Indian Economy: News and Discussion

[Pintu]

Details on disinvestment soon: FM

Details on disinvestment soon: FM
Press Trust of India / New Delhi July 14, 2009, 17:20 IST

Firm on divesting stake in public sector undertakings, Finance Minister Pranab Mukherjee today said he has initiated talks with other ministries to identify PSUs where a portion of government equity could be sold and that details would be announced soon.

"My ministry has initiated discussions with other ministries and departments to identify public sector undertakings, where a portion of government shareholding could be sold or raise fresh equity by PSUs to meet their fund requirement," he said in Lok Sabha, replying to the debate on Budget 2009-10.

"Details are being worked out and could be announced in due course," he said, adding that requirements by PSUs could be for modernisation, technical upgradation or expansion.

Commenting about the reactions of the stock markets, which tanked more than 879 points on the day of presentation of budget, as Mukherjee did not elaborate on government's disinvestment agenda, he said there was expectation that the Finance Minister will also give a list of PSU companies from where disinvestment will take place.

"Unfortunately it did not happen. Therefore, I would not use the word frustration but there was a disappointment and this had an impact on the stock market," he added.

The Finance Minister also recalled President Pratibha Patil's address to the joint sitting of Parliament on June 4 this year when she spelt out clearly the policy of the UPA government that the government will retain at least 51 per cent equity in all PSUs, but it (government) would invite people's participation in these PSUs by way of stake sale.

"And this was reiterated in my Budget on July 6," Mukherjee said.

Another aspect affecting the stock market is volatality of FII inflows, he said.

"We all know the global financial crisis did not affect Indian banks or financial markets directly but it did expose a number of weaknesses in our financial system. The events of last two years and outflows and inflows of FIIs equity more recently has brought home with renewed force the volatile nature of certain private capital flows," he said.

These flows provide critical risk capital to the economy and volatile nature of these flows have negative impact on investment.

"We have to create necessary policy environment that helps in addressing these concerns," Mukherjee said.

 

[I-G]

India among top recipients of remittances: World Bank

India among top recipients of remittances: World Bank
IANS 14 July 2009, 07:39pm IST


NEW DELHI: India, China and Mexico retain their positions as the top recipients of migrant remittances among developing countries, said the World
Bank on Tuesday.

As per official estimates, India has the largest diaspora of 25 million spread over 136 countries.

According to the Reserve Bank of India, private transfer receipts, comprising mainly remittances from Indians working overseas, increased to $46.4 billion (4 percent of GDP) during 2008-09 from $ 43.5 billion (3.7 per cent of GDP) in the previous year.

Private transfer receipts constituted 13.7 percent of current receipts in 2008-09 (13.8 percent in 2007-08).

"India, China and Mexico retain their position as the top recipients of migrant remittances among developing countries," the World Bank said.

"Remittance flows to developing countries are expected to be $304 billion in 2009, down from an estimated $328 billion in 2008," it said in a report on migration and remittances.

It also predicted that even as total inflows into poor, developing and developed economies will fall by 7.3 percent this year.

According to the World Bank, remittances are relatively resilient because, while new migration flows have declined, the number of migrants living overseas has been relatively unaffected by the crisis.

"There is a risk that rising unemployment will trigger further immigration restrictions in major destination countries," said Hans Timmer, Director of the World Bank's Development Prospects Group.

"Such restrictions would curb remittances more than forecast and would slow the global recovery in the same way as protectionism against trade would endanger a global upturn," Timmer said.

India among top recipients of remittances: World Bank - India Business - Business - NEWS - The Times of India

 

[Pintu]

Inflation rate rises marginally, still in negative zone - Indicators-Economy-News-The Economic Times

Inflation rate rises marginally, still in negative zone
16 Jul 2009, 1238 hrs IST, IANS

NEW DELHI: India's annual rate of inflation rose marginally to minus 1.21 percent for the week ended July 4, from minus 1.55 percent the week before, according to official data released here on Thursday.

India's annual rate of inflation turned negative for the week ended June 6 for the first time since the new wholesale price index (WPI) series started in 1995.

The inflation rate had last turned negative in 1977. Negative inflation implies that the average wholesale price level was lower during a given week, than it was in the corresponding week a year ago.

The price index for primary articles remained unchanged at its previous week level of 258.5 (provisional), while that for manufactured products rose by 0.2 percent.

However, the price index for fuel and power rose steeply by 3.1 percent to 338.2 (provisional), from 327.9 (provisional) for the previous week due to higher prices of naphtha (15 percent), furnace oil (11 percent), petrol (10 percent), high speed diesel oil (7 percent) and bitumen (2 percent).

The final data for the week ended May 9 showed that the revised annual inflation rate actually stood at 1.56 percent.

 

[Pintu]

http://www.ptinews.com/news/176754_Higher-fuel-prices-push-inflation-up-to-minus-1-21-pc


Higher fuel prices push inflation up to minus 1.21 pc

STAFF REPORTER 14:1 HRS IST

New Delhi, July 16 (PTI) Driven by higher prices of fuel items like petrol and diesel, inflation rose marginally to (-)1.21 per cent for the week ended July 4 against (-)1.55 per cent in the previous week.

At the same time, prices of food articles like cereals, pulses, spices, and fruit and vegetables also remained firm.

The wholesale price index during the corresponding week a year ago was as high as 12.19 per cent.

Following the government's decision to raise fuel prices effective July 1, prices of naphtha rose 15 per cent, furnace oil 11 per cent, petrol 10 per cent, high-speed diesel 7 per cent and light diesel oil by 4 per cent.

Fuel items turned expensive as the government increased prices of petrol and diesel by Rs 4 and Rs 2 per litre, respectively. As a result, the Fuel, Power, Light and Lubricants index increased by 3.

 

[Pintu]

Sterlite raises $1.5 bn to part-fund power projects- Power-Energy-News By Industry-News-The Economic Times

Sterlite raises $1.5 bn to part-fund power projects
16 Jul 2009, 1710 hrs IST, PTI

NEW DELHI: Vedanta Resources group firm Sterlite Industries today said it has raised over Rs 7,000 crore from the American market as equity to part finance its power projects entailing an investment of Rs 50,000 crore.

"We are raising about Rs 7,000 crore through ADR to mainly fund the power project. The issue is complete today," Vedanta Resources Chairman Anil Agarwal told PTI in an interview from London.

The company offered to sell new equity shares in the form of American Depository Shares that is expected to result in gross proceeds of about USD 1.50 billion. Besides, the parent firm would buy USD 500 million (Rs 2,431 crore) of the said issue, the company had said in a regulatory filing.

The group that specialises in mining metals and minerals and is among the world's top three producers of copper and aluminium would expand presence in the power sector, by bidding aggressively for the upcoming 4,000 MW Ultra Mega Power Projects. The government has already bid out to private players four of the nine UMPPs it planned to set up.

It is working to enhance the overall power production capacity to 11,000 MW by 2011-12 from the present 2,000 MW, for which it has already invested Rs 9,000 crore. It will add 4,500 MW by 2010 at an investment of Rs 20,000 crore followed by more projects, including a 1,980 MW unit in Punjab.

Apart from the power generation business, the group plans to utilise the issue proceeds to meet the planned capital expenditure and for potential acquisitions.

 

[Pintu]

Zee Entertainment Net Slumps 43%; Ad Revenue Lower Than Subscription | Reuters

Zee Entertainment Net Slumps 43%; Ad Revenue Lower Than Subscription
Thu Jul 16, 2009 11:30pm IST

By Sruthijith KK - contentSutra

Subhash Chandra-promoted Zee Entertainment Enterprises Ltd, broadcaster of Zee TV, today said consolidated net profit for the quarter ended 30 June was down 43% year-on-year at Rs91.32 crore. Total revenue was down 12% y-o-y at Rs475.93 crore. Continuing the trend from the quarter ended 31 March, revenue from advertising is lower than revenue from subscription. While revenue from advertising was down 29% y-o-y at Rs197.96 crore, subscription revenue grew 12% y-o-y to Rs240.98 crore.

Zee achieved significant savings on the cost front. Total expenditure was down 9% to Rs366.42 crore. Staff cost is down 43%, suggesting significant reductions in headcount and compensation. The consolidated numbers include those of Taj TV Ltd, ETC Networks Ltd and Zee Turner Ltd. On a standalone basis, net profit was down 45% y-o-y to Rs71.27 crore. Total expenditure was down 34% (staff costs down 65.5%!) while total income was down 28% at Rs238.93 crore.

Full results. Press release.

 

[Pintu]

Govt to borrow 24% more at Rs 2.99 lakh cr in H1- Finance-Economy-News-The Economic Times

Govt to borrow 24% more at Rs 2.99 lakh cr in H1
16 Jul 2009, 1913 hrs IST, PTI

NEW DELHI: The government will borrow Rs 2.99 lakh crore from markets which is 24 per cent more than its earlier estimate for the first half of the current fiscal.

"We have already done and announced Rs 1,89,000 crore. So, the balance is Rs 1,10,000 crore which we are going to be doing up to September 30 in 10 tranches," RBI Deputy Governor Shyamala Gopinath told reporters after meeting Finance Secretary Ashok Chawla and other officials here today.

The government had earlier estimated borrowing to be at Rs 2.41 lakh crore for the first half of the current fiscal.

Allaying fears of disruption in the market due to the government's borrowing plan, she said, "We would be managing this programme in a non-disruptive manner."

She added that "there is ample liquidity in the system". Finance Minister Pranab Mukherjee in the Budget had raised the country's gross borrowing plan to Rs 4.51 lakh crore for the fiscal 2009-10, thus pegging fiscal deficit at 6.8 per cent of the GDP for the year.

The ministry officials said that initially the sale of bonds would be for about Rs 12,000 crore per week and would later taper off in the last few weeks of September.

As regard to open market operations (OMO), which is a system through which the central bank sucks out or injects liquidity into the system against government papers, she said the Reserve Bank would continue the operations as announced.

 

[Pintu]

TCS Q1 net up 19% at Rs 1520 crore- Earnings-News By Company-News-The Economic Times

TCS Q1 net up 19% at Rs 1520 crore
18 Jul 2009, 0622 hrs IST, ET Bureau

MUMBAI: Tata Consultancy Services (TCS) overcame a tough business environment and beat street expectations by a huge margin to post a surprise growth in revenues and net profit for the first quarter of the fiscal, but warned that it was too early to wish away the global recession and demand uncertainty.

India’s largest software exporter posted a 23% growth in net profit at Rs 1,520 crore, helped by lower costs and higher revenues from major markets, but said pricing will remain under pressure in the next one year. Revenues were up 12.4% to Rs 7,207 crore, as the US market showed signs of stability as did the troubled financial services sector.

“It is a stellar quarter, made strong by operational execution. The global economy continues to be weak and job losses are happening all over. We are watchful of the situation and do not rule out more surprises,” said TCS managing director and chief executive S Ramadorai, reflecting the mixed trend.

The company said it would pay the variable component of employee salaries in full for the quarter, but would continue with the freeze on wage hikes for now.

The company has performed better than its closest rival Infosys Technologies with a business volume growth of 3.6% during the quarter, compared with a 1.1% volume decline announced by Infosys. Pricing pressure, however, continues and the company said there was a 25 basis points decline in pricing during the quarter.

“Pricing will not go up. We will be lucky if we maintain it,” said chief operating officer and CEO-designate N Chandrasekaran.

While the financial services sector and the US saw stability, worries remained primarily in three sectors — telecom, manufacturing and hi-tech, Mr Chandrasekaran said. There were signs of this in its first quarter performance, as revenues from a large UK-based telecom client continued to decline. The UK and Europe also did not grow as well.

The TCS stock was up 3.1% to Rs 433.60 on BSE on Friday in anticipation of the better results, the software major was to announce after market hours.

The company's improved performance was also helped by lower forex losses of Rs 85 crore and increased interest and dividend income. "Our hedges for this quarter were $123 million on which we had a forex loss of Rs 85 crore. We won't be taking any new currency hedges as the rupee is still reasonably depreciated," said chief financial officer S Mahalingam.

He said cost management initiatives had delivered margin expansion all-round. Lower costs were also on account of more work moving offshore. The offshore revenues were 50.4% of its total revenues compared with 40.9% in the year-ago period. Onsite revenues, on the other hand, have declined to 44.4% of total revenues compared with 54.9% in the year-ago period.

TCS won eight large deals during the quarter with five of them coming from the US, two from Europe and one from Asia-Pacific. They are spread across different sectors -- two being from customers in manufacturing and other six from retail, pharma, utilities among others. For the first time, the company has shown a decline in the number of net hires by 2119 people, although at gross level it hired 2,828 employees.

The company has made 111 job offers in the US for its largest delivery centre at Cincinnati. The centre has a capacity of 1000 people. Ajoy Mukherjee, head of global human resources, termed it the first large-scale hiring by the company for the Cincinnati facility.

 

[leonblack08]

India scopes out new markets for RMG exports​

Pallab Bhattacharya, New Delhi
India is aiming to cut its garment industry's overwhelming dependence on American and European markets, hit by financial downturn.

It is now looking to Southeast and East Asia and Latin America, Africa and Oceania to expand its market.

As part of the market diversification effort, Indian Textile Minister Dayanidhi Maran will be leading India's first-ever joint textile trade delegation to Japan from July 20.

The Indian garment industry faces stiff competition from Bangladesh, Vietnam and China in the US and European Union markets.

Maran will attend Japan International Fashion Fair in Tokyo on July 22-30. Indian textiles and clothing exporters will be participating in the event.

The Apparent Export Promotion Council, along with Sripur Textile Export Promotion Council and Textile Promotion Council are participating in the fair.

To diversify the textiles and clothing exports and reduce dependence on the US and EU, India is promoting exports to Southeast Asia under its 'Look East Policy'.

Japan is one of the biggest consumers of textiles and clothing but India has a negligible market share of 1.12 percent in the Japanese import basket.

As India seeks large foreign direct investment in the textile sector where 100 percent FDI is allowed, Maran will address a business meeting hosted by Japan-India Business Cooperation Committee (JIBC) and will use this platform to invite investment in the Indian textiles sector.

The Indian government is conscious of the fact that textiles industry needs modernisation and there is huge scope for Japanese investment to upgrade spinning, weaving, processing and garmenting facilities.

The Daily Star - Details News

There will be a competition among India,China,Bangladesh,Sri Lanka and other RMG exporters as all of them races to grab greater share of global market.

 

[Singh]

Economy can't be held hostage by Ambanis bros: Govt

Economy can't be held hostage by Ambanis bros: Govt​

NEW DELHI: The government has slammed the Ambani brothers for having created a private feud over a national asset - natural gas. In an independent appeal filed in the Supreme Court on Saturday, the Centre adopted an unusually belligerent stand towards the two powerful industrial groups while asking them to stop squabbling over something that didn't belong to them.

In its appeal, the Centre urged the apex court to quash the June 15 Bombay High Court order which directed Mukesh Ambani to honour his ``commitment'' and provide gas to Anil Ambani's RNRL as per an MoU between them. This MoU, the Centre maintained, was ``null and void''. Not just that, it also accused the brothers of trying to ``surreptitiously and unauthorizedly'' appropriating the country's sovereign natural resources as ``family property''.

While the stinging comments could seriously hurt the pride of the Ambani brothers, it is also a serious setback to Anil Ambani's claim over an agreed supply of gas from KG basin which is being operated by Mukesh Ambani. Not surprisingly, Anil Ambani rushed to the Supreme Court to file an affidavit, claiming the Centre had no role in the dispute.

Anil Ambani's RNRL reacted sharply to the Centre's appeal and virtually accused it of playing a new game altogether after maintaining before the Bombay High Court that its role in the dispute was limited to interpreting the The Economic Times Sharing Contract. The Centre's affidavit, expanding its role now, should be tossed out, it pleaded.

On its part, the government said natural gas was meant for the country's industrialization and not for the individual gains of ventures owned by the Ambanis. The MoU between Mukesh's RIL and Anil's RNRL was ``null and void'' in the face of enormous national interest involved in the distribution of natural gas, it said, adding, ``the national economy cannot be allowed to be held hostage by the Ambanis''.

In its appeal, the government said the gas produced from KG Basin, if properly utilized, ``will promote industrialization of India''. However, the Ambani MoU made it appear that ``all the gas will be owned by RIL and RNRL and utilized at their discretion. Obviously, the pressing needs of the priority sectors of the national economy cannot be allowed to be held hostage to the benevolence and mercy of RIL and RNRL.''

``Knowing fully well that gas does not belong to them (RIL and RNRL) and that contracting companies are bound by the terms of the The Economic Times Sharing Contract (PSC), RIL and RNRL have appropriated, through the MoU, in a surreptitious and unauthorised manner, the entire gas, treating the same as their personal and family property,'' it said.

``The MoU, therefore, to the extent that it has as its consideration a property not belonging to the signatories to the MoU (in this case belonging to sovereign government of India) is blatantly illegal and in disregard of the provisions of the PSC and should be declared null and void,'' it said.

Till the dispute raised in the appeals filed by RIL, RNRL and the Centre was finally resolved, the Supreme Court should stay the operation of the HC judgment and keep in operation the interim arrangement ordered by the HC in its January 30, 2009 order, the Centre said.

Economy can't be held hostage by Ambanis bros: Govt - India Business - Business - NEWS - The Times of India

 

[I-G]

India-S Korea to sign trade pact on Aug 7
New Delhi (PTI): India and South Korea are likely to sign a Comprehensive Economic Economic Partnership Agreement (CEPA) in Seoul on August 7.

The CEPA, comprising six agreements, would pave the way for duty-free trade of goods and services besides investment and customs cooperation between the two countries.

"India has agreed to eliminate 70 per cent of the tariff line while South Korea will do away with its most of the duties in the next 10-years," a senior Commerce Ministry official said.

India's exclusion and sensitive lists includes agriculture, textile and auto components. The Government had said no product had been offered with complete elimination of duty in these sectors.

Seoul would break duty barriers on items of India's export interests while New Delhi has taken enough care to protect its sensitive industries and the farm sector, he said.

A Cabinet meeting presided over by Prime Minister Manmohan Singh had approved the pact early this month. The negotiations for the agreement had started in March 2006 and were concluded in September 2008.

Commerce and Industry Minister Anand Sharma is likely to visit Seoul in August.

India exports petroleum products, gems and jewellery, cotton yarn and textile products to South Korea. In 2007-08, bilateral trade was USD 10.12 billion.

The Hindu News Update Service

 

[I-G]

India-Bangladesh trade can double by 2011: FICCI
New Delhi (IANS): India-Bangladesh bilateral trade can double by 2011, says the Federation of Indian Chambers of Commerce and Industry (FICCI), which has suggested a multi-pronged action agenda for creating a favourable investment climate.

According to FICCI, India's trade with Bangladesh increased from $1 billion in 2001-02 to $3.17 billion in 2007-08, more than three folds, mainly on the back of a 79.4 percent increase in India's exports.

To enhance the economic linkages between the two neighbours, it has recommended a series of measures including reduction of tariff levels on both sides to increase market access and comprehensive Motor Vehicular Agreement for seamless movement of cargo to the delivery point.

The FICCI has also suggested an agreement on rail link for cross-border movement of containers and simplification of pre-shipment inspection system and simplification of export licensing and banking and banking procedures for import financing.

The government in Dhaka should also look at single-window clearance for new investment proposals in Bangladesh, exploring the possibility of an industrial zone and set up an industrial park for India in Bangladesh, the industry body said in a statement.


It should also look at the possibility of allowing direct container movement by barges from Kolkata to Narayanganj, containing various consumer durable items, the FICCI said.

The recently signed bilateral investment and protection treaty between India and Bangladesh would further strengthen the framework for trade and investment between them, it said.

The FICCI has identified certain key sectors for enhancing trade ties between the two countries. They are textiles, leather, frozen foods and fisheries, jute, agro based industries, FMCG, engineering, chemicals and petro chemicals, ceramic, pharmaceuticals, steel and infrastructure.

The Hindu News Update Service

 

[Pintu]

TCS aims to make BPO a $3 billion business

TCS aims to make BPO a $3 billion business
BS Reporter / Mumbai July 19, 2009, 0:51 IST

To add 1,500-2,000 people in the next 12 months.

Tata Consultancy Services (TCS) aims to make its business process outsourcing (BPO) business worth $3 billion in the next five years.

TCS’ revenue from the BPO segment for the first quarter of financial year 2009-2010 was Rs 822 crore, that is, 11 per cent to the total.

The BPO segment, with 26,000 employees at present, will add 1,500-2,000 people in the next 12 months. The company said none of its 24,885 campus recruits would be asked to join the BPO unit.

N Chandrasekaran, chief operating officer and executive director, TCS, said the BPO offering was key to the company’s full services play and providing end-to-end services.

To ensure full-service capability, TCS BPO, other than vertical and horizontal services, would also offer KPO and platform-based services, he said.

Chandrasekaran also introduced the management team heading the BPO operations. Abid Ali Neemuchwala will head the overall BPO practice, with Rahul Singh looking after the BFSI segment. V K Raman will be responsible for focus on all other verticals and Raj Agarwal will head the platform BPO solutions unit.

For TCS, the BPO play would be slightly different, said Chandrasekaran. The three core elements, he said, would be: Large-scale domain-led transaction services that would ensure huge cost efficiencies for clients; integrated IT and operations; and platform-based business model, which will shifts the business model to pay-per-transaction.

At present, TCS BPO has 50 services domain and seven platform-based offerings. The company already has 14 deals for its platform-based BPO services. Of these, eight customers are live while others will go live soon. The company said that going ahead, it might look for acquisitions to expand its platform offering.

The BPO will also utilise partner eco-system to scale up operations. For instance, CMC, a subsidiary of TCS, has solutions for digitisation and biometrics that can be leveraged by the BPO. Similarly, Tata Communications’ large networking capabilities and data centres could be used for hosting applications. Neemuchwala said, “BPO is a huge opportunity, both globally as well as in the domestic market. The global market is expected to be over $400 billion in 2013, of which the total offshorable market is a $80 billion opportunity. Of this, BFSI is the largest segment with over $100 billion.”

Analysts tracking the sector said that it was natural for the IT giant to increase its BPO focus. “IT players have realised that there are some aspects of BPO that are recession-proof as they cater to non-discretionary spend. So, focusing on these capabilities makes sense,” said an analysts tracking the sector.

 

[Pintu]

Pennar Q1 net profit at Rs 38 crore

Pennar Q1 net profit at Rs 38 crore
Press Trust of India / Hyderabad July 19, 2009, 18:37 IST

Pennar Industries, a leading player in engineered metal products, has clocked a 24 per cent rise in its first quarter net profit at Rs 38.1 crore as against Rs 30.8 crore in the same period previous year.

Total revenues during the quarter declined to Rs 195.5 crore as compared to Rs 200 crore in the same period last year, a press release said here.

During the period, the company has focused more on the heavy engineering and infrastructure segments, which has helped it to strengthen its position in the industry, it said.

EBIDTA, during the quarter, stood at Rs 24.5 crore as against Rs 17.7 crore in the year-ago period, the release said.

 

[I-G]

No pressure to sign IPI pact: govt.

No pressure to sign IPI pact: govt.


New Delhi (PTI): India on Monday said it will not bow to external pressures in deciding on participation in $ 7.4 billion Iran-Pakistan-India gas pipeline project but listed several outstanding issues including finalisation of gas price with Iran as impediments to signing a contract.

Replying to questions in Rajya Sabha, Petroleum Minister Murli Deora said there were some problems in implementation of the project but expressed hope that they would be overcome.

"Energy needs of the country are paramount... There is no question of (succumbing to) any external pressure as far as energy security is concerned," he said. "We are very sure that the pipeline project is good for India, Iran and Pakistan."

The project has been considerably delayed as "we have not been able to decide on price of gas (with Iran)," Mr. Deora said.

Besides, transportation tariff to be paid for wheeling of the gas through the section of pipeline passing through Pakistan has not been finalised. The transit fee to be paid to Pakistan for allowing passage has also not been finalised, he said adding project structure has also not been decided.

India wanted guaranteed supply of gas and wants to take delivery of the gas at its border with Pakistan but Tehran and Islamabad have agreed for handing over custody of the gas at Iran-Pakistan border, he said.

Custody transfer of the gas at Pakistan-India border would make Iran liable for safe passage of gas through Pakistani territory.

The Hindu News Update Service

 

[I-G]

India receives USD 4.5 billion from IMF's SDR allocation

India receives USD 4.5 billion from IMF's SDR allocation

Washington (PTI): India would receive about USD 4.5 billion from the International Monetary Fund's Special Drawing Rights (SDR) to battle economic slowdown.

This is part of the about USD 250 billion allocation of SDR by the IMF to provide liquidity to the global economic system by supplementing IMF's 186 member countries' foreign exchange reserves.

The funds would be available at the end of August, IMF officials said.

The equivalent of nearly USD 100 billion of the new allocation will go to emerging markets and developing countries, of which low-income countries will receive over USD 18 billion, IMF officials announced during a conference call after a decision in this regard was taken by the IMF Executive Board.

"The SDR allocation is a key part of the Fund's response to the global crisis, offering significant support to its members in these difficult times," IMF Managing Director Dominique Strauss-Kahn said.

The officials added that India's allocation of about USD 4.5 billion is based on its IMF quota. The money could immediately boost its foreign reserve. If India does not need this money, it has the option to trade the money with other countries, which are in need of international fund to boost their economic condition.

The SDR allocation was requested as part of a trillion dollar plan agreed at the G-20 summit in London in April and endorsed by the International Monetary and Financial Committee (IMFC) to tackle the global financial and economic crisis by restoring credit, growth and jobs in the world economy.

If approved by the Board of Governors with an 85 percent majority of the total voting power in a vote scheduled to close on August 7, the SDR allocation will be in effect on August 28.

"The allocation is a prime example of a cooperative monetary response to the global financial crisis," the Managing Director said.

The SDR allocations are being made to IMF members in proportion to their existing quotas in the Fund, which are based broadly on their relative size in the global economy.

The operation will increase each country’s allocation of SDRs by approximately 74 per cent of its quota, and Fund members' total allocation to an amount equivalent to about USD 283 billion, from about USD 33 billion.

SDRs allocated to members will count toward their reserve assets, acting as a low cost liquidity buffer for low-income countries and emerging markets and reducing the need for excessive self-insurance, the IMF said in a statement.

Some members may choose to sell part or all of their allocation to other members in exchange for hard currency — for example, to meet balance of payments needs — while other members may choose to buy more SDRs as a means of reallocating their reserves, the IMF said.

In supporting the allocation proposal, the Executive Board stressed that it should not weaken the pursuit of prudent macroeconomic policies, and should not substitute for a Fund-supported program or postpone needed policy adjustments, it said.

The Hindu News Update Service

 

[Antimony]

The term SDR raises shivvers.

It would be helpful to understand what strings this one comes attached with

 

[thakur_ritesh]

The officials added that India's allocation of about USD 4.5 billion is based on its IMF quota. The money could immediately boost its foreign reserve. If India does not need this money, it has the option to trade the money with other countries, which are in need of international fund to boost their economic condition.

the main part of the entire artice is in that one para. the whole article if read without understandig that one para would be completely misleading.

the present forex reserve stands at over 262b usd, which is at a much healthy level than in march when it was at 252b usd when a similar news hit the rounds, but our jurnos rarely read the things properly and then without getting the essence of what is there they start making reports on that.

india in fact has talked of lending some 10b usd to the imf but only if india's over all voting share is increased in the decision making process of the imf.

a statement by the pm at g20 in april, when our jurnos previously could not make head or tail of what was happening.

"We do not visualise any need in the near future to go to the IMF . . . We can consider contribution to (the) IMF in proportion to our quota,"

"As far as India is concerned . . . the question arises that we should contribute (to the IMF),"

rediff.com: Borrow? No. We can give money to IMF: PM

 

[Pintu]

BSNL workers to oppose disinvestment

BSNL workers to oppose disinvestment
Press Trust of India / New Delhi July 20, 2009, 20:57 IST

Workers of telecom major Bharat Sanchar Nigam (BSNL) today said they would observe "Anti-Disinvestment Day" on July 22 against the government's proposal to sell its shareholding in the company.

The proposal (to disinvest) is in violation of the assurances given earlier by the Communications Minister and the government that BSNL would not be disinvested or privatised.

The call to protest comes a day before Telecom Minister A Raja's announcement to hold a review meeting of the PSU in view of the drastic fall in its net profit to Rs 104 crore in 2008-09 compared to Rs 3,000 crore a year ago.

The minister is also likely to discuss the disinvestment plans with the top management tomorrow, sources said. The BSNL board has already approved the resolution towards this end.

"The plea of the management that IPO is necessary to mop up funds for development and expansion is far away from the truth, as the BSNL has more than Rs 37,000 crore slashed up in banks. It can be used for expansion instead of selling shares," V A N Namboodiri, Convenor, Joint Forum of BSNL Associations, said in a statement.

Joint Forum of BSNL Employees Association/Unions of Executives and Non-executives has said that they would sending telegrams to Prime Minister Manmohan SIngh and Telecom Minister demanding dropping IPO and disinvestment proposal, the statement said.

The BSNL board has approved resolution towards this end.

 

[1.44]

India becomes R&D hot spot as high-tech firms cut costs
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At Microsoft's research centre in a leafy lane in India's tech capital, a new generation of researchers are being groomed half a world away from the software giant's sprawling headquarters in Seattle.

Complete with beanbags and coffee served in steel tumblers, the centre is helping change the perception that India is no place for top-end research and development.

Staffed with about 60 full-time researchers, many of them Indians with PhDs from top universities in the United States, the centre is at the cutting edge of Microsoft's R&D. It covers seven areas of research including mobility and cryptography.

Its success, including developing a popular tool for Microsoft's new search engine Bing, underscores the potential of R&D in India at a time when cost-conscious firms are keen to offshore to save money by using talented researchers abroad.

Showing off the Bing tool which enables searches for locations with incomplete or even incorrect addresses, B. Ashok, a director of a research unit at the centre, said the innovation would never have taken root if the R&D had been done in the United States.

"It was completely inspired by the Indian environment, but is applicable worldwide," he said.

While India might seem like a natural location to expand offshoring into R&D, it is hampered by some serious structural problems that range from not enough home grown researchers to a lack of government support.

India produces about 300,000 computer science graduates a year. Yet it produces only about 100 computer science PhDs, a small fraction of the 1,500-2,000 that get awarded in the United States, or China, every year.

"Students here are not exposed to research from an early age, faculties are not exposed to research and there's no career path for innovation because there's a lot of pressure to get a 'real' job," said Vidya Natampally, head of strategy at the Microsoft India Research Centre.

With few government incentives and an education system that emphasises rote learning, India lacks the kind of environment found in say, Silicon Valley, where universities, venture capitalists and startups encourage innovation.

"China has a policy in place for R&D; we don't," Natampally said, adding that India could move up the value chain faster if even a small percentage of its engineering graduates went into research.

The small numbers of PhDs and the lack of government incentives for India's fledgling R&D sector are blunting the country's edge, analysts warn.

COMPETITION

Rival China has already pulled ahead with more than 1,100 R&D centres compared to less than 800 in India, despite lingering concerns about rule of law and intellectual property rights.

Aside from providing funding to encourage students to complete their PhDs, China also offers fiscal incentives such as tax breaks for R&D centres and special economic zones provide infrastructure for hi-tech and R&D industries.

India is also losing out in the patent stakes. In 2006-2007, just 7,000 patents were granted in this country of 1.1 billion people, compared to nearly 160,000 in the United States.

"We're nowhere near the U.S. or even Israel when it comes to innovations," said Praveen Bhadada at consultancy Zinnov, which estimates the R&D sector in India is worth about $9.2 billion.

"Our costs are low and our talent pool is ahead of China, Russia and Ukraine, but China gives specific incentives, and produces way more PhDs than we do."

India is cheaper than China for R&D, those in the industry in Bangalore said. But salaries in India have been rising by about 15 percent every year and may soon reach parity with China. R&D centre costs in Shanghai are currently just 10-15 percent higher than in India.

BEYOND CODING

Microsoft and other firms have been working around the government's indifference.

Cisco, IBM, Intel, Nokia, Ericsson and Suzuki Motor have all gone beyond low-end coding and tweaking products for the local market, with hefty investments and recruitment.

Their success shows India's potential if the government starts supporting such ventures and building high-tech parks and incubators.

"If Paris asks for some work, it's not because they think it's cheaper but because they want inputs from India," said Jean Philippe, chief designer of the Renault India Studio, which competes with the French carmakers' five other global studios.

Texas Instruments and San Jose-based Cadence Design were among the first to set up R&D in India in the mid-80s, drawn by the legions of English-speaking software engineers who could be hired at about 20 percent of the cost of engineers in the United States.

The opening of the economy in the early 90's and the establishment of the software services industry drew more foreign firms looking to cut costs and tap emerging markets.

"From when a few companies offshored non-critical design work, we have seen India emerge as a preferred destination for design and development of chip, board and embedded software," said Jaswinder Ahuja, managing director of Cadence India.

Firms first focused on the 'D' in R&D, but research has grown in importance in recent years, and many of the facilities in India are now the largest outside their home base.

Half of Cisco's core R&D work, including innovations in WiMAX and optical networks, and about 40 percent of SAP's ideas for processes and product development come from India.

"The Indian units are more tuned to the needs of customers in emerging markets. Besides, Bangalore is only a 5-hour flight away from three strategic regions: Southeast Asia, east Asia and the Middle East," said Aravind Sitaraman, vice president at Cisco.

IBM's India Research Labs do a "fair share of patenting", helping swell the parent's record numbers every year, said director Guruduth Banavar in Bangalore.

Its new $100 million-mobile communications research, Mobile Web, is the first time a big project has been driven from outside the United States, he said.

"For a research lab it's the best environment to be in: you can see the problems and the opportunities," said Banavar, who was previously at IBM's lab in Boston and has, like several of his peers, returned to India to oversee operations here.

FEATURE - India becomes R&D hot spot as high-tech firms cut costs - Yahoo! India News