ASSOCHAM exhorts Japanese bussiness community

NEW DELHI, Dec 1: The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has exhorted the Japanese business community to set up a learning centre in India to upgrade India’s skills and trigger greater business opportunities for Japan.

Addressing the joint meeting of the India-Japan Business Cooperation Committee, ASSOCHAM President L Lakshman pointed out that India needs to bring about a ‘learning revolution’ to remove the weaknesses in our education system which suffers from a total mismatch between theory and practice.

Identifying continuous learning and increasing the quality of human resource as the root cause for the Japanese success in the global marketplace, Mr Lakshman said most Japanese companies have very simple ways of using the most sophisticated tools of management and their uniqueness lies in the willingness to share information with partners, beyond the scope of contracts.

Stating that the worst may be over for the Indian economy because of the strong macro-economic fundamentals, ASSOCHAM President said if like China and some of the South East Asian countries, India can target a ten per cent growth in GDP and achieve it, it would move us into the league of lower middle income group of nations over the next 20 years. This would mean a per capita income of 10,000 dollars measured in purchasing power terms.

Yet, a robust and sustainable growth of Indian industry is imperative and the main reason for the economic slowdown is the declining Government expenditure in the infrastructure sector. The Government has responded by announcing new initiatives to strengthen the infrastructure, Mr Lakshman said and hoped the policy environment would change in the next couple of years to facilitate greater participation of the private sector and enable public resources to be diverted to the social sectors which are starved for funds. (UNI)

Perspectives for India, Europe in light of Asian financial crisis outlined

NEW DELHI, Dec 1: Planning Commission member Montek Singh Ahluwalia today said reasonably a growth rate of seven per cent could be expected in the next three years as a consequence of the policy framework for the infrastructure sector being liberalised and consequent higher flow of private Foreign Direct Investment (FDI).

Speaking at the "1998 India economic summit " here, Dr ahluwalia outlined the rationale for India following cautions policy with regard to permitting its companies and banks to borrow abroad and going slow on short term flows.

He said the crucial parameter on which the balance of payments deficit will hinge will be enhanced flows of FDI. Dr Ahluwalia was participating in the session on "from the Asia financial crisis to a global crisis, what perspectives for India, Europe and the world economy."

The session was also addressed by former Prime Minister of France Raymond Barre, the concluding remarks were made by Mr Claude Smadja, Managing Director of Would Economic Forum (WEF) and Mr Rahul Bajaj, a well know industrialist also chaired the session. The conference is being organised by the WEF in partnership with the Confederation of Indian Industry.

A crucial question was raised whether India was positioning itself to take advantage of East Asian crisis by adopting policies and postures to divert foreign flows to itself. The answer was that while steps were being taken to stabilise fiscal and monetary policies and discipline these there was no critical reason as to why these flows will come to the country in a big way.

Mr Barre was of the opinion that Europe and the United States will have to play a lead role in revival of the East Asian economies by absorbing more imports, he, however, said Europe was not doing enough in this direction with its huge trade surplus.

He expected the world economy to grow around two to 2.5 per cent and said the slow down will affect the level of employment. He said countries like Germany and France were hinging on a keynsian type revival package leading to a demand pull revival describing his assessment as ‘optimistic" Mr Barre said "we are going to have a long term phase of expansion."

Mr Smadja was of the view that risk premiums in India will continue to increase and cited the instanced of moody’s downgrading India some time ago India will have to be prepared for this. And stand tall for private investments to be able to make substantial impact on its growth rate.

Dr Ahluwalia said the East Asian crisis had affected India, but only in a normal way. Its currency, which depreciated in its wake, had now adjusted itself. Growth was also not affected in any substantial manner and the national council of applied economic research’s projection of a 5.7 per cent growth in the current year was an indicator that while growth was slow it was not a collapse.

He said all forecasts suggest that the East Asian crisis will bottomed out . In some countries like Thailand and South Korea growth had considerably slowed down and was negative. As India’s exports were diversified and not concentrated to East Asian countries, exports would not be dramatically affected. The United States was doing well and would be able to absorb exports but it was important that its growth rate was maintained and this will depend much on what will happen in europe. The main reason for the East Asian crisis was a very open capital account which ensured easy flow of money but a fragile financial structure. This was combined with its exchange rate policies .

Dr Ahluwalia said India had realised the importance of a strong financial sector much before the East Asian crisis. A committee for banking sector reforms was appointed in 1991 and prudential norms for Non-Performing Assets (NPA) were tightened. Net NPAs, that is netof provisioning which were 16.2 per cent in 1992-93 were now 8.2 per cent in 1997-98.

Even though these were high they should go down three to four percentage points more. The Government has appointed second committee to review the NPA norms. The international banking norms will be much tighter and the committee is expected to submit its report by April this year. India has capital controls even though it is planned to progressively deregulate these corporates have been denied permission to freely borrow abroad and India’s short term debt was deliberately kept low.

Besides, India has followed a fixed exchange rate policy. A problem in export growth will be difficulty of availability of finance. He said the international community would be well advised to spread risks than concentrate them by investing in India. Dr Ahluwalia said India was trying to evolve a policy framework to attract larger foreign flows. India was of the view that excessive openess with too much fragility of some sectors was something to be cautious about. If substantial flows of FDI can be ensured then balance of payments management would not an obstacle. Export growth is not a constraint on national income growth as was the case with East Asian countries because exports do not constitute large percentage of GDP.

The Government is aware that a key determinant will be investment especially public investment. A major focus is opening up the infrastructure which will attract large investments from the private sector. Policies in power and telecommunications were being liberalised to attract more private sector investments. This will insure a higher growth rate.

Mr Barre said a major problem of the European situation was the Russian crisis which was in a state of near collapse. The crucial question was whether it would be possible to roll it back interest rates in Europe were much lower than that which prevailed 20 years ago. This is a good factor for investment. The East Asian crisis has produced a reaction in Europe which is of a psychological nature. This was the first major financial crisis after the globalisation of the economy and underlined the fact hat a correction was necessary and would be very useful.

Mr Barre said the worst was over as far as the East Asian crisis was concerned. European exports to Asia were ten per cent of its global exports and therefore the psychological factor was important. The optimistic mood was transformed into pessimism and media was responsible for this as it always exaggerates facts, he said. There was also pressure from economists who were suggesting polices which were keynsian in nature and aimed at stimulating demand to avoid unemployment and recession. Apart from demand related problems the other issue of unemployment was the structural factor.

The high cost of labour in Europe was mitigating against enhanced competitiveness of its economies and there were labour market rigidities. The emergence of a single currency in Europe as agreed by eleven countries will enhance competitiveness.

Mr Barre was of the view that Japan will emerge as a strong competitor in the coming years.

He said while Japan was in a bad shape it had taken steps to get itself out of the present difficulties. One such effort being attempts to strengthen its banking sector. (UNI)

ICRA downgrades fixed deposit rating of VCK

NEW DELHI, Dec 1: ICRA Limited has downgraded fixed deposit rating of VCK capital market services and Torrent Cables Limited (TCL) to MC and -LBB indicating risk and inadequate safety respectively.

The rating agency has assigned a "CS 5" grade indicating high risk to the collective investment scheme of Endowment Forests (India) Limited (EFL), a company promoted by Surya House and Leasefin. CS 5 rating is considered very high risk and extremely speculative.

ICRA has withdrawn the MB rating, indicating inadequate safety, assigned to the fixed deposit programme of Maha Rashtra Apex Corporation Limited, as the company has indicated that it would not be in a position to co-operate with the rating agency in providing necessary information.

The present rating of VCK is risk prone and susceptibility to default is high. Adverse changes in business/economic conditions could result in inability or unwillingness to service debt on time as per terms, a ICRA release said here today.

In the case of TCL, ICRA said falling demand coupled with a sharp fall in realisations has resulted in the company showing a loss of Rs 18.73 crore for the financial year 1997-98. This has resulted in strained interest and debt service coverage ratios. (UNI)

India’s GDP growth likely to be below 6 pc: Montek

NEW DELHI, Dec 1: India’s economic growth for the current fiscal is likely to be below six per cent and the country is trying to attract more Foreign Direct Investments to bridge a growing Balance of Payment (BoP) deficit, a top Government official said here today.

Forecasting a BoP deficit between two to three per cent, Planning Commission member Montek Singh Ahluwalia said, "BoP is not a big obstacle and we can trust significant foreign investment inflow in the next two to three years."

Referring to the South-East Asian crisis, he said though the country had warded off a direct contagion effect in the short term, India could not think that metldown in the region and the recession worldover did not matter.

Speaking at a function organised by the World Economic Forum and Confederation of Indian Industry (CII) here, he said India would relax controls on Capital Account Convertibility (CAC) in a progressive manner to minimise vulnerabilit.

East Asian economies, which accounted for a significant share of Indian exports, had slowed down and acceleration in economic performance in the other major markets like US and Europe cannot be expected, he said.

"India must recognise that having escaped immediate effect of East Asian crisis, it is headed for choppier seas," Singh said. (PTI)

Lanka imports 12,000 mt rice from India

COLOMBO, Dec 1: Sri Lanka is importing 12,000 metric tonnes of rice from India even as the local Agricultural Ministry has alleged that the imports would swamp the local farmers, media reports said today.

The first consignment of 2000 metric tonnes from India reached the Colombo harbour a few days ago and the remaining stocks were expected during the course of this month.

The rice imports followed the import of large quantities of onions from Netherlands in recent weeks to bring down the skyrocketing prices.

The state owned Co-operative Wholesale Establishment, (CWE), which imports bulk quantities of foodstuffs turned to Netherland for onions this year after India too began importing them due to production shortages.

The import of Indian rice however has created a rift between the trade and agricultural ministers, the report said.

CWE which functioned under the Trade Ministry argued that the rice imports were warranted by steep price increases following shortages in the domestic market and said that more rice would be imported if the prices failed to come down. (PTI)

Private placements of debts increases by 15 pc: Report

NEW DELHI, Dec 1: The private placements of debts have increased by 15 per cent to Rs 18, 727 crore in the first six months of 1998-99 over the corresponding period last year, according to an independent data base company.

In the first half of current fiscal, as many as 88 institutions and corporates have mobilised the amount, over Rs 16,340 crore last half-year, said a mid-term report released by prime data base.

The market had mobilised Rs 10,035 crore, Rs 18391 crore and Rs 30,944 crore in the fiscals 1995-96, 1996-97 and 1997-98 respectively. The size of the market for debt private placements has more than trebled over the last three years, Mr Prithvi Haldia of prime said in a statement today.

The highest mobilisation through debt private placement during FY1 was IDBI (Rs 4,442 crore), followed by ICICI (1,667), IFCI (1,292), MKVDC (700), Reliance Industries (675), SAIL (570), APSEB (519), MJP (513), Reliance Telecom (500) and MSEB (500).

Government organisations and development financial institutions, as per the report, continued to dominate, mobilising 77 per cent of the total amount. This represented an increase from its 75 per cent share in 1997-98 though a fall from 90 per cent in 1996-97.

Among Government organisations, the All-India Financial Institutions and banks led with a 46 per cent share (Rs 8,646 crore), followed with a 24 per cent share by state level undertakings (Rs 4,479 crore, a six per cent share by PSUs (Rs 1,173 crore) and a one per cent share by State Financial Institutions (Rs 200 crore).

A significant feature of period, pointed out by prime, was the growing emergence of state level undertakings, most of which raised resources primarily for infrastructure. From a meagre Rs 311 crore in full 1995-96 and Rs 2,630 crore in 1996-97, 1997-98 has seen this sector raise a high Rs 6,726 crore. In the six-month period of 1998-99, the slus raised raised Rs 4479 crore. The major mobilisers were Maharashtra Krishna Valley Dev Corp (Rs 700 crore), APSEB (Rs 519 crore), Maharashtra Jeevan Pradhikaran (Rs 513 crore), MSEB (Rs 500 crore), KSEB (Rs 400 crore), Kaishan Bhagya Jala Nigam (Rs 320 crore) and RSEB (Rs 300 crore).

On the other hand, there was a drop in the moblisation efforts of psus: Down from Rs 5,301 crore in 1996-97 to Rs 4,008 crore in 1997-98 to only Rs 1,173 crore in the six-month period.

According to the report the period witnessed a further improvement in the moblisation by the private sector. Hile Rs 7,763 crore had been raised by 95 companies in full 1997-98, the recent period saw 51 companies from this sector raise Rs 4229 crore.

The financial services sector continued to dominate the market, collectively raising Rs 9,834 crore or 52 per cent of the total amount. Power ranked second with a 19 per cent share (Rs 3,497 crore), followed by water resources (Rs 1038) crore stell (Rs 933) crore telecommunications (Rs 857) crore and petrochemicals (Rs 685) crore.

A notable aspect of the private placement market, according to the prime report has been that both moblisers as well as investors are mainly institutions and this, therefore, in no way reflect any direct moblisation of household savings as is the case in the primary capital market. (UNI)

Govt to hike sugar import duty soon: PM

NEW DELHI, Dec 1: Government is likely to hike the import duty on sugar soon to protect the indigenous sector from cheaper imports, Prime Minister Atal Behari Vajpayee said today.

A remunerative procurement price would also be fixed for sugarcane, he told the BJP parliamentary party meeting here.

Briefing reporters after the meeting, Parliamentary Affairs Minister Madan Lal Khurana said Vajpayee had told the BJP MPs that sugar was now being imported from various countries, including Pakistan, to tide over the current shortage.

Last week, Food Minister Surjit Singh Barnala said his ministry would put up a fresh proposal for increasing import duty on sugar before the Cabinet after Finance Minister Yashwant Sinha had shot down a proposal sent in early October.

Sinha, while turning down the proposal, said stocks at beginning of the current crop year (October 1998-September 1999) were lower than the last four years and such a move could lead to a rise in the commodity’s prices, adding further fuel to increasing inflation.

Barnala had argued that rising imports were cutting into profits of domestic sugar industry and this could affect payment to sugarcane growers. (PTI)

Mumbai, Delhi figure among most expensive cities in Asia

BEIJING, Dec 1: Mumbai and New Delhi are the second and third most expensive cities in Asia respectively in terms of Grade-A office space, according to a latest survey.

While Grade-A space in Mumbai costs 75.75 US dollars per square foot per annum, Delhi emerged third with a rate of 66 US dollars per square foot per annum, the survey said.

However, Hong Kong is still the most expensive place in Asia to lease Grade-A space, media reports quoted the new office rental guide that calculates net effective occupancy costs across various Asian cities as saying.

Despite an almost 40 per cent correction in office rents in Hong Kong this year, Grade-A office space costs on average 76.07 US dollars per square foot per year, international property agency Cushman & Wakefield said.

The index developed by the company used a standard definition of efficiency across all markets and includes extra costs and fees in the rental package.

Efficiency was the actual space taken up by desks and meeting space in the leased premises, Cushman and Wakefield Director Richard Middleton said.

But, tenants were faced with different definitions of efficiency from building to building and city to city in Asia, he said, adding in many cases, it was almost impossible to compare like with like.

Asia suffers from many different standards of measurement, Middleton added. (PTI)

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