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Wednesday,
September 4, 2002, Chandigarh, India  
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Fernandes
meets PM over disinvestment issue Govt lays
down roadmap for UTI-I Euro-III
petrol, diesel from 2005: Ram Naik Ford small
car by next year |
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Spice
raises services seats Sales
tax collection up 20 per cent in Haryana Fiscal
slippage likely despite recovery
Guj
Ambuja, ACC production rises
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Fernandes meets PM over disinvestment issue New Delhi, September 3 The meeting was also attended by Union Finance Minister Jaswant Singh, who told newspersons that all the points raised by Mr Fernandes would be considered at an appropriate time. The meeting between Mr Fernandes and the Prime Minister follows closely on the heels of letter written by the former reportedly raising objections to the proposed disinvestment of HPCL and BPCL. The Prime Minister’s intervention came a day after the BJP had politely but firmly rejected Mr Fernandes’s objections to the big ticket disinvestments and backed the government’s decisions on privatisation of the major PSUs. Deputy Prime Minister L.K. Advani and Finance Minister Jaswant Singh also attended the meeting at the Prime Minister’s residence. However, Disinvestment Minister Arun Shourie was not present. In a apparent softening of tone, Mr Fernandes played down the controversy over his opposition to the disinvestment of HPCL and BPCL and said he had merely wanted the government to examine if any course correction was needed in the policy. “There was never any fight over the disinvestment policy...It is being projected as if a fight is going on in the government over the policy,’’ he said on the sidelines of an IDSA function later in the day. Talking to reporters after the meeting, Mr Jaswant Singh denied there were any differences within the government on disinvestment of the oil companies. “I only said we must examine how far we have reached, whether the direction is right or some course correction is needed,’’ Mr Fernandes said adding that disinvestment was not new as it had been started by the Narasimha Rao government 12 years ago.
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Govt lays down roadmap for UTI-I New Delhi, September 3 Speaking to newspersons Finance Secretary S. Naryanan said that the government would float tax free certificates, primarily for major institutional investors in US-64. The measure is being considered as an alternative to cash redemption of units. “In view of the commitment of the Government of India to meet all shortfalls in UTI-I, UTI-II will not indulge in asset bleeding to meet redemption pressure and all sale and purchase of stocks will take place in UTI-II based upon the market perception of its funds managers or the management”, he said. Elaborating on the tax concession entailing to unit holders of US-64, Mr Narayan said that any dividend received by UTI-I from corporates used for parking assets, would not come under the tax bracket. On tax free certificates, Mr Narayan said that the alternative document would be available only for institutional investors. He said that investors would be given the option of retaining the units for some time
beyond May 2003 to earn tax incentives. He also said that units of US-64 would be made freely tradeable. The move comes in the wake of the announcement of a Rs 14,561 crore bailout package for UTI to meet its obligations to the investors.
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Euro-III petrol, diesel from 2005: Ram Naik
New Delhi, September 3 Euro-II compliant petrol (with 0.05 per cent sulphur content and one per cent benzene) and diesel (with 0.05 per cent sulphur), currently being supplied in metro cities, would be extended to the rest of the country by 2005, Naik said in his keynote address at the 17th World Petroleum Congress in Brazil. Speaking on “Sustainable Development: The Petroleum Industry, Perspective and Response”, Naik said it was the responsibility of oil and gas industry to provide communities with affordable and eco-friendly energy sources, while also continuously adapting their operations to the needs of a fragile environment. Oil industry has to continue the efforts to reduce pollution, improve quality of effluents and recycle resources, and promote conservation, he said adding their endeavour should be to reduce greenhouse gas emissions. “It makes good business sense for companies to holistically integrate the concept of sustainable development into their corporate vision, mission and strategies; the earlier they bring this exercise, the more benefits they will reap in the future,” Naik said. Naik said the government has also mandated the use of 5 per cent ethanol doped petrol in nine states from January 1, 2003. “This will require 320 million litres of ethanol annually for blending with petrol. Initially, it is proposed to blend 5 per cent of ethanol with gasoline which may be subsequently increased to 10 per cent,” he said. Naik asked oil industry to gradually move towards a system of pricing materials at their ultimate cost, taking into consideration the value of their replacement and disposal, instead of merely the cost of acquisition. “Whether it is reducing gaseous emissions, cleaning up the seas or launching other bio-diversity initiatives, the spectrum of sustainable development activities that need to be taken up by the petroleum companies is huge,” he said adding that the oil industry should resolve to work collectively to erase the adverse footprints of unbridled development on communities, on global climate change and wildlife habitat.
PTI
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Ford small car by next year
New Delhi, September 3 “This year, our primary focus is on localisation but by next year, we plan to diversify into other promising segments, primarily the small car segment,” Ford Motor India Managing Director David Friedman told UNI here. The company was currently studying the option of entering the small car market as it was the biggest, with a scope for growth, he added. “Though already there are many cars in the segment, we plan to enter with new features which will give us a competitive edge over others,” said Mr Friedman. However, he refused to confirm whether it would be the B-segment while adding that it had the maximum opportunities. Ford India has estimated the share for B-segment cars to reach upto 69 per cent in 2003 and 70 per cent in 2005 from the 56 per cent in 1999. Currently, cars in the B-segment that rule the roost in India include Hyundai Santro, Maruti Zen, Fiat Palio, Tata Indica and Daewoo Matiz. Ford yesterday launched a new 1.6 litre petrol engine model, Ford Ikon EXi, taking to seven the variants under its brand, with an eye on a larger share of the mid-size C-segment. The C-segment was expected to capture 14 per cent of the total car market share by 2003 and 17 per cent by 2005. Asked if the company was planning to introduce more models looking at the segment’s potential, he said it could not be ruled out “though something like this will not be by this year-end.” Ford India was the first subsidiary of a multinational car manufacturer in India to launch a car designed specifically for India.
UNI
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Spice raises services seats Chandigarh, September 3 Spice has increased the number of services seats to 100 currently. In addition to providing help in terms of tariff details and bill queries, Spice also has deployed special teams to focus on complaint management and credit management guidance. In a talk with TNS here today, Col J.S. Randhawa, Vice-President, Customer Services, Spice Telecom said: “The customer always comes first at Spice. We are continuously sprucing up customer service to give us the competitive edge in the market and retain our leadership position. We have so far invested Rs 4 crore in developing a state-of-the-art service call centre and have used the latest technology to provide prompt service to the Spice family. With the 100 seat call centre landmark, Spice Call Centre has emerged as one of the biggest and busiest call centres in the region. Spice has already invested a sum of Rs 1,616 crore on its operations and is committed to providing the highest quality of service to its subscribers.
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Sales tax collection up 20 per cent in Haryana Chandigarh, September 3 This was disclosed by Mr Raj Kumar, Excise and Taxation Commissioner, Haryana, here today. Talking to TNS, he claimed that department had decided to provide a hassle-free environment to traders. However, a strict vigil would be kept on them to ensure tax compliance. The government had already decided to abolish all check-posts in the state to ensure free movement of goods. The department would depend on the traders to pay the taxes voluntarily. He maintained that the department had made it mandatory for all the dealers to fill form ST-38 ( outgoing and incoming ) along with payment bills for dealers’ trade among themselves. Though some dealers were still involved in tax evasion by not mentioning the date or other information, the form had ensured that most of the dealers had to pay taxes. In case of any complaints, the dealers could access department officials directly or through the department website www.haryanatax.com. .The model has been appreciated by other states and Tamil Nadu and Karnataka were among those that were implementing the state’s initiatives. Unlike other states, he said, the government had also decided to do away the deemed assessment for dealers with an annual turnover of up to Rs 5 crore. The government was getting just about Rs 20-30 crore annually from this segment so it had decided to take that step. Despite marginal losses, it had helped remove corruption and harassment of traders. Mr Raj Kumar claimed that the department was expecting an increase of about Rs 500 crore in the total sales tax collection this year despite the fact that sales tax collection from Maruti Udyog and petroleum products had registered a fall of about 10 per cent till now. Maruti was contributing about Rs 300 crore and petroleum products about Rs 700 crore annually towards the sales tax collection. The excise collection from the liquor this year would remain on a par with the last year collections which is about Rs 900 crore. Regarding the reforms in the department, he said, “the government has sanctioned Rs 17.5 crore to fully computerise the ST collection in the state. Under the project, all field offices of the department are being linked through computerised network. We further plan to link all the dealers numbering about 1 lakh with the department in the next 3 months. The trade would be monitored through computers network only.”
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Fiscal slippage likely despite recovery The International Monetary Fund has urged India to launch an ambitious programme of fiscal consolidation and accelerate structural reforms if India is to recover from the slowdown and return to the higher growth path envisaged in the Tenth Five-year Plan. IMF’s reinforced concerns over fiscal slippage are reflected in its latest round of consulations under Article IV on the Indian economy with its estimate of public sector deficit touching a new high of 11.7 per cent of GDP in 2001-02. While India has maintained one of the faster growth rates over a decade comparatively, its Budget imbalance is also one of the highest in the world. In its view, the recent economic slowdown highlights the serious policy challenges which have to be overcome. The government must have a credible medium-term programme to cut fiscal deficit to 2 per cent by 2006 and lower the debt-GDP ratio to 50 per cent by 2011, if not earlier. As high as the fiscal deficit - over 6 per cent (Centre), 10.25 per cent (Centre and States) and 11.7 per cent including public sector enterprises - in 2001-02 is the debt-GDP ratio which IMF
estimates at 90 per cent of GDP. The Executive Board’s assessment is that the large deficits and growing debt could create conditions for ‘potentially unsustainable debt dynamics”. This gentle warning comes with a modest projection of GDP growth at 5.5 per cent in 2002-03. But here again, this is subject to industry recovering to 4.5 per cent (from the less than 3 per cent last year) as global demand recovers and if the previous year’s strong agricultural growth translates itself into domestic demand. There is not much expectation from agriculture in the current year (though the Fund has not specifically referred to the widespread drought) while the leading indicators are still mixed pointing to only a mild recovery in the period ahead. Other uncertainties remain in regard to oil prices, which could affect the trade and current balance though the latter could still be held at 0.5 per cent of GDP after the near balancing of current account deficit last year. But the reform prescriptions that IMF has proposed may not jell in a year of electoral politics, especially in regard to the minimum support price and public distribution system which the Fund says could help the budget reducing subsidy burden and encourage badly needed diversification within agriculture. While the government has been complimented for its bold and pragmatic” steps to accelerate disinvestments and urged to maintain the momentum built up, whatever may be the Fund’s judgement, the Vajpayee government can hardly summon the courage to reform the present food management policies, especially in the current year of drought and politics. Another piece of hard to digest priority recommendation from IMF is to make “effective divestment” of control over the public sector banks and giving them greater commercial orientation. IMF does not favour the present obligation on banks for priority sector lending with a stipulation of 40 per cent of total advances and suggests “alternative approaches” for access to credit in rural areas and for the priority sectors. The associated subsidies should be transparent and on the budget, it says. On the monetary and credit policy, the Fund considers RBI’s stance appropriate and sees no need to ease monetary conditions further, given subdued inflation and uncertainty about the strength of recovery. It seems to agree with
Governor Dr. Bimal Jalan who, while maintaining that soft interest rate regime would continue, has ruled out a cut in the Bank Rate from 6.5 to 6 per cent as widely expected, for the present. On exchange rate, IMF says RBI could, taking advantage of favourable external position, allow for greater flexibility in exchange rate which would benefit India as it would facilitate adjustment in the context of trade and capital account liberalisation and structural changes under way as well as the development of a deeper foreign exchange market including for hedging instruments. While the magnitude of adverse impact of the drought which hit several states is yet speculative, the Agriculture Ministry’s tentative estimate is a 12 per cent loss in kharif output. Central teams are yet to tour all states to make a more reliable assessment. Meanwhile, states have together made drought relief demands totalling Rs 15,000 crore. Growth in agriculture in the current year would be almost negative after the impressive 5.7 per cent last year and there is also a levelling-off in the growth of the services sector. Thus, the boost to GDP growth has to come from industry. While the first quarter April-June industry growth is a welcome 4 per cent as against 2.2 per cent in the corresponding period last year, increases are reported in all sub-sectors including manufacture 3.7 per cent (2.6 per cent).
IPA
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New Delhi, September 3
