A new report concludes the prospects for India’s economy could be worse than previously forecast. On Monday, C. Rangarajan, the head of the Prime Minister’s Economic Advisory Council released projections for the fiscal 2011-12. It’s new forecast for growth is 8.2% compared to the earlier 9%. Worst yet, the report says the fiscal deficit in March of next year is likely to reach 4.7% compared to the government’s own target of 4.6%.
Switching to corporate results, the country’s biggest telecom firm Bharti Airtel has reported first quarter earnings that lag behind most street estimates. Net profit for the three months to June dropped 28% to Rs1,215 crore. That was despite a 39% rise in revenue to Rs16,975 crore.
Also in corporate, India’s national carrier has been told it is no longer welcome at one of the most prominent airline alliances. But the reasons for the move aren’t clear. This week Air India’s membership bid for the Star Alliance was rejected even though it had been invited earlier. We’ve learnt the move came after the civil aviation ministry refused to agree to let Jet Airways join the group. Meanwhile, the Maharaja is still getting government support. On Thursday the cabinet approved an extra equity infusion of twelve hundred crores for Air India. This is over and above a Rs500 crore investment the government has made in the airline this year.
Moving on, the government is pulling all stops in its efforts to bring in more funding for infrastructure. And its focus is now on infrastructure bonds. Mint has learnt the finance ministry has decided to cut the lock-in period for foreign investors by half. That means the new lock-in period will be for just 18 months. India is looking to dramatically expand its infrastructure over the next few years. By one estimate it will have to spend a trillion dollars on infrastructure by 2017. Meanwhile, we’ve also learnt the Reserve Bank will also halve FII’s lock-in period for its planned infrastructure debt funds.