01st June, 2010 to 30th June, 2010
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MVAS industry likely to hit Rs 280 Bln by 2013: ASSOCHAM
New Delhi, June 30, 2010: The Indian Mobile Value Added Services (MVAS) industry is projected to register a turnover of Rs 280 billion by 2013 from the current Rs. 97 billion after the rollout of 3G services in India, according to The Associated Chambers of Commerce and Industry of India (ASSOCHAM) ASSOCHAM.
The ASSOCHAM Financial Pulse (AFP) Study titled “Emerging Landscape in Mobile VAS Industry” pointed out that VAS which constitutes 10-12 per cent of the total revenues for telecom operators would also see a rise of 20 per cent during the same period. High speed data services like mobile TV, video calls which have been in their nascent stage so far are going to be the main contributors to this growth, the study said.
ASSOCHAM President Dr. Swati Piramal, points out “growth of MVAS is based on 3G rollout on a serious scale. This involves in huge investments in network equipment and network construction. However, very high 3G license bids are likely to result in under investments in networks. To add to this, 3G licensees in India are the incumbent mobile service providers. There are chances that the incumbent operators are likely to resort to non competitive practices and the nation will derive business and social benefits from the allotted spectrum”.
AFP analyzed that 3G will open new horizons for the telecom operators and the companies engaged in value added service. Competitive strategies of the players will unlock the true market potential of the segment. Effective bundling and packaging of services, innovative practices and extension of coverage areas will also augment the market size.
The Study highlighted, India is the world’s second largest mobile market after China in terms of mobile subscriptions. At the end of April 2010, the total mobile subscriber’s base was more than 600 million. Out of which only 18 to 20 per cent of the users use 3G- enabled handsets, of which mostly are from the urban area.
In terms of market share, 87 per cent of the subscriber base in India is on pre-paid connection, with the remaining 13 per cent on post-paid subscriptions. This has also given rise to opportunities for generating increased revenue, through exploring potential Value Added Services (VAS).
After roll out of 3G services mobile users will access high speed data services such as web browsing, mobile TV, video calls, music & video, applications download are on the top of the list which mobile users use frequently.
The youth segment that makes up 30 per cent of the total handsets market in India seeks entertainment on mobile. Currently, about 51 per cent of MVAS revenue in India is driven by short messaging service applications. The youth segment will also continue to drive the market, particularly after the 3G rollout.
In spite of this growth in the mobile subscriber base, the operator margins are declining quarter on quarter. Though the minutes of usage is increasing however the same is being offset by the lowering tariffs of operators. This could be attributed to the major subscription growth that is coming from bottom of the pyramid.
As ARPU declines, the challenge for operators is to increase revenues by differentiating their offerings and develop alternative revenue streams by offering more value added services to the existing subscribers.
The decrease in average revenue can also be attributed to the structure of the Indian mobility market which is largely prepaid (87 per cent). This means that most of the subscribers added are from the bottom of pyramid with low usage resulting in low ARPU.
Now the telecom companies have to identify the need of the rural user segment, which is not yet penetrated as compared to the urban users. For generating more revenues telecom players have to generate awareness among the rural population about the benefits of the value added services, concluded the AFP Study. Top
CII Buyer Seller Meet encourages MSMEs to achieve Global standards of Quality and Cost Competitiveness
New Delhi, June 29, 2010: “Quality standards, competitive pricing and timely delivery are the key elements to forge business linkages” said Mr P K Bansal, Additional Director Industries, Government of Haryana at the day-long Buyer Seller Meet that was organized by CII Haryana State Council at CII Conference Hall, Gurgaon today.
Mr Bansal said that industry should invest in research and development and use the latest technology in order to achieve business excellence. He further opined that MSME sector is highly unorganized in India and thus a research fund should be allocated for the prosperity of this industry. Today the sector needs funds for training, research, infrastructure, IT application and the likes.
The meet apprised the MSME sector, about the standards followed by the large companies and helped them to equip themselves with the international production standards in production and engineering.
Mr. R P Vaishaya, Director, MSME Development Institute, Karnal, Ministry of MSME, Government of Haryana stated that MSMEs are playing an important role in development of the country, employment generation and exports. The government through credit linked modernization / expansion programs, cluster development, quality certifications etc. is trying to provide the best possible support to the sector.
Speaking about facilitating business environment for the sector, Mr. S K Sinha, Director – Planning & Marketing, National Small Industries Corporation Limited (NSIC) stated that India is home to 26 million MSMEs which accounts for 45% of industrial output, and 40% of exports. He mentioned that NSIC through its various programs has been promoting a facilitating business environment for MSMEs.
Mr Raj Bhatia, Vice Chairman, CII Haryana State Council, in his Welcome address highlighted the need for a strong public policy on procurement of goods and services from MSMEs which comprises 13 million units in India. It is to be noted that the US procurement targets ranges from 20% to 30%, whereas in the EU and Japan it is 5-7%. In India, the public procurement from the MSME is less than 1%. said that apart from support of the government and large industrial houses, MSME’s today have to evolve themselves to meet the challenges of the future. On the other hand, government and large organizations should find ways to foster the sector and minimize existing business gap.
Mr Ravi Kumar Pisipathy, Convenor, MSME Panel, CII Haryana & Plant Head, Hero Honda Motors Ltd stated that the advent and adaption of IT has made global business possible for enterprises. This buyer seller meet is the beginning of bringing together the two crucial sides of business in understanding the specifications and requirements of an industry. This is acting as a base program, which in times to come will become sector specific.
Representatives from large organizations while addressing the session on Fostering New Business Linkages shared the process of selection of vendors for their organizations. Delhi International Airport Pvt Ltd (DIAL), Indian Sugar & General Engineering Corporation (ISGEC), Engineering Projects (India) Pvt Ltd (EPIL), Whirlpool of India Ltd, MSME Development Institute and Engineering Export Promotion Council, Hero Honda Motors Ltd and others presented their Purchase and Procurement policies and discussed their needs and the required standards with the participants. The presentations provided first hand vendor information to the small enterprises.
One to one meetings were organized with the representatives of the large companies. The delegates found the one to one meetings very useful and said that these meetings that were organized for the MSMEs with the large companies is very crucial for them to grow and build linkages. They said it is usually difficult to get an appointment and have a meeting with the Business heads of large corporates but it has been possible to meet these senior officials through this Buyer Seller Meet. The Meet was well attended by small and medium companies from the NCR region. Top
Organized retail share likely to surpass 30% by 2013: ASSOCHAM
New Delhi, June 24, 2010: Organized retail which presently accounts for close to 4 percent of total market will increase its share to over 30 percent by 2013, offering huge potential for growth in coming years, says a study, ‘Indian Retailing-The way forward’.
The study brought by The Associated Chambers Of Commerce and Industry of India (ASSOCHAM), points out that retailing in India is characterized by a high degree of fragmentation with street markets and convenience stores (kiranas) accounting for more than 96% of retail business. There are over 10 million outlets, 96% of them are very small with an area of less than 50sqm.
The organized retail sector with emergence of new store formats is recording phenomenal growth and will completely revolutionize retailing over next 3-4 years. The changing structure and scale of retail will critically impact several industries immediately – the retail industry itself, manufacturing, real estate and in the long term, cascading effects will be felt on tourism, information technology and others.
Releasing its findings, ASSOCHAM President, Dr. Swati Piramal said that impact on brand management and advertising will be huge, even as professionals in sales, marketing, merchandising and promotions will have to cope with radical changes. Through backward and forward linkages, growth of retailing impacts the performance of interlinked sectors such as tourism, manufacturing of consumer goods, recreational and cultural services and agro-based industries.
Key market drivers, fueling retail growth will include rapid economic development of India which will positively influence future of retail industry in India since its economic performance in recent years have given rise to more affluent and demanding set of consumers. Consumers are increasingly becoming brand conscious due to greater exposure to western lifestyle and are another key target for retailers.
With rising income levels, contribution of Indian middle class to retail is likely to increase from existing 20 percent now to over 30 percent in next 3 years. Consumers in this segment are likely to spend a greater part of their incomes on further upgrading and diversifying their lifestyles and moving to higher margins under the age of 25 years. It is anticipated that close to 50 percent of their income would go towards retailing in this age group in future.
The study points out that while price has been a key motivator for many purchases among older generation, this notion is being dispelled by younger generation as they become more ostentatious in their purchasing habits, as this brand savvy urban population is likely to derive demand for lifestyle products such as perfumes, jewellery and watches. Therefore, growing consumerism will be a key driver of over-all retail growth in India, said Dr. Piramal.
As per estimates made by ASSOCHAM, the organized retail in urban market is expected to grow at the rate of 50 percent to reach a value of 30 percent of the total retail market in India. Currently, the rural organized retail in India is at nascent stage with hardly a value of 2 percent of total organized retail but the industry expects it to grow over 10 percent by 2013.
Retail in India comprises various segments of which food and grocery is the biggest accounting for around 75 percent of total retail trade. In contrast, food and grocery accounts for minuscule proportion of organized retail penetration. While traditional street markets and kiranas remain the dominant formats, the assault by major retailers like Reliance and Tata into the sector will help to boost the share of sales through the organized route. Top
"Access to affordable institutional finance must be
a fundamental right"
New Delhi, June 24, 2010: India's strength as one of the most enterprising nations with inclusive entrepreneurial drive that includes bottom of the pyramid innovations that drive social economic growth was highlighted during the multilateral discussions at the G20 Young Entrepreneur Summit in Toronto, Canada by CII's Young Indians (Yi) and Bharatiya Yuva Shakti Trust (BYST). Yi and BYST are representing India at this very unique and historic summit.
Representatives of the G20 nations deliberated over two days on the key challenges facing the development and growth of entrepreneurship in their respective countries and discussed and agreed upon an appropriate coordinated response to these issues. This final communique will be used to call upon leaders of governments participating at the G20 Business Leaders Summit at Toronto to recognize the imperatives and to pledge their support for action.
The issues identified include affordable institutional access to finance, need for a collaborative platform that integrates key stakeholders and services the needs of entrepreneurs, working to build and celebrate an entrepreneurial culture, creating a supportive tax and regulatory ecosystem that promotes business growth and focus on developing a comprehensive system of education and skills training to encourage new ventures.
"Entrepreneurship at macro and micro level is essential in creating economic resurgence in today's global economic scenario. More importantly the Indian entrepreneurial model is key to an inclusive approach to wealth creation that is necessary to address the income inequalities in the world today. Our discussions here at the G20 YES have paved the way for the creation of a collaborative platform of young organizations from the G20 nations who will drive the focus on entrepreneurship in their nations to create an inclusive model of wealth creation and also to support the nations beyond G20 to foster entrepreneurship," said Ms Bhairavi Jani, President, Indian Delegation & CII National Chairman, Yi. Top
“Mutual Fund industry needs definite government policy,” U K Sinha, Chairman & Managing Director, UTI AMC Ltd.
Mumbai, June 23, 2010: On the Securities & Exchange Board of India’s (SEBI’s) regulations on mutual funds, the Chairman, C B Bhave said that the industry should understand what investors want, what are the gaps in meeting demands and should identify the ways of filling gaps. “We should learn lessons from the recent global recession. We have seen that those financial institutions somehow run into troubles which have high incentive structures,” Mr Bhave said while addressing the 6th edition of Mutual Fund Summit 2010, organized by Confederation of Indian Industry (CII).
Addressing to the MF industry captains at the conference, he said, “As professional fund managers, you should give better returns and reduce the costs to increase investors’ returns. You are manufacturers of products. Advisory part for better servicing should be left to investors. They can decide how much would they pay for the advisory service if they want.”
Mr U K Sinha, Chairman – CII Mutual Fund Summit 2010, Chairman – CII National Committee on Mutual Funds and Chairman & Managing Director, UTI Asset Management Co. Ltd., said, “With the challenges lying ahead before the MF industry, there is the need of definite government policy on mutual fund industry as by doing this, many things will fall in place.” He added that the only legislation pertaining to the mutual funds is the UTI Act 1964 which was created with the objective of mobilization of domestic and corporate savings.
Mr Sinha, about the performance of mutual fund industry, said, “About 79% of assets under management (AUM) performed better than the benchmark index in last one year whereas for last five years, the rate is about 77%. Despite global economic turmoil, none of the mutual fund company in India defaulted despite of high redemption rate.”
A joint report by CII-PwC was also released on ‘Indian Mutual Fund Industry – Tow ards 2015: Sustaining Inclusive Growth-Evolving Business Model’ at the summit. The overview of report was that the despite increasing year-on-year AUM growth rate of 47% in 2009-10, MF industry is facing several challenges like, low retail participation, lack of investor education, distribution network and cost pressure.
Mr Pravin Toshniwal, Deputy Chairman – CII Western Region and Chairman, Nivo Controls Pvt. Ltd. in his welcome remarks said, “The GDP, borrowing and saving growth rate of India looks promising.
However, the AUM of mutual funds is considerably low at 5% of GDP whereas the rate is about 70% in USA. Proactive measures in India are required to guide the investors.” Top
Bhopal Tragedy should be a Huge Learning for India: CII President
New Delhi, June 23, 2010: There are huge lessons for India and Indian Industry in the Bhopal Gas Tragedy, said CII President, Mr Hari Bhartia in a press release issued here today.
An industrial accident, which turns into a human tragedy, and involves compensation for the affected, clearing of the site, addressing environment issues, etc, of the scale that Bhopal represents is a call to action for everybody, said the CII President.
CII has said that in such cases it is imperative to ensure that there is action on all fronts – reaching adequate compensation to the affected, addressing issues of clearing up the site and effectively dealing with the environmental impact. Our systems need to learn to react swiftly in such cases, and it is important that compensation is commensurate with the scale of the tragedy.
At the same time it is important to ensure that there is accurate accountability and responsibility determined and the guilty are punished. The law of the land has to be conducive to facilitate this, CII said.
CII would be setting up a special Task Force which would look at the prevalent laws, regulations and compliance issues pertaining to Safety, Health and Environment in a comprehensive manner in the light of developments that led to the Bhopal tragedy and its outcome, Mr Bhartia said. Risk assessment and mitigation is one of the key responsibilities of the management of the company. Hopefully, the report of the Task Force would provide additional levers to ensure that the Boards of companies are better equipped to deal with this aspect effectively. This is the need of the hour in order to ensure that Industrial accidents are avoided in the country and the Indian Industry are better prepared to deal with accidents, should they occur in the future, the CII President said.
Reacting to the sentencing of Mr Keshub Mahindra in the Bhopal Gas tragedy case, Mr Bhartia has yet again requested the Government to treat non executive members of the Board including Non Executive Chairmen, differently when it comes to Directors’ liabilities. CII has said that it has taken note that Mr Mahindra, a former non-executive director of Union Carbide, was charged under the same sections as the officers-in-default namely the Managing Director, Executive Director, Works Manager and others directly involved in the day-to-day running of the company.
While as board members, independent and non-executive directors have the same legal duties and obligations as executive directors, however, because of their limited involvement in the day-to-day running of the company, it is undesirable for the law to expose them to personal liability, feels CII. Unfortunately, the Companies Act 1956 does not differentiate between different categories of directors in terms of liabilities - there is no distinction made within the liability of the director, whether he or she is independent, non-executive or executive —they are all commonly liable.
CII has strongly recommended that the law regarding the potential liability of non-executive and independent directors needs to undergo a change. Non-executive directors cannot be made to undergo the ordeal of a trial for offence of non-compliance with a statutory provision unless it can be established prima facie that they were liable for the failure on part of the company.
Mr Bhartia went on to say that today, large companies operate in several jurisdictions and are required to comply with various legal and regulatory requirements. It is therefore necessary to expressly exempt non-executive directors from vicarious criminal liability under the applicable statutes. Otherwise, the industry would witness a scenario, where good Independent Directors would be reluctant to join the board of companies, owing to disproportionately high liabilities.
CII strongly recommends that a non-obstante clause be incorporated in the Companies Bill 2009 to exclude non-executive directors from any vicarious criminal liability for offences committed by the company. This provision should have overriding effect on all other laws, the CII release said. Top
Drinks & Smoke Responsible For 20% Weekly Absenteeism In Offices: ASSOCHAM
New Delhi, June 23, 2010: Although corporate employees are excessively health conscious and keep fit to meet their deadly deadlines, still 29 per cent of them indulge in smoking with another 5 per cent smoking along with excessive intake of alcohol, leading to an average absenteeism of 20 per cent per week, reveal findings of the Associated Chambers of Commerce and Industry of India (ASSOCHAM) in its study of, ‘Preventive Health Care’.
The findings condensed in ‘self-destructive lifestyle habit’ chapter of the study, however, adds that only 2% of corporate employees are totally involved in self-destructive lifestyle habits.
Releasing the findings, ASSOCHAM Secretary General, Mr. D.S. Rawat said that interestingly, the study reveals that 40% of corporate employees are not involved in any self-destructive lifestyle habits. Self-destructive lifestyle habit means the manner in which an individual leads his/her lifestyle to develop or avoid diseases. Self-destructive lifestyle habits constitute smoking, excessive intake of alcohol and junk food which lead to chronic illnesses.
According to the study, only 5% of such employees consume excess alcohol with 7% admitting to grabbing excessive junk food. The study is based on the sample size of 216 corporate employees who responded to various queries raised by ASSOCHAM on preventive health care issues. It adds that 12% employees smoke and eat excessive junk food.
All these aforesaid factors cause 20% of absenteeism in corporate offices and result in a loss of productivity which is annually estimated within the range of Rs. 70,000 to 80,000 million, pointed out Mr. Rawat.
However, the study refers that as per the estimates made by World Health Organization (WHO), smoking alone is estimated to be responsible for 22% of cardiovascular diseases in industrialized countries and for vast majority of some cancers and chronic respiratory diseases. 80% of coronary heart diseases, 90% of type two diabetics and one-third of cancer cases can be prevented maintaining proper diets, increasing exercise and stop smoking.
0n hours of sleeping and exercise, the study says that increasing demanding schedules and high stress levels in corporate India are also leading to sleep disorders in individual lives.
Loss of sleep has wide ranging effects including daytime fatigue, physical discomfort, psychological stress, performance deterioration, low pain threshold as a result nearly 24% of corporate employees sleep less than 6 hours on a daily basis. This adversely affects their productivity, concludes the study. Top
15% Govt. Procurement from MSMES can create 10 lakh jobs: Assocham
New Delhi, June 22, 2010: Approximately10 Lakh additional jobs can alone be generated in Macro, Small and Medium Enterprises (MSMEs) provided government makes it mandatory to source 15% of its entire purchases from them, without any preferential treatment, reveals an assessment of The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
In addition, the move would also facilitate MSMEs to effectively enhance their capacities expansion by way of receiving procurement orders from various departments as over 90% of them currently operate at less than 70% of their capacities for want of credit and supplies orders, adds the ASSOCHAM analysis.
It points out that inter-ministerial difference among various government departments for sourcing close to 15% of procurement supplies from MSMEs have already been resolved with ministries like defence and railways agreeing to it. Now, their should not be any hesitation in this regard and government should immediately make it compulsory to source at least 15% of its entire procurement from MSMEs segment with issuance of necessary directives to this effect to all departments including its public sector undertakings.
This would not only create demand for MSMEs products as their quality is no longer sub standard and assure them monetary supplies. Increasing in demand for their products and articles will result into net increase in employment ratio as proportionate to growth in national GDP.
Releasing findings of ASSOCHAM analysis, its spokesman said that considering the fact that MSMEs contribute to 45% of industrial output, 40% of exports, provide employment to nearly to 60 million and create as many as 1 Lakh jobs each year. This remains the scenario in which MSMEs have no protection of assured supplies.
In case, these are committed assured supplies of government procurements to a meager extent of 15%, their capacities would run on optimal and besides spurring up all round economic activities, job creation would multiply to level of 10 Lakh per annum.
The sectors in which maximum additional job creation is expected comprised auto, component, ancillaries, engineering, financial sectors like NBFC’s , brokerage houses, IT/ ITes sector.
The ASSOCHAM analysis also emphasizes that Macro Small and Medium Enterprises Development Act 2006 makes a mention that the MSMEs should receive government support in terms getting orders from various government department upto 15 per cent of their total purchases.
Even the task force set up under the chairmanship of Principal Secretary of Prime Minister on MSMEs has also recommended similar steps. However, not much has moved in this direction as yet. Further delay is likely to harm this sector more as competition has already grown beyond anticipation and MSMEs despite making quality products are not getting their due share in government procurements. Top
Quote on Chinese Yuan Reforms-Chandrajit Banerjee, DG, CI
New Delhi, June 21, 2010: Beijing's announcement over the weekend to proceed further with exchange rate reforms and make yuan more flexible is a welcome news for India and the global economy. However, it remains to be seen how fast would China allow yuan to appreciate”, said Mr. Chandrajit Banerjee, Director General, CII. The extent to which Indian industry would benefit from the news would depend on the degree of yuan’s appreciation, he added.
“Given China’s important role in global economy and the World trade, we welcome the announcement by Chinese authorities. We expect Indian exporters of textiles, chemicals and light engineering goods to benefit from such a move, he added. However, Mr. Banerjee stressed that China getting closer to a market oriented economy is the best situation. Top
Prices of consumer goods to stay up: Assocham survey
New Delhi, June 21, 2010: Despite favorable domestic market climate, prices of consumer goods are likely to rise further even as external market sentiment are likely to remain subdued in the near term, according to projections made by a countrywide survey under aegis of the Associated Chamber of Commerce and Industry of India (ASSOCHAM).
The survey in which 266 business leaders participated, giving their opinion on issue of prices of consumer goods comprised areas of business which include consumer durables, consumer non durables, intermediate goods, capital goods, services and infrastructure, made the aforesaid forecast.
Business expectations regarding price realization of their output during the next six months are optimistic with more than 80 % of firms across sectors expecting higher price realization for their products.
Releasing findings of ASSOCHAM, it’s spokesperson said that the sectoral trends indicate that intermediate goods, services and consumer durables are more upbeat about prices for their output, it revealed that equivalently, consumer non-durables, capital goods and infrastructure sectors are relatively less optimistic about prices for their output.
“If we distinguish the responses between MSME firms and large size classes, the former have expressed greater confidence about price rise in the short-run. On the other hand, Public sector respondents as compared to private sector firms have expressed weak confidence about short-term price realization for their output.
These outcomes indicate no let up in inflationary pressure during the first half of the present fiscal,” the survey revealed adding that a very small proportion of respondents have seen decreased price realization for their output.
Industrial production is broadly indicative of the state of the economy. The output of industries producing capital goods and consumer durables tends to be squeezed most during a downturn and otherwise. Expectations on production and prices collectively indicate the direction of change in the inflationary conditions.
Production of consumer durables, consumer non-durables, intermediate goods and infrastructure is estimated to go up strongly over the next six-month period. On the other hand, services and capital goods sectors have indicated relatively low growth in output. Apart from these outcomes, some respondents have estimated falling output levels in the short-run but their share was insignificant.
Under the new quarterly national survey by The Associated Chambers of Commerce and Industry of India (ASSOCHAM), the first round was conducted in the second half of the last quarter of the year 2009-10 and covered the three month period to March 2010.
The main objective of the survey, directly organized by the research unit of ASSOCHAM, is to understand the changing business trends and perceptions in the country and raise the concerns of the business sector emphatically with the policy makers. Top
Citi Appoints Rahul Shukla Head of Corporate Banking for India
Mumbai, June 15, 2010: Citi has appointed Rahul Shukla as head of Corporate Banking for Citi in India, leading the team that manages the diverse financing needs of Citi's key corporate clients in India. Rahul will report to Ravi Kapoor, head of Global Banking India.
"Rahul's appointment underlines our commitment to drive this business forward which we believe is one of the key growth segments in India. Am confident that under Rahul's leadership we will build on the existing momentum and further enhance client focus and coverage. His client management skills, international experience and strengths in understanding and providing customized solutions will add value to our customer needs in India," said Ravi Kapoor, head of Global Banking India.
Rahul Shukla has extensive experience working with clients in Asia. Until recently, Rahul was head of Telecom, Media & Technology (TMT) for the Asia Pacific region. During his tenure, Rahul was responsible for meeting the Global Banking needs of TMT clients in Asia Pacific region, including originating and executing several marquee M&A and capital market deals.
Rahul Shukla joined Citi in 1991 as a management associate and over the last 19 years has gained significant experience in Global Banking by working in South East Asia Investment Banking in Singapore and the TMT group in Hong Kong. Top
Double digit inflation result of high raw material and energy prices: ASSOCHAM
New Delhi, June 14, 2010: The Inflation numbers released today (10.16 % on year-over-year) mirror the high raw material and energy prices that have been festering the business sector since the third quarter of the last fiscal, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) said.
In a reaction to the double digit inflationary figures, the highest in last 19 months, ASSOCHAM secretary general DS Rawat said as the economy was in the process of recovery and supply side bottlenecks can only be addressed in the long run, inflation is going to remain high and more likely increase further in the short run.
The prices of consumer goods are especially projected to go up further, Mr Rawat said pointing out that the high labor costs were another area of concern. Top
SME drives the largest job creation: ASSOCHAM
New Delhi, June 14, 2010: In the aftermath of the global economic meltdown the fastest recovery in terms of job creation has been in the small and medium enterprises (SME’s) more than large industry in India, indicated an ASSOCHAM analysis.
The SME sector reported about 25% job losses during the recent global recession. However, it has been one of the fastest to tide over the gloom with figures of job creation coming up on a steady pace, the analysis said. This sector alone contributed almost 40 % of all jobs created in the economy thereafter - showing the flexibility and adaptability of quick response.
SMEs contributes to 45 per cent of the industrial output, 40 per cent of exports, provides employment to nearly 60 million people and creates as many as 10 lakh jobs each year. The SME sector also produces more than 8,000 different products annually not only for the Indian markets but also international shores.
Further push is being given to the SME sector in the areas such as pharma, food processing, auto ancillary, IT, retails, textiles and garments, agro, nano technology, financial sector and service sectors.
It is probably the only sector with an employment potential at a low capital cost. More labour intensive, the sector has consistently registered higher growth compared to the overall industrial sector. And owing to its size, these units are more adaptable to the changing market scenario and show remarkable innovativeness in each vertical. According to the fourth census of the MSME sector, the sector employs nearly 59.7 million people in over 26.1 million enterprises.
However, a lot remains to be done for the sector to make it all the more dynamic and self-reliant. For instance, there are several gaps to be filled where support from the banking sector
SMEs play a significant role as one of the growth engines of the Indian Economy. In fact, they have been playing a critical role in the socio-economic developments in the country while further facilitating the achievement and streamlining the objectives relating to mass employment generation, low investment, Import substitution, significant export earnings, Labor intensive mode of production, capacity to develop appropriate indigenous technology and high contribution to domestic production. Lastly, SME sector is heterogeneous, highly dispersed and mostly unorganized. The biggest culprit of SMEs is the unduly delayed payments by large industry players.
There has been a clear shift in the mindset of Indian firms displaying an increasing interest in global joint ventures, alliances, and mergers and acquisitions. Here in after Indian SMEs are making their forays into the global markets. Top
PSEs creating National Value in every aspect of life: Panel at CII Summit
New Delhi, June 9, 2010: Mr. Ashok Chawla, Finance Secretary, Government of India sharing his thoughts on the role PSEs focused on the role they would play in developing the economic landscape, while developing themselves in the process. Mr Chawla said, “The Indian economy has seen PSEs playing a pioneering role in development and PSEs will play a far bigger role in the times to come.” He added that PSEs contribute in a big way to the strength of the Indian economy.
Mr. O.P. Bhatt, Chairman, SBI stated that the fact that PSEs generate value for the nation needs to be recognized broadly. Stated Mr Bhatt, “The objective of PSEs is very clear as they look to generate employment, support the growth of the country and create goods and services and ensure their distribution as well. ONGC being a good example of the same.” He called for creation of a comprehensive “Index” which would measure “value creation” which could be used by PSEs and Private Sector.
Another aspect that was brought out in the session is the talent pool created by PSEs which is value creation in terms of producing skilled manpower and workforce for the country. Mr. B.P.Rao, CMD, BHEL said, “PSEs have played a major role in improving our quality of life. PSEs serve as a balance in regional development and their presence plays a major role in competitive pricing.” Mr Rao also insisted that PSEs be allowed more power and independence in day- to-day operations, which will only result in much further value creation by these enterprises.
Mr. R.S. Sharma, Chairman, Apex Council of PSEs, CII said, “PSEs today have crossed national boundaries and have become global entities. PSEs represent the best practices constituting transparency, accountability, governance and financial disclosures.” Top
Shoppers prefer kirana shops to malls - ASSOCHAM
New Delhi, June 7, 2010: Kirana stores and local retailers remain the most preferred destinations for majority of the shoppers across the country as compared to sprawling shopping malls as they provide for cheaper purchases to an extent of 25% and also offer options for avoidance of payment of duties such as VAT and other local levies on articles sold by them.
According to a country-wide survey done under the aegis of ASSOCHAM Social Development Foundation, it was discovered that goods disposed of by the malls are devoid of these twin benefits and thus attract only the upmarket buyers.
The survey completed in a span of two months i.e., March-April 2010 randomly taking a view of buyers in 15 major cities including those in metros, also discloses that it is a myth that malls and shopping complexes store sustained quality products as it is available in kirana shops along with other retail establishments in abundance and that too for a negotiable price.
These cities include Delhi, Kolkata, Chennai, Bangalore, Mumbai, Hyderabad, Pune, Ahemdabad, Lucknow, Patna, Bhopal, Nagpur, Kanpur, Jaipur, Ludhiana and nearly 5000 shoppers across these cities were interviewed by ASSOCHAM team as their preferences for opting from kirana shops and those of malls.
In contrast, the survey also revealed that mall culture is becoming a little pervasive in sub-urban cities of Ghaziabad, Gurgaon, Noida, Faridabad, Navi Mumbai etc. and the fact remains that customers in such places get disillusioned very shortly due to wide gaps in margins and lack of availability of cheaper products.
According to ASSOCHAM, malls only entertain the shoppers and make a big hole in the shoppers’ pocket, while in case of retail shops consumers have the satisfaction of scanning through major brands and products for which prices are generally found to be negotiable, said ASSOCHAM Secretary General, Mr. D S Rawat while releasing its findings here today.
The survey of the apex chambers suggests that the mall culture has not been able to shift the focus entirely away from local traditional markets as the shoppers prefer to hangout and shop there, more so because of the familiarity with ambiance, ease of access, variety of goods, early opening and late closing times etc. which suits to the local residents. A compulsion to take the cash memo for every purchase made in malls is another aspect that puts off the shoppers. It is generally perceived that malls only provide different range and variety in branded stuff, it is nothing but a paradoxical mindset as in reality it is observed that well-established retail outlets not only provide affordable brands but also have abundant variety of products with significant reduction in margin. Top
India, South africa should undertake joint initiatives to promote innovations: Anand Sharma
New Delhi, June 4, 2010: India and South Africa should develop joint initiatives to promote innovations to ride the current global wave of technologies to bring about the socio-economic transformation of their respective economies. Stating this in his special address at an interactive session with Mr Jacob Gedleyihlekisa Zuma, President of the Republic of South Africa, and the accompanying business delegation, organised by CII in association with FICCI, BUSA and Assocham, Mr Anand Sharma, Minister of Commerce & Industry, Government of India, said the two countries should also develop strong partnerships in capacity building and skills development to complement the economic resurgence.
Noting that India was the first Asian country that President Zuma chose to visit since assuming the presidentship of his country, Mr Sharma said the two governments should look to step up the joint efforts to obtain their rightful places in the emerging economic and political architecture and promote the reforms of the United Nations and Brettenwoods institutions.
Mr Zuma in his address said that India and South Africa have a shared global understanding on diverse issues covering trade negotiations, climate change, poverty alleviation, and peace and stability. Referring to the bilateral investment ties, he said that Indian investments in South Africa already amount to $6 billion and many Indian companies have become household names in South Africa.
Mr Zuma said the bilateral opportunity rests on identifying the complementarity in trade and investment relations. This will also open up the broader southern Africa and rest of Africa markets for Indian companies, since South Africa is a gateway to the African markets as a whole. Likewise, South African companies would also be able to enhance their footprint in the Indian market.
He said that the extensive physical infrastructure development programmes initiated by the South African government will open up several investment opportunities for Indian companies in South Africa.
Rob Davis, Minister of Trade & Commerce, South Africa, said the strategic importance of the bilateral engagement stems from the seismic shifts in the global economic architecture with India and South Africa leading the change. He also pointed to the similarity in socio-economic challenges that both countries face.
Referring to the bilateral trade ties, he said that the trade flows have come a long way, from $45 million in 1993 to $4.5 billion in 2008.
He said that the target of $10 billion bilateral trade is achievable with due government and industry engagement on both sides, and added that the current negotiation on India-SACU preferential trade agreement (PTA) should conclude soon. Of equal importance would be the conclusion the a bilateral investment protection agreement (BIPA), he observed.
Mr Symal Gupta, Chairman, Emeritus, CII-Africa Committee, set the tone for the session by welcoming President Zuma and by underlining the opportunities for greater India-South Africa business ties.
Mr Sizwe Nxasana, Chairman, Business Unity South Africa (BUSAS), pointed to the opportunity for enhancing cooperation in the SME segment. Reiterating that South Africa is a hub for the southern African markets, he said that the anticipated India-SACU PTA will play a key role in enhancing bilateral trade and investment flows.
Mr Vikramit Singh Sahney, India-South Africa Business Forum of FICCI, said the focus of attention would be on attaining the $10 billion bilateral trade target.
Earlier, Mr Subhash C Aggarwal, Senior Member, Assocham Africa Committee, provided an overview of the India-South Africa economic ties. Top
Rs.7500 CR. CORPUS needed for meat & fish production : ASSOCHAM
New Delhi, June 3, 2010: The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has demanded creation of Rs.7,500 crore Corpus Fund to infuse technologies and skills so that processing of meat, fish and poultry production is increased to over 25% in next 2 years.
Currently, 70% of meat & poultry and fish production is in hands of unorganised sector as a result, their processing levels remain stagnant between 2% and 4%, even though domestic meat and poultry production has already exceeded 1 lakh million tonnes levels annually. Fish production is estimated to have touched over 7.25 million tonnes.
It is estimated that there are 40,000 food processing units in India of which 10,000 units are engaged in meat, poultry and fish processing and remaining 30,000 processing units exclusively process fruits and vegetables which in percentage terms process a mere 2% of their total production, adds the ASSOCHAM.
According to Secretary General, ASSOCHAM, Mr. D S Rawat , while 80% of the total fruit and vegetables production in economies of scale is processed to derive higher valuation, India one of the leading fruit and vegetable producer, process a mere 2% of its fruit and vegetables since R&D facilities are hardly developed in India for doing the job.
As regards to meat and fish processing, extremely cumbersome licensing process and stringent rules and regulations, processing units to suitably process meat poultry and fish production are not coming up at large scale and remain within jurisdiction of unorganised sector.
Due to this, only 50% of India’s meat production is exported to countries in the Middle East, the pre-dominance of which is for buffalo meat. According to latest figure available with the ASSOCHAM, India exports a little over 5 lakh MT of meat to gulf and neighbouring countries including part of Africa continent.
Of total 7.25 million tonnes of fish production, over 50% is exported to ASEAN region which is a good performance because in fishing sector, India has been doing reasonably well on export front even without developing higher fish processing technologies. This is because of coastal benefit that India enjoys, said ASSOCHAM Secretary General.
,The ASSOCHAM has recommended to the Food Processing Ministry to accord Industry Status on Food Processing Sector as India presents a huge opportunity for food sector because of its rising income levels. Due to this factor, the number of households with annual incomes between US$ 5000 and US$ 25,000 will rise from 76 million currently to 127 million in 2014-15. India will soon have the largest population of young people in the world. These changes will be reflected in increased demand for processed food.
The ASSOCHAM has further highlighted that Indian Inc. losses more than 25% of its produce due to poor post-harvesting equipment, inadequate food processing technology and storage facilities.
Poor infrastructural facilities such as irregular power supply, high inland transportation costs, lack of cold chain facilities and adequate storage facilities are some of the problems faced in the transportation and marketing of processed products. This according to ASSOCHAM continues to impeded the development of large scale processing units and therefore, the issues be tackled at priority levels. Since food processing industry has huge potential in next couple of years, it is going to attract huge investments especially to process fruit, vegetables, meat, poultry and fish products in India provided this industry is completely de-licensed. Currently, the government regulates its through various state agenda including MPEDA. This needs to be deregulated so that India’s food processing goes up to higher levels and does not stagnate in totality at 6%.
Acron Group Launches "Vivara Residences" - A Nationwide Chain of World-Class Residential Communities for Senior Citizens
Are You Over 60? Then Get Ready to Unretire!
Mumbai, June 3, 2010: Now India may be a country full of young people but it has its share of senior citizens too. Who having raised their families, worked hard all their lives, and are now ready to settle down and enjoy the fruits of their labour.
Enter 'Vivara Residences', the latest entrant in the senior citizens housing category. Unlike the many 'retirement projects' launched before, Vivara promises a world class living experience, for which it has tied up with international retirement associations. Sensing the need for senior community living that offers world class facilities, an atmosphere of fun and revelry, and the company of peers who share similar tastes, is what made the Acron Group consider setting up Vivara Residences around the country.
With the first set of Vivara homes ready to roll out in a few months from now, in the tranquil vistas of north Goa, the company is all set to revolutionise senior- living in India. According to Dr John Britto, one of the directors of the Acron Group, "at Vivara Residences care has been taken to ensure people who come to live here can enjoy a worry-free life. We've gone one step further and incorporated this philosophy even into the buying process. Something that has always proved a hurdle for senior citizens. Vivara operates on a leasehold model and not Freehold. So you pay only a deposit and a lease you're comfortable with, we take care of the rest. It has therefore considerably reduced the stress of buying and selling property at that stage in one's life."
Thoughtful features like these that will make living here a pleasure, is what the management of Vivara likes to call - 'Unretirement'. Mr. Amar, another Director on the board of the Acron group describes it best when he says - " Unretirement is pure unadulterated pleasure that you get our of life, when you know that everything has been taken care of for you. From security to maintenance to emergency health care. That's the kind of life we're promising at Vivara Residences!"
The name 'Vivara' signifies "blessed with life", a combination of the words 'viva' for "long live" and the Sanskrit word 'vara' meaning a boon or fulfillment of a wish. Soon Vivara apartments and villas with age-friendly services and facilities will be fulfilling the wishes of senior citizens at various scenic locations. In the pipeline are projects at Coorg, Kerala, Pondicherry, Shirdi, Rishikesh, Brindavan and the outskirts of major cities. Acron Senior Living is a part of the diversified Acron group with a strong record in property development, hospitality, infrastructure projects and retail.
In most so called "retirement" developments in India, homes are sold on an ownership basis and the developer is neither involved in the day-to-day operations nor concerned with the future of the residents in the complex. Another disadvantage for seniors with such freehold, open market sales is that in subsequent transactions, the homes could pass on to unsuitable buyers who do not qualify in terms of the age and lifestyle profile of existing residents. However, the leaseholds in Vivara ensure that the unique, age-appropriate characteristics of the properties are preserved and their privacy and tranquility are protected over the long term. Moreover, Acron's continued management and ownership of Vivara helps maintain the quality of the product and service in each community. This enhances asset values for the residents and thereby increases demand from prospective senior-citizen lessees on an ongoing basis. Choose from the range of attractive pricing plans including some that earn you a profit on your Lease Deposit. The best part is that in all options, residents get their entire Deposit back when they terminate their lease.
Senior-living developments are much more than just real estate projects, they are all about the people who will live in them. Vivara represents a paradigm shift from the 'retirement' developments currently on offer in the country
Vivara is a value-enhancing revolution in specialized housing for older people. The fully furnished, ready-to-move-in homes, in a lively resort setting, are designed to a high standard with eco-friendly features, first class physical amenities and senior-friendly services. Vivara facilitates an "ageing in place" continuum of assisted living and aged care support for residents at advanced ages, helping them live healthily with comfort and dignity.
Vivara is backed by Acron's impeccable track-record of quality design and enduring construction values. We create an enriched living experience for the residents. Acron developments are thoughtfully designed, located in tranquil surroundings yet close to all the action and with an upscale ambience that complements Acron clients' international lifestyles. For over two decades, Acron have been building apartment and villa complexes for lease or sale to discerning customers, many of whom are older homebuyers from various parts of India and NRI's and PIO's from the United Kingdom, USA, Australia, Canada, South Africa, South America and Europe. We create residences that feel like home the moment you walk in the door.
Vivara is owned and managed by Acron, so you benefit from the absolute commitment to quality, service and customer focus. The highly trained and motivated management and staff are guided by a resident-centric philosophy at Vivara. Vivara, the place that you will be proud to call your home! Come to Vivara where you will look forward to your unretirement!
India- an important growth partner to South Africa - H E Zuma , President of South Africa
Mumbai, June 3, 2010: Agro processing and Infrastructure are the key sectors to strengthen relations between India and South Africa – Mr Anand Sharma, Hon’ble Minister of Commerce & Industry, Government of India
The historical ties between India and South Africa need to be converted into a strong economic partnership. India is a very important partner to South Africa at all three levels - political, economic social, said H E Jacob Gedleyihlekisa Zuma, President of the Republic of South Africa, in an interactive session organized by Confederation of Indian Industry (CII).
President Zuma urged Indian and South African businessmen to work towards increasing bilateral trade between the our countries from the present US $ 4.5 bn to $10 bn by 2012. He also reiterated the need to expand the value added trade between the two countries. He mentioned that ‘India is one of the most attractive destinations for FDI inflows and also offers a very large consumer market. A strong relation between both the countries would build long term capacities to effectively compete in the global market, he emphasized. He mentioned that the large business delegation of more than 200 members accompanying him are very keen in doing business in India in diverse sectors such as ICT, Transport, Infrastructure, Agriculture, Financial Services, Energy & Mining, Pharma and Healthcare to name a few.
Mr Anand Sharma, Hon’ble Minister of Commerce & Industry, Government of India, during the interaction said that India shares its icons and heroes with South Africa and has similar patterns of history, challenges and dreams. He emphasized that the cooperation opportunities in areas of Agro processing and Infrastructure are enormous and must be exploited to the fullest. He affirmed that India was less impacted in the recent downturn owing to its strong domestic demand and it now aspires to achieve double digit growth in the near future.
Mr Hari Bhartia, President, CII & Co-chairman & Managing. Director, Jubilant Organosys Ltd, outlined an agenda for both the countries for enhancing economic relations. ‘We must expedite the PTA talks between India and SACU towards rapid conclusion. The issues on market access and legal matters that have been identified need to be quickly resolved. Further, there is need to diversify and expand our baskets of traded goods’, he stated.
He further said that ‘we need to strengthen and develop linkages between the SME sectors of the two countries so that they may take advantage of global opportunities. SME platform could help expand exchanges between the two sides. CII has been active in this area and has assisted in SME capacity-building in South Africa’. He also suggested setting up dedicated investment platforms to assist companies in entering each other’s business sectors.
Mr Ratan Tata Chairman, Tata Sons Ltd, emphasized on leveraging upon complementary skills and strengths. Both the countries can develop a worthwhile entrepreneurial environment.
During the session, there was a launch of an India – South Africa CEOs Forum. CEOs Forum is expected to provide an institutional framework for strengthening and deepening the business relationship between our two countries. The Conference also witnessed the signing of important MoUs between J M Financial & First Rand Bank SA and also between Green Harvest & KZN AC Industrial SA.
Düsseldorf Airport Celebrates Unique IT Outsourcing Partnership with SITA
Düsseldorf, Germany, June 1, 2010: In addition to significant cost savings, the number of third party customers has grown to 250 representing 30% of sales for the joint venture, SITA Airport IT (SAIT), established five years ago by Dusseldorf Airport and SITA.
Thomas Schnalke, Managing Director, Düsseldorf Airport, said: "This is an important milestone for Düsseldorf and SITA as we have genuinely broken new ground for the air transport industry. Looking back over the last five years there is no doubt that we have proved the case for the value and feasibility of airport IT outsourcing.
"Through a period of 20% growth we have introduced cost-efficient technology that benefits our passengers, the airlines and all our tenants. SITA is delivering results that allow us to focus on the overall development of Düsseldorf to ensure its future success on the back of $350 million investment over the last five years."
The visible benefits of this investment are 320 workstations for airline check-in, 74 self-service check-in kiosks and more than 1,000 newly formatted flight information displays. SITA's Baggage Reconciliation System, which ensures the right bag, belonging the right passenger is on the right plane, has also been introduced to reduce the level of mishandled luggage.
Christian Jahncke, Managing Director, SITA Airport IT, said: "In addition to what we have achieved in terms of cost savings through the effective deployment of shared airline infrastructure such as the check-in facilities, data centre and telephone system, we are now looking at other areas for development. Innovative technologies in the area of professional mobile radio services, mobile workforce solutions and foreign object debris detection are all planned for the near future."
SAIT also manages airport TV, an airport customer loyalty card, car park online reservations and management, hosting of the airport website and 24x7call centre. SAIT received ISO certification last year which included ITIL (Information Technology Infrastructure Library) training for all employees.
UCO Bank Selects Xchanging to Implement Disaster Recovery Solution
Mumbai, June 1, 2010: Xchanging (LSE: XCH), a large, fast growing global business processor, announced today that it has extended its relationship with UCO Bank, a leading Indian bank, to implement mission critical disaster recovery solution for its most business critical financial telecommunication infrastructure.
Xchanging will enable UCO Bank to seamlessly integrate near real-time databases, payments, and transactions over its SWIFT payment gateway with the bank's existing disaster recovery infrastructure. Xchanging EastNets' implementation compliance and payment solution conforms to international banking benchmarks. The solution will provide a secure environment for efficient duplication detection, and recoverability of high volume messaging traffic. The scope of the implementation also includes back-up of foreign exchange payments and telecommunications platform.
A leading commercial bank and Government of India undertaking, UCO Bank has an extensive network of over 2,000 service outlets and 35 regional offices across India. With additional offices in Hong Kong, Singapore, Malaysia and China, UCO Bank conducts extensive foreign exchange business in more than 60 centres across India. Xchanging's comprehensive disaster recovery solution will address the data recovery needs of the bank's operations.
David Andrews, CEO Xchanging said, "We are delighted to be the provider of choice for UCO bank and to be the first to introduce the EastNets solution to the Indian banking market. IT is playing an increasingly important role in business processing across industry sectors. As a technology powered business processor, our vision is to now bring the power of collaborative technologies such as cloud computing to our customers' business processing needs. With our extensive Intellectual Property, we have already set the foundations to be ahead of the market in providing our customers the benefits of new generation technologies".
Nimish Soni, Managing Director, Xchanging India added, "Xchanging has been supporting UCO Bank since 2004 as a SWIFT Partner. Xchanging's mission critical solution will allow UCO Bank to streamline its back-up and recovery practices and derive increased operational efficiencies. In the event of any hardware failure, human error, file system corruption or disaster, our solution will help the bank to restart operations without any delay in switching to the back-up system". He further added, "We are seeing a growing number of banks adopt an increasingly focused approach towards disaster recovery management planning. This is spurred by an increased regulatory thrust by the Reserve Bank of India (RBI). UCO Bank when looking for a strategic partner to augment its disaster recovery planning selected Xchanging after a careful assessment of the depth of our experience".
Xchanging designs, builds and runs a range of technology solutions for business processing. The company embeds its Intellectual Property (IP) to create a solution faster and more cost effectively than customers can themselves. These technology services are aimed at organisations that wish to use IT services to improve organisational effectiveness and profitability.
Xchanging's capabilities in the banking and securities industries include retail investment account management and securities processing services. By the end of 2010, it will be the largest independent investment account processor in Germany, and is expected to administer approximately 1.5 million accounts for its Enterprise Partnership (EP) Allianz Global Investors and other customers such as SEB Bank and MEAG MUNICH ERGO Kapitalanlagegesellschaft mbH (MEAG).
DO AWAY WITH SUBSIDIES IN PETROL/DIESEL: ASSOCHAM
Delhi, June 1, 2010: The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has urged government to at once Free prices of Petrol from it’s domain and consider phased wise elimination of subsidy on diesel to help oil companies stop bleeding whose losses on account of continued extension of subsidies on petrol, diesel, LPG and kerosene are likely to exceed Rs.1 lakh crore in current fiscal.
In a representation submitted to Ministry of Petroleum and Natural Gas, by ASSOCHAM, however suggested that pricing of LPG and Kerosene should continue to be subsidized by the government as much as possible for populace below poverty line.
The Chamber has further proposed that LPG and Kerosene pricing could also be taken out of state control for people above poverty line as their income levels are rising with changing consumption patterns and there would be no justification for subsidies for them as it can jeopardize prospects of oil companies.
On account of heavy subsidies, petrol is currently sold off Rs.6 a liter below it’s actual price while diesel pricing is subsidized by little over Rs.7 a liter. There is a subsidy of close to Rs.300 per cylinder of LPG and it’s element on kerosene exceeds Rs.30 a liter, pointed out ASSOCHAM representation.
These put together, will cost oil companies a burden of over Rs.30,000 crore in fiscal 2010-11. Therefore, to begin with petrol pricing can be completely be freed as most of it’s consumers can willy-nilly bear the burden and provide downstream oil sector with a relief of close to Rs.13,000 crore, said ASSOCHAM. The total anticipated amount of subsidies on LPG and kerosene is likely to exceed Rs.60,000 crore by end of March 2011.
Since, elimination of subsidies on diesel cannot be possible for government in one go as it happens to be a product of mass consumption and is largely consumed by people living on subsistence levels, the government should therefore take out its pricing from it’s control in phased manner. The richer lot of society should be charged higher prices and diesel consumption by rich farmers shouldn’t be subsidised.
Since identification exercise for elimination of subsidies on diesel is going to take longer, the government should reduce it in a phased manner as fluctuation in future crude oil prices are unlikely to be abnormally higher.
According to ASSOCHAM, crude prices are going to go in northern direction most of the times because of higher demand and it’s lesser production since most of economies are growing and growth of economies would largely depend on energy consumption patterns which will keep increasing.
As far as kerosene and LPG are concern, the government should continue to subsidise these fuel because their consumption is largely prevalent with masses belonging to restricted sources of income.
In cities and metros, IGL Limited has started making cooking fuel available through pipeline network which has no subsidy element. LPG is going to be replaced by Compressed Natural Gas for cooking purposes. Therefore, the consumption of LPG would increase for poor people for which some extension of subsidies should continue until India becomes a country of affordable people. Likewise, subsidies on kerosene should also continue, feels the ASSOCHAM.
The Chamber is of the view that on account of subsidies, oil companies are in red which once upon a time were paying rich dividend to government and other stake holders but since these have started bleeding and their margins are under serious threats because of rising price of crude oil, it is time that corrective measures are ensured on policy front and pricing mechanism for petrol diesel should be left out to market forces, concluded the ASSOCHAM. |
