Despite the fear of economic slowdown as a result of continuous rise in the crude oil prices, the net direct tax collections increased by 38.61 per cent in the first quarter.

According to a statement released by the Finance Ministry, the growth in direct tax collections in Nagpur and Kochi witnessed as high as 74.08 % and 68.98% respectively, in the direct tax collection, whereas, it was less than 50% in cities like Mumbai, Bangalore and Kolkata. In the capital city Delhi, the direct tax collection increased to 53.57%.

The Reserve Bank of India (RBI) said on Thursday that the flow of credit from scheduled commercial banks has increased between April and June 20 this year. The credit flow has increased by 25.4% during this period. The growth is slower than the corresponding period of last year.

The rise in credit is due to high demand from public sector oil firms. The oil firms are under-recovery due to subsidy on oil products. They are forced to sell petroleum products at the rate below the prevailing global rates.

The economic growth rate of India may moderate to 8% during the current (2008-09) fiscal year.

Planning Commission Deputy Chairman Montek Singh Ahluwalia said that the 13-year high inflation rate of 11.42 percent may result into a little lower growth rate but if necessary steps to control inflation are taken, the growth objective of 9% will not be difficult to achieve.

On the other hand the central bank expects the economy to clock a 8-8.5 percent growth in 2008/09.

Reserve Bank of India (RBI) and Bank of Japan (BOJ) has signed a bilateral swap arrangement (BSA) on Monday. The BSA was signed by BOJ governor Masaaki Shirakawa and RBI governor Yaga Venugopal Reddy in Basel, Switzerland. It will pave a way for swapping local currencies against the US dollar for up to $3 billion. The agreement will also sort out problem of short-term liquidity and strengthen existing international financial arrangements

The agreement was come into effect on Sunday (June 29). Both Japan and India can now swap Yen and rupee against the US dollar up to $3 billion. They will hold biannual consultations on economic and financial conditions of each country with the BSA in effect.

Rating agency, Crisil Ltd has lowered its estimation for India’s gross domestic product (GDP) growth for the current fiscal to 8.1 percent from 8.5 percent.

Crisil attributed increasing inflation and interest rates, together with a declining global growth viewpoint for the downward revision of GDP.

In a declaration, the agency said that it anticipates overall growth to remain strong regardless of the moderation, which is driven by investment.

As the existing inflationary prospects are way beyond the RBI’s comfort zone of 4-5-5%, a cut in key interest rates has been rejected, the report said.

India’s premier business association, CII at 68th Business Outlook Survey said that the Business Confidence picked up for October – March 2007-08 after a decline during the period April-September 2007-08.

CII’s business confidence index for October-March this fiscal, at 66.3, has witnessed a marginal increase of 2.4 points from April-September 2007. However, the index was down by 5.5 points when compared to the corresponding period last year.