Daily Excelsior...Business

Orissa signs MoU
with Centre for Rs
3,000-crore WB loan

NEW DELHI, Oct 14: Orissa, the first state to sign a Memorandum of Understanding with the Centre, .....more

Indian economy — a saga
of broken contracts ?

NEW DELHI, Oct 14: The foreign direct investment to the country has taken a beating in the....more

FIIs net buyers
in equities at
Rs 330 crore

MUMBAI, Oct 14: The Foreign Institutional Investors (FIIs) were net buyers in equities at Rs 330.....more

Inflation rate falls at
year’s low of 3.32 pc

NEW DELHI, Oct 14: Overcoming the sharp rise in vegetable prices, inflation plummeted to year’s....more

Gold, silver dip on
weak overseas advice

Call hovers around bank
rate, gilt bearish

MUMBAI, Oct 14: Except on Friday, the overnight interest rate stayed stable around the bank rate during most part of the five-day inter-bank call money trading session ended October 12, amid comfortable liquidity and.......more

ED seizes worth Rs
15 crore accounts
of Skybiz, associates

NEW DELHI, Oct 14: NEW DELHI, Oct 14: Enforcement Directorate (ED) has informed the Delhi High Court that five bank accounts of US company Skybiz and its Indian associates with deposits worth over Rs 15 crore......more

Orissa signs MoU with Centre for Rs 3,000-crore WB loan

NEW DELHI, Oct 14: Orissa, the first state to sign a Memorandum of Understanding with the Centre, would receive the maiden installment of a Rs 3,000-crore World Bank (WB) loan at a lower interest rate to partially repay outstanding loans of Rs 22,050 crore.

Talking to reporters here last night, the State’s Finance Minister Ramkrishna Patnaik said the MoU was signed between Orissa Chief Secretary D P Bagchi and Union Empowerment Secretary C M Vasudev thereby facilitating the loan through the Centre.

Out of the Rs 10,000-crore loan from the WB, the first installment would be received in the next two months at an interest of four per cent. If the state adhered to financial discipline, the bank would release the rest of the amount subsequently, he added.

Orissa is reeling under the Rs 22,050-crore loan burden at a high interest rate ranging between 12.5 and 14 per cent. The state is availing the loan to pay back previous WB and external loans to save money on interest, he reasoned.

Mr Patnaik said Prime Minister Atal Behari Vajpayee recently indicated that the provision for declaring a special category state would be revised to include states such as Orissa, Chhattisgarh and Jharkhand. "It is unfortunate that these states suffer due to certain provisions in the act," Mr Patnaik added.

Blasting the centre for pushing Orissa to financial disaster, Mr Patnaik said his state was losing Rs 7,500 crore during the 11th Finance Commission period due to non-revision of royalty on coal, which is one of Orissa’s primary sources of income.

For the past several years, the state had been losing Rs 1,150 crore per annum on coal royalty due to the centre’s apathetic attitude.

Talking about financial measures, he said the Naveen Patnaik Government had initiated steps such as augmentation of revenue generation, tax on more items, launching Voluntary Retirement Scheme (VRS) for the public sector and Government employees.

So far more than 4,000 employees have availed of VRS in the state. The target is to shed at least 20,000 employees from the Government roll. The scheme has been launched with the assistance of the United Kingdom-based DFID, he added.

Apart from this, 54,000 posts had been kept vacant after transfers or retirement. At least 10,000 had been abolished, he said.

Unless the centre waived the outstanding loan or fixed a moratorium on the loan, Mr Patnaik said, the state would be neither able to pay salaries nor invest in development projects. (UNI)

Indian economy — a saga of broken contracts ?

NEW DELHI, Oct 14: The foreign direct investment to the country has taken a beating in the recent past due to broken promises and abandoned projects in various infrastructure sectors such as power, telecom and aviation.

In the guise of ‘public interest’, the country today appears to be rescinding on the primary principles of ‘sanctity of contract’ and ‘rule of law’, according to former Additional Solicitor General Dr Abhishek Manu Singhvi.

Addressing a conference on ‘sanctity of contract and rule of law in the Indian infrastructure sectors’ here earlier this week, Dr Singhvi said, "he, who goes to the market must play by the rules of the game and sanctity of contract is the principle of business and the backbone of the whole system including law."

The inability of the Orissa administration to live up to its commitment of support to the US based AES Corporation for the collection of outstanding and revised tarrifs, the Enron imbroglio, and several other cases depict the inability of the country to provide suitable legal recourse to the investors, he said.

Various contentious issues —BALCO, Powergen, National Power, Air India— and the list goes on, provide distinct proof of the inability of the country to live up to the Utopia of being the most promising land for investement opportunities, he said.

The task of maintaining the sanctity of contract and rule of the law has now been taken over by the various regulatory bodies like the Telecom Regulatory Authority of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India (IRDA) and other such present or proposed bodies, he said. "In the ultimate analysis, we can not have a disciplined regime in infrastructure without a regulator and its key characteristics in an ideal regime include independence, transparency, consistency and predictability," he said.

However, "India is an irony, an over legislated and under enforced country where regulators are mushrooming without achieving the desired purpose," the legal luminary commented.

For maintaining the independence, at individual and institutional level, there should be an open and objective approach to the selection of people, specific terms of office, financial freedom and liberty in recruitment policies of regulators, he said.

Exemplifying how the present legislations overrule contracts, he said, Section 18 of the IRDA Act says the authority is bound on matters of policy by the Goverment directives and Section 19 goes a step further to state that Government can supersede the authority altogether.’’

"So if you have in-built, post-judgement dilutors, then where is true independence or autonomy to enforce contracts?" he asked.

He said, "such bodies are created around budget for fanfare, laws and statutes passed and the first recommendations are ignored."

"Regulators are set up for political reasons but have to be designed," he quipped.

To attract FBI, it is necessary to avoid duplication of roles and conflict of interest. Moreover, public and the investors must know about the changes in rules. Laws should be fiercely debated when formulated and then consistently applied, he emphasised.

Taking a dig at the Electricity Regulatory Commission Act, he said,"in the first place, it is not mandatory for the states to have a State Electricity Regulatory Commission and once established, they can be wound up by simply an executive order."

"These issues strike at the very root of the regulatory regime. So we have to decide whether to pay lip service in the era of globalisation

or create de-facto bodies to encourage the much needed FDI for improving the sagging economy,’’ he added. (UNI)

FIIs net buyers in equities at Rs 330 crore

MUMBAI, Oct 14: The Foreign Institutional Investors (FIIs) were net buyers in equities at Rs 330 crore (US dollar 69.3 million) with the mutual funds being net sellers at Rs 184.64 crore for the trading week ended October 12.

FIIs and MFs, however, remained net buyers in debt at Rs 24.9 crore (USD 5.2 mn) and Rs 215.89 crore, according to data available with Securities and Exchange Board of India.

The foreign funds remained away from the debt market for the whole week except for one purchase transaction of Rs 24.9 crore (USD 5.2 mn) on October 11.

MFs were more active in this segment while netting purchases of Rs 133.61 crore and Rs 47.69 crore on October 10 and October nine respectively, SEBI said.

On equity front, FIIs bought equities worth Rs 247.1 crore and offloaded to the tune of Rs 114.8 crore, thus turning into net buyers at Rs 132.3 crore (USD 27.8 mn) on October 11, the highest for the week.

After an early setback on Monday, the BSE benchmark 30-share index gradually moved upwards to a high of 2989.63 before ending the week at 2959.39 as against last weekend’s close of 2812.90, a net rise of 146.49 points.

FIIs were net sellers in equities worth Rs 7.9 crore (USD 1.7 mn) on October nine.

MFs netted sales of Rs 88.53 crore and Rs 62.93 crore on October 10 and 11 respectively in equities. (PTI)

Inflation rate falls at year’s low of 3.32 pc

NEW DELHI, Oct 14: Overcoming the sharp rise in vegetable prices, inflation plummeted to year’s lowest level of 3.32 per cent as against 7.77 per cent in the comparable period of 2000 due to steep fall in prices of food articles.

The week ended September 29 also saw a whopping fall of 1.54 per cent, the sharpest decline in many years, in the point to point inflation based on Wholesale Price Index (WPI) with 1993-94 as base year.

The rate of price rise was contained mainly on account of downtrend in fish items, maize, urad, tea, rawa and solvent extracted groundnut oil.

The WPI, however, rose by 0.1 per cent to 162 as against 161.9 a week ago and the index was 156.8 in the previous year period.

The final WPI stood at 161.8 for the week ended August four compared to the provisional figure of 161.4, while the final inflation was 5.48 per cent compared to provisional level of 5.22 per cent during the period.

Primary articles became cheaper and manufactured items became costlier, while fuel price remained unchanged during the period.

The index for primary articles’ group fell marginally by 0.1 per cent to 170.8 from 171 even as food articles’ became costlier. The index was 160.6 in the previous year.

Food articles’ group rose by 0.1 per cent to 178.1 from 178 as prices rose for gram and eggs (two per cent each), jowar, ragi, arhar, masur and fruits and vegetables (one per cent each).

Prices, however, fell in the case of fish-marine (four per cent), maize (three per cent), fish-inland, moong and tea (two per cent each) and urad (one per cent).

The index for non-food articles’ group dipped by 0.5 per cent to 156.8 from 157.5 on account of cheaper raw jute (13 per cent), raw rubber (eight per cent) and raw silk (five per cent).

Prices rose for raw wool (10 per cent), niger seed (four per cent), fodder (two per cent) and copra (one per cent).

Fuel, power, light and lubricants’ group index stood firm at the previous week’s level of 226.5, while the index was marginally lower at 218.3 in the previous year period.

The index for manufactured products’ group rose by 0.1 per cent to 144.5 from 144.4 a week ago due to costlier food products, textiles and machinery items. The index was 141.8 in the previous year. (PTI)

Gold, silver dip on weak overseas advice

MUMBAI, Oct 14: The wholesale commodities markets here put up a mixed trend during the five-day trading session ended on October 13. While gold and silver suffered a setback mainly on account of bearish overseas advice, sugar moved up on sustained demand from bulk consumers. Groundutseeds, edible oils and cotton, drifted lower, owing to a lack of fresh demand in the face of increased arrivals. However, select metals shot during the week under review. Bullion loses glitter

Silver .999 opened the week on a higher note at Rs 7,865 per kg, but fluctuated both ways during the week, owing to demand-supply mismatch, dealers said.

At the close of the week, the price crashed by Rs 195 to Rs 7,625 per kg, compared with the previous week-end level of Rs 7,820.

In London, silver quoted higher at US dollar 4.39/43 against US dollar 4.62/63 of the earlier week-end.

Standard mint and biscuit opened on positive note at Rs 4,850 per 10 gm and Rs 57,000 per 10 tola respectively, following encouraging overseas advice, mainly from London gold market. They traded in a narrow range of Rs 4,750-4850 (standard mint) and Rs 55,000-57,000 (gold biscuit), during the week under review.

At the close of the week, standard mint and biscuit, recorded a loss of Rs 80 and Rs 1,000 to Rs 4,720 per ten gm and Rs 55,200 per 10 tola respectively, owing to poor demand from local customers and jewellery makers on the back of improved inflows of gold biscuit from upcountry centres, trader said.

In London market, gold quoted US dollar 281/283.50 during the week under review, against US dollar 290/291 of the previous week close. Sugar turns bitter

Prices of sugar small and medium grades moved in a narrow range during the week.

At the close, prices rose modestly by around Rs 10 each to Rs 1,430/1,476 per quintal, for small grade and Rs 1,490/1,528 per quintal for medium grade, on increased demand ahead of festival season and reduced arrivals from Maharashtra co-operative mills.

Sellers reserved their stocks in view of the forthcoming Dussera and Diwali festivals, when the demand is likely to go up sharply. Market sentiment was cautious and the volume of trade was normal, a leading trader said.

Groundnut oil raw up

In oilseeds, per quintal, groundnut javas 60/70, 70/80 and 80/90 varieties, opened the week on a better note, owing to scattered demand from mill at previous week-end’s lower levels.

At the close of the week, prices slipped slightly by Rs 10 each to Rs 2,140, Rs 2,115 and Rs 2,090, on sustained heavy selling pressure by stockists, on expectation of a bumper new kharif crop from producing centres, particularly, from Saurashtra, Hyderabad and some parts of north.

Sesame 95/5 and whitish varieties also declined by Rs 85 and Rs 25 during the week and touched a low of Rs 1,875 and Rs 1,915 respectively, owing to weak advice from global and upcountry centres and thin demand from exporters. Castorseed also eased by Rs 25 to Rs 1,075 in sympathy with weak trend in sesame and groundnut.

However, nigerseed and sesameseed crushed varieties rose by Rs 15 each to Rs 1,575 and Rs 1,790 per quintal respectively, on sustained brisk demand from exporters and poor ready stocks in the domestic market, a leading trader said.

In oils per 10 kg, groundnut raw fluctuated both ways during the week under review. At the close of the week, prices went up by Rs 10 to Rs 365, owing to improved demand from daily retailers and bulk consumers and thin arrivals from producing areas. The strong advice from Saurashtra, Ahmedabad and others centres also helped in pushing prices up, a leading traders said.

But imported palmolein oil declined by Rs 14 during the week and touched a low of Rs 262, owing to increased supply of palmolein oil from Malaysia and Indonesia. The demand, however, was poor from daily consumers and retailers.

Rice, sunflower exp refined and castor commercial varieties also eased slightly by Rs five each, to Rs 195, Rs 305 and Rs 245 respectively, on heavy offerings at higher levels by stocksits, in view of subdued advice from producing centres like Indore, Hyderabad and other centres.

In de-oiledcakes per metric tonnes, groundnut extraction and kardi extraction prices shot up by Rs 100 and Rs 200 to Rs 7,100 and Rs 4,050 respectively, on sustained demand from local exporters and thin ready stocks in the domestic market, dealer added.

In futures trading, castorseed december 2001 contract opened the week lower at Rs 1,168 per quintal on profit-taking by bear operators. The price moved in a narrow range between Rs 1,150 and Rs 1,200 during the week.

On the last day of trading, on oct 13, the price crashed steeply by Rs 20 and touched Rs 1,175 on sustained heavy selling pressure by local bear operators, who were induced by weaker advice from producing centres mainly from Rajkot and Ahmedabad. Copper, brass up

In ferrous metals, prices of copper utensils, brass scrap and cuttings rose by Rs 150, each to touch a high of Rs 10,350, Rs 9,150 and Rs 9,350 per quintal respectively, owing to bullish advice from london metal market.

The demand improved from local dealers and upcountry centres like, and Indore, Hyderabad and Kolkata.

However, aluminium eased by Rs 100 to Rs 7,400 on poor demand from local and Kolkata buyers.

In non-ferrous metals, prices of copper wire bar looked up by Rs 50 to Rs 12,600 per quintal on fresh buying support from local dealers. Aluminium price on the other hand, eased by Rs 50 to Rs 9,150, owing to increased inflows from upcountry mills on the back of restricted demand from local dealers.

However, other items, like zinc slab, lead ingots, tin slab and nickel cathod, fluctuated in a narrow range during the week and were unchanged at Rs 6,800, Rs 4,000, Rs 300 and Rs 360 respectively, due to a lack of fresh interest from local small-scale industrial users. Cotton dips

In cotton market, short staple varieties suffered a setback by Rs 100-150 per quintal during the week under review due to sustained inflows from millers and thin demand from spinners, a leading cotton merchant said.

Prices tended to be weaker on thin demand, following recent reports of cotton purchase price cut announcement by the mahrashtra cotton federation. The Rs 200-250 per quintal price cut has affected the local market sentiments, leading cotton traders said.

Prices of new and old varieties like Bangladeshi fine, J-34,Y-1, H-4, MCU -5, DCH 32 varieties, declined by around Rs 150 each to Rs 3,852, Rs 4,555, Rs 4,302, Rs 5,146. Sankar 6 and Guj 797 were quoted lower at Rs 6,468 and Rs 3,881 per quintal respectively. H-4 and MCU-5 varieties also touched a low of Rs 4,837, Rs 6,468 respectively, due to sustained selling pressure by stocksits.

In futures section, December 2001 and February 2002 contracts for 26mm variety, drifted lower to Rs 4,425 and Rs 4,525 per quintal respectively, at the week-end, compared with Rs 4,508 and Rs 4,608 of the previous week-end. Prices declined on profit-booking by local bear operators in view of weak advice from Gujarat, Karnataka and Andhra Pradesh centres, leading trader added. (UNI)

Call hovers around bank rate, gilt bearish

Call rates opened the week at 7.00-7.10 per cent and ruled in a narrow range of 6.85-7.20 in the first four days of the week, with ample liquidity. However, thursday’s announcement of twin auction in Government stock for Rs 8,000 crore, put slight pressure on liquidity on friday. Call rates rose to a high of 7.75 per cent in the morning as banks, fearing liquidity crunch in the coming week on account of auction outflows, rushed to cover their fortnight’s reserve.

Call rates eased later on improved supply and depleting demand to close the week at 7.00-7.25 per cent.

During the week under review, the Reserve Bank of India’s (RBI) repos got good subscription initially, with the central bank accepting a total of Rs 13,300 crore.

Government securities swung in both ways and ended the week with a loss of 25-40 paise.

Gilt market, nervously reacting to the start of the us strike against Afghanistan and volatile rupee in the forex market, opened the week on a weak note and fell further on heavy selling pressure.

However, securities prices regained some of the lost ground after the RBI Governor late Monday talked up rupee, dismissed fears of any impact on the Indian economy on account of the US strike and assured the market of maintaining the policy of easing interest rate bias.

The hopes of interest rate cut and strengthening rupee helped gilt prices in maintaining a firm trend the following two days. But profit booking sales and concerns of the US strike continued to dampen the market sentiment and checked any sharp gains.

The announcement of twin auction pulled down gilt prices on friday. Market players were worried about liquidity crunch in the week ahead on account of auction outflows and call rates also moved up to 7.75 per cent Friday.

The RBI will re-issue the 10.18 per cent, 26 bond for a notified amount of Rs 2,000 crore through a price-based auction along with a yield-based auction of new 14-year stocks for Rs 6,000 on Monday. (UNI)

ED seizes worth Rs 15 crore accounts
of Skybiz, associates

NEW DELHI, Oct 14: Enforcement Directorate (ED) has informed the Delhi High Court that five bank accounts of US company Skybiz and its Indian associates with deposits worth over Rs 15 crore had been seized by it for alleged violation of Foreign Exchange Management Act (FEMA) in its transaction for sale of websites containing package on computer basics.

Two bank accounts of Skybiz in Pune with deposits of Rs 6.9 crore, one with centurian bank at delhi with Rs 7.2 crore and two accounts of US company’s Indian associates with Rs 1.98 crore and Rs 20 lakh deposits in Mumbai had been seized, ED in its report submitted before the court said.

A division bench comprising Chief Justice Arijit Passayat and Justice D K Jain has sought further details from the ED by October 30 regarding the steps taken by it to prevent such illegal transactions.

The ED submitted the report in reply to a Public Interest Litigation (PIL) alleging that Skybiz was indulging in illegal transaction of money on the sale of website computer packages by accepting payment directly in dollars. The company during past two years had sent over Rs 200 crore to US, petitioner’s counsel Gagan Gupta had alleged.

"As the remittances have been termed illegal by RBI, details are being collected from banks in respect of total remittances sent by their (Skybiz and its associates) branches to Skybiz," the ED said.

The PIL filed by one Anil Kumar Yadav said since Skybiz was accepting payment directly in dollars, it amounted to violation of FEMA and the RBI directives. (PTI)