Here are two reports on rural India from MNC brokerages, with almost converging views. Agriculture is getting increasingly mechanised, farm incomes are rising and supportive government policies are helping
Reports from brokerages Morgan Stanley and JP Morgan last week focused on rural India. Morgan Stanley concluded that a bulk of Indian farmers still continue to be poor. JP Morgan's survey concluded that agriculture is getting increasingly mechanised, given diversification of migrant labour to nonfarm activities, rising farm incomes, and supportive government policies - all these are important catalysts for driving sales of tractors/agri-equipment.
Morgan Stanley conducted a survey of 500 crop farmers across India and concluded that within their aggregate sample, 26% were poor (annual income was less than Rs50,000) and 17% were rich (more than Rs150,000). Others were in between. Rich farmers had a 75% revenue share of the aggregate sample revenue, while poor farmers had just 5% share.
Here are a few other observations from the report:
* Rich farmers prefer to grow cereals while poor farmers prefer oilseeds. The first preference of crop is rice for both. Rainfall is still important for both but irrigation is the second most important factor while for 2/3rd of the rich farmers, return on crop is the second-most important factor. For rich farmers, electricity is a big concern, also credit availability is a bigger concern for rich farmers than poor.
*Around 70% of the rich farmers sell their produce to institutional agents, getting better bargaining power, while about 50% of poor farmers sell in mandis (marketplaces).
* The choice of second income for rich farmers seemed to be dairy.
* Most of the rich farmers were from Punjab and MP.
* Around 70% of the poor farmers owned 3-4 acres of land while most rich farmers owned more than 8 acres.
* 99% of the rich farmers are literate vs. 92% of the poor farmers.
JP Morgan says it visited the key agricultural producing zones across India. Its report quotes a farmer in the south as saying, "the young labourers are moving to cities, while older members are taking to NREGA". The report explains that the government's successful implementation of NREGA and rising industrialisation in urban centres is providing migrant labour with options to move away from fields.
NREGA provides employment to over 45 million households (up from 21 million households in FY07) and under the scheme average daily wages have risen by 35% over FY07-10. Even smaller farmers are using equipment to substitute manual labour, reflected in sales of tillers and sub-20 HP tractors. Mahindra & Mahindra has launched the 15 HP small tractor - 'Yuvraj' - JP Morgan believes it will benefit from growing tractor sales. The report also looks at VST Tillers Tractors, which is benefiting from small equipment sales - but JP Morgan has no rating on the stock.
Here are a few other observations from the report:
* Quote from farmers in Haryana: The labour cost has increased considerably. Sometimes, even though we pay higher wages, labour is not available. The influx of migrant labour has reduced.
* In farm households (especially large farmers), the second generation is keen to migrate to cities as they want to diversify away from agriculture.
* Tractor penetration in India is still low and set to grow at a 12% compounded annual growth rate (CAGR) over FY10-12E.
* There is growing use of drip irrigation, which has improved farm yields by over 30%. This form of irrigation is prevalent in southern/western India.
Tata Teleservices ignores scamsters using its SMS services to offer bumper lotteries
Mobile phone users have, for a long time now, suffered the scourge of unsolicited calls/SMSs. Recently, Union finance minister Pranab Mukherjee was interrupted during a debate in Parliament by one of these calls. But today, ingenious Nigerian scamsters have also started using SMSs to dupe gullible phone users through fraudulent bumper lotteries.
One Moneylife reader shared with us this experience. “I received an SMS from TD-demo account informing that I had won £50,000 in a lottery. I know this is a scam. Many of my friends have received such an SMS. After searching on the Internet, I found that many others have received similar messages from a TD account. TD is the operator code for Tata Teleservices, Delhi. I believe the Tata Tele account is being misused to send SMSs for scam activities. I have complained to Tata Teleservices on their website and also sent an email to the Cyber Cell of the Mumbai Police to take action against the account holder.”
As the SMS originates from the Tata Teleservices’ account, the operator would have a record that could help trace the culprits. A Tata Teleservices spokesperson advised that we send them the details so they could make inquiries.
The spokesperson described SMS marketing and spam as two different issues, saying, “SMS marketing is completely within the regulatory provisions set out by the authorities. Furthermore, if it is creating any trouble for any customer, it is the responsibility of each operator to protect its subscribers from unsolicited calls and SMSs under the DND (Do Not Disturb) provision.” However, the spokesperson did not say what measures Tata Teleservices was taking to stop the misuse of its services.
Only the other day, Mr Mukherjee was in the middle of a discussion in Parliament when he received a call on his mobile phone, with the caller offering him a loan. The minister was understandably irritated. The Indian government subsequently advised telecom operators to ban such unnecessary marketing calls and messages to mobile phones. The direction against unsolicited calls was issued through notices by the Supreme Court to companies such as Bharti Airtel, COAI and ICICI Bank and American Express.
The Telecom Regulatory Authority of India (TRAI) has also imposed a financial disincentive on eight service providers for non-compliance under the Telecom Unsolicited Commercial Communications Regulation, 2007. These companies are Vodafone Essar, Reliance Communications, Bharti Airtel, Tata Teleservices, Spice, BPL, MTNL and Aircel.
But this hasn’t helped, yet, to curb the harassment suffered by mobile phone users due to unsolicited commercial communication. (This is the term the TRAI uses for unwanted calls/SMSs.) For, it seems that the mobile phone operators are more interested in earning revenues.
The Tata Teleservices spokesperson told Moneylife, “Indian telecom operators have received acclaim for reworking the costs of telecom to reach out to the masses, and for becoming a driver of economic growth. A farmer in a village, or a fisherman, is today happy to receive SMSs about crop prices and information on the weather. Any other form of disbursement of information to the public would have cost a 100 times more.” There is no doubt about the benefits of telecommunications. But that doesn’t allow operators to flood customers’ handsets with unwanted, unnecessary messages.
The writer is a subscriber of Tata Indicom for seven years and has also been a victim of such unwanted SMSs and calls. Complaints were made on numerous occasions to Tata Indicom’s customer care department, the nodal officer, the national services head, even managing director Anil Sardana. Each time the complaint was made, Tata Indicom called saying that an inquiry was initiated into the matter and that notices had been sent to the operators involved. The company made no mention about calls and messages originating from Tata Indicom numbers or having its tags. Then every time, the calls/SMSs resumed with a vengeance.
One proposal to curb the menace is to make mobile operators pay for each marketing call/SMS. Vir Sanghvi, editorial director of the Hindustan Times, wrote recently that the customer must be compensated for receiving these commercial calls/SMSs. He suggested a payment of Rs10 for each call/SMS to customers within the country and a minimum of Rs50 for each call/SMS on international roaming.
The Tata Teleservices spokesperson appreciated the sentiment. “SMS marketing has been there since the very inception of the industry. It is unsolicited spam that is the scourge. Being a Tata Group company, we are totally committed to help curb spam and we propose that commercial penalties be levied on operators for unsolicited spam.”
(For more information on unwanted SMS/calls read Call Stall http://www.moneylife.in/article/76/2735.html)
The real-estate market is not focusing on end-user sales, but higher valuations and raising funds through the capital market, says an independent real estate researcher
Real-estate sales fell by 50%-60% in the quarter ended June, as the market turned speculative and developers held prices in the hope that they would improve. Real-estate brokers also expect prices to rise over the next six months.
“The situation in the real-estate market is speculative. Despite falling sales and an inventory pile-up, prices are continuously rising,” said Pankaj Kapoor, founder and managing director, Liases Foras, a real-estate rating and research company.
“It looks like the focus is not on the consumer, but on valuations and IPOs (initial public offerings). People are looking for signs of stability in the stock market. It’s nothing but hoping and that is what is holding the prices in the property market.” Mr Kapoor suggested that the market would not undergo a correction until the hopes of the industry were fulfilled.
In a recent survey of real-estate brokers conducted by ICICI Securities, 93% of the respondents said that prices had moved up during the past three months, and 75% said they had found an increase in inquiries in the affordable segment. According to the survey, Mumbai and the National Capital Region (NCR) had seen the maximum rise in inquiries.
In the NCR, multinational real estate and property service firm Knight Frank said that an increase in consumer confidence, together with availability of various affordable housing units was the key factor driving demand for housing. During the second quarter, the NCR residential market saw the introduction of a new ‘flexi-payment’ plan for buyers and the revival of ‘EMI on possession’ scheme. The flexi-payment plan is designed along the lines of the construction-linked plan and aims to ease the liquidity pressure on buyers, an improvement over previous schemes. Knight Frank, a commercial and residential property estate agency, believes that the two schemes along with reasonably priced home loan rates, could spur the demand for housing in the NCR.
Mr Kapoor maintained that developers alone could not be held responsible for lower sales. “I feel that investors and merchant bankers are not giving them (developers) a green signal, in that investors are not too keen to buy real-estate stocks. In the last two or three IPOs, the participation of retail consumers was a low 7%-8%. The majority were institutional investors. This is an indication that there are not many buyers for realty stocks at current prices and valuations.”
During the June quarter, the Moneylife Real Estate index inched up 1% to 3,790.33 points, while the Bombay Stock Exchange (BSE) Realty index declined by 2% to 3,196.8 points. During this period, the BSE Sensex rose marginally from 17,527.8 points to 17,701 points.