Another Great Depression?

IIPM : EXECUTIVE EDUCATION

Was Bernanke subprimed & caught napping?

The global markets begin to laugh when he smiles; and they start wailing when his eyes get moist. Such is the impact of Ben Shalom Bernanke, the US Chairman of the Board of Governors of the Federal Reserve System, US’ chief financial policy maker. Since the global markets & the economies are so intertwined to the US fortunes, that world over people are looking up to Bernanke to bail the US economy out of recession & send a fresh wave of optimism in the markets. The subprime crisis plaguing the US is causing heartburns across the world and the fear is that capitalism should not plunge itself into the mess similar to that of the 1930s. As the man himself says, “Regarding the Great Depression, we won’t do it again.” Will he do something revolutionary in 2008, like extending the Bank’s mandate to allow it to buy equities? He would probably be little more circumspect in the election year. Would probably play by the book, allowing recession to subside through incremental mitigating policies.

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Source : IIPM Editorial, 2008

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

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Softly suicidal

IIPM’s 36th Glorious Year of Academic Excellence

Can we Indians afford a soft and timid state any longer?

Chomping on a burger, laced liberally with ketchup, Richard D’ Aveni looked a corpulent sight, a few years ago in a five star coffee shop. A tenure professor of Dartmouth College and a conservative to the core, Richard could make you wince with dismay while holding forth on how America must ruthlessly project its power – even at the cost of “collateral damage”. The now famous Thomas Friedman book about the flat world and the Goldman Sachs report on the BRIC economies had already been published and Richard was on a long journey of discovery into the ‘next big boy of the global arena’. I didn’t agree with most of what Richard said; but one statement of his still resonates when I pick up a newspaper or watch a so called erudite TV show. Taking a huge swig of Coke, Richard had witheringly remarked that Indian policy makers must change their negative and timid mindset. “Do you want to forever remain the Mexico of China? were his words that still haunt me.

As Prime Minister Manmohan Singh made a token flying visit to a recent meet of East Asian economic powerhouses to fly on again some place else, Richard’s ‘Mexico’ warning kept coming back to my mind. The simple brutal fact is that India is on verge of losing the eco, energy and geo-strategic war against China. Even though Indian policy makers bend over backwards to please the military junta in Myanmar – lucrative oil & gas exploration rights and access to strategic ports is given to China. Even as Left leaders and ‘progressives’ of all hues pursue more and more minority appeasement, Iran simply throws India out of a pipeline deal with Pakistan. And as mentioned earlier in the column, even the famed lobbying skills of the richest Indian in the world Lakshmi Mittal couldn’t help India beat China in gaining access to oil and gas fields in central Asia.

In various set ups like ASEAN and APEC that represent the most dynamic economies of the world, the Indian presence is barely tolerated as a guest without a voice while China has since long secured a seat on the high table. India still struggls with a flawed free trade agreement with Thailand, China has already become the largest trading partner of east Asia. The day is not far off when it challenges the United States in the region. Modern nation states earn the respect of peers on two counts – grudgingly because of military power and reluctantly because of the ruthless use of economic power. On both the counts, Indian policy makers have so far exhibited unbelievable timidity. Or have they made up their minds that India will become to China in the 21st century what Mexico is to the United States?

Sutanu Guru

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
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The story is the same with almost all LCCs

IIPM’s 36th Glorious Year of Academic Excellence

The story is the same with almost all LCCs. SpiceJet, Paramount Airways, JetLite, Indigo, none of them have been able to break-even despite so much increase in passenger traffic. In fact, Deccan Aviation is currently India’s largest loss making corporation, with Rs.843 crores of losses. The culprit, experts say, is the unduly high ATF tax, and of course, the fuel bill. Jet fuel prices in the Indian market have skyrocketed from merely Rs.21,000 per kilolitre in 2004 to Rs.70,000 at present. In fact, the price went up by 100% in the past one year. “In India, the situation of fuel price increase is compounded by the punitive taxation structure on aviation fuel. However, that does not mean that the low cost model has become unsustainable... Carriers that focus on keeping down other costs may be able to maintain a competitive advantage,” I was told in a formal statement from the office of the Regional Director for India and Middle-East, CAPA.

Compared to Lalu’s profits, in the financial year 2008-09, losses in Indian aviation industry are expected to cross $2 billion, while globally they could cross even $6.1 billion as per CAPA estimates. Even the International Air Transport Association has seconded this opinion forecasting losses of India’s aviation sector to cross $2.3 billion; and that too even if oil prices do not cross $135 a barrel! With oil prices already touching $137 per barrel (June 20, 2008 figures), is this industry on the brink of a mega collapse? Digest this – IATA has now revealed that the global airline industry’s fuel bill for 2008 can swell to $176 billion from the $136 billion in 2007, an increase of 300% when compared to 2003’s fuel bill of $44 billion.

Just around the 1st week of June 2008, airline fares were raised between Rs.300 and Rs.550 by almost all the airlines as ATF prices further rose. Today, a big question on the LCC model’s survival is getting raised as the fare difference between an LCC ticket and a Full Service Carrier (FSC) ticket is very insignificant. In their requisition to ministry for the bailout package, the aviation industry CEOs have asked the government to rationalise the sales tax and reduce it to 3%.

At present different states charge different sales tax on ATF and it is charged up to 30% in some areas. If the tax is reduced to 3%, the tax will come under the ‘declared goods’ category, and would cause the various state governments a combined loss of Rs.8,000 crore. While the states have requested the central government to bear 50% of the Rs.8,000 crore loss as they are not in a position to bear the brunt alone.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus
The Hindu : Education Plus : Honour for IIPM
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IIPM Ranked No1 B-School in India
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IIPM ranked No. 1 B-school in India- Zee Business Survey ...
IIPM ranked No1 B-School in India :: Education, Careers ...
The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...
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Karnataka

IIPM Ranked No. 1 B-School In Global Exposre - Zee...

Certainly, Karnataka is blessed with a very understanding bureaucracy when it comes to IT, which is the biggest advantage of this state. But the problem that stays with the state, especially on the business grounds, is that Karnataka still seems to be restricted to Bangalore in ones’ mind. And why not, the development in the ‘Silicon Valley of India’ is much ahead than that of many other parts of the state. IT players consider Bangalore as the byte-basket of the country as it has been the breeding ground of biggies like Infosys and Wipro. You name an IT company and they have their operations in Bangalore (if they dare to dream big). In fact, IBIBO, an IT company, has set up a research development centre at the capital even without being provided with any kind of subsidies by the government (as IBIBO works for the domestic market only). So what makes them fall for this state and not others? “The biggest reason of IBIBO operating in Karnataka is the talent the state has,” reasons Ashish Kashyap, CEO, IBIBO. And every other IT investor seems to hold the same perspective about the state. “If you look at the growth of the Indian economy and simultaneously at the fastest growing companies, most of them are from the IT sector and the sector is very prominently present in Karnataka,” avers Romi Malhotra, Founder and Chairman Dominion, an IT company based in Bangalore.

However, the state dominates not only in IT, but in biotechnology too. The biotech activities in the state account for about 60% of the country’s export pie. Growing at over 35% per annum, Karnataka surely seems to have become a preferred location for biotech among investors. Further, in the past one year, the government has taken many initiatives to promote investments in every sector and not just IT. Result, real estate players too have started shifting their focus on the state. In fact realty major DLF is planning to invest a whopping Rs.60 billion in the state. “DLF will be looking at further investments as and when an opportunity comes, as a matter of fact it is a very investor-friendly state,” a spokesperson from DLF tells 4Ps B&M. Moreover, supporting the investments made by various companies, Rajesh Verma, Executive Vice President, Kingfisher Airlines opines, “The Greenfield projects in places like Bangalore have made them one of the most favourite investment destinations. There is world class infrastructure, room for expansion and all the basic amenities that are required to carry forward any world class project. That is probably the reason why most of the big companies are more than willing to invest there.” Other than that the industry experts believe that Karnataka is going to be a Food & Beverage (F&B) hub in near future. All thanks to its Food Processing Policy 2003 the turnover is expected to be more than around Rs.15 billion in the coming year and is growing at a constant rate of 20%. The state has almost all the biggies in the F&B industry operating in the state.

Though there are hurdles in the path of the growth of the state but it is definitely on the right track and has a lot of potential to grow in terms of tourism and as well as the money coming into the state from the corporate world. Well, the state surely has many faces but then one definitely need an eye to look beyond just IT!

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
IIPM Ranked No1 B-School in India
Moneycontrol >> News >> Press- News >> IIPM ranked No1 B-School in ...
IIPM ranked No. 1 B-school in India- Zee Business Survey ...
IIPM ranked No1 B-School in India :: Education, Careers ...
The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...
domain-b.com : IIPM ranked ahead of IIMs