The war of words between the billionaire Ambani brothers took an unexpected turn when younger sibling Anil offered an olive branch to elder brother Mukesh in a bid to resolve a feud over the split of the Reliance business empire in 2005.
The widespread coverage the Indian media has given to the squabble between the brothers has led to a debate on social networking sites such as Twitter, with some accusing news organisations of playing host to a reality show or soap opera that stars the Ambani family to boost ratings.
Prominent columnist Vir Sanghvi wrote through his Twitter account virsanghvi: “Do you think some network should plan a reality show on the Ambani battle? Or are they doing it already on the news?”
But the battle between the billionaire Ambani brothers is not a manufactured product for mass entertainment, as it involves two of the world’s wealthiest men and could pose a stumbling block to India’s goal of achieving energy security.
The siblings have been involved in several disputes since the family business was split in 2005 following the death of their father, Dhirubhai Ambani, a legendary Indian business tycoon who built Reliance from scratch.
The latest of these disputes is over a deal for Mukesh Ambani’s Reliance Industries to sell gas to Anil Ambani’s Reliance Natural Resources at below-market rates as agreed in the 2005 family settlement, brokered by their mother Kokilaben.
The dispute has drawn in the government, which claims it is the rightful owner of the gas. The government can also decide who can buy gas and at what price, but it has been accused by Anil Ambani of supporting Reliance Industries.
India’s highest court has not excluded the government from the dispute between the Ambanis’ firms, and will hear the case on Oct. 20.
India, Asia’s third-largest oil consumer and which imports two-thirds of its crude oil, is hoping to reduce its dependence on foreign oil and become a new frontier for oil and gas exploration.
The Indian exploration and production sector will need $40 billion in investments by 2012, the Investment Commission of India estimates, while consultancy KPMG expects the Indian energy sector will require between $120 and $150 billion over 2007 to 2011 as Asia’s third-largest economy expands.
However, India’s latest auction of oil and gas exploration blocks evoked a tepid response, with the government indicating the Ambani dispute may have put off investors.
Now, with the stakes being so high, surely the media cannot be blamed for helping its audience navigate through the twists and turns of the maze that is the Ambani tussle?
Indeed sometimes, to limit things, they just may have been defined in a particular manner.
This struck home when I saw a communication by the World Bank on poverty estimates.
The World Bank produced an update of poverty numbers for the developing world based on an international price survey conducted in 2005.
The latest figures put the percentage of India’s people living below $1.25-a-day poverty line at 42 percent in 2005. This was an improvement on the 60 percent figure in 1981.
On the other hand, the government’s Economic Survey 2007-08 claims a poverty ratio of 22 percent for the country.
There is a huge difference between the two figures. According to the World Bank figure nearly half of India is defined as poor.
This rankles and also gets my attention a bit more than the previous figure. Perhaps it is the same for you.
So whose poor is really poor?
More importantly which figure is the one we want to believe? Which figure do we think conforms to our self image as a nation with the third-fastest growing economy, even after the global recession?
Here is a pop quiz.
How many items of clothing and footwear did you buy over the last one year?
Even if you are no Imelda Marcos, the chances are that the question has stumped you. Do you really keep track of these purchases?
Well, apparently the Planning Commission depends upon people doing so and being able to remember them when approached by the National Sample Survey Organisation for working out the poverty estimates.
This may or may not detract from the accuracy of the findings but it is nevertheless a thought.
Maybe the poor, or at least those who are classified as such, do remember for they have hardly purchased anything.
The Times of India reported last year on an affidavit filed by the Ministry for Health and Family Welfare before the Supreme Court which claims that if a person earns 455 rupees a month in an urban area then she is above the poverty line and hence not classified as poor. That’s 15.67 rupees in daily earnings.
Often, once consensus has been built on a particular fact, it is difficult to move arguments and policies that have been woven around it.
The subtleties and the arcane methodologies that may temper any statistician’s faith in his own figures never enter the popular realm.
The statistics are generated for and by the middle classes, the poor rarely get to see them or use them to enliven their lives even through an argument over a cup of tea.
It is the middle classes who manufacture and consume these statistics that should be more circumspect.
It should be noted that the World Bank estimate of poverty at 24 percent, based on the dollar-a-day poverty line as opposed to $1.25-a-day, is more in tune with the Economic Survey.
Shouldn’t we in tandem with the growing stature of our economy choose a more generous definition of poverty especially for the purpose of public discourse?
Or do we want to continue indulging and deluding ourselves with the same sort of creative accounting as the Satyam promoters did and meet our come-uppance one day?
The shares tumbled nearly 80 percent, roiling investor confidence in India and bringing an undignified end to the illustrious career of one of the country’s top businessmen.
The accounting fraud which analysts instantly dubbed as “India’s Enron”, battered confidence in Indian companies and cast a shadow on the once-booming outsourcing industry.
The biggest Indian corporate scandal in memory threatens future foreign investment flows into Asia’s third-largest economy, already facing slowdown pangs.
The scandal rakes up a number of issues not to mention how profits could have been inflated for several years without anyone noticing. Knock Knock. Independent directors? Anyone listening?
And all this from a company which won an award for corporate governance just three months ago.
(Please ignore the analyst recommendation for Satyam currently running on the Reuters site. Preliminary investigations suggest there seems to be a technical glitch. We are looking into it)
Yet another year is coming to an end and independent India’s idea of being a republic is a year older. But is it any wiser?
On many counts, 2008 was both tumultuous and memorable for India, testing its men and the manner in which they confronted the challenges.
It was a year which saw the Manmohan Singh government face some of the toughest questions in its 4-year rule.
For that matter, some of the questions were directed at the people, the polity and the nation itself, which is still on edge after horrific images of a militant rampage on Mumbai made headlines around the world in late November.
It was a promising start to the year with the economy growing at well above 8 pct and the Sensex touching a staggering 21,000 points in late January.
Inflation was the only worry as global crude prices were near the 100-dollar mark.
For its part, the govt was confident about handling inflation and announced a 60,000-crore rupee debt relief package for farmers which became the highlight of the annual budget.
But global crude prices showed no signs of moderation and India’s inflation too crossed the double digit mark.
What added to the govt’s problems was pressure from its coalition allies. The Communist parties pulled out over India’s historic civilian nuclear deal with the United States and the govt’s survival was put to the ultimate test.
But parliamentary politics in India dipped to a new low when wads of cash were whipped out in the well of the house. Opposition MPs claimed money was used to buy support. The allegations did not stick and the Manmohan Singh govt survived the trust vote.
But the problems were mounting. The global subprime crisis took its toll and the stock markets started crashing as FIIs pulled out billions of dollars. The Sensex has lost more than 60 percent this year and is now hovering around the 10,000 mark, making it one of the worst performers in the Asian equity scene.
The economy too was no longer insulated and growth estimates for one of the world’s fastest growing economies have been revised downwards. Multi-billion dollar stimulus packages have been announced and an aggressive rate-cut campaign has been initiated by the Reserve Bank of India. But economists and analysts say more needs to be done to salvage India as the rest of the world sets off on a road to recession.
Corporate India too had its share of highs and lows. While Tata wowed everyone with the Nano, the world’s cheapest car, the company was forced to move its plant out of West Bengal thereby delaying the car’s roll-out.
Investor confidence was on a razor’s edge throughout the year. While India’s top private lender ICICI’s share price dipped more than 70 pct as concerns arose over the health of its books, IT major Satyam Computer Services faced some tough questions about corporate governance after a botched attempt to buy two of its sister firms for $1.6 billion.
Indian airlines struggled too amid soaring fuel costs and dwindling passenger numbers. Carriers like Jet Airways faced staff ire over efforts to downsize and survive.
More than anything else, it was the internal security situation that took a turn for the worse. Hundreds of lives were lost as a series of blasts shook various Indian cities.
If the bombs in Bangalore, Ahmedabad, New Delhi and Guwahati were blamed on Islamist militants, the needle of suspicion in the Malegaon blasts pointed to Hindu extremists. A serving officer of the Indian army is still being interrogated.
But all the violence seemed only a dress rehearsal for what turned out to be the most audacious terror strike in the history of independent India.
Armed assailants held India’s financial capital hostage for nearly three days. 179 people were killed as many of Mumbai’s iconic landmarks including the Chhatrapati Shivaji Terminus, Taj Mahal hotel and the Oberoi-Trident came under fire.
The lone surviving attacker said he came from Pakistan and New Delhi has put Islamabad on notice. A worried world is watching and urging restraint as reports emerge of heightened military activity along the border separating the two nuclear-armed neighbours.
The man on the street is anxious too. There’s been a clarion call for civilian activism. They want accountability, not just hollow assurances from the political leadership.
Heads did roll. Union home minister Shivraj Patil was asked to go. The Maharashtra CM and home minister were sacked too.
But did it placate the common man? Amid all the tension, five Indian states went to polls and the results showed that development was a bigger election issue than terror. It was a lesson that the main opposition party BJP learnt the hard away.
Its “Congress is soft on terror” campaign failed to win public approval as it tried to mount an assault on the Congress-led coalition ahead of the 2009 general elections.
The biggest surprise of all was the assembly elections in Jammu and Kashmir which witnessed more than 50 per cent voter turnout.
The turnaround in public opinion comes less than six months after the state was up in arms over the Amarnath land row, some thing which led some commentators in New Delhi to even question the worthiness of holding on to Kashmir.
So, does this mean that what had started off a memorable year will turn out to be one best forgotten?
Well, if you look at the sporting arena, it’s actually been a good year for India.
The Indian cricket team started off winning the tri-series in Australia. The success of the inaugural IPL 20/20 league reaffirmed India’s pre-eminence as one of most powerful forces in the world of cricket. India capped its season with home series wins over both World champions Australia and England and many Indians now hope India can actually become no.1 in world cricket.
2008 was also a year that saw Saurav Ganguly leave in a blaze of glory while others like Sachin Tendulkar and Rahul Dravid did enough to let a demanding but adoring public know that they remain a force to reckon with.
New heroes like Gautam Gambhir and Ishant Sharma emerged, and there was success for other Indian sportsmen too.
Abhinav Bindra made the nation proud winning India’s first individual Gold in shooting at the Beijing Olympics.
While boxers like Vijender Kumar packed a punch, Sushil Kumar grappled both inner fear and pressure to add a bronze from the wrestling mat and make it one of India’s most memorable campaigns in the world’s biggest sporting spectacle.
Jeev Milkha Singh winning the Asian Golf’s Order of Merit and shuttler Saina Nehwal’s meteoric rise in the badminton world brought India more cheer.
In the field of literature, India’s Aravind Adiga won the Man Booker Prize for his novel ‘The White Tiger’, a dark tale about the son of a rickshaw puller who dreams of escaping poverty.
It was only the third time in the Booker’s 40-year history that a debut novel won the award. But the win also raised the question whether only the darker side of contemporary India appealed to Western readers.
So, it has indeed been a rollercoaster year for the country.
But what about 2009? What’s in store for India and Indians?
Do vote… not just on Reuters.co.in but also when India goes to polls next year. Have your say. It might be your and India’s best chance to set things right.
The world of equities seems to have opted for a bargain-basement sale. The BSE Sensex which scaled the dizzy heights of 21,000 points in January 2008 is today testing 10,000 and nobody is sure if the bottom has been found.
“Nowhere in the world are we close to a bottom. Put your money in a safe bank at 9 pct and forget about the stock market for the next two years,” Shankar Sharma, Joint Managing Director of First Global, told Reuters.
If that’s the case, one wonders if the response pattern will change to the Reuters Money question - Where do you see the Sensex by Diwali??
High-profile equities investor Rakesh Jhunjhunwala who had advised Indian investors to keep away from the stock markets as early as November 2007 declined comment on the current situation.
The Indian stock markets have been on a downward spiral for the past 8 months and more and bellwether stocks like Reliance Industries, ICICI, Infosys have taken a serious hammering at the bourses. Some equities analysts do see this as a good opportunity to buy and build a good portfolio for the future.
British economist John Maynard Keynes who said “in the long run, we’re all dead” be damned.
But, there again, some of the “experts” were advising investors to buy at every level of the tumble - 18,000, 16,000, 14,000, 12,000 and now near 10,000.
As my good friend and former NSE member PV Subramanyam says “these so called experts on TV are only looking at a teleprompter and not a crystal ball.”
Subbu’s advice: “Stay the course, there’s no point in cutting losses now and neither will you gain anything by panicking.”
Frankly, I’ve less time for those sharks who make their millions in the stock markets and lose a couple during a downturn than for the average retail investor who would’ve entered the market on a “tip” here and a “tip” there.
And, there’s a reason. A man who made and lost a million will most probably find ways to make more. But what about those ignorant investors who bought in a bull run because they wanted that extra money to meet a contingency. That hard-earned money is lost forever.
Although just 3-4 pct of the India’s one billion plus population invest in the stock market, the roller-coaster ride on board the Sensex Express is a story one cannot ignore. It’s still an significant indicator of where the real economy is headed.
There are those who say India, with its domestic demand and lesser dependancy on exports, will remain comparitively insulated from this mess. But this is a connected world, and India still needs foreign capital. If that dries up during a likely recession, India cannot come out unscathed.
Some experts say this is just the beginning. This downturn is going to hit the world (and it definitely includes India) in three waves - the credit market crunch, the trust deficit in the inter-bank money market and lastly a squeeze on corprate funding.
Equities analysts are likely to downgrade companies across sectors and regions as a tight funding environment can push up the cost of borrowing for companies thereby further squeezing their margins, which have already come under immense strain.
Things are not looking great at all and over the past few weeks I’ve seen friends and colleagues heaving a sigh of relief when markets remained closed on national holidays.
But the markets cannot be shut down despite the clear and present crisis and the India stock markets have their own circuit breakers which come into play to arrest free falls.
In such turbulent times, I’ll stick my neck out and request the average investor to stay away for at least a year.
But, I’m no expert and you might as well go by what an ex-Reuters colleague has posted as his Facebook update - a bull run is when fund managers sound like economists and a bear hug is when economists feel like prophets.
Maybe, he has a point. Your views?
– Madhu Soman is a Reuters journalist. The views and opinions expressed are the writer’s own and not those of Reuters. The article above is not intended to be a financial advisory. Readers must seek specific advice from experts before making investment decisions –
As a financial journalist, covering politics and parliamentary debate is sometimes part of my job. What I witnessed on Tuesday in parliament — wads of cash being flashed around inside the lowerhouse– is something I had never bargained for.
The civil-nuclear deal with the United States will go through, and some reforms may be pushed by the government with the help of
its new allies. But politics will never be the same again, tainted by allegations of bribery and a vulgur display of money power.
Shortly after his government won a convincing victory in parliament, Prime Minister Manmohan Singh said the victory sent a message to the world that “India’s head and heart was sound and India is prepared to take its rightful place in the comity of nations.”
India has attracted global attention due to its strong economic growth and aspires to be a global power. But now more than ever, it needs to fix its politics and governance so that these two key elements do not derail its ambitions.
All political parties will need to seriously think about the events of the past few days and work out mechanisms to prevent it from happening again.
Global best practices need to be imbibed to help politics and governance catch up with the demands of a globalising economy. If it does not happen soon, then ordinary Indians’ cynicism and disillusionment with their politicians will become irrecoverable.
July is the season for shareholder meetings, an annual rite of passage for Indian companies, with directors, shareholders and reporters trooping into large, badly-lit auditoriums to hear the chairman speak glowingly of the achievements of the past year, and a litany of woes from shareholders.
As a reporter who has covered many of these meetings of some of India’s largest companies, I have quickly learned that shareholders’ questions have little to do with family squabbles, succession policy, ill-advised acquisitions, or unflattering media reports.
Instead, they usually range from pleas for factory visits and bigger dividends to the quality of the snack served at the meeting. A few will ask about the cost of printing the annual report, and offer up suggestions for new advertising campaigns or congratulatory verse on the company.
Rare is the instance when shareholders pose tough questions, let alone dissent.
Contrast that with the narrow escape the chief of British retailer Marks and Spencer had in one of the biggest shareholder rebellions in recent years, with shareholders questioning the departure of a senior official and calling for the separation of the roles of chairman and chief executive that Stuart Rose held.
Other British firms have faced shareholder ire over such matters as CEO pay hikes, stock bonuses and merger plans, with shareholders forcing CEOs to shelve these plans and even to quit.
In India, some shareholders had questioned Tata companies on falling profits years ago. A few others have also asked consumer goods maker Hindustan Unilever for updates on a thermometer factory in southern India which Greenpeace had accused of causing pollution.
But years of robust economic growth and a six-year bull market have meant shareholders have been by and large pleased with earnings growth and unwilling to ask many tough questions.
“We don’t have enough large shareholder associations that monitor and exercise control over corporates,” said Jayati Sarkar, an associate professor at the Indira Gandhi Institute of Development Research.
“Also, older small investors are culturally very tied to the company, and are not given to criticism.”
But younger shareholders are less inhibited, and as more shareholding passes into the hands of bigger, more powerful mutual funds and other financial instutions, they will have greater clout, she said.
Only last year Indian policymakers were showing off the strong fundamentals of the economy to the world and pressing for a seat at the high table of global fora. Everything was going well — high growth, a surging stockmarket and a lot of attention from global investors attention.
But high oil prices and rising inflation threaten to bring the India growth story to its knees. Finance Minister PalaniappanChidambaram’s speech at a meeting of oil producing and consuming nations in Jeddah on Sunday showed the cracks in India’s confidence levels.
No doubt oil prices have spiralled, threatening the economic gains made by developing countries, as Chidambaram said in his speech.
But in the case of India was it misplaced optimism about growth or lethargy in getting the right policies on the ground that made things worse?
It pained me to read Chidambaram speech, in which he expresses “a heavy heart and foreboding” and says meeting India’s Millennium Development Goals had been imperilled by soaring crude oil prices.
But it is both a frank admission of the dangers facing developing countries, including India, and a fervent call for cracking down on speculators who, according to the minister, are playing havoc with the fortunes of nations. For the complete speech please click on www.pib.nic.in.
The Congress party-led government contains three key reformers — Prime Minister Manmohan Singh, Finance Minister Palaniappan Chidambaram and Deputy Chairman of the Planning Commission Montek Singh Ahluwalia — and it had four years to get things moving. But they appear to have succumbed to their communist allies on policies
and reforms that investors see as vital for India’s growth.
The oil surge and rising prices pose huge challenges for Indian policymakers. Strong measures will be needed. But will India’s leaders bite the bullet?
The war of words between the billionaire Ambani brothers took an unexpected turn when younger sibling Anil offered an olive branch to elder brother Mukesh in a bid to resolve a feud over the split of the Reliance business empire in 2005.
The World Bank produced an update of poverty numbers for the developing world based on an international price survey conducted in 2005.
The Times of India reported last year on an affidavit filed by the Ministry for Health and Family Welfare before the Supreme Court which claims that if a person earns 455 rupees a month in an urban area then she is above the poverty line and hence not classified as poor. That’s 15.67 rupees in daily earnings.
