SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE
 SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

South Asia doing better due to India’s resilience
UN report lauds India for anchoring economic stability in region
New Delhi, March 26
India has proved an anchor for economic stability in South Asia and is helping other economies of the region battle global financial crisis better than some other, more open economies of the Asia-Pacific.

Sensex regains 10K level
Mumbai, March 26
Spurred on by positive cues from the global markets, the Sensex continued its upward move to close above the 10,000-mark after gaining 335 points in today's session after nearly 11 weeks as bulls tightened their grip on hectic short-coverings on the day the March settlement in derivatives was over. In the broader markets, the Nifty closed 3.5 per cent higher at 3,082.

Inflation falls to 0.27%
New Delhi, March 26
Wholesale prices-based inflation fell to a new low in over 30 years to 0.27 per cent during the second week of March, but essential food items were dearer for reasons ranging from high farm-gate prices to a short supply of pulses and coarse cereal, giving no respite to the common man.



EARLIER STORIES



A woman holds up her ‘gift cheque’ from the government in Bangkok on Thursday.
A woman holds up her ‘gift cheque’ from the government in Bangkok on Thursday. Thailand started handing out ‘gift cheques’ to more than 10 million low-income earners as part of a stimulus package aimed at curbing the impact of the global financial crisis. — AFP

US economy shrinks by 6.3% in Q4
Washington, March 26
The US economy contracted at a stunning pace of 6.3 per cent in the fourth quarter of 2008, the most in 26 years, as consumers cut down on spending and exports weakened.

Govt may monetise rising deficit 
New Delhi, March 26
Consequent to over-borrowing by the government, the RBI may monetise the fiscal deficit, say banking sources. What has been done by the US Federal Reserve just a few days ago may be repeated by the country’s apex bank soon.

Banks circumvent RBI directives to seek bulk deposits
Chandigarh, March 26
The directions issued by Government of India and RBI to desist banks from seeking bulk deposits in these times of excess liquidity and poor credit offtake seem to hold little significance for the banks. For, they continue to seek bulk deposits from cash-rich boards and corporations to present a rosier balance sheet, even at the cost of offering higher rate of interest on these deposits.

CBI wants lie-detector test on Raju
New Delhi, March 26
CBI today pitched for a lie- detector and other scientific tests on Satyam Computer's disgraced founder B Ramlinga Raju, alleging that the accused was still holding back certain facts about the accounting scam in the company.

Govt to borrow Rs 2.4 tr in FY 10
New Delhi, March 26
The government today said it would raise Rs 2.4 trillion for the year 2009-10 for in the first six months. A part of the money raised will also include repayment of bonds of the past year to meet the fiscal deficit needs.

Maruti rules out cut in M800 price
New Delhi, March 26
The country's largest car maker, Maruti Suzuki India, today said that "Tata Nano" may have a marginal impact on the sales of its entry level small car Maruti 800 but ruled out cutting its price. "It (Nano) may have a marginal impact on the Maruti 800 segment, but we don't have any plan to cut its price or enter Nano segment," Maruti Suzuki India chairman R C Bhargava told reporters here on the sidelines of CII annual session. — PTI





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South Asia doing better due to India’s resilience
UN report lauds India for anchoring economic stability in region
Aditi Tandon
Tribune News Service

New Delhi, March 26
India has proved an anchor for economic stability in South Asia and is helping other economies of the region battle global financial crisis better than some other, more open economies of the Asia-Pacific.

“India’s economy is estimated to have grown by 7.1 per cent in 2008, providing an anchor of economic stability in the region,” concludes the Economic and Social Survey of Asia and the Pacific (ESCAP) 2009, released in the capital today. It predicts 6 per cent economic growth for India this year.

In poll season, the findings are bound to be exploited by both the Congress which led the UPA at the centre and its former ally, the Left, which has been claiming credit for insulating India’s economy from the global crisis by preventing privatization.

The ESCAP notes India’s measures to improve the liquidity of the financial sector and its relaxed monetary policy, and predicts that the fiscal stimulus packages offered by the government would “soften the economic downturn and further strengthen domestic demand.”

The flagship publication of UN’s regional arm — the ESCAP’s this year’s issue titled “Addressing Triple Threats to Development.” analyses the three global crises which have converged to threaten development in the Asia-Pacific region - the financial crisis, fuel and food prices, and climate change.

The Indian economy, ESCAP says, performed well during 2005 to 2007 by maintaining its growth momentum along with moderate inflation, resilient capital markets, manageable current account deficit and favourable foreign exchange reserves.

“From 2005 to 2007, India achieved an average growth rate of 9.4 per cent, aided by strong performances by industry and services. The economy also gained from significant inflows of foreign investment and the government’s efforts to contain the fiscal deficit while at the same time stepping up public expenditure for employment generation programmes,” state the findings, blaming increased inflation in South Asia partly on higher international commodity prices, particularly prices of oil, basic metals and selected food items.

In India, the price increases in food and fuel groups were higher than those of other groups, admits ESCAP, adding, “As a result, life became more challenging for large segments of the population.” The report further fall in inflation in 2009 due to drop in oil and other commodity prices in international markets.

It also details how the Indian budget in 2008 remained under pressure. “Due to stimulus packages to contain deceleration in economic growth, significant increases in government salaries and subsidies for food, fertilizer and certain fuel products, the Indian budget deficit is estimated to rise to six per cent of gross domestic product (GDP) in 2008,” states ESCAP, naming poverty as the single largest challenge for most countries in South Asia.

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Sensex regains 10K level
Tribune News Service & PTI

Mumbai, March 26
Spurred on by positive cues from the global markets, the Sensex continued its upward move to close above the 10,000-mark after gaining 335 points in today's session after nearly 11 weeks as bulls tightened their grip on hectic short-coverings on the day the March settlement in derivatives was over. In the broader markets, the Nifty closed 3.5 per cent higher at 3,082.

Among the Sensex scrips, most of the stocks ended in positive territory. The biggest gainer today was Tata Motors which was up 7.9 per cent to close at Rs 172. L&T, Sterlite Industries and TCS were the other main gainers in the pack ending more than 5.9 per cent higher each.

Metal and banking stocks continued to rally today with capital goods joining in the upmove. The BSE capital goods index was the biggest gainer closing 5.4 per cent higher. The BSE metal index followed with a 4 per cent gain. The BSE Bankex was up 3.4 per cent.

However, the BSE realty index was loser closing 4.5 per cent lower. Marketmen said the mood is now steadily turning in favour of bulls on the back of positive developments. The Sensex has jumped by a whopping 1,036.42 points or 11.56 per cent in the four-day rally.

Sustained buying by FIIs, which pumped in Rs 348.65 crore on March 25 as per provisional data, mainly boosted sentiment.

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Inflation falls to 0.27%
Tribune News Service

New Delhi, March 26
Wholesale prices-based inflation fell to a new low in over 30 years to 0.27 per cent during the second week of March, but essential food items were dearer for reasons ranging from high farm-gate prices to a short supply of pulses and coarse cereal, giving no respite to the common man.

Rapidly falling inflation has further strengthened the argument for RBI to cut key rates in the coming monetary policy, to be announced on April 21.

What is really bad is that index for primary food articles rose by 0.1 per cent as fruit and vegetables, rice, some varieties of pulses, barley, bajra, and maize turned expensive. The food index in the category of manufactured items also rose because maida, sooji, oil cakes, imported edible oil, gur, and cottonseed oil too became costlier.

Planning Commission Deputy Chairman Montek Singh Ahluwalia said the Indian economy was not heading towards deflation despite inflation nearing the zero-level in the past few weeks.

“It can go to zero or may even be negative for a week or two. It has happened in the past...during 1970s the inflation rate became negative for a brief period. But I don't expect deflation at all now,” he said.

Asserting that banks needed to lend more, he said there was room for the financial institutions to further reduce lending rates.

“There is room for lending rates to come down and to be fair they have been coming down. Since fear of inflation is now down, we have more room on monetary policies,” he added.

No danger of deflation: PM

India's economy would expand by 6.5 to 7 per cent in the current fiscal with revival seen in consumer spending and there was no danger of the country slipping into a deflationary mode, Prime Minister Manmohan Singh said today.

"I don't see India is in danger of deflation (a phase marked by persistent and all round economic downturn)... I don't see that we are facing a deflationary trend", he said while talking to reporters here.

As regards growth in the current fiscal, he said, "We will still grow at 6.5 to 7 per cent." The Central Statistical Organisation in its advance estimate of national income in February had projected a growth rate of 7.1 per cent for the current fiscal. — PTI

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US economy shrinks by 6.3% in Q4

Washington, March 26
The US economy contracted at a stunning pace of 6.3 per cent in the fourth quarter of 2008, the most in 26 years, as consumers cut down on spending and exports weakened.

The country's real GDP shrank by 6.3 per cent in the October-December period, the latest figures from the Bureau of Economic Analysis show.

The decline is higher than last month's official estimate of 6.2 per cent.

"Real gross domestic product — the output of goods and services produced by labour and property located in the US — decreased at an annual rate of 6.3 per cent in the fourth quarter of 2008," BEA said in a statement today.

The American GDP reportedly, has not shrunk as much since the first quarter of 1982. In the third quarter, real GDP dropped 0.5 per cent.

The recession in the world's largest economy deepened in the fourth quarter of 2008 in the wake of the financial meltdown, which saw the collapse of many financial institutions in addition to massive job losses. The economic situation turned worse last year after the bankruptcy of Lehman Brothers in September.

US officially entered into recession in December 2007.

For the full year 2008, the country's real GDP rose 1.1 per cent against 2 per cent in 2007.

In the fourth quarter of 2008, the staggering contraction in GDP was primarily due to negative contributions from exports, personal consumption expenditures and equipment and software, among others.

"Most of the major components contributed to the much larger decrease in real GDP in the fourth quarter than in the third. The largest contributors were a downturn in exports and a much larger decrease in equipment and software.

"The most notable offset was a much larger decrease in imports," the statement noted.

According to BEA, the major contributors to the increase in real GDP in 2008 were exports, personal consumption expenditures for services, federal government spending, state and local government spending. — PTI 

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Govt may monetise rising deficit 
Bhagyashree Pande
Tribune News Service

New Delhi, March 26
Consequent to over-borrowing by the government, the RBI may monetise the fiscal deficit, say banking sources. What has been done by the US Federal Reserve just a few days ago may be repeated by the country’s apex bank soon.

Though India’s laws do not permit direct monetisation, exceptional circumstances like these would allow the government to issue more bonds and print notes and directly pump into the system. There could be policy changes in near future as the circumstances get grimmer and the situation of public finance gets more difficult in the coming days, the sources add.

“Growth moderation is steeper than what we earlier thought and I believe 2009-10 is going to be more challenging year for us than 2008-09,” said RBI Governor D Subbarao at the annual session of CII.

The fiscal deficit in 2009/10 is projected at 5.5 per cent of GDP, below the estimate of 6 per cent for 2008/09, though analysts expect that to be revised up as the government has said the economy may need more stimulus and peg it to around 10 per cent.

Analysts say there is every reason the RBI can resort to such circumstance because there is an oversupply of bonds in the system, thus leading to soaring of yields. In addition to this, the RBI has limited funds to mop up bonds from the market.

The central bank has bought back Rs 366 billion of debt in five auctions since mid-February — more than the government has sold — and will buy back up to Rs 100 billion of bonds later on Thursday.

Subbarao said steps taken to boost spending and activity were necessary in the current extraordinary situation, but cautioned there was a cost to further fiscal stimulus and more borrowings would put pressure on credit markets.

“I am sensitive to the fact that when credit demand picks up, this is going to be more challenging but we will manage,” he said.

He said 2009-10 would be a challenging year unless business confidence and investment revived, and said cuts in policy rates needed to flow through to the broader economy.

“We have responded appropriately and we will respond appropriately,” Subbarao said when asked if there was a case for monetary easing as inflation was nearing zero.

However, analysts say that monetisation could reduce the incentive to contain government spending, and may widen an already large deficit and lead to rating downgrades.

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Banks circumvent RBI directives to seek bulk deposits
Ruchika M. Khanna
Tribune News Service

Chandigarh, March 26
The directions issued by Government of India and RBI to desist banks from seeking bulk deposits in these times of excess liquidity and poor credit offtake seem to hold little significance for the banks. For, they continue to seek bulk deposits from cash-rich boards and corporations to present a rosier balance sheet, even at the cost of offering higher rate of interest on these deposits.

Considering the fact that over Rs 4,500 crore is on the block, which has to be invested by various boards and corporations in Punjab and Haryana, banks seem to have found novel ways to circumvent the directions on bulk deposits.

Since banks have been clearly told not to seek deposits of over Rs 1 crore by offering higher rates of interest, they are splitting the bulk deposits into smaller term deposits of less than Rs 1 crore each and offering a higher rate of interest than the existing card rate. 

Say, for a bulk deposit of Rs 300 crore, a bank would take the bulk deposit in the form of 303 deposits of Rs 99 lakh each and another term deposit of Rs 3 lakh. By doing this, the bank will be able to offer a higher rate of interest ranging from 8.25- 8.50 per cent. Had this money been deposited as a single bulk deposit, the bank would have to offer this at the card rate of 7.5 per cent, as directed by the government.

The government had directed all central public sector undertakings (CPSEs) and advised all state governments to ensure that state government departments and public sector undertakings (PSUs) maintain their bulk deposits maturing up to June 30, with the same bank at the published bulk deposit rates. 

By breaking these bulk deposits into small term deposits, these PSUs make a quick buck by auctioning and then placing its deposits to banks quoting the highest interest rate. It is estimated that a PSU will earn Rs 25,000 per annum on Rs 1crore that it parks as term deposit in a bank, on a higher rate of interest.

According to information gathered by The Tribune, organisations like Hafed, Haryana State Cooperative Apex Bank, Chandigarh Housing Board, PUDA, Panjab University, Haryana Agro Industries Corporation, Semi Conductors Limited, Punjab Energy Development Agency, Education departments of Punjab and Haryana, Bridges and Roads Corporations of Punjab and Haryana, Rural Development departments, Emergency Relief Organisation of Haryana and Punjab Police Housing Corporation are collectively offering deposits worth Rs 4,500 crore. Banks are reportedly in a mad race to earn as many deposits as possible, even if it means spending major part of the “business promotion funds” to please officers and get these deposits.

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CBI wants lie-detector test on Raju

New Delhi, March 26
CBI today pitched for a lie- detector and other scientific tests on Satyam Computer's disgraced founder B Ramlinga Raju, alleging that the accused was still holding back certain facts about the accounting scam in the company.

Terming the Satyam fraud as unique - as the accused was also the one who had founded the company, CBI Director Ashwani Kumar said: "We feel that Raju has not shared everything that he knows about it. This is a case of corporate fraud and the suspect is the same person who has brought up this huge organisation."

The CBI Director was talking to reporters on the sidelines of a function here. He said the CBI has filed an application before before the local court in Hyderabad seeking nod to conduct polygraph test on Raju and his brother, besides the company's former CFO. The court will hear the matter on March 28. — PTI

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Govt to borrow Rs 2.4 tr in FY 10
Tribune News Service

New Delhi, March 26
The government today said it would raise Rs 2.4 trillion for the year 2009-10 for in the first six months. A part of the money raised will also include repayment of bonds of the past year to meet the fiscal deficit needs.

Speaking after meeting RBI officials, Economic Affairs Secretary Ashok Chawla said the gross borrowings, which include funds for repayment of maturing bonds, would be Rs 2,41,000 crore. Gross borrowing for the current fiscal year of 2008/09 is estimated at Rs 3.06 trillion.

Giving details of the market borrowing programme, Chawla said Rs 48,000 crore would be raised every month in the first quarter and Rs 32,000 crore every month during the second quarter. Different estimates put borrowings between Rs 2.20 trillion to as high as Rs 4.48 trillion for the coming fiscal starting April 1.

However, sources say the total borrowing is set to rise to a record Rs 3.62 trillion next year and Rs 2.2 trillion is a conservative estimate. ICICI Securities estimates that the total supply of federal and state debt in 2009/10 (April-March) would be Rs 4.48 trillion against estimated demand of Rs 3.62 trillion.

Analysts reason deteriorating government finances to a slowing economy, large subsidies, increase in salaries of civil servants and waiver or loans given to small farmers.

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BRIEFLY

ONGC to launch IPO of OPaL in 2011
New Delhi:
State-run ONGC will launch an IPO of a unit building a mega petrochemical plant at Dahej in Gujarat in 2011, even as a separate project that was to produce feedstock for the Rs 12,440-crore plant has been delayed by 10 months. "We will go for an IPO of ONGC Petro-additions Ltd (OPaL) closer to the completion of the project (scheduled for February 2012)," ONGC chief RS Sharma told reporters on the sidelines of the CII conference here.— PTI

Thai Tourism packages
Chandigarh:
Ekido Holiday Tours has tied up with Thai Travel Partners under the aegis of Thai Tourism Authority to offer special discounted fares and packages for a trip to Thailand. Kapil Malhotra, director of the company, said the special packages were being offered by select tour operators in Delhi, Ahemdabad and Chandigarh, who had tied up with the Thai Tourism Authority. Representatives of the latter, which include hoteliers and tour operators in Thailand, said that they were promoting the seven wonders of Thailand for foreign tourists this year. — TNS

Sistema teleservices in TN
Chennai:
Sistema Shyam Teleservices, a joint venture between Russian firm Sistema and Shyam Group on Thursday launched its mobile services in Tamil Nadu under the brand name 'MTS' offering up to one million minutes of free talktime to the subscribers here. Sistema-Shyam has entered into an agreement with Mobile TeleSystems of Russia to launch the pan-India operations under MTS brand. — PTI

Shivneet Singh
Chandigarh:
Shivneet Singh has been appointed executive director of The Indus Entrepreneurs (TiE). He was earlier working with industry body CII and was heading states such as Jammu & Kashmir, Punjab and Chandigarh. — TNS

Appelate authority chief
Chandigarh:
Justice Abhay Kumar Gohil has been appointed as chairman of Appelate Authority for Industrial and Financial Reconstruction by the Government of India. — TNS

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