Even after receiving the clearance from the environment ministry, the challenges before the South Korean steel giant to set up a plant in India are far from over
Posco India Pvt Ltd, the unit of South Korean steel giant, is likely to face fresh agitations from activists who say that they are not in a mood to surrender an inch of land to for the project in Orissa.
"Though union environment minister Jairam Ramesh has given clearance for the Posco project, we will not surrender an inch of land for the project at any cost and will resist the land acquisition process," Abhaya Sahu, convenor, Posco Pratirodh Sangram Samiti (PPSS) told Moneylife, in Mumbai today.
Last week, Posco received a conditional clearance from the environment ministry to set up a 12 million tonne per annum plant along with a captive power plant and a port near Paradip. The project would be the largest foreign direct investment in India after 1991.
The state government has said that it will start acquiring land for the project within the next couple of weeks.
"We don't want to disturb a well-established agrarian economy of the region. We don't oppose industrialisation. But it should not happen at the cost of the agriculture economy," Mr Sahu said. "PPSS has closed down check gates. Posco officials, police and the administration will not be allowed to come inside the proposed acquisition area."
Last week, the environment minister gave the green signal for the project, listing 60 conditions-28 for the steel plant and 32 for the port. "These 60 conditions are just an eyewash. The government has been writing false statements and submitting to the Ministry of Environment and Forests (MoEF)," Mr Sahu alleged.
The Posco project requires about 4,000 acres, of which nearly 3,000 acres is forest land, the state owns 567 acres and 438 acres is private land. In May 2010, the state government started land acquisition after the project received conditional and forest clearance in 2007 and 2009. However, Mr Ramesh issued a stop-work order in August last year, after receiving complaints of violation of forest norms.
Questioning the decision of the MoEF, Mr Sahu said, "Government-appointed committees-the Saxena Committee and the Meena Gupta Committee-have reported that the clearances given to Posco were illegal. However, suddenly we find that Mr Ramesh has given the clearance for the project, which is quite surprising, given the negative remarks in the committee reports."
Although Posco has received the environment clearance, there will be other hurdles in its path like acquiring mines, rehabilitation of locals and allocation of raw material linkages. Posco has said on its website that the government of Orissa has assured a mining lease for 600 million tonne reserves, which would be adequate for the 12mtpa plant in Paradip for about 30 years. Nevertheless, Posco will be conscious that there is a lot of difference between signing the papers for such projects and their execution.
Dr KC Chakrabarty, while speaking at Moneylife Foundation’s first anniversary function, said that when the regulator becomes stringent, the framework will automatically provide protection for customers
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In India, one frequent complaint against banks is that they do not provide effective service. And this is because of the lack of proper laws and technology, says Dr KC Chakrabarty, deputy governor, Reserve Bank of India (RBI).
Speaking at the first anniversary function of Moneylife Foundation on Saturday, he said, "In a business organisation it becomes difficult to demand customer service because there are legal restraints in many matters. Unless the necessary legislations are in place, customers cannot avail of all the desired facilities."
Dr Chakrabarty gave the example of ATM and signature frauds, in which cases customers are expected to prove their innocence under existing rules. He said customers have to be made aware of the importance of following certain best practices in a technology-driven scenario and an attempt must be made to put the onus of proving the carelessness or compromise on the banks, rather than less savvy customers.
The RBI has commissioned a survey of customers using ATMs and based on the findings it is trying to bring in a legislation, which would place the onus on the bank to prevent fraudulent withdrawals, the deputy governor said.
He also talked about credit defaults where, in many cases, ignorant customers become defaulters and are penalised even during the inquiry. "For a bank you are a bad customer because you have failed to clear your dues, and as long as your innocence is not proved, you are deemed guilty. We cannot do anything about that. The only advice that I can give people is to talk to their banks honestly."
The RBI's deputy governor said there is a need for a self-regulatory forum which would address such issues. He said that when the regulator becomes stringent, the framework will automatically provide for customer protection.
"In order to improve customer service, the customer base has to be increased," Dr Chakrabarty said. "Banks should widen their reach, specially in the rural areas. And if they can successfully exploit opportunities and technological challenges then every citizen will have a bank account in the next five years."
However, he explained that a technological interface will not have the advantages of face-to-face interaction. Thus, financial statements, which could be simplified or customised to have more details, will be available only in a standardised format. "The very non-discriminatory nature of technology becomes a drawback at times," he said. He gave the example of the ATM machines, which, due to its limited storage capacity, could only accommodate certain denominations of notes in limited quantities.
Problems also arise because of the non-uniform nature of the software various banks are using, which makes certain options available to customers of some banks while leaving others out. This becomes very pronounced in case of core banking. "Unfortunately, the RBI does not have a mandate regarding softwares. When the RBI regulations were founded there were no computers, so these digital norms were not included. But we have to think along these lines, no doubt," Dr Chakrabarty said.
(Also read: Dr KC Chakrabarty says customers should demand better service from banks)
Even if there is a rally, it would be a slow and weak one
The market opened with decent gains as investors went bargain-hunting, picking up stocks at lower levels after the decline seen last week. The uptick was also supported by the Asian peers, which were mostly higher in early trade, most of which opened after the Lunar New Year holiday last week. Choppiness resulted in the indices touching their previous close a couple of times, but positive momentum continued with the market trading range-bound. However, the broader markets wilted under selling pressure, trading in the red. Institutional investors seem to be looking at other markets as India is no longer as attractive as it has been last year.
The market touched an intraday high in post-noon trade after which selling pressure became intense, pushing the key benchmarks into negative terrain. However, the indices were able to pull themselves out of the red, only to finish flat.
The Sensex and the Nifty both opened with a positive gap at 18,135 (127 points up) and 5,430 (34 points up) respectively. For the major part of the day, both the indices traded above Friday's closing. In the last two hours of the trading session, the indices hit their intraday highs, but soon slipped to touch the day's low. They did not fall below Friday's low.
Although the market ended positive, it closed well below the day's opening. The Sensex ended 29 points up at 18,037 while the Nifty ended 0.25 points up at 5,396. The advance-decline on the National Stock Exchange was a poor 587:1,141. The market is not out of the woods yet. The Nifty has to cross 5,550 before we can look forward to some sort of rally.
The market breadth on the Sensex and Nifty was in favour of the gainers. The Sensex had 21 advancing stocks and nine stocks in the declining list, while the Nifty closed with 29 stocks in the green and 21 in the red. The broader indices underperformed the Sensex with the BSE Mid-cap index declining 0.52% and the BSE Small-cap index falling 0.83%.
The sectoral gainers were led by BSE Realty (up 1.67%), BSE Fast Moving Consumer Goods (up 1.42%) and BSE IT (up 0.18%). The top losers were BSE Healthcare (down 1.50%), BSE Consumer Durables (down 1.32%) and BSE Capital Goods (down 1.11%).
The top Sensex gainers were Hero Honda (up 2.75%), ITC (up 2.62%), DLF (up 2.32%), Jaiprakash Associates (up 2.27%) and NTPC (up 1.47%).
Cipla (down 2.95%), HDFC (down 2.07%), Wipro (down 2.05%), Hindalco Industries (down 1.96%) and Larsen & Toubro (down 1.89%) ended at the bottom of the list.
The government on Monday estimated economic growth for the current financial year at 8.6%, as against 8% a year ago. The Central Statistical Organisation's (CSO) gross domestic product growth projection is higher than the forecasts made by the country's central bank-Reserve Bank of India-and India's finance ministry earlier.
The latest GDP growth estimate of 8.6% for the entire fiscal means that the pace of economic expansion slowed in the second half of FY2010-11, given that GDP growth in the April-September 2010 period stood at 8.9%.
Markets in Asia closed mixed as economic optimism in the US lifted investor sentiment, while worries that the authorities in China will consider additional curbs to rein in prices after the Lunar New Year holiday, kept investors guarded.
The KLSE Composite rose 0.25%, the Nikkei 225 gained 0.46% and the Seoul Composite advanced 0.47%. On the other hand, the Hang Seng tanked 1.49%, the Jakarta Composite declined 0.24% and the Straits Times fell 0.59%. The Chinese and Taiwanese markets remained closed today.
Back home, institutional investors were net buyers in the equities segment on Friday. While foreign institutional investors pumped in funds worth Rs144.04 crore, domestic institutional investors bought stocks worth Rs237.45 crore.
State-run power equipment-maker BHEL (up 0.51%) today said it has signed an agreement with Spain's Abengoa to set up solar power projects in India. The agreement will enable both organisations to leverage their capabilities in offering EPC solutions for solar power projects in India, as well as give them the opportunity to explore cooperation on energy projects in other parts of the world.
The agreement is significant in the context of the Jawaharlal Nehru National Solar Mission launched by the government, which aims at the establishment of 20,000MW of solar power generation capacity by 2022.
Tecpro System (down 2.01%), a key player in the power sector, has entered into an exclusive collaboration agreement with Nanjing Triumph Environment and Energy Company, China (NTK) for waste heat power (WHR) projects in the Indian markets.
NTK is a leader of WHR projects in China, having executed more than 120 such projects. The company will provide turnkey EPC solutions in WHR projects to the Indian cement industry along with NTK as the technical associates.
Accentia Technologies (up 0.79%), a leading global end-to-end business process management and consulting company offering managed services in Healthcare Receivables Cycle Management (HRCM), has bagged an order worth Rs25 crore for providing high-level consulting and education solutions for a large, diversified educational trust in south India with over 100 well established institutions and having over 35,000 students over the next three years.
The scope of work comprises financial restructuring, value unlocking, operations and management contract, market positioning, brand management, academic restructuring and effective interventions and devising a dynamic student mobilisation strategy for the group.