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Tuesday, January 14, 2020

economic news of india - world economic news - economics news for students - indian economy news

economic news of india - world economic news - economics news for students - indian economy news


Govt wants crunch-hit oil firms to write it a Rs 19,000 cr cheque

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NEW DELHI: The government is seeking a record Rs 19,000 crore in dividend from state oil companies — about 5% more than last year— to shore up its finances, according to people familiar with the matter. ONGC and Indian Oil, the biggest in the club, have been asked to pay about 60% of the total.The finance ministry has demanded that oil companies should maintain or increase the dividend payout this year. Company executives say the demand is being made even though profits have have fallen from last year.Executives also complained that the government is seeking high dividend even though its stake in the companies have come down.While ONGC has been asked to pay a dividend of about Rs 6,500 crore, Indian Oil is expected to shell out Rs 5,500 crore, BPCL Rs 2,500 crore, GAIL Rs 2,000 crore, Oil India Rs 1,500 crore and Engineers India Rs 1,000 crore, according to people with knowledge of the matter.Cos Resisting MoveCompanies are resisting the move and negotiating with the government to bring down these targets and so the final outgo may be a bit lower, the persons said. 73261592 Companies may have to borrow to pay high dividends, executives said. "What they are asking for is not in sync with the profits reported so far this year," said a company executive. Except EIL (4%), all state oil companies have reported a drop in half-yearly profit: ONGC (-15.5%), Indian Oil (-59%), Oil India (-20%), BPCL (-21%) and Gail (-27%)."Higher dividend outgo means you either cut down on your own planned spending or borrow more, which raises your finance cost," said another executive whose company plans to raise debt for dividend.However, an executive at another company, which too will have to borrow to pay dividend, says it's okay for the government to demand steep dividend. "Shareholders have expectations of certain return on their investments and the management should try and meet that, irrespective of the annual profit. For large oil companies, borrowing some amount to pay dividend is not a bad idea," he said.Since March 2018, the government's stakes have fallen in all oil companies, including ONGC (-5%), Indian Oil (-5%) and Oil India (-6.5%) but its demand for dividend has only risen, executives say. "You are asking for more or demanding the same amount year after year even while selling stake each year," an executive said. The government has been selling shares to meet divestment target. Last year, the government forced ONGC, Indian Oil and Oil India to undertake a combined Rs 9,500 crore share buyback programme in which the state's shares were offloaded. Some shares were sold via exchange-traded funds.

The way you buy gold changes from today

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NEW DELHI: The government will make hallmarking of gold jewellery and artefacts mandatory from Wednesday by issuing a formal notification, but it will give one year's time to jewellers and retailers to register themselves with the Bureau of Indian Standards (BIS) and clear their old stock.Gold hallmarking, which certifies the purity of gold, has so far been operating on a voluntary basis in recent years. It has being encouraged by the government because of widespread complaints about impurity of gold sold in the market.The BIS is already running a hallmarking scheme for gold jewellery since April 2000 and around 40% of gold jewellery is being hallmarked currently.No jeweller will be allowed to sell any kind of gold ornaments without hallmark from January 15, 2021, food and consumer affairs minister Ram Vilas Paswan told reporters. He said hallmarked ornaments would be available only in the caratage of 14, 18 and 22.Traders and jewellers say nonhallmarked jewellery is likely to be sold at a discount, which may hit sellers in small towns, where such ornaments are sold because consumers are not as demanding about purity and standards as in metropolitan areas.The minister said the government's initiative will help consumers across the country."Hallmarking has been made mandatory to protect the consumer against lower caratage and ensure that they don't get cheated while buying gold jewellery. This will benefit especially poor people in villages and small towns who are not able to make out the purity of gold they have been buying," Paswan said.He said a penal provision has been made for those who violate the hallmarking rule."They will have to pay a minimum fine of ?1 lakh or five times the price of the article. There could be one-year imprisonment also," Paswan said.He said the hallmarking rule will not be applicable to consumers and they will be free to sell jewellery to jewelers even after January 15, 2021."Consumers can sell their jewellery to jewellers without hallmarking. But jewellers can't resell the jewellery without getting it hallmarked," Paswan said.He said the facility of hallmarking is available for consumers also who want to get their old jewellery stamped. There are 892 assaying and hallmarking centres spread across 234 districts and so far 28,849 jewellers have been registered.Before making the hallmarking mandatory, a draft quality control order (QCO) was hosted on World Trade Organisation (WTO) website on October 10, 2019 for comments for a period of 60 days. "No comments were received on the draft QCO," Paswan said.

Budget may have a big surprise for small cos

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NEW DELHI: India could unveil a 'fund of funds' for micro,small and medium enterprises (MSME) sector in the upcoming budget to provide funding line to the sector."A fund is on the cards," a government official told ET. It would be modeled on the lines of FoF suggested by former Sebi chairman U K Sinha headed committee on MSME.The committee had in June 2019, recommended setting up of a government-sponsored fund to help the sector."A government sponsored Fund of Funds (FoF) of Rs 10,000 crore to support VC/PE firms investing in the MSME sector that will support crowd funding from venture capital and private equity firms, which focus on investing in the MSME segment on modified term sheets developed by SIDBI. This would encourage innovation in term-sheets and product structures," the report of the RBI committee had said.Take part in ETRise Top MSMEs, India's definitive ranking for Micro, Small & Medium EnterprisesThe government is also likely to extend the interest subvention scheme for MSMEs, announced by Prime Minister Narendra Modi ahead of the Lok Sabha elections, in November 2018."We will continue with the interest subvention scheme," one of the officials quoted above said.The prime minister had announced 2% interest subvention for all GST registered MSMEs on fresh or incremental loans.The scheme, operational over 2018-19 and 2019-20, aims at encouraging both manufacturing and service enterprises to increase productivity and provides incentives to MSMEs for onboarding on GST platform. 73262277 A JUMP IN ALLOCATION IN FY21The MSME ministry has also sought a budgetary allocation of Rs 12,000 crore for financial year 2020-21, a jump of 70% of the allocation for the current fiscal.MSME ministry's allocation in FY20 stood at Rs 7,011 crore in FY 20 — which is its highest till date. The ministry has utilised around 78% of the funds allocated in the current fiscal."We have sought an allocation of Rs 12,000 crore this year," a second government official said. "The focus is on spurring investments in the rural, economic activity in rural, backward and tribal areas," the official said.The ministry will also focus on developing MSME clusters, the official added.Union Minister of MSMEs Nitin Gadkari has maintained that the ministry wants to create maximum jobs in the agriculture, rural and tribal areas, and the industry must also shift focus from urban to rural areas.MSMEs contribute around 29% to the country's GDP, and the ministry has targeted taking this figure to 50% in five years.

Has inflation targeting failed?

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What is the probability of the Reserve Bank of India Governor Shaktikanta Das having to write to the government as to why the Monetary Policy Committee failed to contain inflation as prescribed in the Act?With inflation as measured by the Consumer Price Index soaring to a 64-month high after more than three years of the MPC obsessing with it, questions are being raised about the efficacy of the conservative policy approach.Inflation advancing to a multiyear high could not have come at a worse time for the monetary policy hawks where the growth lobby is blaming the high interest regime, to cap price pressures, for collapsing the economic growth rate as well.Conservative policy prescription of economists as the panacea for Indian economic ills of persistently high inflation and recurring bouts of currency slide is under threat with the country neither having low inflation, nor a sustainable growth rate.When the Modi government signed off on inflation targeting as a monetary policy objective, it was hailed as the step towards moving the economy to global standards. Does it need a review?"The term of the committee is coming to an end next year. So it may be a good time to review the objectives," says A Prasanna, head-fixed income research, ICICI Securities Primary Dealership. "They can form a committee to examine the MPC mandate. A rigid centre point of 4% is the problem. They can consider either changing the band or narrowing it for more effective policy making."In 2016, the government constituted the MPC with three members from outside of the RBI with a mandate to contain inflation at 4%, but within a range of 2 percentage point on either side, widening the window between 2% and 6%. It also said if the MPC fails to keep price rise in this band for three consecutive quarters, the governor would be obligated to write to Parliament as to why it failed and how it could achieve the target.At that point, it chose the CPI as the target discarding the Wholesale Price Index, which was looked up to till then for the state of price pressures in the economy.Stagflation or not?When the government was presented with a dilemma as which one to follow, the expert opinion leaned towards the CPI given that a majority of Indians' spending basket comprised food items. WPI was junked since manufacturing items did not touch the common man much.CPI for December climbed to 7.35%, its highest level since 2014, and a long way away from the predictions of most of the economists. This one coming at a time when the statistical office is projecting the economy to expand just 5% for the current fiscal, an 11-year low.It is leading to debates whether India is facing stagflation. It is a state of the economy where price rise is sharp and economic activity is slumping."Stagflationary conditions will be temporary, underpinned by our expectation that supply-side pressures will soon subside and the consumption shocks will further depress core inflation," says Sonal Varma, economist at Nomura Securities. "This phase however is likely to be transitory."This state of the economy and its accompanying theories came first during the 1970s in the US mostly due to the so called 'oil shock'. It turned on its head the prevailing belief that high inflation is good for the economy because it led to higher employment. Subsequently, Federal Reserve Chairman Paul Volcker had to raise interest rates to as high as 20% to rein inflation.Most central banks across the globe adopted inflation targeting as a key objective as the thinking that price stability is a key for sustained economic growth gained currency.But the question is whether Indian situation is similar to what the US faced in the 70s?"Stagflation comes with high oil prices which is not the case here," says Prasanna of ICICI. "The problem here is due to onion which is a short-cycle crop. At best, it's stagflation for a quarter."73261827 Food vs manufacturingIn the current bout of inflation, it is the food prices, especially onions, that have caused the trouble and it is not spread across the spectrum and there is unlikely to be any second order effect like a spillover.Food accounted for lion's share of headline inflation last month with it contributing 560 basis points, or 75%, of total headline inflation despite its weight in the CPI basket being about 46%."This begs the question, when will headline CPI inflation peak? Our base case has been December itself with onion prices retreating," says Indranil Sen Gupta, economist at Bank of America Merrill Lynch.The opponents of inflation targeting have blamed the choice of the index saying that food prices-heavy CPI is a wrong gauge as interest rates hardly have any impact on food prices.An argument is that with food prices driving inflation, monetary policy is a weak tool to control prices. Because prices of food is more driven by supply-side factors rather than demand. Monetary policy is effective in impacting demand, especially industrial goods and services and not food prices.But those who argue in favour point out that much of the food price rise gains are pocketed by the middlemen who are part of the services industry, and those gains do not reach the farmers after all. It is also an irony that the rise in food prices is pocketed more by services. Without reforming the agriculture sector policy measures, monetary policy may not achieve the objective."There is consensus that improvement in the supply chain could become a major channel for promoting inclusive growth, as this can increase the share of farmers in retail prices paid by the consumers," Governor Das said recently. "The average share of farmers in retail prices of major primary food items varies between 28% and 78%. It is lower for perishables and higher for nonperishable items."The policy stanceWhile critics may say that the MPC was wrong in lowering interest rates by as much as 135 basis points in less than a year, the MPC committee most likely saw this coming. In the last policy in December, it flummoxed the market by maintaining the status quo in rates when the unanimous expectation was for a quarter point reduction.With inflation reading well above the target band, even the most optimist among the economists are pushing back on their expectations for the next rate cut."We believe the RBI will continue to stay on hold during this period of stagflation," says Varma of Nomura Securities. "The strategic retreat of monetary policy activism amid falling growth shifts the focus to the government's policy guidance in its February 1 Union Budget."Yet another factor in inflation is the government spending. When price pressures accelerated between 2010 and 2014, it was blamed on excessive government spending on welfare schemes and higher support prices for farm products.In fiscal 2020, the government may breach the fiscal deficit target of 3.3% of the gross domestic product due to lower revenue growth. Many economists are penciling in a 50-basis points breach and another miss next year too."A slippage in fiscal 2020 deficit target is widely expected amidst weak growth and a corporate tax rate cut," says Anubhuti Sahay, economist at Standard Chartered Bank . "Thus focus is likely to remain on how the government reverts to fiscal consolidation and lower level of debt over next few years."Amid worries about both food prices-driven inflation and fiscal deficit getting out of control, there's a silver lining – the temporary nature of farm products price spike and the absence of broad-based price pressures."The contemporary pressures on inflation are essentially supply driven, and are likely to moderate after the first quarter, easing headline inflation closer to 4.5% in the second and to a sharply lower 2 to 2.5% in the fourth quarter," says Varma of Nomura.If Consumer Price Index rose 7.35% in December, wholesale prices went up by just 2.59%.Governor Das may not have to write a letter if prices behave as economists expect, but the government which has to reconfigure the MPC by March 2021 may consider a review.

Yes Bank invokes pledged shares to acquire 30% in Reliance Power's UP unit

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Yes Bank has acquired 30% in Reliance Power's subsidiary Rosa Power Supply Company upon invocation of pledged shares, the bank informed bourses late on Tuesday. The Rosa Power, which is located in Shahjahanpur district of Uttar Pradesh, has an operational capacity of 1,200 megawatts (mw). Yes Bank acquired 127,321,500 shares, representing 29.97% stake in the Rosa Power. "Shares acquired on invocation of pledge subsequent to default/breach of terms of credit facilities sanctioned by YES Bank to Reliance Power," the bank said in a filing to the bourses. Rosa Power was set up in September 1994 and the first unit of 300 me started generating power in 2009. It generated 4,341 million units of electricity in the year ended March 31. It was the first operating power plant of the Anil Ambani-led Reliance Power. On January 7, Reliance Power informed the stock exchanges that it has defaulted on a debt repayment of Rs 685 crore in the quarter ended December. The announcement coincided with the expiry of the standstill period set by the Reserve Bank of India for resolution of stressed loans as per the inter-creditor agreement (ICA) under the central bank circular dated June 6. Bankers of Reliance Power had signed the ICA in July.

PE Funds Advent, Kedaara in discussions to acquire Sequent

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Private equity investors, including US-based Advent International and home-grown fund Kedaara Capital, are in initial talks to acquire Sequent Scientific Ltd, India's largest animal healthcare company. In this proposed deal, which is expected in the range of Rs 2,500 crore ($350 million), promoters and an existing private equity investor will exit, two people aware of the development said.The founder promoters of Sequent, including serial entrepreneur Arun Kumar, KR Ravishankar and family, together hold about 56.5% in the listed entity, while PE investor Ascent Capital holds 5% stake. JP Morgan is running the sale process.The sale will also involve an open offer. If fully subscribed, the new buyer could end up controlling more than four-fifths of the company.A spokesperson at Advent declined to comment, while a mail sent to Kedaara did not elicit any response. Manish Gupta, Managing Director, Sequent Scientific, declined to comment, saying the company would inform exchanges in the event of any transaction.The promoter family of Sequent is all set to exit the business, ET reported on December 4.Arun Kumar and KR Ravishankar also own stakes in two listed companies — Strides Pharma Science and Solara Active Pharma Sciences - as promoters.Sequent manufactures and markets 26 commercial Active Pharmaceutical Ingredients (API) and 1,000 finished dosage formulations (FDF) across 12 dosage forms in more than 100 countries worldwide. It owns eight manufacturing assets in India, Spain, Germany, Brazil and Turkey. It posted revenue of $150 million (Rs 1,000 crore) in FY19."There is more interest from PE investors. Strategic buyers are not keen on the API business as most clients are their competitors globally," said one of the persons cited above.Sequent has a market capitalization of Rs 2,077 crore. It posted Rs 133 crore EBITDA and a net profit of Rs 57 crore in FY19.Sequent generated Rs 714 crore from formulation sales and Rs 325 crore of API sales in FY19.If the deal materialises, it would be the fourth acquisition of Advent International in India in the past six months.In September, Advent International had acquired DFM Foods, which sells packaged snack foods under CRAX brand while the fund had acquired a 100% stake in Enamor, a leading women's premium innerwear brand in India in October. In November, Advent had acquired Mumbai-based biopharma company Bharat Serums and Vaccines (BSV). Other buyouts of Advent in India include Manjushree Technopack and innerwear brand Dixcy Textiles.In a rare deal in the animal health industry in India, ICICI Venture had sold Vetnex Animal Health — the animal health division of RCFL (erstwhile Ranbaxy Fine Chemicals) to Pfizer for $75 million (Rs 375 crore). ICICI Venture had acquired RFCL (erstwhile Ranbaxy Fine Chemicals) from Ranbaxy in December 2005.The global animal health industry is expected to grow at a CAGR of 4.8% to reach $ 45 billion by 2025 while India's animal healthcare market stood at $460 million in 2015, and is expected to expand to $1 billion in 2025.

Seeing start of credit appetite, especially in flow to NBFCs: Sobti

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IndusInd Bank chief executive Romesh Sobti has completed his last full quarter as the CEO of the bank. He retires in March after a12-year stint. In an interview with Joel Rebello, Sobti discussed succession planning, near-term performance, and the state of the economy. Edited excerpts:What are the highlights this quarter?Our interest engine is humming and, therefore, there is an improvement in our margins. Fee income is growing, and the big highlight is in higher operating profit, which at 3.83% is probably amongst the highest in the industry. Our gross and net NPAs are down (quarter on quarter). We have proactively recognised a few accounts that were lingering in terms of provisioning, like a travel industry account. Our microfinance book has grown 44% and vehicle and non-vehicle retail have also grown at 16% to 17%. Corporate book growth at 8% seems muted as a consequence of recoveries we got [in] this and the previous quarter. Growth in retail liabilities has been very strong at 48%.Slippages have increased, something the market is not happy about.One is the BAU (business as usual) slippages, which happen in the consumer bank and the vehicle finance side. Some slippages we have taken on account of a travel company. The net slippages have come at 42 basis points compared to 46 basis points last year. Accounts slipped but they were recovered, like the diversified NBFC we spoke about, which slipped but recovered. So, it passed through the NPA, but then recovered. Sequentially, they are up to 42 basis points from 35 basis points. What impacts the P&L is credit costs, and the outlook on credit costs is that net credit costs for nine months are at 59 basis points. We should have credit costs in the vicinity of 80 to 85 basis points this year compared to 1.44% last year.What is your assessment of the macro-economy?The situation boils down to demand growth. One of the factors is that the financial sector has to return to some degree of normalcy in terms of risk aversion. Some beginnings are visible. The growth of credit to the NBFC sector has gone up; it is no longer negative. That has a big impact on fuelling consumption demand. We are seeing the beginnings of credit appetite, especially in the flow of credit to the NBFC sector.What is the update on succession planning at the bank?There is a laid down timeline and we are well within it. We expect it to happen sooner rather than later. I will be there very much to handhold. It's happening as we speak. Things are progressing as smooth as we expected them to. I will continue to be very strongly associated with the financial services sector because that is my beat.

Banks set to put up a good show in Q3; NBFCs may remain a drag

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Mumbai: Banks, particularly private lenders, are likely to post better performance in December quarter report cards, helped by robust recovery from NCLT (National Company Law Tribunal) resolutions, though credit demand remains tepid.On the other hand, non-banking finance companies (NBFCs) may see a weak quarter. "We expect improved performance for banks, led by better recovery in a few very large NPLs (non-performing loans), leading to solid recovery in earnings growth," Kotak Institutional Equities said in a note."Impairment ratios will decline, but slippages would be high led by a few NBFCs. While liquidity has improved, weak vehicle sales and moderate housing volumes will translate into weak loan growth at most NBFCs/HFCs (housing finance companies). There could also be stable to marginal moderation in NIMs (net interest margins) for non-banks," they added.Among banks, corporate lenders will be in the limelight on the back of strong recovery from NCLT resolutions driving earnings, an improvement in asset quality, lowering of slippages and better PCRs, said analysts at Prabhudas Lilladher."Loan growth, although, will be a disappointment for many banks, as the industry continues to struggle as reflected in RBI's (Reserve Bank of India) macro data," analysts at Prabhudas Lilladher (PL) said in a note.The banking sector is expected to witness continued weakness in growth in 3QFY20, with domestic growth projected at 2 per cent quarter-on-quarter (QoQ) and 7 per cent year-on-year (YoY), latest RBI data showed.They pointed out that a few vectors to watch will be PCRs (provision coverage ratios) post recoveries, non-corporate segment slippages, Casa (current account savings account)/retail deposits augmentation and margins."Most large private sector banks will see full tax benefit coming in to the earnings, as they fully marked down DTA (deferred tax assets) last quarter," PL analysts said.The brokerage expects state-run banks to see a sharp recovery in earnings with lower provisioning, strong recoveries in a couple of accounts from NCLT resolutions and PCR getting into comfort zone.Analysts at Motilal Oswal Financial Services (MOFSL) expect core profitability for private banks to continue improving. It estimates private banks to report operating profit growth of around 15 per cent YoY.MOFSL estimates private banks to deliver 40 per cent YoY PAT growth, led by stable opex, moderation in credit cost, recoveries in select large NCLT cases such as Essar Steel, Ruchi Soya and the like, and a lower tax outgo.The brokerage expects ICICI Bank to report a 146 per cent YoY increase in net earnings and also a healthy 20 per cent YoY growth in net interest income (NII).MOFSL estimates weakness in PSU banks' earnings, as sluggish loan growth, higher slippages (mainly caused by stressed HFCs) and divergence in GNPLs are likely to keep credit costs elevated, but lower opex run-rate and higher recoveries from NCLT resolutions are likely to cushion earnings.The brokerage expects public sector banks (PSBs) to deliver YoY NII growth of 15% and PAT growth of 36 per cent, mainly led by strong earnings recovery in SBI. It expects PSBs' growth to remain healthy at around 27 per cent YoY.Kotak Institutional Equities expects banks under its coverage to show volatile earnings growth, primarily due to inconsistencies between banks in the recognition of recovered amounts in a few large corporate NPL cases and lower tax rate, as DTA costs were adjusted for private banks in Q2FY20 while the status of the same for public banks is awaited."We are likely to see part-recovery under various heads such as interest income, income from written-off loans and/or reversal of provisions based on each bank's status on each of these NPLs," Kotak analysts said in a note."Core performance will be weak as loan growth has slowed to around 7% year on year, which would put pressure on revenue growth, and we expect the decelerating trend to be more visible on retail-oriented loan books," they said.The brokerage firm sees limited business concerns for small finance banks such as Equitas and AU, which are seeing a steady improvement in core performance.Kotak expects most NBFCs to deliver single-digit growth in core PBT due to weak loan growth, reflecting lower disbursements over the past few quarters."We expect loan growth to remain muted in almost all segments. Most NBFCs will deliver 1-3 per cent QoQ loan growth, expect Bajaj, which is likely to post 9 per cent loan growth QoQ," Kotak analysts said in a note.

Capitalism thrives on liberal values… I'm clear what I stand for: Satya Nadella

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Satya Nadella, Microsoft's India-born CEO, hit the headlines after his comments on the Citizenship Amendment Act. He was replying to a question on the CAA posed by the editor of US news website BuzzFeed.Here's Nadella's verbatim answer.To me, in fact I obviously grew up in India and I'm very proud of where I get my heritage, culturally in that place, and I grew up in a city, Hyderabad. I always felt it was a great place to grow up. We celebrated Eid, we celebrated Christmas, Diwali — all three festivals that are big for us. I think what is happening is sad, primarily as sort of someone who grew up there. I feel, and in fact quite frankly, now being informed shaped by the two amazing American things that I've observed which is both, it's technology reaching me where I was growing up and its immigration policy and even a story like mine being possible in a country like this.I think it's just bad… if anything I would love to see a Bangladeshi immigrant who comes to India and creates the next unicorn in India, or becomes the CEO of Infosys, that should be the aspiration, if I had to sort of mirror what happened to me in the US, I hope that's what happens in India.I'm not saying that any country doesn't and should not care about its own national security, borders do exist and they're real and people will think about it, I mean after all immigration is an issue in this country, it's an issue in Europe and it's an issue in India, but the approach that one takes to deal with what is immigration, who are immigrants and minority groups, that sensibility.That's where I hope these liberal values that we've kind of come to… It's capitalism, quite frankly, has only thrived because of market forces and liberal values, both acting and I hope India figures it out, the good news at least as I see it is it's a messy democracy and people are debating it, it's not something that is hidden, it's something that is being debated actively but I'm definitely clear on what we stand for and what I stand for.

How to manage the 'internal customer': India Inc has a serious battle looming

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The current attrition situation across industries in the country is rather strangely poised. While some sectors such as IT continue to witness retrenchment, for a host of others — ranging from life sciences, pharmaceuticals and healthcare to financial services and retail — the voluntary attrition rate in the previous financial year has been 14.8% to 18.5%, according to a report by the research firm Statista. Such high attrition rates are often attributed to a hankering after higher pay grades and dwindling employee loyalty to the firm, especially when it comes to Millennials, who already constitute more than 50% of the country's workforce.However, this oversimplification would belie an important underlying insight. Notorious for their low-attention span, transactional attitude to jobs and narcissistic self-absorption, millennials undoubtedly lay great store by their social, environmental and ecological values. Even if the pay-packet is high, millennials will not stick around if the organization has policies antithetical to their value-system or does not foster an environment of learning and mentoring — a remarkable finding from Merrill Lynch's study: Millennials and Money.Stemming attrition isn't infeasible, but it would require a serious rethinking — as well as operational reorientation — on the part of Indian industry leaders. If attrition is the outcome, what are its causes? Consider the case of 'ease of doing business', an attribute that has gained much currency in recent years. At a macro-economic level, between 2014 and 2019, India has improved its rank on this metric globally, by 79 positions. Yet, individual Indian organizations have largely sidestepped the truism that like many good practices, this too should begin at home, by making the work experience easier and more engaging for their 'internal customers' – the employees. The old command-centre style of management is not only ineffective — but actually counterproductive. Respect and trust are now two-way streets, and corporate leaders and managers must be prepared to meet their personnel halfway.The most effective initiatives are those that stem from a deep and accurate appreciation of the workforce's hopes and aspirations, and are then able to address them judiciously. Studies on millennials conducted by PricewaterhouseCoopers, Deloitte and other agencies show that millennial employees of the 21st century have no wish to wait around for the annual compliance training or classroom-style lectures delivered by their managers, in order to sustain their learning curve. Instead, they want the training experience to come to them, as part of their daily jobs that entail tangible, goal-oriented work. They want an ecosystem of transparency and innovation, which fosters the crowdsourcing of ideas and a meritocracy that makes no special allowances for seniority of tenure. Talent development, in such a milieu, morphs into a mechanism of mentoring woven into the rubric of business processes. And managers transition from being mere bosses to leaders who inspire and instruct, by example.In the brutally competitive current ecosystem, it's every employee for herself. As a result, notions of teamwork and shared value are overshadowed swiftly by the spectre of a zero-sum game, variants of which are played out repeatedly in most workplace situations that warrant complex interpersonal skills. Instead, consider an evaluation framework that rewards employees for the value they add to their respective teams. The work of bestselling author Michelle Gielan shows that employees investing in the success of others versus merely their own are 40% more likely to receive a promotion over the coming year. Besides which, stronger relationships in the workplace enhances engagement and well-being. The key to acing employee engagement may turn out to be the biggest competitive advantage of firms in attracting and retaining top talent, over the coming years.As for 'ease of doing business', this is best served through the effective use of technology, e.g. by means of a single sign-on portal that houses and integrates all employee management tasks, from expenses and vacation requests to approvals, assessments, compliance and online training. Across the spectrum of industries, including those that pride themselves on being 'high-tech', much precious time is lost in tools where employees replicate the information across multiple forms, or rely on a paper-heavy system of record-keeping or unnecessarily complex and manual schema of approvals that are clearly the hangover of the work practices from the previous century. These in turn sets into motion a ripple effect of inefficiencies that further impede creativity and induce frustration and indolence.But technology, a powerful vehicle of change, needs its evangelists, as do the other aspects outlined above. And this is where the role of HR, and its leadership becomes crucial. Traditionally, Human Resources have been relegated to a rather emasculated, tertiary position in the executive hierarchy of Indian corporates: as an adjunct of Accounts, in its payroll-processing functions, or the mouthpiece of the top management, rolling out its policies, sending communiques to personnel, or its errand-boy on the most abhorrent tasks, such as handing out the pink slip. Herein, the domain needs to reinvent itself at an intrinsic level: from mouth-piece to the designer of formal communication, compliance watchdog to organizational stewardship, and passive, execution-oriented cost-centre to a proactive player in the success of the company.The best organisations in the world are proving that effective initiatives can be undertaken to enhance employee experience, motivation and productivity, and consequently curb voluntary attrition. But they all take one back to a couple of fundamental questions. How well do organisations in India truly understand their workforce? And by corollary, how genuinely invested are they in employee engagement and well-being? The questions at this present juncture may sound regrettably rhetorical — but they are the ones HR leaders in companies across India need to be asking themselves urgently.Avik Chanda is a business advisor, researcher, columnist and entrepreneur. He is the author of "From Command To Empathy: Using EQ in the Age of Disruption".

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