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C O R P O R A T E S & M A R K E T S C O R P O R A T E S & M A R K E T S M O N E Y & B A N K I N G

P U B L I S H E D F R O M : A H M E D A B A D B A N G A L O R E C H A N D I G A R H C H E N N A I H Y D E R A B A D K O C H I K O L K A T A L U C K N O W M U M B A I P U N E

Manufacturing boosts Q1 GDP It’s not end of the

story for Vedanta
growth to 8.8%, fastest in 3 yrs in Orissa: Saxena
fe Bureau ing of the base effect (last
GROWTH PATH year’s high base) and a com- Nistula Hebbar mit to the government.
New Delhi, Aug 31: India’s In % parative dip in growth capi- “Most remain on paper,
grossdomesticproduct(GDP) Industry Q1 09-10 Q1 10-11 tal goods output, which grew New Delhi, Aug 31: Vedan- with no checks,” he said.
expandedat8.8%intheApril- atascorchingpaceinthepre- ta could have another shot Saxena said that more
Agriculture, forestry & fishing 1.9 2.8
June quarter of this fiscal— vious few months. Manufac- at the bauxite mining pro- than anything else, he fears
thefastestpaceinnearlythree Mining & quarrying 8.2 8.9 turinghasnearly80%weigh- jectinOrissa’sNiyamgiriif that certain ambiguities in
years—onthebackof arobust Manufacturing 3.8 12.4 tage in the index of it promises to be within the the Forest Rights Act, 2006
12.4% growth in manufactur- Electricity, gas & water supply 6.6 6.6 industrial production. Al- confines of the legal frame- (FRA) would create some
ingandacomparableshowby ready, farm output in Q1 this work, NC Saxena, member, problems in land acquisi-
Construction 4.6 7.5
certain services industries year (2.8%) was better than National Advisory Coun- tion issues in the future.
like communications and ho- Trade, hotels, transport, communication 5.5 12.2 that in the corresponding pe- cil, who prepared the “What FRA gives tribal and
tels, despite a slowing of the Financing, real estate, business services 11.8 8.0 riod a year ago (1.9%). damning report on the pro-
growth in financial services Community, social & personal services 7.6 6.7 Joshi added that the effect ject, told FE.
andrealestate. GDP at factor cost 6.0 8.8 of the rollback of extra gov- The Orissa government
Commentingonthedatare- ernment spending could be could appeal the matter in
leasedTuesday,financeminis- visibleinthemonthstocome court, and if Vedanta
terPranabMukherjeesaidthe many of them warn that soon,”said DK Joshi, princi- twobasispointsto7.95%after oncertainserviceindustries restarted the process of
economywasontracktogrow manufacturing growth pal economist at Crisil. thereleaseof data.According but private sector services taking permissions and
at 8.5% in the current fiscal, could now moderate, and Tuesday’s data, when pit- to agency reports, some bond would keep the growth pace. stayed within the law, the
while Planning Commission this could reflect in the July- ted against the persistent dealers anticipate a 25-basis Thegovernmenthasalready project has a chance of re-
deputy chairman Montek September quarter data. double digit inflation— pointsrateriseatthenextpol- started cutting down on sub- vival, he said in an inter-
Singh Ahluwalia expressed “While the manufacturing 9.97% last month—could icy review. The central bank sidies and certain adminis- view with FE.
In the news the hope that the growth
ate in the second quarter,
prompt RBI to stick tena-
ciously to its policy of cali-
has raised interest rates four
trative expenses, in its bid to
reduce the fiscal deficit as a
According to sources,
while the Orissa govern- The trend in
The growth in the previ- servicessectorwouldbroad- bratedmonetarytightening. Industrial output in June percentage of GDP. mentiscontemplatinglegal Europe, US and
ous quarter was 8.6%. ly maintain the momentum. The policy will come up for grew at a modest 7.1% on an ■ Continued on Page 2 recourse after one of the
The first-quarter GDP da- There will be a further pick- review on September 16. year-on-year basis, as com- ■ See Edit: Rear-window biggest private investment other parts of the
tawasinlinewithwhatmost up in agricultural activity Yieldonthebenchmark10- pared to 11.35% in the previ- economics, Page 8 proposals for the state was world has been to
economists predicted, but on account of good mon- yeargovernmentpaperfellby ous month, owing to the fad- ■ India Inc upbeat, Page 12 shown the red flag, it is not
spend time and
sure whether Vedanta has
INDICES Closing Up/down ■ Finance Minister Pranab Mukherjee on ■ PMEAC chairman C Rangarajan has said ■ Planning Commission deputy chairman Saxena also denied that developing superior
Tuesday said he expects the nation’s economy lower industrial output in the second quarter Montek Singh Ahluwalia said the 8.8% growth he or anyone in the forest
Sensex 17,971.12 ▼ 60.99 to grow as much as 8.75% in the financial year may pull down overall gross domestic product in Q1 is on expected lines and the economy will advisory committee of the technology, which
S&P ending March 31, 2011. ■ Page 12 growth in July-September. ■ Page 12 grow by more than 8.5% in FY11. ■ Page 12 environment ministry was leads to less
CNX Nifty 5,402.40 ▼ 13.05 inherently anti-industry or
intrusive effects on
anti-development. “India is
Free distribution of the environment

Sinha panel suggests common rules for

not the only country which
grain an order, not isindustrialisingorisgrap- NC Saxena,
a suggestion: SC pling with issues of envi- member, NAC
ronmental degradation re-

all foreign investments other than FDI

said. “But the trend in Eu- forest-dwelling communi-
rope, US and other parts of ties is community rights
the world has been to spend but not ownership; so while
timeandmoneyondevelop- theirclaimstouseofforests
ing superior technology, is recognised, it is not the
fe Bureau the hard caps with percent- which leads to less intru- right to sell or own, or even
Taking exception to ROAD AHEAD age limits to remove quanti- sive effects on the environ- devolve as inheritance.
agriculture minister New Delhi, Aug 31: The fi- ■ Tax global income of residents in a residence-based system tativerestrictions.Itsuggest- ment,” he added. Their consent is required if
Sharad Pawar’s nance ministry on Tuesday ed to study the revenue “Here,theeffortistosub- forest land has to be ac-
■ Create FSAT or empower SAT to hear appeals on foreign inflow
statement, the Supreme proposed to do away with the implications of shifting from vert systems as it costs less quired, but the government
■ No distinction between investor classes on foreign investments
Court on Tuesday different rules for portfolio, a source-based taxation sys- than any genuine develop- remains the owner of the
asserted that it had NRI and foreign venture cap- ■ Qualified global depository participants to enforce OECD KYC norms tem to a residence-based sys- ment of technology which land. This ambiguity will
ordered free distribution ital investments in India and ■ Depository participants must pass Sebi’s fitness test tem of taxation. would help you stay within create problems in the fu-
of grain to the poor institute a single window ■ Abolish FIIs, FVCIs and non resident Indians as investor classes Thegroupalsowantstoem- the law and also lead to in- ture,” he said.
instead of allowing it to regulatory system for all. power Sebi to ask and receive dustrialisation without He added that the Na-
■ Grandfather existing foreign venture capital investments
rot in godowns and that The idea behind the sweep- UK Sinha, all information related to the concomittant environmen- tional Advisory Council of
■ Replace Sebi FVCI and FII norms with QFI regulation
this was not a suggestion. ing changes is to make life UTI AMC chairman ultimate investors in Indian tal degradation,” he said. which he is a member will
“It was not a suggestion. easier for foreign investors companiesthroughparticipa- The example he cited was of be looking into these as-
It is there in our order,” in India and to reduce the tory notes, an instrument is- the reforestation plans that pects when assessing the
the court told the cost of equity capital for lo- proposals do not apply to for- sures. As per the working that as foreign direct invest- suedtooffshoreinvestors. companieswhichwouldcut implementation record
govt counsel. Page 17 cal companies. eign direct investment. group, regulators (Read RBI) ment, which has to comply In essence, the working treesforprojectswouldsub- of the Act.
As per the proposals made As FE hadreportedearlier, willhavetoassignspecificrea- with all sectoral caps and group has attempted to sug-
Stick to science, UN by a working group headed the working group also wants sonsforsuchmeasureswhen- other regulations. Now, FIIs gest a framework where
climate panel urged HDFC raises PLR Corp governance
by UTI AMC head UK Sinha tosetupaFinancialSectorAp- ever they are taken and in- can invest in a company up costs,complexityandregula-
In what calls for a reform and released by the ministry pellate Tribunal (FSAT) or al- vestors should have recourse to 24%. If the directors tory uncertainty would be to 14.25% focus in Cos Bill
of the the UN climate forpubliccomments,thegov- ternatively, enlarge the scope for appeal to the SAT or the agree, it can be raised up to much less to the entities re- Unwilling to absorb rising Listed firms will have to
panel, scientists have said ernmentshouldendtheprac- of Securities Appellate Tri- proposed FSAT. Currently, the sectoral cap. ceiving foreign capital as borrowing costs, HDFC follow strict norms on
that the body should tice of treating foreign insti- bunaltohearappealsonallas- regulators other than RBI The working group also well as to those making those upped its RPLR by 50 bps corporate governance
make predictions only tutional investors (FIIs), pects of regulation related to anyway have to spell out the proposed grandfathering the investments. to 14.25%. Since HDFC’s and any deviations must
when it has evidence and foreign venture capital in- foreign capital inflows. Cur- reasonsfortheiractions. existing foreign venture cap- Now, different classes of adjustable home loan be reported to the gover-
that it should avoid vestors(FVCIs)andNon-Res- rently,theRBIhasunqualified Another significant pro- ital investments after a cut- foreigninvestorsareboundby rates are benchmarked to nment, said the House
policy advocacy. Page 12 ident Indians (NRIs) as dis- discretionary powers under posal is to classify all for- off date. The new norms also different rules, which force RPLR, the rise will hit all standing committee
tinct investor classes. They the Foreign Exchange Man- eign investment less than propose to either rescind the themtoexploittheregulatory customers in the next on Companies
EDIT PAGE P8 wouldbetreatedatparfroma agement Act when it comes to 10% in a company to be FII limit on foreign institutional arbitrage and camouflage to three months. Page 13 Bill 2009. Page 2
regulatory point of view. The taking capital control mea- and any fund inflow beyond investment in debt or replace enterintoreceivingentities.
When green
is more red
than amber
BIBEK DEBROY India gets to access more Swiss bank data with new pact
fe Bureau ment which substantially ex- vision for providing banking treatyshopping—alegalroute ment Directorate, under an use of information by such Swiss border. While there are
pands the scope of informa- andownershipinformation.” often used by companies to escape clause in the new other purposes which are al- no clear estimates of the
NewDelhi,Aug31:Indiawill tion to be shared. Finance ministry officials claimtaxreliefinIndia,evenif agreement, the officials ex- lowed under the laws of both amount involved in the Mad-
Exclusive! now have the right to track Thenewagreementmeans said while the new agreement they enjoyed a tax-exempt sta- plained. On record, Mukher- States and the competent au- huKodascamforinstance,the
banking information from inallthosecaseswheresome- covers only prospective cases, tusinSwitzerland. jee said the information ex- thority of the supplying State five Swiss bank account num-
Chance for Alfa Switzerland.CasesliketheIPL one has run afoul of the Indi- there is no bar on the govern- The data can now also be changed “is to be used for tax authorises such use”. bers unearthed by the income
Alfa Romeo cars haven’t scam or the Madhu Koda min- an tax authorities and has a mentopeningfreshcasestoob- shared with other investiga- purpose only. However, the In the wake of the finan- tax department is expected to
always lived up its brand. ingscamwheretheIndianrev- Swissaccount,NewDelhican tain the data. It will also block tiveagenciesliketheEnforce- new article also provides for cial meltdown of 2008, coun- runcloseto$1billion.
That is changing ■ P18 enuedepartmentcouldnotget obtain information on them tries like the US and the UK The agreement will come
information about the num- from Berne. The Swiss gov- had accused tax havens in- into force after “the comple-
bered bank accounts of those ernment will not insist on In- FORWARD TOGETHER cluding Switzerland of mon- tion of internal process by
prosecuted may now be inves- dia proving that a Swiss law ■ Agreement will be applicable ey-laundering through num- the Switzerland side” said
tigatedwithease,eventhough has also been violated by the only for prospective information bered bank accounts. While the minister. He said at pre-
finance minister Pranab offenderbeforeofferinginfor- ■ Swiss banks don’t give info on the US has reworked infor- sent, income from interna-
MukherjeetoldParliamenton mation. As the minister ex- banking transactions, says FM mation sharing mechanisms tionalshippingisnotcovered
Tuesday that the “provision plained in his statement in ■ Under current DTAA, India cannot with Switzerland, India has under the DTAA. This is now
will be applicable only for both houses, “There is a spe- get banking info from Swiss been stymied so far. sought to be included in the
prospective information and cific provision to ensure that ■ Data can be shared with agencies The signing of the double DTAA by providing for resi-
notforpastinformation”. information will be ex- like ED under an escape clause tax avoidance agreement is a dence-based taxation for
India and Switzerland on changed even if there is no ■ Information can be exchanged even major step for India to deal shipping income from inter-
Mondaysignedareviseddou- (Swiss) domestic interest. if there is no domestic interest with cases where the trail of national traffic.
ble taxation avoidance agree- There is (also) a specific pro- taxevasionhasruncoldatthe ■ Continued on Page 2