SEPTEMBER-OCTOBER, 2010 1

VOL. XXXXVIII NO. 5

E DITORIAL BOARD

Chairperson of the Editorial Board

Smt. Sheela Rani Chunkath, IASChairperson and Managing Director,Tamil Nadu Industrial Investment Corp. (TIIC)Chennai

Vice-Chairman

Shri U.P. Singh, IRS (Retd.)Ex-Chief Commissioner, Income-Tax &TRAI Member

Members

Shri R.C. ModyEx-C.G.M., RBI

Shri P.B. MathurEx-E.D., RBI

Shri K.C. GanjwalFormer Member, Company Law Board,Government of India

Editor and Member-Secretary

Shri K.K. MudgilSecretary General, COSIDICI

Associate Editor

Smt. Renu SethAddl. Secretary, COSIDICI

SEPTEMBER-OCTOBER, 2010

COSIDICI COURIER

BI MONTHLY JOURNAL OF COUNCIL OF STATE INDUSTRIAL DEVELOPMENT andINVESTMENT CORPORATIONS OF INDIA

CONTENTS

From The Editor’s Desk .......................................... 2

Need For Rural Infrastructure Development ............ 4

Emerging Agrarian Policies And Programme

Implementation ........................................................ 7

Profile of the Member Corporations ...................... 10

MANIPUR INDUSTRIAL DEVELOPMENT CORPORATION

(MANIDCO)

Member Corporations ~ Their Activities ............... 13

Questions of Cyberquiz -26 .................................. 14

Appointments ........................................................ 14

News From States ................................................ 15

Success Stories Of Karnataka State FinancialCorporation ............................................................ 19

Economic Scene ................................................... 20

Activities Of Cosidici ............................................. 21

Micro, Small & Medium Enterprises ..................... 25

All India Institutions .............................................. 27

Policy Pointers ...................................................... 31

Miscellany ............................................................. 32

The views expressed in the journal are those of the contributors and not necessarily ofthe Council of State Industrial Development and Investment Corporations of India.

COSIDICI COURIER2

From The Editor's Desk

FARM CRISIS ~ VIABILITY OF INDIAN AGRICULTUREAND ROLE OF FINANCIAL PACKAGE

Indian agriculture has been facing serious crisis ofconfidence, low productivity and sustenance for quitesometime forcing farmers to commit suicide which

is still continuing unabated. There has hardly been anyagricultural economist in the country who has not voicedhis concern about the consistently dwindling viability ofIndian agriculture and steady fall in the annual growthrate rendering it as a losing proposition. The problemhas assumed alarming proportions since 72% of theland holdings are below one hectare affecting thelivelihood of nearly 70% of the farmers community.These economists and various committees set up bythe Government have realistically diagnosed the basicills of Indian agriculture and suggested various measuresfor putting it on sound footing, raising its annual growthrate stepping up productivity and thus mitigating themisery of the farming community especially small andmarginal farmers, tenant cultivators, agriculturallabourers and others. It is however, disappointing toobserve that Government administrators, politicians andso-called reformers did not heed the advice of thesespecialists/committees and instead politicised thisissue. The recommendations of these committees hadonly evoked academic interest. Far from initiating therequired measures for improving its viability andproductivity, the government has been announcing, onthe eve of elections, certain financial packages forproviding instant relief to the farmers such as waiver ofloans outstanding, re-schedulement of loan etc.involving massive financial outlay. These were shortterm palliatives which were not aimed at improving theagricultural productivity. The one-time waiver of loans ifat all it reached the poor farmers was not a viable solutionand would keep them in the same vicious circle of lowproductivity, poverty and destitution. What is thereforeneeded is to make agricultural operations viable,profitable and self-sustaining.

Unfortunately, the government tends to believethat massive infusion of currency notes in the economycould perhaps solve all the problems of the country.There has been phenomenal growth of currency incirculation as also government borrowings, both externaland internal, which have pushed up alarmingly the fiscaldeficit which, at present, on a conservative estimatestands approx. at 10-12% of the GDP, if deficit of thestates is also taken into account. It is a general principleof economics that pumping of paper currency in theeconomy, without corresponding increase in production

Shri K.K. Mudgil

asset formation productiveactivities and resultantgeneration of employment,could spell disaster in theeconomy. This is what wehave been experiencing forthe last two decades or more.As on June 30, 2008, thecountry’s external debt stoodat Rs.10,65,600 crore andinternal debt at Rs.29,39,237crore up from Rs.16,90,554crore in 2003-2004. Theexternal debt expanded by $12 billion every quarter during the last six quarters. Itwill thus be observed that the central government’s debtliabilities have been increasing in absolute terms onaccount of persistent high fiscal deficit which in turn isfinanced by both internal and external borrowings. It is,therefore, a mind boggling fact that the debt liability ofeach individual citizen goes up by Rs.24,467 includingexternal debt of about $ 194 per person. The generalperception among politicians, economic reformers andgovernment functionaries that spread of currency is apanacea for all ills is absolutely wrong and misplaced.Such policies are obviously designed by the party inpower to mislead the general public and appease itsvote bank for winning elections. Such a massive infusionof money in the field has only led to rampant corruptionamong the grass-root level politicians and Govt.functionaries and has not reached the target groups.

Despite announcement of various sops andfinancial packages by the government in the past onedecade or so, the agriculture has continuously lost itsground in asmuchas the growth rate of agricultureconsistently fell from 4.5% till 2004-2005 to 1.6% in theyear 2008-09. Similarly, the share of agriculture in GDPpersistently fell from 38.9% in 1980 to 24.6% in 2000;22% in 2004; 17% in 2006 and further to 16.3% in theyear 2008-09. The sharp decline in agriculture’s sharein national income has resulted in stagnation in the growthof employment opportunities and productivity.Therefore, it is quite disturbing to pointout that about60% of the country’s labour force works on agricultureto produce just 16.3% of the national income while thatof industry increased marginally from 24% to 26%.Growth was mainly in the services sector. The shift hastaken place directly away from agriculture and in favour

SEPTEMBER-OCTOBER, 2010 3

of services. While the Gross Capital Formation (GCF)in the economy steadily went up, it kept declining foragriculture. The share of agriculture in the total GCF(1999-2000 prices) fell from 7.7 percent in 2004-2005,7.2% in 2005-06 and further to 7% in 2006-2007. Whatis really significant is that this decline has been causedby the fall in the share of the private sector in the GCF.According to the figures furnished in the EconomicSurvey, the private sector’s share in the GCF hasdropped from 7.7% in 2004-2005 to 7.1% in 2005-2006and to 6.6% in 2006-2007; the private sector’s share in1999-2000 was as high as 11.9%. The waning privatesector GCF in agriculture is a cause for serious concern.It is clear indication that farmers, the main contributorsto private investment in agriculture, have failed to acquirecapacity to invest more. The reasons for this are severaland quite varied. Although the prices of agriculturecommodities have remained high in the wholesale andretail markets, the farmers gets less than half the retailprice. This has adversely affected the profitability ofagriculture. It was found in the 59th Round of the NationalSample Survey Organization (NSSO) that 40% of thefarmers wished to quit farming, while 27% considered itunprofitable. The Minimum Support Prices (MSP) areavailable only to the producers of a few crops, notablywheat, rice and to some extent cotton. And these areavailable in a few states, where the official agenciesoperate in agricultural markets. Elsewhere, the farmersusually have to dispose off their produce at below theMSP. Even the Economic Survey has conceded thatthere is a need to narrow the gap between the producerprices and the consumer prices through proper marketingsupport.

Further, easy access to cheap credit, which iscritical for boosting private investment in agriculture, isnot available to the bulk of the farmer community. Thereport of the committee on Financial Inclusion (January2008) has revealed that more than 73% of farmerhouseholds have no access to any formal sources ofcredit. Therefore, instead of populist measures like loanwaivers etc. the stress should, therefore, be on gettingmore farmers into the institutional credit network. Thiswill not only wean them off usurious money lenders butalso improve their capacity to invest in productivityenhancing measures. In this connection, it is observedthat most of the schemes of Priority Sector Lending toagriculture have proved completely ineffective and haveby-passed the needs of small and marginal farmers,tenants and agricultural labourers. The Rural CreditInstitutions (RCI) therefore, needs to be re-oriented tothe needs of these farmers. The commercial banks havecompletely failed to dispense credit to the above categoryof farmers. Induction of new technology is also essentialfor agriculture to be economically viable and investmentworthy. However, farmers have absolutely no access to

such technology and extension agencies have abysmallyfailed to address this problem. The NSSO surveyrevealed that only 30% of the farmers had adopted somenew practices; for technical support only 6% of thefarmers relied on the extension agencies and 3% ongovernment agencies.

Concluding Observation :

There is no denying the fact that agriculture isthe backbone of the Indian economy and is the sourceof livelihood for nearly 65% of the population. The overalldecline in its growth and lack of efforts to it on soundlines have had devastating effect on the lives of poorfarmers. These facts are a sad commentary on theGovernment’s planning process. It is disgusting toobserve that the planned economic development duringthe last 55 years has resulted in wide spreadunemployment and poverty in the rural areas. Thesmall and marginal farmers who constitute bulk of thefarming community have been completely ignored forany government assistance. The problems of thissector, therefore, deserve to be given serious thoughtby the government agencies, planners, political leadersand agriculture economists. The imperative need is toput all the heads together for formulating an integratedplan for retrieving agriculture out of the present crisisand thus alleviating sufferings of the farmers. Theunderlying objective should be to make agricultureoperations profitable, viable and investment worthy. Lastbut not the least, the government must bring about landreforms and consolidation of land holdings and providesome incentives to the small and marginal farmers topool their land for adopting improved agricultural practicesand thus increase productivity. It must not be forgottenthat 70% of the Indian population lives in about 6 lakhvillages and depend upon agriculture for theirsubsistence. The continued neglect of this sector couldignite widespread discontent and social unrest besidesaccentuating the income disparities between rich andpoor. It is indeed a national shame that farmers continueto commit suicide in the absence of any relief measures/incentives by the government which trends must bereversed without any delay.

{ K.K. MUDGIL }

COSIDICI COURIER4

NEED FOR RURAL INFRASTRUCTURE DEVELOPMENTNEED FOR RURAL INFRASTRUCTURE DEVELOPMENTNEED FOR RURAL INFRASTRUCTURE DEVELOPMENTNEED FOR RURAL INFRASTRUCTURE DEVELOPMENTNEED FOR RURAL INFRASTRUCTURE DEVELOPMENT

Rural infrastructure in India assumes addedimportance in the current context when thecountry’s economic growth rate is moving

to a higher growth trajectory, triggering off highexpectations among its populace for a better anddifferent standard of living from the normally drearyand staid ones they have been inured to.

With the United Progressive Alliance (UPA)government both in its earlier five-year tenure andthe current one beginning in 2009 putting the accenton inclusive economic development and aamadhmi its core concern, the issue of beefing up theinfrastructure both in the urban and rural areas haspopped up, engaging the attention of policy-makers,experts and administrators alike. No doubt,infrastructure consists of both physical and socialcomponents with the latter such as basic education,primary health and a pollution-free ambiencealways taking precedence over the physicalinfrastructure. But the social infrastructure cannever be securely built or promoted if the physicalinfrastructure such as sound roads, sanitation,employment for people eking out existence on themargins and habitations remain abysmally at a lowlevel.

Against this backdrop, the significance of ruralinfrastructure could scarcely be undermined, giventhe reality that more than 70 per cent of over billonpopulation of India reside in its multitude of villagesdotting across the country. Recognising the crucialand key importance of rural development in theoverall scheme of the country’s economicdevelopment, the central Government has of lateattached substantial weight and volume on theMinistry of Rural Development by equipping it withthe requisite funds and functionaries. The missionand objectives of the Ministry is to correct thedevelopmental aberrations and to accord high

priority to developmentin rural and remoteareas by bringing insustainable and holisticdevelopment througha well-crafted strategy.Even as the thrustremains all-roundeconomic and socialtransformation in ruralareas, the focuscontinues to be one ofbridging the rural-urban divide, guaranteeing wageemployment and ensuring food security, renderingrural people the arbiter of their own destiny, creatingrural infrastructure for better economic opportunitiesand growth and restoring lost or depletedproductivity of the land.

Bharat Nirman

In order to build rural infrastructure on anenduring footing, the UPA government fashionedthe Bharat Nirman scheme in its previous tenurewith a view to ensuring inclusive growth by improvingrural infrastructure in a comprehensive manner. Inits second phase of implementation of BharatNirman (2009-14), efforts are afoot to provideelectricity, safe drinking water, all weather roads,telephones and broadband connectivity to all eligiblevillages/habitations and substantially step up ruralhousing stock and irrigation potential. It may berecalled that as many as 71.8 lakh houses wereconstructed during the Bharat Nirman first phaseagainst a target of 60 lakhs. An ambitious target ofconstructing 120 lakh houses has been set for thesecond phase. Against this, more than 31 lakhdwelling units have already been constructed/upgraded at a cost of around Rs. 11,000 crore.

G. SRINIVASAN *

* Courtesy: Kurukshetra, The author is a Senior Journalist based in New Delhi.

SEPTEMBER-OCTOBER, 2010 5

Secondly, over 35,000 habitations have beenconnected with all-weather roads and over 1.90lakhs kms existing rural roads have been upgraded/renewed. On the supply of safe and potable drinkingwater to village, the emphasis during the first phasewas on providing safe drinking water to over 3.5lakh habitations. With this work more or less over,the priority has now shifted to cover water qualityaffected habitations. Hence as many as 28,672habitations affected with chemical contaminationshave been provided with safe drinking water underthe ongoing programmes. Whereas during the firstphase, 73.1 lakh hectares of additional irrigationpotential was created, additional irrigation potentialof 7.11 lakh hectares has been createdsubsequently.

Thirdly, in a bid to improve access to electricityby rural people, using the Rajiv Gandh GrameenVidhyutikaran Yojana (RGGVY) scheme, 18,734rural villages have been electrified, against thetarget of 17,500 unelectrified villages. Besides,against a target of 47 lakh below the poverty line(BPL) household connections, 47.18 lakh BPLhouseholds have been given free electricityconnections. Also, under Bharat Nirman, villagesnot having access to public telephones were to beprovided with Village Public Telephones (VPTs).Thus 5,69,389 villages out of a total of 5,93,601villages have been provided with VPTs as on end-March 2010. Besides, out of 2.50 lakh targetedvillage panchayats, about a third have beenconnected through broadband. This is the longand short of the progress scored under theambitious Bharat Nirman programme that is all setto transform the country’s rural landscape bybringing in the much-needed improvement in thequality of life to legions of villagers.

Panchayat’s Role

Alongside, the Backward Regions Grant Fund(BRGF) programme is being implemented throughpanchayats in 250 identified districts which aims atremoving regional imbalances by bridging criticalgaps in development and encouragingdecentralised planning. A major milestone hasbeen preparation of decentralised plans by the local

bodies in 246 districts which has met the felt localneeds. BRGF comprises two funding windows-oneCapacity Buildings Fund of Rs. 250 crore and seconda substantially untied grants of Rs. 3500 croretotaling Rs. 3750 crore in a year in 250 BRGF districtsin 27 States (except for Goa) for supplementingfinancial resources and covering existingdevelopmental inflow in identified districts foraddressing regional imbalances in development.

BRGF insists on integrated, decentralised andparticipatory plans consolidated by District PlanningCommittees (DPCs) with the funding pattern being25% for Anganwadis, 16% for schools, class rooms,compounds, 14% for drinking water and 10 per centGram Panchayat buildings. The development grantof BRGF is largely untied in nature and thepanchayati raj institutions would largely decide theactual projects to be taken up. The BRGF schemeis being implemented since 2005-06. While thebudget estimate for 2009-10 was Rs.4670 crore,this has subsequently been reduced to Rs. 3670crore in the revised estimate. However, the budgetestimate for the current fiscal is enhanced to Rs.5050crore with the Ministry now proposing to allocatethe enhanced outlays to the most extremist affecteddistricts in the aftermath of left-wing extremism thatwas manifest in backward regions across theeastern and central India.

There is also in existence a scheme christenedthe Rural Business Hub (RBH), applicable to 250BRGF districts and all districts of North-East region.Piloted and operated by the Ministry of PanchayatiRaj, the scheme basically aims at promoting ruralnon-farming enterprises by availing of local skillsand resources and thereby redounding to ruraldevelopment in a meaningful and purposefulfashion. The scheme works on 4P (Public-Private-Panchayat-Partnership) model and setting up ofRBHs is primarily accomplished throughconvergence of resources from various ongoingschemes. Assistance under the RBH scheme isavailable for professional support services, training/skill development and for purchase of minorequipment. Ideally suited for agriculture/horticulture/handloom/handicrafts related activities with

COSIDICI COURIER6

production being decentralised, the RBH schemehas been in vogue since September 2007.

Be that as it may, a House panel report, tabledin Parliament in the budget session, on the demandsfor grants of the Ministry of Panchayati Raj observedwith dismay that the financial achievement of RBHscheme during 2009-10 was only 32.78 per cent,whereas in the previous fiscal it was 96 per cent. Itfurther noted that though 219 memoranda ofunderstanding have been signed across 20 statesduring 2009-10, no details on the functioning of anyof the Rural Business Hubs could be ascertained.It feared that the slow progress made in theimplementation of RBH might result in delaying thetechnical support and marketing linkages that aremuch needed for providing and promoting ruralareas and rural enterprises. Experts anddevelopment economists alike share the concernsof the House panel and genuinely hope that theauthorities charged with implementing the RBHscheme do their proper homework so that the bestintentions behind the laudable scheme are not laidwaste and the really needy rural people get themuch-deserved outlet for unleashing theirentrepreneurial élan in the larger interest ofintegrating their backward regions into themainstream markets.

Employment

Finally, any study of rural infrastructure wouldnot be complete if a due reference to the ruralemployment aspect is not made. Foremost amongthe plethora of employment schemes currently inforce in rural India is the Mahatma Gandhi National

Rural Employment Guarantee Scheme(MGNREGS). Since its inception in 2006, thescheme has provided nearly 600 crore person-daysof work at a total expenditure of around Rs. 70,000crore. During 2009-10, about 4,90 crorehouseholds have been provided job through 40.98lakh works with 251 crore person-days ofemployment being generated at a total expenditureof Rs. 33,087 crore. The average wage rate perday has increased from Rs.65 in 2006-07 to Rs.90in 2009-10. Wages are being paid to thebeneficiaries under MGNREGS through post officeand savings bank accounts. As of February 2010,more than nine crore savings bank and post officeaccounts have been opened across the country forprovision of wages under the scheme. Though thescheme has elicited mixed reaction, criticismscentred on lack of audits and measures are beingput in place to get the gram panchayats to arrangefor such dispassionate audit so that any loopholesin the scheme could be plugged in the interests ofthe beneficiaries. There is also the Prime Minister’sGram Sadak Yojana, born out of the merger of theearlier Rural Employment Generation Programme(REGP) and the Pradhan Mantri Rozgar Yojana(PMRY) in providing the much-needed off farmoccupations to rural people.

With warts and all, the existing schemes for ruralIndia, if implemented in earnest and by propermonitoring body to eliminate lapses, would definitelybolster the rural infrastructure tremendously andprovide the succour to the teeming rural people bymaking a little difference to their otherwise hard andunpleasant living.

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God likes to bless and use those who aren’t confident inGod likes to bless and use those who aren’t confident inGod likes to bless and use those who aren’t confident inGod likes to bless and use those who aren’t confident inGod likes to bless and use those who aren’t confident in

themselves, and who know they need him. He can’t helpthemselves, and who know they need him. He can’t helpthemselves, and who know they need him. He can’t helpthemselves, and who know they need him. He can’t helpthemselves, and who know they need him. He can’t help

those who don’t even desire His help.those who don’t even desire His help.those who don’t even desire His help.those who don’t even desire His help.those who don’t even desire His help.

SEPTEMBER-OCTOBER, 2010 7

Dr. Swaminathan, an eminent agriculturescientist and Chairman NationalCommission on farmers observed that

agriculture is a gainful industry but it is somethingrelated to their self respect. Due to changingcircumstances the plight of Indian agriculture is ina deplorable condition. It is a fact that the mainobjectives of agriculture sector have not beenachieved since inception of five year plan till today.The effectiveness of Indian culture is theeffectiveness of Indian economy. India has thehighest firm area under cultivation, but the yield isneither encouraging nor remunerative to thecultivators. In chine net cropped area is only tenpercent while the world average is 10.7 percent.In India around 45 percent of the total area is undercultivation. Unfortunately, the investment onagriculture has been gradually decreasingcompared with the first five year plan to IX plan.The plan outlay has also reduced from 15.14percent, 4.9 percent and 11.42 percent to 6.45percent respectively. Likewise average growth rateof food production was also not encouraging.

Decline In Farm Production

The growth of Indian agriculture production overthe years since 1950 has remained more or lessstatic. The production of food grains has notimproved at the required rate and the yield perhectare is also not satisfactory. Agricultureproduction during the year 1991-92 was 167.1millions tonnes and in the year 2004-05 it was 198.4millions tonnes representing an increase of only 19percent during the 15 years.

The First Green Revolution

The first Green Revolution which started in thesixties built-up its tempo with the aggressive roleplayed by various input agencies like seed, fertilizer,pesticide production drastically improvedtechniques and their transfer from lab to land. Thefirst green revolution was a spectacular success in

EMERGING AGRARIAN POLICIES AND PROGRAMME IMPLEMENTATION

Dr. H.D. Dwarakanath *

India and became arole model for manydeveloping nations toimprove agriculturalproduction andtechnology in the dryland cultivation. Italso brought aboutan element ofr e s i s t a n c eagriculture to wardoff threat of famine.In a country like IndiaGreen, Bluerevolution and white revolution should go hand inhand for the improvement of agriculture production.The concept made by hybridization of seed andchemicalization made agriculture the norm. Thegreen revolution favoured the rich landlords owningagri-infrastructure. The scheme has failed toimprove the production of rice and wheat butshowed improvement in pulses, maize and othercommercial crop. While the nation had immenselybenefitted from the green revolution, the technologyinvolved was not free from risk. The scheme hascreated the disparity between the rich and smallfarmers. The rich farmer could afford the requiredinput and reaping most of the benefits of greenrevolution. However, inadequate investment ininfrastructure development and poor infrainstitutional coordination gave negative results ofgreen revolution to the small farmers.

Need for Second Green Revolution

The first green revolution has become outdatedand scientist are of the opinion that there is a needof a second green revolution as food security is themajor challenge before the country. The secondgreen revolution will depend solely on the extensiveand intensive use of integrated nutrient pest andwater management, revival of indigenous specific

* The author is Associate Professor (Retd.) SAP Degree & PGCollege, Vikarabad, Ranga Reddy District, Andhra Pradesh

Courtesy : Kurukshetra

COSIDICI COURIER8

seed and planning material, age old tried farmingtechnology and the use of biotechnology tools tomeet effectively the future challenges to improveagri production.

Agriculture reforms in India are critical to ruraldevelopment. These reforms have started with abroad process of distribution of land ownership tothe landless poor. Indian economy would continueto derive its economic strength from agriculture andits allied activities.

Rural Credit & Problems

A survey of rural credit in 1950-51 showed thatcooperative could meet barely 3.3 percent of thetotal requirement of farmers, while moneylendersaccounted 93 per cent of credit needs of farmers.The AIRCSC (All Indian Rural Credit SurveyCommittee 1954) stated that cooperation has failed,but Cooperative Banks must succeed while lending

rural credit to the farmers to improve foodproduction. On the recommendation of thecommittee, the RBI took a series of measures tostrengthen cooperative institution. AIRCSC (1969)recommended the adoption of multi agencyapproach to finance the rural sector. Thegovernment of India accepted that rural credit couldnot be met by cooperative societies alone and thatthe commercial banks should play an important rolein improving agriculture sector.

In farm sector Rural indebtedness is an obstaclefor development which requires in depth analysisso as to address the problems in all its dimensions.There are many causes which lead to farmers’distress. The Government of India constituted anexpert group to look into the problems of agriculturalindebtedness in its totality.

Relative Share of Borrowing of ultivationHouseholds from Different Sources :

Relative Share of Borrowing of Cultivation Households from different sources

Sources Credit 1951 1961 1971 1981 1991 2002 2004 2008

Non-Institutional 92.7 81.3 68.3 36.8 30.6 38.9 33.3 30.5

Money Lenders 69.7 49.2 36.1 16.1 17.5 26.8 19.5 22.5

Institutional 7.3 18.7 31.7 63.2 66.3 61.1 66.7 69.5

Cooperative Societies/Banks 3.3 2.6 22 29.8 23.6 30.2 32.4 30.5

Commercial Banks 0.9 0.6 2.4 28.4 35.2 26.3 27.6 29.5

Unspecified - - - - 3.1 - - -

Total 100 100 100 100 100 100 100 100

Source : RBI, All India Debt Survey and NSSO New Delhi

The above Table reveals that there is aconsiderable improvement in the institutionalborrowings of the farmers between 1991 and 2008.During the Ist plan period the institutional borrowingwas only 7.3 in 1991 and increased to 69.5 percentin 2008. While the Non- Institutional borrowing has

come down from 92.7 percent in 1951 to 30.5percent in the year 2008.

Failure of Crop Insurance

India is the third country after USA and UK toroll out a crop insurance policy with a view to protect

SEPTEMBER-OCTOBER, 2010 9

the interests of the farmers through risk minimizationin agriculture. National Agriculture InsuranceScheme (NAIS) (Rastriya Krishi Beema Yojana)launched to provide crop insurance coverage andfinancial support to the farmers in the event of failureof any of the notified crop as a result of naturalcalamities, pests and diseases. Crop insurancepolicy has been brought in force to encourage thefarmers to adopt progressive farming, practices,high value inputs and higher technology inagriculture and also to help, stabilize farm income.

In fact crop insurance is an instrument thatmakes marginal and small farmers use the agri-insurance to protect something they have againstdrought. Indian farmers should be at fore front ofinsurance companies for help paradoxically. mostof the farmers are unaware of agriculture insurance.About 27 percent farmers in Uttar Pradesh, 22percent in Madhya Pradesh, 28 percent in AndhraPradesh, 30 percent in Tamil Nadu, 35 percent inPunjab, 26 percent in Kerala, 19% in Maharashtraand just 4 % in Bihar subscribed to agri- insurance.

Need For Drastic Reforms

♦ Indian agrarian policy requires drastic reformsto achieve food production and shift prioritiesand strategies to propel Indian agriculture tohigher growth trajectory.

♦ Public sector agricultural research has to bestrengthened and reoriented particularlytowards dry land crops.

♦ The public extension net work has to bereviewed and strengthened. It will involvelarge scale recruitment and training of

adequate qualified staff.

♦ The state government have to play a crucialrole in ensuring the provision of high qualityinputs at affordable prices at the right time toall cultivators.

♦ An aggressive strategy for a paradigm shift infertilizer policy required. The stategovernments should consciously promote andfacilitate the production and usage of biofertilizers, vermin composting, greenmanauring and other eco friendly fertilityenhancing activities.

♦ Marketing infrastructure is inadequate andthere are numerous procedural problems inthe marketing yards. The agriculturemarketing department must take measuresto provide adequate non- exploitativearrangement in the market yards.

♦ The public distribution system must bestrengthened so as to make available basic,minimum quantities of cereals at affordableprices to all vulnerable households.

♦ The Agriculture Technology Mission (ATM)must act as the umbrella for planning, directionand implementation of all of the policiesrelevant to agriculture and allied sectors andthe welfare of farmers and farm workers.

♦ The ATM must have a holistic approach tothe problems of agriculture in the state. Itshould formulate policies and take action onmeeting challenges of the WTO regime,organizing policy research, on critical issuesin agriculture.

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A time of prayer can lift you up on the wings of God’sA time of prayer can lift you up on the wings of God’sA time of prayer can lift you up on the wings of God’sA time of prayer can lift you up on the wings of God’sA time of prayer can lift you up on the wings of God’s

Spirit and help you see the big picture, It putsSpirit and help you see the big picture, It putsSpirit and help you see the big picture, It putsSpirit and help you see the big picture, It putsSpirit and help you see the big picture, It puts

things in perspective.things in perspective.things in perspective.things in perspective.things in perspective.

COSIDICI COURIER10

PROFILE OF MEMBER CORPORAPROFILE OF MEMBER CORPORAPROFILE OF MEMBER CORPORAPROFILE OF MEMBER CORPORAPROFILE OF MEMBER CORPORATIONSTIONSTIONSTIONSTIONS

MANIPUR INDUSTRIAL DEVELOPMENT CORPORATION (MANIDCO)

The Manipur Industrial DevelopmentCorporation {MANIDCO} formerly known asThe Manipur Small Industries Corporation

Ltd.(MSIC) is the only financial institutions doing twinfunctions in the state of Manipur. They may begrouped as below :

Financial Institutions

Catering of long term financial assistance tothe industrial units ranging from tiny, cottage, SSI,SVO and Medium in the State.

Promotional Activities

Distribution of scarce Industrial assistance tothe industrial units ranging from tiny, cottage, SSI,SVO and Medium in the State.

Infrastructure

Developing infrastructure for developmentpurposes and execution of Engineering works indifferent areas.

Objectives

To aid, advice, assist finance, protect andpromote the interest of small/medium industries inthe state. To enter into contract with the Govt. ofIndia, State Govt. to grant guarantee or recommendthe grant of loan to small industries to acquire landor to take on lease, to guarantee to the NSIC inrespect of the money to be paid by theentrepreneurs to NSIC under the scheme of Hire -purchase, to promote and operate schemes fordevelopment of small industries in the state. Toinvest capital of the company in or to deal with share,to establish, promote, subsidiaries and otherwiseassist any company or companies for the purposeof setting up of an Industry etc.

Promotional Activities

The Corporation under this activity and inthe interest of the Small Scale Industrial units hasbeen lifting scarce raw-materials under SSIDCallocation of the Government of India and Stateallocation for distributing to SSI units of the State.

T h ecorporation hasalso been liftingother materialslike cement,plastics, soap-materials forthe SSI units of theState

M a r k e t i n gA s s i s t a n c eScheme of SSIProducts

MANIDCO under the scheme as anencouragement to the SSI units to promote theirsales has arranged to supply their products to theGovernment Departments and otherestablishments.

Infrastructure

For Industrial Infrastructure Developmentwithin this state, this corporation has a separateInfrastructural Development cell/Engineering cell.This cell executes several infrastructuredevelopments work for various Governmentdepartments/under takings. This cell has also takenup other civil works of other Governmentapartments, which do not have separateconstruction cell.

Technologies for the Rural Sector

♦ AROMATIC & MEDICINAL PLANTS

♦ B U I L D I N G / C O N S T R U C T I O NTECHNOLOGIES

♦ CHEMICAL TECHNOLOGIES

♦ COTTAGE AND SMALL INDUSTRIES

♦ ENERGY

♦ FOOD AND AGRO -BASEDTECHNOLOGIES

♦ FORESTRY

SEPTEMBER-OCTOBER, 2010 11

♦ MACHINERY AND EQUIPMENT

♦ CSIR, NATIONAL LABORATORIES

♦ CSIR, POLYTECHNOLOGY TRANSFERCENTRES

♦ TECHNOLOGY INSTITUTIONS IN INDIA

♦ SOFTWARE TECHNOLOGY PARKS IN INDIA

Industrial Scenario of Manipur

Though Manipur is perceived as industriallybackward there are various opportunities in thestate. In fact, many different routes and patterns ofindustrialization can be thought of in the context ofManipur. Given the relatively satisfactory literacyrate, the geographical location linking India withSouth East Asia and the scope for contemporaryweightless industrialization, Manipur beckonsindustrialization of the most modern kind. The Stateis a suitable place for knowledge-intensiveindustrialization with high learning components.

Though constrained by various limitations, the State Government has been making seriousefforts for fostering conventional industrialization inthe state. Apart from providing a package ofincentives and concessions as laid out in its industrialpolicies and programmes in consonance with thoseof the Government of India, the State Governmentparticipated in the industrialization campaign withthe incorporation of the Manipur Spinning MillsCorporation Ltd. in 1974 which started itscommercial production in 1980. In order to facilitategrowth of industries, the Manipur Small IndustriesCorporation was set up in 1969 and it was furtherupgraded to Manipur Industrial DevelopmentCorporation Ltd. (MANIDCO) in 1987. ManipurHandloom and Handicraft Development CorporationLtd. was set up in 1976 to directly help productionand marketing of handloom and handicraft products.Subsequently, State sponsored undertakings like,Manipur Electronics Development Corporation Ltd.,Manipur Cements Ltd., Manipur State Drugs andPharmaceuticals Ltd., Manipur Pulp and AlliedProducts Ltd. and Khandsari Sugar Factory as aGovt. factory came up in the State. Regional/Statebranch offices of Small Industries Service Institute,National Small Industries Corporation Ltd., Centrefor Electronics Design & Technology and CentralInstitute of Plastic Engineering & Technology also,came up in the State to invigorate the growth ofindustries. District Industries Centres were set up

in the districts in 1978-79 and decentralizationof industrial growth in the rural areas began.Schemes like Seed Margin Money, SelfEmployment for Educated Unemployed Youths andPrime Minister’s Rozgar Yojana were instrumentalin the growth of industrial activities in the State.

In tune with the present trend of economicreforms and given the limited capacity of the Stategovernment, various corporations are looking forinvestors for expansion.

♦ Industrial Policy of Manipur,1996

♦ Small Industrial Service Institute, Imphal

♦ SIDO & Non-SIDO Industrial Units

♦ Prime Minister’s Rozgar Yojana (PMRY)

♦ Handloom

♦ Handicrafts

♦ Food Processing Industries

♦ Training

♦ List of working SSI Units in Manipur

♦ Industrial Corporations

♦ New Industrial Package for the North-East

♦ Indo-Myanmar Border Trade Promotion

♦ Infrastructure Development Projects

♦ Mineral Development

Forest Resources

Manipur has 78.92 percent of its totalgeographical area covered by forests according tothe ground survey report of the Forest Survey ofIndia in 1995. This accounts for an area of 17,621sq. km. under forest cover.

Semi Evergreen Forests:

These forests are found in the western partof Manipur adjoining Cachar district of Assam. Theclimax forests of this type comprise a vegetation ofLaurus-Melia Bauhinia association.

These forests cover 439.70 sq.km of Treeforest and 205.19 sq.km. of the open forest whichtogether constitute 4.26% of total forest area of thestate. Extensive lush growth of Muli bamboo(Melocanna basifera) can also be seen on theabandoned jhum fields.

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Teak Gurjan Forests:

These forests are found along the easternlongitudinal strip of Indo-Burma border at lowaltitude under a tropical climate constituting 4.03%of total forest area.

Wet hill Forests:

A Saurauja-Belischmiedia-phoe be associationis found to cover the upper slopes upto the top ofthe medium elevations. These forests are foundextensively in the state cevering an area of 3918.20sq.km. of Tree forests and 2,672.09 sq.km. of Openforests that may account for 43.49% of the totalforest area of the state.

Sub-Alpine Forests:

Not many ranges reach a height beyond 2700M in Manipur. a sub-alpine vegetation is observedon sporadic hill tops.

Bamboo Brakes:

Vast continuous growths of bamboo speciallythe species Melocanna basifera (Muli),Dendrocalamus hamiltonii (patcha) and Tainostachydulloa (Duloo) occur below 1700 M in the Western,South-Western and North-Western parts of thestate. Besides these, patchy growths occurthroughout the state. Some species grow asunderstorey in tree forests. The bamboo brakescover an area of 3268.00 sq.km. which is 14.64%of the total geographical area of the state or 21.51%of the total forest area.

Cane Brakes:

In the shady, wet ill-drained humus-rich claysoils found particularly in the western hills undertropical climates, impenetrable thorny thickets ofvarious species of canes grow along with palm trees.

Minor Products:

Various forms of animal produce, Bambooand Cane, Fodder and Fuelwood, Grass and reeds,Inces and Perfume and Medicinal plants form theminor forest products which account for a total valueof 21 lakhs of annual revenue of the state. This isto the tune of about 40 p.c. of total annual forestrevenue. Agarwood, Dalchini and Smilax formsignificant groups among these.

Legal Classification:

The legal position of forest administration inthe state is fluid. The government has extended itscontrol to a small portion of the forest comprising1,467 sq.km. of Reserved Forest and 4,171 sq. km.of Protected Forest which together constitute only25.25 p.c. of the total area or 31.99 p.c. of the totalforest area. The remaining 68.01 p.c. of forests areunclosed forests under the control of the tribalpopulations. These unclosed forests are subject towidespread injudicious exploitation of the hill peoplewho at some area meticulously guard patches oftree growth.

Important Tree Species:

The state has an annual potential cut of110,468 cu.m. of plywood quality trees, 40.731cu.m. of Timber species. Annual cuts of 407, 928cu.m. and 35.804 cu.m. respectively of pulpwoodand coffers can be made for industries like paperand match factories etc. Poles and Bamboos stillsubstantiate this potential.

Groundwater

The area covered by valleys that can beinvestigated for groundwater potentials in Manipuris about 1800 sq.km. forming roughly 8% of the totalgeographical area. The important valleys are theManipur Central Valley and Western Jiribam ofImphal District, Khuga valley in ChurachandpurDistrict and Khoupum valley in Tamenglong District.The Central Ground Water Board (CGWB) so farhas covered an area of 6,600 sq.km. out of the totalland area of 22,346 sq.km. in hydrogeologicalsurvey.The valleys have superficial alluvium whichare underlined by tertiary rocks of Barail series inImphal valley and the Tipam formations in Jiribamvalley. Ground-water in top sandy and clayeyformations occurs under water table conditions withthe depth of water varying from 3 to 4 metres bgl.Tubewells have been installed at various places ofthe valley areas with the yields ranging from 0.6 to4 cu.m./hr. On the basis of the monitoring of waterlevel in key/dug wells network stations in the area,an annual recharge of 44 M.cu.m. has beenestimated.

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SEPTEMBER-OCTOBER, 2010 13

MEMBER CORPORAMEMBER CORPORAMEMBER CORPORAMEMBER CORPORAMEMBER CORPORATIONS ~ THEIR ACTIVITIESTIONS ~ THEIR ACTIVITIESTIONS ~ THEIR ACTIVITIESTIONS ~ THEIR ACTIVITIESTIONS ~ THEIR ACTIVITIES

APIIC to set up eco-friendly industrial parks

APIIC has developed over 300 industrial parksin Andhra Pradesh across 121,550 acres of land.The Corporation has also constructed 3,500industrial sheds. The industrial areas range from15-2,500 acres and are equipped with approvedlayouts, roads, water and power supply. TheCorporation is setting up common effluent plants atJeedimetla and Patancheru areas and also a totalsolid waste disposal facility near Jeedimetla. A largenumber of leading industrial houses and globalFortune 500 companies have set up their facilitieson industrial parks and SEZs developed by APIICin the state.

The Corporation has taken many initiativesto digitize and bring automation of the system withEnterprise Resource Planning (ERP) system tointegrate and provide quality service to theentrepreneurs.

Some of the major projects which have beenundertaken by APIIC include APSEZ which is thelargest SEZ spreading across 5,596 acres of landin Atchutapuram in Rambilli Mandals inVisakhapatnam district of Andhra Pradesh. Theexpected inflow of investment is over Rs. 25,000crore. APIIC provided the infrastructure at a costof about Rs. 800 crore. Allotments have been madeto 17 units covering 2,000 acres of which five unitshave gone into commercial production.

The other project is AP PCPIR (Petroleum,Chemicals and Petrochemicals Investment Region)in Visakhapatnam which is the largest PCPIR inIndia, spread over an area of 603.58 square kmbetween Visakhapatnam and Kakinada whichincludes five SEZs. It is strategically located withaccess to the domestic as well as global marketswith excellent infrastructure of three ports, twoairports, well connected by the national highway andthe golden quadrilateral project.

APGIC is formed as a joint venture of APIICand APGenco with an objective of developing stateregional Gas Grid and also to develop the City Gas

Distribution (CGD)network to providenatural gasconnectivity fordomestic, industrialand automobilesector needs.APGIC is also apartner in theconsortium in KGbasin wellsawarded underNELP—VII.

Another project developed by APIIC is FabCity which is India’s first semi-conductor and solarPV cluster spread over an area of 400 hectareswith world class infrastructure near the InternationalAirport Hyderabad. The expected investment isUSD 10 billion and will provide direct employmentto 35,000 people in the next 10 years. Seventeencompanies were given allotment in the SEZ andSolar Semi Conductor is the first company thatcommenced its commercial operations exportingsolar panels for the past one year.

The Corporation has also developed theaerospace and precision engineering SEZ whichhas TATA Advance Systems as the anchor tenant,which has set up its facility with an investment ofRs.1000 crore assembling Sikorsky-92 Helicopters.The first helicopter will be ready for export byNovember 2010.

APIIC has taken an initiative to develop eco-friendly industrial parks. There are plans to havegas-based captive power plants in all the majorindustrial parks in the coming years. APIIC alsoplans to establish dedicated feeders for eachindustrial park to take care of the powerrequirements. The focus is on setting up sector-specific clusters for food processing, automobile,textile, aerospace, EMS and other sectors.Adequate support would also be extended to Smalland Medium Enterprises (SMEs) in the state.

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COSIDICI COURIER14

QUESTIONS OF CYBERQUIZ ~ 26

1. Who is a cyber tourist ?

[a] A person who visits websites of tours and travel companies;[b] A person who stays in a website for few minutes only; [c]A person who goes online only on weekends and holidays;[d] A person who visits the websites of famous touristdestinations of the world.

2. When somebody has been “gatored” on the Net, she or hehas become a victim of what ?

[a] Cyber grapevine; [b] Cyber warfare; [c] Hijackwareprogram; [d] Spyware.

3. The term “cyberspace” refers to networked digitalenvironments, especially advanced systems that produce anillusion of reality. Who coined this term in his book Neuromancer (1985) ?

[a] Thomas Watson; [b] Bill Gates; [c] William Gibson; [d] Steven Spielberg.

4. What does the “last mile issue” refer to ?

[a] Penetration of Internet even to the remotest of places; [b] The connection between theuser and the Internet Service Provider; [c] The last channel partner in the sales process of ITproducts; [d] The last hurdles a typical startup venture has to overcome in order to be successful.

5. You know what is HTML. But what is HDML ?

[a] Hyper Data Markup Language; [b] Hyper Dialup Markup Language; [c] High-level DigitalMarkup Language; [d] Handheld Device Markup Language.

For Answers See Page No. 18

APPOINTMENTS

Shri Bijay Kumar Bose has been appointed as Managing Director, Orissa State Financial Corporation

(OSFC), Cuttack vice Shri Kabindra Nath Khatai, IAS.

SEPTEMBER-OCTOBER, 2010 15

NEWS FROM STNEWS FROM STNEWS FROM STNEWS FROM STNEWS FROM STAAAAATESTESTESTESTES

TAMILNADU

TN most economically free; Gujarat, Andhragain

The Economic Freedom Rankings for theStates of India, 2009 posts sharp changes in theoverall levels of economic freedom in the statesbetween 2005 and 2009. While Tamil Nadu retainedthe top spot, Gujarat moved up from No.5 to No.2,Andhra Pradesh gained four places to claim theNo.3 slot, while Madhya Pradesh fell from No.2 toNo.6 and Orissa was at No.17, six places down.

The authors of the report by the CATOInstitute and Indicus Analytics in partnership withFriedrich Naumann Stiftung caution that thoughthere is a link between economic freedom andgrowth, the correlation is not very high. However,there is an observable trend illustrating thiscorrelation— AP and Gujarat improved the mostand grew at an average of 10.5% between 2004-05 and 2008-09; the states that worsenedmoderately grew at 8.7% on average; those whocame in at the bottom averaged growth rates of6.7% (in the same period). The report defineseconomic freedom as “the absence of governmentcoercion or constraint on the production, distributionor consumption of goods and services beyond theextent necessary for citizens to protect and maintainliberty itself”.

PUNJAB

Punjab signs MoU with NTPC for Rs.15k crorepower project

The Punjab government on October 07, 2010signed a memorandum of understanding withNational Thermal Power Corporation to establish2,640-mw coal-based thermal power project atGidderbaha at a cost of about Rs 15,000 crore. Thiswill be the biggest thermal power project in Punjabwhich will help develop ancillary industries andprovide employment to thousands. NTPC hasdeveloped comprehensive in house expertise invarious facets of power generation from concept tocommissioning, efficient operation in accordancewith Power Policies of the Centre.

Punjab hasagreed to facilitateacquisition of land,allocation of water andconveyed in-principleclearance for about2,316 acre and 125cusec of water.Punjab has alreadyissued notificationunder section 4 ofLand Acquisition Actfor 2,316 acre for theproject. The plantconsist of 4 units of 660 mw each which will befunded by NTPC. At least 50% of the powergenerated from the plant would be allocated toPunjab. Punjab State Power Corporation wouldprovide to NTPC all the reports for the specificstudies and investigations for preparation offeasibility report. The cost incurred on all suchreports would be reimbursed by NTPC.

Punjab launches rural development projectto better living standards

Nine villages of Fatehgarh Saheb in Punjabare looking forward to integrated self-helpcommunity development projects with the help ofthe University of Utah and the School for PublicHealth of PGI.

The University of Utah, USA, chief of publichealth Steve Alder said after an exploratory visitlast year, the team had selected a local NGO,Mehar Baba Charitable Trust (MBCT), and thePGIMER School of Public Health, to becollaborative partners to improve the livingstandards of people in villages.

MBCT advisor Hassan Singh Mejie saidMBCT had been undertaking extensive communitydevelopment work for last five years in 185 villagesof Fatehgarh Saheb district including womenempowerment, vocational training for boys andgirls, regular health checkup programmesespecially in the areas of cancer development,etc from their vocational training centre set up in

COSIDICI COURIER16

Bassi Pathana. The joint project will be known asThe Bassi Pathana Collaborative CommunityDevelopment Project (BP-CCDP), (Dehati JeewanSudhar Abhiyaan) which is being launched in ninevillages, and will focus on medical education andresearch exchange; sustainable village healthdevelopment, entrepreneurial cooperatives.

Punjab and Haryana to set up disastermanagement cell

Punjab and Haryana will start the ground workfor drawing up plans of setting up the State DisasterManagement Authority (SDMA).

The Haryana Revenue and DisasterManagement Financial Commissioner and PrincipalSecretary, Shri Naresh Gulati presided over a jointmeeting of Punjab and Haryana on disastermanagement along with his Punjab counterpartRomila Dubey on October 12, 2010.

Both at the state and the Centre, there hadbeen a considerable concern over restricting socio-economic damage by natural calamities. India, likeany other country in the world was prone to multiplenatural disasters, such as floods, earthquake,drought, landslides and cyclone, hence there wasthe need to adopt multi-disciplinary and multi-sectoral approach and also incorporation of riskreduction in the developmental strategies to reducethe impact of disasters.

The Disaster Management Act 2005 seeksto institutionalise mechanisms at the national, stateand district levels to ensure a swift response to bothnatural calamities and man-made disasters. He saidNDMA had been supporting various initiatives ofthe Centre and state governments to strengthenthe disaster management capacities.

The setting up of NDMA had given the rightimpetus for the country’s vision for a paradigm shiftfrom response to prevention, mitigation andpreparedness in addition to response, relief andrehabilitation. Each State was required to constituteSDMA headed by Chief Minister, assisted by StateExecutive Committee headed by Chief Secretary.

HARYANA

Centre sanctions Rs.23 crore to Haryana forafforestation programme

The Haryana Forest Minister, Shri Ajay Singh

Yadav said the Centre has sanctioned Rs. 23 croreunder National Afforestation Programme and its firstinstallment Rs.11.15 crore has already beenreceived. 4.10 crore saplings have been planted inthe state thus achieving the target of 81% of plantingfive crore saplings in the state by September 30.

He directed the officers of forests departmentthat they should chalk out an ambitious action plan,especially for the Mahendragarh and Rewaridistricts, for setting up of small check dams to storethe rain water so that it could be used for waterrecharge. He also stressed on making the herbalparks self sustainable. He was of the view that suchtype of system should be developed that theseherbal parks could become self sustainable byplanting nurseries and other fruit trees in parks.

Centre approves solar project in Sirsa

A 12.65 crore Solar Photovoltaic StreetLighting System project has been sanctioned by theCentre for Sirsa district. 50% cost of the projectwould be borne by the Centre and the rest 50% bythe district administration under various schemes.

A spokesman of Haryana State RenewableDevelopment Agency said that under the system,75 AH batteries of 12 voltage and CFLs of 11 wattwould be installed. Automatic switch system wouldbe installed to facilitate switching on the light in theevening and switching off in the morningautomatically. Wires would not be used in this systemand as such the maintenance cost would benominal.

Haryana to launch energy audit scheme forindustries

As a part of the Energy Conservation ActionPlan, the Haryana department of renewable energyhas launched a scheme to incentivize energy auditin various industrial sectors, especially for small andmedium sector enterprises during 2010-2011.

The renewable energy department andHAREDA Director, Smt. Sumita Misra said underthis scheme, the industrial enterprises would beprovided with financial assistance to assess thepotential of energy conservation by carrying outwalk-through energy audit at their facilities throughBureau of Energy Efficiency certified energyauditors or consultants. Under this scheme, small,medium and large scale industries will be eligible to

SEPTEMBER-OCTOBER, 2010 17

avail financial incentive at the rate of Rs.7,500,Rs.10,000 and Rs.15,000 respectively.

Haryana to set up biotech parks in Faridabad

Haryana will have Biotech Science Clustersat Faridabad at an estimated investment rangingbetween Rs 750 crore and Rs 1,000 crore during11th and 12th Plan period. This was revealed duringa presentation of the project made in a high-levelmeeting held under the chairpersonship of theHaryana Chief Secretary, Ms.Urvashi Gulati.

The department of biotechnology has beenallotted 40 acre of land and additional 160 acrecontiguous plot in Faridabad, village Bhankari, onGurgaon-Faridabad Highway for setting up thisstate-of-the-art project. The likely completion periodof phase-I of the project is 24 months.

The cluster will have Translational HealthScience and Technology Institute, which wouldfocus on technology needs of Public Health System.It will address the prognostic and therapeutictechnology for the prevention and management ofinfectious and chronic diseases at affordable costfor the vulnerable sections of the society, especiallyneonates, children and women. The project will alsohave Unesco Regional Centre for Biotechnology.The centre will have major programme for trainingand providing assistance in technology validation,trials and scale up. It will also provide training andconsultancy to other institutes and industry.

Haryana industrial policy to focus onpromoting SMEs

The Haryana Industrial Policy to beannounced in November, 2010 will focus on thefollowing : -

♦ Facilitating investment in infraprojects throughPPP (Public Private Partnership) mode.

♦ Will encourage the existing 80,000 SMEsunits, which contribute over 80% in state’sindustrial production.

♦ To focus on giving thrust on new industrialinvestments, especially in SEZs on areas likefood processing and bio-tech.

Haryana to set up data centre

The Haryana government is setting up a StateData Centre (SDC) at a cost of Rs 12.38 crore. The

main benefits of the project include the central datarepository, secure data storage, online delivery ofservices, citizen information or services portal, stateInternet portal, disaster recovery, remotemanagement and service integration.

An official spokesman said the project of stateportal and State Service Delivery Gateway (SSDG)was also proposed to be implemented at anestimated cost of Rs 1,092 lakh aiming at utilisingthe National e-Governance Plan (NeGP) CoreInfrastructure. It would help in using infrastructureof SDC, State Wide Area Network (SWAN) andCommon Services Centres (CSCs).

Haryana to set up three solar energy plants

The Haryana Power Generation Corporation(HPGCL) is venturing into solar power generationby setting up solar energy-based power plants atPanipat, Yamunanagar and Khedar in Hisar.HPGCL plans to tap the vast solar energy potentialand earn carbon credits by generating powerthrough this clean source. The projects will beimplemented under the Jawaharlal Nehru NationalSolar Mission.

HPGCL Managing Director, Shri SanjeevKaushal said that the solar power plants will be gridinteractive. Following a new model, the solar powerplants will be set up at the existing land of thermalpower plants at Panipat, Yamunanagar, Hisar andhydel power plant in Yamunanagar.

As per the Central Electricity Commission(CERC) guidelines, a cost of Rs.16.90 crore permw is involved in setting up solar photovoltaic powerplants and Rs 15.30 crore per mw is involved forsolar thermal plant. The tariff fixed by CERC isRs.17.91 per unit for solar photovoltaic andRs.15.29 per unit for solar thermal.

Haryana gets approval for 10 solar projects

Haryana got an approval from the Unionministry of new and renewable energy to include10 of its solar power projects of 9.8 mw under theJawaharlal Nehru National Solar Mission (JNNSM).These projects would come up as small scale SolarPhoto Voltaic (SPV) rooftop power plants.

Pre-registration of 22 mw has already beendone under the JNNSM and Indian RenewableEnergy Development Agency (IREDA) has

COSIDICI COURIER18

shortlisted 10 such projects in Haryana. As per theproposed guidelines for small solar power plants,connected to 11 kv grid under the national solarmission, projects commissioned on or before March31, 2013 (upto a maximum of 100 mw) will only beeligible for incentives under Phase-I.

MADHYA PRADESH

MP signs investment deals worth Rs.1,06,417 cr

The Madhya Pradesh government finalisedinvestment deals worth 1,06,417 crore with 12companies in different sectors, in a major boost tothe state’s industrial development.

The agreements were signed on the first dayof Khajuraho Global Investors’ Summit-II, which wasattended by the industrial groups such as Essar,Aditya Birla group, NTPC, Gail, Adani group andVideocon.

The Chief Minister, Shri Shivraj SinghChouhan released the new industrial promotionpolicy of the state and assured that the governmentwill create a conducive environment for investors.

“The government has taken the initiative to

take policy decisions in favour of industries and hascome out with an investor-friendly industrial policy,”.Of the 20 MoUs signed on the first day, 16 were inthe industrial sector and four in energy sector.

“Along with industrial development the stategovernment wants to augment employmentopportunities for the youth. For this, special attentionis being paid to skill development,” Shri Chouhansaid.

For promoting investment, the stategovernment has created a land bank of 20,000hectare and has offered special concessions to unitsproviding jobs to more than 1,000 people.

HIMACHAL PRADESH

Himachal Pradesh’s first Biotechnology Parkmay soon be allotted to a developer. The BT parkis proposed to come up at village Aduwal, nearNalagarh in Solan district and is likely to catalysean investment of around Rs 500 crore over a periodof time including investment from the privatecompanies setting up base in the industrial clusterof the park.

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ANSWERS OF CYBERQUIZ ~ 26

1.[c] A person who goes online only on weekends and holidays :A large number of cyber tourists may clog the Net on Sundays andholidays.

2.[c] Hijackware program : The hijackware program seizes controlof an Internet shopping or surfing experience and causes the victim’sbrowser to isplay advertisements or site chosen by the hijackware. Thistactic gets it name from Gator.com.

3.[c] William Gibson : Gibson used the word to refer to the total dataon all the computers on all the networks in the world. He knew littleabout computers when he wrote the book. In fact, he typed themanuscript on a typewriter !

4.[b] The connection between the user and the Internet Service provider : The connection betweenthe ISP and the user is generally through a modem and typically is the slowest aspect of Internet access.

5.[d] Handheld Device Markup Language : HDML was created by Unwired Planet in 1997. It is alanguage that allows the text portions of web pages to be presented on cellular phones and personaldigital assistants via wireless access.

SEPTEMBER-OCTOBER, 2010 19

SUCCESS STORIES OF KARNASUCCESS STORIES OF KARNASUCCESS STORIES OF KARNASUCCESS STORIES OF KARNASUCCESS STORIES OF KARNATTTTTAKA STAKA STAKA STAKA STAKA STAAAAATETETETETE

FINANCIAL CORPORAFINANCIAL CORPORAFINANCIAL CORPORAFINANCIAL CORPORAFINANCIAL CORPORATIONTIONTIONTIONTION

MYSORE POLYMERS AND RUBBER PRODUCTS PVT. LTD., MYSORE

Mysore Polymers and Rubber Products Pvt.Ltd. was established by Mr. S.R.Parthasarathy and Mr. C.D. Nagarajan. It

is engaged in the manufacture of butyl automotivetubes.

The Company is among the leadingmanufacturers of high quality butyl rubber tubes inIndia. The product portfolio comprises automotivebutyl tubes of practically every size for bothdomestic and overseas markets. The company hasexpanded its product range by diversifying intoinnovative and specialized rubber products.

The Company had availed several loansamounting to Rs.1,107 lakhs between 1981 and

1994 from KSFC.

It has a fully-equipped design anddevelopment facility todeliver optimumproduct performanceand quality.

The Companyhas been conferredthe ISO/TS 16949 :2002 and ISO9 0 0 1 : 2 0 0 0certification, accredited by TUV.

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STANDARD SEALS ENGINEERING, BIDAR

Standard Seals Engineering was started in1990 by Mr. Mohammed Sultan Patel. The unit isengaged in the manufacture of mechanical seals.The products of the unit are used in various typesof pumps, mixers and reactors for chemicals,petroleum, pharmaceutical, fertilizer, textile andshipping industries.

The promoter had taken financial assistancefrom KSFC amounting to Rs.2.65 lakhs, under theterm loan, soft seed capital and working capitalschemes. An additional loan of Rs.9.77 lakhs was

also availed by thefirm for expansionactivities.

Standard SealsEngineering won theBest EntrepreneurAward from theGovernment ofKarnataka for theYear 1994-1995.

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Life is more than things. Things may temporarilyLife is more than things. Things may temporarilyLife is more than things. Things may temporarilyLife is more than things. Things may temporarilyLife is more than things. Things may temporarily

satisfy the body, but only God and His lovesatisfy the body, but only God and His lovesatisfy the body, but only God and His lovesatisfy the body, but only God and His lovesatisfy the body, but only God and His love

can truly satisfy the spirit.can truly satisfy the spirit.can truly satisfy the spirit.can truly satisfy the spirit.can truly satisfy the spirit.

COSIDICI COURIER20

Direct tax collection increases 13.9% in April-August

The country’s direct tax collection has exceededRs. one-lakh-crore mark in the first five months ofthe financial year, on the back of growth in revenuereceipts from the corporate sector. Net direct taxcollections during April-August registered a growthof 13.91 per cent, at Rs. 1,00,112 crore, comparedwith Rs. 87,888 crore in the corresponding periodof the previous financial year. Corporation incometax collections rose 17.05 per cent to Rs.57,750crore, against Rs.49,339 crore in the same perioda year ago. Personal income tax, which includessecurities, transaction tax, residual fringe benefittax and banking cash transaction tax stood atRs.42,217 crore n April-August period, up fromRs.38, 491 crore in the corresponding months lastyear—a growth of 9.68 per cent.

The government has budgeted an overall taxcollection of Rs.7,46,000 crore in the currentfinancial year. It has set a target of collectingRs.4,30,000 crore by the way of direct taxes alone.Direct tax collections for 2009-10 stood at Rs.3,78,000 crore. This was lower than the revisedestimate of Rs.3,87,000 crore.

Indirect tax collections up 46%

The revival of the industrial sector has translatedinto higher revenues for the exchequer with thegovernment’s indirect tax collection up by around46% to over Rs. 1.24 lakh crore during the first fivemonths of this fiscal.

The indirect tax department has collected Rs.51,866 crore as customs duty during the April-August period this year, almost 67% up whencompared to the last year corresponding period.Riding on a booming manufacturing sector; exciseduty collections have also registered a growth of42% to around Rs. 49,700 crore.

Service Tax collections during the period isaround Rs. 22,700 crore, up 20% when comparedto last year. This is mainly enhanced due to industrialproduction during the period. Industrial productionmoved up to 13.8% for July.

Non-food credit offtake rises 20.13%, depositsup 15.03%

Non-food credit or the amount of money thatbanks lend to corporates and individuals, grew at20.13% year-on-year to Rs. 34,19,244.54 croreduring the fortnight ended October 8, 2010.

ECONOMIC SCENEECONOMIC SCENEECONOMIC SCENEECONOMIC SCENEECONOMIC SCENE

This is nearly a 140 basis points higher growththan the growth in previous fortnight endingSeptember 24, 2010.The numbers areencouraging giventhat banks haveincreased their bench-mark prime lendingrates (BPLR).However, most bankshave been offeringretail borrowersattractive rates onhome loans and carloans for the festiveseason.

Data put out by theReserve Bank of Indiaon October 20, 2010,showed that banksincrementally lent Rs. 47,185.4 crore during thefortnight. Total outstanding credit, which has grownby 20.07% y-o-y stands at Rs. 34,68,998.94.Deposits grew at 15.03% to Rs. 47,88,309.29 crore,around 172 bps higher than the earlier growth raterecorded for the fortnight ended September 24,2010.

New export policy could harm spice exports

India’s exports of spices could be impacted fromthe new export-import policy because exporters willlose significant amount of revenue after the newpolicy is implemented, officials of All India SpicesExporters Forum (AISEF) said. In the new ForeignTrade Policy 2009-14, spices and its value-addedproducts have been removed from the Vishesh Krishiand Gram Udyog Yojana (VKGUY) scheme andincluded on the list of focus products.

“The extent of incentives have been broughtdown to 2% from 5% because of which exportershave already suffered a financial loss of Rs. 100crore so far and by march next year would loseanother Rs.200 crore.”

It was felt that spices needed to be retainedunder the VKGUY at least till March 31, 2011 andpepper and chillies which face stiff competition fromVietnam and China, should also be included underthe yojana or in the list of focus group. India accountsfor nearly 44% of global spices trade estimated850,000 tonne in a year.

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SEPTEMBER-OCTOBER, 2010 21

ACTIVITIES OF COSIDICIACTIVITIES OF COSIDICIACTIVITIES OF COSIDICIACTIVITIES OF COSIDICIACTIVITIES OF COSIDICI

COSIDICI’s E.C.M. & A.G.M. :

Proposal for Amendment to SFC Act, 1951 :

A meeting of the CEOs of MoU SFCs washeld at APSFC’ Head Office, Hyderabad onSeptember 06, 2010 to deliberate on theamendments proposed by various SFCs keepingin view their business requirements, difficultiesfaced with regard to implementation of Section 29of the Act ibid and the need to provide SFCs withoperational flexibility. The committee afterdiscussing the amendments to the Actrecommended the following views for theconsideration by SIDBI -

Section 2(c)(xxii)

It was felt that the powers conferred on SIDBIunder this section are wide enough to include anyrelevant activity. SIDBI may kindly allow SFCs togive financial assistance to Educational Institutionsincluding those imparting technical/generalknowledge and to major service sectors. It is,therefore, requested that this section may beinterpreted liberally to suit the present day economicscenario.

The Committee strongly felt that there is needto propose amendment to Section 26(1) with regardto limit of accommodation and inclusion of limitedliability partnership concern on par with Companiesand suggested that Section 26(1) should beamended as under:

(i) One thousand lakhs of rupees in the case ofa corporation established by or under any other lawor a company as defined in Section 3 of theCompanies Act, 1956 or the limited liabilitypartnership registered under Limited LiabilityPartnership Act, 2008 or a cooperative societyregistered under the cooperatives societies Act,1912 or any other law relating to cooperativesocieties for the time being in force and

(ii) Five hundred lakhs of rupees in any othercase:

Provided that the financial corporation may, withthe prior approval of the small industries bank,exceed the limit under clause (i) or clause (ii) up tofour times.

Section 28(1)(d)

The Committee felt that in view of the

incorporation of MSMEAct, the limit prescribedin respect of paid upcapital and freereserves has becomeredundant andrecommended fordeletion of Section28(1)(d).

COSIDICI vide itsletter dt. November 16,2007 to Governmentof India has alreadymade a representationfor these amendmentsa copy of which hadbeen forwarded to SIDBI also. However, we againenclose herewith a copy of the same for your readyreference and request you to kindly pursue thematter with the Government of India to enable SFCsto accommodate the MSME sector in respect of itsgrowing credit demand.

Section 29(1)

The Committee discussed the proposedamendments keeping in view the judgement of theHon’ble Supreme Court which held that CollateralSecurity property does not come under the ambitof Sec.29(1). The Committee also discussed aboutearlier judgements of various High Courts, whereinthe Hon’ble High Courts upheld the action initiatedby the Corporations u/s 29 of SFCs Act againstCollateral Security property and confirmed the saidsales. It was felt that in view of the judgement ofthe SC, the sales of Collateral security propertiesalready conducted by the Corporations would beamenable to question by the relevant parties andthe Corporation would have to face severalproblems in that situation. In view of the ambiguityin interpreting the provisions u/s 29 of SFCs Act,the Hon’ble Supreme Court took a different viewfrom that of various High Courts. In order to clearthe ambiguity amendment to the section is neededby explicitly incorporating Collateral Security underthe ambit of sec. 29. The Committee further feltthat the powers u/s 29 shall be available againstCollateral Security property also for speedy recoveryof the loan and to implement the provisions of theAct effectively. The provisions contained underSARFAESI Act for proceeding against Collateral

COSIDICI COURIER22

Security property, which action is available to theCorporation also does not help the Corporation inmost of the cases as SARFAESI Act provisions areenacted to suit to the commercial banks’requirements and SFCs activities are on differentfooting. Further, it was felt that, in the presentsituation, the SFCs have to proceed against theborrowers properties u/s 29 of SFCs Act only andhave to proceed against the Collateral Securitiesunder SARFAESI Act. In that situation, theCorporation has to initiate different actions undertwo different Acts which is a time consuming processand will impede the recovery action. To have acomprehensive action initiated against borrower andCollateral Security property in the same loan accountpowers u/s 29 for initiating action against CollateralSecurity are required. Accordingly, the Committeerecommended the proposed amendment bybringing the Collateral Security property also underthe ambit of Section 29(1) of SFCs Act.

In the case of IDBI vs Biswanath Jhunjhunwalathe Hon’ble Supreme court in its judgement dt.August 18, 2009 (copy enclosed) has stated thatthe liability of the borrower and the guarantor/suretyis co-extensive and not separate. It therefore, ruledthat the principal debtor and the guarantor/suretyare both equally liable to be proceeded against forrecovery of a loan by the creditor.

Section 29(4) is required to be amended in thefollowing terms:-

The existing provision “Where any action hasbeen taken against an industrial concern and/orproperties mortgaged, hypothecated, pledgedor assigned under the provisions of sub-section(1), all cost charges and expenses which in theopinion of the Financial Corporation have beenproperly incurred by it as incidental thereto shall berecoverable from the industrial concern and themoney which is received by it shall, in the absenceof any contract to the contrary, be held by it in trustto be applied firstly, in payment of such costs,charges and expenses and, secondly, in dischargeof the debt due to the Financial Corporation, andthe residue of the money so received shall be paidto the person entitled thereto.”

Section 29(5) may be amended as under:-

“Where the Financial Corporation has taken anyaction against an industrial concern, property,mortgaged, pledged, hypothecated or assignedunder the provisions of sub-section (1), the FinancialCorporation shall be deemed to be the owner of a

concern, property, mortgaged, hypothecated orassigned as the case may be for the limitedpurpose of transferring the same by way oflease or sale to realize the outstanding duesfor the purposes of suits by or against the concern,and shall sue and be sued in the name of theconcern.”

The amendments to section 29(4) & 29(5) arerequired for similar reasons as given for section29(1).

Section 29(6) – A new clause has beenrecommended for insertion as under :

Notwithstanding anything contained in anyother law, for the time being in fore the FinancialCorporation shall have first charge over theproperty pledged, mortgaged, hypothecated orassigned to the financial corporation forrecovery of its dues.

The Committee discussed the proposedamendment in the light of the judgement of theHon’ble Supreme Court, wherein the Hon’bleSupreme Court upheld the amendments to the StateActs incorporating first charge to the dues ofCommercial Taxes, etc. by virtue of which thecommercial tax dues has precedence over the duesof the SFCs against the properties mortgaged/hypothecated. Accordingly, the Committeerecommended for inclusion of new provision tocreate first charge for the dues of the Corporationin the Act by amending the Act.

If the Act is amended as proposed, the dues ofthe Corporation will have first charge against thecommercial tax dues, etc. as the provisions underthe SFCs Act over-rides the State Acts since SFCsAct is Central enactment.

In addition the Committee recommended :-

♦ The power to grant permission to extendfinancial assistance by SFCs’ over and abovethe limit approved by SIDBI, should bedelegated to a State Level Officer of SIDBI incase the limit of accommodation exceedsapproved limit;

♦ The limit of accommodation should beincreased to 5 times for Proprietary andPartnership concerns without referring toSIDBI for prior approval;

♦ The Committee also recommended to deputea delegation alongwith SIDBI to the RBI forrestoration of SLR Bonds quota to raise fundsat cheaper rate so as to enable SFCs tocompete in the market.

SEPTEMBER-OCTOBER, 2010 23

Financial Restructuring & Revitalisation ofSFCs :

The Executive Committee of COSIDICI at itsmeeting held on 24th September 2010 at New Delhidiscussed strategies to strengthen the SFCs. Dueto the relentless and sustained efforts of COSIDICIthe Government of India announced a financialpackage in 2003 to provide some relief to SFCsthrough SIDBI. Consequently 11 SFCs had enteredinto MoU with SIDBI. Almost all these Corporationshave shown signs of turnaround and some of themhave also shown substantial profits. The SFCshowever, continue to be dogged by the twinproblems of non availability of adequate resourcesat cheap cost and their low capital base. COSIDICIhas been emphasizing on two important aspectsviz. all stake-holders must come forward torecapitalize SFCs to enable them to facecompetition with commercial banks and raiseresources from the market on their own. Secondly,availability of adequate lendable resources to SFCsat cheap cost. A few state governments have comeforward to provide additional share capital and otherfacilities to SFCs like KFC, HFC, APSFC, RFC,WBFC, AFC etc. enabling them to turnaround andbecome positive networth corporations.

However, they still continue to be dogged bythe twin problems of non availability of adequateresources at a cheaper cost and their low capitalbase. Shri K.K. Mudgil, Secretary GeneralCOSIDICI, informed the members that detaileddiscussions had been held at the meeting of thecommittee of MoU SFCs held on September 06,2010 at Hyderabad. It was decided therein thatSFCs need to identify issues to discuss with SIDBI.Then alongwith SIDBI the SFCs may meet the UnionFinance Minister and RBI to seek cheaper andadequate funds. It was also decided that SFCs mayapproach Nabard, National Housing Bank, Khadiand Village Industries Commission (KVIC) forrefinance in respect of their sanctions towards AgroIndustries, Housing loans and Village Industryrespectively. Though the SFCs are financing agroindustries they are not getting refinance as they arenot listed with NABARD. In this connection, Shri K.Mukherjee, IAS, MD, KSFC informed the ExecutiveCommittee that KSFC had already got Rs.100 crore@ 8.5% from State Bank of Mysore. The Stategovernment of Karnataka had given a guaranteeof 1% to the Bank. So other SFCs may also explorethis cheaper source of revenue.

It was felt the states could give guarantee or beasked to convert loan to equity. This would help theSFCs in their respective states. Thereafter SIDBI

may be asked to contribute financially andadministratively towards the restructuring of SFCsin these states. It was informed that a meeting ofsome of the MoU SFCs had been called by SIDBIin Mumbai on September 28, 2010. Shri KaushikMukherjee, IAS, MD, KSFC was requested toapprise COSIDICI of the developments therein.

The Executive Committee also decided that ameeting of the Non MoU SFCs may be held in Patnain the 1st week of December. Shri Shishir Sinha,IAS, MD, BSFC would be the convenor of thecommittee. The Executive Committee Resolvedthat: -

“COSIDICI may ask the Non MoU SFCs includingJ&KSIDCO to give specific details about theirproblems and their requirements. While giving theetails these corporations may also take the opinionof their respective state governments and the extentof help they would be willing to provide.”

In this connection, Shri M. Muazzam, MD, J&KSIDCO, Srinagar, advised the Executive Committeethat financing of J&K SIDCO was mainly in Tourismand Agro Industry. Disturbances in the valley mayaffect tourism but not the agro industry. ManyPharmaceutical Companies have also been set uprecently due to the incentives provided by the stategovernment. The state of Jammu & Kashmir wasrich in natural resources like limestone. Transportsystem is also good in Srinagar. The J&K SIDCO,therefore, had abundant scope for financing ofindustry. It required help in managing its operations.It could tie up with Karnataka for know how in silkprocessing. It was decided to take up the matter inthe meeting to be held on 1st December 2010 atNew Delhi.

The Executive Committee also agreed that theSLFIs had an inherent strength for bringing aboutinclusive growth. They have generated employment,contributed to the states’ progress by way of salestax, local duties etc. In this connection, KSFC hadcarried out a study of Standard Assets of 200Industrial Units. It was found that for every crorewhich KSFC had loaned to a unit, that unit gaveRs.30 lakh as Vat to the State government. It was,therefore, imperative that such contributions of SFCsbe highlighted so as to bring about a change in theattitude and mindset of SIDBI, Government of Indiaand RBI.

Training Programme :

The 14th training programme was held at theCollege Campus from 13th to 16th September,2010 and was attended by twenty seven

COSIDICI COURIER24

participants. The feedback received from themhad been very satisfactory and they had found theprogramme very useful and informative. Themembers at the Executive Committee Meeting heldon September 24, 2010 requested that instead ofone, two such programmes may now be held in ayear.

Shri Kaushik Mukherjee, IAS, KSFC, requestedShri Panigrahi for information on trainingprogrammes on subjects of interest to SLFIs whichCAB may hold abroad. He felt that a few deservingofficers may be sent for such programmes as newtechniques and methods thus learnt could beapplied here to improve the working of theCorporation. Shri Panigrahi was requested thatdetails of such programmes may be sent toCOSIDICI to be circulated amongst our MemberCorporations. Shri Panigrahi informed the membersthat considering the vital role played by Micro, Smalland Medium Enterprises (MSMEs) in economicdevelopment, the banks and the policy makers haveactively pursued growth of the MSME sectorfocusing on the encouragement of entrepreneurshipin the private sector. This was particularly noticeablein the economies like Thailand and Malaysia.Hence, to study the models of MSME financing andthe methods applied by the banks in these countriesto overcome the constraints faced while financingto MSMEs and to understand the best practicesadopted and draw lessons for Indian banks, theCollege of Agricultural Banking, Reserve Bank ofIndia, Pune had designed an International ExposureVisit Programme to Thailand and Malaysia forbankers, financial institutions, policy makers andother institutions engaged in supporting / buildingcapacity of MSME sector. One such programmeon SMEs was held from 25th October to 4thNovember, 2010. The 1st two days of the trainingwere in the college campus at Pune. These werefollowed by one week in Malaysia and Thailand in

collaboration with Asian Institute of Technology (AIT)a reputed education and training institute in AsiaPacific region. Two officers from KSFC hadattended the above programme.

Annual General Meeting :

The Annual General Meeting of COSIDICI washeld on 24th September 2010 at India InternationalCentre, Max Mueller Marg, New Delhi. The followingwere elected as the Members of the ExecutiveCommittee of COSIDICI for the Year 2010-2011 :

Smt. Sheela Rani Chunkath, IAS, CMD, TIIC,Chennai as the President of COSIDICI for the Year2010-2011. Shri Kaushik Mukherjee, IAS, M.D.,KSFC, Bangalore; Shri Shishir Mudgil, IAS, M.D.,BSFC, Patna; Shri Vikas Raj, IAS, M.D., APSFC,Hyderabad; Shri Kamal Chakrabarty, IAS, M.D.,WBFC, Kolkata; Shri Sanjay Pratap Singh, IAS,Secretary to Chief Minister & Principal ResidentCommissioner, Mizoram; Shri K.M. Nair, M.D., KFC,Thiruvananthapuram were elected as Vice-Presidents. Shri Priyabrata Patnaik, IAS, M.D.,OIIDC, Bhubaneswar; Shri V. Nagi Reddy, IAS, ViceCMD, APIDC, Hyderabad; Smt. Vandita Sharma,IAS, M.D., KSIIDC, Bangalore; Shri Chetan BhushanSanghi, IAS, M.D., DSIIDC, New Delhi; ShriRajendra Bhanawat, IAS, M.D., RIICO, Jaipur; ShriV.K. Ohri, IAS, M.D., PFC, Chandigarh; Shri M.S.Manivannan, IAS, M.D., AFC, Guwahati; Shri M.Muazzam, M.D., J&K SIDCO, Srinagar were electedas Executive Committee Members. Besides, ShriE. Vallavan, M.D., PIPDIC, Pondicherry and ShriS.I. Sharma, M.D., MANIDCO, Imphal were co-opted as E.C. members for the Year 2010-2011.The contents of the Annual Report of the E.C.M. ofCOSIDICI for the Year 2009-2010 were noted andapproved by the General Body which also approvedthe audited statements of accounts for the Year2009-2010.

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Brighten your day with the sunshine of thanksBrighten your day with the sunshine of thanksBrighten your day with the sunshine of thanksBrighten your day with the sunshine of thanksBrighten your day with the sunshine of thanks

SEPTEMBER-OCTOBER, 2010 25

Sidbi to give Rs.350 cr for Bandhan’s women

Sidbi has extended a Rs. 350-crore line ofcredit to Bandhan Financial Services to on-lend topoor women. Bandhan said it will use the fund tolend to 3.5 lakh new borrowers this fiscal. Sidbihas also committed to offer another Rs. 50 crore toBandhan in the form of subscription to the latter’sproposed non-convertible debentures (NCD). Sidbihas pegged the rate of interest for the loan at 10.5%a year, which is a very competitive rate in a risinginterest rate market. The loan is offered for 3-5years. In comparison, Sidbi had offered Rs. 250crore to Bandhan in 2009 at 12% per year for fiveyears. Bandhan has 32-lakh borrowers at presentand it plans to increase the tally to 40 lakh by March2011. It has an outstanding exposure of Rs. 2,000crore and it aims to grow it to Rs. 3,200 crore bythe end of 2010-11.

IDBI Bank targets Rs. 6,000-cr SME loans

Reflecting a turnaround in credit demand,public sector lender, IDBI Bank, plans to disbursecredit worth Rs 6,000 crore to small and microenterprises (SMEs) in the current financial year.There was an improvement in business sentimentand segments like auto components and garmentsreported a better outlook, Executive Director, ShriT R Bajalia said. The bank extended loans worthRs 2,000 crore during April-September 2010.

To improve energy efficiency in the SMEinitiative, IDBI has signed a pact with the US-headquartered World Resources Institute (WRI).Under the pact, the bank would finance Micro, Small& Medium enterprises (MSMEs) in India forimplementing Energy Saving Company (ESCO)projects. The funding would cover areas like climatechange, ecosystem protection, environmentalgovernance, green markets and sustainabletransportation. WRI would provide consultancy toSMEs to implement energy-saving technologies andsystems. It would also guarantee a return to SMEunits from the new system. The savings in cost wouldbe used to repay loans.

Andhra approves ordinance to rein in MFIs

The Andhra Pradesh government on October14, 2010 approved a law that will regulatemicrofinance firms, complicating efforts to resolve

the suddenly resurgentissue of the interestrates poor borrowersneed to pay for takingloans.

The statecabinet unanimouslyokayed a specialordinance that forcesmicrofinance firms andborrowers to compulsorily register with the localauthorities. The proposed law will also force thecompanies to disclose the methods they use torecover money and the interest rates they charge.The penality for non-compliance is three yearsimprisonment and Rs. 1 lakh penality. Theordinance has now been sent to the governmentfor his signature. The move may muddy the watersas MFIs are likely to move court against any lawthat curb their ability to carry out normal business.Many MFIs are registered as non-banking financialservices companies (NBFCs), with the ReserveBank and the law does not provide for a separatelocal registration.

Smaller units in Tiruchy to set up captivepower plant

Small and medium enterprises operating inand around Tiruchirapalli have decided to jointly setup a 3Mw power plant with the use of second-handequipment sourced from Korea and China,according to industry representatives. Theseengineering units, numbering around 500, catermainly to state-owned Bharat Heavy Electricals’Tiruchy plant, which manufactures boilers. Theseunits are in the process of upgrading their facilitiesto meet the requirements of BHEL, which plans toenlarge the scale of outsourced orders by 150 percent, from the current Rs 1,125 crore to Rs 2,800-2,900 crore in 2011-12.

However, power shortages are a majorconstraint. The power cuts not only affect quality,but also delivery schedules. These units are alreadylooking at adopting a ‘cluster’ approach (whereby afew companies pool their resources and jointly supply

MICRO, SMALL & MEDIUM ENTERPRISES

COSIDICI COURIER26

components to BHEL) to address the capacityconstraints. The cluster approach will enable themto set up common facility centres on the outskirts ofTiruchy, which will be used by the member units.

SMEs in Bangalore to be rated on emissionlevels

A study conducted by the Karnataka StatePollution Control Board (KSPCB) has found thatmany small and medium enterprises (SMEs) in andaround Bangalore lack awareness aboutsustainable industrial ecology because theenormous growth of industry in the state is posinga serious challenge to the region’s ecologicalbalance. The KSPCB study found that 51 per centof the state’s highly polluting industries areconcentrated in four districts — Bangalore Urban,Belgaum, Bellary and Mysore. These districts alsoaccount for a large concentration of SMEs, whichare ill-equipped to meet increasingly stringentnational and international regulations and as a resultare losing their competitive edge.

To help SMEs reduce pollution levels andimprove working conditions as well as their qualitymanagement, TUV Rheinland, a provider oftechnical services and certification based inCologne, Germany, had launched a pilotprogramme in association with KSPCB and DEG(Deutsche Investitions und Entwick-lungsgesellschaft), a KFW banking group firm inBangalore.

Under the public private partnership (PPP)project, known as ‘Comprehensive Programme forEnhanced Productivity and Sustainable IndustrialEcology’, 10 highly polluting SMEs in Bangalorewere selected and put through a 14-monthprogramme to create awareness and implementenvironmental as well as occupational health andsafety standards.

The programme focused on mass awarenessof environmental concerns and the alignment of thecompanies’ systems with international standards.The initiative was called SHINE (Systematic andHolistic Programme for a Balanced IndustrialEcology). It was funded by DEG and is assisted byECC International.

The aim of the project is to develop best-practice examples of environment, health, safety,and social accountability, focusing on SMEs. KSPCBextended support to ‘train the trainer’ activities,which were part of the awareness campaigns.

As part of the project, the 10 companies willbe audited and rated on three dimensions – social,environmental, health and safety – before and afterthe implementation phase. These companies canuse the rating to obtain international acceptanceand recognition. To sustain the project initiatives,an e-learning kit on international standards (EMS,OHSAS and SA) and best practices governingsustainable industrial production will be developedand distributed to over 200 enterprises.

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One of the most difficult parts of this life is thatOne of the most difficult parts of this life is thatOne of the most difficult parts of this life is thatOne of the most difficult parts of this life is thatOne of the most difficult parts of this life is that

our heart’s desires are not always fulfilled, butour heart’s desires are not always fulfilled, butour heart’s desires are not always fulfilled, butour heart’s desires are not always fulfilled, butour heart’s desires are not always fulfilled, but

one of the most wonderful things about heavenone of the most wonderful things about heavenone of the most wonderful things about heavenone of the most wonderful things about heavenone of the most wonderful things about heaven

is that God will either grant us those desiresis that God will either grant us those desiresis that God will either grant us those desiresis that God will either grant us those desiresis that God will either grant us those desires

or gives us something better.or gives us something better.or gives us something better.or gives us something better.or gives us something better.

SEPTEMBER-OCTOBER, 2010 27

ALL INDIA INSTITUTIONS

Interest Subvention On Individual HousingLoans

The Union Finance Minister during his BudgetProposal for2009-10, had announced a Scheme of1 per cent interest subvention for individual housingloans up to Rs.10 lakh, provided the cost of unitdoes not exceed Rs. 20 lakh, initially for a period ofone year from October 1, 2009 to September 30,2010. In the Budget speech for the year 2010-11,the Hon’ble Finance Minister announced extensionof the Scheme till March 31, 2011. The objective ofthe Scheme is to provide interest subsidy on housingloans as a measure to generate additional demandfor credit and to improve affordability of housing toeligible borrowers in the middle and lower incomegroups. The details of the Scheme are -

Interest Subsidy - Subsidy of 1 per cent will bedefined as reduction in interest rate by 100 basispoints per annum from the existing rate of interestfor a particular amount and tenor. It will beapplicable to the first twelve installments of all suchloans sanctioned and disbursed during the currencyof the Scheme and would be computed for 12months on the disbursed amount. The subsidyamount will be adjusted upfront in the principaloutstanding, irrespective of whether the loan is onfixed or floating rate basis.

Implementing Agencies (IAs) - The Scheme willbe implemented through scheduled commercialbanks (SCBs)and housing finance companies(HFCs) registered with the National Housing Bank(NHB).

Nodal Agencies - The Reserve Bank and the NHBwill be the nodal agencies for this Scheme for SCBsand HFCs, respectively.

Terms for Loan and Subsidy

(i) The interest subsidy of 1 per cent per annumwill be admissible for the first year on theamount sanctioned and disbursed against theeligible housing loans. Incase the loan amountis disbursed in parts (installments), theinterest subsidy would be calculated for oneyear and claimed separately for everyinstallment of the loan disbursement fallingwithin the operating period of the Scheme.

(ii) The interestsubsidy will becalculated on thei n t e r e s tchargeable atthe time ofdisbursement ofthe loan.

(iii) The agreed rateof interest will bearrived at by the IAs keeping in view theReserve Bank’s/NHB’s guidelines, if any, forloans up to Rs.10 lakh.

Claim Admissibility - After sanctioning anddisbursing the eligible loans, the IAs will claimdisbursement of subsidy from the nodal agency bysubmitting their claims in the prescribed format ona monthly basis.

Release of Funds from GOI - The Government ofIndia will release the subsidy amount to the nodalagencies based on demand for sanction of subsidyreceived from the nodal agencies on a quarterlybasis.

Utilisation Certificates - The IAs will be requiredto ensure proper end-utilisation of the funds and tosubmit utilisation certificates to their respective nodalagency against the amount of the interest subsidyreleased to them.

First Quarter Review of Monetary Policy for theYear 2010-11

Dr. D. Subbarao, Governor, Reserve Bank ofIndia, in a meeting with chief executives of majorcommercial banks presented the First QuarterReview of the Monetary Policy for the Year for 2010-11 on July 27, 2010. The highlights are:

Projections

♦ Real GDP growth for 2010-11 revised to 8.5per cent with an upside bias.

♦ Baseline projection for wholesale price index(WPI) inflation for March 2011 placed at 6.0per cent.

♦ Money supply (M3) growth for 2010-11placed at 17.0 per cent.

COSIDICI COURIER28

♦ Growth in non-food credit of scheduledcommercial banks placed at 20.0 per cent.

Stance

♦ On the basis of the overall assessment, thestance of monetary policy in 2010-11 willbroadly be to:

♦ Contain inflation and anchor inflationaryexpectations, while being prepared torespond to any further build-up of inflationarypressures.

♦ Maintain an interest rate regime consistentwith price, output and financial stability.

♦ Actively manage liquidity to ensure that itremains broadly in balance so that excessliquidity does not dilute the effectiveness ofpolicy rate actions.

Monetary Measures

♦ Bank Rate retained at 6.0 per cent.

♦ Repo rate under the LAF increased by 25basis points from 5.5 per cent to 5.75 per cent.

♦ Reverse repo rate under the LAF increasedby 50 basis points from 4.0 per cent to 4.50per cent.

♦ Cash reserve ratio (CRR) of scheduled banksretained at 6.0 per cent of their net demandand time liabilities (NDTL).

Expected Outcomes

The monetary policy actions are expected to:

(i) Moderate inflation by reining in demandpressures and inflationary expectations.

(ii) Maintain financial conditions conducive tosustaining growth.

(iii) Generate liquidity conditions consistent withmore effective transmission of policy actions.

(iv) Restrict the volatility of short-term rates to anarrower corridor.

Mid-Quarter Review of Monetary Policy

The Reserve Bank will now undertake mid-quarter reviews roughly at the interval of about oneand half months after each quarterly review. Themid-quarter reviews will be in June, September,December and March.

Guidelines for Engaging BusinessCorrespondents

A discussion paper on engagement of ‘for

profit’ companies as business correspondents(BCs) was placed on the Reserve Bank’s websiteon August 2, 2010 to seek the views/ comments ofbanks, non-banking financial institutions, ‘forprofit’companies, regulators, academicians, non-government organisations (NGOs) and the publicat large. Taking into consideration, all factors andincluding the feedback received, scheduledcommercial banks, including regional rural banks(RRBs) and local area banks (LABs) have now beenpermitted to engage companies registered underthe Indian Companies Act, 1956, excluding non-banking financial companies (NBFCs), as BCs inaddition to the individuals/entities permitted earlier,subject to compliance with the guidelines.

Banks may formulate a policy with their Boardof Directors’ approval for engaging BCs. Duediligence should be carried out on the individuals/entities to be engaged as BCs prior to theirengagement. The due diligence exercise should,inter alia, cover aspects such as (i) reputation/market standing; (ii) financial soundness; (iii)management and corporate governance; (iv) cashhandling ability; and (v) ability to implementtechnology solutions in rendering financial services.

The revised guidelines in this regard are -

Eligibility

Individuals/entities who may be engaged asBCs are -

i) Retired bank employees/teachers/government employees and ex-servicemen,individual owners of kirana/medical/ fair priceshops, individual public call office (PCO)operators, agents of small savings schemesof Government of India/insurance companies,individuals who own petrol pumps, authorisedfunctionaries of well run self help groups(SHGs) which are linked to banks, any otherindividual including those operating commonservice centres (CSCs);

ii) NGOs/micro finance institutions (MFIs) set upunder Societies/Trust Acts and Section 25companies;

iii) Cooperative societies registered underMutually Aided Cooperative Societies Acts/Cooperative Societies Acts of States/MultiState Cooperative Societies Act;

iv) Post offices; and

v) Companies registered under the Indian

SEPTEMBER-OCTOBER, 2010 29

Companies Act, 1956 with large andwidespread retail outlets, excluding NBFCs.

BC Model

While a BC could be a BC for more than onebank, at the point of customer interface, a retail outletor a sub-agent of a BC shall represent and providebanking services of only one bank.

Activities

The scope of activities of BCs may include :-

(i) identification of borrowers; (ii) collection andpreliminary processing of loan applications includingverification of primary information/data; (iii) creatingawareness about savings and other products andeducation and advice on managing money and debtcounselling; (iv) processing and submission ofapplications to banks; (v) promoting, nurturing andmonitoring SHGs/joint liability groups/credit groups/others; (vi) post-sanction monitoring; (vii) follow-upfor recovery, (viii) disbursal of small value credit,(ix) recovery of principal/collection of interest; (x)collection of small value deposits; (xi) sale of microinsurance/mutual fund products/ pension products/other third party products; and (xii) receipt anddelivery of small value remittances/other paymentinstruments.

The activities to be undertaken by the BCswould be within the normal course of the bank’sbanking business, but conducted through the BCsat places other than the bank premises/ATMs.

Distance Criterion

With a view to ensuring adequate supervisionover the operations and activities of the retail outlet/sub-agent of BCs by banks, every retail outlet/sub-agent of BC is required to be attached to and beunder the oversight of a specific bank branchdesignated as the base branch.

Commission/Fee

Banks may pay reasonable commission/feeto the BC, the rate and quantum of which may bereviewed periodically. The agreement with the BCsshould specifically prohibit them from charging anyfee from the customers for services rendered bythem on behalf of the bank.

Transactions put through BC

Banks should adopt technology-basedsolutions for managing the risk, besides increasingthe outreach in a cost effective manner.Transactions should normally be put through ICT

devices (handheld device/mobile phone) that areseamlessly integrated into the core banking solution(CBS) of the bank.

The arrangements with the BC shall specify:

(i) suitable limits on cash holding byintermediaries as also limits on individualcustomer payments and receipts;

(ii) cash collected from the customer should beacknowledged by issuing a receipt on behalfof the bank;

(iii) that all off-line transactions are accounted forand reflected in the books of the bank by theend of the day; and

(iv) all agreements/contracts with the customershall clearly specify that the bank isresponsible to the customer for acts ofomission and commission of the BC.

Consumer Protection

Banks should take all measures to protect theinterests of the customers. Some safeguardsinclude :

♦ The retail outlet/sub-agent of the BC shouldbe personally introduced to the members ofpublic by the bank officials in the presence ofvillage elders and government functionariesin a public meeting to avoidmisrepresentation/ impersonation.

♦ The products and processes should beapproved by the banks and the companyshould not introduce any product/ processwithout the approval of the bank concerned.

Grievance Redressal

Banks should constitute a grievance redressalmachinery for redressing complaints about servicesrendered by the BCs and give wide publicity aboutits existence through electronic and print media. Thename and contact number of the designatedgrievance redressal officer of the bank should bewidely publicised. The designated officer shouldensure that genuine grievances of customers areredressed promptly.

Prudential Guidelines on Restructuring ofAdvances

The Reserve Bank has advised banks and selectall-india financial institutions (AIFIs) that -

(i) The promoter’s sacrifice and additional fundsrequired to be brought in by the promoters

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should be brought in upfront. If, however,banks are convinced that the promoters facegenuine difficulty in bringing their share of thesacrifice immediately and need someextension of time to fulfil their commitments,the promoters could be allowed to bring in 50per cent of their sacrifice, i.e. 50 per cent of15 per cent, upfront and the balance within aperiod of one year.

(ii) In case the promoters fail to bring in theirbalance share of sacrifice within the extendedtime limit of one year, the asset classificationbenefits derived by banks will cease to accrueand banks will have to revert to classifyingsuch accounts as per the asset classificationnorms specified in the Reserve Bank’s MasterCircular on ‘Prudential Norms on IncomeRecognition, Asset Classification andProvisioning pertaining to Advances’ of July1, 2010.

The contribution by the promoter need notnecessarily be brought in cash and can be broughtin the form of de-rating of equity, conversion ofunsecured loan brought by the promoter into equityand interest free loans.

For Profit Firms get Role in Financial Inclusion

The Reserve Bank of India (RBI) onSeptember 29, 2010 allowed for-profit companieswith large and widespread retail outlets to act asbusiness correspondents (BCs). The move will bothdeepen and broaden financial inclusion. Non-banking finance companies (NBFCs), however,have been excluded from the list.

RBI has said that companies with a large andwidespread retail network bring the largerresources, organisational strength and financialbacking needed for a network of BCs. They alsoprovide financial security. A corporate is likely tocontinue as BC for a longer period than individuals,thus ensuring continuity of services. They have alsodeveloped efficient cash-management and retail-outlet monitoring systems.

PSBs to get Rs.8,800 cr in 2nd Dose of Tier Icap

The government will provide the secondinstallment of equity infusion of about Rs. 8,800 crorein public sector banks (PSBs) in coming months, inorder to raise their Tier I capital to 8%.

“The next tranche of capital infusion in the banks

will be to raise government’s holding in public sectorbanks to a certain level, which is being worked out,”department of financial services secretary Shri R.Gopalan said on October 13, 2010. This extracapital will enable banks to raise resources fromthe market.

In the Union Budget this February, financeminister Shri Pranab Mukherjee had announcedcapital infusion of Rs.16,500 crore into PSBs havingTier I capital below 8% as on March 31, 2011. TierI capital comprises equity, perpetual debt anddisclosed reserves. In the first tranche, thegovernment approved capital infusion of Rs.6,211crore in five public sector banks announced in Junethis year.

The banks—Bank of Maharashtra, CentralBank of India, IDBI Bank, Uco Bank and Union Bankof India – were provided capital in the first round,Bank of Maharashtra, Uco and Union Bank receivedRs.590 crore, Rs.375 crore and Rs. 111 crorerespectively. The government pumped in Rs.2,016crore in the Central Bank of India and Rs. 3,119crore in IDBI Bank.

As much as Rs. 8,789 crore would be part ofthe second tranche. The banks would be able toutilise this capital to increase their lending power toproductive sectors of the economy. In 2008-09,the government had infused Rs. 1,900 crore as TierI capital by subscribing to preference shares of fourbanks—Central Bank of India, Vijaya Bank, UnitedBank of India and Uco Bank. Another Rs. 1,200crore was invested this fiscal.

World Bank approves $13m for Mizoram roadproject

The World Bank has approved $13 million tomodernize the road network of North Indian stateMizoram. The project will help widen and improve180 km of state highways, and rehabilitate andmaintain another 300 km, the World Bank said. Itwill also finance improvements in equipment andtraining for the state Public Works Department.“Improvements in basic infrastructure includinghighways are critical to stimulate economicdevelopment,” said Shri Roberto Zagha, World BankCountry Director of India. “With growth there hasbeen an increase in demand for betterinfrastructure. Continued investments in improvingMizoram’s road infrastructure will support theregion’s growth and service delivery goals.”

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SEPTEMBER-OCTOBER, 2010 31

POLICY POINTERSPOLICY POINTERSPOLICY POINTERSPOLICY POINTERSPOLICY POINTERS

THE COMPANIES BILL 2009

The Companies Bill 2009 seeks to deregulatethe umbrella limit and the requirement to obtainapproval from the central government formanagerial remuneration.

CORPORATE GOVERNANCE

♦ Separation of offices of chairman and chiefexecutive officer

♦ Panel to evaluate and recommendindependent directors and non-executive andexecutive directors

♦ Specify number of companies in which anindividual may become a director

♦ Fix attributes for independent directors &provision for a detailed Certificate ofIndependence

♦ Fix tenure for independent directors

♦ Remuneration committee to determine,recommend and monitor principles, criteriaand the basis of a company’s remunerationpolicy

♦ Board to affirm and disclose in its report tomembers about critical risk managementpolicy for the company

♦ Evaluation of performance of board ofdirectors, committees thereof and of individualdirectors

♦ Board to place systems to ensure compliancewith laws

♦ New responsibilities for audit committee inrespect of related party transactions,disclosure of related party transactions to bepart of company board’s report

♦ Audit committee to examine eligibility,independence of the auditor

♦ Certificate of independence should certify thatthe auditor together with its consulting andspecialised services affiliates, subsidiariesand associated companies or network orgroup entities has not/have not undertakenany prohibited non-audit assignments for thecompany and are independent vis-à-vis theclient company

♦ Rotation of audit partners and firms

♦ Clarity on information to be sought by auditorand/or provided by the company to him/it

♦ Appointment ofinternal auditor

REMUNERATIONPOLICY

♦ Prof i t - re latedc o m m i s s i o nwith the priorapproval ofmembers by as p e c i a lresolution

♦ Specific outerlimits withinwhich the companies shall pay remunerationto their directors/ managerial personnel

♦ In case of inadequacy of profits, the paymentshould be subject to compliance with theregulations or guidelines to be framed bygovernment

CORPORATE SOCIAL RESPONSIBILITYLEVY

♦ Two per cent of a company’s average netprofits during the three immediately precedingfinancial years shall be spent on CorporateSocial Responsibility activities

♦ Separate disclosures required to be made inannual report by way of CSR statement

ROTATION OF AUDITORS/ AUDITING FIRMS

♦ No company shall appoint or re-appoint anindividual or a firm as auditor for more thanfive consecutive years

♦ New committee to prepare list of audit firmsfor companies to choose from

♦ The remuneration of the auditor to be fixedon the basis of the net worth and turnover

INDEPENDENT DIRECTORS

♦ Committee for selection of independentdirectors

♦ Every listed public company to have one-thirdindependent directors on board

♦ Independent directors should not have anykind of pecuniary relationship with thecompany

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MISCELLANYMISCELLANYMISCELLANYMISCELLANYMISCELLANY

RAIN WATER HARVESTING !

What is rainwater harvesting?

Rainwater harvesting is the storing andcollection of rain water that runs off from tops ofroofs, open spaces like parks and roads or especiallyprepared ground. This water can be used variouslyfor purposes like drinking (after treatment),household use, livestock or even irrigation. It isalso used for recharging groundwater, that isreplenishing the water that has been extracted fromthe aquifers.

Why should rainwater be harvested?

Much of the water that we receive as rainsimply runs off and gets wasted. In a country likeours where there is so much of pressure on waterresources due to growing population pressures, itmakes immense sense for us to store up this waterand put it to good use. This water can be a usefulsupplement to the water available from othersources, thereby augmenting the total wateravailability. In fact, in some regions, rain is the onlysource of water available, and that too, in highlyerratic spurts. In such regions harvesting ofrainwater is the best option available to people, andhas been known to bring about marked bettermentin their living conditions, for example in many partsof Gujarat and Rajasthan.

Rainwater harvesting is also very importantfor recharge of groundwater as there has beenmassive over extraction of ground water in manyparts of the country. Rainwater harvesting not onlyreplenishes the store of underground water, it alsoimproves its quality by effecting dilution of pollutantsand other harmful substances. Besides these,rainwater harvesting also prevents local flooding inmany areas, caused by the run off water.

How can rainwater be harvested?

A major point in favour of rainwater harvestingis that the structure for this can be made from

i n e x p e n s i v e ,locally availablematerial. It worksboth in individualhouseholds andfor smallc o m m u n i t i e s .R a i n w a t e rh a r v e s t i n gstructures can bem a d ea n y w h e r e —individual homes, apartments, offices, institutions,slums, cities, villages—and by anyone—individualsor small communities.

Rainwater harvesting structures can be simple orcomplex. The main components in a rainwaterharvesting system consist of a catchment area fromwhere water is collected – this could be either fromthe ground like parks, playgrounds, roads,pavements, agricultural field etc, or from therooftops – the channel or conduit through whichwater passes from the catchment structure nto thestorage area – these could be drains, pipes,rectangular or semi circular gutters or channelsmade of PVC material, galvanized iron sheets oreven bamboo trunks cut vertically into two and thestorage tank or other structure where the water getscollected. The size of tanks would depend on theamount of water available and the amount neededfor use. The tanks can be made from RCC, plastic,galvanized iron etc. Even dried bore wells, tubewells etc can be used for collecting water. Ifrainwater is being harvested for recharge purposes,there need to be appropriate structures for this, forexample subsurface dykes built into an aquifer,recharge of abandoned wells, service tube wells,recharge pits etc. Besides these the rainwaterharvesting structures also require arrangements tomaintain the quality of water. Thus, there have to

Courtesy : Yojana

SEPTEMBER-OCTOBER, 2010 33

be arrangements to ensure that the first flush ofrainwater which would contain contaminants, isallowed to flow out. Filters made of cloth, charcoal,sand etc are put in place to flter out pollutants.

Is rainwater harvesting a new concept in India?

No, Indians have been harvesting sinceancient times. Some of the traditional systemsinclude Tanks which were small underground tanksbuilt in houses in Rajasthan, especially Bikaner;Khadim or Dhora, which are embankments builtalong low hill slopes lying under rocky uplands forcollecting water that runs down the slopes and usingit for agricultural purposes later on; Baolis orstepwells of Gujarat and Rajasthan, The Ahar Pynesof South Bihar- Ahars are catchment basinsembanked from three sides and Pynes are channelsleading off from the third side; canals of WestBengal; tanks, phads, and bhandaras ofMaharashtra, Keres or tanks of Karnataka or Zingsof Ladakh which were tanks for collecting melted

glacier. Most of these traditional structures are nowdefunct, but efforts have been initiated by manycommunities to revive these.

What rainwater harvesting technique is mostpopular in urban areas?

The technique for collecting rainwater fromrooftops is most popular in urban areas. Many stategovernments have passed laws making rainwaterharvesting mandatory for all new buildings/apartments etc. Some are even giving incentivesin the form of rebate on property taxes.

How is rainwater harvesting being done in ruralareas?

The stress in rural areas is on communitybased water harvesting systems with the revival oftraditional systems. Communities are creating orreviving structures like checkdams and johads tocollect water.

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