current affairs for ias exam 2011 economi affairs october 2010 www.upscportal

8/6/2019 Current Affairs for IAS Exam 2011 Economi Affairs October 2010 Www.upscportal

1/19

ECONOMYExports surge 23 % to $16.64 b in August

India's exports continued to surge for the tenth successive month growing by 22.5 percent to $16.64 billion in August as compared to the same period last fiscal.

However, imports also jumped by 32.2 per cent year-on-year to $29.67 billion in August,according to the government data released.

During April-August this fiscal, exports posted a growth rate of 28.6 per cent to $85.27billion on a year-on-year basis. Imports grew by 33.1 per cent to $141.89 billion.

The trade deficit for the period stood at $56.62 billion, outstripping the deficit of $40.28billion logged in the same period a year earlier. In August, the trade deficit widened to$13.03 billion as compared to the year-ago period.

The government is aiming for around 15 per cent export growth in the current fiscal yearto March 2011 after a drop of nearly 5 per cent in the previous year and is confident thatit will be able to touch the $200-billion export target set for 2010-11. India's exports rosemore than 30 per cent each month between November and June. Hailing the 22.5 per centgrowth, Federation of Indian Export Organisations (FIEO), President A. Shakthivel said it

reiterated FIEO's view that India's exporters were on our course to realise the exporttarget or even surpass it to reach $210 billion.

IDBI Bank to finance MSMEs with SIDBI

IDBI Bank announced a number of new initiatives, products and services on its 7thFoundation Day, including joint-financing of micro, small and medium enterprises(MSMEs) with Small Industries Development Bank of India (SIDBI).

With IDBI Bank's increasing focus towards the MSME sector, it has entered into aspecial partnership with SIDBI for joint financing of MSME clients across the country,

wnloaded from: http://www.upscportal.com

www.upscportal.com


2/19

IDBI Bank Chairman and Managing Director R. M. Malla said, while elaborating on theFoundation Day initiatives.

IDBI Bank has extended 7-day banking services to customers in select branches in fivecities, that is, Mumbai, Delhi, Chennai, Pune and Bangalore.

The bank will also offer extended banking hours from 8 am to 8 pm in these five citieswith a view to providing convenience to its customers. A specifically designed WomenInternational Debit card' is also being launched for its Super Shakti' account holders.

Deora to pitch for India buying BP's Vietnam assets

India will seek to seal the deal'' for buying BP plc's stake in Vietnam gas fields when theBritish energy firm's newly appointed Chief Executive Officer Robert Dudley visits Indianext week.

ONGC Videsh (OVL) wants to buy BP's 35 per cent stake in the $1.3-billion Nam ConSon gas project in Vietnam. Mr. Deora is likely to pitch for India buying BP's Vietnamassets. OVL has roped in Vietnam's PetroVietnam for buying BP's stake in two offshoregas fields, a pipeline and power project together referred to as Nam Con Son.

Block 06.1, where the Lan Tay and Lan To fields currently produce about 14 millioncubic metres of gas a day, was originally allocated to OVL, but due to the foreignexchange crisis of the 1990s, it had to farm-out some of its stake to BP. Lan To is nowunder development.

OVL has so far invested $217 million on the gas fields and has government approval toinvest up to $377.46 million, the official said

Mercedes to enter financing business

Mercedes-Benz said it was planning to enter the financing services business in India, amove aimed to further boost the sales of German luxury carmaker. We are in thepreparation phase for a Daimler Financial Services operation in India to support all theDaimler commercial vehicle and passenger car brands in the market, said MercedesBenz India Managing Director and CEO Wilfried Aulbur, without revealing when theoperations will begin

Pratibha Patil calls for expanding the SCI fleet

President Pratibha Patil called upon the Shipping Corporation of India (SCI) to expand itsfleet within a timeframe, lay emphasis on technology and meet the country's growingrequirements.

The President was speaking at the golden jubilee celebrations of the SCI. Much in tunewith the exhortation of Ms. Patil, Minister of Shipping G.K. Vasan announced theacquisition of 118 new vessels by 2020.

He said that orders for 28 vessels had been placed, eight of which would be inducted intothe SCI fleet by the end of the current financial year. The SCI will be acquiring 50 morevessels by 2015 and 40 more by 2020.

While congratulating the Navratna public sector undertaking (PSU) on completing 50years and establishing the country as a strong maritime nation, Ms. Patil hoped that theSCI would play a crucial role in meeting the country's energy requirements, expected to


www.upscportal.com


3/19

grow manifold in the coming years. She urged the SCI to gear up, underlining that Indiawas dependent on import of oil, gas and coal.

Aircel to invest $500 m in 3G

After bagging 3G spectrum for 13 telecom circles, Aircel is now planning to launch theadvanced third generation mobile services early next year.

Aircel, a joint venture between Malaysia's Maxis Communications and India's ApolloHospital Enterprise, where the former holds a majority stake of 74 per cent, is betting bigon 3G services for which it has already started upgrading infrastructure and is alsochalking out unique bouquet of services for its subscribers.

Aircel has won 3G spectrum for 13 circles Delhi, Mumbai, Andhra Pradesh, Gujarat,Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra and Goa, Rajasthan, Punjab,UP (West) and UP (East).

Bridge & Roof in talks with BHEL for tie-up

Public sector Bridge and Roof Company (B&R) has begun talks with Bharat Heavy

Electricals Ltd (BHEL) for a tie- up, which will be utilised in the pre-tender stage,Chairman and Managing Director Mukesh Jha said.

He said the tie-up, if it takes place, would bring benefits in the form of reduction inproject cost and execution time. BHEL is one of B&R's major clients and the company isnow implementing nearly Rs.1,300-crore worth project for BHEL.

B&R offers civil, structural and mechanical construction services as well as EPC andturnkey packages for oil terminals. It operates in various industrial sectors includinghydrocarbon, fertilizers, chemicals, power projects including nuclear power projects,steel plants and railways.

Centre in favour of more banks

In line with the Reserve Bank of India's plans to open up the banking sector, thegovernment said it was in favour of more banks coming up in the country, although thegranting of new licences should be linked to the criterion of having branches in un-banked areas.

In August, the RBI came out with a discussion paper on new banking licences andregulations to foster greater competition in the sector.

It had sought feedbacks on the paper, as also the business model for new banks bySeptember 30, with a view to promoting financial inclusion.

India has 27 public sector banks, 22 private sector banks, 31 foreign banks, 86 regionalrural banks, four local area banks, 1,721 urban cooperative banks, 31 state cooperativebanks, and 371 district central co-operative banks.

Website launched for feedback on XII Plan

Seeking feedback from the general public, probably for the first time in its history offormulating five-year plans, the Planning Commission launched a website to elicitsuggestions on the Approach Paper' to the XII Plan (2012-17) so as to make the finaldocument more inclusive and effective.


www.upscportal.com


4/19

Sanofi makes hostile bid for Genzyme

French drug-maker Sanofi-aventis made a $18.5-billion hostile takeover offer for Genzyme Corp,

attributing the move to the American entity's refusal to engage in constructive discussions'.

The French firm had gone public with its offer to buy Genzyme in August, when it had also

hinted at the possibility of an unfriendly takeover attempt. Sanofi-aventis said it tried to engage in

constructive discussions with Genzyme, but the latter's continued refusal to do so led to the

hostile offer. A meeting between the two companies' CEOs on September 20 on the proposed deal

had failed. The transaction is valued at about $18.50 billion.

CA Technologies opens centre in Hyderabad

CA Technologies, a leading IT management software and solutions company, has decidedto spend $600 million on R&D (research and development) during the current year withfocus on becoming one of the top companies in cloud computing and virtualisationmanagement segments.

The New York-based company has opened a state-of-art India Technology Centre atHyderabad

Mahindra & Mahindra to set up tractor unit in Telangana

Giving a major fillip to industrialisation in the backward Telangana region, Mahindra and

Mahindra (M&M) will soon set up a tractor manufacturing unit at its Zaheerabad facility in

Medak district of Andhra Pradesh.

M&M has proposed to invest Rs.300 crore on the tractor manufacturing facility over the next

three years that will provide direct employment to about 2,000 people and indirect employment to

another 5,000 persons.

Elder Health Care ties up with Japanese firm

Elder Health Care, part of the Rs.800-crore Elder group, has entered into an in-licensing

agreement with Japan's leading advanced skincare, body care and cosmetic manufacturing

company, POLA Chemical Industries of POLA-ORBIS group, to introduce POLA's skincare and

cosmetic products in India.

New director for Cisco Services India

Cisco Services, the consulting and technical support arm of Cisco Systems, has announced that

Srivalsan Ponnachath has joined as director, Cisco Services India.

Tata Motors buys Italian design house for Rs.11 crore

Tata Motors said it had acquired 80 per cent stake in Trilix Srl, an Italian design and engineering

firm, for euro 1.85 million (Rs.11.29 crore). Both companies have in the past worked together on

several projects, Tata Motors said in a statemen


www.upscportal.com


5/19

Cabinet approves 10 % divestment in SCI

The Centre embarked on a two-pronged strategy, allowing disinvestment of 10 per cent ofits stake in Shipping Corporation of India (SCI) and allowing it to raise additional equityof like quantum.

The Cabinet Committee on Economic Affairs approved the continuation of 30 per centreservation quota of the requirement of Bharat Sanchar Nigam and Mahanagar TelephoneNigam for procurement of equipment from debt-ridden ITI, Bangalore-based public

sector undertaking under the Ministry of Communication and IT.

BMW launches financial services arm

The BMW Group launched BMW Financial Services as a new business entity in India. It is

headquartered in Gurgaon. It will offer solutions for retail automobile financing for BMW and

multi-make customers and financing for fleet owners. The group will invest $50 million (Rs. 203

core) in BMW Financial Services in India, says a release.

Global recovery at a sluggish pace: IMF

The economic recovery under way has been proceeding broadly as expected, butdownside risks remain elevated and the global financial system is the Achilles' heel ofthis recovery, according to the International Monetary Fund (IMF).

In releasing two key documents on the state of the global economy the October 2010World Economic Outlook (WEO) and the Global Financial Stability Report (GFSR) the IMF provided a cautious outlook that comprised both gradual improvements ineconomic conditions and significant uncertainty in Western economies.

India-EU trade agreement by December: Sharma

The much delayed India-EU Free Trade Agreement for opening up trade, investment andservices is likely to be signed by December as bilateral negotiations have been put on thefast track, Commerce and Industry Minister Anand Sharma said.

He is heading India's high-level delegation of industry to Germany steered by theFederation of Indian Chambers of Commerce and Industry of India (FICCI).

India had started negotiations with its largest trading partner in June, 2007, which were toconclude by the end of 2008. However, differences on the inclusion of items, whichIndian negotiators described as non-trade issues, bogged down the talks.

India and the EU had bilateral merchandise trade worth $75 billion in 2009-10.

Maran buys 5 p.c. in SpiceJet as part of deal

Kalanithi Maran promoted KAL Airways has bought 5 per cent equity in low-cost air carrier

SpiceJet for Rs.91.52 crore, as part of the deal to acquire 37.7 per cent stake in the company

signed this June.

This was an off-market transaction, following which the Chennai-based industrialist's direct stake

in SpiceJet has now increased to 17.72 per cent, the company said in a filing to the Bombay Stock

Exchange.


www.upscportal.com


6/19

The airline, India's second largest low-cost carrier.

Horlicks gets new brand identity

GlaxoSmithKline Consumer Healthcare (GSKCH), a leading player in the health fooddrinks industry and an associate of GlaxoSmithKline of the U.K., unveiled its Horlicksbrand in a new avatar.

Bajaj Allianz launches JiyoFit initiative

Bajaj Allianz has launched a new initiative JiyoFit' that helps customers maintain a healthy

lifestyle and incentivises them in adopting healthy practices and being fit. The JiyoFit card will

also serve as an identity card at Bajaj Allianz network hospitals. The JiyoFit program will provide

Bajaj Allianz customers additional benefits of the association with Yes Bank and Visa, says a

release.

Tata Communications expands into cloud computing space

Tata Communications launched InstaCompute and InstaOffice to offer productivityenhancing services to Indian businesses. This marks the company's expansion in to thecloud space to deliver self-service, pay-as-you-use IT application and data centreinfrastructure services, accessed through the Internet.

Instant data centre infrastructure, InstaCompute, provides secure and elastic, on-demandcomputing and storage resources to businesses over the network, as and when they needthem. Computing and storage is based in India, can be paid for in Rupees or globalcurrencies and provides the user with governance and cost controls.

InstaOffice (powered by Google Apps) brings global Internet-based collaboration andoffice tools to Indian companies, with on-demand ease of use and pricing. InstaOffice

tools include email and calendar, instant messaging, voice and video chat, as well asoffice document applications which are accessible to businesses when and where theyneed them.

$1-billion innovation fund mooted for inclusive growth

A $1-billion fund to facilitate innovations for inclusive economic growth in India hasbeen proposed.

The proposal, yet to be approved by the Centre, was agreed to at a recent meeting of theNational Innovation Council , according to Sam Pitroda, Adviser to Prime MinisterManmohan Singh on Information Infrastructure and Innovations.

Pranab rules out cap on FDI

Finance Minister Pranab Mukherjee ruled out any cap on foreign direct investment inIndia.

Addressing the Woodrow Wilson Center here, Mr. Mukherjee added that while it was theresponsibility of the Reserve Bank of India to watch the situation and as and when it isnecessary to intervene appropriately, he did not believe that the inflow of FII or FDI haddistorted market sentiments. Therefore there is no question of putting any cap, on suchflows, he said.


www.upscportal.com


7/19

IMF warns countries against currency wars

The head of the International Monetary Fund warned global finance ministers that theyshould not use the value of their currencies as an economic weapon.

IMF Managing Director Dominique Strauss-Kahn said that the global economy wascontinuing to struggle as it tries to emerge from the worst recession since the end ofWorld War II.

We are gathering at a pivotal moment facing a very uncertain future, Mr. Strauss-Kahnsaid in remarks to the annual meetings of the 187-nation IMF and its sister lendingorganisation, the World Bank.

34 blocks on offer under NELP-IX

The government will offer 34 areas, including eight in deep-sea, for exploration of oil and gas in

the ninth round of auction under the New Exploration Licensing Policy (NELP), Oil Minister

Murli Deora said.

NELP-IX will be announced on October 15 and the first road show will be held in Mumbai on

October 18. The last date for bidding is March 18.

The NELP rounds have secured $14 billion investment, he said, adding that the last round, NELP-

VIII, attracted investment commitment of $1.1 billion.

Reliance Industries' Dhirubhai1 and 3 gas finds in the D6 block in Krishna Godavari basin off

the east coast has been the biggest success of NELP. The block is currently producing 60 million

standard cubic meters of gas per day, which has increased the domestic gas production by about

72 per cent over that of 200809, he said.

Kharif acreage up by 6.9% this year

Thanks to good monsoon, the area under rice cultivation this kharif season has gone upby 6.4 per cent. Last year, paddy cultivation had suffered owing to drought in 399districts during the same period.

As per the official data released by the Ministry of Agriculture, paddy had been sown in35.8 million hectares till October 7, compared to 33.14 million hectares in thecorresponding period last year, showing an increase of 2.7 million hectares over the sameperiod.

Kharif crops have been sown in 102.19 million hectare area as against in 95.75 millionhectares last year, registering an increase of 6.9 per cent.

There has been a major enhancement in the cultivation of pulses that have been sown in11.59 million hectares this year. This is 1.8 million hectares more than that in thecorresponding period last year.

The area under coarse cereals is also higher by 2.91 per cent at 21.2 million hectaresagainst 20.6 million hectares sown last year.

The area under sugarcane is higher by 20.41 per cent, while the area under cottonincreased by 8.9 per cent and jute acreage went up by 9.68 per cent over last year.


www.upscportal.com


8/19

The cultivation of oilseeds has shown a marginal increase of 0.32 per cent. The oilseedsacreage is 17.5 million hectares this year compared to 17.4 million hectares sown lastyear.

No change in open offer price for Cairn: Vedanta

In the wake of Cairn Energy forming a panel to secure the interest of minority

shareholders in the sale of its Indian interest, its suitor Vedanta ruled out raising the openoffer price for minority stakeholders.

Its open offer itself failed to take off in the absence of clearance from the Securities andExchange Board of India.

Vedanta is paying up to $8.48 billion for 40-51 per cent stake in Cairn India that operatesthe country's largest oilfields, and its group firm Sesa Goa was to make an open offer foran additional 20 per cent stake at Rs.355 a share to minority shareholders of the targetfirm.

Bridgestone to invest Rs. 2,600 cr

Japanese tyre major Bridgestone is planning to produce truck and bus radial tyres at its facility in

Kheda, near Indore in Madhya Pradesh. The company is also planning to set up a new factory at

Chakan near Pune to increase the capacity of PSR (passenger car radials) and truck tyres.

Addressing presspersons, Hiromi Tanigawa, Managing Director, Bridgestone India, said the total

investment in both the facilities would be of the order of Rs. 2,600 crore.

SBI Life launches Saral Maha Anand

SBI Life Insurance launched its new unit-linked insurance plan, Saral Maha Anand. The product,

with a minimum annual premium of Rs. 15,000, has been designed to cater to investment and

protection needs of the middle and low-income segments. The premium can be paid monthly,

quarterly, half-yearly or annually. The product is exempted from medical examination and offers

four fund options Index, Equity, Balanced and Bond says a release. Investors in the 18-55

age group can invest in the product.

IIFCL to buy Rs.1,500 cr loans from Union Bank

State-owned infrastructure lender India Infrastructure Finance Company Ltd. (IIFCL)inked a pact to buy loans worth Rs.1,500 crore from Union Bank of India (UBI) so that

the state-run bank can utilise the funds for other projects in the crucial sector.

This is the first-ever major agreement on takeout' financing in the country, a procedureunder which loans made by banks to infrastructure firms are sold to other institutions sothat the banks recover their much-needed funds ahead of the payment schedule under theloan agreement.

This is done to address the asset-liability mismatch, because loans are made toinfrastructure projects on a long- term basis, whereas deposits of banks are generally of ashort or medium tenor.

The company would do takeout financing of Rs.25,000 crore over three years, he added.


www.upscportal.com


9/19

Out of the Rs.25,000-crore takeout financing, we can expect Rs.100 crore of profit, hesaid.

Mr. Goel said memorandums of understanding had also been signed with AllahabadBank, Indian Bank, Punjab National Bank and UCO Bank for takeout financing.

RBI chief to head FSDC sub-panel

Even as the Financial Stability and Development Council (FSDC) is to be headed by theFinance Minister, the government sought to allay the apprehensions of the Reserve Bankof India (RBI) over the autonomy of regulators by appointing the apex bank's Governoras the head of a sub-committee of the body being set up to maintain financial stability.

It [formation of FSDC] will be announced shortly, Finance Minister Pranab Mukherjeesaid after his meeting with various regulators in the financial sector, namely, the RBI,SEBI (for markets), IRDA (for insurance) and PFRDA (for pensions) on the proposedFSDC.

The Council would have one sub-committee which would be headed by RBI Governor,a Finance Ministry statement later said.

Following the turf war between SEBI and the IRDA over the jurisdiction on mutualfunds, the RBI Governor's position was elevated in a recently formed joint panel that wasset up to resolve the controversy.

The apex bank's Governor was made Vice-Chairman of the committee, a higher positionfrom the earlier status of just being a member.

Industrial growth slumps to 5.6%

To the disappointment of the government and concern of India Inc., the growth inindustrial production plummeted to 5.6 per cent in August the lowest in 15 months from 10.6 per cent in the year-ago period, mainly owing to negative growth in capitalgoods stemming from a slump in manufacturing output. The official data on the Index of


www.upscportal.com


10/19

Industrial Production released revealed that the manufacturing sector, which accounts fornearly 80 per cent of the IIP numbers, witnessed a sharp dip in growth to 5.9 per centduring the month from 10.6 per cent in August 2009. Worse still, the capital goodssegment strayed into negative territory and slipped by 2.6 per cent as compared to arobust growth of 9.2 per cent posted in the same month last year.

The lowest growth in factory output in previous months was in May last year at 2.7 percent. The slump in August this year, however, may be viewed as a one-off aberration as

economic analysts had earlier projected a likely dip in industrial growth to single digitowing to the high base effect of August 2009. Moreover, the marginal growth of 3.7 percent posted by the six infrastructure industries during August this year was also seen as asignal of lower overall industrial output growth for the month.

India explores joint venture with Russia for silicon wafers

India will be seeking Russia's assistance in setting up a national disaster management centre

modelled on a Russian facility, Union IT and Communications Minister A. Raja said.

The Minister was highly impressed' by the high-tech National Emergency Management Centre

he visited. The centre gathers online information about natural and manmade disasters all over

Russia and coordinates relief and mitigation efforts.

The two sides agreed to explore the possibility of setting up a joint venture in India to produce

silicon chips and telecom equipment. The idea came up during the Minister's visit to the Moscow-

based Micron Company, which boasts an integrated chip-making facility.

Priority areas:-

We are looking to Russia, which is among the few countries manufacturing 3G and WiMax

chips, to assist India in achieving self-sufficiency in this field.

Vodafone selects Nokia Siemens, Ericsson for 3G

Telecom service provider Vodafone Essar announced that it had finalised equipmentmaker Nokia Siemens Networks (NSN) and Ericsson for deploying and managing itscountrywide 3G network infrastructure.

According to the contract, the two vendors will enable swift 3G deployment, createsynergy between GSM and 3G networks and maintain high speed packet access (HSPA)networks in the circles where Vodafone had bagged 3G spectrum, Vodafone said in astatement.

Vodafone has spectrum to offer 3G services in nine circles across the country, includingin Delhi and Mumbai. While Ericsson has been selected to provide exclusive 3G servicesin Mumbai, Delhi and Kolkata, NSN will implement and manage its 3G network in thebalance six circles of Tamil Nadu, Gujarat, Maharashtra, Uttar Pradesh (East), rest ofBengal and Haryana.

Vodafone will utilise this latest HSPA technology to deliver services such as videotelephony, mobile broadband, mobile TV and others.


www.upscportal.com


11/19

RBI divests stake in Nabard

Amid debate over whether the Reserve Bank of India should hold stake in lendinginstitutions or only be a regulator, the central bank has sold almost all its holding in theNational Bank for Agriculture and Rural Development (Nabard), to the CentralGovernment.

The RBI divested its stake amounting to Rs.1,430 crore in Nabard on October 13. Withthis, the RBI's holding in Nabard has come down to one per cent of shareholding in the

bank. The Central Government now holds 99 per cent of the stake, the central bank saidin a statement.

The move comes more than three years after the central bank sold its entire stake in thecountry's largest lender State Bank of India to the government.

Cabinet nod:-

The RBI held 72.5 per cent of equity in Nabard, amounting to Rs 1,450 crore. Theremaining shareholding worth Rs.550 crore was with the Centre.

Now, the only major institution where the RBI holds a stake is the National HousingBank (NHB). The central bank holds 100 per cent stake in the housing finance regulator.

Nabard is the apex rural and farm development bank, whose role is to promote creditgrowth in these areas.

The move was in line with the Narasimham Committee II report which held that it wasinconsistent with the principles of effective supervision that the regulator was also anowner of a bank.

Tata Aria launched

Tata Motors has launched Tata Aria, a luxury car having features of a sedan' and SUV(sports utility vehicle), in Kerala. It has in-dash GPS-based navigation system, which

offers guidance to find the destination, and traction control system to maintain stabilityunder situations of sudden acceleration. Other features include height-adjustable driver'sseat, anti-lock braking system, automatic climate control system, darkness sensing lightsand rain sensing wipers.

India launches IX round of oil, gas assets auction

India kicked off the IX round of auctioning under the New Exploration Licensing Policy (NELP),

offering 34 oil and gas blocks, including eight deep water ones, sans tax exemptions to investors.

The New Exploration licensing Policy round IX is being launched in the background of positive

economic conditions, including revision of the administered price mechanism (APM) gas price

and market determination for price of petrol,'' Petroleum and Natural Gas Minister Murli Deora

told reporters at the launch programme. The 34 blocks, which include 15 re-cycled blocks, cover

a sedimentary basin area of 88,807 sq. km. The deadline for making a bid for the blocks is March

18, 2011. The previous eight rounds of NELP in 235 blocks have fetched an investment of around

$14 billion.

The IX round of auction comes amid indications that the government is doing away with tax

incentives under the new Direct Tax Code (DTC) proposed to be implemented from April 1,

2012.


www.upscportal.com


12/19

Investors basically want clarity in NELP IX. The position is absolutely clear,'' Petroleum

Secretary S. Sundareshan. The DTC, once in force, would apply to all production sharing

contracts in the future including under NELP IX, he added. Till it does, the production sharing

contracts will be governed by the existing income-tax laws.

Under the current Income-tax Act, companies that started crude oil production before April 1,

1997, are exempted from paying taxes on profits for seven years. Refineries, which started

operations after October 1, 1980, and before March 2012, are also eligible for the same level of

incentive.

However, no tax breaks are given to natural gas finds, except for the gas that is to be produced

under NELP VIII blocks and the four coal bed methane (CBM) blocks. The first roadshow for

NELP IX will be held in Mumbai on October 18. The discoveries made under the NELP have

resulted in in-place hydrocarbon reserve accretion of a staggering 642 million tonnes of oil and

oil equivalent gas,'' Mr. Deora said.

The VIII round, which closed on October 12, 2009, attracted investment commitment of $1.34

billion for 36 blocks that received offers. Under NELP VIII, 70 areas or blocks for exploration

were offered, the biggest licensing round in India. Of the 36 areas bid for, the government had

awarded 33 blocks to successful bidders.

RBI panel to study functioning of MFIs

The Reserve Bank of India announced constitution of a sub-committee to look into thefunctioning of micro finance institutions (MFIs), as they have drawn flak for usingstrong-arm tactics to recover loans.

The MFI tactics have even prompted the Andhra Pradesh Cabinet to approve anordinance to rein them in.

We have constituted a sub-committee to look into the functioning of the MFIs sector andwhat bearing they have on RBI policy to take further action, RBI Governor D. Subbaraotold reporters after the meeting of the central bank board.

Tata gifts $50 m to Harvard Business School

India's Tata Group has given a huge $50 million to the prestigious Harvard Business School

(HBS) to fund a new academic and residential building on its campus, the largest gift received by

the institute from an international donor in its 102-year-old history.

Nippon Pipe to set up unit in Rajasthan

Nippon Pipe India Pvt. Ltd. of the Nippon group will set up a steel tube components project for

automobiles and motorcycles in the Japanese Zone at Majrakath in Neemrana in Rajasthan. This

is the first such project by a Nippon subsidiary in India.

Nippon Pipe is a subsidiary of Siam Nippon Steel Pipe Company India Ltd., Thailand, which, in

turn, is a subsidiary of Nippon Steel of Japan.

The Japanese Zone has been developed by the Rajasthan State Industrial Development and

Investment Corporation Ltd. (RIICO).


www.upscportal.com


13/19

The annual installed capacity of the unit would be 10,000 tonnes in 2012, which would increase

to 25,000 tonnes in 2015. In the Neemrana's Japanese Zone, 22 companies (including Nippon)

have been allotted 303 acres.

Mumbai gets world's largest diamond bourse

The Bharat Diamond Bourse (BDB), the world's largest, was inaugurated by Union

Commerce and Industry Minister Anand Sharma. As on today, in 2009-2010, the export of diamonds in this industry from Mumbai is Rs.

61,000 crore and I am hopeful that within a year, this bourse will achieve a turnover ofover Rs. 1,00,000 crore, he said.

The BDB has been set up to establish infrastructure for promotion of diamond export,including jewellery, and provide all support and service facilities to eventually makeIndia an international trading centre for gems and jewellery.

Spread over a 20-acre plot, the complex is designed to house around 2,500 small andlarge diamond traders in addition to a Custom House, banks and other service providerswho will cater for the gem and jewellery trade.

Policy on shale gas before the end of 2011

The Union Petroleum and Natural Gas Ministry is likely to sign a memorandum ofunderstanding with the U.S. in the area of technology related to extraction of shale gasduring the forthcoming visit of President Barack Obama to India.

BIPA with Sudan comes into effect

The Bilateral Investment Promotion and Protection Agreement (BIPA) between India and

Sudan came into effect with the exchange of instruments of ratification (IoR) between thetwo countries.

According to an official statement, BIPA seeks to promote and protect investments fromone country in the other country. Such agreements facilitate bilateral investment flowsand grant benefits of national treatment (NT) and most favoured nation (MFN). So far,India has inked BIPA with 79 countries of which 68 are already in force. Sudan is the69th nation with which the provisions of the agreement have now come in to effect.

Sub-panel to submit report on MFIs in three months

Amid growing criticism over the use of coercive ways of micro finance institutions

(MFIs) to recover loans, the Reserve Bank of India said its sub-panel looking into thefunctioning of such lenders would submit its report in three months.

The sub-committee will submit its report in three months, the central bank said in astatement.

The RBI has set up a sub-committee of the Central Board of Directors of the central bankto study the issues and concerns of the microfinance sector, including interest ratescharged by the lenders in this area. Y. H. Malegam, a senior member on the CentralBoard of Directors of the Reserve Bank of India, will chair the sub-committee, thestatement added.


www.upscportal.com


14/19

IOC to commission Paradip refinery by early 2012

Indian Oil Corporation (IOC) said its Rs.29,777-crore Paradip refinery in Orissa wouldbe commissioned by March 2012 and cater more to the domestic market rather thanexports due to rise in domestic fuel demand.

The refinery will start producing fuel by March 2012 when it will commission theprimary units like the crude distillation unit.

The 1,100-km pipeline will carry fuel produced in the unit to consumers in Orissa,Jharkhand, Chhattisgarh and Madhya Pradesh.

Dr. Reddy's to launch Lansoprazole in U.S.

Dr. Reddy's Laboratories (DRL) will be launching Lansoprazole delayed-release capsules (15 mg

and 30 mg), a bio-equivalent generic version of Prevacid delayed-release capsules, in the U.S.

market, says a release. Launch preparations are complete and shipments will commence shortly,

adds the release.

Emaar-MGF bank guarantee ordered to be confiscated

The Rs.183-crore bank guarantee furnished by Commonwealth Games Village builder Emaar-

MGF was on Wednesday ordered to be confiscated on charges of irregularities, as the

Enforcement Directorate prepared to question top officials of the Organising Committee for

alleged foreign exchange violations.

A Rs. 760-crore bailout package given by the Delhi Development Authority (DDA) to Emaar-

MGF, a private builder, also came under the scanner.

Eurocopter forms subsidiary

Eurocopter, which belongs to European consortium EADS, announced the setting up of anew subsidiary in India, sensing a huge business potential and aiming to capture 50 percent of the market share in helicopters.

Established as the 25th worldwide subsidiary and 10th in Asia, Eurocopter India PrivateLtd. has decided to take an aggressive plunge. It hopes to expand its market share fromthe current 30 per cent to 50 per cent by 2015.

The Indian helicopter sector has been growing at an annual rate of 20 per cent and our

ambition is to become the country's number one supplier for the civilian, government andpara-public markets,'' Executive Vice-President (Commerical Helicopters) JosephSaporito told a news conference.

Eurocopter is also competing for the Indian Army/Air Force bid to procure 197 lightutility helicopters.

At present, Eurocopter said, its AS365 Dauphin was serving for off-shore, para-publicand government transport, while it offered the EC135, EC145 and AS350 Ecureuil formedical emergency and law enforcement duties including in naxal-affected areas.


www.upscportal.com


15/19

LIC, SBI among largest bidders for CIL pie

Government-owned companies in the banking and insurance segments have together putin bids worth nearly Rs.30,000 crores in the initial offer of Coal India, which closed forqualified institutional buyers (QIBs) after getting a 22 per cent oversubscription for thissegment.

The issue was subscribed 10 times generating over Rs.1.50 lakh crore against the targetedamount of Rs.15,500 crore. The IPO, whose response has taken everyone by surprise,

closes on October 21. The allotment will be on a proportional basis. The issue is set to getlisted on November 4, a day ahead of Diwali.

Vodafone Essar to launch 3G by early 2011

Third-largest mobile carrier Vodafone Essar will launch third-generation (3G) services in the

January-March quarter of 2011 and plans to spend up to $500 million over the next few years on

its 3G network, according to Managing Director Martin Pieters.

Vodafone is the second mobile operator to announce specific plans for 3G after Tata Teleservices,

which earlier announced plans to launch the service on November 5.

Vodafone owns 67 per cent of Vodafone Essar, with the Essar group holding the balance. The

Essar group has an option to sell its entire stake to Vodafone for $5 billion by May 2011.

Rs. 11,218 cr tax notice slapped on Vodafone

The Income-tax department asked telecom major Vodafone to pay Rs.11,217.95 crore in taxes

within a month for the acquisition of Hutchison's stake in its telecom joint venture with Essar in

India in 2007.

The IT department issued an order raising a tax demand of Rs.11,217.95 crore on Vodafone

International Holdings BV, treating it as an assessee in default under Sec. 201(1) of the Income-

tax Act, 1961, (the Act), for failure to deduct tax as required under Sec. 195 of the Act before

making a payment of $11.076 billion (around Rs.55,000 crore) to Hutchinson

Telecommunications International Ltd. The tax demand is to be paid within 30 days of the receipt

of the notice of demand, an official statement said.

Polaris launches learning centre

School of Financial Technology facility in Hyderabad.

Polaris Software Lab, a leading financial technology company, announced the launch of first

phase of The School of Financial Technology, with the acquisition of a 50-acre facility owned by

Catalytic Software Ltd., (CSL) Hyderabad, principal shareholder of CSL being Catalytic

Software, headquartered in Seattle, U.S.


www.upscportal.com


16/19

FDI dips to $1.33 billion in August

Foreign direct investment (FDI) dipped by almost 60 per cent to $1.33 billion in Augustthis year from $3.26 billion in the year-ago period, says the latest government data.Significantly, this is the lowest FDI inflow in this fiscal.

Industry Department data reveal that in the first five months of 2010-11, the inflowsdeclined by 35 per cent to $8.88 billion from $13.76 billion in the same period last year.

Notably, though there was a smart recovery in the domestic economy and exports, inflowof overseas investment has been on the decline since June.

The overseas investment in June was at $1.38 billion, while that in July was $1.78 billion.The FDI in the first two months of this fiscal, April and May was $2.17 billion and $2.21billion respectively. Interestingly, a recent UNCTAD survey projected India as the secondmost important FDI destination only after China for multinational corporations.

As per the data, the sectors which attracted higher inflows were services,telecommunication, construction activities and computer software and hardware.

Pepsico granted relief

The Gujarat high court has granted relief to the soft drink manufacturing company,Pepsico India Holding Limited, and quashed a criminal complaint against the companyfor having provided drinks unfit for human consumption.

Exports at 2-year high

Reaching a two-year high, exports registered a jump of 23.2 per cent at $18.02 billion in

September compared to the same month last year, while the massive rise in imports raised

concerns over widening of the trade gap.

Asserting that India was on track to surpass the $200-billion exports target, Union Commerce and

Industry Minister Anand Sharma said that during the April-September period of this fiscal,

exports aggregated $103.30 billion, a 27.6 per cent increase compared to last year.

New ULIP from ING Life

ING Life India, an ING Group company, has announced the launch of its new unit linkedinsurance product, ING Prospering Life.

The new scheme has several features allowing customers to maximise their returns evenwhile having adequate protection. It has a variety of fund options and fund strategiesproviding customers the convenience and control to maximise their returns.

Tata Steel forms venture with NML

Tata Steel has incorporated a joint venture company in accordance with the terms of ajoint venture agreement it had signed with New Millennium Capital Corp (NML) ofCanada in November last.

Tata Steel had entered into the agreement through its wholly-owned subsidiary Tata SteelGlobal Minerals Holdings Pte. Ltd.

The joint venture company (JVC) Tata Steel Minerals Canada Ltd. will acquire allthe direct shipping ore (DSO) mining claims and related assets and carry out detailed


www.upscportal.com


17/19

engineering and construction of facilities and will be responsible for the operations of theDSO project. At closing, Tata Steel will own 80 per cent of the joint venture and NMLthe balance.

NML controls the emerging Millennium Iron Range, located in the Province ofNewfoundland and Labrador and in the Province of Quebec, which holds the world'slargest undeveloped magnetic iron ore deposits.

Tata buys into U.S. beverage firm

Tata Global Beverages has said that a U.K.-based subsidiary has acquired a minority stake in the

equity of Activate', a U.S.-based performance beverage and bottled-water company.

In a statement to the stock exchanges TGB (erstwhile Tata Tea) said the subsidiary had an option

to increase its stake in the next 12 months.

Bank of India ties up with Karvy

Karvy Stock Broking Ltd. has partnered Bank of India (BoI), for providing state-of-the-art online

trading services to the bank's customers enabling them to make investments in equities anytime,anywhere. BoI's customers with savings/current accounts along with depository participant

account either with NSDL/CDSL could avail themselves online trading account from Karvy.

India-China trade set to reach $60 billion target, says Zhang

China's Ambassador to India Zhang Yan on Wednesday asserted that trade between Indianand China was set to achieve the $60 billion target fixed by the two sides by the end ofthis year.

Trade between the two Asian giants had already reached $45 billion in the first nine

months of 2010, a 50 per cent increase compared to the same period last year.

ONGC interests will be protected in Cairn deal'

Union Petroleum and Natural Gas Minister Murli Deora on Wednesday asserted that interests of

Oil and Natural Gas Corporation (ONGC) would be fully protected while considering the

application for acquisition of Cairn India by Anil Aggarwal-owned Vedanta Group.

The Petroleum Ministry has maintained that Cairn Energy, which had on August 16 announced

the sale of 40 to 51 per cent stake in Cairn India to Vedanta for $8.48 billion, has to seek specific

approval for transfer of control in each of the ten properties it has in India.

On its part, Cairn Energy had in mid-September applied for specific approvals in seven

exploration blocks it had won under the New Exploration Licensing Round (NELP) since 1999

and sought an overarching consent in the case of its three pre-NELP producing properties

including the giant Rajasthan fields as contracts for them do not have specific prior-approval

clause.


www.upscportal.com


18/19

Biocon to invest $161 m in Malaysia

India's biotechnology major Biocon announced an investment of $161 million in Malaysia for

setting up of a bio-manufacturing and research and development facility, marking the biggest

foreign direct investment in this sector in the country.

The facility will be established in Bio-XCell, a biotechnology park in Iskandar, through a

strategic partnership with Malaysian Biotechnology Corporation, according to the decision

announced during the visit of Prime Minister Manmohan Singh. The facility, targeted to be

operational by 2014, would focus on research and development and production. The documents

between the two parties were exchanged in the presence of Dr. Singh and Malaysian Prime

Minister Mohd Najib bin Tun Abdul Razak.

The most expensive car Bugatti Veyron is here

Volkswagen Group company Bugatti Automobiles launched its super premium sports carVeyron 16.4 Grand Sport', the most expensive car in India so far with a price tag ofRs.16 crore onwards. Packed with many exclusive safety and luxury features, the sportscar will reach the top speed of 407 km an hour and speed of 360 km an hour with the roof

off.

Centre's fiscal position shows improvement in April-August

The Centre's fiscal position has improved in the first five months of the current fiscal,mainly owing to buoyant revenue collections coupled with a sharp increase in non-taxthrough sale of 3G spectrum.

In its quarterly report on Public debt management' for the July-September period thisfiscal released, the Finance Ministry said: The fiscal position of the government duringApril-August 2010 showed improved performance in terms of key deficit indicators due

to buoyant revenue collections.

The report said that while the increase in non-tax revenue was mainly on account oftelecom receipts, tax revenue was added by buoyancy in excise collections whichshowed a growth of 43.3 per cent during April-August 2010.

It may be recalled that the government mopped up a whopping Rs.1.08 lakh crore fromthe sale of 3G spectrum and broadband wireless access (BWA), way higher as comparedto the target of Rs. 35,000 crore. Alongside, with the revival in consumer demand andincrease in excise duty by way of stimulus withdrawal, indirect tax collection also turnedbuoyant.

Swiss firm to set up grain management academy

Swiss grain processor company, Buhler, that provides machinery and technology for rice, pulses

and wheat processing industry in India, plans to set up an academy near Bangalore to upgrade

skills and offer world-class training in food grain management sector.

The company, which is celebrating its 150 th anniversary, is to invest in India Rs.100 crore in an

integrated manufacturing unit and other expansion projects in the next four years as part of its

plans to achieve a turnover of Rs.1,000 crore by 2014.


www.upscportal.com


19/19

RBI to examine recovery mechanism of MFIs

The Reserve Bank of India appointed sub-committee will examine the recovery mechanism of

microfinance institutions and their interest rate practices, amid criticism of these lenders charging

exorbitant loans rates and using strong arm tactics for recovery.

To examine the prevalent practices of MFIs regarding interest rates, lending and recovery

practices, to identify trends that impinge on borrowers' interest, the RBI said in a notification.

Earlier this month, the Reserve Bank had appointed a sub-panel, under the Chairmanship of Y. H.

Malegam, to look into the functioning of MFIs. The committee will submit its report in three

months. The RBI will examine the conditions under which loans to MFIs could be classified as

priority sector lending and give appropriate recommendations.

At present, MFIs charge up to 34 per cent interest rate a year on loans.

PFC to help NPCIL set up nuclear plants The Power Finance Corporation (PFC) and the Nuclear Corporation of India Ltd. (NPCIL) have

entered into a memorandum of understanding (MoU) to facilitate NPCIL to set up nuclear power

projects. The MoU was signed in New Delhi by PFC Chairman and Managing Director Satnam

Singh and NPCIL Chairman and Managing Director S. K. Jain.

Under the MoU, PFC plans to offer debt financing, equity financing and consultancy services to

NPCIL to facilitate the latter's large capacity addition programme. While PFC is a leading

financier in the electricity sector, NPCIL is the only player operating nuclear power reactors in

the country.

NPCIL now operates 19 nuclear electricity reactors in the country with an installed capacity of

4,560 MWe. Three reactors, with a total capacity of 2,220 MWe, are in an advanced stage of

construction. They are two units of 1,000 MWe each from Russia under construction at

Kudankulam in Tamil Nadu and an indigenous pressurised heavy water reactor (PHWR) of 220

MWe at Kaiga in Karnataka. In addition, excavation is under way for 700 MWe indigenous

PHWRs, two each at Kakrapar in Gujarat and Rawatbhatta in Rajasthan. The NPCIL's installed

capacity will reach 9,580 MWe by 2017, 20,000 MWe by 2020 and 60,000 MWe by 2032, says a

press release from NPCIL.

PFC's asset base, cumulative loan sanctions and disbursements as on June 30, 2010 stand at

Rs.85,597 crore, Rs.2,88,932 crore and Rs.1,47,056 crore, respectively, says the release.


current affairs for ias exam 2011 economi affairs october 2010 www.upscportal

Documents