Poll shadow on reform-fired Sinha
Simians stalk budget builders
Solvency norms in insurance may be relaxed
Convergence Bill to set up Net supercop
Markets skittish on budget eve, sensex slips 43 points
Cola battle hots up in war of words
Foreign Exchange, Bullion, Stock Indices

New Delhi, Feb. 27: 
Will it be harsh or soft? Coming only two days after Mamata Banerjee’s election-oriented railway budget, speculation about the nature of the general budget to be presented on Wednesday has reached fever pitch.

This is Yashwant Sinha’s fourth budget, and the second to be presented at 11 am. It was Sinha who broke the tradition of presenting general budget at 5 pm, a long-carried colonial hangover.

Sinha need not share Mamata’s perception and political compulsions. In terms of temperament, they are poles apart. But they are members of the same Cabinet. Sinha cannot be harsh when his colleague is so soft.

The finance minister cannot present a BJP budget. He has to keep in mind that many states will be going to polls this year, and that his budget proposals should reflect the wishes of the coalition partners. If he fails to do so, he will be forced to roll back the unpalatable proposals. His first budget got him the sobriquet, RollBack Sinha. He hates to be called so.

Sinha has to reckon not only with the assembly elections, but also with the recession. The economy has been facing a demand slump for some time. He cannot afford to present a contraction budget in recessionary conditions. At the same time, he cannot ignore the Fiscal Responsibility Act, which insists on reduction in the quantum of fiscal deficit.

The provisions of the Act can be staved off only in the event of natural calamity. The recent earthquake in Gujarat comes handy for Sinha. He can seek a one-time exemption and go in for a higher fiscal deficit. This is what Manmohan Singh did in his second reform budget. He first reduced the fiscal deficit from 8.5 per cent of the GDP to 5.5 per cent and in the second year raised to 6.5 per cent. This triggered the economic boom in the subsequent years. Singh could do it and escape the wrath of the credit rating agencies because he gave the impression of being in command of the economy. Sinha is not in a position to make such a claim.

In times of a recession, the scope for taxation is limited. Sinha can tap new areas to get additional resources. But this should not prove counter-productive. The stock market has to be stimulated and this depends on his package for the corporate sector. Proposals like scrapping of the dividend tax, reconstitution of minimum alternate tax and a reduction in surcharge were being recommended to revive the corporate sector. It remains to be seen how far Sinha will go to help the corporate sector.

The salaried class will remain grateful to him if he can provide a mechanism to adjust taxation to inflation. If he reduces interest on small savings, it will hurt pensioners.

However, this will serve the larger interest of bringing down the cost of funds for the industry. RBI governor Bimal Jalan has already cut the cash reserve ratio (CRR) by half a per cent; another will take effect immediately after the budget.


New Delhi, Feb. 27: 
The budget might just turn out to be monkey business, literally. Just a few days before North Block mandarins locked themselves up for the annual ritual of budget making, a troop of monkeys crossed the Rajpath to invade the corridors of the finance ministry.

And believe it or not, the troop targets senior officials who carry the secret budget files they have been vetting. No wonder, North Block’s exasperated budget makers are threatening a hard budget!

There haven’t been reports of budget files being snatched away by the simians yet. But then, with companies desperate for a peekaboo, who knows someone might hit upon the bright idea of training a few monkeys to do just that.

But, despite the trouble they face in crossing vast monkey-patrolled corridors, North Block mandarins don’t like speaking ill of them. After all, they are the only representatives of Lord Rama, the ruling party’s presiding deity.

P. Chidambaram saw them virtually reign in the corridors. A high-tech drive to evict them using infra-red lights planted at strategic points in the office, merely gave them new perching posts to cavort around. Somehow, with Chidambaram’s departure, many of them lost interest in this seat of power.

The finance ministry is bitter over the way the foreign and defence ministries have joined hands in hatching a ‘deep-rooted conspiracy’ to send these monkeys from their offices across the road into their corridors just before the budget. One theory is that the babus in the two ministries know the budget will have little for them, and hence decided to get even.

South Block officials from across the street say the whole problem started when North Block hired a ferocious langur last monsoon to rid itself of the unwanted monkeys. Langurs, for reasons obvious only to primates, love to chase monkeys. The hassled monkeys simply decided to cross the street and join their brethren already residing in South Block — and the ranks of the Ram Bhakts swelled considerably.


Mumbai, Feb. 27: 
An advisory group on insurance regulation has said the higher solvency margin requirements in the insurance sector may be scaled down in the next 2-3 years as the country gains more experience. The advisory group, one of the 10 constituted by the standing committee on International Financial Standards and Codes which submitted its final recommendation today, said that the Indian approach to solvency requirements could appear to be far more stringent than those in other countries. This, it said, could be due to the fact that the insurance industry is being thrown open to competition after more than four decades. These norms were required purely by way of caution.

“In the next 2-3 years, as we gain experience, the higher prescriptions may be scaled down suitably, depending upon the evolving situation,” the group said. The group, which was constituted to chalk out a course of action to achieve the best practices in the field of insurance regulation in the country, also said that unit-linked life insurance could be brought under the definition of life insurance business both in “letter and spirit” so that they do not engage in mutual fund operations under the guise of life insurance.

Here, it pointed out that close co-ordination was required between the regulators for an efficient unit-linked insurance business.

It further said that the current regulations relating to the valuation of assets pertaining to policy holders in respect of life insurance were on par with international standards. It however, noted that in respect of certain standards the country had yet to catch up with the international practices. One such area, it disclosed, related to the setting up of catastrophe reserves, where the group said, an appropriate Indian standard had yet to be evolved at par with the prevailing international standards.

Moreover, some gaps were observed in the calculations of the unearned premium reserves between the Indian and international standards. “An appropriate Indian standard is yet to be evolved on par with the international standard,” the group added.

The group said that with respect to taxation of general insurance companies, the Indian standard was marginally below the international norm. Further, as regards the importance of catastrophe reserves, while the practice in India was to allow the transfer of such a reserve from profit after tax, the international custom was to make this out of pre-tax profits, which it felt should be followed in India.


Mumbai, Feb. 27: 
The free domain of the internet will soon have fetters imposed on it, if the draft Convergence Bill 2001 framed by the group of ministers (GoM) is accepted.

The draft Bill, based on the recommendations made by a sub-group headed by noted legal luminary Fali S Nariman, proposes to set up a Communications Commision of India (CCI), a ‘super regulator’ that will regulate content on the internet and in other media.

The Bill, put up on the department of telecommunications (DoT) site, has a clause which states the commision “take steps to regulate or curtail harmful and illegal content on the internet and other communication services.”

It goes ahead to define the codes and standards under which the moral police shall operate. The Bill states the commision shall formulate rules from time to time to specify programme codes and enhance general standards of good taste, decency and morality.

“Our position on this issue is very clear. We prefer to self regulate and self censor our content, rather than be regulated by an outside agency,” Dewang Mehta, president of the National Association of Software and Service Companies (Nasscom) told The Telegraph. Nasscom has invited its members for feedback on the Bill.

“We have forwarded the draft to our members seeking their opinion,” the Nasscom president added. The responses, expected to come in by the end of this month, will be scrutinised by Nariman and the GoM will meet again to incorporate any changes.

However, avid internet buffs say self regulation is followed by many websites and therefore the clause on regulating internet content is redundant.

The draft Bill cleared on January 16 by the group of ministers on convergence chaired by finance minister Yashwant Sinha, paved the way for the establishment of the CCI.

The commission will be empowered to issue all licenses, including composite licenses for communication services, to facilitate and regulate all aspects of telecom and broadcasting, including all aspects of convergence in these services, to determine codes and technical standards, tariffs and rates for licenced services, and determine and levy licence fees wherever necessary.

The passage of the Bill will involve repeal of at least five laws, including the Cable Television Networks (Regulation) Act 1995, and certain aspects of the Information Act 2000.


Mumbai, Feb. 27: 
The markets turned skittish on budget eve as a wave of selling pressure in new and old-economy shares on fears of a payment crisis led to 43-point fall in the sensex.

Broking circles kept their fingers crossed ahead of the budget. Then, there were worries that the steep fall in select stocks could lead to a major payment crisis. Rumours of banks dumping pledged shares and bounced cheques hit sentiment.

The losses were more pronounced in tech shares, with all major scrips ending the day lower. Scrips such as HFCL, Global, Silverline, Zee Telefilms, Aptech, Penta Media DSQ Software and Mastek were languishing at new 52-week lows.

If rumours swirling in the market were to be believed, bulge bracket broking houses are in serious trouble. These broking houses, dealers say, are facing a severe payment crisis, which led to heavy offloading of tech shares before the budget. Even retail investors sold joined the selling spree.

Market players ignored the rally in the Dow Jones Industrial Average and the technology-laced Nasdaq Composite Index on Monday and resorted heavy selling, expecting a tough budget with more taxes and surcharges. To make matters worse, FIIs remained inactive and preferred to wait till the budget.

Infotech shares were battered, but the selloff was not limited to them. It was across the board, covering stocks of infotech, media, telecom, FMCG and pharmaceutical companies.

The sensex opened 28 points higher at 4140. Then, it touched an intra-day high of 4156 in early-session deals but the market soon turned choppy on profit-taking at higher levels.

Himachal Futuristic (HFCL), Global Telesystem, Silverline, Zee Telefilms, Satyam Computer, Aptech and Wipro bore the brunt of the selloff. HFCL shed a whopping 16 per cent to close at Rs 578.35, Global Tele fell 15.07 per cent at close at Rs 353.15 and Zee Telefilms slipped 14.22 per cent at Rs 164.95.

The slide was accentuated on rumours that a leading broker with a high exposure in some of these stocks would face a payment crisis on the BSE and Calcutta Stock Exchange.

It was a dramatic recovery at the fag end in heavyweights such as ITC, Infosys and Tisco, which helped sensex recoup its early losses. Otherwise, the damage would have been greater. Domestic financial institutions made a feeble attempt to support falling stocks by making small purchases at lower levels. “The market is in a cautious mood ahead of the budget with expectations running high,” a dealer said.

In the specified group, 110 stocks, many of them from the 30-share sensex, suffered sharp to moderate losses; only 32 advanced.

Satyam Computer notched up the highest turnover of Rs 622.94 crore, followed by Himachal Futuristic (Rs 530.56 crore), Infosys Tech (401.58 crore), Global Telesystems (Rs 342.61 crore) and Zee Telefilms (Rs 288.15 crore).

Market leader Satyam Computer dipped by Rs 18.55 at 307.65, HFCL by Rs 110.15 at Rs 578.35, Infosys Tech by Rs 23.65 at Rs 5695.35, Global Tele by Rs 62.65 at Rs 353.15, Zee Telefilms by Rs 27.35 at Rs 164.95, Digital by Rs 33 at Rs 641.90, Lever by Rs 1.10 at 206.55, MTNL by Rs 5.85 at Rs 157.95, Reliance by Rs 2.70 at Rs 402.75, SSI by Rs 108.50 at Rs 1158.25 and NIIT by Rs 60.80 at Rs 1182.25.

The gainers included BSES, which firmed up by Rs 9.65 at Rs 236.90, Dr Reddy’s by Rs 29.60 at Rs 1329.30, Hindustan Petroleum by Rs 1.25 at Rs 175.10, ITC by Rs 18.50 at Rs 829.65, Pfizer by Rs 11.50 at 612.30, State Bank by Rs 2.15 at Rs 224.75, Telco by Rs 1.20 at 99.30 and Tata Steel by Rs 4.35 at Rs 158.85.


New Delhi, Feb. 27: 
The latest round of the cola war has all the heat in it to make you run for your favourite cola to cool off. After Pepsi raised a storm over the theft of its catchline, Coke’s defence to the charges has both rivals scrambling for their dictionaries, looking for ‘more.’

While Pepsi claims the word in the slogan ‘Dil maange more’ is an English one, Coke, accused of stealing its rival’s thunder (and catchline), protests the word used in its latest ad series is in Hindi and translates as ‘peacock.’

While Coke says there is nothing more to their ‘more,’ Pepsi insists there is.

Coke, in its reply to Pepsi said, “As far as we can see, an English translation of the phrase ‘Yeh dil....’ means ‘This heart wants a peacock.’ Coke officials say they wonder how Pepsi can claim any copyright over such a phrase. Coke’s trademark attorney added: “We deny this phrase has attained exclusive recognition with Pepsi.”

Pepsi’s spokesperson countered, “Coke has trivialised the main issue by stating ‘more’ can also mean peacock.”

Coke’s legal response to Pepsi’s charge states: “It is a settled position in law that advertising slogans/descriptive words are not subject matter of a copyright.” It further adds that registration of a work for copyright does not per se confer any right on the registrant and charges Pepsi with making an “unjustifiable threat.”

Pepsi however is sticking to its guns that it has the copyrights over the “Dil...” lines.

According to Pepsi’s spokesperson, “Coke has today quietely dropped the lines from its ad on Doordarshan, while Star TV had refused to air the ad in the first place. This clearly vindicates Pepsi’s stand that there has been a violation of its copyright.” The Pepsi spokesperson added that to prove its stand, a legal reply would be given in due time.

On the Star TV issue, Coke said they had not offered the ad to the channel, though it could not give any reason for avoiding such a popular channel.

On their part, Coke was in a defiant mood, saying it had no intention of succumbing to the threats contained in Pepsi’s letter. It was also quick to point out Pepsi’s past transgressions. “It is Pepsi who has always taken pot shots at Coke’s ads whether it was the ‘Nothing official’ ad or ‘Eat cricket, sleep cricket’ one. We never served a legal notice on them for all that,” a spoeksperson said.

The spokesperson added that last year an independent research agency had conducted a survey where it found young adults tend to avoid sweeter colas. This was also corroborated by an in-house research by Coke, he said.

The Pepsi’s spokesperson however said the company had reasarch evidence which proves that Pepsi was a favourite with adults.

Coke stated that it failed to understand how its Thums Up ad can be termed as ‘confusing,’ since it actually seeks to distinguish Thums Up from some competitive products.

Interestingly, while Coke seems all set to pit its acquired brand Thums Up against Pepsi on the sweet factor, for its flagship brand Coca Cola, the positioning is that of a ‘universal appeal,’ based on the ‘enjoyable platform.’ Coke’s latest TV ad shows a bunch of school leavers, who grew up on the drink and seem poised to coninue the bond.

On asked to distinguishing between the two colas from its own stable, the Coke spokesperson said, “Thums Up has a more strong Indian taste to it, as against Coke which has a more mature and refined taste.”

And as the two rivals slug it over what’s the good word, it promises to be an interesting summer ahead.



Foreign Exchange

US $1		Rs. 46.65	HK $1		Rs. 5.90**
UK £1		Rs. 67.37	SW Fr 1	Rs. 27.30**
Euro		Rs. 42.74	Sing $1	Rs. 26.40**
Yen 100	Rs. 40.13	Aus $1		Rs. 24.05**
*SBI TC buying rates; others are forex market closing rates


Calcutta				Bombay

Gold Std (10gm)	Rs. 4480	Gold Std(10 gm)	Rs. 4450
Gold 22 carat	Rs. 4230	Gold 22 carat	Rs. 4115
Silver bar (Kg)	Rs. 7475	Silver (Kg)		Rs. 7470
Silver portion	Rs. 7525	Silver portion	Rs. 7475

Stock Indices

Sensex			4069.68		-43.01
BSE-100		2047.25		-39.28
S&P CNX Nifty	1295.55		-16.85
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