Byapaar.com – The Indian Business Blog

First of all, I would like to beg your pardon for not updating this blog for so long. It has been quite a long story – but in short “Politics” kept me pre-occupied for close to two months.

From declaration of Indian General Election to announcement of results and till the full Central Ministry formation – I got soaked into Indian national politics.

Some of my regular readers might wonder what do I have to do with politics as I work in a school! Well, here is my clarification:

I work in a semi-government school which means – all the expenditures of the school is borne by the government and we enjoy all the benefit of a government employee. But our school administration is run by a Managing Committee whereas that of a fully government school is run by the School Education department of the government. We can also participate into active politics unlike government employees who are forbidden to participate in active politics. For being involved with a particular political party- we don’t have to put in any declaration or resignation papers.

Under the circumstances, I joined Bharatiya Janata Party (BJP) just one month before election. Being a teacher does help a great deal in politics as I was immediately given the post of Vice-President in our Mondol Committee (state assembly segment level). So I had to get involved into high-voltage election campaigns. My responsibity was more as the Member of Parliament (MP) candidate from our party comes from same village – barely few hundred meters far from my house.

I am not here to justify BJP policies – but I must say that I had no option but to join them. In our state Congress (I) is in total organizational disarray, and I can never ever join in the Communist Party of India (Marxist) or CPI(M) – as they are totally non-communist in practice. They are more bourgeoisie than even hardcore Capitalist of USA. To be frank – they are communist just by name – in practice all those big capitalist captains of the west would pale before them.

BJP is still in a nascent stage in my state – so I can join them and try to influence them. That has been my rationale.

Let forget it now – for the time being. My heartiest congratulation goes to the United Progressive Alliance (UPA) for the decisive mandate they got. I look forward to them taking the economic reforms forward with more human touch so that all poor of India benefit from the economic boom the county has been witnessing for more than one decade now.

The business communities and investors across boundaries have also been rejoicing for the way Indians have shown a decisive mandate for the UPA and the way they discarded the problematic, out-of-date ideas of the present Left Front. The UPA win taste much sweeter as they got the mandate after literally demolishing the ever opportunistic and negative politics of the Left parties. The election has thrown a big question over survival of the Left politics in India. The sooner they are extinct, the better for Indian poor and deprived people. Because their politics is that of keeping people hungry for want of government help– so that they are forced to join them which tantamount to deception.

The mood of the Indian business and investment community can be seen in the way they stock market has responded. The main market sentiment indicator “Bombay Stock Exchange Sensitive Index (BSE SENSEX) has gained more than 5,000 points since the election result was announced. In between, the Reserve Bank of India also announced that – Indian economy (Gross Domestic Product or GDP) has grown by 5.8 percent during last financial year (2008-2009). It is a big decrease from the previous year – but still very good considering the financial turmoil that has engulfed the world during last year when most big economies saw negative growth of their GDP.

The international business communities have also shown positive responses over the outlook of Indian economy. Recently, renowned international credit rating agency has given Indian economy a “STABLE” status. It seems other agencies will soon bring out their ratings and by all indications they will move in the positive directions instead of negative directions.

That’s for today now. I have serious plans to resume my regular online routine very soon. So “HANG ON” friends –more posts with mix of Indian business and politics will follow on the blog on regular basis.

It was supped to happen!

When economies around the world were either in recession or contraction, Indian government has been projecting a GDP growth of more than 7% for the fiscal of 2008-09 which many economists and analysts termed as over optimistic. With falling demands in major markets around the world, the only way to keep a high growth rate is to create more demands in the domestic market and Indian government has been trying it through three-staged stimulus package by reducing interest rates and releasing huge flow of funds in the market.

It seems the packages were not timed well as third quarter (ending on 31st December from 1st October) GDP growth fell to 5.30% – thus falling below 6% for the first time since 2003. What is more worrying is the fact that farm sector contracted up to 2.20% and manufacturing sector fell 0.2% from the level during same time last year.

As a result of this, stock market fell by 0.7% during the day and Indian Rupees breached the record Rs. 51 barrier against the Greenback amidst sustained pressure for the dollar by foreign banks and oil importers.

With the announcement of this economic performance, eperts are having varied opinions. Some economist like Sherman Chan of Moodys believe that the governments projection of over 7% growth is over optimistic and it is high time the projection is revised. On the other hand, Pawan Kumar Bansal, the junior Finance Minister says the government still expects GDP to grow at over 7% during current fiscal. This group is of the opnion that the stimulus measures are yet to have major effects and the economy will recover during the 4th Quarter.

whatever happens, Industry is of the opnion of more rate cuts by the Central Bank as they need more liquidity in the market to take full advantage of stimulus packages announced by the government recently. This has necessitated more with this announcement of poor performance by the economy. Most believe that, if the economic growth slips below 6%, there will be huge job losses and India need to maintain a GDP growth rate of 8-9% in order to dent against the huge percentage of its people living below poverty line.

Enough talk of the economic and financial crisis on my last few posts. So now let it pass by for some time and get little bit personal. Yes, sometimes I do write some posts which might be personal but might be useful to my readers if I share my experiences with them.

Today, I’ll focus on some fraudulent companies posing as up and coming financial or insurance companies. Some companies also pose as investment funds looking to raise funds for investment in certain industrial or realty projects.

Their modus operandi is quite impressive. Most of the time they target the country side – in rural and semi urban areas where a huge section of people have good income. These people have very little option to leverage their savings as they have little choices. Only traditional fixed deposits or recurring deposits at banks and post offices are available. So when good speaking marketers enter their domains with promises of huge returns within a short period of time for seemingly small investments – the unsuspecting villager falls prey. The company representatives carry with them some glitzy leaflets, brochure of their companies and give lectures on how they will grow as big as Peerless in the next few years.

Just last week, someone from a certain company approached me to invest in preferential shares of a new company working for government projects in West Bengal little knowing that I run a business blog and am well versant with the industry though I might live in a non-descript corner of India. When he started his usual sweet lecture about who the big shots are already in their board of directors, I politely asked him to show all the government approval papers and if they have the required documents from concerned authorities. He told that – he is not authorized to carry original documents! But all the information may be found on their website! Now here is a catch they usually use to allay suspicion of prospective clients. As internet penetration and literacy is too low in India, people from semi urban areas have a mystic impression about the internet and websites because they don’t know about it whatever their educational qualification might be. Most of the time they get convinced and the fraud run away with their hard earned money.

These financial agencies also offer extra benefits such as commission to get newer investors and it works on chain system. Someone with pure commonsense might understand that these are nothing but big SCAMs and Ponzi schemes. Otherwise they can never pay up the promised returns.

The most depressing thing about this whole phenomenon is that, cheated individuals have no where to go for complaints as most of these deals are done at homes and legal actions can hardly be taken due to lack of proper evidences. The so called company executives roam around from place to place and have no permanent or temporary office nearby as they claim that their company is still new and has only the registered office. The obviously promise to set up their office here in the future once their client base has grown substantially so that they can process client claims locally. But as I mentioned before –most of these are frauds, scams.

So be very careful with such shady companies. My advice would be – don’t fall for them at all. Just excuse yourself when such people approach you with offers. If you have intentions to save, save it in time proven schemes such as bank deposits, LICI policies, post office deposits. After all, there was a newspaper report recently that top leaders from across parties are all followers of traditional saving schemes like KVP, Government bonds or just normal recurring deposits.

It has been six long years since India and South East Asian trade block known as ASEAN started negotiations on free trade in goods (TIG). Finally it has concluded in a meeting of economic ministers held in Singapore. The deal is up for final sign in a summit to be held in next December in Bangkok, Thailand.
Indian industry minister Kamal Nath has described the conclusion of the TIG deal as a “key regional milestone” that will create a European Union like open market for goods. It has even bigger prospect than the EU with booming markets and an estimated 1.5 billion people waiting to be conquered by consumerism.
Kamal Nath says,

“It took six years for India to understand the sensibilities of Asean, and for the Asean to understand the sensitivities of Indian.”

Actually, the deal was supposed to be concluded last year but due to differences on the list of products to be excluded, it took one more year. Now that it has been finalized, both parties will remove import duties on 71 percent of products by December, 2012 and additional nine percent by 2015. The ten percent which have been kept under sensitive list will also see duties brought down to five percent. The deal also has provisions for fast track reduction of import duties on five products which are so vital in trade relations. These goods are coffee, tea, crude and refined palm oil and pepper. Currently, trade volume between India and Asean is to the tune of $38 billion which is to go up to $50 billion by 2010. At present India holds seventh position in Asean’s overall trade and the group holds 9.8 percent of India’s global trade volume.
According to a joint press release, both parties also resolved to negotiation on similar agreements in services and investments sector.

“So the potential for enhanced economic engagement between Asean and India is profound.”

Mr Nath says. The question is can this new economic block create same impact as that of EU? It certainly has potentials with fast growing economies and an ever increasing group of middle class flush with disposable income. But my personal opinion is it still has long way to go. First, China must be included in the group so as to have a major global impact. Secondly, unlike the EU, the group does not have a single monetary system. Still, both the parties will benefit hugely with this pact and more so if they could do the same in other sectors too.