Arrest the fall...soon

A falling rupee pushes hopes of economic recovery further beyond

Several pundits have projected that the Indian economy will be back on track in 2013. However, almost half of the year has gone by but there are hardly any indications of recovery. What makes such chances even more remote is the plunging Indian currency, which fell to a historic low of 57.54 against the US Dollar (USD) on June 10, 2013. The next day the rupee depreciation worsened to a new low of 58.35 vs. the USD. Several financial analysts have started believing that the rupee will drift further south towards 59-60 vs. the USD in the days to come. Can India hope to recover from the ongoing economic downturn with a currency that is fast losing all semblance of holding its own?

Economic Affairs Secretary Arvind Mayaram has tried to nullify the impact of a depreciating rupee saying, “panic (in) the market is unwarranted”. Chief Economic Advisor Raghuram Rajan, in a conference, confidently stated that “the weakness in rupee could be a temporary phenomenon.” But the current scenario indicates otherwise. As the depreciation of rupee makes imports costlier, there is no doubt that the weakening currency (which has devalued by over 7 per cent against USD during the current fiscal) will make it tougher for our government and the RBI to contain the current account deficit and check inflation.

On the other hand, exporters are celebrating as they get to earn more local currency for every unit of foreign currency worth of goods and services sold. The Indian IT sector is expected to reap a windfall as its revenue depends overwhelmingly from overseas markets. However, it would be naive to expect our exports to offset the adverse impact of costlier imports. The country's import bill is set for an exponential jump in light of the bulge in the cost of crude imports. Crude oil import accounts for 70 per cent of our fuel requirements and the ongoing currency depreciation will invariably aggravate the CAD situation besides also stoking domestic inflation as rising fuel prices will have a cascading effect.

Voicing her concern over the sliding rupee, Radhika Rao, an economist with DBS Bank says: "A weak rupee can upset the easing inflation trajectory, raise CAD financing concerns and up the currency risks for offshore borrowers. This might also raise another hurdle for the central bank to cut rates." In order to allay such apprehensions, India will need to quickly take steps to restore stability to its currency.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

Down and out in Sarai Khaleel

Once razed to the ground in Emergency, a 65-year old roofless Urdu school now faces closure. Firoz Bakht Ahmed reports.

The Congress may have announced the creation of five minority universities in its never-ending quest to play the vote bank card, but it is unable to protect one school which caters to children from poor families in Delhi’s walled city, an institution once demolished by the party’s city elite in the heyday of the Emergency.

The Qaumi Senior Secondary School, a 65-year old institution which has on its rolls poor Muslim students from Sadar, Qasabpura, Quresh Nagar, Bara Hindu Rao and Kishanganj in the Walled City of Delhi, is in terminal stages of closure.

In the salad days of the Congress family cabal which ran Delhi like a personal fief between 1975-1977, the school was razed to the ground in the presence of then DDA Commissioner BR Tamta, Sanjay Gandhi’s friend Rukhsana Sultana and Jagmohan (now with the BJP) on June 30, 1976, on the promise of being rebuilt in the neighbouring premises: the justification was the construction of ‘janta flats’. The flats have long been sold out but the school never found space.

Temporarily, it was shifted to the Eidgah where it has remained since then. Now the Eidgah management has served an ultimatum to the school asking it to move after 37 years of existence there.

The Qaumi School was founded after Partition in 1948 when it was set up with funds raised by poor Muslim residents of the area. It was taken over by the Municipal Corporation of Delhi in 1960 as a primary school and in 1975 was raised to the higher secondary level.

Since its callous demolition, the school has perpetually faced an uncertain future. For one, it has functioned with minimal infrastructure; a few tents under tarpaulin sheets, a moth-eaten blackboard and creaky furniture passing off as a classroom. Vermin have not just damaged school records but have all but eaten away into the school’s now almost non-existent library. Nearly 70 percent of its furniture and equipment was stolen when the school was forced to shift in 1976.

During monsoon, the school practically closes down because of water logging. If that was not bad enough, a make-shift laboratory under a tin roof is blown away if the weather is inclement!

“Every time there is a dust storm, rain or a cold gust of wind, over 500 students in the ragged tents huddle together wondering when this official apathy will end,’’ says M Atyab Siddiqui, legal affairs secretary of Friends for Education, an NGO devoted to improve the lot of this hapless school.

The school’s manager Abdul Malik Qureshi says exposed to such natural vagaries it is students who suffer the most. Students report sick due to hot sand storms in summers and chilly winds during winter.

“The plight of students mostly drawn from families of book-binders, muezzins, imams, carpenters, box-makers and petty hawkers is pitiable,’’ says Atif Rasheed, a young BJP leader from Qasabpura.

Since 1976, students passing out of Qaumi School have not experienced a roof over their heads, a far cry from the time the 23-roomed five-storeyed building with more than 600 students in Sarai Khaleel area, was pulled down.

Senior economics teacher Furqan Ahmed says it is irreligious in Islam to run a school on Eidgah grounds. While the post-Emergency resettlement programme rehabilitated other residents and shopkeepers in Shahzada Bagh and Inderlok, nothing was done for the school – apart from a slew of hollow promises.

Naim Querishi, member of the Qaumi School Old Boys’ Association, says a memorandum accompanied by affidavits signed by thousands of residents of the Bara Hindu Rao area was given to the then President of India, Zail Singh and freedom fighter Aruna Asaf Ali.

He reels off an impressive list of VIPs who have been contacted for help: Indira Gandhi, Morarji Desai, Chandra Shekhar, Rajiv Gandhi, Vishwanath Pratap Singh, Sikandar Bakht, Arif Mohammed Khan, Tara Chand Khandelwal, Jai Prakash Agrawal and Jagmohan.

In 1991, Jagdish Tytler, then area MP and Union Communications Minister, tried to get school land in Dwarka, Narela or Pitampura but the plan proved unfeasible; poor students had no means to travel from old to outer Delhi. “We informed DDA that moving to the area allotted by them was akin to closing the school,’’ says ex-principal Azhar-ul-Hadi, adding, “most students are below the poverty line and come walking.’’

Read more.....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

Overhaul the intelligence set-up

Our agencies should have a more organic relationship

India faces complex security challenges, which have the potential to derail its economic and social progress. But there does not seem to be any broad-based exercise to reform the country’s intelligence apparatus and make it more pro-active and in line with the pursuit of the nation’s internal and external policies. Whatever piecemeal restructuring has been attempted from time to time, have mostly been crisis-driven and not a comprehensive needs-based attempt to address the structural flaws in the intelligence set-up. So even while we have been eviscerating our intelligence institutions over the decades, the recent attempts to ‘monitor’, ‘coordinate’ and ‘oversee’ this largely dysfunctional apparatus have only created even more layer upon layer of meta-institutions.

Let's take the example of some of those countries which are known for their intelligence-gathering prowess. The UK has just one intelligence agency, the MI-5 that oversees both internal and external intelligence operations. France has four and China one (Ministry of State Security). The US has the highest number of investigation agencies among the developed nations, but even its overall number does not exceed 15. In contrast, India has more than 25 internal and external intelligence agencies -- most have been found of working at cross-purposes instead of complementing each other. As a result, despite their numbers, Indian intelligence is proving to be the soft underbelly of the country with each agency functioning in self-created silos.

The failure of our intelligence agencies to provide for real-time intelligence and advance warnings of developing situations cannot be overstated. But this can happen only by sharing and using multiple databases, including those maintained by the National Intelligence Grid, NATGRID, the Crimes and Criminal Tracking Network and System, CCTNS, and the Intelligence Bureau-run intelligence sharing hub, the Multi-Agency Centre, MAC. Instead, what we get is nebulous intelligence analysis provided by the different agencies that are often in the dark about the investigations carried out by their peer agencies. The sorry outcome of this kind of haphazard sleuthing is that Indian intelligence agencies have time and again failed to perform by producing meaningful, actionable and timely internal and external intelligence.

Even in those cases, where Indian intelligence apparatus has succeeded in busting terror and espionage rings, it has not been able to provide accurate information which could be developed into concrete evidence that stands judicial scrutiny (as was the case with MI-5’s unearthing of the plot to blow-up trans-Atlantic flights over American cities).

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

Why Yeddyurappa Feels Betrayed

It took him four decades of toil and vigil to catapult the BJP to power in Karnataka. today he feels shortchanged reports Kumar Buradikutti

It was February 19 this year. Two ministers had already been caught watching porn clippings in the Karnataka Assembly and the issue was blown ‘out of proportion by the media’. Some media representative in Shimoga compelled Yeddyurappa to respond on the issue and he literally blew hot and cold at the media:  “Everybody watches them. Don’t you watch them at home?” The thing is that all the Porngate accused happened to be his supporters!

 There was another incident in March 2011. BJP general secretary Ananth Kumar and BJP state unit president KS Eeswharappa, both being his rivals in the party from day one, were holding a meeting with some 57 rebel BJP MLAs in the party office in Bangalore without the knowledge of the then CM Yeddyurappa. Somehow the CM came to know about it. The next moment, he breezed through the meeting and breezed out, anger overflowing on his face. Media representatives blocked his car just as he was about to leave. Suddenly, an angry Yeddy hit his car driver in front of media representatives and their cameras.
Yeddyurappa has always been seen in two extremes: either emitting fury like the above two instances or crying like an abandoned child on the street.

Supporters of Yeddyurappa worship him. A highly ambitious angry young man cherishing in his heart a dream of political revolution roams village after village on his motorcycle, organises the masses, brings them into the fold of his party that then had little or no impact on state politics with its negligible presence, gradually builds the party with strong cadre force at the grassroots level, becomes his party’s first elected representative in the lower house of the Karnataka Legislature, becomes the party’s first Leader of Opposition in the state assembly and finally, after four decades of such efforts, brings his party to power and becomes the chief minister of the first BJP government in South India. But how long was he allowed to hold on to the CM’s seat? Just three years! Forty years of party-building and three years as chief minister! And    no hope for future as well. This is, perhaps, the source of his anger and desperation – and of his supporters too.

Another important reason for his anger is that he had never been allowed to function and do what he wanted as the CM. He faced three-dimensional attacks throughout his tenure: firstly from his own party men who used to gang up on  him on a monthly basis; secondly from HD Kumaraswamy of JD(S) who literally haunted him as a nightmare by unearthing one land scam after another on weekly basis involving Yeddy and thirdly from HR Bharadwaj, who left no stone unturned to threaten to dissolve the assembly and impose President's rule using his constitutional power as the Governor of the state. No chief minister, perhaps, has ever faced such multi-pronged attacks in the history of Karnataka. The second and third aspects can be understood and tolerated. What made him particularly furious was the fact that his own party men tried their best to pull him down more than any of the Opposition parties and eventually succeeded in their efforts.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year

BBA Management Education

“We have not dropped our prices as we don’t play short-term games”

Debashis Mitra, Former Director, Sales & Marketing, Mercedes India, speaks about his company’s long-term strategy for India and how it plans to reclaim the No.1 spot in the luxury car segment by next year

B&E: Car models in the mass segment are facing the brunt of the economic slowdown but the luxury car segment is doing well. What are reasons for its good showing? 

Debashis Mitra (DM): As elsewhere, the luxury car market in India is not dependent on economic cycles. Only individuals with surplus income purchase a luxury car. However, on the consumer front economic sentiments matter and currently those sentiments are down. But the Sensex has been moving up of late and the market too will bounce back for the auto sector in general.

B&E: Tough competition in the luxury car segment has seen Mercedes lose its top position. Looking back what do you think led to the loss of your position? 

DM: If you add up the premium and luxury segments we may not have the sales numbers to match our competitors. But then we have not dropped our car prices as there is no point playing short-term games. Dropping the price by 20% may get you the volumes but over a period of time you will not be able to sell more. You can already see this happening with the players who claim to be No.1 or No.2. The resale value of their cars has taken a big hit.

B&E: But the fact is that BMW and Audi sell more cars than Mercedes in India. Do you have a plan to reclaim your position? 

If we look at the traditional luxury market, i.e above the Rs.3 million C-class, E-class, S-class, the SUV segment, ML-class and GL-class, we are still far ahead of the competition. However, right now we are not present in the premium segment, i.e in the Rs.2.5-3 million price bracket. But we will be back in competition by 2014 when the market grows and is much bigger than what it is today.

Read more....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

The only way to reverse the trend in the European Union

The only way to reverse the trend in the European Union is to recapture the spirit of solidarity that animated the European project from the start

To that end, I recently established an Open Society Initiative for Europe (OSIFE). In doing so, I recognized that the best place to start would be where current policies have created the greatest human suffering: Greece. The people who are suffering are not those who abused the system and caused the crisis. The fate of the many migrant and asylum seekers caught in Greece is particularly heart-rending. But their plight cannot be separated from that of the Greeks themselves. An initiative confined to migrants would merely reinforce the growing xenophobia and extremism in Greece.

We could set up solidarity houses in Greece, which would serve as community centers for the local population and also provide food and shelter to migrants. There are already many soup kitchens and civil-society efforts to help the migrants, but these initiatives cannot cope with the scale of the problem. What I have in mind is to reinforce these efforts.

The EU’s asylum policy has broken down. Refugees must register in the member country where they enter, but the Greek government cannot process the cases. Some 60,000 refugees who sought to register have been put into detention facilities where conditions are inhumane. Migrants who do not register and live on the street are attacked by the hooligans of the neo-fascist Golden Dawn party.

Sweden has made migration and asylum policy a high priority, while Norway is concerned about the fate of migrants in Greece. So both countries would be prime candidates to support solidarity houses. And other better-off countries could join them. OSIFE is ready to provide support for this initiative, and I hope other foundations will be eager to do the same. But this has to be a European project – one that eventually must find its way into the European budget.

Currently, Golden Dawn is making political headway by providing social services to Greeks while attacking migrants. The initiative that I propose would offer a positive alternative, based on solidarity – the solidarity of Europeans with Greeks and of Greeks with migrants. It would provide a practical demonstration of the spirit that ought to infuse the entire EU.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year

BBA Management Education

Bi-polar disorder

American democracy is fast making way for a two-party dictatorship, and US citizens are already seeking options

American author Gore Vidal once stated, “Apparently, a democracy is a place where numerous elections are held at a great cost without issues and with interchangeable candidates.” As the trends indicate, this seems to have become a reality for US democracy today. Even when it is suffering from a mammoth public debt of over $16 trillion and a 7.9% unemployment rate, the presidential candidates (and the campaigners behind them) in the recently concluded elections have been ambitious enough to spend an amount of around $5.8 billion (more than the GDP of Malawi) during their respective campaigns. In addition, the adverse effects of political duopoly are becoming vivid with time. The belief in the two party political system – Democrat and Republican – which is deemed “outdated” by experts, is getting shakier by the day.

Super PAC (Political Action Committee), which was established by the Citizens United Supreme Court, has massively influenced the rising expenditures in US elections as it has allowed parties to accept and spend enormous amounts of corporate, individual or union cash; often without disclosing sources. The total cost of the November 2012 election was around 12% higher as compared to 2008 ($5.2 billion) and has almost doubled as compared to the expenditure incurred in the 2004 elections ($3 billion). UK election expenditure of around $49 million in the 2010 general elections looks microscopic compared to the US (120 times more frugal). The trend of rising election expenditure in US has been severely criticized by Iranian President Mahmoud Ahmadinejad, who critically commented, “An election, which is one of the manifestations of the people’s will, has become a battleground for the capitalists and an excuse for hasty spending.”

Even the ‘battleground for the capitalists’ has been limited to only two parties, i.e., Democratic and Republican. A larger proportionate of people displayed their dissatisfaction against the current political system. A Gallup Poll conducted just before the election highlighted that the Americans are no more excited about having only two choices and astonishingly, 40% of Americans consider themselves as ‘independents’.

Over time, the US Presidential election has become more of a political farce that comes into play every four years. In reality, a duopoly is a two party dictatorship where both sides appear to be separate; yet truly represent the same agenda. The American duopoly is highly influenced by corporate interest. For instance, as per media reports, more than 70% of the people demanded a public-run health care option but both parties maintained their support for private health care. Irrespective of peoples’ unwillingness, both parties supported the war in Iraq and Afghanistan. And if we have to believe a leaked ‘Memorandum of Understanding’ signed by both Obama and Romney (Obama & Romney agree to cowardly debates, Russia Today, October 16, 2012), the three televised presidential debates were really ‘planned to prevent any unplanned circumstances’! In actuality, both candidates provided ‘pre-planned’ retorts to ’pre-approved’ queries from ‘pre-selected’ individuals.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

"Our aim is to be in the top-3 players in mobile phones"

Kenichiro Hibi, MD, Sony India, speaks to B&E about his company’s plans to ramp up its mobile division and grow its other businesses in the country

B&E: It’s been three months since you took up your current job. What are your immediate priorities?
Kenichiro Hibi (KH): I am just starting and everything looks challenging here. The market is very big, with a huge potential. We want to connect with our consumers both inside their homes and outside as well with our TV and mobile offerings. We are already the leading player in the flat panel space. In the mobile space, our aim is to be among the top-3 players. According to GFK, Sony Mobile already has a 9% share in the Indian market, and we will further build onto it. We are looking at a rapid growth in the mobile space. Our overall target is to triple our turnover three-fold by 2015-16 fiscal, from the current turnover of over Rs.63 billion to over Rs.180 billion.

B&E: Considering the steep revenue target you have set for 2016 fiscal, where will this growth come from?
KH: We have a three-pillar growth strategy. We expect the TV business to grow further. There is the CRT replacement market, with over 10 million customers who could possibly graduate to LCDs and LEDs. Our focus is on the premium range of products only. As in the case of Bravia though majority of sales still happens in the 22-inch range, but the 55 inches TV sets are doing well too. Also the segment is a big frontier for us. As India is a youth market, so we have products that appeal to the youth like digital cameras, Vaio PCs, gaming, etc.

B&E: What’s the revenue share of your main product lines?
KH: Our flat panel Bravia range contributes 35% of the revenue. Our laptop range Vaio contributes 20% of the revenue, while the Cyber-shot digital camera range contributes 15%. India is already the sixth-largest market for us country-wise.

B&E: Sony is facing strong headwinds in most of its major markets. How do you see those challenges affect your India business?
KH: The global weak economic sentiments have affected us, so has the situation in China. But in India the fundamentals like customer demand are strong. Though in India too GDP growth has slowed down, there’s still demand for our products. Also, since we import all our products, the weakening rupee and the appreciation of Yen creates some price-balancing issues for us here.

B&E: Are you considering local manufacturing here to become more price competitive?
KH: We will decide as we go ahead depending on the market conditions. For the time being we plan to use the FTA agreements that India has with Malaysia. We have production facilities in Malaysia for TV and audio products, while the majority of mobile phones are manufactured in China.

Read more....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year

BBA Management Education

Has ECB found a solution to the debt crisis?

After several failed attempts to rein in the yields on the peripheral government bonds, the European Central Bank (ECB) is back again. This time with Outright Monetary Transactions (OMTs). But can OMTs achieve what other programmes couldn’t? B&E talks to a host of experts, including the ECB President Mario Draghi, to find the answer.

The summer of 2012 was somewhat depressing for countries across the eurozone until European Central Bank (ECB) President Mario Draghi announced he was willing to do “whatever it takes” to keep the single-currency union intact. And he had reasons for it. The eurozones’s economy was (it still is) under tremendous pressure from a credit crunch, and as such fiscal tightening. While the economy had contracted for the second time in a year (Eurozone’s GDP declined 0.2% in Q2 2012 after stagnating in Q1 2012), the composite PMI for manufacturing and services had fallen in July to its lowest level in more than three years (since June 2009). Even the number of people out of work in the region was up by 88,000 to 18 million in July. Although the statement, from the head of the most important financial institution in Europe, was enough to ignite some sparks of optimism, no one had a clear idea of what Draghi really had in mind.

Come September, Draghi has finally explained what he meant; the ECB would now engage in what it calls “outright monetary transactions (OMTs),” unlimited purchases of government bonds for eurozone countries near the brink of financial crisis. With this new intervention programme – termed as European Stability Mechanism (ESM) – the central bank aims at “preserving the singleness of its monetary policy and to ensure the proper transmission of its policy stance to the real economy throughout the region.”

Interestingly, the ECB was engaged in open-market operations a year ago as well, purchasing Italian and Spanish sovereign debt, but it couldn’t achieve much out of it. Yields declined temporarily, but later rose to new heights. For instance, the yield on Spain’s 10-year government bond had again reached 7% (in January 2012), the level that prompted Greece and Portugal to seek help from ECB, after it was driven back under 6% by ECB’s bond-purchase programme in September last year. Result: The ECB purchases were essentially stopped in January 2012, replaced by two so-called long-term refinancing operations (LTROs), which boosted liquidity in the eurozone via €1 trillion in three-year loans to banks. The loans indirectly eased pressure on governments by allowing banks to buy more sovereign debt. Yet interest rates for the debt of fiscally troubled eurozone countries remained stubbornly high. Thus, the question remains: Can OMTs achieve what LTROs couldn’t?

What ECB now plans is a more direct action to keep those borrowing costs down, using open-ended purchases of short-term government bonds in the secondary markets. In fact, as a bondholder, ECB will not claim seniority over other creditors. It will also ignore potential credit downgrades by rating agencies and will not demand more collateral if that occurs. The reason is simple. Financial market fragmentation and the uneven supply of credit across eurozone are holding back growth, effectively delaying a resolution of the debt crisis. Agrees Mario Draghi, President, ECB, as he tells B&E, “Risk premia that are related to fears of the reversibility of the euro are unacceptable, and they need to be addressed in a fundamental manner. The euro is irreversible.”

Read more....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

“We have nothing like a foodgrain surplus”

Shetkari Sangathana founder Sharad Joshi tells Chandran Iyer of B&E that lopsided policies pursued by successive governments could lead to bigger famines

B&E: Let’s take a flashback to the famine that hit India during 1965-67 and then the seventies. What are your memories?
Sharad Joshi: Things were terrible at that time. There was not only food security but also acute drought. The whole of Maharashtra was reeling under water shortage. Most of the wells in this state had become dry. I had seen birds falling down on the roads due to thirst. You can imagine the condition of people.

B&E: Do you think India has learnt its lessons from that famine? Is our agricultural policy today strong enough to prevent it from happening again?
SJ: I don’t think so. Successive governments have pursued lopsided policies. Wrong policies introduced during the British tenure are still being continued. The British imposed the system of land revenue and its collection posed a big problem to even better-off farmers. Even now, in many places in India, landless people are giving loans to the farmers to help them pay land revenues. Even the coolies in the Agricultural Produce Market Committees (APMC) are giving loans to farmers and turning money lenders.

B&E: The agriculture minister recently said that in 1972, there was food deficit while now there is food surplus. What is your take?
SJ: I don’t believe that there is any food surplus. The statistics comes from Food Corporation of India, which has to show that there is excess food, which is rotting. Unless they show that food is rotting, they cannot tally their accounts. They have to show that they do not have enough storage capacity. In the case of wheat and cotton, we are doing quite well. But apart from these two, I don’t think we have anything like grain surplus.

B&E: Can you pinpoint what exactly is wrong with our government’s agricultural policy?
SJ: What is happening now is that there is no official confirmation that the prices cover the cost of production. Farmers cannot pay taxes and the dues of the loans that they have taken and the electricity bills are a huge burden. The loan waiver scheme of the government completely forgot the electricity bills with the result that many farmers have been unable to pay these bills. So, there is no power and diesel is already in short supply as it’s expensive and there is no government policy yet on ethanol and biodiesel. At the same time, labour is in short supply. All these are precursors to a great famine.

B&E: Doesn’t it sound like a bit of a doomsday prediction?
SJ: What we have seen earlier have been famines due to natural reasons. But what we may see in the future is going to be the result of folly of man as well as fury of nature. To avert it, India needs structural reforms. Firstly, there is a need to scrap the APMC system. It has outlived its utility. They have never been able to fix a good minimum support price. The second important step is to scrap the Food Corporation of India. Thirdly, there should be nothing like a Public Distribution System.

Read more....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

IIPM Global Exposure
IIPM Best B School India
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10 Ways to revive the Indian Economy

With faulty policies and incompetent policy makers, the Indian economy has seen its worst. IIPM Think Tank suggests ten critical policy measures that can save the Indian economy from mirroring the paralysed socioeconomic conditions of US and Europe

When the northern, eastern and north eastern power grids in India collapsed in July and left more than half the country in the dark, it was declared to be another vivid indicator of India’s incredible growth story having run its course (following S&P’s downgrade, which predicted that India would be the first fallen angel among the BRICs). What the world chooses to ignore is that structural flaws in our power sector in generation and T&D have been holding back our economy for years, including the years where they felt so overtly optimistic (and even insecure) about India’s potential on the world stage. For the record, India achieved a net capacity addition of around 4 GW per year from 1997-2007. But a McKinsey report (however much you might wish to believe it) indicates that a growing India’s needs from 2007-2017 merit a net capacity addition of 20-40 GW per year, i.e. 5-10 times that figure. And the 11th Five Year Plan added only around 53.12 GW, or a little over 10 GW per year. In fact, the last year (2011-12) was particularly a good one with installation of 20.5 GW. In other words, despite the best attempts of the ‘powers’-that-be in scuttling our growth in the past decade, the economy has somehow pulled itself together and kept up the heat.

Clearly, it appears that countries are perceived very similarly to companies today, and you are only as good as your last quarter. By that yardstick, the Indian economy is still struggling with a depressed GDP growth of 5.5% for Q1, 2012-13; which makes it 9 consecutive quarters of declining growth rates. The surprising part is the shock and awe most Indians feel with this slowdown, as if they were in the middle of a rude awakening! That’s really because even till June last year, the government was predicting 9% GDP growth for India in FY 2011-12 and the RBI was looking at an 8% figure!

However, as B&E had concluded from its statistical analysis last year (refer B&E’s issue dated August 4, 2011 titled “The Upcoming Indian Economic Slowdown”), there were really no surprises. We had predicted it based on a multifactor correlation analysis using inflationary trends in India as the base. Interestingly – and snapping back temporarily to the start of the past decade – during the year 2000, the Indian economy followed a trend in inflation similar to the US. The trend was again repeated in 2010 when the Indian economy mirrored the US economic condition of 2008 just before it (US) stumbled into a deadly recession. As per our polynomial forecasting trend line analysis, the correlation will continue till the end of 2012 with its impact lingering till the last quarter of this fiscal year. So our prognosis is that India would see a relatively depressed growth at least till FY 2012-13. But all is not lost. In fact, this trend is based on the fact that the government will continue to simply do nothing to reverse the situation. In other words, it’s quite easy to electrifyingly turnaround our prognosis.

What is it that our government spokespersons – including our Prime Minister – have done best in this economic slowdown? Blame external factors, and that’s quite a convenient thing to do at the moment! The US grew by 1.7% yoy for the quarter ending June 2012 as compared to 2% for the previous quarter. The Eurozone remained in a quandary with GDP shrinking by 0.4% yoy for the quarter and jobless rates at a record high of 11.3% in July. And that’s why the escapist reasoning by the government. But then, that is hardly an excuse for not setting our own house in order. There is no denying the fact that the Indian economy has sufficient potential of its own accord, and if given the right impetus, India can indeed get back to 8-9% and beyond sooner than expected. B&E and IIPM Think Tank present 10 critical ways in which we can bring the economy back to its high growth phase.

Read more....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

"There is stalemate in dialogue with China"

Clad in an starched white Indian kurta-pyjama, speaking fluent Hindi, Prime Minister of the Tibetan government-in-exile Dr. Lobsang Sangay breaks his silence for the first time on several key issues. In an exclusive interview with B&E’s Aditya Raj Kaul, the Tibetan leader says that with likely changes in China’s top political leadership, the struggle for Free Tibet will reach a decisive stage next year.

B&E: Almost 40 Tibetans including monks have attempted self-immolation since 2009. Why this sudden increase in such desperate acts of protest? Have they lost hope for a free Tibet?
LS: [Brief silence] Yes, it has been really unfortunate. Question is why? The Chinese Government doesn’t allow any form of free speech like we see in India, here we can have dharnas, hunger strikes, and we can protest, and organise rallies. But in China, especially in Tibet, it is not so. You simply cannot participate in protests, even if it’s a gathering of three people, they get arrested and tortured. Tragically, Tibetans are taking to this rather drastic political act of self-immolation. But all the 40 self-immolators have only hurt themselves and not harmed others. Their demands are pretty clear – the return of His Holiness Dalai Lama and Free Tibet.

B&E: The 27-year-old Tibetan activist Jamphel Yeshi also self-immolated himself hours before Hu Jintao’s arrival in March this year. Is self-immolation the only way of being heard?
LS: We have told people not to indulge in self-immolation. A few days after Jamphel Yeshi’s self- immolation we in fact issued a very strongly worded letter asking Tibetans-in-exile particularly not to resort to self- immolations because we have freedom of speech in India. We can resort to and engage in many other forms of protests. Unfortunately, Tibetans inside Tibet don’t have any other option, but to commit self- immolations.

B&E: Have the concerns over Dalai Lama’s security intensified of late? The Dalai Lama himself recently said that a Tibetan may attack him?
LS: His Holiness the Dalai Lama’s security is of major concern to us. Threat perception always remains. The report (about a Tibetan attacking Dalai Lama) is reliable but not verified. Reports are that the Chinese Government at one time was training people like that, so we have to take all this under consideration.

B&E: Your views on Indo-Tibetan relations in the near future?
LS: Before 1959, India and Tibet had close relations. The 1914 Simla agreement makes it very clear. Tibet is of major interest for India from geo-political, environmental and cultural point-of-view. Culturally, because we follow Buddhism, which we adapted from India. Environmentally because Tibet’s Himalayan geography directly affects the region. And geo-politically because China is building a railway line all the way to India. The Indian government spends billions of dollars for border security. Before 1959, it was not necessary. Resolving the Tibet issue is in India’s interest.

B&E: Is there any ongoing back-channel dialogue with China or does a stalemate persist considering recent resignations of your two appointed emissaries?
LS: At the moment it is a stalemate, mainly because of the Chinese government. The relevant Chinese officials have not reciprocated positively to the memorandum that we submitted. That is why our two appointed envoys resigned. The environment is not conducive for dialogue. The situation inside Tibet is also getting worse. Having said that, we are ready to engage in dialogue with the Chinese government anytime. We seek autonomy within China and within the framework of the Chinese constitution. Most likely with the changes in leadership, by early next year there might be slight changes in the trend.

Read more....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

“We’re heavily involved with the app developer community”

Mike Bell, VP, Intel Architecture Group, discusses the global launch of Intel’s first mobile processor

B&E: You already have the largest share of the market in the PC segment. What have been the reasons to move into the smartphones and tablets category?
Mike Bell (MB): Computing is now moving onto a lot of other devices than just PCs. Smartphone and tablets lead the fray. We were instrumental in scripting the rise of the PC. And since then we have been all about the end user experience. So for us, moving onto smartphones and tablets was only a logical extension.

B&E: What would be the difference between the user experience when we talk about an ARM based processor and an Intel processor?
MB: Well you know it’s not just about the processer. Delivering an unparalleled user experience is about fine tuning the hardware along with the processor and the operating system. Only then do you get high performance coupled with low power consumption. So it’s about all the technologies at Intel that work together to bring about a seamless experience and not just the processor.

B&E: The smartphone revolution has been shaped by the kind of applications that the hardware can support. So how are you looking at the app community to push your processor?
MB: We are heavily involved with the app developer community. Again, we have have a group of people who have gone out in the past and worked with PC app developers to optimise applications. And now the same group is working with the mobile ecosystem as well. So we’re putting in significant resources in making sure that the Intel technology is 100% compatible with the entire mobile ecosystem.

B&E: Going forward, when can we expect to see Intel significantly dominating the smartphone market?
MB: Not soon enough! Well, I’m joking. Being ambitious is a part of our very nature and I think the XOLO X900 has been a great starting point. It will be easy to develop great products when we have a solid roadmap. We think we’re on the right path and I believe that people will appreciate and adopt our technology.

B&E: Since Paul Otellini had announced during the CES 2012 that Intel powered Lenovo and Motorola smartphone are being developed, we were expecting to see those hit the market. But eventually, you’ve chosen a lesser known brand like Lava which lacks global appeal to launch your first smartphone processor. Why?
MB: It’s about compatibility. For our first smartphone processor, we wanted to work with a partner who thought like we did. Someone who strived to deliver an exceptional end user experience. It’s not just about selling the device. It’s about educating the customer in store, the after sales service. And I think Lava does that pretty well. Right now, we’re very choosy about who we work with.

Read more....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

 

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

Can MoD ban Diageo?

Banning six defence suppliers is a good start; but why isn’t the Defence Ministry banning Diageo?

The recent allegations by outgoing Army Chief General V. K. Singh about an attempt to bribe him have unfortunately raised more questions than answers. Trace back just a few weeks and the can is open. In early March 2012, the defence ministry blacklisted six vendors that included four foreign defence contractors for their involvement in the 2009 Ordnance Factory Board scam.

That’s a good start. But what is mysteriously suspicious is that the Ministry has continued to deliberately ignore the clear case of liquor giant Diageo (owns Johnie Walker Scotch Whisky, Smirnoff Vodka and others).

In July 2011, the US Security and Exchange Commission (SEC) slapped fines of $16 million on Diageo convicting it for bribing government officials in India and other countries. The SEC further confirmed that $1.7 million worth bribes were paid in India. The SEC ruling that is available with B&E (Release No. 64978 / July 27, 2011) confirms, “In India, from 2003 through mid-2009 Diageo – through Diageo India Pvt Ltd – made over $1.7 million in illicit payments to hundreds of Indian government officials responsible for purchasing or authorizing the sale of its beverages.” Bribes were paid to Indian CSD (Ministry of Defence) canteen employees, Label Registration and Excise Officials across India. While the US government has convicted Diageo, why is it that the Indian Ministry of Defence continues to ignore the issue? Is it because Diageo’s India ‘advisory’ board consists of Naresh Chandra, a former cabinet secretary, defense secretary, advisor to PMO?

Read more....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

 

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

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INTERNATIONAL
BUSINESS, ECONOMY & FINANCE
Meg in, leo out!

When Leo Apotheker was named CEO of HP in October last year, there were doubts about whether a the former CEO of a software company (SAP) would ever be able to handle a mix of hardware and software at the world’s largest IT company (in terms of topline) as the CEO. After analysing the situation and his competencies, B&E did a story titled, “Wrong person. Wrong place” (issue dated November 11, 2010), in which we concluded that “The new CEO is a software guy and has prior experience only in enterprise sales – A clear mismatch with the current philosophy of HP – the largest IT company in the world”. When he announced his decision to sell off HP’s hardware division and buy out Autonomy for $11.69 billion in the last week of August 2011, we ran a follow-up story titled, “Is Apotheker destroying HP?” (issue dated September 15, 2011). This was our claim: “Apotheker, had little clue about what could potentially be done with a PC-plus-services portfolio. Post sell-off of the PSG unit, the company stands to lose $400.74 billion in expected revenue earnings over the next 20 years (arrived at using a binomial regression forecast model; R2=0.99; Eqn: y = -37.75x2 - 1395x + 42154).” The expected followed. Apotheker was booted out of the company. HP’s Board confirmed this publicly on September 22, 2011.

First question: Did he really deserve the bullet so soon? Actually, Apotheker has done enough in 9 months than what humans are usually capable of. Under him, HP’s m-cap shrunk to $47.52 billion – a fall of 51.52% since he took over!

Interestingly, the very moment the Board announced Apotheker’s exit, they pulled out another “typically-HP Board” trick. Former CEO of eBay Meg Whitman, with no prior experience in the field of hardware, was handed over the crown.

This brings us to the second question: Is a lady, who in the past four years was known only for two less-than-glorious acts – she resigned as eBay’s CEO in 2007 and then unsuccessfully ran for the office of the Governor of California (after spending $322.5 million in election campaigns) – fit to become the CEO of the world’s largest IT firm? Apparently, she is a fast learner. And what HP needs right now is someone with a vision. Remember, it was her vision that made eBay buy Skype for an inflated $4.1 billion in cash in 2005 (and which was later sold at $2.75 billion in 2009). But at least a move like this will keep HP’s hardware and software units going for some years! Apotheker destroyed more than 51% of HP’s m-cap in less than a year. How long will Whitman take to wipe out the rest? Difficult to say. But, if she manages to convince the HP Board to eat its own words and retain the hardware and mobility units (with webOS), she would have scored a one on ten to begin with in our books.

BNP Paribas’ $96 billion asset sale

BNP Paribas’ $96 billion asset sale In a move to insulate itself from the impact of the Greek debt crisis, BNP Paribas, the largest French bank, plans to sell $96 billion of risk-weighted assets to allay investor fears about the bank’s leverage and funding. The bank will also reduce its US dollar funding needs by $60 billion by the end of 2012. Unlike some of its main rivals like Société Générale and Crédit Agricole, BNP has been lucky to escape Moody’s Investors Service’s review without a change in rating. But that’s not a long-term remedy as the agency said it would extend its review for a possible downgrade of BNP’s long-term debt and deposit ratings. The bank in a statement on its website said the asset sales would reduce its balance sheet by around 10%. Of late, leading French banks have been fighting to restore confidence after suffering a summer of sell-off by investors, as they feared the banks are ill equipped to cope with the fallout from a Greek debt default. It’s not that BNP has been alone. Even smaller rival Société Générale unveiled a similar plan after post talks of a possible Moody’s downgrade. By selling assets, BNP will be in shape to reach a core Tier 1 ratio of 9% by Jan. 01, 2013, under the new Basel III regime, which calls for more stringent capital requirements.

Read more....

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face