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Foggy Forecast

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In the words of one economist, it’s too bad to be true. The advance estimates of gross domestic product (GDP) for FY13 from the Central Statistical Organisation (CSO) put economic growth for the year at just 5 per cent. This is well below the Reserve Bank of India’s (RBI) estimate of 5.5 per cent, and that of the International Monetary Fund (IMF), at 5.4 per cent. Given that GDP grew at 5.4 per cent in the first half of FY13 over FY12, GDP growth in the latter half of FY13 will have to be 4.6 per cent over the second half of FY12 if the advance estimates are correct.
And therein lies the rub. In 2010, the CSO’s estimate for GDP growth in FY10 was 7.2 per cent; the actual number was 8.6 per cent. For FY11, the CSO estimate was 8.6 per cent, and the actual figure was 9.3 per cent; for FY12, it went the other way at 6.9 per cent versus an actual 6.2 per cent. So the reliability of advance estimates is rather shaky. That, of course, is equally true for the estimates of others ­— including RBI and IMF.
 — Srikanth Srinivas
Juggling Books
The centre may gloat that its share sale process is on track, but it’s not disinvestment in the truest sense. It is, simply, a movement of the Centre’s assets from one of its books to another.
Target amount from disinvestment Rs 30,000 crore.

NTPC’s stake sale alone may contribute Rs 12,000 crore to this

Rs 12,000 crore at the last moment. In November, LIC and State Bank of India did a repeat for Hindustan Copper’s 4 per cent OFS. The practice now seems set. Cash-surplus state-run entities, like banks, are now picking up stakes in their cousins with prior board approval; the current cash pile with them is in the region of Rs 1.5 lakh crore. 
For example, in March 2012, the first ever offer-for-sale (OFS) of 5 per cent in Oil and Natural Gas Corporation was bailed out by state-run Life Insurance Corporation (LIC) — it pumped in 
NTPC’s OFS for 9.5 per cent will get about Rs 12,000 crore and help the Centre better its 2009-10 record of Rs 25,533 crore. But, in this case, it’s not clear how many ‘state’ investors there are.
Raghu Mohan
Now, An ID For Livestock
Maharashtra seems to have taken a page out of Aadhaar’s book. Only in this case, it is livestock that is being issued ID numbers. 
To do this, the Maharashtra Animal Identification and Recording Authority (Maira) was set up to put in place a system of identifying each animal by using approved identification methods such as RFID to record the production and reproduction performance of livestock. The Maira system, once in place, will be mandatory for animals that are a part of government-sponsored animal husbandry schemes. This is to encourage firms to use the ID number for livestock insurance, and will also help in better scientific management and faster quarantine measures when needed. 
Joe C. Mathew
Failed SEZs Find An Exit
Maharashtra’s industrial policy, unveiled last month, created a storm. At the centre of the controversy are developers, who are being allowed to convert languishing special economic
103 Approved SEZs in Maharashtra
zones (SEZ) into integrated industrial areas (IIA).
The new policy envisages using 60 per cent of the land for industrial purposes, while 40 per cent can be set aside for housing and commercial use. The policy provides an escape route to developers stuck with SEZs, by allowing residential townships alongside industrial parks.

Maharashtra has 103 formally approved SEZs. Most have failed to take off because of the worldwide recession and the taxes heaped on them.
Predictably, there has been a howl of protest against the move from those who see the policy favouring builders. Ironically, some builders are unhappy as well, with Lalit Jain, president of the Confederation of Real Estate Developers Associations (CREDAI), saying the allocation for residential use is too little.
Despite the naysayers, allowing setting up of IIAs where SEZs have failed is a positive move. Most of these SEZs are going nowhere. Wholly acquired from agriculturists, they are unlikely to go back to farm use either. In that context, the policy makes the best of a bad situation. It is also a pointer for other states saddled with unviable or de-notified SEZs.
 — Gurbir Singh
Getting The Green Signal
The Lieutenant Governor of Delhi has decided to allow a larger floor area ratio (FAR) for green buildings as compared to conventional buildings. Increasing FAR for eco-friendly buildings is an incentive for developers to switch to new building technology that will consume less energy for cooling/heating and thus reduce the city’s carbon footprint. The new measures, expected to be added to the Delhi Master Plan 2020, also include allowing 15 per cent of roof area for occupation if the rooftop is used for photovoltaic panels generating solar energy. The decision followed a recommendation of the Delhi Urban Art Commission to increase FAR for green buildings by 1 per cent.
Gurbir Singh
Taxing The Transfers 
After increasing the taxable slab on transfer pricing for companies by Rs 45,000 crore last year, the Income Tax Department is said to have hiked the figure this year by several notches. The I-T Department gets particularly interested when the transaction between an Indian entity and its global parent is structured in such a way that the profit in the Indian entity is lower, leading to lesser tax paid to the government.
This year, the department has come down strongly on MNCs trying to cut costs by using emerging economies like India as a low-cost manufacturing/service destination, saying some of the benefits should be shown on the books of the Indian entity too. China, for instance, insists on a share of profits (for tax) from the sale of made-in-China products. 
The I-T Department has also questioned share transfers between global and local entities, but that would appear a bit irrational. An I-T official says that when a firm like Shell recapitalises its Indian subsidiary by putting in money it is, in effect, being allotted shares at a discount. But tax consultants like T.P. Ostwal lament that it is unfair to tax a capital investment when no gain has been ‘realised’. Shell said: “Taxing the money received by Shell India is in effect a tax on foreign direct investment”.  
Abraham C. Mathews
In Search Of An Identity
If someone asks you for your ID, what will you do? With the Unique Identification Authority of India (UIDAI) locking horns with the National Population Register (NPR) Authority, no one’s sure which is the more definitive ID proof — Aadhaar or NPR. Not even the government.
While one arm of the government is asserting that Aadhaar is just a 12-digit number and not an ID card, others like the external affairs ministry consider Aadhaar official enough to be used for passport applications. This has given rise to a duplication of biometric efforts.
For now, Aadhaar has won Round 1, since UIDAI has an approved budget of over Rs 8,000 crore till 2017, while NPR is awaiting clearance for its next round of funding. The Centre has also decided to use the Aadhaar platform to roll out its entire subsidy and entitlement payment schemes. NPR, however, claims that enrolment for a digital ID card is mandatory under the law while Aadhaar is voluntary. Last heard, the government may appoint another committee of ministers to resolve this identity crisis of its own creation.
­— Joe C. Mathew

Sharing To Save
First it was about  sharing networks. Now, telecom operators are looking to share infrastructure, and price it too.
The ball has been set rolling by Bharti Airtel, which is buying out its foreign partner Alcatel-Lucent in Alcatel Lucent Managed Network Service India. The latter manages Bharti’s fixed line and broadband network. 
Bharti wants partners for the network – it is talking to Reliance Communications, Tata Teleservices and BSNL. The focus of telecom firms is now on making a tough business more cost-efficient by sharing almost everything, instead of trying to do it alone.
Anup Jayaram
A One-stop Shop For All Business Clearances
Will the eternally elusive ‘single-window clearance’, routinely offered by every state to attract private investments, become a reality? The commerce ministry’s newly launched eBiz portal attempts to do so. The pilot portal brings together all business- and
investment-related regulatory services across the Centre, state and local governments, thus removing the need for an investor to visit multiple offices or websites. 
The portal, piloted in Andhra Pradesh, Delhi, Haryana, Maharashtra and Tamil Nadu, will offer 29 services, including licences, approvals, clearances, no-objection certificates, permits and filing returns. 
Its payment gateway will allow all payments to be collected at one point and then apportioned, split and routed to the respective central/state agencies. 
The real question is: will the portal fulfil its objective or will it also get mired in inter-department bureaucracy and inaction?
Joe C. Mathew
Shop While You Walk
After much talk and little action, mobile commerce, or m-commerce, is finally being acknowledged as the way
forward, and now think tanks are even throwing in the numbers to justify that. 
According to a recent Forrester analysis, although m-commerce accounts for just 6-7 per cent of the $1.6 billion e-commerce sales in India, another Avendus report predicts that it may increase to 10-20 per cent by 2015. In fact, it says that in two years, 50 per cent of all Internet users will be logging in solely via mobile devices. 
One of the first innovators is Homeshop18 with its ‘Scan and Shop’ display at Delhi’s Terminal 3 airport, which takes the traditional couponing digital. Of course, there are challenges in the way, such as slow Internet speed and network unavailability, but these should get taken care of by 2015. E-tailers are now taking a more serious look at omni-channel marketing, and m-commerce is at the helm of it.
­— Ankita Ramgopal
‘Discrimination’ When It’s Convenient
Those who live in glass houses should not throw stones at others. The US complained against India’s National Solar Policy to the World Trade Organisation, saying that the clause requiring developers to use Indian-made crystalline cells to avail of subsidy was “discriminatory”. Ironically, the US itself passed similar regulations when it discriminated against imports in the petroleum industry, emphasising sourcing of technology locally and even levied a high duty on imported steel from India in April 2012. Countries like France and Italy, too, have similar policies. But the US simply seems to want to act like a recalcitrant child, by crying foul to the WTO when India banned farm poultry product imports with the intention of containing bird flu last year.
New Platform
In early February, 30 software product firms formed a think tank to represent their interests. Many of them are
BW pic by Tribhuwan Sharma
This ‘break’, say insiders, is mainly because new firms — specially those in e-commerce and software products — have often not found voice in Nasscom. iSpirt’s objective is to address the con­cerns of these firms. In the past, Nasscom tried to address some issues through new committees, but that didn’t quite work.already members of the Som Mittal-headed National Association of Software and Services Companies (Nasscom) , the de facto association of the software sector. Members of the new group, the Indian Software Product Industry Round Table or iSpirt, are still affiliated to Nasscom, but their need for a new platform has set tongues wagging.
Swati Garg

Responsible Consumption                                                 
Now, more than ever, the question of sustainability in business practices is of utmost importance. Many alarming stats were discuss-ed during a session on sustainability in retail at a recent event by the Retailers Association of India. 
The consumption demand is expected to double but there is no guarantee that production will double too. It was also found that four products (including palm)and four countries (not India) account for 50 per cent of the world’s deforestation. The good thing, though, is that global studies have shown that 93 per cent of consumers are willing to boycott a firm for irresponsible behaviour. Also, 400 of the world’s biggest consumer goods firms and retailers have pledged to keep deforestation out of their workplace by 2020, under the aegis of The Consumer Goods Forum. For now, nearly everyone is using sustainability as a competitive advantage at the marketplace.
Prasad Sangameshwaran

Food & The GDP
The agriculture sector’s impact on the projected 5% growth in GDP in FY13.
Click Here To View
Compiled by Joe C. Mathew
Sources: CSO and Ministry of Agriculture
Gender Bender
Men are walking down the aisles in large numbers. Shopping aisles, that is. A recent study on shopping behaviour
shows that around 50 per cent of shoppers in hypermarkets are male. It also says that now one in two shoppers comes in a group vis-à-vis shopping alone, and people in groups shop more per person than a lone ranger.
Prasad Sangameshwaran
Taxes And Speculation
Commodity traders are feeling edgy following reports of the finance ministry planning to impose a commodities transaction tax (CTT) on commodity exchanges (first mentioned in the 2008-09 budget by the current finance minister P. Chidambaram) in this year’s Budget. 
If introduced, the levy of around 0.017 per cent tax on commodity derivatives trade, on the lines of the securities transaction tax, is expected to lower volumes and increase trading cost for commodity traders and investors. Apart from pocketing
additional tax revenue, the government intends to curb excessive speculative trades. 
The Indian commodities market is quite significant when it comes to size and trading volumes, and the CTT can help track these transactions. As per Forward Markets Commission data, the commodities market logged volumes worth Rs 136.51 lakh crore from 1 April 2002 to 15 January 2012. On the flip side, experts are cautioning the Centre against such a move as it will prompt traders to shift to the dabba (illegal markets) trading system.“Dabba market is already thriving in India…CTT could shift some portion of volumes from the exchange,” says T. Gnanasekar, director, CommTrendz Research.
Shailesh Menon

(This story was published in Businessworld Issue Dated 11-03-2013)