New Delhi, November 12
The hardening of fuel and food commodity prices is the single major downside in the present India growth story, said Finance Minister P. Chidambaram while opening the Economic Editors Conference here today.

Responding to a wide range of questions after his address, which summed up the government’s economic policies, he said: “No one now advocates full convertibility of the rupee. The current fashionable phrase is ‘fuller convertibility’, which means the process of liberalisation will continue, but some restrictions will stay.”

The third significant announcement Chidambaram made was that the Sixth Pay Commission Report would be submitted by March-April, 2008. Clarifying on the recent SEBI measures to moderate ‘copius’ capital flows, which had jolted the stock markets, he said: “At the moment we are not contemplating any more measures.”

A reporter pointed to a ‘North-South divide’ on the minimum support price for wheat, which is grown largely in the North and whose MSP has been increased to Rs 1,000 a quintal while paddy, grown mostly in the South, has its MSP at Rs 725 only.

The Finance Minister said the government had accepted the recommendations of the Commission on Agricultural Costs and Prices both for paddy and wheat and it announced a bonus of Rs 50 for paddy only.

Replying to a question on banks using muscle power to recover loan arrears from defaulters, Chidambaram said only one or two private banks had done so and the RBI had fined one of them heavily while the Supreme Court too had deprecated the practice. “I will take firm action if any public sector bank resorted to the use of muscle power.” 

• Sixth Pay Commission report by March-April, 2008
• Hardening fuel, food prices a source of worry
• Full convertibility of the rupee not yet
• No more steps at the moment to control capital flows
• Stern action if public sector banks use force to recover bad loans

New Delhi, November 12
Union Finance Minister P Chidambaram today attributed the slowdown in Industrial production in September to crimped demand for consumer durables and maintained that the rupee appreciation contributed to fall in inflation.

Speaking at the Economic Editors’ Conference here, the Minister appreciated the need to contain the rising Rupee’s impact on exports, he said the hardening of the Indian currency against the Dollar had a positive side as well - rising Rupee along with unchanged domestic petroleum prices since February contributed to bringing down inflation to a five-year low.

“Strengthening of the Rupee has led to a decline in rupee prices of imported goods, contributing to a fall in inflation from its highs in 2006-07,” he said.

“Headline inflation in major advanced economies, however, has generally edged up towards the end of the second quarter of 2007-08, mainly reflecting hardening of food and fuel prices,” he said adding “hence, there are still some pressures on inflation measured in terms of the consumer price indices.

On the slowdown in Industrial Production in September 2007, the Finance Minister attributed it to crimped demand for consumer durables and a stronger currency making exports less competitive.

“India’s capital goods sector has retained its vibrant character, although growth of Industrial production slipped in September due to muffled demand for consumer durables,” he said adding “it is too early to take a call on industrial growth based on the data for a particular month.”

“Though the growth of manufacturing has slightly decreased to 10.3 per cent during April-August 2007, the growth in capital goods at 21.3 per cent during the period is suggestive of significant addition to industrial capacity,” he added.

The last four years have witnessed impressive rates of industrial growth, averaging around 10 per cent. In 2006-07, the industrial growth was a splendid 11.5 per cent, while the rate of growth of manufacturing was even higher at 12.5 per cent.

The index of industrial production (IIP) for September grew at nearly half the rate (6.4 per cent) than it did a year ago, as manufacturing sector growth sagged due to a 7.6 per cent decline in consumer durables output during the month.

Capital goods sector - that covers factories, machinery and tools used to produce finished goods - grew by a healthy 18.6 per cent in September as compared to 9.5 per cent in the year-ago period, as per official data released earlier today.

The output of the capital goods sector during the first half of the current fiscal improved to 19.6 per cent from 17.5 per cent a year ago.

He said economic growth will continue to be investment-driven, with the rate of investment growing to over 35 per cent this year from 22.9 per cent in 2001-02. 

New Delhi, November 12
The government today informed telecom tribunal TDSAT that it would not allocate spectrum to any player till December 12, the next date of hearing of a petition filed by GSM operators against new telecom norms.

Appearing on behalf of the Department of Telecom (DoT), Solicitor General G E Vahanvati said it would not act on the report of the committee appointed to revisit the Telecom Engineering Centre (TEC) report till the next date of hearing.

Meanwhile, accepting the request of GSM operators association COAI, TDSAT Chairman Justice Arun Kumar directed affected parties like Reliance Communications, Tata Teleservices, HFCL, Shyam Telelinks, BSNL and MTNL to implead themselves in this matter.

RCom, HFCL and BSNL accepted the impleadment notices on the spot, turning the spectrum row into a battle spanning the entire industry.

The Cellular Operators Association of India (COAI), which has challenged the norms allowing dual technology and increased subscriber-linked criteria for spectrum allocation, also asked the tribunal to stay the issuance of letter of intent (LOI) for spectrum allocation.

The tribunal declined to pass any order, saying it was outside the purview of COAI’s petition.

TDSAT also directed the government to submit within 24 hours, an affidavit having all facts and developments pertaining to this matter. It, however, rejected COAI’s request for putting the methodology of spectrum allocation in the affidavit. He also declined GSM operators’ request to grant status quo in this matter.

The TDSAT also declined to pass any interim order at this stage. It also directed the committee of experts formed by the DoT to have a relook at the TEC report to submit its report within three weeks. — PTI

New Delhi, November 12
The Telecom Regulatory Authority of India (TRAI) today sought to set at rest “misgivings” over its recommendations to the government on spectrum management by stating that the regulator had favoured auction of 3G spectrum, transparency, predictability, and administrative intervention-free allocation of 3G licenses.

TRAI chairperson Nripendra Misra stated this, while delivering the keynote address at a Ficci workshop on Spectrum Management.

Misra said the TRAI also recommended that all spectrums for broadband wireless should be auctioned. He expressed confidence that this approach would be recognised by the Department of Telecom. “There can be some mismatch of pace, but there cannot be any difference of opinion over the management of 3G,” he declared.

The regulator also said entry fees for new mobile licensees in all the circles should be raised as there is good growth potential in the telecom sector. He said it would not be financially viable for new entrants to offer these services as compared to operators who have laid out their infrastructure all across the country.

The TRAI chief said: “Our thinking is that but for 20/30 Mhz of 2G spectrum, which has to be subjected to certain administrative intervention, all spectrum should be auctioned.” Clarifying the position, he said: “If we do decide to auction this part of the spectrum then there would be one set of players, who already have spectrum and therefore, would have a claim to eligibility of licenses; and another set of licensees, who have been waiting for a year, would have to go through the auction route.”

Rajeev Chandrashekhar, MP and member of the Parliamentary Standing Committee on IT and vice-president, Ficci, described the current controversy of companies lining up for spectrum or licence allotment as “needless” and called for addressing it cleanly and transparently.

He said there was general political consensus on the need for more competition and commended an open, transparent bidding process for the allotment of new spectrum or licences bearing spectrum for each distinct circle. Further, the terms of allotment or sale of spectrum must be market-determined and looked at as a monetising process by the country and not as a give away.

Chandrashekhar said it was imperative for the TRAI to steer clear of political interference and play a more forceful, assertive and clear role in all issues, including the issues of spectrum and licensing.

Andrew Wright, MD, Analysys Consulting, UK, said open auctions in 3G licensing processes represent international best practice. The more open the auction, the higher the intensity of competition in the 3G mobile market.

New Delhi, November 12
It is advantage South Korea in terms of attracting Foreign Institutional Investors (FII) inflows as overseas investors have slowed down pumping in capital into Indian equities and have instead shifted their focus to the Seoul stock market.

The FIIs have sold shares worth Rs 1,000 crore so far in November against a net purchase of shares worth over Rs 20,000 crore in October.

They have been a major driver in Indian equities’ upward journey in the recent past and resumption of positive momentum is unlikely before FIIs start purchasing again.

So far, the FIIs have made a net purchase worth over Rs 70,000 crore (more than $17 billion) - the highest annual inflow so far.

However, the FII inflow has slowed down considerably in the past few days, partly due to valuations getting expensive in India, and the overseas investors have started exploring other markets with better valuations.

India focused funds saw a net inflow of just $69.8 million in the first week of November, while inflow to South Korea funds were $295.6 million.

India funds have seen a net outflow of $792 million so far in 2007, against an inflow of $1,751 million in the same period last year.

In comparison, South Korea funds have seen a net inflow of $2,723 million so far in 2007, against an outflow of about $14 million in same period last year.

The losing momentum of FII inflow to India and China is despite the overall inflow remaining strong to the Asian as well as emerging market funds.

According to country-focused fund tracking firm EPFR Global, inflows to Asian dedicated funds remained above $1 billion in the first seven days of November, despite the regional markets falling by over three per cent.

The money flowing into all emerging market funds also outpaced that entering the global equity funds for the eleventh week in a row, totalling $36 billion between August and early November, against just 
$9 billion inflows to the global funds, EPFR said. — PTI

London, November 12
Caparo T1 super car, produced by NRI industrialist Lord Swraj Paul’s Caparo Group, has been described as the “fastest car ever made” by Topgear, the award-winning BBC programme.

The first Caparo T1 prototype was unveiled in June at the Top Marques show in Monaco by Prince Albert II.

In terms of sheer vehicle performance, Caparo T1 is capable of reaching 100mph in five seconds, with a top speed exceeding 200mph depending on the adjustable aerodynamic.

Topgear presenter said: “Caparo T1 is by far the fastest and scariest car ever made.” Commenting on the mould-breaking Caparo T1, Angad Paul, CEO, Caparo Group, said: “This car is in a class of its own when it comes to overall performance. But it also addresses in the most dramatic way possible fundamental design issues facing the automotive industry today.”

Caparo Group bought out Ben Scott-Geddess and Graham Halstead, an automobile design firm, which developed the iconic McLaren F1 car. Angad Paul, son of Lord Swraj Paul heads the company manufacturing Caparo T1, which is priced at £335,000. — PTI

Mumbai, November 12
State-run commodity trading firm MMTC has become the country’s most valued public sector firm, toppling oil exploration major Oil and Natural Gas Corporation (ONGC) from this position.

The market capitalisation of MMTC rose to Rs 2.75 trillion on the Bombay Stock Exchange today, the second highest across all private and public sector firms after Reliance Industries which has a market cap of Rs 3.89 trillion.

The shares of MMTC surged five per cent on BSE to touch its upper circuit limit of Rs 56,931.50. The scrip of the company settled at Rs 55,031.40, up 1.50 per cent at the end of today’s trading.

In the list of top five most valued firms, there are four PSU companies-MMTC, ONGC, NTPC and NDMC-and only one private sector firm-Reliance Industries. — PTI

New Delhi, November 12
The Reserve Bank has given an in-principle nod to invest $ 5 billion of foreign exchange reserves annually in infrastructure projects through two subsidiaries of India Infrastructure Finance Company (IIFCL).

However, certain issues still remain and the government is in talks with RBI to address them, the Finance Ministry said in a note for the Economic Editors Conference that began here today.

“The RBI board has given in-principle approval in respect of the SPV to be established to borrow funds from the RBI and lend to Indian companies implementing infrastructure projects in India, or to co-finance their ECBs (external commercial borrowings) for such projects solely for expenditure outside India,” the note said.

India’s forex reserves stood at $ 266.52 billion dollars as on November 2 and experts believe that they should be utilised at least for financing infrastructure projects. — PTI

New Delhi, November 12
The commerce ministry is preparing a note for the Cabinet proposing further relief for the rupee-hit exporters, especially those in the job-oriented textiles and leather sectors.

“We are looking at traditional sectors like textiles, leather and handicrafts that have been losing a lot of jobs,” a senior official said here today.

The package is likely to be cleared by commerce minister Kamal Nath tomorrow before it goes to the Cabinet Committee on Economic Affairs later this week, he said.

Finance minister P Chidambaram is also slated to meet heads of different export bodies on November 15 to evaluate the impact of rupee appreciation on exports.

Besides, senior representatives of the Federation of Indian Export Organisations and Export Promotion Councils from worst-hit sectors like textiles, gems and jewellery, engineering and electronics are also expected to attend the meeting.

There were indications of differences between the commerce and finance ministries over the level of packages for the exporters, who are losing their competitiveness, especially against China.

The government has already given three relief packages to exporters aggregating Rs 5,200 crore.

Though export growth rate has maintained a healthy trend of 19 per cent, it is not coming from employment-oriented sectors like textiles, handicraft and leather. — PTI

Chennai, November 12
Leading public private sector bank ICICI has announced a reduction of 0.25 per cent to 0.50 per cent on its special deposit schemes from today.

According to a bank release here today that the bank also announced an alignment of interest rates for deposits of greater than one year to 8 per cent.

The interest rate for the 390 days deposit, would be 8.5 per cent now while interest rate for the 590 days deposit scheme would be 8.75 per cent. The bank also discontinued the 890 days special deposit scheme, the release added.— UNI