Does Fox get the Apple in India?

Will Apple make iPhones in India? That's one question in the minds of many Indians whilst Apple Inc.’s CEO - Tim Cook seems reluctant to make a commitment yet.

He might be contemplating about calling off the contract with one of its largest manufacturing partners, Foxconn Technology Group; the contract was signed to look at the possibility of making the iPhone in India in the next two to three years, according to two people with knowledge on the matter.

Move to make devices cheaper 

Local manufacturing would allow Apple to bring products to market quicker besides making them cheaper for Indian consumers and turning the country into an export hub, while adding that this would require creating an elaborate and complex supply chain too.

On his first visit to the country in May 2016,  Cook announced the setting up of an App development unit in Bengaluru and opened a development centre for Apple Maps in Hyderabad, with an investment of $25 million. Apple wants to expand its wholly owned stores in India, which Cook sees as an opportunity to win Indian customers by setting new service standards.

Need to boost sales in India

Apple badly needs to boost sales in the world's fastest-growing smartphone market at a time US and China are slowing down.

In recent years, Cook has repeatedly spoken of India being a market where Apple sees great potential. "India is fast-growing, but our base there is smaller," Cook told the Washington Post in an interview last month. One of the biggest drawbacks that has held India back is the inefficient cellular infrastructure.

Sales boost of iPhones in India

iPhone sales in India were up over 50% in fiscal 2016 compared to the prior year. Cook said India could be as big a market as China and would be crucial for the smartphone maker.

In a market research, it was found that Apple shipped a record 2.5 million iPhones in India from October 2015 to September 2016, up by 56% in a year, according to an estimate.

Make in India push for Foxconn

Foxconn Technology is expected to start the manufacturing operations in Maharashtra by 2018.
In the month of August, Foxconn Technology signed a $5-billion deal with the Maharashtra government to set up manufacturing operations in the state.

Maharashtra government has allotted two plots of 1,500 acres each, one in Pune and the other near Mumbai, for the company to set up its plant.

The company would also be taking 1,000 engineers from India to Taiwan University for a bridge course, to enhance their skills, so India is expecting chances of growth of job opportunity too.

Yet to find 'customers', Foxconn's Maharashtra debut awaited

Maharashtra government's much touted USD 5 billion MoU with the world's largest electronics contract manufacturer and iPhone maker Foxconn is yet to materialize as the Taiwanese giant has "yet to find customers" to start its production unit, a top bureaucrat said today.

Chief Minister Devendra Fadnavis had announced that Foxconn will create direct employment for 50,000 people through the MoU.

Many challenges 

However, making phones locally would come with certain challenges. Compared with indigenous brands manufactured in India, Apple's plans would entail far higher investments, cutting edge technology required for making the high-end smartphones and a component ecosystem  that is currently far more developed in China.

While local brands operate at volumes running into millions, Apple would operate at multiple times that scale as it would look at catering to multiple countries from India, not just the local market.

With Apple's growing popularity in India, there's speculation that it may reduce the lag between launch and sales of the iPhone7 in India, having shortened it last year for the 6s model as well. What remains to be seen is how soon will this turn into a reality!

By:
Ms.Shalu Solanki
Faculty - INLEAD

Are Indian Newspapers losing their charm?

Reading newspapers or dailies, as we call them, has been considered to be one of the best habits humans have imbibed, ever since the learned civilization came into existence. From politics to sports, arts and lifestyle to entertainment, the power of news dailies is not unfathomed. My affair (sic) with newspapers started when I was barely eight. With every passing year, the bond seemed to get stronger and stronger.  I didn’t know back then, that it would hit a rocky path twenty years down the line.

The front page is the most important page of a newspaper. It is what passers-by will have chance to look at, and so it represents the showcase that might determine whether or not they will end up buying the newspaper. Many of us working professionals, thanks to our pacey routines, could possibly afford to read only the front page. Thus, the stories of the front page are carefully selected to catch the attention of a large number of potential readers. Everyday, newspaper editors meet and discuss to choose what they believe are the newsworthy stories of the day to constitute the next day’s front page.

However, the scenario has changed today. Most of the Indian dailies have started featuring full-page advertisements on the front page, some even to an extent of the first three pages, especially during the festive season. Blame it on the fierce competition, or the race for fetching sponsorship, the so called “critical” front page and its news have shifted to the third or the fourth, thereby leading to distaste for avid readers like myself.

With a readership base of over 250 million, India is the second largest print market in the world. However, this market is still under penetrated for a country with a population in excess of 1,200 million and highly fragmented with over 60,000 newspapers printed in 22 languages (Registrar of Newspapers of India). Advertising revenue continues to be the key growth driver behind the industry as declining readership and increasing competition have led the players to further reduce their cover prices. As result, this sector has been the most affected by the slowdown in advertising due owing to the recent downturn. Further, due to rising newsprint costs players were compelled to undertake multiple advertisement rate hikes during the first half of 2008, which on one hand improved per unit realizations from advertising, but on the other hand made the media an expensive proposition for most advertisers. (Source: Indian Readership Survey 2008)

What remains to be seen is whether these dailies continue to be caught up with their pro-commercial approach or shift back to preserving their original charm as a powerful instrument of the print media.

What do you think? Do share your views and inputs in the comments.

- Mr. Sumit Chakravarty, Faculty, INLEAD

Is WAR the answer?

It’s been over a week since the Indian Army Camp at Uri was attacked by Pakistani terrorists, and what has followed since is a situation of warmongerism across the country. There is tremendous amount of anger in India, specifically on social media; it possibly seems too easy for many to be simply sitting in the comfort of their living rooms, introspecting if the nation should go to war with Pakistan. The real standing question is: Could India and Pakistan really go to war?

After all, both countries have long been nuclear powers - a deterrent that encompasses the lives of a combined 1.4 billion people. And yet, hours after 18 were killed in an attack on an army base in Indian-administered Kashmir, the Director-General of Military operations for the Indian Army announced that the terrorists carried gear which had "Pakistani markings."

The allegation released a gush of fury on social media. "Pakistan is a terrorist state and it should be identified and isolated as such," tweeted Home Minister Rajnath Singh. This was followed by Bharatiya Janata Party's General Secretary  - Ram Madhav, who took to Facebook: "For one tooth, the complete jaw," he posted, implying a disparate retaliation.

On India's many TV news channels, a steady drum-beat calling for war gained momentum, reaching a crescendo of sorts in primetime. Arnab Goswami, the host of the country's most-watched English News Hour, expressed rage at Pakistan: "We need to cripple them, we need to bring them down on their knees." One of his guests, Retd. Gen. G.D. Bakshi went a step further: "We must be seen as inflicting punishment on Pakistan by non-terrorist means ... the nation needs a catharsis (cleansing)!"

The other side of the border has really taken this as a grave threat. The following excerpt from Washington Post’s news article on September 22 highlights the same:

“Military officials are calling it a routine exercise, but the thunderous spectacle of Pakistani fighter jets touching down on a major highway Wednesday and Thursday, with commercial flights suspended and traffic blocked for hours, has fueled public speculation that something much more ominous is afoot.

 The air exercise led to the closure of commercial airspace over several regions of the country and triggered a sudden drop in the nation’s stock market.”

Ground realities

It's easy to get carried away by the public rhetoric we're seeing. Uri attack is not the first deadly attack on Indian soil that New Delhi has accused Pakistan of having a hand in. While Indian officials continue to link those attacks to the Pakistan government, Islamabad has consistently denied any involvement. In each of these terror attacks, and others like them, there have been calls for a strong Indian response. According to an interview to CNN by the strategic affairs editor of Business Standard – Ajai Shukla, who is a former Indian Army Colonel, "When it makes decisions, the (Indian) government is guided by realities, not by a public outcry. They realize that if they attack Pakistan, it does not play out in India's favor. One also cannot ignore the fact that Pakistan has the 11th biggest army in the world. We're in a symmetrical relationship, the consequences of any form of attack are far worse than people realize."

As recent as last night, India has conducted surgical strikes along the LoC, which is being considered as a response for Uri attack. According to the Army, surgical strikes were based on specific intelligence input of terror groups ready to infiltrate into India and carry out terror attacks.“Significant casualties have been caused to terrorists and those trying to shield them. We don’t have a plan to further conduct such strikes. India has spoken to Pakistan,” DGMO Lt Gen Ranbir Singh said. 

- Mr. Sumit Chakravarty, Faculty, INLEAD

How Innovative are we?

“India, Innovative? India’s 15 – place jump in a new Global Innovation index has to be taken with a pinch of salt.” Economic Times, dated 25^th August 2016

Should this headline make Indians feel excited or make them wary of the fact that despite this positive jump, our innovations are still not world class? Let’s look into this story.

What is the Global Innovation Index?

The Global Innovation Index (or the GII) was launched in 2007 by Cornell University, INSEAD. It is published annually by INSEAD & World Intellectual Property Organisation, and does an annual ranking of countries by their capacity for success in innovation. The theme for 2016 is “Winning with Global Innovation” and is in its 9^th edition. GII parameters & methodologies are tweaked continuously and hence could be one of the reasons why countries’ rankings keep changing. 

However, countries that are constantly investing in innovative research & development tend to retain their rankings. Switzerland has been ranked as number 1 for the past 6 successive years. Followed by Sweden, United Kingdom, USA & Finland, these countries wrap up the top 5 ranks. India is one of the countries with fluctuating positions, which is a reflection of constant changes the country is going through.

India’s story around Innovation

“There has been a significant broadening of the innovation ecosystem in recent years in India’”, says Nandan Nilekani, former Infosys co-founder. What is this ecosystem Mr. Nilekani is referring to?

The ecosystem comprises educational institutions, research output, patents, entrepreneurship, venture capital, government policies, etc. All of these contribute immensely to creation of new & innovative goods & services that enable better customer experiences, cost reductions, growth & development on the economy. Innovations needn’t always be radical like say an ATM; sometimes incremental ones too add value like say a solar powered ATM. Improvements in all the above mentioned areas are captured in GII sub-indices.

India is currently ranked at 66, a significant jump from last year’s 81. Prior to this in 2008-09 India was at its best at 41 and since then has been tumbling down. The upward movement is a big feather in our cap and we need to make efforts to keep up with the good, or should I say innovative, work. There have been over the past year significant positive achievements in human capital, research, market & business sophistication. Campus startups and incubators being funded by companies across diverse institutions have propelled the startup culture especially in the IT sector. This implies that India’s educational system has improved in the eyes of the global peers, even though our overall ranking in education field is 118.

Things are way better for India in R&D compared with previous years, as the country has been investing consistently in R&D. A major contributing factor to this has been the presence of top multinational R&D centres that have set up shop all across the country. Numbering close to 1000, these R&D centers have made India an innovation powerhouse.

What should we be wary of?

The GII report highlights some glaring inadequacies too in India.  Our biggest drawback is the absence of elite & world class universities that can add to India’s innovation capability. Investments need to increase significantly in education across the board be it primary, secondary or vocational. India has its IITs and of course the Indian Institute of Science (which incidentally comes in top 150 universities in the QS university ranking system) which are facilitating innovation, but scientific innovations are few & far in number, with maximum R&Ds focusing towards making existing products more affordable to the common man.

New initiatives by Government of India could lead to some improvements in the education sector and soon we may see ‘Innovation’ become embedded in the basic fabric of our society. Let’s wait for the day when India breaks into top 10 most innovative countries in the world and hope that it isn’t too far!

- Ms. Monica Mor, Sr. Faculty, INLEAD

E-Commerce and its race in India

The dawn of the Internet era opened up amazing new possibilities and e-commerce has emerged as a perfect amalgamation of technology and marketing acumen. The latest statistics reveal that India has been reported to have 70 million active Internet users, the count rising exponentially by the minute. However, markets involve intricate interactions involving a variety of business/organisational factors, general economic and social trends. And the actual scope of growth in e-commerce cannot be evaluated without taking into consideration the aforementioned factors. For such doubts to be remedied, one may take notice of the recent industry reports. One such report, shared by ASSOCHAM, estimated the online retail industry to touch Rs 7,000 crore (rising from the current Rs 2000 crore), with an annual growth rate of 35 per cent. Adding on to this, IAMI has facilitated data to indicate a zoom in India’s e-commerce sector, with transactions rising 50 per cent annually. Online retailing or e-tailing, which accounts for about 6 per cent of the Rs 46,000 crore industry, has taken the forefront of this rapid growth.

There are shakeups in every industry & this sector is undergoing the same. Ask Me is shutting shop, Pepper Tap went dry, Jabong was bought by FlipKart, TaxiForSure was bought by Ola and then was gassed out completely. Let’s look into the phenomena called E-Commerce.

History of E commerce

   o   1970s: Electronic funds transfer (EFT)

·    Used by the banking industry to exchange monetary information over secured networks.

   o   Late 1970s and early 1980s : Electronic data interchange (EDI) for E commerce within companies.

·         Used by businesses to transmit data from one business to another.

   o   1990s : World wide web on the internet provide easy access to the technology for information publishing and dissemination.

·         It became cheaper to do business

·         It enabled diverse business activities

Some successful e-commerce platforms include:

   1) Amazon

   2)  Flipkart

   3) Snapdeal

   4) Urban Ladder 

   5) PayTm

Some interesting news:

1) Amazon surpassed Flipkart as the most downloaded mobile app on Google and Apple app stores during the first quarter of this year, a milestone for the US company that is seeking to become the No. 1 platform for e-commerce transactions in India.

     2) GST may prove to be  headache for the ecommerce players in India.

Watch this space for more info on this sector.

- Amit Yadav

  Student, INLEAD

  July 2016, INBM 

Carpe Diem

We celebrated India’s 70^th Independence Day this year on the 15^th of August. A huge contingent from India is out there in Rio, Brazil for Olympics and yet all we seem to be talking about is increasing earnings for our farmers, of including Dalits in our everyday lives and of fighting battles with terrorists in Kashmir.

We talk from the ramparts of the Red Fort like we are still under the clutches of East India Company. It would be the day when our Prime Minister isn’t talking about the malaises due to open defecation, due to unemployed youth and due to corruption.

We really need to seize that day! Carpe Diem..

I wait for the day when our Minister for Sports is not embarrassing us with his selfies and antics of his undisciplined entourage; for the day when a Shobha De’s pessimistic tweet prediction doesn’t come true; and for the day when our world number 1 shuttler doesn’t blame her knee for her loss from a 61^st seed.

I wait for the day when at least halfway into Olympics extravaganza we have atleast a couple of golds in our kitty; when more athletes participate in more number of games; and when the number of players travelling far exceeds that of the accompanying government babus.

We need to seize that day! Carpe Diem..

Can we not have a team that plays seven rugby, beach ball, hand ball, that pole vaults? Can we not have a better system of sports in India where parents are not paranoid about their kids’ career when they choose sports over academics? We need to find that day when facilities in schools are stretched to accommodate children who want to pursue sports seriously and not as a 6-8 pm outing; when parents do not have to worry about their kids’ diet which gets taken care of by schools; and when there are ample monetary opportunities in the field of sports.

I dream of a nation whose PM addresses the nation from a modern sporting arena and encourages its youth to go play and make money and bring laurels to their country. If you don’t believe in my dream, watch the happiness and sunshine on the faces of Michael Phelps’ mother and wife, you will love it. Imagine the feeling of procuring 23 gold medals across multiple Olympic presences. I want that sun shine over India.

I want India to seize that day! And seize it real soon!

Carpe Diem...

- Ms. Monica Mor, Sr. Faculty, INLEAD 

A frenzy called Politics in India

Indian politics is a jamboree of councils and assemblies, of multiple parties both national and regional, of politicians young, middle aged and even nonagerian (90 year olds). It can get overwhelming for a newbie to understand how the Parliament works, how the elections are conducted and how the Governments are formed or even brought down. The game of power is rather intriguing and while there may not be as much bloodshed in the name of politics as in the medieval age, but there are definitely enough Machiavellis to be wary of.

In light of the recent Cabinet expansions announced by our Prime Minister, Narendra Modi, let me take you through a beginner’s journey into the Frenzy called Indian Politics. Fasten your seat belts because this ride could be kind of turbulent!

How it all began in India…

Once upon a time a country called India became independent and decided to move ahead with a constitution that believed in socialism. Remember, then we used to be rather friendly with USSR (Union of Soviet Socialist Republics) and we wanted to follow their style of economic system. Well that country doesn’t exist anymore – it split into 15 countries, ummm..not all are friendly with us. And along the way we gradually abandoned socialism and adopted an American baby called Capitalism. So is this politics? No, not really. But our economic system defines the manifesto of the various political parties that battle it out during elections (National or State), so it is important.

Anyway the country’s journey continues rather simplistically. It decides to adopt everything that is British, the democratic system, the bicameral legislature, the election commission, and while they have a rubber stamp Queen, we have one in our president. How convenient!

Our Parliamentary system

So let’s talk about our Parliament and how it functions. The Parliament of India is the supreme legislative body and has two houses for its legislative members. The Upper House or the Council of States is called the Rajya Sabha, and the Lower House or House of the People is called Lok Sabha. There are 543 members in the Lok Sabha, all of whom are directly elected by the citizens of our country. Soon NRIs will also be able to vote from their respective new countries of residence. The Rajya Sabha on the other hand has strength of 245 members only and can expand to only 250. 233 members have to be selected from States and Union Territories (based on their population strength), and 12 are nominated by the President from the expertise of different fields of science, culture, art and history.

At the State level, there are 7 states, namely Jammu and Kashmir, Andhra Pradesh, Telangana, Karnataka, Maharashtra, Bihar and Uttar Pradesh which have bicameral legislature. These states are the most populous ones and hence have an Upper House called Vidhan Parishad and a lower House called Vidhan Sabha. The remaining States and UTs have unicameral legislature, i.e. there’s only the Vidhan Sabha. 

Elections are held separately for the Central government and the different State and UT governments. Although, now there are talks of cutting costs and preventing loss of man hours by holding elections across all SUTs and the center simultaneously.

Now that I have confused you thoroughly, my suggestion is go ahead and find out how many seats does BJP have in the Lok Sabha, in the Rajya Sabha and how many states is it present in and has formed the state government. Not such a tall task, go ahead and plunge into the depth of craziness!

For more details about our political system, keep watching this space.

-Ms. Monica Mor

 Sr. Faculty, INLEAD

Triumphant Trump and its impact on India

The reality TV star and supposedly successful real estate mogul has, in a very short span of time, become United States favourite nightmare. Ever since he threw his hat in the ring as a presidential candidate, Trump has appended all notions of decency, civility, decorum and code of conduct. To him rules are merely suggestions that he could play around with. From his profanity littered speeches to his almost reality TV like campaign events Trump has captivated people like a Rahul Gandhi speech you can’t just stop watching.

So, if one were to entertain the idea of Trump as President of the United States Of America, what would it mean for India?

PM Modi has invested a considerable amount of time and political capital into Foreign policy. He has so far visited over 33 countries in an effort to build bridges that had almost vanished under the tenure of Dr. Manmohan Singh. One particular highlight has been the close rapport he has built with incumbent President, Barrack Obama. PM Modi pulled off a coup by getting President Obama as the guest of honour on Republic day. It also led to the resolution of the contentious issue of the nuclear liability law, which was the bone of contention between the two nations.

Although not all is well between India and the US, relationships have progressed by leap years compared to the previous administration. Issues like WTO food subsidies and issues over IPR still however remain.

Donald Trump is rather unpredictable. He is a volatile and a supposedly shrewd businessman but he has so far failed to provide a great deal of insights into his foreign policy other than “Bombing the of ISIS” but if one were to extrapolate using the pattern he has so far displayed it would be a morose and troubling period for US as well as the world.

He has already dragged China and India over the issue of jobs. This issue might become a bargaining chip to underline his bombastic credentials to the people of US much like his xenophobic rhetoric over immigration. India would feel deeper nerves in the following points:

·    India will have a far harder time dealing with US under Trump, given his policy inexperience and his tendency to look towards short term headlines.

·    Trump will most likely resort towards using inverted domestic protectionist policies to shore up his domestic appeal because that is how leaders like him stay favourable in the public eye.

·    His presidency would be also be one of the most uncertain periods for global institutions including the IMF, WTO, NATO and so forth over which US has maintained an iron grip. He might also use them as tools to pressure countries like China and India over labour issues and exports there by posing a sizable threat to India.

·    Trump’s presidency would also mean a great deal of uncertainty for the Middle East. It would also mean exposing hidden fault lines between nations, thereby putting India’s foreign and economic policies and relations under stress.

·    He has hinted at the US taking a backseat in the Middle East, but the deep nexus between the administrations and industrial military complex would not be broken so easily. It might also result in Trump using his Middle East policy to lash out at vested interests and his political opponents thereby further muddying the picture somewhat.

·    Under Trump, India will also have to contend with the possibility of increased uncertainty over labour and exports which will severely impact the IT and Pharmaceutical industries.

·    It would also mean that India has to move towards building relations with China, rather than trying to counterbalance it like it is doing now with the help of the US. There is strong possibility of Trump bungling the South China Sea issue which will have an out sized impact ton India’s relationship with China.

India will have to build bridges and strengthen its relations will all its closest allies and trading partners because an era of Donald Trump can very well be a terrible mistake the whole world will have to pay.  At a time when the global economy is teetering on the brink of collapse, the threat seems more prescient.

- Mr. M.Ankit, Student, INLEAD  

The World Celebrates ‘International Day of Yoga’

“President, PM join thousands in celebrating International Yoga Day” read one of the news headlines in a leading daily. June 21, 2016 marked the celebration of Yoga on a worldwide scale. Yoga is a 5,000-year-old physical, mental and spiritual practice having its origin in India, which aims at transforming both body and mind. On December 11 in 2014, the United Nations General Assembly, following the call for the adoption of June 21st as International Day of Yoga by Hon’ble Indian Prime Minister, Mr. Narendra Modi, declared June 21st as the ‘International Day of Yoga’. During his address to the UN General Assembly on September 27, 2014, he stated: "Yoga is an invaluable gift of India's ancient tradition. It embodies unity of mind and body; thought and action; restraint and fulfillment; harmony between man and nature; a holistic approach to health and well-being. It is not about exercise but to discover the sense of oneness with yourself, the world and the nature." While suggesting June 21, which is the Summer Solstice, as the International Day of Yoga, Mr. Modi said, "The date is the longest day of the year in the Northern Hemisphere and has special significance in many parts of the world."

Stress has become a chronic aspect of life for many of us; and it takes its toll. With our brains over-stimulated and our bodies more sedentary than ever, many of us suffer from the fatigue and imbalance that comes from chronic stress without sufficient recovery. Practicing Yoga is an excellent way to soothe nerves that are in a constant state of overdrive. Yoga can help give us the ability to live healthy amidst our hectic schedules and bustling environments.

It is no wonder yoga has soared to such heights of popularity. Through yoga practice we begin to find a sense of wholeness. We become more aware. We create balance in our bodies, in our minds, in our lives. As we evolve individually and come closer to an open, authentic state of being, we also evolve as a species, creating a better world for us all.

“Yoga is the journey of the self, through the self, to the self.” – The Bhagwat Gita

-          Sumit Chakravarty, Faculty, INLEAD

Does Raghuram Rajan deserve to get a second term?

“He is rightly deemed as one of the very best central bank governors in the world”, say El – Erian, Allianz SE’s Chief economic advisor. Many bigwigs are backing a second term for our RBI governor. And why is this discussion in the offing? Raghuram Rajan’s tenure as RBI governor is up for renewal (or not), in September 2016. An RBI governor’s tenure is for about 3 years. Discussions are abuzz all around in India and abroad about the possibility of his extension. Hardly anyone is interested in whether the governor will cut rates or not, they are keen to know if he plans to stay put or move on.

Why is a central bank governor so important to any economy?

Well, it’s because he is just that, the governor. He is responsible for the country’s monetary policy. He is responsible for managing the liquidity in the country, which is so vital to the GDP growth of the economy.

According to an article in The Economic Times, dated 6^th June, this is probably the first time since liberalization of the economy began in 1991 that the prospects of the financial markets and industry have become so inextricably linked with the office of the RBI governor, or rather, who’s in it.

History of RBI guvs in India

The Governor of the Reserve Bank of India (RBI) is the chief executive of India's central bank and the ex-officio chairperson of its Central Board of Directors. Indian Rupee currency notes, issued by the RBI, bear the governor's signature. Since its establishment in 1935 by the British colonial government, the RBI has been headed by 23 governors.

The first governor was a Britisher, Sir Osborne Smith, who was the governor for 2 years and 90 days. The first Indian to hold this post was CD Deshmukh who held the post from 11^th June 1943 till 30^th June 1949. Dr. Manmohan Singh was the 15^th RBI governor and he held his position for 2 years & 120 days.

Often the ruling political party wants to bring in their favoured RBI governor, but there has been a different trend since YV Reddy. He was appointed the governor while NDA was in power & continued to be so in the subsequent UPA government in 2004.

Impact of Rajan’s exit

There’s speculation that Raghuram Rajan may want to return to academics post September 2016. So what would be adversely affected with him not getting a second term? So far as monetary policy is concerned, it is unlikely to be affected by the ongoing controversy, especially the one created by the loud-mouthed BJP politician, Subramaniam Swamy, who has been demanding his exit. India’s economy is growing at an impressive rate of 7.9% and that is a story in itself.

Raghuram Rajan unfortunately had been elevated to a superstar status by media. He’s had his successes and his failures, all which have been covered elaborately by all sections of media. His biggest success has been on the inflation front, contributed extensively by the falling oil prices. His crackdown on large corporate defaulters have won him kudos and made him the Indian public’s hero. However, he has often spoken out more than his predecessors which hasn’t really gone down well with the ruling party.

Dr. Manmohan Singh has often described governorship as the “loneliest job in India”. Let’s see if it’s vox populi (voice of the public) or a body of work that determines the future of our current governor.

Ms. Monica Mor

Sr. Faculty, INLEAD  

What is Women Empowerment?

Lucknow, 5^th April 2016: A rape survivor was refused any medical assistance by a government hospital in Lakhimpur, Uttar Pradesh and had to be carried by a policeman and attendants after she was refused even a stretcher. The survivor was a girl with special needs. (Source: The Deccan Chronicle)

This news was being telecast the entire day across various News channels in India. It was both disturbing and horrendously appalling, and was reacted to differently by different strata of the Indian Society. While for some, it was just news, some like me dwelled on the thought of what have we become as a society.

 In today’s times, Women "Empowerment ", "Emancipation", “liberation" and "Women Rights" seem to be the hot topics of discussion in the modern Indian society; the word “empowerment”, particularly, being misinterpret and misrepresented by both men and women. The definition of empowerment has been re-defined every now and then. For some it means financial independence, for others it implies freedom, while for some it signifies freedom of expression. In a recent debate I was witness to, on “the influence of western civilization on Indian culture”, someone mentioned that the concept of women empowerment is a contribution of the western world. Sadly, a rebuttal that followed was that this very concept had led to the introduction of addiction and adultery for Indian women. This brings about the fact that no matter how modern we act or behave, our thought process remains quite conservative. We have been blinded by our values and customs to an extent of treating empowerment in a sense of materialism, rather than an act of morality.

On the other hand, some staunch feminists have created uproar in the name of women emancipation to fight against any kind of injustice or ill-treatment towards them. However, the definition of injustice is very subjective and vague in itself. Who is to decide, what is acceptable and what is not? There have been examples where women have misused the concept of "Women liberation and rights" in order to get their way out, if they are unhappy with their relationship with their spouse, employer, colleague or in-laws.

Let us understand what empowerment means. It means ‘to give power or uplift’. Despite worshipping our god in the form of “Ardha-Narishwar” – Lord Shiva in the Avatar of half woman and half man, we have never come to terms about treating each other equally. Most of the responsibility in this direction dwells on the shoulders of us men, for we have enjoyed being the alpha in the society, and still do. Breaking traditional stereotypes, both at institutions and homes, education must emphasize on the acceptability, inclusivity and gender equality. Ultimately, it all boils down to one single idea - Empowerment is the ability to lead one's life with dignity.

- Mr. Sumit Chakravarty

  Faculty, INLEAD

The Story of Make in India

Make in India campaign commenced a day after India’s manufactured satellite Mangalyaan was successfully put in the Martian orbit, showing the world the processes, technology, science and innovation. On the day of launch Indian prime minister said “over the decades, the trust and confidence in government and policymaker’s have been lost and need to be regained” this shows his commitment towards making India a manufacturing hub.

Currently manufacturing contributes 15% of national GDP and the aim of this campaign is to grow this to 25% by 2022. Indian government is trying to make India a manufacturing hub by encouraging FDI, which can create employment opportunities, aiming to create 100million jobs by 2022. Its focus on Skill India, Startup India and Digital India may boost the “Make in India” campaign; they in fact can be termed as branches of same tree named Make in India.

How will Make in India succeed?

There were lots of doubts in the minds of economists and other industrial experts that whether India can compete with China in the manufacturing sector. China is the biggest competitor of India amongst all the other nations. But considering present situations, with the labor costs in China increasing, bank interest rates have also increased, the Government of China has been trying to push industries which are in the coastal line to the inside areas. In other words China wants to get rid of its “zombie factories”. And the manufacturing units are looking for a substitute country, like India. This is an opportunity for India and one such example is the factory that has been set up by FoxConn in India.

World is looking to invest in Asia, places with high demand, and this may be a very positive opportunity for India to attract investments.

What is the excitement with respect to FDI?

While talking about Foreign Direct Investments, on an average every developing country has contribution of F.D.I at 30%of G.D.P where as in India we have F.D.I only 12%of G.D.P, it is said that each 1% increase in F.D.I adds 0.4% of a country G.D.P growth.

There are many opportunities in India especially with its 65% of population which is less than 35years age, and a huge market with skilled work force. Talking about the Infrastructure, licenses, ease of doing business, etc. we are making steady inroads in all these aspects. Indian government is showing the whole world that India is the best place for investment and a Red carpet for foreign investors has been laid down. Single window clearance system has been put in place by FIPB (Foreign Investment Promotion Board) which lead India to jump by 12 places in Ease of doing business, from 142^nd position to 130^th.

Other requirements for success of Make in India:

Land acquisition bill and GST bill play a prominent role for India in attracting Investments from foreign players. The basic major cost of business is towards land, labor and raw materials. There is a need for Indian government to pass the above mentioned bills, as also increase the number of Special Economic Zones within our country.  In India we have often witnessed lack of cooperation and synchronization between the central and state governments, primarily because of multiparty system. They have to be brought together to ensure success of the Make in India campaign.

As a citizen of this country, I really do wish this campaign succeeds and creates the benefits we expect from it.

Manohar Reddy

Student, INLEAD

INBM, Batch July 2015

Are we smart enough to build Smart Cities?

The current Govt. true to its pre poll promises has taken up some initiatives that will in the long run be those initiatives which Indians would be proud owners of.  One such initiative is construction of Smart Cities. A project if successful, will serve as a model modern living concept.

What is a Smart City?
There are many definitions of Smart cities. While we will tackle that later, let’s look at some initiatives that the Govt of India has taken up in its Smart cities Mission. The mission is expected to set examples that can be replicated both within & outside the smart city.


According to the website http://smartcities.gov.in/ the core infrastructure elements in a smart city would include:
i. Adequate water supply;
ii. Assured electricity supply;
iii. Sanitation, including solid waste management;
iv. Efficient urban mobility & public transport;
v. Affordable housing, especially for the poor;
vi. Robust IT connectivity & digitalization;
vii. Good governance, especially e-Governance & citizen participation;
viii. Sustainable environment;
ix. Safety & security of citizens, particularly women, children & elderly; and
x. Health & education

Smart cities are aimed at improving the quality of life, provide employment opportunities, encourage  green living and especially create inclusive cities that look after its Have nots (i.e. poor, elderly, disadvantaged) and the Haves alike.

Choosing Smart Cities in India
There are 100 Smart cities in the pipeline that have been distributed among States & Union territories on the basis of equitable criteria. The formula gives equal weightage (50:50) to urban population of the State/UT and the number of statutory towns in the State/UT. This has resulted in all States & UTs having atleast 1 smart city, with Uttar Pradesh having a maximum of 13, followed by Tamil Nadu with 12, and Maharashtra with 10 such cities.

Monitoring of Smart Cities
The Union Ministry for Urban Development is responsible for implementing this mission. A total of Rs.70.16 billion has been allocated for this mission. National level monitoring will be of two types: Apex Committee & National Mission Directorate. These committees will develop strategic blueprints, coordinate across center & states, oversee capacity building, and approve the release of funds based on progress in implementation. The first smart city under construction is at the Gujarat International Finance Tec-City at Gandhinagar in Gujarat.

To conclude lets define Smart City:
To provide for the aspirations and needs of the citizens, urban planners ideally aim at developing the entire urban eco-system, which is represented by the four pillars of comprehensive development-institutional, physical, social and economic infrastructure. With these smart cities we will be able to boast of modern facilities & a quality of life comparable to western standard of living. It will be symbolic of a culture that needs to be fostered & inculcated such that a sense of discipline & timeliness becomes an integral part of our lifestyle.

Monica Mor
Sr. Faculty, INLEAD

The Budget Gravy Train of 2016

A budget that was met with tons of cynicism resulted in a plunge in stock prices of some companies & the shedding of close to 200 points in the Sensex on the 29^th of Feb soon after the presentation by Mr. Arun Jaitley, Minister of Finance.  A day after however, the Sensex surged ahead as a result of confidence shown by business houses in the pro farmer budget. The flop show curtailed primarily by our Minister of State for Finance, Jayant Sinha, who called the budget a “Vikas ka Budget”.

In a nutshell, it’s a budget that angers the salaried class, pacifies the startups, cajoles the farmer & nurtures the poor. So here’s presenting a quick run through on what’s in this budget for citizens of the Republic of India:

For the Farmers:

The Finance Minister has rolled out several sops for the farm sector with a focus on doubling farmers’ income in 5 years. An ambitious plan by all means, which clearly asks the nation to bring BJP back in power in the general elections of 2019. And with the upcoming state elections in UP & West Bengal which are typically agriculture driven, the Govt. aims to come to power there. In fact our service tax has risen to 15% (wef June 1), up by 0.5% (a new Krishi Kalyan Cess), clearly pointing to the importance of generating funds for the farming community. A dedicated long term Irrigation Fund with an initial corpus of Rs. 20,000 crore in NABARD has been created. In totality, the target for Agricultural credit in 2016-17 is 9 lakh crore.

Sops for the poor:

Jayant Sinha said that “Garibon ki Unnati”, or upliftment of the poor, would be government’s foremost priority. A unified social security programme which would be linked to Aadhar will identify & target the poor to provide them with food, shelter, sufficient income support, health cover, life insurance, pension & access to various credit facilities.  The Govt. has allocated Rs. 38,500 crore for the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) this year. In addition, there will be a massive nationwide roll-out of ATMs & micro-ATMs in Post offices to ensure credit availability at all accessible points in the rural areas.

For the startups:

Not a very exciting sector, in terms of budgetary provisions this year. Rs. 500 crore has been allocated for Dalit & women entrepreneurs. There will be 100% profit deductions in 3 out of first 5 years for companies set up between April 1 2016 & March 2019.

For the salaried class:

This class is often the most stretched & penalized every year, ironically for paying their taxes! They would hereafter have to pay more for fine dining, movies, a visit to the gym or beauty salon, telecom services, electricity & mobile bills, amongst many other services which have been adversely affected by the hike in service tax. To top it all, their Provident Fund savings are also going to be taxed. It would be on the amount of the interest earned on the PF withdrawn if it’s greater than 60% of the total amount held.

The Digital twist:

Some positives, some negatives; multiple opinions are being posted on this year’s budget.  The budget, I must concede has one big positive, and that’s the huge Digital India flavor. It’s extremely tech-heavy other than being farmer-heavy. The finance minister has proposed establishing a land information management system, a financial data management center, an online agricultural marketing platform, a digital food grain procurement system, a website connecting dairy animal breeders & farmers, automation in 3 lakh fair price shops and a data-mining platform to nab tax evaders.

Well the train has moved from the Fiscal platform, let’s see where its stops, where it rolls back, where it derails & where it catches speed. Keep watching this space for more inputs & for any modifications that may happen as time goes by.

- Ms. Monica Mor

  Sr. Faculty, INLEAD

All that Glitters is Gold…(Bond)

The Current Account Deficit (CAD) in India had touched alarming levels of 4% of GDP (India’s GDP is about 1.2 trillion dollars) in 2011, it then touched a scary 6% in 2012 and since then has come down to a low of 0.2% of GDP in the last quarter of fiscal 2014-15. I will take a small detour to explain what actually is CAD. To begin with, Current Account is the earnings of a country by way of international and domestic trade, net income from abroad and net transfer payments made against services imported or exported from a country. A country enters into a CAD if their payments abroad are more than their earnings.

The drop in CAD figures is a sign of a healthy economy, primarily attributed to the fall in Oil bill with the prices per barrel of crude oil falling to a low of $60. Another major contributor to our CAD is an ever increasing import of gold due to a very high demand in the domestic market. India currently imports about 1000 tonnes of gold every year, leading to outflow of foreign exchange, and pressure on current account. Our erstwhile Finance Minister Mr. P Chidambaram had in early 2014 put in place quantitative curbs and enhanced tariffs on gold imports. But the fact of the matter is that a huge cache of gold still finds its place in our economy via the smuggling route.

While crackdown on smuggling may be an answer, it’s not a long term solution. So GOI (Government of India) is looking at three options very seriously, the first one being Sovereign Gold Bonds, the second being Gold Monetisation scheme and the third being Issuance of Gold coins

In this article I will be primarily focusing on Gold Bonds. For details on other schemes keep watching this space.

Sovereign Gold Bonds

Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold aimed at bringing down gold imports and providing an alternative to physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity, which is a maximum of 8 years. The bond is issued by the Reserve Bank of India on behalf of the Central Government.

Gold bonds will carry an interest rate of 2.75%, and will be sold through banks and designated post offices. Applications for the bonds are being accepted till 20^th of November, and the bonds will be issued on 26^th of November. Gold bond aims to provide people an alternative to buying physical gold. The bonds would be worth 2 gm of gold all the way till 500gm. This is the first tranche of the gold bond scheme. The price of the first tranche is Rs. 2684 per gram. There will be more such tranches.

Benefits and Challenges

Household savings garnered from the bond will be put to productive use by the government as also earn interest for the bondholder. Gold bonds are free from issues like making changes and purity in the case of gold in jewellery form. The bonds, to be sold by banks like SBI, either directly or through their agents, can be also be held in the  demat (dematerialized / paperless) form thus eliminating risk of loss of scrip. They can be traded in stock market and can be given by parents to their children as gifts. Moreover, it’s a Sovereign bond and hence GOI will never default in its payments.

On the other hand, the Gold Bond Scheme might fail to find many takers as the price of a gram of gold at current prices is Rs. 2,599, with the expectation that it will fall through 2016 primarily due to a stronger dollar, which is lower than the price of Gold bond. Moreover the interest rate payment would be in cash, whereas investors may look at payments in gold!

The first Gold bond will roll out on the 26^th of November 2015, and we have to wait and watch the public response to such initiatives. It is a good initiative by GOI to curb gold imports, but how successful, only time will tell.

- Monica Mor

  Senior Faculty, INLEAD

Images Courtesy- Google Images