New Delhi, December 26
The economic slowdown has cast its shadow on the government's revenue realisation, with advance tax collection declining by over 22 per cent to Rs 42,600 crore in the third quarter of this fiscal from Rs 54,900 crore a year ago.

Taxes paid by companies went down by 22.4 per cent, making it a bad year for direct tax collection. Direct tax collection in November had gone down by over 35 per cent, compared to the same month last year.

For the first three quarters of the year ended December 15, advance tax collection fell by 2.6 per cent to Rs 1,13,000 crore from Rs 1,16,000 crore in the corresponding period last year, finance ministry sources said.

India Inc has been hit hard by the current global slowdown with the margins of many firms getting battered.

To help industry, which has seen a fall in growth, the government had on December 7 released a stimulus package. It is planning to introduce a second one soon.

"The fall in advance tax collection shows anticipated lower profits by companies this fiscal," an analyst said.

Direct tax collection, which took a beating in November, was up 11.5 per cent at Rs 2,32,000 crore till December 24, this fiscal from Rs 2,08,000 crore in the earlier year.

Also, corporate tax collection rose 15.3 per cent to Rs 1,50,000 crore from 1,30,000 crore, sources said.

The decline in advance tax collection is disappointing, particularly when the government had revised upwards its direct tax collection target by nearly Rs 30,000 crore to around Rs 3,95,000 crore, after collections in the first two months showed substantial rise.

New Delhi, December 26
Providing the much-needed relief to the government that is battling economic slowdown, inflation nearly halved to 6.61 per cent from a peak of 12.91 per cent four months ago, but the finance ministry said prices of primary articles are still too high for comfort.

A 0.23 percentage point fall in inflation for the week ended December 13 gives more room to the Reserve Bank of India to signal a further cut in interest rates, as was advocated by the Mid-Year Review of the economy in case manufacturing continued to be hit by global developments.

Even as inflation fell for the seventh straight week, food inflation rose to 10.46 per cent from 10.19 per cent during the week. In fact, primary category, comprising non-processed food and raw items, continued to be expensive.

The finance ministry in a statement said, "Prices of primary articles continue to rule high, despite the decline in overall inflation." Analysts expect that falling commodity prices and slackening demand globally may further bring down inflation in the range of 2-3 per cent by March 2009.

"I expect Inflation to drop sharply to below 2 per cent by March... decline in manufactured goods prices and commodity prices," HDFC Bank chief economist Abheek Barua said.

During the week, manufactured products became cheaper with basic heavy inorganic chemicals turning less expensive by 7.2 per cent. Also groundnut oil, sugar, cement and certain textile items like cotton yarn were cheaper.

Among food items, vegetable prices fell by more than three per cent followed by tea, cereals, spices while sea fish, wheat and bajra got dearer.

Food items which became expensive were pulses, other cereals, brinjal and cabbage. — PTI

Hyderabad, December 26
The embattled software giant, Satyam Computer Services, is mulling legal action against World Bank for its refusal to apologise for making certain “inappropriate statements” while announcing an eight-year ban on doing business with the software company.

“We are considering all options at our disposal,” a spokesman of Satyam said after World Bank rejected the company’s demand for apology.

The World Bank, had, on December 23, declared Satyam Computers as ineligible for contracts for a period of eight years for providing “improper benefits” to the bank staff and for failing to “maintain documentation to support fees charges for its sub-contractors.”

The WB’s ban came as a double whammy for the NYSE-listed company, which was already battling an ugly fallout of its decision to buy Maytas Properties and Maytas Infra, the real estate and infrastructure companies owned by Satyam chairman B Ramalinga Raju’s sons.

Following an angry reaction from shareholders, the company withdrew the decision but not before suffering a dent in its global image.

The controversy has led to resignation of an independent director on Satyam’s Board, Mangalam Srinivasan, a US-based academic.

Srinivasan said she was resigning taking moral responsibility for voting in favour of the controversial acquisitions which were questioned by shareholders and analysts.

Satyam had announced its decision to acquire the Maytas firms for $1.6 billion on December 16, but backtracked on the proposal within 12 hours after strong criticism from institutional shareholders.

Close on the heels of this crisis came the World Bank’s announcement banning business with India’s fourth largest software exporter.

In a statement, Satyam said it would evaluate all options in view of both the bank's ‘inappropriate' public statements and its response to the IT firm's requests.

The issue is expected to come up for a discussion at the company’s Board meeting on December 29.

“The World Bank should issue a new statement apologising to Satyam for the harm done to the company due to its actions and it should provide Satyam with a full explanation of the circumstances related to its inappropriate statements”, the company statement said.

“We usually do not comment publicly on matters involving customer relationships. However, the inaccuracy and inappropriateness of the World Bank’s public statements regarding Satyam have forced us to issue this brief statement to set the record straight,” it said.

Satyam had bagged contract work for the World Bank in 2003, maintaining software across all its locations and back-end office support.

New Delhi, December 26
With a view to give support to the small and medium exporters facing a slowdown and possibility of defaults from overseas buyers, the government today approved Rs 350 crore for increasing the insurance cover.

The risk cover will help exporters to get credit on more lenient terms from the banks as against the present situation wherein the banks are wary of advancing credit to exporters in the SME sector for the fear of default, say sources in commerce ministry.

The cover, which was approved by Cabinet Committee on Economic Affairs (CCEA), will allocate Rs 350 crore to the Export Credit Guarantee Corporation of India (ECGC). At present, the scheme provides 75 per cent cover for banks lending to MSMEs, which will now be enhanced to 85 per cent.

Ten per cent extension in risk cover for non-MSME exporters will be limited to textile (including handicraft and handloom), gems and jewellery, leather, engineering products, carpets, project goods, automobile components and chemicals.

“Exporters need additional cover in the face of slowdown,” said Home Minister P Chidambaram while briefing mediapersons after the CCEA meeting.

Banks financing MSME exporters would now continue to give funds even if losses take place in one or two transactions.

The additional risk cover would be available up to June 30, 2009, Chidambaram said.

So far, over 7,00,000 workers have been laid off in the textile industry, while 1,00,000 people have lost jobs in the gems and jewellery sector.

It is apprehended that the number of exporters, who are not realising the dues from buyers in the United States, Europe and in other markets of strategic importance to India, and size of such non-payments would increase substantially and would impact further on bank credit.

New Delhi, December 26
To boost the sagging housing sector demand and providing housing to all, the government has approved 5 per cent interest subsidy for home loans up to Rs 1,00,000 with a repayment period of 15-20 years.

Speaking to The Tribune, Minister of State for Housing and Urban Poverty Alleviation Kumari Selja said “the Interest Subsidy Scheme for Housing the Urban Poor (ISHUP) makes housing affordable for all and is an important policy agenda of the government”.

As per the scheme, EWS is termed as households having an average monthly income of Rs 3,300 and LIG is defined as households having an average monthly income of up to Rs 7,300. The scheme will leverage flow of institutional finance for the EWS and LIG segment and result in creation of additional housing stock of 3.10 lakh houses over the next four years, out of which 2.13 lakh dwelling units are targeted for EWS housing and 0.97 lakh for LIG housing. The subsidy of Rs 1,100 crore is expected to leverage institutional finance of Rs 3,870 crore for the beneficiaries.

“The slowdown has given an opportunity for the urban poor to buy home at affordable interest rates, which were otherwise not possible when the interest rates touched nearly double-digit figure,” the minister explained.

“What will really make the scheme a success is that states should provide land for the construction of these houses along with speedy water and sanitation clearances,” she added.

In 2005, the government had launched the Jawaharlal Nehru Urban Renewal Mission (JNNURM), under which 1.5 million houses are being built for the economically weaker section (EWS) with the provision of basic municipal services and slums are being upgraded with an expected Rs 40,000 crore, half of it from the Central Government. The national housing shortage is estimated at about 24.7 million in 2005-06.

The interest subsidy scheme is expected to supplement the efforts of the government to address the massive housing shortage. The National Housing Bank (NHB) and Housing and Urban Development Corporation Ltd (HUDCO) will be nodal agencies for disbursement of subsidy and monitoring the progress. Housing finance institutions like banks, housing finance companies and micro finance institutions will have an option to avail the resources of either of the two institutions for the period of the scheme. The subsidy will be released to all housing finance institutions on a quarterly basis.

New Delhi, December 26
The Union Cabinet today gave its approval for an integrated energy policy that would envision a roadmap for sustainable growth with energy security over a reasonable period of time.

Briefing newsmen after the Cabinet meeting chaired by Prime Minister Manmohan Singh, Home Minister P. Chidambaram said, "It has been decided to set up a monitoring committee under the chairmanship of the Cabinet Secretary for reviewing the progress of implementation of the policy".

The policy seeks to make energy markets more competitive besides having a market-determined energy pricing and resource allocation, transparent and targeted subsidy disbursal. It also aims to improve the efficiency in the sector.

"India needs to sustain an economic growth of at least 9 per cent over the next 25 years. It is necessary to evolve an integrated energy policy that provides a coherent framework of policy covering different energy sources in a consistent manner," the Home Minister said.

The policy, prepared by the Planning Commission, aims at optimal exploitation of domestic energy resources and exploring and acquiring energy assets abroad to attain energy security for the country.

In another decision, the Cabinet also approved the signing of an agreement between India and Serbia on cooperation in the field of agricultural and allied activities.

The proposed agreement will facilitate cooperation between the two countries in the field of agricultural research and production, post-harvest management and agro-processing and marketing.

New Delhi, December 26
Mutual funds, hit hard by redemption pressure, have something to cheer with the government allowing navratnas and mini-ratnas to invest 30 per cent of their surplus funds in equity market through public sector mutual funds.

The scheme to allow navratnas and mini-ratnas in this regard was expired on August 1 this year, a year after it was notified.

"CCEA today reviewed the position and has extended the scheme from August 1 till further orders," Home Minister P. Chidambaram told reporters here.

He said public sector enterprises (PSEs) operate almost at par with commercial enterprises.

"The main thrust of earlier guidelines regarding investment in surplus funds of PSEs was that they should invest their surplus funds only in instruments with maximum safety, with no element of risk on the yield obtained from such investments. It was felt that they are denied a profitable investment opportunity because of restrictive clauses on investment," Chidambaram said.

Besides, the PSEs have professional management or access to professional management services and hence are capable of taking investment decision in their best interest, he said, adding MFs are now considered as attractive investment opportunities and recommended for retail individual investors.

"It is a positive development for the funds, though not significant as not many PSEs invest through this route," Dhirendra Kumar of mutual fund tracking firm Value Research said. — PTI

New Delhi, December 26
They used to be an avenue of mutual gains for investors in both good and bad times for years, but incurred heavy losses in 2008, when mutual funds became poorer by about Rs 1,50,000 crore or about one-third of their total size.

Such has been the impact of these losses — which accounted for nearly three-fourths of the overall gains in the previous year 2007 — that investor confidence got shattered in just a few months of downturn.

In contrast, it had taken five years to gauge the success of the world's first mutual fund, launched by Massachusetts Investment Trust, in 1925, and to gain the confidence to grow beyond a single fund. Moreover, this confidence came only after the first fund survived the stock market crash of 1929 and came out with positive returns for the investors.

The mutual fund industry in India, with nearly 36 members, was regarded as a safe avenue of mutual gains for investors till 2007 —when their total wealth grew by more than Rs 2,30,000 crore to Rs 5,50,000 crore.

However, the stock market downturn, beginning early in 2008, wiped off close to Rs 1,50,000 crore this year, bringing its asset size to nearly Rs 4,00,000 crore and leaving the industry shattered with a huge liquidity crunch.

But the industry, where players operate with catchlines like "Let's plan to get rich" and "Reaching new heights", hopes its fortunes will revive in 2009 and it will regain retail and corporate investors' confidence.

"We believe 2009 will be a better year and the mutual fund industry would bounce back with general improvement in liquidity and economy as government measures would promote growth, while the overall market sentiment is likely to change from January onwards," Association of Mutual Funds chairman A.P. Kurien said.

Mutual funds are likely to resume growing in a robust manner by April-June 2009 as equity markets are expected to improve by then, Kurien said, adding that the Rs 20,000 crore support given by the government helped in avoiding a crisis situation for the industry. — PTI 

Bangalore, December 26
Kingfisher Airlines' plans to raise $400 million are on track, and private equity players have showed enhanced interest in investing in the airlines, its chairman Vijay Mallya said today.

"Plan (to raise $400 million from private equity investors) is on track", Mallya told reporters after the annual general meeting of Kingfisher Airlines here.

"I have confirmed that we are continuing to discuss with certain private equity investors who are showing increasing amount of interest in this investment opportunity", he said. He did not specify time-frame for the initiative and the extent of equity stake that the airlines would dilute. — PTI

BRIEFLY

Mumbai
DoCoMo defers open offer for TTML: Tata Teleservices (Maharashtra) on Friday said Japanese telecom major NTT DoCoMo's open offer for a 20 per cent stake in the company has been deferred following a delay in approval from market regulator SEBI. In an announcement to the shareholders of TTML, DoCoMo said the Rs 949 crore open offer for a 20 per cent stake in the firm has been postponed, "till further notice in this regard is published by the manager to the offer".— PTI

HDFC Bank raises Rs 1,728 cr: HDFC Bank said on Friday it has raised Rs 1,728 crore through the private issue of subordinated debt. On a private placement basis, the bank has issued unsecured non-convertible redeemable subordinated bonds in the nature of debentures. — PTI

Hyundai to cut production: Falling demand has forced South Korean car maker Hyundai Motor Company to cut its production in India from next week. Speaking to mediapersons after opening a new showroom here on Friday, Hyundai Motor India managing director H S Lheem said the first quarter sales in 2009 was likely to be weak and the demand is likely to pick up only during the second half. He said the company would go for a two-shift production instead of three shifts.— PTI

New Delhi
Nod to Suzlon’s rights issue: The government on Friday gave a go-ahead to wind power major Suzlon Energy to raise Rs 1,800 crore but alas the permission came two months after the firm suspended plans to raise resources through the rights issue. The Tulsi Tanti-led group, which is a major supplier of wind turbines to the US and the Europe, had approached the government way back in September for permission to raise resources.

Ceat shuts down two plants: Amid slowdown in auto industry, tyremaker Ceat Ltd has temporarily shut down its plants at Bhandup and Nashik in Maharashtra to avoid unnecessary inventory build-up. The Bhandup plant will be closed for three days starting on Friday, while the Nashik plant has been shut for seven days from Thursday, the company said.— UNI