India's foreign direct investment (FDI) for July plunged by 38% to $1.09 billion from $1.78 in July 2010. The foreign capital inflows have shown decline for the first time in current financial year. However, FDI inflow for the first four months of current fiscal increased by 92% to $14.45 billion from $7.56 billion in the same period of last fiscal.

The sectors like services, construction activities, power, computers and hardware, telecommunications and housing and real estate attracted maximum FDI. During June, the FDI inflows had surged by 310% to 11-year monthly record of $5.65 billion, and in May it had increased by 111% to $4.66 billion over the same month last year.

In the first six month of current calendar year, foreign investment surged by 57% to $16.83 billion. Despite the uncertainties in the global economy, India's FDI inflow is expected to reach $35 billion from $19.4 billion in the last financial year, on account of major deal like RIL-BP and Posco.

In the last two financial years, India has been witnessing slowdown in FDI inflow. For the 2010-11, FDI declined by 25% to $19.43 billion from $25.6 billion in 2009-10, and in 2008-09 FDI stood at $27.3 billion. Counties like Mauritius, Singapore, the US, UK, Netherlands, Japan, Germany and the UAE are the major source of FDI.

Stating Reserve Bank of India's move of increasing its short term lending and borrowing rates by 25 basis points, signal to bring inflation under control. The Planning Commission Deputy Chairman Montek Singh Ahluwalia on September 16 said 'RBI is signaling their concern about bringing inflation under control. It (inflation) is high. The rate hike is within a range that is not unreasonable.'

The RBI's move of increasing key rates by 25 basis points was expected as headline inflation remains at elevated level from last few months. The headline inflation for the month of August surged to 9.78% from 9.22% in July and it has been hovering above 9% from last 9 months. However, the RBI's decision of increasing repo and reverse repo rate is expected to affect the growth in sectors like auto and other interest sensitive sectors.

Ahluwalia is hopeful that the inflation in domestic economy will come down as prices in international market are declining on the back of sluggish global economy and good harvest expected in this year.

'I think on the supply side also good harvest will have positive effect. My guess is that the global transmission of inflation will also be much less. Taking all things together, I think, the inflation will moderate', Ahluwalia said.

On the impact of depreciation in Indian rupee against dollar on Indian economy, Ahluwalia said "the foreign reserves are very high so I dont see any panic effect because of low rupee". On September 15, rupee fell to its two year low level to Rs 48 to per dollar. However, it gained 12 paise and stood at Rs 47.43 to a dollar after the intervention by RBI.

As a hindrance to exporters, shipments of 1,100 items will be entitled to lower tax refunds under the Duty Drawback Scheme (DDS), which will be operational from October 1. This new scheme will replace the Duty Entitlement Pass Book (DEPB) scheme which is expiring on September 30. However, the tax refunds on these items would be reduced by 1-3%.The Finance Secretary R S Gujral said that 'as a transitory arrangement, these items will suffer a modest reduction in the existing DEPB rate to the extent of 1-3 percent.'

While, tax incentives for these goods will be available under the DDS, the total number of items in the DDS would increase to around 4,000 items from current 2,825 items. Whereas different routes are available for exporters for refund of the duties, the DEPB is most preferred avenue for tax refunds, for its flexibility and attractive rates, which average to around 8%.

With the withdrawal of the DEPB scheme, the government is expected to lose less revenue. Last years, the government had spend around Rs 8,700 crore on DEPB tax refunds and main beneficiary products are engineering, chemical, pharma, textile and marine. As the DEPB is expiring by end of September, the government has decided to provide a smooth transition for these products, while including in DDS. Along with this, the tax refunds for this item have also been reduced in DDS.

'The reduction is mainly on account of the reduction in basic customs duty on crude petroleum from 5 per cent to nil as well as a reduction in central excise duty on diesel from Rs 4.4 per litre to Rs 2.4 per litre,' CBEC S D Majumdar said.

Of the 1,100 being shifted to DDS, there would be a ceiling of 5.5% tax refund rate on 660 items. Although, the limit would not apply to 340 items like worsted woollen yarn, blanket, nylong twine, cut polished chat stones, polyester metalized film. However, performance of exports has been impressive in the first five months of the 2011-12. Exports grew by 54.2% to $134.5 billion. But on the back of slowdown in Eurozone and US, exports may not be able to sustain the momentum.

Worried over the Eurozone crisis, poor industrial performance and depreciation of rupee, Finance Minister Pranab Mukherjee said that the global community can't afford to lose its nerve and will have to deal collectively with the situation.

The finance minister said, "A series of bad news are coming. First we had the IIP index (at 3.3% in July) lowest in two years... and (second) lengthening shadow of the Eurozone crisis all over the market in the world is matter of concern. But at the same time, we cannot lose our nerve".

Stating, hovering commodity and food prices as threat to growth and food security in energy depended emerging economy, finance minister asked for a collective global action to overcome the crisis. Finance Minister said the growth in most advanced economies has declined in the second quarter of 2011 and emerging markets are witnessing a combination of moderation in growth and rising inflation.

Finance Minister's comment came just after the day the India's industrial production plunged to 21 month low level of 3.3% in July, a day before the announcement of August month's inflation data. On the global front the possibility of a sovereign debt default by Greece has increased significantly. The adverse development in the Greece has made panic across the globe.

During April to August 2011, India's steel production increased by 10% to 29.06 million tonne from 26.45 million tonne in April to August 2010. As per the provisional estimates by the steel ministry, during the period under review, steel consumption increased by 1.3% to 28 million tonne.

India's exports of steel for the April to August 2011 increased by 56.7% to 1.82 million tonne from 1.16 million tonne in April to August 2010, however, imports during the same period declined by 45% to 2.27 million tonne from 4.12 million tonne in the corresponding period of last year.

The production of carbon or non-alloy steel during first five month of 2011-12 increased by 9.1% to 27 million tonne compared to 24.7 million tonne in April to August 2010, whereas production of alloy steel increased by 21.5% to 2 million tonnes in April to August 2011. In April to August 2011, India pig iron production increased by 1.4% to 2.4 million tonne whereas consumption increased by 1.7% to 2.2 million tonne.

In April to August 2011, the production of main producers like SAIL, RINL and Tata Steel grew by 3.6% to 7.4 million tonne. The Tata Steel registered highest growth, its production increased by 10.7% to 2.26 million tonne, whereas SAIL's production grew by 2.5% to 4.1 million tonne. However, RINL production declined by 5.3% to 1.1 million tonne.

Other major producers including JSW Steel, Essar Steel and JSPL's collective production increased by 9.7% to 8.1 million tonne. The smaller firms also registered healthy growth in April to August 2011 and their production grew by 9.4% to 25.5 million tonne.

The consumption of steel is viewed as key indicator of economic activities, the slower pace of growth in the consumption of this key metal, especially by sectors like, automobiles, construction and consumer durables, conform the slowdown in pace of growth.

The Ministry of Telecom has given in-principle approval to the draft National Frequency Allocation Plan-2011 (NFAP) which seeks to improve efficiency in management of spectrum and higher mobile penetration in rural areas. The plan intends to increase domestic manufacturing of telecom equipment and efficient utilization of spectrum. In March 2011, the draft of NFAP was made by the Wireless Planning Commission (WPC), the spectrum allocation wing of Department of Telecom (DoT). Within a month, the draft will be submitted to a Group of Ministers and then it will be send to the cabinet for approval.

Several government departments, telecom operators and telecom industrial bodies have expressed disagreement to the DoT on various clauses in the NFAP 2011. However, the final draft has rejected the concerns raised by these organizations as DoT feels that the concerns raised by these organizations don't have technical and regulatory base.

The telecom operators and industrial bodies such as COAI and AUSPI had opposed the recommendation that some spectrum in frequency bands of 900, 1,400, 1,800 and 1,900 Mhz should be kept aside for companies to give wireless services using technology and systems developed by indigenous players. The Ministry of Information and Broadcasting (I&B) had also raised concerns over the suggestion to allocate 700 Mhz band for mobile and wireless broadband service. The 700 Mhz spectrum band was earlier mainly marked for broadcasting services.

The Reserve Bank of India's expert committee on licensing of New Urban Co-Operative Banks (UCBs) headed by Y M Melegam suggested that the new entrants should be encouraged to open banks and branches in unbanked or inadequately banked areas.

"UCBs play a useful role and there is need for a greater presence of UCBs in unbanked districts and in centers having population less than 5 lakh. It is necessary to encourage new entrants to open banks and branches in States and Districts which are unbanked or inadequately banked. It is equally necessary to discourage new entrants from opening branches in Districts and population centers which are already adequately banked", the RBI expert committee said.

On the issue of the preference for the licenses, the RBI Panel said The existing well managed co-operative credit societies meeting certain financial criteria like profits, capital adequacy, NPAs proportion etc. should be given priority for granting licenses as urban co-operative banks particularly in unbanked or inadequately banked centers.

For the capital requirement of the New UCBs, the RBI expert committee recommended minimum paid up capital range from Rs 50 lakhs to Rs 5 crore depending on the area of operation. For the UBCs which wish to operate in more than one State after five years of successful operations, RBI committee suggested a minimum paid capital of Rs 5 crore.

On the issue of the organization structure of UCBs the panel suggested that there should be segregation of the ownership of the UCB as a co-operative society from its functioning as a bank. The new organization structure shall consist of a Board of Management in addition to the Board of Directors. The Board of Directors (BoD) would be elected in accordance with the provisions of the respective Co-Operative Societies Acts.

Providing relief to the cotton exporters, the government on September 12 said that they will no longer have to provide bank guarantees for registration of export contract. The relaxation will be available to exporters from October 1. The Directorate General of Foreign Trade (DGFT) in its notification said that the export of cotton will continue to be free, subject to registration of contracts with the DGFT. However, performance guarantee will no longer be required.'

Earlier, an exporter had to put forward a performance guarantee in the form of a bank guarantee for 2.5% of the value of cotton to be exported, or for Rs 1 lakh, whichever was more. Further to export cotton, the trader has to register the contract with the DGFT and execute the shipment within 30 days.

Following the surge in cotton prices in the domestic market, the government had earlier imposed ban on cotton exports. However, after getting criticized by Ministry of Agriculture and by many state Chief Ministers, last month, the government removed restrictions from exports of natural fibre and put cotton on Open General License (OGL).

As per the Cotton Advisory Board, the domestic production of cotton for the next season is pegged at 35.5 million bales from 32.5 million bales in the current season. Against this India's consumption of cotton are around 26.4 million bales, leaving room for exports.

Stating July's industrial growth figure as disappointing pace of expansion, the Chairman of Prime Minister's Economic Advisory Council (PMEAC) C Rangarajan said, industrial growth projections for the current fiscal will have to be revisited in the wake of 'disappointing' pace of expansion in the factory output, which plunged in July to 3.3%.

After the release of the Index of Industrial Production (IIP), Rangarajan said, 'it is a disappointing number. One had expected that industrial production will be slightly higher than this.' India's industrial growth measured by IIP plunged to 3.3% in July, which is almost two years lowest level, on the back of poor performance by manufacturing, mining and capital goods segments.

The manufacturing segment declined to 2.3% in July from 10.8% in July 2010. The capital good segment witnessed negative growth during July and it declined by 15.2% reflecting eroding investors confidence. Industrial growth during the April-July 2011-12, also shows moderation in growth, it fell to 5.8% in April-July 2011 from 9.7% in same period of last fiscal year.

On the issue of revision in the industrial growth target he said 'as regards the estimate of industrial production for the year as a whole, we will have to revisit the area after one or two months.' In PMEAC's Economic Outlook, PMEAC had projected industry to grow by 7.1% in 2011-12. On the other hand, the government in February had projected to grow by 8.6% in current fiscal. During 2010-11, IIP had grown by 7.8%.

The government auditor, the Comptroller and Auditor General (CAG) is seeking to expand the scope of its powers to evaluate performance of the regulators like Security Exchange Board of India (SEBI), Telecom Regulatory Authority of India (TRAI) and Insurance regulatory and Development Authority (IRDA) as a part of the new legislation which will replace the CAG Act, 1971. As per the government official, the CAG is looking into the books of regulators like TRAI, SEBI and IRDA, but wants to audit their performance too.

The CAG has submitted the draft bill to the ministry of finance, which is considering the proposed CAG bill, and it is likely to be tabled in Parliament's next session. The new law is aimed at significantly expanding the scope of the CAG's audit responsibilities. The government official said, 'we are looking at auditing the regulators. We have asked in the draft Bill to replace the CAG Act of 1971 to allow audit of the financial (statements) and performance of regulators and Public-Private Partnership (PPPs). We are hoping that the Bill would be tabled in the winter session.'

The draft bill submitted by CAG is expected to have provisions for punitive actions against the companies which delay submission of details asked by the CAG. 'We do not have powers to ensure that records are presented to us as and when we ask for it... We do not have punitive powers and our resources are limited,' he added.

Prime Minister Manmohan Singh, emphasizing on good road infrastructure, said that the road infrastructure was crucial for achieving nine percent growth, targeted for the next Five Year Plan (2012-13 to 2016-17), and adequate investment would be made towards that.

However, Prime Minister stressing on transparency for allocation of projects, insisted that the awards on private sector were placed in a fair and transparent manner as to dispel any fear or charges that that the government was resorting to any form of favouritism or arbitrary decisions.

The Prime Minister said, 'Infrastructure will play a key role in achieving our growth target of nine percent. Our effort is to double the investment of $500 million in the 11th Five Year plan to around $1 trillion in the 12th plan'.

Speaking at the conference on 'challenges and opportunities in public-private partnership in national highways Prime Minister said that it is also necessary to ensure projects are awarded in a fair and transparent manner to avoid suspicion of favoritism'.

As per the Road Transport and Highways Minister C.P. Joshi, by the end of this year, government will award contracts under Public Private Partnership to create around 7,800 km of national highways worth around Rs 50,000 crore ($11.1 billion).

According to the Federation of Indian Chambers of Commerce and Industry's (FICCI) survey, most companies expects manufacturing sector growth to moderate in the second quarter of this financial year. Response from 324 manufacturing companies were taken, which showed that the around 74% of the respondents expect slowdown in growth in July-September 2011 from the same period of last fiscal. The chamber presented the findings to validate its appeal to the Reserve Bank of India not to raise policy rates any further.

According to the survey, around 7 out of 12 sectors were likely to experience moderation in growth rate in the second quarter from the corresponding period of last year. These sectors are consumer durables, cement, steel, textiles, chemicals, capital goods and tyres. However, sectors such as automobiles, auto components, leather and food processing are expected to achieve growth rate of more than 10% in the July-September 2011 from July-September 2010.

As per the survey, the respondents felt that the moderation in growth were because of two factors such as increase in the cost of capital and increase in prices of raw material. Around 75% respondent said raise in policy rates had significantly affected on their cost of borrowing. Because of tight monetary policy, the Chamber also expects surge in the bank's weighted average base rates to 10% mark for the first time.

It also stated that there would be a significant change in the demand conditions for the manufacturing sector in the second quarter, compared to previous quarters. Only 38% respondent said they have received higher orders from the first quarter. This moderation in the demand is also reflected in the fact that in June, growth of consumer goods had declined to 1.65%, which is the second lowest growth from October 2009. 'The situation is indeed serious and unless corrective measures are not taken to reverse this trend, we may see an impact on employment,' FICCI said.

Banks witnessed moderation in credit growth, in the first five months of the current financial year. This decline in loan growth is because of slowdown in the certain sectors of the economy. As per the Reserve Bank of India (RBI) data, in April-August 2011, bank loan stood at Rs 1,02,779 crore from Rs 1,09,189 crore in the same period a year ago.

As per the RBI's latest data, the total bank credit declined by Rs 3,595 crore to Rs 40,44,862 crore till August 26 compared to the last fortnight. At present levels, the total loan, which includes loan for food procurement by FCI and loan for farmers, business and individuals, incremental loan growth work out to 2.6% from 3.4% in the last year. However, the year-on-year growth work out to 20.6% compared to 19.5% in last year.

On the other hand, bankers are hopeful of increase in demand for loan in the second half, when investment activity in the economy picks up. Bankers see demand for credit from sectors like mining, and housing infrastructure.

The RBI data on sectoral break-up of bank loan till July 2011 shows that the credit to agriculture, mid size corporate, commercial real estate and certain segments like retail loans for purchase of consumer durables and education loans has witnessed moderation.

The credit data also support the trend showed in the real sector. In the meantime, country's forex reserves increases by $1.6 billion to $320.2 billion on the back of sharp increase in the value of gold in reserves in the week ended September 2.

The total approximate earnings of Indian Railways on originating basis during 1st April - 31st August 2011 were Rs. 41030.37 crore compared to Rs. 37198.66 crore during the same period last year, registering an increase of 10.30 per cent.

The total goods earnings have gone up from Rs. 24760.02 crore during 1st April - 31st August 2010 to Rs. 27435.82 crore during 1st April - 31st August 2011, an increase of 10.81 per cent.

The total passenger revenue earnings during first five months of the financial year 2011-12 were Rs. 11692.45 crore compared to Rs. 10592.02 crore during the same period last year, registering an increase of 10.39 per cent.

The revenue earnings from other coaching amounted to Rs. 1152.91 crore during April-August 2011 compared to Rs. 1028.59 crore during the same period last year, an increase of 12.09 per cent.

The total approximate number of passengers booked during April-August 2011 were 3418.13 million compared to 3252.59 million during the same period last year, showing an increase of 5.09 per cent. In the suburban and non-suburban sectors, the number of passengers booked during April-April 2011 were 1707.77 million and 1710.36 million compared to 1640.53 million and 1612.06 million during the same period last year, showing an increase of 4.10 per cent and 6.10 per cent respectively.

The major coal producing States such as Jharkhand, Orissa, Chattisgarh and Madhya Pradesh have requested for fixation of royalty rates on ad-valorem basis.

The proposal is under consideration of the new Study Group, set up by the Ministry of Coal, to recommend revision of the royalty rates on coal and lignite. The Study Group has already collected the views/comments of all the concerned stakeholders through questionnaires as well as direct meetings. The said Study Group is presently analyzing various suggestions received in this regard. The new royalty rates would be notified by the Government after examining the recommendations of the said Study Group.

India's food inflation measured by Wholesale Price Index (WPI) has registered marginal decline. It moderated to 9.55% for the week ended August 27 from 10.05% in the last week. However, despite the moderation from last week, the food inflation still continues to hover above 9% for the fifth consecutive week.

As per the data released by Ministry of Commerce and Industry, the index for 'Food Articles' group rose by 0.1% to 195.1 (Provisional) from 195.0 (Provisional) for the previous week due to higher prices of poultry chicken (3%), moong (2%) and masur, urad, gram, bajra, arhar, fruits & vegetables, fish-inland and condiments & spices (1% each). However, the prices of fish-marine and tea (4% each), maize, pork and ragi (2% each) and barley (1%) declined.

The index for 'Non-Food Articles' group rose by 1.1% to 183.3 (Provisional) from 181.3 (Provisional) for the previous week due to higher prices of flowers (9%), sunflower (5%), raw rubber (3%), fodder and raw silk (2% each) and gaur seed, groundnut seed and raw cotton (1% each). However, the prices of linseed (1%) declined.
As a result, the index for primary articles group which has the highest weightage of 20.12% in WPI rose by 0.2% to 201.4 (Provisional) from 200.9 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 13.34% (Provisional) for the week ended August 27 as compared to 12.93% (Provisional) for the previous week August 20.

Union Minister for Commerce, Industry and Textiles Minister Anand Sharma, stressed that protectionist measures would delay economic recovery and warned against the collapse of the Doha Round of the World Trade Organization talks. The Doha Development Agenda or Doha Development round is the current trade negotiation round of the WTO which began in November 2001.

Sharma said, 'we must not allow this (Doha) Round to collapse. The Doha Round has to be taken forward as a single undertaking. We need to stay focused on the development dimension of the Round, as the terms of the discourse cannot be changed. Developing countries are being called upon to pay an unconscionably high price to conclude the Round. This certainly was not our expectation and our commitment when we agreed to participate in the Doha Round.'

Minister gave stress on the importance to sustain people faith in the WTO. He said, 'Many skeptics feel that the WTO is at the crossroads and that the lack of progress in the Doha Round raises questions on the relevance and efficacy of this institution. We do not share this pessimism.' A crisis might lead to inward-looking and promote protectionism, but it would be counter-productive and delay the recovery and deepen recession.

On the decade old negotiation round Sharma said, 'timely conclusion of the Doha Round of talks, would not only have strengthened the WTO as a bulwark against protectionism and boosted the global economy but would also have signaled the WTO's firm commitment to development.

Accepting the deadlock in the Doha negotiation, WTO Director-General Pascal Lamy said that with leadership, pragmatism and determination, 'we should continue' to address various issues (affecting the negotiations). 'We cannot give up because of a steep slope or long path. The WTO is a member-driven organization, and its negotiations are a collective enterprise. Stakeholders of global trading systems recognize its worth and contribution in times like these. India is a good example of how trade can be leveraged to achieve growth and reduce poverty.'

The Doha Round's main object is to reduce trade barriers around the world. As of now, the negotiations between developed countries led by US and EU and developing countries led by BRIC nations including India, have delayed on the major issues such as agriculture, industrial tariffs and non-tariff barriers, services, and trade remedies. The international economy has gone under radical transformation. On this, Commerce Secretary Rahul Khullar said 'developing countries today are not silent partners, they are equal partners in the negotiations; you are going to see developing countries dominating the talks. That is why, it is important to have a global trading system that is rule-based.'

Expressing concern over the issue of excess supply of gilts in the secondary market, Reserve Bank of India's (RBI) Governor Duvvuri Subbarao said, the minimum mandatory amount of deposits that banks need to set aside to invest in government bonds need to come down gradually. The RBI has mandated banks to set aside a portion of their deposits as statutory liquidity ratio (SLR) or the minimum amount it must hold in gold, cash or government bonds. Besides this, banks have to set aside a portion of their deposits as cash with the central bank, a requirement called the cash reserve ratio.

These reserves can act as a liquidity buffer for banks during crisis time. While addressing the National Finance Symposium organized by the Indian Institute of Foreign Trade, Subbarao said 'SLR at 24 percent, CRR at 6 percent is still considered high. At some point it (CRR, SLR combined) was 65 percent and now it is 30 percent.' By adding further he said, it is our objective in RBI to bring it down but in a calibrated way.

On the back of Governor's statement on the need to lower SLR on the concerns that such a move may prompt banks to offload some of their bond holdings. On the other hand, government bond yields also rose after this statement. The minimum regulatory requirement acts a captive demand for government bonds. It is reported that currently banks' overall holding of SLR bonds is around 29%.

Subbarao said that the SLR requirement had help protect Indian banks during the global credit crisis and the new global banking rules under Basel III have a provision which mimics the SLR rule. However, he also said that some reduction in the ratio may be needed. 'We should bring it (SLR) down so that credit is available and so that private sector is not crowded out,' he added.

He also hinted that the RBI is considering re-introducing inflation indexed bonds. 'We are looking at reintroducing inflation indexed bonds. One concern of course is, in a period of relatively high inflation that we now have, whether it will be successful. We will think through this, but we will certainly introduce it,' he said.

The inflation indexed bonds are floating rate bonds linked to inflation rate and such bonds help investors to protect their investment from mark-to-market volatility. Yet, an investor will be interested in buying inflation indexed bonds only if when they expected inflation to increase further from the current rate. Last time, in December 2010, the RBI has reduced SLR by 1% to 24%. Since April 2010, RBI has not touched CRR. It had increased CRR by 25 basis points to 6%.

The Draft National Land Acquisition and Rehabilitation & Resettlement Bill, 2011 proposed by the Rural Development Ministry is approved by the Union Cabinet. The cabinet cleared the draft bill without any modifications. The draft bill is expected to be tabled in parliament on September 7, after that it may go to Standing Committee.

The draft bill is said to be giving farmers better deal, whereas it is also expected to help in increasing industrialization in Asia's third largest economy. The government and private developers have faced stiff opposition from farmers over the issue of land acquisition for industrial purpose, which is seen as one of the biggest hurdle in the country's economic expansion.

After the cabinet meeting on August 5, the Rural Development Minister Jairam Ramesh said, 'The Cabinet has approved the draft Bill'. Once the draft bill becomes an Act, the proposals made in the draft bill will be implemented with retrospective effect in case the award has not been made in Land Acquisition Act, 1894 or possession has not been taken. If the proposed bill becomes law, the government will not be able to acquire land for private companies for personal use. Last month, the draft bill was flouted in public domain for recommendation and comments.

As per the recommendations, if private firm is buying land for the public purpose, then it cannot be used for private use and if the land is not used in five years for the stated purpose, then it should be returned to the original owners. The government will also steer clear of acquiring multi-cropped irrigated land. At present, most of such lands are in northern states like Punjab, Haryana, Uttar Pradesh and Eastern States like Bihar and West Bengal.

The draft bill also has comprehensive compensation policy for land-owners and livelihood losers including landless, especially Scheduled Tribes. As per the recommendations made in draft bill, for urban areas, it proposes an amount not less than twice the market rate. In rural areas, the amount should be not less than four times the original market value.

The draft Bill also seeks to balance the need for facilitating land acquisition for various public purposes including infrastructure development, industrialization and urbanization, while at the same time meaningfully addressing the concerns of farmers and those whose livelihoods are dependent on the land being acquired, Jairam said. By adding further he said, the Bill would enjoy primacy over specialized pieces of legislation such as for highways, Special Economic Zones, defence and railways.

On the issue of livelihood safeguard, the draft bill proposes that the consent of 80% of the affected families be made mandatory if the government acquires land for use by private firms for public purpose or public-private partnerships, other than that for national highways. However, the draft bill also authorizes the government to invoke an 'urgency clause' to acquire land for national defence and security purposes' R&R needs in the event of emergencies or natural calamities, and in 'rarest of rare' cases.

Despite the slowdown in European nations, India's coffee exports for the first five months of current financial year jumped by 29% to 1,68,094 tonnes from 1,30,048 tonnes in the same period of corresponding year. European nations such as Italy, Germany, Russia, Belgium and Spain are main destination for the Indian coffee.

As per the Coffee Board data, in April to August 2011, the realization of coffee price in the April to August 2011 increased by 37% to Rs. 1,35,737 per tonnes compared to unit value of Rs. 99,271 per tonnes in the same period last fiscal.

January to August 2011, India coffee exports increased by 34% to 2,68,169 tonnes from 2,00,517 tonne sin the same period of pervious year. In terms of value, coffee exports surged by 77% to Rs 22,281.66 crore in April to August 2011 from Rs 1291.01 crore during the same period last year.

During October to August 2010-11, India's exports increased by 36% to 3,34,031 tonnes from 2,45,061 tonnes in the last year. Coffee years run from October to September.

Apart from the capacity addition of 40,831 MW achieved from conventional sources of energy viz. hydro, thermal and nuclear during the 11th Plan till August 29, 2011, a capacity of 12,401 MW has been added till July, 2011 from renewable energy sources such as small hydro, biomass gas/power, wind energy etc. during the 11th Plan. Similarly, the new capacity commissioned by the private sector has increased from 1931 MW during the 10th Plan to 14,461 MW during the 11th Plan till August 29, 2011.

With a view to achieve sustained Aggregate Technical & Commercial (AT&C) loss reduction, Government had initiated Accelerated Power Development & Reforms Programme (APDRP) in the 10th Plan and launched Restructured Accelerated Power Development & Reforms Programme (R-APDRP) in July, 2008 during the 11th Plan. Under Part-A of R-APDRP, 1401 projects and 42 projects for Supervisory Control and Data Acquisition System (SCADA), and under Part-B, 907 projects have been sanctioned. The schemes sanctioned are under implementation. The national average of Aggregate Technical & Commercial (AT&C) losses has reduced from 36.64% in 2002-03 to 27.15% in 2009-10.

In addition to accelerated capacity addition and reduction in AT&C losses, energy conservation programmes being implemented during the 11th Plan have also resulted in an avoided capacity of 7,665 MW till March, 2011.

India's export of textiles and clothing in current financial year are expected to reach $32.35 billion from $26.8 billion achieved in 2010-11. And by the end of 11th five year plan i.e. 2012, domestic textiles industry is expected to be around $65 billion, textiles minister Anand Sharma said.

Anand Sharma said, 'an exports target of $32.35 billion has been prescribed for the textiles and clothing sector for 2011-12. During 2010-11, the textiles sector achieved an export figure of $26.8 billion.' He also pointed the share of textiles and clothing as a percentage of the country's overall export basket decreased from 11.46% in 2008-09 to 10.63% in 2010-11.

With reference to the latest data published by the World Trade Organization Anand Sharma said the share of India's textile and clothing exports increased to 3.91% of the global market in 2009, up from 3.36% in 2007. On the capacity addition in the textile sector, he said 9 million additional spindles have been established during the 11th Plan so far, taking total spindlage in the country to 48 million spindles as of March, 2011.

Cotton yarn production increased from 2,948 million kg in 2007-08 to 3,510 million kg in 2010-11. Fabric production also increased from 55,257 million square metres in 2007-08 to 61,057 million square metres in 2010-11, Sharma added.

Earlier a US Department of Agriculture (USDA) report estimated India's cotton exports to jump by 21% to 8 million bales in the 2011-12 marketing year (August-July) on the back of record output and a possibly less restrictive government policy.

Ahead of Prime Minister Manmohan Singh's two day visit to Bangladesh, government indicated that, it may allow Bangladesh to export more duty-free garments into Indian markets. The Commerce and Industry Minister Anand Sharma said, 'in April, we had raised the (duty-free) quota from 8 million pieces to 10 million... There is some more demand and the government will take a fair view on that.'

Prime Minister will visit Bangladesh for two days on September 6-7 with the objective of galvanizing bilateral ties between the two nations. On the demand of Bangladesh for more duty-free garment exports to India, the Minister said 'It is true that many of the tariff lines in the textiles sector are being discussed.'

Bangladesh is pitching for the duty-free export of 61 items to India, as against the 54 textile items that are currently allowed. India has kept 61 items in the sensitive list under the Free Trade Agreement with SAARC a nation known as SAFTA. This move of India will boost Bangladesh's garment industry which accounts for 80% of Bangladesh total manufacturing duty-free access into India.

Earlier, in April, India had increase the quota for duty free imports of garments from Bangladesh from 2 million pieces to 10 million. The two way trade between India and Bangladesh stood at $2.6 billion in 2009-10.

The Government may introduce the much awaited Land Acquisition, Rehabilitation and Resettlement Bill 2011, in this monsoon session of parliament as Union Cabinet is expected to approve the draft bill by next week. To speed up the clearance process, Minister of Rural Development Jairam Ramesh met nine cabinet ministers to finalize the draft bill. The cabinet is expected to meet on September 5, to discuss the bill.

As per the rural development ministry official, the government has expedited the process to get the land acquisition bill cleared. It is likely to be tabled in this session and be cleared in the winter session. After being tabled in parliament, the land acquisition bill is likely to be referred to the parliamentary standing committee. Presently, the land acquisition is governed by an old legislation passed in 1894. As of now there is no central legislation to mandate compensation norms.

In recent times, the issue of land acquisition gained importance after farmers’ stiff protest against the land acquisition for development purposes. The new draft land acquisition bill proposed by the ministry of rural development, has been heavily favoring farmers and land owners, by introducing clause to ensure high compensation for land owners. Besides, the proposed compensation norms mentioned in the draft bill would be applicable to both government and industry agencies, who will acquire land for development purposes.

The draft bill also mandates 80% consensus of the project-affected people for land acquisition by government and private agencies. Land buyers will have to shell out up to twice the registration of stamp duty value of land in urban areas and up to six times in case of rural areas.

The draft bill proposal also includes a subsistence allowance of Rs 3,000 per family for a year and an annuity of Rs 2,000 per family per month for 20 years. Along with this, land owner will get 20% of the appreciation in value of their land every time their land changes hands for 10 years. The proposed bill also contains employment provisions.

For the loss of irrigated land, the draft bill, recommends an acre of irrigated land will have to be provided as compensation over and above annuity. For tribals, draft bill had made special proposition, which will get additional 5 acres of land in case of loss of irrigated land. The proposed bill by the rural development ministry, also seeks to make compensation for people whose livelihoods depends on the land being acquired.

As the income of BCCI was entirely exempt from tax under section 12A of the Income Tax Act 1961, the question of disclosing low earnings to avoid paying taxes did not arise. Gross receipt disclosed by BCCI in its tax returns for the assessment years 2007-08 to 2010-11, are Rs.651.82 crore, Rs.1,000.40 crore, Rs.1.387.02 crore and Rs. 1,666.84 crore respectively IPL is a part of BCCI and has no separate legal status.

BCCI amended to objects from 1 June 2006. During assessment proceedings of BCCI for AY 2007-08, this change in objects was noticed. Hon'ble Allahabad High Court in the case of Allahabad Agricultural Institute and Another Vs UOI and others, had held that once the objects are changed after registration, fresh registration for tax exemption is required as the earlier registration does not survive. Taking recourse to this ruling, the registration granted to BCCI under section 12A of the Act was withdrawn in December 2009 with effect from 1 June 2006. Consequent to withdrawal of tax exemption in the assessments completed for assessment years 2007-08 and 2008-09, tax demand amounting to Rs.118.04 crore and Rs.257.12 crore has been raised for the two assessment years respectively. Out of the demand so raised, an amount of Rs.249 crore has already been recovered from BCCI.

The Cabinet Committee on Economic Affairs today approved disinvestment of 5% paid up equity of Bharat Heavy Electricals Limited (BHEL), a Central Public Sector Enterprise (CPSE), engaged in execution of heavy engineering / electrical equipment manufacturing projects.

This is in line with the Government of India's policy of enhancing people's ownership in the CPSEs and enabling them to share in the growth and prosperity of these CPSEs. The Government will disinvest 5% equity in the company, out of its share holding of 67.72% through book building process in the domestic market.

The paid up equity capital of the company is Rs.489.52 crore. BHEL is a listed Central Public Sector Enterprise. The Government has decided to allow 5% price discount to the retail investors as well to encourage greater public ownership of the public sector companies. Ten percent of the shares to be offered for sale through further public offer shall be reserved for the employees of the Company. Government has also decided to allow 5% price discount to the employees of the company. After this disinvestment Government of India shareholding in the company would come down to 62.72%.

A study published by KPMG, a global consulting company has forecast that solar power can meet 5-7% of India's total power requirements by 2021-22.

India has good potential for solar power as it receives solar energy equivalent to over 5,000 trillion kWh per year, which is far more than the total energy consumption of the country, stated, Minister of New and Renewable Energy Dr. Farooq Abdullah. He said the daily average solar energy incident varies from 4 - 7 kWh per square meter of the surface area depending upon the location and time of the year. The solar radiation is available at most locations in the country for about 300 days in a year.

The total installed capacity of grid connected solar power plants as on date is 45.5 MW. The Government has launched Jawaharlal Nehru National Solar Mission in January 2010, which aims to set up 20,000 MW grid solar power by 2022 in addition to 2,000 MW of off-grid solar power. Deployment of solar power is, thereafter, expected to increase rapidly due to declining prices of solar power, indigenization and technology improvements.

With a view to strengthen the regulatory and supervisory structure of non-banking financial companies (NBFCs), the Reserve Bank of India's (RBI) working group headed by former RBI Deputy Governor Usha Thorat has recommended new regulations for NBFCs. The working group of RBI has recommended that 'any transfer of shareholding, direct or indirect, of 25% and above, change in control, merger or acquisition of any registered NBFC should have prior approval of the RBI.

The NBFC is a non banking institution involved in the business of receiving deposits or lending to various classes of consumers. All the NBFCs which raise funds from public are required to register with the central bank. Reliance Capital, Bajaj Finance and Shriram Transport Finance are some of the well known NBFCs.

The proposed guideline also recommended that the RBI should register only those NBFCs which have minimum asset size more than Rs 50 crore, whereas NBFCs which are not raising funds from the public may be exempted from registration only if their asset is less than Rs 1,000 crore. It also suggested that the NBFCs have to maintain certain liquidity ratios like cash, bank balance and holding of government securities fully cover the gaps, if any, between cumulative outflows and cumulative inflows for first 30 days.

The working group also recommended introducing asset classification and provisioning norms for NBFCs in phases similar to banks. It also recommended bringing in suitable income tax deduction and accounting norms similar to banks. The group also proposed to improve a host of disclosure and risk management norms for NBFCs.

India's economic growth rate slowed down to 7.7% in the first quarter of 2011-12 as compared to 8.8% achieved in the same quarter of the previous financial year, on the back of steady rise in interest rates combined with persistently high inflation. The lower growth rate has come mainly on account of construction, which saw an increase of just 1.2% during April-June 2011, compared with 7.7% in the same quarter of last year.

As per the data released by the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, the decline in GDP growth is due to moderation in the construction activities which fell to 1.2% in April-June 2011 from 7.7% achieved in April-June 2010. Other sector such as mining and quarrying (1.8%), manufacturing (7.2%) and community, social and personal services (5.6%) showed moderation in growth in April-June 2011. However, sectors like agriculture, forestry and fishing (3.9%), electricity, gas and water supply (7.9%), and trade, hotels, transport and communication (12.8%) showed improvement.

The estimates of GDP for the April-June quarter of 2011-12 released by the CSO of the Ministry of Statistics an Programme Implementation said the GDP had grown to Rs 12,26,339 crore in the first quarter (Q1) of 2011-12 as against Rs 11,38,286 crore in the same quarter of 2010-11.

According to the latest estimates available on the Index of Industrial Production (IIP) for the new series, the index of mining, manufacturing and electricity, registered growth rates of 1.0%, 7.5% and 8.2%, respectively during Q1 of 2011-12 as compared to the growth rates of 8.0%, 10.3% and 5.4% in these sectors during Q1 of 2010-11. The estimates of Q1 for 2009-10 and 2010-11 have been revised on account of using new series of IIP.

The key indicators of construction sector, namely, production of cement declined by 0.9% and consumption of finished steel registered growth rate of 1.5%, during Q1 of 2011-12. Among the services sectors, the key indicators of railways, namely, the net tonne kilometres and passenger kilometres have shown growth rates of 6.3% and 6.1%, respectively during Q1 of 2011-12.

In transport and communication sectors, the sales of commercial vehicles, cargo handled at major ports, cargo handled by the civil aviation, passengers handled by the civil aviation registered growth rates of 14.1%, 5.2%, 4.9% and 14.6% respectively during Q1 of 2011-12 over Q1 of 2010-11. The other key indicators, namely, aggregate bank deposits, and bank credits have shown growth rates of 18.7%, and 21.0%, respectively during Q1 of 2011-12 over Q1 of 2010-11.

However, the investment in economy have decline because of increased interest rates, as per the CSO data, in terms of GDP at market prices, the rates of Gross Fixed Capital Formation (GFCF) at current and constant (2004-2005) prices during Q1 of 2011-12 are estimated at 28.4% and 31.2%, respectively, as against the corresponding rates of 29.2% and 31.4%, respectively in Q1 of 2010-11.

In terms of GDP at market prices, the rates of the Government Final Consumption Expenditure (GFCE) at current and constant (2004-2005) prices during Q1 of 2011-12 are estimated at 10.5% and 10.4%, respectively, as against the corresponding rate of 11.1% each in Q1 of 2010-11. In terms of GDP at market prices, the rates of Private Final Consumption Expenditure (PFCE) at current and constant (2004-2005) prices during Q1 of 2011-12 are estimated at 58.1% and 60.5%, respectively, as against the corresponding rates of 58.7% and 61.7%, respectively in Q1 of 2010-11.

The slowdown in the GDP growth rate for the first quarter of 2011-12 has mainly come from the interest rate sensitive sectors such as constructions, manufacturing activities and sectors, which indicate that, nonstop hike in Reserve Bank of India's short term leading and borrowing rates have adversely affected the economic growth.

This quarterly decline in the India's GDP growth, is the slowest in last six quarters, during the January-March 2011, India had achieved economic growth of 7.8%. The government has also revised downward GDP data from 9.3% to 8.8% for the first quarter of 2010-11. Another issue of concern is the investment rate i.e. GFCF also showed the moderation during April-June 2011, which can have backlog effect on the growth of manufacturing and other sectors indicating, this slowdown in economic growth may continue in coming quarters.

In no doubt that the negative global cues can be transformed to the country's advantage, Finance Minister Pranab Mukherjee said in the wake of the global economic uncertainties and the resultant slump in overall investor sentiment, India could be a source of stability for the world economy and provide a safe haven for global capital inflows.

Mukherjee said, 'if India can continue to grow and acquire economic strength, we could be a source of stability for the world economy and provide safe havens for restless global capital,' he said while pointing out that it 'would also enable us to develop even faster and spread the benefits of growth to the poor and the marginalized.'

Global markets have been severely impacted by the US rating downgrade by Standard & Poor's (S&P) and the ongoing debt crisis in the eurozone. However, these negative developments in the advanced economies had impacted India too, and remained a cause of concern. However, he argued that they did open up new windows. 'At the same time, these shocks are markers of shifting balance in the global economy, presenting new opportunities for us.'

Stressing on the need of policy reforms to tackle the current global crisis, finance minister said, 'we have to be alert to shape real-time policy responses, reform systems, improve the regulatory framework of our institutions and make the most of the opportunities coming our way. India's robust performance in difficult times shows that it could actually come out stronger from any international financial crisis, he added.

The Ministry of Consumer Affairs, Food & Public Distribution has formulated the Private Entrepreneurs Guarantee (PEG) Scheme to attract private sector investment for construction of covered storage godowns and to reduce the storage in cover and plinth(CAP). Under the scheme, the Food Corporation of India would give a guarantee of ten years for assured hiring to the private entrepreneurs. A capacity of about 152.97 lakh tonnes is to be created in 19 states under the scheme through private entrepreneurs and Central and State Warehousing Corporations. Out of this tenders have been finalized for creation of storage capacity of 52.32 lakh tonnes by the private entrepreneurs till 31.07.2011. CWC and SWCs are constructing 5.31 and 15.49 lakh tonnes respectively under the Scheme, out of which a capacity of about 3.5 lakh tonnes has already been completed by CWC/SWCs.FCI would only pay rentals to the Private Entrepreneurs after taking over the godowns constructed under the scheme.