4 Challenges facing Modi

When Modi spoke of better days, it was hugely appealing to a population that had only seen the Indian economy slide for five years. In the biography of individuals, five years can be an interminably long period


Prime Minister Narendra Modi has started his second year with a reasonably positive track record. He, however, faces four clear challenges that he needs to urgently address if he aspires for a second term.
First, the biggest challenge he faces is with regard to the aspirations and expectations of domestic constituencies, business and industry - and from the international community. This is unprecedented in terms of both scale and speed. UPA 2 had regrettably earned the tab of 'stand-still governance'. Both within India and abroad, there was clear frustration at the manner in which UPA-2 demonstrated utter disregard for India's future.
When Modi spoke of better days, it was hugely appealing to a population that had only seen the Indian economy slide for five years. In the biography of individuals, five years can be an interminably long period.
Consequently, expectations in terms of what better days meant were considerable in terms of both scale and speed. Five years of inactivity had made people impatient. They needed to catch up on lost time. This was fast-forward aspiration. The demand was to cut red tape, create a forward looking budget and to put in place incentives that would spur economic activity and create jobs. But more importantly, the demand truly was to get all of this done overnight.
As the past one year has demonstrated, this is a Herculean task and constitutes a significant challenge for the prime minister and his cabinet.
If the second year of his governance does not show a positive turnaround, the Opposition and the international community would, most certainly, dub him as being high on intentions and low on delivery. He is confronted with a genuinely serious challenge.
The second challenge is with regard to the bureaucracy and this is, to a considerable extent, a consequence of his personal style of functioning. Known to be a person who makes up his own mind, he has so far only succeeded in springing surprises on the bureaucracy and clearly leaving them out of the loop when he makes public announcements. While this might win him applause from crowds in Madison Garden and the Sydney Olympic Stadium that he appeared to revel in, it does not necessarily translate into approvals.
The yardstick of good governance is verifiable translation of promises. Today, there appears to be - at least in terms of perceptions - a serious shortfall between promises and delivery.
Consider, similarly, the strong manner in which the government has made its intentions clear with regard to zero-tolerance towards corruption. With the repeated allegations of corruption during the previous regime, this anti-corruption move has been largely welcomed. However, corruption cases, as we all know, are difficult to prove and where, indeed, traps have successfully ensnared officials and others, these are few and far to have any significant impact in curtailing prevalent levels of corruption. Focus on Swiss bank accounts, while important, ignores how deeply corruption has become an integral part of our everyday biography.
The third challenge is from his cabinet and party colleagues. At one level, clearly irresponsible statements by many of his party members have been a cause of serious concern because of the manner in which they have been perceived as imposing a Hindutva agenda and challenging the secular fabric of India. The prime minister has chosen to keep silent on every occasion and opted for an alternative course where he has, through his own public statements and personal meetings, sought to assuage fears among minority communities. While this is good, it is not good enough because it does not unambiguously demonstrate clarity on how the prime minister himself thinks.
More serious is the manner in which chest-thumping took place after the Special Forces' action in Myanmar, especially because words of bravado and public boasting, including threats to neighbouring countries, were made by those who were clearly not directly in the know of the things. The army, the NSA and the Prime Minister's Office did precisely what they needed to do: they did not comment or issue long-winded statements. Every country that has carried out such operations issues a bland statement: 'An operation was carried out successfully by the Special Forces, which suffered no casualties.' The media and others are then left to draw their own conclusions. Bizarrely, however, this became a media circus with wild statements and hypothetical threats. Modi needs to recognize that his cabinet colleagues lack maturity and understanding. Unless he is able to curb their enthusiasm for making press statements, his own credibility is likely to be seriously undermined.
Modi has given sufficient evidence to demonstrate that he possesses all the tools to be a master tactician and strategist. But as Capablanca, the great chess genius advised, 'Play chess backwards; start from the endgame.' Strategies and tactics or 'the how' works only when you first have clarity on 'the why' and 'the what'.
After a year of governance, sadly, the prime minister appears to have been so fascinated by his own style that he has mistaken it for content. This is his fourth challenge and one which is self-imposed.



tapan sur

1 year ago

living in Delhi knowing many top politicians,North India is a different ball game, unlike west. Bureaucracy not easy to control,you just cannot push them as they are being done.Governing India is different from governing a state in the west or south.Hypes & rhetoric have brought clapping's from the harassed masses,& now if they don't get answers expect them 2 hit back? Metals,infrastructure,foundation of growth, never did well in last one year,so where is the growth, one needs to answer.A good article by you.Keep fingers crossed markets may adjust the hype factor & fall to March 2014.Dangerous time's?

Cairn India to merge with Vedanta

Cairn shareholders will get one equity and one redeemable preference share of Vedanta


Industrialist Anil Agarwal on Sunday announced the merger of two of his group companies -- the oil and gas exploration major Cairn India with the natural resources arm Vedanta Ltd. Cairn shareholders will get one equity and one redeemable preference share of Vedanta.
The transaction is intended to be completed by the first quarter of 2016, the group said.
"The merger of Cairn India and Vedanta Ltd consolidates our position as India's leading diversified natural resources champion, uniquely positioned to support India's economic growth," Vedanta chairman Agarwal said.
"The independent directors, at both Vedanta and Cairn India, unanimously recommend the proposed combination. This marks a significant step towards achieving our stated long-term vision of a simplified group structure with alignment of interests between all shareholders for the creation of long-term sustainable value."
The group, in a filing with stock exchanges on Sunday, said the strategy remains unchanged to continue focus on delivering attractive growth, sustainable development, long-term value for shareholders and to sustain strong dividend distribution.
"Approximately 752 million each of equity shares and redeemable preference shares will be issued to the minority shareholders of Cairn India by Vedanta Limited pursuant to the merger," it said, adding: "No shares will be issued to Vedanta Limited or any of its subsidiaries for their shareholding in Cairn India."
Vedanta Limited itself was created with the merger of Sesa Goa, Sterlite and Vedanta Aluminium.
Cairn said on Saturday in a stock exchange filing: "A meeting of Board of Directors of the company will be held on June 14, 2015, inter alia, to consider and evaluate amalgamation of the company with Vedanta Limited." 
Vedanta took majority control of Cairn India for $8.67 billion in 2011 and holds 59.9 percent in the latter through its various units.
Merging Cairn India with itself would provide Vedanta access to the oil explorer's cash and help reduce its debt burden. At the end of March this year, Vedanta had total liabilities worth over Rs.99,000 crore on a consolidated basis.
The Anil Agarwal-led Vedanta earlier this month hiked stake in its oil and gas exploration subsidiary Cairn India by nearly five percent for $315 million from a wholly-owned subsidiary -- Twinstar Mauritius Holdings (TSMHL).



Dr Anantha K Ramdas

1 year ago

Please refer to your article on the Cairn-Vedanta merger proposal.

Shareholders of Cairn India must oppose this move as it is not a fair and equitable proposal. They have invested money in Cairn because of the gas and oil sourced by the firm and the long term prospects it has. In any case, both the items are in short supply in the country. Shareholders expect Cairn to grow as big as Reliance and ONGC and reward the shareholders for years to come.

What is the compromise solution to this merger proposal? Here are some suggestions:

a) first Cairn shareholders be rewarded with a 1:1 bonus

b) this should be covered in the dividend payout for the current year

c) then the 1:1 merger with Vedanta can be considered

d) the carrot of 1:1 preference share of Vedanta offered and to be redeemed after 18 months should not be accepted, unless, this is allowed to remain, pari passu with the Vedanta shares

e) the Vedanta shareholders also must demand that the Company makes moves to invite China to come in as a joint venture partner in Goa to convert the low grade ores mined there and use the technology of mixing it with high grade ores, obtained from Brazil, Australia or elsewhere, including India. The finished steel can be shipped back to China or exported, thus "make in India" a reality.

Why not Moneylife take the lead in starting a campaign to oppose the merger unless better terms are offered to shareholders?

Niko seeks 3-month extension to sell stake in KG-D6 block

Niko had in February announced it intended to sell-off its 10 percent stake in the KG-D6 block to square a $340 million debt


Reliance Industries' consortium partner Niko Resources of Canada has extended by over three months its search for a buyer of its stake in RIL's eastern offshore KG-D6 gas block to pay off debt.
"The Board of Directors of Niko now believes that it requires more time to determine if the sales process will be successful or, if not, to develop an alternative plan with the assistance of its advisors and stakeholders to achieve the best results for the stakeholders of the company," Niko has said in a filing to the Toronto Stock Exchange.
It said it has now reached reached an understanding with lenders to extend the search till September 15.
Niko had in February announced it intended to sell-off its 10 percent stake in the KG-D6 block to square a $340 million debt. The company had earlier planned to sell off the interest by April 30 but later extended it till May 31.
The company has earlier blamed a lower-than-expected gas price announced by the Indian government for its decision to sell its stake in the KG-D6 block.
The government had in October announced a new natural gas price of $5.61 per million British thermal unit, raising it from $4.2. 
"The announced price for the period from November 2014 to March 2015 is a 33 percent increase over the price received previously, but is lower than expected. In addition, there is uncertainty around the long-term natural gas price outlook in India," Kevin J. Clarke, chairman Niko Resources had said.
In April, Niko had said that RIL's gas discovery MJ-1 may hold 1.4 trillion cubic feet of gas resources, roughly half of the reserves in the KG-D6 block's main gas fields.
Reliance on Friday sought an early revision of gas prices and urged the government to quickly resolve what it termed as "legacy issues" over its production-sharing contracts for discovered hydrocarbons.
Announcing the new gas price October last, the government had said the premium to RIL for its gas discoveries being under arbitration, the company would continue be paid the earlier price of $4.2 per unit.
The arbitration concerns the penalty imposed on the company for allegedly failing to meet output targets from the Reliance-led consortium's specific offshore blocks. The government wanted the company to make good this shortfall vis-a-vis the terms of the contract.
Petroleum Minister Dharmendra Pradhan had told parliament last year that a fresh notice had been served on Reliance Industries seeking additional penalty for lower production of gas.
The government had said that a premium would be given for all new discoveries in ultra-deep-water areas, deep-water areas and the high pressure-high-temperature areas, but did not spell out further details on how it will be calculated and when it will be awarded.
While shallow-water blocks are at a depth of up to 100-500 metres, deep-water blocks descend to around 1,000 metres. Those at depths beyond 1,500 metres are classified as ultra-deep-water blocks. 
These are the areas where the RIL has maximum discoveries.



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