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Business Buzz: Indian Economic Growth, Vedanta-Cairn , BlackBerry, Home Loan Rates & more..

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Last week saw some interesting buzzing news be it – Single entrance test for MBBS from 2011 (For a change, it is related to the medical field) or the glamorous NASDAQ listing of MakeMyTrip, India’s biggest online travel company.

Here are some of the buzzing news of past couple of days..

India to be World’s Fastest Growing Economy by 2013-15

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Even as we digest the news that China’s nearly $5 trillion economy surpasses Japan to become the world’s second largest economy, a new report by Morgan Stanley says that India is poised to accelerate its growth rate to 9-9.5% over 2013-15 powered by demographic and structural reforms within the economy.

The report banks on the fact that India will significantly jack up its expenditure on infrastructure and in plant and machinery. Infrastructure expenditure is expected to rise from 7.5% in 2009 to 8% of GDP in 2010. This gives a preview as to how optimistic the world is on emerging markets such as India and China.

However, for the investors out there – Chinese stocks are better picks over their Indian peers on relatively better valuations, says Merrill Lynch. Indian equities have out-performed year to date as compared to its regional equity markets including Brazil and China. FIIs have invested a net of $11.6 billion in Indian equities so far in 2010.

Vedanta’s Acquisition of Cairn India

London-listed mining group Vedanta Resources, along with group company Sesa Goa, has revealed its plants to diversify into oil business by picking up a controlling stake in Cairn India from its parent company Cairn Energy for 60% stake at $9.6 billion. Cairn India operates in the country’s largest producing oil fields in Barmer, Rajasthan.

However, the deal will need Centre’s approval as Cairn India has signed production-sharing contracts for its oil and gas exploration blocks, which would require Indian government’s approval if any change of ownership is intended. The proposed acquisition significantly enhances Vedanta’s position as a natural resources champion in India.

As a part of the deal, Vedanta Group will acquire another 20% stake in Cairn India – the one to be bought from minority shareholders through open offer from October 11 – for about $3 billion through Sesa Goa, its majority owned iron ore mining business company, as a strategic investment in Cairn India’s world class Rajasthan assets.

62% Engineering Graduates Need Pre-employment Training

Ever since the IT revolution and the outsourcing industry has picked up in India, the number of engineering graduates has witnessed a dramatic rise across the country. But, a big question still remains as to how much our educational system practical in its approach to impart job-oriented education?

A startling study by Aspiring Minds reveals that about 62% of all engineering graduates require training for any job in the IT and IT-enabled services sector. In fact, knowledge process outsourcing firms found only 9.47% technical graduates employable.

RIM to give India partial BlackBerry Access

The Canadian Smartphone-maker Research in Motion (RIM) has assured Indian government about providing partial access to highly-popular BlackBerry Messenger services by September 1, and promised further discussion on monitoring security-related issues on its secure corporate email services.

BlackBerry, which boasts of more than 1 million Indian customers, has been pulled up by the security agencies and was issued an ultimatum to provide technical solution on the issue of interception of its services by August 31. Neither the government nor any of the 9 carrier networks (including state-owned BSNL and MTNL) piggybacking the BlackBerry service in their networks are technically capable of decrypting the Enterprise emails.

Currently, the encryption level of up to 40-bit key length is allowed without prior government permission. In case of BlackBerry, the level of encryption is much higher and complex, surpassing the security guideline norms and standards.

Rising Deposit and Lending Rate Regime

Recession is over and it’s that time of the year where interest rates, for both lending and deposit rates, are likely to go up on the back of renewed demand in the economy. India’s top two lenders – SBI and ICICI Bank – have decided to pass on a rate hike to retail borrowers in line with the RBI’s tightening policy.

The second largest lender – ICICI Bank – said it was raising its lending rates by 50 bps leading to surge in home loan rates. The private-sector bank said its prime lending rate would be 16.25% and the floating reference rate for consumer loans would be 13.25%.

Moreover, with the credit picking up in the economy, SBI has also increased returns on term deposits and has introduced a floating rate deposit scheme to attract investors in a rising rate regime. The rise has been as much as 150 bps in selected maturities such as 45 day deposits.

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