The Tribune, Chandigarh, India

India’s growth will be slowest in 6 yrs: WB

Washington, June 22
The World Bank today forecast India's economy to expand by 5.1 per cent this fiscal, the slowest in six years, although the country has consistently outperformed the multilateral funder's estimates in the past. The economy had grown by 6.7 per cent in 2008-09 against the World Bank's estimate of 6.1 per cent, despite recession setting in most of the developed nations.

Sensex reacts
MUMBAI: The oil and gas sector led the fall in the Sensex today with the BSE-benchmark index dropping by 196 points today to end at 14,326.22. The Sensex resumed firm in morning trade, but declined afterwards to a low of 14,269.77 following a fall in European markets as the World Bank predicted that the global economy will shrink 2.9 per cent this year, a bigger fall than the 1.7 per cent contraction it predicted in March 2009.
Bonanza Portfolio assistant vice-president Avinash Gupta said: “The metals prices were soft because of the prediction by the World Bank. The softening of commodities induced profit booking in metals and it spread to other sectors as well.” The BSE 30-share barometer fell by 195.67 points to settle the day at 14,326.22 from its last weekend's close. — PTI

“Almost two years after problems in the US mortgage market set in motion the biggest financial crisis since the Great Depression, global financial markets remain unsettled, and prospects for capital flows to the developing world are dim," the Bank said in its report - 'Global development finance: Charting a global recovery'.

Prime Minister Manmohan Singh has acknowledged that there is indeed a slowdown in foreign investments, but exuded confidence that economy could soon return to the days of 8-9 per cent growth on the strength of its domestic savings, which was around 35 per cent of the GDP and is the second highest savings rate in the world.

He, however, said this fiscal he expected the country's economy to grow by 7 per cent.

The Reserve Bank of India itself has put the possible growth numbers at 6 per cent - 0.9 percentage points more than the estimates of the World Bank. India's economy had expanded by 8.5 per cent in 2003-04.

‘Global economy to shrink 2.9% this year’

Boosted by the strength of India and China, developing nations would grow 1.2 per cent this year, but without the two, these economies would shrink 1.6 per cent, says the World Bank.

Warning that the world is entering an era of “slower growth”, the multilateral lending agency has projected the global economy to shrink 2.9 per cent this year.

The World Bank, in its report has said excluding India and China, the developing economies would shrink 1.6 per cent this year.

“Developing countries are expected to grow by only 1.2 per cent this year, after 8.1 per cent growth in 2007 and 5.9 per cent growth in 2008.

“When China and India are excluded, GDP in the remaining developing countries is projected to fall by 1.6 per cent, causing continued job losses and throwing more people into poverty,” the report said. — PTI

AI to cut staff costs by up to Rs 500 crore a year

New Delhi, June 22
Air India is working on plans to reduce its expenditure on employees by Rs 500 crore per annum, with a newly formed committee re-examining wage and other agreements in consultation with the unions.

The cash-strapped airline's employee cost currently is over Rs 3,000 crore annually, a company spokesperson said, adding that the airline was now targetting a reduction in employee cost to the tune of Rs 500 crore per annum.

At present, the merged carrier has around 31,000 employees.

One of the six panels set up recently is the cost rationalisation committee, comprising officials of HR and Finance Departments.

The committee has been directed to discuss cost rationalisation and reduction of wasteful expenditure with employees' unions and submit its report by July 15.

The spokesperson said the committee would examine the wage agreements, including those relating to flying allowances and productivity-linked incentives.

The five other committees that have been formed are the committee on integration, committee on green initiatives, committee on safety, committee on customer feedback and route rationalisation committee.

The management has held at least two rounds of talks with various employees unions in this regard, with the union leaders coming up with several suggestions to cut costs.

The spokesperson said the company was looking at improving productivity of employees, eliminating restrictive work practices and reducing wasteful expenditure.

The unions are, however, sticking to their agitation plan that began today with employees on duty wearing black badges to protest the decision to delay the payment of this month's salary by a fortnight. The management has also asked the airline top brass not to take their July salary. — PTI

Hike in fuel prices on cards

New Delhi, June 22
The government is considering raising petrol price by Rs 2 a litre and diesel by Rs 1 per litre as an immediate fall out of the firming international oil prices. State-run fuel retailers are losing about Rs 135 crore per day on sale of petrol, diesel, LPG and kerosene and the government is looking at proposals to make up for these losses, a senior official said.

"Equitable burden sharing principal would entail consumers having to bear marginal increase in fuel prices while the rest of the losses would be made up by issue of oil bonds and upstream assistance," he said.

The official said the proposal to hike petrol and diesel rates would have to go to the Cabinet for approval.

Petroleum Minister Murli Deora refused to answer questions on price hike, but the issue of deregulation of petrol and diesel prices was still under consideration of the government.

The government has been mulling decontrolling petrol and diesel prices for couple of months now but may be fast losing the window as the move would now result in steep rise in fuel prices. Freeing of fuel prices was idle when crude had fallen to below $40 a barrel last year. — PTI

Budget will be popular: Montek

New Delhi, June 22
The first Budget to be unveiled by the new UPA government on July 6 will be “popular”, Planning Commission deputy chairman Montek Singh Ahluwalia said. “The word populist has negative overtones, but I am sure (the) Finance Minister will present a popular Budget. However, we should maintain the mystery of the Budget and you have to wait and see what comes out," he said in an interview.

Making a case for “strong government effort” to promote growth, Ahluwalia said: “The Prime Minister has said we should get back to between 8-9 per cent growth rate that might take a couple of years. I think it is feasible but it requires some strong and purposeful action.”

Prime Minister Manmohan Singh earlier had asked the Finance Ministry “to ensure that the next Budget adequately and appropriately reflects priorities and programmes outlined in the President’s address to the joint sitting of Parliament.”

Among other things, President Pratibha Patil had talked about a Food Security Act to provide 25 kg of rice or wheat per month at Rs 3 per kg to people below poverty line.

Finance Minister Pranab Mukherjee has already indicated the government “would continue to focus on public spending in employment-oriented growth sectors, increasing the purchasing power of the people”.

Referring to the growth prospects during the current fiscal, Ahluwalia said: “Last year, our growth rate was about 6.7 per cent. We are hoping we can do about 7 per cent this year”.

Noting that fiscal deficit can take a back seat during 2009-10, he said: “The idea is to anticipate the investment that otherwise would have taken place a bit later. This means the fiscal deficit would be higher in the short term, but would be lower in the future because we will be only redistributing the expenditure,” he added.

On disinvestment, he said: “The speech of the President does not mention privatisation. It does mention disinvestment up to 51 per cent. It is not that important how much we do this year, but I hope we can lay out a medium term programme”. — PTI

Mahindra Satyam to get new CFO

New Delhi, June 22
Satyam Computer, which has been acquired by Tech Mahindra and rebranded as Mahindra Satyam, is likely to get a new chief financial officer (CFO) by the first week of July.

“Various names are under consideration. Mahindra Satyam is likely to have a CFO early next month,” a source privy to the development said.

The candidate is likely to be from within the Mahindra group, although she/he may not be from Tech Mahindra, he added.

However, when contacted, the Tech Mahindra spokesperson said, "We don't comment on speculation." Earlier, Tech Mahindra was reported to be considering candidates outside the Mahindra Group. — PTI

Govt may not extend tax holiday for Baddi
Bhagyashree Pande
Tribune News Service

New Delhi, June 22
Special industrial package that was extended to Himachal Pradesh (Baddi) region may not get an extension of tax concession. Sources, in the Industries Ministry said special tax holiday that was advanced to Baddi for setting up industries in the region may not be extended and very likely will expire by 2013.

The incentive included outright exemption from payment of central excise duties. But tightening government revenues may prevent the government not to oblige the state any longer, sources close to the development said.

The industrial package announced in 2003 by the NDA government was for a period of 10 years, but it was reduced by two years by the UPA government and will end the tax concessions by 2010.

The tax exemption also included 100 per cent exemption for an initial period of five years and thereafter 30 per cent for companies for a further period of five years, capital investment subsidy of 15 per cent on plant and machinery subject to a ceiling of Rs 30 lakh, applicable also to existing units. Sources say the excise duty aspect is being looked into but did not comment on the IT exemption

The Himachal Pradesh government had urged the Centre to extend the special industrial package to March 2013 as was originally planned.

Himachal Pradesh Chief Minister Prem Kumar Dhumal had earlier written to Prime Minister Manmohan Singh to deliver justice to the people of the state by extending the special industrial package.

The state had succeeded in attracting investment proposals of Rs 36,844 crore.

RIL inks pact with Essar Steel, Ispat

New Delhi, June 22
Reliance Industries (RIL) today signed gas sale agreements with steel makers, including Essar Steel and Ispat Industries, for supplying 3.75 mmcmd of natural gas from its offshore Krishna Godavari-D6 basin.

The agreement, which will be reviewed at the end of five years, will boost profitability of the steel firms who had been buying expensive LNG or naphtha to meet feedstock shortage at their plants, a senior official said.

The Ministry of Petroleum and Natural Gas had last week asked RIL to sell natural gas to steel firms like Essar, Ispat and Vikram Ispat to help the nation's most prolific gas field to produce at optimum level.

As per the Gas Sales and Purchase Agreements (GSPA), Essar will get 2.86 million standard cubic meters per day (mmcmd) of gas, Ispat 0.53 mmcmd and Vikram Ispat the remaining 0.36 mmcmd at government-approved rate of $4.20 per mmBtu.

"We had identified sectors that would consume the initial 40 mmcmd output from KG-D6. But some of them like CNG supply projects in cities are unable to take their entire allocation and that is now being reallocated to steel firms," a senior official said. The official said the allocation has been made in accordance with the EGoM’s decision on April 9. — PTI

Budget 2009
Punjab’s shawl industry seeks special package
Sanjay Bumbroo
Tribune News Service

Amritsar, June 22
Shawl club, an association of shawl manufacturers of this border region, has urged the Centre to give budgetary stimulus to the industry to meet the global competition.

Piara Lal Seth, general secretary of the association, has appealed to the government that it must consider boosting the textile industry in the border district of Amritsar. He said the government should give a special economic package as was being given to Himachal Pradesh, Jammu and Kashmir and Uttarakhand and cover Amritsar district under Section 80 1(b) of Income Tax Act for a period of minimum 10 years.

Seth also urged the government for withdrawal of fringe benefit tax and said it was a hindrance in business promotion. He added that the government should also raise compulsory audit limit from Rs 40 lakh to Rs 1 crore under the IT Act, 1961. It would minimise overhead expenses and burden on small businesses.

The general secretary said the government should also increase personal IT exemption limit to Rs 2 lakh and for senior citizens it should be raised to Rs 3 lakh and also demanded rise of wealth tax from Rs 15 lakh to Rs 40 lakh in view of the hike in gold, silver and realty prices.

Corporate Results
Parsvnath net drops 89 pc

Mumbai, June 22
Real estate firm Parsvnath Developers has reported a 89.13 per cent fall in consolidated net profit at Rs 11.61 crore for the fourth quarter ended March 31, 2009. The company had a net profit of Rs 106.86 crore in the March quarter of FY'08, Parsvnath Developers said.

Revenue also declined to Rs 19.96 crore in the latest quarter from Rs 506.77 crore in the same month last year. Meanwhile, the firm said its shareholders had approved raising up to Rs 2,500 crore through issue of securities and to increase the foreign investment limit in the company by up to 40 per cent.

Neyveli Lignite

Neyveli Lignite Corporation has reported a consolidated net profit of Rs 821.09 crore for the year ended March 31, 2009.

The total income stood at Rs 4,019.89 crore for the year ended March 31, 2009, Neyveli Lignite said. Besides, it has recommended a dividend of Rs 2 per share for the financial year ended March 31, 2009, subject to approval of board members. — PTI