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May 31

Sell the public sector units to raise revenue: Rahul Bajaj
'You cannot cut subsidies because it is politically expensive, you cannot increase fiscal deficit, you cannot allow inflation to go up. So the only way to raise revenue, of up to Rs 200 billion, is to sell the PSU. Then you can increase expenditure to revive the economy.'

Increased defence and sanctions can cost up to Rs 100 billion'
Economist S S Bhandare, in an exclusive interview, also points out that if the government decides to slash cut its employees like China is doing, there will be a revolution.

The Budget can be a great opportunity
Dilip Thakore says that India's two most important problems are mass illiteracy, which hurt productivity, and the public sector enterprises, which run mostly in losses and consume resources.

OTHER BUSINESS REPORTS

When the rupee bombs and the sanctions hurt
The overwhelming part of the burden of Vajpayee's folly will be borne, as always, by the poor. But the worm can turn occasionally. Indonesia's poor have refused to put up with the load of suffering arranged for them by their masters. It is revolutionary time in Indonesia. India's self-seeking leaders should take a trip to Jakarta instead of Washington DC to learn the relevant lesson. Despite gossip to the contrary, revolutions are not yet an obsolete idea, says Ashok Mitra.

RBI asks banks to act on agricultural credit
The RBI has asked banks to follow the recommendations of the Gupta panel, which had suggested measures to simplify procedures and improve credit flow to agriculture.

• Stocks weekly review: Pokhran sends shudders down the market

May 30

'In a globalised economy, we do not have the freedom to choose our own tax structure'
'China has a low income tax rate... If you have a 50 per cent income tax rate and China 30 per cent, people will prefer the latter,' argues Madras School of Economics Director, Dr U Shankar, urging the government to take long-term measures to attract foreign investment. ''India needs a lot of money for infrastructure... We can modernise India in just four or five years if you have good communication facilities.''

'Expect an economic explosion on June 1'
Mahesh Nair points out how, after Pokhran, the government went into an economic overdrive, and says that the Budget will be another blast to boost foreign investment.

Rail budget hikes passenger fares across the board
Second class fares and first class including AC fares have been hiked. Freight fares hike is divided: some have gone up, some inculding foodgrains have not.

THE REDIFF BUDGET '98 INTERVIEW

'I hope economics will be back on BJP's agenda soon'
'There is a certain level of growth in the economy -- whether you have an active government or an inactive government. I have no reasons to believe that the level will go down now. But the issue is how that level can be nudged into 6.5 or 7 per cent,'' says Ashok Leyland Limited Managing Director R Seshasayee, seeking the government's support -- not protection -- for the Indian industry, in this pre-Budget interview.

OTHER REPORTS

Sanctions likely to hit Pakistan hard
There is not much US aid to cut, since Pakistan in any event has been under that country's sanctions since 1990. However, the mandatory sanctions as per the Glenn Amendment, which the Clinton administration has to enforce, will right up front put a $1.6 billion loan from the International Monetary Fund in jeopardy. Japan, Pakistan's largest aid donor, said that it will halt all new economic aid and yen-denominated loans.

Small enterprises must go global to survive
"Although small and medium enterprises policy is traditionally formulated as a domestic issue, it is becoming impossible to have an effective SME policy that ignores international considerations," says a book released by UNCTAD.

• Forex: Rs 41.68-70; Rupee sheds another 30 paise as panic continues

• BSE: 3686.39; Sensex plunges 130 points but ends 35.54 points lower as fear grips market

• NSE: 1063.15; Nifty down by 12.4 points

May 29

Put economy back on 7 to 8 per cent growth path: Economic Survey
The Economic Survey for 1997-98 calls for fresh initiatives to do away with the "inspector raj" and to necessitate raising of savings rate to about 30 per cent of the GDP. It also seeks an improvement in the infrastructure areas like energy, transport and communications.

Govt's last chance to do the right things, feel stock markets
The country's dismal economic outlook, downgrading by international rating agencies and fear of more stringent sanctions.... ''This is a great opportunity. I believe that India can really put up a fight only for another six months,'' says K R Bharat, director, Credit Sussie First Boston.

Assocham calls for retention of direct tax slabs
The Associated Chambers of Commerce and Industry has opposed any move to introduce higher slabs and surcharges for the 'super rich'.

THE REDIFF BUDGET '98 INTERVIEW

'India can achieve 8 per cent growth'
George Otto, representative of one of the world's largest insurance company Allianz AG, on why foreign investors are now eyeing India, his expectations from the Budget and the sanctions.

OTHER REPORTS

Business team to lobby for lifting of sanctions
The Indo-US Joint Business Council will sponsor a delegation to the United States, between June 4 to June 11, to lobby for non-implementation of the threat to revoke India's Most Favoured Nation status.

Khan panel suggests legal changes in banking laws
The Khan Working Group, set to harmonise the working of financial institutions and banks, has said the ultimate goal should be to facilitate free competition.

Enron is firm no-no: Kerala power minister
Kerala Power Minister Pinarayi Vijayan has said there was no question of allowing the participation of the multinational Enron in the proposed 51-mw Kannur power project of K P P Nambiar and Associates.

ICI to quit Asian Paints
The move brings to an end the controversy surrounding ICI's purchase of 9.1 per cent stake in Asian Paints, a move strongly resisted by the latter's board and the government.

Tisco's output up, profits down
The Tata Iron and Steel and Company announces its annual result and annouces a lower dividend.

IPCL crosses target, gives 40% dividend
The Indian Petrochemicals Ltd has managed to hold its own despite a difficult year.

May 28

THE NUCLEAR EXPLOSION

World Bank delays $865 million loan to India
By postponing the meeting that was to decide on the loans, the showdown between the US and India was averted, for the time being at least. The postponement also prevented other countries from deciding which way to vote, a tricky issue.

EU to delay loans to India
The European Union has threatened to slap the 'necessary measures' if India refuses to sign the Nuclear Non-Proliferation Treaty and the Comprehensive Test Ban Treaty without conditions.

BUDGET '98

Railways may land in debt trap if borrowing ignores profitability: minister
Presenting a status paper on the Indian Railways, Nitish Kumar said it should be decided whether the transport sector in general and the railways in particular needed to align their respective growth strategies with the growth of the national economy.

THE REDIFF BUDGET '98 INTERVIEWS

'A lot will depend on the Budget... We don't want protection. What we want is a stimulation of demand'
Tata Steel Managing Director, Sir Jamshed Irani on why his company's profits have been hit despite record production and sales.

'My concern is not inflation or the fiscal deficit, it is getting into a positive growth cycle'
''I do not think the finance minister will tinker too much with the tax rate, even after the nuclear blasts. John F Kennedy had once said, 'I want more taxes, and so I am lowering the tax rate.' If you want more revenue through taxes, then don't increase the rate because that will have the opposite effect. Similarly, if industry sentiments are weak, then we will not be able to kickstart the economy and get into a positive business cycle, which is the need of the hour.'' Madhur Bajaj, president of Bajaj Auto Ltd, on his expectations from Budget '98.

OTHER BUSINESS REPORTS

Govt clears 6 infrastructure projects worth Rs 150 billion
Among the projects cleared are Cuddalore Power Company Limited, Essar Oil Limited, and the Rameshwar Vaibhav Development Private Limited. The last one will build an international tourist city at Pen-Alibag in Raigadh district of Maharashtra with non-resident Indian investment to the tune of Rs 4.12 billion.

Task force submits interim report
The Union government extends the term of the task force on devolution of powers to states, headed by Rajasthan Chief Minister Bhairon Singh Shekawat, till July 31, 1998.

May 27

BUDGET '98

Swadeshi may get the boot as BJP tries to open up insurance
Sanctions seems to be forcing the saffron coalition to discard its policy on the insurance sector. ''The nuclear test is the biggest shot in the arm for the hardcore swadeshi lobby,'' said a BJP leader, justifying the move. ''So that is enough to keep them happy."

Incentives to bring infrastructure boom
Serious thought is being given to the introduction of a modified Voluntary Disclosure of Income Scheme. This is expected to increase the flow into the infrastructure sector as no questions would be asked about the source of income, like in the earlier VDIS introduced by then finance minister P Chidambaram. The scheme had netted Rs 100.50 billion.

Food subsidy may be hiked marginally
The Interim Budget did not increase the food subsidy, maintaining it at the revised Rs 75 billion level.

OTHER REPORTS

34 MNCs get aerial prospecting licences
Two of these multinationals, BHP of Australia and Meridian Peak Resources Corporation of Canada have already started aerial surveys. Other prominent multinationals are RTZ-CRA, White Tiger Resources, Pasminco, all from Australia, Metdist from the United Kingdom and Phelps-Dodge from the United States.

S&P downgrade hits rupee hard
S&P has revised it rating of some of India's most important companies to negative -- a fallout of the economic sanctions imposed by the US and Japan -- and the result has been particularly harsh on the rupee.

New fertiliser policy by next month
Union Fertiliser and Chemicals Minister Surjeet Singh Barnala said the new policy would bring further challenges for the fertiliser industry and its success would depend on the cost-effectiveness and efficiency in every sector of operation.

Govt mulls using rail land for commercial gain
To pay for its share in Bombay's railway development, the ministry is also thinking of issuing bonds.

Railway ministry, Maharashtra government sign MoU for Bombay rail board
The memorandum of understanding is to set up Bombay Railway Development Corporation, which will look after the city's suburban section.

Videocon hikes open offer price
The open offer, made last month to acquire an additional 2 per cent shareholding in the company, has been revised after the company's shares crossed the Rs 140 mark. The new offer is Rs 165 per share.

Ambani among '50 powerful Asians'
Despite an economic downturn, his group has consolidated its status as the best profit earner in India, says Asiaweek explaining his inclusion in the list.

THE BUSINESS INTERVIEW

'This government has only given reason for India to be ashamed of itself'
Eminent economist Dr K N Raj, who was closely associated with the country's first Five-Year Plan, flays the nuclear explosions.

May 26

BUDGET 1998-99

'The nuclear explosions give the impression of a stable government'
This might be the best chance for the BJP government to go ahead and take some tough decisions in the forthcoming Budget to help the country become an economic superpower, says R C Bhargava, former managing director of Maruti Udyog Ltd.

After Pokhran, government prepares for Budget session
The Budget session begins on May 27 and will last till July 29. The Railway Budget will be presented on May 29, and the general Budget on June 1.

Insurance employees to protest against opening up of sector
Insurance employees do not want LIC or GIC privatised, they do not want private insurance companies, and they certainly do not want foreign companies in the sector. They have claimed that competition will hurt their service to the rural poor, that that they are capable of meeting all the country's requirements.

OTHER REPORTS

Sterlite ups the ante for Indal stake to Rs 221 per share
In what might amount to India's first hostile takeover, Sterlite has raised the price and is now seeking a 52 per cent stake instead of the previous 20 per cent. Earlier, Alcan had offered Rs 175 per share to gain a majority stake in Indal.

Bombay railway board to be set up on Tuesday
The Bombay unit will look after the suburban section, which carries five million passengers daily. The World Bank had demanded such a corporation before handing over loan money.

Restrict trade to counter sanctions, says swadeshi brigade
Claiming that the US needed Indian markets more than India needed US aid, the Swadeshi Jagran Manch has called for a boycott of American goods in protest against the sanctions.

• Forex: Rs 40.94-97; Rupee loses 30 paise after plunging below the Rs 41-mark earlier

• BSE: 3908.11 points; Sensex gain 11.01 points

• NSE: 1122.95; Nifty down just 3.6 points



May 24

Bechtel, Mitsubishi must storm India
The entry of such construction industry giants needsto be encouraged. False notions of unwarranted national pride and self-reliance which have deprived the overwhelming majority of the most basic necessity of housing for over four decades need to be given a quick and speedy burial, writes Dilip Thakore.

OTHER BUSINESS REPORTS

Bombay rail development body to become a reality
The corporation, a partnership between the Central railway ministry and the Maharastra government, will over see the development of the suburban network that daily carries 5 million passengers.

Govt further liberalises norms for Euro issues
The government has allowed unlisted companies to float European and American depository receipt issues, provided they fulfilled the three-year track record eligibility. It has also withdrawn the 90-day validity period for final approval of GDR and ADR.

• Weekly review: Mixed signals in markets

May 23

BUDGET 1998-99

PM's five-point plan to accelerate growth
The highlights of the plan are: top priority for the science and technology sector with special emphasis on software development; emphasis on doubling farm production within the next decade; higher priorities for health care, drinking water, education and sanitation; higher allocations for infrastructural development including roads, ports, airports, power and telecom sectors, and equitable distribution of water resources.

Budget to level playing field for Indian industry
The government hopes to achieve this by correcting existing anomalies in duties, and include provisions for deferred duty payment for specificied companies (subject of course to revenue safeguards), besides an overhaul of the anti-evasion machinery.

Govt told not to use PSU disinvestment to meet budgetary deficit
The disinvestment process in the public sector undertakings should be delinked from the budgetary process in case the stock is sold through the capital markets, said the department of public enterprises.

'Allow banks to operate in badla market'
Making this plea in a pre-Budget memorandum to Finance Minister Yashwant Sinha, the Federation of Indian Stock Exchanges has said that income tax benefits should be offered to encourage investment in stocks. The FISE is promoted by 18 stock exchanges in the country.

Open up insurance: CII
Urging the government to liberalise the life and general insurance market, the Confederation of Indian Industry has said that the Insurance Regulatory Authority bill should be reintroduced.

OTHER BUSINESS REPORTS

Air-India, Indian Airlines to sell rail tickets abroad
Air-India, Indian Airlines and Indian Railways signed a memorandum of understanding under which the two national carriers have been appointed as global sales agents for sale of rail tickets abroad through their network.

Marginal hike in plan allocation for surface transport
Union Surface Transport Minister M Thambi Durai has indicated the minstry's resolve to provide both budgetary and extra-budgetary support to road development.

Stable prices will lead to sturdy exchange rate: Rangarajan
The former Reserve Bank of India governor felt that the present reforms would create a financial system capable of responding automatically to changes in the global environment.

Cogentrix told to win friends and influence people
The MNC, which is putting up a 1,000 megawatt power project in Mangalore, has been advised to work harder at its public relations.

Discard archaic labour laws: experts
Experts say there is need for reviewing labour laws and institutions and making concerted efforts to align labour policies with industrial strategies.

• Forex: Rs 40.63; Rupee loses 10 paise

• BSE: 3897.10 points; Sensex falls further

• NSE: 1,126.55; Nifty shows a slight gain

May 22
Top US banks join hands to fight sanctions against India
The message of the proposed document seems to be loud and clear: that no commercial activity with India should suffer due to the sanctions. Coming in handy in this regard is the argument that the loans extended to the public and the private sector have been on commercial -- but not concessional -- terms.

Pak faces greater threat from poor economy: army chief
Pakistan Army Chief, General Jahangir Karamat's warning is an echo of what former president Farooq Leghari said early this year.

THE REDIFF BUSINESS INTERVIEW

'India is not slow at all. But Indians are very tough negotiators'
'We will attract people from all over and set standards of luxury that others will come to India to emulate,' Johne Sharpe, president of Four Seasons which is setting up five luxury hotels in India in association with The Leela, tells Pritish Nandy, 'We will create, in the process, world class hotels and destinations.'

OTHER REPORTS

Indian Airlines makes profit after 8 years
The airline has also decided to commercially exploit its inhouse A-300 aircraft maintenance base by lending maintenance services to private operators for a fee.

ICICI swallows Anagram Finance
By merging with Anagram Finance, ICICI has created a retail base in western India. This follows the earlier merger with ITC Classic which gave the financial institute a retail base in eastern India. And for the Lalbhais of Anagram, it allows them to concentrate on their core competencies such as textiles.

Showing Enron the door was light job, but how long will Kerala grope in dark?
The E K Nayanar government has vetoed the US power company in Kerala, despite the state reeling under its worst power crisis. So how on earth will it cope with the increasing industrial needs? How on earth will it tide over the next years?

Television channels with 20 per cent foreign equity may get uplinking facilities
The decision was subject to the Union Cabinet's approval.

Record rice production expected
There is a setback in pulses and coarse cereals with the overall food production touching 195 million tonnes. Adverse agro-climatic conditions had affected the production of commercial crops. The production of nine major oil seeds for the year was expected to be about 24 million tonnes compared to 25 million tonnes last year.

BUDGET REPORT

CII's 15-point plan targets 7 per cent growth
The present growth rate is less than five per cent, according to a study conducted by the Central Statistical Organisation.

• Forex: Rs 40.54-56; Rupee loses by another 2 paise

• BSE: 3908.79; Sensex surges south, drops 48.14 points

• NSE: 1126.15; Nifty loses 15.15 points

May 21
India friend Pallone opposes bid to end MFN status
Democratic congressman Frank Pallone has opposed an amendment which sought to withdraw the most-favoured-nation trade status for India's textiles and apparel in the United States and said it would punish the poor and working-class people in the country who had nothing to do with New Delhi's nuclear testing.

US yet to draft law on sanctions; bankers, exporters worried
The US has slapped sanctions under the the Proliferation Prevention Act, 1994. But officials have started writing the law and the regulations governing it only after the invocation of the legal provision. As a result, the uncertainty has touched off a scramble among US exporters and banks to find out how the sanctions will affect them.

RBI move brings down CRR rate
The Reserve Bank of India's decision to pump Rs 25.68 billion into the banking system virtually brings down the credit reserve ratio by 0.5 per cent. The decision comes less than a month after RBI Governor Bimal Jalan refused to increase the CRR ratio due to the comfortable lilquidity position.

Investors agitate against plantation companies
Investors' Grievances Forum on Wednesday staged a demonstration in front of the Securities and Exchange Board of India headquarters in South Bombay to protest against the illegal activities of certain plantation companies, which have robbed its members of billions of rupees in the last few years.

Sanctions have not affected AP: Naidu
Andhra Pradesh Chief Minister Nara Chandrababu Naidu said the government was reviewing the situation and would discuss the issue with the Centre.

IMC writes to counterparts against sanctions
The letter urged that the current nuclear testing should be seen in the context of India's geopolitical realities, surrounded as it was by heavily armed countries openly professing aggression and supporting terrorism. By conducting N-tests, India only sought to impress upon such countries that not weakness but good sense and discretion had tempered India's actions towards them.

OTHER REPORTS

A-I, IA disinvestment soon: minister
Union Civil Aviation Minister Ananth Kumar today said the government ''will take a decision with an open mind on the issue of disinvestment of its holdings in the national carriers Air-India and Indian Airlines''.

Govt moots major FDI reform in port sector
In a marked, and dramatic departure from its avowed swadeshi doctrine, the Bharatiya Janata Party-led government has launched a bid to develop port infrastructure by opting to modify foreign direct investment procedures to facilitate the setting up of 100 per cent foreign-owned subsidiaries in the ports sector.

CBI given 2 months' time to wind up probe into Mukta-Panna deal
The Delhi high court on Wednesday granted two months' time to the Central Bureau of Investigation to complete its inquiry into the alleged irregularities in the multi-million-rupee Mukta-Panna oilfields contract. The contract was awarded to the joint venture between Reliance Industries Ltd and the American company, Enron, in 1994.

BUDGET REPORTS

Budget may focus on savings, spare tax structure
In the area of direct taxes, it is expected that the government may retain the existing rates. The BJP-led coalition's national agenda for governance has laid stress on stepping up savings. The Budget is, therefore, likely to provide incentives for savings. It is likely that the Budget may come out with fresh initiative in the housing and construction sector which has great potential for generating demand in a large number of industries while creating largescale employment. bomb

Rail Budget to focus on modernisation
The other objective of the Railway Budget for 1998-99, to be presented to the Lok Sabha on May 29, will be to develop the railways in the backward areas.

May 20
Japanese banks choke lines of credit
The decision comes close on the heels of the US banks's decision to stop intra-day overdraft facility to Indian banks, landing State Bank of India and Bank of Baroda in temporary liquidity problems. The immediate fallout of the Japanese decision seems to be that Indian banks will have to rely on non-Japanese banks which may insist on higher interest rates.

Sanctions may hit economy: CRISIL
The hardest hit, warns a Crisil Research and Information Services study, will be the power sector. Simultaneously, there will be a sharp hike in interest rates, thanks to the increased demand for rupee funds by corporates who will find foreign funding prohibitively expensive. The study, however, does not foresee a similarly drastic impact on the exchange rate.

Sanctions will not hit Boeing sales, clarifies Keskar
The Boeing India, a commercial airplane group, today clarified that the sanctions imposed by the United States on India in the wake of the nuclear tests carried out by the country, will not affect the company's ability to sell airplanes to India.

US congressman wants India to be stripped of most-favoured-nation trade status
An amendment by congressman Edward Markey represents the first congressional effort to punish India with import curbs, adding to the cut-off of US exports, aid and credit ordered by President Bill Clinton.

Power sector confused as minister, PM's aide make contradictory statements
While the prime minister's political advisor said the BJP regime would not provide counter-guarantees for any power projects other than those already committed by the Centre, the power minister said such a facility could be extended if independent power producers supply power at competitive rates.

'BJP cleared projects it had opposed'
The Congress has asked the BJP to explain on what grounds it had cleared 18 pending proposals for joint ventures in the petroleum sector after opposing the very same during the last two years.

Kerala reels under impact of sanctions
Market analysts indicate that the worst hit sectors will be exporters of spices, cashew, seafood and software. So also pepper, which is very sensitive to American moves. The USA is the single largest consumer of the commodity.

States must get 29 per cent revenue: task force
The task force, constituted to propose its recommendations regarding greater financial powers to states, strongly felt that the Voluntary Disclosure of Income Scheme share of the states should not be included in the 29 per cent.

• Forex: Rs 40.49-51; Rupee still moving upward

• BSE: 3924.42; Sensex rises by 16.94 points in a dull market

• NSE: 1121.75; Nifty gains 1.95 points on a quiet day

May 19
Hegde leads panel to WTO meet
The commerce minister to assert India's stand on nuclear issues. He is also expected to demand the stoppage of non-tariff barriers on market access.

BJP has no 'coherent' plan to meet economic challenges: Manmohan Singh
The former finance minister said there was a sharp deceleration in the growth rate of national income while the gross domestic product had declined to 5.1 per cent, the lowest during the last five years. There has been a sharp decline in the growth rate of industrial production and exports.

Pak N-blast may blow up economy
As Islambad declares its intention to go ahead with a nuclear bomb blast in retaliation to India, businessmen point out that the repercussions could deal a body blow to Pakistan which is extremely dependent on foreign aid and has low foreign exchange reserves, unlike India.

'Despite sanctions, growth at 6%'
Planning Commission Deputy Chairman Jaswant Singh has declared that the government will make strong efforts to achieve the growth target.

Incentives to lure states to power ordinance
Announcing a series of measures, Power Minister P R Kumaramangalam said the supply of free power would not be stopped but it would be up to the state to decide what level of tariff or subsidy to offer the farming sector. He said interest and lending rates would be cut, and industries would have to obtain a certification of energy efficiency or pay a cess to the Centre.

TODAY'S COLUMN:

Wrong, Harshad Mehta!
'We can repeat Silicon Valley here. We can create Hollywood. We can give America's new millionaires a run for their money, if we encourage our young college students to set up their own ideas shops in small garages,' says Pritish Nandy. 'The problem is not opportunity. Or the lack of talent. It is the attitude of our rulers. It is an outdated view of our economy.'

• Forex: Rs 40.55-55; Rupee up a wee bit

• BSE: 3908.48; Sensex zooms 58.68 points as FIIs stay away

• NSE: 1119.80; Nifty gains 9.7 points

May 17
US multinationals will be hit by sanctions
The loss to India of $ 20 billion in loan guarantees and other economic aid from the United States and international agencies will reverberate through multinationals with high stakes in India's growing economy, many of them in the United States.

US clears software to Indian 'missile' firm
Despite tough sanctions against India, the US commerce department has allowed an American firm to ship design software to an Indian company that 'makes missiles', says the Journal of Commerce, quoting trade sources.

Sanctions will hit US firms harder
US industry groups worry that unilateral sanctions will not deny India the goods or capital it needs to develop, but will reduce the American role in providing those things.

Pokhran tremors shake capital markets
The uncertainty about the kind of sanctions to be imposed on India has affected the earnings of companies.

Sensex crashes due to sanctions
Depressed sentiment was witnessed on the country's premier bourse, Bombay Stock Exchange following five successful nuclear tests by India, which adversely affected the sentiment of investors during the week ended on May 15.

May 16
Sanctions get 'saffron' whitewash!
The BJP-led coalition claims that international giants have been lining up at the government's doorstep despite the sanctions. As the US continues to fret and fume, an eight-member US agriculture department delegation seems to have ''called on Minister of State for Agriculture Som Pal in New Delhi on Thursday and discussed on-going bilateral co-operation in agricultural research, plant protection and health''.... And three international power companies from the US, Australia and China reportedly assured the government that they would make ''alternative arrangements if sanctions threaten to exhaust their creditors''.

Sanctions force reworking of Union budget
Govt hopes MNC pressure, NRI funding and tighter belts will see India through.

Sanctions won't affect India: Jardine Fleming
Lord Robin Rewick, Director of Jardine Fleming, Britain's largest equity fund manager, said, ''It is not fair to impose sanctions against India. They would produce contrary results. India should be helped to take its economic reforms forward.''

The projects India stands to lose because of sanctions...
On the chop-list are 18 projects in Maharashtra -- including the ambitious $ 167 million sewage disposal project for Bombay. And power projects ranging over $ 400 million -- several in Andhra Pradesh and one in West Bengal.

Hectic lobbying on to save Indo-US trade from the shadow of sanctions
The Indian lobbying against the sanctions is being headed by the Confederation of Indian Industry, the Federation of Indian Chamber of Commerce and Industry, and the Associated Chamber of Commerce and Industry -- all of which have written to US companies that nothing has changed in India, it is business here as usual.

$ 8.1 billion loan will not be affected: World Bank
World Bank Country Director (India) Edwin R Lim said that the $ 8.1 billion loan disbursal does not have to be approved by the board of directors. The annual World Bank loan of $ 3 billion will, however, have to be approved by its directors.

Steps to boost investor confidence suggested
The informal group on capital markets, headed by N Acharya, advisor in the finance ministry, has recommended that the listing requirements of stock exchanges be made more stringent and the bourses more accountable.

90 per cent more jobs if consumer goods output is doubled: HLL chief
''Studies show that consumer goods industries have an employment elasticity of around 0.9. This means that if output in these industries were to double, employment would increase by 90 per cent,'' said Hindustan Lever Limited Chairman K B Dadiseth.

May 15
Liberalise or perish!
''This is a good chance for India to become self-reliant economically," says Professor Jagdish Bhagwati of Columbia University, New York. "This is the time for India to pull itself by its bootstraps, because unless weapons are matched by economic power, you cannot be considered a major power."

Swraj Paul promises backing of NRIs to tackle sanctions
The London-based industrialist Swraj Paul today assured the finance ministry officials of the total support of NRIs who contributed as much as US $11 billion to the country's foreign exchange kitty last year. In the background of a nationalistic euphoria, the RBI is hoping that the NRIs ill bring in about $15 billion this year.

US export finance approvals to India halted
The Export-Import Bank of the United States has decided to stop issuing approvals for financing US export to India after President Clinton imposed sanctions on India for conducting nuclear tests.

SEBI sends red alert to all exchanges
Asking the stock exchanges to keep a close watch on the movement of share prices in the wake of the sanctions, SEBI Chairman D R Mehta said he had received mixed response from various foreign participants in the Indian market. While some FIIs and foreign custodians have expressed fear over slowdown of inflow of foreign funds into India following the US sanctions, a majority of the FIIs said that there was no change in their outlook towards India.

US will lose much more: Hegde
Union Commerce Minister Ramakrishna Hegde said there need not be any apprehensions as the economic sanctions would not not be effective at all.

Power projects won't be affected: Minister
Union Power Minister P R Kumarmangalam said India was capabale of mobilising resources if any sanctions came. The total coverage by the multilateral funding agencies in the power sector is a meagre 20 per cent.

Expert blasts India for 'slow' reforms
Dr Deena Khatkhate, consultant to the World Bank and the Asian Development Bank, ridiculed the view that India was wiser because it had not opened up its economy fully unlike the east Asian counties which were facing a serious financial crisis for the past one year. He said that the Indian economy could not be compared with east Asian countries. ''Only those who have risen high face the risk of a fall. Those who have not risen face no such risk,'' he quipped.

Sanctions may not affect the rupee
The economic fallout of the nuclear tests would not have a serious impact on the value of the rupee, though forward premiums would shoot up and remain at higher levels in the near future. Forex dealers and executives operating expressed confidence over the Reserve Bank of India's 'damage control skills' which would allow the rupee to remain stable.

'Latin America will bail India out'
India can offset trade losses because of economic sanctions by the developed world by foraying into a vast untapped Latin American market.

The FAQ of US sanctions
Could Clinton have avoided the step? How can it be withdrawn? How will India be affected? And other Q&As regarding the economic fallout of nuclear tests

May 14
BJP cares two hoots for US aid
The US sanctions have brought the swadeshi slogan out of the closet. Prime Minister A B Vajpayee's political advisor Pramod Mahajan talks of the inherent strength of the Indian economy and that the country does not live on the west's dole. And BJP's economic cell convenor, Dr Jagdish Shettigar says that the American aid at $100 million is peanuts. Moreover, 60 per cent of the aid is always left unused. "More than we require their aid they require our market," is how Shettigar would round it up.

India, US firms will have 'rough time' if sanctions are multilateral
If other nations join the United States in imposing sanctions, then India could face the same economic hardships the international community imposed on South Africa to protest its apartheid policies in the 1980s. World Bank loans might dry up and the US Export Import Bank, which provides political risk insurance to US exporters, could freeze projects awaiting approval.

Fear over the markets
Panic gripped the markets as the second round of blasts echoed through Bombay, the country's commercial capital. With sanctions looming large, one said, "We are dealing with an unknown situation and are unsure of what to do next." But the indices headed in one direction only: south.

'Too early to gauge effects of sanctions'
That is Caparo Group of Industries Chairman and United Kingdom-based non-resident Indian industrialist Swraj Paul.

RBI modifies NBFC prudential norms
Non-banking finance companies must consider the value of underlying assets while making provisions for non-performing assets in hire purchase and lease assets, the Reserve Bank of India has directed.

Sompal promises the moon
Union Agriculture Minister Sompal Singh agrees that that agriculture and rural sectors should get 60 per cent of the plan allocations in the coming Budget. That the institutional funds for rural and farm credits should be doubled to 30 per cent. That licenced storage capacity should be created in villages. That the Centre will re-implement the 1989 loan waiver scheme...

India tripped on patents issue: Minister
Union Agriculture Minister Sompal said options before the country were to walk out of the WTO regime or come out with a comprehensive legislation to save the country's plant and animal diversity which is being theatened by the WTO patenting clauses.

May 13
Sweeping changes to bring building boom
Urban Development Minister Ram Jethmalani said the Urban Land Ceiling Act will be repealed. He also said the civic bodies would be stripped of their authority to sanction building plans. The power would soon be vested with chartered architects who would be held responsible for any lapses. The government is also thinking of giving infrastructure status to the construction industry.

Nuclear blasts rattle markets
Industry hailed the nuclear explosions. However, paytime is arriving, and the markets are running scared at the thought of economic sanctions knocking the bottom out of India's liberalisation. Right now, everyone is treading carefully.

FIIs watching situation
The markets saw a bear run today, but it could just be long term adjustments and have nothing to do with the blasts. Yet, FIIs have at present adopted a wait-and-watch approach.

SEBI clears derivative trading
Accepting the L C Gupta Committee recommendations with some modifications, a SEBI board meeting on Monday decided that index-based futures will be introduced in the first phase. As for the other derivative instruments like stock index options, futures/ options on individual stocks, interest rate futures or currency futures, no schedule has been fixed.

May 12
'The West cannot ignore the fact that India is a large market'
Monday afternoon's explosions at Pokharan arouses the prospect of US and European economic sanctions against India. K K Modi, chairman of the Federation of Indian Chambers of Commerce and Industry, explains Indian industry's apprehensions and fears.

Jaya threatens to derail BJP's Budget
Coming down heavily on the present three-tier income tax structure, AIADMK general secretary J Jayalalitha has demanded that the government introduce a two-tier income tax system -- 25 and 50 per cent. Some of the allies have reportedly backed her demand, adding to the BJP's woes.

China to wipe out Kerala's power deficit
Inspired by the success of small power projects in China, the Kerala government has signed an agreement for setting up 18 'Chinese model' small hydel projects in the state to produce 107 MW of power.

Rail chief demands more funds
Indian Railway Board Chairman V K Agarwal said his main problem was the decline in the market share. "As against the 80 per cent market share that the railways enjoyed in both passenger and freight traffic in 1951, today it has 40 per cent of the freight traffic and about 20 per cent of the passenger traffic. The share of the road transport had witnessed a steep rise," he said.

May 11
Govt plans to monitor foreign investment
In an effort to please Indian industry, the ruling BJP has proposed a Foreign Investment Regulatory Board. The finance ministry may also set up an exclusive department to promote Non Resident Indian investment.

Highway to progress
On Friday, we reported how Tamil Nadu has become a favourite destination for foreign investors. Shobha Warrier surveys the facilities that have helped the state rise to the number 3 spot in the national investment rankings.

May 8
'Will financial infrastructure be with Indians or with MNCs?'
Should the insurance sector be opened up? Will it benefit India and Indians, or is it just a ploy by western firms, facing stagnant markets at home, to ensure high profits? Are Indian fears against multinationals justified. Jagdish Shettigar of the BJP and Duncan West, CEO, Royal and Sun Alliance, debate the issue.

India's hire-purchase and credit boom could sputter out prematurely
'Though Indian industry has realised the business building potential of hire-purchase, it hasn't been able to shake off its contempt and indifference for the consumer which is the hangover of the perpetual shortages bred by the long era of licence-permit-quota raj,' says Dilip Thakore.

Modiluft to challenge Delhi HC order to windup
Modiluft claims it is all set to relaunch the private airline and had signed deals with financial firms towards that end.

BUSINESS BRIEFS

'Correct exchange rate to keep real effective rate stable'


The BSE, NSE and forex markets were closed on account of Muhurram.

May 7
CII opposes bias against foreign firms
"Swadeshi means that Indian companies should compete globally with foreign companies on equal terms. Foreign companies should not be discriminated against vis-a-vis the Indian companies," declared Rajesh Shah, CII's new president, "And no matter what the Swadeshi Jagran Manch says about economic policies, we are more concerned about Prime Minister A B Vajpayee's assurance to CII that his government will reform the reform process."

SC slams govt on Indian Bank scam
''What is all this? Can the headquarters of the bank not procure the documents from its own branch? What precludes it? Why did not the CBI ask the headquarters for those documents?'' asked Justice Bharucha, resuming the hearing of a public interest petition alleging that, since the stalwarts of the Tamil Maanila Congress and followers of G K Moopanar were involved in the looting of the bank, no action was being taken. The other two judges on the bench also took the government to task for slack progress in the investigation, even though those who were in the opposition then are now in the government.

Maruti gears up for the small car war
Driven by apprehensions that it may suffer a major dent in the market share when the much-talked-about small cars -- Telco's Mint, Hyudai's Santro and Daewoo's Matiz (earlier called D'Arts) -- hit the Indian market, Maruti Udyog Limited has decided to consolidate its dealer and service network, considered its major strength. To ensure that the dealers would not fall prey to the overtures of the new entrants, Maruti has increased the dealer commission on its Zen model by a whopping 50 per cent.

Slap more taxes on farm sector: Sangma
Former Lok Sabha Speaker Purno A Sangma has said the tax structure in the country has a low revenue elasticity, which means that tax revenues could be increased only if tax rates are increased.

Goa's BJP unit opposes international airport in state
The reason may be to allow an airport in neighbouring Maharashtra and allow that state's BJP unit consolidate its position in that state where it received a drubbing in the recent elections.

Monetary boost for road sector
The World Bank will increase infrastructure aid to India to Rs 20 billion, half for roads. Moreover, the government will be levying a toll on certain highways to raise Rs 20 billion for implementing projects.

India enters civilian aircraft club
With the manufacture of the indigenous Hansa-3, a very light aircraft still awaiting its joint air worthiness, that will be much cheaper than its foreign counterparts.


• Forex: Rs 39.77-78; Rupee weakens

• BSE: 4069.79; Sensex crashes 77.50 points

• NSE: 1172.45; Nifty drops 15.65 points

May 6
Power ministry fails to use Rs 4.5 billion despite cash crunch
As charges and counter-charges are exchanged between the present and former power ministers over the issue, project costs soar and the completion dates keep getting extended. This is the first time in the ministry's history that such a large sum of sanctioned money has been returned.

'My reforms will make India self-sufficient in power by 2005'
'We will strengthen our national grid to evacuate 30,000 mega watts from any part of India to any part of India to balance excess/ shortage of power in regions. We will also add 100,000 mega watts through mega projects.' Power Minister P R Kumaramangalam tells the Rediff Chat.

Coke steps up war against Pepsi
Coca-Cola continues to retain its monopoly in the Goan market despite losing its main bottler Goa Bottling Limited to Pepsi in November last. It is now setting up a huge bottling plant in Goa, giving a new twist to the cola wars. coke

'Stock markets will remain in a bearish grip till the Budget'
Financial expert Pramod Maskeri on the RBI's slack season credit policy, the low industrial growth and the stock markets.

May 5
'If multinationals and FDI are evil, they are necessary evils'
'Some people think foreign investors are standing in a queue and knocking at the doors of India to come in. No! If you don't create a climate here, they will go to China or Vietnam or Eastern Europe. They have got better places to go.' Former industry minister Murasoli Maran in a hard-hitting interview.

RBI predicts lower GDP, national income
The real national income is estimated to show a lower growth rate of 4.9 per cent in 1997-98 along with an estimated fall in real gross domestic product from 7.5 per cent in 1996-97 to 5 per cent in 1997-98, according to a study made by the Reserve Bank of India.

Thambidurai to order probe against Chidambaram
Union Law Minster M Thambidurai has said his ministry would investigate as to how former finance minister P Chidambaram had allowed Reliance to re-invest a huge amount of Rs 20 billion without any inspection.

Non-bailable warrant against Ratan Tata
Non-bailable arrest warrants have been issued against Telco Chairman Ratan Tata, Telco Worker's Union general secretary Gopeshwar Lal and 15 others for failure to appear in court in connection with a complaint regarding misappropriation of union funds.

May 3
'Bombay pays 35 per cent of the total tax. Despite all shortfalls. Despite industrial slowdowns'
'We made an analysis of the top 600 companies in Bombay. We saw that, barring the financial sector, that is the banks andinstitutions like UTI, GIC, IDBI, ICICI, the rest have not been performing well. All the manufacturing sectors, except for (say) cosmetics, which is not exactly a large sector, have shown a very downward trend. That is why we had a shortfall in collections,' Bombay's chief income tax commissioner Bibudhendra Mishra tells Pritish Nandy.

The credit policy raises Budget expectations
'All credit policies are the product of their consensus. Dr Rangarajan had certain advantages when he presented the last two credit policies. Bimal Jalan does not have those advantages. There is, for example, the entire Asian currency crisis in front of Bimal Jalan. So he has to tread cautiously. Considering all these things, I think he has done a fairly good job,' says Tata Services chief economist S S Bhandare.

Govt, RBI's bank holdings impedes supervision, warns Tarapore
Former RBI deputy governor S S Tarapore has warned that ownership of Indian banks by the government and RBI impinged on the regulatory and supervisory framework, leading to a situation of "regulatory capture" where the regulators have banking interests. This hamstrings the supervisor in implementing supervisory norms and a reluctance to acknowledge the seriousness of a problem, which only aggravates the matter.

Chidambaram has acquired Reliance shares, alleges minister
Former finance minister P Chidambaram "illegally" acquired Reliance Industries shares for Tamil Nadu CM M Karunanidhi, former Union industry minister M Maran and Tamil Maanila Congress president G K Moopanar, besides himself, alleged Union Law and Company affairs minister M Thambidurai.

May 1
'The credit policy will not kickstart the economy'
Dhruv Sawhney, chairman and managing director of Triveni Engineering and Industries Ltd, points out a major problem is that real interest rates have gone up. "We can reduce the bank rate from 10 per cent to 9 per cent whereas our competitors abroad pay an interest of only 2 to 3 per cent," he said, adding, "A gap of 7 to 8 per cent is too high for us to compete effectively against multinationals."

'Spurring economic growth is not the RBI's function'
'I think the main objective of the RBI is to control inflation and price stability. Spurring economic growth is the function of the industrial sector, agricultural sector, services sector, the GoI -- certainly not the RBI's,' says well known economist D R Pendse. 'I feel the function of the credit policy is not to accelerate economic growth, but to control inflation and price stability.'

Corporate caliphs cautious about government promises
Abhay Firodia, chairman and managing director, Bajaj Tempo, points out how despite the many speeches, precious little had been done in the realm of policy decisions. "China recently announced that its government staff will be slashed by 50 per cent. But has any Indian minister even mentioned the need to cut government staff by a measly 10 per cent? We have too many government employees who do too little work anyway," he said.

Railways status paper to be presented in Parliament
The paper on the condition of the Indian Railways will suggest improvements and steps to be taken to ensure more transparency.

New labour policy on anvil
The matter will be discussed at the tripartite special committee on labour reforms in Delhi on May 13.

Mormugao port turns market-savvy
The Mormugao Port Trust is trying hard to counter Japanese monopoly over Goa's iron-ore exports, by diverting its exports to other countries and also bargaining for a price hike.

BUSINESS BRIEFS

SBI cuts PLR by 0.5 per cent


• BSE: 4006.81; Sensex goes by 36.53 points

• NSE: 1159.35; Nifty up by 8.25 points

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