01 July 2012
BoP, in Q4FY12, showed a deficit (of ~USD5.7bn) for the second straight quarter, as capital flows (USD16bn, better than Q3) were inadequate to fund the widening CAD (~USD21.7bn, 4.5% of GDP). Trade deficit, which typically improves in Q4 due to year-end seasonality, remained elevated on account of higher crude and gold imports and only marginal improvement in exports. Invisibles, too, showed only a slight improvement. On the capital account side, recovery in global risk appetite (post ECB’s LTRO) was well reflected in the sharp rise in portfolio flows, although debt-related flows remained weak, reflecting ongoing deleveraging by EU banks.
For FY12, CAD stood at an all-time high of 4.2% of GDP, which is clearly the vulnerability zone. However, as stated earlier, we see that factors are falling into place (declining crude prices, slowing gold imports and undervalued INR), which will pave the way for CADnarrowing to 3.2-3.3% of GDP in FY13.
CLICK links to Read MORE reports on: Edelweiss
Prime Minister Manmohan Singh has become finance minister too. His first spell as finance minister (1991-96 ) was a heady period of economic reform, converting India from an international beggar into a potential superpower. Will his second spell as finance minister produce another courageous set of major reforms ?
Not a chance. Singh has been pretty powerless for eight years as Prime Minister . That will not change one whit after he becomes finance minister, because all real power is wielded by Sonia Gandhi.
She is not much interested in economic reform- her emphasis has always been on welfare and subsidies. Her National Advisory Council has made sundry NGOs more important than the Prime Minister in deciding policy directions. She believes elections are won not by economic growth but by welfare schemes (like NREGA), giveaways (like the 2008 farm loan waiver) and job reservations. She thinks this strategy won her re-election in 2009, and finds little reason to change it.
CLICK links to Read MORE reports on: Economic Times
IFCI (Rs 40.25): Despite a strong show last week, the long-term outlook remains negative for IFCI. The stock finds an immediate support at Rs 33.5 and resistance at Rs 47. A close above the resistance can lift the stock towards Rs 66, though in between, Rs 54 could act as a minor resistance zone. On the other hand, a close below the support could weaken the stock to Rs 29.
The initial public offer of VKS Projects, an engineering and construction contractor for industrial projects, doesn’t have much going for it.
VKS has a list of reputed clients; revenues and earnings have clocked good growth. But its low order book size, short execution cycle, limited diversification and lack of revenue visibility are significant deterrents.
There is also likely to be a massive earnings dilution in the near term with most of the issue proceeds financing equipment purchase and setting up design offices.
Who has to file I-T returns?
Any individual who earns an income beyond the exempted limit (Rs 2 lakh for the financial year 2012-2013) needs to pay tax as well as file a ‘Return of Income’ to the Income-Tax Department of India. Often, the tax is deducted at the source itself i.e. the employer deducts tax from the salary and transfers it to the I-T department on behalf of the employee. Once the financial year ends, individuals can file for tax returns through decided channels, i.e. either online or by paper mode.
At present, people earning less than Rs 5 lakh from their salary and/or the interest on a savings account, are exempted from filing their I-T return under certain conditions. For example, those who want to claim a refund or have more than one employer in the financial year or earn an interest more than Rs 10,000 from a savings bank account need to file I-T return even if their income is less than Rs 5 lakh.