New Delhi, January 11
The budget for fiscal 2012-13 should send a credible signal on fiscal consolidation by reforming the petroleum subsidy, Planning Commission deputy chairman Montek Singh Ahluwalia said in an interview on Wednesday. The government is expected to present a budget in mid-March for the fiscal year that begins on April 1, amid slowing economic growth and mounting concerns about public finances.

New Delhi had budgeted a fiscal deficit of 4.6 per cent of GDP for this fiscal year.

However, a slippage on that target is near-certain as a result of sluggish revenue receipts and high spending.

"It’s quite clear it’ll be very significantly worse. I can't quantify," he said. "The markets have to know the government isn’t unconcerned about the fiscal deficit, and I’m sure the finance minister will be aware that the credibility of our macro stance next year depends upon both the extent and the quality of fiscal correction”.

Subsidies that India doles out on fuel, food and fertilizer to help the poor and marginal farmers have been the bane of its public finances. The original estimate for the fuel subsidy bill for this fiscal year was Rs 236 billion (US $4.6 billion), but it is already Rs 300 billion more than that figure.

Fertilizer subsidies are set to top 900 billion rupees, against about 500 billion rupees originally budgeted.

The rising subsidy bill has compelled New Delhi to seek parliament's approval for spending 978 billion rupees extra this year.

In a country where any talk of tinkering with subsidies raises a political storm, the government feels it has little option but to pay the increased bills.

Ahluwalia conceded reforming the petroleum subsidy would not be easy, but said the government needed to move forward on this after elections in five Indian states in the next few months.

"The credibility on subsidies doesn’t, in my view, depend on what happens on food subsidy because that’s a limited capped subsidy. The danger about the petroleum subsidy is that it’s an uncapped subsidy," Ahluwalia said. "If you were to say, should the government give a credible signal? It’s a very tough signal to give. But I agree it should give a credible signal." — Reuters

London, January 11
The worst is yet to come in the euro zone's debt crisis but the currency union will survive 2012 intact, according to a Reuters poll of economists who say France will probably lose its top-notch credit rating.

While just nine out of the poll's 64 economists said the bloc had turned the corner on a sovereign debt crisis, only 10 said the euro zone would not survive the year in its current form. The rest were reasonably confident it would. A similarly firm majority of those surveyed in the last few days said France would lose its coveted 'AAA' rating in the next three months, while Belgium, Italy and Spain will suffer further cuts to their ratings.

Athens, which is racing to secure funding from its eurozone partners and the International Monetary Fund to avoid a sovereign default in March, was cited as the most pressing risk to the eurozone's economic stability.

"All eyes are still on Greece. The situation looks extraordinarily bleak. The household sector is getting hammered ... the banking sector is getting pummeled to pieces," said James Nixon at Societe Generale. "But if someone keeps writing the cheques Greece will survive."

The poll indicates at least some improvement in sentiment compared with late last year. A November poll of leading academics and former policymakers, for instance, said the euro zone was not likely to emerge from the crisis intact. However, many of the economists in the latest poll work for the large European banks that stand to lose the most under the gloomier scenarios for the single currency bloc — perhaps one factor behind the relatively more hopeful outlook.

Late last year, the European Central Bank pumped around half a trillion euros of cheap three-year money into the banking system to ease tensions in money markets. Four-fifths of respondents said this had relieved pressure on the bank to start printing money, given that some of this excess cash has found its way into the government securities the ECB is reluctant to purchase.

ECB policymaker Christian Noyer noted last week that European sovereign debt sales had been going much better since the central bank started to extend long-term loans to banks.

The European Central Bank has bought government bonds from some member states, notably Italy and Spain, to lessen painfully high borrowing costs in its regular programme. But it has "sterilised" these purchases by draining equal amounts of liquidity from the banking system. Otherwise, the process would be quantitative easing (QE), purchasing bonds with freshly printed money. The US Federal Reserve and the Bank of England have been conducting QE for several years in vast sums. — Reuters

Chandigarh, January 11
With an aim to expand its presence in the small and medium enterprises, Google India has now launched a unique initiative to help these businesses get an online presence by offering them a free website with a personalized domain and free hosting for one year.

The ever growing internet usage has now converted it from a niche segment to a mainstream medium for helping businesses grow. With over 100 million internet users in India, Google is offering to help SMEs build an online presence and explore new avenues for growth. As part of this, the company is exploring the opportunity with small businesses in Punjab.

Google India country marketing head Nikhil Rungta told The Tribune as part of this endeavour Google was also helping firms that partner with it in running their online campaign for a year.

“Since most Net users are young people (80% are aged between 15-34, we’re targeting the small and medium businesses. In Punjab we’re looking at companies engaged in travel and sporting goods, besides the manufacturing businesses. But our main concentration here is to engage with those dealing in education,” he said.

Google expects to rope in a major chunk of small and medium businesses in Punjab through this programme “India Get Your Business Online”.

“Most businessmen here realize having a website is important because customers are looking online for local business information. On Google, the local business searches have grown at an astounding 140 per cent year-on-year. This is the reason why we’re investing major resources in this campaign to help SMEs in Punjab, as it’ll help in closing the information gap by taking away the barriers for small businesses to get online,” he added.

Rungta said online advertising in India had become quite big, and was growing by leaps and bounds. The advertising market in India is worth US $5 billion, of which TV and print advertising had the major share of $4.5 billion.

“Now online advertising in India has become as big as radio advertising. In the coming years we’ll see online advertising taking on other forms of advertising. Thus it’s important for small and medium businesses to explore this opportunity,” he added.

Mumbai, January 11
Indian lenders may have to downgrade their loans to loss-making state-run Air India after they deferred a long-pending debt restructuring proposal, seeking a revision and making it tougher for the carrier to raise funds, three sources said.

Banks are now expecting the federal government to bail out the carrier, which has overdues of more than 60 days with some banks, two of the sources said.

Banks consider an account as non-performing once the borrower fails to pay interest dues for 90 days.

"Now, the problem is to find funding for Air India. We are happy to look at short-term debt but it has to be viable," said one of the lenders to the carrier.

The national carrier is already burdened with debt worth $4 billion. Banks are reluctant to accept dividend-paying equity in the airline as part of loan restructuring, because the airline has been reporting losses since 2007, the sources said.

The lenders were also concerned that provisions worth nearly $2 billion may hit their profitability if the loan was restructured.

The restructuring proposal was prepared by SBI Capital Markets Ltd, the investment banking arm of the country's biggest lender State Bank of India. "The concern is that Air India is not at a stage to service the equity," said another of the sources.

In March last year, a consortium of 13 banks led by State Bank of India picked up a 23.4% stake in Kingfisher Airlines, another loss-making Indian carrier, at Rs 64.48 a share.

Shares of Kingfisher Airlines have fallen a third since and are currently trading around Rs 22. Kingfisher has been struggling to raise funds and service its loans.

Earlier this month, state-run SBI said its loan to Kingfisher Airlines had become nonperforming. — Reuters

New Delhi, January 11
As the 11th edition of the Auto Expo wound up here on Wednesday, among the most admired vehicles on display were the sports utility vehicles and multipurpose vehicles, the latter being the segment where India’s largest car maker Maruti Suzuki India also made an entry.

The year forward could be one of intense competition in the SUV and MPV segment with the manufacturers jostling with each other to grab a piece of the pie.

A host of SUVs are expected to be seen on the Indian roads in this year including the Audi Q3, Range Rover Evoque apart from the affordable small utility vehicles like the Renault Duster, Mahindra XUV 500, Mini Xylo, Safari Storm, Ford EcoSport, Force Motors One, Volkswagen Touareg and Toyota FrontRunner.

Not one to be left behind is the famed GM Chevrolet which has launched its upgraded Captiva. The stylish SUV has a superior 2.2-litre diesel unit which generates 184 bhp, about 20 bhp higher than the current unit.

Maruti Suzuki’s first MPV, Ertiga is already making waves with its stylish looks and, with favourable pricing, it is expected to be the most awaited MPV on the roads this year. Toyota’s Innova gets a facelift with innovative features to enhance the finest appeal. The new Innova will be devoid of the almond lights and duly replaced by rectangular shaped headlights.

Also getting a facelift is Chevrolet’s Tavera Neo 3 with a new powerful TCDi engine apart from the range of other exciting features.