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Any way you look at it, rising food prices do not augur well for the economy

The powers-that-be seem to have decided that food price inflation is not a worry. For them, that is. From a political point of view, it is easy dismiss inflation as a concern of the urban middle- class. So, it seems perfectly logical to decide that the poor farmer needs to be rewarded for his efforts. With agricultural output hit by the bad monsoons this year, and the farm sector in sore need of investment, it is easy to rationalise that high food prices are the need of the hour.

Support prices for all the major crops are being raised—most recently for rice, dal and wheat. For sugarcane, which is bought by mills (not the government), the Centre has set a new, higher, Fair and Remunerative Price (FRP). Union agriculture minister Sharad Pawar said that “we expect the mills to pay more than FRP” as sugar prices are at a high. The case of wheat, one that I am familiar with, is the most perplexing: stocks held in FCI godowns are at an all-time high after two excellent harvests, but so are prices. And there seems to be no move to raise the amount of grain released into the market. Consistent with the broader line on the subject, government thinking seems to be the poorest—whether urban or rural—will be protected from the ravages of high food prices by our Public Distribution System. Little matter that everyone knows how inefficient and leaky this system is.

The writing on the wall is clear—high food prices are here to stay. Figures released in early November food prices are rising at an annual rate of over 13 per cent. Partly because of this, the RBI has raised its inflation forecast for 2009-10 to 6.5 per cent. These new realities make me pause to consider two matters—one macroeconomic, the other sector-specific. On the first, if inflation is projected at 6.5 per cent, then it seems that the long-term interest rate that the Government of India is paying for its borrowings is a steal. The current yield on paper due in 2019 is roughly 7.25 per cent. So, the real rate of interest a buyer of bonds can expect is only 0.75 per cent. This looks completely unsustainable; another reason to buy gold, which investors have been doing in increasing numbers. But, equally relevant, at some point, investors will feel suckered, and hold out for a higher rate of return. This fact, and the uncontrolled deficit of our governments—both Central and state—will lead to higher interest rates sooner, rather than later.

The second, and pretty obvious outcome of food price inflation is the impact it will have on margins for businesses using agricultural inputs. Food processing firms will be the worst hit, with sugar, wheat and milk prices at all-time highs, and no immediate relief in sight. But, agriculture provides inputs to a wide range of industries—alcohol and the downstream chemical industry use sugarcane; agro-residues help feed the paper industry and also fuel captive power generation plants. Across industries manufacturing margins were boosted last year as the slowdown led to reduced commodity prices across the world and the Union government rolled back excise duties across the board. Eventually, tax concessions will have to go, or else government borrowings will keep ballooning, affecting the economy through the mechanism of higher government borrowings. Whichever way you look at it, inflation cannot be good for our economy. It is unclear whether our senior political leaders genuinely believe that high food prices are, on balance, good. Perhaps they are trying to garner political capital from a situation beyond their control, Either way, I don’t like it.

Sebi Unveils New Platform For SME Listing

Tags: SEBI,  Securities and Exchange Board, Securities and Exchange Board of India, 

The Securities and Exchange Board of India (Sebi) has ruled out the need for a separate exchange for small and medium enterprises (SMEs). Sebi chairman C.B. Bhave said that a separate platform for listing and trading in small- and medium-sized enterprises would be permitted on the existing exchanges. This would make the proposal cost-effective.

Norms. Companies with a paid-up capital of less than and up to Rs 25 crore would be able to list on the SME platform. If the paid-up capital of a firm rises above the Rs 25-crore mark following the issue, the firm will not be eligible for using the platform reserved for SMEs and it will have to move on to the regular platform. Exemptions. Companies listed on the SME platform would be exempted from certain eligibility norms applicable for initial and follow-on public offers. For instance, norms like profit track record for a specified previous period, which is applicable to other companies, would be waived off. Further, to keep compliance costs low for such companies, they have been exempted from quarterly declaration of financial results. Instead, they would be required to declare earnings on a half- yearly basis.

Sebi has allowed companies to go for pure auction of public issues instead of a price band for institutional investors. This means there will not be any price band and the company may just give the floor price to institutional investors who can then bid. However, if a company decides to follow this option, non-institutional investors (comprising retail investors, high net worth individuals, and employees) will have to be given shares at the floor price.

Says Prithvi Haldea, chairman and managing director, Praxis Consulting & Information Services: “SMEs are perceived to be high-risk, high-reward investment avenues. The regulator has tried to ensure that investment-savvy and well-informed investors participate in investing in these companies. The minimum contract size has, therefore, been fixed at Rs 1 lakh, which will discourage several small retail investors from investing in these perceived high-risk high- reward returning companies.”

Two Launches Set The Field For Customer Value

Tags: AEGON, Bharti Axis Elite Secure, lClCl Prudential, AEGON Religare, Kotak, Aviva, ING Vysya

Bharti Axa Life Insurance Company recently launched a new term plan, Elite Secure, which provides coverage till the age of 75, irrespective of the age of entry. Also, following the launch of the lowest cost Ulip, AEGON Religare Life Insurance has launched the lowest cost term plan, iTerm. It can only be bought over the Internet.

LOWEST TERM RATES
Plan                                      Premium (Rs)
AEGON Reliqare’s iTerm    14,350
Bharti Axis Elite Secure        16,350
lClCl Prudential                    17,859
AEGON Religare                19,100
Kotak                                 19,150
Aviva                                  19,500
ING Vysya                         22,460
‘The premiums are furamaleaged 40 years. sum asured of Rs 50 lacks and term of 20 years
Nute:All insurers ewcept LIC, TATA AIG,IDBI , Future General aud Canara HSBC Life Insurance have been considered.

Elite Secure. The minimum entry age for the plan is 18 years and the minimum sum assured is Rs 25 lakh. The plan may be bought for a term of 5, 10, 15, 20 or 25 years, or till the age of 75. One may attach two riders to the plan—critical illness, and accidental death and disability benefit riders. The policyholders of Bharti Axa’s existing term plan, SecureConfident (with minimum sum assured of Rs 25 lakh) are being automatically upgraded to Elite Secure’s rates.

iTerm: The minimum age for entry 18 while the minimum sum assured kept at Rs 10 lakh. The term available is five to 25 years.

When it comes to buying pure term insurance plans, in addition to buying the plan from lower cost insurers, Outlook Money has always recommended to choose the maximum term available or buy a plan that covers you for the maximum age possible.

The premium rates for these two plans are possibly the lowest, as shown in Lowest Term Rates.

Foreign Universities May Get Autonomy

 Tags:  Foreign Educational Institution, Foreign University,

The Foreign Educational Institutions Bill, 2007, has been hanging fire for a long time. Once it is passed, foreign universities will be allowed to open their autonomous campuses in India. Currently, they can have a presence in India only through tie-ups.

The present situation. The bill has been produced in the Cabinet, but after the prime minister’s office (PMO) intervened, it is awaiting clearance from the Ministry of Human Resource Development and other ministries before it is tabled in Parliament. That is expected to happen soon.

Says Naresh Gulati, CEO, Oceanic Consultant, a foreign education consultancy: “If foreign universities set up shop here, Indian universities will be forced to overhaul their educational system to match their standards. So, students stand to benefit. However, even though they can get a similar degree in India, it cannot replace the international exposure students get when they go abroad.”

Annuitants Could Invest In The Stockmarket

Tags: IRDA,  Insurance Regulatory and Development Authority, IRDA India,

The Insurance Regulatory and Development Authority (Irda) set up a committee this month to examine the current status of annuity products and the steps needed to introduce variable annuities in India. The committee is scheduled to submit its report by 31 January 2010.

Currently, annuity products invest only in debt products and investors get a fixed rate of return. With variable annuity, investors would be able to participate in the stockmarkets to keep growing their retirement corpus. The rate of interest, however, is not fixed in variable annuity products.

In light of the population growth and the need for a proper pension system, the variable annuity business has tremendous potential in India. Globally, countries are moving towards variable annuity products as they give flexibility to insurers and address most investor-related issues.

Regulator Makes Sweeping Changes

Tags: SEBI, Securites and Exchange Board of India, ICDR,

The Securities and Exchange Board of India (Sebi) has amended Issue of Capital and Disclosure Requfrements (ICDR) Regulations, which will change the way qualified institutional bidders (QIBs) bid in follow-on public offers (FF0).

The revision. Issuers coming up with an FF0 can now allow QIBs to bid shares at any price above the floor price. The shares will be allotted on the basis of the pure auction method or a price priority basis, where the highest bidder will be given the priority. Retail investors, however, will get shares at the floor price.

To prevent any single entity from accumulating most of the shares on offer, Sebi has also given issuers an option to cap the number of shares or percentage of issue capital which a single bidder can bid. This will ensure wider distribution of issued capital. Until now, QIBs had to bid in a price range. The issue price or the cut-off price was decided based on the demand for the issue. The cut-off price was the maximum price at which all shares on offer were subscribed.

 The new practice is a win-win situation for both the institutional investors and the issuer. Says Prithvi Haldea. managing director. Prime Database: “Institutional nvestors will get the chance to bid at a higher price [beyond the price range] if they think it is correct. The company, in turn, will also get a higher valuation.”

The new practice will continue to exist with the older one. It could later be extended to initial public offers. Cap on employee allotment. Sebi has also capped the number of shares that can be allotted to the issuer company’s employees in a public issue.

The value of the shares issued to an employee under the employee reserved category cannot exceed Rs 1 lakh. Also, the total shares issued under the employee category should not exceed 5 per cent of the post-issue capital.

Strict disclosure. Companies will now have to disclose balance sheet items on a half-yearly basis, which will help the investors understand their interim position in a much better manner.

SBI Extends Its Special Home Scheme

State Bank of India (SBI). India’s largest lender, has extended its ‘My Home Campaign’ till 31 March 2010. The campaign was originally launched on 8 August 2009 for a period of three months, but SBI extended it just before its expiry. P. Nandakumaran, chief general manager, retail loans, said: “The tremendous response to the campaign is the reason for its renewal. Home loan demand has also been high. During the period February 2009-September 2009, we opened 169,174 accounts across India. The disbursement has been over Rs 13,900 crore in the eight-month period.” Nandakumaran added that 85 per cent of the home loans were below Rs 30 lakh. This indicates that the scheme is extremely popular among customers who buy houses in the affordable segment. The Campaign. SBI offers three products under the ‘My Home Campaign’. One is the SBI Hi-Five Home Loan, under which a fixed rate of 8 per cent per annum (p.a.) is charged for five years for loans up to Rs 5 lakh and a maximum tenure of 10 years. For loans between Rs 5 lakh and Rs 15 lakh, the interest rate is 8 per cent p.a. for the first year and 8.5 per cent p.a. during the second and the third year. You can avail this loan as an overdraft with the possibility of saving interest under the SBI MaxCain scheme. This scheme is favoured by the salaried class. For customers looking at high-end properties, SBI offers the SBI Advantage Home scheme. This scheme carries

US markets hit fresh 13-mth closing high; Asia mixed

US markets hit fresh 13-month closing highs post Bernanke’s comment, weak dollar, US retail sales. Bernanke signaled plans to leave rates low for a while leading to weakness in dollar and gain in commodities. S&P 500 closed above 1100 for the first time since October 2008. Dow Jones gained 136.5 points or 1.33% to 10,407. S&P 500 was up 15.8 points or 1.45% 1,109.3 and Nasdaq was up 30 points or 1.38% to 2,197.8. US advancing sectors were Energy (+2.5%), Materials (+2.3%) and Industrials (+2.0%). CBOE VIX ended down 2% at 22.89.

Venkatraman Ramakrishnan: A profile

LONDON: He may have migrated to the US long back, but Indian-American Venkatraman Ramakrishnan on Wednesday made a billion people back home proud by winning the Nobel Prize for Chemistry for his pioneering work on ribosome, a cellular machine that makes proteins. 57-year-old Ramakrishnan, born in the temple town of Chidambaram in Tamil Nadu, is the seventh Indian or of Indian origin to win the prestigious award. Born in 1952, Ramakrishnan earned his B.Sc. in Physics (1971) from Baroda University in Gujarat and later migrated to the US to continue his studies where he later got settled and attained US citizenship. He earned his Ph.D in Physics from Ohio University in the US and later worked as a graduate student at the University of California from 1976-78. During his stint at the varsity, Ramakrishnan conducted a research with Dr Mauricio Montal, a membrane biochemist and later designed his own 2-year transition from physics to biology. As a postdoctoral fellow at Yale University, he worked on a neutron-scattering map of the small ribosomal subunit of E Coli. He has been studying ribosome structure ever since. Ramakrishnan, now a senior scientist at the MRC Laboratory of Molecular Biology in Cambridge has authored several important papers in academic journals. In the August 26, 2000 issue of Nature, Ramakrishnan and his co-workers published the structure of the small ribosomal subunit of Thermus thermophilus, a heat-stable bacterium related to one found in the Yellowstone hot springs. With this 5.5 Angstrom-resolution structure, Ramakrishnan's group identified key portions of the RNA and, using previously determined structures, positioned seven of the subunit's proteins. In the September 21, 2000 issue of Nature, Ramakrishnan published two papers. In the first of these, he presented the 3 Angstrom structure of the 30S ribosomal subunit. His second paper revealed the structures of the 30S subunit in complex with three antibiotics that target different regions of the subunit. In this paper, Ramakrishnan discussed the structural basis for the action of each of these drugs. After his postdoctoral fellowship, Ramakrishnan joined the staff of Brookhaven National Laboratory in ther US. There, he began his collaboration with Stephen White to clone the genes for several ribosomal proteins and determine their three-dimensional structures. He was also awarded a Guggenheim fellowship during his tenure there, and he used it to make the transition to X-ray crystallography. source - http://timesofindia.indiatimes.com Tags: nobel prize chemistry 2009, venkatraman ramakrishnan cambridge, nobel prize in chemistry 2009, thomas a. steitz, venkatraman ramakrishnan wiki, venkatraman ramakrishnan, nobel prize winners 2009, nobel prize, nobel prize winners 2008, nobel prize winners, nobel prize 2009, nobel prize winners from india

Nobel Prize for chemistry of life | nobel prize chemistry 2009

The 2009 chemistry Nobel Prize has been awarded to Venkatraman Ramakrishnan, Thomas Steitz and Ada Yonath. The prize is awarded for the study of the structure and function of the ribosome - the cell's protein factory. The ribosome translates genetic code into proteins - which are the building blocks of all living organisms. It is also the main target of new antibiotics, which combat bacterial strains that have developed resistance to traditional antibiotic drugs. These new drugs work by blocking the function of ribosomes in bacterial cells, preventing them from making the proteins they need to survive. The announcement was made during a press conference at the Royal Swedish Academy of Sciences, during which the three winners were described as "warriors in the struggle of the rising tide of incurable bacterial infections". Professor Ramakrishnan is based at the Medical Research Council's Molecular Biology Laboratories in Cambridge, UK. Thomas Steitz is based at Yale University in the US, and Ada Yonath is from the Weizmann Institute in Rehovot, Israel. The prize is to be shared equally between the three scientists, who all contributed to revealing the ribosome's huge and complex molecular structure in remarkable detail. Professor David Garner, president of the Royal Society of Chemistry, described the three as "great scientists" and said their work was of "enormous significance". Working together These scientists and their colleagues have helped build a 3D structure of the ribosome. In doing so, they solved an important part of the the problem posed by Francis Crick and James Watson when they discovered the twisted double helix DNA structure - how does this code become a living thing? DNA is made available to the ribosome by "transcription" of genes into chunks of messenger RNA. In the ribosome, these are read and translated into the various amino acid sequences that make up an organism's proteins. By looking closely at its structure, scientists are able to study how this translation process works. The work is based on a technique called x-ray crystallography - where protein molecules are removed from cells, purified and made into crystals that can be examined using x-rays. Addressing the Nobel press conference by telephone, Professor Yonath said that modern techniques were allowing scientists to look at the structures on the atomic scale - individual bond after individual bond. This is the 101st chemistry Nobel to be awarded since 1901, and Professor Yonath is only the fourth woman to win. She joins an illustrious list of female chemists that includes Marie Curie, who also won the physics award. During the press conference, Professor Yonath said: "It's above and beyond my dreams and I am very thankful." President of the American Chemical Society Thomas Lane told the BBC that the award was "a wonderful example of leaders in their disciplines - people from around the world - working towards a common goal and being able to achieve it. "It shows that as scientists we don't just sit in our dark labs, we come together and share our research." He added: "With advances in analytical chemistry, computer science and imaging, we now have a valid window into these cellular structures. "This gives other scientists the knowledge to create new drugs, and new materials to combat disease." source - http://news.bbc.co.uk Tags: nobel prize chemistry 2009, venkatraman ramakrishnan cambridge, nobel prize in chemistry 2009, thomas a. steitz, venkatraman ramakrishnan wiki, venkatraman ramakrishnan, nobel prize winners 2009, nobel prize, nobel prize winners 2008, nobel prize winners, nobel prize 2009, nobel prize winners from india

kawasaki ninja 250 india | bajaj kawasaki ninja

It's been ages since Bajaj first announced their intention of getting the Ninja 250 to India. Many a summers had passed by but there was still no sign of the baby green monster of arriving onto our roads. But the good news is that it's finally here. Bajaj has officially launched the bike in the country today and expect to find a growling 249 cc four-stroke, 32 bhp, DOHC, liquid cooled parallel twin draped in green, with a claimed fuel consumption of 42.5 kpl. The Ninja will be sold exclusively at Bajaj pro-biking showrooms across the country within the next 3 weeks. The Ninja will be imported as a CKD from Thailand, with staggered deliveries over the next 2-3 months. These showrooms will cater to the complete three S's - Sales, Service and Spares. The spares will be imported directly from Japan and Thailand. The Ninja series is renowned for their sharp handling and crisp dynamics, something we've been craving for a long time from motorcycles sold in the country and its about time that we have a slice of that pie, no matter how small! The Ninja is priced at Rs 2.69 lakh, ex-showroom Delhi. Bajaj expects to sell 1,000 units of the Ninja 250 R this year and has already assembled 60 units as of now. source - http://www.bsmotoring.com Tags: bajaj, kawasaki ninja, kawasaki india, bajaj auto, bajaj india, kawasaki ninja 250 india

Iran Nuclear Site Could Pose Test to U.S., Israel Ties

Iran's disclosure that it has been building a secret nuclear site ratchets up already simmering tensions between the Islamic Republic and Israel, raising questions about whether President Obama retains enough influence to prevent Israel from launching a preemptive military strike should Prime Minister Benjamin Netanyahu's government turn to its last resort. Polls show Obama's popularity is waning in Israel, where some say his administration is too conciliatory toward the Palestinians. He also took a beating in the Israeli press for his speech at the U.N. on Wednesday, when he warned that "America does not accept the legitimacy of continued Israeli settlements," though Israeli officials continued to publicly praise him for his efforts at restarting peace talks. The president made clear Friday that he remains committed to "serious, meaningful engagement with Iran" to deal with the nuclear issue through upcoming talks among Iran, Germany and the five permanent members of the U.N. Security Council.

G20: US China relationship

One of the issues to be discussed at the G20 summit is the huge trade imbalance between the world's biggest economic power, the United States. and the emerging economic superpower China. China has relied for much of its economic growth on Americans buying its goods. But as US consumers feel the pinch, China is hoping its citizens will spend more to maintain demand and keep its factories open. The BBC's economics correspondent Andrew Walker in Pittsburgh has been talking to two experts, Sharon Feng, a businesswoman who's been living in the US for 25 years and Tom Buelle of Pittsburg China Center.

G20: US China relationship

One of the issues to be discussed at the G20 summit is the huge trade imbalance between the world's biggest economic power, the United States. and the emerging economic superpower China. China has relied for much of its economic growth on Americans buying its goods. But as US consumers feel the pinch, China is hoping its citizens will spend more to maintain demand and keep its factories open. The BBC's economics correspondent Andrew Walker in Pittsburgh has been talking to two experts, Sharon Feng, a businesswoman who's been living in the US for 25 years and Tom Buelle of Pittsburg China Center.

Mass. judge rejects bid to delay Kennedy successor

A Massachusetts judge on Friday rejected a Republican request to delay the swearing in of Edward Kennedy's temporary replacement in the Senate. The state GOP had argued that Gov. Deval Patrick — a Democrat — exceeded his constitutional authority by appointing Paul G. Kirk Jr. on Thursday. Lawmakers passed a bill this week giving Patrick the power to choose an interim senator, but laws usually take effect in 90 days. Patrick got around that delay by signing a letter that declared the bill an emergency. The appointment is critical to his fellow Democrats, who need Kirk's vote to restore their 60-vote, filibuster-proof margin in the Senate. President Barack Obama and his staff lobbied for the change as they try to win approval this year for their top legislative priority, overhauling the nation's health care system. Suffolk Superior Court Judge Thomas Connolly denied the party's request to delay Kirk's swearing in. Vice President Joe Biden was slated to do so at the U.S. Capitol two hours after the ruling was issued. Connolly also granted the state's request to dismiss the case.

U.N. condemns Brazil embassy harassment in Honduras

The U.N. Security Council condemned "acts of intimidation" at Brazil's embassy in Honduras but did not discuss the wider issue of ousted President Manuel Zelaya's future at a meeting on Friday. Zelaya has been sheltering in the Brazilian embassy since slipping back into the country on Monday, prompting a tense standoff with security forces surrounding the mission. "We condemn acts of intimidation against the Brazilian embassy and call upon the de facto government of Honduras to cease harassing the Brazilian embassy," U.S. Ambassador and current Security Council President Susan Rice told reporters after a meeting on Honduras. She said the situation of the Brazilian embassy was the primary focus of the meeting, rather than the broader situation in Honduras.