New Delhi: Reeling under the impact of rising interest and input costs, India Inc is likely to ask finance minister Pranab Mukherjee not to further withdraw the stimulus in his forthcoming budget, reports PTI.
Issues concerning rising borrowing costs, infrastructure bottlenecks and the urgency of achieving double-digit growth are likely to figure in the customary pre-budget consultation meeting of the minister with captains of Indian industry here on Tuesday.
The Federation of Indian Chambers of Commerce and Industry (Ficci) has already cautioned the government against a further roll-back of the stimulus provided to industry to combat the impact of the global financial meltdown.
Ficci president Rajan Bharti Mittal had said that in view of the threat of double-dip recession in advanced countries, the government should refrain from rolling back the stimulus in the budget to be unveiled on 28th February.
According to the chamber, the rates of excise, customs and service tax should be retained at the existing level.
Another chamber, Associated Chambers of Commerce and Industry (Assocham), wants the government to encourage private sector participation and step up investment in the infrastructure sector, especially in power, road, telecom, ports and airports projects, to achieve a 9%-10% growth rate.
In order to help the industry in the aftermath of the crisis, the government and the Reserve Bank of India (RBI) provided a stimulus to the economy to tide over the turbulence. The government reduced tax rates and raised public expenditure, while the RBI released more funds into the system.
In view of the economic recovery, Mr Mukherjee had started the process of withdrawal of stimulus by raising tax rates in the 2010-11 budget.
With the economy recording a growth rate of 8.9% in the first half of the current fiscal, Mr Mukherjee is expected to further withdraw the stimulus with a view to reduce the fiscal deficit, which is expected to be about 5.5% of the gross domestic product (GDP) in 2010-11.
The economy was expanding by over 9% per annum before the global crisis pulled down the growth rate to 6.7% in 2008-09. On the back of the stimulus measures announced by the government, the growth rate picked up to 7.4% in 2009-10 and the economy is projected to chart 9% expansion this fiscal.
Although the growth momentum picked up in the first half of the current fiscal, rising borrowing costs are becoming a major issue. Interest rates have been moving northward following the decision of the RBI to tighten the monetary policy to check rising inflation. During 2010, the RBI raised key short-term rates six times.
With food inflation rising to 18.32% in the week ended 25th December, the RBI is likely to raise interest rates further at its policy review on 25th January.
Mumbai: Patni Computer Systems today said that the US-based IT firm iGate has made an open offer for the 20.6% stake in the company, in accordance with the requirements of the market regulator Securities and Exchange Board of India (SEBI), reports PTI.
Yesterday, after several rounds of negotiations, the US-based iGate-led consortium clinched a deal to buy nearly 63% stake in India's sixth largest IT firm Patni Computer for about $921 million (Rs4,188 crore).
"The acquirers-iGate Solutions, iGate Global Solutions Ltd and iGate Corporation hereinafter referred to as person acting in concert (PAC) propose to acquire 2.70 crore shares of the target company representing 20.6% of the current equity capital of the target company, at a price of Rs503.50 per share," Patni said in a filing to the Bombay Stock Exchange (BSE).
iGate's open offer for Patni will start on 4th March and close on 23rd March, the filing added.
The deal size will go up to about $1.22 billion (more than Rs5,400 crore), after acquisition of the 20.6% from public shareholders at the same price of Rs503.50 per share through the mandatory open offer.
The deal is expected to be completed in the first half of 2011, after obtaining all the regulatory approvals. iGate expects the transaction to be accretive by 2012 on a cash earnings per share basis.