Toll To Be Collected On Three Highways In A. P

Hyderabad: Road-users will have to shell down toll tax for using three important State highways once these are upgraded into four-lane as proposed by the Andhra Pradesh Government under a project taken up with private investment.

The three roads identified for immediate upgradation are Hyderabad-Ramagundam Rajiv Rahadari, Narketpalli-Addanki and Pootalapattu-Naidupet highways. No toll is presently collected for using these roads, which have only two lanes. A year after coming to power, the Rajasekhara Reddy Government scrapped toll collected on 16 State highways to avoid a burden on the travelling public. However, the Government on Wednesday, announced that toll would be collected for 20 years by contractors who will implement the Rs 2,000-crore project taken up to convert the roads.

Tenders for the project will be finalised shortly before grounding works in May-June. Minister for Roads & Buildings T. Jeevan Reddy and P. Rajagopal Reddy, MD, AP Road Development Corporation, told reporters here that the toll for these three roads would be 10 per cent lower than that levied on highways managed by the National Highways Authority of India (NHAI).

India Hopes To Add $100 Bn To Forex Reserve In FY''08

New Delhi: At a time when managing capital flows is becoming a challenge for the authorities, the government on Jan 30 said it hopes to put in $100 billion to the forex reserves in the current financial year. Overall, India''s forex reserves stands at $284.8 billion for the week ended January 19.

Bihar Annual Plan Set At Rs 13,000 Cr For ''08-09

New Delhi, The annual Plan of Bihar for the next fiscal 2008-09 has been set at Rs 13,000 crore inclusive of additional Central Assistance of Rs 100 crore of projects of special interest to the state. This was agreed here at a meeting between the Deputy Chairman, Planning Commission, Mr Montek Singh Ahluwalia, and the Chief Minister of Bihar, Mr Nitish Kumar.

It was also agreed that on the basis of mid-year performance and absorptive capacities, an additional outlay of Rs 500 crore in the special package of assistance to Bihar could be included in the Annual Plan for 2008-09, taking this to an effective Plan size of Rs 13,500 crore. In his initial remarks, Mr Ahluwalia praised the State Government for the major initiatives taken in administrative reforms, decentralisation and simplification of procedures, delegation of powers and also focused attention towards implementation of flagship programmes launched by the Central Government.

Govt To Carry On Project Tiger In 11th Plan; Allots Rs 600 Crore

New Delhi: The government will continue with a central scheme called ''Project Tiger'' during the current 11th Plan and okayed an estimated Rs 600 crore for the purpose. According to Finance Minister P Chidambaram, the money would be used to rehabilitate people living in core area or critical tiger habitat and implement safeguard and retrofitting measures in the interest of wildlife conservation. He said the scheme would also rehabilitate and resettling denotified tribes involved in traditional hunting, and mainstreaming livelihood and wildlife concerns in forests outside tiger reserves.

The money would also be spent on establishing eight new tiger reserves in states like Tamil Nadu, Karnataka, Chhattisgarh and Assam, Chidambaram said. The government would also foster corridor conservation through restorative strategy to arrest fragmentation of habitats. The project also seeks to provide basic infrastructure for strengthening the National Tiger Conservation Authority and establishing a monitoring lab in the Wildlife Institute of India. A part of the outlay would go toward ensuring allowance to ministerial staff working in tiger reserves as well as to promote eco tourism.

Rupee At 39.38 Against US Dollar

The central bank''s monetary policy kept the rupee stable at 39.3850/3950 against a dollar on Jan 30 despite the fears of capital outflows from stock markets. The domestic unit touched the low of 39.4350 a dollar as investors pared rupee holdings following continued bearish trend in equity markets, coupled with the possibility of intervention by the apex bank. An expected cut in benchmark lending rates by US Fed Reserve also weighed on the rupee sentiments. A majority of dealers expressed the view that capital inflows will increase due to wide differential in interest rates in US and India, aiding a surge in local currency.

The rupee traded in a range of seven paise during the day in nervous trade with foreign funds pulling out nearly $4.0 billion in the second fortnight of the current month. Meanwhile, the benchmark Sensex on the Bombay Stock Exchange ended lower by over 300 points at 17,758.64, a net fall of 333.30 points, or 1.84 per cent, from its last close. The 30-share index ended in red for the third day in a row. The Reserve Bank of India kept all key rates steady in its quarterly review of monetary policy yesterday while analysts anticipated a rate cut, if the market turmoil affected growth and financial stability.

RBI Keeps Rates Unchanged

The Reserve Bank of India has kept rates unchanged in its Credit Policy review on Tuesday. Cash Reserve Ratio (CRR) remains unchanged at 7.5 per cent, while the repo rate, the rate at which the RBI borrows from the banks, is held steady at 7.75 per cent. The bank rate and the reverse repo rates have also been held steady.

Announcing the Policy, RBI Governor Dr Y V Reddy stated that the policy endeavor would be to contain inflation close to five per cent in 2007-08. He also stated that liquidity management would assume priority in the conduct of monetary policy through appropriate and timely action. The policy review that seeks to condition inflationary expectations in the range of 4 - 4.5 per cent comes within days of Finance Minister P Chidambaram''s statement that he would be sunk in case there was a high inflation, along with high economic growth.

Gold Scales New Peak Of Rs 11,920 In Delhi

Gold prices zoomed to a record high of Rs 11,920 per 10 gram in the bullion market in New Delhi on Tuesday on heavy buying influenced by strong global trend amid volatile stock markets. This is for the fifth day in a row that the prices of precious metal in the bullion in New Delhi are soaring. Traders said as the equity markets turned volatile, some of the investors shifted their funds toward bullion, considered a safe haven at the time of crises.

However, strong global trends remained the major driving force behind the current rally. Market watchers said stockists and jewellery fabricators rushed to buy the metal even at its current high levels as they feared prices might go up further and make their purchases in the marriage season tougher.

Standard gold and ornaments surged by Rs 80 each at Rs 11,920 and Rs 11,770 per 10 gram respectively. Sovereign was also higher by Rs.25 at at Rs.9300 per piece of eight gram, a level never seen before. Silver ready spurted by Rs 200 at Rs 20,800 per kilo and weekly-based delivery by Rs 210 at Rs 21,440 per kilo. Silver coins also rose by Rs 200 at Rs 25,700 for buying and Rs 25,800 for selling of 100 pieces.

In other Asian markets, gold and platinum traded at near records on speculation that Federal Reserve might cut its benchmark lending rate. Production getting hampered in South African mines also boosted gold sentiments. Silver was close to a 27-year high. The precious metal in global markets surge to record high of 929.84 an ounce stimulated trading sentiment in the region and helped the prices to go up in domestic markets.

Rupee At 39.37 Against US Dollar

The Indian currency on Jan 29 remained stable and ended the day at Rs 39.3750/3850 against greenback amid fairly good demand for the US currency. The local currency resumed stronger at 39.34/35 a dollar following a sharp surge in Asian stocks and amid expectations of a repo rate cut by the central bank. The Indian unit dropped to 39.42 level, after a sharp fall in local stocks and the Reserve Bank''s announcement of quarterly review of monetary policy.

Manufacturing Sector Growth Declines To 9.8% In Apr-Nov ''07

Mumbai: Manufacturing sector growth declines to 9.8 per cent during April-November 2007 as against 11.8 per cent during the year-ago period, the Reserve Bank said. The moderation in the sector''s growth was due to decelerated/negative growth of 11 out of the 17 manufacturing industry groups accounting for 49.3 per cent weight in the index of industrial production (IIP), it said in its Macroeconomic and Monetary Developments Review.

These included machinery and equipment, basic metal and alloy industries, rubber, plastic, petroleum and coal products, cotton textiles, non-metallic mineral products and transport equipment and parts, among others. Metal products and parts'' group recorded a decline due to the performance of tin metal containers, welded link chains and razor blades. The leather and leather and fur products'' group, however, made a turnaround to register positive growth during the period. On the IIP, the apex bank said IIP growth moderated to 9.2 per cent during April-November 2007 from 10.9 per cent during the year-ago period. Capital and intermediate goods sectors recorded a double-digit growth during April-November 2007 while growth in the consumer durables segment declined to 5.2 per cent from 9.9 per cent in the same period.

Rupee Falls Against Dollar

Mumbai: The rupee down a tad against the dollar tracking the weakness in the domestic stock market. The domestic currency opened weak at 39.40/41 and fell to an intra-day low of 39.47/48. It ended the day at 39.38/39, against the previous close at 39.36/37.

Dealers said that there was a lot of bunched up demand for dollars from public sector banks, on account of the strike on Jan 25. In the forwards market, the 6 month premium closed at 2.18 per cent (2.12) and the 12 month premium ended at 1.79 per cent (1.76).

Sundaram BPO Arm Looks At Tier-2 Cities

Chennai: Sundaram Business Services, the Chennai-based BPO arm of Sundaram Finance, is looking at tier-2 cities of Tamil Nadu. The company is looking at investing Rs 10 crore in setting up BPO facilities in Madurai and in Tiruchi.

According to the source, the Madurai facility will go live on February 11 with around 100 employees and the Tiruchi facility is to begin operations before the year-end. SBS plans to hire around 500 employees for its Madurai facility over the next 12 months. In the first phase, it will provide policy administration services for a leading Mumbai-based life insurance customer from Madurai.

SBS focuses on ''non-voice'' support services. It offerings accounting services, credit processing, deposit processing, employee administration, and insurance related processing services to clients. For fiscal ending March 2008, SBS is likely to report revenue of Rs 30 crore compared with Rs 17 crore in the previous year. In July 2007, it picked up a majority stake in the Chennai-based Professional Management Consultancy, a BPO company that doubled its headcount to over 1,600.

India, France Give New Impetus To Strategic Ties

Giving a new impetus to strategic ties, India and France have finalised negotiations for a bilateral agreement on cooperation in civil nuclear energy, Prime Minister Manmohan Singh announced on Jan 25. The two sides also decided to bolster their defence cooperation and take it beyond a buyer-seller relationship, Singh said at a joint press conference with French President Nicholas Sarkozy. During the talks, Sarkozy, who arrived here on Jan 25 on a two-day visit, reaffirmed France''s support to India''s bid for a permanent seat in the expanded UN Security Council.

Economy Will Grow Despite US Turmoil: PM

The Indian economy can sustain an economic growth of 9-9.5 per cent despite the global financial turmoil, even as it hopes for steps by the US to contain the damage, Prime Minister Manmohan Singh said on Jan 25. We live in an increasingly interdependent world and therefore an international financial crisis could impact on the growth of emerging countries including our own, Manmohan Singh stated. As far as the Indian economy is concerned, we are not affected in the sense our banks don''t have lending of that sort, which has led to the crisis, he added, as he referred to the turmoil in the US caused by indiscriminate lending. The prime minister''s comments came a day after an agreement between the leaders of the US House of Representatives and the George W. Bush administration on a $150 billion package to avoid an economic recession in the US.The package included payments to some 115 million Americans to help overcome the mortgage crisis and new tax breaks for both large and small companies in a bid to step up investments.

Keeping Inflation Low High Priority: Chidambaram

Finance Minister P Chidambaram on Jan 25 said keeping inflation rate low, not high growth, was a priority for the government. At the moment, we are comfortable with inflation below four per cent and growth above 8 per cent.His statement comes amid fear that a possible recession in the US can affect economies of developing countries, including India. Between inflation and growth, what hurts the poor most is the inflation. India''s wholesale prices-based inflation rate grew by 3.83 per cent for the week ended January 12 compared to 3.79 per cent in the previous week, but was still under the Reserve Bank''s target of under 5 per cent for the fiscal. He said New Delhi would do everything to maintain the growth rate, while ensuring prices do not rise. He forecast India''s economy to expand by 8.5 per cent in 2008-09 fiscal

Rupee Ends At 39.37 Against Dollar

Mumbai: The rupee closed about 10 paise higher against the dollar on Jan 25, as foreign institutional investors sold dollars and the stock market gained. The rupee opened at 39.39/40 and closed at 39.36/37, against the previous close of 39.46/47. In the forward premia market, the six-month premium closed at 2.12 per cent (1.94 per cent) and the 12-month at 1.76 per cent (1.59 per cent).

Inflation Increases To 3.83%

Wholesale price index-based inflation rate grew by 3.83 per cent for the week ended January 12, as prices of manufactured goods and some food articles edged up. Inflation is still below Reserve Bank''s forecast of close to 5 per cent for the fiscal, and bankers expect the central bank to soften its monetary policy stance when it comes up for review on January 29. Inflation rate for the week ended January 5 was 3.79 per cent and 6.15 per cent in the year-ago period. CRR rate could be left unchanged, as there is enough liquidity in the system, Barua stated, adding that further interest rate cut by the US Federal Reserve is not ruled out when it meets on January 30.

Forex Reserves Increase $3bn

Mumbai: The accretion to the country''s foreign exchange kitty continued, as reserves increased by $3.169 billion to $284.898 billion, for the week ended Jan 19. The increase is less than the previous week''s increase of $5.47 billion, when the total foreign exchange reserves touched $281.73 billion.The rupee was range-bound against the dollar and traded around the levels of 39.28/29 and 39.30/31 in the week, as the RBI bought dollars in the spot market. According to the RBI data, foreign currency reserves increased by $3.170 billion to touch $276.134 billion.

Tax Revenue May Be Over Rs 6,00,000 Crore

New Delhi: Gross tax revenue mop up are expected to exceed the Rs 6,00,000 crore mark in 2007-08. In other words, tax revenue is expected to double compared with Rs 3,04,958 crore in 2004-05.

If the collections surpass Rs 6,00,000 crore, the gross tax to GDP ratio will go up to around 13 per cent in 2007-08, compared with Budget estimate of 11.8 per cent and medium term target of 12.7 per cent by 2009-10. Budget estimate for tax revenue is Rs 5,48,122 crore in the current fiscal year compared to Rs 4,72,328 crore in 2006-07, an increase of over 16 per cent. Much of the credit for the higher tax revenue goes to surge in personal income tax, corporation tax and service tax collections in the last three years. Current year''s tax collection trends indicate that except excise duty, all other direct and indirect taxes are likely to meet and exceed Budget estimates. Direct tax is going to contribute over 50 per cent to the tax revenue in 2007-08 and overtake indirect taxes for the first time. It is expected that direct tax revenue will exceed budget estimate of Rs 2,67,490 crore by Rs 40,000 crore to 50,000 crore in 2007-08. Indirect tax mop may be around the Budget estimate of Rs 2,78,013 crore, thanks to customs and service tax collections, which are likely to take care of any shortfall in excise duty. Besides improving government finances, the higher tax revenue collection will give it a cushion to give a little more tax benefit to income tax payers to sustain the revenue buoyancy.

FICCI, CII Asks For Rate Cut

New Delhi: Taking a cue from the US Federal Reserve which cut the interest rates by 75 basis points, the Fedearation of Indian Chamber of Commerce and Industry and the Confederation of Indian Industry have asked the Reserve Bank of India to signal interest rates cuts by 25-50 basis points. With inflation under control and balanced around three per cent, it is the right time for the RBI to cut repo and reverse repo rates that are currently at 7.75 per cent and six per cent respectively by 25-50 basis points to cover the relative competitive disadvantage India has on the macro economic fundamentals.

Punjab Approves Projects Worth Rs 749 Crore

New Delhi/ Chandigarh: The Punjab government''s empowered committee on mega projects under the chairmanship of Chief Minister Parkash Singh Badal has approved industrial and agro projects worth Rs 749.20 crore.

Industrial projects worth Rs 499 crore comprising three manufacturing units and one industrial park besides three agro projects worth Rs 250.20 crore were approved in the meeting of the empowered committee, said the source. Earlier, 9 pending projects worth Rs 1,345 crore were approved by the committee on November 6, 2007. The projects cleared yesterday included that of Kaur Sain Spinners Ltd, Ludhiana ( Rs 120 crore), Jindal Cotex Ltd, Ludhiana (Rs 138 crore), InBeu India International (P) Ltd, Pathankot (Rs 65 crore), Malhotra Land Developers & Colonizers Pvt Ltd, Ludhiana (Rs 176 crore), Khet-Se Agriproduce India Pvt Ltd (Rs 90 crore), Sunstar Overseas Ltd, Amritsar (Rs 44.20 crore) and SKOL Breweries Ltd (Rs 116 crore).

SKOL Breweries is a subsidiary of SAB Miller India which is a part of SAB Miller Plc, a $20-billion global brewing giant with a presence in over 60 countries, employing over 40,000 employees and selling over 17 billion litres of beer with 150 brands worldwide. The company started Indian operations in 2000 and over a period of over seven years an investment of over Rs 600 crore with 10 breweries in nine states has been made. SKOL now intends to build up a greenfield modern brewery at Patiala or Ludhiana with an initial capacity of 15 million litre per annum expandable to 50 million litre per annum, over a period of 3 years.

J&K Industry To Receive Rs 28,000cr Investment

New Delhi: With an aim to develop industry and create employment in Jammu and Kashmir, the state government is poised to get an investment of Rs 28,000 crore, with export potential of around Rs13,000 crore, by 2012. This biggest-ever investment from outside the state would create employment for at least 2.5 million. The main sectors which will get investment include agro-based industries, floriculture, and handicrafts.

Double Taxation Agreement With Mexico

New Delhi: The Union Cabinet on Jan 24, gave its ex-post-facto approval for the signing of double taxation avoidance agreement (DTAA) with Mexico. The pack was inked in New Delhi in September 2007 on the occasion of the visit of Mexican President, Mr Felipe Calderon. The DTAA was inked with an objective of promoting economic cooperation between the two countries.

India To Respond To US Rate Cut: FM

Anticipating an indirect impact of the US financial crisis on its economy, India on Jan 24 said it will respond appropriately to a hefty cut in the US interest rates. We will respond (to the rate cut in US) through appropriate fiscal and monetary measures, Finance Minister P Chidambaram said in Davos. The RBI is due to review its monetary policy stance on January 29. The US rate cut was part of efforts to stimulate consumption to keep the world''s largest economy from slipping into a recession - fears of which had led to a meltdown in the global equity markets. We are concerned that it (US Fed rate cut) would lead to high flow of capital to India. But government is not in favour of putting curbs on capital. He said despite fears of global recession, the Indian economy is set to grow in the range of 8.5 per cent to nine per cent. However, high interest rates may have an impact on the growth trajectory.

Gold Prices Increase On Firm Global Cues

Gold maintained an upward march for the second straight day on Jan 24 in the bullion market in New Delhi with prices rising by Rs 40 to Rs 11,550 per 10 gram on buying by jewellers in view of the current marriage season. Standard gold and ornaments remained in demand and advanced by Rs 40 each to Rs 11,550 and Rs 11,400 per 10 grams respectively. However, sovereign ruled flat at Rs 9,150 per piece of eight gram in limited deals. A similar trend was extended in silver as silver ready strengthened by Rs 50 at Rs 20,350 per kilo and silver weekly- based delivery by Rs 100 at Rs 20,820 per kilo respectively. On the other hand, silver coins enquired around last level of Rs 25,400 for buying and Rs 25,500 for selling of 100 coins on stray demand.

Marketmen said trading sentiment gathered momentum following reports of the precious metal rising in Asian markets on speculation that the US Federal Reserve may cut interest rates again when it meets on January 29.The Fed, surprisingly had cut interest rate by 0.75 basis point on Tuesday, a fourth time since 2001, to revive economic growth, which will also increase the appeal of bullion as a hedge against the dollar.

Rupee Up 12 Paise Against US Dollar

The spot rupee opened at 39.50/51. Foreign exchange inflows and selling of dollars by companies led it to appreciate to 39.43/44 to a dollar. However, RBI purchased dollars to stem the rupee appreciation and it finally closed at 39.46/47 to a dollar. The annualised premia for six month and one year forward dollars closed at 1.94 per cent and 1.59 per cent respectively.

Indian Economy To Grow At 8.5%: FM

The Indian economy is set to grow at a rate of 8.5 per cent during 2008-09 after factoring in the volatility of the current global financial turbulence, Finance Minister P Chidambaram said at the World Economic Forum on Jan 24. Chidambaram, who is leading the Indian delegation to the annual event, said that India expected the turbulence to continue for a few months but added that the country was not in favour of imposing capital controls to dampen capital inflows. The move by the US government to lower interest rates will increase the differential with the Indian rate, which could see greater capital inflows into the Indian market, he said.

Rupee Closes At 39.58 Against Dollar

The spot rupee opened strong at 39.44/45, compared with Jan 23''s close of 39.55, on expectations of FII inflows following the 75 basis point cut in US Fed rates. The rupee finally ended at 39.57/58 to a dollar. The premium on six month and one year forward dollars closed at 1.92 per cent and 1.54 per cent as against 1.70 per cent and 1.45 per cent on Jan 22.

India Can Help Weather US Recession: Nath

The world may fret over a possible US recession but the strong economies of India and China can act as two engines of growth to counter its global effects, Commerce Minister Kamal Nath said in Davos on Jan 23. Nath, who is in a power-packed Indian delegation of 80 at the annual meeting of the World Economic Forum (WEF) in Davos, also coupled his comments with guarded optimism over the stalled Doha Round of trade talks. I am optimistic this Davos will create a greater momentum towards conclusion, Nath said, referring to process to restart talks at the World Trade Organisation (WTO) that have made little headway due to charges of protectionism by rich and developing nations. I am also realistic that there is an election in the US. I am realistic that Europe is in a new phase of protectionism, he said, even as he sought to spell out the importance of India and China to the world economy today.

Focus On India, China At WEF

Amidst fears of a slowdown in US looming large in the backdrop, the 38th annual meeting of the World Economic Forum opened in Davos on Wednesday, with the world leaders saying that emerging economies India and China would play a key role in dealing with the global financial crisis.The former British Prime Minister Tony Blair and former US diplomat Henry Kissinger expressed confidence that emerging economies like India and China would play a crucial role to deal with the crisis.The financial markets across the globe is faced with an uneasy situation following the sub-prime crisis in the US. It is important that we have good relations with India and China as centre of the political and economic gravity shifts, Tony Blair, who is a Member of the Foundation Board of the WEF said in his opening remarks while referring to the impact of possible US recession.

E-Payment Of Taxes Compulsory For Corporates From April

New Delhi: From April 1, corporates will be needed to pay their direct taxes only through the electronic route. Electronic payment of direct taxes will also become compulsory from this date for all assesses (other than company) to whom tax audit is applicable, a Finance Ministry official said. The official pointed out that taxpayers can make electronic payment via the Internet banking facility offered by any of the authorised banks. As of today, 18 banks are authorised to offer e-payment facility. Taxpayers will also be given with an option to make electronic payment of taxes via Internet by way of debit cards/credit cards. Electronic payment is seen as a cleaner way to make payment and one could avoid paper work also. Already assessees with Net banking accounts make their tax payments via the e-payment route. Of the banks that offer e-payment facility, sources said that only four SBI, Axis Bank, HDFC Bank and ICICI Bank are popular among taxpayers.

Gold, Silver Continue Losing Spree

Both the precious metals dropped further on the bullion market here on Jan 22 following lower global advices amid weak equity markets. Traders and retailers sold metals to cover their recent sharp losses incurred in the stock markets and even to invest at lower levels when share prices stabilised, a dealer said. The benchmark Sensex has crashed by 4,097.51 points or 19.67 per cent in the last seven days of trading, of which 2,283.76 points or 12.01 per cent was in last two days only. In Asia, gold extended its fall in Asia as the dollar gained. Bullion for immediate delivery fell $9.67, or 1.1 per cent, to $855.33 an ounce. Gold has tumbled 5.8 per cent from its all-time high of $914.30 an ounce.

In London, it was fixed down in the morning at $862.00 an ounce from Jan 21''s afternoon fixing of $871.25 an ounce while in Hong Kong it ended lower at $860.90/861.60 an ounce from previous close of $874.10/874.80.Turning to local market, silver ready (.999 fineness) dipped by Rs 320 per kilo to close at Rs 20,150 from overnight close of Rs 20,470. Standard gold (99.5 purity) dropped by Rs 135 per ten grams to Rs 11,055 from last close of Rs 11,190. Pure gold (99.9 purity) also moved down by same margin to Rs 11,105 per ten grams from Rs 11,240 previously.

Rupee Closes At 39.49 Against Dollar

Mumbai: The rupee mirrored the movement of the stock market on Jan 22 and gained about six paise against the US dollar. The rupee opened weaker at 39.70/72 and closed at 39.49 against the previous close of 39.55/56. The Reserve Bank of India probably sold dollars when the rupee touched the day''s low at 39.75. In the forwards market, the six month-premia closed at 1.79 per cent (1.74 per cent) and the 12-month at 1.45 per cent (1.43 per cent).

India To Strengthen Ties With Arab States

New Delhi: To encourage cooperation with Arab states, India is likely to finalise a memorandum of understanding with the League of Arab States, said Mr N. Ravi, Secretary (East), Ministry of External Affairs, while releasing FICCI-IAEF (Indo-Arab Economic Forum) publication. FICCI is also organising an India-Arab Investment Projects Conclave'' in April to focus on sectors like infrastructure, real estate & SEZs; engineering & construction; manufacturing; banking, venture capital & insurance; healthcare; education; IT & ITES; tourism & lifestyle amongst others. Dr Amit Mitra, Secretary General, FICCI, asked cooperation of the Ambassadors of Arab countries to mobilise participation for the India-Arab Investment Projects Conclave and asked them to bring projects which could be offered to Indian public and private sector companies.

Excise-Exempted Units Required To File Quarterly Returns

New Delhi: Industrial units in Uttarakhand and Himachal Pradesh will now be needed to file quarterly returns with the excise department giving out production details, value of goods cleared by them and the transactions undertaken with their related units. They have no database on the number of units in Uttarakhand and Himachal Pradesh that are availing excise exemption and also the extent of duty foregone. Quarterly returns would have to be filed by units for the quarter ended June, September, December and March of a financial year. Such units would have to file the quarterly return by 20th of the subsequent month of the quarter to which the return relates.

Direct Tax Expert For Slashing Of 5pc R&D Cess

Kolkata: Direct tax experts are of the sight that given the new era of knowledge process outsourcing (KPO), and free movement of technology and design and drawings for betterment of Indian manufacturing, the long standing (since 1986) R&D Cess of five per cent, as applicable to an industrial concern, should be scrapped without any further delay. According to Mr Narayan Jain, Vice-Chairman of All-India Federation of Tax Practitioners (AIFTP), and former President of DTPA, as per Section 3(2) of the Research and Development Cess Act, 1986, the cess, to be paid to the Central Government on or before payment towards import of technology by an industrial worry, has now outlived its utility. Any company engaged in construction was now covered within the meaning of an industrial concern, following the changes to the provisions of the Industrial Development Bank of India Act in March 2000. In case of failure in making such payment to the Technology Development Board, penalty likely to be imposed under Section 9 of the R&D Cess Act, of an amount not exceeding 10 times the cess amount in arrear.

Rupee Ends At 39.56 Against Dollar

Mumbai: The rupee declined by about 25 paise against the dollar on Jan 21 and moved close to a one-month''s low, due to the huge losses in the domestic equity market. The rupee opened at 39.35/36 and closed at 39.55/56, against Jan 19 close of 39.30/31. During the day, it reached a low of 39.59/60. These levels were last seen on December 19, when the rupee touched 39.66, said dealers. In the forwards market the six-month premium closed at 1.74 per cent (2.07 per cent) and the 12-month premium at 1.43 per cent (1.66 per cent).

Manipur Annual Plan Pegged At Rs 1,660 Cr

New Delhi, Jan. 21 The Annual Plan for Manipur for 2008-09 has been estimated at Rs 1,660 crore, comprehensive of a special plan assistance of Rs 550 crore for projects of particular interest to the State. This was finalised on Jan 21, at a meeting between the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, and the Chief Minister of Manipur, Mr Okram Ibobi Singh

Corrections Part Of Market Process: PM

Ascribing the steep fall in Indian share market indices to a correction, Prime Minister Manmohan Singh on Jan 21 said the value of shares in India will continue to grow as fundamentals of the economy remained strong. I am confident the markets will grow in an orderly fashion, the prime minister said in New Delhi. From time to time, some corrections are part of market process. The remarks came in the wake of the 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) registering its steepest intra-day fall Jan 21, losing over 2,000 points, as sentiments were down over fears of recession in the US. As trading came to a close, the Sensex made a marginal recovery, but was still down 1,408.35 points, or 7.41 per cent, in what was the steepest closing fall since May 2004.

Earlier, the finance ministry also advised caution on the part of investors and said the fundamentals of the Indian economy were strong and that the steep fall in Indian indices was lower that those in other Asian economies. Today''s market fall reflects the continuing uncertainties in the global economy and not any change in the fundamentals of Indian economy, said the statement, issued after the markets closed on Jan 21. Investors should take informed and responsible decisions in the situation and not be led by market rumours or any unwarranted apprehensions

India, Britain To Boost Trade Ties

The large presence of Indian diaspora in Britain and growing economic engagement strengthen the comprehensive strategic ties between India and Britain, said a joint statement issued by the two sides on Jan 21. The bilateral economic linkages are strengthening through increased trade and investment flows, said the statement issued after delegation-level talks between Prime Minister Manmohan Singh and his British counterpart Gordon Brown. The UK is the third largest cumulative investor in India. India has emerged as one of the largest investors in the UK, including several major acquisitions, reflecting the maturing nature of the bilateral economic partnership.

Brown, who was on a two-day visit in New Delhi with a large business delegation since Jan 20, said around $10 billion worth of projects were in the pipeline between Indian and British companies and hoped they would conclude soon. The two sides acknowledged the potential for greater collaboration in areas like IT, life sciences, nano-technology, advanced manufacturing, infrastructure, energy, healthcare, agriculture and higher education.

Gold Lose Sparkle On Weak Global Cues

Gold fell by Rs 65 per ten grams to Rs 11,190 on the bullion market in Mumbai on Jan 21 on heavy offerings by stockists in view of weak overseas advices. Silver prices also dropped on lack of industrial demand. Globally, Hong Kong gold moved down to $874.10/874.80 per ounce as against the previous closing level of $874.70/875.40. In London also, it was quoted lower in the morning at $874.25 as against $882.00 per ounce previously. In the local market, standard gold (99.5 purity) fell to Rs 11,190 per ten grams from the previous level of Rs 11,255. Pure gold (99.9 purity) also declined to Rs 11,240 per ten grams from Rs 11,305 previously. Silver ready (.999 fineness) too slipped by Rs 215 per kilo to Rs 20,470 from 20,685 previously.

Pension Funds To Invest Via Index Funds

Pension Fund Regulatory and Development Authority will allow investment of money under the New Pension Scheme (NPS) in stock markets only through index funds in the initial years, PFRDA chairman D Swarup said. The NPS came into being in January 2004 and has so far accumulated about Rs 2,500 crore by way of contributions from government officials who joined since then.

Swarup said NPS contributions of the employees of the central government and 19 state governments would possibly be transferred to the three fund managers - State Bank, UTI Asset Management Company and LIC, by the beginning of the next financial year.

At present, employees will have only two investment choices - either investing the entire contribution in government securities or invest 15% in equities and 85% in fixed income securities. After the PFRDA Bill is passed by the Parliament - which is expected in the budget session - the regulator will allow even 50% pension money invested in equities. But in the initial years, it is proposed to restrict investment in markets through index funds and ETFs.

Food Prices A Challenge: Kamal Nath

NEW DELHI: Commerce Minister Kamal Nath said on Monday that high global food prices posed a challenge to economies around the world, and nations needed to work together to tackle the problem.

"World food prices are a challenge. Wheat has doubled, edible oil prices have nearly doubled. It is this challenge that the east and the west must come together to address," Nath told a meeting of Indian and British businessman.

India One Of Our Fastest Growing Export Markets: Australian PM

MELBOURNE: India has become one of the fastest growing export markets of Australia and is expected to continue to post impressive rates of growth, Prime Minister Kevin Rudd said on Monday, while he outlined a five-point plan to combat inflation.

In his first major economic policy speech since taking over late last year, the Prime Minister described inflation as the "most pressing economic challenge Australia is facing and called the problem as one his administration "inherited" from the previous John Howard government.

Rudd noted that the downturn in the economic outlook in the US, Europe and Japan comes as strong growth in the Asia-Pacific region is continuing to drive demand for Australia's rich mineral and energy resources.

"Over coming years, developments in China will increasingly shape both global and Australian economic conditions," he said.

"The Indian economy has become one of our fastest growing export markets and is expected to continue to post impressive rates of economic growth. Combined, China and India accounted for around 40 per cent of Australia's export value growth in 2006-07," Rudd said.

A key component of his inflation-fighting plan was to cut government spending to produce budget surpluses of 1.5 per cent of gross domestic product (GDP), larger than the 1.0 per cent target of the previous government.

The government would also examine options for providing incentives to encourage private savings and for tackling chronic skills shortages in the economy, he said.

AP Govt Forecasts Economic Growth Exceeds National Trend

Hyderabad: The Andhra Pradesh Government has forecasted that the State''s economic growth at 9.83 per cent and per capita growth rate have exceeded national economic growth trends. Following a review meeting of the Chief Minister, Dr Y.S. Rajasekhara Reddy, with the Special Chief Secretary, Planning, Mr A.K. Goel, these numbers were released by the Chief Minister''s Office. The economic growth rate of the nation this year will be 8.5 per cent, while the growth rate during 2007-08, according to revised estimates, will be only 8.9 per cent. This is because of the shortage of essential commodities, fall in growth rate of trade, business, hotel, transport and communications, and comparative decline in agricultural growth rate. While the per capita growth in the three quarters this year for the nation is 7.3 per cent, Andhra Pradesh recorded 8.3 per cent growth.

The State is hopping a buoyant performance by agricultural and allied sectors. The cumulative quarterly Gross State Domestic Product (GSDP) from April to December 2007, at factor cost at constant (1999-2000) prices of 2007-08 is estimated at Rs 1,46,227 crore as against Rs 1,33,138 crore over corresponding period of previous fiscal of 2006-07, a growth rate of 9.83 per cent. The methodology followed in estimations of quarterly GSDP is as that of the Quarterly Gross Domestic Product (QGDP) compiled by Central Statistical Organisation. Directorate of Economic and Statistics estimates the Quarterly Gross State Domestic Product (QGSDP). The agriculture sector contribution during the cumulative third quarter of 2007-08 at constant (1999-2000) prices is estimated at Rs 26,539 crore as against Rs 23,660 crore in the corresponding period previous year, a growth of 12.17 per cent.

FM Cuts Duty On 539 Items Under Agreement With Singapore

New Delhi: The Finance Ministry has slash customs duty on 539 items as part of an agreed tariff elimination package under the comprehensive economic cooperation agreement (CECA) with Singapore. The duty changes have come into effect from January 15 this year. The 539 items mainly comprise of manufactured goods. In December 2007, both countries inked a Protocol to amend the CECA so as to expand the tariff liberalisation package to 539 additional tariff lines within the trade in the goods chapter. Of the 539 tariff lines, India had agreed to eliminate tariffs on 307 items in five equal cuts between January 15, 2008 and December 1, 2011. These 307 items comprise mainly of base metals, machinery, mechanical appliances, chemicals, textiles and textile articles. For 135 products, tariff reduction to 5 per cent duty is to be got in 9 equal cuts between January 15, 2008 and December 1, 2015.

Brown To Visit India On A Likely Economic Agenda

The British Prime Minister Gordon Brown arrives in India later on Jan 20 with an eye on improving business ties and enhancing cooperation on climate change and counter-terrorism. The Indian economy is hoped to tread ahead this year with growth in Europe and the United States. The British government has had the visit to India on top of its agenda after Brown became the premier. He will also take part in a women''s empowerment event, an entrepreneurship summit and launch a sports initiative. The visit is clear indication of attracting and introducing British business to Asia''s economic giants. They are delighted when foreign companies come here and buy British companies because in the end we want those people to come and run these companies who are hungry and who want to bring in new ideas.

Maharashtra Attracts FDI Worth Around Rs 19,632 Cr In 3yrs

LATUR: Making rapid strides in industrialisation, Maharashtra has attracted Rs 19,632 crore Foreign Direct Investment during the last three years.

"This is the highest FDI in the country amounting to Rs 70,750 crore since 1991," Chief Minister Vilasrao Deshmukh said.

Deshmukh said the state has secured approval to highest number of 119 SEZs in the country and pointed out that the new industrial policy was aimed at providing conducive environment for investment.

"We are determined to provide world class infrastructure to boost investment in the state," he said. 245 IT parks and 33 public IT parks were being developed and there was a proposal for having an integrated Delhi-Mumbai Industrial Corridor, Deshmukh added.

With agriculture being the main prop for the state's economy, the state's production of cotton and soya has registered an all-time high, he said.

Asked about the huge outstanding loan of Rs 7,500 crore of farmers in various cooperative banks, the chief minister said he would favour full waiver.

Deshmukh said he would discuss the state's plan size with the Planning Commission soon and seek a ten per cent increase so that his government could lay more emphasis on irrigation, power and the social sector.

Yechury Writes To PM Demanding Higher Allocation For ICDS

NEW DELHI: CPI(M) on Friday slammed the Government for not granting necessary funds for Integrated Child Development Scheme (ICDS) which addresses key issues like infant and maternal mortality and sought allocation of Rs 12,000 crore for the scheme in the next budget.

In a letter to Prime Minister Manmohan Singh, CPI(M) leader Sitaram Yechury said the present allocation of Rs 4,761 crore for the scheme was "too meager to meet the requirements".

Despite achieving a steady growth of 8-9 per cent, "India continues to be in an unenviable position of 128 in the human development index, because of high infant mortality rate, child mortality rate, maternal mortality rate, illiteracy rate among others", he said.

"In spite of this alarming situation, the government has failed to make the necessary financial allocation to ICDS, which has been addressing these issues, in the last budgets," he pointed out.

He drew the Prime Minister's attention to his assurance to expand the ICDS, enhance the wages of Anganwadi workers and helpers and to consider the demand for ex gratia for workers and helpers during a meeting with him last year.

After the meeting in August, 2006, the government set up a review committee to examine the demands raised by Anganwadi workers and it submitted its report around a year ago.

"I am constrained to inform you that till today, neither have its recommendations been made public nor has the government taken any action on the assurance given by you," he said.

Yechury demanded an allocation of Rs 12,000 crore for ICDS, which include Rs 2,500 cr for improving the conditions of anganwadi workers, in the next budget.

Inflation Rises To 3.79%; May Dampen Rate Cut Chance

NEW DELHI: Wholesale price-based inflation rose marginally to 3.79% for the week ended January 5, after remaining at 3.5% two weeks in a row. The rise was mainly because some fuel items like coking coal, non-coking coal, furnace oil, naphtha and manufactured products like butter, coffee and edible oil became dearer during the week under review. This is even as prices of seasonal commodities like fruit and vegetables came down.

Though inflation is way below the 6.37% recorded a year ago, analysts expect the Reserve Bank of India not to soften its monetary policy stance this month. This is because inflation clouds are still looming over the economy due to a possible hike in fuel prices. The Prime Minister’s Economic Advisory Council, too, has projected inflation to go above 4% if prices of petrol and diesel are raised.

Meanwhile, the provisional figure for the week ended November 10 has been revised to 3.20% from 3.01%. The wholesale price index stood at 216.6 compared with 216 points in the previous week, an official release said on Friday.
Crisil director and principal economist D K Joshi said though inflation had gone up marginally, it would remain range-bound due to a combination of tight monetary policy and currency appreciation, which would make imports cheaper and contain price rise. However, in the wake of rising inflationary expectations, it was unlikely the RBI would cut any interest rate, he said.

“The RBI will not ease monetary policy. It is going to keep all the key rates unchanged in its upcoming review,” HDFC Bank chief economist Abheek Barua said.

Experts, however, feel inflation will not jump beyond the long-term RBI target of 5%. “If the government decides to hike fuel prices, it will put some inflationary pressure. But as food prices are stabilising, inflation will remain around 4%,” ICRA economic advisor Saumitra Chaudhury said.

Economists feel keeping fuel prices untouched will help in containing inflation artificially but will distort the fiscal position of the government. “In the backdrop of strengthening crude oil price in the global market, which is ruling above $90 per barrel, the under-recoveries of oil companies are mounting.

The companies are bailed out by the government through issuing oil bonds, which is an off-budget liability on government. Thus, any delay in taking a decision on passing on the burden will result in a fiscal cost,” said Mr Joshi.

In the week under review, the fuel index surged by 1.2% as prices of industrial fuels such as naptha and furnace, which are deregulated, registered positive momentum and contributed to inflation. The index of primary articles rose by 0.1%. Prices of raw cotton, rape seed and mustard seed all went up by 1% each.

Prices of tobacco went up by 3% while prices of fodder, sunflower and raw cotton, rose by 2% each. Bajra, jowar, urad and fruit and vegetables became cheaper. In the manufacturing segment, the prices of food articles like coffee, butter and imported oil went up by 1% each.

PM, Brown To Talk Financial Reforms

NEW DELHI: The lack of progress in the financial sector reforms will come up for discussion when British prime minister Gordon Brown meets prime minister Manmohan Singh here on Monday.

Ahead of Mr Brown’s visit to India, British high commissioner Sir Richard Stagg maintained that India would gain more from liberalisation in banking and legal sectors than the UK. On legal services, the high commissioner’s pitch was that the UK would lose more than India if it liberalised legal services. He said liberalisation would make India into a dynamic legal centre. “From our perspective, the likely loser of the outcome of liberalisation will be the UK. There will be fewer Indian lawyers going to the UK... The UK and US law firms will move away from a high-cost economy,” he said.

Aware of the resistance from Indian lawyers here and those practising in the UK, he said those groups could be compensated by the government. “Almost all win except for groups of people who have narrow sectoral interests,” he said.

On banking sector reforms, the high commissioner said the move was essential for India and would encourage competition in the banking sector. “We strongly believe this is a mutual-benefit agenda and will bring benefits to India,” he said. Interestingly, the British government is also scouting for opportunities for its firms in the financial and legal services in China.

This is said to be part of Mr Brown’s agenda in China.

However, the UPA government is keen to push financial sector reforms, but has been unable to make any forward movement in the face of opposition from its Left allies. In fact, finance minister P Chidambaram recently said he was surprised by people who wanted 9%- plus GDP growth but did not want any changes in the structure of the banking and other sectors.

One of the aims of the Indo-UK summit is to strengthen business and trade linkages. According to government figures, the UK is India’s fourth largest global trading partner and the second largest in the EU, with annual two-way trade of around 8.5 billion euros in 2006. India is also the second-largest investor in the UK, in terms of number of projects, investing over £1billion.

Mr Brown and Mr Singh will look at increasing these linkages, but at the same time, will focus on other aspects of the strategic relationship. The two leaders are expected to discuss civilian nuclear cooperation, counter terrorism, climate change, business cooperation and regional issues. Mr Brown packed itinerary includes attending a women’s empowerment event, an entrepeneurship summit and being conferred an honourary degree from Delhi university.

NRI Funds For Ngos To Come Under Stringent Check System

NEW DELHI: The government may create a stringent check system to track the flow of funds from non-resident Indian to Indian NGOs. This follows complaints about misuse and diversion of such funds.

Minister of state for industry Ashwini Kumar has assured NRI groups in the US and Canada that checks and scrutiny would be put in place soon to track end-use of funds in India.

Last week, during the Pravasi Bharatiya Divas, some NRI groups from the US and Canada had met Mr Ashwini Kumar, apprising him of the instances when the NRI businessmen feel insecure about the end-use of the funds given to Indian NGOs. The government has assured them it would soon be made mandatory that only registered voluntary organisations can access funds from the NRIs.

“It has been often noticed that funds that voluntary organisations receive are sometimes siphoned off. NRIs, therefore, would be advised to donate funds to the organisations that have sustainable upcoming or ongoing welfare projects,” a senior government official said.

Complaints have been received by the government where NGOs have been offered money for building schools, hospitals and other properties for public welfare, but the construction has not taken place in years for proposed projects. In the past, there have been reports of funds from voluntary sector being diverted to fund terror.

“The end-use of NRI funds in India is also a matter of concern as the NRIs are eager to prop up the country’s infrastructure for welfare by pumping in their hard-earned money. The philanthropy should not go waste if funds fall in the hands of unscrupulous organisations,” an official said.

Soaring PE Flows Must Get Portfolio Investment Tag: EAC

NEW DELHI: Private equity (PE) flows, which stood at $17 billion in 2007, should be treated as portfolio investment, feels the government’s key economic policy think-tank, the Prime Minister’s Economic Advisory Council (EAC). The panel has highlighted the lack of clarity on this count and called for simplification.

“PE investment inflows have also been quite large. Since in most cases PE flows constitute less than 10% of the capital of the company being invested in, they should ideally be reported under portfolio capital, and not under FDI,” the EAC said in the review of economy for 2007-08.

While the EAC assumes that PE funds act like portfolio investors, ground realities point to a different scenario. In such cases, the investment is more like FDI rather than a portfolio investor. There are cases of PE funds taking management control of companies in a bid to improve financial performance even in case they do not have a majority stake. Blackstone, for example, took over Gokaldas Exports, a large player in the readymade garments segment. Similarly, Actis runs Punjab Tractors and Phoenix Lamps while ICICI Ventures manages RFCL. India Value Fund, another PE, holds the reins at Shringar Cinema.

The EAC review points out that in the first quarter of 2007-08, there was a difference of $2.5 billion between the sum of net purchases by foreign institutional investors and overseas equity issuance by Indian companies though ADRs and GDRs. It feels the differences could be on account of PE investments since many PE investors are registered under common ownership of registered FIIs.

With the overall capital inflows being pegged at $103 billion, much higher that the council’s own July 2007 projection of $58 billion, the think-tank has recommended continued use of sterilisation to counter the excess flows in the remaining part of 2007-08.

The EAC had suggested a three-pronged approach to deal with large inflows in the economic outlook released in July: allowing rupee to appreciate, absorbing capital and sterilising imposing policy restrictions and facilitating outflows. The total foreign investment is estimated at $27.8 billion, a little more than first half of the current fiscal. However, the total surplus on capital account is estimated at $103 billion, or 8.7% of the GDP, in 2007-08, significantly higher than the $58 billion projected in July 2007 outlook.

Since this would put pressure on the rupee to rise, the council has advised the government to give clear signals to industry to make adjustments alongwith a transitional package.

“Clear signals should be given to industry to make adjustments through productivity increases and to tap the booming domestic market. However, some transitional packages targeted at labour-intensive industries may be called for,” it said.
EAC chairman C Rangarajan also pointed that the capital flows may see some tempering in the next fiscal in the backdrop of developed economies witnessing recessionary trends due to subprime crisis.

The government has taken various steps to counter flows including tightening external commercial borrowings, clamping down on investments through participatory notes and liberalising remittances.

GDP Growth Forecast Down To 8.9%

The Prime Minister''s Economic Advisory Council has scaled down its growth projection for 2007-08 to 8.9 per cent from 9 per cent earlier on account of slow expansion in manufacturing and energy generation. Our current assessment for GDP growth rate in 2007-08 is marginally lower than our previous estimate in July 2007. The main difference stems from lower than expected expansion in manufacturing output and lower growth in the output of energy utilities, said a review of the economy for 2007-08, released by Council Chairman C Ranagarajan. A better than expected growth rate in the farm sector has partially offset the lower expansion rate in manufacturing and energy. The agriculture sector is likely to grow by 3.6 per cent as against the earlier estimate of 2.5 per cent. Manufacturing sector growth is likely to slow down to 9.8 per cent in the current fiscal against 11.3 per cent projected by the Council in its July outlook. The sector had grown by 12.3 per cent last year.

Rupee At 39.30 Against US Dollar

The rupee on Jan 17 barely changed at 39.3050/3150 against the greenback after moving in a narrow range in the day on continued dollar demand by banks amid weakness in equity markets. The Reserve Bank of India (RBI) continued to intervene in the exchange market to block any surge the rupee in the wake of huge response from foreign investors towards Reliance IPO, forex dealers said.

The foreign institutional investors have submitted bids worth about USD 30 billion for shares of Reliance Power. At the Interbank Foreign Exchange (forex) market, the local currency remained trapped in a range of 39.2700 and 39.3450 during the day after resuming weak at 39.31/32 a dollar from its previous close of 39.29/30 a dollar. Dealers said banks bought dollar on behalf of the apex bank but purchases in the greenback were not as aggressive as it was on Jan 16.

Karnataka To Mobilize $200 Mn Loan For Road Projects

Chennai/ Bangalore: The Karnataka government is planning to mop up $200 million from the Japanese Development Bank to improve them with the condition of roads in the state, particularly in the interior areas, deteriorating for lack of maintenance.

The state has a network of 37,000 km of major district roads (MDRs) which need maintenance immediate. Most of these roads fall under the purview of the respective district administrations and the public works department. The roads could not be improved for lack of funds all these years though they were supposed to be maintained every year. On the progress of Karnataka State Highways Development programme, Krishna said the state had successfully completed the first phase utilising the Rs 1,000 crore loan sanctioned by the World Bank. The project will be implemented in three phases by the state. Krishna also announced the launch of electronic payment system for contractors and agencies involved in the National Highways road construction projects.

Annual Plan For Rajasthan Pegged At Rs 14,000 Cr

New Delhi: The annual plan of Rajasthan for 2008-09 was estimated at Rs 14,000 crore, inclusive of additional Central Assistance of Rs 100 crore for projects of special interest to the State. This was decided at a meeting between Deputy Chairman, Planning Commission, Mr Montek Singh Ahluwalia, and the Chief Minister of Rajasthan, Ms Vasundhara Raje Scindia. In his preliminary observations, Mr Ahluwalia hailed the State Government for efforts aimed at improving fiscal health. He said the State has not only achieved the targets laid down in the Fiscal Responsibility and Budget Management Act but also effected additional improvements in the revenue deficit and fiscal deficit.

Rupee Weakens Against US Dollar

The rupee weakened against the US currency and ended at 39.29/30, cheaper by three paisa from the close of 39.26/27 on Jan 15, following the central bank''s intervention to mitigate the currency''s surge. The local currency, however, put up a strong resistance and eased slightly against dollar due to heavy capital inflow in the ongoing mega public offer of Reliance Power Ltd.

In quiet trade at the Interbank Foreign Exchange (forex) market, the Indian unit remained trapped in a small range of 39.2450 and 39.3000 during the day after resuming barely changed at 39.28/29 a dollar. The Reserve Bank of India (RBI) aggresively bought dollars to offset any positive impact on the rupee of strong portfolio inflows into primary market, forex dealers said. The central bank was keen to block the rupee''s surge on the back of inflows into the Asia''s fast-growing economy.

A world-wide stocks plunge, however, weighed on the rupee sentiment. Indian benchmark Sensex ended 383 points or about 2.0 per cent down on growing worries about the US recession while Asian indices fell in a range of 3.4 to 5.4 per cent. The dollar remained weak against major world currencies in overseas markets.

The RBI, however, fixed the reference rate for the US currency at Rs 39.27 per dollar and for the single European unit at Rs 58.29 per euro. The rupee premiums on forward dollar ended lower due to fresh receiving by exporters.The benchmark six-month forward dollar premiums payable in June ended at 35 - 37 paise, down from 39 - 41 paise on Tuesday and the far-forward maturing in December ended weak at 66 - 68 paise from 68 - 70 paise previously.

No Review Of SEZ Policy: Kamal Nath

New Delhi: The Government has said that it does not have the immediate plan to review the special economic zone (SEZ) policy. This was said by the Minister for Commerce and Industries, Mr Kamal Nath, here on Jan 16.

Speaking to reporters at the sidelines of CII Partnership Summit, Mr Nath said, it has generated employment. It has generated investments. Also, it is an Act of the Parliament. I do not think there is any need to review the policy, he said.

Regarding the Goa Government''s request to scrap all the 15 approved SEZs in the State, Mr Nath said that his Ministry was examining the proposal. Goa had announced scrapping of all the 15 SEZs in the State on December 31, 2007. By then three projects, including one from pharmaceutical company Cipla, had already been notified. A senior official in the Ministry said that The Board of Approval (BoA) for SEZs is expected to meet sometime in February to consider Goa Government''s request. However, the official pointed out that while it would not be much of a problem for the Centre to accede to the State Government, the problem would arise in case of the three SEZs that have already been notified and promoters have started putting in their investments.

Gold Touches Rs 11,710-Mark

Continuing its record setting spree Gold on Tuesday rose by Rs 90 to touch a new peak at Rs 11,710 per 10 gram on the Delhi bullion market due to hectic buying by stockists amid reports of a steep rise in overseas markets. Trading sentiment turned bullish following reports that the precious metal in the New York Merchantile Exchange surged to an all-time high level of $915 an ounce.

Marketmen said the gold rose for the sixth day in Asia as the weakening dollar heightened the attraction of precious metals as an alternative investment. The fears of recession in the US markets boosted demand for gold against inflation, which in-turn influenced trading in Indian markets. Standard gold shot up by Rs 90 at Rs 11,710 per 10 gram, a level never seen before. Similarly, gold ornaments surged to all-time high level of Rs 11,560 per 10 gram.

Sovereign also joined the rally and touched a record high of Rs 9,150 per piece of eight gram. However, silver met with resistance at higher levels and fell back by Rs 50 to Rs 20,650 per kg, while silver weekly-based delivery rose by Rs 20 to Rs 21,220 per kg on speculative support. Silver coins remained unchanged at Rs 25,500 for buying and Rs 25,600 for selling of 100 pieces.

Rupee At 39.26 Against US Dollar

The rupee on Jan 15 gained moderately to end at 39.26/27 against the US currency after moving in a narrow range as the central bank attempted to absorb the capital inflows into primary market and bloc the local currency''s surge. The Reserve Bank of India intervened in the exchange market to prevent the rupee''s surge on the back of a strong inflow of about $1 billion from Foreign Institutional Investors for the mega Initial Public Offer by Reliance Power, market players said.

The tremendous response to IPO also had a pull-down effect on the stock markets as investors liquidated some of their holdings to participate in the issue which led to a fall of nearly 477 points in the sensitive index. The IPO of Reliance Power was subscribed ten times in the initial four hours of the opening of the book-building offer. The mega IPO was to raise up to $3.0 billion, including about $1.0 billion from FIIs. In dull trade at the Interbank Foreign Exchange (forex) market, the rupee moved between 39.2550 and 39.2800 during the day after resuming better at 39.26/27 a dollar from previous close of 39.28/29 a dollar. The central bank has been very active for the past couple of weeks and reportedly mopped up about $5.0 to 6.0 billion to contain any major surge in the rupee, a dealer with foreign bank commented.

IPO Response Reflects Confidence, Says FM

The response to mega initial public offer by Anil Ambani group''s Reliance Power seems to reflect the confidence of global investors'' in the future of Indian economy, Finance Minister P Chidambaram said on Jan 15. It is a reflection of world community in the future of India. Investors seem to be confident in the future of Indian economy, said Chidambaram on IPO that hit the Market on Tuesday for mopping up to Rs 11,700 crore.Not only the IPO was fully subscribed within a minute of opening, it generated demand worth over Rs 50,000 crore in less than two hours.

Himachal Project Receives $400 Mn WB Loan

New Delhi/ Shimla: Public sector Sutlej Jal Vidyut Nigam Ltd (SJVNL) inked signed a $400 million World Bank loan agreement for building the 412-Mw Rampur hydel project in Himachal Pradesh. The agreement was signed by SJVNL chief HKSharma and Isabella Guerrio, country director, World Bank, among other officials of the central government in New Delhi today, a SJVNL spokesman said here.

The Rampur project is being built on the Sutlej river in Shimla district 130 km from here. The project is adjacent to the country''s largest hydel project - the 1500-Mw Nathpa Jhakri project - also built and run by SJVNL, a Central government and Himachal government undertaking company. The filtered water of the Nathpa project is being used through underground tunnels by the Rampur project to bring down costs of the project. The Rampur project is slated to be commisioned by January 2012 within the 11th Plan period and will generate 1,770 million units of electricity. The Himachal government is a major beneficiary of this project.

Hudco May Float Tax-Free Bonds

NEW DELHI: You may soon be able to get another tax-free option to park your capital gains. The government is likely to allow Hudco to float capital gains exemption bonds on the lines of National Housing Board (NHB), Rural Electrification Corp (REC), Nabard and NHAI.

The ministry of urban housing proposal is with the finance ministry and an announcement is expected in Budget 2008.
The conditions to park capital gains arising out of sale of asset will remain the same. This means no individual investor or corporate investor will be allowed to park capital gains of over Rs 50 lakh in such bonds.

To ensure the bonds are not cornered by large investors or corporates, the finance ministry, in 2006, had put a limit of Rs 50 lakh per investor per year with respect to capital gains bonds issued by NHAI and REC under Section 54EC of the Income-Tax Act.

“Capital gains bonds under Section 54EC have been allowed to NHB, REC, Nabard and NHAI. Hudco has not been included till now. Since Hudco is the only agency that earmarks 55% of its funds for housing for the lower income group, it is suggested the concession be made available to Hudco to enable it to access funds at a cheaper rate,” a source said.

The money thus generated would be pumped into development of housing infrastructure, especially for low-cost housing. National Housing & Habitat Policy that was cleared by the Cabinet in November has also made a recommendation in this regard.

Experts said the move would benefit not just investors by giving them another avenue to park capital gains but also help Hudco raise long-term funds it needs. Experience with REC and NHAI has shown that the PSUs have been able to raise over Rs 10,000 crore per year to be invested in road and power infrastructure.

Hudco provides long-term finance for construction of houses. It also undertakes housing and urban development programmes. Hudco promotes, establishes, assists, collaborates and provides consultancy services for the projects of designing and planning of works relating to housing and urban development programmes in the country and abroad.

Urban Bodies May Be Allowed Share In VAT

MUMBAI: Urban local bodies could do away with octroi and instead be given a share in the Value Added Tax imposed by the state government, a research paper on municipal finance prepared by the Reserve Bank of India said.

"The search for a substitute for octroi may perhaps end with a formulae-based share for the ULBs in the Value Added Tax," the paper said on Monday.

The study, prepared by Department of Economic Analysis and Policy in RBI, said the size of the municipal fiscal sector in India is very small compared to many developed and developing countries.

It said municipal finances need to be strengthened and suggested a host of levies like vacant land tax, taxation of central and state government properties, motor vehicle tax or a share from the same, betterment levy, a surcharge on stamp duty on registration deed, advertisement tax be considered as part of the scheme of revenue assignment to ULBs.

Govt To Roll Out Rs 10 Coin In Diwali

NEW DELHI: With smaller coins getting out of circulation, the government is planning to roll out Rs 10 coin during Diwali. The finance ministry will soon invite global tenders for manufacturing 30 crore pieces of Rs 10 coins amounting to Rs 300 crore.

The centre of approximately 7.71 gm, 17-mm diameter bimetallic composite rimmed Rs 10 coin will be an alloy of copper and nickel (cupro-nickel) while the rim will be of Al-Bronze (aluminium, copper and nickel). It is believed that only foreign suppliers will be able to supply these coins due to their unique composition.

In addition to the Rs 10 coin, the government has also decided to roll out 200 crore and 80 crore pieces Rs 2 and Re 1 coins, amounting to Rs 480 crore. Sources said SAIL’s Salem Steel and Jindal Stainless Steel have bagged the contract to manufacture blanks of Re 1 and Rs 2 coins at an estimated cost of Rs 200 crore.

Trial runs have also begun for introduction of plated coins (with a low value metal as base and a plating of nickel to give it shine and endurance), a first for the Indian mint market. The Security Printing and Minting Corporation of India, the government company responsible for printing notes and stamping coins, is expected to invited global tenders for it soon.

Introduction of the Rs 10 coin was also recommended by the Tarapore Committee, deliberating on currency management. The committee was, however, not in favour of parallel supply of notes and coins of the same denomination. It had suggested a complete phase-out Rs 5 notes.

The suggestion is unlikely to be implemented due to shortage of coins of the denomination. The government conceived introduction of Rs 10 coin over two years back. However, the trial runs of the earlier coin did not succeed resulting in the delays in its introduction.

Interestingly, RBI is empowered to issue coins of up to Rs 1,000 denomination and notes of up to Rs 10,000 or any other denomination specified by the government of India. Coins of 5 paise, 10 paise and 25 paise have disappeared from the market while use of 50 paise coins too have become minimal.

Currently, Re 1, Rs 2 and Rs 5 coins are used as singles. Coins up to 50 paise are called small coins while one rupee and above are called rupee coins.

Govt May Announce Biofuel Policy In Feb

NEW DELHI: The government may announce a modified biofuel policy next month. A group of ministers (GoM), headed by agriculture minister Sharad Pawar, has arrived at a consensus on the policy and has proposed some changes on its earlier draft.

“The GoM would take the final call on the controversial policy in its next meeting on January 29,” minister of state for new and renewable energy (MNRE) Vilas Muttemwar told ET. The GoM has already met twice and has proposed some changes in the draft apart from seeking some clarifications.

The changes would be incorporated to dispell any doubts in the minds of farmers and other stake holders about the new initiative, an officials involved in the development said. The ministry for new and renewable energy has suggested setting up of a national biofuel development board and formulation of the national biofuel policy for the promotion of biofuel as an alternate source of energy.

The new policy also proposes minimum support prices (MSPs) for farmers engaged in the production of bio-fuel crops like jatropha, karanjaseeds and oil-bearing materials. The rural development ministry, meanwhile, had demanded a gross budgetary support of Rs 1,340 crore to support jatropha cultivation in 400,000 hectare of wasteland over a period of five years.

The new and renewable ministry claims that the government could save foreign exchange worth Rs 20,000 crore once the policy on biofuels is adopted. The policy envisages replacement of 10% of the petroleum products requirement of the country with biofuels by 2012.

Concerns were, however, raised by some NGOs and socialists about the viability of the scheme as there are concerns about food security involved. “No one is clear yet on the implications of a strong bio-fuel policy which is likely to cut into our food security concerns. Secondly, the government, given its present unconcern for sugarcane farmers might let the sugar factories play with the lives of biofuel crop farmers,” said an NGO spokesperson.

Inflation Remains Unchanged At 3.5PC

India''s inflation, based on the Wholesale Price Index (WPI), remained unchanged at 3.5% for the week ended December 29, the Government said on Jan 11. The rate was slightly lower than the average forecast of 3.53%. It was also down from 5.89% during the same week last year. The WPI stood at 216.0 versus 215.9 in the week ended December 22. The index for Primary Articles declined to 222.1 from 222.4 in the previous week, while the index for Fuel & Power was static at 330.2. The index for Manufactured Products rose to 188.4 from 188.1. Inflation is in line with the Reserve Bank of India''s (RBI) FY08 target of 3-3.5% and is unlikely to rise sharply unless the Government decides to hike retail prices of petrol and diesel. If the Centre does bite the bullet and jacks up fuel prices marginally, there could be some impact on inflation.

Rupee At 39.29 Against US Dollar

The US dollar ended slightly dearer against the rupee at Rs 39.2950/3050 per dollar at the close of the Interbank Foreign Exchange market in Mumbai on Jan 11. The rupee ruled steady against the US currency in morning trade on Jan 11 at 39.2850/2950 a dollar despite good movements at the bourses. In continued dull trade at the Interbank Foreign Exchange (forex) market, the local currency resumed slightly better at 39.26/28 a dollar from previous close of 39.28/29 a dollar but later eased to 39.2850/2950 a dollar in late morning deals.

Industrial Growth Plunges To 5.3%

Growth in India''s industrial production plunged to 5.3 per cent in November this fiscal from 15.8 per cent last year following a huge decline in the manufacturing sector. The manufacturing growth dipped to 5.4 per cent in November from 17.2 per cent in 2006. Electricity segment also showed a dismal performance growing by only 5.8 per cent, against 8.7 per cent. Mining was down from 8.8 per cent to 3.5 per cent. For the April-November period of fiscal 2007-08, the Index of Industrial Production settled at a single digit figure of 9.2 per cent against 10.9 per cent in the same period last year.All the segment indices were in the single digit for the April-November period.

FTA With China Unlikely: Nath

India and China are expected to sign dozens of trade deals during Prime Minister Manmohan Singh''s three-day visit to China from January 13, but India is wary of Free Trade Agreement (FTA) with China. Once again the Commerce Minister Kamal Nath has said that no FTA is likely but that does not mean that trade ties will not strengthen. The Prime Minister is ready for his first visit to China but is India ready for more bilateral trade with the communist power? Is it desirable to have a free trade agreement or what is now known as the three dreaded alphabets FTA? The answer is a no if one wee to believe India''s commerce minister. We will ask them to make their currency market driven. There are things to be worked out and we expect some cooperation in areas like chemicals and pharma, said Nath.

Kamal Nath is under tremendous pressure from industrialists like AM Naik who want serious action against China for dumping cheaper products. The low cost products has forced him to stop making some products and he has even gone to the extent of asking for an import duty on Chinese products to protect the industry.

Rs 5 Lakh Tax Refund Cases Likely To Come Under Scrutiny

New Delhi: The Finance Ministry has asked to field formations to ensure that cases involving final refunds of over Rs 5 lakh do not remain outside the scope of scrutiny selection.

The official made it clear that there was no change in the scrutiny norms already laid out for the current fiscal. It was also highlighted that the latest instruction would not impact large number of tax assessees. The latest instruction does not relate to any particular category of assessees, but in general to refund cases where the eventual refund exceeds Rs 5 lakh. Already, as per the CBDT norms for the current fiscal, under selection of cases meant for scrutiny, all banks and public sector undertakings are liable for scrutiny. Also, all NSE-500 companies and BSE-A group companies listed as on March 31, 2007 are covered.

Standard Gold Touches Rs 11,265

Price of standard gold touched a new peak of Rs 11,265 per ten gram at close setting a new record on the bullion market in Chennai on Jan 11 in line with firming global trend. Ornament (22 carat) gold also rose by Rs 13 per gram and touched all time high of Rs 1,044 per gram. Bar silver also moved up to end at Rs 21,250 netting a gain of Rs 695. When the market opened, standard gold rose by Rs 110 per ten gram to Rs 11,240 from its previous close of Rs 11,130 and ended the day at Rs 11,265, netting a gain of Rs 135.Ornament gold opened at Rs 1,041 over its previous close of Rs 1,031 and closed at Rs 1,044 netting a gain of Rs 13.

Punjab Receives Two New Sezs Proposals

New Delhi/ Chandigarh: The Punjab government has got two new proposals worth Rs 2,367.22 crore for commissioning special economic zones (SEZs) at a total area of 110.80 hectares. The two proposals are from real estate developers Ansal Properties & Infrastructure (API), and Ishan Developers & Infrastructure (IDI), according to the information collected from the state industries department.

API proposes to develop a 10.80-hectare IT SEZ in Mohali at an investment of Rs 506.22 crore. The project is expected to give employment to 35,000 people. IDI has proposed for set up an integrated textile park on 100 hectares in Amritsar at an investment of Rs 1,861 crore. It has an employment generation capability of 11,000. In addition to these, Sukham Infrastructure (P) Ltd has got a formal approval from the union government for its SEZ proposal, while Malhotra Land Developers & Colonisers has received in principle nod, said the source. While Sukham proposed to develop IT SEZ with an investment of Rs 745 crore at 11.62 hectares in Mohali, Malhotra Land would set up engineering SEZ in Ludhiana with an outlay of Rs 213 crore. Punjab has eight formally-approved SEZ projects, while four have been given in-principle nod.

Indo-China Trade Poised To Grow

Indian industry is looking forward to Prime Minister Manmohan Singh''s upcoming visit to China with the hope to expand its trade basket but is wary of a Free Trade Agreement (FTA) with Beijing, saying it is too early to sign it. As Singh, accompanied by a high-profile business delegation, begins his maiden three-day visit from January 13, the Indian industry also expects that the visit would further boost Chinese investment in India in sectors such as roads, power, highways, urban infrastructure and manufacturing. Indian businesses have grown manifolds since the last visit of the Indian Prime Minister in 2003. Since then, Indian businesses have increasingly explored the opportunities in China in various sectors, Madhav Sharma, Chief Representative of CII''s China office in Shanghai, said.

PM Asks India Inc To Look At China

Prime Minister Manmohan Singh asked the domestic industry to look at China and to learn to both compete and cooperate even as India Inc sought his intervention for early removal of trade and non-trade barriers to reverse the adverse trade deficit which touched a record $8.6 billion last year.

Urging Indian business to think big, the Prime Minister asked the industry leaders to study China and to identify opportunities for business and greater engagement, stressing that their was enough space in the world for both countries to continue to grow. At a time when there are concerns about a global economic slowdown, China and India can sustain global growth through their own development, Singh said. Singh observed that a large part of the thinking in India about China is shaped by western views of China, and that there is need for greater investment in India in a better understanding of the processes of change in China. CII President Sunil Bharti Mittal said the industry leaders raised the issue of certain trade-related barriers faced by sectors like pharmaceutical industry on issues like generic product registration in China. The business leaders told Singh that they had overcome fears about Chinese imports but there were still areas of concern like very low-priced products from China which were creating problems for Indian industry. The Indian industry''s concerns come against the backdrop of the burgeoning trade surplus to the tune of $9 billion in China''s favour in the bilateral trade which has touched $38.6 billion in 2007, just short of the target of $40 billion by 2010.

WB Upset At Corruption Taking Toll On Its Health Projects

NEW DELHI: The World Bank has yet again expressed concern over corruption affecting implementation of its health projects in the country. A recent probe by the organisation has revealed unacceptable indicators of fraud and corruption, World Bank group president Robert B Zoellick has said.

While the government has said it is committed to fighting corruption in the projects, finance minister P Chidambaram has been categorical in emphasising that the Bank must not link corruption and further disbursals for projects in the country.

The Bank had earlier taken a strong stance and withheld funds for some projects in the past on account of corruption in procurement. Critics had argued the country could do without World Bank’s annual funding in the range of Rs 10,000 crore when the government’s fiscal deficit is pegged at Rs 1,50,948 crore for the current fiscal as per Budget estimates.

The detailed review of Indian projects was prompted by World Bank investigation in 2005 into a reproductive & child health (RCH1) project. It found corrupt practices by two pharmaceutical companies that were subsequently debarred by World Bank and the government.

“A detailed implementation review (DIR) launched by the World Bank in 2006 and supported by the government of India found serious incidents of fraud and corruption in five health projects. The government has announced its intention to re-examine ongoing and future projects to ensure they incorporate the lessons from the DIR,” an official World Bank statement said.

“The government of India values its relationship with the World Bank and is fully committed to continuous systemic improvement in the implementation of all health sector projects. Necessary action under the relevant laws and rules & regulations would be taken against those suspected of wrongdoing and, if found guilty, they will be visited with exemplary punishment,” the finance ministry said in the statement.

Implementation of the projects began between 1997 and 2003, financed by the government and World Bank with other donors. Four projects have been completed while one remains, but funds for the project are not being disbursed as a review is on to incorporate the findings of the DIR, World Bank has said.

While World Bank is categorical is calling the review a detailed one, the ministry of finance has, instead, said the review was in the nature of a fact-finding report and does not extend to detailed investigation. The review was agreed upon and facilitated by the government.

World Bank will also make use of the Right to Information Act to keep a tab on implementation of health projects. Further, World Bank has said it will continue its probe.

The five projects covered by the DIR include the $114-million Malaria Control Project, the $82.1-million Orissa Health Systems Development Project, the ongoing $54-million Food & Drug Capacity Building Project, the $193.7-million Second National HIV/AIDS Control Project and the $124.8-million Tuberculosis Control Project. Of these, four were central-sector projects and one state-sector project.

RBI Willing, Interest Rates Will Fall By Up To 0.5%

MUMBAI: HDFC, the country’s leading housing finance company, has said that interest rates will come down 25-50 basis points, if the Reserve Bank of India (RBI) does not raise interest rates or cash reserve ratio on January 29. The housing finance company said it would take a decision on rates after the RBI policy.

Speaking at a global trade and investment conference organised by the Indian Merchants’ Chamber here, HDFC Chairman Deepak Parekh said that a 25-50 bps fall in interest rates is expected, following the credit policy.

Incidentally, HDFC has extended a festival discount scheme, which was to end in December, till end-January. The company has also realigned interest rates in some categories, resulting in borrowers in the Rs 20 lakh to Rs 1 crore categories getting a 25-bps benefit in interest rates.

HDFC has been offering home loans at 10.25-10.5% as part of a festive offer, and the chairman’s recent comments indicate that these rates might continue for a while.

He added that the bank had seen a loan growth of 25% during the current quarter. “While property prices in the suburbs of Mumbai seem to have plateaued, rates in areas like South Mumbai and Delhi are not showing any such signs,” according to Mr Parekh.

Taking a cue from the Tatas’ latest people’s car, Mr Parekh said builders and the government needed to look at affordable housing as well. “With builders going in for more luxury housing, affordability seems to have been thrown out of the window. There is a need for disincentivising such builders by taxing them more,” he added.

Mr Parekh warned that the subprime crisis in the US might still have an impact on India. “India is resilient, but not immune to global events,” he said. A possible economic slowdown in the US could result in companies cutting down on their IT spends, thus impacting software development activities and outsourcing to India, he felt.

Speaking at the same event, Enam Securities chairman Vallabh Bhansali said, “The US is likely to go through a severe recession, and the domestic pressures resulting out of this will have some impact on the outward flow of dollars. However, on the flipside, the US could start saving more and rates could come down.”

However, a global slowdown will not affect the Indian economy as much as it will affect other Asian economies, including China, as India is not as dependent on exports, and has a significant domestic factor as well. The Indian markets will not see a flood of forex flows like in the past two years, with most investors booking their profits and there has not been a mobilisation of fresh funds, felt Mr Parekh.

The same view, however, is not held by Deustche Bank India CEO Gunit Chadha, who felt that the strong economic growth in the country indicates that forex inflows will continue to come in with the same pace as they have in the past.

States Seek Bigger Service Tax Share

NEW DELHI: The Centre may have to be content with select services of inter-state nature like financial services and telecom. The states now want a bigger pie in services of inter-state nature. They have made a pitch for levying and collecting tax on such services.

The joint working group met on Friday to deliberate on the issue. Consensus also seems to be building in favour of a single rate for service tax both at the central and state levels.

The joint working group will now work out a revenue-neutral rate after which the report would be submitted to the empowered group of state finance ministers, sources told ET. The empowered committee will submit its recommendations to the finance minister for implementation.

The GST report had suggested the states should tax intra-state services while inter-state services should remain with the Centre. Representatives of some states, especially large ones, felt the services that are clearly inter-state in nature like financial services and telecom can be passed on to the Centre, but the ones without a clear identity should remain with the states.

The panel comprises state finance secretaries, commissioners of commercial taxes and concerned joint secretaries in the Union finance ministry and empowered committee member secretary Satish Chandra.

After the finalisation of the model, the empowered committee would call a meeting of chambers of commerce & industry and trade associations, and work out a draft white paper on GST that would be put on the Website for public comments.

GST is proposed to be introduced from April 1, 2010, to integrate all indirect taxes on goods and services at the central and state levels. In November, the empowered committee had accepted the recommendations of a working group on GST for dual GST structure, one at the state level and the other at the central level.

Gold Drops On Profit Booking

After two-day rising spree, gold declined by over Rs 100 on the bullion market in New Delhi on Jan 10 on profit selling by stockists, who felt the record rise in the precious metal was overdone. Trading sentiment turned bearish following reports of a weakening trend in global markets. The metal traded lower in London at $877 an ounce compared to closing at $894 in the US markets. In the bullion in New Delhi, the market opened lower by Rs 110. The metal recovered moderate ground but only to reduce the losses and closed at Rs 11,250 per 10 gram, down by Rs 100. The prices had touched a record high of Rs 11,350 in the previous trading session.

Standard gold and ornaments fell by Rs 100 each at Rs 11,250 and Rs 11,100 per 10 gram respectively. Sovereign maintained its peak level at Rs 9,050 per piece of eight gram. A similar trend was noticed in silver on reduced offtake by silver coins makers and industrial units purchasing. Silver ready fell by Rs 150 at Rs 19,950 per kilo and weekly-based delivery by Rs 130 at Rs 20,370 per kilo. Silver coins also lost Rs 100 at Rs 25,300 for buying and Rs 25,400 for selling of 100 pieces.

Karnataka Finance Committee May Submit Report By June-End

Mangalore: The village panchayats and urban local bodies (ULBs) in Karnataka likely to be rewarded with incentives if they show better performance in tax collection. Such a move is being planned by the Third Finance Commission of Karnataka, which is likely to submit its report to the Government by June end. The Third Finance Commission of Karnataka, said that some of the ULBs and village panchayats have better tax collection records. The commission is planning to suggest incentives to such village panchayats and ULBs in its report. The implementation of self-assessment system of tax collection has helped in increasing the revenue of ULBs.

Cabinet Approves Mous With Italy

New Delhi: The Cabinet on Jan 10 cleared inking of two MoUs with Italy for cooperation in agriculture and food sectors. The two MoUs between India and Italy for cooperation in agro-food, agriculture and phytosanitary issues will remain valid for five years. The MoU with Italy on agro-food sector will facilitate creation of a joint foundation and exchange of technologies between Indian and Italian agro-food enterprises.

Indo-China Trade Poised To Grow

Indian industry is looking forward to Prime Minister Manmohan Singh''s upcoming visit to China with the hope to expand its trade basket but is wary of a Free Trade Agreement (FTA) with Beijing, saying it is too early to sign it. As Singh, accompanied by a high-profile business delegation, begins his maiden three-day visit from January 13, the Indian industry also expects that the visit would further boost Chinese investment in India in sectors such as roads, power, highways, urban infrastructure and manufacturing. Indian businesses have grown manifolds since the last visit of the Indian Prime Minister in 2003. The bilateral trade is at $34 billion, a 10-fold jump since 2002, with a growing trade deficit between the two countries. It is expected to reach $40 billion or more by 2010.

Rupee Ends At Rs 39.27 Against Dollar

Mumbai: The rupee was almost unchanged against the dollar on Jan 10 as the central bank continued to intervene and buy up dollars in the forex market. The domestic currency opened at Rs 39.26/28, touched an intra day low of Rs 39.30 and closed at Rs 39.27, against the previous close at Rs 39.28. In the forward premia market, the 6-month closed at 1.75 per cent (1.57) and the 12-month at 1.41 per cent (1.32).

Asian Economies Face Slight Slowdown In 2008: UN Report

BANGKOK: Developing economies in the Asia-Pacific region will face a slight slowdown in 2008 as exports are likely to fall due to a wobbly United States economy, a UN report said Wednesday.

But overall the economies will remain robust thanks to surging growth in China and India, the world's fastest-growing economies, as India's economy is seen up nine percent with China's 10.8 percent in 2008, it said.

The economies, which exclude Australia, New Zealand and Japan, are set to grow by 7.8 percent this year, down from 8.2 percent in 2007, the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) said.

"The region is expected to face a difficult external environment, with a slowdown in the US economy and continued appreciation of regional currencies," the UN said.

A slowing US economy and anemic growth in Japan will pressure the region's export-driven economies, the report said, warning that textile and agricultural exports could be hit hard due to sluggish demand in the West and Japan.

But it added: "Strong growth in China and India, sound economic fundamentals and buoyant commodity prices will underpin the region's resilience."

Among risk factors, the United Nations called the US housing market crisis "the major downside risk" in 2008, and warned that the scale of losses arising from the subprime loan problem could likely increase "considerably" this year.

The United Nations also said Japan's growth would slow in 2008, saying that the world's second-largest economy "has yet to fulfill the expectations of becoming an alternative growth engine for the region" to counter a wobbly US economy.

Japan's economy would likely expand only 1.7 percent in 2008, down from 2.0 percent in 2007, the UN report said.

Inflation rates in the region were expected to remain high due to rising global oil prices and high food costs, it added.

RBI To Issue Rs 10 Denomination Notes With Inset Letter "S"

CHANDIGARH: The Reserve Bank of India will shortly issue Rs 10 denomination banknotes with inset letter "S" in both numbering panels.

Except for the change in the inset letter, the design of these notes will be similar in all respects to the banknotes of the Mahatma Gandhi Series issued on April 27,2006, an RBI release said here today.

All banknotes in the denomination of Rs 10 issued by the Bank in the past will continue to be legal tender, the release added.

No Easy Way Out Of Debt Recast Scheme For Cos

MUMBAI: It may not be very easy for corporates to exit from the corporate debt restructuring (CDR) scheme. Chief executive officers (CEOs) of large banks who met last week have decided not to relax the recompensation formula.

Corporates, which have restructured their loans through the CDR route, have to pay recompensation to bankers if they want early exit from CDR. As per the current formula, companies have to pay a steep price to exit CDR.

The recompensation is the price that the corporates have to pay for waivers that banks give on debt at a time when they are in difficulties. The waivers are in the form of reduction in interest rates, a part write-off in the principal loan, and sometimes conversion of debt into equity.

Most companies, which saw a turnaround in performance, have preferred to exit since the CDR rules prohibit them from expanding business without the consent of bankers. Also, companies feel that they would be in a better position to bargain fresh loans if they are out of CDR. So far, nearly 30 corporates have exited CDR, while a dozen more have approached CDR for early exit.

As per the current formula, a company has to repay the principal that lenders had scarified while restructuring the loan. Also, they have to pay interest rate which is calculated as BPLR plus term premium and credit risk premium. The interest rate is calculated on the compounded basis which is pinching borrowers. This has resulted in a steep recompensation.

As per this formula, in a particular case the recompensation was as high as Rs 300 crore when the loan size was about Rs 1,050 crore. However, in most cases, corporates have got a better deal by bargaining the recompensation drastically.

The core group committee, which is comprised of CEOs of large banks, felt that it was too early to revise the formula considering that it was approved recently (July 2007). Further, some bank chiefs were of the view that they should have fair idea of the waivers and the compromise they made have resulted in the turnaround of the company.

This is fully captured in the recompensation formula. Bankers added that they would be better positioned to bargain with corporates with the existing formula rather than revising it in favour of corporates.