Main Pre Econ Final

8/6/2019 Main Pre Econ Final

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INDIAN ECONOMY : A BRIEF ECONOMIC OVERVIEW

India is the world’s second -fastest growing major economy, having clocked growth rates averaging 8.9%in the four years prior to the global financial crisis that began in September 2008. The Indian economy isnow poised to resume its fast pace of growth, recovering double-quick from the crisis-induced slowdown.Population growth having come down to 1.5% a year, India’s per capita income is growing at close to7.5% a year, a rate that will allow it to more than double in ten years. This is a remarkable achievement inhuman history, with China’s example as the only precedent.

India’s emergence as a fast -growing trillion plus dollar economy has enormous significance for the rest of the world. The remarkable thing about India’s rise is that it is mostly benign and perceived as such bymuch of the world. It is also true that India faces numerous economic challenges. But India’s newprosperity is indeed trickling down to the bottom of the pyramid. The government’s redistributivepolicies play a major role - direct tax collections (essentially, tax on personal and corporate incomes) havebeen growing at close to 30% a year, thanks to lower rates and better tax administration and thegovernment has initiated sizeable rural development and employment schemes.

Considerable emphasis is being given on infrastructure development and urban renewal. New nationalhighways are being built across India, and this road building activity also drives growth in the rural areas.Indeed, highway projects have been a trigger for a sta te like Bihar, (one of India’s 28 states), to registergrowth in excess of 11% a year for five recent years.

The Planning Commission pegs investment in physical infrastructure to be a cumulative $542 billionduring the Eleventh Five Year Plan period of 2007/08-2011/12. And this is expected to go up further to$1,000 billion over the 12th Five Year Plan 2012/13-2016/17. A steady rise in infrastructure investment is

already visible. Infrastructure investment has moved up from 5.4% of GDP in 2005/06 to 7.5% of GDP in2009/10. The Planning Commission forecasts this figure to climb up to 8.4% of GDP in 2011/12. What is of special interest to foreign investors is the ever more significant role of private investment in buildingIndia’s infrastructure. The share of the private structure in infrastructure investment has moved up from2.2% of GDP in 2007/08 to 2.6% of GDP in 2009/10 and is expected to touch 3.3% of GDP by 2011/12.

No economy can sustain fast growth without undergoing accelerated urbanisation. The 2001 Census putIndia’s urban population at 28% of the total. It probably has already moved past 31%. It is a safe bet toexpect half of India to live in towns by 2030, which means that over 230 million additional town dwellers.The urban space that is required to accommodate these many additional people would be upwards of

20,000 sq km. While this is a great policy challenge, there is little alternative but to build this requiredspace, to house the fast growing sectors of industry and services. Building new towns as energy efficient,climate-friendly habitats, using mixed land use to minimise commute, extensive public transport, greenbuilding codes and green energy would be a policy challenge and a great investment opportunity. Indiaallows 100% FDI in building new townships.

The UN estimates that India would contribute fully a quarter of the addition to the world’s workforceover the next 10 years. India would produce 136 million workers, while China would contribute just 23million. The main challenge for India would be to ensure that these young people are educated, skilledand productively employed. While school retention rates have gone up over the last five years, raising the

quality of education and increasing the proportion of students to who go on to college would be majorchallenges. India’s education sector offers huge opportunities.



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The government has been extremely keen to use public-private-partnership (PPP) to build infrastructure.Thus, national highways, power plants and airports are being bu ilt under PPP at great speed. New Delhi’slatest international airport terminal, T3, one of the largest in the world and the fastest built, stands asgleaming testimony to the efficacy of the PPP framework. A national skill development programme is

underway, with extensive collaboration between the government and the private sector.Thanks essentially to a sustained rise in the demand for food, especially for superior food from ruralhouseholds due to their additional purchasing power arising from enhanced transfers and new economicactivity, India is also facing the challenge of food inflation, in recent times. This is both a problem and anopportunity to raise farm output and boost farmer incomes. While agriculture now contributes less than18% of gross domestic output, it still employs a little more than half the workforce.

But is this growth sustainable? Such scepticism is commonplace, given the infrastructure deficits andshortages. But every such shortage is also a growth opportunity and India is putting in place a robustpolicy and regulatory framework that will allow each infrastructure sector to grow, as the spectaculargrowth of telecom has shown. India’s tele -density now stands at over 50%, with the 127-fold increase inthe number of mobile phone connections from roughly 5 million in 2001 to 635 million by mid-2010leading the way. It is entirely feasible that other sectors would replicate telecom’s success story.

There is an under- appreciated side to India’s growth story. India saves a little mor e than one-third itsoutput and invests that much and little bit more, drawing on global savings, to squeeze out 9% growth.Per unit of capital, India produces far more output, thanks to two things: capital is unsubsidised andcostly and this forces Indian companies to constantly innovate production processes and businessmodels. India’s pharmaceutical industry’s cost efficiency might have its origins in the erstwhile processpatent regime (now superceded by a TRIPS-compliant product patent regime), but its culture of constantly improving its own process continues to pay dividends. Bharti Airtel created a new paradigm inthe telecom industry by outsourcing its networks, customer service and much else, focusing on brandbuilding and customer acquisition. Companies around the world have adopted the model now, includingSprint in the US.

India’s exports are less than a quarter of its GDP and net exports (exports less imports) are negative. Thismeans that Indian producers depend mostly on the domestic market, making them, for the most part,less vulnerable to economic trouble abroad. The information technology sector, of course, is a majorexception.

India depends, again, for the most part on domestic savings for capital formation. Yet foreign capitalinflows do play a significant role in the Indian economy: it stimulates the stock market, reduces the costof debt for large firms with access to global sources, feeds a veritable frenzy of entrepreneurship takinggood advantage of venture capital and private equity and, in general, meets the gap between investmentand domestic financial savings (a large part of domestic household savings are in a physical form and notavailable for investment by anyone other than the saver concerned). India’s fast growth attracts a lot of foreign capital. As significantly Indian industry’s outward investment, is also growing proportionately,with India for example, emerging as the second largest foreign investor in London.



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India maintains control on foreign debt (total debt stock is roughly equal to total foreign currency assets),its debt service ratio is low (a healthy 5%), the share of short term debt in total debt is about 18%, evenas the share of concessional debt in the total has come down by half to about 18% from the early years of the decade. So, foreign creditors have little reason to be concerned by the recent widening of India’s

current account deficit, stubbornly below 2% of GDP and even negative in the early part of the decade.India also regulates foreign investment in some crucial sectors of the economy - banking, insurance,retail, the media, telecom, and so on. The historic record is that most such caps are gradually raised andfinally abandoned, over time. Such caution has served India well and it is unlikely that India would berushed off its feet by any foreign wooer of its domestic opportunities.

For quite some time, it was fashionable to see India as a nation specialising in high-end services,particularly those related to information technology. No more. There is a new confidence in Indianmanufacturing - only about 15% of outward investment from India are related to information technology.The world’s lowest cost car was conceptualised, engineered and manufactured in India, not any

everywhere else. So, while services still grow faster than industry and account for about 54% of theoutput, manufacturing is getting only better - in volume and in sophistication.

Like any other fast developing major economy, India has to further accelerate its growth rate while beingconscious of environmental aspect. India’s carbon footprint is small, per capita. The country has alsocommitted to reduce the emission intensity of its growth - units of emissions per unit of additional output- by more than a fifth over the next one and a half decades. Green energy, green buildings, greenhabitats, greater energy efficient factories, offices and commercial places - these are daunting challengesand, simultaneously, goldmines of opportunity for high-tech firms around the world.

As India grows in size and clout, it will inevitably have an impact on the correlation of forces in the world.While India has no aggressive designs on foreign lands, it is inevitable that India’s defence forces shouldbecome stronger and more sophisticated. Larger procurement of advanced equipment leads on tooffsets, joint ventures, domestic manufacture and eventually, India-based research and development,drawing on the tens of thousands of engineers who come out of India’s colleges every year, the bestamong them being world class.

Visitors to India are astounded at the manner in which the physical landscape keeps changing, from onevisit to the next. The change that is even more striking than the new airports, roads, metro rail and high-rises that keep gett ing added is the new mood of optimism that India’s young people, the largest pool of youth in the world, have about themselves and the future.

FDI IN CIGARETTE MANUFACTURE BANNED

Taking forward the commitment to discourage foreign equity in tobacco trade, the Union Cabinetbanned Foreign Direct Investment (FDI) in cigarette manufacturing.

Commerce and Industry Minister Anand Sharma recently asserted that there was no room forallowing FDI in cigarettes and tobacco and appropriate measures would be taken soon to curbthis. His Ministry had moved the Cabinet on the FDI issue, which got the final approval of the

Cabinet Committee on Economic Affairs (CCEA).



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The decision is the latest in the government's long-standing drive against smoking. In 2008, itbanned smoking in public places and put a curb on tobacco advertisements.

The proposal to ban FDI was mooted by the Department of Industrial Policy and Promotion andapproved by the CCEA.

Asked about the existing foreign investment in the tobacco sector.Under the existing norms, 100per cent FDI was permitted in cigarette manufacturing, but an industrial licence was required andthe proposals needed to be approved by the Foreign Investment Promotion Board.

The move would also align the FDI policy with the existing legislation on tobacco control to agreater extent.

NDIA REMAINS PREFERRED FDI DESTINATION

Foreign direct investment totaled $46.5 billion in 2008

Notwithstanding global meltdown and the financial crisis impacting major economies of the world, Indiacontinued to remain as the preferred and attractive foreign direct investment (FDI) destination attractingnearly $46.5 billion of FDI during 2008.

With regard to foreign institutional investors (FIIs), there were signs that the FIIs who had recorded netoutflows in 2008-09 might have returned to the Indian market in the last two months.

According to an UNCTAD study, FDI into India went up from $35.1 billion in 2007 to $46.5 billion in 2008 evenas global flows declined from $1.9 trillion to $1.7 trillion during the period. It has suggested that FDI limit indefence industries should be raised to 49 per cent from 26 per cent at present and allow up to 100 per centFDI on a case-by-case basis.

IMF RAISES INDIA’S GROWTH FORECAST

The International Monetary Fund raised India’s growth forecast to 5.4 per cent for 2009, even as it projectedthe world economy to shrink by 1.4 per cent. In April, it forecast a growth of 4.5 per cent for India. In itsupdate to the World Economic Outlook, the IMF said the global economy would contract by 1.4 per cent.Earlier it had projected a growth of 1.3 per cent. The Chinese economy would expand by 7.5 per cent, asagainst 6.5 per cent forecast in April, it said.

LIC TIES UP WITH NOMURA AMC AS STRATEGIC PARTNER

The Japanese company will take 35 per cent stake in LIC MF

LIC Mutual Fund Trustee Company Private Limited (LICMF Trustee) and LIC Mutual Fund Asset ManagementCompany Limited (LICMF AMC) announced the induction of Nomura Asset Management Co as a strategicpartner in India.Nomura Asset Management will acquire a 35 per cent stake in LICMF AMC as well as in LICMFTrustee.

LICMF AMC is ranked seventh in the Indian asset management industry with a 4.8 per cent market share.

Nomura Asset Management Co, a wholly-owned subsidiary of Nomura Holdings of Japan, is one of the leadingJapanese and Asian fund managers with 18,950.2 billion yen (about $192 billion) of assets under management



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(as on March 31, 2009). Nomura is a leading financial services group and a pre-eminent Asian-basedinvestment bank with worldwide reach.

TOWARDS THE GST

In one of the significant announcements in his budget speech, Finance Minister Pranab Mukherjee not onlyconfirmed that the Goods and Services Tax (GST) will be introduced as scheduled on April 1, 2010, but alsooutlined broad contours of the new levy, as agreed to by the Empowered Committee of State FinanceMinisters. As widely expected, India will adopt a dual structure, with the Centre legislating, levying andadministering its own GST and the States having their own laws and rates for the tax. In effect, there will betwo sets of GST, one for the goods and the other for the services, levied at two levels, the Centre and theState. These two would be mutually exclusive and operate throughout the value chain. Now that thegovernment has come out clearly on the structure, attention should now turn to other essential features of the new tax on which a consensus is yet to emerge. A key challenge will be the determination of the rates tobe applied. Two other major challenges relate to compensating the States for possible revenue loss and

revamping the legal architecture. The 13th Finance Commission Chairman, Vijay Kelkar, has sought to allay thefears of the States and the Union Territories over possible revenue loss by promising suitable compensation atleast in the early stages. Far more difficult, especially because so little preparatory work is in evidence, is theprocess of repealing Acts such as the Central Excise Act 1944 and the Finance Act 1994. Existing VAT laws willneed to be amended or partially repealed. Amendments to the Constitution will be necessary, for instance, toenable the States to levy a service tax and the Centre to tax goods beyond the factory gate. A dual GST regimefor goods and services will need to be backed up by a comprehensive set of rules for inter-State transactions.Even more than VAT, the GST will require strong political will for its implementation. Technology will need tobe harnessed to a very large extent to make the GST work. The taxpayers, government officials, and the publicat large will have to be educated about the various aspects of the levy. The GST will take the country closer to

the ideal of a well functioning, integrated market, but a great deal of work needs to be done on a war footingif it is to be rolled out by the target date.

ANAND SHARMA TO HEAD BOARD OF TRADE

The UPA Government has named Commerce and Industry Minister Anand Sharma as Chairman of the Board of Trade, a post last held by leading industrialist Kumar Mangalam Birla. The Board is the Government’s highestadvisory body on export- and import-related issues.

The Commerce and Industry Minister will be the Chairman of the Board of Trade (BoT), the DirectorateGeneral of Foreign Trade (GDFT) said in a notification. The BoT advises the Government on policy measures forpreparing and implementing both short- and long-term plans for increasing exports in the light of emergingnational and international economic situations.

Among others, the Secretary in the Departments of Commerce and Revenue and Ministries of External Affairsand Textiles are members of the Board, which meets at least once every quarter.

FIRST GREENFIELD MERCHANT AIRPORT BY 2011-12

India’s first greenfield airport to be se t up as a joint venture with Changi Airports International (CAI) of

Singapore will be ready by 2011-12. The project is set to come up as part of a Rs. 10,000-crore airport city inDurgapur.(West Bengal)CAI, through its subsidiary, Changi Airports India Pte Ltd, has already picked up a 26



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per cent stake in Bengal Aerotropolis Projects Ltd (BAPL) which will implement the project, making it the firstinvestment by CAI in an Indian company.

GREENFIELD

A brand new installation of equipment without the requirement of integrating existing systems. Contrast withbrownfield, which is an upgrade to an existing system. Coined by the building industry to refer to clean,undeveloped land (greenfield) vs. contaminated land or land with existing structures (brownfield), the termmay be used to refer to network installations.

NATIONAL COMMODITY & DERIVATIVES EXCHANGE LIMITED (NCDEX)

NCDEX is a professionally managed on-line multi commodity exchange. The shareholders are : Promoter shareholders: Life Insurance Corporation of India (LIC), National Bank for Agriculture and

Rural Development (NABARD) and National Stock Exchange of India Limited (NSE) . Other shareholders: Canara Bank, CRISIL Limited (formerly the Credit Rating Information Services of

India Limited), Goldman Sachs, Intercontinental Exchange (ICE), Indian Farmers Fertiliser CooperativeLimited (IFFCO) and Punjab National Bank (PNB).

NCDEX is the only commodity exchange in the country promoted by national level institutions. Thisunique parentage enables it to offer a bouquet of benefits, which are currently in short supply in thecommodity markets. The institutional promoters and shareholders of NCDEX are prominent players intheir respective fields and bring with them institutional building experience, trust, nationwide reach,technology and risk management skills.

NCDEX is a public limited company incorporated on April 23, 2003 under the Companies Act, 1956. Itobtained its Certificate for Commencement of Business on May 9, 2003. It commenced its operationson December 15, 2003.

NCDEX is a nation-level, technology driven de-mutualised on-line commodity exchange with anindependent Board of Directors and professional management - both not having any vested interest incommodity markets. It is committed to provide a world-class commodity exchange platform formarket participants to trade in a wide spectrum of commodity derivatives driven by best globalpractices, professionalism and transparency.

NCDEX is regulated by Forward Markets Commission. NCDEX is subjected to various laws of the landlike the Forward Contracts (Regulation) Act, Companies Act, Stamp Act, Contract Act and variousother legislations.

NCDEX is located in Mumbai and offers facilities to its members about 550 centres throughout India.The reach will gradually be expanded to more centres.

NCDEX currently facilitates trading of 57 commodities -

The NCDEX Commodity Index is an equal-weighted spot price index of 20 agricultural commodities

covering different groups such as oils and oilseeds, fibres, etc.



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COMPANIES BILL REINTRODUCED

Seeks to harmonise the framework of company laws with the current sectoral regulations

The Government reintroduced the Companies Bill in the Lok Sabha aimed at replacing the over five decade-oldAct with the objective of simplifying rules and regulations dealing with formation, mergers and acquisitions(M&As) and winding up of companies.

As the Companies Bill, 2008, lapsed along with the dissolution of the 14th Lok Sabha, Corporate AffairsMinister Salman Khurshid reintroduced the new Companies Bill, 2009, in the House which, among otherthings, is shorter than the existing Companies Act, 1956, and seeks to harmonise the framework of companylaws with the current sectoral regulations. As against 600 sections in the existing Act, the new amendment Billhas 480 sections and seeks to provide greater shareholder democracy coupled with lesser governmentintervention.

Objectives of Companies Bill, 2009

The main objectives of the Companies Bill, 2009 are as follows -

(a) to revise and modify the Companies Act, 1956 in consonance with the changes in the national andinternational economy;

(b) to bring about compactness by deleting the provisions that had become redundant over time and byregrouping the scattered provisions relating to specific subjects;

(c) to re-write various provisions of the Act to enable easy interpretation; and

(d) to delink the procedural aspects from the substantive law and provide greater flexibility in rule makingto enable adaptation to the changing economic and technical environment.

The Companies Bill, 2009, provides for:

(i) The basic principles for all aspects of internal governance of corporate entities and a framework fortheir regulation, irrespective of their area of operation, from incorporation to liquidation and winding up,in a single, comprehensive, legal framework administered by the Central Government. In doing so, the Bill

also harmonizes the Company law framework with the imperative of specialized sectoral regulation.

(ii) Articulation of shareholders democracy with protection of the rights of minority stakeholders,responsible self-regulation with disclosures and accountability, substitution of government control overinternal corporate processes and decisions by shareholder control. It also provides for shares withdifferential voting rights to be done away with and valuation of non-cash considerations for allotment of shares through independent valuers.

(iii) Easy transition of companies operating under the Companies Act, 1956, to the new framework as alsofrom one type of company to another.

(iv) A new entity in the form of One-Person Company (OPC) while empowering Government to provide asimpler compliance regime for small companies. Retains the concept of Producer Companies, while



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providing a more stringent regime for not-for –profit companies to check misuse. No restriction proposedon the number of subsidiary companies that a company may have, subject to disclosure in respect of theirrelationship and transactions/ dealings between them.

(v) Application of the successful e-Governance initiative of the Ministry of Corporate Affairs (MCA-21) to

all the processes involved in meeting compliance obligations. Company processes, also to be enabled tobe carried out through electronic mode. The proposed e-Governance regime is intended to provide forease of operation for filing and access to corporate data over the internet to all stakeholders, on roundthe clock basis. (vi) Speedy incorporation process, with detailed declarations/ disclosures about thepromoters, directors etc. at the time of incorporation itself. Every company director would be required toacquire a unique Directors identification number.

(vii) Facilitates joint ventures and relaxes restrictions limiting the number of partners in entities such aspartnership firms, banking companies etc. to a maximum 100 with no ceiling as to professions regulatedby Special Acts.

(viii) Duties and liabilities of the directors and for every company to have at least one director resident inIndia. The Bill also provides for independent directors to be appointed on the Boards of such companies asmay be prescribed, along with attributes determining independence. The requirement to appointindependent directors, where applicable, is a minimum of 33% of the total number of directors.

(ix) Statutory recognition to audit, remuneration and stakeholders grievances committees of the Boardand recognizes the Chief Executive Officer (CEO), the Chief Financial Officer (CFO) and the CompanySecretary as Key Managerial Personnel (KMP).

(x) Companies not to be allowed to raise deposits from the public except on the basis of permissionavailable to them through other Special Acts. The Bill recognizes insider trading by companydirectors/KMPs as an offence with criminal liability.

(xi) Recognition of both accounting and auditing standards. The role, rights and duties of the auditorsdefined as to maintain integrity and independence of the audit process. Consolidation of financialstatements of subsidiaries with those of holding companies is proposed to be made mandatory.

(xii) A single forum for approval of mergers and acquisitions, along with concept of deemed approval incertain situations.

(xiii) A separate framework for enabling fair valuations in companies for various purposes. Appointment of valuers is proposed to be made by audit committees.

(xiv) Claim of an investor over a dividend or a security not claimed for more than a period of seven yearsnot being extinguished, and Investor Education and Protection Fund (IEPF) to be administered by astatutory Authority.

(xv) Shareholders Associations/ Group of Shareholders to be enabled to take legal action in case of anyfraudulent action on the part of company and to take part in investor protection activities and `ClassAction Suits’.

(xvi) A revised framework for regulation of insolvency, including rehabilitation, winding up and liquidationof companies with the process to be completed in a time bound manner. Incorporates international best





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The Indian School of Mines is the only institute of its kind in India and has traditionally catered extensively tothe mining, mining machinery, mineral and petroleum industries. Yet, over the years, other engineeringdisciplines have made their mark in their respective sectors and are now churning out some of the mosttalented engineers in India.

ISM is rapidly improving its position among the top engineering colleges of India. It is consistently rankedamong the top academic institutions in India. In the latest Outlook ranking of Top Engineering Colleges of India(June 2007), ISM was placed 8th, only next to its IIT-JEE league and BITS Pilani.

CABINET APPROVES EXPANSION OF RAJMAHAL COALFIELDS

The Union Cabinet approved the Rs. 155-crore expansion of Rajmahal Coalfields to take the annual productioncapacity at its opencast mines to 17 million tonnes, primarily aimed at increasing supplies to the NTPC facilitiesin Jharkhand.

PERU DROPS SAFEGUARD DUTY ON INDIAN COTTON YARN

The efforts by the Cotton Textiles Export Promotion Council (Texprocil) and the Indian Embassy in Peru haveled to the Peruvian authorities deciding against the imposition of any Safeguard duty on import of Cotton yarninto Peru. According to a statement from Texprocil, shipments of Cotton yarn from India would now continuewithout any incumbrances.

“Being the largest supplier of cotton yarn to Peru with a share of over 80 per cent in total Peruvian cottonyarn imports, Indian cotton yarn exports would have been severely impacted in case the safeguard dutieswere imposed.”

Exports of cotton yarn from India reached a level of $94.45 million in 2008, recording a growth of 73.62 percent. On account of the safeguard investigations, imports of cotton yarn from India during Jan-June 2009 hadrecorded a sharp decline of 54.25 per cent, going down to a level of $24.79 million.

SWISS BANK

Banking in Switzerland is characterised by stability, privacy and protection of clients' assets and information.The country's tradition of bank secrecy, which dates to the Middle Ages, was first codified in a 1934 law. All

banks in Switzerland are regulated by Swiss Financial Market Supervisory Authority (FINMA), which derives itsauthority from a series of federal statutes.

BANKING SERVICES FOR EVERY VILLAGE BY 2011

A high level committee set up by the Reserve Bank of India (RBI) has recommended that a sub-committee of the District Consultative Committee (DCC) of banks — under the Lead Bank Scheme — would draw up a roadmap to provide banking services, in any form, to every village with a population of over 2,000, at least once aweek on a regular basis by March 2011.

The high level committee headed by RBI Deputy Governor Usha Thorat was set up by the RBI to improve theeffectiveness of the Lead Bank Scheme with a focus on financial inclusion and recent developments in thebanking sector.



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MANGALA OIL FIELD MARKS ‘BEGINNING OF A NEW ERA’: MANMOHAN SINGH

Prime Minister Manmohan Singh dedicates the Mangala Oil Field to the nation at Barmer, Rajasthan,

The Great Indian Desert, once discarded as wasteland until foreign tourists discovered its sand dunesby moonlight, achieved another economic milestone for the State of Rajasthan and the whole countrywhen Prime Minister Manmohan Singh dedicated to the nation the Mangala oil field , marking thestart of commercial production of oil from the area.

Dr. Singh, who termed the occasi on as the “beginning of a new era” for the desert State, said thesuccess of the joint venture of Cairn Energy and the Oil and Natural Gas Corporation Limited (ONGC)was a signal to the world community to invest in India.

Mangala is the largest of 25 discoveries made by Cairn in the Barmer Basin. Discovered in January2004, it is said to be the largest onshore discovery in the country over two decades. The Mangala,Bhagyam, and Aisharya fields together have a recoverable oil reserve of one billion barrels.

RBI GOVERNOR D. SUBBARAO ON THE GLOBAL ECONOMIC CRISIS

Macro imbalances and policy conflicts among root causes

The four key aspects of the crisis articulated by the RBI Governor are

Macro imbalances, Conflicts between monetary and fiscal policies, Inflation targeting and The interplay of the real and financial sectors.

WORLD TRADE REPORT 2009

The World Trade Organization released its World Trade Report 2009 recently in Singapore.

The WTO which had earlier predicted a 9 per cent decline in global merchandise trade this year now says thatthe decline will be 10 per cent. The downward revision is due to the fact that trade growth will be ‘stronglynegative’ this year.

OVL EXITS IRAN OIL FIELD

ONGC Videsh Ltd and its partners Indian Oil Corporation and Oil India Ltd have dropped plans to develop an oilfield in Iran after the discovery was found to be commercially unfeasible.

The joint venture of OVL, Indian Oil Corp and Oil India (OIL) had in 2006 made an oil discovery in the Farsioffshore block which was, in the initial estimates, thought to contain one billion barrels of reserves.

“The oil discovery has been found to be commercially unviable primarily due to high sulphur content in theoil,”

The discovery, which was subsequently named Farzad-B gas field, has inplace reserves of up to 21.68 trillioncubic feet (Tcf), of which recoverable reserves may be 12.8 Tcf.



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GOVT TO SET STANDARDS FOR SPECIALISED TEXTILES

The government is considering setting up a regulatory framework to promote specialised textiles which areused in various sectors like healthcare, defence and agriculture technology.

While emphasising on the need for standards and specification for special textiles, the ministry would workwith other ministries including defence, consumer affairs, environment and health.

On protective textiles, its market size is likely to touch Rs 2,000 crore by 2012-13 from Rs 1,260 in 2007-08.This variant is mainly used by the defence sector.

The government has set up four centres of excellence (CoEs) for Meditech, Agrotech, Geotech and Protechsegments of technical textile, which would provide facilities for testing, human resource development andresearch and development.

“The activities of the CoEs will be synergised with the laboratories of Defence Research and DevelopmentOrganisation and Director General Quality Assurance to set standards for defence procurement and fulfil the

defence and para military forces requirement ,” At present, 60 -65% of the domestic consumption of protectivetextile is met though imports. there is an urgent need to develop standards, procedures and manufacturingcapacities of international standards for protective textiles to compete globally.

NADARBAGS UK TRADE & INVESTMENT AWARD

Shiv Nadar, chairman, HCL Technologies, won the Business Person of the Year award in this year’s UKTrade & Investment India Business Awards.

Nadar was recognised for HCL’s pioneering investment in the UK, and for his f ocus and direction inestablishing HCL as a leader in the ICT industry in India.

UK Trade & Investment India Business Awards recognises Indian corporate leaders at the forefront of India-UK business partnerships, mainly in the area of Indian FDI in the UK, collaborations,entrepreneurship and innovation.

CAG: OIL CONTRACTORS TO FURNISH ACCOUNTS

Enabling provision for CAG audit in future production sharing contracts

The Union Petroleum and Natural Gas Ministry assured the Comptroller and Auditor General (CAG)that it would ensure that unfettered access was provided to accounts of private oil and gascontractors.

Exports decline for the tenth consecutive month

Depressed overseas demand cited as the main reason

Declining trend to continue: FIEO

Steep drop in oil imports

The continued recession and economic slowdown in the U.S. and Europe continued to have a negative impacton exports which continued the downhill journey for the tenth consecutive month dipping by 28.4 per cent inJuly.

However, the only good news among this gloom was that in July imports too fell by 37.1 per cent, narrowingthe trade deficit to $5.99 billion from $12.15 billion a year ago.



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RBI RELEASES ‘A PROFILE OF BANKS 2008-09’

The Reserve Bank of India has released ‘A Profile of Banks 2 008- 09’ fifth volume in the series. According to itsrelease, it provides bank-wise data on important performance indicators of all scheduled commercial banks,excluding regional rural banks, for the years 2004-05 to 2008-09.

The publication,provides bank-wise data on important performance indicators of all scheduled commercialbanks, excluding regional rural banks, for the years 2004-05 to 2008-09. The publication covers 18 importantindicators like return on assets, CRAR and business per employee.

The analysis shows the profitability of all scheduled commercial banks at aggregate level improved in2008-09.

At bank group level, while return on assets of SBI & its associates and nationalised banks improved,return on assets of other scheduled commercial banks and foreign banks declined in 2008-09.

Net NPA ratio of nationalised banks at bank group level declined in 2008-09.

CRAR of all the bank groups increased in 2008-09, exhibiting strong capital base of Indian bankingsector.

Average number of employees of all banks increased in 2008-09.

THE RESERVE BANK OF INDIA, CELEBRATING PLATINUM JUBILEE.

RBI Selects Hunder village in Ladakh to mark the occasion to organise outreach events

To celebrate its Platinum Jubilee, the Reserve Bank of India’s Jammu and Ka shmir branch had to cross theworld’s highest motorable road in the Ladakh region as it selected Hunder village to mark the occasion. The

officers interacted with a cross-section of the people to make them aware about banking at large.

The RBI, which began its operations on April 1, 1935, will be completing its 75 years of existence on April 1,2010, marking a major milestone in the history of the bank.

Just a few kilometers downstream from the confluence of river Siachin and river Shyok, village Hunder inNubra valley in Ladakh is located at a distance of 125 km from Leh town and across Khadungla Pass which, at18,380 feet, is the highest motorable pass in the world.

BP DRILLS WORLD’S DEEPEST OIL WELL

BP, Europe’s second -largest oil company, reported a “giant” discovery at the Tiber Prospect in the US Gulf of Mexico that may contain more than 3 billion barrels, after drilling the world’s deepest exploration well. Thewell is located about 250 miles (400 kilometers) southeast of Houston, It was drilled to approximately 35,055feet (10,685 meters), greater than the height of Mount Everest.

The latest discovery will help BP, already the biggest producer in the Gulf of Mexico, boost output in theregion by 50% to 600,000 barrels of oil equivalent a day after 20 20. It’s equal to about a year’s output fromSaudi Arabia, the biggest exporter in the Organization of Petroleum Exporting Countries, as well as comingclose to matching the UK’s entire proven reserves.



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WORLD BANK CLEARS $4.3 BN LOAN TO INDIA

The World Bank will extend $4.3 billion loan to four projects, including $2 billion for recapitalisation of publicsector banks.

The assistance would bolster infrastructure investments, enable public sector banks to expand credit, andstrengthen power transmission networks to meet the growing demand, said a World Bank release.

The four loans, approved by the World Bank’s executive board include $2 billion to enhance banks’ capital,$1.2 billion to infrastructure financing company IIFCL, $1 billion to help address power deficiency, and $150million to improve water supply in Andhra Pradesh.

The multilateral lending agency said the development policy loans have no conditions attached and would bedisbursed in a single tranche after January 1, 2010, unless the Indian government prefers in instalments.

The World Bank’s $2 billion Banking sector support loan, with a 30 -year maturity, would help India’s selectpublic sector banks expand credit. The loan will be given to banks like Oriental Bank of Commerce, Punjab

National Bank, Dena Bank, UCO bank and United bank of India to recapitalise them through infusion of capitals.

Preferring to call it “injection of capital” instead of “recapitalisation” as the latter could mean banks are shortof capital.

A 28-year loan of $1.195 billion has been granted to the India Infrastructure Finance Co Ltd (IIFCL) to help Indiaachieve its vast infrastructure agenda on roads, railways, ports, airports, communication and power sectors.

STATES PERMITTED TO BUY POWER FROM MEGA UNITS

In an effort to attract private investment in the power sector, the Union Cabinet made major changes

in the Mega Power Policy under which States controlling the power distribution system would beallowed to purchase power from mega power units in a bid to encourage such projects.

The Cabinet also decided to remove the condition requiring inter-State sale of power for getting megapower status. Earlier, only those projects which had inter-state power sale agreements were grantedmega power status. The Cabinet also decided to extend the benefits of mega power policy to thesupercritical power projects to be awarded through the international competitive bidding (ICB) routewith the mandatory condition of setting up indigenous manufacturing facility.

Providing a level-playing field to private players, the government also mandated in the policy that the15 per cent price preference available to the domestic bidders in the case of PSU projects would notapply to tariff-based competitive bid projects of these State-run companies. However, the present

dispensation of 15 per cent price preference available to the domestic bidders in the case of PSUprojects would continue.

Under the policy, existing power projects have been allowed to import equipment for brownfieldexpansion at a basic custom duty of 2.5 per cent. Such expansion of existing projects would enjoy allother benefits available to greenfield mega power projects.



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GREENFIELD-BROWNFIELD

Greenfield land is a term used to describe a piece of previously undeveloped land, in a city or rural area, either

currently used for agriculture or landscape design, or just left to nature. In contrast, Brownfield sites areabandoned or underused industrial and commercial facilities available for re-use. Expansion or redevelopment

of such a facility may be complicated by real or perceived environmental contaminations

IMPORTS A MAJOR THREAT TO THE DOMESTIC TEA INDUSTRY

A surge in import of low-priced tea to the country after the removal of quantitative restrictions in April 2001continues to be a major threat to the domestic tea industry.Nepal, Kenya, Indonesia and Vietnam are thecountries from which bulk of the tea imports comes.

TOP EXPORTER OF TEA IN 2008

COUNTRY SHARE

Kenya 23.3 %

Sri Lanka 18.2 %

China 18 %

India 11.9%

Vietnam 7 %

PRASADA RAO TAKES OVER AS BHEL CMD

B. Prasada Rao assumed charge as Chairman and Managing Director of Bharat Heavy Electricals Ltd. (BHEL).Mr. Rao took over to lead the company at a crucial juncture when BHEL is building capacity and capability tocontribute fully for meeting the country’s power forecast for the XI Plan and beyond.

GE MERGES HEALTHCARE UNIT WITH WIPRO

Medical technologies and services giant GE Healthcare said it had merged its healthcare business unitin India with its joint venture partner Wipro to accelerate growth and focus in India along with theentire South Asian market.

In Wipro GE Healthcare, GE holds 51 per cent stake, while the balance is with Wipro. Wipro GEHealthcare, which distributes 85 per cent of GE’s various healthcare and medical diagnostic productsin India, will now incorporate Life Sciences, Medical Diagnostics and Medical Systems divisions. Statingthat the joint venture company plans to increase the number of products it manufactures in India.



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INDIA, THAILAND SET TO EXPAND FTA

Enthused by the likely gains from the recently signed ASEAN-India Free Trade Agreement (FTA), Indiaand Thailand are all set to expand their FTA pact beyond goods to new areas of services andinvestments with focus on further consolidating their economic ties.

Expanding commercial ties would help the two Asian economies to take their bilateral trade to $10billion in 2011 from $6 billion at present. The bilateral FTA, which became operational in 2006, allowsfree trade in 82 items, including plastics, auto components, refrigerators and air-conditioners.However, the FTA has been implemented in a limited way through what is known in the tradeparlance as the early harvest scheme or trading in only a few of the goods included in the pact.

Besides the bilateral trade pact, the two countries would expand their commerce through the recentlysigned FTA between India and the ten-nation Association of Southeast Asian Nations (ASEAN).

DRAFT PAPER ON GST SOON - ASIM DASGUPTA

A draft paper on Goods and Services Tax (GST) will be finalised for discussion within a month tofacilitate implementation of the new tax regime by April 1, 2010, according to Chairman of theEmpowered Group of State Finance Ministers Asim Dasgupta.

On implementation of the GST regime, it would do away with most of the indirect tax levies such asthe Central excise duty and service tax and subsume State levies like the value added tax (VAT) andoctroi duty.



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FOREIGN EXCHANGE RESERVES UP $430 MILLION AT $280.340 B

India’s foreign exchange reserves rose by $430 million to $280.340 billion during the week ended October 2from $279.910 billion a week earlier, the Reserve Bank of India said in its weekly statistical supplement.

‘GREEN SHOOTS’

Green shoots is a term used colloquially to indicate signs of economic recovery during an economic downturn.It was first used in this sense by Norman Lamont, the then Chancellor of the Exchequer of the United Kingdom,

during the 1991 Recession.

A GLIMMER OF HOPE FOUNDATION

The A Glimmer of Hope Foundation was founded by Texas-based philanthropists Philip Berber and DonnaBerber to reduce extreme poverty in rural Ethiopia.

INDIA INKS $4.2 B LOAN AGREEMENTS WITH WORLD BANK

India inked three agreements with the World Bank for a total loan of $4.2 billion (about Rs. 20,000crore) for recapitalising some of the public sector banks (PSBs) and supporting development of infrastructure and power transmission projects. Out of the total credit quantum, while the Centresigned a $2-billion loan agreement for capital infusion in a few of the PSBs during 2009-11,representatives of Power Grid Corporation of India Ltd. (PowerGrid) and India Infrastructure FinanceCompany Ltd. (IIFCL) signed similar loan pacts with the World Bank for $1 billion and $1.195 billion,respectively.

According to an official statement here, the banking sector support loan from the World Bank’s arm,

International Bank for Reconstruction and Development (IBRD), is part of the series of measures tostimulate the economy by assisting state-owned banks in maintaining credit growth to contain theadverse effects of the slowdown on employment and poverty, broaden financial inclusion and helpproduction and trade sectors.

The loan amount is to help bolster the country’s achievements in infrastructure development and laythe foundation for stronger growth by making long-term funding available to such projects beingimplemented through public-private partnerships (PPPs) in a range of sectors, including roads, power,airports, and ports.

The $1- billion loan to PowerGrid is for its ‘Fifth power system development project’ which isestimated to cost $1.562 billion and will be completed by June 30, 2015. The objective of the project

is to strengthen the transmission system (National Grid). The loan is to be utilised for strengthening transmission systems for Sasan, Mundra andKrishnapatnam ultra mega power projects (UMPPs) and the South-West interconnection.

FAKE CURRENCY RECOVERED FROM RBI OFFICE

Counterfeit currency with a face value of around Rs.1 lakh was recovered from the Reserve Bank of India office New Delhi.

A case was registered recently after a senior official of the RBI approached police complaining that296 fake notes of various denominations were detected last month.

It is suspected that some banks have “unknowingly” submitted the notes to the RBI, the notes havebeen sent for examination to the Bank Note Press in Madhya Pradesh.



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ADITYA KHAITAN RE-ELECTED ITA CHAIRMAN

Aditya Khaitan, Managing Director, McLeod Russel India, has been re-elected Chairman of the IndianTea Association. As the ITA Chairman, he will concurrently hold the chairmanship of the ConsultativeCommittee of Plantation Associations (CCPA) which is the apex body of the plantation associations in

India. The ITA’s national association also re -elected Aditya Kumar Jajodia, Managing Director and CEO,

Assam Tea, as Vice-Chairman of the association, and Chirinjiv Singh Bedi, Managing Director, RossellTea, as Additional Vice-Chairman for 2009-10.

KAKODKAR COMMITTEE TO SUGGEST REFORMS IN IITS

A five-member committee, under the chairmanship of Anil Kakodkar, Chairman of the Atomic EnergyCommission, has been appointed to suggest reforms to make these elite institutions global brands.

The committee would submit its report within six months.

CABINET NOD FOR DIVESTMENT IN TWO POWER UTILITIES

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Manmohan Singh,gave its approval to fiv e percentage point stake sale in NTPC and 10 percentage point in SJVNL. “CCEAhas given its approval to 10 percentage point disinvestment in SJVNL out of the Government’s shareof 75 per cent and five percentage point divestment of Centre’s 89.5 stake in NTPC,”

After the stake dilution, the government’s holding in NTPC would come down to 84.5 per cent from89.5 per cent. To make it inclusive and participatory, part of the shares would be offered toemployees of the state- run firms,”

The installed generation capacity of NTPC stands at over 30,000 MW and the company plans to raisethis to 50,000 MW by 2017. The CCEA also approved offloading of 10 percentage points of theCentre’s 75 per cent stake in SJVNL, a75:25 joint venture between the Centre and the Him achalPradesh Government. After this disinvestment, Centre’s shareholding in the company would comedown to 65 per cent and Himachal Pradesh government’s stake would remain same at 25 per cent.The paid-up equity capital of the company at present is Rs. 4,108.81 crore.

NEW SERIES OF WPI-BASED INFLATION SOON

Inflation data with 2004-05 as base year will be released on a monthly basis ‘The monthly data would lead to informed decisions by investors in the capital market and curb

needless volatility’ The Central Government decided to shift the base year for Wholesale Price Index (WPI) basedinflation from 1993-94 to 2004-05 and release the comprehensive data on a monthly basis. However,the price movement of primary articles, including food items, and fuel will continue to be releasedevery week, as at present.

“The new series of WPI inflation with 2004 -05 as base year would be launched soon. The reason is...frequency. The response to change in prices each week is poor, particularly from the manufacturingsector. On a monthly basis, the response is bound to be better, reflecting the true position,”

At present, the rate of inflation based on the movement in WPI is measured on a weekly basis. In theexisting series based on 1993-94 prices, the weight of primary articles in the WPI is 22.02 per cent

while the share of manufactured products is 63.75 per cent. The balance of slightly over 14 per cent isaccounted for by the fuel, power, light and lubricants category in the index.



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With the changes in the base year and periodicity of release coming into force, the government willhenceforth issue two sets of inflation numbers — one on a weekly basis for primary articles and fuelitems and another comprehensive data on a monthly basis which will include manufactured goods.

The government would release the new series (2004-05) of inflation data, which is based on therecommendations of a working group headed by Planning Commission Member Abhijit Sen, afterNovember 14.

The monthly release of WPI was a widely followed international practice and the change wasexpected to improve the quality of the WPI assessment.

The monthly data on inflation would lead to informed decisions by investors in the capital market andcurb needless volatility.The monthly data would be much more reliable and accurate and market willbe reacting to it much more reliably. Needless volatility in asset market would also stop.

Importance of CPI

Alongside, the monthly inflation data, Mr. would also lead the people and market analysts to take into

account the Consumer Price Index (CPI), which is often overlooked. “Now the people will look at bothWPI and CPI. Earlier the CPI used to be ignored.

ANTI-DUMPING DUTY ON FIBRE BOARD IMPOSED

India has imposed anti-dumping duty on imports of a certain type of fibre board to protect thedomestic industry from cheap shipments from countries like China, Malaysia and Thailand.

The duty ranged between $308.7 per cubic metre and $395.5 per cubic metre. Plain medium densityfibre board is widely used for partitions, furniture and cabinets.

Acting on the petition of domestic producers on alleged dumping of the board from China, Thailand,Malaysia and Sri Lanka, the Directorate General of Anti-dumping and Allied Duties (DGAD) had carriedout an anti-dumping probe and recommended the duty. The DGAD said the domestic industry hadsuffered material injury due to the dumped imports of plain medium density fibre board from thesecountries.

Unlike safeguard duty, which is levied in a uniform way, anti-dumping duty varies from product toproduct and country to country. Both duties are allowed under the multilateral trade rules afterinvestigations to stand the World Trade Organisation (WTO) scrutiny. India has slapped anti-dumpingduty on several items such as yarn, fabrics, some of the stainless steel products and chemicalsimported from China and other nations.

A recent WTO report had said that India was second only to Argentina among the G-20 nations ininitiating anti-dumping investigations during January-July 2009. India had started 15 anti-dumpinginvestigations in the first seven months of 2009, while Argentina accounted for 19.

GVK BIO GETS EUROPEAN OUTSOURCING AWARD

GVK Biosciences (GVK Bio) along with Wyeth Research won the European outsourcing award 2009 forthe best new partnership.

The award was received by M. Kantipudi, President GVK Bio, at a function held in Madrid recently.GVK Bio had sent nominations in two categories — ‘Best new product’ and ‘Best new partnership/acquisition/ merger’ and was declared fin alist in both the categories.





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Tata Consultancy Service — among the top ten firms in terms of market value. Reliance Industries and Tata Steel feature in the top ten league in terms of sales. Other Indian firms that have made it to the prestigious list include Adani Enterprise, Axis Bank, Bharat

Heavy Electricals, Bharti Airtel, HDFC Bank, Jindal Steel & Power, Larsen and Toubro, Mahindra &Mahindra, Tata Consultancy Services and Wipro.

The Indian league has four newcomers this year. They are: Adani Enterprises, Axis Bank, Jindal Steel & Power and Tata Consultancy Services. Among the Indian firms returning to the list include Bharat Heavy Electricals, Larsen & Toubro and

Reliance Industries. China has again outdone the rest of Asia Pacific with the most number of firms (16) represented in the

league. Taiwan moved up the ranking this year and is in the third place with five companies on the list, all of

which are from the technology sector. Japan and Australia share the fourth place with four companieseach on the list.

Selection criteria The list included companies that have revenue and market capitalisation of at least $3 billion and a

five-year record of operating profitability and return on equity. The other criteria for being in the list include long-term profitability, sales and earnings growth, stock

price appreciation, projects earnings, quality of management and entrepreneurial skills.

INDIA, U.S. TO CONCLUDE THREE TRADE PACTS

The two countries issued a joint statement at the India-U.S. Trade Policy Forum India and the U.S. agreed to fast-track and conclude within a given timeframe agreements on

enhancing and deepening trade and investment engagement, and Intellectual Property Rights (IPR)

cooperation agreement and an agreement for putting in place traditional knowledge digital library. The two countries also issued a joint statement at the end of the Sixth Ministerial Level meeting of the

India-U.S. Trade Policy Forum (TPF) with readiness to continue focus on agriculture, innovation andcreativity, investment, services and tariff and non-tariff barriers. The Indian team was headed by theCommerce and Industry Minister, Anand Sharma, and the U.S. delegation was headed by the U.S.Trade Representative, Ron Kirk.

KANNAN TO HEAD TEXTILES COMMITTEE

The Union Ministry of Textiles has reconstituted its Textiles Committee. T. Kannan, Managing Director of Thiagaraja Mills, Madurai, will be the new Chairman.

COUNTRY’S FIRST GREENFIELD MERCHANT AIRPORT

India’s first greenfield airport to be set up as a joint venture with Changi Airports International (CAI) of Singapore will be ready by 2011-12. The project is set to come up as part of a Rs. 10,000-crore airportcity in Durgapur.

Bengal Aerotropolis Projects Ltd (BAPL), which will be setting up the country’s first greenfieldmerchant airport near Durgapur in West Bengal , has got the first tranche of land of 533.5 acres.

The project, which had hit hurdles following objections raised by Coal India Ltd (CIL) over the issue of its coal deposits getting blocked by the proposed airport city, now expected to start construction by

March 2010 and become operational by September 2011, Arvind Pande - Chairman, BAPL.



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RBI BUYS 200 TONNES OF GOLD WORTH $6.7 B FROM IMF

The Fund is offering 403.3 tonnes of the metal to increase its resources for lending to low-incomecountries

The apex bank’s gold reserves to touch 557.7 tonnes

The Reserve Bank of India (RBI) has concluded the purchase of 200 tonnes of gold from theInternational Monetary Fund (IMF) at an estimated price of around Rs. 31,490 crore ($6.70 billion),under the IMF’s limited gold sales programme.

Under the Fund’s Articles of Agreement, all gold sales must be conducted at prices base d on marketprices, including direct sales to official holders as in the case of this transaction.

“This was done as part of the RBI’s foreign exchange reserves management operations,” the apexbank stated. As India bought half the quantity offered by the IMF, this purchase is expected to boostthe confidence in bullion among investors. However, this sale, according to market participants, willnot have an impact on domestic bullion prices.

The Executive Board of the IMF, on September 18, announced its decision to sell 403.3 tonnes (or

12.97 million fine troy ounces) of gold as a central element of its New Income Model and to increaseits resources for lending to low- income countries. This represents one eighth of the Fund’s totalholdings. The IMF also decided that the initial offer of the sale of the gold would be directly to officialholders, including central banks.

Foreign exchange reserves held by the RBI was at $285.50 billion as on October 23, of which goldcomprised more than $10 billion. Now with the current purchase from the IMF the share of gold in itsforeign exchange reserves is expected to go up to around 6 per cent of total foreign exchangereserves, that is, the gold reserve to touch 557.7 tonnes from 357.7 tonnes.

Even though India is the wo rld’s biggest consumer of gold, its gold reserves — with the central bank— are much less than most of the developed world. However, India’s gold reserves are higher than

China’s share. But China, recently, emerged as the world’s biggest producer of gold, pushing the U.S.to the second position . The RBI’s purchase of gold surprised markets as the Chinese officials,reportedly, have been in talks with the IMF to shift some of its more than $2 trillion in foreignexchange reserves to gold, in a move to be away from the US dollar.

Gold played a central role in the international monetary system until the collapse of the BrettonWoods system of fixed exchange rates in 1973. Since then, the role of gold has been graduallyreduced. However, it is still an important asset in the reserve holdings of a number of countries, andthe IMF remains one of the largest official holders of gold in the world.

THE BRETTON WOODS SYSTEM

The Bretton Woods system of monetary management established the rules for commercial andfinancial relations among the world's major industrial states in the mid 20th century. The BrettonWoods system was the first example of a fully negotiated monetary order intended to governmonetary relations among independent nation-states.

Preparing to rebuild the international economic system as World War II was still raging, 730 delegatesfrom all 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, NewHampshire, United States, for the United Nations Monetary and Financial Conference. The delegatesdeliberated upon and signed the Bretton Woods Agreements during the first three weeks of July 1944.

Setting up a system of rules, institutions, and procedures to regulate the international monetarysystem, the planners at Bretton Woods established the International Monetary Fund (IMF) and theInternational Bank for Reconstruction and Development (IBRD), which today is part of the World Bank



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Group. These organizations became operational in 1945 after a sufficient number of countries hadratified the agreement.

The chief features of the Bretton Woods system were an obligation for each country to adopt amonetary policy that maintained the exchange rate of its currency within a fixed value —plus or minusone percent —in terms of gold and the ability of the IMF to bridge temporary imbalances of payments.Then, on August 15, 1971 the United States unilaterally terminated convertibility of the dollar to gold.This action created the situation whereby the United States dollar became the sole backing of currencies and a reserve currency for the member states. In the face of increasing financial strain, thesystem collapsed in 1971.

SUDHA MURTHY SELLS 2 MILLION INFOSYS SHARES FOR RS. 430 CRORE

Infosys’s co -founder N. R. Narayana Murthy’s wife Sudha Murthy sold 20 lakh company shares ownedby her for over Rs. 430 crore in the open market.

The money raised would go into the corpus of Catamaran , a venture capital fund founded by her

husband.Mr. Narayana Murthy has informed the company that the proceeds of the sale will be usedas a corpus for the venture capital fund that is being set up in India by him to assist youngentrepreneurs in their business, primarily in India.

SEBI ANNOUNCES NORMS FOR LISTING SMES

The Securities and Exchange Board of India (SEBI) prescribed norms for listing small and mediumenterprises (SMEs) on stock exchanges, including a minimum initial public offering (IPO) applicationsize of Rs. 1 lakh,

The minimum trading lot would be Rs. 1 lakh. An upper limit of Rs. 25 crore paid-up capital would beprescribed for a company to be listed on the SME platform/exchange and a minimum paid-up capitalof Rs. 10 crore would be prescribed for listing on the main boards of the NSE and the BSE. Further, if the follow on offer/rights issue results in triggering of the limit of Rs. 25 crore, then the companywould have to migrate to the main board.

Companies listed on the SME exchanges would be exempted from the eligibility norms applicable forIPOs and FPOs prescribed in the Securities and Exchange Board of India (Issue of Capital andDisclosure Requirements) Regulations, 2009 (ICDR). The board decided to accord the QIB status toinsurance funds set up by armed forces such as Army Group Insurance Fund.

At present the ICDR regulations permit reservation up to 10 per cent of the issue size to employees inpublic issues. However, there is no ceiling on the number of shares that could be allotted. The boarddecided to put a ceiling of Rs. 1 lakh on the value of allotment that can be made to an employeeunder the employee reservation category and to permit reservation up to 5 per cent of the post-issued capital instead of 10 per cent of the issue size.

The board decided to make it mandatory to disclose only limited review or audited results within 45days of the end of the quarter.

YAHOO’S CHIEF EXECUTIVE OFFICER CAROL BARTZ



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ROAD MAP FOR DIVESTMENT PLAN UNVEILED

The Centre on unveiled a road map for the ‘big bang’ disinvestment programme in major Central

pubic sector undertakings (CPSUs), indicating that talks were already on with nearly 60 CPSUs,including SAIL, BSNL, Coal India, for selling government stake.

The government also announced that NTPC and Rural Electrification Corporation will make theirfollow-on public offer (FPO) within this fiscal along with Satluj Jal Vidyut Nigam, which is expected tocome out with an initial public offer (IPO) to offload 10 per cent stake.

FIRST AEROSPACE SEZ IN INDIA LAUNCHED

The country’s first Special Economic Zone dedicated to the aerospace industry inaugur ated atHattargi, 37 km from Belgaum . The SEZ is promoted by Quest Global, an aerospace engineering andmanufacturing company.

According to the Federation of Indian Export Organisations FIEO, cotton accounts for more than 60 per cent of the raw material for the $60-billion textile industry, which is the second largest employer after agriculture.

NMDC, SAIL SIGN MOU FOR LIMESTONE MINING IN HIMACHAL ARKI MINE

National Mineral Development Corporation (NMDC) and Steel Authority of India Limited (SAIL) signeda memorandum of understanding (MoU) to form a joint venture for the development of limestonemines in the sensitive hill region of Arki in Himachal Pradesh.

The MoU for the 50:50 joint venture was signed in the presence of Union Minister for Steel Virbhadra

Singh, Union Minister of State for Steel A. Sai Prathap, Steel Secretary Atul Chaturvedi, SAIL ChairmanS. K. Roongta and NMDC Chairman-cum-Managing Director Rana Som. The Arki mine has deposits of about 100 million tonnes of quality limestone. The SAIL-NMDC joint venture will develop the mine toproduce three million tonnes of limestone annually. The cement industry has a huge demand forlimestone fines.

MITTAL PULLS OUT OF OVL’S KAZAKH PROJECT

Steel magnate L. N. Mittal’s Mittal Investment Sarl has pulled out of a project to develop an oil field inKazakhstan in partnership with ONGC Videsh Ltd. (OVL).

Mittal Investment Sarl, the holding company of the Mittal family, had used the KazakhstanGovernment’s influence to find its way into the Satpaye v oilfield in the Caspian Sea where OVL wasshortlisted for a stake. However, just on the eve of signing an agreement for the field, MittalInvestment decided to pull the plug.

SEBI WANTS LISTING WITHIN 7 DAYS OF IPO

The Securities and Exchange Board of India (SEBI) said it aimed to reduce the time between closing of an issue to listing of the public offer by about one-third to seven days to lend efficiency to primarymarkets.

“The listing time should come down from 20 days to seven days... primary market is somewhat

inefficient compared to the secondary market,” - SEBI Chairman C. B. Bhave.



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COTTON SEED RE-INCLUDED IN ESSENTIAL COMMODITIES ACT (ECA) 1955 ACT

The Cabinet gave its approval for the re-inclusion of cotton seed as an essential commodity for sixmonths under the Essential Commodities Act (ECA) 1955, by amending the Schedule to the EssentialCommodities Act, 1955, or till the Seed Bill was passed by the Parliament, whichever move comesearlier.

With this, the Government would be empowered to regulate the production, quality, distribution,etc., of cotton seed and to curb the sale and spread of spurious cotton seed.

Quality, production and distribution would be subject to regulation under the Seed Control Order,1983, thereby ensuring the quality of seed, particularly private hybrids of cotton/Bt.cotton seeds, andincreasing productivity and production.

Cotton seed was deleted from the list of essential commodities when the ECA was amended in 2007 .As and when the Seeds Bill is passed by Parliament, cotton seed would be regulated under the newregulation. Thereafter, the notification of cotton seed under the ECA would be withdrawn.

MUKESH AMBANI IS RICHEST INDIAN

With a fortune of $32 billion, Reliance Industries Limited Chairman Mukesh Ambani has topped theU.S. business magazine Forbes’ annual list of richest Indians. His brother, Anil Ambani, figures atnumber three. Steel tycoon Lakshmi Mittal, who lives in London but holds an Indian passport, issandwiched between the Ambani brothers with a net worth of $30 billion. The magazine put AnilAmbani’s net worth at $17.5 billion.

The list of India’s richest 100 people included 52 billionaires, nearly double from 27 a year ago and justshort of 54 in November 2007. However, there were only six women in the list.

The collective wealth of these 100 is $276 billion (nearly Rs. 13 lakh crore), which is almost one- fourth of the country’s GDP.

India’s 100 richest command a total fortune of $276 billion, which is $100 billion more than the totalnet worth of their Chinese counterparts, despite the fact that China has a higher number of billionaires at 79.The top 10 richest Indians have a fortune of $155 billion, almost four times that of China’s top 10, Forbes said.

SIX WOMEN IN FORBES INDIA RICH LIST

Savitri Jindal has retained the tag of being the richest woman in India with a net worth of $12 billion,according to the annual India rich list compiled by the business magazine.She is ranked seventh in thelist, which is topped by Reliance Industries Limited Chairman Mukesh Ambani with a fortune of $32billion.Ms. Jindal, who has been the chairperson of the Jindal Group since her husband Om Praka sh’sdeath in 2005, saw her wealth grow by $9 billion since November 2008, when Forbes had lastpublished its annual India rich list.

She is followed by Bennett, Coleman & Co’s Chairperson Indu Jain, who is ranked 19th with a networth of $2.4 billion. Ms. Jain continued to witness a spurt in her fortune with her wealth rising by

$600 million since November 2008.



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Referring to Ms. Shaw as a “pharma tycoon,” Forbes called her “India’s richest self -made woman,whose Biocon is developing the world’s first oral insulin .”

SIDDHARTH TIWARI IS NEW IMF SECRETARY

Indian economist Mr Siddharth Tiwari has been named as the IMF Secretary by its Managing DirectorMr Dominique Strauss-Kahn.

Mr Tiwari, currently Director of the Office of Budget and Planning, is set to assume the position, whichwas held by Mr Shailendra Anjaria before his retirement from the IMF earlier this year.

RIL BIDS FOR WORLD’S THIRD LARGEST CHEMICAL FIRM

Reliance Industries Ltd (RIL) has confirmed its interest in bidding for the U.S.-based companyLyondellBasell , the third largest independent chemical company in the world. If it succeeds, this willbe the largest ever global acquisition by an Indian firm.

The biggest- ever global deal involving an Indian company so far is the Tata Steel’s acquisit ion of European Corus for $12 billion.

BASEL-II NORMS

Basel II is the second of the Basel Accords, which are recommendations on banking laws and regulationsissued by the Basel Committee on Banking Supervision. The purpose of Basel II, which was initially published inJune 2004, is to create an international standard that banking regulators can use when creating regulationsabout how much capital banks need to put aside to guard against the types of financial and operational risksbanks face. Advocates of Basel II believe that such an international standard can help protect the internationalfinancial system from the types of problems that might arise should a major bank or a series of banks collapse.

In practice, Basel II attempts to accomplish this by setting up rigorous risk and capital managementrequirements designed to ensure that a bank holds capital reserves appropriate to the risk the bank exposesitself to through its lending and investment practices.

WORKING GROUP TO STUDY FOREIGN INFLOWS

The Union Finance Ministry has constituted a working group to recommend changes in the existingpolicies on FII (foreign institutional investor) inflows and participatory notes (PNs), with a view toattracting more foreign portfolio investments.

The move comes despite the rising apprehensions in some quarters over the surge in foreign capital

flows and even calls to tax/control the same, as it is leading to steeper appreciation of the rupee.Therupee has appreciated over five per cent against the dollar in the last six months, hitting badly theexport sector.

The 16-member group on portfolio investments, to be headed by UTI MF Chairman and ManagingDirector U. K. Sinha, will also review the policies on other foreign portfolio investment by non-resident Indians (NRIs) and venture capital funds.

The committee has been given four months to submit the report. The group has been asked to reviewthe existing policy on foreign portfolio inflows and suggest rationalisation with a view to encouragingforeign investment and reduce policy hurdles. The group is also expected to identify challenges inmeeting the financing needs of the economy through foreign investment. The panel would alsoexamine the rationale of securities transaction tax and stamp duty.



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NEW CLB CHIEF DILIP RAO SAHEB DESHMUKH

The Centre has appointed Dilip Rao Saheb Deshmukh, new chief of the Company Law Board. The CompanyLaw Board is an independent quasi-judicial body in India which has powers to overlook the behaviour of companies within the Company Law. It was constituted in its present form on May 31, 1991.

IFFCO WINS DOTCOOP GLOBAL AWARD

Indian Farmers Fertiliser Cooperative Ltd. (IFFCO), has won the first-ever dotCoop global award forcooperative excellence. The award, which was sponsored by the U.S.-based firm DotCooperation LLC(dotCoop), was created to recognise the application of cooperative values and principles to drivecooperative and business success.

In another development, IFFCO Chairman Surinder Kumar Jakhar has been elected to the board of theglobal body International Cooperative Alliance for the second term.

SBI-STATE BANK OF SAURASHTRA MERGER GETS PARLIAMENT NOD.

Parliament post-facto approved the merger of State Bank of Saurashtra (SBS) with State Bank of India

(SBI) with Rajya Sabha passing it by voice vote amid opposition from Left parties.

The House approved the two bills to give effect to the merger that took place in 2008.

WORLD'S FIRST HYBRID TWO-WHEELERS LAUNCHED

Eko Vehicles, has launched the world's first hybrid bikes and scooters.

The ET-120 and Strike which were developed in collaboration with US and UK based companies run

both on gasoline and the battery

This 120cc capacity bike reduced the carbon emission to 50%.

INDIA'S FIRST MEGA-WATT LEVEL SOLAR PHOTOVOLTAIC PLANT INAUGURATED

MNRE Minister Farooq Abdullah inaugurated the country's first mega-watt level solar photovoltaic plant at

Jamuria, near Asansol in West Bengal.Accepting that there is no clear blueprint for his ministry's plans for

bringing solar power into the mainstay of India's energy mix, he said that about 1,300 MW of solar power

would be added over the next three years.

8 INDIAN-ORIGIN CEOS AT BIG U.S COMPANIES: FORBES

People with Indian roots are fast climbing up the American corporate ladder, and today there are as

many as eight such CEOs including the likes of Indra Nooyi and Vikram Pandit, who run big U.S.

corporations, according to a Forbes list titled.



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PepsiCo’s Madras -born Indra Nooyi tops the list.

The Nagpur-born Vikram Pandit, the embattled CEO of the ailing Wall Street giant Citigroup, is the

other prominent native Indian in the corner office.

The others in the prestigious league include Adobe Systems’ Shantanu Narayen, Cognizant’s Francisco

D’Souza , storage devices firm LSI’s Abhijit Talwalkar, biopharma Sigma Aldrich’s Jai P. Nagarkatti ,

audio and infotainment equipment firm Harman International’s Dinesh C. Paliwal and Quest

Diagnostics’ Surya Mohapatra .

FAQ – SHARE MARKET

What is a share?

In finance a share is a unit of account for various financial instruments including stocks, mutual funds, limited

partnerships, and REIT's. In British English, the usage of the word share alone to refer solely to stocks is so

common that it almost replaces the word stock itself.

In simple Words, a share or stock is a document issued by a company, which entitles its holder to be one of

the owners of the company. A share is issued by a company or can be purchased from the stock market.

By owning a share you can earn a portion and selling shares you get capital gain. So, your return is the

dividend plus the capital gain. However, you also run a risk of making a capital loss if you have sold the share

at a price below your buying price.

A company's stock price reflects what investors think about the stock, not necessarily what the company is

"worth." For example, companies that are growing quickly often trade at a higher price than the company

might currently be "worth." Stock prices are also affected by all forms of company and market news. Publicly

traded companies are required to report quarterly on their financial status and earnings. Market forces and

general investor opinions can also affect share price.

Quick Facts on Stocks and Shares

Owning a stock or a share means you are a partial owner of the company, and you get voting rights in

certain company issues

Over the long run, stocks have historically averaged about 10% annual returns However, stocks offer

no

guarantee of any returns and can lose value, even in the long run

Investments in stocks can generate returns through dividends, even if the price

What are active Shares ?

Shares in which there are frequent and day-to-day dealings, as distinguished from partly active shares in which

dealings are not so frequent. Most shares of leading companies would be active, particularly those which are

sensitive to economic and political events and are, therefore, subject to sudden price movements. Some



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market analysts would define active shares as those which are bought and sold at least three times a week .

Easy to buy or sell.

What is a Demat Account?

The term Demat, in India, refers to a dematerialised account. For individual Indian citizens to trade in listed

stocks or debentures the Securities Exchange Board of India (SEBI) requires the investor to maintain a Demat

account. In a demat account shares and securities are held in electronic form instead of taking actual

possession of certificates. A Demat Account is opened by the investor while registering with an investment

broker (or sub broker). The Demat account number which is quoted for all transactions to enable electronic

settlements of trades to take place.

Advantages of Demat

The demat account reduces brokerage charges, makes pledging/hypothecation of shares easier, enables quickownership of securities on settlement resulting in increased liquidity, avoids confusion in the ownership title

of securities, and provides easy receipt of public issue allotments.

It also helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of certificates in

transit. Further, it eliminates risks associated with forgery, counterfeiting and loss due to fire, theft or

mutilation.

WHAT IS NET ASSET VALUE ?

The Term Net Asset Value (NAV) is used by investment companies to measure net assets. It is calculated by

subtracting liabilities from the value of a fund's securities and other items of value and dividing this by the

number of outstanding shares. Net asset value is popularly used in newspaper mutual fund tables to designate

the price per share for the fund.

The value of a collective investment fund based on the market price of securities held in its portfolio. Units in

open ended funds are valued using this measure. Closed ended investment trusts have a net asset value but

have a separate market value. NAV per share is calculated by dividing this figure by the number of ordinary

shares. Investments trusts can trade at net asset value or their price can be at a premium or discount to NAV.

Value or purchase price of a share of stock in a mutual fund. NAV is calculated each day by taking the closing

market value of all securities owned plus all other assets such as cash, subtracting all liabilities, then dividing

the result (total net assets) by the total number of shares outstanding.

IPO – Initial Public Offering

An initial public stock offering (IPO) referred to simply as an "offering" or "flotation," is when a company

(called the issuer) issues common stock or shares to the public for the first time. They are often issued by

smaller, younger companies seeking capital to expand, but can also be done by large privately-owned

companies looking to become publicly traded.

http://www.sharemarketbasics.com/NET-ASSET-VALUE.htm
















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Primary and secondary markets

There are two ways for investors to get shares from the primary and secondary markets . In primary markets ,

securities are bought by way of public issue directly from the company.

In Secondary market share are traded between two investors. PRIMARY MARKETMarket for new issues of

securities, as distinguished from the Secondary Market , where previously issued securities are bought and

sold.

SECONDARY-MARKET

The market where securities are traded after they are initially offered in the primary market. Most trading is

done in the secondary market.

To explain further, it is Trading in previously issued financial instruments. An organized market for used

securities. Examples are the New York Stock Exchange (NYSE),Bombay Stock Exchange (BSE),National StockExchange NSE, bond markets, over-the-counter markets, residential mortgage loans, governmental

guaranteed loans etc.

KAUSHIK BASU NEW CHIEF ECONOMIC ADVISOR

Kaushik Basu is the new chief economic advisor in the finance ministry, with the rank of a secretary to the

government of India for a two-year term. He will assist Finance Minister Pranab Mukherjee in formulating

broad policies for the Indian economy & play important role in Economic Survey for the current fiscal.

INDIA'S SHARE IN GLOBAL FDI IS 2.45%

India's share in the global Foreign Direct Investment has almost doubled to 2.45 %

ONGC PICKS UP STAKE IN IRAN GAS FIELD, LNG PLANT

In a major breakthrough, Oil and Natural Gas Corporation (ONGC) on Tuesday signed agreements topick up stake in a giant gas field and a liquefied natural gas (LNG) plant in Iran, which also awarded the

rights to develop a gas discovery it made in the Persian Gulf two years ago.

ONGC Videsh Ltd. (OVL) and the Hinduja Group signed agreements to take 40 per cent interest in the

$7.5-billion, Phase 12 of the gigantic South Pars gas field.

Also, the two, along with Petronet LNG, would get 20 per cent of Iran LNG’s project that will convert

the gas from South Pars Phase-12 (SP-12) into liquefied natural gas for exports. The Indian companies

will get up to 6 million tonnes or 60 per cent of the liquefied gas that Iran LNG will produce in return.

http://www.sharemarketbasics.com/Primary-Secondary-Market.htm









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Mr. Hinduja said in the Iran LNG project his firm would have 10 per cent and the remaining would be

shared by ONGC/OVL and Petronet.

LION’S SHARE FOR TELECOM IN FDI

The telecom sector has the onus of bringing in nearly Rs.4,294 crore in foreign direct investment

among the clutch of 17 FDI proposals approved by the government envisaging a total inflow of

Rs.4,551 crore.

Among the four proposals pertaining to the telecom sector approved on the basis of

recommendations of the Foreign Investment Promotion Board (FIPB), the largest chunk of Rs.3,051

crore is to be invested in Sistema Shyam Teleservices by the Federal Agency for State Property

Management of the Russian Federation by way of picking up a 20 per cent stake in the telecom

service provider company engaged in the field of unified access service licence.

MAHESH GETS TATA AWARD FOR QUALITY MANAGEMENT

The Indian Society for Quality (ISQ) awarded K.Mahesh, Chairman and Managing Director, Sundaram

Brake Linings (SBL), the Jamsetji Tata Award in recognition of his outstanding role in promoting quality

management in his company and industry at large.

ISQ is a not-for-profit society formed to promote the networking, development and recognition of

quality professionals and is the face of India in the world of quality management in international

forums.

The Jamsetji Tata Award was instituted in 2004 and earlier recipients include Venu Srinivasan,

Jamshed Irani, Arun Bharat Ram, Surinder Kapur and B. Muthuraman.

VINEET NAYYAR TO HEAD MAHINDRA SATYAM

Vineet Nayyar has been appointed Chairman of Mahindra Satyam.

M. Damodaran, former chairman of Securities and Exchange Board of India, and Gautam S. Kaji,

Chairman of Washington-based Centennial Group, have been appointed additional directors and the

new appointments will come into force with immediate effect. The size of the board has been

increased to eight comprising four independent directors, including two nominee directors of the

Central Government, two non-executive and two whole-time directors.





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In addition, the government created another category called Miniratna. Miniratnas can alsoenter into joint ventures, set subsidiary companies and overseas offices but with certainconditions. In 2002, there were 41 government enterprises that were awarded Miniratna status.

CATEGORY IThis designation applies to PSEs that have made profits continuously for the last three years orearned a net profit of Rs. 30 crore or more in one of the three years. These miniratnas grantedcertain autonomy like incurring capital expenditure without government approval up to Rs. 500crore or equal to their net worth, whichever is lower.

CATEGORY II

This category include those PSEs which have made profits for the last three years continuouslyand should have a positive net worth. Category II miniratnas have autonomy to incurring thecapital expenditure without government approval up to Rs. 300 crore or up to 50% of their networth whichever is lower.

CHINA SET TO OVERTAKE INDIA AS WORLD’S BIGGEST GOLD CONSUMER

China, the world’s largest producer of gold, is set to overtake India as the metal’s biggestconsumer for the first time in history.

China’s gold consumption in 2009 has now been estimated at 450 tonnes, according to datareleased this week. This exceeds estimates for India’s net consumption last year, which is forecast at around 380 tonne.

According to recently released statistics by the China Gold Association, the estimated demandfor gold touched 450 tonnes last year, up from 395.6 tonnes in 2008.

China has been the world’s largest gold producer since 2007, when the country overtook SouthAfrica.

ALL IT RETURNS OPEN TO PUBLIC SCRUTINY

Are income-tax returns filed by individual citizens open to public scrutiny under the Rightto Information? Yes, says the Central Information Commission.

In a controversial December 14 ruling with far-reaching implications, the CIC held thatindividual assessees could not invoke privacy concerns to prevent an unrelated “thirdparty” from inspecting returns filed with the Income -Tax Department. Sources in theCommission said the ruling must be seen as a trendsetter that could eventually lead tothe tax re turns of all citizens being put up on the department’s website.



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The ruling by Information Commissioner Shailesh Gandhi came on a specific applicationfiled under the RTI Act, 2005

He held that filing tax returns was a statutory obligation and must be treated as a publicactivity open to scrutiny. As a tax assessee had already provided information to the state

as part of his or her legal duties, its disclosure to “another person cannot be construedas an unwarranted invasion of privacy of the individual.”

EURO IV FUEL FOR 13 CITIES FROM APRIL 1

The government announced that the state-run oil firms will start supplying Euro-IV gradepetrol and diesel in 13 big cities and Euro-III compliant petrol in rest of the country fromApril 1.

Euro-IV petrol and diesel will be supplied for sure in 13 designated cities that includeDelhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad and Ahmedabad from April 1.

As per fuel specifications committed to the Supreme Court, oil firms are to sell petrol anddiesel meeting the stringent Euro-IV specifications in 13 major cities from April 1 whileEuro-III grade fuel is to be supplied in rest of the country.

BOSTON CONSULTING TO RESTRUCTURE NABARD

Boston Consulting Group (BCG), a management consulting firm, will soon beginconsultations aimed at restructuring the National Bank for Agriculture and RuralDevelopment (NABARD).

BCG will prepare the restructuring plan for NABARD to make it a commercially viableentity.

On the implementation of the Vaidyanathan Committee report on cooperatives, 7,400crore had been disbursed for strengthening cooperatives. Twenty-five States had signedagreements and 13 States had amended the relevant legislation to make PrimaryAgricultural Cooperative Societies (PACS) financially viable.

CABINET NOD FOR ONGC VIDESH INVESTMENT IN NIGERIAN VENTURE

The Union Cabinet approved ONGC Videsh Limited’s (OVL) proposal to invest $359 million (Rs.1,651 crore) for oil exploration in two deep-sea blocks in Nigeria over the next five years.

INDEX OF INDUSTRIAL PRODUCTION (IIP)







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RUSSIA SAYS IT IS READY TO BUILD NUCLEAR REACTORS AT HARIPUR

Russia has expressed its readiness to build nuclear reactors at Haripur in West Bengal. While Russia is building two reactors at Koodankulam in Tamil Nadu and tying up the

loose ends to put up at least four more units of 1,000 MW each at the same site, spacelimitation has stopped the Central government from allocating land for another nuclearpark in West Bengal.

the Trinamool Congress is against the move to acquire land for nuclear reactors poweredby Russian technology and has resolved to launch an agitation in case the Centre beginsthe process.

NHRC PULLS UP MANIPUR FOR NOT REPORTING 111 ENCOUNTERS

The National Human Rights Commission has sought an explanation from the Manipur Chief

Secretary as to why reports of 111 cases, which were reported as police encounter cases, werenot forwarded to the Commission.

The NHRC, in an order, stated that the Commission had not been receiving any report from theManipur government.

OIL EXPLORATION PACT SIGNED WITH HUNGARY

India and Hungary signed an agreement for oil and gas exploration and decided tostrengthen cooperation in the information technology (IT) sector. Both countries also

agreed to work for increasing the level of trade to $1 billion by 2012. An agreement to this effect was reached during the current visit of the Union Commerce

and Industry Minister, Anand Sharma, to Hungary. Prime Minister of Hungary Gordon Bajnai . An agreement for oil exploration was signed between MOL, the official Hungarian Oil

Company, and Oil and Natural Gas Corporation (ONGC) in which MOL will be a 35 percent partner.

It was also agreed that the two countries would strengthen cooperation in the IT sector.The India-Hungary S&T fund of 2 million euro annually for the promotion of joint

research projects will soon be made operational and bilateral S&T projects would beselected for funding.

The Arab League has 22 members , including Jordan, Lebanon, Saudi Arabia, Kuwait,Oman, Palestine, Qatar and Algeria.



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BANKS TO LEND AT BASE RATE

Commercial banks will be made to extend loans at base rates from next fiscal year, whichis expected to benefit consumers and borrowers.

According to Reserve Bank of India, the apex bank is keen on ensuring that banks provideloans on a base rate from April onwards and not on the basis of current benchmark primelending rate (BPLR) as the latter was not considered a transparent system.

Under the BPLR arrangement, banks used their negotiating power for extending loansand based on that the rates for lending were decided which meant that for differentconsumers banks charged different interest rates.

RBI INTRODUCES NEW CATEGORY OF NBFCS

The Reserve Bank of India (RBI) issued a notification introducing a new category of Non-

Banking Finance Companies (NBFCs) as “Infrastructure Finance Companies (IFCs)”. The existing categories of NBFCs are Asset Finance Companies (AFCs), Loan Companies

(LCs) and Investment Companies (ICs). Further with a view to encouraging larger flow of funds to infrastructure, the exposure of a bank to infrastructure finance companies hasbeen enhanced up to 20 per cent of its capital funds.

The IFCs should deploy a minimum of 75 per cent of itstotal assets in infrastructure loans.Net owned funds of Rs. 300 crore or above with a minimum credit rating ‘A’ or equivalentof Crisil, Fitch, CARE, ICRA or equivalent rating by any other accrediting rating agenciescould enter infrastructure financing.

KOREAN STEEL MAJOR POSCO CHECKS OUT WEST BENGAL

Korean steel major Posco has begun checking out West Bengal, raising hopes of the Statehosting an investment by Korea’s biggest steel company whose plans to set up a 12 milliontonne plant in Orissa is in a limbo.

Posco India sees the Indian market as one with huge potential as much for the growing marketfor steel (mainly for infrastructural projects) as also for the country’s mineral resources.However, its Rs. 52,000-crore project, seen as the single largest dose of foreign direct

investment, faced resistance from landlosers making Posco’s plan go haywire.

U.K. INVESTOR PULLS OUT OF VEDANTA

In a blow to mining firm Vedanta, a fourth European investor has sold its multi-millionpound stake in the company, citing “serious concerns about its *Vedanta’s+ approach tohuman rights and the environment.” The company has been slammed for its plan to minethe Niyamgiri Hills of Orissa, home to the Kondh tribals , many of whom have opposedthe plan.

Vedanta Alumnium, the Indian subsidiary of U.K.-listed Vedanta Resources.



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Vedanta has been criticised by human rights and activist groups, including SurvivalInternational and Amnesty International, due to their operations in Niyamgiri Hills inOrissa, India that are said to threaten the lives of the Dongria Kondh that populate thisregion. The Niyamgiri hills are also claimed to be an important wildlife habitat in Eastern

Ghats of India as per a report by the Wildlife Institute of India as well as independentreports/studies carried out by civil society groups.

THE PRIME MINISTER'S ECONOMIC ADVISORY COUNCIL (PMEAC)

The Economic Advisory Council has been set up with a view to provide a sounding board forinculcating awareness in Government on the different point of view on key economic issues. TheEconomic Advisory Council has been reconstituted time and again with different organisationalsetup headed by various economists who are of recognised international eminence.

The importance of Economic Advisory Council can be gauged by the fact that Sh. Atal BihariVajpayee the then Prime Minister, was the chairman of the Economic Advisory Council.

The present Economic Advisory Council is headed by Dr. C. Rangarajan . The Council has thefollowing economists as its members.

Dr. Saumitra Chaudhuri, Member Dr. M. Govinda Rao, Member Dr. V. S. Vyas, Member Sh. Suman K. Bery, Member

Terms of Reference:

Analyzing any issue, economic or otherwise, referred to it by the Prime Minister andadvising him thereon;

Addressing issues of macroeconomic importance and presenting views thereon to thePrime Minister. This could be either be suo-moto or on a reference from the PrimeMinister or anyone else;

Submitting periodic reports to the Prime Minister on macroeconomic developments and

issues with implications for economic policy; Attending to any other task as may be desired by the Prime Minister from time to time

NAFED TO EXTEND ITS CAMPAIGN TO MORE STATES

After Delhi, Kerala, and Tamil Nadu, the National Agricultural Cooperative MarketingFederation of India (NAFED) has decided to extend its ‘Farm Gate to Home Gate’ campaign (the sale of essential commodities at low prices) to more States to help holdthe price line of essential commodities.

The scheme will now be taken to Maharashtra, West Bengal and Madhya Pradesh.



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Under the campaign, the NAFED procures essential commodities – 20 kitchen basics,including pulses, edible oil, rice and wheat -- from farmers directly and sells them topeople; thereby eliminating intermediaries who make the process expensive.

In view of the clamour from States for replicating the scheme piloted in Delhi, the NAFED

has placed orders for pulses from Myanmar and edible oil from Malaysia.

COMPENSATION FOR EDWARDS E WHITACRE, CHIEF OF GENERAL MOTORS.

Edwards E Whitacre, Jr (Chairman and CEO GM), the chief of auto maker General Motorswill receive an an annual compensation of USD 9 million including a significant amount inrestricted stocks.

General Motors, one of the worst hit by the financial turmoil, has received billions of dollars worth Federal funds. Whitacre, who is also the car maker's chairman, wouldreceive an annual cash base salary of USD 1.7 million, the company said in a recentregulatory filing to the US Securities and Exchange Commission.

Whitacre assumed the role of CEO in December last year, following the resignation of Frederick A Henderson.

The compensation plan has been approved by President Barack Obama's Special Masterfor TARP executive compensation Kenneth Feinberg.

NEW FDI WORTH RS. 1,046 CR CLEARED

The Foreign Investment Promotion Board (FIPB) approved 12 new foreign directinvestment (FDI) proposals worth over Rs. 1,000 crore, including that of Walt Disney andZee Entertainment.

Based on the recommendations of FIPB, the government has approved 12 proposals of FDI amounting to Rs. 1,045.61 crore, an official statement said here. The highest FDI of Rs. 529 crore is likely to come from Delhi-based Max India, followed by Hyderabad-basedSoma Highways (Toll) Projects' Rs. 360-crore proposal.

ANTI-DUMPING DUTY ON PENICILLIN IMPORTS FROMCHINAAND MEXICO

Following the recommendation of the Directorate General of Anti-Dumping and AlliedDuties (DGAD), the Commerce Ministry is toying with the idea of imposing an anti-dumping duty on import of two variants of anti-bacterial drug penicillin to protect thedomestic industry from cheap Chinese and Mexican imports .

The provisional anti-dumping duty to be imposed on Penicillin-G Potassium and 6-AminoPenicillin Acid would range between $18.54 per billion oxford units (BOU) and $2.10 perBOU.

The imposition of the anti-dumping duty is notified by the Finance Ministry. Acting on complaints from the Vadodara-based Alembic and Chennai-based Southern

Petrochemical Industries Corporation (SPIC), the DGAD had initiated the probe into



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dumping of the two products from China and Mexico. In its recommendations, it has saidthat the products have been exported to India below its normal value.

BENZ INTRODUCES COSTLIEST CAR

Luxury carmaker Mercedes-Benz launched its top-of-the-line special protection limousine S-Guard, targeted at politicians, captains of industry, royal families, diplomats and celebrities. Thelimousine has been built on the platform of S 600 and come with a price tag of over Rs.6-crore,making it the costliest car in the country.

DUMPING DUTY SLAPPED ON STEEL, TYRE IMPORTS

Concerned over surge in imports, particularly from China, India has slapped anti-dumpingduty on several stainless steel products and radial tyres.

The Central Board of Excise and Customs has imposed anti-dumping duty of up to$2,254.69 a tonne on steel products, used mainly for making durables like refrigeratorsand also in automobile and kitchenware industries.

The tyre makers seemed pleased with the dumping duty of up to $99.05 per a set of busand truck radial tyres (including tubeless) from China and Thailand.

MARUTI RECALLS ONE LAKH A-STARS

Biggest recall in the domestic automobile industry In one of the biggest recalls recorded in the Indian automobile industry, leading car

marker Maruti Suzuki India announced that it had recalled n early one lakh ‘A -Star' cars,the company's flagship export model, to replace a faulty fuel pump gasket .

The replacement will be done at no cost to the customers and will help check possiblefuel leak, although no complaints have been received from customers.

Last month, Japanese auto major Honda had recalled 8,532 units of its sedan Honda Cityin India due to defective power window switch as part of a global recall initiative.

SUGAR EXPORT TO EU WITHDRAWN

Coming under attack for rising food prices and indulging export of sugar at a time whenthe country was faced with shortage and sky rocketing prices, the UPA II Government hascancelled its export order of 10,000 tonnes of white sugar to the European Union (EU).

The withdrawal of the export order comes close on the heels of the price rise issuerocking Parliament and the Opposition accusing the government of exporting sugar at atime when the country was faced with a severe shortage and the prices had almostdoubled since January 2009.

HYUNDAI TO RECALL SEDANS IN U.S. AND S. KOREA

South Korea's top automaker Hyundai Motor announced that it would recall 47,300 of itslatest model Sonata sedans in the U.S. and the domestic market due to a door lock



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problem. The firm said 1,300 of the cars already sold in the U.S. and another 46,000 inSouth Korea would be called back from March in response to complaints of faulty front —door locks on some of them.

SBI TO OPEN 1,000 ATMS State Bank of India (SBI) is planning to open about 1,000 new ATMs in the current year

under its technological initiatives. The bank at present has 70,000 branches and 20,000 ATMs catering to 286 million

customers. Out of 65,000 villages in India, only 30,000 were covered by the commercialbank branches.

INFRASTRUCTURE SECTOR POSTS ROBUST GROWTH

The Economic Survey 2009-10 tabled in Parliament made out a strong case for adopting aliberal foreign direct investment (FDI) regime for health insurance, rural banking andhigher education, asserting it could boost trade in services.

In the case of the services sector, a more conducive environment can be created byliberalising FDI in services like health insurance, rural banking and higher education as FDIinflows and trade in services have a close relationship. Well thought out policy measureswould give a boost to the services sector.

The Survey says that with pick up in export of software and increase in foreign touristarrivals, the country's services exports are expected to grow in the current fiscal, even as

it contracted in April-September 2009-10. Software exports, including those from BPOservices, have shown a recovery after a negative growth in the first half of 2009-10. Thesurvey says the agriculture services sector attracted FDI of Rs.6,327 crore in the first eightmonths of the current fiscal against Rs.16 crore in the year ago period.

FDI in the sea transport sector was up by 918 per cent to Rs.12,983 crore, while in theelectrical equipment segment inflows increased by 202 per cent to Rs. 2,724 crore duringApril-November 2009-10.

AUTONOMY FOR MAHARATNAS

The government’s decision to allow greater operational and financial freedom to the publicsector companies that qualify as ‘Maharatnas’ — a new category that will have higherperformance criteria than applicable to the existing ‘Navratna’ — is a step in the rightdirection.In 2009, the government established the Maharatna status.

What are the norms for elevation as Maharatnas?

The six point eligibility criteria are:

7. an existing Navratna status;

maharatna

navratna

mini ratna



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8. listing on the stock exchanges with minimum public shareholding as prescribed by theSEBI;

9. annual turnover of more than Rs.25,000 crore for the last three years;10. average annual net worth of at least Rs.15,000 crore;

11. average annual net profit of more than Rs.5,000 crore for the last three years.12. a significant global presence.

NAVRATNA

Navratna was the title given originally to nine Public Sector Enterprises (PSEs), identified by theGovernment of India in 1997 as its most prestigious, which allowed them greater autonomy tocompete in the global market.The number of PSEs having Navratna status has been raised to 18,the most recent addition being Coal India Limited.

CRITERIA

Navratna status is conferred by Department of Public Enterprises. To be qualified as a Navratna,the company must obtain a score of 60 (out of 100). The score is based on six parameters whichinclude net profit to net worth, total manpower cost to total cost of production or cost of services, PBDIT (Profit Before Depreciation, Interest and Taxes) to capital employed, PBDIT toturnover, EPS (Earning Per Share) and inter-sectoral performance. Additionally, a company mustfirst be a Miniratna and have four independent directors on its board before it can be made aNavratna.

MINIRATNAS

In addition, the government created another category called Miniratna. Miniratnas can alsoenter into joint ventures, set subsidiary companies and overseas offices but with certainconditions. In 2002, there were 41 government enterprises that were awarded Miniratna status.

CATEGORY I

This designation applies to PSEs that have made profits continuously for the last three years orearned a net profit of Rs. 30 crore or more in one of the three years. These miniratnas grantedcertain autonomy like incurring capital expenditure without government approval up to Rs. 500crore or equal to their net worth, whichever is lower.

CATEGORY II

This category include those PSEs which have made profits for the last three years continuouslyand should have a positive net worth. Category II miniratnas have autonomy to incurring thecapital expenditure without government approval up to Rs. 300 crore or up to 50% of their networth whichever is lower.



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CHINA SET TO OVERTAKEINDIA AS WORLD’S BIGGEST GOLD CONSUMER

China, the world’s largest producer of gold, is set to overtake India as the metal’s biggestconsumer for the first time in history.

China’s gold consumption in 2009 has now been estimated at 450 tonnes, according to datareleased this week. This exceeds estimates for India’s net consumption last year, which is forecast at around 380 tonne.

According to recently released statistics by the China Gold Association, the estimated demandfor gold touched 450 tonnes last year, up from 395.6 tonnes in 2008.

China has been the world’s largest gold producer since 2007, when the country overtook SouthAfrica.

ALL IT RETURNS OPEN TO PUBLIC SCRUTINY

Are income-tax returns filed by individual citizens open to public scrutiny under the Rightto Information? Yes, says the Central Information Commission.

In a controversial December 14 ruling with far-reaching implications, the CIC held thatindividual assessees could not invoke privacy con cerns to prevent an unrelated “thirdparty” from inspecting returns filed with the Income -Tax Department. Sources in theCommission said the ruling must be seen as a trendsetter that could eventually lead tothe tax returns of all citizens being put up on the department’s website.

The ruling by Information Commissioner Shailesh Gandhi came on a specific applicationfiled under the RTI Act, 2005

He held that filing tax returns was a statutory obligation and must be treated as a publicactivity open to scrutiny. As a tax assessee had already provided information to the stateas part of his or her legal duties, its disclosure to “another person cann ot be construedas an unwarranted invasion of privacy of the individual.”

BOSTON CONSULTING TO RESTRUCTURE NABARD

Boston Consulting Group (BCG), a management consulting firm, will soon beginconsultations aimed at restructuring the National Bank for Agriculture and RuralDevelopment (NABARD).

BCG will prepare the restructuring plan for NABARD to make it a commercially viableentity.

On the implementation of the Vaidyanathan Committee report on cooperatives, 7,400crore had been disbursed for strengthening cooperatives. Twenty-five States had signedagreements and 13 States had amended the relevant legislation to make Primary

Agricultural Cooperative Societies (PACS) financially viable.



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CABINET NOD FOR ONGC VIDESH INVESTMENT IN NIGERIAN VENTURE

The Union Cabinet approved ONGC Videsh Limited’s (OVL) proposal to invest $359 million (Rs.1,651 crore) for oil exploration in two deep-sea blocks in Nigeria over the next five years.

INDEX OF INDUSTRIAL PRODUCTION (IIP)

Index of Industrial Production (IIP) in simplest terms is an index which details out the growth of various sectors in an economy. E.g. Indian IIP will focus on sectors like mining, electricity,Manufacturing & General. Also base year needs to be decided on the basis of which all the indexfigures would be arrived at. In case of India the base year has been fixed at 1993-94 hence thesame would be equivalent to 100 Points.Index of Industrial Production (IIP) is an abstractnumber, the magnitude of which represents the status of production in the industrial sector fora given period of time as compared to a reference period of time.

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