India can return to 8-9% growth: Zoellick
• World Bank president Robert Zoellick .
• India is likely to return to a high growth of 8-9% in a year or two, helped by strong fiscal and monetary measures to counter the global financial crisis.
• The 11th Plan ending in 2012 envisaged achieving an average 9% growth. The GDP growth slipped to 6.7 per cent during 2008-09 as a result of the global crisis, after three years of 9% growth.
Ecopetrol, RIL to explore deepwater blocks in Colombia
• Reliance Exploration and Production DMCC (REP), a wholly owned subsidiary of Reliance Industries Ltd. (RIL), and Ecopetrol of Colombia (Ecopetrol) signed the Farm-out Agreements, effective from November 23.
• Borojo North Block 42 and Borojo South Block 43 in Colombia, subject to approval by ANH, the Colombian national upstream regulator.
• According to the agreements, Ecopetrol acquires a 20 per cent stake in the blocks while REP will retain the balance and the operatorship in these blocks.
Beyond expectations
• The Central Statistical Organisation's estimate of a robust GDP growth of 7.9 per cent during the second quarter of the year (July-September 2009).
• 7.7 per cent recorded at the same time last year.
• During the first quarter, the economy grew by 6.1 per cent.
• The second quarter seems to reinforce the forecasts of the IMF and the World Bank that India and China, along with a few other developing countries, will be in the forefront of a global recovery.
• The second quarter growth has been driven by strong performances of the manufacturing sector, which was up by 9.2 per cent compared to 5.1 per cent last year, and the mining and quarrying sector that registered 9.5 per cent as against 3.7 per cent. The growth in the services sector too has been impressive with the Community, Social and Personal services sub-segment posting a 12.7 per cent growth.
• The impact of the stimulus measures is continuing but there are signs of private consumption expenditure reviving. While there are reasons to be optimistic, a word or two of caution will be in order.
1. Agriculture and allied activities have grown by just 0.9 per cent, down from 2.7 per cent a year ago and 2.4 per cent in the previous quarter.
2. Even that does not take into account the estimated fall in the production of rice, pulses, and oil seeds during the Kharif season. The consensus is that agriculture will fare worse in the third quarter.
The ethanol challenge
• The Cabinet has once again decided that the Petroleum Ministry must ensure mandatory blending of 5 per cent ethanol with petrol.
• Deadline after deadline has passed since 2006 and the ambitious programme is yet to take off.
A complex set of factors involving the sugar industry and the ethanol market is at play
• In recent months, the oil marketing companies have been unable to contract for even half the quantity of ethanol needed for 5 per cent doping. And the quantities offered are at rates as high as Rs.41 a litre. The oil companies have until now offered Rs.21.50, although they are open to paying a little more. One of them has meanwhile planned to invest in sugar mills to ensure a captive source of ethanol.
• The cost of petrol is Rs.23 a litre and the blending of ethanol obtained at a price that is any higher will be uneconomical.
• There just may not be enough ethanol available in India to meet the blending requirement unless the acreage under sugarcane goes up significantly, and sugar mills are given the option to process sugarcane juice directly into ethanol instead of sugar.
• Both these moves will have an impact on sugar production and sugar prices. Given the rising price of sugar and the insistence by the State governments that the sugar mills meet first the demands of the beverage industry, finding enough ethanol is going to be difficult.
• Sugarcane-based ethanol is indeed "the most successful alternative fuel to date." As an excellent oxygenate and octane booster, it clearly has technical advantages.
• But in India, the world's second largest producer of sugar, almost 90 per cent of ethanol comes from cane molasses, spelling dependence on a single feedstock. Sugarcane production has historically been marked by a certain cyclical volatility, with bumper years followed by years of low production.
• In order to reduce its dependence on oil imports, rather than setting much store by ethanol, India should look more aggressively at other options including hybrid fuels and CNG. Several countries of the world, notably Brazil — which introduced ethanol-blended petrol as early as in 1931 — have come a long way here.
• But India has several limitations including land availability constraints and food security concerns that may leave a limited role for the biofuel option for now. It is time the realities of the situation were factored into ethanol policy.
Curtains down on Bajaj scooters
• Bajaj Auto announced on Wednesday that it is exiting the scooter segment altogether, bringing the curtains down on its iconic product line.
• The company had stopped making the Chetak — once the world's largest selling scooter — almost three years ago, and according to its MD Rajeev Bajaj, it will stop production of its non-starter Kristal series by end of the current fiscal.
• Bajaj Auto says it will now focus on making motorcycles.
Tata's show the way for reservations in India Inc
• The Tatas were the first to bring many material things to India — power, star hotels and steel, to name a few. The $71-billion group with interests from tea-to-telecom is also now probably the first to introduce a hiring policy that emphasises 'positive discrimination' for its scores of enterprises located across the country from the seashores to deserts to mountain tops.
RBI to promote take-out financing
• It is a mechanism wherein originator (of a loan) enters into an agreement to sell the loan to another lender at a mutually agreed price in future date. Here the originator holds the loan in his books for the initial years while the buyer of the loan retains its till maturity.
China poised to beat India in gold consumption
• China will overtake India as the world's largest gold consumer in 2009, with total demand forecast at 432 tonne compared with 422 tonne from India.
• China's investment demand alone was forecast at 83 tonne, exceeding India's 53 tonne. India bought 200 tonne from the International Monetary Fund in November, which helped send gold to successive records.
• India's purchase also strengthened speculation that other emerging country central banks will follow suit, particularly China, which has the world's largest foreign exchange reserves worth $2.27 trillion, mostly held in US Treasury bonds.
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with warm regards
Harish Sati
Indira Gandhi National Open University (IGNOU)
Maidan Garhi, New Delhi-110068
(M) + 91 - 9990646343 | (E-mail) Harish.sati@gmail.com
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