Friday, August 11, 2006

Hutch - Essar spat

Essar calling off the sale of BPL Mumbai circle operation to Hutch does not make much sense. Hutch has contested the decision and the Mumbai High Court has asked them to go for arbitration. So something amicable may be worked out here.

Essar is, after all, a partner of Hutch in the joint venture. Essar's attempts therefore looks more like an attempt by a peeved partner to cause serious hurt to Hutch, rather than well measured business decision.

In the mobile space in India, Bharti and Reliance have zoomed ahead. Bharti has had the least of problems. Reliance had trouble when Mukesh and Anil Ambani fought amongst themselves. Now that there is some degree of resolution there, Reliance is forging ahead.

If Hutch had worked out an aggressive strategy it could have reached number two position. Instead, now, it is in a distant fourth position (with BSNL/MTNL combo at number 3), and Idea, Tata Telecom both hot on its heels behind. Others including Maxis owned Aircel will be aggressively snapping up the new users in the 'C' circles.

Essar who has substantial stakes in Hutch Essar JV should realise that a stronger Hutch Essar, when it goes IPO will offer higher premium per share in the stock markets. You don't get a premium when you are number 4. Both number 1 & 2 are listed entities. Idea and Tata Telecom are well funded, but not strong enough brands compared to Hutch. But if Essar continues to harm the JV, Hutch will be left behind, thereby robbing Essar of valuble wealth.

Monday, August 07, 2006

Economic Times on banks lending to rural folks via moneylenders

Today's The Economic Times has an article titled Banks eye money lenders to give cheaper credit to farmers.

The article suggests that Banks cannot easily lend to the rural people because they do not reach the rural folks. What was unstated was also that Banks are afraid of lack of securitisation. So they are looking at village moneylenders, whose combined reach is great. So the banks are looking at somehow regulating them. Apparently a group has been constitued comprising of "six senior RBI officials and a senior bureaucrat each from of Bihar, Rajasthan and Andhra Pradesh" to take a look into using the moneylenders as conduits for reaching money to the needy farmers.

But then moneylenders are known to charge atrocious interest. "However, the money lenders have to be regulated so that they do not overcharge farmers" says one member of the group, according to ET.

I do not know whether this is a good method. Indian central bankers need not have to look at this solution at all. Grameen Bank in Bangladesh has already demonstrated over two decades, what can be achieved by direct micro and mini credit without any mortgage or security whatsoever. Grameen Bank is reaching millions of people - more than 90% are women. Grameen Bank has been successful in cutting out the local moneylenders who are basically exploitative.

How can regulation help change the moneylenders' behaviour overnight? Why should the moneylenders take money from banks and offer the same at low interest to the farmers (and others) when such a business will be entirely against their existing business where they are making substantial income, by charging 10% or more interest per month?

India has not bothered to copy a successful model such as Grameen. Instead we are offering a pale imitation in the form of Self Help Groups (SHGs) where the group is forced to save money first and then borrow from within that group fund so collected. There may be minimal topping-up over the savings at best. The banks do not care much about the SHGs. That job is left to various NGOs. The state governments step in and pay some compensation to the NGOs for starting up new groups.

From what little I have learnt about the SHGs in India, they are in no way comparable to the Grameen experiment.

I would suggest that what India needs is three or four banks in the mould of Grameen Bank, operating in various parts of the country. One each for each zone - perhaps. The Banks can simply be identical copies of Grameen Bank. Like in the case of the Grameen Bank, it is advisable to keep the Government out of the Bank so that Government does not get into one of its debt write-offs every once in a while for the sake of votes. Government, at best, should have only 20-25% equity in such a bank. The rest of the equity should be with the participating women, and other funders. There is also enough of an opportunity for private banks to start this kind of a venture.

It would be better to stay away from using the moneylenders.

Sunday, August 06, 2006

Lok Sabha question on sporting telecast rights to Doordarshan

Minister of I&B Priya Ranjan Dasmunshi, while answering a written question in Lok Sabha has said as below:
The Government has no proposal to set up a Regulatory Authority to monitor and regulate the earnings through telecasting of sporting events. However, the Government is contemplating the establishment of an autonomous authority to regulate Broadcasting sector.

Also there is no proposal to give Doordarshan the sole right of telecasting the sports events organised in the country. However, the Government has issued an order on 5th April, 2006 vide which live feeds of a number of specified sporting events of national importance held in India or abroad are required to be shared with Prasar Bharati with immediate effect by sports channels/sports management companies having television broadcasting rights for broadcast on their terrestrial and DTH networks. In case of cricket events, these shall include all matches featuring India and the finals and semi finals of international events.
It is however surprising that the Minister did not inform the members of the Parliament that Doordarshan and Ministry of I&B have been taken to the judiciary a few times and the judiciary has found no reason to uphold the Government Order of 5th April 2006.

It is also surprising that there were no follow-up questions on why such an executive order was sent out rather than contemplating a proper legislation, what the Ministry is proposing to do about the Ten Sports issue, whether the GO is fair or not, what have the International sporting bodies - in particular the ICC - conveyed to the Ministry of I&B etc.

This is the quality of debate in Lok Sabha. This is the quality of our representatives in the Parliament.

Saturday, August 05, 2006

Ten Sports continues to defy the Indian Government

Ten Sports has been the only channel consistently taking on the Government of India and Prasar Bharati, the Govt. controlled television channel, when it comes to sharing of sporting telecast rights.

In November 2005, the Ministry of Information and Broadcasting issued a policy guideline for Cable operators and Television Channels operating in India that certain notified sports events must be shared with the Govt. owned Doordarshan, only on a revenue sharing basis. Worse, the guidelines were applicable to several events for which the telecast rights were acquired long back.

This was done primarily because Doordarshan was losing out on the lucrative cricket rights. While Doordarshan knows it can make a lot of money from cricket, it doesn't have the ability and money to compete fair and squarely in the rights market. So it used a backdoor method.

This infringes heavily on the rights of private Telecasters and their ability to make money. However other channels did not care much. ESPN - Star Sports, Zee Sports and various other rights holders including Nimbus did not take the Govt. head on.

Only Ten Sports did. Ten Sports owns cricket broadcast rights to events happening in Pakistan, West Indies and Sri Lanka. Ten Sports consistently challenged the Ministry and Prasar Bharati. In the case of Indian tour of Pakistan in early 2006, Doordarshan backed out of Tests but the ODIs were telecast across both the channels after Doordarshan was forced by the Courts to pay a fixed fee for showing the 'dirty feed' (namely the Ten Sports feed with all the Ten Sports advertisements and logo) without any alterations whatsoever.

Basically the Courts called Doordarshan's bluff on 'public service'. Doordarshan kept claiming that its intentions were noble and not money, and that it wanted maximum number of people to receive the broadcasts. So the Courts ruled that Doordarshan shall show the Ten Sports feed without any alteration and not make money out of any advertisements. Doordarshan also tried showing a pre-match, post-match show, which was also stopped by Ten Sports by going to Courts.

Thus, badly mauled by the legal set-up in India, Doordarshan stayed away during the Indian tour of West Indies. Public service did not come in to the picture, since the matches were in the middle of night.

Now that matches are being held in Sri Lanka in broad daylight and prime time, Doordarshan has dusted and brought back to life 'public service'. Ten Sports, as usual, went to Supreme Court, where the bench is finding Ten Sports' claims perfectly valid.

The impugned guidelines from Ministry of I&B are so pathetic, the Courts are repeatedly smashing them. It has become so much of an embarassment for the Government. The Govt. has avoided bringing a legislation and has used the Ministerial guidelines to impose something as major as controlling the event telecast rights and curtailing the freedom of operation of private enterprises. Even if they try a legislation, there may not be a sensible debate on this issue. Majority in the Parliament will be used to force a 'bad law', forcing the private enterprises to fight in the Courts again.

But, there are ways by which a legislation in Parliament can control events held in India, and forcing the event organizers to sell or offer virtually for free, terrestrial rights to Doordarshan. For events held outside the country, no such thing is possible. It does not happen in UK, or Australia, but in both these countries Terrestrial channels must be offered rights for certain events held in the country. India can look at building such a legislation than coming up with patently unfair policy guidelines.

Friday, August 04, 2006

PS Krishnan on Social Justice and Reservation

PS Krishnan, Retd. IAS, is a former secretary to the Government of India and former member secretary of the National Commission for Backward Classes. He was the Secretary in-charge during VP Singh's time resurrecting the Mandal Commission Report.

He was recently in Chennai to give a lecture on "Social Justice and Reservation" organized by the Chennai based Indian School of Social Sciences.

I have recorded the lecture and the subsequent Q&A session and am making it available here. This is a mildly edited version. I have removed one mindless question unconnected with the reservation issue (in the Q&A section), a few word repetitions, coughs, cellphone rings and other such noises.

[Links changed, 1st May 2008]

1. Sashi Kumar of Asian College of Journalism introduces PS Krishnan, followed by Krishnan's lecture on Social Justice and Reservation., 58.43 min, 26.8 MB, 64kbps MP3 file

2. Questions and answers that followed the lecture, 42.37 min, 19.5 MB, MP3 file

Quite a bit of what PS Krishnan said in the lecture appears in an article he wrote in Frontline, Apr. 22 - May 05, 2006.