New Delhi, August 31
Amid stringent monetary measures initiated by the RBI, the country’s economy expanded at an impressive rate of 9.3 per cent in the first quarter of the current financial year, while inflation dipped to its lowest level in 15 months at 3.94 per cent.

Buoyed by the GDP growth, union finance minister P. Chidambaram expressed confidence that economy would expand by around 9 per cent in the full fiscal and investments would remain buoyant.

Gross Domestic Product (GDP) growth of 9.3 per cent during the first quarter of this fiscal was a shade lower than the growth rate of 9.6 per cent in the corresponding period last fiscal.

“Although provisional estimates of 9.3 per cent GDP growth are a shade below than the growth last year, but given the circumstances on account of external situation, it is quite satisfactory,” the finance minister told newspersons.

“As long as savings are high, capital formation remains high, it supports the hypothesis that investment will remain buoyant. I am confident that GDP growth rate will remain close to 9 per cent this year as well,” he added.

The GDP growth was driven by manufacturing, construction and services sector and even agriculture sector, a key area of concern for the government, rose by nearly 4 per cent. The high growth in the first quarter comes on top of 9.4 per cent expansion during 2006-07, the fastest in 18 years.

According to the data released by the government, growth in agriculture, forestry and fishing was 3.8 per cent, while mining and quarrying sector grew by 3.2 per cent.

Trade, hotels, transport and communication registered a growth rate of 12 per cent. Finance, insurance, real estate and business services grew at 11 per cent during the quarter.

At constant prices (1999-2000), quarterly GDP for the first quarter is estimated at Rs 7,23,132 crore as against Rs 6,61,335 crore in the same period last fiscal.

At current prices, GDP is estimated at Rs 9,78,760 crore as against Rs 8,50,797 crore in the first quarter of 2006-07, showing an increase of 15 per cent.

Reacting on the GDP figures, Planning Commission Deputy Chairperson Montek Singh Ahluwalia said, “Growth has widely been expected to fall. RBI has expected an 8.5 per cent growth for the year. So, 9.3 per cent growth is good.”

The government had another reason to cheer today as the inflation dipped below 4 per cent at 3.94 per cent during the week ended August 18, for the first time in more than 15 months, as against 4.10 per cent in the previous week.

The annual inflation rate was 5.12 per cent during the corresponding week last year.

The fall in inflation is being seen as an impact of the stringent monetary measures taken by the RBI and improvement in the supply-side management due to certain fiscal measures initiated by the government.

While prices of essential food items like vegetable, fruits, milk, eggs, meat and fish rose, those of most manufactured products and non-food primary articles declined.

The wholesale price index (WPI) for all commodities for the week ended August 18, 2007 rose by 0.1 per cent to 213.6 from 213.4 for the previous week.

Mumbai, August 31
Ripples of inflationary risks owing to higher asset prices and larger capital inflows, coupled with the surplus liquidity, may prompt the Reserve Bank to return with further policy actions, which may include another hike in Cash Reserve Ratios (CRR).

Indications of further tightening in policy stance were evident in RBI’s annual report yesterday with the regulator contemplating higher food prices as a provocative factor in pushing up the consumer price inflation ahead of wholesale inflation.

While the headline inflation, based on movements in Wholesale Price Index (WPI), moderated to 4.1 per cent in August from 5.9 per cent in March this year, consumer price inflation was placed at 5.7-7.8 per cent in June as against 6.7-9.5 percent in March.

“Although inflation has eased since March end, inflationary pressures could potentially persist for several reasons.

Accordingly, a continuous vigil supported by appropriate policy actions by all concerned would be needed to maintain price stability so as to anchor inflationary expectations on a sustained basis,” said RBI in its annual report.

However, the headline inflation, which has been softened to 3.94 per cent as on August 18 from 4.10 per cent last week, is still hovering higher compared to other emerging markets and to advanced economies in 2006-07, and posing concern for the government.

Reserve Bank is also cautious over the hardening of oil prices and about the inflationary pressures emanating from “strong growth in monetary aggregates, elevated asset prices and larger capital inflows” claiming impact on domestic liquidity conditions. — UNI

New Delhi, August 31
The Cabinet may give a favourable nod to the revised technology upgradation fund scheme (TUFS) within a fortnight, which is going to make more segments, including small and medium enterprises (SMEs), in the textile industry not only eligible for interest subsidy but also more competitive in the international arena.

“We have finalised the revised TUFS and are now awaiting clearance from the Cabinet, which is likely to take a decision on it in a fortnight from now,” textiles joint secretary Sudripta Roy said on the sidelines of the Textile Summit here.

Stating that focus would be given to technical textiles, processing as well as development of SMEs in the revised scheme Roy said, “We are looking at giving capital subsidy to these sectors since they are the thrust areas for the ministry”.

While Roy did not divulge details on the quantum of the revised scheme, sources said the ministry has asked for Rs 11,000 crore for running the scheme for five more years.

The scheme provides 5 per cent interest subsidy to units for upgrading their technology.

On rupee appreciation affecting textile exports, Roy said, “We are looking at a growth rate of 9 per cent for textile exports in the current year. However, this is not what we had anticipated but we are working to improve the export performance,” he said.

The Textile Ministry had set an export target of $ 25 billion for the current fiscal against $ 19 billion during 2006-07.

Earlier, chairman, Economic Advisory Council to the Prime Minister, C Rangarajan, said, “Given the inherent strength of the Indian economy, the level of external interest and attendant capital flows, the industry may need to factor in this amount of appreciation of Rupee,” he said.

The textile ministry has set a target of an annual growth rate of 16 per cent and an export growth of 22 per cent, which would enable the industry to acquire a 9 per cent share in the global textile market by 2015.

Textile minister Shankersinh Vaghela said issues like infrastructure, exploring new areas like technical textiles and rationalisation of labour laws need to be sorted out to ensure growth of the textile industry.

Addressing the inaugural session of the summit, commerce and industry Minister Kamal Nath said industries should focus on building brands that can compete globally. The two-day Textile summit is being organised to deliberate on problems faced by the sector.

During the summit, working groups would be constituted on textile inputs, human resource development, policy framework and role of government.

The recommendations of the core group would be presented to Prime Minister Mammohan Singh when he addresses the valedictory session of the summit tomorrow.

Washington, August 31
Congress president Sonia Gandhi has been placed sixth, a notch behind Indra Nooyi, the Indian-American chairman and chief executive of PepsiCo, in the Forbes list of the world’s 100 most powerful women.

Angela Merkel, the first woman to become chancellor of Germany is No 1 for the second year in a row. the US business magazine said, “She continued to impress the world with her cool leadership at two back-to-back summits.” Chinese vice-premier Wu Yi was at No 2, Ho Ching, chief executive of Temasek Holdings, Singapore’s largest business conglomerate, at No 3 and US Secretary of State Condoleezza Rice at No 4.

Gandhi has jumped to sixth rank this year, up from 13th in 2006. Nooyi has been ranked at the fifth position, down from fourth last year.

However, two other Indian women - Lalita Gupte and Kalpana Morparia of ICICI Bank, ranked at 93rd position last year, have moved out of this year’s list.

In an accompanying list, Forbes named President Pratibha Patil among the most powerful “Women Behind Women”, whom it described as those women wielding behind-the-scenes power.

“Gandhi, the Italian-born leader of India’s most powerful political party, has come far since entering politics in the 1990s. Lawmakers recently elected Gandhi’s choice for president, Pratibha Patil, in a historic vote seen as a step forward for India’s women and girls who endure daily discrimination,” Forbes said.

Abouy Nooyi, Forbes said last February, Nooyi added the title of chairman to her chief executive position at the food-and-beverage giant, maker of Frito-Lay snacks, Pepsi beverages, Gatorade sports drinks, Tropicana juices and Quaker foods; a whopping 17 PepsiCo brands each generate $1 billion or more in annual sales.

Nooyi has pushed PepsiCo to move beyond soda, first by helping to start the company’s fast-food chains in 1997, and later by spearheading the purchase of Tropicana in 1998.

Another person of Indian origin on the list is Vidya Chhabria, chairperson Jumbo Group, UAE, at No 97.

Nooyi and Gandhi have been ranked ahead of Queen Elizabeth II (23rd), Bill Gates’ wife Melinda Gates (24th), talk show celebrity Oprah Winfrey (21st), eBay chairperson Margaret Whitman (22nd), US president aspirant Hillary Clinton (25th) and US First Lady Laura Bush (60th). — Agencies

New Delhi, August 31
Leading industrialist Rahul Bajaj failed to come at a settlement with his brother Shishir Bajaj on the division of the empire within the time alloted by the company law board (CLB).

The brothers today sought some more time from the principal bench of CLB.

Counsels representing Rahul and Shishir today informed the bench that the two brothers have not been able to arrive at an out-of-court settlement, however, adding that they would carry on negotiations to settle the matter.

Accepting it, CLB chairman S Balasubramanian adjourned the matter to the third week of October. The case would now again come up before CLB on October 22, when the two brothers are expected to report about the outcome of their negotiations.

If they fail to reach a settlement by then, the board would resume its scheduled procedure and hear the case for three consecuitive days from October 23-25, as the four-year-old case has reached the final stages of argument.

Senior counsel and former Attorney General Ashok Desai, representing Rahul Bajaj, hoped that by October the brothers would be able to reach a settlement. — PTI 

Brussels, August 31
Steel-maker ArcelorMittal will buy most of German gas distributor Saar Ferngas AG from coal miner RAG AG for $499 million, the companies said today.

ArcelorMittal said the purchase of 76.88 per cent of the largest gas supplier in the German states of Saarland and Rhineland-Palatinate would fit well with its energy network in the region.

It owns a 20-per cent stake in Luxembourg gas distributor Soteg, and the new deal will allow it increase that control because Saar Ferngas owns 10 per cent of Soteg.

Saar Ferngas pipes gas to city electricity plants and industrial plants and power stations. A fifth of it is owned by E.On AG, while German public authorities own another 3.12 per cent.

For RAG the sell off allows it refocus on generating electricity from coal and renewable energies, according to RAG chief executive Werner Mueller.

ArcelorMittal will acquire the shares under the same conditions agreed with RWE, the companies said.

The deal still needs approval from ArcelorMittal’s board and EU antitrust authorities, but it should be completed by the year-end . — AP

New Delhi, August 31
As the government gets down to the task of outlining a roadmap for the introduction of GST (Goods and Service Tax) by 2010, Ficci has suggested a two-tier GST model - a Central GST and a State GST with the existing taxing powers - rather than a national GST, which replaces both CENVAT and State VAT.

In a letter today to the empowered committee of state finance ministers, finance secretary, adviser to the finance minister, revenue secretary and other senior officials of the finance ministry, Ficci has pointed out that ever since the idea of a GST was moved by the Kelkar Task Force, a widely held presumption has been that GST would be levied nationally, replacing both the CENVAT and the VAT now being levied at state levels.

Ficci has stated that a unified tax on goods and services to be administered by the Central Government and sharing the revenues with states may perhaps be a distant dream, for states may not like to forgo their Constitutional taxing powers and reducing themselves to mere spending agencies with little or no power to raise what they spend.

In this perspective, it may be advisable to have, at least in the initial stages, a two-tier GST model - Central GST and State GST with the existing taxing powers.

FICCI has also stressed the need to ensure that over the next two-three years service tax rate and the CENVAT rate are converged at around 12 per cent, ensuring inter alia that the combined tax incidence of GST, including VAT, is around 20 per cent.

The same should cover all segments, with a threshold exemption limit and dispute settle mechanism inbuilt in the model. There must not be any other local levy after the emergence of GST. FICCI is confident that such a tax system would lead to better tax compliance and buoyancy in taxes to the exchequer.

FICCI has also highlighted the need for proper co-ordination between the centre and state governments, determining what sort of services to be levied by State governments and addressing the issue of cross credit of input tax paid on goods and services in the beginning itself to avoid litigations later on.

Further, there should also be a breathing period to implement the GST. The cooling period may be around one year in which corporates and other players can understand the implications of the new system.