Friday, February 6, 2009
Short-term package to bail out exporters soon
Short-term package to bail out exporters soon
The Financial Express, February 06, 2009, Page 3
Even as it is hoped that the recently announced stimulus packages would help revive the economy from June onwards, the government on Thursday, while expressing concern over job losses in the exports sector, said a short-term package for exporters hit by the demand slowdown in major markets in the West, would be announced soon.
“Something will come, but it is going to be ad hoc,” a senior official said, adding the package for exporters is likely to be announced before the month end or before the Election Commission’s code of conduct sets in before the general elections expected in April.
On the cards are increasing drawback rates for employment-intensive sectors (like textiles, leather and marine products), making available foreign currency loans to the import-dependent gems and jewellery sector, refunding service tax and extending export obligation period under various schemes (like the export oriented unit scheme, advance licensing scheme and export promotion capital goods scheme), official sources told FE. But what would finally be given to exporters will be a “political call”, they added.
According to commerce ministry estimates, around 15 lakh workers in export units are likely to lose their jobs by March this year. The government is considering proposals to increase the duty drawback rates by an average of 3%. Currently, the weighted average of drawback rates is 6-7%.
Exports in January had shrunk by 22% in dollar terms over last year, the worst showing in this fiscal so far. The downward trend is expected to continue and total exports for 2009-10 are likely to shrink by 5.88% to $160 billion from the $170 billion, likely to be achieved in 2008-09. The initial exports target for 2008-09 was $200 billion.
Meanwhile, the government forecast that the positive impact of the two stimulus packages (announced in December 2008 and January 2009) on the economy would begin to show from June onwards. “By June we will have turned the corner and start to grow. We may not grow at the same pace as we did between 2004 and 2008 but there will be a definite improvement,” commerce secretary GK Pillai said here at a CII function.
The GDP growth rate for this fiscal is pegged at 7% less owing to the global financial crisis, a sharp fall in the country’s exports and weakening domestic demand. The economy had grown at 9% or more during the last three years.
Pillai said the focus of the stimulus packages on infrastructure, housing and automobile sectors was now slowly beginning to show. He said the first indication of improvement in growth would be seen in the housing sector. “We have seen almost overwhelming response to that and people are now slowly starting to invest,” he said.
In the stimulus packages, the government had cut excise duty across the board by 4% and said it would pump in Rs 20,000 crore as additional non-plan expenditure to boost the economy. In the package, tax refunds to exporters through schemes like duty drawback were increased.
Pillai said the farm sector, which accounts for almost a fifth of the GDP, would be the driving force behind the revival of the economy. He said the agriculture sector might grow by over 4% due to the good monsoon this year and the higher remuneration that the farmers are getting now.
“We have about one lakh tobacco farmers in Karnataka and Andhra Pradesh. The prices which they have got for this year is Rs 1,000 crore more than what they have got last year. Similar situation prevails over whether it’s rice farmers, wheat farmers (as they are also getting) same level of additional income,” he said.
The government has hiked the minimum support price for wheat by 8% to Rs 1,080 a quintal and rice to Rs 900 a quintal for the common variety (including bonus) from Rs 745 from last year.
While the Prime Minster’s Economic Advisory Council expects the farm sector to grow only a 2%, the agriculture ministry had in November estimated the sector would register an over 4% growth rate in 2008-09. In 2007-08, the farm sector had grown at a decent 4.5% after growing at a poor 2.5% during the 10th Plan period (2002-07).
•Around 15 lakh workers in export units are likely to lose their jobs by March this year
• Exports in January had shrunk by 22% in dollar terms over last year, the worst showing in this fiscal so far
• The downward trend is expected to continue and total exports for 2009-10 are likely to shrink by 5.88% to $160 billion from the $170 billion, likely to be achieved in 2008-09
• The govt is considering proposals to increase the duty drawback rates by an average of 3%.
• The govt forecast that the positive impact of the two stimulus packages, announced in December 2008 and January 2009, on the economy will begin to show from June onwards
The Financial Express, February 06, 2009, Page 3
Even as it is hoped that the recently announced stimulus packages would help revive the economy from June onwards, the government on Thursday, while expressing concern over job losses in the exports sector, said a short-term package for exporters hit by the demand slowdown in major markets in the West, would be announced soon.
“Something will come, but it is going to be ad hoc,” a senior official said, adding the package for exporters is likely to be announced before the month end or before the Election Commission’s code of conduct sets in before the general elections expected in April.
On the cards are increasing drawback rates for employment-intensive sectors (like textiles, leather and marine products), making available foreign currency loans to the import-dependent gems and jewellery sector, refunding service tax and extending export obligation period under various schemes (like the export oriented unit scheme, advance licensing scheme and export promotion capital goods scheme), official sources told FE. But what would finally be given to exporters will be a “political call”, they added.
According to commerce ministry estimates, around 15 lakh workers in export units are likely to lose their jobs by March this year. The government is considering proposals to increase the duty drawback rates by an average of 3%. Currently, the weighted average of drawback rates is 6-7%.
Exports in January had shrunk by 22% in dollar terms over last year, the worst showing in this fiscal so far. The downward trend is expected to continue and total exports for 2009-10 are likely to shrink by 5.88% to $160 billion from the $170 billion, likely to be achieved in 2008-09. The initial exports target for 2008-09 was $200 billion.
Meanwhile, the government forecast that the positive impact of the two stimulus packages (announced in December 2008 and January 2009) on the economy would begin to show from June onwards. “By June we will have turned the corner and start to grow. We may not grow at the same pace as we did between 2004 and 2008 but there will be a definite improvement,” commerce secretary GK Pillai said here at a CII function.
The GDP growth rate for this fiscal is pegged at 7% less owing to the global financial crisis, a sharp fall in the country’s exports and weakening domestic demand. The economy had grown at 9% or more during the last three years.
Pillai said the focus of the stimulus packages on infrastructure, housing and automobile sectors was now slowly beginning to show. He said the first indication of improvement in growth would be seen in the housing sector. “We have seen almost overwhelming response to that and people are now slowly starting to invest,” he said.
In the stimulus packages, the government had cut excise duty across the board by 4% and said it would pump in Rs 20,000 crore as additional non-plan expenditure to boost the economy. In the package, tax refunds to exporters through schemes like duty drawback were increased.
Pillai said the farm sector, which accounts for almost a fifth of the GDP, would be the driving force behind the revival of the economy. He said the agriculture sector might grow by over 4% due to the good monsoon this year and the higher remuneration that the farmers are getting now.
“We have about one lakh tobacco farmers in Karnataka and Andhra Pradesh. The prices which they have got for this year is Rs 1,000 crore more than what they have got last year. Similar situation prevails over whether it’s rice farmers, wheat farmers (as they are also getting) same level of additional income,” he said.
The government has hiked the minimum support price for wheat by 8% to Rs 1,080 a quintal and rice to Rs 900 a quintal for the common variety (including bonus) from Rs 745 from last year.
While the Prime Minster’s Economic Advisory Council expects the farm sector to grow only a 2%, the agriculture ministry had in November estimated the sector would register an over 4% growth rate in 2008-09. In 2007-08, the farm sector had grown at a decent 4.5% after growing at a poor 2.5% during the 10th Plan period (2002-07).
•Around 15 lakh workers in export units are likely to lose their jobs by March this year
• Exports in January had shrunk by 22% in dollar terms over last year, the worst showing in this fiscal so far
• The downward trend is expected to continue and total exports for 2009-10 are likely to shrink by 5.88% to $160 billion from the $170 billion, likely to be achieved in 2008-09
• The govt is considering proposals to increase the duty drawback rates by an average of 3%.
• The govt forecast that the positive impact of the two stimulus packages, announced in December 2008 and January 2009, on the economy will begin to show from June onwards
S&P sees economic upturn in July
S&P sees economic upturn in July
The Economic Times, February 06, 2009, Page 11
RBI Steps To Help In Recovery; India To Grow At 5.8-6.3% In ’09: Agency
Our Bureau MUMBAI
STANDARD & Poor’s sees a turnaround in India’s economy by mid-July `09 on the back of responses to various monetary policy measures by Reserve Bank of India.
According to Subir Gokarn, S&P chief economist, Asia-Pacific, the lag effects of earlier monetary tightening in 2008 coupled with a region-wide slowdown in exports and capital flows caused a sharp deterioration of corporate performances in Asia-Pacific economies in fourth-quarter 2008. This slowdown will continue into 2009, while strong policy responses provide some hope for 2010.
S&Ps has pegged India’s growth rate at 5.8 to 6.3% for 2009, while China is expected to grow in the range 5.8 to 7%. These forecasts are based on a baseline forecast of 2% decline during 2009 and a positive growth of 2% in 2010. But some of the large Asian economies like Japan, Singapore, Hong Kong Korea and Taiwan are likely to record negative growth in their economies. There is a pattern here, Gokarn pointed. These are the economies which have been dependent on exports. But China and India would benefit more because of the policy stimulus as also Indonesia because their domestic markets are fairly large.
According to Mr Gokarn, lags may vary depending on circumstances, but a period of about six months is not unreasonable. By this measure, and everything else remaining the same, we should have seen the first signs of the impact around September `09. Since the tightening continued until July or a bit after, we should expect its impact to persist until at least the first quarter of 2009. `When we look back at the region’s dynamics over the past several months, there is another possible explanation for the sharp dip in the fourth quarter of 2008. Inflation has receded so sharply in recent months that the focus has now shifted to the potential for deflation. Scarcely a few months ago—from about March to July 2008—inflation in the region was soaring to very uncomfortable levels.
Although inflation was driven by commodity prices—food, minerals and energy—central banks responded by tightening monetary policy. This was due to concerns about the persistence of price shocks and the inflationary spiral that they could trigger. For about five months, policy rates and liquidity ratios were steadily increased, even as news about the global financial system became increasingly negative. Inflation was seen as a more significant risk than recession.
Tata Steel, Corus ratings lowered
S&P's Ratings Services on Thursday lowered its long term corporate credit rating on Tata Steel to 'BB-' from 'BB', and on Corus to 'B+' from 'BB-', keeping the outlook for both ratings negative, reports Our Bureau from Mumbai. Corus' £3.67 billion senior secured debt was also lowered to 'BB', from 'BB+', and placed on CreditWatch with negative implications, Standard & Poor's said.
The Economic Times, February 06, 2009, Page 11
RBI Steps To Help In Recovery; India To Grow At 5.8-6.3% In ’09: Agency
Our Bureau MUMBAI
STANDARD & Poor’s sees a turnaround in India’s economy by mid-July `09 on the back of responses to various monetary policy measures by Reserve Bank of India.
According to Subir Gokarn, S&P chief economist, Asia-Pacific, the lag effects of earlier monetary tightening in 2008 coupled with a region-wide slowdown in exports and capital flows caused a sharp deterioration of corporate performances in Asia-Pacific economies in fourth-quarter 2008. This slowdown will continue into 2009, while strong policy responses provide some hope for 2010.
S&Ps has pegged India’s growth rate at 5.8 to 6.3% for 2009, while China is expected to grow in the range 5.8 to 7%. These forecasts are based on a baseline forecast of 2% decline during 2009 and a positive growth of 2% in 2010. But some of the large Asian economies like Japan, Singapore, Hong Kong Korea and Taiwan are likely to record negative growth in their economies. There is a pattern here, Gokarn pointed. These are the economies which have been dependent on exports. But China and India would benefit more because of the policy stimulus as also Indonesia because their domestic markets are fairly large.
According to Mr Gokarn, lags may vary depending on circumstances, but a period of about six months is not unreasonable. By this measure, and everything else remaining the same, we should have seen the first signs of the impact around September `09. Since the tightening continued until July or a bit after, we should expect its impact to persist until at least the first quarter of 2009. `When we look back at the region’s dynamics over the past several months, there is another possible explanation for the sharp dip in the fourth quarter of 2008. Inflation has receded so sharply in recent months that the focus has now shifted to the potential for deflation. Scarcely a few months ago—from about March to July 2008—inflation in the region was soaring to very uncomfortable levels.
Although inflation was driven by commodity prices—food, minerals and energy—central banks responded by tightening monetary policy. This was due to concerns about the persistence of price shocks and the inflationary spiral that they could trigger. For about five months, policy rates and liquidity ratios were steadily increased, even as news about the global financial system became increasingly negative. Inflation was seen as a more significant risk than recession.
Tata Steel, Corus ratings lowered
S&P's Ratings Services on Thursday lowered its long term corporate credit rating on Tata Steel to 'BB-' from 'BB', and on Corus to 'B+' from 'BB-', keeping the outlook for both ratings negative, reports Our Bureau from Mumbai. Corus' £3.67 billion senior secured debt was also lowered to 'BB', from 'BB+', and placed on CreditWatch with negative implications, Standard & Poor's said.
Low-cost and quality: The buzzwords
Low-cost and quality: The buzzwords
The Economic Times, Realty, February 06, 2009, Page 25
Low-cost and quality housing are the buzzwords ruling the market in today's day and time. ET Realty explores how Delhi and the National Capital Region is dealing with it
Prabhakar Sinha
After a long time, real estate market has turned into a buyers' market. This has lent a great opportunity to end users to select a suitable home at affordable prices. And, taking cue from the market, developers have been forced to respond to buyers' requirements.
The buzzword in the market today is 'affordable housing' - quality homes at affordable prices. This seems the only way the sector can fight the slowdown in economy. Anshuman Magazine, MD of C B Richard Ellis (South Asia), says that while there is a huge unmet demand in the affordable segment of housing sector, the premium segment is witnessing a condition of oversupply.
The unreasonably high focus on the premium segment of housing sector by a cross-section of developers affected the construction industry - blocking capital of developers saddled with large premium projects. On the other hand, there is a huge demand for affordable housing in the price range of Rs 18 lakh to Rs 30 lakh.
Because of the slowdown in economy, prices in real estate have already fallen by around 15% in the ongoing projects. At the same time, since the slowdown has helped bring down commodities prices as well, the cost of construction has also come down in the last one year. The prices of cement and steel, which consti tute a major chunk of construction costs, have declined substantially. While steel prices have fallen by over 40%, cement prices have come down by around 20%.
Because of stiff competition, developers have passed on the benefit of fall in cost of construction to end users. Now, the developers have launched projects, from Rs 1,800 per sq ft in Ghaziabad on National Highway 58 to Rs 2,100 per sq ft on NH-24 in Crossing Republic, and Rs 2,400 per sq ft in Indirapuram in Ghaziabad, Gurgaon and Faridabad. Even in the premium areas in the National Capital Region of Noida and Gurgaon, developers are launching new projects at around Rs 2,700 per sq ft. This is only one part of the story. As authorities in Noida and Ghaziabad increased the number of units that can be constructed on a given area, developers have reduced the size of apartments. This has helped reduce the cost of apartments in, in a big way. Developers have reduced apartments' size by up to 30% to make them affordable for the middle class. The size of an average two-bed room apartment has come down from 1,500 sq ft to around 1,200 sq ft. In some cases, developers are constructing two-bedroom apartment of 1,000 sq ft. Similarly, the size of a typical three-bedroom house has come down from 2,000 sq ft to around 1,500 sq ft. This has brought a sea change in prices of apartments in the Delhi-NCR. For instance, earlier, an apartment in Noida was being sold at Rs 3,600 per sq ft to Rs 4,200 per sq ft, in the guise of a premium product. At the same time, the size of a three-bedroom apartment used to be around 2,000 sq ft. That means the cost of a three-bedroom apartment in Noida used to vary between Rs 72 lakh to Rs one crore. But now, with the change in market conditions, a new apartment in the same zone is being offered at around Rs 2,700 per sq ft. Besides, as the size of the apartment has been reduced to around 1,500 per sq ft, the average price of a three-bedroom apartment has come down to around Rs 43 lakh. Clearly, the price of that 'sweet home' has come down by almost 50% in Noida. The same is true in other parts of the town also. However, new apartments will not have the same specifications as those that developers offered in the earlier projects. The new projects may not have Italian marble and Jacuzzi, for instance, but they give value for money. They will have all the other ingredients like 24-hour power back up, top-class security system, swimming pools and other amenities.
FOCAL POINT
Developers have reduced apartments' size by up to 30%
The size of an average 2-bed room apartment has come down from 1,500 sq ft to around 1,200 sq ft. Some developers are constructing 2-bedroom apartment of 1,000 sq ft. as well
The size of a typical 3-bedroom house has come down from 2,000 sq ft to around 1,500 sq ft.
The Economic Times, Realty, February 06, 2009, Page 25
Low-cost and quality housing are the buzzwords ruling the market in today's day and time. ET Realty explores how Delhi and the National Capital Region is dealing with it
Prabhakar Sinha
After a long time, real estate market has turned into a buyers' market. This has lent a great opportunity to end users to select a suitable home at affordable prices. And, taking cue from the market, developers have been forced to respond to buyers' requirements.
The buzzword in the market today is 'affordable housing' - quality homes at affordable prices. This seems the only way the sector can fight the slowdown in economy. Anshuman Magazine, MD of C B Richard Ellis (South Asia), says that while there is a huge unmet demand in the affordable segment of housing sector, the premium segment is witnessing a condition of oversupply.
The unreasonably high focus on the premium segment of housing sector by a cross-section of developers affected the construction industry - blocking capital of developers saddled with large premium projects. On the other hand, there is a huge demand for affordable housing in the price range of Rs 18 lakh to Rs 30 lakh.
Because of the slowdown in economy, prices in real estate have already fallen by around 15% in the ongoing projects. At the same time, since the slowdown has helped bring down commodities prices as well, the cost of construction has also come down in the last one year. The prices of cement and steel, which consti tute a major chunk of construction costs, have declined substantially. While steel prices have fallen by over 40%, cement prices have come down by around 20%.
Because of stiff competition, developers have passed on the benefit of fall in cost of construction to end users. Now, the developers have launched projects, from Rs 1,800 per sq ft in Ghaziabad on National Highway 58 to Rs 2,100 per sq ft on NH-24 in Crossing Republic, and Rs 2,400 per sq ft in Indirapuram in Ghaziabad, Gurgaon and Faridabad. Even in the premium areas in the National Capital Region of Noida and Gurgaon, developers are launching new projects at around Rs 2,700 per sq ft. This is only one part of the story. As authorities in Noida and Ghaziabad increased the number of units that can be constructed on a given area, developers have reduced the size of apartments. This has helped reduce the cost of apartments in, in a big way. Developers have reduced apartments' size by up to 30% to make them affordable for the middle class. The size of an average two-bed room apartment has come down from 1,500 sq ft to around 1,200 sq ft. In some cases, developers are constructing two-bedroom apartment of 1,000 sq ft. Similarly, the size of a typical three-bedroom house has come down from 2,000 sq ft to around 1,500 sq ft. This has brought a sea change in prices of apartments in the Delhi-NCR. For instance, earlier, an apartment in Noida was being sold at Rs 3,600 per sq ft to Rs 4,200 per sq ft, in the guise of a premium product. At the same time, the size of a three-bedroom apartment used to be around 2,000 sq ft. That means the cost of a three-bedroom apartment in Noida used to vary between Rs 72 lakh to Rs one crore. But now, with the change in market conditions, a new apartment in the same zone is being offered at around Rs 2,700 per sq ft. Besides, as the size of the apartment has been reduced to around 1,500 per sq ft, the average price of a three-bedroom apartment has come down to around Rs 43 lakh. Clearly, the price of that 'sweet home' has come down by almost 50% in Noida. The same is true in other parts of the town also. However, new apartments will not have the same specifications as those that developers offered in the earlier projects. The new projects may not have Italian marble and Jacuzzi, for instance, but they give value for money. They will have all the other ingredients like 24-hour power back up, top-class security system, swimming pools and other amenities.
FOCAL POINT
Developers have reduced apartments' size by up to 30%
The size of an average 2-bed room apartment has come down from 1,500 sq ft to around 1,200 sq ft. Some developers are constructing 2-bedroom apartment of 1,000 sq ft. as well
The size of a typical 3-bedroom house has come down from 2,000 sq ft to around 1,500 sq ft.
AVAILING A HOME LOAN NOT EASY YET
AVAILING A HOME LOAN NOT EASY YET
The Economic Times, Realty, February 06, 2009, Page 25
Despite fall in interest rates, people are still finding it hard to take home loans. Banks now insist that borrowers contribute 20-30% of the value of the property upfront, instead of 10-15% earlier. As the finance proportion of banks has come down from 85-90% of the property value to 70-80%, borrowers (mainly the younger lot) are finding it difficult to go for a home loan. SBI, which has brought down its home loan rate to 8%, lends only 80% of the value of house if the requirement is between Rs 20 lakh and Rs 75 lakh. If loan is more than Rs 75 lakh, the bank lends only 75%. Punjab National Bank (PNB) lends 75% of loan of above Rs 20 lakh. Other PSU banks like Union Bank and UCO Bank only lend up to 80% and private sector banks like ICICI Bank ask for 20-30% buyer's contribution.
The Economic Times, Realty, February 06, 2009, Page 25
Despite fall in interest rates, people are still finding it hard to take home loans. Banks now insist that borrowers contribute 20-30% of the value of the property upfront, instead of 10-15% earlier. As the finance proportion of banks has come down from 85-90% of the property value to 70-80%, borrowers (mainly the younger lot) are finding it difficult to go for a home loan. SBI, which has brought down its home loan rate to 8%, lends only 80% of the value of house if the requirement is between Rs 20 lakh and Rs 75 lakh. If loan is more than Rs 75 lakh, the bank lends only 75%. Punjab National Bank (PNB) lends 75% of loan of above Rs 20 lakh. Other PSU banks like Union Bank and UCO Bank only lend up to 80% and private sector banks like ICICI Bank ask for 20-30% buyer's contribution.
Citi arm to sell 5.89% BPTP stake
The Economic Times, February 06, 2009, Page 5
Ravi Teja Sharma NEW DELHI
CITIGROUP Property Investors (CPI), the real estate arm of Citigroup, is selling its entity-level investment in Delhi-based developer BPTP and is looking at SPV-level investments in the latter’s various projects.
CPI has a 5.89% stake in BPTP, which it had picked up in 2007 for Rs 322.50 crore but this stake does not give much control to them. According to a source working on the deal, and who did not want to be quoted, CPI is currently carrying out due diligence of some of BPTP’s projects in Gurgaon and Faridabad. The idea is to pick up controlling stakes in these projects, he added.
The promoters of BPTP are expected to buyback the 5.89% stake of CPI. Responding to an e-mail query from ET, CPI said it does not comment on speculations about specific transactions. “Our comment is ‘no comment’.” The source said: “CPI is looking at swapping its investment from the entity level to SPVs to gain more control.” CPI has invested in projects of BPTP in the past. It had bought a 40% stake in each of the four Special Economic Zones (SEZs) of BPTP for close to Rs 640 crore in April 2008.
BPTP had used the money raised to pay the first installment (Rs 1,300 crore) of the Rs 5,006-crore Noida land deal, which it bagged in March 2008. The economic slowdown has had an impact on the 95-acre Noida project and after the Noida Authority announced that developers had the option of stretching payment deadlines and renegotiating land areas, BPTP is learnt to have put in an application with the authority to allot them land worth the money already paid by them, minus the 10% penalty, as stipulated. BPTP had bagged the land at Noida after it outbid DLF, Omaxe, and Ansal API. The company has plans to build a commercial destination that would have offices, hotel and retail space. In July 2008, JP Morgan Chase had also invested Rs 250 crore in BPTP for a 3% shareholding.
Downturn may trigger reverse migration
Downturn may trigger reverse migration
The Economic Times, February 06, 2009, Page 4
Govts Under Pressure To Save Jobs Of Locals, May Target Expats
Sanjeev Choudhary & Shreya Biswas NEW DELHI
THE global crisis is slowly turning into a migration crisis with thousands of expat Indians likely to return home from developed and emerging geographies in the West, Southeast Asia and West Asia where governments are under pressure to salvage jobs of the native labour force.
A serious downturn in these markets, which has already taken its toll on millions of jobs across the globe, now threatens to give rise to artificial barriers that restricts mobility across borders. “Increasing pressure to employ the local workforce is gaining ground across world markets,” says Delhi-based think tank Indian Council for Research on International Economic Relations (ICRIER) director and chief executive Rajiv Kumar.
There are instances galore of a downturn and protectionism going hand in hand. The UK government is under pressure from striking British workers against employing foreign workers, mainly from continental Europe. The US lawmakers too are finding themselves confronted with the pressure to trim expat workforce levels at Microsoft and the Saudi government has asked companies to retrench imported labour. “Labour mobility will be determined by the political economy,” says Infosys HR director TV Mohan Das Pai. “It’s natural that every country will try to safeguard their own workers’ interests.” And this, he feels, will increasingly happen across countries.
A back-of-the-envelope calculation shows that close to 50,000 software professionals from India work abroad for different duration. However, the future of these jobs may be at stake with reports of US senators Dick Durbin and Chuck Grassley planning to introduce legislation that makes it mandatory for Indian outsourcing firms such as Tata Consultancy Services, Infosys and Wipro to hire American employees before they file for H-1B visas for their Indian employees. Back home things are no different. Under pressure from politicians and local staff, Jet Airways is showing the door to several expat pilots. “History is witness that whenever countries try to prop up protectionism, it intensifies depression,”commerce and industry minister Kamal Nath told participants at the World Economic Forum meet in Davos recently. Many other government and business leaders, who gathered at Davos last week, echoed Mr Nath’s point of view, warning against the rising tide of protectionism.
Domestic concerns over job losses could lead to the erection of new barriers to trade and fuel further job cuts. India’s export sector is already reeling under the massive demand destruction in the developed world and industry lobbies claim that attrition levels have climbed close to a million as a result of this.
The IMF last week pegged global economic growth at 0.5% this year, the slowest since World War II while ILO has warned that as many as 50 million people could be rendered jobless in 2009. “While it’s hard to predict the outcome of a recession of this magnitude, fears are rife that the number of US visas being issued will be curtailed,” says Crisil principal economist Dharmakirti Joshi.
Migration to the Gulf, which employs the largest number of Indians outside the country, has helped several families tide over poverty in the past few decades. There is no centralised data of the number of Indians working abroad, but the ministry of labour web site suggests that at least 30 lakh Indians, mainly construction workers and nurses, are currently employed in the Gulf. As the number of migrant Indian workers swelled over the years, overseas remittances added to the country’s forex kitty and afforded the government comfort in framing economic policy. An unceremonious homecoming of thousands of white and blue-collared non-resident Indians would reduce overseas remittances and impact foreign exchange reserves. “One could expect remittances to come down going forward,” points out Mr Kumar of ICRIER.
Countries in the Middle East or Southeast Asia, where migrants comprise a major chunk of their population, could witness lower economic activity on account of reverse migration. According to research reports by several i-banks, Singapore and Persian Gulf countries, could see their total population dwindle by as much as 10%, jeopardising their overall economic activity. And migrants’ returning to India in droves could put further pressure on the local job market.
THE HOMECOMING
Domestic concerns over job losses could lead to new trade barriers and fuel further job cuts
The homecoming would reduce overseas remittance and impact forex reserves too
50,000 Indian software pros work abroad for different duration
In India too, Jet Airways is showing door to many expat pilots
The Economic Times, February 06, 2009, Page 4
Govts Under Pressure To Save Jobs Of Locals, May Target Expats
Sanjeev Choudhary & Shreya Biswas NEW DELHI
THE global crisis is slowly turning into a migration crisis with thousands of expat Indians likely to return home from developed and emerging geographies in the West, Southeast Asia and West Asia where governments are under pressure to salvage jobs of the native labour force.
A serious downturn in these markets, which has already taken its toll on millions of jobs across the globe, now threatens to give rise to artificial barriers that restricts mobility across borders. “Increasing pressure to employ the local workforce is gaining ground across world markets,” says Delhi-based think tank Indian Council for Research on International Economic Relations (ICRIER) director and chief executive Rajiv Kumar.
There are instances galore of a downturn and protectionism going hand in hand. The UK government is under pressure from striking British workers against employing foreign workers, mainly from continental Europe. The US lawmakers too are finding themselves confronted with the pressure to trim expat workforce levels at Microsoft and the Saudi government has asked companies to retrench imported labour. “Labour mobility will be determined by the political economy,” says Infosys HR director TV Mohan Das Pai. “It’s natural that every country will try to safeguard their own workers’ interests.” And this, he feels, will increasingly happen across countries.
A back-of-the-envelope calculation shows that close to 50,000 software professionals from India work abroad for different duration. However, the future of these jobs may be at stake with reports of US senators Dick Durbin and Chuck Grassley planning to introduce legislation that makes it mandatory for Indian outsourcing firms such as Tata Consultancy Services, Infosys and Wipro to hire American employees before they file for H-1B visas for their Indian employees. Back home things are no different. Under pressure from politicians and local staff, Jet Airways is showing the door to several expat pilots. “History is witness that whenever countries try to prop up protectionism, it intensifies depression,”commerce and industry minister Kamal Nath told participants at the World Economic Forum meet in Davos recently. Many other government and business leaders, who gathered at Davos last week, echoed Mr Nath’s point of view, warning against the rising tide of protectionism.
Domestic concerns over job losses could lead to the erection of new barriers to trade and fuel further job cuts. India’s export sector is already reeling under the massive demand destruction in the developed world and industry lobbies claim that attrition levels have climbed close to a million as a result of this.
The IMF last week pegged global economic growth at 0.5% this year, the slowest since World War II while ILO has warned that as many as 50 million people could be rendered jobless in 2009. “While it’s hard to predict the outcome of a recession of this magnitude, fears are rife that the number of US visas being issued will be curtailed,” says Crisil principal economist Dharmakirti Joshi.
Migration to the Gulf, which employs the largest number of Indians outside the country, has helped several families tide over poverty in the past few decades. There is no centralised data of the number of Indians working abroad, but the ministry of labour web site suggests that at least 30 lakh Indians, mainly construction workers and nurses, are currently employed in the Gulf. As the number of migrant Indian workers swelled over the years, overseas remittances added to the country’s forex kitty and afforded the government comfort in framing economic policy. An unceremonious homecoming of thousands of white and blue-collared non-resident Indians would reduce overseas remittances and impact foreign exchange reserves. “One could expect remittances to come down going forward,” points out Mr Kumar of ICRIER.
Countries in the Middle East or Southeast Asia, where migrants comprise a major chunk of their population, could witness lower economic activity on account of reverse migration. According to research reports by several i-banks, Singapore and Persian Gulf countries, could see their total population dwindle by as much as 10%, jeopardising their overall economic activity. And migrants’ returning to India in droves could put further pressure on the local job market.
THE HOMECOMING
Domestic concerns over job losses could lead to new trade barriers and fuel further job cuts
The homecoming would reduce overseas remittance and impact forex reserves too
50,000 Indian software pros work abroad for different duration
In India too, Jet Airways is showing door to many expat pilots
UPA to focus on rural jobs in Interim Budget
UPA to focus on rural jobs in Interim Budget
Business Standard, February 06, 2009, Page 1
Business Standard, February 06, 2009, Page 1
Pro-poor focus in railway budget, too, as country heads for elections.
Saubhadro Chatterji / New Delhi
Employment generation in the midst of a global meltdown will be the central idea of the Interim Budget that the United Progressive Alliance (UPA) will present on February 16 just ahead of the general elections.
Among other proposals to give the job market a leg-up, Finance Minister Pranab Mukherjee’s Interim Budget speech is likely to see larger fund allocations to skill development programmes in the rural sector and subsidies for training schemes for one member of rural Below Poverty Line (BPL) families (in which adult members of the family earn less than Rs 10 a day). Under this scheme, the government will provide a subsidy to companies for training on condition that the member of the BPL family is given a job once he completes the programme.
A pilot skill development project is already in place in some states. To roll it out fully, as the government intends, the cost of the project over the next eight years would be Rs 2,26,400 crore or an average of Rs 28,300 crore a year. The budgetary allocation for the pilot project was Rs 5,650 crore.
Top government sources have made it clear that the Interim Budget will not be a routine statement of accounts for immediate government expenses. Instead, the Union government will use it as an opportunity to announce a slew of “pro-people policy measures” just ahead of general elections.
Union Home Minister P Chidambaram said there was no “constitutional bar” to announcing policy measures in an Interim Budget but added that he couldn’t say what the government was planning.
Top sources indicated that the social sector is also likely to get high priority with large fund allocations likely for agriculture, health, human resource development and rural development. UPA chairperson Sonia Gandhi is keen to make the achievements in the social sector a key plank in the upcoming polls.
Railway Minister Lalu Prasad, too, is expected to announce some more “pro-poor” policies when he presents his budget on February 13. He is also likely to announce new train services in different parts of the country.
Officials suggest that the general practice is to present the full budget within 75 days of the Interim Budget. But the UPA will use Article 85 (1) of the constitution that says the next Parliament session has to be called within 180 days (six months) of the termination of the previous session to announce these policies ahead of the elections.
The Congress-led UPA also feels that the Election Commission is likely to announce the election schedule soon after the session ends (February 26) which will leave little time for the government to announce concessions for voters since the pre-election model code of conduct will kick in. So, the ruling coalition is eying this Interim Budget as its last major opportunity to woo the electorate.
UPA managers point out that ahead of the 2004 general elections, the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) had also presented an Interim Budget full of pro-people sops. Then Railway Minister Nitish Kumar had even announced new trains in his Interim Railway Budget.
Later, UPA Finance Minister P Chidambaram and Railway Minister Lalu Prasad had presented their own budgets with more concessions to voters. The Congress leadership wishes to follow the same political practice.
Employment generation in the midst of a global meltdown will be the central idea of the Interim Budget that the United Progressive Alliance (UPA) will present on February 16 just ahead of the general elections.
Among other proposals to give the job market a leg-up, Finance Minister Pranab Mukherjee’s Interim Budget speech is likely to see larger fund allocations to skill development programmes in the rural sector and subsidies for training schemes for one member of rural Below Poverty Line (BPL) families (in which adult members of the family earn less than Rs 10 a day). Under this scheme, the government will provide a subsidy to companies for training on condition that the member of the BPL family is given a job once he completes the programme.
A pilot skill development project is already in place in some states. To roll it out fully, as the government intends, the cost of the project over the next eight years would be Rs 2,26,400 crore or an average of Rs 28,300 crore a year. The budgetary allocation for the pilot project was Rs 5,650 crore.
Top government sources have made it clear that the Interim Budget will not be a routine statement of accounts for immediate government expenses. Instead, the Union government will use it as an opportunity to announce a slew of “pro-people policy measures” just ahead of general elections.
Union Home Minister P Chidambaram said there was no “constitutional bar” to announcing policy measures in an Interim Budget but added that he couldn’t say what the government was planning.
Top sources indicated that the social sector is also likely to get high priority with large fund allocations likely for agriculture, health, human resource development and rural development. UPA chairperson Sonia Gandhi is keen to make the achievements in the social sector a key plank in the upcoming polls.
Railway Minister Lalu Prasad, too, is expected to announce some more “pro-poor” policies when he presents his budget on February 13. He is also likely to announce new train services in different parts of the country.
Officials suggest that the general practice is to present the full budget within 75 days of the Interim Budget. But the UPA will use Article 85 (1) of the constitution that says the next Parliament session has to be called within 180 days (six months) of the termination of the previous session to announce these policies ahead of the elections.
The Congress-led UPA also feels that the Election Commission is likely to announce the election schedule soon after the session ends (February 26) which will leave little time for the government to announce concessions for voters since the pre-election model code of conduct will kick in. So, the ruling coalition is eying this Interim Budget as its last major opportunity to woo the electorate.
UPA managers point out that ahead of the 2004 general elections, the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) had also presented an Interim Budget full of pro-people sops. Then Railway Minister Nitish Kumar had even announced new trains in his Interim Railway Budget.
Later, UPA Finance Minister P Chidambaram and Railway Minister Lalu Prasad had presented their own budgets with more concessions to voters. The Congress leadership wishes to follow the same political practice.
Hiranandani faces penalty, denies land misuse charge
Hiranandani faces penalty, denies land misuse charge
Hindu Business Line, February 06, 2009, Page 17
S. Shanker
In what could be the highest penalty imposed on a builder for alleged gross violation of land misuse, the Mumbai Metropolitan Region Development Authority (MMRDA) has recommended to the state urban development department that developer Mr Niranjan Hiranandani be made to pay a penalty of Rs 2,000 crore.
The metro authority has charged the builder with constructing large apartments instead of the 40 sq m and 80 sq m flats, for which permission was accorded. The second charge is building commercial complexes in violation of the original agreement and the third, an add-on penalty component, for utilisation of transfer of development rights.
Though the developer is yet to receive a notice of levy for the amount, Mr Hiranandani has denied the charge in totality, stating that the state agency was unaware that no development in the area had been done without obtaining the necessary permissions and sanctions of government departments.
He said development rules and notifications, since the 23-year-old Powai Area Development Scheme, comprising 92.2 hectares, was signed, had undergone changes and consequently implemented after sanctions during different periods. The MMRDA has used the current ready reckoner rates to compute the alleged violations to arrive at the penal sum of Rs 1,993 crore.
The Powai Area Development Scheme was not classified under any scheme for weaker section / lower income group of the society, he said adding that a Bombay High Court decision in 2005 stated that the development at Powai was not for any weaker section / lower income group of the society and the same does not apply to the said lands.
On increase in the size of tenements, he said the scheme came after a tripartite agreement was signed on November 19, 1986. Under the agreement, there was a condition restricting sizes of the tenements. However, the MMRDA permitted the amalgamation of tenements as per its order dated August 18, 1989.
The larger premises were constructed utilising transfer of development rights subsequently, when the TDR concept was introduced in 1991. During the period when the tripartite agreement was executed, the development by TDR was not available.
Petitions
The Bombay High Court is hearing public interest litigation petitions pertaining to the project development.
The MMRDA has also recommended that all concessions extended to the builder be withdrawn, to which Mr Hiranandani said he had not availed himself of any concessions thus far.
Sebi mulls external agency to keep tab on internal auditors
Sebi mulls external agency to keep tab on internal auditors
Business Standard, February 06, 2009, Section II, Page 1
BS REPORTER Mumbai, 5 February
In the wake of rising cases of embezzlement in corporate accounting, the Securities and Exchange Board of India (Sebi) is weighing the option of mandating companies to appoint external agencies to monitor their internal auditors.
The market regulator today said that it was examining the need to tweak existing regulations in order to avoid any more breach of corporate governance laws in future.
Addressing a seminar on corporate governance, organised by the Confederation of Indian Industries (CII), Sebi Chairman C B Bhave said the regulator’s investigation was trying to find out if there was any systemic problem that might have led to the fiasco at Satyam Computer Services, India’s fourth-largest IT and software services firm.
The Sebi chief said the Satyam fiasco had raised several questions on corporate governance and the market regulator was examining if internal auditors should report directly to their boards rather than to their chief financial officers (CFOs). The regulator was also mulling the option of rotating the role of auditors of a company to ensure more transparency in financial accounting, he said, adding that a consultative paper on this would be released shortly.
According to Bhave, Sebi was also examining the role of independent directors in companies’ internal audits and possibilities of giving more rights to large non-promoter shareholders in audit committee selections.
In order to implement peer-review mechanism, Bhave said, “We are examining the working papers of all listed companies and, based on that, we will determine whether we need to overhaul the system.” Commenting on the Satyam fraud, he said, “We need to find out the culprits and bring them to justice… Any incident like Satyam results in changes in laws and governance, and we need to see how fast we tackle such issues. Without taking any hasty step, we have to strike abalance between regulatory interventions and growth of corporate India.” Explaining Sebi actions in the Satyam scandal, Bhave said the new board (of Satyam) that was formed in just two days had started the process of re-stating the accounts and would come out with results shortly.
“While the initial response of the regulators to the Satyam case has been prompt, we need to ensure that the investigation is carried out with speed and efficiency in the medium term,” Bhave said.
On the Sebi concept of having an external agency to monitor the operations of company auditors, Tata Sons Director J J Irani felt that such an agency should be appointed only if the independent directors of a company questioned the transparency of internal auditors.
Some industry experts also disagreed even on the Sebi proposal for rotating the role of auditors in a company. “Rotation of auditors is not appropriate as it may not guarantee that a newly-appointed team of auditors will not fail to comply with the required governance standards. We may look at introducing supervision on all auditors in India through a registration process,” said P R Ramesh, National Director, Audit and Enterprise Risk Services, Deloitte Haskins & Sells.
“Rotation of auditors does not solve the problem of frauds in audit committees, and we do not fully support the concept of hiring external agencies to audit the auditors. The solution to this problem is bringing in regulatory enforcements and appropriately punish errant auditors,” said ICRA Vice-Chairman and Group CEO P K Choudhury.
Business Standard, February 06, 2009, Section II, Page 1
BS REPORTER Mumbai, 5 February
In the wake of rising cases of embezzlement in corporate accounting, the Securities and Exchange Board of India (Sebi) is weighing the option of mandating companies to appoint external agencies to monitor their internal auditors.
The market regulator today said that it was examining the need to tweak existing regulations in order to avoid any more breach of corporate governance laws in future.
Addressing a seminar on corporate governance, organised by the Confederation of Indian Industries (CII), Sebi Chairman C B Bhave said the regulator’s investigation was trying to find out if there was any systemic problem that might have led to the fiasco at Satyam Computer Services, India’s fourth-largest IT and software services firm.
The Sebi chief said the Satyam fiasco had raised several questions on corporate governance and the market regulator was examining if internal auditors should report directly to their boards rather than to their chief financial officers (CFOs). The regulator was also mulling the option of rotating the role of auditors of a company to ensure more transparency in financial accounting, he said, adding that a consultative paper on this would be released shortly.
According to Bhave, Sebi was also examining the role of independent directors in companies’ internal audits and possibilities of giving more rights to large non-promoter shareholders in audit committee selections.
In order to implement peer-review mechanism, Bhave said, “We are examining the working papers of all listed companies and, based on that, we will determine whether we need to overhaul the system.” Commenting on the Satyam fraud, he said, “We need to find out the culprits and bring them to justice… Any incident like Satyam results in changes in laws and governance, and we need to see how fast we tackle such issues. Without taking any hasty step, we have to strike abalance between regulatory interventions and growth of corporate India.” Explaining Sebi actions in the Satyam scandal, Bhave said the new board (of Satyam) that was formed in just two days had started the process of re-stating the accounts and would come out with results shortly.
“While the initial response of the regulators to the Satyam case has been prompt, we need to ensure that the investigation is carried out with speed and efficiency in the medium term,” Bhave said.
On the Sebi concept of having an external agency to monitor the operations of company auditors, Tata Sons Director J J Irani felt that such an agency should be appointed only if the independent directors of a company questioned the transparency of internal auditors.
Some industry experts also disagreed even on the Sebi proposal for rotating the role of auditors in a company. “Rotation of auditors is not appropriate as it may not guarantee that a newly-appointed team of auditors will not fail to comply with the required governance standards. We may look at introducing supervision on all auditors in India through a registration process,” said P R Ramesh, National Director, Audit and Enterprise Risk Services, Deloitte Haskins & Sells.
“Rotation of auditors does not solve the problem of frauds in audit committees, and we do not fully support the concept of hiring external agencies to audit the auditors. The solution to this problem is bringing in regulatory enforcements and appropriately punish errant auditors,” said ICRA Vice-Chairman and Group CEO P K Choudhury.
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