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Monday,
May 12, 2003, Chandigarh, India  
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Indecision on EPF: workers may suffer losses
NEWS ANALYSIS
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The economics of war for America
Weakness may persist
Selecting the right TV brand
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Indecision on EPF: workers may suffer losses New Delhi Provisions of the EPF Scheme are being violated with impunity by the present Labour Ministry dispensation. This, they say, has never happened in the past. For instance, Para 60 (1) of the EPF Scheme lays down that the Employees Provident Fund “Commissioner shall credit to the account of each member interest at such rate as may be determined by the Central Government in consultation with the Central Board of Trustees.” Further, according to the second provision to Para 2 (b) of the Scheme, “the interest upto and for the current month shall be payable to the claims which are authorised on or after 25th day of a particular month along with actual payment after the end of the current month.” This means that all claims authorised to be settled with effect from April 25 have to carry interest for the month of April. How can this happen in the given situation? The fact of the matter is that the rate of interest for the year 2003-2004 has not so far been sanctioned by the Central Government because the Central Board of Trustees (CBT) has not taken a view on it. The CBT could not do it because it was kept dysfunctional for nearly four months. The reason was that chairman of the CBT, Labour Minister Mr Sahib Singh Verma, refused to convene the CBT before its reconstitution! The result of this violation of the scheme is that none other than the subscriber-workers of the EPF have to suffer, they are not getting the interest for April 2003 and will not get it for the ensuing months since the Central Board of Trustees has not yet taken a view on it and the Central Government too has not yet determined it. As a consequence, lakhs of workers are being put to huge monetary losses. This is not to say that the Labour Minister or the Labour Administration of the Provident Fund Organisation are ignorant of the law. They know it well. That is why it was given out that the moment the decision was finalised on the rate of interest, the requisite amount would be credited to the accounts of the concerned members. But, then, they also know that this is easier said that done. The existence of about Rs 5000 crore of “unclaimed” amount of EPF explains it abundantly as to what can possibly be the fate of delayed interest payment. Most of the workers do not know the details of their accounts due to lack of education. They will not be able to submit fresh claims for receiving the due interest. Taking into account the number of workers involved, the actual loss to workers may run into crores, to put it mildly. The government’s approach on hte multi-billion EPF has already created a big controversy in the wake of liberalisation and privatisation. The unprecedented norms adopted by the Ministry this time for reconstitution of the CBT has created doubts about the government’s intentions. The two leading Left trade union centres — AITUC and CITU — have refused to accept the procedure adopted by the Ministry for CBT reconstitution, therefore, the CBT, truncated as it is, is being made to take vital decisions on management of the EPF. Moreover, the Labour Ministry has continued to face problems of its own making. On the one hand, the Labour Minister Mr Sahib Singh Verma has openly said, inside and outside the
Parliament, that his government was not in favour of reducing the EPF rate of interest. On the
other hand, the Finance Ministry has allowed the bank rates to be reduced to the advantage of the corporate sector, of course, at the cost of small savers. In this backdrop, the CBT Sub-committee of Finance and investment, which met here last month, found it difficult to take a decision on the rate of interest, especially when the Labour Minister
himself told the Parliament that the Government was in favour of retaining the EPF rate of interest, which would obviously mean 9.50 per cent rate of interest as given last year. When will the Minister and the sub-committee meet the Finance Ministry and get a favourable decision? It is anybody’s guess. But, what is unmistakable is that EPF subscriber-workers will suffer huge losses. All concerned need to take it seriously because the interests of over 32 million workers and their families are at stake. This mess should be ended immediately. IPA |
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NEWS ANALYSIS “Fast track disinvestment of five public sector companies in progress.” So claims a recent “Punjab Marches Ahead...” advertisement flashed in leading newspapers and magazines by the Amarinder Singh Government. Well, that is an ad, and ads we all know do not tell the whole truth. The truth is that the initial attempt at disinvestment of at least two companies — Punjab Communications Ltd and Punjab Alkalies and Chemicals Ltd — has already flopped. After the fiasco number one, the Managing Director of Punjab Communications was sacked on the ground that he did not provide a correct picture of the company’s strengths to the prospective bidders. The bid received recently for the loss-making Punjab Alkalies and Chemicals Ltd was much below the reserved price. That naturally had to be rejected. The next on the agenda is Punjab Tractors Ltd (PTL). This Chander Mohan baby grew up fast, but has not been keeping a good health lately. Its officials attribute the falling
profitability to the general slowdown in the tractor industry. PTL, as it is popularly called, is the best of what the Punjab Government has to offer for disinvestment and there are multinational companies greedily eying a stake in this second biggest tractor company in the country in terms of market share. Bids are to be invited sometime later this month. Among the likely bidders is Mohindra and Mohindra, the country’s largest tractor manufacturer. The Chief Minister was recently in Mumbai to woo private investment. The M and M boss was among those who interacted closely with Capt Amarinder Singh. There were allegations in the Press, later hotly denied by the Chief Minister, that the Mohindras paid for the aircraft that carried the Punjab team to Mumbai. Although Capt Amarinder Singh is not the sort who would publicly accept any hospitality from a businessman, but to avoid charges of favouritism, litigation and ensure transparency in the process of disinvestment, it is better both for the Chief Minister as well as the Mohindras to be more cautious in their dealings. The second point that calls for attention is the role of bureaucrats vis-a-vis public sector units. The Secretary Industry is the ex-officio Chairman of the boards of directors of PSUs like Punjab Communications and Punjab Tractors. If the Managing Director of Punjab Communications was misleading the prospective bidders, the role of the Chairman also comes into question. It cannot be believed that he as well as the other members of the board were kept out of the picture in such an important dealing and one man was given the entire responsibility to carry out the spade work for disinvestment. One may recall here the unfortunate case of Punwire (Punjab Wireless Ltd), the company that sank under the weight of corruption by those at the helm then. A large number of employees lost their jobs and suffered heavily because of the mistakes of a few. Again, the entire blame was passed, apart from a few senior officials, on to the Managing Director, who fled the country and nobody heard his side of the story. What about the responsibility of the then Chairman and the other members of the Board of Directors who apparently kept sleeping when such large-scale corruption was taking place? The third point to ponder is: is this the right time to carry out disinvestment? There is a global slowdown. The stock markets are in the dumps all over. Companies are hard pressed for cash and hesitant to make large investments. Why should anyone buy a company unless it comes dirt cheap? Common sense says that one should not sell one’s shares in a bearish market when the prices are down and should instead wait for the bull phase to exit. But that is when one’s own money is involved. When it is a public money and a public company, losses and profits do not matter. There is a target to achieve. Besides, saying no to a boss is not a good policy. That any bureaucrat would tell you. |
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The economics of war for America Countries all over the world are today concerned with two things: One is the effect of the SARS virus on their economics and the other is the impact of Iraq war on them. The Iraq war is going to herald a number of changes in the world’s political balance. The relations between America and France and Germany stand strained. Already Iraqi leaders’ demise has forced the neighbouring countries to rethink their strategy. Many like Syria who have been loud in their opposition to war stands to lose a lot on the trade front with Iraq. The American attention is now on Syria for its search for the elusive Iraqi leaders, who it believes are seeking shelter in this country. This has put the Syrian leadership under immense pressure. There are others like Kuwait and Jordan that are hoping for a revival in their economy on the back of the Iraqi reconstruction drive. The post-war scenario might see the whole of West Asia getting a facelift. The impact is, however, not limited to just a region, after all military victory is just a battle won, the war has just started and the more pressing issue is that of the economic implications of war. Although most of coalition countries are developed nations, their economies are far from robust. Take the leader for instance the United States. The US economy is reeling under a series of heavy economic attacks, first the technology bubble busted. This forced the US companies to cut their costs through heavy retrenchment and reduce their IT budgets. Next came the September 11 attack which rattled the American economy and shook the myth of invincibility of the state. The last straw has been the Iraq war. It had hoped that once the war is over the business will rebound with a surge in
demand and rise in investment. However, none of this has materialised rather few things have come to a clear focus the economic uncertainty in the USA continues to persist. This is an anathema to growth and investment. The US government’s budgetary trade deficit is on the rise at $ 42.26 billion. The Bush administration, which was handed over a surplus, has effortlessly converted it into a deficit. The growth forecast for the American economy has been downgraded from 2.8 per cent to 1.6 per cent. The woes of American economy are visible in the weakening dollar. Post war has brought forth the fact that American economy is still ailing. The dollar which had risen 1 per cent against euro till April 8 has now halted its upward swing. The biggest threat now — the confidence may shift from dollar to euro. The euro zone has a larger population with a GDP compete able to that of the USA. Today it is the strength of dollar only which allows US to support its burgeoning deficits. What will happen if the hegemony of the dollar is wiped out, and that also most likely by the only contender the euro. This could initiate a massive economic crisis in America. The war was seen as a strategy to prevent the conversion of petro dollars to petro euros. Countries like Iraq and Saudi Arabia were one of the first ones to convert their surpluses into euros. However, it looks as the USA will have to be disappointed because dollar has again started falling. The only consolation that the US derives from this war is that the immediate likelihood of Britain joining the Euro Zone has been reduced. Since the UK is a partner in the coalition forces it would not likely adopt the euro immediately. It becomes appropriate to ask that what was it that the USA wanted from Iraq war? Was it search for weapons of mass destruction housed by Saddam? Well, they still remain elusive. The first Gulf war cost $ 61 billion and the American firms gained double the cost. It has been estimated that it would now require $ 25 billion to $ 400 billion to bring back Iraq on its feet. It is none other but the US MNC’s who will capture this business opportunity and they are going to finance it with none other than the Iraq oil. The USA today is facing conundrum of handling these vast economic problems with none of its earlier reasons for staging a war standing valid, the Bush administration has to work fast or face public wrath. It cannot just leave the war-ravaged Iraq behind to enjoy its war spoils. After all we are not living in a colonial age or are we? |
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by Lalit Batra Weakness may persist The action on Dalal Street last week was nothing to write home about. Most of the market heavyweights were subdued in the face of disappointing results and uncertainty about future corporate profits. Frontline software shares were flat-to-weak as the rising rupee against the dollar emanated fresh worries about the earnings outlook. The benchmark BSE Sensex moved in a narrow range and lost 17 points to close at 2950. Some action was seen in banking and auto ancillary stocks and there was the renewed hope that the outlook for the Indian auto ancillary industry will improve. Power stocks surged after Parliament approved the Electricity Bill, while soft interest rates and hope of robust results in banking pushed the sector’s stocks further up. Banking Bank shares were the bright spot in a dull market on the back of soft interest rates and expectations of robust earnings. In fact, banking sector stocks have been in the limelight over the last few months on the hope that the securitisation Act enacted late last year would help the banks to improve their financial performance. Action is likely to continue in the banking stocks, and long-term investments can be made in HDFC Bank, Canara Bank and Andhra Bank. Software Tech stocks lost ground on the fear that a strong rupee would further squeeze the margins for the export-driven sector. Mid-cap counters witnessed fresh buying due to some bargain hunting. Digital Global Software after early gains, declined towards the close of the week, after the company denied any plans to merge with Hewlett Packard’s subsidiary in India. Mascot Systems gained by 14 per cent to close at Rs 104 after the company posted 37 per cent jump in the fourth quarter profits. Polaris Software, Aftek, KPIT, Hughes Software, VisualSoft, Satyam, I-flex and HCL Tech also gained ground. Fresh exposure in the tech counter should, however, be avoided due to the uncertainty about pressure on billing rates in the sector. Power Power sector stocks rose following the passing of the Electricity Bill in Upper House of Parliament. The Bill is expected to lead to an improvement in the health of the electricity boards. It envisages a competitive scenario where regulators on the one hand and private power utilities on the other play increasingly significant roles. BHEL surged by seven per cent to close at Rs 247. ABB alstom Power, ABB, KEC International and Emco Transformer also gained ground following the passing of the Bill. The stocks to watch in the power sector are BHEL and ABB. Auto Ancillary Auto-ancillary stocks hogged the limelight on the rosy prospects for the industry as original equipment makers (OEMs) from the US and Europe move jobs to India to cut costs. Global original equipment manufacturers have plans to procure automobile components worth $ 15 billion from India by 2010. India is now being looked upon as the hub for sourcing automobile components. Motherson Sumi spurted by 22 per cent to close at the yearly high of Rs 107 following a report that it had bagged a big order worth $ 125 mn from Ford UK for the supply of dashboard assembly. The stocks to look out for in this sector are Motherson Sumi, Bharat Gears, Exide and Apollo Tyres. Forecast The Sensex could witness a bounce from the current levels after three lean days. In case of a bounce the Sensex is likely to face resistance near the 2960-2974 range. However, if the index slips below 2945, the market could go down further to 2930 or even 2916. Fundamentally, the weak trend is likely to continue with the Sensex unlikely to rise significantly from the current level in the absence of any trigger from such frontline stocks as Reliance Industries, Hindustan Lever and Infosys Technologies. Otherwise heavyweight stocks could drag the Sensex lower by around 100 points before it stages a recovery. |
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by Pushpa Girimaji Selecting the right TV brand Choosing the right television brand was difficult enough when there were half a dozen brands and all of these claimed to give excellent picture quality. Today, with more than a dozen brands aggressively pushing for a larger chunk of the market with claims that go well beyond picture quality and sound clarity, going for the right model is all the more tough. A knowledgeable dealer can easily facilitate comparison of brands and thereby an informed consumer choice through brochures and booklets giving specific quality and performance features of each brand and model. But that’s too much to expect from dealers, most of whom want you to buy the set by just looking at these. Well, here is some good news. In order to help consumers make an informed choice, a Delhi-based consumer group, VOICE, has tested 21-inch television sets of 12 popular brands. VOICE looked at 40 parameters to determine the quality of these brands and rank these accordingly: the first of course was the quality of picture, determined by features such as resolution, colour purity, hue, contrast and brightness. It also examined the quality of reception on the basis of features such as the sensitivity of the TV receiver and its selectivity. It also analysed the sound quality of the sets on the basis of parameters such as ‘sound pressure level’, ‘frequency response’, ‘distortion’ and subjective listening test. VOICE also looked at features such as the set’s ability to withstand voltage fluctuation, besides warranties and guarantees that they provided. It also considered another feature that most of us forget while buying a television set — power consumption of the set. Says Voice: the ‘ecomark’ for colour TVs, introduced in 1997, is administered by the Bureau of Indian Standards. However, no manufacturer has chosen to take up the ecomark label for the set. The ‘ecomark’ specifies that power consumption for colour television sets with screen size up to and including 53 cm (21 inches) should not exceed 100 Watts. Of the 12 brands tested, the energy consumption level of 11 ranged from 69.20 watt to 96.86 watt. One brand, however, exceeded the ecomark specification level and consumed 122.16 watt. Another important criterion that was considered was the operating distance of the remote handset. In the overall ranking, Sony came out a winner. It had the best overall picture quality and topped in parameters like centering, colour purity, hue, HV stability, contrast and brightness range. However, Sony’s power consumption (96.86 watt) leaves much to be desired, especially when compared to brands like BPL (69.20 watt), which do much better in terms of energy efficiency, says VOICE. Philips was adjudged second in the overall ranking. Sansui, marginally ahead of Videocon, got the third position. However, the Sansui set was found to be undersized — it measured 20 inches instead 21”. Says VOICE: Sansui, however, did not respond to our letter informing them of the test results as well as the size of the set. I must mention here that the results were specific to the models tested and consumers would, therefore, do well to check the detailed results and the specific models tested before making a purchasing decision. It was also possible that some models tested had been phased out or upgraded since VOICE bought them. VOICE sends the results of its tests to the manufacturers for their comments and Samsung’s contention was that their model Hitron-CB-21S1 which was tested by VOICE and ranked the lowest, was obsolete and had been replaced by the ‘Bio’ model. The sets were bought by VOICE during the end of 2001 and beginning of 2002. The tests, conducted at the Regional Test Laboratory (North), New Delhi, took a year and were completed in December, 2002. For details, contact VOICE at 441, Jangpura, Mathura road, New Delhi-110014 or e-mail: cvoice@vsnl.net On the basis of its market survey and comparative testing, VOICE has also given certain tips to help consumers make an informed choice. For example, it has been found that the actual selling price of all sets is about 10-15 per cent less than the maximum retail price marked. So bargain hard for price reduction, says VOICE. What should one look for while choosing a brand? Besides picture quality and sound clarity, one should look at factors such as energy consumption, quality of the remote or its operating distance. VOICE tests showed that energy consumption of the models ranged between 69.20 watt and 122.16 watt, with a corresponding increase in the power bill of the consumer. After sales service is another important criteria. So check on that too. Since the colour picture tube is the most important component of the set and contributes to almost 50 per cent of the cost of the product, buy a set with maximum guarantee/warranty on picture tube. And make sure that the set is easy on your eyes and does not cause eye strain. Price is another important factor that determines choice so it is good to compare the prices too. And check the size of the set — measure diagonally, the distance between two opposite corners of the picture tube. |
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