Intellectual Thoughts by Sanjay Panda: July 2009

IMF Predicts Stronger 2010 Global Rebound After 09 Contraction

IMF predicts the global economic rebound next year will be stronger than it forecast in April as the financial system stabilizes and the pace of contractions from the U.S. to Japan moderates. IMF said in a revised forecast that the world economy will expand 2.5 percent in 2010, compared with its April projection of 1.9 percent growth. A contraction this year will be 1.4 percent, worse than an April forecast for a 1.3 percent drop..

The improved outlook for next year reflects differing stages of recovery across the globe, with emerging economies including China helping drive the world out of the worst recession in six decades, while Europe lags behind the U.S. and Japan. Still, the fund warned that the pickup is expected to be “sluggish” and called repairing the international banking system a priority.

Advanced economies will continue to lead the slump this year by shrinking 3.8 percent. They will grow 0.6 percent in 2010, more than forecast in April, when the fund expected no growth for next year.

As per IMF the U.S. GDP will shrink 2.6 percent this year before expanding 0.8 percent in 2010 while for Japan likely to expand by 1.7 percent next year however this year its like to contract 6 percent.

Emerging and developing economies will grow 4.7 percent next year, a 0.7 percentage point increase from the previous forecasts. This year they will expand 1.5 percent, compared with a 1.6 percent expansion expected in April.

China’s growth is forecast to accelerate to 8.5 percent next year, a percentage point more than expected in April, after slowing to 7.5 percent this year. India’s economy will expand by 6.5 percent in 2010, compared with the April forecast of 5.6 percent, after a 5.4 increase percent this year that was higher than the IMF’s prior estimate.


India Budget 2009, Highlights

* Govt plans to bring back economy to high growth of 9%
* GDP growth dipped to 6.7% in FY'09
* FM to make pre-budget talks with state FMs annual affair
* Fiscal deficit up from 2.7% to 6.8% of GDP
* Return to fiscal prudence at the earliest
* 'Aam admi' is focus of all programmes and schemes
* IT exemption limit raised; Rs 15,000 (rpt) 15,000 for Sr.Citizens
* Limit raised by Rs 10,000 for tax payers, including women
* 10% surcharge on personal income tax scrapped
* Fringe Benefit Tax abolished
* No change in corporate tax
* Defence gets Rs 1,41,703 cr, up 34%
* Total fiscal stimulus in 2008-09 amounts to Rs 1,86,000 cr
* IIFCL to evolve mechanism for increased funding of infra
* IIFCL to re-finance commercial bank loans up to 60 per cent in critical
projects through PPP to tune of Rs 1,00,000 cr
* Allocations for highways being stepped up by 23 per cent
* Funds for housing, amenities for urban poor up Rs 3,973 cr
* Funds for JN Urban Renewal Mission up 87% to Rs 12,887 cr
* Assistance for storm-water drainage project up by Rs 300 cr
* Farm credit target up at Rs 3,25,000 cr from Rs 2,87,000 cr
* Interest rates incentive to farmers to repay loans on time
* Additional Rs 1,000 crore for accelerated irrigation scheme
* Export Credit Guarantee scheme extended till March 2010
* 2% interest subvention (IS) scheme extended till March 2010
* IS scheme to cover 7 job-oriented sectors, including textile, handicrafts and handlooms.
* Commodity Transaction Tax abolished
* New pension system trust exempted from STT; DDT
* Minimum Alternate Tax hiked to 15% from 10%
* Tax holiday on petro sector extended to natural gas
* 100% tax deduction on political donation
* Stimulus for print media for another six months
* Fertiliser subsidy to be nutrient-based, not price
* Expert Grp to form viable pricing for imported petro goods
* Banks and insurance firms to remain in public sector
* Rs 100 cr one-time grant to expand banks in unbanked areas
* Govt committed to provide Rs 100 a day as wages under NREGA
* Allocation of Rs 39,100 cr to be made for NREGA
* NREGA coverage increased to 4.74 crore households in FY'09
* Work National Food Security scheme has begun
* Allocation for Bharat Nirman being raised by 45 per cent
* Rs 2,000 cr rural housing fund under National Housing Bank
* Mission for female literacy with focus on minorities, SC/ST
* 50% of all rural women to be brought into SHG programmes
* Full interest subsidy for students in select institutions
* Five lakh students to benefit
* Modernisation of national exployment exchanges
* Action for social security to unorganised sector workers
* New pension benefits for 12 lakh jawans and JCOs from July
* One lakh dwelling units for paramilitary forces personnel
* Unique Identification Card to citizens in 12-18 months
* Provision of Rs 120 crore for UIC project
* Rs 2,113 crore allocated for IITs and new IITs
* Rs 3472 cr for Commonwealth Games from Rs 2112 cr

Update : Pharma Industry as per the latest Economical survey

The pharma industry in the country has grown from mere Rs 1500 crore turnover in 1980 to over Rs 78,000 crore in 2008, with about 10 per cent share in the volume of global production, according to the latest Economic Survey which called for decontrolling of prices.

High growth has been achieved through the creation of required infrastructure, capacity building in complex manufacturing technologies of active ingredients (APIs) and formulations, entering into drug discovery through original and contract research and manufacturing (CRAM) and clinical trials and product specific strategies of acquisition and mergers. The domestic sector had a production turnover of Rs 47,241 crore from about 10,000 small-scale and 300 large and medium manufacturing units in 2008, the survey said.

The survey, presented by finance minister on Thursday in the Parliament, also said price control should be limited to essential drugs in which there are less than five producers. All others should be decontrolled.

Pharmaceutical exports have grown from Rs 6,256 crore in 1998-99 to Rs 30,759 crore in 2008. Exports of pharmaceuticals have been consistently outstripping the value of corresponding imports in the period 1996-97 up to 2007-08. Exports registered a growth rate of 25 per cent in 2007-08 over 2006- 07. The sector attracted FDI amounting to US$1,401.60 million during 2000-01 to September 2008, of which, US$125.30 million occurred during April- September 2008, according to the survey.

Investments in pharmaceutical sector are now expanding into areas of innovative R&D focused outsourcing opportunities like clinical trials, data management services, pharmaceutical informatics, lead discovery and optimization, pharmaco-kinetics and pharmaco-dynamics and pre-clinical drug discovery in combinatorial chemistry, chiral chemistry, new drug delivery systems, bioinformatics and phyto-medicines. "The Indian pharma industry is taking leaping strides in innovative drug discovery with clinical trials underway in 34 molecules. Consequently, the Indian drug discovery market has grown from US$ 470 million in 2005 to US$ 800 million in 2007," it said.

Dow to close 3 Plants in US

Dow Chemical is closing three US manufacturing plants, including an ethylene production unit in Hahnville, Louisiana in a further bid expand its specialty chemicals business. The other facilities earmarked for closure, a second in Hahnville and one in nearby Plaquemine, make ethylene derivatives for plastics manufacture, including for the production of pharmaceutical packaging.

Dow said that the closures will cost around $700m (€497m), but will allow it to save $100m a year over the longer term. It added that the 100 or so workers who staff the three plants will be offered jobs elsewhere in the company.