You can call him the first citizen of the $83-billion direct selling industry. Son of Amway Co-founder Jay Van Andel, the 48-year-old Chairman of $4.5-billion Alticor Inc. (the holding company for Amway, Access Business Group & Quixtar) Steve Van Andel, almost missed joining the family business, but for the providence of a downturn in the United States steel industry! On a business trip to India, he spoke to BT's Shailesh Dobhal. Excerpts:

Many people predicted the death of 'direct selling' with the arrival of the internet. How has the business responded?

I hear the same thing in lot of different countries. The fact is that we look at the arrival of internet as an advantage. We actually combine our business, the person-to-person relationship selling with the technology of the internet.

How much of a problem are 'Unscrupulous Direct Sellers' to the direct selling industry internationally and in India?

Over time they have become more and more of a problem. Once we get into a market, we expose lot of people to direct selling. Then all of a sudden the pyramids come, the unethical people come and they try to copy us. What they are doing, in my mind, is illegal, wrong, and incorrect.

How important is India from Amway's perspective, both domestic market and a base for exports?

India is one of our top 10 markets, internationally. And given that it is a young market and we are is 55 different countries around the world, I think that's spectacular. We source all our products that we sell in India from here. Some of them look to be very good to export to rest of the world. We are looking at doing some of that right now.

Life With Conditional Access
Broadcasters prepare for life in the CAS regime.

Channel-speak: Go out and get that set-top now

July 14 is a day of reckoning for broadcasters. Conditional Access goes live on that day- viewers will receive 30 free-to-air channels on their television sets; to access the rest, they have to invest in a set-top unit that costs anything between Rs 1,500 to Rs 7,000 and pay a monthly fee that could range from Rs 100 to Rs 350. Fearing that viewers may balk at the costs involved in either, broadcasters are pulling out all stops: on Star Plus, a character from one of the popular K-soaps exhorts viewers to go out and get that set-top, and on MTV a veejay does the honours. Broadcasters are also scrambling to enhance the quality of their offering before D-day. The Zee network launched a lifestyle channel (Trends) on May 1. Sony Entertainment has kicked off five new programmes targeting the key 25-35 age group. And Star will launch a clutch of programmes on May 15. Money is the motive: apart from the Rs 7,000 crore customers will spend on set-tops, the CAS regime is expected to help broadcasters increase their subscription revenue from Rs 450-odd crore now to Rs 4,000 crore in the next five years. Given the fate of that other three latter acronym (vat, and that reads rollback), however, we'll believe CAS is on when it really is.

-Swati Prasad

Q&A
"Reduction Was A Judgement Call"

A day after presenting his 11th Monetary & Credit Policy, Reserve Bank of India Governor Bimal Jalan spoke with Business Today's Roshni Jayakar, on the interest rates, inflation, and the Indian economy. Excerpts:

RBI Governor Bimal Jalan: Inflation and monsoon are his main concerns

What are your main concerns about the economy?

The monsoon definitely has a big impact on the growth rate. So, it is hoped at the minimum we get 96 per cent monsoon. The second is inflation, although we have said we expect it to come down. And we hope international oil prices will come down. The rise in prices in the recent past was confined to that group of commodities. So both inflation and the monsoon need to be watched closely.

Do you consider a 0.25 per cent reduction in bank rate adequate to deal with inflation?

This was a judgment call. After analysis, we came to the conclusion that on the best information available, we did not see inflation accelerating. Then, you could take a call that it (the change in interest rate) should (have been) be zero. But if you don't give an indication, it may be presumed by the investor as something that is negative to confidence. Then there were some proponents of a 50 per cent cut... It was judgment call to take a mild stance. It's purely a confidence-building measure.

Is the RBI working towards setting up a framework to encourage banks to lend across the credit spectrum-including small and medium enterprises, for instance?

We have raised the issue that the dispersal around PLR is high. We have been emphasising credit delivery issues. Many of the middle and small enterprises say they don't have the same access to banking funds even if they are well-rated. If they have good ratings they should be given similar access by banks.

Banks hold government securities up to about 39 per cent of their net demand and time deposits as against the statutory minimum requirement of 25 per cent. Is the RBI considering directing them against this?

The standing committee, according to news reports, has made recommendations that we are going to study. As of now, the view is that this is surplus liquidity in the system and it is up to the banks to decide how they are going to use it.

But then, the policy has cut CRR. Will this not add to liquidity?

The RBI has been pursuing the medium-term objective of reducing CRR (the amount of cash kept with RBI on a permanent basis) to the statutory minimum level of 3 per cent, so that there is no pre-emption of funds. Having high CRR for liquidity management has become less important in view of the Liquidity Adjustment Facility (LAF). Two-to-three years ago, when banks had liquid funds, they could invest it in the call money market or just hold it. Now, if the banks have liquid funds they could give it to the RBI, which acts like an overnight CRR. We have been using LAF to constantly keep liquidity in the system within manageable limits.

In February this year, the government pre-paid $3.03 billion of foreign currency loans. Is any further pre-payment of external debt in sight?

Yes. The government is considering pre-payment based on merit.

Finally, do you see the softer interest rate regime continuing?

As of now.