Current Economic Statistics and Review For the Week 
Ended May 06, 2006 (18^th Weekly Report of 2006)

Theme of the week:

Prevalence of Child Labour: Issues and Concerns*

I

Child Labour: A Social Evil and A Sign of Underdevelopment

The incidence of child labour¹ is widely known across various nations of the world and its far-fetching consequences have been discussed at length from time to time. The origin of child work can be traced back to the early stages of the evolution of societies, in which the process of learning by working (child work) was considered as part and parcel of the social and economic uplift; it was also probably a part of the survival  process. In the transition period, attitudes towards children changed and their labour was seen as a marketable service. Similarly, their nature of work, working conditions, environment and employment relations also changed over a period with an attitude of gaining greater economic benefits from a child’s work rather than his/her growth and development. In other words, child labour is detrimental to a child’s growth as it not only interferes with his/her education, but also inhibits physical, mental, spiritual, moral and social development. Hence, there is a general consensus that child labour is reprehensible and unacceptable in any civilized society.

The roots of high incidence of child labour lie at the number of socio-economic factors; the most important being poverty. The other factors are demand and supply for labour, lack of access to relevant and quality education and societal attitude. Children in poor families work to ensure the survival of their family and themselves. Though they are generally underpaid, they still serve as major contributors to family income in developing countries. School attendance by a child is highly correlated with family income (Ilon and Moock 1991). Therefore, when a child drops out of school, it is not necessarily because of irresponsible parenting; but could be due to the family's economic conditions. Similarly, parental education plays a large role in determining child schooling and employment (Tienda 1979). Also, lack of access to schools (due to distance or no school at all) also forces children to work. As a result, parents weigh home-learning (for e.g. working in agricultural fields) and supplementing family income much more than the formal education. Thus, the causes of child labour are varied, but whatever the reason may be, making a child work at the cost of his social, educational and mental development has its far-reaching detrimental implications, not only on the child, but also on the community at large in the long-run. What is more, it deprives a child from his childhood and his dignity as against the opportunities that normal individuals in the society avail. No doubt that in the case of poor families, it is better to work than to die. However, such instant economic gains are too inferior to be compared with the long run benefits that the child, the family and the entire society could receive by preventing a child from working at a premature age.

Key-statistics

According to United Nations International Children’s Educational Fund (UNICEF), an estimated 246 million children are engaged in child labour all over the world. Of these, almost 70 per cent (171 million) work in hazardous occupations, such as working in mines, chemical factories, in agricultural fields (approximately 70 per cent) with constant contact with pesticides or with dangerous machinery. Moreover, millions of girls work as domestic helpers and also unpaid household help and are especially vulnerable to exploitation and abuse. Millions of others work under horrific circumstances; they may be trafficked (1.2 million), forced into debt bondage or other forms of slavery (5.7 million), into prostitution and pornography (1.8 million), into participating in armed conflict (0.3 million) or other illicit activities (0.6 million). 

According to UNICEF (Child Labour Today, 2005), regional estimates indicate that:

• The Asian and Pacific regions harbour the largest number of child workers in the 5 to 14 age group, 127.3 million in total. (19 per cent of the children work in the region.)

• Sub-Saharan Africa has an estimated 48 million child workers. Almost one child out of three (29 per cent) below the age of 15 works.

• Latin America and the Caribbean have approximately 17.4 million child workers. (16 per cent of children work in the region).

• 13.4 million children work in the Middle East and North Africa , which constitutes 15 per cent of the total children.

• Approximately 2.5 million and 2.4 million children are working in industrialised and transition economies, respectively.   

The end-decade (2000) multiple indicator cluster surveys (MICS) by UNICEF, for the first time enabled 49 developing countries to report on working children. Children were counted as working if, during the week before the survey, they were engaged in paid or unpaid work for someone who is not a member of the household, did housekeeping jobs for 4 or more hours per day, or worked for a family farm or business. A preliminary analysis shows that in more than 30 countries covering 35 per cent of the developing world population, 19 per cent of 5 to 14 year-olds are working. Apart from the fact that such a large child population has been working, there exist disparities across these countries in terms of gender and rural-urban distribution as shown in the charts below.  

Chart 1                                                             Chart 2

            It is clear from the chart that there is no significant difference between boys (18 per cent) and girls (19 per cent) in the proportion of working, except for the more number of girls are engaged in domestic jobs. However, as shown in chart 2, there is a substantial urban-rural differences, with 21 per cent of children aged 5-14 working in rural areas as compared to only 13 per cent in urban areas. Clearly, the prevalence of the children engaged in family work (farm or family business) as well as the domestic work is more in rural areas.  Interestingly, the same proportion, that is 3 per cent and 4 per cent of children are engaged in paid and unpaid jobs, respectively, in both the urban and rural areas.

The cross-country comparison (chart 3) shows that Sub-Saharan African countries like Togo , Sierra Leone , Niger , Chad etc. have shown the highest proportion of children working in the age group of 5 to 14 years. On the other hand, the Asian countries have shown relatively lesser incidence of child labour.  

Chart 3

            Interestingly, even in the developed world, the incidence of child labour is visible. For e.g. in United States , an estimated 2,90,200 children were unlawfully employed in 1996 (Institute for Global Communications cited in www.childlaborphotoproject.org). Unicef’s  ‘State of the World’s Children Report’, 1997 says ‘The growth of the service sector and the quest for a more flexible workforce in industrialised countries, such as the United Kingdom and the US, have contributed to an expansion of child labour.’

II

Child Labour: A Case for India

In India , a child is classified as labourer if he or she is in the age group 5 to 14 years and is ‘economically active’. A person is treated as ‘economically active’ or gainfully employed if he/she works on regular a basis, for which a regular remuneration is received or if such labour results in output for the market. This definition has been adopted by International Labour Organisation (ILO) and also by the Indian Census to estimate the number of working children in India . However, such a narrow definition runs into problems if the child is involved in any unpaid work, for e.g. day to day household work or looking after the younger siblings in the family or in the seasonal agricultural work on the household farms. The second set of problem arises when one looks at the number of children in the age group of 5 to 14 years, who are categorised neither as child labour nor as students enrolled in schools. This segment of child population which is often categorised as ‘no where children’ is sizeable (45.2 per cent of the children in the age group 5-14 years in 1991) and though generally working for own household activities, are not counted as a part of workforce, perhaps because of the conceptual narrowness or accounting difficulties in national framework.

A Fact file on Child Labour in India

As per the Census of India, there were 10.75 million child labourers in the age group 5 to 14 years in 1971, 13.64 million in 1981, 11.28 million in 1991 and 12.7 million (3.6 per cent of workforce based on current daily status) in 2001. In absolute terms, there is no consistent trend in the number of working children at the national level, though there is some decline in the incidence of child labour. This can be said given the fact that the period 1971-1991 has recorded the highest decadal population growth (24.7 per cent in 1981 and 23.8 per cent in 1991) in independent India . It is only in the 1990s that with the significant decline by 2.3 percentage points in the decadal population growth rate (21.5 per cent as per 2001 census) along with improvement in overall literacy rates (65.2 per cent in 2001 from 52.2 per cent in 1991) in general, that one would have expected a decline in the absolute number of child labourers. Interestingly, despite increase in the absolute number of working children in 2001, the rate of increase had drastically declined as

compared to that experienced in 1981. 

Furthermore, the fact of declining incidence of child labour is also supported by the findings of the World Bank that the economically active children (aged 10 to 14 years) have been on decline since 1990. As shown in the Table 1, the number of working children as per cent of total number of children in the same age group has declined from 16.7 per cent in 1990 to 10.7 per cent in 2003 (For more details, see Appendix Table A).

According to the report published by UNICEF titled ‘The State of the World’s Children 2006’, about 14 per cent of the children (5 to 14 years) of the total children in the age group were engaged in child labour activities in 2004, with the percentages for boys and girls almost same at 14 per cent and 15 per cent, respectively.²

Regional Pattern  

 There is a considerable disparity in the number of child workers across various states and union territories of India , which can be largely attributed to population growth rate differentials, states’ income and socio-economic development of the states in terms of awareness for education and health of children.  

Interestingly, during 1990s, a more than half (57 per cent) of the child labour in India was concentrated in five states: Andhra Pradesh, Karnataka, Maharashtra , Madhya Pradesh and UP. Thus, it is significant to note that the states with the highest child labourers are also some of the states with a high per capita state domestic product. However, analysis shows that the state domestic product, which is one measure of poverty, is only weakly related to the incidence of child labour (Labour Commission Study Group 2001). The total share of these five states as per cent of the total working children population of India , has declined to 47 per cent in 2001. This can be attributed to an absolute decline in the working children of these states from 1991 to 2001, except UP. Interestingly, most of the other northern states like Punjab, Haryana, Himachal Pradesh, Bihar , Uttar Pradesh and Rajasthan, which had shown an absolute decline in the number of working children in 1991 had shown considerable increases in child labour in 2001. Notably, the state of Kerala distinguishes itself from the rest of India with a continuing decline in the absolute number of child labourers since 1971, which can be attributed to its continued emphasis on educational system.

Correlates of Child Labour in India

Although there are little studies establishing correlation between the incidence of child labour and alternative socio-economic variables, some of them have been quite useful to draw inferences. A study by Sachdeva, Malhotra & Murthy (2001), has tried to establish such correlation and their results are based on data for 1991. According to the study, the incidence of child labour is negatively correlated to parental literacy levels (correlation coefficient of -0.85). This means that higher the parental education level, lower are the chances of child labour. Similarly, the study also revealed that there was a negative correlation between child labour and net state domestic product (-0.56); and child labour and average consumption (-0.58). Contrary to this, as expected, there was a high positive correlation (0.80) between human poverty index and an incidence of child labour, which underlines the fact that high levels of poverty is closely associated with higher incidence of child labour. 

Apart from poverty, high incidence of child labour can be attributed to high costs of schooling and disinterest in education (The International Institute for Population Sciences (IIPS), National Family Health Survey, 1998-99). Also, for girls, an engagement in the household work has posed as another major reason for not attending school. Not surprisingly, the need for children to work in the household is more for girls than for boys, and the need for children to work on the family farm, in the family business or outside the home for payment is more frequently mentioned for boys than for girls.

Another attribute of child labour associates with reasonably extended labour opportunities and a segmentation of the labour market. Under conditions of an excess labour supply and thus low demand for labour, one actually would expect employers to employ adults rather than children by lowering adult wages to a level hardly above the level of child wages. However, this is not always true. Under such circumstances, unhindered by countervailing power, employers have created selective markets for child labour in addition to a labour market for adults. Child labour actually correlates with high levels of employment [see Lieten 2002]. In the case of high labour demand, child labour appears to be higher. In high demand areas, female and male work participation is also high. Thus, broadly, the incidence of child labour can be observed under both the conditions; a low or high demand for labour, but it is generally higher in the case of latter.

III

Provisions and Efforts to Eliminate Child Labour since Independence

The Constitution of India has addressed the issue of child labour explicitly (Articles 24, 39 and 45) to incorporate specific provisions, to secure compulsory education and labour protection for children. Article 24 of the Indian constitution clearly states "No child below the age of fourteen years shall be employed to work in any factory or mine or employed in any hazardous employment" (Constitution of India cited in Jain 1985). Article 39 (e) directs State policy such "that the health and strength of workers . . . and the tender age of children are not abused and that citizens are not forced by economic necessity to enter avocations unsuited to their age or strength" (Constitution of India cited in Human Rights Watch 1996).

Further, the government of India enacted the ‘Child Labour Act’ in 1986 to prohibit the employment of children (below 14 years) in specified hazardous 13 occupations and 57 processes. These occupations are:

(1) Transport of passengers, goods or mails by railways;

(2)  Cinder picking, clearing of an ash pit or building operation in the railway premises;

(3)  Work in a catering establishment at a railway station, involving the movement of a vendor or any other employee of the establishment from the one platform to another or in to or out of a moving train;

(4)  Work relating to the construction of a railway station or with any other work which is done in close proximity to or between the railway lines;

(5)  A port authority within the limits of any port;

(6)  Work relating to selling of crackers and fireworks in shops with temporary licenses;

(7) Abattoirs/Slaughter House;

(8) Automobile workshops and garages;

(9)  Foundries;

(10) Handling of toxic or inflammable substances or explosives;

(11) Handloom and power loom industry;

(12)  Mines (underground and under water) and collieries;

(13)  Plastic units and fibre glass workshops;

The industries which are highly exploitative in India are match factories, lock and brassware industry, diamond cutting, gem polishing, carpet weaving and beedi making (Press Information Bureau, 2003).³ The greatest hazard in these workshops is exposure to glue and other solvents that cause respiratory ailments, nausea, lethargy, and sometimes irreversible damage to the functioning of the immune system. Apart from permanent damage to physical health, they neither gain in terms of reasonable wages nor through the work experience in future. This is shown in a major study undertaken for ILO in India titled ‘An exploratory study of four unorganised sector industries in India ’ by the ‘Administrative Staff College of India’ in 1996:

"Contrary to accepted belief, persons who start work at an early age do not, in adulthood, have any advantage in terms of higher productivity or wages over workers who join employment at a later age. In fact, in some cases it is quite the reverse. In the lime industry, for instance, even where the productivity is the same, the wages earned by those workers who had joined work as adults is higher than those who had joined as children. In the carpet industry workers who had joined as children have both lower productivity and lower wages in adulthood. The advantage of "future gain" thus clearly does not exist for the worker who enters employment as a child".

National Child Labour Project (NCLP), 1988

Ahead of the ‘Child Labour Act’, the government introduced NCLP in 1988. The scheme aimed at the rehabilitation of children after they stop working.  Under the scheme, project societies at the district level were fully funded for opening up of special school/rehabilitation centres for child workers. These centres needed to provide non-formal education, vocational training, supplementary nutrition, stipend etc. to children withdrawn from employment. Till Ninth Five-Year plan (1997-2001), hundred projects (districts) were sanctioned for covering about 2.11 lakh children in 13 states. Under the scheme, more than four thousand schools had been sanctioned in these projects during the Ninth Plan. So far, more than four lakh working children have been covered under the scheme and about 3.08 lakh children have been mainstreamed into formal education system.

Furthermore, an advance in government policy occurred in August 1994, when the Prime Minister announced his proposal of ‘Elimination of Child Labour Programme’. This programme pledged to end child labour for two million children in hazardous industries as defined in the Child Labour Act of 1986, by 2000. The programme announced an incentive for children to quit their work and enter non-formal schooling by providing rupees hundred payment as well as one meal a day for attending school (Human Rights Watch 1996).

With the revision of NCLP in 2003, the scheme has been expanded to additional 150 districts in the Tenth Plan (2002-07), thereby covering a total of 250 districts in the country under the NCLP Scheme. The main objectives of the scheme in the Tenth Plan are child labour elimination efforts, which would be linked to the Sarva Shiksha Abhiyan (SSA) of the Department of Elementary Education and Literacy, Ministry of Human Resource Development (HRD). The intention has been to ensure that all children in the age group of 5-8 years get directly linked to the formal school education system. It was also felt that a more focused and effective enforcement of the provisions of the Child Labour (Prevention & Regulation) Act, 1986 needed to be put in place in the districts during the Tenth Plan period.

Unfortunately, enforcement of these laws is the key aspect that has been lacking in the government’s efforts. No enforcement data for child labour laws are available. Although the lack of data does not necessarily mean enforcement is non-existent, the high number of child labourers and their work participation rates show that enforcement, if existent, is ineffective (World Bank, Working Paper). Recognising these limitations, the government has introduced some additional efforts to combat child labour in the recent past. The various efforts are:

INDO-USDOL ( INDUS Project), 2000

            The Ministry of Labour and US Dept. of Labour have developed a project under ILO-IPEC (International Programme on the Elimination of Child Labour) for prevention & elimination of child labour in identified hazardous sectors. The Indus Project is jointly funded by the Ministry of Labour, Government of India and the Department of Labour, United States of America (USDOL) and is being implemented in ten hazardous sectors in 21 districts across five states namely, Maharashtra , Madhya Pradesh, Tamil Nadu and Uttar Pradesh and NCT of Delhi.  The Programme aims at withdrawing and rehabilitating an estimated 80,000 working children in the age group 8-14 and these working children will be integrated with mainstream education by 2007.

Budgetary Allocation to Eliminate Child Labour

The Central allocation for elimination of child labour increased almost three-fold during the Tenth Plan; it increased to Rs. 602 crore from Rs. 250 crore during the Ninth Plan. Apart from the bilateral financial assistance from the ILO and UNICEF, the cost (US $400 million) of the Indo-US joint programme for elimination of child labour, has been shared equally by India and United States . At present, both countries have contributed equally for the project, which is under implementation in five states as mentioned above. The UK government has also been assisting Rs. 20 crore project for the elimination of child labour in Andhra Pradesh while the Italian Government has assisted Rs. 15 crore project for Karnataka which is under implementation. In addition Rs. 29.6 crore have been provided as financial assistance under ILO-IPEC Project and Rs. 3.3 crore have been contributed so far by UNICEF under Joint Action Plan for elimination of child labour (Press Information Bureau, March 2006).

                                                                        IV

Issues and Concerns

Despite constitutional provisions and the Acts, the problem of child labour has persistently remained for many decades. Given the magnitude of child labour (more than 12 million) across regional and gender dimension, there cannot be a uniform policy framework for all states. A major factor behind the limitation of the regulatory regime in India in preventing entry and participation of children in labour markets is the distinct segmentation of labour market, where more than 90 per cent of labour market is unorganised in nature. This makes it extremely difficult to administer, monitor and implement provisions under various acts.  Interestingly, stringent implementation of the laws is perhaps, neither possible nor entirely desirable. An across-the-board ban on all kinds of child labour, even if feasible, could in fact, push the working children into a far worse state of hunger, destitution and starvation. More importantly, if some work is not at the expense of acquiring education and skills for enhancing capabilities and productivity, it may in fact be a desirable part of childhood training. Naturally, though such an approach pushes us back to the fundamentals of child labour as a social evil, the argument stands valid when it comes to the state of an absolute poverty. Therefore, the best possible means to tackle the problem of child labour is to design programmes to wipe it out in a phased manner.

Apart from what is desirable, clearly, the target of complete elimination of child labour is too ambitious to achieve for the government or any non-governmental body, at least in near future. Therefore, in addressing the issue of child labour, the policy framework, public interventions and civil society initiative has to necessarily focus on to bring about a decline in the proportion of time spent by children in providing labour. At the same time, the time spent by an average child on education has to increase. Therefore, the immediate action plan with a pragmatic approach should include:

First, the child labour should be completely removed from all hazardous occupations as mentioned above. This will ensure safety as well as financial support to them at least in the short term. Second, the enforcement of the compulsory elementary education is the need of an hour in order to address the issue of ‘no where children’. The Constitution (86th Amendment) Act 2002, enacted in December 2002 seeks to make free and compulsory education a fundamental right for all children in the age-group 6-14 years. Positively, it is compatible with a certain amount of part-time work, and therefore a good way to prevent full-time work for children. Third, due to a strong correlation between the incidence of child labour and the parental education, it is indispensable to improve adult literacy rate (defined as a proportion of literate population in the age group 15 years and above), which is a meagre 57 per cent as per NSSO 54^th round (Jan-June 1998). No doubt that the literacy rate of India has increased from 18.33 per cent in 1951 to 65.4 per cent in 2001, despite the fact that during these last five decades there has been exponential growth of the population to nearly 8 per cent per annum. However, this literacy rate should improve further consistent with the goal of the ‘National Literacy Mission’ (1988) by the Department of Elementary Education and Literacy is to attain full literacy i.e. a sustainable threshold level of 75 percent by 2005. The mission seeks to achieve this by imparting functional literacy to non-literates in the 15-35 age group. Literacy to this age group would directly enable them to be a part of workforce as well as it would reduce the inevitability for children in the family to be economically active.

 Given the current scenario, there is an urgent need to implement some such measures in order to gradually combat the problem of child labour. This will ensure timely education and assist in resolving number of structural bottlenecks like high population growth, unemployment and general poor living conditions. Most importantly, it would ensure child’s healthy development, which would ultimately reflect overall socio-economic progress of the community at large.

      ---------------------------------------------------------------------------------------------------

End Notes

¹ There are wide conventional differences on ‘child labour’ as described by various national and international organisations. For e.g. UNICEF, ILO considers a child as one in the age group of 5 to 14, whereas, the World Bank and UNDP define a child as one in the age group of 10 to 14 years.

² Kindly note that due to definitional differences of various organisations with respect to child labour, the data are not strictly comparable. However, they give some idea of the long term-trends. Moreover, as the child labour is employed only in unorganised sector, data are based on different surveys, which further reduce the comparability among them.               

³ The exact number of children working in such industries is difficult to gauge due to non-availability of data.  

* This note is prepared by Gauri Ranade

Highlights of  Current Economic Scene

AGRICULTURE

The first consignment of five lakh tonnes of wheat, imported from Australia , has reached Chennai port on April 25, 2006. This wheat would be repacked in 50 kg bags and would be sent to various public distribution centres in Tamil Nadu, Karnataka and Kerala. 

The decision by the central government to provide a bonus of Rs 500 per tonne above the minimum support price (MSP) to wheat growers, who have sold their produce to government, was too late to gear up the wheat procurement in marketing season 2006-07. The wheat procurement during marketing season 2006-07 is likely to be lower by 3 to 4 million tonnes from 14.8 million tonnes procured during 2005-06, mainly because of market prices being higher than the MSP (Rs 650 per quintal) in major wheat producing states. Wheat procurement by the government has been sluggish at 8.5 million tonnes as on April 25, 2006, a fall of 32 per cent over the previous year.

Given the lower wheat procurement in addition to anticipated marginal fall in wheat production and depleting wheat stocks in the country, the government had decided to import another 3 million tonnes of wheat in 2006-07. It is planning to allow actual users like private flourmills and other users to import the grain under the open general licence scheme at concessional duties to ensure that the supplies do not flow to traders

Wheat movement from the wheat-producing states of north to southern region has bee halted, following the suspension of the open market sale scheme (OMSS) by the Food Corporation of India (FCI) and so-called shortage of railway wagons for transport. FCI has stopped offering wheat to private traders under OMSS from the beginning of April 2006 owing to record low stocks of the wheat in the central pool during the season and under the pressure to supply 1.5 million tonnes of wheat every month under the public distribution schemes across the country. The railway has stopped allotting rakes to the traders to transport wheat from Haryana and Punjab from April 22, 2006 to prevent the traders procuring bulk wheat and to facilitate the FCI to procure more to strengthen its buffer stocks.

As per the statistics available with the Rubber Board, 69,446 tonnes of natural rubber has been exported from the country under different grades during financial year 2005-06. On the other hand its import has been less than 50,000 tonnes during the same period. With the estimated total opening stock of 1,06,200 tonnes as on April 01, 2006, the total availability (opening stock in addition to imports) of natural rubber in the domestic market would be around 9,53,872 tonnes. While the production of natural rubber has stood at 8,03,230 tonnes, the consumption has been 8,01,385 tonnes during 2005-06 was. With an increase of 3.5 per cent in production and 5 per cent improvement in consumption over the pervious year, the consumption is expected to exceed the production.

The National Agricultural Cooperative Marketing Federation of India (Nafed) has procured 1,600 tonne of onions at Rs 300 per quintal in Maharashtra as part of the government’s plan to support farmers. Nafed has estimated the procurement to be around 3,400 tonne more this season over last season. Out of the procured quantity, the federation has exported 600 tonnes to Mauritius .

The latest data from DGCI&S has revealed that the trade surplus from external trade in agricultural commodities has augmented by around 61 per cent to Rs 9,412 crore during April – December 2005-06 over the period of one year. The exports has reported a surge of 13 per cent to stand at Rs 22,723 crore, while the imports has declined by 6 per cent to Rs 13,509 crore during the same period. the exports has risen due to higher production of many commodities including rice, pulses, fruits, vegetables and coffee, with processed fruits and juices reporting the highest export growth of 62 per cent followed by coffee, non-basmati rice and guargaum meal  recording more than 50 per cent growth in their exports.

Indian Meteorological Department (IMD) has predicted the rainfall during monsoon season 2006 (June-September, 2006) to be 93 per cent of the long period average of 89 cm with an error margin of plus or minus of 5 per cent. According to new model adopted by IMD for forecasting of rainfall since 2002, this rainfall is categorized as ‘below normal’. Following this new model, the probability of rainfall being deficient is only 22 per cent. However the forecast is futile in the absence of details of special distribution of rainfall and timing of the rains.

INDUSTRY

Automobiles

Auto component exports from India are expected to touch $25 billion by 2015. Exports of auto components from India have clocked a record compounded annual growth rate (CAGR) of 33 per cent in the last 3 years, owing to a huge increase in sourcing of auto components from India by several developed countries. Many Indian companies have also been snapping up plants and operations overseas, to gain direct access to global OEMs (Original Equipment Manufacturers) and expanding their product range, besides benefiting from outsourcing synergies.

Pharmaceuticals

Medicines sold in retail in the country will shift to a uniform system of maximum retail price (MRP) inclusive of local taxes from June 1. Currently, MRP is exclusive of local taxes and the MRP is printed on medicine packs with the suffix ‘local taxes extra’. The move has been necessitated due to consumer disputes arising out of the present price fixing mechanism. While the maximum selling prices are fixed, the actual selling prices vary from state to state due to the local taxes.

Metals

As per a new import policy in Gujarat , the importer can order raw materials (scrap metals) against Letter of Credit (LC) of any commercial bank. However, the LC’s expenses would have to be incurred by the importer, which would subsequently, decrease the demand for scrap metals. The brass parts industry in Gujarat has been facing a tough time because of this new import policy and the continuously rising prices of imported raw materials. The continuous rise in the metal prices in the international market and the delay in transporting them, has severely affected the industry in the last one-and-a-half years. Materials like brass scrap, copper scrap, aluminium scrap and zinc are used in making brass parts. ‘Brass city’ Jamnagar, meets 90 per cent demand of the auto companies in the country, but recent market conditions have spelt doom for the brass part industry. Many brass parts units in Jamnagar might close down, in case the government does not take any speedy action.

INFRASTRUCTURE

Overall

The six infrastructure industries have grown by 4.9 per cent during the financial year 2005-06 as compared to 5.8 per cent in the previous year, largely due to negative growth in crude petroleum and slump in petroleum products and finished steel for most part of the year. Cement has been a major performing sector growing by 12.3 per cent during 2005-06 compared to an increase of 6.6 per cent in 2004-05.

Petroleum and Petroleum Products

In a report the Petroleum Planning and Analysis Cell (PPAC), the petroleum ministry’s technical wing, has estimated that under-recoveries of oil companies will touch a record high of Rs 57,000 crore during 2006-07, if domestic product prices are not revised and global crude oil prices hover around the current level of over $74 a barrel and could worsen if prices move up further. During 2005-06 this figure has stood at Rs 39,600 crore. In April alone, under-recoveries of oil companies will peak to Rs 4,722 crore - under-realisations on diesel will be the highest at Rs 1,941 crore, followed by kerosene at Rs 1,366 crore, LPG at Rs 1,084 crore and petrol at Rs 331 crore. At the existing global crude prices, petrol is under priced by Rs 5.66 a litre, diesel by Rs 7.64 a litre, kerosene by Rs 14.29 a litre and LPG by Rs 195.10 a cylinder.

GAIL India, which holds 28.33 per cent equity in the Ratnagiri Gas & Power Pvt Ltd (RGPPL), has expressed its inability to complete the re-gasification plant with a total LNG storage capacity of 5 million tonnes per annum (mmtpa) by December this year as it has been yet unable to place orders for the same and has projected the plant to be ready by April 2007. Till then RGPPL will have to run the plant on the more expensive naphtha with the per unit tariff ranging between Rs 4.25 and Rs 7.50. The naphtha is priced at around $19 million per British thermal unit (BTU) in the global market. RGPPL has proposed to restart block II of 740 MW using nearly 42,000 kilolitres of naphtha, which is stored at the plant site and run the plant for eight hours. It also has plans to source additional 30,000 kilolitres of naphtha to continue its operations. It has already entered into a bilateral agreement up to June with Maharashtra State Electricity Distribution Company (MahaDiscom) for the sale of power at the per unit tariff of Rs 4.25.

Non-Conventional Energy

Under a demonstration project for cultivation of non-edible oil-bearing plants and trees for production of bio-diesel, the rural development ministry has released an amount of Rs 4,900 crore to nine states identified under the project, namely, Chhattisgarh, Gujarat, Andhra Pradesh, Himachal Pradesh, Tamil Nadu, Rajasthan, Sikkim, Tripura and Assam. This allocation has been made for plantation of Jatropha curcas in 200,000 hectare forest land and 200,000 hectare non-forest wasteland over a period of five years; and also to be used for technology development, technical support to growers through training, capacity building and other facilitating arrangements. Additionally, the assistance includes development of 80,000 hectare Jatropha nurseries for providing quality seedlings in 2006-07. Petroleum companies under the instructions from the union ministry of petroleum and natural gas have decided to purchase Jatropha oil at Rs 25 per litre, which translates to seed price of Rs 5 per kg on certain assumptions of yield realization from by-products. There are about 552,692.26 sq kms of wastelands in the country, out of which 62.87 per cent, amounting to 347,490.15 sq km, are suitable for cultivation of Jatropha. Though these are non-edible oil-bearing trees, the National Mission on Bio-diesel has suggested special focus on cultivation of Jatropha curcas on wastelands.

Coal

Coal India Limited (CIL) has increased its production by 6.19 per cent to 343 million tonnes of coal in 2005-06, compared to 323 million tonnes in 2004-05. Neyveli Lignite Corporation has produced 215.67 lakh tonnes of coal in 2005-06.

INFLATION

The annual point-to-point inflation rate based on wholesale price index (WPI) has gone up to 3.55 per cent for the week ended April 15, 2006 from 3.24 per cent during the previous week. The inflation rate was at 5.91 per cent in the corresponding week last year.

The WPI in the week under review has increased by 0.5 per cent to 198.5 from 197.6 in the previous week (Base: 1993-94=100). The index of primary articles’ group (weight 22.02 per cent) has declined by 0.4 per cent to 194.3 from the previous week’s level of 195.1, mainly due to a considerable decline by 0.6 per cent and 4 per cent in the price index of food articles and minerals, respectively.  The index of ‘food articles’ has gone down to 196.7 from 197.9 in the previous week, mainly due to a fall in the prices of poultry chicken, wheat and barley, fruits and vegetables and bajra. Similarly, the index of ‘Minerals’ has declined to 342.7 from 357.1 in the previous week, mainly due to a decline in the prices of steatite, iron ore, magnesite and kaolin. The index of ‘fuel, power, light and lubricants’ group (weight 14.23 per cent) has gone up marginally to 316.8 from previous weeks’ level of 316.7, mainly due to higher pries of aviation turbine fuel. The index of ‘manufactured products’ group constituting the maximum of 63.7 per cent of total weight, has also gone up considerably by 0.9 per cent to 173.5 from the previous week’s level of 171.9. The major groups, which contributed to this increase, were the food products, textiles, ‘chemical and chemical products’, ‘non-metallic mineral products’, base metals and machinery tools.

The latest final index of WPI for the week ended February 18, 2006 has been revised downwards; as a result both, the absolute index and the implied inflation rate stood at 196.7 and 4.13 per cent as against their provisional levels of 197.1 and 4.34 per cent, respectively.

BANKING

Bank of India’s net profit in the fourth quarter of 2005-06 have augmented by 382 per cent to Rs 254.42 crore from Rs 52.79 crore a year earlier. The bank’s net profit for the year ended March 31, 2006 has more than doubled to Rs 701.44 crore from Rs 361.39 crore.

Bank of Baroda’s (BoB) net profit in the fourth quarter ended March 2006 increased by around 107 per cent to Rs 208.80 crore from Rs 101.04 crore a year earlier, primarily on account of a sharp rise in non-interest income (NII). During the fourth quarter the NII income rose by 46 per cent to Rs 401.12 crore in the from Rs 275 crore a year earlier.

The Reserve Bank of India (RBI) has asked all banks to seek from companies either an affidavit or an undertaking certifying the end use of working capital during the disbursements of funds. The banking regulator is concerned that a part of the working capital loans availed by companies may have been finding its way to stock and real estate markets. The directive aims at checking the flow of funds into speculative activities. Besides, the RBI also wants to rein in the phenomenal credit growth currently witnessed by the banking sector. The non-food credit has been over 30 per cent in the last two years (2004-05 and 2005-06), leading to over a 100 per cent credit-deposit ratio in the banking system. The RBI, in its annual credit policy, has projected 20 per cent credit growth for 2006-07. The RBI has noted an upsurge in the working capital loans. Companies are citing interest rate uncertainties as the reason for availing large working capital loans to keep costs down in the event of interest rates rising further. Banks have been lending to the corporate sector both in domestic rupee and foreign currency. 

PUBLIC FINANCE

The 15 services which are specifically mentioned in the category of taxable services and the amendments made relating to existing taxable services shall come into effect from the  May 1, 2006. In other words, these changes relating to taxable services will be effective from 1.5.2006.

Section 65 defines taxable services and various terms used in relation to taxable services.  Section 66 is the charging section and provides for levy of service tax on taxable services. These two sections have been amended in the Finance Act, 2006 and these amendments shall come into effect from 1.5.2006.   For details refer to notification No.15/2006-Service Tax dated 25^th April, 2006.

            Fifteen services which are specifically mentioned in the category of taxable services are:

Service provided by a registrar to an issue;

Service provided by a share transfer agent

Automated teller machine operations, maintenance or management

Service provided by a recovery agent

Sale of space or time for advertisement, other than in print media

Sponsorship services provided to any body corporate or firm, other than services in relation to sponsorship of sports events

Transport of passengers embarking on international journey by air, other than in economy class

Transport of goods in containers by rail provided by any person other than Government railway

Business support services

Auctioneers’ service, other than in relation to auction of property under directions or orders of a court of law or auction by the Government

Public relations service

Ship management service

Internet telephony service

Transport of persons by cruise ship

Credit card, debit card, charge card or other payment card related services

FINANCIAL  MARKET

Capital Markets

Primary Market

D.S.Kulkarni Developers Limited will be tapping the primary with its public offer of 55 lakh equity shares at a price band of Rs 250 to Rs 275 per equity share. The issues will open on April 25 and closes on May 3.

Secondary Market

During the week, the market has been witnessing volatility on account of various reasons like the rise in the international crude oil prices to $70 per barrel, weakness in the Asian markets, Sebi’s interim order on the IPO scam, NSE’s hike in margins in both the cash and derivative segments and profit booking by the FIIs. The BSE sensex hit a low of 11344 points on April 28 before recovering to 12043 points in the special session on April 29, thus registering a nominal week-on-week gain of 0.1 per cent. Meanwhile, nifty has also correspondingly dropped to lows of 3342 points before recovering to 3557.6 points for a small week-on-week loss of 0.43 per cent. Amongst the sectoral indices all the major indices have closed the week in positive territory except BSE IT, which has registered a decline of 3.56 per cent as it closed at 4034.92 points, followed by BSE TECk at 2.22 per cent (2745.43 points) and BSE HC at 1.56 per cent (38947.84 points).

During the week, the FIIs have turned net buyers in the equity market to the extent of Rs 2,093.7 crore with purchases worth Rs 16,473.3 crore and sales of 14,379.6 crore. Meanwhile, for the month of April, the FIIs have been net buyers to the tune of Rs 521.9 crore with purchases worth Rs 44,644.8 crore and sales of Rs 44,122.7 crore.

Likewise, the mutual funds have also been net buyers in the equity market to the extent of Rs 1143.86 crore with purchases worth Rs 3770.56 crore and sales of Rs 2626.7 crore. During the month of April, the mutual funds have been net buyers , 2,844.98 crore with purchases worth Rs 12,116.25 crore and sales worth Rs 9,271.27 crore.

Derivatives

The NSE’s F & O segment continued to witness an increase in its turnover with the weekly turnover rising to Rs 259,464 crore from Rs 201,273 crore in the previous week. As usual stock futures has continued to contribute the bulk of the trading at Rs 158,201 crore, while the index futures stood at 77,532 crore.

Government Securities Market

Primary Market

During the week, the RBI has conducted auction of 7.40 per cent 2012 paper and 7.95 per cent 2032 paper for a notified amount of Rs 6,000 crore and Rs 4,000 crore, respectively. The cut-off yield for 7.40 per cent 2012 paper has been 7.0604 per cent and for 7.95 per cent 2032 paper has been 8.0038 per cent. Meanwhile, RBI has mopped up Rs 750 crore and Rs 1300 crore through 91-day and 364-day treasury bills, respectively; the cut-off yields for 91-day and 364-day treasury bill were 5.4065 per cent and 5.9035 per cent, respectively.

Meanwhile, RBI has also conducted the auction of Kerala SDL 2016 for a notified amount of Rs 300 crore and the cut-off yield has been set at 7.65 per cent. Also, RBI has fixed the rate of interest on floating rate bonds, 2016 at 6.15 per cent per annum applicable for the year (May 7, 2006 to May 6,2007). The RBI has also announced sale (re-issue)) of 7.59 per cent 2016 and 7.50 per cent 2034 paper for a notified amount of Rs 6,000 crore and Rs 4,000 crore, respectively on May 4,2006.Secondary Market

During the week, rising international crude oil prices and concerns over the US interest rate has kept the market sentiments cautious, however, given the ample liquidity in the market the call rates have continued to move around the reverse repo rate for most part of the week to end at 5.50-5.60 per cent. The dated securities auction of Rs 10,000 crore as well as the state loan auction of Rs 300 crore failed to pressurised the market liquidity and overnight rates. The daily average outstanding amounts in the LAF (reverse repo) operations during the week stood at Rs 62,036 crore. Meanwhile, the weighted average YTM of 8.07 per cent 2017 paper rose to 7.4949 per cent on April 28 as compared to 7.4268 per cent on April 21.

Bond Market

During the week, the corporate bond yields has risen as robust US economic data, rise in the global crude oil prices, and the dated securities auction in the market weighed down the corporate bond market.

Foreign Exchange Market

In the forex market, the rupee began the week on a firm note, breaching the Rs 45 mark on dollar’s weakness in the overseas market and absence of dollar buying from the PSU banks. However, month-end dollar demand, rising international crude oil prices and RBI intervention has kept the rupee under pressure. The rupee stood 0.38 per cent firm at Rs 44.97 per dollar against Rs 45.14 over the week. In the forward premia market the premiums rose despite spot rupee’s rise, the six-month annualised premia closed at 1.24 per cent on April 28 as compared to 0.99 per cent on April 21.

Commodities Futures Derivatives

During the week, the commodity futures trading has witnessed high volatility with the prices of domestic rubber witnessing a correction given the uncertain and weak overseas sentiments as well as absences of buyers at the higher levels of trading. Inspite of the continued support given by the major manufactures of sheet rubber, the price of RSS 3 has fallen in the week. On the other hand, trading in pepper has registered a decline on account of the huge warehouse stocks in godown across the country.

Meanwhile, on April 25, the FMC has classified real time trading in a commodity by opening the terminals of foreign commodity exchanges without prior approval of the Centre or FMC, as illegal and punishable. It further clarified that forward contracts, other than those that are a) entered into between members of recognised association or through or with such members in goods that are notified under Section 15; b) complying with the by-laws of recognised exchanges and c) not in violation of any contract specification, would be considered illegal and void.

The NCDEX is planning to launch trading in aluminium, zinc, and nickle by the first week of May, thus strengthening its position in the non-ferrous metal trading segment. The contract size for aluminium and zinc is two tonne and for nickel 250 kg; the contracts would be settled on the basis of spot prices in the international markets.

CREDIT RATING

Icra has assigned an ‘LAAA (SO)’ rating to the Rs 3120.3 million series A pass through certificates (PTCs) under securitisation issue backed by residential mortgage backed receivables originated by Standard Chartered Bank. The rating for the PTCs are based on the strength of cash flows from the selected pool of contracts; the available credit enhancement in the form of cash collateral and the integrity of the legal structure.

Icra has assigned ‘A1+’ rating for the Rs 1,000 million short-term debt programme of TGS Investment and Trade Private Limited (TGS). The assigned rating factors in TGS’s strong parentage and the financial flexibility enjoyed by the company by virtue of it being part of the AV Birla group. The rating also factors in the strong liquidity position of the company backed by the market value of holdings in listed group entities and the strategic holdings of non-listed companies in various AV Birla group companies.

Icra has reaffirmed the ‘LAA +’ rating assigned to the Rs. 4.5 billion non-convertible debenture programme of Tata Motors Limited (TML). The agency has also re-affirmed the ‘LAA+’ rating for the Rs. 2.5 billion non-convertible debenture programme of TML. The rating reaffirmations take into account TML’s market leadership status in the domestic commercial vehicle (CV) segment, its strong position in the domestic passenger car segment, besides its favourable cost structure, strong working capital management and comfortable capital structure.

Icra has placed the ‘LA’ rating assigned to the Rs. 10 crores non-convertible debenture programme of Karvy Consultants Limited (KCL) on rating watch with negative implications. The positive outlook assigned to the rating has been withdrawn. The rating action factors in the business and financial risk uncertainties associated with KCL following the SEBI order in the matter of investigations into initial public offerings, which restrains KCL from various capital market related business.

CORPORATE SECTOR

Construction and engineering major Larsen and Toubro has secured Rs 800 crore contract from Reliance Industries Limited for construction services and supply of electrical systems for its special economic zone refinery and petrochemicals project in Jamnagar, Gujarat. The construction division of the company will undertake critical civil, mechanical and electrical works for the 29 million tonne per year refinery and petrochemical complex.

UltraTech Cement has reported 31 per cent rise in net sales to Rs 1,022 crore for the quarter ended March 2006 and almost 17 times-increase in its net profits to Rs 82 crore compared with Rs 5 crore in the same period previous year.

ABB has posted 32 per cent rise in net sales for the first quarter ended March 2006 to Rs 820.9 crore and 87 per cent increase in net profit to Rs 51.3 crore over the same period a year ago.

Rolta India has posted 36 per cent increase in net profit in its third quarter ended March 2006, at Rs 37.11 crore over the same period previous year. The company has recorded total income of Rs 118.44 crore during the quarter, up from Rs 91.17 crore registered in the year-ago period. Recently, the company raised $ 103.50 million from its global depository receipts on the London Stock Exchange.

HCL Infosystem’s gross sales for the quarter ended March 2006 have increased by 60 per cent to Rs 3211.20 crore over the corresponding period a year ago. The company has registered 29 per cent jump in net profit to Rs 84.44 crore. Its revenue from the computer systems business has moved up by 27 per cent to Rs 682.21 crore.

Indian Petrochemicals Corporation (IPCL) has decided to merge six group companies with itself. These are Apollo Fibres (AFL), Central India Polyester (CIPL), India Polyfibres (IPL), Orissa Polyfibres (OPL), Recron Synthetics (RSL) and Silvassa Industries (SIPL).

Gujarat Gas Company has posted net profit of Rs 24.47 crore for the first quarter ended March 2006, down by 10.46 per cent over the same period a year ago. The company’s total income has increased by 26.7 per cent to Rs 202.88 crore.

Mukesh Ambani controlled Reliance Industries Limited (RIL), which is diversifying into retail sector, will set up as many as 52 rural hubs in Punjab at a cost of Rs 6,000 crore, Out of these 52, as many as six would become operational by January next year (2007). These rural hubs will have facilities like pesticides sales centres, purchase centres and other extensive services required by the villages.

Reliance Industries group company Reliance Gas Pipeline Limited (RGPL) will set up a pilot project with an investment of Rs 30-35 crore in Shahdol in Madhya Pradesh. The company will lay a 15-kilometer gas pipeline and will supply gas to companies like Orient Paper Mills, local units in Shahdol and power plants situated closeby.

Nicholas Piramal India (NPIL) has posted a growth of 57.3 per cent in its net sales in the fourth quarter ended March 2006 at Rs 336.19 crore over the same period a year ago. The company has recorded a net profit of Rs 37.59 crore compared with a net loss of Rs 12.48 crore in the same quarter of the previous year. For the year ended 31 March 2006, NPIL’s net profit has marginally gone up to Rs 170.35 crore from Rs 169.57 crore.

During January-March 2006, Cipla has posted 80 per cent increase in net profit to Rs 190.77 crore over the corresponding quarter previous year. Total income has increased by 66 per cent to Rs 917.35. For the financial year ended March 2006, the company has recorded a growth of 46 per cent in net profit at Rs 600.08 crore.

FMCG major Dabur India has posted 21.80 per cent increase in net profit to Rs 50.22 crore for the fourth quarter ended March 2006 over the same period a year ago.

Colgate Palmolive ( India ) has reported a growth of 26 per cent to Rs 302.06 crore in net sales for the quarter ended March 2006 and net profit has stood at Rs 37 crore, 14.71 per cent higher than the corresponding quarter previous year. For the finanacial year ended March 2006, the company’s net sales have been higher by 6.36 per cent to Rs 1,124.19 crore and net profit augmented by 55 per cent to Rs 137.6 crore compared to the previous financial year.

JK Paper has registered about 8 per cent increase in net profit to Rs 8.65 crore for the third quarter ended March 2006 over the corresponding period previous year.

Maruti Udyog Limited has recorded 7 per cent rise in net sales to Rs 3,260 crore for the quarter ended March 2006 and net profit has augmented by 39 per cent to Rs 360 crore over the same period previous year. Domestically, during the quarter ended March 2006, the company has sold 1.46 lakh units of vehicles as against 1.35 lakh units over the previous year and it has exported 8,125 units of vehicles as against 10,941 units.

MRF has reported 648 per cent jump in its net profit to Rs 5.84 crore for the second quarter ended March 2006.

For the quarter ended March 2006, Adlabs Film’s net sales have stood at Rs 34.33 crore, 53 per cent higher than the previous year and net profit has risen by 31 per cent to Rs 8.07 crore. For the year ended March 2006, Adlabs Films has posted a 24.67 per cent increase in net profit at Rs 26.30 crore over a year ago.

Dhampur Sugar Mills has reported a whooping 230 per cent increase in net profit in the second quarter of sugar year 2006-07 (October-September) to Rs 66.4 crore.

Siemens, manufacturer of power equipment, has reported 72 per cent growth in net profit at Rs 117.8 crore for the second quarter ended March 31, 2006 on the back of new orders and strong exports. New orders for the second quarter jumped by 72 per cent to Rs 1,591 crore. Demag Delaval Industrial Turbomachinery, a 100 per cent subsidiary of the company, and Siemens VDO Automotive had amalgamated with the company on November 17, 2005 and January 19, 2006.

Bharat Petroleum Corporation has posted net profit of Rs 1,788 crore for the quarter ended March 2006, up 408 per cent over the corresponding quarter a year ago.

Burdened by higher oil subsidy, Gas Authority of India Limited (GAIL) has witnessed a 22 per cent decline in net profits to Rs 409 crore for the quarter ended March 2006. The subsidy burden shared by GAIL to compensate oil marketing companies for selling kerosene and domestic cooking gas below cost has doubled to Rs 538 crore during the quarter compared with Rs 237 crore previous year.

Reduction in freight rates has pulled down net profit of Great Eastern Shipping Company by 11.37 per cent to Rs 223 crore in the quarter ended March 2006 as compared to the corresponding previous period's Rs 251.7 crore.

Hindustan Zinc's net sales have surged by 142 per cent for the quarter ended March 2006 to Rs 1,774 crore over the same period previous year and net profit has enhanced by 250 per cent to Rs 802 crore. For the financial year ended March 2006, the company's refined zinc production for the year has stood at 2,84,000 tonne or 2.8 lakh tonne, 34 per cent higher than the previous year.

Hindustan Lever Limited (HLL), the country's leading fast-moving consumer goods company, has reported 11.6 per cent increase in net sales to Rs 2,798 crore for the quarter ended March 2006. HLL, which owns popular FMCG brands like Surf, Lux, has registered a growth of 77 per cent in net profit at Rs 442.86 crore for the quarter ended March 2006. HLL's advertising and promotion spending for the quarter has significantly higher by 45 per cent at Rs 303.34 crore.

Kochi Refineries has posted a net loss at Rs 9.8 crore in the fourth quarter ended March 2006, as against a net profit of Rs 224.8 crore for the corresponding period in 2004-05. For the year ended March 2006, the company’s net profit has declined by 75 per cent to Rs 210.8 crore as compared with Rs 842.1 crore in 2004-05.

Wockhardt has reported a net loss of Rs 3.7 crore in the first quarter ended March 2006 compared with net profit of Rs 41.7 crore in the corresponding period of the last year.

Global IT services provider Patni Computer Systems has posted 7.7 per cent drop in net profit to Rs 64.24 crore in the first quarter ended March 2006 over the comparable period of the previous year.

Indian Petrochemicals Corporation (IPCL) has registered a fall of 25.89 per cent in net profit to Rs 249 crore for the quarter ended March 2006. The petrochemical business worldwide has affected by high crude oil and natural gas prices leading to increase in cost of raw materials and reduction in profitability. On the raw-material side, price of naphtha and propane has higher by 27 per cent and 14 per cent, respectively. 

LABOUR

After the government decided to take recourse to legislation to mandate job quotas in the private sector, the Confederation of Indian Industry (CII) has made it clear that the mandatory reservations in any form is not conducive to competencies and therefore, will not be acceptable. It emphasised that since we are externally engaged economy, the multinational companies may show disinterest to set up their bases in India . Further it has stated that even if the legislation is limited the domestic industry, it would prove as detrimental.  Alongside this stance, the industry association has announced setting up of a taskforce to take an affirmative action for underprivileged people. The taskforce is expected to submit its report in eight weeks and find ways to empower scheduled castes, scheduled tribes and other backward castes (OBCs) by giving them education and employment opportunities.

 The Labour Minister has ruled out the possibility of raising interest rate on the Employees’ Provident Fund (EPF) accounts from the 8.5 per cent announced earlier. He added that though the Finance Ministry has allowed 15 per cent investment of the EPFO’s corpus in equities and mutual funds, there is a difference of opinion on the issue in the EPFO’s Central Board of Trustees (CBT). Further, he mentioned that the Bill on providing social security to unorganised sector is likely to be introduced in the next parliament session.      

INFORMATION TECHNOLOGY

The country’s largest software exporter, Tata Consultancy Services (TCS) has planned a capital expenditure of Rs 1000 crore during the current financial year. This includes investment on both technology and infrastructure. The company’s aim is to become one of the top 10 companies globally by 2010. TCS is looking to expand in Chandigarh , Bhubaneswar , Kochi , Coimbatore , Nagpur , Indore and Visakhapatnam .

HCL Infosystem has announced 29 per cent rise in quarterly net profit to Rs 84.44 crore in the January-March 2006 quarter compared with Rs 65.40 crore in the corresponding period of the previous year. The board has declared a second quarterly dividend of 100 per cent on equity shares of face value of Rs 2 each.

TELECOM

Confronted with a severe capacity crunch, state-owned Mahanagar Telephone Nigam Ltd. (MTNL) will soon expand its network by an additional 4 lakh GSM lines. The company has awarded a contract for this purpose to US-based telecom equipment vendor Motorola. The expansion cost for Delhi was estimated at Rs 54 crore, while for Mumbai it would be about Rs 30 crore. Currently MTNL have a capacity of 8.25 lakh lines each in Delhi and Mumbai, with a load factor of over 80 per cent. This is nearly equivalent to complete capacity utilization. The deal with Motorola will enable MTNL to increase its mobile network capacity to 10.25 lakh lines each in the two metros. For Motorola, this marks the second deal with MTNL. In 2004, the company has won a contract to supply 8 lakh GSM lines to the PSU.

*These statistics and the accompanying review are a product arising from the work undertaken under the joint ICICI research centre.org-EPWRF Data Base Project.

LIST OF WEEKLY THEMES

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