Highlights of  Current Economic Scene

The central government is planning to make a record purchase of 24 million tonnes of wheat during the year starting from 1 April 2009 as against 22.68 million tonnes procured a year earlier. This would be undertaken just to boost the incomes of local farmers and to increase stocks in inventories. It is predicted that augmentation in stocks would force the central government to end a three-year ban on exports of wheat.

Food and Agriculture minister stated that sugar production in the country is likely to fall to 16.5 million tonnes during the current crop year, showing a decline of 10 million tonnes from 26.3 million tonnes produced last year. It is projected that country would import nearly 2 million tonnes of sugar this year, so that it would meet the gap between production and domestic demand.

The central government officials have estimated that procurement of wheat for 2009-10 crop marketing season starting from 1 April 2009 would be around 24 million tonnes. This improvement would be due to hike in the minimum support price (MSP) (Rs 80 per quintal) and expected bumper harvest. Stocks of wheat in the central pool as on February 1, 2009 is reported to be around 16.77 million tonnes, while that of rice has been estimated around 20.19 million tonnes.

Lower supplies of sugarcane leading to premature closure of many mills during this year has brought the central government under pressure to announce a significant jump in the statutory minimum price (SMP) of the sugarcane crop that be crushed in 2009-10 sugar season (October-September). Commission of Agricultural Costs and Prices (CACP) has recommended the central government to increase cane prices to Rs 125 per quintal, up from Rs 81.18 in the current season.

The state government of Maharashtra has decided to lift 20,033 tonnes refined, bleached and deodorized palmolein stocks lying in the government owned state trading corporation of India .

National Agricultural Cooperative Marketing Federation (Nafed) had invited bids to sell 2,000 tonnes imported refined bleached and deodorized palmolein at Kandla and Mangalore or Pradip port. Minnimum bid quantity is reported to be around 200 tonnes or multiple of 200 tonnes but parties can also bid for the entire offered quantity.

According to the data available with Indore-based Soybean Processors Association of India (SOPA), exports of soymeal between October and January 2008-09 touched Rs 3,066.33 crore while, in volume terms; shipments have stood at 1.97 million tonnes. India had exported 4.88 million tonnes of the animal feed worth Rs 7,332 crore in 2007-08.

As per managing director of Maharashtra State Co-op Sugar Factories Federation Ltd, half of Maharashtra 's sugar mills have close their operations of crushing due to lower cane availability. During the current sugar year, 145sugar mills in the state started their operations, of which 70 had closed down and remaining would shut by end of the season i.e. by end of March 2009.

According to estimates by South Indian Sugar Mills Association (SISMA), mills in Karnataka are likely to crush 16.5 million tonnes of sugarcane during the current season (October 2008 to September 2009), about 40% less than last year. The shortage is seen mainly on account of changes in the crop pattern by the farmers owing to lower price realisation during the last sugar season and diversion of cane towards jaggery production this year. Owing to shortage of cane, sugar mills are likely to suspend their crushing operations at least 2-3 months ahead to the scheduled closure. Sugar production from the state is likely to drop by 41% to 1.7 million tonnes during the year as compared to that of last year.

According to the International Cotton Advisory Committee (ICAC) report, world cotton trade is expected to decline by 21%, taking it to the lowest volume since 2001-02.  While compared to the five-year average of 33%, only 28% of the world cotton production would be exported in 2008-09. India - the second largest cotton producer as well as exporter is likely to ship 8.75 lakh tonnes of cotton this year (August to July 2009).

Spices exports have risen by 17% in value terms and 5% in volume terms in April-January 2008-09 period as compared to the same period of last fiscal 2007-08. India exported 3,72,125 tonnes of spices and products valued at Rs 4,275.11 crore (US$ 956.75 million) during the same period as against 3,54,875 tonnes valued at Rs 3,645.32 crore ($904.11 million) in the corresponding period a year earlier. Seed spices like coriander and cumin have recorded considerable jumps in exports due to failure of crops in other countries. Exports of value-added products like curry powder, oleoresins and oils have shown an upward trend in both volume and value terms. Exports of pepper and garlic have declined in terms of both volume and value during the period, while chilli, ginger and mint products have declined only in volume terms.

The state-owned-Coffee Board has reiterated that coffee exports from the country have declined by 4% for the period of April-February 2008-09. Coffee shipments during the period January-February 2009 have declined by 11.5% to 28,156 tonnes. But, coffee exports have gained in value terms, up by 12% to US$460.8million because of higher global prices. President of All India Coffee Exporters’ Association has stated that coffee production from the country would fall to 250,000 tonnes in the coffee year started from 01 October 2008; lower by 26600 tonnes from 276,600 tonnes estimated by the board in its earlier estimation.

Consumption of natural rubber has dropped by 10% at 66,000 tonnes in December 2008 and 5.7% at 67,000 tonnes in January 2009. The overall increase in consumption during April-January period of 2008-09 is just 1.8% as against 5% during the same period of last financial year. This reduction in consumption is due to import of truck and bus (T&B) tyres. It is expected that nearly 80,000 tonnes of rubber would reach country by way of direct import in 2008-09. So, the total import would be around 115,042 tonnes by the end of fiscal 2008-09. Total exports of rubber are estimated to touch 50,000 tonnes giving a net import of 65,042 tonnes in the current financial year.

Tobacco exports from the country have surged by around 39% to reach Rs 25.61 billion in the first 10 months of this fiscal as against Rs 15.73 billion during the same period last year. This increase is due to sharp rise in prices of the commodity at international level and weakening of rupee against dollar. In volume terms, tobacco exports comprising raw tobacco and its products have risen by 12% to 1,83,605 tonnes between April 2008 and January 2009 from 1,64,117 tonnes in a year-ago period. Indian tobacco prices hit a new high in the international market last year due to shortfall in output in some of the major producing countries, including China .

Industry

Index of Industrial Production registered a decline of 2.0% over the month resulting in the cumulative growth for the period April-December 2008-09 to reach 3.2% much below to that registered during the corresponding period of last year.

The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of December 2008 stand at 186.0, 298.6, and 223.1 respectively, with the corresponding growth rates of 1.0%, (-) 2.5% and 1.6% as compared to December 2007. The cumulative growth during April-December, 2008-09 over the corresponding period of 2007-08 in the three sectors have been 3.0%, 3.3% and 2.7% respectively, which moved the overall growth in the General Index to 3.2%.

In terms of industries, as many as seven (7) out of the seventeen (17) industry groups (as per 2-digit NIC-1987) have shown positive growth during the month of December 2008 as compared to the corresponding month of the previous year. The industry group ‘Other Manufacturing Industries’ have shown the highest growth of 21.7%, followed by 9.0% in ‘Beverages, Tobacco and Related Products’ and 7.6% in ‘Metal Products and Parts, except Machinery and Equipment’.  On the other hand, the industry group ‘Jute and Other Vegetable Fibre Textiles (except cotton)’ have shown a negative growth of 66.4% followed by 20.0% in ‘Wood and Wood Products; Furniture and Fixtures’ and 17.9% in ‘Transport Equipment and Parts’.

The Sectoral growth rates in December 2008 over December 2007 are 1.7% in Basic goods, 4.2% in Capital goods and (-) 8.5% in Intermediate goods. The Consumer durables and Consumer non-durables have recorded growth of (-) 12.8% and (-) 0.1% respectively, with the overall growth in Consumer goods being (-) 2.7%.

Infrastructure

The Index of Six core industries having a combined weight of 26.7% in the Index of Industrial Production (IIP) with base 1993-94 stood at 247.4 in December 2008 and registered a growth of 2.3% compared to a growth of 3.2% in December 2007.  During April-December 2008-09, six core-infrastructure industries registered a growth of 3.5% as against 5.9% during the corresponding period of the previous year.

Crude Oil production (weight of 4.17% in the IIP) registered a growth of (–) 0.3% in December 2008 compared to a growth rate of (-) 1.4% in December 2007. The Crude Oil production registered a growth of (-) 0.5% during April-December 2008-09 compared to 0.3% during the same period of 2007-08.

Petroleum refinery production  (weight of 2.00% in the IIP) registered a growth of 3.0% in December 2008 compared to growth of 1.9% in December 2007. The Petroleum refinery production registered a growth of 3.7% during April-December 2008-09 compared to 7.5% during the same period of 2007-08.

Coal production (weight of 3.2% in the IIP) registered a growth of 9.4% in December 2008 compared to growth rate of 8.4% in December 2007. Coal production grew by 10.1% during April-December 2008-09 compared to an increase of 3.5% during the same period of 2007-08.

Electricity generation (weight of 10.17% in the IIP) registered a growth of 0.7% in December 2008 compared to a growth rate of 3.9% in December 2007. Electricity generation grew by 2.6% during April-December 2008-09 compared to 6.6% during the same period of 2007-08.

Cement production (weight of 1.99% in the IIP) registered a growth of 11.6% in December 2008 compared to 4.4% in December 2007. Cement Production grew by 7.0% during April-December 2008-09 compared to an increase of 7.7% during the same period of 2007-08.

Finished (carbon) Steel production (weight of 5.13% in the IIP) registered a growth of (-) 0.8% in December 2008 compared to 1.8% in December 2007. Finished (carbon) Steel production grew by 2.7% during April-December 2008-09 compared to an increase of 6.4% during the same period of 2007-08.

Inflation

Wholesale Price Index for ‘All Commodities’ (Base: 1993-94 = 100) for the week ended 14-February- 2009 fell by 0.1 percent over the week.

The annual rate of inflation, calculated on point-to-point basis, came down to 3.4%   as compared to 3.9 percent during the corresponding week of the previous year.

A minor up thrust in the price index of major group primary articles was due to increase in the prices of iron ore etc.

Price index of fuel, power, light and lubricants remained stationary.

The index for major group manufactured products declined by 0.1 percent . In this major group prices of food products, chemicals, and many steel items registered declines.

The final wholesale price index for ‘All Commodities’ for the week ended 20 December 2008 stood at 229.2 as compared to 230.2 and annual rate of inflation based on final index, calculated on point to point basis, stood at 5.9 percent as compared to 6.4 percent.

Financial Market Developments

Capital Markets

Primary Market

The Securities and Exchange Board of India (SEBI) has made due amendments to the SEBI (Disclosure and Investor Protection) Guidelines, 2000. These amendments include the enhanced validity period of observations from three months to twelve months for the issuers in case of the initial public offer (IPO) documents. The benefit of extended validity period would be available to all the observations letters whose validity period has not expired on 4 December 2008. In line with board decision, SEBI has issued a circular stating that every issuer shall be required to file an updated offer document with the regulator, highlighting all changes made in the document, before opening of the issue.

Secondary Market

The markets ended with marginal gains despite a lot of negative global cues. The BSE Sensex found support around January’s low of 8,632, before ending the week with a marginal gain of 48 points at 8,892. Markets got some positive news in the form of tax (excise as well as service) cuts announced by the government to revive demand. Government also announced measures to cheer up export-related sectors like leather, textiles, gems and jewellery. The markets seem to have taken the disappointing domestic GDP numbers (5.3% growth y-o-y in Q3FY09) in their stride and ended up marginally higher. The NSE Nifty grew 27 points or 1% to 2,763. The only point of consolation for the markets was the falling inflation numbers which touched a14-month low at 3.36%. The Defty was down 0.89% as the rupee crashed to a historic low of Rs 50.73 per US dollar.

Among the sectoral indices of BSE, auto stocks moved up on duty cuts and IT stocks gained as rupee slid to over Rs 51 per dollar. Reality stocks lost the most during the week due to continuing concerns on retail demand and lack of action on the interest rate front. The government’s announcement of higher expenditure and tax breaks over the past few weeks have led to concerns on hardening of government securities yields and put pressure on the banking stocks. The Bankex has underperformed the market since 16 February with a decline of 11.6% compared to 4.5% fall in the benchmark BSE Sensex.

Instanex Capital Consultants, which compiles the Skindia GDR index based on global depository receipts of Indian companies, has launched Instanex FII index, which is based on the top 15 stocks in the portfolio of FIIs. The stocks are also part of the 30-scrip BSE Sensex and the NSE Nifty. The top 15 companies included in the index have stock future listed in India, 20% weightage to single scrip, 30% to industry and over 30% holding of principal shareholder in that company. The FII holdings in these 15 stocks is more than one-third of the total floating market capitalisation. Whenever the FII index underperforms the benchmark index, the trading data posted by BSE and NSE at the end of the day show a net seller status for FIIs.

Derivatives

The week was lacklustre for Nifty traders as the bellwether was confined to a very narrow range despite it being the settlement week for February contracts. Trading volume jumped to Rs 50,142.32 crore in the F&O segment as February month contracts expired. The Nifty future moved in narrow band between 2787-2675 and closed the week at 2730. The rollover numbers, after many months, managed to stir interest. After witnessing rollover in the range of 64-68% for quite some time, Nifty future saw a higher rollover of 76% this time around. Market wide rollover at 75%, however, was lower when compared with previous occasions. The March future ended at 2767 and added over 60 lakh shares in open interest (OI). Most of the accumulations were during the closing hours and were on the long side, indicating positive bias of the market. The March series will have new lot size. In all, 243 stocks’ lot size was increased by 2 to 14 times. Puravankara Projects market lot was increased by 14 times to 7,000 from current 500. The revised market lot for Reliance Industries is 300 against current lot size of 75. Among the Nifty March options, Nifty 2700 put and 2800 call were the most active. While put saw writing activity, the call witnessed fresh accumulations, suggesting traders are mildly bullish on market. The Nifty has fallen below a key support-resistance level at 2,850 and unable to test it in five subsequent sessions. The OI in the March futures of Bank Nifty rose over six times from 146,500 shares to 972,700 shares. The trading in Bank Nifty options was seen at 3,800 put (Rs 150 premium) and 4,000 call (Rs 124 premium). The Bank Nifty already has significant liquidity in the April series and Nifty and CNXIT futures positions have expanded satisfactorily. The implied volatility has eased down along with the historical volatility and the VIX is lower at 40. The historical volatility (HV) over the past three weeks has been considerably lower than the average HV over the past year.

FIIs have been net sellers for 10 sessions in succession and that is unusually long. Their exposures in derivatives have spiked to over 41% of all OI and that may be significantly higher than their average exposures of 37-38%. FIIs have tended to be consistent sellers through the early part of recent settlements.

Index futures traded at significant discounts to respective underlyings on the weekend. Short-covering ahead of the weekend in the last half-hour was responsible for the cash market’s recovery. Futures discounts could signify bearishness. On Monday, the underlyings and futures will align more closely and it could mean a bigger drop in the cash market rather than a large rise in futures. Incidentally, if the rupee does lose more ground, a long CNXIT looks almost as good a hedge as a long USD. The put-call ratio is bullish. About 66% of Nifty option OI is in March and the near-month PCR in terms of OI is at 1.7, which is quite bullish. The overall PCR (in terms of OI) is at 1.4, which is also bullish.

Government Securities Market

Primary Market

The Reserve Bank of India (RBI) re-issued 7.46% 2017, 8.35%2022 and 7.5%2034 papers for the notified amounts of Rs 7,000 crore, 3,000 crore and Rs 2,000 crore, respectively on 24 February 2009. The cut off yield for the 8-year paper, 13-year paper and 25-year paper was set at 6.98%, 7.50% and 7.75%, respectively.

On 25 February 2009, RBI auctioned 91 day T-Bills and 364 day T-Bills for the notified amounts of Rs 5,000 crore and Rs 3,000 crore, respectively. The cut-off yields for the 91-day and 364-day T-Bills was set at 4.75% and 4.65%, respectively.

Ten state governments auctioned 10-year paper maturing in 2019 for the notified amounts of Rs 12,759.11 crore. The cut-off yield for these securities was set in the range of 7.59-7.98%, being highest for Jammu& Kashmir and lowest for Meghalaya.

Secondary Market

Bonds gained strongly on rate cut speculation. While yield on the old 10-year benchmark 8.24% paper maturing in 2018 fell 14 bps to 6.34%, the new benchmark 6.05% paper expiring in 2019 ended 13 bps lower at 6%. When yields fall, prices rise. RBI has announced another buyback of dated government securities worth Rs 6,000 crore with a green-shoe option of Rs 3,000 crore through an auction on March 5. The government will raise Rs 12,000 crore by selling three kinds of bonds to finance its additional expenditure. About Rs 8,000 crore would be raised through a paper carrying a 6.05% coupon rate and maturing in the year 2019, while Rs 2,000 crore would be mopped up by bonds, fetching 8.24% returns on maturity in 2027. In addition, the government would raise Rs 2,000 crore through a paper carrying 6.83% coupon rate and maturing in 2039. The government had recently announced that it would go for extra market borrowings to the tune of Rs 46,000 crore this fiscal to meet extra expenditure on account of stimulus packages among other things. In the Interim Budget, the government has further projected its net borrowings to increase from Rs 2.61 lakh crore this fiscal to Rs 3.08 lakh crore.

Bond Market

During the week under review, two FIs/ Banks, one corporate, one state undertaking and one central under taking tapped the market through issuance of bonds.

A finance unit of India 's Mahindra & Mahindra Ltd plans to sell bonds worth 69.25 billion rupees ($1.4 billion) to help fund buyers of its utility vehicles and tractors, the company said. Mahindra & Mahindra Financial Services Ltd will issue the bonds in one or more tranches and the terms will be finalised closer to the date of issuance, it said in a statement to the Bombay Stock Exchange late on Wednesday. Crisil rates the company's long-term debt as 'AA+' with a negative outlook and short-term debt is rated 'P1+'. Fitch rates the company's subordinated debt as 'AA+( ind )' with a stable outlook.

Foreign Exchange Market

The rupee entered uncharted territory on 27 February, breaching the 51-mark against the US dollar. The currency ended the day at Rs 51.16 per US dollar. The dollar rallied sharply on Friday, hitting a three-month high versus a basket of currencies, traders worried about weak European stock markets and banking sector. Domestic dealers are mostly taking leads from the movement of the dollar in international markets for trading.

India ’s foreign exchange reserves declined by $165 million in the week ended February 20. As on this date, the reserves, as per the Reserve Bank of India ’s Weekly Statistical Supplement, stood at $249.527 billion.

Commodities Futures derivatives

Despite the global economic meltdown, domestic commodity exchanges recorded a 21.79% growth in turnover in February 2009. Though the total business in agri commodities plunged by 29% to Rs 50,830 crore the total turnover in non-agri commodities, including base metals, precious metals, oil and gas, sharply shot up by 32.63% to Rs 4,30,967 crore in February 2009 as compared to Rs 3,24,937 crore in the corresponding period last year. The three national commodity exchanges — the Multi Commodity Exchange (MCX), the National Commodity & Derivatives Exchange (NCDEX) and the National Multi Commodity Exchange (NMCE) — recorded a turnover of Rs 4,81,797 crore in February this year as compared to Rs 3,95,602 crore in the corresponding month last year.

Commodity markets regulator Forward Markets Commission (FMC) will shortly ask one of its empanelled chartered accountant firms to conduct a complete audit of NCDEX’s financial accounts. The move to conduct an audit assumes significance in the light of the fact that the commission raised concerns over the financial condition of the leading agri bourse in the order. The order quashed a circular of 28 January by which NCDEX reduced its transaction fee structure by nearly 98%.

The FMC has taken a serious note of the mismanagement of financial affairs and diversion of funds made by the NCDEX in the dealing and utilisation of the Settlement Guarantee Fund (SGF) which has violated regulatory rules. The regulator also noted that NCDEX’s SGF had slipped below the minimum amount of Rs 5 crore as prescribed in the exchange’s own bylaws. The fund size was reduced to just Rs 5.05 lakh as on December 31 from Rs 24.87 crore between March 2004 and March 2006. In a recently released order, the regulator has pointed out that the amount has dropped to as low as Rs 5.05 lakh as of 31 December 2008, from Rs 24.87 crore a few years ago. FMC stated that interest income earned from members’ margins accrued to SGF, which is drawn upon in the event of default by a trading member, guarantees the settlement of exchange trades. SGF comprises the base capital contributed by its members in the form of bank guarantees, bank deposits and securities, cash and interest earned on members’ deposit receipts. The fees for brokers who trade on the exchange were sought to be reduced from an average Rs 3.46 per lakh of trade to Re 0.05 per lakh. The order quashed the circular on the ground that it was neither in the interests of the exchange nor that of the commodity markets. The order dated 19 February came exactly two weeks after the Bombay high court dismissed a writ petition filed by NCDEX that challenged FMC’s right to stay the former’s circular on fee reduction. The high court directed FMC to deal with the matter in two weeks from the date of its judgement on 5 February. Following this, FMC sought details from NCDEX, and in an appearance before the former, the exchange’s MD Mr Ramaseshan said that while NCDEX could suffer a loss of Rs 9 crore, as a result of the reduction in transaction charges, it hoped to make that up by a 30-35% increase in traded volumes.

Crude oil futures on the national exchanges jumped up smartly during the week end, as gasoline prices set the premium over heating oil, supported by Opec members eyeing more output cuts at the March meeting. Copper futures gained some ground during the week on speculation that Chinese demand will come. Gold and silver futures remained subdued on some sell-offs. MCX crude oil April 2009 contracts ended higher at Rs 2,384 per barrel on Friday over the previous week's close of Rs 2,091 per barrel, up by 14%. MCX copper April 2009 contracts recovered sharply and traded higher by 8.6% at     Rs 176.35 per kg on Friday from Rs 162.35 over the previous week. MCX gold April 2009 contracts reacted at the higher level and quoted at Rs 15,457 per 10 gram on Friday over the previous week's Rs 15,661 per 10 gm, down by 1%. Gold was under pressure from ongoing profit taking, after its hurdle above $1,000 an ounce during the week. MCX silver March 2009 contracts were traded lower at Rs 21,807 per kg from Rs 22,970 over the previous week, down by 5% in line with the yellow metal.

Sugar spot and futures prices dropped sharply on 24 February on fresh sell-off by speculators after the central government decided to empower states to impose stock and turnover limits on wholesale sugar trade. Sugar futures on the NCDEX fell nearly 4%, while spot prices at the Vashi wholesale market dropped by around Rs 50 per quintal. On 23 February, Union home minister P Chidambaram told reporters after a Cabinet meeting that the government has approved the imposition of stock and turnover limits to check rising prices and improve availability of sugar.

Jeera spot and futures prices may remain steady-to-firm over the next few days on increased offtake by upcountry traders supported by lower carryover stocks and shortfall in the new crop expected in Gujarat . Jeera March 2009 contracts at the NCDEX were traded at Rs 11,240 a quintal on 26 February. Jeera June 2009 contracts prices on 25 February resumed trading and quoted higher at Rs 11,940 a quintal up by nearly Rs 400 over benchmark contracts.

The National Agricultural Cooperative Marketing Federation (Nafed) has decided to offer cotton through online spot trading system, the National Spot Exchange Ltd (NSEL). The federation has so far sold about 2,500 bales averaged around Rs 20,000 per candy valued at Rs 3 crore - Rs 4 crore through the online platform and may gear up for the sale from next week. NSEL has launched 11 contracts for Maharashtra, 3 contracts each for Gujarat and Andhra Pradesh.

Public Finance

According to the latest press note revenue receipts as on January 2009 works out to be 72 per cent of the actuals to revised estimates at Rs. 404,815 crore with the receipts under net tax revenue reaching to Rs. 329,271 crore and non-tax revenue Rs.75,544 crore.

With total expenditure reaching 74.5 per cent of the revised estimates , fiscal deficit till date works out to be  Rs.262,815 crore. Market borrowings at Rs.256,385 crores  financed about 98 per cent of the fiscal deficit.

Banking

The RBI has cancelled the licence of the Suvarna Nagari Sahakari Bank, Parbhani ( Maharashtra ) after the lose of business on February 20, 2009. The registrar of co-operative societies, Maharashtra , has also been requested to issue an order for winding up of the bank and appoint a liquidator for the bank. On liquidation every depositor is entitled to repayment of his deposits up to a monetary ceiling of Rs.1,00,000/- (Rupees One Lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC). The bank was granted a licence by the Reserve Bank on January 04, 1996 to commence banking business.

HDFC Bank is likely to expand its offer of comprehensive mobile banking services to its customers. Currently, mobile banking solution of the bank offers the usage through short messaging service (SMS) that does not facilitate its users to buy goods or services, or make utility bill payments.

Reliance Capital, the financial arm of the Anil Dhirubahi Ambani Group (ADAG), announced that the company has received the necessary approval from the National Housing Bank (NHB) for setting up a housing finance company. Earlier, the company had also received a nod from the RBI to set up a non-banking finance company (NBFC) to cater to consumer finance business. Reliance Capital will be investing around Rs 1,500 crore in these two business segments.

Corporate

The government has cleared a slew of proposals to boost big-ticket investments. The board of approvals for special economic zones (SEZs), cleared ten more zones, including the country’s largest zone to date, while the Cabinet paved the way for three massive petrochemical hubs, an outcome of another policy formulated in May 2007. Among the SEZs approved was an application to merge three notified SEZs of the Adani group to create a single 6,214 hectare SEZ. The company has two port SEZs of 4,846 hectare and 1,074 hectare, along with a 294 hectare power SEZ. The total investment proposed is Rs 1 lakh crore and the zone is expected to employ 5 lakh people in the next ten years.

ICICI Venture has written to the Registrar of Companies (RoC) to order an inquiry and investigation into the operational, managerial and financial affairs of Subhiksha Trading Services Ltd. It has also sought an independent audit and appointment of a “credible firm of independent auditors” to investigate the accounts of Subhiksha from April 1, 2007 till date.

Suzlon Energy Australia , which is foreign arm of the Suzlon Energy Ltd has entered into an agreement with AGL Energy Ltd for delivery of 54 units of Suzlon’s S88 (2.1mw) wind turbine generators in 2009.  These turbines will be used in AGL’s series of projects in Australia .

Suzuki Motorcycle, two-wheeler manufacturer major, is planning an investment of Rs 150 crore, in order to triple the production by 2012. In addition, the company is planning to launch three new models in the market.

Bata India plans to open four more outlets in Bhubaneswar , Cuttack , Balasore and Sambalpur in this year over and above its existing 23 outlets in the state. The new outlets would have an area of at least 2000 sq ft with a business potential of Rs 1.5 crore per annum.

Bharat Heavy Electrical Ltd (BHEL) has won the contract of Rs 3,150 crore from Madhya Pradesh Power Generating company for setting up two units of 600 MW each at the upcoming Malwa Thermal Power Project in Madhya Pradesh.

External Sector

Exports during January 2009 were valued at US$ 12381 million which was 15.9% lower than that in January 208 as a result during the fiscal year so far the total exports at US$144,266 million registered a growth of 13.2% over that of US $ 127,454 million reported in the comparable period last year.

Imports during January were valued at US $ 18455 million, a decrease of 18.2 per cent over that of US$ 22566 million in January 2008 and the cumulative import at US$ 243358 million was 25.3% more than that of US $ 194285 during April-January 2007-08.

Trade balance during January thus worked out to be $ 6075 as compared to 7849 in January 2008. The cumulative trade balance for April-January 2008-09 estimated at US $ 99093 million was 1.5 times to that of US $ 66830 million during April-January 2007-08.

While oil imports during the current fiscal year so far gone up from US $ 62926 million in April-January 2007-08 to US $ 83290 million, that of non-oil imports accelerated by 21.9% to US $ 160068 million.

Information Technology

Larsen & Toubro (L&T), which has 12% stake in the fraud affected Satyam Computer Services, has decided not to sell its stake in Satyam although another company will acquire it.

Infosys Technologies, India 's second-largest IT exporter, is planning to acquire ‘strategic assets’ overseas. However, it does not intend to go in for big bang acquisitions like that of Axon. The company is believed to be evaluating two-three companies, which are in the revenue bracket of $100-200 million. So far, Infosys has made two successful acquisitions including the acquisition of Australian firm Expert Information Technologies for close to $23 million in 2003, and Philips' global BPO operations in 2007.

Telecom

Currently, India continues to be one of the fastest growing telecommunication markets in the world. As demand boosters, progressive regulatory regime, network expansion by operators, reduction in tariffs and cost of handsets, which essentially make the service affordable for the common users, have supplemented the growth of the Indian telecom sector. The mobile sector has grown from around 10 million subscribers in 2002 to around 234 million in 2007. However, land-line services grew strongly for a while but of late have been experiencing zero growth.

As indicated in the above table, the total addition of subscribers during 2008 is three times the additions in the year 2005 and about five times to that of 2004. The telecom subscriber base in the year 2008 has reached a new milestone, as more than 111.91 million telephony subscribers have been added during January–December 2008 registering a growth of 41%. As the country continues to add about 9-10 million new connections each month, the target of 500 million telephone subscribers by 2010 is expected to be met in advance.

Coming to rescue of new telecom licences like Unitech Wireless, Datacom, Loop Telecom and Swan Telecom, the government has postponed and staggered the penalties liable for failing to meet year-one roll-out obligations. The relief is a result of an amendment by the department of telecommunications in the licence condition so that the meter starts running on rollout obligations from the spectrum allocation date rather than licence allotment date. Since these companies were granted licences for all their circles on January 27, 2008 but were granted staggered spectrum a few months later, not only has the date on which the penalty is due been postponed, but the amount has also been slashed. Collectively, the four licences would have had to pay over Rs 51 crore in penalties by April 27 (factoring in a 13-week grace period). Now, they will be liable to fork out only Rs 2.6 crore by July 22.

On 28 February 2009, BSNL the country’s second largest telecom operator (by combined subscriber base), has launched 3G mobile services, on a commercial basis in 11 cities across the country.  Before BSNL, MTNL had launched this service commercially in Delhi circle. Thus launching this service commercially before private sector competitor firms will give a head-start over rival companies as the 3G auction has now been deferred. BSNL has invested Rs 2,700 crore to roll out 3G services. BSNL has launched 3G mobile services in Agra , Ambala, Jalandhar, Jaipur, Dehradun and Patna .

*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.