Wednesday, August 25, 1999
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B U S I N E S S | Wednesday, August 25, 1999 |
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RBI projects GDP growth
at 6.5 per cent |
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Companies slow on euro Tea prices may go up from October HCL net profit vaults 124 p.c. VSNL achieves total Y2K compliance UB challenges beer ban Service tax from September 1 Investors duped Website unveiled |
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RBI projects GDP growth at 6.5 per cent MUMBAI, Aug 24 (UNI) — The Reserve Bank of India (RBI) has placed the real growth rate of gross domestic product (GDP) at 6 to 6.5 per cent for the current fiscal year 1999-2000. Going by the latest indications in agricultural and industrial sectors, the growth rate will be in line with the average growth recorded in the five years between 1994-95 and 1998-99. In its annual report for the year 1998-99, the RBI said that there were clear signs of improved economic prospects with stability reflecting the gains from the adoption of prudent and carefully designed macroeconomic policies in recent years. If the industrial recovery in the first three months is any indication, industrial production should increase at the rate averaged in the last four years of about 7 per cent. Foodgrains production crossed the 200 million tonne mark for the first time in Indian economic history and the buffer stocks of foodgrains stood at around 33 million tonnes at end-June, 1999, which is considered to be higher than the stated norms from the point of view of food security. Exports have shown some signs of rebound in the first three months of the current year while import bill is likely to grow under the impact of oil price increases. Inward remittances continued to be buoyant and capital flows have been at reasonable level to bridge the gap in the current account deficit. The inflation rate during the year is likely to remain low at around 2 to 3 per cent and much below the long term trend, which was about 8.5 per cent a year for the past three decades. The monetary growth remained close to its long run rate of about 17 per cent and therefore, The current inflation rate seems to have diverged significantly from its long-term trend. Emphasising the need to keep the growth in expenditure within the budgeted limits, the RBI annual report said that the revenue deficit in 1998-99 amounted to Rs 1,01,012 crore, up by about 61 per cent over the position in the previous year. Such a high order of deficit cannot be sustained for long, even if the country’s real GDP grows at an average of 6 to 6.5 per cent annually in the coming years. The huge deficit would require a large mobilisation of revenue receipts which given the rising share of relatively under-taxed services sector, cannot grow without bringing about sharp changes in tax structure and efficiency in tax collections. It would imply a large reliance on market borrowings, placing pressure on market rates of interest and crowding out private initiatives. As the growth scenario during the year was dominated by deceleration in the industrial activity and continued deterioration in net external demand, the report said that a part of the increase in fiscal deficit was due to the decline in the tax revenue in response to the slowdown in industrial activity and import growth. Further, the growth in services sector did not contributed adequately to the revenue earnings of the government since the sector is not effectively brought under the tax base. Given the large
borrowing requirements of the Government and the present
level of development of financial markets, the report
said that the monetary policy has to not only depend on a
relatively large set of instruments to exercise
sufficient control over short term market developments
but also focus on such instruments that could be of
particular significance for the movement of long-term
interest rates. |
Verma report on weak banks in 12 days NEW DELHI, Aug 24 (PTI) — The committee on weak banks which has hinted tough measures for banks’ employees is expected to submit its report in 10-12 days time, M.S. Verma, who heads the committee, said here today. “We are almost through with the work and the report will be submitted in 10-12 days time,” Verma told reporters here on the fringes of a CII conference on financial sector reforms. Without disclosing the content on the report on the three weak banks viz Uco Bank, United Bank of India and the Indian Bank, Verma said it was up to the Government to take a decision based on its recommendations. He hinted tough measures like voluntary retirement scheme (VRS) for the employees of the three banks which would cost over Rs 1,000 crore to the Centre. Asked whether he had expected Indian Bank to report profit during the 1998-99, Verma said the committee was, in fact, waiting for the bank to announce the results to finalise the report. While Uco Bank accounts for the maximum number of employees of about 33,000 as in March 1998, Indian Bank and UB has a staff strength of about 27,000 and 22,000 respectively. The Indian banking and financial system can be cleansed of huge non performing assets by enacting a new Financial Institution Debt Recovery Act, as in the case of Korea, Thailand and Malaysia, Verma said. “Instead of modifying nine existing acts, we should go for enacting of one financial institution recovery Act to solve the problem of massive non-performing assets or bad loans being faced by the Indian financial system at present,” Verma said at the seminar. Korea, Thailand and Malaysia have recently enacted laws to solve their bad loan problems. Such an Act would not only contain the lengthy court procedures but would also ensure that a defaulter does not act to the detriment of the lender during the mediation period, he said. Moreover such an Act could be passed in mere three months. Union Finance Secretary P.G. Mankad today said that creating value for shareholders should be given topmost priority by banks instead of blindly following the Japanese experience of mergers. “Just because top banks have merged in Japan we cannot do the same” Mr Mankad said while speaking at a conference on financial sector reforms organised by the CII. Urging that India should not give too much emphasis on the size of the banks, Mr Mankad said that shareholders’ interest should be given the maximum importance. Elaborating on the structural aspects of the financial sector in India, Mr Mankad said that the issues of optimal efficiency, autonomy and ownership are interlinked. It is argued that State ownership adversely inhibits efficiency, he said. Calling upon bank managements to be firm in inducting new technology,he said that by use of technology, human errors could be reduced.If there was resistance to induct technology, attempts should be made to train and building up confidence in people. The reforms process, he
felt, should be centralised and and then should percolate
down the line. |
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NEW DELHI, Aug 24 (UNI) — About 55 power stations out of total 315 in the country will be affected by Y2K problem, said officials of nine State Electricity Boards (SEBs) in the country during a meeting with the Cabinet Secretary. According to an official release issued today, the National Information Centre (NIC) has conducted an audit in about 30 stations and the remaining stations will be audited in the next 15 days. The meeting was attended by the Chairman, Central Electricity Authority (CEA), the Secretary, Ministry of Power, Secretary Electronics and other officials from the Ministry of Power, Department of Electronics, the heads of the Central Public Sector Undertakings in the power sector. During the meeting the CEA Chairman explained the intensive programme of action that has been drawn up by the CEA, wherein separate teams of officers will visit each SEB to assist and assess the state of readiness of the SEB’s as far as Y2K is concerned. In case of Delhi, a special team has been constituted of officers from the National Thermal Power Corporation, Delhi Vidyut Board (DVB) and NIC who would conduct a through review of the situations by August 31 so as to rule out any failures. It expects that the entire power sector would be Y2K compliant by October 31, this year. The Cabinet Secretary
observed that the situation in the power sector is well
under control but emphasised that full Y2K compliance be
achieved by October 31 1999, the release added. |
Companies
slow on euro CHANDIGARH, Aug 24 — With the introduction of euro in January 1999, European corporates may now require their Indian counterparts to trade in euro. Indian corporates, however, are slow in adjusting to euro. These views were expressed by Mr Ajay Rastogi, Head, ICG Sales (North-India), Deutsche Bank A.G., at a seminar on “Euro and its implications” organised by the CII here today. The introduction of euro is both an opportunity and a challenge for Indian corporates, said Mr Rastogi. It is an opportunity in the sense that fixing of exchange rates of the participating countries to euro will eliminate the exchange rate fluctuation and create a large common market. And it is a challenge in the sense that competition within the EU would intensify and exporters to the EU would not be able to charge differential rates for their products. Mr M.B. Saxena, Manager (Forex and Money), Hindustan Levers Ltd., euro would enable Indian importers to benefit from efficiency gains of supplies as also from transparency and competition amongst European suppliers. Although raising euro loans would become cheaper as the market becomes wider, Indian corporates need to remain careful of forex volatility, particularly of euro vis-a-vis US dollar, added Mr Saxena. Earlier, Mr Alok Dutta
of the CII said that euro is likely to bring stability to
many locally volatile or relatively untraded currencies
like the Italian lira or Franc. The volatility made trade
with these countries risky for India, but that barrier
would now disappear, he said.
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Tea prices may go up from October NEW DELHI, Aug 24 (PTI) — Tea prices are likely to witness an increase from October onwards on the crop shortfall but the rates are unlikely to touch the 1997 high, industry officials said today. “Tea prices will rise in October as there can be a shortfall of 55-60 million kg. Already, the prices are showing a tendency to rise,” A Russik Woodworth official told PTI. United Planters Association of South India officials said the prices, of late, were rising in South India but it was unlikely to reach 1997-level, when it ruled at a record high. “The prices will not touch 1997-level since the export demand is subdued due to limited operations by Russia and Central Asian republics.” India’s tea crop is estimated to decline to 835 million kg this year against a record 868.2 million kg in 1998. During the first half, tea production had declined by 19 per cent to 261.2 million kg against 322.1 million kg during the same period last year. India accounted for 61
million kg of the total 100 million kg crop decline till
the first half of this year. |
HCL net profit vaults 124 p.c. NEW DELHI, Aug 24 (UNI) — The Board of Directors of HCL Infosystems Limited (HCL Insys) today recommended a 25 per cent dividend for the fiscal ended June 30, 1999, with the company having registered a 124 per cent surge in net profit at Rs 58.52 crore. Its net profit during the previous financial year stood at Rs 26.12 crore. The turnover was Rs 950 crore, up 36 per cent from Rs 699 crore a year earlier. According to a statement issued here today, the company has modified its policy on revenue recognition to be in better line with international norms. This has resulted in a one-time adjustment of Rs 23.6 crore in the profit available for appropriation. The company has also conservatively provided Rs 2.5 crore as income tax for the April-June 1999 period, though the actual liability would depend on the tax position for the entire 1999-2000 fiscal. HCL Insys has also
decided to increase its future focus on electronic
commerce and will continue to dominate high-end
enterprise system sales, integration and services
segment. |
VSNL
achieves total Y2K compliance NEW DELHI, Aug 24 — Videsh Sanchar Nigam Limited (VSNL) today announced 100 per cent Y2K compliance for value added and leased line services. In respect of international telephony services, VSNL has achieved Y2K compliance for a total of 36,000 international circuits capacity. Entire Y2K compliance would be achieved by September 1999, a release said. VSNL has also worked out a contingency plan for business critical systems. The contingency plan for VSNL includes switching traffic to alternative exchanges within the network, to alternative transmission path via satellite or cable and to alternative carriers . VSNL’s contingency plan is based on ITU suggested guidelines. Workgroups for various systems have been formed to identify equipment, (including communication equipment, power, AC), identify transmission media, identify key personnel, and define Year 2000 failure scenarios based on VSNL’s network and perform impact analysis. The plan is being
discussed with the DoT and the plans will be updated
based on the experience at field and latest feedback from
operators and vendors, the release added. |
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NEW DELHI, Aug 24 (PTI) — Vijay Mallya’s United Breweries Ltd (UB) has filed a petition in the Delhi High Court against the Excise Department for banning sale of its international beer brand “King Fisher” in the capital. “We have filed a petition in the Delhi High Court against the Excise Department as it did not renew the licence of King Fisher beer in Delhi saying that the brand was advertised on various private television channels,” Divisional Vice-President (Sales & Marketing), United Breweries Deepak Chaudhuri told PTI. He said the Excise Department, which is in-charge of granting licences for various alcoholic drinks, has not renewed the licence from July onwards, saying that King Fisher was advertised on TV, in violation of the excise laws governing the capital. Refuting the Excise Department’s contention, Chaudhuri said there were other international alcoholic drinks available in Delhi. “King Fisher is also an international brand and all advertisements are beamed from outside India aimed at other countries over which the company has no control,” he said. The case is scheduled to come up for hearing on September 2, company officials said. Chaudhuri said at the time of renewal of the licence, the Excise Department had asked for an undertaking that the brand should not be advertised in Delhi, which the company refused to give. According to the
company, the UB group last year had contributed Rs 14.62
crore excise to the Government from Delhi, out of which
King Fisher contributed Rs 7.10 crore. |
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NEW DELHI, Aug 24 (PTI) — Clearing and forwarding agents will be required to pay service tax from September 1, an official release said today. The agents will have to pay as service tax 5 per cent of the commission or other remuneration they earn for clearing and forwarding operations. The service tax on clearing and forwarding agents was introduced in July 1997 but all along it had been passed on to clients. But from September 1,
the service tax will be paid by clearing and forwarding
agents themselves following the change in the mode of
payment.
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Investors
duped ROHTAK, Aug 24 — Hundreds of people have been reportedly duped of their money totalling Rs 3.5 crore by a finance company in the district. The police has registered a criminal case against officials of the company for cheating and for their failure to repay deposits. The company, Incan
Mutual Benefit Limited with its headquarters at Lucknow,
had got deposits worth about Rs 3.5 crore from about
1,400 persons here in the past four years. The accused
named in the FIR include M.S. Ojla, Chairman of the
company, Vice-Chairman (North Zone) J.S. Talwar and D.S.
Dhillon. |
Website
unveiled CHANDIGARH, Aug 24 — Brig Partap Singh Jaspal (retd), who had launched a website www.baisakhi 1999. org during the tercentenary celebrations of the Khalsa this year, has now come out with a colourful website www. babanandsingh Sahib. org. This purely spiritual
and divine treat has been programmed for nearly 30 hours
with a possibility of unlimited coverage. It includes
audio oration and video projection together with
devotional music. The anniversary of Baba Nand Singh Ji
falls on August 29 this year. |
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