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Prime Minister Manmohan Singh’s statement that the cabinet is yet to take any concrete decision on setting up of the Second State Reorganisation Commission (SSRC) puts the hopes of regions aspiring to be independent of their ‘mother states’ on a backburner. The demand for separate entities has come from ‘Telengana’ (Andhra Pradesh), ‘Vidarbha’ (Maharashtra), ‘Gorkhaland’ (West Bengal) and ‘Purvanchal’, ‘Bundelkhand’ and ‘Harit Pradesh’ (Uttar Pradesh), if we go by the recent ‘promise’ of UP Chief Minister Mayawati. While there is no doubt that political considerations have strongly influenced the PM’s - and Mayawati’s comment, especially with reports indicating that the Telengana Rashtra Samiti (TRS) views the formation of such a panel as delaying tactics by the Centre, there is no denying the fact that the bifurcation of large states makes good sense as far as governance and resource management are concerned.

The first reorganisation of states took place in 1956. However, states like Chhattisgarh, Uttarakhand and Jharkhand have been carved out since then, without the SSRC coming into the picture. Hence, the objection from TRS, which says that its demand should also be treated as a one-off and cleared without any further delay. The TRS has now set a deadline of a March 6 for a formal commitment on Telengana by the PM, failing which it would ask its four party MPs, 16 MLAs and three MLCs to resign.

In fact, a reason for demanding a separate Telengana d forms the essence of similar such demands: that the region should be treated “on par with other parts of the state”. It is this sense of alienation that certain parts are always the blind spot of the nerve centre of politics of that state which had led to such demands. And that is not far from truth. Even if we leave politics out, it becomes impossible for any government to administer even handedly considering the resource crunch. In some other cases, resource rich but poorly-developed areas will always question why their wealth is being used to bankroll other parts of the state.

This is not to say that small is necessarily beautiful. The litmus test will always remain the quality of political will and administrative wherewithal a new region has. This demand should not be used as a tool to further political identity issues. Sound administrative sense should be the only criterion for such divisions. A small state emerges in India only when a big stone is broken into small pieces but the chemistry remains the same. So, while it is true that smaller states are easier to manage and govern, they also crucially need a new chemistry of development and much better quality of governance. Otherwise, it will be the same old story all over again.

Country’s largest lender SBI decided to raise Rs 16,736.31 crore from its much-awaited rights issue, which will be priced at Rs 1,590 a share. According to a decision of the Central Board of the bank here, existing shareholders would be given a share for every five shares.

The price at which shares would be offered represents about 36 per cent of discount to State Bank of India’s current share price. This means shareholders would get a share at a premium of Rs 1,580, if face value of Rs 10 is considered, but at a discount of Rs 889, if today’s current price at Rs 2,469 on the Bombay Stock Exchange is taken into account.

For the rights issue, the bank also decided to raise its issued capital to Rs 650 crore from the existing Rs 526.30 crore. The bank would also issue shares to employees under Employees Stock Purchase Scheme, SBI said in a filing to BSE.

The decision of the SBI’s board came one-and-a-half months after the union cabinet gave nod to the rights issue. The issue would also be offered to existing SBI’s Global Depository Receipts (GDR) holders.

The union government is expected to invest around Rs 10,000 crore in the rights issue to maintain its stake at over 59 per cent, for which it would issue bonds to SBI. “We have decided to subscribe to the rights issue. We intend to issue bonds of Rs 10,000 crore for the purpose,” finance minister P Chidambaram had said after the Cabinet meeting, which approved the rights issue.

These bonds would be redeemed through the proposed Securities Redemption Fund (SRF), he said adding the SRF would be funded through taxes and dividends received from SBI.

Annual cost of servicing these bonds would come at around Rs 790 crore, Chidambaram had said, adding the government is required to put at least this much amount to the redemption fund. “We are subscribing to the rights issue, but we will pay to it on deferred basis,” he had said.

The bank has been exploring various options to mop up funds, but a rights issue would allow the bank to raise capital without diluting the government shareholding. It is understood that the government was not in favour of a follow-on public issue, where its stake would have been diluted from the current over 59 per cent to 55 per cent, the minimum prescribed under the SBI Act.

Earlier this fiscal, the government purchased 59.7 .per cent stake of Reserve Bank in SBI in a revenue-neutral exercise.  SBI Life Insurance has invited bids from IT vendors for integrated Treasury System Solution.

“The expression of interest has been invited from software vendors for the supply, installation, customisation and support of softwares for treasury operations of its investment functions,” SBI Life said. The insurer proposes to implement an integrated system solution for taking care of the entire gamut of activities of front-office, mid office and back office functions, it said.

The activities involve critical factors like effectively managing the portfolios in debt, equity, money market and hybrid securities, and calculation of NAV on a daily and timely basis through the system and capture all types of corporate action monetary, non monetary, it said. The last date for submission of non-binding EoI is January 28.

The company’s total premium income is expected to touch Rs 7,000 crore for 2007-08, compared to Rs 2,900 crore in the preceding fiscal. Life Insurance with a paid-up capital of Rs 600 crore is a joint venture between the State Bank of India and Cardif SA of France.  

India and China had to work together to create a level economic playing field by addressing issues like non-tariff barriers, IPR protection and market related exchange rates, Prime Minister Manmohan Singh stressed on Monday, 14 January. Addressing an India-China economic, trade and investment “summit” meeting, the Prime Minister said the challenge was to diversify India’s export trade basket to China.

“I would like to assure this gathering ‘that both governments will work together to put in place an enabling environment for greater trade, investment and economic interaction,” he promised.

India’s trade deficit with China was about $10 billion in 2007, in which total trade was worth $38.7 billion. India was China’s tenth largest trading partner and China was India’s second largest.

“In addition to our competitive manufacturing industries, India has a diversified agricultural production base. Our food processing industry is also growing rapidly and we can supply quality agricultural and marine products to the Chinese market. A conducive environment should be created for this trade to expand,” the Prime Minister said.

Pointing out that the services sector accounted for more than 50 per cent of India’s GDP and over 40 per cent of China’s, Singh informed the massive gathering of Chinese businesspersons that India had had considerable success in positioning itself in high-tech services in world markets.

“There are enormous opportunities for both India and China to expand trade in services, particularly in construction and engineering, education, entertainment, financial services, IT and IT-enabled services, transport, tourism and health,” he felt.

Singh said India would work with the Chinese government to “remove administrative barriers and simplify regulatory regimes” to move forward in these areas. Touching on the theme of India-China competition, Singh said that all countries had to compete in global markets and such competition was not inconsistent with cooperation, nor was it adversarial.

“Economic cooperation between India and China has become a principal diver of our strategic and cooperative partnership for peace and prosperity…India and China working together should develop a habit of mutually advantageous cooperation,” the Prime Minister maintained.