Stage set for softer rate regime
Hudco loans now cheaper
No hire & fire policy for economic zones
11-month export growth 11.1%
Atal sends wake-up signal to PSUs
Maruti 800, Zen to be dearer in capital

From our Correspondent Mumbai, April 1 The string of measures announced by the Reserve Bank of India to pull down interest rates is likely to bear fruit with banks and financial institutions expected to respond to the central bank’s overtures from Monday.

In fact, the impact of the rate cut is expected to be felt across the board.

Besides banks and financial institutions, non-banking finance companies (NBFC) will also be forced to respond to the RBI move.

“This is because the depth of the initiatives is so tremendous that it will have a universal impact on the system,” sources said.

Moreover, the stock markets, lately threatened by a bear run, will get a shot in the arm with brokers expected to benefit from the softening of interest rates.

Says Anand Rathi, Bombay Stock Exchange (BSE) president, “I think it will give a tremendous boost to the capital markets as more and more money will be allocated to the markets.”

Brokers are expected to benefit as loans against collateral in the form of shares and other securities will attract lower interest rates. Moreover, mutual funds are expected to attract more funds while banks may find the going tough in case bank deposit rates are sizably reduced, making them less attractive.

Admitting that “the rate cuts signal softening of interest,” State Bank of India’s (SBI) chairman and managing director, G G Vaidya, however was not willing to hazard a guess on the quantum of the cut. He said that the bank’s asset-liability committee will meet on Monday to take a decision on the issue.

Speaking to newspersons, the man behind today’s developments, RBI governor Bimal Jalan said though the mid-term review of the monetary policy is scheduled to be announced on April 27, the bank decided to announce these measures “to begin the financial year on a positive note.”

Welcoming the RBI move, Confederation of Indian Industry said the move to cut CRR by one percentage point would would improve liquidity in the banking system and improve credit availability.

The Federation of Indian Chambers of Commerce and Industry (Ficci) said the RBI had acted at the right time when the economy was picking up.    

New Delhi, April 1 
Housing and Urban Development Corporation Ltd (Hudco) today slashed interest rate on its retail housing loans by 0.25-1.25 percentage point and reduced the loan slabs from the existing six to three.

Hudco’s chairman and managing director V. Suresh said, “the rationalisation of rates and loan slabs was done in view of the proposed withdrawal of interest tax and reduction in borrowing costs.”

The maximum ceiling on loans to be sanctioned under Hudco Niwas retail credit scheme is being raised from Rs 25 lakh to Rs 50 lakh. Loans up to Rs 50,000 under this scheme would attract interest rate of 11.5 per cent.    

New Delhi, April 1 
Commerce and industry minister Murasoli Maran today assured that the government will set up special economic zones with utmost care and said, “at this time we cannot have a hire and fire policy for SEZs”.

Speaking at a national seminar on exim policy 2000, organised by the Ficci, Maran said the second labour commission was examining the labour laws as a whole and would suggest measures for making it more growth oriented.

In the new exim policy, the central government has recommended to state governments to declare those units which are exporting 50 per cent of their turnover as utility services.

He said, “This will set in motion the process of making labour laws flexible through a democratic process.”

He said the whole issue of reservation of items under the small scale sector would have to be analysed.

Maran reiterated that domestic industry would not be affected by the lifting of quantitative restrictions on 714 items. He said the 44 per cent cumulative tariff would make only 2 per cent of the consumers avail of those items which had been put on OGL.

“The consumers have to pay a price to the exchequer if they have to use those items.”

He also assured that agriculture and small scale sector will not be affected due to the lifting of QRs.

The bound rates for these commodities are very high and it will in no way affect the domestic production in areas like milk, paddy, wheat.

Deemed exports

Director general of foreign trade N.L. Lakhanpal today clarified that 50 per cent export criteria for a unit to be declared as public utility will not include deemed exports.

Answering queries of exporters at a function organised by the Confederation of Indian Industry here, Lakhanpal said, only actual exports will be taken into consideration while requesting states to declare a unit as a public utility.    

New Delhi, April 1 
India’s exports showed a double-digit growth at 11.12 per cent in April-February 1999-2000, marginally short of the 11.3 per cent growth target for the entire financial year.

During April-February of the last fiscal, exports touched $ 33.31 billion compared with $ 29.98 billion during the corresponding period of 1998-99. In rupee terms the exports grew by 14.48 per cent.

Exports in February was valued at $ 3.09 billion which was 9.74 per cent higher than $ 2.81 billion exported in February last year. In rupee terms the growth was 12.71 per cent.

The trade deficit for the 11-month period was higher at $ 8.68 billion compared with $ 8.17 billion in the corresponding period of the previous year.

Imports during the 11 months of the last fiscal were estimated at $ 42 billion, 10.07 per cent higher than $ 38.15 billion during the same period in the previous year.

Imports in February were valued at $ 3.84 billion representing a growth of 21.78 per cent over $ 3.15 billion achieved in February 1999.

Oil imports during April-February period was put at $ 8.79 billion, recording a growth of 66.37 per cent compared with $ 5.28 billion during the corresponding period of the previous year.

Non-oil imports during April-February 1999-2000 was estimated at $ 33.21 billion which was 1.02 per cent higher than $ 32.87 billion registered in the same period of 1998-99.    

New Delhi, April 1 
Prime Minister Atal Behari Vajpayee today asked chief executives of public sector enterprises to shape up to meet the challenges of a global economy.

Speaking at a conference of chief executives of public sector enterprises, Vajpayee said “Despite government infusing capital, strengthening management structures and giving PSEs greater autonomy, returns are yet to be commensurate with inputs.”

Of the 235 operating PSUs, more than 100 are loss-making units. In a third of undertakings, the capacity utilisation is less than 50 per cent.

The total investment in central public sector units is more than Rs 230,000 crore. In 1998-99, total profit of all central public sector units was Rs 19,743 crore and net profit was Rs 13,235 crore with a net dividend of Rs 4,932 crore.

“No less worrisome is the fact that PSEs contribution to public debt is estimated at a third of the internal debt of the union government,” the Prime Minster said.

Vajapyee’s message was: “You have to arrest these worrisome trends and ensure purposeful functioning as well as higher profitability of your respective enterprises.” Dispelling fears on PSU disinvestment, he said they were unfounded. The government’s strategy was to revitalise these units by bringing in competition, granting greater operational flexibility, reducing surplus manpower and upgrading technology, he added. “We are not here to indulge in distress sale,” he said.

The Prime Minister reminded PSU chiefs that the government could only lay down macro-level policy for their functioning and the task of day to day operation was left entirely to the firms. “You are required to deliver, we are here to assist,” he said.

Vajpayee also presented the Prime Minister’s award to top ten PSUs for excellence. They are Bharat Petroleum, Cochin Refineries, Hindustan Teleprinters, NTPC, PFC, TCIL, Hudco, PEC, HAL and Power Grid.

Earlier, Manohar Joshi, minister for public enterprise and heavy industries, said the National Renewal Fund in its present form would cease to exist. It was being revamped and vested with the DPE, he said. The modalities for the scheme is being worked out.    

New Delhi, April 1 
Maruti Udyog Ltd today increased the prices of its models by Rs 14,000 to Rs 40,000 in order to comply with the stringent Euro-II emission norms in the National Capital Region (NCR).

The price of Maruti 800 base model has been increased by about Rs 14,000 to Rs 2.20 lakh (ex-showroom, Delhi). The price of other 800 cc variants—EX and DX—have not been increased since they already conform to Euro-II norms. The 800 CC EX is available for Rs 2.34 lakh, while the DX model costs Rs. 2.56 lakh (ex-showroom Delhi).

Maruti sources said prices had been increased due to increase in cost of raw materials, upgradations and to meet Euro-II emission norms.

Zen LX model will now be available for Rs. 3.22 lakh against Rs 3.07 lakh for the Euro-I variant in the NCR. The Zen VX will cost Rs 3.67 lakh as against the existing price of Rs3.53 lakh. The Euro-II compliant Zen classic will be dearer by Rs 14,000. The price is going up to Rs 3.88 lakh from Rs 3.74 lakh for the Euro-I compliant model.    


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