Post Dost: The changing face of India Post

by Alkesh Tyagi*

 
For over 150 years post offices have been the most visible and popular face of the Indian Government throughout the country. The concept of e-governance i.e Government at your desktop being advocated and promoted today can trace its genesis in services rendered by Post Offices, when the Postman was  the only person delivering mail personally at the doorstep of the people. Now India Post is gearing up to play more comprehensive role by reorienting itself to meet the expectations of future generations.

The Indian economy has scaled new height over the last few years and is still in acceleration mode. Emergence of several significant trends such as: liberalisation and globalisation; demographic shift towards urbanisation leading to increasing internal and external migration requiring to be serviced; monetisation of the economy especially the agricultural sector giving rise to a corresponding demand for financial services by all sections of the population; and government policy to increase funding for weaker section programs has necessitated changes in postal framework.

Services
The four main areas of services offered by India Post are- Communication Services-  Delivering letters, post card etc; Transportation Services- Transporting  parcels, logistics etc; Financial Services-  Facilitating saving bank, money order, insurance etc and Value added Services- Providing  speed post service, business post, direct post etc.

Transmission and delivery of mail is India Post’s core business so far. Post Office Savings Bank is the oldest and largest banking institution in the country. Transmission of funds by postal order/money order has been the traditional way of money transfer. Since 1884 onwards Postal Life Insurance (PLI) has been providing life insurance coverage, initially to employees of P&T Department and subsequently to all Government employees. Since 1995 PLI has been extended to the rural population of the country under a new scheme Rural Postal Life Insurance (RPLI).

Responsibilities
Globalization and the deepening of market mechanism in India have brought forward the concept of self sufficiency and social service going hand in hand.  India Post is committed to fulfil the Universal Service Obligation for providing basic postal service throughout the country, irrespective of terrain, at an affordable price.  India Post fulfils this obligation through the largest postal network of 1, 55,035 Post Offices (as on 31.3.08) in the world.  Of these 1, 25, 489 Branch Post Offices cater exclusively to rural areas.

Besides new responsibility of  facilitating applications under Right to Information is being shouldered by the post offices.

New Initiatives
To meet the challenges posed by ever changing communication technology especially mobile telephony and World Wide Web, Department of Post is attempting to transform it, striking a balance between its objectives and outcomes of transformation.  As the transformation is a multi dimensional process attempt is being made to change the Department at multiple levels.

In order to provide better, faster and satisfactory services to its customers, India Post is focusing on few key areas. Pick up mail facility, electronically enabled services, a dedicated freighter services, the instant money order, and many other similar initiatives have been undertaken to reorient the services for providing greater satisfaction to its customer. At the same time, for self sufficiency, India Post is exploring the role of business facilitator for other organisations.

Dedicated Freighter Service
In an effort to deliver the mail, parcel, speed post and the logistic consignments by the next day in major cities, India Post has added two more aircrafts bringing the total number to three and the process to acquire the fourth is in pipeline.  These three aircrafts dedicated to carry only postal cargo touch nine cities every night making possible faster delivery in major cities and their peripheral areas.

Project Arrow
An initiative to transform India Post into a vibrant and responsive organisation is going on under the ‘Project Arrow’.  Under the Project 50 Post Offices were modernized in the first phase and 450 in the second phase.  Now the third phase is under process for transforming 500 post offices. Selected post offices are undergoing complete overhaul in their look and feel as well as in their core functions and operations.  Systematic transformation of post offices in a phased manner will revitalise India Post.

The new logo of India Post reflects this change. The straight lines have been replaced by bold strokes retaining the ‘wings’ element. There is an element of modernity with a conscious effort to maintain an element of continuity.  Red and Yellow colours used in its logo convey passion, power and commitment with a pinch of hope, joy and happiness.

IT leads Initiatives
Efforts are on to equip post offices with latest communication means. All the post offices in the country will be computerised during the current five year plan. Major 25,000 post offices have already been computerized and the remaining branch post offices will be taken care during rest of the period.  This will make the delivery of information and money order faster.            

Recognition
Nation Wide reach of India Post has attracted many private partners.  Be it Mutual funds or money transfer business.  Since 2001 DOP has been making select mutual fund product available through post offices.  Five years ago UTI Mutual Fund and Department of Post joined hands to bring capital markets closer to common man in semi urban and rural areas.  India Post provides penetration to the remotest corners of India making mutual fund popular.

Recognising the crucial role, India Post was facilitated on 24th September 2009 with UTI-CNBC special commendation award in the form of “Financial Advisor Awards 08-09” trophy for effectively utilizing its network to promote financial inclusion in smaller places.

An efficient and reliable communication network is the lifeline of the nation and plays a crucial role in socio-economic development and the integration of the country. For nearly a century and half the Postal System has been the main component of the communication infrastructure for the country. Given the need for a strong communication and financial infrastructure, India Post is preparing to meet both challenges and avail of the opportunities presented by current market conditions. With its efforts India Post will make social, commercial and industrial life possible in the remotest parts of India. Though, traditionally India Post have been the courier of peoples’ emotions and trust but changing with times will make India Post even more attractive and useful because of its reach and credibility.

*Deputy Director (M&C), PIB, New Delhi

Fiscal deficit projected at 6.8% of GDP

The Finance Minister Pranab Mukherjee has said that the fiscal deficit as a percentage of GDP is projected at 6.8% as compared to 2.5% of the Budget Estimates for 2008-09 and 6.2% as per the provisional accounts of 2008-09.

Presenting the General Budget for 2009-10 in Lok Sabha today, Mr. Mukherjee assured that the government will address the issue in right earnest to come back the path of fiscal consolidation at the earliest as this level of deficit was a matter of concern.

The Finance Minister informed that the Budget Estimates for 2009-10 provide for a total expenditure of Rs.10,20,838 crore consisting of Rs.6,95,689 crore towards Non Plan and Rs.3,25,149 crore towards Plan expenditure. At this level the Non Plan expenditure marks an increase of 37% over BE 2008-09 whereas the Plan expenditure increases by 34%. The increase in expenditure in 2009-10 BE has been pegged at 36%. The Finance Minister pointed out that the Non Plan expenditure mainly increases on account of implementation of the 6th Pay Commission recommendations, increased food subsidy and higher interest payment arising out of the larger fiscal deficit in 2008-09.

Mukherjee provided a substantially increased Defence outlay of Rs.1,41,703 crore in the budget for 2009-10 as against Rs.1,05,600 crore in BE 2008-09. He informed the Lok Sabha that the total provision for subsidies during 2009-10 has been raised to Rs.1,11,276 crore from Rs.71,431 crore in BE 2008-09.

The Finance Minister told the Lok Sabha that the gross tax receipts are budgeted at Rs.6,41,079 crore in 2009-10 as compared to Rs.6,87,715 crore in BE 2008-09, given the possibility of economic down turned persisting in the current year. He informed that the non tax revenue receipts, is likely to be better at Rs.1,40,279 crore in the current fiscal as compared to Rs.95, 785 crore in BE 2008-09. The revenue deficit is projected at 4.8% of GDP as against 1% in BE 2008-09 on 4.6% as per provisional accounts of 2008-09.

ICSA FY 09 Revenues crosses INR 1100 Cr.

Mumbai, April 29, 2009: ICSA India Ltd., which provides embedded technology solutions and Infra structure deployment services for the power sector, is pleased to announce its FY 09 results for the period ended March 31, 2009.

The Profit after Tax (PAT) for FY 09 is up by 51.40 % to Rs. 168.27 Cr. as against Rs 111.14 Cr. for FY 08.

Total Income for FY 09 stood at Rs 1113.09 Cr. as against Rs 678.55 Cr. for FY 08, a growth of 64.03 %

Basic EPS stands at Rs.37.10 per share of Rs.2/- each as compared to Rs.27.57 per share of Rs.2/- each for corresponding previous year.

The results for the Q4 FY09 show that the total income stood at Rs 287.14 Cr. as against Rs 212.03 for Q4 FY 08, registering a growth of 35.42 %

Similarly, Profit after Tax (PAT) stood at Rs 34.05 Cr. for Q4 FY09 as against Rs 37.45 Cr. for the corresponding quarter last year.

“A sound order book position to the tune of Rs 1915 Cr. and strong commitment from our clients has ensured our journey on the growth path in the transmission and distribution segment.” Mr. G Bala Reddy, CMD, ICSA India Ltd said on Wednesday following the company’s board meeting.

"We continue to come up with innovative solutions and improve our services on the Infrastructure business for the power sector. However, the year that passed by has seen significant changes in APDRP, which stands as the backbone of the power sector reforms in India. The new policies and implementation procedures of rAPDRP, coupled with the nationwide electoral process have affected the reforms in terms of cease on new project releases and prolonged execution of ongoing projects.

The overdue caused due to structural changes proposed through rAPDRP have a systemic effect on all the stakeholders in the radius with out exceptions to ICSA.”

Going forward during this financial year, while we are set to achieve the targets, revenue is expected to see a shift, since the order book has a higher contribution from infrastructure services compared to embedded technologies business group. The delayed rAPDRP have pushed the technology project cycles by almost 2 quarters which might show effect on our overall business performance. This change is likely to be visible in the quarter already in progress.

Some important highlights during the year include:

• The infrastructure business has shown a tremendous increase in the overall business mix for the quarter over the previous quarters.

• ICSA has bagged orders worth Rs. 515 crores from various clients in Q4. Infrastructure orders make up majority.

• The Raw material cost increased marginally due to the inflationary trend in major input costs during the quarter

• Manpower expenses has come down as a percentage of sales

• The effective tax rate for ICSA has reduced due to the benefits claimed by commissioning of 9.6 MW wind power facility during the year

• PAT has shown a variation from the last year due to a combined effect of increase of costs, interests and variation in tax rate and business mix.

About ICSA (India) Ltd.

ICSA (India) Ltd. provides hardware and software to power firms and electricity boards to tackle AT&C losses. Over 95% of its business comes from the power space and the rest from oil & gas, where it provides solutions for monitoring and protecting pipelines. ICSA (India) Ltd. is also in the business of infrastructure deployment services in transmission and distribution segments like erection of substations and lines. The company counts amongst its investors Goldman Sachs, Morgan Stanley and the Government of Singapore.

The company's product line includes: Intelligent Automatic Meter Reading System, Multiplexer Unit, Distribution Transformer Monitoring System, Substation Controller, Micro Remote Terminal Unit, Theft Detection Devices, and Pole Top RTU. The company has developed products suitable for power utilities in the field of Energy Management, Energy Audit, and Control applications and provides versatile Data Acquisition Systems using GSM, CDMA, and RF. ICSA makes products, which primarily detect the where, how and how much are the AT&C losses and feed the impacted institutions. Armed with the vital statistics, affected institutions take the necessary steps to plug loopholes.

ICSA enjoys first mover advantage, having begun in FY 2004. It began developing embedded solutions for identifying and minimizing AT&C losses and monitoring power consumption. Its first product was IAMR or the Intelligent Automatic Meter Reading, followed by other products such as DTMS, TDD, iCAP, etc.

ICSA is addressing a critical segment of the economy, and a pressing concern. For more details visit www.icsa-india.com.

For Further information, kindly contact

Shahab Shaikh | Account Manager
Concept Public Relations Limited
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IDBI Fortis launches Retiresurance Pension Plan

• Offers a wide array of flexible investment options to ensure a comfortable paycheck during retirement
• Guaranteed loyalty additions, Tax benefits

MUMBAI: Targeting the Rs 35,000 crore pension plan market, IDBI Fortis Life Insurance today announced the launch of its innovative RetiresuranceTM Pension plan which will help its customer ensure a comfortable paycheck for themselves post retirement.

Launched only last year, IDBI Fortis Life Insurance, one of the fastest growing life insurance companies in India, has come out with WealthsuranceTM, BondsuranceTM and HomesuranceTM plans which have proved to be instant hits with its customers. With the RetiresuranceTM Pension Plan, the company aims to fulfill the needs of the current generation which may find the traditional pensions and gratuity benefits inadequate when they retire.

“With the rising costs of living and fluctuating fortunes, RetiresuranceTM Pension Plan will prove to be extremely useful after one’s retirement when one wants to continue to lead an un-restricted, happy life without having to face a cash crunch,” said Mr. G V Nageswara Rao, MD & CEO of IDBI Fortis Life Insurance.

“Earlier generations may not have had a formal retirement plan but they had relatively fewer consumption needs. It was rare to find people who had shifted through several jobs in the course of an active career. As a result, pensions and gratuities issued by their employers were deemed sufficient. Times have changed now, and in most contemporary industries, few employers provide for a life long pension,” Mr. Rao explained.

Sounding a note of caution, he said that managing finances during retirement would be extremely tough if one hasn’t planned for retirement. The best way to enjoy the good times even in your golden years would be to build your investments in advance for retirement.

The IDBI Fortis RetiresuranceTM Pension Plan allows the customer to choose the premium amount, frequency of payment and payment term, flexibility of reducing premiums within limits or adding top-up premiums as and when one wishes. It offers a wide choice of investment options to build a retirement corpus, such as equity linked funds for those with a high risk appetite and debt funds for those desiring relative stability. The customer also has the option to change his investment options from time to time and use this flexibility to take advantage of changing market conditions. The plan also offers liquidity through partial withdrawals and surrender. Furthermore, the customer also has the option to choose his vesting date (the date when one wants to start the retirement benefits) at any time between age 40 years to 75 years. All these features are with no additional cost to the customer.

IDBI Fortis RetiresuranceTM Pension Plan also boosts the investment returns for its customers through Guaranteed Loyalty Additions at the end of specific terms as an incentive for making long term investments.

Customers of this plan will enjoy tax savings under Sec 80 CCC. More over, one-third of the retirement corpus can be commuted tax free under Sec 10(10A) as well.

About IDBI Fortis:
IDBI Fortis Life Insurance Co Ltd is a joint-venture of IDBI Bank, India’s premier development and commercial bank, Federal Bank, one of India’s leading private sector banks and Fortis Insurance International, a multinational insurance giant based out of Europe. In this venture, IDBI owns 48% equity while Federal Bank and Fortis own 26% equity each. IDBI Fortis launched its first set of products across India in March 2008, after receiving the requisite approvals from the Insurance Regulatory Development Authority (IRDA). At IDBI Fortis, we endeavor to deliver products that provide value and convenience to the customer. Through a continuous process of innovation in product and service delivery we intend to deliver world-class wealth management, protection and retirement solutions to Indian customers. In just five months of inception, we became one of the fastest growing new insurance companies to garner Rs 100 Cr in premiums. The company offers its services through a vast nationwide network across the branches of IDBI Bank and Federal Bank in addition to a sizeable network of advisors and partners. As on March 31st 2009, the company had collected more than 320 Cr in premiums, through over 85,000 policies and over Rs 2,500Cr in Sum Assured. Do visit www.idbifortis.com to know more.

About the sponsors of IDBI Fortis Life Insurance Co Ltd
IDBI Bank Ltd. continues to be, since its inception, India’s premier industrial development bank. Created in 1956 to support India’s industrial backbone, IDBI Bank has since evolved into a powerhouse of industrial and retail finance. Today, it is amongst India’s foremost commercial banks, with a wide range of innovative products and services, serving retail and corporate customers in all corners of the country from over 537 branches and more than 915 ATMs. The Bank offers its customers an extensive range of diversified services including project financing, term lending, working capital facilities, lease finance, venture capital, loan syndication, corporate advisory services and legal and technical advisory services to its corporate clients as well as mortgages and personal loans to its retail clients. As part of its development activities, IDBI Bank has been instrumental in sponsoring the development of key institutions involved in India’s financial sector – such as the Securities and Exchange Board of India (SEBI), National Stock Exchange of India Limited (NSE) and National Securities Depository Ltd. Please visit www.idbibank.com to know more.
Federal Bank is one of India’s leading private sector banks, with a dominant presence in the state of Kerala. It has a strong network of over 600 branches and 500 ATMs spread across India. The bank provides over four million retail customers with a wide variety of financial products. Federal Bank is one of the first large Indian banks to have an entirely automated and interconnected branch network. They operate on the core banking platform and are RTGS/ NEFT enabled through which the Bank offers state-of-the-art technology enabled products and services. In addition to interconnected branches and ATMs, the Bank has a wide range of services like Internet Banking, Mobile Banking, Tele Banking, Any Where Banking, debit cards, co-branded credit cards, online bill payment and call centre facilities to offer round the clock banking convenience to its customers. The Bank has been a pioneer in providing innovative technological solutions to its customers and the Bank has won several awards and recommendations. Please visit www.federalbank.co.in to know more.
Fortis is an international insurance group composed of Insurance Belgium, a leader in life and non-life insurance in Belgium distributing its insurance products through the network of Fortis Bank and independent insurance brokers and Insurance International with subsidiaries in the UK, France, Hong Kong, Luxembourg (Non-life), Germany, Turkey, Russia and Ukraine, and joint ventures in Luxembourg (Life), Portugal, China, Malaysia, Thailand and India. Please visit www.fortis.com to know more.

Sahara embarks on Rs 22,000 cr power plant plans

Sahara India Power Corporation Limited, the subsidiary of Sahara India Pariwar's real estate company Sahara Prime City Limited signed Memorandum of Understanding (MOU) with the Government of Orissa for setting up a 1320 MW (2 x 660) Coal Based Thermal Power Plant in Turla Tehsil of Balangir District, Orissa at an investment of about Rs.5604 Cr.

The MoU was signed by Mr. Pradeep Jena, Commissioner Cum Secretary - Power, on behalf of the Government of Orissa and Mr. Ashok K Bhargava, Chief Advisor and Head – Sahara Power Projects, in the presence of the Hon'ble Chief Minister of Orissa, Shri Naveen Patnaik and other distinguished dignitaries and officials.

To be built on an area of 1,500 acres, the Sahara Power's Turla plant is planned to commission its first Unit of 660 MW by February 2013 while the second unit of 660 MW is expected to be commissioned within 6 to 8 months thereafter. The plant is planned to be set up through Joint Venture Participation with Power Companies from different parts of the world.

Sahara India Power Corporation Limited will develop fuel based or non conventional power plants using the latest and emerging technologies. Sahara Power will set up a 5 MW Grid Interactive Solar Photo Voltaic Power Plant in Dhenkanal District of Orissa at an estimated investment of about Rs. 125 Cr. The Company has already received an in-principle approval from the Government of Orissa through M/s Orissa Renewable Energy Development Agency (OREDA).

Sahara Power has tied up with M/s Solar Integrated Technologies Inc. (SIT) USA, as its strategic partner for supply and installation of the required plant and equipment. In addition to this, Sahara Power is also planning to set up 25 MW of Wind Power projects in Orissa through a reputed Wind Energy Company which has already set up wind masts at 7 locations. The company plans to proceed with the project once it receives data, gathered by the masts in next 6 to 9 months.

Sahara India Power Corporation Limited has also proposed to set up a 2000 MW Coal based power plants in Jharkhand and Chhattisgarh at an estimated investment of Rs. 8000 Cr. each.

On this occasion Mr. Ashok K Bhargava said, "We extend our sincere gratitude to the Government of Orissa for their kind support, cooperation extended to us at all levels of our efforts to initiate the power projects in the state. We are confident that our project will not only serve the Energy requirement of the state and the country but will also bring in all round integrated development in the region of Turla district."

Sahara India Pariwar, considered as one of the most socially responsible corporates of the country, has plans, along with the setting up of the Mega Power Plant, to contribute to the welfare of the people of the Balangir district. The group with the aim of improving the quality of life of the local populace will develop pucca roads in the projects vicinity, make provision for potable drinking water and will also set up primary health and education centre. The Power Plant and its related infrastructure shall further attract investment in the region by Corporate Houses and Entrepreneurs in the Manufacturing, Real Estate, Service Sectors etc. by setting up of establishments, amenities and facilities, including Ancillaries and SMEs.

Commenting on the signing of the MoU Mr. Sushanto Roy, Head – Infrastructure & Housing, Sahara Prime City Limited, said, "It is a moment of great pride for all of us at Sahara India Pariwar as we have joined hands to fulfill the power requirements of the nation. Power Sector also holds a huge business opportunity and we have forward integrated plans to be a major player in all the segments including power generation through conventional and renewable resources, power transmission & distribution, power trading, manufacturing of power equipments etc."

Notes to the Editor

• Sahara India Power Corporation Ltd is a 100% subsidiary of Sahara Prime City Limited, the real estate Company of Sahara India Pariwar.
• Sahara Prime City Limited has developed commercial and residential projects which includes townships, premium group housing projects, hospitals, hotels, among other projects.
• The flagship project of SPCL is 'Sahara City Homes', a chain of townships to be developed across 217 cities in India.
• The other projects of SPCL are 'Sahara Star', a luxurious 5 star Deluxe Hotel located near the Domestic Airport in Mumbai, and a 554 bedded Super Specialty, Multi-Disciplinary, Tertiary Care Sahara Hospital in Lucknow.
• Sahara Power was set up in 2001 with the aim to provide reliable and continuous power supply to 'Sahara City Homes'. Each project of Sahara City Homes will need 30 MW of dedicated power, aggregating over 6000 MW.

Banks must heed to RBI's call to cut rates

by Ashok Handoo*

By not reducing any of the key rates in its third-quarter review of the monetary policy, the Reserve Bank has sent a clear signal to commercial banks that they need to reduce their lending rates and make cheaper credit available to the customers. RBI is clearly of the view that banks have yet to pass on the benefits of the previous cuts in interest rates announced by it. Obviously, the Reserve Bank is not happy with the response of the banks, particularly private and foreign banks, to the initiatives taken by it so far. It feels there is enough scope for banks to do more.

As it is, the Reserve Bank in a space of just one quarter brought down the repo rate (the rate at which RBI lends overnight funds to banks) from 9 to 5.5 percent. The reverse repot rate (the rate at which RBI accepts deposits from banks) was brought down to 4 percent, what the RBI Governor Dr. D. Subbarao described as “historically lowest level”. But as he pointed out it’s “transmission in the credit market has so far been subdued”. RBI firmly believes that it’s policy easing had allowed banks considerable room to respond more actively which has not happened. It has thus adopted a wait and watch policy for the time being, to monitor the response from the banks and give them more time.
The bankers, on the other hand, feel that they have responded to the extent possible. They argue that the average cost of funds to them is still high and lending and borrowing rates can come down only when the fund costs come down. Some even expressed disappointment at the RBI “holding back it’s activism” in reducing the key rates to make cheaper funds available to them. But by and large, bankers agree that the RBI policy is on expected lines.

Through its earlier initiatives the RBI has infused liquidity of over Rs. 4 lakh crore into the system improving the liquidity situation, significantly.

It is not that the doors for further reduction in key rates have been closed. On the contrary, the RBI has made it clear that it will respond to any adverse development. So, more cuts outside the policy can happen anytime. The current pause could only be a temporary thing.

Another message that the RBI has given is that there is a clear evidence of deeper consequences of the global downturn on the Indian economy which can lead to its further slowdown. Industrial activity, particularly in the manufacturing and the infrastructural sectors, is decelerating. The services sector too, which has been the prime engine of growth for the last several years, will slowdown mainly in construction, transport, hotels, tourism and trade sectors. . The consequences have been more pronounced after October 2008 which has led the RBI to revise its GDP growth projection for the current financial year to 7 percent against the earlier 7.7 percent. In fact the Survey conducted by the 13 professional forecasters has put it at 6.8 percent.

That is all the more reason for the banks to respond more vigorously to the rate cuts already effected.

At the same time , there are two positive factors at play. One, the inflation rate has been falling sharply for the last 10 months to 5.6 % with only a small aberration in the latest figure which is attributed to the Truckers strike during that period. The current projections are that the rate will fall further to about 3 percent by March end, though it is reflected more in the Wholesale Price Index (WPI) than in the Consumer Price Index (CPI).That is primarily because of the fall in international crude oil prices, steel and select food items. A fall in demand has also played some role in this.

The second positive factor is the expected increase in consumption demand in the days ahead, reflecting rise in basic exemption limits in tax and tax slabs, the 6th pay commission award, debt waiver to farmers, and the expenditure that would be incurred in the run up to elections in a few months from now.

All this will allow an elbow room to the government to cut the key rates further, if the situation so demands.

The RBI has also warned that the fiscal measures to boost growth and lower revenue receipts could sharply widen the fiscal deficit from the earlier estimate of 2.5 percent to 5.9 % .The combined shortfall of the centre and the state governments could come to 8.5 %, or even more.

As the Prime Minister’s Economic Advisory Council pointed out the other day, both the saving and investment rates are likely to be lower in the current fiscal. The saving rates may fall due to larger negative savings of the Government. The investment rate will be less by 2.5 percentage points compared to the previous year, due to financing constraints facing Indian enterprises.

The widening trade deficit is a matter of concern as is the moderation in capital inflows. Though the Foreign Direct Investment (FDI) has shown an increase in the current financial year the portfolio investment has recorded a substantial outflow. The institutional investors have sold about $10 billion of their investment in Indian companies to cover losses in their home markets.

With Indian economy getting more and more integrated with the world economy and the US, Europe and Japan already experiencing recession, India can not remain totally insulated. A less than optimistic sentiment in the economy is therefore quite natural. As the Prime Minster pointed out India’s economic problems would not be over in the current year and could spill over into 2009-10, but the “Government will continue its efforts for a supporting environment next year also. Both monetary and fiscal policy will have to be tailored.” The Deputy Charmin of the Planning Commission Shri Montek Singh Ahluwalia has also spoken of innovative interim measures. These include floating of tax- free bonds ‘to provide refinancing facilities to banks to encourage them to offer long term debts” to companies investing in infrastructure sectors which have long gestation periods.

It is a matter of satisfaction that everybody agrees that the Indian economy will recover earlier than the world economy, once things begin to improve. (PIB Features)

*Disclaimer : The views expressed by the author in this feature are entirely his own and do not necessarily reflect the views of PIB.

IDBI Fortis secures Title Sponsorship for India-Sri Lanka series

IDBI Fortis also signs on as co-presenting broadcast sponsor on NEO Cricket


MUMBAI, January 23, 2009: Nimbus Sport has entered into an agreement with IDBI Fortis for Title Sponsorship of the India - Sri Lanka Cricket Series 2009 consisting of 5 One Day Internationals and 1 Twenty20 match.

The ODI series will be called the IDBI Fortis Wealthsurance Cup and will be followed by the IDBI Fortis Wealthsurance Twenty20.

As previously announced the television coverage of the entire Series is being produced by Nimbus Sport and in India will be broadcast on the No. 1 sports channel NEO Cricket. The event will also be broadcast worldwide and Nimbus Sport expects to make a separate announcement on Saturday January 24, 2009 revealing the broadcast partners across the world.

Announcing the sponsorship, Yannick Colaco, Executive Vice President, Nimbus Sport said, “We are delighted at the opportunity of bringing one of India’s fastest growing life insurance companies, IDBI Fortis Life Insurance into the world of cricket.”

IDBI Fortis will also be a co-presenting sponsor on NEO Cricket during the live broadcast of the Series.

G. V. Nageswara Rao, Managing Director and CEO, IDBI Fortis Life Insurance Co. Ltd. added, “Wealthsurance is an innovative and novel concept in bundling the power of investments with the protection of insurance. We hope to bring its message to the masses by associating with this Series as the Title Sponsor. With the event being broadcast on India’s No.1 sports channel, NEO Cricket, we are confident that the IDBI Fortis Wealthsurance Cup will have all of India glued to their TV screens to what will surely be a thrilling contest.”


The sporting spirit and never-say-die attitude of the most committed sportspersons is as inspiring as IDBI Fortis’ flagship product, Wealthsurance, which tirelessly strives to achieve your investment goals while staying unaffected by bad kismet that life may throw at you. This Series will showcase the spirit of two very committed and competitive teams that will aim to acquire the coveted IDBI Fortis Wealthsurance Cup.


Raju Udupa, Executive Vice President, NEO Cricket added, “IDBI Fortis is an exciting addition to NEO Cricket’s long list of high pedigree advertisers and we expect that the platform of the No. 1 sports channel combined with this high profile Series will catapult IDBI Fortis to market leadership.”

About IDBI Fortis Life Insurance Co. Ltd.

IDBI Fortis Life Insurance Co. Ltd is a joint-venture of IDBI Bank, India’s premier development and commercial bank, Federal Bank, one of India’s leading private sector banks and Fortis Insurance International, a multinational insurance giant based out of Europe.

It is one of the fastest growing new life insurance companies in the country, having launched operations in March 2008 with their innovative product ‘Wealthsurance’. The company has already launched 31 branches and plans to have a pan-India presence with a total of a 100 branches. It also sells through the more than 1000 branches of its promoter banks, IDBI Bank and Federal Bank.


About Nimbus Sport International Pte. Ltd.

Singapore headquartered, Nimbus Sport International Pte. Ltd. (100% subsidiary of Nimbus Communications Limited) is a leading full service sports management company providing end to end solutions including rights management, television production, sponsorship sales, event management and sponsor services.

Nimbus Sport currently manages various commercial rights (on long term contracts) for a number of global sports federations including the BCCI (Indian Cricket Board), Bangladesh Cricket Board, Cricket Kenya, ACC and the English Premier League (digital/new media rights).

Nimbus Sport has in the past managed the media and sponsorship rights of the ICC Cricket World Cup and other ICC events. As a globally reputed production company for live match coverage, Nimbus Sport has produced live coverage and / or managed rights in 9 of the 10 Test Cricket Playing Nations.

Oil, truck strikes fuel inflation rise

The annual (year-on-year) rate of inflation in Indian economy increased to 5.6 per cent for the week ending January 10, 2009 compared to 5.2 per cent reported last week, showing a rise of 36 basis points, largely attributable to the impact of the oil and transport sector strikes.

A Finance Ministry communique points out that the increase in the inflation rate has temporarily reversed the 11-week declining trend which had set in since the last week of October 2008.

Year-on-year Inflation by Commodity groups

Commodity group-wise examination shows that inflation in the groups of primary articles and manufactured products have mirrored the rising trend seen in overall inflation in the current week.

i.In ‘primary articles’, the rate of inflation increased to 11.6 per cent, compared to 10.9 per cent reported last week. In the sub-group of ‘food articles’, inflation, which had declined to single digit in the last fortnight, rose to 11.6 per cent in the week ended January 10, 2009 as against 9.5 per cent in the previous week, largely due to higher inflation in vegetables and milk. In ‘non-food articles’, inflation continued to decline to 7.1 per cent compared to 9.6 per cent in the previous week, while inflation in ‘minerals’ rose to 41 per cent versus 40 per cent last week due to higher inflation in non-metallic minerals as limestone and felspar.

ii.In ‘fuel and power’, the rate of inflation remained steady at (-) 1.3.

iii.In ‘manufactured products’, the inflation rate increased to 5.9 per cent, compared to 5.6 per cent last week. While most sub-groups recorded stable or declining rates of inflation, the sub-groups of sugar, khandsari and gur, textiles and canned/processed fish showed increase.

For the combined food index (weight = 25.43 per cent), the year-on-year inflation in the week ended January 10, 2009 was higher at 9.5 per cent compared to 7.9 per cent last week. Inflation in cereals, pulses and fruits continue to register inflation rates ranging from 9 to 20 per cent.

Contribution of Commodity groups

Contribution of primary articles to the year-on-year inflation rate for the week ending January 10, 2009 show that this group accounted for 46.9 per cent, as against their share of 22 per cent to the WPI basket. While the contribution of the fuel and power group was (-) 5.1 per cent vis-à-vis share of 14 per cent, that of manufactured products was 58.5 per cent against a share of 64 per cent in the commodity basket.

Inflation measured by CPI

Inflation recorded by the Consumer Price Index for Agricultural Labour (CPI AL) and for Rural Labour (CPI RL) has remained steady at 11 per cent during September – December 2008.

Birla Sun Life Insurance bags micro insurance mandate from global project

• BSLI to offer micro Insurance solutions to over 100,000 people
• Part of a DFID funded Asian project
• To be implemented in UP, Bihar & MP

MUMBAI: In a major development that will see Birla Sun Life Insurance making inroads into micro insurance, the company has been selected to partner a prestigious international development project for promoting a sustainable livelihood program in three states of India – Bihar, Uttar Pradesh and Madhya Pradesh.

This 4.6 million pound development project has been initiated by the UK-based Research Into Use (RIU) project and funded by Department for International Development (DFID) and spans across the next three years.

GY Associates Ltd, UK is the lead partner for this project with RIU. For the project, G Y Associates has a contractual agreement with Centre for Promoting Sustainable Livelihood (CPSL), a Patna based NGO to form 10,000 Self Help Groups (SHGs) and ICAR (Indian Council of Agricultural Research) to provide technical support to the project. CPSL has identified BSLI as a coalition partner to provide micro insurance to the SHG members.
The project will directly benefit 2,000 villages and around 10,000 Self Help Groups and over 100,000 group members. It will cover a total of 500,000 direct beneficiaries in the rural areas.

"We are extremely delighted at this unique opportunity to partner a prestigious international project and to work at the grass root level. With this New Year gift, we are positioned to begin a new era in our service. As a partner, BSLI will create awareness of the need of life insurance among the Self Help Group Members formed under the project and thus generate demand for Micro Insurance Products and make the insurance plan accessible and affordable to that segment. Our objective is to provide social and financial security to the SHG members," said Ajay Srinivasan Chief Executive, Financial Services, Aditya Birla Group.

Inflation decines to 5.9%

Indian Annual rate of inflation, year-on-year, declined to 5.9 per cent for the week ending December 27, 2008 compared to 6.4 per cent reported in the previous week, showing a decline of 47 basis points, says a Finance Ministry communique.

Inflation has consistently been on the decline for three months now and stands slightly above the rate of 5.7 per cent in the week ended February 23, 2008.

Inflation by Commodity groups

Commodity group-wise examination of year-on-year inflation shows that inflation in all groups has recorded decline.

i.In ‘primary articles’, the rate of inflation decreased to 11.6 per cent, compared to 12.1 per cent reported last week. Within primary articles, inflation rate in all its three sub-groups of food and non-food articles and minerals have declined together for the first time in the current week. Inflation rate in food articles at about 10% represents a decline after 5 consecutive weeks of increase in the rate, while the inflation rate in minerals have gradually decelerated to 40 % in the current week from its peak rate of 54.5 % in October.

ii.In ‘fuel and power’, the rate of inflation has remained unchanged at (-) 0.7 per cent.

iii.In “manufactured products”, the inflation rate decreased to 6.2 per cent, compared to 6.8 per cent in the last week.

For the combined food index (weight = 25.43 per cent), the year-on-year inflation in the week ended December 27, 2008 was lower at 8.5 per cent compared to 8.8 per cent last week.

Contribution of Commodity groups

Contribution of primary articles to the year-on-year inflation rate for the week ending December 27, 2008 show that this group accounted for 44.2 per cent, as against their share of 22 per cent to the WPI basket.

Deseasonalised monthly WPI inflation

The deseasonalised overall WPI inflation show a continuing decline which began from July 2008. It has turned negative since September 2008 at (-) 3.2 per cent, (-) 9.6 per cent in October, (-) 18.1 per cent in November and (-) 13.5 per cent in December 2008. An identical pattern of decline from July 2008 and negative from September is manifest in the deseasonalised rate of inflation for manufactured products.

RBI signals another rate cut; slashes repo, CRR

Signaling a further drop in interest rates, the Reserve Bank of India has announced the reduction of the repo rate under the liquidity adjustment facility (LAF) by 100 basis points from 6.5 per cent to 5.5 per cent with immediate effect.

The reverse repo rate under the LAF will also be slashed by 100 basis points from 5.0 per cent to 4.0 per cent with immediate effect.

The apex bank also announced that the cash reserve ratio (CRR) of scheduled banks will reduced by 50 basis points from 5.5 per cent to 5.0 per cent from the fortnight beginning January 17, 2009.

The RBI announcement said that the reduction in the CRR will inject additional liquidity of around Rs. 20,000 crore to the financial system.

It is expected that the reduction in the policy interest rates and the CRR will further enable banks to provide credit for productive purposes at appropriate interest rates. The Reserve Bank on its part would continue to maintain a comfortable liquidity position in the system.

Even as some public sector and private sector banks have cut lending rates in response to the Reserve Bank’s monetary policy stance, concerns over rising credit risk together with the slowing of economic activity appear to have moderated credit growth.

The Reserve Bank continues to urge banks to monitor their loan portfolio and take early action, including debt restructuring where warranted, to prevent the rise of bad assets down the road and safeguard the gains of the last several years in improving asset quality. At the same time, banks should price risk appropriately and ensure that quality enterprises continue to get funding.

The Reserve Bank appreciates that risk management is difficult even in normal circumstances; it is even more difficult in an environment of uncertainty and downturn.

The fundamentals of the indian economy continue to be strong. Once the crisis is behind us, and calm and confidence are restored in the global markets, economic activity in India would recover sharply. But a period of painful adjustment is inevitable, the Bank pointed out.

India's exports zoom to $ 163 billion -26.4% annual growth

Demonstrating signs of a robust Indian economy, India’s merchandise exports increased from US $ 63.8 billion in 2003-04 to US $ 162.9billion in 2007-08 recording average annual growth rate of 26.4% during the last four years.
(Values in US $ billion)
Year Exports %Growth Imports %Growth
2003-2004 63.8 -- 78.1 --
2004-2005 83.5 30.8 111.5 42.7
2005-2006 103.1 23.4 149.2 33.8
2006-2007 126.3 22.5 185.6 24.4
2007-2008 162.9 29.0 251.4 35.5
2007-08(Apr-Nov.) (P) 99.9 153.1
2008-09(Apr-Nov.) (P) 119.3 19.4 203.6 33
Provisional
Data Source: DGCI&S, Kolkata

Steps taken by the Government to arrest deceleration of export -- (1) Excise duty reduced across the board by 4% for all products except petroleum products and those products where current rate was less than 4%; (2) Interest subvention of 2% has been provided till 31.3.2009, to the following labour intensive sectors for exports: Textiles (including Handlooms), Handicrafts, Leather, Gems & Jewellery, Marine Products and SMEs; (3) Additional funds of Rs.350 crore provided for export incentive Schemes; (4) All items of handicrafts included in Vishesh Krishi and Gram Udyog Yojana; (5) Back-up guarantee to ECGC for up to Rs.350 crore; (6) Rs1,100 crore provided to ensure full refund of claims of CST/Terminal Excise duty/ Duty drawback on deemed exports; (7) Additional funds of Rs.1400 crore provided for textile sector to clear the backlog claims of TUF; (8) Export duty on iron ore fines eliminated, and for lumps, reduced to 5%; (9) Import duty on naphtha for power sector eliminated; (10) Some pending issues relating to Service Tax refund on exports – resolved.

Special Economic Zones

SEZs have created employment for large number of unemployed rural youth. Even in the services sector, 12.5 million sq meters space is expected in the IT/ITES SEZs which as per the NASSCOM standards translates into 12.5 lakh jobs. It is, therefore, expected that establishment of SEZs would lead to fast growth of labour intensive manufacturing and services in the country. The total investment in the SEZs, as on 30th September 2008, were Rs.93507.23 crore and the total employment generated so far to 3,62,650 persons.

Out of the 531 formal approvals given till date, 174 approvals are for sector specific and multi product SEZs for manufacture of Textiles & Apparels, Leather Footwear, Automobile components, Engineering etc. which would involve labour intensive manufacturing. Exports from SEZs during the year 2007-08 was to the tune of Rs.66,638 crore with a growth of 92% over 2006-07 (overall growth of exports of 381% over past four years (2003-04). The export projection for 2008-09 is Rs.1, 25,950 crore.

Gems & Jewellery

During the year 2007-08, exports in gems & Jewellery sector were worth US $ 19,657.36 million dollars and registered growth of 23.13% as compared to the year 2006-07. During the period April-July of the current fiscal exports worth US $ 6296.14 million were effected as against US $ 6141.92 million during the corresponding period previous year.

Marine Products

Marine Products Export Development Authority had initiated following measures to sustain the export of marine products during the current year: 1. Launched a comprehensive programme to tap deep sea resources of Tuna and finalised an action plan for development of tuna fishery in the Andamans. 2. Increased thrust on diversification of culture practices and launched a new scheme for providing financial assistance for value addition. 3. Introduced for the first time in the world Organic fresh water shrimp in the international market. 4. Promoted ornamental fish breeding for export. 5. Took steps to set up six more screening laboratories in Andhra Pradesh to improve the quality of shrimp exported. 6. Undertook R&D activities for new aquaculture technologies / innovative methods for increasing the production of fin/shell fish varieties. 7. Taken steps to introduce a brand promotion scheme to promote the image of Indian Seafoods at abroad.

Anti-dumping Investigations during 2008

During the year 2008, the Directorate General of Anti Dumping has so far initiated 18 fresh anti-dumping investigations (till 8.12.2008). The products involved are Cable Ties, All Fully Drawn or Fully Oriented Yarn/Spin Draw Yarn/Flat Yarn of Polyester, Plain Medium Density Fibre Board, Power Steering Gear System, Thyionyl Chloride, Plastic Processing Machinery, Cathode ray Television Picture Tube – III, Nylon Tyre Cord Fabrics, Flax Fabrics, Ceramic tiles, Tyres Curing Presses, Radial Tyres, Pencillin – G, Phosphoric Acid, Diethyl Thio Phosphoryl Chloride, Cold Rolled Products of Stainless Steel, Hot Rolled Steel Products and Axle Beam and Steering Knuckles. The countries involved in these investigations are China PR, Thailand, Vietnam, Malaysia, New Zealand, Sri Lanka, European Union, Indonesia, Belarus, Hong Kong, Korea RP, Japan, South Africa, Taiwan, USA, Iran, Kazakhstan, Saudi Arabia, Russia, Romania, Turkey and Ukraine.

Performance of Plantation Sector

COFFEE – The Government of India has approved the Development Support Scheme for coffee sector with a total financial outlay of Rs.310 crore during the month of March 2008. An area of 47776 hectares has been brought under plantation from January to November 2008. A new scheme on Export Promotion of Coffee and the scheme on Support for Coffee Processing have been approved by the Government of India with a total financial outlay of Rs.45 crore on April 10, 2008. The total export for the period from January to November 2008 was 2,08,023 tonnes earning a foreign exchange of Rs.2,271.81 crore against 2,04,538 tonnes earning a foreign exchange of Rs.1,773.50 crore during the same period last year.

RUBBER – India is the fourth largest producer of rubber with a share of 8.3% in the world production. The rubber sector accounts for 93% of the production and 89% of the area with an average holding size of 0.5 hectare. Natural rubber export and import is expected to reach 72,000 tonnes and 80,000 tonnes respectively in 2008. The Rubber Training Centre received ISO: 2000 certificate in June 2008.

SPICES – Indian spices industry recorded an export of 4,44,250 tonnes worth over US $ 1 billion during the year 2007- 2008. It marked a quantum leap of 19 per cent in volume and 24 per cent in rupee value. Mumbai is the major hub for export of spices and has alone accounted for 39% in volume of the total spice exports during the last financial year.

TOBACCO – India earned a foreign exchange of Rs.2,022.78 crore and Rs.10,271.55 crore as excise revenue in the year 2007- 2008. The exports of tobacco and tobacco products during 2007- 2008 were valued at Rs.2022.78 crore. During April-October 2008, exports of tobacco and tobacco products were valued at Rs.1952.43 crore. During April-October 2008, unmanufactured tobacco exports were valued at Rs.1623.10 crore and exports of tobacco products were valued at Rs.329.33 crore. Going by the current trend exports of tobacco and tobacco products are expected to cross US $ 600 million during 2008- 2009.

Prospects of the Doha Round

India continues to believe in strengthening the multilateral trade rules of the WTO. The full liberalisation through the WTO secures the economic and commercial gains necessary in the goods and services sectors and modes of supply of interest to developing countries. India has reiterated the need for a serious discussion on the expectations of WTO Members regarding other issues. The developing countries want to have progress in some of these issues such as the TRIPS-CBD issue. The WTO Ministers will raise issues that they consider important and it would therefore be prudent to prepare for this so that the discussions in the Ministerial Conference can be held in a constructive environment and lead us to a successful conclusion.
Further, progress needs to be made in other areas of negotiations as well, that are of great interest to the developing countries. Our focus is on the bankable commitments from our major trading partners in areas where we have relative strengths and which would provide certainty and value to trade in Services. India has made it known that without bankable commitments from the major developed countries in Services, it may be difficult for India to agree to the modalities on Agriculture and NAMA. India needs to have clear information on the important elements which are required for completion of Services’ negotiations too.
India has been engaging constructively and actively with other fellow Member countries of the WTO towards this end. For India, it is important that the Doha Round negotiations are brought to a successful conclusion. Such a conclusion can only be possible if we are faithful to the mandate and the outcome reflects a clear balance between market opening and the development needs of the majority of the membership. India is ready to show the necessary flexibility to achieve such an outcome but the onus for movement lies largely with the developed countries.