The Tribune, Chandigarh, India

India’s growth may outpace China’s in 2013: E&Y

New Delhi, October 24
Bolstered by industrialization, India is projected to grow at a faster clip than neighbouring China with a 9 per cent economic expansion in 2013, says a report by global consultancy firm Ernst & Young. It cautioned, however, that India needs to tackle rising inflation and said the country's growth this year would be 7.2 per cent, much lower than 8.2 per cent recorded last year.

India's growth rate would rise to 8 per cent next year, according to the report released on Monday.

"The forecast pegs India's real GDP growth rate to be the highest among all the Rapid Growth Markets (RGMs) starting in calendar year 2013, when the economy is expected to growth 9.5 per cent, followed by China at 9 per cent," it said.

In 2014, India is expected to see an expansion of 9 per cent while Chinese would see a growth of 8.6 per cent.

The Rapid Growth Markets Forecast focuses on 25 nations — including India, China, Brazil and Russia — that display strong growth potential and are, or could be, strategically important for business.

India and China's would be able to better withstand a likely slowdown mainly on account of large size of their domestic markets as well as from beneficial effects of lower oil and commodity prices, E&Y said.

It pointed out that even though the overall outlook for India is positive, the country would need to address rising inflation.

Headline inflation, which has been hovering above the 9 per cent mark since December 2010, stood at 9.72 per cent in September.

"... Provided India's inflation does start to fall back by the end of this year and the US and EU economies do not slip back into recession, the soft patch for Indian growth should be relatively shortlived," the report noted.

Ernst & Young said that once inflation is in check and interest rates are no longer rising, consumers would be more willing to spend. This would support a general improvement in business environment, resulting in steady acceleration in growth next year.

"India enjoys an advantage in its high savings and investment rates, currently a third of gross domestic product; relatively low GDP per capita on purchasing power parity giving significant potential for growth and continuing industrialization and urbanisation," the report said.

E&Y India's Partner & India Markets Leader Farokh Balsara noted that India's consumption-led economy continues to make the country a highly attractive investment destination in the short to medium term. — PTI

Govt set to allow foreign airlines to invest in domestic carriers

New Delhi, October 24
The Indian government is likely to approve a plan to allow foreign airlines to buy stakes in domestic carriers, industry secretary RP Singh told Reuters on Monday.

"It is likely to happen," Singh told Reuters over the phone, when asked if a proposal to allow foreign airlines to invest in Indian counterparts would be approved by the central government.

India allows foreign investment of up to 49 percent in Indian carriers, but foreign airlines are not allowed to invest directly or indirectly in domestic carriers.

The proposal will come as a lifeline to struggling Indian carriers saddled with high debt and mounting losses in a crowded and competitive Indian aviation market.

Kingfisher Airlines, whose auditor had recently said that the airline needs fresh funds to remain viable, rose nearly 6 percent. Jet Airways rose 3.6 percent, while SpiceJet advanced 4 percent.

The department of industrial policy & promotion and the civil aviation ministry differ on the quantum of stake that foreign airlines be allowed to pick up, government sources told Reuters on Monday.

While the industry ministry wants foreign airlines to be allowed to take 26 percent stake, the civil aviation ministry wants it capped at 24 percent, the sources said.

Foreign direct investment in Indian airline companies is a sensitive issue and sources say the home affairs ministry had in the past withheld clearance because of security reasons even though it was discussed informally at a meeting of the cabinet committee on security.

Earlier on Monday, media reports said the cabinet would shortly consider the foreign direct investment proposal and that the industry ministry has circulated a draft cabinet note for inter-ministerial consultations after a nod from the civil aviation ministry.

Earlier this month, Civil Aviation Minister Vayalar Ravi had said his ministry had not rejected the foreign direct investment proposal sent by the department of industrial policy & promotion and the plan was under consideration.

Most Indian carriers, with the exception of IndiGo are loss-making and full service carriers such as Air India, Jet and Kingfisher have high debt on their books.

Efforts by Kingfisher Airlines and Jet Airways to raise equity from the capital markets have been unsuccessful so far. — Reuters

Aviation FDI may soon take wing

Industry secy says FDI proposal likely to take off

Foreign airlines currently cannot invest in local carriers

Proposal to come as a lifeline for struggling Indian carriers

EU leaders agree on strategy
to deal with Eurozone debt

Berlin, October 24
European Union leaders have reached an agreement on the broad outline of a comprehensive strategy to resolve the Eurozone debt crisis, including a substantial writedown of Greece’s debts.

European Commission President Jose Manuel Barroso (L) and European Council President Herman Van Rompuy at a press conference at the EU headquarters in Brussels on Sunday. Europe closed in on a broad agreement to tackle the euro crisis — AFP

The leaders of the 27 EU nations attended a crisis summit in Brussels over the financial troubles in Eurozone nations, and held a separate meeting later of the 17 nations that use the single currency — the euro.

They made significant progress on some of the most contentious issues — waiving of Greek debts, recapitalization of banks which will suffer losses on their Greek bonds and an "effective implementation" of the Eurozone crisis fund, the European Financial Stability Facility (EFSF),German Chancellor Angela Merkel said.

However, some details still remain to be worked out and a deal on a comprehensive package of measures to avert the escalation of crisis could be concluded when the EU leaders convene again in three days, she said.

"The technical work is now in full swing" and France and Germany have made important contributions towards that, she told a joint press conference with French President Nicolas Sarkozy.

She also denied that there were any differences between the two countries, especially on the EFSF, and said their decision to convene a second summit on Wednesday was taken because of the "technical complexity" of the issues involved.

Sarkozy expressed similar views and emphasised that without a close cooperation between Berlin and Paris nothing will move forward in Europe.— PTI

Hope for euro deal spurs world stocks

World stocks put in solid gains on Monday as investors bet on a positive outcome to the Eurozone crisis talks and took comfort from signs that China's economy may not be in as much danger as feared. The euro was flat to higher and the dollar was weaker against a basket of major currencies. Investors appeared to be giving Eurozone leaders the benefit of the doubt in their attempts to reach a comprehensive agreement on fixing the Eurozone debt crisis.

Some progress was made in Brussels over the weekend, with agreements near on bank recapitalization and on how to leverage the European Union's EFSF rescue fund to try to stop bond market contagion. — Reuters

Mumbai tops metros in Net usage, small towns not far behind
Girja Shankar Kaura/TNS

New Delhi, October 24
Mumbai has emerged as the city with the highest number of internet users in the country in a survey carried out to check the internet penetration in India. The survey, conducted by IMRB and the Internet & Mobile Association of India (IAMAI), also brings to light the fact that there are a large number of internet users in small towns having a population of less than 200,000.

And there is not much good news for the tech-city Bangalore. Despite having most the IT firms based out of the city, Bangalore comes in at a low sixth position in the number of registered and actual internet users.

According to the survey, Mumbai with 8.1 million claimed and 6.2 million active internet users tops internet using city followed by Delhi and NCR which have 6.2 million registered users with over 5 million active internet users.

IAMAI is an association representing the entire gamut of digital businesses in India. It was established in 2004 by the leading online publishers and in the last seven years has come to effectively address the challenges facing the digital and online industry.

According to the survey Kolkata has three million registered users followed by Chennai at 2.9 million and then come Hyderabad and Bangalore with 2.2 million registered internet users.

However, Bangalore with 1.7 million actual internet users falls behind Hyderabad which takes the fifth place on account of higher actual internet users, which stands just a notch higher than its South Indian sister city at 1.8 million. There were 28 million active internet users in 30 cities as of March 2011.

The survey also found that towns with less than 200,000 population collectively returned a much higher number of internet users that the top four metros put together.

Commenting on the survey IAMAI president Subho Ray said: “Two things are absolutely clear from the survey. First, the internet density is very poor in top metros in spite of awareness, education and infrastructure. Delhi and NCR for example has only 5 million active users with a population base of 20 million. Secondly, the Net is now clearly and firmly a small town phenomenon.”

The findings of the IAMAI survey also put to rest the myth that the internet is only for rich people.

Reliance Comm unit challenges 2G charges

New Delhi, October 24
Reliance Telecom Ltd (RTL) on Monday moved the Delhi High Court for quashing of charges framed against it by a CBI court in 2G spectrum case, saying there is no material to prosecute it.

Challenging the trial court's order charging it with criminal conspiracy, cheating and forgery, the company, a unit of Reliance Communications Ltd (RCL), part of the Anil Dhirubhai Ambani Group (ADAG), pleaded that it did not indulge in any wrongdoing and charges framed against it were "wrong".

"No incriminating material has been indicated in the charge sheet or by the prosecution in its submission on the charges," the petition filed by Reliance Telecom said.

"The charges framed against the petitioner (RTL) had no basis in law. In fact, there is no act or omission attributable to the petitioner that has been indicated in the charges that justify the continuation of criminal proceedings against the petitioner," it said.

"The charges framed as against the accused indicates that there are charges for multiple conspiracies and it is unclear as to how and when the multiple conspiracies took place and also as to how they form a cohesive single conspiracy," it contended.

The trial court in its order had earlier dismissed RTL’s contention that Swan Telecom was not its "associate", saying it was, directly or indirectly, holding 100 per cent shares in Swan Telecom.

"Its (Swan Telecom) source of fund was RCL/RTL (Reliance Communications Ltd/ Reliance Telecom Ltd). Directly or indirectly it was holding 100 per cent shares of Swan Telecom as on the date of application. — PTI

Infosys to set up branch co in Dalian, China
Tribune News Service

Bangalore, October 24
Infosys Technologies (China) Ltd announced Monday it had signed an MoU with the Dalian High-Tech Zone (DHTZ) government to establish a branch company of Infosys Technologies (China) in DHTZ.

According to an Infosys press release, the branch firm will focus on software development and outsourcing business in the region. As part of this partnership, Infosys (China) and DHTZ will jointly work towards fostering development and innovation in the DHTZ and establishing Dalian High-Tech Park as an innovative world-class software development and outsourcing base.

The pact marks a milestone in Infosys’ cooperation efforts with a provincial government in China, and will encourage collaboration in various fields.

‘RBI rate hike not to impact inflation’

New Delhi, October 24
Ahead of the Reserve Bank of India's midyear credit policy review on Tuesday, a senior Planning Commission official said on Monday the interest rate hike would not have any bearing on either inflation or economic growth.

"On inflation, it (rate hike by RBI) will not have much impact in the short-term. Rate hikes are aimed a brining down inflationary pressures in the long-term," Planning Commission principal adviser Pronab Sen said when asked about impact of possible hike in key rates by the central bank on Tuesday.

As regards the impact of interest rate hike on growth, he said, it will have 'no impact' on economic growth which is likely to be in excess of 8 per cent in the current fiscal.

The RBI in its midyear review of the monetary policy is expected to raise its key interest rate by 25 basis point to contain inflation which is hovering near the double-digit mark. The central bank had raised key policy rates by 12 times since March 2010 to check inflation.

On growth prospects for 2011-12, Sen said, "I am hopeful of 8 per cent plus economic growth this fiscal." — PTI

Rupee rises on dollar inflows, euro gains

Mumbai, October 24
The Indian rupee recovered on Monday from the 30-month low hit in the previous session, as a rally in domestic equities fuelled hopes for foreign fund inflows, although the euro's weakness against the dollar toppled the local unit off the day's high.

The partially convertible rupee closed at 49.8250/8350 to a dollar, after touching a high of 49.80 earlier. The unit had closed at 50.02/03 on Friday, when it had dipped to 50.32, a level not seen since April 28, 2009.

"Equities pared gains intraday and the spike in euro was also merely stop losses getting hit in short positions above 1.3920 region. That's why euro started coming down," said Pramod Patil, a senior foreign exchange dealer at State Bank of Mauritius.

The euro fell versus the dollar on Monday. — Reuters

Bank debt sales to accelerate next year: KPMG

New Delhi, October 24
Banks across the world, including in India, are expected to accelerate their debt selloffs next year for disposal of nonperforming loans and to raise the capital, global consultancy major KPMG, one of the Big Four auditors, has said.

According to a global study of debt sales in 22 countries including India, conducted by KPMG, "investors can expect to see greatly increased levels of activity in the debt sales markets over the next two to three years as banks seek to jettison non-performing or noncore debt portfolios to reduce their exposure to risk and raise much needed capital."

In India, banks typically consider selling bad loans that have been nonperforming for two years or more, primarily to generate liquidity. — Agencies

ITC Q2 net jumps 21% to Rs 1,514 cr

Mumbai, October 24
Diversified business firm ITC Ltd on Monday posted 21.46% rise in net profit at Rs 1,514.31 crore in the second quarter ended September 30. The company, which sells personal care brands like Fiama Di Wills, Vivel and Superia had a net profit of Rs 1,246.74 crore in the quarter ended September 30, 2010, ITC said in a filing to the Bombay Stock Exchange.

During the July-September quarter this fiscal, the firm's net sales rose by 17.52% to Rs 5,974.18 crore from Rs 5,083.48 crore posted in the same period last fiscal.

While the firm's FMCG segment, which includes its cigarette business, had a 19.49% jump in its net revenue to Rs 4,308.80 crore, its hotel business revenue rose marginally to Rs 211.14 crore. — PTI