India has assured the world that Satyam Computer, embroiled in fraud by founder Ramalinga Raju, will continue to provide its clients world class services.
"We did have a fraud, a fraud in one of our IT companies. The company was providing world-class services to its customers... The company has been constituted with a new board and they continue to supply their world-class services. We have to separate the owner from the company," Commerce Minister Kamal Nath told a press conference at the World Economic Forum in Davos.
Nath said Satyam has blue-chip customers, who have been receiving world class services for many years.
"That is expected to continue. (The) new board will look at that," he said.
While the fraud is surprising and shocking, more so since the company was listed on a US bourse and had internationally-reputed auditors, it is not a reflection of the Indian corporate sector, which maintains the global standards of management, the Commerce Minister said.
He said the fraud was not systemic and is one-off incident.
However, he said, "It has to be dealt with like a fraud... Investigations are on."
Pointing out that India's export figures are not high compared to other countries, he said, "Ours are not high figures compared to other countries. We feel that because of greater liquidity in credit and greater government spending, domestic stimulus will balance reduction in exports.
While the Reserve Bank of India injected over Rs 300,000 crore of liquidity into the system, the government came out with two stimulus packages by reducing excise duty by four per cent, increasing planned spending by Rs 20,000 crore, permission for infrastructure finance firm IIFCL to raise Rs 10,000 crore of bonds to be followed by another round of Rs 30,000 crore of papers and so on.
Nath said the enhanced government spending would increase domestic demand and it will continue to be boosted. "There are no fundamentals, which have gone wrong. However, the hype is gone, but sentiments and fundamentals are strong."
However, the Commerce and Industry Minister admitted that some sectors such as textiles and gems and jewellery are taking a hit due to compression of demand in the West.
"We believe that some of the sectors are taking a hit like textiles, gem and jewellery. Ten out of 11 diamond pieces on a jewellery are cut and polished in India. This is huge employment generating sector," he said.
On the positive side, auto and steel sectors which had two bad months of production, are showing pick up in the last 15 days, Nath said, adding, "So, we are on a recovery."
Also, there is strong movement in the FMCG, telecom and pharma sectors, he said, adding that gradually construction will pick up due to huge outlays in infrastructure.
The Minister said some of the sectors which are suffering due to external slow down could have total unemployment of 5,00,000, but expressed the hope that this will balance out by new employment opportunities being generated in other sectors.
