Mumbai: India needs to do more for fiscal improvement to catch up with its peer group, a senior official at Fitch Ratings said on Friday, after India unveiled its annual Budget for the fiscal year that starts in April.
“Overall, we think the country’s fiscal improvement is fairly in place, but India obviously has to do more to catch up with its rating peer group,” Franklin Poon, director at Fitch Asia sovereign team in Hong Kong, told Reuters.
“So, the Budget, in that perspective, is disappointing because it does not announce any measure for India to continue improve to fasten the pace of fiscal improvement,” he said.
International ratings agency Standard and Poor’s (S&P) too said on Friday that India’s 2008 Budget was largely in line with expectations and more work needed to be done for upgrading ratings. “The challenges to India’s ratings in the future comes from the implementation of the Sixth Pay Commission, slower growth and potential expenditure overruns,” said Sani Hamid, director at S&P in Singapore.
S&P upgraded India’s sovereign rating to BBB-/stable in January 2007, the first time the country has been on the lowest rung of investment grade in more than a decade.
Govt to buy RBI stake in Nabard, NHB
New Delhi: The government has allocated Rs1,900 crore to buy the central bank’s stake in two subsidiaries in 2008-09.
The transaction is likely to be Budget-neutral, with the central bank returning the funds as part of its annual dividend to the government, based on how a similar stake transfer was structured last year.
The government will pay the Reserve Bank of India (RBI) Rs1,450 crore for its stake in National Housing Bank (NHB) and Rs450 crore for its stake in the National Bank for Agriculture and Rural Development (Nabard), it said.
RBI owns 72.5% of Nabard, the leading lender to the farm sector, and 100% of NHB, which lends to housing finance companies.
RBI wants to transfer its stakes to the government to avoid conflict of interests posed by it being a bank regulator and owner. The government has supported the plan.
Last June, RBI sold its 59.7% stake in State Bank of India , the country’s largest bank, to the government for Rs35,530 crore.
It returned the sale proceeds in its annual dividend to the government, making the transaction budget neutral. Reuters
Specific duty scrapped on unbranded fuel
New Delhi: In a move to compensate petroleum companies for mounting losses, the government abolished a 6% ad valorem excise duty on sales of unbranded petrol and diesel and replaced the same by an equivalent specific duty of Rs1.35 per litre.
This results in a specific duty of Rs14.35 per litre on petrol and Rs4.60 per litre on diesel, which will help the oil marketing companies limit their revenue losses in future, even in the event of a price hike.
S.V. Narasimhan, director, finance, at Indian Oil Corp. Ltd (IOC), said, “This duty structure change will be revenue neutral for us. However, it will cushion against the impact of any price hike as the duty has been made specific.”
R.S. Sharma, chairman and managing director, Oil and Natural Gas Corp. Ltd, said, “This move will bring better stability when the price are going up. The Budget has given us no shocks or surprises. It is both revenue and tax-neutral.”
The last budget had reduced the ad valorem component of excise duty on petrol and diesel to 6%. Though international oil prices saw a surge in the last couple of years, the government has chosen to only partially pass through the price rise to consumers. Utpal Bhaskar
Microsoft to cut Vista prices to spur adoption, fight piracy
The world’s biggest software maker, Microsoft Corp., will cut the retail price of its Windows Vista operating system by as much as 48% to encourage customers to upgrade, and cut piracy in countries such as China. The cost of upgrading to the Premium and Ultimate editions of Vista will fall 20-30% in so-called mature markets such as the US, Japan and Europe, Microsoft corporate vice- president Brad Brooks said. Full versions will have less of a discount.
Microsoft, which made about 30% of its $51.1 billion (Rs2 trillion) in the last fiscal year from Windows, is cutting prices to attract consumers that haven’t upgraded from Windows XP, the previous version. Test promotions of the new prices have boosted profit, Brooks said. “It’s not so much competition with other companies; they’re competing with themselves,” said Chris Swenson, an analyst at New York-based NPD Group Inc. “If you’re using XP, you may be happy with your computing experience, you may love your computing experience. They really have to work that price lever.”
The price cuts are for versions of Vista sold by retailers, which account for a “very small percentage” of Windows revenue, Brooks said. About 80% of revenue in the Windows unit comes from software installed on personal computers. Microsoft spokeswoman Ange McLaughlin wouldn’t comment on whether prices will change for computer makers.
“Price is a pretty good lever,” Brooks said. “By dropping prices, we’re seeing a significant quantity uptake.” Bloomberg