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Key Economic Data 
  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: 026 - (27/03/06)


The leader of the governing Congress party, Sonia Gandhi, has resigned as Member of Parliament. The decision followed allegations from the opposition side that she has held an office of profit and an ordinance on holding an office of profit was aimed at protecting her. Such an ordinance was passed by the Parliament a few days prior to Gandhi's resignation. Sonia Gandhi also resigned from the National Advisory Council but maintained that she would contest elections from her stronghold seat in Rae Bareilli, Uttar Pradesh. A number of resignations from parliamentary members followed. Karan Singh, also from the Congress party, resigned from Parliament for holding a second office as Chairman of Indian Council for Cultural Relations. The government is planning to introduce a Bill in Parliament to redefine offices of profit for MPs. The government's ordinance was aimed at identifying 62 posts as offices of non-profit, including the post of Chairperson of the National Advisory Council. Meanwhile, the opposition party, BJP, said the resignation of Gandhi was an attempt to save face. Both Houses of Parliament had to be adjourned amid an opposition uproar against the ordinance. Opposition MPs met President APJ Abdul Kalam and sought Gandhi's disqualification as a Member of Parliament. 


President George Bush visits India and Pakistan 

India and the United States have embarked on a fresh chapter in their relations, which hopes to usher in an era of power and respect for South Asia's regional hegemon, India. In the words of President George Bush, "India in the 21st century is a natural partner of the United States because we are brothers in the cause of human liberty. Recently, I visited a memorial to Mahatma Gandhi, and read the peaceful words of a fearless man. His words are familiar in my country because they helped move a generation of Americans to overcome the injustice of racial segregation. When Martin Luther King arrived in Delhi in 1959, he said to other countries, "I may go as a tourist, but to India, I come as a pilgrim." I come to India as a friend. For many years, the United States and India were kept apart by the rivalries that divided the world. That's changed. Our two great democracies are now united by opportunities that can lift our people, and by threats that can bring down all our progress. The United States and India, separated by half the globe, are closer than ever before, and the partnership between our free nations has the power to transform the world." 

Perhaps the most critical segment of the partnership between the two countries was the nuclear agreement reached by President Bush and Prime Minister Singh. According to the nuclear deal, the United States will provide India with nuclear fuel in perpetuity in lieu of India separating its civil and nuclear facilities. This is a tremendous development in the relations between the two countries as the American step is being viewed as a recognition of India's global power; not just regional. Although the agreement has also generated a lot of controversy as critics repeatedly point to how the agreement blows a fuse in the international non-proliferation regime, President Bush and his administration seem resilient in getting the bill passed in Congress. Among the other highlights of the visit, the two leaders made strides in furthering trade and economic prosperity, endorsed the efforts of the US-India Trade Policy Forum, sought to launch the Knowledge Initiative on Agriculture, reaffirmed their commitment to the WTO Doha Development Agenda, and, welcomed the creation of the Asia Pacific Partnership on clean Development and Climate

The success of President Bush's visit was evident in the fact that his visit to India was followed by the visit of Australian Prime Minister John Howard who has also considered supplying uranium to India. While stating that Australia would stick to its policy of not selling to non-NPT countries like India, Howard called the Indo-US nuclear agreement as a "significant development", and said Australia would take into consideration, the safeguards agreement for India to assess whether they met Australian safety and non-proliferation standards. 


Prime Minister Manmohan Singh offered a treaty of "peace, security and friendship" to Pakistan, this month. The Prime Minister made the announcement after inaugurating the bus service between Amritsar and Nankana Sahib in Pakistan. But the emphasis on Kashmir remained. Singh said that India is ready for a practical solution to Kashmir but one, which must be based on ground realities. According to his statement, "President Musharraf and I are in agreement that to achieve a solution to the Kashmir problem we need to take concrete steps. I realise that President Musharraf has time and again said that relations between the two countries won't improve unless the J&K problem is resolved. But I feel that the relations between the two countries need to move beyond carrying forward the J&K issue. At the same time, we have no hesitation in the dialogue on J&K." Singh also stated that unresolved issues between the two countries such as Siachen, Sir Creek and Baglihar could be resolved amicably. Singh applauded Musharraf's efforts to curb the tide of terrorism in Pakistan but felt that more needed to be done toward the interest of both countries. The Chief Minister of Kashmir, Mufti Mohammad Sayeed, has hailed Singh's peace initiative as a positive development. He suggested self-governance for entire Kashmir and said its people should be free to do what it wants to do. While most people see this as a positive step taken by Prime Minister Singh, we can only hope that a speedy resolution to these long standing issues is arrived at in the near future. Also, the import of Prime Minister Singh's peace initiative might hold further weight since President Bush's visit to India also impacted India's image in the worldview. 


India's oil and gas companies have a poor record of finishing projects on time. Currently, there are 30 such extension cases pending with the Oil Ministry and applicants include ONGC, Reliance, GSPC and Oil India. Until the recent past, extensions for blocks were granted in a haphazard manner without any standard guidelines. Now, the Oil Ministry has worked out a new policy, which is going to be tough on companies with a poor track record. Under the new rules companies who have discovered oil and gas are likely to get extensions more easily. Those who haven't had much success with such discoveries will need additional bank guarantees. All extensions will also come with built-in penalties. The time period for extensions has been capped at 18 months. Some analysts feel that the Oil and Natural Gas Commission will find the new regime extremely rigid and tough because of its dreary record in finding oil and gas in its blocks. But ONGC sources claim that Reliance, their old rival, gained the most under the old system of extensions. The new standardized policy on extensions should hopefully put an end to all such claims, whether spurious or authentic. 

Two of India's domestic carriers, Jet Airways and Sahara Airlines, have announced a 90-day extension of the deadline for the share purchase agreement. In a joint statement Jet Airways's Naresh Goyal and Sahara's Subroto Roy said the purchase value would remain the same. Jet Airways had reached a buyout deal with Sahara at Rs 2200 crore. There is mounting speculation over price negotiations - ranging from political pressure to reports of Kingfisher stepping in if Jet pulls out. Sahara says the deal is still being worked out with Jet and the price will stay at Rs 2200 crore. Jet Airways has already got the requisite clearance from the Company Affairs Ministry for buying out the other airline. However, according to sources, Air Sahara President Ronojoy Dutta, Executive Vice President Alok Sharma and Subrata Ro's elder son Seemanto were involved in attempts to resolve the pending issues from Sahara's side. (PTI REPORT).

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India, Pakistan talk to improve air links

India and Pakistan recently continued their talks, reviewing the bilateral air services agreement in a bid to further air connectivity between the two countries. 
In the two-day talks, officials from the two sides discussed ways to increase commercial cooperation and reduce tariff and non-tariff barriers. 
The six-member Pakistani delegation was headed by additional secretary of defence, Muhammad Ashraf Chaudhry, while the Indian side is led by Director General of Civil Aviation (DGCA), Satinder Singh. 
Currently, Pakistan International Airlines (PIA) flies to Delhi and Mumbai and Indian Airlines to Karachi and Lahore. 
Officials from the two countries will also discuss the possibility of setting up air links between more cities and increasing the number of airlines, including private operators. 
"There are a host of issues associated with this which will also be sorted out," said a DGCA official. 
"Actually under the existing conditions, not many are interested in operating in this sector. Certain issues have to be addressed to encourage traffic on these routes," the official said. 
While the two sides are expected to discuss issuance of visa to the passengers of both the countries to ensure economic viability to operators, they will also exchange views on broadening trade cooperation and removing tariff and non-tariff barriers, a senior government official said. 
During the inconclusive meeting last year, Pakistan surprised India by asking for permission to operate PIA flights to Kochi, Hyderabad and Chennai in addition to Delhi and Mumbai. 
Pakistan has offered Islamabad and Peshawar as additional routes for Indian Airlines and Indian private operators. India, while promising to consider Pakistan's request for three more destinations on Indian routes, did not show much interest in the new destinations proposed by Islamabad due to viability factor. 
The two countries resumed their air services in early 2004 after a two-year suspension.

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Cairn looks at partial Indian IPO on rise in key reserves

Cairn Energy said it was considering partially floating its Indian business, as it substantially raised its estimates of the amount of oil in its key Rajasthan fields.
The Edinburgh-based explorer said it believed there were at least 3.5bn barrels of oil in its Rajathan block, about 20 per cent more than earlier estimates.
Cairn said it would return the proceeds of any offering to investors through dividends and stock buybacks.
ONGC, India's state-owned energy group, has previously expressed an interest in buying Cairn's Indian asset, about 90 per cent of the company's value. However, it is understood the two sides could not agree on the Rajasthan fields' value.
Cairn would not comment on talks with ONGC but Bill Gammell, chief executive, suggested the company would try to go it alone.
The company said it would consider listing between 25 per cent and 80 per cent its Indian operations on the Mumbai Stock Exchange. It had no plans to sell itself to another company.
With four of Cairn's seven discoveries in norther India due to go into production from October, ONGC believes the company will need more outside help. However, Mr Gammell said the company had the expertise and capital to develop them on its own.
The company's plans for a partial IPO disappointed some analysts. Teather & Greenwood said its was a "halfway measure that does not solve Cairn's problems." 
The company reported a pre tax for 2005 of US$101.2m, against a loss of US$30.4m the year before. Earnings per share were 50.37 cents on revenues of US$262.6m.
Cairn shares rose 126p, or 6.5 per cent, to a record £20.63, valuing the group at £3.28bn.

Suzlon buys into wind turbine technology

Tulsi Tanti, the Indian industrialist, has bought the world's second-largest producer of wind-turbine gear-boxes in a deal that underscores the rising global ambition of India's manufacturers.
The purchase by Suzlon Energy, in which the Tanti family hold a 69.8 per cent stake, of Hansen Transmissions of Belgium for 465m Euro (US$567m) in an all-cash deal, is the second-largest overseas acquisition by a Indian company. Mr Tanti's coup - funded by debt and 15 per cent from reserves - caps a sizzling recent past for Suzlon, which with 2,000 MW of wind-turbine manufacturing capacity is India's largest integrated wind-energy products company.
Suzlon, based in Pune, south of Mumbai, raised US$330m last September in an initial public offering. Recently, when Hansen deal was announced, the share price closed at Rs1,295, compared with an IPO tender price of Rs510. Sales in the third quarter to December were Rs8.71bn (US$197m). Company officials expect a big jump for the full year to March.
Though wind-energy comprises just 4,000MW of India's 131,400MW of generating capacity, the resource has won big converts such as commodities group Aditya Birla. In a recent report, Ernst & Young, a professional services company, ranked India as the fourth most attractive global market for wind-energy based on criteria such as regulation government incentives and equipment suppliers.
Hansen with sales in the year to March of 213m Euro (US$260m), will plug a big hole in Suzlon's line-up. The European company's gear-box technology, the critical component in wind-turbine generators, will be married to Suzlon's turbine expertise, forming a base for future manufacturing in India. Suzlon also gains access to a mature customer base. 
Mr Tanti offered a reassurance, however, that Hansen would continue as a "separate, profitable business unit," and that its existing manufacturing would not be shifted to India. "One thing we have learned is it pays to be close to customers," he said. Suzlon, which already has product development centres in the Netherlands and Germany, wants sales from outside India to generate 70 per cent of revenues within three years.
A big step will be taken in August when manufacturing starts in the US, where Suzlon's customers include John Deere, a tractor-maker also experimenting with wind energy, and in China.
Suzlon was advised by Mumbai-based Yes Bank.


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