States’ deficit goes up: RBI
MUMBAI, Feb 3 — The aggregate fiscal deficit for all states is budgeted at Rs 26439 crore during 1998-99, which is significantly higher than Rs 19,672 crore.

New Zen features without price rise
NEW DELHI, Feb 3— Pushed to the wall by increasing competition and deepening recession, Maruti Udyog Limited today unveiled value additions on all the four versions of its popular Zen and announced that prices of all variants would not be hiked following the feature additions.

Brazil discredits IMF policies
THE IMF’s deputy-managing director, Stanley Fischer, who has just arrived in Brazil, has an unenviable task.

Pepsico sues Dutch company
NEW DELHI, Feb 3 — The Delhi High Court today issued summons to a Dutch company in a suit filed by Pepsico (India) Limited for recovery of Rs 13.3 crore from the foreign company for allegedly supplying defective “aseptic bags” used for packaging purposes.

GAIL price fixed at 60 per share
NEW DELHI, Feb 3 — The government is likely to mop up about Rs 184 crore from the sale of its equity in the Gas Authority of India as only 30.58 million shares could be booked through private placement in the domestic market.

Core group set up
NEW DELHI, Feb 3 — A core group has been set up by the Department of Fertiliser to explore the feasibility of a delivery system of liquified natural gas essentially to meet the commitment of fertiliser units and projects.

States’ deficit goes up: RBI

MUMBAI, Feb 3 (UNI, PTI) — The aggregate fiscal deficit for all states is budgeted at Rs 26439 crore (1.6 per cent of GDP) during 1998-99, which is significantly higher than Rs 19,672 crore (1.4 per cent of GDP).

According to the RBI, the sharp deterioration in the states’ revenue account has occurred due to deceleration in receipts and a sharp rise in expenditure. The expenditure of states on the revenue account is estimated to rise by 16.7 per cent in the current financial year as compared to 16.4 per cent in 1997-98.

“The nature of expenditure is also a cause of concern as the non-developmental expenditure in the revenue account is projected to absorb 47.70 per cent of the revenue receipts as against 40.9 per cent in 1997-98”, says the article.

The supplement — ‘Finances of state governments — 1998-99’ prepared by the division of fiscal analysis and department of economic analysis and policy of the central bank says that this deterioration has taken place despite fiscal reforms undertaken by some states. The analysis is based on the study of finances of 25 state governments and Delhi.

The gross fiscal deficit (GFD) is expected to rise by 17.5 per cent to Rs 5,9776 crore (3.7 per cent of GDP). The GFD would be financed to the extent of 48 per cent through loans from the Centre and the balance 52 per cent through the states’ own capital receipts.

Revenue receipts of states are projected to decelerate on account of reduction in grants from the Centre, which would rise by 2.2 per cent in 1998-99 as against 19.6 per cent in the previous year.

Many states are raising funds through mobilisation of small savings as they receive 75 per cent of net small savings collections. As a result, accruals of loans against small savings would show a sharp rise of 25.2 per cent on top of a 47.5 per cent growth in the previous year.

The combined revenue receipts of all the states are budgeted to rise by 14.7 per cent in 1998-99, still lower as compared to a growth of 15.8 per cent in the previous year.

To enable the state government to raise loans at competitive rates through auctions, they are provided flexibility in the market borrowings to the extent of 5 to 35 per cent of the allocated amount. They have been given the freedom to decide the timing and maturity of the borrowings. The Punjab Government has raised Rs 60 crore in January through the auction of a 10-year security at a weighted average yield of 12.39 per cent per annum.

The state governments need to fasten the process of fiscal consolidation through measures like expenditure restructuring, cuts on non-merit subsidies and increases in user charges, the RBI has said.

“Revenue deficits, which emerged since the mid-eighties, have led to diversion of part of the capital receipts towards current expenditures. Consequently, the internal debt and debt-servicing burden of state governments have increased, the Central bank noted in its supplement on “finances of state governments: 1998-99” to the February 1999 bulletin.

The fiscal health of states had been under severe stress in recent years, as evidenced by the rising deficits and the compression of developmental expenditure, it pointed.

The responsibility of state governments was high in social and basic infrastructure development sector which yielded very low rates of return, it said.

With state PSUs also running into losses — State Electricity Boards Rs 3,193 crore and State Road Transport Corporations Rs 390 crore — the state governments had limited choices to make, the central bank admitted.

It said the options included reduction in non-essential expenditures, widening the tax base, raising the user charges, and cutting down subsidies wherever warranted.

Brazil discredits IMF policies
From Alex Brummer

THE IMF’s deputy-managing director, Stanley Fischer, who has just arrived in Brazil, has an unenviable task.

It is clear that the $US41 billion programme put together November last year was a disaster. The states are in uproar about fiscal restraints; the real has plummeted almost 40 per cent on the foreign exchange market; one central banker has gone and another, Francisco Lopes, has just arrived - and some $US9 billion of IMF cash has already been lost.

Despite this the Fund is being urged, by George Soros and others, to put more money in now or face a meltdown in Latin America. Certainly the IMF’s policies have been discredited. It counted on high interest rates to hold the value of the currency and preserve equity in the banking system. That has failed. Its fiscal disciplines have proved politically untenable, adding to nervous conditions in the market-place.

The latest word from Brazil is that it is now considering some forms of capital controls. Among the models it is looking at is the Chilean approach, under which investors would be required to keep capital gains in the country for at least a year.

Sensible perhaps: but this is locking the stable door after the cash has bolted. Reserves have shrunk from $US50 billion to $US27 billion since the outflows began last August, and there is not exactly a queue of foreign investors aching to come in.

The IMF will need rapidly to design a new programme. But, now that devaluation has taken place, it should be one built around keeping interest rates down to avoid a catastrophic recession.

It should be accompanied by phased restoration of the public finances, rather than a sudden clampdown. All of this could be accompanied by some limited restrictions on capital flows, but not a Malaysian-style lock-out. That would keep the bargain seekers away just when they are needed.

It is interesting to note that the fastest recovering economies in Asia, according to IMF data, are Korea and Thailand, which held firm to the free market.

— The Guardian

New Zen features without price rise

NEW DELHI, Feb 3 (UNI) — Pushed to the wall by increasing competition and deepening recession, Maruti Udyog Limited today unveiled value additions on all the four versions of its popular Zen and announced that prices of all variants would not be hiked following the feature additions.

Both Zen VX and Zen Automatic will now come with central locking, front power windows, rear wiper and washer, child locks in the rear doors and collapsible steering column.

Meanwhile, Zen LX and diesel will have child locks on the rear doors and a collapsible steering column. The price increase due to the value additions will be absorbed by the company and not passed on to the consumer. All the new models will be available with immediate effect.

The company had on December 30 last year announced major price cuts on its models and also introduced two new versions of Maruti 800 and Zen. Riding on the price cuts, sales of its passenger cars had shot up by 45 per cent in January 1999 to touch 24,379 units from 16,817 units in the previous month.

The growth was significant, especially in the Maruti 800 and Zen segments with the two categories witnessing a 56 per cent and 72 per cent surge respectively over the previous month.

Pepsico sues Dutch company

NEW DELHI, Feb 3 (PTI) — The Delhi High Court today issued summons to a Dutch company in a suit filed by Pepsico (India) Limited for recovery of Rs 13.3 crore from the foreign company for allegedly supplying defective “aseptic bags” used for packaging purposes.

Justice Dalveer Bhandari issued summons to “Netherland based Schoiie Europe B-V” for March 15, the next date of hearing.

The court directed that the summons should be sent through speed post and courier service with acknowledgement slips to ensure that they were delivered to the Dutch company.

Pepsico counsel Arun Jaitley told the court that his client would like to have the consignment inspected by an independent agency in presence of the representatives of the Dutch company to determine the extent of damage.

NSE forecast
Time to book profit
By Ashok Kumar

THOSE investors who had heeded our repeated warning that the market as a whole, and software scrips in particular, had become overheated, thus meriting profit-booking should be laughing their way to the bank right now. A week is a long time in the context of the Indian markets and it has been proved beyond all doubt by the sudden turnaround in investor sentiment.

While earlier there was a debate raging about how investor ‘unfriendly’ Sinha’s Budget would be, political upheavals are now raising doubts where a Budget would be presented at all. While the political clouds could still clear up, it has already dampened investor sentiment and also frozen FII buying whose focus had already shifted from the software sector to the more fundamentally sound pharma sector.

Bear operators could consider short-selling the shares of Hindustan Lever at Rs 1,900 (cover up at Rs 1,875) and Hindustan Petroleum at Rs 230 (cover up at Rs 210). Bull operators could concentrate on the pharma sector and consider buying German Remedies at Rs 700 (square up at Rs 720) and Glaxo at Rs 625 (square up at Rs 650). There is no dark horse bet this week, although discerning long-term investors could consider including blue-chips like Smithkline Beecham Consumer in their portfolios. Yet the name of the game for now still remains booking profits at higher levels.

Core group set up
Tribune News Service

NEW DELHI, Feb 3 — A core group has been set up by the Department of Fertiliser to explore the feasibility of a delivery system of liquified natural gas essentially to meet the commitment of fertiliser units and projects.

The group under the chairmanship of Mr U.S. Awasthi, Managing Director of IFFCO, is likely to give its report by the month-end, said. Mr Surjeet Singh Barnala, Minister of Chemicals and Fertilisers, a meeting of MPs attached to the Ministry.

GAIL price fixed at 60 per share

NEW DELHI, Feb 3 (PTI) — The government is likely to mop up about Rs 184 crore from the sale of its equity in the Gas Authority of India (GAIL) as only 30.58 million shares could be booked through private placement in the domestic market.

The core group on disinvestment today decided to price GAIL disinvestment in the domestic market at Rs 60 per share, government sources said.

Gail was mandated to sell upto 10 per cent of the government equity amounting to about 85 million shares through book building process.

The government had indicated a price band of Rs 60 to Rs 68 and asked GAIL to take into account the average market price of its scrip during the last 10 trading sessions. Gail scrip today closed at Rs 64.90 in the Bombay Stock Exchange.

One of the four PSUs identified at the beginning of 1998-99 for disinvestment to garner a total of Rs 5,000 crore, GAIL is the second after Container Corporation (Concor) to divest in the domestic market.

Together they would bring in about Rs 434 crore, of which Concor accounted for Rs 250 crore.

Indian Oil Company is slated to hit domestic market to divest upto 5 per cent of government equity by March this year.

EU-India row over garments

NEW DELHI, Feb 3 (PTI) — Indian garments worth Rs 30 crore have been held up in various ports of Europe since December 1998 following a discord between India and European Union (EU) over market access for textile goods.

As per the bilateral market access agreement with EU, India should relax curbs on certain textile items and also reduce the Customs duty on these shipments but the EU nations contend New Delhi had not adhered to it.

“We have in fact done more than what has been proposed in the agreement. The curbs have been relaxed and the duties are lower than the prescribed limit. But our only drawback is that we have failed to file it with the EU,” Apparel Export Promotion Council (AEPC) Vice-Chairman Rakesh Vaid told PTI.

The shipments have been held up on the grounds that India had over-utilised the imports quota in EU for these garments under categories four, six and 26 in 1998.

Though such embargo should have lapsed automatically from the new year, the dispute over market access was holding clearance of the goods, Vaid said.

Textiles Secretary Shyamal Ghosh, when contacted, said India was sending details of the steps taken to EU today and hoped the issue would be settled soon.

Government grants relief to garment exporters
Tribune News Service

NEW DELHI, Feb 3 — The Textiles Ministry has decided to modify the Electronic Transfer Scheme (ETS) for garment exporters by allowing mutual transfers of quotas without any pre-condition except that such transfers should also appear on the screen.

This modification would provide a big relief to garment exporters, especially small exporters, who had been adversely affected after the introduction of the scheme and had been representing to the government to bring about a change in the modalities of the scheme.

The transparency in the transfers, which was the basic objective of the scheme would however, still be fully ensured by dissemination of information relating to the identities of the buyer and the seller, the quantity transferred and the price at which the transaction has taken place in the mutual transfer.

This was announced by the Union Textiles Minister, Mr Kashiram Rana, while inaugurating the 22nd India International Garments Fair here today. The three-day fair organised by the Apparel Export Promotion Council would provide an opportunity to 147 garment exporters to display their creations before overseas buyers and buying agents from about 70 countries.

Forex rates
US $ 42.46/47
Sterling £ 69.41/43
Yen (per 100) 37.90/92
D. Mark 48.10/12

Oswal Petro
MUMBAI, Feb 3 (UNI) — The industrial tribunal here has directed Oswal Petro Chemicals, a unit of Agro Mills Limited, to lift the lock-out declared in its Chembur plant and pay wages to the company’s 650 workers. Tribunal member T.M. Mantri directed the company officials that in case of failure to provide jobs to the workers, it should pay monthly wages as it used to pay them earlier. Mr Mantri gave the direction following the complaint filed by Oswal Petro Chemicals workers union.

Unit-64
MUMBAI, Feb 3 (PTI) — The UTI today revised the sale and repurchase prices under the Unit Scheme-64 which are valid for the month of March, 1999. The sale price was revised to Rs 15.10 per unit and the repurchase price to Rs 14.80 per unit, the UTI release stated.

Volvo S80
CHANDIGARH, Feb 3 (TNS) — Modi Motors today announced that the new Volvo S80 will now be available in India through its exclusive tie-up with the Volvo Tourist & Diplomat Sales Network, Sweden. Using new technology such as “WHIPS (whiplash protection system), a totally new seat concept and IC (inflatable curtain), the new Volvo S80 has been dubbed one of the safest cars in the world.

Stona ’99
BANGALORE, Feb 3 (PTI) — Foreign companies can also now float mining ventures with cent per cent equity in India, Union Minister for Steel and Mines Naveen Patnaik announced here today. Inaugurating Stona ’99 an international granite and stone fair he said the Union Government had constituted a Granite Development Council to exclusively address the problems faced by the granite industry in the country.