Oil and dry spell hobble growth
Atal takes trial walk
Rao in good-conduct plea
Bribe seized
Raider from the lost empire aims high
Calcutta weather

 
 
OIL AND DRY SPELL HOBBLE GROWTH 
 
 
OUR BUREAU
 
Oct. 11: 
The cassandras are slowly coming out of the woodwork flashing warning signals that read: the economy is on the skids.

A day after the Reserve Bank of India pared the growth forecast for the economy by half a percentage point to 6-6.5 per cent, the Centre for Monitoring Indian Economy (CMIE), a private Mumbai-based think-tank, slashed its GDP growth forecast to 5.8 per cent for the current fiscal (April 2000-March 2001) from its robust July forecast of 7 per cent. The research outfit attributed the revision to the unusually dry monsoon spell and the sharp hike in petroleum prices.

The prestigious Delhi-based Institute of Economic Growth, which specialises in macro-economic forecast models, says industrial growth for the next five months will vary between 3.3 per cent and 5 per cent.

The gloomy predictions spooked the markets too with the sensex — the 30-stock barometer of the mood on the Bombay stock exchange — slaloming down a precipitous course to hit a 16-month low at 3836.51 points at the close on Wednesday, a plunge of 108.77 points or 2.76 per cent. The ICE caps melted as the information technology, communications and entertainment stock — which have been cresting peaks and at present account for almost 90 per cent of the total volumes on the market — flipped down a roller-coaster, casting a shadow over the market.

The rupee also tumbled in the forex market and closed lower at 46.26/28 against the US dollar, scalded by reports that Standard & Poor’s, the global credit rating agency, had downgraded the outlook for the country’s long-term foreign currency borrowing.

The government, however, continued to put up a brave front in the face of the chilling projections saying that the panic on the markets and the knee-jerk reaction of the credit rating agencies were unwarranted.

“Our fundamentals are strong; we are still faring better than nost Asian and all European countries. There is no cause for worry,” said S.P. Gupta, well-known economist and member of the Planning Commission.

Although finance minister Yashwant Sinha has set his face against an immediate revision in the growth forecast for the year, Gupta and the finance ministry mandarins admitted that the poor monsoon, recent floods and the general slump in demand would trammel growth in both the farm and the industrial sectors.

The CMIE forecast said one worrying fact was that growth in the services sector — which has been the only one to maintain steady growth in recent years — had slowed during the first quarter of this year to 7.7 per cent as against 8.6 per cent during the same period of the previous year.

“I have been saying for quite sometime that we need to scale back our growth targets. With the damage due to floods, our assessment is that farm sector growth cannot be above 2 per cent compared with a target of 3-4 per cent,” said Gupta.

Farm sector growth in the first quarter (April-June) has slowed to 2.5 per cent from 4.9 per cent in the same period last year. Industrial growth has also decelerated to 5.4 per cent in the first quarter from 5.9 per cent in the year-ago period.

The recent CII Ascon report also reflected a slump in the business confidence with industrialists forecasting a less than 10 per cent growth in the cement, fertiliser and automobile sectors.

Gupta estimated indusrial growth this year at 6 per cent, which was almost half of what Sinha targeted in his budget speech.

The number crunchers in various research outfits are no longer able to discount the mounting litter of depressing facts and figures: first quarter GDP growth has slowed to 5.8 per cent from 6.4 per cent last year; oil prices have risen to $ 30, almost three times the level in January 1999; there’s been a sharp slowdown in big-ticket investments in infrastructure projects.

In its monthly review, CMIE said inflation was expected to rise to 8 per cent in therms of the wholesale price index (WPI) and to 7 per cent in terms of the Consumer Price Index (CPI). Mahesh Vyas, CMIE’s executive director, said the rise in petroleum product prices would trigger a 1.3 percentage point icnrease in the WPI.

Prof B.B.Bhattacharya, head of the Institute of Economic Growth, said, “Our view (is) that industry is in recession stage... we are in the declining phase of another business cycle. But things are not all that bleak — by the end of 2000, we expect a recovery.”

Bhattacharya blamed oil price increases as a major cause for the deepening of the “declining cycle” as production costs are going up. Several industry segments have already started raising prices forced by increasing input costs.

Finance ministry officials said the government was aware of these factors and was already taking pro-active measures to jump-start the economy. But the sense in the markets was that this was again an instance of too little, too late.    


 
 
ATAL TAKES TRIAL WALK 
 
 
FROM DEBASHIS BHATTACHARYYA
 
Mumbai, Oct. 11: 
Prime Minister Atal Behari Vajpayee made an attempt to get back on his feet this morning, a day after the surgery to replace his arthritic left knee.

Doctors at Breach Candy hospital helped Vajpayee get out of his bed and stand in the seventh-floor room overlooking the Arabian Sea. He was then led to a chair, where he sat down briefly.

“The time Vajpayee spent on his feet today was short,” Union minister Pramod Mahajan said, quoting a medical bulletin issued by Dr Chittaranjan Ranawat, the New York-based surgeon who operated on the Prime Minister, and Dr F.E. Udwadia of Breach Candy.

The doctors said Vajpayee, who is undergoing physiotherapy, is making “satisfactory” progress and has responded well to post-operative treatment. He was put on a “liquid” diet and the pain in his operated knee, lessened by a method called “regional block”, was tolerable.

Dr Nandu Laud, a Mumbai-based consulting orthopaedic surgeon who had assisted Ranawat, said Vajpayee was expected to walk with the help of a walker in five days.

An aide said that the Prime Minister read all newspapers, which were packed with reports on his surgery. He spoke “normally” with adopted daughter Namita and son-in-law Ranjan Bhattacharya, who were by his side all day.

Ranawat replaced the septuagenarian Vajpayee’s left knee with an artificial joint in an hour-long operation yesterday. The doctor had said the other knee could also do with a similar surgery, but did not say when.

Ranawat said Vajpayee would recuperate in five to 15 days and he will monitor the Prime Minister’s progress from New York, where he returns on Saturday.

On the doctors’ advice, Vajpayee has decided against staying at Raj Bhavan for a few days after his release from Breach Candy. Vajpayee will instead return to New Delhi because the Governor’s house is not well-equipped medically, said Vinod Tawde, the BJP’s Mumbai city president who is helping Mahajan coordinate between the Prime Minister’s makeshift office and the doctors.

Vajpayee remained “off limits”, refusing to meet anybody or take phone calls. “He was advised by the doctors not to take any calls because if he takes one, he cannot say no to the others,” said Ashok Tandon, the Prime Minister’s media adviser.

Several industrialists and senior leaders, including Bal Thackeray, have been denied an appointment. Mahajan said he expressed his regrets when the Shiv Sena chief and the Mumbai mayor called him up today to ask if they could meet the Prime Minister. Mahajan added that Thackeray would be invited the moment doctors gave the go-ahead.

Public interest in the Prime Minister’s surgery appeared to be waning, with few people gathering outside the hospital. For the first time in several days, securitymen appeared to have outnumbered bystanders at the hospital.    


 
 
RAO IN GOOD-CONDUCT PLEA 
 
 
FROM R. VENKATARAMAN
 
New Delhi, Oct. 11: 
With police on stand-by to whisk the convicted P.V. Narasimha Rao away, the former Prime Minister’s counsel today made an impassioned plea for leniency in view of his age and “meritorious service” to the country.

The court is expected to deliver the sentence in the JMM bribery case after 2 pm tomorrow. Rao’s counsel also cited medical reasons to seek probation. Probation implies that a court may not ask a convict to actually serve a jail term, choosing to severely admonish the convict or award only a token jail term.

Special judge Ajit Bharihoke today heard arguments on behalf of Rao and Singh on the length of the jail term both have to serve, which could vary from six months to seven years. The Third Battalion of Delhi police was all set to take Rao and Singh to the Tihar jail in case the judge pronounced his order today.

The counsel for Rao, R.K. Anand, argued that he had solved the “Punjab, Assam and Kashmir problems” as Prime Minister and put India back on the rails when the country was on the verge of an economic collapse.

“Hence,” Anand argued, “my client should be released on probation for good conduct and service to the country under Section 360 of the Criminal Procedure Code, which provides release on probation of a convict after admonition.”

Under the provisions of the Criminal Procedure Code, the conduct of the convict and his record of service to the nation may be taken into account to spare him a prison sentence.

Describing the case as one of its kind in the country, Anand said his client “should not have been convicted” as the “agreement to offer the bribe” in the alleged conspiracy meeting and the source of money had not been established.

He said if the court later decided that the money deposited in the bank by the four JMM MPs was only a donation and not bribe, the sentence would amount to a grave injustice to Rao and Singh.

As Rao looked to the court for mercy, his party drove in the last nail. “There is no question of extending any legal assistance to him. The bribery episode was part of Rao’s own survival game,” AICC spokesman Anil Shastri said.

Buta Singh’s counsel Rajender Singh took a similar stand as Anand and cited the “service” to the nation rendered by his client to plead “probation” and “no sentence”.

The special CBI court has held Rao and Singh guilty of bribing JMM MPs to vote in favour of the Rao-led Congress government during the July 28, 1993 no-confidence motion.

The court has, however, acquitted nine others in the case giving them benefit of doubt for lack of evidence.    


 
 
BRIBE SEIZED 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct. 11: 
History was made again in the JMM case with the special judge ordering that the Rs 50-lakh bribe paid to Sailendra Mahato be confiscated and given back to the state, reports our legal correspondent.

Trial judge Ajit Bharihoke made Mahato sign an undertaking that his share of the bribe money deposited in three accounts would be “forfeited”.

Mahato and his wife Abha held two joint accounts in which part of the sum was paid: one in the Sugam deposit scheme and another with the Naoroji Nagar branch of Punjab National Bank.

Another deposit was made in a Sugam scheme account held by Mahato and his JMM colleagues — Shibu Soren, Simon Marandi and Suraj Mandal.    


 
 
RAIDER FROM THE LOST EMPIRE AIMS HIGH 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, Oct. 11: 
Corporate Calcutta takes on Mumbai. Don’t laugh. Because Arun Bajoria is no laughing stock. He is full of stock, Nusli Wadia’s. And the Bombay Dyeing owner is not laughing.

Having bought 14 per cent of Bombay Dyeing at a cost of around Rs 60 crore, Bajoria has opened a treasure chest of ironies. It’ll be more like a war chest, though, that Wadia might have to fall back on to stave off what has the makings of a takeover threat.

First, out of the corporate desert of Calcutta has sprung up a raider. Whoever thought a businessman from this city would dare to cross swords with one of the icons of the commercial capital Mumbai?

Second, Bajoria has made his name in an industry that has disappeared off the pages of pink papers. Only the charitable would still call it a sunset industry. He owns nine jute mills.

He has targeted a company that has the country’s oldest textile brand, but has lost its way somewhat in the age of Only Vimal.

Third, Bajoria can’t hope to match Nuslia Wadia in corporate pedigree. Wadia can count among his friends people like Ratan Tata, the man he has advised in times of crisis in the past. He belongs among the movers and shakers of India.

Bajoria chews Pan Parag. Wears safari suits. He sits with phones perpetually stuck to his two ears in his office in an old building in central Calcutta, enjoying the discomfort he has caused to always immaculately dressed in a suit Nusli Wadia.

He is so low profile that for four months no one knew he had built up a launch-pad for mounting an acquisition bid.

“I am ready to take over the company if Mohammed Ali Jinnah’s grandson (referring to Wadia) gives in. The company needs a change of guard badly,” he said. He doesn’t think Wadia is any more famous than he himself is. “See, Wadia may not be known everywhere, but Jinnah is,” said Bajoria.

Fame has come to Bajoria through both doors. He attracted attention in the mid-eighties when he started buying one sick jute mill after another and turned them around. He had started with onlyone — Hooghly Jute Mill, which his father had left him. At one point of time, he had control over 14. Now, he has a market share of 18 per cent in the jute industry.

Twice he was arrested. Once for defaulting on provident fund payments and a second time for foreign exchange violation. He is no stranger to tax raids either.

After the quiet Bombay Dyeing stock-building operation, no one will dare say the jute man is a stranger in sunrise territory.

“He knows how to extract the best advantage of technology. The entire stock he has purchased in demat form so that the promoters cannot prevent them from being transferred,” said a longtime associate.

What this means is that Bajoria bought the shares entirely through electronic trading where no paper transaction is involved.

In the case of paper transfer, promoters can always drag out the process to the frustration of the buyer. Here, a transaction comes to the notice of the promoter as soon as the share document is lodged with them.

In dematerialised, or paperless trading, the promoter gets to know of the identity of the buyer much after the transfer has taken place. Which is why it has taken four months for the purchases to become public.

As soon as Wadia got wind of it, Bombay Dyeing moved the Company Law Board which stripped Bajoria of voting right against his shares until the dispute is settled.

He does not intend to raise his holding further. “I am not going to buy any more shares in Bombay Dyeing to avoid making a public offer. But if Wadia sells his entire lot, I am ready to buy.”

A public offer to all shareholders of Bombay Dyeing becomes mandatory once Bajoria’s stake touches 15 per cent.

“Let Wadia make a public offer first if he feels threatened. I don’t have any chemistry problem with him,” says the first-class chemistry graduate from St. Xavier’s college.

But why Bombay Dyeing? “Well, the fundamentals of the company, with high reserves and strong asset base, are sound.”

What adds a twist to the battle is the legendary rivalry between Wadi and the Reliance group’s Ambanis. Rumours refuse to die that Bajoria is fronting for Reliance.

“I am certainly not operating for anybody,” Bajoria said, only to add a qualification that could send shivers down Wadia’s spine.

“If Ambanis are willing to buy the stock at my price, I am ready to sell,” he said.

In a throwback to the raid mounted by Swaraj Paul, Bajoria has set his sights on two domestic business pillars. The other is the Thapar group.

“I am scouting for good companies like Bombay Dyeing and Ballarpur Industries which I can take over,” he said.    


 
 
CALCUTTA WEATHER 
 
 
 
 

Temperature

Maximum: 33.8°C (+2)
Minimum: 26.2°C (+l)

Rainfall:

Trace

Relative humidity

Maximum: 97%,
Minimum:61%

Today

Partly cloudy sky with possibility of light rain in some parts of the city and suburbs    
 

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