04.12.2006

• Govt. may divest its stake in UTI Bank
• The UTI Bank was promoted in 1994 with the state-owned insurers – LIC, GIC, National Insurance Corpn., United India Insurance and New India Assurance Co.
• The insurance companies hold a stake of 16%.
• The Government holds a stake of 27.54%
• Foreign holding are at over 40%
• The government now wants to divest itself from the bank and it is considering offloading its stake to retail investors at a discount to the market price, with a view to promote the equity culture and also to recompense the erstwhile UTI investors as some kind of solace to them. This is largely driven by its desire to see that the bank’s holding is marked by wider public holding, especially by local investors.
• Admen and political parties
• It is not only corporates who hire advertising agencies to promote them. Even political parties do. Piyush Pande of O&M fame has shot a film with the Big B (Amitabh Bachchan) for promoting Samajwadi Party of Mulayam Singh Yadav.
• The Congress had Leo Burnett for its ‘aam aadmi’ campaign.
• The BJP had Grey Worldwide for its ‘India Shining’ campaign.
• FDI in telecom
• FDI upto 49% is allowed under the automatic route.
• Anything above this (but not exceeding the 74% upper limit) comes under the approval route.
• Security checks and norms for companies with upto 49% FDI are almost nil; but the same are stringent for companies with 74% FDI.
• Bill to protect elders in the offing
• There is a proposed legislation that aims at creating an enabling mechanism for the elderly to claim need-based maintenance from their children and siblings. The bill brings within its ambit adopted and step-children as well as grand-children.
• Semiconductor policy
• The proposed policy to be placed shortly before the Cabinet has the following salient features:
• Fiscal incentives upto 25% fo the capital expenditure incurred during the first 10 years of a project.
• This could be in the form of government picking up a stake (equity) of up to 26% in the project or providing investment grants, tax credits or interest subsidy.
• To avail the package a project has to be having a proposed investment of at least Rs. 2,500 cr.
• This threshold level for investment in manufacture of hi-tech products other than semiconductors would be Rs. 1,000 cr.
• This package would be available only up to March 2010.
• This was aimed making India a competitive destination for semiconductor manufacturing.
• Bio-dynamic farming
• This method of farming is characterized by:
• Following the principles of the crop calendar.
• Marking of auspicious dates to find out the correct time to sow, plant and harvest.
• Usage of horn manure. This is made from fresh dung, preferably from a lactating cow, stuffed into a cow horn and buried into humus-rich soil after autumn.
• The origins of this method of farming can be traced back to 1924, when the Austrian scientist and philosopher Dr. Rudolf Steiner, has championed it. It was banned during the Nazi regime.
• This is now being actively promoted and practiced since 1994 by Eco-Agri Research Foundation led by Jai Chaitanya Dasa. This organization is an initiative of ISKCON-Bangalore NGO.
• ISKCON: International Society for Krishna Consciousness.
• All is not well on the retail loan front?
• Rating agency CRISIL has recently downgraded a pool of ICICI Bank’s securitized personal loans.
• This is seen as the first warning signal that all is not well with the retail loan segment in the banking sector.
• The retail loan segment grew by a scorching 30% year on year for the past two and half years. Some estimates put this even at 50%.
• Conventional wisdom says that at the best of times, banks’ loan portfolios contain some bad eggs and when banks lend as furiously as they have during the past few months, the quality of appraisal and post-sanction follow up is bound to suffer.
• As far as the broader economy is concerned what is important is what proportion of each bank’s loan portfolio is contaminated and whether the incidence is confined to a few banks or is widespread.
• As long as it is does not lead to loss of confidence in the bank and jeopardize the integrity of the payment system, the matter will end with higher loss provisions and lower profits for the banks concerned. If it leads to a loss of confidence in the banks and the payment system, it will have wide systemic consequences.
• Global pharma industry
• Its size is estimated to be about $400 bn.
• Typically pharmaceutical companies spend about 15% of their turnover of R&D.
• India’s pharma market size is at $5.7 bn.
• India’s poverty ratio
• Is down to 22% (from 36% in 1993-94) as per latest NSSO (National Sample Survey Organization) figures for 2004-05.
• This shows that reforms do help in improving living standards.
• What is TUFS?
• Technology Upgradation Fund Scheme. This is meant for the textile industry.
• Announced in 1999 it enables lenders to give an interest subsidy of up to 5% for modernization and technological upgradation. Financial institutions have disbursed Rs. 12,673 cr under the scheme so far. The cost of the subsidy is borne by the government and has so far resulted in a spend of Rs. 2,500 cr. The scheme is slated to end on 31^st March, 2007.
• The PMO and the Planning Commission are opposing extension of the scheme.