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INDIA-E  June 2002

INDIA-E June 2002

Subject:

India Network Economic News - June 10, 2002

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Mon, 10 Jun 2002 11:12:09 -0400

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India Network Economic News - June 10, 2002 Volume 14 Issue 108
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Today's News Items
------------------
#1. Inflation rate stands still at 1.43 pc
#2. Amendments to Sebi Act to be finalised today
#3. Markets likely to move down
#4. Poor Farm Management Practices Burn$200,000-hole In Indias Export
Basket
#5. Rupee rallies mildly against $
------------------------------------

#1. Inflation rate stands still at 1.43 pc

NEW DELHI, June 9 (PTI)

Notwithstanding the sharp rise in the price of food articles, excluding
fruits and vegetables, and edible oils, inflation remained firm at the
previous weeks level of 1.43 per cent in the week ended May 25 as against
5.59 per cent a year ago.

The point-to-point change in price level as measured by Wholesale Price
Index (WPI) was static mainly due to firmness in the indices of fuels and
manufactured products. The WPI, however, increased by 0.1 per cent to
162.9 from 162.8 on account of 0.3 per cent hike in the price of primary
articles, which in turn, was due to 0.3 per cent rise in the price of food
articles. The index was 160.6 a year ago.

Commodities that became costlier during the week in review included
coffee, bajra, barley, wheat, milk, groundnut oil, mopeds and motor
cycles. The final WPI stood at 161.8 for the week ended March 30 as
compared to the provisional figure of 161.4, while final inflation stood
considerably higher at 1.63 per cent than the provisional figure of 1.38
per cent.

The index for Primary Articles' group rose to 169.6 from 169.1 even as
prices for non food articles stood unchanged at the previous week's level
of 153.3. The index was 168.3 in the previous year.

Food Articles' group index rose to 177.6 from 177 owing to costlier coffee
(13 per cent), bajra and barley (two per cent) and wheat, maize, gram,
arhar and milk (one per cent each), while there one per cent price dip for
jowar and moong.
Among non-food articles, price rose for raw jute, rape and mustard seed,
cotton seed and kardi seed (one per cent each), even as there was six per
cent dip in raw silk price and one per cent in raw cotton.

The index for Fuel, Power, Light and Lubricants' group stood firm for the
second consecutive week at 230.4 and the index was 222.3 in the previous
year. Manufactured Products' group index stood at 145.5 even as price rose
for food products, machinery and transport parts and the index was 144.1
in the previous year.

The index for Food Products' group rose by 0.1 per cent to 149.1 from
148.9 due to higher prices for rice bran oil (nine per cent), solvent
extracted groundnut oil (three per cent) and groundnut oil (one per cent).
Machinery and Machine Tools' group was up by 0.2 per cent to 129.7 from
129.5 owing to one per cent hike in the price of complete tractor and
electric motors phase three.

The index for Transport Equipment and Parts rose by 0.3 per cent to 149.3
from 148.9 due to three per cent rise in the price of mopeds and one per
cent in motor cycles. Textiles' group index was down by 0.3 per cent to
117.7 from 118 as prices dip for cotton grey cloth and canvas (three per
cent), texturised yarn and hessian and sacking bags (two per cent each)
and cotton grey cloths others, synthetic yarn and mixed fabrics (one per
cent each), while there was three per cent rise in woollen yarn.

The index for Chemicals and Chemical Products' group fell by 0.1 per cent
to 171.9 from 172 due to two per cent fall in the price of caustic soda
and liquid chlorine.

#2. Amendments to Sebi Act to be finalised today

NEW DELHI, June 9 (PTI)

Secretaries of Economic Affairs and Company Affairs along with SEBI
Chairman will meet tomorrow to give finishing touches to the proposed
amendments to SEBI Act to be introduced in monsoon session of Parliament.

Ninety per cent of the work is done. The remaining will be sorted out on
Monday in the meeting among the secretaries, Department of Economic
Affairs Secretary C M Vasudev told PTI.

The meeting of DEA secretary Vasudev, DCA Secretary V K Dhall and SEBI
chief G N Bajpai, comes after Finance Minister Yashwant Sinha and Law
Minister Arun Jaitley ironed out the differences on some vital issues on
May 31.

While Finance Ministry pitched for search and seizure powers, the Law
Ministry maintained reservation on granting such powers to a
quasi-judicial body like Securities and Exchange Board of India.

Sources in the Department of Company Affairs said the two ministers had
agreed to limited power for SEBI but it would be with certain safeguards
to prevent any misuse.

At present, search and seizure powers are provided only to agencies like
Enforcement Directorate and Central Bureau of Investigation. There are
also indications that SEBI would be armed with powers to impose a maximum
penalty of Rs 25 crore for insider trading and other serious offences.

Mr Vasudev did not like to confirm the penalty limit as it would be taken
up in the meeting on Monday. Though the two secretaries would finalise the
amendments necessary to provide extra teeth to the market watchdog, the
DEA secretary said "even after we finalise the bill, it has to get the
Cabinet approval."

The Government was working on the SEBI Act ever since the budget
announcement by Sinha. Mr Vasudev said the Government was hopeful of
introducing the bill in monsoon session of Parliament. The market
regulator had sought extra powers to punish offenders who indulged in
price rigging and pulled down the market after the Budget presentation for
2001-02.

Although SEBI had charged many broking outfits for fraudulent activities,
it could not get access to privy information as it lacked the search and
seizure powers. Even if an offence involving over Rs 100 crore is proved,
SEBI cannot impose penalties beyond Rs 10 lakh.

Regulators like the Securities Exchange Commission of the US has powers to
impose penalties upto three times the value of the offence. In India, the
Reserve Bank can impose such penalties in certain cases of serious nature.

#3. Markets likely to move down

With diplomatic initiatives gaining momentum, the markets staged a modest
recovery and for the week the Bombay Stock Exchange Sensex ended 92 points
higher at 3217 points. Weak global markets coupled with increasing
uncertainty have seen many market players adopt abundant caution.

Only an early end to the border tension and the VSNL controversy may have
positive impact on the markets, feel analysts. Unanimity over the choice
of new President by all political parties will generate positive goodwill
and give a new direction to coalition politics.

For the coming week, markets may remain range bound with a downward bias.
Downward support exists at 3100 points and the Sensex may find resistance
in crossing 3280 points and 3470 levels. Stay invested and pick up value
stocks for long-term gains.

#4. Poor Farm Management Practices Burn$200,000-hole In Indias Export
Basket

BV Mahalakshmi

Hyderabad, June 9:  Poor farm management techniques have caused a dent in
the Indian export basket. About 20,000 tonnes of various commodities were
rejected during last year by the UK, Japan, Indonesia and European Union
markets. This has resulted in a total loss of approximately $200,000 for
India.

The reason for this loss is due to aflatoxicosis. About 20,000 tonne of
mainly groundnut, spices like chillies, black pepper, etc, which account
for nearly 40 per cent of exports, were rejected during last year due to
aflatoxicosis in the upmarkets. The presence of aflatoxins in the pods is
also one of the reason for less exports of groundnut from the country,
according to Dr Farid Waliyar, principle scientist, crop management and
utilisation for food security at the International Crops Research
Institute for the Semi-Arid Tropics (Icrisat).

Incidentally, the export value for groundnuts has fallen to Rs 316.4 crore
during 2000-01 from Rs 371.7 crore during 1999-00, according to Apedas
Export Statistics for Agro and Food Products. The main reason for less
exports, especially groundnut apart from chillies, black pepper, etc from
India, is due to poor farm management practices adopted at the farm levels
during harvest period. Retention of moisture content leads to
aflatoxicosis. Aflatoxins are produced by metabolic activities of fungus
Aspergillus, which may be seen as blackish spots on bread, he informed.

In India, about 21 per cent of groundnut samples contained non-permissible
aflatoxin levels. Icrisat has developed cost-effective tools for
estimation of aflatoxins. It is working on the genetic management to
create aflatoxicosis-resistant varieties in groundnut.

Aflatoxins are harmful to both humans and animals. Poultry, sheep and
cattle are easily susceptible to this disease. We are providing
cost-effective tools or kits to detect quickly the presence of aflatoxins
in the produce. Generally the testing cost of one sample is priced about
Rs 200 but with the tools we have developed, the cost is just Rs 10. The
procedure for testing remains same for any commodity, milk or meat, he
said.

The awareness of killer aflatoxins in India is less, unlike western
countries, as they maintain strict regulations governing the testing of
food products for aflatoxins, according to Dr Waliyar. The contamination
of Indian groundnut in both domestic and international markets restrict
access of groundnuts produced by marginal farmers to lucrative overseas
markets, he opined. At present, there are no techniques or tools to check
the aflatoxins levels in humans but the organisation has worked out tools
in estimating the aflatoxins in foods and feeds.

Meanwhile, a research survey conducted by ICRISAT revealed aflatoxin
presence in ordinary food items such as groundnuts, chillies and various
spices like ginger, black pepper, turmeric and coriander. Popular brands
of milk meant for infants were also contaminated. The milk used in
childrens formula food often comes from cattle feed with contaminated
food, the study revealed.

Aflatoxins act very slowly and prolonged consumption can lead to liver
cancer in humans.

#5. Rupee rallies mildly against $

PTI [ MONDAY, JUNE 10, 2002  11:12:04 AM ]

MUMBAI: The Rupee rallied mildly against the US currency early on Monday
backed by renewed exporter dollar sales following receding border tension.

In moderately active trade at the Interbank Foreign Exchange market here
this morning, the rupee is currently quoted at 49.01/02 per dollar higher
from last Friday's finish of Rs 49.02/03. The rupee opened steadily at
49.02/03.

Exporter dollar sales and supplies accumulated over the week-end gave the
rupee fresh underlying support.

Rupee sentiment also improved due to fading war fears, a forex dealer
said.

In cross currency trades, the indicative rate for Euro was quoted at Rs
46.09/11, Pound Sterling at Rs 71.38/41 and the Japanese Yen (100) at Rs
39.25/28.
----------------------------------
End of India Network Economic News
----------------------------------

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