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Tuesday,
December 3, 2002, Chandigarh, India  
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Govt to go ahead with Nalco disinvestment
India’s currency rating under threat: Fitch
Mid-year economic review today
Industry told to
follow China |
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Banks to trim NPAs to 5 pc FDI proposals worth Rs 490 cr cleared
Farm extension service needs a relook
Chandigarh to
implement VAT Car, bike drive
exports up 64 pc Pierre
Peugeot dead
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Govt to go ahead with Nalco disinvestment New Delhi, December 2 This was disclosed in the Rajya Sabha by Minister for Disinvestment Arun Shourie who said that the government would go by the decision of the Cabinet Committee on Disinvestment (CCD). Replying to questions during the Question Hour, the Minister said that the decision of the CCD “still stands today and the government will go by its decision. There is no proposal to go for a referendum.” In reply to a question on FDI increase in the telecom sector, the Minister said that the Steering Committee on FDI, set up by the Planning Commission, had, inter alia, recommended enhancement of the FDI cap on basic and cellular telephony from 49 to 74 per cent and in total bandwidth and gateway to 100 per cent from 74 per cent. “This, along with other recommendations, is under the consideration of the Group of Ministers on FDI,” he added. Earlier, replying to a question by CPI (M) member Jibon Roy on why Nalco was being disinvested in spite of 100 per cent profits recorded by it, the Minister said the government had fullest confidence in Nalco but it needed to be expanded and would record more production and profits if it went to downstream production. He said there were 15 parties which had qualified for bidding. He, however, dismissed the member’s suggestion whether any assurances had been sought from the bidders that they would register the required profits. Such assurances were not asked for, the Minister said. |
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India’s currency rating under threat: Fitch Hong Kong, December 2 ‘’The domestic credit picture is poor. The local currency rating looks to be under threat,’’ Brian Coulton, Senior Director of Asian sovereign ratings, told a client seminar here. India has set a fiscal deficit target of 5.3 per cent of gross domestic product for the financial year ending March, 2003, down from 5.7 per cent last year. But it has consistently overshot its deficit target in previous years. The International Monetary Fund (IMF) last week said India’s yawning fiscal deficit is a big short-term risk and New Delhi needs to aggressively pursue reforms to overcome the problem. Fitch, which last revised India’s rating in November last year, has a speculative grade BB-plus rating on local debt. The agency said in September it had planned to review India’s rating in another two months. Fitch rates India’s local currency at BB-plus and foreign currency at BB with a stable outlook. Fellow ratings agency Standard & Poor’s cut its long-term local currency credit rating on India to BB-plus from BBB-minus in September, citing a rising debt burden and vulnerable public finances. The S&P’s downgrade came on the heels of concerted opposition within India’s multi-party coalition to a Rs 120 billion ($2.5 billion) privatisation programme that would have helped to bridge the ballooning fiscal deficit. The struggling privatisation programme is also a concern for Fitch, which said the government lacked the appetite to deal with the deficit. ‘’There’s no political will to tackle the problem. You have weak state banks and there has been stop-start privatisation,’’ Coulton said. Despite the underlying economic risks, India’s foreign exchange reserves have risen to a record $ 62.066 billion this year, boosted by stronger exports and remittances from overseas Indians as the US dollar fell. Rival agency, Moody’s Investors Service, bucked the negative trend last month by placing India’s ratings on review for a possible upgrade, based primarily on a substantial strengthening of the country’s external financial situation. The foreign currency issuer rating for India — the proxy for the rating that would likely be assigned were the government to issue a foreign currency-denominated bond in the international capital markets — has also been placed on review for possible upgrade. At present, however, the government has no such bonds outstanding nor are there any rated government-guaranteed eurobonds outstanding, Moody’s said. But the BA2 domestic currency bond rating of the government is not on review and the outlook on that rating remains negative due to continuing stress in India’s internal finances and last year’s broad-based reduction in import tariffs.
Reuters |
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Mid-year
economic review today New Delhi, December 2 The review will lay down the broad policy prescription for the economy. “This will open the Budget-making process”, Chief Economic Adviser Ashok Lahiri told newspersons here today. The document, which will consist of 30 pages, is expected to trash out the broad contours of economic policy framework, including the balance of payments situation, government finances and the overall price situation. “It is not a substitute for the Budget. It will not be as elaborate as the Economic Survey. It will review the economic impact of the policies and programmes enunciated in the last Budget”, Dr Lahiri said. The mid-year review will provide opportunity for analysing the issues of economic importance much ahead of the Budget and will also neutralise the disadvantage of Economic Survey as it is presented only a day ahead of the Budget and thereby leaves no time for discussion of finer details. |
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Industry told to follow China Shimla, December 2 Addressing a press conference, here, he said the country had been left behind by China in exports over the past decade mainly because it failed to attract foreign investment. While China attracted over $400 billion, only $ 40 billion was invested in India. The complicated labour and economic laws were discouraging foreign investors. Moreover, frequent policy changes also did not inspire confidence among investors. China overcame this problem by setting up free trade zones in which laws were tailored to suit the needs of investors. India’s total export stood at $ 46 billion out of which the engineering goods accounted for $ 6 billion. The country’s share in the world trade was a meagre .63 per cent. In 1992, India’s share was .58 per cent and that of China was slightly higher as .78 per cent. However, China took advantage of the globalisation of trade and increased its share to 4.6 per cent whereas India’s share was still as low as .63 per cent. The government had fixed an export target of $ 80 billion for 2007 which meant that the growth of exports would be 11.5 per cent as against the overall economic growth rate of 8 percent. Mr Dhanda, who is also the Chairman of a bicycle export promotion body, is here to launch the mountain bikes produced by Kalvin. The country was producing 1.3 crore bicycle annually and the target for 2007 was 2.5 crore. However, the share in the world market was only 5 per cent. |
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Banks to trim NPAs to 5 pc New Delhi, December 2 The drive to improve financial health is also a precursor to the consolidation process among PSU banks through mergers and acquisitions expected in two years time, top bankers said today. “Net NPAs in the banking industry has been increasing by Rs 5,000-6,000 crore every year. After the Securitisation Bill, we hope that NPAs of the banking industry will come down by 20 per cent or by Rs 6,000 crore this fiscal,” Indian Banks Association Chairman Dalbir Singh said on the sidelines of the ‘International Banking Summit’ here. The banking industry is currently burdened with bad loans which account for 14 per cent of their advances in gross terms and net NPAs at 7-8 per cent amounting to Rs 60,000 crore, he said. In order to address the issue, the government introduced an ordinance on Securitisation of Financial Assets and Enforcement of Security Interest to permit banks to take over assets of defaulting companies without going through legal hassles. The Bill has been passed by both Houses of Parliament and is awaiting Presidential nod for becoming an Act. Union Bank of India chairman and president of the Indian Institute of Bankers, V. Leeladhar, said the industry was targeting to reduce net NPAs to 5 per cent this fiscal mainly through stringent action against wilful defaulters. “The response after the Securitisation legislation has been positive. Many of the defaulters are coming forward to settle their NPAs. Our banks have issued notices to 800 defaulters, of which 100 have approached for settlement through compromise,” Leeladhar said. Corporation Bank chairman K. Cherian Varghese said his bank, which has one of the lowest NPAs in the industry at less than 3 per cent, has also slapped notices to over 40 companies with the hope of reducing bad debts further. Singh, also the chairman of Central Bank of India, pointed out that human resource management was also being taken up by some of the banks after the first tranche of Voluntary Retirement Scheme (VRS) of 2000-01 that trimmed over one lakh excess staff. “Some PSU banks are thinking of a second round of VRS. The government is to take a view on this,” he said. Major players like Bank of India and Punjab National Bank feel that once their technology up-gradation is completed, they would be left with excess staff, which they want to prune through a second round of VRS. Leeladhar said the PSU banks would be able to complete their IT upgradation programme within the next two years after which some of the staff would become excess. “The excess staff can be engaged in marketing and other areas,” he said. Indian bankers also expressed confidence that the international trend of making capital adequacy norms more stringent would not pose any major problems to the PSU banks.
PTI |
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FDI proposals worth Rs 490 cr cleared New Delhi, December 2 Commerce and Industry Minister Arun Shourie approved the 15 proposals on recommendations of the Foreign Investment Promotion Board (FIPB), an official statement said here. The major investment proposals pertain to sectors like cash and carry wholesale trading, manufacture of confectionary items and providing consultancy in manufacturing and marketing beer. Among the proposals cleared was Singapore-based Jurong Infra Global Pte’s for setting up a wholly-owned subsidiary for designing, engineering, procurement and construction activities and projects. It involves Rs 27.3 crore FDI inflow. Also, US major Scovill Fasteners’ proposal to set up a 100 per cent subsidiary for imports and engaging in ex-bonde warehouse sales etc was cleared; it envisages Rs 32 crore FDI inflow.
PTI |
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Farm extension service needs a relook THE set-up for agriculture extension service needs a relook. Agricultural experts say a radical change is necessary. There is too much duplication and overlapping in the functioning of various agencies responsible for agricultural extension service. The state agriculture department with a sanctioned strength of 1,167 officers (Class-I) is considered chiefly responsible for rendering the service. They are expected to take improved cultivation practices, new seeds and agriculture research to farms and enforce agricultural acts. Besides, they should popularise green manuring, give guidance to farmers regarding plant protection measures and organise growers by establishing personal and clear contacts with them. They are also to administer subsidies and ensure their proper utilization. Punjab Agricultural University (PAU) is running Krishi Vigyan Kendras which are funded by the ICAR. In addition it has its own farm advisory service manned by the specialists at all the district headquarters. It has also set up an extension wing in the university. Indian Agricultural Research Institute (IARI) has established its regional station in Karnal. It disseminates research and seed technology both to Punjab and Haryana. Some varieties of wheat and rice developed by IARI were saturated over 80 per cent of area under cultivation in Punjab. About 700 scientists work at the IARI. Then there are autonomous organisations like the Punjab Young Farmers Association (PYFA) and ISAP which play a complementary role with agriculture department in reaching out to the farmers in the villages with new seeds and technologies. Is such a heavy establishment necessary in Punjab? Professor Bhim S. Dahiya, Director of Research at the CCS Haryana Agricultural University says there is no need of keeping two agencies — agriculture department and the Agricultural University for the same type of work. Dr S.P. Sharma, Professor and Head of the Seed Science and Technology Division of the IARI says the private sector has entered the agriculture extension field in a very strong and effective manner. Whereas Haryana has merged its farm advisory service and Krishi Gyan Kendras to bring into being the ICAR funded KVKs, the resource-crunch Punjab state has preferred to retain the old pattern. Undoubtedly, there is an urgent need of a high level committee or commission to go into the working and functioning of various agricultural extension service agencies and suggest measures to evolve a strong and economical unified service. Meanwhile the state government should think of rationalizing the structure at its own level to economise on the wasteful expenditure. PAU is overstuffed and 93 per cent of its budget goes to meet the salary of the staff and other miscellaneous contingencies. There are no funds left for research. Approximately 9-10 per cent from its Rs 140 crore annual budget goes for meeting the expenses on agricultural extension. There are 17 Farm Advisory Service (FAS) centres in various districts and 10 KVKs. An FAS costs about Rs 25 lakh and the KVK Rs 40 lakh annually. The 600 and odd in position officers of the agriculture department can take care of the agricultural extension service successfully if properly monitored and organised. Thanks to the hard work done by the department the output of paddy went up despite a severe drought. The KVKs should experiment with the new technologies at the farms attached to them and take to seed production. It will act as demonstration which would appeal to the farmers. The seed replacement ratio in Punjab being low further spread of new seeds will definitely augment production. Nasty episodes like the recent one in which PAU sold 2500 quintals of certified foundation seed of paddy to favour three firms in the private sector should not be allowed to happen. Such incidents reflect adversely on the university and mar the image of the scientists. |
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Chandigarh to implement VAT New Delhi, December 2 He said the role of the government has to change from that of a regulator to a facilitator in today's competitive era. Punjab is planning to introduce a scheme to modernise the technology for industries, said Punjab Minister of Industries and Commerce Avtar Henry. To ensure planned growth of the industry, the state government also proposes to strengthen the existing industrial clusters. There are also plans to develop IT and IT-enabled services and bio-technology in the state in a big way. Mr Om Prakash Chautala urged businessmen to invest in Haryana as the state provides
uninterrupted power supply and other facilities. Various multinational companies have already set up shops in the state and are successfully doing business.
TNS |
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Car, bike drive exports up 64 pc
New Delhi, December 2 A total of 1.63 lakh vehicles were exported during April-October 2002, over 99,707 units a year ago, data compiled by the Society of Indian Automobile Manufacturers showed. Ford India, reported a marginal decline at 17,806 Completely-Knocked-Down kits (CKDs) of its mid-size car Ikon against 17,812 CKDs last year. Maruti’s exports soared by 119.2 per cent to 12,586 units on the back of good demand for premium small car Alto in Europe. Exports of Hyundai Motor India went up by 37.6 per cent to 4,508 cars while that of Tata Engineering jumped by 293.1 per cent to 920 cars. But, General Motors India’s exports fell by 51.4 per cent to just 17 cars during the review period. In the utility vehicle segment, Tata Engineering and Maruti suffered a 76.2 and 22.2 per cent drop at 281 and 178 units. Exports of truck and bus increased by a modest 2 per cent to 5,710 units. Of this, medium and heavy (M&H) vehicle exports rose by 22.3 per cent to 2,440 units but LCVs drove down by 9.1 per cent to 3,270 units. While M&H goods carrier exports dipped by 20 per cent to 1,111 units, that of M&H passenger carriers jumped by 118.5 per cent to 1,329 units. M&H passenger carrier exports of Tata Engineering and Ashok Leyland rose by 236 and 52.4 per cent to 736 and 593 units. Their exports of M&H goods carriers, however, fell by 22.8 and 24.5 per cent to 528 and 511 units during April-October 2002. In the LCV segment, goods carrier exports dropped by 15.3 per cent to 2,903 units due to a 32.8, 42.2 and 34.5 per cent dip suffered by Tata Engineering, Mahindra and Mahindra and Swaraj Mazda at 1,545, 227 and 140 units. Eicher Motors, however, bucked the trend with a 91.4 per cent rise at 913 units. Exports of LCV passenger carriers jumped by 114.6 per cent to 367 units with Ashok Leyland and Tata Engineering shipping 120 and 136 units. Motor cycle and step-thru exports zoomed by 132.6 per cent to 68,817 units. The growth was led by Bajaj Auto and Yamaha Motor which clocked a 179 and 154.8 per cent rise at 26,873 and 23,541 units. Hero Honda and TVS Motor Company recorded a 62.3 and 236.3 per cent rise at 12,756 and 4,268 units.
PTI
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Pierre Peugeot dead Paris, December 2 Pierre was the Chairman of the supervisory Board of a company now called PSA Peugeot-Citroen, which announced his death. The descendant of founder Armand Peugeot, Pierre was born in 1932 and joined the family business in 1957, playing a big role in a post-war expansion that included the takeover of rival Citroen in the 1970s.
Reuters |
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SBI to open branch in Bahrain Dubai, December 2 The SBI already has an offshore operation in Bahrain. But a full-fledged branch was needed to serve the Indian community.
IANS |
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SEBI Bill approved
New Delhi, December 2 The SEBI Amendment Bill to replace an ordinance in this regard was passed by a voice vote in Rajya Sabha after withdrawal of the statutory resolution. The Bill was passed by the Lok Sabha last week.
PTI |
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ICICI Bank PNB meeting Amartex Mount Shivalik Nasscom SBI |
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