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Today's Hot Stories - April 26, 2010

10 Headlines for Today

(1) No ruling out Manmohan, Gilani meeting during SAARC meet: Krishna
(2) RS adjourns till noon over phone tapping of politicians
(3) Iran discusses nuclear issue with IAEA
(4) Make phone banking more secure: RBI
(5) Sensex up 100 points in opening trade
(6) Volcanic eruption: little fallout for airfares
(7) Batting key to India's fortunes at T20 World Cup
(8) Is the BCCI chief afraid of truth, asks Lalit Modi
(9) Rooney wins PFA player of the year award
(10) Congress did not initiate anti-Sikh riots in 1984: Gadkari

5 Stories for Today

(1) Developing nations get more say in World Bank affairs
(2) BASIC group wants global deal on climate change by 2011
(3) EID Parry makes open offer for 20 p.c. stake in GMR Industries
(4) US witness 57 bank failures this year; 16 go belly up in April
(5) CII Services growth improved on govt's support: CII

(1) Developing nations get more say in World Bank affairs

Emerging economies, including China and India, were given a greater voice at the World Bank, as member nations approved a slight shift of voting shares in favour of developing countries, while agreeing to raise more money for global aid.

The World Bank and The International Monetary Fund (IMF) concluded their annual spring meeting here by increasing the voting rights of India, China and Brazil, among others, thus giving them more say in the institutions' functioning.

This represents a total shift of 4.59 per cent to developing and transition countries since 2008, the IMF and the World Bank said in a joint communique after the meeting.

As a result, India's voting power increased from 2.77 per cent to 2.91 per cent while China whose rights increased from 2.77 per cent to 4.42 per cent was the biggest benefactor.

The shift places India at the seventh biggest place after the United States (15.85 per cent), Japan (6.84 per cent), China, Germany (4 per cent), France (3.75 per cent) and the United Kingdom (3.75 per cent).

"The change in voting-power helps us better reflect the realities of a new multi-polar global economy where developing countries are now key global players," said World Bank President Robert B Zoellick.

The change gives emerging nations more say in how the bank is run and how its funds are disbursed.

"This change in voting share, giving developing countries over 47 per cent, is a significant step," he told , hoping shareholders will review the approach in 2015.

Membership of the financial institution gives certain voting rights that are the same for all countries, but there are additional votes which depend on a country's financial contributions to the organisation.

Zoellick said at a time when multilateral agreements between developed and developing countries have proved elusive, this accord is all the more significant.

This increase fulfils the Development Committee commitment in Istanbul in October 2009 to generate a significant increase of at least 3 percentage points in Developing and Transition Countries (DTCs) voting power.

"We, in calculating this, looked at size of the world economy, using purchasing power but also exchange rate measures, but also, as a development institution, the contribution to development including the contribution to IDA, our fund for the poorest".

The governments also approved over USD 90 billion in extra money for the World Bank's various arms that provide aid and capital to member countries.

Zoellick said the shift in voting powers was designed to try to reflect past contributions, citing the example of Japan that has been "a very gracious contributor".

Zoellick added the change was also "to encourage new ones, including for some of the developing and transition countries".

The 186 countries that own the World Bank Group also endorsed boosting its capital by more than USD 86 billion for the International Bank for Reconstruction and Development (IBRD), the arm that lends to developing countries.

The increase would come from a general capital increase and a selective capital increase linked to the change in voting-powers, including USD 5.1 billion in paid-in capital.

It further agreed on a USD 200 million increase in the capital of the International Finance Corporation (IFC), the World Bank Group's private sector arm, as part of an increase in shares for developing and transition countries.

IFC will also, subject to board approval, consider raising additional capital through issuing a hybrid bond to shareholding countries and through retaining earnings.

The IBRD 2010 realignment will result from a selective capital increase of USD 27.8 billion, including paid-in capital of USD 1.6 billion.

An increase in the voting power of DTCs at IFC to 39.48 per cent -- a total shift of 6.07 percentage points.

The IFC 2010 realignment will result from a selective capital increase of USD 200 million and increase in the basic votes for all members.

Noting that this represent a dynamic transformation for the World Bank Group, Zoellick said the additional capital means that the bank will no longer face the possibility that it would have to cut back its lending later this year.

"We came into this crisis well capitalised thanks to sound financial policies. We have provided a record USD 105 billion in financial support since the crisis began to bite in July of 2008.

"This additional capital means that we will be able to continue to play the role that is demanded of us," he said.

(2) BASIC group wants global deal on climate change by 2011

Environment ministers of the BASIC countries -- Brazil, South Africa, India and China -- have said that a legally binding global agreement to limit climate change needed to be completed by 2011, noting that the world could not wait indefinitely for the US to finalise its legislation on the issue.

The BASIC leaders, who met here to look at how to fast-track such a pact to curb global warming, gave the statement at the conclusion of the third meeting of the group on Sunday.

"A step-change is required in negotiations, and incremental progress on its own will not raise the level of ambition to the extent needed to avoid dangerous climate change and impacts on poor countries and communities," the ministers indicated in a joint statement, noting reports that domestic legislation on climate change in the US had been postponed.

"Ministers felt that a legally binding outcome on long-term cooperative action under the UN Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol, to be concluded at Cancun, Mexico in 2010, or at the latest in South Africa by 2011, the ministers said in a joint statement.

Asserting that lack of such agreements hurt developing countries more than developed countries, the ministers said such deals must include an accord on quantified emission reduction targets under a second commitment period for Annex I Parties under the Kyoto Protocol.

The ministers who participated in the meeting were Xie Zhenhua, Vice Chairman of the National Development and Reforms Commission from China; Izabella Teixeira, Minister for Environment from Brazil; Jairam Ramesh, Minister for Environment and Forests from India, and Buyelwa Sonjica, Minister of Water and Environmental Affairs from South Africa.

The ministers said the only legitimate forum for negotiation of climate change is the UNFCCC.

Small groups could make a contribution in resolving conflicts, but they must be representative and their composition must be determined through fully inclusive and transparent negotiations, with a mechanism for reporting back to the multi-lateral forum, the statement said.

Building on the discussion held in New Delhi in January 2010, the ministers elaborated areas in which progress could be made in the run-up to Cancun, including the early flow of fast-start finance of the USD 10 billion in 2010 pledged by developed countries. Equity will be a key issue for any agreement.

The ministers noted that the Copenhagen accord set a global goal of keeping temperature increase below 2degreesC above pre-industrial levels, without jeopardising economic growth and poverty alleviation.

This implied a certain global carbon budget.

The implications of this budget for individual countries required careful analysis, and must be based on a multilateral agreement about equitable burden-sharing, including historical responsibility for climate change, the need to allow developing countries equitable space for development, and adequate finance, technology and capacity-building support provided by developed countries for all developing countries.

The ministers were of the view that it would not be possible to deal with mitigation actions by developing countries, without also dealing with support for those actions and the two-fold commitments by developed countries to both provide finance for developing countries and reduce their own emissions, with consequences of non-fulfilment.

They emphasised again that BASIC is more than a forum focused on negotiations.

They supported collaboration among experts from BASIC countries and welcomed the creation of an on-going forum, including work on adaptation and mitigation action plans and scenarios.

The ministers agreed that, remaining anchored in the G77 and China, they would continue to contribute constructively to the multi-lateral negotiations on climate change.

The next BASIC ministerial meeting he will be in Brazil in July, followed by one in China in October 2010.

(3) EID Parry makes open offer for 20 p.c. stake in GMR Industries

Sugar manufacturer EID Parry on Monday made an open offer to acquire 20 per cent stake in GMR Industries at Rs 110.69 per share.

Sugar major EID Parry has agreed to acquire 39.92 lakh shares, representing 20 per cent holding in the company, at Rs 110.69 per share, aggregating to Rs 44.19 crore, GMR Industries said in a filing to the Bombay Stock Exchange.

Yesterday, EID Parry had entered into a definite agreement with GMR Holdings Pvt Ltd to acquire a minimum 65 per cent equity in GMR Industries.

As per the December quarter shareholding pattern available on the BSE, GMR Holdings Pvt Ltd held 1.49 crore shares or 74.84 per cent shareholding in GMR Industries.

Post the open offer, GMR Group would become a minority shareholder in the company.

EID Parry, which is part of Chennai-based Murugappa Group, is a dominant player in the sugar industry and also has interests in bio-pesticides and nutraceuticals.

GMR Industries owns and operates three fully integrated sugar complexes in Andhra Pradesh and Karnataka.

The deal would mark EID Parry’s entry into Andhra Pradesh and also consolidate its position as a leading sugar manufacturer in cane rich areas of north Karnataka.

EID Parry Chairman A Vellayan said the acquisition would strengthen its position as one of the leading sugar companies in India and increases the number of integrated complexes.

(4) US witness 57 bank failures this year; 16 go belly up in April

The American banking industry continues to be shaky, with nearly 15 banks on an average biting the dust every month.

Notwithstanding healthy economic growth and rebound of Wall Street majors, a staggering 57 banks have been shut down so far this year and seven of them collapsed last Friday.

As many as 15 entities, most of them small and medium banks, have gone out of business in the last two weeks. So far this month, 16 banks have gone bust.

The failure of the seven banks last Friday is expected to cost the Federal Deposit Insurance Corporation (FDIC) as much as $973.9 million.

FDIC is the federal agency which insures deposits at over 8,000 American banks.

The latest ones to go belly up are New Century Bank, Broadway Bank, Wheatland Bank, Peotone Bank and Trust Company, Citizens Bank and Trust Company of Chicago, Lincoln Park Savings Bank and Amcore Bank, National Association.

The number of failures are expected to climb till the labour market situation becomes more steady.

Despite a quarterly economic growth of over five per cent and improving performance of Wall Street firms, small and medium banks continues to be hit by defaults due to high rate of unemployment.

Currently, the jobless rate is over nine per cent. Last month, 19 banks went bust while the count of failures touched seven in February. The authorities closed down shut down 15 banks in January.

A whopping 211 entities have collapsed since the bankruptcy of Lehman Brothers in September 2008.

(5) CII Services growth improved on govt's support: CII

With government's support, the service sector, accounting for about 55 per cent in India's economy, has revived from slowdown and maintained growth trends during 2009-10 over the year ago period, CII said.

Telecom and mutual fund industry have emerged as the biggest contributors in the growth of services industry both recording excellent growth rates, a survey by CII said.

"The services sector has performed better during 2009-10 over 2008-09 mainly on the back of the stimulus package provided by the government," it said.

In the Budget, the government has continued the 10 per cent service tax benefit for the sector. Earlier, the Centre had taken several measures, including increased public expenditure to prop up the economy against the impact of global demand slowdown.

The study is based on responses of 350 entities in both the private and public sectors.

Of the 51 sectors surveyed, 13.72 per cent recorded excellent growth of more than 20 per cent in 2009-10. This is an improvement over 2008-09 when only 5.88 per cent of the sectors recorded excellent growth rate.

The share of sectors registering high growth has also increased to 43.13 per cent in the last fiscal from 41.17 per cent in the previous year. While the share of moderate growth rate sectors increased from 35.29 per cent to 41.17 per cent indicating substantial improvement.

Sectors recording negative growth rate has significantly declined to 1.96 per cent from 17.65 per cent.

The high growth category (10 to 20 per cent) includes air passenger traffic, retail trade, advertising, courier and logistics and live entertainment.

The industry chamber has underlined some pro-active reform measures, including a policy statement for modern retail while allowing foreign investment in the segment and early implementation of Goods and Services Tax regime.

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