SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI


THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Moody's pegs Q3 growth at 6.1 pc
New Delhi, February 25
Predicting that a worsening fiscal position because of repeated tax cuts would further weaken investor confidence in India, Moody's today said now it is for the RBI to take measures to revive the economy. Moody's Economy.com, an arm of Moody's group, projected that growth in the Indian economy will further decline to 6.1 per cent in the October-December period of 2008, the data for which would be out on Friday.

Chidambaram hopeful of upturn in economy by Oct
New Delhi, February 25
Complimenting the resilience displayed by Indian industry in dealing with the slowdown, Home Minister P Chidamabaram yesterday said the country's economy was likely to find an upturn by October. Presenting the National Tourism Awards here, Chidambaram said “by beginning of the third quarter of 2009-10 we will find an upturn in the economy”.

Govt orders special audit of DLF
New Delhi, February 25
The government today informed Parliament that it has ordered a special audit of the accounts of the real estate giant DLF Ltd and would take necessary action after scrutiny.



EARLIER STORIES



A rail carriage is loaded into an Antonov 124 cargo aircraft in Parchim, Germany
A rail carriage is loaded into an Antonov 124 cargo aircraft in Parchim, Germany on Wednesday. The first of the four Bombardier Movia Metro Vehicles will be delivered to Delhi.
— Reuters

Satyam Fraud
AP not facilitating probe, says CBI
Hyderabad, February 25
The CBI, probing the Satyam fraud, has complained to the Andhra Pradesh High Court that the state government was not doing enough to provide the required infrastructure and other facilities to ensure smooth conduct of the investigations.

Nabard, Punjab differ over credit deposit ratio
Chandigarh, February 25
Disputing the claims made by National Bank for Agriculture and Rural Development (Nabard) regarding a high credit deposit ratio (CD ratio) of 71 per cent in Punjab, Punjab Minister for Cooperatives Capt Kanwaljit Singh said the CD ratio could not be more than 60 per cent.

Excise cut may not boost economy
New Delhi, February 25
The cut in excise duty and service tax announced yesterday is meant to give a boost to consumer spending and to spur further economic activity, but there are various uncertainties that will still hold back consumers from spending, say economists.

Japan’s recession worsens
Tokyo, February 25
Japan's recession woes deepened as a record plunge in exports added to fears today that Asia's largest economy is becoming one of the biggest victims of the global crisis.





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Moody's pegs Q3 growth at 6.1 pc

New Delhi, February 25
Predicting that a worsening fiscal position because of repeated tax cuts would further weaken investor confidence in India, Moody's today said now it is for the RBI to take measures to revive the economy.

Moody's Economy.com, an arm of Moody's group, projected that growth in the Indian economy will further decline to 6.1 per cent in the October-December period of 2008, the data for which would be out on Friday.

"India's growth momentum is easing, and the policymakers must act to support the economy. However, given the government is cash strapped, it is time for the RBI to join in again in reviving the economy," the firm said in a statement here.

Moody's expects the RBI to keep trimming the repo rate, which is the rate at which banks borrows money from the RBI in the short term, to 4 per cent from the current level of 5.5 per cent.

"Compared with the government, the central bank certainly has more room to exercise its policy tools. For growth to remain strong, the central bank needs to ensure ample liquidity and low interest rates," it said.

Inflation has markedly decelerated in the recent weeks, and interest rates must follow suit to maintain a loose monetary policy stance, the statement added.

Stating that the impact of the policy actions on the economy would come not before the next fiscal, Moody's believes growth in the third quarter of this fiscal could decelerate sharply to around 6.1 per cent. The figures would be released on Friday.

Moody's forecasts a further slowdown in the March quarter, which should take annual growth to around 6.8 per cent for the current fiscal.

The projection by Moody's is lower than the one by the government, which expects the economy to grow by 7.1 per cent in the current fiscal.

The statement said tax cuts announced by the government will inject the much needed support into the slowing economy, but will also weaken investor confidence due to deteriorating fiscal imbalance.

"Investor confidence, which has already been hurt by the global financial turmoil, is set to weaken further as the government struggles to manage the fiscal imbalance.

Investment growth is set to slow notably this year," It said.

The Indian government bowed to pressure for more stimulus measures, Moody's Economy.com said in a statement here, adding the tax cuts will inject much-needed support into the economy. — PTI

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Chidambaram hopeful of upturn in economy by Oct
Tribune News Service

New Delhi, February 25
Complimenting the resilience displayed by Indian industry in dealing with the slowdown, Home Minister P Chidamabaram yesterday said the country's economy was likely to find an upturn by October. Presenting the National Tourism Awards here, Chidambaram said “by beginning of the third quarter of 2009-10 we will find an upturn in the economy”.

He said the present downturn was temporary. “Our growth rate is expected to be well over seven per cent,” he said, adding that despite a downturn in global scenario, India had managed to achieve seven per cent growth.

Commending the performance of Indian businesses and industry during the global downturn, the Minister said India stood out as a shining example of a resilient economy when the world was engulfed by economic gloom.

“We owe this resilience of Indian business and economy to its ability to quickly adjust to changing times. But in no other country, I have seen businessmen adjusting so rapidly (to the situation). That is why we were able to hold our head high,” he added.

Chidambaram presented the awards in the presence of Minister of Tourism and Culture Ambika Soni. Highlights of the awards this year was the Atithi Devo Bhava — Pride of India Awards instituted to recognise the outstanding contributions by the tourism industry professionals, individuals, corporates and organisations for exemplary service giving beyond call of duty.

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Govt orders special audit of DLF

New Delhi, February 25
The government today informed Parliament that it has ordered a special audit of the accounts of the real estate giant DLF Ltd and would take necessary action after scrutiny.

"A special audit under Section 142(2A) of the I-T Act has been ordered in the case of Delhi Lease and Financing Ltd, also known as DLF for the assessment year 2006-07", Minister of State for Finance S S Palanimanickam said in a written reply in the Lok Sabha.

The audit report, the Minister said, "is being examined during the scrutiny proceedings, for taking necessary action..." When asked whether some housing companies had misled the Income-Tax department regarding their income and profits, Palanimanickam said "Yes" and added that the details, which are being collected, would be tabled in the House shortly.

The minister also clarified that the government has not ordered a special audit of the accounts of the Darbari Lal Foundation. — PTI

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Satyam Fraud
AP not facilitating probe, says CBI
Suresh Dharur
Tribune News Service

Hyderabad, February 25
The CBI, probing the Satyam fraud, has complained to the Andhra Pradesh High Court that the state government was not doing enough to provide the required infrastructure and other facilities to ensure smooth conduct of the investigations.

In a petition filed before the court, the CBI today lamented that the government was not cooperating in providing facilities to the investigating officers.

Taking a serious note of the issue, Justice SV Ramana directed the government to submit a report by afternoon detailing the facilities it had extended to the central investigating agency in carrying out the probe into the Satyam case.

The court warned that it would summon Chief Secretary or Home Secretary if the government failed to respond by afternoon.

Later, the government pleader appeared before the court and promised to provide all the necessary infrastructure facilities to the CBI by February 28.

The central agency has already asked the government to provide office premises with an armed post, vehicles, guesthouse, computers, telephones and fax machines to facilitate investigations. It is felt that the CBI’s present office is inadequate to house the investigating teams and store the voluminous records seized by the CID from offices and houses of former bosses of Satyam.

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Nabard, Punjab differ over credit deposit ratio
Ruchika M Khanna
Tribune News Service

Nabard has suggested a credit plan of Rs 46,634 crore under priority sector lending in Punjab during 2009-10. Of the Rs 46,634 crore projected, crop loan share is 54 per cent (Rs 25,063 crore), followed by agricultural and allied sector term loan (capital formative investment credit) at 10 per cent (Rs 4,883 crore), non- farm sector (NFS) at 15 per cent (Rs 6,924 crore) and other priority sector at 20.5 per cent (Rs 9,764 crore).

Chandigarh, February 25
Disputing the claims made by National Bank for Agriculture and Rural Development (Nabard) regarding a high credit deposit ratio (CD ratio) of 71 per cent in Punjab, Punjab Minister for Cooperatives Capt Kanwaljit Singh said the CD ratio could not be more than 60 per cent.

Though officials of Nabard said the high CD ratio in Punjab had been achieved because of consistent efforts made by State Level Bankers Committee, the minister, who was the chief guest during the state credit seminar organised by Nabard, said calculations made by the state government revealed that the CD ratio was not more than 60 per cent.

“In fact, the poor (CD ratio) in rural and semi-urban areas of Punjab has been a major cause of concern. There has been a low credit offtake in Punjab, especially in rural and semi-urban areas. The credit and planning policy is creating disparity in rural and urban areas. These regional disparities can lead to disturbances,” he said.

Though the Nabard officials insisted that the CD ratio in Punjab had increased to 71 per cent in March 2008, it is learnt that as against the statutory requirement of 60 per cent, the CD ratio of commercial banks in rural and semi-urban areas is 50.79 per cent and 46.72 per cent, respectively. It is for this reason that in October last year, the RBI had asked the State Level Bankers Committee to monitor the CD ratio areawise, as the CD ratio in four districts of Kapurthala, Nawanshahr, Jalandhar and Hoshiarpur is less than 40 per cent. The lowest CD ratio is 25 per cent in Nawanshahr, followed by Hoshiarpur (29.67 per cent), Kapurthala (30.61 per cent) and Jalandhar (39.55 per cent).

The committee has now suggested that the banks implement area/ block-specific credit schemes; strengthen investment under agriculture and allied activities like dairying, poultry, bee keeping and fishery; and, asked banks to analyse and monitor CD ratio of each branch and initiate suitable measures to improver the same.

The minister also asked Nabard to have a common rate of interest on short-term and long-term loans. “The issue of refinance by Nabard must be restructured. If the short-term loans to agriculture sector are provided at 7 per cent, the long-term loans, availed mainly for buying farm equipment, should not be given at 10-11 per cent rate of interest,” he said.

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Excise cut may not boost economy
Bhagyashree Pande
Tribune News Service

New Delhi, February 25
The cut in excise duty and service tax announced yesterday is meant to give a boost to consumer spending and to spur further economic activity, but there are various uncertainties that will still hold back consumers from spending, say economists. One factor that will keep consumers away from spending is the uncertainty of job and economic activity. No one knows when will they be asked to leave and so the consumer is interested in saving for the rainy day. Hence, even if the industry passes on the benefits to the consumers, these cuts will not give a major uptick in the spending sentiment, add economists.

As per the announcement, excise duty rate on industrial products with will come down to 8 per cent while service tax has been reduced by 2 per cent to 10 per cent. Customs duty exemption on naphtha imports for power generation has been extended beyond March 31.

The effective cut of excise rate announced yesterday and in December (4 per cent across the board) will bring it to around 6 per cent. These measures will lead to revenue loss of around Rs 30,000 crore (excise duty loss of Rs 8,500 crore, Rs 13,000 crore loss in service tax, and Rs 6,600 crore in customs duty), said an official of the Finance Ministry. In addition to this, December cut in excise (of 4 per cent) will dent the government’s revenues by an additional Rs 40,000 crore.

In the Interim Budget, the government has projected for the year 2009-10 a growth of tax revenues of 6.9 per cent over 2008-09, projecting a total collection of Rs 6,71,293 crore on a GDP growth rate of 7.1 per cent.

White goods like refrigerators, colour televisions, washing machines, in addition to daily fast-moving consumer goods like soaps, detergents, colas, are expected to become cheap. In addition to this, commercial vehicles like trucks and hybrid cars and auto components will become cheaper.

Another area that the government has tried to give a kickstart to is the cement and steel manufacturers. After announcing increased outlays in the budget for infrastructure development in the rural hinterland, the government, by reducing the taxes on key building material, wants to give a fillip to construction activity and thus generate employment, say economists.

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Japan’s recession worsens

Tokyo, February 25
Japan's recession woes deepened as a record plunge in exports added to fears today that Asia's largest economy is becoming one of the biggest victims of the global crisis.

Japan's reliance on foreign markets to drive its recovery from a decade-long slump has left it particularly vulnerable to the global economic downturn, which has crushed demand for its cars, televisions and high-tech goods.

The trade deficit ballooned to an unprecedented $9.9 billion in January as exports plunged 45.7 per cent from a year earlier, the finance ministry reported.

It was the worst month since comparable records began in 1979, marking a dramatic shift in fortunes for Japan's economy, which used to enjoy large surpluses thanks to brisk demand for its high-tech products. — AFP

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BRIEFLY

PowerGrid to raise Rs 5,000-cr loan
New Delhi:
State-run PowerGrid Corp on Wednesday said it has received government's approval to negotiate with World Bank to secure a loan of $1 billion (Rs 5,000 crore), agreement for which is expected to be signed by June. PowerGrid requires permission to get a debt from any financial institution as the government serves as a guarantor for the corporation. — PTI

Van Heusen plan
Mumbai:
Van Heusen plans to capitalise on prevailing low rentals and set up more stores even as it has pared its growth to 15-20 per cent this year, a top company official said. "We are re-negotiating rentals for all our 55 exclusive stores and the response has been positive. We are re-negotiating rents anywhere between 20-40 per cent," Van Heusen's COO Shital Mehta said here. — PTI

ING Life ties up with South Indian Bank
Kochi:
ING Life, a part of the ING Group, on Wednesday said it has tied up with Kerala-based South Indian bank (SIB) to collect insurance policy renewal payments. Following the tie-up, customers can pay their policy renewal premiums at any of the 530 South Indian bank branches spread across the country, SIB executive director M Valsan and ING Life chief operation officer Ashwin B told reporters here. — PTI

SpiceJet plans international flights
New Delhi:
Low-cost carrier SpiceJet on Wednesday said it would start international flights by May 2010, but is not looking at the US and the UK markets. "We will start our international flights by May 2010 but we have no desire to fly to the US and the UK," Spicejet CEO Sanjay Aggarwal said.— PTI

Leyland to cut truck prices
New Delhi:
Hinduja flagship company Ashok Leyland on Wednesday said it would cut the prices of its trucks by an average of over Rs 16,000 per unit on account of the government's decision to reduce excise duty by two per cent. — PTI

OVL's Sakhalin-1 project hits roadblock
New Delhi:
State-run ONGC Videsh Ltd's (OVL) mega Sakhalin-1 project in Russia is headed for trouble after Kremlin refused to approve its budget and work plans, leading to suspension of work on future phases. The $17-billion Sakhalin-1 project, where OVL has 20 per cent stake, comprises three offshore fields — Chayvo, Odoptu and Arkutun-Dagi. Of these, Russian authorities have not approved work programme on the Odoptu and Arkutun-Dagi. — PTI

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