New Delhi, May 7
Finance Minister P. Chidambaram today warned the public sector banks not to outbid one another to offer higher interest rates to the corporates before the end of the financial year to bolster higher deposits in their banks.

Replying to a calling attention motion on the need to increase interest rates on small savings in post offices and bringing it at par with banks, he said it was a legacy issue and “I have given strict instructions to the banks” not to continue with it.

The minister said he was aware of the fact that public sector banks bid to offer higher interest rates to corporates in February and March to show higher deposits in their banks.

Raising the issue, CPI leader Gurudas Dasgupta said while the interest rate on small saving schemes were around 8 and 8.5 per cent, public sector banks were offering corportes 13 and 14 per cent.

He alleged Chidambaram's main intention was that small savings should be part of capital markets.

Dasgupta said soon small savings would be negative and small investors would be forced to withdraw money and seek mercy of speculators.

Categorically assuring that the interest of the depositors would be fully safguarded, Chidambaram said net collections under the schemes were positive.

“I cannot direct the depositors to put their money only in small saving schemes in post office, when the number of savings instruments in the market today are manifolds,” the minister said.

Chidambaram said net collections - gross collections minus withdrawals, which includes redemptions on maturity in each financial year - of small saving instruments were up by 4 per cent during the last financial year.

He said the net collections under these schemes in 2006-07 were of the order of Rs 1,56,000 crores and withdrawals including monies returned on maturity were to the tune of Rs 1,11,000 crores. Thus, the net collections were up by as much as Rs 45,000 crores.

The debate on small savings in the House saw a literal clash of titans with charges being hurled at the Finance Minister by Dasgupta and Chidambaram using his tact, legal skills and oratory to repeatedly state that he would not get provoked under any circumstances.

Not satisfied with the minister's reply, Dasgupta said the nicely and innocently drafted language of the minister can't hide his intentions.

Stating that the actions of Finance Minister could affect political fortunes of the UPA government, Dasgupta demanded that interest rates on small savings be reconsidered.

New Delhi, May 7
Country’s largest carmaker Maruti Udyog Ltd (MUL) today launched its premium segment sedan 'SX4' at a competitive price with which it hopes to capture the majority share in the fast-growing A-3 segment.

Priced between Rs 6.18 lakh and Rs 6.89 lakh (ex-showroom Delhi), SX4 has been launched in two variants - VXI and ZXI - and is the second global car, after the Swift, from the Suzuki Motor Corporation (SMC), to be launched in India.

After having phased out its earlier A-3 segment car, Baleno, MUL would be competing with the likes of other popular models in the segment, which includes Honda City, Hyundai Verna and Ford Fiesta.

The company would also be making another model available in the top end variant with additional features, which would be priced at Rs 7.24 lakh.

Speaking to reporters after the launch, Maruti CEO and managing director Jagdish Khattar said the company has worked out an arrangement with its parent company (SMC) whereby the car would not be exported from India.

He said the company was developing another car only for the export market and would be achieving a target of about two lakh units for export by 2009-2010. MUL is also looking at launching its premium segment SUV Vitara during the year.

"The company has already despatched 1,500 units of the new car and would send out another lot of 500 units tomorrow," Khattar said while pointing out that the company had achieved a 72 per cent localisation factor in SX4.

Mumbai, May 7
The Indian rupee, which has risen sharply in recent weeks, has the potential to appreciate another per cent or two, according to investment bank Credit Suisse.

The ongoing rally is seen shrinking profits of export-driven industries like software services and pharmaceuticals, Credit Suisse said in a note on Monday.

The rupee has emerged as the world's fourth biggest gainer this year with a rise of over 8.5 per cent against the dollar.

Appreciation in the domestic currency would significantly hit exporters while sectors like engineering, construction and oil companies were expected to gain from the upswing in rupee against the dollar, Credit Suisse said.

"The Indian currency has been the fourth most appreciating currency after Iceland's krona, Thai baht and Columbian peso, which rose between 8-11.5 per cent," Credit Suisse analyst Nilesh Jasani said.

“The rupee's appreciation is sharp and is here to stay. The impact is material for many and can no longer be ignored as cyclical,” the Swiss bank said.

The rupee has risen more than 8 per cent against the dollar so far this year and is Asia's best-performing currency. It raced to the latest of a series of nine-year peaks on Monday and was quoted as high 40.53 against the dollar.

Credit Suisse said that exporters with relatively low pricing-power would see profits decline if the rupee continued its ascent.

"For example, the pharma companies in the short-term are price takers rather than price makers, so given the competitive landscape they can't raise their prices because of the rupee," Jasani said.

The rupee's gains have been powered by strong capital inflows into the fast-growing economy, including nearly $3 billion in equity-related investments so far this year.

Investors are also confident that the Reserve Bank of India (RBI) will not intervene in the near future, after it aggressively sold rupees earlier this year in a bid to weaken the currency.

Credit Suisse said a stronger rupee would benefit local media and engineering companies, as well as certain consumer businesses.

Another research firm, Citigroup today put its 12-month forecast for Indian rupee at Rs 40 per dollar.

Software and service exporters are experiencing maximum loss as their net foreign earnings as a percentage of profits is among the highest, Credit Suisse said.

For example, TCS and Infosys, the country's largest and second-largest software exporters, have foreign exchange exposure of over 200 per cent on their profits and Wipro, the third-biggest, has over 179 per cent.

Pharma firms can also face pressures on their profits due to weak pricing power on exporting products. — Reuters, PTI

Mansa, May 7
PSU lender Allahabad Bank today said it is planning to open branches in New Zealand and Australia in order to cater to the NRI population in these countries.

“We have plans to have presence in Australia and New Zealand but it would take some time to get its realised,” Allahabad Bank Chairman and Managing Director A.C. Mahajan said.

He said that bank had touched a milestone by crossing Rs 1 lakh crore of business in the recently concluded fiscal year and added that in the current year, more branches would be opened in the unrepresented areas of northern India.

Addressing a function organised here in connection with the opening of 2,065th branch of the bank in this town, Mahajan said that four more branches would be opened in Sangrur, Sunam, Barnala and Ropar areas of Punjab in the current month.

The CMD said that bank had registered a net profit of Rs 750.14 crore during 2006-2007. During the same year, the bank’s operation went global as a branch was opened in Hong Kong and a representative office was made functional in China.

He said besides launching schemes for channel financing to meet both legs of corporate and SEZ financing, the bank had given stress on providing urban amenities in rural areas. The bank had introduced various schemes for basic infrastructure in rural areas like telephony, healthcare, kiosks, development of tourism and vocational training institutes.

Mahajan also inaugurated a modern dairy unit at Sadarpura village under the bank’s white card scheme.

New Delhi, May 7
Underlining the need for management stewardship for giving a thrust to country’s economic development, President APJ Abdul Kalam today urged corporate India to contribute to the upliftment of society, besides creating wealth.

For a prosperous and developed India, the important thrust will be on the growth in the number of such creative leaders who can create wealth to their institutions and also contribute to the uplift of environment and the people in their neighbourhood, Dr Kalam said while distributing the corporate social responsibility awards here.

In his interactive address to the business houses, the President exhorted corporate and industrial houses to reach out to children in rural and semi-urban India by adopting schools and providing infrastructure in the form of clean drinking water, toilet and transportation facilities for children, equipping the sport complexes and providing computing facilities for technology-assisted learning.

“We need creative leaders who can exercise the vision to change the traditional role from the commander to the coach, manager to mentor, from director to delegator and from one who demands respect to the one who facilitates self-respect,” the President said.

The President gave away the corporate social responsibility awards constituted by FICCI and Socio-Economic Development Foundation (SEDF) to seven corporates, including SAIL, Neyveli Lignite, Tata Chemicals, Zensar Technologies, NTPC, HSBC and Hindustan Zinc.

Dr Kalam also said industry had a crucial role to play in the execution of two other missions, namely, energy independence and creation of a world knowledge platform.

New Delhi, May 7
European plane maker Airbus plans to invest more than $1 billion in the Indian aviation industry in the next 10 years, a senior executive said on Monday.

The investment would cover training, a maintenance facility, and a design and engineering centre.

"We have decided to invest over $1 billion in the next 10 years in Indian aviation," John Leahy, chief operating officer (customers) of Airbus, told a news conference.

An Airbus A380, the world's largest passenger aircraft, is in India on a promotional flight for India's Kingfisher Airlines.

Kingfisher, owned by India's UB Group which also controls the country's top brewer and spirits maker, has placed an order for five A380 aircraft and has an option for five more.

Kingfisher's chief executive, Vijay Mallya, told reporters his airline was in talks with Airbus for more planes, including exercising the option. Airbus, part of the EADS group, has said it expects Indian firms to place orders for 1,100 passenger and freighter aircraft valued at about $105 billion over 20 years. — Reuters

New Delhi, May 7
It’s not only the big names that are thriving upon investors’ growing preference for mutual funds as the industry minnows have outpaced even the country’s top five players in terms of growth in assets.

While the collective asset of fund houses in the country surpassed Rs 3.5 lakh crore mark, adding over Rs 24,000 crore in April, the show was stolen by players like Lotus India Mutual Fund, Taurus, ING Vysya and ABN Amro, which reported a 20-80 per cent growth in their wealth during the month.

In comparison, the top five fund houses, including Reliance, ICICI Prudential and Franklin Templeton recorded less than 12 per cent rise in their assets under management (AUMs).

While a lower base is the major factor behind better growth rates for small players, analysts believe this should not take the credit away for the success their new fund offerings have met.

Besides, some of the well-known names, including the one-time leader of the market UTI MF, registered a decline in their assets, losing the share to new entrants like Lotus India and Taurus.

“Fund houses are growing on a smaller base… that’s why a modest increase also shows a huge growth in percentage terms,” mutual fund tracking firm Value Research Online CEO Dhirendra Kumar says.

“Smaller mutual funds had launched a slew of NFOs (new fund offerings) during the first month of the current fiscal which have led to huge surge in their AUM, said Ashish Kapur of Invest Shoppe, a mutual fund distributor.

The base effect was also being reflected on the AUM number, he added.

However, the market leader Reliance MF retained its position as the largest fund house with a growth of 5.44 per cent, while its closest rival ICICI Prudential clocked a 11.6 per cent jump in assets.

Among the other top five players, Franklin Templeton and HDFC MFs gained 11.31 and 11 per cent, respectively.

In comparison, the public sector giant UTI MF’s AUM fell by Rs 66 crore (0.2 per cent) in the month, while those of LIC MF, Tata MF, Birla MF and DSP Merrill Lynch dropped by 2-6 per cent.

Interestingly, the new entrant Lotus India’s AUM crossed Rs 2,000 crore, rising from Rs 1,171.86 crore as on March 31 to Rs 2,086.79 crore at the end of April, a 78 per cent increase, making it one of the fastest growing fund houses in the period. — PTI

New Delhi, May 7
Continued rise in business productivity and competitiveness of Indian economy is likely to inflate incomes in the country by almost three times over the next two decades, according to a latest McKinsey study.

The rising income levels would lift 291 million people out of poverty and create a 583 million strong middle class in the next two decades, a report from McKinsey Global Institute reveals.

If India maintains the growth momentum over the next 20 years, income levels would almost triple, it added.

"Average real household disposable income will grow to Rs 3,18,896 (a year) by 2025 from Rs 1,13,744 in 2005," the global consultancy firm said.

McKinsey is optimistic about India's economic growth rate and forecasts a real compound annual growth of 7.3 per cent from 2005-2025, a marked acceleration from the 6 per cent growth of the previous two decades.

"We believe the optimism is justified because of the substantial scope for continued productivity increases in Indian businesses, growing openness and competitiveness of the Indian economy and favourable demographic trends," it said.

The study titled 'The Bird of Gold' shows that India's rising income has already made a significant impact on poverty reduction. In 1985, 93 per cent of the population had an annual household income of less than Rs 90,000 a year which dropped by about two-fifth to 54 per cent in 2005.

More than 103 million people have moved out of desperate poverty in the course of one generation in urban and rural areas as well.

"In short, India's economic reforms and the increased growth that has resulted have been the most successful anti-poverty programmes in the country," the McKinsey report said.

Interestingly, the research firm forecasts that overall economic growth would continue to benefit India's poorest citizens and the deprived segment would further drop to 22 per cent by 2025 from 25 per cent of the population in 2005.

"Overall, a further 291 million people will move out of poverty during a period when 32.2 million people will be added to the country's population. In effect, India will have 465 million fewer poor by 2025 than if the poverty rate remained at 2005 levels," the report said.

Besides, as Indian incomes rise the shape of the country's income pyramid would also change dramatically. Apart from substantial poverty reduction, India will create a sizeable and largely urban middle class.

In 2005, the Indian middle class was still relatively small, comprising about 5 per cent of the population or 13 million households.

"However, if India achieves the growth rates we assume its middle class would reach 41 per cent of the population or 12.8 crore households by 2025," it said.

In addition, households with real earnings of more than Rs 1,000,000 a year would comprise about 2 per cent of the population but earn almost a quarter of its income.

If India sustains and accelerates its economic growth, it would jump into the premier league of the world's consumer markets by 2025 and would be ranked as fifth largest from its current 12th rank, surpassing Germany.

By then, the middle class would grow almost 12 times, from 5 crore today to 58.3 crore, while over 2.3 crore Indians would number among the country's wealthiest citizens. — PTI

New Delhi, May 7
The first stretch of the Dahej-Panvel-Dabhol pipeline from Dahej to Surat of 100 km length, which will feed natural gas to the beleaguered Dabhol power project in Maharashtra, was commissioned today by union petroleum minister Murli Deora.

GAIL is laying 576-km long Dahej-Panvel-Dabhol pipeline at an estimated investment of Rs 3,200 crore. The pipeline has a design capacity of 12 MMSCMD and will carry gas from Petronet LNG’s terminal at Dahej to Dabhol. The pipeline, on completion, will supply natural gas to the Dabhol Power plant of Ratnagiri Gas and Power Pvt Ltd (RGPPL), and thus help in revival of the power plant, a company release said.

The inter-state gas pipeline would link the two important gas markets of Gujarat and Maharashtra. Currently, the gas market in Gujarat has access to five different gas supply sources namely, the South Bassein fields; Panna-Mukta Tapti Field; Lakshmi fields; Dahej RLNG and Shell RLNG. On the other hand, the Maharashtra market has access to gas supplies from only the Bombay High fields, which is fast declining.

About 222 km long stretch of the pipeline is covered in Gujarat state and the remaining 354 km long stretch of the trunk line passes through Maharashtra.