New Delhi: More than six million people will directly benefit from a new agreement for the World Bank to provide $1.5 billion in funding to expand India's rural roads program, the largest rural roads project the bank has ever approved.
World Bank group president, Robert B Zoellick and India's finance minister Pranab Mukherjee were present at the signing of the deal to supplement the Pradhan Mantri Gram Sadak Yojana (PMGSY) or the Prime Ministers Rural Roads Program.
The funding will be used to build more than 24,000 kilometres of all-weather roads in the states of Himachal Pradesh, Jharkhand, Meghalaya, Punjab, Rajasthan, Uttarakhand and Uttar Pradesh and any other state, which may join the program at a later date over the next five years. The construction and maintenance of these roads will create an estimated 300 million person-days of employment for the rural people. More than 20,000 engineers as well as many contractors and skilled and unskilled workforce will be trained in modern rural road engineering practices and business procedures.
Speaking on the occasion, finance minister Pranab Mukherjee said, "Government of India launched PMGSY in the year 2000-a time when almost 41% habitations did not have access to all-weather roads and a large part of the road network was in poor condition. Today, the PMGSY program has added about 300,000 km of new and improved rural roads connecting over 73,000 habitations, yet some parts of the country, especially in the economically weaker and hilly states still remain inaccessible. Under the overall PMGSY program, some 375,000 km of new roads are being constructed and another 372,000 km improved at an estimated cost of about $40 billion. The World Bank is supplementing our efforts in providing all-weather connectivity.
Delivering much needed infrastructure will help India in its drive to ensure all people have opportunity, said Mr Zoellick. "Roads are an essential lifeline-vital not only to boost people's incomes by providing greater access to markets, but also to help raise education standards, as teachers and children have the means to get to school, no matter what the weather. These roads will not only connect people to markets and services but also create jobs in rural areas."
"The World Bank is pleased to work with the government of India as it ramps up the pace and quality of work under this important national program," he said.
The agreement was signed by Venu Rajamony, joint secretary, department of economic affairs, ministry of finance, on behalf of the government of India, and Roberto Zagha, country director, India on behalf of the World Bank.
The World Bank experience in funding rural roads programs globally will be used to enhance the effectiveness of India's program by improving its overall systems and policy framework, with a greater focus on achieving results. The World Bank project also includes $60 million in technical assistance to build the capacity of the rural roads agencies, especially in the ongoing management of assets and the sustainable maintenance of roads.
Over the next five years, the project, along with government of India funds, will enable participating states achieve 91% connectivity, by building the roads and improving the links of the existing network. A system will be developed for maintaining these roads in good condition over the long term.
The project will be financed from two World Bank institutions-the International Development Association (IDA), the bank's fund for the poorest countries, and by the International Bank for Reconstruction and Development (IBRD), which supports credit-worthy developing countries. The IDA credit is on both regular and hard terms. While IDA on regular terms provides interest-free loans with 35 years to maturity and a 10-year grace period, the latter attracts a 3.2% interest rate with the same years of maturity and grace period. The IBRD loan has a 5-year grace period, and a maturity of 18 years.
New Delhi: The World Bank says India's economic growth would overtake China's growth, on purchasing power parity (PPP) basis, by 2012, but New Delhi has played down the projection by the multi-lateral agency, saying the country is not in a race with anyone.
In its latest report on Global Economic Prospects, the World Bank has projected the Indian economy will grow by 8.7% in 2012, faster than 8.4% expected for China. But these projections are based on PPP basis, which means that purchasing power of currencies are taken into account to measure economic growth. As such, this is not the traditional way of measuring economic growth.
Reacting to the World Bank projections, finance minister Pranab Mukherjee said, "India is trying (to achieve a high growth rate), but I am not going to compete with anybody." He said every country is trying hard to overcome the economic crisis and reach a desired level of growth. "Nothing wrong in it," he said.
Mr Mukherjee said India wants to record double-digit growth with moderate inflation and fiscal prudent policies. "We want to reach double-digit growth, at the same time have a modest rate of inflation without indulging in fiscal profligacy; that means with prudent fiscal management."
Indian and Chinese economies are not comparable. The size of the Indian economy is $1.3 trillion and the Chinese economy is estimated at $5.5 trillion.
The market seems to have suffered a long-term damage today, crashing below the crucial 19,000 mark on the Sensex
The market opened lower, tracking the weakness in the global markets and nervousness ahead of the announcement of the wholesale price index-based inflation for December. Selling by institutional investors in banking and realty sectors on fears of a likely rate hike by the Reserve Bank of India, also added to the early losses. However, selective buying led to a gradual bounce-back into the green by noon.
The market touched its intra-day high in noon trade after which the bears tightened their grip, pulling down the indices sharply lower once again in the late session, in a repeat of the trend seen over the past couple of days. The sell-off resulted in the Sensex falling below the 19,000 mark in the last half-hour and the key indices settled near the low point of the day.
The upmove that started on 6 March has been seriously damaged today with the Sensex crashing below 19,000 and the Nifty falling through the 5,900 level, on continuous selling by foreign investors. It is significant, because for the first time since the rally began in March 2009, the indices have made a lower top and a lower bottom. The recent top at 20,664 (6,181 in Nifty) was lower than the previous top of 21,108 (6,338), while today's low of 18,812 (5,640 on the Nifty) is lower than the previous low of 18,954 (5,690). In fact, the indices are now trading at a level that is very close to the end of the two-year bull market. There will be short rallies, but unless the recent highs are crossed, the decline will continue.
The market breadth favoured the declining stocks, yet again. The Sensex had 25 losers against five gainers, while the Nifty ended with 42 declining stocks and eight in the advancing list. The broader markets outperformed the Sensex today. The BSE Mid-cap index was down 1.18% and the BSE Small-cap index fell 1.04%.
The sectoral space was a sea of red today. The BSE Realty was the top loser (down 2.77%), followed by the BSE Bankex (down 2.62%), BSE Metal (down 2.44%), BSE Auto (down 2.31%) and BSE Capital Goods (down 1.89%).
Tata Power (up 2.11%), Wipro (up 1.77%) and Jindal Steel (up 0.31%) were the noteworthy gainers in the Sensex list. Tata Motors (down 4.62%) led the losers list that included HDFC Bank (down 4.16%), HDFC (down 3.95%), Sterlite Industries (down 3.45%) and Bajaj Auto (down 3.09%).
Inflation shot up to 8.43% in December, from 7.48% in the previous month, as prices of certain food and non-food items continued to show an upward trend, according to official data announced today. After moderating somewhat in November, the overall inflation-measured on the basis of wholesale prices-rose in December, as vegetables like onions, and other protein-based items became expensive.
With inflation showing no signs of moderating, it is widely expected that the Reserve Bank of India will raise key policy rates at its quarterly review of monetary policy on 25th January.
Markets in Asia closed mostly lower today as crude and metal prices declined and on the slowing pace of the global recovery. Rumours of the Chinese government raising interest rates and bank reserve requirements again played on investors' minds. The Beijing government has ordered banks to set aside more reserves six times and hiked rates twice in 2010 to curb asset bubbles after hefty gains in lending and property prices.
The Shanghai Composite tumbled 1.31%, the KLSE Composite declined 0.11%, the Nikkei 225 fell 0.86%, the Straits Times was down 0.30% and the Taiwan Weighted shed 0.03%. On the other hand, the Hang Seng rose 0.18%, the Jakarta Composite added 0.12% and the Seoul Composite surged 0.89%.
Back home, foreign institutional investors were net sellers of stocks worth Rs249.77 crore on Thursday. On the other hand, domestic institutional investors were net buyers of equities worth Rs242.42 crore.
Tata Coffee (up 20%) on Thursday roped in the iconic coffee chain Starbucks to jointly source and roast the beans from its plantations, which in turn would pave the way for the American coffee brand to enter the domestic market, six months down the line. The Seattle-based Starbucks, the world's largest coffee chain has been planning to enter the Indian market for the past five years.
Pharma major Lupin (down 1.53%) has received final approval from the US health regulator to market Nabumetone tablets, used in treating arthritis, in the American market. The company's US arm, Lupin Pharmaceuticals Inc, has been granted final approval by the US Food and Drug Administration for Nabumetone tablets in strengths of 500mg and 750mg, Lupin said in a statement filed with the exchanges.
Nabumetone is the generic equivalent of GlaxoSmithKline's Relafen tablets, used for treatment of acute and chronic osteoarthritis and rheumatoid arthritis.
Gearing up to intensify its play in the luxury segment, Maruti Suzuki India (down 2.88%) is set to launch its sedan Kizashi next month. The vehicle, to be imported fully from parent Suzuki's facility in Japan, will be positioned between the likes of Honda Accord and Toyota Camry at the upper end and Honda Civic, Volkswagen Jetta and Toyota Corolla at the lower end.