India – from Emerging to a Submerging economy


India – from Emerging to a Submerging economy

On 22nd March 2012 , I wrote this on my blog and also sent the same to leading public figures .I had stated dwelling  in detail about how,  ‘ Have we oversold the India story’, and this was much before the bad news starting sinking in !

Link to the blog is  https://commonmansblog.com/2012/03/ .

This blog clearly mentioned that we must be prepared for bad news in April – May – June Quarter , and we know that,  India was downgraded as an economy by the international rating agencies ( S&P & Fitch ) and many Indian banks also faced the brunt , many retailers are gasping for breath ….

This time , I have decided to write about the story of how Indian economy would  enter a dark phase if immediate steps are not taken ,and this note is not against anyone but for everyone who wants to see India doing well !  I have tried my best to put data for every statement ( Besides Almighty , everyone should believe in data !).

So now , it is time to peep in the story of how an emerging economy can become a submerging economy .

Let us look at the following data :

Sector – Industry / company Financials ( Loans / NPAs) Source / Remarks
Telecom Sector Rs. 2.00 Lac Crore debt TOI, 26th September , 2012.
Banking Sector NPAs Rs.1.37 Lac crore as of June’12 Mint , 7th September, 2012
Banking Sector According to RBI’s assessment , a fifth of all re-structured loans go   bad . According to RBI, as on March 31, banks had Rs.2.18 Lac worth of   restructured loans on its books Mint, 7th September, 2012
Banking Sector State-run banks  NPA crosses   Rs.1.23 Lac crore Mint , 23/ August/ 2012
Credit card outstanding Rs. 22150.00 Crore As on July/ 21 Ref. ET 14/9/12
Indian Government Total planned borrowing is Rs.5.71 Lac crore for FY 13, of which   Rs.2.0 Lac crore would be in the second half of the fiscal by Dec’12 As per Mint dated September 28, 2012
Banking Sector Report by Credit Suisse group AG points that exposure to 10 large   Industrial groups constitute 13 % of the entire banking system Mint, August 21, 2012.
Banking Sector As of 27th July, Indian banks had loans outstanding of   Rs.36,600.00 Crore to the mining and quarrying sector, and Rs.93,170.00 Crore   to the Telecom sector Mint, 12th September, 2012.
Power Sector As of March, 2011, the accumulated losses of the State power distribution   companies are estimated to be alone Rs.1.90 lac crore which, by now,  would have crossed  Rs.2.0 lac crore IBN Live dated 23rd, September,  2012
Air India ( NACIL) Rs.67520.00 crores in loans & dues NDTV Profit, 8th Feb, 2012
Pantaloons ( Kishore Biyani’s ) Rs.3300.00 crore ET, 14th June 2012 . After selling a portion of its   apparel business to Aditya Birla Group. Before the sell-off , the debt of   Pantaloon was about a billion dollars
Reliance ADA Group Rs.86700.00 crore  FY’12 Business Line August 26th, 2012.
GMR Rs.33600.00 croreFY’12 Business Line August 26th, 2012.
JSW Rs.40,200.00 crore FY’12 Business Line August 26th, 2012.
Jaypee Rs.45,400.00 crore FY’12 Business Line August 26th, 2012.
Lanco Rs.29,300.00 crore FY’12 Business Line August 26th, 2012.
Essar Group Rs.93,800.00 crore FY’12 Business Line August 26th, 2012.
Vedanta Rs.93,500.00 crore FY’12 Business Line August 26th, 2012.
Adani Group Rs.69500.00 crore FY’12 Business Line August 26th, 2012.
Videocon Rs.27,300.00 crore FY’12 Business Line August 26th, 2012.
GVK Rs.21,000.00 crore F’12 Business Line August 26th, 2012.
Fortis Healthcare Rs.6237.00 crore Business Line August 15th, 2012
King Fisher Airlines Rs.7500.00 crore The Hindu, July 2nd , 2012
Losses of top three oil marketing companies Rs.40,500.00 crore in April-May-June’2012 Forbes India , Sept 03, 2012
Airtel Rs.60,018 Till Q1, 2012 Business Line , Aug 3, 2012

The total debt level of  ten companies alone (Adani, Essar, GMR, GVK, JSW, Jaypee Group, Lanco, Reliance ADA, Vedanta and Videocon) has jumped 5 times in the past five years to Rs 5,39,500 crore  ( Indian Express , September 06, 2012 )

Business Line dated August 26, 2012: Credit Suisse said that the aggregate debt of the ten groups accounts for about 13 per cent of total bank loans and a whopping 98 per cent of the entire banking system net worth.

“Therefore, surprisingly now in terms of concentration risk, Indian banks rank higher than most of their Asian and BRIC counterparts,” it added.

The report said a strong loan growth of Indian banking system in past five years is increasingly being driven by a select few corporate groups.

“Given the high leverage, poor profitability and pressure from lenders, most of these debt heavy groups have initiated plans to divest some of their assets. However, given that most domestic infrastructure developers are already over-geared, demand for these assets may be limited,” Credit Suisse said.

Each of these groups alone account for 1-2 per cent of total banking system loans, the report said, while noting that all banks appear to have high exposure to the same few groups.

“With the economic slowdown and a downturn in these sectors, multiple assets of each group appear stressed and financials of these groups are stretched,” the report said.

Bank’s exposure to real estate sector ( ET dated 22nd August , 2012)

Bank Exposure to real estate FY 2011-12 ( Rs. Crore )
State Bank of India 144668.38
ICICI Bank 81421.73
Axis Bank 52730.39
Punjab National Bank 48474.59
IDBI Bank 36784.47
Bank of Baroda 22157.40
StanChart 26027.78
HDFC Bank 25020.26
Total exposure Rs. 437285.00 Crore

Despite an exposure / investment of about Rs.4.37 lac crore from banks  ,still five lac houses remain unsold ( ET, 22/ 08/2012 & TOI dated 18/ 09/ 2012. ) . So land became costly as the builders brought them with loans , houses became expensive due to builder cartels and now that houses are not getting sold , all are a part of the downturn ……..no solution is in sight except for NPA’s and its cascading affect later .

Clearly, Indian economic story lacks ‘depth’ but has been built on ‘debt’ and this is a painful bubble waiting to burst …. So a common man must have enough savings to last a few years if without a job  !

July 26, 2012 in TOI, it was reported that at least eight cases of FDI in some obscure real estate companies – each worth more than USD 100 Million – from Singapore have come under scanner , with Income tax Overseas unit (ITOU) having investigated them for alleged round tripping . Suspicion was raised when authorities detected huge FDI inflows into some little known real estate firms in India in the form of equity participation . A senior finance ministry official said they suspect these real estate firms to be front entities of some corporate houses and their black money has been routed through Singapore to acquire real estate in the country . All these FDIs coming from Singapore pertain to 2011. India received Rs.1.74 Lac crore worth of FDIs in 2011-12, of which Singapore contributed third highest at Rs.24,700.00 , after Mauritius ( Rs. 46,700.00 crore ) and the U.K ( Rs. 45,000.00 Crore).  So , now we can understand why an Indian’s politician’s family have a flat in Singapore and why Indian Government along with a few ‘parties with vested interests’ are pushing  for FDI ! Does it also not answer the question why Government opened the real estate sector to FDI in 2005 ? So that money stashed abroad can be brought back in real estate sector, and further money could be made by investing in and increasing the prices by buying land !  Does Lavasa ring a bell in your ear !

In absolute terms, bank’s bad assets have doubled in three years between 2009 and 2012  – from Rs. 68216 crore to Rs.1.37 Lac crore ( Mint 21st August , 2012).  Bad assets in coal, iron and steel , mining , construction , textiles and aviation sector have been on the rise . Bankers see stress in telecom and power sector, too.  The biggest beneficiaries of loan restructurings are large industrial houses in the manufacturing sector – 8.24 % of loans given to industries have been recast. In the services sector , the comparable figure is 3.99 % , and in agriculture loans , 1.45 %.  It is clear that the small borrowers don’t get relief  from loan servicing but the large industrial houses have gotton one ( Mint , 21, August ,2012. ). According to the same article , public sector banks have 90 % of the restructured assets , and this in my view clearly states one fact – a strong political – bureaucratic and business houses nexus to make loans and buy private jets and show companies in losses to the investors !  What right do the business houses have to question the Government on profligacy and spending when these business houses have huge debts but have their CEO’s / promoters taking home 10’s of crore in salaries plus stakes in companies and still flying private jets on borrowed money ! We know of the large business house where the debts are more than revenue but the flamboyant chairman / promoter flies on private jets ! Such company’s ( any company that has over Rs. 50 crore external debt ), boards must be restructured by the MCA (Ministry of Corporate Affairs)  and independent directors with fixed term and remuneration should be appointed by the Government , so that the loans and shareholders money is not misappropriated by such promoters in the name of expenses and privileges  !

Three more developments to be noted to give you a sense of state of affairs in the Indian economy :

Remarks
India S&P rating is BBB (Minus) . Outlook  – NegativeFitch rating is BBB (Minus ). Outlook – Negative  ( TOI, 26th June, 2012 ).
Bharti Airtel Downgraded by Goldman Sachs and other banks. ET .  10th , August , 2012
Retail Sector Fitch has downgraded the ratings to negative

Agriculture / Food crises : The US is facing a severe drought , and India has witnessed a bad spell of monsoon this year with erratic and unpredictably low rainfall . When India imports pulses and oilseeds , & the prices of these commodities is set to rise. Stock piles of the biggest crops will decline for a third year as drought parches fields across three continents , raising the food-import costs already forecast by the United Nations to reach a near record $ 1.24 trillion . Combined inventories of corn, wheat, soya beans and rice will drop 1.8% to a four year low before harvests in 2013, the US department of Agriculture ( USDA) estimates . Crops in the US, the biggest exporter, are in the worst condition since 1988, heat waves are battering European crops . Wheat production in Russia , the fourth largest exporter , will fall 20 % this year , and in Australia , output will decline 19 % and, God forbid, another year of bad spell of rain in India will spell disaster for this country . This situation warrants an emergency action ! On 9th August , 2012 on page 7 of ET, I read an appeal to the GOI by All India Starch Manufacturer’s Association regarding the crises due to non-availability of maize in the domestic market.  Even if starch manufacturers were ready to buy maize at higher prices, it was not available and adding to it was the monsoon failure   !  We are all awaiting a miracle to happen with Wal-Mart et al. But the reality is that these players have not much to contribute. We must not forget that , the supply chain structures in these companies are leaner and they work on shortest inventory, so clearly , these people will not do much for supply chain management . Also, the biggest contribution is stated to be creation of 10 million jobs in India . I wish to ask that these companies have a ROI ( Return on investment ) for each employee and so , clearly , we must see what is the cost that we are going to pay to these MNC chains for them creating 10 million jobs & the Government must come out with a white paper on this ? After all , Wal-Mart is not here in India for charity !  For sure , it would mean we paid will pay them dearly for doing what we could have done 100 times cheaper ! All FDI investments to me appear to be taking the ‘economy in debt’ to ‘sell off’ ( divestment )… We are back to what East India Company did to India but this time , it is not one company, but multiple East India Companies !

Also , a time to look at the sectorial composition of GDP 1950-51 – 2011-12 from CSO data

Agriculture Industry Services
1950-51 53.1 % 16.6 % 30.3 %
2011-12 13.9 % 27 % 59 %

In 1950, India had a population of 350 million and now it is 1210 million. During independence,  the population dependent on agriculture was 72% and now it is  54 %. But except Madhya Pradesh, where agricultural growth has increased to dramatically  , not much is visible in other states .

Infrastructure – Construction firms sector ( Mint , September 11, 2012): for a set of 87 firms with a significant presence in infrastructure , sourced from Capitaline database , these numbers show an increasing difficulty to service debts

For these firms , the interest coverage ratio (ICR), for fiscal 2012, plunged  1.9 times , the lowest in at least five years. In other words , for every Rs. 100 of interest payments, the firms earnings before interest and tax ( EBIT ) stood at Rs.1.90 . The comparable number for 2007 was almost five.

In the fiscal 2012, at least 17 firms did not earn enough to pay the interest ! The list includes some of the bigger and better known firms such as Hindustan Construction Co. Ltd, Gammon Infrastructure Projects Ltd and GMR Infrastructure Ltd. This might give us a sense of where India is headed . First we oversold the India story, and now we are gonna pay heavily for it ….. !

Emerging Economy – really ? Let’s have a look at the following figures ;

  • According to the NSSO survey( July 2011 – June 2012 ), 10 % of India lives on less than Rs.17 a day . As per the survey , half of the population in rural India was living on a per day expenditure of Rs. 34.33 , and this is after two decades of reforms in India !
  • About 8.3 % of the population is unemployed
  • 54 % of Indian families live in houses that don’t have concrete or brick roof ( Census, 2011 )
  • 47 % of the total households live in houses with mud floors ( Census , 2011 )
  • More than 800 Mn don’t have toilets at home
  • Millions of tonnes of grains are stored in the open as we have no place to store !
  • Tata shut production of passenger vehicles for two days to avoid inventory pile up due to bad economic situation
  • 1/3rd of rural Indians and 1/5th of urban Indians forego treatment due to lack of money
  • 47 % of rural Indians and 31% of urban Indians finance treatment by loans or sale of assets
  • One child dies every 16 seconds due to malnutrition , diarrhoea or pneumonia
  • All major currencies have appreciated against dollar but rupee has weakened . Even Singapore dollar is up by about 50 % compared to rupee last year

GDP & Growth without fundamentals & eventual Collapse :  This is the India’s growth story’s fate . Let me give you two glaring examples and rest you can relate for your conclude;

I have travelled to the draught prone areas, and heartland of farmer’s suicides i.e. Vidharbha region of Maharashtra .  Lanco is setting up a power plant in Wardha and has purchased land for as high as Rs. 25 lac per hectare ( as per the farmers statement ). So  , let’s look at this example where Lanco purchased 7 acre land from a farmer for Rs.1.75 crore . A farmer who was drought and debt ridden for years becomes a millionaire overnight, and buys a SUV for himself along with a rifle , gold jewelry for his wife , builds a pucca house with the money he gets , and the money is spent soon as he did not know how to plan and how much to spend and the land is also gone to Lanco ! Also, money brought in a lot of vices ( please check the number of AIDS patients in the region ! ).   This company Lanco, runs a debt of Rs. 29300.00 crore and has gone for CDR ( Corporate debt restructuring ).  The banks that gave the loan should be ready for a NPA ( Non-performing asset )! So , the farmer , the company Lanco and the bank have become a non-performing asset ….. whereas , the farmer buying a SUV, Gold etc, would have boosted the sale of vehicles , gold, wines, apparel companies temporarily , and soared the rates & increased the GDP ! So this is growth in GDP but not a sustainable one or growth without prosperity !

Let me quote another example :  Country auctioned the airwaves (spectrum), a few years ago for which the companies paid tens of thousands of crore for airwaves. The companies took loans , passed on the cost to consumers ( Co’s were not wrong as they had to get an ROI for their investors ) and finally , like Airtel with over 200 million customers, run into a debt of about Rs. 60,018.00 crore ……….So , let me consider an alternative scenario . If companies were given spectrum for a nominal administrative fee of say Rs. 500.00 crore + 50 % revenue sharing . In that case, the companies would have invested more into infrastructure and services would have been better and much cheaper , also , the Government could have made a cool Rs.80,000.00 crore every year taking the current revenue of all telecom operators to be Rs.160,000,00 crore, with probably very little debt on telecom companies and no such scams !  Today, the telecom sector has a debt of Rs. 200,000.00 crore and government barely gets anything of the total revenue of Rs.160,000.00 crore as its revenue sharing is in lower single digits .  All have lost due to myopic policies of the Government . This is what I call GDP without prosperity ,  and this is what our entire Indian economy is passing through . It has no depth but debt ! What I call as lack of strong fundamentals, for which none of the parties have shown a concrete action plan . Companies have stock valuations and we are measuring our strength on the stock market indices which are not at all in relation to our ground realities ,  and only 2 % people in our country dabble in stock markets whereas 98 % suffer the hallucinations of this economic growth and GDP which is backed by loans , subsidies and political doll outs and have become a drain on our economy  & our economy is becoming a bottomless pit ! Here I will not fail to quote  the maiden address of our former finance minister and current President of India on 15th August , 2012  ‘It is indeed a wake-up call to Indian polity that even 65 years after independence and 74 years after Bose’s observation ( Subhash Chandra Bose in 1938 had flagged at the 51st session of Indian National Congress at Haripura that country’s primary challenges were poverty , illiteracy and hunger ) , the number of poor in the country today outstrip the population of the country in 1947’

All the sovereign wealth should be leased on 50-50 % revenue sharing between the Government & the private sector companies , and never be auctioned ! There is no other sustainable model for our meeting the financing needs and auctions only give a one-time income ! This must be made a policy so that every year , Government can make decent money and invest in the infrastructure,  growth and give good governance to all Indians

Indian population a mere statistics  ? Let us take the example of the recently concluded London Olympics . China with a larger population came 2nd with 38 gold , 27 silver and 23 bronze medals and India came on 55th position amongst 79 nations with zero gold , 2 silver and 4 bronze medals ….. this is what our leaders have led us to ! With committed leadership we must have made it the top by now …..

Let us do a rough sum of Indian economy which has a GDP of approximately Rs. 100 lac crore and we still borrow about Rs. 5.2 lac crore every year, and we already have  debts of about Rs. 45 lac crore . India’s  42 % of the net annual tax revenues of Rs.7.71 lac crore goes in servicing its debt ( Rs.3.20 lac crore ). Another 25 % goes in subsidies ( Rs.1.90 lac crore ) – an annual amount that would actually be Rs.78000.00 crore higher if off-balance sheet fuel subsidies to oil marketing companies were included.  The fiscal deficit of Rs.5.19 lac crore – 5.9 % of nominal GDP – is 67 % of the net central tax revenue . This was detailed in TOI dated 19th August 2012. I had read somewhere that , 54 % of Indian’s income goes in interest payments on debts taken for decades , 30 % is the cost of running the inefficient Government & bureaucracy and 16 % for subsidies ……so I keep wondering , does India have any money at all to invest in infrastructure or for future !!!! ( Hope I am wrong in remembering these numbers and India does better ). If not , time to take action !

According to Apparel Promotion Export Council ( APEC) , an estimated 4.5 million jobs have been lost over the past 3.5 years . Do our policy makers know how an ordinary Indian would survive without a salary for even a week and what pains his family and relatives pass through him being a jobless !

If all of you witnessed the discount sales season, it was advanced and even extended to make up for the shortfall , and this must show the desperation from the companies to meet the numbers . Unfortunately , If corrective steps are not taken immediately , we will have more companies getting into CDR or closure and millions of jobs might be lost till 2015……worst is yet to come !

Let me quote a facts about why India gained political independence and what was the average age of leadership . Maulana Azad became the President of INC at the age of 35 , Bose became the President of INC at the age of 41 and Nehru became the  President of INC at the age of 40… So now we know  why we got political freedom and why we have not been able to get economic freedom ??? For a nation with more than 65 % of the population below 35 years , it is important to take care of the representation of youth to lead this country with fresh innovative ideas for a double digit growth and that too  grounds up. Though our policy makers tell us that we cannot grow at about 8 % , but the fact is that, in 2011 calendar year , 12 countries clocked more than 8 % growth and some of them like Ghana , Iraq , China , Argentina and Turkey are not exactly small . We have been capped by the ‘old school of policy makers’ and their thinking , who believe that they know all and what they do is right ! This has to go now ! We need leaders with a nose on the ground , good governance and a strong political will and rest will fall in place . Government must earn from the rich and middle class, and help upgrade the lower income class to middle class on a ‘mission mode’ basis by empowering them by providing them training , education, healthcare  and technology  .

Our country’s finance ministers have taken to ‘Populonomics’ ( Economics of populism ) , and not ‘economics’, and this has clearly shown the results to the common man . India is heading towards an economic disaster and short cuts like FDI are short lived solutions !

I can bet you that if a party rises above caste , religion ,reservation, dynasty ,  and parochial regional politics, it is sure to win the youth and come to power without taking to populism !

It is the time for the finance minister to move from being an ‘efficient tax collector’ to ‘passionate creator of wealth through innovation & entrepreneurship ’. India is the only country in the world at this time that  has ample opportunities for each problem to be solved and is a fertile basin for innovation ! If you were born as a human- being , you must be lucky, but if you are born as a human -being and that too, in India , you must be the luckiest on earth, and this describes our India today and what it can offer to the world !

All ministries must have wealth creation strategies  ! Just imagine that for the year 2012-13, India will have gross tax receipts of 1,077612 crores and expenditure of Rs.1490925 crore…. Even if we do the sell-offs , we still cannot pay off the Rs.45 lac crores of debts that India has ! Which assets will be left to sell for our next generation ( oh boy that’s too far , I must say in the next 10 years ) ,to sustain our economy ? I think then , our Government will call upon the US President and ask his farmers & companies to come and invest in Indian land and make it more productive , and that will be the final sell off of this once a great nation i.e India

I am not an economist, though , I have studied economics during my graduation ( but I must confess that I do not remember anything I studied during graduation J , and I am glad that I don’t remember anything J) All that I have written here is a common man’s perspective from the data and facts available in the public domain.  I have researched the state of economy well over five months to help our dear policy makers to do a better job and making the life of a common man better and not bitter !

I am leaving to US for two weeks on 14th October evening , and on my return, I will launch www.indiawewant.org ,and would welcome your suggestions and participation

With best wishes

Rajendra Pratap Gupta

Economy I Healthcare I Retail I Innovation         

http://commonmansblog.com

 

Communal Party of India – AICC – Congress


Communal Congress- History repeats

Today’s headline in The Times of India ( 6th December 2011 ), “Centre bids to push Muslim quota ahead of polls in UP”

This news reminds me of  the 80’s , when Shri Rajiv Gandhi used to meet Shahi Imam of Jama Masjid before the elections,  for issuing a fatwa to Muslims to vote for Congress .

It is time that people realized the real communal party of India – AICC !

Rajendra Pratap Gupta 

Healthcare I Retail I Rural Economy I Public Policy

www.commonmansblog.com

 

 

Nehru Gene , Congress & Faulty Policies – Let’s move on or else suffer more !!


March – April meant a lot of travel and meetings for myself , but the most interesting part were a few conversations that I will never forget !!

Whenever I am travelling to places within India and abroad , I make sure that I interact with people and ask them how much they know of our great country and what they feel about it . I am always proud to be born in this great country . May be , this drives me to find some answers to questions that need not be stated here !!

One conversation I had was  with a senior columnist in Kashmir during my visit last month . While we were talking , the issue of partition came up ( this topic is close to my heart as my mother was born and brought up in Lahore , now in Pakistan ) .

This columnist had an interesting point : He mentioned that due to the insatiable lust for power in Nehru , India got divided . His belief was that, Jinnah was at his fag-end due to cancer  , if only Nehru would have waited for one more year ( It is not good to have a wish that one dies of cancer but…)  , we could have saved ourselves from partition . The columnist went on to add , how could India leave Khyber pass and partition India and give away the pass to Pakistan ;The only way to reach Europe ?? I do not know geography so much , but he had an interesting point !

Other discussion I had was with my cab driver on the way from Washington DCA airport to the hotel . I figured out that the driver seemed to be from our part of the world , So I asked him where he belonged to ? I was right , he was from Pakistan but settled in the US for over 28 years !! While we kept talking about our countries before Partition and the sad story of strained relations now . He shared some very interesting information of why India got partitioned ? 

According to this cabbie . India had the maximum number of Muslims , and Nehru & Congress party knew very well that,  if India remained united , the vote of Muslims would swing to Indian Muslim League and not come to congress , so Nehru used his proximity with Edwina Mountbatten and planted the thought of partition in Jinnah. Well, I never thought of this angle !! Further this cabbie informed that, if you see the history of Jinnah a few years before freedom , he was never in favor of a partition . It was a congress and Nehru’s game plan and they never wanted to share a few states with IML ( Indian Muslim League ), which would have garnered power in some states, as some states had Muslims in majority , and Hindu’s & Muslims lived in complete harmony .

I completely empathise with this cabbie . I can only state that my mother’s family stayed in Lahore and Karachi , and I have seen my grandfather writing letters in Urdu , it never was an issue . It was planted by congress and today both nations are paying a price for the naked & insatiable lust of Nehru & his congress for grabbing power in 1947 .

The amount of money both these nations have spent on armed forces and conflict would have made this region developed in just 25 -30 years after freedom . But what we got was freedom for Nehru family to rule this nation and not for India !! Now we can well understand why Gandhi ji was in Calcutta during Independence and not with Nehru !! Gandhi ji died at the right time. Had he been alive , he would have revolted against Nehru .

AICC should have been dissolved after independence : Gandhi ji was never in favor of AICC continuing after freedom , In fact , he made a suggestion that since the objective of the congress were achieved by getting freedom from the British , it must be dissolved . But we know that Nehru had a different plan and India continues to ruin under this party !!

One of the interesting viewpoints I can share is from LKY ( Lew Kuan Yew , Father of Modern Singapore ). He has openly criticized Nehru for aping the central planning of the Soviet Union . LKY went on add that Nehru was a good writer & poet but not a great leader for India . Nehru kept promoting the non-aligned movement for the developing world but strongly sided with the soviet Union ( that is , he said one thing and did just the opposite , this is what I call the ‘Nehru Gene’ , which by the way is a legacy of the Gandhi family and its congress ) , and in the end, Nehru  caused more harm to India than any other leader ! Nehru had a great opportunity to change the course of the nation immediately after freedom as he had a free hand and people believed in him , but he missed the opportunity .

Indians know that Nehru was the one who took Kashmir to United Nations , he was the one who promoted industries and not SME’s & agriculture ! Nehru guided India towards a disaster with his short-sighted policies ‘Nehru gene’ still rules the Gandhi family and the congress, and it is time to let this party be out of power for at least two terms so that the country can be brought back on track

Rajendra Pratap Gupta

http://www.rajendragupta.wordpress.com

Common Man !!


Dear Rahul,

I read about your definition of the common man at the Congress plenary session . It is rather a matter of shame that, the  Congress has decided to search the definition of a common man after six decades after India became Independent !! Your party has ruled the country for about half a century with absolute power, and your dad used to say in 80’s that,  of every rupee meant for the poor only 15 paisa reaches the poor, and now you say only 10 paisa reaches the poor. So what have you all done for this country ? Your contributions are a serious question mark ?? Now to shadow your failures , you are talking of terrorism !!

We have met twice on your call at 10 ,Janpath  ( Once in March ’10 & second time in Oct’10 , i could not come in July as i was abroad ). Coincidently , Kanishka was present in both the meetings and had told me that i could have fought the elections !! I must tell you that , i have not been impressed by your rhetoric on development or your being a Sipahi for the Tribal’s etc.  Look back , what has congress done to the nation ? In a land of a billion people , if we have to ask the question, to name 10 big business houses ? The person will start answering something like this, Reliance , Tata, Birla , RPG group, Bharti, Vedanta , Sahara …………..and start fumbling for want of more names . Shameful isn’t ? That this should have been the scenario of every state, where we should have created millionaires and billionaires ………….But we just have a handful of tycoons ……..close to the establishment .

But the bigger question is , how & where did these groups become big & make their money ? Answer is simple . They all made their money in natural or government resources (  Steel, Mining , Gas , Spectrum, real estate ). All these resources are owned by the state , and have been either selectively leased or licensed to some tycoons who could bribe the party , politicians and bureaucrats and loot the resources owned by the government . These groups have been created by politicians , and now these groups manage the greedy lot !!

So please do not make tall statements at the public forums . I was having lunch with an industrialist friend from Delhi a week ago, and he thought that i understood the mechanizations at the Delhi’s corridors of power. So quite naively , he asked me ,Rajendra , do you know who is the Mr. Ten Percent in Gandhi Family ? I answered point blank,  ‘No’.

To which he named your brother-in-law !!  Stating that Now a days , Robert Vadra is known to get 10 % , when he is not even worth ten percent . I also heard Tarun Das , Mentor CII, Stating to Niira Radia that , Mr. Kamal Nath takes 15 % cut . He later justified and retracted .But a senior and an elderly Industry spokesperson saying such a thing is a matter of shame for the nation .

You & others have said many things in this plenary , but do you all have a plan ? The malaise is so deep that people will revolt against the powers, should you try to kill the giant whom your family let flourish all these decades ; The Giant call corruption . I understand when Raja made a statement today that ‘ I am not afraid of CBI’ . He knows that, CBI is busy with Jagan Mohan Reddy now a days and Reddy brothers & Yeduyurappa  . It cannot act against its masters !  Else , how will the CBI Chief get his plum post after retirement  ?  We all know that you do not intent to end the corruption my friend !!

Rise up from your slumber and talk sense Prince RG !!

Regards

Rajendra Pratap Gupta

Email : office@rajendragupta.in

Food Inflation – the real issue is of planned production & storage


Pulses – the pulse of the nation : Pre-dominantly , Indians are vegetarians , and so the protein requirements are met through consumption of protein rich – pulses

We have always been worried about high food inflation charging the government for inefficient handling of the prices. Often we quote the high price of pulses . Let’s do a little digging on why pulses cost more when 65 % of our nation is engaged in agriculture ?

Pulses production in India is 12-15 million tonnes , and the requirement is 18-20 million tonnes .  Looks like pulses production have never been planned by the ministry of agriculture or the planning commission ; this is when we have celebrated 63 years of independence recently !!

Second issue is that despite poor production , even storage has not been attended to .

FCI- Food Corporation of India has 60.5 million tonnes of food grains ( all kinds of grains & not just pulses )  . This is good enough of quantity to give 21 KG of grain every month to people below BPL .  Sadly enough , 30 % of the 60.5 Million tonnes gets wasted every year due to storage conditions

Issue is very simple , and the policy makers need to plan production and storage to address the gaps . Once this is done , we should never have issues related to irrational prices of food grains

Rajendra Pratap Gupta

Email : office@rajendragupta.in

Indian Pharmaceutical Industry is already controlled by US / Europe, and now it is Retail Sector’s turn – FDI round the corner


Dear Dr.Joshi,

Namaskaar,

I am sure that this finds you doing good.

Last  year i had detailed discussions with you on FDI and i sent you a note on not opening the retail sector to FDI. Till last year , you were the Chairman, Parliamentary Standing committee on commerce .

This year the issue is out again . It is shocking that UPA is even considering to open the Retail sector for FDI.  Just consider ;

Total retail market is Rs. 1.2 Lac crore. Isn’t that too tempting for recession hit economies like US/ Europe and U.K. to fight recession through markets abroad ? They cleverly call  us as an emerging / developing economy

To foreigners , this is a market but for us (Indians)  it is 40 % of our GDP.  You can expect that in the next few years , a good percentage of 40 % of our GDP will be in the hands of foreigners !!  . We have 15 million retailers , thereby directly employing at least 30 million people and indirectly 6 times more i.e. 90 million .

Only 4 % of our retailers have an area of 500 Sq. Ft.

Food constitute 70 % of our retail trade

The UPA’s discussion paper is a wrong start as it has by-passed the parliamentary standing committee’s report tabled in both houses in June 2009. Consisting of more than 40 Member of parliaments . The committee had taken into account the report submitted by ICRIER

British MP David Amess recently said that the Indian Government to tread”very carefully” if it opened up the multi-brand retail sector to FDI because the entry of companies like UK-based retailer Tesco would”literally change the fabric of life in India” by endangering small shops. Amess chairs the British All Party Parliamentary Group on Small Shops (APPGoSS).

The government is currently holding consultations on allowing companies such as US-based Wal-Mart, France’s Carrefour and Tesco to come in.  Critics have urged the government to insert safety clauses following protests from small independent retailers that potentially face closure.”Britain was a nation of small shopkeepers,” Amess.”All of that has changed and this is because of the supermarkets, led by Tesco. It is impossible for small shop keepers, who have so much to offer, to compete with the prices of the supermarkets”.

APPGoSS Secretary Bob Russell MP, added “the expansion of supermarkets in Britain has been to the serious detriment of small shops, there is no question about this”.

One in six small stores in Britain have gone out of business in the last decade, the group said.

Atul Patel, an Indian origin Briton who runs Pelican News, a small store in North West London. said his family-run business was now struggling to survive, with sales of meat, groceries and fresh fruit having dropped by at least a fifth  after Tesco opened a store hear his.

Largest Indian pharmaceutical companies like Ranbaxy and Nicholas Piramal have already changed hands and are no more with Indians . With the recent acquisition of Piramal with Abbott ,  MNC’s control more than 50 % of the Indian Pharmaceutical industry , and more acquisitions are likely to follow soon.

My personal belief is that, the when the large foreign retailers come in , the fight will not just be between large and small retailers but between  large and medium retailers . Small retailers will die for sure . Needless to mention , when the elephants fight , the grass ( small retailers ) gets trampled !!

Dr. Joshi , please take it up at the appropriate levels .

Recently , it was reported that acute poverty prevails in 8 Indian states ( 421 million people in Bihar , Chhattisgarh , Jharkhand , Madhya Pradesh, Orissa , Rajasthan , Uttar Pradesh and West Bengal which together account for more poor people than in the 26 poorest African nations combined ( 410 Million ), a new ‘multi dimensional’ measure of the global poverty said According to the MPI- Multidimensional Poverty Index , developed and applied by the Oxford Poverty and Human Development Initiative with UNDP support

Also, i hear that Economy is growing at approximately 8  %. I need to tell our Dr. Manmohan Singh, the economist that the literal meaning of Economy is “Community’s system of wealth creation” and not just growth of a few sectors, as is in the case of India and we call it Indian Economy ? So Indian “economy” is not growing , but a few sectors that are in a ‘few hands’ are growing !!

Dr.Joshi , you have profound knowledge of each and every aspect of history , culture and wealth creation and distribution , that is even acknowledged by Congress leaders in power.

Let’s work to change all this . I am hoping to meet you soon.

Thanks with best regards

Rajendra Pratap Gupta

Email : office@rajendragupta.in

Rich get richer and poor get poorer in India – GDP statistics


On 15th June , i wrote on my blog about the topic ‘ High GDP but low GDP per capita’ is like growth without progress and prosperity . Well, i did not know that 11 days after the blog a report would come out that would validate my analysis . Here is the report

According to the 2009 Asia Pacific wealth report , by Capegemini and Merrill Lynch wealth management , India’s high net worth Individuals ( HWNI’s ) are 120,000 ( 0.01 % ) but their combined net worth is close to one third of the India’s GDP

At the peak of recession ,in 2008, India had 84000 HNWI’s with a combined net worth of $310 billion . To put that figure in perspective , it was just under a third of India’s market capitalization , that is, the total value of all companies listed on the Bombay Stock Exchange – as of end March 2008. The average worth of each HNWI was Rs.16.6 crore .

According to the firm’s 2010 World Wealth Report , India now has 126,700 HNWI’s , an increase of over 50 % over the 2008 number . In 2009 alone , an estimated 13.6 million more people in India became poor or remained in poverty than would have been the case had the 2008 growth rates continued , according to the United Nations Department of Economic and Social Affairs ( UNDESA ). Also, an estimated 33.6 million more people in India became poor or remained in poverty over 2008 and 2009 than would have been poor has the pre-crisis (2004-7 ) growth rates been maintained .

I keep saying that recession or growth that we keep reading in the Times of India or The Economic Times , is only affecting people who read these newspapers. Rest all live under abject poverty .

Read the presentation that i made at the 6th India Innovation Summit on 18th June 2010 at Bangalore . You will see that our demographic dividend is fast becoming demographic disaster !! ( Download the presentation from http://www.rajendra.groupsite.com )

Rajendra Pratap Gupta

Email : office@rajendragupta.in