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Current Economic Statistics and Review For the
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The Central Statistical Organisation (CSO) has been conducting Economic Censuses (EC) periodically since 1977; the latest, fifth in this series, has been conducted in 2005. Normally, these censuses cover all states and UT’s. The Economic Censuses also encompass all enterprises, whether they are tiny, small, medium or big, irrespective of whether they are in the private sector or public sector or in co-operative sector. As expected, the Economic Censuses does not cover enterprises engaged in crop production and plantation. This note, the eighth in the series of notes dealing with different aspects of data collected through Economic Censuses, mainly reviews with information grouped under non-agricultural activities. Here, it may be recalled that in our earlier notes also, we have had some brief discussion on the agricultural (narrowly defined) as well as non-agricultural activities the Economic Census studies.
2. Grouping of Enterprises All information about different activities sought to be obtained under the Economic Censuses conducted by the Central Statistical Organisation (CSO) has been grouped into two major activity groups, viz., agricultural activities and non-agricultural activities. Non-agricultural activities have been further classified into 17 categories in the 2005 Census following the National Industrial Classification 2004 (NIC 2004). Earlier Economic Censuses had followed NIC prevalent at that time; thus, EC 1980 had followed an expanded version of NIC 1970 brought out by the CSO specifically for the purpose. EC 1980 gave information regarding 11 major economic activities. Data on wholesale and retail trade have been given together, but data on transport and storage & warehousing were given separately. As per NIC 1987, the economic activities covered have been grouped into 13 major groups; the activity group trade is further sub-divided into retail and wholesale trade. Here also data on transport and storage & warehousing were given separately. The same NIC classification has been followed by the CSO to group the activity data collected during EC-1990 and EC-1998 and thus EC-1990 and EC-1998 had thirteen major groups each.
NIC 2004 has given additional data for sales, maintenance and repair of vehicles. Data on wholesale and retail trade have been given separately here also. It also gives separate data for financial intermediation, which was included in the major group finance, real estate and business services in the earlier Economic Censuses. Moreover, the major group ‘community, social and personal services’ has been categorized into: i) public administration, defense, compulsory social security; ii) education; iii) health and social works; and iv) other community, social and personal service activities. However, in EC 2005, transport and storage & warehousing are combined into one. Communications data include postal, telegraphic, wireless and signal communications, telephone communications and communication nec. Thus for a broad comparison of the data generated by different censuses, some group activities have had to be combined; the list of combined group activities has been presented in Table 1.
3. Limitations 1. As explained above, different ECs have followed different NICs prevalent at the time of conducting the Census studies for grouping different economic activities. Thus, there can be some differences in the method used in grouping different economic activities of the enterprises. However, these differences do not make any noticeable differences at the major group level. 2. Economic Censuses have to be conducted in all states and Uts. But due to some unavoidable circumstances EC 1980 did not cover Assam, and since EC 1990 was synchronized with the house listing operation of decennial Population Census 1991 and that was not done in Jammu and Kashmir and hence Economic Census 1990 also did not cover Jammu and Kashmir.
4. Growth of Enterprises An enterprise is an undertaking engaged in production and/or distribution of goods and / or services not for the sole purpose of own consumption.
The fifth Economic Census 2005 reveals that there were 41.8 million enterprises spread over rural and urban India, with 61.1 per cent of total enterprises numbering 25.5 million engaged in their economic activities in rural areas and 16.3 million forming about 38.9 per cent conducting their business activities in urban areas. It can be seen from Table 2 that the annual growth rate (CAGR) was the fastest between 4th and 5th Economic Censuses ( i.e., 1998 and 2005) at 4.7 per cent. It can also be seen that the CAGR more than doubled in case of enterprises in rural areas between 1998 and 2005 as compared to that between 1990 and 1998. Urban enterprises have also witnessed growth but at a slower pace as compared to that in rural area. However, the overall growth during the 25-year period has been more or less the same (around 3.3 per cent) in both urban and rural areas.
5. Non-Agricultural Enterprises – A Snapshot View
An enterprise engaged in economic activities other than agricultural activities (excluding activities pertaining to agricultural crop production and plantation) is termed as non-agricultural enterprises. These economic activities correspond to the activities
enumerated in Table 1. The Census results pertaining to non-agricultural enterprises have been given in Table 3. It can be seen from this table that in 2005 there were 35.75 million non-agricultural enterprises in the country as against 16.90 million such non-agricultural enterprises in 1980. In rural areas, there were 19.83 million non-agricultural enterprises forming 55.5 per cent in 2005 as against 9.9 million non-agricultural enterprises in 1980, but their share in 1980 has been 58.4per cent, which fell to 55.5 per cent in 2005. The overall growth rate (CAGR) in non-agricultural enterprises at 4.2 per cent between 1998 and 2005 has been more than double that between 1990 and 1998. At the back of this trend, if one examines the trend by considering the share of non-agricultural enterprises in total enterprises, it can be seen that the share of non-agricultural enterprises has been witnessing a continuous decline from 92.0 per cent in 1980 to 85.4 per cent in 2005. But this decline in share has occurred only in rural areas (from 88.3 per cent in 1980 to 77.6 per cent in 2005), while the share in urban areas has been more or less same over the years. All this means is that whatever the growth in all enterprises, especially in rural areas, it has happened in agricultural sector ( other than crop production and plantation).
6. Own-Account Non-Agricultural Enterprises
Own-account enterprises are enterprises normally run by members of the households without hiring any worker on a fairly regular basis.
Table4 shows details of own-account non-agricultural enterprises as revealed by different Economic Censuses. In 2005, there were 21.8 million own-account non-agricultural enterprises. Out of these 13.3 million own-account non-agricultural enterprises accounting for about 61 per cent were functioning in rural areas and the remaining 8.5 million in urban areas; as against these there were 12.2 million own- account non-agricultural enterprises in 1980 with 7.6 million enterprises in rural areas and 4.6 million in urban areas. At this level, the own-account non-agricultural enterprises grew at a CAGR of 2.4 per cent during the 25-year period ending 2005. Thus, the long term growth rates both among rural and urban enterprises have been more or less the same’ but over phases the urban growth has consistently decelerated, while the rural growth has accelerated. The share of own-account non-agricultural enterprises in total non-agricultural enterprises have been registering continued decline from 72 per cent in 1980 to 69 percent in 1990, to 68 per cent in 1998 and then to 61 per cent in 2005. This declining trend has been seen both in rural and urban enterprises. The declining trend has also seen in the share of own-account non-agricultural enterprises to total own account enterprises. There has been a sharp decline between 1980 to 2005 among rural own-account non-agricultural enterprises. However, in case of urban enterprises, there has not been much change in their share to total own-account enterprises.
7. Establishment with Hired Workers - Non-Agricultural Enterprises
Enterprises run by employing at least one hired worker on a fairly regular basis is termed as Establishments with Hired workers for the purpose of Economic Censuses. Table 5 shows the details of non-agricultural establishments with hired workers according to different Economic Censuses. There have been 13.9 million non-agricultural establishments with hired workers in 2005, with 6.6 million (47.1 per cent) spreading over in rural areas and 7.4 million (52.9 per cent) doing their activities in urban areas. As against this in 1980, there were 4.7 million such establishments, with 2.3 million (48.5 per cent) working from rural areas and 2.4 million (51.5 per cent) established their roots in urban areas. Thus, there has been a 3-fold increase in total non-agricultural establishment with hired workers during the 25-year period with rural and urban areas witnessing almost the same kind of rise. The overall CAGR during the 25-year period works out to be 4.4 per cent with the latest 1998-2005 period witnessing an unprecedented growth rate of 7.1 per cent with a still sharper growth of 8.2 per cent in rural non-agricultural establishments with hired workers and the urban only lagging behind with 6.3 per cent growth. The share of non-agricultural establishments with hired workers in the total non-agricultural enterprises steadily increased from 28.0 per cent in 1980 to 39.0 per cent in 2005. The establishments both in rural and urban areas have exhibited similar rising trend implying that establishments with hired workers have been gaining importance. Table 4 also throws some light on the share of non-agricultural establishment with hired workers in the total establishments with hired workers. It can be seen from them, that such share was steady at 95-96 % between the earlier censuses but it recorded a sharp decline between Census 1998 and Census 2005. Again while there has been no change in the share of urban non-agricultural establishments with hired workers that in rural areas witnessed four percentages fall from 92 % to 88%. * This note has been prepared by R.Krishnaswamy
Highlights of Current Economic Scene Agriculture Procurement of rice by Food Corporation of India (FCI) and state agencies have slated to touch a new record to 137.81 lakh tonnes during the ongoing marketing season as against 111.72 lakh tonnes a year ago because of an additional hike over and above the minimum support price (MSP). It is predicted if procurement would take place at this rate then it would touch to 284.93 lakh tonnes. Millers and private dealers have bought just 8.16% of the total paddy from the arrivals in the mandis of Punjab as against 18.49% of the previous year. While in Haryana it has been 15.86% as against 31.67% a year earlier.
Food Corporation of India (FCI), government’s grain procurement and distribution agency is expected to have record grain procurement of 51 million tonnes comprising 28.5 million tonnes of rice and 22.68 million tonnes of wheat, respectively. Upto 1 December 2008, stock of total foodgrains (wheat and rice) in the central pool is reported to be around 35.2 million tonnes comprising 15.6 million tonnes of rice and 19.6 million tonnes of wheat, respectively. This is around 96% more than the last year's corresponding stock of 18.4 million tonnes, and more than double the buffer stock norms of 16.2 million tonnes. Foggy weather conditions in the state of Gujarat would hit quality of Wheat and Jeera crops. As per the data available by Rajkot district agriculture department, acreage under wheat and jeera has increased by 15-20% during this year in the regions of saurashtra and Kutch. Edible oilseeds and oil prices are likely to rise by 20% in 2009 due to rising demand for palm oil. According to the latest estimates by Germany based leading publication ‘Oil World’ reveals that crude palm oil would surge by 33% to $ 660 per tonne in the first half of calendar year 2009. Cotton Corporation of India (CCI) has procured 4 million bales so far during this year, i.e., four times higher than last year. This rise in procurement was reported due to aggressive buying by CCI, owing to which exporters, ginners and textile industry players were not able to hoard cotton to a large extent. Ginning industry is hit badly firm cotton prices. Nearly 70% to 80% of the total 4,000 ginning and pressing units in the country are almost non functional as ginner could not afford to buy cotton at such a higher prices. The central government has allowed sugar mills to export sugar without obtaining prior permission from the food ministry beyond the extended deadline of 31 December 2008. Experts opine that government has extended the period for making shipments without release order because the country is having a large opening stock of 11 million tonnes of sugar. As per sugar industry estimates exports for the first two months of the new marketing year that began on 1 October 2008 is reported to be at 52,000 tonnes as against 450,000 tonnes during the same period a year ago. White sugar shipments have taken place this marketing year at an average price of $375 per tonne. According to latest report by Religare Commodities, potato output from the country is estimated to rise to 30 million tonnes in 2008, 15% higher than last year’s production of 26 million tonnes. This increase in output would be due to favourable climate conditions. As per the report, the area under potato this year has risen from 1.719 million hectares as compared to 1.570 million hectares a year ago. Uttar Pradesh has maintained its position as the largest producer of potato. This year it has been expected that the state would produce 11.8 million tonnes in an acreage of 0.545 million hectares with an average yield o 21.67 kgs. The other major producers of potato are West Bengal, Bihar, Punjab, Madhya Pradesh, Gujarat and Assam. Food and Agriculture Organisation (FAO) of United Nation reiterated that potato would be the next staple food for the people in Africa and Asia. Spice Board reiterated that exports of spices during April-November 2008 has registered 6% growth in volume terms and 15% in value terms over the previous year. Total exports have been estimated at 310,830 tonnes valued at Rs 3,450.50 crore ($ 742.95mn) as against 294,335 tonnes, valued at Rs 3,010.25 crore ($ 742.95mn) last year. Spice oils and oleoresins including mint products contributed 42% of export earnings. While Chilli contributed 21% followed by cumin by 8%, pepper by 8% and turmeric by 5%. About 73% of the target of 425,00 tonnes and 79% of the targeted value of Rs 4,350 crore have been achieved in the first eight months of fiscal. Ginger and black pepper has suffered a serious setback on the export front, as there has been 46 % and 33% drop in volume. Exports of sesame seeds is expected to hit badly due to higher domestic prices of sesame seed, coupled with ongoing economic crisis. Exporters estimates that sesame seeds exports would drop by 50% during March- April 2008-09. Erratic weather conditions have slashed onion output of the summer-sown crop owing to which prices of onion in the country have doubled since last two month. Maharashtra the biggest onion producing state has been delayed the output due to scanty rainfall during the planting phase. International pepper community (IPC) predicted that global pepper supply would be lower than demand due to shrinkage in pepper cultivating area as well as the poor weather and disease outbreak in countries like India, Brazil and Indonesia. Outbreak of bird flu in eastern regions of India failed to hit soya meal prices in domestic market, as exports demand determines the meal price. Prices of oilmeal are currently hovering around Rs 13,200 per quintal while it has been stable since 1 December 2008. The state government of Orissa has imposed a ban on imports of poultry from West Bengal. As per the figures provided by the Marine Products Export Development Authority (MPEDA) country exported 297,901 tonnes of seafood products valued at Rs 4,552.18 crore ($1070.22 million) during April-October 2008 as against 295,375 tonnes valued at Rs 4559.36 crore ($1121.27 million) during the corresponding previous year. Seafood export industry is likely to struggle for survival as leading markets like US and Europe has cut down their consumption. Exports of Seafood to US market has decline by 17% (in rupee terms) while Europe has witnessed a drop of 6% during April-October 2008-09, as against the corresponding period of the previous fiscal. Shrimp exports account for more than 50% of the total exports in volume and value. Export of shrimp has fallen by 6% in volume and 15.5 % in value during the first half of 2008-09. Inflation The annual rate of inflation, on point to point basis, stood at 6.61 percent (Provisional) for the week ended 13/12/2008 (over 15/12/2007) as compared to 6.84 percent (Provisional) for the previous week (ended 06/12/2008) and 3.84 percent during the corresponding week (ended 15/12/2007) of the previous year. The index for primary articles major group rose by 0.1 percent mainly due to rise in the prices of fish-marine, wheat, barley, bajra, groundnut, castor seed, copra etc. Index of fuel, power, light and Lubricants remained unchanged at its previous week's level of 332.1 (Provisional). The index for this major group manufactured products declined by 0.3 percent to 201.7 (Provisional) from 202.4 (Provisional) for the previous week due to fall in prices of groundnut oil, oil cakes etc. For the week ended 18/10/2008, the final wholesale price index for ‘All Commodities’ (Base: 1993-94=100) stood at 238.6 as compared to 238.3 (Provisional) and annual rate of inflation based on final index, calculated on point to point basis, stood at 10.82 percent as compared to 10.68 percent (Provisional) reported earlier vide press note dated 31/10/2008
Financial Market Developments
Capital Markets
Primary Market On 24 December 2008, Fortis Healthcare Ltd, approved raising funds worth Rs 1,000 crore through a rights issue of shares with warrants by May-June of 2008, to fuel expansion plans and repay its debts. According to a Fortis statement, the amount of Rs 1,000, which is to be raised, excludes the value of the warrants, which will be exercised if and when funds are needed.
The crestfallen stock market and the negative sentiment have dented the private equity investments. The private investment in public equity (PIPE) deals have seen an erosion of $2.24 billion in 2008 and qualified institutional placement (QIP) deals have seen an erosion of around $2.35 billion. According to a study by SMC Global Securities, the overall poor condition has seen the mark-to-market losses swell in 2008. Of the total PIPE deals in 2008 was $5.29 billion, the current mark-to-market values has slid to $3.05 billion. It was observed that around 92% of the PIPE deals done in 2007 have turned negative thanks to the buoyant market in 2007 which saw valuations soar. And this was immediately followed by a tremendous slide. Out of the total 63 deals, as many as 56 have turned negative and only five deals or 8% are positive. The five deals that registered positive gains include three from banking and financial services sector, one from telecom and one from manufacturing sector. In 2008, the fund raising activity through the QIP route has reduced to $0.53 billion as against $5 deals that were closed in 2007, representing an 86% drop. There have been only four deals in 2008 as compared to 29 deals that were cut in 2007. The total volume raised through QIPs from 2006 till date aggregated to $6.59 billion. The current mark-to-market value of the same has fallen to $2.31 billion representing current return of -65%. In the QIP zone, real estate deals have caused the highest amount of pain as values have diminished by 86% the engineering and construction comes a close second with a 76% value dip, the report says. Companies like Ansal, GMR, Phoenix Mills, Peninsula Land, Mahindra Lifespaces, Suzlon are amongst the biggest losers in terms of the mark-to-market value erosion.
Secondary Market Key benchmark indices edged lower in the week ended Friday, 26 December 2008, reversing gains in the preceding two weeks. Global economic uncertainties and concerns about corporate earnings weighed on the market ahead of next month's Q3 December 2008 earnings reporting season. The market slipped on all the four trading sessions of the truncated week. The BSE Sensex lost 771 points or 7.6% to 9,329 over the week. The BSE Mid-Cap fell 157 points or 4.8% to 3,107 and the BSE Small-Cap index slipped 196 points or 5.2% to 3,549 in the week. Both these indices outperformed the Sensex. The S&P CNX Nifty slipped 220 points or 7.2% to 2857 in the week. Among the sectoral indices of BSE, all the indices under performed over the week. Profit booking has been seen in most of the interest sensitive sectors like real estate, bank and auto. Pharma stocks lived up to their reputation of being a defensive play and were the least hit.
Derivatives The market crashed in the lead up to the last settlement of the year. The year ended with a low volume settlement and traders abandoning positions as the market fall. The carryover has been lower than normal amidst heavy FII selling. The Nifty future failed to sustain the rally last week. It ended sharply lower, dipping well below the crucial 3000-mark to end at 2866.35. However, it still continues to rule at a premium to the spot, which closed at 2857.7. While trading volumes remained on the lower side throughout the week, it dipped to Rs 24,153.9 crore on Friday, the lowest so far in 2008 (not including the Muhurat day volumes). Rollover of open interest (OI) positions to January month series remained normal for both index and stock futures. The Nifty put call ratio (PCR) in terms of OI is at around 1.1 and the overall PCR is also around 0.87. India VIX or Volatility Index, which had weakened quite a bit in the recent weeks, made sharp turnaround. It climbed above 40-point mark once again and closed the week at 45.16. The cumulative FII positions as a percentage of the total gross market position on the derivative segment as on December 26 stood at 35.98 per cent. Foreign institutional investors were predominantly net sellers during most part of the week. They now hold index futures worth Rs 6,987.03 crore (Rs 9,850.01 crore) and stock future worth Rs 10,113.15 crore (Rs 12,314 crore). Their index options holding declined sharply to Rs 5,499 crore (Rs 15,310.2 crore).
Government Securities Market Primary Market The Reserve Bank of India (RBI) auctioned 91-day Treasury Bills (T-Bills) and 182-day T-Bills for the notified amounts of Rs 500 crore each, on 24 December 2008, with the cut off yield of 5.04% and 5.10%, respectively. The government on 23 December 2008 issued bonds worth Rs 22,000 crore to compensate oil-marketing firm for selling fuel at administered prices. It issued bonds valued at Rs 11,975.51 crore to Indian Oil Corporation, Rs 4,693.73 crore to Hindustan Petroleum Corporation and Rs 5,330.76 crore to Bharat Petroleum Corporation Ltd. The Government of India have announced the issue of ‘6.20% Fertilizer Companies’ Government of India Special Bonds, 2022’ for Rs. 4,000 crore (nominal). The Special Bonds are being issued at par to 16 Fertilizer Companies (list enclosed) as compensation towards fertilizer subsidy during the current financial year on 24 December 2008. Six state governments auctioned 10- year paper maturing in 2018, for the notified amounts of Rs 4,595 crore on 23 December 2008. The cut off yields ranging between 6.34-6.45 per cent, with highest for Bihar and lowest for Jharkhand. On 26 December 2008, the finance ministry announced the auction of Rs 10,000 crore of bonds through a multiple price auction on January 2, 2009. Of this, Rs 6,000 crore worth of bonds will have a coupon rate of 7.46% and will mature in 2017. Another tranche of bonds amounting to Rs 4,000 crore will be auctioned by the RBI with an interest rate of 7.40% maturing in 2035.
Secondary Market Inter bank call rates eased slightly compared with the previous weeks high of 6.7%, steadying in the range of 6.10-6.50% amidst adequate liquidity conditions. The reversal for bonds that started late in the preceding week extended at the beginning of the week- the Ten-year yield rose to 5.74% from 5.47% previous week. However, bonds bounced back in fag end trading boosted by low inflation. Ten-year yield ended at 5.61%. Liquidity remained comfortable. At the weekend Liquidity Adjustment Facility (LAF) auction, recourse to the reverse repo window amounted to Rs 24,105 crore from 14 bidders. Recourse to the repo window was only Rs 3,400 crore.Trade volume averaged about Rs 11200 crore during the week or about Rs 2,000 crore more than equity turnover in the National Stock Exchange. The positive sentiment was also apparent from the thin bid offer spreads of barely 5-10 basis points. Corporate advance tax collections dipped by 22.4% to Rs 42,600 crore in the quarter ending December 15, 2008, over the third tranche of 2007, indicating that most companies are bracing for a drop in their profitability this year due to the global economic downturn adversely impacting India’s growth prospects. In sharp contrast, the third tranche of advance tax payments in 2007 saw a 30% rise yielding Rs 54,900 crore in revenue. The drop in the third quarter collections has hit the exchequer’s overall advance tax collections—corporate advance taxes up till December 24 this year were 2.6% lower than last year at Rs 1,13,000 crore.
Bond Market
Punjab National Bank is planning to raise raise Rs 500 crore from tier II bonds to meet its capital requirement. The bond will be raised from Upper Tier II Bonds Series VI through private placement.
Foreign Exchange Market The local currency had the biggest weekly decline in more than a month as the global economic slump and stock losses prompted investors to pare their local holdings. The rupee has been the worst performer among 10 most active currencies outside Japan during the week, as a finance ministry report showed the economy may expand at the lowest pace since 2003. The currency ended a very volatile week and fell 2.55% over the week to Rs 48.45 per dollar, and extended this year’s loss to 18.6%. Non-deliverable forward contracts showed trders increased bets for further weekness in the rupee. One, three, six and twelve month premia firmed to 6.26 per cent (5.73 per cent), 5.01 per cent (4.59 per cent), 3.42 per cent (3.19 per cent) and 2.39 per cent (2.28 per cent). Three month forward premia widened to 5.19 per cent from 3.9 per cent in view of the high differential between the Federal Funds and the domestic call money ratesThe country’s foreign exchange reserves rose $3.6 billion to $254.1 billion for the week ended December 19.
Currency Derivatives A majority of traders, importers and exporters of commodities including bullion and non-ferrous metals have submitted a plea for extended trading hours in currency futures in a bid to meet the challenge posed by the NDF (non-deliverable futures) market. Currency futures at national exchanges currently trade between 9 am and 5.30 pm. As per trade sources, trading should be extended to 11.30 pm to cover the closing of London and New York currency markets on lines similar to the hours granted to the trading of commodities futures at national commodity exchanges. The restriction of trading hours till 5 pm would be restrained for the importers and exporters who may have to take pricing decisions during the late hours. The move will provide an efficient price discovery compared to the OTC market and NDF markets, after the closing hours of trading in the country. OTC and NDF markets also run counter party risks of settlements since such off-market deals do not fall under any regulation.
Commodities Futures derivatives Forward Markets Commission (FMC) has directed the members of the national commodity exchanges not to indulge in any portfolio management services, portfolio advisory services and such other services either directly or indirectly to its clients for investment in commodities futures contracts. The commission has not formulated any guidelines for investment advisory services by any entity. In its written directive to the national exchanges regulator said, “The Commission has been receiving a significant numbers of complaints containing allegation of widespread prevalence of portfolio management services (PMS) by the members of national exchange. The FMC had already informed national exchange that PMS is not permitted. Since this practice still appears to be prevalent among some members, it is requested that a general warning be issued to the members against offering PMS to clients”. The government’s half-hearted approach to commodity futures trading has again come to the fore with the Centre again failing to consider a bill to amend the Forward Contract (Regulation) Act (FCRA), 1952 in the winter session of parliament following disagreement among various political parties. The amendments would have allowed commodities market regulator the FMC to function as an independent regulator for the commodity markets and exchanges, similar to counterpart SEBI’s role in respect of the securities markets. As per media sources, the bill has been pushed into cold storage till the next session and will be placed for consideration before Parliament in the Budget session. Apart from giving more powers to the FMC, the amendments would have also paved the way for allowing options trading in commodities. The Centre had issued an ordinance in May to amend the FCRA Act, but the ordinance lapsed subsequently as parliament could not provide approval to the bill. According to junior finance minister Pawan Kumar Bansal, India has no plan to ban futures trading in any more commodities, as the Abhijit Sen committee could not establish any definite causal relationship between futures trading and the rise in prices of commodities. Nearly a month after the government lifted the suspension on futures trade in refined soy oil, potato, rubber and chana, an analysis indicates that the price trend is being driven by fundamental factors like demand and supply. At the Multi Commodity Exchange (MCX) on 26 December the potato (Tarekeshwar) contract for March 2009 dropped to Rs 425 a quintal from Rs 477 per quintal registered on 4 December, the day when trading resumed while at the National Commodity and Derivatives Exchange Ltd (NCDEX), it was at Rs 495 per quintal. Since the lifting of the suspension of futures trading on rubber, futures prices for March 2009 have risen marginally to Rs 6,850 per quintal against Rs 5,981 per quintal registered on December 4. In case of chana, prices went down to Rs 2,048 per quintal for MCX January 2009 contracts while the commodity traded at Rs 2,226 per quintal at the MCX on February 2009 contracts. At the NCDEX, chana February futures contracts traded at Rs 2,025 per quintal. NCDEX has decided to introduce two international bullion futures contracts, for gold international and silver international respectively from 29 December. These will be transparent international price hedging contracts in rupees for importers and bullion traders. Gold international contracts expiring in January and March 2009 would be available for trading on 29 December 2008. Silver international contracts expiring in February, April and June 2009 would be also available for trading on December 29. The final settlement price for gold contracts will be calculated on the last trading day based on international spot prices and at RBI reference rates. The international spot price will be added by as one US dollar bank premium and then will be multiplied by 32.15 to calculate the equivalent of the per kg price from the value per ounce. The limit of the daily price fluctuation will be (+ or -) 4% for gold and (+ or -) 6% for silver. Power Exchange India (PEX), promoted by NSE and NCDEX, has approached the Central Electricity Regulatory Commission (CERC) with a plea that MCX-promoted Indian Energy Exchange (IEX) be restrained from introducing, selling, marketing or otherwise dealing in any manner with electricity futures contracts. They should be restrained from introducing any products whether termed as futures contracts or any other contracts that involve dealing in trading. PEX has also made the FMC as a respondent apart from MCX and IEX. MCX has already sought FMC’s permission to start electricity futures contracts. Infact, PEX has questioned the FMC’s jurisdiction to deal with electricity.
Banking The RBI has advised the state and central co-operative banks to ensure that loan application forms, in respect of all categories of loans irrespective of the amount of loan sought by the borrower, are comprehensive and all information relating to fees or charges, if any, payable for processing, the amount of such fees refundable in the case of non-acceptance of application, pre-payment options and any other matter which affects the interest of the borrower, are invariably disclosed in the loan application forms.
Corporate Cairn India has discovered oil and gas in the Raageshwari East 1/1Z well, in Rajasthan, which is the company’s first exploration well in its 2008-09 exploration programme. The discovery is located approximately 15 km east of the Raageshwari 1 well, in the southern part of Mangala. Cairn India is currently focusing exploration and production in 14 blocks in the country. The North India-based construction company Jaiprakash Associates (JPA) announced that it has approved the amalgamation of Jaypee Cement (JCL), Gujarat Anjan Cement (GACL), Jaypee Hotels (JHL) and Jaiprakash Enterprises (JEL) with itself. The amalgamation will be effective from April 1, 2008. As per the scheme of amalgamation the investors of Jaypee Cement would get one share of JPA (of Rs 2) for every 10 shares held and the same ratio would be applicable for JHL and JEL as well. Similarly, shareholders of GACL would get one share of JPA for every 11 shares held. This comes at a time when the company was struggling to meet tough conditions posed by the liquidity crunch and also the slump in the real estate and construction sector. Piramal Healthcare has signed an agreement to acquire Minrad International Inc of the US, a provider of generic inhalation anesthetics, for the total consideration of $40 million. With the acquisition, the combined entity will be the third largest in the $1 billion inhalation anesthetics space in the world, after the likes of big player like Abbott and Baxter. The funds will be raised through internal accruals and debt. Reliance Infrastructure the infrastructure arm of Anil Dhirubhai Ambani Group has bagged the four laning of Gurgaon-Faridabad road and up-gradation of Ballabgarh-Sohana road on Build Operate and Transfer (BOT) basis. The project involves construction of a total 166 km road length on high-density traffic zone. Bharat Heavy Electrical Ltd (BHEL) has bagged two orders for the supply and installation of the main plant equipment for the 1,000 mw in Maharashtra. The contracts have been placed to BHEL by NTPC for setting up the 2500 mw steam generator and steam turbine generator packages in the Nagpur district. FMCG major Dabur India announced its entry into the malted food drink (MFD) market with the launch of its new health drink ‘Dabur Chyawan Junior’ across the country. The company said hopes to capture about 10 per cent share of the Rs 1,900 crore MFD market within the next two years. Tata Motors announced a three-day block closure of its plant at Pimpri-Chinchwad effective from December 29, 2008. The shutdown will be in force in the commercial vehicles section, while work in the passenger vehicles section will continue normally. Kirloskar Brothers has opted for a block closure for 10 days at its production unit at Dewas, MP from December 25, 2008 to January 4, 2009. This block closure is temporary, to adjust the production as per demand.
Information Technology Satyam Computer Services has been barred from business with the World Bank. 'Fox News' has reported on its website that the World Bank had banned Satyam from its related business for a period of eight years from September. Wipro had agreed to buy Citi Technology Services Ltd for $127 million in cash and would sign a six-year service agreement worth at least $500 million. The deal done through Wipro Technologies, is expected to close in March 2009. Citi Technology Services is the India-based captive technology services unit of Citigroup.
Telecom The government is going to make it easy for mobile virtual network operators (MVNOs) to enter the country. The Department of Telecommunications (DoT), which is in the process of finalizing a policy to this end, has decided to grant licenses to prospective MNVOs before they tie-up with any telecom service provider. Analysts opined that if MVNOs were granted licenses prior to any formal tie-up with a service provider, it would tilt the scale in favour of MVNOs while negotiating with the service providers. The MVNO route is likely to see the entry of international players who either find the alternative routes too expensive or are unable to enter via the 3G route owing to the limited number of slots available for auction. Currently, world over there are 360 MVNOs.
*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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