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Thursday,
March 7, 2002, Chandigarh, India  
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Budget is
high on disappointment: Memani Don’t
ease norms on dividend: SEBI US tariffs
on steel to hit India
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Grasim
launches Birla Plus in city PDS
prices to be cut: Shanta Kumar India,
Nepal to fix new quota for imports Bharti
Mobile launches pre-paid service ‘Magic’ FDI
proposals worth 940 cr cleared
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Budget is high on disappointment: Memani New Delhi, March 6 Q:
What is your assessment of the Union Budget for 2002-2003? A:
Well there was lot of hype about the Budget. Everybody expected the Finance Minister to do something radical. One thought he will do something to revive the economy, something to spur demand, and to stimulate growth. But apparently there are no major investments in capital market, incentives for savings and no stimulant for the economy. Paradoxically it has been found that there are large anti-doses to growth like taxing dividends at the hands of recipients which increase the tax burden of the shareholders tremendously. The levy of 5 per cent surcharge on income tax, though insignificant in incidence, has affected the sentiments. People were expecting the Gujarat earthquake surcharge of 2 per cent to go. Instead, they have been asked to pay 5 per cent national security surcharge. Q:
What options did Mr Sinha have? A: The Finance Minister’s budget comes at a time when the fundamentals of the economy are strong as indicated by the Economic Survey. Foreign exchange reserves are high, food stocks are high and inflation rate is
extremely low. Under these circumstances the Finance Minister should have taken little less from the taxpayers and got lot more by reviving economy. He should have taken steps to revive demand in industrial and manufacturing sector. He did not do much on this front and there is lot of frustration. Having said that I would not like to entirely devalue the positive aspects of the Budget. The Finance Minister has rationalised excise duty and customs duty, taken some steps in reducing subsidies, taken the reform agenda forward by announcing the dismantling of administered price mechanism for petroleum goods, increased prices of fertiliser, kerosene and LPG. This taken along with the Railway Budget where the fares have been increased reflects the Government’s commitment to reduce subsidies. Also, the Rs 18,000 crore allotted for Plan expenditure would help in reviving economy in the medium to long term. Investments for the infrastructure growth would also provide gains for the economic sector,
but, this will not happen in the short term. Overall the Budget is high on disappointment and low on vision. Q: The Finance Minister has said he does not want to be a merchant of feel good factor. What do you feel? A:
I am personally not happy with the statement of the Finance Minister. Infact he has to provide an environment of feel good factor which is the basis for bringing about sentiments for growth. The Finance Minister must create an environment where people feel optimistic. Q:
What about allocations for the various sectors of economy? A:
The agriculture constitutes 70 per cent of the economy and the Finance Minister has done quite a bit for the sector. However, growth cannot be achieved on the basis of one sector alone. The industry sector cannot be ignored. No economy can afford to do that. The balance 30 per cent of economy is also important. Q:
Do you think savings in the country will be affected after the Budget? A:
The Budget seeks to raise Rs 10,500 crore from taxpayers. To that extent individuals and companies will be running short of the money at their disposal or they would be spending to improve their standard of life. There have been reduction in rebates, and exemptions for salary earners above Rs 5 lakh has been taken away. At least old policies should have been retained if not improved upon to encourage people to save. Q: Do you think the economy will revive after the Budget? A: You cannot expect this budget to revive growth in the short term. There are other factors which would reverse the slowdown in economy. In the long term there are factors like grants to States on the basis of reforms, improvement in the global economy, and demand for exports which would revive the economy. Q:
Does the Budget give a push to second generation reforms? A: The Finance Minister had introduced second generation reforms in the last budget. He himself has said that this year he has only tried to consolidate it. He has made commitments. The measures are already there in statute. Before Budget too some measures like labour reforms and free movement of agricultural goods was announced. It is due to political reasons that the progress is slow. Q: What about investments. Will foreign investments come? A: It depends on world climate for investments. If it improves then investments into the country will improve. There has to be radical improvement in infrastructure and less of bureaucracy. Then only investments will come. Foreign investments will not come only for meeting local demand. It is not much. You have to make the country a hub for exports and a export base for other countries. For this infrastructure cost needs to be reduced, telecommunications and financial services should be in place, rate of interest should match international levels. Only after the country becomes competitive will investments come.
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Don’t ease norms on dividend: SEBI
New Delhi, March 6 Under SEBI’s Listing Agreement norms, a company has to inform the stock exchanges about the notice period for book closure and record date, which should not be less than 30 days for demat shares and 42 days for shares in physical form. Companies which have announced dividend payments after Budget include Reliance Capital, Tata Tea, Tata Power, Tisco, BSES, MRF, Dr Reddy, Cipla, Wockhardt, Dabur, GE Shipping, Britannia, Hero Honda, Bajaj Auto, Dalmia Cement, Nestle, Kesoram and Mirc Electronics. However, it could not be ascertained as to which companies announced the interim dividends in accordance with the listing norms or whether SEBI would enquire into this issue after today’s warning. “The stock exchanges are advised to take a uniform view in the matter, namely to advise companies of the requirement of due notice period under Clause 16 of the Listing Agreement, and that no relaxation of the said notice period will be permitted,” the market regulator told bourses. However, it was found that scores of companies announced interim dividends within four days of the Budget announcement of taxing dividends at the hand of recipients as against the previous rule of a 10 per cent distribution tax on companies and mutual funds. “This will enable the promoters and shareholders to avoid the tax liability proposed by the Finance Bill 2002,” SEBI noted. The decision comes after a Finance Ministry directive to SEBI to look into the irregularities by companies while announcing interim dividends announced by the companies soon after the Budget. Accordingly, SEBI had asked the stock exchanges to furnish details in this regards. According to the informations received from the stock exchanges, SEBI has noted that many companies have approached bourses with the intention to declare interim dividend in the current financial year. “With the new SEBI directive, many of the dividend declarations by the companies after the Budget announcement will stand nullified,” a DSE official told PTI here. Companies, which have flouted the Listing Agreement and declared dividends at shorter notices, may have to postpone the dividend payments to the next fiscal. This would mean that promoters, which have significantly high shareholding in their group companies, would have to pay dividend tax in the next fiscal. Although the SEBI directive would be effective on listed companies, it is yet to ascertain how the government enforces it on unlisted companies. The Department of Company Affairs is yet to come up with any directive in this regards.
PTI
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US tariffs on steel to hit India
New Delhi, March 6 India's steel exports registered practically no growth in the year ended on March 31. Provisional figures suggest exports, including pig and sponge iron, stood at 3.23 million tonnes in 2000-01, against 2.9 million tonnes in 1999-2000. The latest figures indicate that exports for the year ending March 31 will be lower since the April-September, 2001, exports of iron and steel fell 28 per cent. Imports were up 6.5 per cent. "The decision was completely unexpected. It is definitely going to hit Indian steel manufacturers very badly," said Anurag Sharaf, Chief Executive Officer of Steel RX Corporation, a market place servicing all steel buyers and sellers. "The volume of steel exports from India has already been showing a downward trend in recent years. The U.S. move to impose protective tariff on imports crashes any hope of recovery in the industry," Saraf told IANS. With a view to protecting a major American industry, U.S. President George Bush on Wednesday imposed tariffs of up to 30 per cent on most types of steel imported into the USA from Europe, Asia and South America. The tariffs will last three years, Bush said, to give American steel producers time to consolidate operations and stem layoffs. The U.S. imports about a quarter of the steel it consumes. The nations likely to be hit hardest by the move are Japan, South Korea, China, Taiwan, Germany and Brazil. As a result, the Indian steel industry is likely to be barred for over three years from exporting to its biggest market, the USA. New Delhi's only hope is in the proposal that President Bush's advisers have put forward to exempt most poor nations from the punishing tariffs. Steel producers from around the world angrily denounced President Bush's decision and vowed to fight it at the WTO. Within minutes of the White House announcement, America's European allies and Japan said they would almost certainly challenge the action before the WTO, setting the stage for a major global trade fight. "Indian steel companies have long been subjected to stiff tariff walls in the USA. In a free economy, no company can impose safeguards and restrict imports to remedy injuries caused by other factors," the official said. India's steel exports to the USA plunged 80 per cent to 300,000 metric tonnes after the USA in September imposed anti-dumping duties on hot-rolled coils, a semi-finished product used by many USA mills to make steel for cars and other products. Terming the decision as "very harsh," O.P. Bajpai, co-ordinator of the Indian Steel Alliance, said the domestic industry would work with the Indian government to minimise the impact of the U.S. steel tariff. "We are organizing a meeting of the Indian steel makers this weekend on this issue and then we will approach the government with a proposal to deal with the situation and protect the interest of the steel industry."
IANS
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Grasim launches Birla Plus in city Chandigarh, March 6 He said that Birla Plus is a new generation cement that will bridge the gap between present products in the market and international standards. “It is ideal for protecting structures from water seepages, chemical attacks, corrosion and in preventing the micro cracks that may occur due to thermal and drying shrinkage in concrete and mortar”, said Mr Dua. Talking about the response Birla Plus has received in other parts of the country, he said that the company is likely to enhance capacity for increased production of this product following the tremendous response it has received. Birla Plus contains properties like low permeability, porosity and low heat of hydration making it resistant to corrosive compounds like sulphates, chlorides, acids and strong alkalies. Mr Dua said that the region which captures almost half of the total demand for grey cement holds primary importance for the company. “Punjab alone recorded growth of more than 40 per cent in the last financial year.
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PDS prices to be cut: Shanta Kumar
New Delhi, March 6 “To bring grain stocks to a manageable level, the ministry is working on reducing the PDS prices and hiking the quantum available for every family under the system,” Food Minister Shanta Kumar told PTI. He said the offtake from government stocks this fiscal is likely to touch 300 lakh tonnes, but with a record rabi procurement anticipated this year the government is bracing up for keeping the stocks under check. The cut in prices for APL families and increasing the allocation for BPL last year has had a positive effect on the offtake, prompting the government to take more steps on the same lines for giving a further push to lifting of stocks. At present the government has a grain stock of over Rs 60,000 crore with a carrying cost of Rs 6000 crore which cannot be sustained in the long run. “The current system has to change and a number of proposals for bringing about fundamental alterations in the management of the food economy are being mulled,” he said. However, till a new system is framed and put in place on the basis of the recommendations of the High-Level Committee on Foodgrains, tinkering will have to be done with the prices and allocation under the PDS. The minister attributed the recent increase in offtake from government stocks to higher sales under open market scheme, PDS, Antyodaya, and to exports.
PTI
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India, Nepal to fix new quota for imports Ludhiana, March 6 According to information under the modified treaty that will be applicable for five years, the yearly quota against the zero rate duty has been fixed at 1 lakh tonne for vanaspati, 7,500 tonne for copper products, 2,500 tonne for zinc oxide and 10,000 tonne for acrylic yarns. Mr M.M. Vyas, president, the Ludhiana Spinning Mills Association, said,‘‘ though the government has fixed a quota of 10,000 tonnes of acrylic yarns at zero per cent import duty, but it is very high. The current year’s imports are expected to be around 16,000-17,000 tonnes, resulting in heavy losses to the domestic industry. It has already resulted in the loss of about 50,000 jobs in the state as 80 per cent of acrylic yarn used in India is produced here.’’ Mr V.K. Goyal, Chief Executive, Vardhman Spinning and General Mills, said the government has taken care of the industry’s concerns by inserting a clause about value addition. Now Nepalese manufacturers would have to ensure minimum value addition otherwise the imports would attract normal customs duty. Had the government fixed lower limits for the quota, it would have benefited the domestic acrylic yarn manufacturers. Mr Narinder Gupta, President, Indian Vegetable Products Producers and Traders Association, also lamented that the by fixing a quota of 1 lakh tonnes of vanaspati products annually, the government has only partially solved the problem. He added,‘‘ The government should have rather imposed normal duty on the Nepalese imports, and the funds collected could have been donated to the Nepalese Government to help its economy. It would have reduced prevailing difference of Rs 50-55 per tin between the produce of both countries here.’’ Industry sources said they would ask the government to take non-trade measures to deal with the any extra-ordinary increase in imports from Nepal.
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Bharti Mobile launches pre-paid service ‘Magic’ Chandigarh, March 6 Announcing the launch, Mr I.B. Mehra, Chief Executive Officer, Airtel North said, “Magic cellular card which is now present across the country from Himachal Pradesh to Chennai has been a key growth engine in all these markets leading to massification and vertical expansion of the segment. We expect the impact to be similarly positive in Punjab also”. Available in a Starter Kit of Rs 495 which will include a one time activation fee and applicable taxes will have Rs 100 of talk time free. There will be special night tariffs between 11 pm and 6 am of 50 paise per 30 seconds. Between 6 am and 11 pm , the airtime for Magic customers will be Rs 1.90 per 30 seconds. These airtime rates are for both incoming and outgoing calls. The customers will also be provided an added convenience of making STD/ISD calls until the last rupee, stated a company press release.
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FDI proposals worth 940 cr cleared New Delhi, March 6 The major investment proposals pertain to sectors such as bio-technology, chemicals, petrochemicals, communications, consumer items, automobiles, light engineering
components, information technology, software development, consultancy and NBFC activities.
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Cycle units strike PNB camp |
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