Free run for foreign capital
Blueprint to shed flab in all banks
Jaswant ducks fire in Lanka, gives cash
Calcutta weather

 
 
FREE RUN FOR FOREIGN CAPITAL 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, July 12 
In a burst of reformist zeal, the Vajpayee government today swept away an array of obstacles to foreign investment, overruling the lone objector in the Cabinet, Mamata Banerjee.

At a meeting chaired by Prime Minister A.B. Vajpayee, it was decided to permit 100 per cent foreign investment in petroleum refining and e-commerce and waive the Rs 1,500-crore ceiling beyond which project approvals are now not automatic in the power sector.

As, if not more, significant was the decision to abolish the condition that foreign companies have to match dividend payments to overseas parents with export earnings in hard currency.

The so-called swadeshi lobby within the BJP was conspicuous by its silence at the meeting. But Trinamul leader Mamata Banerjee protested without much success. She did get her way, though, in blocking a move to raise the foreign investment limit in tea and coffee. Mamata argued that affected states like Bengal be consulted before a decision is taken. Sources said she also scuttled moves to shut down units of the Tyre Corporation of India, with a presence in Bengal, and Hindustan Vegetable Oil Corporation.

Parliamentary affairs minister Pramod Mahajan said after the meeting: “It was a question of deciding between allowing more foreign investment in certain sectors to raise production and employment, even though this might prove controversial in the short run, or import more of these products and waste foreign exchange.”

Abolition of restrictions means companies have to merely inform the Reserve Bank before investing in these sectors. At least in power, 100 per cent foreign equity was allowed even earlier, but investors had to go through a tedious process to obtain permission if the project cost was over Rs 1,500 crore.

Mahajan said fully foreign-owned e-commerce ventures would be allowed only for business-to-business portals. Even these companies will have to sell 26 per cent equity to the Indian public within five years.

“This is a good, smart decision and should give a fillip to e-investments,” said an excited Dewang Mehta, head of Nasscom, the software and computer industry body. “Biggies like Yahoo! were waiting for just this,” he added.

The petroleum and power sector moves appear to have been prompted by the need to get off the ground some big-ticket projects. Confederation of Indian Industry president Arun Bharat Ram said: “Foreign players have evinced keen interest in these sectors and this enabling policy should help increase investment.”

But what really seems to have delighted industry is scrapping of the condition to match dividend payment with export earning by foreign firms. The restriction has been dismantled for 22 sectors, including cars, consumer electronics, white goods, soft drinks, food products, cigarettes, leather goods, oil, salt, tea and coffee.    


 
 
BLUEPRINT TO SHED FLAB IN ALL BANKS 
 
 
BY SUTANUKA GHOSAL AND NITHYA SUBRAMANIAM
 
June 12 
Based on the assumption that the banking industry is saddled with a 25 per cent surplus workforce, the Union finance ministry has initiated a massive exercise to rationalise manpower.

It has directed public sector banks to submit their manpower planning schedules after factoring in a 25 per cent surplus. Finance minister Yashwant Sinha is meeting bank chairmen tomorrow in Delhi to discuss a voluntary retirement scheme in the 1-million-strong industry.

Worked out by the ministry, the scheme proposes to offer VR to employees over 40 with 20 years of service completed. Two months’ salary will be paid for every of service left or completed, whichever is less.

Bank officials said: “After discussion with heads of banks, final shape will be given to the VRS.”

The finance ministry has asked all nationalised banks to submit their manpower plans by the end of July. This is the first time the ministry has directed all banks to carry out such an exercise, being seen as a prelude to large-scale weeding-out of excess workforce. Earlier, the exercise was restricted to weak banks.

A senior ministry official said: “Different committees and experts have said nationalised banks have a minimum 25 per cent surplus. While there is a need to induct new workforce, which has adequate knowledge of new skills such as modern technology, foreign exchange, venture capital, e-commerce, and money management, it is also essential to rationalise the existing manpower.”

Several key parameters accentuate the problem in public sector banks. Establishment expenses as a percentage of total expenses are the highest for public sector banks at 20.13 per cent as against 7.66 per cent for foreign banks operating in India and 3.04 per cent for new private sector banks.

Similarly, the average business per employee for public sector banks is only Rs 89 lakh as against Rs 4.46 crore and Rs 8.85 crore, respectively, for foreign and private sector banks.

The official said the government is considering the introduction of VRS to help banks right-size their workforce. “For the VRS to be really meaningful, it is essential that the banks carry out detailed manpower planning. Any future recruitment should be based on this plan,” he said.

The plan will determine the optimum size of the workforce, strength of different cadres, mode of recruitment, promotion, strength of specialist cadres, plans for redeployment and overall skill upgradation. In doing the manpower planning, it has to be ensured that there should be adequate opportunities for promotions for all and proper balance between promoted and direct-recruit officers at the entry level.

Tomorrow, Sinha is also expected to discuss the burgeoning non-performing assets of banks.    


 
 
JASWANT DUCKS FIRE IN LANKA, GIVES CASH 
 
 
FROM PRANAY SHARMA
 
New Delhi, June 12 
Tiptoeing on tricky terrain, foreign minister Jaswant Singh has assured Sri Lanka that India stood by its territorial integrity but, keeping in mind the mood in Chennai, stressed on the need for an early consensus on the devolution package giving autonomy to the ethnic Tamils.

He also made it clear that it would not get involved in any “firefight” to end Lanka’s ethnic strife but offered $100-million credit as humanitarian assistance to tide over any monetary crisis. The minister clarified that humanitarian aid does not construe an offer to evacuate Lankan forces defending Jaffna. He said that there has been no request in that regard from Colombo.

Singh, who returned to the capital late tonight, said: “For the earliest possible ever-lasting peace to the decade long ethnic problem in Sri Lanka it is necessary that the political process for the devolution package is set in motion.” However, the minister admitted that he was not sure whether the Tamil Tigers would agree to end the war even if the Lanka government agreed to implement the power-share package. The rebels have rejected similar offers in the past.

Singh said that his two-day talks with Sri Lanka’s President Chandrika Kumaratunga, foreign minister Lakshman Kadirgamar and Opposition leader Ranil Wickeremesinghe had been fruitful. “My visit helped in further strengthening bilateral ties,” he added.

Singh said he had visited Colombo with a three-point agenda. First, to assure Sri Lanka that India is committed to its sovereignty and territorial integrity; second, to send the signal that Delhi wants an early but permanent solution to the ethnic conflict and finally to hardsell India’s belief that a solution can be worked out by building up a national consensus on devolution.

Singh said the three suggestions were interchangeable and because of the “extreme complexity” of the situation, it was difficult for him to say which of these steps should be taken by the Lanka government first.

By stressing on the devolution package, Singh was trying to send the signal to the BJP’s southern allies that it was in favour of a solution that would benefit the ethnic Tamils as well.

DMK leader M. Karunanidhi had kicked up a storm by suggesting that Lanka follow Czechoslovakia’s example and split into two nations. Though Singh maintained the issue did not come up for discussion, his stress on the devolution deal indicates that Delhi wants Colombo to take urgent steps to resolve the conflict by taking into account the interests of the minorities also.    


 
 
CALCUTTA WEATHER 
 
 
 
 
Temperature: Maximum: 34.1°C (normal) Minimum: 25.9°C (-1) RAINFALL: 9.4 mm Relative humidity: Maximum: 97%, Minimum: 72% Today: One or two spells of showers or thundershowers accompanied by lightning. Sunset: 6.18 pm Sunrise: 4.54 am    
 

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