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  2003 2002 2001 Ranking(2003)
Millions of US $ 598,966 515,000  481,400 12
GNI per capita
 US $ 530 480 470 160
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 012 - (01/02/05)

The first phase of assembly elections are scheduled to be held in many parts of India in early February. As part of this, the Congress party has stepped up its campaign in states like Haryana. Congress President Sonia Gandhi launched her election campaign in Haryana for polls scheduled for February 3. In a statement to the people of Haryana, Gandhi urged the people to vote for the Congress and outlined a program for better governance and welfare of all sections of society. Gandhi also expressed concern for women's issues which included the declining sex ratio and cases of female foeticide in Haryana. In Jammu and Kashmir, the first phase of civic polls were held after a gap of 27 years. However, militant groups and the separatists called for the boycott of polls. In the Baramulla constituency, two municipal corporations and six municipal committees will go to polls. Elections will also be held in the Kupwara and Handwara municipal committees. The main parties contesting the civic polls in Jammu and Kashmir are the PDP, Congress and the National Conference.

India-Pakistan Issues
Initial hopes of an improvement in India-Pakistan relations were dampened after Pakistan accused India violating the ceasefire line across the Line of Control (LOC). These allegations came after Pakistani troops resorted to firing in the Poonch sector of Kashmir. India has dismissed the allegations as baseless. Amidst a fresh round of allegations and counter allegations, Pakistani and Indian troops fired on each others positions in the Mendhar sector. The Indian army claims that "there were two instances of ceasefire violations by the Pakistanis on January 18 and January 20, which the Indian side objected to and asked for a flag meeting. This was held on January 23. There was no ceasefire violation by India." However, the Pakistanis are arguing that mortars were fired from within Indian territory. India's Defence Minister Pranab Mukherjee in a recent statement is claimed to have said that the issue of fresh shelling and firing across the Line of Control from Pakistan has been raised with the Pakistanis. Mukherjee said that the Pakistani side has promised to look into the issue. Mukherjee also added that both parties maintain that there should not be escalation of tension along the border. The situation on the ground, however, is very different. 
Indian Army officials believe that since the infiltration across this border is almost insignificant, it makes the situation tough for the other side. Firing is usually resorted to as a measure to provide cover to militants crossing the Line of Control. The firing seems to have also impeded the Indian Army's plan to fence the Line of Control. Pakistan has always resisted the building of the fence, which is now almost complete. Intelligence reports suggest that despite the ceasefire, more than 2000 militants were ready in different training camps in PoK in November. These militants are now stationed in the forests of Lassa Danna and it is alleged will be pushed through forward posts in Kathua, Bagh, Haji Peer and Kotli. The Indian army claims that this is a deliberate ploy to provoke the Indian soldiers so that they violate the Line of Control, thereby breaching the ceasefire agreement. These incidents of firing though appearing trivial have the ability to push back the process of dialogue that was initiated by leaders of the two countries. But if the provocation suggested were true, and that 2000 plus militants are ready to move, it seems astonishing that Defence Minister Mukerjee appears so sanguine about it.
India further expressed its concerns over the sale of US arms to Pakistan. India views such American policies as being detrimental to the progress of bilateral talks on cross border-terrorism. New Delhi fears that any such measure of placating Pakistan can step up militancy in Kashmir and undermine peace talks between India and Pakistan. The Indian government's fears may possibly be well founded given past experience where the Pakistanis took advantage of US support to ratchet up controversy over the Kashmir issue. 

In a bid to reform the oil and gas sector, Finance Minister P Chidambaram is planning to open these sectors to further competition. Towards this end, duties will be restructured to make oil companies more efficient and bring down fuel costs. The need to consolidate the oil sector arises from a gap in supply and demand. Pointing out that taxes on the sector have to be fuel-neutral and subsidies transparent, Chidambaram said that "Taxes and subsidies in the sector are in conflict with each other," and that adding any departure from fuel-neutral taxes and transparent subsidies should be avoided as far as possible (Source: Press Trust of India Reports). The Finance Ministry is also working on restructuring petroleum duties. 
In other financial news, the IMF expressed concern over high levels of fiscal deficit in India and urged the government to carry out far reaching fiscal reforms to sustain high economic growth. International Monetary Fund's First Deputy managing Director Anne O Krueger suggested that the Indian government needs to improve the Tax-GDP ratio by pushing up revenues and phasing out tax exemptions. Krueger said that "Fiscal deficit is an area of concern that the government needs to give more attention to. In India, Tax-GDP ratio is very low due to lot of exemptions in personal income tax. The tax base needs to be broadened." In addition, measures need to be taken on both fronts; revenue and expenditure. Also, interest rates should be managed effectively and allocation of resources should be done in a better way for higher economic growth. 
The issues that were of critical importance and require to be discussed in the upcoming budget are fiscal deficit management, expenditure control, public sector resource management and rationalization of the tax structure. 

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Jet Airways plans US$500m offering

Jet airways, the Indian carrier responsible for a revolution in the quality of domestic air travel, has filed a draft prospectus for a n offering of new shares that is expected to raise up to US$500m, the Financial Times reported on January 10th.
The sale of a stake of about a fifth of the carrier will reduce the personal holding of Naresh Goyal, who launched and owns Jet through a company called Tail Winds, to about 80 per cent following the initial public offering.
Bankers say the IPO, expected to be launched in February, will kick-start another busy year on Indian capital markets. In 2004, Indian companies raised a record Rs292bn (US$6.68bn), according to Prime Database, which tracks trends in issuance. A record number of public and private-sector banks, telecoms and software companies are hoping to raise capital via global depositary receipts, sponsored secondary American deposit receipts and IPOs.
The fund-raisers include HDFC and ICIC, two leading banks, Infosys Technologuies and Satyam Computer Services in the IT sector, and Hutchison, Idea and possibly Reliance Infocomm in telecoms.
"The demand is deep and prospective issuers have been encouraged by the strong response last year form foreign and Indian institutions and retail investors," said Mr Ravi Kapoor, head of equity capital markets at DSP Merrill Lynch in Mumbai.
Bankers say the strong returns from IPO stocks such as biotechnology company Biocom (65 per cent), IT giant Tata Consultancy Services (32 per cent) and broadcaster NDTV (47 per cent) and the continuing strength of the share market that has pushed the benchmark index to record levels have been additional factors favouring heavy issuance.
While these conditions will benefit Jet, the size of its IPO might prove to be modest following recent policy changes by the government that allows Indian carriers to fly on international routes.
Jet wants to launch services to the UK, US and south-west Asia, but the IPO funds, which after partially paying off debt of about US$600m ad redeeming preference stock, will not be enough to acquire wide-bodied aircraft for long-haul flights.
Jet would have to raise extra funding but after the IPO, its leverage will be enhanced, an executive close to the airline said. "The timing of the policy changes, which were unexpected, and the implications are not reflected in the IPO," he said.
Jet earned revenues of US$650m in 2003-2005 from a 43 per cent share of a rising domestic market in terms of traffic.

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India targets two big energy deals with Russia and Iran

India set in train two multibillion dollar energy deals with Iran and Russia recently, underlining its rivalry with China in the race to secure oil and gas supplies to fuel rapid economic growth, the Financial Times reported on January 8th.
In New Delhi, India and Iran signed a preliminary agreement - unofficially estimated to be worth US$40bn - that committed India to importing liquefied natural gas a nd developing two Iranian oilfields and a gas field.
Mani Shankar Aiyar, Indian oil minister, said: "Every last detail has been settled, price too."
Separately, India's Oil and Natural Gas Corporation said it was in talks about investing in part of Yukos, the Russian oil group broken up in a state-backed auction last year.
Officials from New Delhi's petroleum ministry told India's Business Standard newspaper that ONGC might soon place a US$2bn bid for a stake in Yuganskneftegas, the main production unit of Yukos.
Subir Raha, ONGC's chairman and managing director, said the company was "in touch with the concerned Russian entities about the Yukos assets and other opportunities in Russia."
A spokesman for Mr Raha warned that the talks were in their early stages and the company was discouraged by the liabilities of Yukos, which is being pursued by the Russian authorities for billions of dollars in unpaid taxes.
Late last year Yuganskneftegas was bought by Rosneft, the Russian oil company scheduled to merge with Gazprom later this year. Viktor Khristenko, Russia's energy minister, said recently that Yuganskneftegas would be spun off into a separate company.
A bid by ONGC for a Yuganskneftegas stake could put it in competition with the Chinese National Petroleum Corporation, which Russian officials had earlier indicated was their preferred foreign partner for the assets.
Mr Raha, in a recent interview, said India and China were competing to secure energy sources to cover the next 40 years.
According to the Iranian deal, India will import 7.5m tonnes of LNG starting in 2009 and lasting for 25 years. India's ONGC will also help develop the Iranian oilfields in exchange for 90,000 barrels a day of crude oil.
China's state-owned oil giant, GNOOC, is considering a bid of more than US$13bn for Unocal of the US in what would be the largest overseas acquisition by a Chinese company.
India's rapidly growing economy is hungry for energy and demand for oil is set to grow at an annual rate of at least 3.6 per cent during 2005-07. India imports about 70 per cent of its crude oil.

India to open talks with Burma and Bangladesh on gas pipeline

India has opened high-level talks with both Burma and Bangladesh aimed at approving a multi-billion-dollar gas pipeline to feed India's surging energy demand, the Financial Times reported.
Agreeing to the talks amounts to a significant change of attitude by Bangladesh, which has prevaricated for years over whether it would be prepared to link its still untapped gas reserves to India by pipeline.
There has long been political resistance in Dhaka to exporting its most valuable natural resource to its bigger neighbour.
But Mani Shankar aiyar, Inida's minister for petroleum, told the Financial Times that the three countries had reached the stage where practical negotiations could proceed. Indian officials say Bangladesh's new interest in the pipeline has partly been stimulated by India's improving ties with Burma. If routed through Bangladesh, the pipeline would earn transit fees for Dhaka, while also offering it the option to sell its own gas to India sing the same infrastructure.
The Indian minister will hold talks with both countries in the Burmese capital, then visit the country's offshore gas field, which was partly discovered by Gas India Limited, India's state-owned gas company.
The proposed pipeline could either cross Bangladesh or bypass the country altogether. India' whose demand for gas is projected to surge to 400m cubic metres a day by 2025, is also evaluating a submarine pipeline across the Bay of Bengal, in case Bangladesh does not agree to the project.
Another costlier option would be to route the pipeline from Burma's northern border through India's north-eastern state of Mizoram.
A pipeline could go a long way towards meeting India's growing energy needs, though it remains unclear how large Burma's gas reserves will prove to be.
Gas discoveries in the Shwe field in the Andaman Sea off Burma's coast last year opened the possibility of exports to India.
But further drilling tests were needed in Burma's biggest offshore gas field to assess its commercial potential, analysts said.
"More drilling will be done before any decision can be made on how the gas can be transported to India," said Susan Mance, south-east Asia energy analyst for Wood Mackenzie.
Analysts estimate gas reserves in the Shwe field of up to 14 trillion cubic feet. Estimates for Bangladesh are also hazy, with net proven gas reserves of 15 trillion cu ft, but the US Geological Survey estimated that Bangladesh contains 32.1 trillion cu ft in additional "undiscovered reserves."
India is also keen on the pipeline project for diplomatic reasons.
"This gas pipeline would greatly strengthen relations with a much neglected country to the east of India (Burma)," said Mr Aiyar. "We are expanding our domestic supplies of gas and our overseas sources of gas - there is more than enough demand in India for both to expand greatly."
India's increasingly close ties to Burma's military junta are widely seen as a belated attempt to emulate China's influence in Rangoon, which is extensive and includes a strong military element.
Although India and China enjoy more cordial relations than in the past, many liken their competition for energy and influence in the region to the 19th century "Great Game" between Britain and Russia.
However, India believes it can strengthen relations with Burma without antagonising China.
Mr Aiyar said: "I hope and believe India can have an economic presence in Burma in hte hydrocarbon sector (without jeopardising relations with China)."

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India to boost trade with Kazakstan, Uzbekistan

The fifth Joint Commission Meeting (JCM) between India and Uzbekistan was inaugurated by the Indian Minister of State for Commerce and Industry, Shri Elangovan in Tashkent recently, Interfax News Agency reported.
The JCM was expected to give a boost to the trade and economic cooperation in the areas of apparels, engineering goods, basic chemicals and pharmaceuticals, a statement read.
The Indian minister led a 73-member trade delegation to Uzbekistan and Kazakstan as part of the Focus, Commonwealth of Independent States programme of the ministry of commerce and industry to enhance the areas of economic cooperation between India and the CIS countries. Twelve countries like Armenia, Azerbaijan, Russia, Tajikistan, Kazakstan and Uzbekistan are members of the CIS group.
Under the CIS programme, the government gives assistance to exporter, export promotion councils (EPCs), business chambers to visit these countries, organise trade fairs and to undertake various market promotional activities.
Members from various export promotion councils like basic chemicals and pharmaceuticals EPC, engineering EPC chemicals and allied products EPC were part of the delegation. The thrust areas for cooperation are textiles, engineering goods, chemicals and pharmaceuticals.

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