The united progressive Alliance has coped, and only just, with having power thrust upon it. "It really had no game plan, no properly thought out plan of action for the task ahead," insists Sunil Sinha, a consultant with National Council of Applied Economic Research (ncaer), a Delhi-based economic think-tank. Individual ministers, at least most of those in charge of key economic ministries, have performed well, but by the time it crossed 100 days in power (on August 29), the overwhelming impression the UPA government managed to convey was of a complicated machine, put together from parts made by different manufacturers, still tuning up.

If there is one thing the UPA got right, it is its broad focus on the agricultural and rural economy. Inferring correctly that the previous National Democratic Alliance (NDA) had been voted out for what was seen as its neglect of these key constituencies, the refrain of choice of the new government has been "reforms with a human face". This was evident in the National Common Minimum Programme, the Union Budget, the Prime Minister's Independence Day Speech, and the Foreign Trade Policy. And given that critics are likely to pounce on the fact that inadequate and inefficient delivery systems will prevent the implementation of its rural-economy oriented initiatives, the government has given the Planning Commission the mandate of developing better delivery mechanisms.

Opinion is divided on whether the UPA's rural-focus has translated into the right kind of policy initiatives. This magazine, for one, believed, and still does that Finance Minister P. Chidambaram's efforts to spur growth in the agricultural sector were (and are) commendable, but it finds itself in the minority. The dominant school of thought is that the government, to put it simply, has messed it up. "To me, increased focus would mean an emphasis on agricultural reform," says Arvind Panagariya, a professor of economics at Columbia University. "That has not happened." "Instead, what we have are plans for increasing spending on the grounds that this sector was neglected in the 1990s."

Time has been cruel to the UPA: its period of orientation has seen a clutch of unpleasant surprises that threaten to transform a comfortable economic environment into a relatively hostile one. Crude prices are volatile, the monsoon has been patchy (an average shortfall of 7 per cent), and China's insatiable appetite has upped international commodity prices. The result: inflation (as measured by the Wholesale Price Index) rose to a four-year high of 8.17 per cent for the week ended August 21, and although the resilience of India Inc. (see 10 Things That Make India Inc. Invincible, Business Today, September 12, 2004) should help the economy meet its growth target for the year (6.4 to 7.1 per cent), it is a worrying sign. For instance, a period of inflationary growth could see an increase in interest rates, and, if significant enough, this could have an adverse impact on everything from the booming demand for cars, homes, and consumer durables (all fuelled through loans) to the efficiency of companies-if the rate at which they borrow to fund expansion increases, so does their interest cost.

The government has done its bit to combat inflationary tendencies, such as reducing customs duties on different categories of steel by 5-10 percentage points and on petroleum products by 5 percentage points (this and the reduction in the excise duty on the same will result in a loss of Rs 25,000 crore to the exchequer). Only, this may not be sufficient to counter the groundswell of negative sentiment: the external environment is distinctly unfriendly, the stockmarkets continue to look upon the UPA suspiciously, and India Inc.'s performance remains the only silver lining. However, the NDA's first 100 days in office were nothing to write home about too, and that government signed off on a high.

-By Ashish Gupta

ODDITIES
Globalisation Gambit

This must be as global as it gets. An Indian company launches a single malt for sale in the UK and in Scotland (it was, as was only apt, launched in Glasgow), and a Swiss knife maker introduces kirpans (a type of knife favoured by the Sikh community) for sale to Sikhs in India and to the extended diaspora. The single malt, made by Bangalore-based Amrut Distilleries in its facility in the same city, is the first Indian malt, the company claims, to meet EU specifications. Amrut Single Malt essentially targets Indian curry houses in Scotland, but is still an achievement of sorts. The kirpan is made by Victorinox, the famed maker of the Swiss army knives and related merchandise. And just as apt as the Scotch-launch in Scotland, its launch coincided with the 400th anniversary of the Guru Granth Sahib, the holy book of the Sikhs.

The Bottom Line Of Love
The toll of wedding bells is in sync with the ringing cash registers of organisers and retailers.

Wedding boon: Durables register big-time sales during the wedding season

As far as size goes, it's probably bigger than many new-economy sectors, and a few old-economy ones too. But, at over Rs 10,000 crore, size isn't the only thing going for the wedding industry. As Diivyaa Gurwaara, CEO, Bridal Asia, puts it: "This is a recession-proof industry, and because of the aspirational value ascribed to weddings, it is going to get bigger," she adds.

One reason for such great expectations is that it's not just the Mittals and other well-heeled business families that are planning extravagant weddings. They might not be spending £30 million (Rs 247 crore) like the Mittals did, but increasingly the country's burgeoning middle class is willing to fork out big bucks to make that wedding ceremony even more memorable. Budgets can range from a humble Rs 3 lakh to an eye-popping Rs 10 crore. And it's not just loaded parents who are contributing to this boom; youngsters too are today in a position to pay for their own weddings. "Weddings today provide an opportunity to showcase your wealth as well as to do something in a unique manner," says Pritti Kumar, Organiser, Marwar Mega Wedding Show.

Meantime, the onset of the wedding season spells good tidings for the retail sector too. "Weddings are one of the biggest drivers of Indian retail," explains Arvind Singhal, MD, KSA Technopak. Jewellery not surprisingly is the biggest gainer, whilst clothing in the form of suits and fabrics also sell well. Volume sales also pick up in durables, automobiles (two-wheelers as well as cars), food services, and of late travel and tourism, which is tailoring packages and instalment schemes for brides and grooms.

What's also significant is that weddings are becoming less seasonal, not just restricted to October and November. Singhal expects a fragmented wedding calendar. "There will be multiple peaks," he insists. So not only will spending increase, it will also be evenly spread.

That spending, according to Salil Kapoor, Marketing Head, LG, is "spreading to B and C class towns as well". LG offers wedding packages, which could range from discounts to combo offers to free microwaves. Colour TVS are usually No. 1 on the priority list followed by refrigerators, air conditioners and microwaves. "The middle class purchases all the durables together whereas the lower middle class starts with colour TVS," remarks Venugopal Dhoot, Chairman, Videocon.

When it comes to cars, the Maruti 800 is passé, and premium cars are the norm. "The Honda City has a three-month waiting period. During the wedding season, which also coincides with the festive season, the demand peaks further," explains Neeraj Garg, Marketing Head, Honda Siel. "Sales go up due to weddings, the festive season, harvests and our promotions," adds Atul Sobti, Executive Director, Business Operations, at two-wheeler major Hero Honda.

Apart from the gifting spree, the craze for a lavish wedding is also resulting in demand for wedding planners, what with more and more families-starting with budgets of just Rs 2 lakh-preferring to outsource the entire jamboree to specialists. Vandana Mohan, one of the planners at Wedding Design Company, says, "The idea of outsourcing weddings is gradually coming about."

-Priyanka Sangani and Amanpreet Singh

Industry On Hold
The FDI hike in telecom hangs fire. No problem.

Sunil Mittal: Smiling for good reason

On July 8, when the new Finance Minister, P. Chidambaram, announced a proposal to increase FDI in telecom from 49 per cent to 74 per cent, industrialists gathered at a five-star hotel in the capital to listen to the fm's budget speech lost no time in congratulating Bharti Tele-Ventures' Sunil Mittal who was in the audience. As it turns out, the congratulations were way too premature. Two months on, the proposal continues to hang fire, primarily because one section of the Congress-led UPA (United Progressive Alliance) government's supporters, the Communist parties, is against it. As a result, the Bharti stock (apart from Hutch and Idea Cellular, Bharti will be one of the key beneficiaries of higher fdi in telecom), which started climbing in the last week of June in anticipation, is back down to almost the pre-Budget price of Rs 125 or so.

But the question to ask is whether FDI status quo alters Bharti's growth story in any fundamental way. The short answer: No. The company, which has 8 million cellular subscribers and 0.73 million fixed-line customers, plans to expand its coverage from 16 to 23 circles in places such as Assam, Bihar, Orissa and J&K. It has announced a capital outlay of $700-750 million (Rs 3,220-3,450 crore), two-thirds of which will be accounted for by the cellular business alone. As for funding the expansion, Bharti is "counting more money now than what most telcos did three or four years ago", points out Vineet Nigam, a telecom analyst with ICRA.

No doubt, foreign equity is theoretically cheaper than bank borrowings, but Bharti's outsourced business model has also made its operations much less of a cash hog. In fact, some analysts expect that to come handy as Bharti fights the recent price wars in the industry. "I expect them to generate free cash from FY 06 onwards, and thereafter they will start paying off debt," says Ganesh Duvvuri, a telecom analyst with Motilal Oswal Securities. Bottomline: Mittal's got money coming his way, so what if it's not foreign.

-Sahad P.V.

BT CIRRUS
Latent Equity

Being privately held may not be such a good thing after all. Consider the case of Tata Consultancy Services (TCS). An industry pioneer, it lagged its much younger competitors such as Infosys and Wipro in terms of image in the print media. A BT-Cirrus research, based on the number and kind of press TCS received over the last one year, reveals that both its visibility and image shot up post, and in the run up to, its recent IPO. In fact, in June this year, it scored higher than Wipro and Microsoft in image, and in August it had almost the same image score as Infosys and Wipro. The flipside: It now has to hold on to it.