Delayed monsoon agricultural growth

The Monsoon is finally here but was delayed by more than two weeks; the Meteorological Department predicts Monsoon rains at 93% of normal this year. What impact will this have on agricultural growth? The dry Almatti Reservoir, took care of the irrigation needs of farmers in Bijapur, Bagalkot, Gulbarga, Bidar, and Raichur districts of Karnataka. Built across the Krishna River, the reservoir depends on Monsoon rains in the Western Ghats to fill up :



Businessworld reports that while agriculture’s contribution to GDP has been falling, at 18% now it can still upset the applecart. For every 1% drop in agricultural GDP, 18 basis points are deducted from overall GDP growth rates. According to a senior official in the agriculture ministry, agriculture growth of 0.5 to 1 per cent is being anticipated against the targeted 4 per cent. “If agriculture growth fails, no sector can compensate it to achieve the 6-7 per cent GDP target, since it will directly affect the purchasing power both in rural and urban India,” the offical says.

But others are not so pessimistic. Anil Jain of Jain Irrigation Systems told moneycontrol: "It is a matter of concern but it is still not time to panic because lot of farmers have still not sown a lot of seeds of whatever crops they wanted to do. And even if rains come within let us say two-weeks maximum, then still good amount of output will come and the impact may be only about 5-10% depending on whatever the crop shifting takes place.

For example let us say in Maharashtra lot of farmers are going for cotton. If the rains don’t come for the next 2-3 weeks especially dry land farmers, they will try and do some sunflower, urad or any other short crops."

Infrastructure hopes from the Budget

Infrastructure companies are demanding a range of measures to enhance flow of funds into infrastructure development:

Investment) The Interim Budget had postponed the infrastructure investment target of 9 per cent of GDP to 2014 instead of 2012 set earlier. But with the signs of revival, the target may be advanced to 2011.

Disinvestment) The Government should also expedite disinvestment in PSUs to augment funds for infrastructure.

Bond market) A secondary market for debt trading should be in place to enable private sector raise funds in infrastructure space through long term corporate bonds.

Pension funds) could also be allowed to invest 10-15 per cent of their corpus in infrastructure bonds along the lines of permission granted to LIC to invest in equity.

Introduction of the common goods and service tax) will help the construction industry rationalise its tax structure and simplify compliance.

External commercial borrowings) The Government should permit domestic companies to refinance rupee loans through external commercial borrowings; capital gains tax treatment for special purpose vehicles (SPVs) have to be rationalised, say industry representatives.

Taxation) The law should be amended to reduce capital gains tax rates for SPVs on a par with listed companies. It is mandatory that infrastructure projects are handled through SPVs, which are generally unlisted and cannot get capital gains exemption granted to the listed/parent companies.

Similarly, dividend distribution tax should also be rationalised. Infrastructure development business calls for a multi-tier corporate structure with a holding company at the top which is a listed entity.

Build on core for growth
R Balaji

Tata Motors strategy

Tata Motors has raised Rs 2,500 crore through advances for bookings of its low-cost car, the Nano. In the commercial vehicles segment the company unveiled its World Truck range, developed jointly with Tata Daewoo Commercial Vehicle (TDCV) of South Korea, at Mumbai on May 29. Rs 1000 crore was invested in this project and Tata Motors plans to roll out 55,000 World Trucks eacy year from its Jamshedpur plant. The World Truck can hit 100 km/hour and can travel about 700-800 km a day. The full range comprises multi-axle trucks, tractor-trailers, tippers, mixers and special application vehicles, with a carrying capacity between 10 to 75 tonnes....the trucks are also Euro III and Euro IV compliant in terms of emissions.



Tata Motors floated a Rs 4,200 crore bonds issue last month, with the guarantee of India’s largest bank SBI. The Rs 4,200 crore bond issue has been divided into four tranches maturing in two years, four years, five years and seven years. The Rs 1,250 crore seven-year tranche has been picked up by Life Insurance Corp. of India, while the rest is being refinanced through a consortium of 12 banks, including Citi, SBI, BNP Paribas and Bank of Mitsubishi, at 500 basis points over Libor. Tata Motors has also raised Rs2,200 crore through fixed deposits from the public.

The company stated in May that it had completed refinancing of the Jaguar Land Rover acquisition bridge finance, which stood at $3 billion. Tata Motors raised more cash by reducing its stake in Tata Steel, selling 11 million shares to promoter company Tata Sons for Rs 456.78 crore.