India Culture, Business, Sports and Food. Get all the buzz in India now

THE reported move to roll back domestic steel prices by slapping a 10% export duty on all grades of finished steel is retrograde and worse. The plan to penalise exports could well discourage production across the board. So, instead of dampening prices, this could stem output and needlessly make our fledgling steel exports dearer. The proposed game plan can actually harden prices. It would be akin to shooting oneself in the foot, in policy terms. In fact, the idea of export levy as an instrument of price control is perverse; it needs to be nipped in the bud. It just does not make sense in a supposedly liberalizing economy which is globalising with much gusto.

The fact is steel exports account for a very small part of the total output. To suggest exports are jacking up steel prices is to thoroughly ignore the ground reality. The point is that there’s strong demand for steel on the back of buoyant economic growth. It’s also true that steel prices have considerably firmed up of late. But the way ahead surely is to better match supply with demand and bring down prices with increased production.

In the short term, the steel minister can certainly talk down steel prices and rely on suasion to try and decelerate the trend in prices. In the longer term, the policy objective ought to be to step up domestic steel capacity. The strong price rally also reflects higher input costs. The price signals need to be read right, and steel output significantly increased. Yet a number of investment proposals in steel remain mired in policy inaction and red tape.

What’s required is ironing out the policy glitches holding back steel capacity in the pipeline, without further delay. But to attempt to douse prices by clamping down on steel exports via a steep levy is more likely to backfire. For one, it may not add very much low domestic supply. Steel exports are now more likely to be committed for long-term supplies. For another, to divert exports from the spot market would be essentially myopic. We do have a competitive advantage in steel; what’s needed is a proactive policy to make India the leading exporter of steel, including value-added high grade products. And quick fixes are no substitute for a more conducive and sustained investment environment for steel.

The opening of the 1,000-seat delivery centre by India’s largest software developer TCS in the mid-western state of Ohio could not have come at a more opportune moment. It comes when the US economy is going into a tailspin and politicians there have upped the ante against US jobs being outsourced to India. Hopefully, the new centre will help dilute some of the resentment against export of high volume, low margin jobs to India.

The significance of the “reverse outsourcing” is not lost on the people or the politicians - especially with US jobs shifting to India becoming a talking point among the presidential candidates. The inauguration of the TCS’s delivery centre got a rousing reception from locals. And it is not because of the 1, 000 jobs the centre will add, but due to the symbolism; after a decade of jobs being “Bangalored”, India’s top three IT companies are now creating jobs for locals in the US.

Of course, the number of new jobs to be created is small, but when the economy is slowing and payroll numbers declining, every new job counts. The three IT companies - TCS, Infosys and Wipro - have compelling reasons to set up delivery centres in the US. For one, restrictions imposed on the number of H1B visas issued every year hinders movement of people from India to the US to service clients. And there is a need to be close to the client.

That apart, companies have been unable to find enough skilled people in India. Delivery centres, those set up already and the ones in the pipeline would be in close proximity to universities and therefore would be well placed to tap the available technical talent.

Clearly, Indian tech companies have been driven by commercial reasons to set up shop in the US. Besides, gains from labour cost arbitrage are slowly diminishing. Companies must diversify to new regions and gain a foothold in developed markets to emerge as global corporations. In doing so, they must look beyond the US to markets in Europe and emerging Asia. Localisation of operations is important if India Inc wants to gain acceptance among local people and governments. Here, Indian companies must learn from experiences of MNCs that 

had set up back -office operations in India on managing and integrating different cultures.

Negotiation is the important ingredient of successful business management. Be it the discussion of the price of raw material with the suppliers or trying to minimize the margin you may have to pay to trade while selling the final products. You could even be haggling with your bankers for reducing the working capital interest rate. Every day life in business is a series of negotiations, conducted to maximize economic benefit for all parties.

In any democratic, free economy, negotiations are the cornerstone. In a state-controlled or autocratic regime, the very mention of negotiations-which is in essence a consultative process, a dialogue-is often seen as a threat to the existing hegemony. It can erode authority, challenge the super-structure. This is the reason the non democratic markets face a challenge of relative inexperience in negotiating the best deal for its citizens. This holds them back from being global players. Therefore, the quality of a country’s negotiating skills on the international poker tables is probably directly linked to its state of economic freedom. India is a good example.

As it was a statist groove for years India lost its innate, native entrepreneurial instinct in the marketplace. Its edge in wrangling deals, cornering advantages got blunted over the years. Since most international discussions were conducted by government officials, who had over the decades got used to having their way, they often left behind large sums on the table when faced with hard-nosed international brokers.

It was used as a muscle to include the issues which were not a part of trade by the developed world- largely USA, Europe and Japan. Be it patents, labour, environment or investment standard, these players have used it widely. It was established that the many of the negotiators from the Indian party took the promises made by the developed world at face value, without extracting enough safeguards and promises, which are the hallmarks of a successful negotiator.

This loose agreement was misused to the hilt by the developed world. In fact, the developed world is still using numerous, non-tariff trade barriers to stymie free trade. For instance, Japan and USA claim that they have zero per cent duty on certain agricultural products. But according to seasoned trade negotiators, reality is quite different. Try to import and chances are you’ll collide into a thick, non-tariff wall.

Leader of the Opposition L K Advani deserves to be commended not just for writing one of the longest autobiographies ever. After dashing off 986 pages in just eight months, the 80-year-old Advani still had enough stamina left to break the ice between him and Sonia/Manmohan, neither of whom turned up for the release of the book on March 19.

The BJP leader celebrated Holi by calling on the UPA chairman and the PM to present them with autographed copies of My Country, My Life. Not that there are flattering references to Sonia in the book, which dwells on her foreign origin. Manmohan had been earlier described by Advani as the weakest PM India has seen. But, then, any author worth his salt will tell you writing is all about telling it like it is! And Indian political commentators will add that Advani’s attempt to mend fences with Sonia/Manmohan deserves a Nobel, even it is for peace and not literature!

That My Country, My life was also used to improve intraparty ties is indicated by reports that Advani touched NDA chairman Vajpayee’s feet while presenting a copy of the book whose foreword was written by the 83-year-old former PM. Advani also presented a copy to 56-year-old BJP president Rajnath Singh who then fell at the author’s feet.

But, then, the BJP is a traditional party where younger leaders prostrate before their elders! The release was followed by interviews on TV channels like Times Now where Advani indicated he was kept out of the loop on the decision that his then Cabinet colleague Jaswant Singh should accompany the terrorists who were exchanged for the passengers on the hijacked Indian Airlines plane at Kandahar in December 1999. If Advani has not spilt the beans on whether he threatened to resign over the decision to exchange terrorists for hostages, it could be because some state secrets should remain secret, especially for an author who is also a PM-in-waiting!

The wholesale price index (WPI) has climbed to an 11 month high of 5.92 %. If the high international oil prices had been fully passed through, the inflation rate would have gone way beyond 7 %. The WPI has clearly entered a highly sensitive zone, politically speaking. As the opposition parties begin to up the ante on food prices, the government’s focus is expected to remain firmly on bringing inflation under control. But there is only so much the government can do if global prices of food, oil and other commodities are firming up.

You can ban edible oil exports, drop import duties on palm oil; put an export tax on steel, but there is a limit to which India can insulate itself from global price trends. Every growing economy is facing these supply constraints. Food supply cannot increase substantially in the near term. Oil prices have been rising for quite a while. The inflation rate for manufactures too has climbed to 5.4%. In fact, few realise core inflation in India has been above 4.5 % for quite some time now.
Even in China the Producer Price Index, representing manufacturing prices, has been above 6 %. So we have a situation where prices of food, oil and manufactures are rising together. Normally food prices tend to rise more as we head into the summer months. For the UPA government this is not good news as it faces several assembly elections in the latter half of the year followed by general elections next year.
The best it can hope for is a good Rabi crop and a good monsoon which may somewhat dampen inflationary expectations. Paradoxically, a slowdown in the economy may help in moderating the prices of manufactures. The UPA would rather prefer a more moderate growth rate with inflation under control. For businesses in general the current price rise could not have come at a worse time. Small businesses reeling from high interest rates were hoping the RBI would supplement the finance minister’s fiscal effort by a small cut in the bank lending rate.

The finance minister too had indicated his bias for a cut some time ago. But with the inflation rate at 5.92%, and expectations of further rise in food prices, it is doubtful whether the central bank will answer the prayers of small manufacturers anytime soon.

Less than eight months ago when the Planning Commission set up a committee under Raghuram Rajan to suggest next generation financial sector reforms it could not possibly have envisaged how incongruous it would be to talk of reform when government is engaged in the very antithesis of reform: loan waivers. In such a scenario, the committee’s recommendations can be best described as an eloquent reminder of the contrast between ‘what is’ and ‘what could be’.

To its credit, the committee seems to have a keen awareness of the political economy considerations that govern any reform process in India. Hence, unlike previous committees on financial sector reform, the Gen-Next committee has taken care to suggest a broad macroeconomic framework within which its recommendations need to be anchored. This is important because many of the reforms needed to transform the financial sector into one befitting a 21^st century economic powerhouse that India hopes to become will be pointless unless they are undertaken in tandem with more broad-sweep macro-economic reforms.

Any attempt to develop the bond market, for instance, is futile as long as we do not have a risk-free yield curve. And a risk-free yield curve will not emerge as long as government borrowing is so large that it can only be met by mandatory preemptions like the statutory liquidity ratio (SLR) backed by some careful priming of the market. The reason is that corporate bonds are priced off the risk -free sovereign yield curve - corporates pay a premium over the sovereign (government) for comparable maturity, the precise premium being a function of their credit - rating. Hence the starting point for the development of a corporate bond market - the emergence of a risk-free yield curve - is that government must learn to manage its finances better (read, borrow less). In other words, the importance of a sound fiscal policy cannot be overestimated.

If fiscal policy is important, monetary policy is no less so, as it has wide ramifications for the financial sector. Here, the committee’s suggestion that monetary policy should target inflation rather than the exchange rate is based on sound logic. The events of the past few months have shown, quite convincingly, that targeting the exchange rate does not work. Far better than to use monetary policy to deliver what it is best suited to deliver- price stability; leaving exchange rates to the market.

Moving from the macro-economic framework to the more specific proposals, these are largely unexceptionable. The idea of freeing up branch and ATM (automated teller machines) licensing and easing entry nom1S into’ the banking sector will find few opponents.

Anyone who has seen the transformation in the telecom and civil aviation sectors will testify to the benefits of greater competition. However, it is less dear whether this objective will be best served by allowing more local area banks. It is increasingly becoming apparent that the benefits of competition and even of greater financial inclusion can be better achieved by bigger-sized banks that enjoy both economies of scale and have access to cutting edge technology solutions.

On the issue of revitalising PSBs, the committee has, perhaps, been excessively constrained by socio-political ground realities. As long as government remains majority owner, PSBs will forever be condemned to compete with one hand tied behind their backs. No amount of talk about improving the quality of corporate governance is going to make an iota of difference. There is no alternative to privatising banks if we are serious about improving their performance; the longer we beat around the bush looking for alternatives when there are none, the more time we lose. If countries like Pakistan and China can reduce/abolish state ownership of banks, so, can we if we are serious about next generation reforms.

On regulation, the committee has done well to steer dear of the ’single versus multiple regulators’ debate and suggest a financial sector oversight agency along with distinct sectoral regulators. This is akin to what we have at present in the form of the High Level Co-ordination Committee on Financial and Capital Markets. The oversight agency would merely formalise the existing arrangement; but with one key difference. All regulators would be on, an equal footing and the present anomalous situation with the RBI governor first among equals would give way to a more democratic, and hopefully, more efficient one.

Progressive expansion of ‘priority sectors’ has led to a situation where the priority sector obligation has not served the purpose for which it is intended - wider access to credit for the financially excluded. The committee’s carrot -and-stick approach is, therefore, an improvement over today’s toothless system I where not only is there no penalty for noncompliance but compliance is a bit of a farce.

For the rest, the committee has done a commendable job though its silence on cooperative banks is a bit puzzling. The full report is not yet in the public domain; hopefully we will I’ find some suggestions on revitalising tins sector, given that it is, perhaps, the best way to ensure financial inclusion.

The market made some large swings in both directions last week, but the Sensex finished just 1.35% or 215 points lower. The Nifty closed a modest 0.54% down, and the CNX Midcap lost 1.65%.

New entrant Jaiprakash Associates was the biggest winner among the Sensex stocks with a 14.2% gain. It was followed by ACC, Ranbaxy Laboratories, NTPC and ONGC, with gains between 5% and 9%.

Wipro was the biggest loser among the Sensex stocks with an 11 % fall. Other casualties were Sat yam Computer Services, Maruti Suzuki, Tata Steel, Hindalco, Bharat Heavy Electricals (BHEL) and State Bank of India (SBI), with losses between 6 % and 11 %.

The newly listed GSS America Infotech was the biggest winner among the more heavily traded non -Sensex stocks with a 24.5% gain. Shree Renuka Sugars, Chambal Fertilisers and Chemicals, Bajaj Holdings, Tata Communications, Cairn India and Punj Lloyd followed, with gains between 8 % and 21 %.

GTC Industries was the biggest loser among the more heavily traded non -Sensex stocks with a 17% loss. Other losers were Financial Technologies, Videocon Industries, Steel Authority of India (SAIL), Hindustan Construction and IVRCL Infrastructure and Projects, with losses between 9 % and 15 %.

The intermediate downtrend that began on February 4, when the Sensex topped out at 18895, is still on. The Sensex will have to cross 16683 to start a new intermediate uptrend. The corresponding level for the Nifty stands at 5019, and that of the CNX Midcap index is 7019.

Global markets had started falling again by the time this article was written (on Friday evening), and this may put pressure on the Indian market early next week.

The Sensex has reversed upwards thrice on approaching 15000 since January 22, and a fall below that level can imply a more persistent intermediate downtrend.

The main indices are in major (long-term) downtrends with falling tops and bottoms, and the CNX Midcap can also be taken to be in one, as it closed at a six-month low. A major downtrend means a bear market, and all the better-known global indices are also in one at this time, with many falling to their lowest levels in a year or more during this decline.

The Sensex has to close above its last intermediate top of 18895 to be back in a bull market. The corresponding level for the Nifty is 5545, and for the CNX Midcap index it’s 7814.

Volatility was unusually high last week, with the Sensex’s intra -day ranges averaging more than 550 points. Such spells are often followed by choppy phases - in other words, two-way swings without much of a trend. In fact, last week already saw the indices swinging both ways without really getting anywhere.

Such conditions make the overnight risk on swing trades considerably higher than normal. Even day traders may find it better to use tighter trailing stops, as the market may be prone to changing direction abruptly.

The US Federal Reserve’s $200-billion package provided some relief to the global decline - with the Dow Jones recording its largest percentage gain in five years on Wednesday. European markets also rallied, but Asian markets - including ours still crashed a day later.

Meanwhile, the Dow Jones remains in an intermediate downtrend despite Wednesday’s rally. It will have to climb back above 12850 to get into an intermediate uptrend, while a fall below 11690 will take it below the point from which it rallied after the Fed’s move.

The long-term (major) trends of all the important global indices are down. The Dow Jones will have to be back above 14000 for its major trend to turn up again to enter another bull market. Most global indices ended their bull markets last October, while Tokyo’s Nikkei topped out even earlier in July.

The Sensex’s gain for the 12 months that ended on Thursday stands at 22.6%, making it the sixth-best performer among 40 well known global indices considered for the study. Egypt heads the list with a 53.5 % gain. Brazil, Indonesia, Shanghai and Karachi follow with gains between 33.6% and 43.9%. (These rankings do not take exchange rate effects into consideration). The Dow Jones Industrial Average has gained 0.1 % during the same interval while the NASDAQ Composite has lost 4.6%. Global commodity markets have also been unusually wild, with gold hitting $1,000 for the first time ever. Even sugar futures gained 33% in the first two months of this year. Currency markets are also in the fray, with the US dollar poised to drop below 100 yen.

Online Trading offers lot of investment opportunities. You can trade or invest in Equities, Commodities, Futures, Derivatives, IPOs, Mutual Funds, Tax Saving Certificates and Forex Markets through paperless online transactions.

However, you need to thoroughly understand your service provider’s onscreen trading window, before carrying out any such transactions. A slight negligence may cost you a huge monetary loss.
There are two types of basic transactions namely ‘buy’ and ’sell’ orders. Again, ’sell’ orders are classified into ’selling long’ and ’selling short’ orders. While there is no confusion as far as a ‘buy’ order is concerned, one needs to understand ’sell’ order(s) properly before carrying out such transactions. When you are selling shares that you own in your Demat Account, you are selling ‘long’. In this case, shares owned by you will be sold out and the profit earned will be credited to your account.

A trader can make money by selling the shares without even owning them-’ short selling’-and buying them later when share prices fall. In such cases, the first transaction is ’sell’ and square-off or subsequent transaction is ‘buy’. Traders often resort to ’short-selling’ to earn profit when they sense a bearish stock market. But, such transactions must be squared-off on the same day before the stipulated timeframe set by the exchange, as technically it is not possible to convert such ’sell’ orders into delivery.

If you want to sell the shares from your demat account using the online trading website provided to you by your broker, you must allocate them first, or else, you may end up in ’short-selling’, In such a case, you need to square-off that transaction by buying them.
If you fail to do so, the system will square-off the transaction at the stipulated time. You may lose money if the share is trading above the price that you sold at. The best way to sell shares from your demat is to visit the demat allocation page of your online trading website and click on the ’sell’ button placed next to the equity you want to sell. This will automatically take you to square-off dialogue box.

Another way to prevent undesired ’short-selling’ is to set ‘auto-allocation of funds’ to inactive. In the event of a mistake made by you during trading, such an order will be rejected by the system due to lack of allocation of funds to carry out the transaction. Allocate funds only when you wish to buy shares.
To avoid these types of confusions, some brokerage houses now included separate buttons for ’sell’ and ’short-sell’ orders on the trading page of their website.
You should also be aware about buying or selling at ‘Market’ or ‘Limit’ price. You are executing your order at Market price, if you are transacting at prevailing price to meet required quantity of shares.

Market orders are executed almost immediately when they find desired quantity, irrespective of price factor. Disadvantage of this type of order is that trader does not know the price until trade gets executed and is very dangerous in volatile market. If you are placing an order at a pre-determined price, then you are carrying out a transaction at a price Limit.

It is safe to resort to Limit type of order than getting unfavourable results by transacting at Market price. And it is always better to refer the list of available bidders and offers at different prices and quantities before placing orders.

India’s key fiscal and currency administrators would have to keep a tight vigil on rising foreign capital inflows and high commodity prices as policy makers grapple with options to manage inflation in a period of global economic uncertainty, the Economic Survey has said.

“Monetary policy needs to’ address the inflationary expectations triggered by sub-sectoral price flare-ups arising from mismatches in demand and supply. It also has to manage the stress arising from continued increase in capital flows,” the survey said.

It, however, projected a moderate inflation rate in the coming months as policy measures taken during the course of the year work their way through the system. Despite the hike in petrol and diesel prices, the inflation rate would remain lower at 4.4 per cent during the current fiscal, compared to 5.4 per cent in the previous year.

It also said the behaviour of agricultural prices, including essential consumption items, will be critical, given falling poverty and rapidly rising per capita income.

“We will continue to depend on enhancement of supplies through higher productivity and efficient supply management… Domestic supply management is critical to stabilising inflation expectations,” it said. Inflation, measured by the wholesale price index, is currently hovering around 4.5 per cent. Inflation had hit a high of 6.69 per cent in January 2007.

With a series of interest rates hikes in quick succession the Reserve Bank of India (RBI) has quite aggressively tightened the monetary screws. While the government has cut import duty on several items, including cement and edible oils, the RBI has adopted a policy of monetary tightening hiking the cash reserve ratio (CRR) and the repo rate to contain the price line.

The survey said that supply side pressures are likely only in sectors like agriculture that suffer from structural problems, infrastructure sectors still characterised by a monopoly core, heavily dependent on government investment and relatively slow decision making sectors such as urban land. However, global shortages and rising prices of these farm items are eroding the government’s ability to meet shortfalls at affordable prices, the document said.

Buyback of shares are a common way of dealing with purchases by companies across the world. In India, many investors are not clear about how share buyback actually takes place. With companies slowly adopting this route an increasing number investors will be subject to share buyback and they need to be clear about the operation of this mode. Here are some pointers that will help them in that direction.

The entire process of buyback of shares consists of a situation where the company buys its own shares back from the public and then extinguishes the shares. The process of buying back the shares is vital because it involves a position where the company itself acquires the shares because they feel it is undervalued and the investors reduce their holding in the company. In a case where the shares are not kept alive then there is a reduction in the number of shares “in the company.

There are two ways in which a buyback is conducted and based on this the individual will know the route to be adopted by them for completing the process. On one hand there is the direct market mop up wherein the company fixes a price till which it buys back the shares.

Then whenever it spots the market price lower than the limit it will buy the shares from investors in the market itself. For an investor they will not know who is at the other end of the transaction and here they -sell the shares like in the normal course of investing without knowing who they are selling to.

The second is the direct method of buyback where the company buys shares directly from the investor at a fixed price. The investors know that they are selling the shares to the company and hence they need to transact this in a slightly different way. This will require an off market transaction for the transfer to the account of the company.

The buyback has an impact on several areas. The most important among them is that several ratios will be affected. If the shares are cancelled then the number of shares outstanding will go down and with earnings being maintained or raised it can lead to better earnings per share. Similarly this can lead to several return ratios looking better because of the reduced capital base leading to a better valuation for the company as a whole.

Visit any urban food store in India and you will be spoilt for choices. But very few of these processed foods reveal the secret behind their delectable taste or the origins of their crunchiness. If a new central government rule is cleared by Parliament in the forthcoming monsoon session, this information will become mandatory. Last week, two senior ministers - Health Minister A. Ramadoss and Minister for Consumer Affairs, Food and Public Distribution Sharad Pawar - acknowledged this threat from junk food to India’s health.

The Food Safety and Standards Bill, which is being given final touches by the Health Ministry, will ensure that all processed foods manufactured and sold in India carries information on its weight and nutritional value including energy value, amounts of protein, carbohydrate, fat, information on vitamins and mineral, and amount and types of fats, especially harmful trans fatty acids that raise cholesterol.

The labelling will be a huge step forward considering that trans fats more than the others have the ability to wreck your health. Consider its negatives: it increases artery-blocking bad cholesterol and pushes down good cholesterol. The National Academy of Sciences, which advises the US and Canadian governments on nutritional science for use in public policy and product labelling programmes, says trans fatty acids are not essential and provide no known benefit to human health and it increases the risk of coronary heart disease. In developed countries like the US, it is mandatory to list its presence on the label. But the industry here uses it because it’s cheap and enhances the products’ shelf life.

The Bill is welcome, but much more needs to be done. For one, educating the public relentlessly like it was done in the anti-cola campaign. Activists have been demanding a ban on TV ads for these junk foods, which target children.

And, these harmful foods must be banned in school cafes - be it public or private. The Delhi government for one has banned junk foods in its school canteens, but what about the private schools? Going a step forward, fast-food joints, including the ones owned by the multinationals, must be asked to display the ingredients they use like they do in their home countries.

The fast growing, globalizing Indian economy is expected to slow down to a pace of 8.7 per cent this year, according to the latest Economic Survey 2007-08. The strong message that it sends out is that maintaining overall growth rate at 9 per cent - that has been the experience of the last two years - is a challenge and raising it further to 10 per cent is a greater one. This deceleration or “some degree of cyclical fluctuation” is occurring against the backdrop of heightened global economic uncertainties, including the prospect of full-blown recession in the US economy.

The fast globalizing economy has also attracted record inflows· of capital. Portfolio and foreign direct investments have been booming and have resulted in a sharp appreciation of the rupee vis-a-vis the US dollar. This has, in turn, affected the competitiveness of India’s exports, with manufactured exports to the US slowing down this year.

Some of this has affected industrial performance that has also moderated this year as in the case of textiles. Consumer durables, too, have been sluggish.

Another important factor behind the overall deceleration of the Indian economy has been the slump in agricultural growth to 2.6 per cent when compared to previous year’s 3.8 per cent. Unless this· is stepped up to 4 per cent, this sector will remain a drag on the transition to double-digit growth.

What are the challenges of sustaining’ rapid growth? The Survey notes the heightened urgency to augment and upgrade infrastructure like roads, ports and electricity generation that can fast emerge as an obstacle to the growth process. This is not easy as it requires the mobilization of huge amounts of capital, the right policy framework and regulators. The success so far in telecom and aviation ought to indicate the way forward in this regard. The far bigger challenge is reforms that have taken a back seat over the last four years. The Survey includes raising foreign equity in insurance, retail trade, green field private rural-agricultural banks, disinvesting the State’s equity in public sector undertakings, phasing out controls on sugar, fertilisers and drugs, free entry of private and public-private partnerships in rail freight companies, allowing private entry into coal mining, changes in the Factory Act to increase the work week to 60 hours and daily limit to 12 hours to meet seasonal demand. There is no doubt that without reforms it will indeed be difficult to sustain rapid growth over the medium term. But the big question is: why is there a weakening will to implement such policy options when the Indian economy is showing signs of flagging? True to form, the Survey sticks to economic rather than political imperatives.

Being the oldest stock exchange in Asia with a rich heritage, BOMBAY STOCK EXCHANGE, is popularly known as BSE. It was established as “THE NATIVE SHARE & STOCK BROKERS ASSOCIATIONS” in 1875. It was given permanent recognition in 1956 by the GOVERNMENT OF INDIA, the first stock exchange in the country to get this status, under the Securities Contracts (Regulation) Act, 1956.

The Exchange’s pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an Association of Persons (AOP), the Exchange is now a demutualised and corporatised entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualisation) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI).
The BSE Sensex or Bombay Stock Exchange Sensitive Index is a value-weighted index composed of over 4000 stocks with the base April 1979 = 100. It consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange. These companies account for around one-fifth of the market capitalization of the BSE.

The base value of the Sensex is 100 on April 1, 1979 and the base year of BSE-SENSEX is 1978-79.
At irregular intervals, the Bombay Stock Exchange (BSE) authorities review and modify its composition to make sure it reflects current market conditions.
The abbreviated form “Sensex” was coined by Deepak Mohoni around 1990 while writing market analysis columns for some of the business newspapers and magazines. It gained popularity over the next year or two.
The stock market has grown by over ten times from June 1990 to today. Using information from April 1979 onwards, the long-run rate of return on the BSE Sensex can be estimated to be 0.52% per week (continuously compounded) with a standard deviation of 3.67%. This translates to 27% per annum, which translates to roughly 18% per annum after compensating for inflation.

Housing related

1. Associated Cement Companies Ltd
2. Gujarat Ambuja Cements Ltd

Transport Equipments

3. Bajaj Auto Ltd
4. Hero Honda Motors Ltd
5. Maruti Udyog Ltd
6. Tata Motors Ltd.

Capital Goods

7. Bharat Heavy Electricals Ltd
8. Larsen & Toubro Limited

Telecom

9. Bharti Airtel Ltd
10. Reliance Communications Limited

Healthcare

11. Cipla Ltd
12. Dr Reddy’s Laboratories Ltd
13. Ranbaxy Laboratories Ltd

Diversified

14. Grasim Industries Ltd

Finance

15. HDFC
16. HDFC Bank Ltd
17. ICICI Bank Ltd
18. State Bank of India

Metal, Metal Products & Mining

19. Hindalco Industries Ltd
20. Tata Steel Ltd

FMCG

21. Hindustan Lever Ltd
22. ITC Ltd

Information Technology

23. Infosys Technologies Ltd
24. Satyam Computer Services Ltd
25. Tata Consultancy Services Limited
26. Wipro Ltd

Power

27. NTPC Ltd
28. Reliance Energy Ltd

Oil & Gas

29. ONGC Ltd
30. Reliance Industries Ltd

Corporate houses worried about the Competition Commission of India (CCI) potentially slowing down their inorganic growth plans can take heart. India’s competition regulator is unlikely to finalise its merger control provisions before it becomes full-fledged, which, according to the current scheme of things, would take a year, at least.

This means that the draft regulations framed by the existing set-up (of one member, a few experts and supporting staff) which does not have the legal sanction to be a regulator with authority can be thoroughly rewritten by the full commission later when it finalises these regulations. As per the CCI Act, the commission acquires legal authority when it has a chairman and at least two members.

India Inc has of late been a strident critic of the merger control provisions - which are essentially contained in the act and supplemented by the regulations - for their potential to scupper -mergers, amalgamations and acquisitions. The investment commission chairman Ratan Tata has also denounced the draft regulations of the extant body.

According to official sources, the corporate affairs ministry is now in the process of paving the way for the formation of a selection committee which will find the chairman and members of the commission. The selection committee is to be headed by the chief justice of India or his nominee. The ministry has to recommend the names of two experts in the selection panel, which it will do soon. “We expect the (full-fledged) commission to be in place within a year,” said a ministry official. He added that the selection committee has full freedom to decide on the process to select the chairman and members.

The industry has opposed both the specific provisions in the recently amended competition law-particularly sections 5 and 6 that deal with M& As -as well as certain aspects of the draft regulations framed by the CCI. The industry’s major concern is that the time lines prescribed-21 0 days for CCI to clear a deal and the ambiguity on how long the appellate tribunal could take for a decision -would scuttle the sensitive transactions that corporate houses thrash out in a dynamic economy where time is much more valuable than money. Secondly, the asset turnover threshold for any transaction to come under CCI’s scrutiny is too low, says the industry.

The CCI has tried to allay these concerns of the industry, saying that 210 days would not be the standard time for clearing a merger proposal. It will be the maximum time within which a proposal will be decided upon. If one doesn’t hear from the commission within this time, the proposal will be deemed approved. Clearance of “straightforward cases” will normally take much shorter time (30 days or so), it said. The regulator will set internal time limits for itself. So, parties to the merger should not reckon 210 days as minimum period of compulsory wait for the approval.

These explanations, however, have not pacified the industry. The CCI has so far shown professionalism in the way it has been operating, but some fear that once it gets the full statutory mandate, there is no guarantee it might not act like any other bureaucratic body. While anti-competitive practices must be checked by an agency, it should not be reduced to a hurdle for corporates to function. For the corporate affairs minister Prem Chand Gupta, who is known for his consultative approach to policy making and empathy towards entrepreneurs’ genuine concerns, another round of discussions with the affected party India Inc-will not do much harm.

Anyway, the hands of the ministry are already full with a brand new companies bill and a limited liability partnership bill which would be introduced in the Parliament in the next few days.

The ministry’s priority is to get the Parliament’s ascent for these two major bills, which would be a land mark achievement.

The Centre is planning to fund the farm loan waiver package over the next 24 months and at least 25% of the total Rs 60,000 crore package will be met through government borrowings.

The waiver package will be a part of the supplementary budget that will be presented later this week. Finance minister P Chidambaram has said he will tell Parliament how the government would compensate banks for the losses incurred on account of the farm loan waiver worth Rs 60,000 crore.

There is enough headroom for the government to raise Rs 15,000 crore: a source said. The government expects a higher revenue collection by the dose of the current financial year. The size of the expenditure budget of the government is more than Rs 7lakh crore.

Sources in finance ministry have hinted that the both tax and non-tax revenues and even proceeds from disinvestment may be some of the options for funding the scheme. State governments will also have a share of the burden. The finance ministry is at present finalising the modalities of the scheme. The RBI has already sought details of NPAs and overdue from all banks by March 14. The scheme will be rolled out before July 2008.

Sources said that the advances from the Rabi season in July 2006 amounted to Rs 48,000 crore. With 75% of the total advances being repaid, the government expects at least Rs 12,000 crore to be in the form of an overdue. A short term crop loan becomes overdue within a six month cycle. Other kinds of loans have a longer repayment period. Over Rs 20,000 crore worth of loans were rescheduled in 2004 due top a natural calamity.

Another 10,000 crore is on account of outstanding from the Vidarbha package when loans where restructured and rescheduled in 2006. Under the Vidarbha package, loans were rescheduled in 2006, interest payments were waived off. Till April 2008, no repayment was required, and repayment would be due over the next three years. Interestingly, since these rescheduled loan accounts are standard assets as on February 29, 2008, they become eligible for the onetime settlement scheme which is being offered to large fanners, a banker said.

Of the Rs 60,000 crore, co-operative banks account for over Rs 35,000 crore, scheduled commercial banks and their RRBs account for another Rs 20,000 crore.

Under the scheme, marginal fanners holding up to 1 hectare and small fanners holding up to 2 hectares, are eligible for a complete waiver of all loans that were overdue on December 31, 2007, and which remained unpaid until February 29, 2008. Other farmers are eligible for a one time settlement (OTS) scheme for all loans that were overdue on December 31, 2007, and which remained unpaid until February 29, 2008. Under OT5, a rebate of 25% will be given on payment of 75% of the loan.

The government has said that the fiscal deficit target for 2007 -08 will be met. As against a budgeted estimate of 3.3%, the government expects to dose the year at 3.1 %. After presenting the Union Budget, finance minister P Chidambaram had said that it gives him enough headroom.