The sensex turns

The bulls may come marching in
Ninad Dhirubhai Sheth
On the Richter scale, the victory of the Manmohan Singh lead UPA government, can only be described as super seismic. As if on cue, the stock market went ballistic, rising 2110.79 points and shattering the circuit in 60 seconds.
This is the fastest ever single day rise of the Bombay sensitive index, indeed it is the fastest single day rise anywhere in the world. Although it was all over in just a minute - it added a phenomenal 566,881 crore in investor wealth.
So will the party last of are there enough structural issues that will ensure that a bear grip stays on the stock market?
Says Vikas Seth, director of my money securities, an investment firm, “The rally is real, however for it to be sustainable, two factors will be crucial, the first is fiscal deficit. Even at these levels it is posing a threat to the system as it accentuates government borrowing and crowds out private investment. The other thing to keep an eye on is the appetite that the new government will have for disinvestment of government owned public sector companies. On a positive side, the stability of this government will give it confidence for a bold budget and that will in itself provide a boost to the markets.”
The disinvestment plan of this government, according to finance ministry sources, is likely to be aggressive. It will aim at generating over 100,000 crore from the markets. There are 26 profit making PSU’s that could be on the block over the next few years. Says a Mumbai based banker, “Bombay is certainly bullish, and there is a lot of momentum expected on the disinvestment front. If the budget comes out with some bold reforms, and if, as is expected, the monsoons are good we may be looking at a major rally on the stock markets this year.”
One concern is that in two days the BSE listed stocks price earnings ratio shot up from 16.61 on may 15 to 19.48 on may 20th giving it a distinct casino feel. Says Ajay Parmar, head of equity research, at Enkay securities, a brokerage in Bombay,“The PE ratio will come down. While the mood is bullish one needs to wait for sequential policy measures to have an impact on the ground. Till then it would be a mistake to go euphoric at the rally. Wait is still the watch word. “
The prediction from various stock broking houses is looking optimistic. There is a momentum in the market and some believe that the market could reach as high as 20,000 by December. The consensus looks like the sensex reaching 16,000 levels.
Just as India enters a new period of stability, so the markets look set for a new phase of bullish activity. The time it appears is right for investing, not withstanding that some doubts remain on the fiscal front. Get set for what looks like the beginning of a new bull run on the Sensex. For the retail investor however it is important to add a dash of rationality to the exuberance on display.

A slow down is not a recession

Don't P A N I C

Ninad Dhirubhai Sheth

Confidence is the key. In cricket, when you are low on that critical element, the same shot that got you those spectacular no one moves boundaries result in inglorious caught behinds. The Indian economy is somewhat a similar mood spell. Fundamentals are intact. On almost all parameters including saving rates, investment rates and domestic spending the country is better placed then the US Japan and Germany the three economies which have fallen into a recession. Yet the mood is one of fear. Look around and you see a country low on confidence. The economic crisis globally has induced a scare in India. It is amazing that so many are worried so much by the global crisis even as the economy itself grows apace. It is as if we are determined to talk ourselves into a recession. Go to the ministry of finance and you see nervous bureaucrats scurrying around trying to understand the impact of the global crisis. In Mumbai big firms - the Tata's included - are communicating with staff asking for belt tightening, giants like L&T are cutting back on grand ship building and realty projects. And the airlines, well that's too well documented to be detailed. Thus the fear of recession is writ large in today's corporate India. But is there really a recession? For one thing the classic definition of recession a - shrinking economy for two consequent quarters – simply does not imply to India. The economy grew the last two quarters - albeit at a marginally slower pace. Comments Surjit Bhalla, Chairman, Oxus investments, a noted economist, "We do not have a recession in India. Sure, the global recession will lead to a growth downturn however it cannot be called a classic recession. Look at the realities, inflation is back in single digits and oil prices have halved. Thus we have more elbow room now. " A Standards and Poor's report recently commented that countries like India are less likely to be impacted by the global downturn since their exposure to global trade is marginal when compared to their domestic consumption.Says Pavan Jain CMD, of safexpress, a logistics firm, "There certainly is an economic slowdown, but to call it a recession would be a statement made too soon. As compared to what the other countries are facing we are still in a better position as our banking structure is not as influenced as the western countries. We can call it a spill over effects of the global financial meltdown. More liquidity is coming in to the system and this will help we need to reduce fuel taxes and bring the price of petrol down and lastly the domestic consumption is still a growth story so overall I think we should just concentrate on the basis and results will come." The first bright spot for the Indian economy is the foreign exchange cushion. With nearly $255 billion put the country in a far better position when it comes to measures such as recapitalization of banks and providing support to the rupee. The Software sector that is depended on the external markets is still very much in vogue due to economic arbitrage being in India's favor. With the recent fall in the rupee the InfoTech sector has remained competitive. Firms with size, such as Wipro and Infosys can bet on bigger contracts since the pattern in the rich world is to outsource more - not less - in a down turn. The three large Indian IT firms together hold in access of $500 million in cash reserves. This will allow not only for adjustment s during the downturn - but also overseas acquisitions at the right price since firms in the west are looking good at current valuations. Agrees Raman Roy BPO veteran and chairman of Quattro an IT consultancy based in Gurgaon, "India is a part of the solution of the global crisis not a part of the problem. The US cost structure in a recession predicates further outsourcing. They have to cut costs there not add them. As for India, our dependence on the US market while significant is not absolute. In India there is a growth slowdown that can not be termed as a recession. " A report brought out in October 2008 by Everest, an IT consultancy points out that in fact this quarter and the next will see robust outsourcing orders for larger Indian IT firms from the US should Indian firms manage their cost structures in a correct manner. The state of Indian banks is the third redeeming factor in India's favor Vis a vis the global slowdown. The health of Indian banks is also much better in comparison to their global counterparts. What the US is now doing by taking stakes in big banks, is a matter of course in India. This has helped develop buoyancy. It was reported by the Reserve Bank of India that as much a half a billion dollars came into the NRI bank receipts in September 2008 alone. While some sectors such as banking and export firms have fired a record number of people it is not a sea of pink slips out there. Says Ashutosh Khanna, Partner Korn Ferry, a leading global recruiter "Look, jobs are out there for many sectors. Look at Unilever they grew by 16% last quarter. Sectors such as telecom and consumer durables have picked up and there is robust demand for quality professionals in these. Entertainment too is growing bear in mind that when times are bad sectors such as the liquor industry and entertainment have historically done well. We see a continuing trend of growth in these sectors of the economy." So while there may be a roll back on those fat pay checks the spa as a fringe benefit may not be on offer if you are good enough jobs are still around in many sectors. It's all about Money Globally the crisis is about sourcing money to fund the running of business and supporting business expansion. Here India is on a sounder footing. The RBI is expected to cut lending rates by at least 2 percentage points in the current quarter. This will see an infusion of nearly 80,000 crore of liquidity into the Indian market. What that does is restore confidence among lenders, among entrepreneurs and among corporations - the holy trinity that drives the Indian growth story. With the infusion of cash will also come the peripheral advantages such as new projects and strengthen infrastructure spending on new roads, electricity plants, ports and so forth. This can have the crucial multiplayer effect for the economy. The lending rate is the catalyst to pull a country out of the bad times. Says Ajay Relan of CX partners, an Investment Bank," A dramatic rate cut will certainly help in kick starting the economy, bringing it back on track. However India cannot afford to be complacent. India needs to channels its record level of savings into productive assets. We can no longer afford the ghastly cost overruns in infrastructure projects and so forth." Clearly to ride out the storm India needs to ensure that its tardy abilities at project execution are replaced by a vigorous new approach. We may create new money but it is much harder to create opportunities where that money is spending productively. Taken together, domestic consumption, easier lending rates, entrepreneur culture and robust foreign exchanges can come together to lift us out of what are bad - but not horrid times. As in Cricket so for the Indian economy – stick around this could yet be fun.

boom town jalandhar

A city going hammer and tongs
Jalandhar, for long the poor cousin of Ludhiana, is fast coming into its own. The city is a case study for globalisation at work. Its growth story is unique in two respects: it’s exports-led and manufacture-driven; and it lies in the Doaba area of Punjab, home to a staggering 6 million non-resident Indians—a population equal to that of New Zealand’s.
A major trigger for growth is a property boom, which appears speculative. Says real estate consultant Arjit Kapooria, “On the Grand Trunk Road that flanks the city, the government-auctioned price for an acre of land three years ago was Rs 50 lakh. Today, in the smae area, it’s a staggering Rs 4 crore.
A large part of this growth is fuelled by the buying spree of NRIs.”
Land authorities estimate that NRIs have ploughed Rs 300 crore into buying property in the doaba in the last five years. Add to that the industrial growth, and the exuberance in the property market appears rational. Reliance and DLF are looking for large plots. Fourteen malls are under construction in the Jalandhar area and Radisson has set up a 5-star hotel in the heart of the city.
The driver for this growth is connectivity between Jalandhar and nearby towns. As one approaches Jalandhar, one can see work along the highways for miles around. The Ambala-Jalandhar road is being six-laned; so’s the one connecting the city with Ludhiana.
Exports are where Jalandhar really shines. With Indian exports growing 27% in 2006, these are good times for the city. It leads India in the exports of hand tools, Sports goods and leather. Says Surjit Jolly of the Sports Goods Manufacturing Association, “Sports goods are a true free-market story.
We get no sops from the governm-ent, yet we export Rs 600-crore worth of goods.
If, like Pakistan, we get non-duty imports for raw material, this industry can become a Rs 5,000-crore business within five years.”
Jalandhar is also a focal point for leather with estimated exports of Rs 300 crore last year. However, like elsewhere, globalisation and competition have also brought pain to the city. It is consolidation time, and smaller units are finding survival difficult. The high duty on machinery that the industry needs is also an impediment to growth.
Since Jalandhar is a manufacture-driven growth story, it has created enormous employment opportunities. With an estimated 3.5 lakh migrant workers from eastern UP, Bihar and Orissa, social tension is also growing. Locals can’t do without the labour and yet there is an undercurrent of resentment. I decide to visit a local liquor shop at the eastern edge of the city. It is a tough and dangerous place. Fights break out without warning over trivial issues.
I am sitting next to Hamid Rahim from Barabanki in UP. He and his friends work at a foreign Sports goods manufacturer’s outlet. The working conditions, they tell me over packs of country liquor, are as bad as before but the pay is better.
Semi-skilled labour gets about Rs 2,000 a month plus overtime. Even then there is shortage of labour. Says Rahim: “The real issue is lack of proper places to stay. If we had hygienic dormitories, we could save so much more money.” Is Jalandhar Inc listening?
On my last day in town, I meet the perfect example of the change that in engulfing this city. In Model Town, the downtown shopping arcade, I walk into a very busy shop swarming with youth. It’s a tattoo shop. I chat up Pammi Ahuja, 23, who is looking for a new kind of globalisation-induced opportunity. Having finished her airline course and English diction course, she has recently been hired by a foreign airline. She is morose though as she can’t have a tattoo (the airline forbids them). Globalisation, however, is leaving a mark on her life perhaps without her even realising it in this bustling city of Punjab notorious for female foeticide.
In Jalandhar, you realise that for India to sustain job growth, industrial production and manufacture hold the key. A recent Cap Gemini report hinted that India might yet become a manufacturing hub of the world to compete with China. For that to happen, a thousand Jalandhars will need to boom.

human rights under threat world wide

Human rights under global pressure
Indira Gandhi once famously said that Corruption is a global phenomenon. Going by the latest report of human rights watch the internationally respected NGO, the same seems to hold true for Human rights abuses.
The 2006 edition of human rights watch is a scathing indictment of the United States of America. The damage done to freedom of speech, expression and international guarantees by the Bush administration’s policies come in for special mention.
The US is by no means the only - or indeed the biggest - violator of such freedoms in the world. However, as one of the world largest democracies and a beacon of freedom it is especially troubling for the country to be in the spotlight for some of the worse abuses of human rights that include torture of prisoners and denial of freedoms guaranteed under international law.
The approach to give a state a license to maim, torture and to kill - an increasingly rampant tendency in today’s world has come under special criticism by the report. The executive director of the report Kenneth Roth has said that”… fighting terrorism is central to the human rights cause. But using illegal tactics against alleged terrorists is both wrong and counterproductive.”
India too has come for criticism. In particular, on account of India’s gender discrimination. The report says that in India, women continue to face discrimination and violence. The report also point to the fact the India has a bad record in respecting human right in those areas where it is fighting insurgencies. The report further points out that “militant groups and Indian security forces continued attacks on civilians. Caste-based violence continued, especially in rural areas, and tribal groups that had converted to Christianity were targeted for attack by extremist Hindu organizations.”
To be fair, India has a robust and open society where numerous human rights groups routinely point out the problems. However when an internationally respected group comes up with such findings it should act as a wake up call for our civil society.
Democracies have more influence in global order and a far greater responsibility to maintain human rights standards. From the latest report it would appear that democracies as prone as dictatorships when it comes to the option of shooting first and asking questions later.
This is worrying for the future of democracy as a system and the values that dictate the civil societies of these free countries.

pesticides are a clear & present danger

Consumers have won a major victory in the Supreme Court decision that makes it mandatory for cola firms to reveals the details of their contents. In particular the court’s ruling will go a long way in making public the exact amounts of pesticides in an aerated beverage. Given the fact that a large majority of consumers are children, the publication of information on labels will ensure that at least they become more aware of what they are consuming.
The court up held an earlier order of the Rajasthan high court which the cola majors wanted quashed. However the court has a given breather to the cola majors in not forcing any contempt of court proceedings. The cola majors had not carried such details on their labels following the earlier high court order.
The triumph for consumers however is to be seen in a context. The fact is that in India today everything from vegetables by the any the road side vendor, to milk available at the friendly neighborhood dairy is laced with pesticides. Ground water pollution too is a big worry.
That it took a court decision for this to be implemented rather than a state law is in it worrying. In India ever since the green revolution, Growth in food productivity has been accompanied by an enormous dose of pesticides. In India implementation of food and drugs administrations rules is notoriously lax. It is this that needs to be tightened. For water alone India has two laws one from 1974 that addresses water pollution and another from 1990 that address environment protection. However their implementation has been tardy
Urgent attention is needed to address larger issues of pollution. The yamuna in Delhi is the starkest example. While there is water treatment plants on the river the water has become so polluted now that even these are not enough to treat the water body of affluent. According to a TERI, and environment consultancy, a whopping 6000 million have been spent on the Yamnua alone - with no results to show in terms of controlling pollution. If this is the case with a major river one can only estimate the state of smaller water bodies and ground water in other parts of India.India must learn from China, where rampant industrialization has caused poisoning of as much as 40 % of its water bodies. It is all very well to single out high profile companies and make them accountable for pesticides in their wares - but without ensuring higher environment standards and compliance to laws already in place, the Indian consumer is doomed to leave in poisoned envir

book publishing is big business in india

Publishing gains currency
On the face of it thin crowds at the world book fair underway in Delhi would point to a dampener in sales. Nothing could be far from the truth as far as the publishing industry in India is concerned. . The 3000 crore Indian publishing industry is thriving.

Three factors are driving the growth of publishing in India. The first is the retail revolution some of the stores such as landmark and Oxford have sprawling bookshops in access of 10,000 square feet. This was unheard of in India even three years ago. The footfall is at the malls and the bookshops and only the die-hard bookworm or the industry associate needs to make the trip to the book fair.

The second important driver is the rise in literacy in India. It is estimated that 200 million Indian have access to books in at least one language. A Ficci Pwc study showed that book readership grew at an average of 20 per cent per year since 2000.
The third driver is outsourcing. The global out sourcing market for book publishing is $2.5 billion. India accounts for a minuscule percentage bit the growth are robust. The labor arbitrage is obvious - it costs 50 % less to design typeset and print books in India when compared to the west. . However the industry is unable to fully leverage the biggest opportunity. For one thing the tariffs on paper are prohibitive making the industry uncompetitive for large-scale projects. Compared to India the free port of Singapore offset much higher labor costs by having a tariff structure that has made it a global publishing hub.
The book industry is also hampered by poor distribution as well as inventory management techniques. The time for books gathering dust on the shelf are coming to an end in the retail chain. If the publishing industry shapes up it can ship out a large volume of books though the off shoring model.
To fully employ the opportunity the publishing industry will need to introduce automation and bring to book lacuna such as inventory miss management and distribution hiccups. Not doing so could result in India loosing out to other countries in this segment.

Singur: More Than A Nano Problem

"The word is about, there's something evolving, whatever may come, the world keeps revolving They say the next big thing is here, that the revolution's near, but to me it seems quite clear that it's all just a little bit of history repeating "
—Propellerheads
Walking down Shakespeare Sarani the irony is unmistakable. On the one hand is the obvious bustle of the city of joy. A new excitement is palpable — there is more traffic on the road then ever, pubs are busy, at the addas the bard’s old question is the topic of discussion — its all about the stark ‘to be or not to be’. West Bengal, unlike the $1-trillion Economy that is India, is still grappling with this one.
In his simple office off Park Road former SBI and Peerless chairman DN Ghosh who is a veteran watcher of the West Bengal Economy has this to say: “Look it’s quite simple — industrialisation is needed but how do the communists commutate it to the cadre? How do you change track? These things are difficult. Everywhere in West Bengal it is a Herculean U-turn.”
Cut for a minute to the trade fair in Delhi where the Tata Nano car is being showcased. A total of 3,50,000 of these little beauties will roll out of the plant that the Tatas have controversially acquired in Singur. There are a bunch of English-speaking protestors crying for blood. The reason is an old one. An agrarian Economy is industrialising and pain is likely. According to government estimates, 70% of the state’s population depends on agriculture while the all- India average is 56%. They have never seen any other way of life. Agriculture is now, industrialisation is in the future. But will a successful industrial hub change all that? Says auto analyst Murad Ali Baig, “A thriving plant will likely change the mindset. It is not rocket science. When Escorts came with their plant in the late 80’s in Faridbabd there was opposition. Soon ancillaries came in and so did property development. The same thing happened with Maruti in Gurgaon. When Maruti came, Gurgaon was drab and underdeveloped. Maruti’s success was the forebearer of the MNC boom that followed. I am totally convinced that many of the fence sitters will come around with progress. West Bengal needs the plant to show what industrialisation can do.”
In Bengal however, the difference is Politics. The Left Front’s coalition partners as well as Mamata Banerjee have served notice and even issued ultimatums against this flagship project. It is a dangerous time and there is tension in the air. The site of the factory is picketed by police and private security. Says a labour contractor on the site, “We have 3,500 unskilled labourers working here and 80% of them are from Bengal itself. However, we are afraid that things could spiral out of control. Daily the agitators are instigating people and I fear that any thing can happen.” At the site itself, work is on at a furious pace and two large factory yards have already been constructed. No official is available for comments but clearly the locals are polarised. At a nearby school a teacher says on the condition of anonymity, “When students ask me if this plant is good I am at a loss to give an answer. Some of those who have lost land will suffer but the bigger impact will certainly be positive and allow Singur to move away from the land. We have to wait and watch, I tell my students.”
A lot hangs in the balance beyond the Tata car investment. If the Singur project produces results, a lot many others could follow suit. According to the finance ministry estimates, West Bengal received 12% of total investment proposal in India in 2007. The West Bengal government figures indicate that during January-June 2007, some 127 letters of intent were issued for setting up projects in the state involving an investment of Rs 49,128 crore, and also ensuring additional employment to 77,071 persons.
This is a significant development since in Bengal as much as 80% of industry is in the small-scale sector. Big ticket investment is likely to lead to greater employment mobilisation. Over the last 10 years only 2,00,000 people were added by industry in the state.
Says Sujit Poddar, a senior Peerless official, “Singur is a litmus test but even beyond Singur, after long years there is a revival of interest. However the state needs to articulate a clear policy to sustain this interest. On the ground level too there needs to be a change in the attitude of the cadre. Till then it will be a difficult investment destination. Chief Minister Buddhadeb Bhattacharya’s assertions are a welcome step. He needs to hold on to them and guide the state through the current period.”
Besides the industrial development proposals which are obviously set for the big league, the state’s strength in information technology cannot be ignored. A visit to the Sector-5 area of Salt Lake City is an eye-opener. For one thing all majors are already here. Says Amit Data Ray, a Salt Lake City-based IT workforce consultant, “Bengal has three advantages — firstly the English-educated workforce is large and young. Secondly, they work on 20% lower salaries and the cost of doing business is also less in the state and finally the instability and turnover of jobs you see elsewhere is also comparatively less here, there is the culture of sticking to a job.” Add to that the falling dollar and cost pressures and the sector is likely to see sustained infotech investments.
Though West Bengal is finely poised, like elsewhere in India it has to sort out critical issues of governance to make its promise into a reality.
Samiran Gupta, managing director of investment advisory Access India, sums it up: “Over the last decade, the services sector has grown in West Bengal to offer more opportunities to the youth. Re-industrialisation or bringing West Bengal back to the industrial mainstream in the country got a boost when the Tatas chose Singur as their home for the Nano. So a transformation has already begun. But questions remain as to the speed of the transformation process. The answer to this lies squarely in the hands of the people of the state. The people of West Bengal need to be the change for it to happen.” Like the teacher in Singur said, it’s wait and watch time. And time is running out.

cut indian subsidies

Nectar in a sieve
The Prime Minister’s assertion that subsidies provided by the government of India do not reach the poor and are counter productive for their well being are a welcome sign for any cardiologist watching his political heartbeat. Apparently there is a stubborn reassertion of the reform spirit in his cardiogram. Perhaps the fact that the lecture was delivered at the institute of economic growth in the environs where the professor Prime Minister feels at home was something to do with his reform self resurfacing. As any sensible student of economics knows, in a pork barrel economy like India where pubic policy is hostage to the whims of clan oriented priorities, economic subsidies are dead on arrival.
Coming from the Prime Minister such candor is welcome. The Prime Minister has been candid and has admitted to, even with an election looming, a crisis in governance. The fact is that in any sphere from public distribution system to fertilizers to primary education and onto public health the deliverables on the money invested in subsidies are in terrible shape. The poor are being denied their due by an entrenched system of government functionaries and political patrons. The working of the Indian administrative services, the state and local level counterparts is nothing less than scandalous in its inability to deliver projected results. The reason for this is not far to seek when you allow the state to allocate who should get what - as apart from letting the market distribute the same, discrepancies are inevitable.
The flagship public distribution system is the real culprit. It leaks like a sieve. It has a pronounced urban bias and despite spending billions of dollars a year on the subsidy the Government does not give social return. The story is repeated across the subsidy domain.
The prime ministers statement should be a wake up call. Alas it is unlikely to be anything but rhetoric. As a background one may consider an earlier promise in August during the Independence Day speech where the PM promised an increase of $6 billion in agricultural sector spending. Without a serious re look at the governance issues and delivery problems involved with public policy subsidies in India the coming budget may remain more of the same. That would be a pity for his reform legacy and a tragedy for the Indian poor. .

meglev mumbai?

Maglev is a bad idea
Any one who has done the airport to downtown hop on the Mumbai locals knows that Mumbai needs massive transport solutions. However the proposal to set up a magnetic levitation train at the reported initial cost of 30,000 crore is a white elephant in the making. Maglev is a prestige statute not a utility project that can take the load of the harried commuters of the great metropolis. And it is not coming any time soon. From the feasibility to the first ride downtown is a good 15 years away. As for the cost it is estimated that the Shanghai train cost 320 coroe a kilometer. The real problem with a Meglev is that it is not compatible with existing infrastructure. You have to create a total new set of tracks for this train to run along with fencing and other perihenrialiia - and in Mumbai this could well be a costly logistical nightmare.
The Maglev technology involves magnetic lavation transportation that can do 600 kilometers per hour. That is like traveling the 25 kilometers from the airport to church gate in five minutes flat. The technology uses the magnates beneath railcar to lift up and forwards the vehicle and very fast speed over short distances. However the reason why this incredible and admirable technological wonder has not found too many converts in the cost. The upfront cost tool the 80 kilometer metro line in Shanghai is a staggering $12 billion the maintenance costs per year i estimated to be upward of 80 million of dollars. A ticket on this costly wonder is 600 rupees a ride one way. While this may look expensive a taxi in mumbai already costs 275 rupees and takes one and a half hour to reach where as for 600 rupees you will be alighting at the church gate station in five minutes.It can be argued that a combination of Bangkok style monorail and Delhi style metro can take the load of f mumbai at a much cheaper ate. What is more the tried and tested combination of metro and monorail are far more readily mountable. It is important when considering a project do this size e the maximum number of people that will benefit. The economics of scale on pricing issue therefore factor mass transit systems and rule the magnetic lavation option put Indian in infrastructure will do well to stick to

replace pay with perks

The big pay hike decided by the government for the office of the President, Vice President and Governors is welcome news. Before the pay hike, with a salary of Rs. 50,000 per month the president of India earned less than a manger at one of the top end call centers. Now that the government has doubled the paycheck for the head of state, the office still earns less than a manager whose job may be to sell soap in a tire II city for a multi national firm. The hike is in line with the a similar augmentation in the salary of the MP’s who now earn Rs. 68,000 a month. The Government has obviously decided to follow some of the Singapore model where government functionaries are played in line with salaries that are in the private sector.

The real need is to overhaul the pay structures of public sector undertaking bosses. The average pay for a PSU boss is in the region of about 600,000 a year. This is not enough in the booming job sector of India and neither is it commensurate with his responsibility that includes managing financial outlays of hundreds of crores. The private sector bosses earn that sort of salary in a month.
The discrepancy in pay between the government and private sectors has lead to three chief issues. The first is that it leaves PSU bosses open to temptations and corrupt practices. Secondly the best brains in the public sector can easily be lured to the private sector. This is a real and present danger for PSU's sectors ranging from realty to big industry and even start up companies now poach from the government. lastly the morale of the people on the top is effected if they have to constantly worry about small beers.

There are counter arguments concerning pay hikes in the public sector. that the Psu people get great homes, lot of help, free car and other related perks. They also come under far less scrutiny on the performance front compared to the private sector, which is answerable quarterly to share holders.
These are valid points. Perhaps the time has come top replace perks with pay in the public sector there by you will have greater flexibility as well as transparency on how much is being spent from the tax payers pocket for these mandarins.

The specter of jobless growth

The latest employment figures thrown up by the national sample survey organization raise troubling questions. From the survey it appears that over than last two years there has been a fall in employment by two percentage points. The employment figure has fallen from 43 percent to 41 of the population. Put differently, there is a decline in number of people employed either as casual labor or as organized sector workforce. This even as the private sector investment is at record levels. The grim employment numbers are in spite of the massively ambitious rural job guarantee scheme. The survey says that the proportion of employment in female causal labor was higher by one percentage point when compared to their male counterparts. Traditionally higher employment of females in casual labor has signaled agriculture distress.
Taken together the survey point out that the massive infrastructure growth has not yet provided the tertiary sector employment growth that is normally associated with building roads, ports and power plants. In it self this is not unique to India. It takes a time lag for tertiary sector to take off with infrastructure investment. The bad news is that stagnant agriculture growth has added to the job seekers pool and thus pushed up the unemployment figure.
The survey has also found a stagnation in terms of wages with the casual labor earning only 59.29 rupees - that is just about a dollar and half a day. This bellies the claim that Indian rural causal labor earns two dollars a day. The Indian pyramid, if these statistics are reliable, has an abyss at the end.
For those interested in economic policy and employment creation the survey holds three valuable lessons. In the first the infrastructure effort needs to be streamlined. The delay in implementations across sectors has created a concurrent employment slowdown. Secondly the governance of center sponsored job schemes needs greater scrutiny especially in the backward states. There is an urgent need to shake off complacency in this flagship effort to provide people minimum number of workday a year. Thirdly credit supply to micro businesses have to be streamlined further if self-employment has to be strengthened in India.
The survey paints a grim picture where more then half of all Indian workers are casual labor - that is if they get the opportunity to do so in the first place.