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New Delhi: The government can raise about Rs.80,000 crore ($16.6 billion) by divesting stake in public sector units, says an industry lobby report.

“Dilution of stake in leading public sector units alone could fetch at least Rs.80,000 crore,” the report by Associated Chambers of Commerce and Industry (Assocham) said, adding that this amount could be used to bring down the fiscal deficit burden.

To overcome the immediate deficit, the government may have to borrow Rs.2.4 trillion crore from the market by September, it added.

Even a 10 percent dilution in public sector giants could fetch Rs.60,000 crore and a 20 percent dilution would still leave the government in control of these units, Assocham said.

“NTPC alone could fetch Rs.68,000 crore if the government stake is reduced from 89.5 percent to 51 percent. The four power sector giants together could give Rs.98,000 crore,” it added.

It urged the government to adhere to the Fiscal Responsibility and Budget Management (FRBM) Act, maintain a low tax regime and introduce goods and services tax (GST) by next April to narrow the deficit.

The FRBM Act was enacted in 2003 to bring in fiscal discipline, and imposes limits on fiscal and revenue deficits.

“There is no need for accepting a long-term fiscal deficit and deviation from FRBM goals,” Assocham added.

Manufacturing sector to be hit by slowdown for some more time, it says. A survey conducted by the Reserve Bank of India (RBI) has estimated that the Indian economy would grow at less than 6 per cent during the current financial year, the slowest expansion since 2002-03.

The median forecast of professional forecasters’ survey estimated that the economy would grow by 5.7 per cent during the current financial year and also revised the growth projections for 2008-09.

According to the Central Statistical Organization’s advance estimates, GDP is projected to grow by 7.1 per cent in 2008-09. This would be the slowest growth since 2002-03, when the economy grew by 4 per cent. For three successive years up to 2007-08, GDP rose at a rate of over 9 per cent.

Agriculture, which is projected to grow at 3 per cent during the current financial year, provides a silver lining of sorts with services and industrial growth expected to moderate.

During the current financial year, imports and exports are projected to contract by 4 per cent and 8.4 per cent respectively. This indicates that the manufacturing sector would continue to feel the impact of the global slowdown for some more time.

The only good news is that there are signs of the economy bottoming out. During April-June, the GDP is expected to rise by 5.3 per cent, before improving to 5.6 per cent in the second quarter. The Indian economy is expected to grow at 6.2 per cent in the third and 6.5 per cent in the fourth quarters. During the third quarter of 2008-09, the Indian economy grew by 5.3 per cent as against 7.7 per cent in the first half.

While RBI expects inflationary pressure to remain low during the current financial year due to low commodity prices globally, it also points out that high food prices have kept consumer price inflation at elevated levels. During January-February, inflation based on consumer price indices has hovered around 9.6-10.8 per cent as against 7.3-8.8 per cent in June 2008.

Pointing to more pain for companies, the forecasters’ survey estimated the growth in corporate profit to fall to single-digit rates.

In addition, the quarter-ahead expectations survey on industrial performance conducted by RBI projected all-round deterioration during April-June 2009. Only 11.2 per cent of the respondents said that the overall business situation would be better and 8.4 per cent said the financial situation would be better.

“In sum, the Indian economy has experienced some loss of growth momentum with major drivers of growth witnessing moderation,” RBI said in its pre-monetary policy assessment today.

While savings and investment rates are expected to decline during 2008-09, RBI said the fiscal stimulus packages announced by it and the government would help arrest the moderation and revive consumption and investment with some lag. Besides, it said that the balance of payment position remained sustainable in the context of the present level of foreign exchange reserves and external debt.

Among the positives, the central bank, which is due to announce the annual policy statement for 2009-10 tomorrow, said that foreign exchange reserves continued to remain at comfortable levels, and would ensure stability, despite falling by $59 billion over the last 12 months.

By Joan Gralla

NEW YORK, Dec 16 (Reuters) - New York Gov. David Paterson on Tuesday proposed a new $121.1 billion budget that increases spending by 1.1 percent and relies on cuts as well as higher taxes and fees to close a 15-month $15.4 billion deficit.

Saying the state faces its worst fiscal crisis since the Great Depression, the Democratic governor in a televised address said he was not proposing any “broad-based” tax increases. But he did recommend shutting tax loopholes for hedge funds and proposed an extra 5 percent sales tax on luxury items, including yachts and jets, jewels and furs.

Wall Street’s troubles cost the state dearly because it gets one-fifth of its tax revenues from the financial sector. Hedge funds have in the past avoided federal tax hikes proposed by Congress by arguing they would move overseas. New York City is home to a number of hedge funds, although lower-tax Connecticut has also attracted many firms.

Democrats in the Assembly have sought to raise personal income taxes for millionaires. Paterson’s strategy includes a number of fee increases that would hit residents of all income levels, from a new obesity-fighting tax on sugary soft drinks to higher motor vehicle fees.

Beer and wine drinkers may pay higher excise taxes, but consumers would be able to buy wine from groceries and drug stores. At present, beer is available in groceries and drug stores but wine can only be sold at specialist liquor stores.

A sales tax exemption for clothing and footwear that costs less than $115 would be abolished. Homeowners would lose rebates under a property tax relief plan, called STAR.

Noting the credit crunch has driven interest rates on student loans as high as 18 percent, Budget Director Laura Anglin unveiled a new $350 million lending program for students that will only charge 8 percent rates. But students will have to pay higher tuition at state universities and colleges.

New York City is the only municipality to get less aid from the state, taking a $328 million reduction over last year’s budget. Paterson is planning to reduce funding for the state mass transit agency by $285 million, although the agency says it needs 23 percent more revenue.

Lame duck Senate Republicans last month rejected Paterson’s plan to slice $2 billion of spending, and since then, the Democrats, who won a two-seat majority in November, have failed to pick a new leader. That could imperil Paterson’s budget.

“I think the legislature has been sobered by the incredible downturn in the economy,” Paterson said. “It won’t be easy, it won’t happen overnight.”

Paterson is proposing to save more than $1 billion by enacting his budget by March 1, a month before the deadline.

He is also proposing to increase welfare grants for the first time in 18 years, increasing 10 percent per year for three years, a move that would benefit children most, said Anglin.

More than 500 workers will be laid off as at least 7 agencies are merged. The state workforce will lose a total of 3,108 positions. Workers, who on average earn $68,000 a year, will be asked to forego a planned pay increase, and benefits for new workers will be reduced while the retirement age is raised to 62 from 55.

Paterson is proposing $3.6 billion of cuts in healthcare, mostly in Medicaid, the state-federal health plan for the elderly, disabled and poor. Paterson noted New York’s Medicaid plan will still be the most generous in the nation.

Public schools will lose $2 billion of aid, though Paterson said a majority have sufficient reserves to offset the cut.

Other popular programs singled out for cuts include over $400 million of cuts in environmental protection and mental hygiene, and $300 to $400 million of reductions in human services, economic development, work force, and higher education. (Reporting by Joan Gralla; Editing by Chizu Nomiyama)

Source: Reuters

With the economy in the shape it’s in, even Microsoft and Google are thinking twice before dropping $100 million on a new datacenter. But the two tech giants are easing off the funding pedal for different reasons.

Google (NASDAQ: GOOG) has delayed breaking ground on a planned Oklahoma datacenter by 12 to 18 months, and appears to be going a little slower with a planned North Carolina center. It decided to pass on a $4.7 million state grant to build a data center in the town of Lenoir, N.C.

In the case of Microsoft (NASDAQ: MSFT), a source close to the construction of its planned Chicago, Ill. datacenter said work has been scaled back and many modular containers being used at the site are just being parked but not hooked up. Also, the company has yet to begin construction on a West Des Moines, Iowa datacenter despite announcing it with much fanfare last year.

It’s no surprise such projects would be delayed. Datacenters are about the most expensive capital project a company can undertake. A raised floor datacenter costs between $1,000 to $2,000 per square foot, making it the most expensive piece of real estate for almost any organization, according to Enterprise Management Associates. The cost of a five megawatt data center build-out can easily surpass $100 million.

Microsoft has publicly said it is cutting back datacenter expenses. On the last quarterly conference call to discuss the first fiscal quarter of 2009, CFO Chris Liddell said Microsoft would trim capital investments by $300 million, and he specifically said it would be on the datacenter side.

“We will probably also slow our growth in some of the facilities just by virtue of not having as many people as were expected as well. But that’s likely to be more of an FY 2010 phenomenon,” said Liddell.

Notoriously expensive to operate

He also said $500 million would be cut in operating expenses. Datacenters are notoriously expensive to operate because of their power and cooling requirements.

Google on the other hand, has made no such commitment to cut operating expenses. “Capex is lumpy business. Think about datacenters going up. We have no plans of slowing down. You just see the nature of that lumpiness. Every extra unit of capacity is cheaper for us,” said CEO Eric Schmidt on the company’s most recent conference call.

The delay in Oklahoma is simply because Google has enough capacity now, according to spokesman Eitan Bencuya. “We figured it doesn’t make sense to build it out and sit empty,” he told InternetNews.com. “We don’t feel like we need to turn it on, we have enough capacity elsewhere. So we decided to hold off construction for 12 to 18 months and then bring it online.”

Google’s four most recent datacenter projects have been in North Carolina, South Carolina, Oklahoma and Iowa. The North and South Carolina facilities are open, and Iowa will open next year. Only Oklahoma was delayed.

It decided to pass on the North Carolina Department of Commerce offer of a $4.7 million tax incentive from the Job Development Investment Grant (JDIG) program because, rather generously, Google didn’t need the money but the state did. “Considering State budgetary constraints as well as the difficulty in forecasting our business climate, we do not believe that JDIGs would be a wise investment for both Google and North Carolina at this time,” said Bencuya.

An ill wind hits Chicago

Microsoft’s Chicago datacenter is supposed to be for its Live and on-demand strategy, and by all reports from its own blog posts, the site looks very near completion.

The site is being kept somewhat under wraps in that Microsoft has not disclosed all of the details behind its construction. This is not unusual, as Google is equally guarded when it comes to datacenter construction. The Chicago datacenter is reported to be built using modular containers, with Rackable Systems the rumored provider. However, neither Microsoft nor Rackable would confirm this.

A source close to the construction told InternetNews.com on condition of anonymity that the work at the Chicago site has been significantly scaled back and much is left uncompleted. He reports the containers are being brought in but not hooked up. “It’s being handled like a big storage facility. They might bring power in, but they are talking about it months from now,” he said.

The containers there are only being wired for environmental controls for heating and cooling. They are not being networked or connected to the Internet at all. The project has seen the number of workers cut in half, the source added.

Microsoft has already disclosed some of these cutback details. It said in October that construction and container testing at the Chicago datacenter had entered into a second phase in Chicago, resulting in a workforce reduction, from 900 construction workers working 24×7 with 3 separate shifts, to approximately 450 construction staff, working one shift of 40 hours a week.

“Online and Live services are a major focus of Microsoft, and as we continue to build out our offerings and the Chicago data center, we’re working to make the right, smart operational and data center investments for today and tomorrow,” said Michael Manos, general manager of data centers in Global Foundation Services at Microsoft in an e-mailed statement to InternetNews.com.

Things are even murkier regarding the planned $500 million datacenter in West Des Moines, Iowa, which was announced in August. When the Azure platform was announced at Microsoft’s Professional Developer’s Conference in October, the press release contained references to a number of datacenters, including Chicago, but not West Des Moines.

There often is a lag time between announcement and build-out, since these are not trivial undertakings. Microsoft told the blog Data Center Knowledge that it is in the design phase of the datacenter and plans to open it in the coming years. Beyond that, it would not discuss the facility any further.

Why delaying makes sense

Andi Mann, senior analyst with Enterprise Management Associates, isn’t surprised at the delays in datacenters. “Both companies are looking to expand their services, cloud services specifically, but the potential client base for them is holding off. Industries like financial, manufacturing and retail are all taking a hit with the recession at the moment,” he told InternetNews.com.

Given the huge cost for these facilities – Google’s South Carolina facility was $600 million – he’s not surprised they are trying to save. “There’s no reason why they should be immune to this slow down. IT is well positioned to weather the recession, People are just looking to see what they can delay,” said Mann.

The industry, said Mann, learned its lesson after the dotcom bubble burst and everyone was left with too much inventory, capacity and hardware. “IT is not running fat. IT is already running lean. IT cut back earlier in the decade and never expanded to the huge proportions of the late ’90s,” he said.

source: IN

Amid a series of gloomy predictions and a lackluster start to the holiday season, e-commerce spending caught up with last year’s mark, thanks to a strong week after Thanksgiving.

According to online metrics firm comScore, Dec. 1 to Dec. 5 saw sales jump 9 percent from the same period in 2007, an increase that was strong enough to bring the total seasonal spending in line with last year.

For the period from Nov. 1 to Dec. 5, comScore reported that online spending hit $14.92 billion, about $19 million ahead of last year.

Owing to the sour state of the economy, comScore is projecting flat year-to-year growth for the season, a sharp comedown for an online retail sector that has consistently posted annual gains at or above the 20 percent range.

Nevertheless, aggressive discounts brought shoppers out in earnest on Cyber Monday, as the Monday following the Thanksgiving holiday has become known.

This year’s Cyber Monday was the second-heaviest spending day on record, as Americans logged on and opened their wallets to the tune of $846 million, a 15 percent increase from the same day last year .

The day after Cyber Monday turned in another solid performance, with spending reaching $823 million.

“Mark Twain might have said: ‘Rumors of the death of online holiday shopping have been greatly exaggerated,’” comScore Chairman Gian Fulgoni said in a statement. “Consumers are clearly responding positively to retailers’ aggressive online discounts.”

While Cyber Monday sales were brisk, the figures indicate the extent to which retailers are slashing prices to court cash-strapped consumers. The number of online shoppers that day rose 22 percent over last year, but the average transaction price was down 5 percent.

“Because of the extremely attractive prices offered by a myriad of retailers, it shouldn’t be surprising that nearly two million more consumers purchased online this Cyber Monday compared to last,” Fulgoni said. “But, because of their reduced spending power, it’s also evident that those who did buy were unable or unwilling to spend as much per person as we saw last year.”

Traffic from work computers accounted for half of all online retail activity on Cyber Monday.

Going forward, the year-to-year comparison could take a hit from a quirk of the calendar. The period from Thanksgiving to Christmas is five days shorter this year than in 2007.

“With the compressed time period between Thanksgiving and Christmas this year,” Fulgoni added, “we need to see continued strong growth during the critical weeks between today and Christmas if this year’s shopping season is to at least match that of last year.”

For the five days following Cyber Monday, eBay (NASDAQ: EBAY) saw the heaviest traffic, with 36.6 million unique visitors, though that represented a 9 percent drop from the previous year. At No. 2, Amazon (NASDAQ: AMZN) 29.5 million unique visitors, up 10 percent from the previous year.

On a percentage basis, No. 5 Apple (NASDAQ: APPL) saw the largest traffic increase of the top 10 online retailers, with 29 percent more unique visitors than in 2007.

By category, sports and fitness has seen the biggest uptick since Cyber Monday, with sales up 35 percent from the same period last year. Consumer electronics ranks No. 2, with a 24 percent increase in spending.

The category of movies, music and videos turned in the poorest performance, with year-to-year sales falling 24 percent.

But RIM remains optimistic on strong growth, despite missed launch dates and woes elsewhere in the sector.

Research in Motion (NASDAQ: RIMM) is now on the growing list of mobile handset vendors feeling a financial pinch.

The BlackBerry maker said third-quarter revenue will be less than expected, about $2.75 billion to $2.78 billion, as compared to projections of $2.95 to $3.10 billion.

The updated forecast, which still represents a 65 percent jump over third quarter in 2007, is due to currency valuations, the weak U.S. economy, lower shipments and missed product launch dates.

Yet Co-CEO Jim Balsillie remains bullish on what the year’s end will bring.

“Customer response to the new BlackBerry products launched this quarter has been exceptional and RIM has experienced particularly strong momentum in recent weeks,” Balsillie said in a statement.

RIM did not return requests for additional detail or comment by press time.

The news marks the latest in a turbulent series of developments for RIM, which, like many of its peers in the mobile device space, is looking ways to fight back against an influx of new rivals, like the Apple iPhone, amid a grim economic climate.

The company faltered earlier this year when its BlackBerry Bold shipped six months late, arriving in November — well after Apple (NASDAQ: AAPL) debuted its iPhone 3G on June 9.

The Bold reportedly suffered delays due to problems in network testing by its exclusive carrier, AT&T (NYSE: T).

More recently, RIM’s new BlackBerry Storm — seen as its best attempt yet to thwart the challenge posed by Apple’s strong push into the market — is meeting with lackluster reviews.

It’s unclear precisely how many products RIM wound up shipping during the third quarter. The company had previously said it expected to ship over 7 million units during the quarter, a comment that came during its second quarter earnings report in late September. The company shipped 6.1 million units in the second quarter, it said at the time.

But RIM and its peers may still fare better than other sectors of the economy.

How so? A recent J.D. Power and Associates report said mobile device users are paying more for handsets and services this year, with the average purchase price hitting $107 — an increase of $15 from last year.

It’s also undeniable that RIM continues breaking milestones. It said its daily net subscriber accounts hit a record level with the launch of the Storm on Nov. 21, and that it set a record number of weekly net subscriber additions during the last week of the third quarter.

“Initial sales of new products have been very positive and we believe we have the strongest smartphone portfolio in the industry by far,” Balsillie said. “RIM is well positioned to capitalize on the increasing smartphone market opportunity and we remain focused on driving growth in the fourth quarter of fiscal 2009 and beyond.”

A cloud over the industry?

Yet RIM’s warning comes on the heels of lowered projections by smaller rival Palm.

The company said revenue for the second quarter of its 2009 fiscal year would land way below analysts’ expectations of $299 million to $363.4 million, based on Reuters Estimates. Instead, Palm (NASDAQ: PALM) said revenues would hit somewhere between $190 million and $195 million.

Recent Gartner research showed Motorola (NYSE: MOT) struggling as well during the second half of this year. The company fell to fourth place in global mobile handset sales, trailing behind Nokia, Samsung and Sony Ericsson, in that order.

The only handset maker that doesn’t appear to be suffering is Apple.

A Piper Jaffray analyst reported last week that the iPhone will continue its meteoric rise into the New Year.

According to the report, the smartphone will represent nearly 20 percent of the Mac maker’s overall sales in 2009 — up from 5.7 percent of the company’s total sales this year.