India is in a very strong position: George Soros
Global investor George Soros is betting big on the Indian market. He told Reuters Insider that inflation is probably the only threat to the current rally in the Indian equities. Excerpts:
Here is what George Soros had to say on the US economy and the possibility of a double dip recession.
It is not only China, India is doing very well and in fact, the great hope is that the developing world develops faster and that is the positive side of the current situation that the Chinese public is willing to accept limitations on individual freedom for the benefit of prosperity. But I do not see the rest of the world accepting limitations on each individual freedom for the benefit of Chinese prosperity. The Indian situation is more stable because it is based on domestic growth whereas China has yet to get domestic growth going. So right now, India is in a very strong position. There is some threat of inflation which remains on the horizon.
If I had to sum it up in one word, I would say blah. In other words, it may slip into the double dip or it may not, but it is going to slow down. There is no question in my mind because the stimulus is running out and there is now great resistance for any further stimulus because the preoccupation is with fiscal rectitude and it is a little bit too early for that because the economy has not yet really got dynamic scoring and it would not for a long time because there are grave imbalances that have built up over 25 years of super bubble and it will take time to work it off.
So is this emphasis on fiscal rectitude premature? Would a second stimulus be a good idea?
Yes, it is premature. Of course you cannot run up the national debt indefinitely. So you ought to separate money that you spent on investment. This would be the time when you have got either resources to improve the infrastructure to spend money on education and generally to put the money to where it actually would pay back in one form or another. In other words, you have to separate what you might call investment account in current account, but it is very difficult to do and I do not think it is going to be done. So as a result, you are liable to find it difficult to provide additional stimulus to keep the economy going.
What about Japan, another country that has had a similar problem and is now suffering from currency appreciating in value? What should they be doing? Is intervention a good idea?
Certainly they are hurting because the currency is too strong. So they are right to intervene, but they have had the same problem. They had a real estate boom and then a crash and the banking problem. It is 20 years now and they are still just struggling along. This is a country with an aging and the shrinking population. So we are in a different situation, but still, it will take a long time to work off the excess consumption in this country.
How long?
That I am not in a position to predict.
What about the American relationship with China? You have been spending a lot of time recently with the Chinese officials. What do you think the stage of play there is?
China of course is the great beneficiary of globalisation and now the winner after the financial crash because China was not affected except through its losing exports temporary and may be not just temporarily but more permanently. So China is a great winner, rising very rapidly because the west is sinking. So the shift of power is phenomenal.
Is it faster than most of us think?
I have not seen anything like it and it is difficult to find a parallel in because for the rise of a new power, it takes decades and it is happening here in a much shorter time. So it is a very difficult relationship to manage, but it is very important that it should be managed because the world cannot afford the world economy falling apart. So the Greek tensions and particularly with regard to the currency, China has been so successful.
Did the machinery called community authoritarianism?
No, it is an undervalued currency. People in China can work and do work very hard trying to get rich and then their labour is harvested so to speak through an undervalued currency for the benefit of the state and that is what has made China so successful.
It has a pretty devastating impact on the rest of the world economy though with global financial imbalances. A lot of economists, particularly on the list actually, are calling for the US government to pressure China quite aggressively to allow its currency to appreciate. Is that a good idea?
The currency has to appreciate, but it has to be done in an orderly manner and I hope that the Chinese will actually find it to their own benefit to do it because they actually have inflationary pressures. So having a depreciating currency ought to be beneficial for them, but you now have also rapidly rising wages and superimposing on that a depreciating currency would hurt the export industries badly and they have a voice in China and they resist it. So that’s a big issue how that is going to be. The Chinese have to increase their domestic consumption and to the degree that they have got wage increases. It is happening. So that’s actually a positive development and altogether until the crash, the US consumer was the motor of the burned economy. Now it is the Chinese economy that has become the motor, now it is much smaller than the US consumer. So the world economy has a smaller motor and so it is not moving very fast. But it is the Chinese economy that is now the motor and that’s a tremendous change. Global economy will continue growing even if you have a double dip in the US or Europe because the policies followed in Europe will also bring a slowdown in Europe. So you have got Europe and the so-called west is under pressure and we include Japan in that and the rest of the world actually makes up for it. So actually that is a reason to believe that we will get through this and it is not going to be such a dismal scenario.
RBI hikes repo rate by 25 bps, reverse repo rate by 50 bps
MUMBAI: The Reserve Bank of India (RBI) on Thursday raised its key short-term lending rate by 25 basis points and borrowing rate by 50 basis points to check rising prices.
"Inflation remains the dominant concern in macroeconomic management", RBI said while raising the repo (lending) and reverse repo (borrowing) rates to 6 per cent and 5 per cent, respectively.
The new rates, which comes into effect immediately, were announced as part of the first scheduled mid-quarterly review of the monetary policy.
The hike in rates will lead to a rise in cost of funds for the banks and eventually makes loans expensive, which will reduce consumption.
While inflation for August was 8.5 per cent (as per the new series with 2004-05 as Base Year), food inflation was at a high of 15.10 per cent for the week ended September 4.
To check inflation, the RBI had raised these key rates by an identical margin in July.
Economists had expected quarter point hikes in both rates. This is the fifth rate hike this year.
Asia's third-biggest economy grew by 8.8 percent in the June quarter from a year earlier, its fastest pace in nearly three years while industrial output rose 13.8 percent annually in July, the fastest since April.
RBI for the first time moved towards a six-weekly review of the state of the economy. The first of such reviews was released today.
Soon, Airtel users can shop up to Rs 5000 via mobiles
NEW DELHI: Bharti Airtel customers will soon be able to make virtual payments at retail outlets and restaurants using their cell phones.
The country’s largest telco by both revenues and customers has got the nod from the Reserve Bank of India (RBI) to collect a maximum of `5,000 from customers, which can be converted to virtual money stored on mobile phones, and can be used at outlets that have a tie-up with Airtel.
All leading mobile phone companies are also slated to get the ‘semi-closed wallet’ licence over the next couple of months.
India has over 650 million mobile users and all telecom companies are looking at offering a range of financial services, including the electronic version of the leather wallet, which can be used to make secure payments across a wide spectrum of goods and services covering all sectors, Such concepts are already operational in Japan, South Korea, parts of China and certain markets in Europe.
Earlier this year, RBI in its annual monetary policy said that it was looking to use mobile phones as a medium for taking banking facilities to the remote and far-flung areas while also adding that banks and cellular operators must cooperate, rather than compete with each other for this initiative.
“Semi-closed wallet are prepaid payment instruments that are redeemable at a group of clearly-identified merchant locations/ establishments which contract specifically with the issuer to accept the payment instrument. These instruments do not permit cash withdrawal or redemption by the holder,” Bharti Airtel said in a statement. In fact, Bhutan Telecom has already introduced M-money or mobile money payment, which is a one-stop
shop for making payments of all utility bills including telephone, electricity and water bills. Bharti Airtel did not give any timeframe for the launch of services on this platform.
“Currently we are evaluating various options that this licence provides to find out how best we can create a value proposition for Airtel customers. It is imperative to design a safe & convenient deployment before we can take to the market,” its statement added.
As per RBI guidelines, the pre-paid value that is being loaded will be distinct from talktime. In other words, the telecom operator will not be able to create money. For the consumer, this implies, they will not be able to exchange this money for talktime. Bharti Airtel will also be mandated to deposit the money raised in a zero balance escrow account with a bank.
Analysts say that RBI’s move to approve ‘Semi closed wallet’ will be the first step towards democratisation of mobile commerce in the country. It is estimated that only 1% (8 million) of the country’s 650 million cell phone users avail mobile commerce services. This is expected to go up to 50 million by 2012.
Google's Android to be world No. 2 in 2010: Report
SAN FRANCISCO: Google Inc's Android software will become the world's second most popular operating system for cell phones this year, leapfrogging rival offerings from Microsoft Corp, Research in Motion and Apple Inc, according to a new report.
By 2014 Android will account for nearly 30 percent of all cell phone operating system sales, according to research firm Gartner, putting it in position to challenge Nokia Corp's Symbian software, which has reigned as the top mobile operating system for years.
Symbian will have a 30.2 percent share of the global market in 2014, according to Gartner, compared to Android's 29.6 percent.
Gartner said it expects a variety of less-expensive Android devices shipping in the second half of 2010 to boost Android's growth, allowing Android to grab the No. 2 worldwide rank nearly two years sooner than the firm had initially expected.
The market for mobile phone software has become a prime battleground for technology companies, as consumers increasingly use their phones to access the Internet, listen to digital music and play video games.
Apple jump-started the market for high-end smartphones with the launch of its iPhone in 2007.
For Google, the world's No. 1 Internet search engine, making the transition to mobile phones is key as it seeks to maintain and expand its nearly $24 billion online advertising business.
Google's Android software, which it offers free to cell phone vendors, has experienced dramatic growth since coming to market two years ago. More than 200,000 Android phones, from companies including Motorola Inc, HTC Corp and Samsung Electronics, are sold every day, Google CEO Eric Schmidt said recently.
Android became the No. 1 operating system for U.S. smartphones in the second quarter, according to a report last month by industry tracker NPD.
Nokia's Symbian operating system has maintained the No. 1 spot worldwide, thanks to the company's broad distribution of its handsets. But Nokia has struggled to deliver a high-end smartphone to compete with the likes of the Apple iPhone or devices based on Google's Android.
On Friday, Nokia announced that Microsoft's Stephen Elop would replace Olli-Pekka Kallasvuo as chief executive in a bid to revive the Finish handset company's fortunes.
Gartner projected that Apple's iOS software, which is only available on Apple's iPhone, will add nearly 3 percentage points of market share to achieve a 17.1 percent slice of the global market by 2011, but will slip back to a 14.9 percent share in 2014.
Blackberry-maker Research in Motion will see its share fall from 19.9 percent in 2009 to 11.7 percent in 2014, Gartner said, while Microsoft's Windows Phone software will decline to 3.9 percent in 2014 from 8.7 percent in 2009.
Recession has left huge hole: Obama
WASHINGTON (AFP) - – US President Barack Obama said Friday the "hole" left by the worst recession in decades was "huge" and admitted the recovery had been "painfully slow," but vowed his policies were working.
Obama appeared at a White House news conference designed to showcase his recovery plans and shore up his political standing ahead of November's mid-term elections in which his Democrats face a Republican wave.
"The hole the recession left was huge and progress has been painfully slow," Obama said, capping a week in which he has launched an energetic campaign ahead of the congressional polls.
"These proposals are meant to accelerate job growth in short term," he said, touting plans to revive small business and tackle the 9.6 percent unemployment rate.
"The American people did not send us here to think about our jobs, they sent us here to think about theirs," Obama said, slamming Republicans for blocking an existing plan he formulated to promote lending to small businesses.
Obama opened the encounter with journalists in the ornate East Room of the White House by naming economic aide Austan Goolsbee to serve as the chairman of his Council of Economic Advisors, to replace Christina Romer who stepped down last week.
Obama admitted in a television interview Wednesday that his party would not do well in the election if it became a judgment on the state of the economy in the wake of the worst financial meltdown in decades.
"If the election is a referendum on are people satisfied about the economy as it currently is, then we're not going to do well," Obama told ABC News.
"I think everybody feels like this economy needs to do better than it's been doing," Obama said.
"My challenge, and the challenge of every Democratic candidate who's out there is just making sure the people understand there's a choice here."
A Quinnipiac University poll published on Thursday made uncomfortable reading for the administration, with voters disapproving of his handling of the economy -- the major election issue -- by 56 to 39 percent.
Goolsbee is currently serving as chief economist on the president's Economic Recovery Advisory Board, which Obama set up to provide outside and independent advice as he navigates the economic recovery.
Basque separatists ETA declare ceasefire
MADRID (AFP) - – Basque separatist fighters ETA declared a ceasefire in their flagging, decades-long campaign of bombing and shooting for a homeland independent of Spain.
ETA, blamed for the deaths of 829 people over more than 40 years, said in a video it had decided several months ago that it "will not carry out armed offensive actions."
The separatists did not say if the ceasefire was permanent and their declaration was greeted with broad scepticism by Spanish political parties, which demand ETA give up its weapons for good and disband.
Listed as a terrorist group by the United States and European Union, ETA has not staged an attack on Spanish soil since August 2009, and police have arrested much of its top leadership.
Key facts about Basque separatist fighters ETA
ETA made the announcement in a video sent to the BBC and pro-independence Basque daily Gara, showing three people in berets and yellow hoods sitting at a table flanked by Basque flags and with an ETA symbol on the wall behind.
"ETA reaffirms its commitment to finding a democratic solution to the conflict," said a woman sitting in the centre.
"In its commitment to a democratic process to decide freely and democratically our future, through dialogue and negotiations, ETA is prepared today as yesterday to agree to the minimum democratic conditions necessary to put in motion a democratic process, if the Spanish government is willing."
Prime Minister Jose Luis Rodriguez Zapatero's government, which took a political pounding when ETA broke its last ceasefire in 2006 and bombed Madrid's main airport, did not react immediately.
The Interior Ministry was still examining the declaration, a spokesman said.
Government officials were quoted in the El Pais newspaper as saying the declaration was a move in the right direction but ETA must still definitively abandon the armed struggle.
Analysis: Weakened ETA pushed into ceasefire
In the Basque region, senior members of both the governing Socialist Party and the right-wing opposition Popular Party demanded that ETA bow to the demands of the Spanish people by disarming for good and disbanding.
A victims' group also denounced the ETA statement.
"It has no credibility because ETA has already had several truces and continues to kill," Angeles Pedraza, head of the Association of Victims of Terrorism, told Cadena Ser radio.
"The only thing that matters to us as victims is their total defeat, the surrender of arms and disbandment of the group," she added.
ETA, which was founded July 31, 1959, had been under pressure from its political allies to declare a truce.
Its banned political wing Batasuna plus its new ally, the Eusko Alkartasuna party, called on ETA in the past days to agree to a permanent ceasefire under international verification.
Spanish media say Batasuna, which has been banned from running for office since 2003 because of its ties to ETA, hoped to return to the political game ahead of local elections in 2011.
A spokesman for Batasuna said the ETA ceasefire announcement was a contribution to peace that made the opening of a new political phase "irreversible."
ETA announced a "permanent ceasefire" in March 2006 but months later reversed course and in December 2006 set off a bomb in a car park at Madrid's international airport, killing two people.
After ETA formally called off the peace process in June 2007, the Spanish government stepped up its fight against the group. Since the start of this year Spanish police working with other forces including in France have arrested 68 suspected ETA members.
ETA killed two police officers in a bombing in Majorca on July 30, 2009, its last deadly attack in Spain. On August 10 it set off three small bombs in Palma de Majorca but without causing injuries, the last attack in Spain.
Consumers fail to connect when celebs endorse too many brands
Indian cricket team captain Mahendra Singh Dhoni endorses twenty-two different brands. On an average, advertisements of each brand runs 400 times every day on around twenty top satellite television channels. If each ad runs for 22 seconds, he is endorsing 22 brands 24 hours every day. How many of them can you recall?
“Over-exposing a celebrity can have its ill-effects. The consumer starts losing focus and the communication (of different brands) gets blurred. The consumer fails to connect with any brand,” says Ajay Gahlaut, group creative director at advertising agency, Ogilvy & Mather.
Just what is happening in the case of Amitabh Bachchan. The Bollywood icon appears in two campaigns running simultaneously on television these days. In one of them, he is seen promoting his upcoming reality quiz show Kaun Banega Crorepati (KBC); in the other, he is endorsing the Challengers Trophy cricket that begins next week in South Africa. They are so uncannily similar in their styles, the message is lost if one doesn’t see the full ad.
But brand ambassadors such as Bachchan or Dhoni are rare species. And that explains why most companies with big advertising budgets are in a hurry to rope one of them to feature in their commercials. “The idea is to outdo competition in terms of attracting eyeballs, even if the costs are high,” says Manish Porwal, managing director of Alchemist Talent Solution, which helps companies identify brand ambassadors. Porwal, however, points out that it is very important for the advertiser to select a brand ambassador who gels with the character of the brand which he or she endorses. He cites the example of Kareena Kapoor endorsing Sony’s Vaio laptops. “It’s a perfect match. Kareena exemplifies all the characteristics of the slim and sleek brand.”
Prathap Suthan, national creative director of Cheil Worldwide and who made the Samsung mobile phone ads with Aamir Khan, says, “Most importantly, the creative agency has to keep in mind that the idea of the ad has to be bigger than the celebrity, and the product should not act as a subservient role to the celebrity.”
The irony here is that brand ambassadors are usually hired to differentiate a brand from a clutter, but they end up creating a clutter instead when they do not have diverse brands to endorse, irrespective of the numbers. Aamir Khan, for instance, endorses brands as diverse as Samsung mobile phones, Titan watches, Tata Sky DTH and Atithi Devo Bhava. All are distinct products with diverse characteristics that the consumer recollects even after the long time. Similarly, Sachin Tendulkar has limited brands such as RBS, Jaypee Cement, MRF, Adidas, Boost, among others. So, his brand equity stays intact. Now, take a look at the brands that Dhoni endorses: PepsiCo, Reebok, Aircel, Godrej Hersheys, Maxx Mobile, Big Bazaar, Dabur, Emami and Siyaram. And the picture gets clearer, says Gahlaut of O&M.
India's time has come and all of us have to support it: Mukesh Ambani
In an interview with ET Now, Mukesh Ambani, CMD, Reliance Industries, talks about their bonus issue as well as the vision Reliance has, as also their growth plans.
A massive bonus share issue is a huge Diwali gift for your shareholders. What is the message that you are sending out to them? Would you like to tell them through ET Now, is it that you are convinced that there is much more steam left in Reliance Industries and you are confident of serving them even on a larger expanded base?
First and foremost, let me tell you how privileged I am to be on ET Now and congratulate all of you at ET Now for again proving that India can have flawless grass-root startups. And as far as Reliance is concerned, we have always had growth on what I call value creating cycles and now I have been associated with the process of Reliance for nearly 30 years.
In the last 31 years, it was 1978 when we went public, and if you look at our compounded return to shareholders, they are in excess of 25% year on year. So that has been basically our philosophy and in the last growth cycle that we had, that was really the biggest asset creation and value creation cycle in our history. To my mind, it was also the most challenging and we have just completed that.
Results are we have an SEZ refinery which now demonstrates to the world that India in spite of having no oil of its own can import oil, use its talent and use its competitiveness in what I call complex technology to really create an asset that can then export products and be competitive anywhere in the world, which strengthens India in export terms and gives us the confidence that we can be at par with all people or companies of high technology in the energy again. We can even exceed them at times.
The other piece was deep water gas and clearly, we have again set new benchmarks of efficiency where the world takes about 10 years to really go from concept to bringing this view, done it in a much shorter time and we have completed the project and that also has created huge value for the Indian economy.
Natural gas as you know is a major feedstock to the fertiliser industry and it reduces our fertiliser subsidies for government. So creates value for government, obviously creates value for our own farmers in terms of making sure that we are able to give them urea based on indigenous feedstock. It strengthens our own power situation within the country and it overall strengthens energy security. So having created this value, we were committed to making sure that we reward the shareholders on completion of this project.
So this is nothing but fulfilment of promise that we had made at our AGMs and I am happy that we could do it in time and I am really grateful to literally a few thousand Reliance managers and engineers who worked over the last 4 years, 24x7, 365 days. It is really because of their hard work that we are able to deliver this value to the Indian economy and our shareholders.
But purely from a timing point of view if you look at what is happening around India and the world, everyone is trying to cut cost; everyone is trying to hunker down to say that let the storm blow. So it was somewhat a very bold decision on your part to say that no, I am going to do a contrarian thing and come out with a 1:1 bonus, that too for a company of Reliance’s size?
Yes and even when the economic meltdown hit the world 12-15-18 months from today that we were in the midst of really having the largest capital expenditure, this is one of the biggest programmes not only in India but in this part of the world and we preferred a lot of people even cut it that time. So if you see all the refineries or upstream projects, you see a lot of them on hold, a lot of them operating on reduced scope.
We were sure that we wanted to stay on track and we had the financial resources and the discipline to execute. So we very much stayed on track and we are big believers in terms of saying that once you have conviction and you should think through everything that you do, but then stay on track and yes, with the completion of this value creation cycle, we are really now well established even given the difficult global situation to now embark on really thinking through what our future plans will be and how we will create new value into the future.
As I understand you are still a little cautious about the global recovery. There is a lot of talk about even Ben Bernanke saying that the worst is over, but I sense a little bit of caution as far as you are concerned. So why is that?
I think and I have said this earlier. What happened last year, to my mind, was not part of a normal cycle. It was what I call very early on reset and what I meant by reset is that the rules of managing the economy, the rules of business, the rules of creating value will evolve between now and the next few years. But to my mind, they will be very different than what we have been used to for the last 20 years. The principle among them would be money will not create value.
So we have been through a time-frame where money cannot make money. I am a big believer that at the end of the day it is products and services that are needed by a society and that you deliver to society on a competitive basis that really creates value and we will have to go back to that and in going back, we still have to find a solution to all the debt that we have created. We have to repair the balance sheets.
Chances of US recession 25-30%: Alan Greenspan
MUMBAI: The chances of the US economy slipping into another recession are close to 25-30 per cent, a noted American economist said. "I see a third to fourth of a chance of a double dip (in the US economy)," noted American economist and former Chairman of the Federal Reserve of the United States, Alan Greenspan, said.
The chances that the US slips into another recession are 25-30 per cent, Greenspan said.
According to him, to reduce the double dip probability, recovery in asset base should be created through rising asset prices.
The US Central Bank has done an excellent job to tackle the finance crisis, he said. "You have to have sovereign credit for private credit in the wake of the crisis," Greenspan said.
While expressing concern over the long-term impact of Government deficits, Greenspan said that this had been a crisis of unprecedented proportions, but he did not see another round of stimulus in the US.
"We have had enough stimulus in the US for the moment. It is not a good idea to expand deficit levels in the US. Longer-term consequences of expanding deficits are 'extraordinarily negative.' We need to allow the markets to absorb stimulus and calm down," Greenspan said.
The major problem right now is an extraordinary amount of risk aversion, he said. According to Greenspan, the idea that economies can decouple is an illusion as emerging economies are closely connected with the developed world.
"Emerging economies cannot hope to decouple from the developed world. The recovery of consumer demand in the US will be a critical part of sustaining growth in emerging economies," he said.
While referring about stock markets, he said that the influence of stock markets on economic activity is underestimated.
"Stockmarkets should be seen as a leading indicator to the economy. The rebound in stock markets and other asset markets could help revive sentiments. Stock prices will be a lead indicator for a turn in any economy," he said.
Indian economy is looking like one of the strongest economies from a structural viewpoint, he said, adding "India is doing better than anybody in part because it is largely self-contained."
Gold, silver scale new peaks:
MUMBAI: Both the precious metals, gold and silver, glittered on the bullion market during morning deals, touching their historic peak on the back of heavy stockists buying ahead of forthcoming festive season amid firm global cues.
Fresh industrial buying supported the white metal. Good jewellers demand for the fast approaching festive season too boosted the sentiment.
According to dealers, investors once again turned their attention to these safe-haven metals rather than going for riskier assets like stocks on worries over the faltering global economic recovery.
Standard gold (99.5 purity) resumed at an all-time high of Rs 19,125 per ten grams, the level not seen since June 8, 2010, as against overnight close of Rs 18,945 while pure gold (99.9 purity) also logged its new peak to open at Rs 19,215 per ten grams from its last close of Rs 19,030.
Silver ready (.999 fineness) too started at a fresh historic highs of Rs 31,245 per kilo from Rs 30,755 previously.
Gold for December delivery shot up by $11.10, or 0.9 per cent, to $1,250.30 an ounce on the Comex division of the New York Mercantile Exchange yesterday, highest since late June and just below record settlement high of USD 1,258.30 an ounce on June 18.
Silver for December delivery rose 36 cents, or 1.9 per cent to $19.43 an ounce.
India can grow between 8.5% and 9%: Infosys
V Balakrishnan
Infosys Technologies Ltd.
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In an interaction with ET Now, V Balakrishnan, CFO, Infosys, comments on the just out April-June quarter GDP growth numbers. Excerpts:
Are you happy with the kind of numbers we have clocked in in terms of GDP, 8.8%, in line with street estimates?
Yes, these are great numbers as expected because if you look at globally, there are very few pockets of growth and India is one economy growing at 8% to 9% and 8.8 is what people are expecting. Some of them are expecting close to 9. So these are great numbers.
Most people say that services are bit of a black box for the next couple of quarters as well. It came in at 9.7% in Q4 of course. How do you expect services to pan out because most people are bullish about agriculture, not too bullish about industry. What about services?
Growth is possible, but you have to look at the global indicators also because if you look at globally, all the leading data from the US are too negative, so also Europe. So to that extent if something drastic happens in the global economy, it could impact growth in India also, but looking at what it is today, India has got a better chance of achieving that growth because monsoon has been good till now. So agricultural growth will be there. India has got a better chance of achieving something between 8.5% and 9%.
At the end of Q1, you guys were cautiously optimistic, if I can put it that way, with regards to the European and US situation, at this point of time when you are talking to your clients, are you sensing nervousness of any sort which could have a bit of an impact on services growth overall?
Till now, things are good. We are seeing growth coming in but if you look at all the leading indicators from all the large markets, they are too negative. So we have to keep a close eye on that because if the sentiments are bad, it could affect the budgets for IT next year. So we have to balance between the short term optimism and the long term concern that is what we are doing. We are still hiring people, we are still focussing on growth, we are seeing a lot of volume growth coming in, but if the environment continues to deteriorate like this, probably it could impact the budgets for next year & the growth.
Just wanted to know from you what is your ballpark growth numbers for the service sector within the entire fiscal and any particular dampener or any particular situation can actually hamper this growth projection that you have for yourself?
Service sector will do well, probably manufacturing sector is something we have to watch out what is happening globally. So the trend we saw in the services sector in the last few quarters could continue.
Maggi losing instant noodles market share in India!
NEW DELHI: Maggi instant noodles, foods major Nestle’s flagship brand that has dominated the Indian instant noodles market for nearly three decades, is losing market share on a monthly basis to newer entrants such as GlaxoSmithKline’s (GSK) Horlicks Foodles, Hindustan Unilever’s (HUL) Knorr Soupy noodles, Big Bazaar’s Tasty Treat, Top Ramen and several other smaller players, according to data by market research firm Nielsen.
The data shows that Maggi’s share of instant noodles, on an all-India basis, across urban markets, has slipped consistently between December ’09 to July ’10. While Maggi instant noodles (minus vermicelli) had a 90.7% share in December ’09, the share dropped to 86.5% in July ’10 on an all-India basis.
A regional split of the data shows that Maggi's instant noodles' value market share has fallen across the east, south, north and west zones for the same period.
Analysts say with new competition, Maggi’s market share is certain to get impacted , but add that Nestle has the potential to expand the Rs 1,300-crore instant noodles category – which itself is growing at a rapid 15% annually. A detailed email sent to Nestle on Thursday elicited no response.
Apart from HUL and GSK which have positioned their noodles as ‘healthy’ snacking options targeting kids and mothers, others like Indo-Nissin’s Top Ramen, Capital Foods’ Ching’s Secret and CG Foods’s Wai-Wai , though around for long, are stepping up marketing efforts to take advantage of category growth. Besides, private brands like Big Bazaar’s Tasty Treat and Aditya Birla Retail’s Feasters are notching up share.
Manoj Menon, FMCG analyst at brokerage firm Kotak Securities, wrote in a report earlier this month: “Maggi faces product substitution risk and brands like Knorr and Foodles could potentially impact its incremental growth. Nestle faces a challenging competitive environment in culinary.”
GSK, which entered the category in December last year, has taken away share from Maggi mainly in the South and East riding on the equity of Horlicks and its well-entrenched distribution in the regions.
GSK’s executive VP, marketing, Shubhajit Sen, said: “Consumers were looking for a choice in instant noodles; combined with that, the equity of Horlicks is leading to a lot of trails. The initial response to Foodles is much higher than our expectations.”
On the other hand, HUL, which rolled out Knorr Soupy noodles in the South this February, had to postpone the brand’s national launch due to capacity constraints because of heavy consumer offtake. An HUL spokesman said: “We are very pleased with the performance of Knorr Soupy noodles.”
Private brands are whetting appetites of consumers too. According to Devendra Chawla, business head, private brands, Future group:“The category boundary is set to be re-drawn. From a snack food targeted at children, instant noodles category has evolved as a mainstay meal even for grown ups.”
Mr Chawla said Tasty Treat was the second biggest instant noodles brand in its Big Bazaar stores after Maggi. The brand packaging was revamped last year and Future plans to roll out additional variants in a month’s time taking the number of variants to nine from the existing three.
Gold likely to touch $1,300 on safe haven appeal: GFMS
MUMBAI: Gold, headed for a 10th annual gain, may reach at least $1,300 an ounce this year, as investors seek a shield against financial turmoil, weak currencies and inflation, according to Gold Fields Mineral Services (GFMS).
“There is going to be in all likelihood a surge in investment demand toward the end of this year, driving prices toward the $1,300 level and possibly beyond,” CEO Paul Walker said in an interview, repeating a June forecast. “Prices are going to ratchet up.”
Bullion demand increased 36% in the second quarter as investors boosted purchases of gold-backed funds and pushed up prices to a record during Europe’s sovereign-debt crisis, the World Gold Council said on August 25. Investors bought 291.3 metric tonne of the metal in exchange-traded funds, or ETFs, the second- highest quarter on record, the producer-funded group said.
“There is a wide enough group of people who are going to continue buying gold for a variety of reasons and that’s going to be the key driver of price action,” Walker said from Goa, where he is due to speak at a conference on Friday . “The physical market, the jewellery market, will be playing a somewhat minor supportive role in price determination going forward.”
Goldman Sachs Group forecast earlier this month that prices may reach $1,300 in six months and Deutsche Bank AG said on June 3 that the metal may surge to $1,700 as currencies slump. The euro fell to a four-year low versus the dollar in June. Immediatedelivery bullion traded in London was little changed at $1,237 an ounce.
US RECESSION
Prices have rallied 13% this year in New York and reached a record $1,266.50 on June 21 as investors sought to protect their wealth against financial woes in Europe and the prospect of slowing economic growth. Nouriel Roubini, the New York University economist who predicted the global financial crisis, on Thursday said US expansion will be “well below” 1% in the third quarter and put the odds of a renewed recession at 40%.
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged at 1,297.95 tonne as of August 26, figures on the company’s website showed. Holdings reached a record of 1,320.44 tonne in June.
In India, the biggest gold user, demand almost doubled in the first-half on increased jewellery purchases and investments , the council said on August 25.
Imports by the country this year may equal 2009’s level as early as this month because of “robust” demand, the group forecast. Purchases in the first half were 348 tonne, compared with 559 tonne in 2009, according to council’s data.
‘REMARKABLE THEME’
“This year we are seeing an underlying and somewhat remarkable theme in the Indian market; a willingness to continue to buy at high prices and a belief that the price will continue to go up,” Walker said. “You would have to have a pretty catastrophic final quarter of the year for imports not to match the 2009 level.”
Gold futures in India climbed to a record 19,198 ($410) per 10 grams on June 8. Local prices have advanced 13% this year. The price of silver may reach $20 an ounce as industrial demand rebounds, Walker said. The metal for immediate delivery was at $18.97 an ounce and has added 12% this year.
Cricket: Bharti Airtel to sponsor India's home series
NEW DELHI: Telecom giant Bharti Airtel was on Friday named as the sponsor for all international cricket played in India after offering to pay 700,000 dollars per match, India's cricket board said.
The three-year deal covers all Test, one-day and Twenty20 matches, and with India scheduled to play at least 50 matches in the period, the board stands to earn 35 million dollars.
"Bharti Airtel has won the series sponsorship rights for the period of 2010-2013 with a bid amount of 33.3 million rupees per Test/ODI/T20 International," board secretary N. Srinivasan said in a one-line statement.
Airtel beat telecom rivals Idea Cellular and mobile phone makers Karbonn Mobile and MicroMax in an open bid that was finalised by the board's marketing committee in Mumbai on Friday.
The minimum bid price set by the board was 20 million rupees (428,815 dollars) per match.
This is the first time sponsors have been named for home series for a fixed term. The earlier deal was held by World Sports Group, a sports agency who then sold the rights to companies on a series-by-series basis.
Airtel also sponsors the Twenty20 Champions League, an international club competition, whose second edition will be played in South Africa next month.
DTC: Taxpayers may get relief in terms of tax rates
NEW DELHI: Taxpayers may get relief in terms of tax rates in the proposed Direct Taxes Code, which is likely to replace the 50-year-old Income Tax Act from the next fiscal, a key official indicated today.
"We are in the process of reducing the rate of tax and DTC will be a good example in that direction," Central Board of Direct Taxes (CBDT) Chairman S S N Moorthy said at an Assocham tax conference.
He further said India is coming down to a realistic platform where the rates will be almost in line with international standards. "We are in the process whereby we have to be taxpayer friendly, we have to be in tune with international standards."
At the same time, the government would take measures so that the flight of revenue from India can be checked.
The DTC bill is likely to be tabled in this session of Parliament so that it could replace the archaic Income Tax Act from April 1, 2011.
In the first DTC draft, the government had proposed a substantial widening of the tax base. It had suggested imposing 10 per cent tax on income of Rs 1.6 lakh-Rs 10 lakh, 20 per cent on income of Rs 10 lakh-25 lakh and 30 per cent beyond Rs 25 lakh in a year.
The proposed tax slabs were even substantially wider than the increase in the Budget 2010-11. The Budget imposed 10 per cent tax on income of Rs 1.6 lakh-5 lakh, 20 per cent on Rs 5 lakh-8 lakh and 30 per cent on over Rs 8 lakh in a year.
However, the revised draft on DTC did not talk over tax rates and Finance Ministry officials said the slabs given in the first draft were just illustrative.
The second draft also said that the rates proposed in the first draft could be calibrated, after it dropped contentious proposal of taxing long-term savings like provident funds at the time of withdrawal. This means that tax rates may not be moderated so sharply, as was given in the first draft, but some rate cuts would be there.
Moorthy further said that direct tax collections of Rs 4.3 lakh crore for the current fiscal are on track.
"The target for the current year is about Rs 4.30 lakh crore. Fortunately we are on track. We are growing at the rate of 15 per cent," he added.
He further said tax deduction at source collection, which constitute a major chunk of direct tax, is not adequate but it would pick up. "This year we are going at the (TDS) rate of about 37.5 per cent which is not adequate enough but anyways it will pick up."
Last year, TDS collection touched around 38 per cent of the total revenue. It was about Rs 1.40 lakh crore.
After 300% salary hike; MPs want more
NEW DELHI: Government on Friday faced protests in the Lok Sabha, hours after it decided to raise MPs' salary to Rs 50,000 with several non-BJP opposition members storming the well demanding that it be raised to Rs 80,001.
"Stop the insult of MPs" and "implement report of the parliamentary committee" were slogans chanted by SP, BSP, JD(U), RJD, Shiv Sena and Akali Dal members, forcing Speaker Meira Kumar to adjourn the House twice.
After the adjournment, members of BJP, RJD, SP and JD(U) staged dharna inside the Lok Sabha.
First the House was adjourned till noon when members were on their feet during Question Hour claiming that government had "insulted Parliament" by rejecting the recommendation of its own Committee to raise the basic salary to Rs 80,001 per month, a rupee higher than the highest paid government officer.
This happened after news trickled in that the Union Cabinet, at a meeting earlier in the day, had approved a proposal to raise the basic salary of MPs to Rs 50,000 from present level of Rs 16,000.
The panel has said the MPs should get at least a rupee more than what secretaries in the government draw.
Besides the base salary, an MP also gets a daily allowance of Rs 1,000 for each day when parliament is in session or taking part in house committee meetings.
A member is also entitled to a constituency allowance of Rs 20,000 a month and an office expense allowance of Rs 20,000 each month.
When the House reassembled at noon, leaders of SP and RJD, Mulayam Singh Yadav and Lalu Prasad, led their members to the well raising slogans. Members of Shiv Sena, Akali Dal and JD(U) also joined them in the well.
Prasad and his party colleague Raghuvansh Prasad Singh were heard saying "the government's decision is an insult to Parliament. The recommendations of the parliamentary committee should be implemented."
In the din, the House approved amendments made by the Rajya Sabha to the Trade Marks (Amendment) bill by a voice vote. This was protested by the RJD leaders.
As the protests continued, the Speaker adjourned the proceedings till 1400 hours.
How to go from Rs 11, 000 to Rs 1 crore?
Here's what independent India has achieved. From 1951 to date, our economy has grown from $21 billion to $1.2 trillion. That’s over 60 times in 60 years. From the 3-4% Hindu rate of growth in the pre 90s, India has transformed into one of the fastest growing economies in the world.What’s more, in six to seven years this GDP will further double.
The opportunity today is ripe to achieve a different kind of freedom. Freedom that will help secure the future of ourselves and our loved ones. I call it financial freedom.When it comes to achieving freedom there are no short cuts. Just as our country's freedom was achieved through a concerted effort, so would financial freedom. It won’t happen in a day, but it will happen. What we need to do is follow some basic principles.
The first is to have a systematic and long-term approach to investing. We need to review our risk profile and allocate our savings across different asset classes. As a country we save over 35% of our GDP. But are we investing it judiciously? Most people are risk averse and hence put their full money in bank fixed deposits. While that may be safe but it may not give you adequate returns, which may not even cover the base inflation. Investing some portion of your money into equity as an asset class is very important.
Since the inception of the Sensex in 1979, the Indian stock markets have given around 17% annualised returns. Rs 1 lakh invested in the stock markets in 1979 would today be worth Rs 1.3 crore. At a 12% rate of return; if you invest Rs 11,000 every month in an equity mutual fund through an SIP mode, it will be over Rs 1 crore in just 20 years.That’s the power of compounding. If we take a long-term perspective there is enough money to be made to achieve financial freedom. The trick lies in diversifying investments, investing systematically, and over a period of time.
The second is the use of knowledge and expertise. We spend most of our time and effort earning money, and hardly any managing and growing it. The key to growing wealth lies in knowledge. Lack of knowledge means lack of understanding. And lack of understanding makes us oblivious to the myriad opportunities around us.
Many of us are fearful of the complexity managing money brings. Managing money is not to be feared, but to be understood. It is only when we know more that we will fear less. And if we do not have the time or resources to understand how to manage money, do not feel shy to engage the services of an expert. Besides losing money, the biggest detriment to financial freedom is to let our wealth stagnate.
And last but not the least is the challenge of managing our emotions. A task easier said than done. From Dalal Street to Wall Street, greed and fear are the two most powerful words which can make you lose a fortune. But as someone said: “Be greedy when others are fearful; be fearful when others are greedy.” Be rational in your approach—research before you invest, not after. And once you have done so; have the conviction to stick to your game plan.
We live today in exciting times. The Next Trillion Dollars of India’s GDP growth presents us a once-in-a-lifetime opportunity for creating and growing wealth. Sixty-three years ago, the founders of our nation helped us achieve freedom. Today, it’s time for us to achieve a different kind of freedom— Financial Freedom.
Moral:Invest Rs 11K a month, get Rs 1 crore in 20 years (((The author is CMD, Motilal Oswal Securities)))
Single entrance test for MBBS from 2011
Come 2011 and there will be only one common entrance test each for over 30,000 MBBS seats and over 11,000 MD seats in all government and medical colleges in the country.
This important decision, taken by the Medical Council of India and accepted by the Union ministry of health, was conveyed to the Supreme Court on Friday bringing huge relief to lakhs of aspiring doctors.
Earlier, students wanting to take up courses in medicine had to appear in at least five to six entrance tests for various colleges and worry about attendant problems like clash of exam dates as well as travel to distant places for counselling for allotment of seats.
But from 2011, there will be just one entrance test each for MBBS and MD courses offered by all 271 medical colleges, 138 government-run and 133 under private management. These colleges together offer over 31,000 seats for MBBS courses and another 11,000 for PG.
The confusion caused by multiple entrance tests and counselling saw hundreds of students rush to the Supreme Court every year complaining about the system where they were left high and dry even for making a single mistake in their choices.
One such petition filed by Simran Jain through advocate A D N Rao had sought a direction from the apex court to MCI and the Centre for a single window system for admissions.
During hearing of the petition before a Bench comprising Justices R V Raveendran and H L Gokhale, the decision for one common entrance test was conveyed by MCI counsel and senior advocate Amarendra Saran. Additional solicitor generalP P Malhotra said the government had accepted MCI's suggestion to amend the regulation concerning admissions to medical colleges.
The state of affairs of private medical colleges and their admission process had come for some serious scrutiny in the apex court, which said last year, "Every year, this is happening. We know how these tricks are played on students every year."
Interestingly, the malaise seems to have spread to government medical colleges too as the apex court had last year asked Director General of Health Services Dr Mangla Kohli to look into allegations of malpractices in admissions into some such colleges in various states.
Moscow deaths double in Russia's 'worst ever' heat
Global investor George Soros is betting big on the Indian market. He told Reuters Insider that inflation is probably the only threat to the current rally in the Indian equities. Excerpts:
Here is what George Soros had to say on the US economy and the possibility of a double dip recession.
It is not only China, India is doing very well and in fact, the great hope is that the developing world develops faster and that is the positive side of the current situation that the Chinese public is willing to accept limitations on individual freedom for the benefit of prosperity. But I do not see the rest of the world accepting limitations on each individual freedom for the benefit of Chinese prosperity. The Indian situation is more stable because it is based on domestic growth whereas China has yet to get domestic growth going. So right now, India is in a very strong position. There is some threat of inflation which remains on the horizon.
If I had to sum it up in one word, I would say blah. In other words, it may slip into the double dip or it may not, but it is going to slow down. There is no question in my mind because the stimulus is running out and there is now great resistance for any further stimulus because the preoccupation is with fiscal rectitude and it is a little bit too early for that because the economy has not yet really got dynamic scoring and it would not for a long time because there are grave imbalances that have built up over 25 years of super bubble and it will take time to work it off.
So is this emphasis on fiscal rectitude premature? Would a second stimulus be a good idea?
Yes, it is premature. Of course you cannot run up the national debt indefinitely. So you ought to separate money that you spent on investment. This would be the time when you have got either resources to improve the infrastructure to spend money on education and generally to put the money to where it actually would pay back in one form or another. In other words, you have to separate what you might call investment account in current account, but it is very difficult to do and I do not think it is going to be done. So as a result, you are liable to find it difficult to provide additional stimulus to keep the economy going.
What about Japan, another country that has had a similar problem and is now suffering from currency appreciating in value? What should they be doing? Is intervention a good idea?
Certainly they are hurting because the currency is too strong. So they are right to intervene, but they have had the same problem. They had a real estate boom and then a crash and the banking problem. It is 20 years now and they are still just struggling along. This is a country with an aging and the shrinking population. So we are in a different situation, but still, it will take a long time to work off the excess consumption in this country.
How long?
That I am not in a position to predict.
What about the American relationship with China? You have been spending a lot of time recently with the Chinese officials. What do you think the stage of play there is?
China of course is the great beneficiary of globalisation and now the winner after the financial crash because China was not affected except through its losing exports temporary and may be not just temporarily but more permanently. So China is a great winner, rising very rapidly because the west is sinking. So the shift of power is phenomenal.
Is it faster than most of us think?
I have not seen anything like it and it is difficult to find a parallel in because for the rise of a new power, it takes decades and it is happening here in a much shorter time. So it is a very difficult relationship to manage, but it is very important that it should be managed because the world cannot afford the world economy falling apart. So the Greek tensions and particularly with regard to the currency, China has been so successful.
Did the machinery called community authoritarianism?
No, it is an undervalued currency. People in China can work and do work very hard trying to get rich and then their labour is harvested so to speak through an undervalued currency for the benefit of the state and that is what has made China so successful.
It has a pretty devastating impact on the rest of the world economy though with global financial imbalances. A lot of economists, particularly on the list actually, are calling for the US government to pressure China quite aggressively to allow its currency to appreciate. Is that a good idea?
The currency has to appreciate, but it has to be done in an orderly manner and I hope that the Chinese will actually find it to their own benefit to do it because they actually have inflationary pressures. So having a depreciating currency ought to be beneficial for them, but you now have also rapidly rising wages and superimposing on that a depreciating currency would hurt the export industries badly and they have a voice in China and they resist it. So that’s a big issue how that is going to be. The Chinese have to increase their domestic consumption and to the degree that they have got wage increases. It is happening. So that’s actually a positive development and altogether until the crash, the US consumer was the motor of the burned economy. Now it is the Chinese economy that has become the motor, now it is much smaller than the US consumer. So the world economy has a smaller motor and so it is not moving very fast. But it is the Chinese economy that is now the motor and that’s a tremendous change. Global economy will continue growing even if you have a double dip in the US or Europe because the policies followed in Europe will also bring a slowdown in Europe. So you have got Europe and the so-called west is under pressure and we include Japan in that and the rest of the world actually makes up for it. So actually that is a reason to believe that we will get through this and it is not going to be such a dismal scenario.
RBI hikes repo rate by 25 bps, reverse repo rate by 50 bps
MUMBAI: The Reserve Bank of India (RBI) on Thursday raised its key short-term lending rate by 25 basis points and borrowing rate by 50 basis points to check rising prices.
"Inflation remains the dominant concern in macroeconomic management", RBI said while raising the repo (lending) and reverse repo (borrowing) rates to 6 per cent and 5 per cent, respectively.
The new rates, which comes into effect immediately, were announced as part of the first scheduled mid-quarterly review of the monetary policy.
The hike in rates will lead to a rise in cost of funds for the banks and eventually makes loans expensive, which will reduce consumption.
While inflation for August was 8.5 per cent (as per the new series with 2004-05 as Base Year), food inflation was at a high of 15.10 per cent for the week ended September 4.
To check inflation, the RBI had raised these key rates by an identical margin in July.
Economists had expected quarter point hikes in both rates. This is the fifth rate hike this year.
Asia's third-biggest economy grew by 8.8 percent in the June quarter from a year earlier, its fastest pace in nearly three years while industrial output rose 13.8 percent annually in July, the fastest since April.
RBI for the first time moved towards a six-weekly review of the state of the economy. The first of such reviews was released today.
Soon, Airtel users can shop up to Rs 5000 via mobiles
NEW DELHI: Bharti Airtel customers will soon be able to make virtual payments at retail outlets and restaurants using their cell phones.
The country’s largest telco by both revenues and customers has got the nod from the Reserve Bank of India (RBI) to collect a maximum of `5,000 from customers, which can be converted to virtual money stored on mobile phones, and can be used at outlets that have a tie-up with Airtel.
All leading mobile phone companies are also slated to get the ‘semi-closed wallet’ licence over the next couple of months.
India has over 650 million mobile users and all telecom companies are looking at offering a range of financial services, including the electronic version of the leather wallet, which can be used to make secure payments across a wide spectrum of goods and services covering all sectors, Such concepts are already operational in Japan, South Korea, parts of China and certain markets in Europe.
Earlier this year, RBI in its annual monetary policy said that it was looking to use mobile phones as a medium for taking banking facilities to the remote and far-flung areas while also adding that banks and cellular operators must cooperate, rather than compete with each other for this initiative.
“Semi-closed wallet are prepaid payment instruments that are redeemable at a group of clearly-identified merchant locations/ establishments which contract specifically with the issuer to accept the payment instrument. These instruments do not permit cash withdrawal or redemption by the holder,” Bharti Airtel said in a statement. In fact, Bhutan Telecom has already introduced M-money or mobile money payment, which is a one-stop
shop for making payments of all utility bills including telephone, electricity and water bills. Bharti Airtel did not give any timeframe for the launch of services on this platform.
“Currently we are evaluating various options that this licence provides to find out how best we can create a value proposition for Airtel customers. It is imperative to design a safe & convenient deployment before we can take to the market,” its statement added.
As per RBI guidelines, the pre-paid value that is being loaded will be distinct from talktime. In other words, the telecom operator will not be able to create money. For the consumer, this implies, they will not be able to exchange this money for talktime. Bharti Airtel will also be mandated to deposit the money raised in a zero balance escrow account with a bank.
Analysts say that RBI’s move to approve ‘Semi closed wallet’ will be the first step towards democratisation of mobile commerce in the country. It is estimated that only 1% (8 million) of the country’s 650 million cell phone users avail mobile commerce services. This is expected to go up to 50 million by 2012.
Google's Android to be world No. 2 in 2010: Report
SAN FRANCISCO: Google Inc's Android software will become the world's second most popular operating system for cell phones this year, leapfrogging rival offerings from Microsoft Corp, Research in Motion and Apple Inc, according to a new report.
By 2014 Android will account for nearly 30 percent of all cell phone operating system sales, according to research firm Gartner, putting it in position to challenge Nokia Corp's Symbian software, which has reigned as the top mobile operating system for years.
Symbian will have a 30.2 percent share of the global market in 2014, according to Gartner, compared to Android's 29.6 percent.
Gartner said it expects a variety of less-expensive Android devices shipping in the second half of 2010 to boost Android's growth, allowing Android to grab the No. 2 worldwide rank nearly two years sooner than the firm had initially expected.
The market for mobile phone software has become a prime battleground for technology companies, as consumers increasingly use their phones to access the Internet, listen to digital music and play video games.
Apple jump-started the market for high-end smartphones with the launch of its iPhone in 2007.
For Google, the world's No. 1 Internet search engine, making the transition to mobile phones is key as it seeks to maintain and expand its nearly $24 billion online advertising business.
Google's Android software, which it offers free to cell phone vendors, has experienced dramatic growth since coming to market two years ago. More than 200,000 Android phones, from companies including Motorola Inc, HTC Corp and Samsung Electronics, are sold every day, Google CEO Eric Schmidt said recently.
Android became the No. 1 operating system for U.S. smartphones in the second quarter, according to a report last month by industry tracker NPD.
Nokia's Symbian operating system has maintained the No. 1 spot worldwide, thanks to the company's broad distribution of its handsets. But Nokia has struggled to deliver a high-end smartphone to compete with the likes of the Apple iPhone or devices based on Google's Android.
On Friday, Nokia announced that Microsoft's Stephen Elop would replace Olli-Pekka Kallasvuo as chief executive in a bid to revive the Finish handset company's fortunes.
Gartner projected that Apple's iOS software, which is only available on Apple's iPhone, will add nearly 3 percentage points of market share to achieve a 17.1 percent slice of the global market by 2011, but will slip back to a 14.9 percent share in 2014.
Blackberry-maker Research in Motion will see its share fall from 19.9 percent in 2009 to 11.7 percent in 2014, Gartner said, while Microsoft's Windows Phone software will decline to 3.9 percent in 2014 from 8.7 percent in 2009.
Recession has left huge hole: Obama
WASHINGTON (AFP) - – US President Barack Obama said Friday the "hole" left by the worst recession in decades was "huge" and admitted the recovery had been "painfully slow," but vowed his policies were working.
Obama appeared at a White House news conference designed to showcase his recovery plans and shore up his political standing ahead of November's mid-term elections in which his Democrats face a Republican wave.
"The hole the recession left was huge and progress has been painfully slow," Obama said, capping a week in which he has launched an energetic campaign ahead of the congressional polls.
"These proposals are meant to accelerate job growth in short term," he said, touting plans to revive small business and tackle the 9.6 percent unemployment rate.
"The American people did not send us here to think about our jobs, they sent us here to think about theirs," Obama said, slamming Republicans for blocking an existing plan he formulated to promote lending to small businesses.
Obama opened the encounter with journalists in the ornate East Room of the White House by naming economic aide Austan Goolsbee to serve as the chairman of his Council of Economic Advisors, to replace Christina Romer who stepped down last week.
Obama admitted in a television interview Wednesday that his party would not do well in the election if it became a judgment on the state of the economy in the wake of the worst financial meltdown in decades.
"If the election is a referendum on are people satisfied about the economy as it currently is, then we're not going to do well," Obama told ABC News.
"I think everybody feels like this economy needs to do better than it's been doing," Obama said.
"My challenge, and the challenge of every Democratic candidate who's out there is just making sure the people understand there's a choice here."
A Quinnipiac University poll published on Thursday made uncomfortable reading for the administration, with voters disapproving of his handling of the economy -- the major election issue -- by 56 to 39 percent.
Goolsbee is currently serving as chief economist on the president's Economic Recovery Advisory Board, which Obama set up to provide outside and independent advice as he navigates the economic recovery.
Basque separatists ETA declare ceasefire
MADRID (AFP) - – Basque separatist fighters ETA declared a ceasefire in their flagging, decades-long campaign of bombing and shooting for a homeland independent of Spain.
ETA, blamed for the deaths of 829 people over more than 40 years, said in a video it had decided several months ago that it "will not carry out armed offensive actions."
The separatists did not say if the ceasefire was permanent and their declaration was greeted with broad scepticism by Spanish political parties, which demand ETA give up its weapons for good and disband.
Listed as a terrorist group by the United States and European Union, ETA has not staged an attack on Spanish soil since August 2009, and police have arrested much of its top leadership.
Key facts about Basque separatist fighters ETA
ETA made the announcement in a video sent to the BBC and pro-independence Basque daily Gara, showing three people in berets and yellow hoods sitting at a table flanked by Basque flags and with an ETA symbol on the wall behind.
"ETA reaffirms its commitment to finding a democratic solution to the conflict," said a woman sitting in the centre.
"In its commitment to a democratic process to decide freely and democratically our future, through dialogue and negotiations, ETA is prepared today as yesterday to agree to the minimum democratic conditions necessary to put in motion a democratic process, if the Spanish government is willing."
Prime Minister Jose Luis Rodriguez Zapatero's government, which took a political pounding when ETA broke its last ceasefire in 2006 and bombed Madrid's main airport, did not react immediately.
The Interior Ministry was still examining the declaration, a spokesman said.
Government officials were quoted in the El Pais newspaper as saying the declaration was a move in the right direction but ETA must still definitively abandon the armed struggle.
Analysis: Weakened ETA pushed into ceasefire
In the Basque region, senior members of both the governing Socialist Party and the right-wing opposition Popular Party demanded that ETA bow to the demands of the Spanish people by disarming for good and disbanding.
A victims' group also denounced the ETA statement.
"It has no credibility because ETA has already had several truces and continues to kill," Angeles Pedraza, head of the Association of Victims of Terrorism, told Cadena Ser radio.
"The only thing that matters to us as victims is their total defeat, the surrender of arms and disbandment of the group," she added.
ETA, which was founded July 31, 1959, had been under pressure from its political allies to declare a truce.
Its banned political wing Batasuna plus its new ally, the Eusko Alkartasuna party, called on ETA in the past days to agree to a permanent ceasefire under international verification.
Spanish media say Batasuna, which has been banned from running for office since 2003 because of its ties to ETA, hoped to return to the political game ahead of local elections in 2011.
A spokesman for Batasuna said the ETA ceasefire announcement was a contribution to peace that made the opening of a new political phase "irreversible."
ETA announced a "permanent ceasefire" in March 2006 but months later reversed course and in December 2006 set off a bomb in a car park at Madrid's international airport, killing two people.
After ETA formally called off the peace process in June 2007, the Spanish government stepped up its fight against the group. Since the start of this year Spanish police working with other forces including in France have arrested 68 suspected ETA members.
ETA killed two police officers in a bombing in Majorca on July 30, 2009, its last deadly attack in Spain. On August 10 it set off three small bombs in Palma de Majorca but without causing injuries, the last attack in Spain.
Consumers fail to connect when celebs endorse too many brands
Indian cricket team captain Mahendra Singh Dhoni endorses twenty-two different brands. On an average, advertisements of each brand runs 400 times every day on around twenty top satellite television channels. If each ad runs for 22 seconds, he is endorsing 22 brands 24 hours every day. How many of them can you recall?
“Over-exposing a celebrity can have its ill-effects. The consumer starts losing focus and the communication (of different brands) gets blurred. The consumer fails to connect with any brand,” says Ajay Gahlaut, group creative director at advertising agency, Ogilvy & Mather.
Just what is happening in the case of Amitabh Bachchan. The Bollywood icon appears in two campaigns running simultaneously on television these days. In one of them, he is seen promoting his upcoming reality quiz show Kaun Banega Crorepati (KBC); in the other, he is endorsing the Challengers Trophy cricket that begins next week in South Africa. They are so uncannily similar in their styles, the message is lost if one doesn’t see the full ad.
But brand ambassadors such as Bachchan or Dhoni are rare species. And that explains why most companies with big advertising budgets are in a hurry to rope one of them to feature in their commercials. “The idea is to outdo competition in terms of attracting eyeballs, even if the costs are high,” says Manish Porwal, managing director of Alchemist Talent Solution, which helps companies identify brand ambassadors. Porwal, however, points out that it is very important for the advertiser to select a brand ambassador who gels with the character of the brand which he or she endorses. He cites the example of Kareena Kapoor endorsing Sony’s Vaio laptops. “It’s a perfect match. Kareena exemplifies all the characteristics of the slim and sleek brand.”
Prathap Suthan, national creative director of Cheil Worldwide and who made the Samsung mobile phone ads with Aamir Khan, says, “Most importantly, the creative agency has to keep in mind that the idea of the ad has to be bigger than the celebrity, and the product should not act as a subservient role to the celebrity.”
The irony here is that brand ambassadors are usually hired to differentiate a brand from a clutter, but they end up creating a clutter instead when they do not have diverse brands to endorse, irrespective of the numbers. Aamir Khan, for instance, endorses brands as diverse as Samsung mobile phones, Titan watches, Tata Sky DTH and Atithi Devo Bhava. All are distinct products with diverse characteristics that the consumer recollects even after the long time. Similarly, Sachin Tendulkar has limited brands such as RBS, Jaypee Cement, MRF, Adidas, Boost, among others. So, his brand equity stays intact. Now, take a look at the brands that Dhoni endorses: PepsiCo, Reebok, Aircel, Godrej Hersheys, Maxx Mobile, Big Bazaar, Dabur, Emami and Siyaram. And the picture gets clearer, says Gahlaut of O&M.
India's time has come and all of us have to support it: Mukesh Ambani
In an interview with ET Now, Mukesh Ambani, CMD, Reliance Industries, talks about their bonus issue as well as the vision Reliance has, as also their growth plans.
A massive bonus share issue is a huge Diwali gift for your shareholders. What is the message that you are sending out to them? Would you like to tell them through ET Now, is it that you are convinced that there is much more steam left in Reliance Industries and you are confident of serving them even on a larger expanded base?
First and foremost, let me tell you how privileged I am to be on ET Now and congratulate all of you at ET Now for again proving that India can have flawless grass-root startups. And as far as Reliance is concerned, we have always had growth on what I call value creating cycles and now I have been associated with the process of Reliance for nearly 30 years.
In the last 31 years, it was 1978 when we went public, and if you look at our compounded return to shareholders, they are in excess of 25% year on year. So that has been basically our philosophy and in the last growth cycle that we had, that was really the biggest asset creation and value creation cycle in our history. To my mind, it was also the most challenging and we have just completed that.
Results are we have an SEZ refinery which now demonstrates to the world that India in spite of having no oil of its own can import oil, use its talent and use its competitiveness in what I call complex technology to really create an asset that can then export products and be competitive anywhere in the world, which strengthens India in export terms and gives us the confidence that we can be at par with all people or companies of high technology in the energy again. We can even exceed them at times.
The other piece was deep water gas and clearly, we have again set new benchmarks of efficiency where the world takes about 10 years to really go from concept to bringing this view, done it in a much shorter time and we have completed the project and that also has created huge value for the Indian economy.
Natural gas as you know is a major feedstock to the fertiliser industry and it reduces our fertiliser subsidies for government. So creates value for government, obviously creates value for our own farmers in terms of making sure that we are able to give them urea based on indigenous feedstock. It strengthens our own power situation within the country and it overall strengthens energy security. So having created this value, we were committed to making sure that we reward the shareholders on completion of this project.
So this is nothing but fulfilment of promise that we had made at our AGMs and I am happy that we could do it in time and I am really grateful to literally a few thousand Reliance managers and engineers who worked over the last 4 years, 24x7, 365 days. It is really because of their hard work that we are able to deliver this value to the Indian economy and our shareholders.
But purely from a timing point of view if you look at what is happening around India and the world, everyone is trying to cut cost; everyone is trying to hunker down to say that let the storm blow. So it was somewhat a very bold decision on your part to say that no, I am going to do a contrarian thing and come out with a 1:1 bonus, that too for a company of Reliance’s size?
Yes and even when the economic meltdown hit the world 12-15-18 months from today that we were in the midst of really having the largest capital expenditure, this is one of the biggest programmes not only in India but in this part of the world and we preferred a lot of people even cut it that time. So if you see all the refineries or upstream projects, you see a lot of them on hold, a lot of them operating on reduced scope.
We were sure that we wanted to stay on track and we had the financial resources and the discipline to execute. So we very much stayed on track and we are big believers in terms of saying that once you have conviction and you should think through everything that you do, but then stay on track and yes, with the completion of this value creation cycle, we are really now well established even given the difficult global situation to now embark on really thinking through what our future plans will be and how we will create new value into the future.
As I understand you are still a little cautious about the global recovery. There is a lot of talk about even Ben Bernanke saying that the worst is over, but I sense a little bit of caution as far as you are concerned. So why is that?
I think and I have said this earlier. What happened last year, to my mind, was not part of a normal cycle. It was what I call very early on reset and what I meant by reset is that the rules of managing the economy, the rules of business, the rules of creating value will evolve between now and the next few years. But to my mind, they will be very different than what we have been used to for the last 20 years. The principle among them would be money will not create value.
So we have been through a time-frame where money cannot make money. I am a big believer that at the end of the day it is products and services that are needed by a society and that you deliver to society on a competitive basis that really creates value and we will have to go back to that and in going back, we still have to find a solution to all the debt that we have created. We have to repair the balance sheets.
Chances of US recession 25-30%: Alan Greenspan
MUMBAI: The chances of the US economy slipping into another recession are close to 25-30 per cent, a noted American economist said. "I see a third to fourth of a chance of a double dip (in the US economy)," noted American economist and former Chairman of the Federal Reserve of the United States, Alan Greenspan, said.
The chances that the US slips into another recession are 25-30 per cent, Greenspan said.
According to him, to reduce the double dip probability, recovery in asset base should be created through rising asset prices.
The US Central Bank has done an excellent job to tackle the finance crisis, he said. "You have to have sovereign credit for private credit in the wake of the crisis," Greenspan said.
While expressing concern over the long-term impact of Government deficits, Greenspan said that this had been a crisis of unprecedented proportions, but he did not see another round of stimulus in the US.
"We have had enough stimulus in the US for the moment. It is not a good idea to expand deficit levels in the US. Longer-term consequences of expanding deficits are 'extraordinarily negative.' We need to allow the markets to absorb stimulus and calm down," Greenspan said.
The major problem right now is an extraordinary amount of risk aversion, he said. According to Greenspan, the idea that economies can decouple is an illusion as emerging economies are closely connected with the developed world.
"Emerging economies cannot hope to decouple from the developed world. The recovery of consumer demand in the US will be a critical part of sustaining growth in emerging economies," he said.
While referring about stock markets, he said that the influence of stock markets on economic activity is underestimated.
"Stockmarkets should be seen as a leading indicator to the economy. The rebound in stock markets and other asset markets could help revive sentiments. Stock prices will be a lead indicator for a turn in any economy," he said.
Indian economy is looking like one of the strongest economies from a structural viewpoint, he said, adding "India is doing better than anybody in part because it is largely self-contained."
Gold, silver scale new peaks:
MUMBAI: Both the precious metals, gold and silver, glittered on the bullion market during morning deals, touching their historic peak on the back of heavy stockists buying ahead of forthcoming festive season amid firm global cues.
Fresh industrial buying supported the white metal. Good jewellers demand for the fast approaching festive season too boosted the sentiment.
According to dealers, investors once again turned their attention to these safe-haven metals rather than going for riskier assets like stocks on worries over the faltering global economic recovery.
Standard gold (99.5 purity) resumed at an all-time high of Rs 19,125 per ten grams, the level not seen since June 8, 2010, as against overnight close of Rs 18,945 while pure gold (99.9 purity) also logged its new peak to open at Rs 19,215 per ten grams from its last close of Rs 19,030.
Silver ready (.999 fineness) too started at a fresh historic highs of Rs 31,245 per kilo from Rs 30,755 previously.
Gold for December delivery shot up by $11.10, or 0.9 per cent, to $1,250.30 an ounce on the Comex division of the New York Mercantile Exchange yesterday, highest since late June and just below record settlement high of USD 1,258.30 an ounce on June 18.
Silver for December delivery rose 36 cents, or 1.9 per cent to $19.43 an ounce.
India can grow between 8.5% and 9%: Infosys
V Balakrishnan
Infosys Technologies Ltd.
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In an interaction with ET Now, V Balakrishnan, CFO, Infosys, comments on the just out April-June quarter GDP growth numbers. Excerpts:
Are you happy with the kind of numbers we have clocked in in terms of GDP, 8.8%, in line with street estimates?
Yes, these are great numbers as expected because if you look at globally, there are very few pockets of growth and India is one economy growing at 8% to 9% and 8.8 is what people are expecting. Some of them are expecting close to 9. So these are great numbers.
Most people say that services are bit of a black box for the next couple of quarters as well. It came in at 9.7% in Q4 of course. How do you expect services to pan out because most people are bullish about agriculture, not too bullish about industry. What about services?
Growth is possible, but you have to look at the global indicators also because if you look at globally, all the leading data from the US are too negative, so also Europe. So to that extent if something drastic happens in the global economy, it could impact growth in India also, but looking at what it is today, India has got a better chance of achieving that growth because monsoon has been good till now. So agricultural growth will be there. India has got a better chance of achieving something between 8.5% and 9%.
At the end of Q1, you guys were cautiously optimistic, if I can put it that way, with regards to the European and US situation, at this point of time when you are talking to your clients, are you sensing nervousness of any sort which could have a bit of an impact on services growth overall?
Till now, things are good. We are seeing growth coming in but if you look at all the leading indicators from all the large markets, they are too negative. So we have to keep a close eye on that because if the sentiments are bad, it could affect the budgets for IT next year. So we have to balance between the short term optimism and the long term concern that is what we are doing. We are still hiring people, we are still focussing on growth, we are seeing a lot of volume growth coming in, but if the environment continues to deteriorate like this, probably it could impact the budgets for next year & the growth.
Just wanted to know from you what is your ballpark growth numbers for the service sector within the entire fiscal and any particular dampener or any particular situation can actually hamper this growth projection that you have for yourself?
Service sector will do well, probably manufacturing sector is something we have to watch out what is happening globally. So the trend we saw in the services sector in the last few quarters could continue.
Maggi losing instant noodles market share in India!
NEW DELHI: Maggi instant noodles, foods major Nestle’s flagship brand that has dominated the Indian instant noodles market for nearly three decades, is losing market share on a monthly basis to newer entrants such as GlaxoSmithKline’s (GSK) Horlicks Foodles, Hindustan Unilever’s (HUL) Knorr Soupy noodles, Big Bazaar’s Tasty Treat, Top Ramen and several other smaller players, according to data by market research firm Nielsen.
The data shows that Maggi’s share of instant noodles, on an all-India basis, across urban markets, has slipped consistently between December ’09 to July ’10. While Maggi instant noodles (minus vermicelli) had a 90.7% share in December ’09, the share dropped to 86.5% in July ’10 on an all-India basis.
A regional split of the data shows that Maggi's instant noodles' value market share has fallen across the east, south, north and west zones for the same period.
Analysts say with new competition, Maggi’s market share is certain to get impacted , but add that Nestle has the potential to expand the Rs 1,300-crore instant noodles category – which itself is growing at a rapid 15% annually. A detailed email sent to Nestle on Thursday elicited no response.
Apart from HUL and GSK which have positioned their noodles as ‘healthy’ snacking options targeting kids and mothers, others like Indo-Nissin’s Top Ramen, Capital Foods’ Ching’s Secret and CG Foods’s Wai-Wai , though around for long, are stepping up marketing efforts to take advantage of category growth. Besides, private brands like Big Bazaar’s Tasty Treat and Aditya Birla Retail’s Feasters are notching up share.
Manoj Menon, FMCG analyst at brokerage firm Kotak Securities, wrote in a report earlier this month: “Maggi faces product substitution risk and brands like Knorr and Foodles could potentially impact its incremental growth. Nestle faces a challenging competitive environment in culinary.”
GSK, which entered the category in December last year, has taken away share from Maggi mainly in the South and East riding on the equity of Horlicks and its well-entrenched distribution in the regions.
GSK’s executive VP, marketing, Shubhajit Sen, said: “Consumers were looking for a choice in instant noodles; combined with that, the equity of Horlicks is leading to a lot of trails. The initial response to Foodles is much higher than our expectations.”
On the other hand, HUL, which rolled out Knorr Soupy noodles in the South this February, had to postpone the brand’s national launch due to capacity constraints because of heavy consumer offtake. An HUL spokesman said: “We are very pleased with the performance of Knorr Soupy noodles.”
Private brands are whetting appetites of consumers too. According to Devendra Chawla, business head, private brands, Future group:“The category boundary is set to be re-drawn. From a snack food targeted at children, instant noodles category has evolved as a mainstay meal even for grown ups.”
Mr Chawla said Tasty Treat was the second biggest instant noodles brand in its Big Bazaar stores after Maggi. The brand packaging was revamped last year and Future plans to roll out additional variants in a month’s time taking the number of variants to nine from the existing three.
Gold likely to touch $1,300 on safe haven appeal: GFMS
MUMBAI: Gold, headed for a 10th annual gain, may reach at least $1,300 an ounce this year, as investors seek a shield against financial turmoil, weak currencies and inflation, according to Gold Fields Mineral Services (GFMS).
“There is going to be in all likelihood a surge in investment demand toward the end of this year, driving prices toward the $1,300 level and possibly beyond,” CEO Paul Walker said in an interview, repeating a June forecast. “Prices are going to ratchet up.”
Bullion demand increased 36% in the second quarter as investors boosted purchases of gold-backed funds and pushed up prices to a record during Europe’s sovereign-debt crisis, the World Gold Council said on August 25. Investors bought 291.3 metric tonne of the metal in exchange-traded funds, or ETFs, the second- highest quarter on record, the producer-funded group said.
“There is a wide enough group of people who are going to continue buying gold for a variety of reasons and that’s going to be the key driver of price action,” Walker said from Goa, where he is due to speak at a conference on Friday . “The physical market, the jewellery market, will be playing a somewhat minor supportive role in price determination going forward.”
Goldman Sachs Group forecast earlier this month that prices may reach $1,300 in six months and Deutsche Bank AG said on June 3 that the metal may surge to $1,700 as currencies slump. The euro fell to a four-year low versus the dollar in June. Immediatedelivery bullion traded in London was little changed at $1,237 an ounce.
US RECESSION
Prices have rallied 13% this year in New York and reached a record $1,266.50 on June 21 as investors sought to protect their wealth against financial woes in Europe and the prospect of slowing economic growth. Nouriel Roubini, the New York University economist who predicted the global financial crisis, on Thursday said US expansion will be “well below” 1% in the third quarter and put the odds of a renewed recession at 40%.
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged at 1,297.95 tonne as of August 26, figures on the company’s website showed. Holdings reached a record of 1,320.44 tonne in June.
In India, the biggest gold user, demand almost doubled in the first-half on increased jewellery purchases and investments , the council said on August 25.
Imports by the country this year may equal 2009’s level as early as this month because of “robust” demand, the group forecast. Purchases in the first half were 348 tonne, compared with 559 tonne in 2009, according to council’s data.
‘REMARKABLE THEME’
“This year we are seeing an underlying and somewhat remarkable theme in the Indian market; a willingness to continue to buy at high prices and a belief that the price will continue to go up,” Walker said. “You would have to have a pretty catastrophic final quarter of the year for imports not to match the 2009 level.”
Gold futures in India climbed to a record 19,198 ($410) per 10 grams on June 8. Local prices have advanced 13% this year. The price of silver may reach $20 an ounce as industrial demand rebounds, Walker said. The metal for immediate delivery was at $18.97 an ounce and has added 12% this year.
Cricket: Bharti Airtel to sponsor India's home series
NEW DELHI: Telecom giant Bharti Airtel was on Friday named as the sponsor for all international cricket played in India after offering to pay 700,000 dollars per match, India's cricket board said.
The three-year deal covers all Test, one-day and Twenty20 matches, and with India scheduled to play at least 50 matches in the period, the board stands to earn 35 million dollars.
"Bharti Airtel has won the series sponsorship rights for the period of 2010-2013 with a bid amount of 33.3 million rupees per Test/ODI/T20 International," board secretary N. Srinivasan said in a one-line statement.
Airtel beat telecom rivals Idea Cellular and mobile phone makers Karbonn Mobile and MicroMax in an open bid that was finalised by the board's marketing committee in Mumbai on Friday.
The minimum bid price set by the board was 20 million rupees (428,815 dollars) per match.
This is the first time sponsors have been named for home series for a fixed term. The earlier deal was held by World Sports Group, a sports agency who then sold the rights to companies on a series-by-series basis.
Airtel also sponsors the Twenty20 Champions League, an international club competition, whose second edition will be played in South Africa next month.
DTC: Taxpayers may get relief in terms of tax rates
NEW DELHI: Taxpayers may get relief in terms of tax rates in the proposed Direct Taxes Code, which is likely to replace the 50-year-old Income Tax Act from the next fiscal, a key official indicated today.
"We are in the process of reducing the rate of tax and DTC will be a good example in that direction," Central Board of Direct Taxes (CBDT) Chairman S S N Moorthy said at an Assocham tax conference.
He further said India is coming down to a realistic platform where the rates will be almost in line with international standards. "We are in the process whereby we have to be taxpayer friendly, we have to be in tune with international standards."
At the same time, the government would take measures so that the flight of revenue from India can be checked.
The DTC bill is likely to be tabled in this session of Parliament so that it could replace the archaic Income Tax Act from April 1, 2011.
In the first DTC draft, the government had proposed a substantial widening of the tax base. It had suggested imposing 10 per cent tax on income of Rs 1.6 lakh-Rs 10 lakh, 20 per cent on income of Rs 10 lakh-25 lakh and 30 per cent beyond Rs 25 lakh in a year.
The proposed tax slabs were even substantially wider than the increase in the Budget 2010-11. The Budget imposed 10 per cent tax on income of Rs 1.6 lakh-5 lakh, 20 per cent on Rs 5 lakh-8 lakh and 30 per cent on over Rs 8 lakh in a year.
However, the revised draft on DTC did not talk over tax rates and Finance Ministry officials said the slabs given in the first draft were just illustrative.
The second draft also said that the rates proposed in the first draft could be calibrated, after it dropped contentious proposal of taxing long-term savings like provident funds at the time of withdrawal. This means that tax rates may not be moderated so sharply, as was given in the first draft, but some rate cuts would be there.
Moorthy further said that direct tax collections of Rs 4.3 lakh crore for the current fiscal are on track.
"The target for the current year is about Rs 4.30 lakh crore. Fortunately we are on track. We are growing at the rate of 15 per cent," he added.
He further said tax deduction at source collection, which constitute a major chunk of direct tax, is not adequate but it would pick up. "This year we are going at the (TDS) rate of about 37.5 per cent which is not adequate enough but anyways it will pick up."
Last year, TDS collection touched around 38 per cent of the total revenue. It was about Rs 1.40 lakh crore.
After 300% salary hike; MPs want more
NEW DELHI: Government on Friday faced protests in the Lok Sabha, hours after it decided to raise MPs' salary to Rs 50,000 with several non-BJP opposition members storming the well demanding that it be raised to Rs 80,001.
"Stop the insult of MPs" and "implement report of the parliamentary committee" were slogans chanted by SP, BSP, JD(U), RJD, Shiv Sena and Akali Dal members, forcing Speaker Meira Kumar to adjourn the House twice.
After the adjournment, members of BJP, RJD, SP and JD(U) staged dharna inside the Lok Sabha.
First the House was adjourned till noon when members were on their feet during Question Hour claiming that government had "insulted Parliament" by rejecting the recommendation of its own Committee to raise the basic salary to Rs 80,001 per month, a rupee higher than the highest paid government officer.
This happened after news trickled in that the Union Cabinet, at a meeting earlier in the day, had approved a proposal to raise the basic salary of MPs to Rs 50,000 from present level of Rs 16,000.
The panel has said the MPs should get at least a rupee more than what secretaries in the government draw.
Besides the base salary, an MP also gets a daily allowance of Rs 1,000 for each day when parliament is in session or taking part in house committee meetings.
A member is also entitled to a constituency allowance of Rs 20,000 a month and an office expense allowance of Rs 20,000 each month.
When the House reassembled at noon, leaders of SP and RJD, Mulayam Singh Yadav and Lalu Prasad, led their members to the well raising slogans. Members of Shiv Sena, Akali Dal and JD(U) also joined them in the well.
Prasad and his party colleague Raghuvansh Prasad Singh were heard saying "the government's decision is an insult to Parliament. The recommendations of the parliamentary committee should be implemented."
In the din, the House approved amendments made by the Rajya Sabha to the Trade Marks (Amendment) bill by a voice vote. This was protested by the RJD leaders.
As the protests continued, the Speaker adjourned the proceedings till 1400 hours.
How to go from Rs 11, 000 to Rs 1 crore?
Here's what independent India has achieved. From 1951 to date, our economy has grown from $21 billion to $1.2 trillion. That’s over 60 times in 60 years. From the 3-4% Hindu rate of growth in the pre 90s, India has transformed into one of the fastest growing economies in the world.What’s more, in six to seven years this GDP will further double.
The opportunity today is ripe to achieve a different kind of freedom. Freedom that will help secure the future of ourselves and our loved ones. I call it financial freedom.When it comes to achieving freedom there are no short cuts. Just as our country's freedom was achieved through a concerted effort, so would financial freedom. It won’t happen in a day, but it will happen. What we need to do is follow some basic principles.
The first is to have a systematic and long-term approach to investing. We need to review our risk profile and allocate our savings across different asset classes. As a country we save over 35% of our GDP. But are we investing it judiciously? Most people are risk averse and hence put their full money in bank fixed deposits. While that may be safe but it may not give you adequate returns, which may not even cover the base inflation. Investing some portion of your money into equity as an asset class is very important.
Since the inception of the Sensex in 1979, the Indian stock markets have given around 17% annualised returns. Rs 1 lakh invested in the stock markets in 1979 would today be worth Rs 1.3 crore. At a 12% rate of return; if you invest Rs 11,000 every month in an equity mutual fund through an SIP mode, it will be over Rs 1 crore in just 20 years.That’s the power of compounding. If we take a long-term perspective there is enough money to be made to achieve financial freedom. The trick lies in diversifying investments, investing systematically, and over a period of time.
The second is the use of knowledge and expertise. We spend most of our time and effort earning money, and hardly any managing and growing it. The key to growing wealth lies in knowledge. Lack of knowledge means lack of understanding. And lack of understanding makes us oblivious to the myriad opportunities around us.
Many of us are fearful of the complexity managing money brings. Managing money is not to be feared, but to be understood. It is only when we know more that we will fear less. And if we do not have the time or resources to understand how to manage money, do not feel shy to engage the services of an expert. Besides losing money, the biggest detriment to financial freedom is to let our wealth stagnate.
And last but not the least is the challenge of managing our emotions. A task easier said than done. From Dalal Street to Wall Street, greed and fear are the two most powerful words which can make you lose a fortune. But as someone said: “Be greedy when others are fearful; be fearful when others are greedy.” Be rational in your approach—research before you invest, not after. And once you have done so; have the conviction to stick to your game plan.
We live today in exciting times. The Next Trillion Dollars of India’s GDP growth presents us a once-in-a-lifetime opportunity for creating and growing wealth. Sixty-three years ago, the founders of our nation helped us achieve freedom. Today, it’s time for us to achieve a different kind of freedom— Financial Freedom.
Moral:Invest Rs 11K a month, get Rs 1 crore in 20 years (((The author is CMD, Motilal Oswal Securities)))
Single entrance test for MBBS from 2011
Come 2011 and there will be only one common entrance test each for over 30,000 MBBS seats and over 11,000 MD seats in all government and medical colleges in the country.
This important decision, taken by the Medical Council of India and accepted by the Union ministry of health, was conveyed to the Supreme Court on Friday bringing huge relief to lakhs of aspiring doctors.
Earlier, students wanting to take up courses in medicine had to appear in at least five to six entrance tests for various colleges and worry about attendant problems like clash of exam dates as well as travel to distant places for counselling for allotment of seats.
But from 2011, there will be just one entrance test each for MBBS and MD courses offered by all 271 medical colleges, 138 government-run and 133 under private management. These colleges together offer over 31,000 seats for MBBS courses and another 11,000 for PG.
The confusion caused by multiple entrance tests and counselling saw hundreds of students rush to the Supreme Court every year complaining about the system where they were left high and dry even for making a single mistake in their choices.
One such petition filed by Simran Jain through advocate A D N Rao had sought a direction from the apex court to MCI and the Centre for a single window system for admissions.
During hearing of the petition before a Bench comprising Justices R V Raveendran and H L Gokhale, the decision for one common entrance test was conveyed by MCI counsel and senior advocate Amarendra Saran. Additional solicitor generalP P Malhotra said the government had accepted MCI's suggestion to amend the regulation concerning admissions to medical colleges.
The state of affairs of private medical colleges and their admission process had come for some serious scrutiny in the apex court, which said last year, "Every year, this is happening. We know how these tricks are played on students every year."
Interestingly, the malaise seems to have spread to government medical colleges too as the apex court had last year asked Director General of Health Services Dr Mangla Kohli to look into allegations of malpractices in admissions into some such colleges in various states.
Moscow deaths double in Russia's 'worst ever' heat
MOSCOW (AFP) - – The daily mortality rate in Moscow has doubled and morgues are overflowing amid an acrid smog caused by the worst heatwave in Russia's thousand-year history, officials said Monday.
The smog from the peat and forest fires burning in the countryside around 100 kilometres (60 miles) outside the city has choked Moscow for days, seeping into apartments, offices and even the metro, and causing thousands to flee.
"In usual times 360-380 people are dying each day. Now it is around 700," the head of Moscow's health department, Andrei Seltsovsky, said in televised remarks, acknowledging that city morgues were filled almost to capacity.
The number of people who called for medical aid due to fire-induced problems grew over the weekend by 60 percent, officials quoted by RIA Novosti said.
Emergency services meanwhile reported about 557 wildfires were burning over 174,000 hectares (430,000 acres) in central Russia and the Moscow region, with flames also raging close to a nuclear reprocessing site in the Urals.
Facts: Russia nuclear sites under threat from the flames
And Prime Minister Vladimir Putin announced that record drought would slash the grain harvest in the leading wheat producer by about 10 million tonnes.
Television reports said the smoke reached Russia's second city of Saint Petersburg and the Urals' main city of Yekaterinburg was also veiled in smog.
Russia's top meteorological official, Alexander Frolov, said the heatwave was the most severe in the country's millennium-long history.
"No similar heatwave has been observed neither by ourselves nor by our ancestors," he told a televised news conference. "This is a completely unique phenomenon."
More than 104,000 people -- a record number for the current year -- flew out of Moscow on Sunday, a spokesman for Russian state aviation agency Rosaviatsia, Sergei Izvolsky, told AFP.
The figure for the same day a year ago stood at around 70,000 people, he said.
Officials at Moscow airports assured that reduced visibility would not impact flights, saying that "enough was visible near the airports to ensure we could receive and send off airplanes," ITAR-TASS reported.
Many of those who stayed pulled white and blue gauze masks over their faces to protect themselves from the haze, while national media accused authorities of covering up the true scale of the environmental disaster and related deaths.
State air pollution monitoring service Mosekomonitoring said Monday's carbon monoxide levels in the Moscow air were 2.2 times higher than acceptable levels. They had been 3.1 times worse on Sunday and 6.6 times worse on Saturday.
With the German embassy already closed indefinitely, the US State Department said it was studying a request to fly out of Moscow children and other family members of its embassy staff.
Many Muscovites laid the blame for the catastrophe on the government, saying it was not doing enough to shield them from the smog, and bloggers shared survival tips ranging from producing oxygen at home to sleeping on the balcony.
Leaving Moscow is best smog solution: experts
Russian authorities declared a state of emergency in the Urals town of Ozersk, site of a major nuclear reprocessing plant Mayak, due to wildfires.
They have also been working to put out fires close to Snezhinsk, another town in the Urals and home to of one of Russia's centres for its nuclear research programme. Officials said this fire had been contained.
Meanwhile, leader of opposition Yabloko party Sergei Mitrokhin called for evacuating prisons in the Mordovia region, where 15,000 prisoners may be threatened by fire and have no means of ground transport since the local railroad was dismantled in 2006, Yabloko said in a statement.
Putin last week shocked international markets by announcing that from August 15 Russia would ban exports to keep prices down at home and ensure there was enough feed grain for its cattle herd.
He also said Russia's grain harvest for 2010 would be 60-65 million tonnes, Russian news agencies reported. Only last week it had been forecast at 70-75 million tonnes.
Russia has seen 10 million hectares of land destroyed in the drought and the new figure represents a massive fall compared with its 2009 harvest of 97 million tonnes.
New superbugs spreading from South Asia: study Wednesday, August 11
PARIS (AFP) - – Plastic surgery patients have carried a new class of superbugs resistant to almost all antibiotics from South Asia to Britain and they could spread worldwide, researchers reported Wednesday.
Many hospital infections that were already difficult to treat have become even more impervious to drugs thanks to a recently discovered gene that can jump across different species of bacteria.
This so-called NDM-1 gene was first identified last year by Cardiff University's Timothy Walsh in two types of bacteria -- Klebsiella pneumoniae and Escherichia coli -- in a Swedish patient admitted to hospital in India.
Worryingly, the new NDM-1 bacteria are resistant even to carbapenems, a group of antibiotics often reserved as a last resort for emergency treatment for multi-drug resistant bugs.
In the new study, led Walsh and Madras University's Karthikeyan Kumarasamy, researchers set out to determine how common the NDM-1 producing bacteria were in South Asia and Britain, where several cases had turned up.
Checking hospital patients with suspect symptoms, they found 44 cases -- 1.5 percent of those screened -- in Chennai, and 26 (eight percent) in Haryana, both in India.
They likewise found the superbug in Bangladesh and Pakistan, as well 37 cases in Britain, where several patients had recently travelled to India or Pakistan for cosmetic surgery.
"India also provides cosmetic surgery for other Europeans and Americans, and it is likely that NDM-1 will spread worldwide," said the study, published in the British medical journal The Lancet.
NDM-1 was mostly found in E. coli, a common source of community-acquired urinary tract infections, and K. pneumoniae, and was impervious to all antibiotics except two, tigecycline and colistin.
In some cases, even these drugs did not beat back the infection.
Crucially, the NDM-1 gene was found on DNA structures, called plasmids, that can be easily copied and transferred between bacteria, giving the bug "an alarming potential to spread and diversify," the authors said.
"Unprecedented air travel and migration allow bacterial plasmids and clones to be transported rapidly between countries and continents," mostly undetected, they said.
The emergence of these new drug-resistant strains could become a serious global public health problem as the major threat shifts toward a broad class of bacteria -- including those armed with the NDM-1 gene -- known as "Gram-negative", the researchers warn.
"There are few new anti-Gram-negative antibiotics in development, and none that are effective against NDM-1," the study said.
NDM-1 stands for New Delhi metallo-beta-lactamase-1.
Johann Pitout from the University of Calgary in Canada said patients who have medical procedures in Inda should be screened for multi-resistant bacteria before they receive care in their home country.
Supermodel Campbell defends war crimes testimony
British supermodel Naomi Campbell answers questions at the war crimes trial of former Liberian leader Charles Taylor. Campbell denies giving false testimony at the war crimes trial of Liberian ex-leader Charles Taylor, insisting she had "nothing to gain".
LONDON (AFP) - – Supermodel Naomi Campbell denied giving false testimony at the war crimes trial of Liberian ex-leader Charles Taylor, insisting she had "nothing to gain".
"I've no motive here. Nothing to gain," she said in a statement released in London Tuesday.
The British model defended her testimony after her former agent Carole White and US actress Mia Farrow both told judges this week that Campbell had accepted a gift of diamonds from Taylor and boasted about it the next day.
Farrow said Campbell had named former Liberian president Taylor as the man who sent her a "huge diamond".
This contradicted Campbell's testimony Thursday at the Special Court for Sierra Leone in The Hague, in which the model said she was not certain about the identity of the person who sent her a parcel of gems.
In her statement Tuesday, the 40-year-old model did however concede that she had slipped up when she told judges during her testimony that coming to court was a "big inconvenience".
And she added: "I am a black woman who has and will always support good causes especially relating to Africa."
According to White, the supermodel's agent at the time, Campbell and Taylor had flirted throughout a charity dinner hosted by South Africa's then president Nelson Mandela in Pretoria in September 1997.
At one point, "she told me: 'he is going to give me some diamonds'," White said in her testimony on Monday. "She was very excited."
Defending Taylor, lawyer Courtenay Griffiths on Tuesday branded White's account a "complete pack of lies".
"You've made it up to assist in your lawsuit (for breach of contract) against Ms Campbell. Bluntly, for you this is all about money."
But White, 60, insisted she was not lying: "It is totally the truth. It has nothing whatsoever to do with my business argument with Naomi Campbell."
On Monday, Griffiths also sought to discredit Farrow.
"Mia Farrow sees herself as the modern-day Mother Teresa to Africa," he told a press conference. "She does not have an open mind so far as Charles Taylor is concerned. She is looking for sainthood."
Giving testimony last week, Campbell conceded that two men brought a pouch containing two or three "dirty-looking stones" to her bedroom at the presidential guesthouse in Pretoria.
She said she did not know who the gift came from, but "assumed" it was from Taylor. The model said she donated the diamonds to the Nelson Mandela Children's Fund the following day.
Prosecutors are trying to link the gift to Taylor, whom they accuse of having taken a consignment of uncut diamonds to South Africa "to sell... or exchange them for weapons" for Sierra Leone rebels.
Taylor, 62, is on trial for his alleged role in the 1991-2001 Sierra Leone civil war that claimed some 120,000 lives.
He is accused of receiving illegally mined "blood diamonds" for arming rebels who murdered, raped and maimed Sierra Leone civilians, amputating their limbs and carving initials on their bodies.
In Tuesday's statement, Campbell conceded that telling judges it was a "big inconvenience" that she had been forced to give evidence had been a "poor choice" of words.
"Campbell accepts the use of the word inconvenient was a poor choice of word but it was made off the cuff and was taken massively out of context," said the statement from her media representatives, the Outside Organization.
"It was in relation to a nonsensical question as to whether or not she was nervous appearing in court.
"Campbell had explained
The statement added: "The suggestion that Campbell in some way doesn’t care about the plight of those suffering in Africa is ridiculous and hurtful."
Toyota suspends auto exports to Iran
Toyota Motor Corp. has suspended auto exports to Iran indefinitely in line with global sanctions against Tehran's nuclear programme, the company said Wednesday.
Slideshow: All About Asia TOKYO (AFP) - – Toyota Motor Corp. has suspended auto exports to Iran indefinitely in line with global sanctions against Tehran's nuclear programme, the company said Wednesday.
The world's largest carmaker has halted auto shipments to Iran since early June, "considering the international environment", Toyota said.
"Our company will continue to closely monitor the international situation," it said without elaborating.
Toyota's auto shipments to Iran sharply declined to some 250 Land Cruiser four-wheel-drive and other vehicles in 2009 from 4,000 units in 2008. Toyota has exported 220 cars so far this year.
The Nikkei business daily reported that Toyota's exports to Iran may not violate US sanctions, but the company had decided to stop shipments because "firms continuing to deal with Iran have come under scrutiny from the US government."
North America is a key market for Toyota, with sales in the United States exceeding those in Japan. Toyota's North American sales jumped nearly 40 percent on year in the April-June quarter.
The UN Security council adopted fresh sanctions in June against Iran's nuclear programme, while the US and the European Union have strengthened their own sanctions.
In the United States, any business breaching the sanctions faces restricted access to the American market. Washington fears Iran is developing a nuclear arsenal under cover of its energy program, something Tehran denies.
