Jaadu’s magic
Prime Minister Dr Manmohan Singh launched the state-run Mahanagar Telephone Nigam Ltd’s (MTNL) third generation (3G) service, called jaadu or magic. This enables Indian users to have access to a range of multiple utilities on their mobile phones.
With the launch of 3G services, the mobile number portability (MNP) enables subscribers to change their operators while retaining their number. Moreover, it will also lead telecom operators to further improve their services to retain their customers.
The arrival of this new technology comes with video streaming, mobile TV, mobile gaming, and higher transfer speeds. Data transfer speeds in a 3G network are much faster. Simply put, compared to existing networks, 3G services offer ten times higher speeds while surfing the internet on a mobile phone. This opens the door to a richer mobile internet experience - like a broadband connected PC at home. Apart from this, the bigger advantage comes to rural India. 3G technology especially heralds benefits to rural or hard-to-reach areas. This can increase broadband internet penetration without the need for expensive cabling.
Nano launched
The small nano was in news since its beginning. The Singur drama delayed its appearance on the roads. But finally, it’s launched and it has already started giving profits to its company, Tata Motors. Tata motors gained by close to four per cent on the buying rally during the afternoon trading hours on the BSE on the day Rs 1 lakh car was launched. One lakh is the price for the base model. The higher-end versions have air-conditioning, power brakes and power windows, among others and are priced higher.
Indo-Russia nuke accord
India and Russia inked a civil nuclear accord that envisages Russia to build four additional reactors in Tamil Nadu. Further, India and Russia also reinvigorated their multi-faceted ties by signing 10 agreements in areas ranging from the civil space programme, civil nuclear cooperation, economy, tourism and defence, and combating terrorism. The two countries also sought to infuse new energy in their sluggish economic ties by setting a target of USD 10 billion bilateral trade by 2010 and signed a USD 1.2 billion deal on the purchase of 80 MI-17V-5 Russian helicopters by India.
Three economy related agreements were also signed, including a memorandum of understanding between the Securities and Exchange Board of India and Federal Financing Service and an MoU between the two co-chairs of the CEOs’ council - Mukesh Ambani, managing director, Reliance Industries Limited, and Vladimir Yevtushenkov, chairman of Sistema Group.
PBD: Engaging diaspora
Set against the backdrop of frantic changes in late 2008, Pravasi Bharatiya Divas (PBD) 2009, the premier NRI networking event, assumed a significance of unexpected magnitude. While minister for overseas Indian affairs Vayalar Ravi acknowledged the opinion-making influence of NRIs across the world, more so in the US and parts of Europe, others were keen on engaging the politico-economic influence of the Indian diaspora in key nations to press its case on a whole lot of national and international issues. Chennai, the host of PBD 2009, witnessed Prime Minister Manmohan Singh opening the event. President Pratibha Patil also addressed the valedictory session after conferring the Pravasi Bharatiya Samman Awards for 2009. 1,500 delegates would have contributed to charting the course for India to realise its 2020 vision. The theme of the seventh convention was ‘Engaging the Diaspora: The Way Forward.’ PBD 2009 was primarily a three-way partnership among the ministry of overseas Indian affairs, government of Tamil Nadu and the Confederation of Indian Industry (CII), though a host of corporates chipped in with their best.
German billionaire takes life
Adolf Merckle, one of Germany’s wealthiest men, committed suicide after his family business empire began unraveling amid mounting debt. The suicide of the 74-year-old multibillionaire, whose holding company had US$ 40 billion in annual revenue, is one of several deaths of businesspeople tied to the global financial crisis. The news came after a consortium of about 30 creditor banks put the finishing touches on a bridge loan of roughly €400 million to the family holding company, VEM Vermögensverwaltung GmbH, which oversees dozens of firms in industries from drugs to cement.
Merckle, who shied away from the spotlight, inherited his family’s pharmaceutical company in the 1960s and expanded aggressively. He controlled major stakes in Phoenix Pharmahandel, a German pharmaceutical wholesaler, HeidelbergCement AG and generic drug maker Ratiopharm International GmbH. According to media reports, Merckle lost hundreds of millions of euros last year in misplaced stock market bets. Much of the loss was tied to short positions in Volkswagen AG, in which he wagered that the stock price would fall. Instead, it skyrocketed late last year in what market participants have described as one of the most dramatic short squeezes ever. In a short squeeze, investors who were betting against a company are forced into the market to buy back stock after the price rises.
Hydrocarbon assets’ largest auction
In an attempt by central government to boost India’s oil and gas exploration sector, it carried out auctions for 80 hydrocarbon assets in the country, including 10 for coal-bed methane. Branded as NELP VIII and CBM IV (New Exploration Licensing Policy and Coal Bed Methane), the new round of auction is the largest such exercise under country’s new policy on oil and gas exploration.
The 70 oil and gas blocks under round number eight of the new policy include 24 in deep waters, 28 in shallow waters and 18 on-land blocks. The bids from both domestic companies and multinational corporations was accepted till August 10.
So far, 203 blocks have been offered under earlier seven rounds of NELP (NELP I to NELP VII). After these seven rounds, the area under exploration has increased more than four times to 48 per cent of the Indian sedimentary basin area from just 11 per cent before the implementation of the policy. Meanwhile, during the XI Plan period, the area to be brought under exploration coverage is targeted at 80 per cent of the total Indian sedimentary basin.
India is a net exporter of petroleum products. However, it imports some 70 per cent of its crude oil needs. This is the reason why experts say government is going ahead with the ambitious auction despite the global meltdown.
India leads UNIDO statistics
India was ranked among the leading producers of automobiles, petroleum products, textiles, electrical machinery and apparatus, basic metals, chemicals and chemical products, leather products, coke and nuclear fuel in the United Nations Industrial Development Organisation’s (UNIDO) International Yearbook of Industrial Statistics 2009. The report ranked India among the world’s leading 12 producers of textiles (ranked 4th after China, the US and Italy); electrical machinery and apparatus (5th); basic metals (6th); chemicals and chemical products (7th); leather, leather products and footwear (10th); coke, refined petroleum products and nuclear fuel (10th); machinery and equipment (12th); and motor vehicles (12th), based on 2007 figures. Among the leading developing countries, India figured among the top five.
The report has also pointed out that the annual growth rate of manufacturing value added (MVA) in India rose from 6.9 per cent in 2000-05 to 12.3 per cent in 2005-07, while MVA per capita grew by 10.6 per cent and 5.2 per cent respectively in the period under review. The share of MVA in India’s gross domestic product (GDP) stood at 14.8 per cent in 2006 against 13.8 per cent in 2001.
Japan remained the world’s most industrialised country in terms of MVA per capita, followed by Switzerland, Singapore, Ireland, Finland, Sweden, the US, Germany, Austria, Luxembourg, Republic of Korea, Denmark, Iceland, Canada, Belgium, the UK, Norway, the Netherlands, Italy and France.
New pension system
Life insurers are now getting a run for their money as pension and annuity plans peddled by them have to compete with the new pension system (NPS) offered by the Pension Fund Regulatory and Development Authority (PFRDA). Launched on May 1, Labour Day, for all citizens, the new pension system is believed to give even the EPFO or the employees provident fund a run for its money.
The NPS was made mandatory way back in January 2004 for Central government employees but it was only last April that the PFRDA could appoint fund managers to start actual investments. At the moment, nearly 4.5 lakh central government employees with a corpus of Rs 2,200 crore are under the NPS. And the average return earned by government servants on their pension corpus works to almost 15 per cent.
Wheat futures trade
The government has cleared the way for trade in wheat futures to begin again. The government has given the formal clearance and the contracts are being finalised by the exchanges. However, the ban on rice and pulses future trade will continue. National Commodities and Derivatives Exchange (NCDEX), Multi Commodity Exchange (MCX) and National Multi Commodity Exchange (NMCE) traded wheat contracts before the government ban. They will have to seek permission from commodities regulator Forward Markets Commission before launching the contracts again. The government had banned trade in wheat, rice and pulses in February 2007 when foodgrain prices started rising rapidly. The government ban aimed at checking speculation in these commodities with the ban on futures trade. Global wheat prices had risen dramtically in 2007, as production in Canada and Australia had touched a 25-year low.
New accounting norms
The government has decided to move to a new accrual- based accounting system from the current cash accounting basis within next five years. Under the current cash accounting system, revenues and expenses are recognised only at the time of real cash payments and receipts. The new norm or the accrual basis of accounting would reflect expenses when they are incurred and not necessarily paid out and income when it is earned and not necessarily received in cash. The move is seen as progressive as it reflects a more accurate picture of the government's finances. While fixed assets of government arms like the railways may boost the government's balance sheet, items like pension fund obligations and the issue of oil bonds will make the liabilities rise. Experts expect the obligations to be higher than receivables, which will increase fiscal deficit.
Petro fed for fuel decontrol
In a bid to further liberalise the petroleum sector, the Petroleum Federation of India (Petrofed), the apex body of public and private oil firms, has sent a formal agenda to the petroleum and natural gas ministry recommending the government to decontrol the prices of diesel and petrol. It was the UPA government itself, which reintroduced the administrative price system for petrol and diesel after it came to power in 2004, defeating the BJP-led NDA coalition. The reintroduction of the administrative price system coincided with the understanding of a section of political analysts that the loss of the incumbent NDA government was an anti-liberalisation mandate of the people. If such recommendation is made functional, it would increase the price of petrol and diesel, particularly during the time of rising input costs. Presently, the public sector retailers sell petrol and diesel on government determined prices. Doing away with the price control would enable the private retailers to increase the prices, much to the worry of the consumers. Petrofed also wanted phasing out of the subsidy on LPG cylinders for domestic purpose and instead recommended introduction of coupons or smart cards for providing subsidy to the buyers. It also recommended introduction of smart cards in distribution of kerosene oil to the targeted groups. Petrofed has also recommended restoring tax holiday on natural gas production and to extend it for the private oil refiners. It also wanted seven year income tax holiday for the private companies for setting up of oil refineries. Currently, this facility is available only to the public sector firms setting up oil refineries till March 2012.
Deposit rates cut
The State Bank of India (SBI) has lowered its deposit rates by 25 basis points across all its maturities. The announcement came into effect from June 15, 2009. According to the new rates, the SBI will offer 5.25 per cent for 91 to 180 days, 6.25 per cent for 181 days to one year, 7 per cent for one year to two years, 7.25 per cent for two years to less than 1000 days, and 7.75 per cent for five years to less than eight years. It will offer 7.5 per cent on its special 1000-day deposit and eight per cent on 8-10 year deposits. The cuts in the deposit rates are seen as an indication of cut in lending rates in the near future by the SBI, the country's largest lender. It must be remembered in this context that the finance minister met with the banks urging them to reduce interest rate on loans. Currently the bank’s prime lending rate is 12.25 per cent which it has not reduced since January 2009 though there have been reductions of deposit rates for several rounds. The reduction in the lending rate is envisaged for higher investment and to enhance demand for goods through providing credit for it. However, such credit-led growth policy is being discouraged by many economists who hold the view that the ongoing financial crisis in the US is a product of such a policy.
Mobile irrigation
Today is the time when a farmer uses his cell phone to reach distant world. But in the days of tomorrow, he will ‘cultivate’ his piece of land with it! Tata Teleservices Ltd, in partnership with Ossian Agro Automation, has introduced pilot project at Sojitra in Anand district of Gujarat that brings the technology of operating irrigation pumps from remote locations without having to travel to the farm.
Farmers willing to avail this service will have to buy a Tata Indicom mobile connection and a mobile modem that will be attached to the starter of the pump set. The subscribing farmer will be provided a unique code number. Using assigned code number, the farmer can remotely switch on and switch off the pump set through the mobile handset. The farmer can also check the on/off status of the pump as well as the availability of power by a particular tone. The subscriber will have to pay
Rs 2,700 for the device and additional charges levied for the handset that offers lifetime validity. Two handsets will be provided with the offer. One handset will be installed with the device and the other remaining with the farmer. All calls made to the pump by the Tata Indicom mobile would be free of cost whereas the other calls will be charged as per the tariff plan given to the subscriber.
This is the first remote access service to irrigation pumps using a mobile phone in India, which is named as Project Nano Ganesh. Tata Indicom said that the service will save electricity, time, money and water, which will help the farmers to improve productivity.
SBI in million dollar club
SBI LIFE Insurance has become the first Indian life insurer to top the list of companies whose agents have qualified for the Million Dollar Round Table (MDRT) — a club of insurance agents worldwide who have generated life premiums of over $1 million (Rs 4.9 crore) in a year.
With 2,677 MDRT members in CY2008, SBI Life has left behind its Asian peer, Samsung Life, which held the number one slot for two consecutive years. The Indian company, a joint venture of SBI and Cardif of France, has steadily improved its ranking moving from 5th in 2006 to 3rd in 2007 and 1st in CY2008.
MDRT, an association of insurance advisors or agents, was founded in 1927. Its membership is calculated on the basis of commission earned and premium collected. To qualify in CY2008, each agent had to earn a minimum commission of Rs 7.59 lakh with minimum premium collection of Rs 30.36 lakh. It is estimated that less than one per cent of the world's insurance advisory force is able to make the grade to be a part of MDRT.
Kharif crop suffers
So far, kharif paddy acreage continues to lag significantly by 62.35 lakh hectares from the last year’s levels. The shortfall is highest for Uttar Pradesh (40.05 lakh hectares this year as compared to 60.66 lakh hectares last year), followed by Bihar (21.72 lh against 34.29 lh), Jharkhand (7.32 lh against 15.23 lh), Andhra Pradesh (15.61 lh against 21.42 lh) and West Bengal (40.93 lh against 43.79 lh). However, the shortfalls are quite less for the states like Punjab, Orissa, Chhattisgarh, Assam, Maharashtra, Madhya Pradesh and Haryana.
In most of the states, except for Andhra Pradesh, West Bengal, Orissa and Chhattisgarh, the sowing season is almost over. The final shortfall is expected to be at least 60 lakh hectares. Assuming that yields do not fall, this would imply a reduction to the tune of 12 million tonnes of kharif output as compared to last year.
Meanwhile, there are further apprehensions that in the event of the present heavy rainfall, yields could get impacted through spread of bacterial and fungal diseases on paddy. Heavy rains could also result in foot rot diseases.
Jowar (sorghum), bajra (pearl millet) and groundnut are the other major crops, whose acreage has reduced significantly as compared to last year’s levels.
The only silver lining is that the rainfall in September will allow for early sowing of rabi crops, particularly in the areas where kharif sowing has taken a beating. This would minimise the impact of low acreage of the kharif crops.
