Monday, September 29, 2008

Villagers who demanded employment got it

NREGS is one scheme in Independent India, which is beneficial to the poor. If economists and experts are to be believed, then hunger can be eradicated completely if this scheme is implemented honestly. Initially, the scheme was implemented in 200 villages across India in the first phase, and another 130 villages were added in the second phase. The scheme was to be applicable across the country in five years.

But, in 2008, it was decided that all the 593 districts would be brought under the scheme. This was done due to pressure from the Congress in the wake of the forthcoming general elections the next year. As per the scheme, every family of unskilled labourers would be given guaranteed employment for 100 days a year. But the Rural Development Ministry accepts that the goal is tough to achieve. As per its report for 2006-07, 2,11,88,894 families demanded employment, but only 2,10,16,099 families managed to get it. The real catch is that the government could provide 100 days of assured employment to only 21,42,718 families, which is 10% of the total.

The reality is worse. The representative of the Society for Participatory Research in Asia, Rajesh Sinha, says, “After our research on NREGS, we found that only 6% of those who demanded employment got it.” It is evident that there are flaws in implementation. Economist Alok Puranik says, “The scheme is good, but the problem lies in implementation and accountability. Private sector should be involved to make it more effective.” In terms of Budget, around Rs.18,000 crore is expected to be allotted and approved by the government this fiscal.

But one should ensure that the scheme doesn’t fall prey to discrimination and corruption. Being the main party within the UPA government, the Congress is trying to take away all the political profits. Other partners too are claiming credit. Former IAS and National Vice President of the Republican Party of India, R. S. Darapuri, explains, “In states, where opposition parties have formed the government, the CMs neglect the scheme thinking that it’s a Congress initiative. The Uttar Pradesh CM, Mayawati, recently said that she would dissolve the scheme if she becomes the PM. But the reality is that the scheme can help remove hunger from the country.”

So, while the rural employment scheme can ensure the upliftment of the poor in the long run, its implementation needs to be closely monitored by the Centre and state governments. Or else, it will never become an election issue.

The Snapshot

NREGS was launched in 2006; initially, 200 villages were covered, and this was expanded by another 130 villages in the second phase

In 2008, it was decided to extend the scheme to all the 593 districts in the country

Nearly Rs 18,000 crore is likely to be allocated and spent on the scheme in the coming fiscal (2008-09); it works well in areas where the locals or the civil society take an avid interest to ensure employment.

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IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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ZEE BUSINESS BEST B SCHOOL SURVEY
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Saturday, September 27, 2008

Bollywood and business weds cricket

In a way, February 20, 2008, marked another milestone in the history of this great gentleman’s game. It marked the entry of the glamour brigade – the movers and shakers from Mumbai’s suburbia, who were seen shopping aggressively for players to brighten their bouquets. In fact, superstar Shahrukh Khan, co-owner of the Calcutta franchise, even appointed music duo Vishal and Shekhar to come up with an uplifting anthem for his team. “There’s a lot of glamour in there, along with business acumen,” said Tim Wright, Senior Vice President at IMG, the group that manages IPL. “The franchises have undertaken consultation services from across the world, and there is a sound strategy behind the bidding so that they can zero in on the players of their choice.”

It was, however, also a day of reckoning as we realised the changing face of Indian – and world – cricket. As many disagreed whole heartedly with the fish market-like environment that’s visible in Indian cricket stadiums, Bindra argued that the sharp rise in the game’s entertainment value brings in the extra money. For once, Business and Bollywood had joined hands with cricket. He called it the second-most important day in the game’s history after 1994, when it was freed “from the clutches of (the state-owned) Doordarshan’s monopoly.”

“Cricket is a religion and, therefore, anything associated with it will gain value,” said Sanjay Roy on behalf of DLF, the league’s principal sponsors which has coughed up Rs.200 crore to BCCI to attach its name to IPL’s logo. All in all, the bidding of IPL did create history. It’s excitement for most, while nostalgia for many who can see the old ways disappearing. But whatever one feels, it’s clear that the game of cricket will change forever. IPL and ICL, like the Twenty20 format, will do for cricket what Kerry Packer did, when he completely commercialised cricket. In some years, India may have its own Manchester United, Arsenal and Chelsea. Obviously, there will no dearth of fans in India.

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IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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ZEE BUSINESS BEST B SCHOOL SURVEY
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Thursday, September 25, 2008

Castro finally calls it a day

His brother, Raul, takes over; is more open to open economy
For over 50 times, agents, assassins & assorted killing experts, associated with the CIA of America tried their level best to assassinate the man. Well, before the fanatic Christian evangelist Pat Robertson asked for the head of Hugo Chavez (for his effrontery in declaring Uncle Sam as the public enemy No. 1 of Venezuela), Americans wanted this man, dead. He is none other than Dr. Fidel Alejandro Castro Ruz, the scarlet pimpernel of the Red Revolution, who has defied mighty America for over five decades. Castro is intimately linked with the mystique of the poster boy of revolution-Che Guevara. Hounded by ill health, Castro has finally announced his retirement.

How will this affect the future of Cuba? “The revolution’s investment in human capital has made Cuba uniquely well-positioned to take advantage of the global economy. Cuban citizens are highly literate, cosmopolitan, endlessly entrepreneurial, and by global standards quite healthy,” says Julia E. Sweig, Senior Fellow and Director of Latin America Studies at the Council on Foreign Relations. All eyes are now focused on Castro’s brother Raul, who is taking over Cuba. Will Cuba now change its ‘socialist’ model of development to one based on free markets and genuine democracy? There is hope in the US that Raul will be different from Fidel. “Cuban leaders have allowed private business to emerge in tourism and energy sectors. Fidel has resisted a market-driven economy, and there is some reason to believe that Raul is open to more possibilities”, says Terry McCoy, a University of Florida Professor Emeritus of Latin American Studies.

There is now a possibility of a rapprochement between the US & Cuba. Experts feel that American mindset must change. “In Washington, however, Cuba policy has been dominated by wishful thinking, ever more disconnected from reality,” says Sweig. Off the coast of Florida, Cuba has for long been an enigma. There are many who are harsh on Fidel. Yet, there are many who admire him for creating a genuine welfare state.
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Wednesday, September 24, 2008

It focuses more on performance

Budget process governed by 3Es - economy, efficiency & effectiveness
One more form of budget, which has great significance is performance based budgeting. It is a unique and most advanced way of budgeting, in which the ultimate goal of policy makers becomes a set of performance factors – and developing strategies to achieve them. There are three pillars of this form of budgeting, which are often called 3E! Economy: focusing on cost of inputs with appropriate quality and quantity of financial, human resources. Efficiency: evaluating the relation between output and input. Effectiveness: what is the extent to which goals have been achieved. The speciality of performance budgeting is that it sets up targets to be achieved, comparing the country with the international arena using a few key performance indicators (KPIs) to relate performance with available resources; added to this is the performance scorecard approach, where KPIs are examined and the connections between causes and effects are established.

The world’s most successful countries like Australia, New Zealand, Singapore, Malaysia, UK, France, US, Canada etc. use quality/efficiency/effectiveness indicators to prepare government budgets. Most importantly, international institutions like the World Bank and IMF provide technical and training support to countries that want to adopt performance budgeting. For India, the largest democratic nation, it is high time we incorporate such a model. India then can aptly compare itself globally with key indicators, the way most developed countries have done so. Setting key social, economical and political achievements, it can frame strategies at a micro-level to attain them. In the present conventional budget, where there is no link between budget appropriations and outputs delivered, India can identify its desired outcome by preparing appropriate approaches incorporating a path to progress towards the budget.

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Tuesday, September 23, 2008

This ain’t America

There was a strong case for rate cut
Will Reserve Bank of India helps those who help themselves? The answer appears to be straightforward No. Last week HDFC – India’s largest mortgager, decided to cut lending rates citing ‘improved operational efficiency and good quality portfolio’ as the main reason; by the way, just for your knowledge, this was the first rate cut since 2003!

Well, good for HDFC and good for its consumers and may be good for other too, if they are able to replicate HDFC’s efficiency. But overall bank lending paints a dismal picture. Non-food credit by scheduled commercial banks expanded by 22.2%, y-o-y, as on January 4, 2008 as compared with 28.4% at end-March 2007 and 31.9% a year ago. The deceleration in credit growth coupled with the acceleration in deposit growth led to a decline in the incremental credit-deposit ratio (y-o-y) of SCBs to 63.3% as on January 4, 2008 from 93.7% a year ago.

“By keeping all the key rates unchanged today, the RBI has moved from a tightening of interest rates to a neutral stance,” told Mr. Sameer Kulkarni, Fund Manager – Fixed Income Fidelity Fund to B&E. A rate cut in the US has widened the difference between interest rates in the US and India, which will trigger increased capital flows, besides leading to a faster appreciation of rupee, but RBI seems more concerned about inflation and wanted to leave no room for complacency, hence it played safe.

Big companies will continue to meet their funding requirements though domestic and overseas capital markets, the pain will actually be felt by SMEs both in manufacturing and export sectors.

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IIPM Editorial, 2008
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ZEE BUSINESS BEST B SCHOOL SURVEY
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IIPM in Financial times (Print Version)
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IIPM to come up at Rajarhat
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IIPM Delhi - Indian Institute of Planning and Management New Delhi ...domain-b.com : IIPM ranked ahead of IIMs

Monday, September 22, 2008

Private equity and microfinance

Inspite of all the hype around the advent of big ticket private equity companies and reforms of our banking system, this unfortunate and invisible apartheid is something that is faced everyday by probably every budding entrepreneur of this country unless otherwise s/he is someone from one of the big ticket B-schools or has worked in one of the top five consulting companies of the world. While private equity broadly consists of venture capital, complete buy-outs, special situation and merchant banking, venture capitalism is essentially taking a backseat and is being relegated to oblivion by private funding to top notch companies and midcap companies with proven track record. Let’s take the example of ICICI Venture. Its portfolio consists of who’s who of India Inc.’s emerging companies like Biocon, Centurian Bank of Punjab, Crossword, Deccan Aviation, Karvy Stock Broking, Miditech, Naukri.com, Nagarjuna Construction & PVR.

But none of these companies are start-ups per se. They have been in the industry for quite sometime and even before their funding from ICICI Venture, they were profitable. In the same league, take the example of UTI Ventures. Its portfolio of investments consists of Consolidated Constructions, Koutons Retail, Laqshya Media, Primus Retail, Subex Azure, South Indian Bank & companies like Natural Bioenergy. In most cases, the same story is repeated, of companies being already among the prominent ones or out of the incubation period and have learned to walk on its own or experimenting with a ground breaking concept. In its own way, there’s nothing wrong with private equity companies investing in such enterprises because for a country like India where entrepreneurship has to grow exponentially in order to solve malaises of unemployment, poverty & rural-urban divide, the best thing that can happen is to give a helping hand to middle-level companies to take them into the big league. But problems of availability of seed capital for a conventional start-up still remain, as most private equity & venture capital companies have already shown a preference to established companies.
Private equity companies are essentially driven by high returns that they expect to get in few years down the line, and later exit the company through IPO. Given the high expectations of the investors, their investments would only be justified by exponential returns from the companies where they have put in money. All the more reason for investments in already stable companies or those which are path-breaking. The website of ICICI Venture (iciciventure.com) states, ‘The funds managed by ICICI Venture endeavour to provide financial assistance to well established/existing enterprises with robust business models and healthy balance sheets through a variety of investment instruments. The investment philosophy is to pursue transactions with established enterprises that are leaders or potential leaders in their respective markets and where there is a clear proposition for value creation.’ That defines it all.

The struggling painters at Kolkata’s Book Fair are mirror face of the teeming millions of young Indians who require a support system to nurture their aspirations. And aspirations need not be to be the next billionaire in the Forbes List or the business concept need not be the next big convergence idea. It can simply be to become financially stable. For India and its bag of problems, the need of the hour is more of conventional business which need not have very high returns but essentially can bring about a paradigm change in economic contours through ignition of commercial activities. For a country where banks still remain perennially conservative in lending norms, bridging the rural-urban divide will only be possible when distance between Private Equity & microfinance can be bridged with conventional banking playing more proactive role in financing conventional start-ups. Microfinance is too small to finance them while PE companies wouldn’t be interested in conventional small ventures. The change can only happen if the very paradigm of Indian banking is changed.

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IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
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'This is one of Big B's best performances'
IIPM to come up at Rajarhat
IIPM awards four Bengali novelists
IIPM makes business education truly global-Education-The Times of ...
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
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The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...domain-b.com : IIPM ranked ahead of IIMs

Saturday, September 20, 2008

Inglorious uncertainties!

The economic scenario in the new year appears to be dark
Dark clouds, which had begun to hover over US economy towards the fag end of 2007 are beginning to spread, engulfing developed & developing economies across the globe. The all pervasive dollar decline coupled with food shortages across the globe are the chief causes of concern in the recently released Global Risk Report 2008, released ahead of the ongoing World Economic Form summit. “The discussions in Davos will certainly be dominated by the economic challenges we have at the moment,” says Klaus Schwab, the founder of the Davos forum.

“The report projects an increase in the likelihood of pandemic risk materialising. What makes the risk even more challenging to meet is the fact that their is lack of awareness among the populations in developing countries with regards to the economic consequences of Pandemic outbreaks,” says B. S. Nagaraj, Practice Head-Public Policy & Risk Management, Hill & Associates (India) Private Limited while speaking to B&E. The theme at this years’ meet at Davos has aptly been titled: “The power of collaborative innovation.” All said and done, the leaders will have to be extra innovative to prevent the global capitalism from adopting protectionism.

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IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
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'This is one of Big B's best performances'
IIPM to come up at Rajarhat
IIPM awards four Bengali novelists
IIPM makes business education truly global-Education-The Times of ...
The Hindu : Education Plus : Honour for IIPM
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The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...domain-b.com : IIPM ranked ahead of IIMs

Tuesday, September 16, 2008

Let’s blame it on the yankees then

If the culprit is the US recession, then this must be a nation of 1 billion Rip Van Winkles

Tell us then! What else would you call an investor who gloriously blames this sudden Sensex fall on the imminent American recession? Yes, the news about the US slowdown had been filtering in since the past one year. But that was only a ‘slowdown’. Factually speaking, it was only on January 9, 2008, when for the first time ever in recent past, a most reputed securities firm [Goldman Sachs (GS)] shouted across fears of a possible ‘recession’ in the US. Goldman Sachs, in a research note, gave the massively unnerving statement that the US economy may already be in a recession, or will fall into one within three months. “The unemployment rate has now risen by more than 1/3 percentage points from the cycle trough. Historically, this has invariably been associated with recession, typically starting immediately and almost always within three months,” said Jan Hatzius, Goldman Sachs’s chief economist for America. This ‘recession’ call is now being mirrored by various other investment bankers as well (Lehman Bros., Morgan Stanley et al).

Recent US economic indicators have been vindicatingly pathetic – retail spending is at a nadir, housing indices are at multi-year lows, foreclosures are way up, unemployment has risen, and stock markets in general have been selling off (see charts for more details). And the fact that the trio of George Bush, Ben Bernanke and Henry Paulson ‘claim’ to have a plan (a $150 billion bailout proposal) has instead furthered the fears of the danger existing in the first place. But will this bailout package help? “It will be too late to prevent a recession as the recession likely started in the fourth quarter, and fiscal action will at earliest provide a boost in the second quarter, and probably not before the third quarter,” said Stefan Karlsson, Deutsche Bank Paris economist, to B&E. For that matter, in the sharpest cut since 1984, Ben Bernanke decided to cut the Fed rate by 75 basis points on January 22 citing “a weak economic outlook and increasing downward risk...” So far so good!

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Source :
IIPM Editorial, 2008
Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
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'This is one of Big B's best performances'
IIPM to come up at Rajarhat
IIPM awards four Bengali novelists
IIPM makes business education truly global-Education-The Times of ...
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
IIPM Ranked No1 B-School in India
Moneycontrol >> News >> Press- News >> IIPM ranked No1 B-School in ...
IIPM ranked No. 1 B-school in India- Zee Business Survey ...
IIPM ranked No1 B-School in India :: Education, Careers ...
The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...domain-b.com : IIPM ranked ahead of IIMs

Wednesday, September 03, 2008

No money to buy, and no place to call home

The dilapidated condition of the American real estate sector will continue in 2008
According to a CreditCards.com poll, for as many as 27 million American adults keeping warm this winter will mean borrowing money and 20 million will use credit cards to be able to afford their heating bills. Nearly 12% of Americans say they will need to borrow money to pay winter heating bills; 9% will need credit cards to afford their heating bills.

As I have pointed out before, the median US household’s financial position is extremely precarious. It is, therefore, not surprising that retail stocks are performing poorly. Poorly performing retail stocks are not the only indicator suggesting weak consumption environment.

According to David Rosenberg of Merrill Lynch, the housing recession deepened in November 2007, as new home sales plunged 9%, which places annualised level at just 647,000 – the lowest since April 1995. At the same time supply of unsold homes jumped to 9.3 months in November, up from 8.8 months in October; just shy of the 17-year high reached in August 2007.

It should be clear that the high level of inventories of unsold homes will continue to pressure home prices and depress construction activity as we move into 2008. It is evident from the record level of existing home inventories as a percent of US households how severe the housing recession is. It should, therefore, only be a matter of time until housing starts decline further and will also signal the onset of a US recession.

Please note that each time housing starts declined 50% or more, a recession followed, as was the case in 1970, 1974, 1981, and 1990. Given the high level of unsold home inventories both in terms of months’ supplies and as a percentage of households, the housing and construction outlook remains grim.

In last month’s report, we reproduced a chart showing US median home prices as percentage of median incomes, showing that US home prices would’ve to decline another 25% or stay flat for five years to reach fair value.

However, it should be noted that in some areas of the US where home price appreciation was particularly high in the last few years housing prices could decline much further.

What is new is that the credit problems, which first manifested themselves in mortgage backed securities, have now infected also the bond insurance companies examples being AMBAC (ABK) and MBIA.

The problem is that MBIA – the world’s largest bond insurer – disclosed on December 21 that it had had guaranteed $8.1 billion of the riskiest mortgage securities, which imperil its entire net worth. The company said it had guaranteed $30.6 billion of complex mortgage securities in total. Stocks of bond insurance companies such as MBIA and AMBAC really started to tumble in earnest in October 2007 and were so indicating some problems. As I have emphasized before, we need to look at the performance of shares, which reflect the market perception of the future value of companies and their earnings, and avoid listening resolutely to opinions of analysts and so called “sophisticated” investors.

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Source :
IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

Top Articles on IIPM:-
IIPM to come up at Rajarhat
IIPM awards four Bengali novelists
IIPM makes business education truly global-Education-The Times of ...
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
IIPM Ranked No1 B-School in India
Moneycontrol >> News >> Press- News >> IIPM ranked No1 B-School in ...
IIPM ranked No. 1 B-school in India- Zee Business Survey ...
IIPM ranked No1 B-School in India :: Education, Careers ...
The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...domain-b.com : IIPM ranked ahead of IIMs

Tuesday, September 02, 2008

Elephant’s roll worries Congress!

BSP is making a strident attempt to capture power at the Centre
Kanshi Ram, the founder of Bahujan Samaj Party, had prescribed a three-step formula for his party to come to power – contest the elections first time to familiarise yourself with the election process, contest the second time to ensure defeat of the ruling party & contest for the third time to come to power.

Kanshi’s one-time protégé & party’s incumbent president Mayawati played her cards as per her mentor’s advice in Uttar Pradesh & formed the government in 1993 after contesting elections in 1989 and 1991. Now, Mayawati is trying to repeat her UP performance in other states as well, with an avowed objective to grab power at the Centre as well. BSP won one seat and was runner up on two other seats in the just concluded Himachal Pradesh assembly polls aggregating over 7% votes.

The party might not have won a single seat in Gujarat but it managed enough votes to ensure defeat of Congress candidates in about two dozen seats. It also won sizeable number of seats in Uttaranchal Assembly polls to oust the Congress from power there. The BSP has been netting 4 to 5% votes in Maharashtra, Madhya Pradesh, Chhatisgarh. Now, Maya memsaab has set her eyes on Delhi’s throne. For the past six months, she hasn’t spent a single week-end in Lucknow as she was organising rallies in Maharashtra, Tamil Nadu, Andhra Pradesh, Kerala et al. “We are confident of annexing around 100 parliamentary seats”, BSP MP Brajesh Pathak told B&E.

As the elephant rolls on relentlessly, alarm bells are beginning to ring aloud not only in Congress headquarters but also in CPM and DMK headquarters. And we may see new political equations emerging at the national level. BSP, however, has ruled out electoral alliances. Maya it seems, wants to be the Queen, not the kingmaker.
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Source :
IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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