After Rs1,365 crore of outflows in April 2011, mutual funds have recorded Rs1,480 crore of inflows in May 2011—almost 94% of this amount was from existing schemes
Indian equity funds have recorded a surprisingly robust performance in May.
This huge positive inflow belies the mood prevailing among investors and the marketplace. The Sensex has fallen by 11% (since January to June 2011) and Foreign Institutional Investors (FIIs) have not been investing much in India.
One of the reasons for the net inflows in the last month may be because mutual fund houses are leaving no stone unturned to keep distributors in good humour. Asset Management Companies (AMCs) are paying a higher upfront fee to distribution subsidiaries of foreign and private banks nowadays to drive 'exclusive sales' of their schemes, mainly equity schemes. This commission is in addition to the upfront and annual trail fees that mutual funds pay distributors for selling their schemes.
AMCs are paying large distributors anywhere between Rs50 lakh and Rs2 crore this year as part of the so-called "marketing support" fees. Last year, such payout was in the range of Rs45 lakh to Rs75 lakh. Fund houses said that distributors, who have been deprived of the entry load after its ban since August 2009, are demanding a higher fee, citing difficulty in selling equity schemes in unfavourable market conditions. The marketing support fee would depend on the size of the fund house and performance of the equity scheme. Fund houses with large asset bases, performing funds and good credentials will have to pay less. New and ailing fund houses will be required to pay higher fees.
Ever since the Securities and Exchange Board of India (SEBI) imposed a ban on entry loads, equity funds have suffered redemptions. We mentioned in our article dated 6 May 2011 (Huge mutual fund outflow points to a much deeper malaise) that the regulator needs to address the issue of distributor fees, to make AMCs adopt a better pricing system where the commissions are clear and no other payments to distributors allowed. For such a course correction, SEBI and the mutual fund industry, through the Association of Mutual Funds in India (AMFI), have to sit together. So far, AMFI has done a poor job of putting across the industry's views, which is one of the main reasons why SEBI took the decision without consulting it.
The decline has mainly been on account of poor performance of the manufacturing and mining sectors. Manufacturing, which constitutes about 80% of the index weight, nosedived to 4.4% in April while mining grew by a meagre 2.1% during the month under review
New Delhi: Finance minister Pranab Mukherjee today described the decline in industrial growth rate in April as 'disturbing' and said he would wait for more data to ascertain the trend, reports PTI.
"The IIP (Index of Industrial Production) growth figures are disturbing. (We) need to wait for longer-term IIP growth to see the trend," he told reporters here.
IIP as per the new series (base year 2004-05) declined to 6.3% in April from 13.1% in the corresponding period last year. As per the old series (base year 1993-94), industrial output registered a steeper fall in April to 4.4% from 16.6% a year ago.
The decline has mainly been on account of poor performance of the manufacturing and mining sectors.
The growth in manufacturing, which constitutes about 80% of the index weight, nosedived to 4.4% in April from a high of 18% in the same month last year, as per the old series.
Mining grew by a meagre 2.1% during the month under review as against 12% in April 2010.
Similar trends were noticed in the new data series, which revealed decline in manufacturing sector during the month to 6.9% from 14.4% and mining sector output to 2.2% from 9.2% in the year ago period.
Mumbai's BEST and Bengaluru's BMTC are both innovating to cope up with growing populations. But while BMTC has been growing fast, BEST seems to be losing commuters mainly to the railway system. BMTC can be proud of its progress if it is also able to become financially profitable
BEST (or Bombay Electric Supply and Transport undertaking) in Mumbai has a bus fleet of 4,700, of which 288 are air-conditioned. These buses not only cover the 437 sq km area managed by the Municipal Corporation of Greater Mumbai (MCGM) but also provide services to Navi Mumbai Municipal Corporation (NMMC) areas, albeit to a limited extent. The bus routes have been planned on the staged service system, with point-to-point travel, allowing commuters to choose a route best suited to the individual concerned. Navi Mumbai Municipal Transport, with its fleet of 226 buses, provides reciprocal services to MCGM areas, in addition to service within NMMC areas. BEST also plies buses to other adjacent municipalities of Mira-Bhayandar and Thane. Thane too has a service to CST, Mumbai, as well as Mira-Bhayandar. In fact, there is one more agency that provides public transport in the Mumbai Metropolitan Region (MMR) and that is the Maharashtra State Road Transport Corporation (MSRTC). While MSRTC does ply stage service on its inter-city routes like the Eastern and Western Express Highways and the Sion-Panvel Highway, its major service is from state transport (ST) bus stands to ST bus stands within the MMR.
However, to sum-up, it is BEST that commands the public transportation scenario in the Mumbai, Navi Mumbai, Thane and Mira-Bhayandar urban agglomerate. It carries out a stupendous task, facilitating mobility for about 43 lakh commuters daily, which latest reports suggest has dropped to about 38 lakh.
Innovations are a must if one has to improve efficiency of service, and thereby overall profitability. BEST has the day ticket scheme of Rs25 that enables a commuter to travel by a BEST bus anywhere on its non-AC, non-corridor services. If corridor buses are to be used, one buys a day ticket of Rs40. The equivalent monthly pass amounts are Rs555 and Rs805 respectively. Very recently, BEST has allowed Rs555 monthly pass-holders to travel for the day on corridor buses for a ticket charge of Rs15 and not Rs40. That's innovative pricing.
BEST provides four kinds of services. The ordinary and express routes clubbed as non-AC and non-corridor; the corridor routes which have very limited stops and traverse over flyovers and the Sea-link; the AC routes, which also have limited stops but do not go over flyovers; and AC express routes, which is AC buses run like the corridor routes.
The fact that buses plying on the highways are packed during peak hours, means there is room for improvement through further innovative schemes, like introducing articulated and bi-articulated buses and the Bus Rapid Transit System (BRTS). Introduction of BRTS will enable the bus fare structure to be reformed and made affordable to a larger number of commuters, who otherwise opt for the sub-urban railway system.
Let us shift our attention to Bengaluru. BEST in Bengaluru? The reality is that it is not BEST in Bengaluru but best in Bengaluru. Why do I say that the Bangalore Metropolitan Transport Corporation (BMTC) is better than BEST! The figures speak for themselves. Since 2006, the number of bus depots have increased from 25 to 35. The fleet size has increased from 4,106 to 6,111. Effective kilometres traversed per day has increased from 8.67 lakh km to 12.55 lakh km and staff strength has increased from about 19,000 to 33,000. In 2001, BMTC employed about 13,000 people, it had a fleet size of 2,264 and carried 26 lakh commuters. Today, it carries 43 lakh passengers every day. How has that come about?
Bengaluru has grown not only vertically, but the urban sprawl is also considerable. People from rural Bengaluru who at one time cycled to the city, now perforce use the public transport as the roads and traffic have become hostile. Changing work culture demands that they put in eight to ten hours on the job. The number of professionals has also increased and many have taken to travelling by their personal vehicles, two- as well as four-wheelers. With the growing population and growing vehicular traffic, road and public transport carrying capacity needed to be augmented.
The JNNURM (Jawaharlal Nehru National Urban Renewal Mission) funding has come in handy to augment the bus fleet and associated infrastructure. Unlike in Mumbai or for that matter in Hyderabad, Bengaluru has had no rail-based transportation infrastructure. Metro Rail has been conceived and is being projected as an answer to the city's traffic woes. A twin route, one north-south and the other east-west has been planned and is under execution, albeit at an unenviable pace. Meanwhile, the BMTC has been innovative in its services for commuters.
As Bengaluru has grown, its road infrastructure projects in the form of ring roads (outer and inner), flyovers and underpasses, are being implemented vigorously. And BMTC is providing bus services effectively, on these as well as the other roads across the city. In a hierarchical manner, let us see what the bus system is like.
One can put the Vayu Vajra service at the top of the list. It operates Volvo air-conditioned buses to different parts of Bengaluru and far-flung suburbs. These are the ultra-low floor buses that halt at bus stands at the airport in such a way that the floor at the front door is actually just above the pavement at the bus stop, leaving just a 75 mm climb. This facilitates loading luggage easily too, for which adequate luggage racks has also been provided. The buses also have provision for a wheel-chair bound person to board the bus with reasonable ease and clamp-up on board. The same space is dually used for bicycles, which facilitates ride-carry-ride. These buses cover distances in reasonable time, but the traffic congestion affects its functioning too.
These buses adhere to scheduled timing and have some vacant seats to pick up passengers along the route.
Next is the air-conditioned Volvo Vajra service. The buses are similar to the Vayu Vajra service, but they do not have space for a luggage rack, although they can accommodate wheelchairs and cycles. These buses ply on ring roads and some inside roads too. They also cover far-out places. They have the same bus number as ordinary route buses and traverse the same routes, but they are air-conditioned and have limited stops.
Then there are the BIG10, which ply in the far suburbs to the outer core of the city to facilitate a changeover to buses taking you to your destination. This helps avert city congestion delays for commuters from far-out places, enabling them to cover long distances in quick time. The Suvarna and Pushpak are non-AC bus services with better bus suspensions and seating arrangements plying on some of the routes of the ordinary bus routes.
If the bus destination boards are less cluttered, i.e. only in one language like in Mumbai - say Kannada board in the front and English or Devnagari in the rear or side, it would facilitate the growing non-Kannadiga population to quickly gathering the route number and destination information.
BMTC also has the day ticket and monthly pass facility like BEST has. What is lacking in both is the Bus Rapid Transit System. But them the BRTS needs to be planned for a city by its transportation group such as MMRDA for Mumbai and the Urban Land Transport of the Urban Development Department of Karnataka Government. While I do see that ULT/UDD of GoK is seriously considering this facility, MMRDA seems to have gone past that level of seriousness. It is too engrossed with Metro and Monorail. Given the scenario, it is for you to judge which of the two is better or whether they can both learn from each other.
[Sudhir Badami is a civil engineer and transportation analyst. He is on the Government of Maharashtra's Steering Committee on Bus Rapid Transit System (BRTS) for Mumbai and the Mumbai Metropolitan Region Development Authority's (MMRDA) technical advisory committee on BRTS for Mumbai. He is also member of the Research & MIS Committee of Unified Mumbai Metropolitan Transport Authority (UMMTA). He was a member of the Bombay High Court-appointed erstwhile Road Monitoring Committee (2006-07). He has been an active campaigner against noise pollution for over a decade and he is a strong believer in a functioning democracy. He can be contacted on email at [email protected].]