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BW Businessworld

Spooked By Violence

A lot is at stake for Haryana as it gears up to host the Happening Haryana meet in Gurgaon on March 7-9 against the backdrop of the violent Jat quota agitation.

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A lot is at stake for Haryana as it gears up to host the Happening Haryana meet in Gurgaon on March 7-9 against the backdrop of the violent Jat quota agitation. CM Manohar Lal Khattar visited Japan in January to woo companies like Suzuki, Honda, Panasonic, Aisin, Mitsubishi, Yokohama, Yakult, Mitsui, Asahi, Denso, NHK, NTN, Daikin, Koyo, among others, to expand their investments in Haryana. But the recent events coupled with the sporadic labour unrest that takes place in Japanese manufacturing units in the state seems to have spooked a number of Japanese companies. During a recent visit to Japan, this reporter learnt that the Japanese firms have ‘informally’ been encouraged by their government to explore options like Andhra Pradesh, Maharashtra, Rajasthan and Gujarat for setting up plants. “Despite the ‘investor friendly’ pitch made by Haryana, we are looking around for an even ‘friendlier’ state though nothing has been finalised yet,” a senior executive representing a top Japanese brand said. The chief ministers of Andhra Pradesh, Rajasthan and Maharashtra too have sought to woo the mighty Japanese industries. May the best state win.
— Ashish Sinha

Thanks to the dumb, some sense!
It had to happen. Banks can now count 3 percentage points more of their statutory liquidity ratio (SLR) holding towards the Liquidity Coverage Ratio (LCR). The LCR is to ensure banks have high quality liquid assets (HQLA) which they can sell at the time of a funds’ crunch. But as pointed out in BW Businessworld’s issue dated 8 February (State Paper Not Sovereign Debt?), banks have long held they invest 21.50 per cent of their liabilities in government securities under SLR. So, LCR is an extra burden. Ironically, this perfectly sensible relaxation was the fallout of the nonsensical — fears that dud-loans had shot through the roof. On 11 February, the 30-share index closed 3.40 per cent down at 22,951.83 — the 10th biggest single-day fall. No less than governor Raghuram Rajan had to clarify: “There are some wild claims being made by some financial analysts about the size of the stressed asset problem. This verges on scare-mongering.” That very evening, Mint Road eased its LCR norm.
– Raghu Mohan

January Jitters
Private equity activity may be growing in India, but the same cannot be said of the mergers and acquisitions (M&A) market. January saw the number of M&A deals falling marginally to 44 from 48 during the same period last year. While this drop is not eye popping, what’s noteworthy is the significant decline in value. According to Grant Thornton, M&A worth $1,732 were clocked this time, registering a drop of 49 per cent from January 2015 due to decreased cross-border activity and fewer big ticket transactions. January witnessed only one deal valued above $500 million compared to three such deals in January 2015. However, experts expect domestic M&A to rise on the back of a pick-up in alternate buyout financing by PE funds. M&A activity in IT&ITeS, Telecom, Pharma, Healthcare and Biotech sectors are expected to thrive. All in all, despite the tepid beginning, this is definitely one area to watch out for in the months to come.
— Paramita Chatterjee

Trees And Terror
Union defence minister Manohar Parrikar, at a recent awards function of a business newspaper, had the audience in splits when he remarked that he was ‘a most humourous person’, but the media often spoilt it all and took him too seriously. He then went on to describe his sense of pride in the forces that had neutralised the terror attack on the Pathankot army base recently. He also described the lapse of allowing a tree standing next to the 10-feet compound wall, which he said was used by the terrorists to sneak into the enclosure. He then went on to mention that the Forest Department had not given permission for the tree to be cut, and blamed it all on the unreasonable attitude of the ‘greens’. “Our enemy has built roads and railways near the border, while we cannot touch the forests,” he lamented. There had to be a balance between environment protection, development and the security of the nation, he added. Was he saying the ‘greens’ were disturbing the balance and therefore compromising ‘national security’? Was he just jesting, or are we the media taking him too seriously? Difficult to say.
— Gurbir Singh

Great Expectations
This year’s Railway Budget is likely to be even more challenging for Suresh Prabhu than the previous one. Earnings are expected to fall short of the target set in the last Railway Budget by around 4 per cent. While expenses are on the rise, passenger earnings have shown a decline. Rolling out the 7th Pay Commission recommendations means an extra spend of Rs 32,000 crore. Amidst the turmoil, the Railway ministry is expected to seek an outlay of Rs 1.25 lakh crore for 2016-17 — a significant part of which will go towards safety upgradation, electrification, track doubling and modernisation of yards to clear traffic bottlenecks. For Prabhu, the challenge is to bring back the passengers and make freight an attractive proposition to India Inc. But he is expected to woo the passengers by announcing more special trains fitted with top-class facilities (higher fares) and semi-high speed engines for Shatabdi trains. So how does one streamline railways? Only Prabhu knows.
— Ashish Sinha