Biz and Eco

INR vs Dollar

By Guha Rajan:

With Indian rupee depreciating, it paints a grim picture of our economy. The instability is attributed to many factors including the Euro crisis. Since 2006, economies around the world are in turmoil, if one country attempts to come out, it impacts directly or indirectly the other country. It started of with US mortgage crisis in 2006/07, which was followed by the infamous Lehman brothers crisis and other financial institution collapsing then in 2008. Then came the crash of stock markets, Euro crisis which was followed by appreciation of gold. The news coming out these days is quite conflicting, in one month we would see economic recovery being projected and the following month, one would see depressing news about the economy.

What does rupee depreciation mean to the Indian economy and who could be the probable Gainers or Losers?.

The Gainers:

  • Exporters, particularly who are using the resource and raw materials by paying them in INR and getting return in USD.
  • Companies earning in USD and reporting and exchanging to INR would stand to gain.
  • Indian Origin people sending foreign currency to India and converting them into INR and making permanent investment in India - The reason being they would be getting more INR for lesser amount of USD.

A 100 USD with exchange rate of 56.5 will fetch more INR compared to 100 USD with exchange rate of 40 INR.

The Losers:

Importers, more particularly India Government importing large volume of oil is bound to suffer. Normally such increase in Oil cost is passed on to the customer and naturally, people of India would have to burn more money (as is already evident from the increase in petrol rates). This would eventually continue the spiraling of inflation, which is already high.

Foreign equity investors who are looking for gains might lose, if they attempt to pull out their money.

In short term for India, it will be good if the money does not flow out of India, however, in long run if INR is volatile and continues to depreciate, foreign investors would lose interest in Indian markets.

Lets hope the INR bounces back.


By Nupur Dogra:

Since the advent of industrialization in India we have witnessed setting up of many new industries in various sectors. Indian industrialists after the 65 years of independence have come a long way. Some sectors have developed and some are still developing. Most of the sectors have even attracted foreign investments to the country. Following is an insight to some of the top increasingly booming industries in India.


Tourism is one of the most important industries to any country as it is the best source for inflow of foreign currency into the country. A tourist, with him brings foreign currency and thus his every little spending is contributing in a better way to the country’s economy. Its contribution is around 6.23 % to the national GDP and generates 8.78% of the total employment. It is estimated that around US $375.5 billion will be generated by this particular sector by 2018. India being such a large and diverse destination has become a major attraction for tourists all over the world. The fact that it has 28 different states, and each one has a different and a unique culture of its own, adds to the curiosity of the tourists. There have been efforts to increase new forms of tourism such as rural, medical and eco-tourism. Medical tourism over the years has attracted a large chunk of tourists to Asia especially for plastic surgeries. India, despite having some of the world class medical facilities has suffered due to its low levels of sanitation. This remains one of the biggest hurdles in development of medical tourism here. But one of the major challenges is of security of the tourists. Domestic tourism is over 800 million. Another challenge is shortage of hotels and tourist accommodation places in the country. Lately, government has also started promoting tourism and awareness about tourism in country under the programme of “Incredible India”.

Power Generation

Electricity has become one of the most basic necessities of one’s life today. India has the 5th largest power consuming market in the world. In the 11th five year plan, the planning commission displayed “electricity for all till 2012” as the aim of government but 2012 has arrived and we are not even close to this goal. Power generation sector provides great opportunities to the investors as it promises higher returns. Coal, despite being termed as major pollutant still continues to generate 55% of total power generated. Though government has taken steps to generate electricity from hydro, nuclear and solar energy but there share is still very low as compared the thermal energy.

Hospitality industry

With increasing tourism and with the advent of modern life styles and westernization this particular sector has witnessed a sudden and massive boom.

Hospitality industry is one of the world’s largest service generating sectors. In India though it is new but people are investing in it and also more people are opting for hotel management course to enter this promising industry.

This sector can be divided into two; the entertainment and accommodations sectors. Discs, bars hotels have become part of the urban lifestyles. On the other hand with an increase in tourism in India has lead to need of more hotels and infrastructure.

Animation industry

This particular sector has witnessed a much required boom over the past few years. With the increasing use of 3D technology in movies and many other animation technologies, this industry has managed to create a demand for creative animators, and other technicians.

According to a study this industry is growing at rate of 30% annually.

A slight government help to the animation industries in terms of loan can provide a futher increase and profit to new but rapidly growing industry.

Food processing industries

Food processing industry is another rapidly growing industry in india. The central government has taken many steps to increase the growth of this sector for eg they treat all the agro processing industries with a greater priority and responsibility. This has to some extent brought more organisational factor into the food retail and agricultural sector. This is one sector which has faced a rapid increase in the foreign direct investments. Also, over the time there has been an ever increasing demand of such goods in the Indian market. This industry is growing swiftly and is estimated to cross $200 billion till 2015. This sector currently faces major problem fetching proper investment at various stages of supply. More upgraded technology is the current need of the hour.


By Vaibhav Srinivasan:

This article is based on a true experience and some introspection, I encountered a few days back in my “Air-conditioned” and creatively designed office campus, which stands erect as a beauty of modern day steel structure completely glossy and amusing in the Special Economic Zone (SEZ) outside city limits. Yes. The very same office building, a perfect capitalist in terms of current consumption when the whole state sacrifices their needs for few thousand machines and professionals working inside.

The incident was very simple. Late night post 11:30 pm, cleaners were allowed to clean our floors and one young fellow, probably of my age pick up a small glass article kept on a table. Soon he saw his supervisor approaching and his ability to enjoy the artistic beauty of the fancy doll was kindled and when he tried to put it away from the eyes of his supervisor, he failed and in tension he dropped the same on the floor.

It resulted in a fuss created by his superior. Scolded and abused, the poor fellow was sent out of the office, tagged as misfit. I met him at the corridor when I was on my way for a late night coffee. I took him along with me when I saw the tears rolling down his cheeks and asked him if he was okay.

He started speaking…

(Pointing out to a distant place) “There can you see sir? Some small hill kind of thing… I am coming from a village near that hill. We were, of course, a happy family with my father and mother working as farmers, and I was busy with my schooling. We had very little money. I was like all other village kids who were benefited by the free education from Govt.

Rains betrayed us. Tractors and other Farm equipment completely ruined us. Just when the farms had failed, the announcement from our Govt arrived. Our Village, safe away from the sea, was identified as a hot spot for the SEZ. We were assured of regular jobs, development, infrastructure, connectivity and what not. For the first time in my life, we all had dreamed of seeing our village turning into a developed place like MADRAS!!

Cars, internet, Tar roads… Facilities to come and cater us… It’s going to employ us as well, we thought. We were asked to leave our lands and we left our huts. An asbestos sheeted accommodation was given to us. Land owners gave away their land to Govt. for money. We, the landless laborers were either taken as security guards, or house-keeping assistants. Initially, my mom worked as a maid in the cafeteria of this office and my dad was the security guard at Gate-2.

Now that competition came for us from North and those guys were ready to grab our chances for very less wages we lost even those little jobs we had. My father is now out of job and he has turned into a lunatic and my mother falls ill very often. My beautiful dreams of learning something artistic because of the SEZ development have now been tarnished. All I am left with is the option of do this job to feed my family.”

He continued with his story. After a while, I came back to my seat and did some research about this issue he had faced.

Suicides have become common nowadays. Be it IITian or a farmer… It is a serious problem now. In Tamil Nadu alone, the number of farmer suicide occurrences were 500 in 2008 and 1260 in 2009 (officially). For a quintal of paddy, manufacturing cost is Rs. 1500 and the acquiring cost by Govt. itself is Rs. 700-1100.

Tamil Nadu’s demand of food grains annually is 170 Lakh tonnes while the production is just 80 Lakh tonnes. If Karnataka and Andhra don’t supply us food, my friend, we are on the verge of starvation. The cost of fertilizers is increasing and the land is losing its productivity – gradually due to chemicals.

Statistics shut me down. I started wondering is SEZs are qualified enough to exploit our agriculture and small-scale industries.

And then I realized how I am eaten up by present-selfishness rather than future worries. I want to eat today and so I earn. But when the fear of tomorrow’s food availability comes in me, I get worried. My community should not stay hungry. I am currently developing software which in no direct means would feed a hungry person. And in due process I am sure I would have indirectly exploited farmers to whom the land originally belonged to.

By all means, I tried to justify my stand. But despite doing that. I admit, I feel guilty…

I am not sure what the solution to this problem is. May be it lies in our better decisions, standing up for the right – or may be in just making sure the right information about these problems is right out there.

fair trade

By Shruti Shreya:

How often do you buy a product that bears a special blue-green logo or think about the writing on your take-away coffee cups that says “Fair Traded” or even pay extra attention to placards in departmental stores that say “We only sell Fair Traded products here”?

It is the so-called “First World” countries’ crusades to help the producers of the “third-world” nations get the best price for their produce – that is called the Fair Trade policy. Be it handicrafts, coffee, cocoa, sugar, tea, bananas, honey, cotton, wine, fresh fruit, chocolate, flowers or gold, the organized social movement ensures a transparent and fair trade partnership to achieve a greater equity in international trade.

With a similar vision in mind, India too has the Fair Trade Forum neatly in place. The society that was started in September 2000 currently has a network of 70 Fair Trade promoting organizations in India. With the aim of empowering the producers from the weaker sections of the society, the organization mobilizes 100 students at 75 colleges in four major cities to be Fair Trade supporters and consumers among other activities.

To promote their cause various events are also being rolled out. While Sanyojan, carried out at Siri Fort, New Delhi in March this year was held to enlighten the youth of the country on the Fair Trade issues, “Creative Cut” was a documentary film screened to promote the initiative of Fair Trade.

While measures are being taken to increase knowledge about Fair Trade in India, there still lacks efforts from the government to reduce the hardships of the producer families and ensure they get the best price for their produce or so much as protect their lands. There are no official government policies in place that may help guide a proper development of the Fair Trade phenomenon in the country. The biggest paradox being that despite all the promotion being carried out for issues, the aware consumer seeking fairly traded product is not able to find it in the market. There clearly are some missing links in the Fair Trade supply chain in India.

The UK Fair Trade Chief, John Fingleton, however feels that India may be on the right track with certain new government policies that include competition. He feels that competition-enhancing policies are beneficial for fair trading, especially since it is a magic formula that works in all economic conditions.

Meanwhile, although it is too early yet to say whether or not such moves will help the producers in India, the phenomenon of Fair Trading worldwide is being criticized by economists and the likes for being yet another means to mint money by blindfolding consumers into believing that the amount being raised from fair trades are going towards the betterment of the producers of the developing nations. With no official control or guidelines to be followed, the retailers unfortunately are charging insane prices for products that bear the Fair Trade logo. The extra amount earned however is not always reaching the actual producers and their families, which just makes it even worse than the actual exploitation of manual labor. It is time a globally centralized organization be erected to regulate the Fair Trade prices before retail companies end up making much more than the MRP on the very same products.


By Madhav Gupta:

The apex court gave its verdict on the Vodafone-Hutch case which has been going on for last 5 years. The Supreme Court gave it judgement in favour of the UK telecom giant Vodafone and ordered Indian Government to refund Rs. 2,500 crore along with 4% interest.

On Tuesday, Supreme Court even dismissed the review petition filed by the government. “You can only tax on the basis of existing law. We have no right to tax them, current law will prevail so long [as] law is not changed,” Salman Khursid said after a meeting with the Finance Minister Mr. Pranab Mukherjee and other top ministers.

It is clear that the verdict given by Supreme Court is as per the Book of Law. And the current law book doesn’t have much sight on overseas deals like this. But as soon as the Finance Bill 2012 will be in action, which would be covering latest enhancement of the Business world, the apex court will have to follow it. Any decision on the IT will obviously affect similar foreign deals and a strict act may even lead to high fiscal deficit.

The main problem being faced by the government in the current scenario is of dismal foreign trade and increasing Current Account Deficit. And in the current global scenario, any decision which is not fruitful for the overseas investors is not advisable. Vodafone is the single largest overseas investor in India. So any decision which doesn’t go their way will have an intense impact on the Indian economy.

The only way to get over this scenario is to make the domestic economy strong, especially by giving a greater importance to the primary activity of our country i.e. agriculture and reducing taxes on the domestic companies, providing low interest rate loans to small and medium scale industries, encouraging the youth to start-up their own business i.e. encouraging entrepreneurship and educating youth about the service industry.

Whatever the verdict is, the government has to take corrective measures and make sure the foreign investment is not lost.


By Astitwa:

The eminent economist Dr. C.K Prahlad, called the poorest of the global world, especially those living in the developing countries, as ‘the fortunes at the bottom of the pyramid’ whose potential had not yet been tapped effectively. On a similar note, Amartya Sen has argued that being poor doesn’t translate to just having low income levels but it is a larger problem that leads to the absence of security and ability to be a part of the larger social, political and financial system of the economy. It can be convincingly argued that these thoughts have been the foundation stone of central bankers and policy makers all across the world, for formulating policies that can eliminate financial exclusion from the society. With more than 800 million mobile subscribers it is yet another irony of India that more than half of its population has no access to formal banking system.

The Rangarajan Committee, constituted by the Indian government in the year 2008, defines Financial Inclusion as “the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost.” Why is financial inclusion such a crucial issue for developing countries? A financial system works extremely well when it is inclusive because it helps in participation of more individuals into the financial system. Also, including the poor into the mainstream financial services is one of the major goals of the Millennium Development Goals (MDGs).

When poor families have access to financial instruments that are designed especially for low-income levels, they can increase their savings, invest in various investment sources and it also helps in reducing inequality and poverty in the society. When the poor have access to micro-finance and loans, they can provide education to their children, reducing the reliance on child labour that exists in our society.

As the Human Development Index reports of 2010, by the UN Development Program, India ranked at the 119th position. India has been doing poorly on all fronts, like life expectancy, education and per capita income. This further leads to a huge setback in the inclusive growth agenda. By improving access to credit and improving financial literacy, poor families can be helped to a great extent with respect to the facilities they can avail. In the recent years, there have been mixed results in the goal of achieving financial inclusion. Some schemes of the banks have failed to do well while several others have gained appreciable success. By constantly reviewing their goals and plans, the banks guided by RBI are trying to make the poor an integral part of the complex financial system. Let us hope the challenges are met by completed dedication and effective policy procedures by those who are at the helm of decision making.


By Awanish Shahi:

I have come across many write-ups which question the employability potential of Indian professionals. Ironically, India, a growing economy, boasts of a young working population, especially those of the IT domain, and still questions the credibility of the knowhow of these young Indians. Unsurprisingly it’s partially true. A country keen on fostering intellectual growth allows opening of some hundreds of technical institution annually without paying a single thought on what really goes in these institutions. Well, Indian government hardly needs to pay attention as most of these institutions are run by some of the people among themselves or their coterie.

They establish these institution as cramped buildings churching income with minimum possible facility, both technical and faculty wise. Right from fixing affiliation-granting institutions to roping way for IT companies to recruit pupils at measly remuneration, they master all aspects of this game. As a result half-baked technical minds of these institutions are picked by the IT companies to work at illusive offers. And rest becomes a common history. But where does the major chunk of this half-baked, unemployed and frustrated youth goes?

I see many of them as commuters in our major IT polis, carrying resumes, peeping out from window of buses or taxis in despair. I see many of them in their father’s business or trade, growing pale and weak. I see those applying and doing jobs much beneath their qualification. I see them falling in drug addiction. I see some of them in breaking news of news channels, making waves through extortion, smuggling, MMS and many such activities. Well everything stated above is not a new thing. What made me ponder on it was a revelation from my fellow working colleague talking about an engineering graduate who is applying for a security guard post. It gave me goose bumps and forced me to think of many such professionals and their current working status.


By Vishakh Unnikrishnan:

How easy is it to manipulate someone in this corporate world we live in? That depends on the information that we are provided with from the media, friends, acquaintances etc. Even information can be manipulated to fiddle around with the mind-set of people. In the fast-paced life we live in, we barely have time to do our research on the information that we receive, and in such scenario information remains information and not ‘knowledge’.

Very rarely do we know about the clandestine methodologies that corporates use to manipulate the minds of the public. But in this capitalist world that we live in, such approach is almost inevitable for corporates. Almost every other corporation tries to give the impression that their products are more trustworthy, durable than others, which may or may not be true. This is achieved through intense marketing and business tactics. None of this can be termed as ‘unethical’ though because after all they are corporates, and it is the duty of the customer to research through external means about a product before purchase.

Competition is now a metonymy for ‘war’ in the capitalist environment that we thrive in, and as the saying goes- everything is fair whilst a war. NGO’s around the country and the world, deploy almost the same tactics to attract customers. Many host high-profile parties for celebrities and politicians and spread the message that all the ‘funding’s’ are to be spent for ‘relief and rescue measures’ wherever required.

But what if this capitalist artifice is taken to a whole new level? What if an organization gives the impression of ‘doing good’ for the society or the environment, without actually doing anything? Can that be called ethical? Corporate Social Responsibility is probably the biggest venture that organisations undertake to give the impression that consumer’s money is spent on ‘ethical’ grounds. The idea of philanthropy and altruism has, as and until now, been successful enough to make people donate enough to sustain hundreds of NGOs and corporates that employ thousands to spread the ‘idea’ of altruism and not the actual thing. In recent years, many large corporations have increased their corporate social responsibility departments in an attempt to pre-empt NGO campaigns against certain corporate practices. As the logic goes, if corporations work with NGOs, NGOs will not work against corporations.

Non-profit organisations in India (a) exist independently of the state; (b) are self-governed by a board of trustees or ‘managing committee’/ governing council, comprising individuals who generally serve in a fiduciary capacity; (c) produce benefits for others, generally outside the membership of the organisation; and (d), are ‘non-profit-making’, in as much as they are prohibited from distributing a monetary residual to their own members. Now all NGOs need not be non-profit organizations, but is it ethical for them to market themselves as one? More so, should it even be considered legal? Can it be considered legal to give an impression that monetary donations are ‘not distributed to their own members’ to the public by having the pseudonym ‘not-for-profit’ organization. Under section 25 of the Income tax act ‘not-for-profit organizations involved in relief work and in the distribution of relief supplies to the needy are 100% exempt from Indian customs duty on the import of items such as food, medicine, clothing and blankets. Other exemptions may also be available.’ NGOs don’t even have to worry about the quality of their products; they just have to worry about the ‘quality’ of marketing. With all such exemptions and hefty amount of donations from corporates and high-class individuals, can NGOs be regarded as different from corporates? Or should they be considered even ‘worse’?

“It does not matter what is true, it only matters what people believe is true.”
— Dr. Patrick Moore, President of Greenpeace Canada 1981


By Awanish Shahi:

The news of India deciding, in principle to allow FDI from Pakistan, to me, is like a bolt from the blue. This can be seen as gesture of goodwill and one among many initiatives to deepen the friendship between two nations which share almost a common history. But to me it’s a solemn issue, and I feel skeptic about this friendly move to strengthen sore relations between the two nations.

While India still mourns 26/11 Mumbai carnage and many such past inhuman incidents still haunt the minds of almost every Indian, this handshake to promote trade seems preposterous. The only country in negative list under the Foreign Exchange Management Act, or FEMA is Pakistan which prohibits it from investing in India. Sri Lanka and Bangladesh were removed from the negative list in the year 2006 and 2007 respectively.

In case we allow this move on FDI to shape in, I think three points need to be kept in mind, leaving aside the good trade. The first point to begin with will be the security of our country. We have to minutely observe that there should not be any compromises on national security. Second point, would be a rigorous cross-check of every Pakistani company interested in trade before giving clearance to it. A complete back ground check like who are the directors of the company, have they ever been involved in any anti-India activities, who funds this company etc, as these companies can in turn be funding agencies for various India-dwelling terrorist outfits. RBI and the State Bank of Pakistan are thinking of opening bank branches in each others’ countries. This can be a source of false currency circulation in the country. The third and the most crucial point will be punishments and sever prosecutions on indulging in any anti-India activity.

Though, viewing these developments from the aspect of relations between the two countries, as an ideal common Indian, I, too, give this crucial step my nod, and hope our Ministry of Commerce and Industry with Ministry of Home affairs will formulate safer policy for FDI from Pakistan.


viral marketing

By Abdul Wahid Khan:

Viral Marketing is a way of marketing in which the pre-existing channels available on the internet are used to induce a chain reaction about the message that the company wants to convey to the consumers. Channels used are social media, email marketing to count a few. It is simply like word of mouth marketing done online. People see your ads and if they like it, or in other terms, if the ad fits as a viral ad, then people share it with their network and the process goes on.

Many people say that it is good for only short-term strategy and cannot be followed in long run. They say that when the consumers get to know the reality by testing and using the products or services, they will no longer trust the company in the same way as they did after hearing electronic word of mouth. This is one point but it does not simply mean that it has no long-term advantages.

When something becomes viral, it increases organic ranking of the company in different search engines. It is not easy to get organic results but viral marketing can help you do so. Not only this, it also increases brand awareness. It develops several perceptions in the minds of consumers and if the message or the ad is good, then it really helps build strong brand image. It helps to establish a better relationship with customers and it makes the brand more trusted. Several brands in India like Hindustan Lever, Coke and Amway have been known to employ this form of marketing, so have others like CitiBank,, Hotmail, etc.

It can be a fad sometimes but it has long lasting effects which are quite intangible. It is being standardized and better measures have now been introduced and have begun to be followed, which will make it a long-term tool to measure the Return on Investment and various other marketing tool effectiveness scales.


By Shruti Shreya:

“Passengers, we are sorry to announce a slight delay in our flights due to a financial glitch and hope to take off soon. Any inconvenience caused is deeply regretted.” So is the sad state of Kingfisher Airlines at the moment. With numerous flights cancelled, several routes withdrawn and excess staff laid off, Kingfisher Airlines appears to have busted both its engines mid-air and is steadily tanking toward a 7,000 crores debt.

But while the media is busy splashing its front pages and news bulletins with the updates on the supposed crash of the “Beer Baron” Vijay Mallaya’s Kingfisher Airlines, he may as well be having a soft landing in a distant land with a clever scheme of Foreign Direct Investments [FDI] acting as a parachute. In simple words, or in Business Standard’s words to be precise, all this hue and cry about the airline running into a loss could be a hoax.

It is being speculated that the crisis that Kingfisher Airlines is presently undergoing, or projecting, is just a stunt to manipulate the government into permitting direct foreign investments in the aviation sector. With the government currently mulling over raising the bar on foreign investments up to 49%, this new drama and push from the media may just allow Mallaya’s dream of having a foreign airline as a co-pilot on board KFA, a smooth take-off.

KFA being the only local carrier in desperate need for funds, Mallaya’s strategy is well placed. With great precision, he is busy knocking down the dominoes, one by one, by grounding about three quarters of the airline’s fleet, rolling-back almost all international operations, delaying or defaulting on salaries and outstanding payments, making it look like a house of falling cards. A possible illusion, that is being propagated through the media into creating pressure points for the government to seal the deal on the new FDI policies on aviation. The final domino, Business Standard says is that, “The overall impact of all these moves on increased air-fares is only adding fuel to the fire, further mounting pressure on the government to clear the policy, while it keeps consumers’ interests in mind.”

While this conjecture could easily be laughed off, an acute study of recent developments do seem to fit in like pieces of jig-saw puzzle that do not suggest otherwise. For example, just days before IPL-V, Mallaya managed to compensate his employees and within a few days managed to persuade the DGCA into not cancelling the airline’s licence and further convinced the tax authorities into thawing his bank accounts on the pretext that his airline can be revived.

Now unless Kingfiser Airlines, our desi damsel in distress, has suddenly been blessed by an angel, we might as well wait and watch as the government paves the path for a white knight in shining armor to come to its rescue.


By Dipaksh:

A couple of months ago I bumped into a friend who was reading a book titled “If God was a Banker”. I was intrigued by the title and mused how God will function as a banker; will he go for a private bank, foreign bank or our typical nationalized bank? If things were the usual then he would be one among the many aspirants for government-owned bank jobs and write many such exams. One fine morning his father (one among millions of our Gods) will hug him with the newspaper in hand which is declaring the results, and his mother will stuff his mouth with sweets wiping away tears of joy with her saree palloo. So he will be the son of every Indian middle class father’s desire and needless to say, perfect groom material. So Mr. God will start his career with oiled hair neatly parted and a lunch box in hand. He will see many springs of life in his 10-to-6 job (actually 10-to-8 in disguise) trying hard to maintain a balance with work and family. He will leave for his office while his kids are in bed and by the time he will be back they will again be in bed. So he will be cocooned in one such typical bank employee routine for many years. Finally with salt and pepper hair, swallowing lump in the throat, he will take retirement and proudly say, “It was a fulfilling job”.

This caricature of a bank employee seems ridiculous and quite filmy, unfortunately it’s true. Leave aside the glamorous private bank and foreign bank jobs; the condition of public sector bank jobs in India is pathetic. Prolonged working hours, bad working culture and slow career growth are some factors among many.

India remained untouched by the Global recession which hit the world in 2008 and our economists articulated the resilience possessed by our banking industry in this hard time. Kudos to Indian banking industry! Indian banking tree consists of RBI as central regulatory body with commercial banks and cooperative banks. Cooperative banks in turn are divided into urban and rural. Rural cooperative banks take care of agriculture, the foundation of Indian economy.

The country’s banking sector has made progress over the last five years, as is evident from many parameters, like annual credit growth, profitability, and trend in gross non-performing assets (NPAs). But when alone our public sector banks own 65% in the credit portfolio, its responsibility becomes crucial in the future and progress of India. Emergence of IT has changed the entirely the stereotype banking. From net banking to mobile banking, we have plethora of such services which have revolutionized the way we live.

Having adopted information technology, many public sector banks still seem trapped in old ‘government job’ notion and resist new changes, especially in terms of work culture. While private banks adopt new methodologies to lure customers, our public sector banks have same old pedagogy to follow. Our public sector banks are major foundation our economy and with changing times they need to rejuvenate themselves like the private or foreign counterparts, thus giving India a new momentum. So I genuinely believe healthy and professional work culture is the utmost requirement for public sector banks today. Instead of making an employee sit idly for hours together, inspiring them to be productive and tech savvy will be far more fruitful. Periodical appraisals and recognition for good work will lead to greater returns rather than making it a typical slow growing, take-for-granted government job. It’s a dismal picture that once a job of reputation is losing its value. So nowadays there is huge change in career priorities of youngsters, they prefer to experiment with their careers rather than settling and languishing in conventional government jobs.


By Rohan Singh:

Last Monday, Facebook announced its acquisition of Instagram for a staggering $ 1 billion in cash. The announcement was greeted with a flurry of likes and shares of the original post by its CEO Mark Zuckerberg. And then the battering started, which went on only for a little while. “Is he insane”- was the first reaction; “shelling out a f**kin billion dollars for something that was last valued only at about half the price”.

But a closer scrutiny gives a viable vindication. Instagram, with its 30 million subscribers on the iOS and the Android platforms is worth the amount FB shelled out. Mathematically speaking, at a $1 Billion buyout, each Instagram user has been acquired for around $ 33.33. FB, on the other hand claims to have about 850 million active users and is being evaluated at about $100 billion (when its IPO hits the market on 16th of May) giving it a value of $118 per user. So they managed to acquire these passionate, mobile caressing, active Instagram users at a rather low sum.

That’s what FB precisely had its eyes. ACTIVE MOBILE USERS. The application is purely mobile based which is the bang-on reason for FB to acquire it. As of today, the social networking giant doesn’t make any money from its mobile subscribers. This is bound to change with it acquiring Instagram. Once its much awaited IPO hits the market, FB’s valuation may fall for a short while and that’s when Instagram will come to the rescue of its new master. Monetization on its mobile clients would be the new revenue source for the website.

Not to forget, Instagram was itself a cardinal bluff to FB’s market dominance- to the extent that this application was on its way of becoming the main way people would take and share photos, especially over mobile. Thus Zuckerberg took the opportunity of controlling the future of mobile photo sharing by purchasing the company itself. There was no alternative. Any amount is justified for buying out a threat that could slit your throat in the near future.

Moreover, it’s sole domain, until an year back- the social webspace- is being encroached upon by Google in the form of Google Plus. Another endeavor of the search engine- Google Glass may be available to netizens soon. It would mean instant clicking, tagging and sharing of photos without even moving a finger.  Now that would be perilous for FB which is built entirely around the way we share our photos. With something like Google breathing down its neck, any internet giant (or a minnow when compared to Google) may feel the heat. So, it’s all about the web dominance in the long run.

In short Mr. Zuckerberg’s weekend shopping was an answer to Google Plus, Google Glasses and Instagram itself. Smart move. You are here to stay Mr. Connector. Good Luck!



By Shivangi Singh:

From a very tender age, we are told fables of handsome princes and beautiful fairies that live in grand palaces or dream-worlds with all things shiny and pretty at their disposal.  Somehow, this childhood fetish remains a weak point for all of us and could manifest in the form of adults collecting Barbie dolls, brands focused on the packaging more than the quality of the product, or as in most cases, as simple and common as brand consciousness amongst the youth today. Irrespective of the reason or the cause, this new-found beauty obsession is dangerous.

Take a stroll through local markets, and you will find exact replicas of all the latest designs you saw in branded showrooms and what’s more, even the fabric quality isn’t much different. These flea market retailers even have a collection of labels from all different brands which can be stitched onto the garments. The only real difference lies in a few extra zeroes at the end of the price tag of the branded clothes. While plagiarism and duplicity are uncalled for, a situation like this makes one wonder what are we actually paying for- the clothes or just a name? The metropolitan crowd is especially brand loyal and surprisingly so! The bigger question, hence, is what triggers a person to go into this cycle of financial destruction of the self? Believe it or not, the answer is: our distorted sense of beauty and the fetishism with “everything fancy and everything bright, everything in a pretty package and everything that’s pleasing to the eye”.

The mantra for successful sales these days is: What catches the eye gets the attention. Anything boring, dull or unfashionable is discarded. From cement to garments to educational institutes to real estate to men’s shaving cream, every advertisement these days has a female model, and whether they are actually required for the concept or not is altogether a different issue. This speaks volumes about how obsessed the world really is with beauty and how marketing media is exploiting the same for their vested interests, by seducing us with pretty pictures promising happiness and good times only to be disappointed later, after being thrown-off financially. The fetish is growing like wild fire. Every job interview now-a-days requires candidates to look like runaway fashion models, complete with “professional make-up”.

From aesthetically-appealing surroundings, to good looking attendants and glossy magazines with incomprehensible names for over-priced eatables – the organizations these days, be it airlines, resorts and spas, hotels or I.T. companies, are leaving no stone unturned in luring their way into customer’s pockets. In our weakness the profiteers have learned an invaluable lesson and they are not willing to stop. It’s up to us, hence, to know better and to judge better; be more aware as citizens and individuals. If it’s so easy to seduce our souls then how can we call ourselves responsible and/or moral? How different are we really from a kid lured by sweets and unable to see reality?

The twisted ideas of beauty have played enough games with our minds. It’s time they stop. One must never go by the advertisements alone and trust one’s own judgment because the chances of fraud are very high. It’s very important that customers make an informed decision now more than ever. With the World Wide Web to our rescue, it has made researching for the best deals a lot easier, but also it makes cheating easier for the fraudulent organizations.  It’s very easy to fall into a honey-trap so prior to making a purchase, weigh all pros and cons. In light of all the relentless effort at selling beauty for vanity’s sake alone, it’s entirely inappropriate to throw bundles of green-seeking visual orgasm. A picture is maybe worth a thousand words, but not when it has been “photoshoped “ to perfection in order to assail the customer’s senses and take over them completely. It’s okay to appreciate natural beauty but not when it comes at a cost, literally.

Emerging India

By Shreya Sikaria:

At the stroke of the midnight hour, when the world sleeps, India will awake to life and freedom.

It all started in the monsoon of 1947, when the sub-continent of India was born amidst great turmoil. Immediately, a Constituent Assembly sat down to make the Constitution of our country. Two years later, what we ended up with was a summary of the strong provisions of the Constitutions of all over the world. Looking at it from another point of view, we can also say that we just copied down points from everywhere, not making any changes or amendments, to make our work simple. It resulted in the longest constitution of the world. This has given more problems rather than solutions until now. The implementation of all the laws listed in The Big Book is tough, and this is also resulting in the delay of implementation of policies. Thus, though our long constitution a lot to offer, we will have to wait till implementation proceeds more quickly.

Our country has a threefold distribution of power, so that power is not concentrated in one hand. This makes our judiciary move slower than a snail’s pace. It has been 17 years since the blasts in Mumbai, and 9 years since the attacks on the Parliament, yet the criminals roam about freely in some part of the world. The mercy petition of Afzal, which was submitted in the term of Dr. Kalam, is pending with our present President. We take 15 years and counting to prove a criminal to be guilty of his charges. This is the reason criminals are unafraid of their actions and dare to roam scot-free in our country — they know that even if they are charged, it will take a lifetime to get the file to pass through the Indian Judicial system. And the political influence in Judiciary does not help even one bit. It rather puts envelopes the criminal politicians in a protective shield, as they feel the masters.

India is being sought after by multi-nationals to set-up offices here, one reason is the human capital that we have got. We are responsible for the smooth functioning of industries in many parts of the world. Even history has proof — the zero, calculus, trigonometry and even language developed here much before any other nation. The heliocentric solar system, cosmetic surgery and round shape of Earth were nothing new for us when proposed. And yet, the irony of the matter is that a Cabinet of Ministers, some of which lack basic civic sense and social behaviour, are governing such a country. Thus, uproars in the House, disrupting proceedings and un-parliamentary language are the order of all our Houses across the country. And why is this happening to us?

First of all, we are not keen enough to ask these questions. We actually do not care. Secondly, we are allowing it to happen. We are wasting the power that rests within our hands, by the Constitution. We are squandering the power of vote, wasting all those votes, which eventually lead to election of any Tom, Dick and Harry who starts deciding things for us.

The Indian citizen, living abroad, can never even dream of spitting on the road in Dubai, bribing the government officials in USA or littering on the road in Singapore. It never even comes to that situation there, as we become ‘responsible’ citizens. But the moment the flight lands in one of the international airports of India, suddenly these traits become our birthrights. We care about all other nations of the world, we care more about East Pakistan’s independence than our dwindling economy, even though we get cross border terrorism from there and the fact that we took Pakistan as enemies for life. We care about China being admitted in the United Nations rather than cementing our own position in the Security Council. Philanthropy is good, but ‘Charity begins at home’. And yet, we all sing ‘Saare jahan se achha, Hindustan hamara’.

There is a glaring economic disparity in our country. Look out of a high rise in Gurgaon, and we see more slums than buildings. Many a million people in their lives might not have chanced upon a 1000 rupee note. And here, we have politicians being garlanded with crores of those, in the name of Rural Development. This is as low as it can get.

This is disgusting, and has to stop. It’s high time we took the onus on ourselves to steer our country to a new horizon, towards Dr. Kalam’s 2020 vision, towards the moment when, as Rahul Gandhi said, “India starts affecting the world.”


By Raviraj Anchan:

Despite the slowdown in the global economy, the Indian export sector has shown a commendable growth in its exports in the past years. India has a major landmark in exports of Gems and jewellery, textiles, engineering goods, chemicals, leather goods, etc. Exports in India have a major share towards the country’s GDP (Gross domestic product- an indicator to measure the health and size of the economy). Many large and small scale industries have been showing consistent performance in their overseas sales.

2012, however, would be a year of major challenge to this sector as fierce competition lies ahead from industries across the globe. The Government here has to input facilitative norms to the export sector in order to provide a suitable platform for consistent increase in the country’s exports. FIEO (Federation of Indian Export organizations) has already started pushing the RBI to improvise its credit policy for rising liberal lending norms for the export sector. India is also seeking membership of four export control regimes which will give the country the power to decide on export control issues and to organize the country’s export regulations on high International standards.

Market dynamics are continuously changing, and therefore Export organizations have to tighten up and have to show tremendous improvements in the quality of their goods and services. There should be common platform for Indian exporters to get to share their views, trade ethics and practices with other exporter organizations, which would help creating more opportunities for Indian exporters to create worldwide business and trade. We hope that 2012 should be a successful year for our Indian exporters and they would thoroughly utilize all their resources in order to collectively uplift the growth of the Indian Economy.


By Nitum Jain:

As Kingfisher Airlines is trying to keep its head above water, the travel portals refuse to suffer losses alongside. Kingfisher has been muddling through financial soup for a while now and as it struggles to pay off its debts, it has started to make fliers distrust the airline and hesitate from flying with it, despite Kingfisher accounting for one in every five flights in India. This was once the second largest Indian carrier, but has now reduced its massive operation of 460 flights with 64 airplanes to a humble 100 flights with 16 planes; and despite submission of multiple fight plans, the airline has been unable to keep to them, further reducing its ticket sales due to disgruntled customers.

The International Air Transport Association suspended Vijay Mallya’s airline from its inter-airline transaction body ICH (IATA Clearing House) and BSP (Billing and Settlement Plan) accounts on March 9 because of its pending dues. This prevents the airline, which used to sell more than 80% of its capacity through travel portals, from selling tickets directly through them anymore. These portals had spent huge amounts of money to stock up Kingfisher inventory, and now are trying every way possible to get rid of the very same inventory as soon as possible with minimum losses.

Kingfisher, along with the portals such as, and, has devised a plan to employ the business strategy of Opaque Fares. This has been put to exercise since last November, where money-conscious customers are lured by amazing cheap fares and large discounts for different sectors; however, the name of the flight is not disclosed until the monetary transactions have already been taken care of.

It’s the passengers here who are finally at loss considering the irregularity of the cash-strapped airline’s flight schedules. Cancellations have been a common occurrence with Kingfisher since the past few months, and this will leave any customer who lands a flight with the airline through this deal anxious rather than enjoying the money they saved on it.

While many such portals are actively catering this scheme to its customers, some are sceptical and do not want their customers to go through the distress of a bad experience which might injure their goodwill in the market in the long run. As for now, the scheme is working, if it will make a dent in the huge losses that Kingfisher has incurred, we are yet to see.

Youth Ki Awaaz1

By Pradyut Hande:

The Indian economy continues to register respectable growth rates, given the predicament of a sluggish global economy. Consequently, with a substantial increase in the levels of disposable income, consumption trends have also undergone a gradual metamorphosis both in urban and rural India. Urban India in particular has spawned a new generation of educated, dynamic, globally sensitized, highly aspirational and ever burgeoning socio-economic collective that I call the Neo-Indian consumer. Within the age demographic of 15-35 years and drawing upon its predominantly middle and upper middle class background, the Neo-Indian consumer is more receptive to the morphing socio-economic scenario, both on a domestic and global level. For him, consumption is fuelled by an amalgam of demand, need, curiosity and comfort. Quality is of vital consequence. This rapidly growing consumer base in an emerging economy propelled by sound free market ideals provides more than a fabulous window of opportunity for companies to suitably position themselves by offering a diverse and demand specific range of products and services. Set in this backdrop, I have chosen to view the Vending Machine market in India through a more discerning lens with an accent on the Neo-Indian consumer profile.

Ever wondered how much potential the Vending Machine that gives you a steaming cup of Coffee at the Railway Station every morning or evening holds? Well, I certainly gave it some thought! The Vending Machine market in India has been around for more than a decade and a half but has shown uninspired growth as such. The initial rudimentary machines gradually gave way to more sophisticated and reliable setups but the market as such failed to take off. However, off late, in the backdrop of the emergence of the Neo-Indian progressive consumer and other favorable socio-economic undercurrents; the market has begun to show great promise. Given the potential target consumer base primed for consumption, sale of products through Vending Machines is touted to reach $ 1 billion by the end of 2012. Estimates suggest that only 12 — 15 % of the entire market has been tapped thus far. Furthermore, a majority of the revenues generated accrue through the sale of hot beverages such as Tea and Coffee and Soft Drinks. This presents Vending Machine manufacturers, operators and FMCG companies as such with a huge opportunity to target a largely untapped market.

Automated Vending Machines in particular are becoming increasingly popular in the Indian context. These compact setups that are generally 4 — 6 ft. in height, occupy an area of 4 — 6 ft. These cost Rs.1, 40,000 — 10, 00,000; depending upon the level of refrigeration and order customization. These are generally stocked with a relatively diverse product range inclusive of packaged snacks, food items, candy, confectionary, beverages, stationery and certain other high consumption FMCG items. Predominantly installed at Railway Stations, Airports, Colleges and other Educational Institutions, Petrol Stations, Malls, Offices and Hospitals; the Automated Vending Machine presents a lucrative option for market players to effectively cater to an existential latent demand.

So, what is it that makes these machines a hugely viable and enticing proposition? The following are the merits of Vending Machines as efficient marketing channels —

– The Neo-Indian Consumer Factor: For starters, the emergence of the Neo-Indian consumer driven by changing lifestyle and consumption patterns and the percolating consumerism effect has created a burgeoning market and increased demand
– Greater Distribution: Manufacturers and companies alike benefit by utilizing Vending Machines as an efficient distribution channel for their products by appropriately locating them in spaces liable to see high footfall from the target demographic
Increased Market Penetration: At a fraction of the cost incurred, these machines provide companies with the chance to penetrate new markets without the hassle of hiring too much labor. These machines bring the company one step closer to the eventual consumer; thereby, serving an intermediary role
Enhanced Visibility: Companies willing to sell their products through Vending Machines stand to gain from increased visibility in an already cluttered market. Hence, the machines not only serve as a distribution unit but also serve as a display unit; creating enhanced visibility and brand recognition
– Effective Advertisement Platform: In addition to just merely offering products for sale, the machines also serve as an effective advertisement vehicle; thereby, aiding companies to establish a more holistic interface with the consumers and ensure higher brand recall in the long run
– Silent Salesman: Bereft of any human intervention whilst selling, the machines negate the adverse implications of low productivity as a consequence of employee leave, holiday or strikes. These machines function 24 hours a day, 365 days a year serving customers
– Guaranteed Quality: Vending Machines store quality products in a quality, safe, secure and hygienic environment. This also reduces the chances of adulteration and duplication that can hurt the prospects and credibility of the company per se.

Now despite the many advantages that this avenue presents to multiple stakeholders; the market is fraught with myriad challenges that have hindered its progress and may continue to do so unless addressed at the earliest. Some of these developmental impediments include —

– Availability of relatively cheap labor that fuels the proliferation and operations of Stores and Canteens. These serve as indirect competition
– Lack of usage despite access to automated machines owing to absence of technical knowhow, trust and other psycho-social variables
– Issues pertinent to currency recognition; prices of products within the country is such that making payment through coins is inconvenient and unfeasible at times. A proper currency recognition system which accepts and gives back currency in both notes and coins is vital. Also, alternate payment channels via cards and mobiles could be explored later
– Threat posed by vandalism and inconsiderate usage
– Lack of regular repair and maintenance and replenishment of these machines can render them unfit for operation; thereby, undermining the entire Endeavour

Indubitable is the fact that the Vending Machine market in the country as well as other emerging economies such as China, Mexico, Brazil and South Africa is poised for significant growth in the years to come. However, the industry will be able to fulfill its latent potential only if the aforementioned challenges are taken cognizance of. It will come down to handling the Neo-Indian consumer transition from curiosity to convenience to habit driven consumption through Vending Machines. What it boils down to is whether the market players are able to leverage their core competencies with a strong customer orientation and expand market coverage in the future.

A Vend in the Road is certainly here. We just have to tread on it productively now.

Tax Woes

By Raviraj Anchan:

The service tax was introduced way back in the Finance Act, 1994; on many services rendered in India. The intention to introduce this Indirect tax was to find new avenues to generate revenue for the country. Initially, service tax was charged on few services like telecom systems, Insurance and stock-broking services; however, since 1994, there were several amendments made in the tax rates and the services which would come under the liability to pay service tax.

In order to obtain additional revenues, the finance minister Pranab Mukherjee  announced a raise in the service tax from 10% to 12% in the Budget for 2012. This hike in the tax service tax rate has made the services in India more expensive. Many sectors would be facing a negative impact due to is also expected to go up, and telephone bills and restaurant bills would also increase. Travel, tourism and the hospitality sector would be hit hard by this amendment. The real estate sector is also not being spared, as the cost for new houses would increase due to the increase in the cost of construction.

As this issue is expected to disrupt the Indian economy to some extent, it is more important to see how the service providers who have been affected by this hike in the service tax rates will manage to balance out the burden of this tax hike. It is more likely that the burden would be ultimately passed to the consumer, but on the other hand, the service providers would also be facing an issue of competition from their foreign counterparts, as their services would seem to be comparatively more expensive than the latter’s. This is thus ultimately to unfavourably affect Industrial growth in the country.

The Government needs to take into consideration the levels of discomfort which would be caused to the service sector due to changes in the revenue system and the problems caused to the consumers; and therefore needs to take crucial measures to resolve this important issue.


Indian economy

By Ankit Varma:

I was born in an India which was on the edge of economic hopelessness, opportunities were hard to come by and dreaming was a luxury. Like a set of responsible middle class parents, my mother dreamt of the day her son will have a loving wife and kids and my father’s dream was of seeing his son work for the local Steel Giant. But in some corner of the North block in the capital city of Delhi, Mr. Mannmohan Singh had other plans for me and others who belong to my generation. He was drafting renovation plans for a near-dead economy but I’m not sure if he realized that he was unleashing a revolution. The ‘balance of payment crisis’ and I were born in the same decade. Although I was unaware of its existence till recent times, its extinction was something we should pay attention to. Dinosaurs’ extinction cleared way for humans to flourish, similarly the extinction of economic crisis paved way for hope. The economic reforms started in the year 1991 but little did a toddler know that he was going to be a part of the most exciting journey of India.

Far from the metros, the economic reforms reached the sleepy town of Jamshedpur (which can be equated with any other small-town of early 90s) very late. There was no or very little change in either the lifestyle or disposable income of the people. The only word that can precisely describe the life-style of the city was ‘simple’, no frills attached. Bajaj scooter continued to be the national transport and Maruti 800 a ‘head-turner’. I believe that this simplicity was not an attribute that they had voluntarily chosen, it was more of a by- product of an economy reeling under a debt-crisis and modest disposable incomes. But this was about to change. The economic reforms that had already romanced the big cities of the country were now aiming for smaller pastures.

In my head the year ‘Y2K’ is etched as the tipping point. The new decade started and brought with it new energy, fresh hope and most importantly high salaries. Although very young, I always had the sense of energy which was breaking the usual ennui of the middle class house hold. For a child who has barely learnt percentage and fractions, 6% growth didn’t make much sense. But thoughts of having an air conditioner or a car were clear indications that there was a shift. Away from the booming IT sector of Bangalore and NCR, I entered teenage. For a small town teenager, globalisation manifested itself in different forms, the most visible being Nike, Lays and Nokia. Unaware of absurdly high call rates, I loved playing the good old snake game on the Nokia mobile phone. The undisputed champion of the road Maruti 800 was now facing stiff competition from the Santro and the Indica. New cars were being introduced every day and were flying off the shelf. Scooters made way for trendy motor cycles .The quiet roads of Jamshedpur were swarming with vehicles of all shapes and sizes. As the country inched towards 9% mark, ambitions of people were growing at much higher pace. Ancestral homes made way for luxury apartments. The local market was now home to show rooms of International brands but for me they were just another brightly lit apparel shop which we visited once every year. All this changed on the advent of the satellite television. We got a glimpse of the first world. Steadily burgers and pizzas shunned their junk food tag. The staple attire of cotton pants and shirt were no longer in vogue. People of the developed world provided us with inspiration and guidance. Blue jeans and burgers were the talk of the town. ATM and credit cards were the new toys.

Ironically the education system remained uninfluenced, although I had no clue what I wanted to become in life, my parents were more than glad to make that choice for me. The occupants of an industrial town always have great amount of respect for engineers and the booming IT sector reinforced this. Slowly IIT and engineering became an obsession, coaching classes became manufacturing units. Every year the city honoured the bright minds that made it to the prestigious engineering colleges (but ignored the thousands who did not). Off beat career was unheard of and won no recognition and except for few (talents like Madhavan and Imtiaz Ali belong to this city) most sacrificed themselves to fuel the economy and fulfil their parents dream. Technology was reaching the shores of the city and my people were leaving the home shores in search of education and before I could understand I was part of the rat-race.

On the social front things were looking great. Our town now was now playing host to brands like Van Heusen and Ray Ban, shopping was now a weekly affair. No home was now complete without an army of electronic goods. LG and Samsung literally became the house hold names. Sky scrapers blocked the view of the skies but no one complained because no one these days was looking at the stars, TV made a great substitute. Internet and e-mail made the postman an endangered specie. People were spending generously on health care products which was unheard of till recent times like the much sought after fast slimming potions. Foreign education, luxury cars and villas top the wish list. We are living the dream.

Are we? I have asked this question innumerable times but never found an answer. Is money key to happiness? Are we becoming mere puppets in the hands of capitalism? Have we lost the power to differentiate between the living and non-living? I am sure that these questions have crossed our minds sometime or the other but we have drowned them in loud music or glittering lights. Is this anxiety about the future, cut throat competition, falling health and violence by-product of the economic growth? I don’t know and no one can tell because I belong to the generation which in some ways will be an experiment but what I can say with certainty is that people around me are no longer happy. Modern world offers a never ending supply of anaesthetics to suppress your emptiness. People ask if the rich are becoming richer and the poor poorer. I don’t know because I belong to neither. I have not made any bold decisions in my life so I have lost the right to complain. The economy is still very young and growing at impressive rates, I sincerely hope that it continues to grow for years’ to come. But at the same time each one of us should take time to think and to introspect the meaning of our lives.


India-Pakistan Relations

By Waleed Tariq:

While consecutive Indian and Pakistani governments have often repeated the desire for peaceful relations, reaching over a comprehensive agreement over its long-standing disputes still does not seem to happen, any time soon. Therefore, developing stronger economic ties between the two countries is a way forward.

Since the Partition, both India and Pakistan have been unwilling trading partners, however, recently, trade relations between the two appear to be improving significantly as Pakistan is likely to grant India the Most Favoured Nation (MFN) status. Under the World Trade Organization (WTO) agreements, all member states are obliged to grant equal treatment to member countries with respect to trade in goods. India granted Pakistan MFN status in 1996, but Pakistan held back, citing “strategic considerations”.

So, does Pakistan’s offer matter?

In my opinion, yes it does. It signals determination and goodwill to resolve issues, and build, at last, peaceful and productive economic and political relations amongst the two.

Realization upon Islamabad has come that the region cannot make full use of its economic potential unless peace is given a chance. And to a greater degree, there are encouraging signs so far in terms of the present political configuration in the country is concerned. While the extremist elements have opposed, the dominant political parties in the National Assembly — Pakistan People’s Party and Pakistan Muslim League (N) — have both favoured trade liberalization with India.

As per the Pakistan’s Federal Minister for Commerce and Industry Makhdoom Amin Fahim ‘The purchasing power of Pakistani consumers will increase with the grant of MFN status to India because they will have access to goods at competitive rates.’ The local industry would gain access to the large Indian market with a customer base estimated between 300 and 500 million consumers’. (

Positive sum game for both the countries?

A positive sum game occurs when no one country gains at someone else’s expense and the sum of positives and negatives (wins and losses) are advantageous for both. A fine example of this is the mutually beneficial gains from trade in goods and services between nations. More trade between India and Pakistan will lessen uncertainty, with peace dividends for South Asia and the rest of the world.

Opening up trade will add a whole new dimension of opportunities to the relationship between the two countries. At the national level, the peace dividend is expected to build up as a result of turning aside, the resources from security to development. The nuclear armed rivals have fought three wars since 1947, but when trade between countries improves, the threat of military action is relatively reduced as they have a greater economic stake than to indulge in armed conflicts, i.e. China and the USA. Moreover, increasing trade can significantly raise Gross Domestic Product (GDP) and household incomes in both the countries.

As there is a general agreement over the proposed measures for reducing trade barriers between the business communities on both sides of the border, there is a need of broader constituencies, and greater lobbying in each of the states for an increase in bilateral trade. Trade will obviously not solve all the problems, but will prove to be a catalyst in the hope for peace and lowering of tensions, which certainly is in the interest of the arch-rivals.

Waleed is the Pakistan Lead of Youth Ki Awaaz.


By Ashish Kumar:

One of the primary goals of a taxation regime is always avoidance of “taxation over taxes” or “cascading-effect” of the incident taxes as it adds to the deadweight loss i.e. slump in total surplus of supply chain consisting of supplier, manufacturer, retailer and consumer. These cascading caused due to levy of variety of charges by state and union governments has raised the tax-burden on Indian products and made them less competitive in the International market. The gargantuan-sizes of corporate-taxes owe much to this taxation structure and have led to adoption of tax-evasive practices. The common man finds himself strangled in a Gordian knot of multiple tax-rates, laws and elaborate processes and often fails to comply with these complex legislations. The extra tax paid due to taxation of the already taxed amount is finally bore by the end consumer which is common man and strikes them badly in addition-to inflation.

Cascading effect of taxes is one of the major distortions of the Indian taxation regime. Federal structure of our democracy, allows both states and center to levy taxes separately and this has caused this cascading. While Income tax, Excise duty, Service tax and Central Sales tax (CST), Securities Transaction tax is levied by the center; VAT/sales tax, Entry tax, State excise, Property tax, Agriculture tax and octroi is charged by the State governments. There are many possible transactions which come under the ambit of two or more of these taxes and the value of the second tax is calculated on the value arrived at by adding the value of first tax to the value of transaction. For example, inter-state purchase of goods would attract both Central Service tax and Sales tax and manufacturing and sell would be liable to Cenvat over and above CST.

The prevalent complex, multi-staged and cascading tax-structure steals the advantage of availability of cheap labour and other factors-of-production from India and brings the market-price (post-taxes) at par or above par the price of the international price. The manufacturing industry of India thus is not able to compete with that in China and Brazil. Presently, for industries, the decision of how many inventories to maintain or where to maintain them is guided heavily by the concerns of tax avoidance. Most of the industries maintain warehouses in each state and union-territories to avoid the CST charged on crossing the border. This gives rise to 25-30 warehouses as compared to 8-10 in developed countries and leads to various inefficiencies in terms of space, cost-structure and operations. Extra money is wasted in procuring space for these inventories as well as operating them. This trade-off between cost and quality manifests in inefficient quality to the final consumer. Need to ensure real-time visibility of inventory across the diversified warehouse-network amounts to higher IT cost, Further, multiple handling across the various layers of distribution and multi-layered compliance requirements result in higher material handling and cost-compliance cost. Generally, the numbers of these warehouses being high, their sizes have remained very small and have caused duplication of overheads and have inhibited racking and automation. In short, the prevalent taxation policy has left our industries with no choice but to make do with obsolete and inefficient warehouses and inventory.

Introduction: Good and Services Tax:

In a bid to see-off these complex and obsolete taxation policies and usher-in an era of transparent, fair and legitimate taxation and remove the inefficiencies of supply chain due to such lax policies, India has decided to join the bandwagon of 140 countries already practicing Goods and Services Tax (GST). GST is an indirect tax on goods and services which would be charged on every point of sale in the supply chain and every entrant in the supply-chain would be eligible for input credit of tax which she had paid to the previous entrant for the procurement of goods and services. The sellers or service providers collect the tax from their customer, who may or may not be the ultimate customer, and before depositing the same to the exchequer, they deduct the tax they have already paid.So, the manufacturer will get the input credit of all the taxes paid by them on the raw materials and also on the services.

How does it work?

Let us suppose that the uniform rate of GST is r% and the supply chain. Suppose the manufacturer procures good and service worth of Rs. A and B respectively. Then the supplier is liable to pay r*(A+B). Suppose manufacturer adds some value to the good and its price becomes more than (A+B), say, c*(A+B) (c>1). The tax liability of manufacturer towards the government would be [r*(A+B)*(c-1)]. Looking at the details, one can make out that his total tax liability is r*c*(A+B). But, he has already paid r*(A+B) to the supplier who, in turn, would pay it to the government. The amount r*(A+B) is called input credit or tax and the amount r*c*(A+B) is called the output credit or tax. The difference is the total tax liability.

Let us now consider the case of retailer selling it to the final consumer. He would try to incorporate his profit into the price and hence the price would increase to p*c*(A+B) (p>1). He would charge a total of r*p*c*(A+B) as tax from the final consumer. But, he has already paid tax amounting to r*c*(A+B). So, the retailer needs to pay a total of [r*c*(A+B)*(p-1)] to the government. r*c*(A+B) is the input credit while r*p*c*(A+B) is the output credit.

The total tax earned by the government is r*p*c*(A+B) which equals the total tax-burden on the final consumer. The flow of goods and services is from Supplier to Manufacturer to Retailer to the Final Consumer while the tax-burden flows in just the opposite direction. Never in this mechanism, is tax calculated on any amount which is already taxed. GST is termed last-point retail tax because it is the final consumer who bears the ultimate burden of it.

Consider the present scenario. A dealer from Maharashtra purchases tools worth Rs.L from Andhra Pradesh on payment of CST s% Rs.s*L. When the dealer sells the same tools within the
State, his cost would be L*(s+1) on which adding his margin, sales tax would be charged. If credit of CST was allowed, then the cost would have been reduced by Rs. L*s plus sales tax charged on it. This is an example of cascading effect of taxes. Sales tax is being charged on already taxed (CST) amount.

In order to get credit for the GST paid already dealers must be registered for it and must possess a legitimate tax-invoice. Each dealer would be authorised to issue invoices for the tax paid to her and by showing these invoices input credit can be claimed. If the output-credit is more than the input-credit, the dealer should pay the balance to the government; else if the input-credit is more for that particular taxation-period, the dealer would get a refund. Essentially, each unit of the supply chain become the tax-collection points for the government. Certain goods and services may be declared as exempted goods and services and in that case the input credit cannot be claimed on the GST paid for purchasing the raw material in this respect or GST paid on services used for providing such goods and services. Export of many goods and services is zero-rated and hence the GST paid by them is refunded.

GST is not yet another tax over-and-above whatever already present. GST aims at subsuming prevalent taxes like central excise duty (Cenvat), service tax, and additional duties of customs at the Central level and value-added tax, central sales tax, entertainment tax, luxury tax, octroi, lottery taxes, electricity duty, state surcharges related to supply of goods and services and purchase tax at the state level. Eradicating all these taxes and instead charging an uniform rate of tax across all point of sales in the supply chain is the vision of GST. The uniform rate is the subject of discussion yet but experts suggest that it may lie in the range of 14-16%.


Imports would be subject to GST but the exports are zero-rated, so, exporters needn’t pay any GST. This incentive is bound to bring a boom in exports. Also, the alleviation of cascading of taxes would reduce the price of goods and services in the international market and would hence aid the exports.

Implementation of GST promises many benefits as reduction in the number of taxes at the Central and state levels, cut in effective tax rate for many goods, removal of the current cascading effect of taxes, reduction of transaction costs for taxpayers through simplified tax compliance, and increased tax collections due to wider tax base and better compliance. GST will allow manufacturers to see Indian market as one geographical expanse with no state boundaries which would allow single warehouse for a cluster of 5-6 states. This would cut on logistics as well as inventory costs. It will reduce distortions by completely switching to the destination principle (the tax reaches to the territory where it is sold). It can provide a fiscal base for local bodies to enable them to fulfil their obligations. It will facilitate investment decisions being made on purely economic concerns, independent of tax considerations. GST also promise to offer cash-flow benefits to dealers. The dealer would get the tax payments from their customers as soon as they make sales but need to remit it to the government only when the ta-period i.e. either month or quarter is over. The inventory cost of FMCG companies would be reduced as Cenvat which is included in inventory cost would be abolished and GST paid on the inventory would be credited back as input-credit. Under GST, all goods and services would be subject to tax, unless specifically exempted. Further, it is also anticipated that the number of exemptions would be significantly reduced. Accordingly, the total revenue collections are expected to go up, as already proven by post-GST scenarios in several other countries.

Challenges in implementation:

In general, there are two versions of GST popular- unitary and dual. In the first, only union government collects GST while in second both state and union governments collect GST. India has chosen to adopt dual GST. They will be called Central GST (CGST) and State GST (SGST). Being a consumption-based tax, it is perceived that the less-developed and backward states would get less tax-revenue due to meagre consumption and has thus been opposed by several less-developed states. Some states also allege that by abolishing all the state-levied taxes, the centre is making the states financially crippled and hence is a breach of federal structure of Indian democracy.

The introduction of the GST system is set to be a paradigm-shift in the taxation firmament of India. Consensus and coordination among states is required for it to succeed. Before it can be introduced, the Centre and states have to sort out issues like agreement on uniform GST rates, constitutional amendments empowering states to tax services (services where not taxable in India before 1994 in-spite of the fact that service-sector is the largest contributor to our GDP) , taxation on inter-state transactions of goods and services, drafting of CGST and SGST laws, consultation with all stakeholders including trade and industry associations, administrative and infrastructural preparedness to implement the new tax regime and resolution of all other issues under discussion. Business would also need to change their strategies. They would have to gear-up to prepare new supply-chain infrastructure and attract professionals and experts to harvest the benefits of GST. Some businesses may have to re-work their pricing strategies with the changed tax regime — higher credits coupled with possible change in rate of tax on output.

Currently, an Empowered Committee of State Finance Ministers has been set up to support the implementation of GST. The Centre and states have on agreed to a dual structure for the GST, with multiple rates for goods and a single rate for services.

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