New Delhi, April 12
Industrial growth numbers for February were insipid at 4.1 per cent, raising chances of interest rate cuts by the RBI next week, but the authenticity of the data is now in question with the sharp revision of the January numbers.

Finance Minister Pranab Mukherjee indicated the government’s thinking by calling the numbers “disappointing” and said these will have a bearing on monetary policy announcement scheduled for next week. He said the government along with the RBI would take the required steps to revive economic activity.

The numbers were weak due to manufacturing and consumer goods and Mukherjee attributed this to rising interest rates and poor domestic demand aggravated by global uncertainties which hit industrial investments.

Crisil Research said industrial growth at 4.1% in February was on expected lines. However, the surprise element was the sharp downward revision of January 2012 IIP growth numbers to 1.1% from 6.8% reported earlier. CSO communication states that the revision was necessitated due to incorrect reporting by the directorate of sugar, which wrongly reported the sugar production to be 134.08 lakh tonnes instead of 58.09 lakh tonnes in January 2012.

Industrial growth averaging 3.5% during the April-February period of FY12 although makes a case for a repo rate cut in the RBI’s monetary policy on April 17, Crisil is of the view that inflation as also inflationary pressures are yet not within the RbI’s comfort zone.

According to Sudhakar Shanbhag, chief investment officer, Kotak Mahindra Old Mutual Life Insurance, the rate and degree of revision of previous month’s data is increasingly making reliance on the data a challenge. He said it is increasingly getting clear that focus has to shift to growth and hence the market expectation of an RBI rate cut has increased post this data release and bond yields and equity markets are reflecting the expectation.

FICCI said in a statement that the sharp downward revision of January IIP growth to 1.1% from 6.8% has created avoidable confusion over the data and is also a cause for concern. CII said it is time that the RBI focuses on getting growth back by sharply reducing interest rates.

New Delhi, April 12
The country’s largest car-maker, Maruti Suzuki India, on Thursday made an entry into unchartered territory with the launch of its multiutility vehicle Ertiga, priced from Rs 5.89 lakh to Rs 8.45 lakh.

Calling it a “life utility vehicle”, the company with the Ertiga’s global launch has not only completed its portfolio of passenger cars but would be looking at giving tough competition to auto majors like Toyota, which has the Innova, Chevrolet with the Tavera and home-grown Tata and Mahindra & Mahindra, which have various options in this segment, having priced the Ertiga very attractively.

The firm has invested about Rs 400 crore to develop the MPV, which would be the first vehicle to be powered by the brand new K-series 1.4 litre petrol VVT and 1.3 litre DDiS superturbo VGT diesel engines. While the three petrol variants have been priced from Rs 5.89 lakh to Rs 7.31 lakh, the 3 diesel variants carry price tags ranging between Rs 7.30 lakh and Rs 8.45 lakh. In recent years MPVs have emerged as the fastest growing subsegment among utility vehicles.

New Delhi, April 12
The cabinet deferred on Thursday a much-awaited decision to let foreign airlines buy stake in local carriers and may take up the issue next week, Civil Aviation Minister Ajit Singh said, disappointing investors and sending share prices of carriers down.

Under current rules, foreign airlines are barred from buying stakes in domestic carriers, although foreign investors are allowed to hold a cumulative 49 per cent.

Indian airlines, led by embattled Kingfisher Airlines , have long lobbied for the move. However, a brutal Indian market where five of the six big players lose money, as well as tough conditions globally due to high fuel prices and economic weakness, means interest is expected to be muted.

Indian carriers are laden with $20 billion in debt and probably lost $2.5 billion in the fiscal year that ended in March, according to Centre for Asia Pacific Aviation, a consultancy.

National carrier Air India accounts for the bulk of the industry's losses. The cabinet Wednesday approved a financial restructuring plan for Air India, which includes equity infusion by the government and restructuring of $4 bn in debt.

India's reputation among global investors has taken a knock over the past year as the government has been beset by crises, including a botched attempt to allow foreign supermarkets into the country and a long-running stand-off with South Korea's POSCO over a $12 billion steel plant.

Allowing foreign airlines to buy stake in domestic carriers is expected to benefit Kingfisher Airlines, which is burdened by a debt of over Rs. 7,000 crore. While Kingfisher has been strongly pitching for permission to allow foreign airlines to invest in domestic carriers, other major carriers like Jet Airways and the only profit-making airline, IndiGo are opposed to it. — Reuters, PTI

New Delhi, April 12
The Company Law Board has allowed Unitech Ltd's plea to refer a dispute over its telecoms joint venture with Norway's Telenor for arbitration in Singapore, potentially delaying a resolution.

Telenor said in a statement it was "surprised" by the board's order and would challenge it in a higher court, adding its intention remained to establish a new venture in India.

Telenor is seeking to scrap the joint venture and migrate its business to a new company to seek fresh operating licences, after the JV's telecoms permits were ordered to be revoked by the Supreme Court, which in February declared all permits awarded in a scandal-tainted 2008 sale "illegal and quashed".

Unitech has opposed Telenor's move and has said the Norwegian company cannot unilaterally scrap the joint venture agreement and that it had veto right to block any asset transfer. Both sides had separately approached the Company Law Board over the dispute. Unitech last month appealed to the quasi-judiciary body to refer the case for international arbitration in Singapore, citing provisions in their shareholder agreement.

Unitech said in a separate statement on Thursday it was "pleased" by the board's order and that their shareholders' agreement "clearly defines" a dispute resolution mechanism.

Telenor owns 67.25 percent of the joint venture, which operates under the Uninor brand name, with Unitech holding the remainder. With 41 million customers at end-February, the JV ranks eighth in a market of 15 mobile carriers.

Shares in Unitech, a real estate company, rose as much as 6.3% after the news. At 0828 GMT, the shares were trading 3.4% up at Rs 29.30. — Reuters

New Delhi, April 12
World trade growth will slow for a second year to 3.7 percent in 2012 but "severe" downside risks could drive it further below the 20-year average of 5.4 percent, the World Trade Organization forecast on Thursday.

Trade growth slowed to 5.0 percent in 2011 from 13.8 percent in 2010, and is provisionally expected to rebound to 5.6 percent in 2013. The figure for 2011 was worse than a provisional forecast of 5.8 percent issued in September.

"We’re not yet out of the woods," WTO director general Pascal Lamy said. "The WTO has so far deterred economic nationalism, but the sluggish pace of recovery raises concerns that a steady trickle of restrictive trade measures could gradually undermine the benefits of trade openness."

The main downside threats to trade growth this year were from a deep recession in the eurozone, a worsening sovereign debt crisis and commodity prices, as well as geopolitical risks.

Lamy said this year's trade outlook was largely dependent on the seemingly diverging fortunes of the European and US economies, the world's top two trading powers. "Which of these two developments will exert greater influence on global demand this year will in large part determine the course of trade in 2012," Lamy told a news conference.

The 2012 forecast, based on projected global economic growth of 2.1%, includes a slump in exports of goods from developed countries to 2.0% from 4.7% in 2011.

Exports from developing countries, a grouping that includes Russia, are expected to improve slightly to 5.6% from 5.4% in 2011.

Although developing country export growth slowed in 2011, it was faster than expected, partly because of a robust 7.2 % increase in exports from the United States and a 5.0% increase from the European Union.

The US trade figures were buoyed by net exports of fuels, excluding crude oil, partly reflecting coal shipments to Japan after it was hit by an earthquake and tsunami in March, a catastrophe that contributed to Japanese exports falling 0.5 percent during the year. — Reuters

Chandigarh, April 12
Poor recovery of loans is responsible for the poor fiscal health of at least 22 primary agriculture development banks (PADB) in Punjab. With the recovery rate in these banks being less than 50 per cent, these banks, mostly located in the Malwa belt, are running in huge losses.

But the good news is that the district central cooperative banks in the state are surprisingly doing well. These banks, entrusted with the task of extending crop loans, have a relatively higher recovery rate of 80%. These facts emerged in the recent onsite and offsite monitoring conducted by the National Bank for Agriculture & Rural Development.

Giving details about the fiscal health of banks, Krishan Jindal, chief general manager, NABARD, Punjab regional office, told The Tribune 13 of the PADBs that are not doing well are located in Ferozepur division. “These banks extend investment credit, and are running in losses. Since the PADBs only led money and are not mobilizing resources by way of accepting deposits, their fiscal health is dependent on timely repayment of loans,” he said. He, however, added the situation was not very alarming in Punjab, where the credit culture is much better than in many other states.

Jindal added Punjab is one of the rare states where district central cooperative banks are doing well. It is for this reason NABARD has recommended that three more DCCBs should be given a banking licence by the RBI. The total business of these banks is about Rs 1,200 crore.