To get the most from massive investments, India must adopt a coordinated approach that aligns the development of each transport mode with the country’s needs.
SEPTEMBER 2010 • Rajat Gupta, Hemang Mehta, and Thomas Netzer
Source: Travel Infrastructure Logistics Practice
Continue @:
http://www.mckinseyquarterly.com/Transforming_Indias_logistics_infrastructure_2670
Friday, November 19, 2010
Friday, July 9, 2010
SKS Microfinance Plans IPO
This news appeared in the Indian Edition of WSJ.
IPO Pits Profit vs. Altruism
Indian Microlender Sees Scale in Capitalism; Industry Pioneer Has His
By ERIC BELLMAN
Hyderabad, India
SKS Microfinance Ltd. moved a step closer to bringing Wall Street to the slums of India. But that also will bring more criticism from microfinance experts who say profits and initial public offerings have no place in the industry.
SKS won approval from the Securities Exchange Board of India to proceed with an IPO, according to people familiar with the situation. The company and its early investors expect to raise more than $250 million from the deal, which is likely to happen within 30 days and would make SKS the first microlender in India to go public.
Only a handful of microlenders around the world have made it to the global stock markets, so the SKS deal could encourage other companies in the sector to follow. SKS is the largest microlender in India, with a portfolio of about $1 billion. About $5 billion in microloans were made in the country last year, and the IPO would help SKS borrow money to fuel expansion.
"The only place you can get the amount of money that is needed to help the poor is in the capital markets," Vikram Akula, founder and chairman of SKS, said in an interview. "That's why we are doing this IPO."
But as SKS's executives and investment bankers went on a roadshow to stir up interest in the shares, they stressed how little profit the company makes. The strange sales pitch reflects sensitivity to accusations that SKS is gouging borrowers even as its makes millions of tiny loans to poor families.
Pioneer of Microlending
Mr. Akula has a decades-long relationship with Nobel Prize winner Muhammad Yunus, the founder of Bangladesh's Grameen Bank, who is credited with sparking the microfinance revolution. The two men now stand on opposite sides of the question of whether altruism and capitalism can coexist.
"Microcredit should not be presented as a money-making opportunity. It is an opportunity to make an impact on poor people's lives," Mr. Yunus said in an interview. "An IPO gives a wrong message."
Mr. Akula, a 41-year-old U.S. citizen and Yale University graduate, launched SKS in 1998 after working in nonprofit organizations in India that tried to help the poor. Even the best-run groups lacked the capital or the organization to meet the needs of the world's poor, so he decided to build a new kind of microlender that wouldn't have to depend on government money, grants and charity.
Before launching the company that would become SKS, Mr. Akula went through the training program at Grameen Bank, telling Mr. Yunus that he wanted to tweak his model to reach more people. "If I remember correctly, he just smiled," Mr. Akula said.
Mr. Akula started on his own with a small team that went from village to village in the southern state of Andhra Pradesh. He used the Grameen model, which sets up groups of poor women and lends them as little as $50 to help with small businesses like growing vegetables or running a tea stand.
He also took cues from McDonald's Corp. and Starbucks Corp., standardizing training and lending procedures to cut costs and accelerate growth. Employees were paid a decent wage so that Mr. Akula wouldn't have to rely on volunteers and regional managers from top, rural business schools. And he built in enough profit to make the business appealing to institutional investors.
The debate about profit's place in the microlending market exploded in 2007 when Mexican microlender Banco Compartamos SA listed its shares. Its original investors and founders took home millions, sparking accusations that they were profiteering from the poor by sometimes charging more than 80% annual interest.
Mr. Yunus contends that any microlender charging borrowers more than 15 percentage points above its cost of capital needs to cut costs or profits—and pass the savings on to the poor. SKS charges around 18 percentage points above its cost of capital.
"Vikram is a very capable young man," Mr. Yunus said. "But he took a wrong turn when he decided to use microcredit for making money."
Mr. Akula said he needs to build in around five percentage points of profit to expand, adding that Mr. Yunus's expectations are too high because his experience is in markets likes Bangladesh, where he didn't have to deal with the high costs of reaching remote villages.
A Subprime Crisis?
Some analysts and investors are worried that the growth being fueled by healthy profits could result in a subprime crisis as competing microlenders give too many loans to poor borrowers who can't repay them.
SKS has seven million borrowers, up from 200,000 five years ago. In the same period, the company's profit growth has averaged more than 200% a year.
MFIs Attract Executives From Other Sectors. Access thousands of business sources not available on the free web. Learn More .Mr. Akula said SKS could charge interest rates of more than 40%, instead of its current average of 28%, but doesn't the company needs only enough profit to attract investments and lending for its rapid rollout.
Even after the IPO, a majority of SKS's investors will be committed to sticking with the lower-profit model, he said.
Earlier this year, Mr. Akula sold part of his SKS stake for more than $10 million. He said he isn't ashamed of the money, adding that rewarding microfinance employees with benefits closer to those in the conventional finance world is part of his business strategy.
—Arlene Chang contributed to this article.
IPO Pits Profit vs. Altruism
Indian Microlender Sees Scale in Capitalism; Industry Pioneer Has His
By ERIC BELLMAN
Hyderabad, India
SKS Microfinance Ltd. moved a step closer to bringing Wall Street to the slums of India. But that also will bring more criticism from microfinance experts who say profits and initial public offerings have no place in the industry.
SKS won approval from the Securities Exchange Board of India to proceed with an IPO, according to people familiar with the situation. The company and its early investors expect to raise more than $250 million from the deal, which is likely to happen within 30 days and would make SKS the first microlender in India to go public.
Only a handful of microlenders around the world have made it to the global stock markets, so the SKS deal could encourage other companies in the sector to follow. SKS is the largest microlender in India, with a portfolio of about $1 billion. About $5 billion in microloans were made in the country last year, and the IPO would help SKS borrow money to fuel expansion.
"The only place you can get the amount of money that is needed to help the poor is in the capital markets," Vikram Akula, founder and chairman of SKS, said in an interview. "That's why we are doing this IPO."
But as SKS's executives and investment bankers went on a roadshow to stir up interest in the shares, they stressed how little profit the company makes. The strange sales pitch reflects sensitivity to accusations that SKS is gouging borrowers even as its makes millions of tiny loans to poor families.
Pioneer of Microlending
Mr. Akula has a decades-long relationship with Nobel Prize winner Muhammad Yunus, the founder of Bangladesh's Grameen Bank, who is credited with sparking the microfinance revolution. The two men now stand on opposite sides of the question of whether altruism and capitalism can coexist.
"Microcredit should not be presented as a money-making opportunity. It is an opportunity to make an impact on poor people's lives," Mr. Yunus said in an interview. "An IPO gives a wrong message."
Mr. Akula, a 41-year-old U.S. citizen and Yale University graduate, launched SKS in 1998 after working in nonprofit organizations in India that tried to help the poor. Even the best-run groups lacked the capital or the organization to meet the needs of the world's poor, so he decided to build a new kind of microlender that wouldn't have to depend on government money, grants and charity.
Before launching the company that would become SKS, Mr. Akula went through the training program at Grameen Bank, telling Mr. Yunus that he wanted to tweak his model to reach more people. "If I remember correctly, he just smiled," Mr. Akula said.
Mr. Akula started on his own with a small team that went from village to village in the southern state of Andhra Pradesh. He used the Grameen model, which sets up groups of poor women and lends them as little as $50 to help with small businesses like growing vegetables or running a tea stand.
He also took cues from McDonald's Corp. and Starbucks Corp., standardizing training and lending procedures to cut costs and accelerate growth. Employees were paid a decent wage so that Mr. Akula wouldn't have to rely on volunteers and regional managers from top, rural business schools. And he built in enough profit to make the business appealing to institutional investors.
The debate about profit's place in the microlending market exploded in 2007 when Mexican microlender Banco Compartamos SA listed its shares. Its original investors and founders took home millions, sparking accusations that they were profiteering from the poor by sometimes charging more than 80% annual interest.
Mr. Yunus contends that any microlender charging borrowers more than 15 percentage points above its cost of capital needs to cut costs or profits—and pass the savings on to the poor. SKS charges around 18 percentage points above its cost of capital.
"Vikram is a very capable young man," Mr. Yunus said. "But he took a wrong turn when he decided to use microcredit for making money."
Mr. Akula said he needs to build in around five percentage points of profit to expand, adding that Mr. Yunus's expectations are too high because his experience is in markets likes Bangladesh, where he didn't have to deal with the high costs of reaching remote villages.
A Subprime Crisis?
Some analysts and investors are worried that the growth being fueled by healthy profits could result in a subprime crisis as competing microlenders give too many loans to poor borrowers who can't repay them.
SKS has seven million borrowers, up from 200,000 five years ago. In the same period, the company's profit growth has averaged more than 200% a year.
MFIs Attract Executives From Other Sectors. Access thousands of business sources not available on the free web. Learn More .Mr. Akula said SKS could charge interest rates of more than 40%, instead of its current average of 28%, but doesn't the company needs only enough profit to attract investments and lending for its rapid rollout.
Even after the IPO, a majority of SKS's investors will be committed to sticking with the lower-profit model, he said.
Earlier this year, Mr. Akula sold part of his SKS stake for more than $10 million. He said he isn't ashamed of the money, adding that rewarding microfinance employees with benefits closer to those in the conventional finance world is part of his business strategy.
—Arlene Chang contributed to this article.
Tuesday, April 27, 2010
Stress-Free Blog and Follow up
We're done writing our papers, which takes a lot of stress away, hence the title for this: the stress free blog. India was a stranger before I met it, and now that we've met, it's definitely a place I would like to get to know better. I was ready to leave when we did, and I felt so at home for the next two weeks following the trip, and then a sudden homesickness dawned on me and I realized how much I missed the country. Its culture was so rich that there were so many more things to explore, and I barely got to make some friends who were locals. The only e-mails I exchanged were with my eyebrow threading artist and my sari fitting expert. Therefore, I'm still curious about what I'm missing out on and I'm hoping to go back, potentially teach abroad there for a year or two. Maybe I will be able to see it from a completely different perspective since if I do go on that program, I'll be more independent and be able to experience things somewhat similar to what a local would experience.
Train to India from a Different Angle
Many people have focused on how corruption played a major role in our train ride. Unfortunately, and fortunately, I did not get to witness the scene. Just a couple of cars down, I witnessed something completely different. Because the train was packed, there weren't any available seats, so we ended up standing for a bit. What amazed me were the following actions. First, the conductor felt bad and he personally tried to create a seat for us in the aisle by putting some newspapers on top of a crate. Then, a mother got up and offered her seat so that we could at least eat. Suddenly, it was as if the second world of India was in this car as compared to the one where our tour guide was being harrassed. Many men and women either tried to make space or offered their seats to us and this amazed me since it's a rare event in the states. After some polite declines since it was, after all, their seats, a man said to me "We're men, and it doesn't look good if a woman is standing while we're sitting, so please sit." I finally sat, and rested my head for the last half of the trip. During this time, I was still very sick and had a terrible sore throat so I didn't get a chance to talk much, but I know my classmates had a wonderful experience meeting and getting to know their friendly train neighbors. It's just interesting that the concept of two Indias can fall into so many different contexts, and one such example was our train experience.
Reflection
It is quiet at my desk. The India trip is last month's news, our research papers are handed in, and the class is just waiting to see the fruits of our research and field work manifest into that 'A'.
Before this trip, I was really not sure of what to expect from an MBA level course with a travel component. I knew that the course was designed to meet the elective requirements of a few different concentration areas at Rutgers Business School: Marketing, Supply Chain, and Global Business -- but unlike other courses there weren't traditional metrics to help me judge how I was doing and if I was learning what I needed to be learning.
But a few things helped to eleviate this predicament. There was reading to be done, news to catch up with, and we had to also research the companies we were going to see. During the course of the trip, being in a small, close knit group helped because we were able to bounce ideas off of each other and learn from other people's questions. Pictures, videos and diligent note taking also helped to keep us in check and to remind us of what we saw as we traveled. (Note: for anyone traveling through school, I highly recommend investing in a recorder, or an app on the iPhone. It is worth it when you are trying to remember details from the various meetings and encounters and also much easier to take voice notes than to write out your thoughts.)
When we got back from India, our class reflected on what we saw and how we viewed India. At a few points during our presentations, it was hard to believe we were all on the same trip: everyone had something new to add to the discussion and had viewed India in a completely different light. This was definitely the benefit of a travel based course such as this. We were not bound to text-book learning and could focus our learning on what interested us. I was happy to be able to apply concepts from other classes to what I saw in India. Other students choose to focus on ideas related to their profession.
My suggestion for anyone taking this course, or one similar to this, is to make sure to spend a lot of time reading and preparing for what you will see. But when you are there, just look out the window and take it all in. Try to have a few ideas in mind before you go, as to what lens you may want to see the country in. I knew before the trip that I wanted to look into innovation, science, and entrepreneurship. While I may not have seen all of what I expected to see, having an small idea helped to focus my thoughts during the trip.
Before this trip, I was really not sure of what to expect from an MBA level course with a travel component. I knew that the course was designed to meet the elective requirements of a few different concentration areas at Rutgers Business School: Marketing, Supply Chain, and Global Business -- but unlike other courses there weren't traditional metrics to help me judge how I was doing and if I was learning what I needed to be learning.
But a few things helped to eleviate this predicament. There was reading to be done, news to catch up with, and we had to also research the companies we were going to see. During the course of the trip, being in a small, close knit group helped because we were able to bounce ideas off of each other and learn from other people's questions. Pictures, videos and diligent note taking also helped to keep us in check and to remind us of what we saw as we traveled. (Note: for anyone traveling through school, I highly recommend investing in a recorder, or an app on the iPhone. It is worth it when you are trying to remember details from the various meetings and encounters and also much easier to take voice notes than to write out your thoughts.)
When we got back from India, our class reflected on what we saw and how we viewed India. At a few points during our presentations, it was hard to believe we were all on the same trip: everyone had something new to add to the discussion and had viewed India in a completely different light. This was definitely the benefit of a travel based course such as this. We were not bound to text-book learning and could focus our learning on what interested us. I was happy to be able to apply concepts from other classes to what I saw in India. Other students choose to focus on ideas related to their profession.
My suggestion for anyone taking this course, or one similar to this, is to make sure to spend a lot of time reading and preparing for what you will see. But when you are there, just look out the window and take it all in. Try to have a few ideas in mind before you go, as to what lens you may want to see the country in. I knew before the trip that I wanted to look into innovation, science, and entrepreneurship. While I may not have seen all of what I expected to see, having an small idea helped to focus my thoughts during the trip.
Monday, April 19, 2010
India's Infrastructure Drive Must Steer Around Potholes- WSJ
Upgrading infrastructure has fueled rapid economic growth in the world's most populous country, China. Hope is springing once again that the second-most-populous one, India, might follow the same path. To avoid disenchantment, India will need to work extra hard to get support from investors at home and abroad, and to deliver on past promises.
China, with its sprawling networks of new highways, airports and budding high-speed rail connections, makes for a daunting comparison. India has weaker government finances and an unruly democratic government that lacks China's authoritarian discipline. Clearing land for roads or power plants in China is a cinch; not so in India, where land rights are often hugely contentious. Government-backed companies have led China's infrastructure build-out. India's push will depend heavily on the private sector. And India, with its history of murky and investor-unfriendly rules on infrastructure investment, has a record of disappointment.
Monday, April 5, 2010
Geithner Has His Work Cut Out for Him in India
NEW DELHI, INDIA — Timothy F. Geithner, the U.S. Treasury secretary, lands in New Delhi on Tuesday for a two-day trip to inaugurate a new economic and financial partnership between the world’s largest and oldest democracies. It is a return of sorts for Mr. Geithner, who lived for five years in New Delhi as a child.
Mr. Geithner has his work cut out for him, economists and policy analysts in both India and the United States say. Hammering out economic agreements between the two countries has traditionally been an arduous task.
“On principle, they both agree on everything,” said Jahangir Aziz, chief India economist at J.P.Morgan in Mumbai. “It always comes down to the nitty-gritty and that’s where things get stuck. Part of the problem is neither of them wants to give the other side an inch.”
It took nearly 20 years for the United States to lift a ban on imports of Indian mangoes, for example, and a deal to allow energy-strapped India access to U.S. nuclear technology, agreed in principal four years ago, still has not cleared all the legal hurdles that would let American companies sign contracts to do business here. (French and Russian companies, by contrast, have signed contracts and are expected to begin work soon.)
Continue reading @ http://www.nytimes.com/2010/04/06/business/global/06geithner.html?pagewanted=1&ref=world
Mr. Geithner has his work cut out for him, economists and policy analysts in both India and the United States say. Hammering out economic agreements between the two countries has traditionally been an arduous task.
“On principle, they both agree on everything,” said Jahangir Aziz, chief India economist at J.P.Morgan in Mumbai. “It always comes down to the nitty-gritty and that’s where things get stuck. Part of the problem is neither of them wants to give the other side an inch.”
It took nearly 20 years for the United States to lift a ban on imports of Indian mangoes, for example, and a deal to allow energy-strapped India access to U.S. nuclear technology, agreed in principal four years ago, still has not cleared all the legal hurdles that would let American companies sign contracts to do business here. (French and Russian companies, by contrast, have signed contracts and are expected to begin work soon.)
Continue reading @ http://www.nytimes.com/2010/04/06/business/global/06geithner.html?pagewanted=1&ref=world
Saturday, April 3, 2010
Wednesday, March 31, 2010
Train Ride – Back from Agra to Delhi
So talk about corruption, this was definitely an enlightening experience to see corruption first hand in our face. We were on our way back to Delhi after our visit to Agra, where we got to see the beautiful Taj Mahal. Our tour guide, lead us every where so we were dependent on him to lead us into the right direction, and also on to the right train. But I guess we were expecting too much, as we landed up on the wrong train.
The train was jam packed, and there were literally no seats (more like very few seats). We started looking for our seats and I was shocked to see that people were in our seats. We actually did not even have the tickets in our hand, and we looked back and we said our tour guide has the tickets. The conductor came and was not pleased to see twenty five people standing in the path between seats. The people serving dinner in the train were looking at us and seemed pissed since we were blocking the way. The police on the train were asking us where the tour guide was as they needed to talk to him.
The train was jam packed, and there were literally no seats (more like very few seats). We started looking for our seats and I was shocked to see that people were in our seats. We actually did not even have the tickets in our hand, and we looked back and we said our tour guide has the tickets. The conductor came and was not pleased to see twenty five people standing in the path between seats. The people serving dinner in the train were looking at us and seemed pissed since we were blocking the way. The police on the train were asking us where the tour guide was as they needed to talk to him.
Tuesday, March 30, 2010
Thoughts on Dharavi
After spending a few nights at five-star accommodations in the heart of Mumbai -Nairman Point- our journey to India exposed our bushy-tailed and bright-eyed group to one of the biggest slums in India: Dharavi.
Our RBS group had already been exposed to poverty in India before we reached Dharavi. We had seen make-shift homes around the street corners, under bridges, on sidewalks. Poverty is every where. In both Delhi and Mumbai, our RBS group was approached by peddlers trying to make a rupee. Some of them got lucky and were handed 500 rupee notes. Others were turned away. Being Indian and having visited India a number of times before this trip, I felt comfortable with the poverty in India. It took the eyes of my classmates to show me that this was not really okay. I was not too excited to visit Dharavi. Family members in India were surprised to hear that we were going to the slums, and warned me to take care.
Located in the suburbs of Mumbai, near Sion, Bandra, Kurla, and Kalina, Dharavi is a small scale industry and unlike the beggars on the streets of Mumbai and Delhi, you can sense work-ethic. Our group arrived at the slum around 9 AM. While plenty of stores in Delhi and Mumbai would be closed at this hour, Dharavi was bustling with activity. The slum was divided up into industrial areas: plastics, metal work, leather work, pottery work, and even some popular snacks are made there.
Our RBS group had already been exposed to poverty in India before we reached Dharavi. We had seen make-shift homes around the street corners, under bridges, on sidewalks. Poverty is every where. In both Delhi and Mumbai, our RBS group was approached by peddlers trying to make a rupee. Some of them got lucky and were handed 500 rupee notes. Others were turned away. Being Indian and having visited India a number of times before this trip, I felt comfortable with the poverty in India. It took the eyes of my classmates to show me that this was not really okay. I was not too excited to visit Dharavi. Family members in India were surprised to hear that we were going to the slums, and warned me to take care.
Located in the suburbs of Mumbai, near Sion, Bandra, Kurla, and Kalina, Dharavi is a small scale industry and unlike the beggars on the streets of Mumbai and Delhi, you can sense work-ethic. Our group arrived at the slum around 9 AM. While plenty of stores in Delhi and Mumbai would be closed at this hour, Dharavi was bustling with activity. The slum was divided up into industrial areas: plastics, metal work, leather work, pottery work, and even some popular snacks are made there.
Nehru Quote
“India is a land of contrasts, of some very rich many very poor people, of modernism and medievalism…India is not a poor country. She is abundantly supplied with everything that makes a country rich, yet her people are very poor.”
Jawaharlal Nehru
Jawaharlal Nehru
Friday, March 26, 2010
First Thoughts
As part of the Rutgers Travel Course to India, I had the chance to experience the challenges and opportunities of this great country. Our group traversed the country from Bombay to Bangalore, from the old city of Delhi to the tranquil and modern campus of Infosys. If anything was clear from this trip, India is a nation of severe contrasts. From a malnourished, naked child lying helplessly on the sidewalk, to a well-dressed, highly-articulate business executive speaking of opportunities for his company to emerge as a market leader; the contrasts challenge your senses to the extreme. While it is clear that India continues to face significant challenges, it has also become clear that India is a country with limitless potential.
India is a country of extremes. The largest democracy in the world, India boasts a powerful middle class consisting of over 300 million citizens. At the same time, this is a country with more than one-third of the world’s chronically malnourished children . In fact, over a quarter of the population live below any humanly-accepted poverty level . India became an independent nation in 1947, however the young government installed socialist policies and largely aligned with the Soviet Union with regards to centralized economic planning and the regulation of markets. By 1991, the Soviet Union had collapsed, and it had become clear that deregulated, free markets were outperforming socialistic trending markets around the world. With such clear evidence in hand, India began to privatize industries and increase foreign direct investment opportunities.
India is a country of extremes. The largest democracy in the world, India boasts a powerful middle class consisting of over 300 million citizens. At the same time, this is a country with more than one-third of the world’s chronically malnourished children . In fact, over a quarter of the population live below any humanly-accepted poverty level . India became an independent nation in 1947, however the young government installed socialist policies and largely aligned with the Soviet Union with regards to centralized economic planning and the regulation of markets. By 1991, the Soviet Union had collapsed, and it had become clear that deregulated, free markets were outperforming socialistic trending markets around the world. With such clear evidence in hand, India began to privatize industries and increase foreign direct investment opportunities.
Wednesday, March 24, 2010
Monday, March 22, 2010
Monday, March 15, 2010
Saturday, March 13, 2010
Friday, March 12, 2010
Tuesday, March 9, 2010
India Passes First Vote on Women Lawmaker Quota
Since we will be examining Gender Equality during our trip to India, here's the latest developmnent where the upper house of Indian Parliament (Rajya Sabha) just passed a bill that would reserve one third of the seats in Indian national and state legislatures for women representatives. While this is is just the first and important step in India to provide equal access to women, it also raises questions about reservations for women, minorities etc., and how effective or ineffective the reservation system is.
The WSJ article provides details on how the bill was passed.
Wednesday, March 3, 2010
Rutgers Alumna showers awareness with cloud creation
The Daily Targum ran an article on how a Rutgers Alumna is creating awareness of pollution in India through her creative artwork made of recycled plastic bottles.
Anne Percoco has created a mobile sculpture in Vrindavan, India (which is a holy site in Hinduism where Lord Krishna spent his childhood days). Hope we can get to see the sculpture during our trip to Agra. Meanwhile, you can find out more about her work on her website.
Anne Percoco has created a mobile sculpture in Vrindavan, India (which is a holy site in Hinduism where Lord Krishna spent his childhood days). Hope we can get to see the sculpture during our trip to Agra. Meanwhile, you can find out more about her work on her website.
Tuesday, March 2, 2010
Coca Cola 5 Rupees Indian TV Commercial
As discussed in our last class, here's a video of the 5 rupees Coke Commercial that runs on TV's in India. There are amny more on You Tube that give you a good flavor of Coke's marketing campaign in India.
Monday, March 1, 2010
India Budget Highlights
Here are the highlights of India's Fiscal Road Map for 2010-2011
THE EVENT: Indian Finance Minister Pranab Mukherjee Friday presented the federal government's budget for the fiscal year starting April 1, 2010.
Mr. Mukherjee said the economy is in a much better position now than it was a year ago, and added that growth may exceed the advance estimate of 7.2% for this fiscal year through March.
He said also that the government's total expenditure will be 11.09 trillion rupees ($239 billion) in the next fiscal year, and that the fiscal deficit is likely to narrow to 5.5%--or 3.8 trillion rupees--from this year's estimated 6.9% of gross domestic product.
The Bombay Stock Exchange's Sensitive Index rose 1.9%.
HIGHLIGHTS
*The minister said there is a need to review stimulus measures, which were implemented to revive an economy hurt by the recent global slowdown. But low interest schemes for some sectors will be extended by a year.
*Net market borrowing to be 3.45 trillion rupees for the next fiscal year.
*To simplify foreign direct investment rules and reduce surcharge on companies to 7.5% from 10%.
*Base excise tax on non-petroleum products raised to 10% from the current 8%; analysts were largely expecting a hike of 2%-4%.
*The government aims to raise 250 billion rupees by selling stakes in state-run companies in this fiscal year through March; to sell more in the next fiscal year. The money will be used to bolster social sector funding, which will total 1.38 trillion rupees.
*To spend 223 billion rupees on healthcare, 310.36 billion rupees on schools, 12.7 billion rupees on slum rehabilitation, 1.74 trillion rupees on infrastructure projects, 198.94 billion rupees on roads and 661 billion rupees on the rural sector.
*To have competitive bidding for captive coal blocks and to set up a coal regulatory authority.
*To allocate 51.30 billion rupees to the power sector, and to spend 10 billion rupees on renewable energy. Also, a fund will be set up to promote clean energy
*Excise levy on gasoline, diesel raised by 1 rupee a liter.
*Gold import tax to be increased to 300 rupees per 10 grams from 200 rupees.
*To invest four billion rupees to boost farm output in east India; some farmers will get loans at a low interest rate of 5%.
*To allocate 165 billion rupees for banks' capitalization in an effort to ensure minimum Tier I capital Of 8%. Also, the central bank will consider giving licenses to more banks.
*Panel to be formed to revise financial sector laws.
*The government is confident of implementing a new direct tax code from April 2011. The code aims to consolidate under a single system laws--some of which were framed more than 50 years ago--relating to a number of taxes such as that on income and wealth.
*Annual income up to 160,000 rupees exempted from tax. Government will lose 260 billion rupees in the next fiscal year due to changes in direct tax rules, but gain 465 billion rupees through indirect tax rate hikes. Also, it will gain 435 billion rupees from import tax increases.
*To raise 360 billion rupees through the sale of third generation, or 3G, bandwidth in the next fiscal year.
*A goods and services tax will be introduced by April 2011.
*The government will, in six months' time, present a status paper on its finances. Also, there is a need to manage expenditure better as well as to cut subsidies, the minister said.
THE EVENT: Indian Finance Minister Pranab Mukherjee Friday presented the federal government's budget for the fiscal year starting April 1, 2010.
Mr. Mukherjee said the economy is in a much better position now than it was a year ago, and added that growth may exceed the advance estimate of 7.2% for this fiscal year through March.
He said also that the government's total expenditure will be 11.09 trillion rupees ($239 billion) in the next fiscal year, and that the fiscal deficit is likely to narrow to 5.5%--or 3.8 trillion rupees--from this year's estimated 6.9% of gross domestic product.
The Bombay Stock Exchange's Sensitive Index rose 1.9%.
HIGHLIGHTS
*The minister said there is a need to review stimulus measures, which were implemented to revive an economy hurt by the recent global slowdown. But low interest schemes for some sectors will be extended by a year.
*Net market borrowing to be 3.45 trillion rupees for the next fiscal year.
*To simplify foreign direct investment rules and reduce surcharge on companies to 7.5% from 10%.
*Base excise tax on non-petroleum products raised to 10% from the current 8%; analysts were largely expecting a hike of 2%-4%.
*The government aims to raise 250 billion rupees by selling stakes in state-run companies in this fiscal year through March; to sell more in the next fiscal year. The money will be used to bolster social sector funding, which will total 1.38 trillion rupees.
*To spend 223 billion rupees on healthcare, 310.36 billion rupees on schools, 12.7 billion rupees on slum rehabilitation, 1.74 trillion rupees on infrastructure projects, 198.94 billion rupees on roads and 661 billion rupees on the rural sector.
*To have competitive bidding for captive coal blocks and to set up a coal regulatory authority.
*To allocate 51.30 billion rupees to the power sector, and to spend 10 billion rupees on renewable energy. Also, a fund will be set up to promote clean energy
*Excise levy on gasoline, diesel raised by 1 rupee a liter.
*Gold import tax to be increased to 300 rupees per 10 grams from 200 rupees.
*To invest four billion rupees to boost farm output in east India; some farmers will get loans at a low interest rate of 5%.
*To allocate 165 billion rupees for banks' capitalization in an effort to ensure minimum Tier I capital Of 8%. Also, the central bank will consider giving licenses to more banks.
*Panel to be formed to revise financial sector laws.
*The government is confident of implementing a new direct tax code from April 2011. The code aims to consolidate under a single system laws--some of which were framed more than 50 years ago--relating to a number of taxes such as that on income and wealth.
*Annual income up to 160,000 rupees exempted from tax. Government will lose 260 billion rupees in the next fiscal year due to changes in direct tax rules, but gain 465 billion rupees through indirect tax rate hikes. Also, it will gain 435 billion rupees from import tax increases.
*To raise 360 billion rupees through the sale of third generation, or 3G, bandwidth in the next fiscal year.
*A goods and services tax will be introduced by April 2011.
*The government will, in six months' time, present a status paper on its finances. Also, there is a need to manage expenditure better as well as to cut subsidies, the minister said.
Sunday, February 28, 2010
Leadership Lessons From India
I highly recommend reading this very relevant article from the Harvard Business Review.
Leadership Lessons From India
Leadership Lessons From India
Saturday, February 27, 2010
Kiran Mazumdar-Shaw, India's Mother of Invention
Listen to Kiran's story of how she reached success. Kiran Mazumdar-Shah is Chairman and Managing director of Biocon. She is responsible for evolving Biocon's strategic intent from an enzyme manufacturer to a biopharmaceutical company. In 2004, she became India's richest woman.
Thursday, February 25, 2010
India Travel Checklist
I found a travel checklist that can be used for the trip. Of course we may not need some of the items listed but is a good start.
http://www
http://www.heartspace.org/travel/TravelChecklist.html
Wednesday, February 24, 2010
Budget 2010: Will Rural India Get a Fair Deal?
Here's an interesting article in the Indian Edition of WSJ that provides insights into India's Fiscal Budget process.
-Harsh
-Harsh
Sunday, February 21, 2010
Course Description
Supply Chain Department of RBS is offering an India Travel course during the Spring 2010 semester. The course will meet on a few Saturdays during the semester and will include a field trip to India during Spring Break (March 10 to 20, 2010).
The plan is to visit New Delhi, Bangalore and Mumbai to meet with business, governmental and social leaders along with a visit to a rural village to learn about micro finance. The course will provide hands-on learning opportunity, and students will meet business and governmental leaders to investigate broader policy oriented questions and learn about economic, political and practical aspects of doing business in India.
The trip includes visits to corporate sites to understand India's supply chain process. Previous trips have met leaders from Ministry of Commerce, Reserve Bank of India, Dr. Reddy's Labs, ICICI, Biocon, Infosys, Boeing India, HDFC Bank, Tata AIG, the Dabbawalas etc. Besides, the course will also include some sight seeing to get acquainted with India's rich culture and history.
The plan is to visit New Delhi, Bangalore and Mumbai to meet with business, governmental and social leaders along with a visit to a rural village to learn about micro finance. The course will provide hands-on learning opportunity, and students will meet business and governmental leaders to investigate broader policy oriented questions and learn about economic, political and practical aspects of doing business in India.
The trip includes visits to corporate sites to understand India's supply chain process. Previous trips have met leaders from Ministry of Commerce, Reserve Bank of India, Dr. Reddy's Labs, ICICI, Biocon, Infosys, Boeing India, HDFC Bank, Tata AIG, the Dabbawalas etc. Besides, the course will also include some sight seeing to get acquainted with India's rich culture and history.
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