Economy News Notes

Days after having inked a civil nuclear agreement with South Korea, India will reopen the Comprehensive Economic Partnership Agreement (CEPA)
The first round of talks on “upgrading” the CEPA will begin next week
We are beginning to see Indian IT companies getting a foothold in South Korea because of CEPA
the civil nuclear agreement signed during President Pratibha Patil's recent visit to Seoul.
Korea Electric Power Corporation has already signed a Memorandum of Understanding with the Nuclear Power Corporation of India Limited.

During the previous crises — for example, the global financial meltdown of 2008 — gold benefited as equity stock prices sank. However, even after normalcy returned and stocks rallied, the price of gold did not fall back as one would expect.
It seems likely that investors, traumatised by the crisis, were not fully convinced of the sustainability of the recovery and continued to keep a part of their money in recession-proof assets, of which gold ranks very high.
Gold prices have more than doubled since the recession began in 2007. They have risen by 19 per cent since June when the eurozone debt crisis grew in intensity and threatened to spill over into its stronger economies.
the sharp rise in prices has now brought on a new set of buyers, those who take high risks for quick returns.
Demand has come from yet another direction: Central banks in developing countries are switching their currency reserves to gold.
Ahead of the festival season, the demand from the jewellery industry has risen to unprecedented levels.
But, as this much-sought-after metal bounces along another volatile phase, the gold loan boom points to the risks ahead as much as to the potential.

The Centre is likely to give a go ahead to 51 per cent foreign direct investment (FDI) in multi-brand retail after the conclusion of the Parliament session, although with a changed definition of back-end infrastructure investment
The new areas of investment are: design improvement, quality control and packaging of products.
The move will provide foreign retailers greater flexibility in structuring their India investments in the sector.
at least 50 per cent investment had to be mandatory in back-end infrastructure.

FICCI Vice-President and HSBC India Country Head Naina Lal Kidwai
Dr. Subbarao said, “If a corporate has an interest in a bank as a promoter or a shareholder, but has no position on the board, then there is no prohibition on the bank lending to the corporate. This opens up opportunities for self-dealing.”
The issues, he said, was critical as “it is not easy for supervisors to prevent or detect self-dealing because banks can hide related party lending behind complex company structures or through lending to suppliers of the promoters and their group companies.”
The RBI Governor exhorted the banking fraternity to engage with and seek corrective action on five key areas of corporate governance — bank ownership; accountability, transparency and ethics; compensation; splitting the posts of chairman and CEO of banks; and corporate governance under financial holding company structure.
Shareholders want profits to be maximised by taking on greater risk; depositors have an overriding preference for the safety of their deposits and hence for lower risk.

The National Association of Software and Service Companies (NASSCOM) on Tuesday said Indian IT companies would continue to grow globally at 16-18 per cent in the current fiscal despite the economic crisis
We have spoken to customers and they are looking at expanding into geographies and bringing newer solutions to the market
Notably, the U.S. and European nations account for over 85 per cent of the revenues

Cairn Energy on Tuesday asked Cairn India to accept all the conditions set by the Cabinet Committee on Economic Affairs (CCEA) and agree to pay royalty and cess on the Rajasthan oilfields to finalise the stake sale to Vedanta Resources.