Financial life in a big town

Liberty Property Trust looked to its existing client base to find the first tenant for Round Up Business Park, just one month after acquiring the Northwest Houston industrial property.

Medco Medical Supply will take 46,000 square feet in Round Up, which represents a 72 percent increase over its current amount of space. Medco leases 27,000 square feet at Liberty’s Legacy Center Business Park, also in Northwest Houston.

Medco will move to the 12-acre Round Up Business Park in December.

Round Up consists of two buildings at 10301 and 10305 Round Up Lane near North Sam Houston Parkway that contain nearly 228,000 square feet of space business card. The project was empty when Liberty bought it from developer Caldwell Cos. in July.

Liberty (NYSE: LRY) owns more than 4 million square feet of industrial space in the Houston area. The Malvern, Pa.-based real estate investment trust has 78 million square feet in its nationwide portfolio of industrial buildings.

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Cash is king, and Big Tech companies have it pouring out their ears.

A combination of cost-cutting tactics and an improving economic climate have driven tech-sector profits way up this year. In the second quarter, technology industry earnings are on track to rise 66% compared to last year, according to Thomson Reuters.

That has led to massive stockpiles of cash at some of the world’s tech giants. The eight biggest companies in the industry are sitting on a collective stash of more than $194 billion.

But CEOs playing the role of Scrooge McDuck won’t impress many shareholders. With cash earning next to nothing nowadays, investors want companies to put their cash to good use. The result: A tech M&A frenzy that industry analysts think is just getting started.

Companies can use excess cash to pay a dividend to shareholders, but there’s only so much businesses want to give away, and tech companies are notoriously stingy with their dividend payments. Companies can also buy back their own shares, but some argue that strategy isn’t a great deal for shareholders. Another path is to invest internally, ramping up spending on research, development and hiring.

Instead, tech companies have lately gone with a third option: buying up companies that catch their eye.

In August alone, Intel (INTC, Fortune 500) bought McAfee for $7.7 billion and acquired Texas Instruments’ cable modem unit, IBM (IBM, Fortune 500) bought Unica for $480 million, and Google (GOOG, Fortune 500) bought Slide for about $200 million. Dell (DELL, Fortune 500) bid $1.15 billion last week for storage company 3PAR, but Hewlett-Packard outbid it on Monday to the tune of $1.6 billion — after scooping up security software company Fortify last week.

Analysts say the buyout boom is fueled by companies’ reluctance to gamble on hiring and internally developing new product lines. It’s safer — and often cheaper — to buy up those others have built.

"Everyone’s done a great job at cutting costs and making themselves profitable, but investors are asking where the growth is," said Eric Johnson, director of the Center for Digital Strategies at Dartmouth University’s Tuck School of Business low interest personal loan. "Cost-cutting has created a toxic environment in many firms for internal investments, and you can’t beat the speed to growth of an acquisition."

There is often a snowball effect in acquisitions, leading some companies to snap up smaller companies simply so they don’t get left out of the action.

But it also doesn’t hurt that the cost of capital is extremely cheap right now, and a lot of potential takeover targets are attractively priced. The economic downturn has hammered many stocks, allowing buyers to offer generous premiums on valuations that are much lower than they would have been a few years ago. IBM purchased Unica at a 120% premium, and Intel offered 60% more for McAfee’s shares than they were going for at the time. HP’s 3PAR (PAR) offer is a staggering 149% higher than 3PAR’s shares traded at before Dell announced its offer.

Those three takeover targets do business in analytics, security and storage, respectively — high-growth areas that yield technology applicable to a wide array of business uses. They’re exactly the kinds of companies that make attractive takeover bait.

The question is how long this trend will last. So far this year, there have been 21 billion-dollar deals worth a total of $46.4 billion, according to The 451 Group. That compares to just six last year, totaling $19.7 billion.

Some say the coast is clear for many more deals.

"There are still plenty of attractive transactions to be done," said Murray Beach, managing director of TM Capital’s technology group. "Our clients’ pipeline suggests this trend will continue, and there will be a pretty significant rise in these deals for the foreseeable future." 

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Toyota Motor Co. plans to start recalling luxury vehicles possibly affected by engine problems on Monday.

Toyota will submit documents to recall of 90,000 vehicles in Japan on Monday, company spokesman Mieko Iwasaki told CNN. Recall announcements in other regions will subsequently be handled by each country individually.

On Thursday, Toyota said it was investigating engine problems affecting 270,000 vehicles worldwide. Small valve springs that were made from low-quality metal could crack, potentially causing engines to stall, said Toyota spokesman Paul Nolasco.

In most cases, owners will experience only abnormal idling or engine noise, Toyota said in a written statement, although even that was described as a "remote possibility."

Approximately 137,000 vehicles in the U.S. are potentially affected, the automaker said. The cars sold in the U.S. that could be affected include the Lexus IS 350, GS 350, GS 460, GS 450h, LS 460, LS 600hL. All are luxury sedans and two, the GS 450h and LS 600hL, are hybrid cars.

Only cars from model years earlier than 2010 could be involved, Toyota said.

Also involved is the Toyota Crown, a large luxury car that is not sold in the United States.

Toyota has not received any reports of injuries or fatalities related to the issue, the automaker said instant payday loan.

Toyota’s Lexus luxury division will announce a remedy for the problem as soon as possible, the automaker said in its statement.

"In the meantime, we sincerely apologize to our customers for any inconvenience and request that they contact their nearest Lexus dealer if they believe there is a problem with their vehicle," said Mark Templin, general manager for Lexus in the U.S.

Toyota has been dealing with a long-running spate of quality and safety problems.

Toyota has, in recent months, recalled more than 8 million vehicles worldwide for a variety of potential safety issues including possible unintended acceleration and problems with anti-lock brake software.

Most recently, the automaker recalled some Lexus SUVs because of problems with electronic stability control software.

In a recent J.D. Power survey of initial quality, Toyota slipped to 21st place this year from 6th place last year.

CNN’s Yoko Wakatsuki and CNNMoney.com senior writer Chris Isidore contributed to this report. 

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RxMedic, a maker of automated pill dispensing systems used in pharmacies, has been purchased by J M Smith, a South Carolina company that provides various products and services to the pharmacy industry.

J M Smith, based in Spartanburg, S.C., closed on its purchase of privately held RxMedic in late May, says RxMedic Senior Director Chris Cox. J M Smith had been one of the investors in the Raleigh company.

RxMedic, incorporated in 2007, sells its pill dispensing systems in North and South Carolina and parts of Virginia, Tennessee and Georgia. Cox said J M Smith’s purchase of the company gives it a better opportunity to grow because it can tap into J M Smith’s national sales and marketing force bad credit payday advance.Cox declined to disclose RxMedic’s revenue. The company’s competition includes Durham-based Parata Systems.

With the sale of the RxMedic, former CEO Alan Winchester has left the company. RxMedic currently employs 15. Cox says all of the remaining employees will be retained by the company and additional workers could be hired for its manufacturing operations in coming months. Cox said the number of workers the company hires depends on sales of the product.

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A new brick building stands out from some of its dilapidated and rundown neighbors along Martin Luther King Drive in the Ville neighborhood.

A sign outside the building, home to a new retail center, says, "Success Starts Here" and beckons prospective business owners to inquire about renting space.

A promotional goods and lettering business catering to fraternities and sororities already fills one of the eight storefronts in the 7,200-square-foot building. A women’s wig store is slated to open next month. And a sandwich shop is in the works.

Habitat for Neighborhood Business, a local nonprofit run by current and former business executives, hopes to fill all of the storefronts by the fall.

"Our mission is to target economically challenged areas," said Terry Donohue, Habitat’s president and executive-in-residence at St. Louis University’s Center for Entrepreneurship, one of the partners on the project. "Our goal is to bring businesses back into the neighborhoods in the hope that they will spark some more economic development and job growth in the neighborhood."

This is the first freestanding center the group has built, which was one of its original goals when Habitat was founded about five years ago, said Donohue, a retired Enterprise Rent-a-Car vice president.

The project cost including land and construction was about $1.2 million. Construction began in late 2008 and finished up in the latter half of last year.

A 2006 study by researchers at St. Louis University found a large retail gap in the Ville neighborhood, with some of the greatest needs being a grocery, dry cleaners, a pharmacy and more restaurants, Donohue said. He hopes that some of his tenants will be able to fill those needs but added that the group doesn’t have the resources to recruit specific businesses.

"We’re just trying to find people who are interested in opening a retail or service business in that neighborhood," he said.

Habitat has interviewed hundreds of people interested in moving into the new retail space in the last couple of years. Many of them were already running businesses out of their homes, he said.

"We found a lot of bright people with good business ideas," Donohue said. "But you have to have your own skin in the game. You have to have equity."

And the economy has only made it harder for new entrepreneurs to build enough equity to secure a loan, he said.

For those who have enough startup money, Habitat offers them storefront space at a discounted rate — 50 percent off an estimated market rate in the first year, 25 percent off the second year and 10 percent off after that.

In addition, it pays part of the costs to attend training courses on how to run a business, provides established industry executives as mentors, gives them a computer to keep their records and has SLU students help them with their monthly accounting.

The SLU student who helps Robert Jones manage his books and inventory using a computer accounting system has been a big help, said the owner of Alpha One Greek & Promotional Items, which opened in December.

Jones, 46, had run his business out of his home and through a website for about 10 years. Then a couple of years ago he started looking for a brick-and-mortar store, but he put those plans on hold when the economy tanked.

He jumped when he heard about the new retail center, not only because of its location in an urban neighborhood but also because of the extra help it provided — the discounted rent, the emotional support and accounting help.

He has three employees, all of whom are students at Harris-Stowe State University. He’s been pleased with the business at his store thus far and is planning more marketing in the future.

"I’ve gotten a lot of traffic from Harris-Stowe," he said. "Now I want to push it to Wash U and SLU."

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Factory orders rose in February, bolstered by strong demand for industrial machinery and commercial aircraft. It was the 10th increase in 11 months as manufacturing continues to provide crucial support for the nation’s economic recovery.

Manufacturing companies, which were hit hard by the recession, are benefiting from overseas orders and increased business spending on capital equipment. Quinlan estimates factory orders fell by about 25 percent during the recession but have recovered about one-third of that amount since last spring.

The Commerce Department said Wednesday that new orders rose 0.6 percent last month, just ahead of analysts’ estimates for a 0.5 percent increase, according to Thomson Reuters.

Still, that was the lowest uptick since August 2009. January’s orders also were revised higher to show an increase of 2.5 percent.

Separately, a private company’s report on payrolls Wednesday disappointed analysts. Payroll provider ADP said employers cut 23,000 jobs in March, well below economists’ forecasts for a 40,000 gain.

In the factory orders report, economists were encouraged by a 2 percent rise in orders for capital goods such as computers and machinery following a sharp drop in January. In addition, inventories rose by 0.5 percent last month, the fourth increase in the past five months.

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After more than a year of rancorous debate, health-care reform has won passage in Congress.

The U.S. House of Representatives passed the Senate’s version of health-care reform Sunday night by a 219-212 margin, sending it to President Barack Obama for his signature. All Republicans voted against the bill, joined by 34 Democrats.

“This isn’t radical reform, but it is major reform,” Obama said shortly before midnight. “This is what change looks like.”

The president said the bill would create a health-care system “that works better for the American people.”

The legislation would enable an estimated 32 million Americans to obtain health insurance by expanding eligibility for Medicaid, as well as provide subsidies for low- and moderate-income individuals to buy private insurance.

Individuals and small businesses could purchase insurance through new state-based exchanges, which would offer plans that meet minimum federal standards. Some small businesses with low-wage workers would be eligible for temporary tax credits to help them pay for insurance.

Individuals would be required to obtain insurance, and businesses that employ more than 50 workers would have to provide coverage or pay a penalty of $2,000 per worker if any of their employees receives government-subsidized coverage on their own.

The legislation also would impose a tax on high-cost insurance plans beginning in 2018. New taxes also would be imposed on insurance plans, medical-device manufacturers and pharmaceutical companies. Individuals who make more than $200,000 would face additional Medicare payroll taxes.

Insurance companies would no longer be able to deny coverage for pre-existing conditions or rescind coverage when someone gets ill. They also would be prohibited from capping the amount of benefits individuals can receive.

Democrats say the law will make insurance coverage affordable to all Americans and rein in abusive insurance practices.

Republicans, however, contend insurance will become more expensive. They also argue that businesses will be afraid to hire workers because of the financial penalties they would face if they don’t provide affordable coverage.

In the end, however, it was the issue of abortion — not what the nation’s health-insurance system should look like — that determined the bill’s fate payday loans online.

The House passed health-care reform Sunday night at 10:49, but the outcome was determined nearly seven hours earlier. That’s when Democrat Bert Stupak of Michigan announced he and a handful of other anti-abortion Democrats would vote for the bill.

At issue was whether the bill would allow public funds be used to subsidize abortions. Stupak said an executive order from President Barack Obama would ensure that wouldn’t happen.

“I’m pleased to announce that we have an agreement,” Stupak said. “I’ve always supported health-care reform.”

The abortion issue was the most serious threat to House passage of the bill, and Republicans wouldn’t let the issue go away even after Stupak’s announcement.

“If you vote for this bill, you can never call yourself pro-life again,” said Rep. Paul Broun (R-Ga.).

Republicans also said Obama’s executive order couldn’t be relied on because it could be rescinded at any time.

They also called into question the Senate’s ability to pass a separate bill fixing the House’s problems with the Senate’s health-care legislation. To avoid the need to get 60 votes in the Senate, Democrats decided to have the House vote on the Senate-passed bill, and then approve a package of fixes through a budget-related process known as reconciliation, which only requires 51 votes to clear the Senate.

The problem, according to Republicans, is the reconciliation bill would generate additional contributions to the Social Security Trust Fund, and changes to Social Security aren’t eligible for consideration in a reconciliation bill. That means the Senate bill, might not be fixed, Republicans warned Democrats.

That argument didn’t sway any members. The House passed the reconciliation bill by a 220-211 margin.

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President Obama will sign an executive order Thursday to set up a bipartisan fiscal commission to weigh proposals to rein in the soaring federal debt, according to a White House official.

The official, who requested anonymity because the President has not made the announcement yet, said the co-chairs of the commission will be Democrat Erskine Bowles, former White House chief of staff for Bill Clinton, and Alan Simpson, former Republican Senator from Wyoming. It’ll be officially titled the National Commission on Fiscal Responsibility and Reform.

In his weekly radio and Internet address this past Saturday, Obama touted the commission as the best way to attain "long-term deficit reduction" at a time when Congress seems paralyzed to come together on the mix of spending cuts and tax increases that will likely be needed to balance the nation’s budget.

"Because in the end, solving our fiscal challenge — so many years in the making — will take both parties coming together, putting politics aside, and making some hard choices about what we need to spend, and what we don’t," Obama said Saturday. "It will not happen any other way."

Obama has complained bitterly about the fact that a stronger fiscal commission was killed in the Senate earlier this month after several Republicans dropped their previous support after the President declared he would back it, leading to Democratic charges that the GOP was simply trying to deny Obama a victory.

"Unfortunately this proposal — which received the support of a bipartisan majority in the Senate — was recently blocked," Obama said in Saturday’s address. "So, I will be creating this commission by executive order."

The stronger commission, which was proposed by Sens. Kent Conrad (D-N.D.) and Judd Gregg (R-N.H.), would have had the full force of law instead of just being created by executive order. It would have mandated that the commission’s recommendations had to be voted on both chambers of Congress, forcing lawmakers in both parties to vote up or down on the panel’s expected recommendations on spending cuts and tax hikes.

Under this scenario, the commission will not have the power to force Congress to cast politically unpopular votes. So the report could wind up being another blue ribbon panel report that sits on a shelf somewhere, unless there is public pressure for Congress to act on the proposals.

The commission is expected to study the problem for the next several months and then release its report with recommendations shortly after the 2010 election so that it does not tied up in the politics of the midterms. The new Congress that takes office in 2011 would then have to decide whether or not it wants to consider the proposals. 

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Greece’s biggest union approved the second mass strike this month and tax collectors began a 48-hour walkout, showing that Prime Minister George Papandreou’s parliamentary majority may not be enough to implement his plan to cut the European Union’s largest deficit.

GSEE, which represents about 2 million workers in the private sector, voted at a meeting in Athens today to walk out Feb. 24. The main public-employee union plans a Feb. 10 strike to protest spending cuts as Papandreou steps up budget cuts to persuade investors Greece won’t need a bailout.

“It is still the beginning,” Stathis Anestis, the GSEE spokesman, said on the telephone today. The slogan for the strike is “people come first, markets and profit second,” he said. Anestis reiterated the union’s view that Papandreou’s government “succumbed” to the markets.

Greece’s plan to narrow the budget gap won European Commission backing yesterday after the government announced more measures to reduce the shortfall. Papandreou promised to increase fuel taxes and raise the retirement age, while retreating on a promise to raise wages faster than inflation, a pledge that helped him win elections in October.

“The first part of the action plan is on its way and now has the EU’s approval,” said Ioannis Sokos, a London-based interest-rate strategist at BNP Paribas SA. “What remains is the second part which has to do with the Government versus the Greek people. This is as tough as the first part.”

Stocks, Bonds

The benchmark ASE stock index fell about 3 percent today. Bond rose after European Central Bank President Jean-Claude Trichet said he is confident that Greece can cut its budget deficit. The risk premium investors demand to buy Greek debt over comparable German 10-year bonds narrowed 3 basis points to 347 basis points.

“We expect and we are confident that the Greek government will take all the decisions that will permit them to reach that goal” of cutting the deficit below the European Union’s limit, Trichet said at a press conference in Frankfurt.

Papandreou, 57, has appealed twice this week for Greeks to accept “painful” measures, saying the country can’t afford strikes and blockades. The previous government of Kostas Karamanlis was plagued by labor protests after he tried to tighten pension rules and raise taxes to shore up the government’s finances.

Tax Collectors Strike

The tax collectors struck to protest cuts in bonuses to the public sector. About 98 percent of the 14,000 collectors joined the protest, a POEDY-DOY union spokeswoman said. Also striking for 48 hours are customs workers and Finance Ministry employees, who blocked entry to the economy and finance ministries in central Athens today, the state-run Athens News Agency reported.

“The majority of Greek society continues to support us because it knows these are necessary decisions and taken with a sense of justice,” Finance Minister George Papaconstantinou told Greek Mega TV in an interview late yesterday.

The plan endorsed by the European Union would slash the deficit of 12.7 percent of gross domestic product to within the EU’s 3 percent limit in 2012. Concern that Greece and other European nations may struggle to contain their deficits has pushed the euro down more than 7 percent since late November.

Joaquin Almunia, the EU’s monetary-affairs commissioner, was forced yesterday to reject suggestions International Monetary Fund aid would be needed.

The euro nations “have taken the situation in hand,” IMF Managing Director Dominique Strauss-Kahn said today on RTL radio in France. “We are there to help, if asked, but I understand that the euro nations want to handle the situation themselves.”

Union Tests

Greek unions have already tested Papandreou, who heads the socialist Pasok party. Dockworkers struck for several weeks in October to demand the government keep a promise to re-examine the handover of part of the port to Hong Kong-based Cosco Pacific Ltd. Farmers have been blocking roads and border posts for about two weeks to demand higher prices.

Support for the previous Karamanlis government was weakened by December 2008 riots sparked by the police shooting of a teenager. At the time, GSEE and ADEDY, the civil-service group representing about 600,000 state workers, rebuffed a call from the prime minister to cancel a planned general strike to prevent more clashes, adding to the pressure on Karamanlis.

“Greece and the rest of the fiscally challenged periphery is still in for a bumpy ride, not least because the social and political opposition to austerity programs of this kind is likely to build from here,” said Russell Jones, head of global fixed-income strategy at RBC Capital Markets in London.

Strike Next Week

ADEDY called its Feb. 10 strike to oppose plans by Papandreou to deepen spending cuts and to limit wage increases to those earning less than 2,000 euros ($2,782) and to trim bonuses for all state workers.

Papapandreou widened the wage freeze to all public workers on Feb. 2. State pay increases provide a gauge for increases given to workers in the private sector.

“Our worst expectations were confirmed,” ADEDY Chairman Spyros Papaspyros said yesterday. “There is more to come.”

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The Reserve Bank of India told lenders to set aside more deposits as reserves than economists predicted after raising its growth and inflation forecasts. Stocks and bonds fell.

Governor Duvvuri Subbarao increased the cash reserve ratio to 5.75 percent from 5 percent, exceeding the median forecast for a half-point move in a Bloomberg News survey, an RBI statement showed in Mumbai today. The bank kept benchmark interest rates unchanged.

The decision is India’s biggest step yet toward raising borrowing costs as inflation and asset-bubble concerns reverberate across Asia. China, Malaysia and the Philippines moved closer toward raising rates this month and Australia and Vietnam have already done so, spurring a sell-off in stocks and bolstering the outlook for currency gains in the region.

“The policy is indicating a sequential step towards monetary tightening in India,” said Shubhada Rao, chief economist at Yes Bank Ltd. in Mumbai. “The bank may raise policy rates before the next scheduled meeting,” on April 20.

India’s benchmark stock index extended its drop, bond yields rose and the rupee weakened after the report. The Sensitive stock index fell 1.2 percent to 16,105.75, while the yield on 10-year government bonds increased to 7.59 percent from 7.55 percent at 11:20 p.m. in Mumbai. The rupee weakened to 46.39 against the dollar from 46.36 before the report.

Gaining Momentum

Governor Duvvuri Subbarao said India’s economic growth could “gain momentum” over the next year and “reinforce” inflationary pressures. The central bank raised its inflation forecast to 8.5 percent by March 31 from 6.5 percent.

“The message being sent across is that stern steps will be taken going forward to contain inflation,” said Killol Pandya, who oversees the equivalent of $152 million in Indian debt at Shinsei Asset Management India Pvt. in Mumbai. “There are indications the economy is turning around.”

In China, the central bank ordered some banks to pare lending, raised the ratio for deposits banks must set aside as reserves and guided bill yields higher this month after loan growth surged.

Malaysia kept borrowing costs unchanged on Jan. 26, while warning that rates cannot be kept “too low” for too long because of the need to prevent a build-up of “financial imbalances.” The Philippines increased its so-called rediscounting rate, one of the interest rates it charges lenders for borrowing money from the central bank, as it began unwinding stimulus measures.

Equities Retreat

Equities have retreated on concern that the withdrawal of stimulus measures will slow a rebound in corporate earnings. The MSCI Asia Pacific index has lost 7.3 percent in the past two weeks.

Analysts anticipate currency gains as strengthening economies force central banks to act. The rupee may gain almost 8 percent by year-end to 43 per dollar, according to the median forecast in Bloomberg survey. China’s yuan and Malaysia’s ringgit are estimated to advance 3.7 percent.

The Reserve Bank estimates India’s $1.2 trillion economy, Asia’s third largest, will expand 7.5 percent in the year ending March 31, more than its October forecast of 6 percent “with an upward bias,” Subbarao said in the statement today.

The bank left its benchmark reverse repurchase rate unchanged at 3.25 percent and the repurchase rate at 4.75 percent, today’s statement said. The increase in cash reserves will drain 360 billion rupees ($7.8 billion) from the banking system in two stages, on Feb. 13 and Feb. 27.

Exacerbate Inflation

“As growth accelerates and the output gap closes, excess liquidity, if allowed to persist, may exacerbate inflation expectations,” Subbarao said in the statement. “Though the inflationary pressures stem predominantly from the supply side, the consolidating recovery increases the risks of these spilling over into a wider inflationary process.”

India’s benchmark wholesale-price inflation accelerated to 7.3 percent in December, the fastest pace since November 2008. Food accounted for 80 percent of December’s inflation reading, government data showed, as deficient rains last year hurt output of rice, wheat and sugar.

Subbarao’s move is aimed at checking manufacturing inflation that surged to 5.2 percent in December from 1.6 percent in October. Industrial production rose 11.7 percent in November, the fastest pace in two years, as sales at companies including Hero Honda Motors Ltd. surged.

Hero Honda, the nation’s biggest motorcycle maker, reported a better-than-estimated 79 percent increase in third- quarter net income after sales climbed.

Food Inflation

“Tighter monetary policy will have no impact on inflation as it is largely a supply-side-driven phenomenon,” Harsh Pati Singhania, president of the Federation of Indian Chambers of Commerce and Industry in New Delhi, said before the report. “Interest rates should not be increased.”

Subbarao said there have been “some signs” of demand pressures on inflation and that he expects the current growth rate of 7.5 percent to continue in the next financial year starting April 1.

To ease supply constraints, the government on Jan. 13 announced plans to sell as much as 3 million metric tons of wheat and rice in the open market until March and permit duty- free imports of white sugar until Dec. 31 to increase supplies.

Prime Minister Manmohan Singh’s government is under pressure to tame inflation as opposition parties stepped up their criticism for failing to curb prices. Inflation is politically sensitive in India, where the World Bank estimates almost three-quarters of the nation’s 1.2 billion people live on less than $2 a day.

Subbarao said the withdrawal of monetary accommodation can’t be “effective” in controlling inflation unless the fiscal stimulus is also rolled-back in a coordinated manner. He said government borrowing must be cut to contain inflation and to meet credit demand of companies.

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