Sunday, December 31, 2006

Small Cars Boom Spell Urban Doom

India is basking in the sunshine for the robust growth of economy and the inevitable consumerism it has spurred by way of higher spending and improved lifestyles for Indians. Car - the ubiquitous status symbol delineating the rich from the poor is expectedly much in demand. The nation's image as the one afflicted with widespread poverty has taken a backseat after 1.3 million automobiles have been manufactured during the year 2006. In my previous posts 'Small Is Beautiful' followed by 'Small Cars Make Big News', I had hinted at small cars becoming cynosure of automobile manufacturers.
The year 2007 may see the launch of over 40 new models - many in the small car segment. The scenario is becoming all the more exciting with the international giants Honda, Toyota, GM and Fiat eyeing small car markets and planning huge investments in India. Their combined committed investment in the Indian automotive sector is reported to be a staggering Rs60,000 crores (exceeding $13 billion) over next 4 years. If this is not enough to celebrate, then the forecast made by Golden Sachs that India will have the largest population of automobiles by the year 2050 calls for uncorking Champagne definitely.
Just wait! We should also take into account what is lurking in the darkness. The Indian cities and towns are, as it is, notorious for endemic traffic jams caused by narrow roads with fast moving automobiles vying with slow moving handcarts and three-wheelers besides bicycles for right of way. The air and sound pollution far exceeds the prescribed safe limits. The road accidents in India are also the highest. So if more and more small cars are made, their highly competitive market may benefit the consumers who will also have the luxury to choose from a wide range of models at affordable prices. But it will spell doom for the millions living in the cities. The car density, likewise, will increase several folds from the measly four cars per 1000 people. The boom in the automotive sector will also generate jobs for a few thousand people. However, the flip side is too catastrophic to celebrate India's boom for small cars. Let the government ensure that environmental damage will not take place and more cars are not going to bring more problems in the lives of people.
Then I would also like take part in the celebrations. How about you?

Monday, December 25, 2006

Ah, Plant Trees And Get Tax Concessions!

You may be thinking that it must be a joke. I, too, accepted the news appearing in Economic Times with a pinch of salt. It says the government or more precisely the ministry of Environment and Forests is contemplating to offer tax concessions as incentive for afforestation. Before you start imagining that your personal tax liability will be somewhat reduced if only you planted trees as per the scheme, let me reluctantly pour cold water on your hope clarifying that the whole scheme of things is for the industry.
Be that as it may, I see a ray of hope of such afforestation scheme bearing fruit as no other palliatives worked better than tax concessions for the industry. The appalling deforestation has been largely the result of rapid industrialisation. Industries polluting air, water and land have been held responsible for the impending catastrophe arising out of global warming. Though belatedly, nations have agreed to abide by Kyoto protocol which offers incentives by way of carbon credits for reducing mainly carbon dioxide gas emissions, many are yet to take initiatives as they find that the benefits accrue only on long term even as spending on emission control measures has to be made initially.
I think this new scheme of giving tax concessions when implemented will get good response because of the indication given by the officials that the compensation could be in the form of land tax concession or providing relief from land ceiling. The ministry, as reported by Economic Times, is proceeding on the premise that the country's forest and tree will cover one third of the geophysical area by 2012.
The irony in the scheme has not been lost. Since industry has been the culprit that has played havoc with nature, it is now being made to undo the colossal damage to the environment. It is a classic example of the saying 'sow the wind and reap the whirlwind'.
Is it not?

Wednesday, December 20, 2006

Rivalry Between India And China Exists Even In Diamond Industry

Everyday, I come across either in print or electronic media some news or the other about China's supremacy over India. The whole world is watching almost in total disbelief as both China and India are racing like Phoenix - the mythical bird in the Arabian desert rising again from the ashes to become second and third biggest economy. In every public platform and discussions, it is now routine to highlight the widening gap in various fields of industry and business of the two nations. I think we are harping on it wrongly as India should try to remove its own deficiencies to improve rather than lamenting all the time about its poor performance in comparison with China.
The latest news about rivalry between India and China came from a survey report of the global consulting firm KPMG which was released by Gems and Jewellery Export Promotion Council. It has made a disappointing projection for India that diamond processing industry in which it had a lion's share would be reduced from its present 57% to 49% by 2015 - a drop of 8% in value terms. It goes on to say that China will emerge as a strong player with a share of 21.3%. I thought both India and China are poor nations and since jewellery is used by only the rich and the very rich, market shares of these two nations would be insignificant. The figures tell a different story. While USA remained the world's biggest market for jewellery with 31% share in 2005, India and China registered their shares at 8.3% and 8.9% respectively. At least in this particular case of market for jewellery, India and China are running neck and neck.
Let us not forget that China got started with liberalisation and globalisation more than 15 years before India finally made up its mind. The Communist regime in China ensured easy implementation of plans and policies whereas in India its political parties with diverse goals cobble up wafer-thin majorities to rule democratically. So India predictably experiences hiccups off and on in adopting globalisation.
Diamond processing industry provides employment and earns foreign exchange. India must do everything to retain its predominant position.

Wednesday, December 13, 2006

No Chorus Of Approval For Corus Acquisition

The climax of the drama for acquisition of Corus is about to be enacted shortly and ironically there appears to be no chorus of approval. I had concluded my post 'The Eternal Triangle - Corus-Tata-CSN' with "What Tatas will do to win the hands of Corus? I will be happy to see Tatas a winner. Let not the acquisition drama end like the film Devdas where the hero ruins himself instead of trying to save Paro". The vey same premonition has started haunting me.
The Brazilian giant CSN initially had made an offer of 475 pence per share against Tata's offer of 455 pence per share just only to provoke Tatas to revise their offer upwards to 500 pence which was stymied within hours by its 15% hike to 515 pence. In absolute terms, Tata's offer stands at $9.1 billion as against $9.6 billion of CSN. Clearly, the eternal triangle is inviting economical trouble.
Some analysts are of the view that Tata's offer is expensive whereas others feel that this is a golden opportunity for them to emerge as the world's fifth largest steel manufacturer. A report extracted from Economic Times puts the different perspectives succinctly. "ET spoke to 11 top investment bankers, of which five said the bid was now expensive and the Tatas could do well to consolidate their presence in India, one of the largest steel markets in the world, rather than paying dearly for a foreign steel mill. But another half among the deal-makers who were polled, believes that though painful in the short term, it is the larger picture that is still attractive - of a Tata Steel that is the fifth largest in the world, of a company that is able to influence in raw material negotiations and finally, of a company that did not let go of an opportunity to buy a world class firm."
I am sure Tata has the right corporate wisdom devoid of any personal ego and backed by experts' opinion to continue the bidding war avoiding quicksand that may lie ahead. We will have to wait till the curtain comes down.

Tuesday, December 05, 2006

Global Warming Raises Finger At The Cattle

The poor cow - now is at the receiving end. For ages, man has enjoyed pouring scorn on donkey so much so that the English language makes liberal use of such expressions like 'He is an absolute donkey' or 'The bridge won't be ready for donkey's years.But I was startled to read about a UN report saying the dumb cattle is responsible for global warming. I always thought that among animals, cow serves the man best. Its milk is nutritious for the child and the old alike. Its meat is relished by those who include such animal protein in their food. Its hide is an excellent raw material for leather shoes, bags and belts. Even its excrement has lot of uses - as a manure and fuel of the poor. The blow given by a report of otherwise independent and non-partisan United Nations is too devastating.
The Times of India reported "The increasing world population,a new UN report warns, would lead to further increase in the number of livestock as demand for meat and milk increases and that would mean emission of more greenhouse gases. Not only that. Cattle are also a major contributor to land degradation and pollution of water, the report says. The livestock business, the report says, is among the most damaging sectors to the earth's increasingly scarce water resources, contributing among other things to water pollution from animal waste s, antibiotics and hormones, chemicals from tanneries, fertilisers, and the pesticides used to spray feed crops.
Global warming is a stark reality which is threatening to cause unimaginable damage and loss to the entire population if drastic measures are not taken. That is why nations are jointly trying to fight the menace by Kyoto protocol and carbon emission reduction mechanisms. If cattle indeed are the culprit, we cannot think of a similar carbon trading to reduce their contribution to global warming.
One of the possible ways to reduce their greenhouse emission is to go for their zero-growth population. The good news is that non-vegetarians are gradually turning vegetarians all over the world. Then the meat demand may not rise proportionately with the increase of human population. Substitutes for dung used as manure and fuels may be eventually found. But I cannot think of a world where milk would become a rare commodity. Even as the we are reminded of the apocalyptic end caused by global warming, the very thought of living in a world of perpetual milk famine is equally distressful for me.