Emerging Economies Have Powered Rise In Global Oil Demand

LONDON: Emerging economies have powered much of the rise in global oil demand in recent years, but record oil prices and rising inflation have started to put pressure on this last bastion of demand growth.

Some analysts are talking of oil demand in emerging markets either slowing or perhaps falling next year, as governments look to slash subsidies, raise administered fuel prices and hike interest rates to battle rising inflation.

Oil demand in developed nations has been declining for a while, and if emerging economies led by China, the Middle East and India, which have spearheaded much of the demand growth, slow consumption, a drop in global oil demand may be inevitable. “For the world as a whole, we might get negative growth next year,” said Leo Drollas, chief economist at the Centre for Global Energy Studies in London.

Global consumption expanded by 1.1 million barrels per day (bpd) in 2007, and is forecast by the International Energy Agency to rise by 1.03 million bpd this year.

Research by Deutsche Bank shows the oil demand growth rate was the highest in the past eight years in non-OECD countries with fuel subsidies. These countries account for around 25 million barrels of oil daily. “Certain non-OECD countries can no longer afford the subsidies and have therefore reached tipping point,” Lawrence Eagles at the International Energy Agency said earlier this month.

As oil prices hover near $130 a barrel, within reach of last week’s record of $135.09, signs are emerging that the burden of subsidies are getting too difficult to bear.

Taiwan, Sri Lanka and Indonesia have all cut subsidies on fuel, and India is likely to follow suit soon, as these emerging economies look to protect government budgets under severe strain from high oil prices. “Clearly sustaining subsidies at $130 oil is not the same as sustaining it at $50 or $80,” said Harry Tchlinguirian, analyst at BNP Paribas.

Analysts say China would have to double fuel prices to pass on fully costs of oil to consumers and India would have to increase prices by 50 to 60%.

As subsidies are cut and prices rise, analysts expect demand growth to slow in many of these countries, although the growth monster of them all — China — is not expected to do anything until after the Olympics. “In China, the brakes (on demand) will come on, in my opinion, after the Olympics,” said Drollas.

China has been busy stockpiling fuel to prevent shortages ahead of the Olympics, and that demand may completely go away after the games in August.

Analysts say the world’s fourth-largest economy could be forced to turn its attention to rising inflation against a backdrop of slowing global economic growth. Annual consumer price inflation accelerated to 8.5% in the year to April.

“The inflation aspect is going to be an extremely strong factor in shaping the future of oil demand indirectly through its economic consequences,” said Tchlinguirian at BNP Paribas, adding that China could let its exchange rate appreciate, hurting its exports, or raise interest rates.

And if China decides against letting its currency appreciate, opting to raise interest rates instead, it could slow down investment in fixed assets, which could also lead to a further destruction in oil demand.

India Could Target A 5% Share

NEW DELHI: India could target a 5% share in world trade by 2020, commerce minister Kamal Nath has said. This would translate into a four-fold increase in the country’s share in the next 12 years, which stands at about 1.2% now. India’s total foreign trade was at $391 billion in 2007-08.
Speaking at the annual export award function organised by the Agricultural and Processed Food Products Export Development Authority (Apeda) on Friday, Mr Nath pointed out that the world trade is itself increasing and this would translate into an eight-fold increase in absolute terms. “Ambitious the target may be, but achieving it is not impossible. The agro exports would also have to keep pace with this rate of growth. The task is difficult, but the gains are invaluable,” he said.

Commenting on infrastructure required for the agri and processed food sector, the minister said organised retail was expected to throw up new opportunities for service providers to go in for investment in the cold chain which would be important for preserving the quality of perishable food products and strengthening backward linkages with growers.

He said Apeda has been playing a significant role in building up infrastructure which has helped in finding new markets for Indian agro products and also assisting in providing cold chain infrastructure at airports, packhouses and other infrastructure, critical for growth of exports of perishable agri produce from the country.

Apeda’s products like floriculture, grapes, honey and bovine meat have shown excellent growth, Mr Nath said. The export of Apeda’s scheduled products is expected to grow from Rs 21,150 crore to about Rs 24,400 crore in 2007-08.

Buoyed By A Decline In The Value Of Rupee

Buoyed by a decline in the value of rupee, Indian expats in Kuwait are turning all stops to send maximum remittances back home.The remittances by Indian expats there have increased substantially in last three weeks. While the rupee jumped by 12 per cent last year, the surge in oil prices and other factors led to its decline by 8.2 per cent in 2008. A Kuwaiti Dinar (KD), which fetched Rs 143.5 in January, is now pegged at Rs 162. Titus E D, the director and general manager of Bahrain Exchange Company (BEC), said the current situation presented an opportune time for Indian expatriates.

"This is a win-win situation and NRIs should try to capitalise by remitting maximum money. The depreciation of rupee would not last for long. By the year end, I believe, the currency would rise against the dollar due to poor showing by the greenback. A substantial number of Indians are remitting their money through the door-to-door medium which is an efficient service, Titus said.

Rupee Declined Slightly

The rupee declined slightly against the greenback as corporates bought dollars. The domestic currency opened at 42.74-75 and touched an intra-day low of 42.91-92. It closed the day at 42.78-79, against the previous close at 42.74. In the forward premia market, the six-month closed at 2.57 per cent (2.46 per cent) and the 12-month ended at 1.88 per cent (1.80 per cent).

Govt. Is Now Looking To Plug Excise Revenue

The Government is now looking to plug excise revenue leakages via a more rigorous set of deterrent steps and by obtaining third-party information that could be matched against the information on indirect taxes submitted by assessees. The third-party information collection system is proposed to be modelled on the annual information return (AIR) system that has become successful on the direct tax side. The Finance Minister, Mr P. Chidambaram, on May 29 advised the Central Board of Excise and Customs (CBEC) to revisit the existing deterrent measures, stating that they were not deterrent enough. As many as 49 cases have been subject to deterrent measures. The idea is if you take action against one person, found guilty of excise evasion, the deterrent action taken against that assessee must have salutary effect on the assesses of the same product group.

Gold Fell Sharply By Rs 430 To Rs 12,600 Per 10 Grams

Gold fell sharply by Rs 430 to Rs 12,600 per 10 grams on the bullion market in New Delhi on May 28 on nervous selling by stockists, sparked by a steep fall in its prices in the US market after the release of the consumer confidence data last night. Selling pressure in the domestic market gathered momentum on reports that gold fell by nearly 18 dollar in the US markets last night after the consumer confidence data was released which was below expectation, marketmen said. They said the forex markets remained major driving force behind silver and gold. Standard gold and ornaments dipped by Rs 430 each at Rs 12,600 and Rs 12,450 per 10 grams respectively and sovereign lost Rs 50 to trade at Rs 10,000 per piece of eight gram.

A similar trend was extended in silver as ready variety suffered a setback of Rs 1,450 to Rs 23,800 per kg and weekly- based delivery by Rs.1360 at Rs 24,000 per kg respectively. Silver coins too was down by Rs 200 to Rs 27,000 for buying and Rs 27,100 for selling of 100 coins.

Finance Ministry Is In No Mood To Salsh Duties

The finance ministry is in no mood to salsh duties even as it rules out the possibility of a cess. Although the oil deficit predicted at Rs 2,30,000 crore for 2008-09 is threatening to derail the fiscal balance, the finance ministry is reluctant to slash duties given the huge spending ahead, be it the farm loan waiver or the NREG extension or the Sixth Pay Commission suggestions. Finance ministry sources say that at best, there is scope for decrease in Customs duty in the wake of rupee depreciation. The Customs duty for crude is 5%. A decrease in the duty could give relief to the refining companies. The finance ministry''s reluctance to decrease duties stems from the fact that the oil sector is among the biggest contributors to revenues.

RBI Raised The Interest Rate Ceiling On Trade

The Reserve Bank on Wednesday raised the interest rate ceiling on trade credits used for funding imports with maturity up to one year, making it easier for authorised dealer banks to fund such transactions.

The banks, as per the RBI notification, can provide short-term credit for funding import transactions up to 75 basis points over six months LIBOR (London Interbank Offer Rate) as against the existing 50 basis points. However, the ceiling rate for funding long term imports transactions ranging between 1 and 3 years have been retained at 125 basis points over 6 months LIBOR. The short term credit is used for payment of arranger fee, upfront fee, management fee, handling and processing charges, out-of-pocket and legal expenses pertaining to imports. The RBI has permitted the authorised banks (ADs) to approve trade credits for imports in India up to $20 million per import transaction.

Rupee Fell Against The Greenback

The rupee fell against the greenback on month end dollar demand from importers. The domestic currency opened at 42.80/82 and reached a low of 42.97/ 98. It then bounced back to 42.89/90 but finally ended the day at 42.96/97. The currency had closed at 42.72/73 on May 26. In the forward premia market, the 6-month closed at 2.37 per cent and the 12-month ended at 1.75 per cent.

AP Plans To Develop

The Andhra Pradesh Industrial Infrastructure Corporation (APIIC) is developing border districts of the State to grab the opportunities thrown up by the non-availability of land in Karnataka and Tamil Nadu.

APIIC is eyeing at developing industrial zones in these areas as it could attract more industries to set up operations. Andhra Pradesh lost a lot of opportunities in the past to the two neighbours as there was no proper infrastructure developed in these areas. For instance in Tamil Nadu, Sriperumbudur and Gummidipundi districts have no land available for potential investors and in the same way in Hosur and Doddaballapur districts of Karnataka land has already been allotted and no further space is available for future allotment.

India In ASEAN-India Free Trade Agreement (FTA) Negotiations

Indonesia has reversed the heat on India in the ASEAN-India free trade agreement (FTA) negotiations. Not only is it unwilling to give as much market access to India as has been accorded by other members, but it is also pushing New Delhi to cut import duties on crude and refined palm oil much below the levels negotiated by the two sides. Indonesia has urged India to commit to decrease import duty on refined palm oil to 30% and crude palm oil to 20%. This is much lower than the levels discussed by India with other ASEAN members. India had accorded to take on commitments to lower tariffs on refined palm oil to 51% and crude palm oil to 45%. Indonesia''s export of palm oil to India constitutes about 30% of its total exports to India.

Indian Rupee Ended Slightly Cheaper

The Indian rupee ended slightly cheaper at 42.72/73 against the greenback today on month-end dollar demand by oil companies, amid continued weakness in Asian stocks. At the Interbank Foreign Exchange (forex) market, the local currency fluctuated in a wide range of 42.7950 and 42.53 during the day after resuming weak at 42.7900/7950 a dollar from its last close of 42.71/72 a dollar. Dealers said the rupee attempted a smart rally and touched the day''s high of 42.53 in early trade due to heavy dollar selling by foreign banks. However, it failed to retain gains as oil companies stepped in to make month-end dollar purchases, even as equity markets drifted lower with foreign funds heavily unwinding stocks positions.

Lack Of A Trigger With Inflation High

The rains may even hit the Kerala coast a few days earlier than anticipated. The conditions look favourable for monsoon''s earlier onset. Experts believe good rains will be the positive sign to help increase agriculture production, spark demand for auto, FMCG and fertiliser sectors. Mahesh Vyas, MD & CEO, CMIE, said: We have already forecast agriculture growth in our estimate. We expect India to witness GDP growth of over 9 per cent. The primary articles contribute 22 per cent to the wholesale price index and with two-thirds of India''s summer crop dependent on the south-west monsoon, any good news from met department will only help boost industry sentiment.

D-Street running a bit out of steam is also pinning its hopes on the rain gods. Historically, markets have shown positive correlation with normal to above average monsoons. Call it sentiment or just the lack of a trigger with inflation high and industrial production low, the Indian economy could sure do well with a good bout of rain.

United Progressive Alliance Govt. Increased Its Loan Waiver

The United Progressive Alliance government on Friday increased its loan waiver package by nearly 20 per cent to Rs. 71,680 crore to provide relief to ''big'' farmers, bringing them under the purview of the debt write-off scheme as proposed in the 2008-09 budget.

As per the expanded and modified scheme approved by the Cabinet, in keeping with demands from various quarters including Congress general secretary Rahul Gandhi, all farmers - small, marginal and big - in 237 identified dry, unirrigated and drought-prone districts in various States will get a minimum one-time debt relief of 25 per cent of their outstanding loan amount or Rs. 20,000, whichever is higher.

Briefing journalists, Finance Minister P. Chidambaram made it clear that the loans of small and marginal farmers would be completely waived, whether they were in the identified districts or other regions.

In view of the inclusion of big farmers in dry land areas holding larger acreage, the scheme would benefit more than four crore small, marginal and other large farmers and cost the exchequer Rs. 71,680 crore as per fresh estimates (unaudited), up from the original estimate of Rs. 60,000 crore, Mr. Chidambaram said.

"Small and marginal farmers will get full debt waiver, while 60-65 per cent of large farmers also get full debt waiver. This is why the cost of the scheme has increased."

The number of small and marginal farmers expected to benefit from the enlarged scheme stood revised to 3.69 crore against the earlier estimate of three crore, while the number of other farmers was scaled down to 59.75 lakh from one crore.

CBDT Come Up With New Instructions For The Tax Department

The Central Board of Direct Taxes (CBDT) has come up with new instructions for the tax department on the issue of filing of its appeals before the Income Tax Appellate Tribunals (ITAT), High Courts and Supreme Court, giving greater clarity on the matter. The latest instructions spell out elaborately the monetary restrictions and the conditions under which the department could prefer appeals before the Appellate Tribunals, High Courts and Supreme Court. Although the monetary limits were spelt out in CBDT''s earlier instructions in 2005 and 2007, tax experts said that clarity was missing on issues like treatment of penalty orders. The department can file appeals in those cases where the tax effect surpasses the monetary limit prescribed under the latest instructions. While the monetary limit for appeal before appellate tribunal has been estimated at Rs 2 lakh, the limit for appeal under Section 260A before the High Court is Rs 4 lakh and before the Supreme Court is Rs 10 lakh.

FICCI Has Blamed The RBI''s Tight Monetary Policy

The industrial chamber FICCI has blamed the RBI''s tight monetary policy and rise in interest rates for slowdown in industrial production. The tight monetary policy stance by Reserve Bank of India (RBI) has led to a decline in demand in the economy. This slowdown in demand has in turn affected industrial growth, said Federation of Indian Chambers for Commerce and Industry (FICCI) in a study on slowdown in industrial growth and its policy implications. It also said that apart from rising interest rates, the appreciation of the rupee has also taken a toll on industrial performance.

With industrial growth slowing down to a dismal 3 per cent in March 2008 against 14.8 per cent in the same month last year, FICCI suggested to RBI for reducing the interest rates to arrest the industrial slowdown. The downward revision in the interest rates would help in stimulating demand in the economy and ease the cost pressure on manufacturing sector and would lead to a sustainable solution through expansion of capacity that in turn would ease the supply constraint, the chamber said.

Govt. On Friday Expanded Farm Debt Waiver Scheme

NEW DELHI: The government on Friday rolled out an expanded farm debt waiver scheme, which will cost the exchequer a whopping Rs 71,600 crore, 20% higher than the initial estimate of Rs 60,000 crore. The scheme will now include more than four crore farmers and will also cover those with landholdings in excess of two hectares.

In line with demands from political party leaders, including Congress general secretary Rahul Gandhi, farmers in drought-prone areas covered under the Prime Minister’s relief plan have also been included in the scheme.

In a separate development, RBI on Friday asked banks to take necessary steps to complete the debt waiver scheme by June 30.

The expanded loan waiver scheme, which was announced in the Union Budget 2008-09, will now include farmers engaged in allied activities such as poultry, dairy farming. Direct agricultural loans taken under a Kisan Credit Card, as well as loans of self-help and joint-liability groups would also be covered.

The government has also decided to waive off restructured loans, including those under the Vidharba package and calamity relief, whether or not they were overdue.

Briefing reporters after a Cabinet meeting, chaired by Prime Minister Manmohan Singh, finance minister P Chidambaram said: “Farmers deserve this support. We are only discharging the debt we owe to the farmers. The central government is taking over the debt and will reimburse the banks. All small and marginal farmers will get full debt waiver, while 60%-65% of large farmers will also get full debt waiver. This is why the cost of the scheme has increased.”

While unaudited cost is pegged at Rs 71,600 crore, the FM said the audited estimate was Rs 66,000 crore. The cash outgo from the government as reimbursements to banks is seen at Rs 60,416 crore for small & marginal farmers and Rs 7,960 crore for others, according to estimates by RBI and Nabard.

Loans not eligible under the scheme include advances against pledge or hypothecation of agricultural produce other than standing crop, agricultural finance to corporates, partnership firms and societies other than co-operative credit institutions.

If a farmer has taken two separate loans — for instance a short-term production loan and an investment loan — they shall be counted as two distinct loans, and the scheme would apply to the two loans separately. Direct agricultural loans include short-term production loans and investment loans provided directly to farmers for agricultural purposes.

A short-term production loan is one given in connection with the raising of crops and which is to be repaid within 18 months. An investment loan is for direct agricultural activities, including asset financing and allied activities such as dairy, poultry farming and biogas generation. The amount eligible for debt waiver or relief, in case of a short-term production loan, includes the principal and the interest.

While small and marginal farmers are eligible for debt waiver, others are eligible for a one-time settlement (OTS) scheme.

The debt waiver scheme will cover all loans disbursed to farmers between March 31, 1997, and March 31, 2007, and overdue as of December 31, 2007, and remaining unpaid until February 29, 2008.

Under OTS, the farmer will be given a rebate of 25% of the ‘eligible amount’, or Rs 20,000 (whichever is higher). Further conditions have also been spelt out on the deadline before which the repayment has to be made. Banks cannot charge interest on the eligible amount after February 29, 2008.

However, in the case of investment credit for allied activities, the land holding is not germane, and hence, those farmers, whose principal loan amount is Rs 50,000 or less, will be classified as ‘small and marginal farmers’, where the principal amount exceeds Rs 50,000, he would be classified as ‘other farmer’.

Mr Chidambaram said a scheme of this kind was not contemplated by the NDA government despite being in power for six years. “We have been able to muster courage at the end of four years, as it is a massive scheme. Only when I was confident and Prime Minister was confident of the implementation did we announce the scheme,” he added.

Guidelines will soon be issued to all lending institutions, including banks, rural regional banks, co-operative credit institutions and local area banks. Under the scheme, every bank branch would be required to prepare a list of farmers, along with the amount of loan waived, so that they can claim benefit without problems.

“This list would have to be displayed on the notice board,” he said. The farmers will not be required to submit any documents and will receive a certificate from the bank with the details of the waiver. The list will have to be put up on or before June 30, 2008.

He said the banks have also been asked to set up grievance cells to address the farmers problems with regard to the scheme in a time-bound manner. Besides, a high-level body headed by the secretary, financial services, and including secretary agriculture, RBI deputy governor, Nabard chairman and CMDs of two public sector banks would be set up to monitor implementation.

“All executive directors, bank chairmen have been asked to fan out across the country. Chief Ministers would be requested to co-operate. I will also travel for on-spot verifications to see how lists have been put up by banks and how farmers are getting relief.”

“Banks are in no way prejudiced. They have welcomed the scheme. Extensive consultations have been held with them about the scheme and its implementation,” he said.

“All claims will be on the central government. RBI will be the nodal agency for scheduled commercial banks and Nabard for RRBs and co-operative banks,” he said.

Australia Is Willing To Consider Joining NSG

PERTH: Australia is willing to consider joining the consensus with Nuclear Suppliers’ Group (NSG) and the International Atomic Energy Association (IAEA) to provide India uranium for its power plants if the latter ratified the 123 agreement with the US. The move is clearly a softening of position from the earlier stated stand where Australia has been reluctant to open uranium trading with countries that have not signed the nuclear non-proliferation treaty (NPT).

“The Labour Party has a strong policy of not exporting uranium to any country that is not a signatory to the NPT. We have made this clear to Indian officials that we are bound by the party policy. But if the 123 agreement is passed by Indian Parliament we could consider joining a consensus of the NSG and IAEA,” Australian foreign minister Steve Smith said in an interview to a group of visiting Indian journalists.

He was responding to a query why the Australian government had changed its policy to supply uranium for Indian power plants after the Labour Party-led government under Mr Kevin Ruud came to power in December last year. Uranium supplies are important for India to run its existing and future power plants. Nuclear Power Corporation of India (NPCIL), the government monopoly generating power from nuclear fuel, is running all its plants at below 50% plant load factor and is expecting easing of uranium trade to move ahead on its plans.

“We see our party policy on NPT and opening up uranium trade under NSG and IAEA consensus as two separate issues and this has been made clear to the US and Indian authorities. We don’t see our party policy automatically preventing us from joining the consensus of NSG and IAEA,” Mr Smith said.

“We will wait for the 123 agreement between India and Australia to emerge and then make a judgement,” he said, adding prime minister’s advisor Shyam Saran, external affairs secretary Shivshankar Menon, and former external affairs secretary L Mansingh have all been appraised of the Australian position.

Australia has a vast reserve of uranium that could be shipped to India. Already, Reliance-Anil Dhirubhai Ambani Group has entered into a partnership agreement with Australian Uranium Exploration to start uranium mining for its proposed foray into nuclear power generation.

“Both the nations have differences over the issue of uranium supply. But it is not disturbing the fundamental relations between us,” he said, lending his country’s support to India being given a permanent seat in UN Security Council.

Inflation Has Reached Over 8%

NEW DELHI: It seems that rising prices will become a greater worry for government in the coming days than they are being perceived now. The inflation has already reached over 8% since March 2008, though the government's latest data showed on Friday it is hovering around 7.82%.

The provisional figure released by the government revealed an inflation figure of 7.82% for the week ended May 10, 2008. But, according to the revised figure for the week ended March 15, the inflation has already touched 8.02%, which is highest in the last three-and-a-half year.

Chief economist of ICICI Securities A Prasanna said this figure indicates that inflation is around 8% and is likely to go further up if fuel prices are revised upwards. There used to be around 0.2 to 0.5 percentage points difference between the provisional and revised figures. While provisional figures are released after two weeks, revised figures come after two months.

But, since March 1, revised data is 1.5 percentage points higher that the provisional figure. The final figure of inflation for the week ended March 1 was 6.21 as against 5.11 indicated in the provisional figure. In the week ended March 15, the inflation figure is revised upward by 1.34 percentage points to 8.02%.

A senior government official said during this period the provisional figures could not capture price rise of iron ores and steel due to lack of data, which started coming from second week of March, and pushed up revised figures.

However, a senior analyst with a PSU bank said since the provisional inflation figure captured the price rise in minerals and metals since March 2008, the revised figure will continue to be at least half a percentage point higher than the provisional figures. Therefore, if the current inflation according to the provisional data is 7.82%, the revised figure would be in the range of 8.3%.

But any revision of fuel price will put further pressure on inflation. If the petrol price is revised by Rs 2 per litre and that of diesel by Rs 1.50 per litre, the inflation will rise by 0.5 percentage point. This will take the revised figure close to 9%. This will force government and RBI to take tough action to contain inflation, which may hit growth. "We are watching the situation carefully. We will take further measures if needed," FM P Chidambaram said on Friday. At the same time, petroleum secretary M S Srinivasan said that a fuel price hike was "inevitable".

Control Of Inflation

Control of inflation has been a priority for the United Progressive Alliance government and the steps taken so far would enable the country to return to a regime of moderate inflation in eight to 10 weeks, Prime Minister Manmohan Singh said here on May 22.

Releasing the UPA''s Report to the People, 2004-2008 here, Dr. Singh said the government had made determined efforts to accelerate the pace of development while maintaining price stability. Pointing out that sharp escalation in global oil prices, the price of steel and the price of food crops had impacted the domestic economy, he reiterated the measures taken by the government to meet the challenge and added that a normal monsoon and "public recognition" of the government''s determination to reverse the spurt in inflation should help alter the expectations.

Rupee Fell To 42.95/96 A US Dollar

The rupee on May 22 fell by 12 paise to 42.95/96 a US dollar, recovering somewhat from below 43 level it reached during the day, on fears that erupted after crude oil rose to a record. Global crude oil prices spiralled to a new record high of above $135 a barrel, raising worries of further upward pressure on inflation.

In a two-way trade at the Interbank Foreign Exchange (Forex), the local currency resumed sharply lower at 43.06/07 and dipped further to a low of 43.20, the level not seen since first week of April, 2007. Month-end dollar demand from oil refiners and importers also weighed on the rupee sentiment.

But, it recovered later to end at 42.95/96 a dollar, still lower from overnight closing level of 42.83/84. Dealers attributed late recovery in the rupee to some dollar selling by exporters, who took the opportunity to book profits at higher level.

India-China Has Led To Rise In Consumption Level Has Led To Shortage

Firmly rejecting the contention that rising consumption in developing nations was responsible for the soaring food and fuel prices, India has blamed the policies of World Bank and IMF and ''''excessive and unsustainable'''' demand in developed countries for the crisis. This consumption trend has existed for more than a decade, said Indian UN Ambassador Nirupam Sen, pointing out that over last two years, the demand for oil has gone up one per cent but prices in dollar terms have risen by 90 per cent.

Addressing a special meeting of the United Nations Economic and Social Council to consider the issue of rising food prices, he held financial crisis leading to weakening dollar and diversion of grains to production of bio-fuels among the major causes.Sen also blamed the policies followed by the Bretton Woods Institutions (BWI) responsible and severely criticized their advice to countries to shift from food crops for domestic population to cash crops for exports.The debate came in the backdrop of UN agencies warning that more than one billion could added to those already needing food assistance because of high prices. Finger pointing over the issue was sparked off after the US and EU said the growth of India and China which has led to rise in consumption level has led to the shortage.

The Indo-US Bilateral Trade Relationship Is Rising

The Indo-US bilateral trade relationship is expected to rise at about 50 per cent at $60 billion during 2008-09, against about $40 billion in 2007-08, according to Mr Henry Jardine, the US Consul General in Kolkata.

The Consul-General, who is leaving the city in July, was sharing his experiences about Bengal and the business prospects in the near future. The US investments so far have been focused on petrochemicals, information technology, financial services, engineering and infrastructure. Eastern India and West Bengal in particular need investment in infrastructure such as large multi-lane highways, overpasses, bridges, additional ports, and airports. Over 30 per cent of farm products do not reach the market because of inefficient cold storage and transportation systems.

Gold Prices Gained Rs 180 To 12,860 Per 10 Gram

Gold prices on May 21 gained Rs 180 to 12,860 per 10 gram in the bullion market in Mumbai, recording a 10-week high on brisk buying by stockists influenced by a firming global trend. Standard gold and ornaments moved up by Rs 180 each to Rs 12,860 and Rs 12,710 per 10 gram respectively. Sovereign also rose by Rs 75 to Rs 12,050 per piece of eight gram.

A similar firm trend was noticed in silver as it spurted by Rs 680 to Rs 24,860 after the metal in other Asian markets moved up on rising crude oil prices and weakening dollar against the leading currencies led by Euro.Silver ready spurted by Rs 650 to Rs 24,680 per kg and weekly-based delivery by Rs 690 to Rs 24,390 per kg. Silver coins jumped up by Rs 200 at Rs, 27,000 for buying and Rs 27,100 for selling of 100 pieces.

Crude oil futures rose to reach a record of $129.60 a barrel and dollar fell against the euro, touching 1.5686, the weakest since April 28. A recent reports by the World Gold Council has said that the gold demand dropped to a five-year low in the first quarter as record prices and a slowing US economy reduced purchases in every application for the metal except investment funds.

India Revised Drafts On Agriculture And Non-Agriculture Market

India is not happy with the revised drafts on agriculture and non-agriculture market access (Nama) circulated at the World Trade Organization (WTO) on May 19. In agriculture, dilution of the special safeguard mechanism (SSM) protecting the livelihood concerns of poor farmers is unacceptable to the country, said the source. India also turned down introduction of three different tariff reduction coefficients for developing countries, the linkage established between reduction commitments undertaken and flexibilities and the various carve-outs given to individual developing countries. New Delhi feels this is an attempt to divide developing country members who are negotiating as one through the Nama-11 group.

While lauding the committee on agriculture (CoA) chairman Crawford Falconer for managing to come up with a text with just 30 square brackets, which indicate areas yet to be negotiated, India said that the Nama chairman Don Stephenson appears totally confused as he has introduced 97 brackets as opposed to 17 brackets in the earlier text.

The WTO secretariat is trying to hold a ministerial meet by the end of June in which it wants to finalise the modalities for liberalisation of both agriculture and Nama. The following months would be utilised for scheduling of the commitments undertaken by each member and taking forward the negotiations in other areas which are part of the Doha round including services and rules. The broad idea is to have the Doha agreement in place by end of the year, following which each country would have to individually ratify it domestically. In agriculture, India is unhappy with the text suggesting a price trigger of 30% dip below existing prices for introducing SSMs which involves increasing import tariffs. Moreover, the condition of applying SSMs on 3 to 8 products is also unrealistic for a country with 23 agro-climatic zones, officials added. "During the Uruguay Round, developed countries had SSMs for 40 products. Why should we settle for less?" an official wondered. In Nama, India said that the reduction coefficient of 7-9 for developed countries and the three bands of 19-21, 21-23 and 23-26 for developing countries, translated into greater percentage cuts for the latter. Moreover, linking flexibilities for developing countries to the reduction coefficients they undertake is outside the mandate of the negotiations. India will also oppose the various carve-outs given to developing countries such as Venezuela and South Africa. The Indian industry, too, has lashed out against the Nama text.

Recovering Part Of Initial Losses

Recovering part of initial losses, rupee on May 20 ended lower by six paise to 42.60/61 against dollar following weak Asian equity markets. In quiet trade at the Interbank Foreign Exchange (Forex) market, the domestic unit opened lower at 42.59/61 a dollar and dropped further to a loof 42.74 before recovering to end the day at 42.60/61, a loss of 6 paise over the previous close.

Sluggishness in Asian equity markets, including India, weighed upon the rupee sentiment.The BSE benchmark index, Sensex, was down by nearly 205 points at close on May 20. Expectations of slow-down in capital inflows due to high inflation and oil prices surging above $127 a barrel also have a negative impact on rupee sentiment, traders said.Inflation has risen to 7.83 per cent for the week ended May 3, 2008, mainly due to increase in prices of essential food items and some manufactured products.The Reserve Bank of India on Tuesday fixed the reference rate for dollar at Rs 42.67 and that for single European unit at Rs 66.39.Rupee premiums on forward dollar recovered smartly and ended higher on fresh paying pressure from banks and corporates.The benchmark six-month forward dollar premiums payable in October ended at 29-1/2 - 31 paise, higher from 23- 24 paise on Friday and the far-forward maturing in April also rose to 47 - 49 paise from 41 - 43 paise previously.

In cross currency trades, rupee reacted downwards against the British sterling, euro and the Japanese yen.Rupee fell back sharply against the pound sterling to end the day at Rs 83.66/68 per pound from previous close of Rs 82.87/89 per pound and also dropped against the single European currency to Rs 66.66/68 per euro from last close of Rs 65.84/86 per euro.The Indian unit too declined against the Japanese yen to close at 40.95/97 per 100 yen from overnight close of Rs 40.61/63 per 100 yen.

RBI Governor Y V Reddy Described The Current Inflation Rate

RBI Governor Y V Reddy on May 20 described the current inflation rate that touched 7.83 per cent as totally unacceptable as it affects the poor instantly, but expressed hope that it might start moderating following various steps taken by it and the government.

"High growth benefits the poor with a lag, while inflation adversely affects them instantly. Hence the current high-level of inflation is, especially in terms of impact on inflation expectations," Reddy said while delivering a lecture at the Institute of South Asian Studies, Singapore."As per indications, the currently elevated level of the wholesale price index may start moderating noticeably as monetary, fiscal, and administrative measures impact the economy, while other seasonal as well as global factors turn favorable," he said. He said RBI''s monetary policy aims at bringing price stability because of its impact on the poor "who have no hedge". The central bank''s annual policy aims to bring headline inflation to around 5.5 per cent in the current fiscal with a preference for bringing it close to 5 per cent as soon as possible.However, RBI''s resolve, going forward, would be to bring down inflation rate to around three per cent in the medium term in line with India''s broader integration into the global economy.This objective is also consistence with India''s goal of maintaining self-accelerating growth over the medium term, Reddy said.

India Emerged As The Largest Source Of Foreign Direct Investment

Among the BRIC (Brazil, Russia, India, China) countries, India emerged as the largest source of foreign direct investment for the European Union in 2007, thanks to high value takeover deals like Tata-Corus. From a mere 500 million euruos in 2006, India''s FDI to EU leapfrogged to 9.5 billion euros in 2007, way ahead of inflows from China (500 million euros), Russia (1.0 billion euros) and Brazil (1.9 billion euros), according to Eurostat data. In fact, FDI from China and Russia to the 27-nation EU declined from 2.2 billion euros and 1.5 billion euros. Besides India emerging as an important source of FDI for EU firms, it also saw big rise as a destination for European investment, much more than China and Brazil. While the EU outflows to India were 10.9 billion euros, they were only 1.8 billion euros to China and 7.1 billion euros to Brazil. However, FDI outflows to Russia were higher at 17.1 billion euros.

Thailand Is Interested On Joining Hands With India

Thailand is interested on joining hands with India on the "Green Development" mission. A delegation from the country will visit India in July to explore opportunities for alliances with industries on the clean development mechanism (CDM) front. There are possibilities of collaboration for solar and wind power projects in India. The delegation will talk over climate change issues and will work towards exchange of clean development practices. India was doing better than China on implementing clean industrial practices. While there are 40 projects in India getting UNFCC registration for selling Certified Emission Reductions (CERs), Thailand has only 3-4 projects applying for it.

Indo-Russia Trade Ties Hopes Turnover To Be $10bn In 2years

Indo-Russian trade ties are hoped to produce a turnover of about $10 billion within the next two years. The current annual trade turnover between India and Russia stands at $5 billion. India currently calculates for a little over one per cent of Russia''s total external trade volume. Though the military-technical co-operation between the two countries had been quite stable, there was still a lot to explore in the sphere of trade and economic co-operation. The private sector in both countries has been slow to take advantage of the immense expansion that is taking place in the Indian and Russian economies. The concentration should be on improving visa regimes, removing cargo problems and beefing up market information networks so that private players can step up their activities

Implementation Of The Farmer Loan

NEW DELHI: The government is working hard to keep the implementation of the farm loan waiver scheme real simple — so simple that the borrower will not be required to come to the branch for getting his loan waivedWhile government is preparing guidelines for the scheme, the chances of identity fraud are not being ruled out.

“The scheme is between the government and the bank. The borrower will not even be required to come to the branch in order to avail the waiver. It will all be settled in the bank’s accounts. Borrowers will automatically be eligible for fresh credit once all NPAs against their names are struck off,” a source close to the development said.

Chances of identity fraud are not ruled out, he added. These banks have lakhs of small farm accounts on their books and they need adequate time to authenticate the beneficiaries of this scheme. While emphasizing that implementation will remain the key for the success of this scheme, the source said the bank must have a clear idea of who is eligible and who is not.

However, the government is optimistic that the scheme will take off. There has been a lot of preparation and several issues with respect to implementation have been discussed thread-bare. “If banks follow the guidelines well, implementation will not be a problem," the source said.

US Trade Distorting Farm Subsidy More Than Doubled A Decade

NEW DELHI: This might come as a shocker. The US’ trade distorting farm subsidy more than doubled a decade after it committed to bring them down by 20% in the Uruguay Round agreement of the World Trade Organisation in 1995. The overall trade distorting subsidies (OTDS), which were about $10 billion in 1995, increased to $22.6 billion in 2005 and then fell slightly to $17.4 billion the following year.

India and other developing countries could not do anything about it as the US had all its numbers in order. The country managed to actually increase its subsidies instead of cutting it down as it had sneaked into a foot note of its schedule of commitments for the Uruguay Round, an asterixed point changing the base year of calculation from 1995 to 1986-88. Since in 1986-88, its trade distorting subsidies was at an all-time high of $58 billion, a 20% reduction would mean that it was mandated to reduce its subsidies to just $46 billion.

India, according to officials, is unwilling to be taken for a ride the second time round. Once negotiations of the ongoing Doha round nears completion, the commerce department is planning to recruit and train at least 80 economics graduates to go through the schedules of implementation submitted by individual members based on commitments made during negotiations. The idea is to identify and weed out the different clauses which members might introduce to nullify liberalisation commitments made.

“We have to be extremely careful this time. We want to ensure that the promises we are able to extract out of our developed country partners are fully implemented,” an official said.

India and other developing countries have already raised their vigil against similar moves by the US during the current Doha round. While all members have agreed to accept the base year average of 1995-2000 for further reduction of OTDS, the US is insisting on a base year period of 1995-2004.

Officials said that since US’ OTDS is higher in the 2000-2004 period, increasing the base year average by four years would lower its reduction commitments by around $4 billion. “The G-20, the developing country grouping on agriculture, has strongly objected to the US move,” the official added.

The group of young scholars to be appointed by the government to cross-check claims will be given proper training to go through the voluminous schedules submitted by members, especially the developed countries. Wherever, a discrepancy is identified, the Indian government will approach the member concerned and the WTO secretariat to remove them. “We will sign the final WTO agreement only when we are satisfied that there is no slip between the cup and the lip,” the source said.

Officials pointed out that since the schedules run into thousands of pages, developing countries failed to read the fineprint during the Uruguay Round as they did not have enough officials to go through the text. The appointment of trainees for six months will hopefully take care of the manpower crunch.

Although it seems that it would take a while before the round, which involves not just agriculture, but also industrial goods, services and rules, among other issues being negotiated, India is putting its house in order as it does not want to be caught napping again.

India Plans Campaign Intellectual Property

KOLKATA: In its drive to catch up with China in the field of patents and trademarks, India will shortly launch a national awareness, sensitisation and consultancy programme by roping in universities, laboratories, state-level chambers of commerce and industry, patent attorneys and the scientific community.

Sources in the commerce ministry told ET: "The cost of this awareness campaign has been pegged at Rs 20 crore. This will establish a correlation between intellectual property, innovation, productivity and competitiveness. The campaign is aimed at promoting intellectual property and boost the proprietory rights culture in the country."

According to the figures of World Intellectual Property Organisation (WIPO), of the total 1.56-lakh applications for international patents it received, China came seventh with 5,456 applications. US topped the list with 52,280 applications, followed by Japan with 27,731. Compared to this, India’s applications were a paltry 686.

In 2006, when China filed 3,951 applications, India filed just 831. The Indian Patent Office granted a record 15,262 patents during 2007-08, the government said, more than double the 7,539 granted the previous year (2006-07) and nearly eight times more than the 1,911 patents granted three years ago, in 2004-05.

Historically, the total number of patent filings by residents of India is just three per million population, against a world average of 250. According to the patent office figures, the number of patents granted in 2007-08, the first year of India’s 11th Five Year Plan, compares well with the total number awarded during the entire period of the 10th Five Year Plan, which was just 17,618.

"The application for international petnts should go up substantially to cope up with other countries of the world. We have taken some initiative, but more needs to be done," said the commerce ministry sources.

Incidentally, the government has spent more than Rs 140 crore in the first phase of the modernisation effort, which included setting up integrated intellectual-property offices in four major cities and launching electronic filing of applications. Another Rs 400 crore is to be spent to establish a Trade Marks Registry and Intellectual Property Archives and allied activities.

The government has also begun work on a National Institute of Intellectual Property Management to handle training, education, research and think-tank functions in intellectual-property rights.

Investments In Agri Sector Would Reduce Hunger Threat

MUMBAI: Investment in agriculture, improved bio-energy and trade policies and programmes that target vulnerable people would reduce the threat of hunger in the coming years, International Food Policy Research Institute (IFPRI) said.

A moratorium on grain-based biofuels would quickly unlock these commodities for use as food. This measure might bring corn prices down globally by about 20 per cent and as a consequence, wheat prices may decrease by about 10 per cent, IFPRI Director General Joachim von Braun said today.

If biofuel production was frozen at 2007 levels for all countries and for all crops used as feedstock, maize prices are projected to decline by six per cent by 2010 and 14 per cent by 2015. Smaller price reductions are also expected for oil crops, cassava, wheat and sugar, he said in an IFPRI release.

Suggesting that there should not be export ban, Braun said a country that enacts measures such as agricultural export bans, high export tariffs, and price controls may reduce its risks of food shortages in the short-term.

However, these measures are likely to backfire by making the international market smaller and more volatile.

Export restrictions have harmful effects on import-dependent trading partners. For example, export restrictions on rice in India affect Bangladeshi consumers adversely and also dampen the incentives for rice farmers in India to invest in agriculture, he said.

FIPB Clears FDI Proposals

NEW DELHI: The government has approved 18 FDI proposals totalling Rs 1,820.2 crore, including Manipal Educational Group’s plan to induct foreign investment of Rs 1,435 crore in a holding company.

The Foreign Investment Promotion Board (FIPB) also cleared Mauritius-based Indivision India Partners’ proposal to invest foreign equity worth Rs 120 crore in a company engaged in merchant banking and other NBFC activities.

A proposal of Sweden’s Volvo to invest Rs 123 crore for 8.1% stake in the proposed JV with Eicher Motors also received a green signal from the FIPB. However, another Volvo proposal has been referred to the Cabinet Committee on Economic Affairs (CCEA), as the investment involved is above Rs 600 crore.

Vodafone Essar also got an approval to convert operating company into an operating-cum-holding company to make downstream investment in a company engaged in telecom infrastructure business. However, the proposals of the realty firm DLF Limitless Developers and software giant Pepsi India were deferred by the FIPB.

DLF Limitless Developers had sought approval to issue shares in lieu of pre-incorporation expenses, while Pepsi India wanted the government to waive off the divestment condition which required it to offer a part of equity stake to Indian shareholders.

India Slips Two Rank In Competitiveness Ranking

India has become a less competitive economy in the past one year, with the country slipping two ranks in the latest world''s competitiveness index. The United States, on the other hand, has retained its top position despite signs of an economic slowdown there. According to the annual World Competitiveness Yearbook 2008, released on May 15 by Switzerland-based IMD Business School, India has slipped to 29th position, from 27th in the previous year. While China has also seen its ranking dropping by two places to 17th, it is ranked higher than India and has still managed to keep its position among the top 20 competitive economies in the world.

The Overall Competitiveness Scoreboard is calculated by combining four factors of competitiveness: economic performance, government efficiency, business efficiency and infrastructure, IMD Business School said on its website. Some nations can be rich in assets - land, people, and natural resources - but are not necessarily competitive. This may be the case for Brazil, India and Russia, said Stephane Garelli, Professor at IMD and Director of the World Competitiveness Project.

Rupee Declined By Around 30 Paise Against Dollar

The rupee declined by around 30 paise against the dollar, as foreign banks heavily purchased dollars in the last half hour of trade. The domestic currency opened at 42.44 and rose to 42.31/32 during the day. It however, declined to end at 42.75/76, against the previous close at 42.44/45. In the forward market, the 6 month premium closed at 1.38 per cent (1.68) and the 12 month ended at 1.31 per cent (1.33).

Gold Recovers, Silver Declined Further

Gold prices recovered on the bullion market in Mumbai on May 15 on renewed demand from stockists coupled with positive advices from Hong Kong, while silver declined further due to persistent selling from stockists in view of lower global trend. In Hong Kong, gold ended higher at $ 865.40/866.10 per ounce as against $ 861.50/862.20 per ounce previously. In London, the yellow metal was fixed slightly lower in the morning at $ 866.25 per ounce as against $ 866.50 per ounce previously. Gold and silver prices slipped in New York on May 14 on long liquidation in response to a stronger US dollar and softening crude oil. Standard gold (99.5 purity) firmed up by Rs 45 per ten grams to Rs 11,915 from Rs 11,870 previously and pure gold (99.9 purity) recovered by Rs 40 per ten grams to Rs 11,970 from Rs 11,930. However, silver ready (.999 fineness) dropped by Rs 85 per kilo to Rs 23,470 from Rs 23,555 previously.

Direct Tax Mop Rise 132-Pc

Net direct tax collections went up by 132 per cent to Rs 12,642 crore in the first month of the current fiscal, as against Rs 5,441 crore in the corresponding month of the previous fiscal. The Securities Transaction Tax (STT) collections, however, came down by 18 per cent in April to Rs 351 crore, compared with Rs 431 crore in the corresponding month of 2007-08.

Additionally, mop up from the Fringe Benefit Tax (FBT) and Banking Cash Transaction Tax (BCTT) have come down in April over the corresponding month a year ago, sources said. However, Personal Income Tax (including STT, FBT and BCTT) was up 124 per cent at Rs 8,596 crore in April, compared with Rs 3,834 crore in the same month a year ago. Corporation income tax collections also witnessed a 142 per cent rise at Rs 3,881, compared with Rs 1,602 crore during the month a year ago. Other collections were at Rs 165 crore in the month, compared with Rs 5 crore a year ago. Direct tax collections rose by 35 per cent to around Rs 3,12,000 crore in 2007-08, or Rs 7,240 crore more than the revised estimate of Rs 3,04,760 crore for the year. Direct tax collections had grown by over 39 per cent to Rs 2,30,184 crore in 2006-07.

Gold And Silver Staged A Strong

Both the precious metals, gold and silver staged a strong recovery by recording handsome gains on the back of brisk-buying by stockists. Silver prices shot up by Rs 850 at Rs 23,700 per kg on emergence of buying by stockists and industrial users and gold rose by Rs 55 at Rs 12,125 per ten gram.

Trading sentiment turned bullish after some investors shifted their funds from volatile stock markets to bullion. A steep rise in buying activity even discounted reports of the precious metals weakening in global markets. The overseas trend normally set price band in domestic markets in New Delhi. Gold in London fell for a second day as stocks in Europe and Asia advanced and the dollar rose, diminishing the metal''s appeal as an alternative investment. A significant rise in silver prices was seen. Silver ready registered a hefty gain of Rs 850 at Rs 23,700 per kg and weekly-based delivery by Rs 185 at Rs 23,385 per kg. Its coins too were in demand and gained Rs 100 at Rs 26,700 for buying and Rs 26,800 for selling of 100 coins. Standard gold and ornaments rose by Rs 55 each at Rs 12,125 and Rs 11,975 per ten grams respectively while sovereign remained flat at Rs 9,875 per piece of eight gram.

Rupee Depreciate By Five Paise

The rupee on May 13 depreciated by over five paise to 42.10/12 against the US currency following dollar buying by oil refiners and weak equity markets.

In high volatility at the Interbank Foreign Exchange (Forex) market, the domestic unit opened better at 41.96/98 a dollar from Monday''s close of 42.05/06 following weak dollar overseas and firm equity markets in early trade. However, negative turnaround in local share markets and sustained capital outflows weighed on the rupee sentiment. It, finally ended the day lower at 42.10/12. It moved in a wide range of 41.96 and 42.22 a dollar.

Industry Performed Badly

Industry performed badly during the last month of 2007-08, with growth decelerating to 3 per cent from 14.8 per cent in the year-ago period, a development that could be a major cause for concern for the government that is now focusing on fighting high inflation.

Consequently, growth in industrial production during the year fell to 8.1 per cent from 11.6 per cent in 2006-07, mainly due to poor showing of the manufacturing sector that accounts for over two-third of the Index for Industrial Production (IIP).

Manufacturing sector managed a poor 2.9 per cent growth as compared to a high of 16 per cent in March 2007, followed by a 3.7 per cent growth in electricity. The slowdown in the industry could have a marginal effect on the overall growth of the economy, which is projected to grow by 8.7 per cent.

Rupee Crossed The Psychological Mark Of 42

The rupee crossed the psychological mark of 42, on May 12, due to lesser industrial production data, high oil price and inflation. The lack of dollar supply combined with continuing dollar demand from domestic oil companies, also made the greenback dearer in the currency market. On May 12, the rupee closed at 42.05 against the dollar, about 46 paise lower than the previous close of 41.59/60. The rupee was last witnessed at 42 levels in April 2007.

CII Will Concentrate On Skill Development

The Confederation of Indian Industry in Tamil Nadu will concentrate on skill development, agro business and rural development, healthcare and building inclusive cities, said Mr Manikam Ramaswami, Chairman, CII TN State Council for 2008-09. CII''s members account for 38 per cent of the State''s GDP, estimated at about $300 billion on buying power parity basis. CII recognizes its role in contributing to the industrial development and growth of the State. Its focus areas for the year not only relate to industrial development, but take into account its social responsibility and recognise the importance of the primary sector as much as the manufacturing sector.

PSU Bottomlines Begin To Sag Under Pay Panel Weight

It might be hard to determine the exact impact the Sixth Pay Commission is likely to have on the government’s finances. However, there is nothing ambiguous about its impact on the balance sheet of public sector undertakings (PSUs).

An ETIG analysis of listed PSUs that have already declared results reveals that the effect on the bottom line of some of these companies could be as high as 70%.

Of the PSUs that have declared results so far, five companies, Bharat Electronics, Container Corporation of India, MMTC, Power Finance Corporation and Nalco, have made provisions related to the Sixth Pay Commission recommendation.

Mangalore Refinery & Petrochemicals, which is not directly bound by the Sixth Pay Commission recommendations, has also made such provisions to maintain the industry level wage standard. The average increase in salary expense in the fourth quarter for all these PSU companies is more than 100%.

This is on account of the fact that the entire effect of the full year has been provisioned in the fourth quarter. If taken on year-on-year, the average salary expense of all these PSUs for the financial year 2007-08 has surged by more than 50%.

This rise in salary expense of PSU companies is in sharp contrast to their private sector brethren, in which there has been a decline (7.8% in FY08 as against 8.7% in FY07) in aggregate salary component of all companies whose results for the fourth quarter have been declared till now.

Though the rise in salary is good news for the employees, this additional financial burden for the PSUs might not go down well for the investors. A back-of-the-envelope calculation based on the assumption that other PSUs will have to make a similar provisioning suggests that the aggregate outgo on account of salaries could increase by as much as Rs 25,000 crore in 2007-08. This could also result in shaving off 200-300 basis points from the operating margin.

Of the companies that have already made provisions, Bharat Electronics and Nalco, in which the salary accounts for more than 6% of their net sales, are likely to find their operating margins being squeezed by as much as 4% only on account of this. For MMTC and Power Finance Corporation where the salary and wages account for less than 1%, the effect is not so significant.

With the economy witnessing a mild slowdown, PSU companies might find it difficult to offset the Pay Commission-induced inflation through higher sales.

LDF Impose One Pc Duty On Construction Of Luxury Homes

THIRUVANANTHAPURAM: The LDF Government in Kerala has plans to impose one per cent duty on construction of luxury homes to beef up funds for housing schemes for the poor.

Announcing this at a press meet here, state Housing Minister Benoy Viswam said a legislation in this regard would be brought in.

Details like the limit of construction cost above which the duty was to be imposed would be decided after studying various aspects of the proposal, he added.

Inflation Is Expected To Come Down To 6 Pc

NEW DELHI: Inflation is expected to come down to 6 per cent from the present level of 7.61 per cent in next three to four months, Prime Minister's Economic Advisory Council Chairman Prof C Rangarajan said here on Monday.

"Inflation is likely to come down to 6 per cent in next three to four months. Thereafter it can come down to 5-5.5 per cent depending upon the monsoon and other sectors," Rangarajan told reporters on the sidelines of a conference.

He also said the high international crude oil prices will also have an impact on the GDP growth rate. However, it will not 'derail' the growth process.

In January, the council has revised the GDP growth estimates to 8-8.5 per cent for 2008-09, he said, adding the government's fiscal measures will also have some impact on the tax collection.

Cement Is Being Imported From Pakistan

LUDHIANA: Fifty six thousand metric tonnes of cement is being imported from Pakistan to ease out its price situation in the country, Union Minister for State for Industries Ashwani Kumar said on Friday.

Sixteen thousand metric tonnes of cement has already been received while the remaining consignment would be arriving here during the next two months, he said while addressing a function organised by the Ludhiana Management Association.

Talking to reporters, he said relations with Pakistan were being improved further and strong positive indications to the effect received from the new government in the neighbouring country.

Good Weather Will Help The World's Farmers

WASHINGTON: Good weather will help the world's farmers reap record wheat and rice crops this year, the US government said on Friday, which should allay fears of shortages and help bring prices down from current high levels.

The US Agriculture Department also forecast a record global crop of feed grain, used to feed livestock. The USDA announcement was expected to calm fears of food shortages, worsened by the cyclone that hit Myanmar's rich rice-producing Irrawaddy delta last week, and by a larger than expected 500,000 tonne Malaysian rice purchase on Thursday.

Disappointing harvests, the boom in biofuels and higher meat consumption have pushed up grain prices in the past two years, raising food prices and sparking protests in some 40 poorer countries whose people have felt the effect most strongly.

Officials at the UN Human Rights Council said it would hold a special session on May 23 to assess the effect of the food crisis on the right to food of millions of people suffering from high prices, notably in sub-Saharan Africa and South Asia.

"We're keeping our fingers crossed that we get good harvests this year ... and that it brings prices down some from their high peaks," said analyst David Orden of the International Food Policy Research Institute, a think tank.

Even with bountiful crops, Orden said, larger international food aid efforts would be vital because prices would be higher than usual for the next couple of years at least. The USDA said the world wheat crop would rise 8 percent to a record 656 million tonnes in 2008/09.

It projected global rice output at a record 432 million tonnes, up 5 million tonnes from 2007/08. "This ought to take the edge off commodity prices" said private US consultant John Schnittker, making it easier for poor people to buy enough food.

Other signals that the supply crisis might be easing came from India, which said on Friday that it might allow limited rice exports, and from the Philippines, where traders held off purchases hoping for new crops soon from southeast Asia. India, the world's second-biggest rice exporter last year, banned shipments of all rice except basmati in March, one of a series of protectionist measures worldwide that triggered a wave of panic buying.

"We are reviewing the situation and may allow limited exports," Commerce Secretary Gopal Pillai said on the sidelines of a conference in Kochi, adding that the government might also review an export tax on basmati rice. The USDA forecast depressed wheat prices on the Chicago Board of Trade, but rice prices rose on the USDA prediction that Cyclone Nargis would reduce Myanmar's rice crop by 7 percent.

The UN Food and Agriculture Organisation had said it expected Myanmar to export 600,000 tonnes of rice this year. The soaring cost of food has fuelled unease among governments and street protests from Haiti to Bangladesh.

The situation has worsened as grain exporting nations curb shipments to ensure domestic supplies and keep inflation under control. The Philippines, the world's biggest rice importer, has so far bought about 1.7 million tonnes of the 2.2 million tonnes of rice it needs this year, and officials and traders said they expected prices to fall within a few months.

The USDA said the record harvests expected this year meant there would be an end-year world wheat surplus of 124 million tonnes, despite a rise in consumption of 3.5 percent. The higher rice crop would leave a stockpile of 82.6 million tonnes, the largest in six years, it said.

For Early Conclusion Of Doha Round Of Trade Negotiations India And Us Resolve

NEW YORK: India and the United States have agreed to resolve the divisive issues for an early conclusion of the Doha round of trade negotiations.

It would send a "strong message" of global unity and resolve in the face of increasing uncertainties in world economy due to rising food and energy prices and turmoil in financial markets in several countries, an official statement issued yesterday on the talks between Commerce and Industry Minister Kamal Nath with United States Trade Representative Susan Schwab said.

In the meeting, which was held on Thursday, they have decided to begin technical work to bring about consensus on the divisive issues among the members of the World Trade Organization (WTO), the statement said.

During the talks, Nath told Schwab that India would not accept any constraints or restrictions on its ability to provide assistance to its poor fishermen as it is a question of their livelihood.

The Agriculture negotiation, they agreed, pose the greatest challenges as they involve complex issues of subsidies and sensitivities on market access, especially in developing countries, in relation to food security and livelihood concerns of poor farmers.

Inflation Rising Further

The average inflation figure for the week ended April 26, 2008, is seen at 7.65 per cent, as compared to 7.57 per cent in the previous week. The figures for the same period of the last year was 6.01 per cent. Inflation has stayed above the 7 per cent mark for the fifth straight week.

Among the financial services firms, BNP expects inflation to be at the upper range of the forecast, at 7.75 per cent. On the other hand, Calyon sees it at the lower end, at 7.51 per cent. Inflation in the week ended April 5, 2008, had eased to 7.14 per cent, but in the following weeks had again began its upward march by rising to 7.33 per cent for the week ended April 12, 2008.

PM optimistic on taming inflation

Prime Minister Manmohan Singh on May 8 promised that the United Progressive Alliance government led by the Congress would tame inflation in the coming months and roll back the inflation rate to reasonable levels.

Dr. Singh was addressing a citizens'' meet, comprising elite sections and important Congress leaders/workers organised by the Karnataka Pradesh Congress Committee.

He said inflation had an international dimension. Oil prices touched an all-time high and food grain and commodity prices rose substantially.

In spite of this adverse scenario, he said the government made strenuous efforts to shield the poor and the vulnerable sections. Kerosene and LPG prices were hardly hiked in four years and even petrol and diesel price rises were kept low. The Centre, he said, was bearing a huge cost on the Exchequer on account of this.

Foodgrain issue prices for BPL rice and wheat were not touched while wheat and rice support prices were doubled. This year, he said, the country had a bumper crop and procurement was excellent.

He said that in spite of inflation, the Centre ensured macro-economic stability and a climate conducive to enterprise and creativity. This had manifested in growth rates averaging almost nine per cent in the last few years benefiting every section and enabled in raising resources for development programmes.

UK Minister Visited India For Justice

On her recent visit to India the UK Minister for Justice, Ms Bridget Prentice M.P. said she looked to take forward the Indo-UK trade and business agenda and talk how British legal firms can help Indian companies to grow their businesses internationally. The British law firms can give advise, support and international services that Indian companies are looking for. Ms Prentice said that British expertise could help Indian companies expand via various modes such as mergers and acquisitions, increased exports, joint ventures, establishing operations in the UK and raising capital overseas.

Annual Plan Outlay For Nagaland

The annual Plan outlay for Nagaland for the year 2008-09 was cleared on May 7 at a meeting between the Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, and the Chief Minister of Nagaland, Mr Neiphiu Rio. The Annual Plan size was accorded at Rs 1,200 crore, comprising additional central assistance of Rs 150 crore. The State has been attaining good growth rates despite constraints. It was noticed that despite infrastructural constraints the State has performed impressively in health and education sectors.

Rupee Lost Further Ground On May 7

The rupee lost further ground on May 7 and broke the psychological 41 level, plunging to its lowest in eight months. The Indian currency has depreciated by around Rs 1.20 since the annual review of the monetary policy on April 29, the day the rupee began its downward journey. The domestic currency opened on May 7 at 41.03/06 and reached an intra-day low of 41.41. It finally ended the day at 41.35/36, against the previous close at 40.96. The one-month delivery rupee in the NDF market was at 41.58 against the dollar at close. The rupee''s fall on May 7 was more because of panic feeding on itself. The 6-month closed at 1.79 per cent (1.63 per cent) and the 12-month ended at 1.51 per cent (1.44 per cent).

Indian Rupee On May 6 Fell By 34 Paise

Beating expectations, the Indian rupee on May 6 fell by 34 paise to eight-month low at 40.94/95 against the greenback on as global crude prices hit a new record high, sending oil companies to rush for US currency amidst its short supply.

In brisk trade at the Interbank Foreign Exchange market, the local currency resumed weak at 40.67/68 a dollar from its last close of 40.60/61 a dollar and gradually moved downwards to near 41-level during the day.The rupee had seen this level last on September 4, 2007 when it closed at 40.9750/9850.The rupee premiums on forward dollar ended further lower on sustained receivings by exporters.The benchmark six-month forward dollar premiums payable in October ended at 31-1/2 - 33-1/2 paise, down from 33-35 paise on Monday and the far-forward maturing in April eased to 57-59 paise from 60-1/2 - 62-1/2 paise previously.

Jewellers Are Expecting A 35-40% Rise In Sales

Jewellers are expecting a 35-40% rise in sales this Akshaya Tritiya day over last year''s all India sales of around 780 tonnes. Gold prices which have fallen after hitting an all time high in March is also expected to increase demand for the gold.

Prices of gold have corrected by around 20% since March''08 when it had hit a level of Rs 13,495 per 10 gm. In the local market, gold is selling at about Rs 11,000 per 10 gm and further price corrections are expected in the near future. While south India would continue to dominate the sales with a 40% market share, one-fourth of the business is likely to come from the northern region this festive season. Other brands like Titan''s Tanishq, Alukkas, D''damas and Malabar Gold have either introduced new gold collections or revived existing ones to woo the customers.

Govt Likely To Additional Steps To Curb Inflation

The government is expected to take additional fiscal as well as monetary measures if prices do not soften in coming weeks, said Planning Commission Deputy Chairman Montek Singh Ahluwalia on May 6.

However, Ahluwalia cautioned against taking administrative measures. Ahluwalia said the country is likely to record a growth of 8 per cent during the current fiscal. According to the RBI annual credit policy, Indian economy would grow between 8-8.5 per cent during the current year. During 2007-08, the economy expanded by 8.7 per cent. Inflation touched a 42-month high of 7.57 per cent for the week ended April 19.

Rupee Gained Four Paise At 40.60/61

The rupee gained four paise at 40.60/61 against the greenback on Monday to snap a four-day losing streak amidst expectations of increased capital inflows, a major driver behind the local currency.The Indian currency had fallen by 52 paise, or 1.3 per cent, in the last four sessions.

At the Interbank Foreign Exchange market, the domestic currency surged to 40.52 level after resuming steady at 40.65/66 a dollar against its previous close of 40.65/65 a dollar.

The rupee premiums on forward dollar ended lower on fresh receivings by exporters.
The benchmark six-month forward dollar premiums payable in October ended at 33 - 35 paise, down from 37-1/2 - 39-1/2 paise on Friday and the far-forward maturing in April moved down to 60-1/2 - 62-1/2 paise from 63 - 65 paise previously.

Govt. Has Taken Several Steps To Tame Inflation

Prime Minister Manmohan Singh on May 5 said the government had taken several steps to tame inflation but it would take some time before they bore fruit. He was talking to media persons after the civil investiture ceremony at the Rashtrapati Bhavan.

He pointed to the agriculture situation being "excellent" with a record food production of 227 million tonnes. He wished the new coalition government in Pakistan well and observed that it has begun very well.However, he had no plans to visit that country in the near future. The Prime Minister has been invited to Pakistan by President Pervez Musharraf. Though he had accepted the invitation, no decision had been taken on the visit.

HRD Is Likely To Unveil A Scheme To Interest On Bank Loans

The Ministry of Human Resource Development (HRD) is likely to unveil a scheme to subsidise interest on bank loans taken by students to pursue professional education. According to the sources, the Educational Loan Interest Subsidy Scheme will be rolled out from the 2008-09 academic year.

The officials who arrived at the scheme in the Expenditure Finance Committee (EFC) meeting a few days ago are now preparing a Cabinet note for the scheme.

The loan amount taken by the student should be commensurate with the course fee he/she is paying the institute, according to the contours of the scheme. Loans taken from any bank under the Indian Banks'' Association will be eligible. The scheme would cover students pursuing professional courses in all recognised private institutions. While the HRD ministry would be the nodal ministry, the Canara Bank would be the nodal bank for disbursal of the interest amount to banks. The scheme would require about Rs 4,000 crore in the entire Plan period.

MCX Fell 1.5pc To Per 10 Grams On Thursday

Gold prices may see some correction, a top industry official said in Mumbai. In line with the international market, gold price in local market are also expected to see some more correction in coming days, Bombay Bullion Association President Suresh Hundia said in Mumbai on May 4.

In the local market, gold prices held above a psychological Rs 11,000 per 10 grams.
In the international market, the gold price slipped to 13 week low to trade at $862.40 per ounce as bond yields ticked higher following 0.25 per cent rate cut announced by the Federal Reserve last week.

The demand of gold is expected to rise due to fall in gold prices, during the current Akshaya Tritiya festival. Every year, gold coins worth three to four tonnes are sold during this auspicious Hindu festival, the source said. The benchmark June gold futures contract on the Multi Commodity Exchange (MCX) fell 1.5 per cent to Rs 11,205 per 10 grams on Thursday, its lowest level since mid January.

RBI Raised The CRR To Suck Excess Liquidity From Market.

nflation galloped to 42-month high of 7.57 per cent for the week ended April 19 as compared to 7.33 per cent a week ago mainly on account of higher prices of food articles like rice, milk, tea, vegetables and some manufactured products.

The wholesale price based inflation stood at 6.07 per cent in the corresponding week a year ago. The previous high of 7.76 per cent was recorded for the week ended November 2, 2004. During the reporting week, prices of tea shot up by 17 per cent, even as other food items like milk, rice, vegetables and mutton became dearer. Among other commodities, the prices of Light Diesel Oil and furnace oil went up by 2 per cent and by 1 per cent respectively.

In the manufactured products category cast iron pipes jumped by 51 per cent, pig iron by 8 per cent and steel sheets by 2 per cent. The annual rate of inflation, based on Wholesale Price Index (WPI), has been rising despite fiscal and monetary measures taken by the government recently. While the government has banned export of certain commodities like non-basmati rice and pulses and reduced customs duties on various other items to rein in inflation, the Reserve Bank of India (RBI) has raised the Cash Reserve Ratio (CRR) to suck excess liquidity from the market.

Resolve Differences With WTO Negotiations On Agriculture : US

NEW DELHI: India and the US will try to resolve differences in the ongoing WTO negotiations on agriculture and industrial products during a meeting in New York later this month.

Commerce and industry minister Kamal Nath has said he will discuss with his US counterpart Susan Schwab how the draft modalities for opening up the farm and industrial sectors could be made into an equal package.

Mr Nath said the US will try to understand the sensitivities of India’s vulnerable sections. “We hope the US will comprehend India’s sensitivities towards agriculture and the small scale industries,” he said.

Mr Nath said the G-20 met in Ghana last month in a meet organised by Unctad and discussed the likely contents of the draft modalities in agriculture.

UN's Advisor Blamed Wrong-Headed Policies For Food Crisis

PARIS: The UN's new top advisor on food blamed two decades of wrong-headed policies by world powers for the food crisis sweeping the globe, in a stinging interview published on his first day in office on Friday.

Frenchman Olivier de Schutter, a law professor and human rights campaigner, told Le Monde newspaper the international community was "unforgivable" for its failure to anticipate the riots sparked last month by soaring food prices.

"This is a call to order. The days of cheap food are behind us," said the United Nations rapporteur on the right to food, arguing that the current crisis showed the "limits of industrial agriculture."

"We are paying for 20 years of mistakes. Nothing was done to prevent speculation on raw materials, though it was predictable investors would turn to these markets following the stockmarket slowdown."

Schutter said the World Bank and International Monetary Fund (IMF) had "gravely underestimated the need to invest in agriculture," and accused the IMF of forcing indebted developing countries to invest in export cash crops at the expense of food self-sufficiency.

Workers across Asia, where one billion people are now seriously affected by the food price surge, made food their May Day battle cry, with volatile crowds staging rallies in the Philippines, Indonesia, Singapore and Bangkok.

Experts blame the soaring prices on a confluence of factors, including trade restrictions; increased demand from a changing diet in Asia; poor growing weather; rising use of biofuels that rely on staples like corn; and the hike in fuel prices that make transporting foodstuffs more expensive.

Schutter joined the growing chorus accusing biofuels -- until recently cast as a miracle alternative to polluting fossil fuels -- of usurping arable land and distorting world food prices.

Billions of dollars have been poured into transforming corn, soy beans and sugar to ethanol and biodiesel to help wean rich economies from their addiction to fossil fuels, mainly in the United States, Brazil, Canada and Europe.

"The ambitious goals for biofuel production set by the United States and the European Union are irresponsible," Schutter charged.

He described the biofuel rush as a "scandal that only serves the interests of a tiny lobby" and called for a freeze on investments in the sector.

But he also distanced himself from the hardline stance of his predecessor in the UN post Jean Ziegler, who had called for an outright moratorium on biofuels, describing them as a "crime against humanity".

The rapporteur said it was vital to phase out "shameful" rich world farm subsidies, which he said represent an annual 350 billion dollars, but gradually to avoid driving up prices for buyers in the developing world.

And Schutter took aim at the giants of the agri-business world -- such as US firms Monsanto or Dow Chemicals -- which hold patents on many of the world's most used seeds, fertilisers and pesticides.

"We need to think about changing the intellectual property rules for these companies, whose profits are exploding," he said, arguing that many products were currently priced beyond the reach of small producers.

The World Bank said last month that the doubling of food prices over the past three years could push 100 million people in poorer developing countries further into poverty.

The World Food Programme is appealing to donors for an extra 755 million dollars (487 million euros) to enable it to purchase enough food to meet its global commitments, while UN Secretary General Ban Ki-moon this week set up a new global task force to address the food crisis.

The UN food aid agency urged the US congress to speedily approve 770 million dollars in emergency food aid pledged by President George W. Bush.

Schutter said he was confident a coordinated international response between now and the autumn harvests would manage to avert famine.

Bush : Indian Middle Class Is Rising Food Prices

WASHINGTON: US President George Bush has joined his top diplomat in suggesting that the growing prosperity of India's large middle class is contributing to rising food prices around the world.

"...the more prosperous the world is, the more opportunity there is," he said commenting on the economy during a visit Friday to World Wide Technology, Inc. in Maryland Heights, Missouri. "It also, however, increases demand."

"So, for example, just as an interesting thought for you, there are 350 million people in India who are classified as middle class. That's bigger than America. Their middle class is larger than our entire population.

"And when you start getting wealth, you start demanding better nutrition and better food. And so demand is high, and that causes the price to go up," said Bush joining his top diplomat Condoleezza Rice in suggesting India's role in the world food crisis.

Secretary of State Condoleezza Rice had also said last week that apparent improvement in the diets of people in China and India and resultant export caps among the reasons for the skyrocketing prices of grain worldwide.

Listing some causes for what the World Food Programme director, Josette Sheeran, has described as "a silent tsunami", she had said: "Now, some of that is not so much declining production as apparently improvement in the diets of people, for instance, in China and India, and then pressures to keep food inside the country."

But unlike Rice who acknowledged that biofuels may be a contributory factor, Bush would not agree that America's new found love for corn-based ethanol was causing the prices of food to go up.

"As you know, I'm a ethanol person," he said. "I believe, as I told you, the interim step to getting away from oil and gas is to go to ethanol and battery technologies for your automobiles."

"I think it makes sense for America to be growing energy. I'd much rather be paying our farmers when we go to the gas pump than paying some nation that may not like us," Bush said.

As nearly all of ethanol now is produced from corn, the price of corn is real high now, he said. "And so people say, well, it's your renewable fuels policy that is causing the price of food to go up."

"I've looked at this issue a lot. Actually, the reason why food prices are high now is because, one, energy costs are high. And if you're a farmer, you're going to pass on your cost of energy in the product you sell; otherwise you go broke," Bush said.

"And when you're paying more for your diesel, paying more for your fertiliser because it's got a lot of natural gas in it-in other words, when your basic costs are going up, so does the cost of food," he offered.

Bush also blamed "weather-related problems" for the crisis. "Some of the major producers of food have had drought. That's what happens. Weather patterns change. And so there's a lot of reasons why the price of food is high."

"And no question that ethanol has had a part of it, but I simply do not subscribe to the notion that it is the main cost-driver for your food going up," Bush said.

America is by far the most generous nation when it comes to helping the hungry, he said. "No contest. We're an unbelievably compassionate nation.

"And so I asked Congress to put some more money out. It will be over-it's about $5 billion, over a two-year period of time, of food. Keep in mind, we're spending about $19 billion here at home."

CCEA Gave Clearance For Waiver Dues Of Indian Firms On Cuba

The Cabinet Committee on Economic Affairs (CCEA) on May 1 gave its clearance for waiver of dues of Indian companies on Cuba totaling to Rs 347 crore. The CCEA also gave its clearance for reimbursement (principal + interest) of the dues to individual companies amounting to Rs 128 crore.

The Finance Minister, Mr P. Chidambaram, said that this would facilitate resumption of credit facilities/insurance cover by Exim bank and the Export Credit Guarantee Corporation of India (ECGC) to Cuba to raise bilateral trade and investment. Indian companies CIMMCO Birla Ltd, PEC Ltd and Hiralal Printing Works had exported goods to Cuban companies. EXIM Bank of India expanded credit facilities to Cuban purchasers and CIMMCO Birla Ltd. The total principal dues totaling to Rs 135.41 crore and accumulated interest of Rs 211.78 crore as on March 31, 2007 are outstanding on Cuba.

SEZ Talk Over 18 Proposals For Clearance : Postponed

The Board of Approvals for Special Economic Zones (SEZ), which met on May 1 to talk over 18 proposals for clearance, postponed decision till May 16 when it would meet again. The BoA, which met under the chairmanship of the Commerce Secretary Mr Gopal K.

Pillai, had several important SEZs, comprising the Bangalore International Airport SEZ, two SEZ proposals at Noida and Pune each by DLF Ltd and two SEZs of Ansal Properties and Infrastructure Ltd in Lucknow, Uttar Pradesh. So far, 453 formal clearances for opening SEZs have been agreed under the SEZ Act, 2005, out of which 210 SEZs have been notified. These cover multi-product and sector-specific SEZs for manufacturing industries in areas such as textiles and apparels, leather and footwear, gems and jewellery, engineering, agro and food processing industry pharmaceuticals and chemicals.

Annual Trade Deficit Increased By 35.51pc

The government is concerned about the country''s annual trade deficit, which increased by 35.51 per cent to $80.39 billion in 2007-08, from $59.32 billion in the previous year. They are not comfortable with the trade deficit. However, with prices of crude oil rising globally, they have to live with a big trade deficit.

The commerce ministry has set an export aim of $200 billion for 2008-09. The trade deficit increased as the growth in imports exceeded export growth. In 2007-08, the rupee appreciated by nearly 7.6 per cent, wiping out profits of exporters and encouraging imports of goods like capital machinery, raw material and intermediaries. Global crude oil prices increased nearly 53 per cent in 2007-08, which added to the country''s import bill.

Mills Unlikely To Crush Full Cane This Season

PUNE: Despite sugarcane crushing expected to continue till early June, the state’s sugar commissionerate expects between 8 lakh tonne and 10 lakh tonne to remain uncrushed. This is about the same as the last crushing season.

“During the 2007-08 crushing season, 171 sugar mills operated and so far, they have crushed about 702.1 lakh tonnes of cane, producing 84.1 lakh tonnes sugar, at 11.9% recovery. By the end of this year’s crushing season, which is expected to end by the first week of June, the state’s factories should be able to crush a total of 780 lakh tonnes of cane. However, this will still leave between 8-10 lakh tonnes of cane uncrushed,” Rajagopal Devara, the state’s sugar commissioner, said.

The Marathwada region has the largest amount of uncrushed sugar cane, which is a repeat of what happened in the preceding year, 2006-07. Along with Marathwada, other regions where large stocks of cane are unlikely to be crushed are Solapur, Ahmednagar, Nashik, Jalgaon, Dhule, etc.

In a move aimed at reducing the uncrushed cane, the sugar commissionerate has diverted 14.6 lakh tonne cane to those factories which had less cane in their own region so that their capacities were also utilised for longer periods.

Sugar mills have been informed that they will have to get clearances from the sugar commissionerate before stopping crushing operations. This is part of the state government’s move to ensure that the maximum amouont of cane is crushed before the monsoons end the crushing season.

During the last crushing season, mills crushed 730.9 lakh tonnes of cane to produce 84.3 lakh tonnes of sugar, with a recovery of 11.5%. This year, despite approximately 28 lakh tonne lower sugarcane being crushed, thanks to a .50% rise in recovery levels, sugar production is at comparable levels.

Ssis, Amcs May Get FDI Via Green Channel

NEW DELHI: The government may allow foreign investment in sectors reserved for small-scale industries and asset management companies through the automatic route. The move is aimed at boosting sports equipment — which source mainly from SMEs — before the 2010 Commonwealth Games in Delhi. At present, FDI up to 24% is allowed in sectors reserved for SSIs while 49% FDI is allowed in asset management. The proposals may be included in the yearly FDI review.

Once the proposal is cleared, FDI in the segments could be brought in without delay as the parties concerned have to only inform RBI rather than getting approval from Foreign Investment Promotion Board (FIPB). “However, the automatic approvals would be subject to sectoral caps and other stipulations,” a source in the department of industrial policy & promotion (Dipp) said. At present, 79 items are reserved for the SSI sector.

The government is in the process of removing the 24% FDI cap on companies in the SSI sector. Last year, commerce & industry minister Kamal Nath had indicated removing the FDI ceiling in the SSI sector.

Presently, small-scale units with FDI exceeding 24% lose their SSI status. Once the proposal is approved, the government would allow the companies to retain their SSI status even if they raise foreign equity beyond 24%.

According to data release by the ministry of micro medium and small-scale sector, there are 12.8 million small & medium enterprises in the country, which produce goods worth $140 billion. The SSI units export goods worth $33 billion, which is one-third of the country’s exports.

In the case of asset management companies, the government feels that allowing automatic approval in such cases would lead to growth of the financial sector and increase investing environment. However, the FDI limit will continue to remain at 49% for investments into the sector. At present, companies like Goldman Sachs, JP Morgan Chase and Morgan Stanley are operating in the country.

Poultry Imports Ban In Tamil Nadu

CHENNAI: Tamil Nadu has been badly affected by the ban on poultry imports due to bird flu and plans to set up a sterile poultry zone, free from the avian virus to resume exports of poultry products from the state.

Though no cases of avian virus have been reported, Tamil Nadu’s poultry exports were badly hit by the ban after outbreak of the virus in West Bengal.

Replying to a debate on demands for grants pertaining to her ministry, state animal husbandry minister P Geethajeevan said the zone would fulfil regulations of the World Trade Organisation and International Organisation for protecting animals from diseases.

She said the state was maintaining a strict vigil to see bird flu did not occur there.

Dairy development minister U Mathivanan, replying to a debate on the demands of grants for his department, said the state would launch a scheme to increase income of milk producers, under which 10,000 cross-bred milch animals would be supplied to rural women self-help groups.

The scheme would be named after DMK founder, the late CN Annadurai, whose birth centenary falls this year, he added.