COVER STORY

Hospitality Boom: Discovering !ndia

- - Amit Singh Sisodiya and Kavitha Putta

The explosion in tourist traffic has resulted in a big boom for the hospitality sector in the country. The western world, which for long had perceived India as the land of snake charmers and elephants, is fast changing its view. With the surge of Indian IT firms on the global map and now traditional forms of therapy and yoga leading to the rising popularity of medical tourism, the one sector which is getting the biggest rub-off effect from them is the hospitality sector; the "Incredible India" campaign, which promotes Indian tourism, has also been largely responsible for attracting inbound tourists.

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NOBEL LAUREATES

Dr. Muhammad Yunus : A Man with a `Feminist' Heart

- - GRK Murty

Dr. Yunus took to the cause of impoverished women with passion to add more beauty to their lives and that of the people around them. It was 1974. Bangladesh - the country known to be flood-pronewas reeling under acute famine. People were dying all around. That struggle of his fellow beings to survive the famine gave a terrible jolt to the conscience of a university teacher - Muhammad Yunus. Being an economist himself, he could not stand the visible failure of all the economic theories that he had studied from Dhaka University in Bangladesh to Vanderbilt University in the US. This drove him out of the university corridors to find for himself what exactly was happening.

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NOBEL LAUREATES

Edmund S Phelps: `Nobel' Curve

- - GRK Murty

His economic theories asserted that "man is a thinking, expectant being." Edmund S Phelps won the Nobel Prize not for respecting the well-established wisdom of the world, but for his - to borrow J Z Yung's words - "adventure, subversiveness, inventiveness and resources of the young" mind that questioned the well-established concept propounded by A W Phillips, in his 1958 paper - "The Relationship between Unemployment and the Rate of Change of Money Wages in the UK 1861-1957 - " published in Economica, in which he stated that there is an "inverse relationship between money wage changes and unemployment in the British economy over the period examined."

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BANKING

Financial Inclusion : Reaching the Unreached

- - K C Chakrabarty

Promotion of financial inclusion will increase the outreach of the banking system to the hitherto unreached. The Indian banking sector has evolved significantly over the years. Its changing landscape can be greatly attributed to factors like expansion drive, introduction of innovative products to suit customer's demands, effective usage of technology, etc. Increasing competition among the public, private and foreign players also indirectly facilitated the rapid growth of the sector.

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BANKING

Banking Sector: On the Growth Track

- - Amit Singh Sisodiya and Madhuparna Chakraborty

A buoyant economy along with ongoing reforms has fueled the growth of the Indian banking sector. The forces of globalization and liberalization, unleashed over a decade back, are finally fetching results. The Indian banks, which were previously overwhelmed by the challenges of the twin forces, are now reaping the benefits thanks to the change in their mindsetthey have turned profit seekers and have begun laying increased emphasis on improving their competitiveness.

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BANKING

Management of NPAs: Trends and Challenges

- - Gurudas Saha

To address inclusive growth of the economy, all of us have to take up new challenges to tackle Non-Performing Assets (NPAs). The Government of India has spent more than Rs. 30,000 cr of the taxpayers' money to support banks and financial institutions for NPAs. Whereas lending by banks has a multiplier effect on the growth of the economy, on the contrary, banks' NPAs have a multiplier effect on the value destruction of the economy.

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BANKING

Indian Banking: Future Perfect

- - B Sambamurthy

There is tremendous opportunity available at the "bottom of the pyramid" through the introduction of financial inclusion programs. Banking in India is headed for interesting times. Across the world, banks propel the economy and are influenced by the business cycles. Indian banking too is similarly affected, where corporates issue GDRs/ADRs or raise ECBs, as a source of cheaper funds. Globally, banks are increasingly resorting to automation to establish touch points with their customers through ATMs, kiosks, mobile phones, Internet, etc. Indian banks too have caught pace in computerizing their operations, in adopting core banking solutions, etc.

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BANKING

Indian Banking: The Changing Paradigm

- - Avinash Chander Mahajan

India's quest for integration with the global economy has brought in changes with a far-reaching impact on the Indian banking scenario. While the ongoing economic re- forms have instilled stiff competition among banks and non-bank financial institutions on the one hand, faster economic growth has offered immense opportunity for banking business on the other hand. Market-based financial techniques have taken the key role for diversification of product range.

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BANKING

Indian Banking : Giants in the Making

- - K N Prithviraj

If the process of consolidation through mergers and acquisitions gains momentum, one could see the emergence of a few large Indian banks with international character and some large national banks. Since 1991, the Indian economy in general and the banking sector in particular have experienced a number of changes. Till the early 1990s, i.e., in the pre-liberalization era, public sector banks were enjoying a near-monopoly status, catering to the core banking business of borrowing and lending.

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BUSINESS ENVIRONMENT

News Channels: More the Merrier!

- - Amit Singh Sisodiya and Madhuparna Chakraborty

The glut in the number of news channels in the country raises a serious question about their survival. If you thought news channels are meant only for retired or elderly people, think again. For, the pace at which news channels have been launched in the country, of late, belies that belief. For instance, in the last one year alone, over half-a-dozen news channels have been launched, which include channels like Times Now (a joint venture between Times of India Group and Reuters), CNN-IBN (a collaboration between CNN and TV18), Janmat TV (from the stable of Sri Adhikari Brothers), and Tez TV (from TV Today Group). News broadcasters claim that there is a huge market lying to be tapped.

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BUSINESS ENVIRONMENT

Reverse Mortgage: A Revolutionary Retirement Management

- - D Satish and Y Bala Bharati

With the introduction of reverse mortgage in India, the house-rich and cash-poor retirees are going to breathe a sigh of relief. A conventional adage goes this way: "You can't have your cake and eat it too". People usually believe in and go by what conventional wisdom preaches. Nevertheless, reverse mortgage concept contradicts the saying by proving that one can have the cake and eat it too. With the entry of reverse mortgage in India now, the house-rich senior citizens have a big reason to rejoice. Reverse mortgage allows them to live in and also simultaneously earn from their residential property.

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BUSINESS ENVIRONMENT

US Housing Market: Where it Lands the Economy?

- - N Janardhan Rao and Ravi Babu Adusumilli

The housing boom has been the main engine of America's economic growth in recent years. However, with the changing scenario and the slowdown in the sector taking its toll, it will not only impact the US economy but could also be a key threat to the health of the global economy. As The Economist reported, houses are not just places to live in, they are more important for whole economies. Thus, the housing sector in the US has been playing a vital role in the country's economic growth and employment. The five years of prolonged housing bull market has helped the US economy to combat other ill effects of the economy and helping consumers feel rich.

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BUSINESS ENVIRONMENT

Russian Oil : World Energy Czar?

- - N Janardhan Rao

After laying new export pipelines in the recent past, Russia has steadily come into the international picture as a real energy player. Amidst the escalating oil prices in the international market and the increasing tensions in the Middle East, the importance of Russian oil has grown significantly. It has the world's largest natural gas reserves, the second largest coal reserves, and the eighth largest oil reserves. It has got a fifth of the world's known reserves of natural gas and 75 billion barrels of oil; around 7% of total world reserves.

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BUSINESS ENVIRONMENT

China Inc.: Merge to Emerge

- - N Janardhan Rao

The recent relaxation of foreign currency controls will help Chinese companies, which have been plagued by overcapacity and fragmentation, to grow faster and to expand their overseas presence. After China's entry into the WTO regime, it has been gradually opening up its domestic markets to foreign companies. To maintain the tempo and to defend itself against the competitive threats, consolidation among domestic companies is on the rise. Whether it is the inflow or outflow of investment, China's M&A activities are on the upswing.

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PERSPECTIVES

India's Overseas Acquisition Spree: The flip side

- - GRK Murty

"Can-do" attitude has become all pervading, under which, the embedded losses are getting glossed over. It's very, very amazing: "Tata Steel makes Corus offer" to acquire its steel plant(s) at a whopping (indicative) valuation of anywhere above $ 8 bn. And, if the deal comes through, it would be five times bigger than the biggest overseas acquisition to date, executed by Oil & Natural Gas Corporation.

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PERSPECTIVES

Mission 2007: Every Village a Knowledge Center

- - Rajendra Kumar Dash

Machine Translation (MT) could help bridge the digital divide in India. No country has benefitted more than India from the IT revolu- tion; it has not only ushered in a robust and sustainable economy (in spite of the Gods!) but has also played a key role in augmenting the dissemination of knowledge in various walks of life as diverse as agriculture and software engineering.

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CORPORATE STRATEGY

Britannia: Biting Back?

- - Amit Singh Sisodiya and Madhuparna Chakraborty

As rivals increasingly threaten to bite into Britannia's market share further, the biscuit major should not just think better but also move fast if it wants to retain its leadership. The hitherto calm biscuit market, which was once a fiefdom of Bri- tannia, closely followed by Parle, has suddenly begun to see the competition heating up. It is no longer Britannia vs. Parle, the two players, which once shared among them over two-thirds of the market share. However, All this began to change when ITCthe tobacco to hospitality to paper giantdecided to take a bite into the Rs. 5,50,000 cr biscuit market in the country.

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CORPORATE STRATEGY

Bharti Airtel : On the Move

- - Amit Singh Sisodiya and Sanghamitra Dhara

For India's largest wireless carrier, which enters the global elite club as its subscriber base scores past the 25 million-mark, innovation is the key to success. Bharti Airtelwhich made waves when Vodafone, the world's largest wireless company, took a strategic 5% stake in India's leading mobile operatorcontinues to surprise the market. India's largest telecommunications services provider from private sector now wants to transform itself from being a pure communications player to a "lifestyle enabler".

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CORPORATE STRATEGY

Dilemma Chrysler: Better off Alone?

- - Amit Singh Sisodiya and Sanjoy De

As a combination of factors like shifting consumer preferences, inventory glut, and ageing product line continue to plague Chrysler, it puts a big question mark over the sustainability of the eight-year-old cross-border marriage. For Dieter Zetsche (nicknamed Dr.Z), the charismatic CEO of DaimlerChrysler, who has had an envious record of recuperating the troubled 1998 merger of the transcontinental auto giants, Daimler-Benz AG of Germany, and Chrysler, America's third largest automobile company, thanks to his massive restructuring initiatives in 2000, which earned him the top job at the world's third largest car maker, these are surely not happy days.

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CORPORATE STRATEGY

Alcatel-Lucent: Love in Paris

- - Amit Singh Sisodiya and Kavitha Putta

After waiting patiently for five long years, the two telecom equipment giants finally combine in what could be one of the biggest cross-border mergers in the history of the telecommunication industry. Five years ago, in 2001, when the French telecom equipment ma- jor Alcatel and the US major Lucent wanted to woo each other, it was viewed as a terrific combination. However, the courtship did not materialize and the duo did not disclose the reasons for that. Nonetheless, the two struggling giants have decided to merge finally in a deal valued at $11 bn, leading to the creation of the world's largest telecom equipment manufacturer.

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FINANCIAL MARKETS

Capital Protection Schemes : Welcome to India

- - D Satish and Y Bala Bharathi

Capital Protection-oriented Schemes, approved by Sebi, would come as a respite to many investors who are averse to investing in mutual funds for the fear of losing their corpus. It's a thumb rule in the investment world that risk and return go hand in hand. Higher the risk, higher is the possibility of earning greater returns but there is also a possibility of losing the entire investment. Investors with high risk appetite generally invest in the stock markets and make a lot of money in a bullish market. Nevertheless, there are a lot of instances where the investors have lost even their capital invested, forget about returns.

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INTERNATIONAL MARKETS

Dollar Reserves: Rekindling the Asian Identity

- - Ranjit Goswami

Asian countries have huge dollar reserves which can be used as an effective bargaining tool with the US as well as to build the Asian identity. North America has had one voice ever since the late 1800s. The European Union has spoken with one voice since the fall of the Berlin Wall in 1989; although the Union itself was officially formed in 1992. Today, these two economies with their Western Allies, with less than 15% of the global population, control more than 65% of the global economy. On the other hand, Asia, which accounts for two-thirds of the global population, has a meager share of 22% in the global economy, even after including Japan, the only significant Asian economy of size and scale that alone contributes to 45% of the Asian share.

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APOLITICAL

SEZs: Will They Work for Us, Too?

- - grk

Ever since the Special Economic Zones Act was passed hoping that creation of such specially carved "capitalist enclaves" would attract the much needed investments in creation of excellent infrastructureboth from domestic and foreign sourcesmuch dust has been raised both in the political and academic circles.

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ARTS AND ARTISTS

Echoes from Ajanta

- - Dr. Nirmala

We look before and after, / And pine for what is not .Great souls exhort us to live in the present, "launch ourselves on every wave and find our eternity in each moment." But it is difficult to convince the human heart, which flits about, longing for signs from the past. Nostalgia? Yes, nostalgia in the deepest sense of the word haunts many among us. Perhaps, it is true that from the past and from its continuity down to the present we may discern the significance of the present.

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