A Merry Song December 1, 2009





I was going  with a mind today to congratulate everyone on this wonderful Q2 7.9% growth in India which we have achieved, beyond all odds, breaking the shackles of the strongest of chains and running free into the green meadows, with yellow daisies all around and blue butterflies flying everywhere with chirping sparrows. It is almost Spring again in this beckoning Winter. Even though you may find prices of your daily breakfast doubling by 3 folds, who cares? It is the economy, silly! And we are all part of it!

But somehow in my mundane life of particularly no significant events that might change the course of the Mayan Calendar, and those grey skies and soundproof rooms with venetian blinds that comes between me and the full bloom of nature and and my constant deliberations with myself to find reasons for my miserable existence, I forgot to celebrate this joyous occasion. Join me, my loyal readers to sing this merry song.

Hey hey ho ho. We finally made it through

Take a look at the growth rate we got,

Which we shall share with you not.

But lets dance and sing and do a wonderful thing

To rejoice at the blings which the FIIs bring

Hey hey ho ho. We finally made it through

Everyone is happy and everyone is smiling,

When we  can see the Sensex is climbing,

The Finance Minister can’t hide smiles,

Coz the growth in Q2 has increased by miles.

Hey hey ho ho. We finally made it through

Dark days of sub-prime has told us buh-byes

We shall now go and reach some new highs

Christmas has come early And we have extended our Diwali

Lets hope this year shall end up perfectly!

Hey hey ho ho We finally made it through

If you are China, let me say, we are right behind you.

If you are America, let me say, debt doesn’t suit you.

We went ahead and put our head

And we just got the 7.9% growth rate.

Hey hey ho ho we finally made it through!

Hey hey ho ho ho ho ho

na na na na na na na

Dum di dum dum dum da.

(Okay thats enough, I shall stop now. )

The plague called Optimism January 17, 2009

The title of the post will possibly raise many eyebrows, and I will try my best to send your eyebrows to Mars  after  you have finished reading it. Well, that’s an optimistic start.

The good thing about writing a blog is that you suddenly attain this position of authority, and yet  at the same time, distance yourself from the reality as if the situation in no way affects you. That possibly, you haven’t committed the same mistakes which you would like to point out here. It is so amusing to write,  to dictate, to prove the follies we commit, the fallacies associated with our lives and not be humble enough to accept our mistakes or rectify them.

For years I have wondered the state of mind of being “Optimistic”. What does it actually mean? And how is it supposedly superior to being “Pessimistic”? The Bear can make as much money as the Bull. Logically, the Bear will make money when the Bull will not. And vice-versa. But there is a counter argument to it, which says, even the Bear is “optimistic” about the bad times in market.

Human beings would always like to be optimistic. It is a good thing, to be optimistic, to hope that things will turn around, that there will be light in the end of every dark tunnel, to know what you are doing is always right and believe that it will yield results. But that is where the main reasons for debacle lie.

Look around you. Do you see good things? How is your life?  Does the future seem bright? No. No at this moment. No matter what status you have in your society, no matter how much you earn, no matter how secure your life is, the future does not seem too good.  But why? Why this is so, possibly lies in the instinct of human beings being  ”Optimistic”. The belief that things just cannot go wrong. The absence of humility that plagues us, erodes us every day, preventing us to believe, that we can go wrong.

This is not about always treating ourselves as failure. That is not the point I am driving at. The hindrance to development does not lie in the instance of thinking that we can go wrong. On the contrary, it might help us to reassess what we are doing or what we are about to do. This cannot be termed as second thoughts. But it is just giving us a space to look at things from a different angle, and to try to make all angles perfect. But our prejudice forbids us to explore.

We just cannot face up to the fact that we may be wrong, we may be incompetent and we may not possess appropriate skills. Sometimes, when we attain a certain age or status, learning is seen to be a matter of disgrace. I feel that the word “Learning” has some sort of a long term (equal to Economics’ terminology) connotations attached to it. This is absolutely not true. Learning is continuous. It happens every day, every minute, and every second of our life. This process of learning and replicating is so subconscious and so continuous, that we possibly do not even understand or stop to look at, or marvel at this process. But there are some things in life which need to be consciously learned, and replicated.

For that we need the humility. Humility, I am afraid, cannot be learned.

It was this optimism; that things just could not go wrong; which made people in US cash in on the Realty Boom. Everyone knows about the roots of this recession. But no one questions the Why. Why didn’t anyone anticipate the fall in the demand? And why didn’t anyone reassess the situation; how will things change if the demand fell? And why did anyone not act upon it?

It is not the Greed, that people so scornfully refer to, that has destroyed Economies after Economies. Greed, per se, does not destroy you. The fables of Ali Baba does not hold true in the age of Capitalism anymore. Rather, if you do not have the Greed, you probably will not explore potential areas of growth. And the importance of Growth cannot be overemphasized anywhere.

It is Humility of not accepting that Human Beings can go wrong, because they are humans.

It is Optimism, and illogical Optimism that, which makes us turn the blind eye to us being Humans.

How to beat the Inflation Heat June 25, 2008

What we believe is what we want to believe.

 These words were probably told by me in this very blog a few months ago. Although, I never anticipated such change of fortunes, I still was somewhat correct. Even though, the primary reason for such rise can be attributed to crude oil prices, which is not doing to much good to our deficit in Current Accounts, still, even a minor part of it can be because of us.

 Yes, us. The increase of so many food joints, retail explosion, technology advancements, product lines etc makes the word “Buy More” written in bold red letters in front of us, the buyers. Since, every year, with the budget, the finance ministers excludes people in certain income brackets from paying taxes, the virtue of thrift has become obsolete. Now, you may think, that I am slowly taking the lines of President Bush and his incomprehensible viewpoints, but when you do come to a point in your life when you somewhat agree to President Bush, you know the universe is wrong. And we need to correct it.

 By this time, you have probably understood, that my effective ways of reducing the villain of the story to ashes, are only but rhetorical and not practical in their true sense. But wait! After giving a lot of thought to the problems at hand, I have some quite simple ways of reducing the pinch of price rise which if implemented, can bear some fruitful results. Not for the economy mind you, but for your own self. Even if you are rich and filthy enough to not care, still, caring for inflation has become a fashion statement. Caring for inflation, is an absolute in thing. It is more like saving the world from global warming, adopting children from third world countries, doing aerobic yoga etc.

 Let us look at some of them.

 

1. Celibacy: This is the most effective and the most difficult method of the lot. You see, the amount of money we spend is directly proportional to the amount of people of opposite sex we interact with. Men need to project what they are not; they try to dress somberly, they try and implement manicures and pedicures, they do some funny things to their hair and what not. Obviously, cars and bikes, latest gadgets are something to be considered, but a large chunk does go for the chitchats in restaurants, and watching rubbish films all for the sake of that “special” someone. In case of women, my lips are sealed. If I were to comment on the likelihood of women spending quality time and money on beauty care only to impress Men, the feminists will be enraged. But if we were to seriously consider the reduction of opposite-sex interaction, a lot of inflation related problems could be solved. Women would find it very difficult to undertake complicated  shopping decision if they don’t have Men standing in one corner looking absolutely bored to death and Men would never need to spend time out of watching football in their televison which is quite a cost-effective activity.
2. Increase of Saas Bahu Serials: I understand that attaining efficient levels of celibacy is but a hard thing to do, especially, because it is against the Indian  norms. But, again not a problem. Increase the amount of Indian fictional television soaps and reduce the reality. This would progressively promote the need for starvation, to give long life to your husband. Or, women, if you don’t like the idea of starving for the husband, aim to attain enlightenment by starvation. In fact, I disagree now with my take on reducing reality television series. Increase them, to promote God, and God like attributes by the eternal tried and tested method of a perpetual struggle. The closer you are to God, the farther you will move from Inflation.
3. Say no to Communication: I also believe that a large amount of buyer spending is on communication. What is the need to get tangled in the world wide web? Or involving yourself in worthless conversation with another human being ? Human beings are but cynical, the world is made up of selfish people who don’t care this bit about you and your phone bill. You can do better things than living one-sixth of the lifetime talking to people you hardly know and in doing such better things, you can reduce inflation. Remember, you are doing yourself good, and the phone companies bad. Think about that poor little dog who keeps running around roads and ponds. Reducing inflation and preventing animal exploitation all at one go!
4. Know yourself: In creating full proof methods of isolation from people you will finally come to know who you are. What we are  possibly is only known to the subconscious mind. Don’t go out, don’t spend petrol/diesel, don’t read newspapers, don’t play squash in the club. Just try  to find yourself. In doing so, you may be able to find the genius that is hidden behind that face in the mirror. Who knows, may be you will find more ways to love yourself and that would do you a world of good, not to mention how much good it would do to the inflation situation.
5. Eat less, think more: Now would be the ideal time to utilize your isolated moments. With the global food crisis looming large and your weight issues getting bigger by the day, it is time to direct your energies to be fitter and finer. Reduce your visits to the nearest pizza outlet. Instead, jog to your nearest bank and invest and then don’t forget to jog right back to your house. Eating a lot of good food, reduces a lot of thinking prowess, because after every session of good food, you are already thinking about the next session and the contents of that. What would be more important now, is to think, understand and appreciate the inflationary situation and how you can do good things to ensure that they are in fact good. Utilise your time to think more about how to add more points on how to reduce inflation. And write to me.

Truth and Consequences: Budget 2008 March 1, 2008

 I love the way how the entire country and its citizens are perpetually obsessed by numbers. It doesn’t limit itself to financial and economic arena, though. Just look at how we are so engulfed in questions like how many centuries has Sachin Tendulkar scored and how many thousand runs he has passed and how many test matches he has played etc. At the end of the day, in the moment of truth when we need to win the match, those numbers rarely bail us out.

Quite similar is this year’s Budget. Keeping in mind the elections and yes, the people who vote in elections, the Finance Minister has cleverly and shrewdly provided us a secret gift in a shiny wrapping paper.

What also had to be kept in mind is the slowdown in global markets due to increased fears of US recession, an impact which could directly have in the growing Indian economy. Plus, those fears that the India’s honeymoon with the GDP growth rate was ending. Such slowdown, if true, would be devastating, when the funds riding on the stock markets are primarily of the FII’s, reaping in the benefit.

This post would hardly help the academics or the people preparing for interviews for B schools. What we say there (and I am included too) is what we want to believe and what we want to achieve, NOT what we think is going to happen. Call me cynical, a forbearer of bad news or someone who secretly wishes for doom, but all does not look too well. What the minister did was to tweak a thing or too, which would probably keep the growth rate in Indian economy still at an impressive rate in the next year, enough for his government to get re-elected. As some one sarcastically put it, “The only thing not announced in the budget were the election dates”

To explain things simply, individuals were given a breather with reductions, and other concessions, (One already knows all the numbers). Increasing the disposable income means more buying, more consumption (thereby inducing more production and the Govt coming up with reduced interest rates) with more investment thereby boosting growth in the GDP. Along with this, the budget proposes to increase government expenditure to an all time high with numbers no one had ever dreamt of to increase India’s GDP with a long term intention along with a short term objective to attract all the potential voters and potential Investors.

People, who look at numbers and believe them, would be satisfied at them when they do come out next year. And professional individuals, right now, are also very happy because they think that a high disposable income would increase their ability to buy more. What they will not understand, is that only disposable income increases while goods bought (and necessary ones, those) will not get any cheaper. Inflation will increase, due to increase in money flows, so you pay more than what you are paying now. And you live in an illusion that you have more money now. Measures to check inflation, although, have been conveniently left out in the budget.

The most important question, that everyone is asking right now, is how will the Government arrange for 60,000 crores? That’s not that difficult to explain. The process of loan waivers is a 3 years process, as said by the Finance minister. We only see tax sops to individuals. Corporate tax, on the other hand is a different story. There are stringent rules applied and corporates don’t get any relief. Government hunts down its revenues from here, definitely more than that of individuals.

This budget is actually again a plan suggesting the measures. Implementation is easier said than done. For example, since India still has a deficit in its balance of payments, the loan waiver and other government expenditure has given something to think about. It doesn’t matter if the government is re-elected or not, taxes are bound to increase for the corporate sector next year. Such increase would again cause to look for more SEZs and again the SEZ policy has also been conveniently hidden underneath the carpet, even though Nandigram and Singur were such burning issues this year.

But I do place my facts on the probability that the measures that the government has proposed will be implemented. The building of IITs and IIScs and 16 central universities are still in papers and such “mandatory” announcements are made every year. Evaluation is not done, and the only effects proposed would be short term effects. The numbers, the growth rate, the inflation rate and the tax rate are huge matters which are always applied with a short-term intention, while the consequences are not given any importance.

If the annual financial budget is only created to keep the investor’s confidence, the voter’s confidence and the confidence that India is growing, by whatever measures necessary then what is the need for such annual disclosure? The government and the finance minister can come out every time with their policies when there is an issue at hand, like global markets or economic recession.

Growth is a concept which is never short term. The problem is that foreign investors look for immediate results, through the growth rates. Immediate results can always be arrived at by applying tweaks like increase/decrease in taxes. But in this process, the whole point of the growth of Indian economy in real terms, is absolutely lost.