PM's Inaugural address at the Conference on Public-Private Partnership in National Highways

PM's Inaugural address at the Conference on Public-Private Partnership in National Highways

September 12, 2011

http://pmindia.nic.in/lspeech.asp?id=1093

India faces a war from within, says Sunil Mittal

An excellent view represented by Mr.Sunil Mittal on the role of opposition in India

http://economictimes.indiatimes.com/news/news-by-company/corporate-trends/ET-Awards-Agenda-For-Renewal-2011-India-faces-a-war-from-within-says-Sunil-Mittal/articleshow/10749049.cms

Kingfisher promoters open to reducing stake to 26% Talks initiated with Indian investors, private equity players. The promoters of Kingfisher Airlines are open to reducing their stake to 26 per cent to strategic domestic investors, from the current 58.61 per cent. Ravi Nedungadi, UB group’s president and chief financial officer, told Business Standard the “promoters are willing to pare their holdings on the same lines as the recent Force One deal with Sahara and the UB Group deal with Heineken signed in 2009”. This means the promoters are willing to give equal shareholding to an Indian entity, talks for which have already been initiated. While UB group and Heineken together hold 75 per cent stake in United Breweries (37.5 per cent each), UB Group chairman Vijay Mallya and Sahara India both own 42 per cent stake each in Force One, which is a Formula 1 racing team. At a press conference earlier in the day, Mallya said Kingfisher Airlines was in talks with Indian investors and private equity players to buy into the airline. He refused to divulge any further details. Mallya, however, emphasised he had not sought any bailout package from the government or banks. “We have not asked the government to dip into taxpayers’ money. I have also not asked banks to take a haircut or restructure loans,” he said. His proposal to banks is threefold. First, a Rs 700-800 crore working capital loan and term loan to tackle rising fuel costs and reconfigure the fleet. Second, the airline has asked for a mechanism by which close to Rs 1,200 crore of high-cost rupee debt can be converted into foreign currency loans that attract lower rates. And third, Kingfisher has Rs 1,000 crore locked up as deposits with his aircraft lessors. The management has requested the banks to convert them into letters of credit, which are cheaper, so that the cash can be freed and rerouted to prepay expensive rupee loans. To balance its high debt of Rs 6,500 crore with equity, Kingfisher is also going ahead with its plans to raise up to Rs 2,000 crore by the end of this financial year via a rights issue. Parallel to that, Mallya said he was in talks with Indian investors and PE players to buy into his airline, but refused to divulge details. Despite statements made by his leading lenders, Mallya clarified banks had not officially told him to infuse additional capital. The airline’s officials noted the UB Group’s business associates from the flagship liquor business had already pumped in close to Rs 763 crore this year alone in the form of unsecured loans. Of that, around Rs 150 crore had come in the past one week. These associates acting in concert with the promoter had earlier chipped in with Rs 709 crore by subscribing to the company’s optionally convertible debentures. “If there is a requirement of recapitalisation or infusion of additional equity, we will consider it,” Mallya added. Considering the challenging macro environment of a weak rupee, boiling crude oil prices and lack of investor confidence, Mallya urged the policy makers to open up the Indian skies to foreign strategic airline companies. “I am an avid supporter of FDI. I see no reason why foreign strategic investors should be banned. A general investor may not be keen on investing in aviation. Even in greenfield airports, we allow 100 per cent FDI,” he said. Crude prices, which have gone up by 50 per cent in the last two quarters, coupled with ad-valorem state taxes have also forced the airline to request the commerce ministry to allow direct import of aviation fuel. Taxes make jet fuel in India 60 per cent more expensive than the global average. The carrier, which has never turned a profit since its launch in 2005, saw its fuel bill jump 70 per cent in the September quarter from a year earlier. The UB Group chairman said Kingfisher had brought down the dues to oil marketing companies and given bank guarantees to cover bills from Hindustan Petroleum Corporation, and all other vendors would continue to provide supplies and services. “Fuel costs account for over 50 per cent of the operating cost, which gets increased due to the sales tax charged by various state governments," Mallya added. He defended the decision to stop flying on unprofitable routes, a move that faced serious regulatory and consumer scorn throughout last week. “We cancelled flights not because we couldn't afford to fly," he said. "We cannot, as a private company, afford to fly on routes that are heavily loss-making. We are not in the same arena as the national carrier." The decision to phase out Kingfisher Red was also a strategic one as the earnings from the no-frills segment had been lower than its full-service peer. “With capacity addition taking place in the low-fare market, we believe the bloodbath will be at the bottom end,” Mallya said. Instead, the airline is now focusing on reconfiguring aircraft earlier used for the no-frills services of Kingfisher Red. The exercise will help with incremental revenue. Kingfisher, which announced its results for the September quarter, said its losses doubled to Rs 469 crore from Rs 231 crore in the year-ago period, the biggest since the March 2010 quarter. While passenger revenue rose nine per cent, the revenue per average seat km fell 16 per cent from a year even as the cost per average seat km rose eight per cent. However, the airline's stock ended the day on a higher note, up 2.34 per cent, defying a market sell-off that saw the Sensex go down 1.38 per cent.

Kingfisher tailspin reflects government failure*

By Kevin Brown in Singapore

Vijay Mallya is a man who is easily ridiculed. A flashy billionaire, he wears diamond studs in his ears and calls himself “King of India”. His private Airbus has his initials inscribed in gold on the wings and the engines, as well as its leather seats and china crockery. His fortune is based on Indian whisky, which bears much the same relationship to its Scotch counterpart as the Royal Challengers, his Twenty/20 cricket team, does to traditional cricket.

But the brash Mr Mallya is no fool. His United Breweries group sells 60 per cent of the spirits drunk in India, and half the beer. And he is not to primarily to blame for the financial calamity that threatens to overwhelm Kingfisher Airlines, India’s second-biggest carrier by market share, which he chairs and controls. Indian domestic aviation is suffering from a serious market failure, caused by misguided government policy, and ministers need to step in quickly to fix it.

The scale of the problem became clear last week, when Kingfisher, which carries just under a fifth of domestic passengers, cancelled 50 of its 340 flights a day. Amid revelations that the airline had been delaying payments to creditors and salaries to staff, it asked the government to help persuade its banks to keep it in the air by extending credit limits.

That looks a tall order. The airline, founded in 2005 and named after one of Mr Mallya’s featureless lager beers, has a debt burden of $1.4bn and is in desperate need of fresh working capital. The Sydney-based Centre for Pacific Aviation, an industry consultancy, estimates that it needs $400m just to stay airborne for three months.

Kingfisher has already restructured its debt once this year, and is under pressure from its banks to raise fresh cash from investors before they will reopen the credit tap. However, plans for a rights issue have repeatedly been postponed as the group’s competitive position has worsened, along with market sentiment.

Losses hit Rs4.69bn ($93m) for the quarter to September 30, the airline said on Tuesday, compared with Rs2.31bn in the comparable period of the previous year. That was in spite of higher revenues, which rose from Rs13.8bn to Rs15.3bn. The shares rose 1.9 per cent after the announcement, but are still down 67 per cent for the year.

Kingfisher is not suffering alone. Jet Airways, the market leader with 26 per cent of passenger traffic, reported a loss of Rs7.14bn for the most recent quarter, while SpiceJet, the fifth biggest carrier, lost Rs2.4bn in the same period. Air-India, the fourth biggest, has not made a profit for four years. Only low cost Indigo, which carries roughly as many passengers as Kingfisher, remains profitable.

There are four main reasons why Indian airlines are in so much pain. One is rising fuel prices, common to every airline in the world. The second is a fall in the rupee, which is down 11 per cent against the US dollar this year, making fuel and foreign currency financing more expensive in local currency terms. The third is the high cost of landing fees and airline taxes, which reflect an old fashioned view of the industry as a luxury service for the wealthy rather than a key element in a modern economy.

In a normal market, the airlines could raise prices as costs rise. But they cannot do that because of the fourth reason: aggressive price cutting by Air-India, which is flush with capacity due to a fleet replacement programme launched in 2005. In its latest move, Air-India cut domestic fares by 15-20 per cent despite expectations that it will lose $1.5bn this year.

The state-owned airline is able to slash prices because it has access to frequent infusions of taxpayers’ funds to finance its operating losses and the high costs of servicing Rs400bn in debt. The airline, which in September was strongly criticised for reckless management by India’s comptroller and auditor general, is currently seeking Rs65bn from ministers, according to Indian media reports.

The paradox is that the airlines’ losses are being built up against a background of soaring demand. Domestic passenger numbers rose by 19 per cent in 2010 to a record 52m, followed by a further increase of 18.6 per cent in the first nine months of 2011. Without the distorting effects of the state airline’s behaviour, this is a market that could be very healthy indeed.

For the government, there are two possible strategies. One is to shut Air-India. That would be politically painful for the Congress-led administration, for which the airline is an icon of state sponsored development. The other is to recapitalise the industry by lifting a ban on foreign investment, which might draw in expansion-minded carriers eager for a share of Asia’s fast growing markets.

Either way, the government must act quickly to stop Air-India distorting the market, before other carriers find themselves in the same dire straits as Kingfisher. That really would be ridiculous.

Kevin Brown is the FT’s Asia Regional Correspondent.

* From http://www.ft.com/cms/s/0/b0678242-0f40-11e1-b83c-00144feabdc0.html#axzz1dq4zGlAb

India Insight*

Perspectives on South Asian politics

Kingfisher situation an example of India’s free market/welfare state identity crisis

Bailout. A term which till recently was alien to India.

It was something the West did, to save their big financial institutions which had grown too big too fast and had squandered their cash positions while betting on complex instruments that even they did not fully understand.

India, and largely Asia, was rather different. We were the growth engines of the world. The Asian giants would prevent the global meltdown from getting worse and would reverse it eventually, or so went the perception.

Three years on and as the Greek crisis looms, the major Asian economies and their counterparts from around the world are still pondering on how to prevent the problems in Europe from spreading worldwide.

India, meanwhile, is facing economic and policy conundrums of its own.

From record prices of fuel, food and other essential commodities and multiple rate raises by the central bank, to a growth slowdown and a government struggling to meet its deficit targets.

Bailouts may now become a reality for Asia’s third largest economy in the post-Lehman world. The most prominent example which comes to mind is of course that of the troubled national carrier, Air India.

‘Restructuring’ a government entity is nothing more than providing it a cash lifeline at the taxpayer’s expense. Its rival, Kingisher Airlines, owned by the flamboyant beer baron Dr. Vijay Mallya, might pretty soon need a lifeline as well.

It is ironic that the high fuel prices, which were expected to cut into the savings of India’s middle class, have also taken their toll on an entity belonging to one of the richest men in the country.

To be fair, Dr. Mallya has not asked for any government help, and there are reports that the airline is looking at all alternatives to cut its $1.3 billion debt by more than half, including selling of property.

But if there is a chance it may not be enough for the company, which had cut 36 percent of its winter slots last week amidst reports of pilots resigning en masse, the government may have to bring commercial banks to the table to discuss possible financial assistance, as the civil aviation minister indicated last Friday.

This will draw more ire from the public, but there is no way that this will not be done if all other options fail. Rahul Bajaj might have said that “those who die, must die” in a free market economy, but recent history proves that business in India is seldom, if at all free from political interference.

Be it Jet Airways layoffs in 2008, or the Maruti Suzuki union strikes or the land acquisition controversies surrounding mining companies like Vedanta.

And the government has to interfere as the Indian society and businesses do not have the stomach for mass job cuts, liquidation and crores in bad debt, which is what may happen if Kingfisher Airlines were to go under.

For the fact is, while we may try to be ‘free market’ in our business practices, India is still very much a left leaning welfare state in its mentality.

* From http://blogs.reuters.com/india/2011/11/14/kingfisher-situation-an-example-of-indias-free-marketwelfare-state-identity-crisis/

Civils 2012 - Tentative schedule

http://upsc.gov.in/

PUBLIC ADMINISTRATION

PUBLIC ADMINISTRATION

PART A

PRELIMINARY EXAMINATION

1. Introduction : Meaning, scope and significance. Evolution and status of the

discipline. Comparative Public Administration and Development Administration.

Public and Private Administration: State versus market debate. New Pubic

Administration. New Public Management perspective.

2. Basic concepts and principles : Organisation, hierarchy, Unity of command,

Span of control, Authority and Responsibility, Co-ordination, Centralization and

Decentralization, Delegation, Supervision, Line and Staff.

3. Theories of Administration : Scientific Management (Taylor and the Scientific

Managment Movement), Classical Theory (Fayol, Urwick, Gulick and others)

Bureaucratic Theory (Weber and his critics). Ideas of Mary Parker Follett and

C.I. Barnard; Human Relations School (Elton Mayo and others). Behavioral

Approach, Systems approach.

4. Administrative Behaviour : Decision making with special reference to H.

Simon, communication and control, leadership theories. Theories of motivation

(Maslow and Herzberg)

5. Accountability and Control : The concepts of Accountability and control :

Legislative, executive and judicial control. Citizen and Administration: Role of

civil society, people’s participation and Right to Information.

6. Administrative Systems : Comparative administrative features of USA, Great

Britain, France and Japan.

7. Personnel Administration : Role of Civil Service in developing societies;

position classification, Recuritment, Training, Promotion, Pay and Service

conditions. Relations with the Political Executive; Administrative Ethics.

8. Financial Administration : Budget: Concepts and forms. Formulation and

execution of budget, deficit financing and public debt, Accounts and Audit.

9. Union Government and Administration in India. British legacy :

Constitutional context of Indian Administration; The President, Prime Minister

and the Council of Ministers; Central Secretariat; Cabinet Secretariat, Prime

Minister’s Office, Planning Commission; Finance Commission; Election

Commission; Comptroller and Auditor-General of India. Public enterprises:

Patterns, role performance and impact of liberalization.

10. Civil Services in India : Recruitment to All India and Central Services. Union

Public Service Commission; Training of Civil Servants. Generalists and

Specialists. Minister-Civil Servant relationship.

11. State and District Administration : Governor, Chief Minister, Secretariat, Chief

Secretary, Directorates, District Collector: changing role.

12. Local Government : Panchayati Raj and Urban local Government: Main

features, structures, finances and problem areas. 73rd and 74th Constitutional

Amendements.

PART B

MAIN EXAMINATION

PAPER – I

Administrative Theory

1. Introduction: Meaning, scope and significance of Public Administration;

Wilson’s vision of Public Administration; Evolution of the discipline and its

present status; New Public Administration; Public Choice approach;

Challenges of liberalization, Privatisation, Globalisation; Good Governance:

concept and application; New Public Management.

2. Administrative Thought: Scientific Management and Scientific Management

movement; Classical Theory; Weber’s bureaucratic model – its critique and

post-Weberian Developments; Dynamic Administration (Mary Parker Follett);

Human Relations School (Elton Mayo and others); Functions of the Executive

(C.I. Barnard); Simon’s decision-making theory; Participative Management

(R. Likert, C.Argyris, D.McGregor).

3. Administrative Behaviour: Process and techniques of decision-making;

Communication; Morale; Motivation Theories – content, process and

contemporary; Theories of Leadership: Traditional and Modern.

4. Organisations: Theories – systems, contingency; Structure and forms:

Ministries and Departments, Corporations, Companies, Boards and

Commissions; Ad hoc and advisory bodies; Headquarters and Field

relationships; Regulatory Authorities; Public - Private Partnerships.

5. Accountability and control: Concepts of accountability and control;

Legislative, Executive and Judicial control over administration; Citizen and

Administration; Role of media, interest groups, voluntary organizations; Civil

society; Citizen’s Charters; Right to Information; Social audit.

6. Administrative Law: Meaning, scope and significance; Dicey on

Administrative law; Delegated legislation; Administrative Tribunals.

7. Comparative Public Administration: Historical and sociological factors

affecting administrative systems; Administration and politics in different

countries; Current status of Comparative Public Administration; Ecology and

administration; Riggsian models and their critique.

8. Development Dynamics: Concept of development; Changing profile of

development administration; ‘Anti-development thesis’; Bureaucracy and

development; Strong state versus the market debate; Impact of liberalisation

on administration in developing countries; Women and development - the

self-help group movement.

9. Personnel Administration: Importance of human resource development;

Recruitment, training, career advancement, position classification, discipline,

performance appraisal, promotion, pay and service conditions; employer employee

relations, grievance redressal mechanism; Code of conduct; Administrative ethics.

10. Public Policy: Models of policy-making and their critique; Processes of

conceptualisation, planning, implementation, monitoring, evaluation and review

and their limitations; State theories and public policy formulation.

11. Techniques of Administrative Improvement: Organisation and methods,

Work study and work management; e-governance and information technology;

Management aid tools like network analysis, MIS, PERT, CPM.

12. Financial Administration: Monetary and fiscal policies; Public borrowings

and public debt Budgets - types and forms; Budgetary process; Financial

accountability; Accounts and audit.

PAPER - II

Indian Administration

1. Evolution of Indian Administration: Kautilya’s Arthashastra; Mughal

administration; Legacy of British rule in politics and administration -

Indianization of public services, revenue administration, district administration,

local self-government.

2. Philosophical and Constitutional framework of government: Salient

features and value premises;Constitutionalism; Political culture; Bureaucracy

and democracy; Bureaucracy and development.

3. Public Sector Undertakings: Public sector in modern India; Forms of Public

Sector Undertakings; Problems of autonomy, accountability and control;

Impact of liberalization and privatization.

4. Union Government and Administration: Executive, Parliament, Judiciary -

structure, functions, work processes; Recent trends; Intragovernmental

relations; Cabinet Secretariat; Prime Minister’s Office; Central Secretariat;

Ministries and Departments; Boards; Commissions; Attached offices; Field

organizations.

5. Plans and Priorities: Machinery of planning; Role, composition and functions

of the Planning Commission and the National Development Council; ‘Indicative’

planning; Process of plan formulation at Union and State levels; Constitutional

Amendments (1992) and decentralized planning for economic development

and social justice.

6. State Government and Administration: Union-State administrative,

legislative and financial relations; Role of the Finance Commission; Governor;

Chief Minister; Council of Ministers; Chief Secretary; State Secretariat;

Directorates.

7. District Administration since Independence: Changing role of the Collector;

Union-state-local relations; Imperatives of development management and law

and order administration; District administration and democratic

decentralization.

8. Civil Services: Constitutional position; Structure, recruitment, training and

capacity-building; Good governance initiatives; Code of conduct and discipline;

Staff associations; Political rights; Grievance redressal mechanism; Civil

service neutrality; Civil service activism.

9. Financial Management: Budget as a political instrument; Parliamentary

control of public expenditure; Role of finance ministry in monetary and fiscal

area; Accounting techniques; Audit; Role of Controller General of Accounts

and Comptroller and Auditor General of India.

10. Administrative Reforms since Independence: Major concerns; Important

Committees and Commissions; Reforms in financial management and human

resource development; Problems of implementation.

11. Rural Development: Institutions and agencies since independence; Rural

development programmes: foci and strategies; Decentralization and

Panchayati Raj; 73rd Constitutional amendment.

12. Urban Local Government: Municipal governance: main features, structures,

finance and problem areas; 74th Constitutional Amendment; Global-local

debate; New localism; Development dynamics, politics and administration

with special reference to city management.

13. Law and Order Administration: British

legacy; National Police Commission;

Investigative agencies; Role of central and state agencies including paramilitary

forces in maintenance of law and order and countering insurgency and

terrorism; Criminalisation of politics and administration; Police-public

relations; Reforms in Police.

14. Significant issues in Indian Administration: Values in public service;

Regulatory Commissions; National Human Rights Commission; Problems of

administration in coalition regimes; Citizen-administration interface; Corruption

and administration; Disaster management.