skip to main |
skip to sidebar
India''s bilateral trade will decline some 20 per cent with Pakistan, which is grappling with a major political turmoil, the Associated Chambers of Commerce and Industry (Assocham) said on Nov 29. Projected to touch $2.7 billion in the current fiscal (2007-08), the bilateral trade will not cross $2.1 billion and stagnate at that level, the industry lobby said. Indian businessmen and small merchants, who were contemplating to set up trade relations with it, have now held their plans, Dhoot said, while acknowledging the recent bilateral efforts to facilitate cross-border trade. As per official estimates, bilateral trade in 2006-07 had recorded an increase of 88 per cent and stood at $1.6 billion. It was envisaged to grow to $2.7 billion. India''s exports to Pakistan were $1.2 billion, showing an increase of 96 per cent, while imports from that country were $320 million, an 80 per cent jump over the previous year. The two sides had recently allowed trucks to cross the Wagah border and traders were planning to trade in bulk commodities and enhance bilateral trade by over 100 per cent a year in the next three years.
Kanpur: K Chandramauli, secretary, institutional finance, said as the Assembly was in session, the Act relating to VAT had to be placed before it. This can be done when the House resumes its sitting from December 4. They are, however, prepared to implement it from December 1. Shyam Bihar Misra, president of the UP Udyog Vyapar Mandal, said the reasons for the delay were that the central government had given clearance with certain amendments. Chandramauli, while admitting that the central government has suggested amendments, denied these would require a great deal of work. Misra said there were 14 goods, known as declared goods, whose rate of tax could not be more than 4 per cent, but in the proposed Act, the tax exceeded the limit. Thus the approval by the president has been with amendments. From the face of it, it appears that although there are no orders for reversing policy from the cabinet to the officials, there is likely to be rethinking about the policy in the face of unanimous trader protest. Misra says the government is keen to implement it so that it can get money from the Centre.
New Delhi: Genesis Initiative, a UK-based umbrella for small and medium enterprises, is establishing an India chapter. The organisation will boost the interests of domestic SMEs at the Government level, besides fostering intellectual sharing, technology transfer, and increase in bilateral trade with SMEs of the two nation. Their vision is to promote enterprises and encourage SMEs, create a consensus amongst the sector on key issues, and promote the development of cross parliamentarian consensus on issues relating to SMEs. India is a key destination for it as there is immense potential for SMEs. The body is setting up its India chapter in Bangalore and Delhi. It will seek mutual cooperation between SMEs in India and UK, besides looking for possible joint ventures and partnerships with Indian SMEs in sectors like textile, manufacturing, IT and infrastructure. Indian SMEs can optimise their growth potential if they come together.
India''s top corporate leader Ratan Tata has been named by global business magazine Fortune as one of the top 25 most powerful business heads, along with steel tycoon L N Mittal and PepsiCo''s Indra Nooyi. The Fortune ranking closely follows a list by another global business publication Forbes, released earlier this month that named India''s richie-rich led by Mittal and Ambanis, but there was no mention of Ratan Tata. In the Fortune list released on Nov 27, Tata has been named as the world''s 23rd most powerful person in business, ahead of CEOs of international media and entertainment giant Walt-Disney and French luxury goods major LVMH. PepsiCo chief Nooyi, who was named at the top of a separate Fortune list of world''s most powerful business women for second year in a row last month, has been ranked at 22nd in the latest list, topped by Apple Computer CEO Steve Jobs.
Mittal, largest shareholder and CEO of the world''s largest steelmaker ArcelorMittal, is ranked top among the three people of Indian origin. Ranked at 14th position in the list, Mittal''s name figures ahead of CEOs of international giants like JPMorgan Chase, Hewlett-Packard, Boeing, BHP Billiton, Blackstone and Mexican business tycoon Carlos Slim.
New Delhi: India and Malaysia are looking at an India-Malaysia Comprehensive Economic Co-operation Agreement (CECA) from January 2008, said Mr Kamal Nath, Minister of Commerce and Industry at a seminar here. The seminar, Malaysia India Business Opportunities, was jointly organised by the Ministry of International Trade and Industry, the Malaysia External Trade Development Corporation, the Malaysian Industrial Development Authority and the Confederation of Indian Industry (CII) on Nov 26. To take the trade and investment relations forward, India and Malaysia have set up a Joint Study Group (JSG), which has recommended the set up of CECA that would serve as a plausible institutional framework to provide significant economic benefits to both countries.
Malaysia ranks as the 23rd largest overall investor and the second largest investor from ASEAN with a total foreign direct investment (FDI)of $142.98 million during the period between August 1991 and July 2007, said the Minister. India''s exports to Malaysia during 2006-07 stood at $1.3 billion and imports from Malaysia at $5.3 billion. India''s major exports to Malaysia include cathodes, meats, petroleum oils, onions and shallots, chemicals, cereals, yarns, garments, iron and steel, while imports include petroleum oils, palm oils, electronic goods, chemicals and yarns.
New Delhi: India hailed the focussed approach of the Netherlands for recognizing collaborations in bio-technology, agri-business, health, infrastructure and logistics and research and development. During the visit of Dutch Minister for Foreign Affairs, Mr Frank Heemskerk here, the Union Commerce & Industry Minister Mr Kamal Nath, said: they are happy that the Dutch delegation consists of both small and medium enterprises and has identified focused areas for further collaboration. There is great potential for further intensification of trade and investment relations between India and the Netherlands. He said exports from India during 2002-06 to the Netherlands rose by 11.16 per cent. On India-European Union Free Trade Agreement, both sides resolved that common areas have been identified and further discussions would be held in the third round, scheduled to be next month.
Mr Nath said that there was large scope for Dutch investments in India in agriculture, infrastructure, automotives, biotechnology, food processing and pharmaceuticals. The Netherlands now ranks fourth in the list of countries in terms of cumulative FDI inflows into India during the August 2001-July 2007 period with total inflows amounting to about $2.8 billion. The Netherlands is also among India''s top ten trading partners. India''s main exports to the Netherlands include petroleum (crude and products), readymade garments, electric goods, machinery and the main imports from the Netherlands include metaliferrous ores, metal scraps, machinery (except electric and electronic), organic chemicals, transport equipment.
NEW DELHI: The government is likely to slash the 16% central excise duty on ethanol and classify it as a declared good in a bid to impose a uniform levy on the product across the country. The move aims at incentivising oil companies for doping ethanol with petrol to partly neutralise the impact of rising global crude prices which are at a kissing distance from $100 per barrel. The recently-constituted group of ministers (GoM) on fuel prices is expected to take up the proposal.
“The GoM is expected to consider petroleum ministry’s suggestion to reduce the central excise duty on ethanol for ethanol-blended petrol (EBP) programme, make it a declared good and remove all local fees and duties for inter-state movement,” an official source said.
The duty rationalisation is also needed to have price parity between imported ethanol and domestically-procured ethanol. On an average, oil companies pay Rs 28 per litre for ethanol procured domestically whereas its landed cost at domestic ports is estimated at Rs 21 per litre. Sugar producers in the country are facing a glut in production and a duty cut will help ease the situation as oil companies will be incentivised to increase offtake.
Besides the 16% central excise duty, sales tax on ethanol varies from 4% to 20% in different states. Besides, states levy various surcharges, export fee (from one state to another state), import fee, permit fee, licence fee, administration fee and state excise. For example, Punjab levies a 20% sales tax (plus 2% surcharge on sales tax) and Re 1 per litre import permit fee on ethanol. In Maharastra, sales tax is 4%, in Goa it is 19% and in Tamil Nadu it is 8% (plus 5% surcharge on sales tax).
Commenting on the October 9 decision taken by a GoM, which made a 5% ethanol blending mandatory across the country — except Jammu & Kashmir, north-eastern states and island territories — an official in petroleum ministry said, “The existing 5% EBP programme is subject to commercial viability in procurement of ethanol by oil marketing companies (OMC). If 5% blending of ethanol is to be made mandatory across the country as per the recommendation of the GoM, it is to be ensured that OMCs do not suffer any under-recoveries in selling EBP.”
The October 9 decision has also mandated a 10% blending of ethanol with petrol from October 2007 and the same would be mandatory from October 2008. Oil ministry has argued that OMCs are facing certain constraints with regard to free inter-state movement of ethanol and levy of duties by states. “Therefore, increasing the ratio of 5% to 10% blending optional from October 2007 and thereafter mandatory from October 2008 has to be examined from the point of view of free inter-state movement of ethanol and a conscious decision taken,” an official source said. It is important to note that not all states produce ethanol. Ethanol producing states are Uttar Pradesh, Karnataka, Tamil Nadu, Andhra Pradesh, Maharastra, Gujarat and Bihar.
NEW DELHI: The government is looking forward to a three-fold increase in foreign direct investment (FDI) in the food processing sector over the next couple of years.
“FDI in the sector has almost trebled in the past two years, going up to Rs 441 crore in 2007 from Rs 174 crore in 2005. With the growing interest of international retailers in India, this momentum will further increase,” food processing industries minister Subodh Kant Sahay told ET.
If the government’s estimates come true, the FDI inflow into the sector would be Rs 1,300 crore in 2009. The food processing ministry is demanding more incentives for the sector in the 2008 budget, so that more FDI could be attracted.
“We have had initial discussions with the finance ministry and are hopeful of some more incentives this year. Apart from this, one of our key areas will be to initiate training facilities and capacity building efforts for farmers and entrepreneurs,” Mr Sahay said.
The ministry plans to start a nationwide entrepreneurship development programme. “We will establish food processing training centres at the farm gate level all over the country,” the minister said.
The government will also undertake programmes to provide farmers with linkages to the retail market or industrial users. This will lead to elimination of middlemen and result in substantially higher economic gains to the farmers.
“Today, in the absence of any such linkage, farmers are forced to go for distress sale. This would also reduce wastage of fruit and vegetables, estimated to result in losses of Rs 50,000 crore every year,” Mr Sahay said.
As international retailers like Wal-Mart, Carrefour and Woolworth are taking interest in the Indian market, food processing is emerging as one of the fastest growing sectors.
“We have met representations from most of these companies. India is a major attraction for them, not only as a market, but also as the sourcing hub. Most international companies point out at supply chain infrastructure as the biggest hurdle, and we are working on various ways to address it,” Mr Sahay said.
MUMBAI: The days of one-dollar companies floated by foreign venture capital (VC) funds to enter India are over. For the first time Reserve Bank of India has spelt out that these funds will get the registration to invest in India only if they chip in a part of the investment upfront.
Till now, the regulator has been insisting on end-use restrictions, which meant foreign funds have to give undertakings that they will not invest in the Indian property market. The condition, which is now being laid down, relates to some credible capital commitment before a formal registration can be obtained.
Typically, a new foreign venture capital fund first forms an investment holding company in Mauritius with rudimentary capital, often not more than a few dollars. The investment company then files for registration with Indian regulators, and once it gets the approval overseas investors are gradually roped in.
While filing for registration they do dislcose their investment strategy, possible investment corpus and the period over which the money will come in. But no foreign investor actually signs a cheque till the Mauritius company gets officially recognised by Indian authorities as a VC fund in India.
“RBI is asking us to disclose the capital base, something which it has never done in the past. Perhaps, it wants some credible investment commitment, in the sense that a part of the proposed investment should lie in a Mauritius bank before registration is granted,” said an advisor to several foreign funds.
The central bank, which has the final say on all cross-border flows, may be driven by the urgency to curb inflows; however, it’s equally possible that RBI may have had some bad experience with new funds and is keen to ensure that the commitment is genuine and credible. More so, because a registration once granted can be used indefinitely and no periodic renewals are required. Any fund is required to first apply to the capital market regulator Sebi, which then refers the application to RBI.
However, the new condition being insisted by RBI may discourage many foreign investors who are unwilling to park money unless the investment vehicle gets regulatory approval, said Punit Shah, who heads the financial services group of global consultancy firm PricewaterhouseCoopers (PwC).
Several foreign investors find VC funds comparatively more attractive than the customary foreign direct investment (FDI) channel (either through the automatic route or via the Foreign Investment Promotion Board). Among other things, a foreign VC fund buying a stake in an unlisted company can pay below the fair value of the shares; besides, the lock-in norm is diluted for a foreign VC fund which is already holding shares in a local firm for a year. A normal investment vehicle set up in Mauritius to make FDI in India don’t have these flexibilities.
Bhubaneswar: Out of 32 working state-owned public sector enterprises, 15 units were capable to make profit during 2006-07. The units are the Orissa State Seeds Corporation, Orissa State Cashew Development Corporation, Orissa Forest Development Corporation, Orissa Construction Corporation, Orissa Tiurism Development Corporation, Orissa Power Generation Corporation, Orissa Hydro Power Corporation, Orissa State Police Housing and Welfare Corporation, Orissa Lift Irrigation Corporation, Orissa Rural Housing and Development Corporation, Orissa State Beverage Corporation, Orissa State Road Transport Corporation, Orissa State Financial Corporation, Orissa State Warehousing Corporation and Industrial Infrastructure Development Corporation. The major non-working units included Orissa State Handloom Development Corporation, Orissa Fishery Development Corporation, Orissa State Leather Corporation, Orissa Textile Mills, IDCOL Piping and Engineering works Limited, Kalinga Steel Limited and Orissa State Electronics Development Corporation.
The state government is looking at offloading up to 49% equity stake in Andhra Pradesh State Financial Corporation (APSFC), a term lending institution for promoting small and medium scale industries. The government will be floating an IPO. Currently, the state government holds 100% stake in SFC, which was formed in 1956 through the merger of Andhra State Financial Corporation and Hyderabad State Financial Corporation.
According to the source, Crisil is in the process of rating the corporation and the exercise will be completed by mid-next year. This will be followed by a valuation of the enterprise by one of the rating agencies. The money raised through the proposed IPO will be used to increase our portfolio of advances portfolio.
Some of the other SFCs, such as Gujarat State Finance Corporation, are already listed on bourses. APSFC is targeting to raise its asset base from Rs 1,300 crore to Rs 3,000 crore ($1 billion) this fiscal. Of this, Rs 750 crore would be raised through non-SLR bonds next fiscal. Non-SLR bonds are bonds that do not fall in the SLR basket. Normally, non-SLR bonds have a lock-in period of 7-8 years. Earlier this year, SFC raised Rs 50 crore through the issuance of non-SLR bonds, carrying a coupon rate of 9.10%.
The much-awaited India-ASEAN Free Trade Agreement (FTA) will be in place by May 2008 as substantial progress has been made in all areas, Commerce Minister Kamal Nath said on November 20. Convergence is within reach. We are in our last mile, by May 2008 we will have the FTA with ASEAN in place, he said after meeting ASEAN economic ministers this evening.
He noted that the differences pertained to only four products and three countries, but expressed confidence that these issues would be sorted out soon. Asked to comment on Indonesian Trade Minister Mari Pangestu''s statement that the 10-member bloc had put talks on hold until India came up with better offers, Nath said, everybody has some perceptions. Nath, however, noted talks had definitely not stopped as he had met Vietnam, Singapore, Malaysia this morning to talk about the FTA.
New Delhi: Direct tax collections went up by 42.9 per cent to Rs 1,40,373 crore from April 1 to November 15, 2007 from Rs 98,216 crore recorded in the corresponding period last year. With this, net direct tax collections till November 15 stood at 52 per cent of the budgeted target of Rs 2,67,490 crore for the fiscal 2007-08. Corporate tax witnessed a growth of 45.74 per cent at Rs 83,934 crore, up from Rs 57,593 crore during the previous fiscal. Personal income tax (including FBT, STT and BCTT) grew by 39.96 per cent at Rs 56,212 crore up from Rs 40,453 crore last year. While Securities Transaction Tax was up 69.37 per cent at Rs 4,924 crore against Rs 2,908 crore, Fringe Benefit Tax was up 27.11 per cent at Rs 3,078 crore against Rs 2,422 crore.
Gold went up by Rs 25 to Rs 10,215 per ten gram on the bullion market on emergence of buying by retail customers for the ongoing marriage season.The precious metal was also boosted by firming global trend as weak dollar and spiraling crude prices raised the demand for gold as a safe investment.
Silver followed suit and recorded fresh gains on better offtake by industrial users and coins manufacturers. Marketmen said increased buying by jewellery fabricators and local parties to meet the ongoing marriage season demand.Global trend which normally set a price band in domestic market, placed the metal higher at $790.60 an ounce against previous level of $789.90. Standard gold and ornaments attracted fresh buying support and gained Rs 25 each at Rs 10,215 and Rs 10,065 per 10 grams respectively.
Sovereign followed suit and traded higher at Rs 8,525 from Rs 8,500 per piece of eight gram. Similarly fashion, silver ready shot up by Rs 70 at Rs 19,050 per kg while weekly-based delivery rose by Rs 110 at Rs 19,060 per kilo.Silver coins also met with heavy demand from coin makers and traded higher by Rs 300 at Rs 24,900 for buying and Rs 25,000 for selling of 100 coins.
Pune: The state of Maharashtra has 78 mega projects with a proposed investment of Rs 72,000 crore over the next 18-24 months in the pipeline, and has received Foreign Direct Investment of Rs 70,750 crore over the last three years. According to the Chief Minister, Mr Vilasrao Deshmukh, the State received the highest FDI with a total of 3,933 proposals, and had also got approval for 119 SEZs, the most number in the country in a single State. He was speaking on the sidelines of the inauguration of JCB''s new plant at Talegaon. Included amongst the mega projects is a Rs 1,100-crore investment by Bombay Rayon in the garments and textile business over the next two years. As per an MoU signed with the State Government recently, the company is setting up plants at Islampur, Ichalkaranji, Nanded, Latur, Osmanabad and Kolhapur over the next two years, and a processing factory at Tarapur.
Gold prices increased further on the bullion market on account of sustained buying by stockists and jewellery fabricators. The precious metal closed with a gain of Rs 80 at Rs 10,440 per ten gram in the market. The gold on Nov 12, fell by Rs 480 and gained Rs 410 per ten gram in next two trading sessions, strengthening the metal closer to its all-time high of Rs 10,700 per ten gram recorded on May 12, last year. In Singapore, gold gained $6.30 to $818.24 an ounce and silver advanced 0.8 per cent to $15.09. In Delhi, standard gold and ornaments rose by Rs 80 each at Rs 10,440 and Rs 10,290 per ten gram respectively. Sovereign was also higher by Rs 25 at Rs 8550 per piece of eight gram. Silver ready surged by Rs 200 at Rs 19,400 per kilo and weekly-based delivery by Rs 300 at 19,600 per kilo. Silver coins rose by Rs 100 at Rs 25,100 for buying and Rs 25,200 for selling of 100 pieces.
Jalandhar: Criticising the Punjab government for not taking any plan to fulfil the promises made in its poll-manifesto to improve industry in the state, local industrialists are sour with the Akali-BJP government over the imposition of new power tariffs, security deposits, entry tax and enhanced rates for registration of land as it was proving to be a huge burden. They say the state is facing step-motherly treatment from the Centre in comparison to Jammu & Kashmir, Himachal Pradesh, Uttrakhand and other neighbouring states, which had been given special tax incentive, but the state government also did nothing to provide level playing field to the industrialists of the state.
Jalandhar Chamber of Industries and Commerce General Secretary Charanjit Singh Mangi said the members were astonished at the revision of basic minimum price for land registration, which was more than double (Rs 2 lakh per marla), than the actual price of industrial plots in industrial areas. The government''s decision to impose four per cent entry tax on iron and steel, comprising scrap dyes, chemicals, yarns, fibre tops and chips would directly affect the cost of production. Deputations of Jalandhar Chamber of Industry and Commerce had held several meetings with the state government and its senior officials to declare Godaipur as industrial zone.
New Delhi: The Planning Commission, in its 11th Plan (2007-12) draft, has urged side-stepping the zero-revenue deficit aim by 2009 that is mandated by the Fiscal Responsibility and Budget Management (FRBM) Act. The 11th Plan draft document, which was recently approved by the full Planning Commission, held that maintaining zero-revenue deficit will substantially limit the government''s ability to fund flagship schemes. Finance Minister P Chidambaram has made it clear that the government is bound by the FRBM Act, 2003, which mandates it to cut the revenue deficit by a minimum of 0.5 percentage points every year. In 2006-07, the Centre''s revenue deficit stood at 2 per cent of the gross domestic product. The government has to eliminate this by March 2009. A zero-revenue deficit can restrict expenditure on health and education, which creates human capital.
Revenue deficit is the difference between revenue expenditure and revenue receipts. The Prime Minister''s Economic Advisory Council, in its economic outlook for 2007-08, has said the central government''s revenue deficit is unlikely to be removed by 2008-09 because of the forthcoming Sixth Pay Commission''s report and other unforeseens.
Bangalore: ISRO declared its second lunar mission, a landing-cum-orbiting plan, to be undertaken jointly with Russia around 2011-12. The unmanned Chandrayaan-2 will be coming up closely on the heels of Chandrayaan-1, which is due for launch in April next year. Chandrayaan-2 will be unveiled on the indigenous geosynchronous satellite launch vehicle. It involves a lunar orbiting spacecraft, to be made by ISRO, and a lander/rover, to be made by Roskosmos, to explore the Moon''s surface. Mr G. Madhavan Nair, ISRO Chairman, and Mr A. Perminov, Director of the Russian space agency Roskosmos, inked the cooperation agreement in Moscow on November 12 during the visit of the Prime Minister, Dr Manmohan Singh. ISRO described the pact as a major milestone in the long-standing cooperation in outer space between the two countries. The spacecraft is in the final stages of integration and testing, and will be unveiled onboard the PSLV.
New Delhi: The Centre''s excise duty collections increased 14 per cent on a year-on-year basis in October 2007 at Rs 10,293 crore, from Rs 9,066 crore during the same month the previous year. Customs duty collections remained optimistic and were increased 25 per cent during October this year at Rs 9,353 crore, from Rs 7,503 crore during the same month the previous year. Excise duty collections during the first seven months of the current fiscal stood at Rs 64,948 crore against Rs 60,401 crore recorded during the same period a year ago, an increase of 8 per cent.
Customs duty collections increased 17.4 per cent to Rs 57,833 crore during the period against Rs 49,276 crore during the same period a year ago. For fiscal 2007-08, the budget estimate for excise duty collections has been pegged at Rs 1,30,220 crore while customs duty collections has been pegged at Rs 98,770 crore. Tax revenue from the customs and excise levies cumulatively for the April-October period this fiscal increased 12 per cent at Rs 1,22,781 crore against Rs 1,09,677 crore. Service tax collections were increased 36.8 per cent to Rs 21,891 crore during April-September 2007 (the period for which collection data is now available), against Rs 15,997 crore during the corresponding period last fiscal.
Easing credit constraints for the poorest and the weakest must be a priority to reinforce and sustain their health status.
The government is, ostensibly, ensuring that credit priority, as spelt out and implemented by RBI, is aimed at precisely this. Credit is a key input into agriculture & allied activities and for many small and micro enterprises run by the section that forms the country’s 30-crore unorganised workforce.
Ensuring that access to constraint-free and timely credit is widespread and functioning efficiently in the rural areas becomes urgent against the new economic policies that destabilise their existing modes of livelihood, including widespread acquisition of arable land for SEZs and liberalisation of the retail sector in food.
As crucial would be professional advise on new investments to ease the rigours of a livelihood switchover by building an effective social security net, since the in-depth impact of such policy-inspired livelihood destabilisation would only be visible over a period of time.
Arjun Sengupta-led National Commission for Enterprises in the Unorganised Sector (NCEUS), which submitted its report to PM Manmohan Singh recently, has delivered a scathing indictment of the RBI’s priority sector lending policy (PSLP) commitment to weaker section credit.
Here is an unwittingly state-sponsored, kid gloves-off critique of a deliberately lopsided policy, which has been designed, not by branch managers and loan officials, but by the decisionmakers at the top of RBI to benefit what could only be a travesty of the phrase ‘weaker sections’, NCEUS has asserted.
Stopping just short of calling it a sham in terms of virtually every fundamental count, it has criticised recent policy changes that have shortened the period for declaring a loan an NPA, which can spell death knell to many one-person enterprises in the unorganised sector.
A tawdry application of the mind is evident in RBI’s own PSLP, which has set a target of 40% of the adjusted net banking credit (ANBC) for priority sector lending by banks. Of the 40%, 18% target has been set for agriculture and another 10% has been set for weaker sections.
The fault, NCEUS has charged, lies with RBI credit policymakers, who refused to reduce the 40% (of ANBC) target set for priority sector lending despite the difficulties of banks in achieving it and attendant Narasimham Committee recommendations, mainly due to political compulsions.
What the authorities did, instead, was to ”nullify, through the back door, the operational relevance of the priority sector target by including many items, which can be conceived of as belonging to the weaker section borrowal of small loans who would not possess other bankable projects and who would otherwise face difficulty in getting bank credit...” They diluted the definition of priority sector to suit the achievement of statistical targets.
Diversion of unachieved disbursals under to NABARD’s RIDF and SIDBI have helped banks show lending target achievements for the priority sector on paper. Quoting RBI’s latest report on trend and progress of banking in India 2004-05, NCEUS has pointed out that it “speaks volumes of the extent to which coverage under PS lending has increasingly moved away from the original intentions of the programme”.
Banks, the panel report points out, are not interested in making advances to unorganised sector borrowers in the absence of collateral, irrespective of what RBI guidelines say. They openly subvert and ignore guidelines that say no collateral for loans up to Rs 5 lakh.
According to Rural Finance Access Survey of WB and NCAER (2003), a majority of the loan extended by commercial banks, RRBs and cooperative banks are collateralised with 89% of the households surveyed who borrowed from RRBs and 87% who borrowed from commercial banks, reporting that they had to provide collateral.
Also, small borrowers are forced to compete with small and large borrowers since the credit system operates under the existing RBI guidelines. RBI’s PSL guidelines of April 30, 2007, prove, NCEUS has said, that in the agri sector, too, the small or poor farmer has to compete with large and strong borrowers such as corporate houses, traders and institutions. In 2003-04, 70% of the total priority sector credit for agriculture from scheduled commercial banks (SCBs) went to the relative fat cats.
Small and marginal farmers — although they account for 83.9% of the total farmer households and operate in 43% of the total farmland — received only 30% of credit to agriculture.
In that year, SCBs advanced about Rs 96,000 crore to the agri sector. Of this, marginal farmers received only Rs 15,000 crore and small farmers only about Rs 14,000 crore. What’s worse is that the percentage break-up in credit to different segments of cultivators in agriculture has remained the same since 2000-01.
Ditto situation pertains to the education and housing sectors. “Here, again, it is evident that due to dilution of PSL policy, the poor are competing with comparatively stronger claimants. Such a PSL guideline has made a mockery of the weaker sections,” NCEUS has held.
Nor have interest rates for the weaker sections been lower and easier in practice. On paper, the rate of interest on agri credit up to Rs 3 lakh is 7% and unorganised enterprises have to pay an interest of 9.5% (2% lower than PLR). However, a plethora of service charges levied by banks hike the total cost by another 2%.
This, even while large industries often have to pay an interest rate lower than PLR on account of “better credit worthiness”.
These costs become so high that in spite of comparatively lower rates charged by formal institutions, they work out often higher or equal to the informal rate. Hence, asserts the commission, small borrowers prefer informal channels (money lenders, etc) since they take on the spot decisions.
Poor institutional infrastructure available for credit has made the matter worse. Add to that the loss of momentum in distribution of bank credit to small borrowers from 21.2 million additional bank accounts by SCBs, of which 93.1% were accounts with Rs 10,000 or less of credit limits in the 1970s.
Between March 1992 and March 2001, there has been an absolute decline of about 13.5 million in aggregate bank accounts due to a much larger decline of 25.3 million accounts for the redefined small borrowal accounts of Rs 25,000 or less.
In recent years, the number of commercial bank branches in rural areas declined from 35,134 in March 1991 to 30,572 in March 2006. Many vacancies remain unfilled in rural areas and new-generation banks have been hiring employees on contract. “These unhealthy practices could prove to be counterproductive to the long-term credibility of banking institutions,” NCEUS warns.
NEW DELHI: Lack of single window clearance is the "biggest deterrent" in the path of attracting foreign investment, Union Tourism Minister Ambika Soni said on Tuesday.
Soni, while talking about plans to launch medical tourism, said efforts were being made in her ministry to reduce the procedural delays and fine-tune processes with the Ministry of Health and private players for smooth flow of investment in this sector.
"We have to fine-tune with the Ministry of Health and the private players as to how to facilitate those who want to open hospitals and budget hotels in India and how to provide single window clearance," she said.
"That (lack of single window clearance system) is the biggest deterrent I saw during my two years of ministership," Soni said at the India Health Summit here.
During her address to the doctors and medical professionals, she said to kickstart medical tourism, the government was working on a proposal for opening a 1000-bed hospital with budget accommodation for the visiting families.
Soni also said whenever she is travelling abroad in the capacity of Tourism Minister, she is always exhorting government and industry leaders to invest in India.
Talking about low investment levels compared to China, Soni said, "We may be drawing less, but we are long distance players".
NEW DELHI: You may not have to stop at every toll junction to pay charges. You could be able to pay toll even while driving at 100 km an hour. The government is planning to frame a policy for intelligent transport system (ITS) that will allow cars to be fitted with onboard unit for deduction of toll charges and various other taxes through credit card.
The other systems being considered under ITS are providing real time data on traffic and routes to the driver. Travellers will also be able to save on time or switch transport modes as per their convenience. They would also be able to pay for parking without cash.
Top officials from ministry of information technology and telecom, urban development ministry, ministry of science, health, ministry of heavy industries, finance ministry and home ministry had a meeting on October 12 to prepare the guidelines for the proposed ITS policy.
The ministries are together working on single emergency management services where police, fire service, ambulance and accident services can be reached at a single number.
“The core group comprising senior officials from all the ministries would frame a model policy and circulate it among all the states for its implementation. If implemented in a time-bound manner, the policy can bring a sea change in traffic management on Indian roads. Increase in the average speed of vehicles maintain all safety disciplines simultaneously would be the greatest advantage of the policy,” a senior government official associated with the framing of ITS told ET.
According to sources, the ITS can also be used in emission based speed enforcement which is based on automated speed enforcement technologies. “The goal is not to avoid speeding as such, but to reduce emissions by improving the flow of traffic, avoiding the stop-and-go dynamics that can raise large variations in vehicle speeds and maintaining traffic speeds within a range at which emissions on a gram per km basis are lowest,” the official added.
The officials have had several rounds of talks with policy makers of countries like Japan, South Korea, Singapore, China and the US. Hong Kong has arguably some of the most diverse public transport options on offer.
The densely populated, bustling region is extremely well connected through metro lines, buses, ferries, tram. To assist people make choices based on individual priorities of speed, modes and cost, the Hong Kong government has developed a Web-based multimodal public transport query system called EasyGo. It is a bilingual system and helps travellers find optimal travelling routes for users in terms of fewer transfer modes, shortest travelling time and lowest fare.
NEW DELHI: Negotiations on the India-Asean free trade agreement (FTA) are unlikely to witness any progress at the third East Asia Summit (EAS) beginning next week in Singapore. Prime Minister Manmohan Singh, who will represent India at the summit, has been briefed by the commerce department on the current impasse in negotiations.
The main area of differences between the two sides is the degree of market access being offered by India on four agriculture products including palm oil. Sources said that there was very little which could happen at the EAS on the bilateral pact at this juncture other than a declaration by both sides on their intention to conclude the negotiations as early as possible.
At the second EAS in Philippines in January this year, it was being hoped that the negotiations on the FTA between India and Asean would be wrapped up by the next summit in November. Although things progressed steadily with the finalisation of sensitive list of items from both sides, the talks got stuck over the issue of market access for palm oil, pepper, coffee and tea.
While India has already agreed to bring down duties on all four products to 50% from the levels existing at the time when negotiations began, Asean wants more. It has demanded that India should bring down custom duties on palm oil to 30% and on tea, coffee and pepper to 20%.Speaking to ET, sources said that India had offered as much market access in the four sensitive products as it could, and it was not possible to budge further.Even if India agrees to go a little further, it would be impossible to open up to the extent the Asean members want. “We have our farmers to protect. How can we forget about their interests in order to get a pact off the ground,” the source said.
The East Asia Summit members comprise the Asean + 3 countries (which includes the then Asean members and China, Japan & South Korea), India, Australia and New Zealand. The third summit is scheduled to begin on November 21.
The framework for a comprehensive economic cooperation agreement (CECA) between India and Asean was signed way back in October 2003 during the second Asean-India summit. The idea was to move towards a free trade regime for trade in goods, services and investment. The Asean, however, insisted that a trade pact for goods should be signed first following which negotiations on services and investments should begin.
CHENNAI: Tamil Nadu, which has been promoting special economic zones (SEZs) since the 1950s, has switched to damage-control mode after allegations of farmland acquisition through unlawful and devious means.
The state's Information Commission has pulled up the industries department for denying information under the Right to Information Act 2005 about land acquisition for industry. This was followed by media reports in Nakeeran magazine about land scams.
Soon after, the DMK government removed its powerful industry secretary Shaktikanta Das from his post. It also transferred other top officials, including Hans Raj Verma, chairman of the Tamil Nadu Electricity Board, who have been accused of involvement in the scam.
The state then went public with a new industrial policy, announcing plans to build a land bank of 10,000 acres.
In its new policy, the state government said that 10 percent of the area in new industrial parks promoted by the State Industries Promotion Corp of Tamil Nadu (SIPCOT) and the Tamil Nadu Industrial Development Corp (TIDCO) would be set apart for social infrastructure.
But accusations still continue to fly thick and fast.
DMK ally PMK has criticised the government's land use guidelines in the new policy. PMK leader S. Ramadoss said: "Overall, the (industrial) policy appears to favour MNCs and large industries, with a bias towards land-based industrial parks and SEZ development suited to highly skilled workers and not aimed at gainful employment and dignified livelihood for Tamil Nadu's vast less-skilled workforce."
For the past year or so, Corporate Accountability Desk (CAD) - The Other Media, an NGO, has been researching the status of SEZs in the state. It has accused the state government of persistently following a policy of turning rich farmland into fallow land, so that it could be handed over to industry.
It cited examples in Kancheepuram district of how land near waterways was acquired in the higher reaches and the flow blocked off so that land downstream became fallow.
The revenue department then stopped collecting taxes from the target agricultural land to prove it was uncultivable.
The NGO also said that in Oragadam, on Chennai's western outskirts, and in Cuddalore, new land registration by people was discouraged from the 1990s.
"As a result, people had to sell their land only to the government, which bought and thus acquired huge tracts for SEZs here at very low costs," the NGO stated.
"Village officers across the state are playing brokers," alleged Madhumita Dutta, coordinator, CAD. The government has told the CAD that 55 SEZs have been approved in Tamil Nadu, holding 32,235 acres of land. Besides, proposals are pending for another 13 SEZs.
But Chief Minister M. Karunanidhi has denied allegations that farmland is being acquired for SEZs.
He informed the state assembly that only 345 acres out of the 10,000 acres that the Tatas need for their titanium project in Tuticorin district was farmland and the rest was fallow.
In August 2006, CAD activist Nityanand Jayaraman had filed an RTI application, seeking information on Tatas' titanium project but met with a blank wall.
In December last year, Dutta moved another RTI application, seeking detailed information on 36 SEZs in Tamil Nadu. She also sought to inspect relevant documents under Section 5 of the Act. She again got no reply.
The Tamil Nadu State Information Commission then took up the matter and, after two hearings, reprimanded the industries department for denying information. CAD has since urged the commission to invoke Sec 18 (3) of the RTI Act, which gives it the powers of a civil court and investigate the matter further.
NEW DELHI: Contradicting the growth numbers given by the government, industry body Confederation of Indian Industry (CII) on Sunday claimed that 17 sectors have recorded negative growth in the first half of the current fiscal.
“It is a matter of concern that more than 50% of the manufacturing sector has recorded either moderate or negative growth,” said CII Industry Council chairman Satish Kaura while releasing the ASCON survey conducted by the chamber.
Contradicting the government’s claim that only one of the 17 industry groups (based on two digit NIC classification) recorded negative growth in April-August 2007, the survey said 17 out of 91 sectors showed negative performance during the first half of the year (April-September). The survey attributed low growth in various segments of manufacturing to rising interest rates, reduced credit availability and a strong rupee.
The FTAs with some countries too have adversely affected manufacturing sector, it said. performance, the survey said, adding, “automobile industry, including motorcycles and three-wheelers, are amongst the sectors in the negative sales growth category”.
NEW DELHI: India's industrial output in September is forecast to have grown 9.9 per cent from a year earlier, easing from the previous month and adding to expectations that official interest rates have peaked.
The median forecast of 10 analysts in a poll put annual growth below the robust 10.7 percent in August.
"Manufacturing should be strong but it will be slower than (the) previous year. I expect growth to be in this region as the festival season kicks in," said Riyaz Khan, economist with the Centre for Monitoring Indian Economy.
Policy makers expect a spate of Hindu and Muslim festivals to boost demand into the end of the year, as people traditionally splurge on consumer goods at this time. So far, growth has been dampened by a series of interest rate rises which have slowed demand for automobiles, real estate and some consumer durables.
Automobile sales between April and October fell 5 percent to 5.6 million units, as high interest rates hit demand for motorcycles and commercial vehicles, data from the Society of Indian Automobile Manufacturers showed.
The central bank has raised interest rates five times since June last year, bumping up those on vehicle loans by 250-350 basis points. Further, the rupee has risen 12.5 percent against the dollar this year, more than any other Asian currency, putting pressure on exports and weighing on the manufacturing sector, which accounts for 15 percent of gross domestic product.
The central bank and the government expect economic growth to moderate to 8.5 per cent in 2007/08 from 9.4 percent in 2006/07. The following table shows forecasts for September industrial output.
COLOMBO: India is heading for a nine per cent growth this year on top of buoyant investments and domestic environment, Finance Minister P Chidambaram said here.
"Aggregate efficiency of both capital and labour and the 35 per cent investment in proportion to the GDP ratio quiet easily translates to about 9 per cent growth," Chidambaram said here.
The Finance Minister, who was replying to questions after delivering the annual Lakshman Kadirgamar Lecture here yesterday, attributed the high foreign exchange reserves of over 250 billion dollars to high capital inflows.
"Capital inflows are very large that is why we have a high foreign exchange reserves," he said.
"If the level of investment in any country is 35 per cent and the country can make gains with capital and labour. I think it is reasonable conclusion that that country will witness very high growth," Chidambaram remarked.
When asked about the "secret mantra" behind the high economic growth being registered by India during the last few years, Chidambaram said "there is no secret to growth. Sound macro economic policies followed anywhere in the world will lead to high growths".
"India's growth is led by investment and domestic environment. In fact in the last four years, investment is a prime driver of growth and domestic demand and consumption is a close second. Our investment to GDP ratio is now little over 35 per cent," he said.
According to official estimates, the economy registered a growth rate of 9.3 per cent during the first quarter of FY 2007.
Gold prices surged to 18-month high level on the bullion market on heavy buying by stockists and retailers for the festival season amid reports of the metal rising to record high levels in global markets. As the festival of Dhanteras approaches, retailers indulged in buying silver and gold coins as token purchases on the auspicious day.
Marketmen said the gold rising to 28-year high in global markets over $817 an ounce, a level last seen in January 1980, further fuelled trading sentiment and pushed up gold to a level recorded in May 2006 in India.
Standard gold, which commenced the day higher at Rs 10,500 per ten gram, eased to close at Rs 10,440, still showing a gain of Rs 140. Ornaments also rose by Rs 140 at Rs 10,290 per ten gram while sovereign rose by Rs 75 at Rs 8,350 per piece of eight gram.
Silver ready recovered to conclude higher by Rs 300 at Rs 19,350 per kilo on hectic buying triggered by firming trend in London bullion market. The metal in London rose above $15 an ounce.Silver weekly based delivery shot up by Rs 370 at Rs 19,450 a kilo on speculative support. Silver coins attracted buyers attention due to festival session and gained Rs 100 at Rs 25,200 for buying and Rs 25,300 for selling of 100 a piece
Imposition of emergency in Pakistan has dealt a severe blow to its economic relations with India as businessmen from the two countries have stopped booking fresh orders.
As an immediate fallout, a business delegation from the Federation of Pakistan Chambers of Commerce, which was scheduled to visit India from November 13, has cancelled its programme.
After a series of talks between Commerce Secretaries of the two countries, India and Pakistan had recently allowed resumption of trade through land route. Besides, Pakistan had also agreed to allow trade through the line of control in Jammu and Kashmir.Though the business volume at $1.6 billion had remained low, the two neighbours recently started trade in items like cement, coal, potatoes, onions.
Aiming to achieve a trade target of $10 billion by 2010, the two countries had recently agreed to expand their basket to include items like cement and tea. Former President of the Federation of Indian Export Organisations (FIEO) O P Garg, who exports carpets to Pakistan, said that his counterparts across the border were worried. He said fresh orders have stopped.
Finance Minister P Chidambaram has said that he expects the country''s per capita income to touch $4,000 by 2025, shattering all forecasts by global economic analysts.A BRIC report has forecast India''s per capita income would touch $800 by 2010 and $1,149 by 2015. But we have exploded this assumption as our per capita income has already touched $1,000 this year and expect it to touch $4,000 by 2025, FM said.
Today one cannot get a farm labourer for below Rs 80, carpenter won''t be available for less than Rs 150 and a senior mason will charge Rs 200. People are demanding and getting more. This aspiration is driving consumption which will make India a middle income country in next 15-20 years, said Finance Minister. Chidambaram said that assumptions on Indian cell phone market given in a book had already been proved wrong by consumers.
It has been said that India''s cell phone usage will not double to 400 million users from 200 million very easily. This assumption has been blown to pieces. We are adding 60 million users annually, he said.India is a fast changing market driven by people''s aspirations to lead a better life and move up the ladder. This aspiration is breaking down class and caste barriers, he said. India is a fast changing market, which cannot be captured in a series of articles, essays or books. By the time a book is written, edited and published much of what has been written would become outdated. This makes India an exciting place to be in, the Finance Minister said.According to him, markets will move faster than trade analysts and Vice-Presidents of Marketing of large companies to comprehend.
KOLKATA: Given the current trend in India’s growth trajectory, it would not be difficult to achieve the target of raising bilateral trade to $20 billion by 2012, the director-general for Asian and Pacific affairs, federal foreign office of German government, Hans-Henning Blomeyer-Bartenstein, said.
Speaking at a symposium on Indo-German collaborations, organised by Indian Chamber of Commerce, Mr Bartenstein indicated that given the current dynamism of the Indian economy, Germany is interested in investing in transport, infrastructure development, renewable energy, efficient management of energy and environment, science and technology in collaboration with Indian partners.
Already, the fora on Indo-German Energy and Indo-German Environment are trying to explore possibilities of joint collaboration in generation of renewable energy, particularly solar and wind power-driven energy and other projects relating to efficient management of energy to cut down on pollution. “Such initiatives will be further strengthened in the coming months,” said Mr Bartenstein.
In the first six months of 2007, bilateral trade between the two nations has touched a record $7.62 billion, up by 15.63% over the corresponding period last year.
India’s exports to Germany during January-June, 2007, has increased 12.64% to $3.2 billion and imports from Germany by 17.86% to $4.44 billion. Among foreign investors in India, Germany ranks 6th with total investment of $1.7 billion.
During the current festive season, India Inc''s spend on gifts and greetings likely to go up by 48 per cent to Rs 2,000 crore compared with Rs 1,350 crore last year, according to industry body Assocham. It said the sectors that would take the lead and have budgeted their expenditure on gifts include pharmaceutical, IT and BPO, FMCG, real estate, tourism and aviation and retail. According to rough estimates of the chamber, pharmaceuticals, real estate, FMCG and civil aviation all put together are likely to distribute gifts worth Rs 160 crore as these sectors have been growing at double digit.
Eight Indian firms, primarily from the financial services, IT, retail and aviation sectors may invest in Hong Kong next year, Invest Hong Kong''s Associate Director-General Simon Galpin said. Invest Hong Kong is a department of the Hong Kong Special Administrative Region and is the government''s arm charged with attracting foreign investment into the island. Presently, nearly 20 prominent Indian firms, including Air India and State Bank of India (SBI), have investments in Hong Kong. Total trade between India and Hong Kong, which stood at USD 7.67-billion in 2006, is expected to go up this year with a number of new players increasingly showing interest to Invest in Hong Kong. Other Indian firms, who have operations in Hong Kong include ICICI Bank, Bank of Baroda, New India Assurance Company, HCL Technologies, Satyam Computers and Tata Consultancy Services. Two more banks are understood to be opening their branches in Hong Kong in the near term. According to Invest HK, FDI inflows into that country have tripled in the last three years, from $ 13.6-billion in 2003 to nearly $ 43-billion in 2006, while inflows in the first two quarters of this year are estimated to be around 27.1-billion.
India has expressed optimism on Japanese investment in the country to touch $5 billion by 2010, according to department of industrial promotion and policy (DIPP). Addressing a seminar on ''Doing business in Japan'' organised by Ficci, Mr Thade said Japanese FDI is expected to flow into four sectors-automobiles, auto components, chemicals and infrastructure. The DIPP director said from July 1991 to July 2007, Japan''s cumulative FDI inflow into India is to the tune of $2,585 million, which is only 5% of the total FDI flow of $60.2 billion into India since July 1991. Mr Thade pointed out that the balance of trade was in favour of Japan, which is the 13th largest trading partner of India. A closer look at the Japanese investment pattern over the last decade and a half reveals that Japanese companies invested in countries of Asean and China for the purpose of re-exports to Japan. This clearly indicates that trade and investment are interlinked. Strengthening India''s relationship with Japan is a matter of high priority for us, he said. Mr Thade''s comments come at a time when the Japanese automobile majors like Suzuki, Toyota and Honda are working on plans to increase their exposure in the Indian market.
Naoyoshi Noguchi, director general of Japan External Trade Organisation (Jetro), who was also present at the meeting, indicated that a leading Japanese consumer electronics company, which had shut down its manufacturing facility in India, may again reconsider setting up its production facility in the country.
