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Budget
FM has to walk the tightrope between populism and reforms

New Delhi, June 29
Finance Minister Pranab Mukherjee will present the Budget, the UPA government’s first after it was reelected, for 2009-10 on July 6.

Budget Countdown – IV
Pharma units want tax sops for exports, R&D

Chandigarh, June 29
Faced with stiff competition from China the pharmaceuticals industry is hoping for continued support from the UPA government to beat the challenge and maintain its growth trajectory as the latter readies to present its budget for FY2009-10.
Kumho Asiana Group’s main office building is seen in Seoul on Monday. South Korea’s Kumho Asiana Group said it has decided to put Daewoo Engineering & Construction up for a sale to ease investors worries about its liquidity Kumho Asiana Group’s main office building is seen in Seoul on Monday. South Korea’s Kumho Asiana Group said it has decided to put Daewoo Engineering & Construction up for a sale to ease investors worries about its liquidity. — Reuters



EARLIER STORIES



Economy to ‘recover’ by Sept
New Delhi, June 29
The chairman of PM's Economic Advisory Council, Suresh Tendulkar, said today the economy would expand by at least seven per cent during the current fiscal provided the monsoon does not fail. He ruled out the need for pressing the panic button at the moment.

‘Ambani family pact can’t override govt’s right’
New Delhi, June 29
The Ambani family pact that split gas output from the Krishna Godavari basin D6 field between brothers Mukesh and Anil cannot over-ride government's right to formulate gas utilisation policies aimed at larger public interest, the Fertiliser Ministry has said.

Hyderabad Metro Rail Project
Andhra may scrap deal with Maytas Infra

Hyderabad, June 29
With Satyam scandal casting a shadow over the ambitious Hyderabad Metro Rail project, Andhra Pradesh government is mulling the option of scrapping the Rs 12,200-crore deal with the Maytas Infra-led consortia and going in for fresh bidding.

Pink slip fear drives techies to docs
Bangalore, June 29
IT professionals in this tech hub are battling the global downturn with the help of doctors. Living under the constant fear of losing their jobs or trauma of seeing their colleagues getting the pink slip, the techies are increasingly seeking medical help to survive what experts call the "layoff survivor syndrome".

S Kumars set to buy Hartmarx for $119 m
Mumbai, June 29
Textile firm S Kumars is set to acquire Hartmarx, the American clothing company and the suit makers of President Barack Obama, for $119 million.






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Budget
FM has to walk the tightrope between populism and reforms
Bhagyashree Pande
Tribune News Service

New Delhi, June 29
Finance Minister Pranab Mukherjee will present the Budget, the UPA government’s first after it was reelected, for 2009-10 on July 6. The clear mandate it received will help in coming out with a Budget that sets the tone for spending on its sundry programmes and, at the same time, raising revenues from various sources.

However, this time around the Budget will be announced in a climate of economic uncertainty and entails a lot of expectations. The FM does not have much headroom to manoeuvre because of dwindling tax revenues. He has to make sure the much promised 7-8 per cent growth target has to be brought back on track.

What will also be considered while preparing the Budget is the monsoon’s late arrival and fears the rains could be deficient. This is likely to put the brakes on rural demand that was buoyant till recently, say economists.

That industrial growth has already slowed down is clearly apparent from the official figures put out during the past few months. Though manufacturing output improved slightly in April economists are divided on terming it a revival. A section of them expect May will see improved productivity and maintain recovery is on track. However, others say it is too early to celebrate and a few more months of good performance will decide whether the economy has revived.

Inflation has been low so far but there is a glitch here as well. Economists feel once the Budget exercise is over and government spending begins in earnest inflation would start galloping again. In fact some of them are of the view it could even reach double-digit figures by August-September.

The Budget’s broad contours are known: Increased spending on both physical and social infrastructure, higher food subsidies and funds for various social sector programmes that were promised before the polls. The latter will influence the direction the economy takes, the economists say.

Mukherjee has to perform a delicate balancing act between populism and wooing foreign investors. He has to play the reformist by setting the agenda for big ticket divestments and raising revenues by revamping the tax structure. As exports continue to shrink with a turnaround in the industrialised countries still on the distant horizon, a relief package might well be announced to counter falling demand, both domestic and overseas.

The dilemma facing the government is whether to administer another dose of financial stimulus without further raising the already huge fiscal deficit. This may give the right signals to international investors that the government is serious about reigning in the deficit and expanding capital flows.

However, some economists opine the improving outlook for the economy means another stimulus package is unlikely. Instead, they say, the government will wait for the performance of the monsoon and later consider steps to bolster both agricultural and industrial productivity.

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Budget Countdown – IV
Pharma units want tax sops for exports, R&D
Ruchika M. Khanna
Tribune News Service

Chandigarh, June 29
Faced with stiff competition from China the pharmaceuticals industry is hoping for continued support from the UPA government to beat the challenge and maintain its growth trajectory as the latter readies to present its budget for FY2009-10.

Pharma units in the region are now looking forward to an alternative to the MRP (maximum retail price) based tax regime, which will not only reduce the excise burden but will also help in lowering the prices of medicines produced in tax-exempt states. They also expect stepped up government participation in and tax benefits for R&D as well an increase in abatement from 35.5 per cent to 60 per cent.

Punjab Drug Manufacturers Association president Jagdeep Singh said as an immediate measure the budget should announce a hike the in excise exemption cap for small-scale pharma units from Rs 1.5 crore to Rs 5 crore and an increase in abatement to 60 per cent. “If prices of medicines have to be kept in control and small units in the sector are to remain viable these steps have to be taken immediately,” he noted.

Anil Kohli, president of business development, Surya Pharmaceuticals, said the government would have to undertake protectionist measures for the pharma industry by keeping a check on the Chinese onslaught into the Indian as well as overseas markets. “Norms for entry of Chinese pharmaceutical products into India will have to be tightened. At the same time Indian pharma exporters to African countries should be given cash incentives to enable them to compete with Chinese products,” he asserted.

Pharma companies in the region also want the government to focus on boosting R&D in this industry. Pranav Gupta, MD of Parabolic Drugs and co-chairman of PHDCCI (Haryana state), said the income tax rebate for R&D should be extended beyond 2009-10.

“Pharma units in the region are posting steady growth as they are spending large amounts on R&D, so incentives for this should continue. The government should extend an income tax holiday for pharma exports to boost them. Moreover, there is an urgent need for streamlining the norms on pharma exports. A single window clearance for exports should be set up so that India’s share in the global pharma industry (valued at over $600 billion) can be doubled from the present 6 per cent over the next five years,” said Gupta.said. 

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Economy to ‘recover’ by Sept

New Delhi, June 29
The chairman of PM's Economic Advisory Council, Suresh Tendulkar, said today the economy would expand by at least seven per cent during the current fiscal provided the monsoon does not fail. He ruled out the need for pressing the panic button at the moment.

Talking to mediapersons on the sidelines of a function to observe the third Statistics Day here, Tendulkar said, "If the monsoon does not fail, the economy will grow by at least 7 per cent (during 2009-10).

Asked about the impact of delayed monsoon on agriculture and the economy, Tendulkar said, "it is too early to press the panic button." Rainfall, according to latest official estimates, is likely to be only 93 per cent of the long-period average. As regards inflation, Tendulkar said, it is likely to remain between five and six per cent by the end of current financial year.

"The Wholesale Price Index would still be under 5-6 per cent, if monsoon are all right. If monsoon fails, it will be little more", he added.

Tendulkar also expressed the confidence that the economy, which has been reeling under the impact of the global financial meltdown, will recover by September.

Having grown by about 9 per cent continuously for three years, the growth rate slipped to 6.7 per cent during 2008-09 on account of the global financial meltdown.

Noting that high interest rate was a matter of concern, Tendulkar said, it might not be possible for banks to lower the lending rates in absence of commensurate reduction in deposit rates.

However, Tendulkar added RBI's policy rate cuts was getting reflected on the lending rates of the banks.

The country's largest lender State Bank of India (SBI) recently reduced its Benchmark Prime Lending Rate (BPLR) by 50 basis points to 11.75 per cent. — PTI

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‘Ambani family pact can’t override govt’s right’

New Delhi, June 29
The Ambani family pact that split gas output from the Krishna Godavari basin D6 field between brothers Mukesh and Anil cannot over-ride government's right to formulate gas utilisation policies aimed at larger public interest, the Fertiliser Ministry has said.

Urea plants had been given the first priority in sale of natural gas from Reliance Industries' D6 but the June 15 order by the Bombay High Court had given 70 per cent of the initial volumes from fields to Anil Ambani Group's RNRL.

"The gas in question has been allocated (to fertiliser, power and other sectors) based on the government's authority and rights under the Production Sharing Contract (for D6) aimed at regulating gas marketing and allowing their orderly growth," Fertiliser Secretary Atul Chaturvedi wrote to his counterpart in Petroleum Ministry, R S Pandey, on June 24.

"Our understanding is that any family settlement would not over-ride the sovereign right of government to formulate policies aimed at larger public interest," he wrote.

As many as 12 urea manufacturing companies were allocated 14.97 million cubic meters per day when the government prioritised sale of the initial 40 mmcmd from D6 primarily between fertiliser and power companies based on national priority of food security and meeting energy deficit.

But the Bombay High Court on June 15 ruled that RIL should honour its commitment in the family split agreement and supply 28 mmcmd gas to RNRL.

"If such a private arrangement has implications on already signed Gas Sales and Purchase Agreements for the allocated gas and if the existing rights of fertiliser companies are altered to their disadvantage, I am afraid they may also seek available legal remedies independently," Chaturvedi wrote.

He sought a re-confirmation from the Petroleum Ministry that "existing gas allocation, its price and GSPAs would remain intact." The fertiliser industry, he said, had sought a re-confirmation to the effect that the recent Bombay High Court judgement would have no implications on the supply of gas from KG basin.

The Bombay High Court had said that the terms of supply to RNRL would be based on RIL's bid for a 2004 NTPC tender.— PTI

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Hyderabad Metro Rail Project
Andhra may scrap deal with Maytas Infra
Suresh Dharur
Tribune News Service

Hyderabad, June 29
With Satyam scandal casting a shadow over the ambitious Hyderabad Metro Rail project, Andhra Pradesh government is mulling the option of scrapping the Rs 12,200-crore deal with the Maytas Infra-led consortia and going in for fresh bidding.

Maytas Infra, owned by disgraced former chairman of Satyam B Ramalinga Raju’s family members, has been unable to execute the project due to its failure to achieve financial closure.

This has prompted the government to contemplate floating fresh tenders or implementing the project with central assistance. A final decision on the matter will be taken soon, the officials said.

The cash-strapped Maytas Infra, whose operations have come under a cloud following the Satyam fraud, was supposed to achieve financial closure by March last but missed the deadline. The company is finding it difficult to raise resources from an already recession-hit market.

It has sought six months grace time to complete financial closure but the government is not in a position to grant the request.

“We are planning to go for re-bidding in a Public Private Partnership (PPP) model or take up the project on our own with assistance from union government. The project has to be implemented by 2011,'' a top official said.

Maytas Infra with consortia partners, Navbharat Ventures, IL&FS and Ital Thai, had bagged the project and an agreement was signed in September 2008.

The deadline for financial closure of the project was March 17, 2009. Maytas Infra, which landed in financial crisis post the aborted attempt by Satyam Computer Services to acquire it in December 2009, has been seeking extension of time.

Finding new partners would be difficult in view of the difficult market condition. Against this backdrop, the government was in favour of executing project on its own, officials said.

The Centre is also said to be willing to part-fund the project, with funds from Jawaharlal Nehru National Urban Renewal Mission (JNNURM), on the lines of Delhi Metro Rail. 

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Pink slip fear drives techies to docs

Bangalore, June 29
IT professionals in this tech hub are battling the global downturn with the help of doctors. Living under the constant fear of losing their jobs or trauma of seeing their colleagues getting the pink slip, the techies are increasingly seeking medical help to survive what experts call the "layoff survivor syndrome".

The intensity of the syndrome could become severe when a team member working on a project is benched or sent out, a leading psychiatrist said.

"It's a mental situation where IT professionals who of late have seen their colleagues, who are often friends, too, being laid off," B.N. Gangadhar, professor of psychiatry at the premier National Institute of Mental Health and Neuro Sciences (NIMHANS) here, said.

"First, it is the anxiety that the axe may fall upon them the next time and, secondly, a sense of remorse, with a tinge of guilt that they have survived, whereas their colleagues sitting next to them have lost jobs," Gangadhar said.

Two million people were employed in the Indian IT and BPO industry in 2007-08, according to the IT industry body Nasscom. The BPO sector employed more than 7 lakh persons.

"These are bad times. Recently two of my colleagues, who are also close friends, were fired. I am feeling terrible after the episode," said Sundar Gopal working with a reputed Indian IT company.

UNITES-Professionals (Union of Information Technology-Enabled Services Professionals), says there is no clear estimate of the job loss in these sectors in the wake of the global economic meltdown.

"Every other employed IT professional is thinking that it's their turn next," rues Karthik Shekhar, general secretary of UNITES-Bangalore.

UNITES-Bangalore says it has more than 50,000 members. "Those who are still employed are working under great mental stress, which is taking a toll on their work and professional growth also," Shekhar asserted.

UNITES-Bangalore contends that the employers are not helping their staff to deal with the mental trauma of being laid off.

"The companies are not giving any kind of counselling before handing over pink slips to their employees. This leaves the employees distraught. The companies should provide some kind of counselling in not only giving mental solace to their employees but also some amount of guidance in helping them find an alternative means of livelihood," said Shekhar. — IANS

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S Kumars set to buy Hartmarx for $119 m

Mumbai, June 29
Textile firm S Kumars is set to acquire Hartmarx, the American clothing company and the suit makers of President Barack Obama, for $119 million.

Hartmarx, the men's largest formal wear clothing company in the US, had recently announced that 50 of its wholly-owned US subsidiaries had filed for protection under the local bankruptcy code.

A consortium of S Kumars Nationwide (SKNL) and its operating partner emerged winners after a competitive bidding process. SKNL today said that its US subsidiary along with the operating partner have successfully bid for acquiring Hartmarx Corporation.

"The United States Bankruptcy Court for the Northern District of Illinois on June 26 approved the sale of substantially all of the assets of Hartmarx Corporation for a total transaction value of about $119 million," the company said. — PTI

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BRIEFLY

Towers Perrin, Watson Wyatt to merge
New York:
Global consultancy firms Towers Perrin Forster & Crosby and Watson Wyatt Worldwide will be merging with each other in a deal valued at $3.5 billion. Both entities, which advices companies on people and financial management, among others, have a good presence in India. The merged entity to be known as Towers Watson would have annual revenues of more than $3 billion, both companies said. 
— PTI

Telcordia bags mega deal from Unitech Wireless
New Delhi:
Communication software service provider Telcordia on Monday said it has received a five-year, multi-million dollar contract from telecom firm Unitech Wireless. Under the agreement, Telcordia will provide real-time charging solution for Unitech's mobile pre-paid subscribers in all the circles where the telecom firm will operate, Telcordia Technologies India country manager Anuj Kapur said. — PTI

RCom in pact with BBC
New Delhi:
Reliance Communications (RCom) and BBC World Service have announced a strategic alliance to offer live audio service through Reliance’s R-World VAS platform. This is the first such international offering to be launched by an Indian telecom company. Reliance subscribers will now be able to listen to BBC World Service news in a choice of five different languages, seven days a week. — TNS

Karvy to focus on private wealth management biz
Mumbai:
Financial services provider Karvy has decided to focus on fast-growing and vastly untapped private wealth management business by launching a new entity Karvy Private Wealth, a top official said on Friday. Karvy Private Wealth CEO Hrishikesh Parandekar said that it is still a nascent business. There are only 20-25 organised players comprising foreign and large private sector banks who have been major players in this business, he said. — PTI

Nagarjuna Construction to raise Rs 550 cr
Mumbai:
Nagarjuna Construction on aid it will raise Rs 550 crore through qualified institutional placements (QIP) route. The company would raise Rs 550 crore (with a green shoe option to retain up to Rs 50 crore from the excess subscription received) by issuing securities to qualified institutional buyers, it said.— PTI

BoR to raise Rs 250 cr
Mumbai:
Bank of Rajasthan on Monday said it is planning to raise funds up to Rs 250 crore through private placement of shares. The board has approved the allotment of equity shares on qualified institutional placement (QIP) basis to raise up to Rs 250 crore in one or more tranches, the lender said in a filing to the Bombay Stock Exchange. — PTI

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