The Tribune, Chandigarh, India

Inflation hits 7.31 pc in Dec

New Delhi, January 14
Inflation measured by wholesale rates vaulted to more than a year’s high 7.31 per cent in December on higher food prices, mainly sugar, pulses and potato, adding to the government’s worries about price rise.

The December numbers beat RBI’s forecast that inflation would reach 6.5 per cent-level only by this fiscal-end and research firm Dun and Bradstreet’s 6.31 per cent. Inflation was last above this level in November 2008 (8 per cent). In November 2009, inflation was 4.78 per cent. The intensity of food inflation could be gauged from the fact that prices of processed food items rose at the rate of 26.40 per cent in December, and non-processed food items turned expensive by 19.17 per cent.

However, respite came for the government by way of lower food inflation, measured for the week ending January 2. It eased a bit to 17.28 per cent from 18.22 per cent a week ago. Struggling to put the lid on inflation, the government yesterday announced freeing white sugar imports from duty till December, eased raw sugar processing norms and announced plans to 2-3 million tonnes foodgrain in the open market.

Sugar prices rose 53.98 per cent in December. Sugar in the retail market is selling at nearly Rs 50 a kg. Potato prices too have more than doubled, while pulses was costlier by over 40 per cent from year-ago level. Overall vegetable and cereal prices were up nearly 40 and 13 per cent.

Economists predict continually high food inflation could spread to other items as well. There could be some spike in prices of commodities like steel and cement, even though for December, both these prices had declined. “I expect RBI to hike cash reserve ratio by 50 basis points. The central bank could also raise repo and reverse repo rates by 25 basis points each,” Crisil principal economist DK Joshi said.

The government is yet to take a decision on freeing petrol prices, which could lead to rise in petrol prices by around Rs 3 a litre. For December, petrol prices declined by over 2 per cent.

“Week-on-week it (food inflation) is down, which is a very good (sign). There are a whole lot of measures that are going through that have been decided on,” Chief Economic Advisor Kaushik Basu said. Earlier, Planning Commission Deputy Chairman Montek Singh Ahluwalia had also said food inflation would ease next month as fear of negative impact of poor monsoon on farm produce has eased.

A host of decisions, including selling of 2-3 million tonnes of wheat and rice in the open market over the next two months and asking state-owned trading firms to intensify import of pulses, was taken at a meeting of the Cabinet Committee on Prices chaired by Prime Minister yesterday. — PTI

‘ Will dip to 7 pc by March-end’

New Delhi: Amid projection that inflation could touch the double-digit mark, the Prime Minister’s advisory panel on Thursday said it could fall to 7 per cent by fiscal-end.Noting that food prices are likely to ease in the coming months, PMEAC chairman C Rangarajan told PTI that the RBI should take some money control measures to tame the rising prices.

“Going forward, there could be some decline in food prices. The inflation is likely to be around 7 per cent by March-end,” he said. He added that food supply also needs to be augmented. His optimism is in contrast to alarming projections given by analysts. Global financial services firm Citi said, “If the uptrend seen in fuel and metals continues, inflation could enter the double-digit range in the coming months, possibly resulting in sterner monetary action”. — PTI

Govt to sell 10 pc stake in EIL

New Delhi, January 14
The government today approved selling its 10 per cent stake in Engineers India through FPO route and issuing two bonus shares for every share of the company before the launch of the public offer.

EIL, an engineering consultant mostly to oil and gas companies like Indian Oil and Oil and Natural Gas Corp, is the 7th PSU to go public in the second term of the UPA government.

The Cabinet Committee on Economic Affairs (CCEA) approved splitting every EIL share of Rs 10 into two shares of Rs 5 each and paying a special dividend of 1,000 per cent (Rs 100 per share), an official spokesperson said. The government holds 90.40 per cent in EIL, which posted a profit of Rs 345 crore on a turnover of Rs 1,532 crore in 2008-09 fiscal. Earlier in the day, shares of EIL shares on the BSE rose to an all-time high of Rs 1,784 on anticipation of divestment. — PTI

Stimulus exit policies must be well-timed: ADB

Manila/ New Delhi, January 14
The Asian Development Bank today said exit strategies for fiscal stimulus packages in Asia should be carefully timed as economies in the region are leading the global recovery and set to clock accelerated growth.

“While we believe developing Asia is leading the global economic recovery, it is still too early to relax vigorous efforts to restore demand and stabilise financial systems. In particular, exit strategies for fiscal stimulus must be carefully timed,” ADB president Haruhiko Kuroda said in a statement.

A study, commissioned by ADB and titled “Policy Changes for Asia after the Global Recession: Impact of the Global Economy and Policy Implications”, found Asian economies are poised for accelerated growth as the global economic crisis recedes.

Kuroda said the region is now showing signs of a V-shaped recovery, with a 6.6 per cent growth outlook for 2010.

Noting that recovery continues to be fragile, the bank said carefully calibrated policy adjustments and collective action would be needed to sustain growth and cushion the region against future shocks.

“Mobile capital flows, which can cause volatility in exchange rates, and domestic liquidity also continue to pose a risk to emerging economies in the region,” it added.

The agency noted that poverty reduction would not be sustained at the pace of pre-crisis years unless sources of growth are rebalanced toward more domestic and regional demand, and made more inclusive.

Another study commissioned by the agency said Asia should continue to strengthen cooperation in the financial sector as a bulwark against future crises in developed economies.

“Policy makers should avoid using up scarce bureaucratic resources and limited political goodwill on huge initiatives which do not yield tangible benefits at the ground level but should instead focus on smaller scale efforts,” it noted.

“Smaller economies should adopt policies which attract low cost manufacturers, FDI and tourism,” it added. — PTI

Videocon bets big on mobile handset market
Tribune News Service & PTI

New Delhi, January 14
Leading conglomerate Videocon Group today made a foray into the mobile phones market with the unveiling of a wide range of trendy handsets. It said it aimed at becoming one of the top three mobile handset manufacturers in the country this year.

The company has introduced 12 models under the 'Videocon' brand priced within the range Rs 1,650 to Rs 18,500. These come with features like FM radio, single or dual SIM, MP3 music, camera, multimedia and the latest touch phones and touch windows.

Chairman-cum-MD VN Dhoot said, “Videocon is very excited to launch its mobile phones. Mobile phones are today an integral part of more than five hundred million people. Mobile phone market has been one of the fastest growing markets. Videocon is the largest and most trusted consumer durable company in the country today and our entry in this business is natural”.

After the soft launch of mobile sets in the south and west last year, the company is now aggressively planning to tap the northern and eastern markets within the next two months.

“Our intent is to be among the top three in this space in 2010,” Videocon Mobile Phones Division chief operating business Rahul Goel said.

Videocon, which recently started DTH service, expects its handset business to make significant contribution to its overall turnover in the near future.

“We expect that the mobile segment will give a double digit contribution to our overall business,” Goel said.

When, asked if Videocon would be looking at bringing out 3G phones in the future, he said the company would be exploring opportunities for it. — PTI

BUDGET WISHLIST
Lower taxes, core infra status for airlines

New Delhi, January 14
Cash-strapped domestic airlines have asked the government to declare the civil aviation sector as ‘core infrastructure’ and rationalise taxes and duties on jet fuel, equipment, services and other items.

In their pre-Budget demands presented to Finance Minister Pranab Mukherjee, the airlines have strongly favoured declaring civil aviation as core infrastructure so that the sector could get tax and other benefits, airline sources said.

In a note presented by their umbrella body - the Federation of Indian Airlines - the domestic carriers are understood to have reiterated their demand for reduction of taxes on aviation turbine fuel (ATF) by designating it as ‘declared good’ to attract a uniform four per cent tax rate across the country.

The FIA had called for grounding all flights for a day on August 18 last year on the this demand, as well as lowering of high airport charges. The call was soon withdrawn.

The airline industry has been suffering massive losses in the past three years, with Kingfisher accounting for over Rs 1,600 crore, Jet Airways and its subsidiaries over 1,000 crore and Air India about Rs 5,000 crore. The no-frill carrier. IndiGo. and full-business airline Paramount have been the only ones posting some profits.

The ATF cost accounts for almost 40 per cent of an airline’s total operating cost. Suggestions have been made that oil companies be asked to reduce the base price of jet fuel sold to the airlines.

The airlines also wanted the government to take steps to reduce the impact of their foreign exchange outgo on account of purchasing aircraft spares, which is a major recurring expense, the sources said.

When the industry was badly hit last year due to the steep hike in global petroleum prices to $150 a barrel, the government had helped the industry by cutting five per cent customs duty and asking oil companies to extend credit line to the airlines for six months. — PTI

Exporters seek major chunk of MAI funds

New Delhi, January 14
Commerce Ministry is pitching for a major chunk of the remaining Rs 280-crore Plan expenditure in the 2010-11 Budget to promote exports under a scheme that seeks to create new markets for Indian products.

Under the 11th Five-Year Plan (2007-12), Rs 550 crore was provided for promoting exports through Market Access Initiative (MAI) scheme.

The Budget estimates for 2009-10 for the scheme were Rs 124 crore and about Rs 95 crore were allocated during the first two years of the Plan period (2007-12).

“We are demanding more assistance, at least Rs 150-180 crore, for exporters under MAI for the next fiscal,” an official said.

The Finance Ministry has started inter-ministerial consultations for the next Union Budget.

Though India’s exports have shown recovery since November 2009, Commerce and Industry Anand Sharma had said some of the sectors still required support.

The exports were showing growth due to demand recovery in some of the economies and also because of low base effect.

Under the scheme, project-based assistance is provided to Export Promotion Councils, Trade Promotion Organizations, Apex Chambers of Commerce like CII, Assocham and Ficci. — PTI

DS Group in expansion mode
Ruchika M. Khanna
Tribune News Service

Chandigarh, January 14
Noida-based Dharampal Satyapal (DS) Group is fast diversifying from its core premium tobacco business to hospitality and infrastructure, besides expanding its food and beverage business across the country.

They are planning to invest Rs 2,000 crore in the next few years in its hospitality and infrastructure business.

The group, which ventured into hospitality business a decade ago with a hotel in Nainital, is coming up with two hotels in Kolkata (a five-star and a budget hotel), five star hotels in Guwahati and Jaipur, besides a boutique hotel in Jim Corbett National Park.

The group is also looking at setting up hotels in Udaipur and Ranthambore, and has already acquired land for the purpose. Bhavna Sood, vice-president, DS Group, said the company had earmarked Rs 600 crore for the hotels at Kolkata, Guwahati and Jaipur.

“We are planning to expand our hospitality business in a phased manner. Only when the properties at Kolkata, Guwahati, Jaipur and Jim Corbett are ready, will we go ahead with the remaining hotels,” she said.

She said the group had earmarked around Rs 1,500 crore for its infrastructure business. “We will be setting up a steel plant at Agartala with a capacity of 1.50 tonnes per annum, at an estimated cost of Rs 250 crore. A cement plant, with a capacity of one million tonnes per annum, will also come up at Jaintia Hills in Meghalaya. We have also signed an MoU with the Government of Meghalaya for setting up a 240 MW thermal power plant in Meghalaya,” she said.

Besides this, the company is also looking at expanding its food and beverage business. Satish Rustogi, business head, food division, said they would be introducing a new range of table-top sprinklers to suit the palettes of the globe-trotting Indians. “We have already tested these new sprinklers like Italian seasoning, rock salt, and garlic salt in certain markets, and will be soon launching these commercially,” he said.

OVL gets nod to invest in Nigeria

New Delhi, January 14
The government today allowed ONGC Videsh to spend $359 million (Rs 1,651 crore) for oil exploration in two deep-sea blocks in Nigeria over the next five years.

OVL, the overseas investment arm of state-run Oil and Natural Gas Corp (ONGC), will spend $195 million in Block OPL 279 and $164 million in block OPL 285 in the oil-rich African nation, said an official statement, issued after a meeting of the Cabinet Committee on Economic Affairs.

The company had won the two blocks through ONGC-Mittal Energy Ltd (OMEL), a joint venture with steel czar Lakhsmi Mittal.

OMEL, in which OVL holds 49.98 per cent stake, Mittal Investments 48.02 per cent and SBI Caps 2 per cent, won the two Nigerian blocks in the 2006 round in return for downstream commitments of $6 billion either in power, rail or refining.

“The entire requirement of OVL’s share of investment in the project would be met by OVL from its own resources and/or by borrowings from domestic/international market, without any budgetary support from the government,” it added. — PTI

Tata Comm to offer Wi-Fi Internet
Tribune News Service

New Delhi, January 14
Tata Communications Internet Services (TCIS) is all set to usher in Wi-Fi revolution in the country by tying up with Australia-based Wi-Fi zone solutions provider Tomizone to offer low-cost Internet to subscribers in India.

The partnership would allow Tata Indicom broadband customers to set up Wi-Fi hotspots at their premises instantly. The company said its users would also be able to utilise their unused bandwidth by offering it to others, for which they will get credit on their account. “We will usher in a Wi-Fi revolution that can create thousands of hotspots and enable lakhs of users to access Internet on Wi-Fi technology in a more ubiquitous manner than today,” said COO Prateek Pashine.