Kamal Nath supports new WTO compromise proposals
Mumbai: The new compromise proposals prepared by mediators of the World Trade Organisation (WTO) provided a good basis for starting intensive negotiations on a global trade pact, commerce and industry minister Kamal Nath said.

Any US cut in farm subsidies would be enough to push India to make concessions in World Trade Organisation talks, Kamal Nath said.

In India's first reaction to proposals for a compromise presented by the chairmen of the WTO negotiations on July 17, Nath said he is prepared to use the blueprints as the basis "to resume intensive negotiations."

The US has offered to lower the ceiling it's allowed to spend under WTO commitments to $17 billion a year.This week's proposal from the trade arbiter calls for a reduction to between $13 billion and $16.4 billion.

"The US says it wants to retain the right to increase these subsidies," Nath said. "A development round doesn't mean you reserve the right to keep your subsidies and increase your distortion. We want the distortions removed."

The compromise proposal drafted by the WTO were meant to revive troubled farming and industrial goods talks and save the Doha free trade accord. (Read More)
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Centre to assist Nabard raise funds
To compensate for the withdrawal of funding avenues for Nabard due to ongoing fiscal management policies and financial reforms, the centre, in consultation with the Reserve bank of India, will provide subvention support to the National Bank for Agriculture and Rural Development raise funds to extend concessional farm sector credits.

The centre currently provides subvention to different categories of banks and Nabard to enable them to lend to farmers at 7 per cent interest.

While it has been able to increase its borrowings, Nabard has also had to pay higher interest - last year it raised Rs10,899 crore at 8.69 per cent against Rs8,194 crore at 5.6 per cent in 2005-06.

Speaking at Nabard's silver jubilee function finance minister P Chidambaram admitted that Nabard had to increasingly depend on market borrowings to raise finances to lend to farmers at concessional rates at the cost of its own spread.

This year, Nabard expects to nearly double its borrowings to Rs23,000 crore to provide farm and non-farm credit.
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Government may ease subsidy burden of oil produces
Mumbai: The government will provide for exchange rate losses while calculating subsidy burden on oil producers like Oil and Natural Gas Corporation (ONGC), R S Sharma, chairman and managing director, said.

ONGC is paid in dollars for the crude oil it sells to marketing companies - Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL).

He said ONGC loses about Rs900 crore annually for every one-rupee rise against the dollar. The strengthening of the rupee from Rs45 to the dollar in the beginning of this year to around Rs40 at present translated to a loss of around Rs4,500 crore for the company.

Sharma, however, said ONGC's subsidy burden in the April-June quarter is likely to be lower than the Rs5,120 crore paid out in the same period of the previous financial year.

Indian Oil, Bharat Petroleum and Hindustan Petroleum make huge losses on sales of petrol, diesel, LPG and kerosene as the government, for political compulsions, have not allowed them to raise retail prices in line with rise in global crude oil prices.

These losses are equally divided between the retailers, the government (through bonds) and upstream companies such as ONGC, Oil India and GAIL.

While the high price of crude oil, which is hovering around $72 per barrel, ONGC is expected to end up with less revenue as it converts its dollar payment into rupees.
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Redeploying agricultural labour could lead to double-digit growth: Arvind Panagariya
New Delhi: Eminent economist Arvind Panagariya says the key to India achieving double-digit growth rates lies in pragmatic labour reforms that facilitate the shift of the agricultural workforce to industry.

A few days back finance minister P Chidambaram had stated that 10-per cent growth was possible in the next financial year.

Addressing a CII seminar in New Delhi, the Columbia University said that achieving double-digit growth was possible through labour and education reforms and improvements in infrastructure and not merely.

Panagariya felt that merely focussing on developing the agricultural sector would not push up the GDP growth as it supported about 60 per cent of the country's workforce while showing inadequate growth.

Labour market inflexibility, opined Panagariya, was the cause of the slowdown in the agriculture sector and required a part of the labour force being shifted from agriculture to the manufacturing sector, where the scope for earning was superior to that of agriculture.
He said contract farming should be given to those who remained in agriculture.

He also drew attention to China having achieved a high rate of economic growth through labour intensive techniques.
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Inflation rate holds steady at 4.27 per cent
Mumbai: The annual rate of inflation based on the wholesale price index held steady at 4.27 per cent for the week ended July 7, matching the annual rise of the previous week.
Inflation rose in the last two weeks of June after hitting a 14-month low of 4.03 per cent in mid-June, but it is well below a two-year high of 6.69 per cent hit in late January.
Vegetable prices continued to rise after rains across the country disrupted their supply. Vegetables became costlier by 4.4 per cent this time.

Wholesale Price Index, on which inflation data is based, rose by 0.05 per cent to 212.6 per cent during the week compared to 212.5 per cent in the previous week. Among food items, prices of fruits fell by 16.8 per cent, poultry chicken by five per cent, moong by two per cent, masur and bajra by one per cent each.

Inflation for the week ended May 12, was revised to 5.62 per cent compared to the provisional figure of 5.27 per cent. This was done as WPI for the week stood at 212.4 points against the provisional figure of 211.7.

Analysts attributed the slight pick-up in prices to the annual monsoon pushing up food prices, a seasonal factor that was unlikely to prompt a response from the RBI. Markets also showed little reaction, with the rupee and 10-year bond moving only slightly after the data.

The Reserve Bank of India, which is aiming to contain inflation near 5 per cent for the fiscal year ending March 2008, is unlikely to further tighten interest rates. (Read More)
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