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THE TRIBUNE SPECIALS
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B U S I N E S S

Withdrawal of SAFTA concessions
India refutes Pak’s claim

Islamabad, February 27
India today refuted Pakistan's claim that it has withdrawn tariff concessions under SAFTA in response to Islamabad's refusal to implement the provisions of the regional free trade agreement.

Taming Inflation
Supply side curbs must go, says Survey
New Delhi, February 27
Unless the supply side constraints, especially in food items, are removed, the inflationary pressure will not be tamed fully, says the Economic Survey 2006-07 tabled by finance minister P Chidambaram in Parliament today.

Impact of FDI in retail under study
New Delhi, February 27
Under pressure from the Prime Minister's Office, the commerce ministry said today it has commissioned a study on the impact of foreign direct investment (FDI) and big corporates in retail sector.

India Inc bullish on double-digit growth
New Delhi, February 27
Industry chambers today lauded Economic Survey’s social sector activism and hailed finance minister P Chidambaram’s promise to contain fiscal deficit to 2.8 per cent, with GDP growth touching 9.2 per cent.

Govt going all out to suppress inflation: PM
New Delhi, February 27
Prime Minister Manmohan Singh asserted today that the government was making all efforts to contain inflation without compromising on the growth of agriculture and industry.


A model presents a creation by British designer Vivienne Westwood at the Autumn/Winter 2007/2008 ready-to-wear collection show in Paris on Tuesday.
A model presents a creation by British designer Vivienne Westwood at the Autumn/Winter 2007/2008 ready-to-wear collection show in Paris on Tuesday. 
— AFP

EARLIER STORIES

 
Models pose with Masterstroke deluxe whisky at its launch in New Delhi on Tuesday.
Models pose with Masterstroke deluxe whisky at its launch in New Delhi on Tuesday. Diageo Radico Distilleries, a joint venture between Diageo and Radico Khaitan, unveiled at a price of Rs 400 per 750ml bottle. — AFP photo

Volatile oil prices worrisome
New Delhi, February 27
The Economic Survey voiced concern over the volatile global crude oil prices as it affect the country’s economy in several ways. It expressed concern over the continued transmission and distribution losses and went ga-ga over the multi-fold growth in the telecom sector, with advice to extend the communication revolution to rural India.

Investors want easy Budget
Mumbai, February 27
Dalal Street will be looking for a reprieve from finance minister P Chidambaram when he rises to present the Budget tomorrow, as investors have lost over Rs 3,50,000 crore in 11 days to the annual financial statement.

Civil aviation clocks 35.5 per cent growth
New Delhi, February 27
Civil aviation sector has emerged as one of the key growth areas in the country in the past one year, with new routes and fresh city pairs introduced not only by private airlines but also the public sector airlines, which led to a phenomenal growth.

India ‘biggest’ market for remittances
Chandigarh, February 27
India has emerged as the largest market for remittances, with $25 billion remittances being sent to the country each year, said Hikmet Ersek, executive vice-president and managing director, Europe, West Asia, Africa and South Asia, Western Union.

Wal-Mart makes inroads into China
Beijing, February 27
Wal-Mart today announced the acquisition of a 35 per cent stake in Bounteous Company Ltd, which operates hypermarkets in China under the Trust-Mart banner.

Sebi imposes fine on BFSL promoter
Mumbai, February 27
Sebi has imposed a fine of Rs 25 lakh on the promoter of Bhoruka Financial Services Ltd (BFSL) for illegal trade worth Rs 90 crore on the unrecognised Magadh Stock Exchange Association (MSEA).

MTNL interim dividend
New Delhi, February 27
MTNL today paid an interim dividend of 30 per cent to the government totalling Rs 106.31 crore for the fiscal 2006-07.

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Withdrawal of SAFTA concessions
India refutes Pak’s claim

Islamabad, February 27
India today refuted Pakistan's claim that it has withdrawn tariff concessions under SAFTA in response to Islamabad's refusal to implement the provisions of the regional free trade agreement.

A senior official of the Indian High Commission here questioned Pakistan commerce secretary Syed Asif Shah's claim that India has withdrawn SAFTA concessions to Pakistan.

During the SAARC commerce ministers’ meeting in Kathmandu yesterday, Shah told reporters that India had "unilaterally" withdrawn the concessions and expressed Pakistan's regret over the move.

"What commerce minister Kamal Nath said was that India was entitled to withdraw concessions to Pakistan, but did not say that New Delhi has withdrawn the SAFTA provisions as claimed by Shah," the Indian official said

"Nath said Pakistan should comply with SAFTA," the Indian official said, adding that it appears to be a "deliberate ploy" by Pakistan to present a "distorted" version of India's stand.

Shah was quoted in the media here as saying that India's decision to "unilaterally" withdraw tariff liberalisation programme was in violation of Article 7 of the trade agreement which had been in effect since July, 2006.

"Pakistan remains committed to continuing the trade liberalisation programme as stipulated in SAFTA," he said when asked if Pakistan would come up with a similar action.

He said the Indian decision would be debated at an appropriate level. "We would take all possible steps available under the agreement. We would evolve a strategy and move ahead.

You can't just sit, you have to react, which we will. We will consult all stakeholders on the issue."

Pakistan has applied tariff concessions to only 1,073 items which it has included in the positive list of items for trade with India.

However, it is trading with rest of the SAARC member states with a negative list as stipulated under the regional free trade agreement.

India took exception to this and complained to SAARC about the selective implementation of SAFTA by Pakistan, which was taken up during the SAARC commerce ministers meet.

Shah said commerce minister Humayun Akhtar was in Kathmandu to resolve the issue and a decision would be taken after his return to lay down parameters for a future action on the issue. — PTI

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Taming Inflation
Supply side curbs must go, says Survey
S Satyanarayanan
Tribune News Service

New Delhi, February 27
Unless the supply side constraints, especially in food items, are removed, the inflationary pressure will not be tamed fully, says the Economic Survey 2006-07 tabled by finance minister P Chidambaram in Parliament today.

“In the current year, pressure on inflation may persist because of a mis-match in supply and demand for some primary articles and firm international prices,” the survey said.

Higher demand as a result of an accelerated growth in GDP, higher growth in reserve money because of a faster increase in foreign assets, the multiplier effect of increase in broad money, and the credit growth have also exerted pressure on demand side, it said.

The survey says the fight against inflation has to be calibrated so that policies contain inflation without compromising growth. It noted that the government has been quick in responding to the inflationary trend and has been making efforts to ease the pressure on prices.

In petroleum products, only a partial pass-through of the increase in international prices was provided and later a reduction in the prices of petrol and diesel was made which kept the inflation for the group ‘fuel and power’ moderate, it said.

On January 20, 2007, primary articles recorded an inflation rate of 9.76 per cent as compared to 5.87 per cent a year ago, and contributed 34.87 per cent to over-all inflation this year as against 29.73 per cent last year. Year-on-year rate of inflation for these articles two years ago (January 22, 2005) was 1.04 per cent.

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Impact of FDI in retail under study
Tribune News Service

New Delhi, February 27
Under pressure from the Prime Minister's Office, the commerce ministry said today it has commissioned a study on the impact of foreign direct investment (FDI) and big corporates in retail sector.

"I have asked Indian Council of Research in International Economic Relations (ICRIER) to do a holistic study to determine the impact of big investment from the organised sector, including FDI, in retail on not only small shops, but also the other segments of the society," commerce and industry minister Kamal Nath told reporters.

ICRIER would submit its report in the next three to four months.

Meanwhile, FDI inflows grew by 98.4 per cent in the first six months of the 2006-07 financial year, with three quarters of such flows in the form of equity.

At $4.2 billion during April and September ,2006, FDI was almost twice its level in April-September, 2005, indicating that the capital inflows into India remained strong on an overall basis even after gross outflows under FDI with domestic corporate entities seeking a global presence to harness scale, technology and market access advantages through acquisitions overseas, the Economic Survey says.

Commerce Minister Kamal Nath said the FDI inflows into India during December, 2006, registered an unprecedented increase of 480 per cent over the inflows in December , 2005, making it the highest inflow ever into the country in a single month.

“We received equity inflow of $2.04 billion in December, 2006, as compared to $0.35 billion in December, 2005. With this, the total inflows from April, 2006, to December, 2006, are now about $ 9.3 billion as compared to $ 3.5 billion received during this period last year,” Mr Nath told newspersons.

“The total inflows in 2005-06 were $ 5.5 billion while it is expected that by March, 2007, we would have received this year over $12 billion of FDI equity inflows,” he said.

The survey points out that foreign institutional investment (FII) has turned positive in the second half of the current year after turning into net outflows during the first half of 2006-07.

The net FII inflow during April-September, 2006, was $1.6 billion as against $5.4 billion in April-September, 2005.

As regards external commercial borrowings (ECB), the survey pointed to a sharp increase in net inflows to $5.1 billion in the first half of 2006-07 from a total inflow of $2.7 billion in 2005-06. The foreign exchange reserves reached $180 billion as on February, 2007, with active purchase of foreign exchange by the RBI totalling $9.8 billion in the first nine months of the current fiscal.

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India Inc bullish on double-digit growth
Tribune News Service

New Delhi, February 27
Industry chambers today lauded Economic Survey’s social sector activism and hailed finance minister P Chidambaram’s promise to contain fiscal deficit to 2.8 per cent, with GDP growth touching 9.2 per cent.

Reacting on the Survey, Assocham president Venugopal N. Dhoot said, “It is credit worthy for the finance minister that he has promised to contain fiscal deficit to 2.8 per cent, with GDP growth touching 9.2 per cent growth rate to push up education, health and tame inflation”.

Mr Dhoot said inflation, education and health remain prime areas for concern, with agriculture growth staggering at 2.7 per cent and thereby its share in GDP dipping to 18.5 per cent.

He suggested that in the Budget proposals for 2007-08, the finance minister should initiate enough measures so that health, education and agriculture sector receive fillip in future towards India achieving an inclusive growth rate of double digit.

Assocham chief expressed happiness that services and industry have registered a good growth, with exports rising significantly to 36 per cent in the first 10 months of current fiscal and hoped that this momentum will continue.

Ficci president Habil Khorakiwala welcomed the activism of the Survey on the social sector, especially its emphasis on education, health and poverty alleviation. The buoyant note struck by the Survey on sustaining 9 per cent growth over the medium term, he said, was in conformity with the expectation of Indian business of a high-trajectory growth.

He said the Economic Survey’s prognosis that “the country will miss the target for providing basic education to all by 2007” was an honest admission of the enormity of the problem. He emphasised the need for going beyond numbers and zeroing in on the quality of education and health through the public-private partnership model.

While concurring the Survey’s thrust on skill formation and vocational training and labour flexibility as important elements for sustainable growth, the Ficci chief said: “The focus should not be on allocation of funds alone. The government needs to think out of the box and come up with innovative steps for improving the quality of service delivery and get more out of every rupee spent on training and re-training of the workforce.

CII president R Seshasayee said India was now poised for the next wave of growth, having comprehensively established its strong economic fundamentals through two consecutive years of 9 percent plus GDP growth.

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Govt going all out to suppress inflation: PM

New Delhi, February 27
Prime Minister Manmohan Singh asserted today that the government was making all efforts to contain inflation without compromising on the growth of agriculture and industry.

"We are trying to control inflation while stimulating the growth impulses in our economy because that is the only way you can create more jobs for our youth, for our young people," he told reporters in Parliament House.

He said the challenge before the country was to tackle inflation without hurting the growth of agricultural and industrial economy.

"It is not easy. Everywhere you find there is a trade-off between inflation and growth," he said. — PTI 

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Volatile oil prices worrisome
R. Suryamurthy
Tribune News Service

New Delhi, February 27
The Economic Survey voiced concern over the volatile global crude oil prices as it affect the country’s economy in several ways. It expressed concern over the continued transmission and distribution losses and went ga-ga over the multi-fold growth in the telecom sector, with advice to extend the communication revolution to rural India.

With the recent experience of the crude touching $75 per barrel, the government has taken steps to augment the production of oil and natural gas and regulate volatility in prices.

The government plans to regulate the petroleum sector, maintain strategic crude oil storage facilities of five million tonnes at different places, ethanol blended petro, new exploration licensing policy, intensifying gas search, and encouraging oil and gas search.

In the power sector, the survey said the overall electricity generation by power utilities during 2006-07 was, however, targeted to go up by 6.7 per cent to 663 billion kwh in 2006-07.

While thermal generation exhibited substantial acceleration in growth during the first three-quarters of 2006-07, the growth of hydro and nuclear generation slowed down.

Coal continued to remain the mainstay of the power sector, with 54.2 per cent (69,199 mw) of the total installed power generation capacity in the country of 1,27,673 MW as of December, 2006, in coal-fired thermal units.

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Investors want easy Budget

Mumbai, February 27
Dalal Street will be looking for a reprieve from finance minister P Chidambaram when he rises to present the Budget tomorrow, as investors have lost over Rs 3,50,000 crore in 11 days to the annual financial statement.

While the pre-Budget Economic Survey today lauded the buoyancy in stock market for its continuing record-breaking spree since 2003, the market's benchmark index Sensex has lost over 1,245 points (over 8 per cent) from an all-time high of 14,723.88 scaled on February 9.

Speculation is rife that Chidambaram may give more money to the common man than what had already been agreed upon in allocations to the social sectors. 

The Bombay Stock Exchange's market capitalisation has plunged by about Rs 3,50,000 crore in the same period to an estimated Rs 36,00,000 crore at the end of today's trading session.

The investors have lost Rs 1,90,000 crore in the 30 blue chip companies present on the barometer index, Sensex alone.

Among the Sensex constituents, only a few companies have managed to add to their market value since February 9. While index heavyweight Reliance Industries has added about Rs 2,300 crore to the investors' wealth, private sector steel giant Tata Steel has also gained about Rs 1,000 crore in market cap during this period.

However, public sector major ONGC has lost over Rs 14,200 crore in its market value, while private sector corporate giants like ICICI Bank, Reliance Communications and Infosys Technologies have lost between Rs 9,000 crore and Rs 11,000 crore.

Giants like Wipro, State Bank of India, HDFC, HDFC Bank, Bharti Airtel, BHEL and Grasim Industries have also lost Rs 4,000-7,000 crore worth market cap since the day the barometer index hit its life-time high earlier this month.

The setback received by the Congress party in two state elections — Punjab and Uttarakhand — also added to the market woes with the brokers anticipating the assembly poll results to exert pressure on the stability of the ruling dispensation at the Centre.

The market is also abuzz with expectations for a populist Budget and there could not be enough strong measures to boost further the financial reforms, brokers said.

Meanwhile, the finance minister needs to delicately balance several parameters with some perhaps conflicting — high inflation, signs of overheating of the economy and maintaining confidence of the investors.

Chidambaram’s dilemma is compounded by the reverses in the Assembly elections with his critics charging that high inflation was the root cause of the debacle. — PTI

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Civil aviation clocks 35.5 per cent growth
Tribune News Service

New Delhi, February 27
Civil aviation sector has emerged as one of the key growth areas in the country in the past one year, with new routes and fresh city pairs introduced not only by private airlines but also the public sector airlines, which led to a phenomenal growth.

According to the Economic Survey 2006-07, there has been a phenomenal overall growth of 35.5 per cent in the civil aviation passenger growth section from April to September '06 over the same period previous year. This has mainly been due to a staggering 44.6 per cent increase in the number of domestic travellers coupled by international passenger growth of 15.8 per cent.

In the same period, international and domestic cargo recorded growth of 13.8 per cent and 8.7 per cent, respectively, which amounted to an overall growth of 12 per cent.

The growth has been recognised as a result of private airlines introducing as many as 22 new routes to metro and non-metro cities. Indian also kicked off operations on routes like Bangalore-Bhubaneshwar-Bangalore and Delhi-Khajurao-Varanasi and return, its subsidiary alliance air started flying on Chennai-Bhubneshwar-Chennai sector.

Meanwhile, Air-India Express started operations in sectors like Mangalore-Delhi, Amritsar-Dubai and Dubai-Chennai. It also took over Air-India’s Singapore operations from Chennai from October 29.

Aviation infrastructure development got a boost with the privatisation of Delhi and Mumbai airports. Construction work at greenfield airports of international standards in Hyderabad and Bangalore is in progress.

Besides, the airports authority of India (AAI) is developing and upgrading 35 non-metro airports. Development of aviation infrastructure in the north-east region is being taken up on priority basis.

Through an act of Parliament, an airport economic regulatory authority (AERA) is proposed to be set up to fix, review and approve tariff structure for aeronautical services and monitor pre-set performance standards at indian airports, the survey said. All airports in the country are now open for international chartered flights and Indian passport holders are allowed to travel on them. The government has liberalised tourist charter guidelines further. A revised air services agreement was signed with the United States to increase cooperation in the aviation sector, said the Economic Survey.

Similarly, traffic rights were increased with 19 countries - Australia, Britain, Belgium, Canada, China, Egypt, France, Germany, Italy, Japan, Kuwait, Mauritius, The Netherlands, New Zealand, Oman, Scandinavian Countries, Singapore, Spain and the United Arab Emirates.

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India ‘biggest’ market for remittances
Tribune News Service

Chandigarh, February 27
India has emerged as the largest market for remittances, with $25 billion remittances being sent to the country each year, said Hikmet Ersek, executive vice-president and managing director, Europe, West Asia, Africa and South Asia, Western Union. He was in the city to inaugurate 300,000 branch of Western Union here. He said the global remittance market was $269 billion and India was emerging as the global leader.

He said Western Union was now operating from 40,000 locations in India and 150 consumer-to-consumer transactions were taking place in India. Globally, the company had a market share of 17.4 per cent and the total revenue of the company was $4.40 billion.

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Wal-Mart makes inroads into China

Beijing, February 27
Wal-Mart today announced the acquisition of a 35 per cent stake in Bounteous Company Ltd, which operates hypermarkets in China under the Trust-Mart banner.

Wal-Mart Stores, Inc., announced an agreement under which Wal-Mart has purchased a 35 per cent interest in BCL which has 101 Trust-Mart retail stores in 34 cities in China.

"Through this investment in Trust-Mart we have the opportunity to expand our presence in China, one of the world's fastest growing retail markets," Wal-Mart vice-chairman Michael Duke said.

"This alliance positions Trust-Mart to offer even higher levels of customer service to Trust-Mart's loyal customers as we benefit from Wal-Mart's expertise in logistics and operations," Trust-Mart chairman John Yu said. — PTI

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Sebi imposes fine on BFSL promoter

Mumbai, February 27
Sebi has imposed a fine of Rs 25 lakh on the promoter of Bhoruka Financial Services Ltd (BFSL) for illegal trade worth Rs 90 crore on the unrecognised Magadh Stock Exchange Association (MSEA). BFSL promoter Sidharth Agarwal also gave false and misleading information during investigation about transactions in the BFSL scrip with DLF Commercial Developers Ltd.

He had sold almost the entire stake in the company to DLF for Rs 89.28 crore on the MSEA, whose recognition was still pending, , Sebi adjudicating officer Amit Pradhan said.

DLF was fined Rs 1 crore in the matter last week. Transactions in the BFSL scrip was executed at the MSEA from August 1 to 12, 2005. Sebi alleged that Agarwal's statement as to why the transactions in the BFSL scrip were shifted to yet-to-be-recognised MSEA from the Bangalore Stock Exchange where the company was originally listed was based on false premise. — PTI

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MTNL interim dividend

New Delhi, February 27
MTNL today paid an interim dividend of 30 per cent to the government totalling Rs 106.31 crore for the fiscal 2006-07.

The total dividend declared by the PSU was Rs 189 crore. The government has a holding of 56.25 per cent stake in the PSU.

MTNL has a paid up capital of Rs 630 crore.

CMD R.S.P. Sinha presented a cheque for Rs 106.31 crore to union telecom and IT minister Dayanidhi Maran. — PTI

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BRIEFLY

Gujarat Ambuja sells 11 pc stake to Holcim
New Delhi, February 27
Gujarat Ambuja Cements Ltd has sold 11 per cent of its stake in Ambuja Cement India Pvt Ltd (ACIL) to Swiss cement major Holcim for Rs 526.5 crore. The company said it had exercised its put option for the 11 per cent stake in ACIL and sold 9,53,75,000 shares. ''By selling these shares, the company has realised a profit of Rs 240.7 crore,'' a Gujarat Ambuja statement said. — UNI

BHEL pays 125 pc dividend
New Delhi, February 27
BHEL today paid the highest-ever interim dividend of 125 per cent for 2006-07. A cheque for Rs 207.19 crore was presented to Heavy Industries Minister Santosh Mohan Dev by company CMD A.K. Puri here. While the company's net sales from operations (nine months) has risen by 33.8 per cent at Rs 10,318 crore, profit after tax has catapulted by nearly 56 per cent, at Rs 1,264 crore. BHEL is now poised to introduce 800-MW thermal sets with super critical parameters. It has equipped itself to produce thermal power equipment for 800-MW sets and above suited to Indian 
conditions. — UNI

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