Bharat Rakshak

Yogi,

That is good data. It is a sign of our having graduated into a middle middle income country. Next up is High middle income country when we hit a GDP of $3-$4 Trillion. Once countries enter Middle income territory a lot of disposable wealth, read resources are available to divert into upgrading the living environment. Looking at more than just bare survival. We need to focus on keeping our saving rate up at a high 35% of GDP.

Overseas investors are continuing to invest in Indian equities markets at a brisk pace with inflows already topping $5.5 billion in under two months of trading of 2012.The huge inflows have sent valuations of scrips soaring and benchmark indices making double digit gains, but has also now raised fears, that the rally purely being driven by foreign institutional investors (FIIs) could fizzle out as the fundamentals of the Indian economy have little changed in the past two months.Of course inflation, a big worry has come under control. According to latest data, India's annual inflation was at 6.55 percent in January. Also the rupee which had declined sharply against the US dollar in December has now stabilised.These factors were actually what helped overseas funds to start pouring into Indian markets in a big way.According to data available with the Securities and Exchange Board of India (SEBI), FIIs have were net buyers in January to the tune of $2.03 billion. Last week saw them pump in over $698 million into equities taking the total for February to more than $3.51 billion.The benchmark indices in the same period have rallied smarlty.The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) gained 2,468 points or 16 percent to close Friday at 17,923.57 points, compared to the Dec 30 closing figure of 15,454.92 points.

ET Now: We got the December call right. December is over, this is end of February. What is your market call now? Shankar Sharma: This will be a seminal year for Indian equities relative to global equities and emerging market equities. This year will be a breakaway year for India. After spending 4.5 years in a bear market, my sense is that India will go back to being a market that everybody wants to be in rather than this scepticism that we have seen throughout the last quarter of 2011.
There continues to be a lot of scepticism amongst global investors about India with the rally and macro and current account deficit. The market will climb those walls very easily and we will end the year a lot higher than where we are now. We will do much much better than almost every other equity market of consequence.
ET Now: We are already up 20% for the calendar year. Will you be surprised if the benchmark indices add another 10% to 15% for the rest of the year?
Shankar Sharma: No, I will be surprised if they do rise that much. My sense is that we might get a situation of markets taking out their old highs of 2007 or 2008. Coupled with a strong rupee, we will see in dollar terms the market doing phenomenally well as opposed to last year when in dollar terms we were down 30% or 40%. So this is an exact contrast year for India and we are very optimistic.

ET Now: First Global is talking about China being a Ponzi scheme. The world is betting whether it will be a soft landing or a hard landing for China, but First Global is of the view that China will see a crash landing. What are your thoughts?

Shankar Sharma: There is no soft landing in an economic model that China has run, especially when we run a business run fuelled solely by debt. Everybody has had this notion that China has grown without debt and there is a very low debt to GDP ratio. All this is complete nonsense. We have gone into the greatest amount of detail on this. The real number that China has by way of debt to GDP is something like 150-160%. This number will worsen in the next 2 or 3 years' time to 180%. That is assuming that they do not have a huge NPL problem. ur sense is that they will have at least 40-50% nonperforming loan problem. The other problem that might crop up is that faced with a slowdown, they will again try and inject a lot of money and pump the economy in the classical Keynesian method. Both of those situations are terrible for the economy. Assuming that one out of those 2 things will happen, China will still end up with 180% debt to GDP ratio in the next 3 years. Assuming both will happen, we are looking at a 200-220% debt to GDP ratio. That is like Japan. So, countries that run up debt to GDP ratios of that kind simply cannot continue to grow. We assume China belongs to another planet. It does not have to subscribe to the laws of economics. However, there was another country exactly in the same boat, which is USA. They kept running up huge debt-laden booms throughout the last 30 years. We know how that has ended.

ET Now: So if China goes under, what happens to commodities?
Shankar Sharma: Commodities are a short. Of our big global macro themes, commodities are definitely the place that we do not want to be long on, be it in Indian commodity stocks or global commodity stocks.
ET Now: The US is in a problem. Europe is in a mess with European consumers being exhausted and if China slows down further, what will board for global markets?
Shankar Sharma: Everyone has its own problems, be it affecting global economic growth rates or the ability of China to buy more debt of foreign governments. China has been running a debt-fuelled boom at a staggering scale and by our estimate they will have $22 trillion of debt in the next 3 years. When you run up numbers of that magnitude, the only problem is that nobody will come and tell not to do it.

The Indian state of Gujarat doesn't have a metro rail system, yet the biggest carriage-making factory in the country is located here.As India looks to upgrade its public transport in cities like Delhi, Bangalore and Hyderabad, Bombardier Transportation sees big opportunities.Its fleet of Movia carriages operates on the Delhi metro system, where it has a contract to make 614 of them in total.Benoit Cattin Martel, president of the company, says building the plant in Savli in 18 months was a world record for it."When we were taking the big decision for the metro project, we looked around and decided to be in Gujarat."In fact it's proven to be a very good choice because we have great support from Chief Minister Narendra Modi and his team.Udayan Banerjee is the managing director of Sharda Motor Industries - one of the first Tata vendors to relocate.
He says at the event to inaugurate the Nano plant that Mr Modi said the cost of bringing the huge investment to Gujarat was just one rupee (less than five cents).
This was in reference to the cost of one text message that Mr Modi sent to the Tatas saying "Welcome to Gujarat". That did the trick.Now the Nano plant and around 60 car parts suppliers have moved here to Sanand.But the biggest reason for Gujarat's popularity is that unlike most of India it is a power-surplus state.

Mr Banerjee says: "We don't need a captive generator to run our plant here. This is the only plant I have out of the 17 plants in seven states in India that doesn't need a backup generator."Other than coal-based thermal power plants, the state leads the country in solar energy usage.The Asian Development Bank recently approved a $100m loan to Gujarat to build a 500 megawatt solar park.

February 28, 2012 Kingfisher Airlines chairman Vijay Mallya has reportedly written to employees of his airline saying he has arranged for finances to pay their long-overdue salaries. Kingfisher spokespersons however refused to confirm the development. He also said that the UB Group and its associates have converted loans for an additional 5 per cent equity in Kingfisher Airlines and said this demonstrated the faith he had in the airline.

But Dr Mallya is also reported to have blasted the media in the communication and referred to the “media frenzy around the airline”. “I have organised funding so that we can pay your seriously overdue salaries which is a source of great personal sorrow for me. We are currently handicapped as our bank accounts are frozen by the tax authorities. I have been working tirelessly to resolve this issue through negotiation. We fully intend to pay our tax dues as much as we commit to paying your salaries,” Dr Mallya is reported to have said.

Picture yourself as a smart alec from one of India’s many fast-growing states—Andhra, Gujarat, and now even Bihar—who happens to run a small family business and is an old pal of the local Mantriji. With suitable inputs from his ministry’s babu, Mantriji floats a scheme to put up a large power generation project, say, worth a hefty Rs 2,000 crore.
You summon a huddle of the large extended undivided family, and count your blessings, cash piles and bank accounts. Let’s say you have only Rs 100 crore. That elder who you think has been going senile scoffs and mumbles something to the effect of boys these days wanting to set up projects 20 times larger than the collective family wealth. You sigh deeply and buy him a ticket to Haridwar, Kashi, Chitrakoot or wherever. From here on, he can run the family charitable trust and generate goodwill.
The Rs 2,000 crore power project is of national importance, being of strategic value to the country’s growth, so the government has sanctioned a 12 per cent ‘guaranteed return’. This bait is to be used to get banks in. At high leverage. This implies that instead of the prudent 2:1 debt-to-equity ratio, you can stretch it to 3:1. In simple English, that means for every rupee that you put in, the bank will give you a loan of Rs 3. If you put in Rs 500 crore, banks will release Rs 1,500 crore.
Now, in a company with Rs 500 crore of equity capital, promoters need to have only a little more than Rs 250 crore worth of shares to have a controlling stake of just over 50 per cent. The rest can be dispersed among a million investors. But then, that doesn’t solve your problem. All you have is Rs 100 crore. You are Rs 150 crore short. What do you do?
You appoint a Merchant Banker—guys in suits who help you raise money from capital markets. They make you incorporate a new company with Rs 100 crore in capital, its 100 million shares (of Rs 10 face value each) owned entirely by you and your family. After that, riding on the wonderful project you have bagged, they help you launch an Initial Public Offer (IPO).
You offer the public another 100 million shares at Rs 40 each, a premium of Rs 30. So what if the project has not even acquired land, leave alone plant and machinery, forget generating even a single megawatt of power? The Merchant Banker’s PR division plants helpful stories in the press extolling the virtues of the project and its promoters. Helpful stockbrokers circulate stories of the grey market premium that the yet-to-be-sold shares command. Your IPO is ‘oversubscribed’ thanks to the Standard Tricks Department of the Merchant Banker, and the shares debut on the stockmarket at Rs 50, trading at Rs 10 more than the issue price of Rs 40. The net worth of your company is now Rs 500 crore: Rs 200 crore paid-up capital (half of it yours) and Rs 300 crore in the share premium account. And you still own half the business.
To meet their lending targets (and keep Mantriji happy), the banks promptly sanction Rs 1,500 crore in loans. Mantriji, a coalition partner in the state government by virtue of his three seats in the Assembly, provides support to the Chief Minister, whose party survives on a one-vote majority. Of your 50 per cent ownership, he has been given a secret 10 per cent stake. Of course, he does not own it directly but through two other local businessmen—one, a former property dealer, now a real estate company, and the other, a former tent-tamboo trader, now also a real estate company.
With Rs 2,000 crore in your kitty, you now set off to distant shores to buy power equipment. Your travels take you to Old Europe, to the not-so-old US, and finally to New China, where you settle on state-of-the-art technology for Rs 1,000 crore. Next, your travels take you to Dubai, Singapore and finally Mauritius. Here, your Merchant Bank helps you set up a company that buys this equipment for Rs 1,000 crore from your Chinese suppliers, and then sells it, in turn, to your Indian market-listed power company for Rs 1,500 crore. Thus, your Rs 100 crore investment has already generated Rs 500 crore for you in a tax haven. Satisfied, you return to India with the peace of an ascetic and spirit of a man who has travelled the world to see India succeed.
With the balance Rs 500 crore, you acquire land in a formerly ‘no-go area’ at throwaway prices from naïve tribals who are easily pleased with a third-rate hospital and worse school you set up for their upliftment (thus acquiring a do-gooder’s public image). In two years, the project is up and running. To guarantee 12 per cent returns on the Rs 2,000 crore project, the government buys electricity from you at a price that generates Rs 240 crore. You pay your banks Rs 150 crore in interest, and earn profits of Rs 90 crore on capital of Rs 200 crore. That is an earning-per-share of Rs 4.5, enough to keep your share price in a range of Rs 50-75 and your IPO investors happy.
The Rs 500 crore you ‘earned’ in Mauritius, though, has shrunk to Rs 250 crore because you had to pay off the Merchant Banker, Mantriji, his babu, the press, and a few jholawalas and sundry accomplices. But you are now the proud owner of a Rs 2,000 crore company in India, and have a neat Rs 250 crore in dollars overseas. You can now set up another infrastructure project. This time, your money enters the country as FDI from your Mauritius company.
Oh, we forgot to mention the ‘Business- man of the Year’ award that a business TV channel will give you this year. And the Bharat Sammaan to be awarded by a Hindi TV channel. It’s only a small dent in your overseas bank account. You deserve every bit of it, of course, for having brought so much investment into the country, setting up critical infra projects, putting up schools and hospitals. And those dumb Americans call such path-breaking projects Ponzi schemes!

NEW DELHI: Faced with deteriorating finances, the government has decided on an unusual step: cutting the defence budget for this year.

According to sources, the Centre has proposed a cut of "a few thousand crores" in the defence budget for 2011-12. The Centre has never cut budget allocation for the military in recent years, even though the defence ministry has surrendered unspent money to the government several times in the past.

Sources said the "reluctant" move was prompted by acute fiscal distress, thanks to a huge shortfall in tax collection and disinvestment, as well as miscalculation of subsidies.

It is the first time in recent memory that the government is cutting the defence budget in the middle of a financial year. Last financial year, 2010-11, the ministry had overshot the budget by Rs 4,237.69 crore. In the years before that, the ministry had on several occasions surrendered capital budget allocations, failing to spend them in time. But never has the government introduced a budget cut before the financial year is over.

The government's decision is unusual for many reasons. One, the defence budget for 2011-12 was only 8.47% over the previous year because the revised budget had overshot the allocation. Second, the ministry is in the final stages of several contract negotiations.

Bilateral trade between the two nations has increased from $5.7 billion in 2006-07 to $9.7 billion in 2010-11. The main export items from India to Iraq include metals, electronic goods, basmati rice, meat and machinery. Imports include crude oil, fruits and nuts, sulphur, wool and chemicals.

http://timesofindia.indiatimes.com/business/budget-2012/pre-budget/Budget-2012-Cash-strapped-govt-to-cut-defence-spending/articleshow/12075583.cms

Most of the defense budget is returned without spending and now this! Instead of increasing defense funding to meet the threat of 2 front war, Aspen Institute slave babus have shown their traitorous character. May their families be cursed with barren wombs and incurable diseases.

A high level meeting at the Prime Minister’s Office on Wednesday decided to increase the total Government expenditure on the health sector to 2.5 per cent of the GDP by the end of the coming twelfth plan period, from the current level of around 1.4 per cent of the GDP.

Chaired by Principal Secretary to the Prime Minister, Pulok Chatterji, the meeting decided to request the Planning Commission to allocate adequate resources to achieve the target and motivate and incentivise the States, since health was primarily a State subject and outlay of States for the sector would be critical in this regard.

An official press release on the meeting said the Planning Commission in consultation with the Health Ministry would work out an appropriate mechanism/ scheme for the purpose,

Planning Commission Member [Secretary], Sudha Pillai, attended the meeting, apart from Union Health Secretary, P.K. Pradhan and five senior officers of the Health Ministry.

The meeting, among other things, decided that the Health Ministry prepare a “clear’’ roadmap to merge all the National Rural Health Missions schemes to bring them under one umbrella and that the merger may begin from the coming financial year and be completed by 2013-14.

It also decided that the Clinical Establishments [Registration and Regulation] Act, which was passed by Parliament in 2010 be brought into effect soon so that its provisions are operationalised at the earliest.

It further wanted that the work on the establishment of the National Centre for Disease Control be completed in two years and that the integrated disease surveillance project is strengthened with setting up of public health laboratories at State and district levels.

Besides, it asked the Health Ministry to work towards getting a Bill passed by Parliament for setting up of a national commission on human resources in health to ensure that the country had adequate numbers of doctors, nurses, ANMs and other paramedics.

It decided that an approach paper for induction of health managers and a creation of a public health cadre be prepared for inclusion in the 12th plan and that efforts be taken to strengthen facilities at primary health centres, community health centres and district hospitals so as to provide for a minimum package of care to all citizens through provision of cashless, hassle-free outpatient, inpatient and diagnostic care, with adequate supply of essential medicines.

The meeting also called for steps to speed up the implementation of the Union Cabinet’s decision to establish a central procurement agency for bulk purchase of drugs and to quicken the process of preparation of standard treatment protocols.

The meeting, which was held at the direction of Prime Minister Manmohan Singh, urged for early introduction in Parliament of a Bill to amend the Drugs and Cosmetics Act, which seeks to strengthen the enforcement mechanism of drug control.

It also wanted the Health Ministry to work closely with other agencies dealing with social determinants of health such as nutrition, safe drinking water, hygiene education and sanitation so that there was more focus on prevention of diseases and promotion of good health.

The meeting specifically focussed on the recommendations of the National Commission for macroeconomics and Health and the High Level Expert Group on Health set up by the plan panel.

Gunjar,

I don't find anything wrong with that story. Its called risk to reward.

acquire land in a formerly ‘no-go area’ at throwaway prices from naïve tribals who are easily pleased with a third-rate hospital and worse school you set up

VikramD, sorry we cannot be fiscally responsible, the Nation has chosen the Govt which has a leftist tendency along with scams have made us bankrupt, we now have no choice.

You might be interested to hear that Dr Anupam Saraph (CIO of Pune, India, and an adviser to the UN and the Asian Development Society) and Professor Madhav Nalapat (Director of the Department of Manipal University, India, as well as a UNESCO Peace Chair holder, http://en.wikipedia.org/wiki/Nalapat) accidentally discovered files on an official Indian government website that seemed to have voting result numbers long before votes were actually cast.

On May 6th, while looking for routine, publicly available, candidate data during the election, a detailed Excel file of votes polled results for every candidate in India was found on the official website of the Election Commission of India (http://eci.nic.in/candidateinfo/frmcandidate.aspx). That was 9 days before the final votes were cast on May 15. And, even so, the Election Commission was not supposed to have access to votes cast data until May 16, when official counting was to be done.

On May 7 and 11, the Excel file was downloaded again from the Election Commission site. The numbers of votes cast for some candidates changed in each version of the file. In the version of the file downloaded on the last day before the official counting, May 15th, the votes cast results column was blank.

The downloaded files can be found here (the votes cast numbers are in Column N “votespolled”): http://government.wikia.com/wiki/Tracking_the_elections

When news of the files started to spread, the Election Commission closed its site from May 23 to 25. It was back up on the 25th but, until the 29th, you couldn’t download the file anymore. You can now, but the votes cast data for each candidate is gone (you can just see who won) even though now, two weeks after the election, is when that data should be available.

The implications are unsettling.

acquire land in a formerly ‘no-go area’ at throwaway prices from naïve tribals who are easily pleased with a third-rate hospital and worse school you set up

Govt is lying to Indian people. Custom duty is only 5% as the rest of 14% can be offset.

The government on Thursday announced up to 33 per cent cut in the subsidy rates of decontrolled fertilizers such as Di-Ammonium Phosphate (DAP) and Muriate of Potash (MOP) for 2012-13, a decision which will help the exchequer save about Rs 10,000 crore without hurting farmers.

The decision was taken by the Union Cabinet in the backdrop of about 20 per cent decline in the global prices of these nutrients, which are mostly imported. The subsidy is reimbursed to the fertilizer firms based on the import parity prices.

“Total subsidy outgo for the phosphatic and potassic (P&K) fertilisers for the financial year 2012—13 would be reduced by more than 20 per cent,” an official statement said.

However, the move would not affect the maximum retail price (MRP) of these fertilizers, the industry said.

“We are satisfied with the decision. Subsidy is the prerogative of the government. The reduction in subsidy will not lead to any increase in the retail prices. Farmers will not be affected and we will ensure adequate availability..” Director General of the Fertilizer Association of India (FAI) Satish Chander said.

The government, which is hard-pressed for fiscal resources, would be giving about Rs 65,000 crore fertiliser sops to farmers. Of this, Rs 52,000 crore would be accounted for the the P&K group of the soil nutrients.

As per the new rates, the subsidy on Nitrogen (N), Phosphate (P), Potash (K) and Sulphur (S) for 2012—13 fiscal would be brought down to Rs 24, Rs 21.80, Rs 24 and Rs 1.67, respectively. For this fiscal, the subsidy rate of N, P and K is Rs 27.15/kg, Rs 32.33/kg and Rs 26.76/kg, respectively.

Accordingly, the subsidy on DAP and MOP would be Rs 14,350/tonnes and Rs 14,440/tonnes, respectively.

The proposed amnesty scheme is essentially unconstitutional, arbitrary and unfair, because it goes against the government undertaking given to the Supreme Court in the case of All India Income-tax Practitioner's Appeal (1998) that it would not float another amnesty scheme. It is arbitrary and unfair, as it chooses only grave money laundering offences for amnesty. On the same lines, can corrupt police or revenue officials or petty economic offenders return the bribe money with penal interest and demand the same amnesty as their more corrupt comrades can do, operating hundreds of crores as against their thousands and lakhs?

The result of the previous amnesty scheme, the VDIS of 1996, which resulted in a peanuts repatriation of Rs 10,000 cr,

Further, amnesty schemes promise complete confidentiality regarding the amounts secreted abroad, the amounts returned, and the differentials normally shared by all stakeholders.

While the front door amnesty scheme is in the process of finalisation, a backdoor amnesty scheme is already in operation through a crafty, subterranean sleight of hand. It flows out of Para 146 of the Finance Minister's last Budget speech: "It has been represented that the taxation of foreign dividends in the hands of resident taxpayers at full rate is a disincentive for their repatriation to India and they continue to remain invested abroad. For the year 2011-12, I propose a lower rate of 15% tax on dividends received by an Indian company from its foreign subsidiary. I do hope these funds will now flow to India."

Aitya_V:
Even if customs duty is only 5 per cent and the rest is countervailing duty (proxy for excise duty) the electricity that these companies would produce using Chinese equipments are not subject to excise duty in the first place. So there is no set off available under CENVAT. So domestic equipment manufacturers would enjoy at the very least, a 19 per cent protection from cheap Chinese imports.

Alexandra Patargia is a 26-year-old civil engineer from Greece. After an engineering degree from Athens, she completed her master's degree in development administration and planning from London and is now keen on finding a job in India. "I have been following the India growth story for the past couple of years. My qualifications in civil engineering and development should find a very good fit in India, I feel. Besides, India is on a growth path while European countries such as ours are not doing very well," she says. However, her job search in India has so far not yielded results.
The main reason for this is the $25,000 per annum lower limit that the Indian government has set for giving employment visas to skilled overseas workers. For Patargia, who has two years of work experience in Greece, an annual salary below $25,000 is acceptable. "I would like to work in India to gain experience. I'm willing to start with a lower salary. I know that in my kind of job, there will be an annual increase in the salary based on performance. However, the Indian government rules don't allow that," she says.
Many young professionals like Patargia now want India on their CVs and the reason is not always mind-boggling entry level salaries. Mumbai-based lawyer Ashok Pratap, who has a growing clientele of foreigners looking for employment visas, sees the interest among young foreign professionals to work in India going beyond just good salaries. "India is an emerging economy and is now attracting many young professionals who want to come here to experience a different work culture and a way of life. Often they are willing to work for salaries that are much lower than in their own countries," he says. The Indian government had set the salary threshold limit of $25,000 a year for foreign nationals being sponsored by employers in India for an employment visa from November 2010. It includes salary and allowances paid to them in cash. Suheil Tandon, co-founder and partner of specialised sports management company Pro4Sport Solutions, feels that in the business of specialised sports coaching at the grass-roots level, employing foreign nationals is important. "There are not enough sports coaches and specialists in India.
In other countries, there are many young sportspersons who are well trained and many of them are willing to come and work for us in India. Some are also keen on coming to work as interns while they are finishing their training," says Tandon. India does not have the concept of an internship visa for foreign nationals. Project Visa Even though the Indian government has no plans currently to increase the categories under which the lower salary threshold will be relaxed for employment visa applicants, the project visa category within the employment visa regime, has come as a big benefit for the power and steel sectors.
Under the P visa, foreign nationals can come to India for execution of projects in the power and steel sectors. The visa is project specific but is not subject to the lower salary ceiling. "This visa facility was introduced to meet the huge demand from industry and helps companies to bring in semi-skilled or unskilled foreign workers for specific projects," the home ministry official told ET on Sunday. Not surprisingly, there's a huge demand for the P visas and according to figures from the ministry of external affairs, there have been 1,000 P visas for the power sector and 400 for the steel sector issued within a year of the category being introduced. "In the past, workers from certain regions - such as China - have faced a lot of problems in getting their employment visas. However, the P category has helped to iron out a lot of these problems," says Amitabh Singh, partner, Ernst & Young India, a consultancy.