The Nobel Peace Prize Committee says here that President Obama's extraordinary efforts to strengthen international diplomacy and cooperation between peoples has won him the Nobel for Peace in 2009 . The Committee has attached special importance to Obama's vision of and work for a world without nuclear weapons.
Further, 'Only very rarely has a person to the same extent as Obama captured the world's attention and given its people hope for a better future. His diplomacy is founded in the concept that those who are to lead the world must do so on the basis of values and attitudes that are shared by the majority of the world's population.' ... 'The vision of a world free from nuclear arms has powerfully stimulated disarmament and arms control negotiations.' ...
All this to a man who is Head of State of a nation involved in two wars, where the defence spend is much larger than some nations. While the US has not got out of Iraq it has ordered more troops into Afghanistan. By that yardstick, an Indian Head of State should have won, since everytime India has suffered a terrorist attack, our leaders have restricted the use of our nuclear weapons. Heck, we constructively restrict our anger to newspapers, cricket matches (at neutral venues, if you wish), pleading before the UN, etc and go about our business. If only we knew that pounding bombs on suspected nations coupled with good oration would have 'captured the imagination' of the Nominations Committee, we would have done that.
The least you guys at the Nobel's could have done was wait for the end of Obama's term to see if his wonderful oration, hope and vision actually translated into world peace.
Showing posts with label opinion. Show all posts
Showing posts with label opinion. Show all posts
October 10, 2009
June 25, 2009
The 1/4 life Crisis
Does any of this sound familiar …
1. Feeling "not good enough" because one can't find a job that is at one's academic/intellectual level
2. Frustration with relationships, the working world, and finding a suitable job or career
3. Confusion of identity
4. Insecurity regarding the near future
5. Insecurity concerning long-term plans, life goals
6. Insecurity regarding present accomplishments
7. Re-evaluation of close interpersonal relationships
8. Disappointment with one's job
9. Nostalgia for university, college, high school or elementary school life 10.
10. Tendency to hold stronger opinions
11. Boredom with social interactions
12. Loss of closeness to high school and college friends
13. Financially-rooted stress (overwhelming college loans, unanticipated high cost of living, etc.)
14. Loneliness
15. Desire to have children
16. A sense that everyone is, somehow, doing better than you
An author somewhere has called this phenomenon (of experiencing the above symptoms) the Quarterlife Crisis and has authored a book about the challenges of living in your twenties.
Though I haven't given most of these much thought, at some point or another some of the above symptoms have clouded my thinking. I could count 13 out of 16 - some more intense than the others … which makes the hit rate 81%. (FYI, I left out 1, 15, 16 - before I get mail asking me about my desire to have children ;))
Damn this! Kiddish before 12, teenager issues till 20, quarterlife crisis till mid 30s, midlife crisis in the 40s, prostrate issues after 50 … when is a brother supposed to be enjoying himself? :)
June 23, 2009
Development is the bane of our existence
Some thoughts as I return from a trip where I had a taste of rural life ...
The capitalist system we work in encourages us to do things faster and better with each passing year. Corporates are incentivised to grow faster than the previous year. Profits must be larger than the previous year. Costs must be lower than the previous year. These invariably get passed on to us which makes us humans enter a race, trying to do things faster than what evolution permits ...
… With each passing year, one works harder, runs faster to move ahead because if you do not others will take your place. You try to do things at 30 - that which you are meant to do when 35, achieve things at 40 - that which you were supposed to achieve at 50 … Why? … what do you plan to do in those additional 5-10 years you may possibly gain? (if you don’t kill yourself in the process)
… it all leads to stress and stress related problems … we then spend billions developing drugs that make us live longer with these illnesses …
The race to scale also incentivises man to standardise … agriculture is also standardised ... killing bio-diversity in nature …
Development is the bane of our existence … the more we invent, innovate, develop - the more we substitute our natural instincts and abilities for artificial ones … all to achieve more - the race to beat evolution, which hastens our doom.
The capitalist system we work in encourages us to do things faster and better with each passing year. Corporates are incentivised to grow faster than the previous year. Profits must be larger than the previous year. Costs must be lower than the previous year. These invariably get passed on to us which makes us humans enter a race, trying to do things faster than what evolution permits ...
… With each passing year, one works harder, runs faster to move ahead because if you do not others will take your place. You try to do things at 30 - that which you are meant to do when 35, achieve things at 40 - that which you were supposed to achieve at 50 … Why? … what do you plan to do in those additional 5-10 years you may possibly gain? (if you don’t kill yourself in the process)
… it all leads to stress and stress related problems … we then spend billions developing drugs that make us live longer with these illnesses …
The race to scale also incentivises man to standardise … agriculture is also standardised ... killing bio-diversity in nature …
Development is the bane of our existence … the more we invent, innovate, develop - the more we substitute our natural instincts and abilities for artificial ones … all to achieve more - the race to beat evolution, which hastens our doom.
June 14, 2009
Women reservations: Another policy waiting to be misused
The Government of India seeks to pass the Womens Reservation Bill which will result in 33% reservation of the Parliament seats in the Lok Sabha for women. While I am all for the upliftment of women who have traditionally played second fiddle to men in India (I'm talking of the larger Indian society here), I am not sure reservation is the right way to get there. I say that because reservations in the past have been misused. Deserving persons miss out. I say that from personal experiences, where I have seen people take advantage of their caste status to get benefits. Some of these are people I know well.
One of my friends mentions that this move will only benefit upper class women in urban areas who can contest elections on their own individual credentials. Those for whom this policy is meant - the sparky rural woman who has leadership potential but looses out due to male chauvinism - will find it difficult to get a seat. In all probability, political parties will ration this quota among women who already got elected to Parliament leaving less seats for the ones that need upliftment.
Reservations is curing the symptoms of gender inequality. The malaise is much deeper. Today the average rural woman is mostly dependent on her husband due to economic and social reasons. The only way this can change is if women come together in small communities to work, educate themselves, and have their own support system which can incentivise them to be independent. Empowerment is a long journey. The flipside of the current system is that this will lead to more reservations, where women will ask for representation within the current womens quota for backward castes. It will lead us nowhere
One of my friends mentions that this move will only benefit upper class women in urban areas who can contest elections on their own individual credentials. Those for whom this policy is meant - the sparky rural woman who has leadership potential but looses out due to male chauvinism - will find it difficult to get a seat. In all probability, political parties will ration this quota among women who already got elected to Parliament leaving less seats for the ones that need upliftment.
Reservations is curing the symptoms of gender inequality. The malaise is much deeper. Today the average rural woman is mostly dependent on her husband due to economic and social reasons. The only way this can change is if women come together in small communities to work, educate themselves, and have their own support system which can incentivise them to be independent. Empowerment is a long journey. The flipside of the current system is that this will lead to more reservations, where women will ask for representation within the current womens quota for backward castes. It will lead us nowhere
June 8, 2009
Update: Know they pension plan
Some time ago, I posted about having adequate knowledge of where investment managers put your money to work. As an update, I managed to get a cash flow plan of the scheme. Imagine my shock when I present valued the 'capital' and the 'fees' (Present valuing means discounting all future cash outgoes to present terms to know what it would mean if everything were to be evaluated on todays terms). The fees were a crazy 18%!!! ... which means that if I invested all monies today, 18% would go to this institution as fees for managing the capital. To give you an idea as to why that is crazy, mutual funds take around 1% (0.5% when one buys and 0.5% when one sells), alternative asset managers take close to 1.5% - 3% to manage wealth. The next time you are sold a plan, inquire about the fees
March 30, 2009
Know thy pension plan
I was the audience. A pitch was being made to buy into a pension plan. The salesperson gave the keeping aside for old age spiel. In short the dynamics were like this - I was to put in a fixed amount for the first five years, say INR x per annum. From thereon, till I was fifty, this cash would grow and after I turned fifty I would get a monthly income from this kitty till my passing into the next world.
She was doing her job well until the point where I asked at what rate my cash would grow between the last installment and me turning fifty.
“15%”, came the reply.
“Will you guarantee that?”
“Well we don’t guarantee it but if you invest the money in an aggressive mutual fund you will see those returns”
“Which mutual fund? I thought this was a pension plan”
She unfolded the literature for the plan. It showed options of allocating my annual contributions towards various asset classes – the most aggressive of which (also took on the most risk) and would, assuming the world didn’t fall apart in the intervening years, assuming that Indian equity markets delivered, assuming the fund manager wasn’t a rogue, assuming the companies in which my pension money was invested didn’t blow up due to fraud, bad management, business cycles or otherwise and assuming a million other risks which my tiny brain couldn’t fathom or whose impact I couldn’t ascertain, would potentially deliver 15%! … It was getting clear now …
“So your literature says 15% return annually if I invest in this scheme and allocate my pension to this asset class (Fancy term 1: ‘asset class’ is money that is exposed to similar risks – bonds, shares, etc are examples of asset classes)
“Well on the letterhead we can mention a maximum of 10%. But you can get 15% if …”
“Why 10%? You just said 15%!”
“Well sir, on the letterhead …”
“OK. No issues, So if your letter mentions 10% I assume my cash grows at 10% in the intervening period.” … PS: whatever you may hear from stock brokers, cash growing 10% assured annually for a long time is a pretty good investment, especially for pension plans
“No sir that again would depend …”
“Then why mention 10% on the letter?”
(Uncomfortable babble) … “Sir you can choose our as your asset class. The current NAV (Fancy Term 2: NAV means Net Asset Value – the price of a mutual fund at any given point in time) is INR 4. The NAV will surely rise (?) and your pension money will grow faster than 15%”
(I smile) … “What was the offering NAV?”
“INR 10 sir”
“Don’t you think it’s a concern that it has fallen from INR 10 to INR 4?”
“It’s a five star scheme sir and they invest in AAA+ corporates” … she doodled AAA+ on the literature, possibly to drive home the point
“Is there a possibility the NAV can drop further?”
(again that uncomfortable silence)
“Never mind … I’ll take this literature and get back to you”
As I was leaving I felt a little sorry for grilling her after I came to know about the asset classes logic. I understood the plan fundamentally then but was exploring the possibility that the pension plan scheme actually had a fixed rate of return. There was none. Instead there was a hell lot of market risk. (It actually seemed a clever way to seek contributions to the company’s mutual fund schemes) It called for taking a call on the capital markets for the next 23 years. (I’m around 27, and it would be 23 years till I turn 50). Ideally I would like my pension money to be risk-free. A large portion, say 95% of it, should grow at a fixed rate and the rest in equity shares of AAA+ corporates and pension funds should see to it that the float (Fancy term 3: Float is the premium on insurance / pension contributions collected by such companies in this business) is managed in a similar way. Unfortunately the fees component from selling these products has become huge income drivers for banks. A cross-sell like this gets fees form the pension plan as well as the mutual fund. Obviously bank executives will not want to sell the safer plans which gets fees for just the pension fund.
Just to give you one example of the impact a decision like this will have, assume someone invests in this scheme (most people will eventually). Their money grows in this mutual fund based pension plan till they are 49. Just before they turn 50, we see a recession the likes of today, there is mayhem in the markets and they are left with the capital they started off with, maybe less, which over 23 years has lost its value due to inflation. Assume that this was their only safety net. Isn’t their retirement royally screwed? Where has all the hard work to support old age gone? What if there was someone with a terminal illness at home? As usual the only beneficiary is the bank manager who collected bonuses every year for growing the capital (maybe completely due to luck) till our friend grew 49 and then who gave up his bonus when the fund went under.
Unfortunately, most people are unaware of what they sign up for in such schemes. One old-timer I know very happily told me that he invested most of his savings in a fixed rate investment which is market determined (?). My attempts to explain that there is no instrument that can pay a fixed rate and at the same time be market-determined was met with a “Do you think the managers at the insurance Co are fools?” Well they were not fools, they met their annual targets and scooted off into the sunset.
Financial innovation may have got people access to investment options they never would have, which is a good thing if they understood it. But financial innovation coupled with ignorance could well be disastrous. Know thy investments!
She was doing her job well until the point where I asked at what rate my cash would grow between the last installment and me turning fifty.
“15%”, came the reply.
“Will you guarantee that?”
“Well we don’t guarantee it but if you invest the money in an aggressive mutual fund you will see those returns”
“Which mutual fund? I thought this was a pension plan”
She unfolded the literature for the plan. It showed options of allocating my annual contributions towards various asset classes – the most aggressive of which (also took on the most risk) and would, assuming the world didn’t fall apart in the intervening years, assuming that Indian equity markets delivered, assuming the fund manager wasn’t a rogue, assuming the companies in which my pension money was invested didn’t blow up due to fraud, bad management, business cycles or otherwise and assuming a million other risks which my tiny brain couldn’t fathom or whose impact I couldn’t ascertain, would potentially deliver 15%! … It was getting clear now …
“So your literature says 15% return annually if I invest in this scheme and allocate my pension to this asset class (Fancy term 1: ‘asset class’ is money that is exposed to similar risks – bonds, shares, etc are examples of asset classes)
“Well on the letterhead we can mention a maximum of 10%. But you can get 15% if …”
“Why 10%? You just said 15%!”
“Well sir, on the letterhead …”
“OK. No issues, So if your letter mentions 10% I assume my cash grows at 10% in the intervening period.” … PS: whatever you may hear from stock brokers, cash growing 10% assured annually for a long time is a pretty good investment, especially for pension plans
“No sir that again would depend …”
“Then why mention 10% on the letter?”
(Uncomfortable babble) … “Sir you can choose our
(I smile) … “What was the offering NAV?”
“INR 10 sir”
“Don’t you think it’s a concern that it has fallen from INR 10 to INR 4?”
“It’s a five star scheme sir and they invest in AAA+ corporates” … she doodled AAA+ on the literature, possibly to drive home the point
“Is there a possibility the NAV can drop further?”
(again that uncomfortable silence)
“Never mind … I’ll take this literature and get back to you”
As I was leaving I felt a little sorry for grilling her after I came to know about the asset classes logic. I understood the plan fundamentally then but was exploring the possibility that the pension plan scheme actually had a fixed rate of return. There was none. Instead there was a hell lot of market risk. (It actually seemed a clever way to seek contributions to the company’s mutual fund schemes) It called for taking a call on the capital markets for the next 23 years. (I’m around 27, and it would be 23 years till I turn 50). Ideally I would like my pension money to be risk-free. A large portion, say 95% of it, should grow at a fixed rate and the rest in equity shares of AAA+ corporates and pension funds should see to it that the float (Fancy term 3: Float is the premium on insurance / pension contributions collected by such companies in this business) is managed in a similar way. Unfortunately the fees component from selling these products has become huge income drivers for banks. A cross-sell like this gets fees form the pension plan as well as the mutual fund. Obviously bank executives will not want to sell the safer plans which gets fees for just the pension fund.
Just to give you one example of the impact a decision like this will have, assume someone invests in this scheme (most people will eventually). Their money grows in this mutual fund based pension plan till they are 49. Just before they turn 50, we see a recession the likes of today, there is mayhem in the markets and they are left with the capital they started off with, maybe less, which over 23 years has lost its value due to inflation. Assume that this was their only safety net. Isn’t their retirement royally screwed? Where has all the hard work to support old age gone? What if there was someone with a terminal illness at home? As usual the only beneficiary is the bank manager who collected bonuses every year for growing the capital (maybe completely due to luck) till our friend grew 49 and then who gave up his bonus when the fund went under.
Unfortunately, most people are unaware of what they sign up for in such schemes. One old-timer I know very happily told me that he invested most of his savings in a fixed rate investment which is market determined (?). My attempts to explain that there is no instrument that can pay a fixed rate and at the same time be market-determined was met with a “Do you think the managers at the insurance Co are fools?” Well they were not fools, they met their annual targets and scooted off into the sunset.
Financial innovation may have got people access to investment options they never would have, which is a good thing if they understood it. But financial innovation coupled with ignorance could well be disastrous. Know thy investments!
February 15, 2009
Machiavellian Infomation Overloads
I have stopped reading newspapers. Unless of course it’s a lazy afternoon and the options to spend my time in other pursuits are non-existent.
There was a time when I used to read every bit of news that came along. As a student, I read the Economic Times (even though at the time I could not appreciate the significance of most of the news), The Times of India and the Bombay Times (for funsakes). I was told that the middle pages of the newspaper are the ones where the juice is. The Editorials and comments by wise men of industry and society were on these pages. As a young mind, one was supposed to assimilate the oracle-like opinion (no matter that it could be released verbatim later in front of a group of stunned teenagers … man this guy has god-level insights!) All this until one day some few months ago, I saw one of my friends draft a press release. And no my friend is no journalist; we’ll come back to him a bit later.
Noam Chomsky is a Professor of linguistics at Massachusetts Institute of Technology and given his background in studying languages and their structures ends up learning a fair bit about society. He says that as part of a democratic setup, people have access to a lot more information than those making decisions for that society would be comfortable with. Making policy and implementing decisions thus becomes a challenging process to the extent that ones reputation hangs on its success; and this is true across the spectrum from industry to state. Hence the need to control, filter, jazz up, seduce. In other words: shape public opinion.
One look at Indian media today and you will know what I mean. Apart from just information dissemination, there is entire other world where the significance of the news is forced down my throat. I as a receiver of communication am not allowed to think. The broadcast of any news in any medium is accompanied by ‘expert opinion’ where there is a well known celebrity-like media friendly character who sagely comments on what has transpired and how it will affect our life.
Who is our ‘expert’? What are his credentials? How has he performed in his line of expertise? – Are questions which immediately come to mind. Now to some slightly uncomfortable questions - Who selects him? Why is he on the show? Does he have vested interests? Who does he represent? More importantly, why is he predicting events? What is his track record in predicting events? These may never be answered.
Coming back to my press release drafting friend – Why was an employee drafting a press release? Isn’t that a job for a journalist? Does this rob the journalist the opportunity to ask important questions? Maybe if he asked, the merit of the release would lose significance. Maybe it would be relegated to the obscure parts of the newspapers which are used for personal packing of dirty linen during a long trip. How much more is there in this release that does not meet the eye? Are journos reduced to selecting what news goes where? Do they get incentivized for selecting what news goes where? Who decides these incentives? Why all this cloak and dagger style?
Don’t get me wrong. I have nothing with the withholding of information. In a competitive world, it is necessary. One can’t publish confidential data in the name of the free press. My issue is more with the unholy nexus of journalists and publicists. News has moved on from reporting to generation and sensationalism. Grand quotes from people who have given up something valuable to be on the front page. Which means we are being misinformed. Which means reading newspapers is a waste of time.
You may ask what does one do to be upto speed with the happenings around you? Scan the headlines of a respectable media org. Mostly it is possible to jazz that up to. But given that you see it for a split second, the ability to be influenced is much less.
There is another non-Machiavellian reason that I have stopped reading. There is just too much information. I once tried to list down the central theme of the previous days news stories. I couldn’t. Rarely did I come across an article I remembered. That too because I relayed it several times in my head and told others – it was interesting. Otherwise, for most of the time it was just too much noise. Filtering the noise to come to matters that concern my work / me is painful. I’d rather scan the headlines of a publication that focuses on it; or wait for somebody who finds it interesting to tell me about it. Either way I am not missing much.
There was a time when I used to read every bit of news that came along. As a student, I read the Economic Times (even though at the time I could not appreciate the significance of most of the news), The Times of India and the Bombay Times (for funsakes). I was told that the middle pages of the newspaper are the ones where the juice is. The Editorials and comments by wise men of industry and society were on these pages. As a young mind, one was supposed to assimilate the oracle-like opinion (no matter that it could be released verbatim later in front of a group of stunned teenagers … man this guy has god-level insights!) All this until one day some few months ago, I saw one of my friends draft a press release. And no my friend is no journalist; we’ll come back to him a bit later.
Noam Chomsky is a Professor of linguistics at Massachusetts Institute of Technology and given his background in studying languages and their structures ends up learning a fair bit about society. He says that as part of a democratic setup, people have access to a lot more information than those making decisions for that society would be comfortable with. Making policy and implementing decisions thus becomes a challenging process to the extent that ones reputation hangs on its success; and this is true across the spectrum from industry to state. Hence the need to control, filter, jazz up, seduce. In other words: shape public opinion.
One look at Indian media today and you will know what I mean. Apart from just information dissemination, there is entire other world where the significance of the news is forced down my throat. I as a receiver of communication am not allowed to think. The broadcast of any news in any medium is accompanied by ‘expert opinion’ where there is a well known celebrity-like media friendly character who sagely comments on what has transpired and how it will affect our life.
Who is our ‘expert’? What are his credentials? How has he performed in his line of expertise? – Are questions which immediately come to mind. Now to some slightly uncomfortable questions - Who selects him? Why is he on the show? Does he have vested interests? Who does he represent? More importantly, why is he predicting events? What is his track record in predicting events? These may never be answered.
Coming back to my press release drafting friend – Why was an employee drafting a press release? Isn’t that a job for a journalist? Does this rob the journalist the opportunity to ask important questions? Maybe if he asked, the merit of the release would lose significance. Maybe it would be relegated to the obscure parts of the newspapers which are used for personal packing of dirty linen during a long trip. How much more is there in this release that does not meet the eye? Are journos reduced to selecting what news goes where? Do they get incentivized for selecting what news goes where? Who decides these incentives? Why all this cloak and dagger style?
Don’t get me wrong. I have nothing with the withholding of information. In a competitive world, it is necessary. One can’t publish confidential data in the name of the free press. My issue is more with the unholy nexus of journalists and publicists. News has moved on from reporting to generation and sensationalism. Grand quotes from people who have given up something valuable to be on the front page. Which means we are being misinformed. Which means reading newspapers is a waste of time.
You may ask what does one do to be upto speed with the happenings around you? Scan the headlines of a respectable media org. Mostly it is possible to jazz that up to. But given that you see it for a split second, the ability to be influenced is much less.
There is another non-Machiavellian reason that I have stopped reading. There is just too much information. I once tried to list down the central theme of the previous days news stories. I couldn’t. Rarely did I come across an article I remembered. That too because I relayed it several times in my head and told others – it was interesting. Otherwise, for most of the time it was just too much noise. Filtering the noise to come to matters that concern my work / me is painful. I’d rather scan the headlines of a publication that focuses on it; or wait for somebody who finds it interesting to tell me about it. Either way I am not missing much.
December 6, 2008
... and politicians across the Board put their foot in their mouth
One of the positives in the gloom of last week is the mass public outrage at anyone of political ilk. I was at a public rally on Wednesday to show solidarity and for the first time in my life I saw Indian civilians with blood in their eyes. More than 100,000 people thronged the streets of South Mumbai shouting slogans against Pakistan and vilifying politicians.
It has not just been inaction of the government machinery that has stoked public anger but the foot-in-mouth statements made by politicians in the wake of the terror attacks, which spanned from inept to rude and from insensitive to shocking. Some creative minds have channelized this energy into some interesting posters which have been photographed by an anonymous person and which found their way to my inbox.
The Communists fell first. Comrade Achutanandan, the Kerala Chief Minister, was asked by slain soldier Maj. Unnikrishnan’s father to vacate his premises. Clearly not used to such snubs, our Comrade challenged a dog to visit the martyrs house had it not been for his sacrifice. To which our friends at the rally had this to say –
For my non-Hindi speaking / reading / understanding friends reading this blog, the breaking up of some of the syllables in the Comrades name, especially the part in between the two ‘a’s refers to a certain part of the female anatomy. Comrade still refused to apologise despite being criticised from all quarters. Finally Prakash Karat, the CPI supremo did the apologising.
The poster above summaries most of the blunders made by Indian politicians in the aftermath of the terrorist attacks. It includes RR Patil, the Deputy Chief Minister of Maharashtra saying that such things happen in big cities. In bizarre logic he justified the statement by indirectly saying that he had saved 4,800 people (They came to kill 5,000 we contained the damage to 200). 
All the gentlemen above are however left far behind by the Hon. Shivraj Patil, who has been in stellar form, wearing his incompetence on his sleeve. In what can only be described as shocking, the Home Minister gaily announced the size and time of arrival of the assault team. Later, in an interview after his visit to Mumbai, Mr Patil told the media that the terrorists had left Cama Hospital and the railway station (both terror targets) before he had reached the site. Dear Shivraj, what were you smoking? Did you expect to have tea with the terrorists? Maybe you wanted meaningful intercourse as you indicated when you took charge of the Home Ministry.
It has not just been inaction of the government machinery that has stoked public anger but the foot-in-mouth statements made by politicians in the wake of the terror attacks, which spanned from inept to rude and from insensitive to shocking. Some creative minds have channelized this energy into some interesting posters which have been photographed by an anonymous person and which found their way to my inbox.
The Communists fell first. Comrade Achutanandan, the Kerala Chief Minister, was asked by slain soldier Maj. Unnikrishnan’s father to vacate his premises. Clearly not used to such snubs, our Comrade challenged a dog to visit the martyrs house had it not been for his sacrifice. To which our friends at the rally had this to say –
For my non-Hindi speaking / reading / understanding friends reading this blog, the breaking up of some of the syllables in the Comrades name, especially the part in between the two ‘a’s refers to a certain part of the female anatomy. Comrade still refused to apologise despite being criticised from all quarters. Finally Prakash Karat, the CPI supremo did the apologising.Others (below) indicated that they prefer the canine.
Next caught with his pants down was Maharashtra Chief Minister, the Hon. Vilasrao Deshmukh, who invited Ram Gopal Verma (RGV), a Bollywood film-maker and his actor son, Ritiesh Deshmukh in his official entourage to survey the damage done to the Taj. RGV has in the past made movies like RGV ki Aag which you can review here. (Note - RGV ki Aag flopped at the Box Office). The move surprised even Bollywood. That resulted in this response –
And then from a respectable name, the meaning of which is analogous to ‘landlord’ his name was adapted, with a few nifty changes, and captured in the font of RGV’s previous movie posters, a name that means ‘a national fool!’ 
Mukhtar Abbas Naqvi, the BJP Vice-President, had probably never interacted with the urban, educated and presentable woman before. When he saw some of them in media coverage deriding politicians he ejaculated (pun intended) ‘Some women wearing powder and lipstick have taken to the streets of Mumbai …” No specific interesting poster on this, but the remark drew the ire of women parliamentarians, some even from his own party.
The poster above summaries most of the blunders made by Indian politicians in the aftermath of the terrorist attacks. It includes RR Patil, the Deputy Chief Minister of Maharashtra saying that such things happen in big cities. In bizarre logic he justified the statement by indirectly saying that he had saved 4,800 people (They came to kill 5,000 we contained the damage to 200). And this man was conspicuous by his absence – Raj Thakeray of the MNS did not mind as the NSG, which had North Indian representation, including the slain Gajendra Singh - who lost his life in the operation - protected our nation. But then stooping low as their wont, the MNS put up a poster outside Malad railway station clearly mentioning that three ‘Marathi’ top cops, Karkare, Kamte and Salaskar had gave up their life to protect outsiders and foreigners.
All the gentlemen above are however left far behind by the Hon. Shivraj Patil, who has been in stellar form, wearing his incompetence on his sleeve. In what can only be described as shocking, the Home Minister gaily announced the size and time of arrival of the assault team. Later, in an interview after his visit to Mumbai, Mr Patil told the media that the terrorists had left Cama Hospital and the railway station (both terror targets) before he had reached the site. Dear Shivraj, what were you smoking? Did you expect to have tea with the terrorists? Maybe you wanted meaningful intercourse as you indicated when you took charge of the Home Ministry.
August 15, 2008
Genius
Are we born intelligent or can genius be created? How do people achieve Nirvana? What is that sixth sense? I had a chat with a colleague sometime back and we agreed to the following conclusion - 'THAT genius is Thought that has travelled extensively, created gazillions of permutations, evaluated the results and wired one's brain to think along these terms'
In simpler terms, it's all about pattern recognition. Most people I consider genius' have devoted considerable time to this pursuit. When they spent all their time on stuff they liked to do they were, at some subconcious level, storing patterns and creating natural software to evaluate them. Of course, passion and strong grasping power helps a bit and also limits us - one can't be passionate about multiple things.
So with all this gyaan that I am freely disbursing why am I not a genius? Well efforts are on and progress is slow, but frankly I'm just plain lazy to educate myself. I am too busy working that I am cheating myself of intellectual energy. Aren't we all?
In simpler terms, it's all about pattern recognition. Most people I consider genius' have devoted considerable time to this pursuit. When they spent all their time on stuff they liked to do they were, at some subconcious level, storing patterns and creating natural software to evaluate them. Of course, passion and strong grasping power helps a bit and also limits us - one can't be passionate about multiple things.
So with all this gyaan that I am freely disbursing why am I not a genius? Well efforts are on and progress is slow, but frankly I'm just plain lazy to educate myself. I am too busy working that I am cheating myself of intellectual energy. Aren't we all?
May 6, 2008
Investing in the IPL: Whom would you go with?
The IPL is not about cricket, big sixes or cheerleaders. Instead its about more mundane things like TRP ratings, media spends and a big bet on the regulations in the broadcasting sector. But I could be wrong.
Because Mr. Reliable thinks its project execution by one key man with loads of serfs (precisely the way he runs his businesses) Unfortunately his key man was injured and Mumbai looks more confused than sheep without a shepherd. Mr. Raja Fisher thinks its entertainment and ended up selecting the cheerleaders leaving Dravid to select a T(est)20 team. King Khan's Lal Mirch Manoranjan thinks its the movies ... which is why he's paid each of his players deserving (Ishant, Gayle, McCullum) or underserving (Saurav, Ponting, Akhtar, Agarkar) like movie stars. The wage bill of the Knight Riders is the highest of the eight at $6.2 million. The Deccan Chronicle thinks its all about big sixes which is why they packed their side with so many pinchhitters like Gilchrist, Symonds, Afridi, Sharma, Gibbs and Styris that they forgot to select bowlers. To their credit Delhi and Chennai have a well balanced side. But then they have also overpaid for their respective licenses. Given that all the above teams have superstar players they will also have to increase the player fees significantly next year which will put more strain on the team finances.
But the man who has got it all right is the man who understands TRP ratings, media spends and maybe has a sneak preview of what may unfold in Indian broadcasting. That is Lachlan Murdoch of Emerging Media and son of media mogul Rupert Murdoch who owns the Jaipur franchise - A man who understands that break even is more important than glam dolls. He went shopping for decent players with a budget of $3.3 million, half of what Mohali and Kolkata paid; a license that was available cheap since nobody wanted the relatively small Sawai Mansingh Stadium where gate revenues would hardly amount to anything and one star player whom all the boys would look up to as captain, coach and master. The sole blemish being Kaif who I guess would have had a better career in athletics than cricket.
My gut feel, and I again say I may be wrong, is that Murdoch has bet on two things - one that the IPL opens more franchisees - which means more matches to be played but more importantly that broadcasting regulations in India are at an inflection point. Today, 10-15% of subscribers of cable TV networks are reported which means that 85% of people who watch the IPL fund the mafia (which owns the cable networks). If somehow in the future regulations were to change, these monies would flow to the broadcaster, which after Lalit Modi and his BCCI friends take their cut, would flow down equally to all franchisees. There is a performance bonus too! A portion of what flows down to the franchisees (20%) is proportional to the points scored. Now the more matches you play the more people watch (given that we are a cricket crazy country), the more TRP ratings are, the more media spends are (considering that there is 60% less advertising time than a one-day match hence more premium), the more broadcasters make and if Murdoch gets the regulatory call right, he breaks-even faster than anyone in the league irrespective of whether his team wins or loses considering his threadbare budget. Which then allows him to be the first one to make decent transfers since he would have recovered his investment.
There could also be more than just numbers here. My guess is that Murdoch thinks the IPL is a much safer bet to get evening prime-time in Indian households than the content on Star TV. Why go through the hassles of creating content, making directors, producers, actors and spot boys rush through the rigamarole of soap operas and reality shows when you have the biggest reality show all served on a platter. Where people have overpaid (Mumbai and Bangalore licenses were bought for a staggering $111 million. Players fees another $6 million) Murdoch has made a $70 million investment everything included. The synergies he gets far outrival all other teams. The great perfornance of the team is just an icing on the cake - Kicker as is called in the investing world.
Jaipur was the most financially viable side before the tournament started primarily because they didn't play the auction like it was played; rather they made an investment. As my Finance Prof in MDI said, 'The only guy who makes money in an auction is the auctioneer.' My money is firmly behind Jaipur. But don't listen to me. As I have said umpteen times - I could be wrong ;)
PS: I do not doubt Mr. Reliable's and Mr. Raja Fisher's business acumen. However, in an interesting twist to my hypotheses above is the fact that came to light when I was discussing soccer clubs. It seems that businessmen with loads of unaccounted cash indulge themselves in club ownerships. Not to suggest that the two gentlemen above are enagaged in such activity. I do not care if they do or not. But an interesting thought nonetheless.
PPS: Names have been changed on request!
Because Mr. Reliable thinks its project execution by one key man with loads of serfs (precisely the way he runs his businesses) Unfortunately his key man was injured and Mumbai looks more confused than sheep without a shepherd. Mr. Raja Fisher thinks its entertainment and ended up selecting the cheerleaders leaving Dravid to select a T(est)20 team. King Khan's Lal Mirch Manoranjan thinks its the movies ... which is why he's paid each of his players deserving (Ishant, Gayle, McCullum) or underserving (Saurav, Ponting, Akhtar, Agarkar) like movie stars. The wage bill of the Knight Riders is the highest of the eight at $6.2 million. The Deccan Chronicle thinks its all about big sixes which is why they packed their side with so many pinchhitters like Gilchrist, Symonds, Afridi, Sharma, Gibbs and Styris that they forgot to select bowlers. To their credit Delhi and Chennai have a well balanced side. But then they have also overpaid for their respective licenses. Given that all the above teams have superstar players they will also have to increase the player fees significantly next year which will put more strain on the team finances.
But the man who has got it all right is the man who understands TRP ratings, media spends and maybe has a sneak preview of what may unfold in Indian broadcasting. That is Lachlan Murdoch of Emerging Media and son of media mogul Rupert Murdoch who owns the Jaipur franchise - A man who understands that break even is more important than glam dolls. He went shopping for decent players with a budget of $3.3 million, half of what Mohali and Kolkata paid; a license that was available cheap since nobody wanted the relatively small Sawai Mansingh Stadium where gate revenues would hardly amount to anything and one star player whom all the boys would look up to as captain, coach and master. The sole blemish being Kaif who I guess would have had a better career in athletics than cricket.
My gut feel, and I again say I may be wrong, is that Murdoch has bet on two things - one that the IPL opens more franchisees - which means more matches to be played but more importantly that broadcasting regulations in India are at an inflection point. Today, 10-15% of subscribers of cable TV networks are reported which means that 85% of people who watch the IPL fund the mafia (which owns the cable networks). If somehow in the future regulations were to change, these monies would flow to the broadcaster, which after Lalit Modi and his BCCI friends take their cut, would flow down equally to all franchisees. There is a performance bonus too! A portion of what flows down to the franchisees (20%) is proportional to the points scored. Now the more matches you play the more people watch (given that we are a cricket crazy country), the more TRP ratings are, the more media spends are (considering that there is 60% less advertising time than a one-day match hence more premium), the more broadcasters make and if Murdoch gets the regulatory call right, he breaks-even faster than anyone in the league irrespective of whether his team wins or loses considering his threadbare budget. Which then allows him to be the first one to make decent transfers since he would have recovered his investment.
There could also be more than just numbers here. My guess is that Murdoch thinks the IPL is a much safer bet to get evening prime-time in Indian households than the content on Star TV. Why go through the hassles of creating content, making directors, producers, actors and spot boys rush through the rigamarole of soap operas and reality shows when you have the biggest reality show all served on a platter. Where people have overpaid (Mumbai and Bangalore licenses were bought for a staggering $111 million. Players fees another $6 million) Murdoch has made a $70 million investment everything included. The synergies he gets far outrival all other teams. The great perfornance of the team is just an icing on the cake - Kicker as is called in the investing world.
Jaipur was the most financially viable side before the tournament started primarily because they didn't play the auction like it was played; rather they made an investment. As my Finance Prof in MDI said, 'The only guy who makes money in an auction is the auctioneer.' My money is firmly behind Jaipur. But don't listen to me. As I have said umpteen times - I could be wrong ;)
PS: I do not doubt Mr. Reliable's and Mr. Raja Fisher's business acumen. However, in an interesting twist to my hypotheses above is the fact that came to light when I was discussing soccer clubs. It seems that businessmen with loads of unaccounted cash indulge themselves in club ownerships. Not to suggest that the two gentlemen above are enagaged in such activity. I do not care if they do or not. But an interesting thought nonetheless.
PPS: Names have been changed on request!
February 12, 2008
The Coarse Fabric
This doesn't seem like Mumbai. A city which has always been in a fixed temperature range since as long as I remember, has suddenly become cold in more ways than one. Mercury apart, it has also lost its heart. It's sad to see people in a secular, free country run for their lives, rushing to take the first train North of the Vindhyas. Their only mistake being that they were 30 years late in life. Can you blame them?
Mumbai is what it is because it is the melting pot of India. People come here with dreams in their eyes and with hard work, perseverance and a stubborn belief usually achieve it. The city is entrepreneurial because of migrants who came here many years ago. Gujaratis, Marwaris, South Indians, Punjabis, Sindhis, all of them have shaped Mumbai. My grandfather came here two generations ago and set up a paan-beedi shop at Lower Parel. He stayed above the shop with his wife and five children. He was a migrant. My uncles came here some 50 years ago and worked in kitchens and workshops. My family is just one drop in the ocean of Mumbai. Almost everybody I know has come here and has made Mumbai their home. And Mumbai in return has welcomed them and added different colours to her personality.
Which makes me come to the next point of the rabblerousers that migrants don't enrich Mumbai. Enrichment is a long process. It is not fast food. It took two generations for a betel leaf trader to get the first engineer and consequently the first MBA in his family. What if he was evicted when the Tiger came singing 'Lungi hatao, Pungi bajao'? I guess we would all lose.
Then the entire episode is inconsistent. On one hand unemployed North Indians are forced out. The salaried class against which Maharashtra's New Construction Army actually has an issue with; since they have caused the manoos his job loss; is left alone. Probably because the manoos and the bayka causing the havoc is permanently employed as cook, bai or driver with the Verma, the Singh and the Thakur. If that lacked consistency, then there are expats who are left alone. Well these guys spend dollars at pubs where the manoos is the bouncer or at the gym where the manoos trains him. You Northie. Where do you spend your last rupee? It goes to your village where your family can now have a pukka roof. But since I don't get any of that New Construction pie I'm pissed.
Mumbai creaks under loads it wasn't designed for because the design is outdated. It needs to grow and for that it needs better infrastructure and more planned townships and central business districts. (BKC is a start, I hope Navi Mumbai takes off). Lets leave the betel leaf traders, bhel-puri wallas and the majdoors alone. They make up the coarse fabric that balances the silk. Maybe their grandsons will one day be a part of a team that finances the very infrastructure we need.
Mumbai is what it is because it is the melting pot of India. People come here with dreams in their eyes and with hard work, perseverance and a stubborn belief usually achieve it. The city is entrepreneurial because of migrants who came here many years ago. Gujaratis, Marwaris, South Indians, Punjabis, Sindhis, all of them have shaped Mumbai. My grandfather came here two generations ago and set up a paan-beedi shop at Lower Parel. He stayed above the shop with his wife and five children. He was a migrant. My uncles came here some 50 years ago and worked in kitchens and workshops. My family is just one drop in the ocean of Mumbai. Almost everybody I know has come here and has made Mumbai their home. And Mumbai in return has welcomed them and added different colours to her personality.
Which makes me come to the next point of the rabblerousers that migrants don't enrich Mumbai. Enrichment is a long process. It is not fast food. It took two generations for a betel leaf trader to get the first engineer and consequently the first MBA in his family. What if he was evicted when the Tiger came singing 'Lungi hatao, Pungi bajao'? I guess we would all lose.
Then the entire episode is inconsistent. On one hand unemployed North Indians are forced out. The salaried class against which Maharashtra's New Construction Army actually has an issue with; since they have caused the manoos his job loss; is left alone. Probably because the manoos and the bayka causing the havoc is permanently employed as cook, bai or driver with the Verma, the Singh and the Thakur. If that lacked consistency, then there are expats who are left alone. Well these guys spend dollars at pubs where the manoos is the bouncer or at the gym where the manoos trains him. You Northie. Where do you spend your last rupee? It goes to your village where your family can now have a pukka roof. But since I don't get any of that New Construction pie I'm pissed.
Mumbai creaks under loads it wasn't designed for because the design is outdated. It needs to grow and for that it needs better infrastructure and more planned townships and central business districts. (BKC is a start, I hope Navi Mumbai takes off). Lets leave the betel leaf traders, bhel-puri wallas and the majdoors alone. They make up the coarse fabric that balances the silk. Maybe their grandsons will one day be a part of a team that finances the very infrastructure we need.
January 24, 2008
Points to ponder
1.The man in the pic alongside is smiling. And why not? The first ever IPO from his fold has managed to mobilise $200 bn. If that number makes you shrug, think about it this way - Thats 20% or 1/5th of the value of all the goods and services provided by our nation (in other words the GDP) this year. And all this in 4 working days. Staggering no?
2.
People haggle like crazy when they buy Rs.50 worth of groceries in the market. They will consult experts in person when they buy electronics worth Rs.5,000. They will make sacrifies and carefully calculate monthly budgets when they pay Rs.500,000 for their childrens education. They will save for years to buy a house worth Rs.5,000,000. Yet when it comes to buying a piece of some company worth some Rs.50,000 crore they rely on stock tips, brokers and speculation. Amazing no?
December 23, 2007
Celebrating India with cognac
Some time last month I had the pleasure of being in the private audience of Prof Ramchandra Guha, noted historical commentator (one of the best we have says abyuthvad) and cricket enthusiast. What struck me apart from the fresh smelling straight-off-the-press, duly authographed tome titled 'India after Gandhi' was the passion of the man and the eloquence with which he presented his case to an audience from different nationalities.
I say he was passionate because I was sitting right in the first row (part reason being that I didnt get a seat at the back, but was grateful later to my twist of fate) and I could literally see the twinkle in the eye and feel the energy with which Prof Guha made his points. I say he was eloquent because he made an assortment of foreigners who had come to celebrate India's economic success realise that they should be instead celebrating India's political success.
Reading his book over the weekend I realised why the man was charged up. It's because India is such an antithesis, its baffling to logic to understand its existence today; and once you get to that line of thought even more baffling to realise that almost a billion people get up every morning and go about their business taking it for granted that India still chugs on regardless of its diversity.
Coming back to the talk at the fabulous Lalitha Mahal in Mysore, Prof Guha went on to explain that inspite of these diversities, and given the odds at any given point in time, its nothing short of a miracle that we have continued to exist as a single democratic sovereign entity. There have been attempts to rule India with an iron fist. Fortunately that hasn't been the case and the secret lies in our diversity. A list of reasons were presented, which according to the Professor is the glue that binds us together. I remember just three. One, our Constitution, which empowers every Indian adult with equal electoral rights. Two, the separation of important guardians of the Constitution like the Judiciary and the Election Commission from the Government and finally the game of cricket. Prof Guha's book also throws light on the horrors of Partition; and the cunning and intrigue on either side of the Border. For someone like me who was born long after Independence, the account made for interesting reading.
Looking back, todays economic boom is largely a byproduct of our political success. Had we broken up after Independence into a clutter of princely states there would not be the large market that drives consumption. Had we not integrated, the resources of the East, the technology of the South, the enterprise of the West and the spirituality of the North would not create the unique dynamite that is India.
I left the lecture feeling extremely patriotic and proud to be Indian. At that moment I just celebrated the concept of India with some vintage cognac (and later on with an assortment of liquor shots!) and forgot all those things about India and Indians that sometimes bugged me, even better, I felt that I could understand why we are the way we are. 'India After Gandhi' is a must read.
I say he was passionate because I was sitting right in the first row (part reason being that I didnt get a seat at the back, but was grateful later to my twist of fate) and I could literally see the twinkle in the eye and feel the energy with which Prof Guha made his points. I say he was eloquent because he made an assortment of foreigners who had come to celebrate India's economic success realise that they should be instead celebrating India's political success.
Reading his book over the weekend I realised why the man was charged up. It's because India is such an antithesis, its baffling to logic to understand its existence today; and once you get to that line of thought even more baffling to realise that almost a billion people get up every morning and go about their business taking it for granted that India still chugs on regardless of its diversity.
Coming back to the talk at the fabulous Lalitha Mahal in Mysore, Prof Guha went on to explain that inspite of these diversities, and given the odds at any given point in time, its nothing short of a miracle that we have continued to exist as a single democratic sovereign entity. There have been attempts to rule India with an iron fist. Fortunately that hasn't been the case and the secret lies in our diversity. A list of reasons were presented, which according to the Professor is the glue that binds us together. I remember just three. One, our Constitution, which empowers every Indian adult with equal electoral rights. Two, the separation of important guardians of the Constitution like the Judiciary and the Election Commission from the Government and finally the game of cricket. Prof Guha's book also throws light on the horrors of Partition; and the cunning and intrigue on either side of the Border. For someone like me who was born long after Independence, the account made for interesting reading.
Looking back, todays economic boom is largely a byproduct of our political success. Had we broken up after Independence into a clutter of princely states there would not be the large market that drives consumption. Had we not integrated, the resources of the East, the technology of the South, the enterprise of the West and the spirituality of the North would not create the unique dynamite that is India.
I left the lecture feeling extremely patriotic and proud to be Indian. At that moment I just celebrated the concept of India with some vintage cognac (and later on with an assortment of liquor shots!) and forgot all those things about India and Indians that sometimes bugged me, even better, I felt that I could understand why we are the way we are. 'India After Gandhi' is a must read.
October 27, 2007
A $15 billion toy
In a fit of what seems to me to be utter desparation, Microsoft paid top dollar, $240 million to be precise, for 1.6% of a bit of code which enables jobless people who want to pass their time (not being judgemental here, we need to do it at some point of the day!) fill up gigabytes on the web. The entity in question is Facebook which has become a rage for the range of creative ways to network socially. I spend some time on it every now and then too. But if I knew that what I was fooling around with was a $15 billion toy, I would probably treat every word I typed like I was etching on a diamond. Spoilt brats we all are. Even so the techies at Silicon Valley who think that Moore's law applies to valuations as well.
To get a sense of why I'm so worked up lets do a little analysis here. (by the way $15 billion is Rs.60,000 crore). Bharat Petroleum is a respectable Indian company. Not the one always in the news but still walk the length and breadth of India and you will see petrol pumps, oil storage tanks the sizes of stadiums, refineries, trucks at airports ... in short a huge asset base which you and I can see. The market capitalisation of BPCL at the close of trading yesterday was Rs.13,000 odd crore. Ditto Hindustan Petroleum which at yesterday's close was worth Rs.8,000 odd crore. Siemens India, my previous employer, with concrete orders booked with extremely creditworthy clients over the next few years was worth Rs.29,000 odd crore. My point is that with tangible assets, orders, customers and employees these behemoths of Indian industry are collectively worth Rs.50,000 crore, a wee bit short Rs.10,000 crore or $2.5 billion than Facebook. Something tells me that Facebook might be worth more than the GDP of many
African countries.
African countries.
My valuations based on yesterdays clsoing market price maybe too simplistic. There is a lot more to cover and account for before I put a number to the companies I have mentioned. But even then you can't pay $240 mn for a wee 1.6% for software you cant see anticipating that an 'x' percentage of the world's population will register, see your ads, click on it and make a purchase. There are too many ifs and buts in Facebooks valuation which if you remember correctly was what caused the tech meltdown 7 years ago.
To be fair to Facebook, it could be the case that the deal is structured. Maybe a significant amount of that equity is mezzanine (which is not the same as the shares traded on the market). Part of it could be a corporate loan and it slipped the Microsoft spokesperson. It could be that the guy typing the Press Release missed the decimal point courtesy some-plants-who-shall-not-be-named. ($1.5 billion is also expensive but given that its the tech industry and they have a history of such fallacies, I'll understand.) Maybe the days to come will throw some more light on the transaction.
I never understood tech. Stood far away from it during my engineering days as well. I guess its an industry I'll never understand and this proves it. I'm much better off funding infrastructure projects, things I can see, touch and feel. I wonder what Warren Buffet would say though? It would be nice to hear him wishing Microsoft all the best!
October 12, 2007
SEZ Update
43 days after I made a few suggestions (about people displaced by SEZ land sharing the profits with the developer) to resolve the SEZ controversy in India, it looks like someone is listening. The National Policy on Rehabilitation and Resettlement of 2007, provides for structured solutions to help those displaced by SEZs. Relevant portions of text are reproduced here (Source: rediff)
"The new policy seeks to make those entitled for compensation stakeholders in development by allowing them to take up to 20 per cent of the amount in the form of shares if the acquiring entity is authorised to issue these instruments."
"The policy discourages speculative transactions of land acquired for public purposes. As a relief for developers, 30 per cent land can be compulsorily acquired by states for the promoters while the rest has to be bought by them."
"Reliance Industries which is in process of acquiring land for its mega SEZs welcomed the policy. "The policy will boost the industrial development as it clearly defines the land acquisition rules," a Reliance spokesman said."
Which means that the inhabitants of land notified as SEZ land will be able to share in the upside, if any, from the land. That should make them feel much better, and less jealous (refer to the italiced note at the end of this post) of capitalistic developers.
My only concern being will these inhabitants understand the complex finance behind it all? How is this process made to look fair to all parties? How will the rabble-rousers in political circles, who thrive on conflict, look at their golden goose being neutralised, react? Watch this space ... pour in your thoughts if any.
"The new policy seeks to make those entitled for compensation stakeholders in development by allowing them to take up to 20 per cent of the amount in the form of shares if the acquiring entity is authorised to issue these instruments."
"The policy discourages speculative transactions of land acquired for public purposes. As a relief for developers, 30 per cent land can be compulsorily acquired by states for the promoters while the rest has to be bought by them."
"Reliance Industries which is in process of acquiring land for its mega SEZs welcomed the policy. "The policy will boost the industrial development as it clearly defines the land acquisition rules," a Reliance spokesman said."
Which means that the inhabitants of land notified as SEZ land will be able to share in the upside, if any, from the land. That should make them feel much better, and less jealous (refer to the italiced note at the end of this post) of capitalistic developers.
My only concern being will these inhabitants understand the complex finance behind it all? How is this process made to look fair to all parties? How will the rabble-rousers in political circles, who thrive on conflict, look at their golden goose being neutralised, react? Watch this space ... pour in your thoughts if any.
September 26, 2007
Over Optimism versus Reality
Are we an overly optimistic people? The Sensex is climbing new peaks like a sprightly mountain goat, gaining 1000 points in a week; the rupee trades at 39 to the dollar as we speak and in these merry times if you have a surname which is an anagram for 'infrastructure' you can raise a billion dollars no questions asked. Travel by the local trains (in the First Class ... the conversations in the Second Class are an assortment of desi rugby jokes) and you will hear the sophisticated executive types waxing eloquent on the Indian economy.
Not so says the Planning Commission. In an article which paints a grim picture by describing
the situation as 'pressing panic buttons' we are told that to keep the bubbly flowing we need lots of moolah, $40 bn to be exact, for the current 11th Five Year Plan. Various agencies have made estimates ranging from $350 bn to $500 bn for our infrastructure growth requirements. And with every passing year, prices going northwards, these estimates grow for every project that hasn't taken off yet.
Well there have been deals like this and almost every fund house worth its name has launched an infrastructure focused fund. Private Equity players across the world have also dedicated billions of dollars to the India story; but the action ends right there with the word 'dedicated'. Dedicated does not mean disbursal and disbursal does not happen because it is difficult to find good assets (read: projects) that will give returns which these money czars expect.
Projects that offer high returns like airport modernisation, supply chain logistics, telecoms, etc have been lapped up. What are left are the low return projects like power and roads and virgin territories like renewable fuels. There are a million projects waiting to be launched but investors are searching for the elusive asset that give returns in line with their expectations. Unfortunately, the money chasing these assets will cause valuations to sky-rocket and those who moved in first will make a quick buck. Those who followed and those who will follow may make money. Small investors, as is their wont, will rush in when the floodgates are about to open and will be blown away in the deluge. (Digression: The commies will then blame capitalism for the pains of the common man)
Does that mean the tragic end to our fairy tale economy. Definitely not. Infrastructure projects can be more attractive if they are not politicised. Power for example is more an election issue than an economy issue. Will politicians and bureaucrats ever realise? If they do then maybe the capital kings will loosen their purse strings. Maybe dedication will realise disbursement. Maybe this rant will be inconsequential.
Not so says the Planning Commission. In an article which paints a grim picture by describing
the situation as 'pressing panic buttons' we are told that to keep the bubbly flowing we need lots of moolah, $40 bn to be exact, for the current 11th Five Year Plan. Various agencies have made estimates ranging from $350 bn to $500 bn for our infrastructure growth requirements. And with every passing year, prices going northwards, these estimates grow for every project that hasn't taken off yet.
Well there have been deals like this and almost every fund house worth its name has launched an infrastructure focused fund. Private Equity players across the world have also dedicated billions of dollars to the India story; but the action ends right there with the word 'dedicated'. Dedicated does not mean disbursal and disbursal does not happen because it is difficult to find good assets (read: projects) that will give returns which these money czars expect.
Projects that offer high returns like airport modernisation, supply chain logistics, telecoms, etc have been lapped up. What are left are the low return projects like power and roads and virgin territories like renewable fuels. There are a million projects waiting to be launched but investors are searching for the elusive asset that give returns in line with their expectations. Unfortunately, the money chasing these assets will cause valuations to sky-rocket and those who moved in first will make a quick buck. Those who followed and those who will follow may make money. Small investors, as is their wont, will rush in when the floodgates are about to open and will be blown away in the deluge. (Digression: The commies will then blame capitalism for the pains of the common man)
Does that mean the tragic end to our fairy tale economy. Definitely not. Infrastructure projects can be more attractive if they are not politicised. Power for example is more an election issue than an economy issue. Will politicians and bureaucrats ever realise? If they do then maybe the capital kings will loosen their purse strings. Maybe dedication will realise disbursement. Maybe this rant will be inconsequential.
August 29, 2007
Special Economics (of) Zamindari
WARNING: Long-ish :)
A lot has been said about the SEZ controversy. Some call it a land grabbing scam while others have been proposing it as the panacea to our structural problems.
Why are SEZs arousing so much interest? Well one, it’s a bonanza for the developer. Business margins in real estate construction are close to 90% in the case of commercial projects like SEZs. (In the residential housing market they are 100-200%. It is lower in SEZs because money is recovered through leases over longer period of time). Running an SEZ involves just the Property Tax and normal Admin expenses.
So what does the developer do? He puts up 20% of the money, borrows 70% and collects 10% in advance bookings. Since land acquisition would be a difficult and costly affair he creates a separate company (also called a special purpose vehicle, SPV) in which he and a Govt. body are partners. The Govt. body’s sole purpose is to acquire contiguous tracts of land; and land is acquired for a song.
It is because of this that the ‘SEZ Policy’ has attracted investors from all walks of business, and primarily from the IT sector. As IT companies expand, they require more and more place to seat their ever increasing workforce (since seats is the primary driver to secure those multi-million/billion dollar outsourcing / software maintenance contracts). Today the IT and BPO industry are accounting for 70% of the real estate demand and more than 60%-70% of the SEZs are meant for the IT / ITeS industry. The rest are distributed among sectors like biotechnology, gems & jewellery, automobiles and the like.
But do we really need SEZs for IT? In reality, the IT chaps derive very little benefit in being part of an SEZ since the tax incentives they already enjoy and those in an SEZ do not vary much. The only industries that will benefit immensely are those that can integrate their process inside an SEZ (i.e. have most of their business partners from raw material to end product). The ease of flow of business and the added incentive of customs waivers and tax benefits will accelerate their growth. China has adopted this model. Shenzen is a massive 50,000 hectares and I don’t think IT companies are housed inside. India’s largest on the other hand, the Reliance promoted Navi Mumbai and Maha Mumbai are collectively 14,000 hectares. Most of our other SEZs are in the sub 500 range catering mainly to the IT sector.
So do we really need so many SEZs? The answer is yes. We require SEZs for small and medium enterprises; lots of them. The software industry is mature enough to fund their own buildings. Which brings us to the next question: Why all this brouhaha in the media? A few points follow.
One, current land owners are not compensated enough: True. Govt. vehicles ensure that the SEZ land is acquired cheap
Two, we are losing agricultural land: False. Land has to be put to its best use. If we (India’s GDP) gain more by setting up an SEZ rather than agriculture, it makes more sense to go for the former. In this age of global linkages we better not be thinking micro.
Three, Farmers lose their livelihood: Partly answered by point one. Farmers should be compensated adequately for their land and for their occupation. Options include training them in a new skill, ensuring a certain percentage employment in the SEZ, or even a share in the SEZ profits.
Also these three points have been magnified by political parties for vested interests.
I am sure that if the powers that be have a more humane look at the issues in an SEZ, all parties can share in the economic boom, farmer and developer alike. Till that happens though we will be transforming IT companies into real estate banks.
(Afterthought: IF the sides of the table were interchanged and farmers were developers and vice versa what would the reaction be? Would capitalism or socialism triumph? Me says capitalism since man is inherently selfish and 100% so in the matters of money. Which of the hardened socialists would not want to get his stuff at a lower price? If so then there is nothing emotional about this issue, it’s just power politics at play!)
A lot has been said about the SEZ controversy. Some call it a land grabbing scam while others have been proposing it as the panacea to our structural problems.
Why are SEZs arousing so much interest? Well one, it’s a bonanza for the developer. Business margins in real estate construction are close to 90% in the case of commercial projects like SEZs. (In the residential housing market they are 100-200%. It is lower in SEZs because money is recovered through leases over longer period of time). Running an SEZ involves just the Property Tax and normal Admin expenses.
So what does the developer do? He puts up 20% of the money, borrows 70% and collects 10% in advance bookings. Since land acquisition would be a difficult and costly affair he creates a separate company (also called a special purpose vehicle, SPV) in which he and a Govt. body are partners. The Govt. body’s sole purpose is to acquire contiguous tracts of land; and land is acquired for a song.
It is because of this that the ‘SEZ Policy’ has attracted investors from all walks of business, and primarily from the IT sector. As IT companies expand, they require more and more place to seat their ever increasing workforce (since seats is the primary driver to secure those multi-million/billion dollar outsourcing / software maintenance contracts). Today the IT and BPO industry are accounting for 70% of the real estate demand and more than 60%-70% of the SEZs are meant for the IT / ITeS industry. The rest are distributed among sectors like biotechnology, gems & jewellery, automobiles and the like.
But do we really need SEZs for IT? In reality, the IT chaps derive very little benefit in being part of an SEZ since the tax incentives they already enjoy and those in an SEZ do not vary much. The only industries that will benefit immensely are those that can integrate their process inside an SEZ (i.e. have most of their business partners from raw material to end product). The ease of flow of business and the added incentive of customs waivers and tax benefits will accelerate their growth. China has adopted this model. Shenzen is a massive 50,000 hectares and I don’t think IT companies are housed inside. India’s largest on the other hand, the Reliance promoted Navi Mumbai and Maha Mumbai are collectively 14,000 hectares. Most of our other SEZs are in the sub 500 range catering mainly to the IT sector.
So do we really need so many SEZs? The answer is yes. We require SEZs for small and medium enterprises; lots of them. The software industry is mature enough to fund their own buildings. Which brings us to the next question: Why all this brouhaha in the media? A few points follow.
One, current land owners are not compensated enough: True. Govt. vehicles ensure that the SEZ land is acquired cheap
Two, we are losing agricultural land: False. Land has to be put to its best use. If we (India’s GDP) gain more by setting up an SEZ rather than agriculture, it makes more sense to go for the former. In this age of global linkages we better not be thinking micro.
Three, Farmers lose their livelihood: Partly answered by point one. Farmers should be compensated adequately for their land and for their occupation. Options include training them in a new skill, ensuring a certain percentage employment in the SEZ, or even a share in the SEZ profits.
Also these three points have been magnified by political parties for vested interests.
I am sure that if the powers that be have a more humane look at the issues in an SEZ, all parties can share in the economic boom, farmer and developer alike. Till that happens though we will be transforming IT companies into real estate banks.
(Afterthought: IF the sides of the table were interchanged and farmers were developers and vice versa what would the reaction be? Would capitalism or socialism triumph? Me says capitalism since man is inherently selfish and 100% so in the matters of money. Which of the hardened socialists would not want to get his stuff at a lower price? If so then there is nothing emotional about this issue, it’s just power politics at play!)
June 7, 2007
Dil Dehelani Wali News
A bearded man with slicked back hair ending in a ponytail stands in front of a screen that looks like a cheap rendition of a Powerpoint template. It has an inset where you will constantly see people beaten up, morchas and chaos. (Given the mans appearance you would have reason to believe that he was part of the chaos going on behind him!). He then paces right to left and proceeds to tell you a 'Dil Dehelani wali khahani' in which a doctor is beaten up by a bunch of local goons for allegedly attempting to flirt with a nurse in a local hospital.
The story drags on. There are numerous repeated shots of the man being beaten up. Then there are stills that are again in powerpoint effect style flown in from every corner of the screen with that dil dehelani wali audio effect. The bearded man throws a few questions to ponder on. The local moral police (read publicity seeker) is bang in the middle of your screen. His henchmen try to peek into the camera to get their 15 seconds of fame.
This happens at prime time when most of the population of working India is back from a tiring day at work and looks forward to entertainment / being well informed. Only in this case, the doctor is from a nondescript suburb of Mumbai, the allegation was not proved true, possibly a hundred such 'flirty' encounters took place everyday and there are more pressing issues facing the nation that its citizens need to be informed about. Welcome to the world of Indian News Reporting
Indian news reporting has hit new lows with the addition of competition. The arrival of the private sector to broadcasting promised a lot but today I stay away from any Indian news channel. The reasons are pretty obvious. Practically everything is 'Breaking News'. I can barely see the broadcasts due to a stock market ticker, a weather ticker, the odd cricket score ticker, the ad marquee, the 'Breaking News' marquee, the logo, etc. As each and every news channel jostles for content it doesnt push up the standards but hits a new low every time. And every time they try to shock my sensibilities by broadcasting shocking content I am indifferent, because I have been repeatedly shocked and my brain has adjusted to the madness of some obscure madman.
Does anybody watch this stupidity? (I can only think of people who are a lil' high and cant reach the remote and so resign themselves to enduring the torture) What happened to the good old days when that Tandon guy (yes! the same bearded chap with the excellent collection of ties) on Doordarshan read the News that people in my family stopped their lives for 10 minutes and sat down in front of the TV to listen to him? Isn't there some form of benchmarking with other international news channels?
Whatever it is I have switched to online media, blogs for my news. The newspaper adds a bit here and there, but Indian TV? sorry boss I cant take it. And I hope for the good of the nation they stop the 'Dil Dehelani wali' stories
The story drags on. There are numerous repeated shots of the man being beaten up. Then there are stills that are again in powerpoint effect style flown in from every corner of the screen with that dil dehelani wali audio effect. The bearded man throws a few questions to ponder on. The local moral police (read publicity seeker) is bang in the middle of your screen. His henchmen try to peek into the camera to get their 15 seconds of fame.
This happens at prime time when most of the population of working India is back from a tiring day at work and looks forward to entertainment / being well informed. Only in this case, the doctor is from a nondescript suburb of Mumbai, the allegation was not proved true, possibly a hundred such 'flirty' encounters took place everyday and there are more pressing issues facing the nation that its citizens need to be informed about. Welcome to the world of Indian News Reporting
Indian news reporting has hit new lows with the addition of competition. The arrival of the private sector to broadcasting promised a lot but today I stay away from any Indian news channel. The reasons are pretty obvious. Practically everything is 'Breaking News'. I can barely see the broadcasts due to a stock market ticker, a weather ticker, the odd cricket score ticker, the ad marquee, the 'Breaking News' marquee, the logo, etc. As each and every news channel jostles for content it doesnt push up the standards but hits a new low every time. And every time they try to shock my sensibilities by broadcasting shocking content I am indifferent, because I have been repeatedly shocked and my brain has adjusted to the madness of some obscure madman.
Does anybody watch this stupidity? (I can only think of people who are a lil' high and cant reach the remote and so resign themselves to enduring the torture) What happened to the good old days when that Tandon guy (yes! the same bearded chap with the excellent collection of ties) on Doordarshan read the News that people in my family stopped their lives for 10 minutes and sat down in front of the TV to listen to him? Isn't there some form of benchmarking with other international news channels?
Whatever it is I have switched to online media, blogs for my news. The newspaper adds a bit here and there, but Indian TV? sorry boss I cant take it. And I hope for the good of the nation they stop the 'Dil Dehelani wali' stories
June 1, 2007
Weight can make you unemployed!
The Delhi HC recently told a group of overweight airhostesses to shape up or ship out
Some of the arguments put forward by Justice Rekha Sharma make no sense, especially something like this -
"Observing that planes nowadays fly at 'very high altitude' and are prone to mid-air technical snags, the court said the safety of passengers depended on the cabin crew’s alacrity and presence of mind."
In the event of a technical snag I doubt anybody will trust an air-hostess to rectify the situation given the high risk involved. Such matters are best left to those who are trained in such work. Secondly there is no relation between a persons weight and the ability to solve a problem. At least I don't think so.
However the cabin crew profession is one where looks and personality matter, both for flight pursers and air-hostesses, it makes sense to see that those attending to you give you that in flight experience. You feel bad when the cabin crew in some airlines (which shall not be named) look like your grandparents, worse still when they huff and puff pushing the trolleys bringing you food, etc. Contrast this with airlines like KF where right from check-in you are greeted by smart looking men and women (mostly women) to the in-flight experience and the post flight baggage claim. You want to travel by KF again and again.
And the counter claim that weight control is an insult to womanhood. Sorry ma'am I think you are in the wrong profession
Some of the arguments put forward by Justice Rekha Sharma make no sense, especially something like this -
"Observing that planes nowadays fly at 'very high altitude' and are prone to mid-air technical snags, the court said the safety of passengers depended on the cabin crew’s alacrity and presence of mind."
In the event of a technical snag I doubt anybody will trust an air-hostess to rectify the situation given the high risk involved. Such matters are best left to those who are trained in such work. Secondly there is no relation between a persons weight and the ability to solve a problem. At least I don't think so.
However the cabin crew profession is one where looks and personality matter, both for flight pursers and air-hostesses, it makes sense to see that those attending to you give you that in flight experience. You feel bad when the cabin crew in some airlines (which shall not be named) look like your grandparents, worse still when they huff and puff pushing the trolleys bringing you food, etc. Contrast this with airlines like KF where right from check-in you are greeted by smart looking men and women (mostly women) to the in-flight experience and the post flight baggage claim. You want to travel by KF again and again.
And the counter claim that weight control is an insult to womanhood. Sorry ma'am I think you are in the wrong profession
May 30, 2007
Behenji Strategy
When all political parties in India are trying to establish themselves in various capacities as the saviour of the downtrodden, the middleclass, the unemployed, backward classes, etc the Bahujan Samaj Party led by the firebrand Mayawati seems to have cracked the winning formula.
In the last decade or so, most of the leadership in all almost all political parties in India is purely reactive. After winning an election there is desperate clamouring for alliances and coalitions. Then there is the integration time for getting to know each other and accommodating each other. One third of the tenure is now lost. And before long the powers that be go on a drive to recover their election expenses. You will suddenly see grand schemes being launched and it is but obvious that most of the grants to these schemes are channeled through 'friends' who 'helped' them secure their election victory. Soon its time for the next elections and who know whether you will make it again given that nothing was done for the people so there is a period where everyone maximises the investment they made to get to power. End result? Another run after elections to form the government. If the people who 'helped' you were not happy with their returns you are out and a new Charlie is in the drivers seat. And the story goes on ...
However Behenji as Mayawati is called by her supporters has over the past two years being quitely working behind the scenes to exploit the weakness of her competitors and the environment (UP politics) to her advantage. Given the absence of strong leadership in the state from any national party (read INC and BJP) the only person left was Mulayam. Mayawati set out to put her candidates in place well in advance to make sure the people know who represents which party and to avoid confusion at the end. She then threw the BSP's caste agenda aside and positioned it as the 'sarva samaj' party including Brahmins, Muslims and OBCs under one wing. The new mantra seems to be the welfare of the sarva samaj.
Over two years the idea seeped in, took ground and needless to say the people of Uttar Pradesh tired with the soft Hindutva and caste based politics decided to give the BSP a chance. The result? A thumping victory for the BSP on its own steam. As usual parties have 'reacted' in a bid to woo Dalit voters. The national parties are taking special efforts to see that Dalits dont feel alienated.
What does this mean for Indian politics? Will this (termed 'Brahmin-Dalit bhaichara') be the new mantra? Its too early to say. For one, UP politics has in recent years seen the demise of the INC and the BJP and its more a tug of war between the SP and the BSP. Though the model can be replicated in select states where there is a so called power vacuum. However Im pretty sure that the larger parties will not sit quitely. Another important point is that Mayawati seems to have no idea what to do ahead. i.e. with respect to the development of UP, aligning the various interests of the many factions which make the new fabric of the BSP, etc. Was she expecting a victory? or has the result stunned her as well?
Whatever it is, India has got a new formula to pursue. Whether it will work or not only time will tell. If it works, Indian politics will move from caste based politics to the integration of economically backward classes, hopefully without caste, which is a good thing. If it doesnt work we not be worse off. There is no downside. Welcome Mayawati! Hope you change Indian politics for the better.
In the last decade or so, most of the leadership in all almost all political parties in India is purely reactive. After winning an election there is desperate clamouring for alliances and coalitions. Then there is the integration time for getting to know each other and accommodating each other. One third of the tenure is now lost. And before long the powers that be go on a drive to recover their election expenses. You will suddenly see grand schemes being launched and it is but obvious that most of the grants to these schemes are channeled through 'friends' who 'helped' them secure their election victory. Soon its time for the next elections and who know whether you will make it again given that nothing was done for the people so there is a period where everyone maximises the investment they made to get to power. End result? Another run after elections to form the government. If the people who 'helped' you were not happy with their returns you are out and a new Charlie is in the drivers seat. And the story goes on ...
However Behenji as Mayawati is called by her supporters has over the past two years being quitely working behind the scenes to exploit the weakness of her competitors and the environment (UP politics) to her advantage. Given the absence of strong leadership in the state from any national party (read INC and BJP) the only person left was Mulayam. Mayawati set out to put her candidates in place well in advance to make sure the people know who represents which party and to avoid confusion at the end. She then threw the BSP's caste agenda aside and positioned it as the 'sarva samaj' party including Brahmins, Muslims and OBCs under one wing. The new mantra seems to be the welfare of the sarva samaj.
Over two years the idea seeped in, took ground and needless to say the people of Uttar Pradesh tired with the soft Hindutva and caste based politics decided to give the BSP a chance. The result? A thumping victory for the BSP on its own steam. As usual parties have 'reacted' in a bid to woo Dalit voters. The national parties are taking special efforts to see that Dalits dont feel alienated.
What does this mean for Indian politics? Will this (termed 'Brahmin-Dalit bhaichara') be the new mantra? Its too early to say. For one, UP politics has in recent years seen the demise of the INC and the BJP and its more a tug of war between the SP and the BSP. Though the model can be replicated in select states where there is a so called power vacuum. However Im pretty sure that the larger parties will not sit quitely. Another important point is that Mayawati seems to have no idea what to do ahead. i.e. with respect to the development of UP, aligning the various interests of the many factions which make the new fabric of the BSP, etc. Was she expecting a victory? or has the result stunned her as well?
Whatever it is, India has got a new formula to pursue. Whether it will work or not only time will tell. If it works, Indian politics will move from caste based politics to the integration of economically backward classes, hopefully without caste, which is a good thing. If it doesnt work we not be worse off. There is no downside. Welcome Mayawati! Hope you change Indian politics for the better.
Subscribe to:
Posts (Atom)
