“It is true that we were hoping that this (moderation in inflation) will happen earlier, to that extent our credibility becomes a question,” Planning Commission deputy chairman Montek Singh Ahluwalia told Karan Thapar in an interview for CNN-IBN’s TV programme ‘'Devil's Advocate’
New Delhi: Planning Commission deputy chairman Montek Singh Ahluwalia on Sunday conceded that he went wrong while projecting moderation in inflation which remains near the double-digit mark, reports PTII.
“It is true that we were hoping that this (moderation in inflation) will happen earlier, to that extent our credibility becomes a question,” he told Karan Thapar in an interview for CNN-IBN’s TV programme ‘'Devil's Advocate’ when asked why government's repeated projections on inflation proved false.
“You should recognise that short-term forecast is subject to error,” he said. He, however, asserted inflation would moderate to 7-%7.5% by March 2012.
Headline inflation has remained over 9% for several months and was 9.73% in October. Food inflation stood at 10.63% for the week ended 5th November.
Inflation has remained stubbornly high despite repeated assurances by several government functionaries that it would moderate.
Responding to criticism of India Inc that there was a policy paralysis in the government, Mr Ahluwalia said, “Industry has been a lot more focused on decisions that are holding up infrastructure projects, and not the (financial) reforms.”
The government, he said, “is keen to push (reforms) ahead but needs to develop political consensus and if the measures like GST, DTC and other reforms are delayed, that does not mean that they wound not happen.”
On opening up the multi-brand retail sector for foreign investment, Mr Ahluwalia expressed the hope that the government would take a decision by the end of next month.
“I am hopeful”, he said, when asked whether the government would be able to take a decision on allowing foreign direct investment (FDI) in multi-brand retail. The decision to allow FDI in retail has been pending for long.
As regards the economic growth, Mr Ahluwalia said it would moderate in the backdrop of sluggishness being witnessed in the developed world.
The growth, he added, could moderate to 7%-7.5% during the current fiscal, as compared to 8.5% in 2010-11.
“I think that it (growth) will range between 7%-7.5%. We have to do something about it. It is difficult to know when the turnaround will come,” he said.
Mr Ahluwalia further said it would be difficult for the government to restrict fiscal deficit to 4.6% of the gross domestic product (GDP) during 2011-12, in view of rising oil prices and burden on subsidy.
Answering questions on recent decision of Moody’s to lowering rating of Indian banking system to ‘negative’ to ‘stable’, he said “it was part of knee-jerk response”.
Mr Ahluwalia also raised concern about rising trade deficit and said it could increase to $150 billion by the end of the current fiscal.
However, he added, India has enough cash reserves to handle the situation arising from surge in trade deficit.
“We are locating both our SEZs close together (at Visakhapatnam). Having an API unit at one place and formulation unit at another place complicates the whole matter,” Dr Reddy's Laboratories (DRL) chief financial officer Umang Vohra informed the media
Hyderabad: Pharma major Dr Reddy’s Laboratories has requested the government to denotify its Special Economic Zone (SEZ) at Medak in Andhra Pradesh, reports PTI.
The formulations unit, which was to come up at Medak, will now be moved to Visakhapatnam where the company has another SEZ for manufacturing Active Pharmaceutical Ingredients (APIs).
“We have requested for denotification of entire SEZ (in Medak). We are locating both our SEZs close together (at Visakhapatnam). Having an API unit at one place and formulation unit at another place complicates the whole matter,” Dr Reddy's Laboratories (DRL) chief financial officer Umang Vohra told PTI.
DRL, he said, has given an undertaking to the commerce ministry for refunding the duty benefits availed of in the name of SEZ and the development commissioner of VSEZ has recommended the proposal.
It is expected to come up for consideration at the Board of Approvals meeting scheduled on 28th November.
Mr Vohra said DRL is setting up the formulations SEZ in Vizag for better synergies of management and material flows.
“Land was bought by us (in Medak) and will remain with us. We (have now) decided to put both the units at one place,” he said.
DRL had acquired around 103 hectares at Melasangam and Lingampally villages in Medak to set up a tablets and capsules manufacturing unit for exports. In Vizag, it had acquired around 260 acres for the bulk drugs SEZ, which will now house the formulation SEZ as well.
The company is expected invest around $200 million in both the SEZs, a company official had said earlier.
Mr Vohra said the SEZ land, after denotification, will be used for other expansion plans.
“Every two years or three years we require capacity addition. We can think of that in future. Later on when we wanted to do something with this land, we will go for two plants (API and Formulations) together,” he explained.
Releasing the ICICI Securities’ white paper on disinvestment, finance minister Pranab Mukherjee had said that disinvestment was necessary to unlock the value of state-owned companies and garner resources for funding social sector programmes
New Delhi: The government can garner over Rs3.76 lakh crore by bringing down its holding in state-owned companies to 51%, reports PTI quoting ICICI Securities’ white paper on disinvestment.
“There is huge potential to disinvest most of the holdings while retaining the 51% government stake.
This can lead to unlocking the wealth to about Rs3,76,711 crore,” said the white paper, which was released by finance minister Pranab Mukherjee.
The total market capitalisation of public sector units is around Rs12.83 lakh crore, according to the paper.
A sectoral analysis shows that the value of government stake is the largest in power sector, followed by oil & gas and metals.
The value of government stake in power companies stood at Rs4.03 lakh crore, oil & gas companies (Rs2.98 lakh crore) and metals (Rs1.70 lakh crore). The valuation of government stake in engineering sector companies stood at Rs85,791 crore, the paper noted.
“Experience in other countries indicates that resource mobilisation equivalent to 5%-10% of gross domestic product (GDP) successfully augmented fiscal position and catalysed economic growth while maintaining a desirable and acceptable social thrust,” the paper said.
Releasing the paper, Mr Mukherjee had said that disinvestment was necessary to unlock the value of state-owned companies and garner resources for funding social sector programmes.
“Keeping more than 51% equity in government companies locked-up does not make economic sense when such valuable resources are required for redeployment in area where development is needed,” he had said.
With seven months of the ongoing financial year (2011-12) already over, the government has been able to raise just Rs1,145 crore through stake sale in Power Finance Corporation (PFC) and there are apprehensions that it may miss the mammoth Rs40,000 crore target for the fiscal.
Volatile stock markets have forced the government to delay the proposed stake sales in PSUs. Global equity markets have been on a downslide on fears over the spiralling debt crisis in the euro zone, as well as credit crunch in the US.