New Delhi: With election season closing-in, government took a populist measure on Wednesday. It slashed prices of petrol by Rs5 a litre, diesel by Rs2 a litre and cooking gas by Rs25 per cylinder. No doubt this mini-booster will stimulate growth, help auto industry and inflation.
But there can be a flip side too. The margins that oil companies get from selling a litre of petrol comes down to Rs2 and for diesel less than one rupee. Under recovery or ---the difference between the selling price and the cost--- for a cylinder of LPG goes up from Rs32 to Rs57. So maybe its good politics on the back of bad economics.
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.
It’s over a month Raju made his famous disclosure and the Securities and Exchange Board of India, most competent to go into probe the scam, has still not been allowed to meet the arrested accused. Meanwhile the new board is yet to appoint a CEO.
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.
Back home, Reserve Bank of India has hit the pause button. In its third quarterly review of the credit policy it 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 March end.
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 (Q3).
On Friday, Central Statistical Organisation, released GDP figures for 07-08 at 9%. For three consecutive years Indian economy has scored 9%. Have a hard look because after the downturn it could be long before India turns to this record!
And on Monday India celebrated its 60th Republic day amid tight security.
That’s all we have for the week. Have a great weekend!