NMDC suffered Rs. 746 crore-revenue losses during 2007-10: CAG

Iron ore miner NMDC has suffered Rs. 745.94 crore revenue loss during 2007-10 for not revising the domestic prices of the steel-making raw material in line with prevailing market rates, government auditor CAG said.

"...due to non-revision of domestic prices by the company (NMDC) in line with movement of market price, the company has suffered a revenue loss of Rs. 754.94 crore during 2007-10," CAG said in a report, tabled in Rajya Sabha, today.

The government auditor also said, by extending unwarranted reduction in price, NMDC had passed Rs. 600.83 crore benefit to customers during 2010-11."Further, not increasing the prices by full percentage in line with increase in export prices led to a loss of Rs. 227.40 crore during the same period," CAG said.

The government miner exports iron ore by entering into long-term agreements (LTA) with Japanese Steel Mills (JSM) and the price it gets is at par with what Australian and Brazilian exporters get from JSM.

LTA prices of exports formed the basis for determining the domestic prices for LTA with domestic customers, the auditor said, adding that 95 per cent of NMDC's sales came from LTA and the rest were spot sales during 2005-12. "Sales to domestic customers through LTA accounted for 84 per cent of its sales," CAG said.


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Internet to contribute up to $100 billion to India's GDP by 2015


According to McKinsey & Company prediction, in the next three years Internet services and devices industry will amplify its contribution to $100 billion i.e. about Rs. 5.5 lakh crore to India’s GDP. The report also says that this industry will produce about 2.2 crore recruitments by 2015.

As per the report named ‘Online and Upcoming: The Internet’s Impact on India’, Internet contribution in GDP was 1.6 per cent ($30 billion) in 2011.

McKinsey & Company partner Chandra Gnasambandam stated that currently this industry has generated 1.6 per cent to India’s GDP which could be increased to 2.8 to 3.3 per cent by 2015, if India gets more Internet users and Internet technology-related consumption and investment.

He further added that this could increase Internet’s contribution to GDP from $30 billion now to $100 billion in 2015 as well as increase direct and indirect jobs from 6 million to 22 million.

The report further mentioned, currently India is on third rank in the world’s Internet market with 120 million Internet users, which is expected to grow to 370 million users in 2015. 

Currently the most significant component of the Internet’s impact on GDP is India’s information and communication technology (ICT) exports. However, private consumption and investment from private and public sector can also influence growth in future.


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RBI sets 6 month deadline for banks to cut exposure to NBFCs to 7.5%

The Reserve Bank of India has set a deadline of six months for banks to reduce exposure to 7.5% of their capital funds from 10% in non-banking finance companies or NBFCs which have half of their total financial assets in gold loans.

 The banking regulator warned about concentration risk inherent in NBFC's business model when more than 50% of their lending is against gold jewellery. These NBFCs rely heavily on bank finances to expand their business.

NBFCs which are predominantly engaged in lending against collateral of gold jewellery have recorded significant growth in recent years, both in terms of their balance sheet size and physical presence.

In view of regulatory concerns arising out of the rapid pace of business growth and concentration risk inherent in their business model, RBI has prescribed certain prudential measures like limiting loan to value ratio, increasing the minimum tier I capital requirement and, prohibiting loans against bullion/primary gold.

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Slowdown in foreign trade compounds economic woes

Indian export data released on Friday confirmed a sharp slowdown in foreign trade, adding to the woes of Asia's third-largest economy and piling more pressure on the weak coalition government to take steps to boost economic growth.

Indian exports inched up 3.23 percent to $24.5 billion in April from a year earlier after falling in March, a far cry from the more than 20 percent growth recorded in recent years. India has been hit by falling demand from its traditional export markets in the United States and Europe.

Faced with a barrage of dismal economic data in the past few months, the government's chief strategy has been to blame the downturn on high global oil prices and the euro zone debt crisis, while insisting that this is a temporary blip and growth prospects are still good.

The government has been criticised for its piecemeal approach to the economic crisis so far. Economists were sceptical about the impact of austerity measures announced on Thursday that included some curbs on government spending.

Singh on Friday also unveiled a new plan to fast-track delayed infrastructure projects to provide fresh impetus to the economy. More than 200 large state-funded road, port and oil pipeline projects are running behind schedule.

In the three years before the global financial crisis, India was roaring with growth above 9 percent and ambitions to challenge China as the world's top emerging economy.

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Moody's downgrades major private sector banks

Credit ratings agency Moody's today downgraded India's three top private sector lenders -- ICICI Bank, HDFC Bank and Axis Bank -- on growing concerns over the country's sovereign debt ratings.

Earlier S&P downgraded US and even Japan's ratings were downgraded. Do read about credit rating and sovereign debt crisis.

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