Budget 2014-15 Highlights
The much-awaited budget for 2014-15 has finally been announced by Finance Minister Arun Jaitley yesterday. While some industry-people welcomed the budget with open heart, many criticised it to be a ‘budget for the rich’. While there were several highs in this year’s budget, there were a few lows as well. We present you few of the pointers catering to various industry segments from the budget 2014-15. Information Technology: • Pan India programme “Digital India” to with an outlay of Rs 500 crore to be launched. • Programme for promoting “Good Governance” to be launched. A sum of Rs 100 crore provided. • 5 IITs, 5 IIMs, 4 AIIMS, 12 medical colleges, 2 agriculture universities to be set up. • Government allocates Rs 500 crore for internet connectivity in villages • Government imposes tax on import of telecom, IT products Aviation: • Scheme for development of new airports in Tier I and Tier II Cities to be launched. • Free baggage allowance increased from Rs 35,000 to Rs 45,000 • e-Visas to be introduced in phased manner to encourage tourism in 9 airports • Air India to get Rs 6500 crore allocation • 11.4 per cent hike for Civil Aviation Ministry in budget Oil & Natural Gas: • Production and exploitation of Coal Bed Methane reserves will be accelerated. • Possibility of using modern technology to revive old or closed wells to be explored. • Usage of PNG to be rapidly scaled up in a Mission mode. • Proposal to develop pipelines using appropriate PPP models. • Govt to cut duty on premium petrol • LNG exports to Pakistan to be exempt from import duty • Branded petrol price cut by over Rs 5 per litre • Government to de-regulate diesel prices, reduce subsidised LPG cylinders this fiscal. Retail: • Processed food may bite a bit less • Startups & entrepreneurs get Rs 10,000 crore backup • Government allows manufacturers to retail on e-commerce platforms • -19 inch LED TVs to cost less up to 5% while 3D TVs and imported durables to go up by 3% • Excise duty on footwear slashed • Govt surprises by keeping gold import duty at 10% • Prices of fizzy drinks, flavoured water, juices & energy drinks to increase by 5% • Excise duty on cigarettes, cigars, cheroots and cigarillos increased by 11%-72% Health and Pharma: • Free Drug Service and Free Diagnosis Service to achieve “Health For All”. • Two National Institutes of Ageing to be set up at AIIMS, New Delhi and Madras Medical College, Chennai. • A national level research and referral Institute for higher dental studies to be set up. • AIIMS like institutions in Andhra Pradesh, West Bengal, Vidarbha in Maharashtra and Poorvanchal in UP. A provision of Rs 500 crores made. • 12 new government medical colleges to be set up. • States’ Drug Regulatory and Food Regulatory Systems to be strengthened by creating new drug testing laboratories and strengthening the 31 existing State laboratories. • 15 Model Rural Health Research Centres to be set up for research on local health issues concerning rural population. • A national programme in Mission Mode to halt the deteriorating malnutrition situation in India to be put in place within six months. Well presenting the budget is like laying the foundation, implementation is the tough part, which will eventually ensure if the budget stuck true to its spirit of ‘Sab ka Saath, Sab ka Vikas’ or not. We keep our hopes high till then.
High and Fly: A threat to the travellers
When it comes to travel, people these days have shifted their preference to airplanes rather than going for the traditional carriage—railways. While there are a number of reasons for this shift of option, the primary one is the time saving nature of the airways. These days there are a number of flight options to choose from and the choice depends mainly upon the flight rates and flight safety. While every airline ensures safety and security to all its passengers, it seems that offlate the safety of the air passengers have gone for a toss. According to latest Lok Sabha reports, ten pilots were found tipsy in pre-flight checks and have been grounded in the first six months of this year. According to reports, since 2011, a total of 99 pilots, including the 10, have been grounded for testing positive in the pre-flight medical examination for alcohol consumption. While 17 of them tested positive in 2011, the number shot up to 41 in 2012, 31 in 2013 and 10 till July 14 this year. India’s aviation safety ranking has been recently downgraded, but what comes as a shocker to the commoners is the fact that the authorities are not shying away from relaxing the norms for drunk flying. According to a TOI report, a pilot will now lose his or her flying licence only when caught flying in an inebriated state for the third time. Earlier, this fate would befall them on the second instance itself. The directorate general of civil aviation (DGCA) diluted the punishment for flight crew reporting to work high in the recent past when it issued a new civil aviation requirement (CAR) on alcohol consumption. Well it seems the safety of the passengers have now taken a backseat, while our very own ‘HIGH’-flyers can continue raising a toast to the skies.
Are low-cost airfares really low-cost? A reality check
In this era of low-cost flying, when a majority of airlines are vying against each other to slash prices and lure customers on board, passengers really find it hard to resist the temptation to fly cheap and fall prey to the marketing gimmick played by the carriers. Blame it on the cut-throat competition prevailing among various airlines, such as SpiceJet, IndiGo and Jet Airlines, the news of frequent fare-cut and discount flying keeps pouring in at regular intervals. The spur in this competition can be attributed to the recent entrant in the aviation industry, the low cost flying sensation—Air Asia. But in this rat race to slash price and attract customers, one wonders if the customers are really benefited from such schemes? Well, analysing the actual fare structure, gives a different insight. For instance, airlines floating such schemes always keep their window for booking as narrow as possible, say between 2-3 days. However, a close look at the fare structure clearly shows that 30-50% of the total fare happens to be charges and taxes of airport, government and others, which do not belong to them, but are collected much in advance along with the base fare. This 30-50% comes totally interest-free for their financing of operations and debt. And to make things worse, even in cases such as cancellation of booking, the airlines charge a hefty fee which pricks a hole in the pockets of the customers and comes free to the airlines. Hence, going by the analysis one is forced to think, that whether the low-cost airfare is really a low-cost or is it a blessing in disguise for the carriers floating the scheme. It is for the regulators to answer whether such mobilisation of other’s charges, free of interest is in public interest or not.
Fuel Prices Unaffected By Recent Excise Hike
The oil & gas industry is probably the most volatile industry among others in the nation. Thus, frequent change in price is not an uncommon scenario for the industry and people. While people are used to sudden price hike or cut in petrol or diesel rates, a negative price change is always welcomed. Recently, government of India has hiked the excise duty on petrol and diesel by Rs 1.5. As speculated by the people, the move comes in order to boost government revenues and contain budget borrowing that could put off a likely cut in the retail prices of the two fuels. According to ET report, while the duty on branded petrol excise was hiked to Rs 3.85/litre from Rs 2.35/litre, that on unbranded petrol was hiked to Rs 2.70/litre from Rs 1.20/litre. Excise duty for branded diesel was raised to Rs 5.25/litre from Rs 3.75/litre and that of unbranded diesel was hiked to Rs 2.96/litre from Rs 1.46/litre. However, the excise duty hike is unlikely to affect fuel prices for consumers. Oil companies are likely to cut petrol and diesel prices shortly, due to sliding global prices. NDTV reports that the quantum of the price cut may be lower due to the excise duty hike. Those expecting further relief in prices, may be in for disappointment, as the excise duty hike may offset the likely reduction in prices. There is a possibility that cut may be put off altogether, as well. The government’s move to hike excise duty is aimed at getting higher revenues in its coffers. If prices are cut again, it would be the seventh reduction in petrol prices since August and the third in rates of diesel since its decontrol last month. Well as long as the price fluctuations don’t affect the consumers’ pocket, we are not complaining about the volatile nature of this sector.
Hyderabad Airport To Get A New Identity
There is a famous quote by William Shakespeare which says, “What’s in a name?” Well if he only existed till date to justify his stance. As, the recent decision to rename the domestic terminal at the Rajiv Gandhi International Airport (RGIA), Hyderabad after N T Rama Rao, the founder of Telugu Desam Party, has created much of a furore among the masses . As soon as the news came to light that the Centre has decided to name the domestic terminal of Rajiv Gandhi International Airport (RJAI) after former Andhra Pradesh Chief Minister NT Rama Rao, there seems to be murmurs among the locals of the city. hub-hyderabad As per a report published in The Hindu Businessline, leaders of Telangana Rashtra Samithi and Congress strongly opposed the decision. Flaying the move, Chief Minister, K Chandrasekhara Rao, wondered why the Union Government chose to name it after an Andhra leader. “The Government can consider the names of Adivasi leader Komuram Bheem or Telangana Armed Struggle veteran Chakali Ilamma,” he said. The report further stated that the Centre had on Thursday decided to name the domestic terminal on late NTR. While shifting the international airport to Shamshabad, the then Congress Government named it after former Prime Minister Rajiv Gandhi (the international terminal was named after him at the Begumpet airport) but chose not to name the domestic terminal. This had attracted criticism from the Telugu Desam Party. Obviously what the locals want is a local Telangana leader’s name to be decided for naming the airport. However, latest reports indicate that Chief Minister N. Chandrababu Naidu has welcomed the Central government’s decision to rename the domestic terminal at Shamshabad airport as NT Rama Rao domestic terminal. Well whatever be the outcome of the prevailing discussions, it seems that change is inevitable now and is on the cards for sure.
Real Estate Companies Eye Online shopping Too !
Ranjeeta Bhattacharjee, ranjeeta@diligentia.net.in Online shopping festivals are gaining new highs on the popularity chart these days. Every now and then one or the other famous web portals organises such shopping festivals to attract buyers from different walks of life. The recent one creating a buzz is the Google’s Great Online Shopping Festival (GOSF) 2014. The company is all set to host its third edition of its “Great Online Shopping Festival” (GOSF) between Dec 10-12, a company statement said. While the news that the mega online shopping festival will feature over 450 partners offering their best deals for 72 hours this year is already creating a spur in the market; this year GOSF will also feature exclusive launches from brands like Motorola Nexus 6, HP, Lenovo, Tata Housing, Karbonn, Van Heusen, Asian Paints and great deals on exclusive designer collection from Pernia’s Pop Up Shops. And what is more amusing is the fact that India’s leading real estate developer Puravankara and Provident Housing are also participating in the festivals, wherein they will offer over a dozen of its ready to move-in homes or those that are just about going to be given possession. The properties expected to be offered under the special GOSF offer are: Puravankara Projects – Bangalore: Purva Atria Platina, PurvaVenezia, Purva Gold Crest, Purva Highland. In Chennai: PurvaSkycondos. In Kochi: PurvaGrandbay, Purva Oceana, Purva Eternity. The initiative was launched by Google in 2012, and has seen tremendous response with most players seeing over 350 percent growth in daily sales. Well going by the trend one can definitely say that the online fever is taking every leading sector in its cove and the day is not far off when we might see the purchase of properties done via online sale as well.
Fare Wars- Buyers Win, Companies Lose
The customarily incline season for air travel is continue with the commencement of January. With that, the landing of another contender, Vistara, has at the end of the day prompted a value war in the Indian skies with Jet Airways and Air India chooses to cut airfares. All the airlines organizations are currently advertising their offers that are similarly accessible at a less expensive rate than in the recent past. Doubtlessly diminished fares are fantastic news for buyers like us. At the same time, does it bode well? This may prompt an unfriendly effect on the effectively extended asset reports of some airlines organizations; however a precarious decrease in fuel costs in the course of the most recent three months will give some cushion. Indian carriers barely profit, and everybody know the destiny of Kingfisher Airlines and Spice Jet. High fuel costs and extravagant air terminals make India an extreme offer for aerial shuttles, with tickets typically valued below expense. In this “price deal”, airlines appear to wagering on volume. They contend that offering seats at less expensive costs helps them offer more tickets. The arrangement is to get more fliers, enough to counterbalance the lower tolls. Some airline officials have called such ideas dangerous and bizarre, while Indian airlines have a history of trying them. Though, prices are not directed in India and airlines don’t appear to pay any regard to the controller. Raising charges, and not cutting them, appears like one of the more objective approaches to save the airlines. However, there is a contrast between what is judicious and what is prominent. Such a move would prompt a disliked conclusion: in India, flying is still not for everybody, where the middle class person earns just to survive their family.
Modi’s Hardest Challenges To Boost Infrastructure
In May 2014, BJP under the leadership of Narendra Modi emerged victorious from the largest democratic election. This decisive margin of success gives Narendra Modi enormous leeway in seeking after his approach plan, which incorporates reviving the Indian economy. infrastructure2 In an effort to improve India’s economy, the BJP government has set a massive target of investing USD 500 billion in the nation’s infrastructure. This incorporates roads, power, ports, railways, water, airports, irrigation, gas, storage and telecom. However India has consistently missed such targets over the last many years. As we all know, infrastructure plays a key part in empowering economic growth. In perspective of India’s aggressive growth plans, the government is expected to review issues of private sector privatisation, tariff policy, budgetary allocation, public-private partnerships (PPPs) and fiscal incentives. There are numerous issues that need to be tended in diverse infrastructural fields. In the first place, the gap between power production and demand is influencing both manufacturing and overall growth. The transport sector is another concern for the government; while road transport is the foundation of the Indian transport infrastructure, it is lacking regarding quantity, quality and integration. Furthermore, ports and civil aviation desperately require modernisation. It is anticipated that the public sector will continue to play an essential role in building transport infrastructure. On the other hand, resources needed are much bigger than what the public sector deliver. To prove the endeavours, Modi brace the Indian economy with his foreign policy. He has underlined the significance of economic diplomacy to support trade ties and invite foreign investment into the nation. For this, Modi revitalizing its partnership with the United States, strengthening India’s ties with its South Asian neighbours and managing its relationship with China. However, India may not achieve its desired objective in a straight line or in the timeline that Modi has set for it, yet chances are really great that it will turn into a main player in the financial and geopolitical circles reasonably soon.
Evolution of E-commerce in India
India, rising economic superpower and the third biggest internet market in term of clients, has opened up enormous opportunities for the development of e-commerce. Through the decades, India has seen a great transformation in this market from print literate workforce to the telephone, radio, television to Internet communication and mobile phone applications. While in countries like China and US, e-commerce has taken significant strides to accomplish sales of over 150 billion USD in revenue, the industry in India is, still at its outset. However, the sector has witnessed the growth of almost 35% in 2014. To see the boom in the industry, more organizations in India are joining the digital market bandwagon nowadays. The immense adoption of internet with the rising literacy rate in India has raised the development of e-Commerce in the Country. E-commerce is most likely the best thing that has happened to the middle class population with higher ambitions and lesser time. Not only it appeals to middle class, e-commerce advances both quality-minded Indian consumer as well as small entrepreneurs. Around the world, has gotten a deal chasing– which is quite beneficial for the middle-classes. The huge adoption rates of Snapdeal and Flipkart have proved that in India, e-commerce will go far. Currently, Indian customers are driving e-commerce through online shopping by buying electronics, clothes and books. But, if we look at business transactions, it’s the online ticket booking, which is driving the e-commerce adoption. Though, other segments such as classifieds, matrimonial, jobs all are making good progress. Given the E-business scenario, there has been an enduring climb in the number of organizations choosing on e-commerce in recent years. Even the major portals are moving towards e-commerce as opposed to depending on the web promoting. Also the list covers a wide show of services and products from picture tickets to gadgets. In this way, e-commerce India is perpetually developing and is a shelter to buyers, e-business people, online advertisers and retailers.
Government provide financial support to road projects
India’s much hyped Public Private Partnership (PPP) model to attract investors for the road sector has failed due to slow decisions making, hurdles in land acquisition and single window clearances. Due to this, the ministry failed to execute 21 projects worth Rs.27, 000 crore between the financial years 2013 and 2014. Taking into consideration the failure of earlier model in execution, government has now made an urgent endeavor to recuperate Public Private Partnership (PPP) with the launch of new Hybrid PPP Model, under which, the investors and government will share the contribution of 60:40 in the venture cost (where 60% to be borne by the concessionaire & 40 % by NHAI). The Government will release 40% of the revenue in the equal share of 5 instalments (each 8%) depending upon the development of the project. In addition, Government also plans to share the revenue risk with a low anticipation of traffic flow and plans to finance 100% EPC (Engineering, Procurement and Construction) cost of these projects, if required. Unlike the previous PPP Model, NHAI has an obligation to buy at least 90% of the land required, along with forest and environment clearances for the same. Honourable Minister Mr. Nitin Gadkari, Ministry of Road Transport & Highways and Shipping, is very optimist about the model and shows his confidence towards success of the same. The best part of this model that it is a time bound and a honed penalty will be charged for delay in fulfilling commitments, either on the part of the concessionaire or the government. Now the wait is only to complete the 12th Five Year Plan (2012-17) 2017 wherein the government has estimated an investment of USD 95 billion or Rs 5.7 lakh crore for the highways sector. Under this, the government has expected 50 per cent to come through private sector participation.