Freedom from shortage

Perhaps you could have asked an NRI cousin to apply under a dollar-payment scheme 8212; and then squared up with him through the hawala route. All this for a scooter.

Today, life is somewhat better. The waiting period for a scooter is down to the time you take to sign your cheque. You don8217;t have to break foreign exchange laws to change rupees for dollars.

The past 12 years, ever since P.V. Narasimha Rao and Manmohan Singh began to restructure the economy in that hot and tempestuous summer of 1991, have been something of a second freedom movement. The battle is not over. Total independence, as it were, is a distance away; but substantial autonomy has been won.

In business area after business are, industry and industry, the shortage economy has been knocked down. Till even the early 1990s, the telephone, for just so many Indian families, was a cumbersome, black instrument that worked sometimes and functioned as a gigantic paperweight most times. The government-run telephone company8217;s linesman was a neighbourhood cult figure. Now you probably wouldn8217;t recognise him.

Not everything has been transformed. As one of the pieces below illustrates, much of basic infrastructure, the nuts and bolts of a modern society 8212; services like 24 hour power and education 8212; remains trapped in the past. Yet anyone, at least anyone in urban India, who insists life hasn8217;t become that much easier since in the past few years has to be a deep cynic or in deep slumber.

It8217;s not merely the private telephone-service providers and the easier availability of LPG cylinders that should be welcomed. It is also the fact that with each such step, India has walked further away from feudalism and inched closer to capitalism, to genuine, stakeholder democracy.

You don8217;t have to be a rocket scientist to figure out that one. Shortage is the natural fount of corruption. When demand for goods or services exceeds supply, distribution is obviously open to manipulation. In the Indian experience, socialism equalled kleptocracy.

No wonder each time a bastion of shortage falls, Indians become a little more free.

In a sense then, every day is Independence Day.

AUTOMOBILES: Those waiting lists vanish as companies chase customers

BACK in the early 8217;80s, you didn8217;t just buy an automobile or two-wheeler. You waited for it: a year or more for a Bajaj scooter and nearly as long for an HM Ambassador or a Premier Padmini.

While the advent of Maruti in 1983 and a spate of Indo-Japanese tie-ups altered the marketplace, the road to a competitive market still stretched a long way. When the Maruti 800 was launched in 1984, a deposit of Rs 10,000 was de rigeur for every car registered, and the manufacturer collected some Rs 130 crore from the deposits itself. But the car one booked would make its appearance only a couple of years later. And this gave birth to the unscrupulous practice of selling car allotments at a hefty premium.

Service, even Maruti8217;s, was lackadaisical. Dealers were few, and couldn8217;t handle the workload.

The two-wheeler scene, meanwhile, pepped up with the arrival of the Ind-Suzuki, Hero Honda and Bajaj-Kawasaki and Kinetic-Honda combines, who introduced fuel-efficient, contemporary relatively, and most importantly, reliable two-wheelers that flatlined dated motorcycles and scooter makers. But premiums still existed, and so did deposits and bookings.

And then came the mid-90s. The technical collaborations didn8217;t just offer better everything, they also forced existing manufacturers to either improve or get out. Ideal Jawa, Maharashtra Scooters, AP Scooters and Scooters India either blanked out or were relegated to the sidelines. PAL, HM, and Standard Herald, the pashas of the protectionist era, saw market share plummet as Daewoo, General Motors, Hyundai, Fiat, and Ford entered the market.

While Maruti still has an above-50 per cent market share in the passenger segment, it is constantly kept on its toes by its competitors. As for the old monopolist Bajaj, its sooters now have to contend with the world8217;s largest two-wheeler maker, Honda.

While there still exists scope for improvement in service and contemporaneity, the sun has finally set on the days of waiting lists and premiums. If you need to buy a car or a bike now, you just call up the dealer, fix an appo and the exec will be there with loans, warranties, freebies, and discounts in tow.

Murali K Menon

TELECOMMUNICATION: Dead phones are dead, it8217;s time to be upwardly mobile

TELECOM was undoubtedly the gloomiest sector when the winds of change started blowing through the Indian economy in 1991. If there were 5 million connections, waiting lists ran into two million. An out-of-turn connection called for certification of a life-threatening disease in the house and a convenient cousin in the communications ministry.

Of course, there were discretionary quotas with ministers: The Telecom Advisory Committee was constituted with the sole purpose of doling out connections as a favour. A black market in connections flourished.

And then came the boom, courtesy the private phone companies and the little gadget called the cellphone. Costing Rs 16 per minute at launch-time in 1995, it was dismissed as a rich-n-famous plaything. But more players and competitive schemes brought down prices: The price wars between WLL and mobile companies ensure two million mobile customers are added in a month.

Navika Kumar

BANKING: Teller counter queues? Now it8217;s ATM queues

Of all the sectors of the economy, banking is definitely the one to show the most distinction between 8216;then8217; and 8216;now8217;. Gone are the hours earmarked for bank transactions. IT and computerisation have revolutionised the banking sector in the last one decade.

At the heart of the change are ATMs and computers. In 1991, there weren8217;t even 100 ATMs in India, now there are nearly 10,000 automated teller machines that allow customers to withdraw upto Rs 15,000 in a transaction that lasts less than a minute.

8216;8216;Earlier a customer had wait for 2-3 hours with tokens, sign, countersign cheques. Computers opened up new areas of customer care and products,8217;8217; says an official of UTI Bank. Of the 68,000 bank branches in India, about 19,000 are computerised. The pre-1991 figure is less than 1,000.

Banks 8212; led by the private sector 8212; now offer services like telephone banking, internet banking, new deposit schemes, debit cards etc, all of which were unheard of before 1991. 8216;8216;I can check my accounts at home on the Internet. I can withdraw money from ATMs. I can order a cheque book over the phone, I don8217;t need to visit the bank branch,8217;8217; says K J Anthony, a retired government official.

The spur was the entry of a dozen new generation player like ICICI Bank, UTI Bank, IDBI Bank and HDFC Bank in the 8217;90s. Apart from giving a tough time to nationalised banks, they introduced new ideas in banking; many of them now function as financial marts. And now nationalised banks are catching up.

George Mathew

LPG: Quick supply is not just gas

Post-deregulation and reforms, LPG consumers have proved to be one of the biggest beneficiaries. For one, the long waiting lists for LPG connections have vanished; the ministry of petroleum and natural gas took care of the last such list in October 2000. Quite a feat, considering that in April 2000, there were 63 lakh people waiting in the queue for an LPG connection. In fact, in 1996, the waiting list was as long as 1.33 crore. As recently as 1997, it was 1.42 crore. Now, LPG connections are not only available off the shelf, but oil marketing companies are vying with each other to lure customers with sops and incentives. Not only is the customer king, but the black-market is also history. continued from page 11

Simultaneously in the 8217;90s, the number of LPG agencies went up. If, in 1992, there were 1,730 distributors, the number doubled to 3,438 in 2003. The customer base expanded from 3.81 crore in 1999 to 7 crore in April 2003. Double-cylinder connections also rose: From 3.78 crore in 2001 to 4.28 crore in 2003.

The deposit for a new LPG connection has also gone down substantially. In 2000, new consumers had to shell out Rs 900 as cylinder deposit. This came down to Rs 700 in 2001 and Rs 650 in March 2003.

The reason, according to ministry officials, was the new tender system in procuring the cylinders. For rural and hilly areas, the government also introduced 5 kg cylinders, refills for Rs 100 and new-connection deposits of Rs 300.

On the flipside, the regular price of LPG refills rose gradually from Rs 146 per cylinder in 1999 to Rs 241.20; a hike government officials attribute to the increase in crude oil prices.

Subsidies, meanwhile continue to be in place: Of the Rs 114.61 subsidised on each cylinder, the government bears Rs 45.17 and the oil companies, Rs 69.44.

Santanu Ghosh

CEMENT: Moving from under-supply to under-demand

CEMENT might seem like an unlikely indicator of economic growth, but no less unlikely is its transition from a black-market, under-the-cover-of-darkness product to one that is displayed on open shelves. The most vital building material in India, nearly 60 per cent of the cement produced in India finds use in residential and commercial construction.

Till 1982, the industry was under strict government control. No capacity expansion was allowed and even sale prices and quantities were fixed by the government. That year, cement distribution was partly decontrolled, leading to a spurt in production capacities. Seven years later, in 1989, pricing and distribution were also liberalised and producers were allowed to offload their entire production in the open market. Delicensing followed in 1991.

After the euphoric 8217;80s, the 8217;90s saw massive capacity expansion and an oversupply of cement in a sluggish market. According to A V Srinivasan, secretary-general of the Cement Manufacturers8217; Association, 8216;8216;Cement prices have been under pressure for last two-three years. It will be corrected over the next few years, with less capacity expansion and more offtake of cement.8217;8217;

The Indian cement industry had an installed capacity of nearly 146 million tons per annum at the end of fiscal 2002, with the private sector accounting for 92 per cent of the large plants. Actual cement production in 2002-03 was 116.35 million tonnes, against 106.90 million tonnes in 2001-02, a growth of 8.84 per cent. Besides meeting the entire domestic demand, the industry exported 5.14 million tonnes in 2001-02.

Jaya Basu

BUYING a house was never easier. Thirteen years ago, a loan lay at the end of endless queues. Now, bankers barge in promising personal loans upto Rs 10 lakh without any security, on the strength of three months8217; salary slips.
The convenience is matched by the drop in interest rates. In 1990-91, home loans were available for 13-16 per cent interest. Today it is around 8-8.5 per cent.
So, what triggered the turnaround? Prior to 1991, housing finance was not recognised as an industry. The only sellers in the market 8212; the nationalised banks 8212; were reluctant to give loans because of the apprehended drain on cash. Due to high limits of the Statutory Liquidity Ratio and Cash Reserve Ratio, the banks8217; liquidity was perpetually limited. Post-liberalisation, pri- vate banks, with their strong financial backing, marketed their schemes aggressively.
And it worked, because, on the consumer front, professional salaries had risen even as the joint family finally collapsed. The government contributed by providing special tax incentives: the interest on a loan of upto Rs 1.5 lakh, for instance, is tax free.
The result? The housing finance sector is now the second fastest-growing service sector in the country, as per a report of the Confederation of Indian Industry. Approvals for home loans have risen by 42 per cent this year, up from 40 per cent last year. The report forecasts more than 35 per cent growth this year.
CRIS-INFAC, a Crisil subsidiary, predicts the housing sector will grow by 24 per cent in the next five years. Housing loan disbursements, which was Rs 25,000 crore in 2001-02, is expected to grow at a compounded annual growth rate of 30 per cent in the next two-three years.
Shefali Anand

BEFORE the domestic airlines industry was liberalised in 1992-93, passengers were at the mercy of Indian Airlines, the sole government-run airline, that offered services in a manner that said, 8216;8216;Take it or lump it.8217;8217; IA had around 52 aircraft and flew 25,000 to 30,000 passengers everyday or 9 million passengers in a year.
But even in the early 8217;90s, the new airlines could only be referred to as air-taxis and not allowed to advertise their schedules or rates. It was only in 1994 that the bar lifted.
In the first heady days, some 25 companies 8212; including Damania Airlines, East West, Modiluft, Citylink and Jet Airways 8212; got no objection certificates to operate air services in the country. After a decade, Indian Airlines has only two competitors: Jet Airways and Sahara.
IA has around 54 aircraft, Jet another 40 and Sahara around 10. The number of aircraft have thus doubled, but the number of passengers has increased to only around 13 million, not at the same pace as the capacity.
Navika Kumar