Economy (National)

Content:

1. Forbes lsit
2. RBI buys $10 b worth IMF notes
3. Why favour FTAs?
4. Wind power in the country
5. Govt to reduce stake in SBI
6. What is the ideal debt to GDP ratio?
7. Essar buys Trinity Coal for $600 million

Brief Description:
Forbes lsit

• India has the second largest number of billionaires in Asia

• India is home to 49 billionaires, up from 24 last year, but a few shy of the 53
billionaires the year before. China stands first with 89 billionaires.
• India has the most number of billionaires after the US, China, Russia and
Germany.
• The US is home to 40% of the world’s billionaires, but it is declining. Last year, it
was 45%.
• Pakistan just got its first billionaire — Mian Muhammad Mansha of the Nishat Group,
which has interests in textiles and banking.
• Fifty-twoyear-old Mukesh Ambani, with an estimated fortune of $29 billion, and 59-
year-old Mittal, with a net worth of $28.7 billion, rank four and five, respectively, in a
list of 1,011 billionaires with an average net worth of $3.5 billion. Apart from Mr
Ambani and Mr Laxmi Mittal, only four Indians rank in the top 50. With a fortune of
$17 billion, Wipro’s Azim Premji ranks 28. Mr Ambani’s estranged younger brother
Anil Ambani ranks 36 with a fortune of $13.7 billion.
• India’s 49 billionaires have a combined wealth of $222.1 billion —about 17% of
India’s GDP. They have an average net worth of $4.5 billion. India’s per capita GDP
is about Rs 46,000. Mukesh Ambani and Lakshmi Mittal account for 25% of the total
Indian billionaire wealth of $222.1 billion.
• Carlos Slim of Mexico has overtaken Bill Gates as the richest person in the world. His
net worth is reportedly $53.5 bn
RBI buys $10 b worth IMF notes

• The Reserve Bank of India has entered into an agreement with the International
Monetary Fund to buy up to $10 billion (over Rs.45,000 crore)worth notes to
help the multilateral agency shore up its resources for assisting countries hit by the
global financial meltdown.
• The IMF said it signed an agreement with the RBI, under which the apex bank would
purchase up to $10 billion worth notes, which are denominated in SDRs (special
drawing rights), the Fund's unit of account, with a maximum maturity of five years.
• The agreement offers India a safe investment instrument at the same time as
boosting the Fund's capacity to help its members weather the global financial crisis,
and to facilitate an early recovery from the worldwide economic crisis.

Why favour FTAs?

• As of 2008, 421 RTAs had been notified to the WTO mostly under article
XXIV of GATT.
• Including RTAs not yet notified, being negotiated or at proposal stage, about 400
FTAs would come up for implementation in 2010.
• About 90% of RTAs are proposals for free trade among members but do not extend
to customs unions (CUs). The difference is that in CUs at least some country would
have to lower its existing global (MFN) tariff levels.

Wind power in the country

• It is Tamilnadu which leads wind power capacity in the country with about
3,900 MW.
• Maharashtra’s wind power capacity stands at around 1,800 mw at present,
earning it the second rank. Most of Maharashtra’s existing wind farms are located
in Dhule, Satara and Sangli districts.
• The state is also home to an incomplete 1,000-mw power project currently
managed by a private company in Dhule district. The state’s estimated wind
power potential has been pegged at 4,584 mw.

Govt to reduce stake in SBI

 • At present the Government of India is holding 59.41% stake in SBI. While the
government already has Parliament’s approval to bring down its stake to 55% in
SBI, this gives the bank limited space in fund-raising. Hence the government is
thinking of reducing it further to 51% so as to facilitate SBI in mobilizing additional
capital.

What is the ideal debt to GDP ratio?

• 90% is considered the threshold point after which debt begins to seriously drag down
long-term growth.
• At 180%, Japan has the world’s highest level of public debt as a share of
GDP whereas in countries such as Greece and Italy, the ratio is around
120%. Public debt in the US will be at 90% of GDP by the end of this year.
• Economists Kenneth Rogoff and Carmen Reinhart write in their paper ‘Growth in a
time of debt’ that when government debt as share of the economy exceeds 90%,
median growth rates fall by 1% and the mean levels of growth decline by an even
more substantial 4%.

Essar buys Trinity Coal for $600 million

• The Essar Group, through its subsidiary Essar Minerals, Delaware, and Denham
Capital, an energy and commodities-focussed global private equity firm, announced
that they had signed a definitive agreement by which Denham would sell its
ownership of Trinity Coal Partners LLC to Essar for $600 million.
• Trinity is a leading U.S. coal producer with operations in the Central
Appalachian region. Among the top 10 U.S. coal producers, it owns and operates
mines in Kentucky and West Virginia and has a proven resource base of about 200
million tonnes of coal — split equally between metallurgical coal and steam coal. It
now produces about 7 million tonnes of coal annually and plans to ramp up
production to 10 million tonnes annually.