Borrowings by states unsustainable: FM

NEW DELHI, Dec 12 (PTI) — The Centre has warned that a whopping 63 per cent of the borrowings, now being used by states for current consumption, could lead to a debt trap.

As high as “63.23 per cent of the borrowings of the states including plan assistance, go for current consumption. Most significantly, this is leading to an emergent situation of debt unsustainability of states,” Finance Minister Yashwant Sinha said in a presentation to the Planning Commission yesterday.

Yet another dangerous trend was that in many states the annual rate of growth of government guarantees outstripped the growth in revenue receipts, he said, adding that little incremental investment was taking place from these borrowings, often at market rates.

Giving statistics, the presentation noted that though the magnitude of state government guarantees has hovered around 5 per cent of GDP from 1993-94, the outstanding amount has more than doubled from Rs 48,866 crore in 1993-94 to Rs 99,476 crore in 1999-2000.

The presentation said that from a level of 19.05 per cent in 1993-94, the revenue deficit: fiscal deficit ratio increased to 63.23 per cent in 1999-2000 sending alarm bells to check borrowings from states.

“What has been especially alarming in the sharp deterioration in the ratio of the revenue deficit to the gross fiscal deficit,” it said.

This ratio was a measure of borrowings required to meet the deficit in covering current expenditure; that is the extent of borrowings used for current consumption, it said.

While the revenue deficit of states has gone up nearly six times from 0.45 per cent of GDP in 1993-94 to 2.96 per cent in 1999-2000, the fiscal deficit of states has doubled from 2.35 per cent of GDP in 1993-94 to 4.71 per cent in 1999-2000.

The presentation said it was precisely for this reason the 11th Finance Commission has envisaged reforms by states to bring down revenue deficit to zero per cent by 2004-05 and fiscal deficit 2.50 per cent of GDP by 2004-05.

It said if revenue account balance of the states was restored by 2004-05, the states would start having surpluses in their revenue accounts. For this revenue deficit has to be reduced by 0.59 per cent of GDP annually and fiscal deficit by 0.44 per cent annually.

In this connection the MoU signed with 13 states to bring about fiscal discipline was yielding results as MoUs have “sensitised” states for reforms.

Courier firms make hay
From Sumeet Chatterjee

NEW DELHI, Dec 12—Private courier companies located in the metros and semi-urban cities are striking gold even as the postal services remained crippled for the eighth day following a nationwide indefinite strike launched by the workers.

“Business has increased by almost 30 to 40 per cent in the last seven days. There has been a significant increase in the volume of items. The strike has created good business opportunity for us,” U. Srinivasan, an official of Overnite Express, told IANS.

“The postal strike has forced people to send light documents like greeting cards and letters through courier. We are doing good business and hope to continue it for some time,” Dinesh Chandra, centre Manager of First Flight Courier, said.

According to unofficial estimates, the strike is costing the central exchequer dearly, resulting in a loss of Rs. 300 million daily.

A government spokesman, on the other hand, claimed that the revenue loss was not significant when compared with the inconvenience to the general public.

“We don’t call it revenue loss, its actually postponement of revenue till normal postal services is restored across the country,” the spokesman, Frank Noronha, said.

Once delivery process of all money orders, which have piled up in different post offices, starts the postal department will start earning revenue, but until the delivery starts, the revenue will remain locked up in post offices.

The eight-day-old strike has badly affected the communication services for the citizens as heaps of letters, Christmas and New Year greeting cards and parcels continued to lie unattended at various post offices in the country.

“The postal workers are holding the average citizen to ransom. We can’t send greeting cards to our relatives and even if we post it now they would get it at least one and a half months later,” a Delhi housewife, Nirmala Sinha, complained.

Those who have access to computers can e-mail messages or others can afford to send regular mails through courier, but nobody bothers about the common citizen who depends on the postal department for sending ordinary post to his friends and family, she lamented.

India has a network of 152,000 post offices across the country and of these 127,000 offices are located in rural areas.

Oil, gas production may rise: ONGC
From Our Correspondent

MANDI, Dec 12 — ONGC Chairman-cum-Managing Director B.C. Bora has underlined the need of vigorous efforts for discovering new oil deposits in the country and abroad on equity basic to cope with the increasing demand of petroleum products.

Mr Bora said there was a challenging situation before the ONGC that while the consumption of the hydrocarbons was increasing unchecked in the country there had been no major discovery in the recent past and the producing wells were showing diminishing returns.

The existing reserves were inadequate and the production from them could go up another 10 to 15 per cent. “We are, therefore, pinning hopes on the future discoveries and ongoing ventures abroad. We are looking for equity oil outside India both through farm into discovered fields and exploratory work”, he said.

At present only 30 per cent of the country’s demand for oil and gas was being met by domestic production. The ONGC was producing 30 million tonnes of oil and around 45 million cubic metres of gas per day.

Mr Bora said there were oil and gas reserves of over 1 billion tonnes in 26 sedimentary basins of the country. The ONGC had drawn up an ambitious programme of exploration work in the frontier areas of the country mainly in deep sea waters. And if all went well during the next 10 years the oil and gas production could mark an increase up to 70 per cent.

Rs 20,000 cr wheat in godowns

MUMBAI, Dec 12 (PTI) — Mumbai High Court has directed Food Corporation of India (FCI) to file its say on a writ petition alleging that the “faulty” policy of the Union Government in fixing sale price of wheat has resulted in piling up of unsold stock worth Rs 20,000 crore.

The direction was given by Justices Ajit Shah and P.V. Kakade on a petition filed by Nandlal Wadhawa, President of Maharashtra Roller Flour Mills Association.

The petition has alleged “total failure” of the Union Government in adopting a reasonable pricing policy and in providing proper storage facilities for the stock of 26 million tonnes of wheat which has remained unsold since April this year.

The petition also alleged that the government had taken an unreasonable decision to export two million tonnes of wheat at the rate of $ 90 (about Rs 410) per quintal as against Rs 724 per quintal in the domestic market which was initially pegged at Rs 900 per quintal.

The petition further alleged that the Centre had rejected the offer of roller mill operators — the largest consumers — to lift FCI’s unsold stock at affordable rates ranging from Rs 500 to Rs 650 per quintal, particularly when 26 million tonnes of wheat was lying in the godowns since April and the new crop was round the corner.

The petition has also alleged that 70 lakh tonnes of wheat had turned rotten due to poor and inadequate storage facilities provided by FCI and claimed that sub-standard wheat was being supplied through the public distribution system.

The petitioner said India was the second largest wheat grower in the world, next to China. In spite of drought and cyclones, the total food grain production in 1999-2000 had reached 206 million tonnes. Of this, wheat production was 75 million tonnes — 5 million tonnes more than previous year.

Even though FCI was established to procure, store, transport and market foodgrains in the country, it had failed in its duty over the years, the petitioner alleged.

Major stock of foodgrains was stocked and piled on open grounds and railway platforms in the absence of warehouse and storage facilities, the petitioner further alleged.

On many occasions, the storage cost was more than the procurement price. At the same time due to faulty public distribution system and transport, stock remains uncleared. Major portions were rotten and not sold and pricing of food grains was the major hurdle in clearing the stocks, counsel for the petitioners, C.R. Dalvi and S.M. Gorwadkar, contended.

The petitioner claimed to have informed the government about the prevailing situation and in the circumstances urged for a uniform price of wheat by FCI. The government was informed that due to faulty policy in fixing the price the wheat stock was lying unsold with FCI since April last.

It was pointed out that inferior quality of wheat (C and D grade) was made available by FCI at Rs 750 per quintal when in open market good quality wheat was available at Rs 730.

The petitioner said it had sought an appointment with the Union Minister for Food and Civil Supply in October but the request was turned down. Meanwhile, the government decided to export food grains, including wheat, at extremely concessional rates in the international market.

It was pointed out that to sustain in international market, the quality of wheat should be A or B category which was priced at Rs 900 per quintal as against the international price of Rs 410. The petitioner alleged that the export of wheat products had stopped due to faulty pricing policy.

McDonald’s sales hit by mad cow
By Deborah Cohen

OAK BROOK: McDonald’s Corp., the world’s largest fast-food chain, said on Monday its sees 2000 profits growing at the low end of forecasts as the beef crisis in Europe scares customers away from hamburgers.

The Oak Brook, ILL.-based company said it expects earnings to grow 10 to 11 per cent this year, after November sales turned out to be surprisingly strong in the United States and Asia-Pacific region but weaker in Europe, where one-quarter of its food is sold.

Europe first began spotting cases of the brain-wasting bovine spongiform encephalopathy (BSE) in November, in countries that include Germany, France and Spain. The outbreak has sparked quality control actions by the European Union and concern among consumers who are looking to eat more non-beef products.

“Sales in certain European countries were tempered by the decline in consumer confidence regarding the safety of the European beef supply,” McDonald’s Chairman and Chief Executive Jack Greenberg said in a statement released early Monday.

McDonald’s reported November systemwide sales of $ 3.2 billion, up 4 per cent from the same period last year. This was led by the united states, where sales of Big Macs, French fries and other products rose 7 per cent to $ 1.57 billion.

The company said sales in Europe fell 11 per cent from November 1999 to $ 670.6 million. Comparable sales at restaurants open for at least one year in Europe were down in the low single digits on a percentage basis, McDonald’s said.

Analysts said investors cheered what McDonald’s called a “mid-single digit” percentage rise in same-store sales in the United States and Asia in November. Mad cow disease is also expected to have a short-term impact.

“The strong comps are definitely encouraging,” said Lehman Bros. Restaurant analyst Mitchell Speiser.

“We believe that the quick recovery time from consumers regarding mad cow disease is not likely widely reported, which means December could turn out better than investors are looking for,” said Salomon Smith Barney analyst Mark Kalinowski in a Monday report.

McDonald’s is expected earn $1.49 for full-year 2000, based on a recent poll of analysts by First Call/Thomson Financial. — Reuters

Bank of Punjab to go global
Tribune News Service

The bank issues debit cards and these are accepted in the Master Card, Cirrus and Swadhan Global Networks. Bank of Punjab is in the process of linking up with Visa for its Credit Card. Its present global reach is 13.3 million merchant establishments and 560,000 ATMs.

Offbeat
Nizams’ jewels to be displayed

HYDERABAD: The Salar Jung museum, famous for the world’s largest one-man collection of artifacts, will have yet another attraction soon.

The fabulous jewels of the Nizams, the rulers of the erstwhile princely state of Hyderabad, will be displayed in an exhibition at the museum located on the banks of the Musi river here.

This decision of the Andhra Pradesh Government, which will enable citizens for the first time to have a close look at the dazzling collection, is likely to give a major boost to tourism. The decision followed the Central Government agreeing to Chief Minister N. Chandrababu Naidu’s demand that the priceless jewelry be handed over to Hyderabad for public display.

The Indian government had bought the rare collection of 173 pieces for Rs. 2.18 billion in 1995 following a four-decade-long legal battle with Nizam’s Jewelry Trust. After the death in 1971 of Azam Jah Bahadur, the eldest son of last Nizam Mir Osman Ali Khan, the trust wanted to sell the jewelry to the highest bidder.

Though the jewelry is valued at Rs. 20 billion in the international market, the government managed to buy it for just Rs. 2.18 billion when the Supreme Court intervened in the matter.

The collection includes the 184.75 carat uncut Jacob diamond, said to be the third largest in the world, a seven-strand necklace made up of 150 large and 230 small pearls with a two-diamond centerpiece weighing 705 mg, 22 fine emeralds weighing 414.25 carats and a pair of bracelets studded with 270 diamonds. It also includes a number of small pieces like rings, brooches, buttons, diamond-studded camels and swords as well as turban decorations.

The 11-member Salar Jung museum board headed by Andhra Pradesh Governor C. Rangarajan, at its meeting last week, decided to display the jewelry in a special exhibition in May next year. The museum authorities have to prepare a special gallery for the exhibition and ensure foolproof security. Officials said the Godrej company had been asked to make bullet-proof glass display cases for the purpose.

Museum director A.K.V.S. Reddy said the exhibition would be held for a month. He is still not sure of the final dates as the Central Government is also keen to display the jewelry in the National Museum, New Delhi. — IANS

‘Black cow’ wins damages

LONDON: A woman lecturer of Indian origin who was called a “black bitch” and a “black cow” by her students has won £ 1,000 damages against the college that employs her in Wigan, north of London.

Uganda-born computer teacher Mubina Bhimji said she had also been “attacked” by three unruly students and took her employers at Wigan and Leigh College to an industrial tribunal after accusing them of racial and sexual discrimination.

The college, which said it had dealt with her complaint with compassion and professionalism, retaliated by declaring that Bhimji had used racial insults against colleagues and students.

But Bhimji, who has taught at the college for 14 years, has won her case and was awarded £ 1,000 damages against the college.

A spokesman of her union, the National Association of Teachers For Higher Education, told IANS: “This ruling makes it absolutely clear that colleges are liable for their students’ racist or sexist conduct. We hope it will give institutions the push they need to move beyond lip service in dealing with equality at work.”

“It’s high time colleges train their staff on how to deal with racist incidents and back them up when they complain that a student’s behavior is unacceptable.” — IANS

THAT'S IT

Microsoft launches MS Exchange 2000

NEW DELHI, Dec 12 (PTI) — Software company Microsoft India today announced the launch of messaging and collaborative platform — MS Exchange 2000, for “anytime, anywhere” communication.

“Quick decision making and easy manageability of business communications are the need of the hour for enterprises today. The new product offers messaging and collaboration platform that takes advantage of the web,” Microsoft India Managing Director, Sanjay Mirchandani said in a statement. Exchange 2000, an integral part of Microsoft’s .Net enterprise server family, integrates Windows 2000 platform to offer messaging and collaboration for all businesses from small organisations to big enterprises, the statement said.

The product also offers real-time data, audio and video conferencing functionality that enables virtual teams to work together across geographies or organisational boundaries, it added.

Microsoft would also target small and medium enterprises through its Application Service Provider (ASP) and Application hosting functionality models. Exchange 2000 also supports web store functionality to provide access to information and manage documents and e-mail. 

IT institute in Gurgaon
By B.K. Chum

Having the status of a deemed university, the northern India’s first IIIT would be managed by an autonomous body. A debate is now on in official circles whether the proposed IIIT should be on the pattern of other IT Institutes or should be an institute imparting super-speciality courses. The proposed Institute would acquire a unique status in the country if it is established as an institute of superspecialities, it is argued. — IPA

Webexchange from Satyam

CHENNAI, Dec 12 (PTI) — Satyam Infoway Ltd, a leading internet and E-commerce company, today announced the launch of Satyam Webexchange Ltd offering a range of B2B portals in partnership with Indian and internationals E-commerce and trading sites.

The new Webexchange, a wholly-owned subsidiary of Satyam Infoway Ltd at present has seven portals, four of which are vertical and the rest horizontal, according to a company press release here today.

Operating on the Internet at www.sifywebex.com, the group of portals which include teawebex.co, satyamplastics.com, seekandfound.com, formsindia.com and firmseekindia.com are all transaction enabled with real life functional processes enabled on the internet, the release said.

The value-added features of the Webexchange include multiparametric search enabling the users to find the right suppliers, an e-procurement engine and catalogue functionalities.

CORPORATE NEWS

Key old economy stocks score gains

SELECT key old economy stocks scored impressive gains and helped the sensex to ward off any adverse impact of a negative reaction in a few heavyweights on the BSE on sustained bull support and selective purchases by Foreign Funds.

In keeping with squaring up of positions on the NSE that had the last day of current account, speculators were seen placing buy orders in cyclicals like ITC, BHEL, Grasim, HPCL and BSES which have high weightage in the benchmark. Even a leading domestic institution was reportedly buyer in ACC, Tisco and some others.

NIIT traded heavily throughout the session on persistent purchases by FIIs and domestic players and share prices spurted to Rs 1865 at one stage, but late selling by profit-takers, trimmed part of earlier gains and concluded at Rs 1848,

SSI Ltd too remained in good shape on selective buying by domestic infotech mutual funds and finished Rs 21.25 but Wipro Ltd met with some late selling and shed Rs 4 at Rs 2986 after rising to Rs 3040.

Reliance Industries turned highly volatile on hectic buying and selling by operators and after bouncing between Rs 343.05 and Rs 348, ended Rs 2.90 down at Rs 343.40. Reliance Petroleum also fell in tandem and lost 75 paisa at Rs 60.80.

Glaxo Wellcome Plc and SmithKline Beecham Plc said on Tuesday that their long-delayed merger had won consent from the staff of the US Federal Trade Commission.

The agreement of the staff — which the companies expect to be followed by formal approval from the commission — should pave the way for the merger to take effect from December 27.

Net sales of Unit Trust of India’s (UTI) flagship scheme US 64 registered a 71 per cent growth as on November 30, 2000 over the corresponding period last year.

The total sales up to November stood at Rs 2,161 crore including Rs 607 crore reinvestments, up by 25 per cent over the corresponding period last year, UTI said in a release here today.

Procter and Gamble on Tuesday said it will diversify its products portfolio in India even as 100 of the company’s marketing professionals will be moving to Singapore this year as part of global restructuring.

“We are studying the possibility of launching products which do not fall into the feminine care, healthcare, hair care and detergents segments P&G currently has in India,” Senior Manager (Public Affairs) Anthony Rose said here.

Castrol Limited, UK, a wholly-owned subsidiary of BP Amco Plc, announced its intention to make an open offer to acquire up to 20 per cent of the issued equity share capital of Castrol India Limited at a price of Rs 311.91 per fully paid-up equity share.

The Board of Directors of Industrial Development Bank of India (IDBI) will decide on issuance of bonus shares to its share holders at its board meeting on December 19.

IDBI in a communication to the Stock Exchanges, here informed that if approved, the record date will be fixed at December 19.

This is the first time the IDBI is considering of Bonus issue so far. The IDBI’s present equity stands at Rs 412.25 crore.

State-owned Vijaya Bank’s Rs 100 crore initial public offer (IPO) of 100 million shares at par value has been oversubscribed by 1.84 times despite depressed market conditions. The issue, which opened on November 27 and closed on December 4, received 1,12.254 applications. — Agencies

BIZ BRIEFS

Visesh Info
CHANDIGARH, Dec 12— Visesh Infosystems, an ISO 9001 certified solution provider, launched its operations here yesterday. The operations of the company will derive support from various development centres and teams spread over India and abroad. "The company has been shortlisted and has given its consent to be placed on the panel of total solution providers with the Punjab Government," said Mr. Rakesh Bhatia, Chairman of the company, speaking during the inaugural ceremony. Capt. Kanwaljit Singh, Finance Minister, Punjab was the chief guest on the occasion.

Bank.net
MUMBAI, Dec 12 (PTI) — A two-day exhibition and conference on banking technology will commence here tomorrow. “Bank.net, 2000, will provide a platform for bankers and all institutions related to the banking sector to learn about the latest technology trends from the global banking and the IT industry.” Prem Behl, Managing Director of Exhibitions India, told reporters here today.

DCM Shriram
NEW DELHI, Dec 12 (PTI) — Icra has upgraded the commercial paper programme rating of DCM Shriram Consolidated from ‘A1’ to ‘A1+’, indicating highest safety, for an enhanced amount of Rs 35 crore.

Bharat Gaurav
MUMBAI, Dec 12 (UNI) — The Indian Merchants Chamber (IMC) has decided to present its “Bharat Gaurav” awards to three distinguished overseas Indians — Lord Swraj Paul from UK, Dr Manu Chandaria from Kenya and Mr Bob Harilela, JP from Hong Kong. The awards will be presented to them at a grand function to be held during the second “India calling” conference at Taj Mahal hotel here between January 5 and 7, 2001.

Unitex
NEW DELHI, Dec 12 (PTI) — Uniproducts (India) Ltd a non-woven products manufacturer under the brand name Unitex has received ISO 9001 certificate for maintaining quality standard.

Intel Cap
NEW DELHI, Dec 12 (PTI) — Global chip major Intel Corp’s investment arm Intel Capital has invested in Delhi-based personal finance consultancy Parasmoney Investment Management Services for constructing an online component to the latter’s consultancy business.

LexDrafts
NEW DELHI, Dec 12 (PTI) — LexSite.com, leading legal and taxation destination on the web, today announced the launch of its value-added service “LexDrafts”, a compilation of most commonly used legal documents across various categories. Though a paid service, LexSite is making available this service free of cost of the visitors initially.

Reckitt & Colman
NEW DELHI, Dec 12 — Reckitt and Colman of India Ltd, known for their Dettol brand, will now be known as “Reckitt Benckiser (India) Limited”.