Diesel prices are likely to come down by 37 paise a litre as Delhi government Thursday introduced a bill in the Assembly which is aimed at slashing the rate.Delhi Chief Minister Sheila Dikshit Thursday tabled the Delhi Value Added Tax (Second Amendment) bill in the Assembly which will be considered for discussion Friday.Following a hike in diesel prices in June, Chief Minister Sheila Dikshit had on June 27 announced slashing of the diesel rate by 37 paise a litre to cushion the impact of a rise in prices of the fuel.The decision could not be implemented as certain changes were required in the VAT Act to alter the sale price of diesel.Diesel price had gone up to Rs 41.12 after the hike of Rs 3.37 a litre in June and it will come down to Rs 40.75 if the amendment bill is passed in the House.The city government had arrived at the figure of 37 paise for cut in diesel prices by removing the 12.5 per cent VAT component on the hike of Rs 3.37.(PTI)
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After a series of blade damages in its wind farms over the past three years, Suzlon Energy is launching new wind turbines. The S 9X machines — an improved version of S-88 machines — will give better power output even at inconsistent wind speeds, John O'Halloran, president-technology and managing director at the German Research and Development Centre of Suzlon Energy told Businessworld.The fifth-largest wind turbine maker in the world, which posted profits for the fourth quarter of 2010-11 after successive losses since December 2009, has developed the turbine after two years of research and prototyping. Since the developed and emerging economies are pitching for green energy, analysts see a large market for Suzlon's new turbine. "But itshould ensure the product quality meets its credentials and claims," an analyst adds.Suzlon has already started marketing the S-95 DFIG (2.1-MW) model of the S 9X series and will launch another model of the S97 series early next year, says O'Halloran, who joined Suzlon in October 2009 from US-based Cummins Inc., where he was the executive director.Suzlon was mainly dependent on its S-88 (2.1 MW) machines, which it installed in 11 countries since 1995. These account for 4,100 MW of its total 15,000 MW installations worldwide.These blades had bled Suzlon in the past, it had to spend over $100 million over the past 2-3 years to implement a total blade retrofitting programme across its S-88 machines. Many project developers in the US and Latin America had complained that blades of some of the turbines had developed cracks."We are learning. Now the stress is on developing better technologies that can withstand weather and challenges in any geography", says Robin Banerjee, Suzlon's chief financial officer. Suzlon is one of the few original equipment manufacturers of wind turbines with its own blade testing facility. The blades used in the earlier machines were made in India and were installed in geographies ranging from extreme hot to extreme cold conditions.Suzlon employs about 400 engineers for R&D and maintenance of its machines. It has three R&D centres at Hamburg, Berlin and Rostock in Germany and one each at Pune, Aarhus in Denmark, Hengelo in The Netherlands and Tianjin in China.But, according to experts, Suzlon has a long way to go to match the technical expertise of leaders in the industry. It sells relatively smaller onshore power plants in the range of 600 KW to 2.1 MW. Suzlon's German subsidiary REpower sells rather larger machines with rated power capacities ranging from 2.05 MW to 6.15 MW. Its two models — 6M and 5M are also installed as offshore machines. In contrast, industry leaders have a much larger portfolio of products. Denmark-based Vestas has 16 models of on-shore machines (850 KV to 3 MW) and offshore machines (3MW to 7 MW), including giant turbines like the V-164 model whose blade diameter is the size of three football fields. Gamesa offers four different families of machines and is developing two families of new offshore turbines (the G11X-5.0 MW and the G14X of 6 MW-7 MW). When the outside wind is strong, Suzlon realises a crucial factor in its journey — R&D.(This story was published in Businessworld Issue Dated 11-07-2011)
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India's factory sector expanded at its slowest pace in more than two years in August as export orders shrank amid weakening global demand, a survey of manufacturers in Asia's third-largest economy showed.Still, India was one of the few countries to show growth.Similar surveys released on Thursday showed manufacturing activity contracted in the euro zone, Britain and China, with PMI readings all below the 50 level that demarcates growth from contraction.The HSBC Markit India Manufacturing PMI fell to 52.6 in August, below expectations for 52.9 and July's reading of 53.6. It was the lowest reading for the PMI since March 2009, when it was below 50."The main driver of the weaker reading was a significant contraction in export orders, which are facing stiff global economic headwinds," said Leif Eskesen, chief economist for India & ASEAN at HSBC.Growth in new manufacturing orders in India slowed for the fifth consecutive month, while the export orders index fell to 45.0 in August from 49.2 previously, the second consecutive month it has contracted, the survey showed.Cooling order growth suggests the headline PMI is likely to slow further in the months ahead."It's very clear that these outside risks are rising," said D.K. Joshi, principal economist at Crisil in Mumbai. "There are clear downside risks to industrial activity."Domestic DoldrumsWeakening global demand, rising prices and tighter monetary policy by the Reserve Bank of India (RBI) have combined to crimp economic growth. Data this week showed the economy grew 7.7 per cent in the three months to June from a year earlier, its slowest pace in six quarters.India's manufacturing sector grew 7.2 per cent in April-June from a year earlier, an improvement from the previous quarter but below the 10.6 per cent growth clocked a year earlier, although the services sector continued to perform well and demand from rural consumers remains robust.Maruti Suzuki, maker of nearly half the cars sold in India, this week posted a 12.7 per cent annual drop in August sales, its third straight monthly decline.Prospects for the rich-world's economies look shaky after a US sovereign debt rating downgrade by Standard & Poor's in early August sent global stock markets into a tailspin, while recent economic releases have pointed to a dire outlook in the months ahead.Hopes that emerging markets will continue to offset weakness in the West are fading as even fast-growing "BRIC" nations such as China and India lose momentum amid the global downdraft. Brazil surprised financial markets on Wednesday by cutting interest rates, citing the darkening international economic outlook.India's economy, which grew 8.5 per cent in the fiscal year that ended in March, is expected to slow significantly in the current fiscal year, with Morgan Stanley forecasting growth of 7.2 per cent.Worries that the US economy could slip back into recession, heavy selling in global financial markets in August and Europe's festering debt crisis have soured consumer and corporate confidence.The pace of growth in the US manufacturing sector ticked down to a crawl in August, faring better than economists had forecast but remaining at the lowest level in two years, an industry report showed on Thursday.The US Federal Reserve said last month it expected to leave interest rates on hold at least until mid-2013 and markets are looking ahead to its September meeting for cues on whether there will be a third round of asset purchases or QE3 to prop up the limping economy.The RBI has raised interest rates 11 times since March last year as it struggles to rein in high inflation, with the last hike in July by a greater than expected 50 basis points, taking the repo rate to 8 per cent.Many economists expect another rate increase at the RBI's next meeting on Sept 16, and believe it will pause thereafter.The PMI survey showed inflation will likely remain a major concern in India, with growth in factories' input prices accelerating for the third month running."Inflation pressures remain elevated, with input prices accelerating and output prices still trekking up, albeit at a marginally slower pace," said Eskesen.Wholesale prices in India rose 9.22 per cent in July after growth of 9.44 per cent in the previous month, and economists see the RBI raising lending rates by another 50 basis points before the end of the year.(Reuters)
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International Monetary Fund's (IMF's) new chief and the first woman at the post, France's Christine Lagarde, will have much to do when she takes over the post on 5 July for a five-year term. To start with, Greece's economic situation has to be addressed urgently. In the longer term, one of the major goals is to improve IMF's image and its functioning. The other goal would be to give more representation to emerging markets, which was among the promises Lagarde made while touring emerging nations before being elected. India, as many other countries, voted in her favour at the last moment after the US had made its choice. Nearing An EndONGC's board is finally ready with the red herring prospectus for a follow-on public offer (FPO) now that it has the required number of independent directors, and is thus able to comply with Sebi's norms. The company, however, still needs a go-ahead from the Department of Disinvestment. The plan is to sell 5 per cent of the government's 74.14 per cent stake in the company, worth about Rs 11,500 crore, within three weeks of the government approval.ONGC's FPO has been in the wings for long as it did not have the adequate number of independent directors. No Trust In TrustWith more questions being raised over the way the trustees are running the multi-crore Sai Baba Trust, the Andhra Pradesh government may have found a way in to take over the trust, or at least control it in some part. It began with the government asking the trust to give financial details for the past five years. There is also a suggestion that the Sai Baba Trust should function on the lines of the Tirupati temple's trust.The government may, however, not be the best authority to run the trust, given its own high corruption levels. It could step in temporarily till transparency is built in, but exit after that. MOVING ON: ONGC's A.K. Hazarika (left) (BW Pic By Tribhuwan Sharma) says follow-on offer may be out soon. Justin Timberlake and Specific Media buy Myspace (AP) A BreatherOn 30 June, the Calcutta High Court asked the West Bengal government to file an affidavit by 8 July on Tata Motors' petition challenging the Singur Land Rehabilitation and Development Act 2011. Tata Motors will have to reply by 12 July, and the next hearing will be on 14 July. A day earlier, the auto company had got a breather when the Supreme Court barred the state government from returning the land set aside for a Tata project in Singur to its original owners until the case is settled.It's A CrowdToyota recently launched a premium hatchback, Etios Liva. Priced in the Rs 3.99-5.99 lakh range, it will compete with Maruti Suzuki's Swift and Ritz, Hyundai's i10 and i20, Ford's Figo, General Motors' Beat, Volkswagen's Polo, Nissan's Micra and Tata Motors' Indica. Importantly, there is no diesel variant yet. And that might come in the way of selling 30,000 Livas this fiscal. Sexy's BackMyspace has new owners — Justin Timberlake and advertising network Specific Media. The $35-million deal was reportedly hammered out in just 72 hours. News Corp had bought Myspace in 2005 for a much bigger amount — $580 million. The aim is to revive the ailing social network, which — the new owners believe — can become a leading digital platform for original shows, video content and music. The number of unique visitors to Myspace had slipped to about 35 million in May, and the company is going for large-scale lay-offs. Specific Media's Tim and Chris Vanderhook will take over the day-to-day running of operations.(This story was published in Businessworld Issue Dated 11-07-2011)
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On Monday 18 April, when Standard & Poor's (S&P) sent out a warning about the unsustainable fiscal deficit and the growing public debt of the US government and threatened to lower its rating, reactions were mixed. Financial markets were surprised; over the past few months, Eurozone debt has been widely discussed. Even Japan's fiscal position has caused some worry. US stockmarkets declined sharply on Tuesday, shrugged off the effects of the possible downgrade on Wednesday, and went back to normal after that. Some economists have even laughed at the S&P report.S&P's rating review expressed concern over the "US's meaningful economic and fiscal risks and large external debtor position". From 2003 to 2008, the fiscal deficit varied between 3 and 5 per cent. Following the global credit crisis, the fiscal deficit is 11 per cent of GDP. The failure of US President Barack Obama and the Congress to reach an agreement on a meaningful fiscal consolidation strategy appears to have prompted S&P's rating review. But how serious are the problems of the US external debt and the worsening fiscal profile? Media commentators have lamented that most US debt is held by foreigners, and in the Congress, legislators have called for harsh measures to push fiscal consolidation and spending cuts.Most Asian countries — China in particular — hold a large amount of reserves in dollar-denominated Treasury securities, a reflection of China's trade surplus with the US. There has been much talk about correcting these imbalances, but not much action has resulted. If the US were to replace Chinese exports with domestic goods, employment would rise dramatically, as would tax receipts and GDP growth. The debt-to-GDP ratio would take care of itself. But it is hard to imagine cheap Chinese labour contracting so easily. It is not clear that deep spending cuts would help fiscal consolidation very much either. When Japan tried that in 1997, the debt-to-GDP ratio got worse: lower government spending meant lower GDP, and since public debt does not decline at the same speed, the macroeconomic situation deteriorated even further. More recently, spending cuts in Ireland and Latvia produced the same results. Recent academic research seems to support the idea that spending cuts make things worse. A paper by Victoria Chick of the University of London and Ann Pettifor — Fiscal Consolidation: Lessons from a Century of Macroeconomic Statistics — showed that 10 attempts at fiscal consolidation through spending cuts in the past 100 years all failed to improve debt-to-GDP ratios. The S&P report has something disturbing. Page 4 of the review has this sentence: "...the risks from the US financial sector is higher than we considered them to be before 2008…" S&P believes that risk in the US financial sector are rising. Is another crisis — as many doomsayers have warned — looming on the horizon? Sceptics dismiss the idea: the credibility of rating agencies is questionable after the crisis. It is a cross S&P will have to bear for some time. (This story was published in Businessworld Issue Dated 02-05-2011)
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The United States and Europe must summon the political courage to defuse their debt woes or global economic recovery will be threatened, Chinese official media said on Monday, reflecting the pressures on Beijing with its big stash of dollar assets.A commentary in the People's Daily newspaper, the chief mouthpiece of China's ruling Communist Party, said the troubles facing the United States and European Union grew out of the political dysfunctions of the Western democracies."It must be understood that if the U.S., Europe and other advanced economies fail to shoulder their responsibility and continue their incessant messing around over selfish interests, this will seriously impede stable development of the global economy," the paper said."People have deepening misgivings about the political decisiveness of the Western nations, and this has also seriously hurt global investors' confidence in world economic recovery, exacerbating market turmoil."Such media comments do not amount to a definitive response from China's top leaders, who may tread a more careful public line, knowing that their comments could stoke market alarm.Beijing officials have so far been publicly mute about the blow to Washington after Standard and Poor's stripped the United States of its top-tier AAA credit rating on Friday. But state-run media have decried the potential damage to China's growth and huge holdings of U.S. treasury assets.The critical media comments lay bare the pressures weighing on policymakers handling China's huge holdings of dollar assets, said Yuan Peng of the China Institutes of Contemporary International Relations, a government think tank."This will certainly have an adverse impact on China, because it is the biggest foreign owner of U.S. treasury debt, and this will affect the security of that debt, raise more questions about it," said Yuan, speaking of the downgrade."For China, this is a challenge, because it suggests our holdings of U.S. assets aren't as safe as they were, and the [Chinese] government also needs to explain itself to the people."Nowadays, the Chinese government also faces pressure from the media and public opinion."Warning On ExportsThe official Xinhua news agency warned Washington against seeking to boost exports and growth by letting the dollar weaken, a move that would lower the value of Beijing's vast holdings of U.S. dollar assets.China owns the world's biggest stockpile of foreign exchange reserves at $3.2 trillion, and is also the biggest foreign buyer of U.S. Treasuries. Analysts estimate about 70 per cent of its reserves are invested in dollar assets, including Treasuries, although the exact investment mix has not been disclosed."From this point, the U.S. has every motive to maintain a weak dollar," said an English-language commentary from Xinhua."Before the U.S. makes any move, please remind it: don't forget your responsibility as the issuer of reserve currency to maintain the stable value of the dollar."A weaker dollar could impede global economic recovery by stoking turmoil in financial markets and lifting the prices of dollar-denominated commodities, said Xinhua.The People's Daily commentary said the recent turmoil was driven by Washington politics, not economic fundamentals."What has been pushed to the edge of the precipice is not the global economy, but Washington politics," said the commentator, writing under a pen name "Zhong Sheng", which means the "voice of China." That pen name is sometimes used for commentaries reflecting higher level opinion."Only if the Western nations stop wantonly shirking responsibility and take out a sharp blade of determination and courage to cut through their fetters, strengthening policy coordination with developing countries, then the global economy has hopes of taking a path of stable recovery."On Monday, the Australian Treasurer Wayne Swan criticised China over its media criticism of U.S. "debt addiction", calling the comments unhelpful.The Chinese Foreign Ministry, central bank and other government agencies have not publicly commented on the U.S. debt downgrade and have not answered faxed questions. (Reuters)
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Sugar is becoming a bitter business for its manufacturers and the sugar industry is seeking reforms in policy. But before that the industry needs to get its house in order. Currently they are a fragmented lot speaking in different voices. As the first chairman of the Sugar Committee of the Confederation of Indian Industry (CII), Ajay S. Shriram hopes to convince the government to introduce changes in the licence raj era, subsidiaries, rules and regulation and policy decisions. Speaking to Businessworld's M. Rajendran, he highlights the hurdles in the sugar industry that need to be resolved while focusing on the importance of effecting policy changes soon to end the cyclical ups and down in sugar prices.Excerpts:The sugar industry is a divided lot, what gives you the confidence that the government will agree to the charter of demands? Why isn't there a single platform to debate issues such as change in controls and multiple governing authorities?The CII National Committee on Sugar was formed to pursue policy actions with the government. The sugar industry needs some impetus to survive since it requires support from all stakeholders especially the government. The industry supports 50 million farmers and their families, provides direct employment to millions of people, helps the entire nation by providing sugar at reasonable prices and moreover aids the government in terms of revenues, rural and economic prosperity. The issues raised by this committee have also been discussed and deliberated with the Indian Sugar Mills Association (ISMA) and other members of the CII.Can you give an estimate of the financial status of the sugar industry in India: the total number of companies that exist, among them how many are loss making, profit making, in brink of being shut down and already shut down. Let us consider a ten year period.The Indian Sugar Industry is highly fragmented. There are a total of 651 mills (as estimated in 2009-10) out of which 62 are public, 269 are privately owned and 320 are co-operatives. In my opinion, all sugar mills are running into losses as of now because prices are ruling much below the cost of production.You therefore suggest that the consumers will not mind a hike of Rs 5 in the price of sugar as it would help the industry achieve better financial results? But people will mind any hike especially when the inflation is on a high.The consumption pattern of sugar shows that two third of the usage is for bulk and industrial consumption and one third for household consumption; thereby making the commodity less critical to calculation of the Wholesale Price Index of individual buyers. The share of sugar is only 2.4 per cent and 1.5 per cent of the total consumer expenditure for rural and urban India respectively. Also, the below poverty line (BPL) population is covered through the public distribution system (PDS) system. From the point of view of household consumption, even for a low income household, a 10 per cent increase in sugar price would result in less than one per cent increase in the monthly food expense.What are key policy issues on which you are seeking changes from government?The key policy issues which need to be addressed the decontrol of the Sugar Industry include a number of points; the first being the removal of levy obligation as the industry is required to bear 10 per cent levy sugar obligation for providing sugar to the government for PDS .This will reduce the financial burden of the sugar industry by around Rs 3000 crore. The second issue is concerned with the linkage of sugarcane prices to sugar prices. A proper and transparent pricing mechanism for sugarcane will help the industry as well as the farmers in strategically planning demand-supply in the market, and thus reduce volatility in availability of sugar as well as prices. The removal of release mechanism and stock limit is also a crucial point. The monthly release scheme should also be dispensed with and the government should itself maintain a strategic stock of sugar. Another major issue deals with packaging. The industry should be allowed to use any food grade material for this purpose to cut down costs and organise its sale and stock handling in a more effective manner. The government prohibits packing in any food grade bags except Jute bags. The industry however wants to bring the best technology to India provided we are allowed to pack sugar in any food grade bags.Stable exports policy under the open general licence (OGL) will help maintain reasonable sugar prices which in turn can be passed to the farmers. At present there are multiple departments and ministries which control the industry. For establishing a level playing field and for removal of regulatory distortions, such conflicts need to be resolved.Is the decontrol of sugar the tonic needed to revive the Indian sugar industry?There are a number of industries such as cement, steel, telecom, etc. that have flourished post decontrol. These industries today have dynamic competition and even consolidation which benefit all the stakeholders. Decontrol of Indian sugar industry will lead to operation of market forces and bring in efficiency across the value chain. It will also lead to self sufficiency and reduction in cyclicality with further diversification of the value added products i.e producing green power and also addressing the energy need of the country through ethanol. Decontrol is also imperative for the prosperity of all stakeholders - farmers, consumers, the government and millers.Where can the Indian policy makers look to find a successful sample?Brazil is a great example how decontrol can lead to prosperity in the industry. It started in 1990 with the elimination of public production and export controls as well as a public centre for sugarcane R&D. Today Brazil is the largest manufacturer and exporter of sugar as well as the largest manufacturer of ethanol for blending with petrol, which has helped in reducing their dependence on fossil fuelsIn India, mechanisation in agriculture has not been a uniform phenomenon. Is the industry concerned about it or is the decision left to the farmers?The sugar industry is continuously upgrading itself technologicall. The industry is working towards implementing farm mechanisation but is still in a nascent stage. For example, In South India, mills have around 100 cane harvesters. This development is primarily driven by the shortage of farm labour and the system of maturity based harvesting organised by the mills in South India. North India has not yet started this process as the farmers harvest their own fields. But companies such as DSCL sugar and many others have taken up mechanisation in the form of trench planting to help the farmers. The industry requires support from the government to disseminate such technology to the farmers on a mass scale.What has been the contribution of the industry in developing crops that can give higher yield with lower input costs?Yields in sugarcane have remained constant. Individual companies are working with farmers towards the process of yield improvement as it in the interest of the miller to work with the farmer to increase productivity. The government and the industry need to work together in researching and developing new varieties of sugarcane which can give yield more and sucrose content.
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After years of dealing with pedantic, academic and politically correct (read boring) chief economic advisors in the finance ministry, Kaushik Basu is a refreshing change. Here's a chief economic advisor who holds forth and speaks his mind on all manner of touchy subjects.Consider, for example, his latest suggestion that the law should be modified in such a way that in certain classes of bribes, the bribe giver be given immunity, and only the bribe taker should be punished. This goes against the conventional view that bribe givers are as responsible for fostering corruption as bribe takers. In a novel research paper published as part of the Working Paper series by the Department of Economic Affairs of the finance ministry in March 2011, Basu argues that following his suggestion would greatly reduce the tendency to accept a bribe. Basu's point is that in some cases of bribes — what he dubs "harassment bribes" — people are forced to pay just to get their due. It is a well acknowledged fact that to get the tiniest things done in many offices, a small bribe is almost expected to be asked for and given.How many licences, passports or ration cards, for example, are issued without some money for mithai? Similarly, getting even routine no-objection certificates from any department dealing with property requires payment of specific amounts. Critics argue that the chief economic advisor's premise, though novel, is too simplistic a proposition to ever work. That is because the incentive for the bribe giver to go after the bribe taker is very low due to the fear of it rebounding on him the next time he wants work done (the fear of reprisal). And due to the bribe giver's conviction that very little action may be taken against the bribe taker — nothing may come of your complaint. For the bribe giver to lodge a complaint or help the authorities catch the briber taker, the fear of reprisal has to be very low or absent. In most ordinary situations, unless the bribe giver is certain that he is unlikely to face or encounter the bribe taker ever again, the incentive to seek redressal is very low. Further, it is not clear how such an initiative would eventually work out in the courts. How do you put forth the evidence? Will it all be based on hearsay? Your word against his? Or do you carry a hidden camera to record the evidence? Moreover, with petty bribes involving small amounts, will it be worth the effort ? The legal system — which in reality is actually one of the biggest areas of harassment, and many settlements take place purely because of how big of a hassle it has become — is slow to mete out justice, if it metes it out at all. That the onus should be lifted from the bribe giver is accepted since it is a bit like penalising the rape victim for being a party to the crime. What remains uncertain is whether this alone can achieve the desired result (a big drop in petty corruption). However, it is to tackle this kind of petty corruption that Kaushik Basu suggests a change in law. Tackling the big fish, however, would take more than just changes in the law; it will take a transformation in the moral fabric of the power holders and a justice system that works hard to punish the corrupt.(This story was published in Businessworld Issue Dated 02-05-2011)
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In a recommendation that can have far-reaching implications on public finances, a high-level panel said on Thursday the government should do away with the distinction between Plan and Non-Plan expenditure and redefine roles of the Planning Commission and the Finance Ministry.The panel headed by Chairman of the Prime Minister's Economic Advisory Council (PMEAC) C Rangarajan said that all public expenditure should be split into 'capital' and 'revenue' expenditure.While the Planning Commission should be responsible for formulation of the Five-Year Plan, the task of firming up annual budgets should be entrusted to the Finance Ministry based on inputs from the Plan panel, it said.The report said that Commission should dispense with the exercise of approving annual Plans of states. The Commission, it added, could hold a strategy or review meeting with representatives of the states.These recommendations were made by the committee which was constituted by the government in April last year to suggest steps to improve management of the public expenditure."Plan and Non-Plan distinction in the budget is neither able to provide a satisfactory classification of developmental and non-developmental dimensions of government expenditure nor an appropriate budgetary framework. It has therefore become dysfunctional"The committee, therefore, recommends that Plan and Non-Plan distinction in the budget should be removed", it said. While releasing the report, Planning Commission Deputy Chairman Montek Singh Ahluwalia said: "I do think that the distinction between Plan and Non-Plan is artificial. If we want to move towards budgeting that is based on evaluating outcomes, it is not useful only to focus on planned expenditure."Under the current dispensation, all government expenditure is split into Plan and Non-Plan. Plan expenditure generally signifies expenses taken up for development schemes, while Non-Plan deals with essential outlays pertaining to debt repayment, salary and other administrative expenditure.The report suggested a basic shift in budgeting approach from "one-year horizon to a multi-year horizon and from input based budget to outputs and outcomes".As regards the new roles of key entities, it said, the Planning Commission should be made "responsible for consolidation of Five-Year Plan over all services based on the input from the Ministry of Finance...(while) Ministry of Finance (be) made responsible for the preparation of Annual Budget based on the inputs from the Planning Commission".The report also called for modification in accounting classification with a view to strengthening the framework for transfer of funds from centre to the states."The proposed classification should provide uniform codes for central programmes, sub-programmes and schemes being implemented in the states," it added.The report also called for strengthening the Central Plan Monitoring System (CPMS) and empowering the citizens to seek information on flow of resources and utilisation with a view to promoting transparency and accountability.(PTI)
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Nearly 20 years after he returned from the US, Lagadapati Madhusudan Rao heads India's largest private power-generating company, Lanco Infratech. He is a difficult man to meet since he is out of the country most of the time. Rao tells BW's Anup Jayaram that he is in the process of giving a professional touch to what has been a family-run business till now. Excerpts: What was the catalyst for Lanco to get into the power business? The opportunities in India came only after liberalisation in 1991. We were a small construction company in the early 1990s. There was an opportunity and we said let's look into it. The first experience that we had as a group outside construction was in the steel industry. From 1980-89, we were in Visakhapatnam. At the same time, we were looking for opportunities in other sectors. In 1993-94, seven power plants were given out through MoUs. In the second tranche, every state was motivated to develop independent power plants. We participated in the opportunity in Andhra Pradesh. Among the seven fast-track projects, two were from Andhra. Hundred letters of intent were given all over the country. Each state had given 6-7 letters of intent. Out of close to 100 MoUs signed in the late-1990s with independent power producers (IPPs), Lanco Kondapalli is one of the few successful IPPs. We got the letter of intent in December 1997 and we were able to bring the project to financial closure in December 1998. Many projects failed in the power sector in that period. Very few people were able to successfully convert the opportunities into a project. Some of the marquee names of Indian industry are there in the power business. How do you compare to them?We are benchmarking ourselves from where we stand in capability in the construction business. We do not have to worry that the brand Lanco is not up to the big names. What is more important is that we realise where we have to go. Focusing on the best practices in the industry and on human resources are the only answers to remain a winner in this game. That is where our focus is. We are very unique to what corporate India is doing. There are a few things. Lanco is a family business. We — three brothers and a brother-in-law — decided that we needed to grow Lanco in a professional way. Most important is to separate ownership from management. In the past two years, the four of us went through multiple sessions along with the family business practice of PricewaterhouseCoopers Dubai to structure a constitution on how we need to position Lanco as a global operation. Second, we are developing initiatives in terms of people capability. The question is: do we have the right person at the right place? We have a very structured formal concept called LEO — leadership, entrepreneurship and ownership. As part of taking this forward, we are setting up the Lanco Academy. We have worked with Accenture to give shape to the Lanco Academy. A few years from now, 80-85 per cent of the senior leadership should be able to come from within Lanco itself. Do you see a shake-out in the power business? Are you looking to acquire new assets?Yes, we do see a shake-out. I would say that there could be one around 2015-16. Over the past two years, lots of people have set up projects with the intention of selling them. I do not think we will buy out. There are at least 10 companies that are serious and are here for the long term. All these companies, including Lanco, have a good portfolio of assets at different stages of development. We may not acquire any new assets.(This story was published in Businessworld Issue Dated 11-07-2011)
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