BJP Showcases 9-Year Track Record, Drops Hints On 2024 Election Plank

On today's episode, financial journalist Govindraj Ethiraj talks about the BJP showcasing it's track record of the last 9 years, Mahindra & Mahindra posting a record turnover and profits a month after it's Chairman Emeritus passes away, the upcoming monsoon's implications on the Indian economy and more.

---

TRANSCRIPT

NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.

Good morning, it's Monday the 29th and I'm Govindraj Ethiraj with The Core Report, coming to you from Mumbai, India's financial capital and most rocking city in the world.

Here are our two quick reports and theme, the ‘Hmm' section and ‘Conversation of the Day' where we try and divine what the monsoon could or could not do if it decides to take some detours along the way.

1. BJP showcases its track record of the last nine years, it provided some hints on the 2024 election plank.

2. Mahindra & Mahindra posts record turnover and profits a month after its Chairman Emeritus passes away.

3. The monsoons seem to be on time but El Nino and extreme weather could play spoilsport. I ask Economist Madan Sabnavis how he is looking at the economic impact.

4. And hmm…a financial influencer gets rapped on the knuckles by the stock market regulator. This a sign that the wild west days of influencing are ending.

Mahindra & Mahindra

Sometime in early 2002, auto journalist Hormazd Sorabjee and I were driving to Nasik, roughly four hours from Mumbai.

We were on our way to get a sneak preview and test drive of the to-be-launched Scorpio at the Mahindra & Mahindra (M&M) plant. We were also most likely the first journalists to get a sneak peek at this amazing creation.

The Scorpio at that time was amongst the first fully indigenous Indian four-wheelers to grace Indian roads. Tata's Indica had been launched as a hatchback in 1998, with a diesel engine. But Scorpio was an SUV and the brainchild of Pavan Goenka when he started in 1996-97 with a small team.

Till then, M&M was making jeeps, a popular brand called Commander was one - and tractors. Jeeps of course go back to M&M's origins, in 1947 with Willys which they began assembling in India.

Goenka started with an outlay of Rs 550 crore, lower than what he originally asked for which was Rs 800 crore and way lower than what it would cost to launch a new four-wheeler from scratch.

Which brings me to the present.

M&M must be amongst the few companies in the world to be a significant player in farm equipment and automobiles. Perhaps the only thing common to both is four wheels and an internal combustion engine, for now.

Mumbai-headquartered Mahindra & Mahindra also declared record sales and record net profits for the year ended 2022-23

Now, records are not new for M&M as it is referred to, because it has been growing in top line and bottom line steadily but the size and scale I felt merits some attention, more so coming on the heels of the demise of its chairman emeritus Keshub Mahindra, just last month at the age of 99.

A quick aside. Keshub Mahindra was born in 1923, graduated from Wharton in 1947 and joined the company founded by his father KC Mahindra and uncle JC Mahindra and then ran it from 1963 as Chairman till 2012, perhaps one of the longest stints, at least for a company of this size. It was only in 2012 that Anand Mahindra took over the company.

For the last financial year, M&M posted consolidated net profits of Rs 10,282 crore up 56% on a turnover of Rs 1.2 lakh crore, up 34%, both records. These include revenue from other segments like financial services too.

M&M's automotive segment, which sees bitter competition against several Indian, Japanese, European and Korean auto majors, saw sales at 698,000 while its farm-equipment sector saw sales of 404,000 units, up 15%.

M&M claims it has an outstanding orderbook of around 300,000 units, roughly half last year's sales, with waiting periods of over a year on some popular models. Cancellation rates are around 8% the company said.

Incidentally, a friend of mine got a committed delivery date for September 9 for a Mahindra XUV 700 AX7 a few months ago. The only problem was the year was 2099. Let me repeat that, 2099. I'm not joking because I saw the letter he got and asked him to show it to me again yesterday.

After debating whether it was an error or to will it to, in his words, his great-great-grandchildren, he sought a refund, belonging to the deprived 8% I would imagine.

By the way, despite being a record-setting year in turnover and profits, M&M missed analysts estimates for the 4th Quarter. Bnet profit was at Rs 1,549 crore, up 22%. Analysts estimated varied between a 39 and 69% rise.

Nine Years Of BJP

I had the opportunity to attend a presentation made by and in the presence of senior BJP ministers and leaders on Friday in New Delhi's Ashoka Hotel.

The presentation was on the nine years of BJP's rule. Being a party presentation, it was expected to focus on the positives and also highlight the political and administrative clout of Prime Minister Narendra Modi in the thinking and execution of the many programmes.

The presentation was made by Ashwini Vaishnaw who runs the railways, communication, electronics and information technology ministries.

He is new to the cabinet and sounded energetic, endearing and perhaps mildly professorial as he paced up and down the brightly lit stage with a dominating, wall-to-wall LED screen behind him flashing images and data during his presentation.

He even made concerted attempts to engage the audience at various points. For instance, he asked if anyone had travelled in a Vande Bharat train and what they thought of it. Not that the question would have elicited a negative response in this particular room but the consensus among others I have spoken to is quite positive.

This particular audience comprised a fair number of folks from the finance world in Mumbai (to which I think I was clubbed in) some people from the social media world and a handful of journalists from mostly overseas media organisations.

I was principally trying to understand three things, all through an economic and business lens.

1. What achievements is the BJP projecting?

2. How do these achievements stack up over time?

3. What is the BJP's thinking going forward and likely plank for 2024 elections?

The pitch was largely an attempt to draw a comparison between the 10 years of the previous Manmohan Singh-led United Progressive Alliance or UPA government versus the nine years of the Narendra Modi government

Going into each individual data point could be tedious, so let me bunch up the listed achievements in the following manner, there is no fact-checking here as such because my sense is most numbers stand and at best or worst may be contextually off a little here and there.

Before I do that there are two very critical threads which link most of these developments and investments, the first is the digital thread including the famous India Stack and the second is the physical thread, which includes the massive investments in roads, railways, highways, airports and inland waterways.

These two threads run through many or most of the other investments that have happened, which create or strengthen strong long-term linkages. Many countries have surpassed India on the physical thread but we are in step on the digital thread.

This also finds reflection in the composition of our economy.

To come back to citizens, particularly those in the underprivileged sections, the national free food grain programme is now touching 800 million people or a substantial part of the population. This provided some kind of net during and after Covid.

Citizens have also benefited from banking access via 490 million Jan Dhan or no-frill accounts and linked to that Rs 29 lakh crore of direct benefit transfers.

They have also benefited from insurance schemes like an accident insurance scheme suraksha bima yojana touching 337 million, health insurance scheme Ayushman Bharat at 390 million people, direct tap water connections, 112 million tele-medical teleconsultations and 30 million houses with another 10 million to come under PM Awas Yojana.

Connecting many of the schemes above are small payments systems which allow fool-proof transfers from Government to citizens or the other way round, like in payment of local level dues or even toll road payments which are considerably automated thanks to the FastTag system which is now doing around rs 193 crore a day.

UPI is 53% of digital transactions which enables individual commerce as well as business commerce.

On the business side, perhaps there are three things that stand out, GST which touched a record collection last month of Rs 187,000 crore, lower corporate income taxes at 15% versus 25% and the Insolvency and Bankruptcy Code.

The BJP also says some 1,500 archaic laws have been repealed and some 39,000 compliances have been scrapped. This is very likely but am not sure there is a measure of what new ones have come up either afresh or as addendums. Just in the last two weeks, for instance, there have been new compliances including a presumptive tax for overseas credit card spends overseas.

The good news is that lower taxes have helped companies shore up their bottomlines and made India more competitive internationally as has GST in re-organising and making more efficient the flow of goods.

While GST is in principle a great reform, working with it, particularly for small businesses or even large has become increasingly complex in every passing year.

The Government's make in India thrust and incentives for domestic production is paying some small dividends though Indian entrepreneurs have also shown they can't be fully trusted to be honest in their business actions.

Now to the physical infrastructure bit.

The number of airports have gone from 74 to 148 in 9 years, there are 328,000 km of rural roads and highway building is claimed at 37 kilometres a day. There are 400 Vande Bharat trains of which 16 are operational. Also, 111 waterways have been declared as national waterways.

Metro trains run through many more cities now, though they have or are taking much longer than originally envisaged to come into full operation. Mumbai where I live is a classic case. Also, it is frustrating to see an arterial bridge in the city take over 5 years to rebuild, that's Lower Parel in central Mumbai if you were keen to know, and still not ready while 1,000 km expressways have been built in 3 years.

India has been doing well on its green push, whether in investments in renewables, like the world's largest solar park, solar energy capacity, solarising of agriculture pumps or the distribution of 370 million LED bulbs to save electricity. And finally, going after single-use plastic.

If you were to add state and central Government efforts, they might add even more but in many cases have also fallen short of citizen and business expectations.

There was not much by way of projections in the presentation though as almost all of it was looking back. The Government has however stated its ambitions elsewhere, like the goal of attaining a developed country status by 2047, for which per capita income has to grow, according to columnist T N Ninan, 5-fold in 24 years.

Looking ahead and coming back to the questions I posed in the beginning.

Looking back, for individuals, the accessible benefits are higher for sure and the digital threads have enabled the rapid rollout of several initiatives like the critical vaccine programme with over 2 billion doses administered.

For individuals again, there is higher tax-free income at the lower levels and life potentially made easier through facilities like the Digi Locker which electronically stores your data like Aadhaar or Pan card on your smartphone and can be accepted anywhere.

On the flip side, rising inflation, high cost of living and low job creation has and will increase pressure on welfare measures.

To conclude, at least for now, The BJP seems to be leaning towards a largely pro-welfare plank for 2024, with some cultural-religious thrusts here and there like the construction of a brand new Ayodhya Temple. The cultural thrusts could of course intensify depending on how the economy is looking next summer.

The attempt might be to compare the 10 years (by then) with the previous 10 and suggest that life has changed considerably for the better.

There will be much emphasis justifiably to some extent on the empowering of the individual citizen and consumer. Including with high-speed data and cheap domestically produced phones.

On the business side, ease of business is being touted but that is a tougher sell in my view as business tends to go by what they experience and not what they are told. Though, experiences will differ, depending on whether you are old or new economy.

It is not clear whether in this path we will be a more open economy in the coming years; all signals including the steady raising of tariffs suggest we will not. That may not be the best prescription but the 2024 election season has now formally begun.

Finally, among the few ministerial encounters I could swing after the presentation, one was with Finance Minister Nirmala Sitharaman for a few minutes.

I thought I would ask about the Rs 2,000 note but felt she might lob that ball into the Reserve Bank's court.

So I asked instead about the 20% presumptive tax on international credit card spends. Her answers are I am guessing off the record so I won't replay them. She did ask me if I knew what China's overseas investment limits were, in contrast to our $250,000 per person per year. No, I said. $50,000, was her response.

The Importance Of Monsoons

Thirty-six years ago, British travel writer Alexander Frater traversed the length and breadth of India around this time of the year to write his seminal travelogue, ‘Chasing The Monsoon, A Modern Pilgrimage Through India'.

Frater catches the monsoon in Kerala as it hits in the first week of June and then travels with it across the country. He captures brilliantly the intrigue behind the onset of the monsoon, the anticipation across the country, particularly amongst the political class and the sheer importance of timely and well-scattered rains to India's largely then agricultural economy.

As the first week of June 2023 approaches, not much has changed.

Except, perhaps more uncertainty though we have had seven straight normal monsoons. The first is El Nino, a weather phenomenon that is likely to affect patterns in the latter half of the monsoon season, and then there is the larger question of extreme weather.

Poor monsoons do not play havoc on the economy like in Frater's time but they can have an impact nevertheless.

To understand what has changed and not even as we await the first rains to hit the Kerala coast on June 4 which is 3 days late by the way and what we should be watching out for, I caught up with Bank of Baroda Chief Economist Madan Sabnavis and began by asking him to define the importance of monsoons at this point.

Hmm

A financial influencer or influencer has been asked by the Securities & Exchange Board of India to return advisory fees and disgorge over Rs 6 crore he earned in connection with a case where he apparently offered investment advice without a registration. This is because he chose to settle and compound rather than fight it out.

The amount is quite large, even if not for the person concerned.

The market run of the last few years, accompanied by the growth of social media, has clearly given many articulate people the opportunity to simplify financial matters and, then slowly, start peddling advice, including on buying cryptocurrencies, sometimes in exchange for a fee. It goes without saying there was a gap in the market between the hunger for knowledge and the availability of it, at least in the form desired.

This was a bit of wild west but in retrospect, it is a little shocking how big it had become and how easily articulation could pass for knowledge.

The larger lesson I guess is that where money and health are involved, at least, regulators need to step in very actively and start laying down rules, as they have begun to.

Hmm…

What is the difference between a pressure cooker sold in the north of India and the south?

India's vast cultural and regional differences result in distinct consumer demands, even within seemingly identical product categories, including the pressure cooker or the ceiling fan, and this poses challenges for businesses operating at scale, said Anuj Poddar, Managing Director & CEO of Bajaj Electricals, on Wednesday.

Speaking at the PwC CEO Dialogues hosted by CNBC-TV18, Poddar said: "All my growing up years in Mumbai, I had seen pressure cookers with a lid that goes inside. If you go to the south of India the lid is always outside."

"I don't think it has a fundamental difference on the cooking but the south Indian homes will have a lid on the outside, in the western homes, they will have a lid on the inside. So that changes the whole mould, the R&D, the supply chain etc.," he said.

He noted that the diversity in consumer preferences extends beyond pressure cookers and mentioned even the ceiling fans, whose colour, speed were factors that consumers saw differently in different parts of India.

"Even the fan that will sell in south of India will not sell in north of India and vice-versa. Consumers have their strong preferences and behavioural tendencies and beyond the functional needs there are these diversities that exist," he said.

This diversity in consumer behaviour poses a challenge for companies seeking to cater to a wide range of preferences while operating at scale, he said.