Pound hits 2009 high against euro

Sterling has reached its highest level against the euro since the start of the year after data suggested the UK recession may be over.

One pound was worth 1.1758 euros in early afternoon trading, having closed the previous day at 1.1672 euros.

On Wednesday the National Institute of Economic and Social Research estimated that the economy grew in April and May.

The pound was also boosted by data showing industrial output rose in April - the first monthly rise in 14 months.

In addition, the pound's rise was aided by a survey on attitudes to inflation by the Bank of England, which showed inflation expectations for the coming year rose to 2.4% in May from 2.1% in February, the first rise since August.

Sterling was also up against the dollar, rising one cent to $1.6429.

The pound had fallen against both the euro and the dollar last week and at the beginning of this week amid concerns about possible challenges to the leadership of Gordon Brown.

However, in the past couple of days the political situation appears to have stabilised.

Industry asks Govt to decontrol fuel price, restore tax holiday

Freeing petrol and diesel prices from official control, restoring tax breaks on natural gas production and tax holiday for private oil refiners should be part of the government's agenda in the first 100 days, industry wished.

The Petroleum Federation of India, the apex body of public and private oil firms has submitted to the Oil Ministry a 100-day agenda for the new Government.


On top of its list is decontrol of petrol and diesel prices. Currently, public sector retailers sell auto fuel at Government-dictated rates which the private sector competition is unable to match in times of high input cost (crude oil prices).


Petrofed has asked the Government to operationalise the 28th March 2002, resolution that freed petrol and diesel price from administrative control. State retailers fixed retail selling price every fortnight based on international rates till 2004 when the UPA came into power for the first time and brought back administrative controls.


The Federation also wanted the Government to gradually phase out subsidy on domestic LPG through provision of subsidy to families through coupons/smart cards.

Also, it wanted the Government to provide targeted direct subsidy administered through a smart card system for distribution of kerosene.


It wanted the tax holiday on natural gas to be restored and the same extended to private oil refiners.



The Finance Minister P Chidambaram had in 2008 denied natural gas production of seven year break from payment of income tax like the one enjoyed by producers of crude oil and Petrofed wanted this to be restored. The tax holiday should be enhanced to 10 years from 7 years currently.


"Provide flexibility to claim tax holiday for oil as well as gas production in any 10 years during the first 15 years after the commencement of commercial production under section 80IB(9) of Income Tax Act," its memorandum said.


Petrofed also wanted the seven-year income tax holiday on setting up of refineries to be extended to the private sector.


Currently, this is available only to public sector firms setting up units by March 2012. It also suggested granting 'declared goods' status to natural gas and raising price of gas sold under administered price regime.


Further, it asked the Government to unburden the exploration and production sector of sticking Service Tax since it cannot be set-off, include petroleum products under the Goods and Services Tax (GST) regime, and waive fully the custom duty on import of materials used in transmission projects and removal of anomaly in Naphtha taxation.



Petrofed wanted the Finance Ministry to enlarge the list of goods that could be imported duty-free while also simplifying custom procedures for drilling tools and equipments imported under duty concessions.


"Provide single window clearance for the upstream companies to expedite the process of clearance related to exploration blocks and reduce time and cost overruns," it said.


It recommended developing Petroleum Economic Zone for developing a world-class global upstream services hub in India.

India's economy to grow by 7.2 per cent in 2009-10: Assocham

Indian economy may grow at 7.2 this fiscal on the back of improvement in consumer sentiment, policy reforms and projected growth in agriculture and industrial sector, Assocham survey said.

In a survey of 300 businessmen, about 42 per cent of the respondents said that policy reforms would cast large impact on the GDP growth.


"Indian economy is expected to register a GDP growth rate of 7.2 per cent in 2009-10 on account of improvement in consumer sentiment, rural India and policy reforms," the chamber said.


Majority of the respondents said that the government would be able to bring about significant reforms this year, and about 91 per cent believed that there are good chances of improvement in consumer sentiments in the following months.


About 40 per cent respondents felt that isolation of the rural India from the impact of recession has a huge impact on the GDP growth rate, it said.


"The agriculture sector is expected to record the growth rate of 3.5 per cent as good monsoons, better crop prices and upward revision of the crop forecast has ensured a healthy growth rate for the agriculture sector," it said.


The industry sector which was reeling under pressure due to high interest rates, reduced demand and global recession is expected to record the growth rate close to 4.6 per cent in the fiscal.



With the improvement in consumer sentiment, increased government spending and anticipated reforms, the services sector is estimated to chart 9.7 per cent growth in 2009-10, Assocham said.


About 75 per cent of the respondents believed that government would use further fiscal incentives to stimulate the economy, it said.


However, the factors which continue to inhibit the economic growth rate from pacing up include poor state of the world economy and money market conditions, it added.