Financial Daily from THE HINDU group of publications
Saturday, Jul 06, 2002
Industry & Economy
Business confidence picking up: FICCI
CHENNAI, July 5
THE Federation of Indian Chambers of Commerce and Industry (FICCI) feels that the overall business sentiment is picking up. This is borne out of confidence surveys conducted by it, the FICCI President, Mr R.S. Lodha, told a press conference here today.
He said that 30 leading companies in the country were looking at expansion plans entailing an investment of over Rs 41,000 crore. More than 81 per cent of those covered in the surveys felt that a recovery was around the corner in the next six months. This feeling was corroborated by the fact that the profit-after-tax of companies in the last quarter of 2001-02 had shown an increase of 29 per cent over the same period the previous year.
The FICCI, therefore, believed that the Finance Minister would need to engage himself in announcing the rate of growth that he would like to see. The chamber felt that this could be around seven per cent.
He said that the FICCI would take up with the Finance Minister the falling share of the manufacturing sector in the country, which was only 26 per cent whereas it was 49 per cent in China.
Among the measures that the Finance Minister would have to take were steps to boost the purchasing power of the people. In this connection, Mr Lodha said, the tax component in the retail-selling price was much more than what it would need to be. This was more than 30 per cent whereas worldover the tax component was around 17.5 per cent.
Another issue that needed to be looked into was the capital market and steps to make it more vibrant. There was also a need to develop a long-term retail debt market, possibly by looking at inflation-indexed bonds. The Finance Minister would also have to look at restoring incentives for long-term savings.
Mr Lodha said the FICCI would study closely the recently issued ordinance on securitisation because of the wide-ranging powers it gave banks and financial institutions, especially in dealing with defaulters. Any power should be used to deal with wilful defaulters as described by the RBI only.
The ordinance also gave the institutions the right to take over a management, change the board or recall companies from the BIFR once three-fourths of the lenders were agreed on this step of action. The institutions could go ahead with these actions after just giving a notification in a newspaper. The FICCI would study the implications of these steps more closely before giving its reaction.
To step up focus on film industry
THE Federation of Indian Chambers of Commerce and Industry is increasing its focus on the entertainment sector, which it believes has the potential to grow further. For this purpose, it has roped in film actor, Mr Kamal Hassan, who, the FICCI says, besides being an actor is also a thinker on the industry.
The FICCI's aim is to get some increased recognition for the film industry so that regular institutional financing became easily available, the federation officials told a press conference here today.
Mr Rajendra S. Lodha, President, and Dr Amit Mitra, its Secretary-General, pointed out that FICCI had been working on the entertainment industry for almost four years now. It first worked to get the IDBI Act amended so that the bank could lend to the film industry. It later got the IDBI to commit Rs 100 crore to the sector following which it got the Bank of India also to commit a similar amount. The FICCI then worked towards corporatising the film producing companies, because of which 16 companies got corporatised.
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