TIMES BUSINESS

THE TIMES OF INDIA, HYDERABAD | MONDAY, JULY 18, 2016

47% OF WORKING PEOPLE IN INDIA HAVE NOT

STARTED SAVING FOR THEIR FUTURE: HSBC SURVEY

Its hard to do
business in
India: Tony
New Delhi: Defending the
slow-paced growth of AirAsia India, AirAsia group chief
Tony Fernandes minced no
words in criticising the government for protectionism
in the skies stating that the
aviation sector here was a
double marathon and not a
sprint.
Admitting that it was
hard to do business in India
due to protectionist policies
and vested interests, he said, I am not going to storm in
like a bull in China shop like
Vijay Mallya did, and get
caught. Now we have a (civil
aviation) policy and the policy is very clear on what we have to do. So talk to us in a few
years time.
Observing that the BJPled government has at least
delivered 80 per cent of what
it talked about in the draft
aviation policy, the AirAsia
chief said it is hard (to do business) in India (as) there are
so many vested interest who
were trying to keep some of
the incumbents happy. So at
least they changed it (norm
for international flying by domestic carriers) and we are
clear what we need to do. And
I would not be dead by the time 5 years come along with 20
aircraft we had before, the
AirAsia (Berhad) Group chief
executive officer told PTI on
the sidelines of the Farnborough International Airshow in
the UK last week.
Fernandes also heaped
praise on the new civil aviation policy, particularly the
doing away of the 5/20 norm.
Don't protect airlines. Get
more air traffic rights, get more tourism into India and create more jobs. I think the Mo-

I am
not
going
to
storm in
like a bull
in China shop like
Vijay Mallya did, and
get caught. Now we
have a (civil aviation)
policy and the policy
is very clear on what
we have to do. So
talk to us in a few
years time
Tony Fernandes|

AIRASIA CHIEF

di Government has to be brave in going all the way and

getting rid of vested interests and protectionism, he
said. To questions on AirAsia India's slow progress as
compared to its peer group,
he said earlier there was no
clarity on what the policy
was going to be. "This is not a
sprint this a marathon. India
is a double marathon. So I
think we have been smart,
we are cautious, we built it
slowly, Fernandes said.
Look at how quickly we
grew. I started with two planes in Malaysia. But I did not
have a 5/20 rule. I was not sued every day. I did not have
Naresh Goyal on my back.
How long I have been in India?
Two years. How long has the
government of India been
around? You have been a country of a long time, right?
Wait, patience. Must not
rush," Fernandes said. PTI

Complex generics will

drive growth: DRL
New Delhi: Dr Reddy's Laboratories
(DRL)
expects
complex generics, proprietary products, including creation of branded generics
platform in the US, to be the
main drivers of its growth
going forward.
Our growth, going forward, will be driven by the attractive pipeline of complex
generics as well as our new
proprietary products, Dr
Reddys Laboratories chairman K Satish Reddy said in a
message in the companys latest annual report. The company will leverage these
across the markets we operate in, together with increasing our OTC portfolio, he
added. Highlighting the roadmap the company is taking for expansion, Reddy
said: We are creating a
branded generics platform
in North America and expanding our biologics play in
Russia, CIS and other emerging markets. The outlook
for the API business is also
positive, he added. A branded generic is a drug that is
bioequivalent to the original

product, but is now marketed under another company's brand name.

During the fiscal year
2015-16, the company's revenues from North America
for generics grew 19 per cent
to Rs 7,540 crore during 201516. The sustained performance of our injectables
franchise and market share
gains in key molecules were
the main reason, Reddy said. Dr Reddy's Laboratories
had posted a consolidated
net income from sales and
services of Rs 15,470.8 crore
for 2015-16 fiscal. It was Rs
14,818.9 crore in the previous
fiscal. About the other global
markets, Reddy said: It is
difficult to assess the probable situation in Venezuela and
Russia in the near future. In
case of Venezuela, the company has decided to supply
medicines only against letters of credit or pre-payment, he added. We are cautiously optimistic about Russia, given that there is a gradual recovery in the crude
prices, and its direct impact
on the rouble, he added. PTI

The Performance Of The Indian Economy Has Been Quite Creditable And The
Hope Is That With The Good Monsoon, Sentiment Gets Elevated, Especially In
Rural Areas... That Certainly Is Our Expectation, Says Outgoing RBI Governor

I have sort of refrained from

thumping on the table: Rajan
ON GROWTH

Our last projection

was 7.6 per cent
and I think as the
monsoon develops, as
the global economy
develops, clearly
there will be
changes in that.
But I think we
sometimes get
overly xated
with a particular growth
number 7.6, 8, they are
all within the same sort
of range of numbers

Bengaluru: Infosys CEO

Vishal Sikka said the companys
lower-than-expected
performance in the June quarter which spooked the
stock markets on Friday
was no reflection of his strategy to move the company
away from its focus on lowering costs for clients to one
that develops innovative solutions for them. He said it
was an execution failure in
certain segments of the business and he was taking steps
to fix those.
And in an apparent admission of failure to provide
appropriate revenue guidance in April, Sikka said one of
the big areas he still needed
to address is to improve internal processes and make
Infosys a real-time company,
including our ability to forecast. The modest performance in the June quarter
which follows several quarters of good performance

Infosys CEO Vishal

Sikka says it was an
execution failure in
certain segments of
the business and he
was taking steps to
fix those
compared to most of its peers
forced Infosys to lower its
revenue guidance for the full
year to 10.5-12%, from the
11.5-13.5% it gave in April.
The stock market reaction to
that wiped out Rs 23,000 crore of investor wealth in a
single day. Some analysts are
sceptical about Infosys achieving even this lower guidance, considering that the
first quarter is normally one
of the stronger quarters.
Sikka said the traditional
way of delivering services is
under a very structural threat and there is tremendous
pricing pressure on it. He attributed the pricing pressure to two major developments: the clients being under tremendous cost pressu-

THE RAJANOMICS
ON
INFLATION

am not sure where we are

behind the curve. You have to
tell me that somehow ination
is very low for us to be
seen as behind the
curve

Its Not Dung-Ho

In Rural India
%
14

inflation
1 Rural
higher than urban...

%
8
7

Rural retail inflation

12

due to higher
2 Largely
rural fuel price...
Fuel rural

6
10

5
4

Raghuram
Rajan,

3
6

RBI GOVERNOR

2
1

Urban retail inflation

Fuel urban

head of his last monetary policy review on August 9, RBI governor

Raghuram Rajan has rejected
criticism that the central bank
is behind the curve in reducing
interest rates. He, however, said the Indian economy is doing
well in view of the global challenges and Brexit. Rajan, who
returns to the US after his term
ends in September, ruled out
the possibility of writing on
his stint at RBI and said he
plans to focus on writing academic papers. Excerpts from a
conversation with Pradeep

Thakur.
In the current domestic
situation and global economic challenges, what is the
major test for the Indian
economy?
The challenges have been
relatively same for some time,
which is that we are in the
midst of a recovery. There is a
lot of frustration with the pace
of the recovery but we should
remember that it's in the face of
two consecutive droughts and
with a global economy which
has been quite weak and, of course, with number of shocks
such as what we saw most recently with Brexit. Given that,
the performance of the Indian
economy has been quite creditable and the hope is that with
the good monsoon, sentiment
gets elevated, especially in rural areas... that certainly is our
expectation. The challenges
are obviously strengthening
this process by undertaking all
the reforms that are needed.
There is a lot of talk nowadays
about GST being done in the
monsoon session of Parliament that would be a good
thing.

The government is hopeful

of 8% GDP growth, yet there
are many contradictory
voices. How reliable are
these statistics?
I have sort of refrained
from thumping on the table
and saying this is going to be
the growth number or that is
going to be the growth num-

Sikka: Infy result not a

reflection of strategy
Shilpa Phadnis, Avik Das
& Sujit John TNN

FOREIGN INVESTORS BROUGHT IN `9,700 CR INTO

CAPITAL MKTS IN FIRST TWO WEEKS OF THIS MONTH

re
and
significant
improvement in their ability
to set up captive centres. A
number of leading companies globally has been establishing their own technology
centres in countries like India, a trend that adversely
impacts the volume of outsourcing.
The wrong response to
this, as I have been saying, is
a downward spiral use
cheaper and cheaper people
and jam them more into projects faster and faster. That
journey ends at one place
at zero. The right response is
to transform towards innovation. We need to take projects and services where software and automation that we
deliver improves the productivity of the people and frees
up people to deliver innovation. If we are not able to do
such a transition, the industry will go down, Sikka told
TOI in an exclusive interaction following the companys
announcement of results for
the first quarter.

ber. Our last projection was

7.6% and as the monsoon develops, as the global economy develops, clearly there will be
changes in that. But, we sometimes get overly fixated with a
particular growth number.
The figure of 7.6% or 8%, they
are all within the same sort of
range. What we should rather
be focussed on is undertaking
all the actions that would ensure the growth is strong and sustainable.

What are the challenges

before the RBI?
At RBI, there are a number
of issues that we are working
on and trying to accelerate the
structural reforms process.
Lets see how much we can do.

There is a lot of debate suggesting that the RBI was

probably behind the curve in
cutting interest rate?
This discussion keeps going on without any economic
basis. You saw the CPI (consumer price index or retail inflation) numbers just last week,
which was 5.8%, our policy rate is 6.5%. So, I am not sure where people say we are behind the
curve? You have to tell me that
somehow inflation is very low
for us to be seen as behind the
curve. I don't really pay attention to this kind of a dialogue.

Despite so many new bank

accounts in rural areas
under the PMs Jan Dhan
Yojana, you find very few
bank branches or ATM in
villages. People still have to
travel 4-5 km to get access to
banking. What is the solution?
We cannot put bank branches in every village. That would be too expensive, at least the
full-fledged brick and mortar
branch. Now, one possibility is
a mobile branch and some
banks are bringing in a mobile
branches, which travel from
village to village and stay at a
particular fixed time in a village. We have given the in-principle licence to Postal payment
bank...that could bring a lot of
post offices into the process.

DIGEST
Dailyhunt buys
stake in OneIndia
Dailyhunt, formerly Newshunt, an app which aggregates local language content,
has picked up a strategic
stake in Greynium Information Technology, the publisher
of vernacular portal OneIndia,
besides a bunch of other
websites. TNN
Andhra Bank opens
Sovereign Gold Bond
Scheme Tranche IV:
Andhra Bank has announced
the opening of Sovereign Gold
Bond Scheme Tranche-IV,
Andhra Bank has announced
the opening of Sovereign Gold
Bond Scheme Tranche-IV,
sponsored by the Government of India, for public
subscription from July 18,
2016, to July 22, 2016, at all its
2826 branches across the
country. The issue price of
the Sovereign Gold Bond for
this tranche has been fixed at
Rs 3119 per gram of gold and
RBI has notified an interest
rate of 2.75% per annum,
Andhra Bank said, adding
that the tenor of the bonds is
eight years with a provision
of premature cancellation
after five years. TNN

With mobile companies coming in, you can put in money,

take out money from a kiosk of
a mobile company. So my hope
is if (kiosks that sell SIM cards)
can take in money and give out
money, that could be a big game
changer. But one more thing
which is happening, perhaps
by the end of this month, is the
universal payment interface
(UPI) which I can make a payment from my bank account to
your bank account just by knowing your alias. So if I'm in a
village, I can actually do a lot of
payments without going to my
bank and taking out money. I
just need to know your e-mail,
the NPCI (national payment
corporation of India) has your
bank account details and will
transfer the money to your account and you will get a message that so much money has been transferred. With the UPI,
and a two stage process it will
be easier to take out and put in
money, the kiosks will help and
the Post offices will help.

Is there a need to ring fence

bankers from the investigative agencies, especially given
the kind of debt restructuring schemes you recently
announced?
Bankers have expressed
concern that they should not be
held liable for actions that are
taken in the full spirit of what is
needed. I think everyone has
respected that any actions should be based on appropriate
due diligence and on a proper
application of mind. Given the
situation, they should have some freedom to take actions, because otherwise we will not get
the kind of clean up, the kind of
putting over leveraged projects
back on track that the economy
needs...I think there has to be
some responsibility but the responsibility has to be for taking
measured decisions.

Would you follow your predecessor in sharing your

experience at the RBI?
Ihave no plans to write a book on this subject. I will write
on academic issues.

Jun

Feb
2012

Feb
2013

Feb
2014

Feb
2015

Feb
2016

June
2014

Two
main
contributors
are...

10.8%

7.4%

(Increase in prices
in 2015-16 in %)

Cow dung
cakes

Firewood
& chips

Surojit.Gupta@timesgroup.com

New Delhi: At a time when

low oil prices have brought big
relief to urban households, rural India is hit by an unprecedented rise in cooking fuel prices primarily caused by surging prices of dung cake, firewood and chips.
The detailed breakdown of
inflation data for 2015-16 released recently and analysed by
rating agency Crisil show that
dung cake prices rose by 10.8%,
while inflation in firewood and
chips went up by 7.4% during
the year. Among rural households, 84% still use firewood
and chips as cooking fuel.
Dung cake is used by 41% rural
families. In urban areas, 23%
of families use firewood and
7% use dung cakes. The consumption pattern data are
from National Sample Survey
Organisations household consumption expenditure study
for 2011-12, the latest available.
Overall fuel inflation in rural areas was 6.8% in 2015-16,
which is more than two-and-ahalf times the figure for urban
areas 2.7%. The sharp increase in rural cooking fuels was
due to soaring prices of dung
cake and firewood chips. What
caused inflation in such fuels
is not known, but it is likely
that the supply of dung cake is
falling due to fewer people making them.
The services sector of Indias rural economy, as different
from agriculture that directly
depends on farming, has
grown rapidly in the past decade led largely by opportunities
in rural commerce, trade and
construction, which was hel-

-1

Oct
2014

Rural
kitchen
heavily
dependant
on...

ped by mega schemes like Mahatma Gandhi National Rural

Employment Guarantee Act
(MGNREGA).
Between 2004-5 and 2011-12,
rural incomes had grown at
the fastest pace ever, aided by
better wages and good monsoons. But monsoons have been
poor for two consecutive years,
which added to the distress
caused by higher rural inflation. About 69% of India still lives in villages.
In the past two years to June 2016, while urban inflation
fell from 9% to 5.3% rural inflation declined from 10.1% to
6.2%. The one percentage point gap is due to higher core
and fuel inflation in the rural
areas. Core inflation is a measure of inflation excluding food and energy costs.
In 2015-16, rural core inflation was 6.7% compared with
4.8% in urban. Sub-categories
such as health, education, household goods and services and
recreation and amusement also posted higher inflation in
the hinterland in the last financial year. Economists say
one reason for higher inflationary pressures in the rural
areas is the gaps prevailing in
the public distribution system.
Lack of infrastructure leads to poor transmission mechanism therefore the benefit
of low global prices does not
pass through to rural areas
that easily. This results in higher inflation, said Ashok Gulati, Infosys chair professor at
ICRIER, a think tank. He said
improving connectivity and
reducing the cost of transportation was key to easing bur-

DoT decides to scrap

Trais SUC formula
Pankaj.Doval@timesgroup.com

New Delhi: The telecom ministry has decided to reject

the formula suggested by regulator Trai over fixation of
spectrum usage charge (SUC)
as it has found the suggestion
to be impractical and near-impossible to implement.
A new solution is likely to
be worked out by the end of
this week, following which it
will be presented to the interministerial telecom commission, the top body that takes
decisions on telecom and
spectrum matters.
Official sources said the
ministry, which seeks an early solution to the vexed issue
of SUC in view of the impending spectrum auctions, is
working on a new formula
that takes into account a number of factors, which includes
ensuring a level-playing field
between various operators
and technologies.
While Trai had gone into
the theoretical aspects when
making suggestions on the issue of SUC, its recommenda-

A new solution may

be worked out by the
end of this week,
following which it
will be presented to
inter-ministerial
telecom panel
tions cannot be implemented
practically, a source told
TOI.
The regulator was asked
to suggest a formula by the
Union Cabinet last month. In
its recommendations made to
the telecom ministry on July
12, Trai had suggested that the
annual SUC payout of telecom operators be linked to
their current revenue earnings from different telecom
bands rather than the quantity of holdings.
This, the regulator felt,
will give a realistic picture
and allow the government to
charge SUC as per the revenue streams from various radio frequencies. While recommending this, the regulator
had also reiterated its previo-

us suggestion that the SUC

be made uniform over the
long run (it had asked for a
fee of 3% in 2013).
The telecom ministry officials differ from this view.
Our committee has already
found that revenue segregation is not possible. There is
no way to identify which
spectrum is being used for
providing services at any given point of time, an official
said.
Trai perhaps refrained
from suggesting a flat SUC rate this time due to the recent
recommendation of Attorney
General Mukul Rohatgi, who
had said that there is no scope
for revision of SUC rate on
spectrum acquired in the
2,300 MHz band in 2010 at 1%
rate.
Frequencies in other
bands such as 900 MHz and
1,800 MHz are charged at 5%
from 2014 onwards, while operators were paying between
3% and 8% for airwaves bought before that period (based
on the quantum they hold).

Feb
2015

Jun
2015

Oct
2015

Feb
2016

June
2016

84%

41%

Firewood
& chips

Cow dung
cakes

den of price pressures in rural

India. About 37% of urban households use petrol, and 2%
use diesel compared with
less than half of that 17%
petrol, and 0.8% diesel in rural households. Petrol and diesel account for 3.5% of monthly consumption expenditure
in urban areas, and less than
half that at 1.7% in rural. In addition, poor storage and transport facilities, poor roads and
connectivity, have limited the
pass-through of lower commodity prices to the countryside.
This, in turn, feeds into food and non-food inflation.
While the government is improving access through the
Pradhan Mantri Gram Sadak
Yojana, there is still a long way
to go, according to the Crisil
study done by D K Joshi, chief
economist and economist
Sakshi Gupta. Lack of recreation options and supporting
infrastructure such as un-interrupted power supply also
stoked inflation in rural areas.
And, inadequate institutional
medical services hit healthcare costs. Overall non-institutional medical inflation rose
by 9.7% in the last fiscal year,
adding to the woes of rural India, the Crisil analysis showed.
Among the measures suggested by Joshi is speedier
implementation of the Pradhan Mantri Ujjwala Yojana,
which aims to provide cooking
gas connectivity to 5 crore below-poverty line beneficiaries
over the next three years.
Worlds fastest growing economy cant have majority of its
household dependent on dung
cake to make their meals.

EPFO may invest

up to 12% in
equity markets:
Dattatreya
Hyderabad: Buoyed by strong
stock markets, labour minister
Bandaru Dattatreya has said the
Employees Provident Fund Organisation may invest up to 12
per cent of its investable amount
in equities over a period of time.
According to the minister, as
on June 30, the EPFO invested Rs
7,468 crore in two index-linked
ETFs (Exchange Traded Funds)
-- one to the BSE's Sensex and the
other to NSE's Nifty -- and as of
now the market value of the investment stood at Rs 8,024 crore
with 7.45 per cent yield.
There will be a CBT meeting before July 22. We may take
a decision on the quantum of investments to be made in ETF. We
are in discussions with Bombay
and National Stock Exchanges
also. The investment will certainly increase (over last year).
The Finance Ministry gave us
clearance to invest from 5 to 15
per cent. It is a long term investment. It may up to10 to12 per cent
also depending up on the market
conditions. We expect the markets would be stabilised in the
long run. Markets also need money, Dattatreya. PTI