Highlights of  Current Economic Scene

Growth Scenario

The Central Statistical Organization (CSO), Ministry of Statistics and Programme Implementation have estimated that the third quarter will show a growth rate of 5.3% over the corresponding quarter of the previous fiscal year. Quarterly GDP at factor cost for the current financial year 2008-09, is estimated to be at Rs 8,73,426 crore as against Rs 8,29,172 crore estimated for the last fiscal year 2007-08.   Mining and quarrying (5.3%), construction (6.7%), trade and hotels, transport, storage and communication (6.8%), financial insurance, real estate and business services (9.5%)and community, social and personal services (17.3%) has shown a significant growth in the third quarter of the current fiscal year. However ‘agriculture, forestry and fishing’, and manufacturing have registered a negative growth rate of  (-) 2.2% and (–) 0.2% respectively.

The principal economist of CRISIL Ltd, Dharmakirti Joshi, expects that growth will be 6.5% in 2008-09, which however can slide down to around 6% in 2009-10;mainly due to weak performance in the first half followed by a sluggish recovery in the second half of the current fiscal year. The growth rate in India is highly dependent on advanced economies, if they do not bottom out towards the end of 2009; growth further is bound to show a fall.

Chief Economist of JP Morgan Chase, Jahangir Aziz, is of the opinion that RBI should move forward into resuming the monetary easing which is on hold from January month of the current fiscal year. Monetary policy virtually is the only policy tool, which can help in securing balanced growth rate.

Rajeev Malik, head of India- And- Asean Economics, Macquarie Capital Securities, anticipated that GDP growth for 2008-09 is likely to be around 6.5% and 5.5% for 2009-10. India ’s growth will depend on highly on external demand and capital flows. Fiscal measures, which have caused the consolidated fiscal deficit to surge to 10-11% of GDP, will partially soften the downturn.  RBI should continue doing its job without taking into consideration the suggestion of local analyst, as their policy advice appears to change often.

Pankaj Vashisht, Research Associate in ICRIER, is of the observation that crisis reflected in the third quarter is expected to have a greater impact on growth in the fourth quarter of the current fiscal year. The fourth quarter will post a growth of less than 5% and may end up with an annual growth rate of less than 6.5%. According to him, the second round of reforms should urgently be brought under practice, and should focus mainly infrastructure, education and business environment. Reforms will restore investors and consumers confidence and along with it will improve the inbuilt hurdle to the potential rate of growth.

Abhijit Sen, Planning Commission member is of the opinion that growth in the next fiscal year (2009-10) may reach 7% because of stimulus packages, which is being introduced in the economy.

Broking house CLSA Asia-Pacific Markets has forecast GDP growth of 4.6% in 2009-10 and expects the domestic economy to stabilize only by early 2010.

International Monetary Fund (IMF) said that Indian growth is likely to see a downturn to 6.25% in 2008-09 due to falling corporate investment and deteriorating global outlook. It also projected that India ’s growth will moderate to 5.25% next fiscal year (2009-10).

International Monetary Fund (IMF) has downgraded its global 2009 growth forecast further down towards negative area. In its latest estimates of January 2009, 0.5% of global growth was estimated. They commented that more funding is necessary to help countries to overcome global financial crisis.

Agriculture

Wheat production in Gujarat is expected to decline by 18% this year to 3.14 million tonnes on lower acreage, as most of the farmers opted for long-duration crops like castor. According to the advance estimates, wheat production is likely to plummet to 3.14 million tonnes this year from a record 3.83 million tonnes produced last year. It is projected that acreage under wheat would shrink by 10% to 11.44 lakh hectares in 2008-09 from 12.73 lakh hectares last year.

Procurement of rice during the ongoing kharif marketing season (October-September 2009) is reported to be up by about 18% over last year’s corresponding purchase. Procurement as on 9 March 2009 has stood at 24.36 million tonnes. It is expected that by the end of this season procurement of rice is likely to touch a new record of 29-30 million tonnes, surpassing the earlier high of 28.4 million tonnes. The country’s rice output in 2008-09 is also estimated to be at an all-time record of 98.89 million tonnes.

Sugar mills from Uttar Pradesh have contracted import of raw sugar (at nil duty) from Brazil in a hope of additional revenues since domestic sugar output is likely to be at a four-year low of 16 million tonnes in the current season (October-September 2009). This reduction in sugar output is due to decline in cane production on account of staggered payment made by the mills, in addition to over 25% fall in acreage under sugarcane this year, as farmers shifted to better paying crops like paddy and oilseeds. It is expected that untill now mills from various parts of the country have contracted imports of 900,000 tonnes raw sugar and even more mills would undertake imports once crushing of sugarcane gets over in the next season.

According to Soyabean Processor Association, exports of soyabean meal is likely to drop by 20% from previous estimates as most of the farmers are holding back their supplies anticipating that domestic prices would rise.

According to an estimate by the Indore-based Soybean Processors Association (SOPA), total crushing capacity has been reduced to less than 40%, as most of the crushers are currently facing shortage of raw materials supply from farmers and stockholders. Unlike other oilseed crops, soybean prices are currently quoted at Rs 2,350 per quintal, above the minimum support price (MSP) of Rs 1,390 per quintal. Still, farmers and stockists are holding their stocks in anticipation of rising global demand. Rabobank has estimated that soybean plantings at international level would be around 17 million hectares in 2008-09, slightly higher than last season’s 16.6 million hectares.

As per the official of Indian Sugar Mills Association that sugar output in India, would rebound by 25% next year, as farmers would opt for more sugarcane plantations to benefit from rise in prices and reducing the nation’s reliance on imports. It is expected that sugarcane production may increase to 20 million tonnes in the sugar year beginning from 1 October 2009 from 16 million tonnes this year.

Cotton Corporation of India has reported that sales of cotton in the domestic market has dropped to 23.8 million bales as on 7 March 2009 from 25.3 million bales during the same period last season. Cotton farmers have reportedly sold 6% less fiber during the season started on 1 October 2008 due to delayed sowing and excess rain impaired yields in the main growing areas. Arrivals of cotton from Gujarat have fallen by 26% to 6.25 million bales.

According to the provisional data released by the Coffee Board, coffee exports from India dropped by 14.5% during January-February 2009, as compared to that of the last year owing to global financial crisis and low domestic output. Total exports were 33,120 tonnes from January up to 5 March 2009 as against 38,766 tonnes in the year-ago period. Of the total exports, Arabica accounted for 8,997 tonnes and Robusta 24,123 tonnes. Exports’ earnings in dollar terms are reported to be down by 24% while in rupee terms they fell by 8%. Exports are valued at US $74.14 million (Rs 354.15 crore) in January - February 2009 as against US $97.44 million (Rs 386.27 crore) in the corresponding months of the previous year.

According to export figures provided by the Cashew Export Promotion Council for the first eleven months of the financial year 2008-09, India exported 99,348 tonnes of cashew kernels valued at Rs 2,719.79 crore as against 1,03,139 tonnes valued at Rs 2,033.88 crore during April-February 2007-08. The performance of the current financial year is 33% higher in terms of value and 3.6% in terms of volume as compared with the same period of last financial year. In dollar terms, the exports performance is seen higher by 18%. It is expected that cashew exports of the country for the current financial year are likely to achieve a revenue increase of 25% over the previous year's performance, owing to a deprecating rupee and higher unit value realisation.

National Agricultural Co-operative Marketing Federation of India (Nafed) has invited bids for two separate tenders to sell more than three lakh bales of cotton. The first tender is for sale of two lakh bales of cotton, while second is of one-lakh bales and last date for the submission of bids is 18 March 2009 and 17 March 2009.            

As per preliminary report by the US department of Commerce, anti-dumping duty for exports of Indian shrimp has been lowered to 0.79% from 1.69%. Further, Indian exporters are likely to get cash refund on the customs bond for the period 01 February 2006 to 31 January 2007, during which this ruling is applicable.

Industry

The General Index (IIP) stands at 280.4, which is 0.5% lower as compared to the level in the month of January 2008. The cumulative growth for the period April-January 2008-09 stands at 3.0% over the corresponding period of the pervious year.

The annual growth of thee Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of January 2009 at (-) 0.4%, (-) 0.8% and 1.8% as compared to January 2008. The cumulative growth during April-January, 2008-09 over the corresponding period of 2007-08 in the three sectors have been 2.7%, 3.0% and 2.6% respectively, which moved the overall growth in the General Index to 3.0%.

In terms of industries, as many as five (5) out of the seventeen (17) industry groups (as per 2-digit NIC-1987) have shown positive growth during the month of January 2009 as compared to the corresponding month of the previous year. The industry group ‘Machinery and Equipment other than Transport Equipment’ have shown the highest growth of 17.5%, followed by 10.3% in ‘Other Manufacturing Industries’ and 5.3% in ‘Beverages, Tobacco and Related Products’.  On the other hand, the industry group ‘Food Products’ have shown a negative growth of 16.1% followed by 15.2% in ‘Wood and Wood Products; Furniture and Fixtures‘and 13.4% in ‘Transport Equipment and Parts’.

As per Use-based classification, the Sectoral growth rates in January 2009 over January 2008 are (-) 1.0% in Basic goods, 15.4% in Capital goods and (-) 9.2% in Intermediate goods. The Consumer durables and Consumer non-durables have recorded growth of 2.5% and 0.7% respectively, with the overall growth in Consumer goods being 1.1%.

Infrastructure

The Index of Six core industries having a combined weight of 26.7 per cent in the Index of Industrial Production (IIP) with base 1993-94 stood at 250.6 (provisional) in January 2009 and registered a growth of 1.4% (provisional) compared to a growth of 3.6% in January 2008.  During April-January 2008-09, six core-infrastructure industries registered a growth of 3.2% (provisional) as against 5.7% during the corresponding period of the previous year.

Crude Oil production (weight of 4.17% in the IIP) registered a growth of (–) 8.1% (provisional) in January 2009 compared to a growth rate of (-)0.2% in January 2008. The Crude Oil production registered a growth of (-) 1.3 (provisional) during April-January 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 (-) 2.6% (provisional) in January 2009 compared to growth of 5.4% in January 2008. The Petroleum refinery production registered a growth of 3.1% (provisional) during April-January 2008-09 compared to 7.3% during the same period of 2007-08.

Coal production (weight of 3.2% in the IIP) registered a growth of 6.3% (provisional) in January 2009 compared to growth rate of 7.9% in January 2008. Coal production grew by 8.8% (provisional) during April-January 2008-09 compared to an increase of 4.8% during the same period of 2007-08. 

Electricity generation (weight of 10.17% in the IIP) registered a growth of 1.4% (provisional) in January 2009 compared to a growth rate of 3.7% in January 2008. Electricity generation grew by 2.5% (provisional) during April-January 2008-09 compared to 6.3% during the same period of 2007-08.

Cement production (weight of 1.99% in the IIP) registered a growth of 8.3% (provisional) in January 2009 compared to 5.6% in January 2008. Cement Production grew by 7.1% (provisional) during April-January 2008-09 compared to an increase of 7.4% during the same period of 2007-08.

Finished (carbon) Steel production (weight of 5.13% in the IIP) registered a growth of 1.2%(provisional) in January 2009 compared to 2.0% (estimated) in January 2007. Finished (carbon) Steel production grew by 2.3% (provisional) during April-January 2008-09 compared to an increase of 5.9% during the same period of 2007-08.

Inflation

The official Wholesale Price Index for ‘All Commodities’ (Base: 1993-94 = 100) for the week ended 28th February 2009 declined by 0.04 percent to 227.7 (Provisional) from 227.6  (Provisional) for the previous week.  

The annual rate of inflation, calculated on point-to-point basis, stood at 2.43 percent (Provisional) for the week under reference as compared to 3.03 percent (Provisional) for the previous week and 6.21percent during the corresponding week of the previous year. 

The index of major group primary articles rose by 0.2 percent to 248.1 from 247.5 for previous week mainly due to increase in prices of fruits & vegetables, bajra and masur.

The index for major group fuel, power, light and lubricants remained unchanged at its previous week's level of 323.5 (Provisional).

The index for major group manufactured products declined by 0.1 percent over the week due to lower prices of nylon filament yarn, hessian, steel ingots and batteries.

Wholesale price index for ‘All Commodities’ (Base: 1993-94=100) revised up to 229.2 from 229.0  for the week ended 3 January 2009 and annual rate of inflation based on final index, calculated on point to point basis, stood at 5.33 percent as compared to 5.24 percent (Provisional).

Financial Market Developments

Capital Markets

Primary Market

On 13 March 2009 state-run hydro power producer NHPC said that it would come out with its initial public offer (IPO) only after the market conditions improve. The company had proposed to come out with a public issue in October last year to partially fund expansion programmes, but it was forced to shelve plans due to volatile market conditions. With its IPO of equity to raise Rs 1670 crore put on hold NHPC is in talks with domestic nationalised banks to raise loans to finance a part of its capital expenditure plans during the five years ending 2011-12.

Similarly with a bearish stock market, ICICI Securities has said it has put on hold plans to go for an IPO. ICICI's broking arm Managing Director & CEO, Madhabi Puri Buch, told that the company will wait for a more appropriate time to hit the capital market.

On 12 March 2009, Tata Communications, formerly known as VSNL said that it has dropped the option of rights issue as of now and will incur a capex of 400-500 million dollar in 2009-10 but has no cash crunch. The company said it has raised adequate debt and had strong cash on hand.

In a bid to encourage capital-raising through rights issues, the Securities and Exchange Board of India (SEBI) is proposing to reduce a lot of mandatory disclosures for listed companies. The proposals seek to do away with the non-disclosure of details regarding the company’s business and the basis of issue price, floor price and price band. The SEBI Committee on Disclosures and Accounting Standards (SCODA) has recommended that the listed entities in the country should be permitted to opt for a separate set of disclosures for the rights issues provided the issuer entity has been filing periodical statements and information on compliance with the listing agreement for the last three years. In the discussion paper on the rationalisation of disclosure norms for the rights issues released by SCODA said that such information should be available on the websites of any stock exchange with nationwide trading terminals or a common e-filing platform.

Secondary Market

Indian equities jumped in a truncated week on signs that the stimulus packages announced by the government since December 2008 and an aggressive rate cuts announced by the central bank since October 2008 have started having some positive impact - lower interest rate have helped automobile sales rebound in the past few months. Interest rates have dropped drastically over the past few months. Expectations of further rate cuts by the central bank after recent sharp fall in inflation also aided the rally. The market gained in 2 out of 3 trading sessions in the week. The market remained shut on Tuesday, 10 March 2009 for Id-E-Milad and Wednesday, 11 March 2009 for the Holi festival. Recovery in global stocks also supported the market. Most Asian markets gained for a fourth day on Friday, 13 March 2009, helped by a smaller-than-expected decline in US retail sales and hopes that the largest US banks will survive without a government takeover. The BSE 30-share Sensex rose 430.79 points or 5.17% to 8,756.61 over the week. The S&P CNX Nifty gained 99.10 points or 3.78% to 2,719.25 in the week Inflation at six-and-a-half year lows of 2.34% also assisted a smart bounce back. The market also shrugged off weak industrial production numbers of a negative 0.5% on the way up. Overall, foreign institutional investors (FIIs) who were net sellers this year have been net purchasers to the tune of Rs 27.43 crore during the week.

The launch of 183 mutual fund schemes has been delayed due to adverse market conditions, pending responses to queries from the SEBI and a change in guidelines. Out of these, 68 schemes were fixed maturity plans (FMPs) that had to be shelved because of a change in guidelines in the third quarter of 2008-09. Of the remaining 115, SEBI is yet to approve around 70-75 schemes, despite their offer documents being filed since April 2008, according to an industry source.

According to the new SEBI guidelines, liquid funds can invest only in 182-day paper from February and 90-day paper from May onwards. SEBI came up with the new regulations after the mutual fund industry went through its worst crisis in October, losing Rs 97,000 crore in a single month in assets under management.

February proved to be a good month for the mutual fund industry. After four months, the industry crossed the Rs 5-lakh crore mark in their average assets under management (AAUM). According to data compiled by the Association of Mutual Funds in India (Amfi), income funds saw an increase of 8.6% in their assets in February, when compared with the previous month.

The Children’s Investment Fund Management and its affiliates have emerged as the single-largest seller of Indian stocks among FIIs. The hedge fund registered its biggest annual loss in 2008. The fund is liquidating its investments in India at a steep discount to the prices at which it bought the stocks last year. As per media sources, so far, Children’s Fund has sold as much as Rs 1,154 crore worth of stocks, or 33% of its purchases last year.

Derivatives

The benchmark Nifty futures staged a strong recovery on Thursday and Friday due to the positive global cues. The uptrend was so strong that it led to the covering up of a good number of shorts, leaving the Nifty future to close at a marginal premium. After weeks of closing at a discount, this week the Nifty future closed at about 2720 points as against the Nifty spot’s close of 2719 points, scoring a 4.3% gain over its previous week’s close. The recovery also saw a heavy turnover in the future and option (F&O) segment; the average daily turnover topped the Rs 45,000-crore mark, way above the previous week’s average figure of Rs 42,450 crore. Derivatives volumes remained high in a truncated week when net gains were registered. There was a clear trend of carryover into April and May with a lot of March index positions extinguished. About 16.5 lakh March Nifty futures were extinguished on last Friday and 11 lakh new April futures positions opened. Similarly, a lot of April calls were settled and new May calls opened. Right now, about 13% of index futures open interest (OI) is in April-May and around 44% of index option OI is also in April and beyond.

India VIX or Volatility Index, which measures the immediate expected volatility, has weakened further to 35.57 - the second lowest level since January 23 in 2009 - from the previous week’s level of 37.94.

The cumulative FII positions as a percentage of the total gross market position on the derivative segment as on March 12 improved to 37.16 The FIIs were predominantly net buyers in the F&O segment last week.

Government Securities Market

Primary Market

Ten State governments auctioned 10-year paper maturing in 2019 for the notified amount of Rs 14,997.52 crore on 09 March 2009. The cut-off yield for these securities was fixed in the range of 8.16-8.89% being highest for Assam and lowest for Meghalaya.

On 12 March 2009, RBI auctioned 7.49%2017, 7.94%2021, 7.95%2032 and 7.40%2035 for the notified amount of Rs 4,000 crore for 8-year maturing paper and 1,000 crore each for remaining three securities through open market operation (OMO). The cut-off yield for these securities was set at 7.25%, 7.67%, 8.05% and 8.15%, respectively.

RBI auctioned 91-day and 364-day treasury bills (TBs) for the notified amounts of Rs 5,000 crore and 3,000 crore respectively on 12 March 2009. The cut-off yield for these securities was set at 4.58% for 91-day TBs and 4.99% for 364-day TBs.

Secondary Market

After the last round of reverse repo cut, overnight call rates have come down sharply to 3.5%. With call money rates moving down liquid funds are facing the heat as returns are also sliding. Liquid funds are ultra short-term debt funds, which invest in money market instruments such as certificates of deposit, commercial papers and TBs, on an overnight basis or 10 days or a month. Liquid funds, which earlier yielded close to 7% returns, have now dropped to 5-5.5%. Experts say the yields may fall further, with another round of interest rate cut in the offing. With returns being hit, liquid funds may no more remain an attractive parking option for funds in the short term.

Government bonds jumped the most in two months after the central bank rejected all bids at a government debt auction, stoking speculation that it is seeking to cap yields. Yields on most-traded notes due 2018 tumbled from the highest in almost four months as investors increased bets that the RBI won’t allow further rise in the government’s borrowing costs in the coming weeks. The yield on the 8.24% note due 2018 slid 37 basis points to 6.80% at close in Mumbai, according to the central bank’s trading system.

Bond Market

During the week under review, Tourism Finance Corporation of India tapped the bond market through issuance of bonds to mobilize Rs 100 crore by offering 9.50% for 10 years.

On 13 March 2009, the RBI decided to extend the date for completion of the procedure for buyback of foreign currency convertible bonds (FCCBs) from 31 March 2009 to 31 December 2009. Earlier, in December 2008, the RBI had said that banks might allow Indian companies to prematurely buyback FCCBs, provided the buyback value of the FCCB is at a minimum discount of 15% on the book value.

Foreign Exchange Market

Moving in tandem with the equity markets, the rupee appreciated sharply by 35 paise to close at 51.51/52 against the dollar. In fairly active trade at the Interbank Foreign Exchange market, the local unit opened firm at 51.70/71 per dollar from the previous close of 51.86/87. The rupee reached its highest level against the dollar in nearly two weeks before erasing gains due to demand for the US currency from banks and importers. Following Standard & Poor’s revision of India ’s sovereign rating outlook from stable to negative on February 24, there was heavy pressure on the rupee on fears that the next move could be a downgrade to sub-investment grade. This prompted FIIs to shun Indian stocks debt papers and put pressure on the currency, which hit a new lifetime low of 52.18 against the US dollar on March, 6.5% lower than the level at the start of this year.

India ’s foreign exchange reserves declined by $1.98 billion to $247.29 billion in the week ended 6 March 2009, on account of revaluation of international currencies against US dollar and continued liquidation of investments in securities by overseas institutional investors. In rupee terms, the foreign exchange reserves rose by Rs 8,452 crore to Rs 12,73,041 crore.

Currency Derivatives

On March 12 futures contracts on NSE and MCX ended down tracking the movement in the spot market. On NSE, the one-month dollar-rupee contract ended at 51.96 a dollar, compared with 52.07 on the beginning of the week. The MCX one-month contract ended at 51.96 against the previous close of 52.07 a dollar.

Commodities Futures derivatives

Multi Commodity Exchange (MCX) has moved to fourth place in a list of the Asia 's five largest derivative bourses, with its trading volume clocking the fastest growth in the league for 2008. All the top three Chinese commodity exchanges, Dalian Commodity Exchange (DCE), Jhengzhou Commodity Exchange (ZCE) and Shanghai Futures Exchange (ShFE) continued to grow very rapidly in 2008, according to annual volume survey 2008 released by Washington-based Future Industry Association (FIA). Commodities markets in India and China showed little impact from the crisis wracking western financial markets. MCX registered a growth of 36.8% in its trading volume in 2008 to close to 94.3 million as against about 68.9 million in 2007. MCX and National Commodity and Derivatives Exchange (NCDEX) retained their places in the top 50 - MCX retained its 22 position (from earlier 28th position) while NCDEX slipped four places to 34th in the rankings based on trading volume for the year 2008.

Riddhi Siddhi Bullion (RSBL), one of the leading bullion trading firms in the country, has entered into an agreement with the NCDEX to start a spot exchange for precious metals. The exchange would be known as NCDEX Bullion and is likely to be launched within a month. Prithviraj Kothari, director of RSBL said that they will not need any permission from FMC as it is a spot exchange and are just awaiting RBI’s approval. The proposed spot exchange will have contracts in dollar denomination, for the first time in India . However, the settlement will be done in rupee terms.

According to a senior government official, the Centre is unlikely to take a decision on the ban on futures trading in wheat, rice, tur and urad. In view of the elections, the (UPA) government will like that the decision on futures ban on wheat and rice is taken by the new government. At the insistence of the government, commodity market regulator FMC had in early 2007 banned futures trading in rice, wheat, tur and urad.

According to FMC data, turnover of farm commodities in the 2008-09 fiscal till February 15 dipped 32% to Rs 5,29,000 crore, from Rs 7,79,000 crore in the year-ago period. As on February 15, the total volume in agri-commodity exchange NCDEX also declined to Rs 22,974 crore from Rs 33,607 crore a year ago. Concerned at thin volumes in a few commodities, FMC has asked the exchanges - MCX, NCDEX and NMCE to take steps to improve liquidity in those. Both national and regional bourses are struggling with the problem of lower volume in one commodity or the other. But FMC is trying to improve their efficiency, MCX, which has a predominant position in energy and metals, has a poor volume in agri-futures. Of 26 farm commodities, futures trading in 17 having delivery in March, April, May and June showed zero volume, as per MCX data. Similarly, NCDEX has not been generating enough business in non-agricultural commodities and the volume is nil in some of them.

Lower export demand and rising arrivals are expected to add to the ongoing correction in spices futures on NCDEX. Active month contract of commodities like turmeric, pepper and jeera have experienced an average decline of 4-5% in last five sessions. According to Mehul Agarwal, research analyst at Sharekhan Commodities, “Subdued international demand, especially in the case of pepper, seems to have triggered the correction in prices while arrivals have been regular.” Pepper exports declined 27% in the period April 2008 to June 2009. Exports stood at 21,600 tonnes during this period compared to 29,700 tonnes in the same period last year. Besides lower export demand, exports from Vietnam are also putting some pressure on prices.

On 13 March sugar prices became cheaper by up to Rs 50 a quintal in the wholesale market and about Rs 35 a quintal in the futures market following the Centre’s move on empowering the states to restrict how long a trader can stock the sweetener and the quantity. Prices of sugar declined in the range of Rs 10-50 per quintal, with the Malaknarain variety dipping by Rs 50 to Rs 2,100 while the Titabi falling by Rs 10 to Rs 2,155 a quintal.

Insurance

Star Union Dai-ichi Life Insurance Company, a joint venture for life insurance company promoted by Bank of India, Union Bank of India and Dai-ichi Mutual Life Insurance Company, Japan , is planning to pump in Rs 100 crore in 2009-10. The proposed infusion is to support the company’s expansion plan and meet the target of Rs 500 crore premium in 2009-10.

American Life insurance giant MetLife has expanded its Indian presence by opening 20 new offices across the country’s northern region. The company now has an established network of 58 branches across 40 cities in the northern region.

Public Finance

According to the latest press note revenue receipts as on January 2009 works out to be 72 per cent of the actual 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.262815 crore. Market borrowings at Rs.256385 crores  financed about 98 per cent of the fiscal deficit.

Banking

Citibank has launched Citi Mobil, mobile banking solutions for its customers with advanced mobile technology that is compatible with popular mobile devices across most GSM operators.

Yes Bank has subscribed to Rs 25 crore of rated non-convertible debentures (NCDs) issued by Hyderabad-based non-banking finance company SKS Microfinance. The bond has tenure of one year from the date of allotment with a coupon rate of 10.50% a year.

Dena Bank has reduced interest rate on new housing loans, fresh auto and trade finance loans by 25-50 basis points. The bank has slashed the home loans by 25 basis points across all maturities. Similarly, the interest rates on auto advances and trade finance loans would be cheaper by 50 and 25 basis points, respectively.

Corporate

Automobile sales in the country have increased nearly 13% from a year ago. Total automobile sales in the country were 8,36,926 units in February 2009 as compared to sales of 7,42,856 unit in corresponding period last year.  Passenger cars sales registered a growth of 15%.  This segment has recorded increase in sales and it reached to 1,45,019 units at February 2009 as compared to sales of 1,26,077 last year of the same month.  Same pattern of sales growth has followed for two-wheelers. The increased sales are on account of substantial cut in interest rates for auto-loans and discount offered by manufacturers owing to deduction in excise duty announced by the government in the stimulus package. 

L&T, Spice group and Tech Mahindra, figure among the bidders that completed the first step of registration to acquire the troubled Satyam Computers Services. The Hinduja group, which was evaluating the deal so far, has decided to opt out of the race. Global majors like IBM, HP and Computer Science Corporation were understood to have been evaluating the deal, but all these companies declined to comment.

Delhi-based low-cost carrier, SpiceJet is in talks with the Wadia group-owned GoAir for either a merger or to acquire a controlling stake.

Aditya Birla Retail Limited, which operates supermarkets under the ‘more’ brand, is planning to open 8-10 hypermarkets across the country during the next financial year.

The regional office of the EPFO has decided to attach the bank accounts of struggling Subhiksha Trading Services for failing to deposit PF dues even after the expiry of the deadline for doing so.

India ’s capacity of manufacturing power equipment is set to increase four-fold to around 43,000 MW over the next five years through investments of over Rs 30,000 crore. Currently, the country’s overall capacity of power equipment manufacturing stands around 10,000 MW, solely contributed by the government-owned Bharat Heavy Electrical Ltd (BHEL). The additional 33,000 MW equipment manufacturing capacity is expected to be added by the end of 2015, according to the latest data obtained from the Central Electricity Authority (CEA). It would also bring to an end BHEL’s monopoly in the power equipment market as private sector gains entry in the market. Companies like Larsen & Toubro, JSW and Reliance are in the process of setting up equipment manufacturing capacities in the country in partnership with overseas partners.

Kalpataru Power Transmission has bagged a contract of Rs 385 crore for laying approximately 550 km pipeline under Part-A of the Mundra-Bhatinda pipeline project for transport of crude oil.

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.

Telecom

Department of Telecommunication (DoT) has asked to stop providing 3G services, to BSNL and MTNL, till call monitoring services are made available to the intelligence agencies. 2G call monitoring facility is available to agencies; the problem comes in 3G services because of high data transfer. To provide solution to the security problem related to the 3G services, security agencies have installed lawful interception monitoring  (LIM) equipments at premises of BSNL to monitor 3G calls.

Reliance Communications has added 3.38 million customers in February 2009 on its GSM and CDMA networks, increasing its subscriber total to 69.83 million. 

Endorsing the Department of Telecommunication’s (DoT) view, the TRAI recommended a three-year lock-in-period for stake sale by promoters who have recently received mobile service licences. At the same time, the regulator has given a major concession to the new players. It has recommended that with prior permission from the licensor and on fulfilment of rollout obligations, the promoters may be allowed to sell stake even during the lock-in-period. This permission is, however, based on the condition that half of the profit earned on the stake-sale is retained in the company and utilized for network expansion, while the rest is transferred to the licensor.

IT

Wipro Infotech, wing of Wipro Ltd, has won an e-governance project of Rs 1,182 crore from the Employee’s State Insurance Corporation (ESIC).  ESIC is a statutory corporation under ministry of labour and employment, Government of India.  Aim of the project is to provide healthcare services for the marginalized sections of the society and ESIC’s employees. Wipro will provide online facilities to employees, insuring people for registration, payment of the premium and disbursement of cash benefits. Tenure of the project is six and a half year.

HCL Infosystems has announced a tie-up with Korean major Anutilus Hyosung to launch customized ATM solutions for Indian banks with a focus on rural areas.

*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.