New Delhi: The big story this week was a cut in fuel prices. With election season closing-in, the government took a populist measure on Wednesday. It slashed prices of petrol by Rs5 per litre, diesel by Rs2 per litre and cooking gas by Rs25 per cylinder. This mini-booster is expected to stimulate growth, help the auto industry and tame inflation. But on the flip side, the margins that oil companies get from selling every litre of petrol comes down to Rs2 and for diesel less than Rs1. Under recovery or—the difference between the selling price and the cost—for a cylinder of LPG goes up from Rs32 to Rs57.
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And the bid to acquire scam tainted Satyam is getting hotter. Spice Group would like to buy a 51% stake in Satyam and promises to invest about Rs20 billion in the company. The group has submitted its proposal to the newly constituted board of Satyam.
Engineering giant Larsen and Toubro, first to throw its hat into the ring, has tripled its stake in Satyam to 12% and is seeking management control.
The world’s largest drug maker— Pfizer announced it would be buying New Jersey based Wyeth for $68 billion. Pfizer would borrow $22.5 billion from banks to finance the deal. The company plans to use stock and its cash reserves to fund the rest of the transaction. The deal was announced even as Pfizer’s fourth quarter net income plunged 90% to $266 million from $2.72 billion.
The Reserve Bank of India (RBI), in its third quarterly review of the credit policy, has kept key policy rates and reserve ratios unchanged but lowered the GDP forecast to 7% from 7.5% to 8% earlier. RBI also lowered inflation estimates to 3% by the end of March.
The effects of the economic slowdown have begun to hurt corporate India, and it’s most visible in the domestic auto industry. The country’s largest passenger car-maker, Maruti Suzuki, reported a 54.3% fall in profits in its third quarter.
On Friday Central Statistical Organization, released GDP figures. The GDP for 2005-06, 2006-07 and 2007-08 is 9%. For three consecutive years Indian economy has grown at 9%.