• Kapil Sibal seeks area in seafront for national ocean technology institute

    GREETING: Union Minister of State for Science and Technology and Ocean Development Kapil Sibal with Chief Minister M. Karunanidhi at his residence in Chennai on Monday. Minister of State for Science and Technology and Ocean Development Kapil Sibal called on Chief Minister M. Karunanidhi at his Gopalapuram residence to seek a "large area in the seafront in Tamil Nadu to carry out research activities such as deep sea mining' and "coastal management.' "We want to carry on more activities in Tamil Nadu. So I requested the Chief Minister to look into a proposal by the Ministry to give a large area in the seafront in Tamil Nadu for carrying on research activities such as deep sea mining and others. As you know the Cabinet has in principle accorded approval to the setting up of a maritime university in Tamil Nadu and we hope that the setting up of the university and the grant of a seafront to us to carry out research and development would go hand in hand. This will enable us to invest more money in research activities in Tamil Nadu along the coast,' he said. Asked about the reaction of Mr. Karunanidhi, he said the Chief Minister told him that he would consider the issue very seriously. When it was brought to his notice that a parliamentary committee was looking into the issue of setting up of maritime university, he said that it was only concerned about the methodology and "how it is to be done.' Asked about the location of the university, he said: "We are setting up a maritime university. It will be located somewhere near the coast of some particular State.' Asked if there would be two maritime universities, he said he did not know about that. "It is not under my domain. I only know that in principle it has been agreed to. The location is yet to be decided and wherever it is, it has to be near the coast. And wherever it is, now with Information Technology you can do a lot of activities.' D. Rajasekhar, head of the Vessel Management Cell at the National Institute of Ocean Technology, said the area the Minister sought was for his institute, which is located in Pallikaranai. "We have to use Chennai Port for our berthing facilities

  • India gets hi-tech offshore lab for Rs 232 crore

    On Board Sagar Nidhi: It's an acquisition that would make India's deep-sea research scale new heights and the grit of scientists from National Institute of Ocean Technology (NIOT) indicates they are raring to put the Rs 232-crore

  • Focus on India's new trillion-dollar economy

    The growing relevance of India's newly-minted "trillion-dollar economy' to the changing global economic order was emphasised at a seminar here on Monday in the context of Finance Minister P. Chidambaram's 2008-2009 budget. India's High Commissioner to Singapore S. Jaishankar said China, as "a political aside' in this emerging global story, "has now overtaken the United States as India's largest trading partner.' K. Venugopal, Joint Editor of The Hindu and The Hindu Business Line, traced some "fantastic aspects of India's growth story' but cautioned that the current trends of "a miserable show' in the power sector and project slippages in the overall infrastructure domain could still "stop ... the trillion-dollar economy from cantering' at a comfortable pace. KPMG India Executive Director Girish Vanvari said the Finance Minister had opted for "cautious' projections for the future, keeping in mind the current reality that "the Indian economy is on a roll.' Setting the tone for the seminar, organised by KPMG and the Singapore Indian Chamber of Commerce & Industry in association with The Hindu Business Line, Dr. Jaishankar said: "We are now, probably for the first year, talking about the budget of a trillion-dollar economy. We are talking about a country, where there is a 150 per cent increase in the net FDI flows, where the outward investments have actually also gone up almost seven times over what it used to be in 2003-2004, where the trade-to-GDP ratio has gone up very sharply. The [latest] budget, like any other happening in India, has a certain immediate context and a longer-term context in terms of reform.' Key factors Outlining the budget proposals in the context of what Mr. Chidambaram might have had on his mind, Mr. Venugopal spelt out an array of factors that served as the political and economic background. These were the possibility of general elections within the next 14 months; farm suicides; the drop in public investment in the agricultural sector; some indices of an economic slowdown; the appreciating rupee; the surge in foreign investment inflows; the ebb and flow of the stock market trends which, in the last six months, were "not bad' compared to the U.S. and Chinese markets; "the divergent worms' in regard to trade deficit; and the political sniping at "an economy on the downswing.' He summed up the "budget response' as follows: Rs. 60,000-crore debt waiver for small and marginal farmers; tax breaks for individuals, not companies; and excise duty reduction from 16 per cent Cenvat to 14 per cent, with no sops for exporters. Posing the question whether these proposals would work, Mr. Venugopal said: "Not everyone in the political world congratulates Mr. Chidambaram for the debt waiver. [Some] say he has not done enough. Why is India's agriculture on the rocks? One reason is that irrigation projects have failed to deliver in the last decade or so. The government's Economic Survey conceded as much. The weakening farm pulse [is such that] the only thing that has grown smartly is credit supply.' On income tax, he said the Finance Minister was "like India's spinners: flight the ball more and probably you will get the batsman out.' The growth of the economy "is delivering a lot more as tax revenues for the government.' Citing some "concerns,' including rising food prices, and turning the focus on "some very bright spots' such as the telecom and aviation sectors, Mr. Venugopal said, "The agenda is [still] pretty long' for the future. In addressing it, Mr. Chidambaram might also have to reckon with the "fragility of the coalition that he is part of.' Mr. Girish Vanvari gave an expert overview of the budget matrix of direct and indirect taxes. Vishal Sharma, KPMG Singapore Executive Director, presided.

  • Rising food prices worry Chidambaram

    Expressing concern over rising food prices, finance minister P Chidambaram said he had not forgotten the corporate sector and defended the Rs 60,000 crore farm loan waiver on the ground that the money would flow to a distressed segment of the productive sector where the output was either stagnant or falling. "One of the reasons why inflation is still a threat is food prices in India,' Chidambaram said, adding that after a long gap, India has become a marginal importer of foodgrain, which is a dangerous sign. "Because we are dependent on import, we are subject to world prices... No country with as large a population as India can be dependent on imports (of foodgrain),' he said at the postbudget interactive session with industry chambers. Since April 2007, prices of wheat in the global market has risen by 88% and that of rice by 15%, he said. "Taking all this into consideration, we came to the conclusion that farmers' distress called for an unorthodox response... the response was farm loan waiver,' Chidambaram said. The wholesale price-based inflation rose to 4.89% from 4.35% in the previous week. Responding to the issues raised by the corporate sector, he said, "I have not forgotten the corporate sector. Despite the advice given by my chief economic advisor and suggestion from Economic Survey, we accepted your (corporates) demand of retaining peak customs duty rate.' He said excise duty reductions and relief given in personal income tax would help in spurring demand for consumer goods and benefit the industry. Exports grow 20.5% in January India's exports showed a healthy growth of 20.47% in January this fiscal over the same month last year, but expanded by a single digit figure of 7.66% in rupee terms due to pricey domestic currency. Exports increased to $13.14 billion in January 2008 from $10.9 billion a year ago, while imports grew by a huge 63.57% to $22.50 billion, leaving a trade deficit of $9.36 billion. PTI

  • Band aid, in wrong place

    No one asks the farmerBringing up babus With its Rs 600 billion farm loan waiver in the current budget, the government has applied some band aid to the financial haemorrhaging of India's farmers. It is another matter that the hurt is at some other place. The farmer has difficulty in obtaining cheap and reliable credit; various laws prevent him from selling his produce at the most competitive prices in the open market; there is no reliable advice available to him on how best to tend his fields in an economical manner; existing farming techniques, guided by corporate interests, continue to suck life out of the soil without replenishing it and there is no system of health security in the villages. On all these counts, the government has yet to show even minimal movement. The farm loan waiver gives the impression that farmers do not wish to repay their loans. This is a serious misrepresentation of the ground reality. According to figures from the NABARD, only some 10 per cent of the farmers default on bank loans. And even then, it is rarely that farming assets are taken away by the banks for failure to pay back loans. The problem for farmers lies in the loans taken from informal sources: moneylender and relatives. Often, the moneylender himself is a prosperous neighbourhood farmer. He gives large loans that are beyond the paying capacity of the borrower. These loans come with exorbitant rates of interest and severe penalties for default. The lender here does not falter in taking away farming assets, including land. After all, this could be a strategy for acquiring more land for himself. The advice of the agriculture minister a few days ago at Mumbai that farmers need not pay back loans taken from

  • Aam aadmi to ride the auto sector

    The real winner is the small car buyer who will have to pay Rs 5,000 to Rs 20,000 less for his purchase.

  • Budget bonanza

    A few years ago, while delivering the Palkhivala Memorial Lecture in Mumbai on the then Finance Minister Jaswant Singh's Budget, P Chidambaram made the perceptive comment that it was the most unfunded budget in the country's history. There was no provision in the Annual Financial Statement on many new items of expenditure. Now, ironically, it is the turn of Yashwant Sinha to point out how Chidambaram's budget is silent on expenditure on such proposals as debt waiver! Any issue of bonds to banks by way of compensation for debt waiver and relief, especially when staggered over three years, will put them in the same predicament as the oil marketing companies burdened with similar IOUs. The bonds are not likely to qualify for investments to meet the Statutory Liquidity Ratio. In case of depreciation in their values, the banks will face the same problems they experienced a few years ago in adhering to prudential norms. The difficulties are cropping up at a time when the system is in transition to Basel-II norms. There is an ominous suggestion in some official quarters that banks that have already made provisions for the overdues of farm loans may not be given the compensation. It will be unfair to them. The overdue loans will still remain part of the gross non-performing assets of the institutions, reflecting on their soundness. The loan waiver does not solve the problem of farmer distress. The inequity in the definition of marginal or small farmers based only on cultivated holding is obvious. According to the budget document, a marginal farmer is one with a holding up to one hectare and a small farmer is one with holdings between one and two hectares. A farmer with, say, five hectares of rain-fed land in Pali Marwar in Rajasthan is economically in no better condition than one with two hectares with assured irrigation families in Ludhiana in the Punjab. But the former will not be eligible for the waiver. The need for adopting an income criterion for defining the size of farms was discussed in detail in the Reserve Bank of India's Report on the Seventh Follow-Up Rural Credit Survey entitled "The Small Farmers

  • Govt. to strive for growth with low inflation

    Even as there were no easy ways of balancing high economic growth with low inflation, Finance Minister P. Chidambaram on Tuesday said the Government would strive to peg the overall growth rate at near nine per cent while containing the inflation rate at close to four per cent. In his post-Budget interaction with the Confederation of Indian Industry (CII) here, Mr. Chidambaram said: "The goal is to have a growth close to nine [per cent] and inflation close to four [per cent]. That is why we assume 13 per cent [nominal] GDP growth.' Pointing out that in this exercise, while the Government sometimes succeeded and also missed the target at other times, he said: "In a country where economy is growing close by over eight per cent, close to nine per cent, there is bound to be some inflation.' Inflation in India, he said, was caused by supply-demand mismatch between food items and the oligopolistic tendencies in some industries. Besides, the growth in money supply was yet another reason which, in a sense, was a reflection of the high growth the country was experiencing. However, to keep the India growth story intact, Mr. Chidambaram pointed to the numerous measures announced in the budget for 2008-09. "I think we have announced a number of measures that are intended to ensure that the growth story is intact... I am betting on your [corporates] growth. I am bullish on your growth. I hope you are as bullish as I am about the growth story,' he said. Projecting that India Inc. would provide Rs. 5,50,000 crore next year by way of taxes, excluding personal income-tax, Mr. Chidambaram noted that while steps had been taken to provide more money to the consumer for spending, the fiscal stimulus to the economy would come from the cuts in excise and customs duties and the Central Sales Tax. "Unless my friend Shubhashis Gangopadhyay [Adviser to Finance Minister] and other economists are hopelessly wrong about their economics, all these make up for the text-book prescription for higher growth,' he said. These measures together, including the across-the-board excise cut from 16 per cent to 14 per cent, were a powerful combination to keep the growth story intact. "I have taken the first step to signal the whole country, especially States, that I prepare to look forward in order to accommodate my financial interests with the final number [for goods and services tax], and you can prepare to accommodate your financial interests with the final number,' Mr Chidambaram said.

  • Tata open to global licensing of Nano

    Steals show: The $2,500 (Rs. 1 lakh) Tata Nano attracts attention during the press day of the Geneva International Motor Show on Tuesday in Geneva. Tata Motors is considering the possibility of global licensing of the production of people's car Nano, which, when launched abroad, will be positioned on the same platform as the one back home

  • Why does farm production stagnate?

    India and the world population has doubled or tripled since the World War II. The world and India produces seven times more food than 60 or more years ago when many nations were in a shambles and farms were marred by mines and other hazardous chemicals in the aftermath of millions killed by bombs and gun battles, though not India, which was not a big theatre of war, but of the war of Independence. Imperial rulers were preoccupied with German and Japanese invaders and with conquering them. India was the fodder of the war machine with 2.5 million soldiers to fight on every front to defeat the Axis power. The war had seen the Bengal Famine with tens of thousands dying of hunger, but official records called it malnutrition, not starvation. That was the Imperial nomenclature, valid ever since until today. Yet in the bygone 20th century we have seen great strides, we have seen great visible progress in pursuit of Mahatma Gandhi's goal of wiping every tear from every Indian face. Irrigation dams by the score have been built and dry farms have had irrigation canals and channels supplying life-giving water. Where canals could not reach hand pumps or powered pumps have been installed to irrigate farms. Punjab, Haryana, western UP and many other States prospered, but not all areas. From 30 million tons of grain, India today produces as much as 210 million tons. For a long time, India was supposed to be self sufficient, not needing to import any grain, though for some years now, as part of the policy of food security a buffer stock has been built and wheat and rice have been imported. Sometimes exotic basmati rice has been exported and cheaper and large quantities of cheaper imported to try and feed Indians, but the exercise has not fully succeeded. In spite of the great Indian success story, when India's economy is one of the fastest growing at a clip of nine per cent per year why do we in free India, 40 per cent of us remain below the poverty line, sleep on an empty stomach, why 42 per cent of all children starve or are very poorly fed? Yet, literacy and education are fundamental rights, food is not. There are no free lunches, though midday school feeding programmes are much in place, yet honored more in the breach than in the observance, because 80 per cent of the money provided must be and is known to be siphoned off by the time it reaches the panchayat or the village or the city school into the pockets of all kinds of people, be they suppliers, petty or senior officials and politicians, down now to the village panch, leave alone the sarpanch. Is that the way of the Third World, if not all world, because corruption in the First Word is far more sophisticated; it runs into millions and billions of dollars, not in peanuts or a few rupees, hundreds or thousands of them. Such is the system, like it or not? Is that why 30 per cent growth some areas of the services sector and nine per cent overall, farm or grain production grows only at 2.6 per cent and in years of monsoon failure or excess of it, the growth is what in modern parlance is sophisticated jugglery of world negative as nobody wants to speak the truth that output has gone down or dropped. Management and official jargon has taken a new leap in falsehood and lies as truth is totally at a discount and invention and magic with words is the norm. That is Harvard or management school education, push the dirt under the rug, don't allow it to be exposed. Thanks to multinational producers and sellers of genetically modified seeds or biotechnology, salesmen push the hybrid seeds for well irrigated farms to grow more cotton whereas rainfed farms can take only ordinary seeds, cheaper and ten times costlier. At the time when farmers in Nagpur or Vidharbha and Andhra should be reaping a big crop, they find zero shoots. They have borrowed money to buy this costly seeds. They are deep in debt, of principal and interest. They have been cheated. Since they cannot afford to pay, the moneylender knocks at their men with musclemen in tow, throws them out of their hearth and home and occupies their parched farm. What does the poor farmer do now? He takes his life, next members of his family start doing the same. Thousands of farmers have been doing so for some decades now, although heartless money lenders have been doing this for centuries gone by. That is the story of Indian village, village after village. Now that a general election is less than 15 months away to choose a new Lok Sabha and three States in the north east are in the process to elect legislatures and six more States will do so before the end of the year or early next year, the Government is engaged in double quick time to line up doles for the voters, especially for the farmers, who are the backbone of a democracy, who hold the maximum number of cards. The magicians that the Prime Minister, his Finance Minister, and their boss, the Chairperson of the United Progressive Alliance are, have ordained that Rs.32,000 crores of buoyant government revenues must be dispensed with as debt relief to farmers to woo them for the grand old party. This is less than ten per cent of the bank loans of Rs.3,42,000 crores the farmers owe to the banks, but it is the government which will reimburse them so that they can balance their books and prudential banking does not receive a jolt. But the farmers at the mercy of private money lenders who charge 2 to 3 per cent are unlikely to benefit. Will they continue to die and starve as before? Only time will tell. God save them, for who else can? Lalit Sethi, NPA

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