SPECIAL COVERAGE
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LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Another stimulus unlikely
New Delhi, July 2
There are big expectations of the industry from the UPA government in the forthcoming Budget. Realistically, there is not much money that the government has in the first place for the industry. What really could be done is that reforms agenda could be set in the Budget. Sops really will be given only to exporters like gems and jewellery, textiles, garments, besides those in the IT service.

Survey seeks up to 49 pc FDI in defence, insurance
New Delhi, July 2
Laying the road map ahead of the Budget, the Economic Survey today sought sweeping financial reforms, an ambitious disinvestment programme, free pricing for fuel and fertiliser, opening railways to private sector and liberalising FDI in defence, retail and insurance areas.

6 lakh lost jobs in 4 months: Survey
New Delhi, July 2
About 5 lakh people lost their jobs in the October-December 2008 period, while over lakh were rendered jobless in January this year, the Economic Survey said today.

RBI for improvement in quality of IIP dataShiv Kumar
Mumbai, July 2
If RBI Governor D Subbarao has his way, the method of calculating inflation in the country would undergo a major revamp.

 

EARLIER STORIES



Samsung India’s country head (mobile division), Sunil Dutt poses along with a model at the launch of new handset ‘Samsung Marine’ in Lucknow on Thursday.
Samsung India’s country head (mobile division), Sunil Dutt poses along with a model at the launch of new handset ‘Samsung Marine’ in Lucknow on Thursday. — PTI

SBI Life is largest pvt insurer 
New Delhi, July 2
SBI Life has taken over ICICI Prudential to become the largest private insurer by garnering first year premium of Rs 784 crore in the first two months of the current fiscal.

Delink licence from spectrum: Survey
New Delhi, July 2
Hope emerged for the telecom sector, especially the private players, with the Economic Survey for the year 2008-09 suggesting not only the auction of the 3G spectrum but also its free trading in an effort to garner more for the economy.

‘Remove levies on broadband for rural sector’
New Delhi, July 2
The Economic Survey 2008-09 today suggested the removal of the annual licence fee and other charges on provision of broadband connectivity to the rural sector of the country with a view to removing the rural-urban digital divide.

EGoM to decide on 3G reserve price: Raja
New Delhi, July 2
Telecom Minister A Raja told Rajya Sabha today that the Empowered Group of Ministers (EGoM) will take a final decision on the reserve price for the spectrum.

Staff to get salary today
AI given one month for restructuring

New Delhi, July 2
The government has given cash-strapped national carrier Air India a month’s time to prepare a restructuring plan. Civil Aviation Minister Praful Patel today reiterated that the government support could not be taken for granted and the ailing airline had to come up with a concrete business plan within the next 30 days.

Inflation negative for third week
New Delhi, July 2
Inflation fell to minus 1.3 per cent for the week ended June 20, staying negative for the third week in a row, due to a high base effect even as prices of food like fruit and vegetables rose compared to the same week last year.

 





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Another stimulus unlikely
Bhagyashree Pande
Tribune News Service

New Delhi, July 2
There are big expectations of the industry from the UPA government in the forthcoming Budget. Realistically, there is not much money that the government has in the first place for the industry. What really could be done is that reforms agenda could be set in the Budget. Sops really will be given only to exporters like gems and jewellery, textiles, garments, besides those in the IT service.

Experts say that sops will come in the form of either loans in foreign exchange, and there could be some tax breaks as well for the industry to tide over the crisis.

However, domestic industry is going through a slowdown but given the mounting deficit that is staring at the government, there is not much scope of giving out another stimulus package. The fiscal deficit given by the government is 6 per cent in the Budget, 4 per cent additional deficit is that of off-Budget liabilities (like oil and fertiliser bonds) and 3-3.5 per cent is the fiscal deficit of the states, so the government is already in the region of 13.5 per cent deficit, even though Pranab Mukherjee had in his Interim Budget stated that his successor could take the fiscal deficit to 15 per cent levels.

But economists warn that such a thing would scare away the foreign investors. International rating agencies have started to already downgrade India and the foreign equity that was profusely coming to the country may see a slowdown.

What the industry could expect is that there could be definitive roadmap for goods and services tax (GST). There are expectations that personal income tax could be cut moderately so that there is more money in the hands of the people to spend and prop up demand. But the government is not in a very good position to let go the direct tax revenue, say economists.

CII president Venu Srinivasan’s wish list includes fiscal prudence, capacity creation, promoting investments and fuelling consumption through an investment budget with an 8 per cent growth rate trajectory.

Ficci president Harsh Pati Singhania called for a second Green Revolution and proposed extending infrastructure status to the cold chain projects.

Assocham president Sajjan Jindal’s demand was to step up investments in infrastructure, stimulate demand, moderate corporate tax, remove inadvertent custom duty structure and extend help to Software Technology Parks of India to accelerate exports.

PHDCCI president Satish Bagrodia expected the government to focus on infrastructure, inclusive growth, good governance, agriculture, fiscal discipline and financial sector reforms for reviving the economy. Industry hopes that the Budget will usher in reforms in sectors like pension, health and education and disinvestment to put the country on the next higher level of growth. 

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Survey seeks up to 49 pc FDI in defence, insurance
Tribune News Service

New Delhi, July 2
Laying the road map ahead of the Budget, the Economic Survey today sought sweeping financial reforms, an ambitious disinvestment programme, free pricing for fuel and fertiliser, opening railways to private sector and liberalising FDI in defence, retail and insurance areas.

Stating that the worst of the global meltdown was behind, the Survey said a growth of up to 7.5 per cent was possible during the current fiscal but cautioned that financial investors could be manipulating global oil and commodity prices.

Asking the government to divest up to 10 per cent equity in all unlisted PSUs with an annual disinvestment target of Rs 25,000 crore, the Survey also recommended auctioning of all unviable PSUs.

Though there are indications that the economy may have weathered the worst of the downturn, it cautioned that the situation needed "close watch on various economic indicators, including impact of the economic stimulus and developments taking place in the international economy."

Giving a snapshot of the economy during 2008-09, the Survey said the Indian economy has shock absorbers that will facilitate early revival of the growth, adding that banks were financially sound and forex reserves and debt position was within the comfort zone.

The fallout of the global economic crisis on the Indian economy had been palpable in the industry and trade sectors and had also permeated the services sector, the Survey said, pointing that the wide-ranging challenges included enhancement of physical infrastructure and productivity in farm sector.

The Survey also sought reduced role for government and end of state monopoly in areas like railways, coal and nuclear power while seeking up to 49 per cent FDI in defence and insurance. 
Besides, it added, the government should also develop a policy response system and financial buffer for use when oil prices rise above $80 per barrel in the global market.

Making a case for private sector’s entry into the coal sector, the survey said that the nationalised coal sector is a major roadblock in the steady growth of power sector.

As long as the coal sector remains a public sector monopoly, it could remain a bottle neck for accelerated development of the power sector, said the Economic Survey 2008-09 tabled in the Parliament.

The Survey also prescribed reforms in the subsidy regime in oil, food and fertiliser sectors and asked the government to review the possibility of direct cash transfer to the targeted people.

The survey further said the government should reform petroleum, fertiliser and food subsidies to reduce leakages and ensure targeting in order to provide benefit to the needy. 

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6 lakh lost jobs in 4 months: Survey
Tribune News Service

New Delhi, July 2
About 5 lakh people lost their jobs in the October-December 2008 period, while over lakh were rendered jobless in January this year, the Economic Survey said today.

Attributing to a survey conducted by the Ministry of Labour and Employment, the report said that during the three months from October to December 2008, there was a decline in employment of about half a million workers. Among the sectors, the most hit by the financial turmoil are gems and jewellery, transport and automobiles.

The most affected sectors were gems and jewellery, transport and automobiles where employment has declined by 8.58 per cent, 4.03 per cent and 2.42 per cent, respectively during the period (October to December 2008), it said. Two other surveys ,by Department of Commerce for the period August 2008 to February 9, 2009 and August 2008 to February 28, 2009 revealed job losses (direct and indirect) of 1,17,602 and 1,19,159 persons, respectively, the Economic Survey said.

The Labour Bureau survey, which covered 3,192 units, indicated improvement in the selected sectors with employment rising by a quarter million. Sectors registering increased employment were gems and jewellery (3.08 per cent), textiles (0.96 per cent), IT-BPO (0.82 per cent), handloom-powerloom (0.56 per cent) and automobile (0.10 per cent), the Survey said quoting the Labour Bureau.

In the Eleventh Five Year Plan (2007-12), about 58 million employment opportunities are projected to be created and the unemployment rate is anticipated to fall below five per cent.

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RBI for improvement in quality of IIP dataShiv Kumar
Tribune News Service

Mumbai, July 2
If RBI Governor D Subbarao has his way, the method of calculating inflation in the country would undergo a major revamp.

Apart from upgrading data collection for Wholesale Price Index (WPI) and Index of Industrial Production (IIP), the chief banker of the country wants to keep an eye on the Consumer Price Index as well.

Addressing a statistical conference of the RBI here today, Subbarao called for changes in the way data is collected to formulate official policy. “There is scope for significant improvement in the construction of WPI,” Subbarao said. He also called for the inclusion of the services sector in the calculation of wholesale prices. ''WPI with a more recent base and enhanced coverage, including that of the services sector, may pave the way for a Producers' Price Index (PPI),'' the RBI governor opined.

Subbarao felt that monetary policy should take into account the impact of prices on the end consumer as well. He hoped that the urban and rural consumer price indices under preparation would be useful to planners.

Dr Subbarao further felt that collection of employment data be conducted in real time in order to allow for effective monetary policy management. ''Unfortunately we do not have any reliable nationwide statistics on employment.'' the RBI governor said. He added that data on factory-sector employment culled from Annual Survey of Industry was unsuitable for formulating monetary policy because it came with a long time lag. Even the information available from the employment exchanges was not accurate since these covered only a small part of the workforce. Similarly, he said, employment information on the farm sector, too, was available after a long gap.

Responding to demands that the apex bank cut rates following the decline in wholesale prices, the RBI Governor said such a decision could not be taken on the basis of a single measure alone. For instance, he said, the price of food items accounted for a large part of consumer prices but had lesser weightage in the WPI. Similarly, fuel has a weightage of 14 per cent in the WPI but accounted for between 6-8 per cent in the CPI.

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SBI Life is largest pvt insurer 

New Delhi, July 2
SBI Life has taken over ICICI Prudential to become the largest private insurer by garnering first year premium of Rs 784 crore in the first two months of the current fiscal.

ICICI Prudential during the first two months earned a premium of Rs 483.54 crore from new business while SBI Life promoted by the country's largest lender State Bank of India, at the same time collected Rs 784 crore, according to the IRDA data.

SBI Life, a joint venture between State Bank of India and French firm Cardif SA collected Rs 546 crore in the same period last year, which is Rs 238 crore lower than the premium collected till May, 2009.

In percentage terms SBI Life's first year premium grew by 43.49 per cent over the same period last year.

Meanwhile, new business of ICICI Prudential, a 74:26 joint venture between ICICI Bank and UK-based Prudential plc, declined by almost 50 per cent compared to the same period last year. The company earned Rs 952 crore during the same period last year.

However, the life insurance industry grew by 6.58 per cent during the period under review. — PTI

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Delink licence from spectrum: Survey
Girja Shankar Kaura
Tribune News Service

New Delhi, July 2
Hope emerged for the telecom sector, especially the private players, with the Economic Survey for the year 2008-09 suggesting not only the auction of the 3G spectrum but also its free trading in an effort to garner more for the economy.

It also said spectrum allotment should be delinked from telecom licences.

The survey also brought out that the automotive industry in the country grew at a computed annual growth rate (CAGR) of 11.5 per cent over the past five years.

The survey further said not only should the 3G spectrum be auctioned, but "the auctioned spectrum must be freely tradable, with capital gains on spectrum to be fixed under the Income Tax Act."

The clause would help the government tax the companies which sell off their spectrum space in a bid to rake in profits. This would help the government garner revenue through taxation on profits through sale of spectrum space allocated to the telecom companies.

The government is looking to rake in as much as Rs 30,000 crore from the auction of the 3G spectrum.

On auction price, the Survey added that the price can be fixed or be charged per unit of bandwidth per annum, or a combination of both.

It has also suggested that allotment of spectrum should be disengaged from granting of a telecom licence.

At present, a pan-India telecom licence is allotted with the spectrum.

The Survey also suggested that spectrum should be "traded" freely among telcos having licences.

At present, the policy structure in the country does not allow free trading of the spectrum.

It also suggested levying of a nominal regulatory charge on a telecom licence. This, it said, should be based on the capability of providing sustained services.

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‘Remove levies on broadband for rural sector’
Tribune News Service

New Delhi, July 2
The Economic Survey 2008-09 today suggested the removal of the annual licence fee and other charges on provision of broadband connectivity to the rural sector of the country with a view to removing the rural-urban digital divide.

The survey suggested to the government to eliminate revenue share and other telecom charges on provision of broadband connectivity to villages.

It feels that the move would encourage service providers to take their broadband services to rural India.

With focus on rural telephony, it has also proposed to achieve a rural teledensity of 25 per cent through 200 million rural connections by 2011-12.

Rural teledensity reached 13.81 per cent in January 2009, while urban teledensity shot up to 83.66 per cent.

The survey suggested that to further increase connectivity open access to local loop for broadband provision and designate rural fibre-optic network as a "public carrier" for provision of telecom connectivity in the rural areas should be allowed.

Access to local loop means that other players can reach households to provide broadband services by using incumbent BSNL's huge copper network.

An agreement has been signed with BSNL in January 2009 to provide wire-line broadband connectivity to rural and remote areas by leveraging the existing 27,789 rural exchanges and copper wire link networks and by facilitating the service providers in creating broadband infrastructure.

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EGoM to decide on 3G reserve price: Raja
Tribune News Service

New Delhi, July 2
Telecom Minister A Raja told Rajya Sabha today that the Empowered Group of Ministers (EGoM) will take a final decision on the reserve price for the spectrum.

Replying to supplementaries during question hour on the first day of the Budget Session, Raja said in view of differences between telecom regulator TRAI and DoT on a number of issues, it was decided to refer the matter to the EGoM.

He said the EGoM would be convened soon as the UPA government has just assumed charge after the elections, adding that once this is done, the issue would be resolved.

He clarified that differences between were basically on number of blocks of spectrum to be auctioned, reserve price for spectrum and annual administrative charge.

"There are two issues in front of the EGoM, namely how many blocks of spectrum should be auctioned and what should be their base price," the Minister said while ruling out possibility of any foul play or "scam" in spectrum allocation.

Meanwhile, in reply to a written question Minister of State for Communication and IT Gurudas Kamat said that the reserve price of 3G spectrum and its allocation as well as amount to be auctioned were under the examination of the Government.

He said guidelines for the auction of 3G spectrum were issued on August 1, 2008 and were later amended on September same year adding that several issues, including amount of spectrum to be auctioned, fixing of the reserve price for 3G spectrum and its allocations, were under examination of the government.

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Staff to get salary today
AI given one month for restructuring
Tribune News Service

New Delhi, July 2
The government has given cash-strapped national carrier Air India a month’s time to prepare a restructuring plan. Civil Aviation Minister Praful Patel today reiterated that the government support could not be taken for granted and the ailing airline had to come up with a concrete business plan within the next 30 days.

“The government wants to know what is needed to be implemented in coming weeks and years.

There is every reason for Air India to respond quickly. The management, the employees, all will have to come out with a proper restructuring plan,” Patel said, asserting that government’s support “cannot be open-ended.” But the government was committed to save the airline, the minister assured, explaining: “We want a strong national carrier.”

The business plan will include financial restructuring and rationalisation of manpower, in other words cost-cutting and even layoffs, sources say.

Air India is appointing SBI Caps for financial restructuring. The Centre is keeping a close watch with intervention from the top-most level. Prime Minister Manmohan Singh is monitoring the progress and giving suggestions. He has suggested cost-cutting measures to improve the financial condition of NACIL, which owns Air India.

A three-member panel headed by Cabinet Secretary will monitor the airline’s turnaround.

The airline is also working toward paying wages and salaries to its employees in the lower grades on July 3 as part of the decision finalised at a meeting with the unions last week. Earlier, Air India management had announced that June salary would be disbursed only on July 15.

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Inflation negative for third week

New Delhi, July 2
Inflation fell to minus 1.3 per cent for the week ended June 20, staying negative for the third week in a row, due to a high base effect even as prices of food like fruit and vegetables rose compared to the same week last year.

The rate of price rise was (-)1.14 per cent in the previous week. The decline in inflation could be partly attributed to high rate of price rise at 11.91 per cent in the corresponding week last year. — PTI 

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