Indian Economy - News & Updates - Archive

[Neo]

May 15, 2007
RBI buys $2.3bn in March

MUMBAI, May 14: India's central bank bought $2.3 billion in intervention in March, sharply lower than its record dollar purchases in February, the Reserve Bank of India's (RBI) monthly bulletin showed on Monday.

The rupee began a sharp rally around mid-March that took it to seven-year highs that month. It has since risen to a nine-year high of 40.53 per dollar last week, and on Monday it was trading around 41 per dollar, up about 8 percent this year.

The March intervention took the RBI's dollar purchases to $22 billion since the start of November 2006. It bought a record $11.9 billion in February alone to check the rupee's rise.

The rupee's gains have been powered by robust capital inflows, some of which the central bank had tried to absorb.

Foreign funds have bought nearly $3 billion of local equities this year, after pouring in nearly $8 billion in 2006.

However, when it sells the rupee to stem currency gains, it adds rupees to domestic money supply. That meant it was adding to money supply and stoking price pressures at the same time it was tightening policy to rein in credit growth and inflation.

Firm inflation data prompted the central bank to intervene less aggressively in March, analysts say.

The central bank is widely believed to have sold rupees less aggressively in April and May too, though traders remain wary of building large currency postions on fears of provoking intervention.

India's foreign exchange reserves were $204 billion on May 3, rising $26.8 billion in 2007, of which $9.4 billion had come since early March. Traders said a large part of this year's increase was due to the RBI's dollar purchases.

Before November last year, the RBI had not intervened since May 2006. In the fiscal year that ended on March 31, the central bought a total of $26.8 billion in intervention. — Reuters

http://www.dawn.com/2007/05/15/ebr22.htm

 

[Bushroda]

Deyaar and Ansal API sign MOU for joint development in India

Deyaar, the region's fastest growing real estate company, has announced its foray into the Indian property market in joint venture with Indian property major, Ansal API.

Both partners signed a Memorandum of Understanding (MoU) last week for an exclusive tie-up to develop a mega mixed-use township comprising residential, commercial, institutional and industrial properties in India. The partnership with the Indian property major envisages Deyaar bringing its international expertise to complement Ansal's established expertise in real estate development and rich knowledge of the local market and regulations.

Expressing his delight at entering a market as matured and fast-growing as India, H.E. Dr. Mohammed Khalfan Bin Kharbash, Chairman of Deyaar and UAE Minister of State of Finance and Industry, said that the move was reflective of the expanding economic friendship being forged between India and the UAE. 'The recent visit to India by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and the Ruler of Dubai, has set the pace for a new era in the relations between the two countries. This could not have come at a more opportune moment for Deyaar, which is currently looking for new and promising markets. I am sure the move will open a new and exciting chapter in the short, yet successful history of Deyaar,' he concluded.

Ansal Properties and Infrastructure Limited (APIL), promoted by the Delhi based Ansal-API Group, is one of the largest players in the Indian real estate market. With a track record of 40 years in the business and current market capitalization of over USD 1 billion, the Ansal group has real estate expertise that spans township development, office and residential projects, retail malls and IT parks. With a land bank of over 5,000 acres in northern India, Ansal Group is one of the largest land bank owners in India.

Elaborating on the decision, Zack Shahin, Chief Executive Officer, Deyaar, has stated that this partnership is the beginning of a series of projects across India. 'We are indeed happy to work with a seasoned and reputed real estate developer of the stature of Ansal API, which brings into this relationship its impeccable expertise spanning four decades. In turn, we will be able to take to India our unique experience and state of the art expertise in property development in the UAE, which is now the centre of a globally discussed real estate boom,' he explained.

Entering India is a decisive step in Deyaar's international expansion plans. The move assumes special significance in the backdrop of the phenomenal growth that Indian economy has achieved over the last few years, touching a whopping 9.2% in the financial year 2006-07.

Commenting on the joint venture, Pranav Ansal, Director - Ansal API, said 'We are delighted to have a successful partner like Deyaar which brings its world class expertise of design capabilities , construction technology and financial & management resources in building residential and commercial space to India. Deyaar's projects in UAE and elsewhere are not only impressive, but also reflective of a wise approach to architecture, building dynamics and the idea of space. We welcome Deyaar to India, through what we strongly believe will be a landmark partnership and act as catalyst to growth and development in India.'

Coming close on the heels of India turning a trillion dollar economy and the latest McKinsey Global Institute study predicting that the current rate of growth will inflate incomes in the country by almost three times over the next two decades, Deyaar's decision to enter India reflects a close assessment of the Indian economy and the property market. The Indian real estate industry has reportedly witnessed a growth rate of over 30% in 2006, and has an existing demand-supply gap of over 24 million units, prompting key players from across the globe to invest in the country.

 

[Bushroda]

India’s new Entrepreneurs

Agra is a befitting illustration of how second-rung cities are enjoying the benefit of India’s 8%-plus growth of the last four years

By Pragya Singh

Nearly five centuries ago, Agra was the commercial nerve centre of a flourishing Mughal empire. Thanks to the monuments that were built by the kings and emperors, including the Taj Mahal, this Uttar Pradesh city was just little more than a tourist stopover.

But, almost unnoticed, Agra has come to illustrate another economic revolution. It has, despite its dilapidated state and creaking civic infrastructure, become a hub of new opportunities in the service sector. Such has been the impact of these opportunities that, by the end of 2004 until when data is available, more than six of 10 people here, are now self-employed, up from just five years earlier.

Agra is only symptomatic of a new breed of second-rung Indian cities, beyond the metros of Delhi, Mumbai, Chennai, Bangalore and Kolkata, that have begun to savour benefits of India’s 8%-plus economic growth of the last four years.

A comprehensive government survey, conducted every five years, puts Agra right behind Varanasi as the city with the most self-employed, followed by Bhopal, Indore and Patna. A few years back, Agra was not in this picture with Varanasi, Patna, Pune, Lucknow and Kolkata among the top five cities in terms of self-employed males.

As a result, apart from the 40% of population that depends largely on agriculture, and some who still rely on the traditional leather and footwear business and iron foundries, most people in Agra now work in new professions as “self-employed” persons.

According to the National Sample Survey Organization, in 1999-2000, 431 of every 1,000 employed males were self-employed in the city. This has climbed to 603 per 1,000 in 2004-05. Nationally, the number of self-employed persons has also grown, but from 368 to 395 per 1,000, nowhere close to the trend in Agra and a host of similar cities.

New whizz-kids

Chalk it up to people such as 21-year-old Yatendra Singh. When he graduated from the local university in 2005, he never imagined that in little under three years he would be co-owner of two Internet cafés. “The Internet had started taking off in Agra. I would have survived otherwise, but maybe not run an independent business,” he says.

The Internet boom came a little later to Agra than Delhi or Mumbai, but is now within arm’s distance of Singh’s small basement set-up on the Bodhla-Sawan road, as you enter Agra from Sikandra. It marks the spot where Mughal emperor Akbar lies buried. The area around has been developed afresh to meet demand for housing. “At least eight cyber cafés, big or small, have sprung up since 2004 in this area,” Singh points out. So have dyers and dry cleaners, public telephone call providers, real-estate brokers, and courier-delivery shops, all cheek-by-jowl around busy old streets, crammed with scooters and cycle rickshaws.

Part of the reason why Agra has moved to self-employment seems to be its improved connectivity with neighbouring states and Delhi. A new expressway to link it with Noida, near Delhi, is in the works, while the city government is firming its pitch for a metro rail system. It also has the distinction of being one of the only five cities in a very large state, other than Varanasi, Meerut, Lucknow and Kanpur. All these attributes seem to make Agra the ideal hub for services, despite its low industrial activity. Singh’s older brother Krapal, for instance, is now juggling time between Agra and Noida, a five-hour drive away, setting up their family’s second 15-seat cyber café in Electronics City.

Growing needs

Meanwhile, the UP government projects the population of Agra city will grow 3.84% every year, to touch 2.04 million in 10 years and 2.7 million by 2031.

This, for the state administration, can only mean that the cyber cafés, couriers, call booths, hotels, education centres and real-estate dealers will keep snowballing.

“We are growing very fast and the city is changing. The only way to accommodate these changes is to find new ways of employment, by bringing in investment and modernizing the city,” says Ashok Kumar, commissioner, Agra.

As commissioner, Kumar is the top administrator of Agra, responsible for its planned development and monitoring government schemes. “A sizable chunk of self-employment now comes from professions that either did not exist a decade back or were minuscule,” he says.
The rise in self-employment is evident across the country, though analysts differ in what that means. Arvind Virmani, principal economic adviser with the Planning Commission, the top planning agency for the country, says the move towards self-employment suggests one part of the eventual transition of labour from unskilled jobs in agriculture to skilled jobs in manufacturing.

Self-employment is the usual route for labour as it moves up the value chain from agriculture to industry, Virmani wrote in a 2006 working paper on employment and equitable growth for the Commission. “Whether the final shift to higher-skill jobs in manufacturing actually happens in India depends on other factors – such as skill development and labour laws being more rational, to encourage employment by industry,” he says.

But Arjun Sengupta, a member of Parliament and former member-secretary, Planning Commission, sees in the trend towards self-employment the declining fortunes in farms made worse by laggard industrial activity.

“This needs attention—we must encourage industrial activity and boost agriculture productivity to stimulate higher-paying jobs which have decent conditions,” he says.
Opportunities galore

Analysts say that the rise in self-employment shows a shift in the way the Indian economy now functions. “The rise in self-employment goes to show that people are finding work outside traditional sectors,” said Duncan Campbell, director, policy integration department with the International Labour Organization.

New opportunities have meant that many have been able to affect a career shift that they would not have foreseen.

Take Rajendar Yadav, at 25, he’s already a veteran of the city’s traditional industry: footwear. In 2002-03, when footwear-related exports from the city touched $350 million (Rs1,435 crore), Yadav decided to leave his decent-paying job as production in-charge at Superhouse, a footwear exporter.

By 2005, he had settled into a new role as freelance “indenting” agent for shoe and accessory makers within Agra and in Delhi, Noida and Chennai. A newly minted entrepreneur, he now purchases machinery that makes leather footwear and deals in sundry items such as decorative beads, for five regular clients.

“What is the point if I have to keep working for others while every business sector booms in the city?” Yadav said at his office, a sparsely furnished room on the roof of his two-storey house in Awas Vikas, a new colony being developed by the Agra Development Authority since 1999. Most of his work seems to be conducted over his mobile phone.

Yadav is representative of the shifting employment pattern that is unveiling across cities in India. The Survey data reflects this trend in 29 Class I cities, with population of more than one million, including Howrah in the east to Kalyan-Dombivili in the west and Hyderabad in the south to Ludhiana in the north.

The cyber-café owner and the indenting agent for leather components constitute the top end of the self-employed: they are also employers. The single-largest share of self-employed in the country, however, are what are called home-based workers, who work for themselves, or produce for a contractor/sub-contractor, who is himself part of a long value chain. There are, according to survey figures for 1999-2000, some 29 million families dependent on such industrial outwork. While many of them are women, Agra today has the second-largest proportion of self-employed males in India, after Varanasi, where 757 of 1,000 employed males were self-employed in 2004-05.

Turning point

For Agra, the turning point came when a slew of industries had to be shut down on fears that pollution from these units was damaging the marble exterior of the Taj Mahal. Following a Supreme Court order over a decade ago, the foundry and leather businesses here went through a series of ups and downs.

While some 750 foundries could move to Foundry Nagar after a shift to compressed natural gas, a less polluting fuel, to survive; others engaged in leather tanning, for instance, quite simply shut down.

Former workers of these industries are among those who have moved over time to self-employment. Agra’s foundries are perhaps the best example of this shift. Started 400 years ago by Mughal emperor Akbar to supply weapons and other metalwork to his kingdom, Agra’s foundries became the biggest arms suppliers to the nearby princely states as well.

When closures came, a stunning five lakh workers ended up without jobs, some for the rest of their lives. Parts of the city are still dotted with foundries with their shutters down or locked up.

“For those five lakh workers, self-employment is a necessity than a sign of growth in the local economy,” said Raj Babbar, the member of Parliament from Agra. “We must ensure that traditional skills such as zari embroidery, carpet weaving and marble inlay do not die out.

These are the only way to create new growth. Otherwise, I fear, this city will decline without its big industries or crafts.”

However, trades such as zari embroidery and carpet weaving rely heavily upon homeworkers—who essentially produce at home to work orders provided by contractors.

“Most such work is carried out at very low piece rates (not daily wages), and comes with no social protection whatsoever,” says Santosh Mehrotra, a senior consultant with the Planning Commission and author of a recently published book, Asian Informal Workers. He says it is also important to make the distinction between self-employed workers and self-employed employers very clear, since fortunes tend to vary between the two kinds.

“In urban areas, the self-employed employers are less likely to be poor and also likely to be less poor or live below the poverty line,” says Mehrotra. “This is because they are usually involved in activities where production is directly for sale, such as in crafts or manufacturing.”

Agra has some 10,500 small industries, which employ more than 50,000 workers. Some 7,200 units are in the tiny industry segment and employ more people. “There has been a burst in self-employment after the polluting industries were shut down because of services and trading jobs,” said Sanjay Gupta, who headed the Confederation of Indian Industry in western UP till 2006.

New roles

Sonu Sharma, who was a general handyman with the Agra Development Authority, now runs a public call office (PCO) booth in New Market, a crowded business district of Agra, from a tiny shop he owns next to a busy temple.

“My income has gone up to Rs3,000-4,000 a month now. I used to make half this amount earlier,” said Sharma, whose PCO shop has two phones. Billing machine included, Sharma paid Rs5,000 to start the venture.

“We started running PCOs in western UP in December 2005 and already have 30,000 PCOs there. Agra is the biggest and fastest-growing market in UP, along with Meerut and we have more than 3,000 there,” says a Bharti Airtel Ltd official. Meanwhile, stiff competition between phone companies is replicating what happened in Delhi or Mumbai with a variety of mobile products and services jostling for customers.

Pankaj Timori has been selling mobile phones since 2005 from his tiny corner shop in the local Heeng Ki Mandi. The area, claim locals, is Asia’s biggest market for raw material for footwear, if just 50% transactions conducted off-the-books are considered.

Timori has hit upon a unique way to beat his family business’ biggest woe: selling paints. Their original family trade required a lot more space to display and store the wares. “There wasn’t enough room in our small shop and no room to expand. Considering that, selling phones is proving more profitable,” he said.

It isn’t just stores or retail offerings. Agra has also begun to breed services entrepreneurs such as Kapil Jain, an engineer by training, who set up his event management and wedding-planning business in 2002. His bread-and-butter work comes from non-resident Indians (NRIs) or foreigners who want to marry in the city of the Taj Mahal.

“Agra is not ready for wedding planners or event managers yet, but foreigners do want to marry here because the Taj Mahal provides them an ultimate setting,” Jain said.
He generally gets two-four NRI weddings a season, but with a tour and travel and event management businesses thrown in, he more than takes care of the bills.

Jain’s small office, from the roof of which the Taj Mahal can be spotted at a distance, is as modern as any in Delhi. He has 10 employees including two women. Some 789 of every 1,000 employed women in Agra, up from 462 in 1999-2000, are self-employed, more than anywhere else in the country, except for Varanasi and Jaipur. Overall, in Class I cities, the proportion of women who depend on self-employment has gone up from 352 per 1,000 employed in 1999-2000 to 382 in 2004-05.

Women such as Pragya Mittal, a 25-year-old post-graduate in History from Agra College who decided to become a tourist guide, one of the 130 guides approved by the government to operate in the city. While Pragya still dreams of joining the Indian Administrative Services, she isn’t keen to go to the usual fall-back option, teaching.

“This is an independent and well-paying profession and I would rather stick with it than study more or work elsewhere,” she says. For good reason. More than 20,000 people visit the Taj every month giving a steady flow of business to the guides though there are hundreds of other local residents who also try to piggyback as unapproved guides.

There is a downside to the lack of big industry and large scale job creation ventures as well. Agra is dotted with a large number of tuition centres. Sanjay Rawat, who runs an academy to coach some 100 youngsters on how to make it through a range of competitive entrance tests.

“I can’t be sure, but at least 80% of the students who make it through a test will not return to Agra,” says Rawat. “There is a premium on education in Agra because the opportunities are largely outside.”

 

[Bushroda]

Iraq to push for Indian refineries during visit by minister
Published: Tuesday, 15 May, 2007, 08:50 AM Doha Time

NEW DELHI: Iraq will press Indian firms to set up refineries there during a four-day visit to India by Oil Minister Hussain al-Shahristani later this month, an Iraqi official said yesterday.

“We will invite India to establish refineries in Iraq ... the capacity of our refineries is very limited,” said Muayad Hussain, Iraq’s charge d’affaires in India.

Shahristani is due in India from May 24-27.

Iraq has a refining capacity of 603,000 bpd. It produces 477,000 bpd of refined products and consumption stands at 514,000 bpd, according to the Opec website.

During a visit to the Saudi capital Riyadh earlier this month, Indian Oil Minister Murli Deora met Shahristani. The participation of Indian state explorer Oil and Natural Gas Corp and other firms in Iraq’s oil sector was raised.

The Iraqi minister invited Indian Oil Corp and Engineers India Ltd to consider entering the downstream sector.

Hussain said in New Delhi that the exploration of the Tuba oil field in southern Iraq could also feature in talks between the two countries.

ONGC, India’s Reliance Industries Ltd and Algeria’s Sonatrach tried in 2000 to secure Tuba.
Iraq is expected to enact an oil law by May-end that would allow its various regions to negotiate oilfield contracts with foreign investors.

Baghdad desperately needs foreign investment to revive its shattered economy, which relies heavily on oil export revenues. The country straddles the world’s third largest oil reserves.
The law, which parliament could pass by the end of this month, has been threatened by Kurds in the north who say they are not getting their fair share.

Decades of war, sanctions, under-investment and now widespread violence and sabotage have left it critically short of fuel. It has to import nearly half of all its gasoline.

Iraq has eight refineries, none of which were damaged during the US-led invasion in 2003. Oil officials say that Iraq’s refineries are operating at only 50%-75% of capacity, forcing Baghdad to import most of its fuel. – Reuters

 

[Bushroda]

A leader in medical tourism, almost

Anjali Doshi and BR Srikanth
October 18, 2006

After living with pain for nearly 15 years, Russell Cole, 62, travelled from California to Mumbai last November to have three joints operated — knees and right hip — at the L H Hiranandani Hospital. Cole, who suffered from severe arthritis, paid Rs 6 lakh for the surgeries that would have cost him over Rs 25 lakh in the States.

Three weeks later, he was back on his feet and on the way home. “I would definitely recommend India to my friends who have been putting off orthopaedic surgeries for years because they can’t afford it,” Cole said.

George Marshal, a retired policeman, underwent an angiography in the UK. But when he was put on an eight-month waiting list for surgery, Marshal decided to get his operation done at Wockhardt Hospital, Bangalore. The operation was conducted last year and he is doing well.

In 2005, an estimated 1,75,000 patients travelled to India for medical care. Thailand and Singapore are other popular medical tourism haunts.

“That number is growing by 30-35 per cent every year,” says Vishal Bali, CEO, Wockhardt Group of Hospitals. Wockhardt gets roughly 900 overseas patients every year at its Mumbai and Bangalore facilities.

Mumbai, Delhi, Bangalore and Chennai, in that order, are the major hubs for standard surgical procedures, comprising about 70 per cent of the total medical tourism revenue. South India, Kerala in particular, gets top billing among those looking for alternative therapies, such as Ayurveda, that make up the rest of the revenue pie.

From an excruciatingly long wait for diagnostic and surgical procedures in some countries to skyrocketing medical costs elsewhere, the reasons why India is attracting overseas patients in the thousands are many.

Americans come here because of mounting medical costs and high insurance premiums back home. In 2005, 46.6 million Americans had no medical insurance and 120 million were without dental insurance, according to the Census Bureau.

Patients from Southeast Asia, Sri Lanka, Pakistan and Bangladesh are other countries that favour India due to cost-effective treatment in state-of-the-art hospitals.

The demand-supply gap is the reason many Canadians and British seek medicare in India. The UK’s National Health Service and Health Canada provide medical care at highly subsidised rates but it often takes upto six months just to get an MRI scan.

It also helps that the costs here are one-fifth, sometimes even one-tenth, of the expenses incurred in the US and UK. A heart surgery that costs about Rs 14,00,000 in the US will take about Rs 2,50,000 in India. The most sought-after procedures are cardiac, orthopaedic, spinal, cosmetic and dental surgeries.

Many Indian hospitals like the Asian Heart Institute, Mumbai, have applied for the Joint Commission International (JCI) accreditation — a gold standard in global healthcare standards. Only five hospitals, including Wockhardt in Mumbai and Apollo in Delhi, have JCI accreditation.

According to a 2004 CII report, India has the potential to attract a million tourists every year that would contribute roughly Rs 23,000 crore to the Indian economy.

But while India strives to emulate the success of Thailand and Singapore, there are a number of drawbacks to consider: overall hygiene levels in India, poor infrastructure at airports and a bureaucratic approach to issuing visas.

As till the time these issues are addressed, we remain a few steps away from being the leader in medical tourism.

 

[Bushroda]

India's Solar Power
GREENING INDIA'S FUTURE ENERGY DEMAND



Editor's Note: Using sunlight to create electrical and thermal energy remains the most promising source of clean renewable energy, and projections as to how quickly solar power takes off could be grossly understated. As the author points out, the costs for photovoltaic electricity, for example, have dropped by an order of magnitude in the last 30 years.

The challenge however lies in just how much energy solar power would have to displace if it were to become the dominant source of energy in the world. In 2006, according to the International Energy Agency, 80.3% of the world's energy came from oil (34.3%), coal (25.1%) and gas (20.9%). Fully 90.9% of the world's energy came from combustion, because alongside these fossil fuels in 4th place are "combustible renewables," mostly wood. With nuclear power and hydro-electric power providing 6.5% and 2.2% of the world's energy, respectively, you have accounted for 99.5% of the world's energy!

So where does solar fit into this equation? Most of this last half-percent of one percent of the world's energy, .41%, is provided from geothermal sources. The energy we love so much, wind and solar, currently only provide .064% and .039% of the world's power requirements. Put another way, for solar energy achieve its potential and replace all other sources of energy in the world, this .039% would have to increase 2,500 times.

Moreover, since nations such as India and China have only begun to industrialize, and since the industrialized nations only comprise approximately 20% of the world's population yet consume over 50% of the world's energy production, it is unlikely that global energy production will not have to increase. It is these sobering realities that should inform any reading of the potential of solar power. - Ed "Redwood" Ring

India's Solar Power - Greening India's Future Energy Demand
by Avilash Roul, May 15, 2007



The world's largest solar steam cooking system
at Tirupathi in Andhra Pradesh


Human civilization has been witnessing a gradual shift towards cleaner fuels-from wood to coal, from coal to oil, from oil to natural gas; renewables are the present demand...

With the fluctuating high cost of petroleum, minimizing dependence on importing conventional energy resources, stewardship to protect the Planet and providing affordable energy to all, countries including India have stepped up their energy path for harnessing indigenous renewable resources. To tap the infinite energy and transform as well as transmit it to each household, the Indian government has accelerated promotion of the use of universally available  Solar Energy.

India due to its geo-physical location receives solar energy equivalent to nearly 5,000 trillion kWh/year, which is far more than the total energy consumption of the country today. But India produces a very negligible amount of solar energy - a mere 0.2 percent compared to other energy resources. Power generation from solar thermal energy is still in the experimental stages in India. Up till now, India's energy base has been more on conventional energy like coal and oil. However, India has now attained 7th place worldwide in Solar Photovoltaic (PV) Cell production and 9th place in Solar Thermal Systems. Grid-interactive renewable power installed capacity as on 31.10.2006 aggregated 9,013 MW corresponding to around 7 percent of the total power installed capacity which equates to over 2 percent of total electricity.

Worldwide photovoltaic installations increased by 1,460 MW in 2005, up from 1,086 MW installed during the previous year. That was a 67 percent increase over the 750 MW produced in 2003. In 2002 the world solar market increased 40 percent. Solar Energy demand has grown at about 25 percent per annum over the past 15 years. In 1985, worldwide annual solar installation demand was only 21 MW. According to the IEA's factsheet, "Renewables in Global Energy Supply," the solar energy sector has grown by 32 per annum since 1971. Worldwide, grid-connected solar PV continued to be the fastest growing power generation technology, with a 55 percent increase in cumulative installed capacity to 3.1 GW, up from 2.0 GW in 2004, as per "Renewable Global Status Update Report 2006" (www.ren21.net). Similarly, India witnessed an acceleration of solar hot water installations in 2005. Global production of solar PV increased from 1,150 MW in 2004 to over 1,700 MW in 2005. Japan was the leader in cell production (830 MW), followed by Europe (470 MW), China (200 MW), and the US (150 MW).


In the sun during the day, providing lighting at night,
a photovoltaic/battery lantern illuminates the home


India: Status of Solar Energy:

The solar PV program was begun in the mid 70's in India. While the world has progressed substantially in production of basic silicon mono-crystalline photovoltaic cells, India has fallen short to achieve the worldwide momentum. In early 2000, nine Indian companies were manufacturing solar cells. During 1997-98 it was estimated that about 8.2 MW capacity solar cells were produced in the country. The total installed manufacturing capacity was estimated to be 19 MW per year. The major players in Solar PV are Bharat Heavy Electricals Ltd. (BHEL) (http://www.bhel.com/bhel/home.php); Central Electrtonics Ltd., and Rajasthan Electricals & Instruments Ltd., as well as by several companies in the private sector. The latest, 100 million dollars investment from Tata BP Solar in India is the pointer towards the booming solar market in India. Of late, the market is growing for SPV applications based products with the active encouragement of the government.

The Ministry of New and Renewable Energy (www.mnes.nic.in), earlier known as the Ministry of Non-conventional Energy Sources - have initiated innovative schemes to accelerate utilisation and exploitation of the solar energy. Number of incentives like subsidy, soft loan, 80 percent accelerated depreciation, confessional duty on import of raw materials and certain products, excise duty exemption on certain devices/systems etc. are being provided for the production and use of solar energy systems. The Indian Renewable Energy Development Agency (IREDA) - http://mnes.nic.in/annualreport/2004_2005_English/ch12_pg1.htm - a Public Limited Company established in 1987- provides revolving fund to financing and leasing companies offering affordable credit for the purchase of PV systems. As a result, the Renewable Energy Sector is increasingly assuming a greater role in providing grid power to the Nation as its total capacities reached about 9,013 MW. This apart, the Electricity Act 2003, National Electricity Policy 2005 and National Tariff Policy 2006 provide a common framework for the regulation of renewable power in all States/UTs through quotas, preferential tariffs, and guidelines for pricing 'non-firm' power.

However, in the Draft New and Renewable Energy Policy Statement 2005, which is yet be approved, the federal government is very cautious about the status of renewable energy in the future. It says, "despite the fact that the biomass-solar- hydrogen economy is some decades away, it should not make industry and the scientific & technical community of the country unduly complacent into believing that necessary steps for expected changes can wait."

Present Scenario of Solar Power:

The MNES has been implementing installation of solar PV water pumping systems for irrigation and drinking water applications through subsidy since 1993-94. Typically, a 1,800 Wp PV array capacity solar PV water pumping system, which cost about Rs. 3.65 lakh, is being used for irrigation purposes. The Ministry is providing a subsidy of Rs.30 per watt of PV array capacity used, subject to a maximum of Rs. 50,000 per system. The majority of the pumps fitted with a 200 watt to 3,000 watt motor are powered with 1,800 Wp PV array which can deliver about 140,000 liters of water/day from a total head of 10 meters. By 30th September, 2006, a total of 7,068 solar PV water pumping systems have been installed.

A total of 32 grid interactive solar PV power plants have been installed in the country with financial assistance from the Federal Government. These plants, with aggregate capacity of 2.1 MW, are estimated to generate about 2.52 million units of electricity in a year. In 1995, an aggregate area of 4 lakh square meters of solar collectors were installed in the country for thermal applications such as water heating, drying cooking etc. The thermal energy generated from these devices was assessed at over 250 million kwh per year. In addition, solar PV systems with an aggregate capacity of 12 MW were installed for applications such as lighting, water pumping, communications, etc. These systems are capable of generating 18 million kwh of electricity per year. In 2003 alone, India added 2.5 MW of solar PVs. For rural electrification as well as employment and income generation, about 16,530 solar photovoltaic lighting systems were installed during 2004-05. Over 150,000 square meters of collector area has been installed in the country for solar water heating in domestic, industrial and commercial sectors making the cumulative installed collector area over one million square meters. State-wise details of cumulative achievements under various non-conventional energy programmes, as on 31.03.2006 are shown in the table below:

MINISTRY OF NON-CONVENTIONAL ENERGY
FUNDED PHOTOVOLTAIC OUTPUT BY STATE


Government-funded solar energy in India only accounted for
approximately 6.4 megawatt-years of power as of 2005



Similarly, India's Integrated Rural Energy Program using renewable energy had served 300 districts and 2,200 villages by early 2006. More than 250 remote villages in seven states were electrified under the program during 2005, with additional projects under implementation in over 800 villages and 700 hamlets in 13 states and federal territories (see table below). Rural applications of solar PV had increased to 340,000 home lighting systems, 540,000 solar lanterns, and 600,000 solar cookers in use.

INDIA'S INTEGRATED RURAL ENERGY PROGRAM
REMOTE VILLAGES SELECTED FOR SOLAR ELECTRIFICATION


By 2006 over 2,400 off-grid villages in India had
received solar thermal and photovoltaic systems



Future Plans:

An Expert Committee constituted by the Planning Commission has prepared an Integrated Energy Policy that aims at achieving integrated development and deployment of different energy supply sources, including new & renewable energy. The grid-interactive renewable power installed capacity is expected to reach 10,000 MW as on corresponding to a share of over 2 per cent in the electricity-mix, by 31.3.2007. Further capacity addition of 14,000 MW is envisaged during the 11th Plan (2007-12) leading to a then share of around 5 per cent in the electricity-mix but mostly through hydro-power. A 10 million square meter solar collector area capable of conserving electricity equivalent to that generated from a 500 MW power plant is expected to be set up by 2022. India has recently proposed to augment cooking, lighting, and motive power with renewable in 600,000 villages by 2032, starting with 10,000 remote off-grid villages by 2012.

External Support:

A four-year $7.6 million effort was launched in April 2003 to help accelerate the market for financing solar home systems in southern India. The project is a partnership between UNEP Energy Branch, UNEP Risoe Centre (URC), (http://uneprisoe.org/) two of India's major banking groups - Canara Bank and Syndicate Bank, and their sponsored Grameen Banks. As per the existing policy, Foreign Direct Investment up to 100 percent is permitted in non-conventional energy sector through the automatic route. The FDI received in non-conventional energy sector from January 2003 to September 2006 is estimated at around Rs.35 crore. The Multilateral Development Banks like World Bank and Asian Development Bank are also helping India to achieve its potential on renewable resources. But, the funding from MDBs on solar energy enhancement is negligible compare to other clean energy support in India.


A 200 litre per day solar water heating system
installed in Karnataka by IREDA


Challenges and Constraints:

Solar energy is facing three fundamental challenges of cost, its manufacturing procedure as well as its waste products that have any impact on the environment and the land acquisition for erecting solar PVs.

The hunt for better, cheaper solar cells is due in India. Solar PV now cost one tenth of what they did in early 1980s. Despite the fact that the price of solar photovoltaic technology has been coming down over the years it still remains economically unviable for power generation purposes. During 1999, the cost of solar cells being manufactured in the country was estimated to be in the range of Rs. 1.35 to 1.50 lakhs per kW. The average cost of solar PV modules was around Rs. 2 lakhs per kW. At present the initial cost of both types of solar energy systems is higher compared to the cost of conventional energy systems and also the other non-conventional energy systems. However, the estimated unit cost of generation of electricity from solar photovoltaic and solar thermal route is in the range of Rs. 12 -20 per kWh and Rs. 10 - 15 per kWh respectively in India. With present level of technology, solar electricity produced through the photovoltaic conversion route is 4-5 times costlier than the electricity obtained from conventional fossil fuels.

There are number of R & D projects are going on solar PV Program in India. The Solar Energy Centre (http://mnes.nic.in/solarenergy1.htm) has been established by Government of India as a part of MNES to undertake activities related to design, development, testing, standardization, consultancy, training and information dissemination in the field of Solar Energy. Recently, development of polycrystalline silicon thin film solar cells and small area solar cells concluded at the Indian Association for Cultivation of Science at Jadavpur University. The National Physical Laboratory, New Delhi is working on development of materials and process to make dye sensitized nano-crystalline TiO2 thin films. The Centre for Materials for Electronics, Pune has been working on development of phosphorous paste for diffusion of impurities in solar cells. Under a joint R&D project of MNES and Department of Science & Technology (DST), the Indian Association for Cultivation of Science (IACS), Kolkata continued to work on optimization of process for fabrication of large area double junction amorphous silicon modules.

However, considering the fact that solar energy systems do not require any fuel, the running costs are lower. Therefore, the cost of some of the solar energy systems such as solar water heaters, solar cookers and solar lanterns can be lower than that of conventional energy products when calculated over the life of the systems. The other advantages of solar energy systems are modular nature, long-life, reliability, no recurring requirement of fuel, low maintenance and so on.

In the very near future, breakthroughs in nanotechnologies promise significant increase in solar cell efficiencies from current 15% values to over 50% levels. These would in turn reduce the cost of solar energy production. However, capital costs have substantially declined over the past two decades, with solar PV costs declining by a factor of two. PV is projected to continue its current rapid cost reductions for the next decades to compete with fossil fuel. However, the realisation of cost reductions is naturally closely linked to market development, government policies, and support for research and development.

Environmental Costs:

In India, of late there has been a debate regarding whether hydro-power and solar power are green or renewable? Since solar power systems generate no air pollution during operation, the primary environmental, health, and safety issues involve how they are manufactured, installed, and ultimately disposed of. Also, an important question is how much fossil energy input is required for solar systems compared to the fossil energy consumed by comparable conventional energy systems. Another concern area is installing solar cells on the land area. The large amount of land required for utility-scale solar power plants - approximately one square kilometer for every 20-60 megawatts (MW) generated - poses an additional problem in India. Instead, solar energy in particular requires unique, massive applications in the agricultural sector, where farmers need electricity exclusively in the daytime. This could be the primary demand driver for solar energy in India.

Conclusion:

Even though energy from renewable energy sources is growing rapidly, with markets such as solar cells, wind and biodiesel experiencing annual double digit growth, the overall share is only expected to increase marginally over the coming decades as the demand for energy also grows rapidly, particularly in many developing countries. In India, the scientific focus is deliberately moving towards transforming coal into clean energy as well as harnessing hydropower. The recent surge in nuclear energy is also diverting focus from the solar energy enhancement. In all probability, the Indian government will support off-grid solar energy production through a decentralized manner. In spite of this, India needs to focus research on solar energy and cheaper photovoltaics to provide affordable energy to all.

Additional State Info on Solar Energy:

Andhra Pradesh

The Solar Electric Light Fund (SELF) (http://www.self.org/) founded the Solar Electric Light Company (SELCO) Photovoltaic Electrification Pvt. Ltd. The SELCO was established in 1995 to market, install, and service Solar Home Systems (SHS) in south India. The SELCO has achieved international recognition as the first company to concentrate on marketing and servicing SHS in the rural Indian market. The Company uses TATA-BP solar modules and deep-cycle batteries purchased on the Indian market, while manufacturing its own lights and charge controllers. Currently, its primary products are 22 and 35 watt SHS, and it will be introducing a 50 Wp system to customers shortly.

The Ministry had sanctioned a project to Non-conventional Energy Development Corporation of Andhra Pradesh Ltd., Hyderabad for installation of 50 solar dryers to individual users in rural areas with a view to promote the technology and show its potential in income generation and leading to development of entrepreneurship. The dryers were developed by Society for Energy, Environment and Development (SEED), Hyderabad.

West Bengal

Since 1995, with the help of the US Department of Energy (www.eren.doe.gov/international.html) and the National Renewable Energy Laboratory (http://www.nrel.gov/), the Ramakrishna Mission, a non-governmental organization in West Bengal (http://www.sriramakrishna.org/) has installed more than 500 PV domestic lighting system and has established 'Aditya' - a solar shop in the mission campus in Narendrapur, which sells PV systems up to nearly 10 in each day. The systems are manufactured in India and the US. The technical staff of the Mission has expected to establish six more Aditya solar shops and more than 2000 additional domestic lighting system and seven-community systems in the West Bengal. Through 2005, 73 Aditya Solar Shops were established in India.

About the Author: Avilash Roul has been writing, advocating, researching, and creating knowledge on Environment and Development in various English Daily media since 2000. He has worked with Down To Earth (fortnightly magazine published in New Delhi, India) for the last three years. He has also contributed a Sunday column in New India Express on the environment and development. Right now Mr. Roul is working as an Assistant Coordinator for the Bank Information Center (www.bicusa.org), an independent, non-profit, non-governmental organization that advocates for the protection of rights, participation, transparency, and public accountability in the governance and operations of the World Bank, regional development banks, and the International Monetary Fund.

 

[Neo]

India’s MCX eyes $750bn turnover

ISTANBUL: India’s MCX commodity exchange expects turnover of at least $750 billion this fiscal year and will launch an exchange in Mauritius as part of an international expansion, a senior official said on Tuesday. Reforms, such as allowing new kinds of forward contracts or algorithmic trading in India, are pending approval and Lamon Rutten, joint managing director of MCX, said a go-ahead for just two measures would take volumes to $1 trillion this year.

In the last fiscal year running to the end of March, turnover at Multi-Commodity Exchange (MCX), which was launched in 2003, totalled $480 billion, he said.

“If any two of the government measures come through we’ll hit $1 trillion this year,” he told Reuters on the sidelines of a conference in Istanbul.

Rutten said the aim was for MCX to become one of the top five futures exchanges in the world within five years, from its current ranking at 10th, which already makes it bigger than the New York Board of Trade (NYBOT). MCX, which together with its parent company holds a 49 per cent stake in Dubai Gold and Commodities Exchange (DGCX), also plans to launch a multi-asset exchange in Mauritius this year, targeting offshore players.

“We expect it will exist by the end of the year,” he said, adding it already had a licence. “It would be an offshore financial centre.”

They were still deciding which products would be traded. “We will have gold, the traditional big commodities, but the unique aspect will be the innovative products,” Rutten said, adding the Mauritius exchange would be large, overtaking Dubai in two to three years.

Another project will be announced later, he said, adding that MCX was looking at Asia. Rutten declined to give details.

He also declined to comment on any involvement in a new commodities exchange in Egypt, which Cairo is planning for next year.

Rutten said DGCX has postponed by three months a plan to launch a steel future contract, putting the team that had been preparing it to work instead on a rupee future, which has seen large demand and will be the first in the world.

http://www.thenews.com.pk/daily_detail.asp?id=56069

 

[Neo]

Whisky giant sold to billionaire



Mr Mallya's United Breweries Group confirmed the purchase.

An Indian billionaire has bought the Scottish whisky distiller Whyte & Mackay in a £595m ($1.2bn) deal.

The spirits giant United Breweries, which is headed by Vijay Mallya, announced the all-cash acquisition to the Bombay Stock Exchange.

In a statement, the firms said the deal would help expand the market for Whyte & Mackay's brands in emerging economies such as India.

It will also help UB Group add Scotch whisky to its portfolio of products.

United Spirits, part of the UB Group of companies, said it planned to introduce Whyte & Mackay's brands to the Indian market immediately.

Mr Mallya, who has been dubbed India's Sir Richard Branson after he took his Kingfisher beer brand into airlines, will become chairman and chief executive of the firm.

Speaking at a conference in Glasgow on Wednesday, he said: "Until today, the only missing link in our portfolio has been Scotch and, due to the shortage and rapidly increasing prices of Scotch whisky, we needed a reliable supply source.

In Whyte & MacKay we not only have a strong place in the Scotch whisky business but of course a great heritage of brands

Vijay Mallya
New Whyte & MacKay owner

"In Whyte & MacKay we not only have a strong place in the Scotch whisky business, grain and more distillation, but of course a great heritage of brands."

The tycoon also made assurances that jobs at the company were safe with expansion more likely than any cuts.

He also said he had an emotional attachment to the firm, with its Jura whisky being his late father's favourite single malt.

Vivian Immerman and his brother-in-law, Robert Tchenguiz, had taken full control of Glasgow-based Whyte & Mackay two years ago.

Mr Immerman had been part of a group of investors who paid £208m for the company in 2001.

He said he was selling the company because it would be "very difficult" for him to take it to the next level.

Mr Immerman told BBC Scotland: "Vijay will bring the international distribution, especially in the emerging markets where Scotch has exponential growth which has not been seen over the last several decades, and that is vital for this business."

He said all the existing staff would be transferring over to the new owner and dismissed suggestions that any of the company's brands could be distilled in India.

"Scotch whisky can only be made in Scotland," he stressed.

Whyte & Mackay's self-branded whisky holds about 3% of the UK whisky market.

The company, which employs more than 500 staff on sites around Scotland, also owns the Dalmore and Jura brands as well as Vladivar vodka and Glayva liqueur.

UB Group dominates the Indian spirits market, which is the world's largest for whisky.

But Scotch whisky only makes up about 1% of the Indian market, as a result of tariffs imposed by the country's national and state governments.

Mr Mallya has been criticised by the spirits industry for trying to sell cheap Indian whisky in Europe.

The Scotch Whisky Association (SWA) has in the past argued that UB's Indian-made product was not whisky as it was distilled with molasses rather than malt.

But following the deal, an SWA spokesman said: "This announcement again shows that Scotch whisky has a global appeal and that international confidence in the Scotch whisky industry's future prospects is strong."

http://news.bbc.co.uk/2/hi/uk_news/scotland/6659779.stm

 

[Bushroda]

BSE Sensex inches close to $1 trn
Rajesh Abraham / Mumbai May 17, 2007

New listings and rise in prices of large-cap stocks fuelling rally.

The market capitalisation of India is inching towards $1 trillion after the total value of all listed stocks touched an all-time high of Rs 39,78,172 crore or about $970.28 billion (at Rs 41 a dollar) on Wednesday. The economy touched the $1 trillion mark just recently.

The journey towards the $1-trillion mark is nothing less than spectacular, considering that the market cap was just about $150 billion in 2004. To put in context, the total bank deposits in 2004 was $500 billion and has crawled to about $650-700 billion in the same period.

The new listings and the rise in prices of large-cap companies over the last three to four months aided the upward journey of the bourses.

Market cap of major countries
As on May 15, 2007
$ billion per cent
World 56187.31 100.00
AMERICAS
United States 18817.67 33.49
Canada 1652.29 2.94
Brazil 1295.18 2.31
Mexico 390.76 0.70
Chile 199.85 0.36
EUROPE/AFRICA
Britain 3997.76 7.12
France 2851.26 5.07
Germany 2011.79 3.58
Switzerland 1300.61 2.31
Italy 1183.15 2.11
ASIA/PACIFIC
Japan 4875.72 8.68
China 2181.10 3.88
Hong Kong 1895.45 3.37
Australia 1118.24 1.99
India* 975.52 1.74
South Korea 919.35 1.64
*as on May 16, 2007
Source: Bloomberg


A total of 33 new scrips, including Idea Cellular (Rs 30,372 crore), Power Finance Corp (Rs 15,602 crore), Indian Bank (Rs 5,406.51 crore), Firstsource Solutions (Rs 3,913.32 crore), MindTree Consulting (Rs 2,973.38 crore), Fortis Healthcare (Rs 2217.97 crore), Global Broadcast News (Rs 1,855.46 crore), Redington India (Rs 1,378.69 crore) and ICRA (Rs 926.05 crore) added as much as Rs 70,710 crore to the market cap. One of the prominent gainers in the m-cap journey is Reliance Capital, whose m-cap crossed the $ 5 billion-mark on Wednesday.

Also the Delhi-based Unitech has become the country’s first real estate company to cross the $10 billion mark in market capitalisation. Its market capitalisation increased by Rs 3,981.68 crore on Wednesday to close at Rs 43,446.24 crore ($ 10.64 billion).

The Sensex, which closed at 14,127.31 on Wednesday, is just 525 points away from the peak of 14,652 posted on February 8 this year. The previous highest m-cap was Rs 39,25,746 crore on February 7, when the Sensex touched 14,643.

“We are sure to reach $1 trillion mark sooner than later. If you look at the current rally, only about 10-15 stocks have participated. A combination of new listings and the rise in share prices of the 10-15 large caps have helped us to hit the new milestone,” said Ajay Bagga, chief executive officer of Lotus India Mutual Fund.

The stream of mega share offerings in the pipeline, including Rs 13,000 crore by the Delhi-based property developer DLF, another Rs 10,000-plus crore follow-on issue by ICICI Bank, Rs 7,000-plus crore issue by State Bank of India, apart from share offerings from the SBI subsidiaries and other banks could take the m-cap closer to $1 trillion.

“By including the capitalisation of Indian entities listed on London’s Alternative Investment Market, the global firms acquired by the listed Indian companies in the last two months and others that are often considered a part of the Indian universe, we reach a total of $992 billion,” said Nilesh Jasani, research analyst of Credit Suisse, in the recently published report on the $1 trillion Indian economy.

Indian companies led by the Tatas, Hindalco and now the UB Group have made overseas acquisitions worth $26 billion in the last 10-12 months.

Eight of the 10 economies saw their stock markets rise in the one-year period after they first crossed the $1 trillion GDP mark. The UK is the only economy that fell below the trillion-dollar mark for a while after attaining the status for the first time, according to the Credit Suisse report.

 

[Bushroda]

India beats China at innovation, ranked 58
Japan, Switzerland and US on top, filing most number of patents; India second-best place to innovate
Jacob P. Koshy

New Delhi: India, the second fastest growing major economy in the world after China, has been ranked No. 58 in a study of a country’s innovation prowess—essentially the number of patents per million population filed by the country—by the Economist Intelligence Unit, the research arm of The Economist.

China comes in at No. 59 in a study where Japan, Switzerland and the US come in at the top three positions.

India fared marginally better on a study of innovation enablers (or the ability of a country to facilitate innovation), coming in at No. 50. This index is based on innovation inputs or variables, such as the amount spent on R&D, and innovation environment or issues such as the macroeconomic environment.

While India scores poorly on the data front, it makes up on the perception side: a parallel global study of 485 senior managers by the same firm found India the second-best place to innovate, right after the US.

Sujit Bhattacharya, researcher at the government’s National Institute of Science, Technology and Development Studies, said the number of patents by itself was not an accurate measure of a country’s innovation ability. “Though patents are one of the strongest indicators of a country’s innovation performance, factors such as realising commercial gain out of your patent, and extracting the maximum possible benefit out of every patent is crucial,” he added.

The EIU study is based on data collected between 2002 and 2006. A forecast by the agency for 2007-2011 expects China to improve its rank by five positions, while India is expected to move up by two.

According to the Organization for Economic Cooperation and Development, China spent $136 billion on research and development in 2006, a 20% increase over the previous year. This was more than Japan’s spend of $130 billion, but still well below that of the US at $330 billion. India spent around $6 billion on R&Dlast year.

The report said the commercial infrastructure in China is modernizing rapidly. Multinational companies are opening research centres in China, lured by the fact that local scientists are paid only about 20% as much as Western scientists. The country’s problems, according to the report, include the rampant theft of intellectual property, academic fraud, weak financial markets, and political meddling in science and research.

 

[Bushroda]

Energy needs $150 bn to fuel economy: KPMG
ECONOMY BUREAU
Posted online: Thursday, May 17, 2007 at 0000 hours IST

MUMBAI, MAY 16 : India’s power and upstream energy sectors such as coal, oil and gas need investments to the tune of $120-150 billion over the next five years, according to a KPMG report. By world standards, India’s current level of energy consumption is very low. For the year 2004- 05, the total annual energy consumption for India is estimated at 572 mtoe (million tons oil equivalent) and the per capita consumption at 531 kgoe (kilograms oil equivalent).

However with a targeted GDP growth rate of over 8% and an estimated energy elasticity of 0.80, the energy requirements of the country are expected to grow at over 6.4% annually over the medium to long term. This implies a four-fold increase in India’s energy requirement over the next 25 years, which is a significant challenge for the country.

The report titled “India Energy Outlook 2007”, underlines the recent efforts by the government of India in recognizing the need for private participation and ensuring that policies to promote investments are being implemented. Private participation in coal mining for captive use, in oil & gas exploration and in the power sector is already seeing significant progress. It is also expected that private participation in nuclear energy would be allowed as and when the Indo-US Nuclear deal goes through.

Commenting on the study, Arvind Mahajan, Executive Director, Advisory and Head Energy, Infrastructure and Government, KPMG said, “The general theme of private participation and competition has advanced in the past one year with some concrete examples on the ground to substantiate it. Looking ahead, the Atomic Energy Act is expected to be modified shortly allowing private participation and anticipating this many large Indian and international players have started talks for possible tie-ups.”

Need of the hour
• India’s energy requirement will rise four-fold over the next 25 years, which is a significant challenge for the country
• Energy transport infrastructure and power transmission networks require significant investments urgently

Along with private participation, there is a move to bring in market mechanisms in the energy sector under an independent regulatory oversight. A gradual approach is important till the supply side position improves and more players enter the sector so that markets can work effectively. The Government is seen as making efforts to broaden the supply base both internally and externally. It is intended to diversify the fuel basket by increasing shares of natural gas, hydro and even nuclear energy.

At the same time, both the government and private sector companies are looking to acquire equity in energy assets abroad as seen in recent examples in the oil & gas and coal sectors.

The report also states that energy transport infrastructure such as ports, railways, pipelines and power transmission networks need significant investments.

Tariff reform in the energy sector and distribution reform in the power sector are two important steps that need to be successfully carried out. Tariff reform to phase out subsidies or to target them effectively and distribution reforms to bring efficiency in the power sector are vital. Steps have been taken in this direction with mixed results.

 

[Bushroda]

Expect a minimum 8.5% growth in ‘07-08: Rangarajan
The Prime Minister’s economic adviser also said inflation rate has to be brought closer to 5%
Reuters

New Delhi: The Indian economy should grow by at least 8.5% in the fiscal year ending March 2008, but annual inflation must be brought closer to 5%, the Prime Minister’s economic adviser said on Wednesday.

“The Reserve Bank’s estimate of 8.5% growth for 2007-08 appears alright,” C. Rangarajan, chairman of Prime Minister Manmohan Singh’s economic advisory council, told Reuters in an interview.

“While the global growth rate is expected to slowdown a little bit, nevertheless the overall global environment will be favourable for growth,” he said. “Therefore, one could think of a minimum growth of 8.5% for 2007-08.”

India has grown at an average 8.6% over the past four years, including the estimated growth for 2006-07. But policymakers are aiming for double-digit expansion to cut mass poverty and increase the country’s global economic clout.

Rangarajan, a former central bank governor, said the inflation rate, which hit a two-year high in January, was showing signs of coming down.

“But in the current year, or 2007-08, we should really bring it closer to 5% and if possible a little below 5%.”

He said steps taken by the central bank should moderate money supply, and over the medium term an inflation rate of around 4% was desirable.

Rangarajan said good monsoon rains and healthy government procurement of wheat and rice from farmers to build food stocks would help reduce inflationary pressure.

“If the procurement becomes better than last year and if the monsoon also behaves normally, then there is every possibility of the inflation rate coming down,” he said.

 

[Bushroda]

On the trail of India’s 396 m invisible workers
Chitrangada Choudhury
Email Author
Mumbai, May 16, 2007
04:36 IST(17/5/2007)

Wages below minimum. On call 24/7. No compensation for work injuries. No social security. This world of few laws rules the lives of 396 million Indians in the so-called unorganized sector, according to a new report.

The sector contributes 93 per cent of India’s workforce, higher than in any other world economy, according to the ‘Conditions of Work and Promotions of Livelihood in the Unorganised Sector Report’, released by the National Commission for Enterprises in the Unorganised Sector for public feedback but not yet submitted to the government.

About 44 per cent of unorganized urban workers — mostly migrants who stream in from remote villages where agriculture no longer supports their growing numbers — work in India’s booming construction industry. Yet no one has computed their contribution to the national economy. And that contribution has been growing steadily, says the 450-page report that pulls together studies from across states and analysis data from the National Sample Survey Organization.

The Commission was set up by the UPA government in September 2004 to recommend policy measures that would, in the words of Prime Minister Manmohan Singh, “give a new deal to the working people”. A draft bill it put out has been pending with the government since May 2006. The report recommends a national fund to finance welfare programmes for unorganised workers and a national board to improve opportunities for them and upgrade their skills.

Illiteracy is the most striking feature among workers in this sector. Rural casual workers have it worse: the men have an average of 1.7 years of education, the women just 7 months; 47 per cent of them are illiterate. “Little or no education prevents entry into the coveted organized sector,” says Commission member Ravi Srivastava.

The average landholding of the rural worker is sub-marginal at a little over an acre.

The sector’s weak bargaining power coupled with uninterested authorities, the report says, ensures that plentiful welfare regulation does not work. “The interpretation of laws by courts sometimes tends to exacerbate the livelihood crisis faced by the poor as their compliance costs are well beyond what workers can afford and governments do not step in either to lower these costs or compensate the workers,” the report says.

Small-town dreams sour

Bharat More was one such worker. In November 2000, the subsistence farmer from Thane made his first annual journey to a saltpan in Raigad, south of Mumbai. He was barely 18. At the end of the six-month work season, the saltpan owner turned away all 75 seasonal workers without paying them. The wages amount to more than Rs 10 lakh and have not yet been paid. A local NGO filed a case in the Bombay High Court, which in 2004 ordered the state to survey working conditions in saltpans and pay the workers. The case is still in court, and the court order, when it does get implemented, can no longer make a difference to More. He died last July.

Stagnant agriculture and falling groundwater levels in tribal villages in Thane drive their men, sometimes entire families, to cities in an annual search for work. They are typically headed for building construction sites, saltpans, brick kilns and sand dredges in the satellite towns around Mumbai or across the border in Gujarat.

Dilip Rao of Dahanu in Thane, who makes the annual trip to construction sites in Vasai, returns home at the start of the monsoon to cultivate millet for his family’s livelihood. Despite working soon after dropping out of secondary school a decade ago, Rao has no savings. He lost his elder daughter to malnutrition two years ago.

“To bind labourers to work,” says Brian Lobo of the Dahanu-based Kashtakari Sangathana, “employers give them a few hundred rupees as advance and some expenses and defer wages to the end of the season. But in several instances, workers are cheated of this too”.

Lobo's NGO has filed close to 100 cases of wage violations with government departments over the past two years, but since formal work contracts are never drawn up, it is difficult to pin down employers or brokers.

 

[Bushroda]

Playboys' playboy with a taste for Scotch whisky
COLIN DONALD

WHAT would Mr Whyte and Mr Mackay have thought? When in 1844 the Glasgow merchants formed their docklands whisky blending business, the idea of it passing into the hands of a bejewelled Indian multi-millionaire for £595 million would have occasioned the stiffest of nips.

Even in the globalised world of a century and a half later Dr Vijay Mallya's entrance into the conservative universe of Scotch is a seismic event.

Not because the industry is unused to foreign-owned production of our national spirit - Whyte & Mackay was sold on by a South African after all, and other owners are French, Thai and Trinidadian - but because the Scotch industry has never seen anyone with ambitions on the scale of Vijay Mallya.

For the definitively flamboyant, and controversial businessman-politician, listed by Forbes Magazine as the world's 746th richest man, Scotland's fourth-biggest Scotch producer is a crucial stepping stone in the construction of a dominant global drinks giant.

Already the fastest-growing and third-biggest spirits group in the world, Mallya's United Spirits is well placed to hitch a ride on the explosion in "aspirational" consumption in the future mega-markets of India and China. India, which imports only 500,000 cases of Scotch a year, is estimated to have the thirst to absorb 3 million of them. Vijay Mallya intends that a major proportion are Whyte & Mackay brands.

As the owner of India's first multinational, with interests in engineering, fertilisers, media, pharmaceuticals and civil aviation, Mallya's fortunes - and his $1bn (£505m) personal fortune - are already intimately bound up with those of the emerging economic superpower. Rather too intimately, say his critics.

Mallya's Bollywood-style backstory has been a staple of breathless Indian press reports for two and a half decades, ever since the businessman, who helped establish the UBL conglomerate was elected chairman at the age of 28 on the sudden death of his father.

Since then a shrewd series of consolidations and leveraged buyouts, and divestments, and stock exchange listings, fortuitously timed to coincide with the liberalisation of India's sclerotic socialist economy have helped make Mallya a virtual embodiment of Indian entrpreneurialism.

Dubbing himself "The King of Good Times", Mallya is the playboy's playboy, whose assets include a 300ft yacht Indian Empress, 26 houses around the world including Keillour Castle near Crieff, a collection of Picassos and Renoirs and a fleet of Ferraris.

The high jinks of his publicity stunts are regaled almost with pride in the Indian press, for example his decision to rub his rivals's noses in his acquisition of the super-jumbo Airbus A380, by taking journalists on a jaunt in a plane staffed by scantily-clad hostesses.

Commentators also gasped at onboard service of Kingfisher Beer - strictly prohibited on Indian domestic flights, a law that Mallya is using his influence to change, along with the one about domestic airlines being barred from international routes for five years after their foundation.

For that matter, Kingfisher Airlines itself is in contravention of India's strict laws on the advertising of alcohol, being a flying proxy advertisement for the beer it is named after.

But for all his showmanship, charm and ingenious opportunism, and popular defiance of cultural conventions, Mallya is no dilettante. He works a punishing seven-day working week, and keeps strict tabs on the fine detail of all of his businesses.

He personally vets every applicant for his service staff, while logistical details of every Kingfisher flight must be texted to his mobile wherever he is in the world.

His determined self-association with youth, dangerous sports and glamour may court comparisons with Sir Richard Branson, one major difference is that Branson is not also an elected member of parliament.

Since 2000, Mallya has represented his home state of Karnataka in the upper house of the Indian parliament., and thus plays a direct role in setting government policy guidelines for his own businesses. He has made unabashed parliamentary interventions on drinks regulation.

And while Branson undoubtedly has powerful friends, he might find it harder to command a single industry, as Mallya has done.

The emergence of India as a global superpower has set the clock on the anomalies that have infuriated industry bodies like the Scotch Whisky Association, which gave yesterday's acquisition a tersely formal welcome.

The SWA has long worked to reverse India's combination of heavy federal and state duties on imported spirits - sometimes as high as 550 per cent - that have kept legitimate Scotch imports to India down to a trickle.

Now EU trade bosses have instigated disciplinary proceedings against New Delhi, attempting to use WTO rules where patient persuasion has failed.

The body has also crossed swords with Mallya over United Spirits' co-opting of spurious Scottish associations such as naming Indian brands "Bagpipers" and "McDowells".

Now that Mallya's acquisition of Whyte & Mackay has brought him into the Scotch fold, courtesy should silence any further mutters from the Scottish industry that Mallya has not been entirely distant from Indian government policy on Scotch imports.

He is after all a Congress Party supporter, known to be close to the Indian finance minister, the otherwise impeccably pro-free-trade Palaniappan Chidambaram who included whisky in the category of "agricultural products" subject to high tariffs designed to counter-balance European farm subsidy advantages.

For his part, Mallya has contended that the Indian constitution forbids New Delhi from interfering in state tariff levels, but the argument is scoffed at by the SWA, which contends that India has been given every chance to comply with the rules of global trade.

The WTO will rule on the matter probably around next April, and New Delhi must comply or face expulsion. By this time, as well as having a seat on the board of the SWA itself, Mallya is likely to have set up the bases for Whyte & Mackay's brands to head an tidal invasion of premium-priced, but now more affordable, Scotch into the grateful hands of the Indian middle classes.

Dr Vijay Mallya, the embodiment of the global business muscle and the world-beating aspirations of the new India would be forgiven for raising a toast to the perfection of his own sense of timing.

Diamond smiles from man with fortune and entourage to match

JUST as his reputation for high living goes before him, so did his entourage. Even an hour ahead of Vijay Mallya's arrival at the Glasgow Hilton's Grand Ballroom, there were several of his PAs and an army of metropolitan PRs buzzing round the hall making final checks.

Some of the board were already there and took to exchanging business cards and small-talk with a few early-bird reporters, conversation focusing on the man himself and his Scottish connections - he has a castle here.

But as the big moment approached, the number of Mr Mallya's coterie increased exponentially: appearing, disappearing, BlackBerries glued to ears, all dressed in a uniform of dark suit, white shirt and colourful tie. There were 25 or more, all looking very official, efficient and excited. With the appointed hour of 9:30am for the announcement past, the sense of anticipation grew.

When he finally appeared, it was virtually without introduction but nobody in the room was in any doubt that this was the man they had come to see.

Eschewing the standard businessman's dress-code, Mr Mallya, like his western counterpart Richard Branson, cut an unorthodox figure: long, steel-grey hair swept back, dressed in a black suit with a black shirt and wearing a pair of wrap-around, frame-less spectacles.

The overall effect would have been one of understatement, were it not that in place of a tie there appeared to be a diamond stud the size of a 10p piece, partnered with twinkling cufflinks, lapel badge, rings bearing large stones and a colossal watch fastened to his wrist with a huge turquoise strap. As one observer later put it: "I was dazzled."

Then it was down to the humdrum business of business: figures, statistics, expressions of hope and childhood memories of whisky. Mr Mallya was as happy and relaxed as a man who had just got his hands on a multi-million- pound business could be.

But it was perhaps his parting words that betrayed something of the Indian tycoon's real feelings about his latest acquisition. Asked if there was any emotional element in his buying of the company, he paused before replying: "You can be emotional about two million quid, rather than 200 million quid."

 

[Bushroda]

NITESH ESTATES TO DEVELOP INDIA’S FIRST THE RITZ – CARLTON HOTEL
The Ritz-Carlton Hotel Company, L.L.C. Announces First India Hotel; Partners with Nitesh Estates to set-up a 250-room, five star property in Bangalore.

[ClickPress, Wed May 16 2007] The Ritz-Carlton Hotel Company, L.L.C., the leader in global luxury hospitality, has announced plans for its first location in India. The Ritz-Carlton, Bangalore, a 250-room, five-star property, will open in the nation’s third-largest city by early 2010. Developed by Nitesh Estates, The Ritz-Carlton, Bangalore, will be set up in the central business district of the city.

Nitesh Estates has partnered with Ritz Carlton to facilitate the international hospitality major’s entry into India. This project also marks Nitesh Estates’ foray into the hospitality segment, one of the fastest growing and a lucrative segment for the real estate and construction industry.

“India represents the next great international expansion opportunity for The Ritz-Carlton Hotel Company,” said Simon F. Cooper, president and chief operating officer. “We are especially pleased that our initial presence will be in Bangalore, a city whose thriving economy has made it the Silicon Valley of the nation. “Nitesh Estates, the Bangalore-based developer, has committed to building a world-class hotel in the heart of the city’s central business district,” he added.

Nitesh Shetty, managing director, Nitesh Estates said, “We are delighted that The Ritz-Carlton Hotel Company will be entering the Indian market in association with us. We hope to continue this partnership in other cities, as well.”

The Ritz-Carlton, Bangalore will offer several restaurants, extensive meeting and events space, a luxurious spa and outdoor swimming pool, and an entire floor dedicated to high- end retail store boutiques. In addition to spacious rooms and suites, the hotel will include The Ritz-Carlton Club, a private floor accessible only by elevator key and offering light fare and dedicated concierge service throughout the day. Wimberly Allison Tong & Goo will be the architect and Hotel Interior Design Peter Silling will be the interior designer for the hotel.