Indian Government Policy… Farmers are getting more credit

Perspectives Weekly reports on Indian economy and business

Farmers are getting more credit, even as cultivable land declines. Customer reigns supreme as a Delhi High Court slaps fines on firms that make unsolicited calls, even after the users had signed up for the DND facility.

- Chillibreeze Business Research Team

Government Policy & Infrastructure
Economy
SEZs
Agriculture
HR
Power
Banking & Finance

Government Policy & Infrastructure

India plans innovation law to boost research

The government would soon bring in a comprehensive legislation, the India Innovation Act, to boost research and innovation in the country, Union minister for science & technology and earth sciences Kapil Sibal said here on Monday.

He added that the Government would like Ficci (Federation of Indian Chambers of Commerce and Industry) to draft the legislation and present it to the government in three months. This announcement was made at a meeting of the Indo-US Task Force on Shaping the Global Innovation Economy. Ficci and the Pacific Council on International Policy, a non-partisan organisation based in Los Angeles, have joined hands to form this task force.

The India Innovation Act is likely to be modelled on the America COMPETES Act, which focuses on three primary areas: increasing research investment, strengthening education opportunities in maths, science and technology and developing an innovation infrastructure.

September 11, 2007
Source: Economic Times

Govt may relax ECB norms for Infra cos

India urgently needs more bridges, ports and power plants. But infrastructure projects are starting to face a cash crunch after the government and the RBI cracked down on external commercial borrowings last month.

Infrastructure companies have now once again asked policy makers to relax ECB restriction in the infrastructure sector and this time their voice may finally be heard in the corridors of north block.

The government is considering relaxing the $20 million cap on ECBs for rupee expenditure in the case of infrastructure companies. The limit may now be raised to $50 million. The government may also agree to keep funds raised through exchangeable bonds out of ECB limit.

September 11, 2007
Source: NDTV

Parliament passes Competition Bill

Parliament on Monday passed a bill giving teeth to the regulator Competition Commission of India to deal with a host of contemporary economic issues including monopolies and takeovers of corporate firms.

The Rajya Sabha approved without debate the Competition (Amendment) Bill, 2007 which was earlier passed by the Lok Sabha.

The bill moved by Company Affairs Minister Premchand Gupta was passed in the Upper House even as it was witnessing uproar by NDA members over the Indo-US nuclear deal.

According to the bill, the Commission will ultimately replace Monopolies and Restrictive Trade Commission (MRTPC). The Commission was established way back in 2003.

The new law, when it comes into operation, would bind the companies to inform CCI about mergers and acquisitions within 30 days. Companies could be penalised in case they fail to do so. The bill has a provision for a three-member quasi-judicial body Competition Appellate Tribunal to hear appeals against any direction issued by the Commission.

It also seeks to empower the CCI to impose penalty of up to Rs 25 crore or up to three-year imprisonment or both in cases of continued contravention of its orders if the Chief Metropolitan Magistrate deems fit.

September 10, 2007
Source: Economic Times

NHAI to invest Rs 50,000 cr in NE

National Highway Authority of India would invest Rs 50,000 crore in the northeast region in the 11th Five Year Plan for increased connectivity with all state capitals.

NHAI would invest Rs 50,000 crore in the 11th Five Year Plan for augmenting capacity of high density corridors which would result in provision of improved four lane national highway link to all state capitals, NHAI director general S K Nirmal told reporters here on Monday.

Nirmal, who attended the just concluded three-day seminar 'North-East India' - a gate way to south east Asia, organised by Institution of Engineers, said trans-Asian highways to connect north-east with south east Asian countries should be given priority.

He said alternative national highways to improve inter- region connectivity should be prioritised and all the district headquarters should be connected with such highways.

A team of experts who attended the seminar recommended developing connectivity between Chittagong port in Bangladesh and Haldia port in West Bengal.

The team also recommended linking railways to every capital of the region. At present only Guwahati is connected with railways, while Tripura's capital Agartala is likely to be linked by March next year.

September 10, 2007
Source: Economic Times

Mandatory selloff norm may be removed

The government is likely to remove the mandatory clause of divesting 26% equity in favour of Indian partner or public within five years of operation for the petroleum and natural gas sector.

The divestment clause is seen as a major irritant by foreign investors who have time and again demanded it should be done away with. The department of industrial policy & promotion, which is undertaking a review of the FDI policies, is likely to drop the clause in the case of the petroleum sector, an official said.

The ministry of petroleum & natural gas has also favoured removal of the clause, he added. A proposal in this regard is expected to be taken up by the Cabinet soon.

According to Press Notes 1 of 2004 and 4 of 2006, a foreign company has to mandatorily divest 26% stake in its Indian joint venture or offload the same amount of stake through a public offer.

September 5, 2007
Source: Economic Times

Final document of 11th Plan to be ready by year-end

The final document spelling out strategies and thrusts of the Eleventh Plan (2007-12) would be ready by the end of this year even as some of the important components of them have been identified, discussed at length and incorporated in the Budget 2007, the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, said here on Tuesday.

Talking to Business Line here on the twice postponed full-meeting of the Plan panel to discuss the education sector for evolving a strategy to dovetail into the Plan, Mr Ahluwalia said that already a full meeting of the Plan panel on agriculture took place and strategy identified.

September 5, 2007
Source: Hindu Businessline

Economy

GDP likely to grow by 8.5-9%: Montek

The country's economy is likely to expand by 8.5-9 per cent this fiscal, Planning Commission deputy chairman Montek Singh Ahluwalia said on Tuesday.

Ahluwalia told reporters on the sidelines of a FICCI meeting here that even if the economy grows by 8.5 per cent, it would be "very good". He also said inflation is in "comfort zone" and is expected to remain around the current level.

The country's GDP recorded a growth of 9.3 per cent during the first quarter this fiscal. Inflation, on the other hand, has declined to 3.79 per cent for the week ended August 25 from a peak of 6.69 per cent in January this year.

September 11, 2007
Source: Economic Times

FinMin to review impact of Re rise

The exporters are unlikely to get any additional package from the government anytime soon, as the Finance Ministry will review the impact of rupee appreciation against the dollar only in January next year. "The current package will run till December 31 this year. We will assess the rupee value in January and then decide on the issue," a Finance Ministry source told media.

The Indian currency has risen nearly 10 per cent against the greenback in the past one year. The rupee today rose about 0.3 per cent to 40.54 against the dollar, the strongest intra-day level since August 13.

According to Commerce Ministry officials, the ministry has constituted a team to understand the impact of the rupee appreciation at the ground level and some more incentives could be announced for exporters.

September 11, 2007
Source: Economic Times

Inflation in comfort zone: Official

India's widely watched wholesale price inflation rate has entered a "comfort zone" and is expected to remain low for the rest of the fiscal year, a top government official said on Tuesday.

"Inflation is in a comfort zone and I expect it to remain there," Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters.

He said the Indian economy was expected to grow at 8.5-9.0 percent in the fiscal year ending March 2008.

September 11, 2007
Source: Economic Times

Industrial output seen at 9.6 pct

India's industrial output in July is forecast to have grown 9.6 per cent from a year earlier, slightly slower than the previous month as monetary policy tightening hit consumer demand and increase borrowing costs.

The median forecast of 10 analysts in a Reuters poll put annual growth slightly below June's 9.8 per cent. If the July forecast of annual growth of 9.6 per cent is realised, it would be the slowest growth since last October when industrial production grew a meagre 4.5 per cent.

It would also be the first time annual growth had been below 10 per cent for consecutive months since March and April of 2006.

September 11, 2007
Source: Economic Times

SEZs

Videocon to invest Rs 100-500 cr on Punjab SEZ

Consumer electronics major Videocon Industries on Sunday announced its decision to set up a multi-product special economic zone spread over an area of 1,000 hectares in Punjab with an investment of Rs 100-Rs 500 crore.

"We will be developing a 1,000 hectares SEZ in the field of agriculture as well as electronics and hardware sectors in Punjab which will involve an investment of over Rs 100 to Rs 500 crore," Videocon Industries Chairman and Managing Director, VN Dhoot told reporters here on Sunday.

Dhoot is expected to meet Punjab Chief Minister Parkash Singh Badal in this regard.

The company will acquire land for this purpose on its own rather than asking the state government, he said.

September 9, 2007
Source: Economic Times

Bengal plans tech SEZs to house IT biggies

Undeterred by the Nandigram fiasco, the West Bengal government is planning to set up two new IT-specific special economic zones (SEZs) to accommodate IT biggies like Infosys, Wipro and TCS who have lined up for land to either set up shop or expand existing operations in the state.

Speaking to ET, state IT secretary Siddhartha said the two SEZs would be owned by the state and located at Rajarhat and Kalyani. They would be spread over an area of 323 acres and 200 acres, respectively."

The move is aimed at keeping the state's contribution in IT exports intact after the expiry of the software technology parks of India (STPI) scheme in 2009. The state government is yet to apply to the Centre for a formal approval for the two proposals.

September 8, 2007
Source: Economic Times

Agriculture

Farmers to protest wheat import in New Delhi

In response to a call given by the Bhartiya Kisan Union (BKU), farmers from all over the country, under the leadership of Mahendra Singh Tikait, will stage a demonstration in New Delhi protesting the Centre's decision to import wheat.

Disclosing this here today, BKU's Punjab unit chief Ajmer Singh Lakhowal said farmers of the country would not allow the Centre to import wheat at an exorbitant rate of Rs 1,600 per quintal.

He ridiculed the government's assertion of maintaining buffer stock by importing wheat when the country had already produced more than one crore metric tonnes of wheat.

The demonstration will also press upon the Union government to fix the Minimum Support Price (MSP) for paddy at Rs 900 per quintal. A Memorandum will be submitted to both Prime Minister and Union Food Minister, Lakhowal said.

September 11, 2007
Source: Economic Times

Agricultural loans rise to Rs 2 lakh cr

The son of the soil, it seems, is finally getting credit. At least in monetary terms. Farm credit flow rose to Rs 2,03,297 crore in 2006-07, way above the targetted Rs 1,75,000 crore. In fact, as much as Rs 1,45,343 crore of the lending, or 85.34% of the target for the fiscal, was completed by December 2006.

The lending in 2006-07 is a good Rs 22,811 crore more than the Rs 1,80,486 crore given out in the previous year, according to the agriculture ministry. As many as 84 lakh new farmers were financed in FY07, compared to 79 lakh new farmers in FY06 and FY 05.

Some of that impressive growth can be attributed to the 2% interest subvention for short-term crop loans up to Rs 3 lakh announced by finance minister P Chidambaram in FY07 and continued in the current fiscal. For the current financial year, a provision of Rs 1,677 crore has been made.

September 8, 2007
Source: Economic Times

Cultivable land declines in India

Use of agricultural lands for non-agricultural purposes such as urbanisation, roads, and industries has led to a marginal decline in the cultivable land from 183.14 million hectares in 2001-02 to 182.57 million hectares in 2005-06.

During the same period, area under non-agricultural uses has increased from 24.07 million hectares to 24.94 hectares in the country, Minister of State for Agriculture Kanti Lal Bhuria informed the Rajya Sabha in a written reply.

He said the government is implementing various development programmes like National Watershed Development Project for Rainfed Area (NWDPRA), integrated water-land development project for improving degraded lands in the country.

Under these programmes, since inception up to the end of Tenth Plan, an area of 50.83 million hectare has been recovered and part of it has been brought under cultivation, he said.

September 7, 2007
Source: Economic Times

HR

HIV testing at BPOs may be illegal

June 2007 opened a can of worms in what is fast becoming one of India’s most controversial and sensitive labour law issues. Media reports recently said a few BPOs were examining the possibility of introducing HIV testing at their call centres.

Among the various concerns raised on the proposition were whether such testing would be discriminatory to employees and unconstitutional. As per the National Aids Control Organisation’s (NACO) 2006 estimate, adult HIV prevalence in India is about 0.36%, with 2-3 million living with HIV.

September 5 2007
Source: Economic Times

Telecom

'No unsolicited calls to consumers'

The Delhi High Court today restrained telemarketers from making unsolicited calls to mobile phone users, irrespective of the fact whether or not they are registered with the DND facility.

A bench comprising Justice Tirath Singh Thakur and Justice Kailash Gambhir said if any telemarketer continues with such activities it would be illegal and the consumers can move against telecom companies in the consumer court.

The court passed the order on a contempt petition filed by one Nivedita Sharma saying she had been getting unsolicited calls despite a consumer court order.

The High Court, had, however, earlier stayed the consumer court order, which imposed an exemplary fine of Rs 50 lakh on Airtel and the Cellular Operators Association of India (COAI) for "failure" to stop "unnerving unsolicited" calls and SMS by telemarketing and banking companies to mobile phone users.

The consumer court had also imposed a penalty of Rs 12.5 lakh each on ICICI and the American Express Bank for causing "immense nuisance" by making unsolicited communications such as SMS.

The high court said such calls should not be made to any consumer irrespective of whether one is registered with "do not disturb" registry as recommended by telecom regulator TRAI. The DND facility has come into effect from September 1.

September 11, 2007
Source: Economic Times

Power

Govt proposes 10th Ultra Mega Power Project

The government has proposed to make an addition to the planned 4,000 MW ultra mega power projects -- bringing the total to 10 -- to move closer to meet the 11th plan capacity addition target.

"The government has launched a special initiative for the development of coal-based ultra mega power projects.... 10 such projects have already been identified to boost capacity," Power Minister Sushilkumar Shinde said while inaugurating the 10th India Power Forum, 2007, organised by India Energy Forum (IEF).

The government had earlier announced nine ultra mega power projects, of which two, Sasan and Mundra, have been awarded to ADAG Reliance Power Ltd and Tata Power.

September 11, 2007
Source: Economic Times

Banking & Finance

Banking sector on a boom, set to grow further

Growth in the country's banking sector is likely to grow for the next several years, with rising economic activities and young population but certain weaknesses in the system need to be addressed, says a Standard & Poor's report.

The growth will be fuelled by rising investment by domestic and foreign corporates and increasing consumer expenditure, the report 'Indian Banking System: Strongly Placed but Weaknesses cannot be Wished Away' said.

The credit portfolio in the banking sector for fiscal 2005 to 2007, expanded by about 30 per cent per year, driven significantly by consumer and corporate credit. Consumer credit represents more than one-fourth of the system's credit portfolio.

Despite all these positive attributes, the report said, the Indian banking system remains fragmented with 53 domestic banks accounting for about 93 per cent assets. As on March 31, 2006, the top 10 banks accounted for 66 per cent of the assets, the remaining being shared between 43 banks.

The report warned that the financial profile will start weakening once the niche banks start permeating the strongholds of regional banks.

Advocating more consolidation in the sector, the report said about three-fourths of the banking system's assets are in the hands of 29 public sector banks and a meaningful consolidation is not possible until this segment is included in the process.

September 11, 2007
Source: Economic Times