India Upbeat In Business, Says Survey

Riding on expectations of higher growth, increased inventory levels and greater employment generation, business confidence for the period starting October till end of the current fiscal is upbeat, says a survey by a leading Indian industry chamber.This is much higher than the same survey conducted for the period April-September 2007-08, the survey by the Confederation of Indian Industry (CII) indicated.

The CII business confidence index (CII-BCI) showed the current situation index (CSI) and expectations index (EI) was higher among non-manufacturing firms as compared to manufacturing firms.As many as 59 per cent of the respondents indicated the gross domestic product (GDP) growth rate to be around 9 per cent, while 22 per cent indicated 9 to 9.5 per cent.About 87 per cent of firms expressed plans to increase investment during October March 2007-08 and 59 per cent have revealed capacity utilization in the range of 75 to 100 per cent.

A large number of firms also expressed their decision to increase the value of production. About 66 per cent of the companies surveyed have already increased their scale of production during the first half of 2007-08.All these are expected to generate considerable employment by the second half of the upcoming financial year.

Despite a surging rupee against the weakening dollar, exports would continue to increase. However, the sector continues to face procedural delays, which acts as long-standing hurdle for exporters, which raises transactions costs and needs to be addressed urgently, the chamber said.

Modi Policies Cash Excellent Economics

Narendra Modi''s victory has been ascribed to two factors - an unsubtle exploitation of Hindu communal sentiments and an admirable record of economic development. While the first can be described as the standard defining characteristic of his Bharatiya Janata Party (BJP), the second reason is new in Indian politics.

It is also all the more unusual because the growth has been the result of market-friendly policies, marking a sharp departure from the country''s customary, if unrewarding, faith in socialism.The Gujarat chief minister, therefore, can be said to have charted a new course with the potential of setting a trend that can be of immense benefit to the country.The difference between his approach and that of the Manmohan Singh government is that the latter has been diffident about the pro-capitalist economic reforms that Singh initiated as the finance minister in 1991.However, both he and his party, the Congress, have been somewhat apologetic about the endeavour, presumably because it went against the party''s policy of establishing a socialistic pattern of society, enunciated in 1955.

Their sense of having done something wrong and even harmful was accentuated by the Congress''s 1996 defeat that was ascribed by the socialists in the organisation to Singh''s pro-rich and pro-business economic reforms.This point of view was strengthened in the Left-oriented political class by the defeat of the Andhra Pradesh chief minister Chandrababu Naidu, who had also tried to break away from the usual public sector- and subsidy-based approach to the economic scene. While the private sector was shunned by this group of politicians because of its profit-oriented attitude, free power for the farmers and a wide range subsidies - whether fertilisers or food grains - were their mantra for electoral success, notwithstanding the well-known resultant wastage.

India Inc''s Business Confidence Rises

India Inc''s business confidence has improved for October-March 2007-08 (H2) after a decline during April-September 2007, according to CII''s business outlook survey. Nevertheless, the business confidence still remains lower than the corresponding period last year.

CII''s business confidence index for October-March this fiscal, at 66.3, saw an increase of 2.4 points from April-September 2007. However, the index was down by 5.5 points when compared to the corresponding period last year. Business confidence, constructed as a weighted average of the Current Situation Index (CSI) and the Expectations Index (EI), was higher among services (68.3) compared with manufacturing firms (65.1), the CII survey noted. CSI, which indicates current business conditions, increased marginally by 0.2 points for October-March against the previous six months. However, when compared to the corresponding period last year, it was down by 6.3 points, reflecting a decrease in current business sentiments. EI, which reflects the perceptions of Indian industry with regards to performance of their company, sector and the Indian economy for the period October-March, gained 3.5 points over the first half of the current fiscal, reflecting higher expectations in terms of performance during the second half of 2007-08. However, the EI is down by 5 points when compared to the second half of the last fiscal, reflecting lower growth expectations of GDP and other aggregates during 2007-08, CII said.

About 59% of the respondents in the CII survey said they expected the GDP growth in 2007-08 to be approximately 9%, with around 22% of them expecting it to be in the range 9-9.5%. Also, 87% of the respondents said they planned to increase investments during the second half of the current fiscal. Around 59% of the respondents also said capacity utilisation for October-March this fiscal would be in the range 75-100%.

Govt Likely To Do Away With TDS On Co Bonds

New Delhi: The finance ministry may announce the abolition of tax deducted at source (TDS) on corporate bonds in Budget 2008-09, the source said. The move is expected to stoke the near-dormant secondary market in corporate bonds by bringing them on a par with government securities (G-Secs). TDS on G-Secs was abolished in 2000, a move that had a positive impact on secondary trading in these bonds.

The proposal was discussed at a recent meeting at North Block, which was attended by representatives of regulators such as the Securities and Exchange Board of India, the Reserve Bank of India and the Insurance Regulatory and Development Authority. The finance ministry''s revenue department had initially not been keen to extend the TDS break to corporate bonds on grounds that it would raise the risk of tax evasion since a large number of unorganised retail investors invest in corporate bonds. TDS has been a major irritant in the corporate bond market because it is not uniformly applicable to all investors, making it difficult to trade bonds between the two classes of bond-holders. For instance, insurance companies and mutual funds are exempt from TDS whereas others are not. The proposal to scrap TDS on corporate bonds is in line with the growing demands from policy planners in the interest of creating a liquid bond market. It was a key recommendation of the 2005 RH Patil committee on corporate bonds and securitisation and was seconded by the Deepak Parekh committee on infrastructure financing in its May 2007 report.

In May 2007, the Securities Contracts (Regulation) Amendment Bill, 2007, was passed to provide a legal framework for securitised debt trading. The trading platform for corporate bonds at major exchanges started from July 1.

Chidambaram Expects More Bids For IFCI

India''s finance minister on Dec 29 backed state-run lender IFCI''s decision to reject a bid from a consortium of Sterlite Industries and Morgan Stanley and said he expected more offers to come in when the bidding process starts again.We got a single bid, a conditional bid. Therefore, IFCI rejected the single, conditional bid. And in my view that''s a correct decision, Palaniappan Chidambaram told reporters on the sidelines of an event in Bangalore.IFCI Ltd''s shares had plunged more than 23 percent on Dec. 20 after its board turned down an offer from the consortium led by Sterlite Industries to buy a 26 percent stake.The shares have dropped more than 18 percent since IFCI announced the rejection of the bid, but are still up 575 percent this year.

Rupee Closes At 39.42 Against Dollar

Mumbai: The rupee was unchanged against the dollar as there was both demand and supply of dollars. The domestic currency opened at 39.41/43, fell to a low 39.445 and touched a high of 39.40. It closed the day at 39.41/42, unchanged from Dec 26 close. In the forward market, the 6-month closed at 2.02 per cent (1.88) and the 12- month ended at 1.46 per cent (1.37).

Core Sector Growth Declines To 4.5pc In October

New Delhi: The fall in production of crude petroleum, petroleum refinery products, cement, and carbon steel has cut down the growth of the six infrastructure industries to 4.5 per cent in October 2007, compared with a growth of 9.9 per cent in the same month last year. According to data released by the Government on Dec 27, the output of crude petroleum reported a negative growth of 0.1 per cent in October this year as against 9.3 per cent in October last year. During the April to October period of the current financial year, the growth of the core infrastructure industries, which has a 26.7 per cent weightage in the Index of Industrial Production (IIP), fell to 6.2 per cent from 8.9 per cent in the corresponding period last year. Electricity generation in October this year also fell to 4.2 per cent from 9.7 per cent in the same month last year. While coal production saw a growth of 9.2 per cent, cement and finished steel production for the month declined.

Centre To Help Upgrade Goa''s Infra: PM

The Government will offer support to strengthen Goa''s knowledge sector and also its infrastructure, Prime Minister Manmohan Singh said while inaugurating the Goa Broadband Network at Porvorim near Margao. You have a lot of infrastructural bottlenecks. They have cleared the four-laning of the entire 139 kms length of NH-17 including a second bridge on the Zuari River under Phase III of the National Highway Development Programme. The Government has also approved the upgrading of 69 km of NH 4A, involving an investment of over Rs 1,500 crore. They will provide financial assistance for improving state and district roads and the State Government should send detailed proposals in this regard soon.

Exporters Want Exemptions

Jalandhar: Declaring that the exporters of the state have been very adversely affected due to the rupee gaining strength, AK Kohli, senior vice-president of Punjab Chamber of Small Exporters, has asked to Prime Minister Manmohan Singh for his intervention to pressure the state governments for help and compensation. Due to the increasing rupee and a depreciating dollar, states like Punjab exempted export units from entry tax and house-tax, who were already under huge financial losses. While welcoming Union Finance Minister P Chidambaram and Commerce Minister Kamal Nath''s statement that the states should refund local taxes like VAT and octroi on exports, Punjab Chamber of Small Exporters demanded the Union government should allow the exemptions up to 2010-11 and lower interest rates on export credits. Exporters also demanded that units with up to 100 workers be kept away from the purview of the Factory Act to decrease the huge paper work in the face of the cut-throat competition in the international markets.

CII Seeks Entry Tax In MP Abolished

Bhopal: The Confederation of Indian Industry (CII) has invigorated its demand for the elimination of entry tax in MP to make industry more competitive. The neighbouring states of Maharashtra and Gujarat have already declared the abolition of octroi in their states without introduction of any entry tax. Madhya Pradesh requires to follow this policy to make industry competitive, the apex chamber said in a memorandum of understanding submitted to the State Chief Minister Shivraj Singh Chouhan.

The state government levies entry tax on the sale and purchase of the raw and finished goods. Interestingly, entry tax is imposed at the rate of 1 per cent on all raw materials purchased and re-imposes 2 per cent on finished goods. Effectively entry tax is imposed at 3 per cent, which is totally irrational in the present global competitive business. To protect the industry within the State, the government should pay entry tax on goods purchased and sold within the state. The state government has also increased entry tax on coal from 1 per cent to 2 per cent and the CII pointed out that the coal price itself had been increased two-folds in the last 3 years.

Rupee Ends At 39.42 Against Dollar

Mumbai: The rupee rose slightly against the dollar tracking the gains in the stock market. It opened at 39.41/42, reached an intra-day high of 39.38 and ended the day at 39.41/42, against the previous close at 39.44/45. Market participants said that low volumes on account of the year-end will keep the rupee in the range of 39.38 and 39.44. In forwards, the 6-month closed at 1.88 per cent (1.69) and the 12-month ended at 1.37 per cent (1.25).

India Inc To Have Easier M&A Ride

NEW DELHI: The government has decided to simplify the norms for mergers and acquisitions by removing the bottlenecks that slow down India Inc’s inorganic growth. The idea is to offer a fast-track system which will spare companies from the lengthy process of securing high court sanctions for M&As, if they meet certain criteria.

The ministry of corporate affairs is working on two types of fast-track clearances for M&As. The first one is a new concept called ‘contractual mergers’. Under this, companies needn’t wait for the high court approval, which will take at least six months to materialise.

This proposal, originally mooted by a panel headed by eminent lawyer Shardul Shroff and later endorsed by the JJ Irani panel on company law, will get legal recognition soon, officials said. The second proposal is a simplified procedure for M&As between group companies and unrelated private companies.

Under the contractual merger plan, companies can decide to merge through a contract which should be approved by the shareholders later. Such a window is available in many other countries. Currently, all private sector companies need to get the approval of high courts for M&A activities, while state-run companies have to obtain the government approval.

These clearances will not come before certain agencies — official liquidators attached to high courts as well as regional directors and registrars of companies — certify that the companies were not run in a way prejudicial to public interest. The whole process takes a long time. This form of mergers will have some built-in restrictions, which will be spelt out in the new company law.

The new norms for M&As between group companies will cover mergers between a parent and a subsidiary as well as mergers between two unrelated private companies where public interest is minimal. The logic is that if outsiders are not involved, it is unfair to subject the internal matter of a group or of two private companies to the rigours of an elaborate process designed for public limited companies where the public and other stakeholders are involved.

The new merger norms for these entities will also be listed in the new company law. “Now, with the strong regulatory emphasis on compliance, a lot of groups are merging their arms to lower the cost of compliance. These days, many companies are looking at a compact and simple structure, which is easy to manage,” said an official.

The fast-track merger code is in addition to the government’s plan to introduce the concept of deemed approvals, which ET had recently reported. Under this, approval will be presumed to have been granted by various regulators beyond a particular time.

Govt Comparing Data On Underdeveloped Districts

Mumbai: The Union Government will recur to specific policy intervention for districts with chronic unemployment and industrial underdevelopment. Dr Kumar said the Department of Industrial Policy and Promotion is collating the data on these districts. It would be based on 16 reports of the Planning Commission, some of which date back to the 1960s. There will be intervention from the Government to solve problems like law and order, connectivity, availability of raw material, and power supply. Dr Kumar added that the National Rural Employment Guarantee scheme and Bharat Nirman initiative wll be focussed in these districts. They required blue collar jobs and industrial development in the hinterland, all of which will come from industrial and manufacturing activity. Of the global population below 24 years of age, about 20 per cent stays in India but a majority of them are unemployable.

Direct Taxes Exceeds Indirect Tax Revenues

New Delhi: For the first time, the Centre''s net direct tax collections have exceeded its indirect tax receipts, going by the latest tax revenue mobilisation data available with the revenue department. The net direct tax collections have as on date in the current fiscal reached the Rs 2 lakh-crore threshold. Direct tax collections have been reporting hefty growth rates of over 40 per cent this fiscal, increasing expectations that direct tax receipts will exceed indirect tax revenue some time during 2007-08.

Up to end-November this fiscal, customs and excise duty collections had cumulatively reached Rs 1,41,851 crore. Service tax collections increase to October this year stood at Rs 25,420 crore. Direct tax collections surpassing indirect tax revenues is the hallmark of a progressive taxation system since indirect taxes like excise are paid by poorer sections of society on par with a higher income earning individual. Only three private sector companies Tata Steel, Reliance Industries and ICICI Bank figure in the top ten advance tax payer league. The top ten advance income tax payers in the country have cumulatively increased to December 15 this year forked out 30 per cent more at Rs 22,196.7 crore.

Rupee Ends At 39.45 Against Dollar

Mumbai: The rupee strengthened by 10 paise to close at 39.44/ 45 against the greenback on Dec 24, backed by good dollar selling throughout the day. The home currency opened at 39.46/48 and saw an intra-day high of 39.43 on dollar selling, before ending the day at 39.44/45, up from the previous close of 39.54/55. In forwards, the six-month premia closed at 1.69 per cent (1.53 per cent) and the 12-month closed at 1.25 per cent (1.15 per cent).

Hydro Power Policy May End Tariff-Based Bidding

NEW DELHI: The government has decided to give exemption to private developers from tariff-based bidding for a period up to January 2011. So far, the exemption was available to only public sector companies. The move is aimed at attracting private investments in the sector.

The exemption proposed by the power ministry as part of the new hydro policy, expected to be cleared by the Cabinet soon. “A Cabinet note in this regard has been approved with comments by other ministries and it is in the final stage of drafting,” an official said.

“Tariff-based competitive bidding can not be undertaken for hydro projects in the country due to high levels of uncertainties arising out of construction risks, adverse geological conditions, delays in land acquisition, natural calamities, among other things. Keeping these things in mind, it has been proposed to exempt all the companies from tariff-based bidding in this regard,” an official in the power ministry said.

The Tariff Policy 2006 has proposed that all future procurement of power by utilities will have to be made through a process of tariff based bidding. It has, however, exempted central and state PSUs from the provisions.

Private sector projects would also now enjoy a similar waiver as the policy has proposed that tariffs for such projects would also be determined on cost plus basis by the appropriate regulatory commissions under the section 62 of the Electricity Act.

The exemption would be applicable to only such private developers who obtain the approval of the Central Electricity Authority (CEA), sign power purchase agreements with the distribution companies or licensees and achieve financial closure before January 2011.

Tariff-based bidding, however, would be applicable for all projects to be awarded after 2011. The bidding has already become a norm for thermal power projects. While the policy has proposed booster in the form of exemption from tariff based bidding for next four years, it has put additional responsibility on the developers to bear the cost for getting land allocated for the project.

This additional expenditure would also not form part of the project cost or tariff. However, as a relief the policy has proposed a special incentive by way of up to 40% of saleable energy being permitted for trade as merchant sales.

CLB May Replace BIFR As Healer

NEW DELHI: The government is planning to amend the Sick Industrial Companies Repeal Act to enable revival as well as liquidation of sick units easy. The move aims at bringing an alternative system for restructuring of ailing companies after the proposal for setting up of a tribunal could not take off.

Under the proposed system, the Board for Industrial and Financial Reconstruction (BIFR), the body that presides over corporate revival, will be wound up and the power would shift to the Company Law Board (CLB), a judicial body. CLB resolves disputes between corporates and promoters involving cases of mismanagement and oppression.

The government will also set up more benches of CLB at different cities. The ministry of corporate affairs will also empower itself with the freedom to appoint new members. The power to hear appeals of CLB’s decisions on reconstruction and liquidation will rest with various high courts under the new system.

At present, this power is vested with the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). Under the transitional system, high courts will continue to preside over mergers and acquisitions, while the central government will exercise this power in the case of public sector companies.

The government had earlier enacted the Sick Industrial Companies Repeal Act of 2003 to wind up BIFR and replace it with the National Company Law Tribunal (NCLT). However, this has not been notified because setting up NCLT was getting delayed due to litigation. Now, to bring in the interim arrangement, this Act will again be amended.

The new system will remain in place till the time the government sets up the NCLT and an appellate body to deal with all corporate processes like mergers, acquisitions, restructure and liquidation. That will not happen immediately as the government has to wait till the Supreme Court decides on a petition challenging the constitutional validity of these two proposed entities.

A constitutional bench of the apex court is examining the case. NCLT and its appellate tribunal would be designed as sophisticated platforms where corporate houses could get swift time-bound approvals for various activities.

Andhra Govt To Extend NREGP

Hyderabad: The Andhra Pradesh Government has determined to expand the National Rural Employment Guarantee Programme (NREGP) to all the mandals across the State from April 1 next year. This employment programme is currently being implemented in 656 mandals of 13 districts providing job cards to 81 lakh families. Of these, 64.8 lakh people of 42 lakh families have been benefited. The Chief Minister''s Office, the Chief Minister, Dr Y.S. Rajasekhara Reddy, who reviewed the progress of welfare schemes on Dec 23, said the Government will shortly depute a delegation to the Centre to make a presentation on the State''s success stories, including the supply of free power to the Planning Commission. While the number of service connections reported significant increase, the State Government was able to continue free power supply to the agriculture sector. While the number of connections increased from 23.74 lakh in 2004-05 to 25.27 lakh in 2006-07, the overall power consumption went up from 13,394 million units to 15,640 million units.

Industry Against Mergers Regulation

The amendment of the Competition Commission Act - which aims to regulate mergers, amalgamations and acquisitions of Indian enterprises - will adversely affect the growth of industry, says a leading business chamber. M&A (merger and acquisition) activity in today''s context is an engine for economic growth. Any law that restricts the present status will result in loss of transactions, deny the opportunities for absorption of advanced technologies and impede growth, the Confederation of Indian Industry (CII) said in a statement.

The Competition Commission might take up to 210 days for approving such a proposal and a waiting period of so many days may not augur well for a specific deal, CII said. It also said the mandatory notification requisite should not be based on the turnover criteria, as envisaged in the amended version of the act. The asset/turnover criteria is coupled with the concept of Group covering within the ambit of regulation business conglomerates without having regard to the commonality of the product market being serviced by the members of such conglomerates, CII said.

India Inc Raises Over Rs 45,000 Cr In Ipos, Follow-Ons In 2007

New Delhi: Marking the highest mobilisation in a single year, Indian companies are pegged to have mopped up Rs 45,062 crore via initial public offerings (IPOs) and follow-on public offerings (FPOs) during 2007, almost 85 per cent more than last year. While over 100 IPOs grossed close to Rs 34,134 crore this year, six FPOs during the year raked-in another Rs 10,927 crore. About 45 per cent of the total IPO mobilisation came from the realty sector, this year. As many as 12 companies from the real estate domain got listed and 11 of those saw huge premiums after listing. This shows markets'' appetite for good real estate firms. Interestingly, the average size of the IPOs in 2007 increased to Rs 350 crore against about Rs 260 crore in the previous year. It may be called back that fuelled by DLF''s mega public issue of Rs 9,187.5 crore, the total IPO mop-up in June had exceeded all expectations garnering close to Rs 11,906 crore, while the FPOs had garnered another Rs 10,570 crore. The IPO realisations in January stood at about Rs 2,786 crore, in February at Rs 4,503 crore, and in March at about Rs 460 crore. India Inc raised Rs 682.5 crore in April and Rs 494 crore in the following month. The realisation in July had been estimated at Rs 3,603 crore, in August Rs 666.57 crore, in September Rs 3891 crore. October and November grossed Rs 268.85 crore and Rs 3393.20 crore, respectively.

Pundits Sell Recoupling Story As Market See-Saws

MUMBAI: Equity market mandarins from Goldman Sachs and Morgan Stanley first proposed the theory of decoupling, an economic state, wherein equity markets exist without correlating itself with other markets or insulated from external factors. The theory was new, zesty and there was no reason why one should not buy the theory.

But as December rolled in with fears of an US slowdown; credit collapse; sub-prime worries and a falling dollar, proponents of the decoupling theory are astutely debunking their claims.

Barely a couple of weeks ago, desi equity analysts were vocal about India decoupling from world markets. Now, with the home market toeing the global line, the decoupling theory appears to be fast losing ground. The new theory is — no market can stay insulated from global pressures.

The need to switch theories took flight when Morgan Stanley chief Stephen Roach recently said: “Decoupling is a good story, but it’s not going to work going forward.” Goldman Sachs economist Peter Berezin coined a new term and said the “Year 2008 will be the year of recoupling”.

“Analysts across the world are not expecting decoupling now. If growth in the US slows down, Japan, Europe and China would be badly hit. If China is hit, it will rock emerging Asian markets Korea, Taiwan, Philippines and Indonesia. India would also be marginally impacted,” said ICICI Bank private banking global research head G Ramachandran.

Of the 38 monitored countries, Goldman economists expect growth to slacken in 26 and strengthen in a dozen economies. This, according to reports, will cause global growth to slowdown from 4.7% to 4% next year.

Deutsche Asset Management’s investment specialist Bill Barbour maintains that there is nothing as decoupling of markets. “Everyone talks about decoupling of the US economy with Asian economies. Now, that’s a remote happening. Even if it does, the US still accounts for a huge amount of growth. If the US slows down, it will impact all other economies,” Mr Barbour says.

“If the US GDP comes down in the range of 1.5% to 1.7%, there is very little chance of decoupling. If the decline is more, every market would be impacted. Decoupling happens in specific zones, it is not across markets phenomenon,” says Credit Suisse Securities’ research head Nilesh Jasani.

In case of sub-prime credit defaults, the initial impact was thought to be only on the US economy. But from what experts feel now, sub-prime credit is more of a high-credit condition, moving across different markets and economies. Essentially, the US accounts for one-third of the world GDP and 14% of the world trade and hence is important.

“The Indian market has a higher integration on account of fund flows. However, despite the US economy slowing down, the world GDP growth has held up nicely above 5%, led by emerging markets and Asian economies.

In the strict sense, emerging markets might not decouple, but will certainly diverge from the American market. This could be one reason why emerging markets have not caught cold, despite the US sneeze,” said Enam Securities’ economist Sachchidanand Shukla.

BRIC Nations Raise $131 Bn From Debt Mkt

NEW DELHI: Brazil, Russia, India and China (BRIC) have raised $131.1 billion from debt markets in the year so far, while India’s share stands at just over one-sixth of the kitty.

BRIC nations raised the funds through debt markets in a total of 606 deals in 2007, against $120 billion mopped via 736 deals in the year-ago period, according to a data compiled by global consulting firm Dealogic.

India Inc has raised around $20 billion so far this year through debt capital markets, against nearly $13 billion garnered in the corresponding period last year.

Debt capital refers to funds raised by corporates through instruments such as bonds, including money secured from derivative instruments, such as futures, options and swaps.

Interestingly, China’s debt capital market (DCM) volumes more than doubled this year to $41.9 billion versus $21.6 billion in same period last year.

Capital Gains: Blue-Chip Psus May Pay Bonus

NEW DELHI: It’s party time for investors who have remained invested in public sector companies. The government plans to ask blue-chip PSUs including NTPC, BHEL, SAIL, ONGC, IOC, BPCL, HPCL and Gail to issue bonus shares, as their reserves and surplus have increased to several times their paid-up capital.

The Prime Minister’s Office (PMO) may issue a directive to PSUs having paid-up capital over Rs 100 crore to consider issuance of bonus shares.

“The department of public enterprises (DPE) has prepared a list of 75 PSUs, including about two-dozen listed companies that are sitting on huge reserves and surplus. Companies are shying away from issuing bonus shares. As the final decision is with the administrative ministries, DPE plans to take the PMO’s help to direct PSUs to issue bonus shares. PMO would intervene in case of such companies where paid-up capital would be Rs 100 crore or more,” a government official said.

According to official guidelines in place for public sector enterprises (PSEs), they should issue bonus shares to its shareholders if their reserves are in excess of three times their paid-up capital.

While retail shareholders of listed public sector companies stand to gain, the major beneficiary would be the government, the largest shareholder. Oil companies are currently reluctant to issue bonus shares even though IOC’s reserve and surplus are 29 times (Rs 33,365 crore) its paid-up capital (Rs 1,168 crore).

In case of HPCL, it is 28 times (reserves Rs 9,260 crore, paid-up capital Rs 339 crore), BPCL 27 times (reserves Rs 9,912 crore, paid-up capital Rs 362 crore), and ONGC 28 times (reserves Rs 59,785 crore, paid-up capital Rs 2,139 crore). Oil companies, suffering due to massive under-recoveries, lack the confidence to issue bonus shares.

“In the current market scenario, there is no certainty regarding revenue streams and therefore, issuance of bonus shares might result in reduction in dividend yield to the shareholders,” IOC chairman S Behuria told DPE.

But officials in the petroleum ministry as well as ministry of heavy industry and public enterprises do not buy this logic. “Most of the companies are sitting on huge reserves and they are not suffering from global oil-price hike. The shareholders must be appropriately rewarded,” an official in the petroleum ministry said.

PSU officials, especially from blue chip companies, consider the bonus share move an encroachment on their autonomy. Government officials do not agree.

“The government has vested the board of the navratna and mini-ratna companies with the final authority on the bonus issue. But this clause is applicable only as long as the companies have the stipulated number of independent directors on their board. Most of them do not meet this criterion,” a source in DPE said.

If the companies do not have the stipulated number of independent directors on their board, the government has right to intervene in their decision-making process.

World Bank Approves $225 Mn Loan To Bihar

WASHINGTON: The World Bank has approved a $225 million loan to Bihar aimed to support the state in implementing reforms in fiscal policy, public financial management, and governance in order to boost economic growth.

"While India has emerged as one of the fastest growing countries in the world, it faces the challenge of addressing widening economic disparities. Bihar is the poorest state in India with about 39 per cent of population living in poverty," The Bank said in a statement.

The First Bihar Development Policy Loan is designed to improve fiscal policy, public financial management and governance.

"It aims to boost economic growth through reforms in agriculture, investment climate, and basic infrastructure, with an emphasis on roads. It will also support improving public service delivery in education and social protection," it said.

"Bihar is a crucial state for poverty reduction and inclusive growth in India," said Isabel Guerrero, World Bank Country Director for India.

Bihar registered the economic growth of 4 per cent in recent years which is much slower than the rest of the country, while the state has 8.5 per cent of India's population, it accounts for only 1.6 per cent of the country's GDP.

"It is India's poorest as well as one of its slowest growing states. But with arable land, water resources, favorable demography, and unexploited tourism potential, Bihar has the necessary preconditions to accelerate development. By focusing on accelerating growth and improving public service delivery, this operation will assist Bihar towards achieving the development goals set out in its Eleventh Plan," she added.

Rupee Rises To 39.51 A Dollar

The rupee on Dec 19 strengthened by three paise to 39.51/52 against the US currency on the back of sharp recovery in equity markets and sustained dollar selling by exporters despite heavy capital outflows. In active trade at the Interbank Foreign Exchange (Forex) market, the domestic unit opened sharply higher at 39.46/47 a dollar from Tuesday''s close of 39.54/55.

Dealers attributed initial smart recovery of the rupee to firm stock markets where the benchmark Sensex was up by over 318 points in morning deals. Sustained dollar sales by exporters also aided the rupee sentiment.But some dollar demand from oil refiners to meet their import requirements weighed on the rupee and it fell back moderately to quote at 39.51/52 a dollar, still up by three paise over previous close. Meanwhile, the global crude oil prices hovered above $90 a barrel in Asian trade on De 19 morning.

India Can Push Growth To 10%: PM

Despite the turmoil in the global economy, India can not only sustain its high growth momentum but also push it to 10 per cent with right policies and dedication, Prime Minister Manmohan Singh said on Dec 19. It is possible that with correct set of policies and dedicated effort by both the central and state governments, we will not only maintain this momentum of high growth but may be able to raise it to 10 per cent, the prime minister said.

The high growth rate has become possible because of historically high savings and investment rates, the prime minister told the 54th meeting of the National Development Council (NDC).The NDC, which is the highest institutionalised forum for interaction between the central and state governments for developmental issues, was meeting to approve the Rs 36.44 trillion 11th Five-Year Plan. The prime minister also dwelt on the current turmoil in the global economy but added that while these could have an impact on Indian economy, it cannot derail it completely because of the inherent resilience.

Bengal CM Feels The Need For Fresh Look At SEZ Policy

New Delhi: West Bengal Chief Minister Buddhadeb Bhattacharjee strongly feels that the policy on the zones needs to be reviewed. He has called for a need to limit the number of sectors eligible for setting up Special Economic Zones (SEZs). Speaking at the National Development Council meeting held here, Bhattacharjee said that Industry groups to be covered under the scheme should be identified in the first instance instead of extending it to all and sundry.

At present, there is no limitation on any industrial sector to set up the tax free zones. The government has formally approved 232 SEZs. In addition, 172 have received in-principle approvals. Bhattacharjee''s statement comes against the backdrop of widespread unrest in West Bengal over land acquisition for industrial projects. Significantly, the state has 16 formally approved SEZs while an equal number have got in-principle approvals. Bhattacharjee also vouched for upper limit on the area of SEZs. Currently, there is a 5,000 hectare cap on the maximum area of the zones.

Recently, speaking at the India Economic Summit, Commerce Secretary Gopal Pillai had said that the maximum area on the SEZs could be relaxed according to implementation of the new Relief and Rehabilitation policy and the amended Land Acquisition Act. The CM also called for proper demarcation of processing and non-processing areas within a zone. The present SEZ Rules mandate 50 per cent of the area to be used as processing zone.

Centre Asks States To Help Exporters

Having already given three packages worth Rs 5,200 crore to rupee-hit exporters, the Centre asked state governments to help out the exporting community. The Centre has already given packages to exporters, now states should come forward to compensate the affected export sectors, Finance Minister P Chidambaram said at the 54th meeting of the National Development Council.

Besides giving some incentives to exporters, he said states should also initiate measures to improve functioning of the public distribution scheme. The Centre has to spend Rs 3.56 to given Re one benefit under PDS. Finance Secretary D Subbarao said the Finance Minister suggested that states could refund state-level taxes to the exporting community. The Finance Minister said in the long run, states will also benefit from exports, according to Subbarao. Earlier in his inaugural address, Prime Minister Manmohan Singh sounded a note of caution on the possible impact of global slowdown, saying that it may impact India''s exports and capital flows.Our economy is increasingly integrated into the global economy with the external sector now accounting for almost 40 per cent of the GDP and hence, we cannot be fully immune to international developments, the Prime Minister said.

Kerala Chief Minister V S Achutanandan said the rupee appreciation is badly affecting exports of agriculture commodities from the states. The rupee appreciation has brought about loss of markets and closure a host of small units with serious adverse consequences for employment, he said. Achutanandan suggested that the Centre should form a council with representatives from the Union Government and states to supervise monetary, export and trade policies. The Indian currency has risen more than 12 per cent against the dollar in 2007, eroding margins of goods and services exporters.

Gold Shines On Firm Global Trend

Gold prices ruled higher by Rs 50 at Rs 10,310 per 10 gram in the bullion market in New Delhi on Wednesday on sustained buying.This is for the second day in a row prices have gained. On Tuesday, the prices were up by Rs 55 per 10 gram.

A steep rise in global bullion markets, where gold rose above $800 an ounce, boosted the trading sentiment in domestic markets.Standard gold and ornaments rose by Rs 50 each at Rs 10,310 and Rs 10,160 per 10 gram respectively. Sovereign was also higher by Rs 50 at Rs 8,675 per piece of eight gram.

Silver ready also rose by Rs 15 at Rs 18,470 per kilo and weekly-based delivery by Rs 134 at Rs 18,670 per kilo as speculators turned active on expectations of a more rise in silver prices.Silver coins shot up by Rs 100 at Rs 25,000 for buying and Rs 25,100 for selling of 100 pieces.The precious metal in London traded at around $803 an ounce from previous level of $793, following a rebound in dollar against leading currency.

AP Order On Tax Concessions To Sezs Soon

Hyderabad: The Andhra Pradesh Government has decided to issue orders providing for a wide range of tax exemptions being sought by the developers of special economic zones soon. According to Mr Sam Bob, Principal Secretary, State Dept of Industries and Commerce, the Andhra Pradesh Special Economic Zones Bill has been sent to the Centre. Meanwhile, we are taking all measures to address the requests from SEZ developers. The orders providing for exemption of VAT and stamp duty, among others, will be issued very shortly.

Kerala Cabinet Approves ''08-09 Annual Plan

Thiruvananthapuram: The Kerala Cabinet has cleared the annual Plan for 2008-09, with an outlay of Rs 7,605 crore, as drafted by the State Planning Board. The Planning Board, which met last week, had decided to increase the outlay for the year by Rs 655 crore over the current year''s Rs 6,950 crore. The focus areas of the Plan will be agriculture, industry, traditional industries, information technology and tourism. The Chief Minister, Mr V.S. Achuthanandan, told after the Cabinet meeting on Dec 18 that he would hold discussions with the Planning Commission to finalise the annual Plan during his visit to Delhi to attend the National Development Council meeting.

Corporate Tax Revenues Grow 42.37 Pc In Apr-Dec 15

New Delhi: India Inc is likely to continue to show robust growth in profits even this fiscal going by the corporate taxes collected so far by the Centre. The latest data released by the Finance Ministry on Tuesday showed that the corporate tax collections registered a 42.37 per cent increase in April-December 15 to Rs 98,391 crore as compared to collections of Rs 69,110 crore in the same period last year. For fiscal 2007-08, the Centre has pegged the budget estimate for corporate tax collections at Rs 1,68,401 crore. Official sources also said that the latest data on corporate tax revenues does not fully reflect the advance tax collections that may come in under the December 15 instalment and that the final picture on advance tax front would emerge only later this week.

The data available from certain metros show that some of the top private sector companies in the industrial and financial services space have even doubled their advance tax outgo for the December 15 instalment. According to sources, real estate major DLF has paid Rs 570 crore as advance tax for the third instalment that was due on December 15. The company had paid Rs 480 crore in the first instalment (June 15) and Rs 520 crore in the second instalment (September 15). For the December 15 instalment, sources said that SBI had paid Rs 1,095 crore as advance tax, the figure for Reliance Industries and ICICI stood at Rs 1,045 crore and Rs 500 crore, respectively.

Direct Tax Collection Grows 42-Pc To Rs1.64 Lakh Cr

New Delhi: Direct tax mop up went up by 42.5% to Rs 1,64,407 crore from April 1 to December 15, compared to Rs 1,15,377 crore during the same period last fiscal. The government has achieved over 61% of budgeted direct tax target of Rs 2,67,490 crore. Corporation tax witnessed a growth of 42.37% at Rs 98,391 crore during the period, up from Rs 69,110 crore in the same period in the previous fiscal, while personal income tax (including FBT, STT and BCTT) grew by 42.83% at Rs 5,774 crore, up from Rs 46,051 crore. Growth in Securities Transaction Tax (STT) was 74.36% (Rs 5,895 crore against Rs 3,381 crore) and Fringe Benefit Tax (FBT) was 16.10% (Rs 3,313 crore against Rs 2,854 crore). Banking Cash Transaction Tax (BCTT) grew by 17.04% (Rs 376 crore against Rs 322 crore). Overall direct tax growth was highest in the Mumbai region at 68.43%; followed by Pune region at 58.68%, Chandigarh at 47.98%, Hyderabad at 43.82% and Lucknow at 39.79%.

Corporate tax growth was highest in Guwahati at 244.18%; followed by Kochi at 83.32%, Mumbai at 80.92%, Lucknow at 71.22% and Pune region at 56.24%. Personal income tax growth was highest in Bhopal at 160.95%; followed by Nagpur region at 97.10%, Pune region at 60.39%, Hyderabad at 54.79% and Chennai at 50.90%. The above figures are provisional and do not completely reflect the advance tax paid by December 15, 2007.

India Will Exceed 9% Growth

India is likely to exceed a gross domestic product (GDP) growth rate of nine per cent by end of fiscal 2007-08, Commerce and Industry Minister Kamal Nath said on Dec 18. India''s growth rate is expected to exceed nine per cent despite rising oil prices, appreciation of the rupee (against the dollar), and high interest rates, Nath said in New Delhi.

On the issue of the rising rupee adversely affecting exports, Nath said: We are looking at various mechanisms, such as reimbursing state levies and taxes (to exporters). We are also looking at other kinds of sops. Due to rising rupee, which has surged by almost 15 per cent in the last 12 months, exports, especially of textiles, leather, handicrafts and marine products, are facing job losses. There have been 120,000 job losses (both direct and indirect), the minister said.

Textile exports have come down by about 22 per cent, handicrafts exports have declined 66 per cent, marine products 20 per cent and leather nine percent, according to ministry officials. Nath, who earlier during the day met Prime Minister Manmohan Singh at the meeting of the Council on Trade and Industry, raised the issues facing exporters.

The minister also gave a status report on the inflow of foreign capital into the country.

Inflows are continuing with great momentum. FDI (foreign direct investment) equity inflows during the fiscal 2007-08, as of September 2007, were $7.2 billion, which is a growth of 65 per cent over the same period previous year. Nath also informed the media persons that the 170-member World Intellectual Property Organisation (WIPO) has endorsed India''s recognition as an International Searching Authority (ISA) and an International Preliminary Examining Authority (IPA).

Rupee At 39.54 Against US Dollar

The rupee on Dec 18 ended steady at 39.54/55 against the US currency amid fairly heavy dollar sales by exporters and weakness in equity markets. In active trade at the Interbank Foreign Exchange (forex) market, the local currency moved in wide range of 39.47 and 39.64 after resuming weak at 39.63/64 a dollar from previous close of 39.54/55 a dollar.

Exporters'' dollar sales after a weak start helped the Indian unit bounce from its initial lows, forex dealers said.The rupee recovery from the day''s low was also attributed to the stock market movements in the first half, they added.The benchmark Sensex recouped its initial losses and remained range-bound but again fell sharply at the fag end of trading session, registering a fall of 182 points. Asian markets remained sluggish while European indices traded in the black, indicating some stability. Traders said fears of capital outflows weighed on the rupee sentiment as Foreign Institutional Investors (FIIs) were consistent net sellers in the equity markets for the last three days.Meanwhile, global oil prices gained marginally as the outlook for the US economy continued to weigh on the market. In Asian trade, New York''s main oil futures contract, light sweet crude for January delivery, was 28 cents higher at $90.91 a barrel.

India, China Buying Power Less Than Expected

The economies of India and China are much smaller than previously thought when measured by buying power in US dollars, according to data released on Monday which could weaken their call for more clout at the International Monetary Fund.

The preliminary International Comparison Program report on purchasing power parity - or PPP - was coordinated by the World Bank and based on price data on goods and services in 146 countries, adjusted to reflect local cost and affordability, and converted to dollars.

The report has no bearing on the actual size of those economies, but rather looks at them with a different measuring tool - one that many emerging economies argue is a more accurate representation of their growing global influence since it takes their hefty buying power into account.

Many of those countries want the IMF to take PPP into consideration when allocating voting rights, a contentious issue that is expected to be high on the agenda at the fund's spring meetings in April 2008. An IMF spokesman said there was "growing consensus" that PPP should play a role in determining voting quotas, which would raise the relative weight of developing countries.

"The impact on individual countries depends on the data for them and this new set of PPP data will ensure that any calculations done for PPP purposes will reflect the most up-to-date situation," IMF's William Murray said in an e-mailed response to questions.

PPP is designed to provide an apples-to-apples comparison for the buying power of countries around the world, and also gives insight into the cost of living, consumer spending and investment from country to country. One of the best-known examples is the "Big Mac Index," which compares the cost of the same McDonald's sandwich in different countries.

The report takes data collected by the World Bank, Eurostat and the Organization for Economic Cooperation and Development to calculate each country's PPP for 2005. China's share of the global economy in terms of PPP fell to 9.7 per cent from an estimated 14 per cent.

This was the first time that China participated in the survey, so the prior figure was calculated last year by extrapolating from old data, using a model that has since proved to be faulty.

India's share of the world economy based on PPP dropped to 4.3 per cent from a previous estimate of 6 per cent. This was the first time India had participated in the survey since 1985. "These are changes in estimates, the previous ones having been based on very old and very limited data," the ICP report noted. "The real outputs of their economies have not changed, only the way we measure them has."

POLITICAL RAMIFICATIONS

When measured by market exchange rates instead of PPP, China's share of world GDP is just 5 per cent, and India's is less than 2 per cent - about half of their size using PPP. That explains why the report may have political ramifications as fast-growing emerging markets fight for more say at the IMF.

Emerging markets argue that the big industrialized countries have too much influence over the fund, in part because voting rights do not take into account PPP - something they hope will change in the IMF's revised quota system. But because China and India are smaller than previously thought in PPP terms, they may have a harder time winning support for sizeable increases in their voting rights.

Some industrialized countries worry that China and other emerging markets will surpass them in voting power if PPP is taken into consideration. In PPP, China is the world's second- biggest economy, behind only the United States. By market exchange rates, it trails countries such as Japan and Germany.

The report shows that 12 countries account for more than two-thirds of the world's output, including five emerging economies: China, India, Russia, Brazil and Mexico. Overall, the results show that the size of the world economy measured in PPP terms is smaller than previously estimated. Asia's economies are one-third smaller than previously thought, largely because of the downgrades to China and India, while Africa's are one-fourth smaller.

DLF, Reliance Among 18 In Fray For UP Expressway

LUCKNOW: The construction of the Rs 30,000-crore, 8-lane, access-controlled expressway in Uttar Pradesh has evoked interest from several Indian and global infrastructure majors.

The expressway promises to reduce travel time from Noida to Ballia (the eastern tip of UP) to about 10 hours. The state had invited requests for qualification from prospective developers, which saw 20 companies submitting proposals.

The proposals were evaluated on December 13 and 18 developers have qualified for the next stage of bidding.

The shortlisted developers include Ssang Yong in consortium with Yougraj, GMR, Jaiprakash Associates, DLF, L&T-ECC, Leighton, Punj Lloyd, Reliance Energy, Unitech, Omaxe in consortium with GVK and NCC, Bajaj, SNC Lavalin, Galfar and Plus Expressway, Malaysia among others.

The last date of submission of proposals is by the shortlisted developers is January 11.

India, Sri Lanka To Discuss Trade

Sri Lankan Minister for International Trade G L Peiris will inaugurate a two-day conference on India-Sri Lanka: Trade and Investments in Chennai on Dec 17. The conference, organised by Observer Research Foundation in association with Confederation of Indian Industries and the Sri Lankan deputy high commission, will focus on industrial and investment climate and trade related issues.It will also have one-to-one sessions among traders for developing bilateral contacts and relations of shared, long-term interests.Officials and industry trade representatives from India and Sri Lanka will have a free and frank exchange of views on issues and concerns of mutual concern to both the countries and all stakeholders.After the Free Trade Agreement (FTA) was signed between the two countries in 1998, the bilateral trade has more than doubled in just three years. From $557 million in 1999, it has now grown to $2.7 billion in 2007.

UAE Evinces Interest To Invest In Kerala

Thiruvananthapuram: A high-level delegation from the United Arab Emirates has shown interest in making investments in select areas in Kerala. The team, which met the Chief Minister, Mr V.S. Achuthanandan, and the Industries Minister, Mr Elamaram Kareem, has identified a petrochemical complex and a refinery, a thermal power project, road development project and a financial centre as possible areas of investment. Mr Kareem said that the petrochemical and refinery project was proposed to be set up near the Azhikkal port in Kannur. The power project would also be located in north Kerala, which would be either coal or gas based. The road development project would feature construction of flyovers on major roads in the State, while the financial centre was proposed to be established in Kochi.

The delegation was led by the Secretary (Finance and Industry) of UAE, Mr Younis Haji Al Khoori. A memorandum of understanding on the identified projects will be signed in February next year. Mr Kareem said that the UAE Government was willing to associate with the newly formed IT infrastructure development company of the State Government.

India-China Trade All Set To Achieve $40 Billion

New Delhi: India and China are expected to achieve bilateral trade worth $40 billion much ahead of the official target of 2010, said Mr Yu Ping, Vice-Chairman, China Council for Promotion of International Trade at an India-China-Russia tripartite conference organised by FICCI and CII. Citing rising labour costs in the coastal regions of China and anti-dumping charges in various markets, he said many Chinese companies were scouting for newer markets for manufacturing and exports.

Exports from India to China include cotton, organic chemicals, iron, steel, inorganic chemicals; imports from China are highest in the category of electrical machinery and equipment, nuclear reactors and related machinery, organic chemicals, mineral fuels, oil and products. According to Export Import Bank data, India''s cotton exports to China rose from $514 million in 2005-06 to $750 million in 2006-07, organic chemicals from $460 million to $518 million in and inorganic chemicals and organic or inorganic precious metal compounds from $328 million to $351 million. China''s exports to India in electrical machinery and equipment rose from $2,773 million in 2005-06 to $4,241 million last year, nuclear reactors and machinery increased from $2,162 million to $3,249 million and organic chemical exports jumped from $1,310 million to $1,709 million.

K`Taka Eyes Rs 400 Cr Investment In Tourism

Chennai/ Kochi: Karnataka has decided to organize a Tourism Investors Meet in Bangalore on January 10, targetting Rs 400 crore investments in the first phase in the sector, said the source. The meet would showcase the opportunities for investors belonging to various categories, said the source.

AP Optimistic On Industrial Investment Climate

Hyderabad: During the period 2004-07, the industrial investment in Andhra Pradesh has been of the order of Rs 10,570 crore, with the setting up of 6,092 units. In contrast, the figures for the previous three years (2001-04 during the TDP rule), were Rs 4,524 crore and the number of units opened was 5,046 units. Giving this information, the State Government has claimed that the continuing good performance and investment climate in the State is expected to make it the top destination for investments, ahead of Gujarat, soon.

I have no doubt that AP will surpass Gujarat in industrial infrastructure and investments in a host of leather, textiles, IT, automobile and Bio-technology products, said the Chief Minister, Dr Y.S. Rajasekhara Reddy, during a review meeting on the progress of SEZs held in the Secretariat today. Mr Reddy said the cement production in the State would go up from the present 29 million tonnes to 33 million tonnes with new investment in the sector. Similarly, the capacity in steel sector will grow phenomenally from 4.5 million tonnes to 18 million tonnes. The turnover in the pharma sector will also increase to Rs 20,000 crore from the present 12,000 crore in the next three years, triggering pharma export to Rs 11,000 crore from the present Rs 7,000 crore. The Chief Minister said the production levels in the textiles sector will almost double in view of the Rs 9,000 crore investments proposed in the coming years. The Principal Secretary (Industries), Mr B. Sam Bob, informed the Chief Minister that 70 SEZs have been approved for the State, of which 46 have already been notified and are being developed over 6,894 hectares at a cost of Rs 32,525 crore.

Of these, 24 SEZs have received in-principle approval and are being set up in 1,250 hectares. On completion of all the projects, the SEZs will generate employment for 25 lakh persons, of which they had already created 10,000 jobs. Multi-product SEZs are being grounded in 5,500 acres near Visakhapatnam and 8,000 acres in Kakinada.

High Interest Rates Fail To Scar India Inc’s H1 Show

Despite continued concerns of high interest rates, the latest financial results show that India Inc is emerging unscathed from its impact so far. For the half year ended September 2007, interest coverage ratio for Corporate India, excluding banking sector, has gone up from 10.8 to 11.7 times.

Interest coverage is broadly defined as operating profit to interest cost ratio. This means that operating profit generated by India Inc is more than 11 times its interest cost for the half year. It may also be noted that this ratio was only 8.5 times for half year ending September 2004.

The manufacturing sector, which has significant dependence on debt and is more vulnerable to interest rate movement, has improved its interest coverage from 10.1 to 10.8. However, on disaggregated basis, textiles and auto sector have seen a reversal.

While general buoyancy in demand in Indian economy contributes to this, lower input cost has provided the necessary advantage. For the half year, while sales rose by more than 13%, raw material cost rose by only 9%.

But not everyone is convinced. Says Amit Mitra, secretary general, Ficci: “It must be understood that interest payment is not the only expense item that a company has to meet. Besides interest payment, there are several other elements that contribute to the cost of production. The companies also have to reward their shareholders by way of dividend payments.

Moreover, the rising interest rates need to be seen in relation to the investment cost for the firms. An increase in interest rates has an impact on investment plans of companies. Whenever interest rates go up, some investment projects that were initially viable do not remain so and thus, such investments are held back.”

For H1 2008, while interest cost has gone up by 15.4%, operating profit has increased by about 25%. Operating profit has also been boosted by 45% increase in other income, partly coming from forex gain. However, even if we exclude this item from operating profit and then look at interest coverage, there is still a significant improvement from 9.2 to 9.6.

Among the sectors, cement has outperformed with maximum improvement in interest coverage. Textile and auto ancillary are the only sectors, which have suffered from steep hike in interest rate. Textiles, which was already operating at a low coverage ratio of 4.4, has seen it further drop to 3.4.

For auto sector, while the ratio has gone down, the sector is still operating at very high coverage and does not seem to be a cause for concern.

RBI Tightens Norms On Banks' Market Play

MUMBAI: With the Sensex crossing the 20,000 milestone, the Reserve Bank of India (RBI) is not taking any chances with banks’ exposure to stock markets. The central bank has widened the definition of stock market exposure and has given banks six months to bring down exposure to equities.

In a circular, RBI has told banks that exposure to stock markets will now include lending by banks to mutual funds and also payment commitments made to stock exchanges on behalf of mutual funds and foreign institutional investors (FIIs).

Until now, RBI had announced the exposure limit for loans and advances to individuals against units of mutual funds. However, there are no explicit guidelines for grant of loans and advances to fund houses for their short-term liquidity requirement.

“The annual inspection of certain banks and an analysis of the consolidated prudential return (CPR) of some banks show that they have extended large loans to various mutual funds and have also issued irrevocable payment commitments (IPCs) to stock exchanges (BSE & NSE) on behalf of mutual funds/FIIs. These exposures have, however, not been included by the banks for computation of their capital market exposure,” the circular said.

It goes on to add that after examining these loans, the central bank had decided that they constitute capital market exposure.

According to Sebi regulations, mutual funds can borrow to meet temporary liquidity needs for repurchase, redemption of units or payment of interest or dividend to unit holders. However, this borrowing is limited to 20% of the net asset of the scheme and for a duration not exceeding six months.

“The Sebi guidelines imply that mutual funds should normally meet their repurchase/redemption commitments from their own resources and resort to borrowing only to meet temporary liquidity needs. In view of the above, banks are advised to be judicious in extending finance to mutual funds and grant loans and advances to mutual funds only to meet their temporary liquidity needs,” RBI said. Irrevocable payment commitments are issued by banks to enable mutual funds transact in stock exchanges.

According to RBI, these commitments are to be reckoned as guarantees issued for the purpose of capital market operations and should, therefore, form part of capital market exposure.

Stock market exposure along with real estate and commodities comprise exposure to sensitive sector. Last year, the central bank had cracked down on banks’ exposure to real estate after it doubled in 2006-07. The regulator also widened the scope of real estate during the year.

It has also asked banks to treat loans extended for setting up special economic zones (SEZ) as real estate loans. Capital market exposure, in addition to exposures to shares and mutual funds, also include investments in convertible bonds, debentures, and all exposure to venture capital funds. The overall exposure (fund and non-fund) cannot exceed 40% of the bank’s previous year’s net worth.

India Should Join Global Anti-TB Plan: WB Study

WASHINGTON: Countries like India and China, with high numbers of TB cases could gain more from the money they spend on diagnosis and treatment of the disease if they joined a global plan to sharply reduce the numbers of Tuberculosis-related deaths, a World Bank study has said.

The economic impact of TB deaths and the benefits of TB control among 22 high-burden countries are greatest in China and India, where the combination of growing incomes and a relatively high number of TB deaths translates into a significant economic effect, according to the 'The Economic Benefit of Global Investments in Tuberculosis Control'.

The study says that despite recent gains in fighting Tuberculosis, there were still 8.8 million new cases and 1.6 million deaths from the disease in 2005. Without treatment, two-thirds of smear-positive cases die within five to eight years, with most dying within 18 months of being infected.

Highly affected African countries could also gain up to nine times their investments in TB control with the study warning about the need to step-up TB control worldwide with the growing emergence of multidrug-resistant TB (MDR-TB) and extensively drug-resistant TB (XDR-TB) in Southern Africa, Eastern Europe and Central Asia.

The study, commissioned by the WB on behalf of the Stop TB Partnership and funded by the Bill and Melinda Gates Foundation, has attracted considerable interest from international health and development agencies, along with research and civil society groups, which want more aggressive TB control worldwide. The disease is the leading infectious killer after HIV/AIDS.

India''s Largest Tech Fund Beats IT Sector Blues

A stronger rupee against the dollar and fears of a slowdown in the U.S. are battering India''s software sector but the country''s largest technology fund has already exceeded returns it posted in tech-stock friendly 2006. While the BSE IT index is down 19 percent this year, DSP ML Technology.com Fund is up 49 percent as on Dec. 12, as against the 5 percent average return of a tech fund and better than its 47 percent gain in 2006, data from fund tracker ICRA showed.

Approval For Tax Treaty With Senegal

New Delhi: The Union Cabinet on Dec 13, gave its clearance for the inking of a double taxation avoidance agreement (DTAA) with Senegal. This pact, when it enters into force, would stimulate the flow of investment, technology and services from India to Senegal and vice-versa. The DTAA would give tax stability to the residents of India and Senegal, and facilitate mutual economic cooperation. India has already entered into DTAAs with more than seventy countries of the world.

Rupee Edges Up Against US Dollar

The rupee was quoted slightly up against the dollar at 39.3700/3750 in late morning deals on alternate bouts of buying and selling. In lacklustre trade at the Interbank Foreign Exchange (Forex) market, the Indian unit resumed better at 39.35/36 per dollar from Dec 12''s close of 39.3750/3850 a dollar. Dealers attributed initial firmness to a smart rally in the equity markets this morning. But dollar buying by oil companies to meet their import requirements as global crude oil was quoting high near $94 a barrel, weighed on the rupee sentiment.

India, China Top FDI Destinations

India and China are among the top destinations for Foreign Direct Investments while the world''s centre of power continues its perceptible shift from developed to developing markets. The two South Asian neighbours are among the 25 most attractive FDI destinations, according to Foreign Direct Investment (FDI) Confidence Index by AT Kearney. Emerging markets also have registered the strongest investor optimism, with India, China, Brazil, the United Arab Emirates and Vietnam experiencing the most positive change in investment outlook during the last year, the firm said. While China and India remain the top destinations for first-time investments overall, developing country investors are more bullish about new markets such as Vietnam, Brazil and South Africa, while developed market investors tend to stick to familiar markets.

SEBI Chief Questions Role Of Govt Nominees On Boards

MUMBAI: The SEBI chairman M Damodaran has suggested raising the bar with regard to representatives on company boards. Addressing a CII conference on corporate governance in Mumbai on Wednesday he questioned the role of government nominees on the board of state-owned companies.

“Do people, who represent a certain constituent, continue to represent them when they get into the boardroom? Sometimes it appears that they seem to forget the source from which they have come from,” said the SEBI chief.

The market regulator had in the recent past, for the first time taken to task 20 companies including five state-owned ones for not adhering to the Clause 49 provision. Clause 49 defines certain corporate governance rules for listed companies including board composition. The SEBI chairman said, “We don’t need people who are there just to grace the board. Rather, we need to see how they add value to the board.” Several companies, in recent times, have roped in film stars and cricket personalities to be part of their boards. It is felt that these members added very little value to the company’s growth.

Terming boards as a centre stage for governance process, Mr Damodaran said it was important to retain good people on boards who could also add value to the functioning. To that extent he also suggested a cap on the number of boards a person can be a director. “If the director is expected to do justice to the company, especially if the company is in stress, it requires additional time and effort, which a person of several boards may not be able to do,” he said.
Further, Mr Damodaran called for more flexible corporate governance regulations to enable its implementation more effectively.

“While a minimum prescription of corporate governance is required, at the same time what needs to be found out is whether the current regulations are overtly prescriptive to the extent that it dampens the credibility and innovation on the board,” he said. The SEBI chief questioned whether an “overly prescriptive regime” had dampened innovation or whether stipulation of quarterly reporting made companies take a short term view.

Oil Eases Below $94 After 5% Overnight Jump

SEOUL: Oil prices eased below $94 a barrel on Thursday, taking a breather after a rally of almost 5 percent in the previous session on a drawdown in US crude stocks and a move by major central banks to ease tight credit conditions.

US light, sweet crude futures fell 44 cents to $93.95 a barrel in Globex electronic trading by 0307 GMT, paring Wednesday's jump of more than $4 a barrel as traders questioned whether the central banks' move would solve the credit crunch.

London Brent crude fell 52 cents to $93.50 a barrel. "NYMEX prices fell because of a technical correction, after rising more than $4 during floor trading last night," said Shuji Sugata, manager at Mitsubishi Corp Futures Ltd.

The US Federal Reserve will band together with its counterparts in Europe, Japan, Canada and Britain to shore up liquidity in financial markets.

This marks their first coordinated action since terror attacks shut down US financial markets on Sept. 11, 2001, and boosted markets overnight. Oil prices have come under pressure in recent weeks, easing from a record $99.29 hit on Nov. 21 because of concerns over the impact of tight credit conditions on economic health of the world's top consumer, the United States.

A sharp 700,000-barrel decline in US weekly inventory data on Wednesday, which sent stockpiles down to their lowest since March 2005, also supported oil prices. Distillates stocks fell 800,000 barrels, while gasoline inventories rose 1.6 million barrels, the data showed.

Exxon Mobil Corp said operations at its 150,000 barrel per day (bpd) Los Angles-area refinery in Torrance, California, were returning to normal on Wednesday after two steam boilers were relit, marginally lifting pressure off the market.

Trading of NYMEX futures contracts on the CME's Globex electronic platform resumed earlier in the day after a technical glitch that halted activity for over an hour. Prices returned to normal around midnight GMT. "I don't think the computer mishap had any impact on pushing down prices," Sugata said.

Indo-China Trade To Touch $70 Bn

China has become India''s second largest trading partner, next only to the US, and trade between the two countries is likely to reach $70 billion in 2010. Statistics released by the Chinese commerce ministry reveal that bilateral trade between India and China in the first five months of 2007 touched $14.2 billion, an increase of 53.70 per cent over the same period last year, making it the fastest growth rate among all of China''s top 10 trading partners.

It is therefore not surprising that the fifth China Products Exhibition, opening here on Dec 13, has generated great interest among the Indian and Chinese businessmen. Over 150 Chinese companies are taking part in the three-day event, according to Rajesh Bhagat, managing director, Worldex India Exposition and Promotion Pvt Ltd (WIEP), co-organisers of the event. The expo will showcase products ranging from building and construction to home appliances, and food and beverages to toys.

Rupee Ends At 39.37 Against US Dollar

The rupee on Dec 12 ended lower at 39.3750/3850 against a US dollar amid expectations of central bank intervention in Forex market and weak Asian stock indices. A banker said dealers were disappointed over US Federal Reserve''s quarter point rate cut, instead of 50 basis points, last night.

In a lacklustre activity at the Interbank Foreign Exchange (Forex) market, the local currency opened sharply lower at 39.41/42 per dollar against Dec 11 close of 39.35/36 per dollar. The rupee later touched a high of 39.43 a dollar before felling back to a low of 39.35 on strong recovery in equity markets. The domestic unit finally ended at 39.3750/3850 against a dollar.The Reserve Bank of India, however, fixed the reference rate for the US currency at Rs 39.36 per dollar and for the single European unit at Rs 57.79 per euro.

Oct Industrial Growth Up 11.8%

Belying expectations of slowdown, manufacturing-led industrial growth leapfrogged to 11.8 per cent in October from 4.5 per cent a year ago. The manufacturing sector, which has a overwhelming weightage in the Index of Industrial Production (IIP), saw an impressive growth of 13.3 per cent during the month, up from a mere 3.8 per cent during October 2006.

However, the mining and electricity showed a decline in growth to 3.7 per cent and 4.2 per cent respectively. The two vital segments of the industry had shown growth of 5.9 per cent and 9.7 per cent respectively during last year, according to the official figures. Finance Minister P Chidambaram said the outlook for industrial production is encouraging though it is still slightly lower for the April-October period compared to last year''s figures for the same period last year.

Customs Duty Collection Sees 17.2% Growth In April-November

New Delhi: The Centre''s customs duty revenues remain to be optimistic, with collections recording 17.2 per cent growth during April-November 2007 to Rs 66,838 crore compared with Rs 57,050 crore collected in the corresponding period last year. Excise collections during April-November recorded growth of 7.5 per cent at Rs 75,013 crore compared with Rs 69,957 crore. In November, excise duty revenues increased by 5.3 per cent to Rs 10,065 crore. Service tax collections increase to October 2007 stood at Rs 25,420 crore, representing a growth of 35.3 per cent to collections of Rs 18,792 crore during April-October 2007.

Rupee Ends At 39.35 Against Dollar

Mumbai: The rupee increased on expectations that the US Federal Reserve likely to cut interest rates by 25 basis points at its meeting on December 11. The rupee opened flat at 39.40 and closed at 39.35, up five paise from the earlier close of 39.40. The market is bullish right now and has already factored in a 25 basis point rate cut. In forwards, the six-month premia closed at 1.79 per cent (1.61 per cent) and the 12-month closed at 1.34 per cent (1.21 per cent).

PFRDA Elected As Member Of Executive Committee Of IOPS

New Delhi: The Pension Fund Regulatory and Development Authority (PFRDA) has been elected as a member of the executive committee of the International Organisation of Pension Supervisors (IOPS). IOPS is an independent body representing international entities involved in the supervision and regulation of private pension arrangements. IOPS has 60 members representing more than 40 countries having different types of pension and regulatory systems. The main objective of the IOPS is to improve the quality and effectiveness of pension supervision and work closely with other international organisations involved in pension supervision and policy development.

Economy Likely To Grow By 8.5-9%

The Planning Commission expects the country''s economy to grow by 8.5 to 9 per cent during the current financial year and by 9 per cent in the 11th Five Year Plan period, saying global slowdown would not affect India in the medium term. The world economic slowdown will not affect the medium term growth prospects, Planning Commission Deputy Chairman Montek Singh Ahluwalia said, while addressing the ''TIE Entrepreneurial Summit 2007''. The economy was likely to clock a growth rate of 8.5 to 9 per cent during the current financial year, he said, adding that the Gross Domestic Product (GDP) growth rate was expected to be 9 per cent during the next three years and 10 per cent in the terminal year of the Plan (2011-12).

EU Seeks India To Speed Up FTA

Expressing doubt over WTO talks making headway in the near future, Austria on Dec 11 urged India to speed up free trade agreement with the European Union to enlarge markets for European and Indian business.Austrian Minister for Commerce and Labour Martin Bartenstein held talks with Commerce and Industry Minister Kamal Nath in New Delhi on a host of bilateral and multilateral issues, including progress on the India-EU Free Trade Agreement and Doha Round of negotiations for a global trade deal.

Pascal Lamy (WTO Director General) thinks modalities for the Doha Round could be finished by February/March next. Both Nath and Bartenstein emphasised the timeline of 2008 end for completion of negotiations on India-EU FTA, officially known as Bilateral Trade and Investment Agreement. The Austrian minister said the EU was working on a ''Bluecard'' scheme on the lines of the US Greencard'' for expatriates. Under the Bluecard scheme, there would be a uniform regime for all 27 EU members, he said adding that Austria and other EU members were keen on leveraging Indian human resource.

e-payment of direct taxes likely to be made compulsory

New Delhi: The Income-Tax Department wishes to popularise e-payment of taxes among the 3.2 crore-odd income tax assessees in the country. Towards this end, the department may, from January 1, make it compulsory for certain categories of assessees to pay direct taxes only through the e-payment mode. Indications are that e-payment of direct taxes would become mandatory for corporates to begin with. There is thinking within the Central Board of Direct Taxes that e-payment should be compulsory from January 1, for certain category of assessees.

There are currently 32 agency banks that deal with income-tax payments. Of these, eight already offer e-payment option via net-banking accounts. The 20 banks have expressed interest to offer net banking facility and at least two banks have expressed inability to provide such a facility due to the state of their computerisation. Of the eight banks that offer e-payment facility, which is currently optional for assessees, sources said that only four SBI, Axis Bank, HDFC Bank and ICICI Bank are popular among taxpayers. In fiscal 2006-07, the Government collected less than 1 per cent of its total direct tax collections of about Rs 2,29,272 crore through the e-payment mode. For fiscal 2007-08, the Centre has pegged the budget estimate for direct taxes at Rs 2,67,490 crore.

FM launches large taxpayer unit at Chennai

New Delhi: The Finance Ministry has unveiled the country''s second large taxpayer unit (LTU) at Chennai during the first week of this month. LTUs are configured to render single-window services to large taxpayers. Besides decreasing the transaction and compliance cost for the taxpayers, such administrative mechanisms are also expected to help enhance the efficiency of tax administration. 38 entities have so for opted for the LTU at Chennai and that this number was likely to go up as more large taxpayers have evinced interest. Top Finance Ministry officials had visited Chennai recently for the unveil of LTU at Chennai. The LTU at Chennai was headed by a Chief Commissioner from the Excise Department. Four commissioners, two each from excise and income-tax departments, have been posted at the LTU in Chennai.

A taxpayer (single-PAN based entity) who has paid in cash (or current account) excise duty of Rs 5 crore or more; or service tax of Rs 5 crore or more; or advance income tax of Rs 10 crore or more in financial year 2004-05 or subsequent financial year could opt for the scheme. The Government proposes to implement the LTU scheme in other metro cities such as Mumbai, Delhi and Kolkata also.

Italy targets Indian partners for greater tech innovation

Kolkata: Italy as being among the largest manufacturing economies of the world today, Mr Mauro Battocchi, Councillor, heading the Division for Trade and Investment Support, Department for Economic Affairs, Government of Italy, said here that there should be greater business partnership between the SMEs of Italy and India, particularly in West Bengal, in the emerging new economic environment. Asking more Indian investments into Italy, he said some of the leading industry sectors in Italy today were manufacturing (automotive), furnishings, fashion & leather and food-processing. Mr Battocchi said Italy was searching for partners in India to bring about greater technological innovation in Italian industry.

Rupee closes 39.41 against dollar

Mumbai: The spot rupee market was very weak and the currency was rangebound. It moved in a narrow range of 39.39 and 39.41 during the day. On Dec 10, the rupee opened at 39.38 and closed at 39.40, almost unchanged against Dec 7, close of 39.41. In forwards, the six-month premia closed at 1.61 per cent (1.59 per cent) and the 12-month closed at 1.21 per cent (1.21 per cent).

German exports surge despite euro

Germany''s trade surplus rose to 18.2bn euros ($26.7bn, £13.1bn) in October thanks to growth in exports which surged despite the stronger euro. The value of exports went up a seasonally-adjusted 0.6% to 83.5bn euros compared to September, supporting growth in Europe''s biggest economy. Imports rose 0.2% to 65.4bn euros, much slower than expected by analysts, according to preliminary official data. At the same time, September''s surplus was revised down to 17.8bn euros.

Govt likely to increase retirement age to 62

NEW DELHI: The government is conceiving a hike in the retirement age of government employees to 62 years from 60. The Sixth Pay Commission is looking into the proposal, that would benefit a large number of central and state government employees. Some senior bureaucrats have already given presentations to the commission, explaining how a hike in retirement age would help the government in postponing its pension liabilities by two years. A number of ministries had written to the department of personnel and training (DoPT) about increasing the retirement age for select categories. The commission urged top bureaucrats to make presentations. It is understood that some state governments are in support of increase in retirement age. The Sixth Pay Commission''s suggestions are hoped to result in a hike of about 40% in salaries of central government employees in various categories.

Cambodian PM calls Indian investment

New Delhi: Mr Samdech Akka Moha Sena Padei Techo Hun Sen, Prime Minister of the Kingdom of Cambodia, on Dec 8 called Indian investment for economic lift off and transformation in Cambodia. At a business meeting organised jointly by the Confederation of Indian Industry (CII), The Associated Chambers of Commerce and Industry of India (Assocham) and Federation of Indian Chambers of Commerce and Industry (FICCI), Mr Hun Sen said The Royal Government of Cambodia is helpful of the private sector and has created a favourable environment for the private sector to protect their investments and business activities in Cambodia. The Royal Government of Cambodia promotes private participation in provision of infrastructures, gives national treatment and allows free movement of capital and foreign exchange.

Baltic Sea Region calls Indian cos

Hyderabad: The Baltic Sea Region offers Indian companies an investment climate that is attractive and also the advantage to influence the bigger markets in Russia and CIS countries. Sweden, Finland and Denmark, Estonia, Latvia and Lithuania constitute the Baltic Sea Region countries, with a small but highly consumptive combined consumer strength of 100 million. The highly developed clusters in biotech, pharma, telecom and clean technology offer good opportunities for Indian companies to tap. Already 50 Indian companies, with the likes of Wipro, TCS, Satyam, Bharat Forge, IndoRama, L&T, and Biocon have their presence in these countries. Sweden is contemplating to establish an office in South India, most likely in Bangalore to strengthen its efforts. Many Swedish companies are also looking for opportunities to expand.

India tops on giving edu loans: FM

India occupied first place in the world in giving education loans, benefiting 10 lakh students till September this year, Union Finance Minister P Chidambaram has said. The banks in India have sanctioned a total of Rs 14,500 crore as educational loans, he said while inaugurating the 2878th branch of the Bank of India (BOI) at the temple town of Tirunallar in Karaikal enclave of Puducherry on Dec 08. The Government has planned to further provide education assistance to the tune of Rs 1,500 crore to 15 lakh students belonging to minority communities over a period of five years. From an estimated target of Rs 2,25,000 crore, the farm credit was likely to rise by Rs 10,000 crore in 2007-2008.

Rupee At 39.48 Against US dollar

The rupee was steady at 39.4850/4950 against a US dollar on Thursday due to suspected central bank intervention, dollar demand from banks and a firm trend in equity markets. In active trade at the Interbank Foreign Exchange (forex) market, the local currency fluctuated in a range of 39.45 and 39.55 during the day after resuming higher at 39.45/46 a dollar on the back of initial sharp stock rally.

Attributing the rupee''s better start to capital inflows on Wednesday and strong trend in global equity markets, forex dealers said the Reserve Bank of India (RBI) is believed to have intervened to cap the rupee surge at the fag end of session. Traders expected the rupee to remain in the current range unless any clear indication of FII inflows into the country.The capital inflows have pushed the rupee by about 12 per cent so far in the year.

The benchmark Sensex, which breached 20K level at the outset, later ended with a moderate gain of 58 points. The RBI, however, fixed the reference rate for the US currency at Rs 39.47 per dollar and for the single European unit at Rs 57.65 per euro.The rupee premium on forward dollar ended hardly changed on alternate bouts of buying and selling. The benchmark six-month forward dollar premiums payable in May ended steady at 27-1/2 - 29-1/2 paise from 27 - 29 paise on Dec 5 and the far-forwards maturing in November closed slightly better at 44 - 46 paise from 42 - 44 paise previously. In cross-currency trades, the local unit recovered against the British sterling and the euro while improved further against the Japanese yen.

World Bank Commits $5.8 Bn Rupee Loan To Maharashtra

Mumbai: The World Bank has committed financial assistance to Maharashtra government''s infrastructure projects worth $5.8 billion in the form of rupee loans. Infrastructure projects included projects of around $2 billion related to Mumbai-makeover program. This was said by World Bank Country Director Isabella Guerrero after a day-long meeting with Mumbai government officials. The state government was represented by Chief Secretary Johnny Joseph and the secretary, special projects, Sanjay Ubale. The Bank also accepted the London Interbank Offer Rate (LIBOR) will be the reference rate for providing loan to the state. The LIBOR is currently 4.75 per cent.

Punjab To Spruce Up Wheat Cultivation Area

New Delhi/ Chandigarh/ Jalandhar: Punjab is set to give a boost to wheat production in the state with the inclusion of seven districts in the under the National Food Security Mission programme by the Centre. The districts are Bathinda, Ropar, Sangrur, Ferozepur, Amritsar, Hoshiarpur and Gurdaspur. Under this programme the aim is to increase the average yield of wheat. The average yield of wheat in Punjab is 4,200 kg per hectare. However, in the districts, except Sangrur(4,234 kg), selected under the programme, the yield of wheat is less than the state''s average.

Under the mission, farmers in the seven districts of the state have been provided with a subsidy of Rs. 500 per quintal for wheat seeds. In the rest of the state, the subsidy is on a sharing basis between the state and the Centre. Thus, seed to farmers was being provided at Rs 1,200 per quintal against the market price of Rs 1,700 per quintal. Besides, the state government has distributed 57, 200 packets of 5 kg each of high-yielding variety of wheat PBW 502 free to the farmers to replace low-yielding variety. Earlier, to increase wheat production, Chief Minister Parkash Singh Badal has instructed the authorities to replace at least 33 per cent of wheat seed. About 1.05 million quintals of wheat seed were required for replacement purposes. The state agriculture department has sown high-yielding variety of wheat in 37,000 acre to demonstrate the farmers about the latest technique and practices involved in wheat cultivation. It is also felt that the hike of Rs 250 in the minimum support price (MSP) of wheat has increased the area under cultivation in the Punjab. As against the target area of 3.37 million hectare, wheat has been sown in 3.48 million hectare during this rabi season.

Govt clears Rs 16,680-cr NHDP Phase VII

On Dec 6, government cleared development of road projects including construction of ring roads, bypasses and tunnels under Phase VII of National Highways Development Programme at a cost of Rs 16,680 crore. The total project would be executed on build, operate and transfer (BOT) basis. Of the total money, the government would fund Rs 6,302 crore and Rs 10,378 crore would be ensured through private sector participation, said the source. Under NHDP-VII, Rs 10,500 crore will be spent on constructions for 700 km of ring roads and bypasses and the remaining money would be utilised to construct grade separated intersections, road over-bridges, elevated roads, tunnels, underpasses and service roads. These constructions will improve traffic safety and ensure faster movement of vehicles with improved riding quality time. The works on stand-alone ring roads and bypasses are likely to be awarded by March 2011 and is to be completed by December 2014.