26. July 2009 by amal.

India definitely moved forward post 90’s from protected economy to liberal economy. Many of the PSU’s, govt. controlled sector such as bank, power, telecom, aviation etc. were open for private sector. Today @ mid-2009, progressive volume speaks about the result itself, growth achieved in last two decades. India companies started becoming global powerhouse and started moving inside-out. India is no longer considered a laggard country, rather a leader on its own. India contribution rather participation towards the world economy is must both as consumer and producer. Issue is did India moved in right direction and liberalize all relevant sector, companies towards private participation. Largely yes, if we consider growth demonstrated by Tata’s, Mittal’s, Airtel, SBI, Reliance, Wipro/Infosys establishing credibility not only limited to India, truly in global manner.

However, few thorns are still pricking India and one of them is government backing of sinking ‘Titanic’s’ such as Air-India. Air-India, though one of the best recognized brand “Maharaja” couldn’t able to achieve or open eye to the competition. Today, as it stands Air-India is dying and not gradually rather immediately. It doesn’t have money to pay wages/salaries; customer (even loyal Indians) prefers competitive airlines any day, operational expenses far exceeded the revenue numbers. It is demanding huge corpus in excess of 20,000 crore to infuse sign of life and recovery. It is high likely; Air-India will be given chance to rebirth in totality.  There is no way; Air-India can be left on death-bed with so many employees and support system relying on Air-India. More-over there is brand-equity associated with Air-India. That is still truly aviation brand of India.  There are already certain measures taken, such as change of management, operational expenses reduction, and focus on revenue. Aviation ministry must be contemplating how to infuse funds setting the correct precedence, rather than giving improper impression of supporting bad organizations how-so-ever badly run they are. 

One of the key lessons in this scenario is to evaluate organizations similar stature and establish auditing mechanism such that such instances are not repeated again. Let all the govt. protected organizations such as power companies, petroleum companies, educational institutions etc. define profitability in right manner.  Right manner can always be debated, since there is definite need to provide subsidy to rural sector, BPL families. What can’t be disputed is avoiding such circumstances of letting go organizations at point of no return and then infusion of 20K crore are required just to make “Maharaja” smile again. 

Being an optimist, I believe with such a blessed govt. machinery, they must be taking note of the situation and assessing/redefining business models of other protected organizations @ India. For sure, Maharaja will shine as usual, not hypothetically rather in real-sense sooner than later.

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26. July 2009 by amal.

In continuation with my recent blog about WPI as incorrect measure of Inflation, it seems Indian government is moving in right direction. There are definite steps being taken to reconsider Inflation measure in India. As per Mr. Pronab Sen (Chief Statistician - Central Statistical Organisation), new measures will be introduced around Q3, 2010 timeframe. Not only that, there will be four sub-indices i.e. national, urban, rural, state to define Inflation measure at appropriate levels. 

This will definitely bring sanity and purpose to Inflation as appropriate measure, which is currently grossly disconnected with WPI as measure. Good to know I know one topic in Economic well, at least thought process is aligned in right direction. Time to move forward and wait for Aug, 2010.

Source:  Inflation news  @ www.tradingIdeas.in

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