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Volume 25 – No.08 – November 2010

Season’s Greetings & Happy New Year

In This Issue 4 President’s Message 4 Chamber’s activities FFT progamme on Revisiting Indian Micro finance 4 General Committee 4 Expert Committees 4 Spotlight – Corporate Social Responsibility 4 Policy watch 4 Trade Fairs & Exhibitions 4 Trade Enquiry 4 Economic Review 4 Others Charter Party Holidays


Food for Thought Programme on `Revisiting Indian Micro Finance’

The Madras Chamber has recently introduced a ‘Food for Thought’ (FFT) monthly programme...P2

NEW MEMBERS

MCCI extends a warm welcome to the following new members: Allison Transmission India Pvt.Ltd., Sriperumbudur Business: Manufacturers and Exporters of Automatic Transmission & Parts

Leitner Shriram Mfg. Ltd. Chennai Business: Manufacturers of Mega Watt class wind turbines

Vyosoft Solutions Pvt Ltd.. Chennai Business: Software / IT Chain-Sys Pvt.Ltd., Chennai Business: Information Technology


PRESIDENT’S MESSAGE the country is heading and whether the gloss is

recovery etc. To implement even some of

wearing off from the India Shining story.

these, we require a strong political will and an

The 2010 Corruption Perceptions Index by Transparency International puts India in 87th

A war on corruption must be launched

clean) to 0 (highly corrupt).

immediately to restore confidence in public

problem. Denmark, New Zealand and Singapore are tied at the top of the list with a score of 9.3, followed closely by Finland and

Dear Friends, The Northeast monsoon has been very active in Tamil Nadu and the usual difficulties of bad roads, traffic congestions, and delayed appointments are hitting all of us. We have learnt to live these. What is more disturbing is the recent flood of scams – The CWG scam, the Adarsh Housing Scam, the 2G Spectrum scam, the Housing Loan scam involving prestigious PSUs and major Banks, the list seems unending. The amounts of money that are being mentioned are staggering and beyond comprehension for the average citizen of this country. While we all took pride in Mr Obama’s comments, applauding India on its economic renaissance, immediately following that, came the resignation of his host in India’s financial capital, Mr Ashok Chavan, Chief Minister of Maharashtra, due to serious allegations of malpractices concerning the housing project in the heart of the city meant for martyrs of the Kargil war!

this malaise.

rank with a score of 3.3 on a scale of 10 (very

These results indicate a serious corruption

It’s raining Scams!

unswerving commitment to rid our country of

institutions. All responsible stake holders, politicians, the corporate sector, NGOs and the common man must stand up and fight this scourge.

Sweden at 9.2. India is at par with Jamaica and

The time to act is now! The consequences of

Liberia, sharing the same score! The score might

inaction are too frightening to contemplate.

have been worse had the recent scams been

More importantly, is this the legacy we will

taken into account.

bequeath to the millions of young Indians who

On the other hand, India ranks 119th out of

are the torch bearers of a proud nation?

169 (China- 84th) in the Human Development

With season’s greetings and best wishes,for the

Index ranking. Primarily, HDI measures

New Year.

progress around the world in health, education and basic living standards. Our HDI ranking is really nothing to be proud of. The message is very clear –corruption eats into the vitals of the economy and represents the biggest hurdle to poverty alleviation. High-level

T T Srinivasaraghavan President

corruption plunders the national wealth, which otherwise could have been channelised into developmental projects and impairs the growth momentum of the country. According to the late C.K.Prahalad , the cost of corruption to the country might well exceed Rs. 250,000 crores. The UN Convention against Corruption has suggested several actions to fight corruption, which include establishment of anti corruption bodies and enhanced transparency in the financing of political parties and election campaigns, transparency and accountability in matters of public finance, sensitisation and

These scams and the institutionalization of

development of whistle blowers, criminalisation

corruption, raise serious questions as to where

of corruption and corrupt persons, asset

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CHAMBER’S ACTIVITIES 30th November 2010

Food for Thought Programme on `Revisiting Indian Micro Finance’ Ms Bindu Ananth President, IFMR Trust MCCI’s Food for Thought Programme aims to take up larger issues of topical nature which could involve the economy, civil society, business and the community as a whole, and provide a platform for open discussion and interaction. This programme was the third in the FFT series and was held at the Raintree Hotel, Anna Salai. Mr T Shivaraman, Vice-President of the Chamber, welcoming the gathering said that the topic of micro finance has been in the news recently for wrong reasons. A fairly new concept in India, this scheme, if properly run, has a lot of things to offer for the good of the public. There has been lot of media hype about MFIs in recent days. Let us look at it as a business model he said. The FFT programme is catching on and the Chamber is receiving good feedback and he requested the participants to suggest the topics on which they would like the Chamber to organize these programmes. The Panelists were: Dr Kalpana Sankar CEO & Managing Trustee, Handin Hand Mr K Sathianandan General Manager Chennai Micro Finance Branch. SIDBI

Following are the extracts of their presentations: Dr Kalpana Sankar: Addressing the gathering Dr Kalpana said that dealing with the poor in the remote parts of India and working and getting to know their problems has been a learning experience for her. She said there are 1.02 billion people in India and out of this 26.10% are below poverty line. And out of this, 500 million poor are not served by institutional credit. She said the first Self Help Group was formed in India in 1990. She stressed that we need to evolve meaningful development of the country and hence the focus was from welfare to development and so the concept of microfinance emerged at that time. Comparing India with Bangladesh she said India is much better off. However, there is a huge gap between the demand and what actually the banks are able to finance. SHGs were formed to fulfill development needs of the local areas. All dimensions of poverty need to be addressed through programmes that involve partnerships, coalitions and team work. She urged to build human capital through human development and empowerment and raise social capital through community development and empowerment. Research showed that existing standard savings and credit products did not meet the

needs of the poor; there were complicated and cumbersome procedures; high transaction costs for the poor and the banks and Government schemes for the poor did not recognize their small and occasional savings. What the poor need is simple and easy ways to keep safe thrift and any surpluses and credit to meet emergencies. The NGO’s role was for continuity of support; they were primarily community based; more participatory and hence more likely to lead to sustainability. The role of SHGs is four fold – A voluntary agency, money lender, a development bank and a cooperative while the role of NGO was to get social mobilization and SHG formation; awareness generation among SHG women, quality training for SHGs, motivation for collective action and ensuring sustainability of SHGs. Speaking about her organisation Hand-inHand she said, it was started in one district in India, and now functions from four States in India and it has spread its wings to other countries namely Afghanistan, Sri Lanka, Brazil, South Africa and Kenya. Their core values were – focus on women, local ownership and participation; working in tandem with government to avoid duplication; information and strengthening grass root level democracy; complete transparency and accountability. Speaking about micro finance, she said it is made available to poor people and if you combine it with some training, it will make a huge impact. Poor people

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CHAMBER’S ACTIVITIES need credit for small things. However, before giving loans, we need to find out their capacity to repay. Micro finance is not pure commercial activity. It is connected with social issues, economic upliftment and empowering of rural people particularly women. Let us not see this as a pure business proposition she said. NABARD has many development programmes including skill development and it is partnering with many SHGs including Hand in Hand. She said look more at the real value of the poor people – they should be given loans at reasonable interest rates, coercive methods by MFIs should be stopped and they should be educated to stop multiple borrowing. Whether NGOs or SHGs, whatever they are doing cannot be purely for charity. Ultimately the market will dictate. She gave details of the Afghanistan experience of Hand in Hand where they have provided job opportunities for 6200 people and created 4600 enterprises. There are nearly 5000 beneficiaries and they have promoted small and medium size horticultural enterprises. The challenges faced by them were : - Reduction in grants for building capacity of SHGs - Rising costs of promoting groups - sensitizing bankers to deepen reach to SHGs - Gaps in backward and forward linkages She said the Government too had a role to play in empowering the Panchayats and the local community; clamp down on corruption; build partnerships outside Government and facilitate capacity building of NGOs which in turn can facilitate sustainable enterprises. In conclusion she said we have to speak on behalf of the poor people of India. People are not relying on doles alone. Women can get engaged and bring meaningful change

in society. Indian microfinance has gone beyond borders. Mr K Sathianandan: Mr Sathianandan made a presentation on best practices in microfinance – the Indian experience. He gave a background to SIDBI’s constitution and said the mandate given to them is to promote, finance and develop MSMEs and coordinate the functions of institutions serving the sector. He described the products and services offered by SIDBI as follows: - Project finance - Receivable finance - Working capital finance - Venture capital - Micro credit - Promotional & developmental activities

and also build good organizational cultures. He further added that there should be coherence in the lenders’ policies. Clients should be literate, financial audit of the MFIs should be carried out periodically and standards should be established through self regulation. SIDBI’s initiatives with regard to best practices have been to provide transformation loans to MFIs so as to enable smooth conversion into formal entities. The Innovative Young Professionals programme of SIDBI strives to strengthen the human resource of MFIs. He said SIDBI is impressing upon MFIs to prepare firm road maps to bring down interest rate. It is commissioning a detailed study on the interest rate charged by about 25-30 MFIs.

SIDBI piloted the MFI lending route and pioneered the concept of rating of MFIs to get an unbiased opinion about the prospects of the MFIs.

Concluding he said, responsible micro finance is a pre-condition for increasing the well being of all stakeholders involved. Educating the ultimate beneficiary on the fundamental aspects of financial services particularly debt relationship and strengthening their confidence in the financial sector is imperative.

He said the landscape of Indian micro finance is changing. Most MFIs hardly make any need based assessment. Andhra Pradesh has been the pioneer in MFI sector.

Establishing standards through self-regulation is the need of the hour as it would ensure ownership of standards by the sector and greater acceptance by its members.

- Policy advocacy - Indirect finance

There is emergence of fast growing financial intermediaries and many NGOs have transformed themselves into MFIs. The exponential growth of the sector has led to emergence of issues which have created new pressures of competition and the need for adopting best practices. He also said that there is a need for effective governance that would ensure transparent operations and balanced growth. Independent Board members should be drawn from diverse fields and there should be strong management for Board of Directors that would provide direction and continuity

Ms Bindu Ananth: Ms Bindu spoke on Financial inclusion. She said one branch for 20,000 people is not enough and banks need to go out and open more branches. The period 1950 – 1990 was really dominated by nationalized banks and during late 1990 the MFI segment came in. MFI’s work very differently. She said poor people should be provided credit without collaterals, where neighbours could come forward to guarantee each other. MFIs emerged as a parallel to the banking sector and 6 crore households were able to access finance

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CHAMBER’S ACTIVITIES because of the emergence of the MFIs.

GENERAL COMMITTEE

The interest rates in micro finance range between 24 to 30%. This is expensive. There is lot of transaction costs involved in far flung areas. The transaction costs eat a big chunk of the costs of running MFIs. She said it is possible to lend in a sensible manner. The traditional form of microfinance has been on credit and by expanding the range of products, one could reduce the transaction costs.

20 November 2010

Approach Paper on XII Five Year Plan

She gave the example of Kshetriya Gramin Financial Services model where every customer in KGFS is not required to sign – only his finger print is taken. KGFS focuses on a defined region and extremely local in characte. It is technology based back-end to manage scale, keep variable costs low, reduce transaction time and improve fidelity.

Expert Committees

Each KGFS focused on 2 districts/population of 5 million; its branches are located in villages that are remote with little or no formal access; no customer is more than 3-4 kms away from the branch; timings adjusted as per local conditions; local language interface and staff dealing with customers are locals. When NABARD adopted a systematic approach to give credit to poor people, there were only 250 SHGs in the entire country and there were many capacity building initiatives. At present there are various institutions like banks which have been addressing this issue. She said their mission is to ensure that every individual and every enterprise has complete access to financial services.

Inflation is taxation without legislation.

-Milton Friedman

th

The Committee discussed the following:-

The Committee perused the draft note for the XII Five Year Plan prepared by the Economic Affairs Committee and felt that the points indicated therein could be the starting points. However, more inputs on each of the matrices outlined by the Planning Commission should be adhered with more focused and specific suggestions. The Committee was informed that nine Expert Committees had met so far and a brief gist of the deliberations was given.

FFT Programme on The Employment V/s Unemployability Debate There was an interesting and lively debate and a number of issues have emerged with regard to teaching methods, education system, growing gap between education and employment, behaviour of teachers and students, technical and academic standards, difficulty in finding good teachers, etc. Members discussed the entry of foreign universities and felt that a special programme should be organized to understand whether these universities are an answer to the solution for employability. The need of the hour was quality human resources and towards this the Chamber should work forward.

175th Year Commemorative Stamp The Committee was informed that a few sample designs have been prepared and they were requested to give their suggestions/ preferences.

Forthcoming Programmes It was noted that a number of programmes have been scheduled during December. The details have been sent to members and are also available on the website.

Arrears of subscription The Committee noted that there were still a few members who had not paid their subscription despite several reminders. Members were requested to use their good offices to speak to the concerned members known to them.

Senate of the Annamalai University The Chamber has a seat on the Senate of the Annamalai University and the Committee nominated Mrs K Saraswathi to be the Chamber’s nominee.

EXPERT COMMITTEES 1st November 2010

Expert Committee on VAT The Committee considered and finalized the issues relating to TN VAT to be discussed at the forthcoming meeting with the Commissioner of Commercial Taxes, Government of Tamilnadu.

2nd November 2010

Expert Committee on Indirect Taxes Issues received from members relating to PreBudget memorandum were discussed and the draft memorandum will be prepared shortly/ The Committee also decided to organize a training programme on Excise & Service Tax on 2nd December. Other programmes will also be organized shortly.

13th November 2010

Expert Committee on Economic Affairs The Committee prepared a draft response to the “Approach Paper for XII Five Year Plan”. More inputs are being gathered on each of the matrices outlined by the Planning Commission so that we can come out with more focused and specific suggestions.

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SPOTLIGHT

Corporate Social Responsibility Year 2003 saw the worst of the draught in Coimbatore, the southern Manchester of India. The monsoons failed leaving the water bodies dry and depleting the ground water table rapidly. The source of water for Coimbatore city is river Noyyal, a tributary of river Cauvery. River Noyyal originates from the western ghats and flows through the city and reaches Cauvery near Karur. While passing through the city, the river fills nine tanks which were built by Chola king as a dowry for his daughter given to the Chera Prince. The design is so thoughtful that the water will fill all these nine tanks and the excess will flow back into the river. British Government improved it and PWD now maintains it. But, due to poor maintenance, most of these tanks were silted up and became just a barren low lying land, not able to contain water any more. The rain water will go waste as run-off water with no infiltration, damaging residences and roads. A peculiarity of the sub-surface in Coimbatore is that whatever water infiltrates will go back to the river basin due to a process called “reversal” as there are fissures in the soft rock structure beneath. The industries in Coimbatore led by Pricol joined together and initiated a movement called “Siruthuli”, meaning, Little Drops. The mission is effective

water management. Though it was multi-faceted, the prime objective is to reclaim the nine water tanks in the city. With the funds collected from the employees and an equal share by the management, the industries namely, Pricol, LMW, ELGI, Bannari Amman group and Sankara Eye Foundation took up the work and in a war footing de-silted, strengthened the bunds, and widened the connecting canals within 18 months.The then District Collector and Corporation Commissioner of Coimbatore extended all cooperation to Siruthuli. The results were amazing. All the tanks got filled during the 2004 south-west monsoon. There was an overwhelming response from the public and more entrepreneurs, traders, NGOs and Clubs willingly joined the movement. The seed money was just about ` 15 lacs from Pricol and that induced other industries to contribute more. With the funds dredging work commenced and construction companies volunteered to offer earth moving equipments and vehicles at low rentals. More institutions and organizations joined hands and awareness campaigns on water conservation and development of green belts for better precipitation were launched. As there was need for more funds and technological help on satellite imageries, Siruthuli approached Governmental and Non-Governmental agencies for

help. The Trustees and the Project Coordinator met the then President of India Dr A P J Abdul Kalam and apprised him of the vision and mission of the organization. He not only appreciated but paid a visit to Coimbatore and participated in a programme organized by Siruthuli. On 2nd October 2005, a massive rally was conducted by Siruthuli in which more than a lakh citizens participated. The motto was to `Save the River Noyyal’. The Government agencies were only too willing to help the organization to carry out the mission. The Corporation was supplying water to the citizens to an extent of 600 MLD and bore wells were supporting to an extent of another 600 MLD. So, the load on the Corporation water supply was drastically reduced. The education on Sewage Treatment before letting in the water into the canals leading to river and garbage management had gained momentum and the Corporation got into many joint ventures with Siruthuli and other NGOs. Where there is a will, there is a way and with Public Private Partnership or Community participation, it is possible to undertake projects such as these for the betterment of society at large. M Ramakrishnan Asst. Vice-President – HR & A W.S. Industries (I)Ltd.

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SPOTLIGHT

Corporate Social Responsibility The national survey on corporate social responsibility practices in India, amongst leading business and corporate houses and public sector organisations, was carried out by Times Foundation. The survey used online administration of questionnaire and covered 11 PSUs, 39 private national agencies and 32 private multinationals. The organisations covered were from various sectors including information technology, insurance, automobile, cement, paper and pulp, construction, petrochemicals, metal, media, pharmaceutical, sugar, mining and other important sectoral industries. About 90 percent of the 82 organisations — all the 11 PSUs, fourfifth of the private national agencies (85 percent) and 94 percent of the private multinationals — are involved in various CSR initiatives. The survey highlights that most of the companies implement CSR projects through their own CSR project management divisions, with just about 29 percent involving voluntary oganisations and over one-tenth of the companies giving financial support directly to community or community based organisations. Almost all respondents see CSR initiatives as a catalyst in bringing about positive social change. The findings of the survey place education, health and environment as three of the most popular areas of intervention for companies as part of

their CSR initiatives. The survey also reveals that a majority of the CSR initiatives are regular programmes, whereas a small percentage of surveyed companies implement one-time CSR programme as well.

Some Major Findings Rise of CSR The involvement of the corporate sector in CSR seems to have picked up after 1991 as 64 percent of the participating organisations started CSR during 1991-2005. About two-third of the private multinational agencies (70 percent) and private national agencies (67 percent) initiated CSR during this period, and one-third of the PSUs too started their CSR programmesduring this period. In half of the cases (56 percent), people living near the organisation or industry are covered as part of the CSR programmes. The other groups under CSR initiatives include poor people living in rural areas (42 percent), tribal people (16 percent), people selected in consultation with NGOs (41 percent) and communities selected randomly (11 percent). In the case of PSUs, coverage of people living near the industry or organization and rural population is more, while selection of people through Non-governmental Organisations (NGOs) is more common in the case of private enterprises.

Education is No.1 The selection of issues under CSR by organisations depends on host of factors including organisational mandate, current relevance of issues and demand from the community. The priority areas that the respondents felt ought to be covered under CSR initiatives include education (82 percent), environment (81 percent), health (81 percent), women empowerment (63 percent), livelihood promotion (62 percent), sanitation (61 percent),microfinance (60 percent), HIV/ AIDS (54 percent), child care (55 percent), slum improvement (50 percent), disaster management (44 percent) and agricultural development (29 percent).

Image Does Matter For most companies, CSR is a sure way to improve their public perception, and over half of them do so to brand the company. Only one-tenth of the organisations stated that they are into CSR because it is mandatory, and just about two-fifth of them do it for tax exemption. Public goodwill and branding are high on the agenda in the case of private multinational agencies, and improved perception about the company is the motivation in the case of PSUs. Currently, NGOs and International Non-governmental Organisations (INGOs) are involved in implementation of development projects, capacity building of beneficiaries, planning and execution and scalability of projects. The 6


SPOTLIGHT organisations surveyed felt that NGOs and INGOs ought to be more involved in project implementation, providing voluntary support to corporate agencies, monitoring and evaluation of the ongoing projects.

Role of Government A quarter of the organisations surveyed felt the government was not doing much in facilitating CSR initiatives. However, half the respondents mentioned the role of the Government in helping with the project implementation. About one-fifth of the respondents felt that the Government did play a role in capacity building and project monitoring. Most of the companies expect greater involvement of the Government, and over three-quarter of them want the Government to develop a proper CSR policy. Most respondents argued that business houses should be involved in formulation of CSR policy. Others whom the respondents felt ought to be involved in CSR activities include industries, civil society organisations, Government functionaries and research organisations. A majority wants the Government to be involved in capacity building and providing an enabling environment. Most of the organisations stated that they have a definite CSR policy in place. Four-fifth of the private multinational agencies (80 percent), three-fifth of the PSUs (64 percent) and half of the private national agencies (52 percent) have their own CSR policy.

Do the Numbers Add Up? About 70 percent of the organisations surveyed stated that they have separate

allocation of funds towards CSR projects. This was reported more in the case of private multinational agencies (81 percent) followed by PSUs (73 percent), with the lowest being in case of private national agencies (59 percent). When asked about the average percentage of annual budget allocated for CSR in the past three years, more than half of the organisations (52 percent) did not share information citing ‘no relation between CSR allocation and annual budget’. Almost a quarter of the organisations stated that no specific budget was fixed for CSR initiatives, while 15 percent respondents said that the allocation for CSR depended on decisions of the organisation’s board. More than one-fourth of the organisations (30 percent) allocate less than 5 percent of their annual budget for CSR initiatives, according to the survey’s findings.

Taxing Time Only a little over half of the companies stated that they were not in favour of the Government’s proposal to abolish Section 80 G, granting tax benefits to funds allocated to development projects, as this would discourage CSR spending. The rest did not think the proposal would have any impact or were not very concerned about it. This shows a mixed response of the participating organisations on the issue of tax exemptions on projects of a charitable nature.

Spread to SME Sector The suggestions put forth by the participating organisations to make CSR initiatives more effective and

useful include spreading awareness about CSR among the general public so as to generate project demand and effective partnership between all stakeholders including corporates, community, employees, and the Government. They also felt that the introduction of CSR in the SME sector would help more organisations to reach out to remote areas. CHALLENGES TO CSR INITIATIVES IN INDIA The survey elicited responses from participating organisations about various challenges facing CSR initiatives in different parts of the country. Responses obtained from the participating organisations have been collated and broadly categorised by the research team. These challenges are listed below:

Lack of community participation in CSR activities There is a lack of interest of the local community in participating and contributing to CSR activities of companies. This is largely attributable to the fact that there exists little or no knowledge about CSR within the local communities as no serious efforts have been made to spread awareness about CSR and instil confidence in the local communities about such initiatives. The situation is further aggravated by a lack of communication between the company and the community at the grassroots.

Need to build local capacities There is a need for capacity building of the local non-governmental organisations as there is serious dearth of trained and efficient organisations that can effectively contribute to the 7


SPOTLIGHT ongoing CSR activities initiated by companies. This seriously compromises scaling up of CSR initiatives and subsequently limits the scope of such activities.

often leads many non-governmental organisations to involve themselves in event-based programmes; in the process, they often miss out on meaningful grassroots interventions.

Issues of transparency

Narrow perception towards CSR initiatives:

Lack of transparency is one of the key issues brought forth by the survey. There is an expression by the companies that there exists lack of transparency on the part of the local implementing agencies as they do not make adequate efforts to disclose information on their programmes, audit issues, impact assessment and utilisation of funds. This reported lack of transparency negatively impacts the process of trust building between companies and local communities, which is key to the success of any CSR initiative at the local level.

Non-availability of well organised non-governmental organisations It is also reported that there is non-availability of well organised nongovernmental organisations in remote and rural areas that can assess and identify real needs of the community and work along with companies to ensure successful implementation of CSR activities. This also builds the case for investing in local communities by way of building their capacities to undertake development projects at local levels.

Visibility factor The role of media in highlighting good cases of successful CSR initiatives is welcomed as it spreads good stories and sensitises the local population about various ongoing CSR initiatives of companies. This apparent influence of gaining visibility and branding exercise

Non-governmental organisations and Government agencies usually possess a narrow outlook towards the CSR initiatives of companies, often defining CSR initiatives more as donor-driven than local in approach. As a result, they find it hard to decide whether they should participate in such activities at all in medium and long run.

Lack of consensus on implementing CSR issues There is a lack of consensus amongst local agencies regarding CSR projects. This lack of consensus often results in duplication of activities by corporate houses in areas of their intervention. This results in a competitive spirit between local implementing agencies rather than building collaborative approaches on issues. This factor limits company’s abilities to undertake impact assessment of their initiatives from time to time. Resource pooling, adopting best practices, risk analysis and mapping of CSR initiatives were some of the suggestions offered by the participating firms and organisations. The respondents also recommended accreditation of CSR initiatives by an independent agency and making CSR a part of the curriculum at management schools, colleges and universities. Integration of CSR into the DNA of business, active role played by media in highlighting CSR success stories, top management commitment,

streamlining of CSR with stringent monitoring and CSR-friendly laws were other important recommendations put forward by participating organisations. The issues raised by participating organisations and recommendations put forth by involved stakeholders build consciousness about the critical issues involved in CSR initiatives pursued by the companies and the need for better coordination between various stakeholders to provide the necessary support system. These combined efforts together would be able to facilitate the process of effective programme implementation. This is needed to support gradual evolution of a healthy, more educated and greener society with principles of inclusion, equity and justice. The survey highlights that the participating organisations often tend to list lofty goals for CSR initiatives ranging from nation-building and providing localised rural employment and livelihood opportunities to people empowerment through wealth creation, raising quality of life and social wellbeing of communities, striving for harmony with nature and a greener world. The goals set should be realistic and implementable with measurable outcomes in a time-bound manner, suggests the survey. The survey also highlights the role of all stakeholders in making CSR initiatives a success and underlines an urgent need for effective coordination and communication between the companies, communities and the Government.

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POLICY WATCH Centre sets up Panel on financing Infrastructure $ 1 trillion investment in infrastructure needed Days after Prime Minister Dr Manmohan Singh announced that India needed $1 trillion for developing the country’s infrastructure, the Centre on November 18th announced setting up of a high level Committee on financing of infrastructure. The Committee to be headed by former RBI Deputy Governor Mr Rakesh Mohan will submit its report within18 months. The Committee would suggest steps for improving capital markets for garnering long term savings and facilitating foreign investment flow. The Panel will assess the investments required to be made by the Central and State Governments, PSUs and the private sector in ten major physical infrastructure sector projects. India is aiming to double its investment in infrastructure to about $1 trillion during the XII Plan period from an estimated $500 billion in the current plan.

National Policy for Open Standards notified Centre will soon set up enforcement and compliance body In what is termed a progressive and

momentous move, one that will show the way for the developing world, the Central Government has notified a National Policy for Open Standards in e-governance. The policy, which lays down a framework for selection of technological standards, mandates that all government e-processes adopt a `single and royal-free open standard’ in each

technological domain. This implies that the specifications of the standards – including associated patents and extensions – must be accessible and royal-free in perpetuity. This applies to any new e-governance projects or new versions of the existing projects. The existing applications will have to provide for inter-operability while interfacing with other systems. While the European Union has open standards for inter-operability and a few countries do emphasise the use of open standards, Brazil is the only other country known to have a formal policy. The policy states that a government appointed body will look into the selection of open standards and revive interim standards.

Panel to locate areas to boost trade The Union Commerce Ministry announced the setting up of a committee comprising top corporates, bankers and trade bodies to formulate a firm strategy for export promotion and competitiveness of domestic industry. The Committee had been formed to formulate further strategy on export promotion and competitiveness of domestic industry. This committee would identify within three months at least three thrust sectors in three regions to promote trade. It was important to have a specific strategy for the continent of Africa, the emerging economies of Latin America and the mineral rich economies of Central Asia and a different strategy for Europe and America. To create a unified strategy for India, we need a synergetic approach between Ministries of External Affairs, Commerce, Mines and Petroleum and Natural Gas to leverage our resources to the best extent possible, said the Commerce Minister.

RBI to cap bank charges to protect small savers The RBI is considering a ceiling on certain charges on which retail customers of banks have to pay exorbitant charges and penalties for basic services and pre-payment of loans. For example some banks charge as high as Rs 750 (plus taxes) for failure to maintain a minimum balance in savings accounts. Similarly, pre-paying home loans can attract a penalty of 2% on the outstanding amount. Some banks charge a flat Rs 50 for demand drafts, even in rural areas where drafts are generally not in high denominations.

Food Safety & Standards Act to come into force from January 2011 Food Safety and Standards Act (FSSA) will come into force in January next year replacing the Prevention of Food and Adulteration Act. The Prevention of FAA which is currently in force in the country will be repealed and the FSSA will come into being. The new law is a scientific law which tries to promote food safety. The rules and regulations of the FSSA are ready and it has gone to the Government of India for notification. By January, it will be notified by the Government and once it is done each State will have to withdraw the Prevention of FAA. FSSA is having a scientific approach to the development of food standards and to regulate whole food supplements in the country.

Government for greater role of private sector in Defence Industry Government is taking steps to enhance the role of private sector in the defence industry by encouraging consortiums and joint ventures. Government wants to leverage the capabilities of private sector in the defence industry by exploring various options. These

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POLICY WATCH options include promoting consortium, joint ventures and public-private partnership. The ultimate aim is to create indigenous capabilities and achieve the aim of selfreliance in the defence sector.

Government to restructure Indian Bureau of Mines The Government has constituted a panel to revamp the Indian Bureau of Mines (IBM) to enhance its role keeping in view the projected growth in the mining sector, including increased inflow of capital. IBM would reinvent itself from being a mere regulatory authority to becoming a techno-economic facilitator for orderly growth of mineral sector. The share of mining sector to the country’s GDP which stands between 2.5% and 3%, is poised to increase substantially. The National Mineral Policy 2008 provides measures like assured right to next stages of mineral concessions, transferability of mineral concession and transparency in allotment of concessions in order to reduce delays which are seen as impediments to investment and technology flow in the mineral sector. IBM at present is entrusted with the task of promoting systematic and scientific development of mineral resources of the country through regulatory inspections of the mines, approval of mining plans and environment management plans.

MSMEs Incentive Scheme The Ministry of Micro, Small & Medium Enterprises (MSMEs), GOI in order to encourage MSMEs to adopt good Corporate Governance Practices for

improving their competitiveness, reducing

operational risk factors, overcoming barriers

to trade, successfully meeting the challenges of globalization, accessing lower cost of

finance, to create awareness among them for strengthening of accounts and audit

procedures, transformation of company’

structure, resource management, training, statutory corporate governance rating etc has decided to give one-time financial

incentive (upto Rs. 45,000 per MSME unit) who would acquire company’s structure by

adopting corporate governance or Limited Liability Partnership (LLP) framework. Further, in order to extend Marketing

Assistance & Technology Upgradation in

Charter Party Holidays 2011 15th January Saturday

Pongal

26th January Wednesday

Republic Day

1st May Sunday

May Day

15th August Monday

Independence Day

2nd October Sunday 26th October Wednesday

Gandhi Jayanthi Deepavali

and any other day which the Chennai Port Trust declares as a closed holiday

Packaging, the Government plans to bring

during the year.

different sectors like: Bakery Products, Food

Note: These Charter Party holidays will also

about modern packaging technology in

Processing, Fruits & Vegetables, Marine

be applicable to Ennore Port.

Processing, Banana Processing, Alphonso

FORTHCOMING PROGRAMMES

Foods, Edible Oil, Mango Processing, Fish Mango, Grape Packing, Fish/Plant

If you think of vision and mission as an organization's head and heart, the values it holds are its soul. - Buzotta

OTHERS

Processing to quote a few.

7th & 8th January 201

For detailed scheme, members interested are

Training Programme on Occupational

Website: www.dcmsme.gov.in or

17th January 2011

requested to visit MSME

contact Mr. M. Ali Rahman, Assistant

Director (NMCP) (Mob: 09968150445) to benefit from the Schemes as above.

Safety & Health

Programme on Intellectual Property

Rights in association with British Dy High Commission & Altacit Global 22nd January 2011

Food for Thought (FFT) Programme

10


ECONOMIC REVIEW

(for the week ended 12th December 2010)

HIGHLIGHTS ECONOMY 4

Food inflation dips to 8.69 percent

4

India April-Nov direct tax receipts up 17.85 percent Y-on-Y

4

India’s industrial output grows 10.8 percent in October

4

India’s forex earnings from tourists rise 18 percent to USD 1.45 billion in November

CORPORATE 4

Domestic car sales up by 20.79 percent, bikes 15.61 percent in November

REPORTS 4

FDI into developing countries to rise 17 percent in 2010: World Bank

4

Food Retail in India to touch USD 150 billion by 2025: KPMG

INTERNATIONAL 4

China inflation rises to 5.1 percent in November

4

Japanese unemployment rate rises to 5.1 percent

4

Brazil’s economic growth slows slightly

4

Australia’s unemployment rate drops to 5.2 percent

ECONOMY

0.5 percent.

Food inflation dips to 8.69 percent

The index for ‘Fuel, power, light &

The annual rate of inflation based on the

wholesale price index of food articles in the country plummeted to 8.69 percent during

the week ended 27 November 2010 against 8.60 percent in the previous week.

The index for ‘Primary Articles’ group rose

by 0.4 percent, the index for ‘Food Articles’ group rose by 0.5 percent and the index for ‘Non-Food Articles’ group also rose by

lubricants’ group remained unchanged at its previous week level.

India April-Nov direct tax receipts up 17.85 percent Y-on-Y.

Net direct tax receipts touched 2.17 trillion

rupees in the first eight months of the fiscal, crossing 50 percent of the government’s

target of 4.3 trillion rupees for 2010-11. Corporate tax receipts were up 22.3 percent in the first eight months of the current

fiscal to 1.38 trillion rupees, while personal income tax rose 10.7 percent to 777.7

India’s net direct tax receipts, including

billion rupees against the same period a year

17.85 percent year on year during April-

percent in October.

corporate and personal income tax, rose

ago. India’s industrial output grows 10.8

November period in the current fiscal

India’s industrial production expanded 10.8

ending March.

percent during October 2010, compared

11


ECONOMIC REVIEW Indices of Industrial Production Sectors October 2009-10 Mining 9.1 Manufacturing 10.8 Electricity 4.0 General 10.1

2010-11 6.5 11.3 8.8 10.8

A April-October 2009-10 2010-11 8.1 8.3 6.8 11.0 6.3 4.6 6.9 10.3

Source: CSO, India

with 4.4 percent growth in September 2010.

Forex earnings from foreign tourists in

2010-11 has been 10.3 percent as compared

from `4,935 crore (USD 1.01 billion) in

Cumulative growth during April-October to mere 6.9 percent growth during

corresponding months of 2009-10. The Indices of Industrial Production for

the Mining, Manufacturing and Electricity

November 2009 was up 11.9 percent November 2008.

During the January-November 2010 period, India’s foreign exchange earnings from

tourist arrivals stood at `57,850 crore (USD

sectors for the month of October 2010

12.64 billion) compared with `47,918 crore

11.3 percent and 8.8 percent as compared

period of the previous year ( January-

registered growth rates of 6.5 percent,

to October 2009. The cumulative growth during April-October 2010-11 over the corresponding period of 2009-10 in the

three sectors have been 8.3 percent, 11.0

percent and 4.6 percent respectively, which moved the overall growth in the General Index to 10.3 percent.

India’s forex earnings from tourists rise 18 percent to USD 1.45 billion in November India’s foreign exchange earnings from

foreign tourist arrivals grew to `6,516 crore (USD 1.45 billion) in November 2010 compared with `5,523 crore

(USD 1.19 billion) in November 2009,

recording a growth of 18.0 percent year-onyear in rupee terms and 22.7 percent in dollar terms.

(USD 9.88 billion) earned in the similar November 2009), recording a growth

of 20.7 percent in rupee terms and 27.8 percent in dollar terms.

Foreign exchange earnings from tourism during January-November 2009 in turn

grew (-) 5.0 percent over the corresponding period of 2008 in rupee terms and by a

negative (-) 7.6 percent in dollar terms. Foreign tourist arrivals in India during

November 2010 grew 14.7 percent year-

on-year and stood at 6.06 lakh against 5.28 lakh during November 2009, which in turn grew a negative (-) 0.6 percent from 5.32 lakh in November 2008.

Delhi airport saw an increase of 18.5

percent year-on-year in November 2010 and against a 5.1 percent growth in October 2010.

The increase of 14.7 percent in tourist

arrivals in November 2010 is higher than

that recorded in October 2010 (9.2 percent) and September (12.6 percent).

Tourist arrivals during January-November 2010 period grew 10.4 percent to 4.93

million against a negative growth of (-) 6.6 percent to 4.46 million during January-

November 2009 over the corresponding period of 2008.

CORPORATE

Domestic car sales up by 20.79 percent, bikes 15.61 percent in November Domestic passenger car sales jumped by 20.79 percent to 1,61,497 units in

November 2010, compared to 1,33,703 units in the same month last year.

According to the Society of Indian

Automobile Manufacturers (SIAM),

motorcycle sales in the country during the month grew by 15.61 percent to 7,10,182 units from 6,14,274 units in the same month last year.

Total two-wheeler sales in November

increased by 17.68 percent to 9,30,370 units from 7,90,613 units in November 2009. Sales of commercial vehicles jumped by

18.26 percent to 48,314 units from 40,855 units in the year-ago period. Total sale

of vehicles across categories registered a

12


ECONOMIC REVIEW growth of 17.81 percent to 12,21,981 units

According to the report, executives from

the same month last year.

world believe that despite the various

INTERNATIONAL

world, such as lack of finance and quality of

China inflation rises to 5.1 percent in November

in November as against 10,37,232 units in

FDI into developing countries to rise 17 percent in 2010: World Bank The foreign direct investment flows (FDI)

into developing countries including India,

is expected to recover over the next couple of years and is projected to increase by 17 percent in 2010, according to the World Bank report. According tot the report

`World Investment and Political Risk’

the net FDI inflows into the developing countries is projected to touch USD 416

billion in 2010, up from its 2009 level of USD 354 billion. Overall, FDI inflows

to the developing world continue to be

overwhelmingly concentrated in middle-

multinational companies across the

problems being faced by the developing infrastructure, the biggest worry is political risk.

The top worry of multinational executives when operating in developing countries

over the next three years is political risk, and a fifth of the investors surveyed use political risk insurance to mitigate this risk.

The report, which also focuses on FDI into

conflict affected and fragile economies, said investors there are mainly concerned about adverse government intervention rather than overt political violence as adverse

changes are often responsible for losses in these destinations.

In November, the consumer price index went up by 5.1 percent year-on-year.

The price grew by 4.9 percent in cities and 5.6 percent in rural areas. The food price

went up by 11.7 percent while the non-food price increased by 1.9 percent.

The prices of consumer goods went up by 5.9 percent and the prices of services grew up by 2.6 percent.

Grouped by commodity categories, in November, of the eight categories of

commodities, six of them experienced prices rise and two witnessed prices

decline. Of which, prices for food went up

Federation, India, and China (BRIC) alone absorbing about half.

Food Retail in India to touch USD 150 billion by 2025: KPMG

Net private flows (which include FDI and

prices for household facilities, articles

portfolio equity flows, as well as debt

Driven by the growth of organized retail

and maintenance services went up by 0.7

from private creditors) are projected to

coupled with changing consumer habits,

food retail sector in India is set to be more

percent; health care and personal articles

than double to USD 150 billion by 2025,

rose by 4.0 percent; transportationand

according to a report by KPMG.

communication went down by 0.7 percent;

India’s food retail sector, which is currently

recreation, education, culture articles and

estimated at USD 70 billion, will be more

services grew by 0.6 percent, and housing

than double in the next fifteen years,

went up by 5.8 percent.

according to the global audit and advisory firm KPMG.

Japanese unemployment rate rises to 5.1 percent

income countries, with Brazil, the Russian

rebound in 2010 and 2011, but to remain substantially lower than their USD 1.2

trillion peak in 2007. FDI prospects appear brighter for developing countries in 2010 and beyond: their economic performance

is expected to outpace that of high-income economies as their domestic demand is buoyant, the report assumed.

FDI into developing countries declined by 40 percent in the last year. FDI can

help generate and sustain economic growth and development by providing much-

needed financial resources, technology transfer, managerial expertise, and

connections to the global economy.

Despite the potential, the sector has not yet

seen sufficient investment, specially foreign direct investment (FDI). High growth in

food retail is limited by sub-optimal supply chain caused by low investment in the sector, according to the report.

by 11.7 percent; prices for tobacco, liquor and articles rose by 1.6 percent; price

for clothing went down by 0.7 percent;

Japan’s unemployment rate worsened

slightly in October 2010, as industrial

production slipped and household spending was down. The number of

employed persons in October 2010 was

62.86 million, an increase of 150 thousand or 0.2 percent from the previous year.

13


ECONOMIC REVIEW The number of unemployed persons in

employed increased by 54,600 people to

of 100 thousand or 2.9 percent from the

November. The rise in employment was

October 2010 was 3.34 million, a decrease previous year.

Brazil’s economic growth slows slightly Brazil’s economic growth slowed slightly

in the third quarter of 2010, as interest rate hikes and expiring tax cuts trimmed the

expansion from the torrid pace recorded earlier this year.

In relation to the second quarter, the Gross Domestic Product (GDP) at market

prices grew 0.5 percent considering the seasonally adjusted series. The services

11.417 million, seasonally adjusted, in driven by an increase in full-time

employment, up 55,100 people to 8.033

million that was slightly offset by a decrease in part-time employment, down 400 people to 3.384 million.

The number of people unemployed

decreased by 19,500 people to 627,800 in November, reported the ABS.

The seasonally adjusted monthly aggregate hours worked series showed a rise in

November, up 0.7 million hours to 1,603.1 million hours.

recorded a growth of 1.0 percent, while

MARKETS

percent) decreased.

by 2.29 percent and closed at 19,508.89.

industry (-1.3 percent) and agriculture (-1.5 In comparison to the third quarter of 2009, the GDP grew 6.7 percent. In this

confrontation, among economic activities, industry (8.3 percent) stood out,

followed by agriculture (7.0 percent) and services (4.9 percent).

In the accumulated of the four quarters

BSE: The 30 share BSE Sensex decreased NSE: Nifty decreased by 2.26 percent

during the week and closed at 5,857.35.

Dollar: The value of rupee depreciated by ` 0.04 against the US dollar during the

week and closed at ` 45.06 per dollar.

Euro: The value of rupee depreciated by `

0.10 against the Euro and closed at ` 59.67

ended in the third quarter of 2010,

per euro.

immediately previous four quarters. In

per 10 grams and closed at ` 20,375

growth was 7.5 percent in relation to the the accumulated of the year in 2010, in

relation to the same period of 2009, GDP

varied, up to September, 8.4 percent. GDP at current values reached Real 937.2

billion in the third quarter of this year.

Australia’s unemployment rate drops to 5.2 percent The Australian unemployment rate

decreased 0.2 percentage points to 5.2 per cent in November 2010, according to the Australian Bureau of Statistics (ABS).

The ABS reported the number of people

Gold: Prices of gold increased by ` 380 per 10 grams.

Silver: Prices of silver decreased by ` 765 and closed at ` 44,520 per kg.

Crude Oil: The Brent index prices of crude oil increased by USD 1.57 and closed at USD 88.89 per barrel.

Forex Reserves: India’s Foreign Exchange reserves increased by USD 2.411 billion

to USD 296.390 billion during the weekended December 03, 2010.

I find that because of modern technological evolution and our global economy, and as a result of the great increase in population, our world has greatly changed: it has become much smaller. However, our perceptions have not evolved at the same pace; we continue to cling to old national demarcations and the old feelings of 'us' and 'them'. - Buzotta

Source: ASSOCHAM

14


TRADE FAIRS & EXHIBITIONS 21-23rd January 2011

3-6th February 2011:

Jaffna International Trade Fair BuildMat 2011- International 2011, Jaffna, Sri Lanka Construction & Interior Fair Jaffna offers plenty of scope for industries and JIFT will create an ideal opportunity for the business community from India to meet the potential entrepreneurs and investors in the Northern part of Sri Lanka after a lapse of 3 decades. Event Profile: - Agri business and food processing - Construction sector - Food, Beverage and Packaging - Apparel and Textile - Auto products - Consumer Goods - Hospitality Products - Other products & services For further details, please contact : Federation of Chambers of Commerce & Industry of Sri Lanka Tel: 094 112304253/4 email: info@fccisl.lk website: www.fccisl.lk 3-6th February 2011

India Show, Istanbul, Turkey EEPC India, with the support of Indian Embassy at Turkey will be organizing the above Show in Turkey. The main objective of India Show is to promote India’s image and provide a platform for Indian organizations to showcase their strengths and capabilities in an emerging market and develop a country like Turkey. Hon’ble Minister of State for Commerce & Industry Shri Jyotiraditya M Scindia will inaugurate the event. Those interested in participating in India Show may get in touch with EEPC India , Trade Facilitation Centre Tel: 033-2289 0651/52/53 email: eepcho@eth.net or any of its regional offices located in Chennai, New Delhi, Kolkata and Mumbai.

Organised by the Big 3 –The Builders’ Association of India, The Indian Institute of Architects and the Association of Consulting Civil Engineers (India), this will be held at the Codissia Trade Fair Complex in Coimbatore from 3rd to 6th February 2011. Those wishing to participate in this Fair may contact the Buildmat 2011 secretariat – Tel 0422 4394536/37 Mobile 98423 79666 Email: buildmat2011@gmail.com

Trade Enquiries Germany Mr Ejaz Ahmed, Rahhaq Handels Gmbh., Wagnerstr 2, 22081, Hamburg, Germany

Economic growth without social progress lets the great majority of people remain in poverty, while a privileged few reap the benefits of rising abundance.

- John F. Kennedy

Email: razeq@cyber.net.pk and rahhaq@t-online.de Wishes to export Electrolytic tin plates, sheets and coils, tin free steel sheets and coils, tin mill black plate sheets and coils, galvanized sheets and coils and pre-painted steel sheets and coils.

Kent – World’s most reliable and accurate flow meters: For enquiries, please contact: SS Engineering Industries, C 15 Sector 7 NOIDA 201 303, UP Email: ssengg@vsnl.com website www.ssengg.com

15


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Dr Kalpana Sankar 4

3Mr K Sathianandan

Ms Bindu Ananth 4

3An enthusiastic audience


In Touch_November 2010  

4Economic Review 4General Committee Volume 25 – No.08 – November 2010 4Expert Committees 4Trade Enquiry 4Policy watch Charter Party Holidays...

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