Economy News Notes

DoT agrees to setting up of special purpose vehicle for broadband network roll-out

• DoT was earlier insisting on appointing Bharat Sanchar Nigam Ltd as the agency for executing the project aimed at connecting all the panchayats.
• However, in a note circulated for the consideration of the Cabinet, DoT has agreed to set up a special purpose vehicle (SPV) of all PSUs that have optical fibre infrastructure.
• The telecom regulator had also cautioned the DoT against giving the mandate to BSNL on grounds that it could disturb the level-playing field.
• DoT overruled TRAI, but could not sidestep the Finance Ministry.
• A committee headed by Mr Sam Pitroda, Advisor to the Prime Minister, had also suggested setting up an SPV comprising Central public sector undertakings, which already own optical fibre cable. The proposal suggested BSNL, RailTel, Gailtel and Power Grid Corporation as part of the SPV. Private operators can be given equity stake in the SPV later, it was suggested.
• The SPV will carry out mapping of the present cable infrastructure and fix the project cost.

Surge in air fares due to demand-supply situation: Regulator

• The fares being charged currently by domestic airlines have jumped manifold
• The Director-General of Civil Aviation, Mr E.K. Bharat Bhushan, “We have not observed anything abnormal in the fare".
• The current high fares are a result of the demand and supply situation, he added.
• Besides, the Formula One races near Delhi has put more pressure on the supply
• All the airlines were asked to publish their fares on their Web sites.

Top IT firms can absorb uncertain demand: S&P

• Top Indian information technology (IT) companies(specially Big Three) are likely to maintain their investment-grade ratings even if demand weakens, according to a Standard & Poor's Ratings Services report
• The ‘Big Three' companies are: Tata Consultancy Services (TCS: BBB+/Stable/--), Infosys (BBB+/Stable/--), and Wipro (BBB/Positive/--).
• S&P expect these companies to maintain industry-leading operating (earnings before interest, taxes and depreciation) margins and grow in double digits in the next 12 months.
• Moreover, business and reputation risk is rising due to increasing protectionism.
• Companies also face issues such as dependence on the slowing economies of the U.S. and Europe, visa issues, rising wages in India, and foreign exchange volatility.
• High unemployment rates, slowing growth, and political activism in many countries are generating opposition to outsourcing

Peabody, ArcelorMittal secure majority stake in Macarthur Coal

• Peabody Energy and ArcelorMittal have acquired a controlling stake in Australia's Macarthur Coal — world's biggest pulverised coal producer.