New Delhi, September 29
Buoyant over economic performance but still facing roadblocks from the crucial Left allies, Finance Minister P Chidambaram today asked coalition partners to give "political space" for financial sector reforms for higher growth.

"In a coalition, it is very important that the political space is given to the government to undertake further economic reforms. There are many matters which are pending or are in pipeline. I wish and hope that we are given the political space to push through reforms," he told a press conference marking completion of almost half the term of the UPA government that came to power in May 2004.

Mr Chidambaram's appeal assumes importance in the wake of differences within the UPA, especially the Left's opposition to crucial financial sector reform proposals.

"Financial sector is the heart of the economy and unless financial sector reforms are completed it will be difficult to sustain high growth," he cautioned.

"Given the performance of the last two and half years of the economy, I wish everyone will cooperate in giving the government political space to implement further economic reforms that are contemplated in NCMP, budget speeches and various pronouncements," he said.

In particular, it was very important that the government passed pending legislations in banking and pension sector reforms as also the Bill on insurance, he said.

Expressing satisfaction with economic performance, particularly the 8.9 per cent GDP growth in the first quarter of the current fiscal, he said , "with the cooperation of all economic players, the second half of the UPA government will turn out even better or at least equal to the first half."

With the economy notching a 8.9 per cent growth during the first quarter of current fiscal, Mr Chidambaram said: "In every quarter but one of the UPA government, GDP grew by over 7 per cent. During the last five quarters we have moved up a notch.

"I am confident that GDP would growth by at least 7.5 per cent every quarter now and even do 8 per cent if we follow prudent policies and fiscal discipline."

Complimenting the stock markets, which have swung back to over 12,000 points in just three months after crashing, for orderly behaviour, he said though there were some concerns on price front, particularly wheat and pulses due to supply side constraints, the government would strive to peg inflation at 4 per cent or below.

He dismissed reports about his conflict with the RBI on interest rate management, saying "differences are presumed but there are no differences".

Asked if the Prime Minister's caution to states against excessive sops and tax incentives being given for industrial projects vindicated his stand on SEZs, Mr Chidambaram said, "the Prime Minister speaks for the government." As far as he knew, SEZs had not started borrowing and interest rates for them had not gone up, he said when asked about possibility of loans to SEZs getting costlier following RBI's directive to banks to treat them at par with real estate projects.

Replying to another query on SEZs, he said that there may have been differences of views but the government was not a "divided house".

Chidambaram's comments came a day after Commerce Minister Kamal Nath sought the Prime Minister's intervention against a RBI directive to banks to treat SEZs at par with real estate projects for lending purposes. — PTI

New Delhi, September 29
The government is planning to remove restrictions on trade with Myanmar, Bangladesh and Nepal, and a decision is expected shortly in this regard.

“The Ministry of Commerce has proposed to the Government of India that these restrictions be removed so that trade takes place without any commodity restrictions at Moreh with Bangladesh as also with Bangladesh and Nepal,” said Minister of State for Commerce Jairam Ramesh.

Mr Ramesh, who is currently on a three-day visit to Manipur, disclosed that the value of formal and informal border trade transacted between India and Myanmar had crossed Rs 2,000 crore. At present, only 22 items are exchangeable under the bilateral border trade agreement.

He said the Centre would invest close to Rs 850 crore over the next three years to fully develop 14 land customs stations- eight along the border with Bangladesh, four along the border with Nepal, and one each along the borders with Pakistan and Myanmar.

Of this, Rs 70 crore would be at Moreh in Manipur, presently the only functional land customs station through which trade across the land route along the 1,600- km Indo-Myanmar border takes place.

The minister said the “Moreh project specifically is part of the Prime Minister’s Look East policy, which envisages closer integration of the economies of the north-eastern states of India with South-East Asia.”

Earlier, Mr Ramesh met Chief Minister Ibobi Singh and other ministers, apart from calling on the Governor. He promised central assistance in nine new projects and investments to develop Manipur’s export potential in horticulture (like organic passion fruit and turmeric) and handicrafts.

He also highlighted the enormous strategic and economic significance to the North-East states of the $103 million Sittwe/Kaladan project that India would soon launch in Myanmar through RITES.

New Delhi, September 29
To save a few crores from the salary of employees, the Central Government is losing revenue worth thousands of crores annually, as the Income Tax Department has expressed its helplessness to track massive tax evasion in gold and jewellery market, estimated to cross Rs 1 lakh crore mark annually.

“With an annual import of around 800 tonnes of gold, we are the largest consumer of gold jewellery in the world. Although the transactions in this market involve huge black money and tax evasion, but we are so far unable to monitor the market due to constraints of manpower,” Central Board of Direct Taxes Commissioner A.K. Sinha told The Tribune.

However, with the sanctioning of funds for vehicles for IT officials this year, he said, the department would conduct large-scale surveys of major jewellery shops in major cities across the country during festival season.

The results of surveys conducted during last festival season, he said, had yielded good results, thus encouraging the department to undertake the exercise seriously. However, we would do it in a subtle manner without antagonising the traders and investors community during the festival period, he said.

The industry experts claim that with the gold prices coming down from Rs 10,000 per 10 gm to around Rs 8,500, large number of people are buying new gold and diamond jewellery during the ongoing festival season.

The financial consultants are also forecasting that the gold prices are likely to firm up again, leading to large-scale buying by investors who consider it a safe bet for good returns. It is another matter that huge financial gains will not be shown in the income tax returns.

“Most of the jewellery transactions are through cash, and there is no provision to quote PAN or make payment through bank cheque only, thus making it extremely difficult for us to tract transactions, leading to massive tax evasion and generation of black money,” said Mr Sinha.

Referring to Finance Minister P. Chidambaram’s Budget speech, the CBDT Commissioner said the government had plans to include jewellery transactions under the fold of annual information reporting (AIR), presently limited to seven areas.

At a later stage, the department has plans to make it mandatory to quote PAN while buying jewellery, he said.

Expressing his helplessness, he said, “With a shortage of over 30,000 employees and officials, we are currently finding it difficult to process information relating to around 33 lakh transactions collected through AIRs during 2004-05 and 2005-06.

As per the provision of the Income Tax Act, we can take action only within six years if anything is found inappropriate and illegal in these transactions.”

So, there is little scope to monitor the high-value transactions like in the gold market at the national level, he lamented. 

New Delhi, September 29
Steel tycoon L.N. Mittal's foray into oil and gas trading business through a joint venture with ONGC is facing fresh opposition from refiner IndianOil Corp, which feels the JV is ineligible to bid for its tenders.

IOC has shot off a letter to the Oil Ministry, saying it cannot put ONGC-Mittal Energy Services Ltd (OMESL) on its mailing list for participation in its tenders for import of crude oil/LPG and export of petroleum products as the JV did not have the requisite 3-year experience, a government official said.

For becoming eligible for participation in public sector oil company tenders, a firm needs to have at least three years of international trading business experience and should have handled a thrusthold volume.

OMESL — set up to provide trading, shipping and terminalling services — had been formed earlier this year.

"We cannot break norms for anybody," the official said.

Besides experience, the trading firm should also have parent company guarantees, which could be invoked in case of payment defaults. But in case of OMESL, the two promoters have agreed to provide only 'comfort letters', which has been rejected by the IOC, the government official said. — PTI

Rome, September 29
Ferrari, whose snazzy red racing cars, ultra-expensive sports cars and Formula One champions are the pride of Italian auto racing fans, will soon be all Fiat’s, Fiat chief executive Sergio Marchionne said.

Italian news reports, covering Marchionne at the world auto show in Paris, yesterday quoted Mr Marchionne as saying that at the end of the month, Fiat will acquire the 29 per cent share of Ferrari now held by Mediobanca, an Italian merchant bank.

Mr Marchionne told reporters that Fiat would pay “about $1 billion” for the shares, the Italian news agency ANSA said.

The executive took the reins of Fiat, Italy’s flagship automaker, in 2004 and led the struggling company to profitability in 2005. He was quoted as saying in Paris that Fiat would sell more than 3 million cars in 2010.

The automaker has been introducing new models in its bid to turn around its fortunes, which have been battered by competition from European and Asian car manufacturers. — AP

Mumbai, September 29
BSNL today announced plans to invest over Rs 17,000 crore for the expansion of its network during the current financial year.

The major area of expansion has been identified as mobile phones and a tender for laying six crore GSM lines has already been floated by the company, said a BSNL press note.

The company has over two crore mobile subscribers and its net switching capacity is about six crore. In the next three years, the company plans to double its net switching capacity.

The company has invested Rs 8,892 crore in the expansion of the telecom network and addition of new telephone lines during the past financial year.

BSNL has also emerged as the largest service tax-payer in the country contributing more than Rs 10,000 crore to the government exchequer by way of taxes and levies.

The company has declared a dividend of Rs 1175 crore, which is inclusive of an interim dividend of Rs 375 crore for the fiscal year 2005-06. The company has earned a net profit of Rs 8,940 crore on the revenue of Rs 40,177 crore for the year 2005-06.

The company has registered a net increase of 11.13 per cent in revenue during the year. The operating profit of the company for the year was Rs 8,270 crore, showing growth of 23.69 per cent over the corresponding previous year. — UNI

Mumbai, September 29
Fresh from its acquisition of Ganesh Bank of Kurundwad earlier this month, the Kerala-based Federal Bank is looking for another acquisition in the southern, western or northern region of the country.

“We wish to make another inorganic hit by the end of this fiscal,” Federal Bank Executive Director K.S. Harshan told reporters on the sidelines of the FICCI-IBA global banking conference here.

He said “capital raising will depend on the candidate for acquisition,” when asked about the fund- raising programme.

The bank had a headroom of Rs 400 crore to be raised through the tier-II route.

The Government has already approved the scheme of amalgamation of Ganesh Bank of Kurundwad with Federal Bank effective from September 2.

In the current fiscal the bank will add 28 more branches to their existing network of 510, which, he said, would start going on the core banking platform from November.

“We will start the CBS pilot with 15 branches in November and phase-wise 11 branches will be rolled out on the platform,” he said, adding that Infosys had been roped in for the core banking solution.

Notably, with the acquisition of Ganesh Bank, Federal Bank has added 32 more branches to its network. — PTI

Mumbai, September 29
The Indian infrastructure sector will get $350 billion in investment in the next 10 years primarily in the energy segment, an expert said today.

The country's expanding infrastructure sector is likely to see a huge demand for investments, Mr M.K. Sinha, Executive Director (Business Development and Corporate Advisory), Industrial Development Finance Corporation (IDFC), told reporters here on the sidelines of a banking conference.

According to Mr Sinha, as much as $160-170 billion would be required for power generation, transmission and distribution (T&D) alone.

IDFC subsidiary IDFC Private Equity was planning a couple of more funds this fiscal, details of which would be disclosed later, he said.

Elaborating on the power sector, he said currently 9,000 MW was being generated, but the demand will hit around 1,00,000 MW in the next five-six years as the economy expands.

IDFC Private Equity had raised $630 million before it closed six months ago, out of which $230 million had been invested and the remaining $400 million had been earmarked for various infrastructure projects in the next 18-24 months, he stated.

Capital formation in the infrastructure sector was growing at around 35 per cent, Mr Sinha said, adding that IDFC had done business of Rs 6,000 crore last year and was on track to repeat the performance, if not better it, this financial year. — PTI

Mumbai, September 29
The Maharashtra Government and Ballarpur Industries Ltd (BILT) today signed a memorandum of understanding for expansion of the company’s paper plant at Bhigwan in Pune District.

The MoU for the project, which would require an investment of around Rs 1,200 crore and would be completed in two phases by BILT, was signed in the presence of Chief Minister Vilasrao Deshmukh and BILT Chairman Gautam Thapar.

As a result of the expansion, the capacity of the BILT paper plant would be increased by three lakh tonnes per annum, Mr Thapar said. — PTI