Tuesday, April 20, 1999
today's calendar
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B U S I N E S S | Tuesday, April 20, 1999 |
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spotlight today's calendar |
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Industry expects cut in
CRR, SLR Well done, parties! |
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Pressure to stall Maruti
tax probe ‘Farmer needs govt
support’ |
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Rs 770 crore worth projects
cleared BoI makes Rs 6,800 crore advances |
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Industry
expects cut in CRR, SLR NEW DELHI, April 19 — In the wake of the political turmoil caused by the fall of the Vajpayee Government, the industry is pinning its hopes on the RBI Governor, Dr Bimal Jalan, to announce measures in the slack season credit policy tomorrow that could possibly spurt up industrial activity. The corporate world has already launched an initiative to urge the Central Bank to reduce bank rate, the cash reserve ratio (CRR) and the statutory liquidity ratio (SLR) to enable infusion of more funds to cash-starved industry. Industry observers feel much depends on the credit policy announcements on April 20 as overall business confidence has taken a beating due the roller coaster political situation and this can be well gauged by the violently changing levels of the BSE sensitive index. Industry sources said that the present requirement of CRR at 10 per cent is much higher than internationally prevalent rates of 3 per cent. Banking experts, however, said that although cut in the CRR, would increase the liquidity position of commercial banks, yet, unless demand boost comes about, the excess lendable resources may remain idle with banks. Moreover, observers said, cutting interest rates may not actually be investment generating as long-term investments are generally not interest elastic. A cut in interest rates could at best reduce the cost of working capital for corporates. However, the offtake for working capital is primarily dependent on the demand for finished goods and under the present circumstances, banks may have idle resources. It is also important not to rule out the role of the government borrowing while considering any changes in the interest rates. The Union Budget for 1999-2000 has estimated Rs 84,000 crore of market borrowing for the Centre. Analysts said that the actual sum could touch Rs 100,000 crore and in that case a cut in interest rate would not be a sensible prescription. Corporates, on other hand, are of the view that a cut in CRR in the forthcoming slack season credit policy would create a perceptible improvement in market sentiments. FICCI said that the medium term objective should be to reduce the CRR to international levels which would improve profitability of the banks while releasing funds for the commercial sector. At the present juncture, a reduction in CRR by 1 per cent in two phases needs to be considered. The savings deposit rate of 4.5 per cent is currently regulated by RBI while the interest rate on all other term deposits were freed over the last few years. As of today 20 to 25 per cent of the banking sector deposits constitute savings deposits. These deposits generally have a tenure of 20 days and hence if deregulated, the interest rates on such deposits would be linked to 15-day term deposits. The government, on the
other hand, is of the view that current interest rates
are high.Finance Secretary, Dr Vijay Kelkar, in a recent
meeting with captains of industry had observed that
interest needs to move “southwards” as interest
rates would become the dominant instruments for revival
for economic growth. |
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NEW DELHI, April 19 (PTI) — Industry today hailed the unanimous decision of leading political parties to pass the Union Budget and the Railway Budget. FICCI President Sudhir Jalan said this clearly demonstrated the possibility of an all-party unanimity on economic matters even in the midst of political vicissitudes. “This is an encouraging, healthy and constructive sign,” he said in a statement. CII President Rajesh V. Shah congratulated political parties for reaching a consensus over the Budget and said: “This is an outstanding example of putting the nation’s interest above everything else.” “The crucial
decision reflects maturity and understanding of the
economic compulsions by the political parties and will
strengthen the forces of economic revival and give
investment decisions the much-needed boost,”
Assocham President K.P. Singh said. |
Pressure to stall Maruti tax probe NEW DELHI, April 19 (UNI) — The investigations into tax evasions by Maruti Udyog Limited seem to have hit a roadblock with a high-level intervention from the Industry Ministry urging taxmen not to be harsh on the Rs 8,500 crore carmaker. Sources told UNI here that senior functionaries have communicated to the Finance Ministry urging immediate intervention by asking the taxmen not to be harsh in their investigations. The move comes in response to a letter from Maruti alleging that the Income Tax Department had been rude to MUL employees during the surveys. However, the investigations are continuing and the exact amount of evasion on tax deduction at source is being ascertained. The company is alleged to have evaded tax of Rs 50-100 crore. Maruti has still not responded to the surveys conducted on the company’s premises on March 12. While stating that the IT Department has not received any communication from the Finance Ministry as yet, the officials feel that Suzuki is now employing “pressure tactics” to stall investigations. Prior to this, the
Japanese Chamber of Commerce and Industry had reportedly
requested the department not to prosecuted the Japanese
firms since they had agreed to disclose the salary
packages of their expatriate employees. It had also
provided a list of 90 companies to the department that
are willing to disclose their salary packages and pay up
the dues. However, Suzuki Motor Corporation does not
figure in the list of companies willing to make full
disclosures. |
‘Farmer
needs govt support’ NEW DELHI, April 19 — The Indian farmer will continue to need support from the government through judicious intervention, the Secretary, Department of Food and Consumer Affairs, Mr R.S. Mathur, said here today. Inaugurating a five-day seminar on “Agricultural marketing development planning” here, Mr Mathur said it would appear that time is ripe for India to move to a more open and liberal economic system, yet, considering the vulnerability of Indian agriculture, government support is needed. India is possibly operating the largest public distribution system in the world with a half a million outlets. To service the network, an elaborate system of procuring wheat and rice for the central pool is followed. He said that a bumper crop of about 200 million tonnes is expected this year. The seminar, organised by the Food Corporation of India (FCI) as the nodal agency and the Food and Agricultural Organisation (FAO) and the Association of Food and Agricultural Marketing of Asia and Pacific (AFMA), is aimed at strengthening and developing agricultural marketing and planning and sharing the experience among the member countries of AFMA. Delegates from Pakistan,
Malaysia, Nepal, Korea, Indonesia, Myanmar, Vietnam,
China, Bangladesh, Sri Lanka and India are participating
in the seminar. Representatives from FAO and AFMA are
also attending the seminar. |
Rs 770 crore worth projects cleared NEW DELHI, April 19 (PTI) — The Foreign Investment Promotion Board (FIPB) today cleared 27 foreign direct investment (FDI) proposals worth about Rs 770 crore, including proposals by Bywater International and Mauritius-based GPS Investments. Bywater International Ltd of the UK has been allowed to set up a wholly-owned subsidiary in India for investment and construction of water supply and waste water management and treatment. The UK-based company, which will participate in various water supply projects in the country through competitive bidding route, will bring in FDI of Rs 425 crore in the proposed Indian subsidiary, FIPB sources said. The board also cleared a proposal of GPS tourism Mauritius to bring in FDI of Rs 210 crore for setting up a hotel in Mumbai. The Mauritius company
will hold 93 per cent stake in the Mumbai hotel project.
GPS had last month got FIPB approval for setting up three
separate hotel projects at a total investment of over Rs
380 crore. |
TOKYO (AP): Off with those sombre suits and subdued ties. Skip the formal titles. And forget the morning callisthenics. Appliance maker Hitachi is doing away with three staples of Japan’s straitlaced corporate world. The goal? To promote individuality and stimulate creativity. In a memo circulated at the Tokyo headquarters recently, Hitachi encouraged employees to shed their coats and ties for polo shirts and slacks. Hitachi also asked workers to stop addressing superiors by their formal titles. The company will also do away with morning callisthenics, which fosters group mentality at the expense of individuality. It’s a big change in a corporate culture that long has preferred a docile, faceless conformity from its workers. But Hitachi isn’t alone. At Sumitomo Corp the trading mammoth, employees in the retail and consumer services division have been allowed to dress as they like since 1997. Slow recovery MANILA (AFP): Asian economies will recover this year and next as they emerge from the financial crisis that pulled growth down to the lowest level in over half-a-century. Asian Development Bank predicts. In its annual Asian Development Outlook, the Manila-based bank forecast the region’s gross domestic product (GDP) to expand 4.4 per cent this year and 5.1 per cent in 2000, from only 2.6 per cent in 1998. Inflation is also expected to fall from 6.5 per cent last year to 3.7 per cent this year before inching back up to 4.1 per cent in 2000. “The slowdown in Asian growth that began with the export declaration of 1996 and worsened with the 1997 currency crisis turned into a widespread regional contraction in 1998,” the report said. Growth in the so-called Asian tigers — Hong Kong, Taiwan, Singapore and South Korea — and in South-East Asia hit their “lowest (levels) since World War II” at negative 1.4 per cent and negative 6.9 per cent, respectively. PATA meet NAGOYA (Japan) (UNI): The colourful Rajasthani turban was a star attraction at the 48th annual Conference of Pacific Asia Travel Association (PATA) at the Nagoya Congress Centre at the heart of Japan’s fourth largest industrial town on Monday. Captains of India’s travel industry, led by former PATA President Inder Sharma, dressed in traditional Indian Bandhgala Jodhpuri suits, sported multi-coloured headgear of Rajasthan at the opening ceremony of the conference. The Crown Prince and Princess of Japan opened the conference. Over 1500 delegates and mediapersons spontaneously cheered when the PATA President’s prestigious award for excellent service to PATA and travel industry was announced for Ram Kohli, president of the Indian chapter of PATA. Mr Inder Sharma, President of Sita World Travel received the award for promotion of destination India on the Internet on behalf of the Department of Tourism as no one represented the department at this mega gathering. Another Indian winner of
the gold award was Mr Mandip Singh Soin, a Delhi-based
adventure travel and eco-friendly tour operator. |
BoI makes
Rs 6,800 crore advances CHANDIGARH, April 19 — Mr S.Rajagopal, CMD, Bank of India said that the bank has advanced over Rs 6,800 crore to priority sector and Rs 2,700 crore to agriculture. The bank has sanctioned a loan of Rs 50 crore to Punjab Rural Development Board on April 17, said Mr Rajagopal while addressing a rural gathering of over 600 farmers at Mandi Gobindgarh yesterday. Mr S.R. Birjarh, Chief Regional Manager of the Ludhiana region pointed out that the Bank of India is one of the few banks in the country who have achieved the national goal of 40 per cent in lending to priority sector and 18 per cent to agriculture sector of the total bank credit. The others who attended
the function were Mr S. Gopalkrishnan, Executive
Director, Mr K.M. Mehrotra, GM and Mr I.S. Dosanjh, Zonal
Manager. |
Special
Spices gets award CHANDIGARH, April 19
—A Himachal-based food processing unit, Special
Spices Industries, has been given the National Award for
“outstanding small scale entrepreneurship” by
ensuring high quality of its products. The award was
received by the Chairman of the group. Mr Harbilas
Jindal, from the Vice-President of India, Mr Krishan
Kant, at a function organised by the Union Industries
Ministry at Vigyan Bhavan, New Delhi, on April 17. |
Fire in Ballarpur unit YAMUNANAGAR, April 19 (FOC) — A devastating fire took place in Ballarpur Industries Limited here yesterday, Mr A.N. Pathak, Vice-President of the company, said here today that fire took place in the raw material yard resulting in a loss of about Rs 10 lakh. He said the main loss was to pine/eucalyptus wood — the chief raw material for paper manufacturing. Apart from three fire tenders rushed by the local fire brigade and two fire tender from Ambala were arranged by the local administration. ABB bags 11 crore contract NEW DELHI, April 19 (PTI) — ABB has bagged the engineering, procurement, contracting and installation of sinter plant electricals at the MMTC promoted steel plant Neelachal Ispat Nigam Ltd. in Orissa. The contract valued at Rs 10.95 crore involves design, engineering, supply, storage, erection, testing and commissioning of power distribution, complete electricals, automation, instrumentation and fly ash distribution system for the sinter plant. DVC to tie up with BSES CALCUTTA, April 19 (PTI) — Damodar Valley Corporation (DVC) will soon finalise an agreement with Bombay Suburban Electric Supply (BSES) to implement its Rs 4,000 crore first-ever export-oriented Maithon Right Bank Power Project, DVC Chairman A.K. Mishra said here today. He told reporters that the integrated power project designed to generate 1,000 MW from its four units (4x250 MW) initially, had been considered under the recent mega power of the Centre. Escorts Fin for tie-ups NEW DELHI, April 19 (PTI) — Escorts Finance Ltd (EFL) is in talks with GE Capital Services and Birla Global Finance to mop up cash by using its (EFL’s) receivables as collateral. Under this securetisation, GE Caps and Birla Global would bear the risk of fund receivables of Escorts Finance from its leasing and hire purchase business. As part of the securetisation process, GE Capital and Birla Global would purchase all receivables of Escorts Finance Ltd (EFL) at a discount with the EFL receiving all funds at the beginning of the deal. Escorts Finance sources said talks were in an advanced stage and once the system was implemented, the NBFC would have stable source of funds at a much lower cost. Wipro Lab for NEC BANGALORE, April 19
(PTI) — Wipro Infotech Software and Service group
today inaugurated a Middle Software Laboratory which will
work exclusively on projects for NEC of Japan. This
exclusive Bangalore-based laboratory was inaugurated by
Hiroyuki Izaki, Vice President and Executive General
Manager of NEC’s C&C Systems Software Operations
unit, V. Chandrasekharan, President and Chief Operating
Officer, Wipro Infotech Software and Services group and
Yukio Ebino. General Manager, NEC Middle Software
division were present on the occasion. |
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| Forex rates MUMBAI, April 19 (PTI) — The following were interbank forex and RBI rates (in rupees per unit) US $ Rs 42.85/87 The RBI reference rate was Rs 42.85. Gold gains |
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