Current Economic Statistics and Review For the Week Ended September 15

The Reserve Bank of India collects large amount of data on deposits, credit, number of offices, various characteristics of these accounts, etc., from all scheduled commercial banks, including regional rural banks, through the system of Basic Statistical Returns (BSR), from December 1972 onwards. Among these returns, BSR-7 collects, from all bank branches, data on deposits and bank credit on quarterly basis (March, June, September and December). District-wise data on these two variables, deposits and credit for top 100 centres classified separately according to these two variables, are published in the quarterly publication.[1]

The Reserve Bank has recently released the above data for the month ending March 31, 2007. This note attempts to present a brief review of quarterly data for all scheduled commercial banks and for Top 100 centres during the period 2001 to 2007. Before discussing the status of the centres, an overview of the banking data is presented.

Data on aggregate deposits and credit of all scheduled commercial banks classified according to various bank groups, are presented in Table 1, for selected years, viz, 2001, 2004, 2006 and 2007, whereas the data according to population groups are given in Table 2 for the same four time points.

Table 1: Commercial Banks at a Glance - Bank Group Group-wise
(Amount in Rupees Crore)
	No. of	Deposits		Growth in	Credit		Growth in	C-D
March 2007	Reporting			Per cent			Per cent	Ratio
	Offices
SBI & its Associates	14001	578382	(22.3)	17.9	452221	(23.2)	28.9	78.2
Nationalised Banks	35224	1258038	(48.4)	24.1	925266	(47.5)	28.3	73.5
Foreign Banks	252	145933	(5.6)	30.5	127713	(6.6)	29.2	87.5
Regional Rural Banks	14422	82058	(3.2)	16.2	48168	(2.5)	22.1	58.7
Other Scheduled Commercial Banks	6812	534411	(20.6)	31.5	396198	(20.3)	29.0	74.1
Total	70711	2598822	(100)	24.2	1949566	(100)	28.5	75.0
March 2006
SBI & its Associates	13820	490375	(23.4)	15.5	350961	(23.1)	31.1	71.6
Nationalised Banks	33868	1013664	(48.4)	16.2	721066	(47.5)	30.6	71.1
Foreign Banks	236	111842	(5.3)	44.9	98820	(6.5)	28.2	88.4
Regional Rural Banks	14372	70625	(3.4)	15.0	39447	(2.6)	21.2	55.9
Other Scheduled Commercial Banks	6385	406535	(19.4)	28.1	307201	(20.2)	32.3	75.6
Total	68681	2093041	(100)	19.4	1517495	(100)	30.6	72.5
March 2004
SBI & its Associates	13593	367057	(24.2)	19.7	212420	(23.8)	16.1	57.9
Nationalised Banks	33090	752558	(49.6)	16.2	410376	(46.1)	15.6	54.5
Foreign Banks	196	73323	(4.8)	28.6	61890	(6.9)	15.3	84.4
Regional Rural Banks	14484	55824	(3.7)	12.1	26116	(2.9)	18.2	46.8
Other Scheduled Commercial Banks	5607	268438	(17.7)	23.4	180065	(20.2)	23.8	67.1
Total	66970	1517200	(100)	18.7	890867	(100)	17.3	58.7
March 2001
SBI & its Associates	13494	235017	(24.7)	15.6	163348	(29.4)	19.5	69.5
Nationalised Banks	32687	509824	(53.6)	14.9	260897	(46.9)	16.8	51.2
Foreign Banks	179	50677	(5.3)	7.6	45343	(8.1)	20.2	89.5
Regional Rural Banks	14431	37819	(4.0)	18.2	15737	(2.8)	20.1	41.6
Other Scheduled Commercial Banks	5117	117367	(12.3)	22.1	71112	(12.8)	22.1	60.6
Total	65908	950705	(100)	15.6	556435.96	(100)	18.6	58.5
Note: Figures in brackets are percentages to Total
Source: RBI, Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks

It may be seen from Table 1 that deposits grew at higher rate (at 24.2 per cent) in March 2007 over March 2006 compared with the increases in 2006, 2004 and 2001. Bank credit grew by 30.6 per cent and 28.5 per cent in 2006 and 2007, respectively, much higher than the credit growth in 2001 and 2004. The recent two years, viz., 2005-06 and 2006-07, experienced all-round growth, in agriculture, industry and services sectors resulting a growth rate of 9 per cent and above in GDP. The high demand for goods and services lead to higher growth in output which impacted large growth in bank credit. All bank groups, experienced similar growth rates in their credit in 2005-06 and 2006-07 (over 30 per cent) except by Regional Rural Banks. On the deposits front, foreign banks outpaced other bank groups in their growth in 2004, 2006 and 2007. Nationalised banks, and SBI and its associates accounted for large chunk of deposits as well as credit in all the selected four time points.

Table 2: Commercial Banks at a Glance - Population Group-wise
(Amount in Rupees Crore)
				Mar-07
Population	No. of	Deposits		Growth in	Credit		Growth in	C-D
Group	Reporting			Per cent			Per cent	Ratio
	Offices
Rural	30461	258128	(9.9)	13.9	154785	(7.9)	21.5	60.0
Semi-Urban	16035	356827	(13.7)	18.1	189783	(9.7)	25.6	53.2
Urban	12649	531269	(20.4)	23.1	316166	(16.2)	27.4	59.5
Metropolitan	11566	1452599	(55.9)	28.2	1288833	(66.2)	30.1	88.7
Total	70711	2598823	(100)	24.2	1949567	(100)	28.5	75.0
				Mar-06
Rural	30572	226534	(10.8)	12.8	127445	(8.4)	25.5	56.3
Semi-Urban	15274	302245	(14.4)	15.2	151076	(10.0)	27.5	50.0
Urban	11864	431564	(20.6)	18.7	248141	(16.4)	31.7	57.5
Metropolitan	10971	1132698	(54.1)	22.3	990835	(65.3)	31.6	87.5
Total	68681	2093041	(100)	19.4	1517497	(100)	30.6	72.5
				Mar-04
Rural	32080	195111	(12.9)	10.7	85244	(9.6)	14.0	43.7
Semi-Urban	15018	267378	(17.6)	11.2	101354	(11.4)	19.7	37.9
Urban	10990	330779	(21.8)	14.1	156399	(17.6)	24.8	47.3
Metropolitan	8882	723932	(47.7)	26.6	547869	(61.5)	15.5	75.7
Total	66970	1517200	(100)	18.7	890866	(100)	17.3	58.7
				Mar-01
Rural	32533	139427	(14.7)	15.8	56017	(10.1)	18.2	40.2
Semi-Urban	14508	186733	(19.6)	16.7	63857	(11.5)	16.1	34.2
Urban	10354	217862	(22.9)	15.2	93659	(16.8)	22.0	43.0
Metropolitan	8513	406683	(42.8)	15.4	342903	(61.6)	18.3	84.3
Total	65908	950705	(100)	15.6	556436	(100)	18.6	58.5
Note: Figures in brackets are percentages to Total
March 2007 and March 2006 Classification is based on 2001 Census
March 2004 and March 2001 Classification is based on 1991 Census
Source: RBI, Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks

Across the population groups, metropolitan areas accounted for about 56 per cent of aggregate deposits and 66 per cent of credit, which have increased from 42.8 per cent and 61.6 per cent, respectively in March 2001. Rural areas and semi urban areas bore the brunt of reduction in their shares in respect of both deposits and credit, while urban areas just maintained their share during the period under review. The C-D ratio, however, increased from 40.2 per cent to 60 per cent in rural areas during 2001 to 2007, next to metropolitan areas with the CD ratio around 89 per cent in 2007. Credit in rural areas grew by 21.5 per cent and 25.5 per cent in 2007 and 2006, respectively, as against 28.5 and 34.8 per cent growth in aggregate credit in the two years. The reclassification of branches according to 2001 census population figures could have affected, to some extent, the shares of rural areas in aggregate deposit and credit besides the declining trend noticed during 2001 to 2004.

Statewise distribution of deposits and credit of all scheduled commercial banks for periods ending March 2001 and March 2007 is given in Table 3. It is observed that shares of northern and north-eastern regions remained more or less the same while those of central region and eastern region declined marginally in both deposits and credit. Delhi dominated the northern region with more than 12 per cent share in deposits and credit, whose shares have declined marginally between 2001 and 2007. While the share of western region, in aggregate deposits increased by 5.7 points that of southern region declined marginally. Similar trend was observed in respect of their shares in deposits and credit. While Maharashtra dominated western region in both deposits and credit, Tamil Nadu, Karnataka and Andhra Pradesh have accounted each for around 6-9 per cent share in March 2007.

Table 3: State-wise Distribution of Aggregate Deposits and Gross Bank Credit
(Amount in Rupees Crore)
	Mar-07				Mar-01
REGION / STATE /	Deposits	Per cent	Credit	Per cent	Deposits	Per cent	Credit	Per cent
UNION TERRITORY		to Total		to Total		to Total		to Total
Northern Region	599338	23.1	411051	21.1	221464	23.3	139777	25.1
Haryana	60669	2.3	34951	1.8	19804	2.1	8249	1.5
Himachal Pradesh	17000	0.7	7058	0.4	7347	0.8	1659	0.3
Jammu & Kashmir	21956	0.8	10377	0.5	10105	1.1	3874	0.7
Punjab	84621	3.3	52812	2.7	43950	4.6	18190	3.3
Rajasthan	58973	2.3	48656	2.5	27355	2.9	13179	2.4
Chandigarh	19841	0.8	18780	1.0	7521	0.8	7277	1.3
Delhi	336278	12.9	238417	12.2	105382	11.1	87349	15.7
North-Eastern Region	40336	1.6	16455	0.8	15367	1.6	4318.17	0.8
Arunachal Pradesh	1813	0.1	486	0.0	611	0.1	105	0.0
Assam	25757	1.0	11154	0.6	9864	1.0	3193	0.6
Manipur	1440	0.1	770	0.0	423	0.0	165	0.0
Meghalaya	3877	0.1	1389	0.1	1647	0.2	276	0.0
Mizoram	1208	0.0	650	0.0	390	0.0	100	0.0
Nagaland	2248	0.1	650	0.0	890	0.1	124	0.0
Tripura	3993	0.2	1356	0.1	1542	0.2	355	0.1
Eastern Region	288704	11.1	151665	7.8	126205	13.3	46534.72	8.4
Bihar	56916	2.2	17156	0.9	26506	2.8	5650	1.0
Jharkhand	37196	1.4	12629	0.6	15330	1.6	4355	0.8
Orissa	41638	1.6	26649	1.4	15111	1.6	6265	1.1
Sikkim	1543	0.1	808	0.0	616	0.1	96	0.0
West Bengal	150412	5.8	94142	4.8	68257	7.2	30097	5.4
Andaman & Nicobar Isl	999	0.0	281	0.0	385	0.0	72	0.0
Central Region	300249	11.6	143295	7.4	131063	13.8	43745.85	7.9
Chhattisgarh	24427	0.9	12948	0.7	7458	0.8	2966	0.5
Madhya Pradesh	65498	2.5	40737	2.1	29233	3.1	14129	2.5
Uttar Pradesh	181006	7.0	81699	4.2	85057	8.9	24511	4.4
Uttaranchal	29318	1.1	7911	0.4	9315	1.0	2140	0.4
Western Region	793744	30.5	723958	37.1	236183.95	24.8	177100.17	31.8
Goa	17664	0.7	4642	0.2	7289	0.8	1664	0.3
Gujarat	119224	4.6	76916	3.9	54436	5.7	26910	4.8
Maharashtra	655402	25.2	642170	32.9	173831	18.3	148433	26.7
Dadra & Nagar Haveli	495	0.0	98	0.0	226	0.0	37	0.0
Daman & Diu	959	0.0	132	0.0	401	0.0	56	0.0
Southern Region	576451	22.2	503144	25.8	220421	23.2	144960.15	26.1
Andhra Pradesh	141966	5.5	124314	6.4	54410	5.7	34429	6.2
Karnataka	171898	6.6	133177	6.8	55592	5.8	32984	5.9
Kerala	95282	3.7	60615	3.1	45238	4.8	19477	3.5
Tamil Nadu	163166	6.3	183161	9.4	63488	6.7	57518	10.3
Lakshadweep	207	0.0	21	0.0	54	0.0	5	0.0
Pondicherry	3932	0.2	1856	0.1	1640	0.2	547.57	0.1
All-India	2598822	100	1949568	100	950705	100	556435.95	100
Source: RBI, Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks

Data on outstanding deposits and bank credit of top 100 centres are presented in Table 4 for each of the quarters from March 2001 to March 2007.[2] Centres are arranged in descending order of size of deposits outstanding with a branch on one hand and by size of credit on the other, irrespective of the state in which a centre is located. It may, however, be mentioned that the top 100 centres need not necessarily be same in all the quarters as the branches in a centre can have larger or lower amount of deposits/credit in the current quarter over the previous quarter (s) and accordingly, that centre gets included or not in top 100.

The top 100 centres accounted for about 59 per cent of aggregate deposits in March 2001 while the top 100 centres accounted for 75.5 per cent of credit when the centres are arranged by credit. In terms of number of offices, they, whether classified by deposits or credit, accounted nearly for one-fourth of all offices through out the period. But the share of top 100 centres steadily increased to nearly 69 per cent in aggregate deposits while such share in total credit varied between 75-77 per cent and stood at 77.4 per cent in March 2007.

Thus 75 per cent of the offices accounted for only 23-24 per cent of aggregate credit during 2006 and 2007, though they had a little higher share (around 30 per cent) in aggregate deposits.

It is also observed that the growth in deposits and credit of the top 100 centres is always higher than the growth in aggregate deposit and credit, as expected. Further, the growth in deposits in March quarter is generally higher than the growth in other quarters of the financial year. Bank branches might be canvassing for deposit mobilisation to achieve their targets, resulting in higher growth than in previous quarter of the fiscal. However, similar pattern is not observed for credit. On the contrary, in 2002-03, 2004-05, and 2006-07, the growth in credit of these centres was lower than their credit growth in other quarters. This is only to observe that banks have not making up for enhancing their credit growth towards the end of the financial year to achieve their targets. The growth rate in credit from December 2004 onwards for the top 100 centres was more than 30 per cent while the corresponding growth rates in deposits were lower compared those of credit.

Table 4: Top 100 Centres Classified by Aggregate Deposits and Gross Bank Credit
	No. of	Deposits	Annual		Per cent	No. of	Credit	Annual		Per cent
Month	Reporting	Amount	Growth		share in	Reporting	Amount	Growth		share in
	Offices	(Rs Cr.)	in per cent		Agg. Dep.	Offices	(Rs Cr.)	in per cent		Agg. Dep.
					2001
March	14681	560441	15.5	(15.6)	58.9	14439	418941	19.5	(18.6)	75.3
					2001-02
June	14772	570972	17.6	(17.2)	58.9	14586	413592	15.7	(15.0)	75.5
September	14866	595794	16.9	(16.5)	58.9	14681	427631	15.2	(14.5)	75.3
December	14867	600671	15.8	(15.7)	58.8	14758	439287	13.7	(13.2)	75.2
March	14912	648183	15.7	(15.4)	59.1	14655	526562	25.7	(22.9)	77.0
					2002-03
June	14960	696756	22.0	(18.4)	60.7	14751	506671	28.5	(20.6)	76.7
September	14991	723668	21.5	(17.9)	60.7	14745	517469	27.3	(24.1)	76.3
December	15017	734754	12.2	(18.2)	60.9	14803	527047	26.0	(23.7)	75.6
March	15066	780292	20.4	(16.6)	61.0	14872	575947	13.8	(14.5)	75.9
					2003-04
June	15248	797217	14.4	(12.9)	61.5	15039	557101	10.3	(12.2)	75.4
September	15249	838487	15.8	(13.5)	62.0	15076	576961	11.5	(13.0)	75.2
December	15386	864872	17.7	(14.9)	62.4	15270	602449	14.3	(15.2)	75.0
March	15481	964388	23.6	(18.7)	63.6	15354	672447	16.8	(17.3)	75.5
					2004-05
June	15609	976055	22.4	(17.6)	64.0	15457	667370	19.8	(20.1)	75.5
September	15677	1002904	19.6	(15.8)	64.0	15548	705574	24.9	(24.5)	75.1
December	16016	1062292	22.8	(18.1)	64.9	15928	791819	34.5	(32.9)	75.5
March	16207	1144567	18.7	(15.6)	65.3	16161	879549	31.6	(30.6)	76.0
					2005-06
June	16297	1151588	18.0	(15.3)	65.5	16109	886688	32.9	(32.2)	75.8
September	16257	1245394	24.2	(20.0)	66.2	16101	972599	37.8	(36.4)	75.9
December	16340	1276859	20.2	(17.6)	66.3	16307	1039000	31.2	(30.1)	76.2
March	16592	1401302	22.4	(19.4)	67.0	16508	1160374	31.6	(30.6)	76.5
					2006-07
June	16837	1470822	27.7	(23.6)	67.7	16714	1191354	34.4	(33.1)	76.6
September	17021	1552925	24.7	(21.6)	67.9	16880	1281929	31.8	(30.4)	76.7
December	17314	1615359	26.5	(23.0)	68.2	17249	1372350	32.1	(30.4)	77.1
March	17578	1789500	27.7	(24.2)	68.9	17538	1508095	30.0	(28.5)	77.4
Note: Figures in brackets are percent increase in aggregate deposits/bank credit
Source: RBI, Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks

Table 5 presents the list of top 10 centres and their share in aggregate deposits and bank credit in March 2001 and March 2007. It is observed that the top 10 centres remained the same in March 2001 and March 2007 in respect of both deposits and credit. Of these, Mumbai and Delhi topped with first two ranks both in deposits and credit, being financial and commercial centres. These two centres alone accounted for one-third of deposits and about two-fifths of credit in March 2007. These top 10 centres together accounted for nearly 50 per cent of aggregate deposits with three-fifths of credit (Table 6). They also dominated over other centres with higher growth in deposits as well as credit.

Table 5: Top 10 Centres - Deposits and Credit
	(Amount in Rupees Crore)
			Mar-07					Mar-01
Rank	Name of	Deposits	Per cent	Credit	Per cent	Name of	Deposits	Per cent	Credit	Per cent
	the Centre		share in		share in	the Centre		share in		share in
			Agg. Dep.		Agg. Crd.			Agg. Dep.		Agg. Crd.
1	Mumbai	533368	20.5	560586	28.8	Mumbai	126139	13.3	124026	22.3
2	Delhi	332154	12.8	235028	12.1	Delhi	103683	10.9	87018	15.6
3	Bangalore	107690	4.1	98839	5.1	Kolkata	35198	3.7	32412	5.8
4	Kolkata	83861	3.2	83976	4.3	Bangalore	27300	2.9	23735	4.3
5	Chennai	78531	3.0	71233	3.7	Chennai	25083	2.6	17523	3.1
6	Hyderabad	53932	2.1	54275	2.8	Hyderabad	18566	2.0	13395	2.4
7	Pune	32141	1.2	30284	1.6	Ahemdabad	11528	1.2	10100	1.8
8	Ahemdabad	30549	1.2	23966	1.2	Pune	10256	1.1	7184	1.3
9	Lucknow	23846	0.9	18436	0.9	Lucknow	9022	0.9	6095	1.1
10	Chandigarh	18331	0.7	18412	0.9	Chandigarh	7092	0.7	4977	0.9
Total of 10 Centres		1294403	49.8	1195035	61.3	Total of 10 Centres	373868	39.3	326467	58.7
	All-India	2598823	100	1949567	100	All-India	950705	100	556436	100
Source: RBI, Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks

A frequency distribution of top 100 centres according to their state of location as per the classification of deposits and also by credit is given in Table 7 for the years 2001 and 2007. The distribution of the 100 centres across states according to deposits is almost the same in both time points, viz., 2001 and 2007. While 20 centres each are from northern and central regions, 23 and 24 centres are from western and southern regions respectively in 2007, among the top 100 centres. When the distribution is seen from credit classification, 33 centres are among the top 100 from southern region in 2001 as also in 2007. However, exact identification of the centres at both time points is not attempted. In respect of western region and central region, only 17 and 15 centres appear in top 100 in 2007 compared with 21 and 17 in 2001, respectively. More number of centres (25) appeared from northern region in 2007 compared to 20 in 2001. Large amount of credit was extended in 2007 over 2001 by a few new centres in Haryana (3), Jammu & Kashmir (1), Himachal Pradesh (1) and Delhi (1) to get enlisted under top 100 centres. It may, however, be mentioned that though the number of centres between the two time points has changed in small number, there could be new centres included in top 100 while a few of existing ones might have got excluded.

In summary, the frequency distributions of the top 100 centres across states between the two time points are very close whether classified by deposits or bank credit, excepting a few minor changes and above limitation.

Table 7: Frequency Distribution of Top 100 Centres across States
	Mar-07		Mar-01
REGION / STATE /	Deposits	Credit	Deposits	Credit
UNION TERRITORY	No. of Centres	No. of Centres	No. of Centres	No. of Centres
Northern Region	20	25	21	20
Haryana	4	7	4	4
Himachal Pradesh	1	1	1	-
Jammu & Kashmir	2	3	2	2
Punjab	6	6	6	7
Rajasthan	5	5	6	5
Chandigarh	1	1	1	1
Delhi	1	2	1	1
North-Eastern Region	3	1	2	1
Arunachal Pradesh	-	-	-	-
Assam	1	1	1	1
Manipur	-	-	-	-
Meghalaya	1		1
Mizoram	-	-	-	-
Nagaland	-	-	-	-
Tripura	1		-	-
Eastern Region	10	9	11	8
Bihar	1	1	1	1
Jharkhand	3	2	3	3
Orissa	2	3	2	3
Sikkim	-	-	-	-
West Bengal	4	3	5	1
Andaman & Nicobar Isl	-	-	-	-
Central Region	20	15	19	17
Chhattisgarh	2	1	2	1
Madhya Pradesh	5	4	4	4
Uttar Pradesh	12	9	12	11
Uttaranchal	1	1	1	1
Western Region	23	17	22	21
Goa	4	1	3	1
Gujarat	10	6	10	6
Maharashtra	9	10	9	14
Dadra & Nagar Haveli	-	-	-	-
Daman & Diu	-	-	-	-
Southern Region	24	33	25	33
Andhra Pradesh	6	10	6	8
Karnataka	5	5	5	6
Kerala	6	8	7	9
Tamil Nadu	6	9	6	9
Lakshadweep	-	-	-	-
Pondicherry	1	1	1	1
All-India	100	100	100	100
Source: RBI, Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks

1. A centre is defined as the revenue unit classified and delimited by the respective state government, i.e., a revenue village/ city/ town/ municipality/ municipal corporation, etc., as the case may be in which the branch is located.

2. Population group classification of bank centres for March 2006 & 2007 are based on population data as per 2001 census while such classification for earlier periods is based on 1991 census. There is no change in the definition of population groups, which are defined as:

(ii) Semi-urban – includes centres with population of 10,000 and above but less than 1 lakh

(iii) Urban – includes centres with population in the range of 1 lakh & above but less than 10 lakh

3. Aggregate deposits exclude inter bank deposits and the bank credit represents gross bank credit excluding inter bank advances, but includes outstanding amount of bills rediscounted with RBI and financial institutions.

(Source: RBI: Quarterly Statistics on Deposits and Credit of scheduled commercial banks, March 2007, and earlier issues).

[1] Explanation of few terms is given in Annex

[2] Please see the Annexure

The central government has not been able to achieve the wheat procurement target of 150-lakh tonnes during the current rabi marketing season April-March 2007-08; partly due to low arrival of production in the market and heavy purchase made by the private sector. While Food Corporation of India (FCI) and other governmental agencies have procured 111.04 lakh tonnes out of 154 lakh tonnes of the foodgrains arrived at different wholesale markets in the country, whereas private sector has purchased 18.76 lakh tonnes as on July 30, 2007. Meanwhile, the foodgrains stocks with FCI has touched 211.84 lakh tonnes, out of which wheat stock has been 120.2 lakh tonnes as on August 01, 2007. In order to augment the buffer stocks, the central government has plans to import 50 lakh tonnes of wheat during the current financial year.

The estimation undertaken by Agricultural ministry’s indicates that country’s kharif coverage has moved up in most crops especially in cotton and soyabean. The report released by Ministry’s Crop Weather Watch on August 10, 2007 has revealed that area sown under cotton is 86.24 lakh hectares (lh), which has exceeded the normal coverage of 83.73(lh) under which 53.32(lh) is reported to be planted as Bt cotton. Similarly, the soyabean-sown areas have touched 85 (lh), a quarter more than the normal. As per the India ’s Meteorological Department [IMD] data, during the southwest monsoon season (June to September) 2007, whole country has received an area-weighted rainfall of 565 millimetres (mm), which is 6.6 per cent more than the normal of 530 mm till August 08, 2007. More than normal rainfall has resulted in higher sowings under kharif pulses, coarse grains (bajra and maize) and sugarcane. The expectation accounts that paddy and jute acreage sowings have fallen gradually. The plantation would be lower by 1(lh) mainly in areas of U.P, Bihar , M.P and Chhattisgarh.

Green cardamom output is expected to reduce by 40 per cent, due to unfavorable climatic conditions. Prices are expected to rise because of upcoming festivals and low output. Prices are estimated to raise by Rs 50 i.e. it would reach to Rs 575-600 per kg for the extra bold quality and Rs 475-500 per kg for the virudnagar bold quality. One of the major cardamom-growing states, Kerala, is reported to be under inclement weather conditions that have affected the crop adversely and the arrival of good quality cardamom has fallen drastically.

Central government has approved two major schemes, viz., Additional Central Assistance (ACA) and National Food Security (NFS), which will begin with this fiscal year (2007-08) and last over the period of five years. The total outlay assigned for both the programmes is more than Rs 29,800 crore, under which Rs 25,000 crore has been allocated for (ACA) and Rs 4,882.48 crore for (NFS). This programme is predicted to enhance public investment in agriculture and allied sectors, incentivise state and district agricultural plans and help state to meet the targeted agricultural growth rate of 4 per cent from the present 1.8 per cent. The current year commitment for the scheme would be Rs 1,5000 crore, while in next four years, it will be around Rs 5,875 crore pr annum. Under this mission, the total amount is subdivided as per the crops, i.e., Rs 17,222 crore is allocated for rice, Rs 1,920 is allocated for wheat and Rs 1,240 crore for pulses. It is estimated that with the introduction of this scheme, growth in the rice production would be concentrated in 133 districts of 12 states, while wheat output growth would be in 138 districts of 9 states and pulses in 168 districts of 14 states. Moreover, on the occasion of Independence Day, Prime Minister has ensured that the government would soon launch a special programme to invest more than Rs 25,000 crore in agriculture to enhance livelihood of farmers and increase food production.

As per Central Sericulture Research and Training Institution, nearly 25,000 farming families in Banglore and Mysore belt cultivating mulberry on 40,000 acres have sold their lands for industrial purpose. In the last seven years, i.e. since 2000 onwards, the raw silk production in Karnataka stagnated in the range of 8,000 tonne to 9,000 tonne per annum. In fact, India ’s best silk farmers with high productive technologies are located around Bangalore . It is been estimated that the industrial development since 2000-01, reduction in area for production and acute drought in 2003-05 have led majority of farmers in this belt for not practicing sericulture farming. Thus, to off set the loss due to decline in sericulture tract, the state government has taken steps to develop sericulture clusters in non-traditional areas like Chittradurga, Haveri, Belgaum and Bagalkot in North Karantak .

Department of Commerce, in collaboration with agriculture ministry and APEDA, is going to launch ‘Mangonet’, i.e., a system that would provide complete solution regarding Indian mangoes export. It will be introduced to provide traceability of sources for the comfort of importers, in the wake of bio-safety concerns of farm produce for mangoes. Software would be developed by APEDA, under which they would provide the information to exporters about the monitorisation of the pesticide residue, achievement of product standardization and traceability of the products through different stages of its production, processing and marketing. Whereas, agriculture ministry would set up testing laboratories and the cost would be borne by the National Horticulture Mission.

Singapore International Oils and Oilseeds Conference [SIOOC] held in 2007 have stated that edible oil imports would decline due to high prices; which is likely to reach 58 lakh tonne for oil season (November-October) 2006-07, that is about 6 lakh tonnes lower as per the estimation of 64 lakh tonnes. The estimation undertaken states that the country’s total edible oil demand may increase to 125 lakh tonnes for season 2006-07 from actual 122.80 lakh tonnes for 2005-06, while total supply is estimated to 67.75 lakh tonnes for 2006-07 from actual import 54 lakh tonnes in season 2005-06 mainly through domestic production.

According to the World Health Organisation (WHO), globally there have been more than 300 confirmed human cases of bird flu and nearly 200 deaths since 2003 due to the H5N1 strain and avian influenza. The H5N1 virus spreads disease mainly among birds, but expert’s worry that it may mutate into a form easily transmitted to human beings. It is observed that Myanmar , Bangladesh , China , Indonesia and Vietnam have reported human deaths from bird flu in 2007. Indian government is trying to manage and control outbreak of bird flu in chickens in its northeast regions. It has been reported that there are no incidences of human deaths from the outbreaks since 2006, but health officials are worried about it in northeast region due to neighboring countries.

India would organise genetically modified [GM] trials, under which central government has approved the first large-scale trials of a genetically modified food crop i.e. new hybrid variety of brinjal. It is predicted that it would have better yield with less intensive use of pesticide.

As per the decision undertaken by committee of secretaries (CoS) after reviewing the wheat import situation, the government would facilitate import of wheat flour by reducing the effective duty from 36.4 per cent to zero; this will help processing industries. As the global prices of wheat are appreciating gradually, the government is facing with the problem of justifying imports at high prices. However, it is stated that the country is importing wheat not due to scarcity of the grain, but with a view to replenish the buffer stock. However, it is not clear that whether the government will import wheat flour on its own account or allow imports by the private sector. This has to be approved by the Cabinet Committee on Prices or the Cabinet Committee on Economic Affairs.

International Olive Council (IOC) will launch olive promotional campaigns in India during next three years. The main agenda is to bring down the import duty from the current 50 per cent to 25 per cent. They are urging union government for amendments into food law so that it would align the standards of olive oil with the international standards, which will result in increase of consumption. If the government reduces the import duty, it is expected to bring down the olive oil prices by 15 to 20 per cent. Currently, India imports nearly 2,300 tonnes of olive oil, out of which 1,400 tonnes of oil is used for edible purpose and the rest as raw material for industrial usage, primarily in pharmaceuticals and cosmetics segment. India has completely relied on import route for its olive requirement, as the country has no olive cultivation locally except in a few regions of Jammu and Kashmir and Himachal Pradesh.

The state-run Spices Board is planning to stabilise the market price of cardamom, by forming a new company to brand and retail the product. To save cardamom consumer from unscrupulous traders and vendors, the spices board would initiate some radical steps to popularise the branded variety. As domestic consumption has increased, it has helped to sustain the cardamom price, when the export market has suffered a steep fall from 2,000 tonnes to 500-600 tonnes. India produces around 12,000 tonnes of cardamom annually. Rising productivity and steep fall in exports have affected the fortunes of the farmers. Branded cardamom would help the farmers to get a better farm gate price, as the price will not be dependent on the weekly auctions. It is believed that the manipulations in the auctions can also be avoided by the branding exercise.

World Summit on Sustainable Development (WSSD), has predicted that climate changes in India would lead to severe droughts and would enhance intensity of floods in some parts of the country, which will affect Indian agriculture. In the near future Kutch and Saurashtra that occupies about one fourth of the area of Gujarat and 60 per cent of Rajasthan may face acute water scarce conditions. River basins of Mahi, Pennar, Sabarmati and Tapti shall also face water shortage. River basins belonging to Cauvery, Ganga, Narmada and Krishna shall experience seasonal or regular water-stressed conditions. River basins belonging to Godavari, Brahmani and Mahanadi shall not have water shortages but will face severe flood conditions. The perennial sources of surface water would dry as the Himalayan glaciers are retreating at faster rate. It has been marked that 67 per cent of glaciers are retreating at a startling rate. Accelerated melting of glaciers will increase river water levels over the next few decades, initially leading to higher incidence of flooding and land-slides. But, in the longer-term, as the volume of ice available diminishes because of melting, rivers will have lesser and lesser water. It is revealed that the flow of Ganga river would reduce due to the loss of glacier melt water; particularly in July-September the flow would reduce by two thirds, causing water shortages for 500 million people and 37 per cent of India ’s irrigated land.

Coir exports have suffered due to appreciation of Indian rupee against dollar. Exports have slipped by 5.72 per cent in value terms during April-July 2007, as compared that with corresponding period last year. During 2001-02 exports of coir and its products were around 71,334 tonnes, valued at Rs 320.58 crore, while in 2006-07 exports have touched 1,68754 tonnes valued Rs 605.17 crore.

The International Cotton Advisory Committee (ICAC) has projected that a firm trend in the world cotton prices during the season 2007-08 would fall by 2.7 per cent mainly due to lower cultivation in USA , further depletion of the ending stock and other new relevant factors. The total area under cotton is expected around 33.42 million hectares in 2007-08 as against 34.36 million hectares in 2006-07. World cotton production is predicted to trifle lower at 25.15 million tonnes in 2007-08 as against 25.66 million tonnes in 2006-07, mainly due to decline in area, while average yield is projected to be marginally higher at 753 kg compared to 747 kg in 2006-07. In US, sizable fall of 19 per cent (from 4.70 million tonne to 3.81 million tonnes) is expected; crop in the other leading producing countries is estimated to be higher. In India, the estimated production would be 4.96 million tonnes (approximately 292 lakh bales) in 2007-08,i.e., an increase of 8 per cent from this year’s estimated crop of 4.59 million tonnes (270 lakh bales).

As per the estimation undertaken by the Spices Board, spices export from the nation is likely to touch $1 billion by 2008-09 on the back of higher exports of chilli, cumin, and mint products. Total spices exports worth Rs 3575.75 crore was exported as against that of Rs 813.21 crore in 2005-06, reporting a growth of 36 per cent. The US imported 3,418 tonnes of mint products while China imported 3,088 tonnes. The estimated target of chilli exports is 1, 35,000 tonnes for the current fiscal year; its share in total spices export is likely to increase by 15 per cent per annum, provided efforts are taken to ensure quality. The nation has exported 52,000 tonnes of chilli last year, indicating an increase of 39 per cent in volume terms and 43 per cent in value terms. Export of cumin is also likely to increase by 10 per cent per annum given the better oil content of these seeds, compared to its competitors. The targeted cumin exports is 25,000 tonne for the current year. Mint product exports from the nation are expected to grow by 20 per cent annually; based on the value-addition efforts. During 2006-07, a quantity of 16,250 tonne of mint products valued at Rs 1100.95 crore was exported as against 14,544 tonne valued at Rs 813.21 crore in 2005-06, a growth of 36 per cent in value terms.

Infrastructure

In order to attract tourists the railways are planning to introduce luxury trains with facilities like fashion shows, premiering new films, launch of music albums, spas and beauty parlour. Palace on Wheels, Heritage on Wheels in Rajasthan sector, Fairy Queen on Delhi-Alwar sector, Deccan Odyssey in Maharashtra and Buddhist circuit Special covering places linked with Lord Buddha are the six luxury trains railways are running. Besides two luxury trains in Karnataka and Rajasthan are scheduled to be launched in the tourist season this year while one for Punjab has also been approved.

In a bid to bridge the gap between the steel demand and production in the domestic market and achieve 120 million tonne (MT) production by 2012, the steel ministry has asked the industry to spell out the proposed investment and the expansion plans so that it can take up the matter with concerned state governments and push the matter on case-by-case basis. The ministry has set a target to add 70 MT steel capacity over the next five years and the industry has proposed to invest around Rs 2,80,000 crore to make it happen. Tata Steel plans to add 25 MT steel making capacity over next five years, while JSW and SAIL plans to add 15 MT and 13 MT capacities respectively. Essar steel plans to add 10MT capacity and Arcelor Mittal aims at having steel making capacity of 6 MT by 2012.

Coal India (CIL) and Neyveli Lignite Corporation (NLC) have tied up with Oil and Natural Gas Corporation of India (ONGC) for two pilot projects for coal gasification and liquefaction. CIL - ONGC project is coming up in Jharkhand, while NLC-ONGC pilot project is coming up in Rajasthan. Both projects will require an initial investment of Rs 100 crore each.

Rate of growth of the index of six core- infrastructure industries has gone down from 7.7 per cent in June 2006 to 5.3 per cent in June 2007. Crude petroleum has registered a negative growth of 1.8 per cent in June 2007 as against a rise of 1.2 per cent in June 2006. Coal production also decelerated to 1.3 per cent from 11.8 per cent in the previous year. Cement and finished steel industries have grown at 5.6 per cent each also showing a sharp

decrease in their growth rates. Electricity generation is the only industry, whose production accelerated registering a growth rate of 6.8 per cent in June 2007 on top of 4.9 per cent in June 2006.

Inflation

The annual point-to-point inflation rate based on wholesale price index (WPI) rose by 4.05 percent for the week ended July 28,2007. During the comparable week of the earlier year, it was 5.08 per cent.

During the week under review, the WPI rose to 213.1 from 213.4 in the previous weeks’ level (Base: 1993-94=100). The index of ‘primary articles’ group, (weight 22.02 per cent), fell by 0.4 percent to 222.5 from its previous week’s level of 223.4, mainly due to decline in the prices of ‘food article like fruits and vegetables, poultry chicken, ragi and moong and fish marine.

The price index of ‘fuel, power, light and lubricants’ group (weight 14.23 per cent) registered a marginal rise of 0.1 due to higher price of aviation fuel and furnace oil..

The index of ‘manufactured products’ group declined by 0.1 per cent to 185.6 from 185.7 during the week under review. The lower prices of food products like bran, imported edible oil and sunflower oil and methanol. Bop film and rubber chemicals and also pig iron contributed for the fall in manufactured products.

The latest final index of WPI for the week ended June 09 26, 2007 has undergone no revision; as a result both, the absolute index and the implied inflation rate stood at 211.8 and 4.28 per cent.

Banking

The Export Import Bank of India (EXIM Bank) has entered into a memorandum of cooperation with the Gulf Investment Cooperation for facilitating exchange of information and joint identification of avenues to improve two-way trade and investment between Gulf Cooperation Council (GCC) and India .

Financial Markets

BGR Energy Systems Ltd, formerly GEA Energy System ( India ) Pvt Ltd, plans to come out with an initial public offer to fund its expansion programme in India and abroad. The public issue of 134 lakh shares representing 18.7 per cent of the equity includes a new issue of 72 lakh shares (10 per cent) and offloading of 62.56 lakh shares (8.77 per cent) held by the promoters.

Motilal Oswal Financial Services Ltd proposes to enter the capital market with an initial public offering of 2.98 equity shares of face value Rs 5 each. The issue, which is being made through a 100-per-cent book building process, opens on August 20 and closes on August 23. The price band has been fixed at Rs 725-Rs 825. Of the total issue, 1.42 lakh shares have been reserved for eligible employees and the net issue to the public is 28.4 lakh shares. The total issue will constitute 10.5 per cent, while the net issue will constitute 10 per cent of the post issue paid-up capital of the company. The equity shares are proposed to be listed on BSE and NSE. The company plans to raise between Rs 216.25 crore and Rs 246.07 crore to fund organic and inorganic growth and support its growth plans through long term working capital deployment, enhanced financing facility for broking customers and technology advancement.

The market posted fourth straight weekly loss, tracking weak global markets. A whole host of factors right from yen carry trade unwinding, hedge fund redemption pressure, heavy FII selling and sub-prime concerns haunted local bourses throughout the week. The market declined in 3 out of 4 trading sessions. Markets across the globe were inflicted with intense volatility

The benchmark index BSE Sensex declined 726.73 points to 14,141.52 in the week ended Friday, 17 August 2007. The S&P CNX Nifty was down 225.30 points to 4,108.05 in the week.

On 14 August 2007, Omnitech InfoSolutions settled at Rs 164.55 on BSE, a premium of 56.71 per cent over the IPO price of Rs 105. It debuted at Rs 183.75 on BSE, and hit a low and high of Rs 155 and 183.75, respectively.

IVR Prime Urban Developers settled at Rs 418.15 on BSE, a discount of 23.97 per cent over the IPO price of Rs 550, on 16 August 2007. The IVR scrip debuted at Rs 500. It touched a high of Rs 500 and a low of Rs 388.

Zylog Systems settled at Rs 431.10 on BSE, a premium of 23.14 per cent over the IPO price of Rs 350, on Friday, 17 August 2007. The scrip debuted at Rs 525, also its high. It also touched a low of Rs 356.20.

Despite rising interest rates and appreciating rupee, capital investments by Indian companies in the current fiscal could exceed last year’s level, according to a study by the Reserve Bank of India . Indian corporates expect to spend Rs 1,48,207 crore in capital expenditure in the current fiscal in projects already appraised and sanctioned by banks and financial institutions.This is against the total investments of Rs 2,06,460 crore in 2006-07.

However, the RBI expects the shortfall of Rs 58,253 crore to be more than made good by new projects that will come up in the current year.

For all the developments that have taken place in the mutual funds market, the average level of awareness is still pathetic or so suggests Computer Age Management Services (CAMS), the registrar that caters to a large number of India’s fund houses. A survey done by CAMS through IMRB (Indian Market Research Bureau) in a select location not long ago has revealed a startling fact: There is less than 50 per cent awareness of funds. Additionally, there is less than 50 per cent awareness on two key fronts – regulations and returns.

A SEBI-appointed group studying the issues relating to difficulties faced by investors while dealing with transmissions of securities in physical and dematerialised mode has recommended a threshold limit up to which the listed companies would require only an Affidavit, Deed of Indemnity and No Objection Certificate from other legal heirs. Standard format of these documents have also been recommended. The threshold limit should be fixed at holding of 200 shares or Rs 1 lakh in value, whichever is higher. Also, the prescribed threshold limit shall be the basic minimum limit to be adhered to by all the listed companies. The companies having higher threshold shall continue to do so, and also can set liberal threshold.

The Securities and Exchange Board of India (Sebi) chairman M Damodaran has said that subprime crisis was not the only reason for the market volatility and also ruled out any separate regulation for hedge funds. Damodaran said: “In fact, there exists no single category as hedge funds”. He said that the Sebi would prefer them to enter the Indian markets directly rather than through some offshore derivatives. He said registration of hedge funds with the Sebi, as in the case of foreign institutional investors, was enough. He pointed out that the Sebi was not worried about the large number of players coming into India because their entry presupposes the constant returns being offered by the Indian markets besides a sound market regulatory mechanism. He also said the Sebi would soon issue guidelines for setting up a self-regulatory organisation (SRO) for investment advisers comprising representatives of all sections including brokers and print and electronic media.

The Central Board of Direct Taxes (CBDT) has clarified that lending and borrowing of shares for short selling in equities will not attract capital gains tax. With this clarification one of the important hurdles in the way of permitting short selling on the stock exchanges has been cleared. According to the sources, the short selling of securities will also not attract securities transaction tax (STT) as is prevalent in case of physical sale and purchase of equity shares. This is because securities offered under lending and borrowing of securities does not amount to transfer of shares and hence it is exempt from capital gains tax. Short selling is backed by a scheme of lending and borrowing of shares which will help in settlement of transactions through physical delivery. This is otherwise known as covered short sale.

There are appreciable discounts to spot visible in the index options market. The spot Nifty landed at 4108 after hitting a low of 4002. The August Nifty contract was at 4091 while the September contract was at 4073 and October was at 4052. Incidentally, there is almost 300,000 open interest in the October contract already.

The FII exposure pattern in derivatives is interesting. They were massive net sellers last week in spot. Across the derivatives segment, they increased their exposures with the open interest growing due to an increase in 1) index future sales 2) index call option buys 3) stock futures sales.

This makes it clear that they are bearish in perspective across the entire market, the call index option exposure is a hedging mechanism while the short index and stock futures positions are direct attempts to gain as the market falls. In the index options segment, there has been a massive expansion in the Nifty calls open interest segment across all time frames. A lot of August Nifty puts have been settled but there has been an overall open interest expansion with a large number of September and October puts being opened.

The overall put-call ratio (in terms of open interest) is now an unsustainably high 2.2. This suggests that the market is oversold in the short term and almost guarantees at least one big bullish session in the next week.

Most underlyings fell on vast volumes in spot markets and the action was mirrored by massive volume and high open interest in the stock futures segment. The fact that the FIIs are net short across this segment could be a key.

RBI conducted the sale (re-issue) of "5.48 per cent Government Stock 2009" for Rs.4000 crores under the Market Stabilisation Scheme (MSS) on August 16, 2007. The cut-off yield of the security was set at 7.9864 per cent.

RBI conducted the auction of State Development Loans (SDLs), 2017 for eight states for an aggregate amount of Rs.3484.434 crores through a yield based auction using multiple price auction method. The cut-off yield of the securities was 8.30 per cent for Tamil Nadu, 8.35 per cent for the states of Manipur, Mizoram and Punjab, 8.36 per cent for Kerala, 8.39 per cent for West Bengal , 8.40 per cent for Madhya Pradesh and 8.90 per cent for Jammu & Kashmir.

RBI has announced the sale (re-issue) of "7.27 per cent Government Stock 2013" and "7.99 per cent Government Stock 2017" for Rs.5000 crores and Rs.2000 crores on August 24, 2007.

Overnight rates jumped to a high of 55 per cent, their highest level in nearly five months, from 6 per cent at the last close as a few banks had to resort to sudden borrowing to cover their reserve requirements with the central bank on the reporting Friday.

The 1-10 year YTM spreads decreased by 18 bps to 50 bps. The yield of the benchmark 10 year security - 7.49 per cent 2017 was 7.9918 per cent as against 7.9861 per cent during the previous week.

Average outright settlement volumes decreased by 49 per cent as compared to the previous week. Average repo volumes increased by 5 per cent compared to the previous week. The highest daily settlement volumes for outright trades were Rs.64 billion on August 13, 2007 and Rs.230 billion for repo trades on August 14, 2007.

The US Federal Reserve Board on August 17, 2007 approved temporary changes to its primary credit discount window facility in order to promote the restoration of orderly conditions in financial markets. It has reduced the primary credit rate to 5.75 per cent and has extended the provision of term financing for as long as 30 days.

The corporate bond market witnessed issues of certificates of deposit (CDs), especially by foreign banks, amounting to a total of Rs 300-400 crore. According to dealers, foreign banks are raising rupee resources to stay liquid, fearing an adverse impact of a liquidity crisis in overseas markets. Citibank, Rabo Bank and Deutsche Bank are some of the major issuers of CDs. The interest rates on 3-month to 6-month CDs came down by 5-10 basis points to 7.85 per cent and 8.10 per cent respectively compared with the levels seen on Friday.

Other banks that raised money included State Bank of Hyderabad and State Bank of Mysore . However, the corporate bond market at the longer end of the maturity remained dull and saw passive trading interest.

The rupee depreciated marginally against the dollar, but failed to revup the information technology and export sector stocks.

The six-month forward premia closed at 1.30 per cent (annualized) on August 17, 2007 vis-à-vis 1.90 per cent on August 10, 2007.

Forward Markets Commission Chairman B C Khatua said that commodity futures trading in the country is heading toward saturation levels due to bottlenecks in infrastructure and operational constraints, lack of quality warehousing facilities as well as uniform standards for benchmarking each commodity are some of the constraints facing the commodity market. Setting a uniform standard for a commodity as far as possible will help in increasing the volume of trade as well as ensuring better participation, he added. Turnover in commodity exchanges dropped 6-7 per cent in April-July 2007-08 compared with same period a year ago due to these problems, the regulatory board head said. The Central government banning forward trading in high volume commodities like wheat a few months ago has also contributed to the fall in turnover, he said. Limits imposed on open positions that could be held by individuals for near-month contract in commodities like pepper and jeera has also affected the market, the chairman said. Rejecting suggestions for a ban on futures trade, he said the market will achieve further growth by bringing more commodities under forward trading.

Commodity futures trading in its present form is relatively new in India and the depth of the market is limited at present, he said. “But we could resolve all these issues in consultations with various stakeholders in the market,” Khatua said. The chairman also stated his support for participation of banks and mutual funds in commodity futures trading.

The recently introduced futures trading in raw jute on the Multi Commodity Exchange (MCX) has come in for sharp criticism from the jute industry, with the latter urging the Centre for an immediate ban on the futures. The industry’s appeal is currently being looked into by the textile ministry. The ministry is already in discussion with the ministry of consumer affairs, food and public distribution department (FPD) and the Forward Markets Commission (FMC).

According to the industry, futures trade in raw jute is a clear /fatka and dabba trade perpetrated by unscrupulous brokers and market operators, who care least about the industry, and are mostly interested in maximising gains. Such an action, the industry feels, can never be allowed to grow especially on jute, which is an essential commodity and is governed by Jute and Jute Textile Control Order (J&JTCO).

The industry representatives said that the recent raw jute speculation on MCX showed compulsory deliveries despite -the contract. The market speculators and operators escape the practice through delivery/purchase by paying 5 per cent penalty as mentioned in the penal provisions, they alleged. The penal margins being very low, the speculators are deriving benefits out of these contracts, thereby marring prospects for the industry.

Moreover, the industry argued, with the Centre making packaging of sugar and food grain compulsory in jute bags, the jute prices remaining stable is all the more necessary. The Centre has recently made the order under the Compulsory Jute Packaging Act of 1987.

If prices of raw jute doesn’t remain within limits, the cost of production of bags would shoot up, adversely affecting the operations of the food ministry, FCI and other state agencies, who will then be forced to pack the materials well above the market regulated prices and distribute through PDS,? said an industry representative.

It has been pointed out to the government that due to ?speculative trade? on the National Multi Commodity Exchange (NMCE), Ahmedabad, in jute year 2005-06, the prices of raw jute rose exorbitantly and hoarding became a common practice.

At that point jute was not available in the market, forcing the industry to go in for ?block closure? of mills resulting in unemployment of almost 2.5 lakh workers and daily wage earners across the country.

The industry had then filed an FIR with the state police to investigate the whole activities of the NMCE and its brokers/sub-brokers and agents. Following this, the Centre took a series of steps such as fixing fresh prices of raw jute, registration of all dealers, traders or agencies holding raw jute and launching of de-hoarding operations.

Corporate Sector

In a largest venture capital fund ever raised for India , Sequoia Capital, one of the leading venture capitalists has raised its third venture fund of $300 million recently. Consistent with its two prior India-focussed venture capital funds, the new fund will focus on investing in high growth early stage companies across all sectors.

A study of debt-to-equity ratio of 500 major companies with sales more than Rs 100 crore between 2006-07 and 2005-06 revealed that the D/E ratio of these companies has gone up from 0.61 during 2005-06 to 0.65 during 2006-07.Out of these 500 companies 248 witnessed a fall in D/E ratio whereas 224 showed a rise in the two years under the study. Rest 28 firm’s ratios were same for both years. A significant rise in the D/E ratio is registered by Tisco(0.26 in 2005-06 to 0.69 in 2006-07) and Ranbaxy Lab(0.43 to 1.35).(Fe,19)

Hindustan Zinc (HZL) has received London Metal Exchange (LME) registration which is known to be most demanding standard worldwide, for the lead ingots produced at its Chanderiya lead smelter, in Rajasthan. The product registration branded “Vedanta 99.99” denotes a 99.99 per cent purity of lead produced and signifies that these lead ingots are acceptable for delivery at the LME warehouse. (Fe, 19)

LN Mittal’s joint venture with ONGC Videsh has bagged a gas exploration block in Trinidad and Tobago that is estimated to have reserves of two trillion cubic feet. ONGC-Mittal Energy (OMEL) won the offshore block NCMA-2 beating Britain ’s Centrica Plc in Trinidad and Tobago and Tobago ’s latest bidding round. (Fe, 20)

In a bid to acquire more properties and expand its business, Indian Hotels Company (IHCL) a part of Tata Group is planning to raise up to Rs 1900 crore through a rights issue of shares and convertible debentures. Indian hotels will raise Rs 844 crore with a rights issue of equity shares in the ratio of 1:5 at a price of Rs 70 per share and another Rs 900-1080 crore in a rights issue of unsecured debentures in the ratio of 1:10 at a price range of Rs 150-180, which can be converted into shares after two years. (Fe, 14)

Shriram Transport Finance Company, the largest asset financing NBFC and part of the Shriram Group has picked up 40 per cent stake in Ashley Transport Services, a wholly owned subsidiary of Ashok Leyland and its group companies. (Fe, 20)

JSW Steel is entering into the fields’ of software solutions and Bio-diesel and as a first step the group is exploring options to hive off its in-house software arm, Jsoft solutions into a separate vertical that would provide software solutions to other companies as well. JSoft Solutions currently manages the software requirement of JSW Steel and the rural BPOs that JSW Steel promotes as part of its CSR activities. The group has also undertaken the cultivation of jatropha in 120 acre of land around its steel plant in Vijayanagar and once the group manages to convince farmers to cultivate jatropha in 1000 acres, the company will look at entering the bio-diesel segment. (Fe; 14)

The country’s largest steel manufacturer Steel Authority of India (SAIL) and South Korean giant Posco have signed a memorandum of understanding to cooperate on a wide range of business and commercial interest areas. Through this alliance SAIL will get access to Posco’s best-in- class furnace technology, while Posco would be able to use SAIL’s distribution network.

Mahindra and Mahindra which has tied up with Bramont in Brazil and Bavarian Motors in Egypt to assemble and distribute its brand of Scorpio and Bolero vehicles in those markets is now planning to pick up strategic stake in both these firms. Acquiring its Brazil and Egypt joint ventures will help Mahindras to scale up capacity to 10,000 vehicles per annum from the current 5,000 units per annum.(fe;15)

Tata Steel is facing stiff opposition from various quarters for its Rs 2500 crore Titanium project to be set up in the Tirunelveli District of Tamilnadu.The Company is ready for public debate on any issue and would meet people of the six villages, where the company seeks to acquire 10,000 acres of land through the state government. Apart from providing the market price for the land the company will be employing 1000 persons directly and another 3000 indirectly. If the project goes through, this would be the first titanium project in the world to have a desalination plant as well as a power plant. (15)

Visa steel is setting up a ferrochrome plant in Orissa through a joint venture with China ’s Baosteel Trading Company, a unit of the world’s fifth largest steel producer Baosteel and Switzerland based Visa Comtrade AG. Visa steel will hold a 51 per cent stake in the joint venture named Visa Bao, with Baosteel Trading holding 35 per cent and Visa Comtrade 14 per cent. The 100,000 tonne per annum plant related infrastructure will cost around Rs 260 crore and will be financed through a debt-equity mix of 65:35.(18)

China ’s second largest aluminium maker Qingtongxia Aluminium Group will make the country’s biggest investment so far in India by pumping in $400 million in a joint venture in Gujarat to produce alumina. The Qingtongxia Aluminium Group’s proposal to invest in India has received approval from the National development Reform Commission (NDRC).

Telecom

Nortel Networks Corporation, a global provider of communications capabilities is in talks with an Indian telecom operator for providing technologies to conduct trial for 4G technologies in India . This is for the first time an Indian operator is holding trials for 4G technology. Nortel, the largest telecom equipment manufacturer in North America is also in talks with leading telecom operators in the country to push WiMaxtechnology.

Bharti Airtel Lanka, a subsidiary of Bharti Airtel is going to launch 2G and 3G services in Srilanka by the end of the current financial year. The company is also planning to invest approximately $200 million in the next five years in the Srilankan market.The mobile services will be launched under the Airtel brand.

*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.