Economy Issues

30 Jan - 06 Feb 2010

The task force report on micro, small and medium enterprises (MSME)

headed T.K.A. Nair, Principal Secretary to the Prime Minister.

The report of the task force on micro, small and medium enterprises (MSME)

that has recommended changes in policies to help growth of the sector.

also recommended a road map for the development and promotion of the sector

crucial for economic growth and employment generation.

The task force has called for an agenda for immediate action to provide relief

and incentives to MSMEs, especially in the aftermath of the recent economic

slowdown, accompanied by institutional changes and detailing of programmes, to

be achieved in a time-bound manner.

It has also suggested setting up of appropriate legal and regulatory

structures to create a conducive environment for entrepreneurship and growth

of MSMEs.

The MSME task force has recommended extension of the stimulus package for the

sector for one more year, besides suggesting a procurement policy and creation

of separate fund for the industry.

It has suggested that a standing review committee under Planning Commission

Member Arun Maira be set up to monitor flow of credit to the MSME sector.

It has also called for setting up an independent body at the national level

for promoting MSMEs, which may provide financial and managerial support to set

up industrial estates in partnership with the private sector.

Small, medium units need Rs. 5,500 crore succor to help it recover from the

aftermath of the global economic slowdown that has hit the sector hard.

the MSME sector, which employs 4.2-crore people and contributes about 45 per

cent to the total manufactured output and 40 per cent to our export.

SEBI acts tough on multi-class share entities

SEBI has reportedly put on hold registration of close to 50 investors who are

organised as 'multi-class share entities' in tax havens like Mauritius.

A multi-class share entity is Similar to a mutual fund, a multi-class

structure allows distinct pools of investments — just like the various schemes

of an MF — under an umbrella asset management company. The investors putting

money in the various pools, which are referred to as cells by market

participants, can have different fund managers pursuing different investment

strategies.

Tough action is due to the fear that while the umbrella firm gets registered

as an FII or a sub-account — a special purpose vehicle formed in Mauritius to

access Indian stock exchanges — the regulator may have no control over the

different pools or cells under the firm. And once a multi-class share entity

is registered, it can go on adding new cells which, outside the regulatory

radar, can be the conduits for round-tripping.

It is worthwhile to note that SEBI had banned PCC (Protected Cell Company)

structures in '99-00; but foreign investors can set up multi-class structures

which, as legal entities, are a little different from PCCs.

Difference between PCC & multi-class share entities-

The similarity between the two is that each cell has separate accounts and

losses suffered by one pool cannot be recovered from another. The key

difference is: in a PCC, each cell is legally ring fenced and bankruptcy faced

by one cell will not impact the other cells; but in a multiclass share entity

anyone suing a cell has to sue the entire company and not the share class.

Third quarter review of monetary policy

RBI pitches for recovery with price stability

In its third quarter review of its monetary policy the Reserve Bank of India

has retained the policy interest rates, the repo and the reverse repo, at 4.75

and 3.25 per cent, respectively.

But hiked the cash reserve ratio by a substantial 0.75 percentage point to

5.75 per cent in two stages. The hike is expected to impound Rs.36, 000 crore.

 

The Bank Rate, which has not been used for quite some time now, remains at 6

per cent.

Through these measures the central bank expects to drain excess liquidity and

thereby anchor inflationary expectations and support the recovery process

without compromising on price stability. The calibrated exit will align policy

statements with the current and evolving state of the economy.

It raised the GDP growth estimates from 6% to 7.5% for the current year.

Much ado about tea logo

GOI called for a replacement for the tea plucker logo introduced back in 1976

to represent and certify tea made in the country.

India, the largest producer of tea, has been brewing the drink since the time

of Valmiki and is mentioned in Ramayana.

India exported 169.3 million kg of tea and had earned a foreign exchange of Rs

2311.13 crore in the first 11 months of 2009.

Change in base year

Govt has done the revision in the base year for national accounts from

1999-2000 to 2004-05,

This change will lead fiscal deficit for the current year is likely to drop to

6.5%, other things being equal.with this upward revision in the country's

income under the new series has brought down the fiscal deficit relative to

the GDP.

World Economic Forum - Davos

Amid the multiplicity of voices, opinions and often conflicting viewpoints,

the vague contours of a new world order emerged.

The new shape on economic recovery is LUV — the L-shaped recovery of other

developed nations, U-shaped recovery of the US, and the V-shaped recovery of

the emerging nations.

Subir Raha

This former CMD of ONGC (2001-2006) died of cancer in New Delhi.

20 Indian banks make it to the list of big banks by brand value

SBI's brand value more than tripled to $4,551 million, up from $1,448 million

in 2009 helping it grab the 36th spot in the list.

ICICI Bank, the country's largest private bank, joined it in the Top 100 list

with a 130% jump in its brand value at $2,164 million.

Coco

It stands for contingent convertible capital.

It is a debt that converts into equity when banks run into trouble.

What is DSGE?

It stands for Dynamic Stochastic General Equilibrium.

It is a methodology reportedly used for the first time by IMF to model various

'macrofinancial' linkages, such as the exchange rate and inflation, in the

conduct of monetary policy in India.

Broadly speaking, the idea is to analyse activities in the 'micro' domain to

explain aggregate economic phenomena, such as growth, business cycles, and the

effects of monetary and fiscal policy.

Besides, DSGE models are dynamic, looking at how the economy evolves over

time. Also, they are stochastic, taking into account how the economy is

affected by random shocks such as sub-optimal policy design, oil price spikes

and technological change etc. The plan is to use a few key variables for more

accuracy in models.

BioAsia-2010

The four-day 'BioAsia-2010' was inaugurated at HYDERABAD

Leading companies proposed to invest Rs.1, 000 crore to create infrastructure

of plug-and-play lab space in the third phase of Biotech Park near here.

Sen's cautious path to stimulus rolls back

Even as the Reserve Bank of India has given adequate feelers to the government

to start the process of rolling back the stimulus measures, Chief Statistician

Pronab Sen felt that a decision on this crucial issue should be taken on the

basis of the actual growth scenario which would be available in May when the

GDP (gross domestic product) data for the current fiscal is slated for

release.

National awards for Power Grid

The Power Grid Corporation of India has been conferred three gold shields and

one silver shield in the national awards for meritorious performance in the

power sector during 2008-09.

The awards were presented by Union Power Minister Sushilkumar Shinde to Power

Grid Chairman and Managing Director S. K. Chaturvedi at a function in the

Capital.

The gold shields went to Power Grid Corporation's Western Region-I

transmission system and the North-Eastern Region transmission system, and to

the 220 kV D/C Pul-e-Khumri to Kabul Transmission Line in Afghanistan.

Time of iPad

Apple Computer's iconic Chief Executive Officer Steve Jobs has made another

bid to create digital history.

Following months of speculation, he unveiled the iPad, a 24.64 cm (9.7 inch)

touch-screen tablet. This device, he proclaimed, lets people hold the internet

in their hands. Mr. Jobs hopes to make the same game-changing impact on the

digital world that he did with the iPod, which has sold 250 million units, and

the iPhone.

Apple's nifty new creation is posit ioned as a "third category" mobile device —

between the laptop and the smartphone.