the daily economic update

June 18, 2010

Top stories

1. BIG TELECOS WOULDN’T JOIN TRAI’S CONFERENCE CALLS: India’s leading GSM operators are unhappy with the telecom regulatory authority of India (TRAI)‘s process of fixing prices of 2g spectrum beyond the 6.2Mhz mark. The operators (bharti airtel, idea cellular and Vodafone essar) have all refused to participate in the telecom regulator’s consultation process to set a price for 2g spectrum citing lack of transparency.

2. EASIER RESIDENCY TEST FOR FOREIGN COMPANIES IN DTC: the latest draft on the Direct Tax Code has negated the definition of foreign company given by the earlier paper. The original text brought the world wide income of every foreign firm which had its control partly in India and partly abroad taxable in India. The new paper has junked this definition and stated that a foreign firm will be treated as a resident only if its effective place of management is in India i.e. if the board functions from India or if the strategic decisions are taken from India.

3. RIL IS IN TALKS WITH PIPAVAV TO PICK UP 26% STAKE: PSL or pipavav shipyard ltd. i.e. India’s largest integrated shipyard with facilities to build ships and off store structures is eyed by RIL , which hopes to take a 26% share in the enterprise. Though the deal seems likely to happen, none of the parties have come out with a statement confirming any progression.

4. FOOD & FUEL INFLATION FALL: though the economy is still battling with high inflation a little respite was seen in the food & fuel inflation. Food price inflation for the week ended June 5 was at 16.12% compared to 16.74% in the previous week. Similarly, fuel price inflation dropped to 13.18% as against 14.23% in the previous week.

5. EUROPEAN CRISIS TO BE A THREAT: if country’s chief statistician, Mr. Pronab Sen., is to be believed the European crisis may have an effect on the country’s growth. The crisis may cause a turn down in the global demand hampering India’s exports. But the statistician maintains that the effect would not be as large as it was in the previous years. “At that time a large volume of our exports was based on international trade credit. When the international banks dried up, exports came to a halt as the banks were not prepared for this. Now Indian banks are back to trade credit business” he maintains.

6. Sensex closes at 17616.69 up by .88%.

7. Nifty closes at 5273.85, up by .79%.