Pawar apprises PM of sugar decontrol plan

New Delhi: Making a case for freeing the sugar sector from government controls, food and agriculture minister Sharad Pawar today met the prime minister to apprise him about the proposed move to give freedom to mills for sale of the sweetener, reports PTI.

At present, the government controls the sugar industry by fixing the quantity of the sweetener that mills would sell in the open market as well as through ration shops each month.

With expectations of bumper production from the next season starting October, the ministry is planning to decontrol the sector.

According to sources, Mr Pawar made a presentation to prime minister Manmohan Singh about the way the food ministry is planning to ease controls on the sugar industry.

The issue of the Supreme Court's latest order on free distribution of foodgrains to the poor instead of allowing it to rot might have figured during the meeting, they said.

The minister also discussed in detail how withdrawal of curbs on the sugar sector would benefit consumers and farmers, sources said.

In the presentation, sources said, the ministry is understood to have proposed to do away with the system to fix the monthly quota of sugar for sale in open market and public distribution system (PDS).

To meet the requirement of sugar for ration shops, the ministry has suggested buying sugar from the open market. At present, mills are obligated to sell 20% of their produce to the government for distribution through PDS.

It has also suggested that farmers should be given freedom to sell their produce. Currently, growers can sell sugarcane to designated mills only, sources said.

Last month, Mr Pawar had said the ministry is preparing a proposal for decontrol of sector, which would be sent to various ministries for their views before taking it to Cabinet.

He had made it clear that the government would continue to fix the Fair and Remunerative Price (FRP) of sugarcane to protect the farmers' interest. FRP is the minimum price that mills have to pay to procure cane.


‘Property rates becoming unaffordable for average buyer’

High property value and interest rates, coupled with a lower loan- to-value ratio are becoming serious obstacles for average home buyers, says researcher

An average working class person intending to buy a house will find it almost impossible today, as high interest rates and property values, coupled with low conduciveness of the loan-to-value (LTV) ratio, will make him "ineligible" for the purchase. The LTV ratio indicates how much of a property can be financed through a loan.

Pankaj Kapoor, founder and managing director, Liases Foras, a real estate research firm, says: "He (the average buyer) cannot purchase a property today as the LTV ratio is not very conducive. A consumer is most eligible for a purchase when the banks give 80% to 85% of the property value as loan, as he can manage the rest 15% to 20% from his own sources. However, if he has to pay 30% or 40% of the property value from his own pocket it turns out to be a huge burden. Besides, the property prices have also gone up, making it completely unaffordable for the average buyer."

Mr Kapoor also explained how the high property values deterred consumers from making a purchase of a property in Mumbai. He said the average cost of flats in the Greater Mumbai area of Colaba to Mulund and Borivli, is about Rs1.97 crore and if you ask an average customer to pay about 40%, or Rs80 lakh, then he has no option other than to cancel his purchase as it is unaffordable for him. "The average consumer does not have that kind of money. He may aspire to buy a property, but he will not be able to exercise this purchase today," Mr Kapoor said.

Interest rate is another roadblock that makes a home purchase difficult for a common person. Although some financial institutions offer interest rates of 8% and 8.5%, some customers find themselves ineligible for these schematic loans and move to other institutions where they are charged higher interest. "To expect 8% and 8.5% interest rate on home loans is too much. No one is offering that because the inflation rate is moving at that level," Mr Kapoor said.

A survey conducted by ICICI Securities recently has also found that property prices have become unaffordable. According to the survey in which 3,839 ICICI Direct customers participated, 72% of the respondents believed that property prices were unaffordable and 79% perceived property prices to be high. However, a significant section of the respondents indicated that while affordability was a concern, it was manageable. The survey showed that 48% of the buyers were interested in buying at the current prices or were keen to see a marginal correction. The survey was conducted during June-July this year.

The survey found a larger percentage of respondents in Mumbai and Pune who felt that home prices were too high, as compared to Hyderabad and Kolkata where a lower proportion of the respondents had a similar perception.



pinakin mamtora

7 years ago

Wish to add one point to what I wrote 3 days back (see below): The Government has been and will continue to choose not to use the vast treasure of the domain-knowledge and impeccable integrity of Mr.Deepak Parekh to make housing affordable. Why? It is waiting for a realty-scam (of the UTI and Satyam scale) to happen so that it can then call in Mr.Deepak Parekh for fire-fighting!!!

Sam Kark

7 years ago

I agree with Davesh Bansal. However, it is better to invest in property than to keep black money in Swiss banks by the politicians businessman. Most of the NRI's invest in property for the their future by bringing to India huge amount of foreign exchange. So govt. must see all the pros and cons.


7 years ago

Property prices are slave of black money floating in the economy. it is not the demand and supply of property but the black money which find no other avenue to be kept other than real esate. it will be better that government bring one last time amnesty scheme to curb the menance.

pinakin mamtora

7 years ago

It is hard to envisage property prices coming down to affordable levels in India - the politicians, the bureaucracy and the land-owners and builders have humungously huge money at stake to allow that to happen in reality. No matter what is being said by all/any of them in the media, the lure of astronomical profits is what blinds them all. Practical wisdom of truly credible experts like Mr.Deepak Parekh is being completely ignored by these suckers. I wonder whether they are re-born as mosquitoes who spread malaria/dengue and other killer diseases!! The habit of harassing others for self-gratification is so deeply programmed in the psyche of the powers-that-be that it gets carried forward from one birth to the next!!
Now you know why sucking-based diseases are spreading so bountifully in India?

K Narayanan

7 years ago

The sole reason for the same is govt alllowing investment by FIIs in real estate companies under QIP route and pubic issue.The real estate cos issued the shares at a huge premium -Rs 5 FV share sold for Rs500 or so. and with the huge money these cos bought lakhs of acres at a hefty price causing the land prices to zoom 3to 4 times in 3 or 4 years.

Amalaraj Marian

7 years ago

It is absolutely correct that the prices seem to have run-up quite a bit in the unaffordable zone. considering the fact that even if the average buyer would still want to buy a property for personal use, buy v/s rent analysis will tilt the scales towards rental as coughing up such a huge upfront is next to impossible. similarly the ability to leverage a large loan has also evaporated.

Interest rates may hurt auto sales after the festive season

Despite interest rate and fuel price hikes, coupled with production constraints, Indian automakers have exhibited good sales numbers in August, which marks the start of the festive season

Indian automobile companies reported healthy sales numbers for August despite the recent hike in interest rates and fuel prices, coupled with production constraints. According to analysts, the smooth ride of automobile companies in terms of sales may remain in line with expectations until the festive season or till November. They fear increasing interest rates can hurt auto sales from the second half of the fiscal year. 

Dealers stocking pre-festive season helped to clock higher volumes during August 2010. Demand for vehicles continues to surpass supply despite the fact that most auto majors have hiked prices passing on the cost impact to the consumers owing to the high commodity prices and changes in the emission norms.
During August, automobile majors like Maruti Suzuki India Ltd, Tata Motors Ltd, Bajaj Auto Ltd, Mahindra and Mahindra Ltd (M&M) and TVS Motor Co Ltd (TVS) reported solid monthly sales numbers as companies tried to fill up inventories to meet expected strong demand in the coming festive season. The only exception was Hero Honda Motors Ltd, the country's largest two-wheeler maker, which reported muted sales for August.
Macquarie Research said in a report, “A normal monsoon season, improving consumer sentiment and an overall recovery in the economy should benefit auto sales. We expect sales numbers to remain healthy at least until the festive season, as inventory levels are below average. Increasing interest rates can affect sales in the second half of the fiscal year."
Maruti Suzuki, the Indian unit of Japan's Suzuki Motor Corp, reported a 24% increase in sales to 104,791 units aided by its highest-ever domestic sales at over 92,600 units. India’s largest vehicle maker Tata Motors said its sales rose 32% to 65,938 units during August, supported by a 34% increase in medium and heavy commercial vehicle (M&HCV) sales at the domestic level.
On the other hand, M&M, the country's largest utility vehicle maker, sold 42,338 units, an increase of 28% over the same month a year ago. The company’s sales were affected by a shortage of key components like tyres, castings and diesel fuel injection pumps, which is expected to be resolved by the third quarter.
Korean automaker Hyundai Motor Co's unit Hyundai Motor India Ltd reported an increase of 27% in domestic sales to 28,601 units, even as its exports fell 12.3%. In a release, Arvind Saxena, director for marketing and sales, Hyundai India, said, “The domestic demand continues to be strong and we have constraints in production due to some components supply. We are changing our production mix to meet this increased demand in the domestic market. We expect the demand in the domestic market to be even stronger in the coming festival season.”
Toyota Motor Corp's unit Toyota Kirloskar Motor Pvt Ltd said that during August, its sales rose 26% to 6,361 units from 5,045 units in the same month last year. New entrant in the domestic market Nissan Motor India Pvt Ltd, the unit of Japanese Nissan Motor Ltd, sold 1,249 units during the month, mainly led by its newly-launched small car ‘Micra’. Nissan India said owing to a strong demand for the top-variant of the ‘Micra’, it has realigned its initial production schedule and has also started a second shift at its facility at Oragadam near Chennai.
General Motors India has registered a growth of 34% in sales in August 2010, compared to the corresponding period last year. It sold 7,941 units in August 2010 against 5,939 units in the same month a year ago. The company has also ramped up production by adding second shifts at its Halol and Talegaon plants to meet the increased demand.
In a research report, Kisan Ratilal Choksey Shares and Securities Pvt Ltd said, “We expect strong CV sales numbers in the month of September due to buying before the implementation of new emission norms from 1st October, post which the prices of CVs are likely to be increased by about 4%-5%."
In the two-wheeler segment, while market leader Hero Honda came out with flat growth numbers, Bajaj Auto and TVS Motors have reported robust sales for August. Hero Honda’s total sales for the month stood 2% up at 424,617 units. It expects to improve sales further due to its planned introduction of four to five new models or variants during the rest of the current fiscal year and as the supply situation improves. 
Bajaj Auto continued to report its highest-ever sales during August as well. During the month, the company sold 329,364 units, including two-wheelers and commercial vehicles. In the motorcycle segment, its sales rose 59% to 289,176 units from 182,441 units in the same month last year.
During August, TVS Motors’ domestic sales grew by 29% to 148,000 units, while exports increased by 62% to around 19,000 units. The company’s motorcycle sales grew by 30%, while its moped and scooter sales grew by 27% and 43%, respectively.
After fighting it out in the car segment, two Japanese automakers, Honda and Suzuki are making their fight visible in the two-wheeler segment. While Honda, the earlier entrant in the two-wheeler market, is the leader in the scooter segment, Suzuki on the other hand is gaining ground. According to market sources, there is a waiting period of between two to eight months for Honda’s ‘Activa’ while the same for Suzuki’s ‘Access 125’ is one to two months. 
During August, Honda Motorcycle & Scooter India Pvt Ltd said its sales rose 38% to 132,330 units from 96,149 units while Suzuki Motorcycle India Pvt Ltd reported a 51% jump to 19,314 units from 12,809 units, in the same month last year.
"Going forward, as the festive season picks up further, the two-wheeler sales are quite certain to shoot up sharply; the only deterring factor here could be the capacity constraints that almost all OEMs are facing," said KR Choksey in a note.


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