Industries due at 11 AM will hog the limelight.
Below is the wrap-up of this and more updates that will make or mar the market in Thursday's session:
- Economy lost sheen in Q1: Economic growth slowed sharply in the June quarter, putting the government's target further out of reach and raising concerns that the country will create too few jobs for a burgeoning workforce. Figures released by the Statistics Office on Wednesday showed GDP grew by 7.1 per cent in the June quarter, the weakest in five quarters and down from 7.9 per cent in the preceding three months.
- Year-end Sensex target at 28,800: Global financial services major Citigroup has maintained year-end Sensex target at 28,800 amid expected rise in interest rates by the US Federal Reserve. The US-based firm also said it expects "domestic fundamentals (corporate earnings) to drive markets in the medium term and would use any consolidation post-Fed as an opportunity to buy".
- RIL AGM: Annual General Meeting (AGM) of Reliance Industries is the major talking points of the day, where RIL Chief Mukesh Ambani is expected to give an update on Reliance Jio's 4G launch and signal culmination of the $42-billion capex cycle it had earmarked for its other businesses three years ago.
- Oil prices sink below $45 overnight: Brent crude futures sank below $45 per barrel overnight, but added 0.2 per cent to $47.00 today. US crude added 0.3 per cent to $44.83 after shedding 3.6 per cent on Wednesday.
- Global markets sink: Taking lead from lower closing on the Wall Street, Asian shares dipped in today's session as markets waited to see if US employment data could put the Federal Reserve on track to hike interest rates.
- US private employer data upbeat: A payrolls processor on Wednesday showed US private employers added 177,000 jobs in August, above economists' forecasts and supporting expectations for Friday's closely watched US payrolls report to be strong. An upbeat payrolls report would support the view that further US rate hikes may be on the cards, after Fed officials sounded a hawkish note at a meeting last weekend.
Infrastructure output growth slows to 3.2% in July
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Annual infrastructure output growth slowed to 3.2 per cent in July, mainly dragged down by a slowdown in production of electricity, cement and fertilizer, government data showed on Wednesday.
The output expanded 5.2 per cent from a year earlier in June.
For the period between April and July, the output growth came in at 4.9 per cent. Cement production grew 1.4 per cent year-on-year in July, slower than a 10.3 per cent rise a month ago.
Production of electricity rose 1.6 per cent from a year ago in July, compared with an 8.1 per cent rise in the previous month.
Fertiliser output growth slowed to 2.5 percent from 9.8 percent in June.
Annual infrastructure output growth slowed to 3.2 per cent in July, mainly dragged down by a slowdown in production of electricity, cement and fertilizer, government data showed on Wednesday.
The output expanded 5.2 per cent from a year earlier in June.
For the period between April and July, the output growth came in at 4.9 per cent. Cement production grew 1.4 per cent year-on-year in July, slower than a 10.3 per cent rise a month ago.
Production of electricity rose 1.6 per cent from a year ago in July, compared with an 8.1 per cent rise in the previous month.
Fertiliser output growth slowed to 2.5 percent from 9.8 percent in June.
CCI slaps over Rs 6,700 crore fine on 11 cement companies
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Competition Commission on Wednesday imposed more than Rs 6,700 crore penalty on 11 cement companies, including ACC and Binani, for cartelisation.
Apart from penalising the Cement Manufacturers Association (CMA), the fair trade regulator has directed all the entities to "cease and desist" from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market.
In a release, Competition Commission of India (CCI) said Rs 6,715-crore penalty has been imposed on 11 cement companies and the CMA.
The latest order has been passed by the watchdog following directions issued by the Competition Appellate Tribunal (Compat), which had remanded the matter involving the cement companies to CCI for passing fresh order. The tribunal had also set aside fine on the 10 cement firms imposed earlier.
A fine of Rs 1,147.59 crore has been imposed on ACC, while penalties on Jaiprakash Associates Ltd and Ultratech are Rs 1,323.60 crore and Rs 1,175.49 crore, respectively.
The fines on other companies are Rs 274.02 crore (Century), Rs 187.48 crore (India Cements), Rs 128.54 crore (J K Cements), Rs 490.01 crore (Lafarge), Rs 258.63 crore (Ramco), ACL (Rs 1,163.91 crore) and Binani (Rs 167.32 crore), according to the release.
CMA faces a fine of Rs 0.73 crore.
Penalising the companies, CCI said the actions of the companies and the CMA are not only detrimental to the interests of consumers, but also to the whole economy as cement is a critical input in construction and infrastructure industry and vital for the economic development.
Through a separate order, the regulator has slapped Rs 397.51 crore fine on Shree Cement Ltd, for unfair businesses practices.
According to CCI, the cement companies used the CMA platform and shared details relating to prices, capacity utilisation, production and dispatch and thereby restricted production and supplies in the market.
It was also found that the companies were acting in "concert in fixing prices of cement" which contravenes competition norms.
Among others, CMA has been asked to disengage and disassociate itself from collecting wholesale and retail prices through member cement companies or otherwise.
The association has also been restrained from collecting and circulating the details relating to production and dispatch by cement companies.
Highlighting the role of trade associations in promoting the interests of their members and the industry, CCI said cement companies were interacting using the platform made available by CMA.
"Such interactions have been found to have transgressed the limits in sharing of information and extended to discussions on cost, prices, production and capacities, thereby, facilitating the enterprises to determine prices and production in a concerted and collusive manner, than in a competitive manner," the release said.
Further, the watchdog cautioned that all those who participate in association activities, whether as a member or an executive or manager or employee, have to be sensitive to "the discussions not transgressing advertently or otherwise into anti-trust behaviour or practices".
Competition Commission on Wednesday imposed more than Rs 6,700 crore penalty on 11 cement companies, including ACC and Binani, for cartelisation.
Apart from penalising the Cement Manufacturers Association (CMA), the fair trade regulator has directed all the entities to "cease and desist" from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market.
In a release, Competition Commission of India (CCI) said Rs 6,715-crore penalty has been imposed on 11 cement companies and the CMA.
The latest order has been passed by the watchdog following directions issued by the Competition Appellate Tribunal (Compat), which had remanded the matter involving the cement companies to CCI for passing fresh order. The tribunal had also set aside fine on the 10 cement firms imposed earlier.
A fine of Rs 1,147.59 crore has been imposed on ACC, while penalties on Jaiprakash Associates Ltd and Ultratech are Rs 1,323.60 crore and Rs 1,175.49 crore, respectively.
The fines on other companies are Rs 274.02 crore (Century), Rs 187.48 crore (India Cements), Rs 128.54 crore (J K Cements), Rs 490.01 crore (Lafarge), Rs 258.63 crore (Ramco), ACL (Rs 1,163.91 crore) and Binani (Rs 167.32 crore), according to the release.
CMA faces a fine of Rs 0.73 crore.
Penalising the companies, CCI said the actions of the companies and the CMA are not only detrimental to the interests of consumers, but also to the whole economy as cement is a critical input in construction and infrastructure industry and vital for the economic development.
Through a separate order, the regulator has slapped Rs 397.51 crore fine on Shree Cement Ltd, for unfair businesses practices.
According to CCI, the cement companies used the CMA platform and shared details relating to prices, capacity utilisation, production and dispatch and thereby restricted production and supplies in the market.
It was also found that the companies were acting in "concert in fixing prices of cement" which contravenes competition norms.
Among others, CMA has been asked to disengage and disassociate itself from collecting wholesale and retail prices through member cement companies or otherwise.
The association has also been restrained from collecting and circulating the details relating to production and dispatch by cement companies.
Highlighting the role of trade associations in promoting the interests of their members and the industry, CCI said cement companies were interacting using the platform made available by CMA.
"Such interactions have been found to have transgressed the limits in sharing of information and extended to discussions on cost, prices, production and capacities, thereby, facilitating the enterprises to determine prices and production in a concerted and collusive manner, than in a competitive manner," the release said.
Further, the watchdog cautioned that all those who participate in association activities, whether as a member or an executive or manager or employee, have to be sensitive to "the discussions not transgressing advertently or otherwise into anti-trust behaviour or practices".
Amid growth claims, GDP grows a meagre 7.1 per cent in Q1
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Economic growth slowed sharply in the June quarter, putting the government's target further out of reach and raising concerns that Asia's third-largest economy will create too few jobs for a burgeoning workforce.
Figures released by the Statistics Office on Wednesday showed GDP grew by 7.1 percent in the June quarter, the weakest in five quarters and down from 7.9 per cent in the preceding three months.
And, while India retained the title of the world's fastest-growing large economy ahead of China, the outturn was well below the 7.6 per cent growth forecast by analysts in a Reuters poll.
Growth was dragged down by a contraction in mining and a sluggish farm sector.
"This number is much, much below the market expectation," said Devendra Kumar Pant, chief economist at India Ratings and Research.
Pant added that would make it hard to meet the government's goal of 8 percent in the current fiscal year.
Although India is outpacing China, growth needs to approach double digits to generate the jobs that Prime Minister Narendra Modi has promised to the millions of Indians joining the workforce each year.
MONSOON RELIEF
Looking ahead'' bountiful rains in the June-September monsoon season should provide some support to growth and relief to the country's 263 million farmers as they recover from two consecutive drought years.
Normal rainfall this summer can lift rural consumption by $80 billion in the year to end-March 2017, according to Citibank's estimates.
A hefty hike in wages for nearly 10 million federal government employees and pensioners will also fuel spending, countering some of the caution among urban consumers due to low wage growth.
Some economists still harbour doubts about how well India's new GDP series'' introduced last year, reflects the state of the economy, as it captures value addition rather than production volumes that the old series used.
Having inherited an economy expanding at its slowest in a decade, Modi has sought to get growth moving again by implementing reforms and boosting government spending to offset a lack of private sector investment.
Yet that is unlikely to compensate for slower growth in financial trade and transportation services, analysts said.
The government is trying to followthrough with more reforms, putting together a fiscal package for the textile sector.
"There is still tentativeness in sustaining the growth momentum''" said Shubhada Rao, group president and chief economist at YES Bank.
Rao said the weak figures could prompt the incoming governor of the Reserve Bank of India Urjit Patel to back an interest rate cut before the calendar year is out.
The RBI has been holding off because inflation, at over 6 percent, is outside its comfort zone.
"Broadly, investment continues to remain on a weak turf. We hope that in the second half, consumption will support growth," said Rao.
"The high frequency indicators do suggest a recovery."
Economic growth slowed sharply in the June quarter, putting the government's target further out of reach and raising concerns that Asia's third-largest economy will create too few jobs for a burgeoning workforce.
Figures released by the Statistics Office on Wednesday showed GDP grew by 7.1 percent in the June quarter, the weakest in five quarters and down from 7.9 per cent in the preceding three months.
And, while India retained the title of the world's fastest-growing large economy ahead of China, the outturn was well below the 7.6 per cent growth forecast by analysts in a Reuters poll.
Growth was dragged down by a contraction in mining and a sluggish farm sector.
"This number is much, much below the market expectation," said Devendra Kumar Pant, chief economist at India Ratings and Research.
Pant added that would make it hard to meet the government's goal of 8 percent in the current fiscal year.
Although India is outpacing China, growth needs to approach double digits to generate the jobs that Prime Minister Narendra Modi has promised to the millions of Indians joining the workforce each year.
MONSOON RELIEF
MONSOON RELIEF
Looking ahead'' bountiful rains in the June-September monsoon season should provide some support to growth and relief to the country's 263 million farmers as they recover from two consecutive drought years.
Normal rainfall this summer can lift rural consumption by $80 billion in the year to end-March 2017, according to Citibank's estimates.
A hefty hike in wages for nearly 10 million federal government employees and pensioners will also fuel spending, countering some of the caution among urban consumers due to low wage growth.
Some economists still harbour doubts about how well India's new GDP series'' introduced last year, reflects the state of the economy, as it captures value addition rather than production volumes that the old series used.
Having inherited an economy expanding at its slowest in a decade, Modi has sought to get growth moving again by implementing reforms and boosting government spending to offset a lack of private sector investment.
Yet that is unlikely to compensate for slower growth in financial trade and transportation services, analysts said.
The government is trying to followthrough with more reforms, putting together a fiscal package for the textile sector.
"There is still tentativeness in sustaining the growth momentum''" said Shubhada Rao, group president and chief economist at YES Bank.
Rao said the weak figures could prompt the incoming governor of the Reserve Bank of India Urjit Patel to back an interest rate cut before the calendar year is out.
The RBI has been holding off because inflation, at over 6 percent, is outside its comfort zone.
"Broadly, investment continues to remain on a weak turf. We hope that in the second half, consumption will support growth," said Rao.
"The high frequency indicators do suggest a recovery."
After a disappointing GDP, Govt sees pace picking up ahead
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Attributing the slowdown in first quarter GDP to a higher subsidy outgo, the Finance Ministry on Wednesday expressed confidence that economic growth would pick up momentum in the current fiscal to reach close to the 8 per cent mark.
Given the good monsoon which we had this year, the 7th Pay Commission payout effect and various structural reform measures which the government has taken we expect the growth to be higher than what we achieved last year (7.6 per cent), perhaps close to 8 per cent,'' Economic Affairs Secretary Shaktikanta Das told journalists.
On the CSO numbers, the Secretary said lower GDP is mainly on account of higher subsidy expenditure.
The Gross Domestic Product (GDP) growth data is calculated under the new methodology at market price, while GVA is calculated primarily at factor cost. GDP is GVA plus taxes on products minus subsidies on them.
The main reason for that (slowdown) is about 53 per cent higher subsidy expenditure. That is mainly because from Q1 itself we have started releasing subsidy allocations to the food, petroleum and fertiliser side, he added.
Attributing the slowdown in first quarter GDP to a higher subsidy outgo, the Finance Ministry on Wednesday expressed confidence that economic growth would pick up momentum in the current fiscal to reach close to the 8 per cent mark.
Given the good monsoon which we had this year, the 7th Pay Commission payout effect and various structural reform measures which the government has taken we expect the growth to be higher than what we achieved last year (7.6 per cent), perhaps close to 8 per cent,'' Economic Affairs Secretary Shaktikanta Das told journalists.
On the CSO numbers, the Secretary said lower GDP is mainly on account of higher subsidy expenditure.
The Gross Domestic Product (GDP) growth data is calculated under the new methodology at market price, while GVA is calculated primarily at factor cost. GDP is GVA plus taxes on products minus subsidies on them.
The main reason for that (slowdown) is about 53 per cent higher subsidy expenditure. That is mainly because from Q1 itself we have started releasing subsidy allocations to the food, petroleum and fertiliser side, he added.
General Awareness
India and US signed LEMOA agreement for the revival of defense sector renovation
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The United States and India signed LEMOA(Logistics Exchange Memorandum of Agreement) governing the use of each other’s land, air and naval bases for repair and resupply. This is considered as a step toward building defense ties in order to counter the growing maritime assertiveness of China.
About LEMOA Agreement :
Indian Defense Minister Manohar Parrikar in a meeting with U.S. Secretary of Defense Ashton Carter in Washington signed this agreement.
- This agreement facilitates the provision of logistical support, supplies, and services between the US and Indian militaries on a reimbursable basis, and provides a framework to govern them.
- Logistic Support, Supplies, and Services include food, water, billeting, transportation, petroleum, oils, lubricants, clothing, communication services, medical services, storage services, training services, spare parts and components, repair and maintenance services, calibration services, and port services.
- Logistics support for any other cooperative efforts shall only be provided on a case-by-case basis through prior mutual consent of the Parties, consistent with their respective laws, regulations and policies.
- Provision of Logistic Support, Supplies, and Services from one Party to the other would be in return for either cash payment or the reciprocal provision of Logistic Support, Supplies, and Services.
- This agreement concerning day-to-day military logistics is nonetheless a milestone in theUS-India defense relationship because of the outsized political importance it had taken on in India, where it had touched on domestic sensitivities.
- The Agreement will significantly enhance the operational capacity of the Indian Armed Forces, including in their response to humanitarian crises or disaster relief and does not create any obligations on either Party to carry out any joint activity. It does not provide for the establishment of any bases or basing arrangements.
- It is noted that India has had concerns that such an agreement would commit it to hosting US troops at its bases, or draw it into a military alliance with the United States and undermine its traditional autonomy. Carter and Parrikar reached an agreement “in principle” in April, but had yet to finalize the details.
- LEMOA (or the LSA as it used to be known) helps grease the wheels on the bureaucracy underlying defense collaboration, including reimbursements for military logistics sharing.India and the United States already share logistics on a case-by-case basis; LEMOA simply makes this easier.
Parrikar and Carter provided few specifics on two other so-called “foundational” agreements that complement LEMOA—namely the Communication and Information Security Memorandum of Agreement (CISMOA) and the Basic Exchange and Cooperation Agreement (BECA).
- The United States and India signed LEMOA(Logistics Exchange Memorandum of Agreement) governing the use of each other’s land, air and naval bases for repair and resupply. This is considered as a step toward building defense ties in order to counter the growing maritime assertiveness of China.About LEMOA Agreement :Indian Defense Minister Manohar Parrikar in a meeting with U.S. Secretary of Defense Ashton Carter in Washington signed this agreement.
- This agreement facilitates the provision of logistical support, supplies, and services between the US and Indian militaries on a reimbursable basis, and provides a framework to govern them.
- Logistic Support, Supplies, and Services include food, water, billeting, transportation, petroleum, oils, lubricants, clothing, communication services, medical services, storage services, training services, spare parts and components, repair and maintenance services, calibration services, and port services.
- Logistics support for any other cooperative efforts shall only be provided on a case-by-case basis through prior mutual consent of the Parties, consistent with their respective laws, regulations and policies.
- Provision of Logistic Support, Supplies, and Services from one Party to the other would be in return for either cash payment or the reciprocal provision of Logistic Support, Supplies, and Services.
- This agreement concerning day-to-day military logistics is nonetheless a milestone in theUS-India defense relationship because of the outsized political importance it had taken on in India, where it had touched on domestic sensitivities.
- The Agreement will significantly enhance the operational capacity of the Indian Armed Forces, including in their response to humanitarian crises or disaster relief and does not create any obligations on either Party to carry out any joint activity. It does not provide for the establishment of any bases or basing arrangements.
- It is noted that India has had concerns that such an agreement would commit it to hosting US troops at its bases, or draw it into a military alliance with the United States and undermine its traditional autonomy. Carter and Parrikar reached an agreement “in principle” in April, but had yet to finalize the details.
- LEMOA (or the LSA as it used to be known) helps grease the wheels on the bureaucracy underlying defense collaboration, including reimbursements for military logistics sharing.India and the United States already share logistics on a case-by-case basis; LEMOA simply makes this easier.
Parrikar and Carter provided few specifics on two other so-called “foundational” agreements that complement LEMOA—namely the Communication and Information Security Memorandum of Agreement (CISMOA) and the Basic Exchange and Cooperation Agreement (BECA).
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