Out In The Co[a]ld

Prime Minister Manmohan Singh's Defence in the "Coalgate" Scam Goes up in Flames

By Pradyut Hande

The Comptroller Auditor General's (CAG) reports outlining the "Coalgate" scam has predictably opened a veritable can of worms. Losses to the tune of Rs. 1.86 lakh crore to the exchequer due to the wrongful allocation of 57 coal blocks to private companies at throw away prices have come back to haunt the beleaguered UPA - II Government. With an audacious opposition baying for its blood and an increasingly irate public clamouring for answers, the Centre has had to swing into damage control mode with alacrity. A few days ago, I wrote about the baffling defence concocted by Finance Minister, Mr. P. Chidambaram to elucidate the Government's stance (read innocence). However, having raised more pressing questions than it answered, the Government was in dire need of a more purposeful and lucid defence that would succeed in taking some of the sting out of the opposition's continual acerbic attacks. Time was of the essence.

The Prime Minister's Defence

On Monday, August 27, Prime Minister, Mr. Manmohan Singh finally stepped out of the shadows to offer yet another "front foot defensive shot" on behalf of a rattled Government. In an almost four page long statement, the PM took full responsibility for the contentious decision making of the Coal Ministry, a portfolio he was personally responsible for during the allocation of the coal blocks in question. However, whilst saying that, he also appeared to be placing blame on the lackadaisical and often whimsical modus operandi of the Law Ministry and the many State Governments that displayed a documented disinclination towards embracing the competitive auction process with regards to the coal block allocation. Mr. Singh further emphatically declared that, "any allegations of impropriety are without basis and unsupported by facts".

He also categorically dismissed the figures put forward by the CAG as "disputable". Additionally, he deemed the premise of the CAG "flawed" with regards to its assertion that the foundation of competitive bidding could have been introduced in 2006 by amending the prevalent guidelines; thereby, avoiding the entire mess. The PM ended by reciting an Urdu couplet which stated that his silence is a lot better than a thousand answers.

An Unyielding Opposition

Mr. Singh's lukewarm defence evidently failed to have the desired impact as a drooling opposition led by Mr. Arun Jaitley and Mrs. Sushma Swaraj tore into it, systematically.

The opposition in BJP continued its relentless assault on the Centre, demanding the PM's resignation by resorting to unparliamentary tactics, stalling proceedings. The BJP launched into an impassioned rebuttal stating that the State Government's reluctance do embrace the auction process could not be utilised as an excuse as the Centre always has the final say in such matters and had it possessed the wherewithal, it certainly could have overrode the State Governments and introduced competitive bidding of natural resources like coal. Secondly, Mr. Singh's dismissal of the CAG’s assertions has been perceived as an attack on a "constitutional body" which undermines the veracity of a democratic setup.

Finally, the BJP declared that the PM's excuse with regards to postponing the introduction of the bidding system was done to prevent "low energy production, low GDP growth rate and generation of lower revenues" did not hold water and failed to inspire confidence as these conditions have continued to exist, juxtaposed with the prevailing system in place.

The Clouds Loom Large

The Congress' well documented proclivity to shoot itself in the foot repeatedly has provided the BJP multiple opportunities to ride the "corruption plank" and whip up negative public sentiment in its wake. The "Coalgate" scam has yet again provided the BJP fresh fodder to fuel its intermittent assaults on the incumbent that increasingly finds itself ducking brickbats and rushing for cover. With State elections in Himachal Pradesh, Gujarat and Karnataka around the corner; one can rest assured that the BJP will pull out all stops to further undermine the Congress and its floundering leadership.

With its "defensive shot" failing in its bid to stall a rampaging opposition; the Congress has further been pushed onto the "back foot". Only time will tell if it is able to continue batting on a sticky wicket, with the clouds of "Coalgate" and other scams looming large overhead.

Read more on Coalgate - 
The Sunday Debate
Staying Afloat Barely
All You Need To Know About Coal Gate

| articles | bio | email | blog   

---

Pradyut Hande
The Writer is a Business student with a degree from NMIMS, Mumbai. He is presently working as a Senior Executive with a leading Public Relations firm in Mumbai. He has over 200 publications to his credit in some of the leading national dailies and weekly magazines across the country. He is also a keen Debater, Munner, Quizzer, Painter and Amateur Freestyle Rapper. His other interests include Sports, Music, Reading, Travelling and Social Entrepreneurship

---

Staying Afloat... Barely !

By Pradyut Hande

The incumbent UPA - II Government finds itself sinking deeper into the proverbial quagmire of controversy and disgrace with each passing day. It appears to be courting allegations, reprobation and ignominy with increasing vigour; much to its embarrassment. The recent CAG reports on the allocation of coal blocks, mega power projects and the development of the Indira Gandhi International Airport, Delhi have left the Centre gasping for breath. With a cumulative revenue loss accruing from these projects touted to be an astounding Rs. 3.78 lakh crore; the UPA - II is running dangerously low on "credibility fuel"; further jeopardising its rapidly dwindling chances of survival. The sheer magnitude of the monetary loss coupled with adverse ramifications on its already tarnished image; is most appalling.

To put things into perspective, let us view the "holistic scam" through a more discerning lens. According to the CAG, the losses through the improper allocation of the coal blocks amount to Rs. 1.86 lakh crore. This was a result of the questionable allocation of 57 valuable coal blocks to private companies at hugely subsidised prices. While for the power projects and the Indira Gandhi International Airport, Delhi it amounts to Rs. 0.29 lakh crore and Rs. 24,000 crore respectively. These alarming figures pale in comparison to the Rs. 1.76 lakh crore 2G Spectrum Scam. The cumulative loss to the exchequer has certainly not gone unnoticed and additionally has adversely impacted the economy that continues to grapple with high inflationary pressures, interest rates, sluggish growth, policy stasis and an ever burgeoning fiscal deficit. One can shake his head in disbelief at the level of gross misgovernance, abject mismanagement and blatant abuse of electoral power; but the clarion call for accountability and transparency has never been louder.

The CAG's Latest Reports Bring the UPA - II under Further Fire

These latest revelations are guaranteed to further undermine the Centre's already precarious position from the public's perspective. With "corruption" writ large on the wall, it would be interesting to watch how the Government attempts to extricate itself from this humungous controversy. Any attempts at surreptitiously sweeping it under the carpet would further antagonise an already irate populace. Furthermore, the Government ought to brace itself for the torrents of vitriol and tides of acidulous criticism that promise to rain down upon them, courtesy a sabre toothed Opposition that now has more fodder to launch a savage assault on it. What makes this situation even worse for the UPA - II Government is the fact that Prime Minister Manmohan Singh himself was responsible for the coal portfolio when the blocks were wrongly allocated. This certainly does not augur well for his position and calls for his voluntary resignation are liable to gain greater intensity in the days to come. For someone associated with the tenet of integrity, only time will tell how Manmohan Singh negotiates these choppy waters of controversy. It is also worthy of noting that had the exchequer not incurred such mammoth losses, we would have been able to address our growing fiscal deficit and ease inflationary pressures to a certain extent.

However, fretting over what could have been at this juncture of time is counter productive. The key perpetrators behind these despicable scams ought to be identified and persecuted with alacrity. One must realise that these incidences are a body blow to the haloed institution of democracy and further undermine the electoral process. When public confidence is repeatedly shaken, a deep seated collective negative sentiment is bound to take root. The Centre thus, needs to engage in confidence building measures. For starters, shedding the garb of hesitancy and adopting a more proactive approach to address policy stasis would go some way in assuaging the people; or for that matter altering its generic perception as a corruption riddled, internalised, fiefdom oriented, reform averse entity. Additionally, stipulated guidelines germane to the competitive bidding of such properties and contracts in question ought to be followed rigorously under the watchful scrutiny of the concerned authorities. "Transparency" and "Accountability" must become integral watchwords for the Government moving forward.

Suffice to say, this latest controversy has caused irreparable damage to the UPA - II Government's decadent hull. It remains to be seen how in the absence of any inspirational leadership at present, it endeavours to tide over these multiple scams in the face of mounting pressure and widespread negative public sentiment.

Read more on Coalgate - 
The Sunday Debate
Out In Co[a]ld
All You Need To Know About Coal Gate

| articles | bio | email | blog   

---

Pradyut Hande
The Writer is a Business student with a degree from NMIMS, Mumbai. He is presently working as a Senior Executive with a leading Public Relations firm in Mumbai. He has over 200 publications to his credit in some of the leading national dailies and weekly magazines across the country. He is also a keen Debater, Munner, Quizzer, Painter and Amateur Freestyle Rapper. His other interests include Sports, Music, Reading, Travelling and Social Entrepreneurship

---

The Follies of Nehruvian Socialism

By Pradyut Hande

In the bustling 21st century global economy that remains in the throes of perennial flux, India has traversed a tortuous path of socio-economic progression through the ages. Despite the economic slowdown and consequent market volatility, India is today one of the fastest growing economies in the world; well on its way to realizing its potential as a rapidly emerging socio-economic leviathan. Suffice to say, this can be facilitated predominantly through proactive and progressive governance and wide sweeping reformatory changes that relegate “policy paralysis” to the backburner. Granted the fact that despite the tumults of the day, India’s future appears bright; it is important to take cognizance of our past that eventually led us to embark on our current socio-economic developmental trajectory. Why is it that India presently languishes behind its fellow Asian powerhouse, China? Why have we always been looked upon as a state that is “on its way to realizing its potential”? What has hindered our economic progression over the years? Let me elucidate a critical collective factor that I believe is responsible for our predicament today…that has cost us almost two decades in our cycle of economic progression. 

The Post-Independence Indian Economy: The Follies of Nehruvian Socialism Enmeshed in a Mixed Economy

Circa 1947; after centuries of external subjugation, India was finally free of foreign rule. The air was abuzz with ecstasy, excitement and anticipation as our time had eventually arrived…India’s tryst with destiny. A charismatic statesman in Jawaharlal Nehru was sworn in as independent India’s first Prime Minister. The task before our leaders to galvanize a fragmented and pulverized economy into some sort of action was daunting and required a demonstration of great courage, initiative and character. Given the prevalent global scenario and his ideological leanings, Nehru and his trusted coterie chose to embrace a “Mixed Economy” under the ambit of Planned Development to alleviate the masses from the depressing quagmire of poverty, unemployment and general backwardness. Nehru had committed the nation to “the establishment of a socialist pattern of society where the principal means of production are under social ownership or control”. Enamoured by the economic growth of the erstwhile USSR, Nehru’s socialistic blueprint turned out to be a juxtaposed amalgamation of Keynesian macroeconomics, Stalinist public investment policies and Gandhian rural development measures. On prima facie evidence, it appeared to be an idyllic ideology lined with potential, provided the government was able to establish a sound and flexible framework to facilitate its implementation.

However, with the advent of time, it became increasingly clear that Nehruvian socialism was not the palliative to the country’s woes. However, well intentioned he may have been, his flawed ideology coupled with even poorer management had set India on a disastrous course. In a bid to integrate his ideology into a democratic mainframe, set in a pluralistic society, the hope was that the “mixed economy” would conflate the benefits of socialism and capitalism; propelled by the state’s leading role in industrialization. However, all it did was spawn the birth of an increasingly interventionist state with a heavy leaning towards the establishment of a largely ineffective and grossly underperforming public sector, steeped in Kafkaesque bureaucratic controls that further stymied growth. The powerful albeit monopolistic public sector failed to function anywhere near optimal levels in the absence of autonomy and soon became a huge drain on monetary and non-monetary resources. The state run bureaucracy continued to grow stronger and more rigid as potentially “game changing” reforms met with depressingly premature deaths. The excessive controls that were instituted to facilitate the proliferation of capitalistic tenets across a stagnant economy soon undermined its very purpose and suppressed innovation of any kind, further diminishing economic returns.

The private sector was shunned and riddled with regulations and abominably excessive taxation which killed the faintest spark of entrepreneurship and innovation. Furthermore, our ills were compounded by the fact that we chose to adopt a deeply internalized, import substituting strategy instead of following an export promoting approach with the objective to align the Indian economy with that of the world. Foreign investment was frowned upon and further alienated us at a time when we desperately required our integration into the global economic fabric. The fact that we had just tasted independence after years of foreign rule may explain our distrust of foreign involvement and association. Our faith in the state, although admirable, was grossly misplaced as we continued to pay heavily for our leaders’ impaired vision and floundering mismanagement. As it transpired, Nehruvian socialism that promised so much on paper failed on more counts than one, in both ideology and practice. The dreams of millions that hinged upon its success were shattered in the wake of our poor socio-economic progress for over four decades after independence.

The idealistic “mixed economy” approach was novel in its character. One can understand why it held immense appeal at that time for our leaders and policy formulators. However, its efficacy was questionable at best. Unfortunately enough for us, despite taking cognizance of its failings, we continued to regard the “system” as sacrosanct and sunk deeper into the abyss of low productivity and non-performance while our Asian neighbours embarked on a bold new reformatory trajectory. It took us until 1991 to act on our follies and embrace a majorly liberalized outlook that paved the path towards unprecedented economic growth in the years to follow.

We can lament the limitations and misadventures of our past policy makers and their myopic policies, but these are events that set us on the path that we tread on today. Having learnt from our failings, we ought to now channelize our efforts and resources to further our reformatory agenda down various avenues in our quest to push for greater socio-economic growth in the years to come.

| articles | bio | email | blog   

---

Pradyut Hande
The Writer is a Business student with a degree from NMIMS, Mumbai. He is presently working as a Senior Executive with a leading Public Relations firm in Mumbai. He has over 200 publications to his credit in some of the leading national dailies and weekly magazines across the country. He is also a keen Debater, Munner, Quizzer, Painter and Amateur Freestyle Rapper. His other interests include Sports, Music, Reading, Travelling and Social Entrepreneurship

---

Apple Gets Social : A Potential Investment in Twitter Abounds

By Pradyut Hande

After conquering the electronic realms of computers, portable music players, smart phones and tablets; Silicon Valley behemoth, Apple Inc. has trained its sights on "biting" into the social media pie. At a time when communal networking is growing in popularity the world over and competition in a nascent albeit fragmented market is enhancing exponentially; venturing down strategically diverse avenues, keeping the company's core competencies in mind, is critical to maintaining a market stronghold. Having floundered in its endeavor to make a dent in the social media space thus far, Apple is now contemplating a strategic investment in Twitter to further its efforts at galvanizing its social network market presence. The impact of social media on consumerism and buyer behavior cannot be undermined in a global economy. Thus, Apple's impending foray into this domain promises to open up a plethora of opportunities at both a macro and micro level.

"Apple doesn't have to own a social network. But does Apple need to be social? Yes!", said CEO, Tim Cook recently; words that are reflective of a potential investment down this channel. An impending stake purchase in a market leader like Twitter would create far reaching consequences for both companies alike.

What's in it for Apple?

For starters, one must note that it is not as though Apple hasn't tried to make inroads into the social media market in the past. It is just that its efforts have fallen flat in the face of mounting competition from perennially proactive rivals. For instance, Apple's relationship with Facebook got off to an inauspicious start when attempts at integrating key Facebook features into its own music-oriented social network, Ping, came undone owing to mutual disagreements. Additionally, the fact that a major competitor, Microsoft, already owns a stake in Facebook; makes Apple's position in this space all the more vulnerable. Add to that the mounting pressure being exerted by an upwardly mobile Google with its own social network, Google Plus, and Apple's "social media market experiment" thus far, pales in comparison.

However, fortunately for Apple, its attempts at priming Twitter as an integral partner has spawned a more mutually rewarding relationship in the past. The company has incorporated the latest Twitter features in the robust Apple OS that runs on its computers, laptops, smart phones and tablets. Over time, the Apple - Twitter alliance has tread the path of calibrated stability. Perhaps now is the time to take the relationship to "the next level".

With over USD 117 Billion in liquid assets in its coffers, a financial investment in Twitter at this juncture in time appears to be a prudent move. It would mark a departure from its prevalent strategy of primarily buying out upcoming start ups that can be strategically integrated into its global supply chain. Furthermore, a potential deal would help Apple leverage Twitter's competencies, reach and marketing prowess to gain a valuable foothold in the social media arena. It may not bestow Apple with the market leader position it is so accustomed to, but it would definitely pave the way for bigger and better things to come. While its competitors (and allies) attempt to enter the mobile phone and tablet markets (read Google and Facebook), Apple's proactive surge in social media would serve as an effective "counter". With mergers, acquisitions, strategic investments and an expanding portfolio of competencies fueling greater possibilities; the tech market remains in the throes of perennial flux and caprice. Apple's potential move thus, is not just prudent...but also necessary.

What's in it for Twitter?

With almost 150 million monthly active users, micro blogging site, Twitter has been at the forefront of the "social networking revolution" in the last few years. It may have carved a niche for itself, but in an unpredictable market it ought to remain vigilant and receptive to change. A potential investment oriented alliance with Apple would further augment its strong financial position. Twitter has more than USD 600 million liquid assets, primarily accrued through advertisement revenue.

Furthermore, it would prop up its valuation from USD 8.5 Billion to approximately USD 10 Billion. Being closely associated with a technology giant like Apple would consolidate its market perception and position. It would also come as a much needed shot in the arm in the face of widespread conjecture surrounding the over valuation and inflated potential business projections of social media companies. In the wake of Facebook's lackluster showing on the share market, investors are liable to tread with caution.

An investment by Apple would also prop Twitter up suitably till its impending IPO a few years down the line.

Thus, a potential deal would spawn and augment a mutually beneficial relationship in an increasingly dispersed market landscape. The fact that Twitter does not plan to venture into Apple's traditional markets, lends credence to the partnership's solidity. This is unlike the situation with companies like Google and Facebook that have stepped up efforts to challenge Apple's supremacy in its familiar stronghold of the mobile phone market.

Whatever be the case, all these company directed undertakings are symptomatic of a gradually changing consumer mentality. A strong consumer focus coupled with a vigilant eye on the competitor in the rear view mirror and sound strategic sense will be the name of the game moving forward.

| articles | bio | email | blog   

---

Pradyut Hande
The Writer is a Business student with a degree from NMIMS, Mumbai. He is presently working as a Senior Executive with a leading Public Relations firm in Mumbai. He has over 200 publications to his credit in some of the leading national dailies and weekly magazines across the country. He is also a keen Debater, Munner, Quizzer, Painter and Amateur Freestyle Rapper. His other interests include Sports, Music, Reading, Travelling and Social Entrepreneurship

---

Mutiny in Manesar

By Pradyut Hande

The country's largest automobile manufacturer, Maruti Suzuki India Limited (MSIL) finds itself firmly entrenched in a major "corporate quagmire". In an unfortunate turn of events, July 18 turned out to be a dark day in the company's history, when disgruntled workers at its Manesar facility resorted to violence and went on a gruesome rampage; damaging property and assaulting hapless management executives. Apart from the monetary loss, the sordid episode led to the death of a senior management executive; while over a 100 others were severely injured.

Labour Unrest "Drives" Maruti Suzuki to Declare a Lockout at its Flagship Facility

With tempers frayed and matters perched precariously on a razor's edge, the MSIL has now declared a lockout at its Manesar plant. Mr. R.C. Bhargava, Chairman, MSIL firmly stated that the need for a lockout has been necessitated as a fallout of the widespread worker unrest, fuelling a wave of unprecedented violence that threatens the safety of the management. The top brass' decision to enforce a lockout is a forced albeit inevitable move that has far reaching consequences. Despite the ongoing problems faced by the auto maker at Manesar, the MSIL has dismissed rumours of shifting base to an alternative location. Let me now delve deeper into the entire crisis at large that would help elucidate the chain of events leading upto the fateful Wednesday of July 18.

The Causative Agents :

The Manesar facility of the MSIL employs about 1,500 odd permanent workers and approximately the same number of workers employed on a contractual basis. Labour unrest has been bristling under the surface for a long time now, what with the management and workers adopting a definitively polar opposite stance on various issues of veritable import. In fact, there were three instances of sporadic unrest at the same plant between June and October, 2011. The workers' demands for recognition of an independent trade union, re-induction of suspended fellow workers and the provision of permanent employment to the contract workers amongst others were not met by the company management. This further stoked the ire of the already disgruntled workers. Nevertheless, both the management and the workers came to an agreement to put an end to the forced strikes as cumulative losses had already reached a whopping Rs. 2,200 crores.

On July 18, the tenuous employer-employee relationships endured a major blow when an altercation between a permanent worker and his supervisor resulted in his immediate suspension. The workers' demand to revoke this suspension did not find favour with the management; which further exacerbated the situation. As negotiations collapsed, a mob of about 2,500 workers turned to belligerence to force their hand. What followed was sheer carnage. Thus, numerous factors were collectively responsible for the eventual "snowball effect"; resulting in the rage fuelled violence and consequent lockout.

The Implications :

MSIL's Manesar facility is responsible for 45 percent of its overall production in the country, manufacturing 1,600 cars per day. The unrest thus, has majorly hit production operations causing losses of up to Rs. 70 crores a day. That translates into a cumulative loss of Rs. 210 crores thus far. For a company, that is already grappling with the threats posed by increasing fuel prices, rapidly changing consumer sensibilities and dynamic competitors in a fluctuating marketplace; MSIL can ill afford to compromise on its production if it is to hold on to its dwindling market share. Add to that the losses incurred due to vandalism and arson, and the picture gets that much bleaker. Thus, its production capacity has been hugely dented as a result.

Furthermore, the violence caused grievous harm to human life, killing one and injuring over a 100 executive managers. The company would find it difficult to rally its troops after an incident of this nature. Mounting losses, damaged management-worker relationships and a band of various external and internal pressures have left MSIL vulnerable in an unforgiving market.

The Road Ahead :

Granted the fact that there existed major flashpoints of segregation when it came to key issues between the management and workers' perspectives, but violence of this nature cannot be condoned under any circumstance. There is absolutely no excuse for such acts that disrupt the industrial sanctity of a region in such a brutal manner.

The Haryana Government has already instituted an inquiry into the incident, while the company has set up an internal committee of its own to investigate the deplorable chain of events. For starters, the perpetrators ought to be dealt with suitably. Furthermore, negotiations are in order to resolve the ongoing conflict between the management and the worker's union. Despite the severity of the situation, MSIL can salvage something out of this scenario, provided its corporate honchos act with calibrated alacrity and pragmatism.

Only time will determine the fate of those workers involved in the fracas and whether MSIL can institute a framework to deal with incidents of this nature in the future.

| articles | bio | email |  

---

Pradyut Hande
The Writer is presently pursuing his Bachelors in Business Administration at NMIMS, Mumbai. He attempts to address myriad issues of both domestic and global consequence, ranging from Business and Economics to Geopolitics...from Sports to Arts and Culture.

---

A Vend in the Road

 An Insight into the Vending Machine Market and the Neo-Indian Consumer

By Pradyut Hande

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

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

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

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

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

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

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

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

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

| articles | bio | email |  

---

Pradyut Hande
The Writer is presently pursuing his Bachelors in Business Administration at NMIMS, Mumbai. He attempts to address myriad issues of both domestic and global consequence, ranging from Business and Economics to Geopolitics...from Sports to Arts and Culture.

---

Union Budget 2012-13

By Sahil Mehta

Sachin Tendulkar’s incredible achievement yesterday might not have been enough to save India in the match, but it certainly did save Pranab Mukherjee from a lot of public scrutiny over his budget. Yes, people! The Union Budget was presented yesterday, but don’t worry you didn’t miss much. 

With the government tottering, and Mamata Banjerjee bullying the Congress left, right and centre, not much was expected from the budget. And the budget doesn’t disappoint. For a neutral there isn’t much to criticize in the budget, except that it doesn’t do enough. 

The Fin Min started by stating that the last year was “a year of recovery interrupted”. It is an understatement beyond belief. The government fell incredibly short of almost all the targets. The GDP which supposed to grow at 8.5% in the fiscal grew only at 6.9%. Inflation, which was supposed to come down by August 2011, was still in double digits till December and stood rather high at 6.9% in February. Due to high volatility and uncertainty in the market, the govt. could not raise even 50% of its disinvestment targets. And worse, the fiscal deficit which was supposed to come down to 4.6% of GDP, currently stands at 5.9% of GDP. 

If the numbers tell a sorry state of affairs, the actual condition of the government is even worse. The comple­­te lack of decision making ability and the haphazard manner in which they’ve gone about their business, as demonstrated in the case of FDI in retail, has left industry and investors bewildered and uncertain. 

In his penultimate budget before the General Elections in 2014, the Finance Minister had his last chance at bringing about some of the reforms that he has been harping about since the beginning of his tenure. But he has decided to play it safe. His budget ensures that there is no repeat of the debacle that was the Railway Budget. 

Pranab Mukherjee also talked about “taking hard decisions” and “faster, sustainable and more inclusive growth” as India enters the first year of its Twelfth Five Year Plan.     

Some of the key highlights of the budget are as follows

•  GDP is expected to grow at 7.6% in the coming fiscal.
• Headline inflation expected to moderate further in next few months and remain stable thereafter.
• Fiscal deficit to be reduced to 5.1% of GDP in the coming fiscal year.
• Proposed amendments to the Fiscal Responsibility and Budgetary Management Act.
• Subsidies to be kept under 2 per cent of GDP in 2012-13. Over next 3 year, to be further brought down to 1.75 per cent of GDP. Subsidies related to administering the Food Security Act will be fully provided for.
• Direct Tax Code to be implemented at the earliest after discussions. Goods & Service Tax to be implemented retrospectively from August 2012
• 30,000 crores to be raised through disinvestment. At least 51 per cent ownership and management control to remain with Government.
• During Twelfth Plan period, investment in infrastructure to go up to 50 lakh crore with half of this, expected from private sector.
• Tax free bonds of 60,000 crore to be allowed for financing infrastructure projects in 2012-13.
• Income tax exemption limit raised to Rs.2 lakh to provide relief of Rs.2,000; 20 per cent tax on income over Rs.10 lakh, up from Rs.8 lakh.
• Deduction of up to Rs.10,000 from interest from savings bank accounts.
• Withholding tax on external commercial borrowings reduced from 20 per cent to five per cent for power, airlines, roads, bridges, affordable houses and fertiliser sectors.
• External commercial borrowing of up to $1 billion permitted for airline sector. External commercial borrowings permitted to low-cost housing sector. 
• Service tax and excise duty increased to 12% from 10%.
• Introduction of white paper on Black Money soon.

Summary

As a common man, all these details might not interest you. So I’ll try and break it down for you. The tax limit has been raised, which mean you save some money. But the increase in service tax and excise duty means everything becomes more costly. Except for a few services, 107 services will be taxed. 

ACs, Gold jewellery, Refrigerator, Luxury cars, Air travel, Telephone bills, SUVs, Cigarettes, Branded retail garments, Eating out at restaurants, Hotel accommodation, toiletries, cosmetics, soft-drinks, steel, cement; all are more expensive now! 

Cinema and films, LCDs and LEDs, imported bicycles, housing society charges, LPG
mobile phones,  school education, iron ore equipment, medicines for treating cancer and HIV, processed food, iodised salt, solar power lamps, LED bulbs, natural gas, desktops/laptops are all cheaper now!

Final Word

The budget is not bad. I’ve read reactions from a whole lot of people about how there is nothing is this budget for the aam aadmi. None of those people are aam aadmis. The masses which make up this country are majorly people in the villages and lower sections of the society. The increase in agricultural credit and full food subsidies should help people. It is true, however, that the government’s focus is not the aam aadmi but the macroeconomic environment of the country. The move to curb subsidies at 2% is a commendable one. Tax free bonds for infrastructure are a necessity. Allowing external borrowing will bring much needed relief for the aviation industry. Reduction is price of mining equipment is certainly a good decision. India has vast reserves of coal and iron and yet these two goods constitute a large part of our import bill. It is time India started relying on its own reserves. The hike in service tax and excise duty will definitely cause prices to increase but considering the fiscal deficit facing India, there are hardly any options left.

Of course the budget does leave a few things unsaid. For example there is no definite roadmap for how we are going to achieve 7.6% growth. The estimates seem exaggerated with demand expected to slow. The target of 5.1% of GDP is itself a disappointing one, especially considering the populist budget to be expected next year with elections looming.

All in all, this budget is not aimed at making anyone happy but at ensuring that no one is outraged. The real question is whether it will be enough for the Indian economy? And for the Indian people. 

---

A New Twist in the FDI (Re)-tail

Rahul Gandhi’s Move and What it means for the Frozen Proposal

By Pradyut Hande

With the Centre grappling with myriad issues across a wide spectrum; including stagnating economic growth, inflationary pressures, widening fiscal deficit, weakening currency, drop in industrial output and a general lack of credibility; its attempt at finally paving the way for FDI in multi brand retail would go some way in dispelling its “pseudo-reformist” attitude. Or so the Congress would have thought. However, in its haste to usher in the new era of economic reforms and pick up the gauntlet of liberalization with renewed vigour, the Congress has seemingly collided head on into the impregnable walls of staunch opposition from its coalition partners and other parties such as the BSP and the SP. The fierce backlash to the Government’s decision eventually caused it to temporarily freeze the move, much to the chagrin of the industry at large which has vociferously hailed its previous proactive stance. On the face of it, the move to roll back its overdue decision does appear regressive and flies in the face of its pro-reforms approach after a period of “policy formulation and implementation limbo”; but such are the dynamics of coalition politics that cracks and fissures can suitably be leveraged to browbeat the Central party into submission.

Set in this volatile backdrop replete with a veritable degree of caprice, the industry insiders continue to lament the Government’s incertitude on FDI in retail. However, despite the torrent of negativity and vitriol pouring in from myriad quarters, it does appear that all is not lost. Addressing farmers in the potato belt of Farrukhabad in Uttar Pradesh, the scion of the Congress party, Rahul Gandhi spoke out in unequivocal support of the move to usher in 51% FDI in multi-brand retail in the country. He also went onto term the proposal as a “pro-farmer” measure and took a swipe at the Congress’ regional rivals such as the BSP and the SP, terming their misplaced opposition, resentment and rejection as “anti-farmer” rhetoric. Gandhi’s statement that comes days after the momentary lockdown on the move comes as a timely shot in the arm for a beleaguered Government that continues to struggle in its quest to negotiate the choppy tides of tribulations. It also promises to serve the Congress well by compelling those dissenters from within its ranks to fall in line with alacrity. A unified sense of purpose taking into cognizance the larger picture is of critical significance to the eventual fate of the laid down proposal.

 

The Government is likely to reassess the situation, readdress the concerns of the aggrieved and dissenting parties and take up the cudgels in earnest with regards to the contentious FDI in multi-brand retail issue after the Uttar Pradesh state polls. With the young Gandhi already expressing solidarity with the plight of the farmers who stand to gain immensely from the proposal if implemented and wisely positioning the Congress as a pro-reform and pro-farmer party, he could have pulled off a political masterstroke. Farmers in this region, as well as parts of Punjab and North India, have reportedly dumped their produce as they don’t find it feasible to bear the cost of transporting their yield to the market. Additionally, even if they do manage to get their produce to the market they are unable to fetch remunerative prices, adding to their already existing financial and logistical woes. By emphasizing the fact that the farmers stand to receive better margins on their produce and in turn also reduce significant wastage, Rahul Gandhi is garnering the critical support of a critical vote bank. Hence, it appears that his carefully engineered move is designed to serve multiple purposes.

FDI in multi-brand retail isn’t merely a flashpoint any longer. It is a pressing necessity. For far too long has the Government concealed itself behind the veil of coalition political pressures, precariously perched on the fence of ambivalence and gross indecision, failing to find a middle ground. However, it is high time that proactive governance translates words into actions, ensuring tangible results. How the Government manages to find a way out of this present quagmire and actually galvanize the rapidly burgeoning retail industry remains to be seen. But for now, the industry has to make do with positive words of intent and action that may materialize in the not so distant future. Or won’t it?

| articles | bio | email |  

---

Pradyut Hande
The Writer is presently pursuing his Bachelors in Business Administration at NMIMS, Mumbai. He attempts to address myriad issues of both domestic and global consequence, ranging from Business and Economics to Geopolitics...from Sports to Arts and Culture.

---

The China Strategy

Tackling the Growing Trade Deficit with our Industrious Neighbours 

By Pradyut Hande

It was not more than a decade ago that industry experts, policy formulators and other extraneous potential stakeholders attempted to convince the Government to embrace a more proactive strategy with regards to engaging the Chinese in greater trade. Over time, both the Asian behemoths have embarked on their individual trajectories of socio-economic progression. We may have our fair share of differences – political, ideological, economic, and military – but undeniable is the fact that a stable strategic relationship with the Chinese is integral to our future growth prospects as a rapidly emerging economy. Set in this backdrop, trade between the two nations has blossomed and China has gradually become India’s biggest trading partner. A measure of this can be gauged from the fact that trade with China has boomeranged almost 160% to amount to USD 24 Billion since 2006-07.

However, a cursory glance at the figures is not liable to paint one a complete picture. While holistic trade over multiple sectors has certainly improved and increased by appreciable levels, India’s trade deficit with China too has also escalated. The trade deficit is the difference between a nation’s exports and imports with a corresponding trade partner nation. While imports of Chinese goods has risen from USD 17.6 Billion in 2006-07 to USD 43.5 Billion in 2010-11, Indian export to China pales in comparison, up from USD 8.3 Billion to USD 19.6 Billion over the same five year period. China accounts for more than a fifth of India’s trade deficit. This escalating trade imbalance has not gone unnoticed and has emerged as a domain of alarm for the incumbent Government. In its endeavour to tackle this growing deficit, the Government is exploring myriad measures.

Amongst the many options the Centre is presently mulling over, imposing higher tariffs on a majority of imported Chinese goods appears to be a viable option. It proposes a blanket ban on specific products such as power and telecom equipment; sectors that are increasingly becoming dependent on Chinese imports at the expense of other domestically or internationally procured equipment and infrastructure. It also postulates that it should be made mandatory for Chinese companies to enter into Joint Ventures (JVs) with their contracted Indian firms prior to the import of heavy equipment and machinery from China; consequently marginally diluting their position of strength that they seemingly enjoy in the present scenario. There is also an increasing likelihood of gradually substituting Chinese goods with those from Japan, Taiwan and South Korea as a direct consequence of having to deal with lower tariff barriers.

One must note that the Commerce Ministry hasn’t just drafted a modified “China Trade Strategy” overnight. The ever increasing trade deficit has been rightly taken cognizance of and brought to the notice of the concerned authorities as well. Indian officials say that China has openly acknowledged the trade deficit issue but has continued to pursue its seemingly self-serving uni-dimensional ways and consequently, has done precious little to address the pressing situation at hand. In fact, China has shown scant regard for India’s repeated requests and proposals that could have significantly reduced the widening trade gap. Some of the requests include the reduction in import duties on Indian pharmaceuticals, agro produce, IT products, heavy equipment and machinery. China may have promised to look into the matter but as is often their wont, apart from furthering their interests by adopting a carefully calibrated market penetration and consolidation strategy (primarily through the effective albeit frowned upon use of Predatory Pricing), they have failed to take into consideration Indian concerns. Hence, the plainly evident lack of favourable response from China has compelled the Commerce Ministry to draft the fresh proposal in order to counter the increasing trade inequity.

On the face of it, the aforementioned proposals do hold promise. However, a policy remains steeped in inefficacy if it fails to come to fruition. The intricacies of the revised policy ought to take into consideration the inputs from the concerned industries it is most likely to impact – Power and Telecom amongst others – in the long run. Drafting a more comprehensive policy with strategic revisions and obtaining implementation clearance isn’t the only obstacle in the Commerce Ministry’s path though. Experts believe that the increasing dependence on Chinese goods will only make restrictions on their import that much harder. Opposition to the imminent policy change is liable to stem from the Indian industry itself. Additionally, also at a time when the clarion call espousing the multifarious benefits of an open market devoid of amplified Governmental intervention is at its loudest and nations are increasingly entering into Free Trade Agreements (FTAs), India’s interventionary stance to reduce its trade deficit with China maybe perceived as retrogressive by international quarters. So the Government sure has its work cut out on multiple levels, as far as tackling the trade deficit with China is concerned. Proactive policy formulation continues to remain the need of the hour. The question though that needs to be answered is: “Is the Government willing to take tough decisions that may cause a veritable degree of consternation amongst Chinese ranks in the larger scheme of things?”

| articles | bio | email |  

---

Pradyut Hande
The Writer is presently pursuing his Bachelors in Business Administration at NMIMS, Mumbai. He attempts to address myriad issues of both domestic and global consequence, ranging from Business and Economics to Geopolitics...from Sports to Arts and Culture.

---

Old Wine in a New Bottle or New Wine in an Old Bottle?

Argentina’s Re-elected President and the Road Ahead

By Pradyut Hande

The Latin American nation of Argentina held its National Presidential and Legislative elections on October 23, 2011. The results of these elections were along expected lines, given the wave of populist sentiment the current Government managed to whip up in the run up to the elections. The incumbent President Christina Fernandez de Kirchner has managed to secure a second consecutive term in office after the Front for Victory (FpV) marginally captured over half the seats in the National Congress. Headed by the President, the Front for Victory (FpV) is a coalition party which includes allies like the New Encounter. It is based on the factions of the centre-left Justicialist Party (PJ) that presently owe allegiance to the ruling Government. Fernandez has charted a chequered path, paving the way to her re-election. In 2008, she had suffered a noteworthy decline in support as a consequence of the prolonged imbroglio between the Government and the under-fire agricultural sector. The recessionary situation and the global economic meltdown only amplified her problems. In fact, the reigning Front for Victory (FpV) Government suffered the ignominy of losing its absolute majority in both the houses of Congress during the June 2009 mid term elections. However, Fernandez has managed to stage a gallant albeit gradual recovery in the period following her Government’s mid term debacle that has eventually culminated in her winning her second consecutive term in office.

There are numerous plausible factors that have collectively connived and manifested themselves at the right time to contribute to Fernandez’s re-election. A year ago, on October 27, 2011; with her Government under relentless pressure; Fernandez’s husband, Nestor Kirchner died of a sudden heart attack. Kirchner was Argentina’s President before his enterprising and politically savvy wife succeeded him in office. Many believed that Fernandez had lost her grip on power and her appetite for another tenure in public office following the death of her husband and most trusted political aide. However, Fernandez displayed remarkable poise and drive as she put aside her personal grief to focus on her Government’s performance and Presidential campaign with renewed vigour. One would be naïve to dismiss the fact that the death of her husband – a much respected and influential Statesman – certainly won her a veritable degree of sympathy from myriad quarters. Suffice to say, the extraneous element of luck has undoubtedly played a role in her re-election. However, the Kirchners at large have been remarkably fortunate during their respective Presidential tenures.

It was in the tumultuous year of 2001 that the then moderately developing state of Argentina slipped off the precipice to land itself in a severe debt crisis. Poverty and unemployment soared as the nation and economy per se failed to find a modicum of stability. Five Presidents were elected within a brief period of three years as the country continued to lurch further into the abyss of pressing economic crises. It was one of these temporary Presidents, Eduardo Duhalde that actually succeeded in stemming the rot to a certain extent. Through a sound mix of fiscal and monetary policies coupled with the devaluation of the Peso that was fixed on par with the US Dollar until 2001 and a renewed emphasis on exports, Duhalde managed to put the Argentinean economy on a relatively stable path of progression. However, his year long tenure soon came to an end as he was then succeeded by the late Nestor Kirchner (then the Governor of the Province of Santa Cruz) in 2003. The long term economic and political benefits of Duhalde’s sound developmental strategies were eventually reaped by first Kirchner and then his wife, Christina Fernandez. On account of “inheriting” an economy in improving shape, their task was probably made easier. Fernandez was also aided by the fact that there suddenly was an enhanced demand for farm exports that commanded higher prices in the market and a rapidly burgeoning “next door economy” in the form of Brazil. The mutually beneficial “cross-regional growth effect” stimulated the Argentinean economy as its exports sector boomed.

To placate an impoverished population fuelled by angst that had displayed a well documented proclivity to rise in protest against the Government and its perceived apathy, Fernandez focused her attention on expansionary policies. Robust socio-economic progression and Job creation became her cornerstones of ensuing political success. Although inflation continued to escalate at an alarming rate (and still continues to rise. It is presently in the vicinity of about 20%), the Argentinean economy has bounded to register a GDP growth rate of 9.2% in 2010. Many believe that the Government has often resorted to doctoring the figures to suit their needs. However, the veracity of those claims or alleged rumours remains questionable in the absence of substantial evidence. Thus, her carefully calibrated populist measures have certainly gone some way in winning her approval and favour, especially from the lower income strata of society. She has also attempted to ease inflationary pressures on her populace through welfare schemes, state sponsored subsidies and marginal wage rises. Christina Fernandez may have made her way back to the Presidential office riding on a wave of luck, positive sentiment fuelled by populist people-centric measures and sympathy garnered due to her bereavement. However, undeniable is the fact that she does possess the requisite political skill, diplomatic wherewithal and personal leverage to make her second tenure count. However, recent figures are clearly indicative of the fact that economic development is stuttering and industrial performance is slowing down, especially in the wake of the global economic slowdown at large.

A new tenure demands a fresh approach to policy formulation, especially in the current global economic scenario. The present rapid growth and expansionary policies are beginning to catch up with the economy, what with Argentina struggling to meet its fiscal deficit targets. There also needs to be a detailed review with regards to the numerous subsidies the Government presently offers, that amount to almost 5% of the GDP. There is a fine line between treading the populist path and hampering long term economic progression by placing undue stress on the economic infrastructure. A renewed focus on attracting greater FDI, encouraging proactive private sector partnerships in critical sectors and gradually reducing widespread Government intervention should also be looked at from a more discerning lens. The road ahead appears daunting…fraught with obstacles. However, it remains to be seen whether Christina Fernandez learns from her previous follies and embraces a more balanced approach towards holistic inclusive growth. Populist measures can be relegated to the back burner for now. The need of the hour is structural economic reforms and privatization drives to stimulate greater demand and counter rising inflation.

| articles | bio | email |  

---

Pradyut Hande
The Writer is presently pursuing his Bachelors in Business Administration at NMIMS, Mumbai. He attempts to address myriad issues of both domestic and global consequence, ranging from Business and Economics to Geopolitics...from Sports to Arts and Culture.

---