THE ECONOMIC TIMES

WWW.ECONOMICTIMES.COM
BENNETT, COLEMAN & CO. LTD.
MUMBAI | 14 PAGES | *. 2.50 OR . 6.00 ALONG WITH THE TIMES OF INDIA ` `

SATURDAY, 2 JUNE 2012

We Dont Want to Come Across as Policing Corporate Bodies

CORPORATE 3

Indian Americans Sweep Spelling Bee

FREEDOM FROM ECONOMICS 14

Re Plunge Sends Overseas Study Costs Soaring

CORPORATE 3

ANOTHER KNOCKOUT PUNCH TO ECONOMY

FM says factors leading to slowdown have bottomed out. Do you agree?

JASWANT SINGH
BJP LEADER

15%
YES

81%
NO

4%
CANT SAY

TODAYS QUESTION

Will the New Telecom Policy benefit the sector?

http://economictimes.indiatimes.com

P-Note Investments at All-Time Low in April

y

BJPs Jaswant Now Bats For an NDA PM

Sage Advice: Rise above sectarian politics, former FM tells his rift-ridden party
PARTHA GHOSH
VARANI SAHU

y
Share of PNs in total FII investments slumps to 7.9% despite the govts assurance on taxation
NISHANTH VASUDEVAN
MUMBAI

Inside story
Delhi HC Backs IGL, says Petro Watchdog Cant Regulate Tariff
Ruling in favour of Indraprastha Gas, the Delhi High Court has said the petroleum and natural gas regulator has no jurisdiction to fix rates or regulate tariff. It also quashed the regulators decision to fix compression charges for IGL.

Corporate

lllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll

Air Indias Pay-Parity Report Out, To be Implemented by Mid-July

Civil Aviation Minister Ajit Singh on Friday announced the contours of Air Indias pay-parity report, which aims to bring the national carriers annual wage bill down by `250 crore, with its . implementation set to start by mid-July. Corporate 5

oreign investors taking exposure to Indian stocks through participatory notes (PNs) have pared their positions. The governments clarification that it would not tax PN holders did little to boost the prospects of these offshore derivatives in April. The share of p-notes in total investments by foreign institutional investors (FIIs) in April was at 7.9% the lowest monthly reading in seven years according to the Securities and Exchange Board of India (Sebi) figures. This data was not publicly available before September 2003. PNs are notes issued by foreign funds and brokers to offshore investors who

do not access the Indian market directly The investment is made on their be. half by FIIs registered with Sebi. The value of participatory notes as a percentage of FIIs stock and debt investments was 10.4% in March and 11.5% in February It was as high as 50% . in August and September, 2007, the peak of the bull run that year. It was widely perceived that if FIIs have to pay tax as per GAAR (General Anti-Avoidance Rule), then they will pass it on to PN holders. So, the general assurance that PN holders will not be taxed did not turn out to be very convincing, said Shefali Goradia, partner at BMR & Associates, a law firm that advises on tax and regulatory matters. While most foreign brokers have stopped issuing PNs to clients, hazy prospects are forcing many FIIs to stay away from Indian equities. Most hedge funds, which are among the biggest users of participatory business, have of late, significantly reduced investing in India because of the uncertainty around market conditions, said Vikas Khemani, president, Edelweiss Securities.
Many FIIs Stop Betting Through PNs 3

Jolted Government Swings into Action

As economists and analysts took the knife to their growth forecasts amid criticism of the UPA for its stewardship of the economy, key government functionaries from the prime minister downwards sought to project an impression they were mindful of these concerns and would act, reports Our Bureau from New Delhi. 7

NEW DELHI

Manufacturing PMI Keeps Hopes Alive

FULL REPORT 7

St Slumps 253 Pts on Growth Pangs

FULL REPORT 6

OIL FALLS BELOW $100 FOR THE FIRST TIME SINCE OCT 2011

AZIM PREMJIS INITIATIVE

What is the PROBLEM

What is the REASON

WHAT CAN BE DONE

Veteran BJP leader Jaswant Singh has said the National Democratic Alliances prime ministerial candidate for the next elections should be selected by all partners, and that the party has to shake off its sectarian and non-inclusive image. It is clear that while Congress is failing to meet the aspirations of the people, as Advaniji (LK Advani) said recently in Mumbai, somehow, BJP is unable to rise to the occasion and convince the citizens that it is the answer, said Singh, a close associate of former prime minister Atal Bihari Vajpayee, who had handled the finance, external affairs and defence portfolios in the NDA government, adding his voice to other senior BJP leaders who have called for introspection within the party . Senior leader LK Advani, in a much-discussed blog on Thursday , described the mood in the party as not being upbeat.
No Leadership Crisis in Party 2 JD(U) wont Fight Polls Under Modi 2

Singh says BJP has not recovered from the unexpected loss of 2004

on BJPs Image
It is clear that while Congress is failing to meet the aspirations of the people... somehow, BJP is unable to rise to the occasion

on PM Candidate
It has to be an NDA candidate in 2014 The NDA government for six years was sustained by the strength of these parties

Hope Floats at Maiden Charity Meet

Dozens of Indias wealthiest individuals huddled together on Friday to discuss philanthropy in the first such gathering of its kind in the country reports , Our Bureau from Bangalore. Without any overt pleas for charitable giving, the nearly 50 men and women who attended the event were given a glimpse of the crying need for extra help in areas that are vital to Indias development. The event, a brainchild of Wipro founder and philanthropist Azim Premji, is a subtle, carefully-crafted attempt at catalysing charitable giving by rich Indians. The media was shut out so the discussions could be frank. And it was made clear in the beginning that the invitees were not obliged to commit any money to charitable giving. The event, with a session each on education, healthcare, water and agriculture, was co-hosted by Premji, Microsoft founder Bill Gates and Tata Group Chairman Ratan Tata. Gates, who along with billionaire investor Warren Buffett has persuaded dozens of Americans to pledge their wealth to charity spoke about , the imperative for philanthropy one , of those who attended the event said on condition of anonymity. 3

THINGS
THAT COULD BE DONE TO REVIVE THE ECONOMY
Indias GDP growth dropped to a 9-year low of 6.5% in 2011-12. Getting back to 9% is not going to be easy this time, but a few things can be done to pull the economy out of its current troubles

Leadership Crisis
Absence of coherent, coordinated, determined behaviour at the top
Change of guard in key roles; Sonia Gandhis backing to tough policy reform measures

High Fiscal Decit

200%
rise in subsidies since 2007-08
Speed up Aadhar pilots; use study results to shift to direct transfer of subsidies across India Scrap diesel & urea subsidies, decontrol diesel

Car Sales in UPA-II Mode

Sales sputter in May, 2-wheelers vroom
CHANCHAL PAL CHAUHAN
NEW DELHI

Car Sales Slow Down

MAY 12 MAY 11 CHANGE

8,329

High Current Account Decit

% Likely at of GDP in last scal year

Controlling scal deicit will curtail current account deicit Restore distribution margins on inancial saving products, to curb demand for gold

Indias largest carmakers by volume struggled to lift sales in May due to a sharp rise in petrol price and slack demand after recent hikes in car prices, but resurgent two-wheeler manufacturers posted double-digit growth. Maruti, Indias largest carmaker, posted a 4% dip in sales at 89,478 units despite the excitement surrounding new launches such as the Ertiga and the refurbished DZire. Sales of its older models such as Alto, WagonR and Estilo also fared badly falling 29% to 29,895 units. , Hyundai Motor, the countrys second-largest manufacturer, posted a mere 3% increase in sales at 32,010 cars in May and warned of tough, depressed market conditions ahead. Tata Motors sales rose 6% to 20,503 cars.
Demand Outlook Doesnt Seem Bright 2

89,748

93,519

6,079

Maruti Suzuki

GM

-4%

-27%

High Ination

Rupee Depreciation

Stalled Reforms
Politics
A few bold reforms can turn sentiments quickly, the govt must appear to be in charge Goods and services tax (GST) can change the game

7.23%
& rising; still above comfort level
Ease supply constraints by removing APMC Act and opening up retail sector to FDI

20%
drop in rupee against dollar since early 2011
Overseas bonds are an option Clear FDI decisions quickly

High Interest Rates

8%
repo rate against 5% in March 2010
Strong commitment to iscal consolidation will help the Reserve Bank cut rates

As Economy Slows, Asset Recast Funds Smell Growing Opportunity

A sharp slowdown in economic growth coupled with higher borrowing costs and rising nonperforming bank loans have created a perfect setting for scavenger or asset reconstruction funds to make a killing on assets in distress. Markets+Finance 6
llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll

Drop in Investments

Power Sector Crisis

Decline in Portfolio Inows

Dow Jones Plunges on Weak Employment Data

US stocks plunged on Friday after a weak jobs report added to fears about a global economic slowdown and sent the Dow crashing 254.41 points, or 2.05%, to 12,139 at 12.10 am India time. The Nasdaq Composite slipped 73.61 points, or 2.60%, at 2,753.73. Markets+Finance 6

% of GDP, gross xed capital formation, lowest in seven years

Clarity on coal can kickstart power investments Get cash-rich PSUs to fast-track plans Switch from subsidy to investment, step up investment in roads, towns, broadband infrastructure

29.5

30000MW
power plant idling or underutilised
Supply coal to plants working at sub-optimal capacity Revamp state electricity boards to ensure power producers can sell to them without payment worries

`47,738cr
portfolio inow in 201112 against `110,120 crore in previous year
A general improvement in sentiment will help Allow employees to migrate from EPF to NPS for long-term savings to be deployed in stocks

PURNIMA

For Blue Blood, Royalty Now Blurs into Realty

Erstwhile maharajas cash in on land bank & palaces through real estate projects
RAVI TEJA SHARMA
NEW DELHI

SALAM

maid Bhawan Palace atop Chittar Hill in Jodhpur is the largest private residence in the world, being home to the family of the erstwhile maharaja of Jodhpur. But the grand palace will soon have humbler neighbours, with a clutch of villas popping up on one side of the hill and apartments on the other, both being built by the current maharaja, Gaj Singh. Sixty-five years after Independence, maharajas are making money from what they loved most huge tracts of

land and grand palaces. While running hotels or leasing out palaces to hotel operators started a decade or two ago, monetising land has picked up pace in the past three years after it dawned upon their owners that a new set of rich Indians are wanting to buy homes in these small, booming towns. If in Jodhpur, Maharaja Gaj Singh is building a premium residential project in the precincts of his Umaid Bhawan Palace, in another Rajasthan city, Udaipur, Maharaja Arvind Singh Mewar is giving shape to a residential project that will come up alongside a large convention centre and a new 100-room ho-

tel, next to a 30-room heritage hotel Shikarbadi that until recently was his family's hunting lodge. In Baroda, where the Gaekwads ruled for ages and built beautiful palaces and gardens, a residential project is coming up in the palace precincts. Arvind Singh Mewar, who runs the HRH Group of hotels that includes the Lake Palace hotel in Udaipur, says the residential project will generate liquidity He plans to deploy the . money unlocked in other projects and businesses, for which he is planning to rope in a national developer.
Smaller Kingdoms Catching Up Too 2

6,036

Ford

-14%

7,046