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INDIA


 

 

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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
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: 049 - (29/02/08)

INDIA-BANGLADESH DEFENSE COOPERATION
Bangladesh’s army chief, General Moeen U. Ahmed, is currently in India over a week-long visit that aims to redefine defense issues in the relationship between both countries by seeking to strengthen defense ties and promote greater security and cooperation. Moeen’s visit acquires greater significance for New Delhi because the General has been a key figure in Bangladesh politics where an army-backed interim authority has ruled under a state of emergency since taking charge in January 2007, following months of political violence. While the military in both countries have shared historical and cultural roots grounded in colonialism, today things are different. The Indian military is much more democratic and professionally detached, than its Bangladeshi counterpart. Bangladesh’s generals have ruled the country for almost 15 years until December 1990 when the last military ruler, Hossain Mohammad Ershad, was overthrown by a populist upsurge. Moreover, frequent allegations of corruption and abuse by Bangladesh’s military has given it more of a professional rather than political role. Also, despite generally friendly inter-state relations, Indian and Bangladeshi border guards have often exchanged fire along their 4,000-km (2,500-mile) border accusing each side of targeting the other. Given this scenario, it is especially interesting to see how both countries intend to advance defense cooperation. Moeen will meet with the chiefs of the Indian army, navy and air force, as well as the president, prime minister and senior government leaders. Moeen and his Indian counterparts would discuss steps to combat corruption and terrorism, and the possibility of joint operations against insurgent groups, other officials said. Observers are suggesting that Moeen’s visit comes in the wake of Bangladesh’s attempt to garner India’s political support as it may this time be serious about its anti-corruption drive and reforms, just ahead of the coming election. Strangely, given the history, Moeen seems to believe that the Bangladesh military is the best instrument for bringing change in the country and establishing democracy; a position that seems ironical to say the least. 

WOMEN’S RESERVATION BILL IGNITES WOMENS RIGHTS ISSUE
The much-awaited Women’s Reservation Bill and the controversial Broadcasting Bill is unlikely to come up in the Budget Session of Parliament, primarily due to the absence of consensus. Parliamentary Affairs Minister P R Dasmunsi said the government was making “final efforts” to arrive at a consensus on the Women's Reservation Bill but made it clear that it was not in favour of a proposal to leave the matter to the discretion of political parties. Dasmuni appeared cynical about the opposition BJP which has asked the government to bring forward the Bill in the session and promised support. He is critical of the “final” stand of the BJP on the contentious issue saying that the main opposition party had been changing its position frequently. Also, the BJP cannot boast of an exemplary record in upholding women’s rights. Another controversial bill, The Broadcasting Services and Regulatory Bill, which moots a content code for private broadcasters, is also unlikely to figure in the Budget Session due to lack of agreement on some of its clauses. The minister said he had convened a meeting of representatives of the print and the electronic media on evolving a content code on programming, a move that has virtually forced the Bill onto the back-burner. 

MAJOR FEATURES IN INDIA’S UNION BUDGET 2007-2008
There is much activity and discussion over the forthcoming Union Budget which is meant to have significant political ramifications, with 2009 being the election year. This year, a popular, people-direct budget is expected and while the focus will be on the farm sector, inflation control will get priority. The overall areas of concentration in the budget will be: agriculture, infrastructure, health and education. To make the budget more people friendly, there are possibilities of extending some tax exemptions or raising tax exemption limits. There will be additional benefits for savings, especially for the long term. In order to attract funds to infrastructure, the Government is also likely to exempt tax in terms of capital gains and may also announce an interest exemption on funding. Further, the Government is likely to extend tax breaks on personal income and cut duties on consumer goods.

Inflation control has been a major problem for the Indian Government especially since inflation has escalated since the beginning of December 2007, impacting retail and consumer levels. An escalation in international crude prices and the heightened level of food prices has posed major risks to the inflation scenario. To reduce this problem, the government is expected to cut customs duty on edible oil, and customs and excise duty on processed food products would be further reduced or removed. There may also be some announcements to strengthen the Public Distribution System (PDS). The Government will re-start edible oil supply through PDS and also allow the Government agency to import at lower duty.

Another focus of the budget is the farming sector. India’s agricultural economy is not in great shape with 60-70 per cent farmers not owning land, despite land reforms. Banks are not fully prepared to lend credit to these farmers. Finance Minister, Chidambaram reportedly stated that “banks are not doing a favour when they lend money to farmers. Banks are discharging their duty when they are lending money.” This makes it extremely important for banks to change or re-orient their goals towards farmers. While the Finance Minister is likely to announce softer loans for a large number of farmers, the Centre is in the midst of preparing its biggest ever debt relief package for the farmers. About 90 per cent of Indian workers are employed in the ‘informal’ sector and this sector is often characterised by underemployment, as well as low productivity and low skill activities. 

WALL STREET REPORT ON INDIAN ECONOMY
In a Wall Street Journal Report dated February 25, 2008, in India, there is a new growth sector, which is linked to mineral resources and agricultural commodities. Companies such as Bharti Airtel, India’s largest wireless operator and information-technology Corporation, Infosys, are falling behind. Many resources-related and agricultural-commodities companies are at an earlier stage in their development than India’s bigger and better-known industries, analysts say. The sector has also been more affected by unpredictable short-term government policies, such as export restrictions or import duties, meant to control prices in the domestic market. India has substantial reserves of minerals such as bauxite, iron ore, copper and zinc, but the commercial exploitation of these riches remains at a relatively low level. Much of the sector is state-controlled, and political and social opposition has precluded its progress in tribal regions. However, a surge in the demand for steel has made India’s mineral production and exports much more lucrative. According to the Indian Bureau of Mines, India exported alumina, bauxite, coal, iron ore and several other minerals valued at $19.9 billion in the year ended March 31, 2006, the most recent consolidated data. The Department of Commerce said India exported iron and steel valued at $5.6 billion in the year ended March 31, 2007, up 47% from $3.8 billion a year earlier. Also, Mumbai-listed Sesa Goa, India’s largest private-sector iron-ore exporter appears to be a good bargain for investors. With mining operations in Goa, Karnataka and Orissa, Sesa Goa exports almost 95% of the iron ore it produces. As of December 31, 2007, Sesa Goa reported net profit of five billion rupees, up 141% from a year earlier. Revenue rose 90% to 12.2 billion rupees. Kotak Securities estimates Sesa Goa’s net profit will increase to 12.4 billion rupees during the fiscal year that ends March 31, more than doubling from 6.1 billion rupees a year earlier.

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