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The Times of India, , Friday,October 3, 2003

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TRADING Budget on track, but elections may mar party COMPONENTS By Priya Ranjan Dash Salary,pension and other es- A hard look at the numbers Centre’s deficit stood at 5.9 per Ashok Lahiri, ‘‘At least three Thai deal divides TIMES NEWS NETWORK tablishment expenditure are a cent of GDP last fiscal and is states — Karnataka, Punjab New Delhi: The good news is problem, concedes additional Tax collections are up 10%... budgeted to be marginally low- and Tamil Nadu — have fol- secretary (budget) D Swarup, er at 5.6 per cent this year.Tak- lowed the Centre’s lead.’’ that the Union budget is on ● 2003-04: Rs 85,000 crore * ● 2002-03: Rs 78,000 crore ** auto majors track six months into the cur- but the real mess in govern- en together with the states, the A cash management system rent financial year. The bad ment finances is elsewhere. But non-tax revenues are static... ‘‘desired’’ level of the com- was introduced this year. ‘‘But By Byas Anand news is that this is simply not ‘‘Interests payments, subsi- bined deficit is 6.8 per cent it is early days yet to say if TIMES NEWS NETWORK enough to put the economy on dies, defence and transfer to ● 2003-04: Rs 26,600 crore *** ● 2002-03: Rs 25,500 crore *** against the base year level of that’s working well,’’ says New Delhi: The government’s proposed a high growth trajectory. And states account for 80 per cent of 9.3 per cent. Swarup. But the first quarter And major subsidies continue... inclusion of auto components in a free the coming elections bode ill total spending,’’ says Swarup. It is not that the managers review shows that the six (As proportion of GDP in 2001-02) trade agreement (FTA) with Thailand has for any effort to remedy things. As the World Bank notes in are not trying, but politicians, largest spending ministries divided the automobile industry. While The government’s managers its India Development Policy ● Power: 1.4% (Rs 33,200 crore) who are the final authority, (accounting for 54 per cent of car market leaders, who have invested are relieved that this year’s Review, government finances, ● Food and fertiliser: 1.4% (Rs 35,200 crore) are thwarting the effort. total government spending) both at the Centre and states, They diluted the Fiscal Re- spent only 22 per cent of their heavily in indigenisation, and domestic fiscal trends are comfortable, ● Petroleum: 0.3% (Rs 6,300 crore) parts makers, are opposing the move, a coming on top of last year’s need major repair and this sponsibility and Budget Man- budget against a cash need of year’s Union budget has made agement Act, but even then 27 per cent of the budget that section of MNC car makers are support- good performance. But they Causing deficits to rise ing the pact saying it would enable free also concede that merely only a feeble attempt in that (Govt deficit (Centre and states) as proportion of GDP) this was a welcome first step they had projected. The cash direction. Finances of the that is supposed to keep gov- management system is surely flow of latest technology into India. sticking to the budget numbers ● ● ● The domestic industry has even Centre and the states have 1992-97: 7.2% 1997-2002: 9.3% 2002-03: 10.4% ernment’s borrowings within giving the government greater is not good enough. Deeper termed it as an attempt on part of the big- steadily deteriorated over the * Up to September 5 ** Up to August 31 *** Up to August 31 the budgeted limited of 5.6 controls over spending and op- cuts are needed in government ger Japanese players to weaken the grow- last 15 years and the fiscal per cent of GDP. tions to plan its borrowings. expenditure because the ing popularity of Indian small cars in Eu- mess is turning out to be a brings out the urgent need for 2002-07. The ‘‘desired’’ level of This is having a positive Thirdly, the gross tax collec- borrowings budgeted for this ropean markets. year in absolute terms are just huge roadblock for India’s fiscal correction if the econo- the Centre’s deficit as a pro- impact on states, but only tions this year up to Septem- my has to grow at the targeted portion of GDP is estimated at “It has come at a time when three Indi- too large to sustain high economic wellbeing. on some of them. According ber 5 have been up 10 per cent an car makers — Maruti, Hyundai and economic growth. The 10th Plan document also rate of 8 per cent a year during 3.6 per cent. Against this, the to chief economic adviser or by Rs 8,000 crore. Telco — have managed to make inroads AP into the European markets. Our strength Services up lies in a strong domestic component base. This FTA is an attempt to attack this Unctad projects 5.4% The services sector base,” says Hyundai Motor India presi- continued growing dent BVR Subbu. in the first half of When the issue was raised at the in- 2003-04, says a dustry body meeting, insiders said, Toy- GDP growth for India CII-Ascon report. ota and Honda rallied in its favour. How- •Cellular services ever, officials from these firms were not New Delhi: The United Nations even as per capita labour costs rose grew 180% available for comment. Conference on Trade and Develop- in certain sectors like textiles and Meanwhile, Automotive Component ment (Unctad) on Thursday p roject- transport equipment, in 2000. •Housing finance: Manufacturers Association (ACMA) has ed a 5.4 per cent GDP growth for In- On the Asian economy, the report 35 per cent joined forces with these market leaders to dia in 2003, much higher than the says despite weak global demand •Project consultancy: oppose the proposal. “We have already Asian average of 4.4 per cent. and the impact of Sars, Asian 43 per cent written to the government that auto com- The projection on India is in economies picked up this year,large- ponents should not be included in the ear- Software industry, • ly harvest scheme in FTA as it would kill sharp contrast to the 6 per cent ly because their macroeconomic and domestic and exports: the domestic industry,” says Vishnu growth estimated by the Asian De- balance-of-payment positions al- 20% and 40%, Mathur of ACMA. velopment Bank, but higher than lowed for more expansive monetary respectively the 5.1 per cent estimated by the In- and fiscal policies. Lucas TVS CEO TK Balaji further stat- ternational Monetary Fund. Expressing concern that the •Construction indus- ed that the FTA would create a major dis- In its trade and development re- world economy was in a state of try, production and ex- parity between imported raw materials port for 2003, Unctad has placed In- “malaise” and little improvement ports: 14% and 43%, and finished components. “If it comes dia’s growth after China and Iran in expected over 1.9 per cent growth respectively through, we will have a situation where Asia, with China estimated to grow rate recorded last year, it warned •Tourism, air cargo steel and other raw materials are being by 7.1 per cent, and Iran poised for a of a political backlash and loss of transportation: 13% taxed on import but the finished product Finance Minister and former RBI Governor share a light 5.7 per cent growth in 2003. faith in markets and openness •Lease segment: -3% is coming at zero duty.This can not be al- moment during the latter’s felicitation function hosted by the CII in Mumbai on It said Indian labour productivity unless immediate corrective meas- lowed as it would render the domestic in- Thursday. Jalan was hailed for his contribution to strengthen the Indian economy. had made strides in manufacturing, ures were taken. PTI dustry uncompetitive.” Asean, India to sign pre-free trade pact New Delhi: As part of its last year in Phnom Penh, ternal Affairs Minister Yash- Vajpayee would also pay a Look East policy, India will Cambodia, that New Delhi want Sinha said earlier this bilateral visit to Thailand sign with the 10-member and the grouping should en- week while addressing mem- next week in the second leg of Asean a major “framework ter a free trade agreement. bers of the Harvard faculty his two-nation tour and hold agreement” as a precursor to “It is a matter of great sat- in the US. wide-ranging talks on terror- a free-trade arrangement isfaction to us that the frame- Sinha said, “This major ism and other key issues during a regional summit to work agreement for this pur- breakthrough should con- with the Thai leadership. be attended by Prime Minis- pose has been finalised be- tribute to an increasing inte- The fight against terror is ter in tween India and Asean and gration of the India-Asean also expected to figure high Bali, Indonesia, next week. will be signed at the second economic space over the on Vajpayee’s agenda during Vajpayee had suggested at India-Asean summit at Bali coming years, including a his meeting with Asean lead- the first India-Asean summit in a few days from now,” Ex- free-trade agreement”. ers in Bali. PTI

EXECUTIVE DIGEST

NATIONAL Reva plans to sell 15% A grand amusement for Surat: stake for Rs 75 cr: The Lalit Suri’s Grand group is planning promoters of Bangalore- Reliance Info eyes 30% to set up an amusement park and based Reva Electric Car Co return on capital: Target- a corporate retreat in Surat, with are in talks with global private ing an ambitious 25 per cent an investment of Rs 260 crore. equity investors to raise Rs share in mobile telecom Narendra Modi’s Gujarat 75 crore by offloading 15 per services, Reliance said it’s government is planning to give cent equity, its MD Chetan infocomm venture would the project a fast-track Maini said. The company is break even in the very first clearance. also preparing to launch its year of its commercial electric car Reva in the UK by operations. “We will be able January 2004. He identified to generate 30 per cent return the IFC, the private lending on capital employed... We are arm of the World Bank, as targeting market share of 25 one of the investors it was in per cent. With all these talks with. PTI parameters in place, we are sure to break even in the first HRH group of hotels year of our operations,” says plans stake sale: The Manoj Modi, ED of Reliance HRH Group of Hotels has Infocomm. PTI initiated talks with foreign institutional investors and Metro Tyres aims at 10% international hotel chains to topline growth: Metro expand its business and Tyres is aiming for a 10 per enhance presence in the

cent growth in turnover this Ajit Ninan country, its CMD Arvind fiscal to Rs 330 crore and Singh Mewar said. The pro- Rs 500 crore in the next three facility, Metro group MD Indian Hotels to buy US moters plan to offload up to years on the back of a foray Rummy Chhabra said. The property: Indian Hotels Ltd, 25 per cent equity through into the domestic 2-wheeler Ludhiana plant, which was part of the Tata group, have private placement to FIIs, he tyre market in technical set up at a cost of Rs 40 decided to go ahead with the said. “We are also talking to alliance with Continental AG crore, would start production acquisition of a hotel property global hotel chains for a of Germany. Metro would by the middle of October, and in the United States. The branding and marketing tie- invest Rs 20 crore this year to it hopes to garner 5 per cent board of directors of Indian ups. We are also open to increase production of two- market share this year in the Hotels considered and ap- giving them management wheeler tyres at its Ludhiana two-wheeler tyre industry. PTI proved the proposal. TNN control,” Mewar said. PTI

INTERNATIONAL China vehicle production of solid-gold traditional tops 4-mn units China’s chests for an eye-popping vehicle production, covering 100 million yen each, or BP upbeat on natgas, everything on wheels from approximately $903,500 flags hefty profit: Britain’s sedans to tractors, is each. Tanaka Kikinzoku BP said the US natural gas expected to top 4 million Kogyo KK says the chests prices it received in the third units for the first time ever are replicas of a traditional quarter fell less sharply than this year, state media said. wooden box used in the Edo benchmark prices, in a The figure, based on period. Reuters trading update that flagged estimates by unidentified near-record profits for the oil economic officials, will be up industry. The energy industry from 3.25 million units last ET INSTA POLL giant said the effect of asset year, it said. In the first eight Yesterday’s results: sales on its output in the months of the year, vehicle quarter would be offset by Can the Sensex breach the production hit 2.73 million 5,000 mark before Diwali? its multi-billion dollar Russian units, up 36 per cent from the joint venture sealed in Defence for Frank Quattro- Yes 50% No 43% Can’t say 07% same period in 2002. AP August. Analysts have been ne, former tech banker at • The poll reflects the opinions of Net users who chose to participate, and not necessarily of closely watching BP’s Credit Suisse First Boston, Japan’s bullion house to the general public. performance. High gas prices sought to prove his client sell treasure chests: Today’s question: in the United States have was unaware that subpoe- Although it admits it has no What do you spend on most been a big contributor to nas had been issued for clear buyer in mind, Japan’s during the festival season? profits for the industry this documents relating to hot biggest bullion house said on To vote, log on to http://economictimes.indiatimes.com year. Reuters stock offerings. Thursday it would sell a pair

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