WAY back in the 1980s, when India’s telecommunications network was in a shambles, it had a minister in-charge of the key portfolio, known more for his arrogance than for his ability to handle the ministry. C.M. Stephen, the minister in Indira Gandhi’s cabinet, was being grilled about the appalling state of India’s telecommunications infrastructure, where phones remained ‘dead’ for days at a stretch, and consumers had to wait for as long as up to 15 years to get a connection.

“You can return your phone to the exchange if you are not happy with its functioning,” was the minister’s brusque reply to the complaints that kept piling up in his ministry. But not many subscribers dared take such a step in those dreadful days, as there were no alternatives.

Last week, saw the fall of yet another artificial edifice, built assiduously during the reign of several such telecommunications ministers. MTNL, a state-owned telecommunications service provider in Mumbai and Delhi, decided to part ways with its former parent, BSNL, and strike up a new relationship with VSNL (formerly state-owned, but now controlled by the Tatas).

More importantly for consumers in Mumbai and Delhi, it meant a sharp fall in call charges. MTNL announced that it would be treating calls between the two cities as local, and rates were accordingly slashed. A minute’s call between Mumbai and Delhi will now cost just 40 paisa. Amazingly, the current telecommunications minister, Dayanidhi Maran, was present when MTNL launched its National Long Distance Service, cutting off its ties with BSNL. The latter had refused to offer concessions to MTNL on its long distance charges, while VSNL offered hefty concessions.

National long distance telephony rates in India have been falling in recent months. Maran, representing the DMK - which won elections in the southern state of Tamil Nadu recently - in the United Progressive Alliance government, launched one-rupee (per minute) long distance calls.

These rates are expected to fall further, with MTNL also obtaining a national long distance (NLD) carrier licence. Maran has opened up the NLD and international long distance (ILD) regime, allowing several players to start services. According to the minister, increased competition will lead to further lowering of bandwidth prices, which will make the Indian IT and ITeS (IT enabled Services) industry more competitive.

MTNL, which in a joint venture with BSNL, is finalising a submarine optical fibre cable project connecting India to Singapore and Europe, enabling it to enter the ILD business.

The entry of two other state-owned giants - Railtel, a subsidiary of Indian Railways, and PowerGrid Corporation - will see further reduction in NLD rates in India. Analysts expect the 40-paise a minute regime to set in gradually. Both Railtel and PowerGrid have been granted NLD licenses by the telecommunications ministry.

Over a dozen companies have shown an interest in acquiring NLD licenses, especially after the government revised its licensing policies. The entry fee for operators was slashed from Rs1 billion to a mere Rs25 million, and the annual licence fee has also been cut to six per cent of revenue, as against the earlier 15 per cent.

RUMOURS have a way of playing havoc with the stock markets, and many operators (both bulls and bears) in Mumbai have mastered the art of spreading speculative tales. Last week, the Sensex, the benchmark index on the Bombay Stock Exchange, went on a roller-coaster ride, and millions of timid retail investors (especially first-timers), must have vowed not to play the high-stakes game.

The automation of the securities business has seen thousands of day traders playing the markets. There are dozens of banks, securities firms and other financial industry players offering internet trading in securities. And there are several retired executives, housewives, and others who fancy playing the markets.

When the markets are on a roll and booming, most of the players make a neat pile, but when the beast starts rumbling and heads in a different direction, nervous day traders (and equally nervous foreign investors) panic and dump their scrips.

Rumours of the imposition of a new tax on foreign institutional investors triggered off the massive selling on the BSE, which saw the Sensex nosedive from levels of 12,000 to around 10,000. The bears took control of the market, despite assertions by top government leaders - including Finance Minister P. Chidambaram - that there was no move to impose additional taxes on FIIs. Many FIIs are registered in Mauritius, with which India has a dual taxation avoidance treaty, and do not pay capital gains tax. Following the panic selling on the stock markets, some FIIs came out with public statements, asserting that they were here to stay in India on a long-term basis. Many mutual funds and high net worth individuals also proclaimed that this was a buying opportunity, but retail investors - fearing the worst - dumped their scrips in large numbers.

Of course, the fall in share prices in most emerging markets, following a steep reduction in the price of metals in global markets, added to the bearish sentiments in India. Adding to the confusion were remarks by some left leaders, demanding the re-imposition of long-term capital gains tax.

But Chidambaram and other top government leaders reiterated that there was no such move, nor was the government thinking of reviewing the Indo-Mauritius agreement. Many analysts believe that last week’s correction was much-needed, as the markets have been heading northwards without any breaks.

Just two years ago, when the United Progressive Alliance government was sworn in, the Sensex was around 4,500. After last week’s fall, it fell to 10,500. The key index had climbed steadily, without any major technical corrections, so the substantial fall has come as a much-needed correction. Fundamentally, the Indian economy continues to fare well. The economy is expected to grow by over seven per cent this fiscal, on the back of an eight per cent expansion last year. Foreign exchange reserves are around $160 billion, and inflation is well under control at below four per cent.

WITH global sugar prices soaring, Indian producers are hoping the government allows increased exports of the commodity. Both cane growers and sugar producers are planning to raise production, as they see tremendous opportunities in the global market.

Raw sugar prices have touched 25-year highs, and globally there is likely to be a deficit of nearly 3.5 million tonnes in the current year, according to the London-based International Sugar Organisation. White sugar prices have touched $500 a tonne, as compared to just around $275 last year. According to federal agriculture minister Sharad Pawar, India is likely to produce 19 million tonnes of sugar in 2005-06 (October 2005 to September 2006), up by a million tonnes. The next season starting October would see production go up to almost 23 million tonnes. India’s domestic consumption is about 18 million tonnes, leaving a surplus of a million tonnes this year, and about four million tonnes next year. With improved trade ties with Pakistan - and following the lifting of a ban - India has started exporting sugar to its neighbour. Pakistan faces a shortage of nearly a million tonnes. India is expected to supply about 500,000 tonnes of sugar this year, and producers are hoping to sell the commodity in Indonesia and Sri Lanka as well.

Last week, state-owned giant, MMTC Ltd, announced it would be selling 25,000 tonnes of sugar to Pakistan at $506 a tonne, while another 40,000 tonnes would be sold by another company.

The sugar industry has seen a lot of investments, and nearly a score of new factories have come on stream in recent months. But considering the sensitivity of the commodity and its pricing, the Indian government imposes restrictions on its exports.

Globally, there has been a shortage in sugar availability, following the spurt in oil prices. Brazil, the world’s largest producer of sugar, has been diverting a significant part of its sugarcane crop to the production of ethanol, to combat its rising fuel import bill.

The Indian government too has made it mandatory - from October - to blend ethanol with fuel. Initially, it will be five per cent, but by next October, it will rise to 10 per cent. Farmers in states like Maharashtra and Uttar Pradesh are planning to divert to sugarcane, considering the soaring demand for sugar and ethanol.