The Navhind Times I Monday June 27, 2016

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Indian women in workforce

fell 10% in last decade

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Ragu Rajan will be missed. He is one of the few central bank

governors who have changed the regime in a major country

The RRexit Shock

By Tensing Rodrigues

I
T

he participation of Indian women in the workforce fell 10 per cent

in the past decade as India recorded the lowest female labour
force participation rate, a joint industry chamber ASSOCHAMThought Arbitrage Research study showed on Sunday.
There is an urgent need to create more jobs and entrepreneurship opportunities to promote women empowerment thereby making them economically independent as female labour force participation
(FLFP) rate in India has fallen significantly by 10 per cent during the last
decade, AAN ASSOCHAM-Thought Arbitrage Research study noted, ASSOCHAM said in a release here.
Though there was a spurt in the number of working women in India
during 2000-2005, increasing from 34 per cent to 37 per cent, the female
labour force participation rate has reduced continuously thereafter and
reached 27 per cent in 2014, the study said citing World Bank data, of the
period when Indias economy was experiencing unprecedented growth.
There are certain primary reasons for low participatio n of women in
the labour force like lack of access to higher education among women,
dearth of opportunities to work. Even lack of flexibility in working conditions tends to dissuade women from joining the labour force as they turn
to their domestic duties, ASSOCHAM said.
The FLFP rates during the period among BRICS countries was found to
be - China (64 per cent), Brazil (59 per cent), Russia (57 per cent), South
Africa (45 per cent) and India (27 per cent).
Moreover, the gap between rural male and female labour force participation in India in 2011 stood at about 30 per cent while in urban centres
gap was more pronounced at around 40 per cent.
This can be attributed to social and cultural curtailment and often the
lack of work opportunities, the report said.
As per the latest available data, the FLFP rate in India was about 36 per
cent as of 2011-12, with 31 out of 35 states and union territories scoring
rates below the national average. Only erstwhile Andhra Pradesh, Chhattisgarh, Sikkim and Himachal Pradesh fared better in this regard, the
statement said.
Considering that even a 10 per cent increase in FLFP rate can boost GDP
by 0.3 per cent, according to The UN Economic and Social Commission for
Asia and the Pacific, it is imperaLatest
tive that policy measures and
programmes are introduced and
BSE Sensex
27002.22
implemented to increase the parNifty
8,270.45
ticipation of women in the workforce in India, it added. IANS
Re/ US $
67.44

Rs/ UK Pound

99.89

farm produce prices

Vegetables Retail rates at Goa State
Horticulture Corporation Ltd. outlets (Rs per kg)
hLadyfinger 37.70
h

hCauliflower
h
(piece)

31.00

hCabbage
h

38.00

hChilly 37.60
h

hCluster
h
Beans

30.00

hOnion
h

hFrench
h
Beans

52.00

hPotato 27.70
h

hCarrot
h

37.00

hTomato 46.90
h

17.80

*Rate as on June 26 2016

nside Job is a 2010 documentary film directed by Charles H.

Ferguson about the 2008 US
financial crisis. It won the 2010
Academy Award for Best Documentary Feature. Among the many
persons whom the movie featured
as the protagonists and critics was
a forty-seven year old Indian professor of finance at the University
Of Chicago Booth School Of Business, who had just finished short
stints as the chief economist at the
International Monetary Fund and
as the honorary economic advisor
to the former Prime Minister, Dr
Manmohan Singh. His name was
Raghuram Govind Rajan.
Rajan was noticed perhaps for
the first time by the international
community at an annual meeting of highpowered finance honchos at Jackson Hole,
Wyoming, in 2005,
gathered to honour
Alan Greenspan, who
was about to retire as
Federal Reserve chairman after presiding
over a historic period of economic
growth. Rajan delivered there a
paper Has Financial Development
Made the World Riskier? that
shook the big bulls by their horns.
Naturally Rajan quickly came
under attack. Former treasury
secretary Summers ridiculed the
warnings as misguided, and accused him of being anti-growth.
But Rajan did not have to wait
for too long to be vindicated. Just
three years down the line came
the crisis as he had predicted,
plunging US, and the rest of the
world with it, into a whirlpool

from which it is still to surface

and perhaps never will. I do not
ascribe to Rajan any special powers of prescience. He is simply
honest with his analysis and lets
no prejudice theoretical
or political, influence his
judgment. He is sharp as an
eagle in detecting the rot,
wherever it is.
And he is very vocal. He
does not mince his words
and does not hesitate to
cross swords with the demigods be they academic and
political. This has earned him a
lot of detractors both in US and in
India. But to his credit they have
had to invariably swallow their
pride and accede defeat.
His exit from RBI is definitely
going to make a difference to global finance, as his onetime critic
Summers put it. Ragu Rajan will
be missed. He is one of the few
central bank governors who have
changed the regime in a major
country. This is a major accomplishment.
But it is we who may miss
him more for this twist in Indias

success story is bound to have

serious repercussions for the
economic prospects of India. What
turn the events will take is difficult
to say but we as investors have
every reason to worry.
The markets opened on last
Monday fairly hopeful. The Sensex
went up almost a percentage
point. May be they felt September
is still way off. May they hope the
reforms will continue or maybe
they saw a silver lining in the
cloud that the economy may feel
relieved of the hard taskmaster
and take a stride. I will not disagree with the markets on all that.
But my fears are more intrinsic
and more long term. My fears are
about the health of the economy
not exactly the morning after.
My fears are about two points.
The first is the cleaning up of the
financial mess. Will the next man
have the courage to be ruthless in
the surgery? Will he be given the
mandate and the liberty to do so?
The circumstances of Rajans exit
are not very conducive for entertaining such a hope. Let us not forget that a certain amount of tussle

between the central bank and the

economic ministries is necessary
for a healthy economy. When the
two begin to dance to the same
tune is when things begin going
wrong. Well that is what happened
and still happens in US. That is
where Rajan crossed swords with
Hank Paulson as the sub-prime
crisis unfolded.
My second fear is the turbulence ahead in the global waters.
The world economy is still to get
on even keel. At such times you
need at the rudder a seaman who
has been there and seen it before
and has the guts to take risks
and face failures. These are not
ordinary times. Mere academic
economics will not serve now as
some of Rajans detractors seem to
believe. Time has come to rubbish
those old theories and retire those
old teachers. For their wisdom was
derived from a different world,
and that world is gone with the
last wind. Now is the time to rethink and revise to chart a new
course. As we dispatch Rajan back
to Chicago may someone rise to
the occasion, and may we have
the grace to let her be.
P.S. In the days before Raghuram Rajan came to India, there
were two Indian professors in US
that I regularly tracked during my
study of the US financial crisis.
One was Rajan, and the other was
Viral Acharya, now CV Starr Professor of Economics, Department
of Finance, New York University
Stern School of Business.

*The author is an investment consultant. Readers

can send their comments and
queries to investment.ideas.
shop@gmail.com

New deal for textile workers could add to risks

government initiative to
create millions of jobs
and increase exports in
the textile and garment
industries could put
vulnerable workers at greater risk.
Activists are calling for better enforcement of existing labour laws
in the two industries.
A package to generate 10 million jobs and boost exports by US
$30 billion over three years was
unveiled by the government on
Wednesday. But the measures,
including cutting overtime, have
raised concerns about workers
rights.
India is one of the worlds largest textile and garment manufacturers, supplying many leading international
brands. The US $40 billion-a-year industry
employs around 45 million workers. Workers
rights campaigners said that the industry is
built on the back of cheap contract labour.
Creating more jobs will only mean even less
regulation on the floor with managements hap-

pily taking in new workers and firing old ones,

said Jayaram KR, member of the Garment and
Textile Workers Union (GATWU), Bengaluru.
There are numerous labour laws that already
exist and most of them are not being implemented in factories.
The labour-friendly measures approved

by the Indian cabinet include capping

overtime for workers at eight hours a
week in line with International Labour
Organization (ILO) norms in order to
create more jobs.
The government also plans to
subsidise employers social welfare
contributions for workers. It said
most new jobs would go to women
who already make up 70 per cent of
the workforce in the industry. The
objective of women workers is helping in social transformation through
womens empowerment, according to
the government.
But Gopinath Parakuni, general
secretary of Cividep India, which
campaigns for workers rights, said
the new measures would not help
workers, and urged tighter regulation to stop
workplace abuses. When there are increasing
cases of human rights violations being reported
from the sector better regulation is required.
Instead, the government is dangling a carrot
to the industry by offering subsidies to make
more profits, he said. Reuters

investors guide

Buy on dips

rexit will dictate market sentiments during the

week. Expectations are of further downside in
stock prices at least in the short term. Nifty may
hit levels of
7,500-7,600.
But it will get
support from
domestic
flows once
the shortterm risk
fades. The Nifty is likely to hit 9,500 by the year
end.
During the previous week the market gave up all
that it had gained in the preceding few days. Early
last week a rally took place in anticipation of negative vote for Brexit. So the crash in the indices is a
panic reaction. On the global front stock markets
are going to be extremely volatile but central bankers will step in to bring market stability. UK will take
two-to-three years to complete the whole process
and hence the impact in near-term for India will be
minimal. In India the focus is on domestic factors
like monsoon, parliamentary session etc. In the short
term the Brexit turmoil is resulting in excellent buying opportunities. There are phenomenal opportunities in the midcap segment where investors may not
get quick rewards butholding on to stocks for the
long term would be wise. There are opportunities in
retail banking, consumer discretionary, industrials,
utilities, automobiles and retail.

weekly
market
outlook

sector watch

scrip tip

Unattractive returns

Strong core business

anks are expected to face asset quality

stress along with elevated credit costs for
next three-four quarters. Despite higher
provisioning during last two quarters, provision coverage ratio (PCR) of the banking sector
is at 41.6 per cent which clearly suggests higher
credit cost in coming quarters. Further incremental pressure on profitability due to ageing
of current NPA will be higher on public sector
banks as their PCR is at mere 40.5 per cent v/s
52.2 per cent for their private sector peers. As a
result banks are expected to show depressed return ratio until 201718. Between banks
consumer business
focused private banks
in the medium-term look attractive as they are
better placed to take advantage of economic
cycle. Among public sector banks those which
have higher exposure to consumer loans are a
better option for investment as there is going to
be pick-up in retail loan demand before infrastructure/corporate loans demand rise. Preferred
choice is HDFC Bank, HDFC, IndusInd Bank and
Federal Bank in private sector and Indian Bank
in public sector space. The RBI has asked banks
to move towards uniform classification over the
last two quarter of the current year.
Reliance Securities

Banking

HCL is among the key domestic soda ash players and benefits from
fully integrated plant and various cost advantages which helps it to
enjoy highest margins in the industry. GHCLs textile business that
contributes to 40 per cent of revenues is backward integrated from
yarn to home textiles. The thrust of this division is to drive margins by
changing customer and product mix. GHCLs strong free cash flow, falling
debt-equity ratio and its ability to protect its margins in soda ash in
weak market driven by cost leadership is not truly reflected in its current
valuations. Ongoing capital expenditure in soda ash and potential ramp
up in textiles margins will drive earnings. There is significant re-rating
potential in the stock.

BUY
Target Price

` 228

Current Price

` 173.15
GHCL

Emkay

Improving Margins

BUY

EC International (KEC) has secured fresh orders worth Rs10.3

billion in transmission & distribution (T&D), railways and cables
businesses with which its outstanding order book is healthy. Thanks
to the order inflows KEC will deliver strong earnings growth in the
months ahead and continue to show improving fundamentals. KECs
profitability has been significantly impacted over the last few years
due to aggressively bidding projects at low margins to acquire required
pre-qualifications in new initiatives. The company has executed huge
quantum of loss-making orders in new verticals. Till recently, it kept on
bagging new orders at competitive margins. Overall the company will
show steady improvement in profit margins, driven by reducing backlog
of low-margin legacy orders and breakeven in tower and cable business.
Reliance Securities

Target Price

` 165

Current Price

` 137.50

KEC International