New Delhi, September 14
The government today came out with a new wholesale price index series that measured inflation in August at 8.5 per cent, although under the old system the monthly fall is only marginal at 9.5 per cent.

As per the new series, inflation plunged by 1.3 percentage points from July level, even as the government claimed that it was the lowest in seven months.

Stating that the current rate is still high, Finance Minister Pranab Mukherjee indicated today that the RBI could take some action in its mid-quarter review of monetary policy on September 16.

"Inflationary pressure is still there because food prices have gone up because of the erratic monsoon and certain other things... The RBI is constantly watching the situation. We are in touch with the RBI. The RBI and the Ministry of Finance will take appropriate measures at the appropriate time." As per the new index, which seeks to capture the price situation in a better way, inflation declined on account of falling prices of food items like vegetables, cereals and pulses.

Releasing the new series, Commerce and Industry Minister Anand Sharma said, "We hope that it (inflation) will come down. There are various steps taken by the government. Food inflation has been a cause of concern." The new inflation series with 2004-05 as the base year has 241 more items than the old series with 1993-94 as the base year, which only reflected the price rise in 435 articles. — PTI

Washington, September 14
Even as India's economic growth continues, the poor continue to stay poor with rampant corruption siphoning out over $125 billion in illicit capital flight between 2000 and 2008, according to a Washington think tank.

Noting that "much of the funds flowing out are generated at home within India and then sent illegally abroad," an upcoming report from Global Financial Integrity (GFI) says, "So the growth of corruption and India's underground economy contributes significantly to illicit financial flows from the country."

"Corruption is rampant in India as it is in almost all developing countries. Both corrupt political and corporate officers manage to siphon off funds - intended to aid the people of India - off to political and private sector elite," noted the research arm of the Centre for International Policy (CIP).

"Recent efforts in India to challenge this corrupt affront on humanity have been met with severe violence," Junior GFI Economist Karly Curcio said in a blog post on the report on illicit financial flows (IFF) from India and explaining linkages between IFFs, poverty, corruption, and crime.

"As India develops economically and builds better infrastructure, one would think that all Indian citizens would see an increased standard of living and that the income inequality levels would fall," says the blog post following a news report about recent violent crimes in India against whistleblowers.

"However, the gini coefficient, which measures income inequality, has actually increased over the time period measured, 2000-2005, from 0.32 to 0.37 on a scale of 0 to 1, with 1 being the highest income inequality," Curcio wrote.

Noting that "in India - as in other currently developing countries - that as the economy grows, so do illicit flows, she wrote: "This positive correlation exhibits the increased incentives to conduct illicit flows, mostly because more money is flowing within the system to steal away and constant greed is tapping into that pool."

India ranks 84 out of 180 countries in Transparency International's 2009 Corruptions Perceptions Index ranking.

"As corruption continues to plague both the country and its ability to develop free and fair institutions to monitor and charge corrupt officials, the majority of India's economic growth will never make it to the people of India who desperately need it the most," Curcio warns.

India's legislative efforts to protect whistleblowers and those who work to fight corruption is a step in the right direction, however, more must be done, she says calling for global efforts to make it harder to move illicit funds around the world. — IANS

Chandigarh, September 14
In a major relief to petroleum dealers of Punjab, the state VAT Tribunal has now upheld that the petroleum dealers are entitled to input tax credit on the purchase value of the fuel, even if some quantity of fuel is lost due to evaporation and/or handling.

The order comes in the wake of an appeal by a Moga-based petroleum dealer, who had pleaded against the order of Commissioner, Excise and Taxation, Punjab. The Excise and Taxation department had been refusing any input tax credit to the dealers on the fuel lost during handling or due of evaporation.

The petroleum dealers have been up in arms for the past one year, as they were being forced to pay VAT on the fuel that is lost in handling. They had claimed that the move was unfair as they were forced to pay VAT on fuel that was not even being sold by them. They rued that they were already suffering losses as they were already paying the cost of this fuel (lost in evaporation before reaching their retail outlets) to the oil marketing companies.

On an average, 0.6 per cent of a kilolitre of petrol is lost due to evaporation while being transferred from the tankers to storage tanks at retail outlets and due of evaporation from the storage tanks. In case of diesel, 0.2 per cent slippage is there per kilolitre. Dealers claimed that they were losing 72 litres of petrol (from one oil tanker of 12,000 litres) and 24 litres of diesel on every oil tanker of 12,000 litres.

Gurgaon, September 14
It’s now official. Gurgaon, much hyped as the millennium city, is poor in terms of local connectivity, power, social infrastructure, security and hygiene.

This has been stated in a recent report of the Nasscom Regional Council (NRC), Gurgaon, which compares Gurgaon to cities like New Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Bangalore and Noida from a business perspective.

In the report, Noida and Gurgaon have been rated at the lowest among these cities in terms of social infrastructure and living environment. Gurgaon is comparable to Noida in terms of the government (state) support, while Mumbai tops the list in these parameters.

The report, titled “Gurgaon: The Promise of a Global Business Destination”, has been submitted to various stakeholders in the local government bodies, including the district administration, municipal corporation, HUDA and police etc.

As per the report, Delhi and Gurgaon are the worst in terms of power, while Chennai and Kolkata have been rated excellent. Again, Gurgaon is rated as “poor” in terms of local connectivity, while Chennai and Hyderabad fare well under this parameter.

Though there is much hype about the hospitality sector in the “millennium city”, it manages just about an average under hotels compared to leaders like Delhi and Chennai.

Highlighting the major challenges, the report brings to light issues like increase in congestion in the past 2-3 years, water shortage, increase in criminal activities and high cost of operations, among various other things.

However, there is a silver lining. Gurgaon fairs well in areas like national/ international connectivity, space and recreational facilities, office space and cost-effectiveness.

Ludhiana, September 14
Due to rising cost of manufacturing, exports are dwindling. The prices of raw material and capital are rising and labour cost is also on the increase while business transaction cost is also escalating.

Major labour-intensive industries of Punjab like cycle and cycle parts, hosiery and garments are showing poor performance on exports. Exports of cycle and cycle parts have reduced from Rs 1,044.18 crore in 2007-2008 to 993.28 crore and that of readymade garments and hosiery from Rs 2,189.77 crore to 1,977.14 crore in the same period.

Raw materials are being sold on the cartelied basis. Steel is a prominent example for this. World over steel prices are subdued due to its soft demand. Steel capacity in many countries is being pushed up to the exten of only 80 per cent. In our cases, steel production is not able to meet the rising demand. Our steel producing companies have deliberately not shown interest to increase production capacities. Instead, they have invested in steel plants in other countries.

In the year 2009-2010, shortage of steel was to the extent of 1.5 million tonnes which has now increased to 2.8 million tonnes. Demand for hot rolled coils increased by 21 per cent last year against increase in production of only 4.5 per cent. As a result, import of hot rolled coil increased by 80 per cent. However, SME sector is not able to import and hence, they have to contend with ever increasing steel prices.

P.D. Sharma, president, Apex Chamber of Commerce and Industry, said although the Commerce Ministry has allowed subvention of 2 per cent to exporters but it is too significant a concession. In general, the cost of capital is increasing heavily, mainly due to the policies of the RBI to contain inflation. Banks, too, are functioning in a cartelised manner. Apart from rising interest rates, banks levy heavy processing charges. Similarly, cost of power is taking a toll on the health of industry apart from acute shortage and frequent shutdowns. The Punjab government has levied heavy taxes on power like 13 per cent electricity duty and 10 paise per unit as octroi.

In view of poor performance of exports and recessionary trends world over, the government should direct steel producers to take back the rise in steel prices of Rs 1,000 a tonne. Everywhere in the world steel prices are weakening.

These notional concessions worth Rs 1,050 crore are not going to make any dent when Rs 44,000 crore spent on export promotion schemes have failed to promote exports, added Sharma.

New Delhi, September 14
The country's largest liquor maker United Spirits today said it will acquire a controlling stake in Pioneer Distilleries for Rs 73.95 crore.

The company has entered into a share purchase agreement with the existing promoters of Pioneer Distilleries to buy 73.22 lakh shares, representing a 54.69 per cent stake in the company, United Spirits Limited (USL) said in a filing to the Bombay Stock Exchange (BSE).

Pioneer Distilleries Limited (PDL) has a 160 kilo litres per day spirit facility situated on 188 acres of land in Maharashtra.

"The company has been drawing up its supply side strategy and exploring ways and means of shoring up its primary distillation capacity in order to control over its upstream supplies of extra neutral alcohol," the company said. — PTI