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March 7-8, 1999 Post-Budget phase likely to herald boom time for credit rating companies Rise in share prices, the advent of private insurance companies and rise in the number of mutual funds are expected to bring glad tidings to credit rating agencies. Goans oppose plan for privatising power transmission and distribution Opinion-makers are seeking to expose how statistics were doctored and artificial shortage of power and funds created by politicians in power, to allow private firms to generate power in the tourist state. BUDGET 1999-2000: EXPERT COMMENTS Surfeit of surcharges in the name of rationalisation The finance minister has increased the tax on 14 million income-tax payees by slapping a 10 per cent surcharge on the basic rates. In a period of recession, this will only reduce demand further, says Wilima Wadhwa. Good for banking, tough on automotive sector The bottomline of the banking sector will improve with the new provision for deducting the bad and doubtful debts before calculating taxable income, says S S Kohli. Finance Secretaty swears by govt downsizing, moots VRS for profit-making PSUs Yashwant Sinha's ideas prevailed in the Budget whose 'most important aspect is that it can work in a coherent manner'. Things started moving from the first day itself when certain duty structures came into force, says Vijay Kelkar. OTHER REPORTS PM inaugurates work on two power projects in Bihar The 4,000 MW North Karanpura and Barh mega projects of NTPC are expected to help Bihar to overcome acute power shortage, besides supplying power to the national grid. Hegde calls for scrutiny of WTO role, highlights Third World economies' plight Developing countries should be given special treatment, a level playing field in global trade. Visible and invisible trade barriers must be lifted, the commerce minister opined. PF trust moots hike in interest rate for i-tax exemption The government approval will be sought for conversion of low-yielding securities to high-yielding securities for the benefit of provident fund subscribers. 
• GDR Weekly Review: Skindia GDR index up 64 points to 643.64 • BSE and NSE Weekly Review:Sensex up 250 points, Nifty up 73 points March 6, 1999 Lok Sabha passes Companies Amendment Bill Companies would be allowed to make inter-corporate investments and loans without prior approval of the Central government. Excise surcharge may be withdrawn if revenues improve, but no rollback of taxes: govt The industry must look at the Budget as a 'comprehensive and interlinked package of incentives' and accordingly plan its corporate strategy. 'A stable tax regime would help both -- the tax department and the corporates -- in reducing disputes,' officials of excise, customs and direct taxes said. Sinha offers to quit if Guruswamy's allegations are proved The alleged siphoning off of billions of rupees in the fixing of steel and share prices rocked the Lok Sabha today. BUDGET 1999-2000: EXPERT COMMENTS Budget will help corporate India to recast and reorganise itself The markets will love the reduction in capital gains tax but will dislike the increase in direct taxation, which is a step backwards, says Uday Kotak. Generalities abound, where are the specifics? Nowhere did the FM clarify how the funds will be generated. Nowhere did he say this move will generate a certain amount of funds or this policy will entail certain amount of expenditure, says Vinod Doshi. A Band-aid Budget! The policy announcements on the pharma segment have not come a day soon. But the FM has ignored the industry's request to be very specific on R&D. The Budget lacks soul and is directionless, says Habil Khorakiwala. THE REDIFF BUDGET INTERVIEW 'Budget marks an end to Sachin syndrome in govt that finance ministry should do everything' 'Business is learning to live with political instability. If we have a good monsoon that helps agriculture to recover, then the economy will bounce back regardless of politics,' says Subir Gokarn, chief economist of the National Council of Applied Economic Research. OTHER REPORTS Stringent essentials bill tabled in LS In the case of conviction in summary trial, the maximum imprisonment will be for two years. There will be a fine of Rs 25,000 for the first offence and Rs 50,000 for subsequent offences. AP assembly debates privatisation, World Bank; Naidu, Left leaders exchange barbs Andhra Pradesh CM remarked that even China and Russia could not escape reforms. ''You (Left parties) want reforms and computers in West Bengal but oppose them here,'' he said. Panel moots export of Indian defence products and revamp of ordnance units The government has been asked to provide a special waiver of licence restrictions currently applicable to export of ordnance factory items.
• BSE: Sensex 3649.06; up 47 points • NSE: Nifty 1054.45, up 13 points • Forex: Rs 42.51/52 vs $ Rs 46.11 vs euro Rs 68.46 vs pound Rs 36.80 vs yen (100) March 5, 1999 Parliamentary panel tones down Money Laundering Bill The standing committee feels only serious crimes that pose threat not only to the integrity but sovereignty of the country, should be retained. The rest of the offences sought to be included in the Act should be omitted, it said. Foreign equity in insurance to be limited to 26% The standing committee on finance has decided in favour of abolishing the additional 14 per cent stake proposed for non-resident Indians, OCBs and FIIs, informed sources said. BUDGET 1999-2000: EXPERT COMMENTS 'FM has a problem coming up with good ideas' The Budget does not address the problem of declining capital expenditure, particularly in the rural sector. It could have found money for this by stepping up disinvestment. The FM has not used the word privatisation at all, writes Mohan Guruswamy. Not a win-win Budget, but better than last year's Sinha's last Budget was based on hope. So is this one. I hope he is right, but I fear he will be wrong and the numbers will go haywire, says Bibek Debroy. A 'tough' Budget that wasn't Only if issues like industrial recovery, investments in infrastructure and government's poor fiscal situation are addressed can we expect to see a long sustained bull run in the market, says Rajashekar Iyer. Revenue raising measures are non-inflationary If the low interest regime takes hold, controlling fiscal deficit through lower interest outgo is possible. However, the quality of numbers remains suspect, says Angshuman Chowdhury. THE REDIFF BUSINESS INTERVIEW 'Investors who have come to Kerala are happy' 'Yes, we need investments. But we do not say that only capitalists can change the society. You just come to Kerala and see how the lifestyle of the people has changed. That's our concern,' says Suseela Gopalan, the state industry minister. OTHER REPORTS AP HC rejects plea against deal for Hyderabad business school The court said neither the state government nor Chief Minister N Chandrababu Naidu can be accused of any wrong-doing or committing "constitutional impropriety". M S Verma to take charge as chairman of IDBI Bank The appointment comes at a time when IDBI Bank is riding the success of its maiden public issue at a premium.
• BSE: Sensex 3601.96; down 36 points • NSE: Nifty 1041.20, down 10 points • Forex: Rs 42.51/52 vs $ Rs 46.16 vs euro Rs 68.46 vs pound Rs 34.55 vs yen (100) March 4, 1999 India's rating will be undermined if poor fiscal trends continue: Duff & Phelps Strong political support will be essential for maintaining the medium-term fiscal reform effort. The lacklustre performance of India's exports in the last three years is another major credit concern, the credit rating agency said. Cabinet mulling FDI in housing sector, says Jethmalani Foreign investors and NRIs are keen on investing in housing, the Union minister said. 'I now have a Rs 10 billion proposal from an NRI for Delhi itself.' BUDGET 1999-2000: EXPERT COMMENTS 'The Budget is lacklustre, pedestrian and retrogade!' Three specific things in the Budget bothered me: cutback by Rs 170 billion in the capital expenditure; internal debt trap; the huge imposition of Rs 93.34 billion in additional taxes and duties. These will lead to further decline in growth rates, says Dr Subramanian Swamy. 'Surchage will hit new corporate investments' Except for the fast moving consumer goods, pharma companies, software and oil refining sectors, the corporate world will find it difficult to pay the surcharge, says S S Bhandare. 'Budget shows up govt's failure to demonstrate vision' As much as 27 per cent of the total expenditure of Rs 2.83 trillion will be for repayment of interest on the existing loans, as against the total borrowings of 25 per cent in the next year. It is clear that the country has already entered the debt trap, says Mohan Dharia. 'There's nothing on attracting FDI to the core sector' Infotech continues to get the attention. Ironically, it is treated separately from telecom which is the enabler. This gap needs to be fixed, says Virat Bhatia. Economist cautions govt on fiscal deficit, favours gradual rupee depreciaton There is likely to be a shift of investors from the debt market to equity market. Interest rate reduction is small in dimension and should have been carried out six months ago. It would not lower savings now, said Prof B B Bhattacharya.
• BSE: Sensex 3640.42; zooms up 116 points • NSE: Nifty 1051.85, up 36 points • Forex: Rs 42.49/50 vs $ Rs 46.41 vs euro Rs 68.70 vs pound Rs 35.08 vs yen (100) March 1-3, 1999 RBI cuts CRR to 10.5 pc, repo to six pc and bank rate to eight pc Low rates of inflation over a long period have spurred the central bank to finally loosen its grip on the financial system. BUDGET 1999-2000: EXPERT COMMENTS A true Vajpayee-Sinha Budget 'The economy would be better served if the finance minister stopped constantly peering at the stock market monitor and spent more time reading the notes and papers produced by the ministry and the RBI,' says Mohan Guruswamy. Little to cheer 'The indirect tax revenue projections went haywire last year. They hoped on growth, which didn't materialise. Hoping on growth may not materialise this year either,' says Bibek Debroy. 'When the Opposition is critical and the analysts are happy, it means the Budget is good' 'It is a win-win Budget in that it is good for growth and inflation,' says S S Bhalla. 'Opening Indian stock exchange terminals abroad is not that easy' 'I don't think the fiscal deficit projections are achievable. No finance minister has lived up to his projections -- actuals are always worse,' says Jerry Rao. Long on words, short on action 'Fiscal profligacy, increase in tax rate, no steps towards increase in business confidence, a lack of any vision on the second generation of reforms -- these are areas of concern,' says Prof Shubhashish Gangopadhyay. Sinha took what he wanted without pinching the common man 'I expect the capital markets to go ding-dong. If I were an investor, I would plump for mutual funds. Fixed deposits of companies or banks are neither tax-efficient nor flexible,' says A N Shanbhag.
• BSE: Sensex 3523.98; zooms up 124 points • NSE: Nifty 1015.80, up 34.50 points • Forex: Rs 42.48/49 vs $ Rs 46.70 vs euro Rs 68.26 vs pound Rs 35.68 vs yen (100) February 1999 Archives
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