UNCTAD warns against rapid liberalisation
NEW DELHI, Sept 20 — The United Nations Conference on Trade and Development today warned developing countries against rapid liberalisation and opening up of their economies as the “predicted benefits have been well off the mark.”

• 5 per cent of Pak GNP goes into graft

Judge summons 6 for obscene ice cream ad
NEW DELHI, Sept 20 — A Delhi court has summoned Hindustan Lever Limited and Cable Video (India) Limited and its senior officials in connection with the production of an allegedly obscene advertisement for a popular brand of ice cream.

Panipat project stake for Petronas
NEW DELHI, Sept 20 — Indian Oil Corporation has decided to give equity to Malaysian Oil Major Petronas and Oil and Natural Gas Corporation in the Rs 4,228 crore Panipat petrochemical project, a top company official said.

Indian Rayon plans to buy back shares
Indian Rayon, an Aditya Birla group company, will return upto Rs 144 crore to its shareholders through the buyback of shares at prices to be decided on the basis of bids received in the range of Rs 75 to Rs 85 per share.

UNCTAD warns against rapid liberalisation

NEW DELHI, Sept 20 (TNS, UNI) — In almost a reversal of arguments pronounced by international financial institutions, the United Nations Conference on Trade and Development today warned developing countries against rapid liberalisation and opening up of their economies as the “predicted benefits have been well off the mark.” In its annual trade and development report released here and in other parts of the world, UNCTAD advanced several arguments in favour of this conclusion. These include the fact that big bang liberalisation has produced an import surge in the developing countries, while exports have not been able to keep pace. The slow down in the industrial economies since the early 1970s has added an additional percentage point to trade deficits in the developing nations, and terms of trade declines constantly eat into the purchasing power of exports of developing countries.

There are also arguments which suggest a more careful opening up to foreign direct investment and a much more cautious policy towards portfolio investment and build up of huge foreign exchange reserves, which are only necessary as a precautionary measure in an economy which opens up but are not required for any real production.

It is a well known fact that the World Bank and the IMF as also many UN agencies themselves have pleaded for fast opening up of developing countries. The report shows the inter-dependence of the developing and industrialised economies and not just a one-way street.

Asian crisis : India and China have largely remained unaffected by the Asian financial crisis which virtually affected all developing countries and transition economies.

So far the Asian crisis has had only a limited impact on South Asia, due largely to the sub-region’s restrictions on capital account convertibility and short term foreign debt.

Growth accelerated in Pakistan and continued to increase slightly in India, but slowed in other countries. In 1998, restrictions on trade credits to India and Pakistan associated with nuclear test sanctions reinforced the adverse impact of the Asian crisis, the report said .

Slowdown : For 1999, a general slowdown in growth is likely for South Asia as a whole and for Pakistan in particular, due in part to its uncertain political climate. The outlook for Bangladesh will be dominated by recovery from floods. Short-term prospects for the sub-region are also clouded by uncertainties associated with the border conflict between India and Pakistan.

5 per cent of Pak GNP goes into graft

DHAKA, Sept 20 (ANI) — A United Nations report has painted a dark picture of democracy in South Asia and said corruption is costing the region billions of dollars annually.The UN development report has characterised democracy in the region as “one step forward, two steps backward” and said it was costing countries such as Pakistan 5 per cent of its gross national product.

The human development in South Asia report, prepared by the Islamabad-based Mahbub-ul-Huq Human Development Centre, was released at a news conference in Dhaka by David Lockwood, chief of the U.N. Development Programme in Bangladesh.

“Democracy in South Asia is not about people, it is about access to State power,” the report said, adding that despite their democratic leanings, South Asian States had failed to provide their people with freedom from the worst forms of deprivation.

On corruption, the report said: “In Bangladesh the implicit “private taxes” — the costs of corruption — of setting up a business come to 340 per cent of the estimated initial official costs.”

Accelerate financial reforms: Acharya

NEW DELHI, Sept 20 (PTI) — India needs to accelerate financial reforms to avert any future crisis though it has done well to restrict external debt to $ 9 billion between 1991, when economic reforms began, and 1997, Chief Economic Adviser Shankar Acharya cautioned today.

“We have to work on it (financial sector reforms) and if we do not, we could set ourselves to difficult times from which we will not be able to pull out’’, Acharya told a seminar titled” managing external economic challenges in the nineties: lessons for the future’’, here.

Setting at rest fears of an enhanced external debt as a result of deregulation, Acharya said in fact the external debt of the country was only $9 billion between 1991 and December,1997.

Fortunately India had put in place safety mechanisms following the Mexican forex crisis in the mid-1990s and possibly could avert the contagion of the East-Asian currency meltdown because of this.

On the success of the 1991 economic reforms, Acharya said India’s recovery compares very favourably in comparison with other developing countries undertaking post-crisis reform process.

He said India’s average economic growth in the first three years after 1991 was 6.4 per cent as against an average of 2.2 per cent during the first three years of reforms process undertaken by about 30 developing countries.

On a query whether India had failed to adopt the model of developed countries to deregulate the exchange rate mechanism, Acharya said when it came to strategic interests most of these nations closely monitored the situation.

Though a temporary capital surge does pose a difficult challenge it can be handled, he said adding that when confronted with a similar situation after 1991, the Government decided to put all foreign exchange inflows into its overall reserves to monitor the movement.

“Perhaps the key point is to prevent temporary phenomena from destabilising medium-term objectives of growth in exports, investment and the economy”, he told the seminar organised by the Indian Council for Research on International Economic Relations (ICRIER).

He said the decision to move to current account convertibility in August 1994, and partial liberalisation of the overseas investment policy for Indian firms were among the various policy measures taken to moderate the monetary impact of reserve accumulation.

This was also aimed at seizing opportunities for liberalisation and strengthening of the external sector, he added.

Acharya cautioned that high Customs tariff rate could adversely affect exports and other advantages though it could in a limited way serve the purpose of protecting domestic industry.

Despite very favourable circumstances, India did not remain completely immune to the effects of financial turbulence roaring through the Asian markets, he said, adding that between August 1997 and January 1998, the foreign exchange market was subjected to repeated bouts of speculative pressure.

He said much remains to be done to strengthen India’s capability to deal with uncertainty and volatility in international capital markets.

Former RBI Governor, S. Venkitaramanan and Former Deputy Governor of RBI S.S. Tarapore also participated in the seminar.

Panipat project stake for Petronas

NEW DELHI, Sept 20 (PTI) — Indian Oil Corporation (IOC) has decided to give equity to Malaysian Oil Major Petronas and Oil and Natural Gas Corporation (ONGC) in the Rs 4,228 crore Panipat petrochemical project, a top company official said.

Giving details of the project, IOC Chairman and Managing Director M.A. Pathan told PTI that “Petronas will be given 26 per cent equity, the same as the collective holding of IOC and ONGC.”

“We have cleared the project and the joint venture is likely to be finalised by October-end,” he said.

The petrochemical complex is part of the corporation’s diversification plans uptil Tenth Five-Year Plan for which it has earmarked 7 per cent of the massive Rs 60,000 crore plan investment till the year 2007.

Though IOC initially planned to take 26 per cent stake in the project, it would reduce the holding to accommodate ONGC so that State owned Malaysian company would have equal share in the venture, he added.

IDBI will finance the project either on its own or through a consortium, Pathan said adding that the financial closures would be attained by the end of the current financial year.

Pathan said that share of ONGC in the project, entailing debt-equity ratio of 70:30, would be detailed soon.

Out of the diversification Budget of Rs 1700 crore during the Ninth Plan period, the corporation has earmarked for Rs 976 crore only for the petrochemical sector.

Indian Rayon plans to buy back shares at Rs 75 to 85

Indian Rayon, an Aditya Birla group company, will return upto Rs 144 crore to its shareholders through the buyback of shares at prices to be decided on the basis of bids received in the range of Rs 75 to Rs 85 per share.Sources said a decision to this effect crystallised in the company’s board meeting held today after approval of its buyback programme by the shareholders at their AGM on Friday last.

The decision to go in for buyback was taken in view of company’s underutilised plant capacities which envisaged that there would be no major investment in the next two to three years. The offer will remain open between September 29 and October 14, sources added.

Videocon International Limited (VIL) has received yet another setback in gaining a share of the sick Uptron Colour Picture Tubes Limited (UCPTL) when the Appellate Authority for Industrial and Financial Reconstruction (AAFIR) dismissed the plea of the electronics major to join hands with its arch rival BPL Limited in reviving the sick company.

The plea was dismissed when VIL rejected the AAFIR’s offer to acquire the equity of UCPTL at Rs 60 per share.

French car maker Peugeot has decided not to claim Rs 85 crore from its now defunct Indian joint venture Pal Peugeot Ltd (PPL).

— Agencies

Judge summons 6 for obscene ice cream ad

NEW DELHI, Sept 20 (UNI) — A Delhi court has summoned two companies — Hindustan Lever Limited (HLL) and Cable Video (India) Limited (CVIL) — and its senior officials in connection with the production of an allegedly obscene advertisement for a popular brand of ice cream.

Chief Metropolitan Magistrate R.K. Gauba noted that the advertisement had been withdrawn after he had suo motu sought a police report on the basis of a newspaper article, but said this did not come in the way of legal action.

The summons to the accused have been issued for October 11. Mr Gauba said he saw the video clipping of the advertisement in court and the materials seized by the police following his order in June.

Apart from the companies, the others summoned were HLL senior Vice-President Dependerjeet Singh Sachdeva, Joseph George, who prepared the advertisement for CVIL and its Chief Executive Officer Ram Thakur Dass Hingorani and Senior Vice-President George Sebastian.

Plots cancelled
From Our Correspondent

LUDHIANA, Sept 20 — The Punjab Small Industries and Export Corporation Limited (PSIEC) has cancelled the allotment of industrial plots in Phase VI here.

The reasons for the cancellation have not been given. The amounts already paid for the plots have been forfeited.

Condemning the PSIEC action, Mr Inderjit Singh Pardhan, President, and Mr Avtar Singh, General Secretary of the Chamber of Industrial and Commercial Undertakings, have asserted that the arbitrary decision to cancel the allotment of industrial plots has caused surprise and tension to entrepreneurs.

Mr Pardhan has urged the Secretary Industry, to direct the PSIEC, authorities to stop the cancellation of plots, allotted some 10-15 years ago.

Kids’ wear
CHANDIGARH, Sept 20 (TNS) — Delhi-based “lil tomatoes” devoted exclusively to children’s wear opened a showroom in Sector 17 here today with a dance programme by Ashley Lobo and Dance Worx. Promila Bahari, its promoter, said the company makes its own clothes.

VMC Software
NEW DELHI, Sept 20 (TNS) — VMC Software Limited has received consent from (SEBI) for a public issue of 5,85,200 shares of Rs 10 each for cash at a premium of Rs 85 per share aggregating Rs 555.94 lakh. The issue will open on September 29.