Sinha sees recovery signs
Maran vows free & fair trade policy
Essar Oil readies retail foray plan
Discount stores to spark retail boom
Idiot box gets wiser by the day

New Delhi, March 16: 
Rollback of LPG prices not to affect reforms, says finance minister Allaying fears of setback to reforms with the rollback in prices of cooking gas, finance minister Yashwant Sinha today asserted that the economy was showing signs of recovery and the budget proposals would further boost demand and growth.

“The LPG price hike (by Rs 40) was fairly steep. I am happy even after the rollback. The subsidy on LPG has been reduced by Rs 20. I don’t think it (rollback) is a blow to reforms,” Sinha said after a post-budget meeting with the board members of the Reserve Bank of India (RBI) here.

Sinha, however, was against rolling back the reduction in tax concessions on savings in the budget, saying unnecessary hype was being created that the middle class is being adversely affected by the proposals.

“I myself was a government employee. I can feel that the tax exemptions level announced in the budget are not harsh. It was I who increased the exemption level on those drawing salaries of up to Rs 1 lakh to 30 per cent,” he said.

“Try to understand that out of a population of 100 billion people only 3.65 lakh people have taxable income above Rs 5 lakh.”

The finance minister asserted that the interest of the middle class had always been taken care of.

He justified the proposals to reduce exemption levels of those drawing salaries between Rs 1.5 lakh and Rs 5 lakh a year from 20 per cent to 10 cent and to nil for those drawing annual salaries above Rs 5 lakh.

Sinha was confident that the budget proposals would kickstart the economy. “There are signs of recovery in the Indian economy. The budget has made various provisions for spurring demand. We look forward to better days.”

However, he said growing non-performing assets (NPAs) of banks, depleting foodstocks and high transaction costs were areas of concern which need to be taken care of.

The increase in the volume of NPAs, implies that fresh stock of bad debts are being created in the economy.

Last year, banks had some Rs 56,000 crore in bad debt on their hands; this is estimated to have crossed the Rs 60,000 crore-mark this year, despite an intensive drive to reduce the NPA overhang.

Sinha said the RBI board meeting provided an opportunity to explain the circumstances under which budget was prepared.

Sinha said the budget had to recognise the importance of fiscal thrust to revive growth while maintaining reasonable fiscal discipline.

“More importantly, the revival of the economy required significant injection of capital at reasonable interest rates,” he added.

Sinha also stressed on state-level reforms and laid special emphasis on increasing credit delivery to rural areas.

RBI governor Bimal Jalan said this year’s budget has a long term “reformist vision” and the measures announced for agriculture and infrastructure would provide additional stimulus to the economy.

“The world economy is now believed to be looking up and there were several signs of higher rate of growth in India thanks to a good agricultural year,” Jalan said.

Despite the rise in international oil prices, the RBI chief said “the inflationary scenario was highly favourable. The interest rate environment was expected to remain soft.”

Infosys chief N.R. Narayana Murthy, who attended the meeting as a nominee director on the central bank’s board, said companies should be ready to pay dividend tax.

The board meeting was also attended by D. S. Brar of Ranbaxy, Ashok Shekhar Ganguly of ICICI and defence scientist A.P.J Abdul Kalam among others.


New Delhi, March 16: 
The government is determined to create a hassle-free trading environment by trying to reduce transaction costs and creating a healthy framework for external trade.

At a three-hour meeting of the Board of Trade here today, commerce and industry minister Murasoli Maran said, “The aim is to achieve at least 1 per cent share of the global trade (as against 0.67 per cent at present). We need to make exports as free as possible so that even the small traders are able to export. In India, it is cheaper to import coal from Australia than from Bihar to Chennai.”

A compound annual growth rate of 11.9 per cent would be required over the next five years to increase India’s exports to a level of $ 80 billion by the end of the 10th plan period.

“This is achievable with the co-operation of the trade and industry,” Maran said.

He reiterated the importance of international trade as an effective instrument of economic growth, employment generation and poverty alleviation and it should be treated as an integral part of the country’s economic endeavours and not just a residual activity. Maran said with export consciousness being created for the first time, there has been a shift from export pessimism.

“The time has come to move from policy to implementation,” he said, adding that the states would have to play a crucial role in this process. The 18 per cent export growth witnessed in January should not be a temporary phenomenon and if the same could be sustained in February and March then the reduced export target of 3 per cent for the current fiscal could be achieved,” Maran said.

Maran welcomed the suggestions of the members of the board as valuable inputs and the “last word” in the formulation of the new five-year Exim policy.

Members suggested massive publicity campaigns in overseas markets which could be supported by the government utilising the Market Access Initiative Scheme and the India Brand Equity Fund, which could be clubbed together for optimum results.

S.K. Saraf, vice-president, Federation of Indian Export Organisations urged the setting up of a Trade Centre in Mumbai while Praveen Shankar Pandya of the gems and jewellery industry stressed the need to make India a global exhibition centre which would give a boost to sourcing from India by the major foreign buyers.

They urged the government to continue the DEPB scheme as it alleviated the high incidence of transactions costs to some extent.

Speaking at the meeting Ficci president R.S. Lodha said, “State governments must play an active role to shore up India’s export figures, like the local governments of China which give their fullest support.”


Mumbai, March 16: 
With the deadline for the dismantling of administered price mechanism (APM) in the oil sector drawing near, the Essar group is giving final touches to its marketing plan, focusing on franchisee-based model to make a mark in the retail arena.

Armed with the plan of setting up close to 1,700 retail outlets in the first phase, the Ruias are looking largely at the western and northern parts of the country which, they hope, could fetch them rich dividends. “We have our refinery coming up in the west coast and a good potential exists in the northern region as currently there is a deficit,” Raj K. Varma, chief executive, marketing, Essar Oil, told The Telegraph.

Varma pointed out the first retail set-up of the company is likely to be ready within seven months. “We are awaiting notification from the government which is due shortly. But the company will be ready from April 1 itself,” he added.

The entire 1,700 outlets planned by Essar Oil is likely to be set up within three years. While a large number of these retail outlets will be through franchisees, Varma said that at a later stage the company would set up its own independent outlets. Through these 1700 outlets, Essar is planning to sell 5.5 million tonnes of diesel and 750,000 tonnes of petrol apart from other major lubricant brands.

Essar had already kicked off its retail marketing process by inviting expressions of interest (EoIs) from prospective franchisees. It had received over 8,000 applications for close to 11,000 outlets in the country.

According to Varma, the company is flexible as far as the agreements with franchisees are concerned.

Though some industry analysts are sceptical about the company’s success in the area of retail marketing as it currently does not have any refining capacity, company officials do not consider it to be a problem as various products are now available in abundant quantities.

Essar is likely to source these products from any of the existing public sector refineries, sources said.

Apart from the Essar group, Royal Dutch Shell, British Petroleum and Reliance Industries are the other major private sector players that are likely to unveil aggressive plans for marketing petro products. Most of these players could also bid for HPCL and BPCL, the refining cum marketing majors that have a combined 40 per cent market share.


New Delhi, March 16: 
Discount stores are expected to spark off a retailing boom in the country with organised retailing business projected to surge almost 250 per cent to Rs 45,000 crore in 2005 from Rs 13,000 crore in 2000.

Discount stores started the retailing revolution in the US in the seventies; a gaggle of retailers are jumping on to this bandwagon to churn things up in the country’s retail network. Though this segment is gradually growing it is small compared with international standards where 60 per cent of the business comes from these discount stores.

The big retail outlets which have already joined the bandwagon are S. Kumar’s who are trying to set up a chain of discount stores. The discount stores that are already operating in the market include Subhiksha in Chennai, Margin Free in Kerala and recent entrants like Bombay Bazaar in Mumbai, RPG’s Giant in Hyderabad and Big Bazaar in Calcutta, Hyderabad and Bangalore.

The discount stores have the advantages of price, assortment of dominance, quality assurance and have the ability to build up scales and pass on the benefits.

There are several retailing formats in India—malls, branded stores, departmental and speciality stores. The branded stores run by premium brands have been the catalysts in pushing up the Indian retail scenario. The departmental stores are expected to take over the apparel business from exclusive brand showrooms. One of the big successes here is Shoppers Stop which initially started in Mumbai and now has more than seven large stores across India.

However, there is a great deal of experimentation that is also going on. For example, a famous retail outlet like Shopper’s Stop is trying to develop a quasi-mall.

Similarly, Ebony, another well-known retail outlet, is trying to convert its department store to a quasi-mall adding small outlets and food retail section. Globus, which is primarily a department store, will be adding small fashion stores to its credit. Foodworld, a food supermarket, is likely to be converted into a hypermarket, Foodworld Express.


Calcutta, March 16: 
The idiot box is ready to don an entirely new look. As internet-on-TV becomes a reality, television has opened up sources of revenue for companies providing content, advertisers, cable operators and satellite service providers.

With television channels in the country upgrading to provide services through direct-to-home (DTH), viewers can expect a range of options, including better picture and sound quality, more programme options, video on demand and a basket of value-added services. DTH would also provide access to unique local language content and next generation services like t-commerce (television commerce)

Broadband services will ensure that viewers can surf, view product demonstrations, order a product, make payments and ask for specific programmes—all from the comfort of their couch.

DTH services are expected to rake in revenues of Rs 157 crore by 2006, according to estimates by International Data Corporation (IDC). The pay-per-view revenue is expected to touch Rs 110 crore while video-on-demand services will reach Rs 117 crore by 2006.

Jagi Panda, director of Ortel Communications, feels that the future of cable TV lies in broadband and value-added services. With the liberalisation of the telecom sector, adequate bandwidth will soon become widely available.

Texas-based VALOR Telecom has already introduced internet services over television that is 10 times faster than dial-up services.


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