Doing Business in India: Dissecting UN Report 2009-1.

Going by the recent World Bank Doing Business in India report, India ranks a measly 122nd out of a total of 181 economies worldwide when ease of starting, operating or exiting a business is considered. Singapore is the top ranked economy in the ease of doing business. What surprises me even more is the inclusion of Pakistan on the 77th ranking spot. So, apparently India lags behind its perennial ally(?) and that too by a wide margin. 

I will divide the report in a series of posts. This one here is intended for the: 

Part 1 : Starting a business in India(S.B.I from hereon)

1. Ease of doing business: It incorporates the overall requirement of a burden free, convenient and transparent way to start, initiate, operate, expand, close your business. India ranks 122nd overall.

2. S.B.I: This forms the most important indicator of the level of corruption prevalant in the government. The more the number of procedures and formalities to be completed the more is the potential point of contact with a government official and the more is the possibility of the issue of corruption. 

India has been ranked a lowly 74, two steps down since last year, among 180 countries of the world on the worldwide Corruption Perceptions Index (CPI), prepared by independent international agency Transparency International.

India ranks 121st on this parameter with 13 overall stages to be completed before an entrepreneur can actually concentrate on his business. Denmark and countries like New Zealand have far easier and convenient norms with a just a single step solution to opening a new venture. These are the good practice economies. Comparable economies of the likes of Brazil, China, Japan, Mexico, Pakistan have 18,14,8,9,11 steps that are needed to be completed while initiating a new business. 

The 13 steps as envisaged by the Gomint of India is as follows:

1. Obtain director identification number (DIN) on-line;

2. Obtain digital signature certificate on-line;

3. Reserve the company name with the Registrar of Companies (ROC) on-line;

4. Stamp the company documents either at the  Superintendent or an authorized bank;

5. Present the required documents along with the registration fee to the Registrar of Companies       to get the certificate of incorporation;

6. Make a seal;

7. Visit an authorized franchise or agent appointed by National Securities Depository Services Limited to obtain a permanent account number;

8. Obtain a tax account bumber for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department;

9. Register with Mumbai Shops and Establishment Act, 1948;

10. Register for VAT before the Sales Tax Officer of the ward in which the company is located

11. Register for profession tax;

12. Register with Employees' Provident Fund Organization;

13. Register for medical insurance (ESIC);

So, basically there are 13 contact points. Knowing fully well the functioning of the Government Offices and its workers I can safely conclude how hard it will be for someone to think about starting a business. It takes a total of 30 days in India on an average to complete the procedures involving the start-up. In Brazil the duration stretches to 152 days, it is 40 days in China, 23 days in Japan, 28 days in Mexico and 24 days in Pakistan. 

P.S: You should note from the table provided that India ranks 28th when it comes to access of credit from banking/non-banking firms. Not all is bad on the Indian soil then is it?

Performance and Expenditure of National Political Parties in GE'04

The adjacent table provides the performance of major national parties during the last General Elections in 2004. Bahujan Samaj Party cannot technically be called as a national party inspite of it having contested in as many as 435 states but managing to secure seats in only 19 of those 435 constituencies. A 4.36% winning scenario. BJP managed to secure 138 seats while INC managed 145 winning constituencies.

A look at the state-wise performance of these major parties demonstrate the grip each party has on the political atmosphere. BSP secured all of its 19 seats from the state of Uttar Pradesh alone. A report here says that with an eye on the national stage BSP will be fielding candidates from as many as 500 constituencies, a figure that is higher than both Congress(>400) and BJP(430).

BSP’s numbers game would seem to be working if recent state elections are any indication. According to a study by Marketing and Development Associates (MDRA), a New Delhi-based research consultancy, the party’s vote share rose from 4.5% to 6.5% in Chhattisgarh; 4.8% to 11% in Madhya Pradesh; 2.5% to 14% in Delhi; and from 3.2% to 7.6% in Rajasthan. While the later figures are based on the November 2008 assembly elections in these states, the earlier ones are based on the 2004 general election.

Seems like BSP's strategy of Social Engineering is about to take off in the 120/543 reserved seats including 79 for SC's which comprises the prime vote bank of the party. Of these, 17 seats are in Uttar Pradesh alone. BSP is targeting a vote percentage of about 10% of the total up from 5.33% in 2004 comprising mainly of the Dalit vote bank. Mayawati has aspirations to become the Prime Minister of India and would be instrumental in leading the Third Front post-elections if it manages to do just that. In contrast Samajwadi Party managed to secure 4.32% of the total votes although it won 36 seats (17 more than BSP) in the last General Elections. BSP is hoping to convert the higher vote percentage into seats for a greater say in the national politics.  

Money Power in Indian Polity (Source)

"I have come to the conclusion that muscle power is less harmful than money power. One could silence the muscle power but money power is really a great blot," CEC Gopalaswami has said.

And there are reasons for the EC to be worried. The Income Tax returns filed by 21 political parties show the sheer amount of money at play.The total money spent on elections in 1991 was Rs 359 crore which rose to Rs 597 crore in 1996, Rs 666 in 1998, Rs 886 crore in 1999 and Rs 1,300 crore 2004.The assets and incomes of the political parties, too, have been growing phenomenally.

Two major regional parties Samajwadi Party and Bahujan Samaj Party (BSP) lead the tables. The Samajwadi Party registered an average 41 per cent growth annually in its assets from 2002 to 2006.In 2002 SP had assets worth Rs 13.86 crore, which grew to Rs 13.91 crore in 2003, Rs 26.56 crore in 2004, Rs 38.01 crore in 2005 and reached Rs 77.07 crore in 2006.

Mayawati's BSP's assets grew at over 32 per cent per year. It was Rs 10.92 crore in 2002, Rs 39.39 crore in 2003, Rs 43.69 crore in 2004, Rs 43.10 crore in 2005 and Rs 44.06 crore in 2006.

The growth of the Congress and the BJP is best reflected in the income figures. Congress' aggregate income grew by Rs 631 crore from 2001 to 2006 out of which Rs 343.51 crore were spent on elections.In 2002 Congress' income was Rs 61.50 crore, in 2003 it was Rs 69.56 crore and grew to Rs 153.04 crore in 2004, while in 2005 and 2006 the income was Rs 222.07 crore and Rs 124.93 crore respectively.

While the BJP's aggregate income rose by over Rs 327 crore out of which Rs 238 crore were spent on polls.In 2002 BJP's income was Rs 44.22 crore, in 2003 it was Rs 49.46 crore and grew to Rs 91.49 crore in 2004, while in 2005 and 2006 the income was Rs 104.12 crore and Rs 38.34 crore respectively.

"The kind of political system that we have today is forcing the candidates to spend this kind of money. This has led to a situation where our entire democracy has become a tamasha (drama)," Arvind Kejriwal, founder of Parivartan, said.

The 2 major political parties alone account ofr an expenditure of about 600 crore rupees for the elections. Include the regional parties and the numbers are staggering to say the least. A report in The Hindu here says:

The Election Commission of India, political parties and candidates will incur an expenditure of over Rs. 10,000 crore during the three-month-long run-up to the Lok Sabha elections. The expenditure incurred in the 2004 Lok Sabha elections was Rs. 4,500 crore.

Just a couple of months away from the 15th General Elections of the largest democracy in the world, the biggest challenge facing the Election Commission is tackling the lethal combination of muscle and money power in Indian polity.It's an open secret now that the actual amount spent by political parties on election campaign is much higher than the details they `officially' submit with the election commission. While in an assembly election average spending by a candidate is said to be about Rs 50 lakh, in a parliamentary election, per constituency expense on election campaigning is about Rs 2 crore. (Source)

Sorry For Smoking.

Smoking in India has risen tremendously over the past few years. There has been a marked rise in tobacco consumption amongst the illetrate classes thanks largely to the poverty and lack of awareness that is aiding them in starting to smoke. Developed countries are now visibly showing signs of a decline in the consumption of tobacco(mainly parts of western europe, The United Kingdom, United States, Canada and Australia). They lie in the 4th stage of tobacco consumption as elaborated below. India on the other hand inspite of the various measures taken in by the government has shown a marked increase in the consumption. 

Studies conclude that the trends in Tobocca consumption can be broadly classified into 4 stages. India being in the 2nd one. Below is entailed the socio-economic aspects of tobacco epidemic in the world.

Socio-economic aspects of the tobacco epidemic described in four stages (Source)

The socio-economic pattern of the tobacco epidemic can be divided into the following four stages Stage 1: smoking is uncommon and mainly a habit of the higher socio-economic groups;(Africa)

• Stage 2: smoking becomes increasingly common. Rates among men peak at 50%-80% and are either the same for the different socio-economic groups or higher among higher socio-economic groups. This pattern is, however, delayed by 10-20 years for women. Smoking is first adopted by women from higher socio-economic groups;(India, China, Brazil)
• Stage 3: prevalence rates among men decrease to about 40% as many men stop smoking, especially those with a higher educational level. Women reach their peak rate (35%-45%) during this stage, and at the end of this stage their rates also start to decline;(Central and Eastern Europe mainly)
• Stage 4: prevalence rates keep declining slowly for both men and women, and smoking progressively becomes more a habit of the lower socio-economic groups.(Western Europe, UK, US, Canada, Australia)

During the smoking epidemic there is a reversal from a positive to a negative association between socio-economic status and smoking.

The government on its part has taken a slew of measures to curb the rising menace of a smoking epidemic. Some of them include:

• The 2003 Tobacco Control Act
• Ban on Public Smoking (2008): This entails among others: 1) A fine of Rs. 200 for smoking in public places, 2) No death/smoking chambers on any companies' premises (companies would be held liable for their employee's smoking habits) 3) No smoking allowed at all indoor places.

• Pictorial warnings to appear on packs in May 2009, subject to the government winning the court cases against this. The grotesque depiction of skulls and affected smokers will do a world of good to drive away the youths in India from taking up smoking as a cool pass time. 
• A five year plan in place for massive awareness campaigns. How successful the 5 year plan is can be anybody's guess. 

Who is Smoking?

The un-educated Indians are fast taking up the habit of smoking which is visible from the rise in the number of bidi smokers in India. 

• Bidi smokers: 50%
• Tobacco chewers: 38%
• Cigarette smokers: 14%

Even educated Indians knowing the harm a fag can do are fast taking up the addiction thanks largely to a heavy overdose of westernized media, aggressive marketing by tobacco giants. The idea of masculinity that Cigarette has come to be associated with has propelled the youth here to consider this as a fashion statement. Sad but True.

The consistent growth of the bidi segment in the smoking market has been partly due to taxation being lower then cigarettes, which has given bidis a considerable price advantage. Other factors supporting rapid growth in demand for bidis include the traditional habit of bidi smoking in the family, which is passed on to the children; the relatively low income level of a large part of the population, especially among the rural masses; and increased use of bidis by women in rural areas in certain states, as there is no inhibition to their smoking. By contrast, the government taxation policy seems to have restricted growth of the cigarette market. From 1970/7l to 1997/98, cigarette taxes increased almost 15-fold (from Rs 31 to Rs 439 per 1 000 cigarettes). This resulted in smokers using more bidis. The Indian tobacco market is highly price sensitive. The price elasticity for cigarette consumption was estimated at -0.66 between 1967/68 and 1992/93, i.e. a 10 percent increase in price would result in a reduction in consumption of 6.6 percent. While increased prices have a constraining affect, the wide use of sponsorship of sport events, publicity and advertisement by the cigarette companies have helped introduce large numbers of young people to cigarette smoking. 

Interesting facts regarding tobacco consumption/production/supply chain in India is detailed here here and here. 

Smoking was popular in the west during the early nineties when the harmful effects of the fatal leaves was not known to the mankind. As evidence poured in of the dangerous effects of smoking educated people grew aware and gave up smoking. What surprises me in the case of India is the absence of this awareness inspite of the knowledge becoming known to one and all. One-Fifth of Indians are now consuming tobacco one way or the other. 

A study undertaken by New England Journal of Medicine says that by 2010 one in every 10 deaths in India would be smoking-related.

A task force of the Indian Council of Medical Research conducted a research study from 1990 to 1996 on the Cost of Tobacco-Related Diseases in India. The average economic cost of major diseases due to tobacco use in India in 1999 was estimated at Rs 350 000 for cancer, Rs 29 000 for Coronary Artery Disease (CAD) and over Rs. 23 000 for Chronic Obstructive Lung Disease (COLD). Total losses from these tobacco-related diseases in 1999 was about Rs 277.6 billion, equivalent to US$6.5 billion (Table 4.16). The medical experts, however, consider the estimated total loss to be an underestimate as it is derived from only a small sample.

Smoking Effects on the Human Body (Source)

• Toxic ingredients in cigarette smoke travel throughout the body, causing damage in several different ways.
• Nicotine reaches the brain within 10 seconds after smoke is inhaled. It has been found in every part of the body and in breast milk.
• Carbon Monoxide binds to hemoglobin in red blood cells, preventing affected cells from carrying a full load of oxygen.
• Cancer-causing agents in tobacco smoke damage important genes that control the growth of cells, causing them to grow abnormally or to reproduce too rapidly.
• The carcinogen benzo(a)pyrene binds to cells in the airways and major organs of smokers.
• Smoking affects the function of the immune system and may increase the risk for respiratory and other infections.
• There are several likely ways that cigarette smoke does its damage. One is oxidative stress that mutates DNA, promotes artherosclerosis, and leads to chronic lung injury. Oxidative stress is thought to be the general mechanism behind the aging process, contributing to the development of cancer, cardiovascular disease, and COPD. 
• The body produces antioxidants to help repair damaged cells. Smokers have lower levels of antioxidants in their blood than do nonsmokers.
• Smoking is associated with higher levels of chronic inflammation, another damaging process that may result in oxidative stress.

It is high time to let the masses know of the danger that this epidemic poses on a population that is the youngest in the whole world. To think that 50% of the youth in India can take up Smoking at any given time is alarming while at the same time frightening. Alongwith the degeneration it inflicts on the smoker, passive smoking by the family, friends and by-standers paints a very dismal picture. Mass awareness campaigns, stricter regulations, ecplicit banning and rehabiliation programmes can go a long way in tackling this menace that is all set to embrace the population here with its lethal tentacles.  

Elected Representatives? Think again.

I am reproducing here an article that appeared on DNA a few days back. The data here was taken from the government website Press Information Bureau. It shows the pathetic state of Indian elections wherein candidates win even when they obtain a voting percentage as low as 10%. Hard to digest that our Members of Parliament are selected with just over 10% of the voters mandate. The picture gets grimmer still when you consider the people who didn't turn out to vote but were registered electorates. 

How many votes does a candidate need to get elected to the Lok Sabha? If election commission statistics are anything to go by, a little over 10% of the electorate in a constituency.

This is especially true in constituencies where there are multi-cornered contests, a trend that is increasing by the Lok Sabha. Most noticeable is the case of Uttar Pradesh (UP), which sends a whopping 80 members to parliament. Almost all seats in the state saw three- or four-cornered fights in 2004, with less than 50% of the electorate exercising its franchise.

A similar trend was witnessed in several other constituencies in north and central parts of the country, where polling percentage hovers around just 50. The increasing fragmentation of Indian politics doesn't augur well for the basic first-past-the-post (FPTP), or simple majority, concept of voting. This has been worrying constitutional experts and national review committees such as the National Commission to Review the Working of the Constitution (NCRWC), which submitted its report in 2002.

The situation is acute in states where three- or four-cornered fights have become a norm. The explicit aim of FPTP is to promote two-party politics. But the increasing number of regional parties is leaving a majority of voters without representation in the Lok Sabha.

Many, however, argue that the fragmentation is representative of India's diversity and is good for a federal government. In Basti, Mohanlal Ganj and Robertsganj constituencies of UP, candidates got less than 12% of the total votes in 2004. In the state's 59 constituencies, winners polled less than 20% of the total votes.

The fact that voting percentage was less than 50 in UP and other big states such as Madhya Pradesh makes one thing clear, that a winning candidate needs to concentrate only on a group, say a caste or a religion, or a couple of groups (vote banks) that may add up to about 20% of the total votes in a constituency.

A candidate campaigning selectively and winning support of one or two groups could win, even if majority vote is against him, because those opposed to the eventual winner cast their votes with several candidates.

In 2002, NCRWC admitted this, saying, "The representative character of the representatives itself becomes doubtful and their representational legitimacy is seriously eroded. In many cases, more votes are cast against the winning candidates than for them."

The election commission recently pointed out, "While in Tamil Nadu on most seats the winning candidates secured over 50% of the votes polled (34 of 39 seats), in Uttar Pradesh, only nine of the 80 seats were won by this margin.

"In Andhra, 29 of the 42 seats were won by over 50% of the votes cast, while in Bihar, only 11 winners could get over 50% votes."

In states such as West Bengal, Rajasthan and Orissa, over 50% of winners polled over 50% of the votes cast. These states were followed by Gujarat and Madhya Pradesh, which sent a noticeable number of candidates with over 50% vote share.

Delhi had the distinct identity of sending all its seven MPs with over 50% votes, while only one in neighbouring Haryana's 10 Lok Sabha members could cross the mark. 
In the northeast, the democracy is actually most vibrant in this context. In Mizoram, Meghalaya, Nagaland, Sikkim and Arunachal Pradesh, all Lok Sabha winners pocketed over 50% vote share.

In the 14th Lok Sabha, 324 of the 543 (almost 60%) winning candidates couldn't muster a 50% vote share. Considering the fact that in several states less than 50% votes are polled, 60% of the winners represented only a quarter of the voters in their constituencies. Meaning, a majority of voters are not directly represented in parliament.

Some interesting trivia on GE'09

In line with the flavor of the season namely the upcoming general elections I intend on writing about this and researching a lot more on this. I found some really interesting trivia on a government site.I am reproducing the same here for all to see. Please note the number of winning women candidates in the last elections as also the number of political parties(215) that contested the last elections. Electorates are people who have registered themselves as bona fide voters while voters are the people who actually turned out to vote. 

 

•  671,487,930 electorates  registered in the electoral rolls. 

•  5435 candidates contested the elections for which 6,87,402 polling stations set up. 

•  3050 candidates  represented 215 political parties and 2385 candidates were Independents. 

•  Polling station with least no of electors: Only ONE voter in Polling station No. - 29;(Dharampur) in Miao Assembly segment of Arunachal East parliamentary constituency . 

•  Parliamentary Constituency with Largest Number of Electors -3368399(Outer Delhi) 

•  Parliamentary Constituency with Lowest Number of Electors – 39033 (Lakshadweep) 

•  Maximum contestants in a parliamentary constituency - 35 (Madras south) 

>>35 contestants from a single constituency!! No wonder the average percentage of votes the winners get lie somewhere around the 40%-50% region. So, in effect the majority of MP's that finally get the coveted seat haven't received the 50% mandate of the people. Too many cooks spoil the froth!!

•  Maximum Women contestants in a state - 61 (UP)  

>>Behenji ne mahilaon ki samasya ko samjha aur unhe seats diye. kitnon ne jeeta yeh alag baat hai.

•  Minimum women contestants in a state -1 (Goa)  

•  Maximum women winners - 7 (UP)  

•  Out of 543 elected MPs, 45 were women.  

>>why do they need women reservations in the parliament? 45/543 is a satisfactory number given the mayawati's(behenji), the mamta bannerjee's(didi) and the jayalalitha's(amma) sheer size they alone account for the rest.

•  Maximum age of the candidate-94 years (Ramchandra Veerappa in Bidar, Karnataka)  

>>vow!! look at the lust for power!!

•  Minimum age of the candidate - 25 years (Many).  

>>hmm...some relief there are some who would want to see some change for a change.

•  Maximum age of the winning candidate-94 years (Ramchandra Veerappa in Bidar, Karnataka)  >>and to think he won!!

•  Minimum age of the winning candidate-26 years Sachin Pilot in Dausa (Rajasthan)  

>>genetic lineage and family fiefdom. am not saying he din't deserve this but youth winning a seat in India seems improbable at the very least. 

•  Maximum votes secured - Sajjan Kumar outer Delhi - 855543  

•  Minimum votes secured - Ashok Kumar chandni chowk- 45  

>>lol..his family members and friends got this many I suppose!!

•  Minimum votes secured by a winner - 15597 votes (Lakshadweep).  

•  Minimum margin, Lakshadweep, 71 Votes  

•  Average age of the elected MPs is 52.63 Years.  

>>ohh really...!! Thats not that bad is it?

Given the heat of the situation I would want to concentrate my crappy brain on this dance of democracy. Expect more of such posts in a very short time. 

Introduction

Did you know?

1. The mobile users in India grow @ 2.5 million every month.

2. There are over 1500 software companies in Bangalore.

3. The number of births that occur in India every year is more than the entire population of Australia.

4. About 50% of the residents in India are below 25 years of age.

5. Indian Railways is the largest employer in the world with about 1.6 million people on its payroll.

6. India has about 800 dialects and 15 major languages. 

This is not a trivia blog. This ain't a naked statistics forum either. This blog is intended to provide its readers and the author some rare insights into things that concerns one Varun Jain namely- Finance, Business, Education in India and Governance. So you may not find interesting and funny trivia here. If that's what you had wanted you better not traverse these web pages anymore. This webspace will provide you with mere statistical inputs that are not advanced in any way atleast for now. So, I wont be using variance, regression etc. 

This blog is a self-learning tool and I have intended to let it be that way. I would be forming opinions that are entirely mine and speaking out with numbers to drive home the points if there are indeed any. You would find the labels mentioning the related field of interest to the left of this column and can navigate through this blog on your own. 

Disclaimer: I do not vouch for any statistics that will in due time appear on this domain. I would though like to say that it will be my endeavor to constantly check my source of data and will ensure that it is credible and true.