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The Week in Review for 19 March 2010

The Week in Review for 19 March 2010
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First Published: Fri, Mar 19 2010. 01 15 AM IST
Updated: Wed, Mar 24 2010. 09 21 PM IST
New Delhi: The RBI tightened its monetary policy this week, well before its quarterly review in April. Late on Friday, it increased both the repo and reverse repo rates by 25 basis points. The new repo rate is now 5% and the reverse repo rate is 3.5%. The RBI says the hike comes into effect immediately. The repo rate is the rate at which the RBI lends money to commercial banks while the reverse repo rate is the rate at which the RBI borrows from banks.
There were mixed signals on inflation this week. India’s wholesale price index for February shot up to a 16-month high of 9.89%. In January, the index increased 8.56%
Meanwhile, food inflation showed signs of easing. The food price index rose 16.3% in the week ending 6 March. That’s lower than the previous week, when the index rose 17.8%.
Most of India’s top phone companies turned in their applications to participate in next month’s 3G bids. Bharti Airtel, Reliance Communications, Vodafone Essar, and Tata Teleservices applied to the department of telecommunications on Thursday. And on Friday, the last day for submissions, Idea Cellular and Aircel gave their applications as well.
Only two companies with pan-India telecom licenses, Loop Telecom and Uninor, did not apply to take part in the auction. There are now a total of nine applicants for 3G spectrum auction for just four licenses that will allow coverage across the country. The 3G spectrum auction is currently scheduled to be held on 9 April.
BHEL’s lucrative Sudan contract is coming under fire from potential investors. American pension funds like California’s CalPERS and Colorado’s PERA have written to the company asking it to put an end to its operations in that country. The US government accuses Sudan of sponsoring terrorism and violating human rights.
Advance taxes numbers for the fourth quarter came in on Monday, with some sectors doing better than others. While payments from manufacturing companies shot up, banks and financial companies dragged the numbers down. Advance tax payments by India’s largest company, RIL, rose more than 100% to Rs770 crore. But payments from the country’s largest bank, SBI, went up just 2.6% to about Rs1,857 crore. Analysts have told Mint banks and finance companies have been affected by rising bond yields that have cut into their treasury profits. Companies in India pay advance taxes four times a year, based on their own estimates of their profits.
On Thursday Standard and Poor’s revised its outlook for India from negative to stable. The change in rating was prompted by higher growth prospects and finance minister Pranab Mukherjee’s promise to cut India’s fiscal deficit.
The revised outlook is likely to reduce interest rates for Indian companies borrowing overseas. It could also bring in more capital into the country.
Standard and Poor’s also reaffirmed India’s long-term sovereign rating at BBB-, which is the lowest investment grade. The country’s short-term sovereign rating also remains at A3, which is a medium ranking. Sovereign ratings assess the ability of a government to repay its debt.
Low-cost airline, IndiGo has applied for approval to fly international routes. It has asked the civil aviation ministry for approval for after August next year when it completes its minimum five-year period of domestic operations.
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First Published: Fri, Mar 19 2010. 01 15 AM IST