Tuesday, August 18, 1998
today's calendar
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B U S I N E S S | Tuesday, August 18, 1998 |
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spotlight today's calendar |
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Tata Airline proposal gets
delayed Rs
200 crore plan for information research |
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‘Give low-cost bank
loans to youth’ Cabinet
to consider new farm policy Boost
to imports GDR
holders allowed bonus PSUs
dominate debt placements |
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| Eicher to pay 15 pc dividend ‘Pension funds for venture capital’ Curb on import of CDs goes |
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Binaca to be relaunched Mico plans expansion How civic bodies can raise funds |
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Tata Airline proposal gets
delayed NEW DELHI, Aug 17 — The Tata Airline project has been further delayed as a scheduled meeting of the Foreign Investment Promotion Board (FIPB) today was cancelled at the last minute. The FIPB will now meet on Saturday but it could not be ascertained whether the Tata Airline proposal would figure in it. According to official sources, after the recent reshuffle of bureaucrats a large number of permanent members of the FIPB were not available for the meeting. The newly appointed Finance Secretary, Dr Vijay Kelkar, who is an important member of the FIPB, was out of station. The Tatas have proposed to set up a Rs 1475 crore domestic airlines in which they would have 60 per cent of the proposed Rs 690 crore equity and the rest would be held by foreign institutional investors. The proposal has been surrounded by controversy ever since the day it was floated and the Tata’s initial proposal to have a joint venture with Singapore Airlines was scuttled following the introduction of a new airline policy. Following the new policy, the Tata’s changed their proposal and it now envisages only a technical tie-up with the Singapore Airline.Several Members of Parliament have opposed the Tata Airline proposal as they feel that it would hurt the interests of the Indian Airlines. The Tatas plan to have 7 aircraft in the first phase which would cater to 12 destinations. Over a five year period they want to increase the fleet to 18 aircraft and cover 21 destinations. The Tata Airline proposal had come up before the FIPB on July 11. A decision could not be taken then as the Civil Aviation Ministry had sought some more time for giving a formal approval to the proposal. However, according to the
sources, the Civil Aviation Ministry had yet to give its
comments to the FIPB and even if the meeting had taken
place today, a decision would not have been possible. |
‘Give low-cost bank loans to
youth’ CHANDIGARH, Aug 17 — The Governor of Punjab, Lt Gen (retd) B.K.N. Chhibber, inaugurated the zonal office complex of the State Bank of Patiala in Sector 8-C, here today.General Chhibber called upon the banking sector to urgently address the problem of dependence of rural people on ‘arhtiyas’. More than 46 per cent farmers were getting loans from arhtiyas whereas the share of scheduled commercial banks was only 19 per cent and co-operative banks 27 per cent, in the rural indebtness. The banks should chalk out a plan to attract and motivate youth for opting self-employment ventures. They should provide low-cost loans without procedural delays to overcome hesitation of youth in getting loans from banks, he said. Mr Ram Kumar Gupta, Managing Director of the State Bank of Patiala, said that during the last 80 years the bank’s business has increased to Rs 12,000 crore and it has been granted autonomy by the RBI because of its solid economic fundamentals. He said the bank has been
able to have business exceeding Rs 5,650 crore and CD
ratio of 46.24 per cent in Punjab and UT Chandigarh. The
bank has offered funds to the state government for viable
infrastruture projects. |
Rs 200 crore plan for information research NEW DELHI, Aug 17 (PTI) — The Indian Council of Agricultural Research has prepared a Rs 200 crore plan to strengthen agricultural research information system in the country. ICAR Director General R.S. Paroda said today. Under the project, the ICAR will connect its research institutes and centres, state agricultural universities and Krishi Vigyan Kendras with the computer network. Speaking at a two-day workshop of nodal officers here, Paroda said the project would provide access to latest information available with institutes world over. It would also educate
farmers about proper use of inputs integrated pest
management system and provide information about new seeds
and cropping patterns. |
Cabinet to consider new farm policy PUNE, Aug 17 (PTI) — The newly drafted national agriculture policy, with special emphasis on horticulture, will be placed before the Cabinet next week and implemented soon thereafter, Union Commerce Minister Ramakrishna Hegde has said. Speaking at the annual meet of the Maharashtra State grape Growers Federation here today, Hegde said the new policy was aimed at boosting the export of agricultural produce and help India make a dent in the international market.Indian farmers should gear themselves up to face fierce competition in the world market by improving the productivity, bettering the quality and resorting to aggressive marketing, he said. Leader of opposition in
Lok Sabha Sharad Pawar, who presided, said India should
take initiatives to tap European and Gulf markets for
exporting agricultural goods. |
Boost to imports NEW DELHI, Aug 17 (PTI) — The government today said import of irrigation equipment will be allowed under the export promotion capital goods (EPCG) scheme to boost agricultural products’ exports. The ownership of such
equipment should, however, be with the EPCG licence
holders and cannot be sold or leased, an official release
said.The location of the equipment should be made
available to the jurisdictional Assistant Commissioner of
Customs and Excise for carrying out inspections. |
What is wrong with Indian
agriculture? NEW DELHI, Aug 17 — Farmers’ suicides, sky rocketing prices, declining food production, soil fertility... Is the country on the brink of an agricultural crisis? What has stagnated the growth in farm outputs? Some agronomists hold the indiscriminate use of high yielding varieties (HYV seeds), chemical fertilisers and pesticides responsible for the problems and warn that the entry of MNCs in the farm sector would spell further doom. However, there are those who say that liberalisation will facilitate the use of modern technology in agriculture, which is plagued by “structural problems.”“There is a genuine crisis in Indian agriculture,’’ says a renowned agronomist, Dr Vandana Shiva, noting that the subsidies and selective promotion of some sectors have benefited only a few rich farmers. “Increased inputs are no longer translating into increased outputs. There is a decline in the fertility of soils and rising debts are forcing farmers to commit suicide,’’ says Dr Shiva, who heads the Research Foundation for Science and Technology, an NGO. But Jairam Ramesh, a former Adviser, Planning Commission, says “Indian agriculture is beset with structural problems which have to be addressed at the earliest.’’ “Liberalisation in the industry is more important for agriculture as it would help in the import of technology,’’ says Ramesh suggesting that large holdings and mechanisation can go a long way in making agriculture profitable.The “situation today is not critical. But if we don’t reorient ourselves we’ll land in a crisis,’’ says Minister of State for Agriculture Som Pal.Free trade or globalisation is a two-way trend, argues Dr Shiva. While Indian exports in the years of liberalisation have made no great strides, in fact only declined, the entry of multi-nationals in the seeds, chemical fertilisers and pesticides sector has hit the Indian farmers hard. Hard-pressed to step up productivity in the face of declining soil fertility, the small farmers ended up incurring huge debts to buy expensive high yielding seeds and pesticides. And when their crops failed, they committed suicide, she says citing recent reports from Punjab, Andhra Pradesh and Maharashtra. Warning against the emerging genetic engineering technologies and the “dangerous” shift towards cash crops at the cost of foodgrains, Dr Shiva says that a new agriculture policy based on the sustainability of agriculture and survival of small and marginal farmers should be evolved. In agreement to a new agriculture policy, Ramesh suggests that the Government should follow an open trade policy, and not impose import curbs or give incentives for production of any particular crop.India has decided competitive advantage in foodgrains. Yet incentives were provided for self-sufficiency in oilseeds to such an extent that over the last decade 12 million hectares under cereal cultivation were diverted to oilseed production.Assailing the state’s policy in the past years for investing in floriculture and shrimps in its bid to boost exports, Dr Shiva says: “It’s neither efficient nor sustainable to grow shrimps, flowers or meat for export in India. “In each case more food production capacity is destroyed domestically through diversion of resources and destruction of eco-system than the food that can be purchased from global markets.’’The government invested Rs 137 crore in floriculture infrastructure to promote its exports, but earned a mere Rs 32 crore in return. India can buy only one fourth the food it could have grown with these export earnings, claims Dr Shiva.In an open trade regime farmers would have benefited more by exporting commodities they were good at and economically importing items like oilseeds, explains Ramesh. He also quotes agronomist Ashok Gulati, who noted that farmers had benefited when import production levels were reduced.Shiva says cultivation of staple grains should be encouraged to ensure food security and stresses on the need for switching over to organic fertilisers to sustain soil fertility. “How will India produce food for one billion people if we are not going to produce and where is the foreign exchange to buy the grains then,’’ asks Shiva.Som Pal says food security is very important and it must be ensured even at high costs. There is an urgent need to make use of wastelands. —PTI |
GDR holders allowed bonus NEW DELHI, Aug 17 (PTI) — The Government today allowed Indian companies to issue bonus shares or rights issues in the form of global depository receipts (GDRs) and American depository receipts (ADRs) to the existing ADR and GDR holders. This is, however, subject to these issues being in accordance with provisions of this scheme and the stipulated guidelines, an official release here said.Indian companies would be required to apply to the Department of Economic Affairs for approval for such GDRs and ADRs, which would consider requests after assessing the GDR/ADR holders’ entitlements. Companies have been making representations seeking clarification on the eligibility and entitlement of GDR and ADR holders to the rights and bonus issues made by them. Existing guidelines allow Indian companies to access the global capital markets through GDRs/ADRs under the provisions of the Foreign Currency Convertible Bonds and Ordinary Shares Scheme of 1993 and the subsequent guidelines on euro issues. Under that scheme,
GDRs/ADRs are issued by overseas depositors against
ordinary shares issued and placed with the domestic
custodian by Indian companies. |
PSUs dominate debt placements NEW DELHI, Aug 17 (PTI) — Public Sector Undertakings (PSUs) and financial institutions (FIs) dominated private placement of debt in the first quarter of fiscal 1998-99, accounting for 80 per cent of the total Rs 6,730 crore mobilised. The market was tapped by 48 institutional and corporates through 69 issues, a study by Prime Database, a primary market monitor, said here today. The highest mobilisation was by IDBI at Rs 774 crore followed by IFCI at Rs 590 crore and SAIL at Rs 570 crore.FIs and banks accounted for 34 per cent of all mobilisation through this route followed by state-level undertakings (27 per cent), private sector (20 per cent) and PSUs (18 per cent), Prime said. During the period, ICICI raised Rs 415 crore, Krishna Bhagya Jala Nigam Rs 320 crore, MKVDC Rs 303 crore and RSEB Rs 300 crore.Last year FIs and PSUs had accounted for 75 per cent of all mobilisations. A notable feature of the first quarter, Prime said, was the increase in the number of state-level undertakings raising resources for infrastructure funding. State undertakings raised Rs 1812 crore during April-June compared to Rs 1233 crore raised by PSUs. The first quarter of 1998-99 saw private sector raising Rs 1,371 crore against a Rs 7,763 crore in the entire fiscal 1997-98. Following the financial
sector as the largest mobiliser of funds (Rs 2594 crore)
was the power sector (Rs 1288 crore), steel (Rs 877
crore) and water resources (Rs 517 crore), Prime said. |
Eicher to pay 15 pc dividend NEW DELHI, Aug 17 (UNI) — The Board of Directors of Eicher Limited has recommended dividend of 15 per cent on preference shares and 30 per cent on equity shares for the 1997-98 fiscal. The dividend payout was approved by the company’s shareholders at its annual general meeting held here. The company’s turnover during the year stood at Rs 590 crore, registering a growth of 5.7 per cent over the previous year’s Rs 550 crore. The net profit during the year stood at Rs 24.5 crore as against the previous year’s Rs 26.1 crore. The company attributed the decline in profit to higher interest and depreciation charges relating to new investments, including for the new tractor manufacturing unit at Mandideep, Bhopal and substantial increase in selling and distribution expenses necessitated by the increased competition in the market. The turnover of tractor
business, two-wheeler business and gear business during
the fiscal was Rs 431 crore, Rs 101 crore and Rs 107
crore respectively. This represented a growth of 10 per
cent, decline of 12 per cent and growth of 5 per cent
respectively. |
Binaca to be relaunched NEW DELHI, Aug 17 (PTI) — The Rs 800-crore ayurveda and health care company Dabur India is taking on “Colgate” and Lever’s “Close Up” by launching a tooth paste under the Binaca brand name, a senior company official has said. Binaca brand is being
redesigned and repositioned and will be launched this
year, Dabur’s Chairman and Managing Director G.C.
Burman told PTI. |
‘Pension funds likely for venture capital’ NEW DELHI, Aug 17 (PTI) — The government is considering to divert a part of the corpus from pension funds, insurance companies and mutual funds to various venture capital funds for investments in the information technology industry. This option is being considered seriously following a proposal by the Indian Venture Capital Association after the July 25 notification permitting banks to make equity investment in dedicated venture capital funds meant for I.T industry, official sources told PTI. Making use of pension and insurance companies’ funds is to bring down dependence on multilateral lending and domestic financial institutions, and is in line with U.S. policies where $ 10 billion were mobilised in this way in 1997-98. The government is also considering banks to allow equity investment within its 5 per cent incremental deposits not just in the software industry, but in the entire I.T industry.IDBI and SBI would be asked to set up at least two Rs 50 crore dedicated venture capital funds to cater to the needs of the hardware industry. To infuse certain flexibility, venture capital funds would be allowed to set off losses in one invested company and invest in another during the block years for the purpose of income tax. Hardware design and related services would be treated on par with the manufacturing sector making it eligible for venture capital investments. Currently only software sector is eligible for such investments since the rest of the I.T is being treated as service industry. Data communications and related services, computer hardware-related services, I.T project consultancy, design and testing services would be made eligible for venture capital investment through equity and similar instruments.Since about 40 per cent of the employees in the hardware industry are indirectly engaged in development of software, the employees’ stock option plan offered to software companies are likely to be extended to hardware industry too. Dollar-linked stock option
scheme, made mandatory for Indian software companies by
the government in the last Budget would be modified to
represent the entire I.T industry following change of I.T
definition in the July notification. |
Mico plans expansion NEW DELHI, Aug 17 (PTI) — German multinational Bosch’s Indian subsidiary Motor Industries Company Ltd (Mico) is taking up Rs 500 crore expansion with an aim to set up manufacturing base here for exports to America and Europe. “Investment will be in fuel injection equipment, automobile lighting and electronics along with wiper system in the next three years,’’ Dr Hannes Bertling, Managing Director, Mico, told newspersons while inaugurating power tools service centre here today. He said low labour cost
along with cheap investment compared to other countries
provided good opportunity through operations in
India.Mico has reported a turnover of Rs 1372.2 crore for
the year ending December 1997 and net profit of Rs 95
crore. |
Curb on import of CDs goes NEW DELHI, Aug 17 (PTI) — The government has notified moving 148 items, including uncut ruby, sapphire, emeralds and tape recorders, to the special import licence (SIL) list, keeping in view its commitment towards gradual removal of quantitative restrictions (QRs) on imports. Other precious stones like
uncut aquamarine, chrisobaryle and topaz can also be
imported now without any ceiling on the quantities, an
official release said.The import of compact discs (CDs),
mustard oil, essence of ambrettolide and flavouring
essences of all types, including those for liquors, are
allowed under SIL. |
How civic bodies can raise CHANDIGARH, Aug 17 — To fill the fiscal gap once octroi is abolished the PHD Chamber of Commerce and Industry (Phdcci) has suggested to the Punjab Government that urban residential properties should pay tax based on scientific principles. Taxation of property should be progressive as value of urban land and construction grows rapidly. If properly administered, it is a elastic source of revenue.Additional sales tax on the basic rate should be charged as in UP. This rate should be 10-15 per cent. Buoyancy in revenue would be ensured and if the basic rate of sales tax is lowered, it would encourage compliance. At the same time, effective enforcement is necessary. Offering certain services such as greening of parks to private enterprises subject to advertisement rights be considered, suggests Phdcci.The surplus land of municipalities should be commercially developed or auctioned from time to time for raising funds. Suggesting the urgency to widen the tax base, the Phdcci states that the sales tax structure should aim at revenue elasticity in order to raise resources for development and discourage tax evasion. In this direction multiplicity of rates should be compressed to four categories for essential, general and luxury goods. There is substantial scope to raise sales tax revenue from the present Rs 1400 crore per annum by encouraging voluntary compliance. The state government should support uniform tax rates in North India. To begin with based on the contribution of revenue from various commodities, sales tax on a select 15 to 20 items be made uniform. Although commodities have been identified by the Finance Ministers of the northern states, the Chamber suggests that this should be extended to more commodities. These should include TV,
radio, transistors, audio and visual projection systems,
airconditioners, washing machines, microwave oven,
electrical goods, cables, transmission equipment,
transformers, computers, software and computer
peripherals, building hardware, santairyware, ready-made
garments including knitwear, hosiery goods and leather
garments, and motor spare parts. |
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