Indian Economy: News and Discussion (June 8 2008)

Raju · Post by **Raju** » 17 Jul 2008 10:57

Is it any worse from that created by coal mines, nuclear wastes, fly ash from thermal power plants ?

svinayak · Post by **svinayak** » 17 Jul 2008 11:14

‘India can account for 10 p.c. of world trade’

Special Correspondent

Bangalore: Economist C.K. Prahlad said here on Wednesday that India has the potential to generate over 10 per cent of world trade 15 years from now if it overcame certain weaknesses.

Elaborating his India@75 agenda, adopted by the Young Indians Forum of Confederation of Indian Industry, he said: “The large young and well-educated workforce is our major asset and they can make India a source for global innovations, ranging from new businesses to new technologies.”

Indians should start from the “bottom of the pyramid” and create leaders in health, education, energy, transportation and sustainable development, and attempt to reduce income inequality and not just poverty, he said.

“The Human Development Index and Corruption Perception Index clearly show more corrupt countries have a lower level of human development. These studies show, the more you invest in human resources, the richer the country becomes. A nation gets less corrupt before it gets rich,” Prof. Prahlad said.

joshvajohn · Post by **joshvajohn** » 17 Jul 2008 15:47

My comment on the following news item: I do not think Chidambaram should simply sit in Delhi and comment on the rise of prices rather he should do something dramatically. I understand that he should be realistic about things. But he should announce at least one rupee reduction of Petrol prices. He should also tell the Cement produces to come down in prices at least for a while otherwise like Karunanidhi he will allow importing of cements from abroad. He should also tell the iron and related industries to reduce prices a bit at this time so that economy survives.

He should work along with his colleagues so that there will be some direct link between India and a few oil producing countries or companies in terms of exchange of oil for some goods. It is essential that he does something with his team to contain or dramatically challenge the business people and also other industries to reduce the prices. If he is not in a position to do this he and the commerce minister should resign and go home so that someone with a bit of human heart will do these things within congress.

The Hindu Newspaper
Pressure on prices continues, says Chidambaram

New Delhi (PTI): Finance Minister P Chidambaram on Thursday said there is still pressure on prices, but monetary measures have started having impact on the growth of money supply.

"I met RBI Governor Y V Reddy. Governor said there is still pressure on prices ... I am in broad agreement with him," Chidambaram told reporters after the Cabinet meeting here.

RBI chief informed the Finance Minister it would take some time before the monetary measures start showing effect on prices.

Chidambaram's comments came a few hours before the release of the fresh data on inflation for the week ended July 4.

The inflation has already come close to the 12 per cent mark.

http://www.hindu.com/thehindu/holnus/00 ... 171501.htm

SwamyG · Post by **SwamyG** » 17 Jul 2008 20:34

JJ did a big thing by enforcing RWH to be installed, and part of all constructions. Apart from the direct benefit to the water table, it keeps the domestic economy spinning - creating employment & trade opportunities. Good for the environment. I think Solar energy offers us an opportunity. We don't have to have the entire house running on solar lamps, but the common areas, the park lights, street lights, government office buildings.

pradeepe · Post by **pradeepe** » 17 Jul 2008 22:37

Not much solar lighting, but solar heating is catching on in India, atleast in Hyderabd AFAICT.
Quite a few new developments offer this.

But I agree with an earlier question. From what I know manufacturing of photo-electric materials is a very messy and energy consuming affair.

bala · Post by **bala** » 18 Jul 2008 02:11

Energy issues have a direct bearing on the economy and national security. The politicians/babus better roll up their sleeves and realize the importance of energy independence. Countries like Brazil, long ago, realized that dependence on foreign oil could ruin their economy and they smartly moved to sugar ethanol. Quite surprisingly, Brazil recently has found several billion barrels of oil of their sea coast. For India, with its abundance of Direct Sunlight, solar power is an obvious answer. A less obvious one is gas and gas hydrates.

India is sitting on prognosticated gas hydrate resources of 1,894 trillion cubic metres, which is over 1,700 times as much as the proven natural gas reserves with the country — of 1.08 trillion cubic metres.

All vehicles can be driven by compressed natural gas CNG. In fact, in the US, T. Boone Pickens the oilman, advocates that all cars/trucks switch to CNG, to reduce oil imports. Andy Grove ex-Intel is a believer in another alternate - electric cars.

India must plan on reducing its oil import bill, which stymies the economy and leaves it to the whims of oil prices. Whatever the costs happen to be, the quicker the change, the better for the economy and national security. The central govt. should enact laws to enable conversion. A simple central mandate to have all state electricity boards to allow various alternate energy to supply grid power and for consumers to take grid power when needed, is a good start. Some states allow this and the consumer is only charged on net consumption. CNG enabled vehicles is another area where the center should step in and mandate vehicles can be driven by CNG.

Katare · Post by **Katare** » 18 Jul 2008 03:44

Pro-farmer Budget for Karnataka = Free power for farmers

Raj · Post by **Raj** » 18 Jul 2008 04:57

G Subramaniam wrote:I have actually made money in Indian stocks over the last few months

I invest in EPI, an ETF run by wisdomtree.com, traded on NYSE

GS,
According to this website, EPI has lost money since its inception.
http://www.wisdomtree.com/etfs/fund-det ... p?etfid=51

Question to gurus: I want to invest in Indian market through US based mutual funds. I looked at some funds but they have 5.75 sales charge (CDSC) and 1.5 - 1.75% expense ratio. Are there any US based indian specific funds which have low expense ratio without CDSC? Which ones would you recommend?

G Subramaniam · Post by **G Subramaniam** » 18 Jul 2008 07:36

Raj wrote:
G Subramaniam wrote:I have actually made money in Indian stocks over the last few months

I invest in EPI, an ETF run by wisdomtree.com, traded on NYSE

GS,
According to this website, EPI has lost money since its inception.
http://www.wisdomtree.com/etfs/fund-det ... p?etfid=51

Question to gurus: I want to invest in Indian market through US based mutual funds. I looked at some funds but they have 5.75 sales charge (CDSC) and 1.5 - 1.75% expense ratio. Are there any US based indian specific funds which have low expense ratio without CDSC? Which ones would you recommend?

I bought it about 2 months after it opened and I missed the decline
However, its current valuation is way cheap and undervalued on a long term basis

EPI follows something called fundamental indexing, which is a low PE form of indexing and even plain index funds beat 80% of active funds

In the last 6 months or so, I bet EPI has beaten most indian stock funds

You can also try IFN, INP, and some other closed end funds

Raj · Post by **Raj** » 18 Jul 2008 08:26

G Subramaniam wrote:
You can also try IFN, INP, and some other closed end funds

Thank you very much for the information.

Suraj · Post by **Suraj** » 19 Jul 2008 01:06

Inflation data is showing signs of stabilizing. While the weekly WPI inflation statistic for the current reporting week is up to 11.91%, very marginally up from 11.89% the previous week, the monthly CPI data is down altogether from the previous month reporting period:
Indian inflation steadies at 11.91%

India's annual inflation rate has steadied at 11.91 percent, defying expectations the figure would cross the 12 percent mark, according to the latest government data on Thursday.

The figure for the week ended July 5 was up only marginally from 11.89 percent for the previous week, according to the Wholesale Price Index, India's most closely watched cost-of-living monitor.

Analysts had expected the rate would jump to around 12.1 percent.

CPI-based inflation down in June

Indicative of a softening trend in the prices of items of common use, the inflation rate based on All India Consumer Price Index (CPI) for Agricultural Labourers, released here on Friday, has come down marginally in June this year to 8.77 from 9.11 per cent in May and based on the index for rural labourers, the inflation rate has come down to 8.75 per cent in June as against 8.84 per cent in May.

There are three sets of CPI data: CPI industrial workers (CPI-IW), CPI agricultural labourers and CPI rural labourers (CPI-AL and CPI-RL). The latter two were reported on July 18 (June 2008 data). Latest data for each:
All-India Consumer Price Index Numbers for Agricultural and Rural Labourers

Point to point rate of inflation based on the CPI-AL and CPI-RL decreased from 9.11% and 8.84% during May, 2008 to 8.77% and 8.75% respectively in June, 2008. Respective rates of inflation during June, 2007 were 7.84% and 7.53%.

CPI-IW data is only upto May 2008, since a new statistical methodology is apparently being implemented for it:
Consumer Price Index Numbers for Industrial Workers

The point to point rate of inflation for the month of May, 2008 is 7.75% as compared to 7.81% in April, 2008.

About the indices:
Definition of CPI and WPI (PDF)

Theo_Fidel · Post by **Theo_Fidel** » 19 Jul 2008 06:26

Suraj wrote:Inflation data is showing signs of stabilizing. While the weekly WPI inflation statistic for the current reporting week is up to 11.91%, very marginally up from 11.89% the previous week, the monthly CPI data is down altogether from the previous month reporting period:

Suraj,

Isn't this an inevitable side effect of the high base effect.

I predict that inflation will subside world over by new year.

Suraj · Post by **Suraj** » 19 Jul 2008 10:01

Theo: yes, the high base effect will cut in. But I'm concerned that in the process of the Fed's recapitalization efforts of FNMA and FHLMC, they will further erode the value of the dollar, and in the process continue to feed inflation through dollar-denominated commodity prices. Further, with Alt-A and prime mortgages in the US too facing pressures, and the likelihood of bank collapses, the prospects of a tighter rate regime in the US appears low. That in turn ties the hands of the likes of the RBI when it comes to rate hikes, because interest rate arbitrage will drive money into the country and counteract the effect of the rate hike. Interesting times...

PS: good to see you posting here again!

Suraj · Post by **Suraj** » 22 Jul 2008 02:37

Very interesting new push to create mortgage backed securities in India.
NHB pushes for securitisation

The National Housing Bank (NHB) is drawing a roadmap including prudential norms to buy home loans from banks and housing finance companies (HFC) and securitise the portfolio at a later date. The scheme is aimed at providing liquidity and help release capital locked up in the home loan portfolio.

Under the plan, NHB will carry out due-diligence of the portfolio it intends to purchase. After buying the portfolio, NHB will hold this in its book for a maximum of one year. Later, it will securitise this portfolio by issuing pass through certificates (PTCs) to investors such as insurance companies and mutual funds, said Verma.

Initially, NHB will focus on buying out home loans upto Rs 30 lakh. This is aimed at improving lendings in the Tier II and Tier III cities, Verma said. Home loans upto Rs 30 lakh carry a risk weight of 50 per cent and considered as part of priority sector lending.

He said the securitisation of home loans will not compete with refinance activity nor constrain other funding operations.

The home loan parcels which comes up for securitisation will be much more strong since it will go through intense scrutiny twice and gets credit enhancement . First, when NHB acquires portfolio and second, when rating agencies scan it assigns ratings to certificates.

Meanwhile, NHB is also working on plans for setting up a mortgage guarantee company. It is expected to be a joint venture involving global investors such as American Insurance Group and International Finance Corporation the World Bank’s private sector lending arm.

The proposed entity will buyout mortgages from lenders and resell them to investors. The mortgage company would also provide guarantee to investors.

Railways are benefiting from significant passenger traffic increases thanks to rising airfares and falling flight frequencies:
Amid slowdown, railways' earnings grow at top speed

In June, railway passenger traffic jumped 15 per cent to 8.19 million as compared with June 2007. In the year-ago month, the growth was 9.54 per cent. Air traffic during June this year saw a decline of almost 4 per cent.

If you thought June was a fluke, take a look at the July numbers — railway traffic was up 30 per cent in the first 10 days of the month. To put it in perspective, the Railway Budget for 2008-09 had projected traffic growth of 5.50 per cent for the year.

All this is reflected in the serious money the railways made in June. Total revenue from passenger traffic hit Rs 881.58 crore, a rise of 20.33 per cent over last year. Clearly, there is no evidence of a slowdown here.

One key reason for the surge in traffic is the large increase in the passenger-carrying capacity of the railways. In 2007-08, around 32 new trains were added which offered over 50,000 extra berths per day, that is, over 1.5 million new berths a month. In 2008-09, another 63 new trains are slated to be introduced, of which a few have already been pressed into service.

putnanja · Post by **putnanja** » 22 Jul 2008 03:22

WTO talks may be called off if Indian Govt fails at trust vote

Many of the 30 trade ministers apprehend that the crucial WTO talks in Geneva may be suspended if Prime Minister Manmohan Singh's government does not survive the confidence vote in Parliament.

"Everybody is watching closely developments in India. If the government collapses, it is possible that they may wrap up the talks," a senior official said.

Those keenly watching the high voltage political events in India include the US, EU, Brazil, South Africa, China and the WTO Director General Pascal Lamy.

Asked whether the mini-Ministerial meeting convened to work out a final framework for completing the Doha Round may be called off for the sake of one country, he said, "India is important in WTO and there cannot be a deal without it".

If the Geneva talks are suspended, it could be blamed on the fall-out of the political developments in New Delhi. "It suits those who do not want a deal at the moment. At least, there will not be a blame game," the official said.

After a few bilateral meetings, Commerce and Industry Minister Kamal Nath has already returned to New Delhi for the confidence vote. The country would be represented by Commerce Secretary G K Pillai at the negotiations.

Kakkaji · Post by **Kakkaji** » 22 Jul 2008 21:08

With the victory in the confidence vote, and rid of the burden of Left Front support, MMS has a rare opportunity now to carry out significant economic reforms over the next few months before the election commission directed restraints kick in.

IIRC in the initial days of the PVNR Govt., with the 'nation's gold having been mortgaged' etc. MMS carried out the biggest burst of reforms (rupee devaluation, liberalization of FE control regime, duty cuts, abolition of licensing for setting up industry etc) in the first few months of his becoming the Finance Minister.

He knows what to do and he has shown that he can implement reforms quickly.

Let us see if he grabs this opportunity in the final few months of this Lok Sabha.

Suraj · Post by **Suraj** » 22 Jul 2008 21:59

Indeed Kakkaji. There are already several reform measures that have been lined up by FinMin under the assumption that the trust vote succeeds, as posted in articles in the past few days. Now that the vote has passed, it would be interesting to see what all come to fruition before the administration's term expire. It would seem this is the best time for them to implement significant reforms, to make up for four years of sleepwalking. The success of the vote is very positive news from an economic perspective; political stability matters to economic growth.

putnanja · Post by **putnanja** » 22 Jul 2008 22:14

I would be a bit cautious on what all UPA can do in the final 10 months in office. Populist measures will overtake any rational decision in the last years of any govt. Given the recent fracas over the nuclear deal, UPA will have to do much more to "showcase" its "aam aadmi" face. So not sure whether they are willing to weather labor union oppositions in disinvestment, pension reforms etc. And make no mistake, the left is licking its wounds and will try to oppose any reform measure tooth and nail using its unions.

bala · Post by **bala** » 22 Jul 2008 22:16

Yes, the victory of the vote is already unleashing a new sentiment. The CPI&M Thugs are discredited and booted out. Full speed ahead....
Govt.will push ahead with economic reforms: FM

New Delhi (PTI): Finance Minister P Chidambaram on Tuesday said the Government will now push ahead with the unfinished economic reforms agenda after its victory in the confidence vote.

"With 275 votes, this government has an absolute majority and this is a confidence to go forward," he said after the trust vote.

Crucial legislations in insurance and banking sectors and bills for setting up of a pension regulatory body and one for unorganised sector had been pending following opposition from the Left parties that were till recently providing outside support to the UPA Government.

"The Government will be approaching other members who are not opposed to economic and social reforms and so we will move ahead with the reforms," Chidambaram said.

"Now we have crossed a major bridge that is the Indo-US civilian nuclear deal. Now, we will move ahead on economic and social reforms."

I hope Praful Patel insists that Kolkatta and Chennai Airports be handed over to private party builders/maintainers instead of the leech AAI.

Suraj · Post by **Suraj** » 22 Jul 2008 22:22

RaviBG: I'm more interested in what they can do without requiring broad legislative support. As the articles above indicate, the FM is concentrating primarily on tasks that can be cleared without needing Parliamentary backing, but which had been stalled because of the Left parties intransigence.

We don't need attempts at big bang reforms (which will be diluted due to political issues) and 'dream budgets'. We needed focussed reforms targeting inefficiencies in the public sector and broading access to capital, and anything that can enable this will help. The foundation of our current economic growth is a pair of largely unsung measures, the FRBM act, and the last Finance Commission steps devolving additional fiscal autonomy to states. Both could be seen largely as 'bean counter' actions, but their effect has been revolutionary.

Katare · Post by **Katare** » 23 Jul 2008 01:36

Suraj,

What are the reforms which can be done without legislative changes?

Pension, FDI in insurance both require legislative changes, govt may do some minor disinvestment but it has no time left for starting its national investment fund scheme big bang privatizations. No one's going to touch labor reforms....

Why do you think GoI should shy away from reform bills that no one but left parties oppose?

Suraj · Post by **Suraj** » 23 Jul 2008 01:58

Katare: I'm afraid I have no answer to your question. Right now I'm just going by multiple articles indicating a concerted push to effect whatever reforms can be done at minimal political cost, now that the Left is no longer in the picture and the administration has a mandate till the end of their term. Their new alliance partners would affect what gets done and what doesn't. At least Amar Singh doesn't appear to be inclined to automatically say no to every reform measure, like the Left were. He'll probably want to wet his beak, of course, but that's something I can live with provided reforms do happen in the process.

One more thing is that GoI might find itself in a better position to respond to inflation proactively now that the Left is not in the way, instead of leaving it all to monetary actions on the RBI's part. With YV Reddy's term at the helm of RBI almost at an end (though he might get a temporary extension), the fall of the government yesterday would have been a terrible situation, leading to indecisiveness at the helm of administrative policy (government) *and* monetary policy (central bank). I'm very glad there's political stability for them moment, and hopefully an effective transition at RBI as well.

putnanja · Post by **putnanja** » 23 Jul 2008 01:59

Katare, long time back, the BJP had asked UPA govt to push the pension reforms bill as they too supported it. But the UPA govt didn't take up on that offer as they didn't want to offend the left parties. However, with the fallout over the nuclear deal has been pretty bitter and has created too much of bad blood between UPA and BJP, and I doubt the BJP will support anything that the UPA proposes for the remainder of this term. I would rule out legislative changes.

The non-legislative changes like disinvestment etc can still run into opposition from the labor unions. Multiple and strikes and hartals leading to the polls will just make the congress more nervous.

Amitayus · Post by **Amitayus** » 23 Jul 2008 14:19

My wish list for immediate reforms..
1. Disinvestment of BSNL (sent to cold storage due to left opposition)
2. Reforms of obsolete labour laws esp. Trade Union Act 1926 and Industrial Disputes Act 1947.
3. Pension Bill to reduce the burden on the Govt. and a great step towards fiscal management.

But well, if wishes were horses..

Singha · Post by **Singha** » 23 Jul 2008 18:30

AAI could also be chased out of remaining metro airports and new expantion contract
given on basis of bidding

Katare · Post by **Katare** » 23 Jul 2008 22:57

Suraj,

Fair enough! I think govt should be able to get Pension and insurance bills through easily except left no one really cares.

But Moody's thinks differently...
Further economic reforms prior to polls unlikely: Moody's

"Any major reforms in sectors such as banking, insurance and pension before elections are unlikely as the Government has to address a number of challenges like high inflation and policy differences amongst coalition partners," Moody's India Representative, Chetan Modi, told reporters here.

Katare · Post by **Katare** » 23 Jul 2008 22:58

Singha wrote:AAI could also be chased out of remaining metro airports and new expantion contract
given on basis of bidding

This is for you and Vina

Govt working out on Rs 2,300-cr Air India bailout package

Suraj · Post by **Suraj** » 24 Jul 2008 00:21

Katare: you know what I think of Moodys...

Economic commentary and fallout from the trust vote aftermath:
India Inc bets big on N-power

Indian companies led by Anil Ambani's Reliance Power (RPower), Nuclear Power Corporation of India (NPCIL) and Bharat Heavy Electricals (BHEL) plan to invest over Rs 100,000 crore ($24 billion) in the next five years to expand their presence in the nuclear energy sector after the country signs the nuclear agreement with the US, paving the way for import of fuel and transfer of technology.

Engineering major Larsen and Toubro (L&T) is also foraying into the nuclear energy sector, with plans to manufacture nuclear reactors.

The BHEL stock rose by 11 per cent to Rs 1,772, Reliance Power surged 19 per cent to Rs 170.95, while the L&T scrip went up by 7 per cent to Rs 2,766.65 on the Bombay Stock Exchange today, whose benchmark index, the Sensex, shot up by 838 points on Wednesday.

Reliance Power has planned an initial investment over Rs 20,000 crore to foray into nuclear power generation. The company is already implementing 28,000 mw of thermal power projects.

"There are plans to start with 1,000-1,500-mw capacity initially with one or two reactors and then expand it to higher capacities in the long run,'' V K Chaturvedi, former NPCIL chairman and managing director and nuclear energy consultant for Reliance Power, said.

Industry urges Manmohan to hasten reform process

A day after the UPA government emerged victorious in Parliament, India Inc came into action pushing its demands for economic reforms.

The Associated Chambers of Commerce and Industry of India (Assocham) submitted a seven-point reform agenda to Prime Minister Manmohan Singh and Finance Minister P Chidambaram, urging them to hasten reforms in the changed coalition arrangements of the government.

Assocham urged the government to speed up reforms in the agriculture, labour, insurance, civil aviation and retail sectors, and pension funds, among others.

Assocham also demanded removal of Press Note 1 as far as foreign direct investment (FDI) policy was concerned. Assocham president Sajjan Jindal said: "This note is working as a stumbling block between the two joint venture partners (one domestic, the other one foreign) to expand their operations without necessary approval from domestic partners in the same technology area."

Meanwhile, the Federation of Indian Chambers of Commerce and Industry (Ficci) will also be meeting the prime minister and the finance minister with a draft of agendas that it seeks to promote with the government.

FDI cap in insurance likely to go

Free from the clutches of the Left parties, Finance Minister P Chidambaram today said the government would try to speed up reforms that could see passage of Bills, including the insurance legislation.

"I am confident that we can secure a comfortable majority for many of these Bills if we talk to the other parties and that is what I intend to do," Chidambaram said, while adding that the insurance Bill as a very important Bill and it was necessary to find ways by which these Bills could be taken forward.

The insurance Bill would enable the government to raise the FDI limit in the insurance sector from 26 per cent to 49 per cent, he said.

The Left parties, which withdrew support to the UPA early this month over the civil nuclear deal with the US, were fiercely opposed to raising the FDI cap in the insurance sector as also allowing foreign investment in multi-brand retail.

Others Bills that are due for passage relate to the Ministry of Finance, Ministry of Labour, Women and Child Development, and Social Sector, he added.

putnanja · Post by **putnanja** » 24 Jul 2008 00:35

Disinvestment process may gain speed

New Delhi, July 23 After the initial euphoria over reforms getting a leg-up following the United Progressive Alliance (UPA) Government surviving a trust vote and freeing itself from the Left’s clutches, reality seems to be dawning upon policymakers.

The win at Tuesday’s confidence vote will technically allow the Congress-led alliance to be in power till April next. But as a senior official noted, the ‘window of opportunity’ to push through major reforms exists only till around October, after which Assembly elections would take off in six States.

“Any Bill to be passed would have to be taken up in the Monsoon session, starting next month.

“While there is also the Winter session after that, it would be politically difficult to enact any big-ticket legislation then”, he pointed out.

The Finance Minister, Mr P. Chidambaram, on Wednesday, stated that the Government will ‘try’ to take up various pending Bills in the coming session itself.

These pertain to raising the existing 26 per cent foreign direct investment (FDI) limit in insurance companies to 49 per cent, removing the 10 per cent individual voting rights cap in banks and conferring statutory status to the Pension Fund Regulatory and Development Authority.

“Getting each of them passed is akin to surviving a fresh trust vote. After all the bad blood created in the recent vote, it would take some deft manoeuvring to obtain the support of the main Opposition, Bhartiya Janata Party (BJP), leave alone the Left”, the official said.

While the Government’s new ally, Samajwadi Party (SP), has indicated that it is open to pension, banking and insurance reforms, “it is risky to rely just on their numbers, more so after all the recent horse-trading allegations”.

The official was also pessimistic on FDI being permitted in retail, even if it involves no legislation per se. “Forget SP, even sections within the Congress are dead opposed to it”, he added.
Possible areas

So what reforms can one realistically expect? Disinvestment is one area that could see some action. With the Left off its back, the Government is planning to go full steam with the initial public offerings (IPO) of NHPC Ltd and Damodar Valley Corporation (DVC).

Confirming this, the Minister of State for Power, Mr Jairam Ramesh, told Business Line, “We will complete the NHPC IPO by September-October, if market conditions permit”.

The company is slated to issue 10 per cent fresh equity and offload five per cent through an offer for sale, which will reduce the overall Government stake to 86.3 per cent.

Study under way

In the case of DVC, the Government has already commissioned KPMG to work out the modalities for going public. “DVC is a statutory corporation that was, in fact, created 60 years back through an Act of the Constituent Assembly. The consultant is examining various options, including floating of a subsidiary that can be listed without the need to amend the Act relating to the parent company”, Mr Ramesh said.

The Government also wants to list companies such as Satluj Jal Vidyut Nigam and North Eastern Electric Power Corporation, though these are unlikely to happen in the current Government’s term, Mr Ramesh admitted.

putnanja · Post by **putnanja** » 24 Jul 2008 00:54

Trade unions to protests Govt's bid of financial reforms

putnanja · Post by **putnanja** » 24 Jul 2008 23:46

BJP ready to support economic reforms

NEW DELHI: The Opposition BJP on Thursday said it is willing to consider supporting the Government in expediting economic reforms if the Prime Minister takes the initiative.

“If Prime Minister Mr Manmohan Singh himself takes an initiative and contacts the Opposition Leader Mr L K Advani with specific proposals, the party will examine them,” senior BJP leader and a former finance minister Mr Yashwant Sinha said.

His comments come two days after the Finance Minister Mr P Chidambaram expressed confidence over pursuing the reforms agenda.

Earlier last week Mr Chidambaram had also said that the BJP was “obliged” to support certain key financial sector legislations.

Mr Sinha said the “political scenario has changed in the last few days” and what was valid earlier may or may not be valid now. The UPA government did not pursue many key Bills concerning the financial sector in Parliament as the Left Parties, which sup ported the Government from outside, were opposed to those legislatures.

Mr Sinha said his party's views on economic issues are well known and the NDA had followed a liberal economic policy when it was in power.

Indicating that the party could support the Government in Parliament to pass the Insurance Law Amendment Bill, Pension Bill and Banking Reforms Bill, Mr Sihna said the Prime Minister should talk to the leader of the Opposition on this. - PTI

Suraj · Post by **Suraj** » 25 Jul 2008 00:22

MMS taking Advani into confidence on reform measures would be an extraordinary move towards a bipartisan effort to expediate reforms. Remains to be seen how well it works in reality. The BJP appears to be holding out its hand, lets see if the Congress shakes it.
Govt lines up market reforms

In a move to improve the tradability of domestic convertible bonds, the finance ministry has proposed a mechanism, under which the equity option can be traded separtely. This measure is expected to be implemented by September this year.

Market players said this will enable a portion of the debenture to be separately traded, even at a discount, and address the needs of different classes of investors.

The ministry has asked capital market regulator — the Securities and Exchange Board of India (Sebi) — to implement this measure, which was first announced by Finance Minister P Chidambaram in Budget 2008-09 as part of efforts to expand the domestic market for corporate bonds.

In another market-friendly move, the ministry is planning to ease the norms governing the pricing formula for American Depository Receipts (ADRs) and Global Depository Receipts (GDRs).

At present, the ADR/GDR issue price is determined on the basis of the higher of the last six months' average price or the last 15 days' average price prior to the issue. The proposal is to reduce it to two months' average price.

Inflation turnaround:
WPI recedes to 11.89%

The wholesale price index (WPI)-based annual rate of inflation stood at 11.89 per cent for the week ended July 12, marginally lower than the 11.91 per cent reported in the previous week. The annual inflation rate was 4.76 per cent during the corresponding week last year.

Meanwhile, inflation for the week ended May 19 was revised upwards to 8.66 per cent, up from the 8.10 per cent reported earlier.

On a week-on-week basis, the WPI rose to 239 for the week ended July 12, from 238.7 in the previous week, prompting the finance ministry to say that inflation remains stable.

Despite the index going up, the inflation rate was lower because of the base effect, said Abheek Barua, chief economist, HDFC Bank. "In July, it will continue to enjoy the base effect, but in August, it will tend to push it up."

Interesting event - Chinese banks as a source of funding for Indian infra projects. It's a loaded subject:
R-Power raises $1 bn from three Chinese banks

Reliance Power (R-Power), the Reliance-ADAG group company, which plans to set up 28,000 mw of power plants in India, has secured $1 billion (or around Rs 4,200 crore) funding from three Chinese banks for the Sasan ultra mega power project (UMPP) in Madhya Pradesh.

The fund raised from China Exim Bank, Chinese Development Bank and China Export & Credit Insurance Corporation (Sinosure) will help R-Power to achieve financial closure of the Sasan plant, which is projected to have an investment of Rs 15,000 crore.

Reliance-Infra plans four JVs with Shanghai Electric

Reliance Infrastructure (R-Infra), which plans to set up a $3-billion joint venture with Shanghai Electric Power Co to make power equipment in India, is setting up four more joint ventures with the Chinese partner to offer a range of third-party services to power utilities in India.

The services to be offered in the domains of technical and design support, operations and maintenance, after-sales services and erection of power equipment would involve a combined investment of $400-600 million and generate up to 400 jobs, said a company official.

Katare · Post by **Katare** » 25 Jul 2008 01:28

“If Prime Minister Mr Manmohan Singh himself takes an initiative and contacts the Opposition Leader Mr L K Advani with specific proposals, the party will examine them,”

That's exactly what they said after J18, MMS went and talked to AVB And Advani rest is history......

GoI should ask BJP to publicly announce it's support for bills before it take them up for voting.

putnanja · Post by **putnanja** » 25 Jul 2008 02:50

Katare, don't want to derail the thread. But the PM contacted the opposition only when things started getting hot with the left. They did not try to build consensus with the opposition on any issue. And this has been the case for their entire term in office. In fact, the opposition to many of the bills has been within the coalition. Left was opposed to nuclear issue & economic reform bills, RJD to women's reservation issue etc. As long as the left supported the UPA, they never required NDA's opinion as they had a comfortable majority on their own. It would be better if UPA takes the initiative, for the opposition has nothing to lose. The same congress had opposed many of the reform bills of NDA govt too. So NDA can return the favor and oppose it now, and pass the same bills if they get power next time.

Posting a link of that in today's Indian Express below.

Not all stalled reform is due to the Left. UPA must find a consensus to move on

The trust vote, but perhaps not the taint, is firmly behind the government. Understandably there is renewed focus on the daunting economic challenges and a reform strategy that the government can complete in its remaining months in office. Rahul Gandhi in his speech in the Lok Sabha repeatedly sought a broader national consensus and conciliation on steps necessary to redress poverty, meet energy deficiency and make India a true global leader. I do believe that without such a consensus, undertaking important legislative changes will remain mired in multiple controversies.

No doubt in the administrative domain itself there is a lot that can be done and which can have a more immediate impact on our lives. Administrative reforms, improving quality of public services, speeding up project implementation, looking at ways for a quicker administration of justice as well as enforcement of contracts do not require legislative changes. Improving our rating in either the Global Competitiveness Index or on the “Ease of Doing Business” entails a host of procedural and administrative changes, which remain neglected. Many of these lie in the domain of the states. Improving governance quality in a federal polity may not be in the hands of the Central government but infusing greater trust in the matrix of Centre-state relations need not await the recommendations of the Commission on Centre-State Relations.

Equating economic reforms with those which primarily affect the banking or the financial sector in one way or the other, important as they may, cannot be the sum total of changes necessary to reinvigorate the faltering growth momentum. Improving the cost, reliability and efficiency of infrastructure is more a story of sloppy implementation than absence of enabling laws.

It is also somewhat of an exaggeration to entirely blame the Left for stalling the economic initiatives for several reasons. First, is there a consensus within the Congress party itself on the economic agenda? Many of us have not forgotten that the very reforms which are now intended were stalled by the Congress when the NDA was in office. The bill to reduce government equity in nationalised banks to 33 per cent introduced by the NDA was given a quiet burial since there was no consensus within the Congress party. Similarly the insistence on pegging a fixed number, namely 26 per cent, for foreign equity in the insurance sector was also at the insistence of the Congress. Efforts at labour reforms were resisted as much by the Congress-led trade unions as by organised labour unions of other political parties.

The Congress has a socialist streak in its psychological make-up in no small measure by the Fabian socialist tradition of its founding fathers. Long periods of economic stagnation, periodic exchange crisis and the extraordinary balance of payment crisis in 1991 did result in a major course correction but without altering the deeply ingrained socialistic and egalitarian approach of the party.

Second, the key changes necessary in many sectors like the social sector or infrastructure did not need Left support. For instance, not all the recommendations of the National Knowledge Commission on Education were blocked due to resistance from the Left. Fostering improved primary education system, creating greater competition or appointing an independent regulator to oversee the accreditation system for higher education have been mired in the bureaucratic politics of the HRD ministry. The fact that the health minister had been unduly preoccupied in ousting the AIIMS director or banning advertisements of cigarettes and alcohol instead of addressing the more endemic issues of health to minimise the spread of infectious diseases, seek aggressive private partnership, revamp the primary health care sector is not the fault of the Left. The tardy implementation of important projects, particularly large public outlays, the worrisome progress of the national highway projects due to excessive rent- seeking by coalition partners falls in the same category. As do delayed environment clearances for large public and private investment. The controversy surrounding spectrum allocation among and between private telecom operators has detracted focus from a more rapid spread of rural telephony and ensuring that the resources of the Universal Service Obligation Fund are fully used to enhance rural network and improve broad brand connectivity. Improved expenditure management, time and cost overrun for public outlays entail innovative approaches to implementation, monitoring and accountability, which have eluded successive governments.

The Left alone cannot become an alibi for failed templates of governance in many sectors.

Third, unfortunately the value of any of the big reform is never validated electorally. Election speeches understandably are about giveaways or populist promises. Rarely about decisions which would improve efficiency, enhance productivity through increased competition, and the changes necessary to move India to a higher growth trajectory. Political parties when voted to office are held accountable to implement the populist giveaways but rarely about tardy implementation of promised reforms. Election manifestoes either by way of Common Minimum Programme or Agenda for Governance are never sufficiently explicit about difficult economic options lest they upset the electorate. Opaqueness in the formulation of economic strategy may have advantages but it does not oblige governments to implement them either. Elections are a few months away and most political parties will soon engage in scripting their manifestoes. We should learn from the past and state more clearly what is needed to move India to a 10 per cent plus growth trajectory, wipe out poverty and make up deficiency in social and physical infrastructure.

Finally, it is only in a post-election period and based on the configurations that emerge that serious legislative business can resume. However, we need to think and plan in advance in terms of helping to script commitments and programmes which could bind political parties to a desired course of action. Reforms by stealth, momentary manipulation or an accident of history do not usually stand the test of time. Examples of actions driven by a sudden exogenous crisis are not replicable in normal times.

The need to forge an understanding between the mainstream political parties is central to the conception, design and implementation of any economic strategy in a complex federal polity. Restoration of trust between political parties is more daunting than winning a trust vote.

The writer is a member of Rajya Sabha

putnanja · Post by **putnanja** » 25 Jul 2008 02:53

Post-Left, post-haste

: To take an informed guess at what the UPA can do by way of reforms, consider what its post-Left vulnerabilities are. Would the UPA’s political managers want to test the combination’s majority on the floor of Parliament again — passing a bill would require such a test. Therefore the pension, banking and insurance FDI bills, as well as the less-mentioned coal private mining bill and amendments to forward contracts regulation, will be assessed in terms of the UPA’s risk appetite. After all, cross-voting did help the government during the trust vote. The ruling alliance simply can’t afford a bill piloted by it to not pass parliamentary muster. Politics is and will remain very charged. And the chances of getting the BJP, which is angry and demanding action on alleged bribery of MPs, to support any of these bills are, unfortunately, small. Permitting FDI in multi-brand retail — that is allowing not just Gucci stores but also Walmart stores — is a policy many senior Congressmen find appallingly radical. The SP may not think any differently. So that’s probably out.

For certain broader changes, like a civil aviation policy or even a definitive pharma pricing policy, there’s probably not enough time for a full and final version to emerge. The road building project is the UPA’s great failure, with completion rate in decline since the government took charge. But this was never really thanks to the Left. Indeed, T.R. Baalu, a minister belonging to a valuable Congress ally, the DMK, and some terribly imaginative officials in the Planning Commission between themselves share most of the blame. It seems unlikely Manmohan Singh can make a difference to this now.

Isn’t there a low-hanging fruit? There is: small disinvestment in PSUs. The Left was for some strange reason dead against it, even though the CMP didn’t bar it and even though the UPA never so much as uttered the word privatisation. No one else, including the SP, has a real problem with this. The DMK did ally with the Left in opposing stake sale in Neyveli Lignite. But minus the Left, and getting its way on other things, it may back off. PSUs like NHPC and DVC have done all or most of their groundwork on small equity sale. Start with those and get a few more in — the government needs the money anyway given the real state of the deficit.

putnanja · Post by **putnanja** » 25 Jul 2008 03:46

BJP ready to support economic reforms

The Opposition BJP on Thursday said it is willing to consider supporting the government in expediting economic reforms if the Prime Minister takes the initiative.

"If Prime Minister Manmohan Singh himself takes an initiative and contacts Opposition Leader L K Advani with specific proposals, the party will examine them," senior BJP leader and a former finance minister and Yashwant Sinha said.

His comments come two days after Finance Minister P Chidambaram expressed confidence over pursuing the reforms agenda. Earlier last week Chidambaram had also said that BJP was ‘obliged’ to support certain key financial sector legislations.

Sinha said the "political scenario has changed in the last few days" and what was valid earlier may or may not be valid now.

The UPA government did not pursue many key bills concerning the financial sector in Parliament as the Left Parties, which supported the government from outside, were opposed to those legislatures.

Sinha said his party's view on economic issues are well known and the NDA had followed a liberal economic policy when it was in power.

Indicating that the party could support the government in Parliament to pass the Insurance Law Amendment Bill, Pension Bill and Banking Reforms Bill, Sihna said the Prime Minister should talk to the leader of the Opposition on this.

Soon after winning the trust vote in Lok Sabha on Tuesday, Chidambaram had expressed the confidence on pursuing the reforms agenda.

Earlier in last week Chidambaram had said that main Opposition party was obliged to support the financial bills because the standing committee headed by a BJP member Ananth Kumar had approved these bills.

These include raising the foreign direct investment limit from 26 per cent to 49 per cent in insurance sector, entry of private players in the pension sector and allowing voting rights to shareholders in banks in proportion to their holding.

The former finance minister said his party earlier also offered its support to the UPA government on these bills when the Left parties were supporting the UPA, but "the government haughtily turned down our proposal," as if we were "untouchables".

He said the UPA government could not muster courage to take up these bills during the last four years due to stiff opposition from the Left parties, but now it wants to "better its record on economic reforms".

On whether the Cabinet's approval for the merger of State Bank of Saurashtra with the State Bank of India was the beginning of economic reforms under UPA regime, Sinha said it could not be.

The record of the UPA government on economic reforms has been "dismal" and it failed to push any major reforms in the last four years, Sinha added.

putnanja · Post by **putnanja** » 26 Jul 2008 04:25

BJP spoils for fight

fight
SANJAY K. JHA

New Delhi, July 25: The BJP leadership feels the talk of big-ticket reforms getting a push with its support is “premature”.

The dominant view is the government’s trust vote win has “no sanctity” and hence the BJP isn’t obliged to cooperate.

Most leaders are in a combative mood and expect to the fight the government with renewed vigour instead of facilitating its recovery by backing its agenda of reforms.

The bitterness created by the tug-of-war during the trust vote hasn’t gone, with the stage set for a conflict over the cash-in-the-House episode. The BJP suspects the ruling combine is itching to turn the tables on the three MPs who displayed the currency notes inside the House.

Samajwadi Party leader Mohan Singh has already moved a privilege motion against the BJP members. But the BJP is ready for the faceoff and the MPs — Ashok Argal, Mahavir Bhagora and Fagan Singh Kulaste — today filed a formal complaint, as desired by the Speaker.

They have named Samajwadi leader Amar Singh in and given the sequence of events, detailing how they were offered Rs 3 crore each, and even handed an advance.

BJP leaders assert they will take the alleged bribery battle to “any extent”, a stance that will strain their ties with the government further.

The personal tiff between the Prime Minister Manmohan Singh and the Leader of Opposition, L.K. Advani, is another sticking point. With such animosity, it is difficult to see the party playing a “comrade-in-arms” to push the unfinished economic agenda, sources said.

There is a section, though, that believes supporting big-ticket reforms shouldn’t be a problem as the BJP itself is committed to them. Former finance minister Yashwant Sinha reinforced such a perception when he said yesterday that the party could consider supporting the government on reforms. “If Prime Minister Manmohan Singh takes the initiative and contacts L.K. Advani with specific proposals, the party will examine them.”

Finance minister P. Chidambaram had said after the trust vote the government would approach parties that support reforms, but there were hurdles.

One BJP leader said: “Supporting the government shouldn’t be a problem on this (liberalisation) under normal circumstances. But the party is rattled after the trust vote and its first priority is to put its own house in order. We aren’t thinking about the government’s agenda at this juncture.”

The BJP is confused about the course of reforms and hasn’t reviewed its economic philosophy in the last four years. Party chief Rajnath Singh constituted a committee headed by Murli Manohar Joshi to study the matter but no substantive work has been done so far.

pauldevis · Post by **pauldevis** » 26 Jul 2008 10:59

Fears of major crop damage recede as met predicts revival of monsoon

NEW DELHI: The monsoon, which had played truant in southern and western India after early enthusiasm, is likely to revive soon, abating fears of a major drop in production of oil seeds, pulses and rice in large parts of the country, reports Our Bureau in New Delhi.

According to the India Meteorological Department (IMD), the rains are likely to gather momentum around Sunday. In fact, breaking a disconcertingly long dry spell, it’s been raining in most parts of Maharashtra, including Mumbai, for the past couple of days

putnanja · Post by **putnanja** » 29 Jul 2008 01:10

BJP might ‘test’ govt on reforms

BJP might ‘test’ govt on reforms

By Amit Agnihotri

New Delhi

July 28: The BJP-led NDA, signalling a turnaround in its stand on economic reforms and possible floor coordination with its new Left allies, indicated on Monday it might stall key bills on insurance, banking and pensions when Parliament meets.

The NDA has been a staunch supporter of reforms in the financial sector. Political watchers said this strategy might be part of an effort to test the UPA government’s majority on the floor of the Lok Sabha. "We will not support the UPA on various economic reform bills. After its recent ‘tainted trust vote victory’, this allian-ce has lost its moral authority to introduce such policy changes," senior BJP leader Sushma Swaraj said.

Congress spokesperson Manish Tiwari said finance minister P. Chidambaram would take a call on when to introduce these bills. "If we are confident of the numbers, the bills will be put to vote. The NDA’s move will be against the country as it would derail reforms."

The BJP leaders clarified they were not "opposed to reforms". Ms Swaraj said: "Let’s wait till the elections. If the NDA comes to power, we will continue with reforms."

Katare · Post by **Katare** » 29 Jul 2008 01:21

Kya bola tha mein tumko ravi