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Saturday,
December 7, 2002, Chandigarh, India  
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ONGC to bid for BPCL and HPCL
National policy on subsidy soon
BILT to invest 60 cr
in Shree Gopal unit Tips to tackle rising
internal debt problem |
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Bids invited to collect toll tax
Munjal gets MMA award
Tata Engineering turns around
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ONGC to bid for BPCL and HPCL New Delhi, December 6 ONGC Chairman and Managing Director Subir Raha said the exploration firm would certainly be interested in either of the PSUs to become a fully integrated oil firm. “With acquisition (of BPCL or HPCL) we can go into transport fuel marketing without a long gestation period and against potential competitors who pose a formidable entry barrier,” Raha told PTI. His statement comes within a day of an informal meeting of senior Cabinet ministers at which the row over divestment of two oil PSUs was resolved. Though it is not clear what decision the meeting chaired by Prime Minister Atal Behari Vajpayee took, it is widely believed that the ministers, including Deputy Prime Minister L K Advani, Defence Minister George Fernandes, Disinvestment Minister Arun Shourie and Petroleum Minister Ram Naik have cleared strategic sale of government shareholding in HPCL while opting for a public offering of state’s share in BPCL. Raha said it remained to be seen if government would allow PSUs to bid, contrary to the stand of Disinvestment Ministry of barring all state-run firms from the process. “If allowed, we would certainly be interested,” he said. ONGC, which produces close to 24 million tonnes of crude oil annually, has begin the process of vertical intergration with the acquisition of Aditya Birla Group stake in loss-making Mangalore Refinery & Petrochemicals Ltd (MRPL). With a nine million tonne refinery (MRPL) already under its belt, ONGC has received government authorisation for retailing petrol and diesel in four states. Vertical integration is the growth mantra the worldover, Raha said. With either BPCL or HPCL, the country’s highest profit making company would have a hand in all activities of the oil business — upstream oil exploration and production, refining and downstream retailing. He said that the corporate strategy of ONGC is to continue to focus on core business of exploration and production and at the same time go for vertical integeration to secure sustained growth.
PTI |
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National policy on subsidy soon Kolkata, December 6 Pointing at the accelerated power development programme with the support of the state electricity boards, he said the quantum of subsidy in the power sector during the current financial year would be about Rs 38,800 crore. Hard policy decisions were also taken to strengthen disinvestment process in the country, he said at a function of the Indian Chamber of Commerce. He said there were encouraging trends in the power sector and was of the opinion that the Electricity Bill 2001 would be passed soon. The senior official said the public-private participation in infrastructural projects, particularly in the road sector, was quite a success and such arrangement could be tried in other key sectors also. The senior official said Cabinet Committee on economic reforms, headed by the Prime Minister, was monitoring implementation of the key infrastructure projects and related schemes. He said appropriate steps were now underway to prepare comprehensive food safety laws and a policy on private sector investment in the sector. He said the second generation of reforms emphasised reduced government role in production and distribution and removal of impediments to foreign direct investment. Dr Ghosh said the government’s strategy for the social sector was also very positive and was keen to involve both private and public sector partnership in these crucial sector.
UNI |
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BILT to invest 60 cr in Shree Gopal unit Yamunanagar, December 6 This new machine is expected to raise production of this unit by about 30,000 tonnes per annum, Vice-Chairman and Managing Director, BILT, Gautam Thapar, told reporters here, adding that this will take the total capacity of the unit to about a lakh tonnes per annum. Asked if BILT was planning to launch more products in the retail segment, Thapar said the company was evaluating the digital printing and the kind of paper it requires, and may consider launching a product in this segment. Besides Shree Gopal, BILT has three other manufacturing units with total paper manufacturing capacity of about four lakh tonnes per annum. Besides installing this new machine, the unit is also pursuing an upgradation programme by installing a series of latest finishing equipment besides upgrading the other paper machines. Mr Thapar said that Shree Gopal Unit of Bilt is one of its oldest, manufacturing a wide range of paper from mass consumption creamwave to specially and premium paper like Royal Executive Bond. He said that the unit has also been making strides in energy conservation. He said that for the third consecutive year, it has been a winner of the national energy conservation award from Ministry of Power, Government of India. He said that another land mark achievement has been the safety and welfare award for a commendable safety system at the Yamunanagar, unit. He emphasised that they already have a unique position in the industry and will further complement, it through increasing efficiency levels to offer value for money product. He further stated besides Shree Gopal Bilt has three other manufacturing units with total paper manufacturing capacity of about four tonnes per annum. It has recently shut down a unit in Chowdhwar, since it was manufacturing 18000 tonnes per annum. The largest paper producer in India, BILT claims 26 per cent market share of the writing and printing paper market and about half of the coated paper market with two million tonnes and 250,000 tonnes per annum of each being produced by the company. |
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Tips to tackle rising internal debt problem FINANCIAL sector reforms introduced in Indian economy might have lessened the country’s external debt burden as is evident in the recent revelations made by the World Bank’s study that India has become internationally a less indebted country. But its internal debt cannot be ignored because it has been accumulating for decades. Consequently, the ratio of total outstanding liabilities to total tax receipts rose from 5.5 per cent in 1990-91 to 6.4 in 2002-03 for the Centre and worsened from 3.7 per cent to 4.5 for state governments for the comparable years. This shows if entire tax receipts are used to discharge the debt liabilities, ignoring interest liabilities, it will take years to redeem the debt liabilities for the Centre and 4.5 years for the states. The situation has become more grim when we look at it from the angle of changes in India's ability to pay tax, because internal debt liabilities having been rising faster than India's national income or GDP, which is the main source of taxes. These debt liabilities as per cent of GDP, which were 49.8 per cent in 1990-91, rose to a level of 52.9 per cent in 2000-01 (RE). The rising debt liabilities may be met either by increased rate of revenue collection or by a faster rise in GDP. Not much can be relied upon the latter option in the short run; hence, first option is the only alternative, i.e. to increase the rate of revenue collection. Further, it is important to note that the rate of growth of receipts of the Central and state governments have declined vis-a-vis a rise in the growth rate of their expenditure on revenue account after the implementation of the Vth Pay Commission recommendations. For instance, on revenue account the average growth rate of receipts of the Central and state governments combined has decreased from 15 per cent during 1994-98 to a level of 13.7 per cent during 1998-02 (in which period the recommendations of the Vth Pay Commission have been implemented); whereas, the average growth rate of their expenditure has increased from 14 per cent to 17.2 per cent during the comparable periods. Such divergent trends make it clear that the implementations of the commission have solely been responsible for the abrupt and significant rise in the internal debt liabilities of the states and Central governments, bringing them on the verge of financial crisis. This came to fore at the meeting of the P.M. with Chief Ministers in the form of unanimity over taking tough decisions to defuse the financial crisis. Some states like Haryana, Tamil Nadu and Orissa advocated the abolition of D.A., bonus and commutations of pensions. The decision has been deferred for the time in the absence of consensus. How far will such decision be correct and justified. From the equity point of view, it appears proper to tax more workers in the organised sector on whom relatively more has been spent by the governments in the form of enhanced salaries under the commission which also led to the rise of their relative taxable capacity. The freezing of D.A., bonus and commutation of pension seems to be a most suitable weapon to tax them exclusively more as compared to other sections like workers in the unorganised sector, farmers, shopkeepers, transporters, self-employed professionals, businessman, etc. But while doing so, other vital economic aspects cannot be ignored. The salaries of employees are revised on the basis of a well-designed socio-economic rational so as to maintain their living standards and productivity. Taxing them alone will violate one of the characteristics of a good tax system which “should be acceptable to the public and consistent with the people’s notions of fair play.” It implies that the freezing of their D.A. and bonus apart from annoying the workers are likely to create harmful effects such as (1) It will reduce their ability and willingness to work which will have a negative effect on the growth of the economy. (2) Employees in the organised sector form a major chunk of the middle-income group of the society. Freezing of their D.A. etc. will reduce the aggregate demand in the economy affecting adversely the already sick industrial sector where the prices of industrial products are already low. To avoid all this the problem should be seen in the right perspective. The country is facing a problem of excessive internal indebtedness. Therefore, the Central and state governments should tackle this problem with suitable means otherwise it will lead to bankruptcy of some states on one hand and will affect workers and population on the other. Moreover a fear of higher dose of tax will always lurk in minds of the people. To lessen the tax burden, some methods of debt redemption may be introduced such as the conversion of short-term loans into long-term loans, terminal annuities, the issuing of new bonds by the government to repay the matured loans or to raise the fresh loans at low rates of interest to repay the loans, raised earlier at the higher rate of interest, before maturity, compulsory reduction in the interest rates on internal public debt by declaring a financial crisis and surcharge on the tax specifically meant for repaying the internal debt. Besides, the internal debts crisis should be solved in a manner as has been done in case of India's external indebtedness. India's external debt went on rising so long as it adopted the policy of restricting its expenditure on imports — a policy of import substitution or also known as inward-looking policy. During 1990’s it abandoned this policy and concentrated on increasing its revenues in the form of foreign exchange by raising its exports. Similarly, the Central and state governments instead of reducing its expenditure (except the wasteful expenditure) should concentrate on raising its receipts on revenue accounts more: 1. Fiscal policy must devise ways and means to broaden the base for direct taxes. Professionals like lawyers, doctors, contractors, dealers, businessmen, etc. couldn’t be brought under the tax. It is possible to bring them under a direct tax, enhancing the revenues of the Central and state governments. 2.VAT should be implemented to avoid the evasion of tax as it is imposed at different stages of production on the basis of value, added at each stage of production of a commodity. Since it belongs to the sales tax, the family will add much to the revenue of the state governments. 3.Profit earning public sector units should not be privatised for sometime, keeping in view the significance of public expenditure in a developing economy like India by the Central and state governments. Rather, the emphasis should be on improving their efficiency and productivity by better management and modern technology. Sick units after improving them should be sold to the private sector and the revenues so raised be utilised for the repayment of internal debt. 4.The loss in revenue caused by the reduction in customs duties should be compensated by accelerating imports and exports through a special target-oriented task force. Such measures to raise the revenues of the governments must be accompanied by checking a wasteful and unproductive expenditure being increased at a large scale in India: (i) Expenditure being incurred on the perks and fleet of cars on daily visits and foreign trips of ministers, Chief Ministers and Prime Minister should be checked immediately. (ii) Quasi-fiscal borrowings such as those by the FCI to finance procurement at inflated support prices or those by oil companies to finance the deficit incurred in selling fuel at prices below import to a party should be stopped. (iii) Borrowings by inefficient public sector undertakings should be stopped on merit basis. Thus, the problem of internal debt has increased sharply particularly after the implementation of the Vth Pay Commission Recommendations, which are based on sound socio-economic principles. Taxing employees by freezing their D.A., bonus and commutation of pension to defuse the situation of financial crisis will demoralise workers leading to a fall in productivity on one hand and decrease the aggregate demand on the other. All this will have a baneful effect on economic growth and on that account it may not solve the problem of internal debt at all. Moreover, taxing a particular section like this is not in conformity with the requirements of a good tax system. Hence, accepting the problem of the rising internal debt as a national problem it should be solved by resorting to the means of internal debt redemption, the raising of revenues for the Central and state governments and by checking wasteful expenditure by governments on the lines suggested in the article. The writer is the Director of MD National Law College, Gurgaon. |
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Bids
invited to collect toll tax
Chandigarh, December 6 Under the plan, the first road where the toll tax will be implemented by the end of current financial year is an about 80-km stretch between Ropar-Balachaur-Banga-Phagwara. The board has invited bids from private parties to collect the tax from vehicle users. Conditions of the contract, to be signed between the board management and the highest bidder, say the private party will maintain the corridor for the agreement period. It will also provide value added services to the road users such as immediate medical relief in case of accident, toe-away facility in case vehicles break down and removal of an animal killed on the roads. The PIDB has formulated that corridor management system by engaging IL&FS and Feedback Ventures Pvt Ltd. It will award an “Operate and Maintain” contract for a five to 10- year period, together with toll collection rights. The pre-bid meet has been called on December 10 and bids will be accepted between December 18 and 30. Contract would be awarded by mid-January, 2003, and collection of toll tax will start in the next one-two months.
TNS |
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Munjal gets MMA award
Chennai, December 6 Mr Munjal joins a galaxy of business leaders like Mr J.R.D. Tata to receive the prestigeous award instituted by Amalgamation Group Chairman A Sivasailam in memory of his late father and founder of the Amalgamation Group S Anantharamakrishnan to promote excellence in business leadership.
UNI |
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