Budget Countdown – IV
Economy to ‘recover’ by Sept
‘Ambani family pact can’t override govt’s right’
Hyderabad Metro Rail Project
Pink slip fear drives techies to docs
S Kumars set to buy Hartmarx for $119 m
Tribune News Service
New Delhi, June 29
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.
Ruchika M. Khanna
Tribune News Service
Chandigarh, June 29
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.
New Delhi, June 29
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
New Delhi, June 29
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
Tribune News Service
Hyderabad, June 29
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.
Bangalore, June 29
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
S Kumars set to buy Hartmarx for $119 m
Mumbai, June 29 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.
Mumbai, June 29
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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