Now, Saudis want oil prices to fall

The Saudis, the world’s largest oil exporters, are as stunned as anyone by black gold’s rocketlike rise in price. Just a decade ago, Saudi Arabia nearly was brought to its knees by prices averaging $14 a barrel. While their coffers have since filled to overflowing, the Saudis worry about the impact of $130-per-barrel oil on their customers’ economies as well as the opening that high prices are giving to alternative fuels. "We don’t like it," says a Saudi source, of the recent, fevered market.

The Saudis want to cool the red-hot oil market and are investing heavily in new fields to meet future demand. They already plan to increase production by 300,000 bbl. per day in June, to 9.45 million bbl. This decision is more a response to customer orders than to President George W Bush’s recent pleading for more oil (the government of King Abdullah sees Bush as a lame duck and believes his Iraqi foray has been a disaster). In a move that’s as much psychological as practical, the Saudis also are telling customers they will supply them with all the oil they want.

That will help a little, but for now the Saudis maintain there is only so much they can do to lower prices. They have 2 million bbl. of daily production capacity held in reserve: Saudi policymakers figure this oil has to be kept back from the market in case a drastic emergency (such as a US strike on Iran) threatens world supply.

In addition, analysts such as David Kirsch of Washington (D.C.) oil consultants PFC Energy think that, with so much investment money sloshing around in the commodities markets, the Saudis calculate they have no hope of controlling short-term price fluctuations. They blame the recent price runups on speculation and fear of shortages, factors they say are beyond their control.

In reality, the Saudis add, there is plenty of oil on the market. Iran has put some 30 million barrels of oil that it can’t sell into floating storage. "If we produced more oil, it wouldn’t find buyers," says the Saudi source. "It wouldn’t affect the price at all."

The longer term is a different story. The general hand-wringing over future oil supply may be off-base when it comes to Saudi Arabia. The Saudis have embarked on an ambitious expansion program that should see more than 2 million barrels of new production capacity come onstream by the middle of next year. One new field, called Khurais, may at 1.2 million barrels per day even exceed next year’s global growth in demand.

Nansen G Saleri, a recently retired chief of reservoir management at Saudi Aramco, the national oil company, is confident that the Saudis can reach 12.5 million bbl. per day of capacity—or even 15 million bbl.—vs. their 11.4 million now. "The resource base is there," says Saleri, who now is CEO of Quantum Reservoir Impact, a Houston startup.

Just having that much additional capability should dampen prices, "whether it goes into [reserve] capacity or production," says PFC’s Kirsch. Edward L Morse, energy economist at Lehman Brothers in New York, thinks a sharp correction could begin late this year as demand slows and the market recognizes that the Saudis really are serious about adding capacity. He is forecasting an average price of $83 per barrel for 2009. The Saudis could pay their bills with oil as cheap as $60 per barrel. Whether they have the ability to persuade OPEC to accept much lower prices is the big question.

Easing inflow curbs no cure for ailing rupee

Govt’s move to relax overseas debt curbs for firms and allow foreigners to buy more local debt is not likely to provide the weakening rupee the kind of support it needs as underlying economic conditions worsen. By opening up to more capital inflows, policy makers hope to take some pressure off the rupee, which has fallen more than 7 percent this year, and help control inflation.

Analysts say the move is unlikely to result in a flood of inflows as global market turmoil and the risk of a widening budget deficit dulls the lure of Indian debt, and slowing growth and rising inflation are longer-term weights on the rupee.

"It won’t make a huge difference. The move is largely symbolic and shows the central bank is increasingly worried with the rupee’s continued weakness," said Robert Prior-Wandesforde, an economist at HSBC in Singapore.

India raised foreign investment limits in government and corporate debt to $5 billion and $3 billion, respectively, from $3.2 billion and $1.5 billion, and allowed firms to borrow up to $100 million abroad and repatriate the funds, from $20 million earlier.

That was a turnaround from nine months ago, when authorities clamped down on offshore borrowing by firms to try and rein in the rupee as it rallied to its strongest in nearly a decade. It was also a shift in the central bank’s currency policy, now looking to guard against sharp rupee weakness having bought almost $100 billion in the 15 months since the start of 2007 trying to contain it.

"A FX policy that is weakening the currency is, over time, inconsistent with an overall policy regime that is seeking to curb inflationary pressures," HSBC’s Wandesforde said.

RUPEE WOES

The rupee was trading around 42.6 per dollar on Wednesday, stronger than a 13-month low of 43.21 per dollar hit in May but well below last year’s close of 39.41. Calyon expects the rupee to fall as low as 44 per dollar by September due to growing risk aversion, deteriorating balance of payments and rising political uncertainty.

The rupee last traded at 44 per dollar in March 2007. Annual inflation hit a 3-1/2-year peak of 8.1 percent in mid-May, above the central bank’s comfort-zone of 5.5 percent, and an expected increase in state-set fuel prices, expected to be announced on Wednesday, may push it closer to double digits. According to HSBC research, oil prices in rupee terms have risen 46 percent since April 1

Oil is the country’s biggest import item, and record global prices have upped demand for dollars from refiners and raised worries about a widening trade deficit, a negative for the rupee. On Friday, the central bank said it would provide refiners with foreign exchange against special oil bonds the government issues them as compensation for selling at below-market prices.

JP Morgan estimates the Reserve Bank of India may end up giving as much as $12 billion to refiners, only a small part of its $316 billion of foreign exchange reserves but an indication of policy makers’ increasing discomfort with a falling rupee.

BOND WOES

At the same time, the cost to the government of subsidising retail fuel prices is likely to increase supplies of, and dampen the appetite for, debt. The quasi-sovereign bonds do not appear in the government’s budget deficit calculations, although the government is responsible for the coupon and principal payments.

Morgan Stanley estimates that the total fiscal deficit including off-budget subsidies and national and state deficits at 9.4 percent of gross domestic product in the 2008/09 fiscal year (April-March), up from 7.7 percent in 2007/08. Along with inflation, risk aversion and a weak rupee, that was likely to push 10-year bonds yields to 8.75-9.0 percent in six months, Morgan Stanley said.

The yield was at 8.1 percent on Tuesday. "We are not bullish on Indian paper at the moment because Asian central banks including the RBI remain behind the curve in inflation fighting, and the fuel price issue is not going away," said Edwin Gutierrez, a debt fund manager at Aberdeen Asset Management who manages $5.5 billion in emerging market debt.

Allowing companies to borrow more from the overseas markets could reduce their borrowing costs by 200-400 basis points, but analysts say inflows via this route are unlikely to pick up sharply as global market conditions make borrowing harder.

Central bank data showed net offshore borrowings by firms was $16.3 billion in April-December 2007, about one-fifth of net inflows in the period. Lehman Brothers expects net capital inflows to fall to $56.7 billion in 2008/09 from an estimated $99 billion in 2007/08, with the balance of payment surplus shrinking to $18 billion from $85 billion. "(As long as) oil prices remain elevated, inflation remains high and there are concerns on growth, the rupee will continue to remain on a weak wicket," said Shuchita Mehta, economist at Standard Chartered Bank.

Govt hikes prices of petrol by Rs 5/L and diesel Rs 3/L

Amid growing consumer concern, the Cabinet on Wednesday raised prices of petrol by Rs 5 and diesel by Rs 3 to bail out state-run oil firms that have been reeling under unprecedented high crude prices. Prices of domestic cooking gas was hiked by Rs 50 a cylinder effective midnight tonight.

The excise duty on petrol was cut by Rs 1 a litre and diesel and customs duty on crude was abolished. Poor man’s fuel kerosene was exempted from the hike.

Petroleum Minister Murli Deora told reporters. With the hikes, India joins other Asian nations like Indonesia and Malaysia that are raising regulated domestic fuel prices as they find they can no longer afford to shield their consumers from the full effect of record global prices.

The Cabinet Committee on Political Affairs today met to deliberate on the need of raising fuel prices in view of spurt in global oil prices.

Prime Minster Manmohan Singh was expected to address the nation later in the evening to tell the people why the government increased prices of fuel at this point when inflation is also high.

The meeting was chaired by Prime Minister Manmohan Singh and attended by External Affairs Minister Pranab Mukherjee, Defence Minister A K Antony, Finance Minister P Chidambaram, Petroleum Minister Murli Deora, Railway Minister Lalu Prasad and Road Transport Minister T R Baalu.

Petrol and diesel prices were last raised in February when the Indian basket of crude oil was at 67 dollars per barrel. Today it is at 124 dollars per barrel.

State-run Indian Oil, Bharat Petroleum and Hindustan Petroleum were together projected to lose Rs 2,46,600 crore on sale of petrol, diesel, domestic LPG and PDS kerosene in 2008-09 in absence of any price hike or duty cut

Scientists find new weapon in fight against malaria

Scientists have blocked the sexual development of the malaria parasite in the laboratory, opening the possibility of a drug that could sharply reduce the disease’s spread, according to a new study.

When a mosquito bites an infected human, it sucks up the gametes, or sex cells, of the malaria parasite at the same time that it feasts on the blood.

The sexual cycle of the Plasmodium falciparum parasite continues inside the mosquito, producing cells that are transmitted in its saliva the next time the insect draws human blood with its needle-like proboscis.

The gametes do not provoke malaria’s terrible symptoms, but settle in the liver where they eventually give rise to the parasite that does.

A team of researchers at the London school of Hygiene and Tropical Medicine led by David Baker discovered an enzyme critical to the parasite’s sex cycle, and developed a means for arresting it.

"It acts as an inhibitor that stops the parasite from developing sexually," Baker told AFP.

"If we could develop a drug for patients, it would enable us to block malaria transmission from individual to individual" via the species of mosquitoes that carry the disease," he said.

Malaria severely sickens half-a-billion people in the world each year, and kills more than a million. Ninety percent of victims live in sub-Saharan Africa, and the vast majority of those are infants and children.

Baker said that the drug might also have a curative effect, though the study, published in the open-access online science journal PLoS Biology, only focuses on the spread of the disease.

Each day, some 3,000 young lives -- one every 30 seconds -- are snuffed out by malaria. The disease also saps more than a full percentage point from the annual economic growth of the most affected nations.

Will RBI tighten money supply further to tame inflation?

With inflation crossing 8 per cent, economists and bankers seem divided over whether RBI would once again ask banks to keep more cash with the central bank to squeeze liquidity from the banking system.

"The dilemma between rising inflation and slowing growth will continue and we expect the central bank to tighten monetary policy using CRR hikes rather than repo rate hikes" said Lehman Brothers India Economist Sonal Verma.

"We expect another 100 basis points worth of CRR hikes during the course of the year with unchanged repo and reverse repo rates," she said.

However, bankers have divergent view on the issue of CRR hike. Most bankers are of view that raising the ratio was not the viable option to ease inflationary pressure as it was not driven by money supply.

According to Oriental Bank of Commerce Executive Director Allen C A Periera, high inflation is on account of rising crude oil prices and food prices. So, further tightening of money supply would not have much impact in bringing down inflation.

With the expected good monsoon and fiscal measures taken the by the government, inflation is likely to ease in the coming months, he said.

Finance Minister’s adviser Subhashish Gangopadhyay had said, "inflation rate is higher than what we want it to be and raising interest rate is not the best way to curb inflation."

However, according to a study by financial services major Barclays Capital, RBI is likely to surprise the market by tightening money supply to combat inflation, which would push interest rates up.

Investing in gold can make a lot of sense

The stock market is expected to remain rangebound as last-quarter results are getting discounted in individual stock prices. The market seems to be reasonably valued, with the BSE Sensex between the levels of 16,000 and 17,000. A further upside over the next few months seems limited, in view of the palpable slowdown in economic activities as reflected in the growth rate of companies. This slowdown is compounded by the high rate of inflation. The government is taking all conceivable steps to counter it, and the Reserve Bank of India is taking the necessary monetary measures to control liquidity and bring down prices.

Still, it may be a while before the inflation rate comes down, given external factors. Crude oil is trading at a historic high of around $135 per barrel, and that is bad news for all oil importing economies, especially India. The domestic prices of petroleum products like petrol, diesel and cooking gas are nowhere near international prices, thanks to government subsidies, and any move to increase these prices even marginally will fuel inflation and greatly hamper the already slowing growth rate. With crude oil showing no signs of slowing down, it is indeed possible that our economic growth rate may slow down.

One may be tempted to reduce equity exposure and increase exposure to debt and fixed income options. Commitments to longterm debt instruments may not be a good idea, because interest rates may rise, given high inflation. Short-term debt and floating rate instruments could be considered under the fixed income portfolio allocation. There’s no need to increase the debt portion in percentage terms, as yet.

Have you considered gold?

It is also important to look at other asset classes at a time like this, to diversify your portfolio. Commodities have been faring better than stocks over the past few months, and the precious metal, gold, is one commodity that’s likely to move in tandem with international crude oil prices. Review your investment portfolio in view of the high inflation rate and the possibility of a slowdown in economic activity, and rework your asset allocation. It may be a good idea to reduce equity exposure in percentage terms by about 5-10 % of your total portfolio, and allocate that money to gold.

How to invest in gold

Buying gold in physical form-bars and coins-is an outdated option, fraught with issues including purity, liquidity, secure storage, and so on. The best option is to buy a listed exchange-traded gold fund (ETF) from the stock market. All you need is a demat account and a share trading account with a broker or sub-broker who deals in stocks. Currently, four ETFs are available: Gold BeES (Benchmark Mutual Fund), Master Gold (UTI Mutual Fund), Kotak Gold (Kotak Mutual Fund), and Reliance Gold (Reliance Mutual fund).

These are traded in units of one. That means you can buy one or more units at a time. Each unit represents approximately the market value of one gramme of gold. There is not much to choose between the four funds, because no management skills are involved. You can buy whichever is quoting a little cheaper than the others. However, the volume of units traded on any given day could help you decide, because a higher volume of trading means better liquidity: easy to buy, easy to sell, and the spread between the bid and offer (that is the selling and buying prices on the market) will be low.

Gold ETFs are traded close to real-time gold prices in the market, that is, ETF prices move up and down with the market price of gold in the conventional marketplace. Your expenses in an ETF would be very low: you would pay securities transaction tax (STT), brokerage /service tax, and the like, which are unlikely to exceed 1% of market price. You’d hold gold in demat form in your demat account, just as you hold shares. If you decide to sell your ETF units, you’d do so through your stock broker or sub-broker and the charges would be the same as what you paid while buying the ETF. Thus an ETF is very convenient, and you need not worry about the purity of the gold, secure storage, insurance against theft, and so on.

What about physical gold?

Perhaps you’re one of those parents who keep buying gold over the years, for possible use to make jewellery when your son or daughter gets married. You may be wondering how a gold ETF would help you do that. Well, it’s still the best option for you because of the factors discussed above. You can buy gold ETF units now at the current price of gold, hold them in your demat account, and sell them in the future, whenever you want, and use the money to buy jewellery then. In this way, you will be protecting yourself from rising gold prices, while also sparing yourself anxiety about the purity and safety of your gold. You can keep accumulating gold at a slow rate, perhaps even one gramme at a time.

Returns and taxation

Gold has appreciated substantially over the past couple of years. The growth rate of late has been much higher than the conventional rate of appreciation. But, with global uncertainties rising, gold may be a very good hedge, and can be expected to deliver returns of 10% to 15% a year, over the next few years. If you sell gold ETF units within one year, the resulting gains will be short-term capital gains, and you will be taxed at the same rate that applies to your overall income. If you sell after having held the gold ETF units for more than one year, you would make a long-term capital gain. The taxation is similar to a non-equity oriented mutual fund on which STT is charged-you can pay tax at the rate of 10% on taxable long-term capital gains, or 20% of the long-term capital gains after applying cost inflation index to your cost of purchase. You can choose the option that allows you to pay the lower tax. Surcharge, education and secondary education cess will also be applicable on the amount of tax. Putting money in a gold ETF is considered investment in a mutual fund, and not in gold, so it’s free of wealth tax also.

Cabinet approves fuel price hike in India

India finally succumbed to international pressure as all transport fuel prices in the country are set to be hiked after Cabinet approved it on Wednesday.

The Cabinet Committee on Political Affairs is understood to have approved a hike of Rs 3 per litre in petrol prices, while the diesel prices are likely to head north by Rs 2 per litre.

However, a formal announcement in this regard will be made sometime around noon.

Announcing this a senior official in the Petroleum Ministry said, “Cabinet Committee on Political Affairs, presided over by Prime Minister Manmohan Singh approved the price hike. The quantum of the hike will be communicated to you shortly,"

"The prime minister is also expected to explain to the nation why the price hike was inevitable. Oil marketing companies have been bleeding since the cost of oil has gone up but the retail prices of petrol and diesel had remained the same," he added.

The CCPA meet came in the wake of the relentless rise in international crude oil prices, which have touched levels as high as USD 135 per barrel.

The meeting, chaired by Prime Minister Manmohan Singh, was also attended by External Affairs Minister Pranab Mukherjee, Defence Minister A K Antony, Finance Minister P Chidambaram, Petroleum Minister Murli Deora, Railway Minister Lalu Prasad and Road Transport Minister T R Baalu.

A limit is also expected to be set on the number of cooking gas cylinders that would be available to each household at subsidised rates, sources said.

Zimbabwe inflation passes 100,000%

Zimbabwe, the land of Mugabe. Zimbabwe is a classic case of how inflation can make life hell for people. Experts say it all started with Mugabe’s regime. Whatever may be the reason, the basic flaw in Zimbabwe’s economy is that Zimbabwe lost its ability to feed itself.
So, if you don’t have enough agriculture commodities the prices are bound to go up. This is one lesson India can learn from Zimbabwe. India’s wheat, rice, pulses and edible oil production is not enough to keep pace with the growth the country is witnessing. That is why Indian government is worrying about the rising inflation rates. It was above 5% last week.
However, it is not anywhere near Zimbabwe. Zimbabwe’s skyrocketing inflation -- now the world’s highest, running at more than 100,000 per cent a year -- keeps the cost of living rising. In 1979, when Mugabe’s nationalist rebels overthrew the white-dominated government of Rhodesia, and changed the name of the country to Zimbabwe, thousands of commercial farms managed to grow enough food to export throughout the region.
At present, more than a decade of mismanagement and neglect has dropped agricultural production to pre-colonial levels. This year, Zimbabwe’s shortfall in maize is 360,000 tonnes, and its shortfall in wheat is 255,000 tonnes.
Streets of Zimbabwe are dotted with shopping mall. That shows that there is food on the shelves, but all of it highly priced.Massive department stores, built for a time when farmers from miles around would come to do their weekend shopping, are full of clothes, but without customers.
With cash almost a worthless possession, people have started investing in something different. They stack bags of maize meal in their homes. The situation in Zimbabwe has hit several Indians badly. Many of the Indian businessmen in Zimbabwe, especially Gujaratis, are finding it tough to do trade there.
Because, a sausage sandwich sells for 30 million Zimbabwe dollars, or about US $1.25. A 30-pound bag of potatoes cost 90 million in the first week of March. Now that same bag costs 160 million.
So, Zimbabwe is an example for the world how inflation can ruin a country, which does not produce enough food for itself.
The official rate of annual inflation in Zimbabwe has rocketed past the 100,000% barrier, by far the highest in the world, the state central statistical office said yesterday. Second-placed Iraq has inflation of 60%, according to international estimates.
In a brief statement, the statistics office said inflation rose to 100,580% in January, up from 66,212% in December.
The new official figure was still well below the rate calculated by independent analysts. They estimate the real inflation is closer to 150,000%, citing supermarket receipts showing that the price of chicken rose more than 236,000% to 15m Zimbabwe dollars a kilogram between January 2007 and January 2008. Slower increases in prices of sugar, tea and other basics bring down the average to around 150,000%.
Zimbabwe, a former regional breadbasket, is facing acute shortages of food, hard currency, gasoline and most basic goods in an economic meltdown blamed on disruptions in the agriculture-based economy after the seizures of thousands of white-owned commercial farms began in 2000, accompanied by political violence and turmoil.
Economic hardship is a key issue in national elections scheduled for March 29 in which President Robert Mugabe, who turns 84 on Friday, is facing the biggest challenge to his hold on power since he led the nation to independence in 1980.
Inflation, food shortages and the crumbling of power, water, sanitation, roads, phones and communications and other utilities have fuelled deep divisions in the ruling Zanu-PF party.
In early October the state central statistical office gave official inflation at just below 8,000%. It then suspended its monthly updates because there was not enough in the shortage-stricken shops to calculate a regular basket of goods.
November’s already dizzying rate of 24,470% was announced in January and earlier this month the official rate for December was given as 66,212%, a dramatic escalation in the space of a month.
The National Incomes and Prices Commission, the government’s price control body, this month allowed sharp increases in the prices of the corn meal staple, sugar, bread and other basics in a bid to restore viable operations by producers and return the goods to empty shelves.
But the new prices were still roughly half the price demanded on the black market and were unlikely to guarantee regular supplies to food stores.
Executives at a milling company producing corn meal said the price increase allowed by the government was already overtaken by soaring production costs and gasoline prices and the National Bakers Association said bread shortages were set to worsen unless the price of a loaf was nearly doubled to more than 5m Zimbabwe dollars for a regular loaf.
Gross domestic product in Zimbabwe fell from about $200 in 1996 to about $9 a head last year.

BSNL may call only govt staff for IPO

Faced with stiff opposition from its employee unions over its proposed IPO, the BSNL management is considering a radical formula. It is toying with the idea of offering shares only to government employees with a ’considerable’ reservation for BSNL staff. If this proposal goes through, it will be the first such IPO in the country. The BSNL management plans to present this proposal to its striking union leaders soon.

The company is looking at a compromise formula as its plan to launch the country’s biggest IPO and raise about Rs 40,000 crore (over $10 billion) by offloading a 10% stake in the company has failed to take off so far.

Despite the public sector company’s management as well as communication minister, A Raja, holding talks with employees for several months now, the unions have not relented. In fact, BSNL employees have also threatened to go on an indefinite nation-wide strike and cripple the operations of the company, if the UPA regime goes ahead with the listing of the PSU.

“We are exploring the option of allowing only BSNL and other government employees to buy the shares. This will solve twin purposes — address the concerns of the employee unions as well as enable us achieve our objective of listing the company. This plan can be implemented only if the Department of Telecom as well as the unions accept it,” a top company source said.

But it remains to be seen whether this proposal goes through. For one, both DoT and the unions will have to agree. Secondly, there is no precedent of a public offering in India being restricted to certain section of public only. Moroever, if the sale of shares is restricted, it will not fetch the price that a regular disvestment would. Finally, even if such a float does take place there will be no appetite for these shares in the secondary market if FIIs and other investors are not allowed to buy.

And if they are allowed to buy BSNL shares through secondary transactions, then the original objections of the unions — fear of pri-vatisation, selling family jewels cheap etc — would not be taken care of.

Another BSNL source told ET that the PSU’s management was keen on going ahead with the listing, despite employee opposition, so that the company could be governed by corporate norms specified by Sebi. “The listing is not for the purpose of raising money for our expansion. We also want BSNL to be subject to corporate governance policies that all listed firms must subscribe to,” the executive added.

Earlier this year, the PSU had put the issue of a float on the back-burner after employee unions had threatened to go on an indefinite strike protesting the move. However, the issue was back in limelight last week when the government said the unions were favourable to the proposal.

“The unions will respond positively to the suggestion for the listing of BSNL before June 3, which will help BSNL in getting navratna status — very essential to maintaining its image and ensur-ing its survival and growth,” the government statement said. This led to fresh protests from the unions who alleged that they had given no such assurance and accused the communications ministry of misin-formation.

On Monday, the Joint Forum of Bharat Sanchar Nigam Ltd Unions and Executive Associations held rallies across all major cities to protest the IPO proposal.

BSNL is India’s largest telecom company in terms of revenues and sub-scriber numbers. The PSU, which has over 81 million customers (fixed-line and mobile), had revenues of Rs 39,750 crore in 2006-07, with a net profit of Rs 7,805 crore. BSNL has said it will invest about Rs 15,000 crore this fiscal to expand its mobile and broadband net-works across the country. It has also committed Rs 60,000 crore to ex-pand its telecom infrastructure and operations by 2010.

Govt cuts onion export restrictions to back farmers

The government has decided to ease the minimum export price (MEP) of onion to encourage export in the wake of excess in production of the commodity.

NAFED official said that the excess in production of onion has compelled the government to relax export restrictions in order to help farmers to get a good price for their commodity. The new rates are applicable for the June shipments, he added.

The cooperative major NAFED is the nodal agency for export of onion and it decides the MEP every month taking into account the domestic availability and prices.

The average MEP now stands at USD 155-160 a tonne. The MEP has been slashed as there is huge availability of onion in the country and the price realisation by farmers is low, the official said.

After the revision, the onion MEP (Cost & Freight) now stands at USD 155 a tonne for ’break bulk’ category and USD 160 a tonne in container shipment for destinations like Dubai and Sharjah.

Onion from India’s southern states is exported mainly to Sri Lanka, Malaysia and Singapore, while the Nasik varieties are sent to all export destinations, particularly to the Gulf countries.

Onion farmers in the major growing centres of Lasalgaon and Pimpalgaon in Maharashtra have been receiving less than Rs 1.50 per kg for the last two months compared to Rs 2.50 a kg in last week of March this year, traders said.

'Bill Clinton's heart surgery altered his mental state'

In an embarrassment to Presidential hopeful Ms Hillary Clinton’s despondent campaign, an article has claimed that the aides of her husband, former President Mr Bill Clinton, believe his 2004 heart surgery fundamentally altered his state of min d and that he is constantly in rage.

The article to be published in Vanity Fair, and already posted on the magazine’s Web site also questions some of Mr Clinton’s business dealings and behaviour since leaving the White House.

"Old friends and longtime aides are wringing their hands over Mr Bill Clinton’s post White House escapades, from the dubious (and secretive) business associations to the media blowups that have bruised his wife’s campaign, to the private-jetting around w ith a skirt-chasing, scandal-tinged posse," the article said.

Some, it said, point to Mr Clinton’s medical traumas; others blame sheer selfishness, and the absence of anyone who can say ’no,’ it added.

It also asserts that several of his aides were concerned about reports of his inappropriate behaviour during his travels and one of them unsuccessfully attempted to intervene, believing he was "apparently seeing a lot of women on the road."

The Clinton campaign immediately hit back, saying the theory was flatly rejected as ’false’ by his doctors, who say he is in excellent health and point to his vigorous schedule as evidence of his exceptional recovery.

Mr Bill Clinton also lashed out at journalist Todd Purdum, who wrote the article, for bringing negative attention to his wife’s candidature campaign, calling him a ’sleazy’, ’slimy’ and ’dishonest’ reporter, Huffington Post said. - PTI

SEBI to launch currency futures in 3 months: Bhave

The market regulator, Securities and Exchange Board of India (SEBI) would come out with exchange traded currency futures in the next three months, its Chairman Mr C B Bhave said here on Tuesday.

Last week, a SEBI-RBI committee had recommended introduction of currency futures markets, initially for dollar-rupee contract, to enable investors manage volatility in the currency market.

The committee had suggested that the minimum size of the currency futures contract at the introduction would be $1,000. Meanwhile, the Reserve Bank, in a bid to support the SEBI move, has already issued comprehensive guidelines on foreign currency forwar ds in over-the-counter market.

The SEBI Chairman said that later, the regulator would start working on interest rate derivatives.

"Next we will start working on interest rate derivatives," Mr Bhave said at the Annual General Meeting of Assocham. Keen on providing a trading platform for the small and medium enterprises (SMEs), SEBI would work on the creation of an exchange for the SMEs.

"Next we will engage our mind on creation of exchange for small and medium enterprises," he added. - PTI

Reliance eyes private equity help for MTN control

Anil Ambani, the billionaire chairman of Reliance Communications, may link up with private equity groups in a bid to gain a powerful foothold in sub-Saharan Africa’s biggest mobile phone operator MTN, the Financial Times said on Wednesday.

Quoting people familiar with the situation, the Financial Times said private equity groups had expressed interest in supporting Ambani’s plan to swap all or most of his majority stake in Reliance, India’s No.2 mobile operator, for up to 34.9 percent of MTN.

"These are people who are all interested in telecoms and emerging Markets, therefore this deal is an obvious place for them to invest," the paper quoted a person familiar with the potential tie-up as saying.

A combination of MTN, valued at $35.6 billion at Tuesday’s close, and Reliance, valued at $26.9 billion, would create a top 10 global industry company to rival Japan’s NTT DoCoMo.

MTN and Reliance said on May 26 they were in exclusive talks for a possible combination, just days after India’s top mobile phone operator Bharti Airtel broke off talks with MTN after failing to agree on how to structure a deal.

MTN and Reliance began due diligence on each other on Monday, the Financial Times said.

It quoted the person familiar with the deal as saying it was still not clear whether Ambani would form a partnership with one of the private equity firms or what role they might play.

Rupee may tread water ahead of stock open

The Indian rupee is expected to open little changed on Wednesday and await direction from the stock market, where foreign funds have been pulling out in the wake of a slide in prices.

* The partially convertible rupee ended at 42.60/61 per dollar on Tuesday, half a percent weaker than Monday’s close of 42.40/41.

* The stock index, which fell on Monday and Tuesday, is down more than 21 percent this year, with foreign funds net sellers of $4 billion of Indian shares in 2008 and pushing the rupee down 7.5 percent since the start of January.

* In 2007, foreigners had more than $17 billion of shares and helped the rupee rise 12.3 percent.

* The dollar held onto big overnight gains on Wednesday and oil prices continued to inch down, giving some support to Asian stocks and helping them recover from fresh concerns over the impact of the credit crunch

Coming soon, war for water!

After global warming, what is the biggest problem the globe is facing now? It is water. If you want to know the seriousness of the situation just take the case of India’s Cherrapunjee.

Cherrapunjee once boasted of being the ‘wettest place on earth’. Now also it gets around 40 feet of rain a year. However, Indian government is now seeking Israeli water management experts’ help to manage and retain water that today sluices off the area’s deforested landscape so that the area can get water when there is no rain.

Take another example of Rajasthan where lakhs of people (almost always women) spend hours per day carrying water up to several miles for their family’s needs because no source is close at hand.

On the other side of the globe, in Barcelona, Spain, people are paying a fine of $13,000 if they were caught watering their gardens.

According to media reports, a tanker ship is docked in Barcelona this month carrying 5 million gallons of precious fresh water and officials are scrambling to line up more such shipments to slake public thirst.

Again, Cyprus is ferrying water from Greece. Australian cities are buying water from farmers and building desalination plants.

Thirsty China plans to divert Himalayan water. In southern California, citizens are bracing to face water-rationing.

So, the world may go to war for water in the coming years. Experts say that water is the oil of this century.

Blue Gold
According to researchers, developed nations have taken cheap, abundant fresh water largely for granted. Now global population growth, pollution and climate change are shaping a new view of water as “blue gold”.

Global water markets, including drinking water distribution, management, waste treatment, and agriculture are a nearly $500 billion market and growing fast.

But governments pushing to privatize public water systems are colliding with a global “water is a human right” movement. Because water is essential for human life, its distribution is best left to more publicly accountable government authorities to distribute at prices the poorest can afford.

According to experts, the world is at a transition point where fundamental decisions need to be made by societies about how this basic human need is going to be provided. The profit motive and basic human need for water are just inherently in conflict.

What’s different now is that it’s increasingly obvious that the world is running up against limits to new fresh water supplies, says a water expert. It’s no longer cheap and easy to drill another well or dam another river.

The idea of “peak water” is an imperfect analogy. Unlike oil, water is not used up but only changes forms. The world still has the same 326 quintillion gallons.

But some 97 per cent of it is salty. The world’s remaining accessible fresh-water supplies are divided among industry (20 per cent), agriculture (70 per cent), and domestic use (10 per cent).

Meanwhile, fresh-water consumption worldwide has more than doubled since World War II to nearly 4,000 cubic kilometers annually and set to rise another 25 per cent by 2030.

Up to triple that is available for human use, so there should be plenty, the report says. But waste, climate change, and pollution have left clean water supplies running short.

The world has ignored demand for decades, just assuming supplies of water would be there. Now people have to learn to manage water demand and – on top of that – deal with climate change, too.

Population and economic growth across Asia and the rest of the developing world is a major factor driving fresh-water scarcity. The earth’s human population is predicted to rise from 6 billion to about 9 billion by 2050. Feeding them will mean more irrigation for crops.

Increasing attention is also being paid to the global “virtual water” trade. It appears in food or other products that require water to produce, products that are then exported to another nation. The US may consume even more water – virtual water – by importing goods that require lots of water to make. At the same time, the US exports virtual water through goods it sells abroad.

As scarcity drives up the cost of fresh water, more efficient use of water will play a huge role, experts say.

In the US today, about 33.5 million Americans get their drinking water from privately owned utilities that make up about 16 per cent of the nation’s community water systems.

But private companies’ promises of efficient, cost-effective water delivery have not always come true. Bolivia ejected giant engineering firm Bechtel in 2000, unhappy over the spiking cost of water for the city of Cochabamba.

Last year Bolivia’s president publicly celebrated the departure of French water company Suez, which had held a 30-year contract to supply La Paz.

Private water industry officials say those pushing to make water a “human right” are ideologues struggling to preserve inefficient public water authorities that sell water below the cost to produce it and so cheaply it is wasted — doing little to extend service to the poor.

Global warming isn’t going to change the amount of water, but some places used to getting it won’t, and others that don’t, will get more. Water scarcity may be one of the most underappreciated global political and environmental challenges now. Water woes could have an impact on global peace and stability.

China & India
In the developing world – particularly in China, India, and other parts of Asia – rising economic success means a rising demand for clean water and an increased potential for conflict.

China is one of the world’s fastest-growing nations, but its lakes, rivers, and groundwater are badly polluted because of the widespread dumping of industrial wastes. Tibet has huge fresh water reserves.

While news reports have generally cited Tibetans’ concerns over exploitation of their natural resources by China, little has been reported about China’s keen interest in Tibet’s Himalayan water supplies, locked up in rapidly melting glaciers.

Himalayan water is particularly sensitive because it supplies the rivers that bring water to more than half a dozen Asian countries. Plans to divert water could cause intense debate.

Tibet is not the only water-rich country wary of a water-poor neighbour. Canada, which has immense fresh water resources, is wary of its water-thirsty superpower neighbour to the south.

But don’t look for a water pipeline from Canada’s northern reaches to the US southwest anytime soon. Water raises national fervor in Canada, and Canadians are reluctant to share their birthright with a United States that has mismanaged – in Canada’s eyes – its own supplies.

The lack of clean, safe drinking water is estimated to kill almost 4,500 children per day. In fact, out of the 2.2 million unsafe drinking water deaths in 2004, 90% were children under the age of five. Water is essential to the treatment of diseases, something especially critical for children.

The world water crisis is created by a confluence of factors including climate and geography, lack of water systems and infrastructure, and inadequate sanitation, something that 2.6 billion people (40% of the world’s population) lack access to.

Is futures trading another name for gambling?

Trading in commodity futures – basically an arena of stock market players – may have started with economic objectives such as price discovery and price risk management, but, of late, has become an important part of investment portfolio promising quick and attractive returns.

And, the commodity derivatives trade’s value in relation to GDP has been galloping to touch 66 per cent during 2005-06 from mere 5.81 per cent in 2003-04. Now, it has neared 75 per cent of GDP with growth registering 300 to 400 per cent during past a couple of years.

In fact, stock marketing and futures trading are the main instruments of speculation in the capitalist economy in which the capital is invested and reinvested with a sole purpose of making a profit.

Thus the capital grows, multiplies and gets concentrated in a few hands. In such an economic set-up, the futures trading wields a tight grip over the real economy, influences the movement of spot prices. But, it also happens that the futures trade starts moving in an absurdly divergent manner, showing no connection with the spot market.

Thus, it becomes sheer gambling for a profit. This was particularly happened in the case of agricultural commodities- much illustrative example of chilies last year. Also, such trend lent a high volatility to the prices of agricultural commodities.

It happened in the case of prices of wheat, pulses and food items in past two years after the government allowed futures trading in essential commodities too in 2002. The government took that policy initiative following a pressure from WTO which was aimed at integrating (or opening up of) the Indian agriculture market with that of the developed world.

Futures and price rise
The abrupt rise in the futures trading of agricultural commodities synchronized with spiraling of farm produce prices. Rather, it mounted up volume of goods contracted and flow of capital in the futures trading. The world over, suggestions from the experts sputtered in commodity exchanges and among speculators:’ Make profit from the Global Agricultural Boom’….. bull market in commodities sending agriculture prices through the roof…. Global agricultural boom is the safest, easiest ways to profit…’only two stocks you need to Retire Rich’.

Thus, the agricultural trade became a ’paper based derivatives trade’ keeping prices of food items soaring globally. And, as a part of the price manipulation, a projection of shortage in production and supplies of wheat and other farm goods was made. It led to a worldwide hue and cry over the looming threat to food security. Consequently, some poor countries even witnessed food riots and millions made to suffer severest bout of malnutrition.

In the Indian context, base metals particularly copper, energy (crude oil, natural as) and bullion ( gold and silver) has traditionally been the biggest share-holder (70 per cent) of the commodity futures trading at MCX . And the prices of these items are primarily driven by a benchmark international trade. Till 2005, grams, guar, mentha oil and soy oil has accounted for more than 60 per cent of the futures trade in the farm products.

But with the coming up another exchange, NCDEX , in 2006, the volume of farm good traded went up abruptly. And it focused its trade on the farm produce. The UN body, UNCTAD has quoted it as the third largest exchange trading in agricultural futures in the world.

It is fairly known that futures trading in farm commodities backed up by tremendous financial leverage has been cause of the market manipulation. That is why Finance Minister P. Chindambaram slapped a commodities transaction tax (CTT) on options and futures on the lines of the existing securities transaction tax. But , the Forward Marketing Commission(FMC) made a half-hearted attempt attempted to regulate the market.

Futures Ban
With a steep rise in inflation this year, considered to be caused rise in farm produce prices, the government was quick to ban futures trading in four farm goods and again de-listed four more agricultural items from the exchanges.

And, set up an Abhijit Sen Committee to study the impact, if any, of futures trading on wholesale and retail prices of farm goods. But the committee has evades the direct answer to the question since it was composed of some members associated with trade, others having soft-corner for the trade.

The committee did not recommend the ban on futures trading in farm goods as sought by farmer leaders and civil society campaigners. However, it has unequivocally underlined ’futures markets must work in tandem with physical or spot markets. As the disconnection between the two trading entities widens, it gives rise of fierce speculation and market manipulation.

Suggestions are also coming that India should also treat hedgers and speculators differently in terms of margin requirement and impose strong delivery conditions. As an edit in Business Line says India needs "a delivery-based forward trading rather than paper-based derivatives trade".

The hard fact is that futures trading manipulated the price rise even as the Abhijit Sen Committee chose to be mum on the issue. On can differ on a degree to which the futures trading impacted the food prices in India and elsewhere.

The FAO has already reported that enhanced speculation in futures of agricultural produce has led to at least 30 per cent rise in food prices globally. How the spot market could be prevented from the overwhelming sway of the capital in futures trading could be judged from the following facts: India produces mentha oil worth 250 odd million US dollars but futures trade in this commodity generally goes up to 2500 million dollars.

The case of guar is most interesting; its production in India was around 1.6 million tone last year while its quantity traded on the futures market reached 169 million tone- around 1700 times more.

Such heavy flow of money in speculation is ’out and out’ gambling as it virtually ceases to link with the traded commodity which becomes mere a ’notional’ entity. In this context, Prof K.N Kabra has rightly pointed out that "the Indian policy-makers must keep in mind that specific conditions relevant to agricultural commodities, interests involved in actual production, marketing, processing and export, and the availability of instruments more attuned to the needs of real economy players, and misadventure of in the form of freewheeling futures markets could have been avoided".

The volatile agricultural prices also made US- the champion of free markets-to ponder over the issue. The American concern in this regard is noteworthy when the country aplenty with subsidized food and nearly 70 per cent of its main crops are grown for overseas markets. Such a dispensation provides to America a near-ideal situation for free trade.

CFTC Intervenes
The US futures market regulator, Commodity Futures Trading Commission (CFTC) has already indicated to intervene in agricultural markets to check price volatility. The American Farm Bureau Federation has underlined that trading activity by funds as one of the factor pushing up futures prices. And the Commission also pointed out lack of convergence between futures prices and cash market prices.

The US, too, is taking initiatives to regulate the participation of large finance such as hedge funds. In a scenario that tends to develop as consequent of total oversight of the government, the much flaunted objective of price discovery goes haywire. There ceases to exist any connection between the real prices and transmission of price signals to the stakeholders which is crucial and integral to the commodity trading.

Now, it must be pointed out that the economists advocating Noe-liberal policies of globalization never tired out that futures trade helps the farmers in ensuing better price to them. As above mentioned that when America produces 70 per cent of crops for foreign trade providing heavy subsidies how prices determined by its Chicago Commodity Exchange could help farmers in developing countries including that of India in real price discovery of their produce.

Do farmers benefit?
In short, it is wrong notion or deliberately spread by the vested interests in India that the farmers are benefited from the existing futures trading in the country. The farmers get lowest price for their produce which they immediately sell off during the harvest. They do not have capacity to hold their stocks. Later, the stocks pass into the hands of traders and corporate houses who manipulate high prices for farm goods in the futures market.

The Economic Survey (2007-08) of Indian Government clearly underlined that " "Direct participation of farmers in the commodity futures market is somewhat difficult at this stage as the large lot size, daily margins, high membership fees etc work as deterrent to farmers participation in these markets. Farmers can directly benefit from the futures market if institutions are allowed to act as aggregators on behalf of the farmers". Hence the trade should stop using the farmers name to quench their unquenchable greed which care only for profit and rarely for consumers and producers.

Global Warming: Make Sun the first accused!

Lot of energy and resources are being spent world wide on reducing carbon dioxide(C02) emissions in to the atmosphere with the belief that it is causing global temperatures to rise.

Brian Bloom, the author of Beyond Neanderthal which looks broadly at the causes and impact of climate change says that it could be a mistaken premise. C02 emissions may be exacerbating the global rise in temperatures rather than causing it.

The chief culprit in raising the earth’s temperature could be the electromagnetic activity of the sun, according to Brian Bloom.

Common sense dictates that our more active sun must have been raising the temperature of our oceans; and that the warmer sunshine, together with the warmer oceans, together with warmer winds which they spawn, together with the greenhouse effect, has been melting our ice caps, Bloom said in a press release.

He blames the changes in the electromagnetic activity in the sun to be causing temperatures to rise although a direct cause-to-effect relationship cannot be worked out.

Analysing only the atmospheric temperature changes and neglecting the heat generated in the oceans is a flawed approach. Since around 1860, ‘best estimate’ temperatures have risen by about 1 o C, with half of this increase occurring in the last 25 odd years.
“But focusing only on atmospheric temperature is like listening only to the “tick” of a grandfather clock. There is also a “tock”. Our oceans also play a role in climate.”

Whilst the heat content of our oceans – to a depth of 3,000 meters – certainly rose overall from 1955 to 1998, it fell between 2003 and 2005 Common sense dictates that the 1955 -1998 rise could not possibly have been caused by the rising temperature of our atmosphere. The reason (apart from the 2003-2005 heat content reduction) relates to the significantly different amounts of heat energy required to raise the temperatures of the same quantities of water and air by one degree.

Heat Transfer
Other factors remaining the same, it would take over 1,000 times as much heat energy to raise the temperature of our oceans by one degree as it would take to raise the temperature of our atmosphere by one degree.

Heat transfer is not instantaneous. Just think of how long it takes to bring a kettle of cold water to boil on a red hot stove.

Thus, for example, if the temperature of our atmosphere increases by 1 o C over a period of one year because of greenhouse gas driven global warming (of which Carbon Dioxide is but one such gas) – and if the atmospheric temperature remains constant thereafter – it would take more than 1,000 years for that incremental heat energy to be transferred to our oceans so as to raise their overall temperature by one degree. This time frame falls dramatically outside the roughly 250 year period of the Industrial Revolution during which there has been an increase in anthropogenic CO 2 emissions.

But there could be something else other than electromagnetic activity in the sun that is causing the problem.

It could be linked to the position of our sun within the galaxy and the impact of gravitational forces that are brought to bear on our sun as it travels along its elliptic path.

Beyond Neanderthal forecasts that our galaxy will reach a culmination point in its 26,000 year cycle on December 21st , 2012; when its elliptic will intersect the Dark Rift of the Milky Way Galaxy.

More Myanmars
If this unfolding scenario is indeed impacting on the earth’s electromagnetic field, then we might expect to experience more Myanmar cyclone type occurrences and also an increasing number and intensity of earthquakes and volcanic eruptions.

It is being anticipated by some that, from 2013 onwards the flaring on our sun’s surface will begin to wane (if this is not already happening), and that the earth’s surface will begin to cool again – perhaps culminating in mini Ice Age conditions by 2050.
Brian believes that climatic problems can be addressed provided it is properly understood because it only involves application of technical knowhow and powerful technologies already available.

If C02 is not the driver of climate change, the concept of carbon credit trading is of not much help.

For that matter, even if CO 2 was the driver, it seems likely that carbon credit trading will inhibit the economic development of under-developed countries. Surely, encouraging them to sell their “right” to produce carbon emissions will also serve to discourage them from becoming net contributors to global Gross Domestic Product. That appears seriously counterproductive when viewed from an economic perspective. This is not to say we should not aspire to reduce CO 2 emissions. Of course we need to reduce the level of all pollutants!

Brian says that two new patented electromagnetic technologies have been introduced but private enterprise will not show interest in it. He feels that if the claims of the companies who developed the technology can be validated, it could economically stimulative.

It could even have the capacity to drive the world economy for the next 100 century as oil and other technologies did. One of these may have the capacity to replace fossil fuels entirely. The other may have the capacity to increase agricultural yields in infertile regions which implies that world’s poorer nations could become the breadbaskets of the world.

India fuel prices to rise 6-10 pct - newspapers

India is expected to raise prices of petrol by about 10 percent and diesel by 6 percent on Wednesday, Indian newspapers reported, ending nearly two weeks of debate over how best to bail out state oil firms.

Two panels of cabinet ministers, dealing with political and economic issues, are considering the oil ministry’s proposal to raise regulated fuel prices as crude prices have risen sharply to record highs.State oil firms selling fuel below cost are losing millions of dollars a day and have said they may soon run out of money to buy imports, which meet 70 percent of India’s demand.

Oil ministry officials had pushed for increases of 15-22 percent for retail fuels.

But agreement on the size of the rise has been delayed by a political rift in the government, which faces several state polls this year, a general election next year, and is struggling to calm inflation at a 3-½ year high of 8.1 percent.

The price rises are not expected to trim demand.The government may also raise prices of cooking gas, which have not been raised for nearly four years, several media reports said.The Indian Express said the government may allow consumers to buy eight cooking gas cylinders a year at current rates but charge double for additional cylinders.

On its front page, The Economic Times said prices of petrol and diesel were expected to rise while duties may be reduced to cushion the impact on the consumer.The Express also said Prime Minister Manmohan Singh would address the nation after the decision on fuel prices, but a government spokesman could not confirm this.

Soaring crude costs have forced several Asian countries, the latest being Malaysia, to consider lowering fuel subsidies and raising prices, although China, which makes up nearly a third of Asia-Pacific oil demand, looks unlikely to raise prices before August.

One-third of engg grads find it tough to get jobs

Though about 450,000 engineering graduates come out of colleges every year, the bottom one third of graduates do not find employment easily, IT experts said.

A large number of engineering graduates are not readily employable and there existed a large gap in technology areas as well as communication areas, Professor Sadagopan, Director, IIIT-B, a deemed university, told reporters here while announcing the launch of certification programme to enhance the employability of these graduates.

The programme was designed taking into consideration the need for flexible learning programmes to suit the learning needs of slow learners and to suit the needs of Companies that hire at the entry level, he said.

The programme titled Yogyata is a blended-learning programme that includes a mix of several learning methodologies, including face-to-face calssroom lectures, web-based, multimedia-enabled self learning coursewear.

The highlight of the programme was actionable learning modules where learning is transformed into performance and mistakes are turned into learning opportunities. Synchronous and asynchronous on-line mentoring and collaborative learning.

The programme has been designed in collaboration with Radix Learning, a company focussed on providing blended learning programme. Starting September the target students will be from various engeinering programmes in the state.

Successive batches are planned from October onwards with focus on Andhra Pradesh and Tamil Nadu.

Answering a query on the low employability factor, the professor said that serious problems of governance in higher education and shortage of faculty were among the primary reasons contributing to this problem.

GM's all-electric Volt approved for 2010 launch

General Motors Corp said on Tuesday its all-electric Chevrolet Volt was on track for a launch in 2010 after the company’s board approved funding for production of the high-profile plug-in vehicle.

"The Chevy Volt is a go," GM Chief Executive Rick Wagoner told reporters ahead of the company’s annual meeting with shareholders in Wilmington, Delaware.

"What we’re saying with this approval is that the GM management and board believe the technical goals of the Volt are not only achievable, but achievable generally within the time frame we previously outlined," Wagoner said.

The announcement on Tuesday represents the most detailed road map toward bringing the highly anticipated car to the market by the end of 2010, an ambitious timetable challenged by some of GM’s rivals.

A successful launch of the Volt is critical to GM as the top U.S. automaker struggles with a heavy lineup of gas-thirsty trucks and works to claim an edge in fuel-saving technology against Toyota Motor Corp and its market-leading Prius hybrid.

Wagoner said GM’s plan is to manufacture the Volt in its Hamtramck, Michigan plant. That depends on negotiations with state and local governments for tax incentives, he said.

GM remains committed to its target of getting the vehicles into showrooms by the end of 2010, said Wagoner.

Unlike gas-electric hybrids such as the Prius, which run on a system that twins battery power and a combustion engine, the Volt will be powered entirely by an electric motor and have a battery that can be charged through an ordinary power socket. The Volt’s on-board engine will be used only to power the battery on longer trips, GM has said.

Pay Rs 2.43 lakh fine for helipad, MCGM tells Ambani

Reliance Industries Limited Chairman Mukesh Ambani’s plan to build a helipad atop his residence in south Mumbai has met with opposition from the MCGM, which has asked him to stop the construction work, a senior official said on Tuesday.

The Municipal Corporation of Greater Mumbai (MCGM) has also asked him pay Rs 2.43 lakh for proceeding with the construction without having obtained requisite permissions.

"The plan to build the helipad atop the Seawind apartment in Cuffe Parade was submitted to the MCGM a long time back. However, it did not have required permission from other departments along with it," a senior civic official who did not wish to be identified said.

"After our investigation we found that despite not having got clearances from all the required departments, the architect and builder had begun construction of the helipad which is in violation of the civic rules for such structures," the official said.

A report was submitted to the municipal commissioner who said in order to regularise the structure, appropriate penalty would have to be paid and the amount was fixed on the basis of the amount of work on the helipad, which has been completed, he said.

"We have sent the letter to the architect building the helipad asking him to stop the work and pay a fine of Rs 2.43 lakh for carrying out work without the appropriate permissions," the official said.

The city presently has limited facilities for helicopters to land, most of which are located in central Mumbai and only one located in south Mumbai for private choppers.

Forbes rated Ambani, Chairman and Managing director of the Reliance Industries Limited, the fifth richest man in the world in 2008.

In addition to the Cuffe Parade residence, he is building another residential apartment at Altamount road in South Mumbai at which he is reportedly also planning to build a helipad.

Obama makes history with Democratic nomination

Barack Obama captured the Democratic presidential nomination on Tuesday, capping a rapid rise from political obscurity to become the first black to lead a major U.S. party into a race for the White House.

Rival Hillary Clinton, a former first lady who entered the race 17 months ago as a heavy favorite, did not concede to Obama and said she would consult with party leaders and supporters to determine her next move.

A surge of support from uncommitted delegates helped give Obama the 2,118 votes he needed to clinch the nomination and defeat Clinton.

Obama will be crowned the Democratic nominee at the convention in August and will face Republican John McCain in November’s election to choose a successor to President George W. Bush.

"Tonight, we mark the end of one historic journey with the beginning of another," Obama told a cheering victory celebration in St. Paul, Minnesota, at the site of the Republican convention in September.

"Tonight, I can stand before you and say that I will be the Democratic nominee for President of the United States."

Obama’s win over Clinton, projected by U.S. networks, came in one of the closest and longest nomination fights in recent U.S. political history. Five months of voting concluded on Tuesday night with votes in Montana, won by Obama, and South Dakota, won by Clinton.

Clinton, who would have been the first woman nominee in U.S. political history, won more than 1,900 delegates over the course of the campaign.

She told New York members of Congress she would be open to becoming Obama’s vice presidential running mate, and her backers began to turn up the pressure on Obama to pick her as his No. 2.

Clinton congratulated Obama after he clinched the nomination, and told a cheering crowd of supporters in New York City that she would work for party unity. But she did not concede.

"This has been a long campaign and I will make no decisions tonight," she said. "In the coming days I’ll be consulting with supporters and party leaders to determine how to move forward with the best interests of our party and my country guiding my way."

McCain held a rally in Louisiana to kick off the race against Obama. He sought to distance himself from Bush and questioned Obama’s judgment and his willingness to put aside partisan interests.

"He is an impressive man, who makes a great first impression," McCain said of Obama. "But he hasn’t been willing to make the tough calls, to challenge his party, to risk criticism from his supporters to bring real change to Washington. I have."

Obama questioned the extent of McCain’s independence and tied him to Bush.

NOT THAT INDEPENDENT

"While John McCain can legitimately tout moments of independence from his party in the past, such independence has not been the hallmark of his presidential campaign," he said.

"There are many words to describe John McCain’s attempt to pass off his embrace of George Bush’s policies as bipartisan and new. But change is not one of them."

Obama, 46, is serving his first term in the U.S. Senate from Illinois and would be the fifth-youngest president in history. He was an Illinois state senator when he burst on the national scene with a well received keynote speech at the 2004 Democratic convention.

Obama’s campaign had urged the last 150 or so undecided superdelegates to make their endorsement before the voting ended, so the delegates he wins in the two states voting on Tuesday could allow him to clinch the Democratic race.

A steady flow of superdelegates complied, making their announcements throughout the day.

Obama lavished praise on Clinton after beating her.

"Senator Hillary Clinton has made history in this campaign not just because she’s a woman who has done what no woman has done before, but because she’s a leader who inspires millions of Americans," he said in his prepared text.

"Our party and our country are better off because of her, and I am a better candidate for having had the honor to compete with Hillary Rodham Clinton," he said.

Clinton and her campaign have sent mixed signals over the last two days about how long she would stay in a presidential race that she began as a heavy favorite.

During the conference call with New York lawmakers on Tuesday, she was asked about running as the No. 2 to Obama and said she was open to the idea.

"She said she would do whatever is necessary in order to make certain that we win, and serving as vice president would be one of the things she would be willing to do," Rep. Charles Rangel of New York, a Clinton supporter who was on the conference call, told Reuters in a phone interview.