Move to dilute jute order
Four more ITDC hotels to be sold in a week
Ford drive to step up used car sales
Aviva warms up for launch

New Delhi, May 25: 
The Cabinet Committee on Economic Affairs (CCEA) will soon be taking up a recommendation to dilute the jute packaging control order allowing more foodgrain to be packaged in plastic.

At about the same time it also plans to take up a Rs 500-crore package to upgrade the jute industry, mostly based in West Bengal.

Textiles minister Kanshiram Rana, who heads an inter-ministerial committee (IMC) on the issue, told The Telegraph that “we have to dilute the packaging norms as the jute manufacturers can’t meet the entire demand, but we will take care to protect jute too.”

Rana whose IMC includes agriculture minister Ajit Singh and consumer affairs minister Shanta Kumar, feels the jute packaging order, which reserves foodgrain and sugar packaging for jute bags, has to be amended as jute production capacity has been stagnant even as foodgrain and sugar crops have been showing record growth.

The BJP minister said he would like to place before the Cabinet a Rs 500-crore jute mills modernisation plan.

“These mills are working on ancient machinery, none of them have invested in new technology, consequently their production quality and productivity is low. I want to change all that. We need a jute technology mission which will create new technology and fit the mills with new machinery ... after all there is a demand in the west for high quality jute products,” Rana said.

Though Rana declined to give details of the packaging order dilution plan his committee will set before the Cabinet, sources said it wants to allow up to 20 per cent foodgrain and a quarter of the country’s sugar output to be packed in plastic over the next two years.

The Bengal jute industry which seems to have got wind of the initial deliberations of the committee had approached Calcutta High Court seeking a stay to any move to dilute the original order which reserves all foodgrain packing for jute.

The court has ruled that the CCEA can take any decision it deems fit but cannot notify it till it has deliberated on the issue.

The jute packaging orders are issued every year by the central government on the basis of a law enacted in 1987 that sought to protect the ailing jute industry. But every year the protection to the jute industry comes under attack from powerful plastic sack makers.

Traditionally the order has attracted intense lobbying between the two groups. Both the sides have powerful political support.

While Andhra Pradesh chief minister N. Chandrababu Naidu is considered to be in favour of the dilution in jute order, West Bengal chief minister Budhdhadeb Bhattacharjee, Trinamul leader Mamata Banerjee and BJP minister Tapan Sikdar are against it.


Puri, May 25: 
Disinvestment secretary Pradip Baijal today said four of the Indian Tourism Development Corporation’s (ITDC) hotels in the country would be privatised within a week.

Underscoring the need for faster privatisation of public sector undertakings at a media colloquium on economic reforms here, Baijal said privatisation of these loss-making hotels located at places like Kovalam, Aurangabad and Mandi would fetch the government something to the tune of Rs 60 crore. Of the 26 loss-making ITDC hotels spread over the country, only nine have been privatised so far.

On the disinvestment proposal of National Aluminium Company (Nalco), Baijal said the government would get about Rs 300 crore by selling 34 per cent of its share in the market in the next four months. The Centre, which holds an 87 per cent stake in Nalco, would finalise a global advisor for the company soon. However, he scotched rumours that Nalco would be privatised soon as it was a “brilliantly managed company”.

The Nalco divestment would be followed by selloff in Rourkela Steel Plant, which has been a laggard for quite some time. Baijal said the Centre would go ahead with its disinvestment regardless of the opposition of Union steel minister B.K. Tripathi.

“Unless we remove the bottlenecks, it would take another 200 years to complete the disinvestment programme. In the last two years after the process was speeded up, the government has been able to sell only Rs 874 crore of its equity in PSUs, a mere 1 per cent of total. It’s woefully slow,” Baijal said.

The Centre has been able to earn only Rs 30,000 crore in the last 10 years through disinvestment, he added.

However, this year the disinvestment ministry was confident of meeting its target of Rs 12,000 crore.

Allaying fears of large-scale job loss due to divestment, Baijal said that unlike China, India doesn’t have a large PSU workforce. While 50 million people in China were rendered jobless, in India only 0.4 million people have lost jobs due to privatisation.

Making a case for faster disinvestment, Baijal said once all the PSUs are privatised then the government would rake in at least Rs 8 lakh crore, good enough to wipe away the high fiscal deficit of Rs 1.3 lakh crore.


Calcutta, May 25: 
George Akerlof might have penned the ‘Market for Lemons’ theory and won the Nobel prize in economics for it, but it is Ford Motor Company which has put the theory into practice, albeit in its own way, to create a vibrant market for used cars.

Ford India, the Indian arm of the US automobile major, is now revving up to put its parent’s theory in practice here also.

By the end of June, Calcutta will have a showroom dealing exclusively in used cars with ‘Ford Assured’ tags. The workshop-cum-showroom on the Eastern Metropolitan Bypass will be run by Bothra Ford, the dealer for Ford cars in the city.

Akerlof’s ‘Market for Lemons’ theory on used cars was essentially based on asymmetric market information. In his theory, Akerlof had argued that in an asymmetric market, either the buyer or the seller has more information on the product.

To illustrate the idea Akerlof analysed the buying and selling of a used car. In this market, he noted, the seller has more information about the condition of the vehicle than the buyer. The buyer, on the other hand, is suspicious about the product and makes inferences about the quality of the car based on limited information.

Given this asymmetric nature of the market, Akerlof had concluded that the buyer may not be willing to pay as much for the car as it is worth, assuming it is not a lemon.

This is exactly where Ford has driven in to tinker with Akerlof’s theory. According to the US automobile major, a tag of assurance from Ford Motor would definitely help to restore some symmetry in information sharing and clear the misapprehensions in a buyer’s mind who has come to buy an used car.

According to Vijay Bothra of Bothra Ford, the company has invested over Rs 2 crore to equip the factory and the showroom which would, at any given point of time, display about 50 used cars.

These used cars could be of any make and inspected and tested extensively on 120 parameters and if required reconditioned. According to Bothra, even after reconditioning the cars are tested on 56 parameters before finally qualifying for any transaction.

A number of used car dealers have introduced similar testing parameters for used cars.

“But the ‘Ford Assured’ tag which has already been introduced in several other cities is likely to score over others because of the global testing and reconditioning criteria that are being applied,’’ Bothra said.

The business of used cars is still in its infancy in India—while 10 used cars are sold for every new one globally, here the ratio is just about one is to one, according to an estimate done by the Federation of Automobile Dealers Association.

In this new line of business, Bothra Ford will try to ensure reliable and trouble-free purchase and see to it that all documents are in order and provide warranty on mechanical, electrical and electronic equipment.

’Ford Assured’ used cars will also enjoy three free services during the warranty period as is available in case of new cars.


Calcutta, May 25: 
Aviva Life Insurance—a joint venture between pharmaceutical major Dabur India and British insurance major CGNU—will be launching its products in India in a month. The company plans to sell 10,000-15,000 policies in its first year of operation.

Stuart Purdy, chief executive officer of the company, said: “It took us long to get off the blocks, but in a month’s time we should be selling our policies in the whole country. Strictly speaking we don’t have a target, but we hope to sell close to 15,000 policies in the first year.”

The company was formerly known as Dabur-CGU Life Insurance, but changed its name recently to adopt the new brand name—Aviva—that CGNU launched internationally. Incidentally, India will be the first country where policies under the Aviva brand will be sold.

The company intends to start selling its policies in six major cities: Calcutta, Delhi, Mumbai, Chennai, Hyderabad and Bangalore. The company is also planning to sell its products through banks and sales agents. Aviva has already tied up with a number of leading banks, and now plans to rope in some regional—even co-operative—banks to hawk its policies.


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