Posts Tagged ‘FDI’

POLL: Should FDI cap in media be enhanced?

22 July 2013

With the economic downturn threatening to turn into a full-blown recession and with the finance minister reduced to going around the world with a hat in hand, the Congress-led UPA government last week increased foreign direct investment (FDI) in telecom, defence, petroleum refining, etc, but…

But, not the media.

On the issue of enhancing FDI in media from 26% to 49% under the automatic route as proposed by a finance ministry panel, two separate ministries swung into action. First, the ministry of information and broadcasting sought the views of the telecom regulatory authority (TRAI) and the press council (PCI).

And then, the home ministry opposed the hike, favouring control of media houses by Indians. The Press Trust of India (PTI) quoted official sources as saying:

# “Opening up of current affairs TV channels, newspapers and periodicals dealing with news and current affairs may lead to meddling in India’s domestic affairs and politics.

# “Increase of FDI in broadcasting and print media may also allow foreign players to launch propaganda campaign during any national crisis as well as when interests of any particular country is harmed through any government decision.

# “Big foreign media players with vested interests may try to fuel fire during internal or external disturbances and also can encourage political instability in the country through their publications or broadcasting outlets.”

These reasons have been touted for 22 years now and will surprise nobody. Last week, The Hindu (which was initially at the forefront of the opposition to FDI hikes in media) reported that the industry was divided on the FDI issue:

“While certain big networks like Times Television Network, Network 18 and NDTV are broadly supportive, others like India TV, Sun, Eenadu and Malayala Manorama group have objected to an increase in FDI caps.”

The Centre’s decision to not go-ahead with FDI in media in an election year will not surprise anybody. After all, it wouldn’t want to rub promoters and proprietors on the wrong side, especially when powerful corporates (potential election donors) have substantial stakes in the media.

Still, the question remains whether the media can be given this preferential treatment and, if so, for how long? Will the home ministry’s fears ever vanish? Or, will the media which talks of competition and choice as the great leveller in every sphere of life, seek the protection of politicians in power to protect its turf?

Also read: India opens another door for FDI in papers, mags

Everybody loves a good FDI announcement

CHURUMURI POLL: Is this Congress’s Bofors-II?

8 October 2012

The grenade lobbed by the Arvind Kejriwal-Prashant Bhushan gang on Friday, accusing Robert Vadra, the son-in-law of Sonia Gandhi, of dubious deals with the construction company DLF, has sent the Congress camp into a tizzy. Over half-a-dozen Union ministers trooped into TV studios to defend FDI*—the First Damaad of India—even as Vadra maintained a studied silence, before breaking it on Facebook (he has since deleted his FB account).

To be sure, there was little of surprise: the same details had been carried by The Economic Times a year and six months ago, quoting Registrar of Companies (ROC) documents. At the time, the Congress had not seen it fit to respond. But the timing of the latest “expose”, after the Jan Lok Pal movement was tarred and tarnished, after the announcement of a new party sans Anna Hazare, and in the run-up to the Gujarat and general elections, gives the issue a whole new angle.

Questions: Will the charges against Vadra become a millstone around the Congress’—and by extension, Sonia, Rahul and Priyanka Gandhi‘s necks—forever, like Bofors has? Or will they peter out because there is no foreign hand like Ottavio Quattrochchi‘s and no clear quid pro quo? Do the charges prove crony conspiracy at its worst? Or, has the Kejriwal-Bhushan duo bitten off more than they can chew by hitting below the belt?

*courtesy Rama Lakshmi/ WaPo

CHURUMURI POLL: Will reforms result in UPA-III?

26 September 2012

A week is a long time in politics; ten days is an eternity. Ten days ago, the Congress-led UPA government was weighed down by the scams and scandals that have enveloped it since its return to power in 2009.  The economy was down, the fiscal deficit was up, the ratings were near-junk, the writing was on the wall.

It was deja vu 1991 in circa 2012.

But the partial rationalisation of diesel prices followed by the announcement of foreign direct investment (FDI) in multi-brand retail, aviation and broadcasting (followed by a slew of measures including one rank-one pension for Army wallahs, dearness allowance hike for government employees, etc) have changed the headlines.

Suddenly, the coal scam is off the front pages and nightly news.

Suddenly, the main obstacle to reforms (Mamata Banerjee) is out.

Suddenly, the “underachiever” prime minister is talking.

Suddenly, there is talk of a reshuffle of the Union ministry and Congress party apparatus.

And, on top of all that, the entire opposition from the left to right is united in its opposition to FDI in retail, citing the interests of everybody from the farmer down to the consumer, to dire warnings of economic slavery and colonisation of the mind. Even Narendra Damodardas Modi who has gone around with the FDI bowl in his hand to more countries than most chief ministers is warning of the “foreign hand”.

What last week’s Bharat bandh (in which UPA ally DMK too took part) and today’s BJP suggestion of a rollback of the FDI in retail should it come to power, have done is to willy-nilly paint the Congress as the only “pro-reforms” party in the country ahead of 2014, which is all the more surprising because this was the party which in the last few years had turned subsidies into an entitlement.

Questions: Will the reforms work in reviving the economy and will that in turn convince the electorate to plump for UPA-III? Or, is it just a desperate last-ditch effort by the Congress to revive its chances, one doomed to electoral failure? Will the aam admi see through the xenophobia, or will he let his wallet do the voting?

The New York Times: Reforms do win elections in India

CHURUMURI POLL: Are you for FDI in retail?

28 November 2011

As naturally as night follows day, the Congress-led UPA government’s overnight decision to allow foreign direct investment (FDI) in single and multi-brand retail has led the Opposition to oppose it. And, as naturally as day follows night, a move that was meant to be a way out of the policy paralysis has resulted in a paralysis of Parliament.

In together opposing FDI in retail, both the BJP and the Left have willy-nilly managed to paint the Congress as the natural party of reforms, that party having also opened the doors of the economy in 1991. But in rushing through the decision without building a consensus, the UPA has once again displayed a natural instinct for harakiri, with several key States going to the assembly elections in the next few months.

The pros and cons of FDI in retail are too wellknown to bear repetition. That it will bring in investments, that it will create jobs, that it will offer greater choice, and that it will hurt small stores, that our markets will be flooded with cheap foreign imports, etc. The government for its part claims it has introduced safeguards, like allowing it only in cities of over 10 lakhs’ population and so on.

In all the batting for the neighbourhood trader, not too much attention is being to the person whom FDI in retail is really being intended for: you, the consumer.

Do you want multinational corporations to sell you salt and milk? Or do you not care? If the mom-and-pop store in your neighbourhood could stave off the threat posed by Big Bazaar, Reliance and More outlets, is he really so dumb as to let the MNCs to run over him now? And is the mom-and-pop store really the embodiment of all things good?

Is it healthy for our democracy if policies are implemented on the basis of the parties in power? Are the established big Indian players protecting their investments using politicians? Or has the government raised the FDI bar so high so as to roll it back to reasonable limits when faced with opposition?

External reading: Who wants to shop in a big store anyway?

Forget Congress, what about the state of BJP?

26 November 2011

Shekhar Gupta in the Indian Express:

“Could it be that we have been so obsessed with the freeze in the UPA as to totally overlook the convulsions in the BJP?

“Over the past three weeks, the BJP has excelled itself in its own leaderless-ness, and rudderless-ness. Also, in its own ideological confusion. It’s been topped now by its totally knee-jerk opposition to FDI in retail. Having been a party of reform under Vajpayee, the BJP should have been at the forefront of pressing for not just retail FDI but other positive economic reform. On the contrary, it is using retail FDI to stall Parliament, as if another excuse was needed.

“Its comeback kid, Uma Bharti, is threatening to burn Walmart stores. It is still making noises against a national GST out of utter cussedness. Its threat to boycott P. Chidambaram in Parliament only underlines its lack of creative ideas in a political market that has exactly what a challenge the party needs: a power vacuum, an opportunity and a pent-up demand for solutions. But rather than come up with any ideas, vision documents, alternatives or solutions, it is borrowing everybody else’s nutty ideas.

“It has bought Baba Ramdev’s fantasy of bringing back “lakhs of crores” of black money. It has snatched the Left’s anti-Americanism, unthinking attacks on nuclear liability laws and instinctive opposition to all reform. That, when many of its own chief ministers are supporters of reform and are carrying out much of their own anyway.”

Cartoon: courtesy Prasad Radhakrishnan/ Mail Today

Read the full article: Self-opposition party

Quotas in foreign Universities on Indian soil?

20 March 2010

The Congress-led UPA government has moved a bill allowing foreign universities to set up shop in India. The entry norms specify a minimum corpus of Rs 50 crore, regulation (but no ceiling) of fees by the University Grants Commission (UGC), non-remittance of profits from educational activities, and a possible exemption from quotas for the scheduled castes and scheduled tribes.

R. Jagannanthan, executive editor of DNA, says the bill is designed to kill the IITs and IIMs, and all government-run academic institutions. Reason: it gives the foreign universities the kind of leeway and elbow room that is denied to State-run Indian universities.

Result: Indian institutions will become like BSNL, Air-India and ONGC.

“Will the government allow the IITs to set their own fees for regular students, thus allowing them to subsidise the SC/ST candidates and the poor?

“Will the IIMs be allowed to enforce affirmative action in their own way without being forced to admit poor quality students in the name of quotas?

“What will happen when the foreign institutions come here and offer their own salary packages to the best remaining professors? Who will teach at the IITs? Just the dregs?”

Read the full articleKapil Sibal’s bill

Also read: FDI + Indian Universities = Infinite possibilities?

CHURUMURI POLL: Quotas in private sector?

CHURUMURI POLL: Private sector = Unequal India?

FDI + Indian universities = Infinite possibilities?

14 July 2008

NIKHIL MORO writes from Mount Pleasant, Michigan: With the Left betaal only recently shrugged off, a Parliamentary majority highly tenuous, and an energized BJP nipping at his heels, does Prime Minister Manmohan Singh have the energy to restart economic reform?

That may be anybody’s guess. But the education sector, so far immunized from WTO and GATS negotiations, is begging for a ceding of state control.

In a way it’s odd that private investment for profit should still be disallowed in education, particularly in higher education, after two decades of avowed liberalisation. Two decades is plenty of time to implement cultural safeguards. Investments by charitable trusts and religious institutions have been a trickle, and not universally appreciated.

The National Knowledge Commission seeks a nearly four-fold increase in the number of universities by 2015 for India to maintain any competitive edge. At present only about a tenth of college-age Indians are even enrolled in college; China’s comparable gross enrollment rate is two times that.

In order to increase India’s college GER to 15 per cent by 2015, the Knowledge Commission recommends that spending on higher education, which accounts for less than a sixth of the total spent in education, be doubled to at least 1.5 per cent of the GDP.

Even with limited non-government investment in higher education, nearly a third of college students are enrolled in institutions that receive no government aid.

Additionally, India is under pressure to enhance quality in the existing 350 postgraduate universities and their respective families of about 1,770 undergraduate colleges, which together constitute one of the world’s prodigious systems of higher education.

An average Indian university administers more than 100 affiliated colleges; a few universities administer as many as 400. It is akin to a poor family raising scores of demanding kids. India’s per capita spending on higher education, according to UNESCO figures, is one of the world’s lowest.

Members of the Knowledge Commission are aghast. They want some sort of “family planning” for universities – creating as many as 1500 smaller, “more nimble,” universities by 2015, each taking care of far fewer colleges and spending far more per student.

Clearly, immense investment in higher education is a need of the decade. 

Where the money? The government’s resources are already straining from the unmet challenge of universal literacy: India has 380 million illiterates, more people than the populations of the United States and Canada combined.

Other than raising public bonds, inviting investments from competing private entrepreneurs may be the only sustainable solution. John Elliott of Fortune estimates that investment potential to be $40 billion per year and to increase to three times that in a decade.

So what is the government doing?

Earlier in July, Harvard-educated science minister Kapil Sibal, during a visit to Bangalore, declared his intention to invite foreign direct investment (FDI) in higher education. Not just private but foreign too. Whether Sibal was speaking for the Union cabinet is unclear, but he sure got the Communists’ goat: Three weeks later, CPM secretary Prakash Karat pulled the rug from under the government, albeit over the nuclear agreement.

(Ah, was that a grin crossing Mr. Sibal’s countenance?)

So what might be some implications of opening the sluice gates of higher education to private and foreign investment?

# Dollars/Euros would fund the pursuit of applied, high-demand, subjects (biotechnologies, informatics, telecommunications, chemical engineering, etc).  Some investment would go to the humanities (law, mathematics, philosophy), a trickle to the social sciences (psychology, political science, linguistics) and whatever remains to vocational/trade subjects (aviation, metal work, information technology, etc).

# Academy-industry ties would turn more universities, to a larger extent, into petri-dishes of corporations. R&D activities would migrate from corporations to universities due to lower costs. So more active campuses, more rigorous program requirements, more robust degree programs. Result? More patents and other intellectual property, which in turn would attract even more investments, more trickle-down returns.

# A substantial spike in sources of research funding outside the social sector would result in more avenues for productive student employment, more incentives for creative faculty, a tenure system for professors based on research productivity – more reasons to pursue higher education.

# Education would be priced much higher; tuition and fees would be driven not by utopian fundamentals such as margins of profit or social need but by the inexorable demands of the market.  Banks and other lenders would enter a golden age. Credit rating of individuals would blossom as an industry in itself.

# Resistance to egalitarian programs such as reservation in college seats would get stronger, more so in reservation in faculty positions:  Disadvantaged backward/rural students would find motivation to be as competitive as ever.

# Universities from America and Europe, eager to expand their reach and coffers, would be able to offer high quality programs on their own terms: How about access to the portals of Columbia, MIT or Cambridge while sitting in your red-oxide verandah in Vontikoppal? There’d be a celebration of the scientific method, probably with greater emphasis on process than on concepts.

# Short-term disadvantages to regional aspirations such as Indian systems of medicine and therapy, the Kannada chaluvali, Indology and Eastern philosophies would be corrected over time by the higher-impact creative activities and research.

# The academic year’s pace would hasten; university schedules would move into more flexible, credit-driven semesters or quarters.

Churumuri readers might want to discuss the value additions/deletions from the above implications.

Also read: Yella not OK, guru. Nanna makkalu is not learning

Don’t gift them fish. Teach them how to fish

Can Azim Premji do what the government can’t/won’t?

What can Mysore University do with a windfall

The world’s ascendant education superpower?

CHURUMURI POLL: Is the ‘India Story’ over?

4 July 2008

Six months ago, India was looking at 9 per cent growth rates. Corporate profits were booming at 20 per cent. Consumer demand was huge, inflation was a low 3 per cent, the stock markets were up 50 per cent, the rupee was rising, Indian business houses were buying companies across the world. The world was looking at India, foreign direct investments of $19 billion were pouring in.

Today, inflation based on whole sale prices is hovering around 11.5 per cent; actually inflation sustained by consumers is even higher. The rupee is falling, the oil bill is bloating, the Sensex is down 40 per cent from its 2007 highs, foreign investors have taken out $ 6 billion or more, corporate profits is expected to halve to 10 per cent, the GDP growth could slow down to 7 per cent.

“India has gone from hero to zero in six months,” says Andrew Holland of Merrill Lynch in the latest issue of Businessweek.

Experts say instead of “reining in profligate expenditures, liberalising its financial markets, increasing agricultural productivity, and improving infrastructure, the environment, and energy use”, the Manmohan Singh government has been caught in its own vortex, waving off farmers’ loans, hiking bureaucrats’ salaries, handing out fertiliser subsidies.

Questions: Is the ‘India Story’ over? Or are the “fundamentals” of the Indian economy still very strong? Is the UPA government singularly responsible or has it been the victim of a global meltdown? How long will it take for the good times to roll again? Or, are the reports of the death of the “India Story” exaggerated?

Also read: CHURUMURI POLL: Has the ‘dream team’ been exposed?

How NRIs help India while desis crib about them

28 January 2008

MADHU GOPINATH RAO writes from New York City: If you write about India or Indian matters, and happen to be based outside India, it comes as no surprise to see a couple of “Why don’t you come back to India first…” or a “What do you know of the rural reality?” taunts pop up in the comments. Many of these come from the web 2.0 crowd that has embraced the IT boom and blogging, and are themselves an integral part of it.

We have come to accept, embrace and revere the beacons of India’s web 2.0 : the N.R. Narayana Murthys and Azim Premjis, who, as czars of Nasdaq and NYSE listed conglomerates, made their riches in dollars and pounds among a bunch of other currencies. The NRNs and Premjis are national heroes while your typical Non-Resident Indian (NRI) is a deserter who is pursuing his dreams outside the subcontinent.

Quite a few of these IT giants/heroes, rightfully praised for their entrepreneurship, have shied away from doing domestic IT business as the profits are shallow and it does not make business sense. On the other hand, a garden-variety NRI gets a jeer for the foreign association.

Why the different yardsticks?

Since the rupee-to-dollar conversion provides a 40x multiplication factor, a dollar saved is 40 rupees saved; hardly anything you did not already know. The factor is similarly attractive in some other foreign currencies as well. This has been a strong reason for Indian nationals, and companies alike, being interested in overseas markets—yours sincerely included.

I offer no other altruistic, untrue reason that intends to side-swipe this gospel truth. None is needed in my opinion, for it is not a crime to pursue your dream while being rooted deeply with the mother ship. Far from jeering, NRI baiters may have a reason to thank me and my ilk.

If you think this is another bored to death NRI spinning a tale, no, I’m not about to spin a tale, I sit on my tail thank you.

***

Get this:

India’s Foreign Direct Investment in 2007: $16 billion

NRI remittances: $29 billion, translating to $90 billion

India’s FDI has witnessed a startling surge. As compared with $16.5 billion over the whole of the 1990s at an annual average of $2.2-3.2 billion, the FDI for 2005-06 was pegged at $5.5 billion. In 2006-07, it touched $11.19 billion and for 2007, by Oct-2007, it was at $15.7 billion and climbing. It is downright stupendous when your current year investment (2007) is as much as the whole investments in the last decade pre-millennium(1990s).

In another seemingly unrelated yet relevant news, Western Union, a global provider of cross-border money-transfer services, proudly opened its 50,000th agent location in India on January 14 this year.

According to the Reserve Bank of India, India is one of the largest receivers of foreign remittances. How much is it anyway? And shall we compare that with the FDI that we are so proud of?

Sure, how does 200% of FDI sound? There is no typo there. The remittances were in the excess of $26.9 billion for 2006-2007. Now contrast $29+ billion with India’s 2006-07 defence budget as the fourth largest military on the planet: $20 billion.

By the time you have collected your jaw from the floor to retort about the urban-rural disparity in the flow, let me tell you that Western Union’s 50,000 agent locations in India span across 5,000 cities, towns and villages. This includes more than 8,500 post offices and more than 14,000 branches of leading banks. That’s clearly not just your major metros?

And it gets even better, $30 billion is more like $90 billion!

“If the World Bank is correct, every dollar remitted contributes 3 dollars to the GDP growth—which means that NRIs are contributing almost $90 billion to the growth of India’s rural economy…”

Shekhar Kapoor, the noted film maker, who pursues as much of his dreams overseas as in India.

Per above, the NRI funds seem to disseminate better into the rural areas than many a fancied FDI. The common-man -being-left-out card doesn’t hold water either. Yes, the IT boom and the ‘going abroad’ becoming a commonplace has created an economic imbalance. But the same has also led to the vast upwardly mobile bludgeoning middle class that has a better quality of life.

Per above the myth that this boom has not helped the poor, is well, a myth at best. The McKinsey group‘s detailed study takes a realistic note of the ground realities, the above included. Excerpts:

“Contrary to popular perceptions, rural India has benefited from this growth: extreme rural poverty has declined from 94 per cent in 1985 to 61 per cent in 2005, and we project that it will drop to 26 per cent by 2025.”

“The Indian middle class has already begun to evolve, and by 2025 it will dominate the cities. By then about three-quarters of India’s urbanites will be part of the middle class, compared with just more than one-tenth today.”

***

I have great respect for people who are driven enough to pursue their ambition, and go where it takes them. Likewise, I have profound respect for people who are grounded enough to seek those dreams from their home soil. The former vs the latter is more often than not a matter of circumstance with a million other influences.

To say one is in any way better or noble compared to the other is myopic and naive. In times when the world is getting flattened and global sourcing is an accepted norm, we need to get past denial and onto acceptance.

When was the last time you picked up something that did not have a foreign collaboration slapped to it?

From the Colgate that starts the mornings, to the Suzukis-Chevrolets-Volvos that ply you to software parks that cater to a largely foreign customer base, via the HP-IBM-Dell desktops running Microsoft’s Windows, to the Pepsis-Cokes to the Lay’s chips to the iPods, you are more of a global citizen today than ever before.

It is no secret that, given a sliver of chance, very many of these critics and jeerers would only be too happy to pack their suitcases and line up at the embassies.

That notwithstanding, if ‘Foreign Direct Investment’ and ‘Non Resident Indian’ investments are key to India’s growth, and NRIs, apart from re-investing in India do influence the FDI flow as well, we ought to treat them better—$90 billion is no chump change, and a similar phenomenon is not happening in China that is oft compared to India, and China has a bigger expat population.

***

NRIs have a very strong sense of bonding with the mother ship and this helps India.

If the remittances cannot make a believer out of you, just look at any popular site’s sitemeter. The diaspora that checks in is not all domestic traffic. Nostalgia, a sense of belonging or longing, sardarji jokes, Rakhi Sawant or Deve Gowda, all of the above that gets them there, is pure Indian. From the Bollywood movies to the temples-mosques galore, the Indian diaspora has kept in touch with the Indian culture, despite being away and in their own way.

The above is just my view point. I’m sure there are interesting, constrasting thoughts on both sides of the sea.

Let’s hear them.


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