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Industrial output at 15-yr low
Moody’s blames RBI policy
Auto rescue failure stokes new fears
Chidambaram hints at more borrowings
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Govt may free petrol, diesel prices by Feb
Govt likely to go ahead with 3G auction
Bank of America to slash 35,000 jobs
PSU banks may announce cheaper housing loans
Sagri Group on expansion spree
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Industrial output at 15-yr low
New Delhi, December 12 The government has taken note of a slowdown in the industrial production in October, which appears to be continuing in November, commerce secretary G.K Pillai said. Calling the dismal performance of the industrial production as a matter of concern, the commerce secretary attributed it partly to the impact of global meltdown that had choked up the financial system. Policy makers said the fall was bigger than expected even as they exuded confidence that the December 7 stimulus package would arrest any further decline. Industrial output had last fallen in April 1993. “These figures are more disappointing than what we expected,” Prime Minister’s Economic Council chairman Suresh Tendulkar said. Manufacturing, comprising around 80 per cent of the Index of Industrial Production (IIP), clocked a negative 1.2 per cent growth in the month from a whopping 13.8 per cent a year ago. In fact, output in two of the four sectors that make up the index -- intermediate goods and consumer goods -- contracted to 3.7 per cent and 2.3 per cent, respectively, from a growth of 13.9 per cent and 13.7 per cent, respectively. Within consumer durable goods, both segments — consumer durables and consumer non-durables — shrank by 3 per cent and 2 per cent, respectively. Of the total 17 industries, captured in the IIP figure, as many as 10 recorded a negative growth and could have a similar bearing on economic growth, given the fact that industry accounts for 29.4 per cent of the GDP. Pillai said November, too, might see IIP numbers falling further. Industry association Ficci in its recent survey on the manufacturing sector had predicted that the industrial slowdown would be a matter of concern. Amit Mitra, secretary general, Ficci, reacting to the statement of the commerce secretary said it was the time to immediately release the second stimulus package. To bring the Keynesian multiplier in full effect a third stimulus package must be planned from now and released in mid January 2009 to return the economy to a sustainable growth rate above 7 per cent. Industrial output shrank by 0.4 per cent in October for the first time in 15 years after recording a whopping 12.2 per cent growth a year ago. The committee of secretaries headed by Cabinet secretary K.M Chandrasekhar and the apex committee headed by Prime Minister Manmohan Singh are closely monitoring the situation. “We get fortnightly updates,” Pillai added. The RBI came out with recent measures, including cutting short-term policy rates by 100 basis points and announcing other sector-specific steps, and the government announced fiscal package after deliberations in the apex committee and the panel of
secretaries. |
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Blaming the RBI's earlier tight monetary policy for contraction in India's industrial growth, Moody's today said deceleration in manufacturing output is a concern for overall economic growth. “Despite a global market turmoil, India's central bank continued to tighten monetary policy until July. The moderation in demand is a result of the tight monetary policy settings in the first nine months,” said Moody's Economy.com, a subsidiary of Moody’s group. Pointing out that loosening cycle of monetary policy by the RBI began only in October, Moody’s said it might not have led to an immediate rebound in domestic consumption. “As such, manufacturing orders from the domestic sector likely remained modest in November and December,” it said. However, the RBI had yesterday stated that monetary measures taken by it were “appropriate”. Industrial growth turned negative in October for the first time in 15 years, as manufacturing, which comprises around 80 per cent of the industry, shrank to 1.2 per cent growth in October from a whopping 13.8 per cent a year ago. “Although the Indian economy depends largely on the services sector, a contraction in the manufacturing sector is still of concern to its overall growth outlook,” Moody's said. Linking contraction in industrial growth to decline in both domestic and external demand, Moody's said: “India’s export outlook is dismal. Outbound shipments declined in October, but the worst is yet to be seen. Losing support from external orders, India will unlikely see a rebound in manufacturing output any time soon.” — PTI
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Auto rescue failure stokes new fears
London, December 12 In a further blow to recovery prospects, trade sources said the head of the World Trade Organisation had decided there was not enough consensus among big powers to call ministerial talks on a global trade deal before the end of this year. Leaders of the G20 rich and emerging nations called last month for an outline Doha deal by the end of 2008 to help counter the financial crisis by warding off protectionism. An announcement by WTO chief Pascal Lamy was expected today. The US bailout’s failure in late-night Senate talks will raise fears of an industry collapse that would jeopardise many jobs. The companies say one in 10 US jobs are tied to the auto sector, totalling several million. Japan said it would expand the size of funds set aside to recapitalise banks to 12 trillion yen ($131.1 billion) from two trillion yen and also announced a one-trillion yen package to secure jobs. It was not clear how much of the money was new.
Tokyo has already announced a package of economic measures worth 27 trillion yen ($295 billion), which included five trillion yen in new spending and featured payouts to families, tax breaks on mortgages and relief for small firms. The failure of the auto bailout plan sent Asian markets reeling. General Motors Corp and Chrysler LLC sought billions in aid to see them through March and have warned of potential collapse if they did not receive a bailout. “I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight,” Reid said. Markets across the Asia-Pacific region fell more than 3 per cent on the development, with Japan’s Nikkei average and Hong Kong’s Hang Seng both down more than 5 per cent. European and US stocks were expected to fall about 5 per cent. US crude prices fell by more than $2 to $45.90 a barrel, while the yen hit a 13-year high against the US dollar. Job losses hit a 34-year high in November and the unemployment rate reached a 15-year high. GM, Ford and Chrysler employ nearly 250,000 people directly, and 100,000 more jobs at parts suppliers could hang on their survival. The companies say one in 10 US jobs are tied to the auto sector, which adds up to several million. GM and Chrysler both said in the face of their cash crises, they had hired outside advisers to help them explore possible bankruptcy, which they found had too many drawbacks. The White House called congressional inaction a breakdown and said it would evaluate its options. “It has now fallen to the President to take action,” said Senator Carl Levin, a Michigan Democrat who has spearheaded efforts for a month to get help for Detroit. A treasury spokeswoman said after the bailout bid collapsed on Thursday that its position remained that the funds were only intended to help the financial sector. Senator Christopher Dodd, a Connecticut Democrat, said it was possible Congress could take a “second crack” at a rescue in January when Democrats would have larger majorities in both houses. The development followed intense discussions on a possible 11th-hour compromise that participants said fell apart over proposed wage concessions by the United Auto Workers union (UAW). The UAW could not immediately be reached for comment.
— Reuters |
Chidambaram hints at more borrowings
New Delhi, December 12 He ruled out amendments to the Fiscal Responsibility and Budget Management Act (FRBM), saying the Act was critical as it disciplined public expenditure, placing the economy on a sound footing. The government, he said, would report any breach of the FRBM target to the parliament. The observations came during the question hour when members raised apprehensions of increased fiscal deficit adversely impacting India’s economy. Chidambaram allayed these fears, saying even if the fiscal deficit went beyond the estimated 3 per cent, there was no reason to worry. He told the Lok Sabha that the government would report any increase in fiscal deficit to Parliament. Confident that increased external borrowings would not bother India, Chidambaram referred to the country’s sound position in terms of its external debt in proportion to its GDP. “In respect of external debt as a proportion of the GDP, India is the best placed in the world. We are ranked number one among 57 nations, with our external debt as a proportion to GDP being 18.9 per cent. The corresponding figures for Ireland, the US and the UK is 999 per cent; 100 per cent and 420 per cent respectively,” Chidambaram informed the House. He added that further borrowings would depend on how the revenues behaved post-financial stimulus package announced by the Prime Minister and a host of other measures taken to boost the economy. Referring to the external commercial borrowing policy, Chidambaram said such borrowings were done in consultation with the RBI. |
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Govt may free petrol, diesel prices by Feb
New Delhi, December 12 The government had in April 2002 freed petrol and diesel prices from administrative control, following which the state retailers revised prices every fortnight in line with changes in costs. But, controls were brought back in 2004 when crude oil rose to $37 a barrel and they have stayed high since then with crude oil soaring to an all-time high of $147 a barrel in July 2008. The government has cut petrol price by Rs 5 a litre and diesel by Rs 2 per litre announced earlier this month and this was only an interim measure as the government was keen to watch how international oil prices behave in short-to-medium term add sources. It was an interim measure to complete freeing of auto fuel prices, the official said, pointing that not all of the margins on petrol and diesel being earned because of fall in crude prices had been passed on to the consumers. Even after slashing the prices, oil firms continue to make Rs 9.89 a litre profit on petrol and Rs 1.03 per litre on diesel. |
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Govt likely to go ahead with 3G auction
New Delhi, December 12 While telecom secretary Siddhartha Behura said here on the sidelines of an industry summit: “Quite a few operators have asked us to postpone the spectrum auction due to holidays,” sources here said the process was unlikely to be delayed further as the government was keen to start the services at the earliest. The process has already been put off on two occasions due to various reasons and it would not be done again, an official of the telecom ministry said when asked specifically whether the process would be delayed again. Behura said the e-auction of 3G and broadband wireless access (BWA) will take place January 15 instead of January 9 as reported. “The pre-bid conference should happen on December 23 and the information memorandum will be out today,” Behura said. Meanwhile, he said the policy guidelines for mobile virtual network operators (MVNO) would be out in next two-three months. A MVNO is a company that provides mobile phone service but does not have its own licenced frequency allocation of radio spectrum, nor does it necessarily have the entire infrastructure required to provide mobile telephone service. In another development, country’s telecom watchdog is all set to advice floating of a consultation paper on tariff reduction on short messaging service (SMS). “The request for the tariff reduction in SMS charges has been pending for almost an year with service providers, which needs to be addressed soon. We will float a consultation paper soon in this regard,” Telecom Regulatory Authority chairman Nripendra Misra said. He said a consultation paper regarding per minute to per second billing is also being considered and will be floated soon. Currently, billing is done on a per minute basis, which means a 15-second call requires payment for a one-minute conversation. “Caller must pay for the time used for the service and not for the whole minute,” Misra said. |
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‘Global crisis would not affect India for long’
Amritsar, December 12 These views were expressed by Gurcharan Das, former CEO, Proctor & Gamble (India), who ia also the author of internationally best-selling book ‘India Unbound’ during a talk “India’s future” organised by Indian Academy of Fine Arts here today. Giving the credit of the country’s development to private sector, he said India had very vibrant private space as compare to public space in India while it was less than 10 per cent in China. He added that the credit goes to the private sector. Das said India had about 25 globally competitive companies that could be described as jewels of India while China had only five. “The economists and leaders were talking about the 10 per cent growth, but actually the democratic nation like us would not allow such growth,” he viewed. He said about 7.5 to 6 per cent growth was enough for making India a prosperous country. Das also stated that globalisation was a friend of poor as it provided them access to technology that helped in growth. He said the third world countries remained economically backward as they were not linked with others. However, globalisation has provided an opportunity for them to be linked and grow. Das also said by 2020, half of the population would prosper and become middle class while on the other hand the growth of China would be slow down by 2025 as compare to India. Gurcharan Das has also written a novel — A fine Family — that is being adapted for television. His plays have been performed in many cities in India as well as Off-Broadway in New York and Edinburgh festival and recently published by Oxford University Press. |
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Bank of America to slash 35,000 jobs
New York, December 12 “Bank of America expects to have a final plan early in 2009 and estimates it will project reduction of approximately 30,000 to 35,000 positions over the next three years,” a company statement said. The US banking giant further said: “The reductions are designed to eliminate redundancies created as a result of the merger with Merrill Lynch and to reflect the current recessionary environment.” The layoffs were from both companies and would affect all lines of business and staff units, the company said, adding that as many reductions as possible would be made through attrition. “Severance and other benefits will be provided for those associates whose jobs are eliminated and who cannot be offered another position,” it said. Earlier, in September the Federal Reserve had given a formal approval to the Bank of America for acquiring troubled
financial services firm Merrill Lynch. On completion of the acquisition, Bank of America would be the largest depository organisation in the US, with total consolidated assets of about $2.7 trillion. Shareholders of both Bank of America as well as Merrill Lynch have approved the takeover
and the transaction is likely to be completed on January 1, 2009. The Bank of America job cut announcement comes only weeks after another US bank Citigroup announced a massive 75,000 job cuts. With this announcement, Bank of America has joined the league of biggies who announced the job cuts like telecom giant AT&T and banking major Credit Suisse, among others.
— PTI |
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PSU banks may announce cheaper housing loans
Mumbai, December 12 Interest on housing loans are to be brought down to between 7 to 7.5 per cent at the lowest level with a cap of 10 per cent for high value loans. Loans upto Rs 5 lakh are to be priced at the lowest levels of interest while loans between Rs 5 lakh and Rs 20 lakh would be priced at 100 basis points higher. The union finance ministry is also keen that PSU banks waive processing fees and other charges on loan applicants. At present, floating home loan rates stand at around 11 per cent. |
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Sagri Group on expansion spree
Chandigarh, December 12 The group has also set up a new state-of-art chicken processing plant at Chanalon, Ropar, with an investment of Rs 6 crore. Surjit Singh, chairman, Sagri Group, said the plant had already been commissioned and would be fully operational within a week. The whole plant has been made according to international standards, so that it can also cater to the export market. |
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London, December 12
