Citizens' Issues
Railways' reforms can transformatively impact 1.2 bn Indians
One will have to wait and watch as to how the strategic restructuring in this critical sector unfolds over the next decade. It truly has the capability to have a transformative impact on the lives of India's 1.2 Billion people
 
The railways sector has seen some activity in the past few months. Not only are operational changes being brought about but a long-term strategic view seems to be in sight. The operation changes in ‘tatkal’ remuneration in respect to cancellation as well as the choice to upgrade to a domestic airline in case of waitlisted seats are steps that are beneficial to customers.
 
The long-term view seems to come from the recently constituted seven-member committee under the chairmanship of economist Bibek Debroy on Mobilizing Resources for Projects and Restructuring of Indian Railways. The report proposes five fundamental points for the IR, specifically and the railways sector to look into: 
 
First, what is the core role of the IR in India? This question is pertinent to understanding the core activities and the peripheral ones and separating the commercial from the social role of the IR. At present, there are a lot of activities that take up considerable time and effort on the part of IR. These include the medical service that IR runs with an infrastructure of 125 hospitals, 586 health units and 14,000 beds. Also, pertinent in this regard is the 1 degree college and 168 schools that IR runs. These along with the railway protection, catering, real estate development, housing and the like, according to the committee, are non-core activities that can be clearly outsourced. 
 
Second the report calls for proper accounting procedures and commercial considerations in IR. A formally reformed accounting system will enable the Ministry of Railways that has administrative control over 6 established production units and 16 public sector undertakings (PSUs) to keep proper accounts. Similarly, it will also enable the understanding the level of subsidization in the 17 zones and 68 divisions into which the IR at present is bifurcated. A case in point that finds mention is the Kolkata Metro rail. Any future suburban systems according to the committee should be built on a JV route with state governments (on a 50:50 basis), and the cost should not be borne by IR. 
 
Third, the report recommends streamlining the HR procedures and processes in IR. It is fundamental to carrying out the organizational transformation. It is primarily to be achieved by merging and consolidating the eight Group ‘A’ services into two services. These could be respectively called the Indian Railway Technical Service (IRTechS) comprising of the existing five technical services (IRSE, IRSSE, IRSEE, IRSME and IRSS) and the Indian Railway Logistics Service (IRLogS), comprising the three non-technical services (IRAS, IRPS and IRTS). Aligned with the streamlining of HR procedures is the decentralization of the authority and responsibility to at least the level of Divisional Railway Manager (DRM). The DRM is in charge of one of the 68 divisions of the IR. The financial authority, as well as the power in handling tenders connected with works, stores procurement, to DRM's, ensures that departmentalism is reduced - and there is accountability within the IR. 
 
Fourth, is the issue of ensuring competition and liberalization in the railways sector. The committee has for specific reasons refrained from calling the liberalization of the railways sector as privatization or deregulation. Essentially the committee recommends and encourages open access to private players who want to operate trains on tracks. It is in line with what is practiced at present in some parts of Europe and Australia. Liberalization and open access also call for an independent regulator for the sector and the committee report recommends setting up the same statutorily with an independent budget. The regulator - Railway Regulatory Authority of India (RRAI) - for economic regulation, including, wherever necessary, tariff regulation. 
 
Fifth, the report proposes progressively phasing out of the rail budget and merging the same with the general budget. It reflects the need to define clearly the relationship between the government and the IR. The recommendations also call for ending the system of paying dividends and reduction in the gross budgetary support carried out between the government and IR. 
 
The recommendations of the report are timely and present a systematic roadmap to restructure the IR behemoth in specific and the railways sector in general. However, as with the previous committee reports much will depend upon the acceptance of the report and ultimately its implementation on the ground. One will have to wait and watch as to how the strategic restructuring in this critical sector unfolds over the next decade. It truly has the capability to have a transformative impact on the lives of India's 1.2 Billion people. 
 

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Maharashtra ACB searches homes, offices of Bhujbals
A Special Investigation Team of Maharashtra's Anti-Corruption Bureau on Tuesday carried out searches at 16 offices/homes belonging to senior NCP leader Chhagan Bhujbal, his son Pankaj and nephew Sameer.
 
The former deputy chief minister's Nationalist Congress Party cried "vendetta" on the searches. 
 
The searches were carried out at their homes and offices in Mumbai, Navi Mumbai, Thane, Pune and Nashik, an official of the ACB said here.
 
These include seven residences and offices in Mumbai, a bungalow in Thane, commercial premises in Navi Mumbai, three farmhouses and two bungalows in Nashik, a flat in Pune and a bungalow on a 65-acre plot with a helipad in Lonavala.
 
The searches followed offences registered by the ACB in the past few weeks against the Bhujbals and 14 others for corruption and amassing wealth and assets beyond their known sources of income.
 
Following complaints, the ACB lodged FIR against Bhujbal and son Pankaj, both legislators, and nephew Sameer, a former MP, for alleged irregularities in awarding the contract to construct the Maharashtra Sadan in New Delhi.
 
Last year, following the Bombay High Court directive on a Public Interest Litigation, the ACB formed the SIT to investigate the contract and other cases, including allotment of a plot of land in Kalina to a realtor.
 
The Nationalist Congress Party (NCP) rallied behind the Bhujbals and said the party would challenge these actions in the court of law, senior party leader Madhukar Pichad said and termed the SIT operations an "act of vendetta".
 
Co-accused in these cases are Arun Devdhar, Gita Joshi, Iram Shaikh, Devdutt Marathe, Bipin Sankhe, Krishna Chamankar, Prasanna Chamankar, Pranita Chamankar, Pravin Chamankar, Tanveer Shaikh, Sanjay Joshi, Manik Shah, Deepak Deshpande and Anil Gaikwad.

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Nifty, Sensex, Bank Nifty may push higher - Tuesday closing report
Nifty has to stay above 8,020 for the rally to continue
 
Indian markets opened flat and were down for most part of the day. At around 2 pm the Sensex and Nifty hit the lows of the day and started shooting up, ending up for the second successive day. India Vix closing figure for Tuesday was 17.17, down 2.04%. NSE trading volumes were at 62.35 crore on Tuesday.
 
 
India's trade deficit narrowed to a three-month low in May 2015, helped by lower gold imports, bolstering the outlook for its current account balance. But in a worrying sign, weak global demand as well as persistent domestic bottlenecks led to a sixth straight annual fall in merchandise exports. Exports account for about a fifth of India's $2-trillion economy. The trade deficit shrank to $10.41 billion last month from $10.99 billion in April 2015, data released by the Commerce Ministry showed on Tuesday. The data comes days after India's current account deficit, the broadest measure of its trade with the rest of the world, narrowed to a one-year-low of 0.2% of gross domestic product in the January-March 2015 quarter.
 
India is home to the fourth largest number of ultra-high-net-worth households that have more than 100 million dollars in private wealth, according to a new report from the US. The Boston Consulting Group's 'Global Wealth 2015: Winning the Growth Game' report said continued economic expansion of China and India was driving growth in wealth in the Asia- Pacific region. The US remains the country with the largest number of ultra-high-net-worth (UHNW) households at 5,201, followed by China (1,037), the UK (1,019), India (928) and Germany (679) in 2014, it said. This is important in a period in which economists are giving as much emphasis to investors and employers as to demand/ consumption-led growth of economies with large populations.
 
Cairn India and Vedanta continue to make news in the market. Cairn India shares fell on Tuesday amid concerns that the company's potential merger with Vedanta Ltd may not benefit minority shareholders of the oil producer. Criticising the proposed merger, proxy advisory firm InGovern said, "The minority shareholders of Vedanta Limited gain at the detriment of the minority shareholders of Cairn India." 
 
Suven Life Sciences said it has secured 3 product patents from Israel, Macau and USA for the treatment of disorders associated with neurodegenerative diseases. The announcement was made during market hours on Tuesday. The company’s share closed at Rs245.35, up 0.90%.
 
In news that does not directly affect the stock markets in India, growing passenger traffic in India and other emerging markets would help generate aircraft demand worth about USD 5 trillion in 20 years and the fleet across aviation industry would more than double by 2034, Airbus said on Tuesday. The domestic traffic flow in India alone is estimated to grow nearly 6 times in this period, making it one of the fastest growing markets globally, even as a survey by Airbus has identified Mumbai and Delhi airports to be among the largely congested ones across the world.
 
A threat that still looms over the global markets is the problem in the Greece economy. FT reports that “Over the past several sessions, traders have become more worried about a Greek default and exit from the euro. This is shown by the lurch higher not just in Athens’ borrowing costs but also the Eurozone peripherals’.”
 
The top gainer of the BSE 100 stocks on Tuesday was Glenmark, which was up 4.08% to close at Rs924.05. The top loser was Idea Cellular, which was down 3.82% to close at Rs168.80.
 
Among the Sensex stocks, the top gainer was Tata Power, which was up 2.57% to close at Rs73.95. The top loser was Vedanta, which was down 1.46% to close at Rs178.60.
 
Among Nifty stocks, the top gainers were Bajaj Auto up 2.52% to close at 2,391.10 and IndusInd Bank up 3.40% to close at Rs821.55. The top loser was Idea Cellular which was down 4.04% down to close at Rs168.45.
 
Among US indices, NASDAQ Composite fell 0.42% to close at 5,029.97. Dow Jones fell 0.6% to close at 17,791.17. Among Asian indices, Shanghai Composite fell 3.47% to close at 4,887.43. Hang Seng fell 1.1% to close at 26,566.70. 
 
Among European indices, FTSE 100 fell 0.72% and was around 6,664.43. With Greece in the news, the Athex Composite Share Price Index was down 3.34% and was around 713.59. US Index Futures were in the red on account of negative news from Greece.
 

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