Innholdsfortegnelse for 26 February 2017 i Business Today

In my letter (A Lack of Data) in the Business Today pre-Budget special, I had pointed out: “Almost all economists agree what the finance minister ought to do. He should go in for hefty tax cuts to make firms and consumers start spending again, deepen the social security net so that the poor are benefitted, and boost government spending on infrastructure to get the economy going.” I had also pointed out that the lack of high quality data, post-demonetisation, would make working out the details of this Budget a bit difficult. “The problem is not with what he needs to do. The issue is how much he can do...” The Budget documents show that Finance Minister Arun Jaitley has been cautious about calculating his revenue assumptions for next year. He…

08 RETAINING TALENT WHAT: Workshop on Employee Engagement and Retention WHEN: February 8, New Delhi WHAT TO LOOK FOR: The CII workshop will focus on measuring employee engagement, crucial to retaining talent. Employee engagement is the degree to which employees are emotionally bonded to their organisation and passionate about work. The session will delve on how employees can be intellectually and emotionally bound with an organisation, feel passionately about its goals and be committed towards its values. 08 BETTING ON SOLAR WHAT: Solar Invest 2017 WHEN: February 8, Hyderabad WHAT TO LOOK FOR: The Assocham event will debate ways to harness solar power and make it cheaper. On top of the agenda is discussing ways to improve grid stability for evacuating solar power, which would need large investment in utility…

Be it #SelfiewithModi or #MufflerMan, political campaigns on social media have always managed to stir up a storm. The latter started as a mudslinging campaign against Arvind Kejriwal, and was turned into a meme by Aam Aadmi Party’s social media team to announce his ‘return’ to end corruption. This was in November 2014, before the impending re-election next year, his abrupt exit as the Chief Minister of Delhi after a 49-day stint still afresh in people’s minds. Twitter was abuzz with pictures of #MufflerMan dressed as Spider Man, Bat Man, and Super Man, with the trademark scarf and broom in tow. It became the top political hashtag on Twitter in 2014. AAP managed a sweeping victory. And social media, too, emerged as a winning platform for political campaigns. Much more…

FM’s revenue projections are far more restrained. His spending itself, shorn of the rhetoric in the Budget speech, is also inclined to be conservative The first post-demonetisation Budget has been cautiously praised by most economists and analysts for being pragmatic and restrained and focusing on the right things. Given the slow growth of big private investment in greenfield projects to create lots of jobs, the government has tried to tackle the problem partly through tax incentives to the micro, small and medium enterprises (MSME) sector, which accounts for a tad over 37 per cent of the GDP (taking manufacturing and service firms into account). He has proposed even higher spending on infrastructure, which has been the government’s focus for the past two years anyway. The logic is that infrastructure spending…

Governments have been spendthrift consumers and wastrels; the government as a leader of the economy has been only a dream. Somehow this dream has become achievable in India For two hours in the year, the finance minister is the master of all he surveys. Television cameras show him all over the country; millions watch and listen to him with rapt attention. That is only the beginning; he is the darling of newswomen through the day, and learned-looking grown-ups spin theses the whole day upon the wisdom he poured in the morning. Interviewers queue up to talk to him; he can kick out those known to ask hard questions, and choose his sycophants. What makes him such a cynosure? He owes it to our British past masters. Centuries ago, their common…

This Budget comes in the wake of a good monsoon in most parts of the country. With two successive years of poor rains, 2014/15 and 2015/16, the ‘normal’ monsoon in 2016/17 provided much relief to farmers. There are indeed parts of the country where the monsoon this year, the south west or the north east, has been in deficit. The official Advance Estimates of GDP have been strengthened by a projected growth rate of 4.1 per cent for the agricultural and allied sector in 2016/17. This alone is not anywhere close to the pace required to double farmers’ income in the time frame indicated in last year’s Budget. The challenge for the Budget this year has been to get closer to a strategy that can raise farm sector’s income significantly…

In August last year Rio Tinto, the world’s second-biggest miner, announced it was abandoning its $500-million diamond mining project in Bunder, Madhya Pradesh. It followed in the footsteps of global majors ArcelorMittal and Posco, which had earlier given up on massive mining efforts they had launched in Odisha and Karnataka. In fact, ArcelorMittal now wants to set up a solar plant instead of the steel plant in the 2800-acre land it has acquired in Karnataka. Rio Tinto had been at work since 2002 and had sunk over $70 million into the project. Initially, in 2008 the company had estimated a yield of 37.4 million tonnes kimberlite, which would yield 27.4 million carats of diamonds, but a year later revised the figures to 53.7 million tonnes kimberlite producing 34.2 million tonnes…

DISRUPTIVE TECHNOLOGIES Monopoly and other board games dominated in the early 1990s, but new technologies soon disrupted the gaming space: • Games found a new platform on digital and hand-held devices • Games as apps created dramatically lower entry barriers • Digital games spread virally and achieved global volumes, upending traditional revenue models NEW DISTRIBUTION CHANNELS In the early 1990s, toys and games were distributed primarily through brick-and-mortar retail outlets. Then: • Big-box stores began squeezing out mom-and-pop stores and boutiques • Amazon and other e-commerce players emerged FUNDAMENTAL CUSTOMER SHIFTS In 1995, Hasbro’s primary target consumers were 15 and younger. Over the next two decades: • Dual-career parents spent less time with their children but had more disposable income. Per capita spending on children increased • Parents began to…

The Cultural Revolution: A People's History, 1962-1976 BY FRANK DIKÖTTER PAGES: 432 PRICE: 499 BLOOMSBURY PUBLISHING In 1956, two historic events occurred in the Communist world – one well known, the other, less so. First, in February, at the 20th Congress of the Communist Party of the Soviet Union, Nikita S. Krushchev denounced his predecessor as General Secretary, the deceased Josef Stalin, and exposed the purges and executions carried out during his rule. This had its fallout in neighbouring China, weakening the control of Communist Party Chairman Mao Zedong, who had been modelling himself after Stalin. Next, in September, at the eighth party congress of the Chinese Communist Party, all references to Mao’s thoughts were deleted from the party constitution. This dilution of authority, Frank Dikötter maintains in his latest…

This year’s Budget came in the backdrop of demonetisation, and the global turmoil. In his Budget speech, the Finance Minister emphasised India is a tax non-compliant society, with a low tax-to-GDP ratio. With this background, he presented the Union Budget 2017 with an objective to stimulate growth in the real estate sector, incentivise digitisation, and focus on compliance. At the same time, he has focused on rewarding the common man through a reduced tax rate. Here are some of the key proposals of the Union Budget 2017 that impacts the common man: The Finance Minister has provided relief by reducing the tax rates on income between Rs 2.5 lakh to Rs 5 lakh from 10 per cent to 5 per cent. This quantifies into a tax saving of Rs 12,500…

Indian Economy in a Dilemma This refers to your pre-Budget special cover story (Setting the Pace, February 12). The cover image depicting the elephantine predicament of the Indian economy was brilliant. It is clear that there are numerous threads to be urgently picked up to weave a tapestry of economic growth, affording welfare to the poor and the marginalised. The public awaits the coming Budget like a cat on a hot tin roof and by the time the next issue of BT is out, the cat will be out of the bag! It cannot be gainsaid that the budgetary formulations and prescriptions are being crafted for post-demonetisation period with the data of the pre-demonetisation stage and hence estimates will definitely fall short of demands of the pre-Budget expectations. The action…

Live Stories Image sharing and social networking app Instagram has commenced a live streaming feature for the US and UK; and will launch it in other countries, including I ndia, soon. To go live on Instagram, users need to swipe right on their feed and choose Start Live Video. However, unlike on Facebook, the story will disappear from the app after the live streaming ends. Facebook archives the live streaming videos and users can watch them later. To watch someone else’s live stream, users need to go to Top Live option on Explore, and choose from the list. To use this feature, users have to upgrade their apps to Instagram version 10.0 and above. Talk, Share YouTube has introduced an in-app messaging feature on its app for Android and iOS…

The first Budget since demonetisation has been a careful exercise by Finance Minister Arun Jaitley. It caters to the core constituency – farmers and lower income people – while not introducing anything that hurt industry. The increased focus on infrastructure spending at `3.96 lakh crore could over the medium term lead to more jobs at the bottom of the pyramid. On the fiscal front, despite halving income tax rates at the lowest end from 10 per cent to 5 per cent, Jaitley has managed to rein in the fiscal deficit to 3.2 per cent in 2017/18. Business Today discussed Jaitley’s fourth budget with an elite panel that included Arvind Virmani, President, Chintan and former Chief Economic Advisor; D.K. Srivastava, Chief Policy Advisor, Ernst & Young, Jaijit Bhattacharya, Partner, Strategy &…

The MSME sector in India is a network of 51 million enterprises, which provide employment to 11.7 crore people. It contributes to 37.5 per cent of the nation’s GDP. This sector needs working capital loans of `26 lakh crore. However, the banking system has lent them only `11.1 lakh crore. This is a significant gap that holds the MSME sector back from realising its potential. The government has identified that this sector is significantly and chronically underfunded. Hence, it set up the Micro Units Development & Refinance Agency Ltd (MUDRA) in April 2015 with an objective of developing the micro enterprise sector by extending support, including financial support in the form of refinance, to achieve the goal of “funding the unfunded”. Financial institutions receive refinance from the MUDRA bank for…

The financial sector is the prime mover of development. Efficaciously functioning financial markets optimise utilisation of other factors of production – land and labour – too. India’s reform story began with the financial sector, albeit in primary and less controversial areas like the abolition of the Controller of Capital Issues and opening up of stock markets to foreign participation. A vibrant financial market is characterised by the wholesome presence of investors, entrepreneurs and intermediaries, and a bouquet of products where efficacy – including the behaviour of participants and enforcement of the contract – is ensured by the micro-market structure and the ground rules. Viewed in that perspective, the Budget 2017 proposals presented by Finance Minister Arun Jaitley have the makings of a transformational Budget – the way the business will…

Terrain: Half the 50 mineral-bearing districts have large tribal population, many of them protected by special laws. The average forest cover in mineral-rich districts is 28 per cent as against the national average of 20.9 per cent Naxalite menace: 40 per cent of the country's mineral-bearing districts have a Maoist presence, which endangers miners’ security and inhibits mining efforts Legacy issues: The mining sector has been notorious for engaging in many kinds of illegalities, tax evasion and unscientific practices that have degraded the environment, resulting in deep suspicion of its activities among local population Clearance delays: The multiple approvals required result in inordinate delays that damage investor confidence. It takes three-five years to start a mine in India, one of the highest in the world. Delays…

Ever find yourself staring at a cluttered desk – post-its strewn all over, magazines doubling up as coasters – juggling phone calls and incessant emails, as numerous unread tweets and the lukewarm coffee crave for your attention? If this gave you a sense of déjà vu, your work life is about to get better. On your desktop and smartphone, the very sources of chaos, lies the panacea for most of your professional woes. Be it managing time more efficiently, giving your brain a little boost or staying updated on developments across the globe, there are several apps and websites to help you get by a busy day with ease. You could also learn a new language or imbibe a new skill by enrolling for an online course, while at work,…

By Radhakrishnan Pillai Price: 350 Chanakya was one of the best strategic thinkers of the world. The author distills Chanakya’s age-old wisdom on how to think to the masses through his practical and innovative approach. Little Black Book for Stunning Success By Robin Sharma Jaico Publishing House Price: 250 The Unusual Billionaires By Saurabh Mukherjea Penguin Price: 499 Romancing the Balance Sheet By Anil Lamba Collins Business Price: 750 Ego is the Enemy By Ryan Holiday Profile Books Limited Price: 499 The Dhandho Investor By Mohnish Pabrai Wiley Price: 299 *Top books by sales for Jan 15 - 30, 2017; Includes only books released after Jan 1, 2015; Information provided by…

 Chennai, January 22, 2017 83 golfers teed off at the Madras Gymkhana Golf Course for the Chennai leg of the LLOYD Business Today Pro-Am. The winning team earned itself a place in the Pro-Am National finals to be held in Delhi. The individual winners would compete at the International leg to be held in Thailand later during the year. LLOYD Electric & Engineering - the Co-title sponsor, Indian Oil - the Fuelled By sponsor, Tata Docomo– the Telecom Partner, Golflan.com - the Digital Partner, Nautica – Style Partner, Ballantine’s - Partner & Creatigies – the Marketing Partner of the event.…

Lower tax: The tax rate for income between Rs 2.5 lakh and Rs 5 lakh has been reduced from 10 per cent to 5 per cent. Lower rebate: The rebate under Section 87A has been reduced from Rs 5,000 to Rs 2,500. This is for those whose taxable income is less than Rs 3.5 lakh Surcharge on rich: Taxpayers whose income exceeds Rs 50 lakh but is less than Rs 1 crore will pay a surcharge of 10 per cent Capital Gains: Holding period for computation of long-term capital gains on house property has been reduced from three to two years Indexation: The base year for indexation is proposed to be shifted from 1981 to 2001 for assets Loss from house property: The set-off for ‘loss from house property’ from…

To make transactions using UPI, one does not require an account number or bank details. All transactions can be done using the VPA created within the banking app The Bharat Interface for Money (BHIM) mobile app, launched on December 30, 2016, in a bid to make digital financial services available to all, has emerged as one of the fastest growing apps. Within 10 days of launch, it has seen one crore downloads, and over 20 lakh transactions across the UPI (unified payments interface) and USSD (unstructured supplementary service data) platforms. While it is a big step towards digital inclusion, how different is it really from the existing digital payments systems? ONE FOR ALL BHIM is a digital payments solution app, for easy and quick transactions, based on the Unified Payments…

• No major changes which largely indicates that GST implementation is well on track • Extensive industry reach-out efforts for GST planned by government from April 2017 • Several measures taken by rationalising Customs and Excise duty rates to boost digitisation, domestic manufacturing and address inverted duty structure. • Credit reversal provisions aligned, for treatment of interest/discounts on loans and deposits extended by Banks/NBFC. Compiled by EY…

This was Finance Minister Arun Jaitley’s fourth Budget, plumb in the middle of his government’s five-year tenure. At this juncture, it would not be inappropriate to expect a big-bang Budget. However, the finance minister was hemmed in by several factors. First, the state elections meant that nothing could be announced that would be construed as a poll freebie. Second, fiscal adventurism could hurt badly, putting pressure on inflation and interest rates. Not to speak of adverse action from the much-maligned rating agencies. As such, foreign indebtedness of the private sector is uncomfortably high, and a sharply weaker rupee and higher rates can hurt badly. Third, tax giveaways are constrained by the fact that India has one of the lowest tax-to-GDP ratios among G20 peers. Indeed, in his speech, the finance…

The government’s policy making has been clearly focused on long-term structural benefits, which is likely to be positive for Indian companies, even if sometimes disruptive in the near term. The equity market has reacted positively to the Budget, with a rally driven by relief over lack of change in long-term capital gains tax on equities. We believe consumer and cement sectors may benefit from the rural focus and the thrust on infrastructure development may benefit select defence and capital goods stocks. Banks may profit from digitisation, softer rates and generally from pick-up in growth. Despite moderate declines in earnings estimates recently due to the expected impact of the note ban on consumption demand, consensus estimates forecast a growth rate in the high-teens for 2017/18, which we consider reasonable given the…

BigBasket is the most well funded online grocery startup in India, having raised a cumulative of $246.5 million from well-known investors like Ascent Capital, Bessemer Ventures and Abraaj Group. BigBasket operates in a hyper-competitive business where margins are razor thin but scale is expected to make up for it. It competes with the likes of Grofers, ZopNow and Amazon. To stay ahead of competition, BigBasket needs to ensure that its customer experience and communication is flawless. Didn’t get that exact variety of daal (pulses) you ordered? BigBasket needs to hear about it and address the issue through its in-house contact centre operation. Customer feedback is too important an aspect of its business to be outsourced. The cloud telephony partner who has worked with BigBasket to scale up from a few…

 In the first few years of the new millennium, at the height of the boom in the offshore call-centre business, Tata Consultancy Services, the Indian technology-services giant, made the counterintuitive decision to divest its call-centre operations. When TCS moved out of call centres, it was acting to prevent the right future from being swamped by the wrong one Why? Because although outsourced call centres were a fast-growing piece of its current business, TCS’s leadership had come to believe that they would soon be burdensome. Employee churn was exceptionally high, forcing the HR department into a round-the-clock effort to hire and train as many as half a million new reps annually. This drained resources and distracted the company from its real goal – to develop more-sophisticated capabilities and service offerings. By…

The Essential Book of Corporate Governance BY G.N. BAJPAI PAGES: 335 PRICE: 595 SAGE PUBLICATIONS Most Indians have held Mr. Bajpai in awe. A word or sentence shared with him in his glory years is all it took to create a lasting legacy of remembrance. The interaction with his extraordinary book on a subject most dear to his heart can transform any professional, owner or manager. It can contribute immeasurably to creating value. The Essential Book of Corporate Governance has an extraordinary sweep of history, philosophy, pedagogy, and simple applied common sense. It begins with a dramatic brief history of the way human kind has evolved into a data-ist society today, encompassing hunting, gathering, agriculture, industry, and information technology. He then dwells upon the evolution of the Joint Stock Company…

Kurt Stoeckli, President and Chief Scientific Officer, Glenmark Pharmaceuticals, talks to P.B. Jayakumar about the latest trends in drug research globally. Biologics drug research is gaining emphasis, while for novel chemical entities (NCEs), the number of newly marketed drugs is declining... Pharma companies have shifted their innovation models towards new biological entities (NBES), based mainly on scientific breakthroughs, and marked progress in translational medicine. This is a natural evolution in life science industry. NBES are generally less cost-effective and more challenging to scale up and manufacture. In fact, even minor changes in the manufacturing process can cause significant, potentially clinically-relevant changes in efficacy or immunogenicity – the ‘success’ rate of addressing an unmet medical need and developing a novel medicine appears to be favourable for NBES. That’s because most biologics…

After being subdued for most of last year, the banking sector has gathered momentum. The S&P BSE Banking Index, a proxy for the sector’s performance, has returned 26 per cent between January 16, 2016, and January 16, 2017. Banking sector funds did even better and delivered 31 per cent returns on an average; the top performers returned more than 35-40 per cent. In fact, banking funds beat all equity mutual fund categories (See Fund Performance). THE DRIVERS Alpesh Mehta, Banking Analyst, Motilal Oswal Securities, says the third quarter of 2016/17 was important for the sector due to three defining trends – a sharp rise in current account, savings account (CASA) deposits at most banks due to demonetisation, pick-up in digitisation and massive fund flows into bond markets, which triggered a…