The Tribune, Chandigarh, India

PM pegs growth at 8.5 per cent
Promises steps to tame inflation to 5-6 pc by December
Vibha Sharma
Tribune News Service

New Delhi, May 24
Economist Prime Minister Manmohan Singh today made two significant points that should go down well with people of the country as they struggle to keep household budgets from going awry in the face of unbridled inflation and the industry, which saw an estimated 7.2 per cent growth in 2009-10 - the fiscal that saw India weather effects of global economic crisis.

He said the economy was expected to grow by 8.5 per cent this fiscal and the country was capable of achieving 10 per cent expansion in the medium term. While accepting that inflation was “a problem” and was “affecting people”, he assured that by December it would decline to the range of 5 to 6 per cent.

“Price continues to be a matter of deep concern. The government attaches highest priority to containing inflation so that there is no distress to the common man", he said in his first press conference to mark the completion of one year of UPA-II - a year that saw the government under fierce attack from the Opposition BJP and Left in Parliament and outside on its inability to control prices of essential commodities, especially sugar and pulses.

The Prime Minister, however, explained that the international situation, especially high petroleum prices, coupled with drought and floods back home, had fuelled prices. The Centre, he assured, would closely monitor the situation and together with state governments take all corrective steps to bring down prices. He was confident that with the measures being taken inflation would be down to 5 to 6 per cent by year-end.

While food price inflation is ruling around 17 per cent now, the general price index crossed 10-per cent mark in February. In the past one year, the government relaxed import of essential commodities and imposed ban on export of rice, wheat and pulses, besides importing raw sugar.

The Prime Minister also stressed on the need for a rapidly growing economy, which generates productive employment and resources to finance the government’s “ambitious” social and economic agenda. “Our medium term target is to achieve a growth rate of 10 per cent per annum. I am convinced that given our savings and investment rates, this is an achievable target. However, its achievement will require determined efforts to increase investment in social and economic infrastructure, enhance productivity in agriculture and give a fresh impetus to the manufacturing sector,” he said.

While underlining that the Indian economy had done well when the world was going through a severe recessionary period, he said his government’s first priority was to protect the country's economy from the global slowdown and ensure that momentum of inclusive growth was not interrupted.

Growth, incidentally, slipped to 6.5 per cent in 2008-09 at the height of the economic crisis triggered by collapse of financial institutions in the West. Attaching high priority to raising investment in social and economic infrastructure and also agriculture, the Prime Minister said despite the pressure, the economy was expected to grow by 8.5 per cent in this financial year, up from 7.2 per cent and 6.7 per cent in the previous two years.

Ficci welcomes Manmohan’s strategy

Industry chamber Ficci has welcomed the Prime Minister’s strategy of pushing up the pace of Indian economy to double-digit growth for achieving inclusive agenda.

Ficci president Rajan Bharti Mittal said: “Ficci is fully in agreement with the Prime Minister’s three-fold strategy of increasing investments in social and economic infrastructure, enhancing productivity in agriculture and giving fresh impetus to the manufacturing sector for achieving this”.

Ambanis’ truce deal fails to lift market
Ruchika M. Khanna
Tribune News Service

Chandigarh, May 24
The peace deal brokered between the warring Ambani brothers failed to lift the market sentiments. The Sensex initially shot up by 312 points, but ended just 24 points higher as profit taking washed away almost all gains of the day.

However, the shares of the Mukesh and Anil Ambani group companies shot up today, with RIL gaining 2.58 per cent and Reliance Power rallying 7.86 per cent.

This follows an announcement by the estranged brothers yesterday to bury their differences by terminating the 'non-compete clause' from their July 2005 family settlement.

The market experts, however, have given a thumbs-up to the new found love between the Ambani brothers. Deepak Parikh, analyst, oil and gas, Angel Broking, said though this would not have any immediate financial impact, it would open up new avenues for both RIL and ADAG. “The cancellation of non-compete clause is a win-win situation for both the groups as it allows both the companies to expand into segments, which was restricted earlier, thus opening up further growth avenues for both the companies".

Supporting his views, Amitabh Nijhawan, state head of Fortune Equity Brokers, Chandigarh, said the peace deal would be more helpful for RIL. “The impact has not been immediate as the markets are now taking a cue from the European markets. But the effect will be visible in the coming months. Since RIL has a lot of cash flows coming in at the moment, it is likely to tap into telecommunications and financial services sector. For ADAG, this would mean more value preposition,” he said.

Sarabjit Kaur Nangra, a leading market researcher in Mumbai, said market wise the action will be positive. “Though today was more of a sentimental impact on the shares, which is likely to last for another day or two. Though this peace deal will impact the markets positively in the future too, in numbers, it is too early to predict the rise,” she added.

Shares of Reliance pack on fire

Mumbai, May 24
The shares of the Mukesh and Anil Ambani group companies were on fire today following the brothers burying their hatchet, with RIL gaining 2.58 per cent and Reliance Power rallying 7.86 per cent.

The Mukesh Ambani-led Reliance Industries soared 5.34 per cent at Rs 1,049 intra-day before settling the day at Rs 1,021.45 or 2.58 per cent up, while the Anil Ambani's Reliance power rallied 7.86 per cent to Rs 149.55 after an intra-day jump of 15.36 per cent at Rs 159.95 and Reliance Natural Resources (RNRL) zoomed 27 per cent during the day to a high of Rs 56.35 and ended the day with a massive 22.58 per cent rally at Rs 54.55 as investors cheered the peace pact between the brothers.

The other ADAG counters which saw sharp rally were Reliance Infrastructure which soared 6.23 per cent up at Rs 1,050.05 after jumping a massive 11.89 per cent or Rs 1,105.70; Reliance Communications jumping up 10.87 per cent at 147.90 after rallying 13 per cent during the day; Rpower rallying 7.86 per cent to Rs 149.55 after an intra-day jump of 15.36 per cent to Rs 159.95; Reliance Capital gaining 4.8 per cent to Rs 672.10 after a 10 per cent rally at Rs 696, and Reliance Mediaworks closing 3.9 per cent up at Rs 173.20 after an intra-day rally of over 10 per cent Rs 186.

The other Mukesh Ambani group company, Reliance Industrial Infrastructure soared (RIIL) 18.23 per intra-day to touch a high of Rs 832, and settled the day at Rs 783.55, up 11.35 per cent.

However, the gain in heavyweight RIL and other group could not hold the markets till the end at the benchmark Sensex closed flat with 0.15 per cent, or 23.94 points at 16,469.55 points after jumping 2 per cent intra-day. — PTI

Indirect tax collection at Rs 2.46 lakh cr

Kolkata, May 24
The Centre mopped up Rs 2.46 lakh crore from indirect taxes in the last fiscal, as much as Rs 2,000 crore more than the revised target, despite stimulus packages.

But it collected Rs 3.80 lakh crore from direct taxes against the revised estimate of Rs 3.87 lakh crore, Union Revenue Secretary Sunil Mitra said at a function hosted by the Bengal National Chamber of Commerce and Industry today.

However, Mitra clarified that these were only provisional figures, and the final ones would be released by the Controller-General of Accounts.

Sources said direct tax collection would go up further when final figures come in. Estimates of indirect tax collection were revised down to Rs 2.44 lakh crore last fiscal, from the Rs 2.69 lakh crore estimated at the time of the Budget.

While the customs duty mop-up target was scaled down by Rs 3,523 crore to Rs 84,477 crore, excise duty collection was reduced by Rs 4,477 crore to Rs 1.02 lakh crore. Similarly, service tax collection estimates were cut by Rs 7,000 crore to Rs 58,000 crore.

Sources said this had happened because the cut in excise duty by 6 per cent and service tax by 2 per cent had hit the exchequer drastically. Besides, the slowdown in demand had cut the need for greater imports, affecting customs duty collection. — PTI

Bookings open today
Nissan starts Micra production

New Delhi, May 24
Japanese carmaker Nissan today said it has started commercial production of small car 'Micra' from its plant in Chennai, which it plans to make a global export hub.

The wholly owned subsidiary of the company, Nissan Motor India, will start selling the car from July, for which bookings will open from tomorrow.

"The start of commercial production of Nissan Micra is the beginning of a new chapter for us in India. In an exponentially growing and challenging Indian automobile industry, we are introducing a product that has been specifically designed keeping in mind the discerning consumer needs of India," Nissan Motor Company COO Toshiyuki Shiga said.

The India-made Micra will be exported to "strategic markets" such as Europe, the Middle-East and Africa as part of its plans to sell the car in over 100 countries, he added.

"Nissan is also looking at making the Chennai plant as a global hub for exports. The start of production for the Micra for exports will commence in July, 2010, and the first shipment will begin from September, 2010," the company said.

Earlier in March, the Franco-Japanese auto alliance Renault-Nissan inaugurated its manufacturing plant at Oragadam, near Chennai, in which the two partners will together invest Rs 4,500 crore to produce four lakh units by 2015.

The company will start displaying the 'Micra' from tomorrow in its showrooms across the country. The bookings will also begin simultaneously against an initial amount of Rs 50,000.

Renault-Nissan has made an initial investment of Rs 2,900 crore for production of 200,000 units annually, which can be scaled up to 400,000 units. It plans to produce about 80,000 units in the first year.

Pitted against Maruti's Swift, Hyundai's i10 and i20, the Micra will come with a 1.2-litre petrol engine and will have 85 per cent localisation in components.

The new Micra will be produced in five countries -- Thailand, India, China and Mexico. The fifth location is yet to be decided. — PTI

ICICI Bank eyes No.1 position

Mumbai, May 24
ICICI Bank, which will see its presence in western India grow with the acquisition of Bank of Rajasthan, has said no to foreign takeovers as it wants to focus on becoming India's top bank in terms of profitability and productivity.

"No overseas (acquisition). We are not looking at any prospect (abroad). Internally, our growth strategy is quite India-linked. We are doing just one prospect (deal). I think it is too early to talk of any other prospect," ICICI Bank CEO Chanda Kochhar told PTI when asked which domestic or overseas deals were on its radar.

Asked if the latest deal would help her achieve the dream of putting ICICI ahead of number one State Bank of India, she said, "The number one position could be in many ways like productivity, efficiency and profitability.

"We are the number one in many of these parameters. Clearly, profits will be a key area to our operations," she said. — PTI

2G Spectrum
Operators move TDSAT against TRAI’s proposals
Tribune News Service

New Delhi, May 24
As was expected, some of the leading mobile operators have approached telecom tribunal TDSAT against telecom regulator TRAI’s recommendations on 2G spectrum looking for a policy change and also suggesting a one-time fee for holding radio waves beyond 6.2 Mhz.

Three leading operators Bharti Airtel, Vodafone and Idea have approached telecom tribunal TDSAT against the possibility of a policy change.

The three have been vocal in their criticism of TRAI's recommendations and have asked the government to dump the report, which according to them are "retrograde" and "absurd".

The GSM operators are also critical of capping the spectrum at 8 MHz in all circles except Delhi and Mumbai where the limit is 10 MHz, as they think it would restrict future growth prospects.

These issues are crucial for incumbent mobile operators as paying higher fees for existing as well as future 2G spectrum will be a big financial burden for telcos, especially Bharti and Vodafone, as their profits have already come under pressure due to the intense tariff war.

TRAI had also come under their (GSM operators) attack for recommending reframing of spectrum as per which players holding spectrum in the 900 MHz band would be asked to return spectrum as and when their licence comes up for renewal.

These players are also opposing vacating 900 MHz spectrum because that will mean moving from a more efficient spectrum band to a less efficient one.

If the TRAI recommendations are accepted, operators like Bharti, whose licence expires in about two to three years, would have to return 2G spectrum in the 900 MHz band.

Raja ready to face probe

Hyderabad: Answering questions on the alleged irregularities in the allotment of 2G spectrum for Rs 1,651 crore, Raja said he was ready to face any investigation into the matter.

“I have scrupulously followed rules and recommendations of the Telecom Regulatory Authority of India and consulted the ministries concerned. I am being targeted only because I broke the cartel in the telecom sector. If any instance of corruption is found, I will take action against those in my department,” he said.

Asked about the TRAI’s recommendation that telecom operators should pay for excess 2G spectrum beyond 6.2 megahertz which will give the government the additional revenue of Rs 21,717 crore, he said that the recommendations were currently being reviewed by the Finance Ministry and the Prime Minister’s Office. — TNS

Auction for BWA begins
Tribune News Service

New Delhi, May 24
After the phenomenal success of the 3G spectrum auction, the government is hoping to garner a revenue of Rs 15,000 crore from the auction of airwaves for Broadband Wireless Access (BWA) services which got underway today. The optimism of the government looking to further reduce its borrowings for the fiscal deficit was also reflected in the comments of Telecommunications Minister A. Raja.

"I expect the competition will be very high for BWA... as competitive as 3G. I am expecting Rs 15,000 crore from the BWA auction," Raja said in Hyderabad on the sidelines of an international telecom conference.

As many as 11 companies — Bharti Airtel, Reliance WiMax, Idea Cellular, Aircel, Augere Mauritius Limited, Infotel Broadband Services, Qualcomm, Spice Internet Service Provider, Tata Communications Internet Services, Tikona Digital Networks and Vodafone Essar — are participating in the BWA auction.

BWA spectrum is essential for rolling out Worldwide Interoperability for Microwave Access (WiMAX) services enabling hand-held devices and laptops to access the Internet.

It will allow the winner companies to offer high-speed Internet access as well as Internet telephony and television services. The spectrum can also be used for voice and high-speed data services.

The government has set Rs 1,750 crore as the base price for a pan-India slot.

Cosmetics being sold as ‘medicines’ to evade VAT
Manav Mander
Tribune News Service

Ludhiana, May 24
Hundreds of beauty and cosmetics manufacturers are evading value added tax (VAT) worth crores by selling their beauty products in the garb of “ayurvedic medicines” in Punjab. The cosmetics market is expanding at a rapid speed and the annual sale of beauty products in Punjab alone is to the tune of Rs 2,000 crore. Punjab houses nearly 500 cottage industries and other beauty products manufacturing units. While the VAT on beauty products is 12.5 per cent, it is just 4 per cent on ayurvedic medicines. To evade VAT, traders are selling their beauty products by showing them as medicines.

Recently, the Excise and Taxation department caught a trader V.K. Materials from Patiala selling beauty products in the garb of medicines in Ludhiana. After this incident came to light, it was learnt that the mafia operates from Ludhiana and other districts of the state.

The department has tightened noose around such evaders not only in Ludhiana and Patiala but in the entire state. “We are checking the products of the traders dealing in cosmetics and ayurvedic products. Sometimes there is a very thin line to demarcate an ayurvedic product and medicines and these traders take advantage of this. We are checking records to curb the malpractices throughout the state,” said KBS Sidhu, Director, Investigations.

Assistant Excise and Taxation Commissioner (mobile wing) Tejbir Singh Sidhu is investigating the case in Ludhiana. “Nearly 4-5 wings are under our scanner. We are scrutinising their returns and the investigations are still on,” Sidhu said.

Two years ago, the department had penalised three Ludhiana-based manufacturers and distributors and recovered fine worth Rs 40 lakh.