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CineMaya Media Group Expands US Operations in California
Wed, 25 Jul 2007 12:31:28 GMT
CineMaya Media Group, Inc.

NEW YORK, NY -- 07/25/07 -- CinéMaya Media Group, Inc. (PINKSHEETS: CNMY), a leading media, entertainment and marketing services company focused on India and the Indian Diaspora throughout the world, announced today it is now expanding its business operations with a new office in the West Coast of the United States as the company has recently experienced a healthy increase in advertising and subscription revenue from this market. Incidentally, California, as a state, is also home to the largest concentration of Indian Americans in the US.

The company has appointed Mr. Neeraj Dhar, formerly Vice President of India Business Development and Operations, as the new West Coast Business Head. Mr. Dhar will manage the West Coast business of the company's publication, advertising, and events divisions from the new corporate office based in the San Francisco Bay Area.

"It is no secret that the Indian community has been enormously successful in the US, and a big part of this success has originated from Silicon Valley, California. CineMaya Media Group is now looking for an expanded presence in the California market, primarily through ad-sales and distribution for our publications: The Indian Express North American Edition and Divya Bhaskar North American Edition; marketing services division -- Elephant Advertising; and events management division -- CineMaya, LLC. This expansion will allow us to grow our multi-platform business in a robust hub of the Indian American community. We are very excited that Neeraj Dhar, who has been a key member of our team for several years, will now lead the efforts to expand the business in California," said Nayan Padrai, President of CineMaya Media Group.

Here are some key statistics to consider about the Indian population in America and the West Coast

-- Between 1990 and 2000, the Indian population in the US grew 113% -- 10
times the national average of 13%. Source: US Census Bureau

-- Approximately 2.3 million Indian Americans live in the US as of 2005.
Source: US Census Bureau

-- According to the US Census' American Community Survey, 2005,
California is home to over 450,000 Indian Americans, the largest
concentration of any state in the nation.

-- Today, Indian Americans are the second largest Asian American ethnic
group following the Chinese American community.

-- One in every nine Indians in the US is a millionaire, comprising 10%
of US millionaires. Source: 2003 Merrill Lynch SA Market Study

-- The Indian community in Northern California is a vital driver of the
technology industry. A University of California, Berkeley, study reported
that one-third of the engineers in Silicon Valley are of Indian descent,
while 7% of valley hi-tech firms are led by Indian CEOs. Source: Silicon
India Readership Survey

-- Indians own 50% of all economy lodges and 35% of all hotels in the US,
which have a combined market value of almost $40 billion. Source: Little
India Magazine

-- Indians, along with other Asians, have the highest educational
qualifications of all ethnic groups in the US. Almost 67% of all Indians
have a bachelor's or higher degree (compared to 28% nationally). Almost 40%
of all Indians have a master's, doctorate or other professional degree,
which is five times the national average. Source: The Indian American
Centre for Political Awareness.

About CineMaya Media Group:

CinéMaya Media Group (PINKSHEETS: CNMY) is a leading provider of high quality international South Asian media, entertainment, and marketing services. Established in 2000 as a vertically integrated company, CinéMaya Media Group has since grown into a mini-conglomerate in the ethnic media landscape through its robust businesses within the following areas: Publication, Broadcast Television, Radio, Film & Television Production, Events, and Advertising.

To obtain more information about CinéMaya Media Group, visit www.cinemayamedia.com. Group business sites include: www.elephantadv.com, www.iexpressusa.com, www.divyabhaskarusa.com.

Safe Harbor Statement:

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain of the statements contained herein, which are not of historical facts, are forward-looking statements with respect to events, the occurrence of which involve risks and uncertainties. These forward-looking statements may be impacted, either positively or negatively, by various factors. Information concerning potential factors that could affect the Company is detailed from time to time in the Company's reports filed with Pink Sheets.
 
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Container Corporation net up 12.5% for Jun`07 qtr

Container Corporation of India registered a 12.48% growth in net profits to Rs 1,870.90 million for the quarter ended June 2007 from a profit of Rs 1,663.30 million for the quarter ended June 2006.

Net sales rose 7.57% to Rs 7,759.30 million for the quarter ended June 2007 from Rs 7,213.30 million in the corresponding quarter, a year ago.

Total income rose 9.95% to Rs 8,110 million for the quarter ended June 2007 from Rs 7,375.8 million in the same quarter, last year.

The earnings per share (EPS) of the company rose 12.5% to Rs 28.79 in the quarter ended June 2007.

Incorporated in 1988, Container Corporation of India (CONCOR) is a multi-modal (rail and road) logistics support provider for the country`s exim and domestic trade and commerce, working under the ministry of railways, Government of India. It handles the imports and exports of the country from about 40 dry ports or terminals spread across India. It also enjoys a near monopoly situation in the transportation of containerised cargo through the Indian railways.

CONCOR`s core business is characterised by three distinct activities, that of a carrier, a terminal operator, and a warehouse operator.

The key value the company offers is the provision of a single-window facility co-ordinating with all the different agencies and services involved in the containerized cargo trade right from customs, gateway ports, and railways, to road hauliers, consolidators, forwarders, custom house agents and shipping lines.

Shares of the company closed down Rs 16.20, or 0.72%, at Rs 2,240.00 at the BSE. Total volume of shares traded was 684.
 
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Indian property boom continues
By Nick Booker, Staff Columnist
In2Perspective, UK
Published 25th Jul 2007, (a Wednesday) at 12:00AM

There has been a lot of foreign investment money ploughing into India in recent months as the nation's property market hots up. Prices in the major urban centres have been going up consistently and have been further boosted by the influx of investment.

This has in turn attracted further investment and a number of property market analysts now have India on their shortlists of countries to watch.

A recent report by Reuters found that property prices in key areas of the biggest India cities - such as Mumbai and New Delhi - have more than doubled since 2005. In Bangalore, the price of the average flat has increased by half over the past two years and you would now be lucky to find one for under £50,000.

It may surprise some to learnt that the Reuters report drew comparisons between Indian property prices and Shanghai, the latter being well known internationally as a prosperous business centre. Prices in India are around 20 per cent lower than those for similar properties in Shanghai - but are continually increasing.

One property company based in India - Indian Ocean Ventures - is predicting that the total value of the national property market will rise from £6 billion to £27 billion over the course of the next three years. The company says that this is because the market is experiencing a lot of interest from overseas investors.

CEO and managing partner Rohan Narse advised prospective investors to look at the north - specifically, around Delhi - and the west of India. These are where most of the industry is concentrated and as such where most of the money and demand is. A key thing is "to decide on a certain area or a certain developer - people are sold on India but they're not sold on which area or which developer".

"One of the fastest growing industries is hospitality - hotels. There are probably about seven or eight thousand good quality hotels in the whole of India, whereas in Hong Kong itself there are about seventy thousand. So really there is a significant amount of hospitality building work that is required," he added.

This may be because last year, the government spent just over £8 million on promoting the country as a tourist destination to both domestic and foreign markets. feeds. The Indian tourist office says: "The government is putting greater emphasis on development of infrastructure at important tourist destinations and to promote and publicise various tourism products of India within the country and abroad."
 
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Uganda: Country Must Learn From Indian Lesson
Arthur George Kamya
AllAfrica, Washington
26 July 2007

Relying on a recently published book titled "In Spite of the Gods" by Edward Luce, this article attempts to draw some lessons for Uganda from the economic organisation of post-independence India, initially organised around policies of import substitution (Mohandas Gandhi's handspun and homespun cotton substitute for Manchester-manufactured, imported yarn), self-reliance and tight state control.

In 1991, the Indian government ushered in a period of economic liberalisation responsible for today's so-called Indian economic miracle. In addition to being a vibrant and pluralistic democracy, pre-liberalised India built up an intellectual and technological prowess unequalled in the Third World.

The Indian economy was buttressed by a widespread use of English as the language of higher education instruction. An average GDP growth rate of 3.2% prior to 1990, however, was derided as the "Hindu rate of growth". While per capita incomes of India and South Korea were roughly at par in 1947, the latter was ten times the former by the 1980s.

Questions were rightly raised about the pre-1991 Indian economy: Were the large resources (equal to budgetary allocation for elementary schools) poured into English language universities for the urban elite justifiable in a country with 84% illiteracy rate?

The economic advantages latent in pre-liberalised India came to bloom with liberalisation. India's scientific and technical capacity spawned miracles. The software industry in America's Silicon Valley, dominated by Indians, reproduced several satellites in India. Western patients now routinely travel to India to be treated by India's brain and hip surgeons. Indian drug companies have more pending patent applications in the US than any other country (including the USA). Owing to its facility with the English language, India is the world's call centre capital.

A comparison between the Chinese and Indian model of economic growth is instructive. Chinese economic growth has been relatively more labour intensive compared to India. China spends a comparatively higher share of its budget on elementary education as opposed to India which spends more on higher education. With respect to textiles, while China competes on price, India competes on quality.

Essentially, while China has developed in the same sequence as most western countries (agriculture to low cost manufacturing, climbing up the value-added ladder, to hopefully burst into the nirvana of internationally tradable services), India (half of whose economy comprises of services, with agriculture and industry, each accounting for about a quarter each) is more akin to a middle-income country.

How is the foregoing analysis applicable to Uganda? Post-independence India's economic experience demolishes three shibboleths of President Yoweri Museveni. First, contrary to Movement dogma, it is possible for a country to democratise prior to having a sizable middle-class or majority literacy.

Secondly, India's post-liberalisation rapid economic growth in the absence of broad-based manufacturing-driven industrialisation teaches that destructive industrialisation such as the Mabira Project is not a necessary.

There is more than one way to skin the economic development cat. Thirdly, the argument that we can populate ourselves to economic prosperity (India and China have large populations; India and China are developing very fast; therefore, in order to achieve high development, a country needs a high population) is a fallacy. There is neither correlation nor causation between the magnitude of populations and the rate of economic growth of countries.

Proponents of this piffle mistake population size for population growth. Respectively, 2006-2007 figures of population size, population growth and GDP growth are for India (1.1 billion, 1.6%, 9.2%), China (1.3 billion, 0.6%, 10.7%) and Uganda (30 million, 3.6%, 5.3%), translating into rates of increase in living standards (economic growth rate less population growth rate) of 7.6, 10.1 and 1.7 percent respectively With respect to the ultimate goal of economic development (raising living standards), Uganda lags behind the other two countries not because they have bigger populations but because Uganda has a higher population growth rate..

The bigger question, though, is this: As a former British colony, with a decent higher education system (at least prior to recent changes), our economy is more akin to India than China. Yet we seem determined to follow a China-type model of development. Is this wise? Are not government policies (such as not teaching English until Primary Four) in a world where English is the coin of the globalised realm misguided?
 
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New careers that pay well now

New lifestyles and much more money in the hands of consumers, has led to people willing to pay very well for services that were taken for granted earlier.

There are many traditional careers that people idolised and looked up to, but people would not opt for them because they did not pay well. With globalisation and the booming Indian economy the situation has changed drastically. New lifestyles and much more money in the hands of consumers, has led to people willing to pay very well for services that were taken for granted earlier.

One prominent example is the teaching profession. Good schools today employ teachers of all subjects and skills, both co-curricular and extra-curricular, and are willing to pay them salaries that one could not have dreamt of just a few years ago. Online Tutors are already giving tuitions to foreign students sitting at home, and earning more than 10 to 15 dollars and hour.

People in the arts and creative fields are another example. Where traditionally artists would be on the fringes of society, in their khadi kurtas and “by-two” tea under the trees, today professionals in visual communication and allied fields command not only respectable salaries, they are ensured of steady and secure income.

The same boom has hit the healthcare industry with paramedical professionals such as speech pathologists, optometrists, dialysis technicians, physiotherapists, etc. being given high salaries. Fitness experts are in demand, and so are psychological counsellors.

The list is endless. The significant point to note is that if you have the talent, inclination, interest and aptitude towards any field, howsoever obscure or unusual it may be, do not reject it under the assumption that you cannot make steady money in it. If you are good at the work, money is no longer a constraint. Do not live in the past and presume that those who chose such a career much earlier did not succeed financially, so you also will not. Have a vision for the next 40 years, and select a growing career that will take you to dizzy heights of success and rewards.
 
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India's demographic dividend
BBC
By Kaushik Basu
Professor of economics, Cornell University

Nowadays no meeting on India seems complete without a reference to the coming "demographic dividend".

What really is this demographic dividend?

The basic idea is straightforward enough.

In the year 2004 India had a population of 1,080 million, of whom 672 million people were in the age-group 15 to 64 years.

This is usually treated as the "working age population".

Since outside of this age group very few people work, it is reasonable to think of the remainder, that is, 408 million people, as the "dependent population".

A nation's "dependency ratio" is the ratio of the dependent population to the working-age population. In the case of India this turns out to be 0.6.

On this score India does not look too different from many other developing countries. Bangladesh's dependency ratio is 0.7, Pakistan's 0.8, Brazil's 0.5.

What is different about India is the prediction that it will see a sharp decline in this ratio over the next 30 years or so. This is what constitutes the demographic dividend for India.

India's fertility rate - that is, the average number of children a woman expects to have in her life time - used to be 3.8 in 1990.

This has fallen to 2.9 and is expected to fall further. Since women had high fertility earlier we now have a sizeable number of people in the age-group 0-15 years.

Benefits of demography

But since fertility is falling, some 10 or 15 years down the road, this bulge of young people would have moved into the working-age category. And, since, at that time, the relative number of children will be small (thanks to the lowered fertility), India's dependency ratio would be lower.

It is expected that, in 2020, the average age of an Indian will be 29 years, compared to 37 for China and 48 for Japan; and, by 2030, India's dependency ratio should be just over 0.4.

This can confer many benefits.

First is the direct benefit of there being a rise in the relative number of bread-winners.

Moreover, with fewer children being born, more women will now join the work force; so this can give a further fillip to the bread-winner ratio.

A more indirect but vital benefit for the economy is the effect this can have on savings.

More women can work with fewer children being born

Human beings save most during the working years of their lives. When they are children, they clearly consume more than they earn, and the situation is the same during old age.

Hence, a decline in the nation's dependency ratio is usually associated with a rise in the average savings rate.

India's savings rate as a percentage of GDP has been rising since 2003. It now stands at 33% which is comparable to the Asian super-performers, all of whom save at above 30%, with China saving at an astonishing near 40% rate.

This savings growth is driven by improvements in the government's fiscal health and a sharp rise in corporate savings.

But even if these factors disappear, the decline in the dependency ratio should enable India to hold its savings and investment rate above the 30% mark for the next 25 years.

Striking example

This theory of demographic advantage has been challenged by some as just that - theory.

One way of evaluating this in reality is to look at the actual experience of other nations.

The most striking example of economic growth being spurred by demography is the case of Ireland.

Ireland's legalisation of contraception in 1979 caused a decline in the birth rate, from 22 (per 1000 population) in 1980 to 13 in 1994. This caused a rapid decline in the dependency ratio.

The phenomenal economic boom in Ireland thereafter, earning it the sobriquet "Celtic Tiger", is very likely founded in this fertility decline. (I am disinclined to concede ground to the competing view that it was caused by Pope John Paul II's visit to Ireland in 1979).

India's fertility rate has fallen

One has seen a similar sequence of changes in demographics and the economy in Japan in the 1950s and China in the 1980s.

But even if this happened in some places, will it happen in India?

My expectation is that India will get benefit from higher savings and investment rates and this will continue to fire India's high growth rate.

Beyond that much will depend on how the nation performs on primary and secondary education (to make sure that the larger working-age population conferred by the demographic dividend are an educated lot) and the manufacturing sector (which is needed to create job opportunities for the larger labour force).

What is important to remember is that the demographic dividend is a population bulge in the working-age category.

Like a kill in a python's stomach it will eventually move up, causing a rise in the old-age dependency ratio some three to four decades from now. That is, every demographic dividend comes with an accompanying "demographic echo".

It is in the nation's interest to reap as much as possible from the dividend so that it is robust enough not stymied later by the echo.
 
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The U.S.-India Business Council Hails 123 Progress
PRNewswire-USNewswire, NY

WASHINGTON, July 25 -- The U.S.-India Business Council (USIBC) today applauded the substantial progress made by India and the U.S. toward a bilateral "123" Agreement to put in effect the Henry J. Hyde United States and India Peaceful Atomic Energy Promotion Act of 2006.

Passed by an overwhelmingly bipartisan majority of the U.S. Congress on December 9, 2006, the Hyde Act amended the Atomic Energy Act of 1954, authorizing U.S. companies to engage in civilian nuclear trade with India, subject to International Atomic Energy Agency safeguards.

Ron Somers, President of the U.S.-India Business Council, which spearheads U.S. Industry's advocacy campaign in favor of the deal, said, "Government officials on both sides who are working on this historic initiative deserve our deepest gratitude and respect for their vision and
statesmanship."

Conclusion of the 123 Agreement and approval by the Congress would represent a major stride toward U.S.-India civil nuclear cooperation, which will create jobs and opportunities in India and across the U.S. India's nuclear industry has announced plans to expand from its current installed nuclear power capacity of 3,500 MW to 60,000 MW over the next 26 years. The expansion is valued at $150 billion.

India's rapidly expanding economy, growing at greater than 9% GDP, is confronting a major energy deficit. India's energy security challenge portends major collaborations with American companies.

"The U.S.-India Business Council, a division of the 3 million-member strong U.S. Chamber of Commerce, formed the Coalition for Partnership with India shortly after the July 2005 visit to Washington of India's Prime Minister. The coalition serves as host for like-minded parties --
think-tanks, policy experts, Industry and the Indian American community in support of US-India cooperation.

The U.S.-India Business Council is based in Washington, DC, with offices in New York, Silicon Valley and New Delhi, and is today comprised of the largest 250 U.S. companies with trade interests and investments in India, joined by two dozen of India's premier global companies -- whose common objective is to expand trade and deepen commercial ties between the
United States and India.
 
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India - IOC plans Rs 2,500 cr unit
25 Jul, 2007 - India

Indian Oil Corporation (IOC), the country’s largest refiner of crude oil and marketer of petroleum products, is likely to set up a second paraxylene plant at one of its refineries at an investment of Rs 2,500 crore.

The Fortune 500 company – it recently improved its rank to 135 – has identified forward integration into petrochemicals as its next big business opportunity. It is already operating a Rs 5,000 crore paraxylene and purified terephthalic acid plant at its 12 million tonnes per annum (mtpa) refinery in Panipat.

The paraxylene plant uses naphtha from the refinery and converts it into purified terephthalic acid, which is used to produce polymers.

A Rs 6,300 crore naphtha cracker complex is also under construction at the refinery in Haryana.

Besides, IOC is also planning around Rs 6,000 crore petrochemical complex at its upcoming 15 mtpa refinery in Paradip, Orissa.

“We are very bullish on the petrochemical sector. That is where we see our biggest business opportunities,” said B M Bansal, business development director, IOC.

He added that the new paraxylene plant could come up at any of the company’s major refineries — Barauni, Panipat and Gujarat, among others. “We are still in the process of studying the location,” Bansal said.

IOC, like the other auto fuel marketing companies Hindustan Petroleum and Bharat Petroleum, is also going slow on expanding its retail outlets in the country as a result of mounting losses from selling petrol and diesel at government-controlled prices.

IOC currently loses around Rs 90 crore a day due to selling petrol, diesel, LPG and kerosene at government-controlled prices. It is selling petrol at Rs 5.90 a litre below the desired selling price. The revenue loss, referred to as under-recoveries, for diesel is Rs 4.80 a litre.

“Our auto fuel retail business is suffering and so we are looking to intergrate our refineries with the petrochemicals business, where the demand is expected to grow as the economy grows at a good pace,” said a senior IOC official, who did not want to be named.

The major petrochemical-producing companies in India are Reliance Industries and Indian Petrochemicals, which is in the process of being merged with Reliance. The two companies together control around 70 per cent of the market.

Integrated refining and petrochem operations – with refinery output providing the feedstock for petrochem operations – ensure high margins.

Either naphtha, produced in what is called the first cut of refining or natural gas is used as feedstock and is cracked (where the long hyrdocarbon chains are broken). This is then polymerised (hydrocarbon chains are re-arranged) to produce petrochemical products.

There is a hige scope for increasing consumption of petrochem products in the country. India’s per capita consumption of polyester for example is 1.4 kg compared to 6.6 kg for China and 3.3 kg for the world.
 
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Infrastructure, India's most attractive sector: HSBC
2007-07-25 16:10:26 Source : Moneycontrol.com

Michael Preiss, Associate Director-Investment Advisory Group, HSBC said the Yen appreciation might prove to be a dampener for equities.

He added that there is a big flush of money waiting to enter Indian markets and a lot of money coming in the markets may be borrowed money.

Excerpts from CNBC-TV18’s exclusive interview with Michael Preiss:

Q: What will happen to global equity markets over the next month or so? Are we getting into a bit of a sticky patch now?

A: Most probably, yes. It is a bit like a replay of what we saw in February. There was a question on whether the US housing issue and the subprime mortgage issue is just contained in the United States or whether it can even spread to other parts of the world.

The market seems to imply that even in Europe, the cheap credit financing bubble is actually about to burst and a lot of these deals are actually going sour. So, to some extent that is actually putting pressure on global equities.

The question is whether we should really go long or reduce exposure or whether to go short. Most people would agree that, at the moment, it is better to take some money off the table, go a little bit on the sideways and watch and see.

Q: What is the call on India because we are only beginning to catch up and reports indicate there is a big flush of money waiting to come into the market?

A: The words you used are right. There is a big flush of money. But let us not forget that a lot of that money is actually borrowed money. It is a lot of money done on leverage out of the carry trade, whether it is Swiss Francs or Japanese Yen. Both of these currencies are rising.

So, the real question is whether we see risk aversion rising around the world. The economic fundamentals in India and many emerging markets are excellent.

The only question is whether the financial market is ahead of itself. We see spreads widening and hence, basically people take a more cautious approach, and that could ripple through the system.

That is why we had this big sell-off in the United States yesterday. People realised that there could be systematic risk out there. Hence, they scaled back some of these positions, and in addition to that, the Yen is rising.

Rising Yen and widening spreads is exactly what you would like to see if you want to consider a short position in equities.

Q: Pertaining to India though, what sort of queries do you get from your HNI clients and what sectors at this look the most attractive?

A: Generally speaking, the most attractive sector as a long-term investor, is still infrastructure. Chidambaram said the same thing that India needs to spend more on infrastructure development. That is definitely a long-term investment trend where you cannot go wrong.

On the other hand, HSBC, and some old friends at Wall Street, always were underweight on India, irrespective of the fact that the Indian economy and the Indian market, performed very strongly. But the house view is still that investors, in a well-diversified portfolio, should have less assets in India. Their view hasn’t really changed because of valuations.
 
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India adds a record 7 million mobile users in June
John Ribeiro
IDG News Service
Computer World, Singapore
Updated: 26 Jul 2007

The boom in India's mobile telephony market continues, with the country adding a record 7.34 million new subscribers in June.

The monthly additions were the highest ever for the country, the Telecom Regulatory Authority of India (TRAI) said Wednesday, and followed the addition of 6.57 million new subscribers in May.

The total number of mobile subscribers in India at the end of June was 185.13 million, compared to 40 million fixed-line subscribers, according to the TRAI, based in Delhi. The country's overall teledensity -- the proportion of the population with access to a mobile or fixed-line phone -- crept up to 19.86% in June, from 19.26% at the end of May.

Fixed-line phones did not contribute to the increase in teledensity, however, as the number of fixed-line subscribers has been declining over the last few months.

Gartner forecast earlier this month that India would have more than 462 million mobile connections by 2011. New demand will come from rural areas, where service providers have started to offer low tariffs and handsets priced below $25, it said. Mobile phones are also filling gaps in the country's poorly developed fixed-line infrastructure.

Several phone vendors, including Nokia, have started to make phones in India. Nokia launched a mobile handset earlier this year designed for use by rural communities. Many people in rural areas are expected to use a community phone rather than have their own phone, because of the cost of the devices.
 
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Accelerating infrastructure growth
26 Jul, 2007, 0450 hrs IST,

The next ten years will be critically important for India. As it progresses towards becoming one of the largest economies in the world, its new passport to success will be infrastructure. The proposed plans spreading across railways, airports, ports, roads, water and power are extensive. And each area is demonstrating slow but steady progress.

To begin with the arteries of the country, the colossal Indian Railways — already the world’s second largest rail network under a single management — is looking seriously at investing in dedicated freight corridors, new technologies and manufacturing facilities for rolling stock (locomotives and wagons), modern signaling to improve safety and line capacity, and modernising railway stations. The railways, with its remarkable performance turnaround to deliver over $3 billion in surplus driven by double-digit growth in freight traffic, have become the cynosure of all eyes globally.

In aviation, competitive prices are helping the sector soar higher. Airline passenger traffic in India has been reporting robust growth and is expected to log among the highest growth worldwide over the next five years. Projections show that by 2020 Indian airports will handle a whopping 100 million passengers and 3.4 million tonnes of cargo per annum.

As for intra-city commuters, public transportation is acquiring a new face. The first phase of the Delhi metro has already met with public appreciation and the second phase is well underway.

A million cars were added to India’s roads last year and the roads in turn are expanding to accommodate them. With over 3.34 million kilometres, India’s road network is one of the largest in the world. And with the national highway development programme having been given top priority, this is just the beginning.

The Planning Commission has estimated that India will require at least $320 billion in infrastructure investment over the next five years. This number, if anything, is a bare minimum as it falls below the benchmark 8% of GDP investment threshold. The 8% infrastructure investment rate coupled with 7-8% fiscal deficit necessitates, private investment for public infrastructure development in India which can be done under public-private partnerships (PPPs).

For PPPs to be successful, the central and state governments will have to create policy frameworks for private investment, develop political will and mechanism to collect user charges, develop long-term debt and equity financing mechanisms, offer viability gap funding to generate bankable projects, and build project management capabilities in the public sector.

It is easier to define policy frameworks for centrally-governed sectors such as telecom, national highways, civil aviation, and railways. Water and power are more complex as they involve the states as well. Alignment between state and central governments’ policies is essential as one should reinforce the other.

Policy framework should be aligned with the end objective, otherwise it leads to unintended consequences. For example, currently an accelerated depreciation regime is in place to promote renewable energy projects. Under this regime, developers of renewable energy can take 80% depreciation of the asset during the first year, and 80% of the remaining during successive years.

While this has encouraged renewable energy projects, especially wind, many such projects have not produced electricity at their target load factor as this regime does not reward projects that produce more renewable energy, it merely encourages initial capital expenditure. Indeed the average plant load factor for wind projects is less than 20%. An incentive programme, based on actual production of renewable energy is a better approach. A production credit-based approach will encourage projects that generate more power from renewable sources as opposed to treating all projects equal irrespective of actual plant output.

Technology, user-friendly process, and front-line employee engagement are key to improving collection of end-user charges which chronically dogs power and water sectors. Andhra Pradesh and Delhi have clearly demonstrated that user fee collection can be improved if we make it easier for customers to pay, use tamper-proof metering technology, and make the front-line employees of the distribution company accountable for collection. This success story if replicated all over India will go a long way towards making private power projects bankable.

Infrastructure projects need long development periods (3-7 years) and huge capital investments. Therefore, they become viable only in the long term. Today, India does not have more than 20-year treasury bonds. Therefore long-term debt financiers of infrastructure projects do not have suitable benchmarks; 20 or 25 year papers would become the benchmarks for long-term financiers for infrastructure projects and must be considered.

Success of the Delhi Metro can be partly attributed to their strength of project management. However, in general, the public sector in India is short on project management talent and capacity. Training programmes should be instituted to build project management capabilities for public sector employees and the private sector should offer their expertise to the public sector.

Today, there is a huge disparity in land prices paid to farmers and original owners and its market value after the infrastructure project is completed. A mechanism whereby the original landowners get a piece of the future price appreciation would go a long way towards alleviating this disparity which has now boiled over in public protests.

We are embarking on a long journey to build adequate infrastructure for India. It is an opportunity and obligation to do that in a sustainable way. Thoughtfully done, environment-friendly technologies offer better life cycle costs even when they might seem a bit expensive upfront. We have to consider how to limit adverse environmental impact of building new power plants and other infrastructure as it is in our own best interest as well as that of the environment and society at large.

If the journey of a thousand miles begins with a single step, then the story of India’s infrastructural renaissance has already found its beginning. The path to take it forward can be summed up in one phrase — invest and deliver.
 
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Cos wait for merchant airports
26 Jul, 2007, 0209 hrs IST, TNN

NEW DELHI: After private roads and ports, the country is all set to get a number of private airports, also called merchant airports. Infrastructure developers such as Reliance Industries, Pragati Growth and Development and Anil Ambani-promoted Reliance Airport Developers have already shown interest in owning and operating airports across the country. Kolkata-based Pragati Growth and Development has identified land in Durgapur to develop such an airport.

“The techno-feasibility study is underway for the airport and it should be over in the next three to four months. For developing an airport in Durgapur we are getting support from the West Bengal government for acquiring land,” Pragati managing director Raj Shekhar Agarwal said.

“For developing a basic airport with a terminal building and parking area requires an investment of Rs 100 crore. But an airport can’t just be a standalone structure, hence it would have other facilities such as hotel, restaurant and recreational facilities, which would need an investment of at least Rs 1,000 crore,” added Mr Agarwal.

The rush for private airports is expected to start once the policy is framed. The merchant airport policy is likely to be finalised in the next two months. “We would first get expertise in airport development on public-private partnership (PPP) model and then would go for a complete private airport,” Reliance Airport Developers senior vice-president Tapan K Das said.

“Almost all major corporate houses in the country are interested in merchant airports. Initially they would go for a cargo airport and then for passengers,” IDFC head for PPP initiative Sailesh Pathak said without naming companies.

“There is possibility that big retailers such as Bharti and Reliance would go for their own airport to secure their supply chain,” Centre for Asia Pacific Aviation’s (CAPA) India head Kapil Kaul said.

The domesic air cargo space is expected to grow at 10% in the next few years. To boost the sector, the ministry of civil aviation is planning to build an air cargo hub at Nagpur in Maharashtra.
 
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Learn from China
26 Jul 2007, 0008 hrs IST

China has a sudden image problem. Its former top drug regulator was sentenced to death for accepting bribes to clear untested medicines. This was the result of a global scare over substandard Chinese goods, such as pet-food ingredients, contaminated toothpaste and unsafe antibiotics.

Pet food contaminated with melamine and other compounds has been blamed for the sudden deaths of a number of dogs and cats in North America. The US has stopped Chinese toothpaste imports after adverse reports on consignments sent to Australia, the Dominican Republic and Panama. It has urged consumers not to buy Chinese fish.

Earlier, the US banned Chinese goods such as garments for protectionist reasons. But this time the impulse is not merely economic as the alarm over Chinese drugs is not confined to the US.

China's problem could be India's as well. India is the largest supplier of pharmaceutical products to the US. It sold drugs and ingredients worth $800 million to the US in 2006, against China's pharmaceuticals exports of $675 million in the same year. China provides Indian companies raw materials for antibiotics, some of which are exported. This is not only a concern for the USFDA but also for India's domestic consumers. India slaps anti-dumping duty on some Chinese chemicals; it should go further and probe their quality.

The quality of drugs in India is already suspect. Medicines could cause harm by virtue of being spurious or irrational in terms of ingredient composition. Contamination is rampant in both allopathic and non-allopathic medicines.

The Mashelkar report on the pharmaceuticals sector, in 2003, called for more effective regulation in all types of medicines. For an industry that ranks fourth in the world in terms of volume and 13th in terms of value, the regulatory framework leaves much to be desired.

The Drugs and Cosmetics Act, 1940, would have to be continually expanded in scope to keep pace with technological changes and market realities. Are the existing laws and adminis-trative infrastructure adequate to deal with contaminated
imports or the growing importance of molecular biology, stem cell research and clinical trials?

State governments, such as Maharashtra, suffer from a shortage of drug inspectors. The number of personnel should be increased and their quality improved.

A national drugs authority should combine the functions of the current regulators, the Central Drugs Standards Control Organisation and National Pharmaceuticals Pricing Authority. The current approach of separating issues of health and pricing does not make sense. Most Indians do not have health cover. Medicines account for 60 per cent of an individual's health spending. The task before the government is to ensure availability of quality medicines at affordable prices.
 
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Tata expected to bid for Ford marques
By Joe Leahy in Mumbai
Financial Times, UK
Published: July 25 2007 22:13

Tata , India’s third-largest carmaker, is soon expected to appoint investment bankers to advise on its proposed bid for Ford’s Jaguar and Land Rover units, bankers in Mumbai said on Wednesday.

Mahindra & Mahindra, the country’s largest utility vehicle producer, is also expected to appoint an adviser in the coming weeks to join in the bidding contest for the UK luxury carmakers, one person familiar with the matter said.

Speculation that the two companies would enter into an auction for the Ford units has driven shares of Tata Motors down 2.3 per cent and Mahindra down 2.8 per cent against a 2.6 per cent rise in the broader market.

Investors are concerned that, while Land Rover might make a good fit for the Indian producers, loss-making Jaguar might not.

“One part of the business makes sense for them and the other doesn’t,” said one banker in Mumbai.

The Indian companies are expected to battle it out with private equity contenders for Jaguar and Land Rover. These are expected to include TPG Capital, Cerberus Capital Management, Ripplewood Holdings and One Equity Partners.

Ford is seeking to recoup about $3bn for the two companies compared with the $2.7bn it paid for Land Rover in 2000, auto executives say.

Analysts in Mumbai are split on the merits of the deal for Tata Motors.

The company, which has made headlines globally with plans to make the world’s lowest-cost passenger vehicle, the “one lakh car” at a price of about $2,500, lacks a luxury brand.

It has also been aggressively moving into overseas markets but mostly in developing countries.

Some analysts see the acquisition of Land Rover and Jaguar as an opportunity for Tata to expand its portfolio into luxury vehicles while obtaining distribution networks in developed markets and access to more advanced technology.

“By acquiring these companies, Tata Motors will not only have the greater access to the European markets but it will also have the technology to enter European markets,” said Urmil Negandhi, an automotive analyst with Emkay, a Mumbai-based brokerage.

Mahindra, meanwhile, has been seeking to become the first Indian carmaker to break into the US with its Scorpio sports utility vehicle. It would receive a substantial boost from Land Rover’s sales networks.

The company, which has a joint venture in India with Renault for its low-cost car the Logan, would also welcome greater access to European markets.

Mr Negandhi said he expected the Tata and Mahindra industrial groups, with their large cashflows, to back any bid by their respective vehicle subsidiaries.
 
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Reforms racing down country roads
26 Jul, 2007, 0314 hrs IST,Shishir Prasad, TNN

MUMBAI: India is shinning beyond Dalal Street, even in dusty small towns and distant villages. The rural folk are more than matching their urban cousins in spending as well as earning. So, after a shopping binge, don’t feel guilty about how the money could have gone to improve the villages.

On the contrary, don’t stop — keep spending. For every Rs 100 you blow up, rural income rises by Rs 39. Feeling better? Well, all city slickers accused of being insensitive to the plight of the rural people now have hope.

Future Capital Holdings chief economist Roopa Purushothaman and her team’s recent research shows urban and rural India are too intertwined to be treated as two different worlds and when India does well, so does Bharat.

“The question has been doing the rounds in corporate boardrooms and government. There are many in policy circles who believe urban and rural are two different economies and they need different measures,” says Purushothaman. The big message from the research is the two parts of India are really one. “Policy makers just need to let the economy pull itself,” she says.

There might be something to this because the rural economy is increasingly looking urban. It too has popped the services pill. While agriculture continues to remain the bulk of the economy, it is no longer as powerful. It is important to the extent that 73% of the rural population is still stuck in farm jobs.

Unfortunately, agriculture sector no longer creates wealth. There are more wealth and jobs being created in manufacturing, construction, restaurants, hotels and trade — chemists, for example — than in agriculture. The reason why it doesn’t appear as powerful is there are far less number of people to speak for the non-farm sector. Just 27% of the rural workforce is employed in non-farm jobs.

The one large change in rural economy is wage parity with urban centres in some sectors. People employed in trade
and manufacturing now earn wages that are on a par with urban centres. There are sectors such as utilities, construction and transport where the rural areas still lag behind, but the improved performance in such sectors is also responsible for closing the gap between the spending power of the two parts of the economy.

The research shows during 2000-05, the rural spending grew at 8% while urban India’s spending grew only 4%. In
absolute terms, urban households spend twice the amount that a rural household does. “This will remain, but we are interested in what is changing at the margins, and there it is clear that rural India is growing much faster,” says Purushothaman.

The counter-intuitive bit is that those at the lower income levels in rural areas are closing the gap with their urban counterparts at a much faster rate. So, those in low-income groups in urban areas are
facing a greater inequality than the same strata of people in rural areas. This is not surprising because little investment has been made in improving the quality of urban infrastructure.

“Our research shows that over the last 20 years, urbanisation has actually declined in the country. India clearly has a model different from China’s. China is building new urban centres while India is pushing production processes to rural areas,” she says. The rural rich are not faring that well when compared to the urban rich — for the time being.

The changes have largely been possible because the supply chain of goods and services is now spreading nationwide. Since urban headends of the supply chain are now taking more rupees of consumption, a little over a third of the rupees are ending up as income for the rural population.

There is good cheer in this research because if all the economics indeed captures reality, it clearly means people don’t have to leave the towns and head to the city to board the gravy train. They can stay right where they are and, pretty soon, the train will stop at a station close by.
 
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