New Delhi, August 9
The economic slowdown seems to be worsening as industrial production contracted by 1.8 per cent in June, the third time in last four months showing signs of slowdown in investment and consumption demand.

Even as investments in the economy were declining over the last year or so now there are signs that consumption demand which was keeping the economy going may also be getting hit.

The decline in June compares to a robust growth rate of 9.5% in the same period last year. During the April-June of the current fiscal, IIP growth works out to be -0.1%, as compared to a growth rate of 6.9% in the same period last fiscal.

The poor industrial numbers come just days after several brokerages and rating agencies like Citigroup, Crisil, CLSA, Goldman Sachs, Bank of America Merrill Lynch have downgraded the growth estimates for the economy to below 6%.

The decline in industrial output has been mainly on account of poor performance of the capital goods sector which reported a negative growth of 27.9% in June. The manufacturing sector growth too contracted by 3.2% during the month.

Calling the numbers “disappointing”, Finance Minister P. Chidambaram said it was important to focus on the critical sectors, remove bottlenecks and give a fillip to production. He added production would revive if there were new investments in the demand creating industries.

Planning Commission deputy chairman Montek Singh Ahluwalia said: “I don’t see robust industrial growth in the current fiscal”.

Industry has expressed deep concern at the numbers and said that a prolonged slowdown would be harmful for the economy. CII director general Chandrajit Banerjee said the June IIP numbers are a cause for serious concern.

“These numbers clearly points to a deepening industrial slowdown which could have a long lasting effect on the economy. Any further decline in GDP growth will have a deleterious effect on employment and on consumer demand”, he added.

FICCI president R.V. Kanoria said the consumer nondurable segment had also consistently witnessed deceleration over the last few months, indicating consumer demand had fallen over the period.

Mumbai, August 9
Tata Motors, India's biggest truck and bus maker, posted a 12% rise in quarterly profit that fell below expectations, as margins at its key Jaguar Land Rover (JLR) unit fell and profit at its domestic business nearly halved.

JLR, which Tata bought for $2.3 billion in 2008, has been the automaker's main profit driver in recent quarters, as strong demand for Jaguar luxury saloons and sporty Land Rover cars, particularly from China and Russia, offset slowing sales of Tata's own-branded cars and trucks in India due to the impact of cooling economic growth and high interest rates.

But slowing growth in China now and struggling economies in Europe due to the eurozone debt crisis are dampening profitability at JLR. A drop in margins in the previous quarter sparked a 12% 1-day drop in Tata Motors' share price.

Like some rivals, Tata Motors too was forced to shut down two of its factories, for two 3-day periods in June in order to balance output with demand.

Tata, part of the $83 billion Tata Group conglomerate, said net profit for the quarter ended in June was Rs 22.45 billion, up 12.3% from a year previously, with revenue up 30.1% at Rs 433.2 billion.

Analysts, on average, expected net profit of Rs 27.61 billion on revenue of Rs 429.40 billion, according to Thomson Reuters I/B/E/S.

The operating margin at the British luxury brands unit stood at 14.5%, compared to 15.1% in the same period last year and 14.6% in the previous quarter.

The company said profit in the quarter was also impacted by foreign exchange loss. Tata Motors vehicle sales fell 3.6% to 190,483. — Reuters

Chandigarh, August 9
Growth in priority sector advances by various banks in Punjab and Haryana is showing signs of a slowdown. From registering a double digit growth till last year, the growth in priority sector advances has come down drastically in both the states.

In Haryana priority sector lending by all banks has shown a decline of 10.63 per cent — from a growth of 20.23 per cent between April-June 2011 to just 9.6 per cent between April and June 2012.

Similarly, growth in priority sector advances in Punjab has come down from 27.85 per cent between April to June 2011 to just 17.79 per cent in the corresponding period this year.

The data, released on Thursday by the state level bankers committee for both Punjab and Haryana, shows priority sector advances in Haryana grew from Rs 38,824 crore in June 2010 to Rs 46,680 crore in June 2011. However, the growth rate declined and banks advanced Rs 51,180 crore in June 2012.

In Punjab, these advances rose from Rs 46,700 crore in June 2010 to Rs 59,709 crore in June 2011. In June 2012, the advances grew by 10,626 crore to Rs 70,335 crore.

As per the guidelines issued by the Reserve Bank of India, 40 per cent of all advances by banks has to be made towards priority sector. This includes the agriculture advances, advances to micro and small enterprises, advances to weaker sector and service sector. In case banks fail to fulfill these norms for priority sector advances, penalties can be imposed on them by the regulatory bank.

The data shows the main reason for the slowdown is that the slowdown in growth of agriculture advances. In Haryana, the growth in agriculture advances has come down from 20.72% between June 2010-11 to just 3.8% between June 2011-12. In Punjab, the growth in agriculture advances has come down from 38.05% between June 2010-11 to 15.8% between June 2011-12.

The state level bankers committee for both the states, which was chaired by Rakesh Sethi, executive director of Punjab National Bank, asked banks in the two states to pull up their socks and ensure a steady growth in agriculture advances besides other priority sector advances. As part of this, banks have been asked to increase their presence in rural areas.

In Haryana, the state level bankers committee has proposed that an ultra small bank branch be opened within every 5 km distance in rural areas, so as to offer banking services to all. 

New Delhi, August 9
State-owned Indian Oil Corp on Thursday posted the country's biggest quarterly net loss of Rs 22,451 crore after the government failed to compensate it for capping auto and cooking fuel prices.

Simultaneously, Hindustan Petroleum Corp Ltd (HPCL), India’s no. 3 fuel retailer, also posted a net loss of Rs9,249 crore in April-June, the second biggest quarterly loss by a listed corporate.

The government has not compensated oil firms for selling diesel, domestic LPG and kerosene below cost this year as the Rs 40,000 crore fuel subsidy it had budgeted has all been exhausted in paying compensation for the last fiscal.

BPCL, India's second largest fuel retailer, will report quarterly earnings tomorrow and is likely to post over Rs 9,000 crore of net loss.

Indian Oil, which like other retailers is living off borrowed money, warned that it may soon exhaust the limit to which it can take debt and sourcing crude oil (raw material for making petrol, diesel and other petroleum products) would become difficult as international sellers don't give credit. The three state-run fuel retailers are losing about Rs710 crore per day on selling diesel, LPG and kerosene at government controlled rates which are way below market price. — PTI

New Delhi, August 9
The hot button issue of allowing foreign supermarts like Walmart into the Indian retail sector seems to remain stuck as only four small states and union territories have indicated their support for the move.

"Till date, written communications, indicating support for foreign direct investment in multibrand retail trade, have been received from the governments of Delhi, Manipur and from Daman & Diu and Dadra Nagar Haveli," minister of state for commerce & industry Jyotiraditya Scindia informed the Rajya Sabha on Wednesday in a written reply.

The Department of Industrial Policy and Promotion (DIPP) had written to governments of all states and Union Territories on June 19 to elicit their views on the contentious issue. As per existing policy, FDI, up to 100%, is permitted, with prior government approval, for single brand product retail trading. FDI is not permitted in multibrand retail. “Data relating to single brand retail trade operations in the states is not centrally maintained”, Scindia said.

Though discussions on opening FDI in retail have been going on for more than two years now, not much headway seems to have been made in arriving at a political consensus.

The cabinet had decided on the contentious issue in November last year but the decision was put on hold following opposition from UPA allies like the Trinamool Congress and several non-Congress party state governments.

However, last month there seemed to be some momentum on the issue again as the Commerce Minister Anand Sharma had started meeting state governments to at least get some of the big ones on board. The government’s stance has been that one state cannot have veto over another and therefore states which want to implement the policy should be able to do so.

However, a rollout of the policy even in some states may be difficult unless some significant numbers add up. To add to the opposition, the Samajwadi Party which leads the government in Uttar Pradesh and some Left parties had recently written to the government asking for not allowing FDI in retail.

In a reply to another question, Scindia said that according to US-based global management consulting firm, AT Keamey, India has been ranked the fifth most attractive destination for retail investment among 30 developing countries.

The report further states India remains a high-potential market with accelerated retail market growth of 15% to 20% expected over the next five years. It adds the growth is supported by strong macro economic conditions including a 6% to 7% rise in GDP, higher disposable incomes and rapid urbanization. 

Faridabad, August 9
Even while the embers of recent labour unrest in Maruti Suzuki’s plant in Manesar are yet to be completely doused, industry here has urged the Haryana government to take pro-active steps on the part of the labour department to maintain harmonious labour-management relations in the state.

A government source said apart from politely berating the labour department in a letter to Chief Minister Bhupinder Singh Hooda, the Faridabad Industries Association (FAI) averred unless the “labour department acts in a more responsible and balanced manner proactively”, the situation (relating to the Maruti plant) could always recur.

Strongly condemning the acts of arson and killing of a senior Maruti Suzuki HR official in the Manesar plant, FAI said the incident had “shaken the confidence” of industry all over. It urged Hooda to personally intervene to maintain a healthy industrial climate in the state.

The letter, written last week, says that industrial circles are critical of intervention of “anti-social elements” into trade union activities, especially in the Maruti plant. In the letter industry has urged the government to exercise care and diligence before allowing registration of new unions.