In most James Bond, Tom Cruise movies, the bad guy has an innovative idea/product to destroy the world.
But in the MI3, the most interesting thing about this movie was that it had a mention of the word rabbit-foot. All Tom Cruise knew was that it should not land in wrong hands. But it always remained a mystery what this rabbit foot was, how it worked and how it can destroy the world.
Call it deviation from the norm, or a start of the new era, but people do seem to have liked this change.
The trouble with referees is that they know the rules, but they do not know the game.
Bill Shankly
****
One machine can do the work of fifty ordinary men. No machine can do the work of one extraordinary man.
Recently, to mark another milestone of Sino-India ties, Nathula Pass has been reopened. It is the narrow land passage between Sikkim and Tibet which was closed for past 40 years. Currently to test the grounds, only a limited number of commodities are permitted for trade, but by the next summer, this list should grow and volumes would increase. What does it hold for India?
1) The north-eastern provinces of India have little economic activity. They are solely dependednt of Calcutta to sell or buy goods. Unfortunately Calcutta does not seem to have neither enough appetite for these goods, nor free capital to invest there. Government has been trying hard to build roads, hydel dams and infrastucture in the North East, but there are not enough industries to utilize it and justify the expenditure. Nathula Pass will open the Tibetian market for these people and hence enabling the north eastern people to get better price for their produce and cheeper prices for goods they buy.
2) Chineese has some really giant plans for this route. For some of its interior provinces, the closest ports will be the port of Calcutta. With chineese manufacturing and demand for goods booming, this could translate into a few million dollars as transit and port charges for these goods and jobs for not only people of Sikkim, but also West Bengal. Also at a later point of time, China might invest directly to upgrade the infrasturcture in the region. No wonder West Bengal chief minister was unhappy that he was not involved in the talks with China.
3) Looking at the Khalisthan movement, one can conclude that the best way to curb millitancy in the region is to infuse economic prosperity and reduce unemplyment. Green revolution gave employment and made Sikhs too rich to even think about seperating. It transformed a state from a millitant border town to one of the pillars of Indian economy. Opening border trade might do just the same for these provinces.
4) If you look at the Indian export/import pattern, you find heavy reliance on ports for the foreign trade. Ports currently are saturated and cannot handle more cargo. So the cheepest and fastest alternative might be opening up a copule of land routes with China, Pakistan, Myanmar and Bangladesh.
5) Border trade has always reduced smuggling. Taking the example of gold smuggling in the seventies and eighties, I would say that most enterprise find it cheeper and safer to pay a nominal customs duty than to bootleg. Secondly by legalising the trade, the government generates additional revenue which was earlier lost to the smugglers. This very revenue can now be used to increase the vigilance and fight smuggling.
6) Lastly and most importantly if India has to accomplish its grand plans for FTA, common currency for ASEAN and better bilateral ties with its neighbours, it has to improve the bilateral trade. Also trade with china depends heavily on agricutural commodities and manufacturing goods which reduces our reliance on IT sector.
RBI's announcement read like this:
All the money in excess of the required amount deposited by banks in the CRR account will gain no interest.
With this golden move, RBI reduced its interest burden (something good for the fiscal deficiet) without tinkering with the interest rates. Also it started a new wave of reforms which forces banks to look for deposits other than the treasury bonds to reinvest it. It will help forge an alliance between public sector banks which have excess captial and private banks which have more people seeking loans than depositing.
Private banks with its stream lined processes, loan mela, and aggressive advertizements have managed to attract most of the loan taking people. Also the hassles of inspector raj and bribery is less which makes the loan taking process seamless. Same person on the other hand will stand in the queue of a public sector bank to deposit money with them. People believe that by doing so their life savings will be guarenteed by the govt. This consumer tendency has created this inbalance of capital distribution among banks. Now this golden move with force banks to sublend money to other aggresivebanks, or better still be more aggresive and start lending.
I do not know if Goyel had anticipated it or he adapted himself to get the best of the market condition, but it was a master stroke.
1) Sahara technically does not own anything. All its valuation was on the basis of the parking slots, foreign travel rights, trained pilots and crew. Either Jet could go the expensive way to buying them out, or could engineer the collapse of Sahara, and pick and choose whatever it wants.
2) Jet’s argument that only reason it withdrew was because of the time it took to get all the approvals. Well in a highly regulated industry like Indian Aviation, you cannot exist unless you know lots of government officials and ministers. It is a little hard to believe that both the CMD of Jet and the Sahara Pariwar did not have sufficient number of friends to get the required approval. Remember Sahara pariwar is always questioned for the mysterious source of finance, and its close ties with lots of political big weights.
3) Remember that Sahara, was a full service airline and most of the spoils of it will go to other full service airlines, namely Jet, Kingfisher and Indian Airlines. Indian Airlines does not have the much needed approval to expand, and they are not aggressive enough to make the best of the present situation. Kingfisher operates in too little routes to benefit much. So Jet alone stands to gain the most from the current situation.
4) Even this 100cr is supposed to be returned. So Jet had 2 options, either pay a few thousand crore and gobble the entire airline or pay 100cr and get the most Value for money from it.
5) If the Sahara goes under, or discontinues a lot of its flights, then the landing rights, parking and hanger bays will go for auction. Now I was looking at the finances of most of the airline companies. Almost all of them are bleeding because of the accumulated losses. Almost all of them have booked billion dollar worth of aircrafts. So there will not be too much free capital with them to have a bidding war where the winner has paid dearly and actually lost.
6) I quote from the Air Deccan release which they gave when they went public. “.. Indian aviation industry is headed for a consolidation…” So if you thought that Jet missed an opportunity, then rethink. There will be lots of airlines going bankrupt when the boom flattens out. Only difference will be that Jet (the only airline in India which is making profits) will be in a much better position to buy them out.
Update: Jet Airways posted losses this quater, and its financial condition is not very well. And its stocks are trading at a 515.65 which is near its 52 week low. I wonder how big restructuring budget Jet would have required if it was made to absorb the losses of Sahara also.
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Ankur Aggarwal
sree
Sandip Chaudhuri
vbr
Skabeesh
shobhendrasrivastava