Parliament productivity

Of pending cases....

Farmer lobbies support FDI in Retail

Large farm lobbies are backing the government’s decision to allow foreign supermarkets to set up shop in the country, saying it will shorten the supply chain and get growers a larger share of the final selling price. Most farmers, however, want the government to go a step further and make it mandatory for retailers to buy 75% of their produce directly from farmers, bypassing the restrictive ‘mandi’ auction system. India has 600 million farmers, 1,200 million consumers and 5 million traders. Both farmers and consumers are benefited by FDI in retail. Last week, the government allowed 51% foreign direct investment (FDI) in multibrand retail and also raised FDI limit in single-brand retail to 100%. The move, however,stirred up political dissent with parties such as the BJP, CPI(M) and TMC demanding the government drop its plan as it would cost millions of jobs. But big farmers are all for retail reforms. Bharat Krishak Samaj, a farm lobby with more than 75,000 members, said it supports FDI in retail on the condition that direct procurement from farmers is made mandatory. Farmer leaders say the stranglehold of middlemen and traders is at the root of rural poverty and India’s food inflation. What a farmer sells for Rs. 1 is sold at the mandi at Rs. 2, which becomes Rs. 3 at the mandi at the consumption centre and Rs. 4 when it reaches the consumer through a retailer. Farmers near urban areas are already finding ways to circumvent the mandi system and reach the consumer directly. For instance, 23-year-old farmer S Chandrasekhar drives 10 km every Sunday to sell fresh vegetables to joggers and walkers on Chennai’s Besant Nagar beach. Some 1,160 km away, Shriram Gadhave, president of All India Vegetable Growers Association, organises buyer-seller meets at Thane and surrounding areas to facilitate better price recovery.

Anna Hazare opposes FDI in Retail.

Growth slumps to 6.9%

India's economic growth slumped to its lowest in more than two years while output expansion at key industries tumbled to a six-year low, prompting Finance Minister Pranab Mukherjee to warn of “hard days” ahead. Growth in GDP, or the value of goods and services produced, dipped to 6.9% in the three months to September compared with 8.4% in the year-ago quarter, as rising interest rates and stubborn inflation crimped demand. Output growth in eight core industries, including steel, cement and coal, dropped to near-zero in October, a sharp decline from 7.2% a year ago, signaling the possibility of a sharp deceleration in industrial growth, given their more than one-third weight in the Index of Industrial Production, or IIP. Fiscal deficit for the first seven months of the year has reached 75% of the full-year estimate, adding to the gloom. Economists warned about a further slowdown. The Reserve Bank of India, which has raised rates by 375 basis points since March last year, has indicated it will pause rate increases but may not be in a position to start reversing them as many countries have begun to do because inflation has remained above 9% for 11 months. The GDP data released by the government on Wednesday revealed broad-based weakness in the economy, with mining contracting 2.9% and manufacturing rising a meagre 2.7% in the quarter gone by. Services and agriculture grew 9.3% and 3.2%, respectively. The finance minister expressed hope that the economy would recover some of its lost momentum, pegging the full-year growth estimate at 7.3%. GDP grew 8.5% last year. The government's chief economic advisor, Kaushik Basu, blamed the gloomy global scenario in addition to high inflation and slowdown in decision-making for the slump in growth. Experts were also concerned about the dismal consumption or expenditure estimates of GDP. Consumption demand growth, as measured by private final consumption expenditure, slowed down to 5.9%, the lowest in the new series of data with 2004-05 as the base year. Gross fixed capital formation, a measure of investments, declined 0.6%. The dismal 0.1% growth in core sector output in October, and the sequential decline in investments and private consumption, suggest the environment of high inflation, rising interest rates, and overall pessimism have forced consumers and corporates to cut spending. The decision to open up FDI in retail had given some hope that the government would unleash a slew of policy measures to galvanise investments, but it remains to be seen if the UPA leadership remains firm on the decision in the face of shrill political opposition. Several broking firms have revised their GDP growth estimates recently. Citi has cut growth estimate for the current year to 7.1% from 7.6% earlier and to 7% for fiscal 2012-13. Bank of America Merrill Lynch has cut its forecast for next year to 6.8%.

ADS-B

Flying over oceanic regions is going to be safe and cost effective for airlines as the Airports Authority of India (AAI) is planning to install a new generation surveillance system at 14 small airports in the country. The aim is to plug blind spots over land and sea where radar surveillance is not effective. The new system, automatic dependent surveillance–broadcast (ADS-B), helps air traffic controllers track aircraft faster than with conventional radar. ADS-B ground stations will get the position of a flight automatically every second. Pilots will be able to fly at altitudes as high as 45,000 feet which will make flying safe, green and faster. As the aircraft can be monitored, more flights can be accommodated on an air route. AAI is planning to install ADS-B at Jaipur, Lucknow, Calicut, Agartala, Thiruvananthapuram, Ahmedabad, Guwahati, Port Blair, Nagpur, Mangalore, Coimbatore, Kochi, Varanasi and Amritsar. The deadline is set for 2014. ADS-B uses global positioning satellites to get inputs about the speed, altitude and location of aircraft flying in areas that cannot be reached effectively by secondary surveillance radar. The new surveillance system will be most useful for planes flying over the Bay of Bengal from South East Asia to the Gulf countries, Europe and the UK. AAI will install an ADS-B ground station at Port Blair. Around 200 aircraft cross the 200 nautical miles over Andaman and Nicobar Islands daily. ADS-B will help aircraft flying on seven air routes that cut across Bay of Bengal. It also will help air traffic controllers reduce the separation of aircraft as they cross one another. Now, planes take more than 15 minutes to cross one another which delays flights. When radar coverage is not good, air traffic controllers in Chennai send text messages to the aircraft receiver to obtain its speed and location. This is an expensive system. “ADS-B will help reduce separation between aircraft. One plane can be separated by 30 miles on cruise altitude when the new system comes into vogue. This also helps the plane reach optimum cruising altitude without compromising on safety while cutting down on cost,” said V Somasundaram, member, Air Navigation Services, AAI board. Chennai airport has already installed ADS-B and trials were conducted. “We are yet to start using it. Trials were successful. It’s a good system which helps us to track an aircraft without the knowledge of pilots. The plane and the ground station will be in touch automatically and the input will be visible on the monitor,” said an air traffic controller. “The new system is an evolving technology and we are planning to integrate it with existing radar-based systems at airports. It is going to be a key element in air traffic management world over. Currently, surveillance is being done using secondary radar. India is planning to install ADS-B to provide surveillance in remote areas to cover existing radar gaps and provide complete surveillance over the continental airspace and around Port Blair over the Bay of Bengal,” said D Devaraj, southern regional executive director, AAI.

Somewhere in Imphal....

Grievously injured rickshaw-puller Mohammed Kora lies dazed in Imphal’s palace compound after a powerful bomb ripped his rickshaw into pieces and injured four bystanders. Kora, who succumbed later, said he was paid by rebels to carry the explosives. The blast comes days before Prime Minister Manmohan Singh and UPA chief Sonia Gandhi’s visit on December 3.

Worst month for the Rupee

The rupee completed its biggest monthly loss in almost two decades as slowing economic growth and Europe’s debt crisis hurt demand for the nation's assets. The rupee declined 6.7% this month, the most since March 1992, and 0.4% on Wednesday to 52.21 per dollar in Mumbai, according to data compiled by Bloomberg. It reached an all-time low of 52.73 on November 22. The currency tumbled to a record low last week as bond yields in Greece and Italy surged to euro-area records. The slide in the currency prompted policy makers to take measures to boost the supply of dollars in the financial system. RBI on November 23 eased rules for companies to borrow abroad and sell foreign currencies through swaps, and raised interest rates on bank deposits for Indians living abroad.