3rd March

A capital subsidy to airports

The article argues that if users are required to pay the Airport Development Fee (ADF) at the moment, then they should also be rewarded back their money once the development is completed. Author compares the ADF with a kind of capital subsidy availed to the developers.

Following Delhi Airport, Mumbai Airport is also allowed to levy ADF to the passengers and is expected to raise Rs. 1543 crore over the period of four years. ADF doesn’t cover the operational costs or further development of the Airport, but funds the capital required for the present development work going on at the Airport. Since the developers were not in a position to raise capital through market, it came to end users. Thus, in one way end users are also the stakeholders in these projects. ADF reduces the debt/equity ratio in the projects and thus avails better profits to the stakeholders. 

Thus, it is apparent that once the development work is over the users should be rewarded to the extent they have contributed. Since it is not possible to indentify individual contributor, the returns can be in the form of lower user charges or redirecting the interest savings due to ADF to the Airport Authority for the development of smaller airports which will help the users on a long run.

NSE needs competition

The article advocates multi-asset trading to be introduced in India as well since it is becoming prominent all over the world with NYSE-Euronext already providing it and LSE already in process to provide it.

Recently, MCX, country’s premier exchange to trade in commodities futures, sought SEBI’s approval to trade in equities through subsidiaries. With acquired financial and technical muscle, MCX is all set to provide competition to NSE by providing trading facilities in equities as well besides just commodities. NSE already has a monopoly in India with three times trading volume and bigger derivatives market then BSE. This monopoly keeps transaction charges high and discourages innovation. Competition encourages development of new structures and adoption of better technologies. With series of mergers and acquisitions, exchanges are increasingly offering multi-asset trading options. NYSE and Euronext merged to provide a single transatlantic platform for trading in equities, derivatives and bonds. LSE has acquired Borsa Italiana to get access to Italian derivatives market. Even in emerging markets, Johannesburg Stock Exchange is in process of acquiring Bond Exchange of SA to provide trading in multiple assets.

Thus, consolidation is becoming evident in trading market. Indian market has remained under regulatory restrictions. It is evident now to provide single window to trade in multiple assets to hedge the risks and allow exchanges and NSE to provide such services if desired.

Imagining India

The article expresses grief that in spite of growing popularity of brand India at the international platform, the projected India is still the stereotypical one shown in the tourist brochures and not the real India that we see as citizens. 

As the saas-bahu sagas rock the Brazilian TV shows, the Indian saris and bindis beautify the Brazilian salsa dancers and Oscar Awards go gaga over Slumdog Millionaire, we feel proud back at home. However, we forget one thing that these projections have been there since years. It’s the same projection all over the world; for Caminho das Indas it’s the palaces, gaudy costumes, garlanded Ganesh idols, turbaned beards and big fat weddings while for Slumdog it’s the packed slums, communal riots, the chaos, the grinding urban poverty and the class arrogance of the new India. Everything is the tourist guide version of so-called “Mystic India”

Western habit of occasional off-mainstream foreign film is famous which is why we see Kabir Bedi becoming a star in most of Europe or the super success of Crouching Tiger Hidden Dragon, no way the best directorial debut of Ang Lee. But the sad thing is the real India, with its complexities of urban and rural life, still remains outside the purview of western world.