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Current Economic Statistics and Review For the
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Theme
of the week:
Economic Census –
1
1. Introduction With
the dominance of the informal or unorganized sectors in non-farm activities,
collection of accurate and timely statistics for national income, saving and
investment and many other purposes, is indeed difficult task. Economic
census is an attempt to provide such data for authorities initially as a
benchmark and then to conduct follow-up sample surveys to collect reliable
information on a number of variables. Censuses and follow-up surveys based
on the Census frame regularly collect information on the number of
establishments and number of persons employed by all economic units
including establishments and own account enterprises both in agricultural
(other than crop husbandry and plantation) and non-agricultural sectors, so
that the authorities can make an informed planning policies at aggregative
as well as states levels. The Central Statistical Organisation (CSO), along
with States Economic and Statistics Directorates is conferred with the power
to conduct such surveys to collect detailed data. The CSO until now has
conducted five such economic censuses. This
note is an attempt to give a review of such economic censuses in one place.
Such an attempt of giving all the information of economic censuses in one
place very unwieldy, this note is divided into six parts. The first part
deals with some introductory information on the five economic censuses such
as scope and coverage in addition to their strengths and weaknesses. In the
second part, a review of the trend growth of enterprises as per the
different economic censuses on an all- 2. Genesis The
Indian economy can be broadly be classified into two sectors viz.,
agricultural and non-agricultural sectors. Fairly reasonable data base for
the agricultural sector has been developed historically over the years
whereas such data for non-agricultural sector is scanty and sporadic. The
availability of statistics for non-agricultural sectors of the economy like
manufacturing, trade, transport, construction and services is not
satisfactory. While data are being regularly collected for some organized
segments, there is almost complete lack of reliable data on other
unorganized segments. Data
on manufacturing establishments registered under the Factories Act 1948 are
being regularly collected under the Annual Survey of Industries. But there
is no regular collection of dependable statistics for non-factory units,
i.e., manufacturing establishments using power and employing less than 10
persons or those not using power and employing less than 20 persons.
Similarly, while statistics of the railway and air statistics can be had
from the respective administrative authorities, practically no data are
available on road and water transport in the country. There are similar
chunks of grey areas in the sectors of trade, construction and services. The
unorganized segments have an important role to play in the country’s
development process because they are large in number, their contribution
towards GDP is sizeable and above all, they absorb vast chunk of the
employable force. These sectors are estimated to account for roughly
one-fourth of GDP and one-third of the country’s labour force. Within the
non-farm sector, the importance of unorganized enterprises is much more
dominating. 3.
Earlier Attempts Attempts
were made in the past to bridge data gaps for informal sectors by both
central agencies and the states’ agencies. The first round of NSS
(1950-51) covered a non-agricultural enterprise survey. Such NSS surveys
have conducted regularly up to the eleventh round (1955-56). Subsequently,
selected activities were taken up for NSS surveys in 14th, 23rd
and 29th rounds. Population census 1971 covered establishment
schedules also. In 1971-73 a census of unorganized industrial units was
carried out. A small-scale industries survey was carried out in 1973-74 as a
first SSI census study. During the 4th five-year plan period
(1969-74), a survey on distributive trade was conducted by some states. But,
all such efforts to collect data on unorganized non-agricultural enterprises
have been partial and sporadic. It was acutely felt that an integrated
economic census of the unorganized sectors was essential to provide the
requisite information for planning purposes and computation of national and
regional accounts. 4.
Initiation of Plans for Economic Censuses The
Government of India decided in 1970 to launch a countrywide economic census
followed by surveys to ascertain the structural activities and performance
of unorganized segments of the non-agricultural sectors of the economy. The
survey was designed to seek information on the distribution of
establishments by location, activity and also estimates even at the district
level, on employment, value of inputs and output, investment, etc. for the
unorganized segments of each major sectors of the non-agriculture. The
initial plans did not take off the ground until the first coordinated
approach made by the Central Statistical Organization (CSO), GOI by
launching a plan scheme for ‘Economic Census and Surveys’ in 1976. The
scheme envisaged organizing countrywide census of all economic activities
(excluding those engaged in crop production and plantation) followed by
detailed sample surveys of unorganized segments of different sectors of
non-agricultural economy in a phased manner during the intervening period of
two successive censuses. The scheme envisaged conducting of economic
censuses periodically in order to update the frame from time to time to
capture rapid changes that occur in the unorganized sectors due to high
mobility and morbidity of small units and also on account of births of new
units. 5.
First Economic Census (EC-1977) and follow-up surveys As
part of the above plan scheme the first Economic Census was conducted
throughout the country except For
the purpose of Economic Census, an establishment is defined as a unit or a
household, which undertakes non-agricultural economic activities and employs
at least one hired worker on a fairly regular basis. Data on items such as
description of the nature of industry, number of persons usually working,
type of ownerships etc., were collected. In addition, data about basic
amenities available in the village were also collected. The
Economic Census was under taken during October-December 1977. The census,
the first of its kind, was under taken throughout the country except in The
Economic Census was a massive undertaking in which more than 2.5 lakh
enumerators and supervisors participated. The CSO with the technical support
of state statistical bureaus conducted it. As per the first Economic Census,
there were 3.18 million non-agricultural establishments with one or more
hired workers. The establishment usually employed 27.3 million persons of
whom 24.2 million or about 89 per cent were hired. Out of this,
establishments numbering 1.7 million or nearly 55 per cent were situated in
rural areas and they accounted for 10.9 million workers (40 per cent) with
9.7 million hired workers. Based
on the frame provided by the first Economic Census, detailed surveys
covering establishments engaged in manufacturing, trade, hotels and
restaurants, transport, storage and warehousing and services were carried
out in 1978-79 and 1979-80.NSSO 33rd and 34th rounds
covered surveys on smaller establishments employing less than 6 workers and
own-account establishments. Separate surveys were carried out for larger
establishments. Detailed information on enterprise, employment, capital
structure, quantity and value of input and output were collected. 6.
Second Economic Census (EC-1980) and follow-up surveys The
second Economic Census was conducted in 1980 along with house listing
operations of the 1981 population census. The scope and coverage were
enlarged and all establishments engaged in economic activities both
agricultural and non-agricultural, whether employing any hired workers or
not, was covered except those engaged in crop production and plantation.
Except For
the purpose of the second Economic Census (EC 1980), an enterprise was
defined as an undertaking engaged in production and/or distribution of goods
and/or services not for the sole purpose of own consumption. Agricultural
enterprise is defined as the one engaged in live stock production,
agricultural services, hunting, trapping and game propagation, forestry and
logging and fishing {corresponds to the major groups 02, 03, 04, 05 and 06
of National Industrial Classification (NIC) 1970]. Enterprises engaged in
agricultural crop production and plantation (codes 00 and 01 of NIC 1970)
was not covered. Enterprises engaged in all other activities are termed as
non-agricultural enterprises. The information on location, economic
activity, nature of operation, type of ownership, social group of owner, use
of power/fuel, and number of workers usually engaged with its hired
component and break-up of male-female workers etc. were collected. However,
certain items like years of operation, value of output and input, turnover
receipts, registered, licensed, recognized, etc., were dropped. The
industrial classification used in the EC 1980 for classifying the
enterprises is the expanded version of NIC–1970 brought out by the CSO
especially for the purpose. The
1980 Economic Census had revealed that there were 18.4 million enterprises
in the country excluding Based
on the frame thrown up by EC 1980, three follow-up surveys were conducted. A
survey on hotel and restaurants, transport, storage and warehousing was
conducted in 1983-84, and then on unorganized manufacturing in 1984-85,
and finally one on wholesale and retail trade in 1985-86. Economic
Census scheduled for 1986 could not be carried out. However, EC 1980 frame
updated during 1987-88 in 64 cities, which had problems of identification of
enumeration blocks and changes due to rapid urbanization. On the basis of
updated frame, four follow-up surveys were conducted in 1988-89,
1989-90,1990-91 and 1991-92 covering hotels, restaurants and transport,
unorganized manufacturing, wholesale and retail trade and medical education,
cultural and other services respectively. 7.
Third Economic Census (EC-1990) and follow-up surveys The
third Economic Census (EC-1990) was synchronized with house listing
operation of population census 1991 on the same pattern and coverage as EC
1980 with all states/UTs, except The
scope and coverage of the EC-1990 was finalized by a Technical Advisory
Group (TAG) represented by the Planning Commission, Office of the Regitrar
General and Census Commissioner, Ministry of Industry, Ministry of Labour,
National Sample Survey Organisation, Computer Centres for Department of
Statistics, Reserve Bank of For
the purpose of third Economic Census, an enterprise is an undertaking
engaged in production of goods and/or services not for the sole purpose of
own consumption. Own
account enterprise is an enterprise run by members of the household, without
hiring any worker on a fairly regular basis . An
enterprise run by employing atleast one hired worker on a fairly regular
basis is an establishment. Agricultural
Establishment : All enterprises which are in agricultural sector viz.,
livestock production, agricultural serices, hunting, trapping, forestry and
logging, fishing for the purpose of Economic Census. Enterprises engaged in
activities pertaining to agricultural production and plantation are not
included . Non-Agricultural
Enterprises: Enterprises engaged in economic activities other than
agricultural activities are termed as non-agricultural enterprises. These
are mining, manufacturing, gas, electricity, construction, trade, services,
etc. All
particulars relating to an enterprise were collected such as location of
enterprise, nature of operation, type of ownership, social group of owner,
power/fuel used for the activity, total number of persons employed with
hired workers (with break-up of male/female categories). The 3rd
Economic Census, 1990 had revealed that there are 25.0 million enterprises
excluding Based
on the frame thrown up by EC 1990, four follow-up surveys were carried out.
8.
Fourth Economic Census (EC-1998) and follow-up surveys Considering
the nature of large number of small units which are subject to high rates of
mobility and mortality and also to meet the demand of various user
departments, it was felt that Economic Census should be quinquennium in
nature so that an up-date and complete frame can be made available once in
five years for the conducting of
follow-up surveys. It was also felt necessary to assess the impact of
economic liberalization process on entrepreneurial activities of the country
and its monitor the sectoral changes, particularly the emergence of the
services sector. Technical Advisory Committees was formed, as in the third
Census, for finalizing the scope, coverage, concept and definitions. In this
fourth Census, complete enumeration of all agricultural and non-agricultural
entrepreneurial activities of both own account enterprises as well as
enterprises with at least one hired worker were carried out. The results
revealed that there are were 30.4 million enterprises in the country
employing 83.3 million workers. Of these, 17.7 million enterprises were in
rural areas employing 39.9 million persons. The fourth Economic Census was
planned during 1996, but due to various reasons, the scheme could be
launched in 1998. This Census also followed NIC 1987 classification. For
the purpose of fourth Economic Census, an enterprise is an undertaking
engaged in production and/or distribution of goods and or services not for
the sole purpose of own consumption. An
agricultural enterprise was defined as one engaged in livestock production
and agricultural services including hunting, trapping and game propagation,
forestry, logging and fishing (corresponding to 02, 03, 04, 05, and 06 of
Section 1 of NIC 1987). Enterprises engaged in activities pertaining to
agricultural production and plantation (Divisions 00 and 01 of Section 1 of
NIC 1987) is not considered as agricultural enterprise for the purpose of
Economic Census. Enterprises
engaged in economic activities other than agricultural activities (excluding
activities pertaining to agricultural production and plantation) are termed
as non-agricultural enterprises (corresponding to economic activities
covered by Section 1 to 9 and X of NIC 1987. An
An
enterprise normally run by members of the household without hiring any
worker on a fairly regular basis is an own account enterprise. Based
on the frame thrown up by EC 1998, five follow-up surveys were carried out.
9.
Fifth Economic Census (EC-2005) The
Fifth Economic census was conducted in 2005. However, quinquennial nature of
the census could not be given effect to. Overall responsibility for
organization and conduct of Economic Census rested with CSO. The DESs of
respective states and UTs were made responsible for conducting the fieldwork
and preparing the report concerning to their States. Scope
and Coverage
Fifth Economic Census covered all states and UTs. All economic activities (agricultural and non-agricultural) except that involved in crop production and plantation related to production and/or distribution of goods and/or services other than for the sole purpose of own consumption was covered. However,
as were done in earlier censuses, the following activities were kept out of
the purview of the fifth economic census. i)
Establishments of shelter-less and nomadic population, which
keep on moving from place to place and camp either without shelter or with
makeshift shelter. ii)
Establishments engaged in some activities like smuggling,
gambling, beggary, prostitution, etc. iii)
Domestic servants, whether they work in one household or in a
number of households and drivers, etc who undertake work for others on
wages. iv)
All wage-paid employees of casual nature. v)
Household members engaged in household chores. vi)
Mazdoors , masons, carpenters, working independently, etc. vii)
Household members working for other households and earning
some money, which is insignificant. viii)
Households depending only on remittances, rent, interest,
pension, etc. ix)
Owners of tube-wells, tractors, bullock carts, etc., who
utilize their spare capacity to earn extra money, if the spare capacity
utilization is occasional and not on regular basis. Committees
and Working Groups A
standing committee was constituted under the chairmanship of Director
General, CSO, to look into various aspects relating to the conducting of
fifth Economic Census. The members of the Committee included Registrar
General and Census Commissioner of Classification
of Activities Economic
activities are assigned 4-digit codes as per National Industrial
Classification (NIC) 2004. Concept
and Definitions An
institutional unit in its capacity as a producer of goods and services is
known as an enterprise. An enterprise is an economic transactor with
autonomy in respect of financial and investment decision-making, as well as
authority and responsibility for allocating resources for production of
goods and services. It may be engaged in one or more economic activities at
one or more locations. An enterprise may be a sole legal unit. Establishment The
establishment is defined as an enterprise or part of an enterprise that is
situated in a single location in which one or predominantly one kind of
economic activity is carried out. It is an economic unit under a single
legal entity. Own
Account Establishments (OAE) An
establishment without any hired worker or a fairly regular basis is termed
as an own account establishment. Members of the household normally run it Directory
Establishment An
establishment with hired worker employing less than six persons daily on a
fairly regular basis is termed as directory establishment. Non-Directory
Establishment
An establishment with hired worker employing less than 6 persons
daily on a fairly regular basis is termed as Non Directory Establishment Agricultural
Establishment Agricultural
Establishment is defined as one engaged in livestock production,
agricultural services, hunting, trapping and game propagation, forestry and
logging, fishing (corresponding to groups 012,013,014,015,020 and 050 of NIC
2004). Establishments engaged in activities pertaining to crop production
and plantation (group 011 of NIC 2004) is excluded from the coverage of
economic census. Non-Agricultural
Establishment Establishment
engaged in economic activities other than those carried out by agricultural
establishments are termed as non-agricultural establishment. Nature
of Operation If
the entrepreneurial activity is carried on through out the year more or less
regularly is treated as perennial activity. If the activity of the
establishment is confined to a particular season, the same is called the
non-perennial activity or seasonal activity. Power/Fuel
Used If
any or more sources of power/fuel are specifically used for carrying the
entrepreneurial activity (other than for lighting purpose or heating the
premises etc.) it is considered as power/fuel used. The different sources of
power/fuel considered are electricity, coal/soft coke, petrol/diesel, gas,
kerosene, animal power, non-conventional energy 9 bio-gas, solar and wind
energy) and others such as atomic power etc. Establishment using none of
these types of power/fuel are categorized as operation without power. In
case more than one type of power/fuel is used carrying out the
entrepreneurial activity the code will refer to the major source or on which
more expenditure is incurred. Number
of Persons usually working daily Number
of persons working daily in an establishment will include all persons
whether hired or not. Workers with age less than 15 are categorized as
children. Household members whether paid or not if engaged in any of the
activities carried out by the establishment are included. The data of
persons is a position in the last year for perennial establishment and last
working season for seasonal establishment. This also includes supervisors
and primary workers. A worker need not mean the same person is continued but
refers to a position. Part time workers are also treated as employees as
long as they are engaged on a regular basis. The
fifth Economic Census reveals that there are 41.83 million enterprises with
25.54 million in rural areas and 16.29 million in urban areas.
Non-agricultural enterprises accounted for 35.75 million, the agricultural
enterprises accounted for 6.08 million. Around 100.9 million persons, 52.1
million in rural areas and 48.8 million in urban areas are working in these
establishments. Agricultural enterprises provided employment to around 10.9
million persons at the same time non-agricultural enterprises provided
employment to around 90.0 million persons. 10
Strengths and Weaknesses of Economic Censuses Strengths (i)
Each Economic Census provides a sampling frame of first stage
units (village/urban blocks) for the conduct of follow-up enterprise surveys
on NAEs; (ii)
It also provides the count number of NAEs by broad industrial
activity and the corresponding number of workers engaged in such activities
at different geographical levels (and thus the areas, even at the sub-state
level, having concentration of enterprises of specific activities can be
easily identified with the help of EC); and (iii)
A directory of bigger units in terms of certain minimum number
of workers can be prepared for using as a list frame in the surveys on
enterprises. Weaknesses 1.
Absence of the conduct of economic census with regular time
interval is the major drawback. But,
according to G C Manna of National Sample Survey Organisation (NSSO),
Kolkata , the major limitation
of the Economic Census is that the number of enterprises, particularly the
number of own account enterprise, as per this source is much on the lower
side as compared to the estimate based on the follow-up survey (FS). In
other word, there is apparent under-listing of units in the EC. Number of
non-agricultural enterprises as per EC 2005 and FS were compared in Table
below. The data as per FS exclude (a) government/public sector units, (b)
directory trade establishments, (c) financial sector enterprises and (d)
factories covered under ASI. On the other hand Economic Census includes all
types of units including those listed above. Thus, the figure as per EC is
supposed to be higher than the aggregate estimate presented as per FS. But
it may be seen that the figure as per EC, even with the differences in the
coverage between the two sources, is about 22 per cent lower. Actual
percentage difference after adjustment for the differences in coverage would
be larger.
Summing
up the economic census is one of the major data source for gathering
information on non-organised sector enterprises. However, the
above-explained major weaknesses have to be overcome for a better
assimilation of information so that it will provide better insight to the
authorities for sectoral planning. *
This note has been prepared by R.Krishnaswamy Highlights of Current Economic Scene AGRICULTURE Food
Corporation of India (FCI) has purchased 26.4 million tonnes of rice so far
and requires another 1.1 million tonnes by September 2008 to meet the target
of the ongoing kharif marketing season of 27.5 million tonnes. This
shortfall in rice procurement is due to default in levy rice obligations by
the millers in The
centre has launched a new scheme for subsidised distribution of imported RBD
palmolein and soybean oil, under which allocation of 93,400 tonnes of edible
oil per month would be distributed to 24 States and
As
per the latest estimates of Central Organisation for Oil Industry &
Trade, late revival of rains may encourage oilseed farmers to extend kharif-sowing
upto the second week of August, so that they would recover the losses that
have been witnessed due to bad weather conditions. The uneven distribution
of rains has led to fall in the kharif sowing area by 1.65 per cent this
year. Barring soybean, the sowing area of almost all oilseeds have fallen
during this kharif season due to scanty rain, in the major oilseed producing
states of Maharashtra, Gujarat, Madhya Pradesh. The major losses have been
witnessed in the coverage of sunflower seed and groundnut, while the acreage
under soybean has risen significantly by 842,000 hectares. Sowings of
groundnut in Erratic
rainfall and rising food prices in Cooperative
sugarcane societies from Uttar Pradesh are all set for the approaching
2008-09 crushing season. These societies act as an interface between the
farmers and sugar mills and pay 3 per cent commission on the statutory
minimum price announced by the centre every year.
The societies have between 10,000 to 40,000 farmers as members. The
coverage under sugarcane in the state this year is estimated to shrunk
nearly by 25 per cent, which is likely to impact the profitability of these
societies. At present, there are 168 co-operative cane societies in UP, of
which 100 is expected to make some profit. Most societies based in the
western part of the state are financially healthy and eastern ones are
suffering. At present, UP is the largest and second largest sugarcane and
sugar producer in the country and this sector constitutes a major portion of
the state’s GDP.
According
to Solvent Extractors Association of India (SEA), oilmeal exports for the
month of July 2008, have increased to 4.61 lakh tonnes from 1.42 lakh tonnes,
due to good demand from the overseas countries like According
to a Rubber Board official, production of natural rubber from
According
to the data released by Council for Leather Exports (CLE), exports of
leather and leather products from the country have touched US $3.47 billion
(Rs 14,000 crore) in 2008-09 reporting a rise of 13.67 per cent in dollar
terms and 1.13 per cent in rupee terms. Exports of footwear, footwear
component and non-leather footwear, constituted 42.44 per cent of total
exports, and have increased from US $1236.91 million to US $1475.83 million,
registering a growth of 19.32 per cent. Southern regions from the country
has earned US $1398.49 million by contributing 40.22 per cent to the leather
and products export basket followed by the western regions earning US
$695.63 million with a contribution of 20 per cent, eastern region earning
US $517 million having a share of 14.89 per cent, northern region receiving
US $377.21 million with its share standing at 10.85 per cent, and central
region earning US $99.69 million contributing 2.87 per cent. Germany has
imported 14.05 per cent of the total leather and leather products shipment
from India, followed by Italy (13.78 per cent), the United Kingdom (11.91
per cent), the United States (8.82 per cent), Hong Kong (7.70 per cent),
Spain (6.10 per cent), France (5.64 per cent), the Netherlands (3.84 per
cent), UAE (2.14 per cent) and Australia (1.43 per cent). These 10 countries
have accounted for 75.41 per cent of total exports of leather and leather
products in 2008-09. The
Cabinet Committee on Economic Affairs (CCEA) has introduced new policy to
promote fresh investments for manufacturing urea on August 9, 2008. The key
provision of the policy is that the urea produced from capacity additions
due to revamp of existing units within 4 years from the current year onwards
can carry a price tag that is equal to 85 per cent of the international
parity price (IPP) at the end of fourth year. However, there would be a
floor and ceiling price of US $250 per metric tonne and US $ 425 per metric
tonne, respectively. The ailing public sector units of Fertiliser
Corporation of Prices
of world foodgrain have been eased considerably during the month of July
2008, due to improved crop prospects and supplies of wheat, corn (maize),
rice and soyabean and falling crude prices provided the trigger for
speculators to liquidate their long positions. As per the latest report by
London-based International Grains Council (IGC), world wheat production
during 2008-09 has been projected to be at 662 million tonnes, compared to
608 million tonnes last year, owing to higher acreage and improved weather
condition across the countries. World wheat consumption is estimated to
increase by 5 per cent to 639 million tonnes as against 610 million tonnes
last year, as wheat may get replaced some high priced corn in feed rations
of the US, Canada and EU. Stocks of wheat are expected to be at 144 million
tonnes, compared to 121 million tonnes a year ago. As for maize, the world
production is projected to be at 759 million tonnes as against 785 million
tonnes with US contributing to 295 million tonnes. Maize consumption is
projected to reach a record of 782 million tonnes, compared to 774 million
tonnes due to demand of maize for feed in emerging economies and for
industrial use (ethanol production) especially in the The
International Cotton Advisory Committee (ICAC) has reiterated that the
cotton exports from Industry The
General Index stands at 269.1, which is 5.4% higher as compared to the level
in the month of June 2007. The cumulative growth for the period April-June
2008-09 stands at 5.2% over the corresponding period of the pervious year. The
Indices of Industrial Production for the Mining, Manufacturing and
Electricity sectors for the month of June 2008 stand at 163.2, 289.8, and
217.1 respectively, with the corresponding growth rates of 2.9%, 5.9% and
2.6% as compared to June 2007. The
cumulative growth during April-June, 2008-09 over the corresponding period
of 2007-08 in the three sectors have been 4.7%, 5.6% and 2.0% respectively,
which moved the overall growth in the General Index to 5.2%. In terms of industries,
as many as ten (10) out of the seventeen (17) industry groups (as per
2-digit NIC-1987) have shown positive growth during the month of June 2008
as compared to the corresponding month of the previous year. The industry
group ‘Beverages, Tobacco and Related Products’ have shown the highest
growth of 22.3%, followed by 12.6% in ‘Transport Equipment and Parts’
and 11.5% in ‘Basic Chemicals & Chemical Products (except products of
Petroleum & Coal)’. On the other hand, the industry group ‘Other
Manufacturing Industries’ have shown a negative growth of 21.3% followed
by 9.8% in ‘Jute and Other Vegetables Fibre Textile (except Cotton)’ and
3.0% in ‘Food Products‘. As per Use-based
classification, the Sectoral growth rates in June 2008 over June 2007 are
2.9% in Basic goods, 5.6% in Capital goods and 2.9% in Intermediate goods.
The Consumer durables and Consumer non-durables have recorded growth of 3.5%
and 12.2% respectively, with the overall growth in Consumer goods being
10.0%. Infrastructure The
Index of Six core-infrastructure industries having a combined weight of 26.7
per cent in the Index of Industrial Production (IIP) (base 1993-94)
registered a growth of 3.5% (provisional) in May 2008 compared to a rise of
7.8 % in May 2007. During
April-May 2008-09, the growth of 3.5% (provisional) was almost half to that
of 6.9% during the corresponding period of the previous year. Crude
Oil production (weight of 4.17% in the IIP) registered a growth of 3.2% (provisional)
in May 2008 compared to a negative growth rate of
1.6% in May 2007. The Crude Oil production registered a growth of 2.1%
(provisional) during April-May 2008-09 as against a decline of 0.1% during
the same period of 2007-08. Growth
in Petroleum refinery production (weight
of 2.00% in the IIP) at 0.1% (provisional) in
May 2008 is miniscule compared to growth of 14.9%
in May 2007. The Petroleum refinery production registered
a growth of 2.1% (provisional) during April-May 2008-09 compared to 15.0%
during the same period of 2007-08. Impressive
growth of 8.3 per cent in coal (weight of 3.2% in the IIP) in May 2008
compared to growth rate 0.5% in May 2007 has been the only silver lining in
an otherwise bleak performance.. Coal production grew
by 9.3% (provisional) during April-May 2008-09
compared to an increase of 0.5% during the same period of 2007-08.
Electricity
generation (weight of 10.17%
in the IIP) registered a growth of 2.0% (provisional)
in May 2008 compared to a growth rate 9.3% in May 2007. Electricity generation
grew by 1.7% (provisional) during April-March
2008-09 compared to 9.0% during the same period of 2007-08. Cement
production (weight of 1.99%
in the IIP) registered a growth of 3.8% (provisional)
in May 2008 compared to 9.9% in May 2007. Cement
Production grew by 5.4% (provisional)
during April-March 2008-09 compared to an increase of 7.8% during the same
period of 2007-08. Finished
(carbon) Steel production (weight
of 5.13% in the IIP) registered a growth of 5.2% (provisional)
in May 2008 compared to 8.4% (estimated) in May
2007. Finished (carbon) Steel production grew by 4.5%
(provisional) during April-May 2008-09 compared to an increase of 5.6%
during the same period of 2007-08. Inflation The
official Wholesale Price Index for 'All Commodities' (Base: 1993-94 = 100)
for the week ended 26th July 2008 rose by 0.1 percent to 239.6 (Provisional)
from 239.3 (Provisional) for the previous week.
The
annual rate of inflation, calculated on point to point basis, stood at 12.01
percent (Provisional) for the week ended 26/07/2008 (over 28/07/2007) as
compared to 11.98 percent (Provisional) for the previous week. The annual
rate of inflation stood at 4.70 percent as on 28/07/2007 i.e. a year ago.
The
index for this major group rose by 0.1 percent to 247.9 (Provisional) from
247.7 (Provisional) for the previous week due to higher prices of moong ,
fish-marine, maize, condiments
& spices, castor seed, raw tobacco, copra, raw cotton, gypsum,
phosphorite fluorite and silica
sand. The
index of fuel, power, light and lubricants major group rose by 0.2 percent
to 377.0 (Provisional) from 376.3 (Provisional) for the previous week due to
higher prices of furnace oil (3%).
The
index for manufactured products major group rose by 0.1 percent to 206.1
(Provisional) from 205.9 (Provisional) for the previous week. The
index for 'Food Products' group rose by 0.1 percent to 212.8 (Provisional)
from 212.6 (Provisional) for the previous week due to higher prices of
gingelly oil (3%) and gur (1%). However, the prices of cotton seed oil (3%)
and groundnut oil (2%) declined. The
index for 'Textiles' group rose by 0.4 percent to 141.5 (Provisional) from
140.9 (Provisional) for the previous week due to higher prices of woollen
yarn (8%), woollen cloth (6%), hessian & sacking bags (2%) and cotton
yarn-'hanks (1%). The
index for 'Paper & Paper Products' group rose by 0.2 percent to 200.2
(Provisional) from 199.8 (Provisional) for the previous week due to higher
prices of printing paper white (1%). The
index for 'Chemicals & Chemical Products' group declined by 0.05 percent
to 222.0 (Provisional) from 222.1 (Provisional) for the previous week due to
lower prices of resins (all kinds) and acid (all kinds) (1% each). However,
the prices of caustic soda (sodium hydroxide) (1%) moved up.
The
index for 'Non-Metallic Mineral Products' group rose marginally to 215.5
(Provisional) from 215.4 (Provisional) for the previous week due to marginal
increase in the prices of cement.
The
index for 'Machinery & Machine Tools' group rose by 0.1 percent to 175.4
(Provisional) from 175.2 (Provisional) for the previous week due to higher
prices of batteries (7%) and ball bearings (1%).
For
the week ended 31/05/2008, the final wholesale price index for 'All
Commodities’ (Base: 1993-94=100) stood at 232.3 as compared to 231.1
(Provisional) and annual rate of inflation based on final index, calculated
on point to point basis, stood at 9.32 percent as compared to 8.75 percent
(Provisional).
Banking Indian
Bank is launching its special 'Micro State Branch' here exclusively for
women Self Help Group (SHG) members and other women customers to avail easy
banking services. Besides SHGs, general banking also would be carried out in
the Micro State Branch. The banking service would be given exclusively for
women in Dharmapuri. As the district administration was keen on enhancing
the revolving funds for SHGs, the new branch would support the members of
SHGs to promote their economic status through banking. Seeking
to cut down its operating costs and leverage from an expanded branch
network, private sector lender ICICI Bank has decided to source two-wheeler
loans only through its branches and not at the dealers’ end. Accordingly,
the bank has moved over 200 employees from its two-wheeler team to other
growth businesses such as auto loans, home loans and SME businesses. The
bank has doubled their branch network from 750 in 2007 to over 1,400 in
2008. The move to originate two-wheeler loans only from the branches would
provide the bank an “opportunity to get better quality of credit and
reduce the operating cost. Currently,
the bank's two wheeler loans constitute just about two per cent of its total
retail business portfolio and accounts for nearly Rs 2,000 crore. The
lender's total retail portfolio is more than Rs 1,30,000 crore. Vaidyanathan
said that retail banking has been the cornerstone of ICICI Bank's growth
over the last decade and its retail business balance sheet of 35-billion
dollars accounts for over 55 per cent of the bank's funded assets. Financial
Market Capital
Markets Primary
Market Resurgere
Mines and Minerals Ltd, engaged in the business of extraction, processing
and sale of mineral products and exploration and development of mining
assets, entered the capital market with an initial public offering (IPO) of
44.5-lakh equity shares of Rs 10 each. The issue opened for subscription
from August 11 to August 13. The price band has been fixed between Rs
263-272. On
August 6, Nu Tek India Ltd, a telecom infrastructure services provider, has
fixed the price of its IPO at Rs 192 per share. The company offered 4.5
million shares of Rs 10 each. The issue, which opened on July 29 and closed
on August 1, has been oversubscribed 1.63 times. The portion reserved for
Qualified Institutional Buyers (QIB), which included foreign institutional
investors (FIIs), subscribed approximately around 2.05 times, while the
non-institutional investor portion, which included corporates, individuals
and others, has been oversubscribed around 1.78 times. The retail investor
portion has been fully subscribed. An
alternate payment system will be launched on a pilot basis by August-end to
ensure that the retail investor’s money is not blocked if shares are not
allotted. The alternate payment system will exempt retail investors from
making full advance payment, and instead let the amount be parked in their
bank accounts till the completion of allotment. Under the scheme, the banks
will block the fund to the extent of bid amount, unblock once allotment is
finalised and transfer the amount for allotted shares to the issuer. Secondary
Market The
fall in crude oil prices to 3-month low, improvement in rainfall, return of
FIIs, high direct tax collections helped the Bombay Stock Exchange (BSE)
Sensex to close above crucial 15,000 mark. The inflation at 12.01 per cent
implying somewhat steady rate that enthused the market sentiments, with the
BSE Sensex gaining 511 points (3.49 per cent) to 15,167 on August 8. Even
the BSE Mid-Cap have gained and the index has risen by 244 points (4.33 per
cent) to 5,887, and the BSE Small-Cap index rose 201.64 points or 2.89 per
cent to 7,181.74. The NSE Nifty rose 115.95 points or 2.62 per cent to
4,529.50 for the week ended August 08, 2008. Among
the sectoral indices of BSE, most of the indices edged higher in the week
and closed in positive teritory. Bankex up 9.9 per cent, Auto up 8.58 per
cent, Realty up 5.96 per cent, Capital Goods up 3.58 per cent, Power up 1.48
per cent, IT up 2.26 per cent. The
BSE is all set to get foreign participation at the governing board level as
the Securities and Exchange Board of India (SEBI) is understood to have
approved BSE’s proposal to invite representatives of both its foreign
partners on its board. The Deutsche Bourse and the Singapore Exchange (SGX),
the two foreign allies, have 5 per cent equity each in BSE. The two foreign
bourses had picked up the stake last year as part of BSE’s 51 per cent
equity divestment to non-broker investors in order to achieve
demutualisation. BSE’s younger rival NSE already has NYSE-Euronext’s
representative on its board. Mr
A.P. Kurian, Chairman, AMFI, stated thet the Association of Mutual Funds in
India (AMFI) has initiated a study to form a common online platform, which
would facilitate investors and distributors in mutual fund transactions. The
association is also looking to simplify the process of application for
different mutual funds by introducing a common application form for all
asset management companies. The new system would take a few months to be
implemented. The
country’s accounting regulator the Indian Institute of Chartered
Accountants (ICAI), has asked SEBI to make companies conform to only those
accounting norms, that have been notified by the government and make changes
in the listing norms for facilitating domestic companies to adopt
international accounting standards to make the process of convergence to
international financial reporting standards (IFRS) easier for India
Incorporation. According to ICAI accounting standard board Chairman Amarjit
Chopra, there is a difference of approach between SEBI and the National
Advisory Committee on Accounting Standards (NACAS) in preparing financial
statements according to accounting standards. While SEBI asks companies to
prepare financial statements as per the accounting standards issued by ICAI,
NACAS is of the view that only government-notified standards should be
followed. The
latest step by SEBI chairman, CB Bhave to push through further reform in the
capital markets include focus on key reforms in the mutual fund sector. SEBI
will call a rare meeting of all mutual fund trustees, by the end of August,
to discuss their role in detail and areas of conflict. SEBI has also
appointed SA Dave, former chairman of Unit Trust of India and a highly
regarded personality in the financial sector, as chairman of its mutual
funds advisory committee. The panel will comprise leading names from the
funds industry and investor associations The mutual fund panel will be the
third of SEBI’s advisory committees, after those for the primary and
secondary markets. With
volatility still outbreaking the market and the debt market taking a hit due
to consecutive rate hikes, arbitrage funds have bucked the downward trend by
clocking positive returns. Almost all arbitrage funds have outperformed
their benchmark indices in the last six months. Arbitrage funds, as a
category, have yielded 3.03 per cent returns in the last six months, when
all other funds except pharma were mostly in the red. Pharma funds gave
returns of 6.86 per cent. UTI’s Spread Fund has been the best performer,
posting 4.26 per cent returns followed by HDFC Arbitrage and Lotus Arbitrage
with returns of 3.10 and 3.04 per cent, respectively. While Crisil’s
Liquid Fund Index posted a return of 2.26 per cent on an average, some of
these funds have returned more than 2.5 per cent. On
August 5, the SEBI made an amendment that the directors nominated by
financial institutions are eligible for employee stock options (Esops)
provided the director and nominating institutions sign an agreement on this
and a copy of it is given to the company. The move has taken by SEBI after
it received several cases after a grey area in the regulation led to
institutions forbidding nominee-directors from receiving Esops. KP
Krishnan, joint secretary in the ministry of finance said that the
government is likely to revisit the norms for venture capital funds and
talks have been held with the SEBI in this regard. Mutual
fund houses are pursuing retail investors aggressively with their short-term
fixed maturity plans (FMPs). Fund houses, which raised money through this
instrument, lowered the minimum investment limit from Rs 50,000 to between
Rs 5,000 and Rs 10,000 previous month. The target audience is depositors who
park their funds in banks’ fixed deposits (FDs). The
SEBI is looking at introducing a slew of modifications in its prescribed
regulations for art funds. It may consider art funds on a case-to-case basis
without mandating a blanket approval for all funds. In February, SEBI had
called for registration of art funds as they function as collective
investment schemes. “According to Section 12 (1B) of the SEBI Act, no
person shall sponsor or cause to be sponsored or cause to be carried on a
collective investment scheme unless he obtains a certificate of registration
from SEBI”. SEBI has issued notices to Yatra, Osian’s and Crayon’s art
funds for failing to comply with registration requirements. Some of these
funds responded by citing their establishment as private trusts for the
benefit of select and identifiable groups and not for raising money from the
general public. The regulator is expected to announce its verdict on the
issue soon. The
portfolio management services (PMS) segment is awaiting clarification in the
guidelines put out by the SEBI. The portfolio managers have sought
clarification in the market regulator’s recent norms, asking them to
maintain assets of each client separately and not in a pooled account. The
PMS managers have made a representation to SEBI, highlighting the
operational inconvenience in implementing the new guidelines. SEBI had given
a timeframe of six months for portfolio managers to fall in line with the
changed regulations. According to most brokers, it will take at least two to
three weeks for fund managers to deploy money into the market after shifting
to a non-pooled system. It is not easy to open demat accounts in remote
locations. Derivatives The
market ended with net gains after three sessions, which saw massive
intra-day ranges and little net movement. The Nifty has been up 2.63 per
cent week-on-week with a closing value of 4530 points. The Nifty future
showed strong resilience during intra-week. The Nifty August future, after
oscillating around the spot price throughout the week, managed to close the
week with a premium of about 18 points closed at 4548, marking a gain of
about 2.5 per cent. The Nifty volatility index or India VIX finished around
35; it has calmed down substantially, indicating positive bias of the
market. Advance decline ratios were positive and volumes were high in cash,
and futures and options (F&O) markets, though they tapered on the
weekend. The F&O segment generated high volumes and Open Interest (OI),
which has been not surprising given volatile trading with large intra-day
ranges. FII outstandings in the derivatives segment saw a decline in
aggregate to about 36 per cent of all outstandings from the normal levels of
about 40 per cent. This could be due to rumours that SEBI will revisit the
P-Note issue in its August 13 meeting. So far, August has been a good
settlement with plenty of action. It started with extremely high volatility
and the VIX at record levels. But the VIX has settled down and, although
intra-day ranges remain high, the overall trend has been positive. Index
futures are all trading at premiums to their respective underlyings, which
is one of several bullish signals. Even though the settlement has three
weeks to run, there is the promise of high carryover if one goes by ample
liquidity in September Nifty. There is practically no differential between
August and September Nifty contracts. The hedge ratios, that is, the ratios
of volume and OI generated by stock derivatives to the volume and OI
generated by index derivatives has risen quite sharply. The Nifty put-call
ratio (PCR) remains bullish as well. The August PCR in terms of OI is at
1.23 while the overall PCR is at 1.3. Option volume has expanded in all
segments. Government
Securities Market Primary
Market On
August 6, 2008, RBI auctioned 91-day and 182-day T-bills for the notified
amounts of Rs.3,000 crore and Rs.1,500 crore respectively. The cut-off
yields for 91-day and 364-day T-bills were 9.23 per cent and 9.30 per cent,
respectively. On
August 07, 2008, RBI has set rate of interest for floating rate bonds (FRB)
maturing in 2011 at 9.50 per cent per annum. The rate of interest is
applicable from August 8, 2008 to August 7, 2009. The
rate of interest on FRB 2015(II) applicable for the year August 10, 2008 to
August 9, 2009 has been set at 9.87 per cent. The
RBI re-issued 8.24 per cent 2018 and 7.95 per cent 2032 for Rs.6,000 crore
and 4,000 crore on August 8, 2008 at the cut-off yields of 9.14 per cent and
9.88 per cent, respectively. The amount of underwriting accepted from
primary dealers has been Rs 6,000 crore and Rs 4,000 crore, respectively,
from 10-year paper and 24-year paper. Secondary
Market Call
money rates in the weekend ended at 9.30 per cent due to the tight
conditions, on account of credit demand, were evident from the weekend
Liquidity Adjustment Facility (LAF) auctions. There were 29 bids at the
reverse repurchase window for Rs 32,720 crore. Bond markets rallied as
yields softened on the back of falling international oil prices. Yet,
inflation remained a major worry as the wholesale price index breached the
12-per cent mark. The ten-year YTM retreated to 9.15 per cent on a weighted
average basis, down from the previous week’s level of 9.31 per cent. The
daily trade volumes increased to over Rs 5,000 crore. Bid offer spreads also
narrowed during the week to about 10 basis points. But interest has been
largely driven by FIIs and insurance company purchases. FIIs inflows during
the week amounted to $215 million. Rising
bond yields and more flexible regulations have smoothen the way for the
return of FIIs to the local debt market. FIIs, who were nearly absent from
the debt market for most part of the year, have stepped up investments in
July. According to SEBI data, FIIs invested around $897 million in the debt
market in July, while in March, April, May and June; their investments have
been negative. FIIs’ outflows between March and June were around $928
million. FIIs had, however, started off the year on a positive note by
investing $484 million and $619 million in January and February,
respectively. The FIIs are now seeing a significant arbitrage opportunity in
debt investment SEBI
has allocated the unutilised limits for investment in Government securities
(G-Secs) and corporate debt to FIIs in the waitlist for such investments.
There are limits on debt investments by FIIs. Recently the Government
increased the cumulative debt investment limits by FIIs from $3.2 billion to
$5 billion; and from $1.5 billion to $3 billion for FIIS investments in the
G-Secs and corporate debt, respectively. Each registered FII has a
cumulative investment ceiling of $200 million in the G-Secs and corporate
bonds. Debt limits are allocated by SEBI to individual FIIs on a
first-come-first-served basis in June. As per a SEBI circular, the allocated
limits are not utilised by the entities by August 15, the same shall be
withdrawn and allocated to the entities lower down in the list of requests
received by the regulator. The
corporate bond market has seen a 30 per cent slowdown in trading as the high
interest rate and tight liquidity scenarios have dampened the resource
raising plans of financial institutions, banks and companies. With rising
corporate bond yields, traders prefer to stay off this market. Consequently,
volumes have fallen. Data from Clearing Corporation of India Ltd (CCIL)
shows a steep fall in volumes from Rs 9,500 crore in June to Rs 6,000 crore
in July. The short-term money market is buzzing with activity as companies
are preferring to raise funds for a smaller duration, even if it means
paying a little more, than borrowing long term. According to dealers, the
money market is facing tight liquidity conditions and interest rates have
gone haywire. While there has been no major long-term bond issue, barring
those from public sector companies, Power Finance Corporation (PFC) and
Rural Electrification Corporation (REC), most of the housing companies and
manufacturing units are raising funds through short-term papers that are
referred to as commercial papers (CPs).
While
interest rates for certificate of deposits (CDs) are ranging between 10.50
and 10.90 per cent, interest rates on CPs are 15-20 basis points higher than
the CD rates for corresponding maturities. Dealers at banks said many
companies that usually went for long-term funds have now have opted for
short-term money. The list includes Aditya Birla Nuvo (three months to six
months CP at 10.82-10.85 per cent), Vodafone (three-six months) and Tata Tea
(looking for funds for six months). Public sector oil marketing company
Indian Oil Corporation (IOC) is also raising funds for three months at 11
per cent instead of opting for a term loan. Bharat Petroleum Corporation (BPCL)
has raised three-month funds through loans that later got securitised into
pass-through certificates. Reliance Communications has also raised one-year
funds. Bond
Market During
the week under review, EXIM bank and Housing Development Finance Corp (HDFC)
Ltd tapped the market by issuance of bonds. EXIM bank issued bonds to
mobilise Rs 350 crores by offering 11.10 per cent for 3 years. Crisil and
Icra have rated the bond by AAA. HDFC Ltd issued bonds to mobilise Rs 400
crore by offering 11.15 per cent for 10 years. The bond has been rated AAA
by Crisil. With
state-owned oil marketing companies strapped for cash on account of selling
products at subsidised rates, the oil ministry approached the finance
ministry seeking oil bonds in advance for the second and third quarters of
the current fiscal 2008-09. The oil ministry has suggested that the second
and third quarter oil bonds be issued on the basis of the actual
under-recoveries in the first quarter of the fiscal. The ministry has also
sought to front-load the budgetary provision for these bonds in the first
supplementary demand for grants due to be presented in the upcoming monsoon
session of Parliament instead of staggering it over four demands raised
through the year, thereby reducing the need for frequent Parliamentary
approval. The finance ministry has also been asked to intervene and enhance
the credit limits of HPCL (by an additional Rs 2,500 crore) and BPCL (by an
additional Rs 3,000 crore) to enable them to sustain their operations till
September end this year. The oil ministry has also requested that the
consortium of banks lending to IndianOil’s Paradeep Refinery project
exclude the lending limit of Rs 20,000 crore from the single borrower limit
of 25-30 per cent. While the finance ministry is of the view that a sudden
rush of a large quantum of these bonds in the credit market would impact
their demand prospects. The
high interest rate scenario has led to a slowdown in Tier II bond issuances
by banks. Although the need for capital still exists, banks are putting off
raising capital for the time being, due to high yields. As per bankers and
analysts, issuances could pick up, again, by the fourth quarter, when there
could be an easing of rates. A senior official from the bank said that, they
are not planning to come out with the issue at current yield levels and will
wait for yields to come down and will wait till the December for issuing the
bonds. Foreign
Exchange Market The
rupee closed at Rs.42.20 per dollar on August 08, 2008 as compared with
Rs.42.37 per dollar as on August 01,2008. The Rupee moved between Rs.41.89
and Rs.42.40, with a standard deviation of 21 paise during the week. The
lower oil prices, which moved close to $112 a barrel, down about $30 a
barrel from the July 3 peak of $142 implied reduced dollar demand from
refineries for meeting their import payment obligations. This pulled the
rupee down. In the forward market, the 6-month premium closed lower at 4.32
per cent (4.59) and the 12-month ended at 3.50 per cent (3.74). The
SEBI has recieved proposals from three entities to set up currency futures
in the country. The BSE has applied to SEBI for setting up a currency
derivative segment. The RBI and SEBI issued the final guidelines for launch
of currency derivatives during the week. The SEBI is expected to clear the
applications of the BSE, the NSE and the Multi Commodity Exchange (MCX) for
starting currency futures at its board meeting on August 13. Trading in
currency futures will, however, become operational once the applicants
complete all formalities and put the software and the hardware in place. The
currency futures market will function subject to the directions, guidelines
and instructions issued by RBI. The SEBI will deal with issues related to
trading platforms, contracts, memberships, among others. At the initial
stage, currency futures will be permited in the US dollars and the Indian
rupee. The minimum contract size will be $1,000, which will be settled in
the domestic currency. Paving
the way for the commencement of exchange-traded currency futures in the
country, the RBI and the SEBI issued operational guidelines on Aug 7. The
circular lays down eligibility norms for existing and new exchanges and
their clearing corporations/houses, eligibility criteria for their members,
product design, risk management measures, surveillance mechanism and other
related issues. Initially, FIIs and non-resident Indians (NRIs) would not be
permitted to participate in the currency futures market. Domestic banks
would require prior permission from RBI to participate either in the
trading, clearing and settlement or other related segments of the trade.
Banks with a minimum net worth of Rs 500 cr and capital adequacy ratio of 10
per cent or more are eligible. They will need a three-year profit record and
net NPAs should be less than 3 per cent. Trading members, in case of
brokers, would require approved users and sales personnel who have
certification as applicable to exchange traded equity derivatives. At the
outset, the minimum size of the currency futures would be $1,000 and the
contract would be quoted in rupee terms. The settlement price would be the
RBI reference rate on the date of expiry. The gross open position of a
trading member across all contracts cannot exceed 15 per cent of the total
OI or $25 million whichever is higher. For banks, however, the gross open
position of a trading member, across all contracts, cannot be more than 15
per cent of the total open interest or $100 million, whichever is higher.
While an individual entering into a forward contract in over-the-counter
(OTC) deals agrees to transact at a forward price on a future date,
mark-to-market obligations would be settled on a daily basis in the case of
an exchange traded futures contract. Commodities
Futures derivatives National
Multi-Commodity Exchange (NMCE) in which Reliance Money picked up a 26 per
cent stake recently, is looking to a foreign partner to concede a minimum 5
per cent stake. According to Sudip Bandopadhyay, a member of the board of
governors of NMCE, also the director and chief executive officer of Reliance
Money, the stake sale will unlock more value for the exchange and boost its
knowledge capital. According
to Forward Markets Commission (FMC) Chairman B C Khatua, the Centre may not
extend the ban on the futures trading of soyoil, rubber, chickpea and potato
beyond September. He said that there were no linkages between the commodity
prices and ban on futures trading. While according to commerce secretary GK
Pillai, Centre may extend the ban on futures trading in four agricultural
commodities and expected to retain export curbs on rice and wheat for at
least three months. In May, agriculture minister Sharad Pawar had stated
that the ban on non-basmati rice exports would continue until November, by
when the government would know the output from the summer-sown paddy crop. According
to experts the proposed commodities transactions tax (CTT) has resulted in
rampant ‘dabba’ (illegal) trading in commodities. As per market
estimates, the dabba trading volumes top the combined volumes of official
trading. Dabba’ trades are dealings that happen outside the exchange
without any documentary evidence to relate such transactions. Analysts
estimate that the biggest dabba ‘bazar’ (market) is of guarseed, which
is traded up to 20 times more than that in the official mechanism. Jeera
comes second with an estimated trade of 7-8 times more than the volume
generated on commodity exchanges. Pepper and other agri commodities trade
4-5 times more. An
Icrier report said that, a higher transaction tax is likely to defeat the
very purpose of commodity markets by forcing farmers and hedgers to exit due
to greater cost. The study, released by economic think tank Icrier said that
international experience shows trading volume goes down either due to
increase or imposition of transaction tax. Further, no other major futures
trading markets have CTT. The report pointed out a negative relation between
high transaction cost and trading volume for five selected commodities —
gold, copper, crude, soyaoil and chana — and said higher the cost, greater
the volatility. Market
participants are in a view that, the suspension of the futures trade in
potato has taken away an opportunity to hedge the price risks from the
farmers, leaving them at the mercy of the local traders. Since the last
three years, when the futures trading was allowed in potatoes, farmers were
getting decent prices, but after the suspension farmers are at the mercy of
traders, Sanjit Prasad, vice president-business development, MCX said. The
impact of suspension has been extremely negative for the potato prices as
its production across the country has been extremely good. Corporate
Sector Toyota
Kirloskar Motor is planning for a small car project with at an investment of
Rs 1,400 crore. The company will be developing its compact car, which is
expected to be rolled out by 2010. In
one of the largest deals in the BPO space in Recently,
WNS (Holdings) had acquired AGS, the BPO arm of insurer Aviva, for $228
million. The deal is expected to be completed in the next 2-3 months. External
Sector Exports
during June 2008 had been US $ 14664 million as against US $ 11870 million
in June 2007 registering a growth of 23.5 per cent. As against this Imports
was valued at US $ 24452 million as against US$ 19424 million recording a
growth of 2.9 per cent. In
rupee terms, while export increased by 29.7 per cent , import rose by 32.2
per cent. As a result trade deficit was estimated at US $ 9789 million in
June was higher than the deficit at US $ 7554 million during June 2007. Oil
imports were estimated during June 2008 at US$ 9033 million
and non-oil imports at US $ 15420 million was 53.4 per cent and 13.9
per cent higher than that in last year Information
Technology Infosys
Technologies has commenced work on its second campus at Pocharam SEZ in Telecom The
Telecom Regulatory Authority of India (TRAI) has advised the information and
broadcasting ministry to stop the telecast of ESPN Star Sports channel. In a
tough act, the regulator is also going to independently charge sheet the
sports broadcaster under the TRAI Act. The development comes as the
regulator found repeated non-compliance by ESPN Star Sports to orders and
deviation from mandated rates that should be charged from carriage platforms
like DTH operators. A show cause notice was earlier served to ESPN, however,
TRAI found the reply unsatisfactory. The
Indian telecom sector will be witnessing another telecom reform as TRAI has
given green signal to the mobile virtual network operator (MVNO) model. Once
accepted by the Department of Telecommunications (DoT), the licensed telecom
service provider can re-sale their spectrum to MVNOs, who would then provide
direct services to consumers, like Virgin Mobile does now under a different
set up. However, to operate as an MVNO, a separate licence would be
required. The move would lead to many more players entering the telecom
space, leading to greater competition, lower tariffs and deeper tele-density.
There are over 360 direct and indirect MVNO’s worldwide. According to TRAI
recommendations, any Indian company can apply for an MVNO licence if it has
a net worth of Rs 10 crore for Metro/Category A, Rs 5 crore for Category B
and Rs 3 crore for category C service area, with a paid-up capital of 10 per
cent of the prescribed net worth and satisfies the licence conditions on FDI
and the like. An MVNO would be free to choose its business model. Typically,
a partial MVNO would offer services under its own brand without any
infrastructure and a full MVNO could set up its own HLR, The
official launch of the much-awaited Apple iPhone in CDMA
player Tata Teleservices has announced its GSM foray with an investment of
$2 billion (over Rs 8,000 crore). Of this $1.5 billion would be invested in
a nation-wide roll out of GSM service in the next two years. The remaining
half a billion would be spent on its CDMA service. The company is expected
to rollout GSM network in the six circles by the end of this financial year.
*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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