A month after the deadly blast in its Kabul mission which was accredited to Pakistani secret service agencies, New Delhi Aug 4 declared an additional $450 million package for development and reconstruction of the war-ravaged Afghanistan. In making this declaration after his talks with the visiting Afghan President, Hamid Karzai, Prime Minister Dr Manmohan Singh attempted to send a firm message to Islamabad that India would continue to pursue its relations with and support Kabul. The two leaders said their negotiations were being held against the backdrop of serious threat posed by terrorism to security and stability of Afghanistan, India and the region.
Showing posts with label NEW DELHI. Show all posts
Showing posts with label NEW DELHI. Show all posts
Tuesday, August 5, 2008
Saturday, August 2, 2008
India Must Devise Its Own Ways To Combat Inflation - Aug 02 , 2008
NEW DELHI: A policy, it’s been noted, is but a temporary creed that’s liable to be changed. And while the policy holds, it could be opined, it has to be pursued with apostolic zeal.
Consider, for instance, the latest monetary policy stance and the upward revision, yet again, of the key policy rate and reserve ratio. It’s clear that the policy design is very much as per the book. More specifically, it’s in line with the determinants of monetary policy that has come to be labelled as the Taylor rule. But should the Taylor rule be applied rather mechanistically in the Indian context? It may well have untoward, multi-year consequences.
Now, the Taylor rule in the domain of monetary policy posits that when a shock causes a shift in the inflation rate, the central bank needs to alter (read rev up) the nominal interest rate by more than one-for-one. The idea is to see to it that real interest rates move in the ‘right direction’, so as to restore price stability and sooner rather than later.
The objective of course is to ‘anchor’ expectations of inflation in the medium-term and beyond, and to policy-induce stable growth in a general scenario of only modest price rises across the board.
The weekly figures do suggest that the wholesale price index, close to 12% on a year-on-year basis, has hit 13-year highs. It is another matter that using the y-o-y WPI figure as the operative number for policy purposes can be problematic. It’s not done abroad. Keeping tab of producer price increases can be relatively easy, but there can be much yo-yoing because of seasonal and base effects in y-o-y estimates.
Next, buoyant commodity prices, be it minerals, metals or oil, can disproportionately affect wholesale prices. Be that as it may, the three-year moving average figure for the WPI is now a shade over 7%. Also, the latest data for most consumer price indices peg the inflation rate above the 7% mark. In tandem, the Reserve Bank of India has hiked the repo rate, the rate at which the RBI lends short-term to banks, to 9%. Additionally, the cash reserve ratio for the banking system is to be likewise raised.
However, it needs to be asked whether mechanically applying the Taylor rule makes policy sense. Such rules can doubtless serve as useful benchmarks for the conduct of monetary policy. The real world is surely far too complicated. Monetary policy, of course, ought to aim at maintaining price stability. But the fact remains that the extant inflationary trend is to a large extent supply induced, and especially driven by global commodity price increases.
As the RBI policy review says, on a y-o-y basis about 30% of headline WPI inflation is contributed by minerals oils... It adds that prices of manufactured products have contributed nearly 50% of headline inflation mainly on account of food products, metals and chemicals. And further that primary articles have contributed about a fifth of headline inflation, mainly driven by prices of oilseeds, raw cotton and the like. It’s a moot point whether domestic monetary tightening would by itself bring down headline inflation. More likely that a by and large normal monsoon would dampen the price trend. It is after all hardening import prices, be it of minerals, steel or oilseeds, that are shoring up prices.
Besides, it’s entirely possible that the higher policy rate would jack up interest rates all round. The dearer cost of funds may well affect investment demand and stultify capacity addition, for years. It may not be evident in the immediate period in terms of growth figures. But the quite needless economic damage would nevertheless have been done, thanks to warped policy design.
It is true that there has been the remarkable improvement in both price and output stability observed in the mature economies in the years following the early 1980s. It is also true that the frequency and severity of economic downturns abroad have clearly declined sharply, as has the inflation rate. In parallel, a perceptible shift in the responsiveness of monetary policy did occur at the same time—circa early 1980s. Note that central banks, reflecting much greater focus on inflation, have, generally speaking, been adjusting their policy interest rates in response to inflation by larger amounts and also more readily.
But quite contrary to what dyed-in-the-wool monetarists would have us believe, monetary policy may not have played a particularly large role in achieving the macroeconomic results abroad, sterling though they have been. There’s been much microeconomic change, opening up and reform the world over. It seems quite unlikely that globalisation has played only a minor role in keeping price rises low.
In tandem, there has been much diffusion of information technology and the like that would doubtless have revved up productivity and lowered costs. In any case, just because there has been a seemingly important shift in monetary policy in the mature markets, we need not follow mechanically. Given the weak, underdeveloped financial markets and the poor monetary transmission mechanism here, it’s all the more reason not to do so. Abroad, monetarism is not even considered state-of-the-art, for years. Yet we seem to lap up the monetary-policy equivalent of bell-bottoms.
Consider, for instance, the latest monetary policy stance and the upward revision, yet again, of the key policy rate and reserve ratio. It’s clear that the policy design is very much as per the book. More specifically, it’s in line with the determinants of monetary policy that has come to be labelled as the Taylor rule. But should the Taylor rule be applied rather mechanistically in the Indian context? It may well have untoward, multi-year consequences.
Now, the Taylor rule in the domain of monetary policy posits that when a shock causes a shift in the inflation rate, the central bank needs to alter (read rev up) the nominal interest rate by more than one-for-one. The idea is to see to it that real interest rates move in the ‘right direction’, so as to restore price stability and sooner rather than later.
The objective of course is to ‘anchor’ expectations of inflation in the medium-term and beyond, and to policy-induce stable growth in a general scenario of only modest price rises across the board.
The weekly figures do suggest that the wholesale price index, close to 12% on a year-on-year basis, has hit 13-year highs. It is another matter that using the y-o-y WPI figure as the operative number for policy purposes can be problematic. It’s not done abroad. Keeping tab of producer price increases can be relatively easy, but there can be much yo-yoing because of seasonal and base effects in y-o-y estimates.
Next, buoyant commodity prices, be it minerals, metals or oil, can disproportionately affect wholesale prices. Be that as it may, the three-year moving average figure for the WPI is now a shade over 7%. Also, the latest data for most consumer price indices peg the inflation rate above the 7% mark. In tandem, the Reserve Bank of India has hiked the repo rate, the rate at which the RBI lends short-term to banks, to 9%. Additionally, the cash reserve ratio for the banking system is to be likewise raised.
However, it needs to be asked whether mechanically applying the Taylor rule makes policy sense. Such rules can doubtless serve as useful benchmarks for the conduct of monetary policy. The real world is surely far too complicated. Monetary policy, of course, ought to aim at maintaining price stability. But the fact remains that the extant inflationary trend is to a large extent supply induced, and especially driven by global commodity price increases.
As the RBI policy review says, on a y-o-y basis about 30% of headline WPI inflation is contributed by minerals oils... It adds that prices of manufactured products have contributed nearly 50% of headline inflation mainly on account of food products, metals and chemicals. And further that primary articles have contributed about a fifth of headline inflation, mainly driven by prices of oilseeds, raw cotton and the like. It’s a moot point whether domestic monetary tightening would by itself bring down headline inflation. More likely that a by and large normal monsoon would dampen the price trend. It is after all hardening import prices, be it of minerals, steel or oilseeds, that are shoring up prices.
Besides, it’s entirely possible that the higher policy rate would jack up interest rates all round. The dearer cost of funds may well affect investment demand and stultify capacity addition, for years. It may not be evident in the immediate period in terms of growth figures. But the quite needless economic damage would nevertheless have been done, thanks to warped policy design.
It is true that there has been the remarkable improvement in both price and output stability observed in the mature economies in the years following the early 1980s. It is also true that the frequency and severity of economic downturns abroad have clearly declined sharply, as has the inflation rate. In parallel, a perceptible shift in the responsiveness of monetary policy did occur at the same time—circa early 1980s. Note that central banks, reflecting much greater focus on inflation, have, generally speaking, been adjusting their policy interest rates in response to inflation by larger amounts and also more readily.
But quite contrary to what dyed-in-the-wool monetarists would have us believe, monetary policy may not have played a particularly large role in achieving the macroeconomic results abroad, sterling though they have been. There’s been much microeconomic change, opening up and reform the world over. It seems quite unlikely that globalisation has played only a minor role in keeping price rises low.
In tandem, there has been much diffusion of information technology and the like that would doubtless have revved up productivity and lowered costs. In any case, just because there has been a seemingly important shift in monetary policy in the mature markets, we need not follow mechanically. Given the weak, underdeveloped financial markets and the poor monetary transmission mechanism here, it’s all the more reason not to do so. Abroad, monetarism is not even considered state-of-the-art, for years. Yet we seem to lap up the monetary-policy equivalent of bell-bottoms.
Wednesday, July 23, 2008
Trust Vote Victory To Help Govt Expedite Reforms In Key Sectors - July 23 , 2008
NEW DELHI: Armed with a convincing victory in the confidence vote, the UPA government is now set to fast-track economic liberalisation onto a new trajectory with finance minister P Chidambaram attaching top priority to reforms in banking, pension sector and capital markets.
Streamlining of the commodities market and facilitating merger of State Bank of India’s subsidiaries with the parent bank are also high on the agenda. Disinvestment and hike in foreign direct investment (FDI) ceiling in the insurance sector are other areas shortlisted by the finance minister.
The Banking Regulation (Amendment) Bill is likely to be introduced in Parliament during the forthcoming monsoon session. This bill is to allow foreign investors to have voting rights in banks in proportion with their equity holding , rather than being capped at 10% now.
It is felt that liberalisation in these areas should be put on the fast track to make up for lost time now that the Left (which was blocking most of these reforms) is out of the picture. The new allies of the UPA like the Samajwadi Party would support these moves and there is no time to lose, top government managers feel. While containing infla-tion would be the key priority , these reform initiatives have got a shot in the arm with the government’s victory in the trust vote.
Streamlining of the commodities market and facilitating merger of State Bank of India’s subsidiaries with the parent bank are also high on the agenda. Disinvestment and hike in foreign direct investment (FDI) ceiling in the insurance sector are other areas shortlisted by the finance minister.
The Banking Regulation (Amendment) Bill is likely to be introduced in Parliament during the forthcoming monsoon session. This bill is to allow foreign investors to have voting rights in banks in proportion with their equity holding , rather than being capped at 10% now.
It is felt that liberalisation in these areas should be put on the fast track to make up for lost time now that the Left (which was blocking most of these reforms) is out of the picture. The new allies of the UPA like the Samajwadi Party would support these moves and there is no time to lose, top government managers feel. While containing infla-tion would be the key priority , these reform initiatives have got a shot in the arm with the government’s victory in the trust vote.
Saturday, July 19, 2008
Fitch's Downgrade Not Worrisome - July 19 , 2008
NEW DELHI: Finance minister P Chidambaram on Friday downplayed the lowering of India’s credit outlook by global rating agency Fitch, saying it is not a cause of worry as economic fundamentals are strong.
“One rating agency has revised the outlook from stable to negative. I do not think that should cause us too much worry. We must look at fundamentals which I believe are still strong, but facing difficulties. I do not think we should worry about outlook,” he said.
Fitch had earlier this week revised the local currency outlook of India to negative from stable because of fiscal pressures.
Distinguishing between a rating and outlook, he said what Fitch has done is to take one step down on the outlook from stable to negative, but the rating remains the same for the country.
“What is outlook? Outlook is simply a view of the future. This is based on the context of the world economy and the Indian economy. Outlook can easily change in a month or two. If the objective conditions change, outlook can also change,” he said.
Mr Chidambaram said when this government came into office, many of the rating agencies have a negative outlook, but they changed it to stable and one or two even to positive. He, however, said change in ratings would have have an impact on interest rates. On fiscal concerns raised by Fitch, he said fiscal deficit targets given in the Budget would be met this fiscal.
“I have said every year. Nobody believed me during the year, but at the end of the year we have not only met (Budget deficit) targets but bettered them also. Even for 2007-08, the actuals are better than the revised estimates. This year also the Budget deficit would be met,” he said. The minister said Fitch and others were talking about off-Budget numbers. “These numbers are off-Budget because we do not have the money to provide for them in the Budget,” he said.
Many analysts have been saying that the deficit numbers would have been much larger had the government included expenditures like oil and fertiliser bonds in its estimates of fiscal deficit.
On deteriorating fiscal position of the Centre, rating agency Fitch earlier this week had revised the outlook on India’s long-term local currency issuer default rating of India, while retaining the rating at BBB-, which indicates low credit risk.
“The revision to the local currency outlook is based on the considerable deterioration in the central government’s fiscal position in 2008-09, combined with noticeable increase in government debt issuance to finance subsidies not captured in the Budget,” James McCormack, Asia Head of Sovereign Rating, Fitch, had said.
Lowering by Fitch would in normal times would have impact only on rupee-denominated securities, but in the present uncertain times it would also have some effect on interest rates on external commercial borrowings, stock markets and bonds, analysts had said.
Another global rating agency Standard and Poor’s had also said last week that it might downgrade India’s sovereign ratings if the country’s rising inflation, widening fiscal deficit and political instability continue in longer-term.
Fitch had said the central government’s deficit may increase from 2.8 per cent of GDP in 2007-08 to 4.5 per cent in the current year on account of higher on-Budget subsidies, interest payments and salary bill of government employees.
Fitch expects bonds issued to fertiliser and oil firms may reach 2 per cent of GDP, implying “an underlying central government’s deficit of 6.5 per cent of GDP or higher”.
Future rating actions, said McCormack, would depend upon whether the fiscal slippage in 2008-09 is reversed, leading to resumption of decline in India’s high government debt ratios.
The rating agency said higher oil prices have raised India’s oil import bill dramatically over the past three years and merchandise trade deficit, which was equivalent to 7.7 per cent of GDP in 2008-09.
“One rating agency has revised the outlook from stable to negative. I do not think that should cause us too much worry. We must look at fundamentals which I believe are still strong, but facing difficulties. I do not think we should worry about outlook,” he said.
Fitch had earlier this week revised the local currency outlook of India to negative from stable because of fiscal pressures.
Distinguishing between a rating and outlook, he said what Fitch has done is to take one step down on the outlook from stable to negative, but the rating remains the same for the country.
“What is outlook? Outlook is simply a view of the future. This is based on the context of the world economy and the Indian economy. Outlook can easily change in a month or two. If the objective conditions change, outlook can also change,” he said.
Mr Chidambaram said when this government came into office, many of the rating agencies have a negative outlook, but they changed it to stable and one or two even to positive. He, however, said change in ratings would have have an impact on interest rates. On fiscal concerns raised by Fitch, he said fiscal deficit targets given in the Budget would be met this fiscal.
“I have said every year. Nobody believed me during the year, but at the end of the year we have not only met (Budget deficit) targets but bettered them also. Even for 2007-08, the actuals are better than the revised estimates. This year also the Budget deficit would be met,” he said. The minister said Fitch and others were talking about off-Budget numbers. “These numbers are off-Budget because we do not have the money to provide for them in the Budget,” he said.
Many analysts have been saying that the deficit numbers would have been much larger had the government included expenditures like oil and fertiliser bonds in its estimates of fiscal deficit.
On deteriorating fiscal position of the Centre, rating agency Fitch earlier this week had revised the outlook on India’s long-term local currency issuer default rating of India, while retaining the rating at BBB-, which indicates low credit risk.
“The revision to the local currency outlook is based on the considerable deterioration in the central government’s fiscal position in 2008-09, combined with noticeable increase in government debt issuance to finance subsidies not captured in the Budget,” James McCormack, Asia Head of Sovereign Rating, Fitch, had said.
Lowering by Fitch would in normal times would have impact only on rupee-denominated securities, but in the present uncertain times it would also have some effect on interest rates on external commercial borrowings, stock markets and bonds, analysts had said.
Another global rating agency Standard and Poor’s had also said last week that it might downgrade India’s sovereign ratings if the country’s rising inflation, widening fiscal deficit and political instability continue in longer-term.
Fitch had said the central government’s deficit may increase from 2.8 per cent of GDP in 2007-08 to 4.5 per cent in the current year on account of higher on-Budget subsidies, interest payments and salary bill of government employees.
Fitch expects bonds issued to fertiliser and oil firms may reach 2 per cent of GDP, implying “an underlying central government’s deficit of 6.5 per cent of GDP or higher”.
Future rating actions, said McCormack, would depend upon whether the fiscal slippage in 2008-09 is reversed, leading to resumption of decline in India’s high government debt ratios.
The rating agency said higher oil prices have raised India’s oil import bill dramatically over the past three years and merchandise trade deficit, which was equivalent to 7.7 per cent of GDP in 2008-09.
Saturday, July 12, 2008
Inflation Nears 12% As Fuel Costs Rise - July 12, 2008
NEW DELHI: Cost of living, already at a 13-year peak, is rising again, ruling out any chances that the central bank may soften monetary policy to boost slackening industrial output.
Annual inflation, based on wholesale price index (WPI), climbed further to 11.89% in the week ended June 28, outpacing the previous week’s 11.63% and 4.42% during the corresponding week of the previous year.
The government also sharply revised the inflation figure for the week ended May 3 by 0.9% to 8.73% as compared to the provisional data of 7.83%. This suggests that inflation may be currently close to 13%, forcing RBI to further tighten monetary policy at its review later this month, economists said. The unabated rise in the cost of living is now proving to be a major nightmare for the ruling coalition, which is set to face assembly polls in six states later this year and general elections next year.
The latest spurt in inflation is fanned by costlier food items and manufactured items as the second-round effect of price increase in auto fuel percolated into the economy. Food items like fruits and vegetables, cooking oil, textiles, fertilisers, pesticides and telephone instruments became costlier during the week.
Annual inflation, based on wholesale price index (WPI), climbed further to 11.89% in the week ended June 28, outpacing the previous week’s 11.63% and 4.42% during the corresponding week of the previous year.
The government also sharply revised the inflation figure for the week ended May 3 by 0.9% to 8.73% as compared to the provisional data of 7.83%. This suggests that inflation may be currently close to 13%, forcing RBI to further tighten monetary policy at its review later this month, economists said. The unabated rise in the cost of living is now proving to be a major nightmare for the ruling coalition, which is set to face assembly polls in six states later this year and general elections next year.
The latest spurt in inflation is fanned by costlier food items and manufactured items as the second-round effect of price increase in auto fuel percolated into the economy. Food items like fruits and vegetables, cooking oil, textiles, fertilisers, pesticides and telephone instruments became costlier during the week.
Wednesday, March 26, 2008
Govt Staff To Get Effective Salary Hike Of 28%
New Delhi: The Sixth Pay Commission may have recommended an average 40 per cent hike in the salaries of government employees, but the effective increase will be much less at 28 per cent on account of merger of 50 per cent DA in basic pay way back in 2004.
After submitting the report, the Commission Chairman justice B N Srikrishna had said the average increase in salaries would work out to be 40 per cent over the Fifth Pay Commission award.
The government had merged 50 per cent of the Dearness Allowance (DA) with the basic pay with effect from January 1, 2004.This accordingly puts the basic pay at much higher level than that was provided in the Fifth Pay Commission and the effective increase over that level is 28 per cent, a top Commission official said.
The government increase the DA of its employees every six months to compensate them for rising cost of living. Among other things, the Sixth Pay Commission has also suggested that the government should revise the base year of the Consumer Price Index (CPI) for computation of DA "as frequently as feasible". It further recommended that a separate CPI should be prepared by the National Statistical Commission for computation of DA for government employees
After submitting the report, the Commission Chairman justice B N Srikrishna had said the average increase in salaries would work out to be 40 per cent over the Fifth Pay Commission award.
The government had merged 50 per cent of the Dearness Allowance (DA) with the basic pay with effect from January 1, 2004.This accordingly puts the basic pay at much higher level than that was provided in the Fifth Pay Commission and the effective increase over that level is 28 per cent, a top Commission official said.
The government increase the DA of its employees every six months to compensate them for rising cost of living. Among other things, the Sixth Pay Commission has also suggested that the government should revise the base year of the Consumer Price Index (CPI) for computation of DA "as frequently as feasible". It further recommended that a separate CPI should be prepared by the National Statistical Commission for computation of DA for government employees
Govt To Sell 5-Pc Stake In Mini-Ratna Cos
New Delhi: The government is looking at offloading its stake in about half-a-dozen listed mini-ratna companies including MMTC, STC, ConCOR and Shipping Corporation of India (SCI). The government has decided to sell 5 per cent in these companies through follow-on public offers.
A stake sale in MMTC alone is likely to bring in about Rs 5,000 crore. At present, MMTC is trading at around Rs 19,452 on the Bombay Stock Exchange (BSE). MMTC''s market capitalisation is hovering at around Rs 1 lakh crore, the maximum among all listed mini-ratnas. The proposed stake sale in the mini-ratnas would fetch the government about Rs 7,000 crore. The money raised would be used to fund the government''s social sector programmes. Mini-ratnas have been identified for raising funds as allied Left parties are against dilution of the government''s stakes in navratnas.
According to an official estimate, a 5% equity divestment in Bharat Electronics (BEL), Container Corporation (ConCOR) and Shipping Corporation of India (SCI) would fetch Rs 500 crore, Rs 500 crore and Rs 300 crore respectively. ConCOR is trading at Rs 1,636 per share, STC at around Rs 360, SCI at Rs 195 and BEL at around Rs 1,194 on the BSE. Proceeds from the stake sale in State Trading Corporation (STC) are expected to fetch not more than Rs 54 crore at the current market value. The government is also considering stake sale in the Neyvelli Lignite Corporation (NLC). The stake sale in these companies is expected to help the government fund the proposed Rs 60,000-crore farm loan-waiver, said the source.
A stake sale in MMTC alone is likely to bring in about Rs 5,000 crore. At present, MMTC is trading at around Rs 19,452 on the Bombay Stock Exchange (BSE). MMTC''s market capitalisation is hovering at around Rs 1 lakh crore, the maximum among all listed mini-ratnas. The proposed stake sale in the mini-ratnas would fetch the government about Rs 7,000 crore. The money raised would be used to fund the government''s social sector programmes. Mini-ratnas have been identified for raising funds as allied Left parties are against dilution of the government''s stakes in navratnas.
According to an official estimate, a 5% equity divestment in Bharat Electronics (BEL), Container Corporation (ConCOR) and Shipping Corporation of India (SCI) would fetch Rs 500 crore, Rs 500 crore and Rs 300 crore respectively. ConCOR is trading at Rs 1,636 per share, STC at around Rs 360, SCI at Rs 195 and BEL at around Rs 1,194 on the BSE. Proceeds from the stake sale in State Trading Corporation (STC) are expected to fetch not more than Rs 54 crore at the current market value. The government is also considering stake sale in the Neyvelli Lignite Corporation (NLC). The stake sale in these companies is expected to help the government fund the proposed Rs 60,000-crore farm loan-waiver, said the source.
M.P. Annual Plan Set At Rs 14,182.61 Cr
New Delhi: The annual Plan of Madhya Pradesh for 2008-09 has been set at Rs 14,182.61 crore, inclusive of one-time additional Central Assistance of Rs 150 crore for projects of special interest to the State. This was agreed on March 25 at a meeting between the Deputy Chairman, Planning Commission, Mr Montek Singh Ahluwalia, and the Madhya Pradesh Chief Minister, Mr Shivraj Singh Chouhan.
Mr Ahluwalia said the State needs to devote more attention on human development. Social sector needs priority and efforts should be aimed at improving human development index with policy initiatives for creating investor-friendly environment. He said the State Government should avail itself of benefits available under various social sector schemes. Mr Chouhan informed the Commission that thrust areas of development policy would be eliminating hunger, malnutrition and poverty. Livelihood opportunity would be created through generating economic activities based on natural resources. A number of new initiatives have been taken to improve social protection. These include Mukhya Mantri Mazdoor Suraksha Yojana, integrated livelihood programme and Din Dayal Antodya Upchar Yojana.
Mr Ahluwalia said the State needs to devote more attention on human development. Social sector needs priority and efforts should be aimed at improving human development index with policy initiatives for creating investor-friendly environment. He said the State Government should avail itself of benefits available under various social sector schemes. Mr Chouhan informed the Commission that thrust areas of development policy would be eliminating hunger, malnutrition and poverty. Livelihood opportunity would be created through generating economic activities based on natural resources. A number of new initiatives have been taken to improve social protection. These include Mukhya Mantri Mazdoor Suraksha Yojana, integrated livelihood programme and Din Dayal Antodya Upchar Yojana.
Tuesday, March 25, 2008
India Inc Hails 6th Pay Commission Report
New Delhi: India Inc has welcomed the Sixth Pay Commission report that suggested an average increase of 40 per cent in salaries of central government employees and said the move will not lead to a rise in inflation and revenue deficit of the government.
Industry body Ficci said the pay hike would not add to inflationary conditions and revenue deficit due to buoyant revenue collections.
"The revenue collections and the overall economy is growing. If these trends are kept intact, then this additional expenditure should not be too much of a problem," Ficci Secretary General Amit Mitra said.Echoing similar sentiments, Assocham said increase in salaries would not fuel inflation and increase revenue deficit as the country is witnessing increased direct and indirect tax collections as a result of higher tax compliance.
"The government is going to witness substantial hike in its revenue collections, benefits of which ought to be given to its employees and there should be no grudge against such pay commissions recommendations," Assocham President Venugopal Dhoot said.
Assocham said the move would make the central government employees more accountable, productive and responsive as the exchequer would shed Rs 12,561 crore in 2008-09 itself on account of higher package.
Also, Ficci said the hike would reduce the problem of governance and attract talented personnel, besides making the employees more responsible.
The Sixth Pay Commission submitted its report to Finance Minister P Chidambaram recommending implementation of the revised pay from January 1, 2006, which would impose an arrear payout burden of Rs 18,060 crore on the government.
Industry body Ficci said the pay hike would not add to inflationary conditions and revenue deficit due to buoyant revenue collections.
"The revenue collections and the overall economy is growing. If these trends are kept intact, then this additional expenditure should not be too much of a problem," Ficci Secretary General Amit Mitra said.Echoing similar sentiments, Assocham said increase in salaries would not fuel inflation and increase revenue deficit as the country is witnessing increased direct and indirect tax collections as a result of higher tax compliance.
"The government is going to witness substantial hike in its revenue collections, benefits of which ought to be given to its employees and there should be no grudge against such pay commissions recommendations," Assocham President Venugopal Dhoot said.
Assocham said the move would make the central government employees more accountable, productive and responsive as the exchequer would shed Rs 12,561 crore in 2008-09 itself on account of higher package.
Also, Ficci said the hike would reduce the problem of governance and attract talented personnel, besides making the employees more responsible.
The Sixth Pay Commission submitted its report to Finance Minister P Chidambaram recommending implementation of the revised pay from January 1, 2006, which would impose an arrear payout burden of Rs 18,060 crore on the government.
Monday, March 24, 2008
Punjab Villages Sanctioned Rs 55.86 Cr Under Rajiv Gandhi Grameen Yojna
New Delhi/ Chandigarh: The Rural Electrification Corporation (REC) has approved a sum of Rs 55.86 crore to accomplish diverse developmental activities including release of new domestic connections to people living below the poverty line, erection of 11 KV lines and aerial bunched cable, installation of new distribution transformers and distribution transformer meters in the villages of Panchkula, Ambala, Yamuna Nagar, Kurukshetra, Kaithal, Jind and Jhajjar under the Rajiv Gandhi Grameen Vidyutikaran Yojna.
The Uttar Haryana Bijli Vitran Nigam said almost 30 per cent of the sanctioned amount will be released shortly. The Nigam will embark on implementation of the work and apprise the activities and achievements to the quarters concerned. 90 percent of the total sanctioned amount will be financial assistance in the shape of grant to the Nigam as per salient features of the scheme. As many as 60,961 new domestic connections will be released to BPL and 1282 km. long 11 kv lines will be erected. The spokesman further stated that the REC had already sanctioned Rs. 48.48 crore for district Rohtak, Karnal, Panipat and Sonipat to implement the RGGVY.
The Uttar Haryana Bijli Vitran Nigam said almost 30 per cent of the sanctioned amount will be released shortly. The Nigam will embark on implementation of the work and apprise the activities and achievements to the quarters concerned. 90 percent of the total sanctioned amount will be financial assistance in the shape of grant to the Nigam as per salient features of the scheme. As many as 60,961 new domestic connections will be released to BPL and 1282 km. long 11 kv lines will be erected. The spokesman further stated that the REC had already sanctioned Rs. 48.48 crore for district Rohtak, Karnal, Panipat and Sonipat to implement the RGGVY.
Long-Term Solution To Rising Prices Not In Sight
New Delhi: Soaring prices of vegetables and fruits are increasing the heat for the common man in the midst of the summers largely due to constrained supply, and the experts feel that a long-term solution is still elusive.
More than half the fruits and vegetables in the wholesale markets in Delhi have recorded rise of up to 100 per cent and the effect could be more when it comes to retail prices. According to data compiled by Delhi Agricultural and Marketing Board for 48 fruits and vegetables, coriander prices have more than doubled to Rs 800 per quintal during the month ended March 20, while sweet pumpkin was being sold at Rs 850 a quintal compared to Rs 325 a month ago. However, there was some respite for the common man with prices of potato dropping to Rs 250 from Rs 413 a quintal, while Tomato was being sold at Rs 560, down from Rs 720, at the Azadpur market.
Marketmen said the retail prices of vegetables are usually more than double the rate being charged in the wholesale market, but added that arrival of vegetables is sure to improve in the next few weeks and ease the pressure. The rates of milk and dairy products, pulses, cereals, foodgrain and edible oil have shown an upward trend, prompting the government policy makers to take some immediate decisions like cutting down import duty on edible oil and rice to increase the domestic availability.
"The recent measures announced by the government to augment food supply would bring an immediate relief. But the pressure would still remain," Mumbai-based rating agency Crisil Principal Economist D K Joshi said. The rate of inflation has reached a whopping 5.92 per cent, mainly due to rise in the prices of food articles. With the inflation racing to nearly a year''s high at about six per cent, the supply side management would hold the key to check prices, Joshi said, adding that the consumers may have to pay more for food items because prices would continue to rise, with global food stocks coming to a 20-year low. Commenting on the global situation, Agriculture Minister Sharad Pawar recently said that India imported wheat at about $100-110 a tonne last year but the international prices have now nearly quadrupled.
More than half the fruits and vegetables in the wholesale markets in Delhi have recorded rise of up to 100 per cent and the effect could be more when it comes to retail prices. According to data compiled by Delhi Agricultural and Marketing Board for 48 fruits and vegetables, coriander prices have more than doubled to Rs 800 per quintal during the month ended March 20, while sweet pumpkin was being sold at Rs 850 a quintal compared to Rs 325 a month ago. However, there was some respite for the common man with prices of potato dropping to Rs 250 from Rs 413 a quintal, while Tomato was being sold at Rs 560, down from Rs 720, at the Azadpur market.
Marketmen said the retail prices of vegetables are usually more than double the rate being charged in the wholesale market, but added that arrival of vegetables is sure to improve in the next few weeks and ease the pressure. The rates of milk and dairy products, pulses, cereals, foodgrain and edible oil have shown an upward trend, prompting the government policy makers to take some immediate decisions like cutting down import duty on edible oil and rice to increase the domestic availability.
"The recent measures announced by the government to augment food supply would bring an immediate relief. But the pressure would still remain," Mumbai-based rating agency Crisil Principal Economist D K Joshi said. The rate of inflation has reached a whopping 5.92 per cent, mainly due to rise in the prices of food articles. With the inflation racing to nearly a year''s high at about six per cent, the supply side management would hold the key to check prices, Joshi said, adding that the consumers may have to pay more for food items because prices would continue to rise, with global food stocks coming to a 20-year low. Commenting on the global situation, Agriculture Minister Sharad Pawar recently said that India imported wheat at about $100-110 a tonne last year but the international prices have now nearly quadrupled.
Friday, March 21, 2008
Rice, Edible Oil Duties Cut To Tame Inflation
NEW DELHI: Call it operation attack inflation. With the inflation inching towards 6% mark, the government on Thursday slashed Customs duty on edible oils and rice to contain their prices in the domestic market. While the Customs duty on rice has been slashed to nil from 70%, duty on all crude and refined edible oil imports has been substantially reduced from the current level of 52-75% to 20% and 27.5% respectively.
The steps follow finance minister P Chidambaram’s assurance to Parliament on Monday that the government will take every step, including fiscal measures, to contain inflation.
“The government has been keeping a close watch on the domestic and international prices of essential commodities, particularly food items such as wheat, rice, pulses and edible oils to keep inflation under check. It has also taken appropriate fiscal measures from time to time to achieve the objective,” an official statement said here.
With the duty rejig, semi-milled or wholly-milled rice imports would attract nil Customs duty instead of 70%. The duty exemption would be available till March 31, 2009. It may be pointed out that the international prices of rice have increased sharply from $430 in August 2007 to $590 in February 2008. Moreover, domestic retail price in Delhi markets increased from Rs 15 to Rs 18 per kg over the period.
The duty reduction will help in cushioning the domestic prices of the commodities from the rise in prices internationally. Scrapping the import duty would not make an impact unless the government allows private traders to import rice directly. As of now, imports are canalised through state trading agencies like MMTC. For prices to come down, rice should be shifted to the free list of imports, industry sources said. Vietnam and Myanmar could be sources of cheaper rice (25% brokens) for the domestic market as freight would also be cheap for those importing rice through ports like Kolkata, they added.
The Customs duty on crude palm oil including crude palmolein has been reduced from 45% to 20%, refined palm oil including RBD palmolein from 52.5% to 27.5%, crude mustard/rapeseed/colza/canola oils from 75% to 20% and crude sunflower oil from 40% to 20%. Import duty on refined mustard/rapeseed/colza/ canola oils has been brought down from 75% to 27.5% and refined sunflower oil from 50% to 27.5%.
Besides, tariff values of crude palm oil ($447 PMT), RBD palm oil ($476 PMT), crude palmolein ($481 PMT) and RBD Palmolein ($484 PMT) have been frozen at July 2006 levels.
Owing to a surge in demand, international prices of edible oils have continued to exhibit a sharp and steady upward trend in recent months. For instance, the international price of crude palm oil (fob Malaysia) has increased from $770 PMT in the last week of August 2007 to $1,220 PMT in the last week of February 2008.
During the period, the international price of sunflower oil (cif Rotterdam) has increased from $947 to $1695 PMT, an increase of 79%.
The domestic prices also have been feeling the heat and, despite two rounds of reductions in Customs duties on palm oil in April 2007 by 10 percentage points and again in July 2007 (by 5 percentage points), wholesale prices of RBD palmolein (Mumbai) increased from Rs 4,500 per quintal in August 2007 to Rs 5,820 per quintal in February 2008.
Over the same period, the price of sunflower oil (Mumbai) has increased from Rs 4,900 per quintal to Rs 8,250 per quintal, and of mustard oil (Delhi) from Rs 4,960 per quintal to Rs 6,330 per quintal.
Full exemption from Customs duty is available for wheat. The exemption had been extended beyond the expiry date of December 31,2007, and wheat flour has also been fully exempted from Customs duty.
The steps follow finance minister P Chidambaram’s assurance to Parliament on Monday that the government will take every step, including fiscal measures, to contain inflation.
“The government has been keeping a close watch on the domestic and international prices of essential commodities, particularly food items such as wheat, rice, pulses and edible oils to keep inflation under check. It has also taken appropriate fiscal measures from time to time to achieve the objective,” an official statement said here.
With the duty rejig, semi-milled or wholly-milled rice imports would attract nil Customs duty instead of 70%. The duty exemption would be available till March 31, 2009. It may be pointed out that the international prices of rice have increased sharply from $430 in August 2007 to $590 in February 2008. Moreover, domestic retail price in Delhi markets increased from Rs 15 to Rs 18 per kg over the period.
The duty reduction will help in cushioning the domestic prices of the commodities from the rise in prices internationally. Scrapping the import duty would not make an impact unless the government allows private traders to import rice directly. As of now, imports are canalised through state trading agencies like MMTC. For prices to come down, rice should be shifted to the free list of imports, industry sources said. Vietnam and Myanmar could be sources of cheaper rice (25% brokens) for the domestic market as freight would also be cheap for those importing rice through ports like Kolkata, they added.
The Customs duty on crude palm oil including crude palmolein has been reduced from 45% to 20%, refined palm oil including RBD palmolein from 52.5% to 27.5%, crude mustard/rapeseed/colza/canola oils from 75% to 20% and crude sunflower oil from 40% to 20%. Import duty on refined mustard/rapeseed/colza/ canola oils has been brought down from 75% to 27.5% and refined sunflower oil from 50% to 27.5%.
Besides, tariff values of crude palm oil ($447 PMT), RBD palm oil ($476 PMT), crude palmolein ($481 PMT) and RBD Palmolein ($484 PMT) have been frozen at July 2006 levels.
Owing to a surge in demand, international prices of edible oils have continued to exhibit a sharp and steady upward trend in recent months. For instance, the international price of crude palm oil (fob Malaysia) has increased from $770 PMT in the last week of August 2007 to $1,220 PMT in the last week of February 2008.
During the period, the international price of sunflower oil (cif Rotterdam) has increased from $947 to $1695 PMT, an increase of 79%.
The domestic prices also have been feeling the heat and, despite two rounds of reductions in Customs duties on palm oil in April 2007 by 10 percentage points and again in July 2007 (by 5 percentage points), wholesale prices of RBD palmolein (Mumbai) increased from Rs 4,500 per quintal in August 2007 to Rs 5,820 per quintal in February 2008.
Over the same period, the price of sunflower oil (Mumbai) has increased from Rs 4,900 per quintal to Rs 8,250 per quintal, and of mustard oil (Delhi) from Rs 4,960 per quintal to Rs 6,330 per quintal.
Full exemption from Customs duty is available for wheat. The exemption had been extended beyond the expiry date of December 31,2007, and wheat flour has also been fully exempted from Customs duty.
Govt To Set Up 6,000 Schools With Private Participation
NEW DELHI: The government has fast-tracked its plan to invite private money into schools and hospitals through public-private partnerships (PPP). It has set a target of opening 6,000 well-equipped schools across the country by the beginning of next fiscal.
There would be one school in every block offering classes up to XIIth standard, informed sources told ET.
The proposed schools are expected to change the way education is imparted in the country, particularly in rural areas. “We would want the schools to be a model for others to emulate. We would do everything to provide the best faculty and facilities in the schools. While schools would be set up across the country, there would be an emphasis on rural areas,” a source said.
The ministries of higher education and finance are working on the norms to bring together private sector’s efficiency and the government’s commitment to society. “The corporate sector could contribute in many ways. Under the proposed norms, the corporate sector could partner the government either in offering select facilities in a school or in running it on their own. They may also participate by providing just the physical assets,”a source said.
The norms would promise a decent return on investment for the private players. The scheme would also allow the private partner to leverage the idle assets in government facilities to raise additional revenues and provide better services to students. They would also be entitled to government grants.
To give a boost to the social sector, the government intends spending Rs 34,400 crore in the next fiscal, 20% more that the funds earmarked for the current fiscal. It had also announced in this year’s Union Budget a plan to set up several thousands of high-quality model schools with Rs 650 crore. The government plan is to increase enrolment at the primary level and enhance access to secondary and higher secondary levels.
There would be one school in every block offering classes up to XIIth standard, informed sources told ET.
The proposed schools are expected to change the way education is imparted in the country, particularly in rural areas. “We would want the schools to be a model for others to emulate. We would do everything to provide the best faculty and facilities in the schools. While schools would be set up across the country, there would be an emphasis on rural areas,” a source said.
The ministries of higher education and finance are working on the norms to bring together private sector’s efficiency and the government’s commitment to society. “The corporate sector could contribute in many ways. Under the proposed norms, the corporate sector could partner the government either in offering select facilities in a school or in running it on their own. They may also participate by providing just the physical assets,”a source said.
The norms would promise a decent return on investment for the private players. The scheme would also allow the private partner to leverage the idle assets in government facilities to raise additional revenues and provide better services to students. They would also be entitled to government grants.
To give a boost to the social sector, the government intends spending Rs 34,400 crore in the next fiscal, 20% more that the funds earmarked for the current fiscal. It had also announced in this year’s Union Budget a plan to set up several thousands of high-quality model schools with Rs 650 crore. The government plan is to increase enrolment at the primary level and enhance access to secondary and higher secondary levels.
Central Govt Staff All Set To Get 52% Raise
NEW DELHI: Central government staff and officers, along with their counterparts in defence and paramilitary forces, have a reason to paint the town red on Holi — the Sixth Central Pay Commission is set to hand them a hike of up to 52%, if read along with their house rent allowance (HRA).
The report is likely to be submitted to Finance Minister P Chidambaram by panel chairman Justice B N Srikrishna any day after the festival of colours, possibly as early as Tuesday.
Higher housing and transport allowances may be the icing on the cake, though there could be only a modest hike in city compensatory allowance.
Indications are that a secretary to the government will have a basic salary of Rs 80,000 a month (up from Rs 26,000 with 50% merged dearness pay and 47% DA).
The Cabinet Secretary, the country's seniormost officer, is likely to have a basic of Rs 90,000 (up from Rs 30,000 with 50% merged dearness pay and 47% DA).
As is the practice, the new scales would be effective from January 1, 2006.
The across-the-board hike could be paler compared to the pay commission's fifth edition (1997), the best bounty so far, as the proposed quantum of hike now is a few percentage points (just around 0.40) lower. But the good news is that a government employee could, sources said, now look forward to higher annual increments, besides the regular addition of DA, which is now an annual average of 12%.
There is, however, the possibility of a fresh rationalisation of DA rates (decided on the basis of consumer price index) because of the upward scaling of salaries.
The increase in city compensatory allowance (maximum Rs 300 at present) may also not be substantial. The bounty for senior officers, sources said, could have been more attractive had the President's monthly salary not been fixed at Rs 1 lakh recently.
As expected, the commission may slash the number of scales to 18 from the present 33, to facilitate accounting and uniformity across various employees and officers.
A likely implication for senior officers in A1 cities (Delhi, Mumbai, Kolkata, Chennai, Bangalore and Hyderabad) could be that government accommodation might not seem as attractive as before because their HRA may rise substantially.
At the minimum entry level (Group 'D'), a government employee is likely to get Rs 8,000 now while the highest starting pay in non-gazetted grade (Group 'C') could be Rs 20,000.
The expected starting pay for gazetted Group 'A' and Group 'B' officers could be Rs 26,000 and Rs 22,000 respectively.
Pay at the highest government (secretary) level is likely to be Rs 80,000. At present, a Group 'A' officer gets around Rs 18,000 at entry (12% HRA in A1 cities is extra). These scales would have higher annual increments.
The report is likely to be submitted to Finance Minister P Chidambaram by panel chairman Justice B N Srikrishna any day after the festival of colours, possibly as early as Tuesday.
Higher housing and transport allowances may be the icing on the cake, though there could be only a modest hike in city compensatory allowance.
Indications are that a secretary to the government will have a basic salary of Rs 80,000 a month (up from Rs 26,000 with 50% merged dearness pay and 47% DA).
The Cabinet Secretary, the country's seniormost officer, is likely to have a basic of Rs 90,000 (up from Rs 30,000 with 50% merged dearness pay and 47% DA).
As is the practice, the new scales would be effective from January 1, 2006.
The across-the-board hike could be paler compared to the pay commission's fifth edition (1997), the best bounty so far, as the proposed quantum of hike now is a few percentage points (just around 0.40) lower. But the good news is that a government employee could, sources said, now look forward to higher annual increments, besides the regular addition of DA, which is now an annual average of 12%.
There is, however, the possibility of a fresh rationalisation of DA rates (decided on the basis of consumer price index) because of the upward scaling of salaries.
The increase in city compensatory allowance (maximum Rs 300 at present) may also not be substantial. The bounty for senior officers, sources said, could have been more attractive had the President's monthly salary not been fixed at Rs 1 lakh recently.
As expected, the commission may slash the number of scales to 18 from the present 33, to facilitate accounting and uniformity across various employees and officers.
A likely implication for senior officers in A1 cities (Delhi, Mumbai, Kolkata, Chennai, Bangalore and Hyderabad) could be that government accommodation might not seem as attractive as before because their HRA may rise substantially.
At the minimum entry level (Group 'D'), a government employee is likely to get Rs 8,000 now while the highest starting pay in non-gazetted grade (Group 'C') could be Rs 20,000.
The expected starting pay for gazetted Group 'A' and Group 'B' officers could be Rs 26,000 and Rs 22,000 respectively.
Pay at the highest government (secretary) level is likely to be Rs 80,000. At present, a Group 'A' officer gets around Rs 18,000 at entry (12% HRA in A1 cities is extra). These scales would have higher annual increments.
WPI Breaches RBI’s Tolerance Level Of 5%
NEW DELHI: Wholesale price-based inflation breached the RBI’s tolerance level of 5% for the third week in a row, recording an eleven-month high of 5.92% for the week ended March 5, compared with 5.11% in the previous week. The government, in turn, slashed import duties on edible oil and rice.
Inflation surged by 0.81% over the previous week, as essential items like fruits, vegetables and pulses, as well as some manufactured items like imported oil, mustard oil and steel, became dearer. Inflation had been at 6.51% during the corresponding week in the year-ago period. The government, which is in a bind over rising prices, is working on a warfooting to contain the price line. Apart from the cut in customs duties on crude and refined edible oils (to 20% and 27.5% respectively) effected today, and the existing ban on export of edible oil, the government is also contemplating an export duty on steel, to increase domestic supplies.
Experts say that there is an urgent need to achieve self-sufficiency in products like food and cooking oil in order to bridge the demand-supply mismatch and contain inflation. Global prices of foodgrains like rice and wheat are at record levels and even resorting to imports could put pressure on the price lines.
Beefing up supplies could be a difficult task in the short term and the government will have to fall back on fiscal measures to discourage exports while making imports of essential goods cheaper. Says HDFC bank chief economist Abheek Barua: ‘‘Higher food and oil prices are playing a crucial role in pushing inflation up. There is urgent need to increase the food supply. However, in the short term, as raising productivity is a difficult task, the government may resort to measures such as banning exports of some commodities, and cut the import duty.’‘
The numbers came just a day after the prime minister’s economic advisory council chairman, Mr C Rangarajan, described the inflation rate as a little above comfort level, and said the council does not favour an interest rate cut policy.
Experts feel that as inflation has breached the RBI’s comfort level by a wide margin, it would be more difficult for the central bank to reduce interest rates to bolster the slowing economic growth.
‘‘ The whopping rise in the inflation rate, despite the high base effect, would not allow RBI to go for a rate cut in the near future as it is way above the central bank’s tolerance level of 5%,’’ Crisil principal economist D K Joshi said.
During the week under review, prices rose across all categories. The index of primary articles went up by 0.3%. The prices of arhar, gram and moong went up by 3%. At the same time, fruits, vegetables, maize, condiments and spices were expensive by 1%.
The index of manufactured products too rose by 0.2%. Among manufactured products, prices of imported edible oil went up by 4%, while that of groundnut oil went up by 1%. Coconut and mustard oils were dearer by 3%.
The index of fuel, power and lubricants too went up by 0.1%, as prices of furnace oil rose by 2%. Basic metal, alloys and metal products rose 20%. Prices of blooms and billets and slabs went up by a steep 30%, wire of all kinds by 25%, steel and tensile plates by 20%, and bars and roods by 3%.
Inflation surged by 0.81% over the previous week, as essential items like fruits, vegetables and pulses, as well as some manufactured items like imported oil, mustard oil and steel, became dearer. Inflation had been at 6.51% during the corresponding week in the year-ago period. The government, which is in a bind over rising prices, is working on a warfooting to contain the price line. Apart from the cut in customs duties on crude and refined edible oils (to 20% and 27.5% respectively) effected today, and the existing ban on export of edible oil, the government is also contemplating an export duty on steel, to increase domestic supplies.
Experts say that there is an urgent need to achieve self-sufficiency in products like food and cooking oil in order to bridge the demand-supply mismatch and contain inflation. Global prices of foodgrains like rice and wheat are at record levels and even resorting to imports could put pressure on the price lines.
Beefing up supplies could be a difficult task in the short term and the government will have to fall back on fiscal measures to discourage exports while making imports of essential goods cheaper. Says HDFC bank chief economist Abheek Barua: ‘‘Higher food and oil prices are playing a crucial role in pushing inflation up. There is urgent need to increase the food supply. However, in the short term, as raising productivity is a difficult task, the government may resort to measures such as banning exports of some commodities, and cut the import duty.’‘
The numbers came just a day after the prime minister’s economic advisory council chairman, Mr C Rangarajan, described the inflation rate as a little above comfort level, and said the council does not favour an interest rate cut policy.
Experts feel that as inflation has breached the RBI’s comfort level by a wide margin, it would be more difficult for the central bank to reduce interest rates to bolster the slowing economic growth.
‘‘ The whopping rise in the inflation rate, despite the high base effect, would not allow RBI to go for a rate cut in the near future as it is way above the central bank’s tolerance level of 5%,’’ Crisil principal economist D K Joshi said.
During the week under review, prices rose across all categories. The index of primary articles went up by 0.3%. The prices of arhar, gram and moong went up by 3%. At the same time, fruits, vegetables, maize, condiments and spices were expensive by 1%.
The index of manufactured products too rose by 0.2%. Among manufactured products, prices of imported edible oil went up by 4%, while that of groundnut oil went up by 1%. Coconut and mustard oils were dearer by 3%.
The index of fuel, power and lubricants too went up by 0.1%, as prices of furnace oil rose by 2%. Basic metal, alloys and metal products rose 20%. Prices of blooms and billets and slabs went up by a steep 30%, wire of all kinds by 25%, steel and tensile plates by 20%, and bars and roods by 3%.
Thursday, March 20, 2008
PSU Department Faults Directive On Bank Deposits
NEW DELHI: The department of public enterprises (DPE) has sought a clarification from the finance ministry on its recent directive asking all central public sector enterprises (CPSEs) to invest 60% of their surplus fund in public sector banks.
“This is like infringement on the financial autonomy of CPSEs. On one hand the government is talking about a level-playing field for all companies by taking away the support under the purchase preference policy from the PSUs, whereas on the other hand, it is trying to regulate the financial decisions. We have asked for a proper clarification on why is it necessary for CPSEs to park their money in PSBs,” a senior official in DPE said.
The finance ministry had recently sent a directive to all ministries, including DPE, asking the companies under them to deploy 60% of their funds with PSBs. As the finance ministry cannot ask CPSEs directly about their financial management, it has asked DPE, the nodal department, to issue a directive in this regard.
CPSEs have a total reserves and surplus of around Rs 4 lakh crore. The proposal, if implemented, would result in PSBs getting nearly Rs 2 lakh crore of that. At present, CPSEs have invested around Rs 1 lakh crore with PSBs while the rest has been invested in other debt instruments.
So, the recent move would result in the diversion of about Rs 1 lakh crore from private banks and other debt funds to PSBs. Funds invested in private banks and other debt instruments get them relatively higher returns of 2-3%.
This is for the first time that the government has directed PSUs on the amount of their investment. The earlier guidelines have specified the nature of investments to make it risk-free. However, no necessary obligation of investment had been put on CPSEs ever.
“This is like infringement on the financial autonomy of CPSEs. On one hand the government is talking about a level-playing field for all companies by taking away the support under the purchase preference policy from the PSUs, whereas on the other hand, it is trying to regulate the financial decisions. We have asked for a proper clarification on why is it necessary for CPSEs to park their money in PSBs,” a senior official in DPE said.
The finance ministry had recently sent a directive to all ministries, including DPE, asking the companies under them to deploy 60% of their funds with PSBs. As the finance ministry cannot ask CPSEs directly about their financial management, it has asked DPE, the nodal department, to issue a directive in this regard.
CPSEs have a total reserves and surplus of around Rs 4 lakh crore. The proposal, if implemented, would result in PSBs getting nearly Rs 2 lakh crore of that. At present, CPSEs have invested around Rs 1 lakh crore with PSBs while the rest has been invested in other debt instruments.
So, the recent move would result in the diversion of about Rs 1 lakh crore from private banks and other debt funds to PSBs. Funds invested in private banks and other debt instruments get them relatively higher returns of 2-3%.
This is for the first time that the government has directed PSUs on the amount of their investment. The earlier guidelines have specified the nature of investments to make it risk-free. However, no necessary obligation of investment had been put on CPSEs ever.
Infrastructure Industries Growth Declines To 4.2pc In Jan
New Delhi: On the heels of the slowing in industrial production in January 2008, the six core infrastructure industries grew by 4.2 per cent in that month, almost half the 8.3 per cent growth seen in such industries in the same month last year. The cumulative growth rate in these sectors during April-January 2008 fell to 5.5 per cent as against 8.9 per cent in the same period last fiscal. Crude oil production registered a negative growth of 0.2 per cent in January 2008 as compared to 4.7 per cent growth in same month last year. Electricity sector saw 3.3 per cent growth in January 2008 as against 8.3 per cent growth in same month last year.
The six core infrastructure industries are crude petroleum, petroleum refinery products, coal, electricity, cement and finished carbon steel. They cumulatively account for 26.7 per cent of the weightage in overall index of industrial production (IIP). The performance of the six core infrastructure industries in January 2008 does not come as a surprise. In January, overall industrial growth had declined to 5.3 per cent as compared to 11.6 per cent in the same month in the previous year.
The six core infrastructure industries are crude petroleum, petroleum refinery products, coal, electricity, cement and finished carbon steel. They cumulatively account for 26.7 per cent of the weightage in overall index of industrial production (IIP). The performance of the six core infrastructure industries in January 2008 does not come as a surprise. In January, overall industrial growth had declined to 5.3 per cent as compared to 11.6 per cent in the same month in the previous year.
Wednesday, March 19, 2008
India Calls Turkish Cos To Infuse In Infrastructure
New Delhi: India on March 18, called the Turkish companies to explore the Indian markets and make investments, especially in the infrastructure sector.At the bilateral meeting with the visiting Turkish State Minister for Foreign Trade, Mr Kursad Tuzmen, the Union Commerce and Industry Minister, Mr Kamal Nath, said that Indian companies were also dedicated to make investments in Turkey. The meeting was attended by Mr Ajay Shanker, Secretary (Industrial Policy & Promotion); Mr G.K. Pillai, Commerce Secretary, senior officials from the Ministry of Commerce and Industry, and representatives from the industry. Indian investments in Turkey are in diverse sectors viz., railway construction, electricity transmission, pipelines, consultancy services for earthquake emergency, hydro-carbon, CNG conversion and IT services.
Goa's Annual Plan Pegged At Rs 1,737 Cr
New Delhi: The annual Plan of Goa for 2008-09 has been estimated at Rs 1,737.65 crore, inclusive of additional Central assistance of Rs 35 crore for projects of special interests to the State. This was decided at a meeting between the Deputy Chairman, Planning Commission, Mr Montek Singh Ahluwalia, and the Chief Minister of Goa, Mr Digambar Kamat. In his opening remarks, Mr Ahluwalia said the State had impressive achievements both in the social sector and economy with a growth rate of over 10 per cent per annum, which shows that the State was ready to leap forward to the next stage of development by targeting at attaining higher standards of development and social justice during the 11th Plan period. Agro-tourism, agro-processing and organic farming need more focused attention. Mr Ahluwalia said the social indicators of the State like literacy, birth rate, death rate, infant mortality rate are impressive. The State Government was also complimented for setting up one of the best health care infrastructure including network of hospitals both in urban and rural areas.
Monday, March 17, 2008
Maharashtra To Get 24 Sezs
New Delhi: As many as 101 formal approvals have been cleared for Special Economic Zones in Maharashtra, Madhya Pradesh and Chhattisgarh under the Special Economic Zones Act, 2005. Of the 101 approvals, 24 SEZs will come up in Maharashtra, while three in Madhya Pradesh have been advised and are in various stages of implementation. In Chhattisgarh only one formal approval has been given for setting up an SEZ. In MP, formal approvals have been given for 12 SEZs, of which seven are by Madhya Pradesh State Electronic Development Corporation and Madhya Pradesh Industrial Development Corporation.
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