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GRANITE E-Newsletter February 2008


Budget Woos Debt-struck Farmers

United Progressive Alliance's populist budget made no mistake in wooing the farmers, which is potentially the biggest chunk of votes in the country, and it is been directly addressed this time. Over three crore farmers will gain from the Rs 60,000 crore largesse but the Opposition howled in protest. Then there are the long term issues, public investment in agriculture, critical to reduce farmer dependence on monsoons, which has led to farmer suicides. Hardly 30 percent of the 150 million landholdings have irrigation. Irrigation projects in various states are incomplete because of lack of funds. So, while there is every reason to back loan waiver, the overall agriculture situation has to improve. Otherwise, farmers benefiting this time round will end up running up debts once again.
(www.ndtv.com, February 29, 2008)

Parliament Adjourned over Farmers' issue

The issue of farmers' plight rocked Parliament as Third Front and NDA stalled proceedings demanding a package for the farm sector and waiver of loans, leading to adjournment of both Houses for the day. With the presentation of the General Budget just two days away, Opposition vociferously raised the farmers' issue for the second consecutive day amid reports that government planned to come out with some major sops for the farm sector. It was trouble from the word go as both Houses assembled with members of UNPA, popularly called Third Front, and NDA demanding suspension of Question Hour to take up a discussion on farmers' issue.
(www.ndtv.com, February 27, 2008)

Rice, Wheat Output Will go up in India, says FAO

India’s cereal woes received a bit relief with the Food and Agriculture Organisation (FAO) predicting a 3.5 percent growth in the output this year. According to FAO, the paddy production in India will rise marginally to 140 million tonnes in 2007 against 139.1 million tonnes previous year. Coarse grains output is estimated to rise 5.12 percent to 34.9 million tonnes. Wheat output is expected to go up by 8 percent to 75 million tonnes against the government’s estimates of 72 million tonnes. With the 2007 assessment year coming to an end, the FAO has estimated the country’s cereal output this year at 249.9 million tonnes compared with 241.7 million tonnes in the same period last year.
(www.commodityonline.com, February 18, 2008)

Rising Food Prices Hurt Consumers Hard

Indian exporters of coffee, rice, tea, soyabean meal, cotton, sugar, and corn are gaining from the continuing spiral in prices. Large volumes of these commodities are being shipped out due to the attractive international prices. The downside is that sharply rising vegetable oil and fertilisers prices are raising the cost of importing these essential commodities. Latest estimates from the Solvent Extractors Association say there has been a more than 45 percent jump in India’s cooking oil imports in January alone. Agriculture prices as a basket climbed 4.5 percent in January, led by a 6.9 percent gain in fats and oil prices, the World Bank has said in its latest commodity price review.
(The Economic Times, February 18, 2008)

Banks Alone cannot Save the Farmers

Bankers are wary of the government’s move of waiving interest and writing off farm loans on a large scale. They feel it will end up destroying the credit culture in India. If banks can restructure loans for corporations, bring down the interest rates and offer them a longer repayment period with a moratorium and even freedom to switch from rupee loans to cheaper dollar loans, what’s wrong in offering concessions to agricultural borrowers? After all, farmers’ produce suffers from natural calamities as much as companies get affected by cyclical downturns and neither farmers nor corporations have control over these developments.
(www.livemint.com, February 18, 2008)

Impact of Budget on Textile Sector

An additional allocation of Technology Upgradation Fund (TUF) is made to accelerate the capital investment. The continuation of Schemes for Integrated Textile Parks (SITP) is to attract additional investment in textile sector. Cluster for yarn, handloom, handicraft and power loom to bring more pricing power to this unorganised sector. The National Calamity Contingent Duty (NCCD) of one percent removed on polyester filament yarn to benefit the companies that have spinning capacities.
(www.bharattextiles.com, February 29, 2008)

Textile Industry Overlooked

The textile industry is upset that the Union Budget has no relief measures to overcome the crisis it faced. The Confederation of Indian Textile Industry has expressed its disappointment. According to a release from the confederation, reduction of customs and excise duties on fibres and capital goods, a mechanism to refund the state-level duties to exporters of labour-intensive products and a moratorium on repayment of principal amounts against term loans taken by the textile units would have helped revive the “crisis-ridden textiles and clothing industry”.
(The Hindu, February 29, 2008)

Textile Sector Fails to Gain from Quota Removal

The dismantling of the quota system failed to work wonders for textile and clothing (T&C) exports from India while China marched ahead, despite restrictive quotas imposed by major importers like the US and EU. The Economic Survey, released by the government, shows that India's competitiveness continued to be plagued by a variety of factors like inflexible labour laws, absence of scale, logistical delays and high costs of power. The strengthening of the rupee against the dollar and the slowdown in the US market further compounded problems, the survey said. Quota system was dismantled in 2005 and India was counted among key beneficiaries. However, the survey clearly shows that China beat India in major markets like the US and EU, leaving much to be desired.
(The Times of India, February 29, 2008)

Made in India Brand Has Better Credibility

Indian textile products have a better brand credibility than Chinese products that are flooding the markets across the world, according to Indian Textiles Minister Shankarsinh Vaghela. The minister is leading a high-level delegation on a four-nation tour to promote Indian textile exports and attract foreign direct investment in the textiles industry. After visiting Istanbul, Athens and Cairo, the delegation reached Dubai. Of India's total exports of US$12bn to the UAE, exports of textile products stand at US$1bn. India's total textile exports across the world amounts to US$19bn.
(www.ndtvprofit.com, February 05, 2008)


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