Plan panel skirts divestment issue in 10th plan presentation

NEW DELHI, Oct 29: Amid the ongoing controversy over divestment of Government equity in public sector units, the Planning Commission today made no mention of disinvestment in its presentation on the 10th five year plan made before the Union Cabinet.

Asked about the absence of disinvestment target in the presentation, Deputy Chairman of the Planning Commission K C Pant told reporters that it contained broad targets on various fronts and his concern was on the total gross budgetary support and not where resources were coming from.

"I am not putting myself in the position of the Finance Minister," Pant said when repeatedly asked if the proposed Rs 78,000 crore realisation from disinvestment during the plan period for attaining 8 per cent economic growth target could be met in the wake of differences within the Government.

Asked if any differences surfaced during the cabinet meeting which approved the 10th five year plan, Pant said "no".

He said the commission tries to spell out a total picture of resource mobilisation, including from taxes, saving and disinvestment.

However, he said even if Government surpassed the target set for disinvestment during the plan period, it was not going to increase the overall gross budgetary support.

Pant said the commission was continuing with broad factors provided in the draft approach paper on disinvestment but tried to play it down saying that mobilisation from this front was only 2 per cent of the total plan size.

Pant, however, exuded confidence in making progress on the disinvestment front saying there was some political agreement on carrying out economic policies like disinvestment.

Asked about the attack on a team of Hindalco officials which went to visit Nalco premises in Orissa as part of due deligence exercise, Pant said "I deplore all acts of violence."

"I can only appeal that the ambitious plan which we have adopted today needs a consensus at every level," he said.

Pant emphasised the need for a consensus between the Centre, States and political parties on reforms including that in labour sector and said the collective focus should be on fiscal correction, power sector reforms and removing barriers to inter-state commerce.

He said the plan also envisages governance as the essence of success and emphasised on the need for rightsizing both the size and role of government.G

Other areas that needed governance included revenue and judicial reforms, civil service reforms for improving efficiency, accountability and transparency. (PTI)

RBI lowers bank rate, CRR by 0.25 pc

MUMBAI, Oct 29: Reserve Bank of India (RBI) today reduced the bank rate and cash reserve ratio by 25 basis point each to 6.25 per cent and 4.75 per cent respectively.

The GDP growth rate has also been lowered to 5-5.5 per cent from the earlier 6-6.5 per cent.

Announcing the mid term review of the monetary credit policy for 2002-03, RBI Governor Bimal Jalan also announced a cut in the repo rate by 25 basis point to 5.5 per cent.

Jalan said the cash reserve ratio cut would be effective from the fortnight beginning November 16 while the repo rate cut would be effective from tomorrow.

On the bank rate, the lowest since 1973, the Governor said unless circumstances change, the policy bias in regard to the bank rate is to keep it stable at the present level until the end of the financial year.

Jalan said the GDP rate has been lowered to 5-5.5 per cent in view of poor rainfall in some parts of the country.

He said inflation would remain benign around four per cent despite drought and pressures on oil prices and RBI would continue with the monetary policy as announced in April for the remaining period of the year.

Jalan said India’s foreign exchange reserves have been comfortable at present and consistent with the rate of growth. RBI Governor has proposed to pay interest on eligible crr balances on a monthly basis with effect from April 2003.

Referring to statutory liquidity ratio of Regional Rural Banks (RRBs), RBI has proposed that SLR holdings of these entities in the form of deposits with sponsor banks maturing beyond March 31, 2003, may be allowed to be retained till maturity.

Although deposits with sponsor banks contracted before April 30, 2002, would be reckoned for SLR purpose till maturity, RRBs are advised to achieve the target of maintaining 25 per cent SLR in Government securities out of the maturity proceeds of such deposits with sponsor banks as well as from their incremental public deposits at the earliest.

On the interest rate policy, the apex bank said in order to further improve flexibility, banks have been given freedom to decide the period of reset on variable rate deposits.

Banks are also encouraged to review both their Prime Lending Rate (PLR) and spreads and align spread within reasonable limits around PLR subject to approval of their boards.

RBI also proposes to liberalise interest rates on export credit in rupee terms in two phases in a bid to increase flow of credit to the export sector and encourage competition among banks.

In the first phase, the ceiling rate on prime lending rate (PLR plus 0.5 per centage point on pre-shipment credit beyond 180 days upto 270 days and post shipment credit beyond 90 days upto 180 days) would be deregulated from may one, 2003.

Banks would have freedom to charge PLR or sub-PLR rates subject to approval of their boards.

In the second phase, the rates on pre-shipment credit upto 180 days and post-shipment credit upto 90 days should be discontinued to encourage greater competition on a date to be announced later.

On repayment of export credit, the repayment/payment of pre-shipment credit would be permitted, subject to mutual agreement between the exporter and the banker. Balances held in Exchange Earnings Foreign Currency (EEFC) account of the exporter can be used.

On interest rate on deposits by co-operative banks/RRBs/ local area banks, RBI said sponsor banks are encouraged not to pay interest on the current accounts maintained by RRBs with them.

Co-operative banks are encouraged not to pay interest on current accounts. RRBs/labs and co-operative banks have also been encouraged not to pay any additional interest on the savings bank accounts over and above what was payable by commercial banks, Jalan said.

With a view to provide more flexibility for pricing of certificate of deposit (CDs) and to give additional choice to both investors and issuers, RBI said banks and financial institutions may issue CDs on floating rate basis provided the methodology of computing the floating rate was objective, transparent and market-based.

RBI has also proposed to set up a working group with appropriate representations from the market to look into the possible ways of extending types of derivatives, that were available in foreign currency segment to rupee derivaties.

The group would also review the guidelines for over the counter rupee derivatives in india and suggest further developments in this market.

Referring to rationalisation of standing facilities, the Governor has proposed apportionment of normal and back- stop facilities to one-half (50:50) each from the fortnight beginning November 16 as against the present ratio of two-thirds to one-third (67:33).

Jalan said in order to improve credit delivery to the priority sector and in particular agriculture, it has been proposed that the limit of advances granted to dealers in drip irrigation/sprinkler irrigation system/ agricultural machinery, located in rural/semi-urban areas is being doubled to Rs 20 lakh.

RBI has also proposed to double the existing limit of Rs 10 lakh without any ceiling for working capital in case of small business and weaker sections.

The individual credit limit to artisans, village and cottage industries has been enhanced to Rs 50,000 from Rs 25,000. The limits would be under the overall limit of 25 per cent advances to weaker sections under priority sector or 10 per cent of net bank credit.

Jalan has also proposed to increase the existing limit of housing loans for repairing damaged houses from Rs 50,000 to Rs one lakh in rural and semi-urban areas and to Rs two lakh in urban areas.

Considering the fact that the recovery rate has been very high in respect of banks’ advances to self help groups, the apex bank has proposed that unsecured advances given by banks to SHGs against group guarantees would be excluded for the purpose of computation of the prudential norms on unsecured guarantees and advances until further notice.

This matter would be reviewed after a year in the light of growth in aggregate unsecured advances, and the recovery performance of advances to SHGs, he added. (PTI)

MPSRTC to rope in private operators to make up losses

BHOPAL, Oct 29: To address the mounting losses of over Rs 700 crore, the Madhya Pradesh State Road Transport Corporation (MPSRTC) will launch a new scheme for the private transport operators.

Under the scheme, the MPSRTC will hand over 450 routes in Madhya Pradesh and Chhattisgarh from November 1 to private operators who will pay Rs 1.50 per km as minimum administrative expenditure to the corporation as an incentive, the corpration would give bonus to private parties showing encouraging results, MPSRTC general manager A K Singh told UNI here.

The corporation, which has not been able to pay regular salaries to its employees, is expected to earn net profit of Rs 2.25 crore in the first phase of the scheme, which would earn Rs 4.50 crore for the state exchequer and Rs 20 crore for private owners.

So far, 68 parties have already signed a Memorandum of Understanding (MoU) with the corporation to operate on the 28,000 km route each day under the scheme, Mr Singh said.

The new scheme is an improvement on the earlier one-year-old contract vehicle scheme which, though generated a sum of Rs 13 crore, was not economically viable for the corporation beacause of irregularities by conductors in connivance with private owners, he said. The new scheme would be equally beneficial to MPSRTC, private operators and commuters, he said adding that more parties would be involved in the second phase after analysing the response.

The corporation had retained with it all the inter-state highways and the prime routes like Nagpur-Jabalpur, Indore-Bhopal, Jagdalpur-Raipur, Durg-Raipur, Bilaspur-Mungeli, Gwalior-Bhind, Khargone-Indore, Bhopal-Sarni, and Indore-Ujjain.

Only those routes were surrendered where the corporation’s fleet was running into losses, he said.

He said clandestine operations were posing great threat to the corporation. "We are helpless as it is resposibility of the state Government to check them", he added.

MPSRTC Chairman Lalit Jain also admitted that illegal plying of buses was one of the major reasons for the deplorable financial condition of the corporation.

Mr Singh said the recurring loss of the corporation was due to gap in its everday running. The corporation was covering five lakh kms per day with its fleet of 2000 buses, against its capacity to cover seven lakh kms.

Referring to prolonged pendency of salaries of MPSRTC employees, he said the situation worsened in the lean July to September period. However, it would improve in April next year, he added.

Referring to cost cutting measures, he said certain divisional uneconomical workshops and 13 sub-depots had already been closed. The problem of excessive staff was largely solved by the introduction of the Voluntary Retirment Scheme (VRS) under which 4500 employees had taken VRS. (UNI)

Oil up from 11-week lows as US. pushes Iraq vote

NEW YORK, Oct 29: Oil prices pushed up from fresh 11-week Oows on Monday as the Bush administration said the United Nations had debated long enough over a new resolution to demand that Iraq disarm and it was time to vote.

U.S.light crude CICI ended 24 cents higher at 27.29 a barrel after hitting a low of 26.62, while London benchmark brent crude lcoc1 was up 22 cents at 25.68 a barrel.

Oil prices fell around 2.50 a barrel last week, or nearly 9 percent, to levels not seen since the first half of August as signs that war with Iraq could be avoided prompted heavy selling by speculative hedge funds.

The United States is expected to push for a vote this week at the UN. Security Council on a draft resolution ordering Iraq to allow weapons inspectors back on to its soil after a four-year break.

The Bush administration on Monday signaled increasing impatience as France and Russia tried to weaken the wording of a proposed U.S. resolution, which would pave the way for possible military action if Iraq failed to meet U.N. demands.

"The time has come for people to raise their hands and cast their vote. It is coming down to the wire. This is important. The United Nations has debated this now long enough," said White House spokesman Ari Fleischer.

The U.N. stalemate over the wording of a resolution has appeared to reduce the imminent threat of a military strike against Baghdad.

This has cut into oil’s war premium, which was estimated at one point at roughly 5 a barrel on fears that the use of force against Iraq might disrupt crude flows from the middle east, which supplies about one-third of the world’s oil.

U.S. crude dropped 1.15 on Friday after consultancy petrologistics forecast daily output by the OPEC producers’ cartel would rise by more than half-a-million barrels in October, largely due to higher exports from Iraq.

The Geneva-based tanker-tracking consultancy said it expected the organization of petroleum exporting countries to produce 26.78 million barrels per day this month, up from 26.26 million BPD in September as Iraqi oil sales rise to 2.55 million BPD from 2.095 million. Sanctions-bound Iraq is excluded from OPEC’s quota system. The other 10 members of the OPEC were seen pumping 24.23 million BPD, 2.53 million BPD above the official ceiling of 21.7 million BPD, petrologistics said.

OPEC producers have been increasingly pumping above their quota limits to take advantage of strong oil prices with demand expected to pick up as the northern hemisphere winter sets in.

Gulf Oil producers said on Sunday that they would safeguard world supplies if there was any strike against Iraq.

Saudi Arabian Oil Minister Ali Al Naimi said he and his five colleagues from the Gulf Cooperation Council (GCC) pledged to "protect worldwide supplies, guarantee market stability and preserve stable oil prices...At a fair level for producers and consumers" at a brief meeting in Muscat.

The GCC comprises OPEC’s Saudi Arabia, Kuwait, Qatar and the United Arab Emirates, as well as non-OPEC Oman and Bahrain. (REUTER)

SAIL reduces losses by over Rs 200 crore in first six months

NEW DELHI, Oct 29: An upturn in the steel market has enabled Steel Authority of India to significantly cut its losses to Rs 456 crore after tax during the first six months of the current fiscal as against Rs 704 crore during the same period of 2001.

The undertaking also posted a cash profit of Rs 90 crore on a turnover of Rs 8,189 crore during April-September, 2002, which was 17 per cent higher than the turnover registered during the first half of the previous financial year.

"Actions taken internally, suported by the upturn in the steel market, have helped us in earning a cash profit", SAIL chairman V S Jain said in a statement adding that "we are set to better our performance in the second half of the current fiscal, on the strength of an even more challenging growth and productivity improvement programme".

According to a company release, its operating loss has been reduced by 50 per cent during April-September this year after netting out the one-time capital gains made in the same period last year from divestment of captive power plants and leasing of company houses during this period in both years.

An improvement of 12 per cent in net sales realisation, a volument growth of 8 per cent in mild steel sales, a production growth of 8 per cent and lower capital related charges primarily contributed to the upturn in the company’s fortunes, the release said. (PTI)

Cidco looking for strategic partners for Dronagiri

SEZ MUMBAI, Oct 29: In a bid to attract foreign participation in setting up the state-of-the-art Special Economic Zone (SEZ) ‘Dronagiri’ at Navi Mumbai, the Maharashtra Government has organised roadshows in six countries.

The Government has received good response from seven cities across the world. The road shows were organised at New York, San Francisco, Frankfurt, Dubai, London, Hong Kong and Singapore.

Chief Secretary Ajit Nimbalkar, who headed a team to San Francisco, London and New York, said that Cidco, which would retain 26 per cent stake, was on the look out for credible, experienced and financially sound strategic partners to develop the SEZ as one of the best in this part of the world.

The proposed SEZ would be spread over 4300 hectares of land.

Talking to reporters here, Mr Nimbalkar said the select bureaucrats including Industries Secretary R V Dhumal, Urban Development Secretary Ramanand Tiwari among others, joined the the road shows to instil confidence among industrial partners.

"We have invited expressions of interest by November eight and the deals would be finalised by January 30, 2003", he informed.

Sectors like gems and jewellery, electronic items, information technology, pharmaceuticals, packaging, overseas banking, auto-ancillaries have been identified for setting up units at the new SEZ, he pointed out.

Admitting that the state has always lagged behind in terms of projecting itself as investor-friendly, he said the tour was meant to create awareness about the project among potential investors. "The response has been good and the actual involvement will be known by november eight, when we receive expressions of interest", he said.

Mr Nimbalkar said there was ignorance about investment in India in most places. "For example, in San Francisco, during one of the conferences, a potential investor asked him about Indo-Pak tensions and Kashmir problem, for investing in Maharashtra", he said. (UNI)

SEBI, UTI ordinances promulgated

NEW DELHI, Oct 29: The ordinance to repeal UTI Act was today promulgated paving the way for setting up of an asset management company for managing the net asset value based UTI-ii after the split of the country’s largest mutual fund within two months.

Along with the ordinance to repeal UTI Act of 1963, President A P J Abdul Kalam also promulgated the ordinance to amend the SEBI Act for providing extra teeth to the market regulator besides enlarging its board.

Following the issue of the ordinance, a notification would be issued for setting up an AMC with a initial corpus of Rs 10 crore by Life Insurance Corporation, State Bank of India, Punjab National Bank and Bank of Baroda with 25 per cent interest each.

Government would carry out a due diligence for UTI-ii to enable its privatisation by the proposed AMC, Joint Secretary (Capital Markets) U K Sinha told reporters.

The Chairman and top executives of the proposed company would be appointed by the new management and the professionals would get market-linked pay package.

Till the issue of notification for splitting UTI into two, the mutual fund would continue its operation in the present form.

The equity held by IDBI, the leading stakeholder in UTI, along with other FIs and banks would be paid back.

UTI has an equity base of Rs 5.0 crore but manages assets amounting to about Rs 42,000 crore.

Sinha clarified that the AMC to be floated for UTI-ii would be a transitional arrangement and that NAV-based fund would be privatised in a year or two.

"The proposed AMC floated by LIC and three PSU banks is only a transitional vehicle. We don’t want UTI-ii to be PSU-run mutual fund," he said.

Sinha did not rule out the possibility of the present UTI Chairman M Damodaran continuing as the chief administrator of UTI-i after the split.

UTI-i would comprise of US-64, all assured return schemes, special unit scheme of 1999 and the development reserve fund, which would together amount to Rs 25,000 crore.

UTI-ii having about 25 NAV-based schemes has assets under management amounting to Rs 17,000 crore.

Government has already committed to a bailout package of Rs 14,561 crore to UTI to meet its liabilities on US-64 and other assured return schemes. (PTI)

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