Chidambaram Hopeful Of 9 P.C. Growth

New Delhi: With the country''s economic fundamentals strong and investment climate full of optimism, Finance Minister P. Chidambaram on Thursday exuded confidence on achieving an average GDP growth of nine per cent during the Eleventh Plan period (2007-08 to 2011-12) while reining in inflation alongside.

As for the outlook for 2008-09, Mr. Chidambaram said: Optimism, but with caution, is the watchword while commenting on the policy prescriptions of the Economic Survey 2007-08 which projected a lower GDP growth of 8.7 per cent for the current fiscal and, in that light, viewed sustenance of a high growth as a daunting task.

Speaking to newspersons immediately after tabling the Survey in Parliament, Mr. Chidambaram pointed out that the country was required to respond to the evolving global economic situation so as to ensure that its growth was not affected and this, he said, could be achieved by capitalising on the opportunity arising from the favourable conditions.

I am optimistic about growth and containment of inflation in the coming year [2008-09], he said, while noting that his priority was to provide a conducive investment climate and manage the macro economy to facilitate non-inflationary growth.

Reading out from a prepared statement which was later released to the press, Mr. Chidambaram said: Keeping inflation under control in an uncertain global environment will be one of the major challenges in 2008-09. He noted that the current slowdown and possible recession in the global economy posed risks to growth.

Sustaining 9 P.C. Growth Will Be Tough: Survey

New Delhi: Holding out a warning that the current slowdown in the U.S. would have an effect on the Indian economy, the Economic Survey 2007-08 maintained that sustaining a high GDP growth of nine per cent while reining in inflation would be a tough challenge.

Tabled in Parliament by Finance Minister P. Chidambaram on Feb 27, the Government''s pre-Budget annual economic progress report said that in the current uncertain scenario, an increase in the overall growth to double digits would entail additional reforms and came out with a policy prescription. Among the various measures suggested to sustain the high growth momentum, the Survey favoured partial sale of the identified profit-making non-navaratna public sector undertakings (PSUs), phasing out control on sugar, fertilizer and drugs, sale of old oilfields to the private sector, a higher share for foreign equity in retail trade and further opening up of the banking and insurance sectors to foreign direct investment (FDI).

With the economy projected to grow at 8.7 per cent during the current fiscal, the Survey pointed out that the lower growth represented a deceleration from the unexpectedly high growth of 9.4 and 9.6 per cent in the preceding two years. Maintaining growth rate at nine per cent will be a challenge and raising it to two digits will be an even greater one, the Survey said.

Linking the huge accumulation of foreign capital inflows as the reason for the pressure building up on prices, the Survey said that inflationary impulses from global commodity prices must be tackled through use of fiscal and trade policy instruments. Inflation this fiscal is projected to return to the earlier level of 4.4 per cent, down from 5.4 per cent in 2006-07.

Rupee Closes Tad Against Dollar

Mumbai: The rupee was flat against the dollar on Feb 27 as oil companies bought dollars and also because the stock market was negative. Due to overnight weakness in the dollar, the rupee opened higher by five paise at 39.74/75, against the earlier close of 39.79. During the day, the rupee touched a high of 39.72, but dollar-buying pushed it lower to close at 39.78. In forwards, the six-month premia closed at 0.25 per cent (0.2 per cent) and the 12-month closed at 0.5 (0.48 per cent). According to a forex dealer with a public sector bank, the budget is likely to be a populist one and is not likely to have any negative impact. The FII inflows would resume after March 15. The rupee is unlikely to depreciate below 40.25.

Economic Survey To Be Tabled Today

New Delhi: Finance Minister P Chidambaram will table in Parliament on Thursday the Economic Survey - a report card on the economy during this fiscal that will also show the direction of government policy in the year ahead.

It will be followed by the presentation of the Budget for 2008-09 on Feb 29. The industry, which is upbeat after the presentation of a populist Railway budget yesterday, expects the Finance Minister too to announce cut in income tax and excise duty on various commodities to sustain GDP growth - now under pressure due to a slowdown in the US economy.

The Survey, mainly authored by the Chief Economic Advisor Arvind Virmani, is expected to indicate the government''s priorities and thrust areas for the Budget 2008-09.After posting a scorching 9.6 per cent growth in 2006-07, the Indian growth story was seen slowing down in 2007-08. The Survey is expected to indicate policy measures to dampen inflation, which is ruling above the four per cent mark, reverse slowdown in export growth, tackle the impact of rising rupee and address the issue of spurt in global crude oil and food prices.

It is also expected to present a rosy picture of the economy and outline the achievements of the United Progressive Alliance government, besides high growth in tax collections.Savings and investment.

Rupee At 39.78 Against US Dollar

Extending its surge against US dollar for third day in a row, rupee on Wednesday appreciated by 12 paise on sale of greenback by exporters and fresh capital inflows into the equity market. Weakness in dollar overseas as well as possibility of another rate cut by the Federal Reserve also contributed to the rupee''s surge.

Rupee turned stronger by about 20 paise at 39.70 during morning trade after a strong rally in Asian equity markets raised hopes of increased portfolio inflows into the Asia''s fast-growing economy. The Indian unit ended at 39.78/79 a dollar after moving in a range of 39.70 and 39.83 during the day. It touched the 39.83 level as local stocks turned weak in the afternoon trade.

Court: Deputation Should Add To Service Period For Pension

New Delhi: If teachers working in State government schools are on deputation to Central institutions, their total period of service should be taken into consideration for calculating pension, the Supreme Court has held. A Bench consisting of Chief Justice K.G. Balakrishnan and Justice R.V. Raveendran pointed out that the Government of India, by official memoranda dated August 29, 1984 and February 7, 1986, clarified that the scheme of counting previous service would apply to State government employees moving to Central autonomous bodies.

The scheme required the previous employer, viz. the State government to accept pension liability for the service in accordance with the principles laid down in the memoranda, the Bench said. The State government should first work out its pension liability for the period the teacher worked in the State. For the period of service in Central schools, the Kendriya Vidyalaya Sangathan (KVS) would work out the pension. This order was expected to benefit a large number of teachers who were working or who worked in Central schools on deputation from State governments.

In the instant case, Raghunandan Bhargava retired as an employee of the KVS on December 31, 1999. Prior to joining the KVS, he worked as assistant teacher in the Madhya Pradesh Education department from November 4, 1960 to January 7, 1978. As his full service was not calculated for pension, he moved the Central Administrative Tribunal, Jabalpur, for reckoning and adding the period of his service as assistant teacher in the Education department. The tribunal allowed the petition.

Mangalore Central Excise Mop Up Touches Rs 4,099 Cr

Mangalore: The Mangalore Central Excise Commissionerate mopped up excise duty of Rs 4,099.37 crore till the end of January during the current financial year, surpassing the target set for 2007-08. Petroleum products contributed Rs 3,886 crore of net revenue to the total amount. During 2006-07, the Commissionerate had collected Central excise duty of Rs 3913.40 crore, he said. It has 492 non-SSI and 88 SSI units registered for the purpose of manufacturing excisable goods. The collection of service tax reached Rs 150.84 crore till the end of January. During 2006-07, the collection of service tax was Rs 170.86 crore of service tax. There are 2,800 tax-paying service tax assessees. Mr Ajith Kumar said that 48 cases with revenue implications of Rs 12 crore were filed during the fiscal. The Mangalore Central Excise Commissionerate covers revenue districts such as Dakshina Kannada, Udupi and Uttara Kannada.

Kerala''s Revenue Deficit Declines In ''06-07

Thiruvananthapuram: The revenue deficit of Kerala witnessed a fall in 2006-07 as compared to the previous year.As per the report of the Comptroller and Auditor General of India (CAG) for the year, which was tabled in the State Assembly, the revenue receipts grew by 18.9 per cent (Rs 2,892 crore), while the expenditure increased by 13 per cent (Rs 2,401 crore). This resulted in a fall of Rs 491 crore in revenue deficit over the previous year. The increase in revenue receipts was mainly contributed by tax revenue (Rs 2,163 crore) and the State''s share of Union taxes and duties (Rs 694 crore). The tax revenue rose by 22 per cent to Rs 11,942 crore from Rs 9,779 crore in the previous year. Taxes on sales, trade and others were the major source of the State''s own tax revenue (72 per cent), followed by stamps and registration fees (13 per cent), State excise (eight per cent) and tax on vehicles (six per cent). On the non-tax revenue side, receipts from forest and wildlife (19 per cent), State lotteries (25 per cent), education, sports, arts and culture (11 per cent) and interest receipts, dividends and profits (eight per cent) were the main contributing factors.

Weathercock: Wheat May Hit 8-Year High Of 76 MT Again

NEW DELHI: The country’s wheat output may once again touch the peak level of 76 million tonnes this year. Reports from key wheat states, including Uttar Pradesh, Punjab, Rajasthan and Madhya Pradesh, are positive vis-à-vis conducive weather although the temperatures in Haryana were much higher at about 29 degree Celsius.

Farm secretary PK Mishra said the 1999-2000 peak level in wheat production would be achieved this year, too, going by final area coverage inputs received by the core ministry from states. He was speaking at the Kharif Campaign, which began here on Tuesday.

Although the prospects were good thus far, the estimate could only be reached if the weather remained conducive up to mid-March. Wheat needs a temperature of at least 20 degree Celsius in this period, with no marked fluctuations in temperature.

Mr Mishra said in view of this, his ministry was carefully monitoring temperatures in key wheat regions. The anxiety is understandable, considering the Centre’s inability to procure sufficient wheat last year from mandis, a development that led to massive high priced imports.

The Centre is currently facing a wheat supply crunch for the public distribution system (PDS) and welfare programme. The food ministry has told states such as West Bengal that wheat will not be supplied to above poverty line consumers through PDS until March.

Meanwhile, at the conference itself, the Centre let slip its anxiety over the inability of states to make the best use of newly launched schemes, National Food Security Mission (NFSM) and Rashtriya Krishi Vikas Yojana (RKVY). To what extent they actually succeeded will be known only after their implementation for a number of crop seasons.

Mr Mishra said intermediate parameters were already showing improvement but the farm ministry, significantly, has been unable to identify a base year (for achievement of targets under the NFSM) in which wheat output was high, such as 1999-2000.
Under NFSM, quality wheat seed has been distributed in Bihar and Rajasthan and that of pulses in Chhattisgarh. So far, Mr Mishra said, Rs 360 crore had been released for NFSM and Rs 986 crore for RKVY.

Principal adviser Dr SM Jharwal and National Rainfed Area Authority CEO JS Sarma also addressed the conference.
Besides state agriculture secretaries and agriculture production commissioners, vice-chancellors of state universities, heads of research institutions under Indian Council of Agricultural Research and officials from various departments of central government are participating in the two-day conference.

Avoid Tax Cascades In The Financial Sector

NEW DELHI: Growth means change and pro-active change does involve taking calculated risks for the greater good. Consider, for instance, policy change and reform, which is key to India sustaining the economic growth momentum. The Budget needs to draw up a road map for tax reform and attendant operational changes in a vital sectors like banking and financial services.

As the recent high-powered committee on making Mumbai an international financial centre emphasised, we have indeed dismantled an “autarkic license-permit raj” in industry and trade; but we need to do it again in finance. It would step up efficiency and productivity across the board, and lead to better allocation of resources.

The way ahead is to have a tax regime in finance that does away with cascading rates, including stamp duty, registration duty and the securities transaction tax. Instead, what’s required is sound tax design for a goods and services tax (GST) in finance.

Rupee Appreciates Against Dollar

Mumbai: Rupee was range-bound between 39.91 and 39.92 for most part of the day. The rupee closed about six paise against the dollar, as the cash-dollar shortage eased. The rupee opened at 39.92/ 93 and touched a low of 39.95. However, it recovered to close at 39.90/ 91, against the previous close of 39.96/97. A forex dealer with a private bank said that there was good exporter selling, which helped the cashdollar shortage ease. There was FII selling also, though at a much lower rate. While the rupee has the potential to appreciate, it is unlikely to do so, as long as the Reserve Bank of India. The central bank was active both in the spot and the forward premia market. In the forward market, the six-month premium closed at 0.8 per cent (0.29 per cent) and the 12-month closed at 0.78 per cent (0.51 per cent).

Haryana To Enhance Power Supply In Rural Areas

Chandigarh: Uttar Haryana Bijli Vitran Nigam on Tuesday said that two-phase power supply would be ensured in rural areas for domestic consumers from 5 a.m. to 7 a.m. and 6-30 p.m. to 10-30 p.m. daily in view of the ensuing examinations of students.

These consumers would also get power when three-phase power is supplied for tube-wells for agriculture and public health water works for drinking water purpose, said an official release. The Nigam would supply electricity in two groups to the tube-well consumers. The farmers would get electricity for six hours in the night group and for five hours during the day group with additional one hour supply for drinking water. The timings of rural groups will change alternatively, it said.

A spokesman for the Nigam said on Tuesday that in view of the present demand and availability of electricity the supply would be regulated for more than seven hours on urban and mixed urban feeders supplying power mainly to the domestic category consumers during different time slots daily. The duration of restrictions would vary from 60 to 90 minutes in one slot in district Ambala, Yamuna Nagar, Kurukshetra, Rohtak, Jhajjar, Sonepat, Kaithal, Karnal, Panipat and Jind.

Lalu Plays Santa To Students, Women, AIDS Patients

New Delhi: Railway Minister Lalu Prasad doled out concessions to students, women and AIDS patients. Railways have decided to extend free monthly season tickets for second class travel between school and home for girl students up to graduation and boys up to Class XII, Prasad announced in the Rail Budget.

Earlier, this facility was available to girl students up to Class XII and boy students up to Class X. Prasad also announced a concession of 50 per cent in second class passenger fares for rail travel by AIDS patients to nominated ART centres for treatment.

Railways also increased the concession provided to woman senior citizens in passenger fares of all classes from 30 per cent to 50 per cent. Prasad also announced the extension of the scheme for travel concessions for decorated soldiers in Rajdhani and Shatabdi trains. Paramvir Chakra, Mahavir Chakra and Vir Chakra awardees are entitled for travelling in AC-II tier along with one companion which is valid in Rajdhani and Shatabdi trains.

Nris Change Tack, Opt For Direct Remittances

MUMBAI: India is the largest recipient of remittances by its diaspora across the world with annual inflows of over $20 billion for almost four years now. But a chunk of this money is not new money sent by migrant Indians. Almost half the money is conversion of NRI deposits into the accounts of their relatives back home. But this year there is a slight shift in the pattern with NRIs opting for direct remittances, instead of parking them in deposits.

Remittances are reflected in `private transfers’ in the balance of payments. It comprises remittances for family maintenance, local withdrawals from Non-Resident Rupee Account, gold and silver brought through passenger baggage, and personal gifts/donations to charitable/religious institutions.

According to the latest data analysed by the RBI, of the total remittances (private transfers) amounting to $19 billion during April-September’07, $8.3 billion was local withdrawals of NRI deposits. While $9.4billion was on account of inward remittance for family maintenance.

The share of this component which contributed a significant share of remittance flow to India at about 60% in 1999-2000 dipped to 47% in 2006-07. In the first half of 2007-08, however, the share of inward remittances was about 50% of total remittance flow to India.

Budget set to unveil GST road map

NEW DELHI: The Budget is set to unveil the road map for the most critical tax reform that the UPA has committed itself to—the unified goods & services tax (GST). The road map is based on the recommendations made by the empowered committee of state finance ministers.

The committee has submitted its report to the Union finance ministry, suggesting a dual GST structure—a single rate for services and two rates for goods, one at the Centre and other at states. GST, which is proposed to kick-in from April 1, 2010, will integrate most of the indirect taxes on goods & services at the state and the central level.
The empowered committee’s report is largely based on the recommendations made in November 2006 by the joint working group (JWG) on GST.

The broad contours of the model have been agreed upon and given to the Centre. However, a revenue-neutral rate—the rate at which states don’t lose current revenue as they transit to the new system—is yet to be worked out, a source said.

The JWG report had suggested that states should tax intra-state services while inter-state services should remain with the Centre. Petroleum products, including crude, high-speed diesel and petrol, may remain outside the ambit of GST. At present, these products are excluded from the value-added tax regime and state governments levy sales tax on them that varies from 25% to 33%. The report had also mooted elimination of the area-based and sectoral excise duty exemptions that are being given by the Centre.

While some key elements have been agreed upon, the details of the model will be finalised after discussions with the states. Some state governments have also sought a compensation package to move to the GST regime. But this is likely to be resisted by the Centre. A draft white paper would be brought out after discussions with the industry and trade associations after finalisation of all the details of the model.

The fact that the UPA government is serious about ushering in the GST regime is also reflected in the terms of reference of the 13th Finance Commission. The commission, set up recently, will factor in a GST framework while making recommendations for the transfer of central tax revenues to states. The commission is expected to give its report by 2009 end.

Taiwan Eyes Indian Industrial Park

TAIPEI: The Taiwanese government plans to team up with the island's private sector to jointly develop an industrial zone in India, the economic ministry said Tuesday.

The National Development Fund plans to invest up to 40 per cent in the prospective venture which may have initial capital of one billion Taiwan dollars (30.86 million US), the ministry said in a statement.

The industrial zone is aimed at accommodating Taiwan firms seeking to establish a presence in India, amid concerns over new rules in China, it said.

India and Southeast Asian nations are attracting increased investment from Taiwan as China has imposed new labor laws and adjusted the tax on foreign firms, the ministry said.

The cabinet fund will assist local firms in developing 1,000 hectares of land in India's Andhra Pradesh state for industrial use and another 200 hectares for housing purposes, it said.

The Taiwanese government has called for diversifying of investment from the Chinese mainland, given the lingering hostility between the island and rival China.

However, local businesses have channelled around 150 billion US dollars into China since Taiwan lifted a complete ban on investment in the early 1990s.

Rail Budget Likely To Be On Aam Admi Track

New Delhi: One year before the general elections, the government is worried about rising prices but the Railways might cut freight rates to offset the oil price shock. This could please the industry. Freight charges on coal, fertilisers, food grains, iron ore and petroleum products may be lowered by 3-5 per cent. The total plan outlay is estimated at Rs 36,000 crore as Railways profits this year could be as high as Rs 23,000 crore.

The Railway Minister is also likely to announce 26 railway line projects. A higher capex expenditure on freight corridor, locomotives, technology might also be in the pipeline.There has been a long-awaited demand to improve rail transportation in Mumbai which means that there could be more funds for the Mumbai Urban Transport Project.

Government may try to look at the future of Indian Railways as well. The budget could also see an announcement on feasibility study for high-speed train corridors and may encourage use of higher axle load wagons.Above all, airline companies in this budget will be listening to Lalu''s budget speech very carefully. Expectedly, more Garib Raths might be introduced and fares for AC-3 tier segment could also see a cut by 2-3 per cent.

Rupee Down By 14 Paise To Cross 40-Mark Again

Mumbai: The Indian rupee''s roller coaster ride against the US currency continued on Feb 22 with the local unit losing 14 paise to breach the crucial 40-mark for the second time in three days at 40.05/06, as dollar buying resumed amid weak Asian markets.

The rupee premiums on forward dollar ended sharply lower due to fresh shortage of dollar supplies in the system. The benchmark six-month forward dollar premiums payable in July ended at 5 paise discount - 8 paise premium, lower from 7 - 9-1/2 paise premium on Thursday and far-forward maturing in January also ended down at 9 - 32 paise from 29 - 31 paise previously. In fairly active trade at the Interbank Foreign exchange (Forex) rate, the rupee opened steady at 39.92/93 per dollar as against yesterday''s close of 39.91/9250.

After depreciating by 29 paise on February 20 to cross the 40-mark for the first time in five months, the rupee had strengthened by 28 paise fall below the crucial mark of 40. Forex dealers said fresh month-end demand for dollars from banks which buy the greenback for their clients pushed the rupee downwards today. Even a weak dollar overseas could stem the rupee''s slide.

Budget 2008 Likely To Be Pro Common Man

Personal and corporate income tax cuts, excise duty relief and simplification of taxes are expected in the Union Budget for 2008-09, the last full-fledged budget before the next general elections. Finance Minister P Chidambaram, who will be presenting his seventh budget on Friday in Parliament, has a tough exercise on hand of balancing conflicting interests in coming out with a budget for the ''aam aadmi'' (common man).Social sector projects.He is expected to announce massive funds for social sector projects like National Rural Employment Guarantee (NREG), Sarva Shiksha Abhiyan, rural health and power sectors and a debt-relief package for farmers to share the benefits of high growth especially in view of the coming Lok Sabha elections by this year end or early next year.The Indian middle-class and the industry, which still remember his dream budget of 1997-98, are expecting a bonanza from the Finance Minister in terms of relief in income tax and excise duties and simplification of other taxes.

Government servants are expecting an announcement on implementation of the Sixth Pay Commission.Sources say that the Finance Minister is unlikely to introduce any new tax in the budget for 2008-09 although some controversial taxes like the banking cash transaction tax may be reviewed, adding that with buoyancy in revenue collections he is capable of working out packages for every constituency.Apart from meeting the fiscal and revenue deficit targets, the budget is likely to aim at sustaining 9 per cent GDP growth, while containing politically sensitive inflation rate around four per cent.

Govt To Appoint More Fund Managers For EPFO Corpus

The government on Saturday said it is planning to appoint more fund managers for the efficient management of the Employees Provident Fund Organisation corpus.There would soon be multiple fund managers to manage the fund of EPFO, which has over 4 crore subscriber.Currently, the country''s largest public sector lender State Bank of India is the sole fund manager.In line with managers for new pension scheme for government employees, EPFO would also have multiple fund managers for the efficient management of the corpus.When asked about whether the corpus of the EPFO can be invested in the stock market, Pillai said, no consensus has been arrived at on the issue.

Indirect Taxes Likely To Surpass Budget Targets, Says FM

New Delhi: The Finance Minister, Mr P. Chidambaram, on Feb 24 expressed optimism that the Revenue Department would surpass the budget targets on indirect taxes for 2007-08 and get 1 per cent of excess collections as rewards for this year too. Despite slow growth in excise duty mop ups, this optimism comes on the back of buoyant customs duty collections so far in the current fiscal.

For 2007-08, the Government had pegged the indirect tax collections target at about Rs 2.8 lakh crore. In both 2005-06 and 2006-07, the CBEC exceeded budget targets to the tune of Rs 8,615 crore and Rs 11,300 crore respectively and got a reward of 1 per cent of the excess collections, which amounted close to Rs 200 crore.The Finance Minister''s observations on surpassing budget estimates for 2007-08 came less than a week before he would present the Union budget for 2008-09 on Friday. Achievement of excise duty collections target of Rs 1,30,220 crore for 2007-08 is going to be a major challenge for the Revenue Department if one were to go by the excise duty collections till end-January this fiscal.

Food Prices Spur Indian Inflation

Inflation in India rose more than expected in early February to a six month high on rising food prices. The wholesale price index hit 4.35% for the year up to 9 February, as the price of vegetables, fruit and lentils rose. Economists expect inflation to head higher still as last week''s rise in fuel prices starts to take effect. Inflation remains below the Indian central bank''s target rate of 5% but economists say it could breach that level in the near future.

FM Likely To Hold Service Tax At 12%

The Finance Minister might hold the service tax rate at the current rate of 12 per cent in the upcoming Budget.With the Centre and States working to move towards a uniform tax system, the Goods and Service tax, a hike in key indirect taxes at this stage could create imbalances between State and central taxes.

But to make good the notional loss of revenue by this step, new service are going to come under the service tax hammer in the Budget.Policy shifts are likely in the way the finance ministry is looking at key indirect taxes just before the Budget and the trigger for this is the pressure to chart out the roadmap for an uniform GST.Although the dateline for GST is April 1, 2010, policy watchers say that the timeframe is not enough considering the fact that all central and State taxes will finally converge at one rate.

Policy makers say that one of the steps most likely in the coming Budget would be to hold the service tax rate at 12 per cent. Reason being that under GST manufacturers might be able to set off the service tax paid against State taxes like VAT.Under those circumstances, service tax would be more of an input tax with VAT being the output tax, as the GST framework cannot permit an inverted duty structure.

Forex Reserves Grow By $2 Billion

Mumbai: The foreign exchange reserves went up by $2.048 billion to touch $292.856 billion for the week ended February 15 due to rise in foreign currency assets. The reserves had fallen by $1.86 billion to $290.8 billion in the previous week (February 8).

Foreign currency assets rose by $2.055 billion to $283 billion in the week ended February 15. During the week under consideration, the euro appreciated from $1.4520 to $1.4670. The pound also rose from $1.945 to $1.965.

Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies (euro, sterling and yen) held in reserves.The gold reserves remained unchanged at $9.19 billion. The country''s reserve position in the IMF fell rose by $2 million to $419 million.

Appeal To Waive CHA From Service Tax On Exim Trade

Kochi: The Cochin Custom House Agents Association (CHA) has asked the visiting Parliamentary Sub Committee on Commerce to do away with it and other agencies such as steamer agents, terminal operators etc from the purview of service tax for the services rendered by them for the export of goods.The Association President, Mr C.P. Xavier, said that exporters could not do away with the services of these intermediaries and connected agencies which are essential and vital pertaining to exports. The exporters are bearing these expenses in order to strictly adhere to the norms that the country should export only goods and not the taxes and duties thereon. Additionally, the Association pointed out that exporters and importers are facing considerable difficulties to conduct the inspection of export/import consignments due to shortage of sufficient number of personnel in the Plant Quarantine and Fumigation Station in the sea port and air port. With the Plant Quarantine Order 2003, the number of items covered has also increased. Besides, the personnel at the PQ office at Kochi had to attend to the work at Mangalore, Kollam for cashew, Palakkad and Ernakulam for rice and Thrissur for mango. The Plant Quarantine office situated at Willingdon Island is also looking after the exports/imports through Cochin International Air port. At present the exporters/ CHA''s have to take the Plant Quarantine officers from W Island to Cochin International Airport which is situated quite far away and there is always the element of the Air Cargo which is so perishable missing the scheduled flight.

The Association also highlighted the delay in getting the test results for import samples from the Regional Analytical Lab in the nearby Kakkanad, which had put the importer in considerable difficulties.

Inflation Up On Rising Food Prices

NEW DELHI: Wholesale price inflation inched up to a six-month high of 4.35% in the week ended February 9, compared to previous week level of 4.11%, on account of rise in prices of food articles, such as fruit & vegetables, pulses, condiments, and some manufactured products like imported edible oil, mustard oil and groundnut. Inflation was at 6.52% during the corresponding week in the year-ago period.

Experts opine that inflation will rise further in weeks to come on account of hike in fuel prices. Last week, the government had raised fuel prices by 4% to reduce the under-recoveries of oil marketing companies. Last year alone, the global crude prices surged by 56%. Crude crossed the $100 per barrel mark on February 20.

“The numbers are in line with expectations. Further, when the fuel price hike shows up in the inflation numbers from the next week, inflation would move up and could touch 5% level,” said Crisil principal economist D K Joshi.

Though inflation continues to be below RBI’s forecast of close to 5% for this fiscal, the apprehension of it again moving up had not subsided. Experts said this will restrain RBI from going in for a rate cut.

“Inflationary pressures are still lurking in the eocnomy as the prices of almost all commodities are expected to move up further due to demand-supply mismatch. Hence, a rate cut by RBI in the near term, seems unlikely,” said Standard Chartered bank economist Sucheta Mehta.

During the week under review, prices of arhar, fruits and vegetables went up by 3% each, while the prices of condiments & spices and fish marine surged by 2% each. Prices of Bajra and barley shot up by 1% each.

In a non food articles group gingelly seed, groundnut seeds were dearer by 9% and 2%. However, the prices of sunflower and raw wool declined by 6% and 3% respectively.

The index of manufactured products, accounting for 64% in the inflation basket, rose by 0.4% in the week. Among manufactured products, prices of gingelly oil, oil cakes and bran went up by 3% each, while rice bran oil, imported edible oil, and khandsari moved up by 2% each.

The index for fuel, power light and lubricant remained unchanged. Inflation figure for the week ended December 15, 2007 has been revised to 3.84% as from the provisional estimate of 3.45%, as wholesale price index finally stood at 216.4 points as against the earlier calculation of 215.6.

Food Subsidy Bill Likely To Hit Rs 30,000 Crore

NEW DELHI: The government may have finally cleared the whopping Rs 16,200 crore it owed in food grain buys by the rural development ministry to the Food Corporation of India (FCI) by issuing bonds.

The revised estimate for food subsidy bill alone in 2007-08 is pegged at Rs 30,000-crore odd. But owings to the FCI have not been accounted for traditionally under this head. In effect, although dues to from a government ministry other than Food to the FCI are government spends, they were however not been accounted for under any Budget head but nonetheless have, the potential to impact on fiscal deficit.

The RD ministry still owes the food grain procurement major Rs 10,700 crore. The finance ministry had assured the food ministry that these dues would be settled, too, but failed to spell out a timetable or even the method of settlement: bonds or cash.

A good chunk of the already pending dues to the food grain major from the rural development ministry as well as other departments, totalling a huge Rs 16,200 crore, was settled earlier by the finance ministry through issue of bonds. The bonds were issued in three tranches: the first two tranches in end 2006 totalled Rs 10,000 crore; a third tranche was released in mid-February 2007 for Rs 6,200 crore. They bore a coupon rate of 8.03% to 8.23%.

No bonds were issued to the FCI in the current year, 2007-08. Instead, the RD ministry paid up Rs 950 crore from its budgetary allocation for the year, towards settling dues for welfare programmes run by it that used food grains extensively.

Meanwhile, however, the RD ministry ran up more bills totalling Rs 10,000 crore. In addition, interest on pending dues kept piling up to total a stifling Rs 700 crore plus. “Rs 10,000 crore plus was pending on the principal amount owed to us by the RD ministry alone. The rest of the dues are purely built up interest on the principal,” sources pointed out.

There’s a silver lining to the annual intra government food spend from now on, though. From 2008-09, the SGRY (the special component under the Sampoorna Grameen Rozgaar Yojana) is expected to be wound up to make way for the countrywide implementation of the National Rural Employment Guarantee Programme (NREGP). That would bring the food grain dues from RD down substantially, all the more since the payment by food grain option under the NREGP was removed.

Some indications that dues pending under this head will go down noticeably was already there this year. Food grain bills run up by the SGRY totalled a marked Rs 3,000 crore in2003-04. In 2007-08, though, those dues went down to only Rs 1200 crore.

Subprime-Wary RBI Steps Up Vigil On Mncs

MUMBAI: The Reserve Bank of India has stepped up its vigil on foreign banks operating in the country following the subprime crisis, which has led to many banks writing down loans worth billions of dollars.

The RBI executive director Anand Sinha indicated this to the media on the sidelines of a seminar here on Friday. India’s top policymakers had said in the past month that the spillover effects of the subprime crisis to the country are quite low. However, RBI governor YV Reddy said the unusual developments in the West indicates the heightened uncertainties, which can pose a challenge for the proper conduct of monetary policy, especially for emerging market economies.

According to Mr Sinha, India has still not witnessed a single financial crisis, which shows the stability of the local banking system. But several top notch banks in the US and Europe ran into problems owing to their exposure to loans to borrowers with poor credit history. Till date, banks have written down loans worth close to $150 billion in the past few months. Still there is a growing scepticism that the writeoffs will continue and could touch $400 billion.

Following the subprime crisis, these banks have been cutting down their credit and exposure limits across the world. In India, too, some of these banks have pared their exposure. They are now cautious even while lending to Indian corporates for their overseas funding needs.

Mr Sinha sounded a note of caution on the possibility of predatory competition gripping the local banking segment. He indicated that the entire subprime crisis in the US could have been triggered by banks seeking funds, which arose out of volatile deposits and not core deposits.

To avoid a similar situation in India, Mr Sinha stressed that if there is greater financial inclusion, banks may be able to ensure better quality of deposits. “We cannot leave out a majority of the population. Core deposits are what bring about stability in the economy,” he added.

Britain Urges Companies To Look For Opportunities In India

LONDON: Britain has urged companies in the west Midlands to look beyond established economies and exploit export opportunities offered by India and China.

British Trade Minister Lord Digby Jones, who visited India in January with Prime Minister Gordon Brown, regretted that too many companies in the region were content to do business with established markets such as the US and Europe.

"There are enormous opportunities available and we don't want to look back in five years time and say 'I wish I had done something then' because it could be too late by then," Jones said at a conference yesterday on international trade.

"We are a diverse region and I urge local companies to take advantage of the immense export potential being generated by the new high growth markets, not only China and India but also Mexico, Turkey, South Africa and Saudi Arabia," he said.

"These markets, among others, are expected to be a major source of both trade and foreign direct investment in the future. The economies of the emerging countries are growing at a much faster rate than established markets."

He said manufacturing companies, especially those in the automotive and aerospace sectors were best placed to benefit, while those involved in new technology and telephony could also do well.

Haryana Industry Seeks To Rationalise Taxation

Chandigarh: Industry chambers in Haryana want the finance minister to reduce taxes in the budget for 2008-09. Finance Minister Birender Singh is likely to present the budget on March 7. Haryana is the pioneer in introducing the value-added tax (VAT) in India in 2004. Under VAT, the central sales tax was to be reduced every year by one percentage point. The traders and industrialists want the exemption limit of the Sales Tax Form 38 to be raised from Rs 25,000 to Rs 50,000 to equalise the effect of CST. Members of the Haryana Chamber of Commerce and Industry said that the procedure of VAT refund needed to be streamlined because during scrutiny by the department concerned it was often learnt that the VAT was not deposited in time by the sellers.

Agreement With Luxembourg To Avoid Double Taxation Approved

New Delhi: The Cabinet Committee on Economic Affairs (CCEA) on Feb 21 gave its approval for the double taxation avoidance pact with the Grand Duchy of Luxembourg. The pact will stimulate the flow of capital, technology and personnel from India to Luxembourg and vice-versa, an official spokesperson said after the CCEA meeting. In April last year, both India and Luxembourg had agreed on the text of the proposed pact. It is hoped to benefit the manufacturing and airline companies of Luxembourg having linkages with India.

Rupee Ends At 39.93 Against Dollar

Mumbai: The rupee, which break the psychological mark of 40 and depreciated by almost 28 paise on Feb 20, on Feb 21 witnessed straight gains and increased to close at 39.93. The home currency opened at Feb 20, close of 40.21/ 22 and strengthened by 29 paise to end at 39.92/93. In the forwards, the six-month dollar forward closed at a premia of 0.59 per cent against a discount of -0.53 per cent on Feb 20. The 12-month closed at 0.81 per cent (0.33 per cent).

CST Relief: States Disagree On Compensation Formula

Most analysts are betting that the Finance Minister P Chidambaram is going to cut the central sales tax (CST) rate to 2 per cent from the current 3 per cent but the government officials feel this could cause a sharp drop in their revenues and the centre must compensate for their losses. Last year state finance ministers had agreed for a cut in the central sales tax from 4 per cent to 3 per cent and from April 1 this rate is supposed to be cut further to 2 per cent. But states have raised disagreements on the terms and conditions of the compensation formula asking the finance minister to revise the whole package.

Not just this, as part of the compensation formula from April 1 states are supposed to raise the basic VAT rate from 4 per cent to 5 per cent and bring textiles under VAT. The states are now backtracking on all these counts. The government might be forced to double compensation paid to states to Rs 13,000 crore if it cuts the CST. Probably for this budget the finance minister might be able to pull off an announcement on reducing central sales tax. However, the government sources say it could be difficult for the finance minister to abolish the CST altogether unless it offers states a very substantial compensation package and that could be a hurdle on the road to a uniform goods and services tax.

Re Crosses 40 On Dollar Shortage

Mumbai: The rupee crossed the psychological level of 40 and shed 28 paise against the dollar on the back of sustained purchasing of the greenback by oil companies. The home currency opened on a weaker note at 40.03, reached an intra-day low of 40.24 and ended the day at 40.21/22, down from the previous close of 39.93. The last time the rupee touched 40.20 was on September 20, 2007. The 3-month forward dollar closed at a discount of 1.19 per cent (-1.38 per cent) and the 6-month forward also ended at a discount of 0.25 per cent (-0.25).The 12-month ended at a premium of 0.45 per cent (0.56 per cent).

Budget May Cut Excise Duties To Boost Manufacturing

Concerned over the slump in industrial production and to maintain inflation around 4 per cent, the Government is likely to provide relief to the manufacturing sector by marginally cutting excise duty rates or sector-specific duties in the Budget 2008-09. Finance Minister P Chidambaram may announce cut in excise duty rates across the board from 16 per cent to 14 per cent or sector-specific duty cuts in the budget to be presented on February 29, official sources said. Sectors like pharmaceutical, textile machinery, food processing, paper and auto including two wheelers, tyres are expected to get relief in excise duty, but like last year Chidambaram could also prune excise duty exemptions to maintain revenue collections, sources said.

According to Finance Ministry, due to various excise duty exemptions the estimated revenue foregone touched Rs 9,690 crore in 2006-07 as against Rs 66,760 crore in the previous year. It includes area-specific tax exemptions of Rs 7,000 crore in 2006-07. With the approval of over 400 special economic zones, the revenue foregone figures could be much higher for 2007-08, although some tax exemptions were withdrawn in the last budget.

41pc Increase In Net Direct Tax Collections

New Delhi: The Centre''s direct tax revenues remained to be optimistic, with collections during the period April 1, 2007 to February 15, 2008 registering 41.4 per cent increase to Rs 2,28,745 crore. This collection level constituted 85 per cent of the budgeted direct tax target of Rs 2,67,490 crore for 2007-08. The strong growth in direct tax collections so far in the current fiscal has increased hope among taxpayers that the Finance Minister, Mr P Chidambaram, will moderate direct tax rates in the forthcoming budget. While corporate tax collections increased 38.78 per cent for the period under review at Rs 1,38,073 crore, increase from Rs 99,488 crore in the same period during the previous fiscal, personal income tax (including FBT, STT and BCTT) grew by 45.64 per cent at Rs 90,356 crore, up from Rs 62,040 crore. Securities transaction tax (STT) collections registered 84.64 per cent growth to Rs 7,878 crore (Rs 4,267 crore). Fringe benefit tax (FBT) collections were up 29.75 per cent to Rs 5,216 crore (Rs 4,020 crore). Banking cash transaction tax (BCTT) collections grew 16.81 per cent to Rs 478 crore (Rs 409 crore).

Budget Wishlist: Excise Duty Drop On Steel

First came the price rollback and now India''s steel lobby wants the Finance Minister P Chidambaram to do his bit to bring down the price even more, a relief not just for the aam admi but also for the industry. The Union Steel Minister Ram Vilas Paswan has already flagged off the agenda seeking to halve the excise duty to 8 per cent but expectations don''t stop here.Tax cuts The steel minister proposes to reduce excise duty on steel to half from 8 per cent, export tax to be up on iron ore and Import duty on iron ore to be nil besides cut in import tax on coking coal to nil from 5 per cent.The steel lobby also wants hike tax on iron ore exports and a simultaneous cut in customs on ore imports. The industry is also demanding to coke coal imports duty free and cut in customs duty on other raw materials like zinc, nickle, LNG.

The iron ore exports should be banned. Declining profits The steel sector has seen many ups and downs in one year since the last budget. Looking at the ups, yes the steel prices have gone up but they have not been able to catch up with the raw material price hikes and this has squeezed the margins of the steel players but those feeling the heat the most are the smaller steel producers.

CBEC Attempts To Accelerate Disposal Of Excise Cases

New Delhi: In an effort to speed up the disposal of pending Central excise cases, the Finance Ministry has brought parity in the adjudication powers of Joint Commissioners with that of Additional Commissioners in all the Central excise commissionerates of the country. The Central Board of Excise and Customs (CBEC) have now improved the monetary limit of adjudication of cases by Joint Commissioners to that of Additional Commissioners. Currently, additional commissioners could adjudicate cases involving duty of up to Rs 50 lakhs. There is shortage of Additional Commissioners. This was leading to delay in the adjudication of cases falling under the monetary limit prescribed for Additional Commissioners.

As on end-December 2007, the number of Central excise cases pending adjudication stood at 14,493 involving an amount of Rs 8,652.12 crore. Meanwhile, the CBEC has now urged the concerned jurisdictional commissioners to redistribute the pending cases among the joint commissioners and submit a report to the Board by March 15, certifying that all the work regarding re-allocation of cases has been finished. This move of the CBEC will certainly reduce the number of pending excise duty related cases.

FM Extends Tax Refund To Exporters Of 3 More Services

New Delhi: The Finance Ministry on Feb 19, extended the service tax refund scheme for exporters to three more taxable services, taking the overall number of such services to 13. The three services eligible for service tax refund are courier services, goods transport agency services availed for transport of export goods from the place of removal to actual place of export that is inland container depot (ICD)/airport/port and transportation services in containers by rail from the ''place of removal'' to ICD/airport/port.

These three services are not in the nature of input services but could be connected to export goods and hence the decision to permit refund of service tax. Service tax paid by exporters on input services used for export goods is neutralised under various existing schemes like drawback scheme. So far, the Finance Ministry has specified about ten taxable services, which are not in the nature of input service but could be attributable to exports, as services that would qualify for service tax refund. These comprise port services provided for export, transport services on road and rail for movement of goods from ICD to port of export, general insurance services, technical testing and analysis agency services, storage and warehousing services and business exhibition services.

Punjab Annual Plan Estimated At Rs 6,210cr

New Delhi: The annual Plan of Punjab for 2008-09 has been pegged at Rs 6,210 crore, inclusive of additional Central Assistance for projects of special interest to the State. This was arrived at a meeting between the Deputy Chairman, Planning Commission, Mr Montek Singh Ahluwalia, and the Punjab Chief Minister, of Mr Parkash Singh Badal, here on Feb 19.

The State Government was urged to take the lead in agro-marketing and strengthen Agriculture Produce Marketing Committee. Emphasis should be on skill upgradation via public private partnership, crop diversification, genetic upgradation of major crops and power sector reforms. Mr Badal appreciated the plans of the Central Government like skill development mission and setting up of international airport at Chandigarh. On development policy of the State, he said it will concentrate on removing intra-regional imbalances, generation of productive employment, improving quality of life by providing better healthcare facilities, sanitation, safe drinking water, education and greater access to food.

Budget Likely To Give Relief To Income Tax Payers

Income tax payers are likely to get a major relief in the Budget 2008-09, as the government prepares itself to please the middle class in the election year.Finance Minister P Chidambaram can give a marginal but visible relief to personal income tax assessees this year, as tax collections have substantially improved over the past three years. With buoyant tax collections in 2007-08, there is significant pressure on Chidambaram to reduce the effective rates. The Minister himself has acknowledged that with better tax compliance, there could be a case for cut in rates. The minimum income threshold limit for income tax payer could be raised from Rs 1,10,000 to Rs 1,25,000 or Rs 1,30,000, sources said. Similarly, the income threshold for 30 per cent tax rate could be raised from the current Rs 2,50,000 per annum, sources said, adding that this had been kept constant since fiscal year 2005-06.

Budget May Roll Tax Sops For Power Sector

The Union Budget is an opportunity both for populist as well as meaningful measures to kickstart various sectors and power is one such area, which could do with more incentives. Finance Minister P Chidambaram is all set to announce a new set of measures to add capacity in the sector. According to sources, there may be an excise cut on power equipments from 16 per cent to 10 per cent. The income tax exemption for investment of up to Rs 50,000 in power bonds may be allowed, sources said, adding that CFLs and Energy efficient ACs may get excise cut by 5-6 per cent. The appreciation of rupee may hold FM from making any change in customs duty currently at 5 per cent for non-mega power projects but the cut in excise duty rates may be sufficient for the industry as the cut will translate into lower operational cost for the companies in the business.

The power sector also feels there is a strong case for rationalization in duties as that will make the sector more attractive. There is a case for excise duty cut, said Ravi Uppal, Chairman, ABB India. The electrical equipment companies have grown at a rapid pace in the last few years. However, going by the order inflows of these companies and with the sops expected in the budget, we can expect a much higher growth in the sector. With spiraling fuel prices, there is an urgent need to give incentive to renewable and non-conventional energy and the finance minister may do exactly the same.

Rupee Plunges To 5-Month Low Of 39.90

The Indian rupee plunged by 13 paise against the greenback on Feb 19 to close at its five-month low of 39.90/91 as heavy demand for dollar continued to pour in from domestic banks amidst the US currency''s scarce availability globally. At the Interbank Foreign Exchange (Forex) market, the Indian unit fell to the intra-day low of 39.94 a dollar after resuming steady at 39.75/77 a dollar. It had fallen by ten paise to close at 39.77/78 per dollar on Feb 18.

Puducherry''s Plan Outlay Estimated At Rs 1,750cr

New Delhi: The annual planned outlay of the Union Territory of Puducherry for the fiscal 2008-09 has been estimated at Rs 1,750 crore. This was finalised, here on Feb 18, at a meeting between the Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, and the Chief Minister of Puducherry, Mr N. Rangaswamy. In his first remarks, Mr Ahluwalia complimented Puducherry for growth in the manufacturing and service sectors. However the gross State domestic product (GSDP) growth rate was below the national average. Human development indices remain better than the national average. The Commission offered non-lending technical assistance for procuring the master plan on tourism development. The Eleventh Plan will concentrate on social sector development with allocations stepped up for upgradation of rural roads, better drinking water supply, slum upgradation, primary and secondary education, primary health care services and the public distribution system.

India Trade Exhibition Centre To Setup In Sharjah

Kochi: The first Indian Trade and Exhibition Centre to come up in Sharjah. Establishing such a centre will help encourage trade between India and the Gulf Cooperation Council countries, West Asia and the African region countries, Mr K.V. Shamsudheen, Vice-Chairman of the Indian Business and Professional Council (IBPC), Sharjah, said. A MoU was inked in this regard by Mr Sudesh Agarwal, Chairman of IBPC, and Mr Ahammed Mohammed al Midfa on behalf of the Sharjah Chamber of Commerce and Industry, in the presence of Indian Consul General, Mr Venu Rajamony, in Sharjah. The centre is hoped to play a very vital role in the Indo-UAE trade and investment relations. The centre will hold regular exhibitions of Indian products and services, organise meetings and conferences for the Indian business and professional community, lease office and exhibition space to Government of India enterprises and Indian corporations, as well as provide all information about Indian business and services.

AP Economic Survey Shows Optimism

Hyderabad: The Andhra Pradesh Socio Economic Survey for 2007-08 shows all-round development with various economic sectors showing optimism. The State''s average industrial sector growth has increased by 8.9 per cent during 2004-08 as against 5.4 per cent during 2000-04, the agriculture sector annual production has increased to 161 tonnes (2004-08) from 138 tonnes (2000-04) and the economic growth was up 8.7 per cent during 2004-08 as against 6.17 per cent in 2000-04. The overall economic outcome reflects the policy framework of the State, which seeks to encourage development across various sectors of economy. The Gross State Domestic Product for Andhra Pradesh in 2007-08 is pegged at 10.37 per cent and is the highest seen in the last two decades. The State economy is moving towards employability and the annual employment growth rate during 2004-08 is 3.7 per cent. The State hopes to get full literacy by 2015.

Rupee Ends At 39.79 Against Dollar

Mumbai: The rupee dampened by 11 paise against the greenback on the back of dollar purchasing by both foreign and nationalised banks. The home currency opened at 39.64/66 and witnessed an intra-day high of 39.63 before ending the day at 39.78/79, down from the previous close of 39.67/68. TIn forwards, the six-month premia closed at 0.47 per cent (0.83 per cent) and the 12-month closed at 0.92 per cent (1.13 per cent).

India''s Trade Will Gain From Growing Eastern Economies

Chennai: India''s export growth will push forward if the country leveraged opportunities existing in the eastern economies, said the former Secretary, Ministries of Petroleum and Finance, Dr S. Narayan. Delivering the inaugural address at the seminar on ''Current business opportunities for India in Malaysia and Singapore'' conducted by the Madras Chamber of Commerce and Industry (MCCI) and the South India Chamber of Commerce and Industry (SICCI), even though trade with the US and European nations had been growing, it was necessary to note similar growth happening in trade with China and South East nations. Trade as a percentage of GDP has touched about 40 per cent and therefore it was essential for India to know the happenings in the rest of the world.

PM Expresses Confidence On Achieving 9% Growth

Prime Minister Manmohan Singh on Feb 15 expressed optimism on achieving 9 per cent growth rate. However, he admitted the country cannot be completely insulated from chilly global winds that may blow in its direction. Speaking at Ficci''s golden jubilee auditorium where a picture of Mahatma Gandhi smiled down on the gathering from the backdrop, Dr Singh echoed his theme that industrialists served as trustees of society. He took pains to describe what his government has done over four years and, for the next five years through the 11th Five-Year Plan, proposed to build physical and social infrastructure that industry needs to sustain growth. The prime minister also explained why battling inflation was top priority of his government. An important policy stance we have adopted to ensure that growth is more inclusive has been to keep inflation under check... Some of you are not happy about our emphasis on inflation control. I see things differently. Inflation is an iniquitous tax. It hurts the poor more than the rich. Dr Singh said the government''s initiatives in agriculture and rural development, infrastructure, education and healthcare, along with efforts to keep inflation under check, would step up economic growth and make it more inclusive. In all, prime minister''s speech appeared as an attempt at showcasing the UPA government as the rightful custodian of impressive and inclusive economic growth. PM gave his government credit for higher growth and putting in place the basic architecture necessary for ensuring the growth is broad-based.

India Likely To Lower Import Duties In Budget

India''s upcoming budget for 2008-09 may see some tweaking in the import duty structure, a top official of the Commerce and Industry Ministry said on Feb 16 in New Delhi. Import duties need to be cut in certain areas such as raw material and inverted duties. Inverted duties have to be addressed at this time as lot of trade agreements are coming, the official said. The inverted duty structure has to be dealt with now and we are looking at addressing it seriously. The Indian industry has also been pressing for a considerable reduction in the import duties for a long time now. The import duty reduction as a result of various bilateral agreements has adversely affected sectors such as textiles.

Other sectors like chemicals, electronics, auto components, tyres and electrical equipment have also been affected due to various bilateral trade agreements signed by India. The inverted duty structure impacts the domestic industry adversely as it has to pay a higher price for the raw material in terms of duty, the finished product on the other hand lands at lower duty and costs less. The government had in 2006 set up a committee under Anwar-ul Hoda to examine the inverted duty structure.

AP Annual Plan Estimated At Rs 43,203cr

Hyderabad: Andhra Pradesh on Feb 16, estimated the annual State Plan at Rs 43,203 crore, which is higher by Rs 13,185 crore over the previous year, reflecting an increase of over 32 per cent. Together with non-plan expenditure of Rs 51,885 crore, and Centrally sponsored schemes Rs 5,348 crore (up 81 per cent) and Plan Rs 43,203 crore (up 44 per cent), the total budget for 2008-2009 is up 24 per cent at Rs 1,00,436 crore. The State Finance Minister, Mr K. Rosaiah, presenting the fifth consecutive State Budget, said that plan size is the highest among States in the country for the last two years 2006-2007 and 2007-2008. The State is likely to have revenue excess of Rs 709 crore in 2008-2009 as per budget estimates, which is about 0.2 per cent of the Gross State Domestic Product. As per allocations, the irrigation sector has got Rs 16,500 crore followed by housing Rs. 5,850 crore and panchayat raj Rs 3,838 crore with allocations for various welfare measures. Significantly, the budget has given Rs 1,980 crore for rice subsidy scheme, which the Government expects to launch next fiscal.

Gujarat To Adopt Focused Area Approach To Spur Growth

Gujarat, with more than 50 special economic zones (SEZs) in its kitty, is now working out a special focused area approach to spur growth in sectors ranging from salt and salt-based industries to infrastructure development. According to official sources, special emphasis is being laid for boosting infrastructure development. The government has planned special incentive schemes aimed at attracting global investments into this sector. They will be known as premier or prestigious schemes. In the past years, the state has introduced such schemes but the main focus of them was industrial projects. The pioneer industries scheme, one of such leading schemes, has attracted investment of Rs 1 billion or more. Now a similar experiment is being planned for the infrastructure sector.

One of the major infrastructure development projects is the creation of state-of-the-art industrial and logistics parks. So far, the Gujarat Industrial Development Corp (GIDC) was responsible for creating the requisite infrastructure facilities in the state. Now the state government could opt for private-public partnership for implementing infrastructure projects that would also provide logistics services to meet the needs of SEZs, ports and special investment region.

Forex Reserves Fall $1.86 Billion

Mumbai: The foreign exchange reserves slipped by $1.86 billion to $290.8 billion for the week-ended February 8, owing to a fall in foreign currency assets. Last week, the reserves had gone up by $4.36 billion to $292.67 billion. Foreign currency assets dropped by $1.86 billion to $281 billion in the week ended February 8.

There could have also been a slight revaluation effect as the euro and the pound depreciated against the dollar. The euro fell from $1.48 to $1.44 and the pound also depreciated from $1.97 to $1.94 during the week under consideration. Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies (euro, sterling and yen) held in reserves. The gold reserves and SDRs remained unchanged at $9.19 billion and $9 million, respectively. The country''s reserve position in IMF plummeted by $6 million to $417 million.

India Should Increase FDI Limit In Defence: UK

NEW DELHI: Britain on Friday suggested that India should raise its Foreign Direct Investment (FDI) limit in defence sector up to 49 per cent.

The suggestion came from Creon Butler, Deputy British High Commissioner who was speaking at a seminar organised by a industry body CII.

At present, New Delhi allows only 26 per cent FDI in the defence sector. Echoing such demands from the European industry, the British diplomat said in the years to come the defence sector in India is expected to see significant jump.

India plans to make its defence offset policy open, transparent and less rigid and ensure bigger participation of private players in defence equipment business.

Defence Production Secretary Pradeep Kumar said, "This symposium will provide the UK a platform to understand our Foreign Direct Investment (FDI) policy in the defence sector."

India has gradually liberalised its defence trade by allowing 100 per cent private investment by domestic companies and increasing the number of licences granted to private players. Our defence equipment companies are competitive and global biggies are outsourcing their work to Indian firms," said Kumar.

Kumar expressed confidence that this symposium will provide us an opportunity to understand the eastern and the western perspectives on defence, explore joint ventures and further strengthen India-UK ties.

Investment In Agri Vital To India: World Bank

NEW DELHI: Greater investment in agriculture in transforming economies like India is vital to the welfare of 600 million rural poor, mostly in Asia, says the latest World Development Report (WDR) of the World Bank.

Presenting the India highlights of the report here on Friday, WDR co-author Alain de Janvry said there was "much mis-spending on agriculture" in India, with investments accounting for only 25 percent of public expenditure, while subsidies took up 75 percent.

Haryana Waives Interest On Loans From Cooperative Bodies

CHANDIGARH: Haryana Chief Minister Bhupinder Singh Hooda on Friday announced waiving of interest on cooperative loans of small farmers, petty shopkeepers and artisans.

He said the government is also considering how to waive the remaining debt of these poor people.

The Chief Minister, who was addressing a public meeting at Narnaund in Hisar district, said the scheme to waive interest on cooperative loans was aimed at benefiting the poor to the tune of Rs 830 crore.

Referring to implementation of the scheme under which arrears of electricity bills to the tune of Rs 1600 crore were done away with by the government, he recalled that former Chief Minister Devi Lal had waived loan amounting to Rs 28 crore only.

Never in the history of independent India, he said, any state government had ever waived arrears of Rs 1,600 crore.

Hooda said the state budget for next financial year, to be presented in the assembly in March, would be of not less than Rs 6,600 crore.

Cos Can Issue Issue Foreign Currency Exchangeable Bonds To Unlock Value In Group Cos

NEW DELHI: The government on Friday allowed firms to issue foreign currency exchangeable bonds (FCEBs) to unlock the value of their holding in group companies. The norms governing tax treatment and eligibility for FCEBs are on the same lines as foreign currency convertible bonds (FCCBs).

In the case of FCCBs, bonds can be converted to the equity of the issuing firm. In the case of FCEB, bonds can be converted into equity of a group company. As a result, payment of interest on FCEBs would be subject to payment of withholding tax. Funds raised through FCEBs cannot be invested in the capital market, but can be used for overseas expansion.

The new instrument would provide corporate groups more flexibility to raise funds abroad as they can leverage value of holding of a company in group firms too. The new norms laid down by the government for FCEBs incorporate all the restrictions applicable on external commercial borrowing (ECB) as well as foreign ownership in Indian companies.

This indicates the government's resolve to keep capital inflows moderate. The tax treatment and the overall interest rate ceiling on the new bonds will be the same as those specified by RBI for overseas borrowing, the government said in a statement late on Friday.

The rate of interest payable on such bonds and the issue expenses incurred in foreign currency shall be within the cost ceiling specified by RBI under the ECB policy. For borrowings with an average maturity of 3-5 years, the overall cost ceiling is 150 basis points over 6-month LIBOR, RBI guidelines say. For borrowings over five years, the cost ceiling is 250 basis points over 6-month LIBOR.

FCEB is a bond expressed in foreign currency with the principal and interest payable in foreign currency. Foreigners, NRIs and overseas entities are eligible to subscribe to these bonds, which can be converted into equity shares of a group company (called the 'offered company'). The 'issuing company' shall be part of the promoter group of the 'offered company' and shall hold the equity shares being offered at the time of issuance of the bond.

The 'offered company' should be a listed company engaged in a sector eligible for FDI and is eligible to issue or avail of FCCBs or ECBs. The investment under the scheme shall comply with the FDI and ECB policy requirements. Utilisation of ECB proceeds is not permitted for on-lending or investment in capital market or acquiring a company in India.

Rupee Appreciates 15 Paise

Overcoming the weakening trend of the past few days, the Indian rupee on Thursday appreciated by 15 paise against the U.S. currency at 39.61/62 in sync with the surge in domestic as well as Asian stock markets amid increased availability of dollar. The rupee moved between 39.60 and 39.73 at the interbank foreign exchange market. It had closed at 39.76/77 on Feb 13, its lowest level since November 28 last year.

The rupee premiums on forward dollar also recovered sharply on fresh paying pressure from banks and corporates. Foreign exchange dealers said anticipation of fresh capital inflows, the key driver for the Indian unit, in view of the rise in equity markets and expectations of foreign institutional investors turning active once again boosted rupee sentiment. A record FII inflows had pushed the rupee up by about 12 per cent against the dollar last year.

Small Investors Expect Populist Budget

The UPA''s Finance Minster is expected to deliver a populist budget and so the demands are running high. The small investors are hopeful of a tax cut. At present, income up to Rs 1,10,000 for men and Rs 1,45,000 for women attracts no tax. Experts feel that this threshold can be increased by another Rs 40,000. Since incomes have also risen significantly, the highest tax rate of 30 per cent should be applicable to salaries above Rs five lakh against the current Rs 2,50,00. This could translate into a cool saving of Rs 40,000.

Another way to save on tax is to invest up to Rs one lakh into tax saving instruments. Investors want their limit to be hiked but they are also demanding that the government should extend tax saving sops to a wide variety of options. Investors are also demanding that interest on fixed deposit savings should become tax free and MFs across the board should get a tax saving waiver instead of restricting this option only to ELSS schemes.

Even if you increase tax slab, it will definitely help. Secondly, mutual fund as a method of saving is becoming more popular. It is an opportunity to create wealth and not just an avenue for savings or short-term speculation. Having burnt their fingers in the recent market correction, small investors would be looking for a silver lining in this year''s budget. A cut in income tax rates is what everyone is expecting but at the same time, more money in the hands of investors, whether invested or spent, will also help spur growth.

Exports From Sezs Likely To Increase To Rs 1.4 Lakh Cr Next Fiscal

Ahmedabad: Exports from special economic zones (SEZs), mainly from the IT and ITeS-based zones, are expected to double to Rs 1,40,000 crore in the fiscal 2008-09.

In 2006-07, exports from SEZs touched Rs 34,787 crore and are expected to increase by nearly 93 per cent in 2007-08 to Rs 67,088 crore, according to Mr Ravi S. Saxena, Development Commissioner, Kandla SEZ, Union Ministry of Commerce and Industry. Nearly 70 per cent of this revenue came from the IT sector. The total land requirement for the formal approvals granted till date is nearly 59,933 hectares. Out of the 428 formal approvals, 160 are for sector-specific and multi-products purposes for labour-intensive manufacture of textiles and apparels, leather footwear, automobile components, engineering etc. In Gujarat, altogether 19 formal approvals have been given for SEZs and 16 others notified in which the proposed investment would be nearly Rs 1,06,924 crore with an expected job potential of 5,46,294 (direct and indirect). Of this, Rs 34,600 crore has already been invested, creating nearly 16,000 jobs.

Himachal Annual Plan Fixed At Rs 2,400 Crore

New Delhi: The annual Plan of Himachal Pradesh for 2008-09 has been fixed at Rs 2,400 crore, inclusive of supplementary Central assistance of Rs 450 crore for projects of importance to the State. This was agreed here at a meeting between the Deputy Chairman Planning Commission, Mr Montek Singh Ahluwalia, and the Himachal Pradesh Chief Minister, Mr Prem Kumar Dhumal, on Feb 13. In his initial remarks, Mr Ahluwalia complimented the State Government for implementing the development programmes in totality despite a very difficult fiscal situation. He said the State has succeeded in maintaining healthy growth performance and good human development index. Performance in social sector specially Sarva Shiksha Abhiyan and mid-day meal was appreciated. It was pointed out that the State has achieved 100 per cent rural electrification target. The State was asked to model district planning in a way that optimum benefit can be taken from the Central scheme. In view of vast potential for the growth of horticulture, floriculture and herbs, the State should help in setting up marketing network. Focused attention should also be given to promotion of handicrafts.

Growth Of Infrastructure Sector Falls To 4-Pc In December

New Delhi: The growth of the six key infrastructure sectors in December 2007 slipped to 4 per cent compared to nine per cent achieved a year ago. The April-December performance of infrastructure industries - crude oil, petroleum refinery products, coal, electricity, cement and steel - also fell to 5.7 per cent as against 8.9 per cent in the same period last year. Crude oil was the worst performer with a negative growth of 1.5 per cent in December as against a positive growth of 10.7 per cent in December 2006.

Petroleum refinery products registered a growth of just two per cent in December 2007 as compared with 10.8 per cent in the same period in 2006. Finished steel grew by 5.13 per cent as against 10.2 per cent, while expansion in the cement sector dropped to 3.9 per cent from eight per cent. Electricity generation on the other hand went up by only 3.8 per cent as compared to 9.1 per cent. Coal production, on the other hand, registered a growth of 8.4 per cent as against a growth rate of 2.9 per cent in December 2006.

Govt Clears 25 FDI Proposals Worth Rs 5,585 Cr

The government on Feb 13 approved 25 foreign direct investment proposals worth Rs 5,584.82 crore in various sectors, including a Rs 1,950-crore investment plan of Bycell Communications for starting mobile telephony in the country.The proposals approved by Finance Minister P Chidambaram also include a Rs 1,460-crore plan of J M Financial Trustee for induction of foreign equity by subscribing to private placement of units.

The Indian company is engaged in FDI compliant construction development projects, an official release said.Earlier, the Department of Telecom had withheld Letters of Intent to Bycell for launching mobile services in five circles. The investment plan of the company, which had applied for licences in Assam, Orissa, Bihar, North East and West Bengal circles in January 2006, also envisages raising of paid up capital.

Among other major proposals, Mumbai-based Dumeric Holdings Pvt Ltd''s Rs 400-crore proposal to convert status of operating company into operating cum holding company for making further downstream investments was also cleared.

Another proposal of same amount that was cleared was of KVK Energy & Infrastructure Pvt Ltd for induction of foreign equity in a company by way of subscription to fresh equity shares, fully convertible debentures or preference shares.

Rupee At 39.76 Against US Dollar

The Indian rupee lost 9.5 paise against the greenback at 39.76/77 on Wednesday, the lowest level in almost three months, on heavy demand for dollar despite a surge in stock markets.The lowest level before this was recorded on November 28 last year at 39.80/81. The rupee premiums on forward dollar also fell sharply.

The benchmark six-month forward dollar premiums payable in July ended at 4 - 6 paise, lower from 8-1/2 - 11 paise on Tuesday and the far-forward maturing in January also ended down to 32 - 34 paise from 37 - 39 paise previously.In the Interbank foreign exchange market, the domestic currency moved in a range of 39.60 and 39.89 on divergent factors after a promising start on signs of stability in Asian markets. The local currency had closed at 39.6650/6750 per dollar on February 12.

Foreign exchange dealers said the demand for dollar continued to peak as foreign banks were seen buying dollars. The demand soared after a pull-out by FIIs and also owing to funds flowing out after the refund of some initial public offers in the past 10-15 days. It seemed situation has not improved since then, the dealers said. Besides, there has been a severe shortage of the US currency in the global markets.

Govt Moots Relief Package For Farmers

The government is worried about mounting debt among India''s farmers and their ability to pay so Budget 2008 could see a huge write off of farm loans, according to finance ministry sources. The debt relief package could range between a massive Rs 60,000 to Rs 100,000 crore.

These estimates are based on farm loans disbursed upto December 2007. It is unlikely that there will be any cap on the size of the loan. If only marginal and small farmers are considered then the loan waiver would cost about Rs 60,000 crore. Such a massive loan waiver will be coming in the backdrop of a sharp dip in the growth forecast for agriculture. It is believed that this could seriously jeopardise the 9 per cent growth story of India.According to the Finance Minister P Chidambaram, the government''s highest priority is agriculture.Although the details of the debt relief package are still being worked out, finance ministry officials pointed out that the Centre and states might share the cost of the debt relief package.In addition there could also be a farmer cess, which could be levied on direct as well as indirect taxes just the way the finance minister raised the education cess by 1 per cent in the last budget.

Exports From Sezs Rise By 200-Pc In 2 Yrs

New Delhi: The Special Economic Zone (SEZ) Act of 2005, which completed two years on February 10, 2008, has witnessed a 200 per cent growth in exports from these zones during the period, and has led to an incremental investment of Rs 70,416 crore. However, developers of the zones are skeptical of finance ministry proposals, which seek to reduce fiscal incentives provided under the Act and maintain that investments of $75 billion, lined up in the next five zones, could be at stake. The finance ministry has proposed imposing export obligation in excess of 51 per cent on SEZs as well as imposing direct tax measures like Minimum Alternative Tax and Dividend Distribution Tax. Investors, including ones from abroad like Nike, have lined up long-term investment plans. If fiscal incentives are trimmed, proposed investments would be in jeopardy as investors would back out, said Ajay Nijhawan, convenor of the panel of SEZ developers within the Export Promotion Council for SEZs and EoUs (export-oriented units). According to the source, between 2003-04 and 2005-06, total value of exports from SEZs stood at Rs 50,000 crore. In 2007-08, we are likely to have exports worth Rs 67,088 crore from SEZs and in 2008-09, these are likely to cross Rs 1,00,000 crore. According to developers, the issue of revenue leakage due to SEZs is notional. Other issues pertaining to the SEZs include classification of SEZs as real estate projects by the RBI.

Rupee Appreciates Marginally

Mumbai: The rupee appreciated by about three paise against the greenback on Feb 12. The home currency opened at 39.62/64 and saw an intra-day low of 39.69 before ending the day at 39.66/67, up from the previous close of 39.6950/ 70. Foreign exchange dealers said that the rupee will continue take cues from the global markets and will see some strengthening once there is recovery in global markets. In forwards, the six-month premia closed at 0.60 per cent (0.85 per cent) and the 12-month closed at 1.02 per cent (1.14 per cent).

Industrial Output Witnesses 7.6 Pc Growth In Dec

New Delhi: The official Index of Industrial Production (IIP) has witnessed a 7.6 per cent year-on-year growth during December, marking a second successive month of sub-par growth following the 5.1 per cent of November. However, there is an element of statistical illusion in the 7.6 per cent figure in the latest recorded month. For, it comes on a high base growth rate of 13.4 per cent during December 2006, just as the 5.1 per cent IIP increase for November 2007 was over and above the 15.8 per cent in November 2006.

Moreover, among the IIP''s main sectoral components, the manufacturing index has risen by a reasonably healthy 8.4 per cent year-on-year in December (though below the 14.5 per cent for the same month of the previous year). For the first nine months of the current fiscal, industry as a whole has grown by nine per cent (compared to 11.2 per cent in April-December 2006), with these standing at 9.6 per cent (12.2 per cent) for manufacturing, 4.9 per cent (4.4 per cent) for mining and 6.6 per cent (7.5 per cent) for electricity. The IIP data, moreover shows a 16.6 per cent rise in production of capital goods in December and 20.2 per cent during April-December 2007. This comes on the corresponding previous year''s growth rates of 26.2 per cent and 18.6 per cent.

The high growth in this sub-sector is indicative of buoyant investment activity. This, in turn, seems to be replacing the earlier consumption- and export-driven growth phase. Proof of this is in consumer durables, which has recorded growth rates of 2.2 per cent in December 2007 (1.8 per cent in December 2006) and 1.3 per cent in April-December 2007 (11.2 per cent in April-December 2006).

Import Of Sensitive Items Rise By 11.1% In Apr-Dec 2007

New Delhi: Along the lines of the high import growth rate on the back of an appreciating rupee vis-a-vis the US dollar, the country''s import of sensitive items being monitored by the Department of Commerce in view of their impact on domestic prices, also registered an increase of 11.1 per cent during the first three quarters of the current fiscal, as compared with the corresponding quarters of the last fiscal.

The total import of over 350 such sensitive goods for the period April-December 2007 has been Rs 20,589 crore as compared with Rs 18,532 crore during the corresponding period of last fiscal. The gross import of all commodity during the same period of the current fiscal was Rs 6,82,088 crore as compared with Rs 6,11,522 crore during the same period of the previous fiscal. Import of sensitive items constitutes 3 per cent of the gross imports during the last fiscal as well as the current fiscal period under review.

Imports of consumption items such as foodgrains, cotton and silk, alcoholic beverages, tea and coffee and industrial products such as automobile, products of small scale industry and rubber have shown marked rise during the period under review. While import of foodgrains rose from Rs 1,228.26 crore to Rs 1,475.52 crore in the corresponding period of the current fiscal, alcoholic beverages import rose from Rs 146.83 crore to Rs 182 crore.

Budget Session Of Parliament From Feb 25

The Budget session of Parliament will commence on February 25, it was officially announced in New Delhi on Feb 12. The session will start with President Pratibha Patil''s address to the joint sitting of both the Houses at 11 AM on February 25.While Railway Minister Lalu Prasad would present the Rail Budget for 2008-09 on February 26, Finance Minister P Chidambaram would present the General Budget for 2008-09 on February 29.The three-month session will witness a total 35 sitting with a break from March 21 to April 14.

Plan Panel Agrees To Provide Rs.16,000 Crore For State

Chennai: Consequent to the Tamil Nadu Government''s performance in executing the last year''s annual plan, the Planning Commission has agreed to provide Rs. 16,000 crore for the State.The Annual Plan for Tamil Nadu for 2008-09 was finalised in New Delhi on Monday at a meeting between Finance Minister Anbazhagan and Planning Commission Deputy Chairman Montek Singh Ahluwalia.

Chief Minister M. Karunanidhi is expected to make a formal announcement on the plan size and priorities on Feb 12. Officials said the State had got what it had wanted to carry forward the capital and development works that it had planned to execute next year.

Last year, the Plan outlay was Rs 14,000 crore. This included an additional Central assistance of Rs.200 crore provided for projects of special assistance to the State. Normally, for States that are able to raise resources to utilise the allocated plan size, a ten per cent increase is the norm for the succeeding year. But because the State performed well in all parameters, it had sought more than the norm. This has been agreed to, according to sources. The State, during the Eleventh Plan period, has an outlay of Rs.80,000 crore. Mr. Karunanidhi has made it clear that agriculture would get top priority. He also wanted the Planning Commission to ensure Central funding for the peninsular component of inter-linking of rivers project during the Eleventh Plan period because this would help State in revitalising agriculture, benefiting millions.

Pension Scheme For Govt Staff Expected To Be In Place By May

New Delhi: The Pension Fund Regulatory and Development Authority (PFRDA) hopes to have the entire new pension scheme (NPS) architecture to be in place relating to Government employees by end-May this year. According to the source, a workshop on the ''overview of NPS and CRA (Central Recordkeeping Agency) architecture has been engaged in the process of registering the NPS trust and appointing a custodian and a trustee bank. The State Bank of India (SBI), the UTI Asset Management Company and Life Insurance Corporation have already incorporated their pension funds as new companies under the Companies Act, 1956 and are expected to start work by March 31, 2008. The three pension funds will be performing the investment management functions under the NPS for a fee. The NPS would at present offer only two investment choices - investment of entire contribution in Government securities alone or adopting the investment guidelines applicable to non-government provident funds. For non-government provident funds, the current Government guidelines provide that up to 15 per cent can be invested in equities and 85 per cent in fixed income instruments.

The NSDL Chairman, Mr C.B. Bhave, said that NSDL would take all efforts to make CRA operational with effect from June 1, 2008. The main functions and responsibilities of CRA include recordkeeping, administration and customer service functions for all subscribers of NPS; issue of unique permanent retirement account number (PRAN) to each subscriber and acting as an operational interface between PFRDA and other NPS intermediaries such as pension funds, annuity service provider and trustee bank.

Infrastructure Firms Want Policy Changes

The infrastructure sector is booming but that has not made the industry''s budget wishlist any shorter and topping that list are better lending and refinancing policies. The Indian infrastructure boom is here to stay irrespective of the slowdown in major global economies and the construction giants including L&T, HCC, Gammon and IVRCL want to see this Union Budget come in as a booster primarily seeking policy changes that will solve their problem of dual dividend taxation at SPV company and holding company level, reduction in rate of capital gain tax for unlisted SPVs, better lending and refinancing policies and easing of ECB norms. Opportunities for the construction industry are also being created by industrial capacity expansion such as steel, cement, oil & gas, power and petrochemicals besides growth in housing demand and at a time when the construction and infrastructure companies are growing at over 30 per cent per annum and with projects worth $350-450 billion planned during XIth five year plan spanning 2007-12, the government will clearly will not be a in position to ignore the industry.

Rupee Weakens Tracking Bourses

Mumbai: The rupee fell by eight paise against the greenback on Feb 11. Rupee opened at 39.63/65 and saw an intra-day low of 39.74, before ending the day at 39.6950/70. Foreign exchange dealers said that the rupee would continue to weaken further to the 39.80-39.85 level. In forwards, the six-month premia closed at 0.85 per cent (0.76 per cent) and the 12-month closed at 1.14 per cent (1.04 per cent).

India Should Be Ready For Liquidity Crunch, Says RBI

At a time when Indian markets are feeling the tremors of the overseas financial turbulence, the International Monetary Fund or IMF says that the global slowdown is now serious and its in this backdrop that the RBI governor feels that India needs to be prepared for a withdrawal of liquidity.

But it is the same emerging markets which have helped the world look like a better place at a time when developed markets have plunged into a crisis. So, while IMF may hold little relevance to how the Indian economy behaves now, the questions are clearly now targeted at institutions of developed markets. For the RBI Governor YV Reddy who has grappled with the massive inflows of capital, It is now turn to get into reverse gear as the world faces a slowdown.

India Studying Fresh WTO Proposals

India is studying the fine print of the fresh WTO proposals on reduction in farm subsidies and industrial tariffs, the two most controversial issues that have been stalling a consensus in the Doha Round of negotiations. Its trade negotiators are still studying the exhaustive draft and are likely to comment on Monday.

Released in Geneva on Friday, the revised draft on agriculture has proposed that the U.S. cut farm subsidy by $13 billion to $16.4 billion and most of the developing countries are busy scrutinising the details in the document to infer whether the fresh proposals actually boil down to any meaningful reductions by the developed countries such as the U.S. Earlier this week, Commerce and Industry Minister Kamal Nath had stated that the Doha talks were at a delicate stage and could move away from convergence in case the concerns of the developing countries on livelihood and marginal farmers were not addressed. On the other hand, U.S. officials have stressed that they would like to see the market access issue equally addressed along with the cut in farm subsidies at the core of any global trade deal.

PFRDA Demands Equal Tax Treatment For NPS

Ahead of the budget, interim pension regulator PFRDA on Feb 9 demanded equal tax treatment for New Pension Scheme (NPS) for government employees vis-à-vis provident funds like EPF, PPF and GPF. While contribution, returns and withdrawals under Public Provident Fund (PPF), Employee Provident Fund (EPF) and General Provident Fund (GPF) are exempt from tax, in case of NPS, only contribution and returns do not attract tax. However, withdrawal under NPS attract tax. This is called exempt, exempt and tax (EET) system, unlike exempt, exempt and exempt (EEE) system for PPF, EPF and GPF

Forex Reserves Grow By $4.36 Bn To $292 Bn

Mumbai: India''s foreign-exchange reserves went up by $4.36 billion to a record $292.7 billion in the week ended February 1, the central bank said. Foreign-currency assets went up by $3.5 billion to $283 billion, the Reserve Bank of India said in an e-mailed release in Mumbai. The nation''s special drawing rights with the International Monetary Fund were held at $9 million. Its reserves with the IMF fell by $11 million to $423 million, while gold reserves rose $871 million to $9.2 billion. The reserves comprise overseas currencies, gold and special drawing rights with the IMF.

Inflation Rate Crosses 4% Mark

After a gap of about six months, the inflation rate once again crossed the four-per cent mark due to rising prices of cereals, salt and bakery products. Based on the movement in the Wholesale Price Index (WPI), the inflation rate moved up to 4.11 per cent for the week ended January 26 from 3.93 per cent recorded in the previous week. The previous high of 4.4 per cent was recorded for the week ended July 28, 2007, while the annual rate of inflation a year ago was 6.69 per cent. The Government has also revised the inflation rate for the week ended December 14, 2007, to 3.89 per cent from 3.75 per cent reported earlier. Among the items of common consumption, the wholesale price of salt moved by five per cent during the week, while maize, moong, wheat, bajra and bakery products also became dearer. Although the index that reflects the prices of fuel remained unchanged, thanks to the Government not affecting any hike in fuel prices, the manufactured items and minerals became costlier during the week. Price hike was witnessed also in the case of toilet soaps and industrial inputs like caustic soda, synthetic rubber, limestone and iron ore.

The inflation data point out that the index of food items (within the primary articles category) rose by 0.2 per cent over the previous week due to higher prices of maize (three per cent) and moong, wheat, spices and bajra (one per cent each). However, prices of barley declined by one per cent.

The index of non-food articles rose by 0.5 per cent due to increase in prices of cotton (two per cent), castor and groundnut seeds (one per cent each). The group index of minerals moved up by 2.1 per cent due to higher prices of gypsum (62 per cent), limestone (14 per cent), fire clay (10 per cent) and iron ore (one per cent).

Nabard Sanctions Rs 144.33 Cr Loan To Kerala

The National Bank for Agriculture and Rural Development (Nabard) has approved Rs 144.33 crore for 63 projects from its Rural Infrastructure Development Fund XIII (RIDF- XIII) to Kerala. This includes funding for the implementation of the Chamravattom multipurpose project, which would involve a loan of Rs 95.12 crore, by the water resources department in Malappuram district across Bharathapuzha river.

The project, on completion, is expected to benefit an area of 3,235 hectares ensuring availability of sufficient water for rice cultivation, controlling the intrusion of saline water into the upstream side of the regulator and ensuring availability of assured water for drinking purpose. As many as 16 villages, with a total population of around 43,000, are expected to get direct benefits. The project is also expected to reduce the distance between Kozhikode and Ernakulam by 40 km. The bank has also sanctioned an RIDF loan of Rs 35.44 crore for the construction of 13 rural roads, which include a tourism road, and three bridges.

WB, OECD Won't Get To Rate Co Governance

NEW DELHI: In what is being seen as a move to protect the Indian corporates from criticism on the global arena, the government has said it would not allow either the World Bank or the Organisation for Economic Cooperation and Development (OECD) to rate corporate governance of Indian companies on the parameters set by them.

The norms adopted by these international bodies are best suited to the developed countries and not for countries like India which are still catching up with such practises, the government has argued.

If the World Bank is allowed to rate the Indian corporate about corporate governance, industry representatives feel, it would have dented the image of companies like IOC, Gail, Bhel, NTPC and a number of private players.

“We have told the World Bank and the OECD team that they would be allowed to rate the Indian enterprises for their implementation of corporate governance practises only if the world bodies would take the parameters set by the Government of India for the rating purpose,” a ministry of heavy industries and public enterprises official said.

The protective step has been taken by the government despite the fact that stock market regulator SEBI has made it mandatory for all the listed companies to have 50% of the board members as independent directors with an aim to ensure effective corporate governance practises. The government, however, has mandated that all the central public sector enterprises (CPSEs) should fill at least 33% of their board seats with Independent directors.

Industry observers feel the governments move is aimed towards saving the face of India’s top-notch companies like IOC, ONGC and Gail among others that are short on many parameters of corporate governance –– not on those set by SEBI or the World Bank but even on those set by the department of public enterprises (DPE).

The government has, however, started taking the matter seriously and even pointed out that the navratna and mini-ratna status of the CPSEs can be taken away if they do not adhere to the set norms. This would result in the companies losing lots of financial and administrative powers and more government interference in their decision making.

It is also set to make the prescribed norms for corporate governance mandatory for all the CPSEs from next fiscal. SEBI has recently found over half a dozen listed CPSEs (out of the total 41) violating the corporate governance norms. The situation for the private sector and the unlisted companies are much worse.