India’s economy deteriorates: WB

NEW DELHI, Aug 7 (PTI) — The World Bank has warned that foreign investments in India could slowdown further in the current fiscal, unless the government undertook deeper and faster deregulation of external and internal markets to encourage efficiency and boost higher private investments.

India’s economic environment is weakening in response to the external and internal developments and thus intensifying the need for further economic reforms, the WB report on India 1998 macro economic update says.

The Indian government’s concern focuses now on returning to sustainable 7 to 8 per cent growth within a stable macro economy which can reduce poverty rapidly, the report said adding that the first quarter of 1998-99 pointed to a general deterioration in the economy.

In contrast, 1997-98 witnessed a period of strong, private sector led growth though there was a slowdown in some industrial sectors particularly in agriculture. But GDP growth was 5 per cent, inflation was down, external position comfortable and contagion from East Asian currency crisis was minimal.

Reviewing the first quarter performance, the World Bank study said the exchange rate came under pressure falling by about 7.5 per cent from March 31, with a reserve loss of over $ 1.6 billion.

Referring to the Union Budget, the World Bank study admitted that it did propose a pickup in privatisation including the willingness to cut government equity to 26 per cent in most cases, deregulation measures for insurance, urban land, agricultural exports and foreign exchange and cuts in red tape for foreign investors.

But it did little to reduce the deficit or subsidies and raised average import tariffs by about 5 per cent in the top of the 3 per cent rise effected by the previous government in September last year.

In the light of these developments, foreign institutional investors withdrew more than $ 400 million from the stock markets in May and June 1998 and Moody’s downgraded India’s sovereign rating to speculative.

As the rupee was allowed to slide between March 31 and June 26, the RBI’s foreign currency assets declined by $ 670 million in May and $ 1.2 billion in the first two weeks of June, reducing total reserves including gold to about $ 27.6 billion on June 12.

Though the states received a one-time windfall from last year’s VDIS revenues, they will face even greater fisal pressures as the last years excessive Central wage settlement filters down.

Some states such as Andhra Pradesh, Haryana and Orissa have begun to address these problems.

Major reasons for continued large Central and state deficits are the still narrow tax base and the large explicit and implicit subsidies which often encourage inefficiencies that have adverse effects on agricultural growth because of low service quality and have adverse equity implications.

Also, public sector production remains large in areas where private production would be more efficient, reflecting the limited progress on privatisation and the infrastructure regulatory framework (related to the subsidy issue).

Indian producers remain among the world’s most protected and the protection has increased over the last year, raising concerns about efficiency, technological progress, product upgrading and export competitiveness.

With the recent appreciation of the real exchange rate and slowdown in cuts and protection, India’s export growth in 1997-98 fell below the world export growth for the first time in six years.

Despite domestic liberalisation, the Indian economy remained subject to a complex web of regulations, taxation and explicit and implicit subsidies that limit competition and internal trade and restrain deployment of resources into productive areas.

Though agricultural deregulation has started, the main crops — rice, wheat, sugar and oilseeds — remain subject to many trade barriers, procurement policies and implicit and explicit subsidies.

While the financial sector had improved substantially its ability to finance private sector led growth remained an issue.

Expressing concern over the high fiscal deficit, the study said it absorbs funding from the private sector , threatens macro economic stability and hinders financial sector reform.

Reductions in large existing subsides on power, water higher education, fertiliser would help as well as benefit equity and efficiency and crowd in private investment.

Further efforts to broaden the tax base would help both revenues and equity. Deficit reduction will be most productive in the context of public sector realignment to focus on basic human development, Truly public infrastructure where private interest is low, civil service reform and improved governance.

Ludhiana plots case adjourned
Tribune News Service

CHANDIGARH, Aug 7 — The Punjab and Haryana High Court today adjourned to September 4 the case filed by International Cycles and Strips Ltd seeking the registration of corruption case against eight Punjab officers for allotting industrial plots at Ludhiana allegedly on extraneous consideration.

Justice V.K. Jhanji, who heard the case, said fresh notices be issued to the remaining respondents for September 4 without the process fee.

The officers named in this case are A.S. Chatha, R.S. Mann, I.S. Bindra, K.R. Lakhanpal, Ms Romila Dubey, H.S. Bains and D.S. Kalha (all IAS officers), S.K. Duggal, Gurbachan Singh and B.K. Bassi (all from PSIDC).

The industrial houses which have been allotted plots under the “off-the-self-scheme” are Oswal Oil and Fats (100 acres), Vardhman Spinning and General Mills (60 acres), A-One Cycle (20 acres), Hero Cycles (100 acres), Ritesh Industries (40 acres) and Royal Industrial (25 acres).

Faridabad to have phone on demand
Tribune News Service

NEW DELHI, Aug 7 — The Haryana Government plans to commission 95,000 new telephone lines during the current financial year with national capital regions like Gurgaon and Faridabad likely to be provided telephone on demand, the Chief General Manager of the DoT, Haryana Circle, Dr D.P.S. Seth said here today.

Haryana has 4,30,000 direct exchange lines with an equipped capacity of over 5 lakh connections.As on May 31 this year there were 103495 on the waiting list.

There is also a proposal to introduce direct local dialling between Gurgaon and Faridabad.” A decision in this regard is likely to be taken shortly”, he said.

A plan is under the consideration of the Telecom Commission for providing pagers to the line staff for more efficient response to complaints.

No private basic service provider has so far paid the licence fee.” The ball is in the court of private players”, he said.

The government is considering separate Internet nodes for Gurgaon and Faridabad.

Industry poised for gloom:CII
Tribune News Service

NEW DELHI, Aug 7 — Industry in North India, particularly in Punjab, Haryana and Uttar Pradesh, is poised for depression and gloom during the current financial year due to complete inaction on the part of the state governments at both political and bureaucratic levels.

The warning was issued by the CII after a meeting of its members here today.

Mr Arun Bharat Ram, Chairman of the CII (Northern region), told newspersons that with economic reforms getting decentralised, the northern states were fast losing out to their counterparts in the West and now South.

Industry in North India cannot grow unless the attitudes of politicians and bureaucrats change and the government and industry work in partnership.

Fresh investments in the northern states are not taking place as the environment in the western and southern States is far more conducive with their governments’ taking progressive action and initiatives.

Mr Bharat Ram admitted that the poor performance of the industries in the Northern region had linkages with the slow industrial development in the region but added that in today’s market bad managements cannot simply survive.

IA offers package for Srinagar

NEW DELHI, Aug 7 (PTI) — Indian Airlines has introduced a package tour to Srinagar for promoting tourism.

An IA release here today said the state-owned domestic carrier will offer a 10 per cent discount on the normal fare in economy class to all full-fare paying passengers, including foreign tourists and NRIs, on return fare.

The discount, offered between August 1 and September 30 this year, would be available to a group of minimum 10 passengers travelling together to Srinagar and staying there for minimum two nights.

The airline has also offered a 50 per cent discount to the eleventh passenger accompanying a group of 10 and a free ticket to the sixteenth passenger accompanying a group of 15 passengers, the release added.

While children below 12 years of age shall not be entitled for discount, two half-fare paying child passengers shall be treated as one passenger for deciding the group size.

Japan for aid to Pak, not India

ISLAMABAD, Aug 7 (PTI) — Japan has pledged its support for the restoration of IMF assistance to Pakistan but refused to lend any such assurance to India, a senior Japanese diplomat said.

Addressing a press conference here yesterday, Japanese Charge d’Affairs in Islamabad Hiroyasu Kobayashi said Japan had decided to support the restoration of the external financial assistance to Pakistan in the next IMF meeting.

The Japanese assurance to Pakistan came after Islamabad gave a commitment that it would not transfer nuclear technology to other countries. Replying to a question, Mr Kobayashi said this relaxation was only for Pakistan. “There is no such package for India.”

“However, the sanctions would continue blocking external financial assistance to the new projects in Pakistan, other than the humanitarian assistance as decided in the last G-8 industrial nations meeting,” said Mr Kobayashi.

FDI in credit card

NEW DELHI, Aug 7 (PTI) — The government today opened up credit card and money changing businesses for foreign direct investment (FDI) allowed under the non-banking financial services sector. The normal guidelines applicable for foreign investment in NBFCs including minimum capitalisation norms as well as norms prescribed by the competent authority for operating the business, would be applicable to foreign equity participation in the credit card business and money changing business, an official statement said here yesterday.

The permitted activities on the credit card business would include issuance, sales, marketing, design of various payment products such as credit cards, charge cards, debit cards, stored value cards etc.

NRIs can invest in unlisted companies

NEW DELHI, Aug 7 (PTI) — In a bid to lure NRI investments, the government today permitted non-resident Indians and overseas corporate bodies (OCBs) to invest in unlisted companies under the portfolio investment scheme and also remove some conditions for funding in the health sector.

Such investments would be in conformity with the norms and approval procedures applicable to portfolio investments under the scheme and persons of India origin and OCBs would be permitted this facility, a Finance Ministry release said.

The government also freed NRIs of the condition that medical centres be equipped as per health ministry norms and that 25 per cent of the facilities available in hospitals are provided free of cost to the poor and needy.

Scrapping of these conditions was without prejudice to any conditions agreed to by companies while availing any special incentives or concessions.

The moves follow representations from NRIs that the mandatory offer of free facilities would render investments in health and diagnostic centres unviable and that conditions on equipping diagnostic centres as per specified norms were unduly restrictive.

Detailing the relaxations regarding portfolio investment, the release said investment limit by a single NRI or OCB would be subject to a ceiling of five per cent of paid-up equity capital of the investee company.

Relief for Haryana cement units sought
From Our Correspondent

YAMUNANAGAR, Aug 7 — Mr Prabhat Chandra, president, Haryana Cement Manufacturers Association, has demanded a package for the ailing cement industry of Haryana.

In a memorandum to the Chief Minister he has demanded that the rate of interest be brought down to the present refinance level of 15.5 per cent from the date of loan agreement. Fresh refinancing should be done against interest during the next three years against the fixed assets to cover security enabling units to meet their working capital requirements.

Loan repayment should be deferred for three years. Additional relief of 2 per cent be given to the units regular in payment.

Electricity duty exemption should be given for five years. Electricity tariff should be reduced to the level prevailing in the neighbouring state.

The rate of sales tax should be reduced to 1 per cent and exemption period of sales tax to vertical shaft kiln (VSK) plants should be extended from 7 years to 14 years as has been done by Himachal Pradesh which has reduced sales tax to 1 per cent for the VKS-based mini cement plants.

IDBI and the Rajasthan Industrial Corporation have already given financial package to the cement and granite units.

Even in Punjab the state industrial development corporation has announced relief for sick units.

Ashima, Cone tie up

MUMBAI, Aug 7 (PTI) — The Ahmedabad-based Ashima Group has tied up with Cone Mills, one of the world’s largest denim Manufacturer in the USA, making it the single largest foreign alliance in cotton textiles in the country.

Under a negotiated deal signed here today, Cone is to invest in the equity as a co-promoter by picking up an 8 per cent stake in Ashima Syntex Limited, subject to the approval of the foreign investment promotion board, Ashima Group Chairman and Managing Director Chintan N. Parikh told newsmen here today.

Mr Parikh said Cone would pay between Rs 55 to 58 per share for its 8 per cent stake in the company.

Under the agreement, Cone would guide Ashima in all its future expansions and be represented by a non-executive position on the board.

The products would be marketed in India and throughout the world as Ashima-Cone products.

Package cheers software scrips

MUMBAI, Aug 7 (PTI) — Pivotals suffered a further setback on sustained selling pressure by foreign institutional investors (FIIs) as against minimal support extended by the domestic funds and institutions on the last day of the current settlement at the BSE here today.

Dealers said rumours that China would devalue its currency shortly led to weakness in the Asian stock markets which also spread to the Indian bourses. Hind Lever, ITC, L&T and MTNL dropped sharply on FII selling pressure.

Software scrips scored handsome gains following a major package of incentives announced by the government for software and information technology (IT) industry. Some of the multinational companies (MNCs) were also in limelight on speculative buying. Britania, Cadbury, Nestle and Dr Reddy rose sharply on bull support, Whilst index-based scrips came under heavy selling pressure and brought down the sensex.

Marketmen were in a festival mood on account of “Raksha Bandhan” and there was nothing in the news to boost sentiment. On the other hand, the delay in decision on the issue of buyback of shares and squaring up positions for the current settlement weighed heavily on the market sentiment.

The BSE sensitive index opened at 3094.17, advanced to a high of 3104.87 but reacted to close at the day’s low of 3062.25, showing a sharp fall of 34.08 points from the previous close of 3096.33.

The broad-based BSE-100 closed at 1364.85, showing a loss of 9.61 points from the last close of 1374.46. The BSE-200 closed lower at 315.84 and the Dollex at 123.58 as against its previous close of 317.44 and 124.38 respectively.

Domestic funds were net buyers of Infosys Tech, Knoll Pharma, NIIT, Pentafour Software and Satyam Computers and these scrips showed substantial gains at the close. The local institutions also bought Tisco and Castrol which recovered at the close of the session.

The movements of most of the scrips were range-bound and the volume of business was low which amounted to Rs 674.89 crore. ITC was in the forefront with a turnover of Rs 168.33 crore, followed by Satyam Comp Rs 152.92 crore, Zee Tele Rs 76.02 crore, SBI (NEW) Rs 46.60 crore and Reliance Rs 45.33 crore.

ITC dropped by Rs 5.25 to Rs 589.25, SBI by 90 paise to Rs 201 and Reliance by 90 paise to Rs 129.70. Satyam Computers firmed up by Rs 5.50 to 490.75 and Zee Telefilms by Rs 15.00 to 607.25.

NEW DELHI: Declining trend continued unabated on stock market today as share prices dropped further to close lower on fears of political instability following reports that Akali Dal, northern ally in the ruling-BJP threatened to withdraw support on inclusion of Udham Singh Nagar in the proposed Uttranchal state.

However, shares of computer software companies were in better form on increased buying mostly on announcements of special package for exporters.

Stock brokers said reports that Cauvery water dispute has been resolved with all concerned states agreeing on implementation of interim award of tribunal could not cheer the marketmen.

End of settlement also forced operators to square-up their positions which also induced the sentiment, they said.

Reflecting weak trend, Delhi Stock Exchange sensitive index ended 5.16 points down at 694.00 points.

Coke signs up Karisma
Tribune News Service
NEW DELHI, Aug 7 — Coca-Cola India today announced that it has signed up leading actress Karisma Kapoor for the company’s marketing initiatives. Ms Kapoor is expected to be the nucleus of Coca-Cola India’s Divali promotions slated to begin by the end of September this year.

ICWA chief
Tribune News Service
NEW DELHI, Aug 7 — Mr R.J. Goel has been elected president of the Institute of Cost and Works Accountants of India for 1998-99. Mr Kunal Banerjee has been elected its vice president.

Investors meet
Tribune News Service
JALANDHAR, Aug 7 — The State Bank of Patiala organised an investors conference here today to market Resurgent India Bonds floated by SBI with effect from August 5. More than 70 persons participated. Mr A. Bhattacharya, Deputy General Manager (Jalandhar zone), highlighted various features of the scheme.

IIMM
Tribune News Service
CHANDIGARH, Aug 7 — The Indian Institute of Materials Management, Chandigarh branch, will celebrate its 13th annual day by organising a chief executive meet on August 9 at Imtech Auditorium in the Institute of Microbial Technology in Sector 39 at 10.30 a.m.

Daewoo buses
Tribune News Service
CHANDIGARH, Aug 7 — Daewoo Motors, makers of Cielo, will soon launch two new buses — Deawoo Royale for tourists, travellers and corporates and Deawoo Caravan for schools and transport operators, according to statement by Saluja Automobiles.

Gold steady
NEW DELH, Aug 7 (PTI) — In lacklustre trading on the bullion market today, silver prices moved up on emergence of local buying and closed higher. Standard gold and ornament were quoted at previous levels. The quotations: Silver .999 (ready) 8100, delivery 8160, coins buyer 10,500 and seller 10,700. Standard gold 4250, ornaments 4100 and sovereign 3475.

PNB bonds
NEW DELHI, Aug 7 (PTI) — Punjab National Bank (PNB) term deposits, certificate of deposits and bonds have been assigned highest rating by credit rating agency ICRA Ltd. While term deposits of PNB have been upgraded to “MAAA” the bonds were assigned “LAA+”’ (plus) and while certificate of deposits got A-1+ (plus), all indicating highest safety for timely payment of debt obligation, an ICRA statement said.

Price index
SHIMLA, Aug 7 (PTI) — The consumer price index number for industrial workers base 1982-100 registered a quantum increase of ten points during the month of June 1998 and rose from 389 to 399. With this increase the Central Government employees had become entitled to 6 per cent additional DA from July 1, 1998.

NHPC CMD
Tribune News Service
NEW DELHI, Aug 7 — Mr Yogendra Prasad, the acting Chairman cum Managing Director of the National Hydroelectric Power Corporation (NHPC) has been confirmed in his post. He will hold office for five years. This is the first time that a cadre officer of NHPC has been appointed a full time CMD.

Andaaz opens
Tribune News Service
CHANDIGARH, Aug 7 — Prime Food Ltd opened its unit, Andaaz in Sector 26 here today. A segregated barrel-shaped pub and its hanging garden premises offer meals from North, East, West and South India.