CURRENT AFFAIRS 2010

IMD unveils high-tech weather forecasting system A state-of-the-art Integrated Forecasting and Communication System was unveiled at the India Meteorology Department (IMD) today that is expected to provide more accurate weather data. Dynamic weather prediction models using super computers and very highly sophisticated software will start giving us more and more accurate data. Agriculture, like so many sectors of Indian economy, is highly dependent on weather and climate and it was good that the IMD was moving away from he conventional forms of weather forecast to an advanced one. "Increasing socio-economic benefits of meteorology in all fields, saving lives and protecting goods in a changing climate is the permanent mission of the India Meteorological Department." The governments took it as one of its priorities and a Rs 1,000 crore programme was sanctioned by Planning Commission in 2007 and crucial components including setting up of automatic weather stations, Doppler Radars, connecting them with most high speed digital inter-connecting systems and network as well as buying super computers for numerical weather prediction were completed.

INDIAN ECONOMY-OVERVIEW2010

Farm sector may achieve 3-3.5 pc growth in 11th plan

India's farm sector is likely to grow by 3-3.5 per cent annually during the 11th Five-Year Plan ending 2011-12, lower than the target of four per cent, the Planning Commission said.

"The rate of growth in agriculture in the Eleventh Plan is likely to be better than in the Tenth Plan. However, it may not reach the target of four per cent per year and instead range between 3 to 3.5 per cent per year," according to a Commission's note for discussion in the National Development Council meeting on July 24.

The Plan Panel, however, noted that agriculture production in 2010-11 would be better compared to last year, when the crop was severely hit by the worst drought in 32 years.

The agriculture sector, which contributes 17 per cent to GDP and employs 60 per cent of the population, grew by 0.2 per cent in 2009-10 fiscal. In the first three year of the current plan period, the average growth was 2.2 per cent.

The Planning Commission emphasised on undertaking steps to increase production so that the four per cent growth target is "at least achieved in the Twelfth Plan period".

"Food Security will continue to be an important concern and we need to plan for growth in foodgrain production of around 2 to 2.5 per cent per year," the note said.

The allied sectors (including dairy and fisheries) will have to grow at 6-7 per cent, it added. Highlighting important steps taken in the last few years, Plan Panel said that greater efforts were needed to achieve the targeted growth. The Commission noted that bio-technology holds great potential for expanding agri-productivity, but it also "raises concerns about safety in connection with the introduction of GM technology in foods".

The panel suggested that it was essential to establish a regulatory system that will ensure that safety is not compromised.

"The central government should expedite the establishment of statutory Bio-technology Regulatory Board, with appropriate scientific expertise as quickly as possible," the note said. The panel asked states to pay more attention to agriculture development by strengthening research, extension system, state agri-universities and encouraging private sector in seed development.

Describing extension service as the "weakest link", the panel said states should strengthen the extension system. "It is not an exaggeration to say that the extension service has collapsed in most states with large unfilled vacancies and also poor accountability of personnel where they exist," the note said.

INDIAN ECONOMY-OVERVIEW2010

Agri panel suggests steps to raise grain output

A task force, set up by the Agriculture Ministry, has recommended a slew of measures to increase India’s stagnating grain production.

The panel has advised adoption of new technologies, water conservation and more efficient water management, especially in Punjab, Haryana and western Uttar Pradesh—known as ‘the food bowl of India’. The task force also suggests taking green revolution to the eastern region. It is hopeful that the measures would check the slowdown in the growth of grain production since the mid-nineties and help in increasing net sown area.

The task force, which was set up towards the end of last year, was headed by the agriculture secretary, and its members included representatives of ICAR, ministries of power and water resources, departments of animal husbandry, rural development and land resources, National Rainfed Area Authority and the Planning Commission. Its mandate was to “suggest short-term and medium-term recommendations on efficient management of water, power and other inputs to maximise agricultural production on a sustainable basis”.

The panel submitted its report in June this year while the action-taken report on its recommendations was finalised only late last month.

The report, after taking into account the food production graph over the years, displayed its disappointment over the declining trend in its growth rate. The mean food production during the last decade revolves around 209.68 million tonnes with a coefficient variation of 8%. After factoring in considerations such as changes in preferences, tastes, life-styles, occupational structure and growing urbanisation, it calculated that the demand for grain (including cereals and pulses) was expected to grow to 236 million tonnes by 2011 and 276 million tonnes by 2020-21.

“To meet the projected demand, production needs to increase each year by about 1.01% for rice, 1.10% for wheat, 2.55% for coarse cereals and 2.48% for pulses,” the report pointed out, adding: “These required growth rates are higher than the growth rates experienced during the last decade in case of pulses and coarse cereals.”

It was felt that the projected demand could be met only by raising production of grains, oilseeds and sugarcane. But this was easier said than done. Over the last 30 years, the panel noted that the net sown area had remained static at about 140 million hectares, and the prospects of raising it were extremely difficult because of the growing pressure on land for other purposes.

Moreover, the food bowl of India, it was felt, had reached its saturation point in terms of grain production. Also, there was a large gap between the productivity of rice and wheat in the eastern and western states. The ability of states such as Punjab, Haryana and western UP to contribute more to the food stocks had become suspect because of the “over-exploitation” of water resources and diminishing soil fertility. The practice of supplying electricity to farmers at subsidised rates in Punjab and Haryana had increased the debts, and the losses, of their state electricity boards.

Besides advocating extension of the green revolution to the eastern states, the task force listed a string of recommendations for a better, more efficient management of water, power and other inputs to optimise food production in the northwestern states.

“Sustainable groundwater development and management in the over-exploited northwest region needs to be taken up by incorporating artificial recharge of groundwater and rainwater harvesting, conjuctive use of surface water and ground water, management of poor and marginal quality groundwater, water conservation by increasing water use efficiency and regulation of groundwater development,” the task force suggested.

Besides, it stressed on the urgent need to take up schemes of artificial recharge of groundwater in the states of Haryana, Punjab, UP, Rajasthan and Gujarat. A case in the point was the Central Ground Water Board’s estimate that about 700 million cubic metre of surface runoff flows out of Haryana every year. “The states will have to be sensitised that surplus run-off could be channelled to micro-storages which can be developed using MGNREGA funds,” the report said.

In states such as Haryana and Punjab, which have been staring at declining water levels, the report said that there must be regular and accurate assessment of actual groundwater use in both rural and urban areas. A close scrutiny of further expansion programmes and separation of feeders for domestic and agricultural power and its timely, but well-controlled, supply is necessary, it said.

The task force also built a case for diversification of crops in these areas.

INDIAN ECONOMY-OVERVIEW2010

Indian economy grows by 8.8% in Q1(2010-11)

Indian Economy grew by an impressive 8.8 per cent during this quarter (April-June) on the back of robust manufacturing growth.

However, certain sectors like financial services restrained the growth in economy, which had recorded 6 per cent growth rate in April-June 2009-10.

Agriculture and allied activities grew by 2.8 per cent, higher than 1.9 per cent in the year-ago period, but it is nowhere between the target of four per cent pegged by the government in the medium term.

Manufacturing expanded by strong 12.4 per cent in April-June, 2010 against a mere 3.8 per cent growth rate in the same period last year.

Construction too grew by 7.5 per cent compared to 4.6 per cent.

Among services, financial, insurance and real estate services expanded by just 8 per cent, against a growth rate of 11.8 per cent in the year-ago quarter, while community social and personal services growth slowed down to 6.7 per cent, against 7.6 per cent a year ago.

However, trade, hotels and communication services rose by 12.2 per cent, against 5.5 per cent during April-June 2009.

The government expects economy to grow by 8.5 per cent this fiscal. Though the GDP numbers for the April-June quarter are higher than that of 8.6 per cent in the previous quarter, they lag expectations of 8.9-9.4 per cent forecast by various experts.

The last time the economy grew at a faster clip was in the last three months of 2007 when it expanded 9.7 percent.

Deputy chairman of the Planning Commission, Montek Singh Ahluwalia said that India's economy could grow better than 8.5 percent in the fiscal year that ends in March 2011.

Agri export to double in 5 yrs: APEDA

India’s agri-export turnover is expected to double in the next 5 years. Agri-export turnover is set to rise from $9 billion to nearly $18 billion by 2014.

The country’s agri-exports have registered a 25% growth in 2008-09. Unlike the software and handicraft industry, agricultural products are not US dependent, hence, the country’s agri-export has been not affected. Experts in this field believe the worst of recession is already over. Infact, major economies such as the EU and the US are reporting significant growth and so going by global scenario, the agri-exports will not suffer.

On ‘farming for export’, a concept where farmers shift gear from livelihood farming to Market-oriented Agriculture and international trade. Agricultural and Processed Food Products Export Development Authority (Apeda) supports ‘farming for export’ concept since it is the best option to ensure better quality of food across the globe. Food safety is a major cause of concern in Europe, Japan and the US market and this method will boost export.

As part of the farming for export programme, Apeda is working on horticulture. It is also financing R&D for pomegranate and working on it in clusters. For pomegranate, Apeda is tapping Maharashtra, Andhra Pradesh and Karnataka, for mango Tamil Nadu and Andhra Pradesh, banana in Julgoan and Surat and ginger in the Northeast.

On centre for perishable cargo, the Apeda has more than 15 centres across the country, the latest to start at Guwahati. When asked about taping the untouched market. Apeda plans to tap Russia for exporting grapes and the Middle East for pomegranate. In the financial year 2009-10, Apeda is betting high on export of dehydrated onions, mango pulp, egg powder and honey.

Seven payloads firmed up for Chandrayaan-2

CHANDRAYAAN-2 IN THE YEAR 2013

ISRO has finalised seven payloads that will go on the second lunar mission, Chandrayaan-2, sometime in 2013. At least two key instruments will probe further to confirm presence of water ice - which was indicated by the first lunar mission of 2008-09,

Chandrayaan-2 will have an Orbiter (satellite), a Lunar lander to be built by Russia, and an ISRO-built Rover that will explore the lunar landscape. Five payloads or scientific experiments will be placed on the orbiter and two on the rover. The Chandrayaan-2 spacecraft will weigh 2,650 kg when it is launched; the orbiter alone will weigh 1,400 kg and lander about 1,250 kg. The subsystems of the orbiter and the rover are being developed at the Bangalore, Thiruvananthapuram and Ahmedabad centres.

Three of the orbiter payloads are new while two are improved versions of the payloads that went on the successful Chandrayaan-1 orbiter of 2008-09. On the Chandrayaan-1, a MIP or Moon Impact Probe was included close towards the launch. Nearly half of its 11 payloads were guest experiments from other countries.

The former ISRO Chairman, Dr U.R.Rao, heads the national committee of experts drawn from ISRO centres, academic institutions and R&D labs. Dr Rao also chairs the Advisory Committee on Space Sciences (ADCOS). Chandrayaan-2 is to be launched on the Indian rocket, the GSLV, from the Satish Dhawan Space Centre, Sriharikota.

The orbiter is to carry a Large Area Soft X-ray Spectrometer (CLASS) from ISRO Satellite Centre (ISAC), Bangalore and Solar X-ray Monitor (XSM) from Physical Research Laboratory (PRL), Ahmedabad for mapping the major lunar elements.

An L- and S-band Synthetic Aperture Radar (SAR) from SAC will probe the first few meters for the presence of water ice among others. The first lunar mission had indicated presence of water in the shadowed regions.

An Imaging IR Spectrometer (IIRS) from SAC will map the lunar surface and look for minerals, water molecules and hydroxyl.

A Neutral Mass Spectrometer (ChACE–2) from Space Physics Laboratory (SPL), Thiruvananthapuram, will make a detailed study of the lunar exosphere.

A Terrain Mapping Camera–2 (TMC–2) from SAC will be deployed to prepare a 3D map of Moon's minerals and geology.

The rover will carry a Laser Induced Breakdown Spectroscope (LIBS) from Laboratory for Electro Optic Systems (LEOS), Bangalore; and an Alpha Particle Induced X-ray Spectroscope (APIXS) from Physical Research Labs, Ahmedabad. Both the instruments will analyse the elements at the lunar landing site.

INDIAN ECONOMY-2010

ECONOMIC HIGHLIGHTS

Advance Estimates of National Income - 2009-10

(a) Estimates at constant (2004-05) prices

Gross Domestic Product (GDP)

GDP at factor cost at constant (2004-05) prices in the year 2009-10 is estimated at US$ 961.89 billion (Rs. 44,64,081 crore) showing a growth rate of 7.4 percent over the Quick Estimates of GDP for the year 2008-09 of US$ 889.91 billion (Rs. 41,54,973 crore).The upward revision in the GDP growth rate is mainly on account of higher performance in ‘agriculture, forestry and fishing’, ‘mining and quarrying’ and ‘manufacturing’, than anticipated.

In the case of ‘mining and quarrying’, the Index of Industrial Production of Mining (IIPMining) registered a growth rate of 9.7 per cent during 2009-10, as against the growth rate of 8.3 percent during April-November, 2009, which was used in the Advance Estimates. Due to this increase in the IIP-Mining, the growth rate in GDP is now estimated at 10.6 percent, as
against the advance estimate growth rate of 8.7 percent.

Similarly, the IIP of manufacturing registered a growth rate of 10.9 percent during 2009-10, as against the growth rate of 7.7 percent during April-November,2009. Due to this increase in the IIP, the GDP of ‘manufacturing’ sector is now estimated at 10.8 percent,as against the Advance estimate growth rate of 8.9 percent.

The sectors which showed growth rates of 5 percent or more, are ‘mining and quarrying’ (10.6 percent), ‘manufacturing’(10.8 percent), ‘electricity, gas and water supply’(6.5 per cent)'construction’(6.5 percent),'trade, hotels,transport and communication'(9.3 per cent),'financing, insurance, real estate and business services' (9.7 percent), and 'community,
social and personal services' (5.6 percent). The ‘agriculture, forestry and fishing’ sector, however registered a growth rate of 0.2 percent.

Gross National Income

The gross national income (GNI) at factor cost at 2004-05 prices is now estimated at US$ 890.29 billion (Rs. 44,39,072 crore) during 2009-10, as against the previous year’s Quick Estimate of US$ 886.69 billion (Rs. 41,38,174 crore). In terms of growth rates, the gross national income is estimated to rise by 7.3 percent during 2009-10, in comparison to the growth rate of 6.8 percent in 2008-09.

Per Capita Net National Income

The per capita net national income in real terms (at 2004-05 prices) during 2009-10 is estimated to attain a level of US$ 720.23 (Rs. 33,588) as compared to the Quick Estimates for the year 2008-09 of US$ 682.40 (Rs. 31,821).The growth rate in per capita income is estimated at 5.6 percent during 2009-10.

(b) Estimates at current prices

Gross Domestic Product

GDP at factor cost at current prices in the year 2009-10 is estimated at US$ 1,257.41 billion (Rs. 58,68,331 crore),showing a growth rate of 12.2 percent over the Quick Estimates of GDP for the year 2008-09 of US$ 1,120.46 billion (Rs. 52,28,650 crore).

Gross National Income

The GNI at factor cost at current prices is now estimated at US$ 1,250.40 billion (Rs. 58,35,493 crore) during 2009-10, as compared to US$ 1,115.84 billion (Rs. 52,07,534 crore) during 2008-09, showing a rise of 12.1 percent.

Per Capita Net National Income

The per capita income at current prices during 2009-10 is estimated to attain a level of US$ 950.87 (Rs. 44,345) as compared to the Quick Estimates for the year 2008-09 of US$ 860.73 ( Rs. 40,141), showing a rise of 10.5 percent.

Quarterly Estimates of GDP For Q4 (January-March), 2009-10

(a) Estimates at constant (2004-05) prices

GDP at factor cost at constant (2004-05) prices in Q4 of 2009-10 is estimated at US$ 259.69 billion (Rs. 12,05,119 crore), as against US$ 238.01 billion (Rs. 11,10,041 crore) in Q4 of 2008-09, showing a growth rate of 8.6 per cent.

The sectors which registered significant growth rates in Q4 of 2009-10 over Q4 of 2008-09 are ‘mining and quarrying’ at 14.0 per cent, ‘manufacturing’ at 16.3 per cent, ‘electricity, gas and water supply’ at 7.1 per cent, ‘construction’ at 8.7 per cent, 'trade, hotels, transport and communication' at 12.4 per cent, and 'financing, insurance, real estate and business services' at 7.9 per cent.

(b) Estimates at current prices

GDP at factor cost at current prices in Q4 of 2009-10 is estimated at US$ 349.43 billion ( Rs. 16,21,812 crore), as against US$ 292.02 billion (Rs. 13,61,871 crore) in Q4 of 2008-09, showing a rise of 19.1 per cent.

Monthly Economic Report

• Food grains (rice and wheat) stocks held by FCI and State agencies were 42.84 milliontonnes as on April 1, 2010.
  
  
• Overall growth in the Index of Industrial Production was 17.6 per cent during April 2010 as compared to 1.1 per cent in April 2009. During 2009-10, IIP growth was 10.4 per cent compared to 2.8 per cent during 2008-09.
  
  
• Core infrastructure-supportive sectors grew by 5.1 per cent in April 2010 compared to a growth of 3.7 per cent in April 2009. During 2009-10, these sectors grew at 5.5 per cent as compared to 3.0 per cent during 2008-09.
  
  
• During the financial year 2010-11 (up to May 21, 2010), broad money (M3) increased by 1.7 per cent, compared to 3.7 per cent during the corresponding period of the last year.
  
  
• Exports, in US dollar terms increased by 36.2 per cent and imports increased by 43.3 per cent, during April 2010.
  
  
• Foreign exchange reserves (excluding gold, SDRs and reserve tranche position in the IMF) stood at US $ 248.2 billion at end-May 2010, compared to US $ 251.7 billion at end-May 2009.
  
  
• Rupee appreciated against Pound Sterling, and Euro and depreciated against US dollar and Japanese Yen in the month of May 2010 over April 2010.
  
  
• Year-on-year inflation in terms of Wholesale Price Index was 10.16 per cent for the month of May 2010 as compared to 1.38 per cent in May 2009.
  
  
• Tax revenue (net to Centre) during April-March, 2009-10 recorded a growth of 3.6 per cent compared with corresponding period of 2008-09.
  

Agriculture

• The third advance estimates of crop production released by the Ministry of Agriculture showed an upward revision as compared to their second advance estimates in the production of rice (89.31 million tonnes from 87.56 million tones), wheat (80.98 million tones from 79.06 million tones), cotton (228.34 from 223.18 lakh bales of 170 kg. each) and sugarcane (274.66 million tones from 251.27 million tones) during 2009-10. Due to this upward revision in the production, the growth rate in ‘agriculture, forestry and fishing’sector in 2009-10 has shown a growth rate of 0.2 percent,as against the growth rate of (-) 0.2 percent in the Advance estimates.
  
  
• The Centre increased the minimum support price of jute by over 14 percent to US$ 33.77 (Rs 1575) per quintal for 2010-11. The decision to hike the minimum support price (MSP) for the TD-5 grade (ex-Assam) variety of jute was taken at the meeting of the Cabinet Committee on Economic Affairs (CCEA). "The increase in the MSP of raw jute is expected to encourage the farmers to step up investment in jute cultivation and thereby production and productivity of Jute in the country," the official statement said.Jute MSP was at US$ 29.48 (Rs 1,375) per quintal last year. The government also said that the Jute Corporation of India (JCI) would continue to act as the Nodal Agency to buy jute at the MSP level. Jute production is estimated to be 96.98 lakh bales during 2009-10 season, compared with 96.34 lakh bales in a year-ago period. One bale is 180 kgs. Major jute producing states in the country are West Bengal, Bihar, Assam, Orissa, Andhra Pradesh and Tripura.
  
  
• The Cabinet Committee on Economic Affairs (CCEA) approved US$ 0.13 billion (Rs 632 crore) for the National Horticulture Board to implement its existing schemes and promote 25,000 integrated commercial horticulture projects in the 11th plan period ending 2012."It is expected that with the budgetary support during the 11th Five Year Plan, additional infrastructure for post-harvest, cold-chain and primary processing would be created to handle about 25 lakh tonnes of horticultural produce," said an official statement.An investment of US$ 0.11 billion (Rs 495.61 crore) by the board through back-ended subsidy for hi-tech commercial horticulture and cold chain infrastructure is expected to attract US$ 0.53 billion (Rs 2,500 crore)-US$ 0.64 billion (Rs 3,000 crore) investment in the sector, it said.
  
  
• India's cotton production may increase by over six per cent to a record 25 million bales in 2010-11 season if the country receives normal monsoon this year, the US Department of Agriculture has forecast. Cotton output is pegged at 23.5 million bales (one bale equals 170 kg) in 2009-10 marketing season (August-July)."Assuming normal 2010 monsoon, cotton production in India's marketing year 2010-11 is forecast to increase to a record 25 million bales on expected record planting and improved yields," the USDA said in a report.The Department noted that the area under cotton is forecast to increase marginally to a record 10.3 million hectares from 10.26 million hectares provided there is "timely and well distributed monsoon at the time of planting".
  
  
• Agricultural cooperative major National Agricultural Cooperative Marketing Federation of India (NAFED) is eyeing the markets in the Gulf and Europe with food products aimed primarily at the Indian diaspora."There have been demands in the last several years from Indians in the Gulf and Europe to make our products available for them. We have now decided to source India-specific products, process and package them and export them to the Gulf and Europe. The prices will be competitive," NAFED managing director C.V. Ananda Bose said.The NAFED move will be a boon for the huge Indian population in the Gulf and European cities like London. For the Gulf market, NAFED, the largest farmers' cooperative in the country, will ship Kerala-specific products because of the large presence of workers from the state.
  
  
• The first of the genetically modified seed varieties developed in India will make it to the market soon as the government has registered two such wheat varieties developed by Mahyco, an Indian seeds company. This will create competition in the market dominated by multinational companies and thereby help lower seed prices. The Protection of Plant Varieties and Farmers’ Rights Authority (PPV&FR Authority) has registered two hybrid wheat varieties.Mahyco is engaged in the research, production, processing and marketing of 115 products in 30 crop species including cereals, oilseeds, fibre and vegetables.
  
  
• The Government is contemplating to enhance milk production to 180 million tonnes by 2021-22 through the National Dairy Plan which is a strategic plan prepared by the National Dairy Development Board (NDDB). The Plan has three major components, namely, enhancing milk production through increased productivity, substantially strengthening and expanding the infrastructure for procurement, processing, marketing and quality assurance through existing institutional structures and by promoting new ones, and human resource development.According to the Basic Animal Husbandry Statistics 2008, the average daily milk production was 2.09 Kgs per indigenous cow and 6.52 Kgs per crossbred cow in 2007-08.

Capital Market

• According to The Centre for Monitoring Indian Economy (CMIE), total floatations stood at US$ 7.74 billion (Rs.36,096.3 crore) in March 2010, the highest collected since July 2009. While domestic floatations stood at US$ 7.64 billion ( Rs.35,637.9 crore) in March 2010, overseas floatations stood at US$ 0.09 billion (Rs. 458.4 crore). The private placement of debt and equity was the most sought after route to raising funds in March 2010. More than US$ 4.29 billion (Rs. 20,000 crore) was raised via this route.
  
  
• Market regulator SEBI proposed to reduce the time between public issue closure and listing to 12 days from the existing (up to) 22 days. This would be applicable to public issues opening on or after May 1, 2010.The regulator also said that the ASBA (Application Supported by Blocked Amount) process would undergo suitable modification to make it consistent with the new timelines. SEBI said the new rule was aimed at making the existing public issue process more efficient.Market participants said that reducing the listing time to 12 days was a good move.Investors who borrowed funds to invest in IPOs would stand to gain from a reduction in interest costs.
  
  
• The SEBI also extended the ASBA facility to institutional investors in public issues.This would be applicable for issues opening on or after 1 May 2010.Currently,only individuals could apply through ASBA. Last month SEBI made it compulsory for institutional investors to pay 100 pe cent money upfront for public issues as against 10 per cent currently.
  
  
• CMIE Overall Share Price Index (COSPI) rose by 4.2 percent in March 2010 after two consecutive months of decline in January 2010 and February 2010. The rise was seen across all large, mid-and small- sized companies. While the index started off on a positive note, it fell marginally in the first half of March 2010, before notching up gains in the latter half of the month. The NSE Nifty also rose by 6.6 per cent in March 2010 and its average daily trading volumes increased by 11.2 per cent to US$ 2.92 billion (Rs. 13,631 crore) during the month.The largest gainer among the major CMIE sectoral indices in March 2010 was the CMIE castings & forgings index which rose by 14.6 per cent compared to the previous month.
  
  
• As per CMIE,March 2010 Nifty futures expired (on 25 March 2010) on a positive note with strong long roll-overs in Nifty April 2010 futures. A similar trend was witnessed in key stocks like Infosys Technologies, L&T, HDFC Bank, Bharati Airtel and Reliance Industries. Rollovers in derivative contracts require the open interest in the expiring series (near-month) to be transferred to the next month. The long roll-overs in future contracts indicate that the traders are bullish on the underlying index or stocks.
  
  
• Accordig to CMIE,Foreign Institutional Investor (FII) buying on the bourses surged during the month of March in 2010. They brought in US$ 4.03 billion (Rs.18,833.8 crore) after withdrawing US$ 0.24 billion (Rs.1,136.8 crore) in January 2010 and injecting a mere US$ 0.45 billion (Rs. 2,113.8 crore) in February 2010. Net investments in equities remained positive throughout the month.
  
  
• In March 2010, market regulator, the Securities & Exchange Board of India (SEBI) issued a circular to all mutual funds. According to the circular:
  
  
  • The present maximum limit of the new fund offer (NFO) period of 30 days in case of open ended schemes and 45 days of close ended schemes shall be reduced to 15 days (except ELSS schemes).
    
  • Mutual funds shall use the NFO proceeds only on or after the closure of the NFO period.
  • The mutual fund should allot units, refund money and dispatch statement of accounts within five business days from the closure of the NFO.
    
  • All the schemes (except ELSS) shall be available for ongoing repurchase, sale, trading within five business days of allotment.
    
  • Mutual funds have to compulsorily provide ASBA facility to the investors of all NFOs launched on or after 1 July 2010.
    
  • When units of an open-ended scheme are sold, and sale price is higher than the face value of the unit, part of the sale proceeds that represents unrealised gains shall be credited to a separate account (Unit Premium Reserve) and the same shall not be utilised for the determination of distributable surplus. Henceforth, mutual funds will pay dividends only from realise gains. Mutual funds oppose this move as they feel it will turn fund managers into traders. They will be forced to churn their portfolios regularly in order to pay dividends to their investors.
    
  • SEBI barred mutual funds from entering into any revenue sharing agreements with offshore funds for investments made on behalf of fund-of-fund schemes, which invest in other funds as this would create a conflict of interest. Any commission or brokerage received from the underlying fund shall be credited into the concerned scheme's account.
    

Money and Banking

• As per CMIE,the rate of growth in money supply is expected to improve in 2010-11 due to better economic growth, healthy deposit growth and higher capital inflows. The Country's economy is expected to expand by 9.2 per cent in 2010-11 compared to an estimated 7.1 per cent in 2009-10. Foreign exchange reserves are expected to increase by nearly USD 43 billion compared to nearly USD 26 billion in 2009-10. Deposit mobilisation is expected to improve to 20 per cent from around 18 per cent in 2009-10.
  
  
• According to CMIE, Scheduled commercial bank credit is expected to grow by 16 per cent in 2010-11. Banks are expected to disburse Rs. 5.2 lakh crore as credit during the year. This is much higher compared to the Rs 4.6 lakh crore estimated for 2009-10.
  
  
• CMIE expects higher credit offtake in 2010-11 on the back of a sustained growth in industrial production and substantial capacity expansion plans of corporate India. Industrial production is expected to grow by more than nine per cent for the second consecutive year. This will call for higher working capital credit requirements from companies. To enable this high production growth, corporate India will significantly expand capacities in 2010-11. Compared to estimated Rs 4 lakh crore worth of investment projects getting completed in 2009-10, we expect projects worth Rs.6.5 lakh crore to get completed in 2010-11. Credit growth would be even higher had it not been for the recent trend of corporates increasingly resorting to non-banking sources of funds.
  
  
• According to M V Nair, chairman and managing director of Union Bank of India and chairman of the Indian Banks Association, the general expectation is that the GDP will grow by 8.5 per cent and credit and deposit growth will hover in the range of 20-22 percent.
  
  
• Bank of Baroda expects bank credit to grow by 18-19 per cent in 2010-11. It recorded a growth of 25 per cent in its retail portfolio in 2009-10 and it expects the trend to continue. IDBI grew its home loan portfolio by 30 per cent in 2009-10. It expects the same to grow by 25 per cent in 2010-11. State Bank of India is expecting to grow its loan portfolio by 20 per cent in 2010-11.
  
  
• Indian Bank is expecting a credit growth of 20 per cent. ICICI Bank is expecting its advances to grow by 15 per cent in 2010-11. It expects its "home loans, car loans and project and working capital finance businesses" to together grow by 20-22 per cent.
  
  
• According to R Gopalan, secretary, financial services division of the ministry of finance, the Government set public sector banks a target of 20 per cent for credit and deposit growth for fiscal 2010-11. According to him, the government was of the view that the economy would grow at 8.5 per cent next fiscal and it would require a systemic credit growth of 20 per cent.
  
  
• According to CMIE,growth in deposits of scheduled commercial banks is expected to improve from 17 per cent in 2009-10 to at least 20 per cent in 2010-11. This growth will be primarily driven by higher overseas inflows. We expect overseas inflows to improve from an estimated US$ 16.09 billion (Rs. 75,135 crore) in 2009-10 to US$ 39.88 billion (Rs. 1,86,273 crore) in 2010-11 on the back of continuing strong foreign investment inflows and higher external commercial borrowings. On a net basis, foreign exchange reserves of the country are expected to grow by nearly US$ 43 billion in 2010-11.
  
  
• As per CMIE,Improvement in deposit rates, faster growth in money supply and much higher overseas inflows together are expected in an improvement in the rate of growth in deposits to 20 per cent in 2010-11 from 17 per cent in 2009-10.
  
  
• According to CMIE,demand for funds by corporates grew by about 34 per cent during 2009-10, funds supply by banks through non-food credit was higher by only 12 per cent. Non-bank sources of funds, on the other hand, rose by a whopping 72 per cent. As a result, corporates ended up sourcing 47 per cent of their funds or Rs. 4.1 lakh crore through non-bank sources in 2009-10 compared to 37 per cent in the preceding year.
  
  
• Resilient Indian banks have improved their brand value rapidly amidst global recession. There are 20 Indian banks in the Brand Finance® Global Banking 500, an annual international ranking by UK-based Brand Finance Plc, this year. The State Bank of India (SBI) became the first Indian bank to break into the world’s Top 50 list, according to the Brand Finance study that saw HSBC retain its top slot for the third year in a row. The number of Indian banks in the global list had more than tripled last year to 19 from six in 2007. Differentiation through strong brand and customer base value is becoming a key economic lever for Indian banks. This is as true in financial services as in consumer products. The study notes that global banking sector has begun to show tangible signs of recovery, with the world’s 500 most valuable banking groups growing by 62% in terms of market capitalisation and their brand values cumulatively increasing by 49%. “This year’s BrandFinance® Global Banking 500 shows how significant the recovery of global banking brands has been,” said David Haigh, CEO of Brand Finance plc. The total brand value of the Top 500 banks stands at $716 billion, up 49% over 2009 and 4% higher than in 2008, prior to the crisis.
  
  
• There has been a sharp increase in the use of IT in banking services. With the cellular user base expected to touch 600 million by 2010, the volume of pre-paid card recharging alone could exceed the US$ 4 billion mark. Bharti Airtel launched its mobile payment services in June 2008 and has already got one million registered users. “mCommerce will be one of the top three services offered over mobile in the future,” said an Airtel spokesperson. International remittance is another service that operators are piloting in India.“With the Reserve Bank of India’s new mobile payment guidelines, banks and merchants are fast adopting our open-platform to build a thriving eco-system and a compelling suite of services for consumers,” says Mr Sanjay Swamy, CEO of mChek, a mobile payment service provider.So far, 19 banks have obtained permission from the RBI to provide mobile payment facilities to their customers.
  
  
• JP Morgan Chase is set to enter the corporate banking space in India, offering a suite of services such as providing working capital, cash management solutions, foreign exchange and hedging tools. There will also be an element of retail operations, though liability-led, and financial inclusion.“A key initiative for JPMorgan in 2010 in India is the launch of global corporate banking as a part of the global launch of the same in high growth countries like China and Brazil. This initiative is driven by the bank's continuing dialogue with clients around the world who have expressed a desire for expanded global banking operations from us,” says Madhav Kalyan, chief executive officer, JPMorgan Chase Bank, and head of corporate banking operations in India.

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 stood at 266.9 (provisional) in May 2010 and registered a growth of 5.0% (provisional) compared to 3.2% registered in May 2009. During April-May 2010-11, six core industries registered a growth of 5.1% (provisional) as against 3.5% during the corresponding period of the previous year.

Crude Oil

Crude Oil production (weight of 4.17% in the IIP) registered a growth of 5.8% (provisional) in May 2010 compared to a growth rate of (-)4.3% in May 2009. The Crude Oil production registered a growth of 5.5 (provisional) during April-May 2010-11 compared to (-)3.7% during the same period of 2009-10.

Petroleum Refinery Products

Petroleum refinery production (weight of 2.00% in the IIP) registered a growth of 7.7% (provisional) in May 2010 compared to growth of (-)4.3% in May 2009. The Petroleum refinery production registered a growth of 6.5% (provisional) during April-May 2010-11 compared to (-)4.4% during the same period of 2009-10.

Coal

Coal production (weight of 3.2% in the IIP) registered a growth of (-)2.3% (provisional) in April 2010 compared to growth rate of 14.2% in April 2009. Coal production grew by 8.2% (provisional) during April-March 2009-10 compared to an increase of 8% during the same period of 2008-09.

Electricity

Electricity generation (weight of 10.17% in the IIP) registered a growth of 6.4 % (provisional) in May 2010 compared to a growth rate of 3.0% in May 2009. Electricity generation grew by 6.6% (provisional) during April-May 2010-11 compared to 4.8% during the same period of 2009-10.

Cement

Cement production (weight of 1.99% in the IIP) registered a growth of 8.6% (provisional) in May 2010 compared to 11.8% in May 2009. Cement Production grew by 8.7% (provisional) during April-May 2010-11 compared to an increase of 11.8% during the same period of 2009-10.

Finished (carbon) steel

Finished (carbon) Steel production (weight of 5.13% in the IIP) registered a growth of 2.5% (provisional) in May 2010 compared to 2.8% (estimated) in May 2009. Finished (carbon) Steel production grew by 3.6% (provisional) during April-May 2010-11 compared to an increase of 0.8% during the same period of 2009-10.

GENERAL STUDIES/ESSAY -2010

Corporate Social Responsibility

Indian companies are now expected to discharge their stakeholder responsibilities and societal obligations, along with their shareholder-wealth maximisation goal. Nearly all leading corporates in India are involved in corporate social responsibility (CSR) programmes in areas like education, health, livelihood creation, skill development, and empowerment of weaker sections of the society. Notable efforts have come from the Tata Group, Infosys, Bharti Enterprises, ITC Welcome group, Indian Oil Corporation among others. The 2010 list of Forbes Asia’s ‘48 Heroes of Philanthropy’ contains four Indians. The 2009 list also featured four Indians. India has been named among the top ten Asian countries paying increasing importance towards corporate social responsibility (CSR) disclosure norms. India was ranked fourth in the list, according to social enterprise CSR Asia's Asian Sustainability Ranking (ASR), released in October 2009. According to a study undertaken by an industry body in June 2009, which studied the CSR activities of 300 corporate houses, corporate India has spread its CSR activities across 20 states and Union territories, with Maharashtra gaining the most from them. About 36 per cent of the CSR activities are concentrated in the state, followed by about 12 per cent in Gujarat, 10 per cent in Delhi and 9 per cent in Tamil Nadu. The companies have on an aggregate, identified 26 different themes for their CSR initiatives. Of these 26 schemes, community welfare tops the list, followed by education, the environment, health, as well as rural development. Further, according to a study by financial paper, The Economic Times, donations by listed companies grew 8 per cent during the fiscal ended March 2009. The study of disclosures made by companies showed that 760 companies donated US$ 170 million in FY09, up from US$ 156 million in the year-ago period. As many as 108 companies donated over US$ 216,199, up 20 per cent over the previous year. Although corporate India is involved in CSR activities, the central government is working on a framework for quantifying the CSR initiatives of companies to promote them further. According to Minister for Corporate Affairs, Mr Salman Khurshid, one of the ways to attract companies towards CSR work is to develop a system of CSR credits, similar to the system of carbon credits which are given to companies for green initiatives. Moreover, in 2009, the government made it mandatory for all public sector oil companies to spend 2 per cent of their net profits on corporate social responsibility. Besides the private sector, the government is also ensuring that the public sector companies participate actively in CSR initiatives. The Department of Public Enterprises (DPE) has prepared guidelines for central public sector enterprises to take up important corporate social responsibility projects to be funded by 2-5 per cent of the company's net profits. As per the guidelines, companies with net profit of less than US$ 22.5 million will earmark 3-5 per cent of profit for CSR, companies with net profit of between US$ 22.5 million - US$ 112.5 million, will utilise 2-3 per cent for CSR activities and companies with net profit of over US$ 112.5 million will spend 0.5-2 per cent of net profits for CSR.

CSR Initiatives and Green Measures India Inc has joined hands to fine-tune all its activities falling under CSR. For this, it has set up a global platform to showcase all the work done by Indian firms. Confederation of Indian Industry (CII) and the TVS Group collaborated to form the CII-TVS Centre of Excellence for Responsive Corporate Citizenship in 2007. It provides consultancy services and technical assistance on social development and CSR. According to a National Geographic survey which studied 17,000 consumers in 17 countries, Indians are the most eco-friendly consumers in the world. India topped the Consumer Greendex, where consumers were asked about energy use and conservation, transportation choices, food sources, the relative use of green products versus traditional products, attitudes towards the environment and sustainability and knowledge of environmental issues. Reliance Industries and two Tata Group firms—Tata Motors and Tata Steel—are the country's most admired companies for their corporate social responsibility initiatives, according to a Nielsen survey released in May 2009. As part of its Corporate Service Corps (CSC) programme, IBM has joined hands with the Tribal Development Department of Gujarat for a development project aimed at upliftment of tribals in the Sasan area of Gir forest. The financial services sector is going green in a steady manner. With an eye on preserving energy, companies have started easing the carbon footprint in their offices. The year 2009 witnessed initiatives including application of renewable energy technologies, moving to paperless operations and recognition of environmental standards. Efforts by companies such as HSBC India, Max New York Life and Standard Chartered Bank have ensured that the green movement has kept its momentum by asking their customers to shift to e-statements and e-receipts. State-owned Navratna company, Coal India Ltd (CIL) will invest US$ 67.5 million in 2010-11 on social and environmental causes. Public sector aluminium company NALCO has contributed US$ 3.23 million for development work in Orissa's Koraput district as part of its Corporate Social Responsibility (CSR). India's Human Resource (HR) Over the last decade, India's vast manpower has played an instrumental role in its economic success story. Several corporate bigwigs are now thinking of ways of building the skill sets of their employees. Moreover, as the global economy recovers from recession and Indian companies expand in the US and European markets, India Inc is grooming global managers who can effortlessly connect with diverse geographies and fuel opportunities for growth. Indian companies are shifting their young managers abroad to handle diversity at an early stage and help create a reserve of globally competent people. The Tatas, Aditya Birla Group, Essar Group, Infosys and mid-cap firms like Glenmark Pharmaceuticals and S Kumars Nationwide (SKNL) are among companies that nurture global talent. Not only is India Inc grooming global managers, but companies from across the globe are scouting the country for quality talent to fill positions across geographies. India is fast gaining the distinction of becoming one of the world's largest talent incubators. Recruitment companies, such a s Europe, Africa, Asia-Pacific, Middle East and the rest of the South Asian Association for Regional Cooperation (SAARC) region are expected to import talent from India across profiles and domains, in significant numbers. According to industry estimates, close to 100 top level executive (CXO) positions and 30,000 middle- to junior-level hirings, across profiles and domains are expected during 2010, and these numbers are expected to go up in the coming years. A survey by global HR services firm, Hewitt Associates, released in March 2010, said that a majority of Indian companies, particularly those in infrastructure and energy sectors, were planning to hire in a big way this year. About 93.4 per cent of the firms surveyed were expected to hire this year. Firms in sectors like telecom, oil and gas and infrastructure were likely to recruit the most, across lateral and entry levels. As per a new survey by Manpower Inc, released in June 2010, India's job market is likely to return to pre-slowdown days in the third quarter of this fiscal. India’s hiring outlook is most optimistic among 36 nations, with a net employment outlook of 42 per cent. The hiring is expected to be strongest in the mining and construction industries, with 46 per cent of the respondents planning to recruit in the next quarter. Manufacturing too is set to recruit in a big way with about 44 per cent of employers indicating their plans to do so.