I came across this report recently from my Kiva network and thought would pass it on to you all if you haven't read it.

A committee headed by an expert economist released the latest statistics on poverty in India. As per the report, 37% of the population of India is under the poverty line. 


Story by: TimesofIndia.com
Date: Dec 15, 2009

NEW DELHI: The Suresh Tendulkar committee report revising upwards poverty estimates across the country may further strain government finances with many of the states already demanding special status to address the issue and an enhanced allocation under many of the pro-poor schemes.

The committee, in its report submitted to the Planning Commission last week, had estimated that 37% of India’s population is under the poverty line, while the proportion of the poor is almost 42% in rural areas — sharp increases from official poverty estimates of 27.5% for all of India and 28.3% for rural areas.

The committee has changed the method of estimating poverty to a broad-based consumption basket that includes education and health.

More than half of the rural population of states like Orissa, Bihar, Madhya Pradesh, Chhattisgarh and Jharkhand are still living under abject poverty, not able to meet their basic necessities of food, health and education, according to the revised estimates of the expert group headed by former chairman of Prime Minister’s Economic Advisory Council Suresh Tendulkar. The new figures are not strictly comparable with the earlier estimates, because the Tendulkar panel has significantly changed the method of estimating poverty — from one notionally based on calorific intake to a more broad-based consumption basket that includes education and health.

Nevertheless, the revelation that poverty is higher than it was earlier thought to be may force the government to increase funding for social and rural development schemes such as the National Rural Employment Guarantee Act, Indira Awas Yojana and the Pradhan Mantri Gram Sadak Yojana, say economists.

Tendulkar himself told TOI that though this was not the mandate of the committee, as an economist he thinks government should put a lot of money into education and health, particularly considering the demographic profile of the country with a predominantly young population.

I planned to write a post talking about recent economic developments in India. When I came across this interesting article, I decided to post since it's very descriptive shedding light, touching different aspects of India's growth. The article author talks about, what is current happening in India after recession, how we were able to get back so quickly and what force drives Indian economy. Check it out and share your feedback.


India finds itself awash in foreign investment
14 Oct 2009, 1713 hrs IST, New York Times

Six months ago, it looked as if India was in for a bumpy recession. Factories were laying off workers and construction sites were grinding to a halt as foreign investment slowed to a trickle.

But in the last few months India has hit a gusher, as investors around the world have turned away from the dollar, the global refuge during the crisis, and rediscovered their optimism in the world economy and India’s place in it.

There is palpable optimism here. Major stock indexes have roughly doubled from their March lows. Companies are advertising initial public offerings on television. And articles about bonuses and corporate expansion plans have started replacing news about layoffs and deferred projects on the front pages of newspapers.

Nearly $7 billion more foreign direct investment flowed into India than left the country in the second quarter, from April through June, nearly twice as much as in the previous six months combined.

Including cash invested in the stock and bond markets, India received about $15 billion in foreign investment, the most it has received in any quarter except the last three months of 2007, according to Macquarie Securities.

If the current surge continues – and skeptics doubt that it can – the Indian economy could start growing at 8 to 9 percent a year as early as 2010, far sooner than forecasts by the International Monetary Fund and many independent analysts.

"Clearly after the big shock of last year, things are back on track," said Surjit S. Bhalla, who runs Oxus Research and Investments, based in New Delhi. "People are seeing the recovery to be lot more robust than what many of the naysayers are saying."

While many say the good times are here to stay, some analysts worry that the renewed ebullience will be fleeting if global financial markets take another turn down.

Confidence in India’s potential could also falter if the government does not address some long-standing problems, namely, improved infrastructure, investment in education and economic reforms, as it has promised to do to lift hundreds of millions out of poverty.

Another big concern is that the foreign money might re-inflate bubbles in stock and real estate markets. Indian stocks are less than 20 percent shy of their 2008 peak, even though corporate profits and the economy as a whole are growing more slowly now.

"Because we are a fairly large attractor of capital, the possibilities of bubbles building up in sectors like real estate are very real," said Abheek Barua, chief economist at HDFC Bank, who is nonetheless upbeat about the economy. "It has clearly happened in China and there is some of that sort of problem here, as well."

For a country that quarantined its economy from the rest of the world for much of the last 60 years, India has increasingly relied on foreign investment in recent years. It has helped bridge the gap between domestic savings and the growing capital needs of the private sector and the government, which is borrowing money to pay for welfare programs and subsidies.

In India’s fiscal year, which ended in March, growth slowed to 6.7 percent, from 9 percent a year earlier, in part because of lower foreign cash flows. Most analysts estimate the economy will grow more than 6 percent this year, but some like Bhalla say growth will be as high as 8 percent.

Rising foreign investment should help offset some of the economic impact of erratic monsoon rains. The agricultural sector makes up about 17 percent of India’s economy but sustains more than half its population.

India’s economy lacks some of the handicaps present in other countries. For instance, domestic demand never collapsed to the extent it did in the United States, and yet consumer spending is picking up now. Car sales were up 13 percent in the five months that ended in August, compared with the same period last year. Builders say sales of affordable apartments – priced from $10,000 to $30,000 – are up, too. Even retailers, who were forced to close hundreds of stores last year after overexpanding, are talking about opening new outlets.

Some Western companies are eager to get a piece of this market. Last month, Ford Motor said it would build and sell a new hatchback here. McDonald’s announced that it would open 120 more restaurants. And Baltimore-based T. Rowe Price, according to local news reports, is in talks to buy a stake in an Indian mutual fund firm. T. Rowe Price declined to comment.

At the same time, thanks to strong overseas demand for Indian stocks and bonds, companies here are raising billions of dollars. In a recent initial public offering for Oil India, a government-owned company, demand outstripped available shares by 31 times.

"There is a large amount of liquidity in the world," said A. Murugappan, executive director at Icici Securities. The money is flowing here, because "people see that India and China are the two growth areas."

Still, the rising flow of foreign funds poses challenges.

India’s currency has appreciated 11 percent since early March, to 46.13 rupees to the dollar, because of rising demand for rupees and the broad decline in the dollar. That will make Indian garment and jewelry exports less competitive on the world market at a time when those industries are still recovering.

"That is a cause of worry," Vasant Mehta, chairman of India’s Gem and Jewelry Export Promotion Council, said about the appreciating rupee. "Profit margins are being squeezed, and in such a period we cannot expect to raise prices."

The governor of the Reserve Bank of India recently said that to control inflation, his central bank might have to raise interest rates before developed countries, where rates are at historic lows. But he said that doing so could encourage overseas investors to move even more money into India, driving the rupee even higher.

Last week, we saw how Indian companies are trying to set foot on foreign land? either by buying beaten up companies or brand names. At the same time, many Indian IT companies  are taking back work to offshore(India) to reduce cost/expense at this tough economic times. I read an interesting article posted at financial express on this topic and want to share with you all. 

IT cos increase offshoring focus to beat slump
Rachana Khanzode
Posted online: Sep 02, 2009

After focusing on cutting costs on selling, general and administrative expenses (SG&A), the IT industry seems to be increasing the offshore focus to gain higher margins and better bottom-lines. Large IT firms like Tata Consultancy Services (TCS), Infosys Technologies and Wipro are increasingly focusing on bringing more work to offshore with clients demanding low cost work. Though the model is expected to help them in the short-term, it is not a sustainable model in the long-term, say industry analysts.

Before the downturn, the IT industry was maintaining a ratio of 70% offshore and 30% onsite component. But off late, the offshore component has been increasing, as companies tend to find more demand for the offshore work. This is largely because clients have cut down on IT spends and a low cost offshoring model helps them maintain IT budgets. Under the offshoring model, business processes of a company are outsourced to the Indian IT companies and are done from cost effective centres like India. Certain important aspects like consulting and application development are done onsite, and these are usually high value end work.

Wipro says it wants to target matured projects of application management and BPO, in a bid to increase the offshore component in these areas to about 85%. Wipro executive director and CFO Suresh Senapaty said, “About 50-60% of our existing onsite work is capable of being done offshore and with this the offshore component can be increased up to 85%.” However, Senapaty refused to give any timeline, adding, “It is a constant process to attain this ratio and generally we would target the matured projects. It is a sustainable model because that is what clients are asking for.” Application development, package implementation and consulting could be more of onsite says Senapaty.

The Rs 6,274 crore Wipro’s offshore component at the end of first quarter ending June 30, 2009 was at about 73% from about 69% in the same quarter last year. Offshore component of Infosys Technologies touched to 77.3% in the first quarter from 75.7% the same quarter last year and of HCL Technologies went down to 71.7% in the fourth quarter ending June 30, 2009 from 74.7% in the same quarter last year. Recently, Infosys Technologies CFO V Balakrishnan told FE, “The offshore component will increase due to the demand but we do not intend to reduce the onsite component to 15%. Ideally, the onsite component should be around 25% in the current times.”

At the same time, there has been an increase in the revenues flowing in from the offshore with Wipro’s revenues increasing to 50.4% this quarter, a 4% shift, from 46.1% same quarter last year. TCS grew its offshore revenues shift drastically by 10% to 50.4% this quarter, from 40.9% in the same quarter last year. However, Infosys didn’t see a huge transition from 52.1% offshore revenues in first quarter last year to 53.6% in the same quarter this year.

However, analysts point out that the large firm will tend to miss out on the high-end value projects if they there is an imbalance in the offshore-onsite mix. Therefore the firms are likely to go back to their original levels of offshore component about 70%, once the stability in the global economy comes back.

A recent report “Five themes in the stabilising macro-environment” by Viju George, senior analyst and vice-president at Edelweiss Securities, points out that Wipro has realised more than 50% of its revenues from offshore, highest since Q1FY 2001 and that the continued and inexorable offshore movement shown by TCS and Wipro is unlikely to sustain beyond two-three quarters.

The report added, “If anything, disproportionate focus on this could impair making inroads into new business opportunities and higher-value, closer-to-the customer solutions such as consulting and system integration. What’s more in the long-term, entry into verticals such as government, healthcare (especially in front-end hospital management) will require higher level of onshore intensity. It would not be a durable value-creation model for offshore-intensive service lines such as BPO, infrastructure management and testing, to predominate the revenue pie. There must be a balance, aided by growth of onsite-oriented, domain-intensive, closer-to-the customer offerings.”

Industry watchers say, that the IT industry will start rebounding by the second quarter of the next financial year and the offshore component is likely to go down by then.

Two days ago, US Treasury Secretary  Timothy Geithner said the global economy is "back from the abyss" thanks to efforts by the U.S. and other nations to fight the economic crisis. Geithner insisted his G20 counterparts to continue the efforts until there are clearer signs of recovery.

Economy recovery

In another report issued by Government of India, Indian economy has grown from 5.3 last December to 6.1 in June 2009. The Deputy Chairman of the Planning Commission, Montek Singh, commenting the latest figures said: “The worst may be over and we expect to see improved performance in subsequent quarters”.

The government’s stimulus measures for the economy have helped to create demand. The share of consumer spending in the economy shrunk to 55.6% in April-June from 58% a year ago, while the government’s share rose to 9.9% from 9.6% on the back of stimulus spending. Whilst in 2008 the growth index was at 7.8 it fell at 5.3 in the worst month of the crisis and now is slowly moving up to 6.1. With the recovery shown in the last two quarters from 5.3 to 6.1, India remains the second-fasted growing major economy after China, which has an almost 8% growth rate.

The doubt on the stability of this growth rate is cast by the poor ongoing monsoon, which could severely affect agriculture and mostly the energetic field. The worst-hit sector were trade, hotels, transport and communication. Together these sectors posted 8.1% growth in the first quarter of this fiscal compared to 13% a year ago.

Giving his opinion on the matter the prime minister, Manmohan Singh, while addressing the plan panel on Tuesday said: “We have been through a difficult year because of the global economic downturn, which is only now coming to an end with a slow return to normalcy in the months that lie ahead. The country has also seen a poor monsoon”. He cautioned that despite a slight rise in growth, the road to recovery was a long haul.

The recovery has been possible, in part, because the Indian economy is much less dependent on exports, and is largely sustained by domestic demand. Stimulus packages by the Central Bank amounting to more $100 billion also helped businesses to rebound.

Above news from Mr.Geithner, Government and PM of India increases great deal of confidence among investors around the world, especially foreign direct investors(FDI's) who take good amount of risk investing in developing nation like India.  Many of you who closely track the stock market (US or India) can easily visualize the change from Sept 2008 to Mar 2009 to now Sep 2009.

With this backdrop, let us see how the rupee is doing against dollar and how it set out to do in future.

Rupee moving sideways

Rupee dropped so badly to reach the lowest against dollar on Mar 3rd, 2009 when the stock markets crashed all over the world. The economy was in recessions and the tone was set long back for this to happen. It was good times for NRI's who cashed in dollars for great rupee return. But it was short lived until May. After the Indian election in May when congress took the majority and won by big margin, Indian stock market rallied cheering the people decision. 

Rupee also rallied on and recorded the highest gain of 152 paise in more than decade. It moved higher to 47.47 against the US dollar, on anticipation of heavy foreign capital inflows as stock market may continue their rally. It is also because the dollar fell in the market as the crude oil price went up.

After 6 month of downtrend and 2 month of downtrend, rupee against dollar starts to move sideways trending between 47 - 49 INR and currently in 48 INR range. It strengthened after 3 days of free fall (during Aug end and Sept start)  against the US currency. Weak dollar against some other currencies and hopes of fresh capital inflows by foreign funds into equity markets, which may open higher also supported the Indian rupee.

Here is the rupee average for past 9 months. You can clearly see it is wavering and moving sideways from May till today with an average of 48 INR.

May   48.5497 INR (21 days average)
June  47.7459 INR (22 days average)
July   48.4358 INR (23 days average)
August   48.3314 INR (21 days average)


According to an article published in financial express on May 25, Rupee is likely to appreciate to 46 a dollar in the backdrop of a stable government at the centre and relatively resilient domestic demand, says a report by global financial services giant Goldman Sachs.

"We expect the INR to appreciate further from current levels as the stable government and relatively resilient domestic demand become key catalysts for foreign inflows," the report said, adding that the Indian currency "may touch Rs 46 to a dollar within 12 months".

Noting that there are significant pressures for rupee appreciation, the report said that the Indian currency gained about 5 per cent against dollar since the victory for the Congress-led UPA in the general elections. With the rupee strengthening, it said the sectors dependent on imports will gain, the exports will be hit.

Goldmann Sachs analyst very knowledgeable and might have done proper anlaysis to release a report predicting rupee appreciation. With the economy all over the world in reviving mode, commodity prices are going up and US dollar is losing strength in expectation to inflation, there is good chance for Rupee to reach 46 mark or atleast stabilize at 47 mark at the end of the year.

Currently the rate 48 INR is a good one and 46 INR is also reasonable price for both NRI's and indian exporters comparing a year ago when it was at just 38 INR. Just cherish the days and make full use of it.

Internet has revolutionized the world. It has changed how we operate and how we lead our lives. Nowadays, many of us do their shopping from small to big items over internet. We pay utility bill, banking, even order food over the web. Internet has made our life easy saving lot of time and money. 

Governments of many countries are try to catch on to the Internet fever following foot steps of corporates by computerizing their functions. US President Obama stresses a lot about transparency of his government activities by posting every information on government websites in a way to update the people. In the recent Iran elelction, Internet twitter and Facebook played a key. eGovernance has really taking big driving force in many local and global governments.

India being named one among top leaders in technology front is still lagging in the eGovernance area. Central government is encouraging states to take initiatives to make the government documents and functions available over the internet. This article is in dedication of the topic about India driving towards eGovernance.

Chip off the new block
Courtesy of financialtimes.com
by Sushila Ravindranath
Posted online: Aug 17, 2009 at 0336 hrs

There is a quiet revolution taking place in many of India’s states. Computerisation is slowly creeping in. Its pace can be much faster, but it is happening nevertheless. Which is why it was quite incredible when the Samajwadi party announced its election manifesto in April this year: it spoke of reducing the use of computers to generate more jobs! Party chief Mulayam Singh Yadav also vowed to abolish ‘expensive education in English’. Sure enough, he backtracked very soon and claimed that he was not against computers or English. Remember even Laloo Prasad Yadav used to be sceptical about the benefits of information technology. He might have changed his mind later.

According to a new survey by TCS, 71% of students in Indian metropolitan areas say they use personal computers. And 66% of students in Bangalore say they are active on blogging and social networking sites, compared with 39% nationally. The survey of nearly 14,000 kids studying in English-medium schools in 12 major cities in

India shows schoolchildren have embraced technology and the Internet, with Google and Wikipedia overtaking the library as the most trusted source of information. Some 63% of children surveyed said they spent more than an hour each day on the Internet; 41% of schoolchildren surveyed chose Google as a source of information, while 46% said they use online sources to access news. The politicians who belong to the 20th century will realise sooner than later that young people in semi-urban places and villages are no different from their city-bred counterparts.

In fact the countryside is embracing computerisation with great fervour. Says PWC Davidar, secretary, Information Technology in Tamil Nadu: “We are working on applications which will benefit the common man… We need a proper base for e-governance applications. We have a fully functioning state data centre of our own. With the central government releasing more funds for e-governance, we can function effectively for many more years. We have two mainframes in place. The Tamil Nadu statewide area network (TNSWAN) is one among the core e-government infrastructures to create government to government and government to citizen initiatives.”

With the arrival of worldwide web (which is only 20 years old), many governments started deploying IT in the nineties. This powerful tool suddenly made governments think about good governance. IT-enabled governance would make efficiency, transparency, accountability and citizen-orientation possible. Take the case of Tamil Nadu’s TNSWAN network which has two-tier architecture. Tier 1 is from state to district level and Tier2 is from district headquarters to the revenue division. TNSWAN interconnects the state headquarters with district headquarters and each district headquarter with block headquarters using the 2Mbps free bandwidth availed from public private communication providers. The total number of points of presence of the network is 708. Very soon the state government is planning to launch tools of e-governance in several areas through TNSWAN. This will enable people to access information on land records (an area in which Tamil Nadu has lagged behind), transport facilities, encumbrance certificates, municipal services and food and civil supplies from any part of the state.

The state is launching its programme in five handpicked e-districts. “Once we figure out what all services can be rolled out, we will go to all the 30 districts,” says Davidar. The IT department has identified 124 services that will have maximum impact on the people, and has picked 62 out of them. “There are two stages, AS IS and TO BE. The AS IS stage has been completed. We are developing applications for revenue, OBC, SC and social welfare departments. We have big plans for agriculture. We want to give information on fertiliser application, new equipment, sudden pest attacks, weather forecasts and so on. We have e-teams in each place. The ownership is with each department,” says Davidar. A team of committed bureaucrats (yes, they do exist) from various departments are working on several initiatives and the IT minister Dr Poongothai is fully supportive and wants to speed things up. “In four months hopefully you will see the results of our work,” says Davidar.

The state has been working closely with the big names in the business like TCS, Wipro and HCL. Says a computer industry professional, “Actually the computerisation programmes in most states are bureaucrat driven. Politicians who understand the benefits don’t stand in their way now. Chandrababu Naidu was the exception those days.” Andhra has taken many steps forward in e-governance thanks to the former CM. Karnataka is also way ahead of many other states. The Infosys foundation helped the state undertake many e-governance initiatives. Surprisingly, UP is also going ahead with many programmes.

Sadly, they all get over-shadowed by the political atmosphere in the state and squabbles over statues.

How many people are aware that Chhattisgarh bagged three out of the four e-governance awards declared by the Computer Society of India and Nihilant India for 2007-08. Chhattisgarh pipped states like Maharashtra, Karnataka, Kerala and Goa to be declared the best e-governed state. The state’s food department was declared the ‘best e-governed department’ while its e-procurement project had topped in the ‘best e-governed project’ category. Gujarat was the recipient of best e-governed state award for the previous two years.

Tamil Nadu, which takes pride in being one of the most tech savvy states in the country, has some more catching up to do. “We are moving forward step by step. Giving information on the web is easy. But to devise applications to benefit the common man is our challenge. We’ll get there soon,” says Davidar

Growing cost of education all over the world has evoked interest among many to look out for cost efficient, affordable with internationally credited education. Whether its US, UK or any other country, many Indian universities are stretching their wings to create existence in these foreign lands. It just start out as a support mechanism for Indian students taking correspondence courses, now they are opening up full fledge institutions equipped in all sorts of facilities and accredited faculties to attract both foreign students and Indian origin.

When I was looking to do my MBA in USA, the expenses are tagged to be around $30 grand compared to just $7-$10K thru Indian branched universities in USA. It was interesting to come across an article researching about growing trend on Indian universities going overseas.  It brings lot of light about many reputed Indian universities going abroad. Read on...

Source: financialexpress.com
Indian universities overseas: a growing trend
Malvika Chandan, Prachi Raturi Misra
Posted online: Aug 17, 2009 at 2332 hrs

The five million Indian population in the Gulf, of which over one million is in the UAE, was the reason Birla Institute of Technology and Science (BITS) in the year 2000 opened its engineering campus in Dubai. “Lots of Indians working in Dubai wanted to send their children to an Indian institute,” says LK Maheshwari, vice-chancellor&director, BITS Pilani. “KK Birla was the chancellor of BITS Pilani when the decision on the Dubai campus was taken and he took this decision to ‘help a friendly country’ and not from the commercial aspect,” adds Maheshwari. The arrangement was such that Eskom was the local partner that bore the ‘financial burden entailed in setting up and running the institute in Dubai’ while ‘academic aspects such as faculty recruitment, curriculum and degree award were in control of BITS’. What started with an enrolment of 60 students in 2000 has had 600 students enrolled in 2009 with over 45% from India. BITS was obviously pleased with the response to the Dubai campus that made them consider a proposal in 2003 from the government of Mauritius to set up a campus there, but because of a change in government the plans got stalled.

“When one looks at overseas educational alliances, there are clearly two categories. One category of institutes pursues ‘internationalisation’ with a bigger dimension to uplift all countries involved, to create goodwill through the educational process and in this case money is incidental. If you take the example of BITS Pilani itself, when we opened in 1964 we were helped by the MIT in the US not for money, but to make successful an initiative of a private group in the field of higher technical education. On the other hand, there are the ‘trade-in education services’ such as cross-border supply, setting up institutes, which are the fly-by-night initiatives, not long-term and primarily driven by commercial motivations,” adds Maheshwari.

Others such as SP Jain Centre of Management and Manipal University also have campuses in Dubai focusing on management studies. While time will tell what the motivators of the overseas initiatives of higher educational institutes are, these universities seem to be acting with speed to find their place in the sun. Ask Atul Chauhan, president, Amity education group, which has recently opened its campus in London and Singapore. The two campuses, he says, have been opened after a great deal of research. “So far we’ve got a phenomenal response. The London school, for example, has already got 1,500 applications from students all over the world while the Singapore campus has got about 1,000.”

Singapore’s institutes’ do have a feather in their cap which would serve as a good example for Indian institutes wherein the former’s policies regarding admission, course content, faculty selection and ranking are all transparently declared on the Web site. In India, all claim to be a “top ranking institute” with no official verification provided.

While BITS Pilani was granted a “deemed to be university” status by an act of Parliament back in 1964, private, self-financing institutes such as Institute of Management Technology, Ghaziabad, opened campus in Dubai in 2006. It is already thinking of a new campus in Singapore. IMT chose Dubai because it’s a global business hub and MBAs are much in demand. Another reason is its access to India which would let Dubai campus leverage faculty resources of its India campus. “If you have international tie ups and campuses, you attract more students in India since Indian institutes abroad give students a chance to have a global exposure at a reasonable rate,” acknowledges AM Sherry, chairman, admission&student affairs IMT, Ghaziabad.

However, a counter point to consider is that in India, where students hold Western higher education in high esteem, would prospective students choose an Indian academic institute in England where there is an Oxford or a Cambridge to choose from? Chauhan of Amity education group describes his differing target students and objectives, “There are some unparalleled leaders and we are not competing with them. But everybody doesn’t get into them. We offer an MBA at competitive rates and provide best facilities. Our positioning is not of an Indian academic institute transported abroad. It has been set up like any British B-school with global accreditation, director and faculty members. The same is the case for Singapore. We expect only 20% of students to be Indian.”

Savita Mahajan, chief executive, Indian School of Business, Mohali campus, offers a different perspective. She says, “Indian schools opening abroad are targeting Indian students who can’t get admission in other foreign schools. If it’s about giving a global perspective, we are doing it here in India.”

The Indian government is in favour of formulating guidelines to allow universities and government-run institutions to set up branches abroad to fund higher education for the poor back home and expand the educational infrastructure here. So far, private educational institutions have explored education opportunities abroad. Pune University became the first government-run institution to open its campus in UAE in 2009. While the process was tedious and long-drawn, Pune University was finally able to get approval.

However, bureaucratic hurdles have not dampened the intent of Indian institutes to open branches overseas. Corporate India has put the Indian flag abroad, it’s time Indian education did the same,” quips Chauhan

India is exploding with options to entertain people in many different ways. There are multiplexes and malls opening up in many metro's taking the old theatrical experience to new heights with digital movie exposures. In the home entertainment aspect, there are few known providers like TataSky, SunDirect,  Dish TV and new ones jumping often in the direct-to-home market competiting against each other to find new customers everyday. The number of subscribers changing to dish are startling and surprising even in this bad times.

I can remember those good old days when Doordhashan was the one and only TV network and always played hindi movies. After that came regional Doordhasan opening space later to cable TV  network and now its the DTH revolution. It is currenlty exploding like ever imagined with every provider offering different packages like free DVR, on demand movies and so forth. I came across this nice article again from FE last week and happy to share with you all. Please share your comments and thoughts at the end.

That’s entertainment, direct to home
Sagorika Dasgupta, Sudipta Datta
Posted online: Aug 04, 2009 at 2334 hrs

Digitisation of television is growing at a scorching pace. And that’s sweet news for direct-to-home, or DTH, players; never mind the entertainment&media industry’s slowing pace—its growth lagged to 10.3% in 2008 from 16.7% a year earlier. But industry players agree that the digitisation drive, expanding by 35-40% annually, could open up new business models and dynamics for the DTH segment, still run by a handful like Dish TV, TataSky, Sun TV Direct, DD Direct, BIG TV and Airtel. Videocon, fresh after a rebranding exercise, too will join the DTH rush soon.

Since the DTH market in India is tiny and vastly untapped, its potential for growth is immense. Consider the numbers industry experts are bandying about: India’s TV viewership is the second largest in the world—we are adding over 14 million new TV sets a year to the 130 million TV households; of these, 97 million are cable&satellite (C&S) homes, growing at 25-30% annually. The DTH market now has 14-15 million subscribers, but by 2012, it could swell to 35-40 million.

“DTH is growing very fast,” says Salil Kapoor, COO, Dish TV, the first DTH player with a subscriber base of 5.5 million, adding, “Though it has taken time to take off, last fiscal we added about 2 million subscribers and we hope to add 2.5 million subscribers this fiscal.”

Eight-month-old Reliance BIG TV is also upbeat about the market, boasting of a subscriber base of 1.8 million. “We are bullish on the prospects of the DTH market in India,” says Umesh Rao, chief marketing officer, BIG TV.

BIG TV is expected to be a significant growth driver for Reliance Communications, though its entry was late by two years after the appearance of DTH in India. “That does not make much of a difference,” argues Rao, “because the penetration of the DTH market is still at a nascent stage.” Players like TataSky, Dish TV and BIG TV will have a big role in converting C&S homes to DTH. Tata Sky’s CMO Vikram Mehra told FE that the company, which joined the fray in 2006, hopes “to reach 8 million households by 2012 from 3.5 million now.”

Similarly, BIG TV targets a subscriber base of 3 million by the end of the current financial year. Even new entrants like Airtel DTH, launched in 2008, are aggressive in the market. Ajay Puri, director&COO, DTH Bharti Airtel, told FE the DTH households are expected reach 45 million by 2013. Industry experts see DTH business capturing at least 40% of the C&S homes by 2015.

According to PwC India entertainment and media outlook 2009, India is among the largest media consuming and content-creating industries but constitutes only around 1% of the global industry. Says Marcel Fenez, global managing partner, entertainment&media practice, PwC: “The onset of increased digitisation will expose the industry to new business models and dynamics. For each industry’s diverse segments to participate fully in this growth, they will first need to embrace the digital future. This is as true in India as in the other important entertainment & media markets globally.”

The challenges are great: 82 million of India’s 97 million cable TV households still run on the analogue technology. The entry of DTH players into the pay-TV market has a given a strong push towards digitisation, but the numbers are still small to make an impact. With more players in the DTH market, the consumer is spoilt for choice with each one trying to outdo the other in providing value-added services. If some are offering latest technology, others are banking on a widespread distribution network or on out-of-the-box packaging or programming.

“We have the best combination of titles for our movies on demand,” says Kapoor of Dish TV. Then, Rao says, “BIG TV has an edge over existing players in offering latest technology and innovative packaging.”

DTH players believe regional TV viewers will be the biggest growth drivers of the market. “India is a group of countries with different languages, different genres of preference every few miles apart… so the potential for differentiation is huge,” adds Kapoor. Two call centres of BIG TV, which launched with 200 channels on its platform, handles over 50,000 calls per day in 11 languages.

An IMRB & TAM-S survey reports that 23% urban consumers opted for DTH because of better quality, 16% for more number of channels and 8% for better schemes. Easy payment options, affordability and user-friendliness also figured among their reasons.

“Aggressive marketing campaigns, ambitious growth targets, competitive pricing, superior digital quality, more channel options, interactive applications, games, DVR (digital video recorders) and other digital add services have made DTH operators like TataSky and Bharti Airtel instantly popular with consumers,” says Alan Dishington, sales director, NDS India, which creates technologies that enable pay-TV operators to securely deliver digital content to TV set-top boxes, DVRs, PCs, mobiles and other multimedia devices.

Experts say cable networks are facing the heat of competition from DTH players. Already, cable players like Hathway and DEN have realised the importance of digitisation for their success and survival. “They are upgrading their networks and adding competitive services to rival DTH operators, while still offering popular local content to viewers,” says Dishington. Speaking about the trends in the DTH industry, Dishington says, “India has a strong appetite for new technology and value-added services like DVR and iTV (interactive-TV) applications. With increased digitisation and digital penetration we will see a greater consumer demand for video on demand, DVR, interactive games and applications, and pay per use services.”

The challenge, insiders point out, has been the way the market is structured “with a skew towards cable TV”. Says Rao: “It requires a huge paradigm shift in the mindset of TV viewers to choose the latest proposition in the market and forgo the service that they have been using in the past. This shift has its own pace but has definitely started.”

But advertisers, with their ears to the ground, are already pushing the digitisation drive. Explains Dishington: “The advertiser’s demand for targeted marketing & advertising will see the growth of advanced advertising solutions that are measurable, addressable and interactive and also open new avenues for revenue generation. As the infrastructure improves, viewers will opt for advanced technologies such as interactive TV, HDTV, mobile services and converged solutions.”

A KMPG-Ficci report, issued in February 2009, says the number of digital pay TV households (including digital cable, DTH and IPTV) in India will grow at a compounded annual rate of 35.4% to reach 71 million by 2013. Obviously, digital players and business partners are clued in.

—With inputs by Monalisa Roy

Thanks again to financialexpress.com

We all very well know Indian aviation industry is going thru transformation. New airliners like spiceJet, IndiGo, KingFisher jumped on board and saw lot of traffic and obviously made money when the economy was booming by offering cheaper air fares. But recently, they all took an "U" turn as many airliners increased their fares to coup with their losses during this bad time.  They also complain increasing airport taxes is another contributing factor for their loss and increase in airfares. I found an interesting article and sharing with you under the new series of "What's happening in India?"

Way out of aviation crisis: lower taxes, cheaper tickets
By - Sanat Kaul
Posted online: Aug 04, 2009 at www.financialexpress.com

The Federation of Indian Airlines threatened to go on strike for one day on August 18; it made headlines and upset many, including the government. The strike is off, and, yes, airlines are at fault, including for an attempt at cartel-like behaviour. But the government is at fault too.

India’s aviation industry, flying around 40 million domestic passengers a year, is still an infant industry when compared to railways which transports about 14 million passengers a day and bus transport which carries 90% of passengers, mainly over short distances. As the economy grows and incomes increase, the propensity to travel by air also grows. Air transport, no doubt, is a more efficient form of long distance transport. For efficient economic growth, aviation infrastructure including air connectivity at reasonable costs becomes as much a necessity as railways or road transportation. This realisation came in the early nineties when liberalisation of domestic airlines was carried out, followed by liberalisation of bilateral air service agreements, to allow more domestic and foreign airlines into the country. But air travel is still considered a luxury.

Central and state governments have found an easy way to enrich their coffers by putting very high taxes on petroleum products via both sales tax and aviation related charges. About two decades back, air travel was done mainly by government officers or corporate executives who were not price sensitive as their office paid for the bills. With economic growth, ordinary businessmen and people from all walks of life needed to travel by air also but were price sensitive. The sale price of aviation turbine fuel (ATF), sales tax on ATF, navigation and airport charges kept air travel expensive. With the coming of low cost carriers (LCC), full service carriers started to lose dominance. From about 30% of the market in 2007, they have reached 55% of air passenger traffic in Q1 of 2009, showing how price sensitive this sector has become.

The global financial meltdown impacted the sector globally and Mumbai 26/11 impacted India’s inbound tourism in a big way.

Airlines the world over suffered, including domestic ones. They can recover only with increasing air traffic and cost cuttings by use of better technologies like e-ticketing and improved procedures. Airline seats are perishable like electricity. Unfortunately, some domestic airlines felt that by cartelisation and increasing prices, they would be able to increase their bottomline. This didn’t work We need to relook at the government’s fiscal policy on the aviation sector. Boxes on the right list sales tax on ATF across different states, varying from 4% in Andhra Pradesh to 30% in Maharashtra. They also list comparative airport charges between Singapore and Delhi. Further, they provide a comparison of ATF charges at Singapore and Mumbai stations.

With the kind of price sensitivity we have experienced in the case of LCC vs full service carriers, it appears that if taxes and charges are reduced and this is reflected in reduced ticket prices, the loss to government revenue will perhaps be more than compensated by increased traffic. Andhra Pradesh has already taken a step forward towards reducing sales tax on ATF to 4%. If other states also join in, especially the states with metro cities, this will have a major impact on passenger traffic. Further, if we compare the tax on a railway ticket or bus ticket with the tax on an air ticket, then the comparison becomes completely skewed.

—The writer is chairman, International Foundation for Aviation and Development(India chapter) and India’s former representative to ICAO

Source: http://www.financialexpress.com/news/Way-out-of-aviation-crisis-lower-taxes-cheaper-tickets/497496/#

This is an interesting article written by Carl Delfield who is the founder of ChartwellETF.com. He is specilized in ETF investment strategies from Emerging markets including Eurrope, Asia, Latin America and other upcoming countries.  In the below article, he talks about whether the recent Indian election and the outcome will change the roadmap of India's future growth. Read on...

While the Congress party led coalition strong showing is heartening, it does not in my view signal a dramatic change in economic and market prospects.
First, India’s market had already made a nice run in 2009 and valuations relative to other markets are not compelling. The SENSEX index now trades a t a hefty premium to other emerging markets and has rallied 75% from its recent low in just over two months. 

Second, these gains and valuations are against a backdrop of a weakening economy and financial shortfalls with economic growth rates estimated to fall from 9% to less than 5% according to some analysts. The first budget, due in July, will puncture any sense that financial pressures will lessen going forward.

Third, and most importantly, the impact of the election on the key market reforms needed to significantly improve India’s economy are at best minimal due to the nature of the election. I do believe that great bull markets are often ignited by elections based on significant mandates for growth-oriented change. But this election was about personality, the extreme positions of the opposition and business as usual.

The continued premiership of Manmohan Singh, 76, is a source of stability and serenity when what India really needs is sustained and substantial reform.  Does the election make this more probable? To answer this we need to look underneath the recent campaign to examine the source of the Congress party electoral gains.

Much credit needs to be given to the efforts of Rahul Gandhi, 39, the son, grandson and great-grandson of Indian prime ministers. He vigorously and to great effect campaigned in areas where the party has traditionally been weak.  But what was his message? With barely a nod to the importance of growth and need for market reforms, it was the usual bromides on social justice and the need to protect India from the pitfalls of global capitalism.

 In fact, while it was common to hear over the last five years that reform was being stymied by the leftist wing of the ruling United Progressive Alliance, it was the Nehru-Gandhi power base led by Sonia Gandhi who opposed many market reforms and bragged about nationalizing the banks.

It doesn’t seem to me that there is any new mandate for positive change despite a situation that cries out for more competition, private financing of infrastructure such as power, streamlining bureaucracy, fighting corruption, vastly improving primary education and making labor markets more flexible.