Indian Economy - News & Updates - Archive

[Contrarian]

LN Mittal, HPCL to bid for Nigerian refinery

NEW DELHI: When Lakshmi Niwas Mittal scripts a business plan, he takes the world as his stage. Currently penning his progress into oil kingdom, the steel king has set his sights on acquiring a 51% stake in the Port Harcourt refinery in Nigeria, where his joint venture with flagship explorer Oil and Natural Gas Corporation ONGC-Mittal Energy Ltd (OMEL) has two offshore exploration acreages.

Mittal is riding on his new-found bond with HPCL which is emerging as the preferred partner for getting into refining and gas business globally.

Mittal is becoming an equal partner in HPCL's Rs 16,000 crore Bhatinda refinery and will bring in $728 million for a 49% stake in the SPV for building the plant and laying a 1,100-km pipeline for wheeling crude from Mundra port.

"This will be the first 49% FDI in Indian refining industry and marks world investor confidence in the sector," petroleum secretary M S Srinivasan said on Tuesday.

Mittal is targetting his Nigerian refinery plan through a separate JV with HPCL. The emerging picture points to Mittal building up a portfolio across key oil industry segments. He has a vehicle for exploration in OMEL.

Separately, Mittal Investments has acquired Russian LUKOIL's 50% stake in an independent explorer with oilfields in Kazakhstan. Last week, OMEL joined the fray for Oman Oil's stake in Caspian Pipeline Consortium, a key western exit route for Kazakh oil.

A tie-up with HPCL brings refinery expertise and could open doors for Mittal's oil trading plans. This has been a sore point for Mittal as his second joint venture with ONGC, ONGC-Mittal Energy Services Ltd, has failed to take off due to lack of support from the state-owned partner.

"As a partner, Mittal could easily get into sourcing crude for the unit. That could be a possibility... why not if it is beneficial for the refinery... we are open to opportunitis when they arise. As of now, this (trading) is not on the agenda," HPCL's M B Lal told TOI.

If the partnership extends beyond Bhatinda to Vizag, it could also mean Mittal's entry in petrochemicals. Sanjay Dutta

 

[Contrarian]

Network congestion on the rise, says Trai

NEW DELHI: Frustrated about calls not going through? You are not the only one. It seems congestion in the networks is increasing rapidly, according to the telecom regulator Trai's analysis.

Sadly, Trai's powers on interconnection have become a matter of legal dispute, so there is very little that it can do, except put out reports and analysis.

Trai has been monitoring the level of congestion at points of interconnection (POIs) between various service providers on a monthly basis.

This parameter signifies the ease by which a customer of one network is able to communicate with a customer of another network. It also reflects the effectiveness of interconnection between two networks.

The benchmark notified by Trai in its Quality of Service (QoS) Regulation suggests that out of 200 calls between two operators, only one call should face the congestion problem.

 

[Contrarian]

Customs duty must for police

NEW DELHI: The finance ministry seems in an unrelenting mood when it comes to doing away with tax exemptions.

Ahead of the budget, it has issued an office memorandum making it clear that Central Police Organisations, like Border Security Force, Indo Tibetan Border Police and Central Reserve Police Force, and state police organisations have to cough up customs duty on import of all equipment, including those required for anti-subversion, anti-terrorism and intelligence work.

Only under exceptional circumstances, where the import of equipment for security considerations could not be planned earlier will the government provide an exemption from payment of customs duty, the note said. The same principle will hold true for other government departments, municipal bodies, public sector companies and autonomous bodies.

Equipment and material required for relief and rehabilitation work for flood, earthquakes or epidemics can be the only exception. But even here the unforeseen and exceptional circumstances "will be considered on merit".

"The aforesaid provision in the guidelines makes it abundantly clear that payment of customs duty cannot be viewed as a dispensable expenditure, and there should be no need to seek ad-hoc exemption from payment of customs duty on goods meant for normal functional requirements of the central police organisations, state police organisations and para-military forces," the revenue department circular said.

While advising them to plan their spending, the customs department has suggested that import duty should be built into the budgetary provisions.

The move is being seen as an offensive by the finance ministry and could be used by it for arguing against tax exemptions. While higher budgetary provisions would mean that the government spending rises by a small amount, the revenue department will be able to show higher collections.

 

[Contrarian]

Pune ordnance factory bags top national award

PUNE: Dehu Road Ordnance Factory(DROF) bagged the 'Best performing factory' for the year 2005-06 amongst 39 ordnance factories in India.

Defence minister A.K. Antony presented the award to R.M. Gupta, general manager, DROF.

Rao Indrajit Singh, minister of state for defence production, K.P. Singh, secretary defence production and Sudipta Ghosh, director-general, ordnance factories and chairman, ordnance factory board were present on the occasion.

There was 29 per cent increase in the value of production compared to previous year. It has made considerable improvement in savings of materials, reduction in cost of labour and consumption of power.

 

[Contrarian]

2,000 additional flights in March

NEW DELHI: Air traffic is all set to boom this summer, with south and west India poised for a 27% growth in flights. The country would get an additional 2,000 flights from March 26 onwards.

The number of weekly departures in south India will rise from the current figure of 2,938 to 3,734. West India would also witness a similar 27% increase with weekly departures rising from 2,534 flights to 3,219.

The northern region, with its fewer airports, would see a 14% rise as the number of weekly flights would rise from 2,132 to 2,433. North-East and the East is expected to have a 19% growth with the figure climbing to 1,129 from the current 1,034.

These figures were reeled out at the parliamentary consultative committee of civil aviation ministry meeting in Cochin that concluded on Saturday. The members raised a demand for faster development of infrastructure to meet the growing traffic.

Committee chairman and aviation minister Praful Patel said the ministry had suggested 100% FDI in sea plane so as to build connectivity and tourism along the long coastline of India and to provide connectivity and tourism opportunities to Islands.

Patel also said Air India Express would start its operation from Hyderabad in the later part of 2007 providing connectivity to the Gulf region.

"Air traffic during 2005-06 had undergone a massive increase over 2004-05: aircraft movements had gone up by 17%, passengers up by 24% and cargo up by 10%.

Across the airports of southern Indian itself, aircraft movements had gone up by 30%, passengers up by 33% and cargo up by 10%," said a statement issued by the ministry.

 

[Contrarian]

WB report is biased says town planning chief

MUMBAI: Rubbishing the World Bank (WB) recent report calling Mumbai a difficult place to do business, metropolitan commissioner, T Chandrasekhar of Mumbai Metropolitan Regional Development Authority (MMRDA) said the report was biased because the Maharashtra government did not comply with the World Bank's conditions for some of the projects.

"The report has been prepared by people who know nothing about the city. And it's biased because in the last few years, we have not been dealing with them (WB). We are not going to WB for any assistance. They want us to tow their line," retorted Chandrasekhar, believing WB had given high ratings to people (cities) who were more tuned to the Bank's thinking, perhaps.

In March last year, the World Bank had temporarily suspended the $150-million funding to the road and resettlement component of the Mumbai Urban Transport Project (MUTP). The process of payment had stopped as the Maharashtra Government did not obey the Bank on issues relating to the resettlement of the project-affected people.

Advantage Mumbai

The realtors agree with Chandrashekhar. "I disagree with the report in Toto," replied Anand Gupta, chairman, Builders Association of India, Mumbai centre.

Well known builder Niranjan Hiranandani, MD, Hiranandani Group reminded that the Tatas, Birlas and the Ambanis lived in Mumbai and so businesses will always be drawn to the city. And, with the city attracting businesses in such large volumes, one could never call it a 'bad' or difficult city to do business, said Hiranandani.

Hiranandani added, as he had not seen the report, he would not like to comment on it, specifically. He admitted that in recent times, other cities had shown a trend of a fast progress.

Poor infrastructure is a disadvantage, admits Hiranandani. "The chief minister of Maharashtra himself recognised this and steps are being taken to improve the infrastructure. The state of Maharashtra (or the city) is not a bad place to conduct or establish business. Still, if the report means that Mumbai may be a difficult place to start business then it's a signal for Maharashtra to grow faster with infrastructure, and they will do it," is his upbeat reply.

Anand Gupta tells off the report, as, by its own admission, it tracks only certain indicators or criteria (mostly to do with rules and regulations) but it does not measure actual implementation and reinforcement. "Moreover, it's not enough to say that we lack in infrastructure; the quality of infrastructure also matters."

According to Gupta, it may be true that in Mumbai it takes more days to register a new business but he says that the city is far more professional in its approach and people are responsible in terms of delivering the goods. The level of integrity in doing business is high here than in any other city. "I have dealt with government authorities all over India but I find it easier to transact with government departments in Mumbai than anywhere else in India. The crime rate in Mumbai is far lower and the law and order situation much better than any Patna (some call it the kidnapping capital of India) and Bhubaneswar," says Gupta.

Speaking in the city's defense Gupta adds, "Infrastructure in the city is not to the level of comfort but from the utility point of view, it's far ahead of any other city in India and even the world."

Chandrasekhar wonders aloud, "If Hyderabad was such a great city to do business than it would have been the financial capital of India instead of Mumbai. And the city's infrastructure was undergoing transformation," says the man who transformed Nagpur city and Thane and bringing them at par with high grade cities of India.

"When I compare Mumbai, I do not compare it with smaller cities in India. I compare it with developed countries and cities like Singapore, Shanghai. Yes when compared to those cities, it is lagging behind." says Chandrashekhar.

"How many people go to start a business in Patna? You have to see the volume of people starting a business. When you draw comparisons, draw it among equals," points out Chandrashekhar.

Disadvantages in Mumbai

All agree that at present, the disadvantage Mumbai has is the high cost of starting a business. Land prices, rents etc are high. In other states with less investment, an entrepreneur can start off with much ease.

"Yes, Mumbai has its disadvantages for a newcomer. Land is scarce hence it is costly. Labour cost is high and so is the standard of living. Getting an office space is an expensive affair here. But if you see places like Hong Kong (island city), it too is faced with a similar predicament. Starting business there is not a cakewalk," utters Chandrasekhar.

Mumbai is the business and financial capital of India

All the major financial institutions, banks and stock exchange are in Mumbai. This month, a top financial newspaper reported that Mumbai was to become the destination for Asia's first all-business class commercial air service and plans are afoot to introduce a daily business class service between Tokyo and Mumbai.

According to Press Information Bureau of Government of India, 2006 has been a year of record foreign direct investment (FDI) inflows with Delhi, Mumbai and Chennai regions leading in attracting FDI.

The World Bank report

World Bank released last week it's report on business friendliness, titled "Doing Business in South Asia." It ranked Mumbai 11th (ahead of Kolkata). Hyderabad, according to the report, was the easiest place to do business and small cities like Patna, Bhubaneswar, Jaipur, and Lucknow were far better than Mumbai.

Doing business became easier in India and Pakistan in 2005-2006, according to a new regional report released by the World Bank and its private sector arm, IFC. The report covers eight countries in the World Bank's South Asia region and examines 12 major cities in India, six in Pakistan, and four in Bangladesh. It ranked Mumbai 11th, only ahead of Kolkata.

The highlights of the report:

Within India, Hyderabad has the most business-friendly regulations. Mumbai is in 11th place, ahead of Kolkata.

Karachi is at the top in Pakistan, while Dhaka ranks best in Bangladesh.

Entrepreneurs in South Asia face large regulatory obstacles in doing business.

A standard company in India pays 81% of commercial profits in taxes

In Pakistan, it takes 560 hours per year to comply with all tax regulations.

The report explained why it was not uncommon for large business centers like Mumbai to score towards the lower end on the "ease of doing business" (the aggregate of the 10 Doing Business indicators).

The indicators or criteria set by the report were: Doing Business, getting licences, paying taxes, starting business, registering property, closing business, employing workers, enforcing contracts, protecting workers, getting credit.

Specific city-wise statistics on the amount of investments and business started is not easily available. But experts feel that the WB report cannot be definite, as it depends on the 'criteria' chosen by the bank to rank the cities.

 

[Contrarian]

Luxury customised, at a price of course

With a 65 per cent increase in the number of luxury travellers coming to the city, hotels are making sure that they meet international standards. If that means flowers from the Netherlands, wines from France and personalised services... so be it!

Gone are the days when Delhi was known as a backpackers' hub where only the budget traveller will stop to spend a few days before heading to Varanasi or Rajasthan. The well-heeled ones chose to embark at Mumbai where the hotels were "up to scratch".

And then the situation changed: The capital, in the last three years, saw a 65 per cent increase in the high-end tourists who are staying in the city. And to retain this flow, the hotels are making sure that they offer what these tourists are used to – the best of the best!

So, from Japanese ShiHatsu massage to Corona beer specially flown from Mexico to Indonesian and Ayurvedic spa treatment to a BMW 749 Li to ferry you from the hotel to any destination of your choice, the city hotels are ensuring that tourists get the same treatment here as they will in Paris or New York.

Industry insiders feel that with the Commonwealth Games approaching and Delhi hosting celebrities like Sean Connery and Angelina Jolie, nothing less than the international standards will do. Says Avnish Sood of Eros Group, "Nowadays, customised services are being offered to meet the demands of the high-end customers.

Regular services, even if they meet the five-star standards, don't have that personal touch. These are the people who want you to remember those little details when they are visiting."

And not only the foreign tourists, even Indian travellers want such standards. Says Vipul Gupta, director, The Metropolitan Hotel Nikko, "The number of the luxury travellers has tremendously increased over the years.

Corporate trips financed by companies, a buoyant economy and the desire to live life king size have come in like never before even for Indian travellers."


Considering these guests are ready to splurge, they want you to remember which cheese they prefer and whether they want a French or an American newspaper with their morning coffee.

"Earlier staying at a five-star hotel was enough. Now, customisation to suit each and every traveller's specific need is the buzzword," says Harshita Singh, manager, Corporate Communications, The Claridges.

To ensure that nothing is missed, the hotels refer to the last visit of the traveller to get the details. So then, if a four-fixtured bathroom with Italian tiling and a Jacuzzi is not enough to impress the guests, the hotel offers Ayurvedic toiletries with essential oil base.

Hotels also ensure that only female staff attends to female guests. Then, there are those little details ensuring that a person gets his/her favourite flowers in their room or that the room is absolutely sound-proof so that a person's sleep is not disturbed by any ambient noise.

Meanwhile, personal, round-the-clock butlers, chauffeur-driven Mercedes, a BMW fleet, and business lounges have become a part of every hotel's services.

All this luxury comes at an impressive price as well. The luxury suites can set you back by Rs 65,000 to Rs 85,000 on an average for a night.

At some of the hotels, the rates can go as high as Rs 1.5 lakh. Gupta quips, "With almost 85 per cent of our clientele comprising international guests, the costs are very reasonable and what's more, the guests love to splurge."

 

[Contrarian]

PM launches backward fund scheme in Assam

MANDIYA (ASSAM): Prime Minister Manmohan Singh on Monday launched the Rs 3750 crore country-wide Backward Region Grant Fund as part of Government's major initiatives to bridge regional disparities in development.

Launching the scheme here, Singh said, "250 districts are being taken up in the country under the BRGF with Rs 3750 crore provided to the fund for the year and each district given additional Rs 15 cr annually exclusively for developing its infrastructure."

"Today we are making a major beginning here, moving away from Central and state-level planning to districts and villages. The BRGF is a major initiative of the UPA government in ensuring that regional disparities in development are bridged and backward regions such as Barpeta in Assam catch up with the rest of the country", the Prime Minister said.

"Sixty years back, the Mahatma led us to freedom with the very simple weapon of ahimsa. Indeed, his approach was effective because it was based on a leap of faith - a belief that each individual, however humble his standing, craved for self-respect and freedom".

It is the same spirit that must guide us now", Singh pointed out. "We need to take that leap of faith once more and believe that all of us together can change the country. With the BRGF we have done precisely that by entrusting the prime responsibility of local development to those vitally affected by it, the people themselves", he said.

"In Assam we are taking up 11 districts -- Barpeta, Bongaigaon, Cachar, Goalpara, Hailakandi, Morigaon, Dhemaji, Karbi Anglong, Kokrajhar, North Cachar Hills, and North Lakhimpur", he added.

 

[Contrarian]

Know your candidate before you vote

DEHRADUN: Amid the hustle-bustle of electioneering in Uttarakhand, election watch groups are coming forward to tell the electorate about antecedents of all candidates -- good, bad and the ugly.

"Our aim is to make these voters aware of the true face of candidates," said Pawan Rana, a social activist associated with a watchdog group.

These activists have categorised candidates and parties in different groups on the basis of their background and other records.

According to an election watch report prepared by the Association for Democratic Reforms (ADR) and Experiments in Rural Advancements (ERA), nearly 149 of the total 806 candidates fighting in the Feb. 21 state assembly elections are post-graduates.

Of these, Congress (23) has fielded the maximum number of post-graduate candidates while BJP has fielded 19. These figures are now being circulated among the electorate through local media.

While BSP and Samajwadi Party have fielded maximum number of under-matriculate candidates (8), there are nine candidates who are completely illiterate, the report said.

The list of crorepatis in the state is also sizeable with as many as 40 candidates having assets worth more than Rs one crore. Congress leads the pack, having 21 per cent of such candidates followed by BSP with 8.57 per cent, NCP 7.69 per cent and BJP 5.71 per cent.

The main opposition BJP leads the group of candidates having criminal background.

Of the 59 candidates having pending criminal cases against them, 11 belong to BJP followed by Samajwadi Party with 7 and Congress with 6. These candidates face charges, including murder, rape and extortion.

In all, 560 candidates (nearly 70 per cent) did not furnish their Permanent Account Number (PAN) details.

Avdhash Kaushal, chairperson of RLEK, a social organisation which has also prepared a list of the most corrupt politicians and bureaucrats in the state, said that the Election Commission must take stringent steps to ban the entry of dons and mafia gangsters in the election arena.

Anil Joshi, who heads HESCO, a social organisation working in the state, warned the voters not to choose those candidates who are either corrupt or indulge in similar malpractices.

 

[Contrarian]

Mittal eyes Oman Oil assets

NEW DELHI: Lakshmi Mittal is stepping on the gas with his oil business in Kazakhstan. After acquiring Russain LUKOIL's 50% stake in an independent explorer in December for $980 million, the NRI steel tycoon is now keen on buying Oman Oil's assets in Central Asia's fastest-growing economy.

Mittal had bought into LUKOIL-owned Caspian Investments Resources through his Luxembourg-based group holding arm, Mittal Investments Sarl.

For acquiring Oman Oil assets, he is using ONGC-Mittal Energy Ltd (OMEL), one of his two joint ventures with India's flagship explorer Oil and Natural Gas Corporation.

While this venture is meant for acquiring oilfields across the globe, the other joint venture, ONGC-Mittal Energy Services Ltd (OMESL), aims at transporting and trading in oil and gas.

ONGC-Mittal has submitted a non-binding bid for acquiring Oman Oil's 7% stake in Caspian Pipeline Consortium (CPC) and equity held in undersea exploration acreages in the hydrocarbons-rich Caspian shelf.

The 990-mile CPC pipeline links reserves in western Kazakhstan to the Black Sea. It connects Tengiz and Arman fields in Kazakhstan with the Russian Black Sea port of Novorossiisk. There are also plans to use it for shipping crude from Karchaganak and Alibekmola fields.

The pipeline was completed in 2004 at an estimated investment of $2.6 billion with a capacity of carrying 565,000 barrels a day.

The capacity is to be expanded to 1.34 million barrels daily by 2015 at another investment of $4.2 billion. The other partners in the consortium are: Kazakhstan government (19%), Russian government (24%), ChevronTexaco (15%), LukArco (12.5%), Rosneft-Shell combine (7.5%), ExxonMobil (7.5%), ENI of Italy (2%), BG (2%), Kazakh Pipelines (1.75%), and Oryx of US (1.75%).

Though it is early days, success in Mittal's latest effort will mark his entry in the transportation service segment of the oil business.

This area has remained a dark spot in his oil foray as his services venture with ONGC has been languishing due to support from the Indian state-owned company.

Partnership in a key Central Asian oil transport route can be leveraged later for shipping and trading.

For Mittal, there is another advantage. His stake in Caspian Investments Resources already gives him some capacity in the CPC pipeline.

Caspian Investment is a partner in Kazakhoil-Aktobe which has transportation right to inject about 50,000 tonnes per month of oil from Alibekmola fields into the CPC pipeline at Atyrau pumping station for onward shipment.

Caspian Investments, formerly known as Nelson Resources, has stakes in the highly lucrative Alibekmola, Kozhasai, Zhambai, North Buzachi, Karakuduk and Arman fields and a stake in the CPC pipeline will ensure for Mittal a captive passage for oil from these fields.

ONGC-Mittal has bagged two blocks in Nigeria offshore, the latest hotspot for the world's explorers. It is also likely to get some of Mittal Investment Sarl's equity in Caspian Investments Resources once Mittal completes share-transfer formalities with LUKOIL.

The Kazakhstan government has also suggested that the 50% equity in the Satpayev field it is offering to India without auction be divided equally between ONGC-Mittal and ONGC Videsh, Oil and Natural Gas Corporation's overseas investment arm.

 

[Contrarian]

Tatas join realty rush with 4,500-cr fund

MUMBAI: Better late than never. Even as most of the big industrial houses have set up their realty funds to invest in India's hottest business - real estate, India's oldest and largest industrial house, the Tata group has now suddenly woken up to the opportunity. It has decided to throw in its hat in the ring with a staggering corpus of Rs 4500 crore.

Modelled on the lines of Kishore Biyani promoted Future group's Kshitij, which invests in real estate, Tata Realty & Infrastructure - a newly created company - will invest in infrastructure and real estate projects, a source familiar with the plan told TOI.

Bombay House, the group's headquarter is drawing out a blueprint for its new business. Unlike in the past, where the group was not too hot on the realty sector, the changed scenario is now ensuring that the group is betting big on this sector.

The Ambani brothers - Mukesh and Anil - also have interest in private equity funds. Recently, Morgan Stanley Real Estate fund invested approximately $152 million (Rs 675 crore) for a 10.75% stake in Oberoi Constructions, making it the largest deal in the brick and mortar space.

Tata Sons director RK Krishna Kumar is driving the initiative. Kumar has brought on board Dinesh Chandiok, the former CEO of Ansal Properties to head Tata Realty.

Apart from the Tatas, foreign investors too would be sponsors of the fund. There would be different fund schemes for different projects in phases, the source added.

International Consultancy firm KPMG has been involved in strategising the Tata's real estate business. Tata Realty would look at investing in housing complexes, special economic zones, construction of bridges, ports and airports.

It is not the first time Tatas are dabbling in real estate. Set up in 1984, THDC has put up several residential projects in Mumbai, Pune, Goa and Bangalore including the high-profile Petit Towers in Mumbai's upscale Kemp's Corner.

In the early 2000s, Tatas were looking to exit from the company and had held discussions with Shapoorji Pallonji group.

Things did not fructify and now, THDC has been given a fresh lease of life. It has set the target to achieve a turnover
of Rs 2,010 crore by 2010. It is currently developing housing and commercial projects in East, South and North India.

Like other developers, THDC would also join hands with other investors to achieve financial closure of these projects. The group is sitting on land assets worth crores of rupees in different parts of the country.

 

[Contrarian]

Indian-American 'solves' Einstein's twin paradox

HOUSTON: An Indian American professor of electrical and computer engineering at Louisiana State University has claimed to have solved Einstein's twin paradox.

First suggested by Albert Einstein more than 100 years ago, the paradox deals with the effects of time in the context of travel at near the speed of light.

Einstein originally used the example of two clocks, one motionless, one in transit. The paradox has been described using the analogy of twins: if one twin is placed on a spacecraft travelling near the speed of light while the other twin remains earthbound, the unmoved twin would have aged dramatically compared with his interstellar sibling.

"I solved the paradox by incorporating a new principle within the relativity framework that defines motion not in relation to individual objects, such as the two twins with respect to each other, but in relation to distant stars," said the scientist Subhask Kak.

His indings were published online in the International Journal of Theoretical Physics. He completed his PhD at the IIT, Delhi in 1970.

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Not strictly related to economics, but cool news nonetheless.

 

[Contrarian]

State's salary bill is Rs 7,800 cr

PATNA: The total number of government servants in Bihar in 2006-07 is 4.35 lakh. Their total salary bill is Rs 7,800 crore, more than one-third of Bihar's revenue expenditure.

Similarly, the expenditure on pension accounts for 13 per cent of total revenue receipts. The expenditure on salary and pension together accounts for nearly half of the revenue receipts.

Bihar's budget for 2006-07 was a milestone from the perspective of both development and welfare. First, there is a surplus of Rs 4,636 crore, in place of a deficit of Rs 909 crore in 2005-06, in the consolidated fund.

Tax revenue had been projected to increase by 8 per cent and fetch additional revenue of Rs 2,697 crore over the previous year.

These are some of the points contained in the first-ever economic survey of Bihar, prepared on the pattern of the Union government, to be presented during the ensuing budget session some time in the last week of February.

The economic survey in its voluminous report said: "For the state specific needs, the Twelfth Finance Commission (TFC) has granted a sum of Rs 400 crore to Bihar."

This grant is meant for seven heads, including urban development (Rs 180 crore), technical education (Rs 50 crore), establishment of administrative training institute (Rs 50 crore) and a few other activities.

This sum, according to the survey report, is not adequate to meet all the needs of a disadvantaged state like Bihar.

Bihar had a population of 83.0 million in 2001, which now stands at 90.2 million. Of its total population, 89.6 per cent live in rural areas making it the least urban state among all the major states in India.

Total flood-prone area in the state accounts for 73.06 per cent of its total geographical area and 17.2 per cent of the total flood-prone area in the country. Flood situation is more severe in the northern plains of Bihar.

A long-term solution to this problem can be achieved by constructing dams in upper catchment areas of the Kosi, the Gandak, the Bagmati and the Mahananda rivers, the survey report said.

Tubewells account for 63 per cent of total created irrigation capacity in the state. A very high dependence for irrigation on tubewells and operation of diesel turbwells due to lack of power infrastructure in the rural areas leads to a high cost and inefficient irrigation, it said.

On industry, it said that the overall industrial sector in the state is predominated by the unregistered units, which account for more than half of its rotal income. Bihar also suffers from the problem of a sizeable number of units falling sick.

As on December 2006, there were 259 large and medium units in the state, of which, 35 units were declared sick and 17 were to be closed, it said. Road has been accorded a high priority under the present government.

 

[Contrarian]

Centre must give special package: CM

PATNA: CM Nitish Kumar has said the Centre should take initiatives in the forthcoming Union Budget to show that it is working to fulfil its promise of giving a special package to Bihar.

"So far, the promise has remained just that, a promise. The Centre should make some announcement in Budget to show that it is keen to fulfil the promise of giving Bihar a special package," Nitish told newsmen here on Sunday.

He said spiralling prices of essential commodities and the various problems faced by the people are due to faulty policies of the UPA government. "The minor cut in petrol and diesel prices," he said, "will not bring much respite to the people," he said.

The CM said he expected that the Centre to formulate a Budget in which interest of every sections of the country will be taken care of.

Earlier, after laying foundation and inaugurating 504 schemes at the cost of Rs 197 crore at Barh, Nitish said the government will take a decision on making Barh a district after the completion of the delimitation work.

"To look after the problems of 'taal' areas a high-powered committee has already been constituted which is studying the situation and will submit its report," he said.

Nitish, who represented the Barh Lok Sabha seat five times, also distributed 710 acres of land among 1101 landless families belonging to Dalit and extremely backward castes.

He also offered prayer at the Surya Mandir at Pandarak. He claimed a positive change in the state during past 15 months has changed peoples' perception about Bihar outside the state.

"The traders had started fleeing from here. Now they are getting attracted towards Bihar. The World Bank, Asian Development Bank and JBIC of Japan are taking interest in the state and have assured their help.

In all, investment proposals worth Rs 27,000 crore by private sector have been approved, the CM said.

 

[Contrarian]

State budget all set to be presented today

HYDERABAD: The state cabinet will meet on Monday morning to endorse the budget proposals which would be presented to the state Assembly later during the day.

Chief minister Y S Rajasekhara Reddy will explain details of the budget targets and achievements in the current year.
According to official sources, the chief minister will explain how the government's "commitment and sincere efforts,"had resulted in growth in the state gross domestic produce (GDP).

The emphasis put on agriculture has resulted in improving the share of agriculture in GDP to 25.79 per cent and despite natural calamities like floods and drought, the state has achieved a record production of 169 lakh tons of foodgrains and 69 lakh acres of new ayacut has been added as a result of Jalayagnam programme, the source pointed out.

The chief minister will also highlight the higher allocations for welfare sectors in the 2007-08 budget. Reddy will reel out statistics about how the government had spent about Rs 700 crore more than the previous government on power sector in the last three years.

The TDP during 1999-2004 had spent Rs 3265.71 crore while the present government has spent Rs 3922.72 crore. Chief minister Rajasekhara Reddy is likely to explain about how the government had spent more than the previous government in other sectors such as rural development.

The chief minister would also apprise the state cabinet about his proposal to lay emphasis on better implementation of Indiramma programme, 25 paise interest on loan to self help groups, scholarships, distribution of pensions and other welfare activities during the district collectors' conference whish is scheduled to be held on February 24 and 25.