"$peed money" / Corruption Puts Brakes on India's Retail Growth

"$peed money"(Corruption) Puts Brakes on India's Retail Growth
By Nandita Bose
MUMBAI | Mon May 6, 2013 1:05pm IST

Customers exit a V-Mart retail store in New Delhi April 6, 2013. Picture taken April 6, 2013.
REUTERS/Adnan Abidi
(Reuters) - Hong-Kong entrepreneur Ramesh Tainwala spent 18 months operating branded clothing retail stores in India before deciding it was impossible to succeed without paying bribes.
Tainwala, a 55-year-old expatriate Indian, owns Planet Retail, which held the India franchise rights for U.S. fashion labels Guess and Nautica as well as UK retailers Next and Debenhams. He sold the brands last September to various Indian businesses.

"Right now it's not possible to do business in India without greasing palms, without paying bribes," said Tainwala, who is also luggage maker Samsonite's president for Asia Pacific and West Asia. Tainwala said he himself refused to pay bribes to licensing officials, though that could not be independently confirmed.
India is the next great frontier for global retailers, a $500 billion market growing at 20 percent a year. For now, small shops dominate the sector. Giants from Wal-Mart Stores Inc to IKEA AB have struggled merely for the right to enter, which they finally won last year.
But a daunting array of permits - more than 40 are required for a typical supermarket selling a range of products - force retailers to pay so-called "speed money" through middlemen or local partners to set up shop.
In interviews with middlemen and several retailers, Reuters found the official cost for key licenses is typically accompanied by significant expenses in the form of bribes. The added cost erodes profitability in an industry where margins tend to be razor-thin. It also creates risk for companies by making them complicit in activity that, while commonplace in India and other emerging markets, is nonetheless illegal.
That creates a handicap for foreign operators such as U.S.-based Wal-Mart, the world's biggest retailer, and Britain's Tesco Plc and Marks and Spencer Plc, which must comply with anti-bribery laws in their home countries even while operating abroad.
A Wal-Mart spokesperson said the company is strengthening its compliance programs, part of a global compliance review that has cost more than $35 million over the last 18 months. IKEA, which is awaiting final approval to enter India, has started assessing the market, a spokeswoman said, adding the group has "zero tolerance" for corruption in any form.

"HARASSED FOR MONEY"
Retail is especially prone to bribery because stores sell multiple types of merchandise, which in India increases the number of licenses and permits needed - a legacy of the so-called "Licence Raj" that was largely dismantled during the country's early 1990s economic reforms.
The World Bank's Ease of Doing Business survey ranks India 173rd out of 185 countries when it comes to starting a business, behind Malawi, Niger, Sudan and Guatemala. Transparency International in 2012 ranked it 94th out of 174 countries on its corruption table - a fall from 72nd five years earlier.
"Even for a simple thing like putting up signage in front of your store you are harassed for money," said Tainwala. "There are many bodies regulating that and the permits needed to set up one shop are baffling."
The License Raj, he said, substantially increases costs in a market where sluggish consumer demand, high rentals and a depreciating currency for over a year have made it hard for retailers like him to operate profitably. He plans to return when there is more order in the way business is done.
Ais Kumar, head of the western region for the Food Safety & Standards Authority of India (FSSA), acknowledged that graft exists across government ranks and departments. Many government departments also have staff shortages that cause delays.
"These licenses are required for compliance and safety and not because the government wants to delay or complicate things for anyone. It's the law of the land and it must be followed," he said, adding the government is striving to put licensing systems online to streamline the process and make it more transparent. Checks with three retailers, however, showed the online forms still need to be physically delivered to the respective licensing departments.

UNDER THE TABLE
Permits needed to open a store range from the mundane, such as a trade license, to the petty: lighted shelves require a separate permit, and even a shop window needs a license.
Want to play music in the store? That requires a license. So does selling cosmetics or providing valet parking.
A convenience store that sells basics such as milk, vegetables, cereal, bread, eggs, meat and baby food will require a minimum of 29 licenses from nearly 20 different authorities, according to a list of licenses compiled by the Retailers Association of India and obtained by Reuters.
Those include a food license; a license for sale, storage and distribution; a food-handler's certificate; a license for milk products and another for frozen non-vegetarian food. All those licenses comes from the state-level FSSA, but require separate applications.
But the FSSA does not give permission for operating freezers and chillers. That requires a separate license from a municipal body. Selling baby food requires a permit from a state Controller of Food and Supply. The state Agriculture Produce Marketing Committee must give permission to sell vegetables; the central Directorate of Marketing and Inspection gives permission to grade and sort those vegetables; the Controller of Rationing grants licenses for selling essential commodities like rice.
All those licenses need to be renewed, sometimes annually.
The Directorate of Marketing and Inspection declined comment, while the other departments were not available.
Most of the licenses required can either be done away with completely or combined into one, said Lalit Agarwal, chairman of V-Mart Retail. "Every day, you have new licenses added to the list, but nothing ever gets deleted."
It's not just the red tape of getting those licenses, it's also the under-the-table money that retailers typically have to pay on top of the official fees.
In Bandra, a high-end suburb of Mumbai, a state-issued trade license for a 10,000-sq ft (930 sq meter) store - very large by Indian standards - officially costs US $ 800. But there is an "additional charge" of US $20,000, according to documents obtained by Reuters from the Employee State Insurance, Provident Fund and Industrial Law Practitioners Association of India (EPILPA), which assist retailers in obtaining permits.
EPILPA said their members, who are consultants, collect the "speed money" from retailers and pass it on to the government officials. They act as middlemen who do not take a cut and hence should not be held responsible for the bribes being paid.
"In India, you don't need to ask retailers if you need to pay bribes," said Punit Agarwal, CEO of Promart, a mid-sized multi-brand clothing retailer. "It's known. Here you have a price tag for everything."
He said his company hires middlemen and pays their fees because he knows bribes have to be paid, but does not want his company to get directly involved.
SPEED MERCHANTS
Middlemen sell speed. They provide access to government officers who can sign off on permits as soon as they are paid. The middleman negotiates the bribes, thus keeping company officials from being directly involved.
Take the case of British footwear retailer Clarks. It entered India through a partnership with Future Group, which runs the country's largest listed retail entity, Future Retail. Clarks has hired consultants and, according to one of them, is negotiating with municipal officials for a 365-day license that would allow it to open three of its five stores in Mumbai every day of the year.
For each of the three stores, the company was asked to pay US $1,100 per officer for the eight officers involved in its case - a total of US $9,000 per store, said Oovesh Sarabhai, of Atlas AVA Consultants, who is working with Clarks to secure the licenses. The official fee is about US $ 110 per store, he said.
The government officials involved in issuing the license declined to comment when contacted by Reuters. Future and Clarks declined to comment.
A senior Clarks official, who declined to be identified, confirmed the company had applied for a 365-day license for the three Mumbai stores in January 2012 and received notifications from the government related to this, but has so far failed to receive the licenses. "It's stuck because of the bureaucracy," the official said.
No high-level official dealing with licenses ever accepts a bribe directly, said Raichand Jiwani, owner of Emkay Consultancy Services, who is a member of EPILPA and helps several top Indian retailers to procure licenses. Officials use subordinates to collect the money and only from trusted people. The payment is then shared by junior and senior officers and up the bureaucratic chain.
"The nexus runs far deeper than just a few corrupt officials at the local level," said Jiwani, noting that if a retailer approaches an official directly he will not be told about the bribe, but his papers will take months to be approved.
IS INDIA WORTH IT?
While India holds vast promise for retailers, with its growing spending power and rising middle class, most local supermarket chains lose money due to low prices, poor supply chains and high rents. Wal-Mart has said it aims to turn a profit in 10 years, something it hasn't managed in China after 12 years.
Tainwala thinks India offers miniscule retail returns for the massive investment of time and energy that is needed. Fast expansion requires paying speed money, he said.
Tainwala recalls he was asked to pay either a US $ 400 monthly fee to have signage outside his store in Mumbai's plush Atria mall, or a US $ 40 bribe every month to circumvent it. He said he chose to pack up rather than bribe the municipal officials needed to get his signs approved.
"My people said we have to close the stores, and we decided to do that," he said. "You get excited about the Indian middle class but then you wonder - is it really worth it?"
(Editing by Tony Munroe, Bill Tarrant and Ian Geoghegan)
http://in.reuters.com/article/2013/05/06/india-retail-idINDEE94402K20130506

Census rewriting SC, ST narrative: shows increased material well-being

Census rewriting SC, ST narrative: shows increased material well-being

Wed Jun 20, 2012 11:47 pm (PDT)
Census rewriting SC, ST narrative....Anil Padmanabhan & Remya Nair Latest houselisting data demonstrates a visible growth in the material well-being of the two groups
New Delhi: Indians, all of them, across class and caste, traded up over the past decade, a period of rapid and record economic growth-that's the counter-intuitive message in the latest update to Census 2011.
According to the so-called houselisting data released by the census, scheduled castes (SCs) and scheduled tribes (STs) have, like the rest of the country, and allowing for some variations across regions, demonstrated a visible growth in their material well-being, especially in terms of their access to telecommunication and banking services-two key parameters to measure inclusion, or the effort to integrate the underdeveloped and underprivileged into the country's economic mainstream.
In March, the houselisting data released for the entire country showed a perceptible change in the lifestyle of the population in general, reflecting a silent but strong trend-trading up. The houselisting data collected along with the decadal census allows demographers to measure the level of the quality of life. The story that the data told was that of a rapidly expanding consumer economy.
According to the latest data release, among people belonging to SCs, access to banking services rose from about one of every four persons in 2001 to one in two in 2011; and to telephones, from three per 100 to one in two.
Similarly, for people belonging to STs, the proportion of those accessing banking services rose from a little under one in five persons in 2001 to a little under one in two in 2011; and telephones, from about two in 100 to one in three.
Interestingly, this change is seen most prominently in services that are universal in nature and which, especially in the case of telecom and banking, have seen active participation of private companies resulting in healthy competition. Such dramatic spurts are not visible with respect to other parameters such as the quality of roofing, and access to tap drinking water and electricity.
At the same time, the gap between people belonging to SCs and STs and others has narrowed. And this has coincided with the rapid political mobilization of these communities.
Narendra Jadhav, member of the Planning Commission and author of Untouchables, said the trend fits a narrative. "There is a change and there is no doubt about it. I have been saying this time and again that there is a silent revolution taking place among the SCs, if not STs. Their aspirations are taking flight; it is visible in the emergence of Dalit entrepreneurs and the trends visible in these (census) numbers. There is much greater transformation taking place than what we care to admit."
According to Jadhav, the trend also manifests itself in the broad-basing of the benefits. "I would go to the other extent and say that our long-term growth has been made possible because people who were not in the mainstream have come into it. The broad-basing of the benefits of growth has given birth to new stakeholders."
The numbers show that market-based systems can be employed to deliver certain class of services, say some experts. And that, in some instances, they work much better than government-authored welfare programmes for SCs and STs.
"It is a combination of increase in awareness levels among people as well as a push by banks to bring more people into the banking fold. Opening of bank branches in rural areas has increased awareness levels among the population. Migration and the need for people to access banking facilities to send and receive money have also played a major role in greater banking coverage," said Nachiket Mor, former chairman of the ICICI Foundation for Inclusive Growth.
And, in some cases, progress has been brought about by co-ordinated central planning. According to M.V. Nair, former chairman and managing director of Union Bank of India, who headed a Reserve Bank of India (RBI) panel for revising the definition and structure of priority sector lending, the trend reflects the financial inclusion drive pursued by RBI in the past 10 years.
"Since 2005, there have been a number of regulations such as the business correspondent model and other technology initiatives to ensure that every household that does not have access to banking services gets a bank account," he said. "Inevitably, schedule caste and schedule tribe households did not have access to banking services, either in rural areas or in slums in urban areas, and they benefited from this financial inclusion drive."
Some analysts were however cautious in reading too much into the numbers. N.C. Saxena, member of the National Advisory Council, said that most bank accounts had been opened by wage labourers participating in the government's marquee rural employment scheme and were largely not operational.
"There has been a great development for scheduled castes, and the gap between them and the general population is narrowing, but that is not true for scheduled tribes for whom it is diverging. Eighty per cent of people belonging to scheduled tribes live in central India. The data may be coming about because people from the scheduled tribes are doing very well in Himachal Pradesh and north-east states," he said.
And a much closer reading of the data and more research will be needed before any conclusion can be reached, said S. Japhet, director of the Centre for the Study of Social Exclusion and Inclusive Policy and professor at National Law School in Bangalore. "The increase in telephone (penetration) cannot be very indicative of a trading-up in material well-being as it's not known how the telephone connection is being utilized; as in...does the person use it to make outgoing calls or only stick to incoming calls?"

anil.p@livemint.com
Anuja contributed to this story. URL: http://www.livemint.com/2012/06/21005650/Census-rewriting-SC-ST-narrat.html

Death of a journalist: Putting one's life on the line

Death of a journalist: Putting one's life on the line

Wed Jun 20, 2012 11:45 pm (PDT)

Putting one's life on the line....Sevanti Ninan

Because it is an increasingly lawless country and because media competition pushes those who are sent to get the story to try harder, the risks are greater than before
India can be a rough country if you are practising something other than soft journalism. Last weekend's tragic death of a gifted young photographer from malaria and resulting complications has helped to focus attention on the risks and responsibilities.
Tarun Sehrawat worked for Tehelka and his death following an assignment in Abujmarh in Chhattisgarh has had colleagues in the profession raising issues of safety on the job and institutional structures that even the English language media has not put in place. The rougher things get in India, the more those covering the news will be at risk. They are the ones at the cutting edge of both big-city and district-level corruption, Naxalism, insurgency and much else.
Because it is an increasingly lawless country and because media competition pushes those who are sent to get the story to try harder, the risks are greater than before. Sehrawat's death has drawn attention, that of a mofussil journalist in Madhya Pradesh earlier this year has not. Looking at physical attacks so far this year shows in how many ways the tribe is vulnerable.
April alone saw three assaults on journalists and two attacks on media property. A Chhattisgarh journalist was attacked for exposing illegal forest felling, Nirmal Baba's supporters attacked journalists in Delhi, and railway staff manhandled a Navbharat Times reporter in Mumbai for clicking pictures of an illegal activity. In March, lawyers attacked journalists in Bangalore and in February a journalist in Cachar district was attacked for exposing corruption in the Mahatma Gandhi National Rural Employment Guarantee Scheme work. In January, Manipur journalists were on a pen-down strike to protest continuous threats by militants. How do we even begin to protect such people?
Health hazards then were the last things anybody was looking at. As both Tehelka editor Shoma Chaudhury and CNN-IBN managing editor Vinay Tewari point out, when you are sending a journalist on assignment to Chhattisgarh, it is the Naxal threat that you are briefing them on. It's only on location that they will learn that malaria is equally a hazard.
Media may be a flourishing industry, but once you begin to look closer, particularly at the armies of news gatherers in the regional media, it becomes clear that it is an unorganized and exploitative one. In a country where the bulk of small-town journalists are unlikely to get proper appointment letters, expecting health and risk protection for this category of workers is a pipe dream. The highest circulated newspaper in the country says it employs around 5,000 journalists and 7,000-odd stringers. Can the latter, who don't even get salaries, expect any kind of hazard protection?
Journalism can be a safe profession or a dangerous one depending on the kind of journalism you do. Tehelka has come in for criticism following this tragedy but Chaudhury says you have to take a call based on the reasonable risk doctrine. "Anyone pushing the line a bit on what journalism is will run a risk." Can Indian news organizations prepare their staff better? She says no Delhi editor can assess adequately the risks associated with the local terrain, but Tehelka will now look at issuing standing instructions on reporters making contact with a local doctor and local reporters. It will also look at the issue of insurance for its journalists.
In terms of equipping, insuring and briefing journalists, the gap between the first and third worlds is huge. Indian journalism in parts may be on par with the best, but news organization culture in this respect lags far behind. The BBC's high-risk policy runs into 14 pages. It has a high-risk team which can brief teams going out on hazards in different parts of the world. But, says Chaudhury, "This was not some other part of the world. This is our backyard. We thought we knew it."
The Hindu editor Siddharth Varadarajan says it's clear that Indian media will have to institutionalize safe practices of different kinds. His paper gives open-ended medical insurance, CNN-IBN says it provides bullet-proof jackets to its entire bureau in Srinagar, including outdoor broadcasting engineers and video journalists. It has insurance for all newsroom staff and a corpus to cover news staff when accidents occur. But even so, CNN International is on another planet. They had an armoured personnel carrier for their journalists in Iraq!
When the war is in your backyard and you don't have the UK or the US budgets, you do other things. Varadarajan says that when the local police made things hot for their Chhattisgarh correspondent, he had to take up the matter with the chief minister. Both he and Tewari are also clear that safety comes before risk. The latter says CNN-IBN tells reporters to eschew the romanticism of capturing a face-covered Naxal on camera, because the risk may not be worth it. But, and here's the final point, a driven reporter is often more committed to the pursuit of a story than the editor. In the interests of safety, she has to be reined in.

Sevanti Ninan is a media critic, author and editor of the media watch website thehoot.org. She examines the larger issues related to the media in a fortnightly column.

May 21st Anti-terrorism day

Anti - Terrorism Day "21st May" May 21, the death anniversary of ex-prime minister of India, Shri Rajiv Gandhi is also observed as Anti Terrorism Day all over the country. Terrorism, the most heinous crime by the mankind against the mankind has become the biggest fear for Indians today and of course every citizen of the country is responsible for driving out this phantom of fear. Fighting against this crime has become the moral duty of every India.
At the same time whole nation mourn two minutes of silence to mark solidarity with the world in its fight against terrorism and of course memorize Shri Rajiv Gandhi, the ex prime minister of the country who’s lost to the country was also the result of this intimidating menace called TERRORISM.
Anti Terrorism Day is observed every year on May 21 to promote peace and harmony in the nation. Different committees across the country organize various seminars on drive to create awareness about the danger caused by this unmerciful act of terrorism. The main aim of observing Anti Terrorism Day is to wean away the Indian youth from such dreadful forces threatening human lives.

Even anti-terrorism or anti-violence pledge is also taken in all the government offices, public sector undertakings and other public institutions. There is also need of more serious thoughts on the observance of Anti Terrorism Day and in order to successfully accomplish the aim of Anti Terrorism Day.

Irene Sendler-There ain't no one like her, She is the real superwoman-

Interesting story, as so many of these were of the amazing strength and daring many people went through to help others! REMEMBER THIS WOMAN!!! Look at this woman - Let us never forget!

Irena Sendler Died 12 May 2008 (aged 98) Warsaw, Poland During WWII, Irena, got permission to work in the Warsaw ghetto, as a plumbing/sewer specialist. She had an 'ulterior motive'. She KNEW what the Nazis' plans were for the Jews (being German). Irena smuggled infants out in the bottom of the tool box she carried and she carried in the back of her truck a burlap sack, (for larger children). She also had a dog in the back that she trained to bark when the Nazi soldiers let her in and out of the ghetto. The soldiers of course wanted nothing to do with the dog and the barking covered the infants' noises. During her time of doing this, she managed to smuggle out and save 2500 children/infants. She was caught, and the Nazi's broke both her legs, arms and beat her severely. Irena kept a record of the names of all the kids she smuggled out and kept them in a glass jar, buried under a tree in her back yard. After the war, she tried to locate any parents who may have survived it and to re-unite the families. Most had been gassed. Those children she helped got placed into foster family homes or adopted. Last year Irena was up for the Nobel Peace Prize. She was not selected. President Obama won one year before becoming President for his work as a community organizer for ACORN and Al Gore won also --- for a slide show on Global Warming. In MEMORIAM - 63 YEARS LATER We're doing our small part by forwarding this message. I hope you'll consider doing the same... It is now more than 60 years after the Second World War in Europe ended. This e-mail is being sent as a memorial chain, in memory of the six million Jews, 20 million Russians, 10 million Christians and 1,900 Catholic priests who were murdered, massacred, raped, burned, starved and humiliated! Now, more than ever, with Iran and others, claiming the HOLOCAUST to be 'a myth'. It's imperative to make sure the world never forgets, because there are others who would like to do it again. This e-mail is intended to reach 40 million people worldwide! Join us and be a link in the memorial chain and help us distribute it around the world. Please send this e-mail to people you know and ask them to continue the memorial chain. Please don't just delete it. It will only take you a minute to pass this along...

Christian Council condemns Saudi Grand Mufti Call For Destruction Of Churches In West Asia

Christian Council condemns Saudi Grand Mufti Call For Destruction Of Churches In West Asia

Joseph D’souza, President, All India Christian Council Dr John Dayal, Secretary General, All India Christian Council For further detail, please contact Dr. John Dayal +919811021072 New Delhi, March 30, 2012
The All India Christian Council has condemned the call by Saudi Arabia’s Grand Mufti, Sheikh Abdul Aziz bin Abdullah that it is “necessary to destroy all the churches of the region.” Christian Council President Dr Joseph D’ Souza, said the Mufti’s controversial statement placed Christian churches throughout the Arabian peninsula in jeopardy and could have repercussions for religious minorities in other countries. Council secretary General Dr John Dayal called upon the government of India and other civilised countries to use their good offices to ensure that the nations in the Arabian peninsula rebuffed the Wahabi Imam’s bigoted statement, and assured the safety and security of churches in the Yemen, Kuwait, Bahrain, Qatar, Oman, and the United Arab Emirates. Christianity is already forbidden in Saudi Arabia which has no churches. West Asian media had reported the controversial statement in the context of another statement by a Kuwaiti member of parliament who reportedly called for the ‘removal’ of churches in his country. Legislation was also recently introduced in Kuwait’s parliament that would mandate the removal of Christian churches from the country and impose strict Shariah laws. Kuwait has later clarified the legislation would not remove the churches, but prohibit further construction of Christian churches and non-Muslim places of worship in the country. The Saudi Grand Mufti emphasized that because Kuwait is part of the Arabian Peninsula, it would be necessary to destroy all churches in the country. There are a large number of Christians living in Saudi Arabia and the other countries of the Arabian gulf, many of them from India and the Philippines, with their population estimated at over 3.5 million, over 800,000 of them in Saudi Arabia alone. The All India Christian Council has been following developments in the region with growing alarm and concern as Christians continue to be coerced and harassed at various times. It is particularly disturbing because India has a large number of its citizens, mostly labour but also businessmen, engineers and medical personnel, in the region. A large number of migrant from the states of South India are Christians.
The All India Christian Council said the Mufti’s statement flew in the face of the United Nations Charter and the UN Declaration On The Elimination Of All Forms Of Intolerance And Of Discrimination Based On Religion Or Belief. The All India Christian Council (www.christiancouncil.in), birthed in 1998, exists to protect and serve the Christian community, minorities, and the oppressed castes. The aicc is a coalition of thousands of Indian denominations, organizations, and lay leaders.

Reaction to the Union Budget 2012-13

Reaction to Union Budget 2012-13
Lack Lustre Budget says Mr. Vijay Kalantri Vice Chairman – World Trade Centre Mumbai (WTC) President – All India Association of Industries (AIAI)
World Trade Centre Mumbai (WTC) and All India Association of Industries (AIAI) welcome the decision to implement Goods and Service Tax (GST) from August 2012 which will simplify and rationalize the tax structure. We further welcomes the much needed increase in viability gap funding for the infrastructure sectors like roads, port. Power and further inclusion of Oil and Gas and Tank farm will boost the growth of the Infra sector.
WTC & AIAI welcomes the introduction of much needed Mutual fund for Micro, Small and Medium Enterprises (MSME) sector to tune of Rs. 5,000 Crores which will meet the need for seed capital of this vibrant sector, even the Excise exemption limit should have been increased in view of inflation.
The allowing of External Commercial Borrowing (ECB) for sector like Aviation and low cost housing introduction of doubling the amount of tax free bonds for infrastructure sector such as Ports, Power, and Road etc will give the much needed impetus to achieve over 7% of GDP growth.
However increase in the Excise duties and Service Tax by 2% will adversely impact the automobile, engineering and manufacturing industry and various provision and alteration made in rules of Service Tax, Excise and Customs duty will make the procedure more cumbersome for the assesses and increase harassment.
The Hon’ble Finance Minister, Mr. Pranab Mukherjee should have initiated measures and incentives to boost the infrastructure related industries. However the Budget will add to the inflationary trend and in turn could have a ascending effect on the economic/manufacturing growth.
AIAI feels that the negative list on the Service Tax may be re-looked into. The fiscal deficiency of 5.1% is matter of concern and various leakages in regard with subsidies and popular schemes need to be implemented transparently to avoid further increase of fiscal deficit and misuse of schemes.