Current Economic Statistics and Review For the Week Ended September 15

All-India Debt and Investment Survey (AIDIS)
State and Region-wise Analysis
Part A*

Total Value of Assets and Aggregate Cash Loans Outstanding-
Distribution based on Assets Holding Class (AHC)

Introduction

In Section 1, a brief review of the household characteristics, holdings of assets and aggregate cash loans outstanding as on 30-06-2002 at an aggregate level as per the NSSO 59^th Round was presented. Section 2A dealt mainly with the phenomenon of indebtedness of households in rural and urban India against the backdrop of assets holdings by different size classes.

This section (Section 2B) deals mainly with total value of assets and aggregate loans outstanding as on 30-06-2002.

Total assets of a household are the cumulative result of a variety of factors. Part of the asset, say, land may be inherited. They may also be built up out of personal savings of many years and/or borrowings, i.e., transfer of savings from other sectors. However, all borrowings may not necessarily result in assets formation as the borrower might use some part of borrowings for other purposes. Again, saving rates of households widely differ within a country as they depend upon the households’ capacity and willingness to save. Growth in household assets constitutes a major element in the growth of assets formation in the economy. Moreover, the level of their asset holdings also influences the borrowing capacity of households.

Assets as per NSSO 59^th Round (January-December 2003) Survey on AIDIS as defined as: Household assets are all that are owned by the households and have money value. These include: physical assets like land, buildings, livestock, agricultural machinery and implements, non-farm business equipments, all transport equipments, durable household goods; and financial assets like dues receivable on loans advanced in cash or in kind, shares in companies, banks, co-operative societies, etc., holdings of national saving certificates and the like, deposits in companies, banks, post offices and with individuals.

It also includes the amount of cash held by the households as on the date of survey i.e. 30-06-2002. However, assets do not include crops standing in the fields and stocks of commodities held by the household in household assets.

According to the 59^th Round Survey of NSSO (January-December 2003), households have been classified into 10 asset groups based on the value of their total assets. The asset holding classes in Rs.‘000 are: 0-15, 15-30, 30-60, 60-100, 100-150, 150-200, 00-300, 300-450, 450-800 and 800 or above.

In the earlier NSSO Rounds, the class intervals for the asset classes were kept at a uniform size or spread. The 59^th survey, on the other hand, has decided on the ten household asset classes by examining the distribution of sample households over the assets-holding classes for all-India. In this process, each household has been assigned to its appropriate assets holding depending upon the class in which the total value of assets of the household falls. Therefore, the class intervals are not uniform.

Section 2A of this series of notes discussed the distribution of households in different asset holding classes. This section 2B presents the other side of distribution of households according to asset group, i.e., the distribution of total assets among households falling under different asset holding classes. Hence, these two together indicate the degree of concentration, if any, in asset holdings among different classes of households at all-India and states levels. The share of total assets of households in a particular asset group depends not only on the proportion of households in that asset group but also on the overall distribution of households in the remaining asset groups. It is also be influenced by the distribution of households within different asset groups though the variation will be minimal. On the whole, a relatively high share of assets in top asset group might generally indicate relatively high average value of assets per household, for any state and if the average value of asset per household is relatively low, then it would suggest somewhat greater inequality of asset holding. Correspondingly, low share of assets of such household might indicate relatively low average level of assets per households and greater equality in distribution of assets within the state. Similarly, relatively larger share of assets among low asset groups might indicate lower value of average assets per households in the state and greater equality in asset distribution.

A novel aspect of this note is the attempt at estimating the total value of assets under each size group at all- India as well as in respect of each state and region. This has made us possible to discuss the inequality pattern in the distribution of assets amongst different size groups.

Total Value of Assets and its Size Distribution

All-India

As on 30-06-2002, the total estimated value of assets at Rs.62,42,189 crore is owned by total estimated households numbering 203.4 million for all-India at an average assets holding per households of Rs.3,06,967 (Statement 1). Out of this , about 20.5 million or 10.1 per cent of total households got assets worth Rs 12,954 crore or 0.21 per cent of the total assets distributed among themselves at an average value of Rs.6,317; these form the lowest strata of the households, i.e., they fall under assets holding classe of Rs. 15,000 or less (Statement 2). As against this, at the higher end of the strata, households holding assets worth Rs. 8 lakh and above – the highest size class – constitute 17.7 million or 8.7 per cent of the total and among them they share a massive Rs.30,93,601 crores or about 50 per cent of the total assets, each household on an average holding assets worth Rs.17,52,321 (for details, see Tables 6 to 9). This distribution pattern of assets shows the vast disparity in asset holding prevalent in India .

A scanning of Chart 1 in the above respect reveals the following points: i) there is increased holding of assets as one moves from low asset groups to high asset groups; ii) Upto the asset class Rs.150000-200000, there is a steady increase; thereafter, there has been a sudden quantum jump in the percentage distribution of assets between 150-200 to 200-300 and this trend is maintained; and (iii) when one comes to the last size class, there is a three-fold jump in the asset share of households as between the last two size groups.

An estimated 147.9 million households or 72.7 per cent live in rural India and own assets worth Rs.39,27,062 crore or 62.9 per cent of the total value of assets. The average assets holding per household works out to be Rs.2,65,606. Out of this, 11.3 million or 7.6 per cent possess assets worth Rs. 15,000 or less valued Rs.7,959 crore or a negligible 0.20 per cent of total rural assets.. Average assets at this level works out to be Rs.7,071. At the highest end of the spectrum, i.e., asset holdings at Rs. 8 lakh or above, there are 9.8 million households which constitute 6.7 per cent of the total households in rural areas enjoying assets worth Rs. 16,47,335 crore or about 42 per cent of the total rural assets each holding on an average assets worth Rs.16,68,644 (for details see Tables 1 to 3).

Statement 2: Number of Households, Total and Average Value of Assets as per Assets Holding Class (AHC)
	Lowest Strata, i.e., AHC Rs.15,000 or less			Highest Strata, i.e., AHC Rs. 8 lakhs or above
	Number of	Total Value	Average Value	Number of	Total Value	Average Value
	Households	Of Assets	of Assets	Households	Of Assets	of Assets
	in Million	Rs.crore	Rs.	in Million	Rs.crore	Rs.
All-India	20.5	12,954	6,317	17.7	30,93,601	17,52,321
	(10.1)	(0.21)		(8.7)	(49.6)
Rural	11.3	7,959	7,071	9.9	16,47,335	16,68,644
	(7.6)	(0.20)		(6.7)	(42.0)
Urban	9.2	4,994	5,400	7.8	14,46,265	18,58,475
	(16.7)	(0.22)		(14.0)	(62.5)
Note: Figures in brackets are percentages to total
see Table 1 for notes and source

The rural assets are less inequitably distributed than the urban household assets, as indicated below. The urban asset distribution would have been more steep if assets held by companies and the government were included even notionally.

An estimated 55.5 million households or 27.3 per cent of the total households lives in urban India and these households possess assets worth Rs.23,15,127 crores or 37.1 per cent of the total all India assets holding with an average assets holding per household worth Rs.4,17,158 (Statement 1), that is nearly 60 per cent more than the average value of asset for the rural households. Among them, 9.2 million or 16.7 per cent households fall under the lowest strata of the assets holding class, i.e., Rs. 15,000 or less; these households have assets worth Rs. 4,994 crore or a tiny 0.22 per cent of total urban household assets. Each urban households falling under this class is worth a mere Rs.5,400 (Statement 2).As against this, 7.8 million or 14.0 per cent of the total urban households enjoys assets worth Rs.8 lakh or above and they hold assets worth Rs.14,46,265 crore or 62.5 per cent of total assets of urban households, each households having an average asset holding valued at Rs.18,58,475 (Tables 4 to 6). This distribution reveals that unlike in rural India , the urban picture is more unequal in so far as the distribution of household assets is concerned.

III

Household Asset Distribution Amongst Regions: A Comparative Picture

A comparative distribution of households, total value of assets and average value of assets per households is depicted in Statement 3.

An interesting aspect of the region-wise asset distribution is that the percentage shares of regions in the country’s total assets by and large match the percentage shares of regions in the number of households, thus the average size of asset holdings per household remaining fairly comparable. Even so it must be admitted that the northern region possesses the highest value of assets per household

Statement 3: Distribution of Households, Total Value and Average Value of Assets -Regionwise
	Number of Households			Total Value of Assets			Average Value of Assets
Region	(in Million)			(in Rupees Lakh crore)			(in Rupees lakhs)
	Rural+	Rural	Urban	Rural+	Rural	Urban	Rural+	Rural	Urban
	Urban			Urban			Urban
Northern	24	15.8	8.2	13.6	8.8	4.8	5.7	5.6	5.8
	(11.8)	(10.7)	(14.8)	(21.8)	(22.4)	(20.7)
North- Eastern	6.6	5.7	0.9	1.2	0.9	0.3	1.9	1.6	3.6
	(3.2)	(3.9)	(1.6)	(1.9)	(2.3)	(1.3)
Eastern	41.9	34.3	7.6	7.8	5.5	2.3	1.9	1.6	3
	(20.6)	(23.2)	(13.7)	(12.5)	(14.0)	(9.9)
Central	46.6	36.4	10.3	14.7	10.7	4..0	3.2	2.9	3.9
	(22.9)	(24.6)	(18.6)	(23.6)	(27.2)	(17.2)
Western	31	18.3	12.6	10.6	5.1	5.5	3.4	2.8	4.3
	(15.2)	(12.4)	(22.7)	(17.0)	(13.0)	(23.7)
Southern	53.2	37.3	15.9	14.5	8.2	6.3	2.7	2.2	3.9
	(26.2)	(25.2)	(28.6)	(23.2)	(20.9)	(27.2)
All-India	203.4	147.8	55.5	62.4	39.3	23.2	3.1	2.7	4.2
	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)
Note: Figures in brackets are percentages to all-India total
for notes and source see Table 1

Northern region with 24 million or 11.8 per cent of the country’s total households thus owns Rs. 13.6 lakh crore or 21.8 per cent of total value of asset, at this level, the average value of assets per household works out to the highest amounting to Rs. 5.7 lakh. Though there may be disparity among various household classes, as subsequent discussion reveals, overall this region enjoys a better distribution of wealth among the households.

At the other extreme, north-eastern and eastern regions have similar low average household asset holdings. North-eastern region with 6.6 million or 3.2 per cent of households possesses a meagre assets valued at Rs. 1.2 lakh crore and the average asset holding is worth only Rs.1.9 lakh. In this region, there is wide disparity between rural and urban areas in asset holdings. Rural areas are holding assets almost three times the average assets held in urban areas.

Eastern region with 41.9 million or 20.6 per cent households hase assets worth Rs. 7.8 lakh crore or 12.5 per cent of total all-India assets, with an average assets holding also at Rs. 1.9 lakh. In absolute terms, rural households enjoy more than double the assets of urban households in this region, but the average assets holding in the rural area is roughly half of that of urban areas (Statement 3). This differential feature – which is also true of the north-eastern region – is the result of relatively poor urbanization of the north-eastern and eastern regions thus possessing less proportions of urban households.

The Central region with 46.6 million or 22.9 per cent of total households possesses assets valued at Rs.14.7 lakh crore or 23.6 per cent of total assets. At this level, the average value of assets works out to be 3.2 lakh, which is equal to that of all India .

Distribution of assets in western region is skewed. The western region with 31.0 million or 15.2 per cent of total households enjoys Rs. 10.6 lakh crore or 17.0 per cent of total asset with average value of asset of Rs. 3.4 lakhs per households. The rural areas of this region have 18.3 million households as against 12.6 million areas in urban areas. The value of assets is more or less same at about Rs. 5 lakh crore each. However, less number of households in urban areas enjoy the given assets whose average asset holding per household works out to be Rs. 4.3 lakh as against Rs. 2.8 lakh in rural areas.

Southern region with 53.2 million or 26.2 per cent of total households benefit from assets worth Rs. 14.5 lakh crore and average value of assets is Rs.2.7 lakhs.The rural area of southern region with 37.3 million or 25.2 per cent of total all India rural households or about 70.1 per cent of southern region rural household enjoys Rs. 8 lakh crore worth assets at an average holding of Rs.2.2 lakh per household.A comparison northern and southern region reveals that while in northern region about Rs. 8 lakh crore is enjoyed by 16 million rural household, in southern region almost the same amount of assets is enjoyed by 37.3 million households hence southern region enjoys a better distribution .

Statement 4 depicts the distribution of assets according to asset holding classes, that is the lowest asset owning classes of Rs. 15,000 or less and the highest strata owning assets worth Rs. 8 lakh or more among different regions. As indicated above, the northern region has the highest share of assets enjoyed by the largest asset class: above 67 per cent as against a range of 25 per cent to 53 per cent in the other regions.

Statement 4: Percentage Distribution of Assets as Per Assets Holding Class
	Assets Holding Class ( Rs. 000)
	0-15	=>800	0-15	=>800	0-15	=>800
	Rural		Urban		Rural+Urban
Northern Region	0.03	64.66	0.13	70.49	0.07	66.71
North-Eastern Region	0.32	15.48	0.24	51.88	0.30	25.22
Eastern Region	0.48	20.36	0.33	45.46	0.43	27.78
Central Region	0.09	39.68	0.15	56.57	0.11	44.26
Western Region	0.19	42.68	0.2	63.11	0.20	53.24
Southern Region	0.35	37.49	0.29	66.36	0.32	49.99
All-India	0.20	41.95	0.22	62.47	0.21	49.56
for notes and source see Table 1

Northern region owns assets valued at Rs.13,58,020 crore. This forms about 21.8 per cent of the total households assets in India . Out of this assets, 67 per cent or Rs. 9,05,916 crore are owned by the richer households which falls under Rs. 8 lakhs or more assets holding classes. These households enjoys on an average assets worth Rs. 20,44,541. The poor household -owning assets less than Rs. 15,000 –owns a very small quantum of asset valued at Rs. 909 crore or a tiny 0.07 per cent of the total northern region household assets. This poor households of this region is worth on an average basis a sum of Rs.4,901, the lowest among all the region and also less than the all India average, indicative of the vast dissimilarity in the distribution of assets within this region among different asset holding classes i.e. more households sharing less assets with in a AHC. Same pattern of asset distribution can be witnessed among the states included in this region, the inequality in the distribution of household assets is vast among different AHC in the case of Haryana and Punjab, though there are the most prosperous states in this region with assets worth Rs. 3.1 lakh crore and Rs.3.6 lakh crore respectively (Table 7 to 9). The average assets holding in case of Haryana in the lower strata is only Rs. 3,906 as against Rs. 23.1 lakh held by upper strata households. In Punjab the inequality of distribution of assets are still worse as the respective figures of Rs. 4,878 and 24.6 lakhs reveals (Statement 5). Rajasthan with total assets worth Rs. 3.6 lakh crore is one state in this region, in spite of the disproportionate distribution of household assets, enjoys comparatively better distribution of assets than Haryana and Punjab . The scenario in Jammu and Kashmir and Himachal Pradesh are not in any way different from the other states included in the region. (Table 7 to 9).

Statement 5: Distribution of Households and Total and Average Assets among Lower and Upper Strata of Households in Northern Region
	Lowest Strata, i.e., AHC Rs.15,000 or less			Highest Strata, i.e., AHC Rs. 8 lakhs or above
	Number of	Total Value	Average Value	Number of	Total Value	Average Value
	Households	Of Assets	of Assets	Households	Of Assets	of Assets
	in Million	Rs.crore	Rs.	in Million	Rs.crore	Rs.
Northern	1.85	909	4,901	4.43	9,05,915	20,44,541
Region	(7.7)	(0.1)		(18.5)	(66.7)
Haryana	0.4	154	3,906	1.03	2,38,045	23,07,313
	(9.1)	(0.1)		(23.7)	(77.5)
Punjab	0.31	151	4,878	1.17	2,86,981	24,57,660
	(6.7)	(0.0)		(25.3)	(79.4)
Rajasthan	0.3	171	5,658	1.04	1,58,880	15,25,634
	(3.3)	(0.1)		(11.3)	(44.2)
Note: Figures in brackets are percentages to respective region/state total
for notes and source see Table 1

In the rural areas of states, falling under Northern Region the picture is not different. Households owning assets worth Rs. 15,000 or less holds a mere 0.03 per cent of the total households assets and at the other end households owning assets of Rs. 8 lakh or more enjoys 64.7 per cent of the total assets (Table 1 to 3).

In urban areas, in the lower end of the spectrum i.e. holding assets worth Rs.15,000 or more hold 0.13 per cent of total assets as against 70.5 per cent of the total value of assets by households holding assets Rs. 8 lakhs or more (Table 4 to 6).

The disparity in the distribution of assets within this region is more rational, though the region is poorest among all regions holding an asset worth Rs .1,24,407 crore or mere 2 per cent of all India asset holdings.

About 0.51 million or about 8 per cent of the household who holds about 0.32 per cent of total rural assets falls in the lower strata and 0.20 million households or a mere 3 per cent of the total households of the region holding asset worth Rs. 8 lakh or above enjoys about 25.2 per cent of total region’s assets. There is also wide difference among the different states falling under this region.

The richer households in the smaller states like Mizoram, Nagaland etc. are better of than that in Assam , Arunachal Pradesh and Sikkim with comparatively better average asset holdings ( Table 9). This is true in the case of rural areas to some extent and in also among urban households of Manipur Meghalaya, Mizoram and Nagaland.(Table 3 & 6).

Ownership of assets in this region is more equitable as compared to other region though this region got a mere 13 per cent of total assets. The households in the eastern region falling in the lower strata forming about 10.4 per cent of total households of 41.89 million households owns assets worth Rs.3,385 crore or 0.43 per cent of total asset of 7,79,843 crore and the upper strata forming of 3.5 per cent of the total households enjoys only 28 per cent of total household assets unlike the all India percentage of about 50 per cent (Table 7 to 9 and Statement 6). Bihar, with an asset holding of Rs. 2,87,181 crore or less than 5 per cent of total assets is one of the poorest state in India had an average asset value of Rs. 2,18,781

Orissa with an estimated household of 7.7 million (3.7 per cent) owns assets worth Rs.91,286 crores forming about 1.5 per cent of the total all-India assets. The average asset holding of Rs.8,331 by the poor – Rs.15,000 or less - and Rs.17,44,234 by the rich – Rs. 8 lakhs and above - throws light about the high unequal distribution of assets in this states. But in West Bengal , the richest enjoys an average value of assets of Rs. 13,73,535 only, the lowest asset holding amongst the major states in this region (Statement 6).

Statement 6: Distribution of Households and Total and Average Assets among Lower and Upper Strata of Households in Eastern Region
	Lowest Strata, i.e., AHC Rs.15,000 or less			Highest Strata, i.e., AHC Rs. 8 lakhs or above
	Number of	Total Value	Average Value	Number of	Total Value	Average Value
	Households	Of Assets	of Assets	Households	Of Assets	of Assets
	in Million	Rs.crore	Rs.	in Million	Rs.crore	Rs.
Eastern	4.38	3,385	7,733	0.15	2,16,612	14,57,781
Region	(10.45)	(0.43)		(3.55)	(27.78)
Bihar	0.85	716	8,421	0.56	86,015	15,39,551
	(6.48)	(0.25)		(4.26)	(29.95)
Orissa	1.16	962	8,331	0.10	18,105	17,44,234
	(15.07)	(1.05)		(1.35)	(19.83)
West-	1.95	1,455	7,478	0.70	96,289	13,73,535
Bengal	(11.93)	(0.46)		(5.72)	(30.27)
Note: Figures in brackets are percentages to respective region/state total
for notes and source see Table 1

This region registers comparatively better distribution of assets among different households as compared to all India distribution of assets. Madhya Pradesh with about 0.62 million (5 per cent) households falling in assets class Rs. 15,000 or less possess assets valued at Rs.382 crore or 0.11 per cent of total assets and about 1.04 million (8.4 per cent) households fall under the richer strata -assets worth Rs. 8 lakh or above-actually holds assets worth Rs.1,56,154 crore or 44 per cent of total assets in the state(Statement 7) less than that of all-India.( Table 7 to 9).

In Uttar Pradesh, about 1.30 million (4.6 per cent) households fall in the lower strata of Rs. 15,000 or less owns assets worth Rs. 921 crores and at the other end 2.76 million (9.7 per cent) fall under AHC worth Rs. 8 lakh or above totally enjoys about Rs. 4,32,711 crores or about 45 per cent of states total assets Rs.9,63,478 crores

In Western region, Gujarat boast about a better distribution of wealth, with only 0.90 million (9.2 per cent) households in the lower strata as against 1.27 million (13 per cent) households in the higher strata, the respective value of their assets holding at Rs.514 crore or 0.14 per cent and Rs.2,05,398 crore or 55.93 per cent of total assets. The respective average assets holding is Rs. 5,736 and Rs.16,13,118. However in this state more number of people own assets worth more than Rs.1 million as compared to their penurious brethrens within the state (Satement 8). Maharashtra , the most industrialized state in the country, the distribution of assets is skewed. With 2.86 million (13.8 per cent) households own assets worth Rs. 1,528 crore or 0.23 per cent, each households holding an average asset worth Rs. 5348. As against this, at the other extreme, only 1.89 million or 9.1 per cent households owns Rs. 3,47,943 crores or about 52 per cent of the total assets. The average holding per households works out to be Rs. 18,36,403.

Statement 8: Distribution of Households and Total and Average Assets Among Lower and Upper Strata of Households in Western Region
	Lowest Strata, i.e., AHC Rs.15,000 or less			Highest Strata, i.e., AHC Rs. 8 lakhs or above
	Number of	Total Value	Average Value	Number of	Total Value	Average Value
	Households	Of Assets	of Assets	Households	Of Assets	of Assets
	in Million	Rs.crore	Rs.	in Million	Rs.crore	Rs.
Western	3.82	2,081	5,454	3.25	5,64,387	17,19,396
Region	(12.3)	(0.20)		(10.5)	(53.24)
Goa	0.05	30	6,461	0.07	10,480	14,39,562
	(13.4)	(0.17)		(21.1)	(60.08)
Gujarat	0.90	514	5,736	1.27	2,05,398	16,13,118
	(9.2)	(0.14)		(13.0)	(55.93)
Maharashtra	2.86	1,528	5,348	1.89	3,47,943	18,36,403
	(13.8)	(0.23)		(9.1)	(51.66)
Note: Figures in brackets are percentages to respective region/state total
for notes and source see Table 1

Out of 53.24 million households in this region, 7.5 million or about 14.2 per cent find place in the lower strata and 4.13 million or 7.8 per cent in the topmost strata. Within this region, there is wide inequality in the distribution of households among different asset holding classes as also between different states.

Statement 9 : Distribution of Households and Total and Average Assets among Lower and Upper Strata of Households in Southern Region
	Lower Strata ie AHC Rs.15,000 or less			Higher Strata ie AHC Rs. 8 lakhs or above
	Number of	Total Value	Average Value	Number of	Total Value	Average Value
	Households	of Assets	of Assets	Households	of Assets	of Assets
	in Million	Rs.crore	Rs.	in Million	Rs.crore	Rs.
Southern	7.56	4,647	6,148	4.13	7,24,958	17,56,025
Region	(14.2)	(0.32)		(7.8)	(49.99)
Andhra	3.89	2,368	6,087	0.86	1,58,423	18,52,682
	(20.1)	(0.63)		(4.4)	(42.44)
Karnataka	1.00	598	5,976	0.81	1,40,854	17,33,587
	(9.6)	(0.20)		(7.8)	(46.18)
Kerala	0.28	190	6,654	1.37	2,48,135	18,05,801
	(4.2)	(0.05)		(20.4)	(64.02)
Tamil Nadu	2.35	1,469	6,260	1.06	1,72,361	16,23,601
	(14.2)	(0.39)		(6.4)	(45.88)
Note: Figures in brackets are percentages to respective region/state total
for notes and source see Table 1

In Andhra Pradesh, 3.89 million or almost one-fifth of the total households own assets worth Rs.15,000 or less. The total value of their asset at Rs. 2,368 crore forms a 0.63 per cent of total assets of the state. The average asset holding works out to be Rs.6,087 . As against this 0.86 million or 4.4 per cent households in the richer class -owning assets worth more than Rs.8 lakh- owns assets worth Rs.1,58,423 crores. The average holding of the assets are worth Rs.18,52,682 , the highest in this region depicting the most highly unequal distribution of household assets.

In Karnataka, the distribution of asset among different asset holding classes is more even. Out of 10.47 million households, 1.00 million households (9.6 per cent) fall in the category of Rs 15,000 or less owning assets mounting to Rs.598 crore with an average asset holding of Rs.5,976 and 0.81 million (7.8 per cent) households in the highest strata of Rs. 8 lakh holds assets valued at Rs. 1,40,854 . Average value of the asset holding works out to be Rs.17,33,587.

Tamil Nadu is another state facing a wide discrimination in asset distribution among different assets holding classes. The poor household numbering about 2.35 million or about 14.2 per cent of total households own assets worth Rs. 15,000 or less. Their average asset holding works out to be Rs.6,260. Rich households numbering about 1.06 million (4.4 per cent) who fall under the AHC category of Rs. 8 lakh or more enjoys a total asset worth Rs.1,72,361 crore or about 46 per cent of the total assets.

By contrast,in Kerala the distribution has been more or less even as can be seen in the data in Statement 9. In this state, out of 6.74 million household, 0.28 million households or 4.23 per cent falls in the low poor strata of household owning about Rs.190 crore at an average of Rs.6,654. The richest - households owning Rs.8 lakhs or more - forms 1.4 million or 6.4 per cesnt of the total households. Their total assets are worth Rs.2,48,135 crore and the average holding is Rs.18,05,801.

All loans taken in cash were considered to be cash loans, irrespective of whether those loans were repaid or proposed to be repaid in cash or kind. Cash loans, generally, covered borrowings at specific rates of interest for a specific period of time. Cash loans taken even at nil rate of interest also included here. Cash loans may be taken against security or without any security. Dues payable under hire purchase scheme are also treated as cash loans.

As on June 30, 2002, the aggregate cash loans outstanding in the country as provided in the NSSO report were of the order of Rs. 1,76,793 crore. Out of these loans, rural households owes an amount of Rs. 1,11,466 crore or 63.0 per cent with average cash loans of Rs.7,539 and the urban households owes Rs. 65,326 crore or 37.0 per cent of all-India outstanding cash loans, with the average debt working out to be Rs.11,771 (Tables 10 to 18) .Such high share of rural households in total indebtedness in the country is due to the fact that the bulk of urban borrowing are business borrowings very little of which belongs to households.

Statement 11 presents distribution of outstanding cash loans among various asset classes.

Statement 11: Distribution of Outstanding Cash Loans According to Asset Holding Class (AHC)
AHC ( ' 000)	Rural+Urban		Rural		Urban
0-15	2960	(1.67)	1602	(1.44)	1358	(2.08)
15-30	3958	(2.24)	2749	(2.47)	1210	(1.85)
30-60	8725	(4.94)	6886	(6.18)	1839	(2.82)
60-100	11631	(6.58)	9297	(8.34)	2334	(3.57)
100-150	12268	(6.94)	9659	(8.67)	2609	(3.99)
150-200	9331	(5.28)	7299	(6.55)	2031	(3.11)
200-300	15950	(9.02)	11378	(10.21)	4572	(7.00)
300-450	17291	(9.78)	12020	(10.78)	5270	(8.07)
450-800	29869	(16.89)	17590	(15.78)	12279	(18.80)
=>800	64812	(36.66)	32987	(29.59)	31824	(48.72)
All-hhs	176793	(100.00)	111467	(100.00)	65326	(100.00)
Note: Figures in brackets are percentage to total
for note and source see table 1

Households with higher assets are more advantageously placed and have greater opportunities to avail of and use credit facilities for improving their income. On the other hand, households with lower assets suffer from poor repaying capacity and lesser opportunities to avail of and use credit facilities resulting in low levels of production activities. Thus, from Statement 11 it can be seen that about 37 per cent of total outstanding debt of Rs.1,76,793 crore was accounted by rich households who are holding assets worth Rs. 8 lakhs or above. This class forms hardly 9 per cent of the total households. As against this, at the lower end, i.e., household owning asset worth Rs. 15,000 or less forming about 10 per cent of the total households owes hardly 1.7 per cent of the total debt.

Distribution of credit among different regions as depicted in Statement 12, reveals that there are wide disparities in their distribution among regions. Thus the southern region accounted for 38 per cent of total cash loan outstanding followed by the western region with 22.1 per cent. These two regions having about 41 per cent of total households enjoy 60 per cent of the total outstanding cash loans. The other four regions together, i.e., northern, north-eastern, eastern and central regions together having a total households of 59 per cent owe only 40 per cent of the total debt.

Statement 12: Distribution of Outstanding Cash Loans -Regionwise
Region	Rural + Urban			Rural			Urban
	No of hhs	Cash loans	Average	No of hhs	Cash loans	Average	No of hhs	Cash loans	Average
	in mn	in Rs.cr	per hhs	in mn	in Rs.cr	per hhs	in mn	in Rs.cr	per hhs
			Rs.			Rs.			Rs.
Northern	24.00	24760	10316	15.83	18107	11442	8.18	6653	8138
	(11.80)	(14.01)		(10.71)	(16.24)		(14.74)	(10.18)
North-Eastern	6.63	727	1097	5.71	466	816	0.92	261	2849
	(3.26)	(0.41)		(3.86)	(0.42)		(1.66)	(0.40)
Eastern	41.89	15789	3769	34.28	10214	2980	7.61	5575	7325
	(20.60)	(8.93)		(23.19)	(9.16)		(13.71)	(8.53)
Central	46.63	28603	6134	36.38	21258	5844	10.25	7931	7163
	(22.93)	(16.18)		(24.61)	(19.07)		(18.47)	(12.14)
Western	30.96	39120	12635	18.32	19738	10773	12.64	19382	15334
	(15.22)	(22.13)		(12.39)	(17.71)		(22.78)	(29.67)
Southern	53.24	67470	12673	37.34	41685	11164	15.90	25785	16216
	(26.18)	(38.16)		(25.26)	(37.40)		(28.65)	(39.47)
All-India	203.35	176793	8694	147.85	111467	7539	55.49	65326	11771
	(100.00)	(100.00)		(100.00)	(100.00)		(100.00)	(100.00)
Note: Figures in brackets are percentage to all-India total
for note and source see table 1

Vast inequality in the distribution of debt was more evident if one look into the rural and urban areas of different region viz-a-viz rural and urban areas at all-India level. The southern region enjoys more or less equal distribution of credit in rural and urban areas. But in the western region, while urban areas owe about 30 per cent of total urban India ’s debt, rural areas of western region have only 17.7 per cent of rural India ’s debt. North-eastern and eastern regions do not have much differences as between their rural and urban cash loan distributions. However, in the northern and central region, rural areas have relatively higher proportions of debt (Statement 12).

Statement 13 gives another dimension of the debt distribution, i.e., the distribution of loans between rural and urban areas within regions. In the western region, the distribution of credit has been more even between rural and urban areas with about 50 per cent of total loans outstanding in both the area. In northern and central regions, rural households have got about 73-74 per cent of the regions total debt as against 27-26 per cent in urban areas. Rural areas of north-eastern, eastern and southern regions got about 62 to 64 per cent of the total debt in the respective regions.

Statement 12: Distribution of Outstanding Cash Loans –Regionwise
Region	Rural + Urban			Rural			Urban
	No of hhs	Cash loans	Average	No of hhs	Cash loans	Average	No of hhs	Cash loans	Average
	in mn	in Rs.cr	per hhs	in mn	in Rs.cr	per hhs	in mn	in Rs.cr	per hhs
			Rs.			Rs.			Rs.
Northern	24.00	24760	10316	15.83	18107	11442	8.18	6653	8138
	(100.00)	(100.00)		(65.96)	(73.13)		(34.08)	(26.87)
North-Eastern	6.63	727	1097	5.71	466	816	0.92	261	2849
	(100.00)	(100.00)		(86.12)	(64.10)		(13.88)	(35.90)
Eastern	41.89	15789	3769	34.28	10214	2980	7.61	5575	7325
	(100.00)	(100.00)		(81.83)	(64.69)		(18.17)	(35.31)
Central	46.63	28603	6134	36.38	21258	5844	10.25	7931	7163
	(100.00)	(100.00)		(78.02)	(74.32)		(21.98)	(27.73)
Western	30.96	39120	12635	18.32	19738	10773	12.64	19382	15334
	(100.00)	(100.00)		(59.17)	(50.46)		(40.83)	(49.54)
Southern	53.24	67470	12673	37.34	41685	11164	15.90	25785	16216
	(100.00)	(100.00)		(70.14)	(61.78)		(29.86)	(38.22)
All-India	203.35	176793	8694	147.85	111467	7539	55.49	65326	11771
	(100.00)	(100.00)		(72.71)	(63.05)		(27.29)	(36.95)
Note: Figures in brackets are percentage to all-India total
for note and source see table 1

Statement 13 presents the distribution of outstanding cash loans among different households classified according to their asset holding.

Statement 13: Distribution of Outstanding Cash Loans in Rs crore As per Asset Holding Class (AHC) : Regionwise
AHC ( ' 000)	Northern Region		North-Eastern.Region		Eastern Region		Central Region		Western Region		Southern Region
0-15	134	(0.54)	14	(1.93)	431	(2.73)	285	(1.00)	312	(0.80)	1787	(2.65)
15-30	252	(1.02)	29	(3.99)	644	(4.08)	597	(2.09)	352	(0.90)	2086	(3.09)
30-60	632	(2.55)	49	(6.74)	1637	(10.37)	1429	(5.00)	927	(2.37)	4053	(6.01)
60-100	1209	(4.88)	89	(12.24)	1478	(9.36)	2431	(8.50)	1623	(4.15)	4786	(7.09)
100-150	1746	(7.05)	75	(10.32)	1538	(9.74)	1947	(6.81)	1815	(4.64)	5143	(7.62)
150-200	1162	(4.69)	32	(4.40)	854	(5.41)	1869	(6.53)	1314	(3.36)	4074	(6.04)
200-300	1896	(7.66)	61	(8.39)	1516	(9.60)	3008	(10.52)	2978	(7.61)	6481	(9.61)
300-450	2308	(9.32)	100	(13.76)	1629	(10.32)	2408	(8.42)	4250	(10.86)	6561	(9.72)
450-800	4102	(16.57)	97	(13.34)	2734	(17.32)	4761	(16.65)	7390	(18.89)	10629	(15.75)
=>800	11320	(45.72)	180	(24.76)	3330	(21.09)	9876	(34.53)	18159	(46.42)	21869	(32.41)
All-hhs	24760	(100.00)	727	(100.00)	15789	(100.00)	28603	(100.00)	39120	(100.00)	67470	(100.00)
Note: Figures in brackets are percentage to total
for note and source see table 1

It is an obvious feature that the richer households are better placed in availing of borrowing arrangements than the poor households unless there is a policy intervention favoring the poor households. It can be seen from Statement 13 that in southern and eastern region asset holding households falling in the poorest asset holding classes have higher incidence of borrowings than their brethrens in other region. For example, in the northern region, the poor households get hardly 0.5 per cent of the total cash loans outstanding in the region. Similarly, in the western region also this discrimination is prevalent with the poor households getting loans share of 0.8 per cent of total regional credit.

1. As on 30-06-2002, there were an estimated 203.4 million households in India enjoying an estimated assets worth Rs. 62,42,189 crore. Out of these assets almost 63 per cent belong to rural households constituting 73 per cent of the total and 37 per cent were enjoyed by urban households constituting 27 per cent of the total

2. As expected, average asset holdings in rural India are lower than average asset holdings in urban India . Asset holdings are also relatively more equitably distributed in rural areas as compared with that in urban India .

3. While both rural and urban households face inequality in the distribution of assets the top decennial group broadly enjoys the large chunk of asset holdings.; for the top-most asset group of Rs. 8 lakh and above, the share of asset is 42 per cent in rural areas and 63 per cent in urban areas.

4. Among regions, northern region owning 22 per cent of assets ), southern region (23 per cent) and central region (24 per cent) hold maximum assets. Generally, in these regions, the poorest classes hold meagre amount of assets - northern region (0.07 per cent), southern region (0.32 per cent) and central region (0.11 per cent) . As against this, the highest asset owning classes in these regions own bulk of the assets – northern region (66.71 per cent), southern region (49.99 per cent) and central region (44.26 per cent).

5. Finally, households with higher assets are more advantageously placed and have greater opportunities to avail of and use credit facilities for improving their income. On the other hand, households with lower assets suffer from poor repaying capacity and lesser opportunities to avail of and use credit facilities resulting in low levels of production activities

With an aim to protect coffee grower against anticipated shortfall in yield arising out of deviations in rainfall within a specific area and period, the central government has approved a weather insurance scheme for coffee growers to cover 85,000 growers in Karnataka, Tamil Nadu and Kerala. Three different phases available under the insurance scheme include blossom showers insurance, backing showers insurance and monsoon rains insurance. Maximum sum assured for robusta has been Rs 20,000 per hectare and that for arabica is Rs 30,000 per hectare. The government has also approved a sum of Rs 22.87 crore in the first year towards subsidy component to support small growers and 50 per cent subsidy would be provided to small growers on the premium amount subject to a ceiling of Rs 2,000 for robusta and Rs 2,500 for arabica per hectare.

In the backdrop of the reports that the centre was set to issue a directive banning private traders from lifting wheat stocks from grain markets during the current procurement season 2007-08, farmers in Punjab and Haryana have already sold their standing crop to companies. Companies such as ITC, Cargill India and others have been booked their wheat stocks directly with farmers in their fields. These companies are offering a higher price - ranging between Rs 900 - Rs 1,000 per quintal - to farmers for their wheat, which has been much higher than the minimum support price of Rs 750 plus a bonus of Rs 100, to sum up to Rs 850 per quintal this year. Meanwhile, various farmers associations have announced agitations if the government forces the ban on private traders lifting stocks during procurement season this year.

Sugar exports from the country are likely to touch 2 million tonnes in 2007-08, twice the initial forecast as the government would pay exporters up to Rs 1,400 per tonne towards transportation costs to the ports. An increase in shipments from India may compound a global surplus and lower the chances of a recovery in sugar prices that have slumped 29 per cent in the past year. The sugar industry has expressed dissatisfaction with the government's export incentives, saying a Rs 100 per tonne extra subsidy for mills in northern region as compared to those for coastal areas was not enough.

The government of Maharashtra has announced waiver of sugarcane purchase tax for 2006-07 for sugar industry in the state, which has been facing the problem of falling sugar prices due to excess sugarcane production. The sugar factories that have already paid the purchase tax for this period would be compensated for next year. The government has also announced a hike of Rs 20 lakh in the legislators' development fund, which would now be of Rs 1 crore compared to the earlier Rs 80 lakh.

As per the Tea Board, tea exports from the country have risen by 23.3 per cent in January 2007 from a year earlier to 13.77 million kg. However, tea production has fallen by 12.3 per cent compared to previous year to 21 million kg. on account of unfavourable weather conditions, especially drought-like situation prevailing in northern part of the country.

Production estimates of Rubber Board of India have revealed a downward trend in rubber production in the country. Rubber production has fallen from 96,500 tonnes in January 2007 to 47,500 tonne in February 2007. It is expected to decline to 37,500 tonnes in March and to reach 30,000 tonnes in April 2007. This can be attributed to unusual summer temperatures that are affecting Kerala rubber plantations adversely. However, shortage in domestic production coupled with Bangkok prices ruling at higher level, making imports unviable has lead to escalation in rubber prices in domestic market.

The total import of edible oils during November to February 2006-07 has increased by 4 per cent to10.8 lakh tonnes compared to 10.5 lakh tonnes a year ago. While the total availability of domestic edible oils for the current season 2006-07 is estimated at 77 lakh tonnes, down by 3 lakh tonnes of previous season, total consumption is expected to increase to around 139 lakh tonnes. In this backdrop, the country’s edible oil import is expected to rise by 15 per cent to 51 lakh tonnes during the current oil season 2006-07 compared to import of 44.2 lakh tonnes recorded for the season 2005-06.

The state government of Gujarat has amended the Gujarat Agriculture Produce Market Act, 1963. The new amended act is expected to boost the food processing industry since agro processors, private markets, corporate players and exporters are allowed to deal directly with farmers, which was not the case earlier. Contract farming has also been given prime focus. Moreover, farmers would now be able to take their produce directly to ports, by which they are expected to earn better remuneration.

As per commerce ministry, the special economic zones (SEZs) approved so far (396) would occupy 1,750 sq km accounting for just 0.1 per cent of the total agriculture land (15,34,166 sq km). With this data, the government has been trying to emphasize that the impact of SEZs on the country’s farmland would be negligible. The total area for the 234 SEZs having formal approval has stood at 350 sq km (including 67 sq km for the 63 notified SEZs), while the total land area proposed to be used for 162 SEZs with approval in principle (where land is yet to be acquired) is likely to be 1,400 sq km.

Industry

The recent hike in duty on exports has not affected iron ore shipments via west coast ports. In 2005-06, Mormugao port, the country's largest iron ore exporting facility, handled 24.93 million tonnes. It is estimated that the corresponding figure for 2006-07 will be 25.98 m.t. The throughput at Panjim, another Goa port, was 10.34 m.t. in 2005-06 and is likely to rise to 13.6 m.t. in 2006-07. Bellikeri port handled 1.85 m.t. in 2005-06 and the throughout for 2006-07 is estimated at 2.83 m.t. Iron ore throughput at New Mangalore has shown decline as a Supreme Court ruling has stopped mining by the Kudremukh Iron Ore Company, where the throughput this year has fallen by nearly 3.5 m.t. over last year. Karwar port's throughput too is likely to drop, though marginally to 1.52 m.t. this fiscal year from last year's 1.85 m.t.

More than 200 Indian entities have applied for registering their clean development mechanism (CDM) project under Kyoto protocol for availing carbon credits. Out of all the CDM projects that have applied for registration under Kyoto protocol across globe, 32.86 per cent projects are from India , 17.12 per cent from Brazil , 7.59 per cent from China and 1.95 per cent from Republic of Korea and other countries collectively account for 19 per cent. More than 1,000 companies have applied for registering their CDM projects under Kyoto Protocol across the globe for availing CERs (certified emission reductions). Any company, which reduces carbon dioxide emissions, is entitled for carbon credits, which can be sold in the market. Currently, the rate of one carbon credit is 13 euro. Gujarat has remained the leader in registering CDM projects; Gujarat flourochemicals ltd (GFL) was among the first to register a CDM project.

Infrastructure

In the Rail Budget for 2007-08, the railways has budgeted an outlay of Rs 9,220 crore for rolling stock, excluding the equipment to be leased through Indian railway finance corporation. The allocation includes Rs 3,160 crore for locomotives, Rs 3,030 crore for coaches, and Rs 2,480 crore for wagons. A provision has also been made for Rs 650 crore for workshops and production units. In the context of the target of 1,100 million tonnes of originating freight traffic in the terminal year (2011-12) of Eleventh Plan against the current level of 725 mt and passenger traffic of 8.4 billion against 6.4 billion now, the Indian Railways (IR) has proposed to make substantial investments not only in populist measures such as new trains and projects but also for technological upgradation and modernisation of the system.

IR proposes to conduct pre-feasibility studies for running high-speed trains at 300-350 kmph, one each in the northern, western, southern and eastern regions. Likewise, construction of the eastern and western dedicated freight corridors (DFCs) is to start in 2007-08. An allotment has been made in the annual plan for the DFCs of Rs 1,330 crore out of a total cost of about Rs 30,000 crore for the project. IR has laid special emphasis on containerised cargo, to increase it five-fold to 100 mt by 2011-12. It has already started operating double-stack container trains in Gujarat, from the Pipavav Port to Jaipur. In 2007-08, the IR plans to experiment with triple-stack container trains (for motor vehicles) on diesel routes and double-stack containers on electric routes. It also plans to extend the MGR (merry-go-round) system for movement of coal for big consumers. To augment rail tracks, a multi-pronged strategy of increasing payload and reducing tare weight of wagons, running trains loaded in both directions, minimising empty running is being adopted. The IR estimates an improvement of 1 per cent in the ratio of payload and tare weight to bring in additional annual earnings of Rs 1,500 crore; a 5 per cent improvement is to be achieved over the next five years.

Indian railways is planning to run heavy haul trains with an axle load of 28.5 tonnes and may later increase it to 40 tonnes. Heavy haul trains are also being planned for the dedicated freight corridors. Currently, railways runs trains with an axle load of 22.9 tonnes and a few having 25 tonnes axle load. IR is already in consultation with various international experts on the issue. Running heavy haul trains would require tracks with increased strength, electric brakes as well as automatic train protection system. Heavy haul trains will help increase the freight carrying capacity of railways. It would also save fuel as longer trains are 25 per cent more fuel-efficient.

The Dabhol power project is again facing problems with Punj Lloyd and its British partner Whessoe, the contractors for completing the LNG terminal, have threatened legal action against Ratnagiri gas and power pvt ltd (RGPPL), the owner of the 2,150 mw power plant and the adjacent unfinished five million tonnes LNG receipt facility, for default on payments. RGPPL has paid only Rs 68 crore against Rs 317 crore worth of work executed on LNG jetty and dredging. Bills worth Rs 265 crore are pending with RGPPL. It has been delaying payments since the beginning of the contract in June 2006. Moreover, both Punj Lloyd and Whessoe have been running a cash flow deficit on this project as payments have been delayed; the British company has also stopped supplying materials. The delay in payments and Punj Lloyd’s threat to walk out can further push the date of commissioning of the two power blocks. At present, RGPPL is running a 740 MW Block II on naphtha and expects to make the other two blocks operational in July and November 2007, respectively, to achieve full capacity.

An Assocham survey has projected that the cement industry will need to double its current cement manufacturing capacity to 320 million tonnes in the 11^th Plan period to meet the demand of growing infrastructure sector. The demand for cement would grow by about 15 per cent per annum even if half of the projected $350 billion investment in infrastructure is made. The present capacity of 165 million tonnes is expected to go up by 100 million tonnes in next five years with major industry players taking up capacity expansion.

Inflation

The annual point-to-point inflation rate based on wholesale price index (WPI) stood at 6.46 percent for the week ended March 17,2007 or at a lower rate of 3.69 per cent during the corresponding week last year.

During the week under review, the WPI rose by 0.05 per cent to 209.4 from 209.3 for the previous level (Base: 1993-94=100). The index of ‘primary articles’ group, (weight 22.02 per cent), declined marginally by 0.05 percent to 214.2 from its previous week’s level of 214.3 mainly due to fall in prices of fruits and vegetables,wheat,arhar and barley. The index of ‘fuel, power, light and lubricants’ group (weight 14.23 per cent) remained stagnant. The price index of ‘manufactured products’ group moved up by 0.1 per cent to 183.2 from 183.0 due to increase in the prics of food products by 0.8 per cent.

The latest final index of WPI for the week ended January 20,2007 has been revised upwards; as a result both, the absolute index and the implied inflation rate stood at 208.9 and 6.31 per cent as against their provisional levels of 208.5 and 6.11 per cent, respectively.

Banking

In what would be a major relief for Indian banks, the Reserve Bank of India (RBI) is expected to shortly change the guidelines on priority and agricultural lending. Currently, a bank is expected to achieve a target of 40 per cent and 18 per cent on priority and agricultural lending (included in the 40 per cent of priority sector) of the current year’s net bank credit (NBC). Now, the RBI will set the targets based on the previous year’s NBC, though the numbers may remain constant. This will be in effect from the next financial year of 2007-08 and the RBI is expected to issue a notification, soon. This change would serve as a major comfort level for the banks. According to sources close to the development, the RBI has realised that banks faced problems in estimating targets and meeting them if the credit shot up unexpectedly, especially towards the end of the financial year. For instance, if a bank lends heavily at the end of the financial year, it is very difficult to match priority and agricultural lending with the net bank credit. This move would help the banks to know the exact target to be met and could avoid complications that arose at the end of the financial year. The decision was taken after meetings between the Indian Banks’ Association and the RBI. Apart from the issue of meeting the target of 40 per cent credit to the priority and 18 per cent to agricultural sectors, the union finance minister also made it mandatory to double the exposure for the banks in the agricultural sector in three years starting 2005-06.

The Hyderabad-based SSK Microfinance has announced the second round of capital infusion worth Rs 50.6 crore from a consortium of venture investors led by Seqoia Capital India.

Public Finance

The central government has achieved about 99 per cent of its set target with the revenue deficit standing at Rs 82,411 crore till February this year. According to official statistics, the revenue deficit for 2006-07 is estimated at Rs 83,436 crore. The government, in the previous fiscal, achieved 107 per cent of the set target. Fiscal deficit during the April-February 2006-07 has stood at Rs 1.21 lakh crore, 80 per cent of the target for 2006-07. The fiscal deficit has been primarily financed by external borrowings and domestic markets. Market borrowings by the government have touched Rs 1,24,682 crore at the end of February 2007. The domestic borrowings for the entire current fiscal have been pegged at Rs 1.44 lakh crore. The government has raised Rs 1.15 lakh crore or 80 per cent of the estimates, till the end of February. The Public Provident Fund has raked in Rs 9,456 crore and 76% has been financed from external borrowings. The figure at the end of February for the previous fiscal was 64%.

Capital Markets

Ammana Bio Pharma Limited which tapped the market between March 28 and April 5 through issue of shares of Rs 10 each in a price band of Rs 12-14 per share got no subscriptions from FIIs until the last date of the issue.

The market settled with losses for the week due to concerns about weak global markets, and soaring global crude oil prices, which were trading near $67 per barrel mark. Prior to this week, the markets had settled with weekly losses five straight times.

The BSE Sensex lost 213.8 points (1.6 per cent) for the week ended 30 March 2007, to settle at 13,072.10, while the S&P CNX Nifty lost 39.50 points (1 per cent), to end at 3,821.55.

ICICI Bank slipped 4.30 per cent to Rs 853.10. It announced its Singapore branch, successfully priced the Euro 500 million Reg S Floating Rate Note under its Medium Term Note Programme (MTN). It is the first Indian bank to offer a benchmark sized two-year floating rate note in the Euro market. The offering had an Euro 862 million order-book with a total of 71 investors. New investors accounted for more than 50 per cent of the deal size. The two-year floating rate notes of Euro 500 million were priced at a spread of 40 basis points over the three-month LIBOR.

The Securities and Exchange Board of India (Sebi) decided to allow short selling by institutional investors only in such stocks which are also traded in the derivatives segment. A clarification was made by M Damodaran, Chairman, Sebi, at a press conference in Mumbai on Wednesday (28 March). At present, there are 159 stocks for which derivatives are available. He further added that institutional investors will be allowed to sell short only in these 159 stocks. On the issue of IPO grading, Damodaran said the scope of grading would be expanded gradually to even rights issue and follow-on public offerings (FPOs). Later, companies will also be graded on the basis of previous issues made by them. However, with the introduction of grading, the merchant banker will not be shorn off his responsibility. Merchant bankers will continue to be responsible for all disclosures made in the prospectus and issue related processes.

On the issue of imposing the circuit filters on the first day of listing, Damodaran said, the Surveillance Committee comprising the representatives of the exchange and Sebi, was seized of the matter and some concrete decisions would be taken soon. However, on the issue of imposing ciruit filters on the day of re-listing of securities, Damodaran pointed to an already existing provision for imposing 20 per cent circuit filter.

The spot Nifty closed at 3821 points while the April Nifty future hit 3799.85 points and May Nifty was settled at 3799.35. Open interest expanded strongly in both series. The Bank Nifty lost 3.8 per cent and closed at 5309 in the spot segment while the April series was settled at 5321.

Under the weekly T-Bill auctions, the RBI mopped up Rs.8000 crore (MSS worth Rs.1500 crore) and Rs.3550 crore (MSS worth Rs.1000 crore) through 91-day T-Bill and 364-day T-Bill. The cut-off yields for the 91-day and 364-day T-Bill were 7.9770 per cent and 7.9782 per cent respectively.

RBI conducted the auction of 6.65 per cent 2009 for a notified amount of Rs.6000 crore under MSS. The cut-off yield of the security was 8.1496 per cent.

The Government of India has issued 8.40 per cent Oil Marketing Companies Government of India Special Bonds, 2026 for Rs.4,971 crore (nominal) on March 29, 2007.

RBI has announced that the annual ceiling for the Market Stabilisation Scheme (MSS) for 2007-08 will be Rs.80,000 crore as against the annual ceiling of Rs.70,000 crore for 2006-07.

RBI has issued an indicative issuance calendar for the issue of dated securities for the first half of the year 2007-2008 covering the period from April 1, 2007 to September 30, 2007.

RBI has announced sale (re-issue) of 7.75 per cent 2010 for Rs.6000 crore under the Market Stabilisation Scheme (MSS) on April 4, 2007.

RBI has notified that with effect from April 3, 2007, State Development Loans (SDLs) would be treated as eligible securities under the Liquidity Adjustment Facility (LAF) repo operations.

RBI has retained the aggregate Normal Ways and Means Advances (WMA) limits for the State Governments at Rs.9,875 crore in 2007-08.

During the week, the weighted average call rates during the period ranged between 9.94 per cent and 54.15 per cent, while weighted average repo rates ranged between 7.39 per cent and 26.12 per cent and the weighted average CBLO rates ranged between 7.31 per cent and 28.69 per cent. The average volumes of Call, Repo and CBLO segments were Rs.14153.55 crore, Rs. 4837.55 crore and Rs. 13915.63 crore respectively. The daily average outstanding amounts in the LAF (reverse repo) and LAF (repo) operations conducted during the period were Rs. 711.25 crore and Rs.28167.50 crore respectively. The weighted average YTM of G.S 2017 8.07 per cent bond was 7.9602 per cent on March 30, 2007 as compared to 7.9617 per cent on March 23, 2007. The 1-10 year YTM spreads increased by 2 bps to 19bps

RBI has raised the fixed repo rate under the LAF by 25 basis points from 7.50 per cent to 7.75 per cent with immediate effect.

RBI has increased the Cash Reserve Ratio (CRR) from 6.0 per cent to 6.5 per cent (in two phases) to absorb around Rs.15,500 crore of banks' resources. In the first phase, CRR has been increased from 6.0 per cent to 6.25 per cent, effective April 14, 2007 and in second phase, it has been increased to 6.50 per cent, effective April 28, 2007.

Canara Bank tapped the market to mobilise Rs 400 crore through issue of lower tier II bonds by offering 9.90 per cent for 10 years.

The rupee fell 1.7 per cent on Thursday, posting its biggest single-day percentage loss in nearly nine years, on suspected central bank intervention and short-covering of dollar positions after the Indian unit had risen to a 7-year high on Wednesday. Traders said month end dollar buying by oil companies also pushed the rupee to its lowest close in more than a week.

The rupee ended at 43.770/785 per dollar, weaker than Wednesday’s close of 43.04/06. It was the biggest percentage drop since May 14, 1998, when it had dropped 1.9 per cent. The rupee has gained about 7.5 per cent since hitting a three-year low last July. It touched a peak of 43.01 during trade on Wednesday, its highest level since November 1999, according to Reuters data.

The six-month forward premia closed at 4.4 per cent (annualized) on March 30, 2007 vis-à-vis 3.97 per cent on March 23, 2007.

The combined turnover of commodity exchanges in the country has reached Rs 1,82,114.85 crore during the first fortnight of March of the current fiscal year, up by 27.72 per cent compared to Rs 1,42,583.72 crore in the second fortnight of February 2007, according to data released by Forward Markets Commission (FMC). The data is released every fortnight.

The surge in turnover has been primarily led by the three leading commodities exchanges —Multi Commodity Exchange (MCX), National Commodity and Derivatives Exchange (NCDEX) and National Multi Commodity Exchange of India (NMCE), which together account for nearly 96 per cent of the total turnover in the country. Among the leading three national exchanges, MCX has captured a market share of nearly 73 per cent, followed by NCDEX 22 per cent and NMCE 1.15 per cent. The turnover of MCX increased by nearly 28 per cent to Rs 1,32,504.92 crore during Mar 1-15 period over Rs 1,03,375.95 crore in its previous fortnight. In the regional single commodity exchanges, the Board of Trade (Indore), Ahmedabad Commodity Exchange and Rajkot Commodity Exchange registered total turnover of Rs 3,025.50 crore, Rs 825.49 crore and Rs 204.42 crore, respectively, during the review period.

March 2007 contracts on the NCDEX platform witnessed record physical deliveries to open interest ratio. The exchange recorded physical deliveries in barley contracts of 220 million tonne for the first time. Out of the 17 commodities delivered on the exchange, 10 commodities recorded physical deliveries to open ratio of 100 per cent, exchange release said. Among the major commodities, gold recorded a physical delivery of 75 kg (100 per cent), 15.810 tonne for silver (99.62 per cent), 270 tonne of chana (100 per cent), 5 tonne for chilli (100 per cent), 650 tonne for cottonseed cake (100 per cent), 20 tonne for masoor 20 tonne (100 per cent). Among other commodities, maize saw a physical delivery of 2430 tonne (100 per cent), guarseed — 2,480 tonne (97.25 per cent), sugar—1260 tonne (100 per cent) and mentha oil —155.160 tonne (100 per cent).

The current account deficit of the county has stood at $ 3 billion for the third quarter ended December 31, 2006, according to statistics put out by the Reserve Bank of India compared with $ 4.7 billion in the corresponding period in the previous fiscal. For the nine-month period covering (April-December 2006), the current account deficit has stood at about $12 billion, at the same level as in the previous corresponding period. Exports have seen a growth of 14 per cent in this quarter compared with 21 per cent in the corresponding quarter of the previous fiscal, while imports have grown by 25 per cent in this quarter as against 17 per cent in the corresponding earlier period. A doubling of receipts due to services rendered by software companies, tourism earnings and remittances from Indians working abroad helped India reduce its current account deficit for the third quarter of this fiscal year.

The foreign exchange reserves of India have surged by $1.789 billion to touch $197.746 billion in the week ended March 23, 2007. The reserves have increased by over $3.3 billion in two consecutive weeks. During the week ended March 16, the reserves had touched $1.547 billion to $ 195.957 billion. According to the RBI's Weekly Statistical Supplement, foreign currency assets increased by $1.789 billion to $190.392 billion.

The country's external debt stock has shot up by $6.19 billion in the quarter ended December 2006 to $142.66 billion on the back of a sharp increase in commercial borrowings by corporate sector and also due to rise in non-resident India (NRI) deposits. While long-term debt outstanding for the quarter ended December 2006 increased by $6.80 billion to $132.64 billion, short-term debt declined by $610 million to $10.02 billion at end-December 2006.

Bajaj Allianz Life Insurance has received a fresh capital infusion of Rs 130 crore, taking its total capital to Rs 700 crore.

Agriculture Insurance Company (AIC), the union government’s exclusive entity for agriculture insurance, is likely to bring more commodities under the insurance net in near future. AIC is likely to prepare insurance package based on the report filed by the task force constituted by the central government to study over plantation and spices sector in 2006. The task force has identified some important crops like rubber, tea, coffee, tobacco, chilly, ginger, turmeric, pepper and cardamom for risk insurance. Floriculture was also one of the segments recommended by the task force for insurance coverage.

Indian conglomerate Tata Group’s $12 billion takeover of Anglo-Dutch giant Corus Group Plc reached its culmination with the deal coming into effect from April 2, 2007, making Tata Steel the world’s fifth largest steel firm. The Anglo-Dutch steel giant announced the scheme of arrangement related to the company’s takeover by Tata Steel at a price of 608 pence per share has now become a subsidiary of Tata Steel, which now become effective.

Reliance Industries Limited (RIL) stood front most in pre-selection bidding to set up a $7.73 billion greenfield refinery cum power project in Guatemala . The refinery will have a capacity of 3.6 lakh barrels of oil a day and is expected to cost $6.73 billion. A 750-megawatt thermo-electric power project running on coke is also part of the project and entails an additional investment of $1 billion. US oil major Chevron may participate as a joint venture partner with Reliance.

Pune-based Kirloskar Oil and Engines Ltd has signed a memorandum of understanding with the state government for the setting up of a greenfield project in the backward area of Kolhapur district in western Maharashtra. The company would initially invest Rs 550 crore for the setting up of the plant to annually produce one-lakh diesel engines, however it will, in phases increase its investment to Rs 800crore. The company would be able to start production from September’ 2007, as it has already placed machinery order worth Rs 300 crore.

Nippon Steel, the world’s second largest steel maker and Tata Steel are involved in talks to set up a joint venture in India for thin-sheet steel for cars, which may help them to compete with Arcelor Mittal.

India’s second largest tractor manufacturer, Tractors and Farm Equipment Ltd (Tafe) is currently in negotiations to acquire a 100 per cent stake in one of the two east-European tractor manufacturers Yugoslavia’s Industrija Masinai Traktora (IMT) and Serbia’s Industrija Motora Rakovica (IMR).

Cement major ACC is planning to spend Rs 4000 crore between 2007-09 on its various expansion programmes, including its new facility at Wadi and Barghar. The ongoing projects of the company, which include grinding augmentation at Tikaria, Kymore, Wadi and Sindri are expected to be completed by 2007. With this expansion the capacity of the company will rise to 27.50 mtpa by the end of 2009.

Aditya Birla Nuvo has decided to double its proposed expansion in the western region from 60,000 tonne per annum to 1,20,000 tonne per annum to capitalise on the rapidly growing tyre sector in the country. This move is to make Aditya Birla Nuvo the largest producer of carbon black in the domestic market, overtaking RPG Group-controlled Philips Carbon Black Company.

Tata Motors, which has three automobile units and two greenfield plants under construction, will be setting up another brand new facility to meet the rising demand. While the company’s fourth and fifth auto plants are taking shape in Uttarakhand and Singur, the sixth plant would be completed within a period of four years and would be bigger than the existing facilities at Pune, Lucknow and Jamshedpur .

Hong Kong-based Kerry Logistics, part of the multi-billion dollar, diversified KUOK Group, has acquired a 51 per cent stake in Chennai-based Reliable Freight Forwarders Pvt Ltd, a 10 year old logistics company. The company has renamed into Kerry Reliable Logistics Pvt Ltd.

Bajaj Auto Chairman Rahul Bajaj declared that once Ratan Tata’s dream Rs1lakh car is launched and if it affects the two-wheeler market then they will also enter the passenger car market. (Fe, 26/03/07,PG: 1)

Bajaj Auto Chairman Rahul Bajaj declared that if Tata’s Rs 1 lakh car affects its two-wheeler market then the company would also enter the passenger car market.

Steel tycoon Lakshi Mittal has violated his pact with Oil and Natural gas Corporation (ONGC) to peruse hydrocarbon opportunities exclusively with the flagship Indian firm, by acquiring 49 per cent stake in Hindustan Petroleum’s $3 billion Bhatinda refinery. Although Mittal inked a joint venture agreement in July2005 with a state-run firm to form ONGC-Mittal Energy Ltd for acquisition of oil and gas fields, refinery business and LNG projects Mittal recently decided to go it alone in investing Rs 3300 crore in the Bhatinda refinery.

Tata Power Company (TPC) has acquired 30 per cent equity each in two Indonesian thermal coal producers PT Kaltim Prima Coal and PT Arutmin Indonesia and a related trading company owned by PT bumi resources, for $1.1 billion. As a result, the company will get an assured supply of 10 million tonnes of coal annually for upcoming projects of 7000 MW.

The North India Plantation Operations (NIPO) will restructure into a new company, Amalgamated Plantations Private Ltd (APPL) comprising twenty estates in Assam and four estates in West Bengal subject to requisite approvals of the shareholders and due process.

RIL and Gujarat State Petronet Ltd (GSPL) have signed a gas transportation agreement to transport 11 msmcmd of natural gas from Bhadbhut in Bharuch to RIL’s refinery and petrochemical complex in Jamnagar , under which RIL has an option to increase the volume of gas up to 14 msmcmd. Similarly, Gujrat State Petroleum Corporation (GSPC) has signed a gas transportation agreement with Reliance Gas Transmission and Infrastructure Ltd for transportation of 3.5 msmcmd of natural gas from its largest Krishna-Godavari basin discovery under which GSPC has the option of increasing the volume of gas to 11msmcmd.

Telecom

Cellular operators Hutch and Bharti Airtel has reduced ISD rates by 80 paise per minute, following TRAI’s decision to reduce rates by 37 per cent of the ADC charge – a levy paid by private operators to state-run BSNL for rolling out telecom services in rural areas.

*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.

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