New Delhi: The government today pegged the economic growth rate at a ‘conservative’ 8.75% for this fiscal, and cautioned against contagion effects of the financial crisis in Europe which accounts for 36% of India's exports, reports PTI.
Improvement in exports is essential to bring down current account deficit, which is pegged at 3% of the gross domestic product (GDP) or up to $56 billion and is not sustainable for long term, finance minister Pranab Mukherjee said at the annual general meeting of Associated Chambers of Commerce and Industry (Assocham).
Current account deficit (CAD) represents movement of money out of a country on net basis, barring capital flows.
CAD surged three-fold to $13.7 billion in the first quarter of this fiscal over the same period last year due to higher imports because of economic recovery and larger payments overseas for certain services.
“Current account deficit would be around 3% of GDP and in absolute terms, perhaps around $55-$56 billion (this fiscal) and cannot be maintained for a very long period of time,” Mr Mukherjee said.
“Therefore, recovery of exports is absolutely necessary and those are linked with global developments,” he added.
Mr Mukherjee said 36% of India’s exports go to Europe and if the sovereign debt crisis in Europe turns contagious and spreads, the country will not be able to immediately find new markets.
“Unless there is robust recovery in Europe, immediately we cannot shift our market and improve international trade scenario,” Mr Mukherjee said.
After engulfing Greece, Portugal and Spain, the financial mess has unfolded in Ireland.
Mr Mukherjee also highlighted the need to work together with other countries to build pressure against protectionist measures.
“We cannot live in cocoon, we cannot live simply by raising protectionist measures,” he said.
The finance minister was, however, confident that the economy would grow by 8.75% this fiscal, a conservative estimate given a healthy 8.9% growth in the first half.
“I am a bit conservative so I would be happy if it is 8.75%,” he said.
This estimate is not only lower than what was witnessed in the first half, but also the upper-end of over 9% forecast in the Mid Year Analysis, tabled by the finance minister himself.
Mr Mukherjee said because of the stimulus, fiscal deficit widened to over 6.4% last fiscal, but exuded confidence that it would be pruned to 5.5% this fiscal, as is projected in the budget.
New Delhi: The telecom industry has come out in support of new communication and IT minister Kapil Sibal for his observation that the sector should not be viewed as source of revenue for the finance ministry, reports PTI.
“This sector is heavily taxed. We pay nearly 26% of our revenues to the government in form of one tax or the other. The ministry is taking a different perception about the industry after few years. We are looking forward to work with him,” Peter Martin, MD and CEO, Vodafone-Essar, said.
Vodafone alone would be paying Rs18,000 crore to the government this fiscal which includes levies as well as fees for third generation (3G) spectrum, he said.
Commenting on the present day debate on whether spectrum should be auctioned or not, Mr Sibal had yesterday said, “We must ensure that the industry had enough money to invest in the sector.
If price of spectrum is high then you (service providers) will not be able to provide low tariffs.”
Mr Martin also raised the issue of level playing field.
There are some anomalies over spectrum usage fee charged from an ordinary operator vis-à-vis dual-technology players.
A dual-technology player with 4 MHz of spectrum each in CDMA and GSM technologies ends up paying lesser charges to the government compared to a GSM operators holding 8 MHz of spectrum.
“This needs to be corrected to create a level playing field and the minister has assured to look into it,” Mr Martin said adding that the government must come out with policy for distribution of spectrum in a transparent manner.
The GSM lobby—Cellular Operators Association of India (COAI)—also said they were looking forward to working closely with the government for the growth of the sector.
A new bunch of equity market manipulators has been rigging and twisting stock prices at will, according to reports by the Intelligence Bureau
The 2002 securities scam masterminded by Ketan Parekh brought to light widespread manipulation in share prices. It left indelible footprints across the market landscape, and it appears that a fresh wave of 'market makers' has emerged from that episode, who are fashioning new ways and means to contort share prices, sometimes at the behest of company promoters themselves.
The government's own intelligence wing is maintaining remarkable vigilance on their activities; yet many of them have escaped the 'long' arm of the law. As Moneylife has reported earlier, the Intelligence Bureau (IB) appears to have kept tabs on the market activities of several individuals and has been preparing regular reports on this.
It is already known that barred stock broker Ketan Parekh and several of his associates remain active in the marketplace through various front entities. But less known are several other names that have cropped up in the meantime, who have been found to have colluded with various company promoters to influence the prices of their shares.
According to an IB report, Vinod Rathod, a Mumbai-based market manipulator, had fashioned a plan to acquire floating shares of Ruchi Soya Industries from the open market through "manipulative means", a few months ago. In conjunction with the promoters of the company, Mr Rathod "would engineer a fall in the share price, pick up a sizable chunk in the names of various front entities, take the price back up to Rs500 levels and then dispose off 26% stake to a strategic investor." The share price of Ruchi Soya was at about Rs110 in the first week of July 2010.
Mr Rathod together with one Syed Zafar was also allegedly planning to manipulate the Hindalco Industries scrip, the IB report says. The proposed plan included fund flows from the promoter to 'operate' the scrip. In lieu of 'services' rendered, Mr Rathod was planning to gift a Mercedes car to Mr Zafar, by initially transferring it to one Gagan Gupta in Delhi and later showing a sale to Zafar in Mumbai.
Further, at the behest of the promoters of Karuturi Global, he was planning to stock up shares, orchestrating a hike in prices from around Rs13 to Rs35 and then place the shares with other market operators, including the well-known South Indian industrialist Shiv Shankaran. It has also been found that Mr Rathod was also planning to operate the counter of IRB Infrastructure Developers with insider information.
Meanwhile, the IB has alleged that Mr Rathod was also active on the counter of Hanung Toys and Textiles and that he had "advised the promoter to advance the scheduled announcement of dividend from the third-fourth week of July to an earlier date, so as to facilitate placement with institutional investors." Part of the plan also included hiking up the share price to around Rs270-Rs275. The share price of Hanung Toys was in the price band of Rs250-Rs260 in the first week of July 2010. Mr Rathod has also been named as being active in JVL Agro Industries.
Manish Marwah is another name that features prominently in the IB reports. In August, Mr Marwah allegedly orchestrated arrangements with two Chandigarh-based companies, Ind Swift Laboratories and Surya Pharmaceuticals. Subsequently, Mr Marwah picked-up stakes in these companies through front entities of his associates, including Praveen Gupta and Ashok Kumar, both based in Delhi.
Mr Marwah also struck a deal with the promoters of Symphony and subsequently, Ashok Kumar was directed to start accumulating shares without hiking up the share price, the IB report says. Mr Marwah continued to be active on the counter of Marksans Pharmaceuticals, possibly using an entity called Leapfrog.
Another name identified by the IB for alleged shenanigans in the stock market is Raju Bartar. In August, Mr Bartar is said to have identified two foreign institutional investors (FIIs) for a qualified institutional placement (QIP) in Adserve, with the understanding that the promoter would return the amount to Mr Bartar and that the proceeds from the sale of shares would be shared on a 50-50 basis. Subsequently, around 20 lakh applications for the QIP were made through an FII by the name of Sparrow.
Mr Bartar also explored possibilities to influence the recent initial public offer of Gravita India. The IB also mentions that one of the promoters of Kiri Dyes had tasked Mr Bartar to hike up the share price from around Rs565 to above Rs600.
These are just some of the names that seem to be playing with share prices at will. While some of them, like Mr Marwah, have been booked by the market regulator, the Securities and Exchange Board of India (SEBI), many others still roam freely in the stock market jungle.