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As many readers of this blog would have inferred, I am a strong believer of market economics and free world trade. Capitalism & Free World rewards the hard-working and the entrepreneurs in ways that Nanny states & Socialistic states can’t. Market and Trade when allowed to flourish freely has a self-correcting behaviour. Money is just like Water and Gravity, it flows to places of least resistance. There has been no other tool in Human Civilization that has been effective and proven in lifting millions of poor from hunger and starvation than free trade – look at Japan after WWII, look at China & India for last two decades or even look at African states where democracy and free trade have been allowed to take ground. The trouble with free trade is that you can’t be selective or do it half-heartedly, either you have to be in or you have to be out.
I feel India had lost a whole generation by following an economical model (the famous license raj) after its independence which had a strong socialist bend and isolated it from World for 45 years (1947-1991). Unfortunately the pace gained in 1990s was lost in the last decade due to petty politics & poor leadership at all levels of Government (Central, States & Municipality). Coming to the present issue at hand on allowing “Foreign Direct Investment” (FDI) in Retail in India. There has been huge outcry from many parties and states on this and the weak government in Centre has suspended the whole move – which is sad. India needs huge improvement in infrastructure on getting its food from farm to stores, it wastes so much in the centuries-old process and most elements in the chain are laded with Political interference. The money to improve the infrastructure is never going to come within India alone, it desperately needs it from outside its shores and more so the technology, efficiency, managerial talent and the discipline has to be imported. For this main reason I welcome FDI in retail. The critics claim that FDI will destroy all Mom & Pop shops (Kirana stores as they are called here) doesn’t cut it with me. No retail chain or behemoth can ever match the personal touch, neighbourhood affinity of a local store run by a passionate, caring owner & her family. What the world leaders like Walmart and Carrefour can do is to help in cleaning up the supply chain, improve prices paid to farmers, help them with loans and seeds, bring better quality and hygiene and get cheaper prices for consumer too (as this dipstick survey says). And finally China has been allowing 100% FDI in retail for last two decades and tangible improvements have been visible there.
An example is a small Kirana Store (மளிகை கடை in Tamil) near my house in Mambalam area that has grown many fold only in the last five years than the previous three decades of its existence, and it all happened only after Reliance Fresh, Nilgris Supermarket, More stores opened near-by. The small store converted their place from counter sales to self-service, increased the product mix (added toys, CDs, Luxury cosmetics and more), computerized billing and trained staff. Nowadays in weekend you can’t even enter the store and Reliance Fresh that is near-by appears deserted.
You may be interested to read these two articles which articulate the points further. The first one is from Mint newspaper dated 30/November/2011 titled “Shoot the messenger, not the message” and the second is from Economist magazine dated “December 3,2011” titled “Why India needs Walmart”
In the past I have seen many bogus emails claiming to be from US Income Tax (IRS) Department, most of those emails are poorly crafted and are immediate give-away for trained IT eyes like mine. These SPAM emails are sent by modern day crooks through Zombies to fish (phishing) your personal information like credit card or bank account passwords. Today I got an email claiming to be from Indian Income Tax department it looked so genuine at first site but for two sure easy give-aways. See the original email I got below.
Two items in the above email raised my suspicion are:
1.Income Tax Department when they are able to send a personalized email with exact amount of Refund (Rs.36,120.25) surely knows my name or my PAN Number (Unique number for every Tax Payer), but this email says Valued TaxPayer. Indian IT Department normally address the tax payer as “Assesse”.
2. Moving my mouse over the link (not clicking on it) titled “To Submit a request click here” shows a web address which is different from incometaxindia.gov.in or *.gov.in. See the screenshot below. Copying the base web address alone from what was shown and visiting the site (please don’t try this at home) takes me an Arabic Website which does looks genuine but seems to have been compromised (hacked into) and infected with malicious code that if visited can come down and infect your computer as well.
So this is certainly a fraud email and please delete it immediately without opening it. If you opened it and not clicked on the link nothing much may have happened. Run a scan of your machine and relax. If you are curious on what the page would have done here is a screenshot (please don’t try this at home, I have taken this from a safe Virtual PC that I have destroyed immediately after the screenshot), it redirects to another website which shows a cloned webpage of IT Department then sends you to your Bank’s website for online transfer. If you come this far and typed in your password, your money is gone. You may want to complain immediately to your banker and to nearest Police station or Cybercrime branch – but there is very little of chance of your money coming back, as all these crimes are done across international borders.
The sender (spammer) of this email has done some things correct like the design of the email, sourcing the image (LOGO Image file of IT Department ) from IT Department’s official website itself.
There are of course more technical ways to identify the sender (and hence the authenticity) of an email through SMTP MailServer headers and so on, you can use a simple Bing! search to learn more.
Today Hon’ble Finance Minister (FM) presented his budget for FY2011-12. These are my immediate comments on seeing the live broadcast.
For the initial years of UPA government I had great expectations like rest of India on then dream team headed by Dr.Manmohan Singh. But over the last 6 Years it has diminished and now I am happy if Government just stays on course.
So on today’s budget and FM I had very low expectations, but for that FM seems to have done well. He hasn’t done anything new or path breaking, but thank god he hasn’t messed up anything either. He has retained Service Tax @10% itself which is good for many of us like myself in Services Industry. He has promised easier refunds for Service Tax on input services that go into Exports and on some cases there will be Exemption coupons as well – I wonder what took government so many years to see this..
I was not expecting STPI (Software Technology Parks of India) 10A/B Income Tax exemption to continue beyond 31st March 2011 and FM didn’t extend it, so I am not disappointed on that. But the FM introduced up MAT (Minimum Alternate Tax) on SEZ (Special Economic Zones) at around 18% tax, which basically renders SEZ useless from attracting new investments. The North Block of the Government headed by the FM has to be made to travel to China to understand the true meaning of SEZ and why they are important to generate employment for millions of young Indians.
To inject growth to overall Economy FM has announced some good measures like Tax Exemptions for Cold Storage for Foods products, a much needed thing to address routing of food products. He talked in length on the E-Governance initiatives, introduction of more Central Processing Centres (CPC) that is currently operating in Bangalore for Income Tax Returns Processing, Process of TDS E-Filing getting stabilized (Is it there are many gaps and mistakes happening on this ), exemption from Employees to file their TDS returns as it is already filled by their Employers and so on. All these E-Governance measures are good news for IT biggies who are involved on these, but nothing for SME (Small & Medium) IT Companies.
Lastly, no announcement of much awaited GST (Goods and Service Tax), Labour Reforms, Reforms in FDI, measures to address Inflation and budget deficits are big disappointments.
(Key Highlights of the Budget is available here from NIC Website)
Just like many of you I make international purchases online using my credit cards. Most of the time this is the easiest, hassle free when compared to wire transfers and some times this is the only option to pay. I have read in magazine articles that using Credit Card is recommended and can be cheaper than Traveller’s cheque or Currency conversion while travelling as well.
Many of the international transactions are in US Dollars and it will be converted to local currency (Indian Rupees) by your credit card issuing bank to prepare your statement. I never thought there will be differences in the conversion rates charged by them. Out of curiosity I decided to check this out today between the two credit cards I have from two different banks (Corporate Card & Personal) and below are my findings.
(RBI Rates are taken from the official reference rates for that day published by RBI in their website. Conversion rates are always different depending on whether you are Buying & Selling foreign currency)
I am not a banking expert, so I will not risk into giving any explanation for the above. What I learned from doing this exercise is that before you do a large international transaction with your (Indian Rupee) Credit Card it is better to do a small transaction and check the rates that your bank is charging you. I se e no use in complaining to your bank after the transaction is done as I am sure your bank would have covered all this in the big booklet of ‘terms & rates’ they send to all of us (on RBI instructions) which I am sure none of us bother to read and even if we read are able to understand the jargons.
Today morning I went to do a recording of a brief video message from Prof.M.Anandakrishnan (Former Vice Chancellor Anna University, Advisor INFITT) for Tamil Internet Conference 2010. This got completed earlier than I expected so I had the whole day with me. So I decided to kill time by going to an Exhibition by RBI. As part of its Platinum Jubilee Celebration Reserve Bank of India (RBI) organized an exhibition about its Evolution, History & Functions. The highlight of the exhibition was display of currency notes from different eras. The exhibition was conducted at Government Museum Campus, Egmore, Chennai for 3 Days (Jan 30-Feb 1).
 
My expectation of the Exhibition being interesting was slim, but on the contrary it turned out to be quite informative & interesting. A RBI Officer patiently explained to every one interested to listen on how Currency Notes have evolved over the years, how to easily deduct fake notes and more. Next time a RBI Exhibition happens in your area, I recommend you visit it with your children.
1) Though there are many ways to deduct fake notes which we all are aware of like watermarks, black thin wire, Gandhi’s reflection at left and right of the note smiling at each other, unique numbering and more we rarely look for them because of an awkward feeling to do so in front of others. Today I learned there to be an easy way to find real RBI note. It is to touch words "Reserve Bank of India" at top on the front side with your finger, you should feel the letters to be raised a little and to be of a different texture from rest of the surface. This technique has the advantage of being able to be done by us little discreetly and also being friendly to people with poor/zero eye-sight.
Did you know?.
- The ratio of fake notes to real in India is just “8” in One million notes
- Starting April 2010, Polymer currency notes are likely to be introduced in India
2) On display where currency notes from various periods (Pre Independence and Post Independence) and offices. You can see in this note (Rs.1000) below it says "at any office of issue". This is because Currency Notes were printed and issued at many places across the country, this one was issued at Karachi, but was valid (which was not the case in earlier period) across British India.
3) From a vending machine outside, I bought few newly released Five Rupee coins showing a smiling Perarignar Anna image
Today was the second AGM of our association – ITSME Association at Hotel Savera. The association was formed by an energetic team of SME entrepreneurs from Chennai few years back. The aim of the association is to provide a collective voice for the unique set of challenges that threaten the growth of Small & Medium IT companies in India; learn from best practises and foster a community.
A new team of Executive Committee took charge today under the leadership of Mr.V.Subramanian as President, Mr.Ananth Seshan as Vice President, Mrs.Sarada Ramani as Treasurer. I wish them all the best in their efforts this year.
Today’s AGM was followed by a special business session with a talk by Mr.P.W.C.Davidar IAS, IT Secretary to Government of Tamilnadu. Mr.Davidar gave a good talk on the efforts of Tamilnadu government for IT industry in general and in particular handling the present global meltdown. I was surprised to see a down to earth and a pragmatic talk by a government bureaucrat. Few highlights of his talk:
- Govt. of Tamilnadu with Elcot as the nodal agency for all E-Governance project / IT procurement has lowered the entry barrier to allow SMEs to easily participate in the bids. For example it is now allowed for a Rs.30 Lakh turnover firm to bid for a Rs.10 Lakh tender and so on.
- Govt. is looking favourably at specialized firms with niche expertise (for each project) as an important criteria while awarding projects than blindly going for larger firms
- All tenders in Elcot website are fully administered electronically, all bid openings can be accessed from anywhere from the world through the website
- Many of the SEZ in Tier-2, Tier-3 cities in Tamilnadu getting good response. The lands are now allocated in lots as low as 2 Acres. Government has realized that smaller allocation makes better use of the land and more employment
- Talked about the Citizen Computer Centres that Tamilnadu Govt. is setting in various parts of the state; for the success of those and to be self-sustaining economically it is important those franchisees have Entrepreneur skills apart from the Technical pre requisites. Govt. has provided these centres with thousands of URLs of central & state government services that are now available over the web
- Five districts have been declared as e-districts, where all the government functions/communications will be in digital format and appropriate connectivity are being setup
- Due to global melt-down there are thousands of floor space of IT offices are lying vacant in Chennai and other places, to help these be sold/leased and to provide a marketplace for them and for businesses from outside the state to setup business here easily, Elcot is building an web service to be released soon
Reserve Bank of India has been a Banking Ombudsman programme for a long time, today I was glad to see prominent advertisements about it in major newspapers with an aim to popularize it. For me, whenever I had grievances and send them a fax threatening them to take it to RBI Ombudsman, they seem to act with more care. In general, I feel RBI is doing a fabuluous job in protecting Indian consumers rights, whether it is on Don’t Call Registry or Credit Card online additional protection and on many of the other items.
So for what items you can approach RBI Ombudsman (more details in RBI website here), here is a short list:
- Your bank fail to adhere to the written promises it made
- Your bank fail to disclose up-front the important terms and conditions while selling a product/financial service
- Your bank didn’t communicate clearly about rates and charges
- Your bank not adhering to RBI guidelines or Banking Codes and Standards Board of India
So what you have to do if any of the above happens to you. First write to your bank, if they don’t respond or fix the issue by one month, you can approach RBI ombudsman through letter, fax or email.
Recently RBI seems to have sent guidelines to all banks in India that are issuing credit cards to add additional security measures for online and telephone transactions. Currently most of the online transactions using credit cards require only the card number, expiry, name, address and CVV (printed on the back of the card) – other than address all these information are printed in the card itself. So it is easy for any shop keeper (say in a restaurant where you send your card away from your sight) to copy all these details and use it a fraudulent transaction online. Now RBI will be prescribing that from August 2009 all online credit card transactions will require in to provide additional verification data which is not visible in the card.
Certainly a welcome move from RBI. And probably a pioneering move that central banks around the world will be watching carefully to emulate.
In a recent issue of BusinessWeek I came across this article in which Mr.Paco Underhill author of “Why we buy?” talks about Retail store guidelines. He makes few observations which I found to be very interesting:
1. Shoppers use the area just inside a store’s entrance as a decompression zone. They won’t notice signs put there.
2. Americans naturally turn right as they walk further into a store (Which means I guess Indian’s will turn left)
3. Customers respond best when employees greet them about a minute after they enter. (I will welcome this as more often than not I find it intrusive when I see a person greeting right at the door)
4. Some customers can’t deal with choices. Merchants needs to put up signs that says “Our Best Seller” or “Our Best Student computer” or the likes. (Certainly I will appreciate it)
5. Unlike good times, now when shoppers purchase they spend 20% more time in aisles.
6. He says people more often make decisions about what to buy when they’re out shopping, not before. (True with me 50%)
You can’t stop marvelling at the lack of speed in which the Indian Finance Ministry operates. It has taken 5 Years, change of a finance minister, a global recession for the finance ministry in India to start to “look” into this issue. About 5 years back Mr.P.Chidambaram as then Finance Minister cancelled the exemption given to Exporters from paying “Service Tax” on input services (which amounts at current rate @12.36%) that were rendered towards manufacturing/rendering an item/service that will get exported out of the country. The idea being you can only export a service/item not the tax of the originating country with it and to prevent India from becoming non-competitive compared to its neighbours. Instead of the exemption the Hon’ble minister announced Exporters can claim a refund (which in India means pleasing the bureaucracy & adding infinite delays) for the service tax they will pay, this the minister said was to prevent leakages and misuse of the benefit. In India “Refunds” or for that matter any policy announcements (other than the written law) are mere intentions and are like “Poll” promises – they will always be kept as a promise by then finance minister and his successors. Keeping up this tradition, there has been no clear announcement or notification on the procedure and the forms to be used for this refund claim. For last several years at my company, we have asked every Service Tax & Excise Tax official we have met for the procedure we need to follow to get the refund, every one has said anything but a consistent answer.
Hence, I was surprised Today to see some movement on this with this article in Economic Times Newspaper – “Faster Service Tax refunds on cards”. With today’s budget turning out to be a disappointment (it read more like UPA government poll propaganda) for Indian Inc. and Exporters in particular at least if the FinMin can do this refund notification quickly, it will give us some relief in these testing times.
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