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Current Economic Statistics and Review For the
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Theme
of the week:
Access to Modern Technology for Farming*
1.
Introduction Modern
agricultural technology has vast potential to increase the productivity of
agriculture, which is of great interest to policy makers. The survey
collected data on the extent of adoption of the ‘modern technology in
farming’ by farmer households.
The
reference period of collection of data was January to December 2003. A
total of 51,770 farmer
households spread over 6,638 sample villages has been covered in the
survey. This note is based on the data collected during the survey on
various facets of
‘
Access to Modern Technology of Farming’, and
attempts to review briefly three aspects: access to source of
information, effectiveness of the source in terms of adoption and
subjective assessment of the quality of information. 2.
Different sources There
are 16 sources from where information on ‘Modern Technology of
Farming’ has been accessed by farmer households. These sources can be
categorized according to a) whether it is a multipurpose or specified
source and b) whether it involved one way or two-way transaction. Among
the 16 sources reported in the survey, Radio, Television, Newspaper and
Village fairs are multiple ones whereas the remaining are specified
two-way sources. Krishi Vigyan Kendra, extension workers, government
exhibition, input dealers, farmers’ study tour, other progressive
farmers, Para technician, output buyers/food processors and others; fell
in the second category. Details of these sources are given below: Krishi
Vigyan Kendra (KVK):
Krishi vigyan Kendra are centres set up by the Extension
Worker:
Extension worker is an employee of the government in the department of
agriculture/horticulture/animal husbandry/forestry/soil conservation or of
agricultural universities or of ICAR institutes, and provide necessary
information and guidance to the farmers. Para-technicians/ para-veterinarians
visiting from government departments are also classified as extension
workers. Radio/Television:
Radio and
television supply information to the farmers regarding weather, farming
practices to be followed in different seasons, methods of farming
different crops, technological developments on farming etc. through
different programmes on a regular basis. It can be private or government
channels. Newspaper:
Newspaper provide information on different aspects of farming regularly
through special columns or pages provided for this purpose. It includes al
type of print media and includes newspapers, agricultural magazines,
bulletins and leaflets published periodically. Village
Fair:
Village fair includes the fairs sponsored by the government or private
agencies as well as the normal religious and cultural fairs in the area.
It also includes kisan mela or a stall setup by the government/private
agency in a religious/cultural fair visited by farmers regularly. Government
Demonstration:
Government demonstration refers to demonstration or exhibitions on farming
by any government agency. Input
Dealer: Input dealer
includes all the individuals or agencies dealing in seeds, fertilizers,
pesticides etc., whether wholesale or retail. This dealer in order to
increase their sales gives various information regarding farming and the
use of fertilizer and pesticides, etc. Other
Progressive Farmers:
Other progressive farmers include different farmers’ organizations or
associations, whether registered or not. Many associations of growers of a
particular farm produce such as grapes, mangoes, onion, litchi, guava,
etc. exist in different regions and they often serve as important sources
of information to the farmers. Farmers’
Study Tour: Farmers’
study tour includes all types of educational tours arranged by some
agency, sponsored by government or some private party. Output
Buyers/ Food Processors: These
sources include all those agencies or individuals who advise the farmers
to cultivate a particular variety of a crop with the opinion to buy those
products. These agencies may also provide information on cultivation
practices to be followed for growing that particular crop. Others:
Others include friends, relatives, neighbors, etc. who are knowledgeable
of modern technologies for farming. Similarly, Internet services,
documentary films, video shows, etc., may be considered as others. 3.
Relative Importance of Different Sources of Information Out of 89.4 million farmer households, only 36.1 million or 40.4 per cent of farmer households reported about accessing any source to receive information on modern agricultural technology; which means nearly 60 per cent households continued farming in the traditional way.
Out
of the 16 sources, only 3 sources were accessed by more than ten per cent
of farmer households. ‘Other progressive farmers” have been approached
by 14.9 million farmer households forming about 16.7 per cent of the total
farmer households for obtaining information on modern agricultural
technology. ‘Input dealer and Radio have been accessed by about 11.7
million farmer households or about 13 per cent each. Television served as
a source of information on modern agricultural technology to 9.3 per cent
of farmer households and newspaper to 7.0 per cent. While 5.7 per cent
farmer households had received information from extension workers; 3.6 per
cent farmer households received information from primary co-operative
societies. Output buyers/ food processors, village fairs, government
demonstration and credit agencies each served as a source of information
to about 2 per cent of farmer households. Among the remaining sources,
krishi vigyan Kendra is an important one accounting less than one per cent
of farmer households, which have been setup for specified purpose by
different institutions/universities The
share of farmer households accessing specific a source in the total farmer
households reporting information on their access to any source, can also
gauge the relative importance of different sources. Even by this measuring
stick, it can be seen that ‘other Progressive Farmers’, ‘Input
Dealer’, and ‘Radio’ were the three important sources of
information. Inter-state
variations in the proportion of farmer households accessing information on
modern technology for farming through 6 dominant source and number of
farmer households accessing any source for acquiring information are given
in Table 2. Farmer
households in the states in southern region, western region and
northeastern region have reported more than all-India average ( 40.0 per
cent) of them have accessed any source for information on modern
technology on farming. On the other extreme, farmer households in
Rajasthan (14.7 per cent) are the least among all the states who have
accessed any source for acquiring information on modern technology on
farming. It can be seen from the Table that among different regions farmer house holds in southern region reporting the access to any source of modern technology accounted for thehighest share of 54.4 per cent. Farmer households in Andhra Pradesh (62.7 per cent) and Kerala (58.0 per cent) have the maximum share among all states. In Andhra Pradesh farmer households prefer information from ‘other progressive farmers’ (34.1 per cent) and Input dealer (30.1 per cent) and in Kerala farmer households access information mainly from radio (30.6 per cent), TV (22.6 per cent) and Newspaper (37.8 per cent). About
50 per cent of farmer households in the western region have accessed any
one of the sources for gathering information on modern agricultural
technology. While farmer households in Gujarat depend upon other
progressive farmers (30.0 per cent) and input dealers (24.3 per cent) for
getting relevant information; the farmer households in In
northeastern region states, radio is the main source of information for
more than 16 to 41 per cent of farmer households. Radio and TV had also
been the major medium to collect the information on modern technology on
farming among farmer households of northern states viz., Haryana, Himachal
Pradesh, J & K,
4.
Frequency of Contact with the Sources of Information Table 3 shows the farmer households preference of the frequency of contact. Farmer households contact their relevant sources daily or weekly or monthly or seasonal or need based or casual requirements. Among
the sources used by the farmer households to obtain information on modern
technology for farming, the farmer households reported that radio, TV and
newspaper are the sources accessed daily and also by weekly. It can be
seen from Table 3, seasonal and need based contact has been more prominent
among majority of all other sources. Need based contact with output
buyer/food processors, extension workers, primary co-op. society and
credit agency were also favoured with more than 45 per cent of farmer
households in each case seeking the information. More than 25 per cent of
farmer households contact seasonally extension
workers, primary co-operative society, government demonstration, village
fairs, and participation in training, KVK, and para technician/NGO for
getting information on modern technology on farming. Input dealers were
sought after by large proportion of farmer households seasonally (36.1 per
cent) and on a need based basis (51.8 per cent). Other progressive farmers
- the most sought after source out of the sixteen sources - had been
approached by 47.2 per cent farmer households on a need based basis for
getting required information.
5.
Information on Cultivation Received Through Any Source Table
4 presents the number of households accessing information and especially
on cultivation through any source on modern technology on
cultivation. Any source means that the households availed of at least one
of the sixteen different sources. It may be noted that a household may
avail two or more different type of information from more than two
different sources. Out of 89.4 million farmer households 36.1 million or
40.4 per cent have requested any kind of information from at least any one
source. Among them at all- More
than 60 per cent of farmer households in Andhra Pradesh and From
the Table it can be seen that out of all the information seeking farmer
households, more than 90 per cent have requested information on
cultivation in all states except those of in Punjab, In
6.
Type of Information Sought and Received about Cultivation
Farmer
households usually access any source of information for getting knowledge
on different aspects of cultivation such as improved seed/variety,
fertilizer application, plant protection, farm machinery, harvesting and
marketing and others. Out
of 36.1 million households receiving information from any source, 34.6
million farmer households or 96.0 per cent have received information on
cultivation. Among them, on an all-India basis 20.7 million or 59.6 per
cent have required information on improved seed/variety, followed by about
17.1 million farmer households forming 49.4 per cent, wanted information
on fertilizer application. Knowledge on plant protection has been sought
by 24.0 per cent of farmer households.
Harvesting and marketing information have been priority for another
3.7 million or 10.7 per cent of farmer households. Information
on improved seeds has been sought by a large number of farmer households
in Haryana, Punjab, Rajasthan, Madhya Pradesh, Uttranchal, Uttar Pradesh,
Gujarat, A
very high number of farmer households in eastern region, western region,
and southern region are interested in getting information on fertilizer
application. More than 50 per cent of the farmer households in many of the
states in these region have sought for knowledge on fertliser application Information on plant protection, and harvesting and marketing have acquired by about 25 to 40 per cent of farmer households in the states of western and southern regions. (Table 6) 7.
Accessing Radio for Information on Cultivation At
all- A
large share of farmer households in At
the all-India level, 4.9 million forming about 45 per cent of farmer
households have got information on improved seed /variety through radio
daily. Knowledge of fertilizer application has received by 29.3 per cent
of farmer households and 15.8 per cent on plant protection and another
10.3 per cent on other aspects of cultivation such as farm machinery,
harvesting/marketing etc.
Among
farmer households in different states, 60 per cent in UP, 59 per cent in
Haryana, 54 per cent in Madhya Pradesh, 53 per cent in Chattisgarh, 48 per
cent in Rajasthan, 46 per cent each in Bihar and Karnataka and 45 per cent
in Jharkhand have got information on improved seeds through radio daily.
States where farmers used the radio for cultivation related information,
showing more interest in fertilizer application included Punjab (52 per
cent), followed by Assam (42 per cent), Jammu and Kashmir (41 per cent),
Kerala, West Bengal, Andhra Pradesh, Gujarat(each having 34 per cent) and
Tamil Nadu (33 per cent). (Table
7) 8.
Contacts with Input Dealer for Information on Cultivation Input
dealer may be an individual or an agency dealing in different agricultural
inputs such as seeds, fertilizer, manure, pesticides, etc. Only
13 per cent of farmer households have accessed information on modern
technology for farming through input dealers and of these 98 per cent farmer
households have received information on cultivation. Input dealers played a
big role in disseminating information on cultivation among farmer households
of Haryana, At
all-India level, among the farmer households who accessed information from
input dealers, 41 per cent received information on fertilizer application,
39 per cent on improved seed/variety, 14 per cent on plant protection and 6
per cent on other aspects (Table
8).
Among
farmers who obtained cultivation related information from input dealers,
those interested in techniques of fertilizer application constituted 100 per
cent in Tripura, 90 per cent in Meghalaya, and 87 per cent in Orissa. Above
40 per cent of farmer households in Punjab, Assam, Manipur, Bihar, Jharkhand,
West Bengal, Gujarat, Andhra Pradesh and Tamil Nadu. Those interested in
improved seed/variety formed
80 per cent in Rajasthan,74 per cent in Jamuu and Kashmir, 74 per
cent in Uttranchal, 63 per cent in 9.
Contacts with Other Progressive Farmers for Information on Cultivation Other Progressive farmers are individual farmers and also include different farmers’ organization or associations, whether registered or not. There are associations of growers of a particular crop or farm produce, who serve farmers with important information for improvement of that crop or produce.
At all-India
level, about 17 per cent of farmer households accessed information on modern
technology for farming through ‘other progressive farmers’. Of them, 94
per cent farmer households received information for improvement of
cultivation. Major states where ‘other progressive farmers’ has played
an important role were Orissa, (Table
09) Madhya
Pradesh, West Bengal, Karnataka, Haryana, Bihar,
Among the farmer households who accessed information on cultivation
from ‘other progressive farmers’ at all-India level, 40 per cent
received information on improved seeds/variety, 31 per cent on fertilizer
protection, 15 per cent on ‘plant protection and 14 per cent on ‘other
aspects.
Information about improved seeds/variety was sought
by more than 50 per cent of the farmer households in Haryana, Punjab,
Rajasthan, Manipur, Madhya Pradesh, Uttranchal, Uttar Pradesh, 10.
Information on Animal Husbandry Received through Any Source. Information received on animal husbandry was mainly on breeding, feeding, health care, etc.; and the prominent sources were radio, TV, news paper, extension worker input dealers and other progressive farmers. The number of households obtaining information on animal husbandry is very small compared to that of cultivation. On an all-India basis, less than 2 million households forming about 5 per cent of farmer households have received information from any source. ‘Other progressive farmers’ is most important source from whom the farmer households accessed information on animal husbandry. The major area of concern for farmers, who sought information from these sources, had been health care, with 52.0 per cent of them enquiring about health care. Other areas of interest in the new technique in animal husbandry are breeding (24.4 per cent) and feeding ( 18.1 per cent). Management was another area of concern for farmers with 9.3 per cent requesting information and the major source of information was input dealer.
11. Information on Fisheries Received through Any
Source. Information on seed production, harvesting, management and marketing etc in respect of fisheries has been obtained by farmer households; and the major information providers have been radio, TV, newspaper and input dealer and other progressive farmers.
Percentage of households obtaining information on fisheries was not
more than 3 per cent for each of the major source of information. Marketing
and management had been were the main thrust of information sought by the
farmer households from all the sources of information. 12.
Quality of Information Received from Different Sources The survey evaluated through the farmer households about the quality of information received by them from various sources described earlier. The results reveals that at all India level, more than 50 per cent of farmer households, which accessed different sources for information reported that the quality of information received by them from majority of the sources as good and satisfactory (Table 12).
The survey also collected information from farmer households whether the details received from various sources of modern technology has been tried by them. Further, whether the recommended method by the source has been adopted or put into practice on the field by the farmer households. The report of NSSO has not brought out clearly, the subtle difference between tried and adoption of the recommendation of the source. The report states ‘ adoption of recommended practice means that recommended practice is followed by the farmer on his field after having been convinced about the gains of the technology. A majority of farmer households, i.e, about 94 per cent have reported that the information received by them from different sources has been good and satisfactory excepting in case of credit agencies, farmer study tour and para technician/NGO for which the quality of information has been poor as per more than 6 per cent of farmer households. In respect of the information received from other progressive farmers and input dealers, the information content had been put on trial or adopted accounting to more than 80 per cent of farmer households. Such trial or adoption ratio has been less than 70 per cent for other sources of information and has been the lowest at about 52 per cent for farmer study tour and credit agencies. 13. Suggestion for Improvement At all-India level, out of 36.1 million farmer households, about 7.5 million forming about 41 per cent suggested improvement in quality of information and another 21 per cent sought timeliness of information. About 16 per cent of farmer households’ suggested improvement in frequency of demonstration of the technology. Improvement in quality of presentation and professional competence of information were also suggested but come under low priority as only about 10 per cent of farmer households have reported them. (Table 13).
Highlights of Current Economic Scene AGRICULTURE Wheat prices in the domestic market are remaining
stable, due to which government agencies are poised to improve procurement
during this rabi marketing season 2008-09. It is expected that the rise in
MSP would keep speculative traders away from investing in wheat. The Food
Corporation of India (FCI) has bought 20,000 tonnes of wheat from Gujarat
and Haryana in the month of March and procurement from The Solvent Extractor Association of India (SEA) has
reiterated its demand to the central government for establishing a
separate oilseed development fund to raise production; otherwise the
country would end up paying 67 per cent more to import vegetable oils in
the financial year 2009. The oilseed production in the country has
stagnated at 25-26 million tonnes for the last few years with productivity
of 950 kg per hectare. The government gets Rs 6,000-7,000 crore from the
imports of vegetable oils, even if 10 per cent of this amount is put as a
fund for oilseed development, the country could see higher production of
oilseeds in the near future. At present, the country imports almost 45 per
cent of its vegetable oil requirements annually. Last year, the country
has imported 55 lakh tonnes of vegetable oils, which cost Rs 15,000 crore.
The import bill could reach Rs 20,000 crore this year and, if situation
does not improve, it might rise to Rs 25,000 crore next year. The oil
industry has been demanding to declare Oil Palm as a plantation crop like
tea and coffee so that industry can invest in agricultural land to grow
oil palm. Export ban on edible oils and the cut of import duty
on palm oil have failed to check the rise in prices of coconut oil. Supply
of quality copra has slowed down, due to heavy rains hitting southern
states of the country where drying and processing of raw coconut has been
going on in the current period. As per the leading traders, rise in prices
of palm oil has resulted in a 30 per cent increase in consumer demand for
coconut oil. The Cochin Oil Merchant Association (COMA) is of the opinion
that the ban on export of coconut oil should be withdrawn, as exports are
very meager in volume. Coconut farmers
and coconut development board have also supported this view. Total exports
of coconut oil are less than one per cent of the production, which mainly
goes to west
According to the latest report by Spices Board,
exports of spices during April-February of the current financial year have
risen by 16 per cent to 377,000 tonnes from 325,076 tonnes in the previous
year. Export earnings have also jumped by 19 per cent to Rs 3,785.40 crore
(US $ 940.47 million) against Rs 3177.54 crore (US $ 700.77 million)
attained during the same period in 2006-07. The latest estimates have
shown that the export earnings have exceeded the target fixed for the
year, both in dollar and rupee terms, while in volume, 99 per cent of the
380,000 tonnes target has been achieved. Exports, during the period, have
also surpassed the record performance of 373,750 tonnes at Rs 3575.75
crore (US $ 792.95 million) as registered during 2006-07. Chilli has
accounted for 45 per cent of the total spice exports in volume and 24 per
cent in terms of value. Exports of pepper have grown by 20 per cent to
31,750 tonnes, while earnings have increased by 68 per cent to Rs 466.38
crore. Exports of nutmeg and mace have dropped by 30 per cent to 1250
tonnes (Rs 27.34) and shipments of cardamom have declined by 35 per cent
to 365 tonnes (Rs 17.21 crore). Exports of value-added spices like curry
powder, spice oils and oleoresins and mint products have recorded a rise
in both volume and value terms. Poultry and starch industries have been demanding a
ban on maize exports since last year, as prices of this coarse grain have
surged in most spot markets and due to high demand from oversea countries,
despite a larger expected output. On an average, According to Indian Oilseeds &
Produce Exporters Association (IOPEA), exports of sesame seed from the
country are estimated to surge over 30,000 tonnes in 2008-09, on account
of lower production in the countries like The Maharashtra State Agriculture Marketing Board (MSAMB)
has formed MahaOrange - the apex body for the state’s orange growers
co-operative societies to boost the production, processing, marketing and
exports of the fruit. MahaOrange with assistance from the state government
and MSAMB has initiated to inaugurate the state level Orange Festival on
March 30, 2008, where over 40 societies of growers from Vidarbha would set
up stalls to display and sell oranges. As per the Tobacco board, a global shortfall in
tobacco output has boosted demand for the Indian tobacco, pushing up
prices of the same in the domestic market, casting adverse impact on
cigarette makers and challenging the government plan to cut acreages.
Consequently, average price of Flue Cured Virigina (FCV) has risen by more
than 50 per cent to Rs 71.37 per kg from Rs 47.47 a year ago. It is
expected that domestic FCV production would fall by 6.5 per cent in 2008
to 251,500 tonnes from 269,000 tonnes a year ago, due to adverse weather
conditions and unseasonal rains. Out of the total output of FCV, According to the central government
estimates, imports of jute products form IVRCL Infrastructures and Projects Ltd, has bagged Rs
79-crore contract to build an animal husbandry research centre in Andhra
Pradesh at the upcoming Indira Gandhi Centre for Advanced Research on
Livestock (IGCARL). The contract involved construction of a research
complex, including dairy, poultry, goat and piggery units. Industry A substantial fall was registered in the growth rate of index of industrial production during January 2008 as compared to January 2007. The growth in the index of industrial production during January 2008 at 5.3 is less than half that recorded in January 2007 (11.6 per cent). All the three major groups contributed for this slow down. As a result during the fiscal so far registered IIP index rose by 8.7 per cent as compared to 11.2 per cent last year. Mining sector and electricity sector grew by 1.8 per cent and 3.3 per cent during the month. The growth of manufacturing sector is at 5.9 per cent during January is much below to that of 12.3 per cent recorded last January. Out of the 17 industries, two industries declined and five industries registered double digit growth.. As per use-based classification, the sectoral growth rates in January 2008 over January 2007 are 3.5 per cent in basic goods industries, 2.1 per cent in capital goods and 7.0 per cent in intermediate goods. Consumer goods recorded an increase of 7.0 per cent. Infrastructure The index of six core infrastructure industries having a combined weight of 26.7 per cent in the index of industrial production with base 1993-94 registered a slower growth of 4.2 per cent as compared to 8.3 per cent in January 2008. The dismal performance of exhibited by all the six core industries in January 2008 resulting the core index registering a growth of 5.5 per cent during the fiscal so far as against 8.9 last year. crude petroleum production declined by 0.2 per cent during January 2008 against a growth rate of 4.7 per cent last year. All the other five-core industries witnessed lower growth performance. Thus refinery products, electricity, cement, steel and coal all contributed for the lower rate of growth. Inflation The annual rate of inflation calculated on a
point-to-point basis, rose by 6.68 per cent for the week ended March
15,2008 as compared 6.56 per cent as on March 17,2007. Index of Primary Articles group rose by 0.3 per cent
to 230.5 from 229.8 for the previous week. Food articles group rose by 0.2
per cent. Index of non-food articles rose by 0.6 per cent mainly due to
higher prices many oil seeds. raw cotton, raw rubber. The index for the major group Fuel, Power, Light and
Lubricants gone up by 1.0 per cent due to higher prices of furnace oil,
naphtha, electricity and light diesel oil. Increase in the prices of many iron and steel items
and food products pushed up the the index of manufactured products which
registered an increase of 0.9 per cent The final WPI for all commodities had been revised
upward from 218.2 to 217.1 for the week ended January 15,2008. As a result
the rate of inflation calculated on a point-to-point basis stood at 4.45
per cent as compared to 3.93 per cent provisional. Banking Bank of America Corp, the second biggest Public
Finance Central government’s revenue receipts
at Rs 4,36,389 crore during April- February was about 83.1 per cent of the
full fiscal year estimates of 2007-08 as compared to 83.1 per cent last
fiscal for the period. At this level revenue receipts was Rs 92,339 crore
more than that collected in 2006-07 (April-Feb). Increased
tax revenue at Rs. 3,52,356 crore as against 2,76,932 crore
was the main reason for this substantial increase in revenue
collection. Plan expenditure increase from Rs.1,35,911 crore ( 26 per
cent) in 2006-07 to Rs. 1,71,283 crore and non-plan expenditure witnessed
a growth of 23.3 per cent over the year. During the period fiscal deficit
was comparatively less at Rs. 1,05,402 crore as compared Rs. 1,21,817
crore during Apr-Feb 2006-07. Financial
Market Capital MarketsPrimary Market The Securities and Exchange Board of India (SEBI) is
expected to take two decisions simultaneously in July.
The first is to introduce a shorter time-frame between the closure
of an IPO for subscription and its listing.
The second is asking all classes of investors, including qualified
institutional buyers (QIBs), to make full payment while applying for an
IPO. Triggered by the recent market volatility and low
floating stock of high-value shares in the market, SEBI has kick-started
an extensive review of various issues related to the primary equity
market. According to sources
close to the development, the review is based on recommendations forwarded
by the Parliamentary Standing Committee following the IPO demat scam and
recommendations of the Securities Markets Infrastructure Leveraging Expert
Task Force (SMILE) headed by Axis Bank Chairman P J Nayak.
The major issues under review are pricing of IPOs, quota
reservation for the retail segment in IPOs, reducing the timeframe for
listing IPOs, the refund system in case of unallotted IPO shares and the
minimum public holding in a company. Gujarat State Petroleum Corporation (GSPC) has
decided to come out with an Rs 4,000-6,000 crore initial public offering
(IPO) by mid-2008. The long-awaited Bharat Oman Refineries Ltd’s (BORL)
IPO is likely to hit the market in the second quarter of the coming
fiscal. BORL would be raising Rs 2,400 crore, 50 per cent of which would
be raised through a pre-IPO placement, said a senior company official. The
company filed its draft red herring prospects (DRHP) with SEBI. The public
subscription and the private placement are likely to constitute about 48
per cent of the BORL equity. Secondary Market The market rebounded sharply through settlement week
on short covering. The markets started the week with the second biggest
single-session rally of 928 points on Tuesday. However, the BSE Sensex
ended the week 9.2 per cent higher at 16,371.3 points, up 1,376.5 points.
The NSE Nifty closed at 4942 points, a week-on-week rise of 368.1 points
or 8.05 per cent. Mid- and small-cap stocks did better with both indices
rising over 9 per cent each.
All the sectoral indices of BSE gained over the week,
Consumer durables being the highest by 12.94 per cent followed by Reality,
IT and Capital goods with 12.66 per cent, 11.53 per cent and 10.38 per
cent, respectively. Auto stocks gained the least due to concerns on inputs
while value buying by domestic and foreign funds pushed up the reality and
IT indices to the most. On March 27,2008 Standard & Poor's, (S&P) a
global index provider, announced the launch of S&P India 10, an index
designed to provide the overseas investors with tradable exposure to the
Indian equity markets. The
S&P India 10 index comprises ten of the largest and most liquid Indian
companies, which trade on developed market exchanges.
The companies included in the index are IT and consulting firm
Infosys Technologies, ICICI Bank and HDFC Bank, as well as copper producer
Sterlite Industries. The S&P India 10 index is designed to address
this accessibility challenge. It offers liquidity and investability to the
investors and can also serve as a basis for creating investment products. Derivatives The market eased into the April settlement looking in
slightly better shape than in March. Daily volumes improved in derivatives
though not in cash. There is more breadth and depth as well. Foreign
institutional investors (FIIs) continue to dominate with 46 per cent of
all futures and options (F&O) out standings. There is not much
liquidity outside the April series except in the Nifty. Nifty futures are
at premiums with the spot index closing at 4942 and the futures contracts
being settled at 4,970, 4,967 and 4,940 in the April, May and June series
respectively. There was healthy open interest expansion in April and May
though June has only 190 contracts outstanding. Among other indices, liquidity was spotty. The
junior, which closed at 8,297 in spot, was held at 8,241 in April and
there is about 25,000 open interest. The Bank Nifty closed at 7,038 in
spot and it was held at 7,058 in April and 7,060 in May with 1.2 lakh open
interest in April. The CNX IT closed at 3,905 in spot and it was held at
3,928 in April with about 27,000 open interests. The Midcaps 50 closed at
2,418 and it was held at 2,432 in April with 15,000 open interests.
In the Nifty options segment, the put-call ratios (PCR)
have improved substantially. Until late into March settlement, the PCR in
terms of open interest was consistently below 0.9, which is quite
overbought. Right now, the overall PCR is about 1.44 with the April PCR
looking quite healthy at 1.38. Government Securities Market Primary Market Twelve State Governments auctioned 10-year paper
maturing in 2018, through an yield based auction using multiple price
auction method on March 26, 2008, at cut-off yields ranging from 8.35-8.70
with the lowest for On March 26, 2008, RBI auctioned 91-day and 364-day
T-bills for the notified amounts of Rs.500 crore and Rs.1,000 crore
respectively. The cut-off yields for 91-day and 364-day T-bills were 7.23
per cent and 7.35 per cent respectively.
Secondary Market Bonds remained weak as traders waited for policy
responses to rein in rising inflation, which moved from 5.92 per cent to
6.68 per cent for the week ended March 15, 2008. At the weekend liquidity
adjustment facility auction, the recourse to the repurchase window was Rs
20,585 crore. Average daily trade volume remained low at about Rs
2,500 crore. The low trade volume was partly due to the year-end since the
focus was on balancing trading books. However, according to traders, there
were few buyers. This was largely on account of fears of depreciation.
This resulted in high bid offer spreads, as high as 15 basis points.
Bond Market The Government of During the week under review, four development
finance institutions and 2 non-banking
financial companies have tapped the market by issuing bonds.
IDFC Ltd tapped the market by the issuance of bonds
by offering 9.35 per cent 13 months for an amount of Rs 150 crore.
The bond was rated AAA by fitch and care. Rural Electrification Corp Ltd tapped the market by
the issuance of bonds by offering 9.35 per cent 5 years for an amount of
Rs 1000 crore. The bond was
rated AAA by fitch,care and icra. State Bank of Travancore tapped the market by
issuance of perpetual bonds by offering 9.95 per cent, with a step-up of
50 bps, if call is not exercised at the end of 10th year for an
amount of Rs 100 crore. The bond was rated AAA by crisil and care. Corporation Bank tapped the market by issuing lower
tier II bonds to mobilise Rs 300 crore by offering 9.40 per cent for 10
years. The bond was rated AAA by crisil and icra. Punjab National Bank tapped the market by issuance of
upper tier II bonds by offering 9.45 per cent for call at the end of 10
years for an amount of Rs 500 crore for 15 years. The bond was rated AAA
by crisil care. State Bank of
Foreign Exchange Market The rupee-dollar exchange rate firmed slightly to Rs
40.10 during the week, as exporters repatriated their earnings. Forward
premia, however, widened as importers and corporates with cross border
liabilities took cover. One-month premium rose to 2.24 per cent (0.89 per
cent). Three, six and 12 months premia firmed to 2.59 per cent (1.88 per
cent), 2.14 per cent (1.53 per cent) and 1.52 per cent (1.26per cent)
respectively. Commodities Futures derivatives According to KC Bhartiya, president of the Pulses
Importers Association, imposition of Commodity Transaction Tax (CTT) on
commodity futures trading will defeat the very purpose of having a
platform to ensure transparent trade in the commodities business and will
increase the cost at the real transaction value of the concerned
commodities. The total current cost of transaction in the commodity
derivatives Markets is round Rs. 3 per lac, which will be increased to Rs
19.25 per lac, after imposition of CTT. According to analysis done by the countries top
agriculture commodities exchange, NCDEX, the hike in essential commodity
prices has little to do with futures trading. The report, for which price
data for traded essential commodities was drawn from the commerce and
industry ministry, contends that the annual price (y-o-y, up to March 3,
2008) movement for actively traded commodities actually dipped to 5.17 per
cent. Such commodities include mustard seed, soyabean , chana, sugar and
maize (with a cumulative weight of 6.65 per cent in the wholesale price
index) but exclude inactively traded ones such as masoor, groundnut,
groundnut oil and rape and mustard cakes. In contrast, the study found
that the annual price change in non-traded essential commodities
(including imported edible oil, rice, wheat, gingelly oil, sunflower,
cottonseed, copra, jowar, barley, bajra, rice, bran oil, vegetables and
arhar or tur), was 9.04 per cent. These commodities have an overall weight
of 17.6 per cent in the WPI. In
comparison, price for all traded essential commodities (with a weight of
7.78 per cent in the WPI), registered a hike to 5.84 per cent. The price
rise observed in the actively traded essential agriculture commodity
complex was found to be in line with the overall level of price inflation
of 5.11 per cent. The study has emphasized that after the trading ban was
imposed on select commodities, prices for agriculture commodities have
risen across the board in the domestic market in line with global
commodity price trends. The country’s commodities exchanges are proving
remarkably resilient. Despite turmoil on the Indian stock Markets and
global commodities Markets, volumes in the Multi-Commodity Exchange of
India (MCX) & National Commodity & Derivatives Exchange (NCDEX)
have remained stable in the last three months. Average monthly traded
volumes on the National Stock Exchange (NSE) have come down from Rs 19,441
crore in January 2008 to around Rs 14,007 crore in the current month,
registering a sharp fall of 27.95 per cent due to stock market tumoil. In
the corresponding period, average monthly volumes on the MCX have been
around Rs 3.4 lakh crore, while those on the NCDEX have been around Rs
70,000 crore. Volumes on the NSE have fallen from Rs 4.47 lakh crore in
January 2008 to Rs 2.8 lakh crore in February 2008--a huge fall of 37.36
per cent. Until March 24, NSE’s volume of trade was around Rs 1.82 lakh
crore. The week under review, the global commodities Markets
saw their sharpest fall in several decades. Gold prices tumbled by about 8
per cent and crude oil prices dropped by 6.35 per cent. This significant
fall after rising for months indicate that the bull period in commodities
across the globe is over. Refined soya oil futures on the national exchanges
may breach Rs 600-level in the next week on reports that the government
may cut import duty on it next week. In addition, there are some bearish
expectations that USA 2008 soy plantings will be larger than expected and
figures by USDA are likely to be released on March 31, 2008. On Friday,
NCDEX Refined Soya Oil (RSO) April contract was down Rs 17 to trade around
Rs 611 per 10 kg over previous day on increased offerings on bearish
sentiments Corporate
Sector Tata Chemicals plans to achieve financial
closure in the next couple of days for acquiring US-based General Chemical
Industrial Products (GCIP). Tata Chemicals has acquired GCIP for $1
billion (about Rs 4,000 crore) early this year. Tata Chemicals would raise
$850 million (about Rs 3,400 crore) in debt to fund the acquisition. NRB Bearings, the Rs 303 crore,
Mumbai-based auto ancillary supplier, is focusing on leveraging
opportunities in the industrial sector and over seas markets in a bid to
offset the sluggish demand from its key customer segment. In the overseas
market NRB has received orders from leading European truck and automobile
companies. Mukesh Ambani promoted Reliance
Industries is evaluating a plan to set up its third refinery at Jamnagar
in an ambitious project to reach a total capacity of 100 million metric
tonne (mmtpa) per annum, the largest at a single location in the world.
The company is also setting up a second refinery near the existing one
with a capacity of 29 mmtpa. After nine months of negotiation, Tata
Motors finally signed a deal to buy luxury brands Jaguar and Land Rover (JLR)
from Ford Motor for $2.3 billion in cash, the largest acquisition by an
Indian company in the automobile business. The purchase price is less than
half what Ford paid ($2.5 billion each) to acquire the two brands. Ford
had brought Jaguar in 1989 and Land Rover from BMW in 2000. Tata Motors
will raise $3 billion (Rs 12,000 crore) through bridge finance for 15
months from a clutch of banks, including JP Morgan, Citigroup and State
Bank of Religare Enterprises, a Ranbaxy-promoted
group company, is looking at buying yet another London-based broking firm,
for around Rs 700 crore. External Sector Provisional trade data released by the Directorate General of Commercial Intelligence & Statistics (DGCI&S) estimated that the country’s export during February 2008 at $ 14.2 billion against S 10.5 billion in the corresponding month of 2007, a stupendous growth of 35.2 per cent. Cumulative value of exports during April-February 2007-08 amounted to 138.4 billion against $112.6 billion , an increase of about 22.9 per cent. Interestingly in rupee terms the growth was in single digit (9 per cent). This can be more due to the persistent rise in the rupee value vis-à-vis US dollars, against which most of the country’s export receipts are denominated. Another view was the uninterrupted up trend to commodity price in international market boosted the country’s export price of petroleum products, gem and jewellery and engineering products. Imports during February 2008 at $ 18.4 billion were
30.53 per cent higher than the level of imports valued at $14.1 billion in
February 2007. Cumulative import during the current fiscal so far at $
210.9 billion was 30.2 per cent higher than $ 161.9 billion last year. Oil
imports in February 2008 at $ 6.2 billion forming about 33.7 per cent of
the import bill was 39.5 per cent higher than that of $ 4.5 billion in
February 2007. Cumulative oil imports at $66 billion during the period was
26.8 per cent higher that of $52 billion in last fiscal.
Non-oil imports at $ 12.1 billion as against $9.6 billion pushed up
the first 11-month non-oil import to $ 144.8 billion an increase of 31.8
per cent higher than the level of such imports at $109.9 billion Such high level of import and exports resulted in a
trade deficit of $ 72.5 billion against 49.3 billion during the first 11
months of the fiscal years.
Telecom The five million direct-to-home (DTH)
subscribers may be able to switch from their current service providers to
new DTH players by installing an add-on device called transcoder to their
set-top-boxes. The transcoder is expected to cost just Rs 400 – 600. The Department of Telecommunications (DoT)
is close to finalizing a regulation permitting operators to share active
infrastructure. Currently, sharing of active infrastructure – including
subscribers lines, electronics, switches and other equipment is not
permitted. However, sharing of passive infrastructure like telecom towers,
shelters and repeaters is allowed. The TRAI has threatened to fix prices of
pay channels on the direct-to-home (DTH) platform in line with the Rs 5
per channel in Telecom rates in
*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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