The Tribune, Chandigarh, India

	No headroom for proactive fiscal policy: FM Pins hopes on declining global oil prices and normal monsoon for growth revival New Delhi, June 4 Amid the all-round clamour for reforms like doing away with fuel subsidies, Finance Minister Pranab Mukherjee today said there was no "headroom for running a proactive fiscal policy". "...the second round of global uncertainty and the slowdown has come rather quickly on the heels of the previous one, with practically no headroom for running a proactive fiscal policy," Mukherjee said at the annual conference of CBEC. His comments come amid demand from various quarters that the government imitate bold reforms to boost the sagging economy. The demand got a further clout after the economic growth in 2011-12 recorded the nine-year low growth of 6.5 per cent. The Finance Minister, however, pinned hopes on declining global crude oil prices and normal monsoon in improving growth. "A normal south west monsoon has been predicted for 2012-13 and there has been a rapid decline in international oil prices in recent weeks... All these factors should help in the recovery of domestic growth momentum," he said. The economy has been going through a rough patch with high fiscal deficit and current account deficit pulling down rupee to all-time record low of 56.52 against dollar and expansion in manufacturing and infrastructure being laggards. The government's fiscal deficit during 2011-12 worked out to be 5.7 per cent of the GDP. The fiscal deficit, the difference between the government's total receipts and expenditure, stood at Rs 5,09,731 crore in 2011-12, as per the provisional data released by CAG recently. The Centre is aiming to bring the fiscal deficit down to 5.1 per cent in the current fiscal. Food, fertiliser and fuel subsidies account for a substantial part to the government revenue. The government this fiscal has budgeted for Rs 75,000 crore of food subsidy Rs 61,000 crore of fertiliser subsidy and Rs 43,000 crore of fuel subsidy. The government is targeting to cut the subsidy bill to below 2 per cent of GDP this fiscal and 1.75 per cent in the subsequent years. Highlighting "positives" of Indian economy, Mukherjee said the interest rate cycle has been reversed by the RBI and mining sector growth has turned around. Further, there has been progress in fuel linkage for power projects and improvement in investment growth rate, he emphasised. There were no "major adverse results" on corporate performance in the last quarter of 2011-12, he added. The Indian economy registered healthy growth of 8.4 per cent in 2009-10 and 2010-11, but renewed global uncertainty, emanating mostly from Eurozone area affected domestic business sentiment in 2011-12. A tight monetary policy directed at taming inflationary pressures in the economy also came in the way of consolidating economic recovery. — PTI Cut taxes on petrol, CMs told New Delhi: Amid his pitch for a 25 per cent cut in taxes levied on petrol by states, Pranab Mukherjee today said he had written to Chief Ministers of states to reduce taxes and put in place a mechanism to contain it if petroleum prices continue to rise. Announcing at the CWC meet that he had written to Chief Ministers, Mukherjee said he had sought their cooperation in making their "sacrifice" of tax revenue to help bring down prices of petroleum products and said "nothing was possible" without their agreement.
	Economic crisis grave: FICCI Not all that bad: Assocham New Delhi, June 4 FICCI today demanded that the government should take bold decisions like allowing FDI in multi-brand retail to overcome from "grave economic crisis", but rival chamber Assocham held that India was placed better than global economy and asked shunning negativity. "India is in the midst of a grave economic crisis. The combination of low growth, high inflation, high fiscal deficit and the highest ever trade account deficit has raised a lot of concern," Ficci President R V Kanoria told reporters here. He asked all the political parties to strengthen the hands of the policy makers and help government in taking bold steps, such as implementation of Goods and Services Tax (GST), FDI in multi-brand retail and aviation, and decontrol of prices of diesel and other oil products. Contrary to FICCI's opinion, Assocham President Rajkumar Dhoot said: "The entire world economy is facing the headwinds and Indian economy is certainly not off limits". Dhoot said India is placed better as the world economy is growing by just 2 per cent, while the country is still growing at above 6 per cent. Assocham said under such a precarious global situation, it would not be fair to judge Indian economy solely and blaming it all on the so-called policy paralysis as there is a sense of pessimism across the globe affecting demand. "Thus, we have to face the situation in a bold manner and not get swayed by the negativity around us," Dhoot said. Assocham noted that there is no doubt that Indian economy has been facing sort of a bumpy ride over the past few months, but felt that creating a negative impression is unfair to the inherent strength that economy has shown in the past. Hit by global and domestic problems, India's economic growth rate slowed to a nine-year low in 2011-12 at 6.5 per cent. The growth is pegged at 7.6 per cent (plus, minus 0.25 per cent) this fiscal. In its wish-list, FICCI suggested that timely implementation of Goods and Services Tax (GST) would be a major landmark reform that could alter the dynamics of Indian industry and exports. "It would add 2 per cent in our GDP. Tax administration and tax collection will also go up," Kanoria said. Stating that inflation is largely a supply-side problem, he sought easing of monetary policy by cutting interest rates. — PTI Need of Hour Bring down interest rates by 2 percentage points Cut CRR by 1 percentage point Decontrol prices of diesel and other oil products Impose higher duty on imported diesel cars Shun negativity World economy is growing by 2 per cent, while the country is still growing at above 6 per cent Creating a negative impression is unfair to the inherent strength that economy has shown in the past
	RBI official hints at rates cut Interest rate policy on June 18 Shiv Kumar Tribune News Service Mumbai, June 4 The Reserve Bank of India has dropped fresh hints at the possibility of a cut in interest rates. Deputy Governor Subir Gokarn told reporters here, the second time since last Friday, that cooling global prices of oil and moderating inflation provided enough room for cuts in the interest rates. ''The growth is somewhat lower than expected and that may have positive, moderating impact on core inflation," Gokarn said at a function here. He added that the lower-than-expected economic growth would have some bearing on the central bank's projection of GDP growth for the current fiscal year ending March, 2013. The RBI official admitted that the rupee price of crude has shown a slight decline despite the Indian currency declining in value against the US dollar, thereby reducing the pressure of inflation. The RBI will announce its mid-quarter interest rate policy on June 18. Gokarn's statements helped improve sentiments in the stock markets which opened deep in the red this morning.
	Hero MotoCorp to invest Rs 2,575 cr Tribune News Service New Delhi, June 4 Sitting on cash reserves of over Rs 4,000 crore, Hero MotoCorp today said it would invest Rs 2,575 crore in expanding capacity which would include setting up two new manufacturing plants in Gujarat and Rajasthan and an R&D centre also in Rajasthan by 2013-14. On a day when Hero MotoCorp announced the merger of its investment arm of its parent company into the auto company, managing director and CEO Pawan Munjal of the company said, "We have huge investment plans in various parts of the organisation. We will be setting up our fourth plant at Neemrana in Rajasthan". Of the total Rs 2,575 crore to be invested, Rs 1,500 crore would go into setting up of two plants, Rs 400 crore into the state-of-the-art R&D centre, Rs 500 crore in modernising the existing three plants and Rs 175 crore in other projects. Munjal said the company would invest Rs 400 crore in the Neemrana plant, which will have an installed capacity of 7.5 lakh units per annum. This plant will be commissioned in the first quarter of FY 2014. The fifth plant would be set up in Gujarat with an investment of Rs 1,100 crore. This would have a capacity of 1.2 million units, he said, adding that the plant would be commissioned by the second quarter of 2013-14. Munjal added that once the fourth and fifth plants are commissioned, the company’s total manufacturing capacity will go by over nine million units per year from the current about seven million units. The company also has big plans to increase its exports and the next quarter would also start exporting to Central America and Africa. It has set itself a target of increasing its exports by 25 per cent from the present numbers. The company will also be setting up an R&D centre at Kukas, just outside Jaipur in Rajasthan with an investment of Rs 400 crore at a 250-acre land. Hinting at company looking to bringing in higher capacity bikes into the country, Munjal said the R&D centre would have longest test track of 2.1 kms, which is also needed for testing of the higher capacity bikes. He said while exports would be all under the Hero MotoCorp brand, by the end of the next quarter all bikes being sold in the country would also have the domestic company’s branding. Meanwhile, the company also announced that the Hero Investments Private Ltd (HIPL), the investment arm of the Hero group, would merge into Hero MotoCorp Ltd (HMCL). Bain Capital and the Government of Singapore Investment Corp (GIC), which helped fund the company's buyout of its former partner Honda last year, will take direct stakes in the company after the merger. After the merger, which is subject to approval from the Delhi High Court and shareholders of the companies involved, Bain and GIC will own 8.58 per cent and 3.71 per cent in the automaker, the company said in a statement.
	PHD Chamber inks MoU with Pak chamber Tribune News Service Shimla, June 4 The PHD Chamber signed a memorandum of understanding (MoU) with the Rawalpindi Chamber of Commerce and Industry, Pakistan, here today, to promote two-way trade between the two countries. President, PHD Chamber, Sandip Somany, said it was a move in line with the efforts of the two governments to strengthen the relationship by promoting bi-lateral trade. Business communities in both countries were making serious efforts along with the governments to develop good relationship and take it forward. The two-way trade and people-to-people contact would benefit both the countries in many ways. The MoU was a step towards enhancing cooperation among industrialists, businessmen and the entrepreneur community of India and Pakistan. Regional Director of the PHD Chamber Dalip Sharma said the main objective of signing this MoU was to attract investments and trade opportunities on both sides of the border, besides developing mutual trust. It would go a long way in promoting and marketing joint ventures. An exhibition coinciding the five-day tourism mega mart conclave at Indira Gandhi Sports Complex had not only artisans and craftsmen from the local industry exhibiting their products, but also around 40 exhibitors from Pakistan. The main items from across the border included displaying a wide array of products like garments, footwear, handicrafts, dry fruits, gems and stones, onyx marble artefacts, kitchenware, furniture and decoration pieces.
	Aircel slashes prices of 3G services New Delhi, June 4 Aircel has joined the group of telecom operators who have slashed the prices of the 3G services. It has gone ahead at offering the services at 2G prices. With this, Aircel joined the band of Airtel, Vodafone, Idea Cellular and MTNL. The product will be available in Aircel's 13 telecom circles. This data card will work on 3G and 2G networks seamlessly with no usage restriction on any devices. Aircel is trying to repeat its earlier success with the Pocket Internet. The new product will be called 3G Aircel Pocket Internet Smart. "The 3G Aircel Pocket Internet Smart is an industry first with an aim to offering a world of possibilities through the power of Internet at an extremely affordable price and thus empower the youth of the country," said Anupam Vasudev, head Marketing, Aircel. — TNS
	Re ends 11 paise lower Mumbai, June 4 In volatile trade, the rupee today touched a one-week high of 55.20 but late dollar demand from importers and foreign funds pulled it 11 paise down to close at 55.65 against the US currency, cutting short a two-day winning string. At the Forex market, rupee resumed at 55.50 from last Friday's close of 55.54 and improved further to a high of 55.20 in morning deals on continued dollar selling. However, the currency later fell back to a low of 55.67 on heavy dollar demand from importers and foreign funds, before concluding at 55.65. FIIs sold stocks worth Rs 637.14 crore today, putting pressure on the domestic currency that had bounced back after hitting a record low of 56.52 last Thursday. — PTI
	Excise duty on diesel cars may go up New Delhi, June 4 The Finance Ministry is examining a proposal to hike excise duty on diesel cars, a move which may discourage consumption of subsidised fuel by personal vehicle owners, a senior government official said today. "The proposal is there and that is being examined by Finance Minister Pranab Mukherjee. Consultations are being held and appropriated decision will be taken by the government in due course," Central Board of Excise and Customs (CBEC) Chairman S K Goel told reporters here. Excise duty on petrol cars with engine capacity under 1,200 cc and diesel cars with engine capacity under 1,500 cc is 12 pc. The duty on such cars with length exceeding four metres is 24 pc. — PTI
	Future Group sells arm for Rs 560 cr Mumbai, June 4 Debt-ridden Future Group today said it was selling a 53.67 per cent stake in Future Capital Holdings to US-based private equity firm Warburg Pincus to raise an estimated Rs 560 crore. As per the share purchase agreement, Warburg Pincus will inject another Rs 100 crore into Future Capital Holdings and also make an open offer under the takeover code of Sebi. Kishore Biyani-led Future Group, whose core retail business formats include Big Bazaar, Food Bazaar, e-zone and Pantaloon, has a debt of over Rs 5,000 crore. Pantaloon Retail holds 55 per cent stake in Future Capital. Earlier this year, Pantaloon Retail had formed a high powered 'review committee' with the mandate to consider various options for realignment and divestments. — PTI