Mahalakshmipura Police makes me proud!

I had the most amazing experience recently that strengthened my belief that there is some good left in this world yet. 

Early into the morning a few days ago, I realized that my iPhone had been stolen. I suspected a kid who used to visit us often and ask to do some odd jobs for some pocket money. As he was a familiar sight in the neighborhood, he has a free run of all the homes in the vicinity. My suspicion was confirmed when the 'Find my iPhone App' indicated that the phone was in the vicinity of this boys' home. I approached the Mahalakshmipura Police with this information and the phone was in my possession before the end of the day! Awesome Police Work! 

What really made this a happy-happy-happy day was the way this juvenile offender was treated. I was worried that he would face the strong-arm treatment and suffer a lot of trauma. Surprisingly, all the officers and staff were totally conscious of the fact that he was and underage offender, and made all efforts to treat him with compassion and understanding. Finally releasing him to the custody of an adult relative. I was happy to write them a Letter of Appreciation commending them for their sensitivity, and I hope that all police stations in the country will be as humane and professional. 

Proud to be a resident of Mahalakshmipura! I am happy to reproduce that letter below: 

In a similar vein, I should not forget Apple! What a brilliant product! You guys really made my year!! Congratulations to the entire team of designers at Apple Inc. Worth every buck I paid. 

LETTER OF APPRECIATION 

I write this letter with much pleasure and satisfaction to record my sincere and heartfelt appreciation to Inspector Kumaraswamy and his team of Offices and Staff of Mahalakshmipura Police Station Bangalore for the excellent job done in locating my iPhone in just a couple of hours. 

As you may recall, I had suspected a young boy of the theft as he used to frequent our house very often and hence had free access to the house. My suspicion was confirmed by the iPhone locator application, which indicated that the phone was located in the vicinity of that boys’ house, hence permitting the recovery of the same in no time at all. 

This was great police work, no doubt, but I write this letter to bring everyone’s attention to another issue. As this boy was a minor, I was quite concerned as how he would be treated when he was found to have committed the theft, but I must say I was pleasantly surprised to note that the views of virtually everyone in the Mahalakshmipura Police Station was that he should not be subjected to a harsh experience, and hence he was to be treated as a juvenile offender and handled in a very humane and sensitive manner. 

This is indicative of the sensitivity of the entire station to the rights of underage offenders and the approach was one of ‘counsel’ instead of ‘punish’. I really appreciate this approach of yours and I hope you will be held up as a good example of Police Sensitivity and the same will be practiced in every police station in the country. 

Do keep up the good work. 

Thanking You, 

Yours Sincerely, 

Hemanth Sharma 

Are Indians oversensitive to satire? The Assam Rape Festival

Recently on Facebook, a very good lady friend of mine from Malaysia shared an article posted in the National Report, titled “The Assam Rape Festival in India begins this week” http://nationalreport.net/assam-rape-festival-india-begins-week/ which spoke of a festival that dates back to the year 43 BC, wherein all the men in a village in Assam chase down and rape every girl in the village to exorcise their demons! 

To be honest, to begin with I too read the article with a lot of concern and decided that I need to learn more about this barbaric festival, when I started noticing some cultural inconsistencies and realized that this was a hoax. Unfortunately, many of the other readers were readily fooled by the mock seriousness of the article and had posted comments that were very critical of India and its customs. The indignation of some of the commenter’s was quite funny to me as I was ‘in on the secret’, but I felt that it was necessary for me to write to the site and put things in perspective. My comment to the site is reproduced below: 

 This article is a work of satire. It is as true as the next article in the series “The Great American Mass Shooting Festival Begins Next Week (Response from India) - See more at : http://nationalreport.net/great-american-mass-shooting-festival-begins-next-week-response-india/, which should be billed as The Great American Mass Killing Jamboree”, perhaps a more 'American' term. Even the section in which it is posted - 'Entertainment' is a dead giveaway. Poorly researched – the names used of the so called protagonists are not even culturally accurate. Not particularly funny too, one must add, but surely we need to thank this author, as all Indians really need to wake up to the problem of violence against women. Rapes do happen in India and happen too often for us to be complacent anymore. One can argue that out of a population of 1.2 billion, there will always be a few bad eggs, but that is a specious argument that we should not hide behind any longer. Many political parties and the media are constantly lobbying for stricter laws and the sensitization of the police and society at large, to make rape an unacceptable criminal act, which will be dealt with an iron fist, and each and every Indian must support such forces. 

The lady friend of mine from Malaysia, who I spoke about earlier, wrote to me and asked me if this festival news was true. My response: “Not a chance. Rape is punishable with life imprisonment. We do hear a lot of rapes taking place but they are on account of individual depravity and not some institutional or cultural sanction. India has a 5000 year old history of civilization and one of the safest places on earth.” 

What really surprises, are the indignant and sometimes vituperative reactions from some gullible readers who were fooled into thinking this article to be true. One is shocked to see how many people are ready to believe the worst of a country like India, which has been a beacon of non-violence, philosophy and ethics since thousands of years and was the cradle that gave birth to people like Gautam Buddha, Mahaveera, Mahatma Gandhi and millions of lesser known personages of the human endeavor story. 

I also read in the news today, that this article has stirred up a major controversy with the story sparking widespread protests among the people in Assam, who say it has tarnished the image of the state. I’m also shocked to learn from Yahoo News that “The Assam Criminal Investigation Department has registered a suo-motu case against the website for posting the "defamatory" article. CID Additional Superintendent of Police Nirmal Baishya said that investigations have revealed that the article was sourced from Uganda and the website is hosted in Houston in the US”. Surely a gross overreaction, I would think. 

The best response to this article was from the internet troll, Frappy the Anti-Masturbation Dolphin - "There better not be any masturbation at the festival." That is the level of seriousness that it deserves!

Support for Ms. Durga Nagpal IAS

The country is awash with the news of the Samajwadi Party's (SP) Government in Uttar Pradesh bowing to the pressures of the so called Noida based Sand Mafia and getting the officer in question, Ms. Durga Nagpal IAS, suspended on what seems like spurious charges. The powers that be in SP, must have assumed that like in the past 65 years, they could ride roughshod over this lady, and via their retrograde action on her, send out a stern message to all other officials - that they will face similar consequences if they do not toe the Party line. Being Democratic Dinosaurs, the poor chaps may have never imagined that the entire nation will erupt in anger and condemnation, as is happening now, in response to their illegal actions.

On the first hand, we understand that the Sand Mafia is an entrenched lobby with close connections to the ruling party honchos. Thus, it is quite conceivable that goons from the Mafia, who have been facing the brunt of Ms. Nagpals’ official actions, would have complained to their Political Godfathers to fix this ‘pain in their side’ Officer. After suffering the seizure of several trucks and many Crores of Rupees worth in fines for the illegally mined natural resource, the Mafia would have naturally chafed at the ‘interference’ in their activities and resented it. Naturally.

While I do not support retrograde action of any sort, I believe that the SP Government should have handled this with more finesse. If an officer is causing you problems by preventing your cronies from say, looting, then you would typically look for a more pliant Officer and post him / her in place of the honest and upright Officer. Such action is permitted by law and is well within the boundaries of civilized governance and decency, even if the action was contemplated for less than honest reasons. But, to give the whole issue a religious and communal color to suit their actions is reprehensible and deserves condemnation in the strongest possible language and the strongest purgatory actions permitted under the Constitution.

The Officer was just doing her job and apparently following a Supreme Court order prohibiting the sprouting up of religious structures illegally on Government owned land. Media reports suggest that she herself did not get the structures demolished, but in a most mature and sagacious manner, managed to convince the villagers themselves to abide by the law and demolish the structures in question. Even while this needs to be proven, one must express ones’ total and complete admiration for the maturity of the young officer. If this is indeed true, without doubt she needs to be felicitated and publically adored instead of being witch hunted, as the SP Government seems to be doing. Another report in the media also mentioned the fact that her superior Officers at the District level have given their reports to the Government that there was no evidence of malafide intent on the part of Ms. Nagpal, and that post her actions on the demolition of the Mosque structures, there was absolutely no evidence of communal tension or unrest, nor was any complaint received protesting her actions. All this seems to show the SP Government in very poor light, unfortunately.

Thus, for the SP Government to latch on to this flimsy excuse and accuse her of taking actions that could Endanger Public Peace and be Detrimental to Communal Harmony is just a whole lot of rot. This is Minority Appeasement and Communal Politics of the basest order, and their using it as a fig leaf to cover the disgusting naked illegality of their action in suspending Ms. Nagpal, and later serving her with a Charge Sheet, is plainly visible to every right-thinking citizen of this country.

We the people of India have to protest this illegal action and make it clear that we will not stand for such Banana Republic Politics any longer. Since the SP Government seems to have decided to brazen it out and continue with this travesty of justice, we are forced to turn to the Judiciary to set thing right, as usual. Unfortunately, the Judiciary is currently, the only arm of Democracy that still overwhelmingly stands up to scrutiny, particularly at the level of the High Courts and the Supreme Court. Thus, it is inevitable that we petition the Respected Chief Justice of the Honorable High Court at Allahabad, and seek his intervention in the matter.

• The Actions of the SP Government are illegal and anti-Democratic in nature, and Bad in Law.
• The principles of Natural Justice and the Fundamental Rights of the IAS Officer Ms. Nagpal seem to have been undermined.
• The actions of the Government looks to be strongly in response to the spectacular work the Officer has done to preserve the Natural Resources for the public good, which apparently impeded the functioning of the Sand Mining Mafia.
• In smothering the faculties of an honest and upright Officer, the SP Government has verily extended its tacit support to corruption and crony capitalism, to the detriment of the nation.
• Instead of encouraging and motivating Good Governance, the SP Government seeks to exercise pecuniary control over its Officers, and encourage yes-men and pliant Officers who look the other way when an illegality is being perpetrated.

To do my bit, I have created an online petition, addressed to the Respected Chief Justice, and am collecting signatures in support of the same. Please click on the link below and sign the petition, and then share it with all your contacts, exhorting them to sign the same too. It is hoped that we can all manage to collect 500 endorsements. Thank You.

http://www.avaaz.org/en/petition/Protect_honest_and_upright_IAS_Officer_Durga_Nagpal/

Maoism in India - Why the Kid Gloves?

Every so often, we hear of an attack perpetrated by Maoists or Naxalites, in which several Policemen lose their lives and public property is destroyed. These outlaws have in the past also indulged in kidnapping, intimidation, revenue theft and have even ‘punished’ local people with torture and execution style killings, accusing them of being police informants, or similar 'crimes'. The politicians and the Government are generally seen doing a lot of hand-wringing and “strongly condemning the Maoist action”, but I do have to express my puzzlement at why, without any exception, in every State where this problem exists, the Maoists need to be treated with kid gloves – like just so many wayward children being a tad naughty!  With so many police families having been orphaned over the past couple of decades, and the loss of Governmental control over vast sections of the country, and the destruction of public property, machinery and assets, including the snatching away of thousands of police issue firearms should have been reason enough for any sensible government to launch a concerted effort to rein these terrorists in, using whatever means that it has at its disposal.

However, instead of strong and determined action, surprisingly, we hear politicians insisting that they do not advocate the use of the Army or the Air force "to fight our own people", and hence they will insist on the use of the poorly trained and ill-equipped State Police and Para-military forces, who seem to be like sitting ducks as happened in Dantewada. I was also quite shocked to hear a similar view being espoused by a former Army Chief, who was part of a television debate on the aftermath of the Dantewada incident. He seemed to suggest that the armed forces should be used only to quell an attack from across the borders, like traditional armies all over the world have been doing for about 5000 years. I cannot believe that a notion so outdated is still the view held by a man once tasked with the protection of this nation. Any entity or group waging war against a democratically elected Government should be equated to a traditional enemy, in my view. However, to make this decision easier, there is sufficient reason to believe that the Maoists have sympathizers across the borders judging from the ever increasing number of foreign made weapons that they possess. Thus, coming to the conclusion that they must be actively supported and financed by powers without – is something even a lay person will arrive at. In conclusion, if even one pistol or one grenade has been provided to the Maoists by a foreign power, for whatever reason, this becomes a war like any invasion of our land was before. There is no doubt in my mind that we need to quell such movements, and hence, the inability to understand the “they-are-our-own-people” approach.

This has been going on for a couple of decades, during which thousands of lives have been lost, and it is increasingly evident that it seems that we have a lot of Maoist sympathizers in the political establishment. The same establishment had no qualms about brutally attacking and thrashing up sleeping women and children peacefully protesting against corruption along with Baba Ramdev, or water cannoning and baton charging the thousands of young protestors seeking justice for the Delhi gang rape victim. However, when it comes to dealing with the Maoists, the selfsame establishment becomes all shy, coy and ties itself up in knots. Is this an acceptable and ethical position when “our own people” have taken to arms, some of which are reportedly supplied by foreign powers, and have been wantonly killing other Indians like policemen and villagers who are also “our own people”? Why should the Army not go in and disarm these groups using Arial reconnaissance and tactical support from the Air force?

Of course without a doubt, these groups should be first given the opportunity to surrender and abhor the armed struggle, join the political mainstream, and offered a time-frame of 12 months to turn in their weapons. I am a very staunch supporter of democratic processes and if the Maoists have the conviction that their cause is just, and that the people will be benefited by their movement, they should join the electoral process and become part of the Government. Clearly, only those who refuse the rule of law, and ignore the democratic process need to be brought to book using every power that is at the disposal of the Government. Why is such an action illegal or unethical? Can someone explain?

FDI in Retail - A Consultative process at last

I'm really happy to mention here that the Government is finally taking some concrete steps to solve the FDI in Retail imbroglio. On realizing that despite several clarification notes released by the Department of Industrial Policy and Promotion, the list of doubts and clarifications sought by the retailers grew ever longer and precious little in terms of investment came into the country on this platform.

Now, with a view to fully understanding the concerns of the industry, the Government has decided to have an interactive session with the head Honchos of the Retail Industry on the 27th of this month, and hopefully, this consultative process will result in some of the bottlenecks being eased. I hope we will see some investment finally coming in after this meeting.

In the background of the above meeting, I have written to the Secretary DIPP, giving a couple of suggestions on how one can approach retail policy in India, from the perspective of a Retailer. I do hope Mr. Chandra will read my mail and it will help in putting some of the aspects in perspective.

http://m.business-standard.com/wapnew/storypage1.php?id=5&autono=113062400091

From: "Hemanth Sharma" <sharma.hemanth@gmail.com>
Date: 19 June 2013 7:51:30 IST
To: <chandras@nic.in>
Subject: FDI policy for Retail

To,

Mr. Saurabh Chandra,

Secretary

Department of Industrial Policy and Promotion,

Government of India.

Dear Mr. Chandra,

I write this mail in the background of the article in the Economic Times, stating that the “Government may further simplify FDI norms in multi-brand retail” (please see link), and several other recent press reports and comments that discuss the policy and the poor response received to the policy from the Retail industry.

http://articles.economictimes.indiatimes.com/2013-06-17/news/40027734_1_investment-guidelines-dipp-clarifications

Permit me to introduce myself. I currently work with a very large Indian retailer as a General Manager (however, I write this mail solely in my personal capacity), and have been in organized retail in India and abroad since its infancy in 1996. I have been a keen student of retail, its market dynamics and policy for many years, and hence I have acquired a certain level of expertise in this industry and I would like to offer a couple of suggestions. May I also add that just before moving back to India, I was working with a Far East Asian Retailer, who was very keen on entering India through the FDI route, and I was privy to several discussions that took place in this connection, and hence I possess a certain level of familiarity with the concerns that my then employer (and no doubt many others like him) have with our FDI policy.

A senior official of my far East employer had mentioned that they are able to carry out their retail business in some 20 countries from the very liberal, to highly controlled economies of Eastern Europe, but none were as attractive or as challenging to enter in as India. He also made a remark that they would be happy to even work with just 26% FDI, but would require the rules governing the same to be highly relevant to retail, and be simple, transparent and permit them to make a reasonable return on investment in return for the job creation, infusion of Foreign Exchange, generation of Tax revenues and the general positive rub-off that retail can bring to the economy. In this scenario, our current policy unfortunately does not lend itself to a conducive investment climate, particularly with all political opposition that retail faces in India. I would like to make a couple of suggestions for your consideration.

While retail essentially means buy-store-move-sell when viewed for a very broad perspective, this paradigm has to be constantly modified depending on the type of products, method of acquisition, shelf life, market cycle, pricing, buying pattern and other dynamics. Thus, the need for investments in the chain, or determining the quantum of investment required for the front end and the back end, and other such decisions are based on the products sold and not whether they are of a single brand or of multiple brands. For instance, a multi-brand electronics superstore will require virtually no back end investment, while a single brand gourmet food chain will require huge investments in the back end. Thus, if one is to align the policy to the way retail works, the current classification of Single Brand Retail and Multi Brand Retail needs to be replaced with “Non-Food Retail” and “Food Retail” classifications.

Non Food Retail should be made as free and uncontrolled as possible, as this type of retail is not expected to have any impact on the Kirana stores, it should also be permitted to be propagated as freely as possible. Such a move will improve the investment climate for retail in India virtually immediately, and open up the country for a vast number of brands. However, I do agree that as India needs to protect the millions of Kirana stores selling food and FMCG, we can make the policy for Food Retail as strict as the politics of the issue demands. Food retailing will also need large investments in the back end in the form of infrastructure that the country does not possess (Harvest collection points, Grain Elevators, Cold Storages etc.), and insisting that 50% of the FDI goes towards the creation of the same is totally justified. I’m sure you will agree that this is not the case in Non-Food Retail.

One other rule that most international retailers have difficulty in conforming to, is the rule mandating local SME sourcing to the extent of 30% by value of goods sold. – One would like to submit that it is not feasible for some retailers to achieve this, for instance technology retailers (Laptops, Cameras Televisions etc.) to source any of their products locally as their product line follows global sourcing, where the best factories provide world class quality products, or even retailers who sell products that are GI marked (Swiss Cheese, Belgian Chocolate, Italian sauce etc). Thus, this rule has become a stumbling block to investment. If it is possible, the following easing of the norms for this rule could be considered:

·         Make compliance voluntary, but incentivize its acceptance by introducing ‘bragging rights’ like “Products Sourced from India” stamp.

·         Another incentive could be to offer some temporary tax sops to retailers who meet the 30% sourcing by value norm.

·         The rule should also permit sourcing from any Indian manufactured source and not restricted to SME’s. My former employer who wanted to get manufactured, his Private Label Skin Care, Hair Care and Cosmetics products, will not be able to work with anyone less competent than an ITC, Godrej or similar. Going to an SME would risk liability particularly when the heath of the customer is in question, and no retailer will be willing to do that.

·         Those who choose to go to a capable SME should be encouraged. However, an SME who grows to become a large scale industry on the strength of his supplies to a retail chain should not be dis-incentivized for his success.

·         Lastly, the sourcing rule of achieving 30% from day one is a very major challenge, as any retail chain will need to have some critical mass in terms of establishing themselves as a high-recall brand as well as in achieving a number of stores before being in a position to absorb such quantities of merchandise procured locally. Please consider introducing a window period of 5 years from launch, before which this norm of selling 30% of the merchandise sourced from India, needs to be conformed to.

In addition to the above two suggestions, any other easing of the rules will surely go a long way in bringing the much needed investment into the Country. I also understand that you are planning to meet industry representatives on the 27^th of June to seek their inputs. I congratulate you for adopting this consultative process and for your promise of hand-holding the investors during the startup phase. My best wishes are with you in this regard.

Thanks & Regards,

Hemanth Sharma

Drought and Cloudbursts, Manmade Monsoon Fury

The past week, has been quite a dramatic one - if one is a viewer of any of the 24x7 Television News Channels. We have been constantly bombarded with images that one normally saw only on viral YouTube videos prior to this. Two and Three storied buildings just collapsing like a pack of cards, cars floating furiously away along in the current, dashing into other cars, bludgeoning buildings and bridges along the way, and dramatic pictures of mudslides having decimated holy towns on the banks of the Ganga, after they having stood strong for over a hundred years.

Officialdom is as usual, wringing its hands and begging us to appreciate the fact this is a natural calamity of gigantic proportions, and hence their sorry and uncoordinated rescue attempts need to be seen as brave and heroic by all patriotic Indians. Only the Armed Forces seem to be doing anything credible or worth appreciation in the search and rescue efforts. On the other hand, News reporters have already alleged that this is a 'manmade disaster' and have started pointing out that most of the buildings that were damaged, were illegal or permitted to be built on the river banks in contravention of Environment Ministry norms, and ignoring even the basics of engineering design. Focusing on the illegal structures alone seems to indicate that the reporters too are willing to accept the view that the cloudbursts are indeed natural disasters, and only the consequences thereof were manmade. It is depressing to observe that no one is studying this from a continental perspective, as I sincerely believe that this problem is entirely manmade, including the cloudbursts and feel that nature is wrecking her revenge on us for having raped and pillaged her incessantly for the past 40 odd years. What follows is my perspective as to the causes of the sudden cloud bursts and consequently, the still unknown number of lives lost and immense loss to property.

I’m sure everyone who was a child of the ‘70’s and the ‘80’s will remember the Weather Reports on the Doordarshan channel, in which, the progress of the monsoon used to be tracked from the 1^st of June onwards, by showing a Monsoon Front Line moving in slowly over the sub-continent until it was shown to cover the entire Indian landmass by the first week of July or thereabouts, when it finally became a spent force while battling the might of the Himalayas. One could see the front moving faster over the sea due to the absence of obstruction, and lagging over the land by a few days. The terms used the news readers are still fresh in my mind “The Monsoon front has progressed to cover Lakshadweep and Andaman & Nicobar Islands, Costal Kerala, South Interior Karnataka, North Interior Karnataka, Rayalseema and the Konkan regions. It is expected to further progress over the Deccan Plateau, Goa and Coastal Orissa in the next two days. The Monsoon is also expected to reach Delhi and Rajasthan which are currently reeling under heat-wave conditions, by the 30^th of June”, or something to that effect.  Thus, an entire month of rains starting from the 1^st of June had to first drench the rest of India before it could even reach the foothills of the Himalayas. This time, it took just about 10 days, and like it has done over the past few years, it has entirely skipped Karnataka and Maharashtra, and reached Delhi and the foothills. Why could this be happening?

In a similar vein, I am also quite irritated whenever a discussion on climate takes place on TV for instance, where residents of Bangalore mention that they never saw temperatures in the high 30’s back when they were kids, and the ‘Experts’ will be quick to point out that in some obscure date in May of 1937 or 1928 or whatever, Bangalore had recorded a temperature of 38.7 Deg. C, and hence there was no truth in the alarmist theories of Global Warming. The so called experts are also quick to point out that the 'Average Temperature of Bangalore has remained more or less constant over the past 100 years'. This needs to be debunked in the strongest possible terms, as I have personally seen the change in the temperatures in Bangalore, and never before was it as hot as it is in summer or as cold as it is in winter now. Thus, it seems that nature has a way of ensuring that the average is maintained – warmer summers are compensated by colder winters and thus, when the average temperature is mapped for the entire year, it will seemingly remain same as the average recorded in the ‘70’s. What this average hides is the earlier maximum – minimum range and what change that has undergone over the past 40 years. Similarly, showing us a record of some extreme temperature when our Grandparents were kids in Bangalore misses the fact that back then, such high temperatures were an absolute rarity, and may have appeared on a couple of days due to some global phenomenon like the El Nino effect, while these days, we see Bangalore suffering temperatures of mid-to-high 30’s for over 45 days in April and May, which was unheard of back then. For a city that needed no ceiling fans when we were kids, this is tragic. Nowadays, an Air Conditioner is the ubiquitous adornment for most bedrooms, adding to the environmental impact and climate change, making them more and more inevitable each season.

So, getting back to why the monsoon traversed the sub-continent so rapidly, I think it basically boils down to this – Deforestation. The monsoon front used to traverse very slowly over the peninsula landmass due to the very extensive forest and tree cover over the Malnad region of Karnataka, and the greenery of the North Karnataka and South West Andhra regions. This green cover not only slowed down the movement of the front, but also divested of it a major portion of the water content in the monsoon clouds by forcing copious yet gentle precipitation for weeks. This helped to not only slow down the movement of the front, but also resulted in controlling the amount of precipitation they retained when the winds finally hit the Himalayas, as the mountains seemingly possess the ability to extract every last drop from the clouds. Now, with the forest cover in Karnataka reducing each year, and the whole of Hyderabad Karnataka and Andhra a veritable gaping wound due to the open cast mining rampant there, means that the clouds are able to just pass over the entire landmass virtually unchallenged, and hence arrive still swollen with rain at the foothills of the Himalayas. This leads to cloudbursts, simple. Thus, this extreme weather phenomenon has been caused in part due to the greed of man, and of course, corruption. Greased palms have never possessed the ability to protect our forests, and much like the rain bearing clouds, they slip through the rules, and lay bare larger and larger swathes of forest land.

Touching upon the aspect of how the Himalayan region has been managed, and why the raging rivers have managed to wreck so much havoc, one only needs to look at the flood waters to understand that even in the Himalayas, the greed of man and the lucre of money has apparently laid bare the timeless hills. The water is a deep chocolate brown due to the millions of tons of precious topsoil that has been washed off the hills due to the absence of a tree root network that once bound it together. Further, it must be understood that this is pretty much a one-way street - as water that is mixed with soil and moving at a fast rate becomes virtually an unstoppable force, as the density of the mixture rises, so does its destructive power, eroding away more and more soil to feed the frenzy. Add to this a million trees, a few hundred thousand boulders, several houses and an assortment of cars to the mixture, it will be no different than a weapon of mass destruction, and nothing will stand in its way, especially not the shoddily constructed illegal guesthouses and cheap hotels that sully the banks of the Ganga all along its course.

I do hope that the Experts will wake up and instead of just rationalizing the problem, do something about it. We need to revert Karnataka to the earlier forest cover, ensure that the bald wounds inflicted by the iron ore mining are all greened over, and the forest cover of Maharashtra and Madhya Pradesh are similarly improved to form an effective monsoon barrier or sponge, that traps the rain in a gentle and sustained manner. In the hills themselves, the pressure of human settlement has to be eased and extensive reforestation taken up to prevent topsoil runoff. All along the banks of the rivers, a respectful buffer zone or Ecological Zone needs to be created and the course of the rivers and their flood plains kept unpopulated. Finally, all buildings on the hills have to be restricted to a single level only, so that the pressure on the inclined soil plane is minimized. The officials tasked with the maintenance of ecologically sensitive zones need to faithfully perform their duty and preserve our nation and its precious ecosystem for our children.

Lastly, India as a nation – every single man, woman and child will have to abhor corruption. As long as we are willing to pay a bribe as speed money for our own selfish reasons, the officials will see no reason to reform themselves. Ultimately, it seems that any disaster, natural or manmade can be connected tenuously or otherwise to acts of corruption. This has got to stop!

The story of India's Politics, Policy and GDP growth

Background

I have always been intrigued by the effect that politics has on the economies of nations, and decided that I should study the effect of this on India, in a little depth. I was really surprised as to how much I was able to learn from this simple exercise and how much fun one could have while doing it! The cause-and-effect of a political party’s economic leanings and the decisions they make is seen to be quite significant, hence establishing very clearly that the middleclass apathy towards voting is actually undermining the economic performance of the nation, and hurting them in more ways than one. While I am not an expert on either the Economy or Politics, the readings of the simple exercise should be very clear and evident to all.

Method adopted

What I did was to research the Percentage change in the GDP of India since the days of the first Economic Reforms initiated by Prime Minister Narasimha Rao, right up until today, i.e. the performance of UPA II, and found the data presented by the Ministry of Statistics and Program Implementation in the form of a line graph (source www.tradingeconomics.com). On this graph, which was plotted chronologically, I overlaid colored bands to indicate the various political regimes that were in power at the time, and the effect their economic decisions had on the economy suddenly became very evident. Please see the picture reproduced above.

Some basics about reading such graphs.

The Terminology used of course, is mine and will not be found in any text books, perhaps!

Ascendant Line. A graph line that is very sharply ascendant indicates very robust economic growth. The inference is that the Government of the day had taken apt decisions to encourage such a growth or initiated appropriate actions including the making of public announcements that improve investor confidence. Of course, it is an oversimplification as both these will have some lead or lag time to effect the economy, and no action or statement will have an immediate influence, on the GDP. The Stock Market however, is a different story altogether!

Descendant Line. Further, a graph line that is very sharply descendent indicates on the other hand, influences that have depressed the rate of growth. This may be due to both external impetus as well as policy decisions taken internally. Growth which is following a negative trend will have to be corrected by taking quick and appropriate decisions that improve the economic environment and counter the falling trend. As this fall is mapped against time, a sharply falling growth rate that is arrested and turned around into a growing one is an indication of quick and incisive action. On the other hand, a drop that is occurring over several months without getting reversed indicates a slow response in the monitoring of the economic indicators.

Regime Trend Line. Another indicator is the Regime Trend Line. This is a study of the GDP Rate at the time a new regime took over and the GDP Rate at the time it handed over charge to the successor regime. If this is an ascending line, it means that the regime in question left the GDP in a better condition than it received it in. On the other hand, if the trend is falling, this means that the regime in question has failed to keep the momentum going and has adversely affected the growth rate, either due to its inability or its unwillingness to take the required decisions. Please note that this trend line is not to be confused with the Average GDP Growth Rate for a period. This only shows what kind of an economy a particular Government took over and in what condition they let it when handing over power. Thus, a regime that has taken a growing economy and caused it to drop or a regime that has taken a falling economy and turned it around will be evident by looking at the trend line.

Upward Squiggle. A squiggle line moving generally upwards but with a lot of minor falls indicates that while the GDP is growing perhaps due to external factors, it is constantly being tripped up and made to fall. This can happen both due to poor Government policy as well as changing external conditions. When we see the issue in an over-simplified manner, it indicates a growing economy ‘in spite’ of the Government. I wonder perhaps, do the pushes and pulls of coalition politics cause such dribbles? Constant minor problems caused by internal and external factors that have been solved in a constant but adhoc manner, and whose effects last only a few weeks, before allowing the GDP to drop again. However, if the Trend Line is still a growing one, one can assume that the politics was good for the economy or a case when economics overcame the politics – an eternal struggle in the Indian context.

Downward Squiggle. Obviously, a squiggle line that is moving downwards indicates that the GDP is constantly dropping, and all the intervention that the Government has been making to reverse this trend has not resulted in any substantial change, except for a temporary growth for a few weeks before dropping off again. If the drop is occurring due to adverse international conditions, it indicates that the Government is taking ineffectual steps to counter this, perhaps being unable to take bold decisions due to coalition pressures. If the drop is occurring due to internal issues caused by the politics itself and the Government being unable or unwilling to take corrective action, it shows that the Government is in a state of policy paralysis, and its ability to manage the economy is questionable.

Interpretations: I must mention again here, that I am no Economics Expert, and what follows is generally a layman’s perspective on the issue. While I have done some research on the causative effects, these are my interpretations alone, and presented to entertain rather than educate, nor to enter into a serious debate on economic theory. If however, any of my readers who are more knowledgeable about this subject, would like to write in with their perspective or correct any of my conclusions, I welcome that. Please leave your comments at the end of the article.  Let me now; attempt to make some fun interpretations.

The regime of Narasimha Rao, 1991 to 1996 – This period is the star performer when it comes to the economy. The regime inherited a very precarious situation, and I understand that the country was on the verge of getting into a Balance of Payments crises and the Government had to pledge their gold stocks with international banks to raise the required foreign exchange bail-out from the IMF. I also understand that the IMF mandated some economic reforms in our country, which was then, one of the most closed and pre-historic economies in the world. It is beautiful to see how boldly the line skyrockets upwards in 1992 and continues to climb at a more sensible rate each year, until it reaches to about 7% in 1996, when the regime was voted out of power. While one must admit that the Narasimha Rao Government achieved a formidable growth in percentage terms, it was on a very low base, and hence needs to be viewed in perspective. However, since this was the regime that shook off the chains that bound us to crushing poverty for about 50 years, it was a Pioneer reaching out boldly into uncharted territory and hence gets my vote as the Star Regime. Narasimha Rao also deserves a greater place in our history books instead of a passing mention as it is now. Unfortunately, he did not possess the correct surname, apparently.

NDA # 1 led by Atal Behari Vajpayee, 1996 – which lasted for just 13 days has been ignored for this study, as the politics would not have had enough time to begin having an impact on the growth rate. However, to the credit of the previous regime, it can be seen that the growth trend continues unchanged well into the Deve Gowda regime. This is perhaps due to the momentum the GDP indicators had gathered by then, and was unaffected by the actions of the new regime, which has a certain lag time to make an impact.

The ‘United Front’ regimes of H. D. Deve Gowda and I. K. Gugral, 1996 to 1998 – have been clubbed together as they were regimes that were formed from within the same political alliance (more or less). It must be said that perhaps this was the worst period for the economy of India, as the Government of the day virtually insisted that they would cater only to the needs of ‘the poor and the underprivileged’, and hence willy-nilly ignored the reforms process, nixing them in the bud. As mentioned earlier, some growth is seen in the first six months of the Deve Gowda regime, but perhaps, this was in spite of Mr. Gowda and not because of him! The free-fall commenced soon after and reached down to about 4% from a high of 8%, all in one year. Since these regimes were more worried about staying in power, they may have taken politically good decisions but perhaps, those that were disastrous for the economy, the business climate or even the general sentiment. However, to their credit, it seems like better sense had prevailed in the last 4 months or so of the regimes’ dispensation, where some measures seem to have been put in place to reverse the free-fall and move the GDP growth up a bit. Either that, or my banding accuracy is a little bit off, and the growth phase started only with the NDA Government. However giving the United Front the benefit of the doubt, if it were not for this face-saver, the Trend Line would have been a sharp downward line falling into the darkness with an extrapolation beyond. I’m not sure of the politics of the Third Front, whether they were good for the Country in posterity or not, but this regime was a disaster for the economy and I pray that our country will not experiment with such political alignments ever again, if one considers economic health to be important to the nation!

NDA # 2 led by Atal Behari Vajpayee 1998 to 1999 – which lasted for 13 months in 1998 was the first non-Congress non-Janata regime, and they faced a lot of problems in the Parliament due to their very slim majority. Thus, before they lost the Trust Vote in 1999 by one vote, what little effect they could have on the economy should well have been negative, but to their credit, they took on an economy that was in low ebb, just after it had turned around, post a historic fall by the previous regime, and converted it into a growing economy. They managed to grow the GDP from about 4.5% to 6.5% before they were voted out. If one were to consider the fact that they were managing the fall-out of international sanctions imposed due to the nuclear tests at the same time, this growth is creditable.

NDA # 3 again led by Atal Behari Vajpayee 1999 to 2004 – rode back to power in the aftermath of the Kargil War with Pakistan and the surge of National pride this incident had generated. This time, the NDA held 303 seats – a comfortable majority that permitted them to take some very bold steps in bolstering the economy. Some of the measures that I personally feel were turning points in the India Growth Story include the Golden Quadrilateral & North-South / East-West Corridors, investment in Infrastructure like the Gram Sadak Yojana and Disinvestment initiatives. This coupled with some other bold economic reforms saw the country growing at a rapid pace and the GDP hitting upwards of 7%. We do see a few downward trends in the GDP growth where the figures had hit sub-5%, but suitable corrective measures seem to have been initiated and the growth trajectory corrected upwards. The last year of the NDA # 3 regime seems to have been their best year, where the growth is seen to have occurred from sub-5% to a dizzying high of +8%. However, even when the ‘India Shining’ campaign was hammering this into our consciousness day in and day out, NDA was unexpectedly voted out of power. The Regime Trend Line has been taken across NDA # 2 and NDA # 3, and indicates that the regime took on a weak GDP rate and left it healthier than before.

The UPA # 1 regime, headed by Manmohan Singh, 2004 to 2009, who was the Finance Minister in the earlier Star-Rated Narasimha Rao regime, was expected to deliver this country into the realm of the developed world. He had inherited an economy that was skyrocketing during the last year of the previous regime, but it can be seen that as soon as he took over, perhaps due to sentiment, we see that the growth rate drop right from day one, where it peters off from the dizzying rate to a more sedentary growth rate. As I have written before, this is perhaps still on account of the honeymoon phase, where the policies of the previous regime leave some momentum to push the GDP along the same trajectory, except for a reduction due to sentiment as mentioned. Soon after, for the first few months after the honeymoon phase, we see that the GDP goes into a minor free-fall, before it is corrected and is seen to grow again. Post this growth phase, kindly note the ‘Upward Squiggle’ that I was talking about earlier, where the Government seems to take a lot of small measures, and tentative corrective steps without any bold initiatives to oversee the GDP growth to almost 10%. While this is creditable, I believe that bold and path breaking initiatives could have pushed the growth rate to double digits, an opportunity the Government seems to have missed. It must also be noted that a sharply ascendant GDP Growth seems to have some lag momentum, while the Squiggle perhaps has none. The last year of this government was quite a disaster. They were punished by The BSP for investigating its supremo, Mayawati in the Taj Corridor corruption case, and later by the Left Front for signing the Indo-US Nuclear Deal, which had the potential to erase the Power Deficit of the nation. Thus, self-interest and hollow ideology tripped up the Government which seemingly went into a state of shock, leading the GDP growth rate to drop to about 6%, after tantalizingly going near the double digit mark. The Regime Trend Line is a depressing descending line – an indication that a lot of opportunities were missed, and the Government had forsaken its place in Economic History from a would-be ‘Star’ to an ‘Honorable Mention’.

The UPA # 2 regime, again headed by Manmohan Singh, 2009 to date, which has been studied separately from UPA # 1, on account of the Left Parties being in opposition this time and the BSP being a fence-sitter. Despite another couple more of ‘Withdrawals of Support’ from its constituents, the Government does well with the economy and the GDP is seen to dramatically rise close to 9% in 2010, but after the exit of the Trinamool Congress, Jharkand Vikas Morcha and Dravida Munnetra Kazhagam in quick succession starting from end 2012, the GDP rate is seen to be in constant decline. The gentle slope downwards indicates that perhaps this is largely on account of internal conflict and not external factors, which usually bring about sharper drops. The fact that this gentle ‘death-slide’ continues to this day (mid 2013) is an indication that no substantive corrective measures have been put in place, and the GDP has once again reached the rates prevalent at the time that the Narasimha Rao regime took over, effectively wiping out all the gains made over the past 20 years. In the remaining year of this regime, I do hope that bold and decisive decisions are taken to bring the economy back on track.

Concluding remarks. The news these days however, on the contrary is quite depressing, with all indications pointing towards more difficult days ahead. The Rupee has hit its lowest ever exchange rate against the US Dollar, the Inflation rate is still in sub-5% range, but every purchase has somehow become more expensive, the Interest Rates are manageable at 7.5%, but lending is low and when they do, consumers get loans at much higher rates, the private sector is apparently sitting on cash, but are unwilling to invest in expansion leading to stagnation in the job market, and finally my pet topic, Big Ticket reforms like FDI in Retail has been opened out, but has brought in virtually no investment  – all indications of a faltering economy, charioted by an ineffective and weak dispensation.

References:

http://www.tradingeconomics.com/india/inflation-cpi

http://economictimes.indiatimes.com/news/economy/finance/rupee-suffering-from-ill-effects-of-cosmetic-surgery/articleshow/20546722.cms

http://economictimes.indiatimes.com/news/economy/indicators/industrial-output-growth-sputters-at-2-rate-cut-likely-on-july-30/articleshow/20564332.cms

Where is the promised FDI in Retail?

This is the reproduction of an article written about FDI in response to a request by Mr. Shreekumar, Editor of the Trade Briefs magazine.

It is about six months since the Central Government passed the Law permitting Foreign Direct Investment in Multi Brand Retail. This happened after a long and very hard-fought intellectual, political and very personal battle, taking close on 10 years for this decision to come through, and the expectation was that the Worlds’ finest retailers will be queuing at the door begging to be allowed to invest in the sector. Sadly instead, it seems to have just left the retail industry in utter confusion. Let us try to understand why…

Retail Politics – is this really justified?

Currently the biggest stumbling block to Retail in India is the politics of the issue. One wonders why Retail in India has become the unfortunate victim of a completely unjustified political focus, as it is highly undeserving of it. What ought to have been a simple technical decision based on sound economics has unfortunately become an unexpected high decibel all-stakes-on-the-table battleground, pushing the Government to adopt a forced hawkish position while drafting out the notifications. These notifications, over the past few months, have churned out some very investor-unfriendly guidelines while grudgingly permitting investments under two broad sub-divisions – Single Brand Retail and Multi Brand Retail, and added with the absence of clarity in those notifications, has rendered the entire environment muddied and seemingly fraught with risk. Thus, no major Multi Brand Retailer is queuing up at the Ministry’s doors begging or otherwise – not till date, anyway, leaving just a handful of Single Brand Retailers for the Government to showcase as successes of the policy.

So, why has Indian Retail become so embroiled in politics? I really do not have the answer to that. It will take a more diligent student of Indian Politics and apparently even of Indian Retail than I to answer that one. I can say only this. Retail is a very ordinary, low-tech, basic but capital (both fiscal and human) intensive industry and it is only the implementation of globally tested best practices, intelligently adapted to suit the Indian market, together with the investment of virtually unlimited resources in the form of promoters equity that could make retail work in India. Thus, the shrillness of the political debate that retail has attracted is quite unexpected. The NDA Government, in 2004 had the opening up of this sector in their Manifesto, but chose to 'U turn' on it in 2009. The UPA Opposition in 2004, who was then the shrillest opponent of FDI in Retail, is now the one who is saying it is the panacea for the nation in 2012. Neither position is entirely justified, as Retail is neither a bed of roses nor an instrument of destruction, but a simple, down to earth and an exceedingly tough business. The NDA opposition has even vowed never to permit this notification in States ruled by them and is even ready to bring down the Central Government for this law, despite it being promulgated at least 10 years too late by their own reckoning.

Thus, it is evident that both political alliances have been working only for their own short-term benefit than to formulate policy for the good of the industry and the nation for the long term. Poor politics has been killing good economics for over a generation now, and this has been proved true in the case of Retail in India too. Will politicians ever change and see the big picture? Will the UPA Government ever have the sagacity to seek the NDA’s support for a slightly modified bill and end this atrocious debate once and for all? Will the NDA show the required bipartisanship that would be necessary? Ultimately, can they agree to share the credit (or the blame), as the case may be? My expectations are unfortunately abysmal on that count.

Confusion in Single Brand Retail

Instead of the promised flood, investments in Single Brand Retailing have been dribbling in principally due to the rule that mandates 30% local sourcing from launch of business. Any retailer would find that a challenge, and virtually every one of the current applicants have requested a clarification on this rule. Even a cursory internet search on this subject throws up a number of stories that speculate that the rule will be diluted soon and an equal number that disdainfully insist that that will never happen. One is appalled that we as a nation have the gall to invite investment in this cloak and dagger manner, and one is equally amazed that the world’s finest retailers are still taking us seriously after all this! In my view, ‘Single Brand Retail’ is not even a genuine and cogent classification (more on this later), and if it were to exist, this rule that defines the quantum of local sourcing must be enforced in a phased manner over a 5-year period in the least. While the silly season on this rule is not in a hurry to end anytime soon, some sense needs to prevail and the Government must not insist that the sourcing should be made only from SME’s, and should be extended to cover any Indian manufacturer, regardless of size, as it would be difficult enough to launch with some quantum of local sourcing, and the larger corporates may be better placed than SME’s to match the specification requirements.

Further, as the rule currently reads, an SME who would be trained and developed with much effort to supply quality merchandise by a global retailer has to be dropped as soon as his turnover crosses USD 1.0 Million as he then becomes ineligible. The retailer, who spends a lot of time and effort in developing a reliable resource and enriches him in the bargain by sourcing from him, has to dump this supplier and search for a new one. Does this mean that we intend to punish success, or perhaps encourage subterfuge as vendors will open an unlimited number of new companies each having a turnover of less than a USD 1.0 Million to skirt around the silly law? Is this desirable?

The odd-ball rules of Multi Brand Retail

Multi Brand Retailing is in an even worse bind if that were possible. Apparently, this Government, which has been accused of policy paralysis for too long has decided that it is best to promulgate any ‘paralyzed policy’ with a view to just ducking some heat from the WTO and investor lobby groups! That is perhaps why a major policy reform announced by the Center requires the separate endorsement of every State Government. This is preposterous. This is perhaps the first Central Government economic policy that is not applicable by law all over the country automatically. Thus, this policy, which leaves the adoption of the rule or of dropping it to the States, is a very confusing and spineless one, and is scaring off even the most pioneering of foreign investors, as they have to ensure that all the States that they intend to operate in has adopted their version of the law, before doing business there.

Perhaps, a new retail entrant into the country will have a somewhat lesser cloud of confusion hanging over their heads, as they can in theory; pick and choose to enter only those States that have adopted the new rules. While this is possible in theory, it is highly unlikely for a major retailer to agree to invest in the country if he is not even sure of how many states he can operate in, and how many stores he can ultimately build in his chain. If one is not sure of one’s operational scale in the medium term, one is sure of nothing, how will the investment come in?

On the other hand, for an international Multi Brand Retailer who is interested in buying into an existing Indian chain the situation is simply hilarious. For instance, Future Retail* will have to perhaps split into multiple business entities each registered in various State Capitals and the investor can own 51% of only those entities that are registered in States that have adopted the new rules. Assuming this is done, what happens to the Brand name of the retail chains in question? You cannot have a 100% Future Group entity and a 49% Future Group entity both owning the same Brand Name, so the Brand Name cannot be sold off. Thus, without the ownership of the Brand Name and the goodwill it carries, what would be the use of investing in that chain?

Even if all the above is somehow navigated, the ever-present problem of multiple Taxation Circles and Entry Tax Rules continue to exist and complicate any investment proposal. The adoption of a uniform Tax Code and the GST Act will also be a pre-requisite for a retailer who aspires a pan-India footprint.

The politics of the Multi Brand Retail has also mandated that all retailers will have to invest a minimum sum of USD 100 Million, of which 50% will have to be deployed in the development of back-end processes. Where is the logic in this? Which retailer, other than a Food / Fresh Produce retailer requires any substantial back-end set up? Will an Electronics and IT Equipment Retailer ever require the investment of USD 50 Million worth in his back-end operation? Will that investment not be a millstone around his neck, dooming him from profitability in a low-margin business? Judging from this and other ham-handed rules, it is quite clear that the understanding of the sector by the Government bureaucrats is very poor and they have been guided largely by political dividend.

Debate on the relevance of the classification – Single and Multi Brand Retail

Another aspect of the debate that has befuddled me no end is the seemingly senseless and unnatural segregation of Retail into ‘Single Brand Retail’ and ‘Multi Brand Retail’. The business approach, the investment requirements, the mode of operation and products being sold in retail do not fall under the above classification and vast overlaps are seen. My reading is that this classification was conjured by the Government, on the premise that it expected less resistance to Single Brand Retail, and hence perhaps hoped that it could manage to get at least some investment through the back door. Obviously, the ploy has not worked, and one has learnt that less than ten 'Single Brand Retailers' of repute have made a formal application at the time that this was written. Many others would adopt a wait-and-watch approach and wait the situation out.

Looking at the minefield that the rules of Multi Brand Retail are, I do not expect even a single serious Retailer to put his money here, considering the serious risks involved. One has even heard the NDA politicians say that they will rescind the notification if they capture power in the next Lok Sabha. Investment will come only when there is complete clarity, and the investor is sure that his estate is safe. I have personally heard from a prospective investor that, even in a restrictive 26% FDI regime, that has a clearly framed rule structure, he would be tempted invest in India, considering the innate attractiveness of the Indian market, but with all the confusion hanging over our 51% and 100% regimes, he would be wary of putting in any money. Thus, it is clear that for both Single Brand and Multi Brand Retail, one would not expect the investment flood gates to open anytime soon. The Government will need to actively work with the industry and revise their approach to the regulation of FDI.

Food Retail and Non-Food Retail makes more sense as a Classification

A more logical and cogent classification of Retail in India would be one that is split along the lines of ‘Food Retailing’ and ‘Non Food Retailing’ which would be more appropriate for the Indian scenario. The back-end investments and Farm-to-fork initiatives are very relevant to Food Retailing, and insisting on investments in this sector would not be misplaced. State Governments would then be able look at the Retail industry from this paradigm and formulate the rules as required of them by the Central Government, keeping in mind all the local sensitivities to Food Retailing.

One can readily understand the political sensitivity of food retailing, as millions of small retailers’ livelihoods are apparently in danger by the advent of modern retail and hence requiring of some protection, but why do we have all kinds of retail clubbed together? What are the risks in permitting retail of let us say, Apparel, Accessories, Books, Stationery, Consumer Durables, Cosmetics, Jewelry and a host of other FMCG and Lifestyle goods and services by Multi-national Retailers? Why should we insist that they invest USD 50 Million in infrastructure? Would that huge investment be justified and pay for itself financially?

This artificial Clubbing together of all types of Retail regardless of the type of business structure or product cycle is ham-handed and ill-conceived as it would surely be counterproductive - both to the politics of the issue and for the retail industry, not to mention – to the nation as a whole too. While one can understand the social context of Food Retail needing to be restricted to ensure that the political agenda is adequately addressed, one firmly believes that Non-Food Retail should be simply removed from all unnecessary controls and allowed to propagate freely.

Retailers need access to the traditionally developed markets in India

Retailers also need to be assured that they can freely operate in all the developed markets of India, where modern trade has been in vogue for about 20 years like Tamil Nadu, Karnataka, Andhra Pradesh, Maharashtra, Gujarat and NCR. Without a presence in all these key markets, one would not want to venture into new and untried markets that have welcomed FDI in retail. One hopes that perhaps when provided with this new perspective, State Governments that are politically adversarial to the Central Government, but possessing an otherwise progressive outlook, may be more inclined to notify their own versions of the Retail rules and perhaps choose to closely monitor Food Retail while permitting Non Food Retail to proliferate as that poses no political concerns to be addressed.

For most International Retailers however, the markets of Tamil Nadu, Karnataka and Andhra Pradesh would be the most attractive, as modern Retail (FMCG, Food) has been extensively tried and tested here since the mid 1990’s, due to which the customers are expected to be more welcoming of the USP of Modern Retail. Further, as they are also progressive States, their denizens possess good purchasing power, while also enjoying a relatively politically stable and generally peaceful business oriented atmosphere. I wouldn’t be very surprised if many International Brands choose to postpone their entry into India until these crucial States notify their version of the rules. Sadly, currently only Andhra Pradesh has fallen in line.

This would be particularly critical for Karnataka, and it needs to look at this very closely and very seriously as many international retailers would be keen to be headquartered in Bangalore, considering the fact that it is the most preferred city to live in for expat managers. Thus, if Karnataka continues to choose political exigency over sound policy and economics, they will stand to lose a huge opportunity in the form of being the repository for all the investment and being the beneficiary of the tax revenues accruing out of such business entities.

In conclusion

Business and politics aside, I for one, truly believe from the bottom of my heart that modern retail will genuinely and substantially benefit India, especially with the rules mandating a 50% quantum of investment in the setting up of Retail Backend Infrastructure, if that is focused towards Food Retail. I draw attention to another article of mine, where I have written about the need for the betterment of the agricultural infrastructure (please see link below), which I feel large retailers would be most willing to undertake, if the rest of the rules are more investor friendly. I do hope that someone out there is listening….

Note.

* The Retail Entity has been named only for illustration purposes and not with any other intent. However, the scenarios mentioned above would be equally true for virtually all other Indian promoted retail chains too, and many of which are on the edge of financial ruin and a few of them may be open to an equity infusion at this point in time.

Additional reading.

http://sharmahemanth.blogspot.com/2012/02/grain-elevators-are-needed-in-india.html

http://dipp.nic.in/English/acts_rules/Press_Notes/pn1_2012.pdf

http://economictimes.indiatimes.com/news/economy/policy/fdi-in-multi-brand-retail-full-text-of-goverment-policy-approval/opinions/16398474.cms

http://articles.timesofindia.indiatimes.com/2011-11-29/india/30454303_1_multi-brand-retail-trade-retail-sector

http://ksbpartnersnewsletter.com/FileName/News_FE_a_Sep2012.html