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It's been more than a month since Nirmala bought fresh tomatoes. A fourfold rise in prices since early June has made the essential ingredient in Indian curries and sauces a luxury she can no longer afford."Buying tomatoes feels like buying jewellery," says the 29-year-old maid, who is struggling to make ends meet on her monthly pay of Rs 10,000 as prices for fresh staples such as onions and potatoes also soar in New Delhi.Prime Minister Narendra Modi's election triumph in May had raised hopes of quick action to tackle India's recurring food price shocks. But, despite his strong economic record of running Gujarat, he has resorted to an old inflation playbook that contributed to the last government's crashing defeat.Just like his predecessor, Modi has imposed export curbs and cracked down on hoarding. While these steps can give brief relief, they cannot fix a dilapidated system controlled by middlemen.So far, the cash-strapped government has committed to invest less than one-tenth of the amount it estimates is needed to fix India's cold supply chain. It opposes the entry of foreign supermarket giants who might set up their own logistics.Its only innovation, a food price stabilisation fund, is at $82 million derided as too tiny to make any difference in feeding the country's 1.2 billion people.Economists who had backed Modi to put Asia's third largest economy back on track are already expressing unease at the government's failure to lay out a credible inflation strategy, beyond short-term improvisation.Modi's approach is that of a "district collector" rather than a structural reformer, said Rajiv Kumar, a senior fellow at the privately-funded Centre for Policy Research in New Delhi. The reference is to India's army of low-level officials whose role - dating to British colonial rule - includes being a local tax man and administrator."This is my fear about this government - that it is being captured by the bureaucrats," Kumar says. "Competition is the best short-term guarantee to reduce prices."Chronic ShortagesOfficials privately concede that inward investment in multi-brand retail would help revamp an archaic distribution system that forces farmers to sell at regulated markets where middlemen command hefty markups.India is the world's second-biggest producer of fruit and vegetables after China, but it battles chronic shortages as an estimated 18 percent of the crop goes waste every year due to inadequate cold storage and refrigerated transport facilities.New Delhi estimates it needs to invest $9 billion in the cold supply chain by March 2016 to handle growing output of fruit and vegetables. That is more than 10 times the $822 million allocated in Modi's maiden budget last month, and far more than the government can afford.The South Asian nation has 6,300 cold storage facilities with capacity of 30 million tonnes, barely half its needs, the National Horticulture Board estimates.Annual retail inflation has averaged about 9.5 per cent since January 2012, when the government started its latest data series. In the same time, vegetables have gone up by 64 per cent."Last year, it was onion; this year, it is tomatoes; next year, it will be something else," says Nirmala. "Every year the story remains the same."Onion prices surged last year as high as $1.60 a kilogramme, making them more expensive in India than in the United States, where incomes are roughly 35 times higher.Sapped Consumer AppetitesEconomists say curbing runaway food prices will be vital if India is to achieve a broader revival from a two-year-old slowdown in growth. Food bills devour 35 percent of household incomes, sapping appetites for discretionary spending.Prices for fresh produce also are causing indigestion at India's central bank, which wants to reduce retail inflation to 6 percent by 2016. The Reserve Bank of India held rates on Tuesday, citing the risk that inflation could get higher due to weak monsoon rains needed for summer crops to grow.Abhijit Sen, an adviser to the last government, says only a combination of more cold stores and better mobility of food stocks can solve the problem. But ramping up investments will be a challenge due to stretched government finances."That's the situation which this government faces as much as the previous government," Sen told Reuters.A senior official in the Modi administration defended its inflation approach, saying prices would have risen even more quickly if the government had not taken prompt action as recent extreme heat and dry weather stoked food supply fears."We all know the long-term solutions, but they will not solve the problem overnight," he said. "At the moment, administrative measures are the only recourse."(Reuters)
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“Fifa, I’m afraid, behaves like a mafia family”— Lord Triesman, former Football Association chairman, accusing football’s world governing body of a decades-long tradition of bribes, bungs and corruption“Younger people just aren’t interested in cars like they used to be”— Masanao Tomozoe, CEO of Toyota Motor Sales and Marketing Corp, on how teens worldwide are more consumed by smartphones and computers than cars“Some had been identified as low performers by the external evaluation agency and the board. Some were evaluated to be low performers by senior management”— N.R. Narayana Murthy, chairman, Infosys, at the 33rd annual general meeting (AGM) in Bangalore, playing down concerns of the management exodus impacting the company’s growth “He is going to be a great prime minister because he believes in economic development. I love his focus oninfrastructure”— Alan Mulally, outgoing chief of US auto major Ford, on Prime Minister Narendra Modi“Ford is killing SEX!”— Elon Musk, CEO, Tesla Motors, after Ford Motors threatened to sue the electric car maker if it used the name ‘Model E’, which Ford has trademarked since 2000. Tesla wanted its three lines of vehicles (existing models S and X) to spell S-E-X “I do not say there will be a positive impact, but there will be zero negative impact”— Fabrice Bregier, chief executive of the plane-making division of Airbus Group, after Emirates scrapped a $16-billion order for 70 A350 aircraft(This story was published in BW | Businessworld Issue Dated 14-07-2014)
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The next time you want to open a bank account, you need not run from pillar to post to submit proof of who you are or where you live. Mint Road has decided that from now on you will submit just one proof of address — current or permanent. In case it changes, you will submit fresh evidence to your bank within six months. Better still, if your address is not ‘local’, the bank will make do with a declaration about one. Of course, the bank will verify this address through acknowledgment of receipt of its letters, cheque books, phone calls or visits. You may say all this is just procedural, but it has deeper significance. The biggest beneficiaries will be professionals who have to hop cities and migrant workers — it is of particular importance to the latter as scores of them are not able to open bank accounts due to the extant guidelines which are not practical. Three cheers are in order! — Raghu MohanNano’s Mega ProblemsTata Motors has cut production of its small car Nano to only one shift at its plant in Sanand, Gujarat due to rising inventory. In 2013-14, Nano sales fell by more than half to 21,129 units from 53,848 units in the previous fiscal. This year, analysts peg sales at less than 15,000 units. Does this mean the end of a great idea? Even the rebranding of the Nano seems to have failed to attract buyers. Its problems cannot be clubbed with those of the slowing passenger car market, as its competition is the two-wheeler market, which grew 12 per cent last fiscal. Sadly, Nano’s brand positioning has not worked so far. It started off as a people’s car. Then, it was sold as an aspirational product to the Indian middle class. May be a design change could save the day for the car. — Vishal KrishnaAll The PM’s MenThe Narendra modi government has been quick in implementing its promise of maximum governance with minimum government. Modi has opted for a leaner Council of Ministers with just 45 members compared to 70 in the UPA regime, scrapped all 30 ministerial groups and culled three cabinet committees set up by the UPA government. Now, it is the job of individual ministries to get things done quickly. Also, all controversial decisions will be vetted at the highest levels. While an assertive Prime Minister’s Office could result in quicker decisions, which will hopefully stimulate investment, the big question is whether all important decisions should be taken by a core team. But then, this need to micro-manage affairs is perhaps symptomatic of Modi’s strong personality as well as the burden of promises he needs to keep. — Anup JayaramDevelopment In Fast LaneThe NDA government has really acted fast in green-lighting the Narmada Control Authority to raise the height of the Sardar Sarovar Dam on the Narmada river from the current 122 metres to 139 metres. This will make the dam the second highest in the world, help irrigate an additional 6.8 lakh hectares of land as well as increase water supply and power generation by 40 per cent. All very fine, but the Medha Patkar-led Narmada Bachao Andolan alleges that the decision not just violates conditions imposed by a 2000 Supreme Court ruling but it will also lead to submergence of vast tracts of land and displacement of nearly 2.5 lakh people in Gujarat, Maharashtra and Madhya Pradesh. Development cannot be divorced from human cost. Relief and rehabilitation must precede the submergence this time — thousands of families displaced by the raising of the dam’s height in 2006 are still to be rehabilitated. Expect this matter to head to the Supreme Court next. — Gurbir SinghTerms Of EndearmentEven after a decade of signing of the South Asian Free Trade Area (SAFTA) agreement, the SAARC (South Asian Association for Regional Cooperation) countries have a dismal bilateral trade among its members. We are the only region in the world where 95 per cent of trade among all regional partners is external to the region. Prime Minister Narendra Modi’s decision to invite all SAARC leaders to attend his swearing in ceremony needs to be seen in this context. The geopolitical importance of his decision to choose Bhutan (a SAARC member along with Afghanistan, Bangladesh, India, Maldives, Nepal, Pakistan and Sri Lanka) for his first official foreign outing should also be understood. The setting is now ripe for reviving another dream — the establishment of a customs union, common market and economic union within the SAARC region. — Joe MathewLurking In Danger TerritoryThe 30-share Sensex has gained over 1100 points since the Modi-led NDA government assumed power at the Centre. The pertinent question, however, is: Will this optimism last long? Economic realities do not suggest that. Inflationary pressure and fiscal deficit continue to hover at 7 per cent and 4.5 per cent respectively. A poor monsoon, as predicted by the Met Office, will further fuel inflation. Escalating violence in Iraq and the resultant spike in fuel prices may upset the country’s trade payment cycle. Amidst all this, a jump to a higher growth rate, which is what the market seems to be already factoring in, appears improbable. The World Bank has thus scaled down its growth estimates for India from 5.7 per cent to 5.5 per cent in fiscal 2015. The near-term outlook for equities, thus, looks forbidding as Indian shares have rallied way beyond the core fundamentals. Nimble-footed institutional investors seem to have read the fine-print and have started paring gains from their equity investments. This, in a way, explains the near 1.3 per cent decline in Sensex since the second week of June. Investors should exercise caution while investing in shares, for the ‘rally of hope’ could abruptly change bearings to a ‘whirlpool of despair’ in a jiffy. — Shailesh MenonSad At Surge In SalesAcche din or good times may be returning for the Indian auto industry. Or at least there is a glimmer of hope following an uptick in domestic passenger car sales in May which saw 1,48,577 units being sold as against 1,44,132 units in May last year. Coming as it did after a year of dismal growth coupled with a dip in sales for two months, the 3.08 per cent spike in sales in May should bring cheer to the industry, but that doesn’t appear to be the case. Apparently, many in the industry are ruing the timing of the uptick — they fear that the sops they were expecting for passenger cars in the coming budget may be held back. The UPA government had extended sops to sports utility vehicles, though they had limited impact on sales despite manufacturers passing the benefits to the customers. The automakers’ fear may be unfounded as the government may not take any decision based on just May sales; it may wait for June figures to see if the turnaround is genuine. — Sachin DaveDon’t Be Listless About ListingsThe Indian Share market is on a roll once again, with the 30-share Sensex having decisively breached the 25000 mark. This record surge showcases investors’ belief in the Indian growth story following a thumping victory for the NDA government. This certainly makes for a great primary stock market. A number of asset management companies have launched mutual funds to ride on investors’ confidence. The market regulator, Sebi, is also planning to relax norms for companies planning to launch their Initial Public Offers. As this euphoria builds up, the government should maintain a tight leash on the market to avoid the mayhem during the 2008 January stock market crash when thousands of investors lost billions in a single-day crash of 2062 points. Ideally, Sebi should make the listing norms stringent so that no company with weak financials enters the primary market. — Neeraj ThakurCashing In On FIFA CounterfeitsIndia may not have her own representative at the FIFA World Cup. But for those looking to make money off football, it serves just as well. In a country like South Korea, which has its own football team, most of the merchandising revolves around the national team, and by extension, its prospects. Whereas in India, wares of every country have a market, and irrespective of who wins. But that, of course, does not necessarily mean profits for the master brand. Piracy has taken root so deep that a top English Premier League football club’s jersey managed to sell just 850 units last year. Everything else you saw in those colours were off the streets. — Abraham C. Mathews(This story was published in BW | Businessworld Issue Dated 14-07-2014)
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During UPA-II, the country’s GDP growth crashed from a high of 9.3 per cent in 2010-11 to around 4.8 per cent in 2013-14. As the new government readies to present its maiden Budget, opinion makers suggest ways to turbo-charge the economy“The government needs to make infrastructure investment friendly. It can consider giving a permanent guaranteed return on equity and take away all the risks associated with infrastructure investment. This will bring in FDI, pension funds and other long-term investors.”— AM Naik, Group Executive Chairman, Larsen & Toubro“Revive infrastructure and manufacturing sectors and promote FDI in defence and insurance. Also, create a consistent tax and legal framework and dispute-settlement mechanism. Review land acquisition processes to enable industrial growth in a transparent manner.”— Naina Lal Kidwai, Director, HSBC Asia Pacific and Chairman, India“Sops for housing, construction and auto sectors will help these sectors have significant backward and forward linkages with other key sectors.” — Brijesh Mehra, MD and Head, International Banking, India and South-east Asia, RBS“Retrospective tax amendments (especially of Section 9) must be immediately withdrawn. Retrospective amendments continue to erode global investor confidence in India.”— Nishith Desai, Founder & Managing Partner, Nishith Desai Associates“The mining sector is in crisis. We need a comprehensive legislation to replace the Mines and Minerals (Development and Regulation) Act 1957. It should reduce discretion, improve transparency in concession grants, incentivise deeper exploration, advanced technologies and attract FDI.” — S. Vijay Kumar, Distinguished Fellow, TERI“Agricultural profitability can only improve by raising productivity. The increase in profitability will come through measures that are outlined to increase productivity and not through an increase in minimum support prices (MSP).”— Ashok Gulati, Chair Professor, Agriculture, Indian Council for Research on International Economic Relations “Taming food inflation is key. Unless we tackle food inflation, the RBI is not going to ease interest rates. And unless you ease up interest rates, private sector investment in infrastructure and other areas is going to be delayed or may not even happen.”— A. Didar Singh, Secretary General, FICCI“We need to go back to drafting a clean and simple DTC. And, we need to bring world-class ideas in public administration to build an effective and accountable tax administration that is grounded in the rule of law.” — Ajay Shah, Professor, NIPFP“Make bio-manufacturing the next big opportunity after generics for India. Invest $4-5 billion each year over the next five years to grow the biotech industry to $100 billion with a 25 per cent return on investment and set a growth rate of 30 per cent year on year.”— P.M. Murali, President, Association of Biotechnology-Led Enterprises(This story was published in BW | Businessworld Issue Dated 14-07-2014)
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The rupee dropped to its weakest level in five months on Friday morning, weighed down by geo-political tensions around the globe with concerns about the continuation of foreign fund inflows into local debt and equities also hurting sentiment.By 9:07 a.m. (0337 GMT), the partially convertible rupee was at 61.60/61, after hitting 61.70, its lowest since March 5.Traders said they expect the central bank to step in and sell dollars to limit volatility if there is further downward pressure on the local currency during the session.Asian shares tumbled as investors sought out safe-haven assets on growing fears that conflicts in Ukraine and the Middle East could sap global growth, extending losses after U.S. President Obama said he had authorized air strikes in Iraq. (Reuters)
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Chairman Emeritus of Tata Sons Ratan Tata on Thursday (7 August) termed Prime Minister Narendra Modi as a 'doer' and said he should be given more time."Modi has track record of being a doer. Gujarat is an example and one should go there to see it," Tata, who retired as chairman of Tata Sons two years back, said at an interaction organised by Ladies Study Group of Indian Chamber of Commerce here.He said that since 1984, there was a paradigm shift in India's democracy with a political party getting single majority, unlike coalition government or a minority government.But the government machinery had now shifted to "quick acting and growth-oriented (work) rather than government-oriented", Tata said."We should given them more time," he said.(PTI)
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Refiner Essar Oil Ltd on Monday said its board had approved delisting of shares from the BSE Ltd and National Stock Exchange of India Ltd.Essar Oil, a unit of the diversified Essar Group, said its board met on Sunday to decide on the proposal.The move is part of Essar Oil's plans to take the energy business of Essar Energy Plc private to provide increased financial flexibility to support its business needs.On Friday, the company said the delisting would take place after its founders buy the 27.5 per cent of Essar Oil that is owned by public shareholders.(Reuters)
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Hardening its stand, the University Grants Commission (UGC) on Sunday (22 June) asked Delhi University and its colleges to admit students only under the three-year programme from the new academic session and not under four-year undergraduate programme (FYUP) implemented by it last year, a move hailed by both teachers' and students' bodies.With admission to the undergraduate programme beginning on Tuesday (24 June), UGC asked DU and all its 64 colleges to comply with its order or face "consequence" such as freezing of grants."Under no circumstances shall the University of Delhi or any of the colleges under it admit students to the FYUP for academic year 2014-15," the UGC said in a statement."Any deviation from this directive either by the University of Delhi or any of the colleges under it shall be deemed to be in contravention of the UGC Act, 1956 with its consequences," it warned.The move put a lid on the month-long agitation by students' and teachers' bodies demanding scrapping of the programme.An executive committee member of Delhi University Teachers Association Vijaya Venkataraman welcomed the UGC move.She said DU was "flouting" all norms and conduct of the programme and the Vice-Chancellor remained adamant, therefore, UGC's decision is welcome.Delhi University Students Union President Aman Awana also hailed the decision and said they would take out a victory rally tomorrow. They would also meet HRD Minister Smriti Irani to congratulate her.The UGC direction for the new academic session came a day after the Delhi University struck a defiant note, rejecting the Commission's directive to scrap the controversial FYUP.The UGC said it would be ensured that students, who were admitted in 2013-14 in FYUP when it was introduced, are able to migrate to the three-year programme. The Commission has asked DU to inform all colleges to abide by the direction and "to report compliance to the Commission of this directive by the forenoon of June 23 (tomorrow) without fail".BJP, which rules at Centre, had during the elections promised to scrap the FYUP once it came to power.Officials said disobeying the UGC direction could spell trouble for DU as it could stand to lose grants and degrees offered by it could be de-recognised.In the statement, the UGC said, "Admission for academic year 2014-15 at the undergraduate level in the general degree programmes (including the Honours programme in different subjects of Humanities, Science and Commerce) in various colleges under the University of Delhi shall only be to the 3-year undergraduate programme which was offered prior to the introduction of the FYUP."UGC has also decided to constitute a ten-member committee with representations from teachers, students and statutory bodies to advice DU for implementation of the directive.They would ensure that students admitted in 2013-14 are able to migrate to the three-year programme, without any hassle and acquire necessary academic and other competence during the next two academic years, it said.The committee would comprise the Vice Chairman of UGC, President of DUTA and students' body DUSU, among others.At the full commission meeting on June 13, UGC had asked DU to review the programme as it felt it was in violation of the national policy on education which follows the 10-plus 2-plus 3 pattern.DU, however, stood by the programme and in a reply to the UGC maintained that it has followed due procedure. DU had yesterday said it had revised the programme to make it compliant with the National Policy on Education (NPE).Delhi University Teachers Association (DUTA) along with several student organisations such as NSUI and ABVP had been demanding immediate roll back of the FYUP and the VC's resignation.UGC is a statutory organisation responsible for co-ordination, determination and maintenance of standards of education as well of disbursal of funds for universities in the country.(PTI)
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A Delhi court, which had issued summons against Congress President Sonia Gandhi, Rahul Gandhi and others, on Thursday (7 August) deferred till August 28 hearing in the case filed by BJP leader Subramanian Swamy in the matter pertaining to acquisition of National Herald daily.Metropolitan Magistrate Gomati Manocha postponed the matter after the counsel appearing for Sonia Gandhi and others informed the court that Delhi High Court had yesterday stayed the criminal proceedings pending before the trial court till August 13.Senior advocate Ramesh Gupta, who appeared for Sonia, Rahul and others, told the court that summons have not been served on accused Sam Pitroda as he stays in the USA now.Swamy requested the court to hand over the summons issued against Pitroda to him so that he could serve it on him.The court permitted Swamy's contention and fixed the matter for hearing on August 28.In a reprieve for Sonia, Rahul and others, the high court had yesterday stayed till August 13 the criminal proceedings before the trial court against them."Renotify the matters on August 13. Till that time, the impugned order dated June 26, 2014 of the trial court against the accused shall remain stayed," Justice V P Vaish had said.The stay had come as a relief to Sonia, Rahul and others including Congress treasurer Moti Lal Vora, General Secretary Oscar Fernandes, Sam Pitroda and Suman Dubey who were asked to appear before the trial court today. The Congress leaders have challenged the lower court's summoning orders against them on a complaint of Swamy alleging cheating and misappropriation of funds in the acquisition of the daily by Young Indian (YI).Pitroda is the only accused who, so far, has not moved the high court as the summons has not been served on him.The high court has now fixed the matter for further hearing on August 13 when the counsel for Suman Dubey and Swamy will argue their case.While summoning the six as accused in the case, the trial court had held that Swamy has established a prima facie case of cheating, misappropriation of funds and criminal breach of trust against them.Swamy had accused Sonia and Rahul Gandhi and others of conspiring to cheat and misappropriate funds by just paying Rs 50 lakh by which YI obtained the right to recover Rs 90.25 crore which the Associated Journals Limited had owed to the Congress party.The accused persons were summoned under sections 403 (dishonest misappropriation of property, 406 (criminal breach of trust) and 420 (cheating) read with section 120B (criminal conspiracy) of the IPC.(PTI)
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Power Minister Piyush Goyal, seeking to boost electricity generation, on Friday (20 June) asked Coal India to ramp up production from existing mines, increase supplies to utilities by reducing the quantity offered in e-auctions and address the issue of fuel quality."We need to enhance the supply of coal. We have requested the Ministry of Environment and Forests to allow additional mining from coal mines which are already operational.Reduction in quantity of coal at the time of e-auction will enable additional supplies to power sector," Goyal told reporters here.Goyal, who is also the Coal Minister, met top private power honchos, including Anil Ambani, Chairman of Reliance Power, Gautam Adani, Chairman of Adani Group, Vineet Mittal, Managing Director of Welspun Energy, and Naveen Jindal, Chairman of Jindal Power, to look for solutions to address the country's electricity shortage, which was as much as 7,000 MW in May."We have asked Coal India to expand coal production to the tune of 50-60 per cent for all power companies in the state sector or private sector. We need to enhance power availability in the country," he said.Goyal added that the issue of quality of coal was also discussed during the four-hour meeting with the private power producers and other stakeholders.Power generation has suffered as Coal India has been unable to meet production targets for reasons including delayed approvals for new mines. Importing coal to make up for the shortfall is expensive and utilities are not always able to pass on the higher costs to consumers.Coal India, the world's largest coal producer, sells about 7 per cent of its production through e-auctions, where smaller, non-power users walk away with most supplies as electricity generation companies do not bid aggressively in view of tariff caps.About 60 per cent of India's installed generation capacity uses coal. The minister asked Coal India to increase supplies of the fuel to power stations and said projects where construction is complete should get preference in allocation."We discussed the quality of coal supply and asked Coal India to allow third-party inspection before loading of coal to all buyers of coal across the country. The third-party inspection of supplies of coal from the mines...is aimed at reducing complaints," Goyal said."We are also going to do this on the unloading station (power plant), on an experimental basis for three months for the state-owned generating stations to see if the process works well," he added.Reacting to the reduction of e-auction coal, a Coal India official said, "The priority is national interest. Our purpose is to supply coal for national interest and if the power producers need coal then it will be surely given to them."The official declined to comment on third-party sampling of coal quality.The minister discussed issues including generation, transmission, distribution and fuel supply during the meeting.The private power producers also met Finance Minister Arun Jaitley and said both ministers agreed to consider the issues they raised."We have explained our problems to them. They have assured us that they will seriously consider our issues and do whatever is possible to help growth of the sector," Jindal told reporters after his meeting with Jaitley.He said specific issues such as non-availability of coal and gas, environmental clearances and bank financing were also discussed.(PTI)
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