Wednesday, October 23, 2013

Onion price puzzle can not be solved without a vision.

Onion prices are once again on fire. Just before Diwali  festival it is inching to cross the mark of Rs 100 per kg.  Earlier in August this year onion had a steep rise in retail prices by almost 25% in a fortnight. Thus from the base of July price of ,once the  food for poor has almost doubled.

In August the government had termed that a temporary phase and had made claims that the problem will get resolved soon with arrival of new crop in the market. By end of September some correction was seen, but not only the relief got evaporated soon it escalated far ahead to touch new heights.
Commerce minister Anand Sharma blamed hoarders for the spike in onion prices and put blames on the state governments.  He forgot that Maharashtra which has largest share of 28% on supplies is ruled by UPA. Kharif  crop comes from Andhra Pradesh and Karnataka again no need to tell who
rules there.  Civil supplies minister of Delhi Haroon Yusuf also joined band wagon and alleged that hoarders were keeping supplies from reaching Delhi to sabotage Congress's prospects in the assembly elections.   In September theory put forward was that dwindling supplies have caused this havoc.

Supplies of onion in the market are low due to several reasons and needs to be understood for corrective steps.

First, planting this year is less than last year's because growers could not cover their cost in major growing areas.

Second, kharif onion sowed in the southern states was partially damaged due to occasional rains.

Third, the Nafed, responsible for managing demand and supply, has not taken timely action.

Fourth, arrivals from Maharashtra, a major producer of onions, are low because traders are hoarding the commodity in anticipation of better prices, while other growing areas, Andhra Pradesh and Karnataka, are unable to fill the supply gap from Maharashtra because of high moisture content in the new crop.

Fifth, the weakening rupee has augmented profits on exports despite the imposition of minimum export price of $650 per tonne.

Consequently, around two lakh tonnes less of onions was kept in cold storages while exports increased by six lakh tonnes during the last few months. The government expects that price of this politically-sensitive commodity will moderate from October after the arrival of new onion planted in kharif season in Andhra Pradesh, Karnataka and Tamil Nadu. However, some analysts feel that the onion prices will not cool down due to relatively low acreage, partial damage of production by rains and attractive export price.
The wholesale price of onion in growing states is Rs 45-50 per kg.  On Tuesday, the average wholesale price of the new crop at Lasalgaon was Rs 3,900 a quintal as reported by TOI. However, retail prices in different places are Rs 80-90 per kg. The huge gap of Rs 25-40 per kg in wholesale and consumer prices implies a margin of more than 50%. After subtracting the cost of logistics, 10-15%, the difference in cost price and selling price is still high.
A huge markup is taking place in the retail chain and traders are cornering huge profits. Onion prices have had a tumultuous political history and, therefore, the government is trying to control the price rise. It could impose an export ban or revise the minimum export price upwards and limit stocks for traders. However, these short-term measures would have a limited impact on prices and in solving long-term problems related to production and marketing of this essential commodity.

It seems that government agencies like Nafed are unable to efficiently monitor price rise regularly in the domestic market. Also, it does not take timely remedial action when there is a probability of a major shortfall in supply. So far, the government does not have any effective regulatory cell to monitor and foresee such abrupt increase in prices of essential foodstuffs with inelastic demand.

The issue of rising onion prices is symptomatic of a longer-term problem, which requires serious thought and quick action in food management. Warnings of a spurt in onion prices have been in the public domain for the last 3-4 months but the government has not responded with the required urgency.

Some speculation and hoarding must be taking place. But blaming only these for the price rise does not seem logical. Economists and the media have been alerting policymakers on this subject. A review of the causes of onion price rise needs to differentiate between long-run and short-run shortages since each has to be tackled differently.

The demand and supply gap is a major factor that needs deeper probing. The onion price rise is not an overnight phenomenon and cannot be attributed merely to reduced market arrivals from the major growing states. Rather, it is the result of production not keeping pace with demand, inefficient retail chains and lack of regulation in the form of a cap on consumer prices of food commodities.
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Tuesday, October 15, 2013

Can Priyanka take on Narendra Modi?

Congress has started giving signals that it can sacrifice “Prince – Rahul “ to hold the forte in Delhi.  The media buzz says that the party is planning to make Princess Priyanka as  its face to take on Gujarat Chief Minister and BJP's PM candidate Narendra Modi and other regional parties.
Courtesy :  The Hindu

A section in the party doubts Congress vice president Rahul Gandhi's ability to lead the party in a high decibel campaign, but fear to say in open. This group has been worried about the lack of courage Rahul Gandhi has to lead from the front  and  fluctuations in his behaviour. Because of this party workers have lost hopes for the coming election. A group of congress party leaders like Kapil Sibbal and Rashid Alvi, who were first to appreciate the move,  feel that Priyanka's entry will do the same effect to Congress as has NaMo factor did to BJP.

The speculations began after Priyanka, along with her brother and Congress Vice President Rahul Gandhi held a closed door meeting with party workers in Amethi, in September. She in past has been campaigning in Amethi and Raebareli for her brother and mother respectively.

She had successfully campaigned for the Congress in Bellary in 1999 when was just 26 years of age. Her grace and looks like Indira Gandhi had lots of asset value to the Congress then. Same may not hold true today. Now, she carries load of “Vadra” surname. A name that raises many eyebrows due to defame land deals. This can become a liability on the congress.

But  Sonia has hinted to retire in 2016 from active politics. Dynastic seat of Raebarelly can not be given outside the family. Hence choice is little, her entry into national politics is certain. Question can be , now or after two years?

The approach can be as some media reports say, she can be tried in Madhya Pradesh.  Can address a rally there. If response is favourable it can be stretched to other states going for poll this year. Otherwise Priyanka will continue to focus on Uttar Pradesh for the general elections due next year.

Priyanka Gandhi Vadra’s emotion laden campaign with her children during the last  UP Assembly elections did not gain any advantage to the party. The law of diminishing returns applies  to emotions. She will have to do a lots of home work to get content in appeal where Rahul goofs up. She may attract crowds in some parts of the country. It is an advantage if crowd there should return home with a ray of hope  and not with echo of the stale rotten slogans.

Congress party this time is on a weaker wicket. All around image of corruption, mismanagement, inflation and poor economic scenario. It will not be easy for her to overturn Anti-incumbency and image of ineffective leadership.

But all these negative factors are for Rahul Gandhi too. Only advantage Priyanka might have is that voters are  not disillusioned with her so far. But she lacks the credentials what Narendra Modi has.  The party will not take risk of announcing her as a prime ministerial candidate. She will remain sister of a possible prime ministerial candidate. Unlike Rahul Gandhi, she is not even an MP.  She has no experience of running anything. Modi is elected chief minister of  a state for past 12 years.

Promoting Priyanka will be a straight downgrading of Rahul. Rahul Gandhi may be looking dwarf in front of NaMo, but nobody can deny about his hard work. His failure can not be attributed to him alone. It was mainly because of  unfocussed leadership of the party and lack of maturity in people around him.

Many say that he fails to inspire people because he lacks confidence.  His younger sister has political charisma which he lacks. Priyanka has additional appeal of being a woman- a factor that motivates many in election. But this yet to tested. If gone wrong may boomerang also.
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Friday, October 4, 2013

Samsung was number one Brand in Indian Market

South Korean brand Samsung leads with 31.5% share compared 27.2 % of Share of Nokia. Nokia is a Finland’s brand. During FY 2012-13 total market size was of Rs 35,946 crore.  This grew @ 14.7% where as Nokia recorded a drop of 18% in its revenue.
Source :  Economic Times Ahmedabad Edition
During period Samsung grew by 43.6%. Samsung’s advantage was due to wide range of models and varieties compared to Nokia and other brands. Samsung range starts from Rs  1,500 to Rs 50,000.

Nokia failed to judge the growing popularity of dual sim mobiles and Android platform. Micromax Informatics, Karbonn Mobiles and Cupertino-based Apple have grabbed the next three positions after Nokia with 8.7%, 6.4% and 3.6% share of the market, respectively. The rise of smaller local players in India like Micromax, Karbon, Lava International, and Zen Mobile clearly indicated that consumers want cheaper feature rich phones.
To capture Indian market  Apple made some changes in its sales strategy to attract tech savvy youth consumers.  Apple's revenues grew over four times to Rs 1,293 crore in FY13, compared to Rs 250 crore a year ago.

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