SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Industrial output dips by 2 pc in Dec
Inflation slips to 4.39%
New Delhi, February 12
Once again there is bad news for the economy as the factory output showed a further decline. However, the good news is that the inflation has come down to over a 12-month low of 4.39 per cent.

Explain rationale behind fare hike, DGCA asks airlines
New Delhi, February 12
India’s civil aviation regulatory body, Directorate General of Civil Aviation (DGCA) today directed all scheduled domestic carriers to provide details and justification behind their decision to simultaneously raise air fares by Saturday.

India may miss FDI target
New Delhi, February 12
The country is likely to miss the foreign direct investment (FDI) target of $35 billion for the current fiscal due to the global credit squeeze.

Slowdown in credit flow to farm sector
Chandigarh, February 12
The Agriculture Debt Waiver and Debt Relief Scheme has resulted in a marked slowdown in flow of credit to the farm sector. As against a target of Rs 2,80,000 crore to be disbursed through institutional credit channels, around Rs 1,90,000 crore has been disbursed by banks till December 2008.



EARLIER STORIES




J&K Chief Minister Omar Abdullah addresses the 81st AGM of Ficci in New Delhi on Thursday. Rajan Bharti Mittal (right) and Harsh Pati Singhania (left), president-elect, Ficci, are also seen in the picture.
J&K Chief Minister Omar Abdullah addresses the 81st AGM of Ficci in New Delhi on Thursday. Rajan Bharti Mittal (right) and Harsh Pati Singhania (left), president-elect, Ficci, are also seen in the picture. Tribune photo: Manas Ranjan Bhui

Gold zooms to Rs 14,900
New Delhi, February 12
Maintaining its record-making spree, gold today scaled a new high of Rs 14,900 per 10 gram on the bullion market here on aggressive buying by jewellers amid firming trend in the global markets.

Tata Sons pledges 11.14% stake in TCS
Mumbai, February 12
Tata Consultancy Services (TCS), the country's largest software exporter, today said its promoter Tata Sons has pledged 10.89 crore shares representing 11.14 per cent stake in the company with lenders.

Omar asks India Inc to invest in J&K
Jammu, February 12
Appealing the Indian industry to come to Jammu and Kashmir for investment, Chief Minister Omar Abdullah asked them to re-establish and revive the relationship they had for long with the state, even as industry body Ficci assured him that the power-intensive industries group would explore possibilities of future investment in the state.

Workshop on web 2.0 content on Feb 20
Chandigarh, February 12
Leading Indian web entrepreneurs, bloggers, social media experts and top Indian journalists will gather for the first-ever Web 2.0 content conference & workshop to be held in Mumbai on February 20. It will deal entirely with content strategies.

Satyam chief for outright sale of company
Mumbai, February 12
The government-appointed board of directors of the fraud-hit Satyam Computer Services favoured an outright sale of the company rather than sale of its divisions or businesses, its chairman Kiran Karnik indicated today.

 





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Industrial output dips by 2 pc in Dec
Inflation slips to 4.39%
Tribune News Service

New Delhi, February 12
Once again there is bad news for the economy as the factory output showed a further decline. However, the good news is that the inflation has come down to over a 12-month low of 4.39 per cent.

Industrial output fell 2 per cent in December from a year earlier, the second fall in three months. The manufacturing sector, which has a weight of about 80 per cent in the Index of Industrial Production (IIP), registered a negative growth of 2.5 per cent against a rise of 8.6 per cent in December 2007, according to government data.

Separate data showed annual inflation fell to 4.39 per cent at the end of January (as against 5.07 per cent a week ago), due to lower prices of fuel.

Mining output and electricity generation grew only by one per cent and 1.6 per cent, respectively, as against 5 per cent and 3.8 per cent, respectively, a year ago. The production of consumer durables and consumer non-durables as well as intermediate items declined. Consumer durables production fell as much as 12.8 per cent.

Economists say that there is a definite need for interest rate cuts and re-revision of the estimates of industrial production, released by the government a few days back.

“A substantial proportion of the current fall in inflation is due to falling fuel and commodity prices, which is lowering input costs for corporates. This would help industry become cost competitive in this situation of a slowdown,” said Satish Bagrodia, president, PHDCCI.

The lowering of inflation would pave the way for further cuts in interest rates, which, in turn, would help revive industry that is presently being impacted by a severe credit crunch, Bagrodia added.

The impact of global economic meltdown has been much more on India’s economy than anticipated earlier and is causing apprehension within the industry about the times to come. What is particularly worrisome is that the manufacturing sector is in the red with a contraction of 2.5 per cent in factory output, indicating that the sector is fast losing momentum on account of high interest rates, non-availability of credit and subdued demand conditions, both in the domestic and export markets.

Major segments of manufacturing sector — intermediates and consumer goods — are showing negative growth rates. This is causing concern about the medium-term growth prospects of this sector.

According to PHD Chambers, electricity generation, which has achieved a meagre growth rate of 1 per cent as compared to 5 per cent last year, is equally disheartening.

The Chambers says that, in this backdrop, it has become imperative to rejuvenate industry by contemplating bold demand-inducing measures. It advocated more public investment in infrastructure and skill development. Ensuring adequate credit availability to industry at affordable rates is a priority to boost demand and reduce production costs in industry. Rationalisation of taxes and a special incentive package for sectors worst affected by the slowdown is also necessary to stimulate demand. Reforms in agriculture are also important to invigorate rural demand.

The chamber hopes that the third stimulus package, anticipated shortly, would address the genuine concerns of industry and help to pull the sector out of crisis, Bagrodia added.

India's exports have contracted on an annual basis in three consecutive months since October, while imports have also slowed due to slowdown in economic activity.

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Explain rationale behind fare hike, DGCA asks airlines
Vibha Sharma
Tribune News Service

New Delhi, February 12
India’s civil aviation regulatory body, Directorate General of Civil Aviation (DGCA) today directed all scheduled domestic carriers to provide details and justification behind their decision to simultaneously raise air fares by Saturday.

In a separate communication to all airlines, the DGCA asked for information regarding the recent hike as well as transparency in air fare advertising, adding that all details should be furnished by February 14. To ensure transparency in air fare advertising, the DGCA also directed airlines to display fares as one composite fare, correctly indicating charges accruing to the airlines.

The move came after Civil Aviation Minister Praful Patel yesterday warned airlines against any move towards cartelisation. Patel, who had earlier asked the carriers to reduce fares after fall in ATF prices, said his ministry was keeping a close watch. In a strong statement following allegations of cartelisation amongst airlines, Patel said action would be taken against airlines if they acted like a cartel to hike fares.

The DGCA also asserted that it had been brought to its notice that the Indian carriers had increased their fares simultaneously in the second week of February. “The DGCA was not aware of the reasons for this simultaneous hike, specifically at a time when the ATF prices, effective February 1, 2009, are at the level that they were in 2005,” the DGCA said.

The regulator also observed that air fares displayed on websites of domestic airlines comprised several components like basic fare and fuel surcharge, congestion charge and passenger service fee (PSF) all loosely labelled as taxes. “This aspect gives an impression to the travelling public that high air fares are due to government taxes,” it added.

To ensure transparency in air fare advertising, DGCA has directed the airlines to display fares as one composite fare, correctly indicating the charges accruing to the airlines.

The government’s displeasure has already prompted Jet and some low-cost carriers (LCCs) to revive their low advance fare schemes. Air India, too, declared its commitment to continue offering competitive fares.

Spokesperson of Kingfisher Airlines said “When every airline is fighting for a share of declining pie, there is no question of cartelisation. On the contrary, LCCs are still offering fares starting from Re 1. Airlines have to cover their costs with revenue and not seat factors. Costs are increasing and reduction in fuel prices has been almost mitigated.”

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India may miss FDI target

New Delhi, February 12
The country is likely to miss the foreign direct investment (FDI) target of $35 billion for the current fiscal due to the global credit squeeze.

Commerce and Industry Minister Kamal Nath today said that the country would be able to receive $30 billion foreign investment inflows in the current financial year.

"We will be able to go to $30 billion," Nath told reporters here on the sidelines of MindMine Summit-2009.

However, the FDI inflows of $19.7 billion in April-November have made it clear that this fiscal's target is too ambitious to achieve given the recession in the US and other developed economies, which are the major sources of cross-border investment.

The country needs more than $10 billion in the last four months of the current fiscal ending March to achieve the full-year figure of $30 billion.

Fund flow has trickled in recent past and the country received just $1 billion FDI in November 2008. In October this fiscal, FDI slipped to $1.4 billion after maintaining robust inflows till September with a monthly range of $2.5-3 billion.

Experts also opined that it would be difficult for India to achieve the FDI target. "We are certainly not going to meet the target ... Even FDI inflows could be weaker in the next fiscal as well," ICRIER director Rajeev Kumar said. — PTI

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Slowdown in credit flow to farm sector
Ruchika M. Khanna
Tribune News Service

Chandigarh, February 12
The Agriculture Debt Waiver and Debt Relief Scheme has resulted in a marked slowdown in flow of credit to the farm sector. As against a target of Rs 2,80,000 crore to be disbursed through institutional credit channels, around Rs 1,90,000 crore has been disbursed by banks till December 2008.

Last year, disbursements to the agricultural sector was around Rs 2,41,000 crore, much higher than the targeted Rs 2,25,000 crore. However, this year, the government is unlikely to meet its target for credit flow to agriculture sector.

Top officials in the RBI informed TNS that credit flow in agriculture sector has seen some slowing down after the debt waiver scheme, announced last year. Most of the banks claim that the reason for the slow advances to the agriculture sector is that RBI had released the first instalment of this debt waiver and debt relief scheme to the banks only in November, after banks had written off debt taken by the small and marginal farmers.

However, because of the debt waiver scheme, many banks, especially the cooperative and the regional rural banks, have been showing reluctance to give fresh advances to farmers. Under the debt waiver scheme, farmers whose debts have been written off are eligible for fresh loans from banks. Since majority of the farmers avail loans through these regional rural and cooperative banks, they have now made their norms more stringent for giving fresh advances. These banks have now started asking farmers for their land records, showing their ownership of land, before issuing fresh loans. As a result, a number of tenant farmers are now unable to get fresh loans.

Talking to TNS here today, R. Gandhi, regional director, RBI, New Delhi, admitted that there has been a slowdown in flow of credit to agriculture sector. “However, we hope that the offtake would go up now, during the rabi season. We have been encouraging banks to take up fresh lending in agriculture sector and have also issued guidelines for the same to all commercial banks. Since the cooperative banks and regional rural banks are under the purview of Nabard, we cannot do much,” he said.

Interestingly, even the lakhs of farmers, who were eligible under the debt relief scheme, have failed to avail this scheme, wherein a waiver of 25 per cent of their loan was granted. “Since these farmers had to repay 75 per cent of the loan amount, they have not come forward to repay this in instalments,” said Gandhi, adding that repayment by farmers after the announcement of the debt waiver scheme had fallen by almost 40 per cent.

“We have not collected data from all commercial banks and Nabard, on the number of large farmers who have failed to repay the debts. This has already been submitted to the Government of India,” he said.

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Gold zooms to Rs 14,900

New Delhi, February 12
Maintaining its record-making spree, gold today scaled a new high of Rs 14,900 per 10 gram on the bullion market here on aggressive buying by jewellers amid firming trend in the global markets.

Gold prices spurted by Rs 350 to close at record Rs 14,900 per 10 gram.

Marketmen said heavy buying by jewellery fabricators to meet the marriage season demand pushed up the gold prices.

A significant support from the overseas markets where gold rose to $948.60 an ounce, a level never seen before July 23, also supported the trend, they added.

Gold prices in overseas markets, which set trend in domestic markets, climbed in day-to-day trading on fears that US governments rescue plan may not revive the economy.

"Presently, there is investment buying at existing higher levels joined by actual users for the marriage season," All India Sarafa Bazar president Sheel Chand Jain said. — PTI

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Tata Sons pledges 11.14% stake in TCS

Mumbai, February 12
Tata Consultancy Services (TCS), the country's largest software exporter, today said its promoter Tata Sons has pledged 10.89 crore shares representing 11.14 per cent stake in the company with lenders.

In a disclosure to the National Stock Exchange, TCS said its main promoter, Tata Sons, has pledged 10.89 crore shares without giving any details about the transaction date.

At the end of December quarter, Tata Sons held 73.75 per cent stake in TCS.

Calculated on the basis of today's market price of TCS scrip, the pledging would have fetched the promoter over Rs 5,610.26 crore.

TCS is the latest Tata Group company after Tata Steel, Tata Motors, Tata Communications, Tata Teleservices (Mah), and Tata Power among others to disclose the promoter pledging of shares. — PTI

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Omar asks India Inc to invest in J&K
Tribune News Service

Jammu, February 12
Appealing the Indian industry to come to Jammu and Kashmir for investment, Chief Minister Omar Abdullah asked them to re-establish and revive the relationship they had for long with the state, even as industry body Ficci assured him that the power-intensive industries group would explore possibilities of future investment in the state.

As per a release issued here, addressing the 81st AGM of Ficci, in New Delhi today, the Chief Minister said the state has witnessed the most peaceful elections in the past two decades and people have ensured the success of the democratic process by huge participation. He said people have yearned for change and the state wants to be known for events other than violence. For this, he called for the support of the corporate sector.

Enumerating the investment potential of the state, Omar said while Jammu can be described as the capital of small & medium enterprises, Kashmir holds potential for tourism, agro-based, IT and outsourcing industries. He said only two days ago, he inaugurated the BPO of the Essar group in Srinagar, adding that by investing in sectors like health, education and power, the industry shall not only be earning profits but also fulfilling its promise of social responsibility towards the state as well. He also said he would be meeting the Prime Minister to talk about incentives for investing in Jammu and Kashmir.

Terming J&K as the biggest beneficiary of good relations between India and Pakistan, the CM hoped that the slowdown in relations between the two countries won't go below this. He hoped that the LoC in Kashmir becomes Line of Commerce and said he would be taking the connectivity and financial problems coming in the way of this trade with the Centre.

On the efforts of the government, Omar said infrastructure was the primary focus of the present coalition, adding many infrastructure projects were in the pipeline, including the historical rail project.

Thanking the Chief Minister for his gesture, Ficci director-general Dr Amit Mitra assured him that his organisation would explore investment opportunity with the power-intensive industries group.

Dr Mitra also announced that Ficci would hold its next retreat of CEOs of industry later this year in Kashmir. 

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Workshop on web 2.0 content on Feb 20
Tribune News Service

Chandigarh, February 12
Leading Indian web entrepreneurs, bloggers, social media experts and top Indian journalists will gather for the first-ever Web 2.0 content conference & workshop to be held in Mumbai on February 20. It will deal entirely with content strategies.

NewsroomContent.com, a web strategy and consulting group based in Washington, D.C, is organising the conference. The firm specialises in developing content strategies for news and media portals.

The conference features hands-on workshops that will bring attendees up to speed on the latest content strategies being used in the US by major news web portals, and will feature workshops to help attendees build their brands online leveraging third-party content, and build their online destinies on a shoestring budget using free or relatively inexpensive tools available online.

Vir Sanghvi, a keynote speaker, will dwell on the “State of online journalism in India”.

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Satyam chief for outright sale of company

Mumbai, February 12
The government-appointed board of directors of the fraud-hit Satyam Computer Services favoured an outright sale of the company rather than sale of its divisions or businesses, its chairman Kiran Karnik indicated today.

Speaking to newsmen here after a board meeting of the company, Karnik said ''there are some dangers, if the company is sold in parts''. A sensible businessman will look at cherry-picking the good parts and there could be job losses,'' he added.

The board of directors expect the outline for the bidding process for the sale of the company within the next 10 days, he said. ''We expect the (bidding) process to be defined in 7 to 10 days'', Karnik said, adding that ''It's a work in progress. I can't give any deadline. I can only tell you, this needs to be done quickly.'' The board has appointed Goldman Sachs and Avendus, an Indian investment bank, to look for strategic investors. L&T, Tech Mahindra and Spice Group have evinced interest in buying Satyam.

However, the formal process of bidding for Satyam will begin once the board has a fair idea of the company's future outlook. The board will share the outlook with Satyam's customers.

He refused to comment on the agenda of the board meeting and said the priorities are to ensure financial stability and chalking out a medium and long-term roadmap for the company.

Karnik said after the first knee-jerk reaction, there was greater comfort. The company is now financially stable and customers are now asking questions about the long-term stability. He said the company had enough funds to pay salaries for February.

Apart from receivables from clients, it has raised funds from banks. The company would mortgage land if more funds were required, he said. — UNI

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