INDEX

Revenues buoyant, indirect taxes up by 21 per cent

Finance Minister Yashwant Sinha has said the country's economy was on a firm path of recovery with impressive growth in the revenue collections in the current fiscal even though fiscal deficit continues to be a cause of concern.

"This revival will hold, but fiscal deficit continues to be the most intractable problem of the economy," Mr. Sinha said. "Revenue collections in the first quarter give robust signs of recovery. We can soon look back on the slowdown of the last two years," he said.

Indirect taxes were up by 21 per cent in the first quarter of the fiscal, he said. "For controlling the fiscal deficit, the revenue deficit has to be brought down. Although the country is in a comfortable position as far as foreign debt is concerned, the internal borrowing has crossed all limits and has to be checked in any event", he said.

Mr. Sinha said signs of recovery like buoyant industrial production, low inflation and upbeat mood in the stock exchanges were expected to be sustained and not to be upset by any political changes in the country. "Notwithstanding which political configuration comes to power at the center, reforms will continue. Nothing can stop the reforms as the direction has been clearly set. Differences may occur only about the details", he said.

Mr. Sinha said buoyancy in revenue collections this year did not warrant any Kargil tax or cess but if a review necessitated raising additional resource, such measures could be considered.

"If we do well as we appear to be doing on the revenue front then we can easily meet the additional outgo of expenditure due to Kargil operations," Mr. Sinha said. "If we later on feel that additional expenditure will not meet the (revenue) targets set by ourselves then we will have to think in terms of some measures.''
Revenue collections were buoyant recording a 21 per cent growth in the first quarter of this year, despite economic slowdown, signaling industrial recovery, the finance minister said. While excise growth was 29 per cent in the first quarter of this year, as against a mere nine per cent last year, the customs collection recorded 12 per cent growth against just one per cent last year, he said.

Mr. Sinha however said the economy was facing major challenges. ''It is not merely concern over fiscal deficit. But this year we have to meet other challenges and hence there should be no sense of complacency or let up in revenue mobilization efforts.''

He said the public sector disinvestment will begin in October and the government will meet the Rs 100 billion target set for this financial year. ''We have taken very important decisions regarding disinvestment. The procedure is being set in motion,'' he said adding ''actual disinvestment even in terms of normal timeframe can come only in October.''

''It is not because of elections. It is because procedures takes time. It is only in October when (disinvestment) season starts,'' he said.

The cabinet has already approved this year's disinvestment program which included divestment of government equity in MTNL, IOC, VSNL, Hindustan Zinc, Madras Fertiliser and ITDC.

"I am not doubtful about our capacity to meet disinvestment target, he said adding ''we have eight months ahead of us to achieve the target and I don't think anyone should entertain any doubts.''

Indo-British partnership to focus on growth areas

The Indo-British Partnership (IBP) would be invigorated late this year by shifting focus to the most promising growth areas in particular states to provide a more tailored service for British firms, British High Commissioner in India Rob Young has said.

''The IBP, formed in 1993, has served us well. But like all successful organizations, needs re-invigorating from time to time. We are working on an initiative which will focus on the most promising growth areas in particular states,'' Sir Rob said. He informed that details were being worked out, and hoped that the new approach would provide a more tailored service for British firms wanting to form partnerships with their Indian counterparts in the focus areas.

The new initiative would be formally launched during the visit of the Secretary of State for Trade and Industry later this year.

Since the formation of the IBP, over a thousand new Indo-British joint ventures have been approved and India currently enjoyed a surplus in its trade balance with the UK, he said.

He said till now over 2000 Indian companies have invested in the UK, in the form of acquisitions or joint ventures and between January 1998 and March 1999, the Reserve Bank of India approved 37 Indo-British collaborations worth almost $100 million.

Alluding to the reservations expressed by India with regard to the negotiations at the World Trade Organization, he said the next round at Seattle in November would address the concerns of the developing countries.

''I would urge India to ensure that its concerns are fully tabled at Seattle, so that they can be taken care of,'' he added.

India emerges second largest wheat producer

India has emerged as the second largest global producer of wheat surpassing the United States in total production and in per hectare yield, Agriculture Minister Sompal has said.

"By producing a record 73 million tonnes of wheat this year, we have emerged as the second larger producer of the foodgrain," Mr. Sompal said.

ICAR director-general R S Paroda said India was the largest producer of milk in the world and second largest producer of vegetables, besides the achievement in wheat production. "Technologies generated by our agricultural scientists coupled with efforts or our farmers and developmental agencies have made all this differences, which many developing nations find difficult to replicate," Dr Paroda said.

India set to get $2 billion from World Bank

India is all set to get at least $ two billion from the World Bank this financial year for various social development projects following easing of economic sanctions due to restraint shown in the Kargil operations. New Delhi has already signed agreements with the international financial institutions for over $600 million in the last one week.

The next few months would see more projects worth over $ one billion for water, health and education programmes, additional secretary incharge of fund-bank, V Govindarajan said.

Two agreements have been signed with the World Bank -- $135 million loan for the second integrated watershed development project in Shivalik hills covering five northern states and $105 million loan for the second phase of the Tamil Nadu urban development project.

Last week India inked two loan agreements worth $386 million with World Bank to finance women and child development in Maharashtra, Kerala, Rajasthan, Tamil Nadu and Uttar Pradesh and another for primary education in Rajasthan.

The $135 million watershed development project was signed by Mr. Govindrajan and World Bank country director Edwin Lim and will be implemented in five years. The project is aimed at improving productive potential of the Shivalik hills covering five states of Haryana, Himachal Pradesh, Jammu and Kashmir, Punjab and Uttar Pradesh.

More than one million people, mostly women are to benefit from the $85 million loan provided by the IBRD (a funding arm of the World Bank) and a $50 million equivalent credit from the international development agency, the World Bank's concessional lending arm.

National interest paramount in WTO talks: Hegde

India is ready for fresh round of negotiations during the ministerial round of World Trade Organization (WTO) in Seattle, U S, later this year provided its interests are safeguarded, Commerce Minister Ramakrishna Hegde has said.

"I will not say what stand India will take. But I want to make it clear that as long as our interests are safeguarded we are prepared to welcome any further changes and take further steps," he said.

Mr. Hegde's statement is a marked departure from the earlier stand taken by India that it would not agree to any fresh negotiations at the WTO ministerial meeting other than the agenda agreed upon at the trade ministers meeting in Geneva last year.

International trade experts have been urging India to be flexible in its approach leading to the ministerial round talks to ensure that it is not caught unprepared for discussions on new negotiations.

"We must realize that national interest in world trade is paramount. No one can hurt anybody's interest. But anyone individually or jointly steps on our toes or shoes to hurt our interest, we are prepared to face it effectively," he said. Mr. Hegde said India had to prepare itself to face the strategy evolved by the developed countries at the ministerial round meeting.

"For this as I have suggested in various international conferences, developing and least developed countries should take a united stand to protest their interests against indirect measures proposed to be taken by developed countries," he said. Though government did not have the necessary expertise to deal with WTO issues, it was "ready to take right decisions at the right time" in the country's interests.

Stating that global trade was becoming more complex, he said it was being made free for the developed countries while being restricted to developing and least developed nations. India believed and trusted that the agreements signed at the Uruguay round, leading to WTO formation, would be fully Implemented but it was quite contrary to the country's expectations, he said.

"Developed countries are trying to take advantage of their development by trying to block entry of exportable goods from developing countries with their market practice of protectionism," he regretted.

MTNL TO RAISE RS 9780 MILLION FOR DOT State owned Mahanagar Telephone Nigam Ltd. (MTNL) has decided to raise Rs 9780 million through a bond issue in the domestic market during the next quarter for the Department of Telecommunication (DOT). Board of directors of MTNL which met here, approved the plan to raise the fund for network expansion of DOT, a top MTNL official said.

Details of the bond issue including the interest rate are yet to be worked out, the official said indicating that an interest rate of about 11.5 to 12 per cent was being considered depending upon the market. MTNL would come out with the bond offer probably after September, the official said.

The board also discussed the Telecom Regulatory Authority of India's (TRAI) decision to allow MTNL to give a new telephone connection with every internet subscription without charging the Rs 3,000 deposit amount. TRAI had directed that MTNL should consider Rs 1,000 of the internet subscription as a notional security towards new telephone connection which would be adjusted at the time of first bill, sources said.
MTNL will convene the annual general meeting (AGM) after its results are approved by the Comptroller Auditor General (CAG), sources said.

According to sources, issues including launch of wireless in local loop (WILL) and the GDR issue of MTNL were not taken up for discussion.

Marine Exports slide 32 percent in April - June

Exports of marine products has registered a 32 per cent decline in dollar terms to $213.5 million in the first quarter of 1999-2000 due to a shortfall in domestic production and poor unit value realization, official sources have said. India had shipped a total of 66,623 tonnes of marine products valued at $274 million during the first three months of last financial year.

However, exports recorded a nine per cent decline in quantity to 60,491 tonnes during the corresponding period this year, commerce ministry sources said. In June alone, exports recorded a 35 per cent fall in dollar terms to $71.70 million from $110.7 million clocked during the corresponding period last year.

Marine Products Exports Development Authority (MPEDA) deputy director K K Chandran said the drastic fall in exports during the current year was on account of the fall in domestic production, especially due to the poor catch from the west coast.

In rupee terms the drop has been 34 per cent at Rs 3084.7 million from Rs 4705 million registered during June 1998. The volume of seafood shipment also fell during the period to 15,677 tonnes from 17,297 tonnes exported in June last year.

Siemens, Discovery and Electrolux proposals cleared

The Foreign Investment Promotion Board (FIPB) has cleared 30 foreign direct investment (FDI) proposals worth Rs 1750 million including that of Siemens Ltd. and Discovery channel. Siemens Ltd. will be allowed to increase its stake upto 60.8 per cent from the present 51 per cent through its proposed rights issue amounting to an FDI of Rs 750 million, official sources said.

After the rights issue, the company has to notify by how much percentage the German multinational had hiked their stake.

Discovery channel, which is a 100 per cent subsidiary of its U S-based parent, has been allowed to infuse additional paid up capital of Rs 552 million in their existing company, sources said.

The proposal of Electrolux to increase their paid up capital in Electrolux Kelvinator Ltd. (EKL) through a rights issue by over Rs 450 million was also cleared by the board. Following the rights issue the total capital of the company would go up to around Rs 1.20 billion from Rs 683.2 million at present, the sources said.

Taiwanese computer major Acer will make a re-entry into the country through its Singapore subsidiary. The company, which broke off its ties with Wipro recently, will set up a 100 per cent subsidiary to manufacture computer hardware with an investment of Rs 130 million.

The board also cleared the proposal of Dun and Bradstreet Information Services to pick up 11.3 per cent stake in credit rating agency ICRA for $0.5 million.

The proposal of Internet Express Limited to set up internet services with an FDI of Rs 370 million was cleared.

JMS Worldwide Incorporated of U S will hold 49 per cent equity in the company. The Indian partner, Indian Inet Pvt. Ltd. will hold the majority control.

Data View Solutions Ltd. of U K will buyout 3.75 per cent stake in Infotech Enterprises Ltd. for a consideration of Rs 80 million. The company will manufacture digital video discs and hardware discs.
Forbes Shipping, a Tata enterprise, has been allowed to float a 50:50 joint venture with Brawil Agencies AS of Malaysia. The foreign partner will bring in an FDI of Rs 2.5 million.

Rina Spa of Italy's proposal to set up a 100 per cent shipping consultancy and technical services company was also approved by the board. The company will bring in an fdi of Rs 2.5 million.

In food processing sector, two proposals amounting to an FDI of Rs 330 million were cleared. Snowman's Frozen Foods Ltd. will hike its stake in the existing company to 74 per cent from 34 per cent by bringing in an FDI of Rs 290 million. In another company, MBA Gelatine will bring in Rs 40 million to pick a 51 per cent stake in MBA Gelatine Pvt. Ltd.

In the software sector, the proposals of Birlasoft Inc, U S, Sahgal Software Ltd., Ewonders Com Pvt. Ltd., GDI Soft India and Proview Electronics Ltd. were cleared.

PowerGen signs pact for Torrent's stake

British power major, PowerGen Plc has signed an agreement for acquiring Torrent group's 46.3 per cent stake in the Gujarat Torrent Energy Corporation (GTEC) for $159 million. GTEC owns and operates a 655 MW dual fuel-fired power station at Paguthan in Gujarat.

The deal, which was signed in London, will raise the stake of the British company in GTEC from 27.8 per cent to 74.1 per cent. The transaction would be funded from a combination of PowerGen's existing corporate facility as well as a local rupee facility.

At the end of fiscal 1998-99, GTEC had net assets of Rs 8920.2 million and profits before tax for that year was Rs 1496.3 million.

The move by PowerGen follows a decision by the Torrent Group, which promoted the project originally along with Gujarat Power Corporation Limited, to divest its stake. The Paguthan project was one of the first private sector power plants to operate in India, with PowerGen acting as the operations and maintenance contractor.

PowerGen Plc Chairman Ed Wallis said "India has a vast potential and today we see it as the largest market in the world for independent power projects. Our further investments in GTEC puts us in a strong position to grow while generating a strong cash stream for future investment".

Major Trade Fairs

• The four-day international exhibition and conference for electronics industry "Nepcon India'99" organized by Confederation of Indian Industry begins on October 5, 1999.

• The five-day Indian Trade Exhibition "Indexpo '99" begins on August 11, 1999 in Mauritius.

• The two-week India International Trade Fair '99 begins on November 14, 1999 in New Delhi.
  
• The three-day 12th India Garment Fair (Buyer-Seller Meet) begins on July 27, 2000 in Osaka, Japan.