CABINET MINISTERS

Pranab Mukherjee: Finance
AK Antony: Defence
P Chidambaram: Home
SM Krishna: External affairs
Kapil Sibal: HRD
Anand Sharma: Commerce & industry
Mamata Banerjee: Railways
Kamal Nath: Roads
GK Vasan: Shipping
Sushilkumar Shinde: Power
Murli Deora: Petroleum
A Raja: Telecom, IT
Vilasrao Deskmukh: Heavy industries, PE
Virbhadra Singh: Steel
Dayanadhi Maran: Textiles
M Veerappa Moily: Law
Ambika Soni: Information & Broadcasting
Sharad Pawar: Agriculture, Consumer Affairs, Food & PDS
Kumari Selja: Tourism, Housing
Pawan Kumar Bansal: Parliamentary Affairs
Ghulam Nabi Azad: Health
S Jaipal Reddy: Urban development
Vayalar Ravi: NRI Affairs
Meira Kumar: Water Resources
BK Handique: Mines, Northeast development
CP Joshi: Rural Development, Panchayati Raj
Farooq Abdullah: New/renewable energy
Mallikarjun Kharge: Labour
MS Gill: Sports, Youth affairs
Subodh Kant Sahay: Food processing industries
Mukul Wasnik: Social justice
Kantilal Bhuria: Tribal affairs
MK Azhagiri: Chemicals & fertilisers

MINISTERS OF STATE WITH INDEPENDENT CHARGE

Praful Patel: Civil aviation
Prithviraj Chavan: S&T & also MoS in PMO, parliamentary affairs
Sriprakash Jaiswal: Coal, statistics and programme implementation
Salman Khurshid: Corporate Affairs, minority affairs
Dinsha Patel: Micro, small & medium enterprises
Krishna Tirath: Women and child development
Jairam Ramesh: Environment and forests

MINISTERS OF STATE

Global coal demand will probably stagnate in 2009 after years of expansion because the slowing world economy is curbing power demand, Merrill Lynch & Co said. Coal is burned for about 40 per cent of global power, according to German coal group Verein der Kohlenimporteure e.V. The world economy will contract 1.3 per cent this year, the International Monetary Fund has said. Manufacturers have responded by cutting jobs and output, lowering power needs. After phenomenal increases in the range of 4 to 8 per cent over the past five years, global coal demand would likely remain flat this year, Merrill analyst Francisco Blanch in London said in a May 15 report, calling the outlook particularly dire in the US and Europe. Global energy demand was still frail and coal output in key regions was expanding, he said, Coal-export prices at South Africa's Richards Bay, Europe's biggest source of thermal coal, fell 4.5 per cent last week and more than halved in the past 12 months, to an average 556.15 a tonne, according to McCloskey Group Ltd data. Prices at Australia's Newcastle port, an Asian benchmark, dropped 0.6 per cent to $63.33, according to the global COAL NEWC Index. Seaborne coal prices, which include freight costs, will take at least three to six months to move toward $80 a tonne, Blanch said. The price of coal delivered to northwest Europe last week was $62.45 a tonne, McCloskey figures show.

Steel majors like SAIL, Tata, JSW and Essar may push for a higher import tariff on steel at a meeting convened by the government on Tuesday, even as the dip in foreign arrivals has weakened the case for duty hike.

Seeking protection against cheap dumping of steel items from countries like China and Ukraine, the domestic producers want the import duty to be increased to 15% from the present 5%.

However, with steel imports declining by 14% to 4.8 million tonnes during April-December period of the current fiscal, the government may not immediately decide on hiking the duty, an official source said.

To discuss threadbare the repercussions of a higher import duty and the impact of fiscal measures taken by the government for the sector, the Steel Ministry has called a meeting of the major domestic producers, including SAIL, Tata Steel, Essar Steel, JSW Steel and Ispat Industries tomorrow.

The secondary steel manufacturers like Uttam Galva, Bhushan Steel and representatives from industry's associations have also been invited for the deliberation that would be chaired by Steel Secretary P K Rastogi, official sources said.

"The meeting would review demand-supply scenario in the domestic sector and the steps needed to protect the industry against falling demand and crashing prices," a senior Steel Ministry official said.

Besides seeking an increase in import tariff, the steel producers also want the government to continue curbing overseas shipments of the commodity by keeping it in the list of restricted items for imports.

Endorsing the industry's concern over dumping of steel items in the country, the government had in November brought hot-rolled coils, a vital steel product, under the restricted list of items and slapped a 5 per cent import duty on specified iron and steel products.

Among the other measures taken by the government to cushion the steel sector against falling demand and prices, included restoration of duty entitlement passbook scheme to incentivise exports and withdrawal of 15% export duty on long steel products used by the construction industry.

Accepting the industry's demand for a level playing field against cheap imports of TMT bars, government has also levied a 10 per cent countervailing duty on the product, used widely in real estate and construction industry.

Many steel giants have decided to employ cost cutting measures including production cut and retrenchment of additional staff. Steel prices currently stand at $500 a tonne in the international market as compared to $1,250 a tonne in March-April.

Europe based steel giant, Corus has decided to cut production by 30 per cent following slow in demand.

Sajjan Jindal-owned JSW, Essar Steel and Ispat Industries are also facing low demand of steel and are trying to sell out inventory fearing further decline in global prices. Integrated steel maker Jindal Steel and Power said that it would try to reduce production cost and ease input pressure. Company director (Finance), Sanjay Maru said that the company would do everything to save its interests.

Steel Authority of India Limited (SAIL) would go for its earlier plans and would not cut production.

State-run Rashtriya Ispat Nigam, SAIL, JSW Steel, Ispat Industries and Essar Steel has reduced steel prices to Rs 32000 - 36000 from earlier high of Rs 55000 to avoid import of steel from international market.

Even as steel manufacturers and the government debate over issues related to pricing of steel, it is ironical to note that retail consumers of steel may still not get the same at the intended price. Even if the government was to control steel prices in the domestic market, it may only lead to further hoarding and black marketing of the commodity.

Says Neelkanth Mishra, an analyst with financial services group Credit Suisse, "If steel prices in India remain below the international prices, it may potentially lead to black marketing. People could buy from the domestic market at lower prices and sell at higher prices elsewhere."

Even now, the price of steel in India is Rs15,000 to Rs20,000 lower than international steel prices. They are also expected to remain firm for the next five to ten years on the back of demand from BRIC countries according to consulting firm McKinsey. In such a scenario, if new measures further widen the gap between domestic and international prices, it may just be the speculators and hoarders that benefit.

Mishra's view may also well be the truth if one takes the events of the past few months into consideration. The steel industry manufacturers raised the price of steel by Rs5,000 to Rs40,000 per tonne (nearly 15%), in May this year. But with inflation touching double digit, they were asked by the Finance Ministry to roll prices back. The steel industry rolled prices back by Rs4000 and also promised to hold the same price level till August. The present price of steel in July stood at around Rs36,000 per tonne.

However, the prices in the retail market continued to rise and have risen by nearly 30% in the meanwhile. An independent house constructor, C.P. Sharma says that steel has been especially rising since the past three months. Real estate developer and COO of Parsvnath DP Dhaka too agreed with Sharma. "Steel prices have increased in the past few months and have been affecting his construction cost," he said.

The Minister for Steel, Ram Vilas Paswan, blames the same on the middlemen and distributors. "The steel manufacturers have kept their promise by rolling back prices and holding the same for the past three months, but middlemen and distributors have not been performing their roles. They have not passed this decrease to consumers and have indeed been charging even more from them," he says. He has also warned steel retailers and distributors that if they charged higher prices, they will be persecuted.

However, steel retailing in Indian continues to be largely unorganised. Tata Steel managing director B Muthuraman points out that the large steel producers just account for 30% of the retail steel market. It will be indeed difficult to keep a tab on such a loosely knit group.

The London-based, ArcelorMittal has 27 manufacturing plants across the globe. China and India figure prominently in the company's global business strategy, he said, not explaining the diversification into the energy sector.

Speaking on `Creating Global Champions' in a special session organised by the Confederation of Indian Industry (CII) here on Monday, Mr Mittal said Asia at present would account for half of the global steel consumption. "The steel consumption in China is 500 million tonnes (mt) per annum with a growth of 10 per cent. We have a well-defined China strategy and have recently signed a pact to acquire a company in China," he said.

Observing that Indian steel consumption was much lower than that of developed countries, Mr Mittal said "There is tremendous scope for India in steel. We have a vision for the next 20 years and will be a player here too.". The coal mine allocation for the two plants in Orissa and Jharkhand were done and the ground-breaking would soon be done, he said.

On the rising steel prices, Mr Mittal said the reason was increased prices of raw materials.

"Since 2004, however, the steel industry has stabilised the prices to a greater extent," he said, adding that the market was not consolidated enough to decide raw material prices. ArcelorMittal has a market share of 10 per cent globally.

The largest chunk of the new jobs according to the surveywould be generated by hospitality sector which is riding highwith the tourism boom in the country. "The Hospitality sector will generate the maximum numberof employment in 2008.

426,668 jobs are going to be generatedby the Hospitality sector. This sector is closely followed byHealth at 295,829 and Education Training & Consultancy at166,005," says the survey.

It adds that an estimated USD 11.41 billion is expectedto be seen in the Hospitality sector in the next two years andthat India is likely to have around 40 international hotelbrands by 2011.

"The boom in the tourism industry has had a cascadingeffect on the hospitality sector, which was a result of theincrease in the occupancy ratios and average room rates. Withthe demand continuing to surge, many global hospitality majorshave evinced a keen interest in the Indian hospitalitysector," says K.

Pandia Rajan, Managing Director, Ma FoiManagement Consultants Ltd. While, IT and ITES sector continues with high growth inrecruitment at 7.

Concerned over the demand-supply mismatch in the steel sector, steel minister Ram Vilas Paswan will meet major producers of the alloy on Monday to assess their capacity expansion plans and discuss the impediments to investments envisaged at about Rs 3,00,000 crore by 2011-12. "The minister will meet leading steel producers on Monday to discuss the reasons behind the increasing demand-supply gap in the steel sector and take stock of their mega expansion plans. Paswan is also likely to discuss the bottlenecks impeding fructification of major investments in the country as we are envisaging an investment of Rs 2,80,000 croieby201M2," a top steel ministry official said. The meeting assumes importance as the ministry has also asked the concerned secretaries of mineral-rich states of Orissa, Jharkhand, Chhattisgarh, Karnataka, Madhya Pradesh and West Bengal to be present to apprise diem-selves of the issues raised by the steel makers and share their views on achieving the envisaged investments. This meeting is besides the inter-ministerial group (IMG) set up by the government and being headed by steel secretary Raghav Sharan Pandey to extensively delve into investment related issues. "The minister is particularly concerned that the demand-supply gap has caused 67% rise in steel imports,": die official said.

POSCO BEGINGS TO BUILD PIPE PLANT IN US

South Korea's steel giant POSCO has broken ground to build a $129-million plant to produce pipes in California, the company said on Sunday. The USP--jointly invested by POSCO, US Steel and South Korea's SeAh Steel -- will annually produce up to 270,000 tonnes of pipes for petroleum, it said. Posco, the world's fourth largest steel maker, and US Steel own a 35 per cent stake each in the new factory -- to be completed in Pittsburgh, California, by April 2009. The remaining 30 per cent stake is with SeAH.

COAL MAY FINALLY GET REGULATOR

THE government has set the ball rolling for the establishment of an independent coal regulator; a move mat is being seen as a precursor to opening the controlled coal market. Presenting the Budget proposals for 2008-09, the finance minister made an emphatic statement that an independent watchdog may soon oversee the activities in the coal sector. He, however, slopped short of opening up the sector for commercial mining by the private sector, a step recommended by the Economic Survey 2007-08. "Fifty-three coal blocks with reserves of 13,842 million tonnes have been allotted during April-January 2007-08 to government and private sector companies. A new coal distribution policy was notified in October 2007. A coal regulator will be appointed," the finance minister said in his Budget speech. The announcement assumes importance as proposals on a coal regulator have been floating for the last several years without any concrete results. Recently, the Central Electricity Authority suggested the CERC should be vested with additional powers to regulate the coal sector rather than putting in place a separate coal regulator. Even within the coal ministry, views have been expressed that a regulator will be important once the sector is thrown open to private players. Meanwhile, the coal ministry is finalising Coal Governance and Regulation Authority Bill that will establish the office of the new regulator responsible overseeing issues pertaining to pricing and supply of coal. The bill is being finalised on the basis of a report prepared by Administrative Staff College of India.

FUND TO BOOST INVESTMENTS IN T&D