The Tribune, Chandigarh, India

IMF pegs India’s growth at 8 pc

Rising inflation, fiscal deficit areas of concern

Washington, March 17
The IMF expects the Indian economy to grow by 8 per cent during 2010-11, though high inflation and rising fiscal deficit will continue to remain the areas of concern.

"With India's long-term prospects remaining strong and private sector balance-sheets sound, we expect growth to be back at potential in 2010-11 even if advance economies grow below trend," the IMF said in its latest paper issued after consultation with the Indian authorities.

The fund, however, forecasts a moderately lower growth rate for the 2011-12 fiscal at 7.7 per cent.

For the current fiscal, the fund said the economy would grow by 6.7 per cent, much lower than the 7.2 per cent projected by the Central Statistical Organisation.

The major areas of concern, according to the IMF, are the rising inflation and high fiscal deficit. "On the downside, the main risks are elevated inflation and financing constraints...arising from the fiscal deficit, which could stall the recovery," the paper said.

Wholesale price inflation was at 9.89 per cent in February, much higher than the Reserve Bank's March-end projection of 8.5 per cent.

Besides, the IMF added, other risks included asset price bubble and the possibility of a sudden stoppage of foreign capital inflows caused by turmoil in global financial markets.

In the Economic Survey, Finance Minister Pranab Mukherjee projected the GDP growth of up to 8.75 per cent next fiscal, driven mainly by robust domestic demand and recovery in the global economy.

The multilateral agency said the medium-term growth prospects of the country remain bright and the economy was well-balanced and mainly reliant on domestic drivers, adding that an acceleration of reforms and capital inflows could spur investment.

Prompt fiscal and monetary easing, combined with the fiscal stimulus already in the pipeline and the return of risk appetite in financial markets, had brought growth close to pre-crisis levels. — PTI

Economists see rate hike in April

Mumbai, March 17
With the economy heading for a double-digit inflation due to the spiralling food prices and costlier fuels and manufactured articles, the Reserve Bank is expected to hike its key policy rates next month, say leading economists.

The apex bank is likely to increase the repo and reverse repo rates at which it lends and borrows by 0.25-0.5 per cent at the forthcoming annual monetary policy next month, they said.

"The high inflation surely calls for a rate hike, even if it is food-driven. The RBI is likely to act by hiking the repo and reverse repo rates by at least 0.25 per cent at its April policy," Crisil principal economist Dharmakriti Joshi said.

Bank of Baroda chief economist Rupa Rege Nitsure said the headline inflation was likely to touch 11 per cent in March and stay in double-digits till May-June--until the Rabi crops reach the markets.

"My feeling is that both the repo and reverse repo rates are likely to be increased by 0.5 per cent as the current high inflation warrants such an action," Nitsure of Bank of Baroda said.

Indusind Bank's global markets group head Moses Harding, however, has a different view on the matter. According to Harding, the current inflation did not call for any “panic” reaction from the central bank as food prices were likely to subside in the months ahead resulting in a decline in the inflation numbers. — PTI

Nissan opens plant in TN
N Ravikumar
Tribune News Service

Chennai, March 17
Nissan became the seventh global automobile major to open its manufacturing unit in Tamil Nadu, with the inauguration of the Nissan India Car plant, a joint venture with French major Renaults, at Oragadam near the city.

Chief Minister M Karunanidhi, who inaugurated the unit set up at a cost of Rs 4,500 crore and providing employment for 40,000 persons, said Tamil Nadu had become the home of seven automobile majors out of the top 20 global majors.

Pointing out that Daimler, Ford, BMW, Hyundai and Mitsubishi had already opened their units near Chennai, he said the city was emerging as Asia’s automobile capital.

"Establishment of these automobile projects in Chennai bears ample testimony to the favourable investment climate prevailing in Tamil Nadu. At present, Tamil Nadu, with its investor-friendly policies, has been a fore-runner in attracting large number of domestic and foreign investors", he said.

The Tamil Nadu government had signed 25 MoUs and issued orders for another 12 industries since May, 2006. Though Chennai had become the largest automobile hub of India, the city was lacking the vehicle testing facilities, he said and added that the Union government would soon set up “National Automotive Testing Research and Development Infrastructure Project” near the city at a cost of about Rs 450 crore.

Echoing the Chief Minister's views, Yoshiro Mori, former Prime Minister of Japan, who attended the function, said Tamil Nadu was a major attractive destination for investors and appealed to the state government to provide more opportunities for Japanese manufacturers. Mori, who is leading a delegation of the Japan-India Association, said he was in Chennai to facilitate more investments from Japan.

Hang Seng accessible to investors

New Delhi, March 17
Indian investors can now trade in an international index as the Hang Seng Benchmark Exchange Traded Fund (Hang Seng BeES) will be available on the National Stock Exchange from tomorrow.

Benchmark Mutual Fund's Hang Seng Benchmark Exchange Traded Scheme (Hang Seng BeES) will be admitted to dealings on the exchange from March 18, the NSE has said in a statement.

Hang Seng Benchmark Exchange Traded Scheme is an open-ended scheme tracking the Hang Seng index, which comprises 42 companies, including HSBC Holdings, China Mobile, Bank of China, Cathay Pacific Airways and China Construction Bank Corporation.

Through the Hang Seng BeES, investors can now trade in Hong Kong's Hang Seng Index.

The Hang Seng index represents around 60 per cent Hong Kong's total share market valuation. An exchange-traded scheme tracks an index.

In the past one year the Hang Seng index has gained about 50 per cent, far lower than the over 90 per cent gain posted by the key index Sensex. — PTI

Godrej on the prowl abroad

Adi Godrej

New Delhi, March 17
Unsatiated by a series of acquisitions in the recent past, Godrej chairman Adi Godrej today said his firm was looking for further buyouts in the developing countries to expand operations.

"We are looking for further acquisition. We will announce these as and when (it happens)," Godrej told reporters here.

Last week, Godrej Consumer Products (GCPL) bought one of the leading African personal care brands, Tura, from Nigeria's Tura group for an undisclosed sum.

The firm said the buyout would serve as a platform for it to enter Nigeria and other West African markets. It was the third acquisition by GCPL in the past two years, after Rapidol and Kinky in South Africa.

Asked about the size and financing of future buyouts, Godrej said: "Financing is not a problem because GCPL is a cash-rich company." He said the company would continue to acquire in the hair care, household insecticides, toilet and soaps categories.

Besides, Godrej said the firm would continue to expand its portfolio in the domestic market. “Acquisitions abroad would not come in the way of our expansion in India," he said.

GCPL had recently got the board’s approval for raising Rs 3,000 crore to fund its expansion plans. It has been scouting for acquisitions in the last few years and said it could spend up to Rs 1,000 crore for the purpose. — PTI

Bonus, stock split on EIL radar
Board meets on March 23

New Delhi, March 17
Engineers India Ltd (EIL) today said its board would meet on March 23 to consider the proposal for bonus issue and splitting of shares.

The board will "consider the proposal for issue of bonus shares," EIL said in a filing to the Bombay Stock Exchange.

Besides, the board would also consider the proposal of splitting of shares of the company, it added.

The bonus issue and stock-split is ahead of EIL's proposed FPO through which the government will divest its 10 per cent stake in the company.

Earlier, EIL had announced that it would issue a 1,000 per cent (Rs 100 per share) special dividend. It would issue two bonus shares for every one held.

EIL provides engineering and related technical services for petroleum refineries, oil and gas pipelines, petrochemical industries and chemical process plants.

EIL, which had a cash reserves of Rs 1,320 crore as on March 31, 2009, has till date given Rs 600 crore in dividends to the government on a Rs 25 lakh share capital that formed the company in 1965. — PTI

Videocon unveils 9 mobile sets

New Delhi, March 17
Videocon today launched nine mobile handsets and said it had planned to sell a million devices per month in the country this year.

Videocon, which started its handset business in October, has been so far selling 2.5-3 lakh units a month. With the nine launches, its offering has risen to a total of 21 handsets from 12 at present.

"This year, we plan to sell one million units every month. With the launches, our objective is to be a one-stop shop for the customer and cater to each and every class and age with a price range of Rs 1,300 to 19,000," Rahul Goel, COO of Videocon mobile phones division told PTI.

India is among the fastest growing cellular phone markets in the world, with an existing user base of about 500 million subscribers. It is adding 12 million users every month in the GSM space and about 3 million in the CDMA space.

At present, Nokia, Samsung, LG, Sony Ericsson together with Indian players like Micromax have over 90 per cent market share.

The new range of devices, priced between Rs 1,400 and Rs 7,000, included devices with triple SIM CDMA, Qwerty keypad, optical track pad and touch screen, he said. — PTI

Tata nominated for Cambridge honour

London, March 17
Ratan Tata has been nominated for the honorary degree of Doctor of Law by the prestigious University of Cambridge here. Tata, 72, is among eight distinguished individuals, who have been nominated by the university to Regent House, which is the official governing body of the university.

The Regent House consists of most academic and academic-related staff of the university's colleges and departments, and has over 3000 members.

Tata is among eight distinguished individuals to be nominated and who are expected to be honoured at a congregation presided over by its Chancellor Prince Philip, the Duke of Edinburgh, on June 21, a statement from varsity said today. — PTI

Dow Jones, Airtel ink news pact

Mumbai, March 17
Dow Jones today said it had entered into a pact with Bharti Airtel to distribute financial news to the clients of the domestic telco.

Under the pact, the US-based media firm will provide financial news from The Wall Street Journal and Dow Jones News wires to Airtel customers, DJ India's MD Mitya New told reporters here.

"Our partnership with Bharti Airtel significantly enhances our ability to reach mobile users across India," New said.

The product named “The Wall Street Journal India Mobile application” is free of charge for customers. However, those who choose to access premium financial market news and data there will be a monthly charge of Rs 99.

Both companies declined to divulge the revenue sharing pattern or the period of contract.

Till January-end, Bharti Airtel had a customer-base of 121.7 million users in India. — PTI

US Fed leaves key rate unchanged

Washington, March 17
The US Federal Reserve has retained the benchmark interest rate at near-zero level and struck an upbeat note saying that the American economy has continued to strengthen in recent months.

The Federal Reserve, after its policy meeting on Tuesday, decided to leave key rate unchanged in the range of 0-0.25 per cent.

In a statement, the central bank said "Economic conditions, including low rates of resource utilisation, subdued inflation trends and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period".

The apex bank has been maintaining the rate at 0-0.25 per cent since December, 2008, to bolster the national economy which was badly hit by the financial meltdown. — PTI