Finance minister P. Chidambaram has warned the finance ministry will be forced to revisit tax exemptions if the growing subsidy burden is not immediately contained.
He said this at the full Planning Commission meeting which met on 8 November to approve the 11th Plan. The meeting was closed to the media.
An official present at the meeting, who did not wish to be identified, said the finance minister was of the view that the government could not push tax revenue growth beyond the current trends. “Chidambaram said the only way out will be to revisit tax exemptions, especially those which have outlived their utilities and those which have been granted due to political pressure,” said the official.
The government has been giving a package of tax exemptions to the industry in every budget, including excise and customs duty reduction.
He also said the estimated subsidy of more than Rs73,000 crore on petroleum, food and fertilizer in the current year is likely to cross Rs93,000 crore by March 2008.
Chalking out plans: (from left) Deputy chairman of the Planning Commission Montek Singh Ahluwalia, Prime Minister Manmohan Singh, finance minister P. Chidambaram and external affairs minister Pranab Mukherjee at the full Planning Commission meeting in New Delhi on 8 November.
Earlier, while addressing the meeting, Prime Minister Manmohan Singh, had said that the government’s outgo on oil, food and fertilizer subsidy will be to the tune of Rs1 trillion.
The finance minister also said international institutions are already pointing fingers at the Indian government on off-budget financing, such as floating bonds that defer the actual outgo from the exchequer on account of fertilizer and petroleum subsidies.
In August, the government for the first time, issued fertilizer bonds worth Rs7,500 crore to part-finance the additional subsidy burden.
The official added that Chidambaram said the potential of public sector enterprises have to be unlocked but there are slow signs of that.
He added education and health should be treated as physical infrastructure and at the meeting he asserted that states should spend more on developing the two sectors.
Benazir Bhutto seeks Musharraf’s resignation
Lahore: Detained Pakistani opposition leader Benazir Bhutto called on Tuesday for military leader Pervez Musharraf to step down as President, isolating him in the run-up to a general election.
Bhutto has long called for Musharraf to step down as Army chief and become a civilian President, but it was the first time she had called for him to quit as President altogether.
She also said she could never serve as prime minister under him and her party might boycott the general elections Musharraf has promised to hold by 9 January. “It is time for him to go. He must quit as President,” Bhutto, who has for months held power-sharing negotiations with Musharraf, told ‘Reuters’ in a telephone interview.
Meanwhile, Britain stepped up international pressure on Musharraf, backing a 10-day Commonwealth ultimatum for him to end the emergency and quit as Army chief. Reuters
Texmaco, United Group in wagon-making deal
Kolkata: Wagon maker Texmaco Ltd on Tuesday signed a deal with Australia’s United Group Ltd to manufacture rail wagons and locomotive bogies in West Bengal. “We aim to address the opportunities currently being planned by the Indian Railways for the project under dedicated freight corridor,” president and chief executive officer Ramesh Maheshwari said.
Investment details for the project were not revealed.
As per the agreement, an equal joint venture company will be formed to set up a plant on 100 acres of land in West Bengal, he said. Besides designing and manufacturing rail wagons, locomotive bogies and components, the venture will also focus on repairing work for the Indian Railways, he added.
The exact investment can be ascertained once the feasibility study for the new plant is ready in three months, Maheshwari said, adding, “We want to make the new plant a hub for rail products in the Asian region.”
A part of the production from the new venture will be exported to Australia, Vietnam and Cambodia, he added.
Texmaco, with revenues of Rs600 crore in 2006-07, currently operates five plants in West Bengal.
Texmaco is part of the KK Birla group of companies. K.K. Birla is chairman of HT Media Ltd, which publishes ‘Mint’. Reuters
Indo-US nuke deal: govt hints at thaw with Left
New Delhi: India is likely to approach the International Atomic Energy Agency for negotiations on a safeguards agreement needed to operationalize the India-US nuclear deal following a softening of stand by the Left allies.
“The meeting of UPA-Left has been reconvened on 16 November. We hope a way out will be found at the meeting,” external affairs minister Pranab Mukherjee said. PTI
Start-ups, VCs gather for networking event
Mumbai: The third chapter of TiE-ISB Connect 2007, the annual networking event for start-ups and venture capitalists (VC) in India, kicks off in Hyderabad on Wednesday.
The three-day event, organized by The Indus Entrepreneurs (TiE) and the Indian School of Business (ISB), would feature 40 VC’s and close to 200 start-ups from across the country. Staff Writer
Regulator soon for GM products, processes
New Delhi: India will set up a regulator for genetically modified products and processes and invest up to 50% in biotechnology ventures with private firms, science and technology minister Kapil Sibal said on Tuesday. The government will prepare the legislation for the authority in three months, he said. Reuters
Ministry to allocate 23 coal blocks next month
New Delhi: The screening committee of the coal ministry is likely to meet on 7 December to consider allocation of 23 coal blocks to the steel and cement sectors, which have been seeking adequate raw material linkage to achieve expansion targets, a ministry official said.
Once these are allocated, the government would have exhausted the 203 blocks it had identified for allocating to the power, steel, coal, cement and sponge iron sectors. Earlier, the government had allocated 15 coal blocks for power projects, including the proposed captive plants of Mittal Steel in Orissa and Jharkhand. Captive coal blocks have also been allocated to Tata Power Co. Ltd, Essar Power Ltd, Jindal Steel and Power Ltd and Reliance Energy Ltd. PTI
Jindal Stainless forms JV for coal mining
Mumbai: India’s largest stainless steel maker, Jindal Stainless Ltd, has signed an initial agreement with two private firms and state-run Mahanadi Coalfields Ltd to form a joint venture, a senior official said.
The joint venture firm would mine coal from two adjacent blocks in Orissa and is expected to start operations in three years, director N.C. Mathur said on Tuesday. The agreement for the joint venture was signed on Monday.
“We will be able to leverage the strength of the PSU (public sector unit) and the private firms,” Mathur said.
Mahanadi Coalfields would hold 60% stake in the joint venture, while JSW Group and Jindal Stainless would together hold 31%. Reuters
Govt not to revise fuel prices until crude settles
New Delhi: The government will not revise retail prices of petroleum products such as diesel and petrol until global oil prices stabilize, petroleum and natural gas minister Murli Deora said on Tuesday. “We don’t want to burden poor man ... (we’ll) let it stabilize then we will take a decision,” Deora said, referring to global crude prices.
The government has not raised state-administered retail fuel prices this year even though crude has jumped to a series of record highs close to $100 (Rs3,940).
It has been searching for weeks for a way to stem losses at state refiners who are forced to sell widely consumed fuels at discounted rates to protect the poor and help fight inflation. Reuters
States to be charged for power overdrawal
New Delhi: In a step aimed at discouraging excess withdrawal from the grid, the Central Electricity Regulatory Commission has, for the first time, decided to levy congestion charge on states.
The regulator has issued instructions to levy a charge of Rs3 per kilowatt- hour (kWh) for overdrawal, underdrawal as well as over and under-injection for all grid constituents of northern region, where overdrawals are the highest. The order would be effective from 19 November.
The order would remain in force for a period of three months, but the commission may decide to terminate, modify or extend the scheme. PTI
Chennai hospital weighs PE option for expansion
Chennai: Madras Institute of Orthopaedics and Traumatology (Miot), a Chennai-based multi-speciality hospital, is looking to raise money from private equity (PE) players, as it plans to triple its bed capacity to 1,000 over the next five years from 350 currently.
Miot’s expansion plans would require an investment of more than Rs150 crore. The hospital is planning to construct a medical city for which it is acquiring additional land adjacent to its existing facility.
Mallika Mohandas, chairperson of Miot, did not disclose how much investment would be required for the medical city or how much the core promoters would be divesting.
For the hospital expansion, Mohandas said that many private equity players have expressed interest in buying a stake in the business. “We are evaluating various options,” she added. Miot is also planning an initial public offering in the next two-three years. Vidhya Sivaramakrishnan
Jyothy Laboratories IPO price band at Rs620-690
Mumbai: Fast moving consumer goods company, Jyothy Laboratories Ltd, is entering the capital market with an initial public offering (IPO) of 4.4 million equity shares of Rs5 each on 22 November. The issue will close on 27 November.
The price band for the public issue, which would follow the book-building process, has been fixed between Rs620 and Rs690 per equity share.
The offer would constitute 30.52% of the fully diluted paid-up capital of the company post public issue. Staff Writer
Samsung India to spend $100 on new TN unit
Chennai: Electronics major Samsung India would invest $100 million (Rs394 crore) in four years at its new manufacturing facility at Sriperumbudur near Chennai, a top company official said. The company would invest $30 million in the first year to manufacture colour televisions for the domestic and export markets, H. B. Lee, president and CEO, Samsung South-West Asia regional headquarters said on Tuesday.
“We will begin to manufacture home appliances like fully automatic washing machines early next year. The facility will become the global manufacturing hub for Samsung,” he said. PTI
Govt looks for way out on second metro airport
New Delhi: The government would work to find a way to have more than one airport in the country’s metros that are seeing a surge in aircraft traffic, Union civil aviation minister Praful Patel said on Tuesday.
The current norms do not allow for an airport to come up within 150km of an existing functional airport unless an exception is made by the Union cabinet.
“We will have to find a way; how do we permit more than one airport in the metropolitan regions,” he said while replying to a question on whether the government would allow a second airport to come up in Greater Noida near Delhi despite opposition from some, including Delhi International Airport Ltd (DIAL) that runs the Indira Gandhi International Airport in the capital. Tarun Shukla