No absurd mining please.

Under the instructions from the prime minister, environment minister Mr Jairam Ramesh has from increased the allotted area for mining of coal from 344000hectare to 380000 hectare, which means cutting of 36000 hectares of forest reserves. The current coal production is 53cr tons and coal minister Mr Prakash Jaiswal is willing to increase it to 1000cr tons. Even the prime minister agrees that India needs electricity so there is a need of increasing the production of coal. According to the report of the energy research institute we have coal reserves available for mining for the next 40 yrs. and rest of the coal are present very deep inside the core of earth. So if we double the rate of extraction the reserves will last for next 20 yrs. This won’t be right from the energy conservation view. It is being said that in the next 20 yrs. there will be some new technology coming up for meeting the energy requirements and therefore we should extract more coal and hence increase our speed of development. But it is difficult to forecast the advancements of technology as seen in case of USA, they promoted the consumption assuming there will be new high-tech goods produced by them every time and will therefore keep up the economy and in order to meet the demands they provided easy loans resulting in the economic crisis in which they are stuck at present.

Even if we talk about the electricity being consumed, a major part is being consumed by the things of luxury and not for the basic requirements, many of the villages are not having electricity but many of the city dwellers and shopping malls are wasting electricity for the decoration purpose solely. This type of wastage must not be tolerated in an energy deficit country like ours. The electricity bill for a business person in Mumbai is 70 lakhs; this is really an astonishing figure. To cut forests for such showbiz is not at all right.

After the mining we are presently having a very poor policy of leaving the land barren. Generally an area is dug up and the soil is deposited at a place in the form of a hill and there are no signs of afforestation done there. This is the open cast procedure and is very out-dated. If we see the way mining is done in other countries we will have a lot to learn. In Germany the Roor areas which were once used for extravagation have now converted into beautiful forests. In Congo basin it was found that the forests take 42 years to redevelop so they distributed the areas in pockets, in one pocket mining will be done for 42 years and then will be left for next 42 years when it will be done on the other pocket ,so they will be getting both the woods and the coal in an effective way. While in India we have divided our forests as ‘go’ and “no go” and the area under ‘go‘ will be used for mining.

 

2010 bloodiest year for pakistan

A total of 1,224 people were killed and 2,157 more injured in 52 suicide attacks across Pakistan since January, making 2010 one of the bloodiest years since the turn of the century.

Though the total number of suicide bombings decreased 35 per cent this year as against the past year, 2010 was the bloodiest year since 2001 in terms of the number of the people killed in such attacks, The News daily reported today.

Pakistan witnessed 80 suicide attacks in 2009 that killed 1,217 people and injured 2,305 others.

On an average, suicide bombers killed 102 persons a month this year, compared to last year's average of 101 killings a month.
source: http://economictimes.indiatimes.com/latest-news/2010-bloodiest-year-for-pakistan-since-2001/articleshow/7157736.cms

Mining Policy

India has newly proposed a mining policy which aims to curtail illegal mining and empower people settled in and around mining areas. The new Bill proposes that companies share 26% of the profits from mining with the locals who lose land. The Bill seeks to expedite the grant of mineral concessions in a transparent manner and attract big investments in the sector.

In March, the Environment Ministry had marked as 'no-go' areas 155 coal blocks in nine coal fields that were intended to cater to 10 major power plants.

This had triggered a conflict between the Ministries of Environment and Coal, with the latter saying it would slow down power generation as the banned coal blocks had potential of producing about 660 million tonnes.

The ministry had contended that mining should be banned only in the cases of "pristine forests or wildlife sanctuaries."

The country has about 40 coal-based power plants, accounting for about 70 per cent of 162,366 MW of electricity production.

The current production of coal is about 530 million tonnes and the government is of the view that it needs to be doubled in the next six to seven years as the demand for power is going to increase manifold.

The protagonists in the government argue that coal reserves are usually located in forest areas and a way has to be found to mine these without affecting the ecology, including trees and wildlife.

This can be done by reclaiming and afforesting the pieces of land where mining is undertaken and completed and the process could be carried out in a phased manner, the sources said.

source: http://www4.economictimes.indiatimes.com/news/economy/policy/reworked-policy-on-mining-to-be-unveiled-soon/articleshow/6630595.cms

mobile no portability

India has become the fastest growing mobile industry with around 15 million new connections every month. Nationally, every other Indian has a mobile connection. The metro mobile tele-density is four times higher than the rural mobile tele-density.Customers, initially elated with declining tariff plans, did not realize that the pressure for margins would lead to difficulties like poor voice quality, frequent call drops or no-signal zones even in the densely populated metros. The sudden spurt in the number of mobile subscribers - from 76 million in December 2005 to over 670 million today - too accentuated issues like poor customer care and inappropriate tariff plans. To be fair to the operators, the race for new additions led to lower margins.

In order to shore up their bottom lines in a scarce spectrum environment, customer service levels and the overall customer experience dropped. For the service providers to improve QoS there is an urgent need to grow the current less-than-$4 a month average revenue per user (ARPU) by offering a bouquet of value-added services. The current ARPU levels threaten the long term survival of most new entrants, especially as they look to the hinterland for growth.
According to IT intelligence firm, IDC India, two of every five mobile handsets sold in the country were multi SIM handsets, indicating that a significant number of Indian users are familiar with issues of quality of more than one service provider.While MNP assures customers the freedom to choose service providers, an improvement in the QoS alone will help the mobile customers stay loyal to their service provider.

source: http://www4.economictimes.indiatimes.com/news/news-by-industry/telecom/mobile-number-portability-will-improve-quality-of-service/articleshow/7004780.cms

newspaper comments

We know that due to our growing emphasis on improving welfare for the poor, we are set to spend a lot of money on various social programmes in the coming years. In the last 10 years, we have significantly raised our social spending. This year, the budget for the Natioanl Rural Employment Guarantee Act9 (NREGA) is Rs. 41,000 crore, for Indira Awas Yojana10 (IAY) Rs. 15,000 crore and for Sarva Shiksha Abhiyan11 (SSA) Rs. 15,000 crore. As we have more social programmes, and various rights-right to food, right to education, right to work-get provided for within our welfare schemes we will see spending increase further. This expenditure is ultimately spent on individuals, on beneficiaries. Today, however, because of fundamental problems in confirming the identity of beneficiaries, we have not been successful in reaching benefits to the people who deserve it. The databases are such that there are large numbers of inclusion, as well as exclusion errors. A large number of people are claiming more than their share of public benefits, and there are large numbers of ghosts-people who do not exist but in whose name benefits are being claimed. At the same time, you have millions of deserving people who are not in the system because they do not have any identity. The NCAER (National Council of Applied Economic Research) has estimated for example, that there are over 12 million poor left out from the Targeted Public Distribution System (TPDS).

Changes to be brought in IT in rural area

ICT brings about openness, accessibility, connectivity, democratization and decentralization that results ultimately in social transformation. To really capitalize on all the work we have done in the past what it means to me is to really bring broadband as major infrastructure to connect all our municipalities, connect all our panchayats, schools , colleges, R&D labs, governments so on and so forth. We have a program on National Knowledge Network to connect 1,500 nodes with 10-40 gigabit using fibre to interlink all our universities R&D labs, libraries to improve collaboration and share more information. Similarly, we plan to have a program to connect 250,000 panchayats to fibre. We already have 2,500 municipalities connected to broadband. 
-- Sam Pitroda

The coming of e- stamps

The postal department is working with USbased consulting firm Accenture to prepare a detailed modernisation plan.The electronic form of postal stamps will fully substitute paper stamps in two years,” said an official with the ministry of communications and Information Technology. India Post currently has electronic stamping facility in select urban postal circles. 
 “There have been cases of revenue leaks due to postal stamps being forged in some parts of the country,” said the official, without getting into details. The department sold stamps worth Rs 606 crore in 2008-09 . It reported a loss of Rs 3,638 crore in 2008-09 after posting a 34% jump in expenditure to Rs 9,500 crore. Revenues grew only 6.6% to Rs 5,862 crore during the period.  
Its accumulated losses stand at Rs 7,640 crore. Some premium segment products such as Speed Post are already using bar coded stamps and several large cities have computerised post offices. But most parts of the country, including rural and semi-urban areas , use paper stamps
Besides shifting to e-stamps , the postal department has initiated other e-enabled services to survive in a world that is going the digital way, particularly in the communications space. Its e-post service, for instance, allows sending of messages through email to be printed at post offices near to the address.

Conglomerates donating money.

Premji, chairman of India’s thirdbiggest IT services exporter Wipro, will do this by transferring about 8.6% stake worth over 8,000 crore to a private trust controlled by him. The trust will then use the money to finance the educational initiatives being carried out under the ambit of the Azim Premji Foundation. 
Sunil Mittal of Bharti and Shiv Nadar of HCL Technologies are spending money on education and the government is also stressing greater corporate involvement in social service activities.

Nadar recently donated over 580 crore by selling his 2.5% stake in HCL Technologies to fund the education initiatives of his eponymous foundation. Mittal’s Bharti Foundation is running free English-medium schools for about 30,000 students in Punjab, Haryana, Rajasthan , Tamil Nadu and Uttar Pradesh.

India 2nd in manufacturing

A study conducted by Deloitte and the US Council on Competitiveness has revealed that India is ranked second behind China in manufacturing competitiveness and will only narrow the gap over the next few years.

The Global Manufacturing Competitiveness Index , based on the views of more than 400 senior manufacturing executives worldwide, has rated the overall manufacturing competitiveness of 26 countries.

More surprising (than China’s rise to the top) is that India is now positioned at number two and expected to gain an even stronger foothold over the next five years. “India’s rich talent pool of scientists, researchers , and engineers as well as its large, well-educated Englishspeaking workforce and democratic regime make it an attractive destination for manufacturers,” the study said.

Executives surveyed said that research and development capabilities paired with engineering , software, and technology integration abilities were essential ingredients for manufacturing enterprises. 
While China, India and South Korea, the three most manufacturing competitive economies would retain their position, Brazil is projected to replace US from the fourth slot. The US, where concerns of losing competitiveness are already causing some concern, is expected to slip to the fifth slot.

According to the senior manufacturing leaders who participated in the study, the most important drivers of global manufacturing competitiveness are the classic factors of production labour, materials and energy.


source:  http://economictimes.indiatimes.com/news/news-by-company/corporate-trends/India-ranks-second-in-manufacturing-competitiveness-Study/articleshow/7033483.cms

UNION BUDGET 2010

HIGHLIGHTS

■To waive excise duty on solar panels
■Opposition walks out of Parliament over petrol price hike
■Petrol prices to go up
■Fresh services to be brought under service tax
■Service tax to GDP ratio 1%
■Service tax to result in net revenue gain of Rs 3000 cr
■Customs duty on silver at Rs 1500/kg
■Custom duty on gold to be reduced
■Mobile phones to be cheaper
■No capital gains tax on conversion of a business entity into Limited Liability Partnership
■To encourage manufacture of accessories such as battery chargers and hands-free sets, the concessions will be extended the mobile phone sector
■5% customs duty on crude petroleum back
■Peak customs duty unchanged at 10%
■FM raises central excise duty on all non-petroleum products from 8 to 10 per cent
■Revenue loss of Rs 26,000 crore on direct tax proposals
■Stimulus-led excise duty rollback partially reversed
■FM allows housing projects to complete projects in 5 years instead of 4 years to avail tax break
■One-time interim relief to housing and real estate sector
■Businesses up to Rs 60 lakh and professionals up to Rs 15 lakh to be exempted from auditing obligations of their accounts
■Uproar in Parliament over petrol price rise
■To levy excise duty of Re 1/litre on petrol
■New tax rates would offer relief to 60 per cent of tax-payers
■CET on petroproducts hiked by Re 1
■Uniform Direct tax receipts to fall by Rs 56,000 cr
■Standard excise rate up from 8 to 10%
■Large cars, SUVs excise up to 22% from 20%
■Sops for real estate, housing projects extended by a year
■Partial roll back the rate reduction in central excise
■Direct tax scheme to result in revenue loss of Rs 26,000 cr
■Compliance burden reduced on professionals and entrepreneurs
■Corporate tax surcharge down from 10 to 7.5%
■New income tax slabs will bring relief to the middle class
■Rs 20,000 additional tax break for infra bonds
■Minimum Alternate Tax hiked to 18%
■R&D allocation increased 200%
■To unveil new Saral 2 form for salaried individuals in two pages
■Deduction of additional 10% for investment on infrastructure bonds
■Tax slabs: Broadening 1.6 lakh - Nil above 1.6 lakh-up to 5 lakh 10%
■5-8 lakh- 20% above 8 lakh- 30%
■Tax paying interface to be de-cluttered
■States to be offered assistance to computerise commercial taxes
■Greater transparency in tax administration targeted
■Centralized Tax Centre at Bengaluru fully functional
■Fiscal deficit at 5.5% for FY'11
■Rolling target for fiscal deficit 4.2%
■Gross tax receipts at Rs 7.46 lakh cr
■New symbol for Indian Rupee
■Tech advisor group under Nandan Nilekani
■Allocation for development of micro and small scale sector raised from Rs 1,794 cr to Rs 2,400 cr
■Rs 2,600 cr for Minority Affairs Ministry
■To create 50 cr skilled workers by 2022
■Rs 1,900 cr to UID authority allocated
■First set of UID to be issued by this year
■Rs 19,484 cr allocated for road development, to build 20 km of highway every day
■Subsidy for affordable housing extended
■Skill development programme for textile and garment sector
■Pvt sector to meet deficit in grain storage
■50% increase in women & child development allocation
■Development of rural infra remains high priority area
■Power sector allocation doubled to Rs 5130 cr
■Rs 400 cr corpus for micro-finance scheme
■National pension scheme allocation increased
■States to get Rs 3,675 crore for primary education at rural level
■Rs 400 cr corpus for micro-finance scheme
■NREGA allocation to Rs 40,100 crore
■National Social Security fund to be set up for unorganized sector
■Urban Development allocation to be raised by 75 per cent
■20,000 mw of solar power by 2022
■Rural development allocation to Rs 61,000 cr
■Indira Awaas Yojana allocation raised in proportion to plain and hill area housing
■Development of rural infra remains high priority area
■Social sector spending at Rs 1.38 lakh cr for FY11
■Rs 500 cr for Clean Ganga Mission
■Rs 66, 100 cr for rural development in FY10-11
■Allocation for school education up from Rs 26, 800 crore to Rs 31, 036 cr
■Rs 22, 300 crore allocated for Health Ministry
■Coal regulatory authority proposed
■Rs 300 cr for Rashtriya Krishi Vikas Yojana
■Bank farm loan target: Rs 3.75 lakh crore
■Rs 200 cr To Tamil Nadu for textiles
■Need to take firm view on opening up of the retail sector
■National clean Energy Fund to be set up
■Rs 200 crore to Goa as a special golden jubilee package to restore beaches and increase green cover
■To provide 2% loan subsidy to farmers
■Extend loan payment by calamity hit farmers
■Rs 400cr for four-part strategy for agriculture
■2% interest subvention for exports extended
■Additional banking licenses for pvt players
■4 pronged strategy for agriculture
■Rs 16,500 cr capital support for PSU banks
■Will consider Parikh report on fuel pricing
■Goods and services tax to be introduced in 2011
■Fertiliser subsidy to be reduced
■GDP growth for FY'10 is seen at 7.2 pc
■Rs 25,000 cr disinvestment target this year
■India weathered economic crisis well
■Direct tax code to be implemented from April 1, 2011
■Gradual phasing out of economic stimulus
■Pvt investment can sustain 9 pc growth
■First challenge: Return to GDP growth
■Manufacturing growth highest in the past 2 years
■Indian economy is in a far better position today
■FM is expected to simplify tax laws in 2010
■Biggest challenge is to make the growth all inclusive
■Need to strengthen food security
■Pranab: Indian economy has stood through the test of time
■Economic growth slows down to 6 pc in Q3
■Finance Minister presents Budget 2010
■Pranab Mukherjee presents his 5th Union Budget
■Finance Minister Pranab Mukherjee reaches Parliament
■Inflation is forecast to reach 10 percent in coming weeks
■Government borrowing was forecast to rise by another 2.2 percent
■Economists forecast India may cut its fiscal deposit to 5.6% of GDP


TAXES

■More services to be brought under service tax net
■Service tax to result in net revenue gain of Rs 3000cr
■Customs duty on gold to be reduced; silver at Rs 1500/kg
■Uniform concessional duty of 5% on all medical appliances
■Rationalising of customs on gaming software
■Custom duty of one of the key component of microwave oven reduced
■Peak customs duty unchanged at 10%
■Custom duty for importing of duplication of prints of films revised
■No capital gains tax on conversion of a business entity into Limited Liability Partnership
■Businesses up to Rs 60 lakh and professionals up to Rs 15 lakh to be exempted from auditing obligations
■Nominal duty of 4% electric cars
■Partial rollback of excise duty on cement, cement products, large cars
■To levy excise duty of Re 1/litre on petrol
■R&D Corp Tax break up to 200%
■Uniform Direct Tax receipts to fall by Rs 56,000 cr
■Pilot project for tax grievances extended to 4 cities
■Direct tax scheme to result in revenue loss of Rs 26,000cr
■Corporate tax surcharge down from 10 to 7.5%
■Rs 20,000 additional tax break for infra bonds
■Corp Min Alternate Tax up from 15 to 18%
■New tax rates would offer relief to 60 per cent of tax-payers
■Direct tax slabs: income upto 1.6 lakh = nil, 1.6-5 lakh = 10%, 5-8 lakh = 20%,
■above 8 lakh = 30%
■Centralized Tax Centre at Bengaluru fully functional
■Gross tax receipts Rs 7.46 lakh crore
■Deferment of goods & service tax negative for corporates in FY10-11
■Direct tax to be implemented from April 1, 2011
■Simple tax system with minimum exemptions near completion

MARKET

■Realty stock gain after tax sops for developers
■Nifty up 100 pts
■Sensex surges over 350 pts on direct tax sops
■BSE real estate index extends gains to 3% on sops to developers
■12.30am: Markets responds positively, Sensex up 300 pts
■Banking stocks up, react to banking expansion plans
■Markets up by 100 points
■Fertilizer stocks up, react to reduction of subsidy
■11.30am: BSE Sensex, Nifty up by 0.5%
■Markets react positively to Pranab speech
■9am: BSE Sensex at 16,296.59, 0.26%
■9am: NSE index at 4,880.55 0.4%

PRICES

■Gold gets cheaper
■Petrol, Diesel to be expensive
■Mobile phones to be cheaper
■Large cars, SUVs to cost more
■Petro products, cigarettes to be expensive
■Fertilisers to be costlier after the reduction in subsidy
■High fuel prices added to inflation: Pranab
■Pranab Mukherjee said the govt would initiate action to bridge the gap between wholesale and retail prices.
■Govt promises to tackle food inflation in budget
■Calls for fiscal discipline have gained urgency as inflation is forecast by some economists to reach 10 percent in coming weeks as high food prices fuel broader inflation expectations.

Railway Budget 2010

HIGHLIGHTS

•No increase in passenger fares
•Rs.100 reduction in freight per wagon for fertilisers and kerosene
•Free travel for cancer patients in 3rd AC classes
•Cost-sharing in public-private-partnership (PPP) mode in some gauge-conversion projects
•Further extension of Kolkata Metro on priority basis; stations to be named after Bahadur Shah Zafar, Tagore family
•Karmabhoomi trains to be introduced for migrant labour
•New Janmabhoomi train between Ahmedabad and Udhampur
•Special 'Bharat Teertha' train to be run around India to commemorate Rabindranath Tagore's 150th birth anniversary
•Railway line to be extended from Bilaspur in Himachal Pradesh to Leh in Jammu and Kashmir
•Andaman and Nicobar Islands to get railway line from Port Blair to Diglipur
•Sikkim capital Gangtok to be connected by rail from Rangpo
•2011 being 150th anniversary of Rabindranath Tagore, special train to be run from West Bengal to Bangladesh
•Gross earnings in 2009-10 estimated at Rs.88,281 crore
•Working expenditure in 2009-10 estimated at Rs.83,440 crore
•Expenses during 2010-11 estimated at Rs.87,100 crore
•Thrust on expansion in 2010-11 with allocation of Rs.4,411 crore
•Kashmir rail link to be extended to Sopore in the north of the valley
•Net profit of Rs.1,328 crore in 2009-10
•10 automobile ancillary hubs to be created
•Twenty-two million energy saving CFLs for lighting distributed already
•Policy decision to employ one member of family whose land is requisitioned for railway projects
•North-south, east-west dedicated freight corridors to be created
•Construction of high-speed passenger rail corridors envisaged
•More multi-functional hospitals to be set up
•Educational facilities to be set up for children of 80,000 women families
•Special facilities to be established for gangmen
•Insurance facilities for licensed porters as part of railway's corporate social responsibility
•Centre for railway research to be established with Indian Institutes of Technology and
•Defence Research and Development Organisation
•Will involve unions in policy making
•Integral Coach Factory Chennai to be further modernised
•New wagon repair shop in Mumbai
•Design, development and testing centre for railway wheels at Bangalore
•Within five years, all unmanned level crossings to be manned
•Construction of more underpasses, besides road overbridges
•Greater coordination with state governments to protect railway property
•Security of women passengers to be improved
•Ex-servicemen to be employed in Railway Protection Force
•Five sports academies to be set up
•Astroturf to be provided for development of hockey
•Employment opportunities for sports persons
•Railways to be lead partner for Commonwealth Games
•Special drive to increase passenger amenities
•Upgrade of 94 stations
•Six new drinking water bottling plants in PPP mode
•Modern toilets at railway stations
•More ticketing centres to help the public
•Acquisition of cutting edge safety technology
•1,000 route km to be created
•Special task force for clearing investment proposals in 100 days
•New business model to be created
•No privatisation of railways
•But greater participation of private sector
•117 of 120 new trains for current fiscal to be flagged off

Who's your Competitor

Who sells the largest number of cameras in India?
Your guess is likely to be Sony, Canon or Nikon. Answer is none of the above. The winner is Nokia whose main line of business in India is not cameras but cell phones.
Reason being cameras bundled with cellphones are outselling stand alone cameras. Now, what prevents the cellphone from replacing the camera outright? Nothing at all. One can only hope the Sonys and Canons are taking note.
Try this. Who is the biggest in music business in India? You think it is HMV Sa-Re-Ga-Ma? Sorry. The answer is Airtel. By selling caller tunes (that play for 30 seconds) Airtel makes more than what music companies make by selling music albums (that run for hours).
Incidentally Airtel is not in music business. It is the mobile service provider with the largest subscriber base in India. That sort of competitor is difficult to detect, even more difficult to beat (by the time you have identified him he has already gone past you). But if you imagine that Nokia and Bharti (Airtel's parent) are breathing easy you can't be farther from truth.
Nokia confessed that they all but missed the smartphone bus. They admit that Apple's Iphone and Google's Android can make life difficult in future. But you never thought Google was a mobile company, did you? If these illustrations mean anything, there is a bigger game unfolding. It is not so much about mobile or music or camera or emails?
The "Mahabharat" (the great Indian epic battle) is about "what is tomorrow's personal digital device"? Will it be a souped up mobile or a palmtop with a telephone? All these are little wars that add up to that big battle. Hiding behind all these wars is a gem of a question - "who is my competitor?"
Once in a while, to intrigue my students I toss a question at them. It says "What Apple did to Sony, Sony did to Kodak, explain?" The smart ones get the answer almost immediately. Sony defined its market as audio (music from the walkman). They never expected an IT company like Apple to encroach into their audio domain. Come to think of it, is it really surprising? Apple as a computer maker has both audio and video capabilities. So what made Sony think he won't compete on pure audio? "Elementary Watson". So also Kodak defined its business as film cameras, Sony defines its businesses as "digital."
In digital camera the two markets perfectly meshed. Kodak was torn between going digital and sacrificing money on camera film or staying with films and getting left behind in digital technology. Left undecided it lost in both. It had to. It did not ask the question "who is my competitor for tomorrow?" The same was true for IBM whose mainframe revenue prevented it from seeing the PC. The same was true of Bill Gates who declared "internet is a fad!" and then turned around to bundle the browser with windows to bury Netscape. The point is not who is today's competitor. Today's competitor is obvious. Tomorrow's is not.
In 2008, who was the toughest competitor to British Airways in India? Singapore airlines? Better still, Indian airlines? Maybe, but there are better answers. There are competitors that can hurt all these airlines and others not mentioned. The answer is videoconferencing and telepresence services of HP and Cisco. Travel dropped due to recession. Senior IT executives in India and abroad were compelled by their head quarters to use videoconferencing to shrink travel budget. So much so, that the mad scramble for American visas from Indian techies was nowhere in sight in 2008. (India has a quota of something like 65,000 visas to the U.S. They were going a-begging. Blame it on recession!). So far so good. But to think that the airlines will be back in business post recession is something I would not bet on. In short term yes. In long term a resounding no. Remember, if there is one place where Newton's law of gravity is applicable besides physics it is in electronic hardware. Between 1977 and 1991 the prices of the now dead VCR (parent of Blue-Ray disc player) crashed to one-third of its original level in India. PC's price dropped from hundreds of thousands of rupees to tens of thousands. If this trend repeats then telepresence prices will also crash. Imagine the fate of airlines then. As it is not many are making money. Then it will surely be RIP!
India has two passions. Films and cricket. The two markets were distinctly different. So were the icons. The cricket gods were Sachin and Sehwag. The filmi gods were the Khans (Aamir Khan, Shah Rukh Khan and the other Khans who followed suit). That was, when cricket was fundamentally test cricket or at best 50 over cricket. Then came IPL and the two markets collapsed into one. IPL brought cricket down to 20 overs. Suddenly an IPL match was reduced to the length of a 3 hour movie. Cricket became film's competitor. On the eve of IPL matches movie halls ran empty. Desperate multiplex owners requisitioned the rights for screening IPL matches at movie halls to hang on to the audience. If IPL were to become the mainstay of cricket, as it is likely to be, films have to sequence their releases so as not clash with IPL matches. As far as the audience is concerned both are what in India are called 3 hour "tamasha" (entertainment). Cricket season might push films out of the market.
Look at the products that vanished from India in the last 20 years. When did you last see a black and white movie? When did you last use a fountain pen? When did you last type on a typewriter? The answer for all the above is "I don't remember!" For some time there was a mild substitute for the typewriter called electronic typewriter that had limited memory. Then came the computer and mowed them all. Today most technologically challenged guys like me use the computer as an upgraded typewriter. Typewriters per se are nowhere to be seen.
One last illustration. 20 years back what were Indians using to wake them up in the morning? The answer is "alarm clock." The alarm clock was a monster made of mechanical springs. It had to be physically keyed every day to keep it running. It made so much noise by way of alarm, that it woke you up and the rest of the colony. Then came quartz clocks which were sleeker. They were much more gentle though still quaintly called "alarms." What do we use today for waking up in the morning? Cellphone! An entire industry of clocks disappeared without warning thanks to cell phones. Big watch companies like Titan were the losers. You never know in which bush your competitor is hiding!
On a lighter vein, who are the competitors for authors? Joke spewing machines? (Steve Wozniak, the co-founder of Apple, himself a Pole, tagged a Polish joke telling machine to a telephone much to the mirth of Silicon Valley). Or will the competition be story telling robots? Future is scary! The boss of an IT company once said something interesting about the animal called competition. He said "Have breakfast ...or.... be breakfast"! That sums it up rather neatly.

The Textile and Apparel Industry in India

Introduction
The Multi-Fibre Agreement (MFA), that had governed the extent of textile trade between nations since 1962, expired on 1 January, 2005. It is expected that, post-MFA, most tariff distortions would gradually disappear and firms with robust capabilities will gain in the global trade of textile and apparel. The prize is the $360 bn market which is expected to grow to about $600 bn by the year 2010 – barely five years after the expiry of MFA. An important question facing Indian firms is whether their capabilities and their diverse supply chain are aligned to benefit from the opening up of global textile market?

The history of textiles in India dates back to the use of mordant dyes and printing blocks around 3000 BC. The diversity of fibres found in India, intricate weaving on its state-of-art manual looms and its organic dyes attracted buyers from all over the world for centuries. The British colonization of India and its industrial policies destroyed the innovative eco-system and left it technologically impoverished. Independent India saw the building up of textile capabilities, diversification of its product base, and its emergence, once again, as an important global player. Today, the textile and apparel sector employs 35.0 mn people (and is the 2nd largest employer), generates 1/5th of the total export earnings and contributes 4 per cent to the GDP thereby making it the largest industrial sector of the country. This textile economy is worth US $37 bn and its share of the global market is about 5.90 per cent. The sector aspires to grow its revenue to US $85bn, its export value to US $50bn and employment to 12 million by the year 2010 (Texmin 2005).

The Textile and Apparel Supply Chain
The Textile and Apparel Supply Chain comprises diverse raw material sectors, ginning facilities, spinning and extrusion processes, processing sector, weaving and knitting factories and garment (and other stitched and non-stitched) manufacturing that supply an extensive distribution channel (see Figure 1). This supply chain is perhaps one of the most diverse in terms of the raw materials used, technologies deployed and products produced.

This supply chain supplies about 70 per cent by value of its production to the domestic market. The distribution channel comprises wholesalers, distributors and a large number of small


retailers selling garments and textiles. It is only recently that large retail formats are emerging thereby increasing variety as well as volume on display at a single location. Another feature of the distribution channel is the strong presence of ‘agents’ who secure and consolidate orders for producers. Exports are traditionally executed through Export Houses or procurement/commissioning offices of large global apparel retailers.

It is estimated that there exist 65,000 garment units in the organized sector, of which about 88 per cent are for woven cloth while the remaining are for knits. However, only 30–40 units are large in size (as a result of long years of reservation of non-exporting garment units for the small scale sectors – a regulation that was removed recently). While these firms are spread all over the country, there are clusters emerging in the National Capital Region (NCR), Mumbai, Bangalore, Tirupur/Coimbatore, and Ludhiana employing about 3.5 mn people. According to our estimate, the total value of production in the garment sector is around Rs.1,050–1,100 bn of which about 81 per cent comes from the domestic market. The value of Indian garments (eg. saree, dhoti, salwar kurta, etc.) is around Rs.200–250 bn. About 40 per cent of fabric for garment production is imported – a figure that is expected to rise in coming years.

The weaving and knits sector lies at the heart of the industry. In 2004-05, of the total production from the weaving sector, about 46 per cent was cotton cloth, 41 per cent was 100% non-cotton including khadi, wool and silk and 13 per cent was blended cloth. Three distinctive technologies are used in the sector – handlooms, powerlooms and knitting machines. They also represent very distinctive supply chains. The handloom sector (including khadi, silk and some wool) serves the low and the high ends of the value chain – both mass consumption products for use in rural India as well as niche products for urban & exports markets. It produces, chiefly, textiles with geographical characterization (e.g., cotton and silk sarees in Pochampally or Varanasi) and in small batches. Handloom production in 2003-04 was around 5493 mn.sq.meters of which about 82 per cent was using cotton fibre. Handloom production is mostly rural (employing about 10 million, mostly, household weavers) and revolves around master-weavers who provide designs, raw material and often the loom.

Weaving, using powerlooms, was traditionally done by composite mills that combined it with spinning and processing operations. Over the years, government incentives and demand for low cost, high volume, standard products (especially sarees and grey cloth) moved the production towards powerloom factories and away from composite mills (that were essentially full line variety producers). While some like Arvind Mills or Ashima transformed themselves into competitive units, others gradually closed down. In 2003-04, there remained 223 composite mills that produced 1434 mn. sq. mts. of cloth. Most of these mills are located in Gujarat and Maharashtra. Most of the woven cloth comes from the powerlooms (chiefly at Surat, Bhiwandi, NCR, Chennai). In 2005, there were 425,792 registered powerloom units that produced 26,947 mn. sq. mts of cloth and employed about 4,757,383 workers. Weaving sector is predominantly small scale, has on an average 4.5 power looms per unit, suffers from outdated technology, and incurs high co-ordination costs. Knits have been more successful especially in export channels. Strong production clusters like Tirupur and Ludhiana have led to growth of accessories sector as well, albeit slowly. The hosiery sector, on the other hand, has largely a domestic focus and is growing rapidly.

The spinning sector is perhaps most competitive globally in terms of variety, unit prices and production quantity. Though cotton is the fibre of preference, man-made fibre (polyster fibre and polyster filament yarn) is also produced by about 100 large and medium size producers.
Spinning is done by 1566 mills and 1170 Small and Medium Enterprises (SME). Mills, chiefly located in North India, deploy 34.24 mn. spindles and 0.385 mn rotors while the SME units produce their yarn on 3.29 mn spindles and 0.119 mn. rotors producing 2270 mn kg of cotton yarn, 950 mn kg of blended yarn and about 1106 mn kg of man-made filament yarn every year. Worsted and non-worsted spindles (producing woolen yarn) have also progressively grown to 0.604 mn and 0.437 mn respectively. Spinning sector is technology intensive and productivity is affected by the quality of cotton and the cleaning process used during ginning.

The processing sector, i.e., dyeing, finishing and printing is mostly small in scale. The largest amongst these would dye and finish about 5000 m/day. The remaining are independent process houses (or part of composite mills) that use automated large batch or continuous processing and have an average scale of about 20,000 m of cloth daily. About 82.5 per cent or 10,397 units are hand processors who dye cloth or yarn manually and dry in open sunshine. Of the remaining (and these use automated and semi-automated equipment), 2076 are independent process houses.

Cotton remains the most significant raw material for the Indian textile industry. In 2003-04, 3009 mn kg of cotton was grown over 7.785 mn acres. Other fibres produced are silk (15742 tonnes), jute (10985000 bales), wool (50.7 mn kg) and man-made fibres (1100.65 mn kg). Cotton grows mostly in western and central India, silk in southern India, jute in eastern and wool in northern India. Significant qualities of cotton, silk and wool fibres are also imported by the spinning and knitting sectors. (Except for garments, all data in this section was obtained from OTC 2004 and Texmin 2005.)

Managing such a complex supply chain requires coordination through excellent managerial practices, technology and facilitating policies.

Competitiveness of Indian Textile & Apparel Industry
India is one of the few countries that owns the complete supply chain in close proximity from diverse fibres to a large market. It is capable of delivering packaged products to customers comprising a variety of fibres, diverse count sizes, cloths of different weight and weave, and a panoply of finishes. This permits the supply chain to mix and match variety in different segments to deliver new products and applications. This advantage is further accentuated by cost based advantages and diverse traditions in textiles.

Indian strength in spinning is now well established – on unit costs on ring yarn, open-ended (OE) yarn as well as textured yarn, Indian firms are ahead of their global competitors including China. Same is true on some woven OE yarn fabric categories (especially grey fabrics) but is not true for other woven segments. India contributes about 23 per cent of world spindles and 6 per cent of world rotors (second highest in the world after China). Fifty five per cent of total investment in technology in the last decade has been made in the spinning sector. Its share in global shuttleless loom, however, is only about 2.8 per cent of world looms (and is ranked 9th in the world). The competitiveness in the weaving sector is adversely affected by low penetration of shuttleless looms (i.e., 1.69 % of Indian looms), the unorganized nature of the sector (i.e., fragmented, small and, often, un-registered units, low investment in technology & practices especially in the powerloom, processing, handloom and knits) and higher power tariffs. There is, however, a recent trend of investment in setting up hi-tech, stand-alone mid-size weaving companies focusing on export markets. India also has the highest deployment of handlooms in the world (handlooms are low on productivity but produce specialized fabric). While production and export of man-made fibre (and filament yarn) has increased over the years, Indian industry still lags significantly behind US, China, Europe, Taiwan etc. (Texmin, 2005.)

Indian textile industry has suffered in the past from low productivity at both ends of the supply chain – low farm yields affecting cotton production and inefficiency in garment sector due to restriction of size and reservation. Add to this, contamination of cotton with consequent increase in cost (as it affects quality and requires installation of additional process to clean and open cotton fibres before carding operations), poor ginning (most equipment dates back to 1940s), high average defect rates in production process (which also leads to increase in effective labour and power costs), hank yarn requirement, etc. and its competitiveness gets compromised severely. Similarly, processing technology is primarily manual and small batch oriented with visual colour matching and sun drying. This leads to inconsistency in conformance quality. Lead times across the sector continue to be affected by variability in the supply chain – defect rates average over 5%, average % of orders on time is about 80%, variance in order size across firms is high (e.g., the coefficient of variability of average order size for spinning firms is about 2.6), and on an average, 16 days of sales as work-in-process inventory (the highest for garment firms) and an average of 30 days of sales in raw material inventory (the highest for spinning firms) (Chandra 2004). Some of the hurdles (eg., reservation in the garment sectors) including tariff distortions between the organized and unorganized sectors have now been systematically removed by policy initiatives of Government of India and have opened avenues for firms to compete on the basis of their capabilities.

Trade data of post-MFA performance reveals some interesting trends – Indian firms registered a 27 per cent growth in exports to US (against China’s 52 per cent) during the Jan-April 2005 time period. Most of this growth has been in textiles while apparels show marginal gains. Apparels & accessories constituted 78% of global exports to USA (FICCI 2005). (India is still a relatively small yet growing player in the global apparel market.) It is expected that India will soon replace Mexico as the second largest apparel supplier to the US.

Challenges facing Indian Textile and Apparel Industry
Textile supply chains compete on low cost, high quality, accurate delivery and flexibility in variety and volume. Several challenges stand in the way of Indian firms before they can own a larger share of the global market:

Scale: Except for spinning, all other sectors suffer from the problem of scale. Indian firms are typically smaller than their Chinese or Thai counterparts and there are fewer large firms in India. Some of the Chinese large firms have 1.5 times higher spinning capacity, 1.25 times denim (and 2 times gray fabric) capacity and about 6 times more revenue in garment than their counterparts in India thereby affecting the cost structure as well as ability to attract customers with large orders. The central tendency is to add capacity once the order has been won rather than ahead of the demand. Customers go where they see both capacity and capabilities. Large capacity typically goes with standardized products. These firms need to develop the managerial capabilities required to manage large work force and design an appropriate supply chain. For the size of the Indian economy, it will have to have bigger firms producing standard products in large volumes as well as small and mid size firms producing large variety in small to mid size batches (the tension between the organized and un-organized sectors will have to be addressed first, though). Then there is the need for emergence of specialist firms that will consolidate orders, book capacities, manage warehouses and logistics of order delivery.

Skills : Three issues must be mentioned here : (a) there is a paucity of technical manpower – there exist barely 30 programmes at graduate engineering (including diploma) levels graduating about 1000 students – this is insufficient for bringing about technological change in the sector; (b) Indian firms invest very little in training its existing workforce and the skills are limited to existing proceses (Chandra 1998); (c) there is an acute shortage of trained operators and supervisors in India. It is expected that Indian firms will have to invest close to Rs. 1400 bn by year 2010 to increase its global trade to $ 50 bn. This kind of investment would require, by our calculations, about 70,000 supervisors and 1.05mn operators in the textile sector and at least 112,000 supervisors and 2.8mn operators in the apparel sector (assuming a 80:20 ratio of investment between textiles and apparel). The real bottleneck to growth is going to be availability of skilled manpower.

Cycle Time : Cycle time is the key to competitiveness of a firm as it affects both price and delivery schedule. Cycle time reduction is strongly correlated with high first pass yield, high throughput times, low variability in process times, low WIP and consequently cost. Indian firms have to dramatically reduce cycle times across the entire supply chain which are currently quite high (Chandra, 2004). Customs must provide a turnaround time of ½ day for an order before Indian firms can they expect to become part of larger global supply chains. Indian firms need a strong deployment of industrial engineering with particular emphasis on cellular manufacturing, JIT and statistical process control to reduce lead times on shop floors. Penetration of IT for improving productivity is particularly low in this sector.

Innovation & Technology: A review of the products imported from China to USA during January–April 2005 reveals that the top three products in terms of percentage increase in imports were Tire Cords & Tire Fabrics (843.4% increase over the previous year), Non-woven fabrics (284.1% increase) and Textile/Fabric Finishing Mill Products (197.2% increase) (FICCI, 2005). None of these items, however, figure in the list of imports from India that have gained in these early days of post-MFA. Entry into newer application domains of industrial textiles, nano-textiles, home furnishings etc. becomes imperative if we are to grow beyond 5–6% of global market share as these are areas that are projected to grow significantly. Synthetic textiles comprise about 50 per cent of the global textile market. Indian synthetic industry, however, is not well entrenched. The Technology Upgradation Fund of the government is being used to stimulate investment in new processes. However, there is little evidence that this deployment in technology has accompanied changes in the managerial regimes – a necessary condition for increasing productivity and order winning ability.

Domestic Market : The Indian domestic market for all textile and apparel products is estimated at $26 bn and growing. While the market is very competitive at the low end of the value chain, the mid or higher ranges are over priced (i.e., ‘dollar pricing’). Firms are not taking advantage of the large domestic market in generating economies of scale to deliver cost advantage in export markets. The Free Trade Agreement with Singapore and Thailand will allow overseas producers to meet the aspirations of domestic buyers with quality and prices that are competitive in the domestic market. Ignoring the domestic market, in the long run, will peril the export markets for domestic producers. In addition, high retail property prices and high channel margins in India will restrict growth of this market. Firms need to make their supply chain leaner in order to overcome these disadvantages.

Institutional Support : Textile policy has come long ways in reducing impediments for the industry – sometimes driven by global competition and, at other times, by international trade regulations. However, few areas of policy weakness stand out – labour reforms (which is hindering movement towards higher scale of operations by Indian firms), power availability and its quality, customs clearance and shipment operations from ports, credit for large scale investments that are needed for upgradation of technology, and development of manpower for the industry. These are problems facing several sectors of industry in India and not by this sector alone.

In conclusion, competitive strategies are developed by sector level firms and its their individual and collective initiatives that secure higher market share in global trade. While one has to be ever vigilant of non-tariff barriers in the post MFA world, the new market will be won on the basis of capabilities across the supply chain. Policy will need to facilitate this building of capabilities at the firm level and the flexible strategies that firms will need to devise periodically.



Reference :
Chandra, P., “Competitiveness of Indian Textiles & Garment Industry: Some Perspectives,” a presentation, Indian Institute of Management, Ahmedabad, December 2004.

Chandra, P., “Technology, Practices, and Competitiveness: The Primary Textiles Industry in Canada, China, and India,” ed. P. Chandra, Himalaya Publishing House, Mumbai, 1998.

FICCI, “Trends Analysis of India & China’s Textiles and Apparel Exports to USA Post MFA, FICCI, New Delhi, July 2005.

Texmin, Official website of Ministry of Textiles, Government of Indian, http://texmin.nic.in, 2005.

OTC, “Compendium of Textile Statistics,” Office of Textile Commissioner, Minsitry of Textiles, Government of India, Mumbai, 2004.

New Direct Tax Code

The New Direct Tax Code is proposed to be implemented from the year 2011. For its smooth implementation, changes in the present system have to be made on an on going basis. The forth coming budget may thus be expected to bring about some of the changes for a smoother transition. This article will focus on the impact of the forthcoming budget and the New Direct Tax code with respect to individuals only.

Personal Income Tax Rates

The New Direct Tax Code talks of substantial increase in the tax slabs for an individual tax assessee. A part of this may be implemented in forthcoming budget. The Tax Code Bill 2009 talks of increasing the 10% slab to Rs 10 lakhs, 20% slab between Rs 10 lakhs and Rs 25 lakhs and 30% above Rs 25 lakhs.

The difference between the current slabs and the New Direct Tax Code is very high. The gap may be bridged at least to the mid way or even slightly higher in this budget.

Perks to be Part of Salary This will negate the increase in the tax slabs to some extent. The impact will be felt by all salaried persons as currently items like Leave Travel Allowance, House Rent Allowance and Medical Reimbursement can be tax free (or less taxed) if supporting expenses documents are provided. This budget may not make any sweeping changes in this area, as the New Direct Tax Code proposed taxable slabs may not be implemented in full.

Reduction in Wealth Tax

Currently Wealth tax is at the rate of 1%. This is proposed to be reduced to 0.25% in the New Tax Code. This may be implemented immediately in the budget. The need of the hour is to increase the number of people who pay wealth tax. The current compliance is very less.

To better the compliance the slab for the wealth tax has been proposed to be increased to Rs.50 crores. This is a huge jump from the current Rs.30 lakhs.

80C Limit Increase

It is proposed in the New Direct Tax Code to increase the 80C limit to Rs 3 lakhs from the current Rs 1 lakh. There may be a marginal increase in this limit in the current budget. The increase in limit is proposed to be applicable to individuals and HUFs (Hindu Unified Families).

EET (Exempt - Exempt - Tax)

The New Direct Tax Code talks of talks of going for EET for most of the favoured investment and savings avenues of Indians today. Life insurance, provident funds and superannuation are the schemes that will be affected. The New Pension Scheme had at the time of launch itself been under the EET regime. The budget 2010 may include some of the others also in the EET scheme of taxation.

The benefit to investors however is given by the making the shifting of investment from one eligible scheme to another eligible scheme not taxable.

Change in Rate of Capital Gains

The New Direct Tax Code proposes to remove the concept of a separate Capital Gains Tax rate and tax capital gains at the applicable income rate itself. This concept may be implemented during this budget itself, incase the tax slabs are sufficiently raised.

Rent Deduction Reduction

In case of rental income 30% was the deduction allowed for maintenance of the property. The New Direct Tax code plans to reduce this to 20%.

Any service tax paid for receiving services related to the house property is deductible. This is a feature which is currently not available on any income for individuals.

The current budget may implement the rent deduction reduction immediately. This will affect those who depend on rental income as their primary source of income. However the limit hike in the wealth tax and the service tax benefit will offset the increase in the rental income in a big way.

Fiscal Deficit and Revenue Deficit

What is fiscal deficit?
The difference between total revenue and total expenditure of the government is termed as fiscal deficit. It is an indication of the total borrowings needed by the government. While calculating the total revenue, borrowings are not included. Generally fiscal deficit takes place due to either revenue deficit or a major hike in capital expenditure. Capital expenditure is incurred to create long-term assets such as factories, buildings and other development. A deficit is usually financed through borrowing from either the central bank of the country or raising money from capital markets by issuing different instruments like treasury bills and bonds.

What is the difference between fiscal deficit and primary deficit?
Primary deficit is one of the parts of fiscal deficit. While fiscal deficit is the difference between total revenue and expenditure, primary deficit can be arrived by deducting interest payment from fiscal deficit. Interest payment is the payment that a government makes on its borrowings to the creditors.

What is revenue deficit?
A mismatch in the expected revenue and expenditure can result in revenue deficit. Revenue deficit arises when the government’s actual net receipts is lower than the projected receipts. On the contrary, if the actual receipts are higher than expected one, it is termed as revenue surplus. A revenue deficit does not mean actual loss of revenue. Let’s take a hypothetical example, if a country expects a revenue receipt of Rs 100 and expenditure worth Rs 75, it can result in net revenue of Rs 25. But the actual revenue of Rs 90 is realised and expenditure is Rs 70. This translates into net revenue of Rs 20, which is Rs 5 lesser than the budgeted net revenue and called as revenue deficit.

Start preparing for oil at $200 a barrel

The Kirit Parikh Committee is the third such committee to suggest decontrolling petroleum product prices. Probably politicians will again refuse to World's top oil exporting countries do so, and instead decree a modest increase in petrol and diesel prices.

Yet the key issue is not whether petrol and diesel prices should reflect today’s oil price of $75/barrel. It is that booming Asia will in a decade push oil to $200/barrel and maybe $300/barrel. India must prepare for a world of scarce, expensive oil instead of pretending that astronomical subsidies can ensure price stability.

Today, the “under-recoveries”, implicit subsidy, of oil companies is Rs 60,000 crore. The immediate price increases suggested by the Committee may cut this to Rs 30,000 crore. But if oil goes up to $200/barrel, the subsidy will rise astronomically up to Rs 500,000 crore, eroding funds for all other anti-poverty and development initiatives.

In the 1990s, oil cost $16-17/barrel. When it doubled to $35 by 2004, politicians refused to believe it was permanent, and decreed piecemeal price increases instead of price decontrol. When oil doubled again to $70/barrel by 2006, they cut excise and import duties and provided huge subsidies rather than raise prices proportionally. And when oil shot up to $147/barrel in mid-2008, they just closed their eyes and crossed their thumbs.

Luckily for them, the global financial crisis and Great Recession then sent oil crashing down to $40/barrel, saving them from facing up immediately to a future of scarce oil. But the global economy is now recovering, so that challenge must be faced.

The global recovery looks weak in Europe and North America, but is gathering steam in Asia. China and India look like powering ahead at 12% and 9% respectively in 2010-11. Other Asian countries are also buoyant. These developing countries are at a very energy-intensive stage of development.

Booming Asia is sucking in commodity imports from Africa and Latin America, fuelling booms there too. Slackness in rich countries has kept a lid on commodity prices, but the long-term trend is unambiguously upward.

China has already overtaken the US as the world biggest consumer of cars and emitter of carbon. India is following in China’s footsteps, one decade removed. So, even if oil consumption is muted in the West, even if rich countries drastically reduce carbon emissions (which is doubtful), oil consumption will rise stridently in developing countries.

The world’s old oilfields are in steep decline, and large new oil discoveries offshore in Brazil, Mexico and Africa are in deep waters that will take time to exploit.

Indian politicians say it is politically impossible to decontrol oil prices. They fear that freeing oil prices will stoke inflation, because of the impact on transport costs. But in countries with free oil pricing, like the US, inflation excluding food and energy has been less than 1% although oil prices have doubled in the last 12 months.

It is simply untrue that price decontrol leads to inflation. On the contrary it leads to efficiency, conservation and a switch to alternatives. It will also reduce the fiscal deficit, and that will tame interest rates and hence prices.

When I became a journalist in 1965, oil was decontrolled but steel was controlled on the ground that it was politically impossible to free a commodity so vital to the economy. But steel was decontrolled in the 1980s and proved no problem at all.

Why so? Because voters understand that commercial producers need to sell at market prices, but know that governments can subsidise goods indefinitely. As long as oil bears a political price, voters will resist any price increase. But if oil is decontrolled, voters will soon accept the realities of the market, as it already has for steel.

In 1974, when OPEC first flexed its muscle, the government doubled the price of petrol overnight. It was a big blow of course, but the economy adjusted to the reality of expensive energy. India adjusted again in the second oil shock of 1980.

We now face another huge energy crunch, and need to adjust to that reality too. After decontrol, we can replace the kerosene subsidy with solar and LED lanterns for the poor. Farmers should switch from diesel pumps to electric ones. Cooking gas cylinders can be replaced by piped gas. Buses can switch to compressed natural gas. The poorest can get cash transfers through smart cards to reduce their fuel bills.

We must stop massive subsidies for a non-renewable and polluting resource. Instead, we must prepare for the coming reality of oil at $200/barrel.

--- Courtesy Swaminomics

The Integrated Goods and Services Tax (GST)

During the presentation of the Union Budget 2007-08, erstwhile Finance Minister P. Chidambaram indicated that an integrated Goods and Services Tax (GST) would be implemented by April 1, 2010. Since then, the Finance Ministry and the Government of India have taken significant steps to keep to their commitment. However, come 2010 it seems unlikely that this could be effected by the proposed date. Not just that, but there also appears to be uncertainty as to when this GST legislation will precisely be implemented. However, it is certain that this will eventually be implemented, timing being the only area of indefiniteness. Given the importance of this piece of tax legislation, we will go over the key aspects relating to GST, how it is intended to work, benefits and challenges in its implementation and its implications on Indian economy and business.

Direct and Indirect Taxation
Taxes levied by the government can broadly be classified into two heads: Direct Taxes and Indirect Taxes. A direct tax is one which is collected directly by the government from entities, individual or corporate, on whom such taxes are imposed. For example, individuals are subjected to personal income tax, based on their total earnings for the year, and are taxed at a particular rate based on the tax-band they come under. Similarly, corporates are also taxed at the ruling corporate tax rate, which is around 30 percent in India, on the income they have earned for a particular year. Thus, a direct tax is one where the tax burden cannot be shifted by the taxpayer to someone else. However, an indirect tax, such as excise duty, value added tax (VAT), or goods and services tax (GST), is one which is collected and paid by the manufacturer or distributor of a product, but eventually the burden of tax is borne by some one else, say, the consumer. For example, let us suppose a motor car manufacturer first pays excise duty on the manufactured car as a result of which the cost of the car increases when it reaches the show room. When a consumer purchases the car from the showroom, he eventually pays for the duty component as well, which is included as part of the selling price of the car. Although the manufacturer initially paid the duty to the government, it is the consumer who bears the indirect tax burden.
Taxes are levied by both the central and state governments; which government bears what tax is an issue of constitutional definition and is clearly earmarked. At present, around 30 percent of central tax revenues are further transferred to states, with a greater share accruing to poorer states. An important anomaly also exists in that taxes, both from the perspective of incidence and in terms of rates, manufacturing and services sectors are treated differentially. There are also a host of taxes prevailing in the country; both at the national level and at the state level like octroi, central sales tax, state level sales tax, entry tax, service tax, stamp duty, turnover tax, tax on consumption of electricity, taxes on transportation of goods, etc.
Over the last few years, the government of India has been steadily rationalizing the country's taxation regime to bring them in line with international best practices; direct taxation has received its share of significant rationalization. Indirect taxes have also been rationalized over the last decade and schemes like value added tax (VAT) were introduced. However, implementation of an integrated goods and services tax (GST) is expected to position India's indirect taxation regime in line with global best practices.

History and Current Form of Indirect Taxation
Earlier, till the 1990s there was a burden of 'multiple-point' taxation with the central excise duty and the state sales tax systems. Manufactured products were subject to a series of tax burdens - first before the product was produced, inputs were taxed. Then, the final product was taxed again, which meant tax was calculated even on the earlier taxed component. This resulted in duplicate taxation, referred to as "a tax on tax," creating a cascading effect. Eventually tax payers were subjected to a very high level of tax burden. Such duplication resulted in lower tax collections as there was a reluctance to pay such unreasonable taxes; tax payers chose to evade taxes rather than promptly pay the same.

The Indian government realized this anomaly and introduced the Value Added Tax (VAT) at the central level, originally as MODVAT (Modified VAT) replacing the Central Excise Duty in 1986. In a phased manner, it completed the implementation of CENVAT (Central VAT) by 2002-03. By 2005, services tax was also added to CENVAT and this started emerging as a unified goods and services tax, applied by the Central Government, in the country. Introduction of CENVAT, to a certain extent, addressed the 'tax on tax' issue through a mechanism of providing a set-off on tax earlier paid. Tax compliance and collections also improved due to the fact that set-offs could be claimed only if sufficient proof existed that taxes had actually been paid on inputs.
Introduction of VAT at state levels became more of a challenge as various states were empowered through the Constitution for levying and collecting sales tax, and such tax rates varied vastly between states for the same commodities. The process commenced during 1995. After serious contemplation over the possibility of having a uniform tax rate across states for commodities and at the same time, preserving and accommodating certain state level distinctive differentials, a small flexibility in the rate structure was also agreed upon as a critical need. On this basis, state level VAT was introduced eventually by 2005 with deviations from the agreed VAT rates being very minimal across the states. This resulted in significant growth of tax revenue since the introduction of VAT.
Hence the introduction of VAT, to a large extent, helped harmonization of tax rates across the states and minimized the problem of 'tax on tax' to a certain extent. Then, what is the requirement for replacing VAT by GST? What further benefits will GST bring in?

Benefits of Introducing GST
Tax in the nature of an integrated goods and services tax, attracting the same rate of tax, has already been introduced in many countries the world over. This uniform rate is a fundamental premise of the GST concept. As compared to VAT, GST will result in further benefits consolidating a host of indirect taxes across the country. Benefits of the proposed GST framework will arise out of the following:

•GST is intended to be an integrated indirect tax framework covering manufacture, sale and consumption of goods, as well as services at the national level.
•CENVAT, in its current form, does not include several taxes which are levied separately such as additional customs duty, surcharges, etc. Further consolidation is thus required and hence the requirement for GST. Moreover, with the state level VAT, there are still many indirect tax components that are yet to be converged into VAT. This includes luxury tax, entertainment tax, etc. GST is expected to achieve this.
•More importantly, the CENVAT element is further taxed under the state VAT, duplicating the tax burden; in that sense, the 'tax on tax' component on the CENVAT element is still not eliminated in totality. In the proposed GST, such cascading effects of CENVAT as well as service tax are removed with set-off, and a continuous chain of set-off from the original producer's/service provider's point up to the retailer's level is established; this reduces the burden of all cascading effects. This is a critical improvisation in GST, which VAT lacked.
•As an outcome of removing the cascading effect on CENVAT, the burden of tax under GST on goods is expected to generally fall, being a positive driver for manufacturers, consumers and the industry, at large.
•There is also expected to be revenue increases for both the centre and the states, primarily through widening of tax base and possibility of a significant improvement in tax-compliance.
How does the proposed GST system work?
The tax burden on GST is applied across the entire 'value chain'; incidence of tax on entities is proportional to the value addition at each point. Let us take the example of a detergent manufacturer (see figure). Assuming a packet of this detergent is sold at Rs.380 in the retail stores, the GST on this packet of detergent is uniformly applied across the detergent manufacturing 'value chain'. By 'value chain' we mean, the process of raw materials being supplied to the manufacturer (by the raw material supplier), finished detergents supplied in a 'bulk' form to the whole sellers (by the manufacturers) and the packaged detergents being supplied to the retailers (by the whole sellers), and finally, the consumers purchasing the final packaged detergent at the retail stores.


The example illustrated in the figure shows that at the first stage the raw material supplier, who supplies raw materials worth Rs.200 to the manufacturer, has already paid GST of Rs.20. The manufacturer processes the raw materials and adds total value to the extent of Rs.50 (process value addition Rs.40 and profit margin Rs.10) and sells the bulk detergent to the whole seller at Rs.250. The manufacturer will then pay a GST on output of Rs.250, which will amount to Rs.25 (GST rate of 10 percent on Rs.250), but will get to set off a GST credit of Rs.20 (10 percent on Rs.200) thus paying a net GST of Rs.5. Similarly, as illustrated in the figure, the whole seller and the retailer will each pay a net GST of Rs.10 and Rs.3 respectively. In total, the raw material supplier, manufacturer, whole seller and the retailer, all put together, pay Rs.38 as GST, on the value additions along the entire value chain, from supplier to retailer, after setting off taxes paid at earlier stages. Hence, GST is a tax which has an incidence of tax burden only on the component of 'value additions' at each stage, and a supplier at each stage is permitted to set-off the earlier payment, through a tax credit mechanism.

What are the challenges in introducing GST?

•Given the current state level VAT variations, there are challenges in securing unanimous consent on the rate of the integrated GST; hence this is yet to be finalized. It is not only a matter of rate, but the states have to let go the powers of levying many forms of taxes, which will henceforth be converged into the proposed GST. Such loss of powers/ state revenues have turned out to be a major hurdle for securing unanimous approval from the state governments in implementing GST.
•The GST would have two components; a central component and a state component. The rates applicable for the central and the state components are under consideration by the expert committee. However, all other aspects are expected to remain uniform, as far as possible.
•As regards the proposed rate of GST, the task force of the 13th Finance Commission (TFC) has prescribed a GST rate of 12 percent; the states are refusing to accept this. Many other bodies that are working, in parallel, to come up with a rate have prescribed numbers that are different; one such rate is 11 percent for the state component, and other agencies establish an incremental rate of around 6 percent to 9 percent to cover the central GST component alone, taking the consolidated integrated GAST rate much above the 12 percent recommended by the TFC.
•There is likely to be significant loss of revenue to the state and the central governments on account of GST implementation; an equitable formula that will share this loss also needs to be mutually agreed upon.

Given these complications the implementation date needs to be finalized; it is unlikely to be 01 April 2010, as earlier committed to by the finance ministry. Stiff resistance has also been encountered from the opposition; the Bharatiya Janata Party (BJP) is opposing the implementation of GST on the grounds that sufficient discussions need to take place with all the stakeholders (central government, state governments, industry federations and academia) in order to ensure that interests of all are protected.
Overall, it is going to be a really tall task to design and implement an integrated goods and services tax framework that will be in line with international best practices, and at the same time, will take care of the unique complexities of the Indian central and state legislations. We have moved forward significantly in this initiative, but, when we would be in a position to actually implement this in entirety still remains a key question!

Budget 2010: What to expect

Expect higher tax rates and massive disinvestment in the coming Budget to help reduce the huge fiscal deficit from 6.8% of GDP this year to 3% over the next five years. Finance minister Pranab Mukherjee will package his higher indirect tax rates as an exit from the fiscal stimulus of 2008-09 and a return to the path of fiscal responsibility.

Such sound finance will not, however, be politically popular, and critics will complain that it is inflationary. Hence, the tax hikes are likely to be introduced in small instalments — increases of 1% or 2% at a time — over a long period.

The finance minister is entering that part of the political cycle that calls for fiscal toughness rather than populism. When a government serves a full five-year term, its fifth and last budget is typically a giveaway budget, attempting to buy votes in the coming election. The first budget of a new government is also typically populist, to thank voters. But the second and third budgets have belt-tightening measures to make up for the earlier populism. And we are about to witness the second budget of the UPA-II government.

No changes in direct tax rates are expected till the Direct Tax Code is fully discussed, and that will take another year. But, given the high inflation of the past two years, the income tax exemption limit could be raised a bit to provide relief to middle-class families.

The Goods and Services Tax (GST), to replace the existing spectrum of indirect taxes levied by the Centre and states, cannot be implemented by April this year, as earlier hoped by the finance minister. The target date may be put off by a full year. State finance ministers are yet to determine what GST rates they will levy.

Optimists hope for GST rates of 8% each for the Centre and states. In that case, the Central excise duty can stay at its current 8% level, making any rollback unnecessary. However, the FM shows no sign of being so optimistic.

The Budget will assume fast GDP growth of up to 9% for 2010-11, with a correspondingly high boost in tax collections. Tax revenues could rise by over Rs 1,00,000 crore. At the same time, outlays on the government’s flagship programmes such as Bharat Nirman and NREGA (National Rural Employment Guarantee Act) may be hiked only modestly, after steep increases last year.

The combination of these two factors, plus massive disinvestments of public sector shares, could reduce the fiscal deficit substantially.

The Budget may, however, have to provide a much higher sum for the food subsidy with the expansion of cheap food supplies under the proposed Food Security Act. Many state governments are already providing voters with cheap rice or wheat, and it is unclear how the burden of the Food Security Act will be shared by the Centre and states. The same is true for burden-sharing of additional costs entailed by the Right to Education.

Inflation is a political hot potato, and food prices have risen exceptionally fast. However, this cannot easily be countered as long as Indian food prices remain below global rates. Hopefully, a bumper monsoon, along with a good global crop, will bring down prices later in the year. However, metal and manufactured prices may continue to rise, as the world recovers from the recession. The base effect will tend to produce lower inflation figures as the year progresses. The FM may target an inflation rate of just 4% by the end of 2010-11.

Indian stock markets are likely to be buoyant, and this in turn should help the government raise unprecedentedly high sums by selling minority stakes in public sector corporations. Investment banker Uday Kotak expects inflows into the market of $15 billion (almost Rs 70,000 crore) each from foreign institutional investors and Indian insurance companies, plus another $5 billion (Rs 23,000 crore) from retail investors. This inflow can support disinvestments of well over Rs 50,000 crore, if the government gets its act together.

The Central sales tax is currently at 2%. Possibly, the finance minister will cut it to 1% in the Budget, and say it would be abolished when GST is introduced in April 2011.

There is no sign of the political will to abandon price controls — which translate into massive subsidies — for fertilisers, petrol, diesel and cooking gas. The Kirit Parikh Committee is looking into fuel pricing. But the recommendations of many earlier committees on the topic have been ignored, and the Parikh committee may not fare much better.

INDIA : 2009

It has been a strange year.

On the one hand, some stability returned to politics with the Congress party managing a fairly comfortable majority in the general elections. After the horrors of the 2008 Mumbai attacks, India actually went through 2009 without a terror strike. The economy appeared to have weathered the worldwide recession. Indian science and cricket scaled new heights.

On the other hand, the year held out ominous portents - Maoist rebels are threatening to go to war with the Indian state; food inflation is threatening to negate the gains of improved growth; and, egged on by the movement for Telangana, homegrown separatism is rearing its head again. There is growing suspicion that the country's natural resources are being bartered away cheaply. All this - and more - could turn 2010 into an extremely restive year.

Here's my pick of the defining events of 2009:

THE END OF HARDLINE HINDU NATIONALISM?

The Hindu nationalist Bharatiya Janata Party (BJP) proudly calls itself the "party with a difference". By the end of the year, India's main opposition was a party with many differences - within. When it was trounced by Congress at the general election, its fortunes hit rock bottom. Since then nothing has gone right: its leaders have bickered bitterly and openly; and one of them was banished , ostensibly for writing a book on Mohammed Ali Jinnah.

Party president and paterfamilias LK Advani looked jaded, and as the year wound down he handed over the baton as leader of the parliamentary party to a younger colleague. He also handed over the party presidency.

Whatever the changes, the BJP appeared lost. Critics say that ideologically, the party is past its sell-by date - still making noises about building temples, refusing to come to terms with the fact that India has grown up and strident Hindu nationalism has lost its vote-catching lustre.

Others say the BJP's only hope appears to lie in reinventing itself as a modern day, right-of-centre, Indian Conservative party. But observers find the leadership uninspiring. They say the party's best chance of revival is a dramatic slide in Congress fortunes.

RAHUL GANDHI'S SECOND COMING

He began as a gawky politician with a disarming smile that won him more female admirers than serious followers. But Rahul Gandhi, the latest scion of the Nehru-Gandhi dynasty, showed some serious political mettle this year.

Travelling through the northern Indian heartland - especially in Uttar Pradesh - Mr Gandhi quietly worked on rejuvenating his party's grassroots network and attracting younger talent, his supporters say. His party staged a comeback of sorts in Uttar Pradesh - a return from virtual politician oblivion after two decades.

Mr Gandhi has his work cut out for him - revitalising Congress and making it less of a family enterprise. Apparently he believes the party should go it alone, bucking the current narrative of coalition politics. Most analysts feel he may be wrong on this, and that coalition politics is here to stay in a complex country like India. 2010 will prove whether Mr Gandhi can help maintain his party's momentum - and even perhaps take up the cabinet position which he has repeatedly been offered.


BEATING THE RECESSION

India, by and large, escaped the ravages of the global recession. Its conservative banking system and lower exposure to the world economy possibly saved the day. But to be fair, thousands lost jobs and companies stopped hiring and slashed costs. Spending plummeted and the property bubble burst.

Now Prime Minister Manmohan Singh is holding out the hope of slightly higher growth - 7% plus - in this fiscal year. Companies have begun hiring again and spending is up. However, many economists believe that India's growth is not pulling enough people out of abject poverty, while deepening the divide between the haves and the have-nots. Even if India hits double-digit growth like China, there will be no reason to party when a third of its people live in dire poverty and milions of children go underfed. Why does an increasingly rich country treat its poor so shabbily?


SMALL IS BEAUTIFUL?


When Tata Motors unveiled the world's cheapest car, everyone sat up and took notice. The buzz around the rear-engined, four-passenger, 624cc Nano, whose basic model costs $2155, had been immense - one magazine wrote that it embodied a "contrarian philosophy of smaller, lighter, cheaper" transport.

The Nano is a nifty little car all right. User reviews have been mixed: most say it's great value for money, but caution that it may not be the safest car on the road. Others believe it's safer than the wobbly three-wheeled auto-rickshaw. Next year will tell whether Nano is a path-breaker or a risky gimmick. Customers seem to know what they want. The Nano's order books - more than 200,000 orders and counting - are full. Newsweek magazine, meanwhile, worries about potential "global gridlock" caused by Nanos and their ilk.


INDIA'S OSCAR MOMENT

In the days before the Big Hype, Bhanu Athaiya,a Bollywood costume designer, picked up India's first Oscar for costume design for her work in Gandhi. That was in 1982. Nine years later, the celebrated auteur Satyajit Ray was honoured with a Lifetime Achievement Oscar, joining such greats as Charlie Chaplin, Jean Renoir and Akira Kurosawa.

But India went truly Oscar-crazy only in 2009 when music director AR Rahman and sound recordist Resul Pookutty picked up a golden statuette each for their work in Slumdog Millionaire.

The redoubtable Rahman - dubbed the Mozart of Madras, where he lives and works - is India's finest music composer and a brilliant crossover musician. Pookutty's triumph showed how Indian movie technicians are today on a par with the best of the world - even the worst Bollywood tripe these days has a sheen and technical verve which is impressive.


AN ACCOLADE FOR INDIAN CRICKET

India defeated Sri Lanka at home to become Test cricket's reigning champions. The team's awesome batting line-up is difficult to match. The bowling has improved vastly. The fielding can be infuriatingly inconsistent though.

In a country where cricketers are worshipped like gods and are the highest paid in the world, India cannot afford to slip up. There seems to be talent aplenty: hungry, young players coming up from smaller towns and villages are flocking to the game. The only threat to India's cricketing fortunes, say critics, comes from the country's notoriously fractious and inept cricket officialdom and the riches of the shorter Twenty20 game. Will mammon crush nationalism in what a sociologist called an "Indian game accidentally discovered by the British"? Watch this space.


OVER THE MOON

When India pulled the plug on its inaugural Moon mission in August, 10 months after it was launched, some questioned whether it had "delivered the good science" it had promised. Two months later, Chandrayaan, as the mission was called, was hailed as a "grand success" after helping find evidence of water on the Moon. The mission cost less than $100m and fetched an enormous amount of goodwill for the country's bright space scientists. One newspaper crowed, One Big Step for India, A Giant Leap for Mankind. This time, few minded the hyperbole.

AN INDIAN ENRON

It had all the makings of an Indian Enron - one of the world's largest software companies, Satyam, found itself embroiled in India's biggest-ever corporate fraud. Its founder admitted exaggerating its cash reserves by nearly $1bn. That was in January. Thousands of jobs, millions of dollars worth of shareholders wealth and India's corporate reputation was at stake. The government waded in and appointed directors to run the beleaguered company.

Four months later, the fraud-hit firm found a suitor - a local company called Tech Mahindra - which picked up a stake of more than 30% in the company. And in June, the company, amazingly, announced a profit of more than $10m.

Rebuilding Satyam is a work in progress. But the fact that the company managed to stay afloat and fight back despite its founder and eight others facing charges of criminal conspiracy, cheating and forgery for stealing millions of dollars from the company is a testament to the spirit of its workers and a steely resolve by the government-appointed directors who refused to let the company crash.

THE TOP TEN

Top 10 scares
Y2K: A computer bug suggesting a theory that all computers would crash at the end of the 20th century.

Anthrax scare: In 2001, letters with anthrax spores were mailed to several news media offices in the US.

Global Warming: An increase in the Earth's temperature is the most debated topic in the last 30 years.

The Fear of 1984: Published in 1949, this dystopian novel concluded that life would intimate fiction.

Facebook and the CIA: A theory links the networking site to CIA and the US defence department.

Cellphones and Cancer: A Californian physician sued his phone company for giving him a tumour in 2002.

Trans Fat: Started in the US in 2006, banning trans fat became a worldwide movement eventually.

Doomsday 2012: According to the Mayan calendar, December 2012 is said to be the end of the world.

Recession: In 2008, stock markets and financial institutions all around the world collapsed.

Swine Flu: Hundreds of cases were reported in Mexico in 2009. Nations reviewed their health care policies.


Top 10 frauds

Harshad Mehta Scam: Arise was engineered in the stock exchanges in the Rs 600-crore scam in 1992.

Ramar Pillai: Claimed to have invented herbal fuel, which was actually kerosene laced water in 1996.

Fodder Scam: Exposed the nexus between bureaucrats, businessmen and politicians in Bihar in 1996.

Chandraswami: The self-styled godman is accused of cheating Lakhubhai Pathak of $100,000 in 1996.

Abdul Karim Telgi Scam: A fake stamp racket involving Rs 23,000 crore was busted in 1999.

Petrol Pump Scam: Kickbacks meant 297 outlets allotted by the NDA were cancelled by the apex court in 2002.

Kavya Vishwanathan: Was branded a literary fraud for her book How Opal Mehta Got Kissed, Got Wild, and Got a Life.

Cash for Questions: A 2005 sting operation showed ministers accepting cash to ask questions in Parliament.

Satyam Fraud: Pegged at Rs 14,000 crore, the fraud shook up corporate India last year.

Madhu Koda Scam: The former Jharkhand CM's money laundering ventures worth Rs 4,000 crore are being probed.


Top 10 global achievements

World Cup: The victory in 1983 brought attention to India and the sport among non-cricket playing nations.

Hotmail: Sabeer Bhatia created history when he created a web-based email system in 1996.

Nuclear Tests: India made it to the top news across the world for its nuclear tests in 1998.

Mother Teresa: She came to India at the age of 18 and founded the Missionaries of Charity.

Amartya Sen was the recipient of the Nobel Prize for his contribution to welfare economics in 1998.

M.F.Husain: He consistently raised the price of art works in India and was a big draw globally.

Tata-Corus Deal: The takeover of the Anglo-Dutch steelmaker in 2006 made Tata the 5th largest steel group.

Abhinav Bindra: The sharp shooter from Mohali put India on the global map with a gold at the 2008 Olympics.

Chandrayaan: India's first unmanned lunar probe brought its space programme global accolades in 2008.

Slumdog Millionaire: With three Oscars to two bonafide Indian citizens, it captured the attention of the world.


Top 10 conspiracy theories

Sanjay Gandhi's Death (1980): The Congress and Opposition suspected the other was responsible.

Pavagada Wolves (1983): Congress and Janata Party blamed each other as wolves carried off children.

Air India Bombing (1985): Some Khalistan separatists suspected Indian intelligence had engineered it.

Parveen Babi (1992): She believed Amitabh Bachchan ran the underworld. Was suffering from schizophrenia.

Plague from NATO Lab (1994): "Imperialistic forces" were widely suspected to be behind the Surat plague.

KFC(1996): The Karnataka Raita Sangha believed that KFC used genetically modified chicken with two heads.

T.A. Majeed (1997): Majeed feared that the allopathic lobby was out to kill him for developing a "cure" for AIDS.

Iodised Salt (2004): The Swadeshi Jagran Manch alleged it was a tool of MNCs to expose Indians to diseases.

Colgate (2004): Some RSS members claimed that the company channelled its profits to Christian missionaries.

Veerappan (2004): There is a rumour in the villages near Sathyamangalam Hills, Tamil Nadu, that he is still alive.


Top 10 disasters

Tangshan quake: China's mining city was devastated in 1976 with 6.55 lakh people dead.

African drought: Twenty nations hit from 1981-84; 20,000 people starved to death each month.

Armenian Earthquake: Spitak was destroyed, all its residents died. Over 1 lakh died in Leninakan.

Bangladesh Floods: The 1991 floods disrupted the lives of millions, killing 1.4 lakh people.

Gujarat Earthquake: Killed 20,000 people, injured 1.67 lakh in 2001 and destroyed nearly 4 lakh homes.

Indian Ocean Tsunami: Hit Indonesia, Sri Lanka, India and Thailand in 2004, killing 2.75 lakh people.

Kashmir Earthquake: Centred in PoK and NWFP. Killed 80,000, including 1,400 in J&K in 2005.

Hurricane Katrina: In 2005, 1,836 people were killed in the US, mostly in New Orleans, which was the worst-hit.

Sichuan Earthquake: Nearly 70,000 died and 3,74,176 were hurt in 2008 in China. Still missing: 18,222 people.

Sumatra Earthquake: Hit southern Indonesia in 2009; 1,115 dead, 1,214 hurt, lakhs of houses damaged.


Top 10 innovations

EVMs: Electronic voting machines changed the way people vote in the world's largest democracy.

Telemedicine: ISRO's rural satellite programme enabled healthcare reach remote Indian villages.

IT: With annual exports of over $50 billion, the outsourcing boom has made India a software powerhouse.

Tata Nano: The game in car manufacturing is changed forever by the world'smost affordable car.

Mobile ECGs: Portable,battery-operated cardiograph machineshave reduced the costof an ECG.

Manual Cow-milking Machines: The low-cost home-made machine is a steal for the 250 million Indian cattle.

Jugaad: The locally improvised rural transport vehicle runs on irrigation pumpsets used by farmers.

Simputers: These simple computers running on open hardware are bridging the digital divide in India.

Low-cost Sanitary Napkins: A Tamil Nadu entrepreneur's innovation rolls out 1,000 pieces, at Rs 2 a piece.

Artificial Weather Stations: They are satellite-linked weather monitoring and data sharing systems.