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PMEAC economic outlook report for 2010-11
Prime Minister' Economic Advisory Council (PMEAC) pitched for tightening of the monetary and fiscal policies to check rising
inflation in its economic outlook report for 2010-11.
It has projected -
GDP growth at 8.5% for this year,
9% for 2011-12 and
Inflation rate is anticipated to be 6.5% by March 2011
for agricultural production 4.5% growth this fiscal and 4% in 2011-12.
According to the PMEAC projections, industry that grew 9.3% in 2009-10, is set to grow at 9.7% this fiscal and 10.3% in the next
fiscal. Services sector that contributes more than 57% to the gross domestic product is estimated to grow at 8.9% in the current
fiscal and 9.8% in the next one as compared to 8.5% that it had achieved in 2009-10.
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Un Food Regulations May Not Impact Indian Exporters
India is unlikely to be impacted by the new melamine and afaltoxin limit set by the UN Codex Alimentarius Commission
(Codex). In an effort to prevent dangerous contamination of food with melamine, a toxic chemical, Codex set new limits for the
amount of substance that can be present in baby formula, other foods and animal feed without causing health problems. The
maximum melamine allowed in baby formula was set at 1mg/kg and 2.5 mg/kg in other foods and animal feed. According to
trade bodies, India need not worry as it does not produce, consume or export melamine.
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India will be 3rd largest FDI recipient in 2010-12
According to United Nations Conference on Trade and Development (UNCTAD), India would emerge as the third largest
recipient of foreign direct investment (FDI) for the three-year period ending 2012. As per the report, India remained in the list
of top ten countries in 2009 to have the highest FDIs in the world. In 2009, the country received FDI worth $34.6 billion, while
the outward FDI was $14.9 billion. The world economy is expected to grow by 3 per cent in 2010.
A dose of 0.5ml of the vaccine Nasovac — delivered directly to the nasal cavity — would guard the person against the worrisome
H1N1 virus for a period of over a year or even two.
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InTErnATIOnAl AFFAIrs
Goldman settles charges with SEC for $550 m
GOLDMAN Sachs Group Inc agreed to pay $550 million to settle civil fraud charges over how it marketed a subprime mortgage
product, ending months of negotiations that rattled the bank’s clients and investors. The US Securities and Exchange
Commission (SEC) said the penalty was the largest ever for a financial institution.
Goldman, which regretted failing to disclose information in marketing materials, agreed to require two internal committees to
vet complex deals linked to residential mortgages. It also agreed to run by its legal or compliance department all marketing
materials used in connection with mortgage securities offerings.
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China - the world’s biggest energy user
China overtook the US as the world’s biggest energy user last year, according to the International Energy Agency. China
consumed 2,252 million metric tonnes of oil equivalent in 2009 in the form of crude, coal, natural gas, nuclear power and
renewable sources. That exceeded the 2,170 million tonnes used by the US.
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ECOnOMY, BAnKInG AnD FInAnCE
Costlier fuel nudges up June inflation to 10.55%
Even as the annual Wholesale Price Index-based inflation rose a lower-than-anticipated 10.55 per cent in June from 10.16 per
cent in May, actual estimates could well be much higher
The consistent upward revisions in the final monthly inflation numbers by the Government since
January have been rising provisional inflation figures.
On Wednesday, the Government raised the April inflation reading to 11.23 per cent from a provisional 9.59 per cent. It has been
making progressively steep upward revisions to the readings since January, suggesting it may be a step behind in anticipating
inflationary pressures.
On the revision in the data, Dr Pronab Sen, former Chief Statistician of India, said: “When inflation is accelerating, the
correction tends to be upward. This is because when data for certain products do not come in when provisional estimates are
compiled, the last recorded data (for the preceding month) is used. By the time the final estimates are prepared, updated data
collected from the centres is factored in, which pushes it (the final numbers) upwards.”
The provisional data for June shows inflation in primary articles in June rose 16.28 per cent from a year earlier, mostly due to
an increase in prices of food articles such as pulses, fruits and milk as well as non-food articles including fibres and minerals.
The data showed annual food inflation eased to 14.60 per cent in June from 16.49 per cent in the prior month. The fuel index
rose 14.32 per cent, while the June index of manufactured products was 6.6 per cent higher from the year-earlier level. On a
sequential basis, the primary articles index rose 0.8 per cent due to higher prices of vegetables, fibres and minerals; the fuel
index rose 1.7 per cent month-on-month due to recent price hikes; while the manufactured index rose 0.2 per cent.
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The Takeover Regulations Advisory Committee under the chairmanship of C Achuthan, in its 139-page report to the Securities
and Exchange Board of India (Sebi), has proposed sweeping changes on critical issues, including the open offer trigger, offer
size, indirect acquisitions, exemptions from open offer obligations, calculating the offer price and competing offers.
MEASURE:
Open offer trigger limit increased from 15% to 25%
Analysts said the proposed rules would raise the financing required for taking over a firm, but would encourage investors
taking strategic stakes in companies. It Gives PE entities and institutional investors more room to raise stake without
triggering an open offer. Likely to increase foreign flows.
Open offer size increased from 20% to 100%
Acquirers to make open offer for entire equity in case once stake exceeds 25%. And Minority shareholders will be able to exit
fully
Acquirer can't purchase shares in target firm for 26 weeks following completion of open offer
It Will prevent acquirers from underpricing offers and later buying shares from secondary market
Acquirer to accept shares in open offer proportionately, if response exceeds maximum permissible
promoter shareholding of 75%, but falls short of delisting threshold of 90%
Could be a dampener, as investors can't be certain of complete acceptance of their shares in open offer
Proposal for equal tax treatment on gains due to sale of shares through open offer as well as on those
sold in open market
Will encourage more people to tender shares in open offer if tax liability is lower
Total exports in the first quarter of this fiscal were worth $50.8 billion, up 32.25 per cent over the same period last fiscal.
Imports in June were $28.3 billion, up 23 per cent, while in Q1 it was $83 billion, a rise of 34 per cent.
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Cabinet okays SBI-State Bank of Indore merger
THE Cabinet cleared the merger of State Bank of Indore with its parent State Bank of India, a move that would help the
country’s largest lender scale up operations and cut costs.
SBI holds 98% stake in State Bank of Indore. The merger proposal was approved by the central board of SBI last year. Following
this, the Centre also gave an in-principle approval.
Acquisition of State Bank of Indore by SBI would allow economies of scale in terms of footprint, manpower and other resources.
State Bank of Indore has a large number of branches outside Madhya Pradesh and Chhattisgarh and all of them would be
controlled conveniently from SBI’s local head offices in various states, leading to substantial cost savings.
Fact: SBI is facing a situation where most of its branches and those of State Bank of Indore are competing for the same
business, in the same market, under the same brand. This has prevented SBI from fully exploiting its brand equity for driving
business growth. This will be the second merger of an associate bank with SBI after a similar exercise with State Bank of
Saurashtra in August 2008.
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Rice production less than third estimate at 89.13 mt
India harvested less rice in the crop year July 2009-June 2010 than earlier forecast by the government, at 89.13 million tonnes
against 89.31 million tonnes forecast in the third advance crop output estimates.
Cotton output pegged at 23.94 mt compared to 25.41 mt in third estimates
Sugarcane output pegged at 277.75 mt compared to 274.66 mt estimated earlier
APPOInTMEnTs
S Y Quraishi - 1st Muslim CEC
Dr. S.Y.Quraishi assumed charge as the 17th Chief Election Commissioner of India. Dr. Quraishi earlier held the position of
Election Commissioner since 30th June 2006. He is the first Muslim Chief Election Commissioner of India.
He will assume the office with effect from the 30th July, 2010 as the present Chief Election Commissioner Navin B. Chawla will
leave the office on attaining the age of sixty- five years
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sPOrTs
Muttiah Muralitharan became the first — and almost certainly the last — bowler to take 800 Test wickets. He took his 800th
wicket when he bowled out (leg-before) Harbhajan Singh.
Table Tennis
Anandita Chakraborty won both her matches as South Eastern Railway beat Eastern Railway 3-1 in the last league match of the
58th all-India Railways table tennis championship.
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MOrE CUrrEnT AFFAIrs
IOC ‘blocks' 250 domestic LPG connections
India will mount its first scientific expedition to the South Pole to mark the centenary of the first successful
expedition to the southern end of the world by the Norwegian explorer, Roald Amundsen.
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