Slump in world economy: Report
New York A report in the New York Times says that according to the latest economic statistics from around the globe many regional economic powers like Italy, Germany, Mexico, Brazil, Japan and Singapore - have become economically stagnant or have fallen into recession, defying most economists' expectations that growth in other countries would help compensate for the slowdown in the US.
The slowdown of world economy is now attributable to the slump in the US, Europe and Japan. However, the recovery is likely as developing countries like India expect to attain good growth in the current year.
In Asia, Singapore has tumbled into a severe recession some economists say is the worst the island country has suffered in at least 15 years. Japan has also slipped into recession as its government battles stubborn deflation.
Nearly every major economy in the region, with the notable exception of China, has seen growth plunge despite six months of interest rate cuts, it said.
The $33-trillion world economy is still likely to expand this year, as it has every year since the Great Depression. Of the top economies, only Japan's total output seems likely to shrink, and even bearish forecasters say they expect the world to grow at about a 2 per cent rate, albeit faster than during international slumps in 1982 and 1991.
And this time, there is no single outside factor that accounts for the widespread weakness, persuading some economists to believe that recovery may be slow in coming.
The biggest surprise, the Times says, is the sluggish performance in Europe, especially Germany, where leaders had until recently thought they could escape the American slowdown.
The result is that Europe, with a combined economy about as big as that of the US, is in no position to fill in for America as a locomotive of world economic growth.
European companies, the paper reported, seem persuaded that the real future growth markets are not at home but in the US, Asia and Central Europe, so domestic investment has lagged.
There are at least two schools of thought suggesting that a more problematic and longer-lasting slump than usual is under way, the daily said.
The first is the worry that widespread malaise is the flip side of the record-setting US-led expansion of the 1990s. Greater world integration in trade, finance and technology fueled the expansion.
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Cell user base touches 42.8 lakh in July
New Delhi--The cellular phone subscriber base in India has further increased by 2.1 lakh in the month alone July to reach 42.8 lakh against 40.7 lakh in June.

The cellular user base in the Circle A states, including Maharashtra, Gujarat and Karnataka, went up up by 95,000 in July against an increase of only 75,000 in the metro circles.

The cellular base in the month of July is 46.3 per cent more than the number of new subscribers added in July last year as per the figures released by the Cellular Operators Association of India (COAI).

As per COAI, Delhi continues to dominate the national cellular scene with over 6.5 lakh users closely followed by Mumbai with 6.4 lakh users. In the latter 35,000 more users were recorded in the past one month.

Cellular users in B Circle states have also grown by about 35,000 to touch 10.4 lakh of which the major gainers are Spice Telecom in Punjab and Reliance in Madhya Pradesh.

The number of subscribers in C circle states also increased from 1.34 lakh in June to 1.40 lakh in July.

Mahanagar Telephone Nigam Ltds cellular service recorded an increase in its user base for the first time with the number of users in Delhi increasing from 9,593 in June to 10,641 in July. In Mumbai, it increased from 8,867 to 13,494 during the period.

Surprisingly, Spice Cell in Kolkata reported a decrease in its user base from 1,01,291 to 79,877 from June to July.

Bhartis subscriber base in Himachal Pradesh has also decreased from 12,764 to 11,738.

The number of cellular phone subscribers in India has grown by over 84 per cent year-on-year.
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RBI to come out risk-based supervision system
Mumbai--The Reserve Bank of India (RBI) plans to come out with a bank-specific risk-based supervision (RBS) system from the last quarter of the financial year 2002-2003.

Banks with a better compliance record and a good risk management system will be entitled to an incentive package, which means lesser supervisory intervention.

Those banks which fail to show improvement in response to the monitorable action plan (MAP) will be subjected to a disincentive package.

This will include frequent supervisory examination and higher supervisory intervention including directions, sanctions and penalties.

The risk profile of each bank will determine the supervisory programme consisting of off-site surveillance, on-site inspections, structured meetings with banks, commissioned external audits, specific supervisory directions with close monitoring through MAP.

Key individuals at each bank will be accountable for each of the action points. If actions and timetable set out in the MAP are not met, RBI will consider issuing further directions to the defaulting banks and even impose sanctions and penalties.

The RBS process essentially involves continuous monitoring and evaluation of the risk profiles of the supervised institutions in relation to their business strategy and exposures.

As part of the supervision process, the RBI has called for the risk profiling of banks via CAMELS (capital, asset quality, management, earnings, liquidity and systems) rating with trends; narrative description of key risk features captured under each CAMELS component; summary of key business risks including volatility of trends in key business risk factors; MAP and bank's progress to date; strength, weaknesses, opportunities, threats (SWOT) analysis and sensitivity analysis.

The supervision cycle will vary in accordance with the risk profile of each bank, the principle being the higher the risk the shorter will be the cycle.

The supervision cycle will remain at 12 months in the short-term and will be extended beyond 12 months for low risk banks at a suitable stage.

The inspections under the new approach would be largely systems based rather than laying emphasis on underlying transactions and asset valuations.

All this was done following recommendations of Pricewaterhouse- Coopers (PwC), a management consultancy firm.
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Insurance companies cut returns
Mumbai--Insurance companies have started dropping the returns their policies offer policyholders, in keeping with the general drop in interest rates.
Soon after the Life Insurance Corporation of India (LIC) reduced the assured rate of return on its single premium product Bima Nivesh, ICICI Prudential Life Insurance Company has applied to the Insurance Regulatory and Development Authority (IRDA) to bring down the promised return on the ICICI Pru Single Premium Bond by around 50 points to 100 basis points.

The private insurance player is now offering 9.39 per cent on this bond.

A couple of other new players are expected to follow the trend over the next few weeks. Since ICICI Prudential launched its products six months back, the yield on 10-year government paper has fallen by 130 basis points.
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Car sales marginally up
New DelhiAccording to data released by the Soceity of Indian Automobile Manufacturers, while car makers like Maruti and Ford reported an increase of one per cent in sales in July 2001, others like Hyundai and Hindustan motors posted negative growth in sales and Daewoo Motors India did not reveal its sales figures for the month.
A total of 48,481 cars were sold against 48,028 units in the corresponding month a year ago.
Cumulative sales (April 2001-July 2002) stood at 1.96 lakh cars, up 2.8 per cent over 1.91 lakh units sold last year.Market leader Maruti Udyog posted a 9 per cent sales growth at 30,168 units over 27,665 units sold in July 2000.
Other segments of the automobile industry like multiutility-vehicles, scooters, motorcycles witnessed positive sales growth while commercial vehicles, mopeds and three-wheelers continued to remain in the negative territory.
Sales of commercial vehicles, a good indicator of economic growth, fell 1.9 per cent month-onmonth at 10,195 units against 10,397 units.
MUV sales increased nine per cent at 10,069 units in july 2001 over 9,237 units in the same month last year. Scooter sales grew marginally by 0.05 per cent at 73,082 units while motorcycle sales also increased by 30.9 per cent month-on-month at 2.08 lakh units against 1.58 lakh units. But, sales of mopeds fell 25.2 per cent at 46,551 units against 62,289 units sold in July 2000.
Three-wheeler sales also dipped by 6.0 per cent at 18,801 units over 20,002 units.
Car sales of Hyundai declined by 4.1 per cent in July at 6,963 units over 7,265 units last year. Ford recorded a massive 130.5 per cent jump in sales at 3,463 cars against 1,502 units while its native rival general motors sold 650 cars, two units more than July 2000.
Sales of Telco went up 17.5 per cent month-on-month at 4,212 cars over 3,583 cars but that of Hindustan Motors fell by 31.4 per cent at 1,331 cars (1,941 cars in July 2000).
Sales of Honda Siel cars and luxury car maker Mercedes Benz increased by 48.3 per cent and 243.6 per cent at 899 cars and 189 units respectively in the review month.
Fiat sales fell 7.1 per cent at 606 units in july 2001. In the commercial vehicles segment, medium and heavy vehicles sales went up 5.6 per cent at 6,252 units (5,917 units) while that of light commercial vehicles dipped 11.9 per cent at 3,943 units (4,480 units).
MUV sales increased mainly due to 15.8 and 35 per cent rise in sales of market leader M&M and Toyota Kirloskar Motor which sold 4,115 and 3,107 vehicles respectively during the review month. But, telco posted a 28.7 per cent drop at 1,847 vehicles.
Sales of scooters, which is witnessing a sluggish trend, increased marginally by 0.05 per cent in July.
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