Currency notes issued before 2005 to be withdrawn: RBI

The Reserve Bank today decided to withdraw all currency notes issued prior to 2005, including Rs. 500 and Rs. 1,000 denominations, after March 31 in a move apparently aimed at curbing black money and fake currencies.

"After March 31, 2014, it (RBI) will completely withdraw from circulation all bank notes issued prior to 2005. From April 1, 2014, the public will be required to approach banks for exchanging these notes," the RBI said in a statement.

The public can easily distinguish the currency notes issued before 2005 as they do not have the year of printing on reverse side. The year of printing in a small font is visible at the middle of the bottom row in notes issued after 2005.

Asking people not to panic and cooperate in the withdrawal process, the Reserve Bank of India (RBI) said old notes will continue to be legal and can be exchanged in any bank after April 1.

"From April 1, 2014, the public will be required to approach banks for exchanging these notes. Banks will provide exchange facility for these notes until further communication," the RBI said.

From July 1, 2014, persons seeking exchange of more than 10 pieces of Rs. 500 and Rs. 1,000 notes will have to furnish proof of identity and residence to the bank.

Although the RBI did not give any reason for withdrawal of pre-2005 currency notes, the move is expected to unearth black money held in cash.

As the new currency notes have added security features, they would help in curbing the menace of fake currency.

At present, currency notes in denominations of Rs. 5, Rs. 10, Rs. 20, Rs. 50,Rs. 100, Rs. 500 and Rs. 1,000 are issued.

Source: http://profit.ndtv.com/

IMF Ups India’s Current Growth Estimate to 4.4%

The International Monetary Fund (IMF) has bumped up India’s growth forecast for the current fiscal by more than half a percentage point thanks to a normal monsoon and improved exports, virtually admitting that it may have been too pessimistic in October when it pegged the number at less than 4%. 
Finance minister P Chidambaram had led India’s strong protests against IMF’sassessment, which was made amid economic gloom and a depreciating currency. In an update of its flagship World Economic Outlook (SEO), the IMF said on Tuesday that India will grow 4.4% in 2013-14 in terms of market prices against the 3.8% estimated initially, citing a better second half. “Growth in India picked up after a favourable monsoon season and higher export growth and is expected to firm further on stronger structural policies supporting investment,” it said. 
In terms of factor cost, which is the more widely used method of computing national income in India, growth is pegged at 4.6%, revised upward from 4.25% estimated earlier. 
IMF sees growth rising to 5.4% in 2014-15 and 6.4% in the year after, which is lower than the respective 6.2% and 7.1% recovery forecast by its Bretton Woods twin, the World Bank. 
The estimate for 2014-15 is marginally higher than the October forecast of 5%. The fund said global activity strengthened in the second half of 2013 and expects it to gather pace thanks to a recovery in advanced economies. It sees 2014 calendar growth at 3.7% against 3.6% estimated earlier, which is forecast to rise to 3.9% in 2015. “The basic reason behind the stronger recovery is that the brakes to the recovery are progressively being loosened. The drag from fiscal consolidation is diminishing. The financial system is slowly healing. Uncertainty is decreasing,” said Olivier Blanchard, IMF chief economist. 
The report – Is the tide rising? – warns that “downward revisions to growth forecasts in some economies highlight continued fragilities, and downside risks remain”. Estimates have been lowered for the Association of Southeast Asian Nations (Asean), Italy and the Commonwealth of Independent States, or CIS, led by Russia. 
It said the euro area was turning the corner from recession to recovery, adding that growth is likely to rise to 2.8% in the US in 2014 from 1.9% in the current year, which is good news for India’s exports. The report cautions against any rushed withdrawal of stimulus programmes. 
“With prospects improving, however, it will be critical to avoid a premature withdrawal of monetary policy accommodation, including in the United States, as output gaps are still large while inflation is low and fiscal consolidation continues,” it said, adding that strong growth is needed to repair balance sheets. 
In the case of emerging market and developing economies, it said there was a need to manage the risk of potential capital flow reversals.

Source: The Economics Times

DECEMBER FLIGHT STORY IndiGo Slips for a 2nd Month, but is Still Numero Uno

India’s largest passenger carrier IndiGo lost market share for the second consecutive month as its market share slipped marginally to 28.2% in December 2013 as compared to 28.6% in the previous month. And clambering back to the second spot in December was low-cost carrier SpiceJet with a 19.1% market share, which it shared with Jet Airways, which reported a market share of 19.1% in December. However, when combined with JetLite, the Jet Airways Group was the second-largest airline with 24.6% market share, courtesy Jet-Lite’s 5.5% share. GoAir, which was the largest gainer in November 2013, kept its market share at 8.8% during December, while Air India’s share fell marginally to 19%. 
Market leader in India, and also the most profitable airline, IndiGo’s declining share for the second successive issue was not a serious issue. “It’s just a marginal drop in market share and such fluctuations keep happening. They have kept it more or less at November levels. But November was a big drop and that was due to an aircraft which was grounded for maintenance. It meant IndiGo had lower capacity, while GoAir added its capacity in November by taking delivery of another aircraft,” an aviation industry consultant, who did not want to be quoted, said. The month of December also brought some cheer to the airlines. More passengers flew in December 2013, than they did in the same month of the previous year. 
Overall, domestic airlines carried 55.86 lakh passengers or 3.37% more, during December 2013 as compared to the same month last year. During the full calendar year 2013, airlines carried 6.14 crore passengers or 4.43% more than the previous calendar year. Apart from Air India’s slight drop in market share, the greater concern was its on-time performance during December 2013. After achieving 82% on-time performance from top six metros in the first half of the 2013-14 fiscal, the airline’s on-time performance at top six metros during December was the lowest at 69.8%. The airline is preparing to join Star Alliance over the summer. 
In terms of on-time performance, SpiceJet, which is chasing the more lucrative corporate clientele, achieved the best performance in December 2013, with 82.2% of its flights operating on schedule from the top six metros. With a total score of 82.2% of flights on-time, SpiceJet was at the top of the list on the parameter of on-time performance (OTP) for December 2013. 
On-time performance of scheduled domestic airlines is computed by the DGCA for six metro airports — Bangalore, Chennai, Delhi, Hyderabad, Kolkata and Mumbai. There was also good news for airlines in terms of load factors. All airlines improved over November 2013, but the leader of the pack in December was JetLite, which was flying its planes 78.5% full. 
Air India’s flights were also operating more than three quarters full with 77.3% load factors during the month. IndiGo’s flights were marginally less full than Air India’s as the low-cost carrier had 77.1% load factor. 
Regional carrier Air Costa, which is based out of Hyderabad, was the surprise of the month. The carrier, which struggled to fill its planes even by half during the first two months of operations, had load factors of 72.6% during December 2013. 
During the calendar year, Air India also managed to eat into a portion of the private carrier’s market with a 10.46% growth over the number of passengers carried last year. Air India carried 119.09 lakh domestic passengers in 2013.

Source: The Economics Times

Mobile Launches Grow 85% in 2013: The Economics Times

                                                                     

CHASING MARKET LEADER P&G To Invest 1,500 cr in India to Catch Up with HUL

 P&G Home Products, an Indian unit of Procter & Gamble, will borrow . 1,500 crore in the form of inter-company loan, the firm has said amid efforts to catch up with market leader Hindustan Unilever. 
The unlisted maker of Tide detergent and Pantene shampoo has passed a special resolution for the borrowing, which will be in addition to its paid-up capital and reserves, according to its annual filing with the Registrar of Companies last week. The company did not specify the time frame for the borrowing or how it would be used. 
A spokesperson for P&G did not respond to ET’s specific query on how the funds would be utilised, but said, “Inter-company borrowing is regular business practice where funds move between different divisions at different times. Since our Indian operations are spread across three different legal entities, it is routine to make updates on such plans to move funds within our own legal entities as per the Companies Act.” 
Analysts say the company would have to direct most of the funds to capacity expansion if it has to include more brands from the group’s global portfolio. “Setting up more manufacturing units and expanding existing plants will be key for P&G if they want to launch more brands from its parent company,” said Nitin Mathur, consumer research analyst at Espírito Santo Securities. 
P&G Home Products has already invested more than . 2,000 crore over the last two years to spruce up its existing factories and set up a new multi-product plant near Hyderabad. The company’s efforts at increasing local production are aimed at cutting dependence on costly imports. For instance, the company, which entered the toothpastes category six months ago, is dependent on China for most of its oral-care supplies. 
P&G is the world’s largest consumer goods company by revenue. Despite clocking a CAGR of 25% in India in the last decade, it has been facing criticism for its increased spending in emerging markets at the cost of expansion in developed countries, which had been a cash cow for the global company. The huge investment in India, in turn, has impacted its local profitability. 
P&G Home Products posted a loss of . 481.5 crore in 2012-13 — its third consecutive loss and the highest so far — as it engaged in a price war despite rising commodity costs. In contrast, the net profit of Unilever’s local arm grew more than 40%. 
With a two-decade-long presence in India, P&G rakes in over a billion dollars in revenues through its subsidiaries — Procter & Gamble Health & Hygiene, Gillette India and Procter & Gamble Home Products. The group, however, has been slow in increasing its local market share in comparison with HUL. 
“While Tide and Olay gained share rapidly in the initial years after their launch, both brands seems to have plateaued now. Even its latest brand Oral B hasn’t made much impact with Colgate still gaining share every quarter,” a senior analyst at a domestic brokerage house said, requesting anonymity. There are production issues, too. Last year, Delhi-based third-party manufacturer JHS Svendgaard took P&G to the competition watchdog when it did not renew an agreement to make its laundry brand Tide. 
sagar.malviya@timesgroup.com 

Source: The Economics Times

By:  SAGAR MALVIYA

India Saves 14k Cr as US Refuses Higher IMF Quota

The United States’ refusal to sign off on a higher quota for developing countries such as India in the International Monetary Fund (IMF) has given the government an opportunity to save . 14,000 crore that it had budgeted for this reform and use it for shoring up its fiscal deficit. 
The government has been setting aside the sum for the past three years to pay for the higher quota at the multilateral agency that has been stalled as the US Congress has refused to ratify the IMF reform agreed to in 2010. “There are no signs of any breakthrough, so there will be no cash outgo of . 14,000 crore as budgeted,” said a senior official, adding that any increase in quota was unlikely before next year. 
The reform seeks to increase the quota of developing countries in the IMF by six percentage points and also move two of the 24 directorships from European to developing countries. With the stalling of the reform, the government has got some leeway at a time when the finance ministry has ruthlessly cut expenditure to stay within its fiscal deficit target of 4.8% of GDP for 2013-14. The government had budgeted . 56,574 crore for investment in international financial institutions this fiscal. Of this, . 42,149 crore was to be met through issue of securities, or without any cash outgo. The additional saving will help the government rein in its fiscal deficit, which rose by November-end to . 5.1 lakh crore, or 94% of . 5.42 lakh crore estimated for the entire fiscal. 
“The government should look at any opportunity that comes its way. Anything as a standalone may look like a small amount but such opportunities can make a serious contribution towards reining in the fiscal deficit,” said Sunil Sinha, principal economist at CRISIL Research. 
The government is looking to plug all gaps to curtail its expenditure and find ways to shore up its revenues. It has already asked state-run companies to issue special dividends given that it has managed to raise only about . 3,000 crore with its disinvestment programme this fiscal. 
“After Coal India, other public sector units will soon follow suit on specialdividends. The government is expected to raise around . 7,000 crore through its partial stake sale in Axis Bank,” an official said, adding that with some clarity on stake sale in Balco and Hindustan Zinc, the government would be easily able to garner revenues to meet the fiscal deficit target.

Source: The Economics Times
By:  Dheeraj Tiwari