Sep 2011 Economy

The finance ministry on 27 September 2011 released the draft national public-private partnership (PPP) policy aimed at creating a framework for implementing infrastructure projects across sectors. The draft of PPP policy was released in pursuance of government's commitment to improve the level and quality of economic and social infrastructure service. The policy addresses the issues concerning definition of various terms and processes so that stakeholders, including centre, states and private investors, can adopt a clear and consistent position. The policy was designed to ensure that a value-for-money rationale is adopted with optimal risk allocation in project structuring with life cycle approach. It aims to develop governance structures to facilitate competitiveness, fairness and transparency in procurement and attaining appropriate public oversight and monitoring of PPP projects. The government aims to bring more transparency in the PPP projects that are mainly undertaken to provide public service by private players. The government is envisaging an investment of USD 1 trillion in infrastructure sector during the 12th Five-Year Plan (2012-17), up from USD 500 million in the current Plan.

The Union government on 30 September 2011 increased the foreign direct investment limit for FM radio from 20 per cent to 26 per cent. The government also exempted the education sector and old age homes from the conditions imposed in the construction sector.The FDI limit in terrestrial broadcasting and the Cabinet approved FM radio in July 2011. TRAI in 2010 had made necessary recommendations arguing that increasing the limit will help the third-phase for FM radio, which will see 806 FM stations across 217 cities.

Asia’s oldest stock exchange , Bombay Stock Exchange (BSE) on 28 September 2011 got an approval to set up an exchange for small and medium enterprises (SMEs) from the capital markets regulator Securities and Exchange Board of India (SEBI). The permission from SEBI is likely to boost BSE’s efforts in offering multiple asset classes to Indian investors. The permission to set up SME will enable BSE to contribute towards the governmental agenda of greater financial inclusion and allowing promising enterprises of the future to access retail capital. The new exchange set up by BSE will allow small-unlisted domestic companies, with less than Rs 10 crore capital base, to raise money from the primary market.

The Union Government on 26 September 2011 announced the reconstitution of the National Manufacturing Competitiveness Council (NMCC) under the chair of V. Krishnamurthy. The NMCC was restructured vide a Government Gazette Notification dated 17 August 2011.The council is to energise and sustain the growth of manufacturing industries and help in the implementation of strategies by the government.

Twenty-Second World Mining Congress and Expo was held at Istanbul, Turkey between 11-16 September 2011. World Mining Congress & Expo is a unique opportunity for companies and manufactures to display their latest achievements and equipment technologies to a wide audience especially to those officials and specialists from all over the world.

In a move to contain persisting inflationary pressure, the Reserve Bank of India (RBI) hiked the short-term policy rate (repo rate) by 25 basis points from 8 per cent to 8.25 per cent on 16 September 2011. The reverse repo rate as a result got automatically adjusted to 7.25 per cent and the marginal standing facility (MSF) rate to 9.25 per cent. Repo rate is the rate at which banks borrow from the central bank and reverse repo is the rate at which banks park their funds with the RBI. The central bank raised rates for the 12th time since March 2010.

The Union Government on 15 September 2011 approved the Approach Paper for the 12th Plan (2012-17) which seeks to attain second generation economic reforms, improving governance and raise annual economic growth rate to 9 per cent during impending five-year period. The Paper would be placed before the National Development Council (NDC) for its final approval in October 2011. The theme of the Approach Paper to the 12th Five Year Plan is faster, sustainable and more inclusive growth. Health, education and skill development, environment and natural resources and infrastructure development was pointed to be focusing areas in the next Plan. The paper lay emphasis on inclusive growth. For the first time in the history of the Five Year Plans the Approach Paper has a chapter on governance and corruption. The paper suggests terms measures to be taken to set up new institutions like the Lokpal and Lokayukta.

UNCTAD's Trade and Development Report 2011 was launched in New Delhi on 6 September 2011. The report mentioned that global economy would witness a slow down to 3.1 per cent in 2011 from 4 per cent in 2010. The slow down would impact developing economies which would get affected by recession in the developed world.The South Asia region was likely to be among the best performers globally, with a growth of seven per cent in 2011. On the other hand, growth in the U.S. was to remain low because of low domestic demand, stagnating wages. The European debt crisis is expected to act as a drag on the global growth. UNCTAD projected an economic growth of 8.1 per cent for India, the fastest rate of expansion in the world after China.

The five-day 71st International Congress of FIP (International Pharmaceutical Federation) was inaugurated by President Pratibha Patil on 4 September 2011 in Hyderabad. The World Health Organisation and the International Pharmaceutical Federation (FIP) signed a joint-statement on the role of pharmacists in tuberculosis care and control on the inaugural day of the conference.

During the conference, the Pharmacy Council of India (PCI) urged the Union government not to permit the opening of new colleges in the country, except in the northeast, Bihar, Jharkhand and Chhattisgarh. The PCI pointed out that the mushrooming of pharmacy colleges in India created an imbalance. The vast number of institutions in the country posed a major challenge to the foremost challenge in pharmacy education. Currently India has 700 pharmacy degree colleges. Andhra Pradesh has 300 pharmaceutical colleges- the highest number in the country.

NTPC and Ceylon Electricity Board have sealed a deal for jointly setting up a coal-fired power plant in Sri Lanka at an investment of up to 700 million dollars. NTPC chairman Arup Roy Choudhury and CEB chief Wimaladharma Abeywickreme signed the final agreement in Colombo on 6 September 2011 for setting up the 500 mw power plant at Sampur in Trincomalee.The project will be a major milestone in bilateral relations and further cement the economic bonds between India and Sri lanka. It will also mark NTPC’s overseas debut.