How many years will it take for income per person to double?

AVERAGE incomes in developing economies are growing more quickly than at any previous time in history according to a recent report by the McKinsey Global Institute. It took more than 150 years from the start of Britain's industrial revolution for GDP per person (measured at purchasing-power parity) to double from $1,300 to $2,600. Around 120 years later, America, with a similar sized population, achieved the same feat in a third of the time. China did it in just twelve. South Korea's GDP per person has grown rapidly from the $2,600 mark around 1980 to stand at almost $32,000 per person now. Looking ahead using the IMF average of growth forecasts for 2011-16, GDP per person in both China and India could double from 2011 levels by the end of this decade. People in the developed economies will have to wait another quarter century to see their incomes double.
source:The Economist

Hazare's movement among top 10 news stories of 2011: Time


New York, Dec 7 (PTI)

Anna Hazare's anti-corruption movement that saw Indians rally in support has been named among the top 10 news stories in the world this year by Time magazine, which listed the Arab Spring and killing of Osama bin Laden as the top attention-grabbing headlines.


Time magazine compiled 54 wide-ranging lists of the top 10 happenings in 2011 in the field of politics, entertainment, business, sports and pop culture.

Among the 'Top 10 World-News Stories' is "Anna Hazare's Hunger Fasts Rock India" with the magazine saying that "in a year with more than its share of protests worldwide, perhaps the most striking act of dissent took place in India, where the country's ruling coalition took flak for a host of corruption cases implicating a number of leading politicians".

Hazare's "fasts — even the threat of them — triggered mass demonstrations of support across India's major cities and heaped pressure on the government to create an independent ombudsman body capable of investigating the nation's political elites — even the Prime Minister — and bringing the corrupt to justice".

It said the mass support 74-year old Hazare commanded, particularly from India's burgeoning middle class, is a "sign of the growing frustrations and aspirations of those in the world's largest democracy".

The top news stories of 2011 were the Arab Spring that spread to a number of countries and the killing of bin Laden in a covert US raid in Abbottabad, besides the famine in the Horn of Africa, fall of longtime Libyan dictator Muammar Gaddafi and Europe's financial crisis.

In a different category, Time magazine said the death of religious leader Sathya Sai Baba was among the top 10 'Religion Stories' of 2011.

Given that the spiritual leader was one of the "most famous gurus" in India, Baba's funeral was attended by hundreds of thousands of people and the "pomp wasn't surprising".

In other lists, Time said the story of Casey Anthony, the Florida mom accused of killing her two-year old daughter was the "most overreported" news of the year followed by the British royal wedding of Prince William with Kate Middleton, guesswork over the presidential candidacy of Donald Trump and Sarah Palin, the Dominique Strauss Kahn sex scandal and the reality TV drama that was Kim Kardashian's wedding.

Time said the self-immolation of Tibetan monks was the most "underreported" story of the year.

"It usually takes a US President tweaking Beijing by meeting with the Dalai Lama, or a celebrity-studded Richard Gere fundraiser, to get Tibet into the news these days. Even then, the attention is fleeting".

As at least eight Tibetan monks, two of them teenagers, torched themselves this year to protest Chinese rule, the publication said "hopefully more attention will be paid" to the issue.

Time named Slumdog Millionaire actor Frieda Pinto-starrer Miral among the worst movies of 2011.

"There was his (Director Julian Schnabel) peculiar casting of Indian actress Frieda Pinto to play the title character, a passionate Palestinian schoolgirl — a choice that undercut his good intentions".

Other lists included the best and the worst tweets, business blunders, political gaffes, scandals and top crime stories of the year.

ISB grads develop bio-absorbable stent 3V Avatar

by K. V. Kurmanath

source:The hindubusinesline  

Business Line The first bioabsorbable endovascular drug-coated stent '3V Avtar' developed by S3V Vascular Technologies. Photo: P.V. Sivakumar

Hyderabad, Dec. 7: 

This is a tale of four technocrats with varied experience — one managed the medical devices firm Relisys, another is chemical scientist, the third one is a spice extractor and the last one spent a decade setting up manufacturing facilities in Japan and elsewhere.

What brought them together is a Post Graduate Programme at Indian School of Business (ISB) in Hyderabad. While doing the course that is confined to experienced managers, they struck on a business idea with a global potential. They began working on a bio-absorbable drug eluting stent (called 3V Avatar) that becomes part of patient’s body in just 18 months.

They set up S3V Vascular Technologies with an initial investment of Rs 20 crore to work on devices that target vascular interventions and drug delivery. With medical devices firms moving to the fourth generation stents that slowly dissolve into arteries, the start-up firm has begun research and development of bio-absorbable stents.

Clinical trails of the stent 3V Avatar will be started. The company expects that the stent would be ready for use in 24 months after completing different phases of trials and permissions. The company has done preliminary work on the stent at two laboratories in Italy and Germany. It is scouting for a location in Andhra Pradesh and Karnataka to locate its base in India.

A stent is a small ball-pen spring-like mesh that is inserted inside an artery through angioplasty to ensure free flow of blood. Some of these stents are coated with drugs to prevent clogging again. But these stents carry certain life-threatening risks along as the body finds it difficult to assimilate the foreign body.

Mr Badari Narayan, who was former Managing Director of Relisys, said the fourth generation stents gave no scope for side-effects. “Our stent will be absorbed by the vessel in 18 months, leaving no scope for stent-induced problems. As it soaked up into the blood vessel, the stent releases a pro-healing drug during the 18-month period and anti-proliferative drugs for the first 90 days,” he said.

“We will raise Rs 120 crore more to set up a research and development and manufacturing facility. Of this, we are raising Rs 30 crore from investors and the remaining from banks. We are evaluating three locations — two in Karnataka and one in Andhra Pradesh — to set up the facility,” he said.

Enterprise: Garments manufacturing

Recession and the garments sector

by Mohan Mani


The global supply chain is such that Indian producers and workers get only a small share of the final price.


In the language of global outsourcing business, the term “Bangalored” conjures up images of glass and chrome office buildings of the IT sector, with well-paid white collar employees representing the aspirations of middle-class urban Indian youth. What it conceals is the under-belly of outsourcing — the manufacture of ready-made garments under conditions of sweated labour.

Across the country, in Bangalore, Tiruppur, Chennai, Delhi and NCR, and Ludhiana among other cities, over 20 lakh workers find employment in the industry, manufacturing garments for the export market. Garments employ significantly larger numbers than the IT sector.

OUTSOURCING IN GARMENTS
What is the nature of this global garments supply chain? The broad structure is simple, following the logic of outsourcing, seeking production centres with low labour cost. Around 50 per cent of global garment trade is fed from low-cost manufacturing centres in Asia, for sale in the OECD countries of USA, EU and Japan. The gains to the consumer in the OECD are enormous from this structuring of the industry.

As a thumb rule, labour costs constitute around 12-15 per cent of total sales value for the Indian garment manufacturer. At the same time, the price the Indian manufacturer gets for his product — say, a pair of jeans — is around 25 per cent of the final price to the consumer in the OECD.

What this actually implies is that the labour cost as a ratio of the final price in garments along the global supply chain is only approximately 3-4 per cent — an extremely low value for a labour-intensive product. The ratios are roughly the same for other Asian garment export manufacturing centres in China, Bangladesh, Sri Lanka, Thailand, Vietnam and other countries.

Wages in the industry are very low, accompanied by high work intensity. Wage in the sector in India is typically governed by the statutory minimum wage. These vary widely, ranging from Rs178 per day for an unskilled worker in the garment sector in the NCR, to Rs 157 per day in Bangalore, to Rs108 for Chennai.

The wages bear no relation to the relative consumer price index (CPI) in the cities, or actual living costs. The minimum wage in Bangalore barely covers half the monthly expenditure of a typical family of a garment worker. In real terms, based on CPI, the current minimum wage of a tailor in the city is approximately the same as the Rs18 per day she earned in 1985.

However, any demands for wage increase or enhanced benefits in the sector is met with protests from manufacturers of economic downturn, and falling returns from the industry.

EXCHANGE RATE FACTOR
The claims of economic downturn and profitability must be examined from different angles. Projections seem to indicate falling global demand for garments.

However, the demand contraction will not be uniform for all categories of garment manufacture. Indications are that the mass consumer segment would be less affected than the high-end and luxury segments. The bulk of Asian manufacturing addresses the mass consumer segment in garments.

The changing demand pattern would also trigger restructuring of the industry. Industry projections indicate that with a stable currency and rising worker aspirations, China would become too expensive for garment manufacturing and the global supply chain would have to seek alternative manufacturing centres. India would be one of the beneficiaries of this.

The competitiveness along the global supply chain is very dependent on exchange rate fluctuations. For example, the Indian rupee strengthened by 10 per cent during 2007-08, as against a stable Chinese Yuan, thus reducing the competitiveness of Indian exports.

From 2008 to 2009, the rupee weakened significantly by 17 per cent, while the Yuan strengthened against the dollar by 6 per cent. This gave the Indian manufacturer a significant price advantage, to partially offset the effect of the recession.

It is another matter that most exporters in 2008, following the currency pattern for the previous year, and expecting the Indian rupee to continue to strengthen against the dollar, hedged their contracts against dollar devaluation, and would therefore not have been able to take full advantage of the weakening rupee. Today, compared with 2009 values, the Indian rupee has furthered weakened by around 10 per cent, while for the same period the Yuan has strengthened by 10 per cent.

The cumulative advantage on exchange terms to the Indian garment exporter from 2007 levels is around 30 per cent, while for the same period the Chinese exporter has lost by around 15 per cent. While currency patterns during the global economic downturn might have benefited Indian manufacturers, how valid are their claims of declining competitiveness and profitability? As the financial results of two of India's largest garment manufacturers, both Bangalore-based, reveal, the jury is still out on this.

IMPACT ON PRODUCERS
In the case of Bombay Rayon Fashions Limited, the company turnover went up continuously, from Rs 927 crore in 2007-08 to Rs 2254 crore in 2010-11. Its profit after tax also increased steadily during that period from Rs 122 crore to Rs 226 crore.

The turnover for Gokaldas Exports, on the other hand, remained steady, from Rs 1056 crore in 2007-08 to Rs 1135 crore in 2010-11, the company's profitability, declined in this period from a net profit of Rs 47 crore in 2007-08, to a net loss of Rs 88 crore in 2010-11.

Clearly, supply-chain models across the industry must be more rigorously analysed to understand why some companies posted losses during the same period that others raked in record profits.

Today, with foreign direct investment in retail under active consideration, the Indian urban markets for branded products in garments seem poised for huge expansion.

The question that remains is whether this expansion in the domestic markets will benefit Indian garment manufacturing, in terms of increased turnover and profits, or would the logic of the supply chain dominate, with the international brands continuing to determine prices and order sizes?

This is a vital matter of government policy, which will in turn determine the extent to which benefits of economic development will accrue to Indian business, and in turn, further trickle down to the very large workforce employed in this sector.

(The author is an independent labour and industry researcher.)

Mass migration in the internet age is changing the way that people do business

Indian, Pakistani and Chinese border disputes

Disputed borders are both a cause and a symptom of tensions between big neighbours in South Asia. When the colonial power, Britain, withdrew from India it left a dangerous legacy of carelessly or arbitrarily drawn borders. Tensions between India and China flare on occasion, especially along India’s far north-eastern border, along the state of Arunachal Pradesh. In recent years Chinese officials have taken to calling part of the same area “South Tibet”, to Indian fury, as that seems to imply a Chinese claim to the territory. A failure to agree the precise border, and then to demarcate it, ensures that future disagreements may flare again.

Pakistan, too, is beset by difficult borders. Afghanistan, to the north, has long been a hostile neighbour. This is largely because Afghanistan refuses to recognise the frontier—known as the Durand line—between the countries, drawn by the British.

Most contentious of all, however, are the borders in Kashmir, where Pakistan, India and China all have competing claims. By the time of independence, in 1947, it was clear that many Indian Muslims were determined to break off from Hindu-majority India. It fell to a British civil servant, who knew nothing of the region, to draw a line of partition between territory that would become Pakistan and India. Pakistan was given Muslim dominated areas in the far north west, plus territory in the east (which itself got independence as Bangladesh in 1971). The rulers of some disputed areas, notably Kashmir, were told to choose which country to join.

While Kashmir’s Hindu rulers prevaricated, hoping somehow to become an independent country, Pakistan’s leaders decided to force the issue. Since Kashmir was (and is) a Muslim majority territory, Pakistan felt justified in seeing Pushtun warlords charge in from the north-west of Pakistan, late in 1947, to seize control of Kashmir. In response India, apparently invited by Kashmir’s rulers, deployed its national army and stopped the invaders taking Srinagar, Kashmir’s capital, located in the Kashmir valley, the most coveted part of the territory. The resulting line of control, by and large, remains the de-facto international frontier within Kashmir and, in effect, is accepted by Paksitan and India. Huge numbers of Indian and Pakistani soldiers remain in Kashmir today as both countries profess to be the rightful authority for the rest of Kashmir.

Complicating matters, China has also extended its influence, and control, over portions of Kashmir, largely with the support of Pakistan, an ally.
source: The Economist

Data source: The Mint

The Indian I T Industry has witnessed several headwinds in recent times. The industry has been touted as one that would suffer the adverse impact of the global financial crisis. The reason being that people expect order inflows for the industry to decline as client industries come under pressure. Though there is no evidence of this as of now, even stalwarts of the industry have stated that the global demand environment continues to be uncertain and this may have an adverse impact on the industry. But even then, as per a recent study done by The Mint, the IT industry still continues to witness the maximum number of start ups in India. As shown in today's chart of the day, entrepreneurial interest in India is maximum in IT (Information Technology). The other sectors which see high level of start ups are education, retail and m edia
(source:J Mulraj)

Driving Internet to rural India

ABHISHEK LAW

source:thehindubusinessline  

Hop on, hop off: The Google Internet Bus.

 

December 1, 2011:  

The big white bus chugs into some of the small towns of the country. With the sun beaming on top, the snazzy white giant — like the famed wandering magicians and street side gymnasts who found their place in the annals of colonial travelogues of India — has cast a spell on the children, transporting them into a whole new world.

As evening sets in, it heads for the “city centre”. Enthralled kids trudge toward the bus, but this time with hesitant parents in tow. Hesitancy soon makes way for a variety of expressions, if not surprise. For some, if not most, it's their maiden foray online and their first steps into the World Wide Web.

The large bus — with drawings across its body — is the Google Internet Bus. It's a free mobile cyber café that represents the company's initiative to “spread awareness” about Internet usage across the country.

Welcoming the initiative, R.C. Bhatia, a retired professor in a government college in Gwalior, says, “It is very useful especially for the students. I am very impressed.”

From being on the other side of the digital divide, 33-year-old Samita Thakur has become a YouTube fan. This government school teacher in Lucknow (UP) now uses the Internet to get a flair of the different teaching videos uploaded by her counterparts across the globe.

Internet up, but not quite

Thanks to the telecom boom, Internet penetration in the country has gone up a lot. It still, however, remains off the radar for the majority of people in tier II and tier III cities where metropolitan sophistication is yet to sink in. Internet penetration currently stands at 10 Internet users per 100 people, low compared with developed countries such as the US (78) and emerging ones such as China (36).

“We came up with a variety of options that included setting up kiosks as well as the bus. But after several discussions, we zeroed in on the bus. It was easier taking the Internet to the people rather than taking people to the Internet,” says Vinay Goel, Country Head, Products, Google India.

Since its journey began on February 3, 2009, the bus has already covered nearly 50,000 km across 11 states — nearly 2,000 locations in 130 small towns. It has touched nearly 6.5 million lives, according to Google, including a substantial number of first-time users. The Internet search giant says that one lakh people have signed up for their own Internet connection.

Measuring success

For the Google instructors, success comes when first-time users taste the potential of the Internet and foray into a hitherto unknown world, full of possibilities.

“I had no idea of the vast opportunities across the Internet,” says a Canara Bank manager posted in Thiruvananthapuram, of the ways in which the initiative has helped him.

An instructor on the bus recalled an incident where a millet farmer in Tumkur (Karnataka), happy with his experience, asked his son to go online to search for a job. In Krishnagiri (Tamil Nadu), an old couple found ways of overcoming low network coverage and embraced e-mail for connecting with their only son posted in Dubai.

While most students have been fans of Google Earth and other “education-related information”, adults have shown interest in topics that range from job search to matchmaking. The content — such as using regional languages to access the web and explore other options too — has come as a revelation for many “new users”.

Y. Niharika, a Std VIII student of the Gowtham Model School, Tirupathi (Andhra Pradesh), is happy with the “new avenues” she saw. “Other than regular searches, we learnt about new Web sites and ways of using Google Maps,” she adds.

Archana from Gandhinagar (Gujarat) raves about the use of regional languages for sending e-mail. “It's new. I never knew that I could type in English and yet get the mail across in Gujarati,” she says, promising to be a frequent user of the service.

Bumpy road

But the road towards Internet literacy hasn't been without bumps. Initially the bus was dependent on satellite connectivity to access the Internet. This required the team to fix a giant dish antenna.

“It was difficult travelling with the dish (antenna) on top of the bus. There were regulatory issues too,” an instructor points out.

However, technology has been a great leveller. With the advent of improved mobile networks and their data cards — including 3G connections, faster connectivity has been possible in the five workstations on board the bus.

Internet on the mobile

For a country crazy about mobile phones, the Google Bus has an additional surprise. It offers a sneak peek into the world of the mobile web. Each work station has a handset — ranging from a smartphone to the common man's web-enabled feature phone — to allow users to experience the Internet on the mobile phones. Pinku Kumar, an auto-driver from Patna, had brought a low-end smartphone but had no clue about his phone's Internet services.

The Internet Bus' Bihar trip came as a blessing. Not only did he learn to use the services, he is now hooked onto Google maps to get driving directions to areas he is unfamiliar with.

Even local cyber café operators and owners can take a crash course to keep up with the search engine's latest features.

“Our random surveys show that nearly 30 per cent of first-time users have started using the Net,” says Goel.

abhishek.l@thehindu.co.in

Choose Your Gold Wisely




source:Value research

If you look at the performance of all the gold funds, the returns are quite disparate. As on December 1, 2011, Gold Exchange Traded Funds (Gold ETFs) delivered a one-year return of around 39.85 per cent. The other two gold funds fell way below. AIG World Gold had a return of around 8.83 per cent while DSPBR World Gold found itself at the bottom of the rung with just 10.23 per cent.
If anything, this should be a reminder that investing in gold-related investment products is not to be done blindly.

The gold mining funds
If you invest in DSP BlackRock World Gold or AIG World Gold, do so with the realisation that neither fund will hold physical gold or any metal. The investment will take place in stocks of companies in the business of extracting, processing and marketing of gold. Investment may also take place in companies engaged in the business of mining other metals or precious stones. Geographically, the investment universe is not limited - investments will take place in companies across the globe. While they are similar in the above aspects, it would be naïve to assume that their portfolios are similar.
Though the top 10 holdings account for pretty much the same allocation, there are just five identical stocks found amongst them and that too with a different allocation. In terms of sector allocation too there is a difference. Naturally, since the sector allocations differ and so does the stock picking, it would translate into differences in the geographical allocation as well as the returns.
For instance, DSPBR World Gold has its highest allocation to Newcrest Mining, which is Australia’s largest gold mining company. Incidentally, Newcrest Mining saw its share price crumble in October on the news of sagging output; it reported lower gold production in the September quarter. On the other hand, AIG World Gold is betting the most on Goldcorp Inc, a North American gold producer with mining operations in various countries including the US, Canada, Mexico, Brazil, Argentina and Australia.
AIG World Gold tends to hold a little more cash than its peer and rarely does any investment outside gold and silver. Even earlier this year, this trend was prevalent in its portfolio. And its annual returns over the past two years and its year-to-date returns put it ahead of DSPBR World Gold.


The options available
It is safe to say that bullion and gold mining stocks are entirely different asset classes. Unlike mining stocks, bullion is not subject to changes in production costs, management skills, availability of financing or exploration success. On the other hand, these stocks could deliver handsomely not only because of the metal they mine but because they embody a neat trait called leverage. So when the price of gold rises, they rise by much more. While the positive leverage could be as low as 2 to 1, it has been known to go up to 4.5 to 1. What this means is that for every 1 per cent rise in gold, there is a 4.5 per cent rise in the gold stock. But that holds true in an equity market bull run. The reverse can take place in market downturns even if the price of gold does not fall. In 2008, gold mining stocks could not escape the selling panic in the general equity and commodity space. Even currently, Gold ETFs boldly reflect the run-up in gold but the gold equity funds lag way behind.
If you are just plain happy betting on the price of gold, then consider a Gold ETF. In its best year, the performance will fall short of that delivered by a gold mining fund. Till date, the best year in a Gold ETF has delivered 55 per cent while it has been around 148 per cent in a gold equity fund. But its worst year will not disappoint as much as the equity oriented fund will. Even in its worst annual period, a Gold ETF has delivered a positive return of 2 per cent. Compare that with -55 per cent of DSPBR World Gold.
If you are in for the long haul, then you could consider a gold equity fund. While gold mining stocks will track the price of bullion, they are still stocks whose performance co-relates to the equity market. If you want a pure play on the price of gold, they consider a Gold ETF. Alternatively, you can distribute your gold allocation between these two types of funds. If you want a very miniscule holding to gold, then consider some of the hybrids where the fund manager takes a call on when to increase or lower the gold allocation. Canara Robeo InDiGo stands out here because it combines just debt and gold. Keep your equity allocations separate

Devanand No More.

New intelligence technology feeding surge in political espionage

Praveen Swami

source;The Hindu

 

 

 Few people at the North Block headquarters of India's domestic intelligence service, the Intelligence Bureau, cared: dealing with these national problems, strange as it might sound, isn't their job. The combo file picture shows former IB Director Ajit Doval (top) and former chief of RAW A.S. Dhulat.

Large part of Intelligence Bureau remains deployed on political tasks, not national security duties

Early this summer, India's intelligence services were facing the most serious internal security threats since 26/11: new urban terror cells, on which there was little information, were known to be planning strikes; Maoist insurgents had expanded their reach and lethality to unprecedented levels; Pakistan's descent into chaos had threatened renewed violence in Jammu and Kashmir.

Few people at the North Block headquarters of India's domestic intelligence service, the Intelligence Bureau, cared: dealing with these national problems, strange as it might sound, isn't their job.

Instead, highly placed intelligence sources have told The Hindu, a large part of the IB's resources were committed, and remain committed, to providing the government raw information and assessments on its increasingly bleak political prospects. In the summer, the IB carefully monitored Congress leader Rahul Gandhi's public meetings in Uttar Pradesh after the events at Bhatta Parsaul; later it sought to penetrate Anna Hazare's anti-corruption mobilisation in New Delhi.

Prime Minister Manmohan Singh and Union Home Minister P.Chidambaram, the sources alleged, both received briefings on these events, in part based on passive communications intelligence monitoring — technology capable of intercepting staggering amounts of voice, text and e-mail data, without legal authorisation. Earlier this month, The Hindu, in partnership with a media consortium brought together by WikiLeaks, revealed India's intelligence services and police forces had made large-scale acquisitions of such equipment since 26/11.

It is improbable that either the Prime Minister or the Union Home Minister knew what the basis of the information provided to them was — and neither, the sources insisted, had authorised its use. The equipment had in fact been deployed with a legitimate objective — ensuring that at large rallies political leaders were not targeted by terrorists. There are, however, no firewalls in the IB to ensure that data obtained for counter-terrorism aren't available to political analysts; nor is there a system to ensure that the interception of information is first logged, and then destroyed.

Less than a third of the IB's estimated 25,000-strong manpower, two former high-ranking officers told The Hindu, is dedicated to what might be described as national security tasks — like monitoring terrorist groups or extremist organisations. Even that ratio, one serving officer said, was “a charitable assessment.”

There are at least two joint directors — officers of a rank equivalent to inspectors-general of police and joint secretaries to the Government of India, who sit at the apex of the permanent bureaucracy's operational systems — devoted to analysis of the activities of Congress dissidents and non-Congress parties. Five other joint directors have the job of making assessments of the political landscape across India, with the help of the stations the IB has in State capitals, which in turn help the Director brief the Prime Minister and the Union Home Minister on potential political challenges emerging across the nation. There are only one or two joint directors for the operations division that deals with counter-terrorism.

Even though it is improbable that the Home Secretary would issue warrants to tap the conversations of opposition leaders, the IB was able to use technology to build a picture of who had been talking to whom and when — and, in some cases, what their conversation had been.

For politicians in power, this kind of information is invaluable; for everyone else, it ought to be a nightmare.

The East India Company's political officers, the seeds which gave birth to the modern IB, saw mass movements as the main threat: for them, state and government were one and the same thing. Little changed in the years after Independence: except in the North-East and Jammu and Kashmir, the IB invested the bulk of its energies on monitoring revolutionary communists. The IB's anti-communist unit, the “B-Wing,” was its most prestigious division; the former National Security Adviser and now-West Bengal Governor, M.K. Narayanan, spent much of his career in the unit.

In 1969, though, after Prime Minister Indira Gandhi broke with the right wing of her party, the B-Wing diminished in size. Mrs Gandhi believed that the Hindu nationalist Rashtriya Swayamsevak Sangh, not the Left, was the principal threat to India — and also, weakened by the rifts in her party, began to use the IB as an independent channel of information-gathering on adversaries and the bureaucracy. “There were plenty of people in the intelligence services who built careers out of feeding her paranoia,” one contemporary recalls.

Following the end of the Emergency, her abuse of the IB led some officers to be hounded out — but there was no effort at structural reform.

In 1987, on the eve of the outbreak of the long jihad in Jammu and Kashmir, the IB station in Srinagar had fewer than 100 personnel — most of them focussed on the Congress' troublesome ally, the National Conference, not the Islamist networks that would soon send thousands of people across the Line of Control for training at Inter-Services Intelligence-run training camps.

Punjab had a far larger IB station — but much of it was, again, committed to watching the many factions of the Shiromani Akali Dal through the 1970s. India, as a result, had next to no information on the training of Khalistan terrorists and their links with the ISI until the early 1980s.

Ever since then, the numbers of IB personnel committed to national security tasks has slowly grown — a process that has been further nudged along by the organisation's current chief, Nehchal Sandhu, himself a career-long counter-terrorism operative.

‘A product of history'

“I think the problem was the product of history,” says A.S. Dulat, a highly regarded career intelligence officer who retired as chief of the Research and Analysis Wing after serving in the IB for over two decades, “the product of time when we could not take our survival as a nation for granted. It is unforgivable that it still goes on today — and it needs to stop, now. It is in the interests of neither our intelligence services nor our polity, just a handful of self-serving individuals.”

Not a few serving intelligence officers agree with that — but national security still hasn't become the IB's principal task: it only began monitoring the Maoist movement late in the day, and police officers in West Bengal, Orissa, and Chhattisgarh told The Hindu that the organisation has only just begun to put together a serious body of intelligence.

Expending staff resources on political intelligence gathering is all the more reprehensible because the IB is desperately understaffed. In 2008, the Union government announced it had sanctioned 6,000 additional staff — expanding the organisation by almost a quarter. In practice, though, the strength of the 25,000-member organisation has stayed static, in part because it hasn't found the kinds of staff it needs, but also because it can train only some 1,200 personnel a year, barely covering for retirement.

Does this mean the IB's political intelligence work should end?

Complex questions

Back in March 1658, Henry Cromwell, Lord Deputy of Ireland and Oliver Cromwell's son, offered an evocative description of what intelligence services are called on to do, in a letter to England's spymaster, John Thurloe: “picking the locks leading into the hearts of wicked men.”

In a thoughtful 2009 volume on domestic intelligence-gathering in the United States, the scholar Brian Johnson pointed out that the reason to have intelligence agencies in the first place was to gather information “not related to the investigation of a known past criminal act or specific planned criminal activity.” That is the job of police services; intelligence organisations must search for crimes no one has — as yet — committed.

The core of the problem is this: we do not all agree on who Henry Cromwell's “wicked men” might be. From 1975, following allegations that the United States' intelligence services were spying on its own citizens, an official committee led by Senator Frank Church issued 14 reports revealing that peaceful dissidents had been targeted for surveillance. Even in countries like the U.S. and the United Kingdom, where oversight mechanisms exist, credible fears of abuse still exist.

“I think we should not have a simplistic view of this issue,” argues Ajit Doval, who served as IB Director in 2004-2005 and was the first civilian to be awarded a Kirti Chakra, for a daring undercover operation that led to the successful conclusion of the second siege of the Golden Temple. “The fact is that in India, there are many political movements which may not be terrorist in character, but are none the less real threats to the nation. The Khalistan movement was not, after all, initially violent — but better intelligence on its intentions would have saved lives.”

“The distinction I would draw,” Mr. Doval says, “is this: political intelligence should be focussed on gathering information on actual and potential national security threats, and the despicable behaviour of some individual intelligence officers, who seek to curry political favour.”

MI5's history

It isn't always easy, however, to know precisely what political intelligence actually is. From the eminent scholar Christopher Andrew's Defence of the Realm, MI5's authorised history, we know that MI5 monitored left-wing politicians and the trade union movement. In an article written this summer, The Guardian's Martin Kettle recounted reading now-declassified MI5 files on his father, Arnold Kettle. Arnold Kettle had been a lifelong communist and, back in university, a friend of the Soviet Union's double-agents inside MI6, Anthony Blunt and Guy Burgess.

MI5 carefully followed Dr. Kettle's activities, down to recording his lectures on Shakespearean literature, and his intellectual debt to F.R. Leavis. Their only substantial discovery was, however, that Dr. Kettle was homosexual — a “secret” his family had known for years.

Mr. Kettle, interestingly, said he believed MI5's decision to spy on his father was correct: in its early years, after all, the party he belonged to wanted to overthrow the regime and was receiving foreign finance to do so. By the 1950s though, he pointed out, the communist party “wasn't going anywhere as a revolutionary force, and was increasingly looking for democratic and liberal legitimacy.” His father remained under surveillance, though.

There is no simple answer — but in India, where political parties have shown little interest in understanding and debating even a private member's bill seeking oversight of our intelligence services, the first steps towards one are yet to be taken.

Challenges of doing business in India

Sanjay Kumar

source:thehindubusinessline  

Companies such as LG don’t enjoy market leadership in their very own home countries, which score far higher than India.

Not all MNCs are able to deal with the policy maze that is India. But those which do so are winners.

In a recently-published WB report, India is ranked 132nd, in terms of ‘ease of doing business' and a disheartening 166th, in terms of ‘starting up new businesses'.

It's quite apparent that it's a lot more difficult to start a new business in India than it is to remain engaged in doing an existing one. I propose to identify some of the behavioural and policy issues, which we need to address in such an environment, so that a fast-growing market can be a profitable one too.

The gaps in the rankings essentially means that having navigated the regulatory environment to overcome the start-up challenges, the organisation is relatively better-equipped to manage the business going forward, as the hurdles are less, with a better ranking for “ease of doing business”. Yet, one cannot ignore the key policy and regulatory challenges that companies and organisations face in India. This gets even more amplified for new ventures.

GOVERNANCE FRAMEWORK

The biggest challenge that most multinational companies face is the unique architecture of the Indian governance framework, which is badly intertwined between the Central and State structures. Hence, the attractiveness of contiguity of geography needn't enable simplicity of market access, and may not even offer benefits of scale due to logistics optimisation.

The reasons are simple. State laws and incentives are structured to attract investments which local leadership see as critical to driving economic growth, and are also dependent on electoral constituencies of ruling parties.

An interesting example is alcohol. You can buy a bottle of wine or beer within a mile's length of desire in Bangalore, but 50 km away in the state of Tamil Nadu, you would be hard-pressed to even locate a store.

It's not uncommon for neighbouring State Governments to have vastly differing legislations on labour, land acquisition, commercial taxes, priority sector categorisation for incentives, and intrastate movement of goods.

These come into play in a substantial way when planning investments in India. Very often, companies get lured with incentives and/or hinterland market access, yet realise much later that it doesn't translate to improved returns on capital employed.

A classic example is the currently applicable duty on automobiles, which includes customs duty, CENVAT, excise duty, central sales tax, motor vehicles tax, passenger and goods tax, state sales tax, and additional road user/toll taxes. All of which ensure that you could buy a car manufactured in Gurgaon at a much cheaper price 2,000 km away in Goa or Pondicherry .

In addition, duties and levies see frequent changes in the Annual Central and State budgets presentation exercise.

POLICY ENVIRONMENT

And not all MNCs are able to cope with the uncertainty and want of clarity around the policy environment. A good example of the recent past is the telecom sector, which saw a huge enthusiastic entry of large MNCs when the sector was opened up for FDI, and soon enough, many exited, thanks to the ever-changing policy framework. The few that survived were mostly Indian, and earned good returns. The boldest of them all, Vodafone, a start-up MNC, continues to battle the Government in the Indian courts. The risk of an uncertain regulatory environment eventually ensures that those who survive usually do so with good returns. This brings us to an interesting conundrum, when we compare ourselves with China. While most statistics reveal that FDI in China is almost three times that of India, yet, in terms of GDP growth, China delivers just a percentage point more than India. Consequently, it may be assumed, with some degree of certainty that the return on capital for investments, made by foreign firms in India is, on an average, higher than China.

A recent McKinsey study showed that the nine market leaders by category in India enjoyed a ROCE (Return on Capital Employed) of 48 per cent, and even the next 26 enjoyed a ROCE of 36 per cent. Implicit in the return is the reward for managing the regulatory risk. Interesting inclusions in the list are Korean white-goods-maker LG and automobile giant Hyundai, and Japanese automotive giant Suzuki. Surprisingly, these companies don't enjoy market leadership in their very own home countries, which score far higher than India in terms of ‘ease of doing business' or ‘starting up anew'. The one common theme visible across these companies is their willingness to remain engaged with the regulatory environment and manage the concomitant uncertainties. Their ability to win includes, in large measure, their capacity to allow scale to subsume the vagaries of an uncertain political and regulatory environment.

Very few markets on the planet continue to offer the opportunity of scale to drive interest from policymakers at a Government-to-Government level. This, in a sense, forces the Government to ensure moderation in policy level interventions, and limits the risk of any potentially-destabilising policy dispensation. Simultaneously, it leaves enough on the table to help enhance returns by carefully understanding the policy regimen. As all countries emerge from their current crises, there will be increased regulation, and business leaders need to build a deep understanding of the regulatory environment and governance frameworks, to deliver improved returns for their enterprise.

JOINT VENTURES

The coming decade will be a decade of momentous change, as India integrates better with the global economy, focuses on driving greater competitiveness, and draws up a policy framework to enable a more transparent governance structure. Those MNCs that participate in this process are likely to position themselves more strongly to succeed, compared to those that rely on local Indian partners or JVs. The reason isn't difficult to fathom. Indian JV partners would be mostly family-owned or state PSUs, and, in most cases, diversified. Consequently, they may often have competing priorities in leveraging their relationship with the Government, and hence deferring to them for insights is fraught with inherent risks.

In fact, many a times these conflicting interests can make the task of setting up a new business in India appear a lot more difficult than it might actually be. From my own experience of having been involved in the setting up two new businesses for an MNC in India, a key driver of success has been the ability to understand the regulatory environment and factor in the risk-reward from policy changes in the “best case scenario”, while developing the business forecasts. You may not always get it right, but if you do, then your fastest growing market could well be your most profitable one too. A story that most shareholders like!

(The author is Global Head, Business Intelligence and Strategy Analysis, Shell India Markets Pvt Ltd. The views expressed are personal.)

Sixth season of border trade ends at Nathu la
PTI | 06:12 PM,Dec 03,2011

Gangtok, Dec 3 (PTI) The sixth season of Indo-China border trade through the 14,000 feet high Nathula Pass came to a close with the final day of trading. Besides trading, the day was marked with exchange of gifts among the traders and get-togethers between relatives otherwise separated by the border. There was also a cultural programme organized at Sherathang, the trade mart on the Sikkim side, by Indian traders along with food and drinks on the last day, November 30. Exports dipped in September to Rs. 42 lakh as a result of the quake and the blockade of the route to Tsomgo and Nathula. The actual figure of exports for the month of October is Rs. 94,62,225. Figures for the month of November are being computed. A bulk of the export from Sikkim is of vegetable oil , which, during the month of September, was worth Rs. 20.22 lakh. Next are copper items, canned foods, blankets, textiles and tea. Cigarettes are also a favoured item of export. The Joint Secretary, Ministry of Commerce and Industries, had visited Sikkim in the month of July to study the existing road conditions along the border trade route and also the infrastructure existing at the trade mart at Sherathang. The objective of the visit was to weigh the feasibility of changing the status of trade but as the infrastructure and double laning of the road had not been completed nothing could be decided.