Current Economic Statistics and Review For the
Week | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Theme
of the week: Non-Conventional Renewable Energy Sources
“For
meeting the development targets of The power sector is often identified as the single most crucial growth driving sector of an economy. The power requirements of a country share a non-linear relationship with GDP growth (an elasticity factor of much above 1). ‘A 7 per cent rise in GDP warrants a 10 per cent rise in power capacity to maintain the status quo in terms of the country’s current shortage. Additionally, to bridge the shortage, as well, the rate of growth would have to be much higher for the next ten years.’[2] Though the pace of electricity generation has improved in recent months as compared to a growth of around 5 per cent over the last few years, substantial augmentation of generating capacity is called for if the aspiration of a double-digit GDP growth is to be realised. The need for accelerated growth in power generation coupled with environmental considerations has brought into focus the use of renewable sources of energy generation.
Conventional
Sources of Energy
Nuclear
Power Generation Nuclear
energy which began to be used for power generation in 1970 remains
practically unexploited till date due to geo-political issues, alleged
safety and environmental concerns as well as serious worries on its cost
effectiveness. The development of nuclear power for achieving energy
independence by the country remains a contentious issue with as many
lobbies opposing as it has supporters. The opposition is largely based on
ecological grounds with reference to the management of radioactive wastes.
While, on one hand, enthusiasts claim that nuclear technology offers a
cheap and safe way for generating power, several critics argue otherwise.
They point that
Indian
policy makers are actively promoting the development of nuclear power
generation. A planning commission report estimates that the share of
nuclear plants, which currently have a share of 1 per cent in the total
installed capacity in Non-Conventional
Renewable Energy Sources It
was in the early seventies that the importance of harnessing renewable
energy sources for power generation in the transition to a sustainable
energy base was recognised in
Current
Scenario in the Power Sector
Developments
in Major Renewable Energy Programmes The MNES (or MNRE now) has undertaken numerous programmes for the promotion of renewable sources. Annexure 2 enumerates estimated medium-term potential and cumulative achievements of renewable energy sources as provided by the ministry. We undertake a brief review of the progress under various programmes for development of renewable energy resources: 1.Wind
Power Programme 2.Small
Hydro Power Projects The small hydro projects are a critical area for power generation from renewables to help improve the overall energy scenario of the country and in particular for remote and inaccessible areas. The ministry has been encouraging development of small hydro projects in the state sector as well as through private sector participation. The
estimated potential of small hydro projects is about 15,000 MW. The last
decade has seen a four-fold increase in the capacity of small hydro
projects up to 3 MW from 63 MW to 240 MW. Additionally, about 420 small
hydro power projects up to 25 MW station capacity with an aggregate
capacity of over 1,423 MW have been set and over 187 projects in this
range with aggregate capacity of 521 MW are under construction. 3.Biomass
Power Programme The biomass resources, including crop residues and agro-industrial wastes, provide a source of non-conventional energy for industries through biomass gasification technology. The industrial sector consumes approximately 35 per cent of total electricity generated in the country and demands for high quality, stable power supply to attain the higher growth rate projected for this sector. A majority of industries in India requires both electrical and thermal energy and biomass fuels provide efficient for meeting these requirements, often partially if not fully. The power programmes using biomass fuels fall under two broad categories. Biomass
Power/Cogeneration (Non-Bagasse) Programme Several industries, such as sugar, paper and pulp, textiles, fertilisers, petroleum, petrochemicals and food processing, etc. require electrical as well as thermal energy for their operations. These requirements can either be met through different energy sources or from a single source which is capable of generating electricity as well as producing thermal energy. Simultaneous production of power and thermal energy from a single fuel source is termed as co-generation. The power generated from such co-generation plants can be used for meeting the captive requirements and the surplus power produced can be exported to the grid. The
MNES has notified a scheme on biomass energy and co-generation (non-bagasse)
in industry with provisions for financial assistance from the central
government. Biomass
Gasifier Programmes In
the area of small-scale biomass gasification, significant technological
development has made 4.Solar
Power Programme Most renewable sources of energy, such as wind, hydro power, biomass, ocean energy, are the indirect forms of solar energy. The direct exploitation of the widely and freely available, environment friendly and virtually inexhaustible resource of solar energy is undoubtedly an attractive proposition. India has one of the world's largest programmes in solar energy given its endowment of 300 clear sunny days in a year; the country receives solar energy equivalent of over 5,000 trillion kWh (kilowatt hours) per year, which is far more than the total energy consumption of the country and the daily average of incident solar energy ranges between 4-7 kWh/m2 depending upon the location. The MNES is implementing countrywide schemes on solar thermal energy programme and solar photovoltaic power programme. Solar
Thermal Power Programme Solar
thermal energy refers to the utilisation of solar energy by capturing
available solar radiation and transferring it as heat to be applied to
perform various useful activities, like, heating, cooling, drying, water
purification, industrial process heat and power generation. This
technology route also includes solar architecture, which finds utility in
designing and construction of energy efficient buildings. The solar
thermal power generation potential
is estimated at 35 MW per square kilometer. Solar
Photovoltaic Power Programme
Solar
photovoltaic (PV) technologies offer a unique, decentralised option for
providing electricity locally at the point of use. The country-wide solar
photovoltaic programme is aimed at developing the cost effective PV
technology and its applications for large-scale diffusion in different
sectors, especially in rural and remote areas. The programmes of MNES
cover PV systems for solar street lighting systems, solar lanterns, solar
home lighting systems/solar home systems, stand-alone PV power plants;
solar PV water pumping systems and a few others. PV systems of about 245
MWp aggregate capacity (about 13,00,000 systems) have been installed till
December 2005, for various applications including export of about 160 MWp
aggregate capacity of PV products. Additionally, there are separate programmes intended towards urban and rural energy generation using renewable resources. This is because given their unique demographic characteristics, like population concentrations in urban conglomerations as against dispersed populations in rural areas, these areas deserve attention in distinct forms. Also the schemes in rural versus urban areas would depend on the nature of bio-fuels available in these areas. 5.Urban
Energy Programmes Urban energy programmes
are aimed at mitigating the energy problems of cities and providing
alternative energy solutions for industrial and commercial establishments.
Energy
Recovery from Urban Wastes The
increasing quantities of urban wastes resulting from rapid urbanisation
and changes in the lifestyle patterns which accompany economic growth are
beginning to threaten urban environment. To use this waste for energy
generation has a two-fold benefit of waste disposal along with supporting
the decentralised energy generation programme of the country.
According to a recent estimate, about 42 million tonnes of solid
waste (1.15 lakh tonnes per day) and 6,000 million cubic metres of liquid
waste are generated every year by Energy
Recovery from Industrial and Commercial Wastes Concomitantly, high paced
industrialisation results in the generation of huge quantity of wastes,
both solid and liquid, in the industries like sugar, pulp and paper, fruit
and food processing, sago/starch, distilleries, dairies, tanneries,
slaughterhouses, poultries, etc. The estimated potential for recovery of
energy/generation of power from solid and liquid wastes being generated in
various industrial units is expected to increase to about 1,300 MW by
2007, 1,600 MW by 2012 and 2,000 MW by the 2017. Several initiatives for
the development of effective waste-to-energy systems have been taken up in
the country; a total of 21
projects for energy recovery from a variety of industrial wastes with an
aggregate capacity of about 27 MWeq (megawatt equivalent) have been
installed as on 31st August 2005. 6.Rural
Energy Programmes While
for dense urban population masses, centralised generation/production of
energy followed by transmission/transport makes eminent sense, this
approach tends to be prohibitively costly and inefficient for dispersed
residents presenting remote, scattered and low loads which inevitably lead
to greater transmission and distribution losses. Beyond certain breakeven
distances from the grids/transport systems associated with centralised
generation/production, it appears to be more cost-effective to implement
decentralised village-scale generation/production coupled to local
mini-grids like in the compact villages of Biogas
Development The national project on biogas development was started in l981-82 with the objectives of providing fuel to rural households for cooking purpose, organic manure for application in agricultural fields, mitigating the drudgery of rural women, reducing the pressure on forests, recycling human waste by linking toilets with biogas plants and thereby improving sanitation. Indigenously developed models of biogas plants, namely floating drum type and fixed dome type are being gradually popularised. The programmes are provided for by central financial assistance, including central subsidy, turn-key job fee, service charges, staff support, training and publicity support, etc. Integrated
Rural Energy Programme (IREP) The most comprehensive rural programme IREP aims at developing capabilities at the micro-level for planning and implementation of area-based energy plans and projects and meeting energy needs of rural population for productive and subsistence needs. The programme has two components, viz. the central sector and the state sector; the former includes centrally sponsored scheme (CSS) for developing capabilities in the states and union territories for preparing and implementing integrated rural energy plans and projects while state sector outlay is utilised for implementation of the IREP plan and projects including funding of demonstration activities, provision of financial incentives for various energy devices, providing funds for extension and other related activities for the implementation of the plan. Project
Costs of Renewable Power Sources
The cost estimates for setting up power plants based on renewable energy sources as provided by the MNES are presented in Table 3. While these costs might appear slightly higher than those involved in thermal generation (approximately Rs 2-3 per kWh), it is argued that if environmental and social benefits offered by the projects are considered then these projects compare favorably with conventional power projects. Also, cost of thermal projects are subject to vagaries of oil prices in international markets which given their current upward spiral strengthens the argument in support of renewable sources. Renewable
Energy Sources in the Plans (Ninth and Tenth) The Ninth Plan (1997-2002) undertook to restructure the then existing renewable energy programmes towards gradual commercialisation for which purpose socially-oriented programmes were restructured so as to reduce the direct capital subsidy to such projects as provided by the government. The Tenth Plan (2002-2007) carried on this process by including various incentives such as a interest subsidy instead of a capital subsidy. Further, the plan encourages private sector investments by promoting a bidding process for available subsidies with the entrepreneurs providing maximum benefit at the lowest amount of subsidies being awarded the contracts. Recently, venture capitalists have been looking beyond their traditional businesses to invest increasing sums of money in alternative energy companies.
Table 1 summarises the likely physical achievements of renewable energy programmes as against the targets set under the Tenth Plan. While achievement in wind power has already exceeded its target in the first three years of the plan period, some other areas, like solar power, are expected to witness shortfalls. The mid-term review reasons out that the undue delay in commissioning the 140 MW integrated solar combine cycle power plant in Rajasthan due to contentions on its viability and availability of gas would make the targets for solar generation plants unachievable.
On the financial front, data on budgetary support during the Ninth Plan and the first four years of the Tenth Plan highlight the large amount of unutilised funds by the ministry of non-conventional energy sources (Table 2). While utilisation of the total GBS (gross budgetary support) and IEBR (internal and extra budgetary resources) for renewable energy sources at the end of the Ninth Plan was a little over 65 per cent at Rs 4869.74 crore, the amount utilised by the end of the Tenth Plan estimated at Rs 3426.11 crore would be even lower than half the amount allocated. The gross underutilisation of funds has been blamed on lack of co-ordination among several ministries that have to concur before grants are allocated or released for this ministry and its programmes and the fact that there is less than allocated utilisation of grants on many programmes[4]. Summing
Up Energy
security is a prime concern for any economy and Over the years, MNES has made considerable progress in promoting an interest in non-conventional energy resources. It has demonstrated that alternative sources with all their advantages can satisfy a significant proportion of the growing demand for power. But it is equally evident that the ministry, whose allocation is a fraction (18 per cent) of the huge allocations for the power ministry, has a long way to go. (* This note has been prepared by Nilopa Shah.) References Bose, Deb Kumar (2000): ‘Decline of Nuclear Power’, EPW, June 10-16 Cover Story (2006): ‘Alternative Energy: End of Oil Age?’, The Analyst, August Editorial (2002): ‘Power: Underutilising Alternatives’, EPW, August 31 Editorial (2006): ‘Thermonuclear Way Out of Crisis’, Indian Express, November 22 GoI (2002): ‘Tenth Five-Year Plan (2002-07)’, Volume II, Planning Commission GoI (2005): ‘Mid Term Appraisal of the Tenth Five-Year Plan (2002-07)’, Planning Commission, June GoI (2006): ‘Annual Report 2005-06’, Ministry of Renewable Energy Sources GoI
(2006): ‘Energy Conference
on Renewable Energy, Ministry of Renewable Energy Resources (www.mnes.nic.in) Reddy, Amulya K N (1999): ‘Goals, strategies and Policies for Rural Energy’, EPW, December 4 Sharma, Vinod (2006): ‘Making Power While the Sun Shines’, Business Standard, Nov 25
[1]
President APJ Abdul Kalam's
Inaugural Address at The South Asian Conference on Renewable Energy,
Energy
Independence, New Delhi, 18th April 2006 [2]
Vinod Sharma, Making Power
While the Sun Shines, Business Standard, 25th November 2006 [3] The ministry has been renamed as ministry of new and renewable energy (MNRE) as per Cabinet Secretariat notification No. Doc. CD-566/2006 dated 14.10.2006.
Highlights of Current Economic Scene AGRICULTURE
In order to curb the rising prices of maize, the central government has reduced the import duty on maize to zero from the existing 60 per cent and this zero duty regime would be applicable only for calendar 2007. In the past one-year, prices of maize have shot up from Rs 600 per quintal to Rs 750 in the domestic market. Doing away with the import duty would provide relief to starch manufacturers and poultry industry, the two major consumers of maize. Exports
of black pepper have achieved the export target set for the current
financial year 2006-07 during the first nine months between April and
December 2006. Higher price in the international market and export subsidy
scheme announced in October 2005 have triggered this upsurge in exports
with exports touching to 20,000 tonnes, 65 per cent higher over the
corresponding period of last year. Total export earnings have stood at Rs
203.53 crore, 20 per cent higher than the target of Rs 170 crore. The
exports of spices, as a whole, have posted an increase of 31 per cent in
terms of value. Total exports were 2.5 lakh tonne worth Rs 2,335.24 crore
compared to 2.5 lakh tonne worth Rs 1,781.8 crore during the same period
last year. According to provisional estimate of Rubber Board of India, natural rubber imports in the country have stood at 47,193 tonnes, 14 per cent higher compared with same period a year ago, surpassing the projection of 45,000 tonnes for 2006-07 (April-March) on account of domestic rates staying higher than global prices since October 2006. Automotive Tyre Manufacturers Association, an apex body of tyre makers, has projected 30,000 tonnes rubber imports during January-February 2007. As per the provisional estimates of Marine Products Export Development Authority (Mpeda), marine products’ exports from the county has posted an 8.03 per cent rise in value and 3.8 per cent increase in quantity, during the first nine months of this fiscal. A total 4,10,983 tonnes of seafood, worth Rs 6,055.39 crore has been exported as against 3,95,911 tonnes worth Rs 5,605.5 crore exports attained during the same period last year. Gujarat State Civil Supplies Department has put a limit on wheat stock held by retailers, wholesalers and flourmill owners in the state at 3,000 quintal per month, except exempted firms like Gujarat State Civil Supplies Corporation itself and Public Distribution System of the state. The notification will come into effect at the end of January, around the time of arrival of new wheat crop in the market. The firms and other industry players procuring wheat have to declare their stocks to the department. The
country has plans to export10 containers of eggs (4.75 lakh eggs /
container) per week to the UAE from first week of February 2007 after a
gap of nearly one year. The finance ministry has reduced the basic custom duties on vegetable oils and has decided to keep the tariff values — the base prices on which duties are computed — on palm oils frozen at their end-July 2006 levels. As per the Revenue Department's notification, the basic custom duty on CPO, crude palmolein and other fractions of CPO has been slashed from 70 to 60 per cent. In case of RBD palm oil, RBD palmolein and other refined palm oils, it has been reduced from 80 to 67.5 per cent. For crude sunflower oil the duty has been cut from 75 to 65 per cent and that for refined sunflower oils from 85 to 75 per cent. The
World Bank has announced $485 million in assistance to Tamil Nadu to
modernise the state’s irrigation infrastructure. Of the total loan
corpus, $335 million will be routed through the International Bank for
Reconstruction and Development (IBRD) while $150 million in credit will be
provided by the International Development Association (IDA). The scheme
seeks to synergise the work of agencies involved in irrigation with
multiple activities like on-farm development, horticulture, agriculture,
marketing, livestock, fisheries and applied research. The project would
aim to improve productivity of water in irrigated agriculture and promote
diversification into higher-value, less-intensive crops. Special focus
will be placed on modernisation of tanks and strengthening of Water
Resources Organisation and Water Users Organisation to improve irrigation
service delivery. Infrastructure
Power The power sector requires investments to the tune of $ 100 billion for improving generation capacity and augmenting the accompanying transmission and distribution networks during the 11th Plan period according to a senior government official. Of the total amount, about $ 50 billion would be needed only for raising the generation capacity, nearly $ 30 billion to ramp up the country's transmission capacity and around $ 20 billion for the rural electrification programme and the distribution sector. Petroleum,
Petroleum Products and Natural Gas In
December 2006, crude oil output of the country has risen by 10.6 per cent;
however, natural gas output has fallen by 1 per cent to 2.7 billion cubic
metre (BCM). During the first nine months of the current fiscal year,
crude output has totalled 25.5 million tonnes, 6 per cent higher than the
24 mt produced in the corresponding period a year earlier. Output from the
Mumbai High fields, accounting for more than half of Cement The
government's move to scrap import duty on cement may not have any impact
on the retail prices of domestic cement as per industry sources who
rationale that the high logistics cost makes it unviable for users to
import cement. They add that though bulk users may consider importing
cement from
BankingThe
President has approved a Bill to amend the Banking Regulation Act. The
Bill gives the RBI flexibility to lower the floor on mandatory statutory
liquidity ratio (SLR) investments, currently set at 25 per cent. The
mandatory percentage of deposits banks must hold in government bonds. HDFC has recorded 25 per cent growth in net profit for the quarter ended December 31, 2006 to Rs 355 crore, against Rs 285 crore in the corresponding quarter lat year. For the nine-month period ended December 31, 2006 the company’s net profit jumped 23 per cent to Rs 1020 crore against Rs 831 crore in the same period last year. Bank
of Maharashtra has posted 178 per cent increase in the net profit for the
October-December quarter as the profit reached Rs 74.32 crore compared
with Rs 26.75 crore in the same period last year. Financial
Markets Capital
Markets Primary
Market Redington
( Secondary MarketThe
BSE sensex gained 100.01 points or 0.70 per cent over the week to close at
14282.72. The Nifty closed at 4147.70, up 57.55 points over its close last
Friday. The Sensex and the Nifty both closed at their historic all time
highs. On Monday, the Sensex advanced 26.53 points (0.19 per cent), to
close at 14,209.24. On Tuesday, cement stocks witnessed sharp falls after
the centre relaxed import duties across all varieties of cement except
white cement. Correction in banking sector stocks also added to the
downward pressure on both the indices. There was also some significant
squaring of long positions in the derivatives segment on the day ahead of
expiry. The 30-shares BSE Sensex lost 168 points (1.18 per cent), to end
at 14,041.24. Wednesday proved to be some breather as firm global markets,
short covering in derivatives and a surge in FII buying helped the market
recover after Tuesday’s 168-point fall. The sensex closed the day 69.22
points higher to settle at 14110.46. On Thursday came a pronounced rise
for the market amidst the derivatives expiry for the month. The sensex
surged 172.26 points on the day to close at 14282.72 while the Nifty put
up 57.80 points closing at 4147.70. The Sensex also touched an intra-day
high of 14,307.19. Thursday was the last trading day of the week with
Friday being an off on account of Republic Day. FIIs
have taken a tepid approach towards Indian equity in the first two weeks
of January. There have been net FII outflows to the tune of Rs 552 crore
between January 1 and January 15. A study of net FII inflows into Nissan
Copper’s IPO for 64.1-lakh-shares was subscribed 5.2 times in December
and the offer price was fixed at Rs 39 per share. However, on debut, the
stock rose to a high of Rs 135.70 on the BSE, before ending the day at Rs
128.80. Delivery-based transactions accounted for over 60 lakh shares on
that day, arousing suspicion that the prices may have been rigged. The
following day, it climbed to a new high of Rs 154.55, before closing at Rs
115.20. After Sebi imposed the ban on payout of shares and funds — which
was partially lifted later last week — Nissan Copper shares have been
steadily going downhill. The stock closed at Rs 68.85 on January 22. Sebi
has withled the payouts of 40 entities who are suspected of attempting to
rig the share price of Nissan Copper. “An important feature of the
trading on December 29, 2006 was that there were clients who sold heavily
even though they did not appear to be in the list of top 100 allottees in
the IPO.
Prima facie, it appeared that the said clients had sold on the basis of
some prior understanding with the top allottees in the IPO who would in
turn deliver the shares to these clients to fulfill their pay-in
obligations,” Sebi had said in its order. Many
entities named in the IPO share allotment scam are also said to be
involved in the recent manipulation of Nissan Copper shares. Sebi’s
order in the Nissan Copper share manipulation case mentions that the modus
operandi was similar to that in the IPO allotment scam. Its initial
investigation has revealed cases of multiple IPO applications with
different combinations of names, but often with the same PAN and same
residential addresses. “The trading pattern on the first day of listing
and offloading of around 88 per cent of issue size (by Venus Capital
Management, a FII) suggests that there is something more to the price rise
and high volumes of the shares of the company than what meets the eye,”
the Sebi order had said. Backed
by 19 states, the Central government said that an interim investment
pattern would be notified for funds collected under the New Pension Scheme
(NPS) to allow 5 per cent investment of the corpus in stock market. Under
NPS, the Centre and states have collected about Rs 1,500 crore till date.
The initiative will allow more funds to flow into the market and provide
an opportunity for better returns to NPS subscribers. The NPS corpus earns
only 8 per cent interest at present. The government plans to appoint fund
managers to handle the investments and the first one is likely to be from
the public sector. The decision comes despite opposition by the Left
parties and Left-ruled states of After
the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE),
foreign stock exchanges are now eyeing equity stake in the Over the
Counter Exchange of India (OTCEI), as the government is planning to throw
a lifeline to the now defunct bourse for small and medium companies. It is
learnt that the government wanted to position the OTCEI on the lines of Derivatives
FIIs
were net buyers in the F&O during the week at Rs 300 crore. They were
net sellers in stock futures at Rs 990 crore with net buying in index
futures and index options. The aggregate open interest positions, however,
declined last week as FIIs squared off their positions worth Rs 7000 crore
on account of expiry of January contracts.
Government
Securities Market
Primary MarketRBI
conducted the auction of 7.94 per cent 2021 for a notified amount of
Rs.5000 crore. The cut-off price and cut-off yield of the government
security was Rs.97.81 and 8.2005 per cent respectively. The
Government of Jammu & Kashmir has announced the sale of 10-year State
Development Loan for an aggregate amount of Rs.200 crore through a
yield-based auction using multiple price auction method on February 2,
2007. Secondary MarketThe
inflation rate, as measured by the wholesale price index (WPI), declined
to 5.95 per cent for the week ended January 13, 2007 as compared 6.12 per
cent for the week ended January 6, 2007. The inflation rate for the
comparable week one year back (January 14, 2006) was 4.19 per cent. During
the week, the weighted average call rates during the period ranged between
7.76 per cent and 7.93 per cent, while weighted average repo rates ranged
between 7.04 per cent and 7.32 per cent and the weighted average CBLO
rates ranged between 7.23 per cent and 7.25 per cent. The average volumes
of Call, Repo and CBLO segments were Rs.12,436.96 crore, Rs.5,980.65 crore
and Rs.14,755.24 crore respectively. The daily average outstanding amounts
in the LAF (reverse repo) and LAF (repo) operations conducted during the
period were Rs.210 crore and Rs.12,419 crore respectively. Under
the interim investment pattern (modelled on the lines of non-government
provident funds), the Union Government has decided to allow 25 per cent of
the corpus accumulated under the new pension scheme to be invested in
central government securities, 15 per cent in state government securities
and 25 per cent in public financial institutions and others, and 5 per
cent in equities. The remaining 30 per cent can be invested in any of the
first three instruments mentioned above. CCIL
launched the CCIL MIBOR (CCIL Mumbai Inter-Bank Offer Rate) /MIBID (CCIL
Mumbai Inter-Bank Bid Rate) based on Dealt Quotes from NDS-Call on January
25, 2007. The
weighted average YTM of 8.07
per cent 2017 bond was 7.8693 per cent on January 25,2007 as compared to
7.7896 per cent on January 19,2007. The 1-10 year YTM spreads increased by
5 bps to 59bps. Bond MarketDespite
an under-developed debt market and fewer number of entities accessing it,
the resource mobilised through debt has increased 45 per cent in 2006 to a
staggering Rs 80,000 crore. Close to 67 per cent (Rs 59,000 crore) of the
total debt amount has been mobilised by banks and financial institutions
to augment their capital base. In comparison, despite bullishness in the
capital market, the mop-up through equity markets by corporates has almost
stagnated at around Rs 20,000 crore. Also, in a noteworthy development,
the number of entities tapping the domestic bond market has fallen on
account of issues related to stamp duty in the above-mentioned period. Foreign Exchange MarketThe
rupee-dollar exchange rate has appreciated from Rs 44.34 on January 19 to
Rs 44.24 on January 25. The six-month forward premia closed at 3.97 per
cent (annualized) on January 25, 2007 vis-ŕ-vis 3.67 per cent on January
19, 2007. Commodities
Futures Derivatives
The
FMC Director, Mr Anupam Mishra, has said that the Forward Contracts
(Regulation) Act, 1952 has now become archaic and is coming up in a new
form, factoring the market changes and for better financial
administration. We expect this enactment to come into being early next
fiscal. He further said that the first nine months of the current fiscal
have been eventful and the commodity exchanges transacted business of over
Rs 27 lakh crore against Rs 21 lakh crore last fiscal. The
NCDEX Managing Director, Mr P.H. Ravi Kumar, said that the futures trading
in commodities on an online commodity exchange such as NCDEX has brought
about transparency and fair price on account of largescale participation
of entities associated with different value chains. This reflects the
views and expectations of a wider section of people in relation to a
particular commodity. NCDEX has emerged as an effective platform for price
risk management for all segments of players ranging from producers,
traders, processors, exporters and importers to end-users of the
commodity. He further said that the effort is on to bring even small and
marginal farmers into the fold. Logistics is one issue is hindering
bringing them on for trading. If a truck has to be transported it would
have to take about 10 tonnes. A small farmer cannot handle this alone, nor
can we transport half the truck. To address this, it is proposed to form
teams of 5-6 traders for wheat and 7-8 in the case of pulses. Mr
Ravi Kumar also said that it has become difficult to distinguish between a
farmer and a trader since in some cases they act as both. In order to
bring about such a distinction, Kisan cards are being considered. The
Multi Commodity Exchange (MCX) is set to launch coffee futures linked to
London International Finance and Futures Exchange (Liffe) on Monday. The
Forward Markets Commission (FMC) has for the first time given the nod for
night trade in an agro commodity. According to MCX officials, futures
trade would be in robusta coffee and will be formally launched by Coffee
Board chairman GV Krishna Rau. A
day after the finance ministry cut customs duty on cement and other
products to check inflation, commodities market regulator Forward Markets
Commission imposed a temporary ban on two essential commodities, urad and
tur, from futures trading. Delisting these two commodities for trade on
all exchanges, the FMC directive asked traders to square off all their
positions at Tuesday’s closing price. Traders have been told not to
trade in these two commodities without the permission of the FMC. The
rising prices of essential commodities have been an issue of major concern
within various sections in the government. The government allowed free
import of pulses against zero duty, but even this failed to ease the
situation with inflation climbing to 6.12 per cent for the week ended
January 6. When inflation breached the 6 per cent mark, the finance
ministry said among food items, urad, tea, tomatoes, coconut and arhar
were a matter for concern. A statement said the ministry was in touch with
the agriculture ministry on how to control the rising prices of these
commodities. A day after the Government jolt by way of banning futures
trading in two pulses (tur and urad) the market saw a decline in futures
prices across commodities. Presence of bearish fundamentals in the market
also led to the decline in prices of wheat and edible oil, observers said.
Refined soya oil declined by about 6 per cent at Rs 455.7 per 10 kg on one
of the exchanges. The
government’s decision of banning futures trade in tur and urad had a
ripple effect across the mandis on Wednesday. The spot prices of the
banned commodities witnessed a fall of 4 to 8 per cent in the physical
market. Traders with positions in the futures market and those with stocks
meant for delivery sold heavily in the spot market after squaring off
their futures deals on Tuesday, leading to a decline in prices. The agri-futures
market, as expected, opened on a weaker note, but recovered within an hour
after Chairman of the Forward Markets Commission S Sundareshan assured
that trading in other commodities would continue as usual. However,
analysts foresee the bearish trend to stay for the time being, with
apprehension of a ban on other commodities looming large. In the Latur
market, a leading hub of pulses trade, prices plunged, with tur quoting Rs
2,200 a quintal on Wednesday against the previous day’s price of Rs
2,400 a quintal. Similarly, urad declined to Rs 3,450 from Rs 3,600 a
quintal whereas Chana slipped by Rs 100 to Rs 2,400 a quintal. However, in
the After
30 per cent decline in turnover in the second fortnight of December,
commodities exchanges have witnessed a rebound in the value of trading
during the first fortnight of January with a record 38.33 per cent growth,
according to data released by Forward Markets Commission (FMC). However,
the growth was a meagre 3.5 per cent compared with the first fortnight of
December. Commodities exchanges clocked a turnover of Rs 147,273.55 crore
during the first fortnight of the current month compared with Rs
106,462.54 crore in the second and Rs 142,311.22 crore in the first
fortnight of December. Ahmedabad-based National Multi-Commodity Exchange (NMCE)
topped the chart with 72 per cent growth in turnover at Rs 1,474.16 crore
in the first half of January compared with Rs 853 crore during the second
half of December. The leading commodity exchange, Multi Commodity Exchange
of India (MCX), came second with 52 per cent growth at Rs 104,997.48 crore.
The exchange remained a top performer with regard to all-round trade with
copper gaining 90 per cent in value term at Rs 15,641.27 crore. Gold
clocked a turnover of Rs 27,110.07 crore (up 68 per cent), silver Rs
25,161.80 crore (up 36 per cent), natural gas Rs 1,661.52 crore, mentha
oil Rs 2,858.30 crore and guar seed Rs 3,454.41 crore. The second largest
commodity exchange in the country, National Commodity and Derivatives
Exchange (NCDEX), also registered a turnover growth of 14 per cent at Rs
36,297.10 crore during the first fortnight of the current month from Rs
31,757 crore posted during the last fortnight. The overall value of
trading between April 1, 2006 to January 15, 2007, has been recorded at Rs
2886,613.91 crore. Corporate SectorDeccan
Aviation has posted a net profit of Rs 9.64 crore for the quarter ended
December 31, 2006, against a net loss of Rs 33.35 crore for the half-year
ended December 31, 2006. There are no prior period comparisons as the
company was listed in June 2006. The improved performance was partly on
account of other income of Rs 161.93 crore, which included Rs 132.69 crore
that accrued as the second tranche of payment on aircraft sale. In
a bid aimed at bringing inflation under control, the government has cut
customs duty on 11 product categories, including portland cement, capital
goods, project imports and raw materials. While the duty on portland
cement has been cut from 12.5 per cent to nil, the duty on stainless steel
has been reduced from 7.5 per cent to 5 per cent, on specified capital
goods from 12.5 per cent to 7.5 per cent and on primary semi-finished base
metals from 7.5 per cent to 5 per cent. The government has also reduced
the duty on project imports from 12.5 per cent to 5 per cent. In addition,
it has cut the duty on organic chemicals like sulphur, carbon, hydrogen
and alkali metals from 10 per cent to 5 per cent.
Fiscal SectorThe
net direct tax collections of the central government have increased by
41.74 per cent during April 1, 2006 to January 22,2007 to Rs 1,55,442
crore as compared to Rs 1,09,668 crore during the corresponding period of
the previous year. While gross corporate tax collections for the period
under review have stood at Rs 1,18,183 crore (Rs 82,550 crore during the
corresponding period of the previous year), personal income tax
collections have surged to Rs 56,228 crore (Rs 44,215 crore). The
income-tax department has detected tax evasion of over Rs 1,700 crore and
seized undisclosed assets worth about Rs 228 crore in searches carried out
during the current fiscal year up to November 2006. Central
government would provide Rs 1,000 crore as budgetary support to states in
the first year of the central sales tax phase-out. This has been a part of
a compensation package. The compensation package would be based broadly on
what was agreed upon and would be a combination of states being given more
services to be taxed and budgetary support. But several states are still
not satisfied with the compensation package. The CST, currently levied at
4 per cent, has set to be reduced by 1 per cent annually over a period of
four years, so that it has been completely abolished by 2010-11. As part
of the compensation package, states would get the entire proceeds from 33
services currently being taxed by the Central government and the 44 new
services. The CST is estimated to generate over Rs 25,000 crore during the
next fiscal year and the 1 per cent decrease would lead to an estimated
loss of Rs 6,250 crore for states.
In
a moved aimed at bringing inflation under control, the government has cut
customs duty on 11 product categories, including Portland cement, capital
goods, project imports and raw materials. While the duty on Portland
cement has been cut from 12.5 per cent to nil, the duty on stainless steel
has been reduced from 7.5 per cent to 5 per cent, on specified capital
goods from 12.5 per cent to 7.5 per cent and on primary semi-finished base
metals from 7.5 per cent to 5 per cent. Fuelled by a rise in the prices of
foodgrain, cement and base metals, inflation rose to a two-year high of
6.12 per cent for the week ended January 6, 2007. The government has also
reduced the duty on project imports from 12.5 per cent to 5 per cent.
Significantly, it has extended the project import rate of 7.5 per cent to
airport development projects and Metro rail projects.
In addition, it has cut the duty on organic chemicals like
halogens, sulphur, carbon, hydrogen and alkali metals from 10 per cent to
5 per cent, on carbon black feedstock from 10 per cent to 5 per cent and
on refractories from 7.5 per cent to 5 per cent.
External
Sector Export
of Information Technology Wipro
Infotech, the EstatsIndia,
an internet research and consulting firm, estimates that the
business-to-consumer (B2C) market in e-commerce in terms of revenues for
the fiscal 2006-07 would be Rs 4,160 crore. Within this, it estimates the
market size of retail segment and job portals at Rs 200 crore each, with
e-greetings and ISPs each bagging Rs 20 crore of online retail. The
matrimonial and dating services would contribute Rs 120 crore and
e-broking based transactions would be Rs 80 crore. As consumers prefer to
book tickets online, based on the billing figures the e-ticketing market
is estimated at Rs 1400 crore and bookings of hotels, cars and e-tours at
Rs 300 crore. Mobile value added services have been placed at Rs 580 crore
and e-gaming at Rs 480 crore. TelecomThe
Telecom Regulatory Authority of India (TRAI) has issued a tariff order
substantially reducing the tariffs for national roaming for cellular
mobile subscribers. The tariff order is applicable for all mobile
customers, prepaid and post paid, and applicable across all type of tariff
plans offered by both GSM and CDMA mobile operators. The reduction in the
roaming rate includes the removal of a 15 per cent surcharge on air time
plus a carrier charge of Re 1 on every call. Besides, no rental permitted
for roaming in any form. Receiving SMS is free while roaming. Maximum
permissible per minute charges for roaming calls, irrespective of the
terminating networks, and irrespective of tariff plans would be: Rs 1.40
for outgoing local calls; Rs 2.40 for outgoing NLD calls and Rs 1.75 for
incoming calls. Bharti Airtel has transferred its passive infrastructure for mobile communications such as towers into a wholly owned subsidiary, Bharti Infratel Ltd., the move was initiated at increasing operational efficiencies and cutting down on costs. Bharti has 34,000 towers across the country, which can now be shared with other mobile operators for a fee. Bharti has applied for a DTH licence and would be launcing DTH service by the end of 2007. Riding on an unprecedented growth in mobile subscribers, Bharti Airtel has registered 123 per cent growth in its net profit to Rs 1,215 crore for the third quarter ended December 2006 compared to Rs 545 crore in the corresponding quarter previous year. The growth has been on account of a huge surge in the mobile subscriber base with nearly 4.7 million new users added in the third quarter. Bharti had 31.9 million mobile users at the end of 2006 compared to 16 million at the end of 2005.
*These statistics and the accompanying review are a product arising from the work undertaken under the joint ICICI research centre.org-EPWRF Data Base Project. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
We will be grateful if you could kindly send us your feed back at epwrf@vsnl.com |