Thursday, August 27, 2009

Finances of State owned PSEs

This excel sheet contains the last available summary financial data of each of the state owned PSE as reported by CAG of India. This is compiled are released in public intrest for wider awareness of the finances of State government owned enterprises and facilitating a cross country comparison.

Here are some interesting facts from this compilation:
  • Andhra Pradesh has the highest turnover for companies owned by it at Rs 36k crores as also the highest number of employees at 2.6 lakhs.
  • Gujarat has almost the same revenue as Andhra Pradesh at 33k crores but with less than half the number of employees at 1.15 lakhs.
  • Maximum revenue per employee is by Gujarat but Profit per employee is highest for Orissa at Rs 3.4 lakh.Profit margin for Oriya PSE is highest at 17% probably driven mainly by Mining and its Power companies.Remember that Orissa was the first state to introduce Electricity reforms.
  • Power companies have the highest turnover with TNEB(Tamilandu) at top with Revenues of 14.5k crores.Beverage (read liquor) sector comes 2nd led by Beverage corporations of Andhra Pradesh and Karnatka at 6.7k crore and 6.38 crore respectively. Civil supply or PDS sector comes third with Tamilnadu at 4k crores and Punjab at 3.5 crores.
  • Among individual companies, maximum number of employees are employed by MSEB(Maharashtra) at 1.16 lakhs which is much higher than 77k employedby TNEB with similar revenues. Remember that distribution of power is privatised in its largest city, Mumbai.Tthe process for privatisng in some other cities is going on.
  • PSEB(Punjab) is the highest loss making company with losses of 1.6k crores rupees.17 of the top 18 highest loss making companies are in Power sector with next 5 from Transport sector.
  • Ironically, the top 3 profit making companies are also from Power sector with MPSEB(MP) at 1.2k crores at the top followed by ~Rs 570 crores Gridco(Orissa) and GSECL(Gujarat) ~Rs 500 crores
  • In transport sector, most of the states are making huge losses relative to revenues and few are just breaking even not surprisingly since the total turnover of the transport sector is only Rs 16k crores. Regional integration of transport sector is urgently called for but this is unlikel to happen since Transport sector is one of the biggest employers employing about 4.7 lakh people.Considering the vital role of public transport and the number of citizens it touches directly, overhaul of the sector is urgently called for. If we assume an average ticke price per trip per person of Rs 20, an average Indian must be making at least 8 trips per year by state transport buses alone.

Sunday, August 23, 2009

Just how many Millionaires are there in India?

Its better to be roughly right than precisely wrong
Since the compilation of any list of Millionaires is bound to be imprecise for a variety of reasons, chief among them being secrecy and the fluctuating valution of asset classes, i would only use rough estimates here.
We often come across new studies by esteemed sources like Forbes who claim there are 1 Lakh millionaires in India where a millionaire is defined to be one having liquid wealth of at least 1 Million dollars.As soon as these reports are published in media, commentators jump up and say there would be these many millionaires in 1 geography alone: say South Mumbai or South Delhi.
Here I have attempted to answer this question from a different angle: compiling the total liquid wealth in India.
As i understand following are the different liquid asset classes:

  1. Cash:As per latest RBI figures total cash in circulation is about Rs 6 lakh crores.
  2. Bank Deposits:As per RBI again, total bank deposits are about Rs 35 lakh crores.
  3. Equity: As per this report in Times of India, the breakup of ownership of top 500 companies is: -23%,Government-22%,Promoters-29%,Corporates-4%,Rest-22%).These companies constitute 93% of stock market cap of India as per the same report. Since the number of promoters would be few thousands and is not a signifcant number compared to upwards of 1 lakh Millionaires, the total equity wealth avaiable to potential millionaires is about Rs 10 lakh crores
  4. Bonds:As per a recent ADB report, Bonds are about 40% of GDP of which more than 50% is owned by Banks and RBI and rest by MFs,LIC,PDs etc. So a maximum 10 lakh crores is available to potential millionaires from this avenue.
  5. Gold:This is by far the most democratic asset class as far as India is concerned since Indians own about 14,000 tonnes of it(source) which includes jewlery.Some people have even wilder estimates at 25,000 tonnest e.g. Taking a price of Rs 13 lakhs per kg, Gold accounts for about Rs 18 lakh crores of wealth.
The window for overseas asset ownership has recently opened and must be having modest assets. i hope no significant liquid asset class is missing here. So the potential millionaires have a total liquid wealth of about 80 lakh crores available to them. If one attributes this entire wealth equally distributed among millionaires we can have 16 lakh millionaires in India.But that would leave about 120 crore Indians penniless.Randomly assuming an average wealth of 2 million dollars for all millionaires and attributing half of the nation's significant liquid wealth to them (randomly again) gives us a more plausible maximum number of 5 lakh millionaires in India.

Saturday, August 15, 2009

Judges Conference: Review of important developments in Indian Legal framework

Here are some important developments in Indian Legal framework taken from background reading to Chief Justices'conference.Thanks to Nick for posting this.
  • New Civil cases in High Courts have increased from 2.5 million in 2002 to 3 million in 2009 despite a disposal rate of 1 million per year.Criminal cases have increased from 5.3 lakhs to 7.7 lakhs with disposal rate of 4.9 lakhs.Of the total cases, 0.9 million are pending with High Court of UP.

  • In subordinate courts,civil cases increased from 7.2 million to 7.5 million with a disposal rate of 3.8 million per year while criminal cases increased from 15.1 million to 18.8 million with a disposal rate of 11.5 million. Of the total cases,5 million are pending with UP courts.

  • Indications are that number of cases filed will only increase with time.
  • If we are to remove the pendency we need to boost the output of our legal framework by 100%. Filling existing vacancies alone will boost the disposal by 50% at High court level and 25% at subordinate court level.
  • In India more than half the amount spent on judiciary is raised from judiciary and the total expenditure on judiciary is hardly 0.2%, whereas it is 1.2% in Singapore, 1.4% in USA and 4.3% in UK.

The document has following suggestions:
  • Of entire litigation,50-60% is due to central acts.There are 340 central laws that are adjudicated in subordinate courts.The state governments have to spend money for implementing laws formulated by Centre.Further, Article 247 allows Central government to setup additional courts for better administration of Central laws.
    While Central government may use lack of resources as an excuse it surely can simplify the Central laws and reduce filing of fresh cases.

  • Whenver a new legislation is enacted that is likely to increase the workload of Courts,High courts should ask State governments to accordingly increase the strength of Judges.

  • Adequate infrastructure should be provided for subordinate court buildings.Such basic facilities as regular water and electric supply are not available.Also new court complexes should be developed with proper planning.This is one recommendation that all Governments will be too happy to comply with.

  • Technology: Courts should communicate with advocates/litigants through email. Already, one can file a case through internet now at nominal charges.The court documents should be scanned.Video conferencing has been a success in states that have amended CrPC to allow it.Curious to know which states have not amended it and why and why state government?Why not a constitutional amendment?

  • All states should try to make optimal use of infrastrcture and setup Morning or Evening Courts. The ‘Morning Courts’ have started functioning in the State of Andhra Pradesh and they function from 7.30 A.M. to 10.30 A.M. five days a week. ‘Evening Courts’ are functional in the States of Gujarat, Delhi and TamilNadu also.

  • Setting up and strengthening of vigilance cells is suggested. What is not mentioned is if any vigilance cell has found anything or action has been taken by a High court upon the cell's report.

  • Alternate Dispute Resolution should be strengthened in a big way.
    In U.S.A. there are private mediation firms which employ full time mediators and possess infrastructural facilities to hold a large number of mediations. More people go to such firms rather than wait in Courts. Also, there are Court Annexed Mediation Centres, running on funds made available by the Government. There are thousands of lawyers practising exclusively as mediators. Retired Judges also act as mediators.
    There are mediators who specialize in various branches such as intellectual property, accident, commercial cases etc. and more than 90% of the cases do not go to trial

    Its noted that the reason ADR mechanism is virtually absent in India due to lack of human resources trained in ADRs and people who can train others in ADR.Further, its noted that Government being the biggest litigant should take the lead in promoting ADR. There are total only 147 mediation centers in India.This is a business opportunity waiting to be tapped!!Wondering what prevents this from happening.

PS: PIB Press Release, PM's speech during Joint Conference of Chief Ministers and Chief Justices, Law Minister Moily's comprehensive update on GoI's action agenda.