Friday, June 12, 2015

Bearishness in soyabean prices on better production estimates
[Editor: This report says that the International trends aren’t supportive of Soya prices in Indian market. This is music to the companies like Rasoya Proteins Ltd (Rs.0.34), who were suffering due to steep increase in the price of the Soyabean, due to destruction of a large part of the crop in Maharashtra. However, the Soya Oil, imports continue to create problems for the domestioc players, as the Narendra Modi government is yet to take measures, to stem the tide. 
The shares of Rasoya Proteins Ltd, which is now hovering around Re.0.34, should soon cross Rs.5 in the near future; as the company's production is likely to gather steam, post September, 2015. Moreover, the company has come out with a comprehensive plan, regarding insider trading--all these augurs well for the company. The stock has hit the UC, today, and is likely to continue till Re.0.60. So, accumulate the scrip in every dip, so that your acquisition price comes down.
Meanwhile, there are reports that the market for soybean derivatives is estimated to be worth $176,921.05 million in 2015, and is projected to reach $254,913.10 million by 2020, at a CAGR of 7.6%. In 2015, the Asia-Pacific region is estimated to be the largest market and is projected to grow to $125,854.43 million by 2020, at a CAGR of 7.8%, as studied from 2015. North America is the second-largest market and is projected to grow at a CAGR of 9.2% during the period under review. The soybean crop is processed into soy meal and vegetable oil, and almost all of that meal is used in animal feed. Steady demand for soybean derivatives also confirms sustained need for food-grade soybeans, including specialty varieties, organic, non-GMO, and IP beans. Also, Washington recently unveiled a proposal that mandates less ethanol and greater biodiesel use than was originally outlined by law. Vegetable oil prices have since rallied, with CBOT soyabean oil futures gaining 4.5 per cent in the past two weeks and breaking daily volume records on May 29]
May 31 2015: Improved arrivals in the domestic market and forecasts of better global production are expected to keep a check on soyabean prices, which have been bullish since April. Spot prices, which have been hovering around Rs 3,300-3,470 per quintal between January and April, had gained 22 per cent to a high of Rs 4,217 per quintal (100 kg) in May. In the futures market too, prices that were at Rs 3,406 per quintal in January-end, moved up to Rs 4,380 in the first week of May.

Prices were under check between January and April as supplies were sufficient in the domestic market; soy oil imports had gone to record levels and the international price trends too were weak due to bumper crop in South America. In 2013-14, the country had achieved a record production of 119.89 lakh tonne.

The import of soyabean oil between November 2014 and April 2015 went up to 1,059,901 tonne compared with 641,286 tonne in the year ago period, up by about 65 per cent.

In the international market, soya- bean prices had dipped 8.6 per cent to $9.24 a bushel from over $10.11 a bushel since March as global inventories were expected to rise by over 12 per cent.

Due to disparity between international and domestic prices, soya meal exports from India declined. “The demand for Indian soya meal was weak due to the disparity in prices largely on unattractive quotes compared with other exporting countries such as the US, Brazil and Argentina. Vietnam lowered imports from India, while Iran, sought cheaper soy meal from other countries after the sanctions against it were lifted,” said Ritesh Kumar Sahu, analyst, agri-commodities, Angel Commodities.

Prices of Indian soya meal were quoted $80-90 per tonne higher than other countries. However, by May, predictions of a deficient monsoon increased concerns about a lower crop in India. Soyabean Processors Association of India (SOPA) predicted the production in 2014-15 would be about 99 lakh tonne. This saw prices moving up to Rs 4,200 in the spot market.

Meanwhile, Solvent Extractors’ Association came up with reports that the production could be normal in 2014-15 and that farmers had held up their crop due to lower prices. The market is also not expecting monsoon to be normal. This once again brought in bearishness in soyabean prices.

According to recent United States department of agriculture reports, global soyabean production for 2015-16 is expected to be similar to last year’s 317.3 million tonne. The larger crops from Brazil, India, Canada and Ukraine are expected to offset decline in production in the US, Argentina and China. There is also a 35 per cent increase in global carry over stocks.

“We expect soyabean prices to continue to remain sideways with negative bias for near to medium term on sufficient stock levels in the domestic market and expectations of better sowing in this kharif season. Soyabean prices may be trading in the range of Rs 3,650-4,150 per quintal in the next two months depending on the progress of monsoon and international price movement,” said Sahu.

Do you know? 
Karuturi Global has allotted 36.50 crore convertible warrants of face value ₹1 each to non-promoters on preferential allotment basis instead of 34.5 crore convertible warrants. 

Earlier, the company had informed the exchanges that its board (on May 25) had allotted 34.5 crore convertible warrants as approved by shareholders. On this news the shares of Karuturi Global jumped 9.6% to ₹2.62 on the BSE.

The management of Karuturi Global seems to be have gone fully ballistic, regarding future prospect of the company. The next target for the scrip remains Rs.5-7; don't sell the shares in a hurry. I will speak with the sources this week and put the details on the blog. 

Meanwhile, Karuturi Global has reported a consolidated total income from operations of Rs.92.84 crore and a net profit of Rs.18.45 crore for the quarter ended Mar '15. Other income for the quarter was Rs.(-)1.06 crore. For the quarter ended Mar 2014 the consolidated total income from operations was Rs.156.33 crore and net profit was Rs 26.18 crore, and other income Rs.(-)12.67 crore.

Actually, I am too busy with some domestic problems and hence is not able to update this blog on time. Please bear with me, as I feel by next week, much of the problem will be solved; as I shift my location here in Mumbai (Bombay).

Wednesday, June 03, 2015

Karuturi Global reports consolidated net profit of Rs 18.45 crore in the March
Sales rise 18.58% to Rs 92.84 crore
Net profit of Karuturi Global reported to Rs.18.45 crore in the quarter ended March 2015 as against net loss of Rs.51.39 crore during the previous quarter ended March 2014. Sales rose 18.58% to Rs.92.84 crore in the quarter ended March 2015 as against Rs 78.29 crore during the previous quarter ended March 2014.

For the full year, net profit declined 53.00% to Rs 32.47 crore in the year ended March 2015 as against Rs.69.09 crore during the previous year ended March 2014. Sales declined 46.00% to Rs 266.23 crore in the year ended March 2015 as against Rs.493.06 crore during the previous year ended March 2014.

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Friday, May 22, 2015

Rolta India Ltd: Breaks Out
Rolta India Limited, a leading provider of innovative IT solutions for many vertical segments, including federal and state governments, defense and homeland security, this month announced the signing of definitive agreements for establishing a joint venture with Meprolight, a leading international electro-optics company. 

To be owned 51% by Rolta and 49% by Meprolight, the JV will take advantage of technology transfer from Meprolight for manufacturing and developing state-of-the-art optronics devices based on image intensifier and thermal imaging technologies in India, for addressing the growing demand for night fighting capabilities by the Indian defence and security forces.

Meanwhile, there were recent media reports that, Indian Institute of Information Technology (IIIT) will be coming to Pune. Guardian minister Girish Bapat announced the decision which put an end to the long wait of having one of the 20 proposed IIITs in the Mumbai-Pune corridor by the ministry of Human Resource and Development (HRD). It will be located in Chakan. 

For IIIT Pune, the government has joined hands with Rolta India Limited, Mumbai, Hubtown Limited, Mumbai and Quick Heal Technologies Private Limited, Pune. The industry partners for IIIT Nagpur are NDCC, Nagpur and Tata Consultancy Services Limited, Mumbai. The total estimated expenditure for the venture is Rs 128 crore. As many as 40 acres in Chakan have been allotted to the project where work will begin immediately as the government plans to begin admission from academic year 2016-17," announced Bapat.

Moreover, Rolta Ltd has a P/E of only 2.47 against the industry average of 22.60. Now if the company gets a decent P/E of 15, then the shares can trade above Rs.200. 

Thursday, May 21, 2015

The Nifty as expected turned bullish since yesterday. The resistance of 8390, was covered today, as FIIs started buying again, amists the rumours that there is a mutual ceasefire, agreement between the government and the FIIs in matters of "TAX TERRORISM". It was basically due to this episode and the NDA's government's directionless economic policies, which spooked the FIIs. However, with Narendra Modi, returning to the Indian soil, after burning a hole in the economic map of India; hopes are being whipped up, that he would now concentrate on the domestic reforms more. Narendra Modi is a rustic-hard-working Indian. However, he neither has the intelligence nor has much idea how to run the economic landscape of this country. His speeches are not only substandard but sometimes laced with only self-praise. His finance minister, Mr.Arun Jaitley, is equally inapt and amateur. The markets moved up due to some unrealistic expectations from the Narendra Modi government, which got diluted as the "Real Modi" unfurled from the ramparts of Red Fort.  However, most of us never thought that persons like Arun Jaitely would be FM and Smriti Irani would occupy the HRD ministry in Narendra Modi's government, leaving the stalwards, like Dr.M M Joshi, Mr.L K Advani, Mr.Arun Shourie, etc. This proves that Narendrfa Modi is a snob and rewards his blind followers. Moreover, this is the same Modi-Jaitley-Sushma Swaraj combination, who opposed FDI in retail and insurance, only to take a U-turn later. 
Today, was the day of Rolta India Ltd. The scrip moved to Rs.121, intra-day before closing at 120.05 up 4.48%. The next target for the scrip is Rs.125.
Today, Gammon Infrastructure Projects Ltd was recommended to the Paid Groups at Rs.11.74. The scrip moved to Rs.11.95, intra-day before closing flat at Rs.11.58. The short term target for the scrip is Rs.15. It is in talks with Mumbai Port Trust to start roll on-roll off operations and putting the Indira Container Terminal project to alternative use.  Meanwhile, the company has  posted consolidated Jan-Mar net profits at Rs.73.77 mln  as against loss of Rs.405.61 mln a year  ago. It has come out with  net sales of Rs. 2.08 bln in Q4FY15, up 1.1%  Y-o-Y  basis. 

Wednesday, May 20, 2015

Indian banks may offer interest on gold deposits of above 30 grams
Indians are fond of gold
Mumbai, May 19, 2015: India could allow individuals deposit a minimum of 30 grams of gold with banks in return for interest payments to help monetise large quantities of the metal lying with households, a step that is aimed at cutting expensive imports.

Trying to mobilise 20,000 tonnes of unproductive gold owned by Indian households into cash, Finance Minister Arun Jaitley in his budget speech on 28 February unveiled the gold monetisation scheme.

Banks could treat gold deposits as part of their cash reserve ratio (CRR) or statutory liquidity ratio (SLR), the finance ministry said in its guidelines released on Tuesday to seek opinions about its gold monetisation scheme. It said the stakeholders could respond to its suggestions by 2 June.

The SLR is the minimum amount of bonds that banks must have, while the CRR is the share of deposits they have to compulsory keep with the central bank.

"Both directionally and in terms of content, this draft reflects a practical approach," said Somasundaram PR, managing director of World Gold Council's India operations.

"Once the incentive framework falls into place to the satisfaction of the banks, customers and others, we will own a uniquely Indian scheme that allows gold to become a dynamic, fungible asset in the hands of gold saver," Sundaram said.

The government is trying to convince households, who sometimes have little faith in financial institutions, to break the tradition and hand over gold passed down the generations.

Under the scheme, customers' will have to deposit gold for at least a year and banks may pay the interest after 30 or 60 days of the opening of the gold savings account, the proposal said.

Both the interest and the principal payable to depositors are likely to be valued in gold and the gains will be tax-free, it said.
"Lower threshold for deposits and tax exemptions will make the scheme attractive for households," said a Mumbai-based dealer with a bullion importing bank.

But the biggest challenge would be to set up collection centres that can accept gold, the dealer said.

Courtesy: First Post

Tuesday, May 19, 2015

Gitanjali Gems Ltd: Forward March has Started

Recently there were media reports that working capital loans of Rs.4,300 crore given to Gitanjali Gems Ltd (Rs.42.25) have been restructured under the joint lenders’ forum (JLF)  mechanism. 

The company announced on April 21 that it is consolidating the business at group level to improve cash flows and reduce costs in various activities such as sourcing, manufacturing, distribution, exporting and retailing. It proposed the merger of three of its subsidiaries Asmi Jewellery India and Spectrum Jewellery with Nakshatra Brands and also the merger of Gitanjali Jewellery Retail and Gitanjali Lifestyle with GILI India.

Gitanjali has also sought rescheduling its repayment of ECB loans with IDBI, with the RBI providing in-principle approval for the rescheduling.

The gems and jewellery sector has been under stress owing to a rise in customs duty, RBI-imposed restrictions on gold imports and a volatile rupee. “Gitanjali being one of the largest players in the Indian jewellery space was also impacted by these regulations,” Gitanjali’s CMD Mehul Choksi said in the company’s FY14 annual report. Further, the company had to significantly rationalise its operational costs primarily the manpower and administration costs.

However, current NDA government has taken a liberal approach towards gold. Among others, the government is taking steps to change the way Indians are holding gold. The 80:20 scheme — under which 20% of imported gold has to be exported back — has already been scrapped. 

Now the finance ministry has proposed two schemes, which are aimed at the way Indians are holding gold and mobilise idle gold lying with the Indian households and temples. The Gold Monetisation Scheme and gold sovereign bonds were proposed in the Budget and are being finalised.

Bonds are for giving gold returns without buying physical gold, while gold monetisation is to mobilise gold for productive purpose and also give good returns to those who holds it. Both will also contain interest rates over and above gold price returns. According to estimates, 22,000 tonnes of gold or $1 trillion worth of gold, which is half the size of the Indian economy, is lying idle with households. This could reduce the need to import gold without imposing any controls on gold import. However, the government has retained 10% duty on import of the yellow metal and collected $3.4 billion as import duty in 2014-15. This is leading to smuggling and a flourishing unaccounted market.

Jewellery exports from India are likely to hit a four-year high, crossing $40 billion, in the current financial year on robust American demand. Also expected is a rise in demand for gold ornaments in West Asia and Turkey. The Gems and Jewellery Export Promotion Council (GJEPC) has fixed a target of $43 billion this year.

Diamond jewellery demand is robust across all destinations, led by the US. Gold jewellery demand has also seen phenomenal growth in 2014-15. The trend looks likely to continue, on rising order flows. Thus, according to experts, India can easily surpass $40 billion this year.

Gems and jewellery are 13% of Indian merchandise export. India processes 11 of every 13 diamonds in the world. America constitutes around 42% of world jewellery consumption and around 40 % of India's overall gem and jewellery export goes there. 

Indian jewellers have taken several initiatives to promote gold and diamond ornaments. Apart from frequent bilateral meets, they've also successfully made a dent in the Latin American market, set to fetch good volume this year.

The latest book value of the shares of the company is Rs.287.39. The stock has started to move up after a long consolidation phase. The next target seems to be Rs.47.

Monday, May 18, 2015

Karuturi Global Ltd: Steady Upmove expected
Banglore-based Karuturi Global Ltd (KGL) is India's largest rose exporter. Recently, it has been taking various steps to reduce its debts including selling off 53% stake in Mumbai-based Florista India Pvt Ltd, which operates a chain of floral designing boutiques across India. Founded in 2007, Florista India offers roses, orchids, gerberas and exotic flowers for anniversary, birthday, congratulations, get well, love and affection, miss you, and new baby occasions.

The scrip of KGL seems to be on a steady uptrend since the last few days, after a long consolidation phase. The latest Book value of the shares of the company is Rs.12.04. The P/E of Karutuuri Global Ltd (Rs.1.95) is 14.54 against the industry average of 33.94, giving it enough room for appreciation with the current set of fundamentals in place. The next logical target for the scrip is Rs.2.25.
Breaking It Down: MAT = Tax Terrorism
[Editor: Last month there were media reports that the  Indian Finance Minister Mr.Arun Jaitley, rather jocundly said that the opposite of tax terror cannot be a "Tax Haven". Pointing finger to his critics,  he asserted that Modi government would not let go off what it sees as a "Legitimate Tax Demand".  Mr Jaitley was infact referring to the tax  notices served on FIIs and FPIs  to extract Rs.40,000 crore from them (after they lost an appeal at the Authority for Advance Rulings (AAR) against levy of 20% MAT on capital gains they made in years through March 31) under a tortuous law called Minimum Alternate Tax (MAT).  The Indian FM was probably unaware as  how this sounded when Indian IT-department is already infamous for arbitrariness. MAT brings out this infuriating arbitrariness quite succinctly. This is a simple example, of Mr.Arun Jaitely amateurish gibes, a person who is in charge of managing trillion dollar Indian economy. It is pertinent to mention here that, last month, the eminent banker Deepak Parekh had said impatience has begun creeping in among businessmen as nothing has changed at the level that matters in the first nine months of the Narendra Modi-led government]
Photo: Income Tax
May 13, 2015: Since April 1 this year, the union government has been on the MAT! Figuratively, on the controversial Minimum Alternate Tax (MAT). Just when you thought, it can’t get worse on this highly contentious subject which has seen a flight of foreign portfolio capital out of India, comes the news that a powerful FII lobby group is thinking of impleading itself in the battle for clarity. And this is despite the recent CBDT offering a clarificatory statement on the said issue.

Empirical evidence backs the changing mindset of foreign investors after the overhang of retroactive taxation appeared. In April 2015 FIIs made net purchases amounting to Rs 7,864 crore while in May, it has been the reverse, with FII outflows totalling (-) Rs 5353 crore. The trajectory undergoing a shift, from buy to sell.

Sentiment turned as investors were once again spooked by tax terrorism. Retrograde, regressive and retrospective tax claims have tarnished India’s image over the last several years. Retro claims against global MNC heavies leaving a pall of gloom in their wake. The worst part is that there is no definitive answer to tax terror. We love keeping things in abeyance, putting elephants and camels under the carpet, wishing that they go away. Investors don’t want turbulence, they are looking for continuity. Genuine claims are understood, but retroactive are unacceptable and they allow the tax man to run riot by sending notices. In an age of ease of doing business, inspector raj is back with a vengeance.

And as if all this wasn’t enough to contend with, the government has failed abysmally on the legislative front. Two show piece bills, material to reform – Land Bill and the Goods and Services Tax bill – have seen no bipartisanship in the tower of babble called parliament. Instead they have now gone into a tailspin referred to select and joint committees and pushed back to the next session of parliament. Volatility, confusion and lack of stability through continuum in tax policies is worrisome for the investor community.

News just coming in seems to suggest that a Hong Kong-based lobby group representing global banks and investors is considering challenging the controversial tax in the Supreme Court, escalating a row that has eroded foreign investor confidence in Prime Minister Narendra Modi’s government.

Reuters is reporting that the Asia Securities Industry and Financial Markets Association (ASIFMA) is in confabulations with financial firms, lawyers and tax consultants about applying to join an existing legal action on a tax dispute.

The existing Supreme Court case, filed by Mauritius-based Castleton Investment Ltd, is seen as a test case on the legitimacy of extending the so-called minimum alternate tax (MAT), which was intended to ensure companies inside India paid a minimum tax rate, to foreign investors’ gains.

The government has conceded that MAT will not apply to such gains from April 2015, but the tax authority is pursuing claims for past years.

Castleton’s hearing was brought forward to August to achieve a quicker resolution of the issue. The court can deny ASIFMA’s application if it rules it does not share enough in common with the Castleton case, which deals with broader tax-related issues. If accepted, it would be the first time an overseas lobby group has challenged India’s government in its top court. Foreign investors have been working together to fortify their opposition.

Clarity of policy and thought process is crucial. Even as Modi traverses the globe making promises, the ground realities back home are far different. The tyranny of numbers in the Rajya Sabha being what it is legislation will always be that much difficult, so executive order which doesn’t require legislative ratification is the way forward. But in the mean time, let us not complicate our lives with unnecessary tax and inspector raj or retro taxation.

Courtesy: Focus News

Sunday, May 17, 2015

'What are you doing to accelerate growth?' asks P Chidambaram
[Editor: The Narendra Modi era of duplicity and U-turns is perhaps over---Mr.P Chidambarm is the man of the moment. Under his powerful shoulders, India performed well in the past and now it is time to see him in the chair of the PM, of this great country. This might also somewhat cool down the controversies surrounding Modi Vs Rahul debate]
It has been a year of promises but little implementation, says former Finance Minister P Chidambaram, asking hard questions of the Modi government in a no-holds-barred interview.

P Chidambaram has been India’s longest serving Minister of Finance (seven-and-a-half years, across three governments). In fact, the senior Congress leader has, in different capacities, been involved in shaping the Indian economy for more than three decades. He has also had a turbulent three years as Minister of Home Affairs (2009-12), during which he had to contend with the Telangana movement, the 2011 Mumbai bombings, and a surge in the Maoist movement. 

It’s safe to say that the suave, articulate lawyer-by-training is battle-scarred. After two straight terms as a member of the ruling party, Chidambaram is now at a vantage point to critique and assess the current administration. In a freewheeling chat with Forbes India, he evaluates the performance of the Narendra Modi-led government as it completes a year in office. He gives the National Democratic Alliance government its due where required but holds back no punches where he feels it has failed to live up to the expectations of the people. Excerpts from the interview:

Q. Do you think the Modi government has lived up to expectations as it completes its first year in office?
They have made a lot of announcements. Let me accept that their intentions and goals are good. But if you measure performance against the spate of announcements they have made, I am afraid their performance falls far short of people’s expectations. They are completing one year, which means 20 percent of their term is almost over. That’s a lot of time. On the ground there must be something concrete and visible either in terms of infrastructure, investment or a new major social justice programme. I can’t name any single achievement that will stand out as notable. It is a lot of sound and fury. 

Q. Are we seeing a policy paralysis of a different kind today with decision-making centralised at the PMO [Prime Minister’s Office]?
In the UPA [United Progressive Alliance] government, there was no policy paralysis. In fact, there were a lot of policy initiatives. But I think there was, in the last few years of its [the UPA’s] term, a certain incapacity to deliver on those promises or clarify its policies from time to time. In the case of the NDA government, there are intentions and announcements but there is no policy. Take, for example, the 100 Smart Cities programme. Just because you announce it a hundred times, a hundred smart cities don’t come into existence. Where is the blue print for one smart city? Likewise, the UPA started the [National] Skill Development Mission. It had a clear goal/focus, an instrument and a chief executive to implement it. Now the NDA government has said they are renaming the programme as Skill India. Does Skill India mean anything more than continuing with the Skill Development Mission? The problem with this government is the complete centralisation and concentration of power in one person and his office—the PMO. Therefore there is a total inability to translate a policy into framework, breakdown a policy framework into objectives, crystallise objectives into milestones, and then move towards them. I think they simply do not have the capacity to understand what implementing a policy means.

Q. The external environment has been very kind to this government…
Yes. Crude oil and commodity prices have fallen sharply and this is a huge bonanza for the government. I am afraid they simply do not know how to capitalise on this opportunity.

Q. The present government has benefited from far-reaching reforms and measures that the UPA government took towards the fag end of its tenure.
In fact, they are only carrying out many of our initiatives. Take, for example, Jan-Dhan Yojana. They claim to have created 13 crore accounts, but that stands on the shoulder of the 24 crore accounts we had created. They have tried to black out these 24 crore accounts and, in fact, I am surprised that the Reserve Bank of India [RBI], when it talks about Jan-Dhan, talks only about the 13 crore accounts but does not own up to the 24 crore accounts which the banking system created on the direction of the RBI under its financial inclusion programme. It is a sad commentary on the neutrality and objectiveness of the RBI. 

The Direct Benefit Transfer scheme is only a continuation of what was launched earlier. They just overcame the apprehension that there will be consumer opposition and pushed it through for LPG. 

The Insurance Laws Amendment Bill had already been introduced by us. They had stalled it then, but have now passed it, but without saying mea culpa. The GST Bill had already been introduced; they are taking it up now. In a sense they are reaping the benefits of the seeds that we had sowed earlier. But that is the right of every successor government. We don’t grudge that right. 

Q. Despite a solid majority in the Lok Sabha, the government is finding it difficult to pass laws. Do you think they should be doing things differently?
I recently told Mr Arun Jaitley at a public gathering to imagine what UPA would have done if it had 282 seats. The highest we had was 206. With 282 seats, it is a wasted opportunity. They should have been far more generous and accommodative because, ultimately, the weapon of majority is in their hands. Because of their disdain for dialogue, disdain for regional parties and, above all, their deep-seated hatred for the Congress party, they did not reach out to the Opposition. From day one, Mr Modi should have done that knowing fully well he has the ultimate trump card, which is the majority.

Q. And also considering that he does not have a majority in the Rajya Sabha…
Rajya Sabha is really no obstacle. All finance bills can be passed in the Lok Sabha. It does not require Rajya Sabha’s concurrence or consent. It will remain there for 14 days—whether they pass it or not, it does not matter. For all non-financial bills, you could have built a coalition around each of them. If the Lok Sabha passes a bill with a huge, comfortable majority, the Rajya Sabha will follow suit. Show me an example where the Rajya Sabha has actually blocked a bill passed by the Lok Sabha with a comfortable majority. They may delay it but the Rajya Sabha knows that it is the Lok Sabha that is the House of the people.

Q. Congress helped the government pass the Insurance Laws Amendment Bill. Can we see similar cooperation when it comes to other crucial legislations?
Congress will not keep quiet. It is the Opposition. The BJP [Bharatiya Janata Party] was the Opposition and stopped the insurance bill session after session for four sessions, despite my making several trips to Ms Sushma Swaraj’s chamber where she, Mr Arun Jaitley and once even Mr Yashwant Sinha were present. We won’t play that obstructionist role, but certainly play the role of an Opposition, which means we have a say in deciding when a bill will be passed, whether it will be passed with or without amendments. 

Q. What will be your stand when it comes to GST?
I am told there are eight changes in the bill introduced by Mr Jaitley from what was introduced by our government. I have not yet studied the changes. I will study them and if my party asks for my view, I will give them.

Q. What is wrong with the Land Acquisition Bill in its current form?
I have very practical views. I welcome one or two changes that have been made. So we are, again, not being obstructionist. Firstly, the government has to make a strong persuasive case as to why it became necessary, before the end of 2014, to amend a bill that was passed in 2013 near unanimously (just two or three isolated voices of opposition and BJP supported it), without giving it a fair trial. The government has not made such a case. 

Secondly, if a state government felt strongly that the bill has to be amended in its application to its state, it could have passed the necessary amendments and the President can consent to it under Article 254(2). Why bring it to Parliament again? Leave it to the states. After all, the states are going to acquire the vast majority of the land. 

Thirdly, the government has still not explained why the social impact assessment and the consent clause which requires consent from 70 percent of the affected families is not in tune with the spirit of freedom, transparency and equity that pervades political and social dialogue in the 21st century. In the 19th century, nobody was concerned about the environment. Today it is universally accepted that environmental concerns have a major role to play in policy decisions.

Q. How important is the Land Acquisition Bill in attracting investment into the country?
It is important. Because, ultimately, land has to be acquired. Land can come out of two sources—the government must already have a land bank or land must be acquired. But, in India, we tend to overplay our hand. If you want to build a hospital, 100 acres is allotted. Why do we need 100 acres to build a hospital? Similarly, universities are allotted 200 acres. There are universities in London and New York which are vertical [in construction]. This is really land hoarding. And the [proposed] land acquisition law will be used for that purpose, which is why the consent clause and social impact assessment are relevant.

Q. Do you see the gambit the government took in delaying fiscal consolidation to fuel public spending and thus kick-starting growth working?   
I opposed the delay. They should have stuck to the timetable. However, the delay is a minor one and therefore we can forgive them their trespasses. But, having delayed it by a year, where is the government using that 0.3 percent headroom it has got for itself by stretching the fiscal deficit from 3.6 percent to 3.9 percent? The plan expenditure is coming down while non-plan expenditure is going up sharply. This 0.3 percent is entirely for non-plan expenditure which is why I question the quality of the expenditure they are making from the additional resources that delaying the fiscal consolidation gave them. 

Q. Where do you see economic growth in the next 12 to 24 months?
It will come. You see, the economy had got over the slump and had started accelerating. It moved from 5 percent to 6.9 percent in 2013-14 and that momentum has carried it to 7.4 percent in 2014-15 and that will continue. There is nothing to arrest the momentum. If you do nothing, that growth will still come. The point is, what are you doing to accelerate the growth? What are you doing to prevent another international crisis from arresting your growth?

Q. As the finance minister, you were frustrated by the RBI’s hawkish stand on interest rates. You even remarked that you are willing to walk alone. Of late, you have supported the RBI’s work. What has changed between then and now?
Mr Subbarao [former RBI governor] simply refused to move one way or the other. His position was standstill. That, I don’t think, helps the economy. Nor was he willing to articulate and explain why he was taking such a stand. In the case of Mr Raghuram Rajan [current RBI governor], he is willing to state his position, argue and defend it. Therefore there is scope for engaging and debating with the RBI. That debate—both with the government and the RBI and between outside critics and the RBI—has resulted in two rate cuts. Mr Rajan has not stood still like Mr Subbarao did. He has either been persuaded or been obliged to do two cuts. He has also tweaked some other instruments which have indirect bearing on monetary policy. What he now says is that he does not share the government’s optimism about growth or inflation. He is very data driven. If he has the data or if he expects to have the data which supports his argument, then I think we have to give him the benefit of doubt. I still think the RBI is behind the curve. The two cuts should have come earlier and even now there is room to cut interest rates.

Q. What are your views on the monetary policy framework that the government and the RBI have put in place?
It is the correct thing to do. There are very few countries that give absolute authority to the central bank. The US and the UK have Monetary Policy Committees [MPCs]. India’s MPC was recommended by the Financial Sector Legislative Reforms Commission. I strongly support that recommendation. There must be an MPC. We can debate about the composition of the MPC, whether the government should have a representative on the committee, and the million dollar question—whether the RBI governor should have a veto over the MPC’s recommendations. These things can be worked out. A phased solution can also be worked out, where the governor can have a veto for the first two-three years and then, as the MPC gains experience, he can give up his veto. There is enough room to accommodate different points of view.

Q. Do you think the Direct Taxes Code is history?
No. It is not. The Standing Committee on Finance has made a recommendation that the Direct Taxes Code [DTC] must be enacted. The best draft to start with is the original draft that I had published. Then Mr [Pranab] Mukherjee made some drastic changes to the draft, many of which are questionable. I had to reconcile the original draft and Mr Mukherjee’s draft and brought out a third draft which I think is better than the second draft but not entirely satisfactory. Anyway, there are three drafts; let the government take any draft and work on it. But DTC is absolutely important.

Q. On farmer suicides, what is the way forward to alleviate their problems?
The problems of farmers are myriad. There is no one solution to the problem. The government owes an obligation to address the issues of farmers as and when they arise. It could be drought, unseasonal rains, decline in wholesale prices, indebtedness or interest rates. 

Farmers understand that these issues won’t go away overnight. What they want is support. The feeling of the farmers today is that this government has no empathy for them. This government is biased in favour of the corporate [sector] and there are not enough voices within the BJP that are being heard by the leadership, which is why some are driven to suicides. 

Also there is the social environment. Farmer suicides are mainly reported in Maharashtra, Andhra Pradesh, parts of Karnataka, now Rajasthan and isolated parts of Gujarat. You don’t get frequent reports of farmer suicides in West Bengal, Tamil Nadu or Kerala. I think state governments also have a duty to create a social environment that supports farmers. 

Q. Is this government anti-poor and pro-rich?
This government has no empathy for the poor. Its body language, verbal language and style of functioning are clearly pro-corporate.

This article appeared in the Forbes India magazine issue of 29 May, 2015

Courtesy: Forbes India