Foreign Direct Investment in India

Posted by Gopal Unnikrishna

Foreign Direct Investment in India

The retail market in India is alluring to  many foreign economies. Contributing  14% to the national GDP and employing 7% of the total workforce, it  is regarded as the ‘second most attractive retail destination globally.. FICCI in 2003 estimated that the total retail business to be Rs.11,00,000 crores or 44% of GDP. and the sales account for 44% of the total GDP of which food sales form 63%. There are far more retailers in India than other countries in absolute numbers.That about 4% of India’s population is in the retail trade shows how vital this business is to the socio-economic stability in India. . India is said to have the highest shop density in the world. In 2001 there were 11 outlets for every 1,000 people. Most of the unemployed find shelter in this sector.

However the Indian retail is highly fragmented, with about 11
million outlets operating in the country and only 4% of them being larger
than 500 square feet in size. Compare this with the figure of just 0.9 million
in the US, yet catering to more than 13 times of the Indian retail market size.The typical traditional indian retailer follows the low-cost-and-size format, functioning at a small-scale

There are the unorganized and unorganized sections of itThe  unorganized retailing, not subject to licensing, is by far the major form of trade in India, constituting 98% of total trade. The  organised trade under licensing and corporates accounts only for the remaining 2%. Unorganized retail trade employs nearly 3.95 crores, whereas organized trade employs only roughly 5 lakh people. So the former  is to be regarded as a well spread cushion to mitigate the lot of the unemployed millions of the country

Supporters of FDI in retail trade argue that ultimately the
consumer is benefited by both price reductions and improved selection,
brought about by the technology and know-how of foreign players in the
market. This in turn can lead to greater output and domestic consumption
but there are many considerations to show that things are not as simple as that. FDI in retail comes to the nation at a high cost.But the most important factor against FDI driven “modern retailing” is that it is labour displacing to the extent that it can only expand by destroying the traditional retail sector. Retailing is by far the easiest business to enter, with low capital and infrastructure needs, and as such, performs a vital function in the
economy as a social security net for the unemployed.  Entry of foreign players now will most definitely disrupt the current balance of the economy, will render millions of small retailers jobless by closing the small slit of opportunity available to them

The average Indian retailer is relatively small, with a turnover of just Rs.186,075. Only
4% of the 12 million retail outlets were larger than 500 sq.ft in size. The
total turnover of the unorganized retail sector was Rs. 735,000 crores
employing 39.5 mn persons. Contrast this with the largest retailer in the world ‘Wal-Mart’which has a turnover of $ 256 bn. and is growing annually at an average of 12-13% The average size of a Wal-mart is 85,000 sq.ft and the
average turnover of a store was about $ 51 mn.

India has 35 towns each with a population over 1 million. If Wal-Mart were
to open an average Wal-Mart store in each of these cities and they reached
the average Wal-Mart performance per store - we are looking at a turnover
of over Rs. 80,330 mn with only 10195 employees. Extrapolating this with
the average trend in India, it would mean displacing about 4,32,000 persons.
If large FDI driven retailers were to take 20% of the retail trade,  this
would mean a turnover of Rs.800 billion on today’s basis. This would mean
an employment of just 43,540 persons displacing nearly eight million
persons employed in the unorganized retail sector. The agriculture  already employing 60% of the work force and cannot absorb more unemployed. So manufacturing sector is the only other alternative. But with only 17% of our total workforce already
employed in industry, which contributes altogether only 21.7% of our GDP,
this sector can hardly absorb more without a major expansion. Contrary to our need the western concept of efficiency is maximizing output while minimizing the number of workers involved - which will only increase social tensions in a poor and yet developing country like India, where tens of millions are still seeking gainful employment

Foreign corporates with their huge resouces buy big from India and abroad and be able to sell low - severely undercutting the small retailers. Once a monopoly situation is created this will then turn into buying low and selling high. Thus by controlling both ends of the chain, the company could buy cheap and sell dear.

Even without FDI driving it, the corporate owned sector is expanding at a furious
rate. The total size of the corporate owned retail business was Rs. 15,000 crores in 1999 and was projected to grow at a rate of 40% per annum Thus The question then that arises is that since there is obviously no dearth of indigenous capital, what is the need for FDI? It is not that retailing in India is in the need of any technology special to foreign chains.

.Really, retailing is not an activity that can boost GDP by itself. It is only an
intermediate value-adding process. In fastly developing countries like China,it is the manufacturing sector  that is major  Whereas in India, manufacturing contributes a mere 23.1% of the GDP. If there aren’t any goods beingmanufactured, then there will not be many goods to be retailed! This underlines the importance of manufacturing in a developing economy It is evident that the manufacturing sector has been the engine for economic growth in China, which has been growing at 10.1% since 1991. In India, the credit for its 5.9% growth over the corresponding period goes mostly to
the service sector..it is an anomalous situation in India that it is the service sector , contributing 56% of GDP that is major, a situation obtained in developed countries.

Till we can create more jobs in the manufacturing sector we should put the FDI in retail on hold.


source

Posted by Gopal Unnikrishna

Incredible Photos: A Child is Born

Swedesh photographer Lennart Nilsson spent 12 years of his life taking pictures of the foetus
developing in the womb. These incredible photographs were taken with conventional cameras
with macro lenses, an endoscope and scanning electron microscope. Nilsson used a
magnification of hundreds of thousands and worked right in the womb. His first photo of the
human foetus was taken in 1965.

Sperm in the fallopian tube

The egg cell

Will they have a date?

The fallopian tube

 

Two sperms are contacting with the egg cell

The winning sperm

 

Sperm

 

 

5-6 days.
The clump has developed into a blastocyst, containing many more cells,
and has entered the womb

8 days.
The human embryo is attached to a wall of the uterus

The brain starts to develop in the human embryo

24 days.
The one-month-old embryo has no skeleton yet.
There is only a heart that starts beating on the 18th day

4 weeks

4.5 weeks

5 weeks: Approximately 9 mm.
You can now distinguish the face with holes for eyes, nostrils and mouth

40 days.
Embryonic cells form the placenta.
This organ connects the embryo to the uterine wall allowing nutrient uptake,
waste elimination and gas exchange via the woman's blood supply

Eight weeks.
The rapidly-growing embryo is well protected in the foetal sac

10 weeks.
The eyelids are semi-shut. They will close completely in a few days

16 weeks.
The foetus uses its hands to explore its own body and its surroundings

The skeleton consists mainly of flexible cartridge.
A network of blood vessels is visible through the thin skin

18 weeks: Approximately 14 cm.
The foetus can now perceive sounds from the outside world

19 weeks

20 weeks: Approximately 20 cm.
Woolly hair, known as lanugo, covers the entire head

24 weeks

26 weeks

 

 

6 months.
There are still 8-10 weeks ahead, so the little human is getting ready to leave the uterus.
It turns upside down because it will be easier to get out this way

The Indian Corruption Scene

Posted by Gopal Unnikrishna






Corruption, in addition to its ethical corroding impact is also very much a political issue having impeding economic consequences of lost opportunities,deferred investment, aborted entrepreneurship, and abandoned innovation. Widespread corruption evolved in independent India mainly from the distortions arising from a tightly controlled socialistic political economic regime where the economy was under excessive regulation and protectionism till the end of 1980s..”Corruption emerged almost as an illegitimate price mechanism, a shadowy quasi-market”

Since the first major scam in independent India, the  Haridas Mundhra scandel, that broke out in 1957, there have been at least 56 major scams which rocked India. That works out to be more than a major scam every year which after the year 2004 increases to an average of more than four per year, with the year 2010 being the high watershed of corruption scandals that can "boast" of a total of nine scams. Among those of last year, there are the shockers like 2G spectrum ,Commonwealth Games, Adarsh Housing Society, Indian Premier League, Lavasa, Uttar Pradesh Food Grain, Hosing Loan, all big scams. And this year so far we are bombarded with Hasan Ali Khan, Noida Corporation Farmland, Black money in Swiss bank, Bellary Mines, and EPFO scams, a veritable basket of hot potatoes.

Transparency International's Corruption Perceptions Index in 2010 rated India as 87th out of 178 countries. An earlier 2005 study by  them in India discovered that more than 50% of Indians had primary experience of paying bribes or influence pitching to get tasks done in public offices with success. Indian bureaucracy is notorious for its inefficiency. A 2009 study of the heading economies of Asia, disclosed Indian bureaucracy to be not merely least efficient out of Singapore, Hong Kong, Thailand, South Korea, Japan, Malaysia, Taiwan, Vietnam, China, Philippines and Indonesia. It was also found that forging with India's civil servants was a "slow and painful" process. Added to this bureaucratic ineptitude is corruption by avaricious, power-thirsty political leaders and the black money being laundered and or stashed abroad..

From a country where 80% of the people earn less than 2$ per day and every second child is malnourished, it is estimated that more than a trillion dollars are stashed away in foreign havens. India is said to top the list for black money in the world and has more black money than all other countries put together, according to Swiss Banking Association Report (2006). India is a rich country of poor people, it seems.

Take the case of India’s most powerful ruling family, the Nehru-Gandhi political dynasty. "Independent reports published through 1991 to 2011 calculated the financial net worth of the family to be anywhere near between $9.41 billion (Rs 42,345 crore) to $18.66 billion (Rs 83,900 crore), most of it in the form of cash.

Criminalization is also a serious problem in contemporary Indian politics.  The Vohra Report, submitted by the former Indian Union Home Secretary, N.N. Vohra, in October 1993, studied the problem of the criminalization of politics and of the nexus among criminals, politicians and bureaucrats in India. The report revealed a criminal network that was running an almost  parallel government which enjoyed patronage of politicians from all parties. In successive elections criminals had been elected to local bodies, State Assemblies, and even the Parliament. The Washington Post in 2008 reported that nearly a fourth of the 540 Indian Parliament members faced criminal charges, "including human trafficking, immigration rackets, embezzlement, rape and even murder"--

Not that there is no anti corruption mechanism in the country. At central Government level, there is Central Vigilance Commission, Departmental vigilance and CBI. CVC and Departmental vigilance deal with vigilance (disciplinary proceedings) aspect of a corruption case and CBI deals with criminal aspect of that case.However, if a citizen wants to make a complaint about corruption by a politician or an official in the Central Government, there isn’t a single anti-corruption agency which is effective and independent of the government, whose wrongdoings are sought to be investigated. CBI has powers but it is not independent. CVC is independent but it does not have sufficient powers or resources

"The fast by social reformer Anna Hazare not only forced parliament to move on an anti-graft bill, it may have woken the ruling Congress party to the fact governance is more important than playing populism with regional and caste-based votes."
That perhaps is the only silver line now.

The Godly Treasure

Posted by Gopal Unnikrishna

The Sree Padmanabha Temple in Thiruvananthapuram in Kerala, India, traditionally regarded as the family temple of the erstwhile royal family of the State of Travancore and administered by the royalty, at once emerged as the wealthiest temple in the world when its long-closed vaults ,barring one that couldn't be opened , were accessed and the contents enlisted in compliance of a directive by the Supreme Court of India. The directive of the court was in pursuance of a suit filed by a member of a priestly family associated with the temple, praying for state take over of the temple from the royalty in the wake of  his dissatisfaction with the temple administration. This gargantuan wealth consisting of precious stones, gold, silver and also ornaments , statues and other exquisite artifacts in high-pristine gold studded with gems, have aroused sheer ecstasy among devotees, It is speculated, perhaps not widely off the mark, that this temple treasure is worth 1.5 to 2 lakh crores of rupees and that if the antique value of most of it is taken in to account the value might rise to mind boggling astronomical figures. Unfortunately and expectedly such hitherto unheard of wealth has aroused envious angst and greed among certain other sections of people. This section mainly consisting of atheists and leftists would rather have this incomparable temple heritage be confiscated and amalgamated to the state exchequer so that they can lay their hands on it with the help of the wily politicians among them.

                                                                    

The royal family of Travancore ( Thiruvithammcode) is believed to be the successors of famed Cheraman Perumals who were headquartered at Kodungalloor ( the ancient Mahodayapura).. Chera kingdom under the Perumals got dismembered in early 12th century which led to the formation of many feudatories and to their ascendency as local rulers. The southern section known as Venad together with nearby Aynad was soon constituted as the early Travancore principality by the Venad kings whose family deity it was, Lord Vishnu in the form of Sree Padmanabhaswami.

The history of the temple can be traced back as far down to 9th century as evidenced by Vaishnavaite saint Nammalvar"s devotional songs called "Malainattu Thiruppatikal" which eulogize the Vishnu temples of Kerala wherein Sree Padmanabhaswami temple is praised as one of the most sacred Vishnu temples of Kerala. The devotion of the royal family to the temple was extraordinary, amounting to almost total surrender. Maharaja Anizham Thirunal Marthandavarma the maker of modern Travancore, extended the small principlity he inherited that consisted of only areas from Kanyakumari in the south to Attingal in the north in to what is now known as the Travacore area or the erstwhile princely state of that name, by conquering and annexing all the feudatories beyond Attingal and up to Alangad and to the very borders of old Cochin kingdom, finally defeating even the great Samuthiri of Kozhikode. At the end of all his conquests and the consolidation of all the territories in to a viable new greater princely state, the Maharaja performed 'Thrippadidanam",the ultimate act of devotion to his deity by surrendering the whole state at the feet of Lord Padmnabhaswami and vowed to rule the state only as a trustee and servant of the lord, and then on assuming the title of Sree Padmanabhadasa ( servant of the Lord).

                                                                            

Though the state was symbolically surrendered to the deity, the administration of the state and the temple was maintained scrupulously separate . Even in earlier days the temple affairs were managed by a group called "Ettarayogam" ( group of eight and half) consisting of eight Brahmin houses and the Maharaja, latter being the half unit or vote. The treasury of the temple and the exchequer of the state were never allowed to be mixed up or overlapped. Management and revenue records of the temple were known as "Mathilakam Records" and have been published over the time ,one volume having been published by the famed Malayalam poet ,the great Ulloor S. Parameswara Iyer when he was the Dewan Peshkar of the state.

It is quite clear that the wealth now uncovered in the vaults of the temple represents the offerings of the devotees , among them other rajas and dignatories, over the ages, and the conquest booties gifted to the deity by successive maharajas all of which accumulated in to great wealth  rightly belonging to the temple. It is in fact  the personal property of Lord Padmanabhaswami who according to Indian laws is to be deemed as a juristic person with all the rights and privileges of an individual. The latest and the most famous case where the argument based on juristic nature and attribute of divinity or diety is the Ayodhya Ramajanmabhoomi verdict accepted and relied in the verdict by the three men bench of the Allahabad High Court wherein that was the only argument accepted by the court (See: http://jeeyu.blogspot.com/2010/12/blog-post.html). There is no way the state can claim it or come in to the picture except as provider of adequate security, considering the wealth  as matter of great pride to the state. No amount of gratitude and praise for the royal family of Travancore is adequate, who most faithfully and zealously guarded this wealth over the ages. Their flag while in power, red with a silver, dextrally-coiled, sacred conch shell can now truly be imagined to be flying and fluttering in the high winds of grandeur and they deserve a 21 gun salute as the British Empire used to honor them with.

Mubarak Tumbles

Posted by Gopal Unnikrishna

Arab Republic of Egypt bursts out in exultation as Mubarak quits

     His exit countermands, six decades later, the Arab domain's original secular despotism. He was tumbled by a radically fresh force in regional politics — a mostly secular, bloodless, youth-led democracy campaign that fetched Egypt’s civil-libertarian and Islamist resistance groups collectively for the first time below its banner. One after another the demonstrators defied each weapon in the armory of the Egyptian autarchy — foremost the heavily weaponed riot constabulary, and then a governing party militia and ultimately the state’s potent propaganda machine. Mr. Hosni Mubarak* capitulation dispatched a rampart of American foreign policy in the neighborhood. The America, its Arabian allies and Israel are now brooding whether the Egyptian armed forces, which has vowed to hold liberal elections, bequeath a move over  to a new era of parliamentary pizzazz or to a precarious careen into instability or Islamist reign.

The Muslim Brotherhood, the unlawful Islamist social movement averred it represented simply a supporting actor in the rebellion.The fraternity, which was sluggish to keep up the track of its own youth wing into the streets, has pronounced it will not field a nominee as President.

Hosni Mubarak epoch ceased without whatever of the constancy and predictability that constituted as the hallmarks of his incumbency.

Egypt and the Rest of Middle East

by Gopal Unnikrishna

For decades it has been the assumption in the Arab world that its rulers are too powerful to be confronted by unarmed people. So when Tunisia provided a real, live example of how, when the security forces kill demonstrators the people can raise the agitation to the sblime level of revolution ,  it was no more a big surprise to Arabs. Suddenly the Middle East's authoritarian states only look  solid until the day they turn into clay and revolution seems possible everywhere. Algeria, Egypt, Jordan and Libya all seemed more likely candidates to go first. The domino effect is in full swing. Jordan, Algeria, Syria, Yemen and Morocco are all candidates to suffer the same fate. Obviously President Hosni Mubarakhas has run out of carrots, though not quite of sticks.


Yet, it may be too premature to say that the Egyptian turmoil will spread like wild fire in the middle east engulfing most countries there. This is because most of the issues that have brought Egypt to the brink may be more easily solved by Arab countries richer in oil. In neighbouring Libya, for example, the regime has just announced vast spending on public housing in an attempt to buy off discontent.


In the powerful signal the Egyptian uprising is sending to Arabs elsewhere, the crucial to the long-term consequences for the region will be the nature of whatever government eventually wins control of Egypt. The most favourable next step would be if someone known and respected like Mohammed elBaradeior or another figure with similar stature such as Arab League Secretary Amr Moussa.was to become acting president for a few months before free multi-party elections were held.

But such a propitious outcome is by no means guaranteed. Algerian style civil war, a new Saddam Hussein or a Yemeni-style Maoist regime are all remote possibilities and there is a real chance of a military coup.What's more, despite their remarkably cautious role in the revolution so far, elections might well bring the Muslim Brotherhood to power - which, as the ideological twin of Hamas in the Occupied Palestinian Territories would worry  many in the West but delight the Islamist tendencies bubbling away beneath the surface of other Middle Eastern states.

Where Egypt goes, history shows that other countries soon follow. Almost every major social or political movement of the last 100 years in middle east started in Egypt - from the Muslim Brotherhood, launched in the city of Ismailia in the 1920s, to Ayman al-Zawahiri, Osama bin Laden's chief ideologist.

If Mubarak is removed tidily and replaced by something better, it could have a benign effect on many other countries in the region.

Egypt Convoluted

Posted by Gopal Unnikrishna

This is a new Egypt and no matter what happens it will not rivert to become the old Egypt.

In Cairo's Tahrir Square, thousands of Egyptians-men and women, young and old, rich and poor-gathered today to celebrate their victory over the regime's hated police and state security forces and to call on Mubarak to step down and leave once and for all. This followed the massive protest on Friday, the culmination of three days of demonstrations that began on January 25th to mark National Police Day.

The people had almost believed that they culd never revolt during Mubarak"s regime but the Tunisians showed the way and the Egyptians did it in just three days. People talked about Friday's protest like a war; a war they'd won. Crowds had the right strategy in that the military was greeted warmly on the streets of Cairo Throughout the day people chanted: "The people, the army: one hand."Crowds roared with approval as one soldier was carried through Tahrir square holding a flower in his hand. Dozens of people clambered onto tanks as they rode around the square.

The police were a different story. Their brutality the past few days--decades in fact--has been well documented. Saturday the police force hauled up iside their HeadQuarters in the Interior Ministry fired upon the crowd when they approached the building, three people instantly fell, and the crowd retreated, but only to advance menacingly as soon as the firing stopped, while the burnt up skeleton of Mubarak's National Democratic party Headquartes loomed in the background pointing to the ominous portends.

At this point it seems clear that  the people are not leaving the streets. They own them now and they are refusing to go until Mubarak does.