Biz and Eco

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By Shambhavi Saxena:

On Wednesday afternoon, the internet surprised me with some delightful and confusing puppy-related news. Cab company Uber, first launched in San Francisco and now running in 57 countries, has tied up with Dogspot, India’s top e-Commerce website for dog merchandise, for a one-afternoon-only opportunity – Uber Puppies. Uber customers could use their mobile apps to request a fifteen minute play-date, and even had the option of formalizing an adoption. And the best part – they were all desi dogs, or Indian breeds that are often neglected because desi dogs are difficult to place in homes because of the high demand for fancier breeds with beautiful coats and exotic names. Divya Divakaran, who leads social media and events at Dogspot.in said, “At the end of the day a dog is a dog, and they will love you equally. That people have started thinking along the lines of ‘all dogs should be given homes’ is a huge success for us.”

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The pups were requested at various places – residential areas in South Delhi, offices in Connaught Place and even Gurgaon. So was all this driving around okay for them? Divakaran responded to the questions raised by many about the welfare of the puppies: “We didn’t pick up puppies from the streets. Foster parents voluntarily let their pups participate, because they believed in the cause. Uber sent one SUV for each puppy and experienced long-time volunteers were handling them, to make sure they were not strained in any way. They had plenty of food and water, and we even had one vet on standby. They were groomed and we made sure they were well enough for the outing. Yes, many people had apprehensions about puppies being driven around like this, but they spent hardly ten minutes in the car, and were outside most of the time, very playful, very happy. Thanks to the guidance and leadership of Dogspot’s Founder and CEO, Mr Rana Atheya, everything went smoothly.”

The initiative is reminiscent of the Human Walking Program that was conducted only last year with office workers in Melbourne, Australia – shelter dogs came to the rescue of humans who were trapped in their cubicles all day. The program resulted in a 100% adoption rate, according to the organizers, The Lost Dogs Home. With Uber Puppies too, the focus is adoption. Dogspot has tie ups with a number of NGOs managing pet adoptions, explained Divya Divakaran, who leads social media and events. Through their online portal, they are able to collect information and requests, and connect pet-lovers to said NGOs. “You’ll be amazed to know, we got over thirty adoption interests that day,” she said, “and many more via Facebook and Twitter.”

With thirty or more prospective homes out here in the city, things are looking good for these pups. But there have been those who have expressed their concern about the cab company’s involvement. Referring to its “corporate culture of misogyny and recklessness”, The Observer’s Jack Smith IV wondered if “a couple of puppies could wash away all that bad blood.”

Was this just a stunt for good press? Pups aren’t concerned with the trifles of human business. They only want what are called “forever homes” in shelter parlance. Divakaran stressed that it was an effort to place desi dogs in committed, loving homes. In India, unhoused dogs are scavengers, risking their lives for inadequate food, often dying on the streets of starvation, dehydration, hypothermia, or end up as victims of mindless human violence. Indies are Pariah dogs, which have existed in Asia and North Africa for over 14,000 years, forming close relationships with human tribes, for a mutually beneficial system of hunting and protection. And yet today, they are treated as vermin.

Dogspot takes its adoption process very seriously. “We aren’t simply handing over puppies to people. We’ve sent out adoption forms to those who asked, and if all the requirements are fulfilled, then we will perform house-checks to make sure there is ample space for the puppies and that the people are genuine dog-lovers, before they can be adopted.”

This was the second time the program was carried out in India, the first time being in Pune. Uber partnered with organizations abroad as well, like the BARC Animal Shelter and Adoptions in Texas, USA this June, and the Montreal SPCA, the Ottawa Dog Rescue, and the Moosonee Puppy Rescue in Canada, as well as with Petsy in Mexico City. Business concerns aside, the issue of adoption is an important one. For one thing, adopting and sterilizing pets keeps these furries off the streets, manages populations, and actively seeks to end the dog-breeding industry. Having more such playdates in the future would only increase awareness about the welfare of shelter dogs, and we may just see more and more people opening their hearts and homes to them. Like they say: don’t shop, adopt!

For representational purpose only

By Shinjini Devbarman:

The Chinese stock market has been experiencing a sharp fall after a year of crazy zeniths. The drop made almost 500 companies halt their trading on Wednesday. China’s stock market has created $ 6.5 trillion in value over the last year, a growth that no other market has seen, ever. However, the experts see it as a “stock market bubble”, which can threaten to destabilize the economy. If the concerns of the economists are to be taken in account, the effects of this could be worse than Greek Crisis.

For representational purpose only
For representational purpose only

What is happening?
The two major stock exchanges of China, the Shanghai Composite Index and the Shenzhen Composite Index lost 32% and 40% of its value, respectively since last month. All in all, the Chinese stock market has lost more than $ 3.5 trillion in value. That is a huge amount, enough to pay Greece’s debt 20 times over and cause serious vertigo to the investors and companies.

Meanwhile, the Chinese government is trying everything it can to restore faith in the market. It has cut interest rates to a record low for starters. The China’s Securities Finance Corporation (CSF) announced on Wednesday that it will lend billions to big brokerage firms so they can buy more stocks, hence halting the price drop which had lead to the loss last month.

Even as the Chinese government has been pulling all measures to stabilize the market, the markets remain volatile.

Why is this happening?
Chinese stocks rose to unbelievable heights this year as novice investors started pouring all their savings into the market. The majority of these investors are not even high school graduates. Even farmers started investing their savings in the stock market. The growth in the stock market invited inexperienced investors to the $6.5 trillion market. Today individual investors make about 80% of China’s stock trading. The number of newly opened trading accounts has gone up to 2.8 million, all of them amateur investors.

The Chinese stock market boom does in no way reflect the real economy of the country. In reality, the Chinese economy has been growing at a very slow pace. The economy grew by only 7% in the first quarter which is disappointing considering the fact that Chinese economy had been growing at 10% for years in the 2000s.

The stock market boom was also fueled by debt as people have been buying stocks with borrowed money- a practice which is called ‘margin trading’. As the Chinese government has relaxed its limits on buying stocks from borrowed money, it fueled the market’s rise. People had bought $ 350 billion of stocks with borrowed money by the time the stock market reached its peak in June. If and when the stock market bubble bursts, the country will face a huge debt burden. Chinese market has been experiencing bigger market fluctuations than any other market except Greece.

Essentially the panic is caused by the fact that the boom in the stock market is not a result of a robust economy but because of government stimulus and investor frenzy. So the bubble is likely to crash.

What does this mean for India?
Given the fact that China is largely an independent market from the rest of the world, it doesn’t really matter much to India. Since all economies are essentially tied together, the Chinese stock market crisis will have some impact on the Indian market but if market experts are to be believed, India has the ability to withstand it. India is mainly a domestic demand driven economy so that means that even as global stocks fall, its effects on Indian market will be shallow.

Indian market experienced a drop as the entire Asian market did. The Chinese market drop triggered a 400 point drop in Sensex on Wednesday. Even then experts believe that India has the ability to bounce back.

As IMF announced that India as the fastest growing economy in the world with the growth rate at 7.5%, which is higher than China, experts believe that India is in a relatively better position.

china economic collapse

By Akhil Kumar:

While the world is anxiously following the dramatic developments in Greece as its exit from the Eurozone will have a huge impact on the global market, we are also faced with an impending meltdown of the world’s 2nd largest economy.

A report says that China’s market is 10X more important than Greece’s debt, as $3 trillion has ‘evaporated from the Chinese stock market in the last month,’ which is nothing compared to Greece’s $350 billion debt that has got the world anxious. So, should we be concerned? The same report also goes on to say that ‘the Chinese market is largely independent from the rest of the world. But as 1929 reminds, wild swings in markets can have severe economic and political consequences‘. This video explains what might have led to this crisis.

If you want to explore the issue in more depth, a report in The Washington Post titled ‘7 big questions about China’s astonishing stock market crash and what happens next‘ provides valuable insight.

To know more about what I think of this story, follow me on Twitter at @Akhil1490

Image credit: Mario Lolos

By Shinjini Devbarman:

There is a high chance that Greece will leave the Euro, as an overwhelming number of people have voted against a bailout deal from foreign creditors in a referendum yesterday. The referendum basically asked the people if they were in favour of continuing getting payments from the troika or the IMF, the European Union, and the European Central Bank, in exchange for budget cuts and increased taxes. The country has been facing an enormous debt crisis for years now, as the economic climate is in a very bad shape.

Image credit: Mario Lolos
Image credit: Mario Lolos

As more than 61% of people have voted ‘No’ against an international bailout package that would have just added to the already existing debt, the question is what happens next for Greece. The finance minister, Yanis Varoufakis has already resigned stating Sunday’s referendum would, “stay in history as a unique moment when a small European nation rose up against debt bondage”.

Given the country’s financial status, the future of the country and its place in the Eurozone has come under scrutiny. The result of the referendum doesn’t necessarily mean that the Greeks have said no to Euro, although a Greek exit from the Euro zone is imminent.

The poll results on the referendum are seen as a victory of democracy, especially since the Greek Prime Minister Alexis Tspiras had campaigned heavily against the austerity measures proposed by the troika. He tweeted Sunday night saying that, “Even in the most difficult circumstances, democracy can’t be blackmailed – it is a dominant value and the way forward”.

The austerity measures as proposed by the Euro zone leaders would have included bailout money and severe budget cuts and tax increase, which have already driven thousands of people to poverty. The Greeks have been suffering under austerity measures from international creditors for five years.

If there is a Greek exit, the country will have to leave the euro and go back to its former currency Drachma. The new currency would be worth a lot less than the euro. Although, experts believe that a low value currency would not be a completely bad idea as it would help the economy to grow again, as foreign investors would want to buy property and goods in Greek at a lower price.

Now that the referendum has resulted in a ‘No’ to the EU bailout package, the Greek government would have to negotiate with the creditors again. The Grexit (Greek Exit) would have a direct impact on the Euro zone. A Grexit will leave the European Central bank holding billions of dollars of Greek debt which will put the Eurozone countries vulnerable to masses of investors retreating to safer shores. It is already weighing on markets as global companies are witnessing a demand drop off on their products as European customers hold off on spending.

As for the Greek, an exit from the Euro zone will be painful but still better than a total collapse of the economy. As long as Greece remains dependent on the troika for financial support, the economy will not be able to pay back its outstanding debt, let alone flourish economically. If there is a Grexit, the entire Euro zone will need to be ready to deal with its weaker members.

indiaspendship

By Chaitanya Mallapur:

With India’s road and rail infrastructure in most high-traffic areas running at full capacity, the government plans to raise Rs 1 lakh crore ($15.6 billion) to develop ports and improve inland waterways.

The Sagarmala (necklace) plan, as it is called, envisages a series of ports and coastal and inland-shipping routes that will not just move cargo but also reduce India’s carbon footprint and save energy.

indiaspendship

Coastal shipping is the cheapest and least polluting mode of transport, 63% cheaper than road and 38% cheaper than rail: Rs 0.55 per tonne-km versus Rs 0.90 for rail and over Rs 1.50 for road, according to the estimates by the erstwhile Planning Commission.

The project aims to develop ports and make them drivers of economic activity by linking them to road, rail, inland and coastal waterways.

But first: Improve India’s ponderous ports

India’s port efficiency is low and work moves slowly, compared to leading international ports.

India has 12 major ports and 200 minor ports. Ports in India carry 95% of India’s total trade in volume and 68% by value.

Coastal shipping in India transports just 7% of domestic cargo. Compare that with 42% in Japan and 20% in China.

India’s sea-borne traffic is 950 million tonnes with a total coastline of 7,500 km compared with China’s 9 billion tonnes with a coastline of 15,000 km.

Another important drawback for coastal shipping is the slow turn-around time, the time a ship spends entering the port, loading, unloading, and departing.

The average turn-around time for India, as of April-November 2014, was reported to be 2.1 days (50 hours).

Singapore port, recognised as one of the best in Asia and globally, turns around ships in less than 12 hours. In Hong Kong port, container ships are turned around within 10 hours.

A two-day wait for a coastal container ship increases costs in India by close to 10% for short voyages.


Roads transport 57% of India’s domestic cargo and railways 30%.

India’s inland water-transport is also poorly developed.

Of 14,500 km of navigable inland waterways, only 5,200 km (36%) of major rivers and 485 km (3%) of canals can handle mechanised vessels. Only 0.5% of India’s cargo traffic is handled by inland water-transport, compared to China at 8.7%, the US at 8.3% and Europe at 7%, according to this KPMG report.

Ports start to get a leg up

An agreement was signed recently for a satellite port in Dahanu between Jawaharlal Nehru Port Trust (JNPT) and the Maharashtra Maritime Board. The port is expected to reduce the traffic at Jawaharlal Nehru Port.

Similarly, the central government is planning six ports including the Rs 12,000-crore deep-water Sagar port in West Bengal, Colachel in Tamil Nadu, the Rs 6,000-crore Vadhavan port in Maharashtra and the Rs 1,200-crore Haldia dock 2.

The capacity of all major ports was 800.52 million tonnes (MT) as on March 31, 2014, and cargo traffic was 555.54 MT.

Kandla with more than 87 MT in cargo traffic in 2013-14 was India’s busiest port. Its average turn-around time was 2.9 days (69.6 hours). Building ports as part of the Sagarmala plan will, clearly, not be enough.

This article was originally published on IndiaSpend. (Mallapur is a policy analyst with IndiaSpend.)

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Image Credit: IndiaSpend.com

By Devanik Saha:

Retail e-commerce sales in India are expected to reach $17.5 billion (Rs 105,120 crore) by 2018, from $5.3 billion (Rs 31,800 crore) in 2014, according to data analysed by eMarketer, a digital-research firm, but only two of 10 internet users in India shop online.

India’s e-commerce market is intensely competitive, with US giant Amazon establishing its presence in India in 2013 and Alibaba, the Chinese giant, planning to start selling by August this year. Flipkart, India’s largest e-commerce firm, recently raised $550 million (Rs 3,300 crore) at a valuation of $15 billion (Rs 90,000 crore).

Despite having the third-largest internet user base in the world with 200 million users at the end of 2014, India does not feature in the top ten e-commerce markets in the world, according to an eMarketer report. The reasons centre on low Internet reach, slow internet speeds outside the metropolitan cities and poor customer services.

India’s e-commerce sales in 2014 were $5.3 billion (Rs 31,800 crore), 1/80th the size of China’s $426.26 billion (Rs 2,557,760 crore) and 1/58th the size of the US’ $305.6 billion (Rs 1,833,900 crore).

If you look at Japan, China and US, e-commerce became popular as early as 2002-2003. It has taken them about 12-13 years to reach where they have reached. E-commerce really took off in India only in 2012-13. It will take India also that much time to reach there,” Rajnish (he uses only one name), a technology expert, said.

China: Number 1 in e-commerce with skyrocketing growth ahead

China and the US accounted for more than 55% of global internet retail sales in 2014. China’s growth over the next five years will widen the gap between the two countries.

China will likely exceed $1 trillion (Rs 6,000,000 crore) in retail ecommerce sales by 2018, accounting for more than 40% of the total worldwide.

Globally, retail sales reached $22.492 trillion (Rs 134,952,000 crore) in 2014 but retail e-commerce sales stood at $1.316 trillion (Rs 7,896,000 crore, 5.9% of overall retail sales).

E-commerce sales are expected to increase 89% to $2.489 trillion (Rs 14,934,000 crore, 8.8% of overall retail sales) in 2018.

Digital-buyer penetration—a measure of digital reach—is a major factor in determining the success of retail e-commerce sales. India’s digital-buyer penetration was quite low at 24.4% in 2014 as compared to the global average of 41.6%.

The UK leads the world with 88% penetration. Ironically, China with 55.2% and US with 74.4% penetration do not feature in the top five.

Indian e-commerce has a long way to go

E-commerce in India still has a lot of friction,” Rajnish said. “Till that is solved, it will be hard for penetration to go beyond 30%. For example, India has very low credit-card penetration and the cash-on-delivery (COD) model is why Flipkart really took off.”

People above 35 are not very comfortable using their debit card online. PayTm and others solve this problem but there is a lot of friction. “I use PayTm for Uber and it is still a process that has friction. ​In US, the return policy is very generous. I bought a coat from Amazon in the Bay area; it ended up being the wrong size. My experience of changing to the correct size was very seamless. When I bought a down jacket in Bangalore, and it ended up being the wrong size, getting the right size was really a painful experience,” said Rajnish.

That view is echoed by Paritosh Sharma, an advisor to tech startups and an entrepreneur with PayUMoney, a digital-payment platform.

Digital buying has an attached expectation to it. I place the order and it should appear in front of me over the next two or three days. In many cases this does not happen. Also, in a lot of cases (especially in tier-2 and tier-3 cities) in India, if you get a product that is not of the exact quality that you ordered, returning it is a major problem. Most people, hence, prefer what’s available in a physical retail store,” Sharma said.

There are two more reasons for low online sales, said Sharma.

First, the internet infrastructure in India is poor. If one steps outside city limits, you automatically are shifted from 3G to an Edge (a lower-speed) connection, deterring buyers.

Second, lack of good service and support. While most Indian e-commerce companies are sprucing up their support via phone and digital media, it’s quite haphazard. Most companies still lack processes to ensure customer satisfaction and trust.

Notes:
1) Retail e-commerce sales includes products and services ordered via any internet device; excludes travel and event tickets.
2) Digital buyers are internet users (ages 14+) who have made at least one purchase, including mobile, online and tablet purchases during the calendar year.
3) Dollar-Rupee exchange rate used: $1=Rs 60

This article was originally published on IndiaSpend.

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modi

By Bishal Paul

On 26th May last year, the Narendra Modi led National Democratic Alliance stormed to power backed by a massive mandate and popular voter sentiment. One year and counting, has the chest thumping rhetoric of the supreme leader yielded to any substantial results, or is the marketing blitzkrieg continuing to dominate the larger political space? Intentions may be motivated by personal bias but facts and numbers never lie.

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The Number Game

Let’s then start with economy which they keep harping about all the time. During the elections and even post that, the Modi led government had always maintained that the last government mismanaged the economy and that they would put it back on track. One year later, the situation is rather interesting. In the recent budget session of the Parliament, the Union Finance Minister Shri Arun Jaitely informed us that the country’s GDP is growing by 7.4% this fiscal. However what is interesting in this is the fact that in order to achieve this high growth rate, the government changed the very process of how the GDP was earlier calculated. The move was so sudden that even the Chief Economic Advisor Arvind Subramanian expressed surprise, “I am puzzled by the GDP growth numbers and, consequently, all the constituent elements that went into constructing it.” So if we go by the latest method of calculation, then the growth rate under the UPA in the last year of its government was a healthy 6.9% and not the projected 5.4%. This government has therefore added a growth of 0.5% to the GDP.

Rupee Vs Dollar

When it comes to the value of rupee vis-a-vis the dollar, I would just like to echo honourable PM Modi, who in 2013 said that if trends continue, then the rupee will cross the age of the then Finance Minister, who was 68. Fast forward to 2015, the situation hasn’t changed much, the rupee has crossed not only the age of FM Jaitely (62), but also that of PM Modi who is 64 now. Coming to black money, the BJP President Amit Shah has already publicly called the bringing back of black money and the “15 lakh in every citizen’s account“, an election ‘jhumla’. They’ve been boasting about the dip in inflation but will never tell you that the drop in the international crude prices have contributed significantly to it. After all, why not take credit for something when it’s given to you on a platter. However, despite the heavy fall in the international crude oil prices, the government hasn’t passed on the benefit to the consumer and our petrol prices remain highly disproportionate and the highest in South Asia. Remember those messages we used to get during the UPA days comparing oil prices with neighbouring countries? Well, all you need to do is just google it and you’ll be surprised to know that it is cheaper to buy petrol from Pakistan and even a small country like Bhutan.

Fall In The Production Sector

As of April 2015, production growth in the eight core sectors in fiscal year 2014-15 was at 3.5%, which was lower than the 4.2% growth posted in the previous fiscal year, according to figures released by the Commerce & Industry Ministry. A sharp drop in the production of steel, cement and refinery products resulted in a 0.1% fall in the growth of the eight core industries in March, to its lowest rate in 17 months. The eight core sectors are coal, crude oil, natural gas, refinery products, fertiliser, electricity, steel, and cement, and account for 38% of the overall Index of Industrial Production. Industry representatives are concerned that the fall in production in the core sectors indicate a slowdown in economic activity. Similarly when it comes to taxation, the government has increased the service tax up to 14%. So every time you go out for dinner or to watch a movie from June onwards, be ready to bear the brunt of the government’s latest tax policy.

Setbacks To Agricultural Sector

The government has particularly shown lack of sensitivity towards the farming community which contributes close to 17% of our GDP and employs about 49% of our population. Agriculture and irrigation are one of the worst hit as the Rashtriya Krishi Vikas Yojana has seen a reduction in funds to the tune of Rs 7,426.50 crore. Apart from the massive cuts in several agricultural policies as mentioned above, they’ve brought in several amendments to the Land Acquisition Bill which snatches the rights of the farmers by removing crucial clauses such as the consent clause and the social impact assessment clause. Data shared by their own Ministries reveal that only about 8% of developmental projects are stalled due to land acquisition issues. But yet the government in its arrogance and ignoring the protests held across the country by farmers, re-promulgated the ordinance for the third time as they were unable to pass it in the Parliament. As a result, agriculture growth has gone down from 4.7% to 1.1% in the current fiscal year. Farmer suicides have risen by 40% to 1,306, from May 20, 2014 to May 24, 2015

Farmers in rain-fed areas are going to be paid a meagre Rs 2,750 per acre and Rs 5,465 per acre in assured irrigation areas. However, even then, there are conditions. Norms say that compensation will be limited to farmers having a maximum 4.9 acres of land. This means that more than half the farmers will not be eligible for compensation. A circular by the disaster management division of the Union Home Ministry on April 8 asked Chief Secretaries to compensate farmers from the State Disaster Relief Fund (SDRF) and get it reimbursed from the national fund. But, there’s a ‘jhumla‘ here too: this assistance will only be for the first disaster in a financial year. “In case the state faces another severe disaster during the same year, no adjustment will be made while releasing National Disaster Relief Fund (NDRF) assistance,” the circular said. And as the government continues to resort to such cheap political theatrics, the farmers suffer.

One can do extensive marketing or tweak the numbers to show a very rosy picture, but if the foundation of a structure itself is weak, it can’t sustain itself for long. It’s time the government realises that people are restless for change and intent only can’t serve the purpose.

tiger vs dragon

By Karthik Shankar

If you believe the reports that Modi’s visit to China was the second coming of Beatlemania, you will also believe these figures that have the government seal of approval – we are finally beating China in growth. Prematurely celebrating about ‘overtaking‘ China is akin to AAP assuming that winning the elections counted as a victory for the party rather than the cold hard job of actual governance.

tiger vs dragon
Photo Credit: Mike Cohen

Technically speaking, the figures are akin to a white lie; true only in a certain context. Our growth in the last quarter of 2014 was 7.4%, a smidge higher than China’s. Many analysts using their favourite reductive analysis of spirited India and inscrutable China will have you believe that they have switched places in the economy sprint race.

It’s About Method Stupid

First, it’s important to note that we changed our methodology of calculating our GDP. By changing it from factor prices to market prices, we have added in that secret X-factor, which are the numerous taxes levied on us by our overlords. However in 2014 the difference between levied and collected taxes was Rs 77,000 crore; large enough to overshadow Jayalalithaa’s disproportional assets (I think).

Interestingly when retroactively applied, the methodology shows a significant increase in the GDP growth recorded in the last year of the UPA regime. I wonder why ace economist Manmohan Singh didn’t dream up this solution.

All About That Base

There’s also the GDP base. China as of 2013 has a GDP of $ 9.24 trillion while India’s was pegged at $ 1.87 trillion. Saying that India grew faster than China is like saying you’re a bigger philanthrope than Bill Gates because percentage wise Rs 100 from your salary wins out against his billions of dollars. Then look at infrastructure. Despite our relentless belief that Mumbai’s glittery glass and chrome structures will put Shanghai’s to shame (on a non-rainy day), we allocated $11 billion for infrastructure. China on the other hand is fast tracking a whopping $950 billion worth of infrastructure projects this year. Tiger and Dragon seem like very apt synonyms considering one can swallow up the other whole.

Many experts have also wondered if the data really paints an accurate picture of the Indian economy. Our Chief Economic Advisor Arvind Subramaniam himself was mystified with the numbers. Just earlier this month, data showed that growth in eight core sectors was at its lowest in seventeen months. Forget China when we haven’t gotten over the UPA political free for all.

One Ticket For Pragmatic Central

Now this doesn’t mean it’s time to stop buying those Xiaomi phones (because let’s be honest those are great deals). We just have to take a pragmatic look at our economy by clearly demarcating actual growth versus comparative growth. Of course stopping the train to hype express is almost impossible, considering we as a country are addicted to jingoism.

China’s growth story is remarkable and awe-inspiring no doubt, but why do our politicians and the media always rush to draw the parallels? We are very dissimilar countries. Ours is a democracy with a highly socialist economy whereas China is an autocracy with a fairly liberalised economy. So the next time Arun Jaitley announces that India is set to overtake China in growth, don’t applaud, question if that economic feat can be replicated for the next 30 years.

Photo Credit

By Chaitanya Mallapur:

On 26th October, 2014, Border Security Force (BSF) soldiers seized counterfeit notes worth nearly Rs 15 lakh from a border outpost in West Bengal’s Malda district. Counterfeiting has emerged as a new challenge to the government, a form of economic terrorism, say experts.

Photo Credit
Photo Credit

According to central intelligence and investigating agencies, Fake Indian Currency Notes (FICN) stream into India from various countries, such as Nepal, Bangladesh, Thailand, Malaysia, Sri Lanka and the UAE, through a well-operated criminal network that routes fake currency through the South and South East Asian region, in addition to the new route of China via Nepal.

Several agencies, such as the Reserve Bank of India (RBI), Ministry of Finance, Ministry of Home Affairs, along with security agencies, such as the Central Bureau of Investigation (CBI) and National Investigation Agency (NIA), are working together to address these challenges.

Let us look at the major denominations under which fake notes were circulated in India over the last three years.

You Might Want To See This Chart Before You Hold Another Rs. 500 Note

Between 2011 and 2014 (up to 30th June), a total of 2.5 million counterfeit notes worth Rs 122 crore have been recovered and seized by RBI and security agencies. Rs 500 notes are the most circulated fake denomination in India, with more than 1.3 million notes circulating between 2011 and 2014. Rs. 100 notes are next, followed by Rs 1,000 notes, to be circulated as counterfeit currencies.

Here is a comparison of the top five states that face the major challenge of counterfeit notes:

Source: LokSabha; Note: Others include Denominations of 50, 20, 10, 5, 2, 1

Delhi leads the states that report fake currency, a total of Rs. 6.69 crore in counterfeit notes, followed by Maharashtra (Rs 6 crore), Tamil Nadu (Rs 3.7 crore), Andhra Pradesh (Rs 3.5 crore) and Gujarat (Rs 2.9 crore). Similarly, Delhi reported the highest number of fake Rs 500 notes in 2013 (67,783), a decline of 74% from 2012 (259,210).

Let us now look at the number of persons arrested in the last three years in counterfeiting cases.

Source: LokSabha

A total of 2,456 persons were arrested for counterfeiting currencies in 2013, with West Bengal reporting the highest number at 490 people. Andhra Pradesh was next, arresting 312 people, followed by Bihar (304), Maharashtra (221) and Uttar Pradesh (190).

In states like AP and Bihar, arrests have gone up over the last two years; there is a decline in states like Maharashtra, Uttar Pradesh and West Bengal. One of the reasons for West Bengal and Bihar reporting so many arrests could be that these states share porous border with Nepal and Bangladesh, major counterfeit-smuggling routes.

Delhi, the state most affected by fake notes, does not rank among the top 10 states in terms of arrests for counterfeiting of notes. In 2013, only 50 people were arrested in Delhi.

The government has strengthened the legal framework; smuggling or circulation of counterfeit Indian currencies is now declared a ‘terrorist act’ under the Unlawful Activities (Prevention) Act, 1967.

RBI highlights features to be watched for identifying counterfeit notes
RBI highlights features to be watched for identifying counterfeit notes

Some of the measures taken by the government to prevent counterfeiting include:

– Ministry of Home Affairs (MHA) has formed a special FICN Coordination Centre (FCORD) to share intelligence or information among different security agencies within India and abroad.

– A Terror Funding & Fake Currency Cell in the National Investigative Agency (NIA) will focus on terror funding and fake currency cases. The MHA has directed the law-enforcement agencies of the states, central armed police forces, ministry of civil aviation and the bureau of civil aviation security to augment security.

The RBI has launched a multimedia, multi-lingual awareness campaign, initially through Doordarshan channels, titled “Paisa Bolta Hai”. The short film tries to inform the common man about the measures of examining bank notes.

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This article was originally published by IndiaSpend.

make in india

By Mayank Jain:

“It’s complicated, too many relations, too many people can have a say, too many people can block. Currently, there are lots of complexities or uncertainties. Was I surprised at the international backlash post the retrospective taxation, I was not surprised. Has this really backfired on India, the answer is yes. I wasn’t surprised when India’s public image suffered.” – Vodafone Group CEO Vittorio Colao.

Prime Minister Modi, with his unfazed focus on improving the industry and manufacturing conditions in the country, launched the ‘Make In India’ initiative. He has graciously rolled out the red carpet, inviting MNCs and other industrial corporations to consider India not just as a market but as a manufacturing hub. With demographics on our side and every third person with a graduate degree looking out for a job, manufacturing in India is not a bad idea at all and instead, is the need of the hour.

Make In India couldn’t have come at a better time, but will it be enough?

The differentiator between developed and developing economies is majorly seen to be the contribution of organized manufacturing to the GDP, which is devastatingly low in India as compared to our contemporaries. India’s manufacturing sector accounts for only 16% of GDP, while China is already receiving one third of its GDP from manufacturing. The share of Indian manufacturing in the worldwide markets is also pitiable at 1.4%, while China has already zoomed to 13% plus from a level of 2.9% just 20 years back.

Make In India projects India as a fertile industry base, and competent to handle the business needs of MNC’s due to its linkages with the rest of the world. However, the rosy picture depicted in PowerPoint presentations and press conferences seldom holds true on ground as global businesses seem to back off from setting up bases in India; Vodafone, Walmart, and a whole lot of Japanese companies are glaring examples.

The 3 Problem Children Of Manufacturing

Indian manufacturing revolves around the FDI rhetoric so much that we have most likely forgotten that around 8-9 million people join the workforce every year. Not all of them can be employed in projects that come through the way of FDI since the process is usually long drawn and erratic. The Ease Of Doing Business Index, which tracks the relative easiness of setting up operations in the country, reveals the same fact about rampant red tape and lax governance in the country. We are placed on a measly 134th position with countries like Uganda, Kazakhstan and Cyprus ranking above us.

Infrastructure Deficiency: Projects Worth Rs 7 Lakh Crore Stuck In Red Tape

“We need infrastructure, we need highways, we need cold storage facilities”, we have all heard this enough and now we need a break. It isn’t a bad idea to actually think about delivery before planning new projects. Promising is easy, but fulfilling isn’t. A lot of projects never take off from the paper they are inked on, and remain stale headlines in some forgotten newspapers.

Infrastructural development is not just about making better buildings or faster trains, but at the same time, overhauling the overall processes involved in getting a new entity set up. Intellectual properties, research and development grants, a market friendly atmosphere with transparency and focus on e-delivery of services are all part of infrastructure which we can start to build right away instead of waiting for the disbursement of hundreds of crores from the Union Budget every year.

Job-Skill Mismatch: Only 10-15% of regular graduates are employable

People graduate with flying colors every year from popular courses like Engineering, Medicine and Business Studies, but end up looking for their elusive first job simply because they aren’t equipped enough to work in the industry. While we blame the industry for not giving young graduates a chance to work and point out evils in FDI, the focus never comes back to the quality and characteristics of the kind of training and education people receive.

75% of IT graduates are deemed ‘unemployable’, 55% in manufacturing, 55% in healthcare and 50% in banking and insurance, as pointed out in a report produced by FICCI and Ernst and Young, called Higher Education in India: Vision 2030.

Studying about an industry and working on the shop floor are two completely different things, and a lot of surveys point out the anomaly that has crept in our mode of imparting education. The government should start analysing the quality of education soon and industry interface needs to be built in schools and colleges so that students are apprised about the current trends and requirements in the job they hope to take up right from the beginning of their courses.

Agriculture Myth

India is often termed as an agricultural economy whose mainstay is agriculture. However, the contribution of agriculture to the GDP is fast coming down from its above 50% levels at one point. Industry and services together rose over 11% in their contribution to the GDP, but employment figures rose only by 6%. This implies that we continue to employ more and more people in agriculture while income growth is happening in the industry.

share of sector

The mismatch is due to a lot of factors and the major one is lack of skilled labor in the country, which could be employed gainfully in the factories and shop floors. However, lack of education and hereditary patterns observed in the interiors make youth more drawn towards agriculture. This, however, is no excuse to not internalize the industrial development and make work opportunities reach people rather than waiting for them to migrate.

Despite these three big anomalies and other issues like red tape and corruption, Indian industry continues to grow, which reinstates faith in the resilience of the economy. However, it is the right time to take the debate beyond FDI and fix on ground issues at home before we throw open the doors for visitors and expect them to ‘Make In India’.

breakout-nations-review

By Parul Garg:

‘Interesting book’ would clearly be an understatement for ‘Breakout Nations’ by Ruchir Sharma. Economics lovers or not, you have to read this book to understand what economic development had been like, and how it is working now. I must tell you that your perspective develops and changes a lot while you are reading this book. It’s not like all other development economic texts, it captures your interest and keeps your mind on the move.

breakout-nations-review

Here are 10 things which inspire me to tag ‘Breakout Nations’ as a must read:

1. The book talks about the course of economic development as a racing track, where no winner wins for a long period of time, and the competition gets stronger and harder with development reaching the new level every time.

2. The book is a perfect blend of economic and political situations in different countries, and apprehends their influence on each other very smoothly.

3. “Breakout Nations – In pursuit of the next economic Miracles”, the title says a lot about the book itself. It is like a book having future year forecasts for different economies which might be true or false, but definitely insightful.

4. The book gives you a walk through history, which in turn helps you understand the present scenario better. It very efficiently bridges the gap between history and present economic situations.

5. The book takes examples of many different countries like Brazil, India, China, Philippines, South Korea, South Africa and others, and explains their journey down the development lane till date. It also talks about their future growth prospects, which then give you not only an inward outlook of the nation, but also the outward stance of the world.

6. It familiarises you with working conditions, investment climate, growth progress, and price level variations in different economies, which further makes it easier to compare growth and development strategies in different economies. i.e. It also puts to display the relative viewpoint.

7. It gives statistics in the form of remarkable facts, which not only makes it easy to summon up, but also makes it more interesting than usual monotonous data tables.

8. The book is not only about the good picture, instead, it also discusses accidents and trends which lead to negative forecasts.

9. It comes up with words and phrases like cappuccino economy, is god Brazilian?, E-merging markets, Efficient corruption, and so on, which makes a few important concepts build home in your memory.

10. The book is no less than the stage show going on among the developed and developing countries, synonymous to insightful entertainment.

So go ahead, grab your copy of this international best seller.

Happy Reading!

Photo Credit

By Rahul Muralidharan:

The world is being deluged in a massive downpour of data. ‘Big data’ is the latest buzz word doing the circles. Big data refers to voluminous amounts of data that cannot be processed through traditional techniques. This data ranges from a few terabytes to many petabytes. Making sense of this big data and using it to drive business growth is an uphill task. The concept of using previous consumer data to predict consumer behaviour and sales has been prevalent from quite some time.

Photo Credit
Photo Credit

In the 90s, the point of sale scanners was to gather consumer insights and influence pricing. With the proliferation of the Internet, a humongous volume of consumer data is waiting to be processed to generate valuable nuggets of information. Marketing today, is faced with both the challenge as well as the opportunity to utilize big data to revolutionize the relationship between the customer and the business. A survey conducted by Teradata revealed that 71% of the marketers plan to design and implement a big data analytics solution in the next 2 years. Efficient use of big data analytics would ensure the success of data driven marketing. Big data helps marketers in several ways. It helps not only in retaining the existing customers but also to tap into new customers. Analyzing trends in big data can lead to more marketing opportunities and measure the effectiveness of advertising campaigns. They can micro target the customers with personalized products, campaigns and offers. Outlined below are 7 principles that marketers should keep in mind to ensure effectiveness while adopting a big data strategy.

1. ‘Strategy is Alohomora’: The key idea is to understand how big data insights can support the marketing strategy of the company. It needs to be aligned with the company’s vision and goals. This reduces complexity as data is now in the context of a specific strategy. For example, if Amazon wants to improve its website experience, it needs to look at the relevant data.

2. ‘Divide and Conquer’: Marketers must understand it is impossible to use all the data available. They need to profile the data, filter it into good and bad. After this, they need to divide and analyze the data according to their objectives for efficient results. For instance, if Shoppers Stop wants to launch loyalty and promotional offers, it must filter and study the consumer behaviour in similar scenarios, particularly that of the First Citizen Card Holders to effectively launch these offers.

3. ‘The pricey fallacy’: The advent of big data has made pricing quite transparent and competitive. Starting from Flipkart to MakeMyTrip, there is a growing trend to offer the lowest prices. Marketers must avoid this temptation and focus on enhancing the brand equity so that pricing can be in accordance to the quality of the products.

4. ‘United we stand’: Using big data strategically involves a cross functional collaboration. The 2012 BRITE-NYAMA Marketing in Transition Study reveals that nearly 50 % of the marketers acknowledge that a lack of sharing customer data within the organization acts as a barrier to effective marketing campaigns using big data. Marketing has to work in tandem with all departments especially with IT to ensure its campaign success.

5. ‘Cook the Cookie’: A common mistake perpetuated by most marketers is to place excessive reliance on ad cookies. Cookies serve as an effective tool to identify the target audience. For instance if your web search increasingly revolved around CAT coaching, your Gmail ad suggestions would pertain to CAT coaching centres and study packages. That is due to the ad cookies. However ad cookies suffer from two major flaws. Firstly, most customers remove cookies periodically, and secondly, on a multi user system, the identification of the target audience might be wrong. The solution lies in using in-flight campaign information so that the data is real time and accurate. Marketers should cook the cookie before using it.

6. ‘See the tree’: A potential problem that marketers face is that of selection bias. Sometimes they choose non-random samples of data from the data pool that leads to mistaken inferences. This is described as ‘seeing the forest and not the tree’. This percolates down the various layers of strategy and hinders the end goal of the marketing strategy.

7. ‘Be a Soothsayer’: Marketers should use predictive analysis to determine the customer behaviour and future buying preferences. Amazon has successfully used predictive data analysis and recommendation algorithms to suggest products to customers. This not only enhances the user experience but also helps generate more sales.

flipkart

By Mayank Jain:

Flipkart: 2.4 seconds. That’s the amount of time it took Flipkart to go out of Xiaomi’s latest phone Mi 3’s units as soon as it was launched. Flipkart is riding high on its exclusive tie ups with companies, thereby helping them wipe off their inventories in a matter of a few days to a few seconds in some cases. And now, in this latest tie-up, it’s the Ministry of Textiles that is exploring the marketing capabilities of a ‘website’ which has challenged millions of on ground retailers to sustain themselves, as people are buying everything online at a cheaper price point after they check it out in the stores.

flipkart

Ministry of Textiles: The Ministry took Indian textiles to the ramps of a renowned fashion show. Hand woven fabrics like chanderi, tussar silk and kalamkari crafted into new-age silhouettes made their debut at the Lakme Week Winter/Festive 2014. The response to this Indian Handlooms collection was stirring. Handmade silks and kadwa brocade technique from Varanasi stole the show as truly Indian outfits made from antique and at the same time, exquisite materials were given a modern twist.

25th August, 2014: Flipkart and Ministry of Textiles came together to market Indian textiles online in a game changing and first of its kind association.

Indian handloom industry can be best classified as ‘exotic’; it offers superior quality products at competitive pricing but the reach of these products is largely limited by zero or negligible marketing efforts. The public at large knows ‘khadi’ only as the fabric that Mahatma Gandhi spun and his followers donned during the freedom struggle to signify India’s capacity for self-reliance and not as a flagship brand. Though we ride high on exports and culture/region specific demand like that of Pashmina, there is usually no impetus for the common man on the street to check out the clothing and handloom products which workers and artisans help manufacture in Indian villages.

In a one of a kind tie-up, Flipkart has managed to rope in a government unit to market their products on a purely private e-commerce platform. The collaboration between Flipkart and the Ministry of Textiles will provide a platform, analytics of their sales, data on trends as well as support in customer acquisition to numerous weavers in India. This is a step in the right direction as remotely located weavers will finally be able to reach out to buyers from across the country. Their products will sell under their own brand name and soon enough, they will turn into self-made entrepreneurs with a clear sense of running an online business for indigenous goods and a ready market.

Flipkart plans to put its nationwide network of business associates to good use and help weavers provide their goods from their door steps and the network will assist them in distributing these products without ever stepping out of their workplace or shop floor.

“This kind of a coordinated effort has been planned and executed for the first time with Flipkart for handloom weavers which will bridge the missing linkages of market intelligence, market access and logistics and help the Indian weavers in getting remunerative prices for their products,” the press release detailed.

The list of problems with Indian manufacturing sector runs long and almost equals the potential. With our 820 million people still living on less than $2 a day, the boost in employment opportunities is long overdue. While agriculture remains the largest ‘employer’ in the country, it can’t be called ‘financially viable’ given the erratic monsoons and lack of infrastructure which make farmer suicides a common phenomenon during a bad harvest. Manufacturing needs to step up and so does the infrastructure.

This partnership will open avenues beyond traditional retail which is expensive and not always profitable. It is a brilliant opportunity for Flipkart to firm their position as the premier online marketing platform while the Ministry has a chance to resurrect the glory of Indian handlooms. We are yet to see how this partnership works out but it definitely holds lots of promises for manufacturers. With 243 million internet users in the country, it might just be the right time for the small scale industries to finally go online.

Narendra-Modi

By Jaimine Vaishnav:

PM Narendra Modi’s slogan “minimum government, maximum governance” is economically an expropriation of the ‘acting agents’ and is an intrinsic threat to the economic liberty of all.

Narendra-Modi

What it is

‘Unity in diversity’ is a superficial phrase. In the Indian context, it is practically impossible to generate ‘unity from diversity’. The diversified culture in India is a natural blessing to the economy of India as it motivates the scope of division of labor and specialization. This also influences the scope of the rule of catallaxy in the market, making the functional role of big/socialist government structurally unnecessary. Catallaxy is an alternative expression for the word “Economy”. Whereas the word economy suggests that people in a community possess a common and congruent set of values and goals (“imposed order system”), catallaxy suggests that the emergent properties of a market (prices, division of labor, growth, etc.) are the outgrowths of the diverse and disparate goals of the individuals in a community (“spontaneous order system”). According to Nobel laureate F. A. Hayek, catallaxy is “the order brought about by the mutual adjustment of many individual economies in a market”.

“If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of finer clay than the rest of mankind?” – Frédéric Bastiat

How it is

Minarchism, in the strictest sense, holds that states ought to exist, that their only legitimate function is the protection of individuals from aggression, theft, breach of contract, and fraud, and that the only legitimate governmental institutions are the military, police, and courts. In the broadest sense, it also includes fire departments, prisons, the executive, and legislatures as legitimate government functions. Such states are generally called night-watchman states. This, holistically speaking, massages PM Modi’s belief - “minimum government”. Whereas, statism is the belief that the state should control either economic or social policy, or both, to some degree. Statism can take many forms from minarchism to nazism. In my opinion, minarchism is the ‘diet coke’ of statism. The problem, I believe, with ‘minimum government’ is that it doesn’t stay limited because the organism of the state is driven by the animal spirit. The health of the armed state is dependent upon abundant production of unthinking disarmed agents. Minarchists also expropriate the liberty and privacy of all individuals, thereby intimidating the financial portfolios of the acting agents through the means of legal robbery, called taxation.

Actions in the past few weeks, however, have clarified that Modi’s vision of minimum government is very different from the classical liberal notion of limited government. For all heavy political rhetoric about smaller government, Modi has done little in moving towards reducing the role of the state. And judging by his policy decisions, the idea of “minimum government” in Modi’s lexicon seems to mean, at most, nothing more than an Indian state with a downsized bureaucracy. Thus, to those who had expected radical reforms, scaling back the size of government, what was offered was a mere restructuring of government ministries. A slimmer bureaucracy was envisioned to implement policies, albeit the same old regressive ones that strengthened the status quo of an economy with very little scope for the enrollment of catallaxy. With great pride, the finance minister said the government will not engage in retrospective taxation but recognized its legality. This, the finance minister believes, will get foreign investors brimming with confidence to invest in India and help growth pick up. But it is simply reminiscent of Jawaharlal Nehru’s buffoonish promise to foreign investors, “We want to encourage in every way private enterprise. We want to promise the entrepreneurs who invest in our country, that we will not expropriate them nor socialize them for ten years.”

Sadly, unlike Arun Jaitley, or Modi, who couldn’t care, but for the next general election, many investors do possess time horizons over five years. Given its sizeable contribution to government spending, even a partial rollback of wasteful subsidies could have counted for “radical reforms” in India. But the government earmarked Rs.2.51 trillion towards subsidies, more than what P. Chidambaram had estimated in February this year. The Mahatma Gandhi National Rural Employment Guarantee Scheme, the pet scheme of the Congress that was widely criticized for wasteful populism, was allotted a massive Rs.33,353 crore–up from Rs.33,000 crore last year. Adding to these, a massive Rs.37,880 crore has been allotted to fund a Keynesian government infrastructure spending programme, and, as usual, a lot more money has been splurged on a number of pet projects to satisfy every vote bank. To fund all of this populism, the government wishes to improve the tax to gross domestic product (GDP) ratio, sell public assets, and implement a nation-wide Goods and Services Tax (GST). The idea has been lauded as favourable to fiscal consolidation and helpful to create a single, uniform market across India. However, higher government spending , funded either through increased taxes or liquidation of assets, directly contradicts the fundamental principle of limited government, which is to cut down the share of government spending in the economy. A nation-wide GST, on the other hand, would once and for all end tax competition between states that is crucial to preventing draconian taxes. To fund all of this populism, the government wishes to improve the tax to gross domestic product (GDP) ratio, sell public assets, and implement a nation-wide Goods and Services Tax (GST). The idea has been lauded as favourable to fiscal consolidation and helpful to create a single, uniform market across India. However, higher government spending, funded either through increased taxes or liquidation of assets, directly contradicts the fundamental principle of limited government, which is to cut down the share of government spending in the economy.

Whether it is

PM Modi’s esoteric allegiance to India’s surveillance project Centralized Monitoring System (CMS) also reveals the government’s lethal and all-encompassing surveillance capabilities, which, without the assurance of a matching legal and procedural framework to protect privacy, threaten to be as intrusive as the U.S. government’s controversial PRISM project. This clearly indicates the fallacy of minimum government.

“Full government control of all activities of the individual is virtually the goal of both national parties.” — Ludwig von Mises

PM Modi’s “minimum government, maximum governance” requires critical reconsideration, because it camouflages the theory of liberty. Blessed with resources, but tortured by red tapism, India can culturally disintegrate “on its own, for her own, by her own” for the economic goodness of the acting agents because only an individual thinks, reasons and acts. It is naturally impossible to enhance maximum governance, without the facilitation of maximum government.

Where it is

Marginal cost-pricing is not dysfunctional, when the equilibrium is left to the market for decision. Problems begin when the state, be it any form, distorts the peaceful transactions processing in the market. So, it is immoral to trust individuals with liberty and moral to trust people with power? The urge to shield the ‘mass society’ against any external factor is nothing but a greedy motive to extend statism systemically. For example, Finance Minister of India Arun Jaitley set the military budget at 2.29 trillion Indian rupees ($38.35 billion) for 2014-15, 50 billion rupees more than what the previous government agreed in an interim budget earlier this year. India’s increased military budget, at just under $40 billion, is however still less than a third of China’s. So, while India continues to play catch-up, it still has a long way to go. Also, the expansion of the military budget certainly won’t ease relations between India and Pakistan, which already share one of the most militarized borders on earth. It is hobby of any form of state to add more fuel to the fire, and expecting government to honor liberties of all individuals is like seeing fire creating the wood.

The past two months have provided proof, that the so called ‘acche dinn’ (good days) are certainly amiss for the near and distant future. It seems as if we are back in 2004 at the start of the UPA term, with the announcement of various new social welfare programs, infrastructure projects, tweaking of existing programs, and SEZ projects. There is little proof that “Modinomics” is any different from the previous government’s “Keynesianism”. Any visible changes seem too small, around the edges which will have no significant on the Indian economy. A prime example of the continuing cronyism of the previous government is the latest announcement from the Commerce ministry regarding [new] Special Economic Zone “incentives”. The typical list of incentives includes tax holidays for a fixed time period for private firms to start new businesses, and increase investments in existing ones. A common theme that runs through the SEZ project is the acquisition of land, primarily farm land. The government at the center and states always run into the difficulty of convincing farmers to sell their land to the government at a “fair price”. The farmers are generally promised a market price for their sale of land, which most of the time turns out is a false promise, and a distorted price. Once the tax holiday ended, the firms had to bear the cost of paying a tax along with the existing taxes. If it is not profitable to produce goods and services, minus the crony benefits provided by government, does it not make sense to let firms bear the initial cost of setting up their respective businesses, and not tax them at all?

Special Economic Zones (or SEZs) seem to be part of a growing list of ‘reforms’ which are passed in the name of ‘liberalization’. But a closer inspection shows that these reforms (along with the rest of them) are in fact corporatist reforms. SEZ, far from being liberal reform, is a corporatist reform that cares mostly for the well-connected and should not be confused with free trade and free market, in anyway. Free trade is the freedom of all individuals to trade freely, SEZs are a travesty. Do the people who support the SEZ projects consider the fact that in the long run, sale of the large farm lands will drive the prices of land high, which leads to an unsustainable boom in real estate? Does the thought of directing away land as precious capital and a scarce resource to taxpayer subsidized activities in manufacturing and IT/ITeS cross their mind? Do we know if the firms in the manufacturing and IT sector are actually competitive, if it not for taxpayer funded subsidies? Do they even consider the impact this has on higher education, and creating an unsustainable boom in education? Can it be ignored that State intervention has created an education bubble in India, which has rendered a vast majority of students to mere low skilled employees? Subsidization of Air India, reservation policies (legal racism), food security act and appeasing certain religious schools are all/also another addition to India’s fiscal deficit. This all interventionist measures or minimum government in action is/are succinctly antithetical to catallaxy. Nevertheless, in the long-run, we’re all dead.

When it is

Concluding that ‘human action’ (acting agencies) is a purposeful behaviour. Or I may say: ‘Action is will put into operation and transformed into an agency, is aiming at ends and goals, is the ego’s meaningful response to stimuli and to the conditions of its environment, is a person’s conscious adjustment to the state of the universe that determines his life.’ Such paraphrases may clarify the definition given and prevent possible misinterpretations. But the definition itself is adequate and does not need complement of commentary. What PM Modi fails to realize is that the various measures he suggests are not capable of bringing about the beneficial results aimed at. On the contrary, he is producing as well as sustaining, a socialist state. Now, if the government, faced with this failure of its first intervention, is not prepared to undo its interference with the market and to allow establishment of catallxy, it must add to its first measure more and more regulations and restrictions. Proceeding step by step, on this way, it finally reaches a point in which all economic freedom of individuals has disappeared.

flipkart

By Anju Anna John:

One of my greatest woes about going back to Kochi for the next semester stems from the fact that Flipkart has stopped delivering in Kerala[1]. As I skim through the items that I want to order and try to check if they deliver to my address, I am told that ‘This product is not available in 683503 (my PIN number)’. In fact, Flipkart is not the only online retailer that has stopped providing services to their consumers in Kerala, popular sites like Snapdeal, Jabong and Myntra had also stopped services to postal addresses within the state of Kerala. However, eBay and Amazon continue to deliver, albeit with longer shipping durations.

flipkart

One of the primary features that helped Flipkart gain its popularity was the Cash-on-Delivery feature. This service seems to be the root cause that triggered a string of events that have resulted in the present problem. The Kerala Commercial Sales Tax Department is of the view that, in case of the Cash-on-Delivery option, the sale takes place within the State and thus, becomes liable to be taxed by the State.

The modus operandi of most online retailers is to hire third-party logistics to deliver their merchandise to the consumers. According to the Circular No. 16/2011 , in case of inter-state movement of goods, the shippers are expected to fill in the Declaration Form 8F under the Kerala Value Added Tax Rules, 2005 [Rule 66(6)]. A courier company (Blue Dart) was penalised to the tune of Rs. 3 Crore, by the Commercial Sales Tax Department. Following this, the matter has been taken to the court and a verdict is awaited regarding the same[2].

However, Vijay Kumar, CEO of Express Industry Council of India, has been reported to have stated that, Blue Dart has managed to get a stay on further proceedings from the High Court. If this is in fact the case, Blue Dart and other courier services would be able to resume the Cash-on-Delivery service until the matter has been finally decided by the court. Thus allowing e-Commerce sites like Jabong and Myntra to resume the Cash-on-Delivery service for the time being.

There are speculations by online shoppers in Kerala that the Sales Tax Department’s policies are in order to help the local business . Although this may be disputable, there is no denying the fact that the present situation has benefitted the retail market in the State. Kerala is largely considered a consumer state with a large NRI population.

The essential question that this issue has raised is whether the Cash-on-Delivery option (in pursuance of an e-commerce purchase) should be subject to Central Sales Tax (CST) or the State’s Sales Tax Department? Or both? A uniform tax policy with regard to e-commerce across the nation is the need of the hour.

[1]Source
[2]Source

By Jhalak Agarwal:

The hike in gas prices may be just a speculation now but that doesn’t mean that it will always be that way. There has been a lot of controversy when it comes to the subject of gas pricing. If the Model code of conduct was not implemented, the price would have risen to USD 8 per million British thermal unit (mmBtu) as against the current USD 4.2/mmBtu. “The model code of conduct is a set of election rules that restricts government decisions that might unduly influence the country’s 815 million voters.” The Cabinet Committee of Economic Affairs (CCEA) has decided that the gas prices should be increased and that raises fear among the power producers as well as the fertilizer manufacturers who are the chief users. If the prices do rise, this will hugely favor the Reliance Industries.

If we talk about the way the prices are estimated, we find that the method is quite controversial. The Rangarajan panel recommended a base price that is arrived at by averaging the prices of imported gas by different users over a 12-month period and the prices that prevail in major international gas trading hubs. In an ideal world, India should not rely on the prices that prevail in international markets. This method is not fair either for the consumers or the domestic suppliers who provide natural gas. The estimation of the cost gets complicated because a part is sourced from the international markets and a part from the domestic users.

At present, India faces a very odd situation when it comes to the hydrocarbon sector. ONGC dominates in the public sector while RIL is the only company in the private sector. In such circumstances, we need to carefully evaluate, implement and regulate its management in order to avoid disproportionate gains for the producers. One of the ways in which equity as well as the efficiency issues can be addressed is when the government intervenes in the pricing decisions, but it always results into controversy instead because of the non-transparent and corrupt environment in which the decision making takes place.

It is still not certain if the prices should be increased or not. No one seems to know how the increased price was reached at. Even Veerappa Moily had no idea how the new price was decided. In an ideal situation, the pricing decisions should be broadly disseminated. Instead, it was left wide open for speculation. This situation is quite complicated. The KG-D6 basin is in the hands of RIL at present and the fact that RIL needs to raise the gas prices because of the circumstances invite suspicion.

Recently, the Comptroller and Auditor General has indicted that India’s largest private sector company, Reliance Industries Ltd has violated the terms of its contract for exploring the gas fields in the Krishna-Godavari Basin. If this were to be true, this would be the chief factor for the rise in the gas prices because such corruption in the assets of the country puts inflationary pressure on the price of the goods because of the extremely high rate of transportation as well as fuel.

When it comes to Modi’s agenda, his stand is that “he may review the formula on the lines suggested by a senior party leader last year and announce the date of implementation of new prices.” It is said that the Ministry will make a presentation on the issues pertaining to the gas and oil sector to the PM Narendra Modi and then it will give a clear direction on how to proceed on gas pricing. If the PM agrees to go according to the Rangarajan formula which was approved by the government in December last year, the announcement will be made forthwith.

Before its implementation, there are some changes that are required in the formula in order to protect the users in the fertilizers and the power sector. The Rangarajan Formula prices seek out to bring price clarity to support the E&P activity. They also seek out to remove the arbitrariness of prices as determined by the APM. Nevertheless, these prices may have an undetermined impact on the subsidy bill. “On the one hand, fuel subsidy may reduce, but on the other hand, the central government may end up spending more on fertilizer subsidies.” Also, RIL is seen with a suspicious eye as it is alleged that it has kept the production of KG-D6 block natural gas low over the past few years deliberately so that they would make a windfall when the prices rise and the production is increased.

With all these controversies flying around the corner, it is hard to know the truth and even the Supreme Court verdict asked the government to file an affidavit explaining why present gas prices in India are double than those in Bangladesh and why is the complex formula of Rangarajan necessary. At present, it seems that the hike will benefit only the RIL and will be highly against the domestic producers and the consumers.

fin-bluetooth-ring-1

By Mayank Jain:

The Indian innovation has led the way for the world to follow from the times of giving the world a ‘0’ to paving the way for modern Chess as we know it today which developed in Europe after borrowing from the Indian game of Chaturanga, developed in Gupta Empire.

The sun shines over us in the 21st century and the Indian innovation space is heating up with multiple contenders with their products and services promising to put India back on the world map of innovation. The start-up space has been given a new lease of life by the interest of foreign investors and venture capitals while rural innovators are counting on funding by National Small Scale Industries Corporation and together, they are giving birth to a new enterprising India which is first to unveil things the world will love.

Here are the best of recent innovations that you should keep an eye on:

1. Fin: Fin can be rightly called the lord of all the rings. It is a path breaking product in the wearable technology space. Fin is a tiny ring that you can wear on your thumb and connect seamlessly to many devices through Bluetooth and go on with your work without the need of pulling out the device out of your pocket. With Fin, one can share music, change songs, control car AC, switch the lights of their living room by just gesturing the thumb on other four fingers. The uses are endless and the cost is just $120 making it an affordable piece of the future for you. Fin was born in Cochin and incubated in California. Here is a video that explains Fin:

2. Adister: Adister is a startup in the right direction. Started by Ex IIT Roorkee students who didn’t go for placements to make their dream come true. Adister provides smart notebooks which are every day notebooks with high quality paper and an advertisement on their cover which brings down the cost of notebooks by as much as 60%, or more in some cases. The availability of cheap stationery is crucial to achieving India’s dream of literacy and this ingenious idea needs as much support as it can get to scale up and revolutionize the way we educate our children. Here is a video you should watch to understand the concept:

3. Reliance Jio Wi-Fi Hotspots: Mukesh Ambani’s Reliance Jio telecom is about to make another dent in the Internet universe of India by 4G Wi-Fi hotspot services being rolled out on pilot basis. As many as 55,000 devices in parts of Gujarat are using these services which are free of charge, for now. Reliance Jio has already entered into multiple content tie-ups with Walt Disney, Extramarks Education, and Network18 for its offerings. A small country called Niue is the world’s only country with free Wi-Fi available all over its 260 square kilometers of area. On the other hand, most European and American provinces have Wi-Fi hotspots available which make the internet easily accessible and ensuring seamless availability of work and fun on the devices.

Master jio logo-ver-CMYK

4. Renew It: Computers from the scrap, that’s what Renew It does every day. Started by an IIM alumnus Mukund, the company is in the business of buying computers and electronic scraps from the corporates and they turn them into working computers. These working machines are then, sold to the rural areas at very cheap rates which makes computing, an affordable affair for the people with limited means. The company has already sold 10,000 computers so far and you can check them out here.

5. Flipkart-Myntra Wedding: The great Indian eCommerce wedding, as it is being called in the tech circles is one of the greatest acquisitions so far in the Indian eCommerce space. The deal is one of the biggest attempts at consolidation in the e-tail market. The growing dominance of Amazon and eBay has been effectively put on hold with this acquisition which will enable Flipkart to eye its IPO plans more seriously. Flipkart’s one day delivery, premium services called Flipkart First and its alliance with Motorola to retail their phones have already made the world take notice of this new fire power in the Indian economy. Here are the implications of the deal.

Sachin-Bansal-CEO-Flipkart-and-Binny-Bansal-COO-Flipkart-2

The Indian technology industry is finally going beyond just software development and IT services concentrated in Bangalore and the sheer potential of Indians to change the world can be observed in the success stories of Ola Cabs, Zomato and Flipkart to only name a few.

What do you consider to be the next big thing from India? Tell us in the comments below.

To know more about this story and what I think, follow me on Twitter.

INDIA-ECONOMY-RBI

By Tushar Mangl:

Everyone likes to save a little money. The rich, the poor, the average earner and even the lavish spender likes to have a little nest of savings. Banks are the biggest media today to enable investment and savings transactions. It is no wonder then that we need banks for a good economic system and an ideal way of life where we can save some cash and also go for any needs of loans. They make good business too. You save your money at four or six percent and your friend gets a loan from the bank at 10 percent plus.

When the British left India, they left behind a fairly good banking system with a nice number of banks in select corners of the country. All we needed to do was use the system, polish it well, and spread it thick and deep. What Indians did instead was use it as a milking cow, ruining these institutions instead of using them for positive gains. In the 1970’s Indira Gandhi led the nationalization of the banks. The cat was out of the bag. Politicians controlled the banks and not the bankers or professionals. They now had almost autonomous power over the banks, which were trustees of sorts of the public money. The people of India loved the idea. They even loved the idea of Vajpayee who years later started selling shares of these banks as IPOs or FPOs in the open market. So, first you nationalize a bank, and then you make money selling its share. We Indians have done our socialist, communist and capitalist dharma in a matter of decades. All this time, did we ever stop to think, which way do we want our banks to go?

INDIA-ECONOMY-RBITo spice up things, co-operative banking was launched in India. Now, most of these banks are going nowhere, with tight political control and awry finances. But then we had an economist Prime Minister. He is the great Dr. Manmohan Singh, who is the former finance minister of India and also a former governor of the Reserve Bank of India. You would think, banking system could be saved or put on a right track under his rule. And yes, he and his cronies in the government did allow a lot of great banking reforms in India. He made sure that all hard working politicians of his party, the Indian National Congress be accommodated as much as possible as the directors of various public sector banks.

The list of hard working Congress workers, who were appointed as directors of various banks include — Indu Singh Panwar (Central Bank of India), Ram Chandra Khuntia (Andhra Bank), Sooraj Prakash Khatri (Indian Overseas Bank), Maulin A Vaishnav (Bank of Baroda), A Ali Azizi (Bank of Maharashtra), Romesh Sabharwal (Central Bank of India), Masarrat Shahid (Bank of Baroda), Nafisa Ali Sodhi ( Indian Bank), Pankaj Gopalji Thakkar (Canara Bank), Ponguleti Sudhakar Reddy (Indian Bank), Satya Behn (Central Bank of India), Prabha K Taviad ( Bank of India), Maj (retd) Ved Prakash (Central Bank of India) etc. The list is quite long.

Today the media, while branding the corporate and business class as villains of the latest banking mess that is brewing in India, won’t tell you how the government of India being the legitimate representative of people of India, played around favorites while running the banks. A recent report of the RBI shadows doubts on quality of board governance in the public sector banks. Is it possible that the policy of accommodating a number of working members of the party in the financial institutions backfired?

unorganised labour in India

By Aanchal Khulbe:

The Indian Constitution abolished the last remaining form of slavery in 1976 by the Bonded Labour System (Abolition) Act. However, slavery persists. In the little dark concealed pockets around the nation, we see the diluted form of slavery. Which, being unsung, unprotected and legally unrecognized finds its stronghold in the lowest sections of the society- The Below Poverty Line families, the Dalits and women. Temporary recruitment, permanent exploitation- the strategy is simple. Boasting of more than 94% of the employment, the lucrative unincorporated sector is undoubtedly the nation’s most formidable, and the most infuriating.

unorganised labour in India

Contract labour is characteristically not only the sale of one’s labour when there is absolutely no scope of job security, a regular pay, gratuity or pension, but also that of one’s dignity. It is the workforce not run by legal provisions, but solely on the mercy of the employee industry.

In this destructive framework of opposing identifications to ‘development’, the role of states need to be emphasized. The industries glean the urgency of the minimum classes, and this has supplemented momentum to the system. Being devoid of legal provisions or state protection, this process has had unprecedented access to almost-free labour. The prospect of “healthy employment” through this has been epitomized so much so that the former Gujarat Chief Minister, Narendra Modi, legalized the setting up of SEZs or Special Economic zones in Gujarat and this had been welcomed as the supreme-most constructive policy n the line of national development. SEZs offer unhindered control of industries over the amount and type of labour they desire , and this is how he was able to present a 5% increase in industrialization on paper (I would have mentioned other leaders who have implemented the SEZs as well but the Gujarat Model of Development has been potrayed as the best model in India, and this, I thought, needed a closer look!). Nobody highlights what is beneath this industrialization – a class of unprivileged labour being raised from the shackles and dumped back, devoid of rights, devoid of means. A legal form of slavery this is, a working institution called Contract Labour.

For the Indian patriarch, the female gender endorse a form of such submissiveness that the task of mobilizing labour on unequal wage basis and sheer discrimination becomes very easy. Therefore, the unorganized sector has seen a large ‘feminization’ of the work place. This easy to recruit, cheap to maintain and easy to un-employ community has come out as the clear majority in the total amount of labour recruited on contract basis. Women are also subject to sexual harassment at workplace which, like all other forms of exploitation, goes unregistered because the perpetrator is generally a person of authority. About 96% of the employed women come under this sector.

When we talk about economy, an increase in investment or industrialization, we are not talking about development as a whole. In fact, the upward directed arrow on paper is a downhill ever-falling graph of exploitation, and this is not what growth is about. It is about raising the complete standard of living, providing resources even to the marginalized, including them in your schemes as well. The growth in economic development is an illusion. Development of half the state is still half the story. And the gap between the two sides is ever-increasing.

Consecutively, it does not guarantee a future for their children. Parents have to force their children to go out and work in order to contribute to the family economy. Children themselves grow up in an early realization of this band grow up to be labourers themselves. Therefore, the occupation takes the form of a hereditary chain.

The industries make huge profits by exploiting the already exploited, thereby limiting any opportunities for their growth. The unorganized sector is that successful milking machinery of the economic right wing which works on a simple agenda of maximum exploitation and minimum pay, which shows the Dalits their eternal place – inferior.

fdi

By Ankita Nawalakha:

In December 2012, the Indian Parliament approved of the central government’s decision to allow foreign direct investment (FDI) in multi-brand retailing. There have been many speculations on its potential benefits and costs and, depending on their socio-political-economic ideologies; the commentators have positioned themselves either in favour or against this policy. The policy impacts people across various sections and hence it is important to closely analyse its impact on different stakeholders.

fdi

Firstly, FDI in retail will directly benefit the Indian government. The organised retail sector facilitates the generation of significant tax revenues through the building of a sophisticated supply chain. Also direct tax receipt like income tax will also increase as large number of employees engaged in this stream will get salaries/benefits in transparent way as per laws and rules of employment. Conclusively, there will be an improvement in balance of payment.

The most immediate beneficiary from the coming of multinational players in retailing would be our farmers. Certain regulations have been put in place by the Indian Government, one of which says that at least 50% of the total investment has to be on back-end infrastructure- cold storages, warehouses, transport etc. Thus construction of storehouses and improved transportation will reduce the losses of the farmers and will provide a larger market. The farmers will receive better/fair prices by directly selling to organized retailers and getting away from relying solely on the intermediaries who often pay lower prices.

Furthermore, FDI is likely to benefit micro, small and medium industries. With clause of 30 % sourcing from MSME mandatory, a precautionary approach has been taken to safeguard and promote MSME sector. For the MSME, there will be an increase in demand for their goods from organized retailers provided that they improve the quality of their products and are able to match certain standards. There will also be growth in export opportunities for MSME’s.

Also, there is no dispute over the fact that FDI in retail will improve consumer wellbeing. The entry of foreign retailers will not only provide cheaper prices for products but it would provide larger space for product display, hygienic environment in the shopping area, availability of a large number of products under one roof, and better customer care.

The section of society which people speculate might be harmed from FDI in retail would be of unorganized retailer, local kiranas, street vendors etc. The major apprehensions of those opposed to FDI in retail is that unorganized retailers will lose their business and the large number of people employed in this sector will consequently become jobless. However, this is a gross misinterpretation. FDI in retail can only be implemented in cities which have a population of more than one million. There are only 58 such cities in India. It is true that in these cities unorganized retailers and local kiranas might lose some of their business. However, the experience of other developing countries indicates that the presence of foreign retail and consumer companies contributes to building a new middle class, which drives economic success, prosperity and social progress for all. This can be proved through China’s example. Since 1992 it has attracted huge investments in the retail sector without affecting either small retailers or domestic retail chains. In fact, since 2004 the number of small Chinese outlets has increased to around 2.5 million from 1.9 million. Moreover, we cannot neglect the fact that small retailers have inherent advantages- they are located next to the consumer, they know them well, they give credit too – which no large retailer does. Today, we have retail companies like Big Bazaar and Shoppers Stop but people have not stopped going to kirana stores. Thus even if small retailers and local kiranas lose some of their business, it will be rather small and insignificant compared to the benefits FDI in retail will bring.

Finally, it’s important to assess the likely impact of FDI in retail on job employment. Contradictory to the apprehensions that FDI in retail would lead to massive unemployment; it is more likely that bringing in foreign investors would create jobs that will offer better salaries, work environment, social security as compared to unorganized trade.

The concern about the competition to domestic companies, monopolization of market, loss of employment, procurement of produce from farmer at low price have been addressed properly through provisions in the scheme announced on FDI in retail. However, it is difficult to conduct an objective assessment of potential benefits and costs of FDI in retailing for several reasons. It is also unlikely that all the potential benefits and costs will be realised to their fullest extent, at least in the foreseeable future. The economic dynamics and the political process will play an important role in determining the outcomes of this move to allow FDI in the retail sector and will ultimately determine the effects on various stakeholders.

Sources

1) Department of Industrial Policy and Promotion (2010). Foreign Direct Investment (FDI) in Multi-brand Retail Trading. Discussion Paper.
2)Ernst and Young, “The Great Indian Retail Story”, 2012
3)Dr Hiranya K Nath, “Foreign Direct Investment (FDI) in India’s Retail Sector”; Space and Culture, India 2013
4)Dr. Sheetal Mundraa, Mukesh Mundra and Manju Singh, “A Review of the Impact of Foreign Direct Investment on Indian Retailing”, International Journal of Sciences: Basic and Applied Research (2013) Volume 10, No 1, pp 01-18
5) Federation of Indian Chambers of Commerce and Industry, Impact of FDI in Retail on Stakeholders, 2012

By Syed Kazim:

On the one end, we have big brand names, big MNCs, big turn overs, big employment generators and what not. But on the other hand, their greed has led them to earn profit by exploiting the resources of the country by bribing the governments. These companies are filthy rich but the greed to earn more and more money does not die. Ethics in business has become a matter of discussion only in class rooms. The million dollar question is, when will it become a reality?

Tata Motors’ Nano plant at Sanand in Gujarat is lying idle. It has utilized just a fraction of the Rs. 2000 crore facility. It has been only two months when Tata Motors utilised more than 25% of its installed capacity at Sanand.

So how did it all begin? Tata built a huge infrastructure for Nano in Singur, West Bengal, which faced tremendous resistance from the locals backed by Mamata Banerjee’s Trinamool. The farmers alleged that their fertile land was forcefully grabbed by the ruling left front. In November 2008, Gujarat CM Narendra Modi offered Tata Motors an eye-popping deal, a deal which convinced the auto giant to choose Gujarat over other states as the alternative for the Tata Nano’s plant. The incentive was Rs 9,570 crore soft loan over 20 years – close to 25% of Gujarat’s annual budget. Tata Motors will repay the loan in 20 years, at 0.1 per cent interest rate and will repay the land price in eight equal annual installments. That’s not all. The state government also provided four-lane road connectivity and exempted Tata’s from electricity duty, registration and transfer charges of land. The state also put up a waste disposal plant, supplied natural gas through a pipeline and provided 100 acres of land near Ahmedabad for a township. As if so much was not enough, Modi used some more public money to give Mr. Tata free publicity for his Nano car when Modi put up hoardings featuring him and Mr. Tata with Nano all over Gujarat.

However, the real deal is still in the dark. Besides appreciating Modi’s investment friendly policies and telling the nation that he is PM material, one might wonder what else Mr. Ratan Tata had to dish out to get this dream deal which might have costed the state in excess of Rs. 30,000 crores for a mere Rs. 2000 crores. Rs. 30,000 crores of public money drained out for a private project whose total worth is less than one-tenth of the money spent. How much money did Mr. Ratan Tata give Mr. Modi for all these favours?

Recently, a protest broke out at the Manesar plant of Maruti Suzuki, the country’s largest car maker. The management had stopped electricity, gave no water and food, no access to medicines and three thousand odd workers were forced to share only one toilet. The worst part was that the labor department too lacked the minimum courtesy to bother about it.

All this began when eleven workers were expelled from the company for their efforts to form a new union, Maruti Suzuki Employees Union (MSEU) as the existing union, Maruti Suzuki Kamgar Union (MSKU) was a puppet of the management. On the other hand, the management had forcibly taken written undertakings from workers that they are happy with the old union. The labourers could not do much as the Government also started speaking the language of the management. Now, what can the laborers do when the law makers support the law breakers?

The villagers of Jagatsingpur district in Odisha have been protesting against land acquisition for POSCO, the South Korean steel giant’s $12 billion steel plant since the last seven and half years. The government is going ahead with the land acquisition process for POSCO, even when the environmental clearance given by the Ministry of Environment and Forests stands suspended by the order of National Green Tribunal (NGT).

POSCO project no longer has a memorandum of understanding with the state government. The state, which clearly has no legal basis to acquire land for the POSCO project, continues to terrorize, attack, destroy livelihood resources, arrest and file charges on the villagers on behalf of a Korean company. ‘Don’t steal in the name of steel’ is what the villagers have to say.

Google, a company knows for giving us answers to all our questions. It earns money by violating your privacy. They go through every word of your personal email so they can target you with ads. Every word of every email. Even the most private ones, like messages about relationships, health care, finances, and more. Even if you don’t use Gmail, Google will still go through emails you send to Gmail addresses in order to sell ads, despite you never having agreed to their terms of service. There is absolutely no way to opt out, whether you use Gmail or not. Can’t Gmail search for an ethical way to advertise by googling on its very own search engine?

Just a few years ago, the situation for workers in Florida’s tomato farms was so bad that one federal prosecutor called Florida “Ground-zero for modern slavery.” With the implementation of the Fair Food Program, we’re now on the verge of eliminating slavery in Florida’s tomato fields.

That’s because the Fair Food Program has made historic progress in tackling forced labour and exploitation. Wendy’s, one of the biggest international fast food chain from US refuses to join the Fair Food Program to ensure slavery is not in its supply chain. If Wendy’s joins the Fair Food Program, their immense purchasing power could help bring the last 10% of farms to the table and ensure the tomato industry never sees another case of modern slavery. Feed the rich at the cost of modern slavery is the order of the day.

Target is one of America’s biggest retailing company. How do they keep their prices so low? Turns out some of Target’s products might be so cheap because they are made with slave-picked cotton from Uzbekistan or purchased from Daewoo International, a company that accounts for approximately 20% of all cotton processed in Uzbekistan. Every year, during the harvest season, over a million children and adults are ripped from their homes, schools and jobs, and forced to work in the cotton fields of Uzbekistan to meet daily picking quotas. They are often threatened and beaten.

Target pledged not to buy slave-picked Uzbek cotton. Now, they’re following up on their pledge by joining the Daewoo Protocol, declining to do business with Daewoo, until it takes serious steps to stop sourcing slave-picked Uzbek cotton. Despite its promise, Target has not yet signed the Daewoo Protocol. A company that takes pride in holding the highest ethical standards for itself and for its business partners has indulged in such an unethical act. Is all this only to earn more money, what is Target targeting at?

Nigeria’s lucrative oil industry is dominated by Shell, a multinational oil and gas company incorporated in the United Kingdom, which in conjunction with the government, controls most of the country’s oil wells. It is also in part responsible for the thousands of spills, many enormous, which have occurred in Nigeria since the 1970s. Sued by some of the people whose lives have been destroyed by the pollution, Shell is still arguing about just how much oil pollution it is liable for, claiming sabotage is behind most.

Debatably, the corporations in charge of an industry are responsible for everything that happens in that industry, regardless of the specifics of each individual case. Shell, of course, is not going to have any of that. However, since the corporation has earned huge profits at the expense of Nigeria’s people and environment, it should at the very least, stop spinning and provide compensation to the victims. With Shell, ‘all is well’ but their attitude is ‘let others go to Hell’.

When Warner Bros., an American producer of film, television, and music entertainment, announced that it was bringing Harry Potter’s favourite chocolate treat to life, muggles throughout the world rejoiced! The only problem is that outside of the wizarding world, Chocolate Frogs have a sinister side, they could be a product of modern slavery. In the Ivory Coast of Africa, children as young as 7 are forced to work long hours collecting cocoa beans, often beaten if they don’t meet their quota. Their supplier Behr’s Chocolates scored 1 out of 48 possible measures to ensure their operations are slavery-free. When Warner Bros. is asked what steps were taken to ensure there was no slavery in Harry Potter Chocolates, they refused to respond. The chocolates might be sweet but the process is dam bitter, why doesn’t Warner Bros. make film on this?

Most of the business management students have a dream to join these big companies. Are they going to support this system after joining them? How effectively and practically are they going to implement business ethics which they studied in their subject? After witnessing all this, one question strikes my mind, are these companies the new rulers of the world? I would conclude with a small poem – ‘greed is on the lead, which many companies are ready to breed, how much do their bellies need and where will all this lead?’

ongc

By Amit Bhandari:

A fierce public debate on the price of extracting and then selling natural gas from an oil well under India’s jurisdiction, borne by the taxpayer, is also causing some confusion in the minds of those trying to get to the bottom of it, at least conceptually.

Officials of the newer Aam Aadmi Party (AAP) shoot off an allegation and Reliance Industries (the company which is drilling for it) or RIL promptly responds to it. Now the Election Commission (EC) has also joined the party —it ordered a long proposed increase in natural gas prices to be delayed till the end of India’s 2014 general elections.

ongc

The heart of the problem is a simple issue — can the same product be sold for two (or more) different prices, a market price and a government dictated or administered price (APM)? In essence, this is what is happening for natural gas. To complicate matters, the APM price gets revised every few years.

Obviously, this creates two vested interests — the gas suppliers and the gas buyers. Both will try to get a decision that favours them, and at least one of them (sometimes both) will be unhappy with the outcome, no matter what it is.

According to a statement made in Parliament, domestically produced natural gas is sold in India from prices ranging from $3.5/unit to $6.79/unit (FY12). Natural gas from RIL’s KG-D6 field is being sold at $4.2/unit. Meanwhile, imported liquefied natural gas (LNG) was priced at $13.4-16.4/unit. The current prices of LNG are even higher, up to $18/unit.

The gas price revision that was due on April 1, 2014, was actually an attempt to simplify this situation. On that date, a formula would kick in to decide gas prices. This methodology had been suggested by the Rangarajan Committee, headed by former Reserve Bank of India governor Dr. C Rangarajan. The key recommendations were:

1) Domestically produced natural gas would have the same price irrespective of source
2) Gas price would be notified on a quarterly basis
3) Gas price calculation would have the following parts:

* Calculation of weighted average price for all Indian imports
* Calculation of world weighted average price for Henry Hub (US), National Balancing Point (UK) and Japan
* The average of above two would give the price for Indian producers

One of the problems with this formula is that natural gas benchmark prices can vary widely as well — since gas cannot be freely traded, unlike oil. Therefore, no matter what the ‘formula’ price is, it will be higher than some of these figures and lower than others. Figures can be selectively picked to show that consumers are either being ripped off or heavily subsidized.

How did it come about?

To use a cliché, it’s complicated. Just like crude oil, India is also short of natural gas. Unlike crude oil however, natural gas cannot be easily imported. Till 2003, the only gas available in India was what ONGC produced. In that era, prices of almost all petroleum products (including natural gas) were dictated by the government, a policy referred to as the Administered Price Mechanism (APM).

Since natural gas was in short supply, use was prioritized. The fertilizer sector was deemed critical and would have top priority. Also, the price was very low — much below the price of natural gas in other markets such as the US. Since the gas was produced by a government owned company (ONGC), it didn’t matter.

Two events that took place 10 to 12 years ago promised to change the situation. In 2002, Reliance discovered natural gas at the KG-D6 field. Then, in 2004, India’s first LNG import terminal was set up at Dahej (Gujarat). LNG imports started in 2004 and these prices were much higher than the APM prices.

Despite some concerns, commercial users picked up as much LNG as could be delivered. This created a problem — the same product, natural gas, was being sold at two widely different prices — APM rate and market rate. Later on, when Reliance started producing natural gas from the KG basin, it got yet another price.

The reasoning was that because Reliance had invested large sums in developing this gas field, it had to be given a fair return on its investment. It is this price that is causing the heartburn.

During 2012, India imported approximately 25% of her natural gas requirements. India’s gas production has fallen in the past 3-4 years because Reliance’s KG-D6 field has run into some complications. Production is now less than half of what it was originally expected to be. That has led to yet another set of allegations about the company deliberately not producing gas, but we are not going to look into that yet.

Perhaps one solution is to free natural gas pricing. Allow customers to freely bid for natural gas and buy it from suppliers. This price, whatever it is, cannot be contested. This mechanism already works very successfully for imported LNG — without any allegations of corruption or crony capitalism. Meanwhile, sensitive sectors such as fertilizer can be provided subsidy to make up for the higher cost of raw material.

Whichever way it goes, it might be difficult to resolve this issue the way things are. Moreover, the current policy also ignores the lesson that was (painfully) driven home by the 2G telecom spectrum scam — natural resources are best auctioned!

This article was originally published by IndiaSpend .

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