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BW Businessworld

The Line Of Exclusion

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The Rangarajan Committee recently revised India’s poverty line, from  a per day expenditure of Rs 27 in rural areas and Rs 33 in urban areas set two years ago to Rs 32 a day in rural areas and Rs 47 in towns and cities, reigniting the debate over its efficacy. The new poverty line faces the same criticism as its predecessors — it excludes people not falling in its ambit from social benefits. The government needs to understand that while people spending Rs 47 a day are poor, those who cross this threshold also survive with difficulty. The fix for this anomaly lies in multiple thresholds, as they will at least ensure that while the extremely poor get maximum benefits through government welfare schemes, others among the poor also get covered by other programmes.
— Neeraj Thakur

Hindi, And Other Tongues
South Block wants automated teller machines (ATMs) to spit out receipts in Hindi. Before you scream “What?” in disbelief, get this. It will apply only to ATMs in Hindi-speaking states; these ATMs will also continue to give out receipts in English. What it, in effect, means is that you will get a receipt in the language you “inter-faced with the ATM”. What’s in store? The Department of Financial Services is spot on when it says, “As per the official language policy of the Union, banks are required to procure only that equipment which has the facility of working both in English and Hindi.” But given language chauvinism, it is only a matter of time before non-Hindi speaking states insist on the same. And why should it be restricted only to Hindi and not to other languages? Just for the record, Diebold is the only one to have machines (of recent vintage) which can print a receipt in Hindi. You will hear more forked tongues on the subject.  — Raghu Mohan

Clinical Trials & Tribulations

Sanofi Pasteur recently came out with positive results on the first ever dengue vaccine phase III efficacy trials conducted in five countries in Asia. If all goes well, Sanofi will be able to launch the vaccine in a few years in these countries. Interestingly, India was not part of the study, even though dengue infections are rampant in the country. Why? Apparently, multinationals feel that Indian laws for clinical trials do no suit them. As a result, very few trials have been held in India in the past few years. We must ensure liberal norms for and fast-tracking of clinical trials of vaccines and medicines of bigger relevance to the Indian population. No clinical trials in India means the wait for introduction of the dengue vaccine in the country will take longer than in the Asian countries that undertook the trial.  — P.B.Jayakumar

Beating A Hasty Retreat
Reliance Broadcast Network (RBNL), the television arm of Anil Ambani’s  Reliance Group, recently ended its alliance with German broadcaster RTL Group. A few months ago, it severed its joint venture (JV) with US-based broadcaster CBS. Over the past three years, the two JVs had managed to launch just four channels between them — Big RTL Thrill, Big CBS Prime, Big CBS Love and Big CBS Spark. The exit of these large international broadcasters shows they were not prepared to rough it out in the tough and competitive Indian market. This is evident from the fact that they did not invest substantially here. In contrast, Viacom, News Corp and Sony have proved that if a media company is willing to put its money where its mouth is, success cannot be too far behind. Mere tinkering, as the two JVs showed, just does not work.
— Gurbir Singh

Sleepless For Soccer
A record number of Indians watched the FIFA World Cup despite the odd timings of matches, data released by TAM Media shows. The Sony channels beaming the games saw a total viewership of over 50 million even before the semis had started. Besides West Bengal, Kerala and the North-east, Mumbai and Chennai too saw a big following. Interestingly, 33 per cent of the audience comprised women! Since the last World Cup, a slew of sports channels has been launched and they are hungry for content. A good national team is what may satiate their hunger as well as that of Indian soocer fans.
— Gurbir Singh

Sky Match
Air India’s entry into Star Alliance is no doubt good news for its Flying Returns members who can now earn and burn points on 26 other carriers and gain access to up to 1,000 lounges across the network. But the membership that has navigated through plenty of turbulent weather will also benefit German carrier Lufthansa. There was a time when Lufthansa was the dominant foreign carrier in the Indian market before the Gulf carriers flew away with the outbound traffic. Now, Lufthansa gets a foothold into the Indian domestic skies. It helps that AI is now operationally more efficient. But there are some anxious days ahead. Air India CMD Rohit Nandan’s tenure ends in August. He’s the one who steered AI’s entry into the Alliance. Who will be the successor? A very strong Air India may not suit Lufthansa either.
— Chitra Narayanan

Long Live Archie!
Publishers of Archie Comics are learnt to have finalised a storyboard in which Archie Andrews will die saving his gay friend Kevin Keller from an assassination bid. According to Archie Comics Publications CEO Jon Goldwater, Archie “will die a hero” in Life With Archie series, which caricatures the adult life of the comic character. But such an ending is sad and melancholic. Generations of Archie Comics readers have loved the red-haired comic character for his boy-next-door image, his high school buddies and his easy-going American way of life, and they will hate to see him go this way. The publisher can end the comic series if it desires so. Archie and his friends can retire if they want to or stay incommunicado in Riverdale. But Archie certainly cannot die — not at least for the next 50 years or till his last fan dies. 
— Shailesh Menon

The Unintended Versus The Intended
Corporate India is heaving a collective sigh of relief at the government’s clarifications to some of the contentious provisions of the Companies Act 2013. But none more than the latest one on treatment of related party transactions. The clarifications do not take away from the intent of the legislation by any means. For example, it says that if a director or shareholder is not a related party in a certain transaction, he will not be barred from voting. Also, amalgamations and demergers, which usually take place within a group, also would not be covered by the provisions.

The clarifications were much needed, as they simply rectify the unintended effect of provisions in the Act. That said, there is scope for abuse of the provisions by corporates looking to circumvent the law. India Inc will have to resist such tendencies if they want to avoid going back to a regime where legislation is aimed at nipping every possible abuse in the bud, and the ensuing difficulty of operating under such conditions.
— Abraham C. Mathews

Doing A Disservice
As part of the government’s attempt to streamline the tax administration as well as to ensure higher revenue collection both for the Centre and the states, certain exemptions are proposed to be withdrawn this year. While there is nothing wrong with such a move, the government should be sensitive to the impact such decisions can have on the stakeholder industry. The proposal to end service tax exemption on clinical trials of newly developed drugs is one such case. The Indian clinical trials industry has been going through a very difficult phase during the last several years. Litigations, regulatory demands and alleged unethical practices have curtailed the growth of this sector. The decision to withdraw the tax sop, seen from this context, will only augment the general feeling of disillusionment among the industry stakeholders. Any adverse impact on the business prospects of the industry can only shave off the revenues the government hopes to gain.  ­— Joe C. Mathew

The Talent Fix
even as the Union budget augurs hope for more job creation, the news on employability is not good at all. Of the 600,000 engineers graduating every year in India, less than 20 per cent are employable for software jobs, barely 7.49 per cent are employable for core engineering jobs, and just 3.95 per cent are adequately trained to be deployed on projects, says the National Employability Report by Gurgaon-based testing and assessment solutions firm Aspiring Minds. However, the more important issue it raises is the bias that employers display towards tier-3 colleges. A systemic overhaul — both from education providers as well as recruiters — is clearly needed to solve our talent conundrum.
— Abraham C. Mathews

(This story was published in BW | Businessworld Issue Dated 11-08-2014)