The Tribune, Chandigarh, India

	Economy heading for a full-blown crisis: Experts Sanjeev Sharma/TNS New Delhi, June 13 The Indian economy now seems to be in a full-blown crisis as all leading indicators are bringing in more bad news with every passing day. The last couple of months have seen shockers of macro data hitting multi-year lows, clearly showing how things are getting worse for the economy. The most recent disappointment was the industrial growth numbers for April at 0.16 per cent after a decline of more than 3 per cent in March. The last quarterly GDP data of a mere 5.3 per cent was at a 9-year-low, last seen in 2003. The rupee has hit lifetime lows of more than 56 to a dollar before recovering only recently due to lack of foreign inflows of capital and higher cost of imports like crude oil and gold fuelling a whopping current account deficit of $180 billion last fiscal. Inflation, which was a headline grabber till recently, has moderated but still remains above the comfort zone at above 7 per cent. Analysts are warning of stagflation, which is lower growth but high inflation, which tends to drag for a while. Global rating agency Standard & Poor’s (S&P) warned that India could become the first country in the emerging economic bloc called BRIC (Brazil, Russia, India, China) coined by a Goldman Sachs analyst, to lose its investment grade rating. The report included controversial and stinging remarks against the political leadership and their reduced will to lead economic reforms. This was a follow-up report to the downgrade warning for India issued by S&P in April. Says public policy expert Ramesh Adige, “GDP growth over some quarters is slowly creeping down, indicating a gradual slowdown in the economy while NPAs of banks are showing worrying sign of growing. The IIP is also exhibiting negative growth. There is a need for stable policies.” The Indian economy was cruising along at almost 8 per cent growth rate till the 2008 global financial crisis, also referred to as the Lehman after the iconic Wall Street firm, Lehman Brothers, which went bust. Reliance Industries Limited (RIL) chairman Mukesh Ambani had described the 2008 crisis as a “reset in the global economy” which may have changed the way business is done. India had weathered the 2008 crisis reasonably well with the help of a fiscal stimulus though the developed economies were still wobbly. The time towards the end of 2010 saw the beginning of a rash of scandals and scams breaking out, which started hurting the business sentiment and that has only got worse. Though the buck for handling the economy stops with the government and it is drawing flak for living in denial and letting things come to a boil, it has been citing coalition compulsions as a major roadblock. It may be naïve to say that the situation is easy to handle. The 2008 crisis has been followed by the European financial crisis, the only difference being that while earlier, banks were going bust, now, countries like Greece are virtually going bust. Such crises tend to have a ripple effect across the globe and especially the integrated financial markets, leading to a meltdown. Business sentiment has gone for a toss and fresh investments are not happening. The so-called policy paralaysis in the government has hurt new projects. Even as the government is not being able to carry through new reforms though in some areas it has tried and failed, the biggest problem is that day-to-day functioning of the government in giving clearances and routine procedures has come to a halt. Assorted anti-corruption agitations, RTI, CAG reports and Supreme Court rulings and most of all, events related to the telecom scam, have spooked bureaucrats as well as business houses. The flip side of this is that analysts say this is a clean-up taking place in the system which will cut out business based on unethical practices. “The recent clean-up actions by the executive, judiciary and regulators in business activity may lead to slower growth in the short-term, but will eradicate certain undesirable business practices, lead to a clean-up of the system and also put under pressure business models which thrived on policy capture”, according to a research report by Kotak Institutional Equities. Industry and markets are clamouring for bold economic decisions to salvage the situation. A few times, like on FDI in retail, railway budget, pension bill and raising fuel prices, the government has been trying but not really succeeding due to political opposition and ally pressure. The Prime Minister has recently tried to sort out the bottlenecks in large infrastructure projects. The next big event to watch will be the RBI monetary policy next week in which a rate cut is expected as the plummeting growth seems to have created enough headroom for the central bank. bad to worse The last couple of months have seen shockers of macro data hitting multi-year lows The rupee has hit lifetime lows of more than 56 to a dollar before recovering only recently The last quarterly GDP data of a mere 5.3 per cent was at a 9-year-low, last seen in 2003 Global rating agency Standard & Poor’s warned that India could become the first BRIC country to lose its investment grade rating
	Tax on diesel cars may not yield desired results Girja Shankar Kaura/TNS New Delhi, June 13 Even as the carmakers are fighting hard to remain afloat with just 2.78 per cent growth in May, the industry is staring at the renewed session of recession as the government mulls another round of tax on cars, and this time only on diesel cars. While the Union Budget has already imposed additional excise duty on cars, which has greatly affected the sales of vehicles, industry watchers say additional tax on diesel cars may well push the car manufacturers to the brink while not being able to achieve the purpose of levying a fresh cess. Experts point out that while the government is consistently increasing the prices of petrol, which has shifted the focus on increased sales of the diesel cars, it has done little to address the situation in totality. The government is hesitant to increase the price of diesel because of political pressure, and is therefore mulling an increase in taxes on diesel cars and utility vehicles. A similar proposal had been on the cards even before the Union Budget was presented, but Finance Minister Pranab Mukherjee chose not to impose further burden on diesel car buyers, who would have faced a double whammy in the wake of cess on diesel cars as well as increase in the excise duty. According to Society of Indian Automobile Manufacturers (SIAM), "From April last year onwards, the demand for diesel cars has gone up by more than 24 per cent, while the sale of petrol cars has declined by 16 per cent." Earlier, the share of diesel cars was restricted to 25 per cent of the total sales but from April 2011 onwards it has gone up to 70-80 per cent for the models offering diesel variants. At present, diesel cars account for 40 per cent of total auto sales. This has not only prompted most of the car manufacturers in the country to ramp up their diesel car production units but also go in for new facilities producing only diesel cars. Reports suggest that collections from a one-time tax (estimated at Rs 90,000-Rs 140,000 per car depending on fuel and vehicle use) on all new diesel cars and utility vehicles sold would almost equal the subsidy borne by the government over the life of the vehicle. This tax would form 16-20 per cent of a typical diesel car’s price. However, since such a one-time tax would be levied on only new vehicle sales, the government will be able to collect only Rs 5,800-6,000 crore annually, which forms only 12-15 per cent of the total diesel subsidy bill (estimated for 2011-12).
	Gold at all-time high of Rs 30,420 New Delhi, June 13 Gold prices touched an all-time high of Rs 30,420 per 10 grams in the bullion market here today on the back of rising demand for the wedding season amid strong cues from the global markets. Gold spurted by Rs 270 to surpass its previous record of Rs 30,400 set on June 6. Silver prices also rose by Rs 600 to Rs 55,600 per kg on increased offtake by industrial units and coins makers. Traders said the market sentiment firmed up on heavy purchases by jewellers and stockists for the marriage season beginning at the end of this week. The uptrend was further supported by a firming global trend as weakening dollar boosted the demand for bullion as an alternative investment. — PTI
	Traders demand National Trade Policy, rollback of GST Ruchika M. Khanna/TNS Chandigarh, June 13 While shunning foreign direct investment (FDI) in multi-brand retail, traders across the country are demanding that the government should formulate a National Trade Policy for the upgradation and modernisation of the existing retail sector. This policy will help bring the largely unorganised sector into the organised fold, besides helping improve the sector’s contribution to the gross domestic product (GDP). Traders, under the aegis of Confederation of All-India Traders (CAIT) - one of the largest bodies of traders in the country - are also demanding early rollback of Goods and Services Tax, amendments in the Food Safety Standards, and introduction of delivery clause in future trading of commodities in order to curtail inflation. Talking to The Tribune on the sidelines of a seminar of FDI in multi-brand retail, Parveen Khandelwal, secretary-general of CAIT, said they would oppose the FDI in multi-brand retail by creating a mass opinion against this. “We will meet Chief Ministers of different states and leaders of national and regional parties to garner support. We will also approach MLAs of different states and update them how the entry of MNCs will initially bring in predatory pricing and later eliminate competition from the neighbourhood shops, thus causing huge unemployment. Once they get a monopoly, they will dictate prices of commodities, thus adding to inflation,” he said, adding that the government should come up with a Small and Medium Retailers Act to assimilate the 95 per cent unorganised traders through cluster development approach. Khandelwal denied that FDI in retail will help improve the lot of farmers, or help build cold chain infrastructure to stem post-harvest losses. “If the government has failed to set up cold chain infrastructure, why will the MNCs, whose sole objective is to earn profits with minimum investment, do this?” he asked.
	RCom gets nod to list undersea cable unit in Singapore Tribune News Service New Delhi, June 13 Telecom operator Reliance Communications (RCom) has got the Singapore stock exchange approval for an IPO for its undersea cable unit that could raise more than $1 billion for the company. Another Anil Ambani group company, Reliance Capital today said it has got approval from market regulator SEBI and the Monetary Authority of Singapore (MAS) for Rs 1,450-crore stake sale in its mutual fund business unit to Japan 's Nippon Life. According to RCom officials, the company is looking to list the undersea cable unit as a business trust in Singapore and will use the proceeds from the proposed share sale to cut its debt burden. As of March, the company was under a debt of $7 billion, which it raised to finance the 3G spectrum purchase in 2010 besides funding some other projects and increasing the company’s capacity. The Singapore exchange granted the "eligibility to list" the unit as a business trust, RCom said. The company did not disclose when it plans the IPO. The Reliance Group currently has a net worth in excess of Rs 89,000 crore, cash flows of Rs 10,900 crore and net profit of Rs 3,600 crore. The company plans to sell 75 percent of the wholly-owned undersea cable unit, which could be listed as Global Telecommunications Infrastructure Trust. SEBI okays RCap’s stake sale plan Meanwhile, Reliance Capital (RCap) would sell 26 per cent stake in Reliance Capital Asset Management Co (RCAM), which runs India 's most profitable mutual fund, to the Japanese firm Nippon Life. RCap said it has received approval from SEBI, as also MAS, for the deal.
	Suri takes over as GM of Power Grid Jammu, June 13 KR Suri has taken over as General Manager (O&M), Northern Region Transmission System-II of Power Grid Corporation of India. He will be responsible for operation and maintenance of transmission system in the states of J&K, Himachal Pradesh, Punjab, Haryana and UT Chandigarh. Suri has over 32 years of experience in project management, execution, construction, operations and maintenance in the power sector. He also played a vital role in diversification of Power Grid Corp into telecom sector. — TNS