Kamalnath Says, Worst for the Economy is over !- Is he in senses ?? Rajendra Pratap Gupta

Worst for the economy is over – Senior Congress Minister – Fooling Indians to vote ???

On 28th December 2008, I had written on this blog, that the GDP growth will be less than 6 % , I had also given the reasons as to why it would fall below 6 % for sure, when the government was firm that GDP growth would be 7.1 %. The fact is out now , and we our GDP has grown as low as 5.3 % in the Q3, 2008.

We will have lacs of suicides from job losers ! Earlier it was the farmers , now it will corporate people and workers who will commit suicides or commit crimes or suffer a nervous break-down. Why are we sleeping now . We just have 45 days – Please check the congress score card on my blog , They are a bunch of inefficient & dishonest people ! Can we entrust them our nation ?

As per the latest data ,

• India had an external debt of $221.3 Bn at the end of June 2008, 20 % of it is the short term debt, this will be hurt badly due to weak rupee .
• NRI deposits declined by as much as 1.1 Bn USD at the end of June 2008 compared to end – March 08 level.
• India’s foreign exchange reserves declined by 62.35 Billion dollars to 249.53 Bn USD as on Feb 20, 2008 from 311.88 Billion as on April 4, 2008.
• Agriculture is reporting negative growth at -2.2 % in Q3 , 2008,
• Exports have plummeted and people in export oriented companies are being fired every minute
• Industrial production is at a record low
• Fiscal deficit is highest since independence
• Sensex is at a record low in the last 40 months , Investors have lost more than 2/3rd of their investments
• Real estate sector is facing worst crisis ever
• GDP fell to 5.3 % in Q3 , 2008
• Rupee is weakest at about Rs.52 to a dollar
• Tax collections and revenue earners for government are dipping every day due to the above mentioned factors

Is what we call an economy of strong fundamentals ? When US , Europe and Japan sank into recession, immediately our growth story withered away, and we had been fooled to believe that India had strong fundamentals and we will not be affected . Is this not severe recession ?

At the top of all this , our learned writer of the book ‘India’s Century’ & also our Union trade and commerce Minister , Kamalnath had said just 3 days ago, that the ‘Worst time for the economy is over’. And just three days after the rupee is about 52 to the dollar and the sensex is on its 40 months low !! How clueless is our Union Minister ? Do we give such people to run our trade and commerce for the next five years ? If his words cannot last even a week , how come he writes a book on India’s century ?

We are into an unprecedented crisis , if we let congress win , I am sure that some of us will not even survive to vote !!

Rajendra Pratap Gupta
President
Country First
Email: rajendra.india@gmail.com
President@countryfirst.org
Mob: +91-9323109456

FDI in Retail

Dated : February 16th, 2009

Dr.Murli Manohar Joshi
Chairman
Parliamentary Committee on Commerce
New Delhi

Ref : Foreign Direct Investment in Retail Sector

Dear Dr.Joshi,

I wish to draw your attention to the following for a postive consideration and further recommendations.

There has been a lot of debate about the opening of the retail sector for foreign direct investment

My view is , that the retail sector in India is a major employer and is the key to India’s youth employment and empowerment . It today comprises of about 12 million establishments . Adding to this, there are atleast 2 helpers at a retail outlet. Further , indirect employment is provided to at least 6 people

With such a massive employment potential . We must consider the following before we talk of FDI in retail sector

1. Why should foreign brands take away India’s earnings ? Land is ours, employees are ours, spending is ours , raw material is ours. Then why do we allow foreign co’s take away our earnings by just putting their brand names ?

2. It is a known fact that, most of the reputed brands all across the wordl manufacture their products in India sub continent and sell across the World . The products are of highest international quality and well accepted . Why do we not sell locally and serve the local economy as well

3. It is well known that this big foreign MNC’s change the rules of the game by increasing rentals , salaries and lowering prices or even increasing them . Thereby , making it difficult for the localites to operate . We cannot regulate all this , but for sure , we can check the entry of these MNC gaints

4. What the retailers in India need is a different version of FDI – Finance from Domestic Institutions . If we get finance from domestic finance intitutions , we will be more competitive and we can grow profitably and grow even internationally . Indian products are already sold in differne parts of the world

5. I also suggest you to consider and recomend that retail be given an ‘industry status’ and there should be a separate ministry for retail and vocational training . That also takes care of re-skilling of the talent . We have a sever skill gap that needs to be immediately addressed

Hope that your good selves will consider my suggestions and incorporate with your recommendations

Looking forward to hear from you

Thanks again with high regards

Rajendra Pratap Gupta
President
Mobile : +91 9323109456
+91 9867300045
Email: president@countryfirst.org / mail@rajendragupta.org

Address to the Journalists who covered the Mumbai Terror Strike on Nov 26,2008

This is the text of the speech delivered to over 100 Journalists who were Felicitated recently at a function organized on Feb 2nd 2009 at Mumbai.
Good Evening Friends,

We all are glad to have ‘brave hearts’ with us today and we feel proud of you. In fact, on 26th November, i was awaiting to board the flight at the New Jersey airport for Mumbai when i got a call from my friend with whom i had the lunch that afternoon. He sounded worried and said, Rajendra, my God, did you see what is happening in Mumbai? I asked him? What do you mean Nailesh? He said terrorist have taken over Taj and Hilton hotels and a police Commissioner has been shot dead. It sent shudders down my spine. I had heard about Akshardham temple but now, it was my very own Mumbai .I walked to the nearest TV screen at the airport. I was shocked. I could watch all this thousands of miles away as you all staked your lives and kept sending the live footage. This held the nation captive for three days to the television sets. After the freedom movement, this was the first time that united the communities and the nation.
Press has always played an important role in nation building and society.
How many of you know how the democratic movement started? It was with the Introduction of printing press in mid 15th century in Europe, the proliferation of printed information helped fuel the rise of democracy. So my journalist friends, when you started the democratic movement, you will also have to safeguard the same.
After this November 26 terror strike, a lot many politicians have lost their jobs and so a debate has started on whether press should have shown everything live. I strongly believe that, since the press was showing it live, and that the whole nation was watching it, those who were fighting the battle with terrorists performed to their very best. Else, we could have lost many more lives. You all in fact, pushed the forces for their best performance . Freedom of press should not be compromised .I would go to the extent of requesting to the government to even make the sting operations legal and give immunity to the press for bringing such issues to the public . Most of the development and progress that you see in India today, is due to two reasons ; first, cheap telecommunications and second, proliferation of the Media. Media has opened the eyes and ears of the common man.
Now coming to the root cause of terrorism: Remember that each of the terrorist had 400 USD. Intelligence agencies took weeks to figure out why only 400 USD was in each pocket. This is exactly the amount you require to pay to enter your boat or jetty into the Indian waters. Our national security is priced at USD 400 ? If we stand at the Vashi check post , the price is down to 500 rupees. You can get your truck into Mumbai by just slipping a Rs.500 note at the check post
“Unemployment, uncertainty & frustration amongst the youth coupled with corruption in the government and administrative inefficiency is the root cause of terrorism and you just cannot fight it with sophisticated weapons alone” .
Terrorism survives and thrives on political and systemic corruption and inefficiency .
Remember,
When trust fails, people resort to justice
When justice fails, people resort to power
When power fails, people resort to violence
India has already slipped into an economic recession .Thousands are becoming jobless every week. This will increase criminalization and health problems.
How can we help fight terrorism? We must have a nationwide ‘Neighbourhood program’. Where every 50 or 100 people in a locality form groups and spend 4 hours a week for community work. This way, we will be able to watch and ward out suspicious people and help build closer ties within the community and will be more active to serve the community and the nation better
Why did Country First decide to honour our Brave hearted journalists? Today we only recognise the contribution when someone dies, but rarely during their lifetime. You all could have been hit by hundreds of bullets getting fired. But you decided to stay there , track this terrorist strike at the cost of your lives. Police had weapons, all you had is just a camera & the conviction and courage to stand there without caring for yourself in the interest of this nation – that is Country First ! Some of you had a near death experience .We must recognise your contribution. So we are here today
Hat’s off to you !
Jai Hind!
Rajendra Pratap Gupta
President
Country First
Email : President@countryfirst.org / mail@rajendragupta.org
Mobile :+91 9323109456 / 9867300045

Satyam Saga- Many heads may tumble. Raju’s life might be in danger

Rajendra Pratap Gupta

The satyam saga is not as simple as people believe . My personal view is, that it happened due to the political comfort Raju enjoyed with all the powers that are at play. More specifically , all the A.P. Governments be it of CBN or YSR..

I am sure that, this dirty trail will pull out many political skeletons. And if this is bound to happen, Raju’s life might be in danger . No A.P. politician would like to be named when elections are just a few weeks away. I fear that Raju might be eliminated in the name of a heart attack

The center must interrogate , investigate and keep the custody of Raju out of Andhra . But as we know, that our courageous politicians , corrupt agencies working under political influence and control, inefficient judiciary and biased press will not let the truth be out for the common man. That is what is called the CMP – Common Minimum Programme !!

Government has given mobilizing advance to Maytas infra. What steps have been taken to build safeguards for the two thousand Crores given as mobilising advance ? It is well understood that government has a cut in every such deal. Rajiv Gandhi once said that, out of every rupee meant for poor , 15 paisa reaches the poor. In ( political – business ) deals , poor are our politicians and they demand much more than 15 paisa out of every rupee in the name of the party and themselves – They have no shame – Remember Bangaru Laxman ?. How come suddenly a news paper cartoonist like Bal Thackeray and his entire clan run deals worth hundreds of Crores !! A poor man when becomes a saviour of the poor ( read politician ) suddenly becomes rich ?? I recall a quote- A Politician is one, who extracts votes and money from the rich and poor on the pretext of protecting each from the other !!

A few days back, I was talking to one of my friends who has access to the powers at the center. I was shocked to learn , that planning commission does not issue money to the states till there is a guarantee for the portion of the money being returned for fighting elections. If the grapevine is to be believed , this amount per state runs into thousand crore plus !!! That’s why when you complain about corruption , no one listens, as all the powers are deeply involved into it either at the front end or at the backend . Corruption is the politician’s only religion . Corruption is a trickling down process and is like rain water . It comes from the top and not the other way round !

While a lot of people are looking at bringing about a change in the governance of the nation . But trust me , it will not happen soon. Reason is, that there are only less than 5 percent of people who read and get frustrated about the current state of affairs ; unfortunately, they don’t even vote . So frustration alone will not change this system.. Rest 95 percent are victims and partners by force to such an ‘illegal democratic System’. The corruption is “institutionalised business” to such an extent that you and i cannot imagine as honest individuals . A Member of parliament. has to pay for becoming an M.P. then he has to collect the same money ( with returns ) from business houses, IAS & IPS officers in the name of getting things done !! A low level clerk or the hawaldaar / constable has to be pay for his posting and lucrative transfer . At the end , i and you have to pay for all this as bribe. This is my definition of the current democracy – a totally manipulated system by the politicians , for the influential at the cost of the common man.

Those of us who think that we can change it by mere lighting a candle or filing an PIL. Just go and check how many election commissioners , retired judges that have given favourable judgements are in plum postings post retirement ? why did Chief Election Commissioner T.N.Sesan not become a Union minister and Mr.Gill become a union minister ? Why do IPS officers , Judges become governors of states after retirement ? Many such cases exists. Just peep into the past. You might have all answers. Why does the CBI need a permission from the government for prosecuting the officers or M.P.’s ? Simply to delay and bid time . Anyways, an average Indian is so lost in daily chores that he/she doesn’t have time to get ‘involved’ in ‘such issues’ . Votes that the ‘intellectuals’ like us give does not exceed 3 % .Mostly, we don’t even go to vote. Majority of the people who vote for these corrupt politicians decide not on the basis of good governance, but whether his wives get a saree and the family gets a sumptuous meal a few days till the voting day. These are the 600 million innocent and exploited people who for almost next five years after elections will go to bed empty stomach every day. They cannot practice our principles ! And the politicians don’t wish them to prosper . If these 600 million people prosper and come out of poverty, corrupt people like Lalu Yadav, Shibo Soren, Mulayam Singh , Amar Singh, Sharad Pawar and many more would not be rubbing shoulders with Sonia or Manmohan or dreaming to be union ministers !! We all know why Ashwariya got the Padmshri award ? Simply because Amar and his gang have bailed out the congress ? Rahul Gandhi and Sonia Gandhi talk about democracy in the nation . If Rahul was not Gandhi would he become the Gen.Secy of the congress so soon ? When the party itself is against democracy and decides the top posts based on sycophancy , favouritism and dictatorship how can it guarantee democracy to the nation ? Why are we getting fooled. I would go to an extent of writing that Manmohan would have been forced for the cardiac surgery . So that if by chance , Congress comes to power. On health grounds , Manmohan can be retired and Rahul can step in to lead the nation to disaster ! Anyways, the Gandhi dynasty has ruled the nation for 90 % of the time since Independence . Earlier , they can be credited with ‘license raj’ and now ‘quota raj’ . Both the steps led them to manipulate and come to power but weakened he nation and divided it . We have gone backward than becoming developed . Elections have never been fought for good governance . It has been fought to stay in power. The priorities are misplaced totally. Last five years into power they had all to develop an indigenous growth model for India . But they went on to build a dollar based economy and gave us recession to live with . What a colossal failure for Sonia , Manmohan and PC !!

Don’t expect the system to change soon . A new cult has to come up from the youth , specially women who will have to lead another mass movement to make it happen. And it cannot happen if you read this and still decide to sit back and go into thinking mode.

We must get up to action .

Rajendra Pratap Gupta
President
Countryfirst
Email: mail@rajendragupta.org
rajendra.india@gmail.com

Global Recession- An opportunity for India to come out stronger ?

January 16th, 2009

Dr. Manmohan Singh
Prime Minister &
Minister for Finance
Government of India
New Delhi

Subject: Economic policies and the current turmoil- Recommendations

Dear Dr.Singh,

I am writing this letter to draw your attention to the issues affecting the nation and some practical solutions

On the outset, I wish to place it on record that I am neither a world renowned Economist nor a Nobel Laureate but have spend 12 successful years at the helm of many corporate companies more so because of my approach rather than some other qualification. As an ever lasting student of the corporate world, my focus has been on constant innovations and prioritizations in order to simplify complex situations and search for practical, achievable and sustainable solutions. The spirit and essence of this communiqué flow from these thoughts.
and trust me, if you follow my advice, we can certainly come out of the recession faster and emerge stronger. There are lessons to be learned to make India stronger

Let me clear you that India is in a recession and that we are headed for a severe recession if we don’t take immediate steps. I wish to quote you the following data to enlighten you about the same.

• Exports :According to the President ,Federation of Indian Export Organizations ( FIEO), Mr.A.Sakthvel, 2009 is going to be the worst year in history and the Indian Exporters may cut 10 million jobs by March as the orders are drying up
• Slow down in the leather industry is likely to axe 5 lakh workers in leather units in the next three to four months with worsening market scenario in US and Europe . The industry employs almost 2.5 million people. Ref: The Economic Times dated Jan 2009.
• Tax Collections :The Tax collections for December quarter dropped by 22 % ( Ref: The Economic Times dated 27th Dec 2008 )
• Corporate – Domestic slowdown Net profit of India Inc. likely to decline by almost 46 % in the 3rd Quarter of third fiscal .Ref: The Economic Times dated 28th Dec 08.
• The private sector abandoned projects worth 44 billion in the third quarter of 2008
• Insurance Sector April to Nov 08 , the insurer’s first premium income and number of policies sold were down by 14 % – Ref : The Economic Times dated 3rd Jan 2009
• Banking SectorFor a leading private bank , between Nov and Dec 08 the credit card delinquency increased to 26 %
• The gross NPA’s of banks will reach 4.7 % of the total loans in FY10 from the current of 2.3 %. Credit card delinquency has gone up to as high as 14 %. Loan defaults would follow shortly and this will be a big blow to the banking / loan system. In the first half of Dec 2008, in Bangalore itself there have been defaults to the tune of Rs.80.23 crore at Corporation Bank . Out of the total home loan portfolio exposure of Rs.1000 cr , 50 % is in the IT sector. Defaults will start increase going forward. We will see the real impact in April 09.
• Aviation Sector Jet airways and Jet lite have defaulted in payments of Rs. 32.78 Cr to AAI TOI 29th Dec 08. Airline industry is expected be in deep red this year
• Hospitality Sector The hotel occupancy has dropped by 50 %. Ref : The Economic Times dated 28th Dec 2008
• Diamond Sector 60 % of the 8000 units into diamond polishing and cutting business went on forced holiday leaving 100,000 people without jobs. (Times of India 27th Dec 2008). There is a 40 % reduction in demand according to Gems and Jewellery Promotion Council (GJEPC). Exports account for $ 20 billion in the industry. Ref: The Economic Times dated 28th Dec 2008
• Auto & transport Sector Approx 90 % of all the commercial vehicles sold in India is via loans. Kotak Mahindra Bank has repossessed about 200 vehicles. Deepak Sachdeva, President of the Delhi Goods Transport association said that between April and Dec alone, close to 158000 commercial vehicles were either surrendered or repossessed due to loan defaults. Ref The Mint – Wall street Journal dated Dec 26th 2008
• IT sector is likely to lay off 50,000 people in the next 6 months. Already layoffs are happening across sectors

Let’s look back as to why we have had a problem ? We built an economy on dollars, FDI and stock market and not on 600 million people who live on 2.5 USD a day. We have tried to compete with China or serve the developed world. The outsourcing business is not build on merits other than low costs of human capital. We don’t have a lasting story if we bank on cheap labour only!! We need to capitalize on our resources internally and not become a body shopping country. But till now, we have let others capitalize on our strengths. You will have to change this. Common minimum programme has to be Common man’s programme

India has always been a land of ‘Rishi’ and ‘Krishi’. We forgot this aspect of India. We still have not done much for the farmers of this nation. We know for sure that 18 % of the GDP (agriculture) supports 60 % of the population. Kamal Nath believes that this might not be possible. I must correct him. What we need is value addition to agriculture and connecting the value chain of agriculture business to farmers at the place of produce. We need to think more about farmers producing cash crops besides staple crop. We need to increase the value of 18 %. We must note that 80 % farms in India are smaller than 5 acres. From 1971-96, the average size of the farms has reduced from 2.3 to 1.4 acres. Whilst, in the developing countries the average farm size has decreased, same has increased in developed world.

Having given the above mentioned data let me inform you that in abnormally tough times you cannot take routine decisions. Baby steps would not help. Severe crisis needs several big interventions. You need to take drastic steps. Some of which i am putting for your immediate consideration

Just lowering the interest rate or some small duty cuts would not raise the morale of the countrymen. This is a crisis of comfort and confidence both. You are testing waters by lowering the rates in monthly reviews and at intervals. Not realising that that these SOPS in instalments are deteriorating the economy and the morale of the people is suffering as time is passing. We are drifting in the ‘quick sand of recession’. Please consider, people do not buy because a particular product or service is cheap. But the buying decision is dependent on certainty of income and availability of cheap capital coupled with host of other social and market factors. Seeing what is happening in the country, i don’t see a positive mood till you take drastic steps like,

1. Replace the portfolio of Minister of Finance with the Minister for economic development
2. Have a dedicated secretariat to monitor the economic indicators and look to prevent surprises and signal disasters much in advance- in short to do a overall risk assessment across sectors in the economy. They should have no other job than to forecast and warn against the impending threats to the economic growth
3. Have a dedicated minister for modern agriculture practices
4. Dedicate a separate ministries for each innovation ,poverty alleviation and PPP- Public Private partnerships . PPP must be encouraged in all sectors
5. Economic policies should be more inward looking than foreign dependent
6. Tax rates must be reduced for individuals in one go and in a massive manner and not in instalments
7. Fuel rates should be reduced immediately and be made market driven
8. We need to focus and take immediate steps for setting up Agri and processed foods SEZ on an urgent basis.
9. Announce incentives for organic farming.
10. Announce incentives for tourism
11. Government must give big push to vocational training and employment for students
12. Increase recruitment for teachers , police and other government staff
13. Scholarships for education and R&D must be given
14. Lower the bank interest rates for corporate lending to around 9 % at one go.
15. Home loan rates be immediately reduced to 7.5 % for amount up to Rs. 5 lac, 8 % above 5 Lac till 20 Lac, 8.5 % for amount above Rs. 20 lac till Rs.50 Lac and 9 % for amounts above Rs. 50 Lac. The customers must be allowed to get these at fixed rates and not floating rates for a period of 20 years. Construction boom will increase activity in a lot of infrastructure industries like construction workers, cement, iron and steel and paints etc. which will add to the economy in a big way. All these must be lowered in one go rather in instalments
16. While you give incentives to the infrastructure , you must appoint a housing regulator to bring in confidence of a fair play amongst the investors
17. Government must build houses for weakest sections of the society to be leased on rentals and not be sold
18. Banks must be mandated for giving loans to students for vocational courses without any guarantor .This will lead to enhancement of skills and employment and the loan amounts will be small. Plus the bank will secure the loans as the students cannot get the job without clearance from banks !! So safer loans. People can earn and pay along
19. IT sector must focus on agriculture sector & education– This one step will take India to a better placed economy
20. Big corporates must be mandated to outsource 2.5 % of their requirement to SSI (Small scale industries).
21. Encourage Small scale industries and incentivise them by making them tax free for 3 years
22. SSI based SEZ must be considered for every state
23. Agriculture and food processing SEZ must be established near ports and in every state
24. Don’t transform Mumbai to Shanghai. Create more Mumbai’s in India. Have realistic goals
25. Remove bureaucratic hurdles to set up small businesses like removing multiple approvals. Let it be a single window clearance for setting up a shop or small business

We must be focussed on servicing our population and not be dependent on globalization. We have learned now that building an economy based on just FDI will not be a stable economy. We need to learn a lesson from the BJP’s Swadeshi strategy. Albeit in a different manner. Let the financing be local and focus on intrinsic industries. Agriculture, and SSI is good enough to give stable growth to the economy

Unchecked capitalism has failed in USA . Now America is fast moving towards being a socialistic economy – American government is funding and buying into big defaulting and bankrupt corporations thus socialising the economy. It is clear that you can’t build a great economy on capitalist lines. I have my serious doubts on Barack being able to revive US capitalist economy. In India, we have only four five major corporates in a land of a billion people. This indicates that the policies of the government have favoured or controlled by a privileged few !! This needs to be changed immediately. Encourage entrepreneurship and SSI in an institutionalised manner and support them.

Give a push to communication, Infrastructure, healthcare, education and PPP to grow India to the next level. Have a robust pension system and a culture of long term investments and savings. This is critical to avoiding America like defaults and disaster

I must also take you through the US failure and where it might head for. The failure of America is due to lack of culture of savings and greedy & unnatural growth strategies. It is the start of the historical shift of power equation. Historically, Greek & Roman empires dominated the world. Then came the turn of Britain that controlled the world , It shifted the power equation to USSR & USA. Now it is the USA. Future undoubtedly is of China. If you care to correct the situation with drastic measures, India will be back in to glory by the year 2020 as the world’s top most power.

We have faltered due to our myopic policies. You have the opportunity to change this nation’s future by taking appropriate measures or get caught in the web of political compulsions or electoral policies. Needless to mention, peace is a precondition to progress.

See the date of different states, this tells us a lot. I have arranged in ascending order w.r.t. population

S. No State Population Per capita net state domestic product in INR No. of M.P.’s
Lok Sabha No. of M.P’s Rajya Sabha No. of Assembly seats
1 Lakshadweep 60650 N.A. 1
2 Daman & Diu 1.58 Lac NA 1
3 Dadra & Nagar Haveli 2.2 Lac N.A. 1
4 Andaman & Nicobar 3.56 Lac 28340 ( 2002-3) 1
5 Sikkim 5.4 Lac 21586 (2003-4) 1 1 32
6 Mizoram 8.88 Lac 22207 (2002-3) 1 1 40
7 Chandigarh 9 Lac 57621 (2003-4) 1
8 Poducherry 9.74 Lac 50936 (2003-4) 1 1 30
9 Arunachal Pradesh 11 Lac 17393 ( 2003-4) 2 1 60
10 Goa 13.47 Lac 53092 (2002-3) 2 1 40
11 Nagaland 19 Lac 18911 (2001-2) 1 1 60
12 Manipur 21.66 Lac 14766 (2003-4) 2 1 60
13 Meghalaya 23.18 Lac 18135 (2003-4) 2 1 60
14 Jharkhand 26.9 Lac 12509 (2003-4) 14 6 81
15 Tripura 31 Lac 18676 (2002-3) 2 1 60
16 Himachal Pradesh 60 Lac 24903 (2003-4) 4 3 68
17 Uttaranchal 84 Lac 13260 (2001-2) 5 3 70
18 J&K 1 Crore 13320 ( 2001-2) 6 4 87
19 Delhi 1.38 Crore 51.664 (2003-4) 7 3 70
20 Chhattisgarh 2.0 Crore 14863 ( 2003-4) 11 5 90
21 Haryana 2.11 Crore 29963 ( 2003-4) 9 5 90
22 Punjab 2.4 Crore 27851 (2003-4) 13 7 117
23 Assam 2.65 Crore 13139 ( 2003-4) 14 7 126
24 Kerala 3.18 Crore 24492 ( 2003-4) 19 9 140
25 Orissa 3.68 Crore 12388 (2003-4) 21 10 147
26 Gujarat 5 Crore 26979 ( 2003-4) 26 11 182
27 Karnataka 5.28 Crore 21696 (2003-4) 28 12 225
28 Rajasthan 5.60 Crore 15486 (2003-4) 25 10 200
29 M.P. 6 Crore 14011 (2003-4) 29 11 230
30 Tamilnadu 6.2 Crore 23358 (2003-4) 39 18 234
31 Andhra Pradesh 7.6 Crore 20,757 (2003-4) 42 18 295
32 West Bengal 8 Crore 20896 (2003-4) 42 16 294
33 Bihar 8.29 Crore 5780 ( 2003-4) 40 16 243
34 Maharashtra 9.68 Crore 29204 (2003-4) 47 19 288
35 Uttar Pradesh 16.61 Crore 10817 (2003-4) 80 31 403

I must also advice that you convince your colleagues on increasing the salary of M.P.’s, and this is one thing that they might or might not agree. 545 Member of parliaments run this country. Let them have the best salaries. I will recommend for them salaries starting Rs.2.5 Crores with a larger bonus on performance. Reasonable cause for this high salary is that;

1. We will get the best brains drawn to politics
2. Public will not let incompetent people to be elected to such ‘high paying offices’ and public outcry will question non performance for the high salaries
3. Bribes ‘might’ stop
4. People taking such salaries will have guilt if they did not deliver (at least we can hope so !!).

Recently, I interviewed more than 100 students of a top internationally renowned management institution at Mumbai and was both happy and felt at a loss. I am glad that we have a logical and a responsible youth contrary to media perception. But i felt sorry that, they are lacking proper guidance and so they are disillusioned. We must unleash the power of youth, more so, of women power. Then only we will begin a new era of growth.

Recession is equally big an opportunity as robust economic growth.

Economic Forecast for 2009: If the Indian economy grew at 8 -9 % in 2007-8. I must believe that, about half of this came due to intrinsic or local market factors that is about 4 to 4.5 % . So we will continue with that growth with some downward slide in 2009, and also that the remaining half was due to foreign or extrinsic factors. Which i believe, will reduce by a good 50 % . So intrinsic or internal growth will contribute between 3.5 to 4.5 % and remaining 2- 2.5 % will come from the extrinsic factors. So in all , i guess this year we will witness growth somewhere around 6.0 to 7.0 %. If the World economies shrink badly , which is expected, this might impact this growth a little more and bring it down well under 6.0 %

You will not be remembered for how you managed the crisis of the 90’s but how you manage 09. That time, we were alone in the crisis and compulsions left with you with only one option. Now it is a Global crisis . Only intelligent and effective leadership can work. I see so many opportunities and endless possibilities. Hope see that as well. Good Luck !

Dr.Singh, we cannot drive our car looking at other cars rear view mirror. We must drive our car from within and people cannot steer it from outside. This has a message for you. Look inside and drive India to glory, out of recession

I hope i have made a point

Best regards

Rajendra Pratap Gupta
President
Country First
Email: rajendra.india@gmail.com
Mobile: 09323109456 / 9867300045

Corporte Governance – Just a lip service

Also, please read the next blog below titled “Indian Economy- At the right place under wrong circumstances” that talked about the accounting fraud much earlier than the Satyam Fiasco.
Also check the blog that i wrote on 27th Dec 2008. http://rajendrasays.blogspot.com/2008/12/economy-in-severe-recession-government.html
———————————————————————————–

Madhav Mehra
President
World Center for Corporate Governance , U.K .
President
Institute of Directors
India.

Dear Madhav,

Wish you a great 2009.

While i was the Hon. Director at IOD , i had clearly cautioned IOD, that the companies that are getting the award for corporate governance from IOD could be the next Enron’s of the world and i had cautioned Gen.Ahluwalia categorically even quoting some of the recipients

Having said this , i must re-iterate that IOD must be careful in giving out the award to companies who really deserve it after proper scrutiny and due diligence .

I had written earlier on my blog ,much before the Satyam fraud came to light. I ,must emphasize again , that more corporate frauds can’t be ruled out. Though, after this Satyam Fiasco , corporates will be more vigilant before they resort to this route.

After leaving Reliance almost two years ago , i had taken a course in Corporate governance from Kellogg Business School ,USA and decided to pursue independent board positions as my full time professions , much before people focussed on this board positions as a full time profession. Earlier , it was considered as a retired Executives parking slot,. While i took on this lead in India , a lot many people were shocked that i gave up a cushy job in Reliance and decided to pursue independent directorships as my profession. Trust me , i have been very strict with my companies for compliance and disclosures . I clearly insist and minute my issues in the board meetings so that compliance and disclosures are not dealt with lightly ( i can show some of the minutes where i have requested the board members to furnish me the quarterly compliance certificate ). If i find that the companies are not willing or are shying away. I move out of the board and mention the same in my resignations. I did that in the MNC – Medicine Shoppe . Today , we see it on the verge of closure and whatever i wrote to the board members while resigning from the board has happened . I could see that the company was not managed well and there were discrepancies in what the management was presenting to the board every quarter . I could foresee a downfall good two years back and wrote to the board and moved on as i believed that board and the management were not driving the company well.. This is despite the fact, that Medicine Shoppe Intl is a part of the fortune 20 , Cardinal Health, it was the fastest growing retail chain in India and a pioneer in pharmacy retail, adding to this ,the the investors were highly regarded PE players in the country .The country not just needs a strong law and strict guidelines to have independent directors but also the independence of directors . Independent directors and independence of directors is equally important This is not as easy as i write , as i have the experience of a dozen companies and i can understand it well from the independent directors standpoint .This has to be done by SEBI and the government without any further delay. Today, most of the independent directors are chosen from the level of comfort of promoters with the individual . In India , corporate governance is as big an issue as in the US . Only difference that , in USA you have punishments and in India you can get away with ‘ Contacts’ and ‘Payouts’.

This is what i wrote in my blog much before Satyam fiasco came to light http://rajendrasays.blogspot.com/2008/12/economy-in-severe-recession-government.html
.

“The government should be vigilant on big business houses for accounting and reporting in case they are listed, or we might see a fraud and failure like Enron or WorldCom. This is a step to avoid ‘financial terrorism’ . Some business houses ‘control’ many politicians and this is an area of big concern. We have created unequal wealth in the form of strong and gigantic business houses who are iconic Any wrong doing in such a big business houses would be like a corporate suicide and will severely impact the market scenario. I don’t rule out ‘accounting manipulations’ or ‘jugglery’ in these ‘tough times’ to keep the image and reputation intact for such big business houses”

You might like the entire blog at https://rajendragupta.wordpress.com/

It is high time that IOD reconsiders the Corporate governance award model to people who just give up the “award fee” , it must have the options of picking up people besides these applicants. Thus people like Satyam would easily get this award and no wonder that these business houses will pay any amount to get these awards and fool the investors. Seeing the current list of recipients of IOD awards. I am scared that more such names may come to light ! There is more pain in the corporate world in these turbulent times – Just wait to watch

Also, please work on the corporate governance day on 3rd Feb to create the awareness amongst people

All the best ,

Rajendra Pratap Gupta

Cell : + 91- 9323109456
+ 91- 9867300045
(USA) +1515-450-6165
Skype: rajendra.india
E-Mail: mail@rajendragupta.org / rajendragupta@aol.in

Indian Economy- At the right place under wrong circumstances

Indian Economy is in a severe recession: Rajendra Pratap Gupta

Except God, for everything else , i believe in data. Here is what the Honourable PM must consider and restate the fact that actually , India is into a recession

The Tax collections for December quarter dropped by 22 % ( According to the Economic Times dated 27th Dec 2008 )

60 % of the 8000 units into diamond polishing and cutting business went on forced holiday leaving 100,000 people without jobs . Narendra Modi has refused any package for them ( Times of India 27th Dec 2008). There is a 40 % reduction in demand according to Gems and Jewellery Promotion Council ( GJEPC). Exports account for $ 20 billion in the industry

According to ET 01 Jan 2009- Slow down in the leather industry is likely to axe 5 lakh workers in leather units in the next three to four months with worsening market scenario in US and Europe . The industry employs almost 2.5 million people

Jet airways and Jet lite have defaulted in payments of Rs. 32.78 Cr to AAI TOI 29th Dec 08

Hotel occupancy has dropped by 50 % in the holiday season – Sept – Dec 08.

Net profit of India Inc likely to decline by 46 % in the 3rd quarter of this fiscal.

The gross NPA’s of banks will reach 4.7 % of the total loans in FY10 from the current of 2.3 %. Credit card delinquency has gone up to as high as 14 %. Loan defaults would follow shortly and this will be a big blow to the banking / loan system. In the first half of Dec 2008, in Bangalore itself there have been defaults to the tune of Rs.80.23 crore at Corporation Bank . Out of the total home loan portfolio exposure of Rs.1000 cr , 50 % is in the IT sector. Defaults will start increase going forward. We will see the real impact in April 09.

I was recently in Delhi and talked to my cab driver ( he drives for a cab company at Delhi airport ). He informed me that, earlier he would earn between 15 – 22000.00 per month . Now for the last three months , his income has dropped to Rs.6000.00. He is expected to do a minimum of 52 trips a month to get his basic salary , which is getting difficult now . So he was worried.

Approx 90 % of all the commercial vehicles sold in India are via loans. Kotak Mahindra Bank has repossessed about 200 vehicles. Deepak Sachdeva , President of the Delhi Goods Transport association said that between April and December 2008 alone , close to 158000 commercial vehicles were either surrendered or repossessed due to loan defaults. According to The Mint dated Dec 26th 2008. With such an massive loss, just imagine what must be happening to the families of 158000 truck drivers, helpers , cleaners and the people associated with providing services at Dhabas and repairers for these trucks !! It is a solid loss for a small economy like India

All the businesses have cut down the expansion plans and the same will continue for the next year in my view . TATA motors have cut the production for two days a week, Cisco is on long Christmas and a new year holiday, All auto majors including Maruti is slowing or voluntarily suspending production to take care of the ‘standing or piled up’ inventories

ACC cement has already shut the production in one of the plants and slowed the same in others

I visited quite a few malls and talked to employees. At Lifestyle store at Mulund last year around this time , the 2nd floor has five counters. This year they just had one counter. The salesman when quizzed ,did accept that there is a drastic drop in customers and sales

Big Bazaar, has no different story. They were operating with two counters and not long queues which earlier operated eight counters. Big Bazaar has launched shopping schemes that is drawing customers but not much sales. The same scheme in 2007 March could have doubled the turnovers. ‘Marketing Steroids’ are not working well

The news is not good for mall developers. The big retailers who use to easily come as anchor tenants have changed their mind . Now onwards , they will expect the malls to get other tenants before they step in . Earlier, the anchor tenants would come in at a low rental and assure footfalls for the the new tenants. So it was easier to get new tenants . Now the anchor tenants have clearly said no to such anchor tenant proposals thereby putting already troubled mall makers in a spot

The best mall in the country , Inorbit Mall employees had the same views. They were shocked at the drastic drops in customers and sales. Their wide aisles at the Hypercity had few customers.

Aditya Birla retail is likely to shut down around 100 out of 700 stores in the name of rationalization . They are doing a business of Rs. 5 per Sq. Feet and expenses of Rs.200 per Sq. Feet. It is a thumb rule, that such retail formats should not incur more than 120 per sq. Ft.

A month back when i visited the Fame Adlabs at Kharghar to watch the night show for the hit film Fashion, my wife and myself were refused tickets as we were the only two people to watch the movie and the counter girl told us that, she needed at least 5 people to start the show !! Did you expect this in good times !!

Reliance retail is no better, they have changed the strategy for the second time in the last two years and if i remain accurate in my predictions. This time again Reliance will have to redo a lot of things to avoid exiting the retail venture . All these retail majors banked on experienced retail expats . Who themselves wanted to ‘Earn while Learn in India ’ at the cost of these employers. It is learned through credible resources that, Reliance has shut down the Wellness vertical and asked most of its employees to leave . Firing of people is becoming a norm at Reliance

Some organised retailers are not even in a position to recover their expenses , losses are mounting and credit is moving at an escape velocity not imagined in 2007 !! Money is not available, as earlier even the small companies would value themselves on the lines of the listed companies . With stock market following the Wal-Mart model ( everyday low prices, even Wal street is joked and nick named as Wal-Mart street !!! ).Now there are no takers for these companies . Defaults are increasing day by day. We know the outcome.

Industrial production and growth is slowed . I believe that at this time , for most businesses , survival is the main question and not growth or profits !! . Takeovers will happen or closures. In India , bankruptcy is not practised widely. So we will see closures. The government should be vigilant on big business houses for accounting and reporting in case they are listed, or we might see a fraud and failure like Enron or WorldCom. This is a step to avoid ‘financial terrorism’ . Some business houses ‘control’ many politicians and this is an area of big concern. We have created unequal wealth in the form of strong and gigantic business houses who are iconic Any wrong doing in such a big business houses would be like a corporate suicide and will severely impact the market scenario. I don’t rule out ‘accounting manipulations’ or ‘jugglery’ in these ‘tough times’ to keep the image and reputation intact for such big business houses.

Even the TATA’s are not able to raise funds , the rights issue was a case in point . DLF , Unitech were rising stars in 2007 are shooting stars now. Projects are delayed and more news is to come in the times ahead.

The Dec 08 quarter results of companies will be disappointing and that will take the shine off the Indian growth and strong fundamentals story.

I urge our politicians to give up the ‘Academic definition’ of recession and accept that we are into a recession and take steps to correct the path going forward .
Let’s see the countries by their GDP and their share in the World GDP. India may not be more than a rounding error at this point !!

2006 GDP USD GDP as % of the world GDP
1.USA 13,201,819 27.3
2. Japan 4,340,133 8.9
3. Germany 2,906,681 6.0
4. China 2,668,071 5.5
5. UK 2,345,015 4.8
6. France 2,230,721 4.6
7. Italy 1,844,749 3.8
8. Canada 1,251,463 2.6
9. Spain 1,223,988 2.5
10. Brazil 1,067,962 2.2
Top Ten Total 33,080,602 68.6
World 48,244,879 100.0

Chinese Consumer spending is to reach USD 1.3 Trillion this year, France USD 1.4 trillion, US economy is USD 9.9 Trillion , India is just 660 Billion according to the Mint Dec 23 , 2008. So if the world’s biggest economies is de-growing and we are dependent on these countries. How can we say that we are not into a recession ??? Are you talking sense Mr.P.C and Mr. Singh ????. Those who buy clothes and other merchandise from US / Europe know well, that all leading brands outsource their production to India , Bangladesh and Sri Lanka . Now that the sales are down, these countries are under sever loss . USA, Japan and Europe account for 68 % of the world GDP and they are into recession. Do we need more reasons to convince ourselves that we are heading towards a more severe recession. Problem started with US , till it ends in the US the problem the world over will continue. The interest rates in USA and Japan have come close to zero. China will get into recession or pass on the pressures to countries like India via dumping cheaper goods to avoid recession. This is one area where India needs to be watchful. US recession will also pass on pressures to nations dependent on its economy

I believe that congress may take to surgical strikes to play with the public sentiment , to dodge the economic issues to come into power. Forgetting , that the parliament attacker is still alive. All these steps should have been taken when parliament was attacked . If then we did not act then, i see no reason to act except for the fact that the elections are near . The government needs to fight many forms of terrorism . i.e. Economic terrorism, militant terrorism ,healthcare terrorism ( seeing that 6000 children die every day below the age of 5 years due to disease and malnutrition ). Few reasons that India might not attack Pakistan are that , we are working with weapons which are Bofors like and secondly , our economy cannot afford to take on a full-fledged war with Pakistan, thirdly, in case we do surgical strikes , Pakistan will drop a nuclear bomb as it is not a nation that honours any pact ( All likelihood , that it will not honour its pack on this as well and quote anything stupid to justify its act.)

India needs to understand the order of world has changed with history. Earlier , the nation with a stronger military was considered stronger , then the nation which was financially stronger was stronger . Future will be for both technically and financially stronger nations . India needs to be financially and technically independent .

New year is not going to be better than 2008. So i don’t know how to wish you for 2009, but i must send my best wishes for hopeful and a pragmatic 2009 that is full of moderation in growth plans , better financial regulation , increased spending from governments , encourage and increase savings for emergencies and a more peaceful 2009

Best wishes
Rajendra Pratap Gupta
President

Cell : + 91- 9323109456
+ 91- 9867300045
(USA) +1515-450-6165
Skype: rajendra.india
E-Mail: mail@rajendragupta.org / rajendragupta@aol.in
http://www.countryfirst.org

Economic forecast for 2009

If the Indian economy grew at 8 -9 % in 2007-8. I must believe that, about half of this came due to intrinsic or local market factors that is about 4 to 4.5 % . So we will continue with that growth with some downward slide in 2009, and also that the remaining half was due to foreign or extrinsic factors. Which i believe, will reduce by a good 50 % . So intrinsic or internal growth will contribute between 3.5 to 4.5 % and remaining 2- 2.5 % will come from the extrinsic factors . So in all , i guess the next year we will witness growth somewhere around 6.0 to 7.0 %. If the World economies shrink badly , which is expected. This might impact this growth a little more and bring it down under 6.0 %

Rajendra Pratap Gupta
President
Countryfirst
Cell : + 91- 9323109456
+ 91- 9867300045
(USA) +1515-450-6165
Skype: rajendra.india
E-Mail: mail@rajendragupta.org / rajendragupta@aol.in
http://www.countryfirst.org

Beauty and business – Aviation Sector

Dear Mr.Praful Patel,

When a few months back Jet airways sacked about 1200 air hostess . Seeing these pretty girls crying , you were moved so much that you called the Jet Airways chief and pressurised him to with draw the order. You even went to the extent of black mailing ( by saying that if the airlines needs sops , they need to avoid sacking )

Look here now :

There are about a crore travel agents in India who sell almost 85 % of the air tickets ( as per the report published today in The Economic Times ). They are nearing to get out of business. As the airlines have decided to withdraw the commission on the sale of air tickets and also the surcharge that these agents were levying on air tickets.

Most airlines did away with the 5% commission on Nov 1,2008 forcing travel agents to shift to a fixed transaction fee for every ticket issued. However ,the fixed transaction fee which was in the range of Rs.350 to 2500 a ticket depending upon the class and routes , had also been discontinued from December.

Mr. Patel, India is in a severe recession ( read http://www.rajendragupta.wordpress.com ) , and putting one crore travel agent’s families out of business is a proof of your inaction and being unpragmatic. Please wake up and get into the act immediately. It’s a call to action

Best,

Economy in recession, aviation , Stock markets , India , Rajendra Pratap Gupta

Indian Economy headed for a severe historic recession

Indian Economy – Getting into worst ever recession ??

It is high time , we acted fast by reducing fuel prices, drastically reducing loan rates and take all possible measures to ease out of a severe recession. Every where, there is a job loss, loss of contract, shrinking consumer spends , production cuts, halting growth plans, adding to this , the recent terror strikes have crippled our already bad travel and aviation sector. We need to convince the consumer that all these steps would be long term. Trust me, we are headed towards a severe recession that will blow out the India story. We don’t need a nuclear deal or a moon mission as a priority today, what We need is ,to keep our feet on our ground. India needs to be pragmatic. This road to recession can be a good turning point for the Indian Economy if used as an opportunity

Why is Indian economy in recession? Indian economy was known as the most intriguing economy for the last three years. There was a lot of hype and hoopla created around the same, everyone wanted to ride the booming India. Some called it the ‘rise of the east’ or ‘a billion under-served customers’. It was the country no one wanted to miss. What happened? What went wrong and why at all?

Firstly, a few things led to a sudden hype. Rise of Infosys and Wipro’s, TATA Tetley acquisition, Arcelor Mittal takeover, Indra Nooyi taking over PepsiCo as CEO, Arun Sarin took over Vodafone etc… This was backed by a lot of media coverage.

Secondly, the triumvirate of Manmohan Singh , P. Chidambaram & Montek Singh talking of a double digit growth excited a lot enthusiasm of politically connected ( and not so politically connected ) business groups to enter into ‘businesses of future’ like infrastructure , power, retail etc… This was based on ‘Big Talk’ of the triumvirate. We all know how many people pumped in money at unrealistic valuations and market was heated up beyond logic, banks were also enjoying the party, share market was expanding like a balloon, manpower was charging anything and still jumping for tempting offers, retail was spotting everywhere. Result: competition became suicidal. Money got pumped into real estate and supply increased and the prices soared. Brands started fighting for space and not profits. Finally, reality was surfacing; growth was not double digits; which the triumvirate shouted for three years. We saw profits were not as projected, corporates were missing numbers, shutting the outlets and man power layoffs. Just forcing Jet airways to take back air hostesses will not cover the reality…………how unfortunate!!!

Thirdly, the ‘Big consulting majors’ were talking in 2007 -8 about the multi-billion dollar markets suddenly growing three fold or four fold by 2012-15. How stupid of CEO’s who believed these news releases of these so called ‘big consulting majors’ and spent millions to buy their reports & finally presented their boards with these rosy projections and raised funds. Now they are shying about the current share prices and valuations (let’s not even talk about growth achievements versus plan or the crazy profits numbers!!!)

All the three factors basically did no good but just created a ‘sexy story’ about a nation like India, where more than 70 % people don’t have access to basic healthcare, only 3 % dabble in stock markets, only 10 towns can boast of a retail revolution, has 36 billionaires and more than 800 million living on about a dollar a day.

Let’s evaluate a little more ……..When people talked of India in 2007 they talked about big IT giants , call centre’s high paying jobs to teen agers, overseas acquisitions of TATA’s & Mittal’s, Mumbai becoming like Shanghai, Big malls coming , dollars flowing as FDI, Big brands coming to India , MNC’s coming to India, ballooning stock markets, BPO’s multi million outsourcing contracts & the great retail revolution. Now with US / Europe in recession and may be, with Barack taking over as the next US President. India will have to take a big hit. We just saw the first wave of negative effects of the US Financial market collapse. India’s stock market crashed almost to a third of its high. With India’s IT / BPO shying and taking to lay off’s, we know the real estate sector would be hit as the entire 2 BHK ( Two bed room , hall & Kitchen ) flat story was built on these young ‘Ripe aged’ employees buying flats at the age of 25-30. Splurging on mobiles and white goods by credit cards …………all this is over (believe me!!)

The hype was more of a story of 36 billionaires , Infosys, TATA, Arcelor, stock market manipulations , FDI and not the story of economic development & and the 800 million population. What we see happening was a foregone conclusion. It was not a ‘bubbling economy’ but an ‘economic bubble’. And it got burst

When the banks started hiring recovery agents, it was the start of the default / delinquency crises (credit card delinquency has gone up to as high as 14 %). Loan defaults would follow shortly and this will be a big blow to the banking / loan system. When the government has to get in to pump in money or the so called confidence, It’s a sure shot sign of crisis or recession or both.

I wish that congress leaders should have thought well before announcing a Rs.60000 crore write off for farmers. This has put a pressure on banks and it will manifest in banking / loan crises. Now imagine, I am a farmer with an Rs.10000 loan for my sister’s marriage or due to a crop failure (trust me, farmers crisis has come due to rise in social costs as much as crop failure). If my loan was waived off what it did to me? Firstly, it gave me nothing to raise a healthy crop and earn for the season so my problem would be standing as such on my head. Has it given me seeds or irrigation which i needed? I could have earned and paid for the loans in the next few years (a moratorium on payments & Interest was more than enough). Moreover, it has set a precedent for me not to pay my loans and hope for future waivers. When politics drives finance, chaos is the only outcome.

Take a cue from USA . They have pumped 700 billion dollars ( India cannot think of even a tenth of this amount in the case of a crises !!! ). This pumping of funds actually helped the banking system in the US and not the economy as people have been made to believe in !

We can knock off any crises if India develops an indigenous model for growth in which technology only becomes the enabler and not the key driver or determinant. What i am pointing is that, we need not depend on FDI totally. When FDI came in, we were roaming the whole world and shouting about it. Now that these economies are under crises, they will take care of their home first, and may even exit from our country as we have seen in the case of FII’s exiting the stock market and leading to a sudden crash. We must have started our economy with 75 % dependence on domestic and 25 % on foreign fund generation besides a host of infrastructure & ground level measures. We need a ‘self reliant India growth model’ and not a USA – Europe dependent-driven growth model. Hope the policy makers will learn from the crises & take steps to correct it.

Now a day’s the most talked about line from the ruling politicians is, that India is fundamentally strong economy. Which ‘Fundamentals’ are they referring to ? Our consumer sentiment is low, stock markets have crashed, industrial production is low , inflation is high, uncertainty is looming over every corporate , retrenchment is happening , rupee is weak against the dollar, farmers that constitute 65-70 % of the population are committing suicides , IT & BPO industry is hit hard due to US –Europe recession, terrorism and lawlessness is rampant. I am still trying to get which fundaments appear to be strong !!! Is it the large suffering population that is being referred to ?

Coming to the most happening sector – The great Indian retail story : I see some retailers having burnt their fingers in metros , now are planning of moving to class II & III towns for the next cycle of growth. Let me express boldly, that this will be a big loss making proposition. In towns like Mumbai and Gurgaon, retailers are having a tough time, how come they will survive in smaller towns with more ‘service class’ & ‘Small time traders’ people. At least , bigger towns have industries and other corporates to support higher spending opportunities. Some learned Advisors have informed these retailers that 70 % of India lives in rural areas so rural India is a bigger market than urban India (calculating that rural India with USD 530 income per capita is three times the population of urban India with the per capita income of USD 1200). What an ‘unintelligent logic’. The 530 USD that the rural India earns is not even enough to spend on basics, unlike urbanites who have the basics already and can afford to spend on the new class of products which supports the modern retail formats. It is analogous to three boys of seven years marrying a girl of eighteen years (3 boys x 7 years = 21 Years, marriageable age!!!). Intelligent logic isn’t!!! That’s what our great retailers are trying to do . Only smart ones are Pantaloon and Wal-mart. Rest all are smart looking idiots !!!

Retailers must realise that they are making investments for 2012-15 market projections. The figures of these projections are not even validated. But the cash burnout is happening now. Imagine this , rentals going up by 5 % every year , salaries by 20-30 % , cash burnout for new openings , increasing offering –SKU’s, reducing margins to attract customers or wash off old inventory. However can a retailer survive ? Adding to this , move to class II towns!!!

Just to make a note that if in towns like Panvel in Navi Mumbai, the two supermarkets owned by Foodland have closed within a year due to opening of ‘MORE’ supermarkets, D’mart & Reliance Fresh stores, how can small kirana stores survive? If i don’t go wrong, even ‘More’ & Reliance will have to shut down in the times to come in the area or make perpetual losses . So the retail story in its current form is not a lasting one. But the lessons are to be learnt . One thing that has happened in India which is totally wrong is that, we have tried to CCP (cut, copy and paste) foreign retailers. But we have missed to note the most important point , that foreign retailers were pretty slow in the first ten years in their country. Even Mukesh Ambani made a strategic mistake; he announced 5 billion dollar investment in retail only to face the back lash from local traders. No one expected seasoned businesses houses to make such tall claims ….This gives us a clear feeling that Indians are unaware and unprepared for the hype that has been created by the media and neither are they guided by the realities . I would call Wal-Mart the smartest retailer in India. They have just done a retail tie up in India without using its brand name . So that the Indian partner has the expense & experience and Wal-mart has the learning’s. Moreover, their growth plans are practical. Just 15 stores now compared to 600 + stores of Reliance and Birla’s. What if the Ambani’s & Birla’s want to change the strategy or make changes backwards because of their learning’s?? It is easier to correct and make changes in 15 stores of Wal-Mart then 600+ stores of Reliance or Birla’s.

We must note:

85 % of the rural India does not have the power to consume very much at the prices that currently prevail in the market.
30 % of urban India constitutes 75 % of the GDP.
70 % of the rural India constitutes 23 % of GDP
According to the Central Statistical organization, in 2001, 48 % of the rural GDP was agricultural.

In 2001, the NDP contributors were: agriculture 46 % , industry 21 % and services 33 %.

If India needs to grow sustainably, we need to make a prudent choice between education, vocational training and SSI. Needless to mention that, India’s growth will be driven by creating more jobs in lowest rungs of the society. They will build the real consumption led growth for a ‘Shining India’. The earlier, the better.

India today is in a recession and we must accept the fact. By closing our eyes the problems will still remain. We must build growth models not based on dollars , stock markets , urban India but go in for holistic models of growth that suit the local conditions and requirements , are broad based for all sections of society and industry , and just don’t reflect isolated figures .

US economy, Recession , terrorism, Economic fundamentals, Barack Obama, Recession in Indian economy, Terrorism , Curruption.

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