Mumbai:Corporate biggies put prime city properties on sale

Rajshri Mehta TNN  Mumbai: Sell when the going is good, that's what the pundits say. But a few corporates and multinationals are effecting a trend reversal of sorts by selling when property sales in Mumbai have dipped. Keen on consolidating their financial position, three big companies have put their flats and commercial properties in the market.      One of them, Bishopsgate, is a five-storeyed residential building co-owned by Standard Chartered and the Hongkong and Shanghai Banking Corporation Ltd in upscale Breach Candy. Located opposite the Breach Candy club, the building is spread over 2,075 sq metres or approximately 22,000 sq ft. Its market value: a cool Rs 300 crore. Senior bank executives, including the chairman of HSBC, currently reside in the 20-odd flats of 3,000 sq ft each.      Citibank, a leading USbased bank, recently put up for sale a 3,000 sq ft flat in Usha Kiran building on Altamount Road for an estimated price of Rs 18-20 crore. 'Renting a flat works out cheaper than buying it'  Mumbai: Property sources say Citibank is likely to put its 2,500 sq ft apartment at Il Palazzo on Malabar Hill back in the market later in the year. It may be recalled that former BJP MP and actor Vinod Khanna had quoted an astounding Rs 1.25 lakh per sq ft for the flat, but the deal fizzled out later.      HSBC and Citibank officials refused to comment on the properties that are being put on the block.      Property consultants are not surprised by the move. "The reason simply is to show a healthy balance sheet. There is no point in blocking assets worth crores of rupees in maintaining a property. In the current environment, renting an apartment works out to be much cheaper than outright purchase," said Pranay Vakil, chairman of Knight Frank. "It's the newer properties where one notices sluggish sales because of their high rates. We are noticing a trend of buyers looking at old properties with a substantial number translating into sales. Not surprising then that corporates who own flats in such good buildings are putting them in the market," said a veteran property broker in the area.      Hindustan Unilever Limited too has put on the block two seven-storeyed buildings: their former headquarters at Churchgate and Gulita, a training centre at Worli seaface. Three lending institutions—State Bank of India, Bank of Baroda and a large non-banking finance company—are said to be frontrunners for the Churchgate building. Spread over 1.54 lakh sq ft, the property is said to be worth approximately Rs 500 crore in the open market.      Worth about Rs 300 crore if sold in the open market, theWorli sea-face property is little under an acre at approximately 40,500 per sq ft. Ten to twelve well-known developers like Sheth, Peninsula, Wadhwa, Runwal, Lodha and Ajay Piramal are learned to have submitted bids for the property. In their bid document, HUL has proposed to sub-lease the property for anything between 30, 60 or 90 years. There is also an option to quote a price for outright sale.      Property consultants believe the HUL deal for Gulita will take a long time as the bid conditions are quite complicated. "This is a BMC leasehold land. Though leased on perpetuity, HUL will have to pay 50% of what it earns from the sale price to the civic body. It is a case similar to the Glaxo property which was purchased jointly by Vikas Oberoi and ICICI Ventures. HUL wants to avoid paying this sum and has therefore, come up with this unique sub-leasing concept which involves the successful bidder paying advance rent for a stipulated period," said a senior property consultant. Bishopsgate, at Breach Candy, is co-owned by HSBC and Standard Chartered Bank. The 5-storeyed building has a market price of nearly Rs 300 crore The market price for Gulita, a seven-storey building owned by Hindustan Unilever Ltd on Worli sea-face, is estimated at Rs 300 crore

Home & auto loans to pinch more as RBI raises key rates 50 bps; corporates frown on move

Subbarao Takes a Giant Leap of Faith, Leaves All Stumped Reserve Bank of India Governor Duvvuri Subbarao took a leaf out of his predecessor YV Reddy's book to shock investors and industry by raising interest rates double the expected to 'maintain the credibility', but it will blow a hole in household budgets and corporate balance sheets. Funding cost of nearly everything from homes and cars to building roads and utilities will climb. But a demand slowdown may temper future price rises and help sustain a stable economic growth over the long term. YES Bank took the lead in hiking rates, and others said they would follow soon. Stocks and bonds fell, but the rupee rose against the dollar expecting overseas investment in highyielding fixed-income securities.  Inflation forecast was raised as the flawed pricing of petroleum products, coal and agricultural products could strain government finances and have the potential to worsen inflation. If softening global commodity prices reverse, or the monsoon falls short of requirement, prices could shoot up.      There is a need to continue with a 'firm anti-inflationary' stance as there is 'no evidence' of a sharp slowdown in the growth momentum as claimed by industry, said the central bank. Supply bottlenecks also need to be resolved if prices have to cool, it said, pointing to little help from the government in fighting prices.  "The Reserve Bank of India has sought to give a strong signal to further moderate inflation and check inflationary expectations," said Finance Minister Pranab Mukherjee. "With this policy adjustment, we will be able to get back to a more comfortable inflation situation."  Subbarao raised the repo rate—the rate at which he lends to banks—for the 11th time, by 50 basis points to 8%. The reverse repo—the rate it pays banks for investing excess funds with it—was raised by the same amount to 7%. The penal rate on lending to banks under the Marginal Standing Facility is up at 9%. Inflation forecast has been raised to 7% with an upward bias and non-food loan growth forecast lowered to 18% from 19%. A basis point is 0.01 percentage point. Economic growth rate is maintained at 8%. Cash reserve requirement and statutory liquidity ratio, however, remain unchanged.  Low & Behold the High Rates!  Although the RBI has raised interest rate for the 11th consecutive time starting March 2010, it doesn't mean a higher cost of capital—in real terms  Savers are earning negative returns: 1-year FD with SBI fetches 9.25%, whereas inflation in June was 9.44%—a negative interest of 0.19%  Borrowers  are getting money cheap too:  Prime borrowers are still getting funds at almost negative real interest rates--SBI's base rate is 9.5%  Savers are  subsidising  borrowers: Interest rates need to rise to provide positive inflation adjusted returns to depositors  Find funds abroad:  Businessmen are free to borrow from abroad at lower nominal interest rates. Companies borrowed $4.7b abroad in April-May  RBI's enemy is inflation:  Reserve Bank's mandate is to fight inflation even if it means sacrificing some growth  Government  isn't exactly helping: The ballooning public spending and subsidies are nullifying some impact of monetary tighteningINTEREST COSTS ARE NOT HURTING YET :Companies can absorb the increase in cost of capital without worrying about pressure on margins RBI ACTION AFFECTS BOTH INDIVIDUALS & INDUSTRY Home Prices to Fall on Costlier Loans Property prices are expected to correct around 20% following another round of tightening by RBI. Sensex Slumps 353 Points on Rate Hike The Sensex fell the most in more than a month after the rate hike, shedding 353 points to 18,518. Policy Actions Needed to Sustain Growth: RBI  "It is important to recognise that in the absence of appropriate actions for addressing supply bottlenecks, especially in food and infrastructure, questions about the ability of the economy to sustain the current growth rate without significant inflationary pressures come to the fore," the RBI said in the statement reviewing monetary policy for the June quarter. "The economy's ability to grow rapidly for any length of time without provoking inflation is dependent on implementing policies, with corresponding resource allocations, which will allow the supply of various products and services to keep pace with demand."  The central bank's move is contrary to market expectations. All the 15 economists and treasurers polled by ET were for a 25-basis-point increase and moderation in tone about future increases. Industry, including Ratan Tata, chairman of Tata Sons, was for a pause since economic expansion may stall. But the policy handed out the opposite of it. Inflation as measured by the Wholesale Price Index was 9.44% in June, and it possibly was above 10% given the upward revisions in the past.  The benchmark BSE Sensex slumped 1.9% to 18,518.22. The yields on 10-year benchmark government bond rose 14 basis points to 8.43%.The rupee closed at 44.18 per dollar against the previous close of 44.39 per dollar.  "Early corporate results for Q1 of 2011-12 suggest some moderation in margins," said Subbarao. "However, such moderation so far has been modest, implying that pricing power persists."  Hero Honda's net sales grew 32.3% in the June quarter and net profit rose 14%. Reliance Industries' revenue rose 37% and profit climbed 17%. Among lenders, HDFC Bank's net interest income grew 16% and profit after tax advanced 34%. Interest outgo as a proportion of sales for BSE 500 companies fell in FY11 to a three-year low of 10.1%, from above 11% in fiscal 2009, an ET Intelligence Group analysis shows. Corporates are not happy as their borrowing costs will go up as banks raise lending rates.  "Increase in lending rates is inevitable,'' said Deepak Parekh, chairman at Housing Development Finance Corp, the country's biggest mortgage lender. "At HDFC, we will review rates within a month. No institution can absorb a 50-bps rise in rate. It was unexpected. Indian industry is becoming uncompetitive, with high interest rates, high wage cost and rising raw material cost. This will be a big issue."  Industry has been lobbying for a pause in rates since there is a slackening of demand as captured in the Index of Industrial Production numbers, which the RBI does not trust and has termed 'analytically bewildering'. IIP grew 5.7% in April-May 2011, lower than 10.8% a year earlier, but these numbers have been erratic. Merchandise trade, however, registered strong growth with exports surging 46% in theJune quarter.  For 2009-10, the advance estimate of GDP growth at market prices from the expenditure side, which came out in February 2010, was 6.8%. That was changed to 7.7% in the revised estimate in May 2010, and again to 9.1% in the quick estimate in February 2011. Initial WPI estimates for were 8.2% and 8.3% for January and February, respectively. Both were raised by 120 basis points later.  Although the rate hike looks steep, some economists believe it may possibly be the end. "With this move, the RBI has significantly surprised the market with the rapidity and extent of its rate hikes," said Tushar Poddar, economist at Goldman Sachs. "Having burnished its anti-inflation stance, we believe there is little need for the RBI to hike further to enhance its commitment to fighting inflation and keeping medium-term expectations anchored."  Planning Commission Deputy Chairman Montek Singh Ahluwlia said the RBI's policy move was not improper. "You do need to send signals and if the situation improves, he can reverse the position later. It (the decision) is bound to be effective in controlling inflation," he said.  The next mid-quarter monetary policy review will be on September 16 and quarterly review on October 25. Govt Must Now Show Will to Act  Inflation hurts the poor, chokes growth and has to be contained. But is squeezing demand the only means to that end? The RBI does not think so. It would like the government to channel investment, directly or through decisive, clearheaded policy, to increase supply in key sectors such as milk, pulses, vegetables and coal. At the same time, government consumption should be contained, to curb fiscal deficit. If the government does not show sense or the will to act, the RBI has no choice to hike rates further — this is the message from Mint Street. The government should take heed, denationalise coal, invest in rural roads, free up agri marketing, and slash oil, fertiliser and power subsidies. The RBI cannot, need not, battle inflation on its own.

Global Investors Have Confidence in India Story, Says Pranab

For once, it was not Pranab Mukherjee in the firing line. At a joint press conference with UK chancellor George Osborne, ostensibly about the UK-India relationship, Mr Mukherjee adroitly avoided any mention of the dread word Murdoch, despite a pointed question, even as his British counterpart was on the backfoot about his dinners with Mr Murdoch, his economic policies, and his differences with business secretary Vince Cable. 

Ostensibly, the conference was to highlight over £1 billion of UK-India deals since David Cameron's visit to India last year and some head-nodding about the uncertain state of the global economy and the risks it faces. But the headline deals mentioned include BP-Reliance and Essar Energy's buyout of Shell's Stanlow refinery, all of which are old hat. So both ministers were in the unenviable position of fielding scam and corruption-tainted queries from their respective media contingents — as Mr Osborne remarked to Mr Mukherjee at the start — "I told you we wouldn't get any questions on the UK-India relationship." Denying the perception that the Indian government is in a decision-making paralysis, the finance minister pointed out that in the past three months, FDI proposals into India were at $7.9 billion, almost double that in the same time last year. "It shows that international investors have confidence in India," he said, never mind any number of scams. George Osborne, who faces the prospect of either a shrinkage or a further flatlining in the quarterly UK GDP figures due out Tuesday, defended his coalition's policies, and said he was sticking to his austerity measures, despite business secretary Vince Cable openly calling for further stimulus. That is, when he was not defending his meetings with the Murdochs. 
Mr Mukherjee also said that the Indian government will have to take drastic action to bring down fiscal deficit from the 2010-11 levels of 4.7% in the next couple of years.

British FM George Osborne with Indian FM Pranab Mukherjee in London on Monday

Tenant Mahindra to Buy Out City Bungalow for 270 cr

Group arm to buy Nepean Sea Road property where Anand Mahindra was born

The Mahindra Group's real estate arm will pay close to . 270 crore to acquire a three-storey bungalow on south Mumbai's Nepean Sea Road in which Vice-Chairman and Managing Director Anand Mahindra was born and lives as a tenant. 

The bungalow, named Gulistan, occupies around 13,000 square feet of land opposite Priyadarshini Park and is owned by a special purpose vehicle set up by one of Mumbai's top builders, Orbit Corporation. Rishi Gagan Trust, whose beneficiary is businessman Om Navani, also has a small stake. Navani had bought the bungalow from an earlier owner in the early 1980s while Orbit acquired the property in 2008. 
Arun K Nanda, chairman of Mahindra Lifespace, the real estate arm, said his company has signed a termsheet, or a preliminary agreement, with the current owners and made an advance payment of . 11 crore. 
"The company has a 90-day window to complete due diligence and complete the transaction," he said. It will have to come to a settlement with its co-tenants that include Bank of Maharashtra, which operates its Nepean Sea Road branch from the premises. Nanda, who became non-executive chairman of Mahindra Lifespace in March 2010 after Mahindra stepped down as chairman, also said the deal amount was not . 270 crore.

Anand Mahindra's Gulistan

Serial Blasts Rip Through Zaveri Bazar, Opera House & Dadar During Evening Rush Hour 21 Killed In Terror Strikes

YET AGAIN

Serial Blasts Rip Through Zaveri Bazar, Opera House & Dadar During Evening Rush Hour 21 Killed In Terror Strikes, Many More Fight For Life

Team TOI 

Mumbai: No other city in the world has been the tragic target of as many serial terror attacks and bombings as Mumbai: 1993, 2002, 2003, 2006, 2008 and now July 13, 2011. On Wednesday evening, three serial bomb blasts in the span of 12 minutes ripped through three of the busiest hubs in the city—Zaveri Bazar, Opera House and Dadar—at rush hour, killing 21 
people and injuring 130. 
    The first explosion was at 6.54 pm at Zaveri Bazar, followed by another at Opera House a minute later.The third explosion was at 7.06pm outside Kabutarkhana, a few metres away from the western side of Dadar railway station.This is the third terror attack at Zaveri Bazar. 
    The high explosives with timer devices were kept on or near vehicles at Opera House and Zaveri Bazar while at Dadar a bus stop was the target. Police said that the three locations,two of which were khau gallis, had been chosen for maximum impact.Police chief Arup Patnaik said it was a terror attack. 
    While the police have not named any outfit responsible for the blasts, sources say that it could be the handiwork of a banned outfit, the Indian Mujahideen (IM), which recently formed a group called the 313 Squad and has been recruiting youngsters to it. Security agencies suspect the use of ammonium nitrate in the blasts.Splinters of nuts and bolts, which were used in the bombs, were found and removed from the injured. Police had reportedly zeroed in on a CCTV camera near Opera House but later found that it was damaged in the blast. 
TIME AFTER TIME 
Mar 12, 1993: 11 blasts in city. 257 dead, 713 hurt Jan 23, 24 & 27, 1998:Blasts on tracks/stations at 6 locations across city. Four killed Dec 2, 2002:Explosion in BEST bus at Ghatkopar. Two killed Mar 13, 2003: Blast on Karjatbound train in Mulund. 11 killed Aug 25, 2003: Blasts in taxis at Gateway, Zaveri Bazar. 52 dead July 11, 2006: 7 blasts in 7 locals in 7 minutes. 188 killedNov 26-29, 2008: LeT strikes at CST, the Taj, Oberoi-Trident and Chabad House. 166 killed

NOT AGAIN: Victims of the Zaveri Bazar blast are rushed to GT Hospital in a tempo

TATA- AIR POWERED CAR IN INDIA

Air Powered Car Tata Motors is ready to introduce Air Car - Will it be the next  big thing?Tata Motors is taking giant strides and making history for  itself. First the Land Rover/Jaguar deal, then the world's cheapest car, and  now it is also set to introduce the car that runs on compressed air. With spiraling fuel prices it is about time we heard some breakthrough! India's largest automaker, Tata Motors, is set to start  producing the world's first commercial air-powered vehicle. The Air Car, developed by ex-Formula One engineer Guy N'gre  for Luxembourg-based MDI, uses compressed air, as opposed to the gas-and-oxygen  explosions of internal-combustion models, to push its engine's pistons. Some 6000  zero-emissions Air Cars are scheduled to hit Indian streets by August 2011. The Air Car, called the "MiniCAT" could cost around Rs.. 3,47,523/- ($8,177.00) in India and would  have a range of around 300 km between refuels. The cost of a refillwould be about Rs. 85($2..00) The MiniCAT which is a simple, light urban car, with a tubular chassis that is glued, not welded, and a body of fiberglass powered by compressed air. Microcontrollers are used in every device in the car, so one tiny radio transmitter sends instructions to the lights,indicators,etc. There are no keys -  just an access card which can be read by  the car from your pocket. According  to the designers, it costs less than 50  rupees per 100 Km (about a tenth that of a  petrol car). Its mileage is about  double that of the most advanced electric  car (200 to 300 km or 10 hours of  driving), a factor which makes a perfect  choice in cities where 80% of motorists drive at  less than 60 Km. The car has a top  speed of 105 Kmph. Refilling the car will, once the market develops, take place  at adapted petrol stations to administer compressed air. In two or three minutes,  and at a cost of approximately 100 rupees, the car will be ready to go another  200-300 kilometers. As a viable alternative, the car carries a small compressor  which can be connected to the mains (220V or 380V) and  refill the tank in 3-4 hours. Due to the absence of combustion and,  consequently, of residues, changing the oil (1 litre of vegetable oil) is  necessary only every 50,000 Km). The temperature of the clean air expelled by the exhaust pipe is  between 0-15 degrees below zero, which makes it suitable for use by the internal   air conditioning system with no need for gases or loss of power.

Chennai pips Mumbai in home loan race Tier-II Cities Drive HDFC Growth: Parekh

 It's been almost 18 months since Deepak Parekh moved on from becoming executive to non-executive chairman of HDFC. Despite the move, Parekh continues to have his finger on the pulse of the economy and the company. And why not? Apart from captains of industry, even the government pays attention when he speaks. It's small wonder then that he is on some of the most important committees formed by the government on segments like financial inclusion, infrastructure, real estate or manufacturing. In an interview to TOI, he spoke of how jobs could be threatened with the slow pace of manufacturing activity as well as how the housing loan market continues to grow in healthy double digits, driven by cities outside the metros. Excerpts. 

There is a lot of talk about a slowdown in economic activity yet areas like home loans are showing good 
growth. Is there any cause for concern? 
    It is certainly a worry. Because of inflation and higher interest rates, the tempo of sales growth has been affected. You can see the slowdown in auto and auto ancillaries. Besides sales, margins are also down by a few basis points because manufacturers are not able to pass on to customers the higher cost of inputs—be it freight, materials or steel. While we can still aim at a 7.75% to 8% growth, we need more manufacturing because if we don't where are the jobs going to come from? No one is talking about new factories. Those wanting to do so are getting delayed either because of not getting an approval or land trouble. Basically, there is uncertainty and uncertainty leads to a slowdown. Yesterday I met a top industrialist who told me; 'I don't want to set up a new project because I don't know when will it be completed'. 
What is causing this uncertainty? 
    It is just lack of decision by bureaucrats and politicians. The media has created so much of a scare that honest people are scared to take a decision. There is total paralysis in policy. My hope is that there is this ministerial and bureaucratic change that has happened and is happening…and this will lead to quicker and more transparent decision making. I am sure there will be a huge cleansing effect because of what has happened. Today we have politicians, businessmen, bureaucrats, government employees, professional accountants, managers all in jail. Both the giver as well as taker of bribe is inside. So the giver of the bribe will be more cautious now. 
What is the trend in real estate prices and loan disbursements…Are high 
prices deterring buyers? 
    Prices have not gone up so much in smaller cities. There is a huge growth in tier-two cities. Today our business in Chennai is bigger than that in Mumbai. Chennai has overtaken Mumbai and ranks as the second largest market after the National Capital Region in loan applications. Hyderabad boomed a little but last year because of the Telangana issue, business is a bit slow. Pune and Ahmedabad, however, continue to grow. 
Have real estate prices 
peaked? 
    Real estate prices have stabilized. Builders may not have brought it down but they are not increasing prices. It depends on their holding power. If RBI keeps hiking rates, automatically the demand will come down. 
What is your take on the 
RBI's policy paper on holding companies? 
    There are certain issue like stamp duty and taxes. There is a stamp duty implication on transfer of assets and there is the issue of a 17% dividend distribution tax that is payable at every level. These are not part of RBI's mandate and they will have to convince CBDT and revenue department. Things like that need to be done to make the report on financial holding companies workable. 
Would HDFC continue to infuse capital in HDFC Bank to retain stake? 
    The last time we invested Rs 4,000 crore in the bank was when they raised capital for the merger of Centurion Bank. I don't see them needing capital for the next two and a half years. We will address the problem when we come to it. 
HDFC also has large investments which were to be transferred into a special purpose vehicle to realize value… 
    We first thought of doing a separate SPV but it was time consuming and there were conditions on our investments so we did not go ahead. But we have sold several of our unlisted companies—we sold IL&FS, we sold our investment in Lafarge and we sold stake in Intelenet. We also sold our holding in Siemens at 30% premium to market price in response to their open offer. The sales 
were either because we felt the investment had peaked or because something had happened which was detrimental to our holding. So it is circumstantial and there is no compulsion to sell every quarter. 
When will your real estate fund book profits? 
    We have many real estate funds—domestic and international. In our Rs 1,000-crore domestic fund, we aim to repay Rs 1,000 crore by end-September so that at least the principal is paid back to investors which include SBI and other institutions. We will divest the remaining holding in future years when we get an opportunity. It's too early to talk about returns but we are targeting 15-20%. 
What about HDFC's foray into education? 
    We are still discussing. We have not decided how to go about the subsidiary. It is still premature as we do not have board approval yet. Vocational is one thought because we are convinced about the need in information technology, ITes, travel and tourism, which would help in skills upgradation.

Deepak Parekh | CHAIRMAN, HDFC

India IT Biggies to Post Top-Dollar Sales

Top 4 cos expected to report sequential growth of 4-6% in dollar-denominated revenues

SHRUTI SHARMA & RANJIT SHINDE BANGALORE |MUMBAI 

The top four listed IT companies are expected to report sequential growth of 4-6% in dollar-denominated revenues during the quarter ended June 30, 2011, better than the lukewarm growth of 2-4% in the previous quarter, as demand stays strong in the key markets of Europe and North America. 
The profitability of some companies, including TCS and Infosys, the two largest IT players, could face marginal pressure due to wage hikes, but overall profitability of the sample group of companies is expected to remain intact with some marginal improvement expected from Wipro, as per estimates by ET Intelligence Group. TCS, India's largest software company, and Shiv Nadar-controlled HCL Technologies, the fifth largest, are likely to be the biggest beneficiaries of the IT outsourcing demand. According to ETIG estimates, investors can expect a 5-7% sequential topline growth from these companies during the June quarter. 
Infosys and Wipro, the secondand third-largest IT companies, are likely to experience higher revenue growth than the previous quarter, but may continue to lag behind their peers. 
Infosys, which will kick off the first-quarter results season when it declares its numbers on July 12, is expected to beat the upper end of its guidance. The company has guided for sequential revenue growth between 2.6% and 3.6% in dollar terms. But the average of the estimates of seven brokerages is higher. They predict a 4-5% revenue growth in the June quarter. Wipro may Beat Guidance 
The company is expected to raise its full-year dollar-denominated revenue guidance from 18-20% by 50 basis points. 
TCS is expected to reap the benefits of strong demand, especially in the BFSI segment, with around 6-7% sequential growth while HCL Technologies is likely to clock a similar growth backed by benefit from strong infrastructure spending to see a quarter-on-quarter revenue growth of 6-7% in dollar terms. 
Wipro is expected to beat the upper end of its guidance with a sequential revenue growth of 2-2.5% in dollar terms. Investors would also be keen to gauge the future demand scenario in the backdrop of the uncertainty hanging over the world economy in the wake of the Greece debt crisis, and an apparent weakening of US growth. 
In a report that was widely reported, brokerage firm CLSA spoke of a deceleration in new contracts. The report, which was issued last month, expressed concerns over the growth momentum of top IT players after taking into account the delay in economic recovery in the US and Europe, the major markets for Indian IT companies. These markets contribute over three-fourths of India's IT exports. 
Other industry analysts reckon that demand is likely to remain firm despite the macroeconomic woes of the West. Last week, research firm Gartner said it expects global spendon IT services to grow by 6.6% in 2011, more than twice as fast as in 2010. The firm had earlier predicted 5.6% growth for 2011. 
The views on future demand among sector players are mixed, though. Infosys CEO and MD S Gopalakrishnan was cautious while speaking to ET early last month on discouraging economic data from the West, "The business environment remains volatile with decisions being delayed or postponed frequently. This may impact the IT services business broadly, or by industry, or by customer," he had said. 
But is appears to be business as usual for Wipro. "We haven't heard any concerns during our discussions with customers so far. We also expect sustained demand for our services and continued growth momentum in the coming few quarters," CEO TK Kurien had told ET before the company's silent period. TCS also reiterated its stance of sustained client funding and smooth project ramp-ups in an investor communiqué in June. 
Attrition is likely to remain high for most companies as most of the movement happens during this quarter and employees also leave for further studies. The top four players are trading at P/Es of 18-25 of their FY12 estimated earnings. This fully takes into account the expectations of sustained demand recovery in the quarters to come. Therefore, the valuations of top players are likely to remain range-bound until a major trigger in terms of escalated volume growth coupled with higher billing rates.

‘In India, to do Well, don’t Talk About the Poor’

Jean Drèze, until recently the intellectual driving force behind the National Advisory Council, is measured but unmistakable in his disenchantment with many current UPA welfare schemes. The economist who quit the Sonia Gandhi-led NAC in late June, won't comment on whether the UPA government has failed the NAC. But, he tells Ullekh NP, there's not enough empathy in the Indian establishment for the poor. Programmes like NREGA, he says, attract the hostile attention of both employers and government officials

Why did you not want Sonia Gandhi to extend your membership at the NAC? Has she replied to your letter? 
I had agreed to join the NAC for a limited period of one year. Having done what I had agreed to do, I felt that the time had come to return to other commitments that are closer to my heart. Ms Gandhi has kindly agreed to release me. 
What are your worries about the proposed Food Security Bill which sets aside a huge sum of money for the purpose of "feeding the poor"? 
My main concern is that the proposed framework for the public distribution system (PDS) is confused, impractical and divisive. The whole framework is based on a division of the population into three groups (excluded, general and priority), without any clarity as to how these groups are to be identified. By default, the "priority group" is likely to be equated with the below the poverty line ( BPL) list. This is a major setback, because the NAC's work began with an almost unanimous rejection of the BPL approach. 
Is India's "self-sufficiency" in food production a joke? 
It is not quite a joke, but the apparent selfsufficiency certainly reflects low levels of food intake, in quantitative as well as qualitative terms. For Indians to eat like the Chinese, let alone the Germans or Canadians, there would have to be a lot more food around. For instance, vegetable consumption was recently estimated to be more than twice as high in China as in India, and meat consumption eight times as high. In the age group of 4-6, average nutrient intake as a proportion of the Indian Council of Medical Research's "recommended daily allowance" is only 16% for Vitamin A, 35% for iron and 45% for calcium. 
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA; formerly called NREGA) has had many ups and downs in the past five years. What is your assessment of the future prospects? 
NREGA is going through a phase of enhanced vulnerability, when workers' organisations to defend it are yet to be formed, while hostile forces are gaining strength. Among the hostile forces are employers' lobbies, concerned with the rising or allegedly rising cost of labour. In many states, the local administration is also turning hostile, because NREGA means extra work, more accountability, and no easy gravy. In Jharkhand, where there is no concept of government employees doing anything without inducement, I am told that narega marega(NREGA will die) has become a popular slogan in sarkari circles. This happened after the transition to bank payments of wages, when the corruption tap was tightened. Perhaps the greatest vulnerability is the loss of interest on the part of many NREGA workers, due to prolonged delays in wage payments. Of course, millions of people still have a very strong stake in NREGA. But this needs to translate into organised collective power if the programme is to survive and thrive. 
What are you currently working on? Are you pursuing any new interests? 
My current interests are quite enough for a lifetime. But if possible, I would like to contribute to the democratisation of social sciences, including development economics. In my view, the "expert monopoly" of social sciences has done a lot of damage. Fortunately, with the spread of communication facilities and growing possibilities of associational life, a large number of people are getting involved in collective thinking. 
You have famously opposed the creation of Natgrid. What are your major concerns? 
I don't remember opposing Natgrid, let alone "famously" opposing it. But I'm pretty sure that I would oppose it if the details of the project were in the public domain. I am opposed to the concentration of power in general, and of state power in particular. Naturally, this makes me very suspicious of Natgrid, which seems to be part of the move towards permanent state surveillance of all citizens. It is amazing how all the good libertarians who constantly bash the state in the business media watch this without a squeak. 
Is there conspiracy of silence on the part of the government when it comes to implementing pro-poor initiatives? 
There is certainly too little discussion and public debate of poverty and related issues in India. But it is not a conspiracy, and nor is it confined to the government. It is a reflection of the control of democratic institutions by privileged classes. If you want to do well as a minister, or a journalist, or a lawyer, talking about the poor is hardly the way to go. 
How do you rate Poor Economics, by Abhijit Banerjee and Esther Duflo, which has quoted your work quite extensively? 
Judging from the reviews, it seems to be a great book. I am hoping to find out why after reading it.

Jean Drèze 
Born 1959 

• A development economist of Belgian origin 

• An Indian citizen, Drèze has taught economics at institutions like LSE and the Delhi School of Economics 

• Currently visiting Professor at the GB Pant Social Science Institute, Allahabad

• Drafted the original version of the MGNREGA 

• Until recently a member of the National Advisory Council