Indian domestic markets are more promising amidst the crisis in overseas equity markets. Therefore, investors should be prudent and adopt a wait-and-watch attitude in the equity market and not rush for the exit
While the domestic economy appears to be in better shape than those of the developed countries, stubbornly high inflation and the consequent aggressive stance of the Reserve Bank of India (RBI) have raised the possibility of GDP (gross domestic product) growth being lower than 7%. Developed stock markets have seen value erosion of 12%, while Indian markets have tanked 10% in three months.
According to brokerage firm IDFC, the demand scenario continues to be strong, with sectors like FMCG and retail clocking strong volume growth in the past three months. While some moderation is visible in certain segments of automobiles (the industry being an interest-rate sensitive category), demand for two-wheelers and LCVs (light commercial vehicles) remains healthy. There has been a sharp increase in deposit and lending rates, resulting in robust deposit mobilisation. Weak global demand has not adversely affected the Indian IT industry in its exports, as technology spending continues both in India and abroad.
Concerns on account of government policy to control inflation include the tight monetary policy adopted by the apex bank (325 basis points hike in interest rates since March 2010) has increased cost of funds (State Bank of India's prime lending rate, or PLR, is at an all-time high of 14.75%), impacting credit growth and discretionary spending in the economy. On the fiscal front, lack of positive policy triggers from the government has slowed down investment spends.
Moderation in commodity prices (likely on weak global demand outlook) and clarity on the interest rate cycle would be key triggers for Indian corporate entities for improvement in performance and consequently, earnings growth. When inflation declines and the RBI (Reserve Bank of India) lowers interest rates, it will be the trigger for improvement in sectors like infrastructure and capital goods, which in turn will kick-start the capex (capital expenditure) cycle.
As we are still in a high interest regime, investments have slowed down in infrastructure (power, roads, etc) and capital goods as rising interest rates have increased funding costs and pressured project IRRs (internal rate of returns). IDFC believes that order inflows are likely to be dull in the next few quarters, which will impact earnings visibility in FY13 and drive an earnings downgrade cycle. Havells and Kalpataru are the top performers in the current context.
Demand remains strong in the consumer goods sector with categories like shampoo, skincare, homecare and toothpaste continuing to see volume growth in the mid-teens, with no slowdown in rural or urban segments. Mature categories like soaps have slowed down to low single digits; but Hindustan Unilever and Godrej are still registering mid to high single-digit volume growth despite raising prices by high single digit levels. As a result, while revenue growth would sustain, margins would remain under pressure in the near term.
In the IT sector, larger players like Infosys and Tata Consultancy Services are better placed to sail through the challenging times. IT spends typically react to any contraction or recovery in economic activity with a lag of 3-4 quarters and this could be the challenge for larger companies, if the downturn persists.
In the real-estate sector, developers are willing to negotiate with genuine buyers though they are not reducing prices officially. Absorptions in NCR are also witnessing a slowdown, largely led by land acquisition issues in Noida/Greater Noida and sharp price appreciation in Gurgaon. While end-users are adopting a wait-and-watch strategy, investor interest is low due to limited upside potential in the value of properties. Meanwhile, demand in Bengaluru is steady, with moderate price appreciation. However, the trend is gradually shifting to high-end residential projects.
IDFC expects prices to appreciate in the near term although a 15%-30% correction is required to drive absorptions in markets like Mumbai and Gurgaon.
In the steel sector, a combination of cost support, supply flexibility and China's relative strength are set to arrest the sharp fall in steel prices. Therefore, while the risk of a financial collapse persists, IDFC expects that prices in all regions are now at levels that have strong support.
Experts say that the recent decision to lift the export ban will give no respite to consumers as retail prices might increase due to traders who continue to charge high rates for fatter margins
After indefinite strikes by farmers and traders across Maharashtra against the decision to ban onion exports, the government has finally lifted the ban. The strikes were supported by political parties across the spectrum, but little has been done to bring down the prices at the retail market. Consumers continue to pay high prices due to traders and retailers who charge high prices for increasing their margins.
After the ban was imposed on 9th September, onion prices moved up to Rs20-Rs22 per kg in Mumbai's retail market—from Rs10 kg just a week ago.
Experts warn that retail prices might shoot up as retailers continue to charge high prices under the guise of an artificial scarcity and the excuse of the forthcoming festive season.
RP Gupta, director, National Horticultural Research and Development Foundation (NHRDF) told Moneylife, "The decision was taken yesterday in the evening, so in two days' time, regular onion arrival will start. Considering the production, there shouldn't be a worry about price rise. But it is the retailer market where customers shell out high prices. Something should be done to regulate this market."
He added, "The government can consider distributing onions and garlic in the retail market through co-operative societies or the public distribution system (PDS)."
NHRDF monitors onion prices and market arrivals on a daily basis.
The government had imposed a ban on onion exports to check spiralling prices which touched Rs25 a kg in the retail market in New Delhi. The Empowered Group of Ministers (EGoM) on Food fixed the Minimum Export Price (MEP) of onions at $475 per tonne.
Ashok Walunj, director—onion-potato market of APMC, Vashi, said that prices will be stable in the wholesale market. "The wholesale price, Rs10-Rs11 per kg, will remain stable. It will further stabilise once the fresh early kharif production arrives in the market." When asked about the prices in the retail market, he said, "The retailers are not in our control. So we have no say in the prices charged by them."
The current wholesale onion price in Mumbai is around Rs10-Rs11/kg, while in retail markets, it is at Rs18-Rs22/kg, depending on the produce.
Consumers have to continue with their tight household budget. "I keep reading there is a record production of onion, there is good monsoon, or some or the other political party demanding fair price for farmers. Farmers should be given a good price, but as a consumer, I keep paying the same price even despite all this news. In fact, it is always that I have to pay extra," said Sangeeta Jadhav, a homemaker.
A trader based in the Vashi wholesale market said, "After the decision, prices might just go down for a week or so—and it will again come back to the current level. Prices are bound to be in the same range and might even inch up given the festive season. However, this decision will help farmers, who sell it at a good export price."
This victim of the Delhi High Court Blast has his leg amputated below the knee but the RTI activism in him will never be crippled
Harish Kumar (41) is a tenacious RTI (Right to Information) activist based in Delhi who has invoked the RTI 1,500 times with nearly 150 second appeals at the Central Information Commissions' offices. That fateful day on 7th September, he was at Gate No 5 of the Delhi High Court to pursue his PIL (public interest litigation) against illegal encroachments and was one of the many seriously injured.
But Mr Kumar is determined to continue his RTI activism, despite having his leg amputated below the knee. He is still recuperating at a hospital in Delhi.
Mr Kumar has been a regular visitor to the Municipal Corporation of Delhi (MCD) as an RTI activist, taking up various issues relating to illegal encroachments and other civic issues, reflecting sloppy or non-governance by the municipal corporation. His professional background of a plastic entrepreneur is overshadowed by his RTI crusade considering that since the last six years, he has filed 1,500 RTI applications mostly with the MCD and some with the Delhi government, and has made nearly 150 second appeals with the Central Information Commissioners.
Now he is nursing his severe injuries at the Ram Manohar Lohia Hospital in Delhi, after he was injured in the Delhi High Court blast of 7th September. "I had gone for my PIL case on illegal encroachments, which I had filed in the Delhi High Court. I don't know what happened as I had become unconscious. The next thing I knew was that I was in the hospital.''
His injuries are severe—his right foot is fractured, he suffered injuries on his back & hand -and worse, doctors were compelled to amputate his left leg last week, from below the knee. For many it would seem that his life has come to a standstill. However, Mr Kumar speaks with such enthusiasm and a positive attitude that it overwhelms you. When asked whether he would continue to pursue his RTI crusade, he quipped instantly, "Jyada teji se (with more fire)." A few more days to go back home he says, and he would like to forget his pains and continue to serve society through RTI.
Every week, this column takes up variegated issues and crusades relating to RTI but this week, the indomitable spirit of Harish Kumar compelled this writer to tell his brave story, some RTI issues he had taken up and his attitude of moving forward in life despite an unexpected physical disability that could have been the cause of a permanent setback in life, physically as well as emotionally.
Central Information Commissioner Shailesh Gandhi to whose office Harish Kumar has appealed 123 times, visited him at the hospital and spent an hour with him. Mr Gandhi said, "What I saw and experienced will remain etched in my memory for my entire life. I was with him for nearly an hour, and Harish Kumar was smiling and happy! Not once did he complain about anything. Most of the time, he was describing the corruption which he is trying to curb in the Municipal Corporation of Delhi. He was telling me that he is sure he will be back at the hearings before me within some weeks. His younger brother and wife were also infected by Harish's enthusiasm. Mr Kumar said, "Sir, the nation is taking good care of me; what more can I expect?"'
Mr Gandhi further states with admiration for this 41-year-old activist whom he terms as an 'RTI yogi', "There was not the slightest complaint about having lost a limb, or about the terrorists. Not a whine about government apathy, lack of security or the hospital services. He was really radiating happiness and satisfaction about everything. Mr Kumar spends a lot of time using RTI to obtain better governance, and that day he gave me a lesson on being positive in life. I came away feeling I had witnessed a true RTI yogi."
One of the issues taken up by Mr Kumar is licenses issued to the temporary vendor (hawker) stalls in different zones of Delhi. What prompted Mr Kumar to seek information is because he observed several of these temporary stalls becoming permanent by conversion into shops and others encroaching beyond the permitted boundary of 6ft x 4ft. Mr Kumar said, "I had filed an RTI application asking for information on the number of temporary stalls of 6ft x 4 ft in the city zone and Sadar Pahadganj Zone; details of violation of norms and action taken in case of violations. The PIO gave an unsatisfactory reply and stated that out of the 12,500 files pertaining to these allocations, 5,588 files were missing. I realised there was large-scale corruption as indiscriminate permissions were being given leading to illegal encroachments and shops. I appealed at the Central Information Commissioner Shailesh Gandhi's office who has given a stern order to the department to file an FIR against the 'missing' files as they amount to loss of government property." Mr Kumar is still following up the case.
In another instance, Kumar filed an RTI application demanding copies of the 'Construction Watch Register' (CWR) in order to monitor the construction of quality buildings in Delhi. The CWR is a register in which sanctioned building plans and inspections are recorded when the building is being built. There is an office order issued by the Additional Commissioner (Engineering) on 20 August 2001, based on which MCD can record and register that it is monitoring construction of buildings in which building plans have been sanctioned. This is expected to ensure that the buildings follow the plans which have been sanctioned and also ensure that the buildings are structurally sound and safe for human habitation.
Mr Kumar did not get any information from the PIO and so he filed his first appeal with the First Appellate Authority. Even then he did not the get the required information, so he filed a second appeal with Central Information Commissioner Shailesh Gandhi.
During the hearing, the PIO stated that the total number of new buildings' plans sanctioned was not more than 200 (in a particular locality of Delhi) in the last five years. He also stated that the number of unauthorised buildings booked in the last one year in Missalband (name of a locality) register is over 400. Thus, observed the Commission, "It is evident that illegal buildings are far more than the legal buildings. In that case the Commission cannot understand how it has been so difficult to give copies of the Construction Watching Register to the Appellant. The Commission sees this as a complete collective failure of all the staff supposed to record and monitor these registers. If Municipal Officers neglect doing their duties in such a systematic manner the lives of people in this city even where building plans have been sanctioned by MCD may be at grave risk.''
The Commission observed during the hearing that "The Commission would like to record that this requires a JE (Junior Engineer) to make an entry about his observations/findings each time he inspects the property under construction. The order states that it is mandatory on the part of (the) JE to carry out inspection to such buildings every fortnight and to record his observation in such (a) register against any deviation."
Mr Gandhi had asked NK Gupta, PIO & SE, to find out who was responsible for not providing information. Mr Gupta, during a subsequent hearing, stated that he had identified Rajesh Kumar, JE, as the person responsible for the delay in providing the information. He states that the order of the FAA was sent to Rajesh Kumar, JE, on 7 June 2010 and Mr Kumar took no action on the order of the FAA to provide information to the appellant.
Mr Gandhi ordered heavy financial penalty on Rajesh Kumar. The order read thus: "As per the provisions of Section 20 (1) of the RTI Act 2005, the Commission finds this a fit case for levying penalty on Mr Rajesh Kumar, JE & Deemed PIO. Since the delay in providing the correct information has been over 100 days, the Commission is passing an order penalising Mr Rajesh Kumar Rs25,000 which is the maximum penalty under the Act. The Commissioner, Municipal Corporation of Delhi, is directed to recover the amount of Rs25,000 from the salary of Mr Rajesh Kumar and remit the same by a demand draft or a Banker's Cheque in the name of the Pay & Accounts Officer, CAT, payable at New Delhi and send the same to Shri Pankaj KP Shreyaskar, Joint Registrar and Deputy Secretary of the Central Information Commission, 2nd Floor, August Kranti Bhawan, New Delhi-110066. The amount may be deducted at the rate of Rs5,000 per month every month from the salary of Mr Rajesh Kumar and remitted by the 10th of every month starting from February 2011. The total amount of Rs25,000 will be remitted by 10th of June, 2011. This decision is announced in open chamber.'' Subsequently, Rajesh Kumar had apologised for the delay and requested exemption from paying penalty. Harish Kumar procured part information—copies of Construction Watch Registers of some localities which showed violation of norms and in some cases meddling with details by applying 'whitener' (correction fluid on typed copy).
In yet another instance, Harish Kumar had filed an RTI Application with East Central Railways demanding copies of minutes of meetings of Tender Committees. He was denied information because of which he was compelled to file a second appeal in Central Information Commissioner MM Ansari's office. Mr Ansari ruled that "The minutes of the tender committee should ideally be put in (the) public domain, so as to enable the citizens to observe and scrutinise the decision-making process in the matter of award of tenders," but left it to the government to take a call on it. This had disappointed Harish Kumar and Mr Ansari had come for heavy criticism by RTI activists.
No one can break the heart and passion of an RTI activist and Harish Kumar is a sterling example. Not even a serious injury from a bomb blast can undo his commitment. Mr Kumar will soon continue to make the corrupt officers of the MCD uncomfortable and bring about good governance, steadily but surely. We wish Mr Kumar all the best in his relentless endeavour. Like they say, "little drops of water, little grains of sand, make a mighty ocean and a pleasant land."
(Vinita Deshmukh is consulting editor of Moneylife. She is also an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She can be reached at [email protected]).