All views / opinions are solely that of the author and no other individual, group of individuals or organization (including my employer) has any stake whatsoever in the same. While every possibile care is taken with respect to the correctness of the facts and figures given in the blog, some inadvertant errors may have crept in and are regretted. The author accepts absolutely no responsibility for any action taken [and any consequence thereof] by anyone on reading these posts.

Thank you for visiting this blog. Have a nice time!!

Monday, October 30, 2006

How many SEZs? - A Correction

I got a figure wrong. The estimated revenue loss over the next 5 years from SEZs is put at a staggering Rs 170000 Cr by NIPF.
Now if anyone gets an impression that I'm against SEZs, you're wrong. I'm all for SEZs. Just that we need to go a little slower and soothe the frayed nerves.

Friday, October 20, 2006

How many SEZs?

How many SEZs? This is a question that's been puzzling me for sometime now. Every other day, a new SEZ is approved. As on October 10, 2006 the no. of SEZs with formal approval is 212 and the ones with in-principle approval, 158. What will it stop with? OK, OK, I agree SEZs are a way forward for the rapid industrialization of our economy (though not the only one, I dare say). The SEZ Act 2005 came into force on February 10, 2006. It is expected to facilitate large flow of foreign and domestic investment to the SEZs, and contribute to improvements in infrastructure and productive capacity, generation of additional economic activity and creation of employment opportunities. The important point is that there is enough flexibility built into the proposed system with respect to labour laws, taxation, etc.

Even before SEZs, we had EOUs, EPZs, (and so many other acronyms) etc. But the SEZ policy, in the lines of the Chinese model, has seen an unprecedented demand. The main incentive this time around is that there are tax breaks for the developers of SEZs as well. Almost all industrial houses worth its name has announced an SEZ. However, it needs to be highlighted that almost all SEZs announced are in states which are already in the forefront of industrial activity in India - Gujarat, Maharashtra, Haryana and Tamil Nadu, to name a few. That raises the question: if the incentives are available to everyone everywhere, why this scramble for the top states? Already the space available in such states is less. Where will the land for SEZs come from? This is one of the sore points - at least to the Left and the so-called activists: will it lead to eviction of farmers from their lands? Yet, the fact remains that only less than 10 SEZs have come into operation; and no farmer has been evicted for SEZs! Only one or two SEZs are proposed on farm lands. But that's enough to raise the hackles of the activists!

Another concern is to do with the fiscal impact of SEZs. The Ministry of Finance estimates that Rs 90000 Cr will be forgone in tax and other incentives. There is also the fear about a real estate scam. As far as I know, the first shot was fired by the RBI. The RBI had this to say on SEZs in its Annual Report for the year 2005-06, “The SEZs are envisaged to act as catalysts for growth. The simplification of the procedures for development, operation and maintenance of the SEZs and the fiscal incentives are expected to spur investment and promote industrial activity. At the same time, there are concerns that the SEZs could aggravate the uneven pattern of development by pulling out resources from less developed areas. Revenue implications of taxation benefits would also need to be factored. The revenue loss for the Government in providing incentives may be justified only if the SEZ units ensure forward and backward linkages with the domestic economy.” It has now advised commercial banks to treat SEZs on par with real estate projects and this will jack up the cost of funds for the parties concerned. Then there is the tussle between Ministry of Finance and Ministry of Commerce. The Left, which is on an all-out effort to woo big industrialists to West Bengal, too has joined the chorus demanding a relook into the SEZ Act.

As always, the absence of a good debate on the stakes involved is badly felt. Now we have two opposing sides: one, which has the activists and the Left which says that SEZs be done away with (well, almost there) and the other, which wants the status quo to be maintained. Some like Business Today (dated October 22, 2006) have ludicrously suggested that SEZs could be India's future metros! Talk of letting your imagination run riot! Not even one year into the implementation of the Act and you're talking of metros.

The bottom-line: As is with almost all acts and policies of govts in India, the SEZ Act too was passed without much thought going into it. The result is that there is absolutely no clarity on anything. The statement of ICICI Bank Chairman KV Kamat is pertinent: he's said that till everything is cleared up, his bank will not be joining the bandwagon of SEZ-financiers.

Thursday, October 19, 2006

RDB Reviewed

This is a review of the Hindi movie 'Rang De Basanti'. I wrote it soon after watching it. Publishing it here for a wider audience.
Rang De Basanti: A Gem
Considered just a movie, RDB is a gem. Everything about it is top class. To start with, the taut screenplay and editing and crisp dialogues. There's is not a single jarring sequence, not a scene that's irrelevant. Kudos to Prasoon Joshi (the scenarist) and the editor. Prasoon Joshi, as you may know, also penned the songs. Remember, he's the man behind many successful ads, like the 'Thanda Matlab Coca Cola', 'Log Chloromint kyun khate hain?' and the latest 'Happy Dent'. Surely, he's a man with multiple talents.
Then there is the cinematography by Binod Pradhan. I'd always thought that Ravi K Chandran was the best DoP in India. But, here's competition for him. The shots are all fantastic, to say the least. The use of sepia tone to show the portions of the documentary was a novel idea. The Digital Intermediate technology is put to the best use here. [Shankar can pick up a lesson or two from this one!]
And, now about the songs. Yes, the songs are special for me, cos it's by ARR. But, the integration of the songs into the narration makes a Himalayan difference - both to the movie and the songs themselves. When I first heard the songs, I'd formed some ideas about each of them, like sad, romantic, chill out, etc. But the songs are given a totally different treatment in the movie. Note that none of the songs have the characters lip-synching the lyrics. Instead, the songs are left to play in the background. This magnifies the intended impact. Also, you may feel that when the narrative goes in one direction, the song goes in another. E.g. 'Khoonchala' during the lathi charge, 'Roobaroo' after the confession, etc. Yet, the impact it leaves you with is phenomenal. Remember, in the usual lathi charge scenes, there'll generally be huge, rising violins and chorus. Look at the similar sequence here. It's a slow one [Khoonchala] with a slight romantic feel to it.
I should also mention the spectacular background score. At various points, it switches from silence to heavy-duty orchestra and takes you to a new world!
With this movie, Rakeysh Mehra has announced his arrival. Yes, his debut was with 'Aks', but to me it seemed to have a lot of violence. RDB is to him what 'Lagaan' is to Ashutosh Gowarikar. I'd say his brilliance is best shown in the scene where the commandoes burst open the door to the studio, where Siddharth and Aamir are chatting jovially. The scene is frozen immediately thereafter and what you hear are the gun shots. You watch with a heavy heart....
Rakeysh has successfully extracted the best performance from his cast and crew. The leading ones, Aamir, Siddharth, Sharman Joshi, Kunal Kapoor, Atul Kulkarni, Madhavan, Soha and even the debutante Alice Patten have all given their best. Now, imagine Shah Rukh instead of Madhavan and Hrithik instead of Siddharth....yes, they were the ones first offered these roles! Had they accepted it then, RDB wouldn't have been RDB! It'd have been crushed by the weight of these stars. Not that they aren't good performers, but they do not have the flexibility like Aamir to get into the skin of these characters....

That was about the movie as such. What about the message it tries to send out? If you recall, in recent times, there were a few movies which tried to convey a similar message, like Yuva, Swades, Anniyan, Hazaron Khwahishen Aisi, etc. But none of them succeeds like RDB in etching the message of 'Wake Up!' firmly in the minds of the viewers. Whereas Yuva and Swades seemed preachy at times, Anniyan's gloss and other aspects were distractions. I haven't seen 'Hazaron...' to comment on it. In my view, the key factor behind this success of RDB is the way it juxtaposed the past with present. It tells you that what happens today is just a replay of the yesterday. In other words, History Repeats Because You Failed To Learn The Lesson The First Time.
There's so much we, the youth, can do for our country. Violence, it may seem, is the answer. It's NOT. Instead, like Madhavan's character says, you can join the military, civil service...To expand that, let me add that being sincere in whatever you do makes the difference. And, don't forget about the down-trodden. Look at what the richest man in India Azim Premji is doing for them through his 'Azim Premji Foundation'. Look at the Murthys, the Tatas...whatever little community service you can do, do it...Let's make this country the Heaven on Earth.

Union Budget 06-07: A Review

This is an article I wrote a few months back, on the Union Budget 2006-07. Thought I need to let it have some fresh air, after getting suffocated in my Hard Disk a tad too long!

Union Budget 2006: A Case of Missed Bus?

The Finance Minister Mr P Chidambaram presented the Union Budget for the fiscal 2006-07 on February 28, 2006. Reams have already been written on it and it has been dissected and discussed at length on various fora. Almost all are of the opinion that the FM played it safe. However at least a few have expressed the view that the budget left much to be desired.
Today the Indian economy is in a state of flux. All the sectors are doing well with the result that the economy grew at 8.1%, but there are pockets of poverty and there are incidents of farmer suicides. In this context, the general expectation was that the FM would initiate a host of measures to set right the anomalies. Of course, in the present-day market economy, the government does not enjoy the kind of flexibility to influence the economy the way it used to prior to 1990s. In FM’s own words, the days of ‘Big-Bang’ budgets are over. However, there are a few things that the FM left hanging in the air and this article takes a look at a few of them. This is not to gloss over the positives like the efficient fiscal management which has seen the fiscal deficit down to 3.8% of GDP and increased outlay to social sectors.
First of all, though there were no new taxes or levies, the hike in Service Tax to 12% (in effect, 12.24% including education cess) is sure to pinch – to use UPA Government’s pet term – ‘aam aadmi’. This is an increase that will be felt across the board as it is an indirect tax. The minister has failed to give any convincing reason for the hike. Again, the withdrawal of the exemption given to BPO units – they have provided jobs to many an educated youth – from service tax is really surprising. The FM seems to have forgotten that the low cost of BPO services in India is one of its core competencies. If this cost advantage disappears, the day China and Philippines come up to the expectations vis-à-vis quality, the BPO industry in India will go bust, unless of course, it gets a domestic clientele.
Another provision that has caused resentment is the increase in Minimum Alternate Tax (MAT) to 10%. There was no justification for this either, primarily because MAT in itself is a sort of penalty for efficient tax planning. [MAT was introduced to tax zero-tax companies i.e., those which had book profits but no taxable income because they availed of the various deductions and exemptions in the Income Tax Act]. The minister should have given serious consideration to the Kelkar Committee recommendations relating to doing away with all deductions and exemptions in the Income Tax Act. The continuation of Banking Cash Transaction Tax (BCCT) is another sore point because it sort of amounts to double tax.
The global crude prices are galloping and the partial pass through of these high prices has seen the oil companies sinking into the red (notwithstanding the views that some of the loss is notional). It was expected that the budget would provide a roadmap for reforms in petro-products taxation, especially a provision for moving over to quantity-specific duty from the present ad valorem structure. That was not to be. Not only that, even the Rangarajan Committee recommendations (on reforms in petro-pricing) were given a go-by!! Had these recommendations been acted upon, it’d have provided some respite to the ‘aam aadmi’. The reasons for inaction on this front is not far to seek. Successive Finance Ministers and state governments have viewed petro products as their milch-cow, with the result that India probably will be the only country where duties on a product exceed its cost of manufacture. Again, at a time when the Central Sales Tax (CST) is to be phased out (with the introduction of State-level VAT), the FM has sought to use it to control the price of LPG, by making it a ‘declared’ good under the CST. Surprising, to say the least!!
Just a few days before the budget, there was a revolutionary recommendation by an MPs’ Panel (on Widening Tax Base) for bringing agriculture income under the tax net. It will be worthwhile to recall that the Committee on Agricultural Taxation headed by Dr K N Raj suggested back in 1975 that the agricultural income of landholding classes should be taxed. Till date, the formula given by him is used to club agriculture and non-agriculture income under the provisions of the Income-Tax Act, 1961 in order to calculate tax liabilities of a farmer (subject to fulfillment of a few conditions). Surely, it is high time farm income is taxed in its entirety. In the present-day set up, we cannot subsidize one sector (agriculture) at the cost of two other sectors (industry and services). It goes against the principles of equity. But, it is to be seen how the legislation for bringing farm income under the tax net will see the light of the day overcoming the lobbying of rich rural farmers.
Many international and national economists and other commentators have lamented the infrastructure bottlenecks in India. The Jawaharlal Nehru Urban Renewal Mission (why do we always need a long dead Prime Minister’s name for any project?) and Bharat Nirman Project notwithstanding, the FM failed to give a significant push to infrastructure projects underway. On top of it all, he withdrew the exemption u/s 10(23G) of the Income Tax Act, which was available to income of infrastructure capital fund/company. This is a set back to many an infrastructure company because it’ll jack up the cost of funds for them.
To cut a long story short, though the time was apt for the FM to unleash a host of reforms to accelerate the pace of growth, he missed the proverbial bus. However, the stock markets have continued their bull run, prompting many to comment that the absence of any major negatives in the budget is itself a great positive. To what extent stock markets reflect the real state of the economy is in itself a debatable issue. The imminent elections in five states and the constant barking by the Left (which dare not bite, at least till the UPA Government’s completion of two years in office as only then the MPs will be eligible for lifelong pension!) probably played high on the mind of the FM. And, he has done a dexterous balancing act, by including so many ‘feel-good’ measures that the likely-contentious issues got swept under the rug. In fact, the Union Budget 2006-07 is an example for the saying that ‘Good Economics and Good Politics do not go together.’

Monday, October 16, 2006

Kochi - Growth out of control

Been to Kochi for taking an exam. That trip afforded me an opportunity to see the 'growth face' of the city. Truly awesome, I should say, especially about the high rises coming up in the vicinity of Marine Drive. Of course, the city will still be a minnow in comparison with the other big cities in India and abroad [since I've not been to such cities, for the time being, Kochi is The Metropolis for me]; yet, it has the potential to rival biggies like Bangalore and Mumbai. It is the only landing site in India for two undersea communication network cables. The proposed Vallarpadam terminal can blaze a trail for the shipping industry. For all this and much more to take place - and that is the point I want to raise in this post - proper planning is absolutely essential. That is exactly what Kochi lacks today.
The city today is growing not because of any governmental action; it's growing on its own.  A lot of plans and proposals are announced by the authorities almost on a daily basis. But, no follow-up action is taken on any of these. A case in point is the bus terminal proposed at Vyttila. Due to opposition from the agriculture department of the state govt., it has been held up. Another grouse is with regard to the traffic; the roads need widening for it to ease. There is the need for a couple of fly-overs at key points. It's high time a Mass Rapid Transport System  - a metro rail or a sky bus - is introduced there. There is still a lot of confusion about the rail-road connectivity to Vallarpadam. There are many more such cases, but the bottom line is that if there's no proper urban development planning, we'll only end up choking the city's development down the line.
The GCDA can take a leaf out of what's currently happening in Thiruvananthapuram. About 42 kms of roads in the city is being developed / widened and the contract has been given to Punj Loyd Ltd. How efficiently are they going about the job! Their work is mostly done at night, without causing much inconvenience to the city residents. I'm not saying that the TRIDA is matching this efficiency of the company, but the buzz is that 'something is happening', which is a good feeling. Way to go, Kochi and way to go, Thiruvananthapuram!

Thursday, October 12, 2006

Banning Child Labour: Will it work?

So, the government has banned child labour in India. A good action; in fact, one to be lauded by all. But, I wonder whether any real thought has actually gone into this decision being made. What will happen to those children who suddenly find themselves with no income to take home? Send them to schools and provide them with food via the mid-day food programme, say the activists. Pray, where are good schools? How many government schools have proper infrastructure? How many teachers don’t play truant? What books, let alone other learning aids, do we have to give to these children?

It’s common knowledge that primary and secondary education in India is in shambles. But, we have the institutes of higher learning to focus our attention on, right – like the IIMs and IITs, where if reservation is not made applicable, the heavens will fall?

A write-up in The Hindu says eradication of poverty is not a pre-requisite for banning child labour and quotes the example of Kerala. The writer forgets that Kerala is a different ball game altogether. The people in Kerala are aware of the benefits education can bestow on their children and take great pains to send their children to the best ‘English Medium Schools’ they can afford, even overlooking the nearby government school. Such high levels of awareness are not there among the people of any other state in India. Until such awareness is created, banning child labour will only see more children out on the streets.

Sunday, October 08, 2006

What this blog is about

I'd wanted to start blogging in 2003 itself, but kept holding back myself coz I wasn't sure how I wanted to go about it. Another reason was the time constraint [which is there still now, but I'm taking lessons in time management ;)] and yet another was my ignorance of HTML. No, I've not mastered HTML yet, but then how long can someone hold back one's inner urge to give expression and an outlet to one's thinking and feelings about things around him?
Yes, as I'd said in my first post, I'll blog - about things I have a view / opinion about. The following are the likely areas that I'll cover in this sojourn of the Blogosphere:
  • Indian Economy & Current Affairs
  • Movies - Malayalam, Hindi, Tamil, English.
  • Indian Socio-political trends
  • Lifestyle trends
  • Music - generally film music of the above-mentioned languages and particularly ARR's
May be I'll have an audience...may be not...but I'll have the satisfaction of letting my views into the open..
Wishing myself all the very best!!!

Friday, October 06, 2006


Just to test...

Manoj...in Blogosphere!

Thus, egged on by a friend, I'm setting my foot into Blogosphere. This blog will serve as the point to give vent to what I feel about the things around me....It could be about anything and everything.
Owing to time and other resource constraints, I do not think I'll be posting regularly here, at least in the beginning....Still, this is an attempt and let me see what comes of this effort of mine....