London, February 5
The Bank of England slashed interest rates to a record low on Thursday to help Britain out of recession, while dire German industry orders and Spanish industrial output confirmed European businesses were struggling.

The British central bank cut its base rate by 50 basis points to 1.0 per cent, the lowest since its creation in 1694 and the latest in a series of aggressive cuts designed to stimulate the flagging economy.

“The global economy is in the throes of a severe and synchronised downturn,” the bank said in a statement accompanying the decision. “Output in the advanced economies fell sharply in the fourth quarter of 2008, and growth in the emerging market economies appears to have slowed markedly,” it added.

Policymakers have cut interest rates sharply in an effort to stimulate demand and get credit flowing again after a financial crisis that began with a collapse in risky US home loans, has devastated the banking sector and pushed the United States, the euro zone, Britain and Japan into recession.

The International Monetary Fund says Britain's economy, heavily dependent on the ravaged financial sector, could be the worst hit in the industrialised world, shrinking by 2.8 per cent in 2009.

The governments and policymakers worldwide are scrambling for policies to beat the worst financial crisis since the 1930s as consumption falls and unemployment and social unrest rise.

The outlook for the euro zone's second biggest economy remained “extremely subdued” the Economy Ministry said. Adding to the gloom, Spanish industrial output in December fell 19.6 per cent year-on-year, its sharpest slowdown on record.

Business lobbies blamed banks for Spain's severe recession and demanded state intervention if banks fail to boost lending. The data could increase pressure on the European Central Bank to trim its rates. It reviews policy later on Thursday but was expected to leave its key rate untouched at 2 per cent after four months of cuts.

But financial markets will be looking for signals of what further steps it might take to shore up the euro zone economy. European shares fell in early trading on a large writedown by insurer Swiss Re, while rising bad loans at Spain's biggest bank Santander and a bleak outlook at Deutsche Bank fuelled concerns about the wider economy.

Glum figures from US corporate stalwarts such as Kraft Foods stoked fears of deepening recession, the US Senate voted to soften a “Buy American” clause in a $900-billion stimulus plan that President Barack Obama said could spark a trade war.

Atsushi Mizuno, who sits on the Bank of Japan’s rate-setting policy board, said new policies might be needed. — Reuters

Hyderabad, February 5
Even as SEBI officials are quizzing Satyam Computer founder B Ramalinga Raju and his brother Rama Raju, the Andhra Pradesh police are likely to make more arrests in the Rs 7,800-crore fraud involving the IT major.

CID officials investigating the case have not ruled out more arrests in about a fortnight.

“We are constantly scrutinising the seized documents and trying to retrieve data from the hard-disks and laptops recovered during the raids of residences and offices of Satyam officials, including its former chairman B Ramalinga Raju,” a senior CID official probing the Satyam fraud said today.

There are over 25 trunks loaded with seized documents and “we are putting all our efforts to scrutinise (them) with the help of financial experts,” the official said.

To retrieve the data from the seized computers, the CID has been taking the services of experts of the National Informatics Centre and the Forensic Science Laboratory, besides IT experts within the department, he said. Once the investigating agency completes its work of scrutinising the documents, more arrests will follow, the official indicated.

New Delhi, February 5
At a time when uncertainty shrouds auction of the 3G spectrum for the private telecom operators in the country, state-run telecom major Mahanagar Telephone Nigam Ltd (MTNL) today launched its third generation (3G) mobile services in limited areas of Delhi. Named as Jadoo, the service has been started at an initial investment of about Rs 400 crore.

The company can currently support around 150,000 subscribers on its 3G infrastructure. For activating Jadoo, the MTNL customers will have to pay Rs 500 plus taxes as activation charges and a monthly rental of Rs 599.

A voice call on MTNL’s own network will cost 60 paise per minute, where calls to other networks will cost Re 1 per minute.

The domestic and international long distance (STD and ISD) call tariff will be as per the budget plan.

According to MTNL officials, an MTNL-to-MTNL video call will cost Rs 1.80 per minute, while such calls to other networks will cost Rs 3. The voice STD will cost Rs 3.75, and the voice ISD remains as high as Rs 30. These tariffs are promotional offers from the company that will be valid for three months.

Incidentally, launch of the 3G services by MTNL would again have the private operators cry foul as there is no clarity from the government as when the auction of the spectrum for the third generation service would be held.

The auction has already been put off twice and after the latest suggestions given by the Department of Telecom over the pricing of the spectrum the Cabinet Committee on Economic Affairs has referred the matter to a group of ministers.

New Delhi, February 5
Falling prices of fruit and vegetables and certain manufactured items pulled down inflation after a gap of two weeks, to 5.07 per cent, raising hopes of a further cut in policy rates by the Reserve Bank.

Inflation, measured by movement in wholesale prices, dropped by 0.57 percentage points for the week ended January 24 from 5.64 per cent a week earlier, mainly on account of softening prices of food items like coffee and metal products like iron and aluminium.

Having declined for 10 consecutive weeks, the rate of price rise moved up to 5.60 per cent for the week ended January 10 and inched up further to 5.64 per cent the next week. Axis Bank economist Saugata Bhattacharya said: “Falling inflation after a gap of two weeks gives more leeway to the RBI to go in for further rate cuts. The central bank might slash the repo and reverse repo rates by 50 basis points in the coming days.” Crisil Principal Economist D K Joshi too opined: “Decline in inflation certainly provides more scope for a further cut in policy rates by the RBI.”

The drop in inflation during the reporting week has been mainly on account of fall in prices of vegetables, which dipped by 2.7 per cent. Fruit too became cheaper by 1.2 per cent. — PTI 

Chandigarh, February 5
Cash-rich public sector enterprises (PSE) can no longer make a quick buck by auctioning and then placing its deposits to banks quoting the highest interest rate. The Finance Ministry has now asked all public sector banks (PSBs) to quote only the card rate for getting these bulk deposits.

The move is expected to facilitate a general reduction in the cost of deposits, paving the way for a further cut in lending rates.

Over the past couple of years, the PSEs had started auctioning its cash deposits and banks began competing with each other to get these deposits by quoting a higher value rate of interest (finer rate of interest). This was generally one to 1.5 per cent higher than the prevailing card rate. Each year, the banks would set up teams to chalk out the deposit mobilisation and visit government offices and health and educational institutions, offering them higher rates of interest.

The banks had been facing a liquidity crunch because of high lending costs. They were, thus, trying to cap maturing bulk deposits and reduce lending costs by offering higher interest rates. In February last year, some banks were offering as high as 9.10 per cent rate of interest for a period of 46 days, and 9.30 per cent interest on a bulk deposit for 91 days. In fact, this “deposit mobilisation” war between banks would start in February and continue till March as a result of the banks’ trying to make up the year-end targets.

On their part, the government departments, boards and corporations and private institutions, were looking at making a quick buck through these ‘incentives’ offered by the banks. Cash-rich boards and corporations in the region like the urban development authorities of Punjab and Haryana, housing boards, warehousing corporations, mandi boards, HAFED and Markfed were being approached by banks to avail this “annual incentive”.

New Delhi, February 5
Giving a clear indication on unveiling a package in the interim budget to stimulate industrial demand, the government today said it as not restrained by the Constitution from announcing urgent policy intervention in the run-up to the Lok Sabha elections.

“A very calibrated policy prescription is in the process of being formulated. You will see some indications in the vote-on-account, in the interim budget,” Minister of State for Industry Ashwani Kumar said at a Ficci function here.

He said some sector-specific stimulus packages would be announced even before the vote-on-account in Parliament.

The government is not restrained from announcing packages in the vote-on-account, Home Minister P Chidambaram said, adding, “Constitutionally, there is no bar”. Talking to reporters after the Cabinet meeting, the Home Minister said: “Wait till February 16. There may be one (package), there may not be one.” But Kumar was forthcoming. “We are coming up with sector-specific packages to boost those areas which need to be kick-started, particularly those which are labour-intensive,” he said.

After handsome growth in the first four years of its tenure, the UPA government is concerned at massive job losses in the run-up to general elections. — PTI

BRIEFLY

Infosys, Cambridge ink MOU
LONDON: Infosys has signed a memorandum of understanding with the University of Cambridge for collaborative research ventures in the areas of engineering, management and business, architecture and pharma. The, MoU signed by Narayana Murthy, chairman of the board and chief mentor, Infosys Technologies, and Professor Alison Richard, vice-chancellor of the University of Cambridge, seeks to develop opportunities in these areas over the next three years. — PTI

Hexaware Technologies
MUMBAI: Caliber Point Business Solutions, a leading human resources outsourcing provider and a Hexaware Technologies subsidiary, has signed a new agreement with Oracle to offer Oracle’s Human Capital Management offerings. — UNI

Era Infra bags NTPC order
MUMBAI: Era Infra on Thursday said it had bagged a Rs 222.98-crore order from state-run power utility NTPC for engineering-related works for its thermal power project in Nagpur. The company has secured a contract for “mail plant and off-site civil works package for its Mauda Super Thermal Power Project,” Era Infra said. — PTI

JSW Steel
NEW DELHI: JSW Steel, the country’s second largest private steel producer, on Thursday said its crude steel output surged by 41 per cent to 3.21 lakh tonnes in January 2009 over the previous month as the steelmaker recommenced operations from closed furnaces in view of improving demand. However, the production in last month was down by 3 per cent compared to its output of 3.30 lakh tonnes in January 2008. — PTI