Why did it take so long for your third book to come out?The book, The Oath of the Vayuputras, has grown very long. It’s more than 160,000 words, which makes it nearly twice as long as my earlier books. I guess there were many loose ends to tie-up! So it took me a long time to write which consequently, delayed the launch of the book. What explains your interest in mythology? How did you start off with the trilogy in the first place?I was fortunate enough to be born into a very religious family. My grandfather was a priest and both my parents are very religious. So I guess that’s where much of my interest and knowledge on this subject comes from. Tell us about your writing schedules. When and where do you write?I am a morning person, so I write in the mornings. It’s important that I hear music while writing; music which has to match the mood of the scene I am writing. Besides this condition, I can pretty much write anywhere. I have written the third book in various places, in a café in Singapore, in a temple in Benaras and at my home in Mumbai. Can you share with us one of the most memorable moments you had while writing this book? The most memorable moment for me was when I got the ‘Har Har Mahadev’ speech (In the first book, The Immortals Of Meluha). I remember clearly; I was having a shower, when suddenly, the speech occurred to me. I started crying, rushed out and wrote the speech down. And then as I usually do with important scenes, I went to my wife and told her the speech. Her expression confirmed to me that the speech was working. Tell us about the kind of books or vedic texts you had to access learn more about Indian mythology…I learnt most of our Vedas, Upanishads and Puranas the old fashioned way — through shruti, through listening. I learnt all of this while growing up, listening to my grandfather and my parents. Maybe that’s why they are embedded in my brain. But of course, I read a lot as well. It’s good to read different interpretations; it expands your understanding of the core text. What’s your energy drink?In the morning, I like a glass of milk. I don’t drink as much alcohol now as I used to in my younger years; but when I do, I like red wine. What according to you makes a book a good read and/or a bestseller? It’s a mystery. I always believe that you shouldn’t set out to write a bestseller. You should write a book that flows from your heart. Let fate decide whether it’s going to be a bestseller or not. The Oath Of The Vayuputras By Amish Tripathi Westland Publications Pages: 600Price: Rs 350What's the hardest thing about being a writer?Making money is the hardest part. Regrettably, writing is not that lucrative a profession, though a few are lucky enough to make a living from it. That’s why I always suggest that it’s good for a writer to have a job on the side — it ensures that he won’t have to compromise on his writing just so as to pay his bills. So, what next?I haven’t decided on the topic of my next book series. But it will certainly be in the space of mythology/history. Tell us about the books you read in 2012…Of the books I have read in 2012, one of the best ones was India, A Sacred Geography by Diana Eck, a professor of Comparative Religion and Indian Studies at Harvard University. Eck is an American; but her understanding of India is so deep, that I genuinely believe she must have been an Indian in her previous birth. She understands India better than many Indians do. The book can be slightly serious for those not inclined to the subject. But it's a very good book. I also liked Breakout Nations by Ruchir Sharma. What I liked about the book is the sheer width of its coverage. Sharma has covered many nations in it, and obviously, considering the broad width of analysis, he hasn't analysed each country in nauseating detail. But it gives you a broad idea of what's happening in each country’s economy, which can give you a guideline to analyse further. Em And The Big Hoom by Jerry Pinto is the another book I liked - it's a rather sad story about four people: a Mother, Father, Son and Daughter. And it's told from the son's perspective. The mother suffers from a mental illness and the book chronicles the challenges the family faces and how they handle it. Despite the extremely sad subject, it doesn’t get melodramatic. I particularly like the character of the father, a solid, old-world man. Pinto says this interesting line in the book when describing the father: "They don't make men like this anymore; men who are built for endurance, not for speed.” I believe the book is semi autobiographical. Tell us about the kind of authors you like to read?I read books by all kinds of authors, though I prefer non-fiction over fiction. I give every book a chance. I browse a lot, I read a lot, I buy a lot of books which are thankfully tax-deductible now due to my profession. I give every book about 40 pages of my attention. If I don't like it, then I don't read any further. But if it catches my fancy, I complete it. I don't work with any biases. I like to read opinionated books; where the book starts with a hypothesis and the rest of the book goes on to justify and support that hypothesis. I find that one tends to learn from such books. I like books with a purpose, with an agenda. Maybe that’s why I prefer non-fiction books. Do you think publishing industry will see more of Mommy Porn?It’s difficult for me to hazard a guess on that. I haven't read the Fifty Shades series. I may not pick it up. However, I think it's wrong for anyone to judge what others are reading. India is a free country. Everyone has the right to read what they want. Let people decide what they want to read. Your view on content in books for children…In India, books for children are at two extremes. Either we have historical/ mythological content or imported content. What we also need is modern Indian content. For instance, if you buy a book on foods for your toddler, you will see scones in it. It doesn't have idlis or paav bhaji. Abhi, India mein scones kaun khata hai, bhai? Adults may not know about scones and hence will not be able explain it to their child. These are not part of our daily diet. So, I would hope to see some localised content which is modern and Indian. Interestingly, my wife has the same view and has actually started a children’s book publishing company called funOKplease with this very philosophy. These days we see several authors talking about their book via social media. How important is the role of an author in promoting the book?An author should never forget what the core is about. The core of his existence as an author is the book and being true to it. So an author must write the book with his heart completely in it. But you cannot say that marketing does not matter. And that attitude, which I see persisting in some parts of publishing, is childish. I am a voracious reader and I can give you long list of books that should have been massive bestsellers. But very few people have read those books; simply because they haven’t heard of them. Authors will have to focus on marketing and cannot delegate it to the publisher. You cannot hand over your baby to someone else. Note: The interview was conducted before the launch of The Oath Of Vayuputras on 28 February 2013businessworldbooks (at) gmail (dot) com
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Those in the publishing industry are aware that India is among the top 10 publishing countries in the world. Going by the India office of the ISBN agency, we have over 12,000 publishers. Add to that a bunch of unregistered publishers, and we have at least 18,000 publishers producing in excess of 80,000 titles a year, of which more than 18,000 are English titles. This, interestingly, makes India the world’s third largest publishing country for English language titles, next to the UK and the US. A quick scan of Nielsen’s report on the top selling English books (in December 2012) throws up some interesting facts: Of the top 1,000 books sold in retail across India, 188 were classified as children’s books (fiction, non-fiction, etc.) led by Diary Of A Wimpy Kid! Of these, 188, 47 were ‘Indian’, calling for celebrations. But that is only if you consider Wren & Martin ‘Indian’! Without the ‘Indians of foreign origin’, the list drops to 33 or so! Out of these, more than 20 per cent are from Amar Chitra Katha (ACK). In November 2012, 183 books for children made it to the top 1,000. And ‘Indian’ books were 43 of these. And ACK publications typically contribute 20 per cent of the kids reading genre month on month. The big question that really seeks to be answered: What are kids reading nowadays? For all who believe that ACK is all about mythology, here’s the ‘doosra’: Fables (including folk tales) is the publication’s largest selling genre, with stories from Panchtantra, Jataka and Hitopadesha, and other folk tales. This is roughly about 25 per cent of the retail sales. Mythology, popularly believed to be ACK’s core strength by parents, is also the second largest genre in terms of sales. Other best selling collections from ACK include ‘Nation Builders’ , ‘Mahabharata’, and ‘The Complete Collection’, which is a collection of 300 Amar Chitra Katha’s packed into one beautiful box. As a recent seminar at the University of Baroda, we ‘educators’ were exchanging notes. At least two doctoral dissertations support our sales pattern (Rachana Bhangaokar, PhD, Assistant Professor, Department of Human Development and Family Studies and Maharaj Sayajirao, University of Baroda). The reasons were similar to the ones volunteered by our customers — uni-variate stories and clear take-outs are the reason why books on fables (Aesop is of course an integral part of the world community of fables). My colleagues at other quality publishing houses would probably support this hypothesis and report similar sales patterns. Why are fables our largest genre? One reason is that our core readership is between 8-12 years old. Children in this age group are getting into the stage where reading becomes a choice beyond ‘activity’ books. Because the classical and much loved ‘grandmothers tales’ find content from a lot of these stories, and as you know, the comfort of familiarity is very important. The reading pattern changes with older kids moving on to Mythology and/or History. Fables pass the baton to Mythology and History. Kids start (or should start) making inferences on ‘right and wrong’, ‘good and bad’ based on what they have learnt in their fables. Some kids drop out of reading other comics after the first two or so years of reading, however, the ‘loyals’ will convert to other genres. Within the ‘older child’ genres, Heroic and fun characters quickly gain precedence. I quote from data based on responses from kids who applied for the Amar Chitra Katha scholarship, run in conjunction with Big Bazaar and which generated >25,000 entries. The primary question was: who is your favourite Amar Chitra Katha character? And the top 4 characters: Birbal, Raman of Tenali, Hanuman and Krishna. I was impressed by the intrinsic ‘wit’ in the answers. Perhaps it’s a sign of the times that Human Wit is valued over super natural powers… especially in a specific segment of the population. What fuels a child to read a story book? A familiar eco-system, Characters or stories that s/he has heard about from her/his significant others, A familiar storyline, for instance, victory of good over evil, triumph of intelligence over foolishness, foolishness is not ‘bad’… in fact, it is loveable, bravery over cowardice, conquering adversities to achieve good (Soordas was blind…) The data on the popularity of fables and characters supports the ‘FSBT’ theory. This is a theory that I presented at a seminar held at Baroda University. Simply put, give the child a choice and s/he will chose familiar, simple, byte-sized stories with clear takeaways. This ‘FSBT’ principle was already known to the people who developed the collections of stories that make up Indian Folk Tales through the centuries. Uncle Pai or Anant Pai who created ACK in the 1960s followed this to the hilt; Walt Disney created an entire world on this principle; and all ‘knowledge-based’ TV channels (Discovery Channel, National Geographic Channel, etc.) seem to follow the same principle when creating programming for kids. Pratham Books use familiar storylines to create inexpensive and beautifully art-worked books for the mass audience. I quote from their website: “…and we believe they should have stories set in surroundings familiar to them and in a language close to their culture…”. So, for instance, you will find children dressed in Indian attires, or games or food found in local setting in the story books published by Pratham. Uncle Pai’s other great creation, Tinkle, is arguably the largest selling magazine for kids in the country with 2.25 lakh-plus copies being sold every month. The probable reason for its success: The clumsy but loveable Suppandi who takes everything literally (thus marking the difference between literal and figurative) and the animal-fearing Shikhari Shambhu — who personifies all the fears that kids themselves will want to share and overcome. Chandamama from Delhi Press is a publication that simplifies life. Simple pictures and uncluttered pages make it popular with the masses as does its low price. There are hundreds of other publishers producing children’s products, but seldom, if ever, make it to the Top 1,000. The key here seems to be the development and ownership of a scalable and specific intellectual property, a la Suppandi, Shambhu and Chacha Chaudhry. The publishers are trying to create books that would compel people to read more. Perhaps we are still lacking in our marketing efforts. We must have our core general products worked out to sustain the bread and butter of each business, with half a dozen best sellers providing the cream. Pricing continues to be an area of concern. Any lower and there is no sustainability in the business; a little higher and books go out of reach of the massive majority. The hunt for the sweet spot continues… Mohan is COO with ACK Mediabusinessworldbooks (at) gmail (dot) comFollow us on Twitter @booksbw
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Forty-four-year-old Anant Gupta has been formally anointed as the new CEO of India's fourth largest software services exporter HCL Technologies. The current incumbent Vineet Nayar who successfully spearheaded the growth of HCL Technologies over the last seven years, will retain the position of vice chairman from July 2013. Gupta's elevation was a foregone conclusion as he was appointed president of the company in 2012. This was the same role to which Nayar was appointed by the billionaire founder of the company Shiv Nadar in 2005. In 2007, Nayar had become CEO of the company and eventually vice chairman and joint managing director. Shiv Nadar, who in the recent past has mainly focused on philanthropic activities, will continue to be the Chairman and the Chief Strategy Officer of HCL Technologies, the company added. Gupta, a two decade veteran of the company, is largely credited with growing the key infrastructure services division of the company from next to nothing to a billion-dollar plus business. A gadgets and gizmo afficianado, Gupta till recently also spearheaded HCL Tech's growth in the key European market, from where HCL gets a larger share of its revenues compared to its peers like TCS, Infosys, Wipro and Cognizant. An MSc in Engineering from Liverpool University, Gupta is seen as a key strategist who helped Nayar turn around HCL Tech's fortunes. Gupta inherits a company that is setting the industry's benchmark for growth, along with Cognizant Technology Solutions albeit on a smaller base. For the latest quarter ending 31 December 2012, which is the second quarter for HCL Tech, it clocked revenues of Rs 6,274 crores and a net profit of Rs 965 crores indicating a quarter on quarter growth of 3 and 9 per cent, respectively. Now that HCL tech has grown its revenues five times and profits four times under Nayar, the challenge to Gupta would be to sustain the pace of growth even as it maintains (or increases) its margins. businessworldonline (at) gmail (dot) com
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The finance minister has banned government officials from holding conferences at five-star hotels, restricted travel and ordered a freeze on hiring to fill vacant posts. A single-minded political veteran who commands both fear and respect in officialdom, P. Chidambaram is squeezing government ministries hard to cut spending wherever they can, and quickly, to help rein in a widening fiscal deficit. He is a man under pressure and with an eye on the clock. Four weeks ago to the day, he set himself an ambitious target: to hold the government's fiscal deficit for 2012-13 to 5.3 per cent of gross domestic product, even as sceptical private economists forecast a deficit closer to 6 per cent. But a series of revenue-raising setbacks since 29 October now means it will be almost impossible for the government to meet that target, economists say, and some finance ministry officials privately agree. That increases the risk that credit rating agencies could downgrade India to junk in the coming months. "This has taken on a very great sense of urgency," said Rajiv Biswas, chief Asia economist at market information and analytics company IHS, as he called on Chidambaram to draw up a credible medium-term road-map for cutting the deficit. The deficit reduction plan unveiled by Chidambaram last month was panned by economists for being short on specifics and putting a firewall around fuel subsidies and expensive social welfare programmes for the country's millions of poor. A month earlier a deficit reduction panel appointed by Chidambaram had urged the government to cut such spending. Their language was dramatic: India was on the edge of a "fiscal precipice" and the economy was "flashing red lights", they said. 'Band-Aid Approach'The government is pursuing a "band-aid approach" to deficit reduction, favouring quick fixes instead of implementing structural reforms to slash the deficit, said economist Rajeev Malik of CLSA in Singapore, who is sticking to a deficit forecast of 6 per cent of GDP. Financial markets are already expecting the government to overshoot its target and hit around 5.6 per cent of GDP, which helped push benchmark 10-year bond yields to the highest in nearly three months late last week. But the big unknown is the response of the rating agencies, which have repeatedly warned India to get its finances in order. The agencies are unlikely to reveal their thinking until after Chidambaram unveils his budget in February, analysts said. But in October, Standard & Poor's said India still faced a one-in-three chance of a downgrade within the next 24 months. Such an outcome would hurt investor sentiment and push up overseas borrowing costs for Indian companies. Chidambaram, 67, a lanky politician with a disarming smile that belies a sharp tongue and an intolerance for time-wasting, charmed financial markets with his can-do attitude and burst of economic reforms in September, after years of policy inaction by Prime Minister Manmohan Singh's weak coalition government. Sensex rallied more than 6 per cent after the reforms were announced in mid-September. But concerns over implementation, the fiscal deficit and falling foreign fund inflows have since pushed it down 3.3 per cent. "We believe that this is the beginning of the realization that a sustainable turnaround in India's growth prospects would require considerable effort, well beyond the burst of measures seen in September," Deutsche Bank said last week in an analyst note headlined "Reality Check". Man On A MissionChidambaram's deficit reduction plan banks heavily on raising billions of dollars by auctioning off cellphone airwaves and selling shares in state companies. Neither effort is going particularly well. The government raised less than a quarter of its Rs 40,000 crore target in a 2G spectrum auction in mid-November. A second auction is planned before March, but a senior government official told Reuters there would likely be at least a 200 billion rupee shortfall. The government succeeded in raising Rs 810 crore by selling shares of state-run Hindustan Copper Ltd on, although the deal was supported by buying from state institutions. To put the deal in context: New Delhi aims to raise Rs 30,000 crore by selling shares in state companies this fiscal year, which ends in March. Excluding the latest sale, it has managed just Rs 125 crore so far. The government is staring at an overall shortfall of nearly Rs 50,000 crore in revenues this year, the government official said, speaking on condition of anonymity because of the sensitivity of the subject. This may require additional borrowing from the market. Chidambaram's battle to tame the deficit takes place against the backdrop of a continued economic slowdown, and a fractious parliament where the government has lost its majority after its biggest coalition ally withdrew support to oppose its reforms. Manufacturing is contracting and exports are falling. India's October trade deficit of nearly $21 billion was its worst on record. And a second round of reforms aimed at liberalising the pension and insurance sectors has fallen victim to gridlock in parliament. It is not clear if the measures, long sought by investors, will be passed in the current winter session. But Chidambaram, who began his second stint as finance minister in August, gives no appearance of being disheartened and as recently as Saturday was confidently predicting he would be able to contain the deficit to 5.3 per cent of GDP. Inside his ministry, officials said the target looks daunting but they have had no word of a revision from the minister. Instead, he has intensified pressure on them to find ways of meeting the target, they said. Chidambaram's credibility is not yet on the line, said analysts. In fact, perhaps the opposite. His credentials as an economic reformer during two previous stints as finance minister are buying him time to pull India back from the fiscal precipice. (Reuters)
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When Gautam Sinha was appointed as the director of IIM Kashipur in May this year he inherited a fair share of challenges and responsibilities. A make-shift campus situated within an idyllic but relatively ill connected town in Uttarakhand, undergoing teething troubles— from faculty recruitment to establishing academic infrastructure — where the “show was being run” by mentor institute IIM Lucknow. Sinha believes the functioning of IIM Kashipur is akin to running a startup: there are no fixed working hours and there is always a lot to be done. Yet it is a startup that needs to live up to the reputation of a Fortune 500 company in this business allegory. Starting from scratch is always tough; it gets tougher when a formidable reputation as the benchmark in business education precedes your existence.Among the newest of the new IIMs proposed in 2009, IIM Kashipur commenced operation from July 2011 and is the thirteenth IIM to be set up in the country. Even as all the IIMs are “same yet different,” autonomous yet united, the categorisation between the new IIMs and the old hasn’t and isn’t likely to be dissolved yet. The six new IIMs are, however, allied in their ideological standpoints and bound in pragmatic solutions. One of the strategic decisions has been to jointly conduct interviews for the 2013 batches of PGP aspirants for all six institutes. “We don’t have the vast resources; the fairly high amount of faculty involvement required in the selection process and none of us has the wherewithal, so it makes sense to pool, aggregate and conduct the (admission) process together. It saves us the time, effort and maybe if left to ourselves, we won’t be able to handle it,” Sinha reasons.When it comes to drawing up admission criteria, ensuring diversity is certainly part of the design, although, overdoing diversity could result in a whiplash of some other kind, says Gautam Sinha who believes that even this non-diversity (the overwhelming majority of engineers) within business schools in India today is rooted deeply within the larger socio-cultural context that exists. “We can’t run away from the realities of the education scene in India. Unless one is very convinced at the age of 12, 13 or 14 about what one wants to be, everybody wants to be an engineer”, he says while describing how mothers in upper middle class houses across India’s are acutely aware of the sectional cut offs in IITs while fathers draw up extensive excel sheets to compare and contrast the different branches in various IITs their son or daughter should analyse. The ‘holy grail’ of middle class India’s aspiration, all pervasive he calls it. “Changing the admission process will not necessarily change the world outside”, Sinha claims even as he passionately asserts that one willing to change careers can always do so provided (s)he has the talent and zeal for it. Case in point, Sinha left his successful career in the steel and engineering industry to teach In IIT Kharagpur’s Vinod Gupta School Of Management and then moved on to become the director of The Lal Bahadur Shastri Institute of Management in New Delhi before his stint in IImM Kashipur began.Then there is the issue of gender diversity. It made headlines when the 2010 batch of IIM Kozhikode’s PGP programme comprised 30 per cent female students. “Ideally I would like 50 per cent girls in the institute but in order to achieve that I will need to tweak the admission criteria in a manner that would deny many others who deserve to be admitted to the program,” Sinha explains as he goes on to talk about how there are a number of industries where hardworking, sincere women may not want to work. “Would a girl like to go work in a coal mine or a steel plant?” he asks. It seems like a rational question considering there are very few women who opt for such a career. It will still take a few years before that kind of parity becomes a reality, he opines.Opening doors to more students to be a part of the IIM family may be changing the intra-personal dynamic between the premier business schools, but one thing it isn’t resulting in is the loss of exclusivity or brand dilution: Sinha is beyond confident and shirks of opposition to the idea with force and fact.“Around 2 lakh people apply for CAT every year, out of which we select 2,000 which is 1 in 100. When it comes to selectivity, there may be 5 students who fall within the 99.99 percentile rank; when you move to the 99.98 would be 200 and by the time you reach 99.7 the number would have risen to 5,000. If I start counting from the top and stop at 2,000, I will have to do so because of the lack of seats. No matter which process of shortlisting we employ —alphabetical, random selection based on registration numbers or date of birth—there will always be so many people in that percentile rank whom we will not selecting,” Sinha states as he explains the predicament of the number game in the admission process. Therefore it is more than welcome to induct more students from a qualifying percentile ranks in the IIMs and by extension other business schools as well. As for exclusivity being compromised, “ the Chinese president came to India to look at the IITs and said there should be hundred IITs in China,” is his taut response to the subject.Learning From GeographyGautam Sinha expresses how every (physical) location comes with its set of pluses and minuses: it is matter of attitude and innovation that can turn the tide when it comes to terrain. Having lived and taught in IIT Kharagpur for over nine years, he informs how because of its peculiar location as a small town with virtually no social life, it provided students the fillip to spend their time more by engaging in activities as varied from water polo to English drama. “This may not have been the case if a PVR was located nearby perhaps,” he quips. In the case of IIM Kashipur, it is located about 250 kilometres from Delhi but reaching the place isn’t very easy. What makes Sinha optimistic is that fact that “ there are about 50 large industries in a 50-kilometer radius around the campus: from Tata Motors , Mahindra and Mahindra, Bajaj Auto, ITC , Britannia among others.” This creates huge scope for industry interaction as well as students’ involvement in understanding local businesses, which is a mutually beneficial process.The integration of local business and culture into designing new courses and centres is something which has led IIM Udaipur, for instance, to set up a centre for tourism and in IIM Kashipur, Sinha feels the setting up of a centre for sustainable development, which takes into account environmental concerns as well as manufacturing (given the host of industries). The possibility of eco tourism also emerges thereon given the lush greenery that is characteristic of the state. “Just because we are IIMs we can’t be situated in our ivory tower; we have to find a way to give back as well,” Sinha maintains.Problems of perception, however, plague IIM Kashipur to some extent. “When it comes to (IIM) Rohtak vis-a- vis Kashipur, the former can be reached in 2-and-a-half hours from Delhi and it takes about 4-5 hours to reach the latter. Yet for a visiting faculty from Mumbai, Rohtak is still Delhi but Kashipur is far away,” Sinha informs. These are some real problems that can’t be intellectualised to a great extent. Yet, well in the way of recruiting new faculty and hopeful to admit a batch of about 70 students this year (the current batch size is 40), Gautam Sinha is well on the way to make IIM Kashipur a name of its own.
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How do India's investors spell relief? Palaniappan Chidambaram. Stocks have soared since word broke in June that the urbane lawyer might take a third turn as finance chief. His return in August has proved an antidote to the errors of his predecessor Pranab Mukherjee, and has revived foreign buying. But the rally will only last if the latest reforms boost flagging growth. Chidambaram's latest feat is to promise a National Investment Board, a one-stop shop for investment approvals that could replace the bureaucratic wilderness that helps put India below the West Bank and Gaza in the World Bank's ease-of-doing-business rankings.A lawyer from Tamil Nadu with a business degree from Harvard, Chidambaram knows what investors want to hear. That makes his encore a welcome relief to Mukherjee's widely panned tenure. Before being bumped up to the presidency in late June, the finance minister presided over an anti-investment rollback, threatening to levy taxes retroactively on foreigners, while failing to arrest a slide in government finances. The government once expected annual GDP growth close to 8 percent; the Asian Development Bank's most recent forecast is for just 5.6 percent this year. As a result, investors pulled $1.93 billion from India in the second quarter, helping send the rupee to a record low.The mere prospect of Chidambaram's return helped to revive faith. Since May, Mumbai's benchmark stock index has risen almost 19 percent: investors pumped $2.1 billion back into the country in July alone. Since his reappointment in August, Chidambaram has not disappointed. After winning ruling Congress party kingmaker Sonia Gandhi's support, he unveiled September's "big bang Friday" reforms - cutting diesel fuel subsidies while easing restrictions on foreign investment in retail, airlines and broadcasting. India has since lifted rules on overseas borrowing and moved to open the insurance sector.The promised National Investment Board may prove even more significant. But investors will eventually need to see evidence that new investment is eliminating infrastructure bottlenecks, reviving GDP growth and corporate earnings. Indian stocks now trade close to 14 times this year's expected earnings, up from a multiple of about 12 times in the spring. If Chidambaram succeeds in pulling India's growth story out of the hat, the revival will be more than justified.(Reuters)
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Two glittering events centred around power-packed panel discussions in Mumbai and Delhi, respectively, became the magnets for the banking industry last week. The who’s who trooped in for the unveiling of the most authoritative book on the industry —Businessworld’s ‘Contemporary Banking in India’, edited by Naina Lal Kidwai, HSBC’s country head and executive director on its Asia-Pacific board. Kidwai kicked off the Mumbai event with an expansive account of the 14-month journey of editing the book with some of the industry’s best minds. “It’s a celebration of one of India’s most robust sectors. A sector that has withstood global headwinds, a sector that has done us well through the ups and downs of volatility over the last 3-4 years,” she said. The essayists include the PM’s Economic Advisory Council chairman C. Rangarajan, RBI governor Duvvuri Subbarao, ICICI Bank MD Chanda Kochhar and Bharti Group chairman Sunil Mittal, besides other distinguished bankers, financiers and academicians. The panel discussion that followed on Contemporary Banking in India had some forceful arguments put forward by HDFC Bank’s MD Aditya Puri, ICICI Bank’s Chanda Kochhar and Viral Acharya, professor of finance, Stern School of Business, NYU. L&T Finance’s CMD Y.M. Deosthalee held forth for the NBFC sector. The Delhi event was put in perspective by the opening remarks of D.D. Purkayastha, MD of BW’s parent, the ABP Group. “Challenges of the next decade will test our banking system and the leadership in our banks even more,” he said. The evening warmed up to an animated discussion moderated by Kidwai. She was joined by Adil Zainulbhai, chairman, McKinsey India; Arun Duggal, chairman, Shriram Capital; Jaspal Bindra, group executive director and CEO, Asia, Standard Chartered Bank; M.D. Mallya, CMD, Bank of Baroda; Nachiket Mor, chairman, SughaVazhvu Health Care; Rana Kapoor, founder, MD and CEO, YES Bank; and Business Standard chairman T.N. Ninan. Glenlivet was the associate partner for the event while The Oberoi Group was hospitality partner.(This story was published in Businessworld Issue Dated 10-09-2012)
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There are both astonishing similarities between the current Coalgate scam and the recent 2G scam, and several big differences. Both were highlighted and caught national attention thanks to the Comptroller and Auditor General (CAG). In both cases, the figure that has caught people’s imagination is the huge loss (over Rs 1 lakh crore in both cases) that is assumed to be have been lost or gained, as the case may be. In both cases, private companies appear to have gained favour through malafide means. However, in the 2G case, the fact that the process of licensing had been subverted was far clearer — and it could also be pinned to the discretionary powers of one minister. In the coal allocation case, it is still far from clear whether the process was actually subverted, and if it was, then who was responsible for it. There is no way of knowing where the entire Coalgate scam is headed and whether the matter will — like the 2G allocation — end up in court and whether all allocations will be cancelled. As with every story, there are two sides to it. The CAG has presented his version in a 200-page report. Montek Singh Ahluwalia, the deputy chairman of the Planning Commission and a member of the Union Cabinet, presents his own viewpoint on the coal fiasco. Excerpts from a detailed interview with BW’s Anjuli Bhargava: In the case of the coal block allotments, two separate issues are being raised. The first is on presumptive gain by companies that won in the allotment. The second is on how some extremely small and undeserving companies got allotments. The government has defended itself quite strongly on the issue of presumptive gain. But there is also a CBI investigation into some of the companies which were given coal blocks. How does the government justify this especially since these blocks were allotted at the time when the Prime Minister held the coal portfolio?As you say, the government has presented its case on the issue of “presumptive gain” and I won’t repeat it. The PM has pointed out that a number of the assumptions underlying the CAG’s estimate are questionable and the issues need to be gone into detail by the PAC. I would, however, like to point out that in the whole debate critics are projecting the entire so-called gain as a loss to the exchequer. The CAG did not call it a loss — only a gain to private parties. What he said was that if the blocks had been auctioned, a part of the gain would have come to the exchequer. However, the CAG report never tried to quantify this. So what we have is an estimate of gain to private parties, which needs to be subjected to expert scrutiny, and a statement that a part of the gain could have come to the exchequer through auctions. The opposition and the media have picked up the Rs 1.86 lakh gain number and are treating it as the loss. That is totally incorrect. On the question of some companies being investigated I don’t know the details but it is always possible that there may be companies that misrepresented their eligibility, or used unfair means to influence a decision in their favour. This kind of malfeasance can never be ruled out and all we can do is investigate, which is what the CBI is doing. If malfeasance is found, action should be taken. Could the government have avoided making these allocations which are now proving controversial?That is a very good question. The government had already decided to move to auctions but this took time. What option did they have in the meantime? Some people may argue that they should have given the blocks to Coal India as that would have avoided any gain to private parties. But the whole reason for having a policy of captive blocks was that Coal India was not able to meet their production targets from the mines they had. In fact, the CAG has noted that Coal India would not have met the target, so that was not an option. The other option was not to allocate the blocks and live with less coal being produced. Some people have said that these blocks have not gone into production anyway, but that is because clearances take a long time. Many of these blocks will go into production even if it is later than originally planned. This means the allocation of captive blocks will yield more coal in the Twelfth Plan and the Thirteenth Plan. And the user companies would have also gone ahead and tied up downstream investments in power, fertilizer and other sectors. If the government had not allocated the blocks at all, we would not have had any alleged gain to private parties but we would have had less coal, less electricity, less GDP and lower revenues. The government, therefore, continued with the system of allocating blocks which had been in place since 1993. The CAG’s real criticism is that the blocks should have been auctioned earlier by choosing to do so administratively without going to Parliament. There are two flaws in this argument. First in a Parliamentary democracy, even if the administrative option exists, but a government chooses the parliamentary route it is odd to criticise it for that. This is especially so since several coal bearing states had opposed the step on the grounds that it violated state rights. However, the real flaw in the CAG’s argument is that the administrative route was not feasible. This conclusion of the CAG is based on an initial view expressed by the Law Ministry, but within a couple of months, after thorough examination, the Law Ministry advised that the only way to do it properly was to amend the law. I am not a lawyer but I am persuaded that it could not have been done administratively because the Mines and Minerals Development and Regulation (MMDR) Act, 1957 specifically prescribes that the applicants for mining licenses must be recommended by the state governments after which the centre can accept or reject. We know the state governments did not want to give up their privilege. Should it really have taken as long as it did?I am not sure whether one can put a time frame on securing legislative action of this nature. Look at the number of policy related legislations that have been introduced in earlier Parliaments that have lapsed. I am sure there was a certain intent behind those legislations which could not fructify. Can that be construed as a policy lapse? In a democracy, the final word in policy-making is that of the Parliament and it is improper to impose time-limits on legislative action. Any judgement on delay then becomes a political question, not an audit matter. In this case, even when the Bill went to Parliament in 2008, the standing committee asked the ministry to consult the states again and the Bill was passed only in 2010. This bears out the view that the CAG underestimated parliamentary sensitivity on this issue. Isn’t it wrong to allot coal blocks to sectors that follow market principles for selling their products — for example, steel companies? In the case of power firms, coal allotment could be justified because they were signing PPAs for subsidised power, but that does not apply to other industries such as steel and cement.That is a valid argument which is why the government wanted to switch to auctions. However, this is a case of an evolution in policy thinking. The entire MMDR Act was based on an acceptance of the principle of allocating mining rights by some sort of screening procedure. Iron ore mines are allotted to steel producers and coal mines to cement producers, who sell their product in the open markets. The shift to auction was the right move. break-page-break What is the scope of a “performance audit” that CAG performs? Can it question policy per se or look at efficacy of implementation of policy decisions once policy is decided?Questioning policy decisions per se is dangerous as CAG becomes some kind of a super-policy tribunal which pronounces on the wisdom of policy decisions on narrow revenue considerations alone. It should be limited to whether policy decisions are implemented effectively. If we are talking of auctioning coal blocks, will that mean a change in the status of Coal India? Will auctions throw open the blocks to all mining players, or just to the power sector?That is a very relevant question. In principle all coal blocks could be allocated by auction so that even Coal India has to bid along with others. I don’t think the Ministry of Coal is contemplating this. But we should think about what is the best course. I am not in favour of discriminatory behaviour. If auctions are right we should auction to everyone. Remember Coal India has minority private shareholding so it is not the same thing as the exchequer. If the political opposition continues to grow, should the government consider cancelling the coal block allotments — given that only one company has started mining so far, this will not be too difficult.Cancellation because of political opposition is surely not the right thing to do. However, if there are legal infirmities in the allotments, or if the allottees have not fulfilled their obligations, or if they have misrepresented the position regarding their eligibility, then it is a different matter. Will the coal issue go to the Supreme Court, as the 2G license issuance did?I have no way of knowing what will happen and I wouldn’t want to speculate. If the government decides to auction coal blocks, will it also press for foreign direct investment in the coal mining sector?FDI and auctions are unconnected. Coal India is a public sector company but it has foreign shareholders as a consequence of disinvestment. As far as captive blocks are concerned, as long as the company eligible for captive mining has FDI, that doesn’t prevent them from getting a captive block. Were coal blocks allotted before the UPA came into power? And if yes, how should/will those allocations be dealt with?There were several blocks allotted before the UPA come to power. Allocations increased after the UPA because growth accelerated and people perceived that coal supplies from Coal India might not be easily available. Growth of the economy in terms of value is not a linear function. Therefore, as time passes, demand for energy and hence coal, would grow at an accelerated rate. People may also have anticipated that international coal prices were on an upward trend, in which case having a domestic mine would be profitable. What is the stance of the Planning Commission on Coal India selling its coal at prices less than international market prices?This is an important issue. As a general rule, the Planning Commission takes the view that the price of an energy source, especially one where imports are taking place, must be aligned with its international trade parity price. The principle is well established as a policy objective in the case of petroleum products. We are not following it currently, but that’s a different matter. In the case of coal, the volume of traded coal is small compared to total consumption and international price of traded coal is much higher than the price of coal charged domestically in coal exporting countries. So one has to consider what is an appropriate benchmark. However, on balance I would say Indian coal is underpriced and we should evolve a strategy to bring it in line with a suitable level, keeping in mind global energy prices. However, we cannot at the same time ignore the larger picture of pricing in our energy sector as a whole, including power, petroleum, gas and coal, and therefore, parity pricing for coal cannot be an immediate goal. Do you think the CAG has tended to overstate/ exaggerate the loss, as has happened with other sectors like telecommunications? Why/why not?As I said, I don’t want to criticise the CAG, but the fact is these are complex issues, going well beyond normal audit. Also, as I said earlier, the CAG has not actually called the Rs 1.86 lakh figure as a loss. The report has called it a gain and there are questions which could be asked whether the gain has been properly computed. Besides, if private investors invest they expect to make a gain so one should distinguish between a reasonable gain and a supernormal gain. Part of the gain will accrue as tax to the government but there is no calculation of gain net of tax. All that the CAG has said is that part of the gain would have accrued to the exchequer if the resource had been auctioned. That is true but no estimate of this amount has been given. And if auctioning was not immediately possible what should the government have done? I imagine the PAC will go into all these questions and we should wait to see the result. What in your view is the best way out of the current crisis and is it wise/fair to cancel the entire allocation in view of the fact that power supply is so short as it is?The issue should be thoroughly debated in Parliament so that all concerns can be taken into account. What penalty should Coal India pay those who it promised coal to and now it can’t meet their demands?That depends on the legal agreements they entered into. Coal India should certainly be held to their legal obligations, but it is possible the legal penalties are very low. In that case, Coal India has a moral obligation to meet expectations it had encouraged, but there can be no question of penalties. Since import of coal is inevitable, I believe the most important thing for Coal India to do is to meet its obligation by importing coal and pooling the price of imported and domestic coal to avoid very high price to those who are supplied imported coal. We must overcome the coal shortage and fuel uncertainty which will otherwise cripple the revival of the economy. (This story was published in Businessworld Issue Dated 10-09-2012)
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