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Will Inflation Turn in Gamble in Fortune by Farmers

Comments Off on Will Inflation Turn in Gamble in Fortune by FarmersPosted by on May 1, 2011

I was going through an article published in Sunday Economic Times [May 01, 2011 to be precise] which was titled “Will inflation turn out to be a game-changer in India?”

It was nicely crafted and argued article by T K Arun, and all the arguments look relatively on rational side, but I have my apprehensions, which may be dubbed as irrational or idiotic.  But I feel like sharing.  The below is article I am talking about.

Will inflation turn out to be a game-changer in India?

If the RBI decides its foremost task is to stamp out inflation, never mind if it flattens the growth rate also in the process, that would be change we don’t want. However, inflation can also drastically change the rural landscape, boosting farm output and delivering millions out of poverty-provided the right policy initiatives are forthcoming.

Inflation is driven by, even if not confined to, food, particularly superior food: vegetables, egg, meat, milk, fish and lentils, vegetables and protein, in other words. Nor is this confined to India. Over the past 10 years, the least developed countries as a group have grown at an average rate of 7% a year. All of them witness a spurt in the demand for food. And for a variety of reasons ranging from prolonged drought to excessive rains, supplies have been disrupted, raising food prices across the board. Of course, the huge expansion in liquidity unleashed by the US and other developed countries, pumping speculative capital into all commodity markets, adding a thick layer of froth to the real pressures pushing prices upwards, plays its role as well. The net result: Thomas Malthus, who made the dire but fortunately erroneous forecast that the human race would proliferate faster than food production can grow, is back in fashion.

Beating Malthus is fait accompli. People not only have proliferated with abandon but also enjoy ever-improving standards of living, instead of straining hollow eyes into a darkening future of dwindling food supplies. However, beating Malthus promises to rise as a fresh challenge, an enormously profitable one. India has varied agroclimatic regions, capable of producing a great variety of crops. The challenge is to harness the potential and boost India’s farm output to feed not just a burgeoning India but also the rest of the world. It looks daunting but is, in fact, eminently doable.

Agricultural economist Ashok Gulati reports that the largest boost to farm income comes from investment in rural roads compared to other forms of agri-related investment. This offers a key insight that our policymaking obsession with the technical means of raising yields has ignored: farm production, too, is determined by the market. If you provide farmers easier access to markets for farm inputs and output, they would make use of that access to raise output and incomes. If the best seeds and fertiliser boost production in an interior village which cannot evacuate the surplus harvest to a market outside, the only result of the surplus would be to depress local prices and farmers’ incomes. On the other hand, if farmers can take their produce to buyers outside, their income would amplify.

A primitive system of state-mandated monopoly denies Indian farmers the freedom of choice in whom they sell to. The Agricultural Produce Marketing Committee Act must be scrapped. An organised, efficient supply chain must link farmers with urban consumers. This is what organised retail would do, if it is allowed to. Amul achieved this in the case of milk. New farmers companies or cooperatives should now be catalysed to accomplish this for other produce.

Observation of and by Blogger:

Please do not get surprised as reality is rarely known. People know, what I will call as a sucessfull propaganda, turning in Fad, leading to creation of a Mirage which looks like a Panacea to a very long [nearly seeming to be perpetual] Problematic Issue.

These days every body keeps talking about what ever he/ she feels will sell, without any consideration on its merit. Be it Organic Farming, Growing Jatropa for Bio fuel, Setting up of private mandies or scrapping of APMC Act.

Would someone like to comment on the situation that forced a Nation’s Goverment and its legislatures to formulate, pass and implement APMC Act, that today every one says should be scraped.

Inplace of just talking of implementing what the columnist T K Arun has argued in his article “Will Inflation Turn Out to be A Game Changer in India”; I would like to take my audiences a step ahead and deliberate on one of such models.

On the same lines as mentioned in paragraph above lets have some discussion on a very popular model — Acclaimed by Corporates as a Great Success Story. I do not think that every individuals who talks about it and considers it as a success has gone deeper in search of reality. So here it starts:

E – Choupal of ITC

Widely acclaimed as an ICT success story, it typifies the complete corporatization of the social enterprise model.

An initiative seeking to become the Wal-Mart of rural India, e-Choupal is a gateway to an expanding spectrum of  commodities leaving farms and also selling to rural India urban oriented goods and services like FMCG, consumer durables and insurance services (Gurumurthy, 2009; Prahalad, 2006).

Based on a business model providing connectivity and services to a closed network of farmers through an entrepreneur whose role, interestingly, is projected by ITC as a “public office”, e-Choupal exemplifies the win-win problematique (Gurumurthy, 2009; Prahalad, 2006).

However a closer study of the model, from a development perspective, unpacking the socio-politics of the e-Choupal ecosystem, indicates a monopolistic control over the entire local agriculture ecology by a transnational corporation through the use of a captive ICT infrastructure, with minimal regulation and competition.

The e-Choupal hubs serve as sales outlets for agriculture and other products and services. Cutting off alternative systems, local middlemen and government services, e-Choupal locks in a large number of farmers into its network.

While the project has resulted in some increase in rural agricultural incomes through privatization driven efficiency improvements in the supply chain, e-Choupal underscores ‘trickle-down’ and individual enterprise at the village levels (Gurumurthy, 2009; Prahalad, 2006).

The average village shopkeeper/entrepreneur is bound to get affected as local demand for goods and services shifts to ITC and Choupal sagars. Needless to mention livelihood of traders/middlemen whose livelihood has been squelched through this model.

Further, the ‘DNA’ profile of the farmers acquired during the registration of e-Choupals has allowed ITC to determine and understand their buying behavior very closely.

This has allowed targeting, positioning and delivering goods and services to match their needs and wants continuously, succinctly called Customer Relationship Management (CRM) in marketing parlance.

This makes them more vulnerable to a shift from the present more or less sustainable existence to materialistic consumerism. Little awareness of their (farmer’s) rights may not guarantee total protection of the database and its unethical usage. This is where the government is expected to protect its citizens from such transactions.

However, the government has been changing slowly but surely towards a free market economy.

[The blogger, here is not arguing against or in favour of India moving towards a market economy. The above discussed issue has to do with not only business but ethics, morale, privacy, awareness and many other social issues.]

The information above has been picked from a Research Paper Titled E – Choupal – Hope or Hype. The Same can be accessed by Clicking here. ]

The Rest of the article continues……

Farmers require investment in infrastructure, not subsidy. Politics must shed its love for doling out subsidy and invest massively in harnessing water, roads, power and scientific storage of farm produce.

Policy must change, too, in allowing farmers access to global markets. The short-term distress this creates would be more than removed by the rise in incomes and employment that would result.

Farming would cease to be a punishment and become the biggest fighter against poverty. Inflation is indeed a horse that India’s beggars could ride their way out of poverty

Always Yours — As Usual — Saurabh Singh

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Sahara India Commercial Corporation (SICCL) — A MYSTRY — AN ENIGMA — OR — A LOOT

4 CommentsPosted by on April 23, 2011

2.6 m Shareholders, but Sahara Co Still Unlisted

Sahara India Commercial Not on Bourses Despite  3,000-cr Issue

In October 2009, Sahara India Commercial Corporation (SICCL), part of Sahara Group of Companies, decided to issue shares to a bunch of investors. While the size of the share issue— 3,000 crore—was substantial, what was really startling was not the amount, but the number of shareholders who were allotted shares: 2.6 million. Even if this were the only share issue by the company, it would make it the third-largest company in the country today in terms of number of shareholders—behind Reliance Power (4.9 million shareholders as of December 2010), and Reliance Industries (3.5 million). That share issue by SICCL placed it far ahead of other stellar names of India Inc such as Tata Steel and NTPC, in terms of the shareholder base.

But here’s the real surprise. Despite the share issue, SICCL is not listed on any stock exchange. According to filings by the company with the registrar of companies, West Bengal, the company issued 30 crore shares with a face value of 1, at a premium of 99, on October 29, 2009. The number of allottees were 26,89,935. The company has also uploaded, on the RoC site, a long list of the share allottees. The shares have not been listed on any exchange. “The companies act and SEBI regulations are clear,” says Tejesh Chitlangi, a senior associate with Finsec Law Advisors: “Section 67 of The Companies Act construes an offering of shares or debentures to 50 or more persons as an offer or invitation to the public, for which norms listed out in SEBI Regulations would need to be followed. These include issuing of prospectus, compliance with the procedures and other disclosure norms.”

In response to a questionnaire sent by ET, Sahara spokesperson, Abhijit Sarkar said: “SICCL is an unlisted public limited company and does not intend to list its shares at any of the stock exchanges as decided by the board of directors of the company. Compliances with the SEBI Regulations are applicable for the listed companies as well the company who intend to get their shares listed on the stock exchanges.”

He said necessary board and shareholder approvals were taken. Further, the fact that the return of allotment was duly approved by RoC West Bengal was evidence that “required compliances for allotment of equity shares by the company are fully complied with”. According to Sahara, an approval from the RoC was given in September 2010.

Staying Away from the Street Sahara arm not listed on any stock exchange
The company: Sahara India Commercial Corporation

Business: Real Estate and infrastructure

No. of shareholders: 2.6 million Funds raised: Rs 3,000 crore

Type of company: Public, but unlisted

•Third-largest company in India today in terms of number of shareholders—behind Reliance Power and Reliance Industries

• As of March 2009, SICCL posted a loss before tax of Rs 449 cr, on revenues of Rs 1,600 cr
• Its balance-sheet size, as of March 2009, was Rs 8,591 cr. Over 80% of this, Rs 6,922 cr, was raised through OFCDs Two Share Allotments

Says Jayant Thakur, a chartered accountant specialising in securities law: “When a company raises funds from more than 50 people, it does not remain a private placement, but is a public issue. For this, listing requirements, as well as other SEBI norms must be followed.” SICCL, according to other filings with the RoC, is primarily a real estate and infrastructure developer. Documents filed by the company describe it as ‘perhaps one of the largest infrastructure and housing development company in India.” As of March 2009, the company posted a loss before tax of . 449 crore, on revenues of . 1,600 crore. SICCL’s balance-sheet size, as of March 2009, was . 8,591 crore. Of this, . 6,922 crore (over 80%) was raised through the issue of optionally fully convertible debentures, or OFCDs. OFCDs are bonds, which on maturity, and at the option of the investor, can be converted into equity shares.
Between March 2009 and June 2010, SICCL completed two share allotments—one for . 3,000 crore to 2.6 million investors, and the other of . 2,000 crore, done on June 30, 2010, to five private limited companies. Thus the total amount of shares issued by the company, as a result of these two allotments, was . 5,000 crore. It could not be ascertained whether the two share allotments arose as a result of the conversion of OFCDs, issued earlier by the company, into shares or whether these were standalone issues of shares to investors. Sahara Group did not give details about the circumstances under which the shares were issued.

According to SICCL’s debenture prospectus, shareholder approvals for OFCDs were given at seven different meetings held between 1998 and 2005 and were to be on private placement basis to “friends, associates, group companies, workers/employees and individuals having their association with group companies”. The OFCD issue opened on July 6, 1998, and closed on June 30, 2008. According to the debenture prospectus, the total size of the issue, spread over five types of bonds, and 10 years, was . 17,250 crore. The funds raised were to be used to finance a number of projects, including the development of the Aamby Valley project.

Late last year, the Securities and Exchange Board of India (SEBI) had banned two other Sahara Group companies—Sahara India real estate corporation (SIRECL), and Sahara Housing Investment Corporation(SHICL)—from raising funds from the public through the issue of OFCDs, without going through the necessary approvals and procedures required. The two companies claimed that they had not made a ‘public offer’ (defined as an offer to more than 50 investors), as claimed by SEBI, but had placed the debentures privately and among a few friends, associates and others close to the group. Therefore, the companies claimed, SEBI had no jurisdiction. The market regulator, disagreeing with the claim of a ‘private placement’, had imposed the ban.

The SEBI ban on the other two Sahara companies was stayed by the Allahabad High Court but the stay order was lifted earlier this month. SEBI has filed a caveat in the Supreme Court against the issuance of any ex-parte orders in the case (which are issued without one of the parties being present). Sahara is reported to have filed a special leave petition in the Supreme Court as well, though this could not be confirmed.

Always Yours — As Usual — Saurabh Singh

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Budget 2011- 12 under Scanner

Comments Off on Budget 2011- 12 under ScannerPosted by on March 16, 2011

Already having presented the facts prior to budget, as to what I as a country man expected in the budget to be presented on February 28, 2011, and following the same by publishing salient features in the budget, probably now it’s time to comment upon it. It’s not due to the reasons that it required so much of time for analysis, but is just due to waiting for the dust to settle down, so as to get a clear glimpse of the events.

Having said and done all the things earlier, now I can say that ‘budget or no budget’, things would have remained more or less the same.  The fundamental feature of budget lacks any focus or any strategy of any kind (Chandrasekhar, 2011). Even on the crucial issue like that of ‘financial inclusion’, only lip service has been paid, rather it could be blamed to be biased more towards ‘financial consolidation’.

Expenditure as a ratio to GDP as proposed in Budget

Plan Expenditure when compared with that of 2009 – 10 rose from 4.6 per cent to 5.0 per cent in 2010 – 11 and has been budget to come down to 4.9 per cent in 2011 – 12. On the other hand non – plan expenditure in the same period has come down from 11 per cent to 10.4 per cent and projected in budget to carry on the downward trend and reach a figure of 9.1 per cent.

Reality: Decrease will automatically be forced to be much larger

This is being said due to the reasons that non tax revenue in FY 2010 – 11 which stood at Rs. 2, 20, 148 crore had received a contribution of the tune of Rs. 72,000 Crore from sale of 3G and wireless broadband spectrum. Deducting this amount, the non tax revenue of FY 2010 – 11 will rest at Rs. 1, 25, 435 crore only.

Discussion:

In presence of such a crystal clear scenario, which clearly projects fall in aggregate revenue [due to fall in non – tax revenue], how come the budget expects to see it rising to Rs. 7, 89, 892 crore in 2011 – 12 against Rs. 7, 83,833 crore in 2010 – 11.

Even this partial increase fails to directly point towards a source from where it will accrue. Though, it seems to be, projected out of an increase in tax revenue collection. This is being said as projected tax revenue collection stands at Rs. 6, 64, 457 crore in 2011 – 12 against Rs. 5, 63, 685 crore in 2010 – 11.

While a glimpse of budget exposes that while union finance minister proposes to raise additional revenue of RS. 11, 300 crore from increase in indirect taxes, he is giving away Rs. 11, 500 crore in way of direct tax relief. These figures expose a negative contribution of Rs. 200 crore in aggregate tax revenue.

This discussion is being stopped at moment simply after discussing a single issue. There are more issues like inflation towards which this budget seems to be contributing positively, Increasing credit supply to agriculture but reducing public investment in agriculture etc. are many other important issues that require discussion.

 

Note: I am now not writing it as part one or two as my experience says that before I could think of discussing next part of story, some new event important in nature gets born.

Always Yours—As Usual— Saurabh Singh

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Bank on Government’s Social Agenda

Comments Off on Bank on Government’s Social AgendaPosted by on March 4, 2011

It has always been nice to hear the Central Banker of the country talking and favouring financial inclusion despite of tremendous pressure in favour of financial consolidation. Though, this does not down size the importance of Financial Consolidation, looking into type of competition the banks or rather banking sector in locked into.  The prospective change in policy, when it comes to granting license to Banks to operate, towards asking them to commit themselves to Governments’ social agenda of Financial Inclusion is again an august step.

 

Four decades succeeding the bank nationalization, have just succeeded in provide access to banking services to barely 30,000 out of 6 Lakh habitations. This clearly means the huge task that banks still have to complete. Looking into achievements of banks one may infer as if the banks were just paying lip service to governments agenda of financial inclusion.

 

Central Bank, should perhaps consider asking new bankers to have their headquarters located in one of 570000 habitations, which are still facing financial exclusion. As this will automatically initiate what is called as seepage economy at those places and in process will gradually attract more bankers and other stakeholders in the development process there.

 

Due credit goes to the backing given by Prime Minister Manmohan Singh to the Central Banker of the country, which forced even union finance ministry to a bit down on its focus towards financial consolidation. Though finance ministry, still wants to stick to financial consolidation, as Union Finance Minister Pranab Mukherjee could not abstain himself from containing in Financial Bill 2011-12 presented by him in the Parliament on February 28, 2011.

Always Yours–As Usual—Saurabh Singh

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Salient Features of Indian Union Budget 2011 – 2012

Comments Off on Salient Features of Indian Union Budget 2011 – 2012Posted by on February 28, 2011
  1. IncomeTax exemption limit raised to Rs. 1.80 lakh from Rs. 1.60 lakh .
  2. Exemption for senior citizens raised to Rs. 2.5 lakh.
  3. Tax under women slab unchanged.
  4. Tax exemption raised to Rs. 5 lakh for senior citizens of 80 years.
  5. To increase service tax on air travel.
  6. Excise and customs duty proposals to result in the net gain of Rs. 7,300 crore.
  7. Export duty rates on iron ore unified and kept at 20% ad valorem.
  8. Basic customs duty on agricultural machinery reduced to 4.5% from 5%.
  9. Basic customs duty on raw silk reduced from 30 to 5 per cent.
  10. Excise and customs duty proposals to result in the net gain of Rs. 7,300 crore.
  11. Nominal one per cent central excise duty on 130 items entering the tax net. Basic food and fuel and precious stones, gold and silver jewellery will be exempted.
  12. Peak rate of customs duty maintained at 10% in view of the global economic situation.
  13. Customs duty exemptions for hybrid auto parts.
  14. Nominal one per cent central excise duty on 130 items entering the tax net. Basic food and fuel and precious stones, gold and silver jewellery will be exempted.
  15. Standard rate of central exercise duty maintained at 10%.
  16. Central government debt in proportion to GDP will be 44.2% in 2011-12.
  17. 20% export duty on all grades of iron ore.
  18. Basic customs duty reduced on certain textile products
  19. No change in service tax rate of 10%.
  20. No change in central excise duty.
  21. Plan to levy 1% on 130 consumer items.
  22. Revenue deficit fixed at 2.3 per cent in revised estimates of 2010—11 and 1.8 per cent in 2011—12.
  23. Total plan expenditure will go up 100 per cent in nominal terms in the next year.
  24. 15% tax on dividend for Indian cos from foreign unit.
  25. Direct Tax proposals result in expenditure of Rs. 11,500 cr.
  26. To reduce surcharge on domestic companies to 5% from 7.5%
  27. MAT rate hiked to 18.5% from 18%.
  28. MAT on developers in SEZs to be levied.
  29. Fiscal deficit revised to 5.1% from 5.5% for FY’11.
  30. Total expenditure raised by 13.4% at Rs. 12.57 lakh cr over budget estimates.
  31. Gross tax receipts estimated at 9.32 lakh cr for FY 2011-12.
  32. Bill to amend India Stamp Act soon.
  33. Budget allocation of Rs. 100 cr for Ladakh and Rs. 150 cr for Jammu for implementation of projects identified by taskforce.
  34. Old age pension to persons of over the age of 80 raised from Rs. 200 to Rs. 500
  35. Health allocation up by 20% to R 27,600 cr.
  36. Rs. 9- lakh ex-gratia for defence personnel for 100% disability fighting Left-wing extremism.
  37. To set up 15 more mega food parks.
  38. Remuneration of anganwadi workers raised from Rs. 1,500 to Rs. 3,000 per month, Helpers to get Rs. 1,500 from Rs. 750.
  39. Tax free bonds of Rs. 30,000 cr to be issued for infrastructure development. This will cover Warehousing Corporation, NHAI, IRFC and Hudco.
  40. Allocation under Rashtriya Krishi Vikas Yojana to be raised from Rs. 6,755 crore in the current year to Rs. 7,860 crore.
  41. Rs. 50 cr grant to Aligarh Muslim University centres in Murshidabad in West Bengal and Malappuram in Kerala.
  42. Rs. 200 cr for environmental remediation programme.
  43. Age for pension eligibility reduced from 65 years to 60 years under Indira Gandhi Yojana scheme.
  44. To move insurance, pension and banking bills in Parliament.
  45. Rs. 500-cr for National Development Fund.
  46. Rs. 400-cr as one-time grant for IIT-Kharagpur.
  47. Move to set up State Innovation Councils underway.
  48. Allocation to education sector raised to Rs. 52,000 cr.
  49. Scholarship scheme for SC/ST students in classes iX, X.
  50. Increase in allocation to higher education.
  51. Plan 17% increase in social sector spending.
  52. To introduce Food Security Bill.
  53. Tax free bonds of Rs. 30,000 cr to be issued for infrastructure development. This will cover Warehousing Corporation, NHAI, IRFC and Hudco.
  54. Fertiliser industry to be included under infrastructure category.
  55. New companies bill to be introduced.
  56. GoM to be set up to deal with corruption.
  57. Five-fold strategy to deal with black money.
  58. Mega cluster for leather products to be introduced.
  59. Existing interest subvention scheme on short term farm loans at 7 % interest to continue.
  60. Self-assessment in customs to be introduced.
  61. Credit flows to farmers raised from Rs. 3.75 lakh crore to Rs. 4.75 lakh crore.
  62. Constitution Amendment Bill for introduction of GST in this session.
  63. Goods and Services Tax Bill this year.
  64. Direct Taxes Code Bill likely to be passed by Parliament next financial year after getting Standing Committee report.
  65. Public Debt Management Agency Bill in the next fiscal.
  66. Indian mutual funds to get direct access to foreign markets; FIIs to be allowed to invest in MFs.
  67. To liberalise FDI policy further.
  68. To extend infra tax breaks to fertiliser sector.
  69. To set up microfinance equity fund.
  70. Government to move towards direct cash transfer of cash subsidy as regards kerosene, LPG and fertilisers from March 2012 for BPL in view of large diversion.
  71. 3% interest subvention to farmers who repay in time.
  72. Nabard capital base to be increased by infusing Rs. 10,000 cr.
  73. Rural housing fund increased to Rs. 3,000 cr.
  74. Banks asked to step up lending to agriculture.
  75. Allocation under Rashtriya Krishi Vikas Yojana to be raised from Rs. 6,755 crore in the current year to Rs. 7,860 crore.
  76. Budget proposes to raise housing loan limit from Rs. 20 lakh to Rs. 25 lakh for priority sector lending.
  77. Allocation for farm development hiked to Rs. 7,860 cr.
  78. Rs. 300 cr proposed to promote production of cereals.
  79. Indian micro-finance equity with SIDBI to be formed at Rs. 100 crore.
  80. Rs. 6,000 cr to be given to public sector banks to maintain capital-to-risk assets ratio norms.
  81. RBI to bring in new guidelines for banking licences.
  82. Aiming Fiscal deficit of 3% by fiscal 2014.
  83. Central electronic registry to reduce fraud cases.
  84. FII investment limit for infra corporate bonds hiked to $40 billion.
  85. Discussions on to further liberalise FDI policy.
  86. Preparation of GST rollout in final stages.
  87. Microfinance equity fund of Rs. 100 cr proposed.
  88. Govt committed to hold 51% in PSUs.
  89. Rs. 3,000 cr to Nabard for handloom societies.
  90. Women self-help group development fund to be set up.
  91. Direct transfer of subsidy for kerosene.
  92. Goods and Services Tax Bill to be introduced in Parliament this year.
  93. Direct Tax Code Bill likely to be passed by Parliament next financial year after getting Standing Committee report.
  94. Disinvestment target at Rs. 40,000 cr.
  95. Direct Tax Code from April 2012.
  96. SEBI-registered MFs to be allowed direct access to foreign funds.
  97. Expect RBI to moderate inflation.
  98. Public Debt Management Agency Bill to be introduced next financial year.
  99. Current account deficit and average inflation in 2011-12 likely to be less than current year.
  100. FDI policy review done in Sept 2010.
  101. Economic growth in 2011-12 likely to be 9 per cent.
  102. Admits large-scale diversion of kerosene.
  103. Introduction of DTC will be a watershed moment.
  104. Debt managment bill to be introduced.
  105. Constitutional Amendment Bill on GST to be introduced.
  106. Expect agri sector to grow at 5.4% in 2011.
  107. Growth in 2010-11 broad-based.
  108. Economy resilient to shocks.
  109. RBI measures will further moderate inflation.
  110. GDP estimated growth at 8.6% in real terms.
  111. New dynamism in rural economy.
  112. Core inflation in check.
  113. Current account deficit is at 2009-10 levels, and is a matter of concern.
  114. Huge difference in wholesale and retail prices not acceptable.
  115. Total food inflation down from 20.2 per cent last year to 9.3 per cent in Jan
  116. Revival in private investment should be sustainable.
  117. Service growing in double digits.
  118. Need to reconcile legitimate environmental concerns with developmental needs.
  119. Food Inflation has declined by half, but still a matter of concern.

 

 

 

 

Always Yours — As Usual–Saurabh Singh

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Union Budget 2011: The Wish List

1 CommentPosted by on February 25, 2011

Governments come and go. But their visions outlined in the annual fiscal planning (the Union Budget) have a long lasting impact on the economy. The Budget of 1992 was one such document. It was a threshold that set India on a superior economic growth path. The first Union Budget of the current decade also comes to meet several challenges. It should not just counter risks within and outside the economy. But it needs to also fortify India’s position amongst global heavyweights.

Consequently in the Budget 2011-12, emphasis should be on maintaining and even accelerating the pace of growth and employment. The ensuing budget is expected to take note of the current scenario and announce policies and reforms to support and form a suitable base for the economy to continue to grow at 8%+ levels. In general one can feel that the budget would be skewed towards investment rather than consumption. Agriculture & related activities would continue to be the focus area as inflation and food security is high on the government agenda. Government would allocate higher amounts towards infrastructure (logistics, rural infrastructure and water management), education and technology to give a multiplier effect to the economy to sustain high GDP growth in the coming years.

The Union Budget 2011-12 might be a key from a policy stand point and may provide incremental direction to markets. There is an inherent value in India economy given the growth story and favorable demographics, but catalysts are required at macro level to deleverage the underlying value.

India was among the few countries in the world to implement a broad-based counter-cyclic policy package to respond to the negative fallout of the global slowdown. These policy actions has helped Indian Economy to clock a growth of 8.6% in FY11 (advance estimates). While rising strongly in the world economic order, India faces the most critical challenge of crossing the ‘double digit growth barrier’. Current macroeconomic challenges are manifold

1. Controlling inflation, including that for essential commodities,

2. Maintaining fiscal deficit amongst rising oil prices,

3. Absence of one-time revenues such as 3G, WiMax license fees,

4. Allocation & channelising investment in Infrastructure,

5. Domestic financial sector liquidity management with large government borrowing can potentially be a dampener for private investments,

6. Reducing current account deficit from current elevated levels,

7. Over and above, handling corruption issues.

The upcoming elections in some of the major states may prompt the government to continue to take some populist measures

Normal Expectations, on few Specific Fronts, from Upcoming Budget  are Deliberated Here Under

Higher short term capital gains tax for FIIs:

The volatility in Indian stock markets over the past six to nine months can to a large extent be attributed to fickle mindedness of the FIIs. Loose monetary policies in developed markets have not helped either. Hence, a stricter policy to curb short term capital gains earned with the hot money is in order. While the DTC has proposed to tax all FIIs, the current budget should lay a foundation for the same by hiking the taxes on short term gains.

Incentivise low income housing:

The construction sector is unlikely to have a very peaceful fiscal ahead. Low bank funding and high interest rates could stall projects and build up inventory in the sector. Allowing higher fiscal incentives on low income housing loans could address the problem of high cost for the houses as well as offer a solution to builders to increase sales.

Incentivise long term investment in equities:

Institutional investors such as insurance companies, PFs and mutual funds should be offered fiscal incentives on their schemes wherein investments are locked in domestic equities for 5 years and above. This could help draw more retail savings into equities for a longer term.

Pool in private sector funds for infrastructure investments:

Floating SPVs that can pool in private funds for meeting the 12th and 13th Five year plan targets may be an ideal way to meet the funding gap. Especially given that the contribution from the private sector is seen going up from 30% in the Eleventh 5-Year Plan to 50% in the Twelfth Plan.

Decontrol of Urea Prices:

Where as Government seems to be planning to raise Urea Prices by 2 to 5 per cent in 2011 – 2012. De-canalization of Urea imports is also expected once it comes under Neutrient Based Scheme Regime. Perhaps the fertilizer industry expects Rs 50000 Crore in cash for Financial Year 2012 by way of subsidies. It would not be a great surprise if import and export restriction on Urea trade are lifted.

Deepen India’s corporate debt market:

Developing a vibrant corporate debt market is paramount to serving the long term funding needs of corporates. The Budget should initiate policies in this direction so that retail participation in corporate debt issuances becomes easier and more transparent . The debt papers also need to be rated to suit investors’ risk profiles.

Rejig subsidies and off balance sheet items:

An increase of 245%! This is exactly how much the cost of major subsidies has gone up in India in the last five years. And mind you, this does not even include oil. In CAGR terms, it amounts to a huge 28%. When one considers India’s nominal GDP growth rate of 14%-15%, it quickly becomes clear that such a growth in subsidy is not sustainable at all. Fortunately, the Government seems to have woken up to this fact. Hence, rather than trying to increase subsidies further, it is now looking to reduce pilferage in the system. As a big step towards the same, it has set up a task force to create a way to directly transfer cash to the ultimate beneficiaries of various subsidy schemes. We believe in addition to reducing indirect subsidies, investing more in warehouses and logistics could help keep the food prices in India under control to an extent.

Always Yours — As Usual — Saurabh Singh

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Relationship Marketing in Retailing

1 CommentPosted by on January 13, 2011

Relationship Marketing in Retailing-by-Saurabh Singh

Relationship Marketing in Retailing : The Individuals Interested may download a presentation by clicking on the image below.

—Always Yours —- As Usual — Saurabh Singh

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A LOOK ON SOME FASTEST GROWING ECONOMIES–AT A RATE HIGHER THAN INDIA-NOTHING TO BE SURPRISED

Comments Off on A LOOK ON SOME FASTEST GROWING ECONOMIES–AT A RATE HIGHER THAN INDIA-NOTHING TO BE SURPRISEDPosted by on December 24, 2010

GHANA

Several African nations are now growing at a rapid pace. So, this way Ghana also is no exception. It’s unique only in a way that, no nation is witnessing the growth in GDP rate as high as Ghana. Since a long time, unflattering adjectives like ‘worst managed’, ‘disastrous’, etc., were used when it came to talking of Ghana; but now they do not hold true. The Ghana of today has come a long way ahead in its journey towards prosperity and has earned the status of being the world’s fastest growing economy today. Ghana’s economy is growing at a phenomenal rate of 20.15 per cent. Ghana is oil-rich, has large gold and diamond deposits, while at the same time, the boom that is being witnessed by its tourism sector has added more glitter to its diamonds.

QATAR

Qatar is an oil- and gas-rich nation with world’s third largest gas reserves. It has undoubtedly enjoyed the status of being a nation which is world’s largest exporters of petroleum, and has got something more remarkable added to it. The growth in GDP of Qatar has helped it in achieving a new distinction, and that is of being the world’s second fastest growing economy growing at a rate of 12.337 per cent. The economy of Qatar is primarily oil-based. High oil and gas prices have boosted the economy of this Gulf state over the last few years. The per capita income of Qataris stands at $66,100, which in comparative terms makes it, a nation with sixth highest per capita in the world, and still Qataris do not know a phenomenon known as Income Tax .

TURKMENISTAAN

Turkmenistan is also not far away when it comes in terms of being blessed with reserves of natural gas. In this context Turkmenistan stands at the rank of being world’s fourth-largest nation in terms of owning the reserves of natural gas. In present story it has earned slot at number three, due to it being the world’s third fastest growing nation with a GDP growth rate of 12.18 per cent. Although oil and gas is the biggest revenue generator for Turkmenistan, agriculture too accounts for a healthy percentage of its GDP. Citizens in Turkmenistan get 120 liters of petrol free every month for car drivers, while truck/bus drivers get 200 liters of petrol free. Apart from this, electricity too is subsidized for the citizens. Probably, one should not expect beyond this and turn greedy.

CHINA

China, which in this story has earned a slot at number four, also happens to be the world’s fourth fastest growing economy at 9.908% GDP growth rate. In monetary terms, it turns out to be of order of amazing $6 trillion. However, now certain not so desired elements have started to raise their heads. The rising inflation rate in China is a new challenge, which stands in way of growth, of the economy of the country. China’s gross domestic product grew 9.6 per cent in the third quarter as compared to the same period last year. The growth rate slowed down from 11.9 per cent in the first quarter and 10.3 per cent in the second quarter.

LIBERIA

Even though, the nation still continues to live with dubious and infamous distinction of being one of the poorest countries on earth; Liberia has recorded robust economic activity in past couple of years. This African nation, despite of all said and done, has managed to steal the fifth rank when it comes to the list of world’s fastest growing economies. The Liberia, now as world’s fifth fastest growing economy has a GDP growth rate of 9.003 per cent. It is a $1.05 billion economy. The nation has rich reserves of iron ore, and also exports rubber. In the last few years, it has been receiving a lot of foreign direct investment which has resulted in higher employment, better infrastructure and spurt in economic activity.

 

 

 

 

 

 

 

 

————Always Yours — As Usual — Saurabh Singh

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THE DRAGON AND THE ELEPHANT SHOULD TANGO

Comments Off on THE DRAGON AND THE ELEPHANT SHOULD TANGOPosted by on December 18, 2010

“THE DRAGON AND THE ELEPHANT SHOULD TANGO,” Chinese Premier Wen Jiabao suggested today.

Wen came up with this quip to emphasise the need for the two Asian giants, whose rivalry has been compared to that between the dragon (China) and elephant (India), to come closer.

Speaking to group of editors and scholars before leaving for Pakistan he said that India and China were partners in cooperation and not rivals.

Wen had warm words of appreciation for his Indian counterpart Manmohan Singh describing him as a person “with an open and inclusive mind”.

The Chinese leader mentioned that the Cambridge University had brought out a publication containing speeches by him and Singh whose common theme was the importance of open and inclusive societies.

He distributed copies of that publication with his autograph to those present at the interaction.

Wen mentioned that the Indian Prime Minister had last year sent him a gift package of black tea and in return he had sent Chinese white tea. “That reminds me of how our two countries connect with each other.”

China to provide data of Sutlej river to India

China will provide India with real-time flood data of Sutlej river during monsoon, according to an agreement signed between the two countries.

Under the five year agreement, China will set up a special station in Tibet to monitor rainfall and flood to enable India get advanced warnings.

In turn, India will pay Rs 12 lakh per annum to China. The money will be used by Beijing to maintain the station, sources in the government said.

The flood data will be provided twice every day between June and October every year.

“Since we have five to six hydro electric power projects on the downstream Sutlej, the data will help us operate the projects in a safer environment,” a source said.

Floods in downstream Sutlej have been creating problems on the Indian side.

In July this year, India had renewed a similar agreement with China to get flood data of the Brahmaputra river. The agreement was signed in 2004.

Though China had been providing flood data of the Sutlej, the agreement will help streamline the system, especially during the monsoon season. New Delhi had been paying Rs 12 lakh per annum to China for data of the Brahmaputra.

Always Yours– As Usual — Saurabh Singh

Source: Business Satndard


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IN GUJARAT, E-LITERATE PAANWALA GOOGLES NREGS, STUMBLES ON RS 1-CRORE SCAM

1 CommentPosted by on November 16, 2010

IN GUJARAT, E-LITERATE PAANWALA GOOGLES NREGS, STUMBLES ON RS 1-CRORE SCAM

A newly e-literate village paanwala’s obsession with Google has blown the lid off a unique NREGS scam in Porbandar. The motley bunch of beneficiaries include affluent NRIs, doctors, government officials, teachers and well-off farmers — all shown as unemployed village labourers holding NREGS job cards. So far, the money siphoned off comes to nearly Rs 1 crore.

On paper, there are 963 NREGS job cardholders at Kotda village in Kutiyana taluka of Porbandar district. Records show they have been paid over Rs 95 lakh for their ‘labour’ over the past three years. In reality though, none of them have ever dug wells or built roads in their lives or actually received any money for the same under NREGS or otherwise.

The scam came to light after Aslam Khokhar (37), a Class X dropout and a paan shop owner in Kutiyana learnt how to use computers and searched NREGS on Google. “I was thrilled to find every detail of NREGS work in our area on the website. But I then came across the job card of a friend, who is a government employee.

IN GUJARAT, E-LITERATE PAANWALA GOOGLES NREGS, STUMBLES ON RS 1-CRORE SCAM

I searched and found there are doctors, teachers and NRIs I personally know in the village, listed as ‘labourers’ on the site,” said Khokar.

Veja Modedara, an independent councillor at Kutiyana taluka panchayat, and Congress worker like Bhanukant Odedara soon joined hands with Khokhar. The trio conducted door-to-door meetings with villagers named in the website and found they had neither worked on any NREGS site nor received any wages.

Several like Bharat Ganga (23), who has been to Muscat for the past three years, were shocked to learn that they were named as NREGS employees on record and have been even paid for their work. “How can this be? I moved out of India three years ago,” Ganga told The Indian Express.

Varu Karsan Uka (38), an official with the Pashcim Gujarat Vij Company Limited for 15 years also holds the job card number GJ-21-005-030-001/726. Even his wife has been also named as a card holding labourer. According to the records, the couple had built roads and dug wells for 60 days and received Rs 6,000 for their work. “How can I possibly get an NREGS job card when I am a state government official ?” said Uka.

Dr Dayaram Babhania (58), a well-known physician in Kutiyana too holds a job card (number GJ-21-005-030-001/526), though he admits never to have lifted a pickaxe in his entire life.

Other like him on the list are Range Forest Officer Jesa Odedara, Forest Guard Arshi Bhattu, Gujarat State Road Transport Corporation (GSRTC) employees Meru Odedara and Arjan Odedara, teacher Leela Dasa, Ex-serviceman Kunti Rama and NRIs Haja Modha, who have long left the village and settled in Israel. On paper, all are ‘labourers’ and many have been paid too.

Kutiyana Sub-Inspector I Damor said the police probe will take a while since details of all the 963 accounts need to be verified.

Kutiyana Taluka Development Officer J Gamit said, “Preliminary investigation by the department has revealed that at least 73 cardholders are government employees, professionals or NRIs.”

District Development Officer K D Bhatt said: “We will begin a door-to-door survey to find the exact scale of the scam.”

Always Yours ————–  As Usual——————  Saurabh Singh

Source: http://in.news.yahoo.com/48/20101115/804/tnl-in-gujarat-e-literate-paanwala-googl.html?printer=1:::: Hiral DaveMon, Nov 15 06:09 AM

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