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| Wednesday, February
14, 2001, Chandigarh, India   
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Govt ready
to sell 50 pc stake in Maruti India’s
growth not pro-poor: economist
Children share a meal at a makeshift community kitchen in Bhuj on
Tuesday. — Reuters photo |
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Centre
to ban fashion channel Beware,
love bug can strike today! HC
orders probe into cell overcharging No
takeover threat, says Kesoram Ind Globsyn
offers shares
Tax scare
about PF
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Govt ready to sell 50 pc stake in Maruti NEW DELHI, Feb 13 — The privatisation committee of the Cabinet will consider the sale of the government's 50 percent stake in Maruti Udyog, which has dominated the Indian market for more than 15 years with its small, inexpensive cars. "The CCD (Cabinet Committee on Disinvestment) will discuss several options, including going ahead with global bidding for selling the government's stake in Maruti," a senior Disinvestment Department official told Reuters. Analysts have said the selloff is likely to attract a flock of eager bidders since Maruti's dominant position, large dealership network, pool of component manufacturers and spare parts suppliers, and the growth potential of the Indian market make it an attractive acquisition for any carmaker. Media has said the government is likely to invite bids from foreign automakers and has asked Suzuki Motor Co, which owns 50 percent of Maruti, to give it a list of acceptable partners. Under the joint venture agreement, any buyer must be approved by Suzuki. Still, the government may confound expectations by choosing another of the five options under consideration for disposing of Maruti, whose market share has tumbled to 57 percent from over 80 percent in just two and a half years due to competition from foreign carmakers recently allowed entry. Five options of share sale The Business Standard newspaper reported on Tuesday that the Prime Minister's office had urged a group of Indian financial institutions to pick up the government's stake and later sell it off to the public. Up to now, financial institutions have proven unwilling, citing Maruti's recent financial losses and falling market share. If the choice is made to sell the stake to a strategic foreign partner, the group of potential suitors is likely to included General Motors, the world's largest automaker which owns a 20 percent stake in Suzuki. Tata Engineering and Bajaj Auto have also expressed interest in picking up the stake. Suzuki is believed to prefer the government stake be sold to the public, and is prepared to accept only General Motors as a partner. Former Maruti Chairman R.C. Bhargava told Reuters in November he believed Suzuki would not be interested in buying the government stake itself. Analyst say the quicker the sale is completed, the more money the government is likely to raise to help finance the reconstruction of areas devastated by the earthquake in Gujarat. Earlier this month the government decided to sell part of its stakes in two other state-run firms, Videsh Sanchar Nigam Ltd and CMC Ltd. Recent losses to hit valuations Maruti is certain to fetch less now than it would have two years ago, before new entrants like Hyundai and Daewoo of South Korea and U.S.-based Ford Motor Co set up factories in India and began stealing market share. Maruti posted a net profit of 3.3 billion rupees on revenue of 96.7 billion rupees in the year to March, 2000. But in the first seven months of the current business year, Maruti lost 1.28 billion rupees ($27.5 million) due to falling sales, a bruising price cut made to hold onto market share, and labour trouble. In the nine months through December, sales shrank 19.7 percent from a year earlier to 241,322 vehicles. Still, Maruti's large-scale output in a volume-sensitive business makes it the industry's lowest cost producer. It sold 239,094 cars in April-December, four times the 60,815 units of Hyundai, its nearest competitor. By global standards, though, Maruti is rather small. It sold just 406,272 vehicles in the year to March 2000, about as many as the General Motors group sells in a single month.
— Reuters
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India’s growth not pro-poor: economist NEW DELHI, Feb 13 — India’s growth is not pro-poor, leading to wide disparities in distribution of wealth and increase in rural poverty, says well-known Asian Development Bank (ADB) economist Nanak Kakwani. Dr Kakwani, who advised the governments of Laos, Thailand and Korea on poverty programmes during the Asian meltdown, told a meeting here yesterday that little had changed in the condition of the poor in three decades. Children were still begging and the poor affected by the high pollution levels, caused by the cars of the rich, he said. If the government had been concerned about poverty, it could have easily ensured, through legislation and other means, that children did not beg. As a result, India went the way of Thailand and Laos, not the route taken by the Philippines and Korea. Dr Kakwani said his research indicated that agricultural growth was normally pro-poor. But in India, growth bypassed agriculture and there was little investment in health and education. A pro-poor bias was not introduced in government policies, he felt. An econometrician, he developed the index used to compute poverty in these three countries. Dr Kakwani, consultant to the ADB, is to soon join the School of Economics, University of New South Wales, as professor. Dr Kakwani was speaking to leading economists and senior government officials at the Research and Information System (RIS) for non-aligned and other developing countries. Dr V.R. Panchamukhi, RIS Director, who was in the chair, said certain kinds of growth including non-sustainable, reckless and futureless growth, and growth not beneficial to the poor, must be avoided. “It is difficult to get a picture from aggregates.” Each policy has to be examined to ascertain whether it is pro-poor. For example, a higher proportion of indirect taxes are anti-poor. Besides, the variation among regions was so vast that getting a complete picture was difficult. Economists must therefore, go over the data of each state before concluding who followed pro-poor growth policies, he opined. Dr Kakwani, who presented a paper on “what is pro-poor growth?” said he had not worked on India because the authorities did not give him the requisite data. “There has been so much talk about liberalisation and globalisation. Then, why is there so much secrecy about basic data,?” he wondered.
— UNI
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Illiteracy causes poverty, not vice versa NEW DELHI, FEB 13 — Indian experts have challenged the conventional view that illiteracy is the result of poverty, saying a lack of education was the cause of economic deprivation. “The ruling elite has been successful in creating a ‘poverty syndrome’ which is an absolute myth,” Indian child rights campaigner Kailash Satyarthi told a conference on basic education on Tuesday. “It is not poverty that causes illiteracy, but it is illiteracy that results in poverty,” he added. Around 170 delegates from 33 nations under the banner of the Global Campaign for Education said world budgets for primary education were abysmally low and pressed for early action to achieve a U.N. mandate seeking “Education For All” by 2015. The conference aims to press governments and institutions to raise spending on basic education to an annual $8 billion worldwide from the current levels estimated at only a tenth of that amount. Satyarthi said $8 billion equalled only four days of the world’s annual military spending, a fifth of what Europeans spend on ice-cream in a year and a sixth of what Americans spend on tobacco. “Are we really poor, financially? This is nothing but sheer bankruptcy of global political will and human solidarity,” he said. A U.N. conference at Dakar in Senegal last year said there were 113 million children worldwide with no access to primary education, 880 million illiterate adults and widespread discrimination against women in education. Ten years ago, India’s census showed that about 48 percent of adults could not read or write. According to domestic media reports, the figure was estimated to have fallen to about 38 percent in 1997. The conference also called for efforts to provide access to primary education for all children, a 50 percent improvement in adult literacy and the elimination of gender disparities in education by 2015. Former Prime Minister V.P. Singh told the conference he had realised during his days as Finance Minister that spending on health and education always suffered most in cost-cutting exercises by governments. India spends less than one percent of its national income on education. He said over the centuries the poor had been deliberately kept away from education, resulting in their deprivation. “Knowledge has been the key to power,” he said. “Depriving the masses of education has been an instrument of enslavement... Universal access to knowledge is a human right, which is still a far goal.” Satyarthi cited one example of a bonded labourer he had helped free from virtual slavery after the labourer had indebted himself to a landlord. The labourer had been made to give his thumb impression on papers that said he had borrowed huge sums of money — papers he could not read.
— Reuters
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Haryana & Centre sign power MoU NEW DELHI, FEB 13
— Haryana and the Union Ministry of Power today signed an MoU envisaging joint commitment for power sector reforms in the state. “The Central Government will provide support to the Haryana Government for overcoming certain difficulties such as those pertaining to fixed capital issues and also in distributional matters in certain cases”, the Union Minister of Power, Mr Suresh Prabhu, told newspersons later. The MoU was signed by the two parties in the presence of the Prime Minister, Mr Atal Behari Vajpayee, here. The objective of the reform programme in Haryana is to provide adequate, reliable and good quality power and achieve commercial viability in the
power sector so that the sector can finance its own growth, Mr Prabhu said. The MoU, which is valid for a period of five years with the implementation being reviewed every three months, envisages that Haryana would bring down transmission and distribution (T&D) losses to 20 per cent by 2006. Currently, according to the Haryana State Electricity Regulatory Commission (HERC), the T&D losses across the state stands at 40.76 per cent. The Haryana government has also committed to undertake energy audit and institute 100 per cent metering of all consumers by December 31 this year. Early execution of Faridabad Gas Based Thermal Power Station (Stage II) and the Yamunanagar Thermal Power Project ( 500 mw) has been agreed upon. The Haryana State Electricity Board (HSEB) has already under four independent corporations. |
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RAIPUR, FEB 13 — The Centre has decided to ban the “F” channel, dedicated to fashion, for allegedly projecting “vulgarity”, according to Minister of State for Information and Broadcasting (I&B) Ramesh Bais. “A decision to this effect was taken yesterday at a meeting in New Delhi”, Bais told reporters here today. The channel will be off the air soon as action has already been initiated in this respect, he said. To a query, the minister said the Centre has decided, in principle, not to allow any advertisements or programmes promoting tobacco products and vulgarity. “Any programme against Indian culture will not be tolerated”, he said quoting an example of an advertisement banned recently on Sony channel. The Centre would soon call for tenders to start FM radio channel at Raipur, Bais said, adding that four years ago tenders were invited for FM radio at Raipur but the idea was dropped since there was no response. The Centre is also taking steps to re-shape the I&B Ministry as per the Geeta Krishnan Committee recommendations, he said. “However, this will be done after the Budget session”, Bais added. |
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Beware, love bug can strike today! HONG KONG , Feb 13 — Don’t feel overly-flattered should you get love messages from unknown admirers come Wednesday when the world celebrates the day set aside for lovers. Experts say the day may also be perfect for the resurrection of the “I Love You” or “Love Bug” e-mail virus that struck millions of computers last year. “Valentine’s Day will be the perfect time for I Love You or a variant to re-appear on the Internet,” said Nick Hawkins, Vice-President of MessageLabs Asia Pacific, an international firm that specialises in e-mail filtering. “At this time of the year, I would be very hesitant to open anything (to do with Valentine’s Day),’’ said Hawkins. Hawkins said Hong Kong could be particularly prone to such attacks. “We do see a number of viruses that originate from here,” he told Reuters. Another virus already doing the rounds and spreading in Hong Kong in recent days promises a photograph of glamorous Russian tennis star Anna Kournikova. The virus, first discovered in August, uses a so-called worm to spread in the same manner as the Love Bug. The subject line on the Kournikova virus e-mail reads: “Here you
have”. The body of the e-mail says “Hi: Check This!” Unlike the Love Bug, the experts say it is not data destructive but is damaging because it can clog up e-mail systems and cause servers to crash. The Love Bug infected an estimated 15 million computers in May last year and brought servers around the world to a complete standstill. The bug appears in the form of an e-mail that comes with an attachment. Once the attachment is opened, the virus infects the users computer and sends itself to every name in the users address book. Hawkins said even nearly a year after the Love Bug first struck, the virus has remained virulent and that tens of thousands of attacks are still being recorded each month.
— Reuters |
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HC orders probe into cell overcharging NEW DELHI, FEB 13 — The Delhi High Court today asked Delhi Police to investigate any overcharging of subscribers by cellular operators in the capital. Senior officials of the Crime Branch of the city police should probe the matter as it involves a public interest, a Bench comprising Justice Usha Mehra and Justice K. Ramamoorthy said in its order. The direction to this effect followed a writ petition by “AirTel” operator — Bharati Cellular Ltd (BCL) — seeking quashing of an FIR against it by the police. The FIR was registered after a chartered accountant, J.K. Mittal filed a complaint against the company alleging that it had overcharged him twice for the cell phone service, which he had been availing since January, 1998. According to the complaint lodged with the police, Mittal alleged that the BCL had charged Rs 20 excluding 5 per cent service tax for a call received on February 22 at 2.14 p.m. Similarly in the November 22, 1999 Bill, he was charged for the call made on hotline “toll free” cell phone number of “Escotel” on November 2, 1999. “When I am roaming on Escotel network, call made on its number cannot be charged,” Mittal in his complaint claimed. Mr Mittal said if the company was allowed to “manipulate” the bills in this manner, then it would be collecting huge amount from thousands of its subscribers this way.
— PTI |
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No takeover threat, says Kesoram Ind KOLKATA, FEB 13 — The B.K. Birla flagship Kesoram Industries today brushed aside any possible takeover threat even as the market is abuzz with reports about the acquisition of a substantial stake by a Dubai-based bank. “We are quite safe and there is no threat at all. It could be just because of our improved performance during the last two quarters that our company’s scrips have witnessed renewed attraction,” a top Kesoram official told PTI. Centurion Bank The Centurion Bank Ltd will raise Rs 128.08 crore by offering 10.67 crore shares on rights basis to its shareholders with premium of Rs 2 per share (face value Rs 10 each) to meet the capital adequacy requirements. As a part of rights issue, which opens tomorrow, existing shareholders would be entitled for shares in the ratio of 7:10 held on January 27, according to the offer document. HCL Infosystem HCL Infosystem’s Singapore arm has bagged an order from the Singapore-based Commercial and Industrial Security Corporation for end-to-end implementation of enterprisewide resource planning (ERP) system. The order which is valued at 2.7 million Singapore dollar is the third major SAP implementation contract for HCL Insys in its first year as the national implementation partner of SAP in Singapore. Excelcia Foods Swiss major Nestle said today it has begun restructuring of the biscuits and extruded foods company Excelcia Foods after having bought over the 40 per cent stake held by Dabur India Limited last year.
— PTI |
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Globsyn offers shares CHANDIGARH,
Feb 13 — Globsyn Technologies has come out with a public issue of 36,93,600 equity shares of Rs. 10 each at a premium of Rs. 30 per share. The offer will close on February 20. Proceeds from the IPO will be used for projects, including an instructional research and development centre in Delhi, software finishing school of the company and for the investment in equity in wholly owned subsidiary in the USA and setting up of a subsidiary in the UK, said Mr. Rohit Srivastava, Vice- President. |
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Tax scare about PF NEW DELHI, Feb 13 — As the Finance Minister prepares to present the Budget on February 28, there is an unease among the salaried class about reports that the axe is going to fall on the Provident Fund and small savings. It has been reported that the Finance Ministry is proposing to tax Provident Fund withdrawals at the peak income tax slab of 30 per cent, as per the recommendations of the Dave Committee on small savings. Since the PF account exceeds Rs 1 lakh crore, the sweep of the proposal would be far reaching and touch virtually every section of society. The other worrying aspect of the Budget is that the Finance Ministry has made up its mind to effect a percentage point cut in the small savings rate as recommended by the Prime Minister’s Economic Advisory Council. Finance Ministry officials are mum about the reports as they are bound by the secrecy clause when the Budget proposals are being framed. This has led to more unease. On the reported proposal of the Finance Ministry to tax Provident Fund withdrawals, a tax consultant pointed out that this provision already exists for the National Savings Scheme. The earnings are not taxed if the total amount comes within the exemption limit. Similarly in the case of the Provident Fund, it would not be taxable when withdrawn at the time of retirement as there is likely to be no other earnings at that time. However, this proposal suffers from a basic flaw, a senior banker pointed out. A person saves in the Provident Fund account to save on taxes. In a way he is forced to go in for compulsory savings. The savings in the PF account are often withdrawn prematurely to pay for exigencies. These include construction of house, marriage and other pressing needs. “The Provident Fund is the mainstay of the middle class and the government can ill- afford to be harsh on this part of the savings” he added. The Dave Committee had recommended that the Provident Fund amount be handed over to professionals for investments so that it can earn higher returns. Left parties and employees unions are, however, against this proposal as it involves dabbling with the savings of the salaried class. On the other hand, taxing the PF withdrawals would enable the Government to retain more funds for developmental works. A senior BJP functionary admitted that politically the step would be suicidal. Another bolt from the blue for the middle class could be the proposal to reduce by a percentage point the small savings rate. This approach was adopted last year by the government interest rate on the Post Office savings scheme and the NSC series were brought down to 11 per cent. It remains to be seen whether the Finance Minister goes all out to burden the salaried class. |
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