13 Economic Priorities For FY13-14 - MSLGROUP India

AreportbyMSLGROUPIndiaPartofthePublicisGroupe

• Preface 4-5
• Women’s empowerment 6-9
• Internal security 10-13
• Sports 14-17
• E-governance 18-21
• Corruption 22-25
• Low-cost medicine 26-29
• Affordable housing 30-33
• Agriculture finance and food prices 34-37
• A smoother road for FDI in retail 38-41
• Aviation 42-45
• Taxing the super-rich 46-49
• Goods and services tax 50-51
• Coalition politics 52-53
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Table of
contents
13 Economic Priorities For FY13-14
A report by MSLGROUP India, part of the Publicis Groupe

Exactly 50 years after he was assassinated, Kennedy’s warning continues to ring true. Ever since
India set off on the reforms path in 1991, the parameters for judging the progress of the economy
have been narrow. Growth rate, investment, expenditure and deficits are the terms frequently
heard during discussions on ‘development’ and ‘progress’.
But an economy is more than just that. It has as its constituents obscure moving parts that are
forgotten – sometimes deliberately – or which remain hidden because of a lack of understanding.
For instance, many would be shocked to know that sports are vital to the economy. Usually,
discussions on sports are restricted to the number of medals or trophies won, or what sporting
icons do for the national mood. But, did you know that the United Nations Millennium
Development Goals view sports as an economic engine? Sports contribute to development
through employment opportunities and demand for sports goods and services. An inclusive
national sports programme would also provide economic opportunities and social upliftment for
marginalised sections such as women and the physically challenged.
The positive economic impact of e-governance, too, is rarely discussed. Seen mainly as a tool for
convenience and greater reach, a well implemented e-governance programme could slash
government expenditure by reducing the cost of service delivery. These lower costs would help
shrink the fiscal deficit, which has reached worrying levels.
The internal security situation – alarmingly precarious across large swathes of India – also has a
profound impact on citizens, industry and society. The economy is not immune to it. Naxalism
alone affects 60,000 sq km of central and eastern India, depriving this area from the benefits of
reforms and the chance to contribute to national progress. This isolation has kept farmers
backward and made the establishment of industries virtually impossible. The delivery of
government services is another casualty of this internal war.
Yet, the link between such insurgencies and the lack of economic progress in the areas they affect
– though understood by many – rarely finds a mention during debates on the Budget.
MSLGROUP India, through this report, aims to bring into focus precisely such linkages between
issues and our economy, the opportunities missed and the ones that are within reach. We have
focused on subjects rarely mentioned in the same breath as the economy, but there are also those
more familiar to the economic debate – taxing the super-rich and the Goods and Services Tax are
but two examples. Together, we have chosen 13 that we think should be India’s economic priorities
for Fiscal year 2013-14.
Yes, there are many others on India’s plate of concerns and our 13 choices leave us open to
allegations of subjectivity. To that charge, we plead guilty.
In our defence, we can only say that throughout our aim has been not to preach, but to foster an
understanding of the issues and to suggest recommendations for the way forward.
We hope you find this report interesting and useful.
- Ashraf Engineer, Head – Content, MSL India
Preface
Economic
growthwithout
socialprogress
growthwithout
socialprogress
growthwithout
lets thegreat
socialprogress
lets thegreat
socialprogress
majority of
lets thegreat
majority of
lets thegreat
peopleremainin
majority of
peopleremainin
majority of
poverty,whilea
peopleremainin
poverty,whilea
peopleremainin
privileged few
poverty,whilea
privileged few
poverty,whilea
reapthebenefits
privileged few
reapthebenefits
privileged few
ofrising
reapthebenefits
ofrising
reapthebenefits
abundance.
ofrising
abundance.
ofrising
-JohnFKennedy, late USPresident
Economic
growthwithout
socialprogress
letsthegreat
majority of
peopleremainin
poverty,whilea
privileged few
reapthebenefits
of rising
abundance.
-JohnFKennedy, late USPresident
5
Image:wikipedia

A recent study by Booz & Company,
which studied the economic
empowerment of women in 128
countries, ranked India a low 115.
What’s more troubling is that the
government is stubbornly apathetic
towards women’s issues. The distress is
evident when you see how various
corrective recommendations are
gathering dust. Take the example of the
December 2012 Delhi gangrape case
that shocked the nation. The delay in the
filing of the chargesheet was typical of
an uncaring system.
Gender stereotypes, discrimination and
cultural beliefs foster disempowerment.
In India, a little more than 50%of girls
are enrolled in school, of which many
drop out by age 12. At least 40% of those
who complete their primary education
are not allowed to pursue higher studies
by their conservative families. A survey
conducted by the non-profit Child Rights
and You (CRY) across lower-income
groups of 480 households in five cities
showed that 33% of households felt
that girls were abused in school, while
nearly 48% were abused en route to
school. About 57% of them were
ignorant of the Right To Education Act
two years after its implementation.
This lack of education – and awareness
about its essentiality – denies women the
knowledge and skills needed to advance
their economic status. At the community
level, social and economic development
of women is negatively impacted by
corruption in developmental schemes
and the absence of good governance.
Implications
A strong society has as its foundation the
social, economic and political well-being
of women. The participation of women in
decision-making is absolutely necessary
since they will play a vital role in building
social infrastructure and contributing to
economic growth.
Their inclusion in the national push for
upskilling of 500 million workers by
2022 is essential. Kiran Mazumdar
Shaw, chairman and MD, Biocon
Industries, told ‘The Times of India’:
“Women have enormous opportunities
to excel and succeed. All they need is
to be willing to take on leadership
challenges and to use their spirit of
enterprise and perseverance.”
Research shows that women contribute
three-fourths of the labour globally, but
own only a quarter of the resources. It is
presumed that an increase in literacy and
the attainment of a higher level of
education and skills will lead to greater
employment of women at higher levels.
Still, women’s work participation in India
stood low at 25.6% as compared to
males’ at 51.7%, according to the
provisional 2011 census. This was blamed
on gender discrimination.
Discrimination limits women’s economic
choices and freedom. The male-female
literacy gap is a just indicator. Provisional
2011 census data showed the female
literacy rate as 65.46% compared to
males’ 82.14%. There also exists a
rural-urban divide in education access for
women, which indicates poor education
infrastructure as well as the societal
response to the need for female literacy.
It was encouraging that Finance Minister
P Chidambaram allocated Rs 97,134
crore to the gender budget for 2013-14.
In 2009-10, the gross total allocation
towards gender budgeting was
Rs 56,857.61 crore and Rs 78,251.01 crore
in 2011-12 – a rise of 38%.
Security is a major concern for women
working in the business process
outsourcing (BPO) and information
technology-enable services (ITES) sector.
Increasing crime against women in Delhi
has deterred many from taking up jobs in
this industry. Incidents like the December
2012 Delhi gangrape have a profound
impact on productivity in cities like
Mumbai, Hyderabad, Bangalore, Pune,
Chennai, Ahmedabad, Lucknow and
Jaipur. In an Assocham survey, a majority
of the respondents working in firms in
Gurgaon, Noida, Delhi, Sonepat and
Faridabad said they now insist on leaving
offices immediately after duty hours.
Over the past two decades, India’s booming economy, strong
manufacturing capabilities, and respected universities have
positioned it as an emerging world leader. However, its gender
disparity remains among the highest in the world, impacting
not just economic growth but society as a whole
Women’sempowerment
6 7
Image:allsettodonothing.blogspot.in
Image: lidovky.cz

Recommendations
• Follow up allocation of funds for
women’s development with a suitable
tax policy, that is, gender budgeting.
Fiscal policies affect men and women
differently; gender budgeting ensures
greater opportunities for women, a
better standard of living and fair
distribution of income. Additionally, it
ensures better allocation of funds to
healthcare. Also, the tax code does not
discriminate against work efforts or
products that are the core expenditures
of poor families disproportionately
headed by women.
• As recommended in the 12th Five
Year Plan, ensure all ministries and
government departments tabulate
gender-specific management
information system (MIS) data for
improving the gender budgeting
mechanism.
• Monitor funds allocation and utilisation
better. There is a delay between
allocation and release of funds mainly
due to faulty design, apathy and
bureaucratic bungling. This is why the
success enjoyed by government
initiatives is uneven.
• The government raised the corpus of
the Women’s Self Help Group (SHG)
Development Fund from Rs 200 crore in
2011-12 to Rs 300 crore in 2012-13. The
objective was to empower such SHGs to
access bank credit through interest
subvention. The effective interest rate
under this initiative works out to 4% for
women who repay the loan on time.
Establish more such SHGs to provide
women bank credit at modest interest rates.
• India can learn from women-friendly
tax policies of other countries. In
Singapore, for instance, working
mothers get child relief if they earn less
than SGD 4,000 (Rs 1.74 lakh) per
annum. Likewise, give tax exemptions to
women who run their houses and have
dependents. There could also be tax
credits for professional women who
return to work after a break owing to
family responsibilities.
• More stringent laws would help
reduce the number of crimes against
women. The Rs 1,000-crore Nirbhaya
Fund as a tribute to the 23-year-old
Delhi gangrape victim can help if the
money is utilised well. The Ministry of
Women and Child Development and
other ministries were working out the
details of the fund’s structure, scope
and application at the time of writing.
• According to a World Bank study, just
26% of women in India have an account
with a formal financial institution
compared to 46% of the men. The
proposal to set up India’s first women’s
public sector bank is welcome. It is
likely to start operations through six
branches from November 2013 and will
lend to women and women-run
businesses, and provide support to
women SHGs. Moreover, it will employ
mainly women while taking deposits
from men and women.
8 9
Image:addledbraindump.blogspot.in
Image: newslivetv.com
Image:posterwomen.org
Image:addledbraindump.blogspot.in

India is home to diverse socio-economic
groups. Some have been assimilated
into the mainstream, but many others
are still fighting for justice and identity.
Three regions – the Naxalite belt in
Central India, Kashmir and the
North-East – have felt the harsh
economic impact of internal conflict.
NAXALISM: In 2004, Prime Minister
Manmohan Singh described Naxalism
as India’s biggest internal security
threat. Almost a decade later, Naxal-hit
areas – about 60,000 sq km in central
and east India – still comprise of some
of the country’s least developed parts.
Between 2005 and 2010, the conflict
claimed more than 10,000 lives, but
the root cause of the problems
remains unaddressed.
India’s economic growth – uneven, with
a tendency to create growing rich-poor
disparity – led to a demand from
business houses for land and natural
resources. Orissa, Chhattisgarh, Andhra
Pradesh, Jharkhand, Maharashtra and
Bihar have huge mineral resources.
Business houses want access to forest
and tribal land for development, but this
has meant the loss of homes and
livelihoods for many tribals.
Grinding poverty, endemic malnutrition
and virtually no healthcare have
worsened tribals’ living conditions. The
often-unrestrained exploitation of
natural resources has also led to
rampant environmental degradation.
Tribals claim they are not even
adequately compensated for their lands.
They have no political voice to address
their grievances.
Tribals see Maoists as their saviours
because their ideology holds the
government, bureaucracy and business
houses responsible for their plight.
Over time, these ‘saviours’ themselves
have been accused of exploitation and
violent crimes against the villagers. Often,
they have been charged with using
civilians as human shields during
operations against the police. According
to the UN secretary-general in his annual
report ‘Children and Armed Conflict’,
Maoists have even recruited and
indoctrinated children to form squads
deployed in their war against the state. In
2011, between January and August, 333
people were killed – 241 civilians and 92
security personnel. In 2010, 534 people
were killed in 1,103 attacks.
Despite having an abundance of mineral
resources, projects to set up refineries in
these areas have run into trouble as
investors have not been assured of
protection from Naxalites. The Naxalites,
meanwhile, have abducted officials, blown
up roads and disrupted development.
KASHMIR: It is one of the longest
standing and deadliest conflicts in the
world, and it has the potential for
nuclear war. The troubles date back to
Independence. On October 26, 1947, the
ruler of Kashmir signed the Instrument
of Accession, acceding to India in
exchange for military assistance.
Since then, India and Pakistan have
been locked in a bitter standoff, both
sides staking claim over the province.
Separatist leaders, meanwhile, demand
complete independence from both
countries. Three wars have been fought
– 1947, 1965 and 1999 – over the issue.
With the imposition of the Armed Forces
(Special Powers) Act (AFSPA) in Kashmir
in July 1990, the Indian Army and
paramilitary forces have been accused of
brutal oppression, extrajudicial killings,
rapes, murders, and of arresting people
on the mere suspicion of being terrorists
or their informants. Many also accuse
the army of displacing families and
firing on unarmed protestors. All this
has led to the radicalisation of large
sections of Kashmiri society.
Kashmir is primarily an agrarian economy
with sericulture and horticulture being
major revenue earners. In 2005-06, the
state reported Rs 1,150 crore in exports.
Several sectors were identified by
Assocham, an industry association, to woo
investors; the state and central
governments are also working to establish
special economic zones.
The economic potential is tremendous
because of the availability of natural
resources, but efforts to harness it have
not paid off because of poor
administration, corruption and
government inefficiency. The scarcity of
ration shops, drinking water and power,
along with the security issues, has made
the creation of roads, infrastructure and
overall economic development difficult.
Even tourism, which played a central
role in the Kashmiri economy, all but
disappeared after the start of the
insurgency in 1989. It is seeing a revival
of sorts only now.
The National Sample Survey (NSS)
estimated the rate of unemployment as
5.3% – much higher than the adjoining
states’. There is an all-pervasive sense of
disappointment amongst the youth, many
of whom fail to secure jobs despite being
qualified. The public sector, too, has been
accused of discrimination along
communal lines when hiring people.
While India grows at 6%, Kashmir’s
economy remains crippled.
THE NORTH-EAST: Arunachal
Pradesh, Assam, Manipur, Meghalaya,
Mizoram, Nagaland, Sikkim and Tripura
are connected to the rest of the country
only by the 22-km wide Siliguri Corridor in
West Bengal. This ‘geographical isolation’
from the rest of India has had far-reaching
consequences on development.
The inclusion of north-eastern states in
India’s ‘Look East’ policy in 2003
ushered in new hope for the region’s
economy. The policy was meant to
integrate the region better with India’s
overall economy as well as that of its
brutal oppression, extrajudicial killings,brutal oppression, extrajudicial killings,
insurgency in 1989. It is seeing a revivalinsurgency in 1989. It is seeing a revival
brutal oppression, extrajudicial killings,brutal oppression, extrajudicial killings,
on the mere suspicion of being terroristson the mere suspicion of being terroristson the mere suspicion of being terrorists
the army of displacing families andthe army of displacing families andthe army of displacing families and
of whom fail to secure jobs despite beingof whom fail to secure jobs despite being
qualified. The public sector, too, has beenqualified. The public sector, too, has been
Kashmir is primarily an agrarian economy accused of discrimination along
meanwhile, have abducted officials, blownmeanwhile, have abducted officials, blown
up roads and disrupted development.up roads and disrupted development.
KASHMIR:
It is one of the longestKASHMIR: It is one of the longest
nuclear war. The troubles date back tonuclear war. The troubles date back to
Since then, India and Pakistan have
sides staking claim over the province.
Separatist leaders, meanwhile, demandSeparatist leaders, meanwhile, demand
the root cause of the problemsthe root cause of the problems
– 1947, 1965 and 1999 – over the issue.– 1947, 1965 and 1999 – over the issue.– 1947, 1965 and 1999 – over the issue. overall economic devoverall economic dev– 1947, 1965 and 1999 – over the issue.
(Special Powers) Act (AFSPA) in Kashmir
in July 1990, the Indian Army and
role in the Kashmiri economy, all butrole in the Kashmiri economy, all butrole in the Kashmiri economy, all butrole in the Kashmiri economy, all but
paramilitary forces have been accused ofparamilitary forces have been accused of
report ‘Children and Armed Conflict’,
insurgency in 1989. It is seeing a revival
of sorts only now.
insurgency in 1989. It is seeing a revivalinsurgency in 1989. It is seeing a revival
of sorts only now.brutal oppression, extrajudicial killings,brutal oppression, extrajudicial killings,brutal oppression, extrajudicial killings,
sections of Kashmiri society.
rapes, murders, and of arresting peoplerapes, murders, and of arresting people
firing on unarmed protestors. All thisfiring on unarmed protestors. All this
sections of Kashmiri society.sections of Kashmiri society.
brutal oppression, extrajudicial killings,brutal oppression, extrajudicial killings,brutal oppression, extrajudicial killings,
or their informants. Many also accuseor their informants. Many also accuseor their informants. Many also accuse
insurgency in 1989. It is seeing a revivalinsurgency in 1989. It is seeing a revivalinsurgency in 1989. It is seeing a revival
on the mere suspicion of being terroristson the mere suspicion of being terrorists
indoctrinated children to form squads
deployed in their war against the state. Indeployed in their war against the state. In
The National Sample Survey (NSS)The National Sample Survey (NSS)
5.3% – much higher than the adjoining5.3% – much higher than the adjoining5.3% – much higher than the adjoining5.3% – much higher than the adjoining
disappointment amongst the youth, manydisappointment amongst the youth, many
qualified. The public sector, too, has beenqualified. The public sector, too, has beenqualified. The public sector, too, has been
accused of discrimination alongaccused of discrimination along
states’. There is an all-pervasive sense ofstates’. There is an all-pervasive sense of
people were killed – 241 civilians and 92
states’. There is an all-pervasive sense ofstates’. There is an all-pervasive sense of
security personnel. In 2010, 534 peoplesecurity personnel. In 2010, 534 people
has led to the radicalisation of largehas led to the radicalisation of largehas led to the radicalisation of large
up roads and disrupted development.up roads and disrupted development.up roads and disrupted development.up roads and disrupted development.
Between 2005 and 2010, the conflictBetween 2005 and 2010, the conflict
the root cause of the problemsthe root cause of the problems
Despite having an abundance of mineralDespite having an abundance of mineralDespite having an abundance of mineral
meanwhile, have abducted officials, blownmeanwhile, have abducted officials, blownmeanwhile, have abducted officials, blown
protection from Naxalites. The Naxalites,protection from Naxalites. The Naxalites,
resources, projects to set up refineries inresources, projects to set up refineries inresources, projects to set up refineries in
Despite having an abundance of mineralDespite having an abundance of mineral
Kashmir is primarily an agrarian economyKashmir is primarily an agrarian economy
Kashmir is primarily an agrarian economyKashmir is primarily an agrarian economy
protection from Naxalites. The Naxalites,protection from Naxalites. The Naxalites,protection from Naxalites. The Naxalites,protection from Naxalites. The Naxalites,
meanwhile, have abducted officials, blownmeanwhile, have abducted officials, blownmeanwhile, have abducted officials, blown
It is one of the longestIt is one of the longest
of Accession, acceding to India in
Since then, India and Pakistan haveSince then, India and Pakistan have
Since then, India and Pakistan haveSince then, India and Pakistan haveSince then, India and Pakistan have
been locked in a bitter standoff, bothbeen locked in a bitter standoff, both
Separatist leaders, meanwhile, demand
Grinding poverty, endemic malnutritionGrinding poverty, endemic malnutrition
complete independence from bothcomplete independence from both
Separatist leaders, meanwhile, demandSeparatist leaders, meanwhile, demandSeparatist leaders, meanwhile, demand
countries. Three wars have been foughtcountries. Three wars have been fought
the root cause of the problemsthe root cause of the problemsthe root cause of the problemsthe root cause of the problemsthe root cause of the problems
and virtually no healthcare have
– 1947, 1965 and 1999 – over the issue.– 1947, 1965 and 1999 – over the issue.– 1947, 1965 and 1999 – over the issue.
(Special Powers) Act (AFSPA) in Kashmir role in the Kashmiri economy, all but
paramilitary forces have been accused of
has led to the radicalisation of largehas led to the radicalisation of large
Kashmir is primarily an agrarian economy accused of discrimination along
been locked in a bitter standoff, bothbeen locked in a bitter standoff, both
complete independence from both
Grinding poverty, endemic malnutritionGrinding poverty, endemic malnutrition
Internal
Security
10 11
Globalisation and
reforms are turning
India into an economic
powerhouse. But
growth is largely
dependent on the
internal security
environment. Volatile
political and social
landscapes often
destabilise
administrations,
adversely impacting
the economy
Image: viiphoto.ning.com
Image: kashmirvoice.org

neighbouring countries. The
socio-economic conditions of these
states, however, are a reflection of the
policy’s failure.
Violence is part of daily life, keeping the
rate of economic development
abysmally low. AFSPA, imposed on
September 11, 1958, has empowered the
army to control unrest to some extent
but has also led to accusations of
human rights violations, rape, murder
and custodial deaths, leading to further
militarisation of the people. Civil society
groups are demanding the repeal of
AFSPA. Irom Sharmila Chanu, a
Manipuri political activist, has been on a
hunger strike since November 2002 to
support this demand.
Ironically, the North-East is rich in
mineral resources, which should have
created a thriving economy. Instead,
there is a secessionist movement that
charges the central government with
exploitation of resources, especially oil,
while neglecting the development of the
region and interests of the locals.
Meghalaya, for instance, has coal and
uranium deposits and the governor has
advocated their judicious mining to
boost the economy. The tribals, however,
are opposed to it. The Khasi Student’s
Union in Shillong called for a 36-hour
general strike on June 11, 2007, to
protest a public hearing on mining by
the Uranium Corporation of India Ltd,
which wanted to invest Rs 1,000 crore in
a mine and ore processing plant in West
Khasi Hill District.
In Assam, insurgents often blow up oil
pipelines and trains that transport coal
and petroleum for industrial use.
Nagaland’s oil reserves are estimated to
be worth billions, but locals fear forceful
displacement by the government and
the oil companies. They also fear
environmental degradation and want
protection for their rivers and paddy
fields. In 1981, when the Oil and Natural
Gas Corporation, found huge oil
reserves in Wokha region, Naga
insurgents stopped it from further
exploratory works.
Guerrilla outfits like The National
Socialist Council of Nagaland-Khaplang
have threatened oil and gas companies
with violence if they try to extract oil.
The central government, meanwhile,
has not adequately invested in
infrastructure like roads and easy access
to markets. This has led to slow
industrialisation. The region’s agrarian
economy, supported by primitive farm
practices, can’t produce enough to feed
the population. As a result, almost all
states in the region are forced to buy
food from other parts of India.
While the government claims that there
is no dearth of investments in the region,
there is a lack of accountability in
development efforts. Corruption, social
unrest and lack of a skilled workforce
have made development difficult, and
the unrest has kept investors away.
Mani Shankar Iyer, the erstwhile minister
of development for the North-East, had
said that the region’s gross domestic
product (GDP) must grow at 16.37% by
the 13th Five Year Plan for it to catch up
with the rest of India.
There is renewed private sector interest
in the region – it proposed investments
worth Rs 700 crore in 2007-08 after the
North-East Industrial Investment
Promotion Policy was unveiled – but the
opportunity will slip away unless law and
order improves.
Implications
“Those who are in power are responsible
for the issue of Naxalism. It cannot be
solved by force deployment, but by
social reform and change in policies,”
former army chief VK Singh was
reported as saying.
This is a telling statement. The internal
security crisis has landed a major blow
to India’s image as an investor-friendly
nation. Internal tensions have often
destroyed pre-militancy infrastructure,
making even investments from within
the country impossible.
Political stability and a peaceful
environment are prerequisites for
economic growth, but the insurgencies
have excluded several parts of India
from the growth story.
Recommendations
• Allocate more funds for the
upliftment of troubled regions. Focus
on social welfare, rural development,
roads, bridges, power, drinking water,
healthcare, industrial infrastructure
and government services. Ensure
statutory minimum wages for locals.
• Military operations are often not the
solution for internal security problems.
Invest in modernising state police forces
and strengthen state security networks.
• These regions need both public and
private investment. Assure
infrastructure and security to investors.
At the same time, address tribals’
grievances to ensure that development
doesn’t impact their lives and livelihood.
• Tourism could be a cash cow. Focus on it.
• The onus can’t be only on the
government; it’s also up to business
houses to invest in these areas, to
assuage locals’ fears. The private sector
needs to interact regularly with all
potential stakeholders of their projects.
12 13
Image:de.flash-screen.com
Image:indiatravelpal.com
Image:faujindia.blogspot.com

The United Nations Millennium Development Goals
(MDGs) urge that sports be viewed as an engine of
development. They contribute to economic progress as
sports programmes provide employment opportunities
and stimulate demand for goods and services. The MDGs
also stress the need for sports programmes to be based on
the ‘sport for all’ model, ensuring that all groups are given
the opportunity to participate, particularly those who gain
additional benefits, such as women, the physically
challenged and the young.
This is not a message India has taken to heart
India trails nations poorer than it,
despite the huge pool of talented
sportspersons. The usual story is one of
failure at the international level – barring
a few exceptions like cricket, cue sports
and the few recent Olympics medals in
shooting, boxing and wrestling.
The problem lies in improper training,
poor organisation at the grassroots
level and a woeful lack of
infrastructure. No wonder, then, that
India is a sporting disaster as per the
Weighted Ranking system of the
Olympics – 0.1 weight medal points per
million; 48th position overall.
The underlying economic story here lies
in the state-centre dichotomy acting as
a barrier and the manner in which funds
are allocated – through sports
federations and authority centres. Much
like with India’s social welfare schemes,
much of this money never reaches the
sportsperson in the form of training
facilities or infrastructure.
Take the case of the Indian Amateur
Boxing Federation. It claims that much
of its Rs 12 crore budget for 2011-2012
was met through sponsors even though
the sports ministry gave it Rs 3 crore for
administrative expenses. It was alleged
that the federation spends money on
administration and junkets for officials.
A group of former officials and athletes
took the Wrestling Federation of India to
court, charging that its funds were spent
on foreign travel for its president and
secretary rather than on athletes.
The story is one of political interference.
Politicians with little knowledge of or
interest in developing sports occupy top
positions in associations and selection
committees. Fifteen of the 39 Indian
Olympic Association (IOA) constituent
federations and 23 of 33 state Olympic
association presidents are politicians.
Veteran sportspersons or experts rarely
get a chance to run these bodies.
Rahul Mehra, sports activist and lawyer,
told ‘Tehelka’ magazine: “The IOA,
which is supposed to promote Olympic
sports, has created federations for
non-Olympic sports because it is easier
to manage these smaller bodies and
secure their votes. Since there are no
stipulated criteria for becoming a
member of a sporting body and the ‘be
all and end all’ is to stay in power, you
nurture a vote bank by appointing
people close to you. They also ensure
that even if they retire, the transition is
just on paper. Dynasties seem to rule
Indian sport.” Former hockey star Ashok
Kumar told ‘The Sunday Guardian’ that
“when politicians started heading these
bodies, initially sportsmen felt that this
would be of use to them. We felt that
our grievances and voices would be
heard by the authorities. Some bosses
also began to take up our issues at the
highest level. But once these people
settled in, they began to distance
themselves from the welfare of the
sportspersons. They began to further
their own interests and distanced
themselves from the sportspersons.”
14 15
Abhay Singh
Chautala
Vijay Kumar
Malhotra
Ajay Singh
Chautala
Politician Political background Sports Authority
Suresh Kalmadi
Member of Indian National Congress President - Indian Olympic Association
Member of Parliament, Pune Chairman of Organising Committee, Delhi Commonwealth Games
Former Member of Rajya Sabha
& Lok Sabha President, Table Tennis Federation of India
MLA Haryana Assembly Member of Organising Committee, Delhi Commonwealth Games
MLA Haryana Vidhan Sabha
President, Indian Olympic Association
Member of Organising Committee, Delhi Commonwealth Games
Jagdish Tytler
Member of Indian National Congress President - Judo Federation of India
Former Member of Parliament
Vidya Stokes Member of Indian National Congress President - Hockey India
Sharad Pawar President - Nationalist Congress Party Past President of Board of Control for Cricket in India
Leader of Opposition - Delhi
Legislative Assembly
SOME OF THE POLITICIANS HEADING SPORTS BODIES, NOW AND IN THE PAST
SVP - Indian Olympic Association
President - Archery Association of India
Source -The Sunday Guardian & Wikipedia
Image:vwallpaperpassion.com
Image:kootation.com

The problem of misadministration is
compounded by the lack of good
coaches and physical education (PE)
teachers. There is practically no training
for PE teachers; they are mostly former
athletes who get their degrees after a
correspondence course. There is no
system for renewal of coaching licences
either, unlike in England where coaches
must renew their licences every three
years. China has 3.5 lakh sports
instructors, whereas the Sports Authority
of India (SAI) – which runs three PE
colleges – churned out only 1,577
coaches in 2012.
Hence, the Rs 250-crore allocation in
the Budget for the modern National
Institute of Sports Coaching at Patiala
was welcome. This will facilitate
international-level coaching for athletes.
Sport in India has never been integrated
with formal education, always ranking
well below academics. There is virtually
no effort to integrate sports science into
training. In comparison, the West divides
PE into three phases – foundation, basic
skills and pick-up – to lay the foundation
for sporting success.
Abhinav Bindra, who won an Olympic
gold in the 10-metre air rifle shooting
event, minced no words when he said
that the training facilities provided by the
authorities are below par.
Let’s look at what the US does. The
effort begins at the grassroots level
with scholarships given to those who
excel. Schools are well equipped with
coaching and infrastructure and
sports are treated on par with
academics. It’s no wonder that the US
is a sporting superpower.
Implications
The Delhi Commonwealth Games
scandal damaged India’s – and the
region’s – reputation immeasurably.
Generally, such games serve as a
springboard to bigger events. Now,
international bodies think twice before
thinking of India as a venue. In fact,
the bid for hosting the 2018
Commonwealth Games was won by
the Gold Coast in Australia as many
nations privately expressed a wish to
“stay away” from Asia. Hambantota in
Sri Lanka was the rival bidder.
The Delhi games cost citizens Rs
14,830 crore. What they got in return
was broken roads, choked drains,
traffic snarls and incomplete
projects. Azim Premji, founder of
Wipro Technologies, called the
games a “drain on public funds”.
In December 2012, the International
Olympic Committee (IOC) suspended
IOA, barring India’s participation in the
Olympics. IOA conducted elections
under the government’s Sports Code,
defying the IOC rule to hold them
under the Olympic Charter. IOC had
repeatedly warned IOA in the run-up
to the elections. Now, IOA will stop
receiving IOC funding and its officials
will be banned from attending
Olympic events. More significantly,
India’s athletes will be barred from
competing in Olympic events under
the national flag; they can, however,
participate under the IOC banner.
Technically, the suspension was not
aimed at government interference but
for the character of those involved at the
top levels of Olympic and other sports
leadership in India.
Within days of the suspension, the
International Boxing Association (IBA)
provisionally suspended the Indian
Amateur Boxing Federation (IABF),
alleging possible manipulation in its
recent elections. The former is now
investigating the election and a
potential political link with the IOA
president, as former chairman of the
IABF. Outgoing president Abhay
Singh Chautala, who was elected IOA
president despite the IOC suspension,
was retained in the IABF as
nominated chairman during the
September 2012 poll.
Recommendations
• Adopt the United Nations MDGs
immediately, not just in word but in deed.
• Corruption is ubiquitous in Indian
sports bodies. Focus on undoing their
politicisation. Focus on optimum
utilisation of funds.
• In a ‘Tehelka’ article dated December
22, 2012, former hockey Olympian
Jagbir Singh suggested that India
revamp its youth centres. “Divide the
country into five zones, identify rural
and urban sports based on differing
talents and popularity,” he said. “Create
two centres of excellence in every zone,
one urban and one rural. They should
pick 30-40 children of both genders
under the age of 14 every year. For three
years, provide them state-of-the-art
facilities, top coaches and foreign
exposure. At the end, you will see 700
children mature into great athletes.”
That could be one way of ensuring the
right use of money.
• Develop an effective mechanism for
tracking funds released for sport.
Track the movement of money and its
utilisation at all levels, including
development of infrastructure,
training facilities, research and
development. This would ensure
greater transparency.
16 17

visited the CSC, the operator filled his
form online and gave him a unique
application number imprinted on a
computer-generated receipt. Well
within 72 hours, Charandas had the
certified copy, digitally signed by the
concerned official.
This story shared by the National
e-Governance Plan is testimony to the
emergence of e-governance in India.
E-governance is defined by UNESCO as
“the public sector’s use of information
and communication technologies with
the aim of improving information and
service delivery, encouraging citizen
participation in the decision-making
process and making government more
accountable, transparent and effective”.
The origin of e-governance in India
dates back more than three decades
when the government started
computerisation initiatives. Back then,
the term e-governance was restricted
to development of in-house
government applications for defence,
economic monitoring, planning and
the deployment of IT to manage
data-intensive functions related to
elections, census and tax
administration. The next significant
step was when the National
Informatics Centre tried to connect all
district headquarters.
The growth of the web and, more
recently, the evolution of digital
communities have fuelled the
e-governance drive. There is a
constant need for information and it is
here that e-governance can play a
significant role. With the increase in
internet and mobile connections,
citizens expect easy access to
information and services online.
In the last few years, state governments
and central ministries have initiated
several projects.
After getting a certified copy of the
electoral roll in just 72 hours from the
nearby Common Services Centre (CSC),
a smile appears on the wrinkled face of
50-year-old Nitai Charandas. For the
resident of Bhootpara gram panchayat
in Sonitpur district of Assam, this was
unlike any of his past experiences with
government service delivery.
This time, he did not have to commute
35 km to the district headquarters or
pay a penny to either a government
official or an advocate. And, he did not
require a bureaucrat’s signature or
official stamp on the certificate.
Three days [earlier], when Charandas
RECENT PROJECTS
State/Union
territory
Andhra
Pradesh
e-Seva, CARD, VOICE, MPHS, FAST, e-Cops, AP online - One-stop-shop on the Internet,
Saukaryam, Online Transaction processing
Delhi
Automatic Vehicle Tracking System, Computerisation of website of RCS office,
Electronic Clearance System, Management Information System for Education
Automatic Vehicle Tracking System, Computerisation of website of RCS office,
Electronic Clearance System, Management Information System for Education
Gujarat
Mahiti Shakti, request for Government documents online, Form book online, GR book online,
census online, tender notice
Bihar Sales Tax Administration Management Information
Chhattisgarh Chhattisgarh Infotech Promotion Society, Treasury office, e-linking project
Goa Dharani Project
Haryana Nai Disha
Karnataka Bhoomi, Khajane, Kaveri
Kerala e-Srinkhala, RDNet, Fast, Reliable, Instant, Efficient Network for the Disbursement of Services (FRIENDS)
Maharashtra SETU, Online Complaint Management System – Mumbai
Rajasthan Jan Mitra, RajSWIFT, Lokmitra, RajNIDHI
Tamil Nadu Rasi Maiyams - Kanchipuram; application forms related to public utilities, tender notices and display
Himachal
Pradesh
Madhya
Pradesh
Community Information Centre. Forms available on the Meghalaya website under schemes
related to social welfare, food civil supplies and consumer affairs, housing, transport
Arunachal
Pradesh,
Manipur,
Meghalaya,
Mizoram,
Nagaland
Lok Mitra
Initiatives covering departmental automation, user charge collection,
delivery of programme information, delivery of entitlements
Source: PC Quest
18 19
Effectively implemented
e-governance can reduce the
cost of public-government
interaction, raise
government and public
productivity and
significantly bring
down governance
costs.
The fiscal deficit
worry could be
partly addressed by
lowering the cost of
service delivery
through e-governance

Implications
On May 18, 2006, the government
approved the National e-Governance
Plan (NeGP) to “make all government
services accessible to the common man
in his locality, through common service
delivery outlets, and ensure efficiency,
transparency, and reliability of such
services at affordable costs to realise the
basic needs of the common man”.
NeGP aims to integrate e-governance
initiatives into a single vision. As part of
this, the government is evolving an
enormous infrastructure network that
reaches the remotest corners of India.
Services offered
1. G2C or government-to-citizen
services (accessed by citizens):
Information on agriculture services,
change of address in records, bill
payments, birth registrations.
2. G2B or government-to-business
Services (accessed by
businesses): E-filing, purchase
and sales invoices, issuance of
statutory forms, information
services, stamp duty calculations.
3. G2G or
government-to-government
services (accessed by government
departments): Collection of road
tax, open space bookings, issue of
disability cards, online publication of
the government gazette.
Challenges
• Resistance to change: Government
officials have felt indispensible for the
longest time. Processes that will ease
services for citizens are bound to face
resistance. There is a disconnect also
between departments’ needs and solution
developers. E-governance projects require
great restructuring of administrative
processes – a sensitive matter that
requires intervention at various levels,
making it a long-drawn process.
• Infrastructure and training: Not all
departments have the necessary
infrastructure, neither are they equipped to
maintain and retrieve governance
information electronically. There is no
uniform policy that charts out an
e-governance blueprint that can be
replicated. The biggest challenge is the
lack of training. Often, computerisation and
the use of basic software programs are
mistaken for e-governance. While several
departments have IT policies, not all of
them have staff qualified to execute them.
• Lack of awareness, low IT literacy:
There is little awareness about the
advantages of e-governance. This is
compounded by a lack of trust, both in
the technology as well as in the process.
There are low levels of IT literacy even
among users.
• Poverty: With close to 30% of the
population living below the poverty line,
the digital divide is a serious roadblock.
There are millions for whom even regular
electricity supply is a distant dream;
computers with internet connectivity are
unheard of. In such a scenario, there is one
strata of society that has access to
e-governance while the other is still
hoping for basic education.
Ravindra Datar, VP and global head of
marketing, Cheers Interactive, said:
“Some of the policies are really good.
The minute you introduce procedures
that facilitate easy accessibility, it
reduces the role of middlemen and
brings in transparency. For instance,
Aadhar [a unique identification
number that will facilitate access to all
government services] is a great
initiative. However, the challenge lies
in the last mile. Often, the ideas are
excellent but execution is a problem.
There must be accountability.
Awareness has to be created among
citizens as well as government
officials. Policymakers will have to
think it through to ensure that there
are no loose ends.”
Recommendations
• Policymakers – politicians, senior
public servants, members of the IT task
force – require hands-on training. Often,
there is a disconnect between the policy
and its implementation, making it
important for all those involved in the
implementation and maintenance of
e-governance services to have IT skills.
• Bring more beneficiaries into the
digitised beneficiaries net. This will
mean more receive the benefits of
social welfare schemes directly into
their bank accounts through the Direct
Benefits Transfer Scheme, reducing the
scope for embezzlement.
• Measure pilot projects better.
Engage an independent agency, which
would also identify bottlenecks and
causes of delay.
• Detailed documentation of successful
e-governance projects is vital to build a
central resource that would be a ready
reckoner for all agencies concerned.
• Increase connectivity to make services
accessible to rural areas or provide
alternatives, such as e-governance
kiosks in regional languages.
• Ensure that security of sensitive
information is not compromised. This
will help win the confidence of citizens.
20 21
Image:siasdeeconomica.blogspot.in

Illegal allotments in Mumbai’s
Adarsh Society, the Commonwealth
Games scam, the Uttar Pradesh
foodgrain scam, irregularities in coal
block allocations, the Uttar Pradesh
National Rural Health Mission
scam… These were all merely the tip
of the iceberg. The 2G spectrum
scam – said to have caused a loss of
Rs 176,645 crore ($32.15 billion) to
the exchequer – once again brought
into focus corruption at the highest
levels as well as the nexus between
media houses, the corporate sector
and politicians.
In 2011, the 2G scam was ranked second
in ‘Time’ magazine’s list of ‘Top 10
Abuses of Power’.
Gone are the days when bribes used to
comprise of petty sums or ‘bakshish’.
Now, corruption involves kickbacks
worth tens of thousands of crores and
the siphoning away of public funds
meant for social welfare.
The Prevention of Corruption Act,
introduced in 1988 and amended in
2008, makes active and passive
bribery, extortion, abuse of office, and
money laundering criminal offences.
The law even puts a strict restriction
on public servants’ involvement in the
private sector. However, while the law
is in force, the rate of conviction under
it is dismally low.
22 23
India’s annus
horribilis, 2010,
was marked by
a series of
corruption
exposés. The
government
came under
fire from the
Opposition, the
media and the
common man,
as a series of
high-profile
scams were
unearthed
over the next
two years
Image:commons.wikimedia.org

major indicator of an economy’s
competitiveness. Corruption can also
result in a volatile political and
economic environment that is not
conducive to investment growth.
Fair business competition is another
casualty of corruption. The World
Bank’s Ease of Doing Business Index
released in 2011 ranked India 134 out of
183 countries, significantly lower than
China (79) and Brazil (127). Not
surprisingly, India’s FDI inflows in H1
2012 stood at a low $10.4 billion.
Corruption has limited India’s
poverty-reduction efforts as public funds
assigned for social spending – education
and healthcare, for instance – are often
embezzled. India spends more than 2%
of its GDP on uplifting the poor, but a
World Bank Study said social welfare
schemes for initiatives such as food
distribution are so riddled with corruption
that only about 40% of the foodgrain
reaches the intended beneficiaries.
Management guru CK Prahalad
estimated that the investment,
economic growth and employment
opportunities lost due to corruption
amount to more than Rs 2,50,000
crore, or $50 billion, a year.
Social discontent finally saw the angry
middle-class, comprising mostly the
youth, taking to the streets, staging
hunger strikes and anti-corruption street
protests in 2011. This movement was led
by septuagenarian activist Anna Hazare,
(pictured below) who proposed a revised
anti-corruption bill. The Jan Lokpal Bill
would mean an anti-corruption
ombudsman at the centre supported by
Lokayuktas in the states. It would also
mandate the appointment of judges and
Indian Administrative Service officers
through a transparent process, and
non-involvement of the central
government in the creation of
Lokayuktas. The opening up of FDI in
retail and other reforms are set to give
growth a major boost. If corruption is
controlled, India can get back to the
9% growth path. On the flipside, India
could suffer an economic debacle
with investment and growth
opportunities eroding if corruption
remains unchecked.
Recommendations
• Transparent,speedyenforcementof
existinglawswillgoalongwayincurbing
corruption,evenintheabsenceofaLokpal.
• Corporate India is not immune to
corruption. Article 21 of the UN
Convention against Corruption calls for
legislative measures to ensure that
private sector corruption is criminalised.
India is a signatory to it, so it is up to the
Ministry of Home Affairs to introduce
the necessary amendments to the
Indian Penal Code. However, the
government should ensure that there is
no harassment in the name of the law.
• Introduce provisions to protect
whistleblowers. The Whistleblowers
Protection Bill, yet to be approved, will
encourage public participation in
exposing corruption.
• Industry bodies must adopt
a zero-tolerance approach
towards corruption.
There have been other anti-corruption
initiatives, such as the Right to
Information Act, Guidelines on
Corporate Governance, the Central
Vigilance Commission and the proposed
National Anti-Corruption Strategy, but
none has effectively curbed the malaise.
Even the judiciary is not without its share
of problems. People are discouraged
from using the legal recourse in cases of
corruption because of political
interference, complex laws, ignorance of
the legal framework and delay in
imparting justice.
The private sector, which was for so long
a victim of corruption, is itself under
scrutiny. A survey by Marketing and
Development Research Associates
released in January 2010 showed that 9
out of 10 employees working in private
firms felt that corporate India was
fraught with corrupt practices. The
private sector and politicians work
hand-in-glove to perpetrate massive
corruption, felt respondents.
Many projects hit roadblocks due to red
tape, rigid laws and labour regulations,
resulting in huge losses. The political
class steps up to provide relief in return
for kickbacks. Often, the private sector
obliges. The unwritten rule is that
nothing happens without a bribe.
Due to the complete lack of
transparency, national resources and
public contracts are doled out to those
willing to pay the decision makers.
Rarely are public servants and
beneficiaries accountable.
The economic impact of corruption was
summed up by Comptroller and Auditor
General (CAG) Vinod Rai at the 11th All
India Lokayuktas Conference 2012 in
New Delhi: “Economic growth cannot be
made sustainable, cannot be made
inclusive, unless it is based on
transparency and accountability.” The
World Bank too identified corruption as a
major obstacle to inclusive social and
economic growth.
Implications
Before 2010, even double-digit
growth seemed within grasp.
At that time, inflation was
under control. Economists
predicted that India would
overtake China’s growth rate
by 2013 and would remain the
fastest growing nation for the
next 25 years.
Cut to 2012-13. Chidambaram
estimated the fiscal deficit
at 5.2% for 2012-13; this puts
pressure on India’s foreign
exchange reserves and the
rupee. There is no doubt
that corruption has resulted
in a significant loss of
tax revenues.
The impact on growth cannot be
escaped. Kaushik Basu, chief economist,
World Bank, projected a growth rate of
just around 6% for India in 2013.
According to advance estimates by the
Central Statistical Organisation, growth
for 2012-13 would be less than 5%,
compared to 6.2% in 2011-2012. The
heady days of 9% growth are behind us
for the foreseeable future at least.
According to a KPMG report, the
all-pervasive high-level corruption will
damage India’s credibility among
foreign investors and stymie economic
development, turning the target of 9%
growth into an impossible dream.
Former Supreme Court Judge N
Santhosh Hegde has held corporate and
political corruption responsible for the
country’s economic woes. Corruption
was also discussed at length at the
World Economic Forum Annual Meeting
2013 in Davos. The Corruption
Perceptions Index 2012, released by
Transparency International, ranked India
94 out of 176 countries surveyed, with a
score of 36 on a scale from 0 (0 = highly
corrupt) to 100 (100 = virtually no
corruption), warning that rampant
corruption could lead to social instability
and dwindling investor confidence.
According to the World Economic
Forum’s Global Competitiveness Index
2010, freedom from corruption is a
IT GOES ON AND ON ...
SCAM
LOSS (IN RS CRORE)
TO THE EXCHEQUER
Karnataka Wakf Board land 200,000
Coalgate (coal blocks allocation) 185,591
2G spectrum 176,645
Uttar Pradesh foodgrain 35,000
Goa mining 35,000
Commonwealth Games 95
Sources: CAG, media reports
FDI
(IN $ BILLION)
Source: United Nations Conference on
Trade & Development
FDI INFLOWS (H1 2012)
COUNTRY
China 59.1
Brazil 29.7
Russia 16.3
India 10.4
24 25
Image:thanthanpal.blogspot.in

MEDICINEMEDICINE
The world over, life expectancy has increased
on the back of improved sanitation, medical
services and access to food
For India to achieve a robust healthcare
mechanism, it has to overcome several
challenges. Inadequate facilities and
diagnostics, insufficiently trained
personnel, and geographical and
socio-economic barriers are major
roadblocks. Geographically, for instance,
transportation and infrastructure make it
difficult to build a network that makes
drugs accessible to people in the
remotest corners. Lack of
culturally-sensitive services or ethnic
understanding are also drawbacks.
Gender discrimination means women
have minimal access to healthcare,
making them more susceptible to
disease and higher mortality rates.
However, the high cost of drugs is
perhaps the biggest barrier. India has
thousands of generic drug makers.
Some Indian multinational generic drug
producers supply most of the world’s
quality low-cost generics. A focus on
improving quality standards and
ensuring more stringent regulatory
oversight for domestic generics
manufacturers would mean that millions
of needy people would benefit from
better access to low-cost generic
medicines, greatly reducing the
economic and social burden of disease.
In India, the last decade has seen a shift
from communicable diseases to chronic
ailments such as diabetes,
cardiovascular diseases and several
conditions that can be treated and
managed by low-cost generics that
have a proven track record. If the
country is serious about healthcare
reform, it needs to prioritise access to
these medicines.
For a developing country like India,
meeting the healthcare needs of its vast
population is a massive challenge. This
concern is even more crucial in the case
of millions living below the poverty line
and who do not have access to
healthcare. It is here that generic
medicines can play a key role in breaking
down the burden of disease.
In 2008, the government launched Jan
Aushadhi, a chain of medical stores run
by the Department of Pharmaceuticals
that aims to make generic drugs
accessible to low-income groups.
Unfortunately, the scheme was plagued
by irregular supplies, lack of proper
distribution channels, insufficient generic
prescriptions by physicians and, most
importantly, lack of awareness among
consumers. Currently, there are 112 Jan
Aushadhi stores that sell 348 medicines
under the National List of Essential
Medicines (NLEM). The department
hopes to increase the number of stores
to 3,000 under the 12th Five Year Plan. A
tough ask, considering the original plan
was to have 600 stores by 2012.
AVAILABILITY OF
CHEAP MEDICINES
States/Union
Territory
Jan Aushadhi
Stores
Rajasthan 53
Punjab 21
Orissa 14
Himachal Pradesh 5
Haryana 4
Andhra Pradesh 3
West Bengal 3
Delhi 3
Chandigarh 3
Uttarakhand 2
Jammu & Kashmir 1
All India 112
Source: http://janaushadhi.gov.in/
26 27
Image:the-healthy-omnivore.com

A report in ‘The Economist’ pointed out
that the law bars patents that are only
minor variations of existing drugs, a
practice known as ‘evergreening’.
According to the report, “Drug
reformulations are often used to extend
patents elsewhere; they get no
protection in India. The country also has
broad criteria for ‘compulsory licensing’.
A WTO agreement allows countries, in
some instances, to force a firm to
license a patented drug to a generic
company. India’s rules give officials
broad powers to do this.”
Now, both provisions are under attack.
In 2006, India denied Novartis a patent
for Glivec, calling it an unpatentable
modification of an existing substance,
imatinib. Novartis insists this is
nonsense. Only by making it in salt
form, imatinib mesylate, did Novartis
have a proper drug. The body absorbed
the medicine 30% more easily. The
government stand was recently upheld
by the Supreme Court.
Paul Herrling, the chair of Novartis’s
Institute for Tropical Diseases, had said
earlier that the case was a test of what is
patentable in India. “We are being
accused of evergreening,” he says.
“Having that concept applied to Glivec,
which was one of the major
breakthroughs in cancer therapies, is
completely ridiculous.” Michelle Childs of
Médecins Sans Frontières, a non-profit,
counters that drug firms such as Novartis
should not win patents for minor
improvements. “This would keep generics
off the market, driving up prices.”
While the controversies continue, the
government is working on measures to
procure cheaper drugs. Plans to offer
free generics in public hospitals would
boost sales of cheaper alternatives.
On the other end of the spectrum, a
report in the ‘The Economic Times’
suggested that “the government is
apprehensive that the Indian drug
companies’ strategy of launching
generic versions of patented drugs
could trigger retaliation from overseas
countries that may hit the country’s
ambitious drug export plans”.
Talking about the complexities involved,
from licensing and patents to
production of generics, DG Shah, of the
Indian Pharmaceutical Alliance, which
represents major generic companies,
told ‘The Economist’: “We realise that
the industry will take a hit. We’re trying
to find a solution so that the
government’s concerns on access and
affordability are addressed without
threatening the long-term growth of the
pharmaceutical industry.”
For patients and health advocates, the
competition between major
pharmaceutical producers and local
generic drugmakers spells good news as
medicine costs are set to get cheaper.
Recommendations
• Ensure regular supplies and efficient
distribution so that low-cost generics are
easily available. Studies show that even
giving away medicines for free will not
work unless the supply chain is strong.
• Sensitise physicians about the need to
prescribe low-cost generics, especially
to those who can’t afford medication.
Physicians can turn advocates by
consistently prescribing generic drugs
and driving home the point that their
effectiveness is parallel to that of
branded drugs. Till that happens,
generic drugs will continue to face
credibility issues.
• Pricing policies alone cannot boost
access to medication; put in place a
unified approach that involves all
stakeholders – doctors, diagnostic
centres, patient groups, healthcare
service providers, insurance firms, the
pharmaceutical industry, non-profits,
academia, central and state
governments, and the media.
• Awareness about generic drugs is
critical. Highlight the fact that India has
thousands of generic drug-makers and
some Indian multinational producers
supply most of the world’s quality
low-cost generics.
• A sustained effort is needed to make
available resources and infrastructure
to each individual. Extend public
services and encourage the
public-private model.
Implications
India’s pharmaceutical boom was
bound to create fierce competition.
For international drugmakers battling
a stagnating market in the West, India
is an exciting opportunity. This also
necessitates a framework for the
protection of patents and intellectual
property. With a thriving generics
industry, cloned drugs make up for
90% of the Indian market share. Drug
patent laws are nascent and the
government is supporting generics to
ensure that prices stay low.
In a country where pharmaceutical
patents were not even recognised for
more than three decades, local
manufacturers imitated drugs to
produce cheaper versions. It’s only after
joining the World Trade Organisation
(WTO) in 1995 that India was compelled
to change its patent policy. The policy, in
place since 2005, has many loose ends.
The drugs available at Jan Aushadhi stores are anti-inflammatory, anti-bacterial,
anti-infectives, anti-tuberculosis, anti-fungal, intravenous fluids, vitamins,
gastro-intestinal, cardio-vascular, respiratory, anti-diabetic, cortico-steroids,
anti-malarial and accines. Generic drugs are meant to be inexpensive but the
difference in prices from branded drugs is at times drastic. This makes their
production and sales even more important.
CHEAP, BUT EFFECTIVE
Medicine Dosage
Average MRP of
Branded Medicines
(In Rs)
Price of Generics
Sold at Jan Aushadhi
Stores (In Rs)
Ciprofloxacin 250 mg 55 11
Ciprofloxacin 500 mg 97 21
Diclofenac SR 100 mg 52 3
Cetrizine 10mg 37 3
Paracetamol 500 mg 14 2
Nimesulide 100 mg 39 3
Cough Syrup 110 ml 33 13
Source: Press Information Bureau
28 29
Image: marksolock.wordpress.com
Image: marksolock.wordpress.com

Affordable
housingThe housing sector contributes
5%-6% of India’s GDP. While
the strengthening of policies
would fuel the real estate and
infrastructure segment, a
special focus is required on
affordable housing
According to the Confederation of Real
Estate Developers’ Associations of India
(CREDAI), there is a shortage of 1.81
crore houses at present, and another 3
crore would be needed by 2020. The
demand is unlikely to contract for at
least two decades. One reason for this is
that India’s urban population is
expected to rise from the present 28%
to 40% of overall population by 2020.
Amod Kumar Singh, VP (low Income
and rental housing), Tanaji Malusare
City, a large affordable housing
project close to Mumbai, said at a
panel discussion hosted by the ‘DNA’
newspaper that they received 66,000
applications for their 3,000 homes
in Karjat.
As they urbanise rapidly, developing
countries face a severe challenge in the
form of housing. India too is struggling
to provide housing to its middle- and
low-income
population.
The
government’s
contribution
has been
minuscule,
with private
players being
the major
providers.
One of the
primary
problems is
the lack of
clarity on
what
constitutes
affordable and low-cost housing. At
present, the middle and upper classes
are being considered for the affordable
housing section when the need for such
houses is largely for the
low- and middle-income
groups.
Also, there is a lack of
clarity on the price
bracket for affordable
homes. The standard
definition in India is when
a household
pays no more
than 30% of its
annual income
towards
housing.
Homes in the
Rs 6 lakh-Rs
15 lakh, Rs 20
lakh and Rs 25
lakh-Rs 40 lakh segment are all
categorised as ‘affordable’. Not
surprisingly, this has led to great
confusion.
Conversion of land use
Project letter of intent and license / Intimationof disapproval (IOD)
Pre-construction approvals from state level bodies*
Pre-construction approvals from central bodies*
Approvals for construction plan sanction
Approvals for commencement of construction
Construction period
Inspection and approval procedure for building completion
Occupancy certificate receipt from dateof completion of above
0 12 24 32 60Months
ROADBLOCKS GALORE
Approval Process after Land Acquisition Till
Commencement of Construction (24-32 months)
8-12 (Months)
4-6
5-7
5-7
2-3
2-3
2-3
6-8
24-30
Source: CREDAI- Jones LangSaile Real Estate Transparency Survey 2011
Note: The stage Pre-construction approvals from state level bodies and central bodies can happen simultaneously
Doing Business 2011, World Bank and International Finance Corporation
houses is largely
low- and middle-income
groups.
Also, there is a lack of
clarity on the price
bracket for affordable
homes. The standard
definition in India is when
30 31

While real estate players are aware of
the need for affordable houses, they
say they need governmental
assistance. Although the margins are
lower than in luxury housing, the high
demand ensures that affordable
houses are easily sold. However,
government policies, difficulty in
acquiring land, lack of adequate
infrastructure and restrictive building
norms have kept many large players
away. In the ‘Doing Business 2011’
report, the World Bank and the
International Finance Corporation
ranked India a low 177 out of 183
countries on ease of getting permits.
The time taken to obtain approvals could
stretch to two-and-a-half years.
Another problem is that, while demand
is high, many consumers are unable to
raise money post the down payment.
Even if the buyers borrow money, there
is no guarantee that they can furnish the
repayment installments.
Sometimes, the challenge is lack of
documentation. Often, buyers of
low-cost homes are not part of the
organised sector and hence do not have
the necessary income proof.
Implications
A report by Jones Lang LaSalle (JLL)
estimated that 88% of the housing
shortage was suffered by the
economically weaker sections and 11%
by lower-income groups.
Traditionally, developers have been
interested only in high-end housing due
to the high margins. However, during the
2008 slowdown, the affordable housing
sector became popular for investment
as the demand for high-end homes
contracted. Large players – DLF,
Unitech, Tata Housing, Mahindra
Lifespaces – and smaller ones
announced forays into this sector.
However, DLF seems to have rethought
its 2009 announcement that it would
build 100,000 flats in the Rs 20-lakh
range in major cities. Rajeev Talwar,
executive director of DLF, was quoted as
saying that they no longer found the
segment profitable. Does that mean that
investments in this sector are losing
their charm? According to Ashutosh
Limaye, head of research and real estate
intelligence services at JLL India, the
sector is bound to grow due to the high
unmet demand which won’t reduce in
the near future.
While affordable homes are available in
smaller cities like Raipur, Kolhapur,
Sangli and Satara, they are rare in
metros like Mumbai, Delhi and
Bangalore which account for 20%-50%
of the need. Some real estate
developers feel that an increase in the
number of rental homes could partially
solve this problem.
Satellite cities could provide a solution too.
There are two major aspects
to this: cost of land would
be low, but
infrastructure –
including transport –
would have to be
put in place for the
development to be
successful. As of now,
satellite cities have enjoyed
mixed success due to lack of planning.
Sunil Mantri, MD of Mantri Realty and
the vice-president of the National Real
Estate Development Council
(NAREDCO), told Magicbricks.com that
clearances need to be issued within 48
hours for affordable housing to
become a reality.
The success of China on this front is
worth noting. In 2007, China’s
government allotted $1.2 billion to
low-income families’ housing. The aim
was to house 20% of urban
low-income families by the end of
2015. China managed to commence
construction with 7.2 million affordable
housing units, exceeding the annual
target of 7 million.
Recommendations
• Develop infrastructure outside cities.
If satellite cities are to work, amenities
like electricity, water and high-speed
transport must be available.
• Promote public-private partnerships.
Although private players are already in
the affordable housing space, the
government must encourage more to
invest in this sector. For this, it needs to
be more cooperative on the permits and
policy front. An article in ‘The Economic
Times’ in July 2012 said that private
players were reluctant to enter the
sector. According to Navin Raheja,
president of NAREDCO, laws
pertaining to this sector need to be
revisited so that efforts are directed at
the right audience.
• Promote efficient technology, specific
design strategies, optimum utilisation
of resources and lighting in order to
reduce costs.
• Provide incentives for builders.
According to Mantri, builders pay up to
40% of the final sales price in taxes.
Incentives like exemptions of service tax
or stamp duty, and waiving of customs
and excise duty for
imported
construction materials, would help.
• Ensure greater transparency. The
Housing and Urban Poverty Alleviation
Department (HUPA) has demanded
‘infrastructure status’ for the housing
sector, which would increase the flow
of funds and encourage players to set
up affordable housing projects. An
article in ‘The Financial Express’ in
February 2013 said that the
government would present the Real
Estate (Regulation and Development)
Bill 2013 in Parliament. The Real
Estate Regulatory Authority,
established through the
bill, would safeguard
buyers’ rights.
32 33
Image: homeloanguru.co.in
Image: fuzzywaffle.com
Image: architectada.com

Agriculture
financeand
food prices
Agriculture accounted for 14% of the GDP in FY2012 and nearly 52% of
the employment in rural India. Sixty-six years after Independence, most of
our agriculture-related problems remain unresolved. Poor infrastructure;
lack of irrigation, mechanisation and institutional credit; as well as the
dominance of middlemen in the farm-to-plate chain plague the sector
A CREDIT CRISIS ON THE FARM FRONT
States Number of farmer house-holds
Number of Indebted
farmer house-holds
% of indebtness
Andhra Pradesh 6033900 4949300 82
Tamil Nadu 3888000 2895400 74.5
Punjab 1844200 1206900 65.4
Kerala 2194600 1412600 64.4
Karnataka 4041300 2489700 61.6
Maharashtra 6581700 3609800 54.8
Haryana 1944500 1033000 53.1
Rajasthan 5308000 2782800 52.4
Uttaranchal 896200 64400 7.2
Meghalaya 254300 10300 4.1
Arunachal Pradesh 122700 7200 5.9
Source: Press Information Bureau
The irony of the world’s fourth largest
agricultural producer – in terms of
production, the government has
declared India ‘self sufficient’ – being
ranked 134 among 187 countries on the
Human Development Index is
inescapable. Roughly 212 million people
remain undernourished despite usable
farmland, manpower, largely favourable
climatic conditions and perennial rivers.
The biggest problem is the lack of
formal credit, which thrusts farmers into
the clutches of local moneylenders and
eventually leads to the loss of their land.
A large segment of small and marginal
farmers have no access to institutional
credit. There is a stark difference in
credit flow between underdeveloped
regions and those that have better
infrastructure or are closer to urban
areas. Lack of information has resulted
in farmers not understanding the
benefits of formal credit. According to
an article in ‘The Economic Times’ in
April 2012, only 50% of farmers avail of
agricultural credit, both formal and
informal. According to a National
Sample Survey Organisation (NSSO)
report on indebtedness of farmer
households, 43.42 million of the 89.35
million households are in debt.
The middleman is the
main connection
between farmers and
markets. A lot has been
said about the benefits
of middlemen – they
are sources of
information for farmers
and drivers of
technology transfer,
they are an effective
link to exporters, etc.
However, in practice,
middlemen mainly play
the role of purchasing
produce at low rates
and selling it at higher rates in cities,
pocketing the difference. The farmers’
financial position remains unchanged.
This system also ensures that food
prices remain high, leading to inflation,
which has been the cause of great
disquiet in India.
Farmers in western Uttar Pradesh
supported the government’s move to
allow FDI in retail as it would eliminate
middlemen and help them get better
prices for their produce. Hari Om, a
farmer from western UP told ‘India
Today’ magazine that they paid
10%-15% commission to agents. They
were paid Rs 2-Rs 3 for a kg of potato,
which was sold at double the price to
wholesalers. The eventual consumer
paid Rs 8-Rs 10 at a local market and
much higher in the cities.
Farmers say the odds are stacked in
favour of the middlemen. In the
wholesale markets, middlemen
decide the crop rates and get a
commission. Farmers are not allowed
to sell their produce directly to traders
and they bear all the incidental costs.
One of the reasons farmers are
dependent on middlemen is the lack
of storage facilities; middlemen
ensure that the produce gets to the
consumer on time.
34 35
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Implications
A farmer’s main income is the price he
procures for his/her crop. However, the
constraints and debt burdens have
driven many farmers to suicide.
According to the National Crime
Records Bureau, 2,70,940 farmers
committed suicide between 1995 and
2011 with Maharashtra topping the list.
Andhra Pradesh, Karnataka,
Chhattisgarh, Madhya Pradesh, Tamil
Nadu and West Bengal have also
reported several farmer suicides.
An article in the ‘Business Standard’
said that some southern banks were
offering interest rate arbitrage on loans
by which farmers could take an
agriculture loan at 4% and keep the
money as a fixed deposit in the same
bank at 9%. This results in the farmer
earning the interest rate difference and
banks maintaining liquidity. However, it’s
not clear whether all banks are
providing this benefit.
An article in ‘The Times of India’ in
August 2012 detailed the stranglehold
enjoyed by moneylenders. For
example, private moneylenders in
Maharashtra’s Bhandara district gave
crop loans of Rs 150 crore to 75,000
farmers at a monthly interest rate of
5%-10%, which is cumulative. Bankers,
meanwhile, ignored the state
government order to disburse loans to
small and marginal farmers. Farmers,
whose average land holding is 2 acres,
had no choice but to approach
moneylenders who then pre-fixed the
rate of the paddy before the harvest,
causing the farmers huge losses.
In this context, the Budget 2013-14
proposals on agricultural credit were
encouraging. Agricultural credit was
increased to Rs 700,000 crore from the
revised estimate of Rs 575,000 crore for
2012-13. Farm loans would be provided
at 4% to farmers who make timely
payments. This discount scheme would
be available for loans by private sector
banks apart from loans disbursed by the
government and cooperative banks.
Timely availability of agricultural credit
at reasonable rates, especially for small
and marginal farmers, is crucial.
Additionally, the budget also provided
Rs 500 crore for crop diversification to
promote technological innovation and
to encourage farmers to choose crop
alternatives. Rs 1,000 crore was
allocated for extending the Green
Revolution to eastern India, particularly
Assam, Bihar, Chhattisgarh and West
Bengal. Finally, to improve productivity
of land and water use, the allocation for
integrated watershed programmes was
increased from Rs 3,050 crore in
2012-13 to Rs 5,387 crore in 2013-14.
The Indian agricultural system is highly
dependent on the monsoon, always a
gamble since it can be irregular and
inadequate. Irrigation facilities are
needed to provide for areas with scarce
rainfall and in months when there is no
rain. Soil types vary across the country,
which means that the quantity of water
required also varies. As a country with
more than a billion mouths to feed,
India can’t afford to be so vulnerable.
The lack of mechanisation is worrying.
Most land holdings are fragmented,
which makes it unviable for small
farmers. Mechanisation would increase
production, productivity and profitability.
China, India’s biggest competitor, has
been taking large strides on this front.
According to an article in the ‘China
Daily’, the Chinese government is
providing machinery purchase subsidies
to farmers. In 2011, the country reached
a farm and harvest mechanisation level
of 54.8%, an increase of 22.5% from
2002. This resulted in more foreign
investors flocking to China.
India, meanwhile, is struggling. The
level of progress across the country is
uneven. The north – Punjab, Harayana,
Uttar Pradesh – have shown progress
while north-eastern states are lagging
behind due to their hilly terrain and
socio-economic conditions. Some
western and southern states – Gujarat,
Maharashtra, Rajasthan, parts of Tamil
Nadu – have made some ground due to
the increase in irrigated land area and
higher awareness of modern farming
practices amongst farmers.
According to the National Bank of
Agriculture and Rural Development
(NABARD), India will have to double its
food production by 2020. For this,
mechanisation will have to play an
instrumental role. The modern plough is
200% to 300% more efficient than the
traditional one; efficient machinery
increases crop productivity by 30% and
allows farmers to grow a second crop. At a
recent conference on farm mechanisation
in New Delhi, Union Agriculture and Food
Processing Industries Minister Sharad
Pawar emphasised the need for farm
mechanisation to satisfy the projected
foodgrain demand of 280 million tons
by 2020-2021.
Recommendations
• Increase access to institutional credit
for farmers. The Aadhaar project could
be the key. Most farmers in rural areas
have no proof of identity. This leaves
them out of the banking net. The
Aadhaar card would allow them to avail
of formal credit.
• Involve the private sector in developing
agriculture infrastructure. Agriculture
requires huge investments. This would
pay off with farmers getting better
prices for their crops and middlemen
being left out of the loop. In England,
the government promotes farmer
markets so that farmers have more
control over their earnings. There are no
middlemen and farmers diversify their
skills as they gain experience in
marketing and business, and get an
opportunity to network. The local
economy benefits by promoting local
businesses and employment.
• Train farmers in the latest technology
and make provisions for them to access
it. Machinery rentals are one way of
achieving this. At the same time,
counsel farmers against taking drastic
steps in times of financial stress.
• The UK has come up with the Single
Payment Scheme through which funds
are provided to farmers to grow nuts,
protein crops and those needed for
energy production. Farmers growing
such crops receive a pre-fixed premium.
There is a lesson here. Not all farmers
can avail of institutional credit, and
provisions need to be made to assist
those who have no collateral.
• Encourage micro-credit. Microfinance
institutions assist farmers and small
enterprises, and promote
entrepreneurship. Due to their flexibility,
knowledge of the local problems and
presence in remote areas, they enjoy
better acceptability.
• Mobile banking could be looked
upon as way to reach people in remote
areas. The high cost keeps most
formal credit institutions away from
such regions; also, transaction values
are very low. Mobile banking could
help the poor open accounts and
transact securely.
• Agricultural scientists have
suggested a pilot project to establish
‘nutri-farms’ that experiment with new
crop varieties rich in micronutrients. A
provision of Rs 200 crore for this was
made in Budget 2013-14.
• Promote gender-sensitive farm
equipment since the role of women
farmers in agriculture is increasing.
36 37
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Image: gtresearchnews.gatech.edu

India is struggling to come to terms with
the initiation of foreign direct investment
(FDI) in the retail sector. While the debate
on whether 51% FDI in multi-brand retail
will help resurrect the flagging growth rate
has not ended, five months after the
proposal became law very few investment
bids have been received.
Global retailers want more clarity on
India’s stiff sourcing and investment rules,
and are adopting a wait-and-watch policy.
The political opposition to it has
unnerved many. The Bharatiya Janata
Party (BJP), the largest Opposition
party, has declared that it would scrap
the retail policies should it come to
power in 2014. The BJP is not averse to
FDI, only FDI in multi-brand retail. It
alleges that there is no provision to
safeguard the interests of traders and
fears that the entry of global retailers
would lead to more unemployment
and farmers being pressurised to sell
their produce at low prices.
The political divide is wide. States and
union territories such as Andhra
Pradesh, Maharashtra, Assam, Delhi,
Haryana, Jammu and Kashmir, Manipur,
Rajasthan, Uttarakhand, Daman and Diu,
and Dadra and Nagar Haveli have
okayed FDI in multi-brand retail. But
others such as Karnataka, Tamil Nadu
and Kerala – home to major metros
such as Chennai and Bangalore – have
given it the thumbs down.
The Opposition also believes that FDI in
multi-brand retail would snatch away
the livelihoods of those engaged in
traditional grocery retail, which accounts
for 10% of total employment in India.
Most global retailers would have a
model that requires a nationwide rollout.
Few would want to invest in a country
where several metro cities are out of
bounds to them.
Also, there are problems related to
norms that mandate at least 30%
sourcing from small-scale industries
and 50% of investment in back-end
infrastructure. Some formats, such as
fashion and electronics, don’t require
such investments.
All this has meant that India has been
deprived of huge investments, in
addition to the retail sector’s natural
evolution being stunted.
Harminder Sahni, MD of retail
consultancy Wazir Advisors, told the
‘Economic Times’ that big retailers are
not buying the India story. If they had, he
felt, they would have lobbied hard for
the easing of norms.
Implications
According to an Assocham report, the
size of India’s overall retail sector was
Rs 23,00,000 crore in 2011-2012 and is
estimated to double to Rs 47,00,000
crore in five years. Considering India’s
RETAIL SECTOR
INDIA 7 1,210 51
BRAZIL 36 205.7 100
RUSSIA 33 143.1 100
CHINA 20 1343 100
INDONESIA 30 242.3 100
SOURCE: RESEARCH REPORTS
COUNTRY
ORGANISED
RETAIL
SHARE (%)
POPULATION
(MN)
FDI ALLOWED
(IN %)
SOURCE: RESEARCH REPORTS
3938
While FDI in
multi-brand
retail is now a
reality, the
road ahead is
a rocky one
Image: ruralmarketing.org

to 15% growth for the overall retail
sector, attracting investments of Rs
40,000 crore in multi-brand retail,
while the organised market is likely to
grow to Rs 4,80,000 crore.
Recommendations
• Take a firm stance on FDI, which has
already cleared the parliamentary
hurdle, in multi-brand retail despite the
opposition. This would make investors
confident about India.
• Fix problems in the regulatory
environment, bring more clarity to
reforms. Multinationals are skeptical
due to the ever-changing guidelines,
complex market scenario and
political unrest.
• Make it mandatory for companies to
procure raw materials from India alone.
A regulator could monitor whether the
norm is being followed and deal with
farmers’ and traders’ grievances.
• Encourage traditional retail alongside
FDI. Promote modernisation, innovation
and competitiveness among traditional
retailers. Take a cue from Singapore; its
approach is to “cherish, but upgrade
and modernise”.
• Upgrade the traditional supply chain.
The major difference between modern
and traditional retail is the effectiveness
of the supply chain. Retailers are able to
provide quality products at low cost due
to their strong supply chain. Strengthen
infrastructure and services at wholesale
markets from which small shops source
goods. China and Mexico have adopted
this policy for traditional retailers and
reaped the benefits.
• Amend state laws to allow direct
marketing, contract farming and
market yards in private and
cooperative sectors. So far, only 17
states and union territories have made
such an amendment.
population, the share of organised
retail is minuscule compared to other
nations. This is mainly due to the
heterogeneity of consumer tastes and
preferences, which makes it difficult to
standardise offerings.
FDI in retail would bring about several
positive changes. The much-needed
cold chain and logistics system would be
developed and strengthened, which
would reduce wastage and promote
optimum utilisation of agricultural
produce. Warehouses in India lack in
optimal size, layout, ventilation,
inventory management and storage.
This situation must be corrected if the
agriculture chain’s efficiency is to be
improved. Foreign investments in cold
storage have been insignificant so far,
even though 100% FDI in cold storage
has been permitted through the
automatic route. FDI in retail would
encourage foreign investments in cold
storage facilities.
Retailers would bring with them the
necessary agricultural technology for
creating critical physical and
institutional infrastructure. In a recent
interview, Nancy Powell, American
ambassador to India, said that a better
supply chain would drastically reduce
wastage, which currently stands at a
staggering 40% in India.
Experts pointed out that the entry
of global retailers would ensure
better prices for farmers as they
would directly engage and source
from them, eliminating
intermediaries. This process would
make the entire agriculture value
chain effective and short,
benefitting the final consumer as
he/she would pay less for the
produce. This would tame food
inflation, which has been a major
worry over the last two years.
There would be greater employment
opportunities across the agro
processing, sorting, marketing, logistics,
back-end and front-end retail spaces.
Studies show that one person is needed
for 350 sq ft to 400 sq ft of retail space,
which translates to 15 lakh jobs in
front-end retail by 2017. Additional
employment would be generated on the
supply chain front to supplement the
business model.
Umesh Patel, analyst at KR Choksey
Shares and Securities, said that with
the advent of FDI, the retail sector
would take massive strides and
catalyse GDP growth. The benefits
would take shape in five to seven
years. Organised retail is expected to
grow at 24% by 2016-17 as compared
Source: ForbesIndia.com
HOW FDI IN RETAIL WILL AFFECT DIFFERENT SEGMENTS
IMPACT Limited
WHY
Retailers across the world like to work with a small group of
select vendors for economies of scale. Nevertheless, the
supplier base will be larger in number and smaller in
turnover than elsewhere, because of regional diversity in
consumption patterns.
SMALL MANUFACTURERS
INFRASTRUCTURE, COLD CHAINS
IMPACT Limited
WHY
Each retailer will invest only for what his own business
requires.
IMPACT Very little
WHY
They operate in small towns and rural India, and serve the
lower social class customers as well. Modern retail will
target the top income layers in urban areas. In bigger cities,
many kirana shops will morph and specialise, offering
phone-in home delivery, e-commerce and the like.
KIRANA STORES
JOBS
IMPACT Limited
WHY
A new skill category called 'retail jobs' will be created. The
birth of modern retail could improve wage rates in
traditional retail.
40 41
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13 Economic Priorities For FY13-14 - MSLGROUP India

13 Economic Priorities For FY13-14 - MSLGROUP India

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13 Economic Priorities For FY13-14 - MSLGROUP India