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Monetary Policy
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Maytas allowed to finalise Q2 results by Dec SMEs expect new policy on lending rates Chinese industrial goods, a mixed blessing ‘India emerging market for online advertising’
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Monetary Policy Mumbai, October 26 "Managing trade-off between supporting growth and reining in inflation expectations is a complex policy challenge," RBI said in its macro-economic and monetary development report a day before the release of second quarter review of the monetary policy. Prime Minister Manmohan Singh yesterday talking to reporters in Thailand said global economy has not recovered fully and hence the time was not right for withdrawing stimulus packages provided to the industry to combat the impact of meltdown. "Emerging inflationary pressures may also persist and escalate further on account of the fading away of the base effect, cost push pressures," the central bank said while pointing out that its professional forecasters have lowered the economic growth rate projection for the current fiscal to 6 per cent from 6.5 per cent. The apex bank had earlier forecast 6 per cent growth rate with an upward bias. More recently, the Prime Minister Economic Council has projected 6.5 per cent expansion. Referring to the inflationary concerns, RBI pointed out that supply side constraints in a limited number of commodities, led by food, have been driving current inflation pressures in the economy. "Anchoring inflation expectations in face of sustained high inflation in essential commodities will be a key challenge" for the monetary policy, RBI said. Despite the low wholesale price inflation at 1.2 per cent for the week ended October 10, the RBI said, inflationary pressures have started to emerge as the rate of price rise stood at 5.9 per cent over its March, 2009 levels. Also, consumer price inflation remains "stubbornly elevated" at double-digit level. The overall economic outlook for the current fiscal, RBI's review of macro economy said, "is, therefore, a mixture of upside prospects of recovery and downside risks". Besides inflation, downside risks include sluggish demand, decline in corporate sales, deceleration in credit growth and contraction in exports. On the positive side, it added oil prices have stablised in the global markets. Besides, RBI said, "adequate buffer stocks of foodgrains and the prospects of better rabi crops...could partly offset the adverse impact of deficient kharif". The upside prospects, it said, also includes the impact of supportive fiscal-monetary policy stance, recovery in industrial production, significant upturn in overall business confidence, return of capital inflows and strong recovery in stock markets. In order to boost the economic growth, the RBI has since September last year made available additional liquidity of about Rs 2 lakh crore to help the cash-starved industry.
— PTI
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Changes in iron ore policy mooted New Delhi, October 26 Union Steel Minister Virbhadra Singh told The Tribune that he had proposed an increase in tax on iron ore exports. Refusing to disclose the ‘target tax’, Singh pointed out that India was a major producer of iron ore but most of our exports were low-priced. He believed that the country should work towards a policy of encouraging value-added exports that are sure to fetch better revenues. At present, India is producing annually about 155 million tonnes of iron ore. Of this, nearly 89 MT is exported, with China being the biggest buyer. Last year, the Ministry had lobbied for a major lump sum tax on iron ore fines and a 15 per cent ad valorem duty on iron lump exports. The Ministry had argued that India should follow a policy similar to that of China, which does not allow the export of high quality coking coal. On the fierce scramble for India’s largest iron ore resources at Chiria mines in Jharkhand, Singh said that the government recently decided to split the Chiria iron ore mines into two and give about one billion tonne reserves to the Steel Authority of India (SAIL). The remaining reserves will be kept for future use. Talking about his efforts to implement the new policy on iron ore, Singh said the National Mineral Development Corporation (NMDC) had set up its own steel plant to add value to its output. SAIL has plans to turn its fines into sinter and use that in its steel plants instead of selling it. The NMDC is also in the process of securing mining leases of iron ore mines in Sasangada and Ghatkuri (Jharkhand), Ramandurg (Karnataka) and Bailadila (Chhattisgarh). India’s per head steel consumption is about 35 kg, which is expected to increase to 300 kg by 2020. While steel manufacturers have supported the Ministry’s argument that they require more iron to expand their capacity to 85 million tonnes by 2011, iron ore mining companies claim that the country’s reserves are sufficient to meet the demands of the steel industry as well as of the exports market. |
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US seeks more access to boost trade New Delhi, October 26 “We would also like to see more improvement and openness in the investment environment for US businesses in India,” United States Trade Representative Ron Kirk said. Kirk is here to attend the 6th ministerial-level meeting of the US-India Trade Policy Forum (TPF). He met Commerce and Industry Minister Anand Sharma. Both US and Indian governments signalled their readiness to continue their bilateral trade policy dialogue in the five areas - agriculture, innovation and creativity, investment, services and tariff, and non-tariff barriers - with renewed vigour. Sharma said the TPF provided opportunity for both governments to discuss their concerns and work towards resolving them. The two governments agreed to work together on a framework for promoting real and meaningful cooperation in trade and investment. They also agreed to work together to support greater involvement of small and medium enterprises in each other’s markets and to pursue initiatives in the further development of India’s infrastructure, collaboration on clean energy and other key sectors. |
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Maytas allowed to finalise Q2 results by Dec
Mumbai, October 26 In a filing to the Bombay Stock Exchange, Maytas Infra said, "The CLB, vide its order dated October 23, 2009, granted extension of time for publication of financial results of the company for the quarter ended September 30, |
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SMEs expect new policy on lending rates Ludhiana, October 26 In 2001, RBI permitted the banks to allow lending at Sub-Primary Lending Rates (PLR) in order to meet the competition. But the banks bent whole-hog in lending at PLR rates, which exceeded more than 75 per cent of the total lending. Due to this, the Small and Medium Enterprises (SMEs) seem to have suffered the most. The SMEs feel that currently it was the only segment of borrowers which paid the highest rate of interest. More than 75 per cent of the lending was below BPLR and rate of interest went down by 3 to 5 per cent below PLR. PD Sharma, president of Apex Chamber of Commerce and Industry told The Tribune that a committee constituted by the RBI had recently come out with an alternative reference point for determining rate of interest. The committee had recommended doing away with the BPLR system. Instead, each bank will have a specific bank lending rate linked to the one-year deposit rate. "Incidentally, one-year deposit rate has come down steadily in recent months after the crisis broke and is hovering between 5-6 per cent. The deposit rates in general have come down by more than 4 per cent, but lending rates have not decreased accordingly. We expect that with a new base rate, the lending rates will come down heavily", said Sharma. At present, SME sector was getting the highest risk weightage and thus rate of interest was the highest for this segment. The export credit shall also be linked to the base rate which will be much lower than the current benchmark rates, stressed Sharma. |
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Chinese industrial goods, a mixed blessing Ludhiana, October 26 Enquiries made by The Tribune revealed that bicycle manufacturers in India, including Ludhiana, have set up their offices in China where they buy cycles and related parts in bulk, assemble the same and export these to European countries. These bicycles include allay bicycles, racing bicycles, terrain cycles, MTV bicycles and city bikes that are also manufactured in China and Taiwan. A leading cycle manufacturer told that this happened as cycle and auto parts were easily available in China and even labour was very cheap there. However, India’s signing of the free trade agreement (FTA) with some countries, including Sri Lanka, Thailand and Bangladesh, has harmed these local manufacturers, as these countries import cycle parts from China and export the same to India under the mark of ‘made in Sri Lanka or made in Thailand’. Under the FTA agreement, these countries enjoy some benefits, like the exemption of customs duty, which are not available to the local manufacturers. Satish Dhanda, vice-chairman, Medium Scale Industrial Development Board, Punjab, and former president of Engineering Export Promotion Council of India (EEPC), has confirmed the report. Dhanda and Avtar Singh, general-secretary, Chamber of Industrial and Commercial Undertakings, said: “The government must stop these benefits extended to Sri Lanka, Thailand and Bangladesh, as they pose a threat to the domestic bicycle and engineering goods industry.” During 2008-2009, Indian bicycle manufacturers imported Chinese components worth about Rs 1,100 crore. Export of bicycles to Middle East and African countries has not picked up yet. Even European buyers have not shown much interest. The manufacturers are eagerly waiting for the Christmas season, as then sales are organised and they get new orders. |
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‘India emerging market for online advertising’ Q. Worldwide online classifieds are eating heavily into the newspaper market. So far this has not happened in India. Why is this so? A. This has happened in India also. But the impact is less visible as the newspaper industry here is still growing unlike in some major economies like the US, where so to say it has totally crashed. Here, it started off with the newspapers losing share in categories like Jobs, Matrimonial and Travel. Online classifieds are also taking away a big chunk in categories like Real Estate, Automobiles and Services. This is bound to happen with the growth in Internet users as well as the change in the mindset of the Indian consumer and media consumption habits. Q. How can an online advertising venture like Quikr hope to penetrate the classifieds market in India when most people are still conservative and rely on newspapers to deliver their requirements? A. The Internet is changing all that. Not sure if you know this but, with our presence in 40 cities, the number of people visiting us every month is already more than the circulation of any of the daily newspapers in the country. The Indian consumer is now more willing to experiment and try new things as long as they see the benefits. So, people are seeking the Internet and approaching Quikr to address a lot of their regular day-to-day needs that are not being addressed easily or efficiently offline. People using classifieds on Quikr and on newspaper classifieds are no different. They are businessmen - both big and small - and individuals like you and I. They are discovering the power of Internet: they see how a website like Quikr offers a great opportunity to connect with thousands of buyers and get more customers at no cost, and a range of categories that no newspaper can ever match. And all this, simply sitting in their office or home! These benefits are driving newspaper classifieds users to the Internet in both big and small towns. Q. Internet penetration is still in its infancy in India. So how would the local advertising model work for an online service provider? A. We have already talked about how Internet is increasingly becoming a default choice for people with various needs across different categories. This clearly indicates that local advertising works for Quikr users, irrespective of the size of their location. The reason is that buyers love it! Moreover, they also find local products and services that they never find in a newspaper, as placing an ad in a newspaper is more expensive. Since we offer a broader range, we are getting more buyers, which in turn equates into more sellers. We are also increasing our reach by using the mobile phone medium - we send alerts through SMS if anyone replies to the ads and also send leads of potential buyers to sellers. This has expanded our market beyond the world of Internet users into the enormous mobile phone user base in the country. Q. Indian media houses have been very quick in adopting technologies in the online space. How would an online service provider compete with a newspaper entering the Internet classified space? A. We do keep a close watch on all potential competition, including newspapers. Indian media and newspapers have had the advantage of seeing early on the impact online classifieds have had on newspapers globally. All major newspapers in India have over the last decade made efforts to go online in some vertical classifieds categories. But very few of them have seen success. Vertical classifieds like Jobs and Matrimonials are still led by online classifieds players in India. In the horizontal classifieds, Quikr is the leading website. In fact this question is better posed to the already established media companies, as truly digital classifieds players like us will always have an advantage over someone whose main business is in print and for whom the Internet is more of an afterthought. |
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Indian newspapers have so far escaped the trend of online services eating into the classified advertising business. However, Quikr India, an online classified service provider with backing from global behemoths like eBay’s promoters, is all set to storm the classifieds market with services being rolled out in 18 cities across the country. In an exclusive interview with Shiv Kumar, Quikr India CEO Pranay Chulet tells how the trend is bound to change with a growing change in the mindset of the Indian consumer and media consumption habits. Excerpts:
