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April 2010 Economy

The Central Government said that ICICI Bank and HDFC Bank could not be called Indian-owned banks. According to Department of Industrial Policy and Promotion (DIPP) Secretary R. P. Singh,”At best, the two can be called Indian-controlled banks.” ICICI Bank and HDFC Bank have over 74 per cent foreign holding, including that of foreign banks and overseas institutional investors. 

According to the 13th Finance Commission report, the Transmission & Distribution losses were about Rs.40,000 crore in 2009-10 which would swell to Rs.68,000 in the current fiscal. The Planning Commission was trying to set up an expert committee to find out the causes for such losses and to know the financial status of the distribution companies.

Nuclear Power Corporation of India Limited (NPCIL) and NTPC entered into a joint venture agreement (JVA) to set up nuclear power projects in the country.

The Planning Commission announced the setting up of an 18-member expert committee headed by Prime Minister's Economic Advisory Council Chairman C. Rangarajan to recommend measures for efficient management of public expenditure.

The Union Cabinet approved a capital infusion of Rs.15,000 crore in Tier I capital instruments of the public sector banks (PSBs) during the current fiscal to facilitate an increase in their lending capacity by about Rs.1.85 lakh crore.

NTPC announced that it was exploring the possibility of setting up two coal-based thermal power plants in Kazakhstan,which has huge coal reserves of about 33 billion tonnes. NTPC's total coal requirement for the current financial year (2010-11) is about 145-150 million tonnes, of which the company is planning to import 14 million tonnes.

The government would earn up to Rs. 45,000 crore from the auction of 3G and broadband spectrum.

As said by Communications and Information Technology Minister A. Raja, the Telecom Commission, the policy-making arm of the Department of Telecommunications, will soon take up the issue of disinvestment in the Bharat Sanchar Nigam Limited. The Sam Pitroda Committee had recommended 30 per cent disinvestment in BSNL, besides offering voluntary retirement scheme to 1 lakh employees, to improve the financial health of the organisation. 

The Reserve Bank of India hiked the short-term indicative borrowing and lending rates — repo and reverse repo and the mandatory Cash Reserve Ratio (CRR) of banks by 25 basis points each.

The Government has accepted the Tendulkar Committee Report to adopt a new poverty line to identify poor. The new standards of the Planning Commission would consider more parameters than only the sufficient food basket for assessing poverty. Earlier a family was called poor if did not have the required income to buy sufficient food containing a minimum number of calories (2100 for urban areas and 2400 for rural areas) per day. Now, the minimum income required to rise above the poverty line, apart from food, would also depend on expenditure on education and health. The new poverty estimate would not change the urban poverty figure but for rural India, the number of poor would increase from 28.3 per cent to 41.8 per cent. As many as 372 million Indians will be categorized as poor. 

BGR Energy Systems has signed a memorandum of understanding (MoU) with the Orissa Government for setting up a 1,320 MW (2 × 660) power plant at Bhapur in Nayagarh district, Orissa, at an investment of about Rs. 6,287 crore.

The Cabinet Committee on Economic Affairs approved financial support of Rs. 282.25 crore to the Indian Maritime University (IMU), Chennai, to meet capital expenditure and recurring deficit.

Cabinet Committee on Economic Affairs (CCEA) banned Foreign Direct Investment (FDI) in cigarette manufacturing.

The UN Agency UNFC & CC (UNFCCC) issued the first set of certified emission reduction (CER) to the ONGC from its first registered CDM (clean development mechanism) project,the waste heat recovery project at Mumbai High. With this, ONGC is to earn green revenue from CDM projects.

Union Commerce and Industry Minister Anand Sharma released the final document of FDI Policy Framework that would comprise the single document on FDI policy and mark the inception of a whole new chapter on FDI policy.

The government of India is drawing up ambitious plans to set up a ‘Sovereign Fund' that would help its state-run companies pursue acquisition of oil, gas, coal, LNG and other raw material in other countries in order to compete with China which has $2.4 trillion of reserves and a $300-billion sovereign fund. It has outpaced India in the global quest for resources. Chinese companies spent a record $32 billion last year buying oil, coal and metal assets abroad, while a $2.1-billion investment by OVL was India's sole energy acquisition.

Four major public sector undertaking (PSU) companies — Indian Oil Corporation (IOC), NTPC, Steel Authority of India Limited (SAIL) and Oil and Natural Gas Corporation (ONGC) — are aiming for the ‘Maharatna' status and have made presentations before the inter-ministerial committee (IMC) making a claim for the status seeking more autonomy in decision-making and financial investments. 

The government of India indicated that it would soon put in place the Financial Stability and Development Council (FSDC) to plug the regulatory gaps and loopholes generated recently by the controversy surrounding the Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority of India (IRDA) over administration of unit linked insurance plans (ULIPs). 



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