Bangkok, August 13
India today signed an agreement with 10 south east Asian nations for duty-free import and export of 4,000 products ranging from steel to apparels to sugar and tobacco over a period of eight years.

After intense negotiations of six years, the pact on trade in goods under the Comprehensive Economic Cooperation Agreement (CECA) was signed by Indian Commerce and Industry Minister Anand Sharma and ASEAN Economic Ministers here. The agreement would kick in from January 1, 2010.

While the pact opens the 1.7-billion consumer market to each other, it also eliminates duties on 80 per cent of goods traded between the two regions by 2016. Under the trade pact, India has included 489 items from agriculture, textile and chemicals in the negative list, meaning these products will be kept out of the duty reduction.

Addressing concerns of domestic planters, black tea, coffee, pepper and rubber have been included in the sensitive list, which could mean duties will be cut by 2019 only. However, duty on these items at no time will be eliminated.

Farmers in South Indian, especially Kerala, fear lower duty on plantation crops like coffe and pepper would lead to a deluge of imports from ASEAN members like Indonesia, Malaysia, which could leave domestic farmers vulenrable to competition.

Sharma had said yesterday that the agreement was well balanced and was in harmony with India's Look-East Policy. "I can say negotiations have been painstaking. The negotiators have ensured that our sensitive areas where we had concerns are fully addressed," Sharma had said.

He had also said the whole debate of the CECA adversely impacting domestic planters was based on "uninformed" speculations.

Prime Minister Manmohan Singh had formed a GoM to allay domestic concerns.

The bulk of the trade between the two regions include textiles, steel, processed food, plantation crops, iron and steel, ready-made garments, chemicals etc. Industry body FICCI, which has accompanied Sharma, leading a business delegation, said the agreement would provide access to the large ASEAN market to India.

"It will give Indian business access to the large ASEAN market; Indian industry does not have many concerns (and) sensitivities on agri products have been taken care of," Ficci business delegation leader OP Lohia, present at the signing ceremony, said.

India's exports to ASEAN were about $17 billion in 2007-08 and imports $23 billion. 
— PTI 

New Delhi, August 13
Rating agency Standard & Poor's today forecast India's economic growth to rise by 30 basis points to 6.3 per cent for the current fiscal owing to the stimulus measures the government had taken and improvement in global conditions.

The agency had earlier said that the economy would grow at the rate of 5.8 per cent.

In a teleconference, S&P said the revision was occasioned because of the positive policy responses by the country and improving global conditions, despite the deficient rains and lurking swine flu.

"We are now beginning to see impact of stimulus measures ... strength of the domestic market will help India maintain a respectable growth," S&P chief economist Subir Gokarn said in the call.

The impact of monsoons is still to be assessed, he said, but held that "the growth in industrial production would be able to offset the low growth in agriculture production." The swine flu pandemic would not affect growth much, he said, as "precedence shows that pandemic and health scares do not have much of an impact on the macro-economy".

The Index of Industrial Production for June released yesterday showed a "positively shocking" 7.8 per cent growth against 5.4 per cent in the month a year ago, signalling recovery of the economy.

"If yesterday's number is anything to go by, credit offtake in the coming days would be much better than anticipated. But if the previous two months' trend continues, rate of recovery would be moderate," he said.

Gokarn also marked China's role in contributing to India's recovery. He said growing demand from the neighbouring country would help cushion the fall in exports from India, though the outbound shipments would remain in the negative territory through the calendar year.

However, he added, rising commodity and oil prices and "not much of a turnaround" in the US economy spoiled the party a bit.

The Asian Development Bank forecast for India is 6.5 per cent, IMF is 5.6 per cent, and the World Bank 4 per cent for the year 2009. — PTI 

New Delhi, August 13
Prime Minister Manmohan Singh has decided to constitute a Group of Ministers (GoM) to look into the issue of high aviation fuel prices in India. Civil Aviation Minister Praful Patel said the GoM will look into issues related to sales tax on the ATF and also base price of jet fuel.

The Prime Minister’s assurance came after Patel briefed the Cabinet on issues related to the recession-hit aviation industry. Patel specified that the GoM will only deal with issues related to jet fuel.

The primary cause for airline industry’s woes is high sales tax on the ATF, which varies from state to state. While Andhra Pradesh and Rajasthan are charging the lowest sales tax of four per cent, it was 28-30 per cent in some states like Karnataka, Madhya Pradesh, Bihar, Gujarat and Kerala. “A Rs 1,000 change in ATF price translates into Rs 300 crore increase or decrease in cost of operations of the sector," Patel said, adding that while sales tax is a state issue “facts speak for what needs to be done.”

Giving a comparison of ATF prices in India and abroad, Patel said while jet fuel price is as high as Rs 46,000 per kilolitre in Kolkata it is as low as Rs 24,000 in Kuala Lumpur.

ATF charges vary between Rs 24,000 and Rs 27,000 per kilolitre in international markets and in India they range between Rs 34,000 and Rs 46,000 per kilolitre. Jet fuel accounts for more than 40 per cent of the operation cost whereas for foreign airlines it comes to around 20-25 per cent.

Patel also briefed the Cabinet on other issues broadly referring to both public and the private sector and apprised the Cabinet about the long-pending issue of Air India equity infusion. “As owner of the company, the government has to bring in the required equity infusion into the airline,” he said, adding that a separate committee was looking into this as well as the matter related to replacement of high-cost debt with low-cost debt.

The decision to form the GoM comes after members of the airline industry threatened to go on strike to “draw government’s attention” towards their demands. They later backed out following the government’s tough stand.

Regarding the other demands of the airlines — that of lowering airport charges — Patel said airport charges in India are “not completely disproportionate with the rest of the world.”

In the recessionary impact on the industry, he said the number of flights during January-July dropped by 12.5 per cent. However, he expressed confidence that the “industry is likely to grow 8.5 per cent annually until 2015”. 

New Delhi, August 13
The government has decided to make a formal intervention in the KG gas dispute between Mukesh and Anil Ambani. Prime Minister Manmohan Singh has constituted a ministers group to monitor the government's stand on the Ambani gas dispute in the Supreme Court.

The group will be headed by Finance Minister Pranab Mukherjee and will include Petroleum Minister Murli Deora, Law Minister Verrappa Moily and Power Minister Sushilkumar Shinde, a source close to the development said.

It is a core group that will monitor the governments stand in the Supreme Court, adding that the Prime Minister has backed the official stand taken by the government.

The decision is a fallout of a meeting between Oil Minister Murli Deora and the Prime Minister yesterday.

The matter of gas dispute will come up for hearing in the second week of September and the government is preparing its stand in the matter.

Deora is believed to have told the Prime Minister that any MoU which appropriates the gas in complete disregard of the government policies would be detrimental to national interests and rights of government under PSC, necessitating filing of a Special Leave Petition in the apex court.

The source said the minister also explained that the pricing of gas from RIL's KG-D6 field and its utilisation was not approved by his ministry suo moto but was approved by an eight-member Empowered Group of Ministers headed by Mukherjee.

Chandigarh, August 13
In order to stem the menace of fake notes being circulated through the banking system, the RBI today asked all bank branches to install note-sorting machines.

This recommendation has been made by a high-level group on Systems and Procedures for Currency Distribution, set up by the RBI. The group headed by RBI deputy governor Usha Thorat has asked all banks to ensure that the note-sorting machines or the desk note sorting machines are installed at all branches in a phased manner.

The group has also recommended that banks switch over to the ‘cassette swapping system’ so that replenishment of currency notes in ATMs is done in a highly secured manner.

As of now, only 4,000 currency chests out of 70,000 bank branches across the country have these machines. The RBI has admitted that forged notes are finding their way into the banking system. In 2007-08, the forged notes detected by the banking system were 1,95,811 as against 44,225 million notes in circulation.

The committee has also recommended that the current requirement of filing an FIR by banks in case one gets possession of a few fake currency notes should be done away with. Bankers admit that in case of just one or two fake notes found in a bundle, they do not seize or cancel the note. Rather, the fake note is returned back to the customer, who could use it elsewhere.

It may, however, be noted that the bankers are not very keen on installing these machines as these are quite expensive (each machine costs around Rs 20 lakh). Also, the software of these machines has to be updated regularly in consonance with the frequent changes in security features of notes being introduced by RBI from time to time. 

Chandigarh, August 13
National Bank for Agriculture and Rural Development (Nabard) has asked all banks and cooperatives in Punjab and Haryana to lend more to farmers to help them tide over the increased input cost on irrigation, in wake of the drought-like conditions prevailing in the region.

Talking to mediapersons here today, on the sidelines of the State Level Bankers Committee meeting for Punjab, JR Sarangal, general manager, Nabard, said all banks should assess the additional credit requirement of farmers and advance them loans for their agricultural operations. “Farmers have reportedly been spending huge sum of money on running tubewells with diesel so as to irrigate their fields. We have heard reports that because of this, the input costs of paddy farmers have gone up by Rs 2,000 per acre. Banks should not shy away from lending to these farmers in distress,” he said.

Sarangal said Nabard has already advanced Rs 2,700 crore for cooperatives

in Punjab and Rs 1,800 crore for cooperatives in Haryana during this kharif marketing season. “The RRBs (regional rural banks) can play a proactive role in disbursing additional advances as they have surplus funds lying with them and they can contribute more in this situation,” he said.

He stated that banks should estimate the additional cost of cultivation and lend farmers more money if their cost of input has surged. “Based on this, banks can enhance the credit limit of the farmers,” he said. 

New Delhi, August 13
Consumers continue to reel under the rising prices of essential commodities like cereals, pulses and sugar though the official data released today revealed that inflation has dipped to over a three-decade low of (-)1.74 per cent for the week ended August 1. During the corresponding week a year ago, inflation stood at a 16-year high of 12.91 per cent.

This is the ninth week in a row when inflation remained in negative territory even as the prices of cereals surged by 12 per cent, pulses by 18 per cent, and fruit and vegetables by 18.4 per cent on an annual basis.

During the week, prices of food items like barley, gram and jowar rose by two per cent each while arhar, spices, and fruit and vegetables became costlier by 1 per cent each.— PTI