Indian Economy - News & Updates - Archive

[Bushroda]

Indian Railways posts record 6.3-billion-dollar surplus

NEW DELHI (AFP) — Giant state-run Indian Railways, once on track for bankruptcy, posted a record 6.3-billion-dollar surplus on Tuesday, announced new lines and cut fares in a populist budget with elections looming.

"The world today acknowledges I've done a tremendous job," said the wisecracking Railways Minister Lalu Prasad Yadav, presenting his fifth railway budget since the Congress-led coalition government took office in 2004.

The railway budget for the fiscal year to March 2009 is seen as a harbinger of the national budget, which comes on Friday and is the last expected to be presented before the next general elections due within 12 to 15 months.

The charismatic minister, known for his self-congratulatory style, said the railway would post a record cash surplus of 250 billion rupees or 6.3 billion dollars this year, up from a 4.4 billion dollar surplus the previous year.

The surplus, helped by higher freight traffic in a booming economy, came after experts warned in 2001 the Victorian-era railway was mired in a "terminal debt trap" and faced bankruptcy.

Yadav presented what the media dubbed a "please-all" budget with steps to boost freight operations, cut freight and passenger fares and improve services such as reservations and toilets -- both often an ordeal on Indian trains.

The budget contained planned record spending of 370 billion rupees (9.27 billion dollars), up 21 percent from the previous year, on new dedicated high density freight routes, network expansion, safety and other improvements.

Priority "has been given to modernisation," Yadav said. Easing transport bottlenecks are regarded as vital to spurring economic growth.

The fare cuts were seen as aimed at curbing inflation, running at a six-month high of 4.35 percent, that has hit hardest India's poor masses credited with giving the government its 2004 upset win.

"This is a good and strong, anti-inflationary measure," said Rajeev Chandrasekhar, president of the Federation of Indian Chambers of Commerce and Industry.

When the minister took over the railway, one of the world's largest which carries 18.5 million people daily, it was burdened with huge losses.

But Yadav transformed its finances by expanding freight capacity and building new lines, leasing out ad spaces, introducing competitive bidding and other innovations. It now is one of the public sector's best cash generators.

"If you do not milk the cow fully, it falls sick," Yadav, son of an illiterate cowherd, once said to explain the railways' transformation.

He compared Tuesday the "historic" turnaround of the railway, still India's main form of long-distance travel despite fierce competition from new private airlines, to the latest Bollywood hit movie "Chak De India" or "Go India."

"Every child in the country will now say 'Chak De Railway,'" Yadav told parliament. "We're scoring goal after goal."

Indian Railways forecast gross traffic earnings would grow by over 12 percent next year despite the fare cuts.

Yadav, head of the Rashtriya Janata Dal, the second biggest party in the coalition, is now invited by business schools to pass on his management tricks.

"The sapling we planted will grow into a mighty tree and bear fruit," said Yadav.

The railway's upturn has given an image makeover to Yadav, whose 15-year-rule of poverty-hit, crime-ridden eastern Bihar state was dubbed by critics as "jungle raj."

 

[Bushroda]

Medical tourists from around world flock to India
Julie Hutchinson
Rocky Mountain News, CO
Tuesday, February 26, 2008

Ryan McLean has been accepted for experimental therapy involving human embryonic stem cells at a clinic in Delhi, India, where the treatment is legal.

People with irreversible injuries can voluntarily undergo experimental treatment at clinics like the one where McLean will go this summer.

McLean applied to the Delhi clinic of Dr. Geeta Shroff after learning of the experience of 40-year-old Basalt resident Amanda Boxtel, who has lived in a wheelchair since a 1992 skiing accident at Snowmass left her a paraplegic.

On the Web site McLean established to help raise money for her trip to India, the Cherry Creek High School biology teacher describes Boxtel as a "mentor" who helped her following the 1997 car crash that left her paralyzed from the rib cage down.

Boxtel reports she is experiencing significant ongoing improvement, including increased bladder and muscle control, since she completed her second round of therapy at Shroff's Nutech Mediworld clinic early this year.

Boxtel traveled to Delhi for her first treatment in June 2007. If progress continues, Boxtel expects to undergo up to six more treatments over the next two years.

Boxtel said on her Web site that each regimen costs about $15,000, plus travel, meals and medicine, and requires rigorous daily physical therapy - a further expense.

In an article in The Aspen Times, Boxtel said she was one of the first Americans to visit Shroff's clinic last June.

The Indian Journal of Medical Ethics said the country's growing medical tourism market contributed more than $300 million to the economy in 2005. More than 1 million foreigners from 55 countries visited India for medical care in 2005. The Journal estimates visitors from the U.S. and United Kingdom represented the biggest increases.

 

[Bushroda]

India ’on the brink of property boom’
by Robert Carry
Asia Property Report, Thailand

Market analysts are predicting a seven fold growth in Indian real estate value – from US$12 billion to $90 billion by 2015 – in the wake of the government’s decision to implement a 100 per cent relaxation of foreign direct investment regulations last year.

Martin Bowen, UK Sales Director of Profile Europe (UK) Ltd said, “The residential property market is experiencing exponential growth right across India, but especially in urban areas and those close to the government’s new specialised industrial zones.

“Recent figures cited by the Bank of Baroda’s Chief Economist show properties have appreciated by as much as 60 per cent to 100 per cent over the last 12 months in most towns.”

The ratio of supply and demand is believed to be a key factor in the massive growth. Bowen continues, “There is a shortfall of some 20 million units, this is largely due to 55 per cent of India’s population being under 25 and the fact that the economy is booming and has resulted in a growing middle class, looking for quality accommodation because of growing disposable incomes.

“Add to this the growing mortgage market and declining interest rates which have made property more affordable despite actual property price increases.”

Profile Europe (UK) Ltd comes under the umbrella of the Profile Group, which was established in the UAE in early 2003 with interests in capital, investments, consulting, real estate developments, project management and real estate sales.

 

[Bushroda]

India’s ‘Model T’
By JAMES A. MCFADDEN
Harvard Crimson, MA
Monday, February 25, 2008 10:37 PM

The ownership of an automobile in the United States has become nothing short of a divine birthright. It’s a universally accepted fact: Americans love their cars and would sooner sacrifice their firstborn than relinquish their entitlement to the family sedan. And naturally, many have lambasted for years the environmental destruction brought upon by this auto-centric culture. Yet as the U.S. continues to look for a balance between going green and the American dream, India has found its place amidst the controversy with its new initiative, the Tata Corporation’s Nano, also known as the “world’s cheapest car.” Rather than criticize the environmental impact of this car, people around the world should praise these Indian innovators for their contribution to a developing economy.

The subcompact vehicle introduced last month costs $2,500 and Tata’s self-proclaimed goal is to make automotive transport accessible to every Indian family, calling it “The People’s Car.” Proponents laud the Nano as a giant egalitarian step for India that will help to break down class barriers and bring transport to the masses. Such praise has been drowned out, however, by critics who claim that the car will mark the beginning of the environmental apocalypse.

This argument is ridiculous considering that the United States overwhelmingly dominates global vehicle production and accounts for more than 20 percent of global gas consumption, although America accounts for only 4.6 percent of global population. It’s laughable that India should be criticized for attempting to enter the auto era as America’s love affair with cars enters its second century. The double standard of Western environmentalists smacks of a “do as I say, not as I do” attitude toward the Indian innovators. Not only should India’s government more actively facilitate such accessible transport, but also the rest of the world should applaud Tata’s step in a positive direction.

Economics professor Lawrence H. Summers has said that current levels of gross domestic product per capita in India—essentially, standards of living—are roughly equivalent to those in America pre-Civil War. As such, the closest automobile comparison to the Nano would be the Ford Model T. The Model T first rolled off the assembly line in 1908, its production reaching 15 million within 20 years. That is three times the rate at which Tata plans to introduce its no-frills vehicle. Furthermore, Model T fuel consumption averaged 15 miles per gallon—better than a Hummer—while the Nano can boast 50 miles per gallon. And when it comes to the bottom line, there’s no contest: the ‘affordable’ Model T ran the typical turn-of-the-century buyer under $20,000 in 2007 dollars, almost 10 times as much as the Nano costs.

This begs the question: if the Nano was being released in the U.S., would it be considered the same hazard to the environment? The champions of sustainability salivate at the thought of a Toyota Prius roaming the interstate highways, and yet the Nano has been dubbed an “eco-disaster.” Nobel Laureate and chairman of the United Nations Intergovernmental Panel on Climate Change Rajendra Pachauri goes so far as to say that the new Nano “is giving me nightmares,” and worries about the effects upon traffic and confusion on India’s roadways.

What Pachauri should be worried about is the improvement of infrastructure and bringing smarter technology to India’s masses, rather than simply avoiding the problem by posturing against the Nano. In a country with such a rapidly growing middle class, on the verge of becoming the world’s largest nation, the Nano is an exceptionally smart innovation. It is compact, it is safe, it is cheap, and above all it is more fuel efficient and produces fewer emissions than the vast majority of cars you’ll find on the Mass Pike or any other American expressway. In short, the development of India’s economy is more important right now than a relatively small environmental threat like the Nano. Tata has reached its goal in terms of supplying accessible and emissions-compliant transportation; the Indian government should now step up to the plate as well to implement strategies to increase the viability of accessible transport.

It is true that many Americans consider themselves incapable of living without the cherished automobile, and correspondingly, traffic and pollution in the U.S. has become a big problem. This, however, does not mean the same thing will happen in India as a result of cars like the Nano. Transportation regulation standards have traditionally lagged in India, which is something that should be a governmental, not entrepreneurial, concern. India deserves the right to be able to responsibly grow its automotive culture and learn from the western world’s mistakes. While the goal of improved mass transit and other alternatives should be actively pursued, it is not India’s sole responsibility to do so at the expense of convenient, low-cost, environmentally compliant transportation.

Tata has raised the bar. Compared to the more common forms of transport such as crowded buses and packed motorbikes, the Nano is like a dream come true to the average Indian traveler. Furthermore, this car is emissions-compliant and poses a small environmental threat, unlike the sport utility vehicles driven by soccer moms on Massachusetts Avenue. As such, it’s decidedly hypocritical and perhaps even ethnocentric for western environmental activists to lecture Indians against driving cars.

James A. McFadden ’10, a Crimson editorial editor, is a government concentrator in Mather House.

 

[Bushroda]

Indian cos raise millions in UK market
26 Feb 2008, 0847 hrs IST,PTI

LONDON: Indian companies raised hundreds of millions of pounds on London's Alternative Investment Market (AIM) during the last year, and more companies are expected to be listed this year.

Seymour Pierce, a leading brokerage firm that tracks Indian companies on AIM with its own index, said the Indian companies had grown from a market value of 250 million pounds to 3.3 billion pounds since January 2006.

The Seymour Pierce India Index comprises 22 Indian companies and funds. They are predominantly financial - almost half - followed by media and utility companies.

Two Indian companies that have performed particularly well are KSK Power Venture, which has developed power plants in India, and entertainment giant Eros International.

Nicholas Linington, an analyst at Seymour Pierce, wrote in a report last week: "There has been a steady addition of Indian companies listing on Aim in the last two years. We expect a greater number of small and medium-sized Indian companies to seek international investors as the economy opens up."

Seymour Pierce found that Indian companies on AIM had delivered 21 per cent absolute performance over the past year, compared with flat results for the rest of the market, according to the report quoted in The Independent.

 

[Bushroda]

New Bangalore airport exposes India's infrastructure challenge

BANGALORE, India (AFP) — In southern India the much-awaited Bangalore international airport is almost ready, but getting there could prove a nightmare for travellers facing more chaos on clogged roads.

The 630-million-dollar facility is 95 percent complete, and will open for flights as scheduled on March 30, Bangalore International Airport Ltd. (BIAL) chief executive officer Albert Brunner said.

Brunner has met his deadline to complete the airport, located 36 kilometres (22.5 miles) north of the choked city centre, in three years.

That feat alone is remarkable in a country where such large infrastructure projects routinely run into major delays.

But the government has not delivered on promises to widen access roads or build a dedicated rail link to and from the city -- meaning the commute could take much longer than a short-haul flight.

The railway is still only a proposal on paper, while a four-kilometre road from the nearest highway to the airport is still to be completed. The airport itself has taken over construction of the link in a bid to open it on time.

"It's a pity the government didn't do anything about connectivity to the airport," lamented Marcel Hungerbuehler, chief operations officer at BIAL, a consortium that includes Unique Zurich Airport, Siemens of Germany and Larsen and Toubro of India.

The Bangalore project well illustrates the problems India faces in fixing its creaky infrastructure to match an economy expanding at an annual rate of nine percent.

Growing personal incomes have fuelled a surge in air traffic and car sales, straining aviation and road infrastructure in a country that needs to invest tens of billions of dollars in public works.

Domestic air traffic is forecast to double to 60 million passengers by 2010 from last year, while car sales are projected to reach two million units from 1.4 million in the same period.

"BIAL has done its job," said Kapil Kaul, the India head of the Centre for Asia-Pacific Civil Aviation.

"The other stakeholders, mainly the state government, have almost totally ignored their responsibility of providing logistics.

"I find it shocking that an airport is ready, but there may be no way of getting there."

From Electronic City in south Bangalore -- the hub of India's information technology industry -- it could take a four-hour drive to reach the airport when it opens.

Flying time to the nearby southern city of Chennai is just 40 minutes.

"It will be a nightmare driving to the airport," said N. Reghuraj, the head of the local chapter of the Confederation of Indian Industry, who flies out of Bangalore's old airport twice a week.

"The passengers are not happy, the cargo guys are not happy."

India's traffic problem is particularly acute in Bangalore, and seemingly set to worsen. The city of six million people adds 1,000 vehicles to the roads a day and traffic crawls at an average speed of 13 kilometres an hour.

Bangalore also recorded growth of 38 percent in air traffic in the year to August 2007, the highest for any Indian city.

The new airport is one of several from Hyderabad to Mumbai and Delhi where old terminals are bursting at the seams, and had to be redesigned to handle 11 million passengers a year over earlier estimates of five million.

Under an agreement between the government and BIAL, the existing airport in east Bangalore, a modest 10 kilometres from the city centre, will be closed to commercial traffic when the new facility is open.

But calls to keep the old airport open are becoming louder as airlines and passengers prepare for a painful transition.

"People don't want to spend four hours on the roads commuting from the south to the north of Bangalore," said G.R. Gopinath, head of Deccan, India's biggest budget carrier.

"Multiple airports add competitive pressure for better pricing and better service quality -- there shouldn't be a monopoly."

Meanwhile, he plans to start a helicopter shuttle from the city to the new airport for passengers who can afford to cough up 4,000 rupees (100 dollars) for the ride.

 

[Neo]

Indian Railways posts record $6.3bn surplus ​

Wednesday, February 27, 2008

NEW DELHI: Giant state-run Indian Railways, once on track for bankruptcy, posted a record 6.3-billion-dollar surplus on Tuesday, announced new lines and cut fares in a populist budget with elections looming.

“The world today acknowledges I’ve done a tremendous job,” said the wisecracking Railways Minister Lalu Prasad Yadav, presenting his fifth railway budget since the Congress-led coalition government took office in 2004.

The railway budget for the fiscal year to March 2009 is seen as a harbinger of the national budget, which comes on Friday and is the last expected to be presented before the next general elections due within 12 to 15 months.

The charismatic minister, known for his self-congratulatory style, said the railway would post a record cash surplus of 250 billion rupees or 6.3 billion dollars this year, up from a 4.4 billion dollar surplus the previous year.

The surplus, helped by higher freight traffic in a booming economy, came after experts warned in 2001 the Victorian-era railway was mired in a “terminal debt trap” and faced bankruptcy. Yadav presented what the media dubbed a “please-all” budget with steps to boost freight operations, cut freight and passenger fares and improve services such as reservations and toilets, both often an ordeal on Indian trains.

Indian Railways posts record $6.3bn surplus

 

[Bushroda]

India still Asia's reluctant tiger
By Zareer Masani
Presenter, BBC Radio 4's Analysis

Bangalore's hi-tech enclaves are an oasis of excellence

With its economy growing at more than triple the speed of Britain's, India has become a global leader in information technology and other hi-tech products.

But how has this been possible in a country where poverty is so widespread and where more than a third of people are still illiterate?

In the words of Nobel laureate economist Amartya Sen, "the danger of India moving in the direction of being half California and half sub-Saharan Africa is a real one."

The contrast between hi-tech, silicon enclaves such as Bangalore and the primitive conditions of many Indian villages and urban slums strikes even the most casual tourist.

So is the dramatic rise of Indian IT firms just a Californian bubble in the sub-Saharan deserts of Indian poverty? Not according to Anand Mahindra, managing director of a family business, Mahindra and Mahindra, that has grown into one of India's largest conglomerates, producing everything from tractors to telecommunications.

"The IT sector was a kicker to growth," he says. "Its impact was psychological. It signalled to the world that India was much more than its old historical stereotypes.

"It suddenly in an exaggerated manner, if you ask me, made the world think that every Indian was smart and could fix their computers.

"But that helped entrepreneurs in India from all industry segments, because it gave them a more receptive environment in which to do business."

The number of Indian IT professionals has leapt from 56,000 in 1991 to a million today. That's still tiny relative to a population of over a billion, but a rare achievement in a global market where IT has traditionally been the preserve of advanced industrial economies.

Reliability costs

But how do hi-tech Indian companies survive and prosper in an environment where even basic infrastructure like transport, power and water is so notoriously unreliable?

Phiroz Vandrevala, executive director of Tata Consultancy Services, India's oldest and largest IT firm, says: "What we've actually done is within our own environments created global circles, oases of excellence.

"So if we build any facility, we create a 24-hour power back-up," he says,"or if you employ x number of people, you actually transport everybody from their home to their place of work."

"But it certainly is a cost to doing business."

While IT firms are cocooned within their oases of excellence, poor infrastructure can be a crippling cost for other sectors, such as large-scale manufacturing.

Anand Mahindra, whom many consider the sub-continent's most thoughtful businessman, warns that India cannot live by IT alone.

"Even Bill Gates when he came to India said, 'IT is not the answer for employment. You're going to have to emulate China and its manufacturing sector, because that's where the jobs are and that's where the multiplier effect is the highest,'" says Mr Mahindra.

"So it was a nice, sobering thought to come from the Messiah of IT himself.
"If you want to make a million Barbie dolls, this is not the place to come. Then you go to China. This is not a widget-making manufacturing economy, and that is largely and possibly only due to our poor infrastructure.

"We simply don't have the power in terms of energy to meet such high capacities. We don't have the port infrastructure and the transportation infrastructure to ship out such a high volume of goods in a reliable and timely manner."

Education, education

So instead of making widgets, Indian manufacturing is currently building on its comparative advantages in engineering-intensive goods, which require versatility, flexibility and innovation.

One example is carmaking, with domestic and foreign firms now investing an estimated $6.6bn in new Indian factories.

Manufacturing is the backbone of India's strong economic growth

But growth in these high-value sectors is also running up against a skills shortage fuelled by lack of what's called social infrastructure - primarily good education.

Although Indian universities churn out three million graduates a year, only 15% of them are suitable employees for blue-chip companies.
That's nowhere near enough for Phiroz Vandrevala of Tata Consultancy Services.

"We have a tremendous amount of availability, but the suitability quotient is slightly low. If you look at about a hundred engineers from different educational institutions, in a company like ours about 20% make the cut," says Mr Vandrevala.

"Every industry is going to have to make significant investments in training for their own skills."

Despite growing investment in education, India still lags way behind its Western competitors. Thirty-five per cent of its population is still illiterate; only 15% of Indian students reach high school, and just 7% graduate.

Change is messy

Privatisations, or at least public-private partnerships, are now widely seen as the way to open up essential infrastructure like education, transport, power and even water to competition and new investment.

But local delivery depends on the quality of local leadership and its willingness to cut back its own powers.

Indian democracy undoubtedly makes structural change a lot slower and more messy than in China, but there is genuine optimism among Indian economists that the system will eventually deliver.

"Our confidence in rapid growth is quite recent, because rapid growth itself is recent, and so for the state to gear up to provide the infrastructure that's appropriate for 8 to 9% growth is taking a while," says Suman Bery, head of a leading Delhi think-tank called the National Council for Advanced Economic Research.

"We're not one of these countries like France or China which does things in advance and pre-emptively. "The shoe has to pinch before we get round to it. "Infrastructure strikes me as an issue that will solve itself. It may hold growth back a little bit, but I don't think it's fatal."

 

[Bushroda]

School stake a passage to India while students go to Europe and US
Steve Coomber finds that despite closer ties, students will still travel to gain MBAs

Steve Coomber
The Times, UK
February 28, 2008

AN ECONOMIC superpower in the making, India is the world’s second most populous nation, home to 1.1 billion people, as well as emerging multi-national corporations such as Tata, Infosys and Wipro. With India’s star in the ascent it is no surprise that business schools in the US and Europe are forging links with one of Asia’s most promising success stories.

Tarun Ramadorai, lead academic on the India Business Centre initiative at Saïd Business School at Oxford University, says: “India is at a unique moment in its history, it has moved from an annual growth rate of 3 per cent to 9 per cent, and done so with a model led by services rather than manufacturing, using human rather than physical capital.”

Such success merits study, and Saïd recently announced it is establishing an India Business Centre. The intention is to learn from the country’s successes but also to study some of the challenges it faces, with research themes driven by issues relevant to business and management.

In turn the centre’s research will inform the MBA curriculum. Colin Mayer, dean of Saïd, says: “There is a great deal of interest in the Indian economy from our students. We will develop MBA electives based on the work of the India research centre. We also expect components of courses will be delivered in India, in association with institutions there.” Other schools are also focusing attention on India. For example, Judge Business School at Cambridge University is setting up the Cambridge Centre for Indian Business, while London Business School (LBS) has already opened its Aditya V. Birla India Centre.

MBA students wishing to experience the challenges of Indian business life as part of their studies should consider programmes at schools that have developed strategic partnerships with Indian business and management schools.

Essec Business School, near Paris, for example, recently celebrated the 25th year of its relationship with the Indian Institute of Management of Ahmedabad (IIM Ahmedabad).

Pierre Tapie, dean of Essec, says: “We were convinced that Indian students would be interested in gaining exposure to our education system, and our students would gain an advantage from having experience of India.” The school introduced MBA and PhD student exchange programmes, and invited visiting faculty. Tapie adds: “Gradually, we became more involved in Indian affairs, created a permanent office in India, appointed prominent Indian business figures to our advisory board, and created a double degree programme with IIM Ahmedabad.” Historically, many of India’s brightest students have travelled to Europe and North America to take an MBA. But, as India’s economic prowess grows, might this trend reverse, with international students coming to India to study for their MBA?

At present there are few signs of a permanent influx of international students. One of a wave of new business schools setting up in India, the Indian School of Business (ISB) in Hyderbad launched its first post graduate programme in 2001, with close support from three leading business schools – Wharton, Kellogg and LBS.

Rammohan Rao, dean of the Indian School of Business, says: “So far we have not been as successful as we should in attracting foreign students to India although a lot of exchange students come for a six to twelve-week period. But, as more schools set up, and educational quality improves, the number of foreign students wanting to come here may increase.” Nor is the trend for Indian students travelling abroad to take an MBA likely to change in the near future, says Anant Sundaram, faculty director of executive education at Tuck School of Business at Dartmouth College in America. He says: “There are only four or five world-class schools in India, but hundreds of thousands of high-quality applicants. As Indians become better off, they are more able to afford an education in top schools in the US and Europe. Also, in terms of the global career opportunities that top US and European schools can offer, Indian schools have a way to go.”

For the time being it seems that despite India’s tremendous economic success, and with business schools in North America and Europe strengthening ties with India, and businesses looking to enter Indian markets, many of the best Indian MBA students and business academics will continue to take a passage from India, heading in the opposite direction.

MORE INDIANS ARE RETURNING AFTER STUDYING ABROAD

ALTHOUGH the lure of business schools in Europe and the US remains strong for Indian students, says Siddharth Nambiar, 24, a full-time MBA student at Saïd Business School at Oxford University, the difference is that many of those students are returning to India after graduation.

With a first degree in business, and still in his early twenties, Nambiar launched what is today one of India’s leading business magazines. So why take an MBA?

He says: “After building an organisation employing about 250 people, I found it difficult to add value, My skill set tapered off. I needed a better understanding of the financial aspects of running a business to take it to the next level of investment.”

Nambiar decided not to apply to an Indian business school, though. “Beyond the top five or six business schools, the quality of education drops off dramatically and more than 100,000 students chase 1,250 places available at the leading Indian business schools.”

Then there is the salary factor. “Average starting salaries for Saïd MBAs are still a multiple of the salaries of MBAs from the top Indian schools, although the gap is reducing,” he says.

But while the trend is still to leave India and study abroad, postgraduates are more willing to return to pursue their careers.

“Getting an MBA overseas was seen as the ticket to getting a job and creating a better life overseas. But the recent growth has made it more possible for people like me to return to India,” says Nambiar.

“I would say 80 per cent of my Indian colleagues at Saïd are looking to go back to India in the next few years, to have their family and to work there. I will definitely return to India.” STEVE COOMBER

 

[Bushroda]

Chinese cos to pump in Rs 8,735 cr in Karnataka
28 Feb 2008, 0055 hrs IST,PTI

BANGALORE: Chinese conglomerate Xinxing group and China National Metal products, which have forged a joint venture with three Indian partners, on Wednesday announced an investment of Rs 8,735 crore to set up iron ore pellet plant in Karnataka in two phases.

The JV, Xindia Steels is being promoted by the Xinxing Group, China National Metals products, a part of China Minmetals Corp, along with Manasara Investments, Kelachandra Group and Sigma Minmet.

Under the JV, a two million tonne iron ore pellet plant will be set up at Koppal in the phase I and expanded to six million tonnes with the setting up of a five million tonne steel plant in the phase II, Liu Mingzhong, Chairman Xinxing group told reporters here.

The Indian partners hold 45 per cent stake in Xindia and the Chinese companies, 55 per cent.

The new facility would use Xinxing's leading edge elletization and steel making technology and be fully equipped with best-in-class safety, health and environment compliance systems.

The project is expected to provide direct and indirect jobs to over 16,000 people in the local community in both phases.

Mingzhong said the facility would meet the growing local demand of the Indian steel industry. Its design allows for additional capacity expansion to accommodate growth in future. The investment is in line with the company strategy to be an active contributor to the emerging Indian steel industry.

He said Indian infrastructure has seen rapid growth in recent years resulting from investments in all sectors of the economy.

"Our Indian team has demonstrated that Xinxing has the products and capability locally to bring these to the Indian market in a way that provides better value for customers." : Chinese conglomerate Xinxing group and China National Metal products, which have forged a joint venture with three Indian partners, on Wednesday announced an investment of Rs 8,735 crore to set up iron ore pellet plant in Karnataka in two phases.

The JV, Xindia Steels is being promoted by the Xinxing Group, China National Metals products, a part of China Minmetals Corp, along with Manasara Investments, Kelachandra Group and Sigma Minmet.

Under the JV, a two million tonne iron ore pellet plant will be set up at Koppal in the phase I and expanded to six million tonnes with the setting up of a five million tonne steel plant in the phase II, Liu Mingzhong, Chairman Xinxing group told reporters here.

The Indian partners hold 45 per cent stake in Xindia and the Chinese companies, 55 per cent.

The new facility would use Xinxing's leading edge elletization and steel making technology and be fully equipped with best-in-class safety, health and environment compliance systems.

The project is expected to provide direct and indirect jobs to over 16,000 people in the local community in both phases.

Mingzhong said the facility would meet the growing local demand of the Indian steel industry. Its design allows for additional capacity expansion to accommodate growth in future. The investment is in line with the company strategy to be an active contributor to the emerging Indian steel industry.

He said Indian infrastructure has seen rapid growth in recent years resulting from investments in all sectors of the economy.

"Our Indian team has demonstrated that Xinxing has the products and capability locally to bring these to the Indian market in a way that provides better value for customers."

 

[Bushroda]

Indian PC sales soar: survey

BANGALORE, India (AFP) — Indian computer sales jumped 20 percent last year, led by laptops, as falling prices prompted more consumers to log in and companies accelerated automation, a survey said Wednesday.

Personal computer sales rose to 6.5 million in the year ended December, from 5.4 million in 2006, according to the survey by the market-research firm IDC India.

Notebook PC sales surged to 1.8 million, from 980,000, as prices that fell below 20,000 rupees (500 dollars) made laptops the favoured choice of young first-time buyers.

"Notebooks are reaching out to more people because of the falling price point, portability and the power back-up option they offer," Piyush Pushkal, manager of PC Research at IDC India, said in an interview.

"Usage of computers in the education space is increasing," he said. "You can see young students carrying computers to college these days, which is a new trend."

An economy that has expanded at an average annual rate of 8.6 percent in the past four years has put more money in the pockets of urban Indian consumers, who are splurging on consumer durables including mobile phones and computers.

Businesses from large banks to small groceries are upgrading computer systems to cut costs and stay competitive while the government is contributing to PC sales by stepping up the automation of its departments.

The world's biggest business management software maker, Germany's SAP, said earlier this month that India is its fastest growing market after more than doubling customers to 3,000 in 2007, from 1,350 at the end of 2006.

"There is a lot of expansion happening in the information technology sector; banks are opening new branches and organised retail is coming up," Pushkal said. "That's because of the overall economic growth."

But to accelerate PC penetration, India needs more affordable Internet infrastructure, local applications and Indian language content, e-commerce and education, he added.

 

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India To Upgrade Rail Infrastructure With Public-private Partnership
RTT News
2/26/2008 10:26:29 PM

Indian Railways has drawn out a five-year expansion plan of 2.5 trillion rupees or US$63 billion for upgrading rail infrastructure.

Unveiling this year's railway budget, the Railways Minister Lalu Prasad Yadav told parliament on Tuesday, that the government will invite public-private partnership in most of its expansion works. These include projects to upgrade facilities at railway stations, rail equipment manufacturing, multi-modal logistics parks and running of container trains.

The Minister said that the feasibility study on the dedicated freight corridors, which were announced in the 2007-08 Railway Budget, will be expedited to facilitate their construction in 2008-09 fiscal.

According to the Minister, the dedicated freight corridors, will likely to reduce the pressure on about 20,000 km of the railways' high density network, coal and iron ore routes and port connectivity railway lines that have become saturated and have a capacity utilization is in excess of 100%. These routes carry 75% of the railway goods traffic, he said.

Indian Railways, running more than 14,000 trains a day, also plans commercial use of its vast land across the country to boost revenues, the Minister said.

 

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Engaging India: Farming focus
By Amy Yee, New Delhi correspondent
February 28 2008 01:09

Engaging India is an online column analysing the issues, trends and forces behind the business and politics shaping India and its impact on the world. Engaging India appears on Thursday mornings exclusively on FT.com India, a dedicated online section on India, and is written by Jo Johnson, the Financial Times’ South Asia bureau chief; Amy Yee, New Delhi correspondent; and Joe Leahy, Mumbai correspondent.

With its new budget on Friday, India’s current administration will have its last crack at pushing an agenda geared toward aam admi – the common man – in the critical run-up to general elections in 2009.

In general, finance minister Palaniappan Chidambaram has reason to be optimistic. Revenues from corporate taxes have swelled on the back of unprecedented growth and more effective tax systems. The savings rate is nearly 35 per cent of gross domestic product and the investment rate is more than 36 per cent of GDP. Foreign direct investment exceeded $20bn last year, a level unimaginable a few years ago.

Yet India also faces testing times for its economy including gathering clouds over the US. ”The reasons for fiscal caution lies ahead of us, not behind,” wrote Ajit Ranade, chief economist at Indian conglomerate Aditya Birla Group, in the Hindustan Times this week.

Growth for this fiscal year was expected to top 9 per cent, as in the previous two years. Recent projections, however, are that the pace will slow to 8.7 per cent this year with interest rates high and a rising rupee denting exports.

Mr Chidambaram has encouraged banks to lower interest rates to spur consumer spending. Yet India’s central bank has kept rates relatively high as it strives to check inflation in the face of soaring global food and commodity prices.

Taking a populist approach ahead of elections to appeal to the country’s voting masses, the new budget will likely feature measures such as a reduction in indirect taxes to soften the blow of rising expenses. The Congress-led United Progressive Alliance government is expected to continue spending heavily to strengthen India’s weak public education and healthcare systems.

But most prominent will be a big push to revive the flagging agriculture sector. An $8bn debt-relief package for farmers and other provisions for the rural sector are reportedly in the works.

Finally, a looming crisis in agriculture and food security is gaining urgency. India is waking to the consequences of neglecting agriculture for industrialisation.

”The challenge today is to recast agriculture in the new environment of globalisation, rising prices, growing domestic demand and greater private sector involvement,” said Isabel Guerrero, World Bank country director in India. ”But this will require greater investments to increase farmer yields and profitability and in rural infrastructure such as irrigation, roads, power and markets.”

Food grain production in India increased a paltry 0.9 per cent last year, according to statistics from India’s ministry of agriculture. Average rice yield of 2.9 metric tonnes per hectare barely exceeds that of Burma, and is far below the US’s 7.83 metric tonnes.

This reflects a steady deceleration in agriculture. India’s food grain output declined at an average rate of 0.1 per cent over the past five years, compared with 1.3 per cent growth in the five years ended March 2002 and 3.4 per cent in the five years ended March 1997, wrote Chetan Ahya, economist at Morgan Stanley, in a recent report.

Most worrying is that food demand in India is outpacing supply. India’s population of 1.1bn is growing at about 1.4 per cent. And on the back of unprecedented economic growth, middle-class Indians are eating more and better food.

On top of that, arable land is diminishing as Indian farmers sell land to property developers willing to pay sky-high prices.

To make up for the imbalance, India increased food imports 54 per cent year-on-year as of last September, said Morgan Stanley. This is a startling development considering the country once prided itself on self-sufficiency for staple foods.

The World Bank, after scaling back spending on agriculture in India in the 1980s and 1990s, recently pledged to refocus on the sector and has committed $2.6bn so far.

Manmohan Singh, prime minister, this month said about $8.75bn will be allocated over the next five years to two major agriculture programmes which, combined with complementary initiatives, could boost agricultural growth to 4 per cent in coming years, from around 2 per cent.

Yet while India has awakened to the importance of agriculture, reaping the fruits of investment – if implemented effectively – would take years.

Some also question the wisdom of the large debt relief package for farmers. Forgiving bad loans ”is only a feel-good factor,” said R.S. Seshadri, director of Tilda Riceland, India’s largest basmati rice producer. ”It’s great for election speeches but will not solve any problems.”

In the long run it would be better to let food prices rise for India’s growing middle class so farmers can earn more, suggests Mr Seshadri.

There may be a grain of truth in that, but you won’t hear it in tomorrow’s populist budget. Heading into an election, it would make the government decidedly unpopular.

 

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Official survey says Indian economy will keep growing, but calls for key reforms
International Herald Tribune, France
February 28, 2008

NEW DELHI: India's booming economy is likely to keep growing at a fast pace in the coming five years, the government said Thursday, but that poor infrastructure and outdated regulations will keep it from achieving an even higher rate of growth.

The economy is expected to grow by 8.7 percent this fiscal year, which ends March 31, slowing from 9.6 percent growth rate it achieved in the 2006-2007 fiscal year, its fastest expansion in nearly two decades, according to the government's annual Economic Survey, released Thursday.

The survey said it was forecasting a slowdown because of tighter monetary policy and a weakening global economy.

After presenting the survey — delivered to Parliament a day ahead of the annual budget presentation — Finance Minister P. Chidambaram told reporters he thought India's next fiscal year looked promising, despite slowing growth.

"I am optimistic about growth and containment of inflation in the coming year," he told lawmakers. "If you wish me to sum up in one phrase the outlook for next financial year, I would say 'optimism,' but with caution as the watchword."

The report called for allowing foreign companies to own 100 percent stakes in single-brand retailers, up from the 51 percent stakes that overseas owners are currently allowed to hold.

The move would not affect the likes of American's Wal-Mart Inc. or France's Carrefour SA, multi-brand retailers that are currently prohibited from opening their own stores by laws designed to protect India's millions of mom-and-pop shops.

Other suggested reforms included raising the foreign investment ceiling in insurance to 49 percent from 26 percent and opening coal mining to private companies.

The report said there was "heightened urgency" to upgrade the country's infrastructure, an investment that could top US$500 billion (€330 billion).

Chidambaram echoed the report in calling the curbing of inflation a high priority for the government.

"Given the high level of food, oil and other commodity prices in international markets, the risks to inflation remain," Chidambaram said. "Thus keeping inflation under control in an uncertain global environment will be one of the major challenges in 2008-09."

The survey said the inflation rate, measured by the wholesale price index, would likely be roughly 4.4 percent in the current fiscal year, lower than an average of 5.4 percent recorded in the previous fiscal year.

India has gradually opened its markets to foreign competition and capital since the country switched from a socialist-style economy in the early 1990s, and the country's economic growth has averaged about 9 percent a year over the past four years.

 

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Spend 6 percent of GDP on education - Economic Survey
February 28, 2008

New Delhi: India needs to double its spending on education to six percent of its gross domestic product (GDP) to make primary education universal, the Economic Survey 2007-08 said Thursday.

"It's imperative to give good quality elementary education to all children in the age group of 6 to 14 years," the survey said.

"Policies and programmes in this direction are also necessary for honouring country's commitment to... 'Education for All' as well as commitment under the National Common Minimum Programme (of the United Progressive Alliance government) for increasing public expenditure to 6 percent of GDP."

Praising government programmes in boosting secondary education, the survey said the number of secondary and higher secondary schools have increased from 7,416 in 1951 to 152,049 in 2005.

"Total enrolment in higher secondary has increased correspondingly from 1.5 million in 1951 to 37.1 million in 2005."

However, the survey said that with the rapid growth of the Indian economy, coupled with the need to improve quality of life and reduced poverty, skill development is essential in schools.

"It's essential that a student at the end of the secondary education acquires a level of knowledge and skills."

There has been significant growth in higher education during 2005-06. According to the University Grants Commission, enrolment in various courses was 11.34 million in 2005-06 as against 10.50 million the previous year.

Of the total, 4.58 million were women students (40.39 percent).

"With the increased demand for higher quality of education, training of teachers has become even more important and out of the box thinking is required to ensure adequate supply of quality teachers."

The survey has also lauded Sarva Shikha Abhiyan (SSA), saying 170,320 school buildings have been constructed under the programme till September 2007.

It added that SSA has done some good work in reducing school dropouts and improving learning conditions.

The programme aims to enable elementary schoolchildren to enrol in higher schools by 2010. IANS