The Reserve Bank of India&rsquo;s reduction of one per cent in the Statutory Liquidity Ratio in its first-quarter review of monetary policy is a welcome move.

Reduction in SLR a welcome move: Chanda Kochhar

Business Standard

Contribution to economy 
Family businesses form the backbone of the Indian economy, with gross output equalling about 60% of GDP or about 90% of India&rsquo;s industrial output
Number of mid-sized FBs
The number of mid-sized family firms in India between Rs 50 crore and Rs 1,000 crore of revenue stood between 4,655 and 8,547 in 2011(Click on graphic)

All in the family

The undivided Reliance group had made the onerous task of raising money from the public into a fine art. Even in the era of tight controls on capital issues, the group managed to raise hundreds of crores through innovative methods, such as issue of convertible debentures. On occasions, the money raising came first and the projects came later, some analysts say. The group has regularly come up with public issues, each the largest of their respective times.

Flag bearer no more?

With the economy in the doldrums and a faltering monsoon to boot, captains of India Inc are unanimous in their view on what P Chidambaram, the new finance minister, needs to tackle head-on.

Mr FM, Please...

Even as the prime minister reallocated the crucial portfolios of finance and home just a week before the monsoon session of Parliament, the updated list of Cabinet ministers was not reflected on either the Prime Minister&rsquo;s website or that of the Cabinet Secretariat. In fact, the UPA government seemed to have tied itself in knots over the Cabinet list on its official websites and is now wary of uploading the list that would reveal the order of precedence of the ministers. The last time it attempted to put up a list, it incensed Agriculture Minister Sharad Pawar, who felt he had been &ldquo;insulted&rdquo;. Now it appears that the final list will only be uploaded after the monsoon session closes in September, when another reshuffle is due.

Tangled web

Almost half of India went powerless yesterday for several hours. Three regional grids &mdash; supplying electricity to northern, eastern and north-eastern states &mdash; collapsed, resulting in a power outage in more than 20 states that severely disrupted all economic activities, brought to a standstill several essential services and adversely affected the services of over 300 trains including the Metro network. The scale of the disruption was unprecedented. And coming as it did just a day after a similar collapse of the power grid for the northern region, with almost similar consequences, it underlined once again the depressing state of the country&rsquo;s power sector and its poor governance by regulators.

Powerless at noon

A government research agency recently contracted a private firm to build a machine for it &mdash; and then ran into a problem because the job was completed on time. The problem was that the building in which the machine was to be installed had not been built. So the query from a senior government official was, &ldquo;Why did you have to be so fast?&rdquo; Six months after it was delivered, the product is lying in a government godown, awaiting installation.

Timed out

Your editorial &ldquo;Well below trend&rdquo; (August 1) rightly suggests that &ldquo;the RBI needs to consider whether it has lost the crucial balance between growth support and inflation-fighting that a central bank must maintain&rdquo;. However, I differ with your view that the RBI&rsquo;s balance of its twin objectives &ndash; growth and inflation &ndash; may be wrong. It is, in fact, currently tilted. The central bank does not seem to be focusing on its main aim of &ldquo;controlled expansion&rdquo;; it has instead maintained its avowed focus on &ldquo;controlling inflation&rdquo;. Unfortunately, things are not happening the way the RBI desires.

Letters: Losing the battle

For some years now, the idea of an Indian sovereign wealth fund has been floating around New Delhi. This was just barely understandable as an idea in the distant days before the 2008 financial crisis, when several countries seemed to be making money through canny investments, even in financial companies and stocks. Oil-rich countries like Norway, the UAE, Saudi Arabia and Kuwait have long-standing investment programmes. These funds usually specialise in investments that are meant to ensure that the benefits of oil wealth is not transient. All these funds have assets of close to $500 billion (about Rs 28 lakh crore).

A fund of imprudence

Former Tata Steel chief Russi Mody used to say quite often that he knew nothing about steel, but did know how to connect with workers. Mr Mody was among the pioneers of investment in &ldquo;human resource development&rdquo; when such management jargon was Greek to India Inc. But history has been unkind to Mr Mody &mdash; many management writers have since dismissed his style of operation as being suitable only for dinosaurs.

Where are the HR CEOs?

Government shouldn&rsquo;t give tax concessions for donations to educational institutes. Education business is the best way to convert black money into white. Even if government allows tax concessions upto a certain limit, businessmen who own educational institutes can claim deduction on their personal tax-liability by donating money to their own institutes.

Student's corner

The Congress sits in opposition in Madhya Pradesh and is always on the lookout for issues to take on the BJP government in the state, and the recent expulsion of two Congress MLAs from the Assembly provided the perfect opportunity. The Congress had demanded a discussion in the House on corruption in the state but it was rejected. Thereafter, the membership of two Congress MLAs, Choudhary Rakesh Singh Chaturvedi and Kalpana Parulekar, was terminated for &ldquo;unruly behaviour&rdquo;. The state Congress soon swung into action, planning rallies and demonstrations against the state government with the full approval and backing of the Congress high command in Delhi. But the party found itself red-faced when its two MLAs suddenly &ldquo;apologised&rdquo; for their behaviour. Even before the planned demonstrations could begin, the Speaker swiftly reinstated the two and Chief Minister Shivraj Singh Chouhan hailed it as a &ldquo;historic&rdquo; decision.

Demonstration effect

Although Kaushik Basu and R Gopalan bid farewell to the finance ministry on the same day, they get to spend some time with each other for the next few weeks. Basu is going to keep his room in North Block till August 18 because his successor (yet to be named officially) is unlikely to take charge soon. Gopalan will also be in North Block for a while to wind up certain things till he moves to his next assignment. Since Gopalan&rsquo;s successor, Arvind Mayaram, took charge on August 1, he will not be able to occupy his old room, so he will be sharing Basu&rsquo;s room. In Basu&rsquo;s company, it is unlikely that Gopalan will be able to avoid the media.

Roommates

Tuesday, July 31, was a day of farewells in the finance ministry. R Gopalan retired as economic affairs secretary and Kaushik Basu&rsquo;s tenure as chief economic advisor came to an end. The heads of both revenue boards &mdash; the the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC) &mdash; also retired on Tuesday. Apart from the official farewells, both Basu and Gopalan decided to meet the press on their last day and the meetings started on an emotional note. The media-friendly Basu said he was &ldquo;feeling sentimental&rdquo; and confessed to being nervous when he took charge in December 2009 because &ldquo;I had never seen so many cameras together in my life before&rdquo; &mdash; though he never let on. Gopalan confessed to not being media-friendly and apologised for losing his temper on several occasions.

End notes

The Chinese Whisper item &ldquo;A skit in time&rdquo; (August 1) evokes amusement at an officer&rsquo;s talents being spotted through a skit enacted by him and landing him in a post normally reserved for Indian Information Service officers. But it also says a thing or two about how Indian authorities plan the career path of our diplomats, who are stated to be in short supply. No doubt diplomats should have a variety of experience, but they should not end up holding posts that do not strictly fall under their diplomatic field. I mention this because a former diplomat turned columnist writing in your newspaper revealed in one of his columns that some of our foreign secretaries had not worked in two major continents. So much for the career planning for our diplomats.

Letters: Career diplomacy

This refers to the editorial &ldquo;Powerless at noon&rdquo; (August 1). The Regional Load Despatch Centres (RLDCs) regulate power that states draw from power grids, but they can only warn the states overdrawing power. Warnings without non-compliance costs matter little. Had RLDCs been empowered to cut power supply to states drawing power in excess of their allocated share from the grids, collapse of northern, eastern and north-eastern grids could have been averted and 600 million people across the country would not have been pushed into the worst-ever power breakdown that brought life to a grinding halt on July 31. Maybe a toothless regulator suits the powers-that-be, but it defeats the purpose.

Letters: Power puzzle

Apropos the editorial &ldquo;Powerless at noon&rdquo;, I would like to say that the political blame game that followed the power grid failure indicates the government&rsquo;s lack of clarity and direction. The responsibility rests with the regulator. If things do not change, states will not shy away from overdrawing power in the future too. Therefore, the need of the hour is to implement strict guidelines and ensure compliance.

Letters: Looking for light

Kudos to Business Standard for objectively documenting the unethical nexus between pharmaceutical companies and medical practitioners (Weekend, &ldquo;The pill pushers&rdquo;, July 28). If doctors expect foreign jaunts in return for prescribing certain medicines, are they not compromising the Hippocratic Oath they take before embracing the noble profession? And surely, it is a breach of trust with the unsuspecting patients. Should doctors, then, argue that even though they accept gifts from drug companies, they recommend the right product? Clearly, benefits are paid to colour objective judgement.

Letters: A dose of truth

The mini-reshuffle of the Union Cabinet is disappointing. True, the appointment of P Chidambaram as a full-time finance minister is a relief; the prime minister&rsquo;s month-long stewardship of the ministry did not feature any major new directions or fresh policy initiatives. As home minister, Mr Chidambaram provided a clear direction to policies pertaining to internal security. He is now expected to take firm charge of the government's finances, which are in dire need of prudent management.

All eyes on new FM

An examination of the April-June 2012 quarterly results declared so far (Q1, 2012-13) indicates that rising interest costs continue to retard profit growth. So far, about 824 listed companies operating across about 60 sectors (including conglomerates with diversified and miscellaneous businesses) have released Q1 results. This sample includes many market leaders. Sales hit Rs 618,313 crore, an increase of 17 per cent over the corresponding quarter of June 2011. There is a substantial 21 per cent increase in other income, which may be a sign of some padding of the profit &amp; loss account. Operating profits (Profits Before Depreciation Interest and Tax, or PBDIT) have also increased by 17 per cent. Interest costs have ballooned by over 30 per cent. As a result, net profits are up by just under 10 per cent.

Business Standard

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