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A survey of business confidence done by the Federation of Indian Chambers of Commerce of India (Ficci) has thrown up a heartening result. The Overall Business Confidence Index of Ficci has climbed to a 14-quarter high. Confidence and business sentiment is brimming at three levels of the economy, the industry and also for individual firm’s growth prospects. This survey sets the tone for budget week when the new government will flesh out its tax and spending plans. After months of dismal mood where the industry was of on the brink of turning manic depressive, this survey captures the changes expected from the new government at the centre. Prime Minister Narendra Modi promised a lot and now his government will have to start delivering. The first few steps of increasing railway fares and petroleum prices indicate an appetite for unpopular but critical decisions. Much of the confidence is rooted in these initial steps. Of course, it will be impossible for the Modi Government to make everyone happy even within the industry. But it should be able to hold on to its strength of conviction and maintain the path of taking tough calls. The Iraq crisis threatens to throw the import bill out of gear while domestic consumption story will be marred by poor monsoons. Industry leaders will have to keep their expectations in check. They have been patient for long. But they for one must realize that any turnaround requires time and action. The budget policy announcement will be a good starting point for turning the economy around.
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If union health minister Harsh Vardhan is to be believed, the government is thinking of giving 50 essential drugs free of cost to 1.2 billion Indians from ‘birth to death’. To be initially rolled out at select hospitals across India, the programme will focus on efficient procurement, quality control and rational use. We know where this is coming from. As Delhi state’s health minister during 1993-98, Vardhan had pioneered the ‘public drug distribution’ model which helped people access subsidised quality drugs through an efficient procurement and distribution system. That model was later adopted by the WHO and implemented by a dozen other Indian states. But the latest proposal veers towards populist zeal and fiscal recklessness. Consider this: the Indian pharmaceuticals market is worth over Rs 75,000 crore at present and basic essential medicines account for 40-50 per cent of this market. Free drugs to all will mean a tab of Rs 30,000-37,500 crore every year. A more sustainable approach will be procurement and distribution of essential drugs at affordable prices through public hospitals. — P.B. JayakumarSense & Sensibilitythe recent rail fare hike was supposed to be the first of the tough measures to put the country’s finances back on track. But within days, the hike in suburban services was rolled back. After all, Maharashtra goes to the polls soon, and the Mumbai commuter was badly hit by the nearly 100 per cent hike in monthly fares. While that may be a politically sound decision, it’s time the suburban railway networks in the country are spun off — Mumbai, Chennai and Kolkata — into separate entities. This will allow each unit to focus on the city it is operating in and also allow planners to invest and improve networks. By removing the subsidy on them, the networks can be modernised to meet global speed and safety norms. — Anup JayaramIt’s Wish-ful Thinkingit’s budget season once again, and we are all collectively coveting a tax-break from the government. Who doesn’t want lesser taxes, after all? But one question that merits discussion is the possibility of deductions for expenses incurred by individuals, similar to those allowed to corporates. Currently, corporates pay a tax on the profits they make after deducting expenses. On the other hand, salaried people get a minimum exemption, but get taxed on their total revenues. Such deductions will compensate for the lack of social security in our country. At a time when inflation is eating into disposable incomes, allowing deduction of at least some living expenses, or a higher minimum exemption limit, will act as a balm to soothe the salaried class of India. — Abraham C. MathewsWin Some, Lose SomeIt’s not all doom and gloom for Reliance Industries (RIL), ONGC and Oil India following the government’s decision to defer the gas price hike. The move has its silver linings too. In fact, the inability of the government to arrive at decisions on policies related to the gas sector has discouraged foreign players from exploration and production activities in India. Already, British giant BP Plc, which bought a 30 per cent stake in RIL’s 21 oil and gas blocks for $7 billion in 2011, has been struggling to recover its investments. In such a scenario, global giants are likely to keep off the Indian market in future, giving a free play to the domestic giants. — Nevin JohnVoice Of ReasonHDFC chairman Deepak Parekh wants banks and housing finance companies (HFCs) to be allowed to fund land acquisitions. The logic: at present, finance is sourced from sundry sources at exorbitant interest rates which pushes up the cost of the final product — land cost can be 30-80 per cent of a realty project depending on the location. If formal and cheaper finance (via banks and HFCs) is available at a project’s inception— the land buying stage — it will drastically reduce what you pay to buy a nest. It will also have a huge multiplier effect on the economy: steel, cement, consumer goods, furnishings, malls, entertainment, the works really. But if Parekh’s suggestion is to see the light of the day, the mindset needs to change at Mint Road: it classifies realty, equities and commodities as ‘sensitive’ sectors. It notes that unlike in the past, in 2012-2013, bank loan exposure to ‘sensitive’ sectors doubled largely due to exposure to realty as a result of the steep rise in housing prices in Tier-1 and Tier-2 cities. You can’t miss the irony: realty exposure in a way went up only because we have not done what Parekh wants! — Raghu MohanSetting The AgendaA group of economic experts, under the banner of the World Hindu Economic Forum (WHEF), has framed an agenda for the new government. It calls for an end to what it thinks is wasteful expenditure and seeks additional taxation and reduction in the reach and role of the government in the economy (perhaps, a euphemism for disinvestment of public assets and reduction in subsidies). The 27-point agenda has one flaw though. Many a times, it stands against the electoral promises of the ruling BJP. The forthcoming Union Budget will perhaps prove whether WHEF’s prescriptions are holier than the so-called nationalist sentiments expressed by the Swadeshi Jagaran Manch or the Rashtriya Swayamsevak Sangh, with both explicitly favouring a less liberalised economic regime. — Joe C. MathewNothing Black And White About ItThe government on June 24 extended the ban on import of milk and milk products from China by another year. The ban was imposed after it was alleged that milk and milk products from China contained melamine, a toxic substance used for making fertilisers and plastic. But here is an irony: India does not import any milk or milk products from China. In fact, it does not import milk at all —it is a milk-surplus country and the world’s largest producer of milk. So what’s the ban all about? Some say it could be a pre-emptive step as the government is wary of taking any risk. Alternatively, there could be a diplomatic angle to it — the ban can come handy as a diplomatic tool if and when the NDA-led government decides to sweeten trading relations between India and China.— Sachin DaveMedieval MindsetUnion health minister Harsh Vardhan’s view on sex education deserves the reaction it has evoked. To call for a ban on ‘so-called sex education’ in schools is outright retrograde. His stress on value education and yoga in the school curriculum, although perfectly fine in its own right, seems to imply the corruptive influence of sex education in schools. He forgets that scrapping the topic from the curriculum will not stop children from accessing information about sex as it is everywhere on the Internet. A 2013 UNPF report says four million girls in India aged 15-19 years give birth every year, which is a matter of concern. The best and easiest way to communicate the ill-effects of the same to children at an early age is only possible through schools. After all, teenage pregnancy or rapes can be better handled by sharing the right information rather than those through multiple sources on the Internet. — Rozelle LahaThe New CoolThe splits versus windows debate is passé. The new kid on the block that’s fast becoming the coolest one is Variable Refrigerant Flow (VRF) systems using inverter technology. This is a multi-split AC system offering a cheaper and more energy efficient alternative to central airconditioning. According to AC makers, the adoption level is fast rising, not just in offices but in new residential apartments as well. According to LG’s Head of Business for AC Saurabh Baiskhia, VRF technology has a bigger application in homes thanks to the ability to cut off cooling where not required. Also, costs have dropped substantially this year — 30 per cent from last year (it now works out to anywhere between Rs 45,000-Rs 55,000 per tonne narrowing the gap between the VRF and a single split AC). The total residential AC market in India (split AC and Window AC together) is around Rs 10,000 crore. VRF is an additional Rs 2,000 crore market, and now expected to grow at a fast clip. Energy saving is clearly emerging as the biggest USP in the power guzzling AC segment. — Chitra NarayananEngineering A ChangeIndia’s membership of the Washington Accord augurs well for engineering education in the country as well as its engineers. Besides global recognition for Indian engineering degrees, the membership of this club is likely to eventually ensure global quality for all engineering institutions in the country. But all this will depend on astute gate-keeping by the National Board of Accreditation (NBA). The 220-odd Tier-I engineering institutes shortlisted by it will have to apply afresh for accreditation and get their programmes vetted before they are awarded equivalence with Washington Accord institutions. So expect extensive rejig of courses and changes in emphasis. Also, NBA has asked universities to allow affiliated Tier-II engineering colleges to design 50 per cent of their programmes. These developments, along with the Modi government’s efforts to spur the manufacturing sector, may revive the glory of engineering education, which, in the past few decades, has mostly been used as a stepping stone to an MBA degree. — Rozelle Laha(This story was published in BW | Businessworld Issue Dated 28-07-2014)
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The rupee is trading at 60.72/73 versus its close of 60.61/62 on Wednesday (21 August).Dollar gains broadly as investors detect a hawkish turn in policy discussions at the Federal Reserve.Dollar's index versus six majors up 0.13 per cent.Almost all Asian units lower against the dollar.Traders will monitor flows into the debt and share markets for direction.The Nifty is trading up 0.17 per cent in early trade.(Reuters)
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The Budget Session of Lok Sabha on Monday (7 July) started on a tempestuous note with members belonging to several opposition parties storming the Well protesting against inflation and hike in rail fares and prices of petrol, diesel and LPG. Trouble started as soon as the Question Hour began, with members of Congress, Trinamool Congress, RJD, SP, Aam Aadmi Party and the Left trooping into the Well raising the issue of prices and rail fare hike. Speaker Sumitra Mahajan's repeated pleas to allow the questions to be taken up went unheeded, leading to adjournment of the House for nearly 40 minutes. Monday (7 July) was the first day of the Budget session of the Narendra Modi government. Telangana Rashtra Samithi (TRS) members were also in the Well opposing the ordinance on the Polavaram project. Slogans like "achha din ayega, mahangai badhayega (good days will come, prices will rise)" and 'roll back rail fare hike' were heard. Members also opposed rise in prices of petrol, diesel and LPG. Congress leader Rahul Gandhi was seen standing in the aisle, while his party colleagues Jyotiraditya Scindia, Deepinder Singh Hooda, K C Venugopal and several others were in the Well. RJD's Pappu Yadav was vociferous in his protest as was TMC's Kalyan Banerjee and most of his party colleagues. Bhagwant Singh Mann of AAP was also in the Well and was heard raising the plight of Indians left behind in trouble-torn Iraq. Prime Minister Narendra Modi was in the House during the entire period of turmoil along with his senior party and ministerial colleagues L K Advani, Rajnath Singh and Sushma Swaraj. Congress President Sonia Gandhi was also seated in the front row of the opposition benches. Amidst the din, the replies to questions given by Petroleum Minister Dharmendra Pradhan and Labour Minister Narendra Singh Tomar could not be heard. NCP's Supriya Sule, who was asked to raise a question on unemployment, shouted the government's reply was "unsatisfactory and bureaucratic". (PTI)
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The Oil Ministry is likely to move the Cabinet Committee on Political Affairs (CCPA) soon with an expert panel recommendations of raising kerosene price by Rs 4 a litre and cooking gas (LPG) rates by Rs 250 per cylinder.The ministry is preparing a draft note for consideration of the CCPA on pricing of diesel, kerosene and LPG, official sources said here.Endorsing the previous UPA government's monthly 40-50 paisa per litre increase in diesel prices, the ministry is likely to propose that the monthly revisions may continue till the present Rs 3.40 a litre loss on the fuel is fully bridged.After the diesel subsidy is eliminated during the course of the year, the ministry wants CCPA to authorise it to decontrol or free price of diesel as was done in case of petrol in June 2010.Since its decontrol, petrol rates are revised on 1st and 16th of very month based on average cost in the previous fortnight. Barring a few exceptions, petrol prices have moved in tandem with cost since then.Sources said the ministry wants the CCPA to consider recommendations of an expert panel headed by former Planning Commission member Kirit S Parikh.The committee had in October last year recommended to the government that diesel prices should be hiked by Rs 5 per litre, kerosene by Rs 4 a litre and domestic LPG rates by Rs 250 per cylinder immediately to cut fuel subsidy bill by Rs 72,000 crore.But as the monthly increases have led under-recoveries, or the difference between cost and retail price, falling below Rs 5, the ministry is unlikely to press for implementation of the panel's recommendation on diesel.Besides diesel, state-owned oil firms at present lose Rs 33.07 a litre on kerosene sold through the public distribution system (PDS) and Rs 449.17 on LPG, they said. The Parikh Committee had suggested liquiditing all of the diesel subsidy within one year and was for restricting supply subsidised LPG cylinders to 6 bottles of 14.2-kg per household in a year. Currently, households are entitled to 12 cylinders of LPG on subsidised rates.The sources said the ministry is not taking this recommendation of the panel to the CCPA.If rates are not increased, state-owned oil firms are projected to end the current fiscal with Rs 1,07,850 crore of under recovery or revenue losses. This will have to be met through a combination of government cash subsidy and contribution from upstream firms like ONGC.The sources said the ministry is also taking to the CCPA the expert panel's recommendation of continuation of existing pricing principles for controlled petroleum products despite the Finance Ministry's objections.The Finance Ministry is pushing for refiners being paid the equivalent of rates they would have realised if diesel, kerosene and LPG were exported. The export parity pricing (EEP), it feels, will cut its subsidy outgo by Rs 13,000 crore.After discounting the quality specification of fuel exported by private refiners, the difference between the EPP and currently practiced trade parity pricing was only Rs 108 per kilolitre or 1.5 per cent.(Agencies)
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The rupee was trading at 59.67/68 versus its close of 59.73/74 as gained in the domestic sharemarket raise hopes for continuation of foreign fund inflows.Overseas investors bought Indian shares worth $159.20 million on Thursday (3 July), provisional exchange data shows.The BSE Sensex is trading up 0.2 per cent.The rupee is expected to hold in a range of 59.40 to 59.80 during the session. Most other Asian currencies also trading stronger compared to the dollar.The Reserve Bank of India on Thursday restored the overseas investment limit of Indian companies to 400 per cent of the firm's net worth after the rupee rebounded from last year's record low levels against the dollar.(Reuters)
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He knows what it takes to keep the show going. New Infosys CEO Vishal Sikka has promoted 5,000 employees to stop them from leaving the software major. The company has sanctioned promotions for employees falling between level three — software programmers— and level five, senior management. It has also given salary hikes of 6-7 per cent to employees in India and 1-2 per cent to those on site, effective 1 April. With this latest round of promotions, Infosys has promoted 15,000 employees in all since the start of the year.Off The HookSetting aside the Jharkhand High Court ruling, the Supreme Court quashed criminal proceedings against J.J. Irani, former Tata Steel joint managing director and Tata Sons director, in the 1989 Jamshedpur steel plant fire tragedy. Irani, who was charged with negligence in the fire that killed 60 people and maimed more than 100, could not be incriminated as the case was filed three months after the accident.Flying OutGabriele Del Torchio, CEO, Alitalia, is ready to leave the airline after striking a rescue deal with Etihad Airways. Recruited last year to help nurse the struggling carrier back to profits, Del Torchio successfully secured a deal with Etihad in less than a year’s time. The deal will see the Abu Dhabi-based carrier buy 49 per cent of Alitalia and invest 560 million euros in the loss-making Italian airline. The airline will also have a new chairman as the current chairman, Roberto Colaninno, too, has decided to step down.Pay CutBharti Airtel founder-chairman Sunil Bharti Mittal’s remuneration dropped about 45 lakh or 1.8 per cent to Rs 23.88 crore in the last financial year from Rs 24.33 crore in the previous fiscal. This, despite higher perquisitites. He received about Rs 79 lakh in 2013-14 , up from Rs 49.6 lakh a year ago. The drop in pay has been mainly due to a Rs 75-lakh decline in the performance-linked incentive.In The SlammerVice-chairman and managing director of Bhushan Steel Neeraj Singal has been arrested in connection with a Rs 50-lakh bribery scandal involving the chairman mangaing director of Syndicate Bank, S.K. Jain. Accused of offering a bribe to Jain to increase the credit limit of some companies in violation of banking rules, Singal’s application for anticipatory bail has been rejected in view of the serious nature of the crime, which involved public money.No DealRupert Murdoch’s 21st Century Fox scrapped its $80-billion offer to buy Time Warner to create one of the world’s largest media conglomerates after the latter declined to engage in negotiations. Murdoch, chairman and CEO of Fox, cited Time Warner’s refusal to come to the table to discuss takeover as one reason for the stunning turnabout. He now intends to buy back $6 billion of its own shares.Out Of The windowHead of Nokia India, now Microsoft Devices Group (MDG), P. Balaji, has resigned less than a month after Microsoft took over the Finnish company’s mobile phone division. The global streamlining of the devices business by the US technology giant is seen as a plausible reason behind Balaji’s move. He will, however, continue to be an advisor to MDG through the transition till October 2014.Riding HighPawan Munjal, managing director and CEO of Hero MotoCorp and the third son of Hero Group chairman Brijmohan Lall Munjal, 59, has been elevated as the vice-chairman of flagship Hero MotoCorp, lending clarity to the succession plans at the country’s top two-wheeler maker. Munjal’s elevation was cleared by the board. He was running the firm even before the JV with Honda was dissolved in 2011.(This story was published in BW | Businessworld Issue Dated 08-09-2014)
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The rupee edged higher by 16 paise to over two-week high of 59.53 against the US dollar at the Interbank Foreign Exchange market on Thursday (03 July) on increased selling of the US currency by exporters amid capital inflows.Forex dealers said a higher opening in the domestic equity market and strengthening of the euro against the US dollar overseas also supported the rupee.The rupee appreciated by 38 paise, its biggest single-day rise in seven weeks, to close at 58.69 in Wednesday's (02 July) trade on optimism that the budget next week would have strong measures to put finances and the economy back on track.Meanwhile, the benchmark BSE Sensex climbed to yet another record-high of 25,924.25, rising 83.04 points, or 0.32 per cent, in early trade on Thursday.(PTI)
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Shillong , a pine- wooded British era hill town famous for its boarding schools and love for western musicals has become busier, its traffic clogging the narrow roads and the old cottages slowly giving way to concrete buildings to accommodate an ever growing population. If the face of Shillong is changing, Cherrapunjee, an hour’s drive away, is its refreshing antidote. Breathtaking waterfalls, monoliths, home to Mawlynnong, acclaimed the cleanest village in Asia and two living root bridges not found anywhere else in the world make this place quite surreal.The living root bridges in the deep depths of Cherrapunjee are a good two-three hours trek away. They have been described as one of the greatest engineering feats. Built by Khasi villagers, the roots of the Indian rubber tree (Ficus elastic) have been interwoven to make it grow into a bridge serving local needs. Despite its remoteness, the place has made it to the National Geographic photo contest and has even been filmed by the BBC. We begin with the drive from Shillong passing by Upper Shillong that houses the Eastern Air Command of the Indian Air Force. The drive takes us through the village of Smit, famous for its Nongkrem dance. It is a market day and women sit in rows selling organic vegetables and the famous red oranges of Cherrapunjee. A colourful sight that conveys the strong identity of the Khasi men and women dressed in their traditional attires. Once we cross this busy stretch, the landscape opens out into a plateau broken occasionally by deep gorges and waterfalls. The air is clean and the long drive forms part of the excitement of the trek.You know you have arrived when the topography suddenly changes, roads narrowing and the descent becoming sharper leading to a flat patch of land for parking with a sign that reads ‘Meghalaya Tourism Welcomes You to the Living Root Bridge’. It is the vantage point. The trek looks intimidating against the backdrop of the sub-tropical forest we are about to explore. We are going to cover a 4 km walking trail down the steep slope of approximately 3000 steps with an average five hours of going down and coming up. Our group assembles for a quick last minute check for food, water, first aid etc., as there are little amenities along the route save for few eager villagers who welcome you with a smile and a curious look. The walk is effortless in the beginning. Steps are well laid out for tourists with railings to hold on to. Midway is when the steps get replaced by a ruggedness of uneven walkways, steeper climbs and steeper descents. We take a few rests, at the same time taking in the stunning scenery around us. There is a great melange of flora and fauna unique to this place — orchids, beetle nut trees, butterflies of various size and colours, and mushroom and moss-covered tree trunks.It is a long, arduous trek and after almost one-and-half hours into it we have our awe and shock moment at having to cross our firstwire rope bridge suspended over the rain-fed river about 25 feet below. The single wire metal bridge is narrowly constructed with rusted iron cables and held together with steel wires. It shakes as you step foot on it and there is a high possibility of slipping from the gaps. With safety standards not spelt out, it is one of the world’s scariest bridges but in such moments you trust the instincts of the locals for whom this is a regular thoroughfare. One steeper climb and we arrive at Nomngriat village, our final destination where the legendary double decker living root bridge stands almost magical. I feel I am having my Lord of The Rings moment, a lost in time feel buoyed by excitement as I walk up and down the bridge before we sit by the river to take in the sights. How the living root bridge came about is through necessity. With Cherrapunjee having been the wettest place on earth, the villagers belonging to the warrior Khasi tribe needed walkways across its many rivers and hills. So they recognised the potential of the roots of the Indian rubber tree grown here and started growing the trees by intertwining the roots. As we begin to head back, having just experienced our brush with mankind’s most original invention, I pick up a stone from the river as a souvenier. My Khasi friend tells me that in their tradition nothing is picked up from the river and taken home. I take it as something profound. They need to preserve their nature, after all. The author is a consulting editor with The Indian Weekly published in Melbourne(This story was published in BW | Businessworld Issue Dated 08-09-2014)
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The rupee rose marginally by two paise to 60.05 against the US dollar in early trade today on sustained capital inflows amidst a higher opening in the domestic equity markets.Dealers attributed the rise in domestic currency to sustained selling of the dollar by exporters amidst heavy foreign capital inflows.Besides, dollar's weakness against other currencies overseas also supported the rupee's rise, they added.The rupee rose by 10 paise -- its biggest single-day rise in over ten days - to end at 60.07 against the dollar after the government hiked fuel and LPG prices to ease subsidy burden and rise in stocks.Meanwhile, the benchmark BSE Sensex surged 216.52 points, or 0.84 per cent, to hit new record high of 25,732.87 in opening trade.(PTI)
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