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Interim Budget
Industry shows mixed reaction
CII, Ficci hail, PHDCCI, Assocham think otherwise

New Delhi, February 16
The Interim Budget presented by stand-in Finance Minister Pranab Mukherjee today has evoked a mixed response from the industry. While trade bodies like CII and Ficci have hailed the Budget, others like PHD Chamber and Assocham have pointed out that “little more” could had been done.

Graphic: Interim Budget 2009-10: Deficit Trends

Auto industry disappointed
New Delhi, February 16
Auto industry expressed its displeasure over the Interim Budget, saying that it did not meet their expectations.

No bright spot for textile industry
Chandigarh, February 16
The Interim Budget presented by the UPA government has failed to woo the recession-hit textile SMEs. Other than the fact that the Budget speaks of extending the interest subvention of two per cent on pre and post-shipment credit for exports in SME, textile, handloom and handicrafts sector till September this year, there are no exemptions in income tax, duty drawbacks or excise cuts.



EARLIER STORIES





This file photo shows airport workers loading cargo onto a Singapore Airlines plane at Changi International Airport in Singapore. Singapore Airlines said on Monday it would cut 17 per cent of its operating fleet and was exploring other cost-saving measures amid a global economic slump which has hit travel and cargo demand. — AFP

Interest subsidy to exporters extended till Sept
New Delhi, February 16
The government extended interest subsidy till September for exporters, who said they were expecting more in the face of extraordinary challenges being faced in overseas markets.

Sensex crashes 329 points
Mumbai, February 16
The stock markets, which were on a high on anticipation of stimulating measures for the industry and some tweaking in tax structure, today tanked with the benchmark Sensex on the BSE nosediving by 320 points as the Interim Budget turned out to be a damp squib.

CBI to probe Satyam scam
Hyderabad/New Delhi, February 16
The Andhra Pradesh government has handed over the Rs 7,800-crore Satyam scam to the CBI, more than a month after the IT major's founder B Ramalinga Raju confessed to cooking his company's account books and inflating profits over the past many years.

NACIL allocation up by Rs 4,029 cr
New Delhi, February 16 The government today substantially increased the allocation for Air India holding company, National Aviation Company of India Limited (NACIL), by about Rs 4,029 crore in the Interim Budget. Almost the entire increase in allocation for the Civil Aviation Ministry has been cornered by NACIL with the airline firm being earmarked Rs 8,165.64 crore, up against the revised estimate of Rs 4,136.89 crore for 2008-09.

Govt seeks $3 b from WB for PSU banks
New Delhi, February 16
The government will seek additional $3 billion (about Rs 14,440 crore) from the World Bank to infuse funds into public sector banks to shore up their capital against various risks to ensure credit flow to productive sectors to beat the economic slowdown.

Rupee down by 15 paise
Mumbai: In tune with the fall in stock markets, the Indian rupee today lost 15 paise to close at 48.82/83 against the greenback. At the Interbank Foreign Exchange (Forex) market, the domestic unit opened sharply lower at 48.78/79 a dollar and moved down further to settle the day at 48.82/83. The local unit had gained 17 paise to close 48.67/68 in the previous day's trade. — PTI





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Interim Budget
Industry shows mixed reaction
CII, Ficci hail, PHDCCI, Assocham think otherwise
Tribune News Service

New Delhi, February 16
The Interim Budget presented by stand-in Finance Minister Pranab Mukherjee today has evoked a mixed response from the industry. While trade bodies like CII and Ficci have hailed the Budget, others like PHD Chamber and Assocham have pointed out that “little more” could had been done.

The Confederation of Indian Industry (CII) has hailed the increased Budget expenditure on infrastructure and social sectors, with CII president-designate Venu Srinivasan saying the former would have a multiplier effect on the economy while the latter would put money into the hands of the people.

Srinivasan said both were required to help the economy get out of the current economic stagnation, and the two stimulus packages announced so far have addressed critical areas of weaknesses in the economy like housing, SMEs and exports.

“Fiscal expansion is being used all over the world as a counter-cyclical measure. For these measures to be effective, the RBI should follow it up with further monetary easing in the form of an interest rate reduction,” he said.

The CII has also welcomed the extension of interest subvention on pre and post shipment credit to exporters. Given the difficulties being faced by exporters in getting credit at a reasonable cost, this could prove as a timely measure. Another measure hailed by CII is the attempt to ensure better delivery of social sector schemes through the allocation of Unique Identities. This was a long pending reform that would help target the beneficiaries of these schemes and prevent misuse, said Srinivasan.

The Interim Budget had set the direction for the next government and gave a clear message on what steps needed to be taken in the months following the general elections, said Harsh Pati Singhania, the president of Ficci. It emphasises on restoring the growth momentum, he added.

Singhania pointed out that the Finance Minister had, in his speech, said tax rates must fall in times of crisis, and this was a big missive for the next government and Ficci would now like to see some development on this front.

PHD Chamber president Satish Bagrodia has said the Interim Budget was a major disappointment for the industry, which was expecting a slew of measures from the government to rejuvenate the economy to overcome the demand slump accruing from the meltdown. While the Chamber appreciates that the announcement of tax measures should be left to the presentation of the full Budget, the four per cent excise concession, announced as part of first stimulus package to stimulate demand, should had been continued beyond March, he said.

Assocham president Sajjan Jindal has said that the industry did expect that at least surcharge on corporate taxes would be removed and new corporate tax ceiling introduced. “There was no hint in this direction by the Finance Minister. Likewise on infrastructure refinancing, the focus is there in the Budget but directions are not clearly laid out.”

Jindal said in the wake of the falling industrial production, decrease in exports, the Finance Minister strengthened many of his social schemes and enhanced allocations for rural infrastructure, which, according to Assocham, would become main sources for demand generation.

Jindal, however, said Mukherjee made lot of good allocations for increasing social schemes such as subsidised education in ITIs for widows, housing loans upto Rs 3 lakh for rural poor @ 7 per cent interest rate and increase subsidies for fertilizer, food and petroleum.

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Auto industry disappointed
Tribune News Service

New Delhi, February 16
Auto industry expressed its displeasure over the Interim Budget, saying that it did not meet their expectations.

Dilip Chenoy, Director General, Society of Indian Automobile Manufacturers (SIAM), said, “If you look at it from the point of view of an Interim Budget and what was expected, then perhaps it is not meeting the expectations that were created in the minds of people in the corporate sector and also in a lot of sectoral groupings.”

He said there was an expectation that the Interim Budget could be used to announce a series of measures that will further act as a fillip to the economy.

But what has happened is that they have looked at increasing infrastructure spending etc, he said, while adding “the two key issues, which are impacting the growth of the automobile sector, are the availability of finance coupled with repossession loans which are not budget items.”

Venu Srinivasan, chairman and managing director, TVS Motor Company, said, “The government has followed the electoral guidelines of not announcing policy projects, preceding the election. At the same time, the government has continued the support given for exporters, social sector and for the subsidies to be maintained. As an industry, we are not particularly disappointed.”

Eicher Group chairman S Sandilya said, “The problem is of implementing whatever has been committed, which is invariably lacking. Had it been a regular Budget, there would obviously be lots of expectations, for example, there could be some relief on personal taxation. But I do not expect it now.”

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No bright spot for textile industry
Ruchika M. Khanna
Tribune News Service

Chandigarh, February 16
The Interim Budget presented by the UPA government has failed to woo the recession-hit textile SMEs. Other than the fact that the Budget speaks of extending the interest subvention of two per cent on pre and post-shipment credit for exports in SME, textile, handloom and handicrafts sector till September this year, there are no exemptions in income tax, duty drawbacks or excise cuts.

The small and medium enterprises (SMEs) said the government has failed to come to their rescue even as they are forced to cut down on production and lay off employees in the wake of export orders drying up.

What has dismayed the textile sector here is the fact that the Central government had been talking about a third stimulus package for industry to be announced with the Budget.

Satish Bagrodia, president of the PHD Chamber of Commerce and Industry and CMD of Winsome Group of Industries, said announcements for a third stimulus package made by senior Cabinet ministers had raised their hopes, but the Budget had proved to be a disappointment.

“The government should have doled out some sops for the textile sector. Already production in textile sector is down by 25 per cent. With the sector now having to wait for another six months, till the time the new government comes out with its Budget, many units are likely to close down,” he said.

S P Oswal, chairman of Vardhman Group of companies, said the textile sector, which is the second largest employment generator in the country after agriculture, is crest-fallen. “We had expected a duty drawback for the garment sector, which is the worst hit as export orders have gone down drastically. We agree that these are tough times for the government as well, as the fiscal deficit is going up. But had the government been more conservative in its spending in the past, there would have been some contingency fund for the industry now,” he rued.

Ramesh Verma, president of the Panipat Handlooms Export Association, too, said with huge cancellation of export orders in handloom sector, these SMEs will not be able to sustain themselves for long. “Recently, carpet export orders worth Rs 100 crore from Panipat have been cancelled. Many contract manufacturing units in Panipat have already closed down. If there is no government aid now, many more units will close down,” he said.

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Interest subsidy to exporters extended till Sept

New Delhi, February 16
The government extended interest subsidy till September for exporters, who said they were expecting more in the face of extraordinary challenges being faced in overseas markets.

The Interim Budget for 2009-10, presented in Parliament, extended the period for concessional finance to exporters, hit hard by recession in major global markets.

Earlier, the interest subvention of two per cent could be availed of till March.

"The extension of interest subvention is a welcome step but we were expecting the extension till December," Federation of Indian Export Organisations (FIEO) president A Sakthivel said. He said exporters were also expecting the abolition of fringe benefit tax and increase in the duty drawback rates.

After registering a handsome growth rate of over 30 per cent in the first half of the current fiscal, India's exports entered the negative zone in October 2008 and dipped by 12.1 per cent. — PTI

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Sensex crashes 329 points

Mumbai, February 16
The stock markets, which were on a high on anticipation of stimulating measures for the industry and some tweaking in tax structure, today tanked with the benchmark Sensex on the BSE nosediving by 320 points as the Interim Budget turned out to be a damp squib.

With investors exercising caution, the markets opened weak before the presentation of Interim Budget by Finance Minister Pranab Mukherjee at 1100 hours in Parliament.

As Mukherjee went on reading out the Budget papers the Sensex plunged into deeper red as it fell short of the investor expectations.

Besides a lacklustre budget, sluggish Asian markets also contributed to across-the-board selling pressure. The BSE barometer finally closed the day at 9,305.45 points, lower by 329.29 points, the biggest drop since February 2.

Realty stocks, which bucking the trend surged in early trade on anticipation of emphasis on real estate and hospitality sectors in the Interim Budget, however ended the day with heavy losses.

As the Interim Budget fell short of market expectations, selling pressure gained momentum and spread across the wide front which saw all sectoral indices ending in the red.

"Euphoria was built up in the market last week ... but the government took a conservative approach, and has presented an interim statement. It did not want to expand its fiscal deficit by announcing any further fiscal stimulus," SMC global vice-president Rajesh Jain said.

On the other hand, brokers said investors were concerned over the rising fiscal deficit which has been revised at 6 per cent of the GDP against 2.5 per cent in Budget estimate. Revenue deficit also placed at 4.4 per cent against 1 per cent in the estimate for 2008-09 augmented their concerns, they added.

"We term the budget a disaster; instead of bringing cheers for (the) common man, they have rather exercised caution saying that the next government will have to live with a high fiscal deficit," Arun Kejriwal, director, Kejriwal Research and Investment Services, said.

RIL led the fall and closed lower by 3.42 per cent. Blue-chip ICICI Bank was another big loser at 5.79 per cent.

Jaiprakash Asso at 7.88 per cent and Rel Infra at 6.35 per cent were other major losers among the elite club.— PTI

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CBI to probe Satyam scam

Hyderabad/New Delhi, February 16
The Andhra Pradesh government has handed over the Rs 7,800-crore Satyam scam to the CBI, more than a month after the IT major's founder B Ramalinga Raju confessed to cooking his company's account books and inflating profits over the past many years.

Andhra Pradesh Home Minister K Jana Reddy today said the state has issued a 'Government Order' handing over the probe into the Satyam Computers fraud to the Central Bureau of Investigation. The order was issued on February 13, he added.

Separately, Union Corporate Affairs Minister Prem Chand Gupta told PTI in New Delhi that the case would be now jointly probed by the CBI, along with the SFIO and other agencies.

"Now, the case will be probed jointly by the CBI, SFIO, I-T department and others," Gupta said.

The country's biggest ever corporate scam, currently being probed by the Serious Fraud Investigation Office (SFIO) in Hyderabad, is expected to be discussed in the Rajya Sabha tomorrow, Gupta added.

Earlier, Chief Minister Y S Rajasekhara Reddy had written two letters to Prime Minister Manmohan Singh proposing that the CBI take over the investigation into the Satyam fraud in view of the multi-faced nature of the issue.

The scandal is currently being probed by the CB-CID of Andhra Pradesh police also.

Satyam executive asked to quit

Meanwhile, Satyam Computer Services today asked its senior vice-president of banking and financial services vertical Anil Kumar to quit immediately.

The company spokesperson said that Anil Kumar has been asked to put in his papers. — PTI

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NACIL allocation up by Rs 4,029 cr
Tribune News Service

New Delhi, February 16
The government today substantially increased the allocation for Air India holding company, National Aviation Company of India Limited (NACIL), by about Rs 4,029 crore in the Interim Budget. Almost the entire increase in allocation for the Civil Aviation Ministry has been cornered by NACIL with the airline firm being earmarked Rs 8,165.64 crore, up against the revised estimate of Rs 4,136.89 crore for 2008-09.

In all, the ministry received a total allocation of Rs 12,164.76 crore, compared with the revised 2008-09 estimate of Rs 7,490.06 crore, a hike of almost Rs 4,675 crore. The move comes in the backdrop of AI seeking enhancement of its equity and a soft loan to meet the growing expenditure on its ongoing aircraft acquisition programme.

Amounts earmarked for Pawan Hans Helicopters Limited, Hotel Corporation of India and Air India Charters Limited showed a decline in comparison with the budgetary allocations made last year.

A provision of Rs 4 crore for salaries and other administrative infrastructure was also made in the non-Plan budgetary allocation of the ministry for the newly-created Airport Economic Regulatory Authority. Air India was also earmarked Rs 620 crore for operating the Haj Charter flights to Saudi Arabia.

The AAI’s allocation grew from revised expenditure of Rs 2,667.43 crore to Rs 3,244.96 crore. It also received another Rs 89.15 crore for upgrading of Jammu and Srinagar airports, as also for operational improvements in airports of the northeast and crucial areas of Leh, Port Blair and Puducherry. The government also substantially enhanced the allocation for the Bureau of Civil Aviation Security (BCAS) from the 2008-09 revised estimate of Rs 9.93 crore to Rs 23.54 crore.

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Govt seeks $3 b from WB for PSU banks

New Delhi, February 16
The government will seek additional $3 billion (about Rs 14,440 crore) from the World Bank to infuse funds into public sector banks to shore up their capital against various risks to ensure credit flow to productive sectors to beat the economic slowdown.

This is the part of $4.2 billion (about Rs 20,160 crore) additional fund that India is seeking over and above the permissible annual grant to the country.

"We have sought additional World Bank funding over and above what is normally admissible every year additional to the extent of $4.2 billion. Of that $3 billion has been sought for the recapitalisation of the banks over the period of about two years," Department of Economic Affairs Secretary Ashok Chawla said in a post interim-budget conference.

The process is currently in the pipeline and appropriate provision and inclusion would be made in the budget statement as we go along during the year," he said. — PTI

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