Boom-Boom-Bomb-Aye?: Sid Harth

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cogitoergosum

2010-04-25 12:50:10 UTC

Boom-Boom-Bomb-Aye?: Sid Harth
http://bakulaji.typepad.com/blog/boomboombombaye-sid-harth.html

Have faith in India's real economy: P Chidambaram
23 Jan 2008, 0057 hrs IST,MK Venu,TNN

Finance minister P Chidambaram on Tuesday suggested that investors,
who have panicked following the turbulence in the financial markets,
need to draw confidence from the strength of India’s robust real
economy.

And the government would, he told ET in an exclusive interview, take
special fiscal measures to shore up any weak spots in that growth
story. Specifically, fiscal measures would boost consumption in the
economy, if the current slowdown in the production of consumer goods
persists.

The index of industrial production showed a negative growth in the
overall consumer goods production for two months this fiscal,
September (a marginal -0.9%) and November (-2.6%).

Mr Chidambaram said, “We will wait to see if the negative growth in
consumer goods production is just a blip. If the trend persists for a
quarter, we will take fiscal measures to deal with it.”

The finance minister’s statement comes in the backdrop of a global
stock markets meltdown, which caused a 13% fall in the Indian stock
indices over the past two days. He said India need not be affected
that much by the turmoil in the global markets as the “Indian economy
was driven by its own robust investment and consumption. Ours is a
long-term growth story based on real investments and consumption.”

The finance minister also sought to separate the behaviour of the real
economy from that of the financial economy. Asked how much of the
current risks to India’s economy comes from the weaknesses in the US
markets, Mr Chidambaram said, “The risks emanating from the US have
more to do with liquidity flows. These risks would apply perhaps to
our exchange rate management or the management of capital inflows.
These are external risks, which we will manage. The real economy in
India is in good shape.”

Asked whether increasingly heavy losses suffered by big US banks could
lead to further withdrawal of funds from the stock market here, Mr
Chidambaram said those banks did not have that kind of money invested
in India. Their liquidity problem will be addressed mainly by their
central banks.

The finance minister suggested India just needed to focus on its real
economy. In this context, the negative growth in consumer durable
production since April 2007 and the overall consumer goods production
growth turning negative in November is evidently causing some worry.

If the negative growth in consumer goods persists through December and
January, the finance minister is most likely to activate fiscal
measures to boost consumption. Theoretically, this could take many
forms. One could be to put more money in the hands of the people
through adjusting existing income tax slabs.

The other measures could relate to excise reductions in consumer
goods, as had been suggested by the Prime Minister’s Economic Advisory
Council chairman C Rangarajan.

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Led by ICICI Bank Indian ADRs add $3 bn in a week
25 Apr 2010, 1420 hrs IST,PTI

Topics:stocks ICICI ADR

NEW YORK: Indian stocks trading on American bourses added $3 billion
to their cumulative market capitalisation last week, with private
sector
lender ICICI Bank accounting for most of the gains.

For the week ended April 23, the 16 Indian entities listed on the New
York Stock Exchange and Nasdaq together added $3 billion to their
market capitalisation.

However, as many as seven companies listed as American Depository
Receipts (ADRs), including IT major Wipro and copper producer Sterlite
Industries, have witnessed an erosion of their total market
capitalisation.

ADRs are bought and sold on American markets just like stocks and are
issued in by a bank or a brokerage firm.

ICICI Bank, which leads the pack of gaining stocks, saw its valuation
jumping by $2.3 billion to $25.02 billion.

Another private sector lender HDFC Bank's market capitalisation surged
by $1.01 billion to $22.9 billion.

Meanwhile, Wipro emerged as the major loser during the week. The
company's valuation fell by $556 million to $34.21 billion.

Wipro is followed by Sterlite Industries whose market capitalisation
plunged by $513 million to $15.03 billion.

Apart from ICICI Bank and HDFC Bank, auto maker Tata Motors and pharma
major Dr Reddy's Laboratories too saw a significant gain in their
respective market capitalisation.

Tata Motors' valuation rose by $459 million to $9.15 billion, while
that of Dr Reddy's Laboratories grew by $104 million to a total of
$4.59 billion.

Among other gainers on the list include internet firm Reddif.com,
telecom major Mahanagar Telephone Nigam, IT firms Mahindra Satyam
(earlier known as Satyam Computer Services) and Patni Computer Systems
whose valuation increased in the range of $1 million to $90 million.

Telecom major Tata Communications' market capitalisation remain
unchanged at $1.77 billion during the week.

The valuations of IT bellwether Infosys Technologies' slipped by $18
million and of internet company Sify Technologies fell by $0.4
million. BPO firms WNS Holdings, EXLService Holdings and Genpact's
market capitalisation fell by $17 million, $12 million and $54
million, respectively.

On Friday the US markets ended in the positive territory, with Dow
Jones Industrial Average ending up 69.99 points at 11,204.28 and the
S&P 500 settling up 8.61 points to 1,217.28. Besides, tech heavy
Nasdaq was up 11.08 points at 2,530.15.

http://economictimes.indiatimes.com/Global-Markets/articleshow/5855873.cms

APRIL 23, 2010, 9:00 A.M. ET.

WEALTH ADVISER: Among ETFs, Four Different Roads To India
By Ian Salisbury
A Dow Jones Newswires Column

NEW YORK (Dow Jones)--For investors looking to bet on Indian stocks,
the exchange-traded fund industry offers no fewer than four different
options. The problem is that that country's limits on foreign
investors mean each one involves a different compromise.

The world's fifth-largest economy typically restricts stock ownership
of foreign companies to about one-fourth. While that shouldn't
necessarily be a deal breaker for U.S. investors, understanding the
ETFs' subtly different responses is key to choosing between them,
according to a recent report by Wells Fargo & Co.

"There isn't one that stands out as the perfect one," says analyst Dan
Brown. "They each have their strengths and weaknesses."

The ownership restrictions mean the best-known Indian indexes are
difficult for U.S. index funds to track. Approaches to the problem
fall into roughly two categories: aiming to track a popular index
while knowing the results may not be perfect, and designing an
alternative, custom benchmark that is easier to invest in but which
ETF holders may not be familiar with.

The funds that take the custom-made approach are PowerShares India
Portfolio (PIN) and WisdomTree India Earnings Fund (EPI). Perhaps it
should come as no surprise both are designed by fund companies that
specialize in semi-active index funds.

The WisdomTree version also has some additional quirks investors may
find appealing or not. With 124 holdings, its portfolio has more than
twice as many stocks as any of the other funds. Moreover, although the
WisdomTree fund, like competitors, is primarily focused on large-
company stocks, it has roughly twice as much mid-cap exposure as the
other three, and it is the only one to include small-cap stocks, which
make up about 6% of its holdings.

By contrast one distinct advantage of the PowerShares fund is its
expense ratio. None of the four funds radically undercuts competitors,
but the PowerShares offering is the cheapest, with fees of 0.78% of
assets each year, compared to 0.88% or 0.89% for all the others.

The two ETFs that track better-known benchmarks are the iShares S&P
India Nifty 50 Index ETF (INDY) and iPath MSCI India ETN (INP), which
is technically a debt security, not a fund, but operates in a way that
closely resembles an ETF.

The Nifty index is a benchmark of 50 big companies that trade on the
National Stock Exchange of India and the closest thing U.S. investors
are likely to get to the Indian equivalent of the Dow or the Standard
& Poor's 500. A big question is how closely iShares can track the
index, however.

According to Wells Fargo, there are currently two companies,
representing about 2% of the Nifty, that are flirting with the Indian
government's maximum limits for foreigners. But in the past that
figure has been higher, Brown says. Another drawback of the fund: It's
the youngest of the three, having launched only in November, so its
track record is too short to judge success on this critical point.

The iPath MSCI Index ETN (INP) is the oldest, having been around since
2006. It's also largest in terms of assets, with about $1 billion. But
in some ways it's the most complex: The security is actually an
unsecured note issued by Barclays Bank promising investors returns
that match the India index designed by prominent benchmarking company
MSCI Barra. Its status as a note means Barclays doesn't necessarily
have to buy the stocks in the index. That gives it extra flexibility
in managing the investment vehicle, but also means the India note
holders would face losses if Barclays ever defaulted.

That arrangement holds out a lot of promise because it means investors
could get an investment tied to a popular index and one with little or
no tracking error, but there is one more wrinkle. Because of a tussle
with the Indian government apparently tied to Barclays' other business
activities, the company has had to suspend issuing new shares of the
India ETN, a situation that could lead the security to trade at
erratic prices. That's something anyone who trades the ETN would want
to monitor closely.

(Ian Salisbury is a Getting Personal columnist who writes about
personal finance; he covers topics including exchange-traded funds and
separately managed accounts. He can be reached at 212-416-2241 or
***@dowjones.com.)

(TALK BACK: We invite readers to send us comments on this or other
financial news topics. Please email us at
***@dowjones.com. Readers should include their full
names, work or home addresses and telephone numbers for verification
purposes. We reserve the right to edit and publish your comments along
with your name; we reserve the right not to publish reader comments.)

http://online.wsj.com/article/BT-CO-20100423-707805.html?mod=WSJ_World_MIDDLEHeadlinesAsia

Bloomberg

India Stocks Gain as Rate Increases Meet Economist Forecasts
April 20, 2010, 6:51 AM EDT

April 20 (Bloomberg) -- Indian stocks advanced, rebounding from a five-
day slide, led by financial companies and developers after the central
bank raised interest rates in line with economists’ forecasts.

“Since the government is all for ensuring continued growth, the stock
market is responding favorably,” said Deven Choksey, chief executive
officer of K.R. Choksey Shares & Securities, who manages about $123
million for wealthy individuals. “We have been using any drop in the
market to buy.”

The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 59.9,
or 0.3 percent, to 17,460.58. The gauge had declined 3 percent over
the previous five trading sessions amid predictions rates would rise.
The S&P CNX Nifty Index on the National Stock Exchange rose 0.5
percent to 5,230.1. The BSE 200 Index increased 0.7 percent to
2,206.34.

State Bank climbed 3.2 percent to 2,098.35 rupees. ICICI Bank Ltd.,
the second-biggest lender, rose 1.4 percent to 933 rupees. Axis Bank
Ltd., the fourth-largest lender by market value, gained 2.4 percent to
1,187 rupees after it said its full-year profit climbed to 25.2
billion rupees from 18.2 billion rupees a year earlier, according to a
statement filed to the National Stock Exchange.

DLF, Unitech

DLF rose 2.9 percent to 325.9 rupees. Unitech Ltd., India’s second-
biggest developer, jumped 4.5 percent to 83.55 rupees. Reliance
Infrastructure Ltd., the builder of a mass rapid transit system in
Mumbai, increased 2.5 percent to 1,116.45 rupees.

The central bank increased the reverse repurchase rate to 3.75 percent
from 3.5 percent, the repurchase rate to 5.25 percent from 5 percent
and the cash reserve ratio to 6 percent from 5.75 percent.

“This is very good news for the market, because there was talk of 50
basis points on the cash reserve ratio and thankfully that didn’t
happen,” said Mohit Mirchandani, Mumbai-based head of equity
investment at Taurus Mutual Fund, which oversees 25 billion rupees
($560 million) in assets.

Governor Duvvuri Subbarao described India’s inflation as “worrisome”
and is aiming to slow it by restraining consumer demand until
companies can expand capacity.

‘Upward Bias’

Subbarao estimated India’s $1.2 trillion economy, Asia’s largest after
Japan and China, will expand 8 percent, “with an upward bias,” in the
year ending March 31, according to today’s statement. Inflation may
slow to 5.5 percent by March from 9.9 percent last month, he said,
adding that the forecast is “contingent” upon normal monsoon rains
this year and a fall in food prices.

“With growth expected to accelerate further in the next year, capacity
constraints will reemerge,” adding to price pressures, Subbarao said.
“There is, therefore, a need to ensure that demand side inflation does
not become entrenched.”

Maruti Suzuki India Ltd. gained 1.5 percent to 1,352.35 rupees. Tata
Motors Ltd., India’s biggest truckmaker and owner of Jaguar Land Rover
Ltd., climbed 2.1 percent to 792.35 rupees. Mahindra & Mahindra Ltd.,
India’s largest maker of sport-utility vehicles and tractors, gained
1.4 percent to 510.85 rupees.

Overseas Investors

Overseas investors bought a net 3.64 billion rupees ($81.8 million) of
Indian stocks on April 16, taking their total purchases of the
equities this year to 260.7 billion rupees, according to the nation’s
market regulator.

Foreign funds have been net buyers of stocks for 30 straight trading
days, the longest streak of inflows since August 2005, after Finance
Minister Pranab Mukherjee on Feb. 26 pledged to trim the fiscal
deficit from a 16-year high.

Inflows from overseas reached a record 834.2 billion rupees in 2009,
exceeding the high set two years earlier in domestic currency terms,
as the biggest rally in 18 years lured foreign funds. They sold a
record 529.9 billion rupees of shares in 2008, triggering a record
annual decline.

--With assistance from Cherian Thomas in Bangalore and Manish Modi in
New Delhi. Editor: Reinie Booysen, Linus Chua

To contact the reporters on this story: Rajhkumar K Shaaw in Mumbai at
***@bloomberg.net; Ketaki Gokhale in Mumbai ***@bloomberg.net

To contact the editor responsible for this story: Linus Chua at
***@bloomberg.net

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India’s Stocks Fall, Reversing Two-Day Rally; DLF Leads Slide
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Madam I am Adam: Sid Harth
http://groups.google.com/group/soc.culture.indian.marathi/browse_thread/thread/fbe56c67d373c696/31b16b774a16ac15?q=Madam+I+am+Adam%3A+Sid+Harth&lnk=ol&

It's the Economy,Stupid: Sid Harth
http://groups.google.com/group/soc.culture.usa/browse_thread/thread/a46d86d4a3976279/829733db353960a?q=It%27s+the+Economy,+Stupid:+Sid+Harth

...and I am Sid Harth

navanavonmilita

2010-05-12 18:55:00 UTC

Permalink

Boom-Boom-Bomb-Aye?: Sid Harth
http://bakulaji.typepad.com/blog/boomboombombaye-sid-harth.html
http://bakulaji.typepad.com/blog/boomboombombaye-sid-harth-1.html

Madam I am Adam: Sid Harth
http://groups.google.com/group/soc.culture.indian.marathi/browse_thread/thread/fbe56c67d373c696/31b16b774a16ac15?q=Madam+I+am+Adam%3A+Sid+Harth&lnk=ol&

It's the Economy,Stupid: Sid Harth
http://groups.google.com/group/soc.culture.usa/browse_thread/thread/a46d86d4a3976279/829733db353960a?q=It%27s+the+Economy,+Stupid:+Sid+Harth

The Associated Press May 12, 2010, 12:03PM ET

Proposed regulations hit India's telecom giants
By ERIKA KINETZ

MUMBAI, India

Things just got tougher in the world's fastest-growing cell phone
market. A government proposal to hike existing mobile spectrum fees
for India's largest players sent stocks swooning Wednesday, with
shares in market leader Bharti Airtel plunging 8.3 percent.

If accepted, the proposal would help the government reduce its fiscal
deficit, but it's unwelcome news for leading operators caught in a
brutal price war and burdened by a pricey auction for third-generation
licenses.

It's also a reminder that you can't do business without the government
in India.

The Telecom Regulatory Authority of India said Tuesday that its
proposals were meant to encourage consolidation and maximize
efficiency. They still have to be approved by the Department of
Telecommunications.

The most controversial change calls for a one-time fee for existing
operators with large allocations of spectrum. The price would be based
on the cost of 3G spectrum, which has spiraled past $3 billion for an
all-India license in the ongoing bidding process.

The chairman of the regulatory authority, J.S. Sarma, told India's
CNBC-TV 18 that the government could make 350 billion rupees ($7.8
billion) from the fees. Add that to an anticipated 550 billion rupee
($12.2 billion) windfall from 3G auctions and the telecom department
could rake in an amount equal to 1.6 percent of India's estimated
gross domestic product for the year that ended March 31.

The uncertainty couldn't have come at a worse time for India's once-
golden telecom industry. New players such as Norway's Telenor and
Japan's NTT DoCoMo have piled in, driving call costs to less than one
cent a minute in some cases. Even as their margins erode, companies
are scrambling to amass war chests to bid for 3G spectrum, which
analysts say is crucial for future growth.

Critics say the regulator's proposal is an about-face by the
government which could cost market leaders like Bharti, Vodafone and
Idea Cellular billions of dollars and drive away investors wary of
government interference.

"The government one fine day cannot stand up and say you have to pay
up for that spectrum at a price not anticipated by anyone in the
telecom market. It's not sticking to your own promises," said
PricewaterhouseCoopers executive director Sandeep Ladda. "This is not
going to be looked at by overseas new entrants in a very favorable
manner."

Concerns about resurgent government assertiveness have been running
high since the Supreme Court's ruling last week that the government's
right to price natural gas trumps a private contract -- even if it
happens to be between two of the richest and most powerful brothers in
India, Mukesh and Anil Ambani.

Bharti bit back Wednesday, issuing a withering statement that called
the telecom regulator's recommendations "shocking, arbitrary and
retrograde." It said they overturn 15 years of policy in India and are
at odds with global norms.

"It seems that the recommendations are designed to punish efficient
and performing operators like us for contributing to the growth of the
Indian telecom sector and are instead tailor made to benefit select
operators whose contribution to telecom growth and government revenues
have been negligible," the statement said.

Bharti, which has a 21.8 percent market share in India, is in an
especially tough situation. It has massive financing demands, both for
3G spectrum and its $10.7 billion offer for the Africa assets of
Kuwait's Zain Telecom.

A company spokesman declined to comment on how much the proposed
changes might cost the company, but analysts estimated $1.4 billion to
$2 billion.

Advocates of the proposals say making spectrum allocation more
efficient would be good for consumers, who deal with the daily
frustration of dropped calls. Some say they would also foster
competition by helping some smaller players, like Reliance
Communications, get more spectrum.

Existing players with less spectrum also wouldn't feel the pinch of
added fees and would benefit, like all others, from a proposal to cut
licensing fees by as much as 40 percent.

Reliance Communications executives called the recommendations "forward-
looking, pro-consumer and pro-competition."

Reliance Communications shares closed up 0.03 percent in Mumbai
trading Wednesday.

Angel Broking analyst Rahul Jain said the government, which nurtured
the industry with infrastructure and tax breaks, is now looking to get
its share.

"The government is trying to extract more revenues from an industry
earning good profits," he said.

http://www.businessweek.com/ap/financialnews/D9FLD2OO0.htm

TECHNOLOGY

MAY 12, 2010, 7:59 A.M. ET

Bharti Protests Proposal as Shares Drop
By ROMIT GUHA And R. JAI KRISHNA

MUMBAI—Bharti Airtel Ltd. Wednesday said the Indian telecom
regulator's latest recommendations on allocation of second-generation
bandwidth are "shocking, arbitrary and retrograde," and hoped the
government will reject the suggestions.

"...these (recommendations) are against all existing global norms for
spectrum allocation and efficiency," India's largest mobile-phone
operator by subscribers said in a statement.

"We are confident that the DoT (department of telecommunications) and
the government will take a rational approach and summarily reject
these arbitrary, impractical and perverse recommendations," it added.

Bharti Airtel's shares ended 8.3% lower Wednesday amid investor
concerns over the new rule.

The Telecom Regulatory Authority of India Tuesday said companies
operating under the global system for mobile, or GSM, communications
platform and those on the code division multiple access, or CDMA,
platform with more than 6.2 Megahertz and 5 Mhz of 2G bandwidth,
respectively, should pay a one-time fee to keep the excess spectrum.

The regulator said that the fee should be linked to the ongoing
auctions for third-generation bandwidth.

It also recommended the capping of bandwidth to be given to each
operator at 8 MHz and 5 MHz for GSM and CDMA companies, respectively,
for all services areas except Delhi and Mumbai, where the limit will
be 10 MHz and 6.25 MHz, respectively.

Write to Romit Guha at ***@dowjones.com and R. Jai Krishna at
***@dowjones.com

http://online.wsj.com/article/SB10001424052748703339304575239970378247644.html?mod=WSJ_business_whatsNews

Indian telecom stocks slide on proposed spectrum fee
(AFP) – 7 hours ago

MUMBAI — Shares in India's top mobile phone operators fell sharply
Wednesday on concerns that a new wireless spectrum pricing proposal
may hit company earnings.

India's biggest mobile phone firm, Bharti Airtel, saw its share price
plunge 8.38 percent, or 23.9 rupees, to 261.3, while rival Idea
Cellular was down 7.2 percent, or 4.3 rupees, at 55.4 in early-
afternoon trade on the Mumbai stock exchange.

Nine cellular firms, including market leaders Bharti Airtel and
Reliance Communications, are currently bidding in an auction of
spectrum for super-fast 3G mobile services in India. A record 20.31
million users signed up for 3G last month.

Bids for nationwide licences have hit 2.65 billion dollars -- nearly
3.5 times the 35 billion rupee reserve price set by the government for
a pan-India 3G slot.

On Tuesday the telecoms regulator recommended that the auction price
be used as the base for setting a one-time fee to be paid by firms
holding 2G radio-spectrum beyond 6.2 mega hertz (MHz).

Analysts said that this could hit the earnings of top telecom
operators, who are already witnessing a rise in capital expenditure
due to the ongoing auctions.

"The regulator's proposal is a negative for companies like Bharti and
Ideal Cellular," analysts with Mumbai-based Karvy Stock Brokers said
in a note.

"Steep bidding is being witnessed in the ongoing auction and companies
will have to cough up significant funds if the proposal is
implemented," the analysts said.

Copyright © 2010 AFP. All rights reserved.

India's biggest mobile phone firm, Bharti Airtel, saw its share price
plunge 8.38 percent

http://www.google.com/hostednews/afp/article/ALeqM5gqAWyhw35xVMR8JXfrDvkE0kO70g

Bharti, Idea shares drop; earnings may be hit
12 May 2010, 1348 hrs IST,REUTERS

Topics:Sunil MittalVodafoneBharti AirtelideaReliance communications

NEW DELHI: A new proposal to levy additional fees for mobile spectrum
in India's cut-rate telecoms sector stoked earnings worries for
BhartiGainers & losers

Airtel, already caught in a vicious price war and a pricey
acquisition.

Shares in India's top mobile operator, which reported its first profit
fall in three years last month, dropped nearly 9 percent and were the
biggest losers in a steady Bombay's 30-share index. Smaller rival Idea
Cellular lost 7.5 percent.

On Tuesday, the telecoms regulator recommended companies pay a one-
time fee for holding 2G radio-spectrum beyond 6.2 mega hertz (MHz)
based on 3G prices, a move that will hit established operators
dominant on the GSM platform.

"This has come at a time when Bharti is working on closing the Zain
deal integration, 3G auction is acting as a burden and the local
competition is not showing signs of stabilising," said Sanjay Chawla,
an analyst at Anand Rathi Financial Services.

Analysts said the proposal would stretch the balance sheet of leading
players such as Bharti, Vodafone's India unit, and Idea Cellular, who
are seeing a surge in capital expenditure due to an ongoing auction
for the 3G spectrum.

Bharti, controlled by billionaire Sunil Mittal and also 32 percent
owned by Singapore Telecommunications, has been struggling in a margin-
chomping price war with Reliance Communications and other rivals in
the world's fastest-growing and arguably the most competitive market.
Call rates have slumped to as low as 0.7 U.S. cents per minute.

The Indian mobile sector has 15 operators and about 600 million mobile
users, making it the world's largest market after China.

New subscriber additions of nearly 16 million a month have attracted
overseas firms such as Norway's Telenor, Japan's NTT DoCoMo and Abu
Dhabi's Etisalat, but profit margins have taken a hit due to a tariff
war.

Bharti shares fell to their lowest level in more than five months. On
Tuesday, Bharti fell 3.1 percent and Idea shed 5.3 percent.

Reliance Communications shares lost 2.1 percent, and analysts said the
No. 2 operator would be less impacted as it held less additional 2G
spectrum than its rivals.

"The proposal is going to be negative for the stocks in the near-term,
more so because regulatory moves always create uncertainty in the
market," Chawla said.

Bids for one set of all-India 3G spectrum licence have reached $3.1
billion as of Tuesday and the tender process, in which nine mobile
carriers including Bharti are participating, is still on.

Last month, Bharti said it expects to close its $9 billion deal to
acquire Kuwaiti telecoms Zain's African assets by mid-May.

The sector regulator's recommendations have to accepted by the
telecoms ministry before they become law.

Brokerage Prabhudas Lilladher expects Bharti to pay one-time 2G
spectrum fee of 61.46 billion rupees ($1.4 billion), while Idea would
have to pay 24.81 billion rupees if the regulator's recommendations
are accepted by the telecom ministry.

http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/Bharti-Idea-shares-drop-earnings-may-be-hit/articleshow/5921118.cms

TRAI recommendations big negative for Bharti, Idea: Analysts
12 May 2010, 1318 hrs IST,ET Bureau

Topics:Bharti AirtelideaAnand Rathi

MUMBAI: Shares of telecom sector were beaten down badly as the market
reacted sharply to the recommendations of the Telecommunications
Regulatory Authority of India. According to analysts these
recommendations are yet another headwind for the sector and if
implemented will be big negative for GSM players like Bharti Airtel
and Idea whereas Reliance Communications and Tata Teleservices are
less likely to be hit badly.

Karvy Stock Broking

“We believe TRAI's proposal to charge operators for spectrum over and
above the contracted spectrum is a negative for Bharti and Idea, given
that they hold spectrum above the contracted limit in 13 and 6
circles, respectively. On the other hand, RCOM holds excess spectrum
in just one circle - Bihar.

Given the steep bidding being witnessed in the ongoing 3G spectrum
auction, the amount of money they will have to cough up as excess
spectrum is significant as per our calculations, at over Rs 52 billion
for Bharti and nearly Rs 18 billion for Idea, while RCOM is likely to
pay just Rs 174 million,” said Karvy Stock Broking note.

KIM ENG Securities India

KIM ENG Securities India is of the view that rising license/spectrum
costs and declining earnings are cause of concern for Indian telecom
sector. It has recommended selling Bharti Airtel and Idea.

“The government could move on the proposal this quarter and generate
revenue of Rs 105 billion. Given the concerns about rising license/
spectrum costs and declining earnings, we maintain ‘Underweight’ for
the telecom sector and recommend SELL for BHARTI and IDEA,” the note
said.

Anand Rathi

According to Anand Rathi these recommendations are unlikely to be
implemented in totality in their current form. It has a cautious view
on the sector.

“Our initial take is that these recommendations are unlikely to be
implemented in totality in their current form, given their
significantly negative implications for incumbent GSM telcos. The
recommendations are pro-new entrants, and pro-CDMA incumbents (dual
technology operators) like RCOM, Tata.

We believe belatedly charging for spectrum creates avoidable
uncertainty in a sector already roiled by irrational competition.
Further, there seems to be little justification for using 3G bids for
pricing 2G spectrum, as the former are driven more by scarcity and
lack of a transparent spectrum roadmap. We maintain our cautious
sector view,” the update said.

Prabhudas Lilladher

“TRAI recommendations on charging the excess spectrum at the
discovered price through 3G auctions is rather aggressive since
recently 2G licences (4.4 MHz) were allotted at Rs 16.5 billion to new
entrants. However, with 3G bids reaching Rs 140 billion for pan India,
the recommendations will develop negative sentiment for stocks of
Bharti Airtel & Idea Cellular over the short term.

Competitive landscape and crowded telecom market would weigh for
sometime on telcos before consolidation kicks in. Tariffs which have
stabilised over the last two months would see next round of cuts, with
MNP implementation scheduled over the next 2-3 months.

Telcos are in a dizzy spot, with falling realizations and rising cost
for running networks, thus, straining margins. We continue to maintain
our Reduce rating on the sector,” the research note said.

At 11:40 am, Idea Cellular was down 6.77 per cent, Bharti Airtel fell
6.57 per cent, Tata Teleservices Maharashtra declined 4.15 per cent
and Reliance Communications slipped 1.67 per cent.

http://economictimes.indiatimes.com/markets/stocks/views/recommendations/TRAI-recommendations-big-negative-for-Bharti-Idea-Analysts/articleshow/5920809.cms

Telecom cos could legally challenge new TRAI 2G rules
12 May 2010, 0743 hrs IST,ET Bureau

Topics:TataTelecomTRAIVodafoneBharti AirtelideaReliance
communications

NEW DELHI: The telecom regulator’s proposed new rules for the sector
have been greeted with anger by mobile phone companies, which said the
cureTop 10 telcos of the world

that the Telecom Regulatory Authority of India (TRAI) wants to
administer is worse than the disease.

Many cellphone operators warned that any move to implement these
recommendations without consultations could result in legal challenges
and ET has learnt that some of them have started making out a case for
a ministerial panel to rework all key policies for the telecom sector.
Reliance Communications was the sole operator to welcome the planned
changes.

“The government asked them to clean up regulatory and policy
loopholes, and TRAI responded by unleashing more confusion that will
impact the prospects of all companies in the world’s fastest-growing
telecom market,” a top executive with a telecom company said.

Officials at mobile phone firms spoke on condition of anonymity,
saying they had not read the entire 450-page report by TRAI but only
the main recommendations. TRAI chairman JS Sarma said the plan to
charge a one-time fee for holding 2G radio spectrum in excess of 6.2
MHz would mean mobile phone companies must pay Rs 30,000-35,000 crore
more to the government. The fee will be linked to the price of 3G
spectrum that is now being auctioned. The worst affected companies
will be Bharti Airtel, BSNL, Idea Cellular and Vodafone Essar.

Airtel shares closed 3.1% lower on the BSE while those of Idea
Cellular and Reliance Communications fell about 5% each.

Mr Sarma emphasised that while the regulator had recommended that 2G
prices be benchmarked against 3G, it would hold more consultations
with all operators to determine how this amount must be calculated.

“The very fact that telecom shares crashed is an indicator that TRAI
has been harsh on the sector. If these recommendations are implemented
in the current format, it will have negative impact on the industry.
After skyrocketing 3G rates, which is to be followed by broadband
auctions, telcos may have to pay for 2G. This coupled with
uncertainties in the sector and one paise per second tariffs indicates
a bleak future,” said Prashant Singhal, the head of telecom practice
at consultancy firm Ernst & Young.

Allocations of 2G frequencies have been put on hold since March 2009
and alleged irregularities in the allotment of the spectrum in 2008
are being investigated by the CBI. “The government will make money,
but telcos will have to first survive for the Centre to continue to
get revenues off them,” said KPMG telecom analyst Roman Shetty.

Also Read

→ 3G auctions & proposed changes in 2G pricing could fetch Rs 90k cr
http://economictimes.indiatimes.com/news/news-by-industry/telecom/Aggressive-3G-bids-may-make-low-cost-services-unviable/articleshow/5919693.cms
→ ‘Aggressive 3G bids may make low-cost services unviable’
http://economictimes.indiatimes.com/news/news-by-industry/telecom/Aggressive-3G-bids-may-make-low-cost-services-unviable/articleshow/5919693.cms
→ Trai’s 2G direction could kill GSM ambitions of key players
http://economictimes.indiatimes.com/news/news-by-industry/telecom/Trais-2G-direction-could-kill-GSM-ambitions-of-key-players/articleshow/5919678.cms
→ Bids for 3G licence reach $3.1 bn
http://economictimes.indiatimes.com/news/news-by-industry/telecom/Bids-for-3G-licence-reach-31-bn/articleshow/5919028.cms

TRAI has recommended that no new telecom licences bundled with
spectrum should be issued, a step that will end the aspirations of
nearly 25 companies waiting to enter the Indian telecom market. But it
said the government can issue new licences without spectrum. “A mobile
permit without spectrum is just a piece of paper,” said an executive
with a company that has applied for a telecom licence.

The head of the grouping of GSM operators said it is not in the
“national interest” to link the price of 2G spectrum with 3G.

“This will hamper growth in the sector as all capital expenditure
lined up by the big operators could be wiped out to make 2G payments,”
said RajanTop 10 telcos of the world

S Matthews, the director-general of the Cellular Operators Association
of India.

TRAI has said that allocation of 2G spectrum should also be linked to
rollouts by phone companies instead the current practice of providing
them based on customer numbers. TRAI is asking the government to cap
the allocation of 2G airwaves to all telecom companies at 8 MHz,
except in Delhi and Mumbai, where the cap will be 10 MHz.

Incumbents who hold more than 8 MHz in certain circles will be allowed
to retain it after paying a one-time fee.
“The subscriber-linked formula was controversial enough. The new one
increases the confusion further. Most companies were keen for future
allocations of 2G airwaves to be made through auctions. An auction
would have been a simple and direct solution,” an industry executive
observed.

TRAI wants the government to scrap existing rules that do not allow
companies to sell majority stakes within three years of getting a
licence and also relax rules to make it easier for them to buy one
another out as long as the combined entity does not command more than
a 30% market share by revenues or number of customers.

The proposals relating to mergers and acquisitions are also proving
controversial. An industry executive said that by lowering the market
share cap to 30% from 40%, Bharti is being shut out of acquisitions.
India’s largest phone firm has a revenue market share of around 32%
and nearly a quarter of the subscribers. Moreover, mergers between two
large operators or even big operator and a mid-sized one will not be
possible.

TRAI is saying that if a merged entity holds airwaves beyond 6.2 MHz,
it must pay market rates for all additional airwaves as well as a 5%
spectrum transfer fee, possibly discouraging consolidation.

The regulator wants the 4.4 MHz of start-up spectrum that new entrants
hold to be raised to 6.2 MHz at no additional cost while giving them
first priority for 2G spectrum allocation. Next in line will be
incumbents currently holding less than 8 Mhz. Their holding will be
enhanced to 8 MHz, if they meet rollout obligations and pay the one-
time fee. Last in queue will be new entrants like Tata DoCoMo and
Uninor who are yet to receive start-up airwaves in many circles. But
being placed last, they stand little chance of getting start-up 2G
airwaves.

“Tata Teleservices has been waiting for 2G spectrum allocation in
Delhi and many other key Indian cities for the last more than 30
months now. The recommendations, thus, impacts TTSL adversely and
makes our case of expecting minimum spectrum the worst in the
industry,” a Tata Teleservices representative said. Tata Tele provides
services on both GSM and CDMA technology platforms. Reliance
Communications described the recommendations as “progressive” and said
it will ensure spectrum efficiency.

“We have spectrum beyond 6.2 MHz only in the Bihar circle and will
have to pay a one-time fee of Rs 20 crore. For other incumbents, the
fee may run up to Rs 10,000 crore as they have excess spectrum in many
circles,” Syed Safawi, the CEO of its wireless business said.

http://economictimes.indiatimes.com/news/news-by-industry/telecom/Telecom-cos-could-legally-challenge-new-TRAI-2G-rules/articleshow/5919810.cms

Info-Tech - Regulatory Bodies & Rulings
TRAI may ask operators to pay for 2G spectrum

Regulator to spell out its views on air wave allocation today.

Points to ponder

One-time fee for spectrum beyond 6.2 Mhz
New players may be given air wave based on roll out
Spectrum fee could be linked to 3G auction
Merger and acquisition rules likely to be relaxed

Our Bureau

New Delhi, May 10

The Telecom Regulatory Authority of India is expected to ask operators
to start paying for spectrum when it announces the crucial
recommendations for allocating second generation (2G) spectrum on
Tuesday.

The entire industry has been waiting for the telecom regulator to give
its solution to the complex issues of how to price 2G spectrum given
that different operators have been given air waves at different points
in time.

According to sources, the TRAI is likely to impose a one-time fee on
all existing operators which have more than 6.2 Mhz spectrum. But this
fee may not be with retrospective effect but from the date of
implementing the report. This could provide some relief to the
incumbent players such as Airtel and Vodafone as the rival CDMA
players had pushed for a fee from the time they got the excess
spectrum.

Fee calculation

On the other hand, if TRAI calculates the fee to be paid based on the
ongoing 3G auctions then again the incumbent players may end up
coughing out a lot of money given that value of 3G spectrum in some
circles have crossed Rs 2,000 crore mark. However, if the regulator
calculates the one time fee based on the entry fee paid by all the
mobile players when they took the licence then it will be a huge
relief to them. Whatever may be the formula one thing that's certain
is that incumbent operators will not get any more spectrum free of
cost.

“It will be difficult for the regulator to suggest that the existing
subscriber-linked criteria should continue given the intensity of the
3G auctions,” said an industry watcher. TRAI may also put a cap of 10
Mhz of 2G spectrum per operator in each circle.

For new players, the TRAI is likely to allow them to get up to 6.2 Mhz
spectrum without going through any auction. However, the regulator may
change the rule for the allocation from the existing subscriber based
norms to a roll out based criteria. This is aimed at ensuring that the
new players roll out their network in line with Government's objective
to reach telecom services to the rural areas.

The TRAI may suggest that the Government should auction any available
spectrum after allocating the start up air waves to new players.

Consolidation

On the issue of mergers and acquisition, sources said that the TRAI
may relax the norms to facilitate consolidation in the sector. This
could include allowing up to 15 Mhz spectrum to a merged entity.

The debate over 2G spectrum allocation has been going on for the past
two years with the industry sharply divided. While the existing GSM
players are pushing for a status quo with only 4.4 Mhz to new players,
CDMA operators along with new GSM players have been advocating that
the incumbent players should be asked to give back excess spectrum or
pay for it.

http://www.thehindubusinessline.com/2010/05/11/stories/2010051153140700.htm

TRAI invites comments on green solutions for telecom
Technology - Others

By: Our News Bureau| afaqs! Telecom Yatra | New Delhi, May 10, 2010

The Telecom Regulatory Authority of India (TRAI) is inviting
stakeholders of the telecom industry to give their views on how to
make telecom environment friendly and to identify the concerns
associated with it, by June 14.

The government body is planning to come up with a consultation paper
on green telecom. The primary focus of the paper is to encourage the
use of eco-friendly equipment in the telecom and information and
communication technology (ICT) sectors.

In the pre-consultation stage, comments are being invited on issues
such as contribution of telecom industry in increasing carbon
footprint; need for carbon credit policy for the telecom sector;
methods to reduce the carbon footprint by ICT industry in India;
standardisation of green telecom equipment; framework for monitoring
carbon emission produced by the telecom industry and corrective action
that can be taken; options for environment friendly energy sources;
cost implications in adopting alternative energy sources; incentive
schemes for promoting alternative energy sources in telecom; types of
incentives to boost research and development in green telecom
initiatives; challenges and alternatives in meeting futuristic energy
demand in the telecom sector; management of e-waste etc.

http://telecomyatra.afaqs.com/news/?sid=856_TRAI+invites+comments+on+green+solutions+for+telecom

...and I am Sid Harth

cogitoergosum

2010-05-13 13:36:16 UTC

Permalink

Boom-Boom-Bomb-Aye?: Sid Harth
http://bakulaji.typepad.com/blog/boomboombombaye-sid-harth.html
http://bakulaji.typepad.com/blog/boomboombombaye-sid-harth-1.html

Madam I am Adam: Sid Harth
http://groups.google.com/group/soc.culture.indian.marathi/browse_thread/thread/fbe56c67d373c696/31b16b774a16ac15?q=Madam+I+am+Adam%3A+Sid+Harth&lnk=ol&

It's the Economy,Stupid: Sid Harth
http://groups.google.com/group/soc.culture.usa/browse_thread/thread/a46d86d4a3976279/829733db353960a?q=It%27s+the+Economy,+Stupid:+Sid+Harth

India Business Forecast Report Q3 2010 - New Report Published

Newly released report, India Business Forecast Report Q3 2010,
provides detailed company analysis
Published on May 13, 2010

by Press Office

(Companiesandmarkets.com and OfficialWire)

LONDON, ENGLAND

In this article, BMI assesses the speed and strength with which India
has shrugged off global economic headwinds. In line with our long-held
view, the country has fared extremely well from a growth perspective,
although we note that fiscal stimulus has left a worryingly large gap
in the public sector accounts. With growth on an upward trajectory,
the government will be more concerned about other issues, such as the
rise in inflationary pressures, the growing internal security threat
and the urgent need to boost the country's infrastructure capacity.
The success of policies on all these issues will undoubtedly help
shape the country's long-term economic prospects, on which we remain
bullish overall. We are pencilling average real GDP growth of 7.6%
over the next decade, which would make India a global growth
outperformer in the coming years.

The major talking point on India's political scene is the Naxalite
(Maoist insurgency) threat, which Prime Minister Manmohan Singh has
described as the greatest internal security threat facing the country
today. As has been shown in other emerging markets (such as Mexico), a
hardline stance against local power groups may not be sufficient to
quell discontent, and may even lead to further violence in the short
term. Longer-term, the government will have to ensure that the fruits
of India's recent growth boom start to permeate down to poorer, rural
regions - a trend that we already believe is in play.

India's economy continues to enjoy a remarkable recovery from the
depths of the global downturn, driven (as we had forecast) by the
engine of domestic demand. With industrial production, auto sales and
commercial credit all clocking double-digit growth, we expect the
economy to notch up a robust 7.8% growth in FY 2010/11 (April-March)
even as base effects start to unwind. This will allow policymakers at
the central bank to turn their focus towards inflationary risks -
which are certainly building - a key factor underpinning our view of
higher interest rates and a stronger local currency in the months
ahead.

Indian infrastructure is the focus of our business environment
section, a sector which we believe will be a major driver of urban
investment in the coming years. India's infrastructure deficits are
well documented, and reflected in the country's below-par score of
44.1 in our new business environment ratings. However, we believe that
an ambitious private and public sector investment drive could provide
exciting opportunities for global investors looking to tap into
India's attractive growth story. Indeed, aggressive capital outlay
could see infrastructure investment rise to as high as 8.5% of GDP
this fiscal year, from just 3.7 % in FY2002/03.

India Business Forecast Report Q3 2010:
http://www.companiesandmarkets.com/r.ashx?id=7N272L63R286064&prk=46a6cb428c454caa9a5b119150c68d12

http://www.officialwire.com/main.php?action=posted_news&rid=144060

Indian economy on expansionary mode
News Date: 13th May 2010

After recovering from the impact of global financial crisis, Indian
economy is poised for more expansion, according to a parameter of the
Organisation for Economic Cooperation and Development (OECD).

The OECD Composite Leading Indicators (CLI), which provide early
signals of turning points in business cycles--fluctuation of the
economic activity around its long term potential level-- shows India's
score at 101 at the end of

March, higher from 100.7 in the previous month.

According to OECD, if the CLI of a country is increasing and is above
100 it means the economy is on expansionary track. However, if CLI is
decreasing and is above 100 it means the country is in downturn.

Decreasing CLI below 100 mark indicates slowdown.

However, increasing CLI below 100 shows recovery in an economy.

Among BRIC nations, India and Russia are the only ones whose CLI is
above 100 and is rising. At the end of March, CLI of Russia stood at
102.2, higher from 101.6 in February.

While China's indicators showed halt in expansion, Brazil's parameters
indicated that recovery is not sustaining.

For Brazil, the CLI decreased from 99.3 to 99, while China's CLI was
at 102.2, down from 102.5 in the previous month.

Indian economic growth slowed down to 6.7 per cent during 2008-09,
after coming under the impact of deepening global financial crisis,
compared to nine per cent annual growth in the preceding three years.

After the government provided stimulus by cutting taxes and increasing
public expenditure, the economy improved and is estimated to have
expanded by 7.2 per cent during 2009-10.

This fiscal economy is expected to grow in the range of eight and 8.75
per cent by various estimates.

Source: GNA

http://www.businessghana.com/portal/news/index.php?op=getNews&news_cat_id=2&id=127125

Bloomberg

India to Exit Monetary Stimulus Amid Europe Crisis, Gokarn Says
May 13, 2010, 6:10 AM EDT

By Anoop Agrawal

May 13 (Bloomberg) -- India will continue to exit monetary stimulus in
a “calibrated” way as the central bank has taken into account global
economic risks, including Europe’s debt crisis, a deputy governor of
the Reserve Bank of India said.

“Our pace of exit takes into account the fact that the global economy
has not fully stabilized and even before the current European
situation became so prominent we were looking at this and some other
possible threats,” Subir Gokarn told reporters in Mumbai today. “So,
our pace of exit has been calibrated to some notion of the global
uncertainties and for the moment that’s the way we will continue to do
things.”

India and China, the world’s fastest-growing major economies, are
struggling to contain inflation while keeping an eye on risks to
economic growth posed by the debt problems emanating from Greece.
Gokarn’s comments came as industrial production in India grew 13.5
percent in March, adding to pressures on inflation, which is at 9.9
percent.

In China, where industrial production rose 17.8 percent in April,
consumer prices climbed at the fastest pace in 18 months, adding
pressure on policy makers to raise interest rates and allow yuan
gains.

European policy makers on May 10 unveiled an unprecedented loan
package worth almost $1 trillion and a program of bond purchases to
contain the region’s sovereign-debt crisis from spreading.

The Reserve Bank has raised its benchmark interest rates twice since
mid-March by a quarter-point each.

--Editors: Cherian Thomas, Russell Ward

To contact the reporter on this story: Anoop Agrawal in Mumbai at
***@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at
***@bloomberg.net.

http://www.businessweek.com/news/2010-05-13/india-to-exit-monetary-stimulus-amid-europe-crisis-gokarn-says.html

MAY 13, 2010, 3:19 A.M. ET.UPDATE: RBI: Stimulus Exit Will Take Global
Uncertainties Into Account

(Adds comments from Gokarn, India official, background)

By Nupur Acharya, Bijou George and Mukesh Jagota

Of DOW JONES NEWSWIRES

MUMBAI (Dow Jones)--The Reserve Bank of India's exit from its
monetary stimulus will take global uncertainties into account, a
deputy governor said Thursday, adding that Europe's debt crisis isn't
becoming a problem for the wider economy.

"Our pace of exit is taking into account the fact that the global
economy is not fully stabilized," Subir Gokarn said on the sidelines
of a banking conference.

India's central bank has said it prefers a calibrated approach to
exiting the monetary stimulus introduced to help the local economy
through the global financial crisis.

Gokarn said the European debt crisis isn't an immediate trigger for
the RBI to stop its monetary tightening.

"We don't believe that there is any reason to change our approach,
because it is not showing signs of spilling over into a larger real
economic problem," he said.

The RBI has raised its key policy rates by 50 basis points and its
cash reserve ratio by 100 basis points since it began unwinding its
monetary stimulus late January.

Some economists have been pushing back calls for an inter-meeting rate
hike by the RBI as they expect the central bank to maintain a cautious
stance due to the current European turmoil.

"The ongoing nervousness from the European debt fallout may prevent
the RBI from immediately announcing any monetary measures," said
Rajeev Malik of Macquarie Securities.

Growth in factory output, though strong, fell for the third straight
month in March to 13.5% on year after record high growth of 17.7% in
December, data released Wednesday showed. Industrial output is
expected to moderate more in the coming months as the effect of a low
base wanes.

Indian policy makers also expect inflation to ease in the coming
months on the back of normal monsoon rains, which will help contain
rising food prices.

Gokarn said the central bank will have a clearer view by mid-to-late
July on how the monsoon pans out, in time for its next scheduled
meeting on July 27.

"We will be positioned to make a much more rigorous assessment of what
impact the performance of the monsoon is going to have on food
prices," Gokarn said.

Better-Than-Expected 3G Revenue

Gokarn also said capital inflows via debt remain the central bank's
least-preferred option.

"We have always felt that equity is reasonable because the investor
takes on the entire risk. Foreign direct investment is desirable
because there is actual asset creation and debt has always been the
least preferred."

He added that higher-than-estimated revenue expected from the sale of
bandwidth for third-generation mobile services may not lead to lower
government borrowing.

"We will see how things work out, because other shocks may hit as we
go along. Nothing can be taken for granted is the basic lesson," he
said, adding that the RBI will stick to the budgeted INR4.57 trillion
gross borrowing figure.

The bids for bandwidth for 3G mobile services for the whole of India
had reached INR144.66 billion ($3.212 billion) per slot by late
Wednesday, against a starting price of INR35 billion.

The better-than-expected revenue from the auction will help India's
federal government meet subsidy obligations that are not provided for
in the budget, and help keep the fiscal deficit within target, a
senior finance ministry official said Thursday.

"The 3G proceeds will also help to keep the fiscal deficit at 5.5%
this fiscal year," the official, who asked not to be named, told Dow
Jones Newswires.

The government had budgeted INR350 billion from the spectrum sale, but
it now is expected to top INR500 billion.

-By Nupur Acharya, Bijou George and Mukesh Jagota, Dow Jones
Newswires; 91 22 6156113; ***@dowjones.com

http://online.wsj.com/article/BT-CO-20100513-703878.html?mod=WSJ_latestheadlines

Greek crisis not impacting policy: RBI
13 May 2010, 1044 hrs IST,REUTERS

Topics:Mumbai reserve bank of india Subir Gokarn Deputy Governor

MUMBAI: The Greek crisis is not having any impact on the Reserve Bank
of India's (RBI) policy approach at present, Subir Gokarn, a deputy
governor
at the central bank, said on Thursday. The pace of exit from the loose
monetary policy takes into account that the global economy is still
not stable, he told reporters on the sidelines of a banking
conference.

The RBI has said it prefers baby steps to normalise monetary policy,
but analysts say high inflation could force it to tighten more swiftly
and sharply.

http://economictimes.indiatimes.com/news/economy/policy/Greek-crisis-not-impacting-policy-RBI/articleshow/5924967.cms

Top stories

Govt may provide duty sops to domestic power equipment cos
13 May 2010, 1445 hrs IST
http://economictimes.indiatimes.com/news/economy/policy/Govt-may-provide-duty-sops-to-domestic-power-equipment-cos/articleshow/5926053.cms

The government may consider duty concessions on power equipment to
create a more level playing field for domestic manufacturers hit hard
by cheap Chinese imports at zero duty.

Greek crisis not impacting policy: RBI
http://economictimes.indiatimes.com/news/economy/policy/Greek-crisis-not-impacting-policy-RBI/articleshow/5924967.cms

13 May 2010, 1044 hrs IST

The Greek crisis is not having any impact on the Reserve Bank of
India's (RBI) policy approach at present, Subir Gokarn, a deputy
governor at the central bank, said on Thursday.

Dynamic poverty list to help target aid
13 May 2010, 0420 hrs IST, Amiti Sen

Govt to set eligibility criteria for automatic inclusion & exclusion
of names from list.

Fresh road map soon for capital a/c convertibility
13 May 2010, 0258 hrs IST

The Reserve Bank of India is likely to come out with a third road map
for bringing in capital account convertibility.

RBI has no plan to intervene in forex markets now: Gokarn
12 May 2010, 2309 hrs IST

The Reserve Bank today said high capital inflows are a matter of
concern, but no specific action is being mulled as of now, as they
have not started exerting much pressure on the rupee compared to 2007.

Inflation pressure becoming visible: RBI Dy Governor
12 May 2010, 2143 hrs IST

"...Inflationary pressure starting to become visible. Not just food,
but also outside food," RBI Deputy Governor Subir Gokarn told
reporters.

RBI for gradual exit from easy policy
12 May 2010, 2020 hrs IST

RBI will stick to a gradual exit from its easy monetary policy as the
risks associated with stronger action are high, a deputy governor
said.

RBI sees high risk from stronger monetary action
12 May 2010, 1845 hrs IST

The risks associated with stronger monetary action were very high,
Subir Gokarn, a deputy governor RBI said.

India Post mails govt on land bank utilisation
12 May 2010, 0330 hrs IST, Souvik Sanyal

Dept to maintain its character by partnering pvt cos in select sectors
like retail & fin services.

SC clears way for tribunal to speed up corporate cases
12 May 2010, 0317 hrs IST, Sanjay K Singh & Souvik Sanyal

In a landmark judgment, a five-judge constitution bench of the Supreme
Court on Tuesday upheld the legality of the Companies (Second
Amendment) Act, 2002.

http://economictimes.indiatimes.com/articlelist/1106944246.cms

http://bakulaji.typepad.com/blog/

...and I am Sid Harth

cogitoergosum

2010-05-13 22:26:31 UTC

Permalink

cogitoergosum

2010-05-25 20:13:26 UTC

Permalink

Boom-Boom-Bomb-Aye?: Sid Harth
http://bakulaji.typepad.com/blog/boomboombombaye-sid-harth.html
http://bakulaji.typepad.com/blog/boomboombombaye-sid-harth-1.html
http://bakulaji.typepad.com/blog/boomboombombaye-sid-harth-3.html
http://navanavonmilita.wordpress.com/boom-boom-bomb-aye-sid-harth/

Madam I am Adam: Sid Harth
http://groups.google.com/group/soc.culture.indian.marathi/browse_thread/thread/fbe56c67d373c696/31b16b774a16ac15?q=Madam+I+am+Adam%3A+Sid+Harth&lnk=ol&

It's the Economy,Stupid: Sid Harth
http://groups.google.com/group/soc.culture.usa/browse_thread/thread/a46d86d4a3976279/829733db353960a?q=It%27s+the+Economy,+Stupid:+Sid+Harth

http://bakulaji.typepad.com/blog/

Indian shares at 3-1/2-mth low as Europe rattles
Tue May 25, 2010 6:34am EDT

Stocks Reliance Industries Limited

RELI.BORs986.85-34.60-3.39%5:29am EDT

State Bank Of India

SBI.BORs2,154.60-88.40-3.94%5:19am EDT

ICICI Bank Limited

ICBK.BORs809.40-22.60-2.72%5:26am EDT

* Main index ends down 2.7 pct; sheds 8.7 pct so far in May
* World stocks tumble heightens fears of equity outflows
* Foreign funds pull out $1.8 bln in May
* Financials, Reliance Industries among major losers

(Updates to close) By Ami Shah MUMBAI, May 25 (Reuters) -

Indian shares skidded 2.7 percent to their lowest close in three-and-a-
half months on
Tuesday as Europe's sovereign debt woes sparked heightened
fears of larger foreign fund outflows.

Financials and energy major Reliance Industries (RELI.BO)
led the slide amid worries the problems in Europe may trigger a
renewed crisis in the continent's banking sector and delay a
world recovery.

Although India's economy is firmly on an upward trajectory,
thanks to strong domestic demand, the weak global sentiment has
doused investor appetite for risky assets and foreign funds
have come under redemption pressure.

"Even though fundamentals are in our favour, liquidity and
sentiment are currently acting against the market," said
Sanjeev Patkar, director of research at Almondz Global.

The 30-share BSE index .BSESN shed 2.71 percent, or
447.07 points, to 16,022.48, its lowest close since Feb. 10.

Only one of its components managed to close in the green. The
benchmark has lost 8.7 percent so far in May, weighed
down by foreign fund withdrawals of around $1.8 billion as the
deteriorating fiscal health in Europe rattled world markets. The fall
was almost in line with China's Shanghai Composite
Index .

SSEC that is down 8.6 percent but lower than Brazil's
Bovespa stock index .BVSP which has shed 11.3 percent in May.

The BSE index has also fared better than MSCI's measure of
Asian markets other than Japan .

MSCIAPJ000PUS that has fallen 13.1 percent so far in May and MSCI's
emerging market index
.MSCIEF that has dropped 12.6 percent. Foreigners are still net
investors of around $4.8 billion
in Indian equities in 2010. "The market will stay rangebound until we
have more clarity
on developments in Europe," Patkar said.

World stock markets tumbled with pan-European FTSEurofirst
300 .FTEU3 index of top shares down 3 percent by 1017 GMT,
while MSCI's index of Asian shares other than Japan dropped 4.6
percent, hit by the euro zone worries and tensions in Korea.

[ID:nSGE64O00O]

Highly indebted Italy was the latest euro zone country due
to announce a three-year austerity plan worth 24 billion euros
later on Tuesday. On the weekend, the central bank had taken over a
small
Spanish lender, leaving investors worried over what next was in
store in the region.

Trouble started showing up in Europe weeks ago when a debt
crisis begun in Greece. Top lender State Bank of India (SBI.BO)
dropped 3.9
percent, while rivals ICICI Bank (ICBK.BO) and HDFC Bank
(HDBK.BO) closed down 2.7 percent and 1.1 percent respectively.
Standard Chartered (STAN.L), which is raising as much as
$588 million through an issue of Indian depositary receipts,
saw investors bidding for just 4.5 percent of the 204 million
shares on offer by 4 p.m. (1030 GMT) on the first day of sale.

Mukesh Ambani-led Reliance Industries, which has the
highest weight on the Sensex, dropped 3.4 percent to 986.85
rupees. Export-led software companies declined on concerns the
deteriorating fiscal health of the euro zone will lead to
reduced order flow from the region.

Top outsourcer Tata Consultancy Services (TCS.BO) shed 2.7
percent, while Infosys (INFY.BO) and Wipro (WIPR.BO) lost 2.4
percent and 2.2 percent respectively.

In the broader market, losers outnumbered gainers in the
ratio of 4.7:1 on a relatively low volume of 301 million
shares. The 50-share NSE index fell 2.8 percent to
4,806.75, its lowest close since Feb. 15.

STOCKS THAT MOVED

* Top consumer goods maker Hindustan Unilever (HLL.BO) shed
0.6 percent to 230.10 rupees. After the market closed, the
company said its March quarter net profit rose 47 percent.

[ID:nBMA007607]

* Tata Power (TTPW.BO) slid 3.2 percent to 1,203.05 rupees
after the leading private sector utility said late on Monday
its March quarter net profit fell 35 percent.

[ID:nSGE60H05T]

* Metals stocks such as Sterlite Industries (STRL.BO),
Hindalco (HALC.BO) and Tata Steel (TISC.BO) lost between
4.5-5.4 percent as industrial metals slid in London.
[ID:nLDE64O0RX]

* Oil explorer Cairn India (CAIL.BO), an unit of Cairn
Energy (CNE.L), shed 2.25 percent to 271.75 rupees as crude oil
prices dropped toward $68 per barrel.

MAIN TOP 3 BY VOLUME

* Alok Industries (ALOK.BO) on 15.9 million shares

* Reliance Natural Resources (RENR.BO) on 9.4 million shares

* NHPC (NHPC.BO) on 7.5 million shares FACTORS TO WATCH

* For technical analysis double click on www.reutersindia.net

* Indian rupee report [INR/]
* Indian bonds report [IN/]
* Euro falls to 8-1/2-year low vs yen [FRX/]
* Oil extends drop towards $68 as risk aversion returns [O/R]
* Stocks hit 8-½ mth low on banking, Korea [MKTS/GLOB]
* U.S. stock index futures signal sharply lower open [.N]
* For closing rates of Indian ADRs INADR

(Editing by Ranjit Gangadharan)

Asian Economic News

India's Economy To Grow By 8.5% This Fiscal: P.M.
5/24/2010 3:30 AM ET

(RTTNews) - Prime Minister Manmohan Singh said on Monday in New Delhi
that the country's economy was expected to grow by 8.5% this fiscal
and that it was capable of achieving 10% expansion in the medium term.

He said this at a press conference to mark the completion of one year
of UPA-II in office.

The forecast came on top of an estimated 7.2% growth last fiscal, the
year that saw India weather the effects of the global economic crisis.
In 2008-09, the growth slipped to 6.5% at the height of the economic
crisis on account of the collapse of financial institutions in the
West, which brought back memories of the Great Depression of the
1930s.

"We need a rapidly growing economy to generate productive employment
and resources to finance our ambitious social and economic agenda,"
Singh added.

by RTT Staff Writer

For comments and feedback: contact ***@rttnews.com

http://www.rttnews.com/Content/AsianEconomicNews.aspx?Id=1313867&SM=1

MAY 25, 2010, 9:26 A.M. ET.
India Rupee Near 8-Month Low On Global Risk Flight; Bonds Flat

Latest Change USD/INR 47.71 +0.72 7.80% 2020 Bond 7.40%
Unch 8.20% 2022 7.65% -1 BPs Call Rate
3.85% -10 BPs Forward Dollar Premium/Discount*
April 0.94 +0.0925 MUMBAI (Dow Jones)--Indian
rupee fell to a near eight month low against the U.S. dollar Tuesday
as global risk aversion received a fresh fillip from geopolitical
concerns in the Korean peninsula while signs of stress showing in the
Spanish banking sector sparked concerns that the Euro-zone may not be
out of the woods yet.

The dollar was at INR47.71 in late trade--the highest level since Oct.
1, 2009--sharply up from INR46.99 late Monday.

"The pair is mirroring the capital outflows. There are some foreign
institutional investors pulling out (of local stocks) and also many
others who were punting on the rupee (falling)," said Mohan Shenoi,
treasurer with Kotak Mahindra Bank Ltd.

Indian shares fell 2.7% to their lowest level in more than three
months ending at 16,022.48.

Offshore sales in the non-deliverable forward market triggered the
selling in the local currency, traders said.

The global run on risk was sparked in part by reports that the
unpredictable North Korean leader Kim Jong-Il has put troops on a
combat footing, raising geopolitical concerns in the Korean
peninsula.

There were also reviving concerns on the health of the Euro-zone's
economy as Spanish banks faced further restructuring with four of the
country's savings institutions merging to form the country's third-
largest savings bank.

Traders expect the rupee to remain weak in the coming sessions.

Another dealer with foreign bank said that the rupee is likely to test
a key resistance at INR48.10 over the next few sessions, and a breach
of that level could spark another slide.

"It looks quite bleak for the rupee and it seems perfectly possibly
that today's fall is just the beginning of a larger move down," said
the trader.

Indian government bonds pared early gains as the heavy supply pipeline
and low yields weighed on market appetite for fixed income
instruments.

The benchmark 7.80% 2020 bond ended flat at INR102.76 from Monday's
close of INR102.78 after touching an intra-day high of INR103.07. The
most actively traded 8.20% 2022 bond ended up at INR104.18 from its
previous close of INR104.11.

"There's no real appetite to buy bonds at these levels," said a state-
run bank dealer.

Traders said that the approaching INR120 billion government bond
auction Friday would also weigh on demand in coming sessions.

-By Nupur Acharya, Dow Jones Newswires; +91-22-61456117;
***@dowjones.com

http://online.wsj.com/article/BT-CO-20100525-707493.html?mod=WSJ_World_MIDDLEHeadlinesAsia

China to do an India?
Agencies
Posted: May 24, 2010 at 0918 hrs IST

Beijing China is all set to expand domestic consumption and thereby
try and emulate the successful Indian story that has kept the latter’s
economy relatively safe during the global financial crisis
, termed as the worst ever, surpassing even the Great Depression in
the US in the early parts of the last century.
Also, when the tide finally turned positive, India was much swifter in
recording a recovery.

Chinese President Hu Jintao said on Monday that China, the world's
third-largest economy, would make huge efforts to boost domestic and
household consumption.

Earlier in the day, Hu also said China would continue to work towards
reforming its currency system and liberalising its economy with more
reforms.

http://www.expressindia.com/latest-news/chinatodoanindia/622875/

Govt vows to eliminate coal mafia
Agencies
Posted: May 25, 2010 at 1458 hrs IST

New Delhi Pained that India's rich coal belt was roiled by naxalism
and mafia, Coal Minister Sriprakash Jaiswal on Tuesday said he had no
say on tackling naxalism, but vowed to eliminate mafia.
"Unfortunately, the coal producing areas are affected by twin problems
of naxalism and mafia. Naxal problem is not in my domain. So, I cannot
do anything about it. But, I will focus on the other problem. I want
to end the mafia (raj)," he said.

Mafia, pilferage and theft are eating into productivity and
profitability of the coal companies at the cost of the nation, the
minister said, adding that eliminating these were his top priority in
the second term of UPA-II - which has completed one year in office.

"I can't say... when I will be able to bring normalcy in the sector"
he said pointing out that the sector has been besieged by the evil of
crime and mafia for over three decades.

"I will take time to cleanse the system... I don't know how much time
it will take... I will do everything to weed the evil out," he said
when asked about the impediments created due to a nexus between mafia,
officials and politicians.

Majority of the coal producing belt in the country is dominated by
mafia operations, according to trade unions in the coal sector.

"At least 10,000 mafia groups operate in the country mostly
concentrating in Coal India Ltd collieries and the annual plunder is
not less than 5-6 million tonnes causing huge loss to the state
exchequer," former MP and trade union leader Jibon Roy said.

India is home to cumulative coal reserves of 267 billion tonnes, the
largest in the world, and the fossil fuel accounts for 55 per cent of
the country's energy needs.

Andhra Pradesh, Chhattisgarh, Jharkhand and Orissa are the main coal
producing states and also happen to be naxal-infested states.

Roy who had been a member of the Standing Committee on Coal and, at
present, is the CITU General Secretary alleged the nexus included that
of executive from the coal companies, bureaucrats, police and
criminals.

Mafia operations are more rampant in CIL subsidiaries like Central
Coalfields Ltd, Bharat Coking Coal Ltd, Eastern Coalfields Ltd and
SCEL, he said pointing out that the coal mafia virtually ran a
parallel administration there.

State-owned CIL, which accounts for over 80 per cent of the domestic
coal production through its seven subsidiaries, marginally missed its
output target of 435 million tonnes in 2009-10. The issue of coal
pilferage is also being probed by the Central Bureau of Investigation
and other agencies.

The CBI has conducted a nationwide special drive against large-scale
pilferage and irregularities in public sector coal companies from
January 18 to January 25 and unearthed misappropriation and loss to
the tune of over Rs 10 crore to various public sector coal companies.

Besides cleansing the mafia, Jaiswal said his ministry's priority will
be to bring out more reforms in the sector.

"Apart from Coal India's proposed disinvestment, we are going to
shortly appoint a Coal Regulator to monitor various issues including
pricing of coal. Also, we are working to introduce competitive bidding
for allocation of coal blocks for captive use," Jaiswal said.

The government is in the process of divesting 10 per cent stake in
'Navratna' CIL in the current fiscal, expecting to raise up to Rs
12,000 crore.

http://www.expressindia.com/latest-news/Govt-vows-to-eliminate-coal-mafia/623460/

HEARD ON THE STREET
MAY 25, 2010, 6:27 A.M. ET.

Asia's Great Currency Race .
By HARSH JOSHI And ANDREW PEAPLE

China and India may soon find another turf to compete for: their
currencies' clout.

It's an idea that's got some economists at the Reserve Bank of India
thinking. A recent study from the central bank says that the growing
economic prowess of China and India makes their respective currencies—
the yuan and the rupee—contenders for greater international use. But
the researchers are worried the rupee could be left behind.

The RBI economists expect the yuan to grow in importance as a regional
currency in Asia, eventually—one far-off day—becoming a global reserve
currency. For India, the researchers draw a clear conclusion: India
needs to "increase the role of the rupee in the [Asian] region to
catch up with the growing influence of the Chinese renminbi."

True, India's currency, unlike China's, floats almost freely and isn't
pegged to the dollar. But the rupee can't officially be used for
international transactions other than with Nepal and Bhutan, while
foreigners face limits on their holdings of both assets and
liabilities denominated in rupees.

One worry about further liberalization of the rupee is that this will
increase its already high vulnerability to rapid capital withdrawal at
times of economic stress. Even with restrictions in place, the
currency was whipsawed in 2008 and 2009, dropping 23% before rising
13% against the dollar in just 26 months, as investors rushed out and
then back in. A sharp drop in the currency would be far worse for
India, which runs persistent trade deficits, than for China, which has
a large trade surplus. Sharp appreciation of either currency,
meanwhile, creates problems for exporters.

These short-term risks may be the price India has to pay to ensure
that its clout in the region keeps up with the size of its economy in
the long run. Eventually, currency dominance will depend on how much
faith investors put in the two economies, the stability of their
markets and their politics.

Despite their qualms, it's clear some at the RBI are worried about
India sleepwalking into a world—or at least an Asia—where the yuan
wins that race.

Write to Harsh Joshi at ***@dowjones.com and Andrew Peaple at
***@dowjones.com

http://online.wsj.com/article/SB10001424052748704026204575265971004056664.html?mod=WSJ_Markets_section_Heard

Indian Premier Stresses Economy and Diplomacy

Harish Tyagi/European Pressphoto Agency
Prime Minister Manmohan Singh of India spoke during a news conference
in New Delhi on Monday.

By JIM YARDLEY
Published: May 24, 2010

NEW DELHI — Prime Minister Manmohan Singh said Monday that India must
reach 10 percent annual economic growth in coming years and improve
relations with Pakistan if it wants to reduce poverty and make more
rapid progress.

Mr. Singh, who has staked his personal prestige on improving ties with
Pakistan, said India was working to restore trust with Pakistan so
that more serious negotiations could resume on the full range of
disputed issues between the nuclear-armed neighbors.

In July, the foreign ministers of both countries will meet in
Islamabad, the Pakistani capital, in another attempt to rebuild the
diplomatic ties shattered by the 2008 terrorist attack in Mumbai,
India, by militants based in Pakistan.

“This will be the first major effort to deal with the underlying
causes — that is, lack of adequate trust between our two countries,”
Mr. Singh told reporters, noting that any progress was contingent on
Pakistan’s stopping attacks against India by terrorist groups within
its borders. He added, “I’m hopeful this process can move forward.”

Mr. Singh’s comments came during a wide-ranging news conference on the
anniversary of India’s coalition national government, which is led by
his Congress Party. After taking power amid great expectations last
May, the new government, known as the United Progressive Alliance II,
has had a mixed early record, having successfully steered the economy
out of the global recession even as Indians have grown angry over high
inflation.

Mr. Singh, 77, argued that India had done better than almost every
other major economy in blunting the impact of the global downturn —
with growth projected at 8.5 percent for the new fiscal year following
a record drought in 2009. He predicted that inflation, currently near
double digits, would fall to between 5 percent and 6 percent by
December.

But he also acknowledged that the government’s performance had not
been perfect.

“I would be the first person to admit that we could have done more,”
Mr. Singh said in a prepared statement.

Mr. Singh does not often hold major news conferences, and his
appearance came as the government was being criticized for its
inability to thwart deadly attacks by Maoist rebels operating in the
Indian countryside. Earlier this month, militants blew up a passenger
bus loaded with police officers and civilians, killing at least 31
people. Last month, Maoists killed 75 paramilitary officers during an
ambush in a remote forest.

Mr. Singh denied that the central government had underestimated the
Maoists, noting that for the past three years he had called them
India’s gravest internal security threat. India’s future prosperity
hinged on curbing the Maoists, he said, adding that the national
government was coordinating a response with state governments, who are
at the forefront of the police response.

Mr. Singh also swatted away the speculation that has ebbed and flowed
in Indian political circles of a chill between himself and Sonia
Gandhi, president of the Congress Party. It was Mrs. Gandhi who
installed Mr. Singh as prime minister when Congress first regained
power in 2004 through the first United Progressive Alliance
government, and their close working relationship had been considered
critical to the party’s success.

Mr. Singh, a former economist, is the face of the pro-growth wing of
the party, analysts say, while Mrs. Gandhi focuses on political work
and social issues, like national projects to provide work, food and
education to the rural poor. But some analysts suspected a rift
between them in recent months, and some members of the Congress Party
grumbled that the prime minister was not dedicating enough attention
to social causes.

When Mrs. Gandhi was reinstated to a cabinet-level position as leader
of a national advisory group on social issues, some political
commentators interpreted the move as a deliberate curbing of the prime
minister’s authority.

“There is not an iota of truth that there is an element of distrust or
mistrust between me and the president of the Congress,” Mr. Singh
said.

In a lighter moment, one journalist noted that the prime minister was
advised by two powerful women — Mrs. Gandhi and his wife — and he was
asked whose advice he favored. The prime minister said he was
“privileged” to benefit from their advice.

“Both of them deal with different subjects,” he said, “and I welcome
the advice from both of them.”

http://www.nytimes.com/2010/05/25/world/asia/25india.html

Frustrations fail to deter investors in India
Tony Munroe,Reuters:

Who needs reforms? A year into office, the Centre has disappointed on
hopes it would usher in a new wave of economic liberalisation.

Foreign firms and investors, however, are getting on with business
undeterred. Despite the dimming of reform expectations, India’s long-
term potential is too compelling to ignore.

The economy is booming, funds are pouring in, and overseas firms from
Toyota Motor Corp to Standard Chartered and Wal-Mart Stores are
investing to tap surging demand, cheap labour, a 300 million-strong
middle class and a demographic outlook more attractive than China’s.

“Lots of companies want to be in India now, so they don’t really have
to open up new sectors to attract money,” Ambit Capital CEO (for
equities) Andrew Holland said, adding “it could be a lot quicker if
they opened up a bit like China, but they obviously want to control it
a lot more.” Freed from its alliance with the communists, the Congress
government was re-elected last year amid high expectations for reforms
but has refrained from liberalising foreign investment in retail and
financial services. The window to do so will narrow as state elections
approach. Still, the economy is poised to grow 8.5 per cent this year
and 9 per cent the next, behind only China. Cellular carriers are
adding 16 million users a month and April car sales rose 40 per cent
year-on-year – growth trajectories that exceed China’s. A young
population – nearly 31 per cent of Indians are under 15, compared with
20 per cent in China – and a much lower level of urbanisation mean
that even though China is a larger and richer economy, India arguably
offers more upside for investors. To exploit that potential,
automakers such as Volkswagen are investing a combined $5 billion in
India, while Wal-Mart and Tesco are working around restrictions
through wholesale outlets and joint ventures to access a market where
organised retail makes up just 6 per cent of the total. Foreign direct
investment in the first 11 months of the fiscal year that ended in
March was $33 billion, which if the trend holds would be an all-time
high.

Overseas portfolio investors, who must be selective in a market that
tends to be expensive, poured nearly $24 billion into India in the
same period, also on track for a record.

Indian stocks trade at nearly 15 times forward earnings, the second-
highest in Asia after Sri Lanka, but UBS expects returns on equity
(ROE) to improve, helped by domestic consumption. UBS expects the ROE
for Sensex index firms to rise to 17 per cent in this fiscal year and
17.5 per cent the year after from 15.8 per cent last year, driven
largely by manufacturers.

While China awes by doing big things quickly, change in the largest
democracy moves at the proverbial elephant’s pace.
In the most recent parliamentary session, the government was bogged
down by a no-confidence motion, a cricket scandal, and the
embarrassing realisation that it lacks the cohesion or muscle to push
through even modest legislation without a struggle. “Quite a bit of
the political capital is being deployed on what I might call the
social agenda... because that is seen to be politically kind of
popular,” said Suman Bery, director general of the National Council of
Applied Economic Research.

Plans to build much-needed roads and power plants miss targets,
corruption and red tape remain endemic, and state and local decision-
making adds layers of complication. Much of the vibrancy of India’s
economy stems from 1991 when a group of top officials, including then-
Finance Minister Singh, threw off the crippling ‘licence raj’ and
opened up the economy. Subsequent reforms have been incremental and
uneven. China, by comparison, has been more broadly welcoming of
overseas investment, using inflows and foreign technology to build
itself into an economic juggernaut even as key sectors such as
telecoms remain state-run and off-limits to foreign players. Pro-
market moves have not ground to a full halt. India is selling minority
stakes in state companies, trying to get its deficit under control and
is in the process, albeit belatedly, of streamlining its tax
structure. It may also finally submit gasoline and diesel prices to
market control. Given political realities, reforms are sometimes
indirect.

The airline industry, once synonymous with shoddiness, is now fiercely
competitive. Unable to privatise loss-making Air India, the government
instead threw the sector open to local rivals, a typically Indian work-
around solution known as ‘jugaad’.

Making do

Shifting rules and prevailing uncertainty mean companies in India need
creativity, persistence and thick skins.
Posco has endured three years of delay for a $12 billion steel plant
in Orissa on protests from farmers. Instead of giving up, it hedged
its India bets with plans to build another plant in more business-
friendly Karnataka. It takes an average of 1,420 days to enforce a
contract claim in India. Enforcing a contract in India costs about 40
per cent of the claim’s value, double the OECD level, World Bank data
shows. Even established players have difficulties, but successful
foreign investors in India learn to adapt.

http://www.deccanherald.com/content/71127/frustrations-fail-deter-investors-india.html

PM pegs growth at 8.5 per cent
Promises steps to tame inflation to 5-6 pc by December
Vibha Sharma
Tribune News Service
New Delhi, May 24

Economist Prime Minister Manmohan Singh today made two significant
points that should go down well with people of the country as they
struggle to keep household budgets from going awry in the face of
unbridled inflation and the industry, which saw an estimated 7.2 per
cent growth in 2009-10 - the fiscal that saw India weather effects of
global economic crisis.

He said the economy was expected to grow by 8.5 per cent this fiscal
and the country was capable of achieving 10 per cent expansion in the
medium term. While accepting that inflation was “a problem” and was
“affecting people”, he assured that by December it would decline to
the range of 5 to 6 per cent.

“Price continues to be a matter of deep concern. The government
attaches highest priority to containing inflation so that there is no
distress to the common man", he said in his first press conference to
mark the completion of one year of UPA-II - a year that saw the
government under fierce attack from the Opposition BJP and Left in
Parliament and outside on its inability to control prices of essential
commodities, especially sugar and pulses.

The Prime Minister, however, explained that the international
situation, especially high petroleum prices, coupled with drought and
floods back home, had fuelled prices. The Centre, he assured, would
closely monitor the situation and together with state governments take
all corrective steps to bring down prices. He was confident that with
the measures being taken inflation would be down to 5 to 6 per cent by
year-end.

While food price inflation is ruling around 17 per cent now, the
general price index crossed 10-per cent mark in February. In the past
one year, the government relaxed import of essential commodities and
imposed ban on export of rice, wheat and pulses, besides importing raw
sugar.

The Prime Minister also stressed on the need for a rapidly growing
economy, which generates productive employment and resources to
finance the government’s “ambitious” social and economic agenda. “Our
medium term target is to achieve a growth rate of 10 per cent per
annum. I am convinced that given our savings and investment rates,
this is an achievable target. However, its achievement will require
determined efforts to increase investment in social and economic
infrastructure, enhance productivity in agriculture and give a fresh
impetus to the manufacturing sector,” he said.

While underlining that the Indian economy had done well when the world
was going through a severe recessionary period, he said his
government’s first priority was to protect the country's economy from
the global slowdown and ensure that momentum of inclusive growth was
not interrupted.

Growth, incidentally, slipped to 6.5 per cent in 2008-09 at the height
of the economic crisis triggered by collapse of financial institutions
in the West. Attaching high priority to raising investment in social
and economic infrastructure and also agriculture, the Prime Minister
said despite the pressure, the economy was expected to grow by 8.5 per
cent in this financial year, up from 7.2 per cent and 6.7 per cent in
the previous two years.

Ficci welcomes Manmohan’s strategy

Industry chamber Ficci has welcomed the Prime Minister’s strategy of
pushing up the pace of Indian economy to double-digit growth for
achieving inclusive agenda.

Ficci president Rajan Bharti Mittal said: “Ficci is fully in agreement
with the Prime Minister’s three-fold strategy of increasing
investments in social and economic infrastructure, enhancing
productivity in agriculture and giving fresh impetus to the
manufacturing sector for achieving this”.

Ambanis’ truce deal fails to lift market
Ruchika M. Khanna
Tribune News Service
Chandigarh, May 24

The peace deal brokered between the warring Ambani brothers failed to
lift the market sentiments. The Sensex initially shot up by 312
points, but ended just 24 points higher as profit taking washed away
almost all gains of the day.

However, the shares of the Mukesh and Anil Ambani group companies shot
up today, with RIL gaining 2.58 per cent and Reliance Power rallying
7.86 per cent.

This follows an announcement by the estranged brothers yesterday to
bury their differences by terminating the 'non-compete clause' from
their July 2005 family settlement.

The market experts, however, have given a thumbs-up to the new found
love between the Ambani brothers. Deepak Parikh, analyst, oil and gas,
Angel Broking, said though this would not have any immediate financial
impact, it would open up new avenues for both RIL and ADAG. “The
cancellation of non-compete clause is a win-win situation for both the
groups as it allows both the companies to expand into segments, which
was restricted earlier, thus opening up further growth avenues for
both the companies".

Supporting his views, Amitabh Nijhawan, state head of Fortune Equity
Brokers, Chandigarh, said the peace deal would be more helpful for
RIL. “The impact has not been immediate as the markets are now taking
a cue from the European markets. But the effect will be visible in the
coming months. Since RIL has a lot of cash flows coming in at the
moment, it is likely to tap into telecommunications and financial
services sector. For ADAG, this would mean more value preposition,” he
said.

Sarabjit Kaur Nangra, a leading market researcher in Mumbai, said
market wise the action will be positive. “Though today was more of a
sentimental impact on the shares, which is likely to last for another
day or two. Though this peace deal will impact the markets positively
in the future too, in numbers, it is too early to predict the rise,”
she added.

Shares of Reliance pack on fire
Mumbai, May 24

The shares of the Mukesh and Anil Ambani group companies were on fire
today following the brothers burying their hatchet, with RIL gaining
2.58 per cent and Reliance Power rallying 7.86 per cent.

The Mukesh Ambani-led Reliance Industries soared 5.34 per cent at Rs
1,049 intra-day before settling the day at Rs 1,021.45 or 2.58 per
cent up, while the Anil Ambani's Reliance power rallied 7.86 per cent
to Rs 149.55 after an intra-day jump of 15.36 per cent at Rs 159.95
and Reliance Natural Resources (RNRL) zoomed 27 per cent during the
day to a high of Rs 56.35 and ended the day with a massive 22.58 per
cent rally at Rs 54.55 as investors cheered the peace pact between the
brothers.

The other ADAG counters which saw sharp rally were Reliance
Infrastructure which soared 6.23 per cent up at Rs 1,050.05 after
jumping a massive 11.89 per cent or Rs 1,105.70; Reliance
Communications jumping up 10.87 per cent at 147.90 after rallying 13
per cent during the day; Rpower rallying 7.86 per cent to Rs 149.55
after an intra-day jump of 15.36 per cent to Rs 159.95; Reliance
Capital gaining 4.8 per cent to Rs 672.10 after a 10 per cent rally at
Rs 696, and Reliance Mediaworks closing 3.9 per cent up at Rs 173.20
after an intra-day rally of over 10 per cent Rs 186.

The other Mukesh Ambani group company, Reliance Industrial
Infrastructure soared (RIIL) 18.23 per intra-day to touch a high of Rs
832, and settled the day at Rs 783.55, up 11.35 per cent.

However, the gain in heavyweight RIL and other group could not hold
the markets till the end at the benchmark Sensex closed flat with 0.15
per cent, or 23.94 points at 16,469.55 points after jumping 2 per cent
intra-day. — PTI

Indirect tax collection at Rs 2.46 lakh cr
Kolkata, May 24

The Centre mopped up Rs 2.46 lakh crore from indirect taxes in the
last fiscal, as much as Rs 2,000 crore more than the revised target,
despite stimulus packages.

But it collected Rs 3.80 lakh crore from direct taxes against the
revised estimate of Rs 3.87 lakh crore, Union Revenue Secretary Sunil
Mitra said at a function hosted by the Bengal National Chamber of
Commerce and Industry today.

However, Mitra clarified that these were only provisional figures, and
the final ones would be released by the Controller-General of
Accounts.

Sources said direct tax collection would go up further when final
figures come in. Estimates of indirect tax collection were revised
down to Rs 2.44 lakh crore last fiscal, from the Rs 2.69 lakh crore
estimated at the time of the Budget.

While the customs duty mop-up target was scaled down by Rs 3,523 crore
to Rs 84,477 crore, excise duty collection was reduced by Rs 4,477
crore to Rs 1.02 lakh crore. Similarly, service tax collection
estimates were cut by Rs 7,000 crore to Rs 58,000 crore.

Sources said this had happened because the cut in excise duty by 6 per
cent and service tax by 2 per cent had hit the exchequer drastically.
Besides, the slowdown in demand had cut the need for greater imports,
affecting customs duty collection. — PTI

Bookings open today
Nissan starts Micra production
New Delhi, May 24

Japanese carmaker Nissan today said it has started commercial
production of small car 'Micra' from its plant in Chennai, which it
plans to make a global export hub.

The wholly owned subsidiary of the company, Nissan Motor India, will
start selling the car from July, for which bookings will open from
tomorrow.

"The start of commercial production of Nissan Micra is the beginning
of a new chapter for us in India. In an exponentially growing and
challenging Indian automobile industry, we are introducing a product
that has been specifically designed keeping in mind the discerning
consumer needs of India," Nissan Motor Company COO Toshiyuki Shiga
said.

The India-made Micra will be exported to "strategic markets" such as
Europe, the Middle-East and Africa as part of its plans to sell the
car in over 100 countries, he added.

"Nissan is also looking at making the Chennai plant as a global hub
for exports. The start of production for the Micra for exports will
commence in July, 2010, and the first shipment will begin from
September, 2010," the company said.

Earlier in March, the Franco-Japanese auto alliance Renault-Nissan
inaugurated its manufacturing plant at Oragadam, near Chennai, in
which the two partners will together invest Rs 4,500 crore to produce
four lakh units by 2015.

The company will start displaying the 'Micra' from tomorrow in its
showrooms across the country. The bookings will also begin
simultaneously against an initial amount of Rs 50,000.

Renault-Nissan has made an initial investment of Rs 2,900 crore for
production of 200,000 units annually, which can be scaled up to
400,000 units. It plans to produce about 80,000 units in the first
year.

Pitted against Maruti's Swift, Hyundai's i10 and i20, the Micra will
come with a 1.2-litre petrol engine and will have 85 per cent
localisation in components.

The new Micra will be produced in five countries -- Thailand, India,
China and Mexico. The fifth location is yet to be decided. — PTI

ICICI Bank eyes No.1 position
Mumbai, May 24

ICICI Bank, which will see its presence in western India grow with the
acquisition of Bank of Rajasthan, has said no to foreign takeovers as
it wants to focus on becoming India's top bank in terms of
profitability and productivity.

"No overseas (acquisition). We are not looking at any prospect
(abroad). Internally, our growth strategy is quite India-linked. We
are doing just one prospect (deal). I think it is too early to talk of
any other prospect," ICICI Bank CEO Chanda Kochhar told PTI when asked
which domestic or overseas deals were on its radar.

Asked if the latest deal would help her achieve the dream of putting
ICICI ahead of number one State Bank of India, she said, "The number
one position could be in many ways like productivity, efficiency and
profitability.

"We are the number one in many of these parameters. Clearly, profits
will be a key area to our operations," she said. — PTI

2G Spectrum
Operators move TDSAT against TRAI’s proposals
Tribune News Service
New Delhi, May 24

As was expected, some of the leading mobile operators have approached
telecom tribunal TDSAT against telecom regulator TRAI’s
recommendations on 2G spectrum looking for a policy change and also
suggesting a one-time fee for holding radio waves beyond 6.2 Mhz.

Three leading operators Bharti Airtel, Vodafone and Idea have
approached telecom tribunal TDSAT against the possibility of a policy
change.

The three have been vocal in their criticism of TRAI's recommendations
and have asked the government to dump the report, which according to
them are "retrograde" and "absurd".

The GSM operators are also critical of capping the spectrum at 8 MHz
in all circles except Delhi and Mumbai where the limit is 10 MHz, as
they think it would restrict future growth prospects.

These issues are crucial for incumbent mobile operators as paying
higher fees for existing as well as future 2G spectrum will be a big
financial burden for telcos, especially Bharti and Vodafone, as their
profits have already come under pressure due to the intense tariff
war.

TRAI had also come under their (GSM operators) attack for recommending
reframing of spectrum as per which players holding spectrum in the 900
MHz band would be asked to return spectrum as and when their licence
comes up for renewal.

These players are also opposing vacating 900 MHz spectrum because that
will mean moving from a more efficient spectrum band to a less
efficient one.

If the TRAI recommendations are accepted, operators like Bharti, whose
licence expires in about two to three years, would have to return 2G
spectrum in the 900 MHz band.

Raja ready to face probe

Hyderabad: Answering questions on the alleged irregularities in the
allotment of 2G spectrum for Rs 1,651 crore, Raja said he was ready to
face any investigation into the matter.

“I have scrupulously followed rules and recommendations of the Telecom
Regulatory Authority of India and consulted the ministries concerned.
I am being targeted only because I broke the cartel in the telecom
sector. If any instance of corruption is found, I will take action
against those in my department,” he said.

Asked about the TRAI’s recommendation that telecom operators should
pay for excess 2G spectrum beyond 6.2 megahertz which will give the
government the additional revenue of Rs 21,717 crore, he said that the
recommendations were currently being reviewed by the Finance Ministry
and the Prime Minister’s Office. — TNS

Auction for BWA begins
Tribune News Service
New Delhi, May 24

After the phenomenal success of the 3G spectrum auction, the
government is hoping to garner a revenue of Rs 15,000 crore from the
auction of airwaves for Broadband Wireless Access (BWA) services which
got underway today. The optimism of the government looking to further
reduce its borrowings for the fiscal deficit was also reflected in the
comments of Telecommunications Minister A. Raja.

"I expect the competition will be very high for BWA... as competitive
as 3G. I am expecting Rs 15,000 crore from the BWA auction," Raja said
in Hyderabad on the sidelines of an international telecom conference.

As many as 11 companies — Bharti Airtel, Reliance WiMax, Idea
Cellular, Aircel, Augere Mauritius Limited, Infotel Broadband
Services, Qualcomm, Spice Internet Service Provider, Tata
Communications Internet Services, Tikona Digital Networks and Vodafone
Essar — are participating in the BWA auction.

BWA spectrum is essential for rolling out Worldwide Interoperability
for Microwave Access (WiMAX) services enabling hand-held devices and
laptops to access the Internet.

It will allow the winner companies to offer high-speed Internet access
as well as Internet telephony and television services. The spectrum
can also be used for voice and high-speed data services.

The government has set Rs 1,750 crore as the base price for a pan-
India slot.

Cosmetics being sold as ‘medicines’ to evade VAT
Manav Mander
Tribune News Service
Ludhiana, May 24

Hundreds of beauty and cosmetics manufacturers are evading value added
tax (VAT) worth crores by selling their beauty products in the garb of
“ayurvedic medicines” in Punjab. The cosmetics market is expanding at
a rapid speed and the annual sale of beauty products in Punjab alone
is to the tune of Rs 2,000 crore. Punjab houses nearly 500 cottage
industries and other beauty products manufacturing units. While the
VAT on beauty products is 12.5 per cent, it is just 4 per cent on
ayurvedic medicines. To evade VAT, traders are selling their beauty
products by showing them as medicines.

Recently, the Excise and Taxation department caught a trader V.K.
Materials from Patiala selling beauty products in the garb of
medicines in Ludhiana. After this incident came to light, it was
learnt that the mafia operates from Ludhiana and other districts of
the state.

The department has tightened noose around such evaders not only in
Ludhiana and Patiala but in the entire state. “We are checking the
products of the traders dealing in cosmetics and ayurvedic products.
Sometimes there is a very thin line to demarcate an ayurvedic product
and medicines and these traders take advantage of this. We are
checking records to curb the malpractices throughout the state,” said
KBS Sidhu, Director, Investigations.

Assistant Excise and Taxation Commissioner (mobile wing) Tejbir Singh
Sidhu is investigating the case in Ludhiana. “Nearly 4-5 wings are
under our scanner. We are scrutinising their returns and the
investigations are still on,” Sidhu said.

Two years ago, the department had penalised three Ludhiana-based
manufacturers and distributors and recovered fine worth Rs 40 lakh.

BRIEFLY

Oil nears $71
Singapore: Oil prices rose to near $71 a barrel on Monday in Asia as
recovering stock markets bolstered the confidence of crude traders.
Benchmark crude for July delivery was up 69 cents to $70.73 a barrel
at midday Singapore time in electronic trading on the New York
Mercantile Exchange. In London, the Brent crude July contact was up 31
cents to $71.99 on the ICE futures exchange. — AP

Central Bank net up 83 pc
Mumbai: Central Bank of India on Monday reported a 82.83 per cent
growth in consolidated net profit for the year ended March 2010, at Rs
1,162.55 crore. The board of directors has proposed a dividend of Rs
1.20 per share, or 12 per cent, for the financial year ended 2009-10
to the shareholders. Total income rose to Rs 13,820.61 crore in the
year-ended March 2010, up 19.75 per cent, from Rs 11,540.97 crore in
the corresponding period a year-ago.— PTI

Sun Pharma net down
New Delhi: Pharma major Sun Pharmaceuticals Industries on Monday
reported a marginal decline in its net profit for the quarter ended
March 31, at Rs 394 crore. During the quarter, net sales declined to
Rs 1,109 crore against Rs 1,134 crore in the year-ago period, down by
2.2 per cent. It has recommended a dividend of Rs 13.75 per equity
share of Rs 5 each for the year ended March 31, 2010, Sun
Pharmaceuticals said.— PTI

Genpact, Carnation Auto tie up
New Delhi: BPO firm Genpact on Monday said it has entered into a five-
year deal with multi-brand auto sales and service centre Carnation
Auto. The financial details of the deal were not known. As per the
deal, Genpact will design and manage Carnation Auto's core processes,
including finance and accounting, customer relationship management,
procurement and supply chain management and human resources, Genpact
said. — PTI

Mirae bluechip fund
Mumbai: Mirae Asset announced the launch of the Mirae Asset Emerging
Bluechip Fund, an open-ended equity fund, on Monday. The fund is
primarily a mid-cap fund that invests in Indian equities and equity-
related securities of companies that are not a part of the top 100
stocks by market capitalisation, but have a market cap of at least Rs
100 crore at the time of investment. — PTI

Entrepreneurs meet
Chandigarh: With a view to attract investment in different sectors,
Punjab State Industrial Development Corporation (PSIDC) is holding an
‘entrepreneurs meet’ on May 26 at the CII Convention Centre here.
During the meeting, Onkar Singh Thapar, chairman, PSIDC, Dr SS Channy,
principal secretary, industries, Anurag Agarwal, GK Singh, additional
managing director, PSIDC, and other senior officers would be
interacting with the industrialists.— TNS

Maruti milestone
New Delhi: Maruti Suzuki India on Monday said its premium compact car
Swift has crossed the 4.5 lakh unit sales mark since its launch five
years ago in 2005. The Swift was launched in India on May 25, 2005. —
PTI

http://www.tribuneindia.com/2010/20100525/biz.htm#2

2010 Issues > May 30, 2010

Perspective

Euro crisis and its fallout on India
CA Gopal K Agarwal

India has seen widespread corruption. The people in power, possessing
resources make sure that all benefits get concentrated to a select
few. This rampant manipulation is a fault line in our economic
planning and is a major cause of concern.

GLOBAL economy is in doldrums, world economy is sitting on a time
bomb, where there are periodical new revelations. Successive bailout
packages are being announced, but how long a patient can survive on
life saving mechanism.

It is being said that the economic activities are moving towards east,
specially India and China. Developing countries are attracting funds
flow from across the world. Indian Gross Domestic Product (GDP) is
said to be poised for growth rate of around 8 to 10 per cent per
annum. But in my opinion these growth rate predictions for our country
are not correct and are presenting a false picture.

Though we have the potential of becoming an economic superpower but
there can be no complacency on our part. We will have to take
corrective steps at every level with determination and indomitable
will, to achieve success. Factors that need our attentions are
enumerated below:

Parameters for Gross Domestic Product (GDP) valuation
There is a large segment of Indian economy which does not form part of
the GDP calculation. With the successive improvement in the collection
and availability of statistical data, more and more unaccounted
economic activity in the country will get accounted for in the GDP
calculations, e.g. services in the unorganised sector, rural economic
and household domestic activities etc.

Secondly India has a large parallel economy. As we move towards a
regime of low taxation and strong audit trail, the incentive to move
to the main frame economy will increase. Further, with the
implementation of VAT and GST, there will be a systematic
synchronisation of all business data, slowly all these segments will
start forming part of overall GDP figures. This clearly brings out a
fact that, the actual current GDP figures, for India does not reflect
its true picture. Indian economy is much larger than what it is being
represented at present. As we move ahead, statistical figures will
show growth automatically, but there will not be real growth in
absolute terms at this rate.

The other basic problem in Indian context is of inclusive growth.
India has seen widespread corruption throughout the country. The
people in power, possessing resources make sure that all benefits get
concentrated to a select few. This rampant manipulation is a fault
line in our economic planning and is a major cause of concern. A
recent glaring example is the IPL fiasco, where who’s who of the
society is involved across party line. Unless the common man stands
strongly against this menace of corruption nothing much regarding
inclusive growth can be achieved in India. Everything is a mere lip
service. Our countrymen need to rise to the concept of Tax Payer’s
money, making every politician and bureaucrat answerable to its
misuse.

Capital flows
There is a very strong pressure by the US on China to revalue Yuan.
Yuan is pegged to US dollar at a fixed rate. If the Chinese currency
appreciates, thereby depreciating US dollar there will be a major
movement in the world currency markets, impacting funds flow to the
emerging economies. India has seen large inflow of funds, causing
bullish trends in the domestic markets. Considering high uncertainty
of this hot money and its impact on our overall economy, Indian
Government has set-up a committee under the chairmanship of Shri U K
Sinha to gauge its impact on its usefulness or otherwise for our
country. A very thought is required on the issue. Do we need foreign
capital? What is the quantum that we need? And at what terms and at
what cost?

Indian capital market
Indian markets over the past few months have seen an upward trend but
in the last week this trend has been reversed. The impending news on
the seriousness of the Greece debt crisis has shown its major impact
on the world markets, including our markets. Although, European Union
has come out with a second bailout package, amounting to 750 billion
Euros, but there is an apprehension; whether this bailout package can
contain this crisis as a long term solution? In addition, there is a
widespread anxiety about the crisis, spreading to other European
countries. Credit Rating Agency; like Moody’s have issued a warning
regarding downgrading Portugal debt rating and further cut Greece
rating to junk status. Question is how our domestic economy can be
delinked and protected from the vagaries of the global financial
meltdown?

In addition to this our market can get into a bear phase, thereby
applying brakes to the future economic development. Some factors which
points towards this scenario are; Firstly, there is a big queue of
IPO’s lined-up. The total expected targeted collection figures,
amounts to approximately Rs 2,00,000 crore. The huge influx of IPO at
a hefty premium will suck excess liquidity from the system. Secondly,
the current nifty is being traded around a Price Earning (PE) of 24,
which is very high. The basis thumb rule for an investor is to exit
markets whenever, the PE crosses 22, sitting on cash, and buy when the
PE falls below 15. Therefore there can be a selling pressure in the
markets. Thirdly, in the Mutual Fund segment, the April month has seen
the net outflow of Rs 1,133 crore from the equity scheme, against a
net outflow of Rs 196 crore in the corresponding month of the previous
year. This is quite high and is contrarian to the market expectations.
Usually April month should witness fresh inflows in the equity markets
because of a start of new financial year, pointing towards a plight of
capital from the market.

Inflation and rising commodity prices
Rising commodities prices is fuelling unprecedented inflation in the
country, causing concern for the common man. The government does not
seem to have any clue to contain this menace. On the one hand surplus
food grains are rotting in the warehouses, citing inadequate and
improper storage facilities, and on the other hand common men are
suffering due to faulty and corrupt Public Distribution System (PDS).
With the storage and warehousing facilities in the county in such a
dire state, the farmers are ready with the new crop to be purchased by
the government and are demanding higher Minimum Support Prices (MSP).
Inflation in food items and mishandling of commodities has resulted in
a strong nationwide protest by all Opposition parties. United
opposition brought out a cut motion against the hike in the petroleum
prices by the government in the Budget Session. The manner, in which
the Government has been successful in overcoming this crisis, raises
several questions about the functioning of some of the institutions in
the country.

The way UPA government is handling economy leaves much to be desired,
hope that they wake-up to the situation and take corrective steps
before it is too late.

(Email: ***@hotmail.com)

http://www.organiser.org/dynamic/modules.php?name=Content&pa=showpage&pid=346&page=25

...and I am Sid Harth

cogitoergosum

2010-05-29 09:43:46 UTC

Permalink

Boom-Boom-Bomb-Aye?: Sid Harth
http://bakulaji.typepad.com/blog/boomboombombaye-sid-harth.html
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Madam I am Adam: Sid Harth
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It's the Economy,Stupid: Sid Harth
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Economic Extremes Seen Side By Side In India
by David Kestenbaum

May 28, 2010

Listen to the Story
All Things Considered
[4 min 45 sec] Add to Playlist

India's economy is one of the world's fastest growing. So why do its
poor remain so very, very poor?
Copyright © 2010 National Public Radio®. For personal, noncommercial
use only. See Terms of Use. For other uses, prior permission
required.

MELISSA BLOCK, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

MICHELE NORRIS, host:

And I'm Michele Norris.

If a rising tide lifts all boats, the news hasn't reached India. Its
economy is growing more than twice as fast as ours over eight percent
of the year and it's producing billionaires. But it still has hundreds
of millions of poor people who don't even have electric power to
switch on a light bulb.

David Kestenbaum, with our Planet Money team has this story from
India's capital: Delhi.

DAVID KESTENBAUM: It's not hard to find both economic extremes of
India right next to each other. Take this street in the Shantiniketan
neighborhood. You walk by a mansion that's being built: three floors,
giant bathrooms with Italian marble. There's a swimming pool being
built in the basement. Then you turn the corner and you meet a short,
old man furiously polishing shoes. His name is Umral Singh(ph).

(Soundbite of shoe polishing)

KESTENBAUM: How old are you?

Mr. UMRAL SINGH: (Through translator) Seventy-five.

KESTENBAUM: Singh's store, if you can call it that, is the space
between two stacks of bricks that function as walls.

A customer drops off shoes to be shined and another guy brings in a
bag with a busted zipper. Singh figures he makes maybe $2 a day. Where
do you sleep, I ask? Right here, he says proudly, on the ground. What
if you get sick? I eat the leaves from this tree, he explains. This is
what God has chosen for me.

Mr. SINGH: (Through translator) There's nothing I can do about it
because it's all written. It has to do with Gautama. I think what is
written is written and you can't change it.

KESTENBAUM: There is karma, God, scriptures and there is also
economics. In India, the gap between rich and poor is getting wider.
And you have to wonder, is that just what happens in fast growing
economies or is there something wrong here?

Professor ROHINI SOMANATHAN (Economist, Delhi School of Economics): I
think there is something wrong about that.

KESTENBAUM: Rahini Samanotan is an economist at the Delhi School of
Economics.

Prof. SOMANATHAN: What's wrong is not that you have people in
different income classes who have different lives, but I think what's
wrong is just how far apart those levels are.

KESTENBAUM: The usual route for poor people to stop being poor is that
as the economy grows, new higher paying jobs open up. And typically,
for the very poorest, the first rung on that ladder is a manufacturing
job, making something, T-Shirts or furniture.

Partha Sen is director of the Delhi School of Economics.

Mr. PARTHA SEN (Director, Delhi School of Economics): So far as I
know, the only way out of poverty for a hugely overpopulated economy
is through manufacturing.

KESTENBAUM: But for a variety of reasons, he says, the manufacturing
rung of the ladder in India, it's kind of missing or it's small. And
the parts of the economy that are growing, like, the IT sector,
they're not creating the kinds of jobs that people from the villages
can do. Umral Singh, the cobbler, he's never going to work in a call
center.

If you read the government's five-year economic plan, it lays out a
grand vision for helping India's poor: better education, roads, health
care, infrastructure. I mentioned that to Rohini Somanathan and she
jumped in.

Prof. SOMANATHAN: But that's what they've been talking about for 60
years. That was in the first plan, in the second plan and the 11th
plan.

KESTENBAUM: I met with India's chief economic adviser, Kaushik Basu.
Until recently he was a professor at Cornell University. But he came
over to help diagnose and treat India's problems. Basu says one thing
to keep in mind is that India's sudden economic growth has been
relatively recent. The economy is exploding, growing at eight percent
now. But for many years, growth was less than half that, three and a
half percent.

Mr. KAUSHIK BASU (Chief Economic Adviser, India): That used to be
described the Hindu rate of growth.

KESTENBAUM: The Hindu rate of growth?

Mr. BASU: Yeah. That was coined by, actually, one of my senior
colleagues. He said it jokingly that no matter what we do, why do we
remain stuck at 3.5 percent? Maybe it is there in the scriptures.
That's the Hindu rate of growth. But from 2003, it's really
unbelievable. It's virtually at 9 percent that the country is
growing.

KESTENBAUM: The economy is growing, he says, in part because India
opened up to the global economy. But that's helped business owners
more than the shoe shiners.

Mr. BASU: We do know that when a country takes off, there's a bit of a
natural propensity for inequality to worsen. It's happened in China in
a very big way. It's happening in India.

KESTENBAUM: And in India it's worse.

Mr. SINGH: (Speaking foreign language)

KESTENBAUM: I went back that night to hang out with the cobbler, Umral
Singh. He was cooking some Indian flatbread on top of a stove made of
bricks he had set up over a manhole cover.

Mr. SINGH: (Speaking foreign language)

KESTENBAUM: Singh told me he's content with what he has. But then his
neighbor piped in. Remember how you told me, he says, that in the next
life you wanted to be born into one of those nice apartments across
the street? And they both laughed.

David Kestenbaum, NPR News.

http://www.npr.org/templates/story/story.php?storyId=127244601

Bloomberg

India’s Economy Probably Grew Fastest Since 2007 (Update1)
May 28, 2010, 1:29 AM EDT

(Updates with stock index, bonds in fifth paragraph.)

By Kartik Goyal

May 28 (Bloomberg) -- India’s economy probably grew at the quickest
pace in more than two years, increasing pressure on the central bank
to raise interest rates even as Europe’s sovereign- debt crunch
threatens to undermine the global recovery.

India and China, the world’s fastest-growing major economies, face the
threat of the debt crisis cutting demand in the European Union, the
market accounting for a fifth of their exports. India’s central bank
said last week that it will raise rates only cautiously even though
they are “out of line” with inflation, running close to 10 percent.

“The Reserve Bank of India is likely to follow a measured approach as
global factors contaminate the issues relating to monetary policy,”
said Sailesh K. Jha, Singapore-based managing director for fixed-
income strategy and sales at Jefferies & Co., a New York-based
brokerage. “Inflation may further broaden.”

India’s benchmark Sensitive Index rose 0.6 percent to 16,769.89 at
10:30 a.m. on the Bombay Stock Exchange. The yield on the 10-year
government bond gained 6 basis points to 7.58 percent in Mumbai.

Rupee Declines

The rupee advanced 1.4 percent against the U.S. dollar in Mumbai
today. Even so, it has declined 4.9 percent this month, making imports
costlier and impeding central bank Governor Duvvuri Subbarao’s efforts
to cool inflation.

The Reserve Bank’s benchmark reverse repurchase rate is at 3.75
percent after two quarter percentage point increases since mid-March,
while the wholesale-price inflation touched 9.59 percent in April.

Growth in India’s $1.2 trillion economy, Asia’s largest after Japan
and China, is accelerating as rising incomes boost demand for cars,
mobile phones and air travel. Salaries in India may increase at the
fastest pace in the Asia Pacific in 2010, according to Hewitt
Associates Inc., the Lincolnshire, Illinois- based human resources
adviser.

The economy grew 6 percent in the quarter ended Dec. 31.

Car sales by companies including Maruti Suzuki India Ltd. and Tata
Motors Ltd. rose 39.5 percent in April from a year earlier, the
biggest jump for the month since 1999, according to the Society of
Indian Automobile Manufacturers.

3G Auction

The government’s auction of high-speed wireless licenses this month
highlights corporate enthusiasm for the nation’s prospects. Companies
including Newbury, England-based Vodafone Group Plc, the world’s
biggest mobile-phone operator by sales, took part and the sale raised
677.2 billion rupees ($14.3 billion), almost double the amount
budgeted by Finance Minister Pranab Mukherjee.

Services including air travel, which account for about 55 percent of
India’s economy, expanded the most in 21 months in April, according to
the Purchasing Managers’ Index released by HSBC Holdings Plc and
Markit Economics.

In comparison, China’s $4.3 trillion economy grew 11.9 percent in the
first quarter. The Organization for Economic Cooperation and
Development said May 26 that China and India need “a much stronger
tightening of monetary policy” to counter inflation and reduce the
risk of asset bubbles.

Infrastructure Impact

Some economists say Indian Prime Minister Manmohan Singh’s government
has made slow progress in creating new capacity in infrastructure such
as power, roads and ports, which is adding to inflation pressures and
limiting economic expansion.

“Unless infrastructure is addressed in a serious way in India, it will
remain a drag on growth and inflation,” said N.R. Bhanumurthy, an
economist at the New Delhi-based National Institute of Public Finance
and Policy.

Singh wants to boost growth to 10 percent pace, which he says is
needed to pull the 828 million people living on less than $2 a day out
of poverty.

India, ranked below war-ravaged Ivory Coast and Sri Lanka for the
quality of infrastructure, in March lowered its target for spending on
roads and ports, after failing to complete planned projects.

Projected investment in electricity, roads and wharves may reach 407
billion rupees in the five years to March 2012, half the original
goal, according to the Planning Commission, a government office that
sets investment targets.

Bhanumurthy said companies’ costs rise as they invest in their own
power generators to meet a shortage in supplies. The finance ministry
estimates that India produces about 10 percent less electricity than
it needs, and roads, which account for 65 percent of the nation’s
cargo, are plagued by single lanes and irregular surfaces.

“The key thing required in India, is a significant pick-up in
infrastructure investments,” said Vetri Subramaniam, head of equity
funds at Mumbai-based Religare Asset Management Co., which manages
about $3 billion in assets.

--With assistance from Manish Modi in New Delhi. Editors: Cherian
Thomas, Sam Nagarajan

%INR

To contact the reporter on this story: Kartik Goyal in New Delhi at
***@bloomberg.net

To contact the editor responsible for this story: Chris Anstey at
***@bloomberg.net

http://www.businessweek.com/news/2010-05-28/india-s-economy-probably-grew-fastest-since-2007-update1-.html

Bloomberg

India Plans $11 Billion Road Fund to Narrow China Gap (Update2)
May 14, 2010, 8:20 AM EDT

(Updates with currency gain in sixth paragraph.)

By Unni Krishnan and Santosh Kumar

May 14 (Bloomberg) -- India, ranked below war-ravaged Ivory Coast for
the quality of its infrastructure, is planning to set up a 500 billion
rupee ($11 billion) debt fund to build ports, roads and bridges needed
to drive economic growth.

“The modalities are being worked out,” Montek Singh Ahluwalia, a top
government adviser said in a telephone interview from New Delhi. “The
idea is to refinance lending institutions. We are talking to the World
Bank and other multilateral agencies.”

India doubled its target for infrastructure spending to $1 trillion in
the five years starting 2012 to narrow the gap with China, the world’s
fastest growing major economy. The fund is the latest attempt by the
government to raise capital from overseas after a $5 billion fund
planned in 2007 with Citigroup Inc. and Blackstone Group LP was
shelved.

The fund is a “good start but it won’t be enough,” said Prasanna
Ananthasubramaniam, chief economist at ICICI Securities Primary
Dealership Ltd. in Mumbai. “One fund cannot take all the risks of
infrastructure projects.”

India spent 6.5 percent of its gross domestic product in 2009 on
infrastructure, compared with about 11 percent by China, according to
an Ernst & Young India report. Failure to lift investment may imperil
Prime Minister Manmohan Singh’s target of boosting economic growth to
10 percent needed to pull 828 million people living on less than $2
per day out of poverty.

Rupee Rallies

Ahluwalia’s comments helped the rupee post the best week in more than
a month. The currency climbed 0.6 percent this week to 45.22 per
dollar as of the 5 p.m. close in Mumbai, according to data compiled by
Bloomberg.

“The rupee is gaining as the market has already started pricing in the
billions of dollars that the infrastructure fund is expected to bring
in,” said Vikas Babu, a currency trader at Andhra Bank in Mumbai.
“Also, capital inflows into stocks have picked up this week.”

Ahluwalia, deputy chairman of the nation’s Planning Commission, said
in a report in March that India may need as much as $1 trillion in
such investment between 2012 and 2017.

Global Funds

Global funds including 3i Group Plc have invested in India’s ports and
power plants. Macquarie Group Ltd., Australia’s biggest investment
bank, and State Bank of India, the nation’s largest lender said last
year that they raised $1 billion to invest in the South Asian nation’s
infrastructure.

Citigroup, based in New York, said in May 2008 it had raised $500
million to build ports, roads and utilities. The finance ministry in
Feb 2007 announced the formation of the $5 billion infrastructure fund
with Citigroup and Blackstone.

Finance Minister Pranab Mukherjee in February offered tax breaks to
individuals and companies to encourage infrastructure investments. The
country is ranked 89 out of 133 nations for its infrastructure,
according to the World Economic Forum’s Global Competitiveness Index.

India’s per capita spending on city development is $17 each year, just
15 percent of what China spends, according to a report released by
McKinsey & Co. last month. India will have 68 cities with a population
of more than one million people, 13 cities with more than four million
people and 6 mega cities with populations of 10 million or more, at
least two of which will be among the five largest cities in the world
by 2030.

India produces about 10 percent less electricity than it needs. The
roads, which account for 65 percent of India’s cargo, are plagued by
single lanes and irregular surfaces, slowing trucks to an average
speed of about 20 kilometers per hour, according to a 2009 study by
Transport Corp. of India and the Indian Institute of Management,
Calcutta.

The average time taken by ships to unload and load at Indian ports is
almost 96 hours, about 10 times longer than in Hong Kong, the
government said in its latest annual economic survey.

--With assistance from Anil Varma in Mumbai and Kartik Goyal in New
Delhi. Editors: Abhay Singh, Sam Nagarajan

To contact the reporters on this story: Unni Krishnan in New Delhi at
***@bloomberg.net; Santosh Kumar in New Delhi at
***@bloomberg.net

To contact the editor responsible for this story: Chris Anstey at
***@bloomberg.net

http://www.businessweek.com/news/2010-05-14/india-plans-11-billion-road-fund-to-narrow-china-gap-update2-.html

Bloomberg

Nomura ‘Bullish’ on Indian Stocks as Economy Improves (Update1)
May 27, 2010, 1:49 AM EDT

(Updates with comment from analyst in second paragraph.)

By Shiyin Chen and Weiyi Lim

May 27 (Bloomberg) -- Nomura Holdings Inc. is becoming “more bullish”
on Indian stocks as the nation’s economic outlook improves and after
valuations fell.

“While we acknowledge that the market could remain weak in the short
term given global uncertainties, we would now be buyers on dips,”
Nomura analysts led by Prabhat Awasthi wrote in a report dated today.

Citigroup Inc. said May 24 that India’s macroeconomic “headwinds” had
peaked and the benchmark stock index may gain 10 percent by yearend.
The gauge has fallen 5.6 percent this year as policy makers raised
interest rates twice to quell accelerating inflation and Europe’s
sovereign debt crisis prompted investors to withdraw funds from
riskier assets.

Nomura upgraded banks, property, construction, automobile and energy
shares to “overweight,” while lowering metals and consumer shares to
“underweight,” according to the report.

“The worst of inflation fears for the market are now behind us, we
believe,” Awasthi said in the report.

Inflation may slow to 7.4 percent for the year through March from an
earlier prediction of 8.4 percent, according to estimates by Citigroup
economist Rohini Malkani.

Demand Pick Up

Nomura is “overweight” on property companies such as Unitech Ltd.,
saying demand should pick up. Banks, including State Bank of India,
should see improved loan growth, while automakers such as Bajaj Auto
Ltd. may benefit from lower raw material costs, according to the
report.

Concerns about funding of the government’s fiscal deficit are “much
lower,” Nomura’s analysts wrote in their report, saying they were
“positively surprised” by the “significant ramp-up” in prices in an
auction of third-generation mobile- phone spectrums.

“It appears the government could get more than double the 350 billion
rupees ($7.4 billion),” they said.

Companies including Vodafone Group Plc and Bharti Airtel Ltd. bought
the high-speed wireless permits in an auction that raised 677.2
billion rupees for the government last week.

India’s central bank today eased rules to boost liquidity at banks to
avoid a cash crunch because of payments for tax and license fees for
the spectrum.

India’s monetary policy will be “conditioned” by risks to global
growth even as inflation remains a “visible concern,” central bank
Deputy Governor Subir Gokarn said yesterday, adding “the pace and
magnitude of actions will be conditioned by the global uncertainty.”
The benchmark reverse repurchase rate is 3.75 percent and the
repurchase rate is 5.25 percent.

--Editors: Margo Towie, Linus Chua

To contact the reporters on this story: Shiyin Chen in Singapore at
***@bloomberg.net; Weiyi Lim in Taipei at ***@bloomberg.net

To contact the editor responsible for this story: Linus Chua at
***@bloomberg.net

http://www.businessweek.com/news/2010-05-27/nomura-bullish-on-indian-stocks-as-economy-improves-update1-.html

Insight May 27, 2010, 12:17PM EST

Why China and India Need Each Other

To speed their economic development, both countries must overcome
their mutual suspicion, write columnists Anil K. Gupta and Haiyan Wang
By Anil Gupta and Haiyan Wang

Recent rumblings that the Indian government is making it difficult for
Chinese companies to export telecom equipment to Indian operators (or
may even issue an outright ban on security grounds) is just the latest
development in a two-step-forward, one-step-back dance that China and
India are trying to master, albeit awkwardly.

From a tiny base of $2.9 billion in 2000, bilateral trade between
China and India has grown explosively over the past 10 years. It
reached $52 billion in 2008, retreated somewhat in 2009 due to the
global financial crisis, and will likely cross $60 billion in 2010. To
put these numbers into perspective, China's bilateral trade with the
entire Latin American region and the entire continent of Africa is
about $110 billion in each case. Over the past decade, China-India
trade has grown at a 40 percent annual rate, twice the pace of growth
in either country's trade with the rest of the world. China is now
India's largest trading partner. In turn, India is now China's 10th-
largest trading partner.

Consider also some of the recent developments. Chinese companies are
now the largest suppliers of equipment to India's power producers. In
March 2010, a Chinese company shipped custom-built subway trains for
use by Mumbai Metro. The same month, Kamal Nath, India's Minister of
Road Transport and Highways, noted publicly that he would like to
invite Chinese companies to play a role in developing India's high-
speed rail networks, a statement that received a very positive
response from Chinese officials.

India's exports to China consist largely of raw materials. After
Australia and Brazil, India is the world's third-largest exporter of
iron ore to China. Aside from trade, economic links between the two
countries are growing along other dimensions, too. With its
acquisition of Jaguar and Land Rover from Ford (F), Tata Motors (TTM)
now derives nearly $1 billion in revenue from the China market.
Another Tata company, Tata Consultancy Services (TCS:IN), has become
the leading provider of core banking software to China's banking
sector.

In turn, such Chinese companies as Lenovo (992:HK), Haier (1169:HK),
and Alibaba (1688:HK) have a growing presence within India, and
Shanghai Automotive (600104:CH) recently acquired a 50 percent stake
in General Motors' Indian operations. Huawei Technologies, China's
leading technology company, runs a 2,000-person software research-and-
development center in Bangalore—its largest outside China—and has
announced plans to expand it to 5,000 people over the next three to
five years.

Aside from growing trade, investment, and technology links between
companies, the Chinese and Indian governments have also begun to
harmonize and coordinate their policies in a number of areas, such as
global warming, global trade talks, and decision-making power in such
multilateral institutions as the IMF and the World Bank.

Sources of Distrust
Notwithstanding these positive developments, two major issues continue
to cause friction—India's trade deficit with China and the lingering
distrust rooted in unsettled border disputes, coupled with China's
enduring friendship with Pakistan. Even though political leaders on
both sides have been explicit in charting a pragmatic course, the
trust deficit occasionally rears its head, with negative side-effects
on the economic front.

Witness the recent rumblings regarding import of Chinese telecom
equipment and the fact that India now leads the world in filing
antidumping cases against China. In the context of this two-steps-
forward, one-step-back dance, we put forward four recommendations.

First, the China-India economic relationship is of utmost importance
to both sides. China is upgrading the structure of its exports from
labor-intensive consumer goods to technology-intensive capital goods.
As India's infrastructure and manufacturing revolution continues to
gather momentum, it will offer by far the largest market opportunity
for Chinese machinery manufacturers. Also, within 15 to 20 years,
India will almost certainly become the world's third-largest economy.
It will become increasingly difficult for Chinese companies to claim
global championships in their respective industries without a sizable
presence in India. The same logic applies to Indian companies with
global ambitions. Thus it would behoove both countries' political
leaders to stay pragmatic and level-headed and not become captive to
the extremist rhetoric of nationalists on both sides.

Second, India should cast aside its misguided apprehension about the
trade deficit with China. It is short-sighted for the Indian
government to become captive to the concerns of domestic machinery
suppliers, who in any case are unable to meet the rapidly growing
domestic demand. Short of heavenly intervention, there is no way India
can hope to become an economic power without aggressively building and
upgrading the country's infrastructure. Lower-cost machinery from
China can be a massive help to India in accelerating the
infrastructure and manufacturing revolution. In fact, if China wants
to give the machinery away for free, India should welcome it even
more. As India's infrastructure begins to become world-class, it will
easily start giving China a run for the money in the very sectors
where China presently has the lead—manufactured goods. India's
engineering capabilities are second-to-none, and its labor costs are
less than half those of China.

The Appeal of Joint Ventures
Third, India should learn from China and push to deal with it in the
same way that China deals with Western companies. The message should
be: Our doors are open, you are welcome, but we would like you to set
up joint ventures and invest in India. Such an approach will expand
the scope of economic links between the two countries to dimensions
other than trade. It will also enable the flow of Chinese
infrastructure capabilities and capital to India. Importantly,
investment ties and joint venture partnerships will also accelerate
the pace at which entrepreneurs and managers on both sides learn about
and become comfortable with each other.

Finally, reliable and trusted bridges must be built to enable Chinese
capital (in the $100 billion range) to find its way into India. China
is a mountain of capital looking for attractive investment targets.
Over the coming decade, with a target of more thatn $1 trillion in
needed investment, India's infrastructure projects may provide China
with the largest such opportunity.

In short, aside from machinery, Chinese capital could also emerge as
India's partner in accelerating the latter's infrastructure
revolution. The gulf that needs to be bridged is one of lingering
mistrust, but well-established mechanisms do exist to enable parties—
who do not trust each other—to do business with each other. One such
mechanism is for Chinese capital to go in as a "limited partner" in
India-focused infrastructure funds managed by mutually trusted third
parties. After all, if China and Japan can learn to engage in a close
economic dance, why not China and India, two countries that have led a
much more harmonious relationship for more than 2,000 years?

Anil K. Gupta (***@insead.edu ) is the Insead Chaired Professor
of Strategy at Insead. Haiyan Wang (***@chinaindiainstitute.com) is
managing partner of the China India Institute and an Adjunct Professor
of Strategy at Insead. They are the coauthors of Getting China and
India Right (Wiley, 2009) and The Quest for Global Dominance (Wiley,
2008).

All Reader Comments

'Baboo Patil'
May 29, 2010 2:39 AM GMT
'No doubt India and China need each other. No doubt combining their
resources would lead to betterment for all. No doubt, China is far
ahead of India in the economic game. Big doubt- Does China see India
as a friend or foe. Reasons -Canadian Computer Scientists discovered a
huge PLA attempt to hack Indian Security Establishment recently -
Chinese support a crazy state with a fatalistic idealogy Pakistan.
This country sent people to Mumbai to kill innocents in a normal
hotel. Everyday in J&K they try to repeat this. if the Chinese count
them as friends, they can forget about us. A well known joke in India-
Why did Pakistan take 2 weeks to explode a nuke in 98 after India.
Because the instruction manual was in Chinese. However your article is
definitely on the right track, congrats.'

'Henry L.'
May 28, 2010 5:40 PM GMT
'It''s interesting how popular media always try to propagate the myth
that India engineering is "second to none" while always try to take
cheap shot at Chia "...if they want to give it away for free...".
Overall, I do agree that both India and China must be pragmatic and
it''s in both''s interest to work together'

'cardealerrsstip'
May 28, 2010 10:52 AM GMT
'When I started to do research on my new car, I came across this page
that showed me everything I needed to know about how to buy a new car.
There are more ways than you could think of that the car dealership
makes money off of every sale; doc fees, holdbacks, finance charges,
and so many more. I went to this site and they sent me FREE
information on how to negotiate with a car dealer and how to purchase
a new vehicle below invoice. After reading everything that they sent
over to me, I was much more educated on the buying process and wanted
to share that with all of you. I simply printed the eBook, brought it
to the dealership, and I walked out of there paying less than invoice.
If you are in the market for a new vehicle, this is some must read
information and it is FREE. Take a look and please post any other
advice you might have to help others who are purchasing a new car. <a
href=http://www.newacuraincentives.com/freebook.html>Car Buying Tips
eBook</a>'

'cardealerrsstip'
May 28, 2010 9:50 AM GMT
'When I started to do research on my new vehicle, I came across this
web page that showed me everything I needed to know about how to buy a
new car. There are more ways than you could think of that the car
dealership makes money off of every sale; doc fees, holdbacks, finance
charges, and so many more. I went to this web site and they sent me
FREE information on how to negotiate with a car dealer and how to
purchase a new vehicle below invoice. After reading everything that
they sent over to me, I was much more educated on the buying process
and wanted to share that with all of you. I simply printed the eBook,
brought it to the dealership, and I walked out of there paying less
than invoice. If you are in the market for a new car, this is some
must read information and it is FREE. Take a look and please post any
other advice you might have to help others who are purchasing a new
car. <a href=http://www.newacuraincentives.com/freebook.html>Car
Buying Tips eBook</a>'

'MeThinks'
May 28, 2010 8:32 AM GMT
'Indian do have 1 advantage, because among the far east people the
closest the Indian ever be at root level are Chinese. This is the
reason why sometimes stupid comments or "not proper" behavior from the
Indians put their own overseas Indian in a very difficult situation
because lot of overseas Indian stay in Chinese influence countries
example those in south east asia. Places like Singapore, Malaysia and
Hong Kong even Taiwan. No Chinese are interested in migrating to
India. If you look at the influence at the root level alone you have
to redefine what it really means by "Chinese". Suffice to say, Indian
need Chinese more than Chinese need Indian. You gotta admit if you
ever live in sout east asia, you will know Indians tends to do things
that are more damaging to themselves than to others, but Indian thinks
its the other way round. Its is influence at root thats matter. Hard
to explain. '

'''Methinks'''
May 28, 2010 8:15 AM GMT
'''You cannot compare China and Japan with China and India. Japan,
Korea and Vietnam are consider Far Eastern people.Their culture,
society and even their looks shares similiarities. People tends to
stick together and work with those that more resemble themselves. No
matter how much they fight or disagreess it is still them. This is the
ground reality at root level. Indian are very different in terms of
culture, looks and even mentality compared to the far east.'' '

'Amen'
May 28, 2010 6:33 AM GMT
'India is a chauvinistic, corrput and protectionist country. That
makes it extremely difficult for multinationals from any foreign
country to operate. In addition to the above, Chinese companies have
to face Indian discrimination because of jealousy and paranoia against
them. The Indians don''t realize that their country needs China than
China needs them. India only accounts for a small percentage of
China''s trade, but China is India''s largest trading partner. By
excluding Chinese companies that offer the best value for money, India
will only impede its own development as it will have to pay many times
more for Western goods. Meanwhile, China can export the same captial
goods to Africa and Latin America as it has been doing. '

'IndianAuthor'
May 28, 2010 2:22 AM GMT
'The author said: India''s engineering capabilities are second-to-
none ..... vow! is this why India is so backward and has to import
virtually every weapon from Russia ? I say India''s engineering
capabilities are way behind: USA, Japan, Germany, Russia, China,
Australia, UK, France, every European country, Korea .... the list
just is endless.'

'Satish Khosla'
May 27, 2010 11:32 PM GMT
'If India manage to make itself clean, the economy will improve a
lot. '

'dan'
May 27, 2010 10:39 PM GMT
'Being a low ended software programmer requires only high school
knowledges. This is exactly where india is good at for the low cost,
low-end software IT. as far as building something that requires the
law of physics, hard-core engineerings skills, india is unable to
compete because its engineers and scientists either are lag behind or
unqualified.'
Link to this comment

'Indian engineers'
May 27, 2010 7:52 PM GMT
'"India''s engineering capabilities are second to none". Really? How
could India, a country with little to no modern infrastructure or
manufacturing to speak of, acquire such sophisticated engineering
skills? Computer programmers are not the same as civil engineers or
mechanical engineers. Since India is so lacking in infrastructure and
manufacturing, one would assume there are few engineering grads(not
counting computer engineers) as there are no jobs for them. Either
that or there are lots of unemployed engineers in India. '

'India needs to solve its own problem first'
May 27, 2010 3:43 PM GMT
'Another shallow, oversimplified article on Chindia. If western
companies can''t succeed in India, what makes you think Chinese
companies can do any better? The reason infrastructure is not more
developed in India has more to do with bureaucracy, corruption and
land acquisition than capital or engineering know how, the same
reasons why manufacturing is not more developed in India. Until the
Indian government gets its act together and solve those problems, no
country in the world can help them develop, not the US, nor Japan,
Korea...not even China.'

http://www.businessweek.com/globalbiz/content/may2010/gb20100527_319526.htm

Bloomberg

India’s Bonds Complete Worst Week in Month on Cash Concerns
May 28, 2010, 9:05 AM EDT

By V. Ramakrishnan

May 28 (Bloomberg) -- India’s 10-year bonds completed their biggest
weekly loss in more than a month on concern cash at banks will
decrease before the payment of mobile-phone license fees and corporate
taxes.

Bonds also fell today as the central bank auctioned 120 billion rupees
($2.6 billion) of government bonds due in 2015, 2020 and 2032. The
size of the central bank’s daily reverse- repurchase auctions, an
indicator of surplus cash in the system, dropped to an average of 51
billion rupees each day this week from 428 billion rupees last week,
pushing overnight interbank rates to their highest since March.

“There doesn’t seem to be an immediate solution to the liquidity
crunch in the market,” said Sanjay Arya, a treasurer at state-owned
Bank of Maharashtra in Mumbai. “There are more bond supplies ahead,
which also may tighten cash.”

The yield on the 7.8 percent bond due May 2020 rose 17 basis points
this week to 7.55 percent as of the 5.30 p.m. close in Mumbai,
according to the central bank’s trading system. The price fell 18, or
18 paise per 100 rupee face amount, to 101.75. The benchmark yield
touched their lowest in six months this week.

Nine carriers bought third-generation wireless permits in an auction,
raising 677.2 billion rupees, almost double the government’s target.

India’s central bank temporarily eased rules to help banks avoid a
cash crunch stemming from payments toward third- generation phone
services and corporate taxes.

Lenders can raise more cash by cutting their debt holdings by as much
as 0.5 percentage point below the minimum regulatory requirement of 25
percent of deposits until July 2, the Reserve Bank of India said on
May 26.

The cost of one-year interest-rate swaps, or derivative contracts used
to guard against fluctuations in India’s borrowing costs, increased
this week. The rate, a fixed payment made to receive floating rates,
rose 10 basis points to 4.96 percent.

--Editors: Sandy Hendry, Indranil Ghosh

To contact the reporter on this story: V. Ramakrishnan in Mumbai at
***@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at
***@bloomberg.net.

http://www.businessweek.com/news/2010-05-28/india-s-bonds-complete-worst-week-in-month-on-cash-concerns.html

Bloomberg

Tata Turns to Profit on Jaguar, India Truck Demand (Update1)
May 28, 2010, 1:53 AM EDT

(Updates with Tata Motors share price in fifth paragraph.)

By Vipin V. Nair

May 28 (Bloomberg) -- Tata Motors Ltd., India’s largest truckmaker and
the owner of Jaguar Land Rover, turned to full- year net income after
the luxury unit had a pretax profit and sales gained amid economic
growth.

Consolidated net income in the year ended March totaled 25.7 billion
rupees ($543 million), compared with a loss of 25.1 billion rupees a
year earlier, Mumbai-based Tata Motors said in an e-mailed statement
yesterday. That beat the 15.6 billion rupee average of 14 analyst
estimates compiled by Bloomberg.

Jaguar Land Rover had a pretax profit of 32 million pounds ($46
million) in the year as the global economy began to recover from the
worst recession since World War II. Tata reduced its workforce and cut
costs at its luxury vehicle unit and will next week open a new factory
to boost production of the Nano, the world’s cheapest car, as demand
surges in the world’s fastest- growing major economy after China.

“They have taken many steps in the right direction,” said Juergen
Maier, who helps manage 1.1 billion euros ($1.4 billion) of assets at
Raiffeisen Capital Management in Vienna. “With their local sales also
picking up, Tata Motors can continue to surprise on the upside.”

Tata Motors shares rose as much as 4.4 percent to 774 rupees in Mumbai
and were trading at 754 rupees at 10:16 a.m. American depositary
receipts of the automaker gained 8.7 percent to $17.05 in New York
yesterday.

Jaguar Sales

Jaguar Land Rover, which Tata purchased from Ford for $2.5 billion in
2008, sold 193,982 vehicles last fiscal year compared with 167,348 in
the 10 months ended March 2009, the company said in the statement.

Sales of trucks, buses, Nano cars, and sport-utility vehicles in the
year gained 32 percent to 667,971 units as expansion in Asia’s third-
largest economy spurred demand.

“Overall economic recovery, a benign liquidity environment along with
government stimulus has driven domestic demand revival this year,”
Tata Motors said in the statement.

India’s economy may grow 8.5 percent this year and the nation is
aiming to achieve an annual gross domestic product expansion of 10
percent in the “medium term,” Prime Minister Manmohan Singh said May
24.

Economic growth and higher auto sales have brought in new competition
for Tata. Toyota Motor Corp., Volkswagen AG, and Honda Motor Co. were
among carmakers that introduced 10 passenger vehicles at the Delhi
Auto Show in January. Daimler AG, MAN AG and Navistar Inc. are also
expanding their truck operations in India.

Jaguar Land Rover reduced expenses by firing 2,200 workers and
increased sales by introducing new models. Chairman Ratan Tata also
hired Carl-Peter Forster, the former head of General Motor Co.’s
European unit, as the chief executive officer. Ralf Speth took over as
the CEO of Jaguar Land Rover.

‘Big Worry’

“Europe is in the doldrums and that is a big worry for Tata Motors
since it is a big market for Jaguar Land Rover,” said Umesh Karne, a
Mumbai-based analyst at BRICS Securities Ltd., who has an
‘underperform’ rating on the stock. “Till Europe stabilizes, Jaguar
Land Rover will be under pressure.”

Tata Motors had 1.91 billion rupees in employee separation costs at
Jaguar Land Rover during the year and wrote off 1.05 billion rupees on
prepayment of a bridge loan taken to buy the U.K.-based units,
according to the statement.

The earnings were inflated by a foreign exchange gain of 844.7 million
rupees, it said. Tata Motors also benefited by selling a 20 percent
stake in its construction equipment venture to partner Hitachi
Construction Machinery Co. for 11.6 billion rupees.

--Editors: Anand Krishnamoorthy, Garry Smith.

To contact the reporter on this story: Vipin V. Nair in Mumbai at
***@bloomberg.net.

To contact the editor responsible for this story: Neil Denslow at
***@bloomberg.net.

http://www.businessweek.com/news/2010-05-28/tata-turns-to-profit-on-jaguar-india-truck-demand-update1-.html

...and I am Sid Harth

cogitoergosum

2010-05-31 08:35:05 UTC

Permalink

cogitoergosum

2010-06-01 08:53:54 UTC

Permalink

cogitoergosum

2010-06-01 17:31:57 UTC

Permalink

cogitoergosum

2010-06-02 16:47:42 UTC

Permalink

Boom-Boom-Bomb-Aye?: Sid Harth
http://navanavonmilita.wordpress.com/2010/06/02/boom-boom-bomb-aye-sid-harth-3/

Posted: Tue, Jun 1 2010. 3:18 PM IST

Two economic transitions

Economic growth is being powered by investment now and factory output
is higher than farm output for the first timeCafe Economics | Niranjan
Rajadhyaksha

The Indian economy underwent two important transitions in 2009-10,
even as it rebounded smartly despite the worst drought in two decades
and a stuttering global recovery.

The first transition is of immediate interest, as it tells us a lot
about the strength of the economic recovery and the state of the
business cycle.

The good news here: Indian economic growth at the end of the last
fiscal year was no longer dependent on government support alone. The
downturn that came in the wake of the Western financial crisis saw a
collapse in private sector activity. The Indian government had already
boosted spending a year ahead of the national elections in May 2009,
and this politically inspired profligacy—later cleverly repackaged as
a stimulus programme —kept domestic demand and economic growth on
track though it blew a hole in public finances.

Also Read Niranjan Rajadhyaksha’s previous columns

As with most other countries, government spending was a major driver
of Indian growth during the downturn, with net exports also
contributing a fair chunk in some quarters, thanks to the savage
import compression seen in the last three months of 2008 and the first
three months of 2009.

The key task right now is to shift away from dependence on government
spending and towards a greater role for private consumption and
investment. The fourth quarter national output numbers released by the
government on Monday offer some good news on this score. Almost half
the economic growth in the fourth quarter of the last fiscal year came
from investment activity. Net trade accounted for another third. The
contribution of government final consumption spending was a slim 2.2%.

The pickup in investment activity between January and March and the
earlier reduction in inventory suggest that industrial recovery is
well on track. Investment activity too has been growing smartly. The
nature of this economic recovery is in sharp contrast to the
bounceback we saw in India after the Asian economic crisis of 1997 and
1998. The recovery then was led by private sector consumption spending
rather than investments. It took India at least five years from that
trough before capital spending accelerated after 2003.

That we seem to be leaving the recent downturn on the back of robust
investment growth is an indication of the strength of the current
recovery.

One issue that needs to be watched with care is whether there are
enough domestic savings to fund the investment acceleration. I had
pointed out in an earlier instalment of this column that household
savings are unlikely to cover more than half of the $35 billion or so
of fresh capital that large companies will need in this fiscal year,
thus making them dependent on volatile foreign capital flows (see Café
Economics, 5 May 2010).

The point can be extended to the macroeconomic level. Inadequate
domestic savings for private sector investment activity could lead to
a growing gap between savings and investments. We are already seeing
signs of this in terms of the widening current account deficit, which
is larger than what India needs at a time of global economic
volatility. The surest way for more domestic savings to be released
for the private sector is a sharp drop in the government revenue
deficit. That is still at best an unfinished task.

The second big transition that I mentioned earlier is structural
rather than cyclical. The last fiscal was the first in which the value
of factory output was higher than the value of farm output. India was
a predominantly agricultural country when it broke free of colonial
rule. The role of agriculture in economic output has diminished since
then, but the early dreams of an industrial India remain unfulfilled.

The revised estimates for 2009-10 show that the value of output in
agriculture, forestry and fishing at constant 2004-05 prices was
Rs6,51,901 crore while the corresponding number for manufacturing was
Rs7,19,975 crore. This is the first time since data has been available
when manufacturing output was higher than output in farming, forestry
and fishing. The two numbers were more or less equal in 2008-09,
according to the government statistics office’s quick estimates.

The gap will widen in the years ahead, as industrial growth powers
ahead of agricultural growth. India still has a small industrial
sector compared with China, but it is no longer smaller than the farm
sector. The well-known problem with this structural change is that the
change in the composition of Indian output is not being matched with a
change in the structure of employment. Too many Indians are still
stuck in farm jobs. How to ensure that industrial jobs grow in tandem
with industrial output is a challenge that the second Manmohan Singh
government shows no signs of tackling.

After all, it believes that loan waivers and entitlement programmes
will keep winning it elections.

Niranjan Rajadhyaksha is managing editor of Mint. Your comments are
welcome at ***@livemint.com

http://www.livemint.com/2010/06/01201559/Two-economic-transitions.html

May 26 2010. 11:27 AM IST

The two Manmohan Singhs

Finance minister Manmohan Singh seemed to project a different idea of
inclusive growth than the Prime Minister doesCafe Economics | Niranjan
Rajadhyaksha

The first anniversary of the second United Progressive Alliance
government has brought forth a stream of commentary about its hits and
misses in national security, foreign policy and economic management.

In his first domestic press conference after the Congress-led alliance
came back to power in May 2009, Manmohan Singh reiterated his
commitment to inclusive growth in the opening remarks. It is a mistake
to believe that Manmohan Singh has discovered the poor only recently.
He has mentioned them in most of his important speeches through the
years, though there have been subtle yet important differences in what
he thought was a good way to help them beat poverty. This is as good a
time as any to examine how the very concept of inclusive growth has
evolved over the past two decades and what this has meant in terms of
public policy.

The Manmohan Singh who was the finance minister in the Narasimha Rao
government seemed to project a very different idea of inclusive growth
than the man who now runs the government does. In the course of his
stunning budget speech in 1991 that basically announced an end to many
decades of statist mismanagement of the economy, Manmohan Singh had
said: “A vast number of people in our country live on the edges of a
subsistence economy. We need credible programmes of direct government
intervention focusing on the needs of these people. We have the
responsibility to provide them with quality social services such as
education, health, safe drinking water and roads.”

And then had carried on in the same vein in his 1992 budget speech:
“Our longer-term objective is to evolve a pattern of production which
is labour-intensive and generates larger employment opportunities in
productive, high-income jobs, and reduces the disparities in income
and wealth between rural and urban areas.”

The main lesson from these statements is that the government should
create conditions whereby the poor can participate in economic growth
by having access to public goods and employment opportunities in
industry and services. The long-term task that Manmohan Singh clearly
outlined in his 1992 budget speech was to create conditions that would
allow the poor to move out of low-productivity jobs and into high-
productivity jobs. The latter is most likely to be achieved when less
stringent labour laws allow firms to hire and let go of workers, which
is why labour market reforms were such an important part of the early
reforms wish list, though they were later abandoned.

This early vision of inclusive growth is clearly at odds with the one
embraced by the ruling alliance. It is no longer about creating public
goods and productive jobs; the focus now is on entitlements. Income
redistribution through public spending has its attractions and the
politically attractive programmes to guarantee people jobs, food and
education act as useful safety nets for the poor.

The question of how a fiscally responsible state can fund these
programmes on a narrow tax base has never been adequately answered.
Even the fiscal correction that was announced in the latest budget has
left the revenue deficit at an unsustainably high level, a brute fact
that finance minister Pranab Mukherjee coyly did not mention in his
budget speech.

But the more troubling question is whether the current entitlement
schemes will come in the way of the essential transition of millions
of poor Indians from dead-end farm work to jobs in the more productive
parts of the economy. Interventions such as the Mahatma Gandhi
National Rural Employment Guarantee Scheme will put a floor under
wages that is unrelated to productivity and hence inevitably distort
labour markets.

The experience across Asia is that heavy investments in physical and
human capital, as well as job creation in labour-intensive
manufacturing and services, are the surest ways to beat mass poverty.
Look at Taiwan, South Korea, Thailand and now China, for example.

An explicit policy to make growth inclusive is essential. The
Commission on Growth and Development headed by Nobel laureate
economist Michael Spence—and with Planning Commission deputy chairman
Montek Singh Ahluwalia as a member—has argued in its 2008 report that
inclusiveness has several facets such as equity, equality of
opportunity and “protection in market and employment transitions”.
Governments thus have to be sensitive to both market outcomes and
access to opportunities.

A strategy of inclusive growth is needed to manage this transition,
but the better way to do so is through job creation rather than income
redistribution. Finance minister Manmohan Singh seemed more focused on
the former, while Prime Minister Manmohan Singh seems to bank more on
the latter. India would do better if he resurrects some of his old
views.

Niranjan Rajadhyaksha is managing editor of Mint. Your comments are
welcome at ***@livemint.com

http://www.livemint.com/2010/05/25212134/The-two-Manmohan-Singhs.html

Posted: Tue, May 18 2010. 8:32 PM IST

India’s rentier state

Incomes from natural resources and asset sales should not be used to
correct fiscal and revenue deficitsCafe Economics | Niranjan
Rajadhyaksha

The 3G bidding frenzy and higher prices for part of the 2G bandwidth
being used by phone firms could land the Indian government a bounty
that will help it meet its fiscal deficit target. Is this good news or
bad?

It is undoubtedly good news for the finance minister and his team.
Investors across the world have become more sensitive to weak public
finances since the Greek crisis. The 13th Finance Commission headed by
Vijay Kelkar has already set a clear road map to bring down the fiscal
deficit and public debt in India. Pranab Mukherjee also indicated in
his February budget speech that fiscal correction is essential to
maintain economic stability.

But there are two problems as well. First, the government should not
be depending on one-time bonanzas such as revenues from spectrum
auctions to put its finances in order, because politicians would then
have little incentive to curb wasteful spending or plug tax loopholes.
There will always be lottery winnings to balance the books.

Rental income from natural resources and asset sales should ideally be
ring-fenced, and used for specific purposes such as paying off public
debt, funding infrastructure or any such measure that will improve the
competitiveness of the Indian economy. The hard work of bringing down
the fiscal deficit and eliminating the revenue deficit should be done
through higher tax revenues and lower public spending. The National
Investment Fund that was launched to channel privatization proceeds
into productive uses has been given a quiet burial.

The other problem is that the government will have an incentive to
maintain permanent shortage in the natural resources it controls, be
it in the air (telecom bandwidth) or under the earth (metals and
ores), so that rents can be high. It is the old monopolist game:
restrict supply to get high prices.

The bandwidth war is an interesting example. There is little doubt
that many of the problems in the sector can be laid at the door of
telecom minister A. Raja, who has done immense harm over the past six
years. However, that is not all.

Here’s how the Financial Times’ Lex column caustically put it:
“India’s guide to reducing a budget deficit: allow a dozen or so
mobile phone operators to compete in your country, block market
consolidation and repeatedly postpone the release of third generation
spectrum, and then as competition descends into a price war, auction
off far fewer spectrum chunks than potential bidders. Finally, watch
as 3G spectrum prices go through the roof.” This could be a useful
case study for game theorists to examine.

Another telling example is oil and gas. The rich KG D6 gas field being
operated by Reliance Industries has been the epicentre of the
prolonged legal battle between the two Ambani brothers, so less
attention has been paid to its ability to transform our public
finances. The gas fields are expected to yield the Indian government
royalties and profit petroleum around $28 billion over their life,
according to independent estimates by investment banks. And there will
undoubtedly be more such resource revenues from mines and hydrocarbon
reserves.

India does not suffer from the infamous resource curse, a malady that
strikes many nations that are rich in natural resources. Huge tax and
other revenues from these gifts of nature leave governments with very
little incentive to nourish the private sector or make an economy
competitive. Money from resources can be thrown at the people to keep
them in line.

India by no stretch of imagination resembles an Iraq or an Iran.
However, we could be headed to a milder version of the malady, where
revenues from privatizations and natural resources help the government
hide deeper economic imbalances. The government will then have reason
to design policy with a view to revenue maximization rather than
welfare. We saw this in a different context in some recent
privatizations, where retail investors stayed away because the
government was out to get the best price rather than encourage wide
ownership of public sector companies.

Hong Kong is an unusual example of a country that maintains a key
natural resource in permanent short supply and then conducts lucrative
auctions to maximize government revenues. That resource is land.
Despite its well-deserved reputation as a free-market haven, the
island city has a land market controlled by a government monopolist.
So it is not only repressive regimes such as the oil-rich states that
behave in this manner.

There are strong reasons why the government should leave the telecom
sector to private companies, continue to aggressively sell shares in
public sector units and offer mining rights to the highest bidder. The
money should be used to build infrastructure or repay public debt
rather than balance the government’s books. A strong dependence on
monopolistic rents may not be such a good thing in the long term.

In short, the Indian state should not behave like a rentier.

Niranjan Rajadhyaksha is managing editor of Mint. Your comments are
welcome at ***@livemint.com

http://www.livemint.com/2010/05/18203229/India8217s-rentier-state.html?d=1

Posted: Wed, Jun 2 2010. 12:23 AM IST

Stage set for BPL census pilot project

It is the first time that a pilot project is being undertaken ahead of
the BPL census to be launched in April 2011Ruhi Tewari

New Delhi: The stage is set for the launch of the census to identify
families below the poverty line (BPL) after all the stakeholders
signed off on the pilot project covering 90,000 villages to be started
next month.

Poverty focus: Planning Commission member Abhijit Sen. Madhu
Kapparath / Mint

It is the first time that a pilot project is being undertaken ahead of
the BPL census to be launched in April 2011. The census, which will
cover all of rural India, is significant as it is part of the
government’s efforts to push for inclusion through better targeting of
subsidies.

Progress on the census had been delayed because the state governments
had raised objections, particularly with respect to the choice of
parameters to identify the poor.

At a meeting convened by the rural development ministry on Tuesday,
representatives of the Central and state governments approved a plan
that will conduct a census of 260 villages across the country. The
pilot will, besides testing all the parameters to identify the poor,
also explore integration with the government’s ambitious unique
identity (UID) project or Aadhaar.

“This is in the background of the recommendations of the N.C. Saxena
committee which were circulated to the various states and also
includes the suggestions received from (economist) Jean Dreze... The
pilot project is basically to test the questionnaire,” said Planning
Commission member Abhijit Sen, who attended the meeting.

By seeking to integrate the process with the UID programme, the
government wants to minimize leakages and ensure targeting. It is,
however, potentially controversial as it could lead to the exclusion
of people from the existing BPL list.

The BPL card is used to obtain benefits under the government’s poverty
alleviation programmes as well as gain access to cheap foodgrains from
the public distribution system (PDS), subsidized health insurance and
scholarships.

Specifically, the card is a precondition to availing of facilities of
social welfare programmes such as the Rashtriya Swasthya Bima Yojana
(national health insurance scheme) and the Indira Awaas Yojana (a
housing scheme for the rural poor), as well as various state
government programmes.

The pilot survey “will provide an all-India comparison and also
provide some flexibility to the states for the BPL census”, Sen said.
“Some criteria are mindlessly included in the census which leads to
absurd results like in the last BPL census. The survey will help to
see if some recommendations could actually be used at the ground
level.”

The government has already earmarked funds for the census by providing
for Rs300 crore in the Budget for 2010-11. More funds are expected to
be allotted in next year’s budget.

The pilot project seeks to cover all eventualities and will include
four villages in every agro-climatic region of the country (as is the
normal practice with the National Sample Survey). Further, villages in
the two poorest and richest districts will be covered. Also, the pilot
will, with the help of the Public Health Foundation of India, seek to
identify malnutrition levels, which can be used to qualitatively
identify the poorest.

While India’s apex planning body, the Planning Commission, estimates
the level of poverty, the census to identify BPL households is
undertaken by the rural development ministry. The ministry carries out
a census based on 13 socio-economic parameters to identify BPL
families.

The Planning Commission’s estimate puts the number of BPL families at
62.5 million, while state governments say the number is closer to 107
million.

The rural development ministry had set up a committee under former
Planning Commission secretary Saxena to review the methodology of the
census and resolve the conflicting estimates.

The Saxena panel’s methodology takes a three-pronged approach: to
identify those who are to be excluded, to ensure that poor and
vulnerable sections are automatically included, then grade these
households and find out the poorest among them.

According to people close to the development who did not want to be
identified, the pilot projects will conduct a census of the entire
village to identify the poor and check whether the criteria laid out
in the Saxena panel report as well as additional ones, some of which
have been proposed by the states, lead to a match with estimates.

All indicators suggested by the Saxena panel will be tested by the
pilot project to determine what would be the most suitable methodology
for the BPL census. By covering the entire rural population, the
census is expected to be one of the biggest registrars for the UID
project, which seeks to create a national identity for every Indian
citizen.

An expert, however, believes linking the two might not serve the
purpose.

“The BPL list is often not very accurate. People who are truly poor
sometimes get left out,” said Vijay Mahajan, chairman of Hyderabad-
based Basix group, which works to improve the livelihoods of the rural
poor. “These errors are very well known, so to use the BPL list as a
source for UID is just compounding the same mistakes all over again.”

Asit Ranjan Mishra and Karen Leigh contributed to this story.

***@livemint.com

Tags - BPL Census Aadhaar Planning Commission Rashtriya Swasthya
Bima Yojana Indira Awaas Yojana National Sample Survey

http://www.livemint.com/2010/06/01234304/Stage-set-for-BPL-census-pilot.html

Posted: Thu, May 27 2010. 12:10 AM IST

Poverty’s definitional woes

Poverty estimates stumble on differing definitions of the household
for statistical and policy purposesHimanshu

Officially, the Planning Commission accepted the Tendulkar committee’s
report on revision of poverty estimates after the empowered group of
ministers on food security asked the commission to issue a final
estimate of poverty in the country. Despite the commission’s
acceptance, the ministerial group asked it for another estimate of
poor households.

Photo: Indranil Bhoumik / Mint

The simple reason is that the Tendulkar committee’s estimate— or any
estimate by the Planning Commission—shows the percentage of poor
people in each state. The number of poor households has never been
released.

In theory, once the percentage of poor people is known, it should be
straightforward to arrive at the number of poor households. In
reality, the process is complicated by the fact that households are
defined differently for different purposes. While the National Sample
Survey Organisation and the census recognize a common kitchen as the
basis of identifying a household, the below-poverty-line (BPL) census
and the Mahatma Gandhi National Rural Employment Guarantee Scheme
(MGNREGS) use the definition of a nuclear household. The extent of
variation due to this difference is huge.

Take, for example, Bihar— among the poorest states in the country.
Food ministry data says Bihar has 6.42 million BPL/AAY (Antyodaya Anna
Yojana) cardholders. Since the existing number of BPL/AAY
beneficiaries is fixed, according to 1993-94 poverty estimates, this
amounts to 54.96% of households in Bihar. This percentage— actually a
percentage of the poor population—is then converted to the number of
households using the estimated household number in Bihar as 11.9
million in 2000. This estimate is arrived at using the census
population estimate of Bihar at 73.1 million and an average household
size of 6.16. That means the Bihar government has almost exhausted the
number of beneficiary households that the BPL census identified
correctly or incorrectly.

Of course, there were many targeting errors in this process. When the
Bihar government undertook the BPL census (after a Supreme Court stay
had been lifted in 2006) it found that the total number of households
to have been surveyed was 22 million, with the number of beneficiary
households at 13 million. As a result, the state government had to
exclude almost half of the poor correctly identified. This was almost
double the existing number of households that the food and rural
development ministries recognize as poor. The average household size
reported by the state’s BPL census turned out to be 3.99—much lower
than the 6.16 estimate used by the Indian government.

The Bihar government has pointed this out and its chief minister has
been critical of the Planning Commission’s poverty estimate. However,
the problem lay with the estimate of household size, which in turn led
to underestimation in the number of households in the state. Had the
number of households in the state been correctly recognized as 22
million based on the average size of 3.99 and adjusted population
estimate, all the beneficiaries identified by the state government
could have been given their entitlement. That is, the state government
should have insisted on correcting the estimate of household size and
total number of households in the state.

Now that the poverty estimates have been corrected, does it make a
difference? In the case of Bihar, it unfortunately does not. The new
poverty estimate based on the Tendulkar committee report for the state
is 54.5% of the population— roughly the same as the the old poverty
estimate of 1993-94.

The real problem lies in the different ways households are defined for
statistical and policy purposes. This is something that has been
imposed by the programme design, be it MGNREGS or the public
distribution system, where entitlements are based on households
irrespective of their size. It, therefore, makes sense for households
to show themselves as two different units even though they may be
sharing the kitchen.

This would not have been a major problem if it were just a convenience
of nomenclature and definitions. But this has an impact on actual
services obtained, particularly for the poor, who are forced to remain
outside the purview of programme benefits because of arbitrary caps
assuming statistical estimates of household size. But this also has
the adverse social consequence of young married people not wanting to
live with their parents because it deprives them of government
benefits, or siblings being forced to split households to avail of
social benefits. It will then not be unfair to say that our programme
designs have contributed to splitting households for pecuniary
benefits. While nuclearization has often been a subject of enquiry for
sociologists, it would be interesting to analyse the impact of public
programmes-driven division of households.

There is also a message here for the policymakers: It would be much
better to design basic entitlements such as employment and food on an
individual rather than household basis. For the proposed right to food
programme, this would not only take care of the unnecessary debate on
the 25kg versus 35kg entitlement, it will also mean that food subsidy
is utilized properly. Even more importantly, it will be in the true
spirit of a right that is an individual and not a household attribute.

Comments are welcome at ***@livemint.com

Himanshu is an assistant professor at Jawaharlal Nehru University and
a visiting fellow at Centre de Sciences Humaines, New Delhi.

Tags - Planning Commission Poverty BPL MGNREGS Antyodaya Anna
Yojana

http://www.livemint.com/2010/05/27001014/Poverty8217s-definitional-w.html?d=1

Posted: Fri, May 28 2010. 10:44 PM IST

A grass-roots challenge to the UID project

Awareness is the first challenge the ambitious programme has
encountered at the grass-roots level and while it will encounter more
challenges, this is something the UIDAI, which oversees Aadhaar, needs
to address quickly as it increases the scale and scope of its
effortKaren Leigh

Kibbanahalli, Karnataka: One humid day in May, in a small building off
the main road, Manjola, a farm worker, sat at a small wooden table,
pressing her fingers, one at a time on an electronic pad that scanned
and stored her prints.

She is among the first Indians to be enrolled in the unique identity
programme (UID), or Aadhaar, which seeks to provide at least 600
million residents with a universal government identity by 2011.

The only problem is that Manjola knows nothing about the programme in
which she is being registered.

Loading video...

Awareness is the first challenge the ambitious programme has
encountered at the grass-roots level and while it will encounter more
challenges, this is something the Unique Identification Authority of
India (UIDAI), which oversees Aadhaar, needs to address quickly as it
increases the scale and scope of its effort.

Manjola hadn’t heard of Aadhaar or UIDAI.

“No one has told me anything about it. I don’t know who’s in charge of
it,” she said, leaning forward in her chair as her retinas are
scanned, the second and final step in the biometric data gathering
process. “My children’s school teacher told me there was a programme
to give my children an ID, so I came because I knew that would be good
for them.”

Pilot project: A Kibbanahalli resident (top) gets her photo taken for
enrolling in Aadhaar; a biometric device is used to scan fingerprints.
Most villagers have limited knowledge about the programme’s benefits.
Hemant Mishra/Mint

Aadhaar met its initial target in this part of Karnataka; at least
2,200 residents of Kibbanahalli—and 25,000 in the Tumkur district—
registered for the 12-digit Aadhaar numbers in a “proof of concept”
study, a test ahead of the programme’s national roll-out, from August
through next February.

Similar tests were carried out in Andhra Pradesh and Bihar.

The month-long Tumkur project, which concluded on Thursday, showed two
or three clerical mistakes per 100 registrants.

“There will be mistakes because it’s early on,” said Raju S.K., a
teacher who participated in both rounds of the test. “My name was
written wrong; a wrong initial.”

But the larger issue, if Tumkur is any indication, is awareness,
especially among the rural poor whom UIDAI chairman Nandan Nilekani
has said will be the programme’s biggest beneficiaries.

The UIDAI’s communication and awareness team plans a large-scale
education push for the weeks leading up to the test’s start in August.

But with limited trained personnel on the ground, it could be an
uphill battle.

Vijay Mahajan, chairman of Hyderabad-based Basix, which works to
promote microfinance innovation in rural areas, said that in the
absence of a structured education programme, word of mouth among rural
residents would be crucial.

“The first few million people who get a UID will end up educating
their neighbours, and slowly it will spread,” he said. “They won’t
know it conceptually, or just because they enrolled. They’ll know
about it after they’ve had some experience using it.”

In Kibbanahalli, the only visible sign of Aadhaar’s presence was one
UIDAI sign, set far back from the road at the door to an enrolment
site.

At another centre where data was being collected, there was no signage
and no lighting. Several residents waiting in line to have their
biometrics recorded said they didn’t know what a unique identity was
and had never heard of Nilekani or the project.

During the early stages, turnout was so thin in Kibbanahalli that
local officials began doing everything in their power to draw in
registrants.

Adarsha S.S., a programme supervisor in Tumkur, said this included the
practice of telling residents to bring their government-issued ration
cards to one of the Aadhaar enrolment sites, without first telling
them that once there, their fingerprints and retinas would be scanned
for a UID.

“People came on a small scale before, during the first round,” he
said. “Then we told them to bring their ration cards, and they began
coming more.”

Nanja Muri, the village accountant in Kibbanahalli, highlighted the
dearth of manpower in rural areas.

He said that only district revenue inspectors—in Tumkur, he added,
there is only one overseeing 48 villages—had been sufficiently trained
by government officials to educate residents, and that village
accountants in the district had taken it upon themselves to spread the
word among residents.

Muri’s own grass-roots effort included a small musical band that
walked the streets, drawing people out of their homes to explain the
fundamentals of UID and provide them with application forms.

Kathye Yini, a local housewife who had just been registered for a
unique identity, said she had learned of the programme through Muri,
who knocked on her door one night.

She added that it was her neighbours—and not government officials—who
were responsible for her limited knowledge of the programme’s
benefits.

When asked about the impact a UID would have on her life, she only
knew that, unlike the ration and voter ID cards she currently
possessed, a UID would give her proof of address if she travelled
outside Karnataka.

UIDAI officials are not surprised about the initial responses.

“It’s a slim organization compared to the width and breadth of India,”
said K.K. Sharma, assistant director general of UIDAI’s regional
office in Bangalore. “We were expecting teething mistakes.”

He said that by August, fewer than 30 UIDAI staffers would be working
in the regional headquarters in Bangalore, overseeing three states,
two Union territories and at least 150 million residents.

Sharma declined comment on the issue of lack of publicity.

However, an official, who did not want to be named, said that the
proof of concept was only meant to be a technical test of the
biometric machines and overall enrolment process, and not meant to be
about explaining the programme to people. In the next month, UIDAI’s
awareness council will be submitting its report on the communication
strategies it should employ to increase awareness among rural
residents.

Sunil Abraham, executive director of the Centre for Internet and
Society, who has opposed the programme as well as the government’s
decision to have Nilekani head it, said it was troubling that
residents did not comprehend why they were providing their personal
information.

Basix’s Mahajan said that given the advantages the programme would
eventually bestow on them, people would learn, though it would be of
their own accord.

“When the first woman to be registered for a UID in a village sticks
her finger on a biometric device and is able to access banking with
it, she’ll get excited and will tell her friends,” he said. “And thus
UID will spread.”

***@livemint.com

Tags - Find More Articles On: UID Unique Identity Programme UIDAI
Karnataka Biometric Device Fingerprints Aadhaar Video Story

http://www.livemint.com/2010/05/28215929/A-grassroots-challenge-to-the.html?d=1

Posted: Wed, May 19 2010. 12:25 AM IST

Cabinet allows use of biometrics for UID

Iris scans to be collected on a national basis for the first time; UID
numbers to be issued from AugustSanjiv Shankaran

New Delhi

The government has approved the collection of an individual’s
biometric attributes, including iris scans, as part of the unique
identity (UID) programme, also known as Aadhaar.

On track: Nandan Nilekani. Rajkumar / Mint

It will be the first time that such scans will be collected on a
national basis and used for the government’s ambitious plan to provide
an ID to residents of India. Apart from a photograph, the ID will also
contain the person’s fingerprints.

The cabinet committee on Unique Identification Authority of India
(UIDAI) has given an “in-principle” approval to the template that will
be used to collect biometric and demographic information, Nandan
Nilekani, chairman, UIDAI, told a press conference after the cabinet
meeting.

According to Nilekani, the approval was in-principle as there were “a
lot of implementation issues”.

UIDAI plans to place draft legislation in public domain in a few days
giving details of the legal framework for its operations.

Listen to an explainer on UADAI. Click here

The cabinet committee also approved iris scans for children from five
to 15 years of age, which will be part of the ongoing census.

UIDAI, which is attached to the Planning Commission, plans to use
existing databases such as the National Population Register (NPR) to
provide residents with a 12-digit unique identity number.

According to a strategy report on UIDAI’s website, “biometric
attributes of the residents are going to be used as the basic
signature for deduplication and ensure uniqueness”.

The UID number is a 12-digit lifetime number, but biometric
information contained in the database would have to be regularly
updated. Children may have to update their biometric information every
five years, and adults every 10 years, the strategy report said.

The unique identification would be used by both Central and state
governments to enhance the effectiveness of social welfare schemes by
ensuring the benefits reach the target population. According to
Nilekani, UIDAI has signed a memorandum of understanding with nine
states and Union territories to extend the project there.

Harsh Mander, a former bureaucrat who is now the Supreme Court
commissioner on food security, is sceptical about the impact UID would
have on the government’s social welfare programmes. According to
Mander, the aim of bringing the poor into a database through a unique
number was at odds with the behaviour of the people the project sought
to help.

“They (the vulnerable sections) survive by staying out of the state,”
Mander said. The most vulnerable fear that getting into the state’s
records would endanger them in future, he added.

The first set of UID numbers will be issued between August 2010 and
February 2011, a government press release said. Later, 600 million UID
numbers will be issued in the next five years, the release said.

UIDAI will carry out its mandate through intermediaries known as
registrars. Registrars would be entities such as NPR’s Registrar
General of India and other government entities which have an existing
database. In addition, private registrars will also collect
demographic and biometric data. The cabinet’s approval of the template
on Tuesday will allow all the registrars to gather data in a
standardized manner.

The ongoing data collection for national census is already collecting
demographic data for the UID project. This includes basic information,
including names and addresses of residents.

According to Nilekani, the UID project will eventually function as a
back end where an individual’s identity can be verified by any agency
which needs to do that. According to the strategy paper on the
website, UIDAI’s revenue model would be based on collecting a fee from
agencies that want to verify the identity of an individual.

UIDAI was constituted by the government in January 2009 and the
cabinet committee to deal with it was set up in October.

***@livemint.com

Tags - Nandan Nilekani UIDAI Manmohan Singh National Population
Register Podcast Audio story

http://www.livemint.com/2010/05/18152140/Cabinet-allows-use-of-biometri.html?d=1

Posted: Thu, Apr 29 2010. 9:28 AM IST

India ID project fights dust, doubt

The project is expected to better target and reduce waste in India’s
multi-billion dollar welfare schemes, including pensionsRina Chandran/
Reuters

Mumbai: As the government gears up to build the largest biometric
database in the world with the aim of providing most of its 1.2
billion citizens a Unique Identification (UID), perhaps the biggest
challenge is smudged fingerprints.

The UID Authority of India will issue the first UIDs linked to a
person’s demographic and biometric information between August and
February, and issue about 600 million such IDs over the next five
years to help verify citizens quickly and cheaply. It will be a boon
for companies and government agencies alike.

It would give millions of Indians the means to open a bank account,
buy a mobile phone, and access welfare services easily, while saving
companies and government agencies the expensive and time-consuming
process of verifying and establishing identities.

Also Read | ID programme faces first challenge over privacy, data

The project, which has drawn the interest of mobile services firms and
technology giants including Tata Consultancy Services, Microsoft and
Google, is expected to better target and reduce waste in India’s multi-
billion dollar welfare schemes, including pensions.

“There is a concern that a lot of the welfare benefits that the
government provides don’t reach the intended beneficiaries because you
can’t correctly identify them,” said Ajit Ranande, chief economist of
the Aditya Birla Group in Mumbai.

“The UID will hopefully enable better targeting, identification of
beneficiaries, and plug leakages. If you can improve targeting by even
5-10%, it would be a big deal.”

Previous governments have also considered creating unique ID numbers.
Yet it is the Congress-led government, with its focus on inclusive
growth, that has pushed the envelope by setting up the UIDAI office
and allocating some $444 million to the UID project.

The UID project, named “Aadhar”, is estimated to cost some $2.2-$4.4
billion to implement, but will bring in an equal amount in savings
annually from the elimination of duplicate and false identities, said
Samiran Chakraborty, head of research at Standard Chartered.

“The programme may have a significant positive impact on India’s
growth and fiscal health in the years to come,” he said.

But with an estimated 75 million people homeless and millions others
criss-crossing the country as migrant workers with little or no
documentation, the UIDAI has its work cut out.

UIDAI is working with Census 2011 survey, as well as local government
bodies and NGOs to reach millions, including an estimated 410 million
people living on less than $1.25 a day, a blot on India’s otherwise
compelling growth story.

“It all boils down to a lack of proper identity, and the exclusion is
debilitating,” said Nandan Nilekani, UIDAI chief.

“At the same time, India is clocking 8% growth. So it is clearly
creating a huge divide; if we want people to be included in the growth
story, we need to recognize the people the system doesn’t recognise,”
said Nilekani.

Calluses, burqas

The average Indian citizen typically has multiple identity cards,
including a voter ID, a tax ID, a ration card, passport, driving
licence and others. Yet there is no central database, which has
created “phantoms” on voter lists and welfare schemes.

Duplicates and fake identities abound, and millions of the poor have
no identification at all, which could deny them “a basic right to an
acknowledged existence”, says Nilekani.

Nilekani, the former chief of No. 2 software firm Infosys
Technologies, was handpicked by Prime Minister Manmohan Singh to head
up UIDAI after he wrote extensively on the need for a unique ID in his
book, ‘Imagining India’, published in 2008.

“Acknowledging the existence of every single citizen automatically
compels the state to improve the quality of services, and immediately
gives the citizen a fairer, more equitable access to services,” said
Nilekani.

“This recognition creates a deep awareness of rights, entitlements and
duties,” he said.

Beyond developing the smart cards, the challenge is making the back-
end infrastructure secure and scalable, ensuring privacy and
integrating agents who issue the numbers, said Nilekani, who has the
rank of a cabinet minister.

Among the biggest challenges is securing “clean” fingerprints as part
of the biometric identification that will also include an image of the
face and of the two irises, in the dusty conditions of rural India,
where nearly two-thirds of the population lives.

Frequent power outages are another hurdle, said Sreeni Tripuraneni,
chief executive of 4G Identity Solutions, which is conducting pilot
tests in the southern state of Andhra Pradesh. “Most biometric
technology was developed for clean, air-conditioned environments, but
dust is a big problem in the villages and we sometimes get multiple
impressions, or residue.”

“We also have to carry our own generators for power,” said
Tripuraneni, whose firm developed an algorithm to remove “noise” from
the images, and modified the software for use in India.

Operators have also been trained to deal with labourers with deeply
calloused hands, for example, or women wearing burqas, said
Tripuraneni, who calls the UID “the mother of all databases”.

The biggest risk is losing political steam, said Ranade, which would
pull the plug on resources and crucial support.

“But perhaps we shouldn’t be so sceptical about it. In this case, we
have not lived in a world where every Indian has a unique ID, so we
can only imagine what that would be like.”

Chandra, a maid servant in Mumbai who gives her earnings to her
employer for safekeeping, is already imagining that world.

“I can finally get a cell phone and open a bank account in my name. It
will make a big difference to me,” she said.

Tags - UID Aadhar Identity Nandan Nilekani India READ MORE
ARTICLES BY: Rina Chandran/Reuters

http://www.livemint.com/2010/04/29092832/India-ID-project-fights-dust.html?d=1

Posted: Wed, Apr 28 2010. 1:15 AM IST

ID programme faces first challenge over privacy, data

The government is looking to the ID programme to help ensure that
various welfare programmes reach the poorVenkatesha Babu and Karen
Leigh

Bangalore/New Delhi: In the first significant challenge to the
government’s ambitious programme to give more than one billion Indians
a unique identification number, a group of NGOs (non-governmental
organizations) are planning to take the government to court over a
range of issues, including concerns over privacy and the safety of
information.

Loading video...

About 100 NGOs, including Alternative Law Forum, Centre for Internet
and Society, People’s Union for Civil Liberty and Slum Jagathu, have
come together to oppose the implementation of the project in its
current form, Mathew Thomas, general secretary of Citizens’ Action
Forum, said in Bangalore on Wednesday.

The Unique Identification Authority of India (UIDAI) “is not a
statutory body, not having been created by any Act or under any law,
but by executive fiat”, he said. “It is set up as an appendage to the
Planning Commission. It cannot be scrutinized either by Parliament or
the Comptroller and Auditor General.”

In what had been expected to become a hurdle to the project, those
against it are citing data protection and privacy, factors that led to
the failure of a similar initiative in the UK.

“The government could not prevent recent cyber attacks by Chinese
hackers on its own websites. What guarantee is there that a
centralized database would be safe?” said Sunil Abraham, executive
director of Centre for Internet and Society, one of the groups opposed
to the ID programme, which has been named Aadhaar. “Also, data
collected might be misused to discriminate against minorities and
other vulnerable sections of society.”

R.S. Sharma, UIDAI director general, declined to comment in detail.

“Everything is transparent. Whatever we have been doing, we have been
putting it on our website,” he said. “As to their specific complaints,
I will not be able to respond over the telephone.”

The NGOs are also questioning the cost of the project and why no
feasibility study was conducted. UIDAI is headed by Nandan Nilekani,
co-founder and former chief executive of Infosys Technologies Ltd,
India’s second largest software firm.

“First, the government has to respond how the chairman was chosen and
appointed,” Thomas said. “Would the same person in his earlier
organization authorize a project involving thousands of crores without
a preliminary project report on feasibility? Public money is being
spent without accountability.”

Nilekani wasn’t reachable for comment.

The government is looking to the ID programme to help ensure that
various welfare programmes reach the poor. This objective would be
difficult to achieve, the NGOs said.

“In a country with 48% illiteracy, a 12-digit card might prove to be a
handicap instead of help,” they said in a release. “The project in its
present form must be scrapped.”

The NGOs also said that projected savings from the stemming of
leakages owing to the ID programme were not authenticated or backed by
independent data. “It’s surprising that the project is being
implemented with no discussion in Parliament nor consultation with
other political parties,” they said.

***@livemint.com

Tags - Unique Identification Authority of India NGO Alternative Law
Forum Centre for Internet and Society Government Video story

http://www.livemint.com/2010/04/28234537/ID-programme-faces-first-chall.html?h=A1

...and I am Sid Harth

cogitoergosum

2010-06-04 21:17:04 UTC

Permalink

Boom-Boom-Bomb-Aye?: Sid Harth
http://navanavonmilita.wordpress.com/2010/06/02/boom-boom-bomb-aye-sid-harth-3/
http://navanavonmilita.wordpress.com/2010/06/04/boom-boom-bomb-aye-sid-harth-4/

Emergency rate hike in India?
June 4, 2010 3:56pmby FT writers
By James Lamont in New Delhi

A possible emergency interest rate hike in India is back on the cards.

Data showing India had recorded 8.6 per cent economic growth in the
quarter to the end of March has reignited expectations that the
Reserve Bank of India might not wait for the July quarterly policy
review to tighten monetary policy.

Comments by Pranab Mukherjee, the finance minister, on his arrival in
South Korea for G20 talks will have only emboldened the hawks. India,
after only Australia, has tightened monetary policy most aggressively
in the G20. More is to come soon.

Mr Mukherjee said India would continue to raise interest rates in
spite of uncertainty surrounding the wider effects of the eurozone’s
debt woes to the global economy. In his view, India’s largely
domestically-driven economy has very little exposure to Greece.

What Mr Mukherjee says about monetary policy counts. The RBI is a
powerful but not a fully independent institution, it is headed by a
former finance ministry official and Mr Mukerjee is an influential
veteran. He was once the late Indira Gandhi’s finance minister, and
was once banking minister not long after she nationalised the
country’s banks.

One of the reasons India may not pause its monetary tightening is
political pressure centred on fast rising prices. Another is simply
that the economy has outlived the emergency measures taken during the
global financial crisis, and is roaring ahead.

The government has set a target to curb inflation. Sensitive to how
unpopular high prices are among India’s 1.2bn people, Manmohan Singh,
the prime minister, has pledged to halve stubbornly wholesale price
inflation over the next six months. Mr Mukherjee needs to help bring
it down to below 6 per cent by December.

A number of market analysts have warned that India is maintaining a
loose monetary policy and fiscal stimulus measures long after it needs
to. One of the latest voices to add to this chorus was Stephen Roach,
the chairman of Morgan Stanley Asia. Others have described the Indian
economy as on a “binge”.

The trouble with binges is that you always feel queasy afterwards. Mr
Mukherjee is rightly quick to reach for the stomach settler.

Tags: growth, india, inflation, interest rates

June 4, 2010 3:56pm in Asia, G20, GDP, interest rates

http://blogs.ft.com/money-supply/2010/06/04/emergency-rate-hike-in-india/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+ft/money-supply+(Money+Supply)

India reveals its hand on a global bank tax
June 4, 2010 10:22amby James Lamont

India has kept its hand well hidden at the table of the G20’s
deliberations over how to prevent another global financial crisis. So
the acknowledgement by Pranab Mukherjee, the country’s finance
minister, that a bank tax is no alternative to better regulation is
illuminating.

Senior Indian policymakers have been non-committal about International
Monetary Fund-backed proposals for a global banking tax. They were
similarly muted when Gordon Brown, the former UK prime minister,
claimed to have gained wide support among the G20 countries for a
global banking tax to fund future bail outs. The UK Treasury was
seeking out India as a key ally.

Part of the reason for India’s reticence is that it experienced the
financial crisis very differently from the west, and even some of its
Asian peers. India’s banks suffered no threat of collapse, nor earned
a reputation for excessive risk or returns. Policymakers are confident
of India’s own prudent regulation. They are less sure of regulation
elsewhere.

Unlike Washington and London, New Delhi’s sentiments are against
increasing the tax burden on India’s largely state-owned banking
system at a time when financial inclusion of the country’s tens of
millions is a top priority.

Mukerjee has now made this clear.

In an interview, published today in the daily Economic Times, the
finance minister says: “I do believe instead of taxation there should
be better regulation. Taxation is not an alternative.”

Although India has steered clear of public debate of a global bank
levy, the Reserve Bank of India has expressed its intention to issue
guidelines on the pay of senior foreign bank executives in India. Some
policy advisers have recommended closer scrutiny of foreign banks
operating in India, arguing that they weak regulation elsewhere
threatens to disadvantage Indian depositors.

The finance ministry and RBI shouldn’t, however, be too self-
congratulatory. Stephen Roach, the chairman of Morgan Stanley Asia,
has given them both a sharp dig in the ribs by telling an Indian TV
network that with India’s economy growing at 8.6 per cent in the
quarter to the end of March, fiscal and monetary stimulus is
“outlived”.

“Your economy is growing so rapidly you do not need to leave your
policy settings at the emergency levels,” he warned.

For all that good regulation, the triple-peril of property bubbles,
bad bank credit and inflation grow once again.

Tags: G20, global bank tax, India

http://blogs.ft.com/beyond-brics/2010/06/04/india-reveals-its-hand-on-a-global-bank-tax/

India won't pause rate hikes for now: FM
4 Jun 2010, 1517 hrs IST,AGENCIES

Topics:euro zone debt crises Euro zone/banks financial crises

BUSAN: India will keep unwinding economic stimulus deployed during the
financial crisis and continue raising interest rates despite
uncertainty
linked to euro zone's debt woes, the finance minister said on Friday.
( Watch )

Pranab Mukherjee told a deepening debt crisis in Europe could hit
India's and other emerging economies' exports and growth, but such a
risk was not stopping India from gradually reversing loose fiscal and
monetary policies.

Asked whether uncertainty about the impact of Europe's debt crisis on
the global economy was a reason to hold off with further interest rate
increases despite last quarter's buoyant growth, Mukherjee said: "No,
we won't pause them."

The finance minister was speaking on the sidelines of a meeting of
Group of 20 finance ministers and central bankers in the South Korean
port city of Busan.

India's central bank raised rates in March and April by 25 basis
points and signalled more hikes would follow, when it last met for a
regular quarterly policy review in April.

However, recent market volatility and worries that Europe's efforts to
rein in debt will sap global growth, cast doubt on the scope of
monetary tightening by major central banks. Such worries also gave
rise to suggestions that major emerging markets economies, such as
China, India, Brazil and Russia, should help sustain global recovery
by delaying the exit from loose policies put in place during the
global downturn.

Mukherjee, however, said that Asia's third-largest economy would
continue to consolidate its finances and underscored the contrast
between the relative fiscal health of emerging economies and debt-
laden euro zone members.

"You need fiscal prudence and in the developing countries, we are
doing so." Mukherjee said that India, which has pumped an equivalent
of 3 per cent of gross domestic product into its economy to shield it
from the global crisis, planned to withdraw that stimulus next year.

"I hope to have next year a total exit policy." The Indian economy
grew by 8.6 percent in the March quarter from a year earlier in yet
another sign that the world's major emerging economies have been
little affected by Europe's troubles. However, Mukherjee said a
deeper, protracted crisis would not leave those economies unscathed.

"If the larger Europe and the entire euro zone is affected by this
crisis and the recovery process is slowed down, naturally it will
affect both exports from the developing countries ... and the flow of
FDI (foreign direct investment)," he said. "We do hope the crisis will
be resolved sooner rather than later."

http://economictimes.indiatimes.com/news/economy/policy/India-wont-pause-rate-hikes-for-now/articleshow/6011207.cms

No need to tax banks to create bailout fund: Pranab
4 Jun 2010, 1610 hrs IST,IANS

Topics:economy Bailout crisis debt

NEW DELHI: India on Thursday said it does not favour taxing banks to
create a corpus for future bailouts and stressed the importance of
well-placed
regulations to detect and contain any deviation in financial
institutions' functioning.

Finance Minister Pranab Mukherjee made this clear during talks with
Sakong Il, chairman of the presidential committee for G-20 finance
ministers meeting, in the South Korean city of Busan.

The levy idea is backed by the United States and Europe. Developing
nations plus Australia and Canada oppose it, saying their banks did
not trigger the 2008-9 financial crisis and should not have to pay for
cleaning up the mess.

Mukherjee said India's banking system could withstand the trouble,
mainly because of well-placed regulations.

Indian banks had largely remained unaffected during the global
financial crisis, which saw many large banks based in the US and
Europe go under or seek state help to stay afloat.

Both Mukherjee and Sakong, a former finance minister of South Korea,
said the G-20 will be able to play a major role in the global economic
recovery, reflecting the change in the balance of power in the world.

"This is all the more relevant as various advanced and developed
economies have failed to resolve their financial problems on their
own," the two leaders said in a joint statement, released here by the
finance ministry.

Both hoped that Europe could contain the euro zone damage with a
support package for debt-ridden countries such as Greece worth $1
trillion.

Mukherjee is scheduled to attend the four-nation BRIC (Brazil, Russia,
India and China) meeting later in the day before taking part in the
G-20 ministerial meeting.

http://economictimes.indiatimes.com/news/economy/policy/No-need-to-tax-banks-to-create-bailout-fund-Pranab/articleshow/6011398.cms

Mining bill to establish govt as ‘natural’ owner
4 Jun 2010, 0550 hrs IST,Rohini Singh & Subhash Narayan,ET Bureau

Topics:cabinet Supreme Court POSCO mining

NEW DELHI: The government plans to update the draft legislation on
mining to unequivocally establish it as the owner of all natural
resources,
incorporating the substance of a Supreme Court verdict last month in
the dispute between the Ambani brothers over the price of gas from the
KG basin.

The move is intended to facilitate, with state governments’
cooperation, the allocation of mining leases to projects the
government considers to be of national importance by cutting through
procedural and legal snarls.

The new mining bill itself seeks to clean up one of the most
unreformed sectors of the Indian economy, bringing in transparency and
reducing the scope for discretion in the award of permission for
reconnaissance, prospecting and development of mining blocks.

The update was among the amendments suggested by the law ministry,
which was asked to vet the new mining bill before it is sent to the
Cabinet and thereafter introduced in the monsoon session of
Parliament.

“The rationale behind the Supreme Court judgment on gas was that the
state is the owner of all natural resources. We initially thought of
issuing an ordinance after the verdict, but then came to the view that
passing it through a legislation would be a better approach,” said a
top official in the ministry.

The May 7 Supreme Court judgment established the government’s complete
authority over all natural resources and gave the state the freedom to
decide on contractors, pricing and allocation of natural gas. The
inclusion of the provision in the new mining law is expected to help
fast-track large projects worth several billions of dollars and also
check widespread illegal mining.

In the case of iron-ore leases, several companies stake claim over
resources in almost all explored blocks in the country. Differences
between claimants often result in litigation, with state governments
relegated to just being spectators.

“An empowered state government could avoid this by awarding the
resource in favour of a company that puts the mineral to best use,
overriding claims of others,” said a government official.

In the case of Korean steelmaker Posco, the Kandahar iron-ore block
that has been recommended for the company by Orissa government is
under litigation over a decision by the state government in the 1980s
freeing up a block reserved for PSUs for use by private companies. The
proposed change may enable Posco to get faster access to the
resource.

The government will get the right to determine the pricing of
minerals, preventing private firms from making abnormal profits. And
state governments will be empowered to take quick decisions and
initiate action against offenders. “The authority over mineral
resources follows a complex structure where both the Centre and state
governments play a vital role. Any changes in the legislation should
clearly bring out this aspect to prevent confusion,” said a senior
official of the mines ministry.

Clarity about the role of the state could boost foreign investment in
the mining sector, which is now at just $200 million. The Centre is
aiming to increase this to over $20 billion through the reform
measures proposed in the mining legislation.

http://economictimes.indiatimes.com/news/economy/policy/Mining-bill-to-establish-govt-as-natural-owner/articleshow/6009694.cms

Bloomberg

Mukherjee Says Wider European Crisis Would Hurt India (Update1)
June 04, 2010, 3:01 AM EDT

add to Business Exchange (Updates with comment from Mukherjee in
second paragraph. See {GMEET <GO>} for more on the G-20 meeting.)

By Liza Tan and Timothy R. Homan

June 4 (Bloomberg) -- India’s economy would be hurt should the
sovereign debt crisis that originated in Greece spread in Europe,
Finance Minister Pranab Mukherjee said.

“If the whole of Europe is affected by the debt crisis it will be
harmful to us,” Mukherjee said today in an interview in Busan, South
Korea, where he is attending a meeting of finance officials from the
Group of 20 nations.

The European Union is India’s biggest overseas market, accounting for
a fifth of the nation’s merchandise exports. The South Asian nation,
which opened its market to foreign investors in 1991, has become
vulnerable to slowdowns and financial crises abroad as exports play a
bigger role in the economy.

Trade represented 35 percent of gross domestic product for the year
ended March 31, 2008, up from 21 percent in 1997-98, the year of the
Asian financial crisis, according to the central bank.

India’s economic growth accelerated to 8.6 percent last quarter, the
fastest pace after China among the world’s major economies.

Growing consumer demand is stoking inflation, with the benchmark
wholesale-price index climbing 9.59 percent in April.

Inflation is “an area of concern, but I’m not pressing the panic
button,” Mukherjee said. “There is a disturbing signal as core
inflation is likely to go up.”

Core Inflation

Core inflation, which excludes food and fuel prices, is currently
close to 6 percent from 1.8 percent at the end of 2009, Kaushik Basu,
chief economic adviser in the finance ministry, said yesterday.

The Reserve Bank of India has raised interest rates twice since mid-
March by a quarter percentage point each time. The bank’s benchmark
reverse-repurchase rate is 3.75 percent.

Last month, Subir Gokarn, the deputy governor in charge of monetary
policy at the Reserve Bank, said the central bank will pursue a
“cautious” pace of monetary tightening because of risks to growth
posed by Europe.

The G-20 is meeting at a time when the U.S. and Europe are split on
the scale and timing of increases in bank-capital requirements, which
have been under discussion since governments were forced to bail out
lenders, an official from a G-20 government said.

Countries such as the U.S., whose economies are largely financed by
markets, want banks to be required to hold more assets on their
balance sheets to buffer against future crises, the official told
reporters on condition he not be named.

Policy makers in continental Europe, where banks provide more
financing, are concerned that too-high reserves risk choking off
growth, the official said.

Mukherjee said “regulated mechanisms, instead of taxing the banking
system, are better,” without providing details.

--With assistance from Kartik Goyal in New Delhi Editors: Cherian
Thomas, Stephanie Phang

To contact the reporters on this story: Timothy R. Homan in Busan,
South Korea, at ***@bloomberg.net Lisa Tan in Busan, South Korea,
at ***@bloomberg.net

To contact the editor responsible for this story: Chris Anstey at
***@bloomberg.net

http://www.businessweek.com/news/2010-06-04/mukherjee-says-wider-european-crisis-would-hurt-india-update1-.html

Photo: AP
An Indian laborer welds at a workshop in Mumbai, India, 31 May 2010

India's rate of economic growth is returning to the high levels of the
years prior to the global financial crisis. But there are concerns
high inflation could slow down the momentum.

The latest growth numbers have brought good news for India. The
economy grew by 8.6 percent in the first three months of the year.

This is the fastest pace since the global financial crisis triggered a
slowdown, abruptly ending the boom that India had been experiencing
prior to 2008.

The overall growth rate for the fiscal year that ended in March is 7.4
percent - higher than government estimates.

A rebound in the manufacturing sector has triggered the economy's
momentum. Consumers are buying homes and cars. An optimistic industry
has started drawing up expansion plans.

Anjan Roy, an economist with the Federation of Indian Chambers of
Commerce and Industry, says strong domestic consumption has been the
key to the revival of the Indian economy. But he warns this may be
affected by any interest rate increases in the coming months.

"There is increasing talk of a squeeze on liquidity and rise in
interest rates. This talk is unnerving the manufacturing sector. Then
demand will fall and manufacturing development, growth will be
affected," he said.

The government is under pressure to raise interest rates to control a
massive rise in food prices, which is hurting ordinary people.

Economists say much will depend on annual monsoon rains, which come
between June and September. Last year's low rainfall led to smaller
crops and triggered the high food prices. But forecasts that monsoons
will be normal have raised hopes that a good harvest this year could
lead to a fall in prices.

The debt crisis affecting several European nations is also a key
concern. Economists say the flow of foreign investment funds will slow
down if the European crisis undermines global growth. Europe is also a
key trading partner for India, accounting for one fifth of its
exports.

But despite the concerns, there is optimism the economy will post even
stronger growth this year. Policy makers say high growth is critical
if the country is to tackle widespread poverty among its 1.2 billion
people. India is among the world's fastest growing economies, but
millions of people still live on less than $2 a day.

http://www1.voanews.com/english/news/economy-and-business/Indias-Economic-Growth-Returns-to-Pre-Global-Financial-Crisis-Levels-95605489.html

US, India Meet for Strategic Dialogue
Jim Stevenson | Washington 02 June 2010

Officials from India are in Washington this week to participate in a
Strategic Dialogue with their U.S. counterparts. India's Minister for
External Affairs, S.M. Krishna, and U.S. Secretary of State Hillary
Clinton are leading the comprehensive discussions. Topics of the
talks are expected to include energy, agriculture, science and
technology, health, education, defense and counter-terrorism.

The four-days of meetings are the first high-level Dialogue of its
kind between the United States and India. Robert Blake, the Assistant
Secretary for South and Central Asian Affairs, says several
discussions are already underway.

"We have 18 separate dialogues underway between the United States and
India to really try to capture the full scope of the opportunities
ahead of us," he said.

President Barack Obama hosted Indian Prime Minister Singh at the White
House last year for the first state visit of the new Administration.
President Obama is planning to visit India later this year.
Assistant Secretary Blake says the discussions this week are intended
to boost future cooperation.

"The purpose of this dialogue is really to think strategically and,
again, to get the key people who work on these issues together to
think ahead to the President's visit and to think strategically about
what we can do. It is not so much to have a review of all the things
that we've done. We know what we've done. It's really to think ahead,"
said Blake. "And when we have all of these senior-level officials
together in one place, we have to take maximum advantage of their time
and, again, use it productively. It is not to supplant the 18
different dialogues that we have, headed by all these different
cabinet ministers on both sides."

Blake says the Strategic Discussion will maximize that time with a
schedule that covers almost every important issue between the United
States and India.

"We will have, really, two sessions. We will have a plenary session
that will cover a lot of the - all the bilateral issues that we're
working on - counterterrorism, export controls and high technology,
economics and finance, infrastructure, education, energy, climate
change," he said.

Blake says the top officials - Secretary of State Hillary Clinton and
External Affairs Minister S.M. Krishna - will delve into the most
sensitive topics of India's neighbors.

"The Secretary and External Affairs Minister Krishna will have a
discussion on both the global issues that I mentioned, but again come
back to some of the important regional issues, particularly
Afghanistan and Pakistan," he added.

As a major nuclear state, Assistant Secretary Blake says India could
be in position to open a direct opportunity for U.S. nuclear workers.

"We are now following very closely the nuclear liability legislation
that the Indian government has introduced into the Indian parliament,"
he said. "If passed, it would provide a very important legal
protection and open the way for billions of dollars in American
reactor exports and thousands of jobs."

And he says the U.S. education sector may also be on the verge of
tapping into the huge Indian market.

"A very important draft bill has been introduced into the Indian
parliament that would open up for the first time India allowing
foreign universities to offer degrees and set up campuses in India,"
Blake said. "India, as you know, has an overwhelmingly service
economy, but also, increasingly, a knowledge-based economy. And they
feel that it is very important to be able to provide higher education
to the young population of India, half of whom who are under the age
of 26."

The Strategic Dialogue between the United States and India concludes
Friday.

http://www1.voanews.com/english/news/US-India-Meet-for-Strategic-Dialogue-95398094.html

Unprecedented US, India Engagement Defines New Era of Cooperation
David Gollust | State Department 03 June 2010

Photo: AFP
Indian Minister of External Affairs S.M. Krishna (File)

Senior U.S. and Indian officials have begun an unprecedented strategic
dialogue aimed at increasing cooperation in combating terrorism,
climate change and other global problems.

Secretary of State Hillary Clinton said she hopes the talks will
dispel lingering doubts on both sides about the growing bilateral
partnership. The new new dialogue underscores a growing U.S.-India
alliance, which President Barack Obama said last week will be one of
the defining partnerships of the 21st century.

The historically uneven U.S.-Indian relationship took a major turn
toward stability in 2005 during the Bush administration, when the two
sides reached a controversial civil nuclear agreement.

Cooperation in various fields has grown rapidly since then, though
Secretary Clinton, in welcoming remarks to the Indian team led by
Foreign Minister S.M. Krishna, said doubts remain on both sides about
the durability of the partnership.

"We must not only build on areas of agreement but frankly address
doubts that remain on both sides - doubts among some Indians that the
United States only sees India, or mainly sees India, in the context of
Afghanistan and Pakistan, or that we will hasten our departure from
Afghanistan, leaving India to deal with the aftermath," Clinton said.
"Doubts in America that India has not fully embraced its role in
regional and global affairs or will not make the economic reforms
needed to foster additional progress."

In his remarks, to the assembled teams of senior defense,
intelligence, trade, agriculture and other officials, Indian Foreign
Minister Krishna stressed the need for closer U.S.-India cooperation
against transnational terrorism.

He pointedly singled out the attempted car bombing in New York's Times
Square a month ago, in which a Pakistani-born U.S. citizen has been
charged.

"Though the epicenter of this threat lies in India's neighborhood, it
reaches far and wide all across the world, as we have seen time and
again and most recently a few weeks back in Times Square," Krishna
said, suggesting that American anti-terrorism effort has been too
narrowly focused on al-Qaida.

"Given the fact that the groups who preach the ideology of hatred and
violence are increasingly coalescing, sharing resources and operating
as one, it is incumbent upon all of us to focus our efforts, laser-
like, on every one of them," Krishna added. "Targeting only one of
such groups will only provide false comfort in the short term and will
not assure any long-term stability."

The Indian minister said his government values U.S. support for its
investigation of the 2008 Mumbai terror attacks, and said the logical
next step is giving Indian authorities access to persons he said have
been apprehended by the United States in the case.

Krishna also said, in the wake of the U.S.-India nuclear deal, that
the United States should lift remaining export controls on high-
technology sales to India, which he termed "anomalous" and a hindrance
to further trade.

Clinton noted that two-way, U.S.-Indian trade last year totaled $66
billion, ten times the level of 1990.

President Obama, due to visit India later this year, is to address a
closing session of the dialogue plenary late Thursday.

http://www1.voanews.com/english/news/-India-US-Pledge-Stronger-Ties-in-Inaugural-Strategic-Dialogue-95521584.html

...and I am Sid Harth