Indian Economy: News and Discussion (June 8 2008)

[SwamyG]

I used to think that credit cards would be a good way to combat the unofficial economy. Looks like it will need some doing to compel people to use them.

The worst plastic we have is 'credit card'. It is good only if the card holder pays off the entire balance without any fees, interest or charges.

[Suraj]

On the matter of base year updates for IIP, inflation and GDP, here's an article that demonstrates what is wrong with the current data collection mechanism - an old base year essentially cannot model new streams of economic activity. In this case, cellphone manufacture (Nokia India manufactures about 100 million cellphones a year at it's Chennai plant) is entirely missing from even the planned new 20004-05 IIP series:
Cellphone manufacture to be outside IIP ambit

“It is a matter of statistical contention. The debate regarding the inclusion of mobile phones has been on for some time but in 2004-05, India did not manufacture mobile phones and therefore the revision of base will not include this particular industry,” said Pronab Sen, chief statistician of India and secretary, ministry of statistics and programme implementation (Mospi).

Mobile phone manufacture in India started only in 2006. Finnish company Elcoteq established the first mobile phone factory at Bangalore in April 2005. It started production in 2006 and with other major companies too starting production the same year. Market leader Nokia and Korean giants LG and Samsung, along with local brands like Spice, Usha Lexus and BPL now have mobile manufacturing units in India.

Growing domestic demand and relatively cheap labour saw production increase manifold. In 2006 alone, India produced around 31 million mobile phones and production crossed 100 million sets in 2008.

Gartner, a telecommunication research and consulting agency, has predicted that the mobile phone manufacturing industry, which is around Rs 30,000 crore, will see a compounded annual growth rate of 25 per cent every year.

On the monsoon and drought situation:
Govt plans drought management

The government has decided to hold regular meetings of group of ministers (GoM) to review the situation.

“The GoM will meet on a regular basis and the ground reality was that the drought has set in,” Finance Minister Pranab Mukherjee was quoted as saying in an official statement.

At the same time, Agriculture Minister Sharad Pawar asked states to start relief operations in the drought-affected districts and clamp on hoarders to ensure prices do not shoot up, while describing the year as a difficult one for both farmers and consumers.

“We have faced problems like this before and now there is much greater elbow room to deal with this drought than in the past. There is adequate wheat and rice stocks in our godowns. And what is more, this time we have in place livelihood programmes like NREGA and RKVY,” the prime minister said.

The country as a whole has witnessed a rainfall deficiency of 29 per cent as on today and the number of districts reeling under drought or drought-like condition has gone up to 207.

Nine states — Assam, Bihar, Himachal Pradesh, Jharkhand, Manipur, Nagaland, Karnataka, Maharashtra and Uttar Pradesh — have declared drought, partly or wholly, Pawar said and urged the chief ministers to start relief operations immediately.

“Continuation of the prevailing climatic conditions is likely to affect production... Thereby, negatively impacting foodgrain availability,” he said.

He said poor rains were having an impact on rates of food articles, mainly pulses and sugar, and also blamed speculation and hoarding for the price rise. Observing that only 18 states and Union Territories have imposed stock limits on essential items, he said “remaining states must also take necessary steps in this regard”.

As several states have raised their demands for more money to combat the drought situation, the Congress will convene a special meeting of its Working Committee on August 19.

Jobs:
More firms plan to reverse salary cuts, hiring freezes

According to the bi-monthly survey by leading global consulting firm Watson Wyatt the number of employers planning to reverse salary cuts and freezes has increased in the past two months.

"44 per cent plan to roll back salary cuts in the next six months, compared with 30 per cent two months ago," the survey, conducted earlier this month, revealed.

While around 33 per cent of the employers who froze salaries plan to defreeze them within the next six months, an increase from 17 per cent two months ago, it added.

Moreover, a majority of employers (52 per cent) are now more concerned about retaining their top performers and critical-skill employees than they were before the economic crisis hit.

"Some employers are seeing the light at the end of tunnel and feeling optimistic about the prospect of improved business results," Watson Wyatt Global Director of Strategic Rewards Consulting Laura Sejen said.

"However, even as some of the program cuts are rolled back, many employees are facing smaller raises, lower bonuses and higher health care costs," Sejen added.

In an effort to keep employees engaged, 83 per cent of employers have increased communication and 40 per cent have held additional employee forums such as town halls or other interactive sessions to address economy-related concerns.

[Katare]

a_Bharat,

There were numarous articles and news out there in recent months where workers were complaining about they were being paid for "amount of work done" not for the time put into it. Things like "its hard rocky soil so we can't cut 6 meter long thench on this side of the road so we should be paid for 4 meter" and so on. There will be different experiences accross the country some Ok some bad some total waste.

ShauryaT,

On the dot! That's why govt should stay out of economics and economy as much as possible.

[ShauryaT]

On the dot! That's why govt should stay out of economics and economy as much as possible.

If you meant government should stay out of the business of business then no arguments with that concept, however the Indian state is institutionally not designed for such an outcome and will require the reinvention of the state. Even in such a state, for example in the US, the government can never stay out of the economy.

[Rahul Mehta]

We do not debate economic return/waste of defense spending because it's not an economic issue.

The Military and Military-Industrial Complex are the importantest economic issues. The economy runs on Military.

The so called Military is labor of soldiers and scientists, engineers etc who make weapons. And the labor of these people is what enables us to retain the land, waters and mineral ores (or gain the ores just as US gained the oil wells of Iraq). Without land, waters and minerals, economy will become near zero. Hence, Military and Military Industrial Complex have REAL economic value just as medicines or any other commodity.

The reason why Indian Economic Textbooks phoo-phho defense expenditure as waste is because the textbook writers are told to write texts that way. We should dismiss their views as lies.

Above all it prevents further naxalism and Maoism in rural/tribal areas (which costs a lot more in econmic terms than NERGA does)

Growth of naxalism hasnt reduced. So man be, NREGA did no good or may be it was not enough. I would say that it did no good, as benefits reached bottom in very very few cases.

The siphoning in NREG is phenomenal. Many Rajasthani servants I know tell me that they go to village once a month to collect some 25% of NREG money !! IOW, they are working in Ahmedabad, but they are on NERG payroll in their village. They get 25%, and some 75% goes to Nbjprie. And those who work get only 50%. Because if they dont give out 50%, then local Talati will somehow expel them from the scheme. The NREG scheme was created by MMS to keep local party workers and local babus happy, not really help the poor. Which is why direct payments are opposed, as corruption in direct payments would be too too low.

[darshan]

I agree with RM as far as Guj/Raj area is concerned.

[harbans]

On the matter of base year updates for IIP, inflation and GDP, here's an article that demonstrates what is wrong with the current data collection mechanism - an old base year essentially cannot model new streams of economic activity.

Suraj ji, so if the base year is advanced there will be a massive upward revision to the nominal GDP and will include industries like mobile manufacturing etc. I understand you'd not like to give a figure estimae of how much upward revision wold be if we increase the base year, but is there anywhere i can find out economic acivities that are 'uncounted' post 1993-93 base year?

From your article:

The current index with a base year of 1993-94 covers 534 items that account for around 80 per cent of the output of the manufacturing industry.

Whic means just the manufacturing sector is being under represented by 20%. What about other sectors..is there any source of info how much we are under reporting our GDP?

[Singha]

afaik the discrepency is likely to be lot more in services and retail. most of it didnt exist in 1993 or even 2000.

[Suraj]

harbans, yes a significant component of manufacturing, and probably even more so in services (as Singha said) goes currently unreported, and we're only talking about the white economy here, not even the informal one. We all know how big the latter is.

[amit]

harbans, yes a significant component of manufacturing, and probably even more so in services (as Singha said) goes currently unreported, and we're only talking about the white economy here, not even the informal one. We all know how big the latter is.

You know Suraj, I sometimes wonder. Surely the folks in government are aware of this problem just as we are?

What's prevents change which would immediately give a major fillip to GDP numbers? Is it just sheer apathy of various government departments or is there any advantages to be had by having under-reported numbers?

I'm really at a loss to understand.

[Singha]

being in poorer category permits Govt to seek various long term soft loans from folks like ADB and aid agencies. if the official figures were shown as better, we'd be crowded out by more deserving nations.

poverty is a industry - everyone from GOI to the lakhs of NGOs, political formations and evanjihadis feeding on this problem have their own agenda to perpetuate it - if not in reality atleast on paper.

we are bhookha nanga yindu onree.

[amit]

being in poorer category permits Govt to seek various long term soft loans from folks like ADB and aid agencies. if the official figures were shown as better, we'd be crowded out by more deserving nations.

poverty is a industry - everyone from GOI to the lakhs of NGOs, political formations and evanjihadis feeding on this problem have their own agenda to perpetuate it - if not in reality atleast on paper.

we are bhookha nanga yindu onree.

You know, I suspect as much. And it may not be too bad a strategy at all.

Who'd be envious/jealous of the bhookha nanga yindu?

At an appropriate time, hopefully, we'll make the adjustments, the way the Chinis did.

But I'd like to see the new literacy figures, this half of India is illiterate charade has gone on for far too long.

[Suraj]

Amit: you're about 4-5 years late to this discussion Long back, some of us spent several pages on this topic; folks like Singha, Katare etc will remember it well. Back then there was indignation on the same lines, but with time it has mellowed to 'it is what it is'. Singha even did a scathing pen portrayal of the interior of the CSO HQ, vividly drawing an image of a dank, unproductive sarkari office, complete with slowly rotating fan and snoring employees.

The bottomline is that India does not put a huge premium on putting forth our best when it comes to GDP figures, much in contrast to China, who will go to extraordinary lengths to do so. Of course the GDP jingo in me would like to see that change, but more seriously, what matters is that effective data collection is critical to the ability to respond to economic crises.

An example I mentioned before is the US during the Great Depression - their data collection system was so lax that they simply had no idea they were heading down the precipice. However, they learned their lesson, and the Treasury Dept has since had a well-funded department for comprehensive data collection and monitoring. Of course they resort to madrassa math at times, such as inflation reporting, but they have copious raw data of the situation on the ground, that we really don't.

[Singha]

yes its better to have comprehensive data and then run chankian filter, than have incomplete data and make a chankian virtue out of it. in PRC the chankianness runs at several levels from local village bully commies upto tier1 officials.

but I suspect if we do gather complete data, the open nature of our democracy, media and RTI will make chankian filter tough to apply. so they are content to let the shaggy flea bitten dog lie where it does.

[Rahul M]

could some gyani explain to an ignoramus (who last confronted economics in class X) how changing the base year to a more recent one increases the gdp ?

[pankajs]

being in poorer category permits Govt to seek various long term soft loans from folks like ADB and aid agencies. if the official figures were shown as better, we'd be crowded out by more deserving nations.

poverty is a industry - everyone from GOI to the lakhs of NGOs, political formations and evanjihadis feeding on this problem have their own agenda to perpetuate it - if not in reality atleast on paper.

we are bhookha nanga yindu onree.

If I may add saar, it also allows them to claim special Privilege at WTO or block some forms of arm twisting by the western block by claiming to be defending the rights of the poorest of the poor. The carbon foot print is another case in point where it was recently used. These two I support.

[pankajs]

Rahul Saar, I am no economist so take this with a pinch of salt.
---------------
Look at it this way
Base Year: 1980 - What is produced and how much does each contribute to the GDP?
Say, we are a total agri economy. so let assume some produce and tabulate their contribution to the GDP.
Rice - 40 %
Dal - 30 %
Oil - 10 %
Sugar - 10%
Banana - 10 %
------------
Base - 100% (Starting point) and defines the basket of produces to be used in the subsequent year calc.
Base GDP = qty * price in that year (for all products, services, etc)

In 1990 : What is produced and how much does each contribute to the GDP?
The character of the economy changes. So lets again tabulate the produces.
Rice - 30 %
Dal - 10 %
Oil - 10 %
Sugar - 10%
Banana - 10 %
Tourism - 30%
---------------
100% of GDP in 1990
Real 1990 GDP = qty * price in that year (for all products, services, etc)
Calculated GDP = qty * price in that year (70% of 1990 produce will be considered only)

The basket defined in 1980 does not include Tourism. So the GDP calculated based on 1980 basket will be lower than the actual because it will omit certain items. Now If you re-adjust the base year to 1990 the omitted items will come back into counting and the GDP will be higher.

Hope this makes sense.

[Suraj]

pankajs: thank you for the example.

Some of the entries in the CSO list of manufactured items are outdated. For those of you who have availed of a range of goods and services between 1993-94 and today, just think how many more new things are available now than back then. More importantly, output of several old product categories have not just been exceeded by newer items like consumer electronics goods (e.g. cellphones), but the growth rates of these new categories are far higher than the older mature ones, further skewing things towards an underestimated GDP figure. Therefore, just keep in mind that when you quote a figure like $1.3 trillion for the GDP, there's a big asterisk next to that number.

[pankajs]

Saar pls revisit the example and check. I have streamlined the presentation and changed the wordings a bit.

[Suraj]

pankajs: that looks fine.

NREGA gets monitoring body at last

The ministry of rural development is at the receiving end of criticism for holding in abeyance for a year the Employment Guarantee Council set up under the National Rural Employment Guarantee Act.

When the Council was convened yesterday after a year’s inactivity, some members pointed to this and other failiures to enforce the mandate provided under the Act.

Jean Dreze and Aruna Roy noted the Council not being convened for a year was against the law. They also pointed out that the Council was given powers to monitor the programme, besides sending annual reports to Parliament. The Council, they noted, has been convened just eight times in four years.

Union rural development minister C P Joshi acknowledged the points and agreed with the need to activate the body in line with the law.

NREGS being expanded to cover drought-hit districts - again in line with what I suggested a few days ago. Not only that, but there are plans to combine NREGS with the Bharat Nirman rural infrastructure program, something I'd recently mentioned as a viable possibility:
Mega expansion of NREGS today

As vast parts of the country reel from the effects of a drought, the second UPA government will unveil a mega expansion of its flagship National Rural Employment Guarantee Scheme (NREGS) on August 20, which coincides with late prime minister Rajiv Gandhi’s birth anniversary.

More than 25 new jobs, ranging from cooking of mid-day meals to running a crèche, are likely to be included to provide an alternative source of rural employment and livelihood in these difficult times.

The government also plans a convergence between different works of NREGS and its ambitious Bharat Nirman programme. Among the proposals lying before the Union rural development ministry includes setting up of Bharat Nirman Sewa Kendra, a mini secretariat under the NREGS, and the Backward Regions Grant Fund.

“This would accommodate multiple development project needs in one place and encourage convergence at the gram panchayat level. States can be advised to take this as the ‘core’ activity this financial year. This activity would need convergence of NREGS labour with funds for BRGF,” said an inertnal note from the ministry.

According to the latest estimates, 870 million persondays of work have been generated up to July 2009 in 619 districts under NREGS. While 25.2 million household were provided employment, the average persondays of work per household is just 34.

Nearly half of districts affected by drought

“Ten states have declared 246 districts as drought-affected. It comes to about 46-47 per cent of total districts in the country. This year, there is 29 per cent less rainfall. This has affected crops in many states,” Agriculture Minister Sharad Pawar said on the sidelines of a meeting with state food ministers here.

As the number of districts witnessing drought has been revised sharply upwards from 207 two days ago, the government said its main focus would now be on saving the standing crop and offsetting some losses in output during the coming Rabi season.

“First, our top priority is to save the standing crop. For this, (all affected) states can give subsidy on diesel and power to save crops, if required,” Pawar said.

The Centre has also asked states to lift more seeds for replanting the crops, if necessary, as it has about 1.5 million tonnes of surplus stock.

These apart, the government is laying more stress on increasing output during the Rabi season.

“Our main focus will be on the Rabi where there is assured water supply to the field. There is substantial improvement in the water level of reservoirs during the past one-and-a-half months,” Pawar said. He said states had been asked to focus on compensating the production loss during the Kharif season in Rabi season.

[Hari Seldon]

25% shares in all listed cos to be public owned: Govt

Long overdue, IMO. More float, more public participation via common stock with voting rights, better for Indian capital markets and corp governance.

Finance minister has put his seal of approval on a proposal that could willy-nilly lead to disinvestment in many of India's biggest listed PSUs.

Aha. Divestment thru the backdoor or what?

[Rahul M]

pankaj and suraj, thanks a lot for the explanation.

so it's dependent only on the items being considered ? are there any other factors ?

[Katare]

Yeah I remember we had that discussion 4-5 year back. I think it got initiated because Pakistan and China revised their base year and GDP’s upwards (30-40%) around that time. That was some serious cruel time for GDP jingos of Indian origin. I used to give example of Scooters having twice as much weight in IIP than motor cycles. After 2000 scooter market was shrinking while motorcycle market was exploding but our data was showing a shrinking/stagnant two wheeler market.

Similarly our system still looks at typewriter production while largely ignoring computers and laptops which are exploding. It looks at cassettes while ignoring CD’s and DVD etc. A significant portion of growth comes from new products which are not being counted while old shrinking markets are being counted with much higher weight than they are worth. Constant changing of base years is needed to accurately account for economic activity in changed world where a lot of things become obsolete in matter of couple of years.

I guess CSO can't do any better than 2004 for base year because that may be the latest years that they have final GDP numbers available for.

[Katare]

Will prefer acquiring a domestic bank over global: ICICI

Asserting that the bank was the best capitalised entity in the world with over 17 per cent capital adequacy ratio, she said, "So, clearly, what I would say, we are definitely growing in India, when one talks of aggression. Again, in a way to put that in context, we are definitely a growth organisation and the growth DNA continues."

Now the issue, she said, "Is whether you grow organically or inorganically. Well, we have capacity to set up 580 branches in one year. So, obviously one then weighs what is the cost of acquiring a bank of similar size or is it more economical to do it internally."

[Satya_anveshi]

Don't come fishing for account details: Swiss banks to India

India needs to respond strongly to this and develop a comprehensive solution to complete stop this uncivilized culture/practice of Swiss govt/institutions.

[derkonig]

^^^^
What are the chances that the current public posture of Swiss Banks towards India is due to pressure from 'the party'?

[vasu_ray]

Don't come fishing for account details: Swiss banks to India

India needs to respond strongly to this and develop a comprehensive solution to complete stop this uncivilized culture/practice of Swiss govt/institutions.

Make a Indian law that money can be deposited in foreign banks only when the respective govts have transparency agreements with us, else its illegal.

Use that legislation to make all swiss account holders as potential defendants, it gives legal means to pursue their accounts with Swiss authorities.

[Sanjay M]

I thought Swiss banking secrecy laws were facing challenge from the USA in its War on Terror.

India needs to demand an international standard for banking transparency, so that it can combine its leverage with others, rather than dealing with the Swiss individually from a position of weakness. Let's see if all these noisy NGOs will speak up in support, or mysteriously stay quiet on the issue.

Meanwhile, here's a Time article on the effects of the drought in India:

http://www.time.com/time/world/article/ ... 81,00.html

[ashish raval]

Now Swiss Govt. take Indian Govt. on a ride. Needs to say that Swiss thinks that India is a banana republic !

http://timesofindia.indiatimes.com/news ... 928503.cms

Why dont anyone from opposition or government sponsor a bill which makes mandatory for anyone who is a citizen of India after 1947 declare their all the overseas bank accounts ? Once the law is passed, we can then pressure the Swiss government about its statuatory obligation as per Indian law and it is required by Swiss government to declare the names if it needs to trade with India. Any less than that, Swiss government will not oblige and black money will remain black until forever. Waiting to see that Congi. goons saying in parliament that Swiss govt. has refused to cooperate and chapter is closed. We tried out best...double faced di**s.

[Satya_anveshi]

xposting:

http://forums.bharat-rakshak.com/viewto ... 22#p724222

nothing will happen while Congress is in power.

IMO, the most effective way to stop this practice is a message from people of the affected nations such as India to the people of Swizerland and other developed nations where these institutions exist.

A full page ad in NYT, WSJ, WashPost, Swiss and other European National papers, depicting poverty, health, malnutrion etc can be showcased and ask the nations under the censure to stop evil practices. If corrupt means are reduced there will be one (biggest) less incentive for the politicians to be corrupt.

Some non-profit should lead this initiative. GOI action must run parallel to this and deal directly with the institutions.

Can anyone identify any non-profit that is in position to do this? We can certainly help in raising funds required for this campaign. I am willing to volunteer in such a case.

[Satya_anveshi]

Now Swiss Govt. take Indian Govt. on a ride. Needs to say that Swiss thinks that India is a banana republic !

http://timesofindia.indiatimes.com/news ... 928503.cms

Why dont anyone from opposition or government sponsor a bill which makes mandatory for anyone who is a citizen of India after 1947 declare their all the overseas bank accounts ? Once the law is passed, we can then pressure the Swiss government about its statuatory obligation as per Indian law and it is required by Swiss government to declare the names if it needs to trade with India.

Yes, we should do this too. Host of actions are required by Govt, people, and institutions. We need to show Swiss nation and institutions are in direct violations of law (no matter it may be our law). That can ad punch to our messaging.

It is amazing that Switzerland being a democratic nation (and some say oldest democracy) can practice this "barbaric" practice in this day and age!

I am not buying any swiss made product ever nor will be visiting or recommend anyone to visit that nation.

[joshvajohn]

The language the swiss banks used against Indian government request is very racial in nature. Indian government as usual does not realise their power. If Indian government stops dealings with Swiss banks or even announce that according to Indian law their dealings are illegal and no money transfer should be done from or through or to them. Indian government should also show that it was through Swiss banks many of the transfers from Indian politicians and rich folks are done to terror groups. So Indian government has all the right to say that it is illegal to have dealing with swiss bank according to Indian law or at least make amendment in this regard. Ofcourse our hands are weaken by our own politicians who have their big money particularly all the unaccounted government money which were taken as bribes through contracts and other things. In this sense many of the present ministers and even the opposition leaders have their account and big money (black) in swiss accounts and thus all the blood money of Indian people are out there in swiss accounts.

[Satya_anveshi]

Now Tata Tea asks public to stand up against corruption

New Delhi: After asking the public to "Jaago Re" or wake up and register themselves for voting, tea major Tata Tea is urging the people to fight corruption with a new ad campaign.

[Katare]

The language the swiss banks used against Indian government request is very racial in nature. Indian government as usual does not realise their power. If Indian government stops dealings with Swiss banks or even announce that according to Indian law their dealings are illegal and no money transfer should be done from or through or to them. Indian government should also show that it was through Swiss banks many of the transfers from Indian politicians and rich folks are done to terror groups. So Indian government has all the right to say that it is illegal to have dealing with swiss bank according to Indian law or at least make amendment in this regard. Ofcourse our hands are weaken by our own politicians who have their big money particularly all the unaccounted government money which were taken as bribes through contracts and other things. In this sense many of the present ministers and even the opposition leaders have their account and big money (black) in swiss accounts and thus all the blood money of Indian people are out there in swiss accounts.

Should go little easy on word "Racial", race has nothing to do with it. Second its not Swiss govt that's replying but the president of banking association talking in one of his speeches.

[Neshant]

Swiss govt that's replying but the president of banking association talking in one of his speeches.

.. which is essentially the position of the swiss government.

There is no economy in switzerland other than promoting tax fraud & evasion, money laundering, crime related kickbacks & loot. It lives off promoting corruption & robbery in the rest of the world.

[Katare]

sure!

but the quoted statement was not racial and it was not from Swiss govt.

Today Swiss govt replied and assured GoI that they'll provide assistence on tax cheating cases if individual cases brought to it with supporting documents under double taxation treaty that exists between India & Swiss.

But don't expect much, neither GoI's going to pursue it nor Swiss are going to volunteer. If they start giving out customer information on demand money would move to some other location. Better option is to amend tax laws in India, improve monitoring and audit. Finmin is already talking about ammending tax laws to enable it to seek information from foreign countries.

They did provide information on Bofors case and accounts were sealed for years until cases were dismissed/decided by SC.

On famous Pune's Ali case, where it was alleged that he had $8Billion in Swiss banks. The docs that CBI submitted were found to be forged by Swiss authorities.

[vishwakarmaa]

sure!

but the quoted statement was not racial and it was not from Swiss govt.

Being Racial is an institutionalized norm in white economies. Here "racial" doesn't refer to "skin color" but ethnicity.

[Sanjay M]

I've been reading a lot lately about High-Frequency Trading, and I'd like to find out who does it in India, particularly in connection with the Futures markets, but not limited to that of course.

We've all heard about IndiaBulls.com in the past couple of years, due to their meteoric rise from nowhere. But who else does this kind of thing? Does anyone have any info on the details of their operations?

http://en.wikipedia.org/wiki/Indiabulls

Frankly, I'm not too aware of the state of Indian commodities/futures markets in general, so even pointers to information on that would be appreciated.

[Katare]

sure!

but the quoted statement was not racial and it was not from Swiss govt.

Being Racial is an institutionalized norm in white economies. Here "racial" doesn't refer to "skin color" but ethnicity.

[Suraj]

Core sector growth affected by refined petroleum production decline in July. However, coal, electricity and cement all registered strong growth:
Core sector growth down 1.8% vs 5.1% a year ago

Growth of six core infrastructure industries eased to 1.8 per cent in July, the lowest this fiscal, as petroleum refinery output acted as a drag on the sector. A 14.4 per cent contraction in petroleum refinery products constricted expansion of the six key industries in July, against 5.1 per cent a year ago.

The core sector, which comprises petroleum refinery, crude oil, coal, electricity, cement and finished steel and accounts for 26.68 per cent in the country's industrial production, had grown by 6.8 per cent in June and had then raised hopes of industrial recovery.

Crude oil, though at lower rates, dipped by 0.4 per cent in July against minus three per cent a year ago. However, coal expanded by 9.7 per cent against 5.5 per cent, electricity by 3.3 per cent as compared to 4.5 per cent, cement by 10.6 per cent as against 5.5 per cent and finished steel by 1.2 per cent as against 6 per cent.

POSCO delinks steel, mining projects in $12 billion Orissa development

The South Korean steel major Posco, proposing to set up a 12 million tonne integrated steel plant near Paradeep in Orissa, today said, it will separate the captive mining from the steel project to expedite work on the mega steel plant.

It hoped to start ground leveling work for the project early next year. It, however, ruled out the possibility of leaving out Dhinkia, the epicenter of anti-Posco agitation in the project area, from the original site plan. It was speculated that the company may drop this village from the site map to circumvent opposition to its project in the area. “We will separate the mining project from the steel plant and the construction of the steel plant will be taken up first”, Dong-He-Lee, chairman, Posco India told the media persons here.

He said, almost all the problems pertaining to the project has been resolved and the construction work will start soon. “ By the end of 2009 all the legal matters will be solved and early next year, the construction work like leveling of land will start”, he added. Sources said, the meeting lasted for more than 45 minutes and the state government assured to support the project. However, Patnaik insisted that the company should start the project in time and give close attention to the issues relating to the rehabilitation and resettlement of the affected people.

Since the grant of prospecting license (PL) and subsequently mining lease (ML) will be delayed due to the litigations involved in the matter, the company sought raw material linkage for the project. In this context, the government agreed to provide raw material linkage through Orissa Mining Corporation (OMC), as it has been providing to some MoU signed companies, to Posco as an interim measure.