Our lives are so fragile and vulnerable dependent on the monsoon winds. A deflection of even four degrees in the travel of these winds in any year can make for the draught in several States. To this day, with all the economic and technological advancements, the irony is that farmers continue to look up to the sky and pray for the winds and the rains on time; urban cities in their search for solutions for water and power shortages, are so completely dependent on the monsoon for life and living. If the farmer cannot grow food without the winds and the rains, the urban dweller does not get power at home and food at the Mall, without the rich water catchments that either generate hydel power or increase the inflow of greens and cereals into the market.
The rainfall pattern has held for many years on the same. So on what does this pattern depend upon? The Indian sub continent is the only region in the entire world which is dependent on winds that flow 24/7 from across the seas to the land and back again to the Arabian Sea and Bay of Bengal and the vast Indian Ocean that lies beneath. These northwest and southwest monsoon are as old as Time, and travel at a speed of 12/18 Kms an hour. These winds might have taken the present directions after the formation of Himalayas which must be just over 15-20 million years ago; this is nothing compared to the fact that the creation of earth goes back to over 4,000 million years.
Malabar Coast became a leading trading hub and a vibrant passage of cross cultural mergers and dialogues because the sea lanes beyond the borders led the ancients to this place because of the wind movement. Monsoon lands in Kerala in India at the first instance. The guts of wind that herald rain bends and break the Coconut trees, which are very weak or too stiff and upright, but the more flexible ones bend and extend their palm leaves to break the downpour and so many tiny waterfalls hang out from their branches.
Like the self sufficiency in food while mass hunger continues in many parts, it is another great contradiction of India that there is too much water in some areas while draught prevail in others. Distribution is the key word in both cases. Meanwhile, traditional and local water management practices, which sustain the most deprived in remote areas are ignored and damaged by modern development.
The full moon day in the thick of monsoon, is a day villagers come in herds to worship the water itself; the life sustaining element created by the harmonies of nature.
Monsoon if bountiful will push our agricultural output; if deficit, it will hit the food economy. Rainfall in 2009 was lowest since 1972, yet that fiscal accounted for a diminishing 0.2% in output. If monsoon comes, India’s agriculture will regain resilience. Output of Khariff food grains fell by 15% and oil seeds by 5%. Government released the figures that the agricultural growth accounted for 0.2% in agricultural GDP. Are the estimates correct? The Economists, who are policy advisors, have to anticipate problems and suggest solutions before problems turn to crisis. And not justify the crisis as a fall-out of international reasons. Devaluation of the Dollar has been a frenzied monster, and to offset that, the Rupee: Dollar parity should have been narrowed down, which if done, would have angered the business crowd. Our Agricultural policy is ridiculous. Planning Commission and MoA, and the economic advisors of the PM/Finance Ministry have been fooling people. Inflation is directly related to hoarding of food grains. The solution lies in bringing down stocks to appropriate levels, and inventory should relate to food grains required for PDS. Government has no business to buy food grains more than what is required for PDS and that too at the prevalent market rates. Government policy appears to be: give farmers highest prices and give the grains at throw away prices. Traders do not keep any inventories of food grains, and what they did was paid the farmers and allowed the goods to be kept with them, and took them and sold them at savaging prices during mid inflation in food. The price raise has been caused by a plethora of problems, the government needs to accept them and the opposition need to understand them and then evolve effective policies to solve it. Instead, destructive arguments for all the wrong reasons see Parliament adjourned again and again. Government’s only solution appears to be imports of food grains and essential oils. And to curb inflation, its only solution is minimizing Customs duties. It has also banned import of edible oils by canalizing imports and has prohibited all sorts of exports of essential edible oils. With free import of oils from abroad at nil customs duties, the market is invaded nakedly by the imported oils that it sounds death knell for indigenous edible oils. But our agricultural ministry behaves like King Canute, who asked the waves to roll back. Is the Government not acting like King Caunte by asking the monsoons to come? The economists have no other option or armory. Our agricultural minister thinks that agriculture prices are like a 20:20 match. The more the price goes up, the more will be supply. But unfortunately, the Opposite happens!
In the context of Growth Vs Inflation, it is intellectually and methodologically flawed. Economic strategy must reflect high yield, high growth with modest inflation and high employment. When prices were falling globally, Govt adopted an aggressive food procurement programme. When there were enough stocks, the right approach should have been to release that and allow market forces to act. This would have allowed demand and supply equation, and the prices would have been in sync with global prices. Government also did not undertake any global market operations. Food issue was dealt with too many ministries- Finance, Cabinet Committee on prices, NAC, PDS was not good. There is also a need to know behaviour trends like cropping pattern, emerging trends in growth in different crops, weather trends. Food prices are high, Foreign exchange reserves is not a problem, monsoon is good, food supplies are ample available. How to do, what needs to be done and that too, very fast.
We need to restructure the PDS model, as PDS has not been able to perform for the last 60 years.
In a general equilibrium model, you need to operate in both. Demand side is a larger issue, whereas spillover of food inflation into a more of generalized inflation is a core issue. If you have a strategy that is led by consumption instead of investment, then the demand side management is an issue. On the supply side, we need to take care of wastage. More than 45% of the food and vegetables are wasted.
Tuesday, August 31, 2010
No forcible land acqusitions
In deference to the near unanimity amongst the political parties against forcible land acquisitions, the Centre is proposing to bring out a bill which was being considered by the Group of Ministers headed by Agriculture Minister Mr Sharad Pawar. The interest of farmers would be protected through a comprehensive legislation. There were many conversion of agricultural lands for being converted to SEZ. Governments were buying land from farmers at throw away prices and passing them on to the authorities for development, industrialization etc depending upon a Law enacted in 1894.
The Supreme Court in a case filed by an individual whose lands were acquired for public purpose by the State Government by invoking the Special Land Acqusition Act held that when fixing the compensation, the present market value plus the future potential value, the purpose for which the land was acquired and proposed to be used must be taken into account when arriving at the just compensation.
The Court held that today’s market value of the property but the value with reference to the better use to which it is reasonably capable of being put in the immediate or near future. The potentiality of the acquired land, in so far as it relates to the use to which it is reasonably capable of being put, must be given due consideration.
The location of the land that was being acquired, the futuristic developments that are in the pipe line, and the increase in the marketability of the property has to be assessed to arrive at a fair compensation value by prudent examination of the existing, potential and notional increase in value.
The State Government, Central Government, Public bodies acquire land for different purposes citing public purpose as the indent for their acquiring the land. If it is an agricultural land, the body vested with the power, provides NoC to convert the existing agricultural land into general land which can be used even for commercial purposes. The lands have been taken over to build dams, hydro electric power stations, setting up factories, building colleges, setting establishments of Central government, or state government including defence, public sector undertakings, setting up parks, recreation centres, for development of houses under various Schemes, etc. In India, we do not have a Rehabilitation and Resettlement Plan/Act by which displaced persons are given dwelling places on the same scale or model in which they lived prior to the acquisition. A settlement is disturbed, the persons are given dwelling places in four or five different areas, splitting them according to land availability, where there will be no infrastructure and facilities similar to the one enjoyed by the displaced.
In Karwar, when the naval establishment (for Defence purposes) proposed to acquire about 20,000 hectres of land along the sea coast, I did a costing taking into the calculation, the notional value of returns from coconut trees, jack fruits, and areca trees, the notional loss due to the tract of sea front lost for fishermen to fish, and consequent to the setting up of the naval base, an area will be declared as No entry Zone, which will restrict the movement of the traditional fishermen. In North Canara, the land was scarce, hence alternate land was difficult to be obtained. All this, should be factored in the Compensation. The Govt of India was kind enough to accept some of the arguments, and a proposal namely, Greater Karwar Development Authority was suggested. But in the absence of a uniform Rehabilitation policy, along with a Resettlement Act, it would not be possible for the evictees to get instant justice, but the case will drag on. The Government’s late thinking of bringing a law to curb poaching agricultural land and/or acquiring the agricultural land and permitting legal conversion, will go a long way to restrict frequent misue of the public purpose take-over of land. The Supreme Court’s direction has not come a day soon, as it will open up discussion on arriving at a just formula which could be arrived at for uniform implementation on a case to case basis depending upon parameters.
Especially when Right to property has been removed from the fundamental right even though the people who enacted the Constitution where part of the Constituent Assembly on the basis of land holding. The 116 year old Act needs overhaul. Government should Act now. Right now.
The Supreme Court in a case filed by an individual whose lands were acquired for public purpose by the State Government by invoking the Special Land Acqusition Act held that when fixing the compensation, the present market value plus the future potential value, the purpose for which the land was acquired and proposed to be used must be taken into account when arriving at the just compensation.
The Court held that today’s market value of the property but the value with reference to the better use to which it is reasonably capable of being put in the immediate or near future. The potentiality of the acquired land, in so far as it relates to the use to which it is reasonably capable of being put, must be given due consideration.
The location of the land that was being acquired, the futuristic developments that are in the pipe line, and the increase in the marketability of the property has to be assessed to arrive at a fair compensation value by prudent examination of the existing, potential and notional increase in value.
The State Government, Central Government, Public bodies acquire land for different purposes citing public purpose as the indent for their acquiring the land. If it is an agricultural land, the body vested with the power, provides NoC to convert the existing agricultural land into general land which can be used even for commercial purposes. The lands have been taken over to build dams, hydro electric power stations, setting up factories, building colleges, setting establishments of Central government, or state government including defence, public sector undertakings, setting up parks, recreation centres, for development of houses under various Schemes, etc. In India, we do not have a Rehabilitation and Resettlement Plan/Act by which displaced persons are given dwelling places on the same scale or model in which they lived prior to the acquisition. A settlement is disturbed, the persons are given dwelling places in four or five different areas, splitting them according to land availability, where there will be no infrastructure and facilities similar to the one enjoyed by the displaced.
In Karwar, when the naval establishment (for Defence purposes) proposed to acquire about 20,000 hectres of land along the sea coast, I did a costing taking into the calculation, the notional value of returns from coconut trees, jack fruits, and areca trees, the notional loss due to the tract of sea front lost for fishermen to fish, and consequent to the setting up of the naval base, an area will be declared as No entry Zone, which will restrict the movement of the traditional fishermen. In North Canara, the land was scarce, hence alternate land was difficult to be obtained. All this, should be factored in the Compensation. The Govt of India was kind enough to accept some of the arguments, and a proposal namely, Greater Karwar Development Authority was suggested. But in the absence of a uniform Rehabilitation policy, along with a Resettlement Act, it would not be possible for the evictees to get instant justice, but the case will drag on. The Government’s late thinking of bringing a law to curb poaching agricultural land and/or acquiring the agricultural land and permitting legal conversion, will go a long way to restrict frequent misue of the public purpose take-over of land. The Supreme Court’s direction has not come a day soon, as it will open up discussion on arriving at a just formula which could be arrived at for uniform implementation on a case to case basis depending upon parameters.
Especially when Right to property has been removed from the fundamental right even though the people who enacted the Constitution where part of the Constituent Assembly on the basis of land holding. The 116 year old Act needs overhaul. Government should Act now. Right now.
Why guarantee employment, when unemployment dominant?
Many years ago, perhaps in the sixtees, there was a migration of white collared like typists, stenographers, to Mumbai the land of Opportunity. Like United States, Bombay was the land of many migrants who have made it one of the best cosmopolitan cities in India. This is old story.
Today, there is migration of labour to hot spots in South India. Not migration, rather an exodus. The wheel of the circle has changed 360 degrees.
The Government of India feels that there is large scale un-employment. They promulgated the Scheme, the Mahatma Gandhi (National) Rural Employment Guarantee Scheme, which gives a fixed wage for 100 days in a year to a particular individual. Does this Scheme open the door for further opportunities? Or does its tail end there?
Unemployment? Under employment? Voluntary unemployment? There are people with necessary qualifications and aptitude. Due to lack of sophistication or naïve manners, they do not get appropriate employment. There are others, who do not want to do employment. If you ask them why, they tell you, why should we work? We have enough at home. Or our brother is there in the Gulf. He is sending regular money. There are auto stands where a number of autos will be parked. You get into the first auto, the driver will come after a lapse of time and will tell you, ‘I am not going, get into the next auto’. This is the case, if you hail an auto which is passing by. You have hardly a requirement of an electrician for half-an-hour for a small repair. You search and search. You won’t find a single electrician. The same thing with a plumber. The worst is your search for a Computer mechanic. Worser still for the internet service provider or TV channel provider.
There has been major shortage of manual labourers in the agriculture, hotel, service industry, small shops, households, etc. Getting local labourers who are just not available is a serious problem. All the demands of the domestic sector, catering, hotel services, sales, maintaining of huge walls, dormitory works of hospitals, security agencies, house hold chorus, there are not enough people available. Nepalese gurkhas have earned a niche for themselves in the Security service and most of them have left their homes becomes of insecure uncertainty in the Himalayan Kingdom.
Most of the migrant labour makes a beeline to the construction industry. It might be a pride for this lot, as they were the major workers who saw the construction work of the Tamil Nadu Assembly Secretariat building complex at Chennai. Construction industry remains in the throes of workers from Bihar, Orissa. They neither come without any formal education nor acquire any skills. Their skills are self acquired, and are brought to the various southern cities by middle men who bring hoardes of fresh hands from Bihar, Northeast, Orissa and other far off States. There is acute and major shortage of manual labour whether it is agriculture, hotels and services, cleaners, semi skilled unorganized labour, cooks for households, gardeners, due to diminishing local supply of labour. Domestic servants are difficult to get. It is said that in Kerala, people who climb coconut trees have come down drastically, with the result the cropping cycles have changed to once in 4 months from 2 months. Migrant labour is an important ingredient of the manual labour scenario. Local boys and girls opt for more skilled work, call centres, telemarketing, field studies, sales boys and girls making a bonus through their sales in addition to their salaries. The qualified youth have moved up the employment chain. They are prepared to sit on the bench in expectation of white collared job.
Another advantage for these agents who involve migrant labour which constitute around 20% of the labour force, these labourers do not come under any labour laws, they have intimidating working conditions, no fixed working hours, low wages and are over-exploited. But since they are mostly in the un-organized sector, with language problems, they hang on. Taking advantage of the labour boom, some undesirable elements like criminals, law breakers also come in their wake. Since these workers do not have a permanent address, there was a thought that they must be given an identification card, their details collected, their photo videoed and their details must be catalogued through Computer.
New pastures present itself with greater opportunities. New development
would draw more industries, ventures, and investments. For completion of these, manual labour is required. The law of demand and supply takes over. New herds of unskilled labour migrate and learn the various skills. When they go up the value chain, another wave of migrants come. Which ever place is in need of labour, workers in anticipation of jobs converge on that place. They will work to earn their livelihood. If such is the case in the labour scenario, why should government bring in schems like employment gurantee scheme? Labour is in shortage. There is demand for more and more labour. Shortage makes it more complex. Why should anybody guarantee employment when employment opportunities are available in plenty?
Today, there is migration of labour to hot spots in South India. Not migration, rather an exodus. The wheel of the circle has changed 360 degrees.
The Government of India feels that there is large scale un-employment. They promulgated the Scheme, the Mahatma Gandhi (National) Rural Employment Guarantee Scheme, which gives a fixed wage for 100 days in a year to a particular individual. Does this Scheme open the door for further opportunities? Or does its tail end there?
Unemployment? Under employment? Voluntary unemployment? There are people with necessary qualifications and aptitude. Due to lack of sophistication or naïve manners, they do not get appropriate employment. There are others, who do not want to do employment. If you ask them why, they tell you, why should we work? We have enough at home. Or our brother is there in the Gulf. He is sending regular money. There are auto stands where a number of autos will be parked. You get into the first auto, the driver will come after a lapse of time and will tell you, ‘I am not going, get into the next auto’. This is the case, if you hail an auto which is passing by. You have hardly a requirement of an electrician for half-an-hour for a small repair. You search and search. You won’t find a single electrician. The same thing with a plumber. The worst is your search for a Computer mechanic. Worser still for the internet service provider or TV channel provider.
There has been major shortage of manual labourers in the agriculture, hotel, service industry, small shops, households, etc. Getting local labourers who are just not available is a serious problem. All the demands of the domestic sector, catering, hotel services, sales, maintaining of huge walls, dormitory works of hospitals, security agencies, house hold chorus, there are not enough people available. Nepalese gurkhas have earned a niche for themselves in the Security service and most of them have left their homes becomes of insecure uncertainty in the Himalayan Kingdom.
Most of the migrant labour makes a beeline to the construction industry. It might be a pride for this lot, as they were the major workers who saw the construction work of the Tamil Nadu Assembly Secretariat building complex at Chennai. Construction industry remains in the throes of workers from Bihar, Orissa. They neither come without any formal education nor acquire any skills. Their skills are self acquired, and are brought to the various southern cities by middle men who bring hoardes of fresh hands from Bihar, Northeast, Orissa and other far off States. There is acute and major shortage of manual labour whether it is agriculture, hotels and services, cleaners, semi skilled unorganized labour, cooks for households, gardeners, due to diminishing local supply of labour. Domestic servants are difficult to get. It is said that in Kerala, people who climb coconut trees have come down drastically, with the result the cropping cycles have changed to once in 4 months from 2 months. Migrant labour is an important ingredient of the manual labour scenario. Local boys and girls opt for more skilled work, call centres, telemarketing, field studies, sales boys and girls making a bonus through their sales in addition to their salaries. The qualified youth have moved up the employment chain. They are prepared to sit on the bench in expectation of white collared job.
Another advantage for these agents who involve migrant labour which constitute around 20% of the labour force, these labourers do not come under any labour laws, they have intimidating working conditions, no fixed working hours, low wages and are over-exploited. But since they are mostly in the un-organized sector, with language problems, they hang on. Taking advantage of the labour boom, some undesirable elements like criminals, law breakers also come in their wake. Since these workers do not have a permanent address, there was a thought that they must be given an identification card, their details collected, their photo videoed and their details must be catalogued through Computer.
New pastures present itself with greater opportunities. New development
would draw more industries, ventures, and investments. For completion of these, manual labour is required. The law of demand and supply takes over. New herds of unskilled labour migrate and learn the various skills. When they go up the value chain, another wave of migrants come. Which ever place is in need of labour, workers in anticipation of jobs converge on that place. They will work to earn their livelihood. If such is the case in the labour scenario, why should government bring in schems like employment gurantee scheme? Labour is in shortage. There is demand for more and more labour. Shortage makes it more complex. Why should anybody guarantee employment when employment opportunities are available in plenty?
Saturday, August 28, 2010
Fair and fast Judicial reforms
Indian judiciary, one of the pillars of the Indian Constitution, was venerated, respected and believed to be conscience keeper of the Country’s constitution. Certain land mark judgments, which recognized the right of the individual over absolute Power, independence of the IV estate and Executives invasion into the freedom of the Press had been considered sacred by the Courts, even Courts looked into certain legislative actions from the strict eyes of Law and juristic covenants, precedents and templates, have bee lauded and respected. It acted as an accountable body protecting the fundamental rights, the Courts struck acts and laws transgressing the limits of the Constitution, and kept up its supremacy.
However, when the Governments at the Centre and States started tinkering with Laws, and any arbitration between Centre and states, states and States, States Vs individuals were referred to the Courts for adjudication, the Executive wantonly transferred its responsibility to Courts. When even administrative matters were not solved on the basis of Driot Administratef, Central Government and State Government Rules, but referred to Courts,. Examples of this are Ayodhya dispute, Cauveri Water dispute, etc were referred to Courts for its arbitration. There are many issues which had been referred by the President of India to the Supreme Court for its clarification, Courts naturally became highly pro active, and took upon itself, cases which normally should not have been admitted. The Public Interest litigation was easy route for anybody to approach the highest Court of the land, whether the applicant had prima facie interest and affected by a particular order or action of the government, he surpassed the usual channels of law available to him, and knocked at the Supreme Court whether he was bona fide affected or not. This PIL later became a nuisance, and Supreme Court had warned the petitioners not to file vexatious PIL without sufficient reasons.
The present judiciary is losing common man’s respect for obviously many reasons. Cases have been piled up in the lower Courts, higher Courts and Supreme Courts for ages, there are corruption charges against Judges of the higher Court, there are impeachment proceedings against some Judges, some judges involved in the PF case have brought shame to the judiciary. Criticism of one judge by another pusine judge through twitter or speeches have become common, there are parallel trails by the visual media 24x7 which prejudices the Case and one of the sad repercussions of these are loss of faith by the litigants on Courts which is supposed to dispense Fair Law. There have been past judgments which have been reversed 360 degrees by higher Courts. The recent incidents involving some of the sitting judicial officers for their Post Graduate legal examination at Andhra Pradesh were caught red handed copying by a CCTV camera is a shame on the entire judicial system. If a judicial officer who should administer fair justice indulge in incorrect procedures, who will give justice to the litigants? Can litigants have faith in such judicial officers or the judicial system?
There are also reports that appointments to the High Courts and Supreme Courts and transfer of High Court judges from one state to another are not fair. Good lawyers do not want to become Judges. Another factor in delay in delivering Justice is shortage of Judges. Even cases filed in the Fast Track Courts are unusually delayed.
There is a need for overhauling reforms in Judiciary. The left over of the colonial past including Rules, regulations, acts, laws have been a stumbling block to deliver Law in these days when speed is a necessity. Globalization has changed global laws. World has changed. There are States or nations which indulge in Wars. There are non state actors who indulge in terrorism acts or take Law into their hands. Whether these acts are out of frustration, economic backwardness or political thinking is another matter. Judges are human, they can commit mistakes. But when some of the judicial officers think that they are conferred with infinite powers, they should be told that there are checks and balances in the judicial system. There are many acts of indiscipline within the Court rooms. The Judges are accountable to the system and Rule of Law. They are also accountable to the Constitution of India. They must be mild in their observations for the litigant who has obeyed the Law and stringent in their language against law breaker. Government also should respect protocols and act impassionately. During the vote on account during the introduction of the Financial bill, CBI told the Supreme Court that enough evidence of financial irregularity against Mayawati is not there; but when to get the Nuclear Bill passed, where there was necessity to get the Left and BJP to support the Government, the CBI took a 360 degree turn and now says that evidences are there against Mayawati. This is the highest political misuse.
Judicial Reforms is the need of the hour. Like the Fourth estate, Indian judiciary needs to exert self discipline. The hallowed institution should command respect, reverence and worship! It must regain its lost legacy.
However, when the Governments at the Centre and States started tinkering with Laws, and any arbitration between Centre and states, states and States, States Vs individuals were referred to the Courts for adjudication, the Executive wantonly transferred its responsibility to Courts. When even administrative matters were not solved on the basis of Driot Administratef, Central Government and State Government Rules, but referred to Courts,. Examples of this are Ayodhya dispute, Cauveri Water dispute, etc were referred to Courts for its arbitration. There are many issues which had been referred by the President of India to the Supreme Court for its clarification, Courts naturally became highly pro active, and took upon itself, cases which normally should not have been admitted. The Public Interest litigation was easy route for anybody to approach the highest Court of the land, whether the applicant had prima facie interest and affected by a particular order or action of the government, he surpassed the usual channels of law available to him, and knocked at the Supreme Court whether he was bona fide affected or not. This PIL later became a nuisance, and Supreme Court had warned the petitioners not to file vexatious PIL without sufficient reasons.
The present judiciary is losing common man’s respect for obviously many reasons. Cases have been piled up in the lower Courts, higher Courts and Supreme Courts for ages, there are corruption charges against Judges of the higher Court, there are impeachment proceedings against some Judges, some judges involved in the PF case have brought shame to the judiciary. Criticism of one judge by another pusine judge through twitter or speeches have become common, there are parallel trails by the visual media 24x7 which prejudices the Case and one of the sad repercussions of these are loss of faith by the litigants on Courts which is supposed to dispense Fair Law. There have been past judgments which have been reversed 360 degrees by higher Courts. The recent incidents involving some of the sitting judicial officers for their Post Graduate legal examination at Andhra Pradesh were caught red handed copying by a CCTV camera is a shame on the entire judicial system. If a judicial officer who should administer fair justice indulge in incorrect procedures, who will give justice to the litigants? Can litigants have faith in such judicial officers or the judicial system?
There are also reports that appointments to the High Courts and Supreme Courts and transfer of High Court judges from one state to another are not fair. Good lawyers do not want to become Judges. Another factor in delay in delivering Justice is shortage of Judges. Even cases filed in the Fast Track Courts are unusually delayed.
There is a need for overhauling reforms in Judiciary. The left over of the colonial past including Rules, regulations, acts, laws have been a stumbling block to deliver Law in these days when speed is a necessity. Globalization has changed global laws. World has changed. There are States or nations which indulge in Wars. There are non state actors who indulge in terrorism acts or take Law into their hands. Whether these acts are out of frustration, economic backwardness or political thinking is another matter. Judges are human, they can commit mistakes. But when some of the judicial officers think that they are conferred with infinite powers, they should be told that there are checks and balances in the judicial system. There are many acts of indiscipline within the Court rooms. The Judges are accountable to the system and Rule of Law. They are also accountable to the Constitution of India. They must be mild in their observations for the litigant who has obeyed the Law and stringent in their language against law breaker. Government also should respect protocols and act impassionately. During the vote on account during the introduction of the Financial bill, CBI told the Supreme Court that enough evidence of financial irregularity against Mayawati is not there; but when to get the Nuclear Bill passed, where there was necessity to get the Left and BJP to support the Government, the CBI took a 360 degree turn and now says that evidences are there against Mayawati. This is the highest political misuse.
Judicial Reforms is the need of the hour. Like the Fourth estate, Indian judiciary needs to exert self discipline. The hallowed institution should command respect, reverence and worship! It must regain its lost legacy.
Friday, August 20, 2010
Cut throat competition to get top salaries?
The salaries of CEOs have skyrocketed over the past 20 years, rising at a faster pace than average wages, managerial pay, or corporate earnings. This is mainly due to compensation benchmarking. A standard practice in many industries, benchmarking occurs when compensation committees use peer executives at rival firms to establish a “fair” market wage. The problem is that each year, some CEOs leapfrog others by raking in huge bonuses or raises that are unrelated to their company’s performance, often thanks to poor corporate governance or oversight. These inflated salaries are then used by other companies to set their compensation levels; over time, the snowball effect makes CEOs’ salaries swell dramatically.
The compensation survey conducted by Standard & Poor’s (1992 to 2006) revealed that there were haphazard sharp increases in CEO salaries. When the pay of Chief Executives were compared with the compensation received by the salaried Directors on different Boards. An attempt at examination as to how CEO pay was determined by analyzing consultant and compensation committee records. Leapfrogging accounted for about half of the overall increase in CEO salaries in that time period, according to the survey. The mean CEO salary plus bonus, adjusted for inflation, grew by 58 percent from 1993 to 2005, and the mean total compensation, which included stock and stock options, increased by 116 percent. Meanwhile, mean annual compensation in India overall rose by only 20 percent.
As per SIBI Guidelines, there is a mandate that the firms shall disclose the salaries drawn by the top-CEOs, how much bonus, percentage of profit was paid to them, what were their perks. Also salaries, commissions drawn by paid Directors also need to be disclosed. Some firms give Stock options to the Staff, wherein a good chunk in blue chip companies land in favour of the top executives like CEO, Mg Director, Dy Mg Director, Working Director etc. One CEO of a firm based in Chennai draws Rs 42 Cr as compensation per annum. His wife, who is the Dy MD, is also drawing an equivalent sum. There are many CEOs in India who draw an average salary and compensation of Rs 1 Cr and above.
The salaries of CEOs fixed during the last twenty years or so, based on standard surveys conducted by international reputed Analysts are that competition benchmarking is the bottomline for fixing the salaries of their own CEOs. Otherwise, there will be migration or desertion. But the comparison of salaries of competitions is often inflated, which artificially drive up competition.
The same benchmarking with the 6th pay commission recommendations to the bureaucrats has necessitated an enlargement in the salary and allowances of members of Parliament. However, Cabinet on the basis of the recommendation by parliamentary affairs ministry proposed to increase the salary from Rs 16,000 to Rs 50,000 against Rs 80,000 as recommended by the Parliamentary panel. Today, a Secretary to Government gets a pay of Rs 80,000 per month after the revision of their salaries after introduction of 6th Pay Commission. In addition an MP gets a daily allowance of Rs 1,000 per day, constituency allowance of Rs 40,000 and office expense of Rs 40,000 per month. The conveyance allowance has been increased to Rs 4 lakh. Spouses are also eligible for free travel by flight. The increase is from retrospective effect (arrears from May 2009). In addition each MP is provided with Rs 2 Cr which can be spent by him for special works in his constituency. These are times when inflation is in the two digits, there is widespread disquiet because of non availability of jobs, or basic income, huge defence outlay because of fearsome neighbours, terrorist masterminds who want to see the country destroyed, agriculture and industry’s growth is slow paced.
The free economy regime will see demand for more and more wealth, and creation of more wealth will lead to more spending resulted in runaway inflation.
..
The compensation survey conducted by Standard & Poor’s (1992 to 2006) revealed that there were haphazard sharp increases in CEO salaries. When the pay of Chief Executives were compared with the compensation received by the salaried Directors on different Boards. An attempt at examination as to how CEO pay was determined by analyzing consultant and compensation committee records. Leapfrogging accounted for about half of the overall increase in CEO salaries in that time period, according to the survey. The mean CEO salary plus bonus, adjusted for inflation, grew by 58 percent from 1993 to 2005, and the mean total compensation, which included stock and stock options, increased by 116 percent. Meanwhile, mean annual compensation in India overall rose by only 20 percent.
As per SIBI Guidelines, there is a mandate that the firms shall disclose the salaries drawn by the top-CEOs, how much bonus, percentage of profit was paid to them, what were their perks. Also salaries, commissions drawn by paid Directors also need to be disclosed. Some firms give Stock options to the Staff, wherein a good chunk in blue chip companies land in favour of the top executives like CEO, Mg Director, Dy Mg Director, Working Director etc. One CEO of a firm based in Chennai draws Rs 42 Cr as compensation per annum. His wife, who is the Dy MD, is also drawing an equivalent sum. There are many CEOs in India who draw an average salary and compensation of Rs 1 Cr and above.
The salaries of CEOs fixed during the last twenty years or so, based on standard surveys conducted by international reputed Analysts are that competition benchmarking is the bottomline for fixing the salaries of their own CEOs. Otherwise, there will be migration or desertion. But the comparison of salaries of competitions is often inflated, which artificially drive up competition.
The same benchmarking with the 6th pay commission recommendations to the bureaucrats has necessitated an enlargement in the salary and allowances of members of Parliament. However, Cabinet on the basis of the recommendation by parliamentary affairs ministry proposed to increase the salary from Rs 16,000 to Rs 50,000 against Rs 80,000 as recommended by the Parliamentary panel. Today, a Secretary to Government gets a pay of Rs 80,000 per month after the revision of their salaries after introduction of 6th Pay Commission. In addition an MP gets a daily allowance of Rs 1,000 per day, constituency allowance of Rs 40,000 and office expense of Rs 40,000 per month. The conveyance allowance has been increased to Rs 4 lakh. Spouses are also eligible for free travel by flight. The increase is from retrospective effect (arrears from May 2009). In addition each MP is provided with Rs 2 Cr which can be spent by him for special works in his constituency. These are times when inflation is in the two digits, there is widespread disquiet because of non availability of jobs, or basic income, huge defence outlay because of fearsome neighbours, terrorist masterminds who want to see the country destroyed, agriculture and industry’s growth is slow paced.
The free economy regime will see demand for more and more wealth, and creation of more wealth will lead to more spending resulted in runaway inflation.
..
Sunday, August 15, 2010
Agriculture in a mess due to faulty Planning?
India of 2010 is not the India of 1947.
In India, which has a population of over 1.2 billion today, does it have sufficient grannery to feed the mouths? Has our Below Poverty Line estimate suffices the requirement of food for the downtrodden. The much proclaimed Food Guarantee Bill, will it create a harvest of mouthful for these have-nots? India is looking forward to a thrillion economy; in these, how much these dastard and laggard people, earn to lead a hand-to-mouth livelihood. Has Malthusian theory come true in India?
When the First Five Year Plan gave supremacy of Agriculture, and the Green Revolution that followed, today’s plan (XI Five Year Plan) has hopes of achieving 4% growth even though the Plan delivered a flat 0.20% during the mid-term analysis of the XI Plan. The Plan, gives scant outlay to agriculture, does not evolve Schemes to better productivity in agri-based products, and in the least pretexts, and look as an instant solution to Imports. It even imported Public Loan 480 from America, the rice not fit enough even for rats! The Rice, and wheat stored in the Food Corporation of India mainly meant for distribution to the BPL families, is fodder for rats. Food Security Bill with Crores of Rupees of public money can be advantageous only if the food reached the poor, downtrodden. In India, for agriculture subsidy, kerosene oil subsidy (for lighting, cooking), fertiliserz, etc the middle-men knocked off a chunk of money. The Plan architect Montek Singh Aluwaliah, and the agriculture expert Dr Swaminathan are polls apart in perceiving what is best for agriculture. Our Economists theorize but often theory in the alter of reality never meet; we have massive outlay for Agriculture, that is funds spent in the name of agriculture. Hydro electric projects drowned the fertile lands, and doused the agricultural yield. Conversion of agricultural land for development, a mantra of the Globalization concept, has devastated agricultural development and growth. In Kerala, where Coconut was a plantation has become a home stud crop thanks to Kerala Land Reforms.
First area of concern is Agricultural Credit. Credit flow has risen sharply, Dr B K Chaturvedi, Dy Governor will explain eloquently. The Credit was channelised through RRBs, commercial Banks in rural areas. Commercial banks gave loans to SIDBI and other institutions that supported agriculture. Agricultural loans were characterized as priority sector loans. In the last decade or so, loans were given to Corporates, tractor manufacturers, fertilizer companies, advances worth many Crores, but they were shown as priority sector advances to agriculture. A disturbing future of the agriculture Credit is astronamal growth of agricultural finance that is urban in nature. The share of agricultural Credit supplied by urban and metropolitan bank branches in India increased from 16.3% to 30.7%. . One third of the agricultural Credit was given by metropolitan and urban banks while the share of the rural, semi-urban, RRB got reduced to less than 50%. One question is pertinent- Corporate/agricultural firms get Credit over Rs 1 cr in aggregate per borrower, but shown in Bank books as agriculture Credit (2007 onwards). Is it not an institutional make-up in the loan portfolio to show that Credit for agricultural is growing. Fertilizer subsidy, one would like to ask the question. How much have fertilizer companies grown their declared profits, and what catalytic role they played in improving agricultural productivity? In the state of Maharashtra alone, rural branches provided 25.7% credit towards agriculture while metropolitan bank branches gave a credit for agricultural sector @ 42.6% of the total agricultural credit in Maharashtra in 2008. The actual farmer in the villages, whose financial needs are sparse, would benefit the least from the present Agricultural Credit Policy which are pocked by Corporate, partnership firms having as allied enterprise, agriculture, etc. Reliable data is available to show that what is termed as agriculture Credit may have little to do with agriculture! Shocking!
The Second area of which government is least concerned is the irrigational source. Hon’ble Minister of Agriculture, Dy Chairman of Planning Commission will blame the rains for failure in Rabi crops or poor show of kharif crops. Poor monsoon, sluggish agriculture growth. No agriculturalist is concerned about average rainfall data but he looks for daily rainfall during the agricultural season for his survival. The Planners presuppose that the fluctuation of monsoon on a year-on-year basis is the problem of agricultural diminishing returns. It is not the total rainfall or levels in reservoirs that matter to majority. It is the rain on time. Dry crops might not require lot of Water or expensive irrigation facilities but timely rain. Drought related measures to temporarily assist may be useful but strategic and long term measures need to be taken. Here, our planners have failed lock, stock, and barrel. Irrigation infrastructure is deteriorating due to poor maintenance of irrigation systems. The overuse of Water is being covered by over pumping aquifers, but as they are falling by foot of ground water yield, this is limited resource. It is unscientific approach of the Planning Commission for the improper use of water, irrigation planning.
We suggest some steps: a. Agriculture, adaptation measures in rural sector should receive major institutional/financial support for evolving policies for implementation of specific programmes in the short- to- long term. (b) Measures to manage water resources on an annual cycle basis and it should be stored and distributed; some times long spell of rainfall above the normal, some times successive draught hamper the storage of water policy. The water storage level has to be decentralized to a sub basin level. Storing water on surface and underground in order to build storages for later years need to be planned. (c) Focusing on dry land agriculture and soil moisture. 75 million hectares are under food grain production in the dry land mode (d) Policy interventions: lack of saving the water or improving water productivity is actually leading to wastage. But not one rupee is in the XI Plan is allotted; (ii) incentives to use chemical fertilizers may actually induce soil degradation and put farmers of dry land farming in disadvantage(iii) Poor farmers, rural farmers do not require Rs 1 cr capital loan; the metropolitan banks need not support agriculture. Let it to be supported by NABARD (by forming micro finance companies run by honest NGOs), RRB, and Rural Banks. Stop writing off of loans, stop free power, and re-look at the clients who have agricultural loans.
Let Planning Commission answer? Let RBI do some introspection in respect of Credits to agricultural farmers? Let the Agriculture Minister look at the agriculture in its total prespective. Let the Controller and Audit General, look at Crores of Rupees of money not getting into the Agricultural arena? Let the opposition ask pertinent questions and do some honest homework. Let our newspapers and electronic media look at the agricultural issue in germane and file a faithful and accurate report. All these institutions are sleeping. Only when rats enter the FCI godowns and eat wheat, the matter comes to national attention?
In India, which has a population of over 1.2 billion today, does it have sufficient grannery to feed the mouths? Has our Below Poverty Line estimate suffices the requirement of food for the downtrodden. The much proclaimed Food Guarantee Bill, will it create a harvest of mouthful for these have-nots? India is looking forward to a thrillion economy; in these, how much these dastard and laggard people, earn to lead a hand-to-mouth livelihood. Has Malthusian theory come true in India?
When the First Five Year Plan gave supremacy of Agriculture, and the Green Revolution that followed, today’s plan (XI Five Year Plan) has hopes of achieving 4% growth even though the Plan delivered a flat 0.20% during the mid-term analysis of the XI Plan. The Plan, gives scant outlay to agriculture, does not evolve Schemes to better productivity in agri-based products, and in the least pretexts, and look as an instant solution to Imports. It even imported Public Loan 480 from America, the rice not fit enough even for rats! The Rice, and wheat stored in the Food Corporation of India mainly meant for distribution to the BPL families, is fodder for rats. Food Security Bill with Crores of Rupees of public money can be advantageous only if the food reached the poor, downtrodden. In India, for agriculture subsidy, kerosene oil subsidy (for lighting, cooking), fertiliserz, etc the middle-men knocked off a chunk of money. The Plan architect Montek Singh Aluwaliah, and the agriculture expert Dr Swaminathan are polls apart in perceiving what is best for agriculture. Our Economists theorize but often theory in the alter of reality never meet; we have massive outlay for Agriculture, that is funds spent in the name of agriculture. Hydro electric projects drowned the fertile lands, and doused the agricultural yield. Conversion of agricultural land for development, a mantra of the Globalization concept, has devastated agricultural development and growth. In Kerala, where Coconut was a plantation has become a home stud crop thanks to Kerala Land Reforms.
First area of concern is Agricultural Credit. Credit flow has risen sharply, Dr B K Chaturvedi, Dy Governor will explain eloquently. The Credit was channelised through RRBs, commercial Banks in rural areas. Commercial banks gave loans to SIDBI and other institutions that supported agriculture. Agricultural loans were characterized as priority sector loans. In the last decade or so, loans were given to Corporates, tractor manufacturers, fertilizer companies, advances worth many Crores, but they were shown as priority sector advances to agriculture. A disturbing future of the agriculture Credit is astronamal growth of agricultural finance that is urban in nature. The share of agricultural Credit supplied by urban and metropolitan bank branches in India increased from 16.3% to 30.7%. . One third of the agricultural Credit was given by metropolitan and urban banks while the share of the rural, semi-urban, RRB got reduced to less than 50%. One question is pertinent- Corporate/agricultural firms get Credit over Rs 1 cr in aggregate per borrower, but shown in Bank books as agriculture Credit (2007 onwards). Is it not an institutional make-up in the loan portfolio to show that Credit for agricultural is growing. Fertilizer subsidy, one would like to ask the question. How much have fertilizer companies grown their declared profits, and what catalytic role they played in improving agricultural productivity? In the state of Maharashtra alone, rural branches provided 25.7% credit towards agriculture while metropolitan bank branches gave a credit for agricultural sector @ 42.6% of the total agricultural credit in Maharashtra in 2008. The actual farmer in the villages, whose financial needs are sparse, would benefit the least from the present Agricultural Credit Policy which are pocked by Corporate, partnership firms having as allied enterprise, agriculture, etc. Reliable data is available to show that what is termed as agriculture Credit may have little to do with agriculture! Shocking!
The Second area of which government is least concerned is the irrigational source. Hon’ble Minister of Agriculture, Dy Chairman of Planning Commission will blame the rains for failure in Rabi crops or poor show of kharif crops. Poor monsoon, sluggish agriculture growth. No agriculturalist is concerned about average rainfall data but he looks for daily rainfall during the agricultural season for his survival. The Planners presuppose that the fluctuation of monsoon on a year-on-year basis is the problem of agricultural diminishing returns. It is not the total rainfall or levels in reservoirs that matter to majority. It is the rain on time. Dry crops might not require lot of Water or expensive irrigation facilities but timely rain. Drought related measures to temporarily assist may be useful but strategic and long term measures need to be taken. Here, our planners have failed lock, stock, and barrel. Irrigation infrastructure is deteriorating due to poor maintenance of irrigation systems. The overuse of Water is being covered by over pumping aquifers, but as they are falling by foot of ground water yield, this is limited resource. It is unscientific approach of the Planning Commission for the improper use of water, irrigation planning.
We suggest some steps: a. Agriculture, adaptation measures in rural sector should receive major institutional/financial support for evolving policies for implementation of specific programmes in the short- to- long term. (b) Measures to manage water resources on an annual cycle basis and it should be stored and distributed; some times long spell of rainfall above the normal, some times successive draught hamper the storage of water policy. The water storage level has to be decentralized to a sub basin level. Storing water on surface and underground in order to build storages for later years need to be planned. (c) Focusing on dry land agriculture and soil moisture. 75 million hectares are under food grain production in the dry land mode (d) Policy interventions: lack of saving the water or improving water productivity is actually leading to wastage. But not one rupee is in the XI Plan is allotted; (ii) incentives to use chemical fertilizers may actually induce soil degradation and put farmers of dry land farming in disadvantage(iii) Poor farmers, rural farmers do not require Rs 1 cr capital loan; the metropolitan banks need not support agriculture. Let it to be supported by NABARD (by forming micro finance companies run by honest NGOs), RRB, and Rural Banks. Stop writing off of loans, stop free power, and re-look at the clients who have agricultural loans.
Let Planning Commission answer? Let RBI do some introspection in respect of Credits to agricultural farmers? Let the Agriculture Minister look at the agriculture in its total prespective. Let the Controller and Audit General, look at Crores of Rupees of money not getting into the Agricultural arena? Let the opposition ask pertinent questions and do some honest homework. Let our newspapers and electronic media look at the agricultural issue in germane and file a faithful and accurate report. All these institutions are sleeping. Only when rats enter the FCI godowns and eat wheat, the matter comes to national attention?
Thursday, August 12, 2010
Infrastructure growth inadequate?
Infrastructure capacity over-stretched in India?
India’s infrastructure, meaning Ports, Roads, airports, and railways, are they sufficient to meet the burgeoning demand of the economic growth of the Country which is expected to emerge as one of the largest economies of the World in a few year’s time?
Is India’s growth commensurate with the growth in automobile, bus, motor vehicle, two wheelers, three wheelers, four wheelers, six wheelers, and giant trucks that move Containers, passenger growth in trains, aero planes, and Container traffic through ports?
Has the Planning Commission estimated the normal growth and superfluous growth, and arrived at the forecasts that would accurately predict the demand: Supply? Year-on-Year, the Finance Ministers have worried about raising expenditure, bridging the gap, collecting taxes, and focusing on bringing down the fiscal deficit, and allotting a chunk of money for populist schemes with the Vote banks in view. Is there any sincerity in their spending for the downtrodden? Is it aimed at making their standard of living grow? With all the spending, the have-nots increase in geometrical progression. Why? Faint and half hearted attempts to give an impression that the Government looks at an egalitarian Society, when Laws are framed and passed to assist the rich grow to figure in the Forbes List!
You cannot plan growth of rural areas by experimenting with examples. Gross root economics is not what is visualized in the theories of master economists. Even Hayward and London School economists failed to come up with an alternate strategy when the world economy led by America and Europe fretted and fumed?
The Central Government can wash off its hands saying that Road Transport is a state subject. That is why, when they raise the price of petrol or diesel, they tell states to reduce the Commercial/Sales Tax. But it is a fact that the vehicle population, both existing and new, is out of proportion to the available infrastructure. India hardly spends 4% of the GDP when China allocates 9% of the GDP for infrastructure growth. Infrastructure capacity is wholly inadequate rather inconsistent. The supply has not picked momentum against demand. Sector has not achieved the growth commensurate with its potential. The Road usage should have been restricted to 70% of its capacity. In India, the Road capacity is stretched beyond 100%. Port capacities are extremely stretched which raise inefficiencies as the utilization has breached 100%. The traffic is growing at a Compounded Annual Growth rate of 20%, while new capacities created are sizably low. Strong domestic consumption and favourable demographies in terms of young working population in India has resulted in heavy growth of vehicles. To cite an example, the State Bank of India, Kerala Circle, (the smallest circle of the SBI in India) gave auto loans to the extent of Rs 354 Cr in 2009-10 against Rs 34 Cr in 2008-9. What is the percentage of increase? Can the roads in Kerala, limited as they are, accept this additional load?
Just to give comparative figures, the automobile population (including the two wheeler segment) in India during 1990-91 was 22 lakh against 8.59 Cr in 2008-9.
According to statistics provided by the Economic Survey (2009-10), 11,037 Kms of High way has been completed. The Survey says that 1, 45,000 Kms of rural roadways at a cost of Rs 37,000 Cr has been laid upto 2008-9. This year’s budget for the NHAI is Rs 6,972.47 by Cess Funds collected from petrol & diesel users. The Government concedes that it underwrites under-recoveries to the extent of Rs 20,000 Cr. The Cess collected through compulsory taxation is 30% of the under-recoveries. Government should explain that when such is the case, how they can say mathematically the oil Companies are in the red, even after an upward increase every three months. There is something wrong somewhere, taking into account IOC profit of Rs 10,000 Cr in 2008-9. This is a mathematical puzzle more complicated than Satyam. If we look at the budget of NHAI, Rs 6,942.47 Cr is collected through Cess, Rs 1515 Cr is ploughed by way of External assistance (in the form of grant & loan) Rs 379 Cr + Rs 1096.26 Cr borrowings, while the actual Government’s budgetary support is only Rs 159 Cr. Mr Kamalnath is right that when the planning commission coughs up just Rs 159 Cr through budgetary support while the Ministry’s fixture is to lay 20 Kms of highway totaling 7,000 Kms of national Highway per annum. That is to say Government spends Rs 2, 27,142.85 to build 1 km of National Highway.
Private Sector invested 19% of the total plan outlay as participation in the Highway Development Programme, while it has grown to 30% in the XI Plan. Only in the building of Roads, PPP has risen from 5% to 36%.
Term funding, both equity and debt, by Banks, is impossible for the simple reason that the gap in long term debt financing is largely due to asset: liability mismatch facing the Banking industry. Long term equity capacity is also difficult to come by. Permitting pension funds and insurance cos to invest in long term stabilized constructions like roads, directly and indirectly, would be cost effective. Indirect investment in infrastructure funds or creation of listed perpetual funds holding infrastructure assets where investors could invest with an annuity philosophy may be explored. Foreign Exchange Reserves may be deployed for asset creation at little costs but with high returns. If Planning Commission goes on singing in chorus as to the whereabouts of the funds, even though the deployment is in unproductive and unwanted sectors, the infrastructure development will halt the country’s progress.
India’s infrastructure, meaning Ports, Roads, airports, and railways, are they sufficient to meet the burgeoning demand of the economic growth of the Country which is expected to emerge as one of the largest economies of the World in a few year’s time?
Is India’s growth commensurate with the growth in automobile, bus, motor vehicle, two wheelers, three wheelers, four wheelers, six wheelers, and giant trucks that move Containers, passenger growth in trains, aero planes, and Container traffic through ports?
Has the Planning Commission estimated the normal growth and superfluous growth, and arrived at the forecasts that would accurately predict the demand: Supply? Year-on-Year, the Finance Ministers have worried about raising expenditure, bridging the gap, collecting taxes, and focusing on bringing down the fiscal deficit, and allotting a chunk of money for populist schemes with the Vote banks in view. Is there any sincerity in their spending for the downtrodden? Is it aimed at making their standard of living grow? With all the spending, the have-nots increase in geometrical progression. Why? Faint and half hearted attempts to give an impression that the Government looks at an egalitarian Society, when Laws are framed and passed to assist the rich grow to figure in the Forbes List!
You cannot plan growth of rural areas by experimenting with examples. Gross root economics is not what is visualized in the theories of master economists. Even Hayward and London School economists failed to come up with an alternate strategy when the world economy led by America and Europe fretted and fumed?
The Central Government can wash off its hands saying that Road Transport is a state subject. That is why, when they raise the price of petrol or diesel, they tell states to reduce the Commercial/Sales Tax. But it is a fact that the vehicle population, both existing and new, is out of proportion to the available infrastructure. India hardly spends 4% of the GDP when China allocates 9% of the GDP for infrastructure growth. Infrastructure capacity is wholly inadequate rather inconsistent. The supply has not picked momentum against demand. Sector has not achieved the growth commensurate with its potential. The Road usage should have been restricted to 70% of its capacity. In India, the Road capacity is stretched beyond 100%. Port capacities are extremely stretched which raise inefficiencies as the utilization has breached 100%. The traffic is growing at a Compounded Annual Growth rate of 20%, while new capacities created are sizably low. Strong domestic consumption and favourable demographies in terms of young working population in India has resulted in heavy growth of vehicles. To cite an example, the State Bank of India, Kerala Circle, (the smallest circle of the SBI in India) gave auto loans to the extent of Rs 354 Cr in 2009-10 against Rs 34 Cr in 2008-9. What is the percentage of increase? Can the roads in Kerala, limited as they are, accept this additional load?
Just to give comparative figures, the automobile population (including the two wheeler segment) in India during 1990-91 was 22 lakh against 8.59 Cr in 2008-9.
According to statistics provided by the Economic Survey (2009-10), 11,037 Kms of High way has been completed. The Survey says that 1, 45,000 Kms of rural roadways at a cost of Rs 37,000 Cr has been laid upto 2008-9. This year’s budget for the NHAI is Rs 6,972.47 by Cess Funds collected from petrol & diesel users. The Government concedes that it underwrites under-recoveries to the extent of Rs 20,000 Cr. The Cess collected through compulsory taxation is 30% of the under-recoveries. Government should explain that when such is the case, how they can say mathematically the oil Companies are in the red, even after an upward increase every three months. There is something wrong somewhere, taking into account IOC profit of Rs 10,000 Cr in 2008-9. This is a mathematical puzzle more complicated than Satyam. If we look at the budget of NHAI, Rs 6,942.47 Cr is collected through Cess, Rs 1515 Cr is ploughed by way of External assistance (in the form of grant & loan) Rs 379 Cr + Rs 1096.26 Cr borrowings, while the actual Government’s budgetary support is only Rs 159 Cr. Mr Kamalnath is right that when the planning commission coughs up just Rs 159 Cr through budgetary support while the Ministry’s fixture is to lay 20 Kms of highway totaling 7,000 Kms of national Highway per annum. That is to say Government spends Rs 2, 27,142.85 to build 1 km of National Highway.
Private Sector invested 19% of the total plan outlay as participation in the Highway Development Programme, while it has grown to 30% in the XI Plan. Only in the building of Roads, PPP has risen from 5% to 36%.
Term funding, both equity and debt, by Banks, is impossible for the simple reason that the gap in long term debt financing is largely due to asset: liability mismatch facing the Banking industry. Long term equity capacity is also difficult to come by. Permitting pension funds and insurance cos to invest in long term stabilized constructions like roads, directly and indirectly, would be cost effective. Indirect investment in infrastructure funds or creation of listed perpetual funds holding infrastructure assets where investors could invest with an annuity philosophy may be explored. Foreign Exchange Reserves may be deployed for asset creation at little costs but with high returns. If Planning Commission goes on singing in chorus as to the whereabouts of the funds, even though the deployment is in unproductive and unwanted sectors, the infrastructure development will halt the country’s progress.
Wednesday, August 11, 2010
Meaning of 'Globalization to the 3rd world'?
Until the markets went global, Marketing has been one of the neglected functions in the Indian business environment. Few Indian Companies had assiduously applied and practiced marketing strategies till about a decade and half ago. They had a distribution arm and a selling arm. Since the dawn of 1990s, however, the Climate has changed considerably, thanks to what is being described by Economists as LPG- Liberalization, Privatization and Globalization.
The term ‘Globalization’ was first used by Mr. Theodore Levitt in an article in Harvard Business Review in 1983. Globalization meant, national products, identity and companies were replaced by globalized products, globalized identities and globalized Companies. The market did not have any boundaries and it was Open market without boundaries. The increased integration of national economy, the more and more Joint ventures, dealer networks, wholesale markets were replaced by retail markets where world class goods were available for wholesale prices, all these constituted the syndrome of this paradigm shift. All these have ushered a new world economic order. The harbingers of the cataclysm are on its way. But it has its own perils too. Globalization can be disquiet too. When American banking began to fail, and liquidity became sparse in America, it caused an economic meltdown; this permeated to Europe, another developed continent. And this development cascaded to a number of developing countries including the new blocks of economic growing power like India, China, Brazil and Russia, resulting in trade slowdown affecting the economic growth of these countries which were slated to touch double digit growth against which it faced double dip growth.
Organizations will need to master and muster new competencies in order to advance and progress in this scenario. Managers and workers will require new skills to function in the context of a global conglomerate. Globalize or perish would become the mantra for achieving any commercial success in the millennium. It is only the commercial or economic changes, but all other resonant and consequent changes in the social, economic, political menu.
If we need to understand the evolution of the global market, the theory of state and nation, the historic perspective of different models of the national economy and their correlation to the genesis and growth of globalization as a contemporary phenomenon, we need to relook at the origin of modern global economy, political philosophies and economic theories of Adam Smith, Kant, Jeremy Bentham, John Mill, Karl Marx, etc. We also need to look at the interregnum between two world wars. The Great Depression, the establishment of Gold standard, Bretton Wood Conference, meergence of Third world in the international economy is forerunners to the Globalization of the economy.
The genesis of globalization in the context of and in sequel to the crisis in the international economy makes a fascinating transition from welfare capitalism to laissez-faire economy. Has the collapse of Soviet Russia and formation of the Commonwealth of independent states anything to do with liberalization?
Globalization, what it means to the third world, developing world, and developed work demystifies the concepts of world economy of the immediate post war economic era of 1945! Right or wrong, time alone can tell.
The term ‘Globalization’ was first used by Mr. Theodore Levitt in an article in Harvard Business Review in 1983. Globalization meant, national products, identity and companies were replaced by globalized products, globalized identities and globalized Companies. The market did not have any boundaries and it was Open market without boundaries. The increased integration of national economy, the more and more Joint ventures, dealer networks, wholesale markets were replaced by retail markets where world class goods were available for wholesale prices, all these constituted the syndrome of this paradigm shift. All these have ushered a new world economic order. The harbingers of the cataclysm are on its way. But it has its own perils too. Globalization can be disquiet too. When American banking began to fail, and liquidity became sparse in America, it caused an economic meltdown; this permeated to Europe, another developed continent. And this development cascaded to a number of developing countries including the new blocks of economic growing power like India, China, Brazil and Russia, resulting in trade slowdown affecting the economic growth of these countries which were slated to touch double digit growth against which it faced double dip growth.
Organizations will need to master and muster new competencies in order to advance and progress in this scenario. Managers and workers will require new skills to function in the context of a global conglomerate. Globalize or perish would become the mantra for achieving any commercial success in the millennium. It is only the commercial or economic changes, but all other resonant and consequent changes in the social, economic, political menu.
If we need to understand the evolution of the global market, the theory of state and nation, the historic perspective of different models of the national economy and their correlation to the genesis and growth of globalization as a contemporary phenomenon, we need to relook at the origin of modern global economy, political philosophies and economic theories of Adam Smith, Kant, Jeremy Bentham, John Mill, Karl Marx, etc. We also need to look at the interregnum between two world wars. The Great Depression, the establishment of Gold standard, Bretton Wood Conference, meergence of Third world in the international economy is forerunners to the Globalization of the economy.
The genesis of globalization in the context of and in sequel to the crisis in the international economy makes a fascinating transition from welfare capitalism to laissez-faire economy. Has the collapse of Soviet Russia and formation of the Commonwealth of independent states anything to do with liberalization?
Globalization, what it means to the third world, developing world, and developed work demystifies the concepts of world economy of the immediate post war economic era of 1945! Right or wrong, time alone can tell.
Base Rate effect-Bane or Boon?
Banks all over the globe have been clearly avoiding the public gaze till very recently, whether it is for presenting its balance sheet, cost of funds, interest mechanism, handling of bad debts, and similar crucial aspects of their operations. This has been 100% true of Indian banks. NPA of Banks published or otherwise is incorrect and profit is padded up profits, and the growth of deposits is not transparently projected by all Banks. Gold loan is projected as priority sector advance for agriculture by taking a piece of paper wherein the borrower states he is an agriculturalist and has 5 cents of land! Cars loans and building loans, which are loans having high collateral security are stated to be amongst the public loans which has grown year after year plummeting the profit yield of Banks.
Whenever a new guideline for transparency come from RBI, the public hopes for more benefits such as increase in deposit rates, reduction in the rate of borrowings, etc. The home loan buyer is the target group, consisting of a good number of senior citizens. NRI deposits are perennial source of deposits for the Banks. They are the most sought after constituency by the Bank personnel. Credit Card group (salaried employees) is another favoured customer constituency the Bank seeks favour from.
The recent changeover by Banks to the Base Rate has also attracted much enthusiasm among prospective borrowers, and even the existing borrowers. The Base rate now being widely published is the successor to the Prime Lending Rate (PLR) which has been in vogue for over a decade now. Before the PLR came into operation, there used to be a linkage with the Bank Rate or RBI rate. SBI Rate was the prime rate, was an independent rate, not comparable with other Banks’ rates.
Even though PLR was in operation during the last decade, some Banks started lending at sub-PLR to wean fat account from competitator banks. There was unhealthy competition amongst the Banks. For large lenders, the sub PLR was adjusted most favourably. RBI set up the Deepak Mohanty Committee, which came up with the Base rate concept. RBI has announced that with effect from 1 July 2010, all Banks will have a base rate. However, Creditors with a lending rate different from base rate would have that rate, if they do not agree to the base rate, and all new creditors will have base rate. The banks have asked RBI to advise them on this possibility.
As the Base rate is based on Cost of funds of each bank, the liquidity levels after the compliance with statutory requirements like CRR and SLR and pre-tax return on assets, the benefits to borrowers will not be uniform, varying from bank to bank. Banks with less cost of funds and higher return on lending may be able to offer a lower base rate.
The Home loan segment has been charged interest either at fixed or floating rate. Fixed rate may attract a change only when there is a review or at the reset time forming the conditions of Contract between the bank and loanee. For floating rate, a change may come when there is a renewal of the facility. Since the Base rate is reworked every three months, there cannot be modification in the interregnum. The Creditors expectation that Base Rate would be advantageous is a misplaced notion. PLR may be a shade lower than the Base rate. The Base rate depends upon the Credit Policy of RBI announced quarterly. It is ambiguous at this point to say which is better. RBI’s intention, whether good or bad, can be concluded after a gestation.
Whenever a new guideline for transparency come from RBI, the public hopes for more benefits such as increase in deposit rates, reduction in the rate of borrowings, etc. The home loan buyer is the target group, consisting of a good number of senior citizens. NRI deposits are perennial source of deposits for the Banks. They are the most sought after constituency by the Bank personnel. Credit Card group (salaried employees) is another favoured customer constituency the Bank seeks favour from.
The recent changeover by Banks to the Base Rate has also attracted much enthusiasm among prospective borrowers, and even the existing borrowers. The Base rate now being widely published is the successor to the Prime Lending Rate (PLR) which has been in vogue for over a decade now. Before the PLR came into operation, there used to be a linkage with the Bank Rate or RBI rate. SBI Rate was the prime rate, was an independent rate, not comparable with other Banks’ rates.
Even though PLR was in operation during the last decade, some Banks started lending at sub-PLR to wean fat account from competitator banks. There was unhealthy competition amongst the Banks. For large lenders, the sub PLR was adjusted most favourably. RBI set up the Deepak Mohanty Committee, which came up with the Base rate concept. RBI has announced that with effect from 1 July 2010, all Banks will have a base rate. However, Creditors with a lending rate different from base rate would have that rate, if they do not agree to the base rate, and all new creditors will have base rate. The banks have asked RBI to advise them on this possibility.
As the Base rate is based on Cost of funds of each bank, the liquidity levels after the compliance with statutory requirements like CRR and SLR and pre-tax return on assets, the benefits to borrowers will not be uniform, varying from bank to bank. Banks with less cost of funds and higher return on lending may be able to offer a lower base rate.
The Home loan segment has been charged interest either at fixed or floating rate. Fixed rate may attract a change only when there is a review or at the reset time forming the conditions of Contract between the bank and loanee. For floating rate, a change may come when there is a renewal of the facility. Since the Base rate is reworked every three months, there cannot be modification in the interregnum. The Creditors expectation that Base Rate would be advantageous is a misplaced notion. PLR may be a shade lower than the Base rate. The Base rate depends upon the Credit Policy of RBI announced quarterly. It is ambiguous at this point to say which is better. RBI’s intention, whether good or bad, can be concluded after a gestation.
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