Views on the new norms for long term borrowings by banks for funding infrastructure and low cost housing

Time to turn the tap off

http://www.businessworld.in/news/corporate/time-to-turn-the-tap-off/1434986/page-2.html

PPP intervention in water supply and management can happen at various points of the supply-chain using multiple mechanisms.

PPP mechanisms in water are  relatively recent an the PPP initiatives in Johannesburg and Nepal are considered to be success stories whereas the initiative of providing success linked payments to water utility employees in Kampala in Uganda also is considered to be a success story.

There are a complex set of issues that constrains us from charging a competitive rate for water. The issues range from absence of a culture to pay for water to inability to pay for lifeline water which then pushes the argument of charging for water being against the tenets of welfare state. Overall, it’s a issue of political leadership to push through the necessary reforms that would ensure a sustainable supply of water.

Given that upgradation of water supply systems is a capital intensive initiative, and the fact that a majority of existing public sector organizations that are responsible for water supply have become fossilized, bringing in private participation would help in attracting the required capital as well as bringing in the state of art water supply management perspectives. Clearly, privatization is definitely a feasible option. However, the option has to be exercised on a case to case basis. It is not a panacea for this sector.

Sarvajal is an excellent for-profit initiative. Since it is for profit, it is scalable and financially sustainable. The only issue is that in many of the cases, the funding organizations use CSR funding for provding the water solutions from Sarvajal. Perhaps with introduction of section 135 in the New Companies act, there would be a greater availability of CSR funding that would see sarvajal being adopted in a larger number of communities.

Private sector can be attracted to this sector by making the sector financially viable. Financial viability can be brought in by either (a) increasing the water charges or (b) providing viability gap funding for once time capital or (c) providing viability gap funding for operations or a combination of the above three. Given that water is a sensitive issue, any mechanism adopted, has to be crafted with care and due diligence, with active participation of relevant stakeholders and also perhaps by including the stakeholders in the final solution by making them co-responsible for the water supply.

Views on Budget 2014

http://indiatoday.intoday.in/story/union-budget-2014-2015-india-inc-key-reforms-higher-growth/1/370709.html

http://www.mydigitalfc.com/news/nda-unveils-social-agenda-sans-upa%E2%80%99s-political-gas-304

http://articles.economictimes.indiatimes.com/2014-07-10/news/51301154_1_reits-real-estate-sector-smart-cities

http://www.thehindubusinessline.com/economy/budget/achche-din-coming-for-neomiddle-class-smart-cities/article6197956.ece

http://auto.economictimes.indiatimes.com/news/industry/steel-sector-is-upbeat-on-budget-proposal-to-develop-100-smart-cities/38202441

We welcome the initiative which is the need of the hour for the Indian economy. Cities are the growth enablers and current Indian cities are choking with the economic growth in India. It is heartening to note that budgetary provisions have been made for modern next generation cities

The allocation of Rs 4000 crore and promises to make easier FDI flow in this sector along with additional tax incentives and cheaper credits for Low cost housing for EWS and weaker section is not only the need of the sector but the economy

The focus on senior citizens through pension schemes is welcome. Other specific initiatives such as kisan vikas patras and rural housing schemes will help build the foundations of a stronger rural society

Views on Economic Survey 2014

http://articles.economictimes.indiatimes.com/2014-07-09/news/51247881_1_economic-survey-urgent-steps-indian-economy

http://indiatoday.intoday.in/story/economic-survey-growth-recovery-union-budget-arun-jaitley/1/370526.html

"Besides correcting some of the subsidy interventions that have distorted the labour market and have contributed to inflation, the government may well consider urgent steps to facilitate investments that would lead to job creation and infrastructure creation at a rapid rate, easing out the fiscal and monetary pressures in the medium term.

Interpreting the survey, which is a general report on the state of the Indian economy, Jaijit Bhattacharya, Partner, Infrastructure and Government Services, KPMG in India has said that it is clear that the economy is going through challenges, which are translating into fiscal and monetary constraints

"Besides correcting some of the subsidy interventions that has distorted the labour market and has contributed to inflation, the government may well consider urgent steps to facilitate investments that would lead to job creation and infrastructure creation at a rapid rate, easing out the fiscal and monetary pressures in the medium term," Bhattacharya said

Views on Rail Budget 2014

http://www.moneycontrol.com/news/economy/rail-budget-2014-financial-headroom-to-enable-modernisation-kpmg_1121948.html

http://economictimes.indiatimes.com/industry/transportation/railways/railway-budget-has-something-for-all-stakeholders-without-being-populist-jaijit-bhattacharya-kpmg/articleshow/38014135.cms

 

http://www.hindustantimes.com/specials/coverage/unionbudget2014/railbudget2014/gowda-to-focus-on-fund-inflows-fiscal-stability-infrastructure-in-his-maiden-railway-budget/sp-article10-1237956.aspx

http://www.moneycontrol.com/news/economy/rail-budget-2014-financial-headroom-to-enable-modernisation-kpmg_1121948.html

 

http://www.moneycontrol.com/news/local-markets/live-market-updates-sensex-falls-over-600-pts-nifty-breaches-7600-bhel-slumps_1121922.html

 

http://www.firstpost.com/india/railway-budget-2014-well-thought-out-and-non-populist-says-kpmg-1608911.html

 

http://www.financialexpress.com/news/rail-budget-2014-well-thought-out-nonpopulist-says-kpmg/1267809

http://economictimes.indiatimes.com/industry/transportation/railways/rail-budget-2014-well-thought-out-non-populist-kpmg/articleshow/38013330.cms

 

http://www.business-standard.com/budget/article/kickstart-indian-railways-to-boost-economy-114070700340_1.html

http://www.business-standard.com/article/news-ians/growth-oriented-budget-for-railways-expected-curtain-raiser-114070700719_1.html

http://www.smartinvestor.in/market/read-251415-readdet-Kickstart_Indian_Railways_to_boost_economy.htm#.U7thGZSSySo

http://www.goodreturns.in/news/2014/07/07/growth-oriented-budget-for-railways-expected-curtain-raiser-277346.html

 

http://www.moneycontrol.com/news/local-markets/live-market-updates-sensex-slips-over-350-pts-post-railway-budget-hdfc-shines_1121922.html

 

http://zeenews.india.com/business/indian-budget-2014/growth-oriented-budget-for-railways-expected_103350.html

 

http://www.mid-day.com/articles/growth-oriented-budget-for-railways-expected/15430195

     

http://www.nagalandpost.com/TagRelatedNews.aspx?tagname=Growth%20oriented%20budget%20for%20railways&tag=VEFHMTAwMjY4OTM%3D

http://www.business-standard.com/budget/article/kickstart-indian-railways-to-boost-economy-114070700340_1.html

http://www.business-standard.com/article/news-ians/growth-oriented-budget-for-railways-expected-curtain-raiser-114070700719_1.html

http://www.smartinvestor.in/market/read-251415-readdet-Kickstart_Indian_Railways_to_boost_economy.htm#.U7thGZSSySo

http://www.goodreturns.in/news/2014/07/07/growth-oriented-budget-for-railways-expected-curtain-raiser-277346.html

Non-Ticketing Revenue Generation for Indian Railways

Indian Railways is in a desperate position to generate revenues. Besides the need to cover its operational costs and pension costs, the revenues are required for a large number of initiatives that are urgently required for the upgradation and modernization of Indian railways. These include safety measures, building of tracks and bridges, upgradation and modernization of signalling, investments into rolling stock, building stations and terminals, building dedicated freight corridors, high speed passenger train corridors, training and upgrading skills of human resources in railways and creating indigenous capacity for development.

Railways have always played a significant role in the development of any economy and have been particularly significant for the Indian economy. A recent study by KPMG on economic impact of the second phase of high speed railways in UK concludes that the project could potentially generate GBP 15 billion per year for the economy. The analysis was a critical input into policy making for rolling out High speed railways in UK. And thus, a strong railway network plays a significant role in strengthening and growth of the economy. As a corollary, a dilapidated railways is detrimental to any economy.

Hence it is imperative that Indian railways continues to invest into its upgradation and modernization in order for the Indian economy to grow.

However, a slow growth in revenues for the Indian railways while having a galloping increase in costs has left Indian railways constrained in making the necessary investments required to transform itself into a modern, reliable and safe railway system.

Railways has been focussing on ticketing as a primary source of revenue generation. However, if railways has a significant multiplier effect on the economy, it should be possible to generate revenue by monetizing the economic value that Indian Railways can generate. In fact, many railway systems globally, have a significant percentage of their revenues generated from non-ticketing sources.

Economic value is trapped in assets such as spaces, impact zones, monopolistic data and ability to create wealth by marrying tangible and non-tangible assets of the railways with capital, in a manner that no other organization is in a position to do.

One of the obvious mechanisms for monetizing the economic value unlocked by a railway system is to monetize the impact zones. Impact zones are areas which become accessible and hence open to commercial exploitation. It can include opening up areas that are non-arable for industries or even tourism.

However, significant revenues can be generated by the Indian railways by adopting a set of new trends in business models, operational models, financial models and technological models for achieving enhancing revenue generation.

Such models include increasing sales of other services and commodities to its captive passengers. Such offerings can stretch from in-coach sales of products to sale of insurances and even solicitation for sale of real estate etc.

Revenue can also be generated by exploiting non-tangible assets such as the data it generates, analytics of the data, diversifying into other data driven businesses that leverages Indian railways’ existing data and customer base and helping cargo customers optimize its logistics using the data under the possession of Indian railways.

Many of these revenue generating initiatives can potentially be taken up through a PPP mechanism, thus saving the Indian railways from even making the initial investments.

Needless to say, Indian railways also has a significant potential to cut costs and a any cost savings is also essentially revenue generated. It can also significantly optimize its passenger train operations and cargo train operations by using modern techniques including analytics and reduce energy costs by adopting energy saving practices.

In order for the Indian economy to continue to grow, it is an urgent calling for the Indian railways to generate revenues from non-ticketing sources in order to implement the initiatives necessary for its upgradation and modernization. Indian railways should consider roping in private investments into such initiatives through PPP mechanisms. These initiatives become even more important in the context that the Indian traveller is extremely price sensitive and is reluctant to pay a higher fare while any increase in cargo fare has an inflationary impact.