ESCAP survey: India to grow 7-7.5 per cent
New Delhi: India is likely to post an impressive growth of 7.2 per cent this year and 7.3 per cent next year, a United Nations report has said, despite an overall slowdown in Asia-Pacific region due to adverse effects of tsunami and the oil price shocks.

"Assuming no major internal or external shocks and no political instability, India should be able to sustain real GDP growth rates in the range of 7-7.5 per cent in 2005-07," Economic and Social Commission for Asia and Pacific (Escap) survey has said. The growth would be supported by a 2-4 per cent growth in agriculture coupled with 7.5-8 per cent growth in industry and 8.5 per cent in services, it said.

Escap projects India to grow by 7.2 per cent, while rest of the Asia-Pacific region economy as a whole is likely to expand by 6.2 per cent during the current calender year 2005. For 2006, the survey predicts Indian economy to expand by 7.3 per cent.

India will be one of fastest growing among its neighbours with Pakistan expected to grow by 6.6 per cent, Sri Lanka (5-6 per cent), Bangladesh (5.2 per cent), Nepal (4 per cent) and Iran (7.1 per cent). Only Bhutan is slated to grow faster than India and log 8 per cent GDP growth.

Escap has warned that external and regional environment weakness for the Asia-Pacific region looms large with a possible rise in inflation if global oil prices remain high rest of the year.
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Aiyer and Chidambaram face off yields nothing for oil companies
New Delhi: Yesterday's high profile meeting between Petroleum Minister Mani Shankar Aiyar and Finance Minister P Chidambaram, expected to thrash out the differences over duties, has resulted left Aiyar high and dry, with the Finance Ministry refusing to accept his views that the duty restructuring proposed in the Budget is adding to the problems of oil companies. The Finance Ministry claims that the duty proposals in the budget are revenue neutral.

"We will need to talk to the Left to discuss this matter further. More discussion is required before we can take a final assessment," Aiyar said.

Under the new duty regime, by slashing customs duty on crude by 5 per cent, the government is losing Rs5,500 crore, and by bringing excise and customs to zero for both kerosene and LPG, the government is losing another Rs2,400 crore. The total revenue loss including some additional hits on other duty cuts comes to Rs9,000 crore.

Analysts though present a different picture of the equation. They say that by re-jigging the excise duties on petrol and diesel the government is gaining Rs7,200 crore, and the imposition of additional excise duties on petrol and diesel fetches it another Rs1,900 crore.

The additional cess of fifty paise per litre of petrol and diesel fetches it further revenue gains of Rs3,116 crore, which bring the govt. a total of Rs12,216 crore by way of revenues.

While the government claims it will lose if it agrees to Aiyar's request, analysts say what is happening is exactly the opposite as the above calculations are based on crude priced at 38 dollars a barrel. With present prices hovering at over 50 dollars a barrel, the Finance Ministry stands to gain much more.

The total industry loss is expected to be a whopping Rs42,000 crore for the full year - enough to cripple them completely.
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IFC to provide $49 mn for Himachal hydel project
New Delhi: The International Finance Corporation (IFC), the private sector arm of the World Bank, has committed around $49 million of equity and debt funding for the 192 MW AD Hydro Power Ltd., in Himachal Pradesh, one of the first hydro power plants to be financed on a merchant basis in South Asia.

The project, coming up in Himachal Pradesh, is expected to alleviate peak electricity shortages in the north, an IFC release said here.

IFC's financing consists of a loan of up to $42 million and equity of up to $7 million for a 10 per cent stake in the project. The loan will have a maturity of 15 years and will be denominated in rupee terms, the release said.

The project involves the construction, operation, and maintenance of the 192 MW run-of-the-river hydroelectric power project in the Kullu district of Himachal Pradesh, and the construction of a 185 km, 220 kV transmission line that will extend to the interconnection point on the regional grid. The power plant will utilise the perennial flows of the Allain and Duhangan rivers and combine the flows through two underground headrace tunnels to feed a single powerhouse near Prini village. The estimated construction period is about four years and the total cost is about $195 million.

The project sponsor is Malana Power Corporation Ltd, which is owned 51 per cent by the LNJ Bhilwara group and 49 per cent by Statkraft Norfund Power Invest AS of Norway (SN Power). It will have a number of other significant positive impacts, including employment creation, reduction of greenhouse emissions, and a community development programme, the release said.
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