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Journalism of Courage
March 28: With a new Government in saddle, the markets are hoping that stability is not far behind. But he the market regulator is taking a few chances. It has unleashed a slew of measures which are aimed at lifting the spirits of the markets.
The Securities and Exchange Board of India (SEBI) has improved disclosure standards, made delisting more difficult, relaxed lock-in norms for promoters and has given a push to stock-lending scheme. At its board meeting here on Friday, SEBI made it mandatory for companies to publish their unaudited financial statements on a quarterly basis. The market regulator has also decided that not more than 20 per cent of the promoters’ contribution shall be locked in both in the case of preferential allotment as well as a public issue.
Although SEBI has permitted voluntary delisting in all stock exchanges other than the regional exchange, companies will now have to give a `buy-offer’ to all the shareholders. The move aims to protect the shareholder’s interest and to ensurethat investors are not left in the lurch in case of voluntary delisting. The buy-offer will have to be made at a six-month average price from the last traded day of the share. To guard against fly-by-night operators, SEBI has made it mandatory for companies to pay upfront the listing fees for three years which will be kept in an escrow account with the stock exchanges.
In a move which will go down well with the smaller stock exchanges, SEBI has struck down the Chandratre Committee recommendation making listing on the regional bourse optional for issuers. According to SEBI, “Such a move would have adversely affected small exchanges and investors, especially those situated in the jurisdiction of the regional stock exchange.”
The Security and Exchange Board of India also considered a uniform listing norm for all stock exchanges, for which it will draft guidelines.
Half-way Budget
The much-awaited interim Budget spelt good news for the states even though there was bad news on the national front.Finance Minister Yashwant Sinha decided to give the states their full share from VDIS collections amounting to Rs 7.594 crore in this financial year itself. This is more than what his predecessor P Chidambaram had planned at Rs 4379 crore.
This has resulted in a higher fiscal deficit which has been compounded by sharp fall in tax revenues. The interim Budget presented by Sinha along with the vote on account, has indicated a fiscal deficit of six per cent of Gross Domestic Product (GDP) for 1998-99, or roughly the same as this year’s.Given the sharp shortfalls in tax revenue in the current year — collections fell short by 12.6 per cent — it seems unlikely that Sinha will be able to reduce tax levels any further. The sharp shortfalls in tax collections, in fact, have also forced the Government to temper their expectations for the coming year. As against the 21-per cent increase in the target for 1997-98, the interim Budget is targetting a more modest increase of nine per cent.
In the case of customs,which saw the largest shortfall, a six-million tonne reduction in petroleum imports resulted in an import duty shortfall of Rs 5,000 crore alone. Similarly, imports of most items such as capital goods, chemicals, non-ferrous metals actually fell. In fact, while it was expected that imports would touch $ 47 billion for the year, they actually reached just $ 41 billion.
