Showing posts with label IIPM Gurgaon. Show all posts
Showing posts with label IIPM Gurgaon. Show all posts

Friday, August 10, 2012

Enemies in the shadows

As Sri Lanka negotiates the detritus of a long and tragic ethnic conflict, huge challenges loom over the tentative reconciliation process. B&E’s Surabh Kumar Shahi reports from Vavuniya

Ponnambalam Ramanathan was part of Sri Lanka’s tragic war. It was a long time ago. He is now part of the wobbly peace now. Four years ago, a LTTE veteran of ten years, he accompanied a small assault team that detonated a bomb inside the office of a political entity which was a constituent of the government alliance then. Ramanathan does not remember exactly how many were killed. He just remembers that no one was left. He killed two people.

Sitting inside a rehabilitation camp in a suburb of Colombo, he does not want to recall those days. He surrendered in 2006 outside and promptly threw away the cyanide capsule that any LTTE cadre, was supposed to swallow to evade arrest. He is now learning carpentry and is almost impervious to any emotions. But he regrets the violence.

Such optimism seems misplaced in today’s Sri Lanka. To overwhelm the LTTE, the regime had augmented the war machine to match the callousness of its opponent. It is now tackling the fallout of that war. As it confronts accusations of human rights abuses, the regime tries to alleviate the uncertainty and mistrust among ethnic Tamils after the conflict that lasted close to 30 years. The president, therefore, has an uphill task of reconciliation before him.

In the refugee camps in the North many Tamils are still struggling to survive. Between 150,000 to 300,000 refugees are still there. They somehow managed to survive the last stages of the battle. However, the end of the conflict has triggered questions regarding their future and the odds of co-existence between the Sinhalese and Tamils.

The first step is to allow the remaining refugees to return home. Without this, all talk of reconciliation would be meaningless. Talking to B&E, Wickremabahu Karunaratne, leader of the New Left Front, says, “The government has stressed it has sifted about 10,000 rebels from among the refugees. Then what are the camps for? Let the people return and take the initiative in the peace process.”

The government too understands the issue and is keeping it on its priority list. However, the process is painfully slow and ridden with red-tape. The regime’s non-clarity over their plan to develop and reconstruct the north and east is not helping at all. With the elections out of the way, the regime needs to take local communities and political leaders into confidence before beginning the process of reconstruction. “The military influence over policies and control over the population need to end. Only demilitarisation can lead to confidence-building,” says K Sarweshwaran, a political scientist based in Colombo. The regime must also allay fears that demographic changes could dilute the Tamil character of the north.

Restoring land comes next. A huge section of the Tamils sent out of the IDP camps have not returned home nor have they been resettled. Instead, they have been sent to “transit centres” in their respective home districts. These are essentially schools, government buildings and places of worship which are far away from any means of livelihood. Also, the homes of many of these Tamils were either partially damaged or fully destroyed during the conflict. And most of these houses have also been relieved of household items and any items of value. The regime must come up with adequate compensation so that the people might restart their life.

Return of agricultural land will be another essential step. But there are teething problems. Large tracts of farmland, riddled with land-mines laid by the LTTE, are yet to be de-mined. Farming is impossible on these plots. Even in areas that have been officially de-mined, the exercise had been done only up to “battlefield use” standards, not up to “humanitarian” standards.

The government on its part has done a few things that will help mend ties. For example, the allotment of rice for the northern and eastern region has been increased so that till the time agriculture is impossible, there is a constant supply of rice. Also, the government and financial institutions have decided to reduce interest rates and taxes on loans in these regions. This will encourage investors as well as bring in much-needed change in infrastructure in the area. Tender for a new railway line connecting the region with other parts of the country has already been floated. In some of the sections, the work has already started. All these initiatives are part of the regime''s “Northern Spring” initiative.

Strengthening of democratic institutions would be equally crucial. Sarath Fernando, moderator of the Movement of Lands and Agriculture Reform, told B&E, “A country needs strong democratic institutions for confidence building. We are no exception.” A strong independent media is the need of the hour. One of the conflict’s casualties has been an independent press that can openly criticise both the parties without any fear of retribution. Sri Lanka’s ranking in a press-freedom index has slid in recent years as prominent journalists critical to both the Rajapaksa political family and the LTTE have been assaulted, threatened and even killed.


Monday, July 30, 2012

Stratagem-TELECOM: POST 3G IMPACT

Amidst sluggish indicators of revenue, margins & subscriber additions, 3G and the promised data play were supposed to be major game changers. But evidently, it won’t be a moment too soon

When we look at service provider market share between the end of September 2010 and June 2011, the top 6 players who really lord over the market with double digit shares each – Bharti, RCOM, Idea, Vodafone, Tata & BSNL – had a combined market share of 88.37% last September. This combined market share has gone down to 86.15% by June 2011. A number of times, there is talk of consolidation to improve market share. Even if M&As happen between players beyond this coterie of 6, that can give valuable gains on a circle by circle basis. But consolidation is currently a difficult end considering that the norms are still not conducive for it. So the one way of getting rid of their performance blues is to look at ways to grow market share and aggressively grab customers from each other.

So far, they have been trying to achieve that through the ‘famous’ (for customers, at least!) price wars. However, the game may now significantly move away from pricing. Recently, Bharti Airtel, Vodafone, Idea and RCOM have all announced phased increase in tariffs of a minimum of 20%. Tata DOCOMO announced a price increase by 25-67% across various circles (see related story on price rise in this issue). RCOM also announced that it would no longer offer minute-based mobile schemes, which would offer unlimited minutes over a period. The costs of laying out network infrastructure and the heavy debt loads are the reasons for the same and it may be also be conjectured that larger players are colluding in recognition of the fact that price wars are helping no one. The constraints of a high amount of debt on their balance sheets has already lead them to cut down significantly on expansion plans. From Rs.298 billion in CY 2008, Bharti, RCOM and Idea together have brought down their capex drastically to Rs.95 billion in CY 2010 (COAI-PwC report).

In the short term, ARPUs and VAS share of revenue may fluctuate quite consistently. But as Stefan Zehle, CEO, Coleago Consulting tells us from UK, “When you are analysing post-3G impact and how it will change competitive dynamics in the sector, the most important criteria is the kind of customers each player is attracting.” While that gives more impetus to players like Bharti and Vodafone who got the cream, MNP subscriber movements post-3G will be an interesting statistic to watch out for. All leading players have reported decline in per month subscriber additions this year. Both Bharti & Vodafone had net subscriber additions of 3.1 million in December 2010, but the numbers have tapered off over the months to around 2.1 million in June, according to data from Angel Broking. For BSNL, the figure has dropped from 3.2 million to 0.8 million. Idea added 1.4 million in June 2011 compared to 3 million in December 2010, while the corresponding figures for Aircel are 0.9 million and 1.4 million respectively. RCOM had lost over a million customers to MNP till May (COAI), though the company claims that it has been gaining a sizeable number of high value clients as well.

So what will work for them in this battle for margins and not volumes? As far as 3G is concerned, a lot of the emphasis will now have to be on quality of service. The greatest gain from any M&A activity they undertake will ostensibly the one that they paid through their teeth for – spectrum. If India reaches the projected 1 billion wireless subscriber figures by 2014, the requirement of spectrum will be as high as 800 Mhz. according to TRAI. Post MNP, service will be a significant differentiating factor to avoid churn of high value customers in particular. On a benchmark basis, Indian mobile operators are working on a 3G spectrum of 5MHz. (compared to global benchmarks of 2x10 MHz. and 2x15 MHz.), which is very miniscule in terms of offering high quality data services. Incumbents are waiting for M&A norms to be eased, and a number of the new players are also reportedly sitting on spectrum waiting for the right time. Spectrum wars may get even more intense in the coming months. Another important aspect that players have to look out for more aggressively is enterprise services. At present, the market is estimated at around Rs.230 billion, and at a CAGR of around 12-13%, is estimated to be worth around $10 billion in another five years.

While 3G winners have discovered a blue ocean for themselves to revel in, the challenges in the short term towards revival of revenues and margins are pretty daunting. According to estimates by a JP Morgan report, 3G subscribers would grow to around 240 million by 2015 and operators would cumulatively earn revenues of Rs.899 billion by then. Yet, they would fall short of the expenditure incurred along with the interest rate on the debt they have accumulated (include cost of network roll out & the break even dates push back even further). Also, 240 million is a highly positive projection compared to the E&Y-FICCI report, that projects 142 million 3G users by 2015 and just over 300 million by 2020. The telecom space is well into an air pocket. On one end, players have to look at how they can best milk the investments that they have made rather than looking at making new ones. On the other, they have to look for ways to manage demand in higher value segments to their benefit, so that they can have the cream and eat it too!


Saturday, July 28, 2012

The Globe this year and analysis on Major Sectors of India that are ripe for M&A

B&E & IIPM Think Tank present the M&A update 2011-12, Including a Primer on M&As across The Globe this year and analysis on Major Sectors of India that are ripe for M&A

The fact is that whether M&As are used for survival or for growth, they’ll remain one of the most glamorous strategies a CEO could ever employ.

And to that extent, it has been an interesting first half of the year 2011, which just about took us through everything the world (read: corporate) has been through over the last 3-4 years. From prosperity at the bourses, to shareholders suddenly crying out for mercy; from an economic boom to a devastating recession, the world has been through a roller-coaster ride all these years. Needless to say, the scenario had also affected the appetite for mergers & acquisitions (M&As) across the globe. After all, investor sentiment, consumer demand, and most importantly financing was simply not there for deals to happen. But, as US corporate profits reach 60-year highs and global economies start accelerating, M&As are definitely coming back with a bang. In fact, financial investors have already started flexing their muscles as new capital starts flowing in their funds. But is the corporate world ready for consolidation – across geographies, across industries – once again? And if yes, which sectors are ripe for consolidation? Or, are these moves by companies just add-on efforts to stay relevant amidst yet another recession (a double dip) that has not only started haunting the US, but also several economies across the euro zone and is also giving sleepless nights to the world at large?

The numbers look stunning. Global M&A deal value reached $1.16 trillion in the first half of this year, registering a 27.9% increase from last year levels. Although the deal volume was down by 2.7%, from 5,843 announced deals in H1 2010 to 5,684 announced deals in H1 2011, the ongoing trend suggests that while the larger, cash-rich buyers are prepared to spend, their smaller counterparts are playing a waiting game, sceptical of making commitments in an uncertain economic climate. But despite the dip in the volume of deals, there’s potentially good news on the supply side, as previously frustrated sellers recognise that the market is now open for business – even if it is not quite as hot as they would like. These sellers include private equity (PE) players, which need to sell assets (which they have been holding for long) in order to move forward. In fact, the first half of 2011 was the busiest six-month period since H1 2008 with closed deals worth $1,266.1 billion. While the largest deal so far this year is Deutsche Telecom’s $39 billion disposal of T-Mobile USA to AT&T (the largest corporate deal since ExxonMobil’s $40.6 billion acquisition of XTO Energy in December 2009), Johnson & Johnson’s $21.2 billion acquisition of Switzerland-based Synthes GmbH stood a distant second. Even cross-border M&As saw the busiest six months since 2008. Deals by individual countries announced in the first half of 2011 added up to $468.1 billion; registering a whopping 53.3% increase since H1 2010.


Thursday, July 26, 2012

Russians Out! Yankees in! Germans down!

A Comprehensive Journey through The History of The North Atlantic Treaty Organisation (NATO) and Libya will Convincingly Demonstrate that The World has more to fear from NATO than from Colonel Muammar Gaddafi!

Libya, a developing nation in North Africa, which has set an ideal example of development, is witnessing a downfall; economically, politically and socially. This is because ‘rebels’ (with an ever-present tribal mentality to overthrow Gaddafi without realising the severity of the measures they have adopted), who are aided and equipped by NATO forces are destroying Libyan oil fields & buildings, ruining existing infrastructure and killing innocent civilians. A nation built with hard earned wealth (Americans or Europeans didn’t gift Libya the wealth it has earned, in fact they tried everything possible to stop Libya), is now being sent back to the stone age with naive impunity.

In its last 43 years of history under the leadership of dictator Gaddafi whom NATO now wants to remove badly, Libya hasn’t met with such a catastrophe. To a sane observer, it is not difficult to realise that if Gaddafi is bad for Libya, then what NATO strikes are gifting to Libyans in the name of ‘liberation’ is even worse. However, this is not the first time that the world’s most influential collective defence force NATO has endangered world peace. History bears testimony to the blunders that NATO has committed and the wars that it has waged, which are not only unjust but also unpardonable for mankind.

After being formed on April 4, 1949 based on the North Atlantic Treaty with a simple ideology to keep the “Russians out, Americans in and Germans down”, as aptly stated by the first NATO Secretary General Lord Hastings Lionel “Pug” Ismay, NATO basic structural premise was its key fault. Its biggest failure has been in defining its relationship with Russia. The Soviet Union expressed its desire to join NATO in 1954, but the proposal was rejected, suspecting that the Soviets were conspiring to weaken NATO. But surprisingly, in the next year, it accepted West Germany on May 9, 1955 as a member to resist Russian military might. This move not only formally started the Cold War but also resulted in the creation of the Warsaw Pact signed on May 14, 1955 by the Soviet Union, Hungary, Czechoslovakia, Poland, Bulgaria, Romania, Albania, and East Germany – a pact to counter NATO, which apparently hasn’t even matured with age. As recently as in 2007, NATO again slighted Russia with its announcement of plans to install a defence system with interceptor missiles in Poland and Czech Republic to defend the nations against Russia. Yes, one can understand that Putin loves to attack nations faster than talk (Georgia, an iconic case study), but to deliberately go overboard in announcing the missile systems was a critical geopolitical blunder.





Tuesday, July 24, 2012

Stratagem-INTERNATIONAL : WALT DISNEY COMPANY- RIGHTS AND WRONGS

The Walt Disney Company has been one of The Most Iconic Corporate Turnarounds in Business History. Robert Iger has been Strategically Leading The Company since 2005, but The Challenge lies in reducing dependence on a Specific Business Segment. Is Disney up to it?

Nevertheless, Walt Disney Company is a much steadier ship today. In 2003, revenue stood at $26.48 billion and it grew to $38.06 billion in 2010, implying a CAGR of 5.31%. It isn’t the 20% growth rate that Eisner targeted yet, but the company is showing a reasonably healthy financial position despite the global financial meltdown. The man behind this success is Robert Iger, President and CEO. When he took over the office in 2005, Disney was a bottomless spiral of bureaucratic traps. Employees were afraid of decision making, which was largely centralised. His first priority was to undo the damage, which Disney had endured mostly on part of Eisner’s egoistic pursuits. He started off by patching up with Steve Jobs’ Pixar Animation, a relationship which Eisner had destroyed. According to Michael Corty, CFA Stock Analyst, Morningstar “Iger knew the importance of animation to its studio entertainment business, so he quickly patched up with Steve Jobs”. On January 24, 2006, Disney acquired Pixar for $7.4 billion in stocks. Although the move made Jobs the largest shareholder in Disney, it has proved to be one of the best acquisition that has bolstered Disney’s animation division. In 2010, the studio released Toy Story 3. Produced at a budget of $200 million, the movie grossed $1.06 billion; becoming the highest grossing movie of 2010 worldwide and the 5th highest grossing film of all time. The acquisition of Marvel entertainment couldn’t have come at a better time. Despite being in the movie business for ages, Disney always felt restricted with respect to its target audience. With more than 5000 characters under its label, Marvel has given Disney access to an array of inventory, which presents enormous franchising opportunities (properties can be exploited across segments). Disney is making considerable investments in the Parks and Resorts business. It has already started construction of the Shanghai Disney Resort. Conceptualised on a budget of $4.4 billion, the media giant holds a 43% stake in the venture. Although this is a late cycle business, the company will realise formidable earnings riding on the back of economic recovery and the 260 million viewers of its TV shows in the mainland.

One of the areas where Disney needs to work extensively is the interactive media segment. The business has been incurring operating losses for the past three years. Till last year, the Interactive Media Group had an employee base of 700. After the announcement of the results for 2010 wherein the division posted losses of $234 million, around 30% of the workforce was laid off.

Disney is on the right track so far and Iger seems to be playing all his cards right. The risk however lies in the fact that revenues are centralised. A segmental analysis of Disney’s business reveals that the Media Networks business generates 45% of all revenues. The remainder, which includes Parks & Resorts, Studio Entertainment and Consumer Products contribute 28.27%, 17% and 6.83% respectively. The media network business forms the backbone, and ESPN contributes 75% of cable network sales. But the growth of live streaming providers like Netflix can threaten that in the future.

Disney needs to extensively work on reducing its dependence on one business. Currently, the business is doing well, but then, the problem with good times is that they may ignore potential problems on the way. Moreover, with the kind of opportunities that he now has, Iger needs to push for higher growth in revenues and a return to the legendary days of lore.

Read more...

Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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Wednesday, July 18, 2012

Understanding and Solving The Great Indian Onion Price Crisis!

There seem to be two commodities that are all set to face each other in a combat mode.  If on the one hand, bidding at IPL-4 is breaking and making newer records by offering otherwise affordable players, almost unaffordable bids and making them out of the reach of smaller teams, then on the other hand, an affordable and staple vegetable – the onion – is all set to make newer records with its price rise, again making it unaffordable to almost every consumer!

The prices of onions have been exponentially shooting up since December 2010, mercilessly burning the pockets of consumers at large! As per figures released by The Ministry of Commerce and Industry, the wholesale price index (WPI) for food climbed up by more than 12% in the first week of December 2010. Comparatively, onion prices have shot up by anywhere between 80 to 150% during the same period across the country.

What has been intriguing is the manner in which the government has dealt with the entire crisis! It is not that the government is not aware that the onion is an integral component of its citizens’ food baskets, and more so for the ones below the poverty line who barely survive – still, the government maintained its lackadaisical attitude towards the crisis. It is also not that the government was unaware of the fact that climatic challenges had created havoc for the crop in Maharashtra – still, the government chose not to take preventive action. It is also not that the government was unaware of the fact that hoarders in our country await such opportunities and make a killing by further creating supply bottlenecks – still, it chose not to intervene adequately. It is also a fact that the government knows that onions have a legacy of bringing down governments – but it still chose to remain silent! So much so that in the month of November, when onions were taking more time than normal to reach the market from Nashik (due to untimely rain), the government and authorities didn’t put into place any measure to check the expected price rise. And what followed in December was bloodbath, as onion shipments were reduced by almost 270%, thus escalating the price by 150% in a period of seven days. What is most paradoxical is that instead of tracking and acting upon real time information, the Minister for Agriculture was busy issuing export licenses, which had to be revoked immediately after the crisis! And mind you, such illogical issuing – and then cancelling – of export licenses is not new. The same was done for sugar and wheat sometime back.

It is not just about onions – the distortion in prices of essential food commodities has been at a crisis point for a long time now. There have been numerous reports which document the kind of exponential gaps (at times, to the tune of 400%) that exist between the wholesale and the retail prices of essential food commodities – but no concrete action has been taken by the government. As a kneejerk reaction this time, what the Ministry of Agriculture did to contain the price rise of onions was to ban exports on one hand and to permit imports on the other. It did give a temporary relief, but clearly, was a hasty and illogical call. As per reports, the onions that were exported to countries like Pakistan for Rs.20 per kilo, had to be imported back at Rs.45 per kilo! Not to forget that Pakistan too eventually had to put a ban on exporting to India.

The truth is that onions would keep burning the national pocket till the time structural changes are not made in the agriculture sector – and this is no secret, given the yawning gap that exists between production, storage and distribution! In the given environment, taking advantage of these gaps, those are the retailers who make merry perpetually, and the hoarders who wait for their pound of flesh in times of crisis! And the consumers, particularly the poor, are made to bleed at all times. Although people might debate that the production of food grains is subject to the vagaries of nature – and that nothing much can be done about it – the fact is that even after 63 years of Independence, our irrigation infrastructure is shameful! The truth is that by now, we should have created such an irrigation infrastructure, that our dependence on nature should have been negligible. But then, the same has been a monumental failure! And similar is the state of distribution and storage infrastructure. It needs no Einstein to realise that taking advantage of these bottlenecks are the middlemen who have been exploiting these inadequacies to the fullest! And the irony in the entire episode is that while prices of crops like onions are going up by 150%, it is the farmer and the consumer who is losing it all. And shamefully, the government allows this to happen not once, not twice, but repeatedly!


The Brazilian growth clock ticking Amidst Rising Inflation

Dilma Rousseff takes over a Booming Economy, but can she keep The Brazilian growth clock ticking Amidst Rising Inflation and Skyrocketing Interest rates?

Though Rousseff wants the benchmark interest rate fall to 2% in real terms (interest rate minus inflation), doing that without scrapping the inflation target would require much tighter fiscal policy. To stop the real’s appreciation, Rousseff will either have to raise the tax on capital inflows, or will have to lower the rate of return on government bonds. However, the first option, raising the tax on capital inflows, has not worked so far for the Brazilian policy-makers. In fact, in the last one year, Brazil has raised the tax three times to 6%, but all in vain. The 10% spread between the Selic, Brazil’s reference rate (which is at 10.75% at present), and the Fed’s discount rate (at 0.75%) remains profitable even with a 6% tax on inflows. What’s more? Brazil’s treasury too is losing about $24 billion every year as it sells Brazilian bonds to foreign investors while investing the proceeds in dollar instruments yielding 10% less return.

In such a scenario, the only option left with Rousseff is to lower the Selic as it would narrow the spread between Brazilian interest rates and other global interest rates thereby decreasing its attractiveness and in turn curbing the excessive money supply in the system. While Banco Central do Brasil didn’t respond to the queries sent by B&E (till the time this magazine went to print), Eugenio J. Aleman, the US based Senior Economist at Wells Fargo agrees to the logic as he tells B&E, “Brazil cannot grow on a sustained basis with interest rates that are higher, in real terms, than in many other countries. Today’s Brazilian real interest rate is positive and very high, and this high real interest rate can create serious problems for the Brazilian currency as it attracts large amounts of short term investment, or what is called portfolio investment, that tend to worsen the appreciation of the Brazilian currency.”

Even Alfredo Coutino, the US based Director at Moody’s Analytics is of the same opinion as he tells B&E, “Brazil’s central bank should cut interest rates next year to slow the currency’s revaluation, rather than increasing them.” “But how?” This still remains the big question. In fact, considering the current pace of inflation, many economists even expect a 50 basis points rise in the benchmark Selic rate in January 2011 itself, and a further 2-3 such rises during the year.

Further, how can one forget the recent bailout of Brazil’s leading bank, Banco PanAmericano, (on November 9, 2010) which exposed cracks in a system? Several believed it to be one of the most solid financial systems among emerging markets, and as such now requires an overhaul. No doubt, Brazil’s economy grew at its fastest pace in last 15 years in 2010, but it was powered, to a large extent, by a rapid expansion in consumer credit. In fact, Brazil has recorded a whopping 400% increase in consumer credit over the last eight years, with the total value of outstanding loans reaching $440 billion (October 31, 2010).


Can she Beat The Brazilian Heat?

Dilma Rousseff takes over a Booming Economy, but can she keep The Brazilian growth clock ticking Amidst Rising Inflation and Skyrocketing Interest rates?

As 63-year-old Dilma Rousseff took over as Brazil’s first woman President from her extremely popular predecessor Luiz Inacio Lula da Silva on January 1, 2011, she vowed (during her inauguration) to cut taxes, rein in public spending & control inflation. She repeated almost exactly the same points on which she had stressed on during her statesmanlike victory speech on October 31, 2010. “But can she?” is the question that many have started asking now, not only in streets of São Paulo, Brazil’s financial capital, but across the globe.

Reason: Challenges galore! While Brazil’s economic growth is expected to slide to 4.5% in 2011 (from an enviable 7.6% in 2010), inflation at 5.91% continues to be well above the government target of 4.5%. In fact, inflation in Latin America’s largest economy is already running at a six-year high, with food prices rocketing to 10% in 2010. And with memories of dreadful hyperinflation in initial years of this decade (see chart) still alive in the minds of Brazilians, new President Rousseff surely wouldn’t allow this plague to return to destroy Brazil’s impressive performance.

No doubt, the most logical move for Rousseff would be to boost interest rates. But then, Brazil’s interest rate, at 10.75%, is already among the world’s highest and raising them further would only give foreign investors yet another reason to buy its currency – the real – that has soared almost 35% against US dollar since the start of 2009. This directly points towards Rousseff’s other big task – to cope with the rising strength of the real.

With interest rates at all-time lows in much of the developed world, the 10.75% return on benchmark 10-year government bonds is attracting funds from all across the globe. Foreign investors have poured over $110 billion into Brazilian debt & stock in the past two years, which has lifted the real astronomically. Considering this Goldman Sachs has recently dubbed real as the world’s most overvalued currency. This not only puts Brazilian exporters on the backfoot, but also hampers the economy’s growth in the long term.


The State of Education Philanthropy in India

While there have been Welcome Instances of Individual Largesse Towards Education, B&E’s Anindita Chakraborty provides an as-is-where-is Analysis of The State of Education Philanthropy in India

Yet, irrespective of even quasi-marketing intent (in the sense that some individuals have donated simply to make a huge ballyhoo of their public profile), in the context of a developing nation like India riddled with an utterly corrupt bureaucracy, administration and government, the state’s pathetic investment will never ensure that quality education reaches the masses and down to the grass roots. That is why, to save India’s future, private enterprises and individuals must invest into this crucial area – not just as capitalists, but as philanthropists. Rather than question their individual motives, it is the end that they would help achieve that should be taken into consideration. Their finances allow these pure capitalists to take part in the economy and influence the livelihoods of the masses – ergo, giving them their share of fame, privilege and opportunity to influence individual, societal and national growth is perfectly acceptable.

It is not for nothing that Prime Minister Manmohan Singh said in one of the seminars organised by CII, “Eschew conspicuous consumption, save more, waste less, care for those who are less privileged and less well-off, and be the role models of moderation and charity.” Unfortunately, the task ahead is quite daunting, as the numbers cited previously indicate. According to a recent report (see table on previous page), though India leads developing countries in terms of charity contribution as a percentage of GDP (for India, the figure stands at 0.6% compared to China at 0.1% and Brazil at 0.3%), developed countries are far ahead with US at 2.2%, UK at 1.3% and Canada at 1.2%. That is the gap we have to reduce.