Steps to kickstart economy
Tenth Plan targets hinge on rise in investment
Govt rules out going back on Air-India selloff
BK Modi breathes fire

New Delhi, June 30: 
The government is preparing to cobble a series of pump-priming measures to ratchet up the floundering economy. Finance minister Yashwant Sinha hoped that the measures to boost public investment—to be announced in the next few days—would jump-start the economy by October.

On Friday, the Central Statistical Organisation released another set of sombre figures that scaled back growth in gross domestic product (GDP)—a measure of the country’s economic health—to 5.2 per cent in 2000-01 from the earlier estimate of 6 per cent.

“We will be taking a series of measures that will kickstart the economy despite the global slowdown,” Sinha said today.

“We hope that the measures will increase public expenditure and spur demand in the economy. If necessary, I will not shy away from making additional allocations,” Sinha told reporters after launching an insurance scheme for landless agriculture labour.

Sinha loathed to set a time-frame for the revival of the economy. “But I am hoping that with all the investment that takes place, we will see a lot of action on the ground by October that will give a boost to the economy,” he said.

The finance minister expressed his concern over the industrial torpor and said the government had already initiated a number of steps in this year’s budget to take the Indian economy over the hump.

“I have already started the discussions with my ministerial colleagues who are responsible for expenditure. I am meeting the representatives of financial institutions and banks besides RBI governor Bimal Jalan over the next few days to take a series of steps so that public expenditure takes place,” he said.

“It all boils down to a question of generating demand in the economy,” said Sinha. “We will definitely make the effort to spend productively whatever has been provided for in the budget. After that, if there is a need for additional expenditure, I will definitely not be found wanting. I too feel that public expenditure should increase.”

Sinha admitted he was deeply disappointed over the CSO’s latest numbers. “My own estimate was that because of the sharp fall in agriculture production, the growth rate could dip below 6 per cent. But I had not anticipated that it would go down to as low as 5.2 per cent.”

Meanwhile, Sinha raised the targeted micro-credit flow mainly to women self-help groups to Rs 17,500 crore in three years from Rs 7,000 crore at present in a bid to boost the tiny sectors of the economy.


New Delhi, June 30: 
The Planning Commission today said attainment of the 8 per cent growth target in the Tenth Plan hinged on the ability to raise the investment rate, which now hovers around 22-23 per cent.

“One of the important ways to raise investment in the economy is to expedite the divestment process,” K. C. Pant, deputy chairman of the Planning Commission said. To provide momentum to the selloff of public sector units, the Planning Commission intends to suggest the delinking of functional control over the PSUs identified for disinvestment.

The aim is to raise Rs 16,000 crore on an average from the disinvestment process. Pant defended the disinvestment target saying, “It was not very high keeping in view the Rs 12,000 crore target set in the current fiscal.”

More focused unit-wise attention was needed along with effective policy and programmes to achieve the targets, he added.

“The full Commission meeting agreed to grant special category status to Uttaranchal as it was found to comply with the conditions for granting the status, including hilly terrain and backwardness,” he said.

“But the Commission decided against granting retrospective special status to Jammu and Kashmir and Assam as it was felt the Eleventh Finance Commission had already granted them benefits and extending such status would lead to duplication of benefits.”


New Delhi, June 30: 
The government has decided to go ahead with disinvestment in Air-India even if only one bidder remains in the field.

“We will go ahead even if one bidder remains ... this is a Cabinet decision. Of course, the bid has to be above the reserve price,” disinvestment minister Arun Shourie told Air-India union leaders, who tried to dissuade the government from selling the airline if only one bidder remains in the field.

The Cabinet Committee on Disinvestment is slated to decide on Air-India’s bidding on Thursday, July 4 after another Cabinet committee—on security—decides whether or not to allow the Hinduja group to bid for the Maharaja. A cloud hangs over the Hinduja offer because the group is an accused in the Bofors pay-off case. The only other bidder for the flagship carrier is the Tata-Singapore Airlines combine.

“The Cabinet committee will also finalise a policy on whether to allow business houses indicted by courts or regulatory bodies to participate in the divestment process and another policy on corporates facing charges but not yet found guilty of wrongdoing,” Shourie later told reporters on the sidelines of the meeting with trade unions, which was called to smooth over the differences they have with the disinvestment process.

Sources in the disinvestment ministry added that the proposal was to debar those who had been clearly indicted but to allow those who were merely accused to participate in the process, as “the law believes that one is innocent until found guilty.” If this principle is accepted, then the Hindujas are likely to be allowed to bid, unless they themselves drop out from the race as the group’s officials have threatened.

Shourie made it clear the government would not accept any conditions which the Hindujas wished to set such as right to right size Air-India after its privatisation.

“We have received a letter from Srichand Hinduja late last night which mentions a demand that the strategic partner should have the right to restructure and right size the organisation. We do not have to respond to each condition...The government can’t give a blank cheque to any bidder,” he said.

Shourie said intelligence reports on the two bidders have been filed by Research & Analysis Wing of the Cabinet secretariat, which handles external intelligence, as well as by the Intelligence Bureau, the domestic intelligence gathering arm and the Central Bureau of Investigation, a federal detective body.

The unions demanded that Shourie plough back disinvestment proceeds in Air-India so that the airline is able to stand on its feet quickly. They also insisted that the employees should have at least one seat on the reconstituted board of directors.


New Delhi, June 30: 
Industrialist Bhupendra Kumar Modi today lashed out at financial institutions for bringing in a chairman of their choice in Modi Rubber Ltd (MRL) and stripping him of his powers of running the tyre major.

“I am still the managing director of the firm and I am still in control,” a visibly agitated Modi told reporters here. Financial institutions who control about 44 per cent stake in the company had appointed T. Pandurang Rao as the chairman of the company and then backed his move to strip Modi of his powers and hand them over to his brother and co-managing director Vinay Kumar Modi.

Modi, however, implied he would not be taking legal recourse to “right” things. Instead, he said, he would take his battle to the annual general meeting of shareholders after an open offer made by him and his brother V.K. Modi to buy up to 35 per cent shares in the company closes on July 3. The two brothers together control about 15 per cent stake in the company while the other Modis control another 10 per cent.

Dismissing reports that he had fallen out with his brother, Bhupendra Kumar said he had spoken to his brother and claimed “V.K has told me he is not party to all this ...” describing the move to strip him of his powers as a bid to drive a wedge between the two.

He also claimed the open offer which he had made jointly with V.K.Modi “was still on and my brother will buy half of the share we are aiming at buying, that is 17.5 per cent.”

B.K. Modi also claimed that the management functions of Modi Rubber had been carved up between the two brothers on the basis of a shareholders’ pact between the two which delineated duties between the two—giving him control over production and purchases and Vinay Kumar control over marketing.

Institutions obviously do not recognise this shareholders’ pact as a valid base to run a corporate entity where they are the single largest block of shareholders.

The FIs have long been alleging mismanagement on the part of the Modis in running the tyre company and have been demanding that they either change the management or allow them to sell out.

The Modis have been willing to buy but at their offer price of Rs 90 a share, which the FIs feel is too low. The FIs, Modi alleged, wanted bank guarantees that they would buy their entire stake over and above the public offer.


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