The Tribune, Chandigarh, India

	Fitch cuts India’s credit outlook to negative Says progress on fiscal consolidation limited Sanjeev Sharma/TNS New Delhi, June 18 After Standard & Poor’s (S&P), another ratings agency, Fitch Ratings has revised India's outlook to negative from stable. A statement from Fitch said the outlook revision reflects heightened risks that India's medium to long-term growth potential will gradually deteriorate if further structural reforms are not hastened, including measures to enhance the effectiveness of the government and create a more positive operational environment for business and private investments. It said the negative outlook also reflects India's limited progress on fiscal consolidation and, in particular, on reducing the Central government deficit despite improvement in the financial health of the state governments. "Against the backdrop of persistent inflation pressures and weak public finances, there is an even greater onus on effective government policies and reforms that would ensure India can navigate the turbulent global economic and financial environment and underpin confidence in the long-run growth potential of the Indian economy," said Art Woo, Director in Fitch's Asia-Pacific Sovereign Ratings group. Finance Minister Pranab Mukherjee said while the markets had already anticipated that Fitch would revise the outlook and so there is no surprise in the announcement, it must be pointed out that Fitch has primarily relied on older data, and has ignored the recent positive trends in the Indian economy. In particular, it has not taken note of many recent structural reforms initiatives taken by the Government - such as UIDAI, fertiliser subsidy reform, capping subsidies as a fraction of GDP, new manufacturing policy and new telecom policy. The concerns expressed by Fitch on the economic growth potential, inflationary pressures, and weak public finances are based on earlier data and government has already taken note of such concerns. Industry body Assocham said the revised Fitch rating making India’s outlook to negative from stable is an aggressive overreaction and does not spell out the economic strengths that the country is bestowed with.
	Re loses 53 paise as RBI holds rates Mumbai, June 18 Tracking weak stocks, the rupee today again breached the 56-level before closing a whopping 53 paise down at a more than two-week low of 55.93 versus dollar after RBI did not deliver the widely expected interest rate cut and rating agency Fitch downgraded India's credit outlook. After opening stronger at 55.33 in sync with global currencies in early trade as Greece poll results eased concerns over a deepening Euro crisis, the rupee strengthened further as it hit the day's high of 55.28 as forex markets factored in a minimum 0.25 per cent rate cut by RBI. — PTI
	Seven PSUs also downgraded New Delhi, June 18 Global agency Fitch today lowered the rating outlook of public sector companies, including NTPC, SAIL and IOC to negative but said the downgrade of India's credit outlook to negative would not impact the rating of Reliance Industries. The global agency's downgrade of seven state-run companies follows the lowering of India's credit outlook to negative from stable. "Fitch Ratings has revised the outlooks on the Long-Term Issuer Default Ratings of seven Indian state-owned enterprises to negative from stable and affirmed the ratings," it said in a statement. The seven entities, whose outlook have been lowered, are NTPC, SAIL, GAIL, IOC, REC, PFC and NHPC. In a separate statement, Fitch said there is no immediate impact on Reliance Industries' Issuer Default Ratings (IDRs) following India's credit outlook revision. "This is because RIL's FC IDR is constrained by India's country ceiling ('BBB-') and will be lowered if India's country ceiling is revised down in future," it noted. Regarding the downgrade of outlook of seven PSUs, Fitch said the move follows revision of the India's Long-Term Foreign-and Local-Currency (Issuer Default Ratings) to negative from stable. — PTI
	Retail inflation inches up to 10.36% in May New Delhi, June 18 Retail inflation moved up marginally to 10.36 per cent in May on account of increase in prices of vegetables, edible oils and milk. Based on the Consumer Price Index (CPI), the inflation for April was revised to 10.26 per cent from the provisional estimate of 10.32 per cent, as per the government data released here today. Vegetable prices recorded the maximum spurt in prices, up 26.59 per cent, followed by edible oils - 18.21 per cent and milk products - 13.74 per cent in May, year-on-year basis. Prices of egg, fish and meat shot up 10.50 per cent, while non-alcoholic beverages became costlier 9.44 per cent. Among other items, prices of cereal and its products saw a rise of 4.79 per cent over the May 2011 level. While sugar saw a marginal rise of 5.38 per cent in May, 'pulses and products' were up by 7.89 per cent, over the same month last year. Prices of fuel and light, and clothing, bedding and footwear segments remained in the double-digit. Inflation rates for rural and urban areas were 9.57 per cent and 11.52 per cent respectively in May. According to the revised data, the inflation rates for rural and urban areas were 9.67 per cent and 11.10 per cent respectively in April. — PTI
	Carmakers disappointed with RBI’s move Tribune News Service New Delhi, June 18 Reeling under high petrol prices and decreasing sales as a result, the carmakers in the country have expressed disappointment at the RBI’s decision not to cut key policy rates. Also facing a possible high tax rate on the purchase of new diesel cars, the carmakers are of the view that the RBI’s move would be discouraging for the industry which is already witnessing a major slump. The growth will continue to suffer due to the high interest rate regime, they said. Incidentally, the slowdown in the economic growth and the hike in the excise duty in the Budget has already seen a major impact on the automobile industry with the car sales reporting the slowest growth in May. Recent figures released by the industry body Society of Indian Automobile Manufacturers (SIAM) pointed out that the car sales in fact grew the slowest in the past seven months at 2.78 per cent. An official of Maruti Suzuki India Ltd (MSIL) said no cut in rates was disappointing for the automobile industry, especially for the car industry as 70 per cent of sales are financed through loans. Similar sentiments were expressed by other companies. The passenger car industry is under a lot of pressure on account of high fuel costs and had the RBI taken some measures it could have brought down car finance rates and helped the industry, they said. Experts pointed out that with the further fear in the market for major cess on the purchase of the new diesel cars, the situation may turn worse. Carmakers are expecting that a diesel engine car tax ranging between Rs 1.5 lakh and 2.5 lakh would be imposed soon.
	Renewed euro zone crisis may affect India: RBI Mumbai, June 18 India and other developing countries could be adversely affected due to increased risk aversion and slowdown in global capital flows amid renewed concerns over sovereign debt crisis in the euro zone, RBI said today. The Reserve Bank also cautioned that growth and inflation of developing nations, including India, would be adversely impacted, if there is an "event shock" globally, which could prompt the central banks in advanced countries to ease their monetary policy leading to a possible rebound in commodity prices. Recognising that global situation is turbulent, the apex bank, in its mid-quarterly monetary policy review, said that it is "ready to use all available instruments and measures to respond rapidly and appropriately to any adverse developments." The RBI's observations comes in the backdrop of turmoil in euro-zone economies and its impact, which will dominate the agenda of a G-20 summit that begins in Mexico today. Although the world cheered a narrow election victory of Greece's pro-bailout New Democracy party in Sunday's elections, RBI pointed that euro zone sovereign debt problem continues to weigh on the global recovery. "After a brief phase of relative calm reflecting the large liquidity injection by the European Central Bank (ECB), renewed concerns have arisen about a sustainable solution to the sovereign debt problem and the increasing vulnerability of the banking sector," it said. — PTI
	DGCA asks airlines to relook at sudden rise in fares Operators assure 5% to 20% cut in highest fare bucket Vibha Sharma/TNS New Delhi, June 18 The “phenomenal” spurt in air fares on domestic routes due to Air India crisis and Kingfisher Airlines’ downsizing may have prompted civil aviation regulator Director-General of Civil Aviation to take cognisance of the situation but how much of that concern will finally translate into meaningful gain for passengers is yet to be seen. DGCA EK Bharat Bhushan today convened a meeting of CEOs of scheduled domestic airlines. Expressing concerns on the “exponential increase in air fares on various domestic sectors”, he directed the operators to address all issues in a time-bound manner and upload revised tariff sheets on their websites. According to an official statement, airlines proposed 5 to 20% reduction in air fares in the highest fare bucket. Sources, however, say attempts to regulate fares have mostly met with a dead-end as with the kind of opaque fare system that carriers follow it is difficult to put any checks on their activities. Though airlines are supposed to file tariffs in advance, regulation of air fares is outside the purview of the government. Besides, airlines follow this complicated system of “bucket fares” which means there are a certain number of seats reserved in each flight at low fares that have to be booked in advance. As soon as these seats are filled, the fares grow progressively to a higher bucket closer to the date of travel. But now, apart from huge variation in the highest published air fares by different carriers on the same sector, there have also been instances of tactical changes in tariff with some airlines starting with the highest air fares and decreasing them towards the departure date. As per DGCA’s own admission, there have been instances when fares of higher inventory were opened and then lowered as the date of departure approached, resulting in passengers buying tickets in advance paying more than those buying later.
	Govt eyes $5.4 bn from PSUs’ stake sale this year New Delhi, June 18 India plans to sell stakes in 15 state-run firms by the end of March next year, including shares worth $1.25 billion in miner NMDC, a finance ministry official said on Monday, in a move seen aimed at boosting investor sentiment following slower economic growth. The government also wants to raise 300 billion rupees from the sales to help plug a yawning gap in the fiscal budget. It raised just 140 billion rupees in the last fiscal year which ended in March, less than half of its 400 billion-rupee target. The poor markets and investor sentiment are likely to make sales equally difficult this year, analysts and bankers say. Apart from NMDC, the government plans to raise $622 million from the sale of a stake in capital goods-maker BHEL, $520 million from miner Hindustan Copper and $365 million from Steel Authority of India Ltd, the official said. The divestment pipeline in the current fiscal year also includes a $158 million stake in Engineers India as well as shares in Oil India and Hindustan Aeronautics. Last month, state-owned steelmaker Rashtriya Ispat Nigam Ltd filed a draft prospectus for an initial public share offer for a 10 per cent stake held by the government. Proceeds from the stake sales will help the government to meet its deficit target of 5.1 per cent of gross domestic product for this fiscal year. — Reuters
	Coal India inks fuel supply pacts with 27 power units New Delhi, June 18 State-owned Coal India Ltd (CIL) has entered into fuel supply pacts with 27 power units, including Adani's Mundra Power plant in Gujarat. The signings come even as the Prime Minister's Office (PMO) is slated to convene a meeting on Friday to iron out issues in the pact, mainly the penalty clause, which have kept power firms like NTPC from inking the fuel supply agreement (FSA) with CIL. "So far, CIL has signed FSAs with 27 power units like Adani's Mundra," a source close to the development said. — PTI