New Delhi, October 3
Punjab, Uttarakhand and Haryana are among the most developed states, as per the Raghuram Rajan report on identifying backwardness of states for devolution of funds from the Centre to the states.

The committee was formed by the Finance Ministry and headed by the then Chief Economic Adviser and now RBI Governor, Raghuram Rajan. Following demands from Bihar Chief Minister Nitish Kumar to declare the state as backward for additional Central assistance, the committee had been asked to suggest methods for identifying backwardness of states using a variety of criteria and also to recommend how the criteria may be reflected in future planning and devolution of funds from the Central Government to the states.

The Rajan committee has proposed a general method for allocating funds from the Centre to the states based on both a state’s development needs as well as its development performance. The Committee has recommended that each state may get a fixed basic allocation of 0.3 per cent of overall funds, to which will be added its share stemming from need and performance to get its overall share.

While Jammu & Kashmir and Himachal Pradesh have been put in the category of less developed states, Punjab, Uttarakhand and Haryana are in the highest category of relatively developed states. The lowest category of least developed states comprises Bihar, Rajasthan, Odisha, Madhya Pradesh, Chhattisgarh and Uttar Pradesh, among others. The earlier concept of special category states which included many hilly states has been done away with.

Many of the northern states stand to lose out on allocation of funds from the Centre under the Raghuram Rajan formula. As per the new formula, Punjab is slated to get 1.07 of the total fund allocated by the Centre to the states as against its current share of 1.26 per cent under the total Central assistance to state plans and Centrally sponsored schemes.

Similarly, Haryana’s share will come down marginally from 1.36 per cent to 1.33 per cent. There is a huge drop in the proposed share of the hilly states in the North. Uttarakhand’s share is down by more than half to 0.79 per cent from 1.90 per cent, Jammu & Kashmir loses out by more than half to 1.83 per cent from its earlier higher share of 4.92 per cent. The biggest loser is Himachal Pradesh, down to one-fourth of its current allocation to 0.67 per cent from the current level of 2.04 per cent.

The big gainers among the allocations are Bihar, Rajasthan, Odisha, Madhya Pradesh, Uttar Pradesh. More developed states like Maharashtra and Tamil Nadu also lose out in the new criteria. Tamil nadu Chief Minister J Jayalalithaa has already criticised the criteria.

The committee has come up with a Multi-dimensional Index of backwardness based on per capita consumption as measured by the NSSO, the poverty ratio, and a number of other measures which correspond to the multi-dimensional approach to defining poverty outlined in the 12th Plan.

Finance Minister P Chidamabaram said the Committee has observed that the demand for funds and special attention of different states will be more than adequately met by the twin recommendations of the basic allocation of 0.3 per cent of overall funds to each state and the categorisation of states that score 0.6 and above as “Least Developed” States.

According to the Committee, these two recommendations, along with the allocation methodology, effectively subsume what is now “Special Category”. 

New Delhi, October 3
In a bid to boost consumer demand, the government has decided to pump in more funds into public sector banks to enable them to lend at cheaper rates to sectors like auto and consumer durables in the festival season.

Since the RBI is not cutting rates due to macro issues, this is being seen as a stimulus measure to provide cheaper credit to consumers, boost demand and stimulate production in the economy.

The decision to increase the quantum of capital infusion was taken at a meeting between the Finance Minister, P Chidambaram, the RBI Governor, Raghuram Rajan, and the Economic Affairs Secretary, Arvind Mayaram today.

“This amount (Rs 14,000 crore provided for capital infusion in the Budget) will be enhanced sufficiently. The additional amount of capital will be provided to banks to enable them to lend to borrowers in select sectors such as two-wheeler, consumer durables, etc at lower rates in order to stimulate demand,” a finance ministry statement said.

It further said the additional fund infusion would help in combating slowdown and boost output.

“While this will bring relief to consumers, especially the middle class, it is also expected to give a boost to capacity addition, employment and production,” it added.

Sectors like auto and consumer durables have remained sluggish for months now due to high interest rates, high inflation, stagnating incomes and a cloudy growth outlook. Consumer durables, a reflection of demand for manufactured products, include TV, fridge, washing machine.

The meeting, which lasted for over an hour, discussed credit growth in different sectors. At the end of September 2013, growth of gross bank credit stood at about 18 per cent, year-on-year. However, credit growth is sluggish in some sectors leading to the conclusion that demand in these sectors remains subdued. Based on the discussions, the government has decided in principle to enhance the amount of capital to be infused into public sector banks.

New Delhi, October 3
Paving the way for the biggest ever foreign investment in India's aviation sector, the Union Cabinet tonight cleared Jet Airways' proposed sale of 24 per cent equity to Abu Dhabi-based Etihad, days after the Rs 2,058 crore deal got regulatory clearances.

"Yes, it has been cleared," said Civil Aviation Minister Ajit Singh after a meeting of the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Manmohan Singh.

Replying to questions, he said the deal has "gone through all the regulatory processes" and would be "good for civil aviation and good for the passengers".

The proposal was of Etihad to subscribe 27,263,372 Jet shares of Rs 10 each, amounting to 24 per cent of post-issue paid-up equity share capital for Rs 2,057.66 crore.

CCEA gave its nod on the conditions that, among other things, Jet and Etihad would adhere to RBI policy guidelines and SEBI regulations, comply with all Indian laws and take prior FIPB approvals for any further changes in the shareholders agreement, commercial cooperation agreement, articles of association, investment agreement and shareholding patterns, the sources said.

The deal has already been cleared by the SEBI and the FIPB, with the minister saying that approval to the deal was delayed as it had to go through all regulatory processes. — PTI

Mumbai, October 3
The benchmark S&P BSE Sensex soared 385 points to a one-week high today as the partial US government shutdown eased fears among investors of the Federal Reserve tapering its stimulus programme.

The index was boosted by heavyweights Reliance Industries, TCS and HDFC Bank. Twelve of the 13 sectoral indices gained, led by metals, banks and IT stocks.

Sesa Goa, which rose 7.21%, was the top gainer on the index. Bajaj Auto climbed 5.1% after the company reported better-than-expected September sales.

The 30-share Sensex opened higher at 19,585.79 and advanced to the day's high of 19,929.24 before ending at 19,902.07, a gain of 384.92 points or 1.97%.

The 50-share Nifty on the NSE rose 129.65 points, or 2.24% to finish at 5,909.70. The SX40 index on the MCX Stock Exchange closed at 11,853.27, up 233.36 points or 2.01%.

"With the US government shutdown, the likelihood of the Fed tapering its quantitative easing program any time in the immediate future is reduced, thus helping the Indian equity and currency markets," said Raghu Kumar, co-founder of brokerage firm RKSV.

A delay in tapering the Federal Reserve's monetary stimulus would ease concerns about investors pulling out from emerging market assets.— PTI

New Delhi, October 3
In another pre-election bonanza for UPA chairperson Sonia Gandhi’s Lok Sabha constituency, the Indian Railways today signed two agreements with state-owned steelmaker Rashtriya Ispat Nigam Ltd (RINL) for setting up a Rs 1,100-crore forged wheel factory in Raebareli.

This would be the Railways’ second project, after the Rail Coach Factory (RCF), which would be coming up in Congress president Sonia Gandhi‘s constituency.

The Railways is racing ahead against time to fully operationalise the RCF by June 2014 and the progress of the project is being closely monitored.

The forged wheel plant at Lalganj, Raebareli, will be in the same complex where the RCF is being set up but will be set up on a separate piece of 40 acres of land.

It will produce 1 lakh forged wheels per annum in the first phase for locomotives and high-speed trains. The plant will provide direct employment to 500-600 local people and an indirect employment opportunity to about 2,000 people.

“Uttar Pradesh is the biggest state in the country but there is hardly any development. Sonia Gandhi is our leader and we got the land there, so it is being constructed there. Today securing even 40 acres of land is a big thing,” Steel Minister Beni Prasad Verma said after signing of the pact between the Railways and the RINL.

Railway Minister Mallikarjun Kharge said, “The plant will supply 85,000 wheels and there will be an assured offtake for 26 years by the Railways. The production from this factory will help in meeting the demand and will result in import substitution”.

The Railways has given a commitment to source 85,000 wheels every year from the factory, when it is constructed. The capacity will then be doubled in the second phase to produce over 2 lakh wheels per annum.

The proposal for setting up of the plant was announced in the Railway Budget 
for 2013-14.

“The production will result in meeting the growing demand of forged wheels while reducing our dependence on imports and will also provide employment opportunities in the vicinity of the plant,” Kharge said.

The forged wheel factory will require about 50,000-60,000 tonne of steel, which will be sourced from RINL’s plant in Vizag. 

New Delhi, October 3
The Railways could soon announce an increase in the freight with the proposal to hike the fares being under active examination of the Railway Minister who would take a decision soon.

Speaking to the media on the sidelines of a railway exhibition here, Railway Minister Mallikarjun Kharge said the proposal for fare hike was pending with him and he would soon take a decision.

However, railway officials clarified that the hike would be administered only in the freight with the passenger fares unlikely to be tinkered.

Former Railway Minister Pawan Kumar Bansal had announced the implementation of FAC-linked revision in only freight from April 1.

Kharge said, "Fuel adjustment component (FAC) was announced in the Budget and as per the Budget proposal it should have been implemented from October 1. The file containing the FAC proposal has come to me and I am examining it and a decision will be taken shortly".

According to the Budget proposal, the fuel component is segregated from tariff as FAC. Railways is expected to revise the passenger fares and freight every six months after taking into account the input cost.

Railways have had to bear an extra burden to the tune of Rs 2,000 crore and of Rs 1,200 crore over the next six months due to increased energy and input cost. The cross-subsidy for passenger service is currently touching Rs 26,000 crore a year.

The Railways had earlier decided not to pass on the additional burden of Rs 850 crore because of the fuel hike to the passengers and absorbed it.

Earlier, inaugurating the 10th edition of International Railway Equipment Exhibition (IREE), he said in a move to adopt environment friendly and cost-effective alternate fuel, the Indian Railways has taken a global lead in starting development of the Common Rail Electronic Direct Fuel Injection system for its fleet of diesel locomotives.

New Delhi, October 3
The advent of the festive season may have brought about some hope for the beleagured automobile industry reeling under high interest rates and fuel costs, but the sales figures for September have remained low, reflecting the lack of interest from customers.

Despite the variety of discounts being offered by the car manufacturers, the sales have not picked up to bring about any cheer for the industry.

Maruti Suzuki India Ltd reported a 11.7% increase in sales at 1,04,964 units in September against 93,988 units in the same month last year.

Its domestic sales increased by just 1.8% during the month to 90,399 units as against 88,801 units in September last year.

Exports during the month surged nearly three-fold to 14,565 units as compared to 5,187 units in September last year.

Hyundai Motors reported a 3.99 per cent decline in its sales in September at 51,418 units as against 53,557 in the same month last year.

Its domestic sales stood at 30,601 units during the month, marginally down from 30,851 units in September 2012. The company is looking at improving its sales over the next few months on the back of its latest i10 Grand which has received a good response.

Mahindra & Mahindra reported a 10.45 per cent decline in its sales at 43,289 units in September. M&M's domestic sales stood at 40,574 units as against 45,263 units in the same month last year, down 10.35 per cent.

There was, however, some increase in sales for Toyota Kirloskar Motors which registered sales of 15,795 units in September as compared to 14,291 units in September 2012. The company exported 3,780 units of the Etios series last month.

Honda Cars India reported a sales growth of 88% during September 2013 by selling 10,354 units as against 5,508 units sold during the corresponding month in 2012.

Chandigarh, October 3
The Haryana Cooperative Supply and Marketing Federation (HAFED) has revised the policy for supply of fertilisers to Primary Agricultural Cooperative Societies (PACSs) and Cooperative Marketing Societies (CMSs).

A spokesman of HAFED said the policy had been revised to strengthen these cooperative institutions engaged in the supply of fertilisers to farmers in the rural areas. It has also been done keeping in view the long-standing demand of these institutions to increase distribution margin on sale of fertilisers.

Under the Fertilizer Supply Policy-2013, effective from September 27, 2013, the HAFED has substantially increased distribution margin of PACSs and CMSs on sale of fertilisers in addition to providing credit facility to them. The new scheme would provide additional benefit to these cooperative institutions to the tune of about Rs 6 crore annually. Employees of the PACSs and CMSs will also be incentivised for their target-based performance.

Representatives of PACSs and CMSs had been demanding increase in sales margin on sale of fertilisers and increase in credit period on fertiliser supplies. 

BRIEFLY

Cognizant buyout
New Delhi: IT services provider Cognizant on Thursday said it will acquire ValueSource NV, a subsidiary of Belgium-based integrated bank insurance group KBC, as part of a five-year contract with the group. The terms of the deal were not disclosed. — PTI

Infosys bags Toyota contract
Mumbai: IT major Infosys on Thursday said it has bagged a four-year contract from Toyota Motor Europe. This will cover applications across Toyota's operational areas in Europe, including core automotive processes (like supply chain, manufacturing, sales, after-sales and customer service) and corporate functions (including human resources and finance), it added. — PTI

Wipro’s senior executive quits
Bangalore: Wipro on Thursday said Anand Sankaran, senior VP and business head of Global Infrastructure Services and Wipro Infotech, has quit. “Wipro confirms that Anand has decided to pursue a career outside Wipro," it said. — PTI

SBI Life ‘Smart Power Insurance’
Mumbai: SBI Life Insurance on Thursday launched 'Smart Power Insurance' plan. "It is a simple, low-premium product that takes care of the changing needs of the policy holder as his income increases while giving him flexibility of periodic increase in sum assured and partial withdrawal," SBI Life CEO Atanu Sen said. — PTI