Business,recruitment in China hit record low

BEIJING: China's business confidence and recruitment activity slipped to record lows in January, a survey showed, adding to signs of weakness in the world's second-largest economy that could prod policymakers to roll out more support measures.
The Sales Managers' Index, compiled by London-based World Economics, fell to 51.0 in January from 51.7 in December.
"The Headline SMI index fell slightly in January, but continues to suggest ongoing, albeit modest growth in economic activity," World Economics chief executive Ed Jones said.
The index has averaged 51.4 since the second half of last year, indicating China's economic activity is still growing steadily, albeit at a much slower rate than a year ago.
The Sales Managers' Index covers all private sectors of the economy. It is designed to reflect overall economic growth, bringing together the average movement of confidence, market expansion, product sales, prices charged and staffing indices.
The staffing index fell to 50.3 in January, near the 50 no-change mark, from 50.8 in December, hitting its lowest since the survey began, as businesses have become more hesitant to recruit as economic activity weakens, the survey showed.

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‘Start-up India’ Action Plan: a good start, but Govt apathy, big corporates a hurdle

The much anticipated, and needed, ‘Start-up India’ initiative was launched last weekend by Prime Minister Narendra Modi in a move to help start-ups and catalyse entrepreneurship. Start-ups and entrepreneurship are critical to India’s efforts to restart private investment into the economy, in the face of risk aversion, stalled or slow investments from corporate India.

Start-ups in India have faced two significant obstacles. One is government apathy, corruption and a complex approvals process. The other is the power of entrenched corporates, to oppose or kill start-ups which challenge them. So while the Action Plan unveiled by Mr. Modi is a catalyst, also needed are structural reforms that permit free and fair competition and other issues that determine the viability and existence of start-ups. Net neutrality, for instance, is a policy requirement that will determine the future for tech start-ups.


The Start-up India Action Plan lists out a comprehensive set of structural and regulatory reforms in order to achieve this. Income tax exemption, easing compliance through reduction of regulations and having fixed qualifications as to what a ‘start-up’ is, were expectations at the top of the entrepreneurial bucket-list.

But the Action Plan goes further. It goes on, for instance, to provide an 80 per cent waiver on patent filing fees by start-ups, provide advisory services and create a Rs.10,000 crore fund-of-funds which is to be managed by professionals drawn from the private sector. These are just a few of the ‘sweetheart’ deals for start-up entrepreneurs under the Action Plan.

Money matters

But the Action Plan also appears to have a few flaws which need to be addressed. For instance, it sets up an ‘Inter-Ministerial Board’ led by the Department of Industrial Policy and Promotion which ‘validates’ the innovative nature of an enterprise, thereby qualifying it as a start-up – an involvement of government in this ecosystem that is hardly desirable. It also requires a start-up to obtain a recommendation from an incubator in order to be eligible. The most obvious and tangible benefits to start-ups under the Action Plan are the tax breaks and funding support. The Action Plan waives income tax on profits for a period of three years and also exempts taxes on capital gains which are invested in the ‘fund-of-funds’.

This move will help to reduce cash outflows and bring down the cost of running a start-up. In conjunction with the waiver of the ‘angel investor’ tax under the Finance Act, 2013, start-ups now can have improved access to funding opportunities.

Pending reforms like the GST regime, would also make it easier for small start-ups to operate across the country.

Rs.10,000 crore ‘fund-of-funds’

The Rs.10,000 crore ‘fund-of-funds’ is a significant financial commitment by the Government under the Action Plan. It is set to start with Rs.2,500 crore initially with the amount set to recur for 4 years.

This mega fund will not directly invest in start-up ventures. Instead, it will do so via SEBI registered venture funds. This fund will contribute a maximum of 50 per cent of the daughter fund size, providing a significant boost to the corpus of investments that start-ups have access to. It is important that this corpus is not managed by Politicians or bureaucrats, but smart, savvy fund managers who have a track record on investing.

On the cost saving side, an 80 per cent rebate on patent filing costs alongside an exemption from having ‘prior-experience’ to be eligible under the public procurement process are steps taken to promote tech-based start-ups in particular.

While tax incentives, cost saving measures and funding support will undoubtedly drive up investment into innovative start-ups it is essential that the government not lose sight of non-tech start-ups. It should make special provisions to ensure that this support structure extends to the agriculture, manufacturing, and handicrafts sectors.

Ease of doing business

Promoting start-ups by improving ease of doing business is clearly at the forefront of the Action Plan. A significant benefit a start-up accrues under this policy is the waiver from labour inspections for 3 years.

Now, anyone who has run a business and navigated the maze of bureaucracy understands the quagmire that labour laws can be, especially for a start-up. Along with the ease in environmental checks, these changes to labour inspections are a step in the right direction — particularly for those start-ups which are based in the manufacturing sector. But the Action Plan exempts starts-up from inspection under a fixed number of labour laws — six to be specific. There are about 45 laws at the central level and about four times this number at the state level. The Centre needs to work with the States to ensure a smooth rollout of the benefits under the Action Plan and avoid discord between policies at the two levels.

‘Start-up India Hub’

The Action Plan also creates a centralised system under the ‘Start-up India Hub’ which assists start-ups by providing advisory services on financing, business structuring and improving management skills. It also provides for a mobile app which allows start-ups to self-certify themselves and also acts as a single point of contact between entrepreneurs, regulators and the government. This is a positive move in simplifying the registration process.

This is perhaps the most pertinent question which has been answered by the Action Plan. In order to obtain the wide ranging benefits which have been detailed in the 40-page Action Plan, it is essential for an enterprise to qualify as a ‘start-up’. An uncontroversial requirement, but the devil is in the details.

The Action Plan requires an enterprise or partnership to be innovative by developing and commercialising a new product or service — a step to promote truly innovative ideas. But it institutes an inter-ministerial body led by DIPP to examine whether an enterprise is ‘innovative’.

It also requires a ‘recommendation’ from an incubator setup by the government or be supported by an incubator in a post-graduate institution recognised by the government — this need for validation and recommendation goes against the very steps the Action Plan takes to reduce government involvement. This additional layer of bureaucracy could slow down the starting up process and needs to go.

Start-up India is consistent with the PM’s call for innovation when he launched Digital India. The Start-up India Action plan is a good start to this – but will need continued support and evolution to make this a true, deep revolution for the youth of India.

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Parliamentary panel to study work progress on industrial corridors

A Parliamentary panel will undertake field visits to sites where industrial corridors are to be established and prepare a report in a bid expedite the projects.

Many industrial corridor projects are yet to take off due to various impediments including land acquisition and finance.

Initially, the government wanted the Parliamentary Standing Committee on Commerce to include only the Delhi-Mumbai Industrial Corridor (DMIC) for the study as it had witnessed the maximum progress in work compared to the other projects. However, the panel decided to undertake an indepth study of all the problems affecting all industrial corridors official sources told The Hindu.

Report before Budget Session
Significantly, this also include Amritsar-Kolkata Industrial Corridor (AKIC) which covers Varanasi, the Parliamentary constituency of Prime Minister Narendra Modi, where work has hardly begun, they said. Panel Chairman and BJP MP, Chandan Mitra, told The Hindu that the committee will visit Amritsar, Mumbai and Bangalore between January 28 and February second, and then cover Varanasi, Lucknow and Kolkata from February 14 to 18.

Other important corridor sites will also be covered and the panel intends to submit a comprehensive report -- to be titled ‘Growth and Development of Industrial Corridors in India’ -- before the end of the forthcoming Budget Session of Parliament (on May 8), he said.

“Land acquisition is a sensitive issue, and there will always be people who go to court challenging it and the compensation. But I don’t expect the kind of trouble we saw in Singur (in West Bengal over land acquisition). States are negotiating with farmers and people are coming forward as the corridors are to bring benefits including jobs and lead to greater investment, manufacturing and exports,” Mr. Mitra said.

Besides DMIC and AKIC, the other proposed corridors are Bengaluru- Mumbai Economic Corridor (BMEC), Chennai-Bengaluru Industrial Corridor (CBIC) and Visakhapatnam-Chennai Industrial Corridor (VCIC or the East Coast Economic Corridor).

AKIC covers Punjab, Haryana, Uttar Pradesh, Uttarakhand, Bihar, Jharkhand and West Bengal, while DMIC spans Uttar Pradesh, Haryana, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra.BMEC covers Karnataka and Maharashtra. CBIC includes Tamil Nadu, Karnataka and Andhra Pradesh, whereas VCIC covers Andhra Pradesh and Tamil Nadu.

Official sources said the panel will look into all issues concerning these corridors including land acquisition, infrastructure development and financial aspects including loans from banks, financial institutions and multi-lateral/regional agencies such as the World Bank, Asian Development Bank (ADB) and Japan International Cooperation Agency (JICA). The development of these corridors is also being monitored by the Prime Minister’s Office and the Cabinet Secretariat, the sources said.

As regards DMIC, eight nodes have been identified in six states under the first phase by the DMIC Development Corporation (DMICDC), the commerce and industry ministry said.

The master plans for these nodes except for one each in Uttar Pradesh and Rajasthan have been completed and accepted by the states.

Land acquisition problems
However, the ministry said one of the main impediments was land availability. Land acquisition was a time-consuming and cumbersome process requiring huge financial resources.

Besides, the institutional framework for formation of node/city-level Special Purpose Vehicles (SPV) for implementation of DMIC project has also been a time consuming process, needing amendment of existing laws / passing new laws for delegating powers of planning and development to node/city level SPVs and facilitate notification of the proposed investment regions / industrial areas under the DMIC, it said. State-level meetings are being held to expedite these issues, the ministry said.

On CBIC, the ministry said the nodal agency JICA has completed a comprehensive regional perspective planning and master planning completed, and three nodes have been identified for master planning. Regarding VCIC, the ADB has completed a conceptual development plan report and two nodes have been identified for master planning. The AKIC feasibility study is under progress.

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Don’t question my data, get your analysis right, says India’s Chief Statistician

India’s Chief Statistician has slammed analysts questioning the credibility of official economic data, stating that most commentators are oblivious to the nuances of analysing monthly data on industrial production and inflation. “It is not a problem with the data. It is a problem that the analyst needs to get a lot more sophisticated,” T.C.A Anant, Secretary, Ministry of Statistics and Programme Implementation, told The Hindu. Edited Excerpts:



Analysts such as Morgan Stanley’s Ruchir Sharma question the credibility of official data, pointing to a dichotomy between GDP growth numbers and corporate performance. Others say falling industrial output doesn’t add up with rising inflation. What would you say to them?

The Index of Industrial Production or IIP is and has always been a volatile series. To correlate it on a month-on-month basis with inflation is not statistically desirable or advisable. The IIP monthly data faces a number of sources of volatility which include seasonal factors and includes in the context of India, a complicated seasonal, but not regularly predictable set of holidays. For example, Dussehra and Diwali occur every year, but in a band of 30 to 45 days. There are other regionally significant festivals some of whom are very predictable in there timing while others are not.

This complicates the volatility in Indian industrial data, which needs to be appreciated when you work with disaggregated monthly data. Remember this volatility is missing if you work with the annual data. But when you come down to the monthly level, a very large number of commentators are oblivious to this.



What about inflation?

The two major indicators of price movement — consumer price index (CPI) and wholesale price index (WPI) — cover very different baskets of commodities with different weightages. People talk about a discrepancy between CPI and WPI. If looked at carefully on a common set of commodities, the two indicators behave similarly. It’s not that something is being done differently in the WPI, but different commodities are behaving differently. This is a reality – all commodities are not experiencing the same form of price movement today, unlike in the past when there was generalised inflation and every commodity was seeing a rise in prices, albeit at different rates. We are now seeing a situation where some commodities are seeing a fall in prices, while some are seeing a rise. That is captured based on whether they enter the consumption basket or not. This complexity in price movement needs to be understood for its implications on what it says about the economy and what does it say about incentives to different segments of the economy. It is not a problem with the data. It is a problem that the analyst needs to get lot more sophisticated in their analysis.



How do you see global turmoil impacting India’s growth?

I don’t want to give a simple answer to a complex issue. Like everybody else, global slowdowns affect us. But what we have going for us is a large domestic economy and internal market with huge potential to address our market from internal resources. India is a large economy and our demand is not only capable of changing our own growth rates, but also influencing global growth rate.

Virtually anyone who analyses India points out that it has the scope and the potential to be the next world leader. To take a line that the global economy is poor and slowing and therefore, India doesn’t have a choice or chance – is simply not possible. Our own internal growth potential is very strong. What is our growth potential? A lot of people answer this by analysing past statistics. What you are not capturing is our possibility which exists because of the development gap in a large part of the country. If you were to factor that in, our growth potential is actually quite high. We are capable of delivering much higher growth rates going ahead.



Does food inflation remain a concern?

Yes, it is high both in CPI and WPI, with pulses staying particularly high. There are seasonal elements in food prices where average supply and demand are close. Then there are commodities like pulses in which there has been a secular gap between domestic production and demand.

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Cabinet nod for power tariff policy

He Union Cabinet has approved several amendments to the national power tariff policy with a view to promote renewable energy and improve the ease of doing business for developers in the sector.

In a major shift, power companies are allowed to pass costs on to consumers arising out of any changes in taxes, ceases and levies levied on them.

The policy also seeks to “create a win-win between the generator, utilities and consumers” by allowing power generators to sell their surplus power on the power exchange and sharing the proceeds with the state government.

“The amendments are based on four Es—electricity for all, efficiency that will ensure affordable tariffs, the environment, and ease of doing business to attract greater investment in the sector,” Piyush Goyal, Minister of State for Power, Coal and New & Renewable Energy, said in a briefing on the cabinet’s decision on Tuesday.

The amended tariff policy also imposes a renewable energy obligation on new coal or lignite-based thermal plants, requiring them to establish or purchase renewable capacity alongside their own generation units.



“This provision is very important as it will be a big boost for renewable energy.

“But the other side is that it could add to generating companies’ stress.

“There are generating companies that are already stressed as they are not being able to sell the power they generate. Now they will have to purchase renewable power, which will add to their stress,” Kuljit Singh, Partner and Industry Leader – Infrastructure, EY told The Hindu.

No interstate transmission

The new policy also mandates that no inter-state transmission charges will be levied until a time to be specified by the government.

“The signal from such a move towards compulsory generation and procurement of renewable power by coal-based plants is a clear directional shift to renewables.

“So anyone involved in the energy sector has to be prepared for that,” said Arunabha Ghosh, Chief Executive Officer of the Council on Energy, Environment and Water.

He added that firms will also have to take a call on how they procure their renewable obligations. “The costs and business models for different renewable alternatives such as rooftop solar or grid-connected sources are constantly evolving so the decision won’t be top-down any longer,” he said.

To encourage efficiency, the policy allows power producers to expand up to double their capacity through the automatic route, at their existing unit locations.

This automatic approval was earlier limited to 50 per cent capacity expansions.

Commission to fix tariffs

Further, the tariffs for multi-state power projects will be determined by the Central Electricity Regulatory Commission, thereby removing a major point of uncertainty to do with such projects.

Need for action plan

The amended policy also said that the power regulator has to come up with a clear action plan to ensure 24x7 power supply to all consumers by 2021-22 or earlier. Towards the power for all initiative, the policy enables the creation of micro-grids in remote villages as yet unconnected to the grid, and also says that these micro-grids can sell their surplus power to the grid when it reaches those areas.

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‘69 journalists died on the job in 2015’

Sixty nine journalists were killed around the world on the job in 2015. Twenty eight of them were slain by Islamic militant groups, including al-Qaeda and the Islamic State, according to the Committee to Protect Journalists.

The New York-based organisation says Syria again was the deadliest place for journalists, though the number of deaths there in 2015 13 was lower than in previous years of the conflict.

“These journalists are the most vulnerable,” Joel Simon, the committee’s executive director said of reporters and broadcasters working in Syria and other areas inundated with Islamic extremists. “This is, clearly based on the data, an incredible risk for journalists.”

Those killed by Islamic extremist groups this year included eight journalists killed in an attack in Paris in January at the office of satirical magazine Charlie Hebdo, which had published caricatures of the Prophet Muhammad. The group al-Qaeda in the Arabian Peninsula claimed responsibility for the attack in which two gunmen massacred 12 people. They said it was in “revenge for the prophet”.

In October, two Syrian journalists, Fares Hamadi and Ibrahim Abd al-Qader were killed by Islamic State militants.

While some of the deaths were among reporters covering conflict zones, journalists in several countries also were killed after reporting on sensitive subjects. At least 28 of the reporters who were killed had received threats before their deaths, the Committee to Protect Journalists said.

In Brazil, Gleydson Carvalho, a radio broadcaster who often criticised local police and politicians for purported wrongdoing, was shot and killed while presenting his afternoon radio show in August. The committee tracked six killings in Brazil this year the highest it has recorded there.

Among the 69 journalists killed were reporter Alison Parker and videojournalist Adam Ward, of Roanoke, Virginia, TV station WDBJ, who were fatally shot in August by former co-worker Vester Lee Flanagan II during a live broadcast. Their interview subject, Vicki Gardner, was wounded. Flanagan fatally shot himself five hours later after a police chase.

“Journalists are a target and this just confirms it,” Mr. Simon said of the data the committee compiled. “This is a global threat.”

Other countries with several journalists killed included Bangladesh, where extremist groups are suspected in the deaths of four bloggers and a publisher; and South Sudan, where five journalists travelling with a local official were killed in an ambush by unidentified gunmen.

The deaths in Bangladesh included the February attack on Bangladeshi-American blogger and writer Avijit Roy with meat cleavers on a crowded street in Dhaka, the capital. The killings have raised concerns that religious extremism is taking hold in the traditionally moderate South Asian country.

Iraq, Yemen and Brazil also saw at least five journalists killed in 2015.

The Committee to Protect Journalists report warns that it is increasingly difficult to research the deaths of journalists in conflict-hit places such as Libya, Yemen and Iraq. As in Syria, the Islamic State group holds parts of Iraq, where the organization says it has received reports of “dozens more journalists killed”.

The committee has been compiling reports of journalists’ deaths since 1992. The count includes the deaths of at least 17 journalists killed in combat or on other dangerous assignments or murdered for their work.

In its own count, the Paris-based group Reporters Without Borders says in a report released on Tuesday that at least 67 journalists were killed worldwide while reporting or because of their work in 2015. It says the circumstances around another 43 deaths remain unclear.

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WTO talks: Kenya backs food security, farmers’ interests

India said it was significant that Kenya, the country hosting the WTO Ministerial Conference, backed issues of interest to the developing countries, including on food security rights and ensuring the protection of poor farmers from the heavily subsidized agricultural imports from the rich world.

Referring to the speech given by Kenyan President Uhuru Kenyatta during the official opening of the WTO's Ministerial Conference at the Kenyatta International Conference Center here, commerce minister Nirmala Sitharaman said, “The Kenyan president spoke what many of us have felt. He spoke about the need to address the Doha Development Agenda in its entirety and the need for this ministerial to deliver a successful outcome. It was heartening to know that the emphasis is on agriculture and protection of the livelihoods of poor farmers.”

“This shows that the concerns of emerging and developing economies as well as the least developed countries (many of which are in Africa) are linked,” the minister told reporters on Tuesday.

The Kenyan President said the WTO Ministerial Conference in Bali, Indonesia, in December 2013, was the first under the ongoing Doha Round of talks of the WTO (for a deal to open up world trade) that succeeded in concluding negotiations in a limited number of areas including the Trade Facilitation Agreement.

It was important to build on the Bali Ministerial Declaration, and agree on tangible outcomes in Nairobi to give credibility to the WTO as a rule-based organization, he added. The agriculture negotiations in the Doha Round are the ones from which developing countries can derive most gains, Kenyatta said. Agriculture is particularly important for Africa considering that majority of the population depends on it for food, livelihood, and employment, he added.

However, distortions in this sector have continued to prevent Africa from realizing its full potential, he pointed out, adding that Africa’s farmers cannot compete against heavily subsidized farmers in developed countries.

In this connection, the Doha Round of negotiations in agriculture provides the best opportunity to address the distortions and align global trade with Africa's development goals, he said.

Kenyatta asked all WTO member countries to accelerate toward a positive end to the long journey (of Doha Round talks, which began in 2001) to establish a fair and market-oriented trade in agriculture. He said Africa is ready to do all it can to ensure the success of the Nairobi Ministerial Conference.

Sitharaman said she felt encouraged from Kenyatta's statement, adding that African nations are likely to stand by India in its fight to secure the interests of the developing and the poor world.

India to help on contentious issues

Meanwhile, India is part of a newly constituted smaller group of countries which will steer the talks on different contentious issues, and then take them to the larger group for consensus building, sources said.

The WTO director general Roberto Azevedo and Amina Mohamed, the chair of the Nairobi ministerial conference and Cabinet Secretary in Kenya's Ministry of Foreign Affairs & International Trade, will coordinate on critical issues which need political will and inputs to ensure a successful outcome to the Ministerial Conference, they said.

India has also made it clear that protection of poor farmers’ interests and its food security programmes are not up for any bargain at the negotiations.

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Alibaba.com aims to more than double India user base

Alibaba group’s B2B arm Alibaba.com on Monday said it aims to more than double its user base in India over the next few years through on-boarding of over 5 million businesses on its wholesale trading platform.

Alibaba.com, which connects buyers and wholesale suppliers globally, has 40 million users globally and 4.5 million users in India.

“India is a very important market for us. It is the second largest for us after China. SMEs are an important contributor to any economy and the same is the case with India... In the next few years, we hope to have 10 million businesses from India on our platform,” Alibaba.com Global Business Development Timothy Leung told reporters here.

He added that Alibaba aims to support the trading business of SMEs in India to help them grow and scale up.

As part of the strategy, Alibaba.com has partnered with Indian organisations to launch an online platform SMILE (Small and Medium Industries Leveraging Export).

“SMILE aims to provide Indian SMEs access to global business trading counterparts as well as one-stop trading solutions, including financing, logistics (domestic and cross-border), inspections and certifications, technology and SME trade-linked education,” he said.

ICICI Bank, Kotak Mahindra Bank, Crisil Rating, Tally, Capital Float, Jeena, SGS, Mypacco have become partners for the SMILE programme in financing, credit rating, software, online lending, transportation, inspection and verification, and online logistics respectively.

“By offering combined trading solutions to Indian SMEs, SMILE hopes to make cross-border trading easier, helping over 10 million SMEs in India explore global trading opportunities in a more cost-effect way,” he said.

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Student loans dry up as bad debts climb at banks

An increase in non-performing assets have led several public sector banks to go slow on educational loans, latest data complied by the Finance Ministry shows.

“Banks have achieved 50 per cent of the disbursal targets of the year 2015-16 up to 30 September,’’ according to a note circulated among chief executives of the public sector banks before Finance Minister Arun Jaitley met the bankers on Monday. “`However, banks namely the Corporation Bank, Dena Bank, IOB , UCO Bank, SBI, State Bank of Patiala, State Bank of Hyderabad and the State Bank of Travancore have not achieved proportionate targets,” the note said.

Banks were given a target of 20 per cent growth in disbursement and 15 per cent growth in accounts for the current financial year.

Reserve Bank of India Governor Raghuram Rajan had, earlier this month at the Delhi Economic Conclave, raised a red flag over the increase in non-performing assets in education loans and said such loans should be devised in a flexible manner, providing options like automatic moratorium if borrowers were under a period of unemployment. He wanted guidelines on know-your-customer (KYC) to be made easier.

“There are lots of NPAs in the education sector. They have been rising in the last few years. It's a matter of concern,” Mr. Rajan said.

A student, under the educational loan scheme, can borrow up to Rs.10 lakh for domestic education and Rs.20 lakh for studying in foreign colleges. Borrowers need not pay during the tenure of the course and for an additional year. The repayment period is five to seven years.

For loans up to Rs.4 lakh, banks cannot demand any collateral. According to bankers, the maximum number of bad loans are in this segment.

Due to rising bad loans, the finance ministry, at the request of bankers, has created a credit guarantee fund for education loans. The Ministry of Human Resources has transferred Rs.351.09 crore to the corpus fund and Rs.112.05 crore may be transferred in the next week, according to the Finance Ministry.

It has also asked banks to integrate with the Vidya Lakshmi portal – which is a first of its kind portal providing a single window for students to access information and submit applications for educational loans to banks and for government scholarships.

While 24 banks have registered, only eight have integrated their system with the portal for providing loan processing status to the students. “All the remaining banks are requested to take steps to integrate with the portal,” according to the note.

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