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Watershed Management as a way to a Sustainable Development * 1. What is a Water Shed? A watershed can be defined as an independent hydrological unit based on the principle of proper management of all the precipitation by way of collection, storage and efficient utilisation of run-off water and use of groundwater that discharge to and receive discharge from streams, wetlands, ponds, and lakes. In simple terms, it refers to the entire upstream topography around a defined drainage channel, which feeds water to the lands below. A watershed may vary from a few hectares to several thousands of hectares. Watershed is thus the land and water area, which contributes runoff to a common point. It comprise of a Catchment area (Recharge Zone), a Command area (Transition Zone) and a Delta area (Discharge Zone). The topmost portion of the watershed is known as the “ridge” and a line joining the ridge portions along the boundary of the watershed is called a “ridgeline”. A watershed is thus a logical unit for planning optimal development of its soil, water and biomass resources. Watershed could be described as fan shaped (near circular) or fen shaped (elongated). Hydrologically, the shape of the watershed is important because it controls the time taken for the runoff to concentrate at the outlet. Watersheds may also be categorised as hill or flat watersheds, humid or arid watersheds, red soil watershed or black soil watershed based on criteria like soil, slope, climate etc. Depending on the land use pattern watershed could again be classified as highland watersheds, tribal settlements and watersheds in areas of settled cultivation. Watersheds could be classified into a number of groups depending upon the mode of classification. The common modes of categorization are the size, drainage, shape and land use pattern. The categorization could also be based on the size of the stream or river, the point of interception of the stream or the river and the drainage density and its distribution. All India Soil and Land Use Surveys (AIS&LUS) of the Ministry of Agriculture, Government of India, have developed a system for watershed delineation like water resource region, basin, catchment, sub-catchment, and watershed. The usually accepted five levels of watershed delineation based on geographical area of the watershed are the following;
Water characteristics like inflows 1) Macro watershed (> 50,000 Hect) 2) Sub-watershed (10,000 to 50,000 Hect) 3) Milli-watershed (1000 to10000 Hect) 4) Micro watershed (100 to 1000 Hect) 5) Mini watershed (1-100 Hect)
2. The need for Management of a watershed A Watershed is considered as the ideal unit for integrated management of soil, water and vegetation in a geographical region, soil and vegetation can also be managed conveniently and efficiently in this unit. Watershed in this sense is the ideal unit for planning, implementation and monitoring of projects pertaining to integrated natural resources management (Kishor Vimal, 2000) Operation of watershed management is ideal particularly where the rainfall pattern is very short, uneven and there is no support of major and minor irrigation systems to enhance agricultural production. Benefits of green revolution have not been enjoyed by semi-arid tropical regions in the country that has experienced little growth over the last few decades. While irrigated agriculture appears to be hitting a plateau, by capturing scarce water resources and improving the management of soil and vegetation, watershed management poses a promising avenue to create conditions conducive to higher agricultural productivity, while conserving natural resources. The management of water shed entails the rational utilisation of land and water resources for optimum production while causing minimum trauma to natural and human resources. Watershed management in the broader sense is informed by an undertaking to maintain the equilibrium between elements of the natural eco-system or vegetation, land or water on the one hand and human activities on the other. The watershed management implies, the judicious use of all the resources i.e. land, water, vegetation in an area for providing an answer to alleviate drought, moderate floods, prevent soil erosion, improve water availability and increase food, fodder, fuel and fiber on sustained basis. 3. Principles of Watershed Management The main principles of watershed management based on resource conservation, resource generation and resource utilization are: •Utilizing the land based on its capability •Protecting fertile top soil •Minimizing silting up of tanks, reservoirs and lower fertile lands •Protecting vegetative cover throughout the year •In situ conservation of rainwater •Safe diversion of gullies and construction of check dams for increasing ground water recharge •Increasing cropping intensity through inter and sequence cropping. •Alternate land use systems for efficient use of marginal lands. •Water harvesting for supplemental irrigation. •Maximizing farm income through agricultural related activities such as dairy, poultry, sheep, and goat forming. •Improving infrastructural facilities for storage, transport and agricultural marketing, •Improving socio - economic status of farmers Development of watershed refers to the conservation, regeneration and the judicious use of all the natural resources (land, water, plants, animals). Watershed management tries to bring about the best possible balance in the environment between natural resources on the one side, and human and other living beings on the other. The components of watershed development would thus include: Soil and land management, Water management, Crop management, Afforestation, Pasture/fodder development, Livestock management, Rural energy management, Other farm and non-farm activities and development of community skills and resources All these components are interdependent and interactive.
4. Indian experience Integrated treatment of all lands on a watershed basis can be traced back to as early as 1949, when Damodar Vally Corporation had adopted and implemented this strategy that resulted in effective and self sustaining flood control. Further work of soil and water conservation that began since the first Five Year Plan period continued through the successive plans. The watershed development programmes that were implemented up to the fifth Five Year Plan were beneficiary oriented, however, the focus shifted to economic development in in the Sixth Plan, sustainable development in the Seventh Plan, peoples’ participation in planning, management and monitoring of watershed development programmes in the Eighth Plan.
Watershed Development ProjectsWatershed Development Projects have been taken up under different programmes launched by the Government of India. The Drought Prone Area Programme (DPAP) was launched in 1973-74 to tackle the special problems faced by those areas that are constantly afflicted by drought conditions. Desert Development Programme (DDP) was launched in 1977-78 to mitigate the adverse effects of desertification. DPAP and DDP adopted the watershed approach in 1987. The Integrated Wasteland Development Programme (IWDP) launched in 1989 under the aegis of the National Wasteland Development Board also aimed at the development of wastelands on watershed basis. Initially these programmes have laid down their own separate guidelines, norms, funding patterns and technical components based on their respective and specific aims. For example, while the DDP focussed on reforestation, the DPAP concentrated on non-arable lands and drainage lines and the IWDP, made silvipasture, soil and moisture conservation on wastelands under government or community or private control as their predominant activity. While the focus of these programmes may have differed, the common theme amongst these programmes has been their basic objective of land and water resource management for sustainable production. The Technical Committee constituted by the Ministry of Rural Development (MoRD) in 1994 under the Chairmanship of Prof. Hanumantha Rao, studied the implementation and impact of the DPAP, DDP and also the IWDP programmes all over the country and recommended that a common set of operational guidelines, objectives, strategies and expenditure norms for watershed development projects should be evolved integrating the features of the three programmes under the Ministry of Rural Development. Accordingly, the Guidelines for Watershed Development were framed and all these three programmes were brought under the Guidelines for Watershed Development with effect from 1st April 1995. Other major programmes now being implemented through this approach are the National Watershed Development Project in Rainfed Areas (NWDPRA) and the Watershed Development in Shifting Cultivation Areas (WDSCA) of the Ministry of Agriculture (MoA). The focus of these programmes with the advent of the Department of Land Resources (DoLR) shifted to the enhancement of the viability and quality of rural livelihood support systems. The watershed projects taken up by the Ministry of Rural Development (MoRD) from 1994 to 2001 followed these guidelines. In 2000, the Ministry of Agriculture revised its guidelines for its programme, the National Watershed Development Project for Rainfed Areas (NWDPRA). These guidelines were intended to be common guidelines to make the programme more participatory, sustainable and equitable. However, the MoRD revised the 1994 Hanumantha Rao Committee guidelines in 2001 and yet again in 2003 under the nomenclature “Hariyali Guidelines”. A Technical Committee on Watershed Programmes in India, constitutated under the chairmanship of S. Parthasarathy, which submitted its report in January 2006, recognised that flexibility and adaptability need to be incorporated into these Hariyali guidelines as situations and the context through the country differ widely and any implementation needs to accommodate this factor. The programmes conceived with differing paradigms therefore converge on the same approach, i.e., watershed development. Some of the major programmes under implementation are
As per the data available with the MoRD, 14,105 projects have been sanctioned under DPAP programme covering 7 million hectares area involving an outlay worth of Rs 4,224 crore. So far fund of Rs 822 crore have been released, while 2.02 million hectares of area has been treated under it leading to completion of 76 projects, located in 16 states. Andhara Pradesh is the leading state where 44 numbers of projects have been completed. Ministry has so far approved 11,343 projects under DDP programme with an expenditure of Rs 3,369 covering an area of 5.6 million hectares. Fund released up till now have amounted to Rs 602 crore, while covering 1.57 million hectares of area leading to completion of 176 projects situated in 7 states. Rajasthan is the foremost state where 5,069 projects have been sanctioned, though Karnataka has reported highest number of projects that have been completed (73 out of 1,111 projects). IWDP covers 10 million hectares of area, the largest compared the two programmes mentioned above. 1,842 projects have been endorsed so far having an outflow of Rs 5,927 crore. Out of these, Rs 2,419 crore have been released, while 3.04 million hectares of area has been utilised, completing 95 projects located in 28 states. Excluding 8 north-eastern states, among the remaining 20 states, 119 projects have been sanctioned in Uttar Pradesh, followed by Madhya Pradesh (116) and Andhra Pradesh (101). Madhya Pradesh is leading as far as the completion of projects is concerned (15). While in 8 north-eastern states, the maximum projects have been sanctioned is in Assam (149) and Arunachal Pradesh (144), but Nagaland has registered the highest number of completed projects (Annexure I, II, III, IV and V). The scheme of National Watershed Development Project for Rainfed Areas(NWDPRA) was launched in 1990-91 in 25 States and 2 Union Territories based on twin concepts of integrated watershed management and sustainable farming systems. During IX Plan, the scheme was extended in 28 States including 3 newly formed States of Uttaranchal, Jharkahand and Chhattisgarh. The scheme of NWDPRA has been subsumed with “Scheme for Macro Management of Agriculture- Supplementation/Complementation of the States efforts through Work Plans from 2000-2001. At present, this scheme is being implemented as a programme of Centrally Sponsored Scheme of Macro Management of Agriculture. Planwise area developed and expenditure made under NWDPRA programme as shown in the table1.
5. Impact Evaluation of watershed development programmes In general, Watershed Development programme increased employment to rural people due to implementation of soil & water conservation interventions and this improved their income in watershed villages and reduced out-migration of labour from these villages. Soil and water conservation structures in arable and non-arable lands reduced runoff and soil loss and increased rainwater infiltration, groundwater table, surface storage leading to increased cropping intensity, productivity of crops, etc. Saplings of different forest tree species, horticultural plants and grasses were popularised through planting/saving in government lands, arable lands. In some of the watersheds, dairy, sheep rearing, goatry, poultry, duckry, fishery, etc. were also popularised to raise the income levels and thereby standard of living of rural people. As long as works were carried out based on funding by government and subsidies provided for supporting income-generating enterprises, the impact is expected to be positive. It plays a pivotal role in food security and environmental security in the present era. It is an appropriate strategy to manage natural resources and provide sustainable livelihood to the rural poor. Global experiences show that watershed management practices across the world have led to environmental sustainability, forest regeneration, water conservation, crop productivity and social sustainability. Naturally, after the Earth Summit in 1992, international development agencies declared watershed management as the best strategy to address the issue of sustainable natural resource management. It has been observed that most of the successful watershed programmes in India have been implemented on a small scale basis in a few villages and through the collaborative and concerted efforts of research institutes, non-governmental organisations and government departments. These projects were successful as the participant organisations devoted time and resources to social organisation, built each group’s interests in the project, worked with the farmers to design interventions and select technologies; chose the village not the watershed as the unit of implementation; screened villages for enabling conditions, and ensured effective coordination in their work. Project staff generally worked very hard, and development funds for all kinds of activities were allocated on a priority basis. This facilitated the development of successful model watersheds like Sukhomajri, Ralegaon Sidhi, Chitradurga, Fakot, Kothapally, Tejpura, Alwar. Certain states in India have been more successful than the others by implementing these projects in “mission mode”, viz., Karnataka Watershed Mission and Rajiv Gandhi Watershed Mission (Madhya Pradesh). Leveraging of international support from large donors like the World Bank, DFID, DANIDA, SIDA etc. have also been quite helpful in developing proper protocols, implementation strategies and internalising international experience. Gujarat (India) has been successful in leveraging the participation of private entrepreneurs in implementation of a large number of successful village-level water harvesting structures. States like Madhya Pradesh and Andhra Pradesh have taken to a `mission mode’ to go about watershed development. For instance, the Rajiv Gandhi Watershed Management Mission initiated in Madhya Pradesh in 1994 identified degraded lands in geographical units of 5000 to 10000 hectares. Called milli watersheds, they are further divided into micro watersheds of 500-1000 hectares where people were organised into User Groups for the land owning class, Self-Help Groups of the landless and Thrift and Credit Groups for women. Between 1994-98, against a target of 12 lakh hectare, the Mission covered 34 lakh hectares; completed soil and moisture conservation works in 12 lakh hectares; and formed 5000 watershed committees, 30344 user groups and self-help groups and 5304 women thrift and credit groups. As a result, of all these efforts, the ground water has been recharged in these areas and water levels have increased considerably. There has been an improvement in agricultural productivity and in the coverage of land by bio-mass. In Andhra Pradesh, the early nineties saw successful watershed development in select districts. In 1997-98, the government launched a 10-year perspective plan for development of 100 lakh hectares of wastelands. The technical input for this came from Andhra Pradesh Remote Sensing Application Centre, which will also monitor the progress on half-yearly basis in terms of changes in ground water levels, afforestation, biomass coverage etc. A massive programme of training and capacity building has been initiated. An essential pre-requisite to select an area is community mobilisation. Water Development programmes has been taken up in large scale in Kuppam area in Chittoor district of Andhra Pradesh. Many water harvesting structures such as check dam cascades, percolation tanks and farm/sunken ponds were constructed to augment water resources in addition to canopy development. Thus, ground water recharge has increased tremendously (Sastry et al., 2002). As a result many bore wells have been dug in the area and highly value added and exportable quality vegetable crops (Jerkin, baby corn, etc.) have been introduced and grown in this area under drip/sprinkler irrigation systems. Thus, water use efficiency has increased. 6. Some Case Studies Watershed Development in Ralegaon Siddhi Ralegaon Siddhi Project, covering four watersheds in geographical area of about 892 hectares in Maharashtra, having an outlay of Rs 112.75 lakh, of which state government contributed Rs 52.75 lakh, Rs 47 lakh was borrowed from banks, Rs.11 lakh was put together by villagers through shramdan and the remaining Rs 2 lakh was raised from other sources. Result of the initiative was a series of checkdams, cemented bandharas, and nullah bunds built at strategic locations. All these increased the infiltration of harvested water and recharged ground water. Today it has two percolation tanks, thirty nullah bunds, eighty-five wells, and eight borewells all of which are viable right through the year. Farmers now grow two or three crops every year including fruits and vegetables. All the soil and water conservation structures were built through community action. The villagers have stopped grazing their animals on common lands; instead, they have switched to other ways. To take care of equitable distribution of water, they have formed associations like pani puravatha mandals. Johad – Watershed in Alwar District of Rajasthan Responding to an impending water crisis, people at Alwar acted jointly to revive a traditional technology to restore the ecological balance of the region. They used ‘Johad,’ a form of tank in which the locals stored water for lean seasons in years gone by. Tarun Bharat Sangh (TBS), a voluntary organisation, brought the village community together to build 2500 Johads in 500 villages in 8 blocks of Alwar district. The Gram Sabha (i.e. village community) selected the site that receives maximum run-off for harvesting and constructed Johads and maintained it. Villagers contributed 70-90% of the cost in cash, kind and labour. The Johad initiative has fulfilled a need for water to drink and for irrigation purposes, and restored ecological stability by increased recharge of ground water. It has increased food production, helped in soil conservation, increased the level of water in wells, increased biomass productivity and even converted two seasonal streams Arvari and Ruparel into ¾ perennial rivers. Integrated Micro Watershed Development Programme of N.M Sadguru Water and Development Foundation in Gujarat Village Thunthi Kankasiya is a tiny village of Gujarat, inhabitants of tribals. Groups of villagers in 1991 tried to bring River Machhan water to their village to meet the need for drinking water and irrigation. Thus began a major watershed initiative which involved conserving soil and water. Their efforts grew in intensity, the experiment left a considerable impact on the socio-economic milieu of the village. In 1998, almost the entire village population was brought above the poverty line with average household income a tidy Rs.35, 620 per year vis-a-vis Rs.9,000 in 1991. Agriculture production is up to 4000 Kg per hectare per year as against 900 Kg per hectare in 1991. In 1998-99, there were 2,00,000 trees and more in a village which barely had 50- odd trees when the experiment was launched. There were more than 300 such tribal villages across the borders of Gujarat, Rajasthan and Madhya Pradesh falling under Mahi basin and Mahi macro watershed. They all have witnessed similar transformation under the Sadguru integrated micro-watershed development approach. This transformation has been brought about with full involvement and participation of the local people in the form of Watershed Associations, User Groups, Self-Help Groups and Irrigation Management Committees. All- Woman Watershed Committee in MP Village Gauraiya is a multi-caste village 25 Kms from Sagar District in Madhya Pradesh. This area was characterised by barren land and a feudal set-up. Traditionally, the task of fetching drinking water from far flung places fell on women. The turning point came in 1977 when an all-woman Watershed Management Committee was formed, headed by Sita Bai. This initiative under Rajiv Gandhi Watershed Management Mission has paid unexpected and rich dividends.The village now gets assured water supply through pipes throughout the year. Area under cultivation has almost doubled and the average farm produce trebled in three years. Women’s Self Help Groups protect 5.5 lakh trees planted on community and Government land. Social fencing by women volunteers has also ensured the survival of 90% of those trees. The improvement in soil quality and underground water levels has also led to regeneration of nearly three lakh teak and two lakh bamboo trees planted four years ago. Gauraiya women have also organised seven mahila bachat samoohs (women’s self help groups) with impressive bank savings ranging from Rs.15,000 to Rs.25,000. Jagriti, a self help group of harijan women, plans to go in for cattle rearing, while some other groups have taken up a Government contract to supply porridge and dal to 150 aganwadis in adjoining villages under mid-day meal scheme. In Gauraiya women lead and men follow. It is the change in the gender relations brought about by the empowerment of women that makes the story of Gauraiya stand apart. Indo-German Watershed Development Project (IGWDP): IGWDP is an integrated programme for rehabilitation of watersheds for the regeneration of natural resources. This programme is implemented by the Village Watershed Committees (VWC- a body nominated by villagers), in association with Non-Governmental Organisations (NGOs). IGWDP, which was operationalised in December 1992 under the bilateral aid agreement between the German and Indian Governments, was visualized and initiated in 1989 by Fr. Hermann Bacher of Social Centre, Ahmednagar. The Programme is administered and managed by the National Bank for Agriculture and Rural Development (NABARD) and the Watershed Organisation Trust (WOTR) with the support of Government of Maharashtra. It was initially implemented in Maharashtra and was further spread across other states like Rajasthan, Uttaranchal, Uttar Pradesh, Tamil Nadu, Andhra Pradesh, Jharkhand, Himachal Pradesh and Maharashtra. Box 1 describes five of the main projects. BOX 1 GERMAN-SUPPORTED WATERSHED PROJECTS IN INDIA Indo–German Bilateral Project: Watershed Management (1989–2005) – It provides advisory and financial support for integrated watershed management and is focused on capacity building, monitoring and evaluation. Indo–German Watershed Self Help Programme (WOTR) – It promotes watershed self-help programmes, focusing on building capacity of NGOs and community-based organisations. This phase runs from 2001 to 2004. Indo–German Changar Eco-Development Project – aims to reduce environmental degradation by focusing on building capacity of village development committees/panchayati raj institutions, natural resource development, building capacity of local animators, and building capacity of future institutions for programmes such as Himachal Pradesh Eco-Development Society as a knowledge centre. The first project phase ran from 1994 to 1999, with the current phase II planned for 1999 to 2006. Reorganization and Strengthening of Watershed Training Institutes in Maharashtra (2002-2005). This initiative is working to reorganize and strengthen Maharashtra Water, Soils and Watershed Management Training Institute. Capacity Building and Strengthening of Decentralized Watershed Management (2003-2007) – aims to build the capacity of all relevant watershed management actors through training and other kinds of capacity building.
The main strategies adopted under IGWDP were:
Constraints of IGWDP: Sound watershed management is constrained by the following factors.
7. Conclusion Watershed management tries to bring about the best possible balance in the environment between natural resources on the one side, and human and other living beings on the other. Watershed management is an emerging concept for the efficient use of rain run-off in the rural areas of India. The approach to watershed management should be participatory in nature; people friendly, location specific, process based and geared to cater to the problems and needs of the rural communities. It involves sustainable utilisation of available water and has further promoted agriculture and allied operations making it economic viable and enhancing socio-economic development by achieving overall development of the villages. Thus, watershed is considered as the ideal unit for integrated management of soil, water and vegetation. With scope for further surface and ground water irrigation sources utilization in India getting narrowed, water shed management particularly in rain fed area becomes highly important. Protecting environment and sustaining living conditions in poor rain- fed areas also would depend upon how efficiently the water sheds are managed.
*This note is prepared by Anita.V.Naik with the guidance of Pallavi Oak. References Parthasarathy Committee Report (2006): ‘Report of the Technical Committee on Watershed Programmes in India Department of Land Resources’, Ministry of Rural Development Government of India: January Kishor Vimal (2000): ‘Problems and Prospects of Watershed Development in India’, Occasional Paper-12, NABARD. Watershed Management Challenges Improving Productivity, Resources and Livelihoods: International Water Management Institute in association with the Indian Council of Agricultural Research and the International Crops Research Institute for Semi-Arid Tropics. www.nabard.org www.watermissionmp.com www.india.gov.in/ www.agricoop.nic.in www.kerala.gov.in
Highlights of Current Economic Scene
Agriculture
Rice procurement for the 2009-10 crop marketing year has started at a slow phase. As per the latest figures, Food Corporation of India (FCI) has managed to procure around 7.2 lakh tonnes of rice till now as against 15 million tonnes achieved during the same period a year ago. It is expected that the impact of low paddy acreage in Uttar Pradesh and Bihar, drought and the loss caused to the standing crop in Andhra Pradesh would badly effect overall procurement this year. So far, Punjab and Haryana have contributed 3.8 lakh tonnes and 3.2 lakh tonnes, respectively, while FCI and its affiliate’s agencies have been able to lift only 0.16 lakh tonnes in Kerala and 270 tonnes in Tamil Nadu. The central government has decided to sell 1 million tonnes of wheat from its reserves under the open market sale scheme (OMSS) to arrest price hike because of fears of low kharif foodgrain output and floods in several parts of Andhra Pradesh, Karnataka and Maharashtra. This is part of an earlier government plan to sell around 3 million tonnes of wheat in the open market from October 2009 to March 2010. It would further clear around 30 million tonnes of foodgrain that are lying in various state run warehouses to make space for paddy procurement that has already started in some northern states. Import of Vegetable Oils during September 2009 has set a new record and reported to be at 905,192 tonnes, up by 39% as compared to 667,916 tonnes a year earlier. Overall import of vegetable oil during November 2008 to September 2009 jumped by 57% to 7,975,683 tonnes from 5,429,247 tonnes for the same period of last year. This rise in import is attributed to disparity in domestic seed crushing, increasing per capita consumption of edible oils with rise in income, lower price has boosted the demand and consumption, Zero import duty on crude edible oil and very nominal duty on refined edible oils coupled with low international prices and depreciation of dollar by 5%. The central government has planned to hike Minimum support price (MSP) of Jute by Rs 300 to prevent price fluctuation recorded since last year. Currently, its MSP is at Rs 1,375 per quintal. Nearly 3 lakh hectares of area have been hit by floods in Karnataka and Andhra Pradesh and heavy rains that lashed some parts of Maharashtra. The central team would visit the affected areas once flood water recedes. This has adversely affected production of paddy, pulses and oilseeds at a larger scale. Sugarcane mills from Maharashtra were expected to crush sugarcane from 1 November 2009. But it is now likely to be delayed as various parts of the state are adversely affected by unseasonal rains. Cotton crop has been started to arrive in the states like Punjab, Haryana, Gujarat and Madhya Pradesh. So far 350,000 bales of cotton have been arrived in mandis, which is lower than 35,000 bales as compared to a year ago following late sowing and delay in harvest in Maharashtra. Floods in Karnataka and Andhra Pradesh are expected to cut their corn output by 1.3 million tonnes in the crop year to June 2010, 7% of national output. Corn output in 2008-09 was about 19 million tonnes, of which these two states produced 6.5 million tonnes. Rains lashed in key soyabean growing regions of Madhya Pradesh and Maharashtra has halted the harvesting of the crop, which is expected to impact the quality of the harvested crop. Altough, overall soyabean output in the country might not be affected much, but the crop quality and oil content could be hit due to the late showers. To keep the prices of onion under check in the metropolis, the Delhi government on 8 October banned its sale to areas outside the city from the wholesale market. Agriculture output from Karnataka during the current kharif season is expected to slump by almost 60-65% because of floods in main paddy, groundnut, ragi (finger millet) and maize growing regions. Standing crop in around 15 districts of the state are completely submerged in water. According to provisional figures released by the Coffee Board, exports of coffee stood at 1.81 lakh tonnes, fetching foriegn exchanges of around Rs 1,970 crore in the coffee year ended September 2009. Foreign exchange earned through exports of coffee failed to touch the target of Rs 2,000 crore as erratic rains dragged down production, despite higher price realisation for the commodity at the global level. The unit value of Indian coffee at international market increased to Rs 1.09 lakh per tonne in 2008-09 from Rs 1.05 lakh in the previous year. A double digit growth of 10.4% in the index of industrial production has been witnessed during August 2009 over the index of August 2008. All the three major groups witnessed double digit growth mining and quarrying leading the way with an increase of 12.1% during the month. Other two groups manufacturing grew by 10.2% and electricity by 10.6%. Basic goods index rose by 10.0 per cent on the back of mining and quarrying and electricity growth. Capital goods growth was only 8.3% is a cause for concern. Consumer durable industries are the only group which recorded decline due to fall in the production of food products and beverage and tobacco products. Fourteen out of 17 industries registered positive growth during the month. The industry group rubber and plastic products, textile products, and wool, silk and man-made textile recorded substantial growth. Infrastructure The Index of Six core industries having a combined weight of 26.7 per cent in the Index of Industrial Production (IIP) with base 1993-94 rose substantially by 7.1 per cent in August 2009 as compared to 2.1% last year as a result the growth during the current financial year works out to be 4.8% as against a lower growth of 3.3% last year.. However crude oil registered a decline of 2.6%. Production of Petroleum refinery products and steel grew marginally during August 2009. Substantial increases have been witnessed in the production of Coal (12.9%), electricity (9.8%) and cement (17.6%). Inflation The Annual inflation measured by WPI continues to increase and registered an increase of 0.8% against 12.1% last year for the third week of September. Over the week WPI rose by 0.3% as against a fall of 0.2% last year. An increase of 0.7% in food articles index pushed up the price index of primary Article by 0.4% during the week ended 19 September 2009. The second major group fuel, power, light and lubricants witnessed an increase of 0.7% in its price due to higher prices of furnace oil and light diesel oil. Marginal increase of 0.1% in the prices of manufactured products can be attributed to increase in the prices of all other sub groups except food products which exhibited a deckling trend mainly because of fall in prices of certain edible oils. The final WPI for 25-7-2009 stood at 249.0 as compared to 236.9 resulting in the inflation rate exhibiting a decline of .7 % instead of a decline of 1.6%. Financial Market Developments Primary Market Shree Ganesh Jewellery House, a jewellery maker and exporter, has filed for regulatory approval for its initial public offering (IPO) of 1.42 crore shares. The issue consists of a fresh issue of 1.21 crore equity shares and an offer for sale of 21.30 lakh equity shares by Mauritius based Credit Suisse Pe Asia Investments. Indiabulls Power's IPO will be open for subscription from 12 October 2009 to 15 October 2009. The company will issue 33.98 crore equity shares, excluding green shoe option of 5.09 crore equity shares and including anchor investor portion up to 6.11 crore equity shares. Indiabulls Power has fixed its IPO price band at Rs 40-45 per share. The company will issue a total of 39.07 crore shares in the IPO which remains opens between 12 and 15 October 2009. The company aims to raise about Rs 1,750 crore at the top end of the price band. Private sector ship builder Pipavav Shipyard listed on the stock exchanges on 9 October 2009. The company had priced its IPO at Rs 58 per share. The company had offered 7.01 crore shares in the price band of Rs 55- 60 in the IPO which remained open for subscription between 16 to 18 September 2009. The issue was oversubscribed 8.25 times. The issue received total bids for 57.87 crore shares as against 7.01 crore shares offered by the company. After disappointing debut recently from state-run NHPC and Adani Power, Pipavav Shipyard fell below the IPO after its debut in the secondary market on 9 October 2009. The stock settled at Rs 56.80 on BSE, a discount of 2% over the IPO price of Rs 58. The company had offered 7.01 crore shares in the price band of Rs 55- 60 in the IPO, which remained open for subscription between 16 to 18 September 2009. The issue was subscribed 8.25 times, with total bids for 57.87 crore shares as against 7.01 crore shares offered by the company. Secondary Market A sell-off in telecom stocks on concerns over declining tariffs and rising competition dragged the market lower during the week. A liberal 1:1 bonus issue by Sensex heavyweight Reliance Industries failed to lift investor sentiment. The BSE Sensex fell 492 points or 2.87% to settle at 16,643 in the week ended Friday, 9 October 2009. The BSE Mid-Cap index fell 0.63 points or 0.01% to 6,301.38 and the BSE Small-Cap index fell 215.39 points or 2.84% to 7,371.79. Both the indices outperformed the Sensex. The NSE Nifty fell 138. points or 2.71% to 4945 over the week. Derivatives The derivatives market was characterised by steady volumes and narrow range-trading throughout the week. Among the subsidiary indices, the CNXIT started underperforming during the week, dropping over 7% while the Nifty dropped less than 3%. The Bank Nifty outperformed the Nifty, losing 1.9%. Government Securities Market Primary Market Eleven state governments have sold 10-year state government loans on 6 October 2009 for the aggregate notified amount of Rs 9,501 crore when the notified amount of the individual state has ranged between 101 crore- 1,750 crore with the cut-off yield ranged between 7.65%-8.49%. The lowest cut-off yield (7.65%) was se by West Bengal with the notified amount of Rs 500 crore and highest yield has given by Bihar (8.49%) with the notified amount of Rs 1,000 crore. Government has re-issued three securities, 7.02% 2016, 6.90% 2019 and 8.28% 2032, with the notified amount of Rs 3,000 crore, Rs 4,000 crore and Rs 3,000 crore, respectively on 9 October 2009. Cut-off price and yield for the above securities were set at Rs 98.60, 7.28%, Rs 97.13, 7.31% and Rs 99.37, 8.34%, correspondingly. RBI has issued 91-day and 364-day Treasury Bills (TBs) with the total notified amount of Rs 9,000 crore. The notified amount of 91-day TBs was Rs 7,000 crore with cut-off price and yield to maturity (YTM) of Rs 99.20 and 3.23%, respectively. 364-day TBs have the notified amount of Rs 2,000 crore with cut-off-price and YTM at Rs 95.62 and 4.59%, correspondingly. Secondary Market During the week under review call rates remained more or less in the range of 3.00-3.30% as higher liquidity in the banking system has helped it to vary in a narrow band. On the beginning of the week the rates have ranged lower at 2.90-3.00% and remained constant thereafter at 3.20-3.30% on two consecutive days but lowered on the fourth day of the week to 3.10-3.20% however improved on the last day of the week to 3.25-3.30%. Bond prices kept moving to and fro during the week. Bond prices have increased on first day; have seen downward revision on second and third day, again revived on the fourth day before falling on the last day of the week. During the week the 10-year benchmark bond, 6.90% 2019, has seen fall in the price from Rs 98.21 on the first day of the week to Rs 97.08 on the last day of the week with the yield rising on the last day of the week to 7.32% from the 7.15%. The 7.02% 2016 have also witnessed same movement in price, as price of the security was closed on the first day of the week at Rs 99.19 with YTM of 7.16% and on the last day of the week it closed at Rs 98.41 with YTM of 7.31%. Total traded volumes on the order matching system were higher on the first day with Rs 11,620 crore as compared to Rs 8,960 crore on the last day of the previous week and ended on lower note on the last day of the week to Rs 5,645 crore Under LAF auctions, banks have parked Rs 6,76,310 crore through 288 bids in reverse repo recourse. Bond Market During the week 1-bank, 1-central undertaking and 1-corporate have accessed corporate bond market to mop up Rs 1,600 crore.
Foreign Exchange Market The absence of the intervention by RBI, either in the spot or in the forward market prompted the rupee to appreciate from Rs 47.86 to Rs 46.50 against the dollar during the weekend. But currency appreciation was not driven by current account flows, which were limited. Instead, the flows were on the capital account, both debt and non-debt. The debt capital flows were partly from the refinancing of the foreign currency convertible bond/GDR issues by corporates. The long forward premia remained wide. Premia for one, three, six and 12 months ended the week at 2.61% (2.67%), 2.90% (2.78%), 3.23% (3.02%) and 3.22% (3.12%). Traders said exporters were covering only their short end in tandem with release of payments, leading to a slight retreat in the 30-day premium. Commodities Futures derivatives NCDEX will extend the evening trading session by 25 minutes to 11.55 p.m from 2 November 2009 and 31 March 2010. Gold rallied to an 18-month high on 6 October as a report that Gulf Arab states were considering pricing oil in a currency other than the dollar knocked the US unit, boosting interest in the metal as an alternative asset. Insurance Bharti AXA General Insurance company is planning to expand its network to over 70 branches from the current 40 branches by end of December 2009. Aviva Life Insurance has announced its nation-wide strategic partnership with India Post, which will help it collect its premium through post offices. As a result, now Aviva customers can make premium payment at any of the 8,294 computerised post offices across the country without any additional cost. The premium amount collected by the post offices will be transferred to Aviva through e-payment system of India Post. BankingPunjab National Bank (PNB) is scouting for an acquisition of a bank in Kazakhastan as part of its plans to expand its presence. Leading bankers have started finalising modalities for the implementation of 1% interest rate subvention on home loans. The central government had earlier announced the decision on subvention of home loans on September 30. The new subvention scheme will be applicable for all individuals housing loans up to Rs 10 lakh and for properties costing up to Rs 20 lakh. National Housing Bank (NHB) which is the nodal agency for the scheme along with the RBI, held a meeting of the bank officials of various scheduled commercial banks in New Delhi to discuss the modalities. Nabard had managed to refinance banks with a total amount of Rs 10,000 crore, of the targeted Rs 33,000 crore, in the first five months of the current fiscal year. The refinanced amount comprises Rs 9,000 crore of short-term and Rs 10,000 crore of long-term loans. International Finance Corporation (IFC), the multi-lateral lending arm of the World Bank, is planning to pick up a stake in Chennai-based Belstar Investment Finance Pvt Ltd, a microfinance subsidiary of the Hand-in Hand group. The RBI had rejected the government’s proposal of auctioning the external commercial borrowings (ECB) to Indian companies. The RBI has explained the finance ministry that ECB auctions will be difficult to operationalise, with the biggest challenge being how to decide the auction premium. The central bank opined that such auction of overseas loan quotas will not benefit the borrowers and will virtually shut this borrowing window to small and medium enterprises. The RBI has argued that not only could the large companies weed out small players during the auction process, it will also raise the overall cost of borrowings for Indian companies. In a bid to reposition itself among the techno-savy customers, Central Bank of India is undertaking a massive recruitment drive. The bank is planning to recruit 2,500 staff and is also expected to cover all its 3,500 branches under core-banking solution platform. Corporate Kishore Biyani-promoted Future Group and leading UK shoe retailer Clarks have agreed to form a joint venture (JV) to retail footwear in India. The Enforcement Directorate has attached 280 properties owned by Ramalinga Raju and 131 others, including his brothers after it established that the properties were obtained through all-gotten gains from the Satyam fraud. The attached properties are valued at Rs 1,200 crore, but their worth is shown as Rs 200 crore on paper. The investigations into the rest of the properties are on and more properties would be attached. The Hero Group subsidiary, Hero Electric is planning to increase its market share in the electric scooters market in Gujarat from the current 35% to the position of market leader. In a total market size of about 10,000 units per year in Gujarat, Hero aims to capture a larger pie compared to state-based player, including Oreva and Electrotherm. The company has set a sales target of about 48,000 units in the current fiscal year with about 2,000 units to be exported mostly in North American markets. After facing a series of troubles in the US market last year, Ranbaxy Laboratories has received a set back in the European market. Recently, the French unit of Ranbaxy was among the many pharma firms raided by European Commission officials for evidence of ‘restrictive trade practices’. The board of Reliance Industries Ltd (RIL) has recommended a bonus issue in the ratio of 1:1 (i.e. one bonus share for every share held in the company). The company’s bonus issue comes after a long gap of 12 years. The last time it issued a 1:1 bonus in September 1997. Bajaj Auto’s ultra low cost (ULC) car project with Renault is on track and the car is expected to hit the roads in 2011. External Sector Exports during August 2009 at US $14289 million were 19.4% lower than that of US$ 17734 million last year. Cumulative value of exports for the period April-August, 2009 was US$ 64129 million as against US$ 92959 million, a negative growth of 31% over the same period last year. Imports during August, 2009 were valued at US $ 22661 million representing a decrease of 32.4% over the level of imports valued at US $ 33512 million in 2008. Cumulative value of imports for the period April-Aug 2009 was US$ 102300 million as against US$ 153691 million registering a decline of 33.4%. Oil imports during at US $ 6281 million was lower by 45.5% over the year. Oil imports during April-Aug, 2009 valued at US$ 28275 million which was 47.4% lower than the oil imports of US $ 53742 million in the corresponding period of the previous year. Non-oil imports during August, 2009 were estimated at US $16380 million was lower by US $ 5611 million over the August 2008 level. Non-oil imports during April-August, 2009 were valued at US$ 74024 million which was 25.9% lower than the level of such imports valued at US$ 99949 million in April-Aug, 2008. The trade deficit for April- August, 2009 was estimated at US $ 38171 million which was lower than the deficit of US$ 60732 million during April-August, 2008. Information TechnologyIBM had bagged a deal from Datacom Solutions, the telecommunications arm of the Rs 24,000 crore Videocon Industries group. As per the agreement, IBM will provide a high-performance IT infrastructure and a range of business solutions to support Datacon’s commercial launch this year and complete pan India coverage over the next two years. Essar Group company Aegis BPO had acquired 80% stake in Sri Lankan outsourcing company Ismart Timex for an undisclosed amount. TelecomThe long-awaited auction of 3G spectrum would be delayed by a few weeks since the original blue print will be clashing with the Christmas holidays. The delay was apparent as the crucial information memorandum, which was supposed to be released on September 29 has still not been issued. In the absence of it the companies cannot apply. Barely a week after talks with South Africa’s MTN failed, the country’s largest telecom operator Bharti Airtel is planning to acquire Luxemborg-based telecom firm Millicom’s operations in Sri Lanka. Bharti Airtel, which itself has mobile services running in Sri Lanka, is believed to be keen on acquiring 100% stake of Millicom’s operations in the island nation. The world’s largest communications firm, the $124 billion AT&T, is poised to re-enter the booming Indian telecom market, nearly five years after it left the country, exiting the three-way venture it had with the Tata and AV Birla groups. Apart from AT&T, other two global majors who are expected to enter the Indian market through the 3G broadband wireless access route are Australia’s Telstra, which had exited from its 49% stake in Modi Telstra in 2009 and the South Korea’s $12 billion SK Telecom. A consortium comprising India’s telecom PSUs, BSNL and MTNL, among others, has started negotiations for acquiring control of Kuwait’s biggest phone company, Zain Telecom, which has a presence in 24 countries.
*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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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