The government on Friday announced the second and final installment of its fiscal stimulus package. Complementing monetary easing by the Reserve Bank of India (RBI), the Centre enhanced the spending power of states with specific measures to boost credit availability.
It offered additional sops to exporters and the small-scale sector, besides raising the level of protection for cement and steel sectors a tad. It has also incentivised purchase of commercial vehicles.
Credit availability has been hiked in a variety of ways, the interest ceiling on external commercial borrowings has been removed; the cap on foreign institutional investments in the domestic corporate debt market has been jacked up two-and-a-half times from $6 billion to $15 billion; a special purpose vehicle is being created to lend to non-banking finance
companies to the tune of Rs 25,000 crore; Indian Infrastructure Finance Company is being permitted to raise another Rs 30,000 crore by means of tax-free bonds, and states are allowed to borrow an additional Rs 30,000 crore from the market.
In addition, public sector banks would be given additional capital to the extent of Rs 20,000 crore over the next two years, so they can lend roughly 10 times as much additionally.
The latest measures, which come in less than a month after the first package was unveiled on December 7, are aimed at benefiting housing, NBFCs that lend to infrastructure and finance commercial vehicles.
Announcing the measures, Planning Commission deputy chairman Montek Singh Ahluwalia said: “By no measure can we insulate our economy from slower growth, when the external factors are of such enormous magnitude. However, we will be able to manage a 7% growth this fiscal through these measures.”
Mr Singh added that these contra-cyclical steps and fiscal policy “in these truly exceptional circumstances” would ensure that growth momentum would be maintained next fiscal, which, he said, would be tougher than this year. But such counter-cyclical fiscal activism has to pay a price in the form of a higher fiscal deficit.
“Considering the implementation of the Sixth Pay Commission, the consensus within the government was a fiscal deficit of 3%. The mid-term review of the economy said that the fiscal deficit would be over 5%, excluding the below-the-line items such as fertiliser and oil subsidy. If we include these items, the fiscal deficit could exceed by 3% of gross domestic product, what was being targeted,” said Mr Singh.
The budgeted target for the fiscal deficit is 2.5% of GDP. The global financial meltdown has already forced the US and some other major developed countries into recession, and hit India too. This year, the economic growth is expected to be around 7%, down from the 9% average of the past three years.
The first stimulus package, estimated at over Rs 30,000 crore, included a 4% across-the-board cut in excise duty for the remaining part of the financial year and an additional Plan spending of Rs 20,000 crore.
“Because of slowing industrial output and resultant tax receipts, the government will have to forego about Rs 40,000 crore this fiscal. This is a rough estimate in a dynamic situation and improved production because of the steps taken could offset part of it,” said finance secretary Arun Ramanathan.
To facilitate access to funds for the housing sector, companies developing integrated townships have been allowed to borrow overseas with prior approval of RBI. The ceiling on interest rates for all overseas borrowings has been removed to provide flexibility to companies to borrow abroad.
Source: Agencies
Saturday, January 3, 2009
Citigroup to limit top executives' pay, bonuses
The recipient of a $45 billion infusion from the US government, Citigroup Inc on Wednesday said it would place strict limits on management's compensation, including no severance for its top five executives.
Under pressure from lawmakers, Citigroup Chief Executive Vikram Pandit and Chairman Win Bischoff opted to forego their 2008 bonuses. The company's new executive pay limits also feature a clawback provision in which Citigroup can recoup executive pay ``that over time proves to be based on inaccurate financial or other information.''
The compensation restrictions come as the New York-based bank signed an agreement with the federal government to receive an additional $20 billion on top of the $25 billion it received in October. Restrictions on expenses, including the use of corporate aircraft and costs related to entertainment or holiday parties, also will be put in place.
Part of the $700 billion bailout program authorized by Congress, the capital infusions to Citigroup and dozens of other banks are the government's main tool for attempting to stabilize the financial services sector and spur lending between financial institutions and to customers.
Citi said it will issue $20 billion in preferred shares to the Treasury Department, and warrants to buy about 188.5 million shares of common stock at a strike price of $10.61 a share, according to a filing with the Securities and Exchange Commission.
In doing so, members of the company's senior leadership and executive committees will see pay cuts and limits on severance packages, according to a memo sent to Citigroup staff Wednesday.
In the memo, Pandit announced measures that will tie executive pay more closely to performance.
``We are fully committed to paying for high-performance people at all levels of the organization and at competitive rates, in the context of the company's overall financial results,'' Pandit said.
The most senior leaders will be affected the most, Citi said. Pandit said he and Bischoff thought it ``fair'' to forgo their bonuses ``in light of the challenges of the year and the need for compensation elsewhere in the organization,'' the memo said. Robert Rubin, a Citigroup adviser and former Treasury secretary, also will decline a bonus.
Pandit added that senior leadership committee members will see their bonuses ``substantially reduced,'' while executive committee members will have larger proportions of their bonuses in deferred compensation than other employees.
As a condition for receiving government money, lawmakers are making companies reel in bonuses. The congressional backlash and public outrage followed a series of high-profile cases involving Wall Street executives walking away with millions of dollars after their firms received taxpayer money.
Last month, American International Group Inc. said it would be limiting how much it pays its top executives, including granting a $1 salary for 2008 and 2009 to its CEO Edward Liddy.
New York-based AIG has received a roughly $150 billion rescue package from the federal government.
Shares of Citi fell 9 cents to $6.71 Wednesday. The company's stock shed more than three-fourths of its value in 2008.
Source: Agencies
Under pressure from lawmakers, Citigroup Chief Executive Vikram Pandit and Chairman Win Bischoff opted to forego their 2008 bonuses. The company's new executive pay limits also feature a clawback provision in which Citigroup can recoup executive pay ``that over time proves to be based on inaccurate financial or other information.''
The compensation restrictions come as the New York-based bank signed an agreement with the federal government to receive an additional $20 billion on top of the $25 billion it received in October. Restrictions on expenses, including the use of corporate aircraft and costs related to entertainment or holiday parties, also will be put in place.
Part of the $700 billion bailout program authorized by Congress, the capital infusions to Citigroup and dozens of other banks are the government's main tool for attempting to stabilize the financial services sector and spur lending between financial institutions and to customers.
Citi said it will issue $20 billion in preferred shares to the Treasury Department, and warrants to buy about 188.5 million shares of common stock at a strike price of $10.61 a share, according to a filing with the Securities and Exchange Commission.
In doing so, members of the company's senior leadership and executive committees will see pay cuts and limits on severance packages, according to a memo sent to Citigroup staff Wednesday.
In the memo, Pandit announced measures that will tie executive pay more closely to performance.
``We are fully committed to paying for high-performance people at all levels of the organization and at competitive rates, in the context of the company's overall financial results,'' Pandit said.
The most senior leaders will be affected the most, Citi said. Pandit said he and Bischoff thought it ``fair'' to forgo their bonuses ``in light of the challenges of the year and the need for compensation elsewhere in the organization,'' the memo said. Robert Rubin, a Citigroup adviser and former Treasury secretary, also will decline a bonus.
Pandit added that senior leadership committee members will see their bonuses ``substantially reduced,'' while executive committee members will have larger proportions of their bonuses in deferred compensation than other employees.
As a condition for receiving government money, lawmakers are making companies reel in bonuses. The congressional backlash and public outrage followed a series of high-profile cases involving Wall Street executives walking away with millions of dollars after their firms received taxpayer money.
Last month, American International Group Inc. said it would be limiting how much it pays its top executives, including granting a $1 salary for 2008 and 2009 to its CEO Edward Liddy.
New York-based AIG has received a roughly $150 billion rescue package from the federal government.
Shares of Citi fell 9 cents to $6.71 Wednesday. The company's stock shed more than three-fourths of its value in 2008.
Source: Agencies
Toyota developing solar powered green car
Toyota Motor Corp is secretly developing a vehicle that will be powered solely by solar energy in an effort to turn around its struggling business with a futuristic ecological car, a top business daily reported.
The Nikkei newspaper, however, said it will be years before the planned vehicle will be available on the market. Toyota's offices were closed Thursday and officials were not immediately available for comment.
According to The Nikkei, Toyota is working on an electric vehicle that will get some of its power from solar cells equipped on the vehicle, and that can be recharged with electricity generated from solar panels on the roofs of homes. The automaker later hopes to develop a model totally powered by solar cells on the vehicle, the newspaper said without citing sources.
The solar car is part of efforts by Japan's top automaker to grow during hard times, The Nikkei said.
In December, Toyota stunned the nation by announcing it will slip into its first operating loss in 70 years, as it gets battered by a global slump, especially in the key U.S. market. The surging yen has also hurt the earnings of Japanese automakers.
Still, Toyota is a leader in green technology and executives have stressed they won't cut back on environmental research despite its troubles.
Toyota, the manufacturer of the Lexus luxury car and Camry sedan, has already begun using solar panels at its Tsutsumi plant in central Japan to produce some of its own electricity.
Source: Agencies
The Nikkei newspaper, however, said it will be years before the planned vehicle will be available on the market. Toyota's offices were closed Thursday and officials were not immediately available for comment.
According to The Nikkei, Toyota is working on an electric vehicle that will get some of its power from solar cells equipped on the vehicle, and that can be recharged with electricity generated from solar panels on the roofs of homes. The automaker later hopes to develop a model totally powered by solar cells on the vehicle, the newspaper said without citing sources.
The solar car is part of efforts by Japan's top automaker to grow during hard times, The Nikkei said.
In December, Toyota stunned the nation by announcing it will slip into its first operating loss in 70 years, as it gets battered by a global slump, especially in the key U.S. market. The surging yen has also hurt the earnings of Japanese automakers.
Still, Toyota is a leader in green technology and executives have stressed they won't cut back on environmental research despite its troubles.
Toyota, the manufacturer of the Lexus luxury car and Camry sedan, has already begun using solar panels at its Tsutsumi plant in central Japan to produce some of its own electricity.
Source: Agencies
Microsoft to axe 15,000 jobs this January
The world's top software firm, Microsoft, is planning a massive reduction in its workforce where up to 15,000 jobs may be axed this month, says a media report.
"Microsoft is preparing to announce the first wide scale layoffs in its 32-year history, with up to 15,000 jobs at risk, according to some predictions," The Times said in a report published online.
Speculation about job cuts was triggered by a report by Fudzilla, a technology blog site, which said employees were told that the software group was preparing for major layoffs from its global operations on January 15, it added.
Earlier, a brokerage firm Oppenheimer & Co's analyst Brad Reback had asked Microsoft to cut its workforce by 10% or about 9,100 employees.
"Such layoff exercise "would be a healthy move for the company," Reback added. Microsoft had close to 91,000 employees on its payrolls at end of July-September quarter.
Further, The Times report stated that the news of job losses came amid the company being forced to apologise for an embarrassing hiccup with its Zune digital music player.
A bug in the device's internal clock in the original 30-gigabyte version failed to cope with the last day of the leap year and thousands of owners were left with a frozen screen on December 31.
The report quoted Microsoft statement as saying, "the issue should be resolved over the next 24 hours as the time change moves to January 1, 2009. We expect the internal clock on the Zune 30 GB devices will automatically reset."
Besides, Microsoft is scheduled to release its second quarter results for the fiscal year 2008-09 on January 22.
Battling the economic crisis, companies in their bid to save costs, have announced over one lakh job cuts in December in the US.
Source: Agencies
"Microsoft is preparing to announce the first wide scale layoffs in its 32-year history, with up to 15,000 jobs at risk, according to some predictions," The Times said in a report published online.
Speculation about job cuts was triggered by a report by Fudzilla, a technology blog site, which said employees were told that the software group was preparing for major layoffs from its global operations on January 15, it added.
Earlier, a brokerage firm Oppenheimer & Co's analyst Brad Reback had asked Microsoft to cut its workforce by 10% or about 9,100 employees.
"Such layoff exercise "would be a healthy move for the company," Reback added. Microsoft had close to 91,000 employees on its payrolls at end of July-September quarter.
Further, The Times report stated that the news of job losses came amid the company being forced to apologise for an embarrassing hiccup with its Zune digital music player.
A bug in the device's internal clock in the original 30-gigabyte version failed to cope with the last day of the leap year and thousands of owners were left with a frozen screen on December 31.
The report quoted Microsoft statement as saying, "the issue should be resolved over the next 24 hours as the time change moves to January 1, 2009. We expect the internal clock on the Zune 30 GB devices will automatically reset."
Besides, Microsoft is scheduled to release its second quarter results for the fiscal year 2008-09 on January 22.
Battling the economic crisis, companies in their bid to save costs, have announced over one lakh job cuts in December in the US.
Source: Agencies
Friday, January 2, 2009
Kingfisher slashes air fares between 21 to 65 per cent
Kingfisher Airlines said it had slashed air fares between 21 per cent and 65 per cent on various routes across its network with effect from January 1, 2009.
"This is consistent with Kingfisher Airlines' mission to aggressively pursue increase in market share and to deliver India's only five star experience at highly competitive fares", a Kingfisher press statement said here on Friday.
The airlines will also offer significant discounts to its traditional corporate customer base, it said.
Its frequent flier programme, King Club, will now offer incentives and rewards including free overseas travel on its new launched international routes.
"The declining prices of ATF facilitate such consumer-benefitting initiatives that will also stimulate the industry", CEO and Chairman of the airlines, Vijay Mallya said in the statement.
"We will aggressively pursue sales and share and this will help sustain increased load factors in the shoulder season between February and April", he said.
Source: Agencies
V
"This is consistent with Kingfisher Airlines' mission to aggressively pursue increase in market share and to deliver India's only five star experience at highly competitive fares", a Kingfisher press statement said here on Friday.
The airlines will also offer significant discounts to its traditional corporate customer base, it said.
Its frequent flier programme, King Club, will now offer incentives and rewards including free overseas travel on its new launched international routes.
"The declining prices of ATF facilitate such consumer-benefitting initiatives that will also stimulate the industry", CEO and Chairman of the airlines, Vijay Mallya said in the statement.
"We will aggressively pursue sales and share and this will help sustain increased load factors in the shoulder season between February and April", he said.
Source: Agencies
V
Job losses would be temporary, says Montek Ahluwalia
The government on Friday said the current economic situation could lead to some job losses, but these would only be temporary with economy poised to grow at seven per cent this fiscal.
"Certainly in sectors that are badly affected, if we are not able to completely counter the effect of recession, there may be some job losses. We hope they will be temporary," Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters while briefing on the stimulus package.
He said the idea behind this package is to ensure that economy does not slow down too much.
Ahluwalia said the economy is expected to grow at seven per cent this fiscal and that will be a good performance.
"So, when I say that this package will hopefully generate a growth rate of seven per cent, that is a growth rate that is certainly consistent with the total number of jobs in the economy increasing," he said.
The Planning Commission Deputy Chairman, however, said it is not possible to completely counter the impact of an external slowdown.
"But with this package what we are doing is minimising the pain on that score," he added.
Source: Agencies
"Certainly in sectors that are badly affected, if we are not able to completely counter the effect of recession, there may be some job losses. We hope they will be temporary," Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters while briefing on the stimulus package.
He said the idea behind this package is to ensure that economy does not slow down too much.
Ahluwalia said the economy is expected to grow at seven per cent this fiscal and that will be a good performance.
"So, when I say that this package will hopefully generate a growth rate of seven per cent, that is a growth rate that is certainly consistent with the total number of jobs in the economy increasing," he said.
The Planning Commission Deputy Chairman, however, said it is not possible to completely counter the impact of an external slowdown.
"But with this package what we are doing is minimising the pain on that score," he added.
Source: Agencies
Nasscom no authority to probe Satyam-WB episode, reacts Som Mittal
Reacting to a request by an IT-BPO union UNITES to conduct inquiry into the Satyam-World Bank fiasco, IT industry body Nasscom on Friday said that it has no authority to look into the matter.
"It is a company-level issue and we do not have any authority to conduct an inquiry into the matter," Nasscom President Som Mittal said, adding that he was yet to received a formal request in this regard.
Fearing that the image of the Indian IT firms globally will take a beating following the Satyam fiasco, IT-BPO union UNITES has urged Nasscom to institute an inquiry in association with the World Bank on Satyam,which has been banned from doing business with the bank for eight years.
"We want the inquiry to look into the possibility that some vested interests, who want to tarnish the good name and reputation of the Indian IT companies," Prithviraj Lekkad, President, UNITES Professionals India told PTI.
Nasscom and the government would have to decisively intervene and get to the bottom of the World Bank findings on Satyam and clear the fair name of Indian firms, including Satyam, and the integrity of the staff working for them abroad, he added.
The Bank had said on December 23said, "Satyam was declared ineligible for contracts for providing improper benefits to Bank staff and for failing to maintain documentation to support fees charges for its sub-contractors.
Within two days of the Bank's announcement, Satyam had formally requested the World Bank to immediately withdraw those statements and asked it to "issue a new statement apologising to Satyam for the harm done to the company due to the Bank's actions."
Source: Agencies
"It is a company-level issue and we do not have any authority to conduct an inquiry into the matter," Nasscom President Som Mittal said, adding that he was yet to received a formal request in this regard.
Fearing that the image of the Indian IT firms globally will take a beating following the Satyam fiasco, IT-BPO union UNITES has urged Nasscom to institute an inquiry in association with the World Bank on Satyam,which has been banned from doing business with the bank for eight years.
"We want the inquiry to look into the possibility that some vested interests, who want to tarnish the good name and reputation of the Indian IT companies," Prithviraj Lekkad, President, UNITES Professionals India told PTI.
Nasscom and the government would have to decisively intervene and get to the bottom of the World Bank findings on Satyam and clear the fair name of Indian firms, including Satyam, and the integrity of the staff working for them abroad, he added.
The Bank had said on December 23said, "Satyam was declared ineligible for contracts for providing improper benefits to Bank staff and for failing to maintain documentation to support fees charges for its sub-contractors.
Within two days of the Bank's announcement, Satyam had formally requested the World Bank to immediately withdraw those statements and asked it to "issue a new statement apologising to Satyam for the harm done to the company due to the Bank's actions."
Source: Agencies
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