High oil prices should be passed on to consumers

The best argument for using market driven rates is the utter disrespect that Indian consumers have in splurging on oil in the past few years in spite of raising oil prices around the world. Car and bike sales have increased tremendously for the consumers are not feeling the pinch of the oil price. We hear news of US consumers switching to compact cars, dumping SUVs and hitching to public transport. If the rise in oil prices were passed onto the consumers in India, I'm sure there would have been more care taken in spending less. It could also have had some lessening effect on the auto pollution in our metros. So continuing with the current oil policy is not just a matter of fiscal issue but also physical!

--Vj

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3 May, 2008, 0301 hrs IST,Cuckoo Paul, TNN

For a government which is preoccupied with tackling inflation, OPEC president Chakib Khelil’s observation couldn’t have come at a worse time. The OPEC president, in a recent statement, warned that crude oil could hit $200/bbl with the dollar losing its lustre. That too when oil prices have already climbed 100% to top the $120 a barrel mark over the last one year. With alternative sources of energy becoming a rage, land is being sacrificed for bio-fuels, pushing food prices to new highs.

For a country which is critically dependant on overseas sources for its energy needs and whose appetite for oil is insatiable, these developments are clearly worrisome — especially for emerging economies like India, China, Russia and Brazil.

“If we look at the BRIC countries, India looks like a sore thumb. We are the only country out there which is not in the pink of health when it comes to oil as all the other countries have their own resources or finances to manage the situation,” says Ajit Ranade, group chief economist with the Aditya Birla Group.

There are several others like him worried about the management of the oil economy. With polls round the corner, pump prices are unlikely to be hiked significantly to pass on the burden of the crude price rise. India is still among a handful of countries where kerosene is still being sold at $20/bbl levels, when international prices are ruling close to $125/bbl.

Over the years, when it comes to raising the prices of petrol, diesel and LPG, governments, irrespective of political hues, have uniformly chosen not to take any hard decision. This is because a decision on this issue can hurt them politically, never mind the fact that retail prices do not reflect international realities and that it can drill a hole into government finances.

The NDA government and its finance minister Yashwant Sinha started issuing oil bonds to skirt the issue. Since then these bonds which are IOUs guaranteed by the government of India and given to oil marketing companies (OMCs) to compensate them for their losses have proved to be a convenient tool to postpone solutions to the problem.

The OMC problem

Earlier these bonds compensated one third of the losses of the marketing companies. Over the years these bonds now offer up to 42% of the losses. When the bonds were originally issued, the plan envisaged was to gradually decontrol oil prices and make them market-related by the end of 10 years.

But as prices went up, the political cost became too high. Now with oil touching new highs every week, doubts are beginning to surface again whether the current mechanism of price-redress can be stretched beyond a point. Economists have already warned that postponing the problem would have long-term implications for the economy.

India’s fiscal deficit works out to 3.2% of the GDP and if the outstanding oil bonds are added to this number, the same fiscal deficit to GDP ratio escalates to 4.4%.

In general, under-recoveries are moving up faster than the jump in crude oil prices and this is again a cause of worry as it impacts all segments of the economy. In FY07, marketing companies had under-recoveries to the tune of Rs 50,000 crore which are expected to vault to Rs 1,00,000 crore in FY09, a rise of 100% in two years. During the same period average crude oil is expected to go up by 60%. For every $1 increase in price of crude, the under recoveries go up by Rs 3,000 crore.

Like American shoppers, the Indian government has followed a ‘consume now and pay later’ philosophy that is obviously unsustainable, feels an economist with a brokerage firm. The questions now being raised are: Does the government have any option? And how do other countries handle the same issue?

Options for the future

S Narasimhan, the finance director of India’s largest oil retailer Indian Oil, is one man who battles the fallout of high-oil prices on a daily basis. With the oil-major’s borrowings going up to Rs 36,000 crore, it is not surprising that his energy is focussed on finding ways to improve cash flow.

When oil prices increase, management of working capital also becomes a tricky issue as everything from inventory to cost of transportation needs to be reworked. One solution he can offer is to sell off the government issued oil bonds as soon as possible. Indian Oil holds bonds worth Rs 14,000 crore and is very keen to sell them, albeit at a loss. Narasimhan says, “Cash flows are severely constrained by the low retail prices of petroleum products.”

The marketing companies have no option but to sell these bonds at a loss as these bonds are not liquid. Again, since these bonds do not have statutory liquidity ratio (SLR) status, banks are lukewarm to the idea of picking up these bonds. To compensate for the lack of SLR status and liquidity these bonds offer a 25 basis extra coupon over the gilt rates.

One of the solutions to make these bonds attractive is to grant them SLR status. This way the marketing companies can obtain the right price for these bonds as banks would line up to buy them given the higher yields. If these bonds do get SLR status, then the extra 25 basis coupon will have to go and thus may not have the same attraction for banks. Since the government has a borrowing programme every year and banks are captive buyers of government paper, there is a scare that if oil bonds are given SLR status, the borrowing programme of the government will get impacted.

Banks will always find the oil bonds more attractive in terms of maturity as well as liquidity compared to other instruments floated by the government. Today the oil companies use the CBL route where the OMCs do the borrowings by using these bonds as collateral. This is turning out to be more efficient for the OMCs in many ways.

Gilt funds are allowed to invest in oil bonds, as these funds are mandated to invest in any security issued by the government of India. However, oil bonds are not included in the basket of securities, which banks invest in to meet the statutory requirements. According to IDBI Gilts’ head of fixed income S S Raghavan, “The main issue with gilt funds is that these securities lack trading interest and hence, are illiquid. First of all, banks do not prefer to invest in oil bonds because they do not carry an SLR status.

Secondly, provident funds and pension funds, which comprise the large set of investors in these securities, hold these bonds till maturity. Hence, there is no trading interest from these superannuation funds. Due to these reasons, most gilt funds which are professionally managed, do maintain an internal cap on investments in oil bonds.”

Typically, on the shorter end, these bonds carry a 25-30 basis point spread over the government bond of a similar tenor. On the longer end, the spread extends to over 50-100 basis points over the government bond. Currently, oil bonds of a 15-year tenor carry a coupon of 9%, almost 100 bps over the corresponding g-sec.

Much of the trading is now concentrated on the shorter end, where yields have witnessed a sudden spike on account of monetary measures such as the recent hike in the cash reserve ratio. On the longer end, trading interest is restricted given the illiquid conditions.

Apart from the financial management part, there are other issues which needs to be addressed. One of the best options would be for state governments to lower the sales taxes on fuel,the Rs 50 or so that a consumer pays for a litre of petrol, about 60% is the tax component, for diesel it is roughly 40%.

Oil revenues form a major chunk of earnings for the governments, both at the centre and in the states, so the measure has not found favour yet. The centre has cut taxes to an extent on some petroleum products, but the states have not yielded ground at all. There is a lot of scope on sales tax reductions, the taxes are currently linked to retail prices and hence increase each time prices go up.

Oil analysts say China has tackled the high oil problem by capping levies to a single tax rate. Duties on transportation fuel are a uniform 13% all over China, much lower than the Indian rates. Of course, the additional advantage that countries like China, Brazil and Malaysia have is that they produce more oil domestically.

India now imports close to 70% of its oil needs and domestic production has been stagnant for over a decade. Narasimhan says the second option to deal with the situation is an oil cess. Oil companies have proposed that the government levy a 3% cess on income tax on the lines of the education cess. This could raise close to Rs 15,000 crore every year, which could be used to stabilise oil prices.

Targeted subsidies

The third option is to have targeted subsidies; which means passing on the subsidy only to economically weaker sections instead of all the consumers. The huge under-recoveries by the oil companies are on the sale of four petroleum products — petrol, diesel, LPG and kerosene. “Of these, LPG and petrol are products that are consumed by a vast swathe of urban population that can afford to pay much more,” says an oil company official.

Subsidised LPG and kerosene can be sold to families below the poverty line, but why should everyone enjoy this benefit? he asks. This can be done through the issue of pre-loaded oil-cards, on the lines of the Kisan cards. This would ensure that the under-recoveries come down by almost half, according to estimates. This is something some economists have also endorsed.

The new president of CII KV Kamath says, “While the situation on inflation does not make it possible at present to consider a greater pass through of oil prices, this is a measure which would have to be taken sometime in the near future, based on the situation on inflation.

The situation on oil prices also mandates that the country set a target for itself in terms of conservation. Demand management of energy consumption including greater efficiency in utilisation is a must for the country.”

The impact

The impact of the high prices is being felt by oil companies more than anyone else. Consumers of aviation fuel, naptha and furnace oil too are bearing the brunt. For the rest it is of little consequence. However, the slowdown in oil company spends may soon start impacting growth.

For 2007-8, the government expects to issue oil bonds worth about Rs 32,000 crore. The figure is not fixed yet and bonds for the fourth quarter of the year are yet to be issued. In 2008-9, the figure is likely to be higher, depending on actual prices through the year.

The under-recoveries of the oil marketing companies, are currently shared between the companies themselves, oil producers (ONGC) and the government (through the issue of bonds). As oil prices went up, the central government has taken a larger share of the losses which meant greater recourse to oil bonds.

Weighed against the backdrop of these developments, it is amply clear that the government may have to soon bite the bullet. The options are limited. Either the political managers would have to take some hard measures or the other option would be to settle for lower economic growth rate. Issuance of oil bonds was fine as long as the economic growth was robust.

However, exercising such a relatively easier option may be far more difficult when the economy slows down. That is the time when these bonds can be a heavy burden. There is no escaping the fact that oil prices will have to be passed on to consumers. Many countries have done it. India may not have much of a choice. The longer the government delays it the greater will be the collateral damage.

(With inputs from Pravin Palande and Preeti Iyer)


http://economictimes.indiatimes.com/Features/Special_Pages/The_Big_Story/High_oil_prices_should_be_passed_on_to_consumers/rssarticleshow/msid-3006066,curpg-1.cms

Angry China

What I'm bothered about this article is the tinge of surrenderness to China. The Economist is concealing a fear that China might act against the world than itself. Are you worried that political changes in China would be bad to the world? Are you worried about the power the Politburo can wield over the Chinese and World affairs?

Whatever the fear might be, any observer of Indian foreign policy would point out the deftness with which the Chinese have been handling their foreign policy. The Economist is showering gratitude on China for budging on its views on Myanmar, Sudan and Tibet, on which the Chinese have held very hard and inappropriate stances (by Western standards). On the other hand Indian patience on matters with Sri Lanka, Pakistan and Bangladesh are never spoken of in the same breath. Our views are taken for granted, though we have been overly patient and reluctant to act hard. This is probably where the Indian foreign affairs lacks - firstly, we are too reluctant to take hard stances even on matters concerning self protection, for fear of hurting the diplomatic relationship of so called World powers and secondly, we have been bad marketers of the favours that we have done to our neighbours and have not extracted enough sound bytes for our patience.

--Vj

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The recent glimpses of a snarling China should scare the country's government as much as the world

CHINA is in a frightening mood. The sight of thousands of Chinese people waving xenophobic fists suggests that a country on its way to becoming a superpower may turn out to be a more dangerous force than optimists had hoped. But it isn't just foreigners who should be worried by these scenes: the Chinese government, which has encouraged this outburst of nationalism, should also be afraid.

For three decades, having shed communism in all but the name of its ruling party, China's government has justified its monopolistic hold on power through economic advance. Many Chinese enjoy a prosperity undreamt of by their forefathers. For them, though, it is no longer enough to be reminded of the grim austerity of their parents' childhoods. They need new aspirations.

The government's solution is to promise them that China will be restored to its rightful place at the centre of world affairs. Hence the pride at winning the Olympics, and the fury at the embarrassing protests during the torch relay. But the appeal to nationalism is a double-edged sword: while it provides a useful outlet for domestic discontents (see article), it could easily turn on the government itself.

A million mutinies

The torch relay has galvanised protests about all manner of alleged Chinese crimes: in Tibet, in China's broader human-rights record, in its cosy relations with repellent regimes. And these in turn have drawn counter-protests from thousands of expatriate Chinese, from Chinese within the country and on the internet.

Chinese rage has focused on the alleged “anti-China” bias of the Western press, which is accused of ignoring violence by Tibetans in the unrest in March. From this starting-point China's defenders have gone on to denounce the entire edifice of Western liberal democracy as a sham. Using its tenets to criticise China is, they claim, sheer hypocrisy. They cite further evidence of double standards: having exported its dirtiest industries to China, the West wants the country to curb its carbon emissions, potentially impeding its growth and depriving newly well-off Chinese of their right to a motor car. And as the presidential election campaign in America progresses, more China-bashing can be expected, with protectionism disguised as noble fury at “coddling dictators”.

China's rage is out of all proportion to the alleged offences. It reflects a fear that a resentful, threatened West is determined to thwart China's rise. The Olympics have become a symbol of China's right to the respect it is due. Protests, criticism and boycott threats are seen as part of a broader refusal to accept and accommodate China.

There is no doubt genuine fury in China at these offences; yet the impression the response gives of a people united behind the government is an illusion. China, like India, is a land of a million mutinies now. Legions of farmers are angry that their land has been swallowed up for building by greedy local officials. People everywhere are aghast at the poisoning of China's air, rivers and lakes in the race for growth. Hardworking, honest citizens chafe at corrupt officials who treat them with contempt and get rich quick. And the party still makes an ass of the law and a mockery of justice.

Herein lies the danger for the government. Popular anger, once roused, can easily switch targets. This weekend China will be commemorating an event seen as pivotal in its long revolution—the protests on May 4th 1919 against the humiliation of China by the Versailles treaty (which bequeathed German “concessions” in China to Japan). The Communist Party had roots in that movement. Now, as then, protests at perceived slights against China's dignity could turn against a government accused of not doing enough to safeguard it.

Remember the ides of May

Western businessmen and policymakers are pulled in opposite directions by Chinese anger. As the sponsors of the Olympics have learned to their cost, while consumer- and shareholder-activists in the West demand they take a stand against perceived Chinese abuses, in China itself firms' partners and customers are all too ready to take offence. Western policymakers also face a difficult balancing act. They need to recognise that China has come a long way very quickly, and offers its citizens new opportunities and even new freedoms, though these are still far short of what would constitute democracy. Yet that does not mean they should pander to China's pride. Western leaders have a duty to raise concerns about human rights, Tibet and other “sensitive” subjects. They do not need to resign themselves to ineffectiveness: up to a point, pressure works: China has been modestly helpful over Myanmar, North Korea and Sudan. It has even agreed to reopen talks with the Dalai Lama's representatives. This has happened because of, not despite, criticism from abroad.

Pessimists fear that if China faces too much such pressure, hardliners within the ruling elite will triumph over the “moderates” in charge now. But even if they did, it is hard to see how they could end the 30-year-old process of opening up and turn China in on itself. This unprecedented phenomenon, of the rapid integration into the world of its most populous country, seems irreversible. There are things that could be done to make it easier to manage—including reform of the architecture of the global institutions that reflect a 60-year-old world order. But the world and China have to learn to live with each other.

For China, that means learning to respect foreigners' rights to engage it even on its “internal affairs”. A more measured response to such criticism is necessary not only to China's great-power ambitions, but also to its internal stability; for while the government may distract Chinese people from their domestic discontents by breathing fire at foreigners, such anger, once roused, can run out of control. In the end, China's leaders will have to deal with those frustrations head-on, by tackling the pollution, the corruption and the human-rights abuses that contribute to the country's dangerous mood. The Chinese people will demand it.

Handwritten Newspaper

Each page of this Urdu newspaper is handwritten by 'katibs'

Chennai: At the office of 'The Musalman', the oldest Urdu daily in the country, and possibly the only handwritten newspaper in the world, no one has ever quit. They work, says Rahman Husseini, the chief katib or copywriter of the paper, till they pass on. Rahman joined the Urdu daily more than 20 years ago as an accountant, learnt calligraphy, and when the then chief katib passed away at the age of 80, he took over the front page of 'The Musalman' and has been working on it since, earning Rs 2,500 a month.

It is the same story with the reporters, the production staff, the distribution staff and everyone else at this newspaper office. "We are all family," says Rahman. "Even bhai worked here till the end of his life."

When he says bhai, Rahman is referring to Janab Syed Fazullah Sahib, the editor of the paper, who died on April 26 this year at the age of 78. Syed Fazullah had taken over the hand-written paper from his father Syed Azmathullah, who was also the founder of the daily.

Nothing much has changed at the newspaper's Triplicane High Road office since its inception in 1927. 'The Musalman', an evening paper, has always been handwritten — all four pages of it — everyday, not a single day missed in all 81 years. The calligraphers still work in a dingy little corner of the 800 square foot one-room office that also houses the printing press, as they have been doing for years. There is no airconditioning in their corner, just two wall fans. In terms of ventilation, it all comes through the narrow front door. Lighting is three bulbs and a tubelight.

Even the editor's room is a still from a bygone era. Papers stacked everywhere, a solitary fax machine in the corner, lots of files and ledgers, not a single computer or typewriter anywhere. For the next 36 days though, the newspaper will have no editor, says Aarif, who is Syed Fazullah's youngest son. "I am looking after the paper while my brothers take care of the funeral arrangements. We are not allowed to decide anything till the 40th day is over, so we have no editor. But the paper has come out every single day," he says.

The katibs, one man and two women, work almost three hours on each page, writing out by hand the headlines and news reports in Urdu, then sticking on the advertisements, sending the pages in for plating and then for printing. When one of them is ill, the others work overtime to bring out the paper. If there is a mistake, sometimes the entire page has to be rewritten.

The front page is always for national and international news, the second and third for local news and the fourth for sports. One square of space is always left blank at the bottom right corner of the front page, says Rahman, in case there is breaking news. "But we only carry it if the breaking news happens by 3 pm as we still have to write it down by hand and then get it printed to reach the houses on time." The paper is also sold on the streets every evening for 75 p a copy.

"We have correspondents all over the country," says Aarif. "In New Delhi, Kolkata, Hyderabad etc. They fax us their stories or call and tell us and we write it."

For the 22,000 subscribers of the paper, 'The Musalman' is the only newspaper as they cannot read any other language but Urdu, says Aarif and though the number of subscribers is reducing in Chennai, it's going up in certain interior parts of Tamil Nadu. Profits are down, he adds with a sigh, but it's not stopping them.

kamini.mathai@timesgroup.com

Friend to foe: Pak forces falter under jihadi fire

Islamabad may be the national capital of Pakistan, but the country’s real centre of power - the General Headquarters (GHQ) - is just half an hour’s drive away, in the garrison town of Rawalpindi. This is a completely khaki town, with neatly polished staff cars zipping up and down its wide roads, heavily armed guards standing like statues at the gates of British-era military buildings and smartly dressed officers and men going about their work in a hurried and nervous manner.

With its heavy razor-wire fences and tall and muscular armymen on patrol, it should be the safest town in the "most dangerous place in the world".

But it’s not. As the war with the Taliban and al-Qaida on the country’s north-west fringes moves to the heart of the nation, it’s the immaculate streets of Pindi that have been awash with blood and enveloped by fear, and the GHQ - obsessed with the ‘real enemy’ on the eastern front for the past 60 years - looks shaken and confused by the ferocity of attacks from the enemy who lurks within.

Last week, as Lt Gen Mushtaq Baig, chief of army medical services, was blown to bits by a teenaged suicide bomber in the heart of the Rawalpindi cantonment, Pakistan’s worst fears were confirmed once again: the militants were determined to attack the core of the Pakistani army.

And the Army is not ready for this deadly game with the people it has patronised, nurtured and guided in the past. Though it has been involved in a high-voltage battle of nerves with militants in the NWFP, it has gained little ground against them.

The militants are elusive and deeply motivated, and there have even been incidents of some army units willingly surrendering to the heavily armed militia rather than fight them.

The reason for this debacle is quite simple. Trained to fight conventional war with the Indian army in the mountains of Kashmir, the plains of Punjab and the desert of Rajasthan, the Pakistani army struggles and fumbles as it takes on battle-hardened guerrillas in the treacherous terrain of the Pashtun belt.

There’s another reason: Since 1947, generations of Pakistani army have been trained, motivated and indoctrinated to fight India. Just like in jingoistic Bollywood flicks, the word enemy always had only one meaning in the barracks of the Pakistani army. Explaining the Pakistani establishment’s perception of India in a recent interview, Ayesha Siddiqa, author of Military Inc: Inside Pakistan’s Military Economy , said: "India is an enemy, it is about to eat us up. We have to challenge it."

It’s probably this mindset that explains the ‘misuse’ of more than $5 billion given by the US to the Pakistani military to fight the Al-Qaida and Taliban in its restive border areas with Afghanistan. In a report published last year, US military officials said they believed that much of the American money had been diverted to help finance weapons systems designed to counter India.

The American accusation led to a war of words between Islamabad and Washington, with the Pakistanis accusing the Americans of ingratitude and the Americans in turn charging them with not doing enough to counter the Al-Qaida "which was expanding its influence from the remote border regions into the more populated parts of Pakistan".

"The Pakistanis are damn good fighters," says a retired Indian Army officer who saw action on the western front in 1971. "But unlike us, counter-insurgency is not their strength. It’s a different ballgame altogether. They have to shift their focus from India if they want to defeat the militants in the mountains."

This is precisely what the Americans have been telling Islamabad. In recent weeks as the country voted in the general elections and President Pervez Musharraf stood defeated and isolated, some top US officials - CIA director Michael Hayden, deputy secretary of state John Negroponte and chairman of the joint chiefs of staff Admiral Mike Mullen - flew down to Islamabad, offering to train Pakistan’s Frontier Corps in anti-guerrilla operations and trying to persuade army chief Gen

Ashfaq Kayani to switch from training in conventional warfare to counter-insurgency operations. The general reportedly agreed with the Americans’ viewpoint.

But even if Gen Kayani manages to shift the focus of his army’s training, it’s not going to be easy to win this battle, for an entirely different reason. Because of the heavy dose of religion during training and the army’s symbiotic relationship with religious extremists in the past, the soldier on the front is not convinced he is fighting the right battle. Trained to fight the ‘big enemy’, the soldiers are getting a bit confused as they take on the people who once fought alongside them.

"Even before the Taliban, we engaged with non-state actors and militants," says Siddiqa. "Who fought the war in 1947-48? We got those tribal warriors from Waziristan primarily to fight. In 1965 again, we used jihadis." In addition, the army also used religious extremists to defeat its political opponents. Now they are in a Catch-22 situation. Though Pakistan joined the US war on terror after the threat of being "bombed back to the Stone Age", its army is not ready - militarily and mentally - to fight the enemy’s enemy which has turned its guns on its former patron.

shobhan.saxena@timesgroup.com

Finance ministers voice concerns about euro

By Tony Barber in Brussels

Published: March 4 2008 11:19 | Last updated: March 4 2008 11:19

European finance ministers on Tuesday made clear their growing concern about the euro’s strength against the dollar, but said they had not pressed for co-ordinated central bank intervention in foreign exchange markets.

Ministers from the 15 eurozone countries issued a statement on Monday night saying: “In current circumstances, we are concerned about exchange rate moves… We don’t think the recent moves are reflecting economic fundamentals.”

They were reacting to the euro’s rise on Monday to $1.5275, the highest level it has touched since its launch in 1999. The euro has risen by 16 per cent against the dollar in the past year and is also stronger than some eurozone governments prefer against the yen and Chinese renminbi.

Financial market commentators noted that the eurozone statement was similar in tone to that used before the European Central Bank intervened in support of the euro in September 2000.

On Monday ministers drew attention to the fact that Jean-Claude Trichet, the ECB president, had emphasised before going in to the talks that the US authorities had said it was in the US national interest to have a strong dollar.

This was interpreted in financial markets as a warning signal from Mr Trichet about the dollar’s most recent slide against the dollar.

But on Tuesday at least one finance minister, George Alogoskoufis of Greece, said there had been no discussion among his colleagues of joint currency market intervention by the ECB and the US Federal Reserve. “No, no, there was no discussion of that,” he said.

He added: “There is a slight increase in the attention we are giving to currency market developments, because the turbulence continues and this is not something we want. But it does not mean anything dramatic…This is a global problem, it is not a European problem. I don’t think there is anything we can do on our own.”

Jean-Claude Juncker, the chairman of the eurozone finance ministers’ group, also avoided commenting on possible central bank intervention, saying: “I don’t think it would be wise to offer targets to financial markets.”

Some eurozone countries, such as Germany and the Netherlands, contend there are certain advantages in the euro’s strength, in that it is helping to contain inflation, currently at a 14-year high. In addition, they see little impact on the eurozone’s export performance.

Although the European Commission last month cut its 2008 economic growth forecasts for the eurozone, José Manuel Barroso, the Commission president, said on Tuesday the outlook was by no means bleak.

“We face economic headwinds that a few years ago might have been strong enough to sink us. But today Europe is continuing to grow and create jobs. Our employment rate at 66 per cent is our highest ever, and our unemployment rate at 6.9 per cent is the lowest for 25 years,” he said.

Copyright The Financial Times Limited 2008