Mumbai, July 28
A further rate hike seems imminent with RBI a day ahead of its quarterly monetary review today saying that inflationary pressures are likely to continue for some time.

The central bank fears the situation may worsen in case of a hike in global oil prices which as such have not been fully passed on to consumers in India.

Expecting that global crude prices would remain high due to tight supply conditions, RBI said in first quarterly review of Macro Economic and Monetary Developments that "the pass-through in case of administered petroleum products is still incomplete".

The government on June 5 hiked the prices of petrol, diesel and cooking gas which had catapulted inflation to double-digit mark. The increase, however, did not fully cover the rising prices in global markets, RBI said.

The central bank also said inflationary pressures are likely to be there for some time.

"As the potential inflationary pressures from international food and energy prices appear to have amplified and, by current indications, are likely to remain so for some time," it said.

In Tokyo, finance secretary D Subbarao also said inflation may accelerate from a 13-year high and a further interest rate increase is an "obvious solution".

Global investment banker Goldman Sachs expected RBI to increase short-term lending rate (repo) and mandatory deposit rates of banks with the central bank (CRR) by 25 basis points each tomorrow as inflation is much above the RBI's comfort zone.

However, chambers and bankers called for maintaining a status quo in monetary policy of the RBI since it would harm the growth prospects. — PTI

New Delhi, July 28
In the wake of soaring inflation and apprehensions about the over heating of economy growing by over 9 per cent in 2007-08, the RBI has made continuous efforts in squeezing the money supply in calendar year 2008. Through tight monetary measures undertaken, an estimated Rs 40,000 crore of liquidity has been sucked out of the banking system by hike in CRR that was carried out four times from the initial rate of 7.75 per cent as on April 26, 2008, to 8.5 per cent in July 2008 and repo rate from 8 per cent to 8.5 per cent in 2008.

Economists expect that the RBI will yet again hike interest rates at its upcoming policy meeting tomorrow as it battles to curb inflation, hovering at a 13-year-high of nearly 12 per cent.

But, there is a lot at stake for a developing economy like India. On the one hand, increasing rates will choke the already sluggish industrial sector, on the other curbing the inflationary spiral in an election year is a top priority.

Cautioning the RBI on taking the next hike, Dr L.K. Malhotra, president, PHDCCI, said, in the wake of the fear of the Indian economy slipping into stagflation, high inflation accompanied by slowing economic growth, the RBI should be extra cautious in further tightening the monetary policy, as this would not only curtail consumer spending, but would hit the manufacturing as well as the services sector. Higher interest rates may add to the already declining Index of Industrial Production, which registered a growth rate of only 3.8 per cent in May 2008 as compared to 10.6 per cent in May 2007.

Indian economy has witnessed an increase in the investment rate from 24 per cent in 2003-04 to 38 per cent in 2007-08, resulting in an increase of 2-3 percentage points in the GDP growth rate. Thus, the inflation neutral growth rate in India has moved from about 6 per cent earlier to 8.5 per cent today.

“Tightening of the monetary policy will result in reduced industrial investment and infrastructure investment, adversely affecting both upcoming expansion plans and greenfield projects. Further hike in interest rates or CRR will check the pace of economic growth in India,” adds Dr Malhotra.

Political considerations were looming large at the moment and curbing inflation was more important than keeping the growth momentum, said an economic policy adviser in a political party. “Growth can be restored and we have had a good growth in the past four years, but at a time when the world, including India, is reeling under pressure of high crude oil prices, there is a need to address the inflationary situation,” he added.

Geneva, July 28
The US today blamed India and China for creating hurdles in the ongoing WTO talks here and said Doha trade talks have been thrown into the "gravest jeopardy" by these two countries which are not willing to open their markets for more imports.

"Their (India's and China's) actions have thrown the entire Doha Round — the Doha Development Round — into the gravest jeopardy in its nearly seven-year life," a US trade official told ministers at ongoing WTO meeting.

US Trade Representative Susan Schwab, too, voiced her frustration against the stand taken by developing economies in the talks. She left the WTO headquarters after a meeting last night.

"Unfortunately a few emerging markets have decided that somehow they want to re-balance it in favour of one or another issue," she said while indicating her unhappiness against India and China.

She said while the negotiators at the talks have a tentative agreement on a path forward "I think the biggest concern we have is that a handful of large emerging markets threaten this round for the rest of us and for the other developing countries who are so critically dependant on a successful development outcome of this development round". — PTI

Chandigarh, July 28
The industry is finally moving towards the hinterland. The depleting land bank in the traditional industrial hotspots of Ludhiana, Jalandhar, Amritsar and Dera Bassi has now forced the manufacturing sector to move towards the southern part of the state.

Perhaps for the first time, at least two manufacturing units, with a total investment of Rs 367.16 crore, have offered to set up their projects in Bathinda and Faridkot. Tayal Energy Limited has offered to set up a spinning unit (with 1,26,000 spindles and employment potential of 500 persons) at Faridkot with a total investment of Rs 335.36 crore, while Chahal Spenten has offered to invest Rs 31.80 crore for setting up a spinning unit in Bathinda. The latter will provide employment to 140 persons.

Though Bathinda has a unit of National Fertilizers Limited (NFL), the majority is small industrial units. On the other hand, Faridkot has so far not caught up with the industrial boom. With both districts being part of the cotton belt of the state, the companies, too, will benefit because of the easy availability of raw material.

Both projects have already been cleared by the screening committee for mega and super mega projects headed by the chief secretary Ramesh Inder Singh and recommended to the Empowered Committee. Says S.S. Channy, principal secretary, industries,“A major component of an industrial project is the land cost. Because of the high cost of land in the traditional industrial belts, a number of investors are now looking at the southern parts of the state for investment”.

Amongst the other projects approved by the screening committee are two multiplexes to be set up in Patiala. To come up with a total investment of Rs 222.35 crore, these multiplexes will come up on the fringes of Patiala, at Bahadurgarh. In all, the screening committee has cleared 13 projects, which will attract investment worth Rs 20,765.03 crore. Though the maximum investment is going to be made by the four super mega mixed use integrated industrial parks (with investnment of Rs 19,190 crore), the manufacturing sector, too, will get a boost with Nector Life Sciences coming up with a bulk drug manufacturing unit near Rajpura, with an investment of Rs 600 crore.

London, July 28
Arun Sarin, a controversial albeit one of the most successful CEOs of British telecom giant Vodafone, will hang his boots tomorrow to don a new gear for trekking in Himalayas.

Sarin, 53, quits Vodafone at the pinnacle of his career, accentuated by addition of India on the map of the UK telecom behemoth, amid speculation that he may get an offer from conglomerates like Tatas or a host of MNCs across the globe.

After heading the world's largest mobile firm for five years, a tenure that saw him grappling with demands for his resignation to the high points like takeover of Indian mobile player Hutch, India-born Sarin immediately plans trek to Himalayas before settling down in California.

The British daily Financial Times said in a report today that "Sarin wants a new challenge, perhaps a mixture of business, philanthropy or a stint in public service - should a call come through from Downing Street or the White House".

Speculations have been rife about Sarin's next move right from the day Vodafone announced his departure two months ago — spanning from possibilities of starting a PE firm, a public service role and taking up non-executive roles on boards of some large MNCs to heading some diversified business conglomerate in the US, UK or even India. — PTI

Ludhiana, July 28
Troubled by power cuts and reduced availability of wood, plywood manufacturers in the state have increased prices by seven per cent with immediate effect.

Most factories in the state have been functioning at almost 50 per cent of their capacity for almost a month due to poor power supply. To top it, manufacturers said they were facing acute shortage of wood supply from within the state as farmers were unwilling to sell on previous rates.

Nearly 25-30 per cent shortage of labourers in most units, has further added to costs.

This is the second time this year that plywood unit owners have effected a hike that would lead to a rise in furniture prices.The previous increase was announced last month after rise in petroleum rates.

"Most of our units are working at less than half of their production capacity. We procure wood from within the state and for the last few moths are facing lots of problems. Besides, a 25 per cent to 30 per cent shortage of labour in most factories made it tough to function smoothly. Under such circumstances, when costs have recorded a significant rise we are left with no option than to hike prices," said Ashok K. Juneja, secretary-general, Punjab Plywood Manufacturers Association.

The increase would have a bearing on competitiveness of Punjab's plywood industry that faces stiff competition from Yamunanagar. "Producers there are better off due to smooth availability. Procuring wood from outside would result in an increase of Rs 80-100 per quintal for us," added Juneja.

He said prices of many chemicals too had registered an upward movement by roughly 20 per cent.

Industrialists here supply nearly 70 per cent of their total products to domestic markets, the remaining 30 per cent demand to states like Uttar Pradesh, Maharashtra and Rajasthan. 

Chandigarh, July 28
With an aim to give a boost to the budding small and medium enterprises (SMEs) in North India, PUM, a Netherlands-based organisation of experienced retired professionals, has offered to provide free consultancy assistance to SMEs in this region. The NGO is going to focus on agriculture, dairy, agro-processing industry and address energy and environment concerns.

Talking to TNS here today, Wouter Creijghton, country coordinator (North India), PUM, said though PUM has been actively participating in India over the past two decades, they have now decided to lay special emphasis on making SMEs more energy-efficient, helping them establish their backward and forward linkages and thus help them improve their production process.

Creighton was in town to create awareness amongst members of Haryana Chamber of Commerce and Industry about the free consultancy services being provided by PUM. Talking on the sidelines of a conference, he said PUM has senior experts from different sectors on board, who voluntarily provide consultancy to SMEs in the developing countries. “We have seen that SMEs lack knowhow on general management, quality control, financial, technical, IT, sales and marketing and research and development. We hope to participate in this process of making knowledge and expertise available to SMEs free of cost, as PUM is financially supported by the Dutch government,” he said.

He said that in the context of the thrust towards globalization and the prevailing highly competitive business environment, Indian industries stand to gain substantially from well-focused and result-oriented technical, managerial and organisational inputs, which PUM can make available to them at their doorstep. “The impact of higher productivity, improved quality and manufacturing economies cannot be underestimated. PUM could provide these inputs, to progressive and forward-looking ventures. We have already provided services to steel industry in Mandi Gobindgarh, dairy cooperative in Ludhiana and Amritsar,” he added.

Mumbai, July 28
State-run Oil and Natural Gas Corporation today announced a net profit of Rs 6,636.33 crore in the first quarter ended June 30, a 43.94 per cent growth from that in the corresponding period a year-ago.

BRIEFLY

Patni BPO facility
New Delhi: With an aim to minimise adverse environment impact, IT services provider Patni Computer Systems on Monday inaugurated a 3,500 seater IT-BPO facility here entailing an investment of Rs 175 crore. Developed on Green Architecture, the centre is spread across five acres and has provisions for better utilisation of energy, water and natural resources and is likely to consume 45 per cent less energy, Patni BPO senior vice- president and head Sanjiv Kapur said. — PTI

Ranbaxy launch in US
Mumbai: Pharmaceutical major Ranbaxy Laboratories on Monday said it has launched the generic version of Omeprazole capsules, used in the treatment of acid related diseases in the US healthcare system. Ranbaxy Pharmaceuticals Inc (RPI), the wholly-owned subsidiary of Ranbaxy Laboratories under an agreement with AstraZeneca Pharmaceuticals has launched an authorised generic of Omeprazole 40 mg capsules in the US, the company said. — PTI

Marriott to add 24 hotels
New Delhi: International hotel chain Marriott is planning to add 24 luxury hotels comprising about 7,000 rooms by 2011 in the country as it looks to tap the booming hospitality sector. This was announced by Marriott International regional vice-president (hotel development — Indian subcontinent) Navjit Ahluwalia. — PTI

Skoda hikes prices
New Delhi: Czech automaker Skoda Auto's Indian subsidiary Skoda India on Monday announced an increase in prices of all its models in the country. A hike in the range of Rs 10,000 to Rs 25,000 would be effective from August 1, Skoda India said is a statement. — PTI

ONGC foray
New Delhi: Close on the heels of Indo-US nuclear deal, state-run ONGC will make a foray into uranium mining, an official said. ONGC board has approved entering into a MoU with Uranium Corporation of India Ltd (UCIL), for exploration and exploitation of uranium, the official said. — PTI