National updates
UPA report card: PM gives cautious pat on back, lists challenges
Presenting his government's report on completion of first year, Prime Minister Manmohan Singh today vowed to fight terrorism "root and branch" and enforce the writ of the State in dealing with naxalism and political extremism.
A 107-page 'The Report to the People -- 2009-10', which was unveiled by Singh and UPA Chairperson Sonia Gandhi, highlighted 12 major themes of the government's priority.
These cover areas like economic resurgence, internal security, education, health, child rights, food security, empowerment of women, weaker sections and minorities, rural renewal and foreign relations.
Naxalism & extremism
Government's determined to fight terrorism "root and branch" and deal with Naxalism "firmly" while addressing developmental issues. An amount of Rs 668.61 crore has been released during 2009-10 under the schemes for Modernisation of Police Forces (Rs 578.61 crore), Security Related Expenditure (Rs 60 crore) and Special Infrastructure Scheme (Rs 30 crore) to left wing extremism affected states. A sum of Rs 1230 crore has been released to all the states for modernisation of state police forces.
Defence & security
An integrated and synergistic approach has been adopted by involving the Indian Navy, Coast Guard, Intelligence, Custom, State Marine Police, and other central and state agencies in meeting this challenge. Two mountain divisions to safeguard the North-Eastern borders and setting up of the second Officers Training Academy (OTA) at Gaya in Bihar approved. The modernisation of Rashtriya Rifles was also approved to improve the counter insurgency grid in Jammu and Kashmir. And another area being accorded high priority is the development of roads and infrastructure in the high altitude areas. The government has decided to induct the Indo-Russian joint collaboration 'BrahMos' supersonic cruise missile system, with precision strike capability against land targets. Akash surface-to-air missile system capable of multi-target handling was also being inducted. To improve the living conditions of the troops, 48,470 family dwelling units were constructed under the Married Accommodation Project (MAP). The government accepted a high-powered committee's recommendation to improve welfare and it benefited 12 lakh personnel and an Armed Forces Tribunal was established to provide an appellate forum to aggrieved personnel.
Inflation
Allocation to state governments under the open market sales scheme (domestic) for release of 20 lakh tonnes of wheat was made between October 2009 to March 2010 to improve supply. Prices of rice and wheat were maintained to protect the poor. PM added that there are enough food grains to intervene in the market to keep the prices at reasonable level.
Other measures: a selective ban on exports and futures trading in food grains, zero import duty on select food items and removal of restrictions on licensing, he said.
Rural development
Mahatma Gandhi NREGA has provided nearly 600 crore person-days of work at a total expenditure of around Rs 70,000 crore since its inception in 2006. The UPA-II aims to make the country slum-free in the next five years under the Rajiv Awas Yojana for slum dwellers. Construction of around 1.5 million houses for the poor and slum dwellers has been approved. Dealing with the implementation of the forest dweller’s act, it says that 7.82 lakh titles have been distributed while for urban citizens, 64 projects at a cost of Rs 8,600 crore have been sanctioned under JNNURM. And an investment of around Rs 36,000 crore is devoted to it
Women empowerment
Women's Reservation Bill passed in the Rajya Sabha. UPA government has set up the National Mission for Empowerment of Women in March this year. Government has decided to enhance the corpus of the Rashtriya Mahila Kosh to Rs 500 crore from the existing Rs 100 crore. And to promote girls' education, government has started a scheme for the establishment and management separate hostels for them in the educationally backward blocks. During 2009-10, approval has been given to set up 379 such hostels in 11 states.
Roads & highways
The government today said it will construct 7,000 km of national highways per year contrary to a lower annual target of 2,500 km for this fiscal set by planning commission. While Road Transport Minister Kamal Nath has been reiterating that the ministry will construct 20 km of highways every day, the Planning Commission recently set an annual target of 2,500 km for 2010-11.
Climate change
Launch of National Action Plan on Climate Change, the passage of a bill for early disposal of environmental cases and unlocking of Rs 9,900 crore green fund lying unused for last several years, were the highlights of the UPA government. On the green fund, states have been asked to set up panels on Compensatory Afforestation Fund Management & Planning Authorities (CAMPA) for enabling release of 10 per cent of the Rs 9,900 crores for the next five years. Eight missions of the NAPCC of which solar mission have already been launched. Three others namely Himalayan Ecosystem, Strategic Knowledge on Climate Change and Enhanced Energy Efficiency have already been approved "in principle". One of the major achievements on the green front was the passage of the National Green Tribunal Bill, 2009, providing for establishment of a tribunal for effective and expeditious disposal of cases relating to environmental protection, conservation of forests and other natural resources.
Electricity
Four more reactors are under advanced stages of construction and on completion will take the installed capacity to 7280 MWe by 2011. with the commissioning of the Rajasthan Atomic Power Station Units 5 and 6 during the year, the total installed capacity of nuclear power has reached 4560 MWe. Government would commission four hydro power projects in Jammu and Kashmir this year. In the last fiscal, against a target of 17,500 un-electrified villages, 18,374 villages have been electrified under the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY). Against a target of 47 lakh below poverty line (BPL) household connections, 47.18 lakh BPL households have been given free electricity connections.
Education
The UPA government has opened nearly 20,000 elementary schools across the country. And 9,247 primary and upper primary schools have been opened in 2009-10 till December end. These facilities include 7,400 primary schools and 11,847 upper primary schools. Over 35,000 teachers have been appointed in this period and 9,708 additional classrooms constructed. Similarly, 26.62 lakh teachers have been provided in-service training and 9.54 crore children given textbooks. Government has launched Rashtriya Madhyamik Shiksha Abhiyan with the objective of improving access to secondary education. Clearance has been given for setting up of 2,478 new schools and improving 6,998 existing schools under the scheme.
Judicial reforms
The Government is making efforts to cut down pendency of cases from the present 15 years to just three years. Government has decided to set up a national mission for delivery of justice and legal reforms. The government has accepted the recommendations of the 13th Finance Commission for providing Rs 5000 crore to the states to set up morning and evening courts, promoting alternative dispute resolution mechanisms and providing more allocation for legal aid to the needy. Government has implemented the Gram Nyayalaya Act on October 2 last year to enable setting up of over 500 rural courts at the grass-roots level for delivery of quick and affordable justice to people at their doorsteps.
Northeast development
Development of road and rail network and improving air connectivity to the Northeast has been the priority area for the UPA government to ensure overall growth in the region. Guwahati and Agartala are already connected. Projects for connecting the capitals of Manipur, Nagaland, Mizoram and Arunachal Pradesh have been taken up. About air connectivity, the government said one greenfield airport at Pakyong in Sikkim was already under construction involving a cost of Rs 264 crore. About 596 km of road length has been completed in last one year in the region. Giving details on improving security in the region, the government said a regional coordination mechanism, covering all the Northeastern states, for gathering, analysing and disseminating intelligence has been set up at Shillong and has been operationalised with effect from February 23. Formation works along a length of 35.89 km and surfacing works along a length of 11.2 km were completed on 11 roads along the India-China border.
Minority welfare
Prime Minister's new 15-point programme for ensuring targeted development to minorities and the government's thrust on improving their education status find mention in the UPA-II report card to people. Special development plans for the 90 minority concentrated districts (MCDs) as major steps in this regard. 60 ITIs, located in the MCDs are to be upgraded as part of the new 15-point programme. Three new schemes have been added to the Prime Minister's new 15-point programme in 2009-10.
Singh has also referred to the recent passage of a bill to amend the Waqf Act, 1995 on May 7 by Lok Sabha that provides for penal provisions to prevent encroachment of waqf properties, representation of women in the waqf boards and greater accountability and efficiency in the administration of waqf properties by the waqf boards. Minorities were provided over Rs 96,000 crore of bank credit while 502 public sector bank branches were opened in districts with a substantial minority population.
Presenting his government's report on completion of first year, Prime Minister Manmohan Singh today vowed to fight terrorism "root and branch" and enforce the writ of the State in dealing with naxalism and political extremism.
A 107-page 'The Report to the People -- 2009-10', which was unveiled by Singh and UPA Chairperson Sonia Gandhi, highlighted 12 major themes of the government's priority.
These cover areas like economic resurgence, internal security, education, health, child rights, food security, empowerment of women, weaker sections and minorities, rural renewal and foreign relations.
Naxalism & extremism
Government's determined to fight terrorism "root and branch" and deal with Naxalism "firmly" while addressing developmental issues. An amount of Rs 668.61 crore has been released during 2009-10 under the schemes for Modernisation of Police Forces (Rs 578.61 crore), Security Related Expenditure (Rs 60 crore) and Special Infrastructure Scheme (Rs 30 crore) to left wing extremism affected states. A sum of Rs 1230 crore has been released to all the states for modernisation of state police forces.
Defence & security
An integrated and synergistic approach has been adopted by involving the Indian Navy, Coast Guard, Intelligence, Custom, State Marine Police, and other central and state agencies in meeting this challenge. Two mountain divisions to safeguard the North-Eastern borders and setting up of the second Officers Training Academy (OTA) at Gaya in Bihar approved. The modernisation of Rashtriya Rifles was also approved to improve the counter insurgency grid in Jammu and Kashmir. And another area being accorded high priority is the development of roads and infrastructure in the high altitude areas. The government has decided to induct the Indo-Russian joint collaboration 'BrahMos' supersonic cruise missile system, with precision strike capability against land targets. Akash surface-to-air missile system capable of multi-target handling was also being inducted. To improve the living conditions of the troops, 48,470 family dwelling units were constructed under the Married Accommodation Project (MAP). The government accepted a high-powered committee's recommendation to improve welfare and it benefited 12 lakh personnel and an Armed Forces Tribunal was established to provide an appellate forum to aggrieved personnel.
Inflation
Allocation to state governments under the open market sales scheme (domestic) for release of 20 lakh tonnes of wheat was made between October 2009 to March 2010 to improve supply. Prices of rice and wheat were maintained to protect the poor. PM added that there are enough food grains to intervene in the market to keep the prices at reasonable level.
Other measures: a selective ban on exports and futures trading in food grains, zero import duty on select food items and removal of restrictions on licensing, he said.
Rural development
Mahatma Gandhi NREGA has provided nearly 600 crore person-days of work at a total expenditure of around Rs 70,000 crore since its inception in 2006. The UPA-II aims to make the country slum-free in the next five years under the Rajiv Awas Yojana for slum dwellers. Construction of around 1.5 million houses for the poor and slum dwellers has been approved. Dealing with the implementation of the forest dweller’s act, it says that 7.82 lakh titles have been distributed while for urban citizens, 64 projects at a cost of Rs 8,600 crore have been sanctioned under JNNURM. And an investment of around Rs 36,000 crore is devoted to it
Women empowerment
Women's Reservation Bill passed in the Rajya Sabha. UPA government has set up the National Mission for Empowerment of Women in March this year. Government has decided to enhance the corpus of the Rashtriya Mahila Kosh to Rs 500 crore from the existing Rs 100 crore. And to promote girls' education, government has started a scheme for the establishment and management separate hostels for them in the educationally backward blocks. During 2009-10, approval has been given to set up 379 such hostels in 11 states.
Roads & highways
The government today said it will construct 7,000 km of national highways per year contrary to a lower annual target of 2,500 km for this fiscal set by planning commission. While Road Transport Minister Kamal Nath has been reiterating that the ministry will construct 20 km of highways every day, the Planning Commission recently set an annual target of 2,500 km for 2010-11.
Climate change
Launch of National Action Plan on Climate Change, the passage of a bill for early disposal of environmental cases and unlocking of Rs 9,900 crore green fund lying unused for last several years, were the highlights of the UPA government. On the green fund, states have been asked to set up panels on Compensatory Afforestation Fund Management & Planning Authorities (CAMPA) for enabling release of 10 per cent of the Rs 9,900 crores for the next five years. Eight missions of the NAPCC of which solar mission have already been launched. Three others namely Himalayan Ecosystem, Strategic Knowledge on Climate Change and Enhanced Energy Efficiency have already been approved "in principle". One of the major achievements on the green front was the passage of the National Green Tribunal Bill, 2009, providing for establishment of a tribunal for effective and expeditious disposal of cases relating to environmental protection, conservation of forests and other natural resources.
Electricity
Four more reactors are under advanced stages of construction and on completion will take the installed capacity to 7280 MWe by 2011. with the commissioning of the Rajasthan Atomic Power Station Units 5 and 6 during the year, the total installed capacity of nuclear power has reached 4560 MWe. Government would commission four hydro power projects in Jammu and Kashmir this year. In the last fiscal, against a target of 17,500 un-electrified villages, 18,374 villages have been electrified under the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY). Against a target of 47 lakh below poverty line (BPL) household connections, 47.18 lakh BPL households have been given free electricity connections.
Education
The UPA government has opened nearly 20,000 elementary schools across the country. And 9,247 primary and upper primary schools have been opened in 2009-10 till December end. These facilities include 7,400 primary schools and 11,847 upper primary schools. Over 35,000 teachers have been appointed in this period and 9,708 additional classrooms constructed. Similarly, 26.62 lakh teachers have been provided in-service training and 9.54 crore children given textbooks. Government has launched Rashtriya Madhyamik Shiksha Abhiyan with the objective of improving access to secondary education. Clearance has been given for setting up of 2,478 new schools and improving 6,998 existing schools under the scheme.
Judicial reforms
The Government is making efforts to cut down pendency of cases from the present 15 years to just three years. Government has decided to set up a national mission for delivery of justice and legal reforms. The government has accepted the recommendations of the 13th Finance Commission for providing Rs 5000 crore to the states to set up morning and evening courts, promoting alternative dispute resolution mechanisms and providing more allocation for legal aid to the needy. Government has implemented the Gram Nyayalaya Act on October 2 last year to enable setting up of over 500 rural courts at the grass-roots level for delivery of quick and affordable justice to people at their doorsteps.
Northeast development
Development of road and rail network and improving air connectivity to the Northeast has been the priority area for the UPA government to ensure overall growth in the region. Guwahati and Agartala are already connected. Projects for connecting the capitals of Manipur, Nagaland, Mizoram and Arunachal Pradesh have been taken up. About air connectivity, the government said one greenfield airport at Pakyong in Sikkim was already under construction involving a cost of Rs 264 crore. About 596 km of road length has been completed in last one year in the region. Giving details on improving security in the region, the government said a regional coordination mechanism, covering all the Northeastern states, for gathering, analysing and disseminating intelligence has been set up at Shillong and has been operationalised with effect from February 23. Formation works along a length of 35.89 km and surfacing works along a length of 11.2 km were completed on 11 roads along the India-China border.
Minority welfare
Prime Minister's new 15-point programme for ensuring targeted development to minorities and the government's thrust on improving their education status find mention in the UPA-II report card to people. Special development plans for the 90 minority concentrated districts (MCDs) as major steps in this regard. 60 ITIs, located in the MCDs are to be upgraded as part of the new 15-point programme. Three new schemes have been added to the Prime Minister's new 15-point programme in 2009-10.
Singh has also referred to the recent passage of a bill to amend the Waqf Act, 1995 on May 7 by Lok Sabha that provides for penal provisions to prevent encroachment of waqf properties, representation of women in the waqf boards and greater accountability and efficiency in the administration of waqf properties by the waqf boards. Minorities were provided over Rs 96,000 crore of bank credit while 502 public sector bank branches were opened in districts with a substantial minority population.
Jharkhand under President’s rule
The Centre imposed President’s rule in Jharkhand in view of the fact that none of the major political players in the state — JMM, BJP, Congress and JVM — were in a position to lead the next government. . The assembly had simultaneously been placed under suspended animation.
The Centre, in a sense, had been presented with a fait-accompli after chief minister Shibu Soren was forced to put in his papers on Sunday after failing to convince his party’s erstwhile allies as well as the other principal stakeholders, Congress and JVM, to forge an alternative government.
This is the second time in two years that the state has been put under President’s rule. The decision to impose President’s rule in Jharkhand has, by and large, been welcomed by almost all the political parties.
THE tussle between Jharkhand Mukti Morcha (JMM) chief and outgoing chief minister Shibu Soren and his MLA son Hemant Soren for control over the party has put Jharkhand politics at the crossroads, reports Navtan Kumar from Ranchi. According to a senior party leader, the senior Soren, who has been the undisputed leader of the party ever since the Jharkhand movement days, has been facing a serious challenge from none other than his son Hemant, who is desperately trying to gain control over the party. The ‘overambition’ of the Soren junior has caused the present political crisis in Jharkhand, which has seen seven governments and two spells of President’s rule ever since its inception in 2000.
Mamata Continues Triumphant March with Landslide Win In Civic Polls
Riding the winds of political change, Mamata Banerjee's Trinamool Congress on Wednesday won the 141-ward city municipal corporation polls, inflicting a crushing blow to the ruling Left Front in the civic elections, dubbed as a semi-final before next year's Assembly polls. A total of 81 civic bodies across 16 districts in West Bengal, TC also tasted success in the districts where it alone bagged 20 of 43 municipalities. The party bagged another eight civic bodies where it had local-level seat adjustment with the Congress.
The party bagged another eight civic bodies where it had local-level seat adjustment with the Congress.
The Trinamool Congress, which had already won two-thirds majority in the 141-member KMC, will not need the support of the Congress to rule Kolkata where her party has already captured 94 of the 135 wards the results of which were available.
Pakistan, Bangladesh wants India to honour cotton contracts
PAKISTAN and Bangladesh have demanded that the contracts for supply of cotton made by Indian growers before exports were suspended last month should be honoured. In separate letters to the Indian government, they have also said that future supply of cotton to the countries should not be disturbed.
India has now put cotton on the restricted list and its exports can only be allowed through licenses issued by the government.
The textile ministry had suspended exports of cotton on April 19 following complaints from the domestic textile industry of a 20% rise in cotton prices since October last year, which was increasing cost of production.
The commerce ministry subsequently lifted the suspension on May 21, after cotton farmers and states like Gujarat and Maharashtra protested against it, but allowed its exports only against licences.
Bangladesh’s economy is heavily dependent on a textile (which forms 80% of its total exports) for which they source cotton from India. We also have bilateral trading arrangements with them under which they may demand cotton
Pakistan grows a lot of its own cotton, in fact it is the fourth largest cotton grower in the world--but because of burgeoning demand from its textile industry it imports about 3 million bales annually, much of it from India.
PM signals switchover to direct subsidy mode
PRIME minister Manmohan Singh signalled his government’s intent to move to a system of direct transfer of subsidies to the poor, a system that is seen as the best way to reach the intended beneficiaries. Acording to economic survey 2009-10, which mooted the idea of food coupons as a way of direct transfer of food subsidy, the subsidy should be handed over directly to the households, instead of giving it to the PDS store-keeper in the form of cheap grain.
However, Mr Singh underlined the government’s resolve to attain fiscal consolidation through a calibrated reduction of fiscal deficit. The government has budgeted a fiscal deficit of 5.5% for the current yearagainst 6.7% in 2009-10 and is working on a new framework for the fiscal responsibility law.
India wants UK to return Kohinoor
THE ARCHAEOLOGICAL Survey of India (ASI) has joined an international network for the return of priceless artifacts taken away during British rule, including the Kohinoor diamond and the Sultanganj Buddha. ASI director-general Gautam Sengupta said the list of India's treasures held abroad was “too long to handle” and there was a need for a “diplomatic and legal campaign” for their restitution from institutions, including the British Museum, the Royal Collection and the Birmingham Museum and Art Gallery. After decades of unsuccessful unilateral lobbying, India was looking to join a campaign with the support of UNESCO, and other countries with longstanding complaints about the foreign ownership of their artistic riches, including Egypt and Greece.
Indian Mujahideen declared terror unit
THE Centre designated the Indian Mujahideen, a Simi offshoot funded and mentored by Pakistan’s ISI and Lashker-e-Toiba, as a terrorist organisation under the Unlawful Activities (Prevention) Act. IM has been involved in a string of terror attacks here, starting with the Varanasi blasts of 2005 to the more recent serial bombings in Delhi, Jaipur and Ahmedabad through 2008.
An order has been issued adding Indian Mujahideen and all its formations and front organisations to the list of Unlawful Activities (Prevention) Act, 1967. IM is the 35th outfit to be included in the list of terrorist organisations. The terror group, which is believed to be under the direct control of Pakistan’s ISI, has so far carried out over 10 blasts in various parts of the country, killing nearly 500 peopleAmir Reza Khan was the founding members of the Indian Mujahideen, which was created by ISI and LeT to give an indigenous colour to terrorism aimed at India. This is the reason what IM has claimed responsibility for most high-profile blasts carried out by it, justifying its bloody acts by citing “injustice” meted out to Muslims and the “inaction against those behind the 2002 communal riots in Gujarat.
Railways take to private tracks
THE Railways will now allow private players to build railway tracks and earn revenue from freight charges. It will also permit private operators to run special freight trains for a number of commodities such as chemicals and petrochemicals, fertiliser, cement, fly ash, molasses, edible oil and special steel products. In its attempts at attracting private investment in rolling stock and terminals, Indian Railways has finalised special freight train operator (SFTO) and private freight terminal (PFT) schemes.The PFT would integrate rail transport with supply chain to provide cost effective logistics to end-users. This would extend to registered container train operators and users having private siding on private land. Similarly, the SFTO would market train services to end-users. Both the policies extend a new business opportunity to the investor
Through the PFT scheme, the Railways have given an option to private firms to set up sidings and handle all cargo except outward coal, coke and iron ore. PFT can be put up only on private land by logistics companies, end users and container train operators. This scheme will provide a window to the container train operators – particularly the new entrants who have not been able to set up terminals according to their licence norms due to prohibitive land prices and other issues. This can be made use of by several mill owners and other rail customers who have old sidings. By paying an application fee (Rs 1 crore) and security deposit (Rs 10 crore), PFTs can handle cargo for 20 years, extendable by another ten years. The PFT owner will not have to pay any other charges to Railways initially (2 years for brownfield, 5 years for greenfield terminals). But, after the moratorium period, the terminal operator will have to share 50 per cent of its terminal charge or Rs 10 a tonne of cargo handled (whichever is higher).
SFTO SCHEME: SFTO scheme – which has a bit of both the erstwhile own your wagon and wagon investment scheme; and the current container train operator scheme. With this, companies can invest in special purpose wagons and offer services for carrying those commodities. Apart from investing in wagons and their maintenance, the company has to pay a licence fee ranging from Rs 5 crore to Rs 20 crore, depending on the type of commodity. The discount of current freight will be higher if the capacity of wagons is more than ten per cent of the existing wagons used by Railways for that commodity. But, the SFTO is free to fix its tariff levels for its customers.
Govt gives 87% more funds under RKVY
The Centre on Friday said it has allocated Rs 6,755 crore to the states in this fiscal, 87% more than last year, under the Rashtriya Krishi Vikas Yojana to raise productivity and production of crops. RKVY was operationalised with effect from August 2007 with an outlay of Rs 25,000 crore in the 11th Five-Year Plan. The scheme was launched to incentivise states to invest in agriculture and achieve 4% growth in the sector in the current Plan period. Rs 6,755 crore has been allocated to various states and UT to increase production and productivity under the RKVY
Auto fuels may cost Rs 3 more
PETROL and diesel prices could rise by up to Rs 3 a litre next week as per a key proposal favouring free auto-fuel rates that awaits the approval of a panel of ministers meeting . If the empowered group of ministers (EGoM) passes the proposal, an important attempt to cut fuel subsidies significantly, it would be the third such price rise in nearly a year. The petroleum ministry had raised petrol prices by Rs 4 a litre and diesel by Rs 2 a litre on July 2, 2009, and finance minister Pranab Mukherjee had unexpectedly raised taxes on petroleum products in his February budget this year that made petrol costlier by Rs 2.71 and diesel Rs 2.55 a litre.
State-run oil marketing companies Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp sell auto and cooking fuels at government-set prices to help control inflation. Still, these companies are currently losing Rs 2.79 a litre on the sale of a litre of petrol and Rs 2.91 on diesel.
The estimated fuel subsidy bill for 2010-11 is nearly Rs 90,000 crore at an average crude oil import price—popularly called Indian basket—of $80 a barrel. The crude oil price of the Indian basket, which was as high as $85 a barrel on May 4, has receded by $10 a barrel due to the European economic crisis. Yet, the government could intervene to protect the interests of customers by suspending the pricing freedom of oil companies if global oil prices soar sharply. The EGoM may either recommend a price band beyond which the government can step in or leave it to the government to decide. The government constituted the ministerial panel led by Mr Mukherjee to take policy decisions on fuel prices. The deregulation of auto fuel prices apart, it will consider increasing the rates of kerosene by Rs 6 a litre and cooking gas by Rs 100 a cylinder. Other members of the panel include oil minister Murli Deora, agriculture minister Sharad Pawar, chemical & fertilisers minister MK Alagiri, railway minister Mamata Banerjee, road transport minister Kamal Nath and Planning Commission deputy chairman Montek Singh Ahluwalia.
The proposal to free auto fuel prices essentially borrows a page from the Kirit Parikh committee report established by the oil ministry to devise a viable system of pricing petroleum products. The Parikh committee, in its report submitted this February, recommended that the government end its control over pump prices of petrol and diesel. It also proposed raising prices of kerosene by Rs 6 a litre and cooking gas by Rs 100 a cylinder. The Parikh panel is the brainchild of the finance minister.
International updates
Outrage emerging over Gaza strip
Israeli naval commandos stormed a flotilla of ships sent by Turkey carrying 10,000 tonnes of aid and hundreds of pro-Palestinian activists to the blockaded Gaza Strip, killing 10 passengers in a botched raid in international waters that provoked global outrage and a diplomatic crisis. The activists were headed to Gaza to draw attention to the blockade, which Israel and Egypt imposed after Hamas seized the territory of 1.5 million Palestinians in 2007.
ISRAEL, which is facing international fury over its raid on a Gaza-bound flotilla, on Tuesday backed the conduct of the Israeli Defence Forces and reaffirmed the policy of intercepting the flotilla. Israel’s ambassador to India, Mr Mark Sofer, said Israel was within its rights to seize and destroy a ship being sent toward Gazan waters in defiance of an embargo, especially after giving abundant warnings to leaders of the largely Turkish-based Free Gaza Movement, which had sent the flotilla that they would not be permitted to sail to Hamas-controlled territory.
Japan PM resigns after US base row
Japan's Prime Minister Yukio Hatoyama tearfully resigned Wednesday, just nine months after a stunning election win, his brief reign derailed by a row over an unpopular US airbase.
Hatoyama ended more than half a century of conservative rule in an electoral earthquake last August, but the centre-left politician soon earned a reputation for crippling indecision at the helm of the world's second-biggest economy.
The 63-year-old millionaire, the scion of an influential family dubbed "Japan's Kennedys", quit at a meeting of his Democratic Party of Japan (DPJ), blaming the base dispute and political funding scandals.
G-20 meet in South Korea
The finance ministers and central bank chiefs of G20 countries will meet at Busan, South Korea through Friday and Saturday amid growing fears of an-other round of economic crisis. The meeting will set the agenda for the G20 summit later this month in Canada.
BACKDROP
Sovereign debt crisis in the Europe threatens another round of economic slow-down.
Stock markets across the world have crashed, Dow down almost 8% in May.
The euro has depreciated sharply, raising questions over the currency’s viability. The currency does not offer the individual country flexibility to take corrective action.
Overhanging issue of the over-valued Chinese currency yuan.
Renewed tensions between North and South Koreas.
What will be on the table?
Reform of the global financial system will be discussed to prevent another crisis. Bank levy: Making banks pay for future bailouts; the US and the EU in favour, but countries such as Canada and Australia oppose the plan. Bank Capital: New capital standards for banks as the financial crisis has ex-posed the current ones. Capital Flow: Regulations to cushion capital flows could be discussed. European debt crisis: Many of the indebted countries face tough time and pose risk for the global economy. A reaffirmation of support to troubled countries to calm the markets.
No market access without reciprocal gains, says India to US
Criticising the ‘attempts' by rich countries to change the basic purpose of the Doha Round negotiations of the World Trade Organisation (WTO) from ‘development' to ‘market access', India said it would not provide market access without reciprocal gains. This comes in the backdrop of recent reports that the US has asked India, Brazil and China to take up a more “responsible” role at the Doha Round talks matching with the gains they have made from global liberalisation.
India's chief negotiator at the WTO, Mr D.K. Mittal said that No market access above the level of what exists can be given for free. But if at all countries agree, then certainly they'll demand payment from those who are demanding the market access. This is the language of WTO. He said the Doha Round cannot be called a ‘development' round if the rich countries shift the goal post from ‘development' to ‘market access' and change the basic purpose of the round, which is ‘development'.
The new US ambassador to the WTO Michael Punke, who was appointed after the post lay vacant for a long time under the Obama administration, had recently said that the progress of the Doha round depended on advanced developing countries including India, Brazil and China and called for greater market access commitments from them. The US wants lower tariffs on a large number of goods which goes beyond what WTO members tentatively agreed to in Geneva two years back when the talks collapsed. The Doha round, launched in November 2001, broke down over disagreement over issues such as level of protection to be given to farmers against import surges and dismantling of cotton subsidies.
The Doha Round was launched in 2001, but it has missed many ‘deadlines' due to differences between developed and developing countries over the extent of liberalisation of agriculture and industrial goods.
EU to overhaul GM crop system
The European Union is to radically overhaul its approval system for genetically modified (GM) crops, opening the way to large-scale GM cultivation in Europe.
With most Europeans showing no appetite for GM produce in food, EU politicians have approved just two varieties for growing in 12 years, compared with more than 150 worldwide.
Under proposals due to be adopted on 13 July, the EU executive Commission will be given greater freedom to approve new GM varieties for cultivation in return for letting EU governments decide whether or not to grow them. The idea is to maintain an EU-level approval system, but then leave member states totally free to decide whether or not they want to grow. The plan would allow large-scale commercial planting in pro-GM countries such as Spain, the Netherlands, and the Czech Republic, while legally endorsing existing GM bans in countries including Italy, Austria and Hungary. But critics say the proposals could spark internal market disputes within Europe, and leave the EU open to legal challenges in the World Trade Organisation (WTO), which largely backed a US complaint in 2006 that the EU’s GM policy was unscientific.
The Commission proposal has two main elements, several sources familiar with the details confirmed. The first is a “fasttrack” approach, which will see the Commission issue new guidelines to member states on the “coexistence” of GM and non-GM cultivation. These would allow countries to set their own technical standards for GM farming, for example requiring buffer zones of 10 km (6.2 miles) between GM and non-GM fields, which would in effect rule out GM cultivation in entire regions and countries. The second is a “restricted amendment” to current EU legislation on the release of GM organisms in the environment, that would allow countries to ban GM cultivation altogether for reasons other than safety or coexistence grounds. The legislative change would have to be agreed by a qualified majority of EU governments and the European Parliament under the EU’s system of weighted voting.
The Centre imposed President’s rule in Jharkhand in view of the fact that none of the major political players in the state — JMM, BJP, Congress and JVM — were in a position to lead the next government. . The assembly had simultaneously been placed under suspended animation.
The Centre, in a sense, had been presented with a fait-accompli after chief minister Shibu Soren was forced to put in his papers on Sunday after failing to convince his party’s erstwhile allies as well as the other principal stakeholders, Congress and JVM, to forge an alternative government.
This is the second time in two years that the state has been put under President’s rule. The decision to impose President’s rule in Jharkhand has, by and large, been welcomed by almost all the political parties.
THE tussle between Jharkhand Mukti Morcha (JMM) chief and outgoing chief minister Shibu Soren and his MLA son Hemant Soren for control over the party has put Jharkhand politics at the crossroads, reports Navtan Kumar from Ranchi. According to a senior party leader, the senior Soren, who has been the undisputed leader of the party ever since the Jharkhand movement days, has been facing a serious challenge from none other than his son Hemant, who is desperately trying to gain control over the party. The ‘overambition’ of the Soren junior has caused the present political crisis in Jharkhand, which has seen seven governments and two spells of President’s rule ever since its inception in 2000.
Mamata Continues Triumphant March with Landslide Win In Civic Polls
Riding the winds of political change, Mamata Banerjee's Trinamool Congress on Wednesday won the 141-ward city municipal corporation polls, inflicting a crushing blow to the ruling Left Front in the civic elections, dubbed as a semi-final before next year's Assembly polls. A total of 81 civic bodies across 16 districts in West Bengal, TC also tasted success in the districts where it alone bagged 20 of 43 municipalities. The party bagged another eight civic bodies where it had local-level seat adjustment with the Congress.
The party bagged another eight civic bodies where it had local-level seat adjustment with the Congress.
The Trinamool Congress, which had already won two-thirds majority in the 141-member KMC, will not need the support of the Congress to rule Kolkata where her party has already captured 94 of the 135 wards the results of which were available.
Pakistan, Bangladesh wants India to honour cotton contracts
PAKISTAN and Bangladesh have demanded that the contracts for supply of cotton made by Indian growers before exports were suspended last month should be honoured. In separate letters to the Indian government, they have also said that future supply of cotton to the countries should not be disturbed.
India has now put cotton on the restricted list and its exports can only be allowed through licenses issued by the government.
The textile ministry had suspended exports of cotton on April 19 following complaints from the domestic textile industry of a 20% rise in cotton prices since October last year, which was increasing cost of production.
The commerce ministry subsequently lifted the suspension on May 21, after cotton farmers and states like Gujarat and Maharashtra protested against it, but allowed its exports only against licences.
Bangladesh’s economy is heavily dependent on a textile (which forms 80% of its total exports) for which they source cotton from India. We also have bilateral trading arrangements with them under which they may demand cotton
Pakistan grows a lot of its own cotton, in fact it is the fourth largest cotton grower in the world--but because of burgeoning demand from its textile industry it imports about 3 million bales annually, much of it from India.
PM signals switchover to direct subsidy mode
PRIME minister Manmohan Singh signalled his government’s intent to move to a system of direct transfer of subsidies to the poor, a system that is seen as the best way to reach the intended beneficiaries. Acording to economic survey 2009-10, which mooted the idea of food coupons as a way of direct transfer of food subsidy, the subsidy should be handed over directly to the households, instead of giving it to the PDS store-keeper in the form of cheap grain.
However, Mr Singh underlined the government’s resolve to attain fiscal consolidation through a calibrated reduction of fiscal deficit. The government has budgeted a fiscal deficit of 5.5% for the current yearagainst 6.7% in 2009-10 and is working on a new framework for the fiscal responsibility law.
India wants UK to return Kohinoor
THE ARCHAEOLOGICAL Survey of India (ASI) has joined an international network for the return of priceless artifacts taken away during British rule, including the Kohinoor diamond and the Sultanganj Buddha. ASI director-general Gautam Sengupta said the list of India's treasures held abroad was “too long to handle” and there was a need for a “diplomatic and legal campaign” for their restitution from institutions, including the British Museum, the Royal Collection and the Birmingham Museum and Art Gallery. After decades of unsuccessful unilateral lobbying, India was looking to join a campaign with the support of UNESCO, and other countries with longstanding complaints about the foreign ownership of their artistic riches, including Egypt and Greece.
Indian Mujahideen declared terror unit
THE Centre designated the Indian Mujahideen, a Simi offshoot funded and mentored by Pakistan’s ISI and Lashker-e-Toiba, as a terrorist organisation under the Unlawful Activities (Prevention) Act. IM has been involved in a string of terror attacks here, starting with the Varanasi blasts of 2005 to the more recent serial bombings in Delhi, Jaipur and Ahmedabad through 2008.
An order has been issued adding Indian Mujahideen and all its formations and front organisations to the list of Unlawful Activities (Prevention) Act, 1967. IM is the 35th outfit to be included in the list of terrorist organisations. The terror group, which is believed to be under the direct control of Pakistan’s ISI, has so far carried out over 10 blasts in various parts of the country, killing nearly 500 peopleAmir Reza Khan was the founding members of the Indian Mujahideen, which was created by ISI and LeT to give an indigenous colour to terrorism aimed at India. This is the reason what IM has claimed responsibility for most high-profile blasts carried out by it, justifying its bloody acts by citing “injustice” meted out to Muslims and the “inaction against those behind the 2002 communal riots in Gujarat.
Railways take to private tracks
THE Railways will now allow private players to build railway tracks and earn revenue from freight charges. It will also permit private operators to run special freight trains for a number of commodities such as chemicals and petrochemicals, fertiliser, cement, fly ash, molasses, edible oil and special steel products. In its attempts at attracting private investment in rolling stock and terminals, Indian Railways has finalised special freight train operator (SFTO) and private freight terminal (PFT) schemes.The PFT would integrate rail transport with supply chain to provide cost effective logistics to end-users. This would extend to registered container train operators and users having private siding on private land. Similarly, the SFTO would market train services to end-users. Both the policies extend a new business opportunity to the investor
Through the PFT scheme, the Railways have given an option to private firms to set up sidings and handle all cargo except outward coal, coke and iron ore. PFT can be put up only on private land by logistics companies, end users and container train operators. This scheme will provide a window to the container train operators – particularly the new entrants who have not been able to set up terminals according to their licence norms due to prohibitive land prices and other issues. This can be made use of by several mill owners and other rail customers who have old sidings. By paying an application fee (Rs 1 crore) and security deposit (Rs 10 crore), PFTs can handle cargo for 20 years, extendable by another ten years. The PFT owner will not have to pay any other charges to Railways initially (2 years for brownfield, 5 years for greenfield terminals). But, after the moratorium period, the terminal operator will have to share 50 per cent of its terminal charge or Rs 10 a tonne of cargo handled (whichever is higher).
SFTO SCHEME: SFTO scheme – which has a bit of both the erstwhile own your wagon and wagon investment scheme; and the current container train operator scheme. With this, companies can invest in special purpose wagons and offer services for carrying those commodities. Apart from investing in wagons and their maintenance, the company has to pay a licence fee ranging from Rs 5 crore to Rs 20 crore, depending on the type of commodity. The discount of current freight will be higher if the capacity of wagons is more than ten per cent of the existing wagons used by Railways for that commodity. But, the SFTO is free to fix its tariff levels for its customers.
Govt gives 87% more funds under RKVY
The Centre on Friday said it has allocated Rs 6,755 crore to the states in this fiscal, 87% more than last year, under the Rashtriya Krishi Vikas Yojana to raise productivity and production of crops. RKVY was operationalised with effect from August 2007 with an outlay of Rs 25,000 crore in the 11th Five-Year Plan. The scheme was launched to incentivise states to invest in agriculture and achieve 4% growth in the sector in the current Plan period. Rs 6,755 crore has been allocated to various states and UT to increase production and productivity under the RKVY
Auto fuels may cost Rs 3 more
PETROL and diesel prices could rise by up to Rs 3 a litre next week as per a key proposal favouring free auto-fuel rates that awaits the approval of a panel of ministers meeting . If the empowered group of ministers (EGoM) passes the proposal, an important attempt to cut fuel subsidies significantly, it would be the third such price rise in nearly a year. The petroleum ministry had raised petrol prices by Rs 4 a litre and diesel by Rs 2 a litre on July 2, 2009, and finance minister Pranab Mukherjee had unexpectedly raised taxes on petroleum products in his February budget this year that made petrol costlier by Rs 2.71 and diesel Rs 2.55 a litre.
State-run oil marketing companies Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp sell auto and cooking fuels at government-set prices to help control inflation. Still, these companies are currently losing Rs 2.79 a litre on the sale of a litre of petrol and Rs 2.91 on diesel.
The estimated fuel subsidy bill for 2010-11 is nearly Rs 90,000 crore at an average crude oil import price—popularly called Indian basket—of $80 a barrel. The crude oil price of the Indian basket, which was as high as $85 a barrel on May 4, has receded by $10 a barrel due to the European economic crisis. Yet, the government could intervene to protect the interests of customers by suspending the pricing freedom of oil companies if global oil prices soar sharply. The EGoM may either recommend a price band beyond which the government can step in or leave it to the government to decide. The government constituted the ministerial panel led by Mr Mukherjee to take policy decisions on fuel prices. The deregulation of auto fuel prices apart, it will consider increasing the rates of kerosene by Rs 6 a litre and cooking gas by Rs 100 a cylinder. Other members of the panel include oil minister Murli Deora, agriculture minister Sharad Pawar, chemical & fertilisers minister MK Alagiri, railway minister Mamata Banerjee, road transport minister Kamal Nath and Planning Commission deputy chairman Montek Singh Ahluwalia.
The proposal to free auto fuel prices essentially borrows a page from the Kirit Parikh committee report established by the oil ministry to devise a viable system of pricing petroleum products. The Parikh committee, in its report submitted this February, recommended that the government end its control over pump prices of petrol and diesel. It also proposed raising prices of kerosene by Rs 6 a litre and cooking gas by Rs 100 a cylinder. The Parikh panel is the brainchild of the finance minister.
International updates
Outrage emerging over Gaza strip
Israeli naval commandos stormed a flotilla of ships sent by Turkey carrying 10,000 tonnes of aid and hundreds of pro-Palestinian activists to the blockaded Gaza Strip, killing 10 passengers in a botched raid in international waters that provoked global outrage and a diplomatic crisis. The activists were headed to Gaza to draw attention to the blockade, which Israel and Egypt imposed after Hamas seized the territory of 1.5 million Palestinians in 2007.
ISRAEL, which is facing international fury over its raid on a Gaza-bound flotilla, on Tuesday backed the conduct of the Israeli Defence Forces and reaffirmed the policy of intercepting the flotilla. Israel’s ambassador to India, Mr Mark Sofer, said Israel was within its rights to seize and destroy a ship being sent toward Gazan waters in defiance of an embargo, especially after giving abundant warnings to leaders of the largely Turkish-based Free Gaza Movement, which had sent the flotilla that they would not be permitted to sail to Hamas-controlled territory.
Japan PM resigns after US base row
Japan's Prime Minister Yukio Hatoyama tearfully resigned Wednesday, just nine months after a stunning election win, his brief reign derailed by a row over an unpopular US airbase.
Hatoyama ended more than half a century of conservative rule in an electoral earthquake last August, but the centre-left politician soon earned a reputation for crippling indecision at the helm of the world's second-biggest economy.
The 63-year-old millionaire, the scion of an influential family dubbed "Japan's Kennedys", quit at a meeting of his Democratic Party of Japan (DPJ), blaming the base dispute and political funding scandals.
G-20 meet in South Korea
The finance ministers and central bank chiefs of G20 countries will meet at Busan, South Korea through Friday and Saturday amid growing fears of an-other round of economic crisis. The meeting will set the agenda for the G20 summit later this month in Canada.
BACKDROP
Sovereign debt crisis in the Europe threatens another round of economic slow-down.
Stock markets across the world have crashed, Dow down almost 8% in May.
The euro has depreciated sharply, raising questions over the currency’s viability. The currency does not offer the individual country flexibility to take corrective action.
Overhanging issue of the over-valued Chinese currency yuan.
Renewed tensions between North and South Koreas.
What will be on the table?
Reform of the global financial system will be discussed to prevent another crisis. Bank levy: Making banks pay for future bailouts; the US and the EU in favour, but countries such as Canada and Australia oppose the plan. Bank Capital: New capital standards for banks as the financial crisis has ex-posed the current ones. Capital Flow: Regulations to cushion capital flows could be discussed. European debt crisis: Many of the indebted countries face tough time and pose risk for the global economy. A reaffirmation of support to troubled countries to calm the markets.
No market access without reciprocal gains, says India to US
Criticising the ‘attempts' by rich countries to change the basic purpose of the Doha Round negotiations of the World Trade Organisation (WTO) from ‘development' to ‘market access', India said it would not provide market access without reciprocal gains. This comes in the backdrop of recent reports that the US has asked India, Brazil and China to take up a more “responsible” role at the Doha Round talks matching with the gains they have made from global liberalisation.
India's chief negotiator at the WTO, Mr D.K. Mittal said that No market access above the level of what exists can be given for free. But if at all countries agree, then certainly they'll demand payment from those who are demanding the market access. This is the language of WTO. He said the Doha Round cannot be called a ‘development' round if the rich countries shift the goal post from ‘development' to ‘market access' and change the basic purpose of the round, which is ‘development'.
The new US ambassador to the WTO Michael Punke, who was appointed after the post lay vacant for a long time under the Obama administration, had recently said that the progress of the Doha round depended on advanced developing countries including India, Brazil and China and called for greater market access commitments from them. The US wants lower tariffs on a large number of goods which goes beyond what WTO members tentatively agreed to in Geneva two years back when the talks collapsed. The Doha round, launched in November 2001, broke down over disagreement over issues such as level of protection to be given to farmers against import surges and dismantling of cotton subsidies.
The Doha Round was launched in 2001, but it has missed many ‘deadlines' due to differences between developed and developing countries over the extent of liberalisation of agriculture and industrial goods.
EU to overhaul GM crop system
The European Union is to radically overhaul its approval system for genetically modified (GM) crops, opening the way to large-scale GM cultivation in Europe.
With most Europeans showing no appetite for GM produce in food, EU politicians have approved just two varieties for growing in 12 years, compared with more than 150 worldwide.
Under proposals due to be adopted on 13 July, the EU executive Commission will be given greater freedom to approve new GM varieties for cultivation in return for letting EU governments decide whether or not to grow them. The idea is to maintain an EU-level approval system, but then leave member states totally free to decide whether or not they want to grow. The plan would allow large-scale commercial planting in pro-GM countries such as Spain, the Netherlands, and the Czech Republic, while legally endorsing existing GM bans in countries including Italy, Austria and Hungary. But critics say the proposals could spark internal market disputes within Europe, and leave the EU open to legal challenges in the World Trade Organisation (WTO), which largely backed a US complaint in 2006 that the EU’s GM policy was unscientific.
The Commission proposal has two main elements, several sources familiar with the details confirmed. The first is a “fasttrack” approach, which will see the Commission issue new guidelines to member states on the “coexistence” of GM and non-GM cultivation. These would allow countries to set their own technical standards for GM farming, for example requiring buffer zones of 10 km (6.2 miles) between GM and non-GM fields, which would in effect rule out GM cultivation in entire regions and countries. The second is a “restricted amendment” to current EU legislation on the release of GM organisms in the environment, that would allow countries to ban GM cultivation altogether for reasons other than safety or coexistence grounds. The legislative change would have to be agreed by a qualified majority of EU governments and the European Parliament under the EU’s system of weighted voting.
Economy, Banking & Finance
GDP grows at 8.6% in fourth quarter
Driven by a robust performance by the manufacturing sector, the Indian economy grew by 8.6% in the last quarter of 2009-10, pushing up the overall growth to a better-than expected 7.4%.
The manufacturing sector grew by 16.3% in the fourth quarter (January-March 2009-10) and 10.8% in the fiscal.
The Gross Domestic Product (GDP) grew at 7.4% for 2009-10, higher than the February projection of 7.2%.
The Central Statistics Organisation (CSO) also revised upwards the growth rates for Q2 and Q3 of 2009-10 on better-than-expected performance by manufacturing, mining and quarrying industries than first thought.
There was no decline in agriculture growth in 2009-10, despite widespread drought and floods hitting the farm output.
According to the CSO data, the farm sector recorded a growth rate of 0.2%, contrary to expectations of negative growth.
Finance minister Pranab Mukherjee reiterated his confidence that the economy would post at least 8.5% growth in 2010-11.
Per capita income surges by 10.5%
The average income of Indians rose 10.5% to Rs 44,345 in 2009-10, against Rs 40,141 in 2008-09 at current prices. Per capita income means income of each Indian, assuming national income is evenly divided among the country’s population of 117 crore.
At market price, size of the economy rose to Rs 62,31,171 crore in 2009-10, up 11.8% from Rs 55,74,449 crore in 2009-09. At 2004-05 prices the size of GDP stood at Rs 44,64,081 crore in 2009-10 as against Rs 41,54,973 crore in 2008-09.
China is the only large economy with a higher growth rate at 11.9% in the January-March quarter. The rest of the world is witnessing a fragile recovery, which is now under threat due to the brewing Euro-zone crisis. The sixteen developed countries in the Euro-zone expanded by just 0.2% in the quarter. At the same time, the Organisation for Economic Cooperation and Development (OECD) — a grouping of mostly developed countries including Europe that account for over 60% of the global economy — grew at only 0.7% in the quarter, against 0.9% in the previous quarter. US and Japan grew at 0.8% and 1.2% respectively.
Financial Services Growth Slows Down To 7.9% In Q4 Against 12.3% Last Fiscal
GROWTH in financial services in India had slowed down to 7.9% in the fourth quarter of FY10 against 12.3% in the same period a year ago. This was despite the economy clocking one of its highest quarterly growth rates in more than two years.
An analysis of the economic output or GDP (gross domestic product) data over the past several quarters indicates that the contribution of financial services, which is reflected in ‘Finance, insurance, real estate and business services’ has been secularly decelerating since the fourth quarter of FY09 when the growth rate peaked 12.3%. A crucial component of services GDP, this segment roughly accounts for a sixth of the country’s GDP and is the secondlargest component after trade, hotels, transport and communication. Interestingly, this is the only segment, besides agriculture to witness a slowdown in growth. According to experts, the drag on the segment could be largely because of a slowdown in the real estate sector.
Govt kicks off 10% HCL selloff and matching FPO
THE government has initiated the divestment process in Hindustan Copper (HCL) in which it intends to offload a 10% stake. Along with the proposed offer of sale, the company has decided to make a fresh issue of equal number of shares, taking the issue size to Rs 9,000 crore at current price. The government has invited requests for proposal from investment bankers for appointment of book running lead managers (BRLMs). This would be the third company in the current fiscal (2010-11) after Coal India Ltd (CIL) and Engineers India Ltd (EIL), in which the government has initiated the disinvestments process.
At current price, HCL issue would be second largest issue after Coal India in which the government intends to mop up around Rs 14,000 crore. Since the government is currently holding 99.59%, public holding is 37.98 lakh shares amounting to 0.41%.
The government had projected to mobilise Rs 35000 crore from spectrums auctions and another Rs 40,000 crore from disinvestments. As per the current estimates, the government may raise around Rs 14000 crore from divestment of Coal India, and another Rs 1,000 crore from EIL. Earlier this fiscal, the government had raised Rs 1079 crore from divestment of 10% stake in Satluj Jal Vidut Nigam Ltd.
No bank licence for loan defaulters
Corporate houses seeking banking licences will come under the scrutiny of both the Reserve Bank of India and the finance ministry, which are keen to restrict the entry of players involved in dubious transactions. The books and accounts of all group companies will be examined before granting the new banking licences, proposed by the finance minister in the Union budget. The scrutiny is meant to avoid situations such as the Bank of Rajasthan fiasco, where the Tayal Group owned more than 55% stake, which had resulted in serious corporate governance issues
RBI will put out a discussion paper next month on the norms for issuing new banking licenses to private companies and non-banking finance companies.
Pulses, milk push food inflation to 16.55%
Driven by higher prices of pulses, milk and fruits, food inflation rose to 16.55% for the week ended May 22. Inflation increased by 0.32 percentage point from 16.23% in the previous week. Potatoes and onions became cheaper by 34.09% and 11.55% respectively. Prices of pulses, on the other hand, shot up by 30.84%, that of milk by 21.12%, fruits 13.7% and vegetables 1.34%. Among other food items, rice and wheat turned costlier by 7.30% and 3.07% respectively. Although food prices have been firming up, experts feel prices will come down in the next 2-3 months.
The overall inflation for April, that includes food and manufactured goods, stood at 9.59%, moderating slightly from 9.90% in March.
Govt pegs rice production at over 100mt in 2010-11
The government has set a target of producing more than 100 million tonnes of rice in the 2010-11 crop year by bringing more area under hybrid seeds.
In the 2009-10 crop year, India's rice production is expected to be lower, at 89.31 million tonnes, against 99.18 million tonnes in the previous year. Rice production was impacted in the 2009-10 crop year due to a severe drought that hit almost half of the country.
Rice is grown in the kharif and rabi season every year. The kharif season runs from June to September and the rabi season is from October to December.
Apart from the forecast for a normal monsoon, the Centre's proposed initiative to "aggressively" promote hybrid seeds for better area coverage may have helped the ministry to raise the expectation of rice production to 100 million tonnes in the next crop year.
The government has already announced a new initiative for bringing a Green Revolution to the eastern region and has allocated funds primarily to promote rice crop. Boro rice area would also be increased in the eastern regional states of Assam, West Bengal, Bihar, Orissa and eastern UP.
It has also set a target of producing 16.5 million tonnes of pulses in the 2010-11 crop year.
The country's total foodgrain production was 234.47 million tonnes in the 2008-09 crop year. This is estimated to have come down to 218.19 million tonnes in the 2009-10 crop year.
Credit offtake picks up, but deposit kitty shrinks too
BANK credit to businesses and individuals has seen a pick-up of around Rs 5,600 crore while deposits with banks have fallen by nearly Rs 5,000 crore during the fortnight ended May 21, which has accentuated the tightness in money markets.
Latest data on business done by banks in India show that total bank credit rose Rs 2,406 crore during the fortnight to touch Rs 32,30,178 crore as on May 21. Of this, food credit (loans to the government for grain procurement) dipped Rs 3,225 crore while non-food credit rose (all other loans) Rs 5,631 crore.
Total deposit mobilisation slipped by Rs 4,997 crore during the fortnight to touch Rs 4,526,220 crore as on May 21. Both demand and term deposits have dipped by Rs 4,085 crore and Rs 912 crore, respectively.
on an incremental basis, deposit growth is significantly lower than the growth in the year-ago period. on an incremental basis, deposit growth is significantly lower than the growth in the year-ago period. Bank investments in government bonds also rose Rs 16,585 crore during the fortnight, taking the banking sector’s outstanding loan investment to Rs 1,444,728 crore as on May 21.
Bankers to meet today for base rate consensus
CEOs of large commercial banks meet on to arrive at some consensus on the base rate — the new system of charging interest rate on loans. Base rate is the rate, below which no bank can lend to its customers and is aimed at bringing transparency in the system. RBI has asked banks to replace prime lending rate with base rate from July 1. At the same time, the banking regulator has given banks discretion to decide on parameters to arrive at the bank rate. While some banks may choose to peg base rate on one year deposits, another bank may choose to peg on overnight call money rates. As a result, bank rate may vary widely from one bank to another.
So far, even as most banks have pegged their PLR in the range of 11-12.75%, bulk of the loan is disbursed at rates below the PLR — popularly known as sub-PLR. Nearly 70% of the loan is at sub-PLR rates. Now that no bank can lend below base rate, some government-owned banks are worried that private banks and foreign banks may peg their base rate very low to capture business. This is because several top-rated corporates, especially oil companies, have been borrowing for one month to three month at rates ranging from 6.5% to 7.5%.
The meeting of bank chiefs has been initiated by State Bank of India as it will be held at SBI headquarters in Mumbai. In a media briefing, sometime in February, SBI chairman OP Bhatt had indicated that the base rate would be around 8%.
The draft report on base rate, headed by Deepak Mohanti, executive director of RBI, had suggested that banks could arrive at base rate, taking into account one-year deposit to calculate base rate. However, in the final report, RBI said each bank is free to choose any deposit to arrive at the base rate or they can have their own formula to arrive at it.
Warrants to foreign investors only if they pay 25% up front
INDIAN companies will be allowed to issue warrants, or option to buy shares in the company, to foreign investors but under stiff terms including a high 25% up front payment, making the instrument less attractive for the investors. The department of industrial policy and promotion, or DIPP, is the nodal body for foreign direct investment policy , will soon circulate a cabinet note to amend the FDI policy. The proposed move will clear the uncertainty created by the recent change in the FDI policy.
However, issue of warrants to foreign investors will require an approval of Foreign Investment Promotion Board, allowing the government to keep a tab on the funds raised.
A number of mergers and acquisitionsand private equity deals are structured using such financial instruments. India saw mergers and acquisitions and private equity deals worth $2.21 billion in April, 2010. The new norms issued in April had disallowed issuance of warrants and preference shares to foreigninvestors over concerns on quasi debt instruments masquerading as equity.
However, both sides have veered around to the view to keep the period of conversion at one year as against 18 months prescribed by market regulator Sebi its guidelines on issue of warrants by listed companies.
Though, on the up front payment the provision of 25% is identical to the one prescribed by capital markets regulator Sebi for listed companies, the proposed norm will impact foreign investment in unlisted companies such as private equity.
The earlier norms did not prescribe any limit on the payment terms. The higher up front amount would mean that for a given amount, the foreign investor will be able to buy an option on a fewer number of shares. Essentially, the high initial payment will reduce the leaverage available to investor and thereby make the instrument less attractive.
A warrant is a financial instrument that allows the holder to buy shares of a company at a pre- determined price and within a specified period. Warrants are popular with Indian companies as these can be attached to convertible bonds or preferred stock and carry lower interest rates or dividends.
Now as per new FDI policy, Capital means equity shares; fully, compulsorily & mandatorily convertible preference shares. It will also include fully, compulsorily and mandatorily convertible debentures but Instruments like warrants, partly paid shares etc. are not considered as capital.
RBI forms panel to put in place a system for grievance redressal
CUSTOMERS can look forward to a fair treatment from banks with RBI forming a six member committee under the chairmanship of former Sebi chairman M Damodaran to put in place a system for quick grievance redressal. Besides reviewing customer grievance redressal and setting maximum time limits for settling complaints, the central bank wants the panel to propose ways of leveraging technology for better customer service in light of increasing use of Internet and IT for bank products and services. The panel will also recommend measures to enhance consumer protection. The committee will also examine the functioning of banking ombudsman Scheme — its structure, legal framework and recommend steps to make it more effective and responsive. It will also suggest ways to make the bank boards more involved in customer service.
Besides setting up a separate customer services department within the central bank (in addition to the office of Banking Ombudsman), RBI has also set up a separate Banking Codes and Standard Board, directing banks to adopt fair practices in customer services.
But despite all these measures, customer complaints are on the rise. In FY09, the Bank Ombudsman received 69,117 complaints in FY09, up 44% over previous year. Of this, 9,433 complains are still pending.
The six-member committee under the chairmanship of Mr Damodaran, with representatives from both the consumer forums as well as the banking industry, will review the existing system of attending to customer service in banks — approach, attitude and fair treatment to customers from retail, small and pensioners segment. The committee will also evaluate the structure and efficacy of existing systems and recommend measures for expeditious resolution of complaints. Besides, it may also lay down a suitable timeframe for disposal of complaints, including last escalation point within that timeframe.
Govt issues 25% compulsory public rule
The government made it mandatory for all listed companies to have a minimum public float of 25 per cent. Those below this level will have to get there by selling at least 5% to attain the mandated level. But the absence of a penalty clause for non-compliance may make the change ineffective.
There are at least 179 companies listed on the stock exchanges where the float is less than 25%, Crisil Equities estimates. Based on the current market price and the extent of promoters' holding, it is estimated that these companies will raise Rs 1,60,000 crore if they opt for sale of shares and Rs 2,10,000 lakh crore if they plan to dilute their stake via issue of fresh shares. The move would significantly increase liquidity in the equity markets, make fair price discovery more robust and enhance investor participation.
The biggest chunk of sale may come from the government through disinvestment in companies such as Hindustan Copper and trading firm MMTC, which have less than 1% traded on the stock exchanges.
Crisil estimates show that 82% of the expected funds may be raised by public sector companies.
For new listing, if the post-issue capital of the company calculated at offer price is more than Rs 4,000 crore, it may be allowed to go public with 10 per cent public shareholding and comply with the 25 per cent public shareholding requirement by increasing the public float by 5 per cent annually. An already listed company can offer less than 5% shares if the lesser amount is sufficient for it to achieve the 25% limit.
BSE plans SME exchange
Asia’s oldest bourse, the Bombay Stock Exchange (BSE), is planning to set up a separate exchange for small and medium-size enterprises (SMEs). Currently, there are almost 3,000 SMEs trading through the BSE.
Apart from the BSE, National Stock Exchange and new entrant MCX Stock Exchange (MCX-SX) have also shown an interest in setting up an SME exchange. The Securities and Exchange Board of India (Sebi) has laid the groundwork to allow SMEs to list on SME exchanges recently.
Karnataka gets Rs 4-lakh cr investment proposal
THE two-day Global Investors Meet (GIM) hosted by the Karnataka government ended with an assurance given by chief minister BS Yeddyurappa that there would be a periodic review of the investment proposals which amount to Rs 4 lakh crore. At the end of GIM, the state signed 352 memorandum of understanding (MoUs) with various companies, with the steel sector taking the majority share with Rs 2,21,344 crore, followed by the cement industry at Rs 36,991 crore and the power sector with Rs 25,214 crore. The total investment proposals have the employment potential of 8.65 lakh people.
Mr Yeddyurappa said, “There will be a Cabinet sub-committee headed by me with special incentives to be provided on a case-tocase basis depending on the quantum of investment.” He said the project proposals will be monitored in a timebound manner and implementation aspects will be looked into by the chief secretary every month. The chief minister will be reviewing the progress on a quarterly basis.
Insurers told to provide users’ guide
IN A move to curb mis-selling of unit-linked insurance plans (Ulips), regulator Irda has directed life firms to attach a `key-features’ document with every policy to help customers understand what they are buying. There will be a new provision in the `Regulations for Protection of Policyholders Interests’ to make this mandatory for insurance companies. Until now, the only explanatory document that a policyholder received in addition to the policy was a benefit illustration that showed the returns a policyholder could expect on maturity.
The details in the proposed document will spell out the type of the policy, minimum surrender value, list of complaint centres, benefits of the policy as well as benefits not payable, among others.
A key feature document should not be too long as to lose the precision nor should it be too short thereby missing out on key facts. The document should avoid jargon, should be easy to read and most of all be attractive for the consumer to peruse. It should be titled prominently and should use easy-to-understand language.
Auto cos lines up $30-b investment in 4 years
Daimler, Maruti Suzuki and Mahindra & Mahindra are set to lead estimated $30-billion investments by automakers in the next four years to meet the galloping demand in the world’s second fastest growing market after China. Global auto companies after facing a sedate growth in existing markets are investing to tap the growing demand in India as investment spending and the government’s social programmes raise incomes in smaller cities and rural areas too.
These investments by automakers are set to trigger expansion of capacities by component suppliers too such as Amtek Auto and Bharat Forge.
The Automotive Mission Plan is a 10-year road map prepared by the Indian government in 2006 to make India an automobile hub, raise the industry contribution to 10% of the gross domestic product from 5%, and provide additional employment to 25 million people.
Car sales rose 25% last year, the fastest in six years, to 19.5 lakh and domestic motorcycle sales climbed 26% to 94 lakh. Domestic passenger car sales gained 40% in April, despite price increases. The growth rate has hastened plans of many manufacturers such as Germany’s Volkswagen and France’s Renault.
Ministry wants freedom for PSUs to invest in private MFs
THE ministry of heavy industries wants public sector companies to be given the freedom to invest their surplus cash in mutual funds run by private companies and not just those managed by government-run financial firms. Such a proposal is being sent to finance ministry with the aim of giving state-run companies wider choice in the management of surplus money and to enable them to diversify risk. Also under consideration is a plan to increase the limit of investment in equity-oriented funds.
Navaratna and miniratna public sector companies, the largest and most profitable among governmentrun enterprises, have about Rs 3 lakh crore of surplus funds. At present they are allowed to invest 30% of this money in equity-linked mutual funds managed by public sector financial institutions.
Before they were allowed in 2008 to invest in mutual funds, public sector companies could only have exposure to fixed deposits, treasury bills and RBI bonds. By preventing competition and forcing them to keep cash deposits with state-run banks, public sector companies are losing about Rs 5,000 crore a year.
Certified agents to sell MFs
As per SEBI, mutual fund distributors and agents will need a National Institute of Securities Market (NISM) certificate to sell policies. With effect from June 1, associated person, i.e. distributors, agents, or any person engaged in the sale of MF products, shall be required to have a valid certification from NISM. move is intended to give quality service to investors and bring the unorganised segment under its loop so as to curb them from mis-selling products. Also person possesses a valid certificate of the AMFI Mutual Fund (advisors) Module before June 1, he would be exempted from the requirement of having an NISM certificate.
SBI readies $1b war chest for buys in Africa
STATE Bank of India is preparing $1-billion war chest to buy a bank in Africa, as the country’s largest lender looks to keep pace with Indian companies, which are striving to gain a foothold in the resource-rich continent.
The state-run bank is currently examining a number of options in countries such as Botswana, Ghana, South Africa and Egypt. It is looking at banks with a presence across some major countries.
Indian companies are increasingly focusing on Africa after ignoring it for several years. China and its companies have a major presence in the continent. The sixth India-Africa project partnership conclave earlierthis year was attended by 38 African ministers. The meet discussed 145 business projects worth about $9 billion.
Overseas business contributed about 11% of the bank’s net profit in the financial year ended March 2010. The bank’s international credit portfolio increased 54 % to Rs 86,267 crore the year. The bank has also submitted a Rs 40,000 crore fund raising plan for the next three financial years to the finance ministry. The bank will raise money through equity or hybrid debt issues.
The bank’s acquisition strategy will depend on the existence of Indian players in that country, the bilateral relations and the presence of Indian diaspora.
India’s exports to Africa rose from $5.6 billion in 2004-2005 to $14.6 billion in 2008-2009. Africa’s share in India’s total exports is about 8%.
SBI’s presence in the African continent, apart from South Africa, is through joint venture banks in Mauritius and Nigeria as well as representative offices in Cairo and Angola. In 2007, SBI had considered a mid-sized South African bank Capitec and had even appointed consultancy firm KPMG to do the due diligence. The deal, however, never took off. SBI has a network of 92 offshore offices spread over 32 countries. The bank has so far bought stakes in three foreign banks — one each in Kenya, Mauritius and Indonesia.
India’s exports up 36.2% in April
India’s exports have increased by 36.2% to $16.88 billion in April, the sixth consecutive month of growth. Last April, exports had shrunk nearly 30% to $12.4 billion under the impact of the worst recession in 60 years that dried-up demand in key markets such as the US.
ONGC, OIL get freedom to price natural gas
In a significant development, the government has given national oil firms ONGC and OIL freedom to price any additional natural gas produced from blocks given to them on nomination basis at market rates. So far, all gas — current and future — produced from blocks given to Oil and Natural Gas Corp (ONGC) and Oil India (OIL) was priced at government controlled rates, called APM (administered pricing mechanism).
The petroleum ministry, in an order dated May 31, has now made a distinction between existing producing fields and new ones in the nomination blocks. ONGC and OIL would have the freedom to sell any production from new fields in their nominated blocks at non-APM rates
NTPC to buy Australian coal mine
INDIA’S largest power producer, NTPC, is set to acquire controlling interest in a 720-million-tonne coal field in Australia in a deal valued at $1-1.5 billion, which will enable it to fire about 3,500 mw of power capacity. The coal mines, located near Perth in western Australia, will allow NTPC to bring home up to 10 million tonnes of coal annually for its plants.
The debt-ridden promoters (of the Australian project) may sell the 416 mw power project along with its captive coal mine separately from the virgin coal field. In this case, NTPC is likely to participate only for the greenfield coal project that will give it access to 7-10 million tonnes of goodquality thermal coal. The annual production from the field could go over 12 million tonnes per annum.
Along with the Australian offer, NTPC is in advanced stages of discussion to pick up equity stakes in two coal fields in Indonesia, and is studying prospects of acquiring interest in two coal blocks on offer in Mozambique and one in South Africa.
NTPC needs about 125 million tonnes of coal annually for existing power plants and imports 10 million tonnes to meet the gap. The imports are expected to cross 30 million tonnes by 2017, forcing the company to look at alternative routes to build fuel security. It is already working on its eight captive coal blocks with peak production capacity of 83 million tonnes per annum.
Rise in fiscal deficit by 24.89% in FY10
As the government cut duties and stepped up public expenditure, its fiscal deficit rose by 24.89% to Rs 4,12,307 crore in 2009-10 compared to the year ago period. Fiscal deficit had stood at Rs 3,30,114 crore during 2008-09. Initiating the stimulus measures to spur the slowing down economy after global financial crisis deepened, the government cut excise duty by four per cent in December, 2008. It again cut excise duty as well as service tax by two per cent in February, 2009 so higher impact of stimulus measures in the form of tax cuts came in 2009-10, which resulted in widening of fiscal deficit. Similarly, Plan expenditure was stepped up to give a boost to the economy, further widening the gap between expenditure and receipts of the government.
GDP grows at 8.6% in fourth quarter
Driven by a robust performance by the manufacturing sector, the Indian economy grew by 8.6% in the last quarter of 2009-10, pushing up the overall growth to a better-than expected 7.4%.
The manufacturing sector grew by 16.3% in the fourth quarter (January-March 2009-10) and 10.8% in the fiscal.
The Gross Domestic Product (GDP) grew at 7.4% for 2009-10, higher than the February projection of 7.2%.
The Central Statistics Organisation (CSO) also revised upwards the growth rates for Q2 and Q3 of 2009-10 on better-than-expected performance by manufacturing, mining and quarrying industries than first thought.
There was no decline in agriculture growth in 2009-10, despite widespread drought and floods hitting the farm output.
According to the CSO data, the farm sector recorded a growth rate of 0.2%, contrary to expectations of negative growth.
Finance minister Pranab Mukherjee reiterated his confidence that the economy would post at least 8.5% growth in 2010-11.
Per capita income surges by 10.5%
The average income of Indians rose 10.5% to Rs 44,345 in 2009-10, against Rs 40,141 in 2008-09 at current prices. Per capita income means income of each Indian, assuming national income is evenly divided among the country’s population of 117 crore.
At market price, size of the economy rose to Rs 62,31,171 crore in 2009-10, up 11.8% from Rs 55,74,449 crore in 2009-09. At 2004-05 prices the size of GDP stood at Rs 44,64,081 crore in 2009-10 as against Rs 41,54,973 crore in 2008-09.
China is the only large economy with a higher growth rate at 11.9% in the January-March quarter. The rest of the world is witnessing a fragile recovery, which is now under threat due to the brewing Euro-zone crisis. The sixteen developed countries in the Euro-zone expanded by just 0.2% in the quarter. At the same time, the Organisation for Economic Cooperation and Development (OECD) — a grouping of mostly developed countries including Europe that account for over 60% of the global economy — grew at only 0.7% in the quarter, against 0.9% in the previous quarter. US and Japan grew at 0.8% and 1.2% respectively.
Financial Services Growth Slows Down To 7.9% In Q4 Against 12.3% Last Fiscal
GROWTH in financial services in India had slowed down to 7.9% in the fourth quarter of FY10 against 12.3% in the same period a year ago. This was despite the economy clocking one of its highest quarterly growth rates in more than two years.
An analysis of the economic output or GDP (gross domestic product) data over the past several quarters indicates that the contribution of financial services, which is reflected in ‘Finance, insurance, real estate and business services’ has been secularly decelerating since the fourth quarter of FY09 when the growth rate peaked 12.3%. A crucial component of services GDP, this segment roughly accounts for a sixth of the country’s GDP and is the secondlargest component after trade, hotels, transport and communication. Interestingly, this is the only segment, besides agriculture to witness a slowdown in growth. According to experts, the drag on the segment could be largely because of a slowdown in the real estate sector.
Govt kicks off 10% HCL selloff and matching FPO
THE government has initiated the divestment process in Hindustan Copper (HCL) in which it intends to offload a 10% stake. Along with the proposed offer of sale, the company has decided to make a fresh issue of equal number of shares, taking the issue size to Rs 9,000 crore at current price. The government has invited requests for proposal from investment bankers for appointment of book running lead managers (BRLMs). This would be the third company in the current fiscal (2010-11) after Coal India Ltd (CIL) and Engineers India Ltd (EIL), in which the government has initiated the disinvestments process.
At current price, HCL issue would be second largest issue after Coal India in which the government intends to mop up around Rs 14,000 crore. Since the government is currently holding 99.59%, public holding is 37.98 lakh shares amounting to 0.41%.
The government had projected to mobilise Rs 35000 crore from spectrums auctions and another Rs 40,000 crore from disinvestments. As per the current estimates, the government may raise around Rs 14000 crore from divestment of Coal India, and another Rs 1,000 crore from EIL. Earlier this fiscal, the government had raised Rs 1079 crore from divestment of 10% stake in Satluj Jal Vidut Nigam Ltd.
No bank licence for loan defaulters
Corporate houses seeking banking licences will come under the scrutiny of both the Reserve Bank of India and the finance ministry, which are keen to restrict the entry of players involved in dubious transactions. The books and accounts of all group companies will be examined before granting the new banking licences, proposed by the finance minister in the Union budget. The scrutiny is meant to avoid situations such as the Bank of Rajasthan fiasco, where the Tayal Group owned more than 55% stake, which had resulted in serious corporate governance issues
RBI will put out a discussion paper next month on the norms for issuing new banking licenses to private companies and non-banking finance companies.
Pulses, milk push food inflation to 16.55%
Driven by higher prices of pulses, milk and fruits, food inflation rose to 16.55% for the week ended May 22. Inflation increased by 0.32 percentage point from 16.23% in the previous week. Potatoes and onions became cheaper by 34.09% and 11.55% respectively. Prices of pulses, on the other hand, shot up by 30.84%, that of milk by 21.12%, fruits 13.7% and vegetables 1.34%. Among other food items, rice and wheat turned costlier by 7.30% and 3.07% respectively. Although food prices have been firming up, experts feel prices will come down in the next 2-3 months.
The overall inflation for April, that includes food and manufactured goods, stood at 9.59%, moderating slightly from 9.90% in March.
Govt pegs rice production at over 100mt in 2010-11
The government has set a target of producing more than 100 million tonnes of rice in the 2010-11 crop year by bringing more area under hybrid seeds.
In the 2009-10 crop year, India's rice production is expected to be lower, at 89.31 million tonnes, against 99.18 million tonnes in the previous year. Rice production was impacted in the 2009-10 crop year due to a severe drought that hit almost half of the country.
Rice is grown in the kharif and rabi season every year. The kharif season runs from June to September and the rabi season is from October to December.
Apart from the forecast for a normal monsoon, the Centre's proposed initiative to "aggressively" promote hybrid seeds for better area coverage may have helped the ministry to raise the expectation of rice production to 100 million tonnes in the next crop year.
The government has already announced a new initiative for bringing a Green Revolution to the eastern region and has allocated funds primarily to promote rice crop. Boro rice area would also be increased in the eastern regional states of Assam, West Bengal, Bihar, Orissa and eastern UP.
It has also set a target of producing 16.5 million tonnes of pulses in the 2010-11 crop year.
The country's total foodgrain production was 234.47 million tonnes in the 2008-09 crop year. This is estimated to have come down to 218.19 million tonnes in the 2009-10 crop year.
Credit offtake picks up, but deposit kitty shrinks too
BANK credit to businesses and individuals has seen a pick-up of around Rs 5,600 crore while deposits with banks have fallen by nearly Rs 5,000 crore during the fortnight ended May 21, which has accentuated the tightness in money markets.
Latest data on business done by banks in India show that total bank credit rose Rs 2,406 crore during the fortnight to touch Rs 32,30,178 crore as on May 21. Of this, food credit (loans to the government for grain procurement) dipped Rs 3,225 crore while non-food credit rose (all other loans) Rs 5,631 crore.
Total deposit mobilisation slipped by Rs 4,997 crore during the fortnight to touch Rs 4,526,220 crore as on May 21. Both demand and term deposits have dipped by Rs 4,085 crore and Rs 912 crore, respectively.
on an incremental basis, deposit growth is significantly lower than the growth in the year-ago period. on an incremental basis, deposit growth is significantly lower than the growth in the year-ago period. Bank investments in government bonds also rose Rs 16,585 crore during the fortnight, taking the banking sector’s outstanding loan investment to Rs 1,444,728 crore as on May 21.
Bankers to meet today for base rate consensus
CEOs of large commercial banks meet on to arrive at some consensus on the base rate — the new system of charging interest rate on loans. Base rate is the rate, below which no bank can lend to its customers and is aimed at bringing transparency in the system. RBI has asked banks to replace prime lending rate with base rate from July 1. At the same time, the banking regulator has given banks discretion to decide on parameters to arrive at the bank rate. While some banks may choose to peg base rate on one year deposits, another bank may choose to peg on overnight call money rates. As a result, bank rate may vary widely from one bank to another.
So far, even as most banks have pegged their PLR in the range of 11-12.75%, bulk of the loan is disbursed at rates below the PLR — popularly known as sub-PLR. Nearly 70% of the loan is at sub-PLR rates. Now that no bank can lend below base rate, some government-owned banks are worried that private banks and foreign banks may peg their base rate very low to capture business. This is because several top-rated corporates, especially oil companies, have been borrowing for one month to three month at rates ranging from 6.5% to 7.5%.
The meeting of bank chiefs has been initiated by State Bank of India as it will be held at SBI headquarters in Mumbai. In a media briefing, sometime in February, SBI chairman OP Bhatt had indicated that the base rate would be around 8%.
The draft report on base rate, headed by Deepak Mohanti, executive director of RBI, had suggested that banks could arrive at base rate, taking into account one-year deposit to calculate base rate. However, in the final report, RBI said each bank is free to choose any deposit to arrive at the base rate or they can have their own formula to arrive at it.
Warrants to foreign investors only if they pay 25% up front
INDIAN companies will be allowed to issue warrants, or option to buy shares in the company, to foreign investors but under stiff terms including a high 25% up front payment, making the instrument less attractive for the investors. The department of industrial policy and promotion, or DIPP, is the nodal body for foreign direct investment policy , will soon circulate a cabinet note to amend the FDI policy. The proposed move will clear the uncertainty created by the recent change in the FDI policy.
However, issue of warrants to foreign investors will require an approval of Foreign Investment Promotion Board, allowing the government to keep a tab on the funds raised.
A number of mergers and acquisitionsand private equity deals are structured using such financial instruments. India saw mergers and acquisitions and private equity deals worth $2.21 billion in April, 2010. The new norms issued in April had disallowed issuance of warrants and preference shares to foreigninvestors over concerns on quasi debt instruments masquerading as equity.
However, both sides have veered around to the view to keep the period of conversion at one year as against 18 months prescribed by market regulator Sebi its guidelines on issue of warrants by listed companies.
Though, on the up front payment the provision of 25% is identical to the one prescribed by capital markets regulator Sebi for listed companies, the proposed norm will impact foreign investment in unlisted companies such as private equity.
The earlier norms did not prescribe any limit on the payment terms. The higher up front amount would mean that for a given amount, the foreign investor will be able to buy an option on a fewer number of shares. Essentially, the high initial payment will reduce the leaverage available to investor and thereby make the instrument less attractive.
A warrant is a financial instrument that allows the holder to buy shares of a company at a pre- determined price and within a specified period. Warrants are popular with Indian companies as these can be attached to convertible bonds or preferred stock and carry lower interest rates or dividends.
Now as per new FDI policy, Capital means equity shares; fully, compulsorily & mandatorily convertible preference shares. It will also include fully, compulsorily and mandatorily convertible debentures but Instruments like warrants, partly paid shares etc. are not considered as capital.
RBI forms panel to put in place a system for grievance redressal
CUSTOMERS can look forward to a fair treatment from banks with RBI forming a six member committee under the chairmanship of former Sebi chairman M Damodaran to put in place a system for quick grievance redressal. Besides reviewing customer grievance redressal and setting maximum time limits for settling complaints, the central bank wants the panel to propose ways of leveraging technology for better customer service in light of increasing use of Internet and IT for bank products and services. The panel will also recommend measures to enhance consumer protection. The committee will also examine the functioning of banking ombudsman Scheme — its structure, legal framework and recommend steps to make it more effective and responsive. It will also suggest ways to make the bank boards more involved in customer service.
Besides setting up a separate customer services department within the central bank (in addition to the office of Banking Ombudsman), RBI has also set up a separate Banking Codes and Standard Board, directing banks to adopt fair practices in customer services.
But despite all these measures, customer complaints are on the rise. In FY09, the Bank Ombudsman received 69,117 complaints in FY09, up 44% over previous year. Of this, 9,433 complains are still pending.
The six-member committee under the chairmanship of Mr Damodaran, with representatives from both the consumer forums as well as the banking industry, will review the existing system of attending to customer service in banks — approach, attitude and fair treatment to customers from retail, small and pensioners segment. The committee will also evaluate the structure and efficacy of existing systems and recommend measures for expeditious resolution of complaints. Besides, it may also lay down a suitable timeframe for disposal of complaints, including last escalation point within that timeframe.
Govt issues 25% compulsory public rule
The government made it mandatory for all listed companies to have a minimum public float of 25 per cent. Those below this level will have to get there by selling at least 5% to attain the mandated level. But the absence of a penalty clause for non-compliance may make the change ineffective.
There are at least 179 companies listed on the stock exchanges where the float is less than 25%, Crisil Equities estimates. Based on the current market price and the extent of promoters' holding, it is estimated that these companies will raise Rs 1,60,000 crore if they opt for sale of shares and Rs 2,10,000 lakh crore if they plan to dilute their stake via issue of fresh shares. The move would significantly increase liquidity in the equity markets, make fair price discovery more robust and enhance investor participation.
The biggest chunk of sale may come from the government through disinvestment in companies such as Hindustan Copper and trading firm MMTC, which have less than 1% traded on the stock exchanges.
Crisil estimates show that 82% of the expected funds may be raised by public sector companies.
For new listing, if the post-issue capital of the company calculated at offer price is more than Rs 4,000 crore, it may be allowed to go public with 10 per cent public shareholding and comply with the 25 per cent public shareholding requirement by increasing the public float by 5 per cent annually. An already listed company can offer less than 5% shares if the lesser amount is sufficient for it to achieve the 25% limit.
BSE plans SME exchange
Asia’s oldest bourse, the Bombay Stock Exchange (BSE), is planning to set up a separate exchange for small and medium-size enterprises (SMEs). Currently, there are almost 3,000 SMEs trading through the BSE.
Apart from the BSE, National Stock Exchange and new entrant MCX Stock Exchange (MCX-SX) have also shown an interest in setting up an SME exchange. The Securities and Exchange Board of India (Sebi) has laid the groundwork to allow SMEs to list on SME exchanges recently.
Karnataka gets Rs 4-lakh cr investment proposal
THE two-day Global Investors Meet (GIM) hosted by the Karnataka government ended with an assurance given by chief minister BS Yeddyurappa that there would be a periodic review of the investment proposals which amount to Rs 4 lakh crore. At the end of GIM, the state signed 352 memorandum of understanding (MoUs) with various companies, with the steel sector taking the majority share with Rs 2,21,344 crore, followed by the cement industry at Rs 36,991 crore and the power sector with Rs 25,214 crore. The total investment proposals have the employment potential of 8.65 lakh people.
Mr Yeddyurappa said, “There will be a Cabinet sub-committee headed by me with special incentives to be provided on a case-tocase basis depending on the quantum of investment.” He said the project proposals will be monitored in a timebound manner and implementation aspects will be looked into by the chief secretary every month. The chief minister will be reviewing the progress on a quarterly basis.
Insurers told to provide users’ guide
IN A move to curb mis-selling of unit-linked insurance plans (Ulips), regulator Irda has directed life firms to attach a `key-features’ document with every policy to help customers understand what they are buying. There will be a new provision in the `Regulations for Protection of Policyholders Interests’ to make this mandatory for insurance companies. Until now, the only explanatory document that a policyholder received in addition to the policy was a benefit illustration that showed the returns a policyholder could expect on maturity.
The details in the proposed document will spell out the type of the policy, minimum surrender value, list of complaint centres, benefits of the policy as well as benefits not payable, among others.
A key feature document should not be too long as to lose the precision nor should it be too short thereby missing out on key facts. The document should avoid jargon, should be easy to read and most of all be attractive for the consumer to peruse. It should be titled prominently and should use easy-to-understand language.
Auto cos lines up $30-b investment in 4 years
Daimler, Maruti Suzuki and Mahindra & Mahindra are set to lead estimated $30-billion investments by automakers in the next four years to meet the galloping demand in the world’s second fastest growing market after China. Global auto companies after facing a sedate growth in existing markets are investing to tap the growing demand in India as investment spending and the government’s social programmes raise incomes in smaller cities and rural areas too.
These investments by automakers are set to trigger expansion of capacities by component suppliers too such as Amtek Auto and Bharat Forge.
The Automotive Mission Plan is a 10-year road map prepared by the Indian government in 2006 to make India an automobile hub, raise the industry contribution to 10% of the gross domestic product from 5%, and provide additional employment to 25 million people.
Car sales rose 25% last year, the fastest in six years, to 19.5 lakh and domestic motorcycle sales climbed 26% to 94 lakh. Domestic passenger car sales gained 40% in April, despite price increases. The growth rate has hastened plans of many manufacturers such as Germany’s Volkswagen and France’s Renault.
Ministry wants freedom for PSUs to invest in private MFs
THE ministry of heavy industries wants public sector companies to be given the freedom to invest their surplus cash in mutual funds run by private companies and not just those managed by government-run financial firms. Such a proposal is being sent to finance ministry with the aim of giving state-run companies wider choice in the management of surplus money and to enable them to diversify risk. Also under consideration is a plan to increase the limit of investment in equity-oriented funds.
Navaratna and miniratna public sector companies, the largest and most profitable among governmentrun enterprises, have about Rs 3 lakh crore of surplus funds. At present they are allowed to invest 30% of this money in equity-linked mutual funds managed by public sector financial institutions.
Before they were allowed in 2008 to invest in mutual funds, public sector companies could only have exposure to fixed deposits, treasury bills and RBI bonds. By preventing competition and forcing them to keep cash deposits with state-run banks, public sector companies are losing about Rs 5,000 crore a year.
Certified agents to sell MFs
As per SEBI, mutual fund distributors and agents will need a National Institute of Securities Market (NISM) certificate to sell policies. With effect from June 1, associated person, i.e. distributors, agents, or any person engaged in the sale of MF products, shall be required to have a valid certification from NISM. move is intended to give quality service to investors and bring the unorganised segment under its loop so as to curb them from mis-selling products. Also person possesses a valid certificate of the AMFI Mutual Fund (advisors) Module before June 1, he would be exempted from the requirement of having an NISM certificate.
SBI readies $1b war chest for buys in Africa
STATE Bank of India is preparing $1-billion war chest to buy a bank in Africa, as the country’s largest lender looks to keep pace with Indian companies, which are striving to gain a foothold in the resource-rich continent.
The state-run bank is currently examining a number of options in countries such as Botswana, Ghana, South Africa and Egypt. It is looking at banks with a presence across some major countries.
Indian companies are increasingly focusing on Africa after ignoring it for several years. China and its companies have a major presence in the continent. The sixth India-Africa project partnership conclave earlierthis year was attended by 38 African ministers. The meet discussed 145 business projects worth about $9 billion.
Overseas business contributed about 11% of the bank’s net profit in the financial year ended March 2010. The bank’s international credit portfolio increased 54 % to Rs 86,267 crore the year. The bank has also submitted a Rs 40,000 crore fund raising plan for the next three financial years to the finance ministry. The bank will raise money through equity or hybrid debt issues.
The bank’s acquisition strategy will depend on the existence of Indian players in that country, the bilateral relations and the presence of Indian diaspora.
India’s exports to Africa rose from $5.6 billion in 2004-2005 to $14.6 billion in 2008-2009. Africa’s share in India’s total exports is about 8%.
SBI’s presence in the African continent, apart from South Africa, is through joint venture banks in Mauritius and Nigeria as well as representative offices in Cairo and Angola. In 2007, SBI had considered a mid-sized South African bank Capitec and had even appointed consultancy firm KPMG to do the due diligence. The deal, however, never took off. SBI has a network of 92 offshore offices spread over 32 countries. The bank has so far bought stakes in three foreign banks — one each in Kenya, Mauritius and Indonesia.
India’s exports up 36.2% in April
India’s exports have increased by 36.2% to $16.88 billion in April, the sixth consecutive month of growth. Last April, exports had shrunk nearly 30% to $12.4 billion under the impact of the worst recession in 60 years that dried-up demand in key markets such as the US.
ONGC, OIL get freedom to price natural gas
In a significant development, the government has given national oil firms ONGC and OIL freedom to price any additional natural gas produced from blocks given to them on nomination basis at market rates. So far, all gas — current and future — produced from blocks given to Oil and Natural Gas Corp (ONGC) and Oil India (OIL) was priced at government controlled rates, called APM (administered pricing mechanism).
The petroleum ministry, in an order dated May 31, has now made a distinction between existing producing fields and new ones in the nomination blocks. ONGC and OIL would have the freedom to sell any production from new fields in their nominated blocks at non-APM rates
NTPC to buy Australian coal mine
INDIA’S largest power producer, NTPC, is set to acquire controlling interest in a 720-million-tonne coal field in Australia in a deal valued at $1-1.5 billion, which will enable it to fire about 3,500 mw of power capacity. The coal mines, located near Perth in western Australia, will allow NTPC to bring home up to 10 million tonnes of coal annually for its plants.
The debt-ridden promoters (of the Australian project) may sell the 416 mw power project along with its captive coal mine separately from the virgin coal field. In this case, NTPC is likely to participate only for the greenfield coal project that will give it access to 7-10 million tonnes of goodquality thermal coal. The annual production from the field could go over 12 million tonnes per annum.
Along with the Australian offer, NTPC is in advanced stages of discussion to pick up equity stakes in two coal fields in Indonesia, and is studying prospects of acquiring interest in two coal blocks on offer in Mozambique and one in South Africa.
NTPC needs about 125 million tonnes of coal annually for existing power plants and imports 10 million tonnes to meet the gap. The imports are expected to cross 30 million tonnes by 2017, forcing the company to look at alternative routes to build fuel security. It is already working on its eight captive coal blocks with peak production capacity of 83 million tonnes per annum.
Rise in fiscal deficit by 24.89% in FY10
As the government cut duties and stepped up public expenditure, its fiscal deficit rose by 24.89% to Rs 4,12,307 crore in 2009-10 compared to the year ago period. Fiscal deficit had stood at Rs 3,30,114 crore during 2008-09. Initiating the stimulus measures to spur the slowing down economy after global financial crisis deepened, the government cut excise duty by four per cent in December, 2008. It again cut excise duty as well as service tax by two per cent in February, 2009 so higher impact of stimulus measures in the form of tax cuts came in 2009-10, which resulted in widening of fiscal deficit. Similarly, Plan expenditure was stepped up to give a boost to the economy, further widening the gap between expenditure and receipts of the government.
Kenya sees cure in Indian generics now
THE Kenyan health ministry has conceded that the country should not have passed the anticounterfeit law last year and said it would try and make changes to ensure that imports of legitimate generics were not affected. This marks an important victory in India’s sustained efforts in Africa to counter propaganda by multinational pharma companies against cheap generic drugs.
African Nation’s Health Ministry Says It Will Try To Change Anti-Counterfeit Law To Save Genuine Generics. The government now plans to focus on countries such as Uganda, Nigeria, Zambia and Malawai that areplanning similar anti-counterfeit legislation. Generics are copies of drugs that do not have patent protection in India, allowing any manufacturer to produce them. The competition among manufacturers helps bring down prices substantially. India is one of the world’s largest producers of generics with yearly exports of an estimated Rs 30,000 crore, a sixth of which goes to Africa.
Kenya’s anti-counterfeit law could render genuine generics imported from countries like India illegal if a company holding a patent to the formulation in any country files a complaint. This could happen despite the fact that the drug is off-patent in the exporting countries. Kenya now seems to have realised that the legislation could hamper access to cheap life saving drugs for its population. The international intellectual property agreement (Trips) under the WTO allows exports of generics to countries with insufficient production capacities on public health grounds even if patents are held by companies in other parts of the world.
The commerce department had earlier written to the Kenyan government pointing out the downsides of the anticounterfeit legislation and had also held several meetings at the official level on the issue. Indian officials have also met government representatives from other countries that are planning similar legislation including Uganda, Nigeria and Tanzania to sensitise them about the importance of generics for the poor.
One of the reasons behind anticounterfeit legislation being considered in a number of African countries is an attempt by global pharma companies to create confusion between counterfeits (genuine drugs that are made in violation of patents) and fake or spurious drugs that are harmful, the official said.
Generics eat into the profits of large pharma companies holding patents to those medicines in the Western countries as they can’t make inroads into poor countries that prefer to buy the cheap yet effective copies of the original drugs.
Sports
Nadal wins French Open; regains number one ranking
Rafael Nadal won the French Open for the fifth time in six years with a crushing defeat of Robin Soderling 6-4, 6-2, 6-4 to re-establish him as the best on the clay.
Swede Bjorn Borg holds the record of six title between 1974 and 1981. Nadal won his 38th career match at Roland Garros against the one loss to Soderling.
Francesca Becomes First Italian Woman to Win A Grand Slam
Francesca Schiavone became the first Italian woman to win a Grand Slam singles title when she beat Australia’s Samantha Stosur in the final of the French Open.
Schiavonetamed Stosur’s greater power to win 6-4, 7-6. Both women were making their Grand Slam final debuts but it was the 29-year-old Schiavone who seized her chance.
She is also the oldest woman to win her first Grand Slam title since Ann Jones won Wimbledon in 1969.
Leander Paes and Lukas Dlouhy out of doubles
A second successive French Open doubles title eluded Leander Paes as the Indian ace and his Czech partner Lukas Dlouhy lost the final to Daniel Nestor and Nenad Zimonjic in straight set In line for a second successive title, the defending champions ran out of steam and lost 5-7, 2-6 to their second seeded opponents Daniel Nestor of Canada and Nenad Zimonjic of Serbia in a 65-minute contest at Roland Garros here.
North Korea called off pre-World Cup warm-up session in Zimbabwe due to protests
The North Korea football team’s controversial planned pre-World Cup warmup session in Zimbabwe here has been called off following threats of protests in the African country.
The North Korean squad had been due to arrive here to train and play friendlies against local teams before moving onto South Africa, where the World Cup kicks off on June 11.
The visit was called off after it provoked outrage among supporters of Tsvangirai’s Movement for Democratic Change (MDC).
North Korean army instructors in 1983 trained the newly-formed Zimbabwean army brigade that went on to slaughter thousands of civilians during a small insurgency in Matabeleland. Reports put the numbers killed in the operation at between 8,000 and 20,000 civilians.
Singapore end China’s 19-year reign in TT
Singapore women trio of Feng Tianwei, Wang Yuegu and Sun Bei Bei defeated The Chinese trio of Ding Ning, Liu Shiwen and Guo Yan by 3-1 and won the gold medal at the World Team Table Tennis Championships. China did not clinch gold for the first time since 1991.
But China’s men regained some pride for their supporters in claiming their fifth consecutive world team title by beating Germany 3-1
Mary Kom, Sarita Strike Gold at Asian Championship
Four-time world champion M C Mary Kom notched up her third Asian title while L Sarita Devi clinched her fourth, as Indian boxers finished fourth in the event with two gold, a silver and five bronze medals in Astana, Kazakhstan today. Former champion Aswathi Mol settled for silver after losing the light heavy weight (81kg) final 0-5 to China's Wang Yanrui.
India finished behind overall champions hosts Kazakhstan, DPR Korea and China.
Saurav Ghosal is highest ranked Indian
Saurav Ghosal became the highest ranked Indian squash player ever in the world rankings (PSA or WISPA). In the latest men’s ranking released by the PSA, Ghosal climbed two places to 26th, surpassing former women’s national champion Misha Grewal’s best world ranking of 27 in March 1995. Joshna Chinappa also achieved her career best in the the June WISPA rankings. The India women No 1 last week won the German Ladies Open title in Saarbrucken which propelled three places to 28 in the list.
Santosh Trophy in Kolkata from July 15-Aug 8
The 64th National Football Championship for the Santosh Trophy 2009-10 will be held in Kolkata from July 15 to August 8, but only without some of the country’s top players in action.
Sri Lanka end India’s Agony
A sloppy India crashed out of the cricket tri-series after Sri Lanka thumped them by six wickets in a crucial One-day match of the series. Tottering on the brink of disaster after their back-to-back defeat against Zimbabwe, India badly needed to win this match with a big margin to keep alive their final hopes but they could not pull off a repeat performance of their previous encounter with the Lankans
Azharuddin Steps into Badminton Court
Lok Sabha MP and former cricket captain Mohd Azharuddin on Saturday surprised everyone by declaring his intent to contest for the post of the president of Badminton Association of India (BAI), immediately inviting claims from rivals that his life ban on account of match-fixing in cricket makes him ineligible for sports administration.
The Congress MP from Moradabad made it clear that the ban slapped by BCCI does not prevent him from contesting elections in other sports bodies.
Appointments
New NHRC chairman
FORMER CHIEF justice of India K G Balakrishnan has been appointed as chairperson of the National Human Rights Commission. 65-year-old Balakrishnan, who retired on May 12, will be the sixth chairperson of the commission and will have a tenure of five years. President Pratibha Patil gave her approval to his appointment after recommendation by a parliamentary committee, headed by Prime Minister Manmohan Singh.
Mr Balakrishnan, born on May 12, 1945, at Thalayolaparambu in Kottayam district of Kerala, was the chief justice of India from January 2007 to May this year.
New NHRC chairman
FORMER CHIEF justice of India K G Balakrishnan has been appointed as chairperson of the National Human Rights Commission. 65-year-old Balakrishnan, who retired on May 12, will be the sixth chairperson of the commission and will have a tenure of five years. President Pratibha Patil gave her approval to his appointment after recommendation by a parliamentary committee, headed by Prime Minister Manmohan Singh.
Mr Balakrishnan, born on May 12, 1945, at Thalayolaparambu in Kottayam district of Kerala, was the chief justice of India from January 2007 to May this year.
IMPORTANT DAYS
International Days
World Environment Day – 5 June
World Blood Donor Day – 14 June
World Refugees Day – 20 June
United Nations Public Service Day – 23 June
World Diabetes Day – 27 June
National Days
National Statistics Day – 29 June
For better read with more info, download its pdf file June 1-7 Current Affairs
Posts
No comments:
Post a Comment