IDIOSYNCRATIC RUMINATIONS

Budget Wishlist 2009

2009-06-27T20:03:00.001+05:30

My wishlist regarding the Budget proposals:

The budget should bring forth clarity about the taxation aspects of Limited Liability Partnerships [LLPs]. This will help foster their growth, especially since it is a better and less expensive form of constituting a business.
The New Pension Scheme, introduced recently, has not caught on, more so since it's on EET model. The FM needs to seriously consider the suggestions to bring parity between NPS and other savings schemes like PF etc. Otherwise, this very efficient and people-friendly scheme will be left without many takers.
Another aspect which needs the FM's serious attention is the issue of pricing of petroleum products. The prevailing method is quite messy and lacks transparency. The earlier this is resolved and fine-tuned, the better for the fisc.
This brings us to the topic of fiscal discipline. Even as there is the need for the state to step up its own spending, it needs to be seen that fiscal deficit does not turn out of control. Towards this end, stake sale of profitable PSUs is advisable. At the same time, to put more money into the consumers' pockets, tax breaks like raising the exemption level and/or restoring Standard Deduction are necessary. To raise revenue, dividends above a certain threshold limit can be brought under the tax net.
The Govt needs to move forward on the path of introducing Uniform GST. For this, FM should present a road map towards adoption of GST and abolition of CST.
Development of our creaking infrastructure is critical to ensure sustained growth. To raise revenues for these long-gestation projects, a vibrant bond market is vital. The FM should introduce the necessary reforms for the development of our bond markets.

And, he wins it!!!

2009-01-12T22:13:00.003+05:30

A R Rahman wins the award for Best Original Score at the 66^th Golden Globe Awards, beating stalwarts like Hans Zimmer, John Howard & Clint Eastwood. Way to go, ARR!!! Jai ho!!!

The Mithya of Satyam; aka the Satya(m) of a Mithya!!!

2009-01-11T19:35:00.002+05:30

Mithya --> Illusion

Satyam --> Truth (also, the name of the now infamous IT company)

It was with great disbelief that I heard the story of Ramalinga Raju's confession. In fact, till I read it, on the web, I didn't really grasp the enormity of the fraud. Now, his confession has showed us the 'Satyam' behind a number of 'Mithyas'. What are they?

Till recently, almost all write-ups on the economy and business environment had repeatedly pointed out that we have great / impregnable systems and checks in place and the absence of any major scandal after Ketan Parekh's proved that. Who could have guessed that a gigantic one was taking place right in front of us, without anybody knowing about it? It's next to impossible that the auditors and key finance personnel in the company could not find this out. Just the CEO & CFO managed to pull it off and that too for a number of years? No way, I'd say.

The fiasco showed us, again, that auditors, if not all of them, are hand-in-gloves with the perpetrators of frauds. However tight the auditing guidelines & accounting standards, if one is creative enough, fudging is incredibly easy. To find gaps, given the current technological advances in book-keeping & complex business processes, auditing professionals need to be highly skilled; we have a long way to go in this respect. Revenue recognition norms, especially for those firms in service industry, need a relook.

With Enron went Arthur Anderson; will Satyam episode lead to black-listing of PwC, given that it was already under the scanner for its role in the failure of GT Bank? No chance, if one were to look at the utterances from ICAI functionaries; they say action will be taken only against the partners and not the firm. Yours truly once had a great deal of admiration towards this firm; no longer it remains. A valuable lesson is that, being big is not a guarantee against failure; in fact, as you grow in size, stronger measures to manage operational risks are to be put in place.

Independence of independent directors is to be ensured through new means. One feels that, for companies which fulfil certain criteria in respect of their assets / market cap, SEBI should be the body which appoints independent auditors, so that, the independence is fully ensured.

Listed companies carry an aura of transparency with them, and subsequently, lower risk premia are attached to them. It is assumed that fear of a market backlash will prod them along the path of self-regulation. Raju's confession tells us that it was his fear of such a backlash and takeover attempts that made him cook up the figures! That is a direct barb at the short-termism of market participants. In fact, one is tempted to say that we are living from quarter to quarter. The behaviour of markets soon after the announcement of quarterly results is too wild nowadays; the stock is battered, even in case of growth, if the growth is not as per analysts' predictions and no thought is given to the long-term prospects of the company. Such an obsession with the Q_n figures needs to be restrained.

One's heart goes out to those investors who bought into the Satyam stocks on Jan 7, before the story broke. Who will compensate them [that is, the ones who have not yet exited], as well as others who invested in shares of other companies and suffered losses from the market meltdown that followed?

What needs to be done now?

Speedy investigation, trial & justice
Tighter regulation
Revamp of audit practice – it's time competition is brought into the auditing profession; the ICAI's monopoly over the same is not good for the profession and the country in the long-term [yes, I'm an interested party here; but that does not dilute the logic of this line of thought].

What’s cooking for 2009?

2009-01-04T17:07:00.001+05:30

Now, this – how 2009 will pan out – is a question that's been 'analysed' in many fora already. So, yours truly would desist from doing it. In fact, my mind wanders and seeks answers to a number of questions... Again, that is something my mind always does. For a change, I'll jot down a few here...

Governance

When will we, Indians, have a well-functioning government in India? We have an elected government, yes; we have a functioning government, yes; but, we lack a well-functioning one – an accountable one. Agreed, there cannot be any govt which satisfies all people's aspirations; however, every party in India always utters food, clothing and shelter for all. It's indeed a matter of shame that even after sixty years of getting independence, we're nowhere near the goal of a minimum standard of living for our billion-plus population! Moreover, where was our government when a handful of terrorists, like rabid dogs, audaciously kept on planting bombs and attacking innocent civilians in different parts of the country? While not a day goes without blaming the rabid terrorists and the nation which harbours them, what firm action has been taken to rout them? Again, where was the govt when hundreds of farmers committed suicide due to mounting debt? Apart from destroying the 'debt-repayment culture', what did the much-publicised farm debt waiver scheme achieve? Given that 2009 is an election year, will we finally elect a government that performs well? Or, are we destined to get one more lame-duck ministry?

Economy

Everything was honky-dory till the US economy sneezed and ours caught pneumonia! Pray, how long can we keep blaming the global economy for our woes? When the fruits of globalization took time to reach the masses due to inefficiencies in our system, globalization was blamed; it is being blamed again when the economy is facing a downturn. In 2008, the RBI tightened the strings too much and too early, thus jacking up interest rates; it's doing the same thing in reverse now – too much and too fast. By releasing an estimated Rs.300000 Crores within a short span, ignoring the money multiplier effect, and relaxing many rules together – e.g., special finance facilities for NBFCs etc – is the stage being set for the enactment of a desi version of the sub-prime drama? How much of the currently perceived slowdown in our economy is due to our own creation? And, any news about investments for improving our infrastructure?

Corporate Governance, Financial Markets

No, it's not about the Satyam imbroglio; it's about credit rating agencies [CRAs] and mutual funds [MFs]. It's time a new system is put in place to ensure independence of CRAs' job – rating the public issue of debt / equity capital. From the 'issuer-pays' model, we should move to 'regulator-pays' model, ensuring at the same time that there is no patronising of any particular CRA. As for MFs, one cannot fathom why listed companies [are allowed to] invest in them. Two reasons why they should be kept out: one, the companies, especially the listed ones, [can afford to] have professionals to manage their fund flows and to optimise cash flows and two, MFs were conceived as a mechanism to allow retail investors who aren't finance-savvy to reap the benefits of participating in equity markets. One feels that the kind of redemption pressures Indian MFs faced in Oct 2008 could have been avoided, to a great extent, had companies been kept out.

The bottomline is that, instead of being garrulous, our so-called leaders should now take firm action to help India emerge stronger from crises; and the people, too, should take an active and renewed interest in nation-building. Jaago re!!

2009.....

2009-01-01T20:38:00.002+05:30

Thus, a new year had dawned, bringing with it hopes - of a peaceful world, betterment in economic fortunes [blame it on the business confidence gone into a tailspin ;)], better work-life balance, and above all, the ability to fulfil promises made to self!!!!

Happy New Year!!!!!

Musings on new FY

2008-04-01T20:46:00.001+05:30

A new financial year (FY 2008-09) dawned today, in India. There are hopes as well as fears about the same. How will the new FY pan itself out? Even if one goes by the trend as in previous years, this time around, the scene is a bit confounding and confusing for all stakeholders. The beginning of an FY is important to me on a personal front too, given my job.

The thing that is foremost on everyone's mind is inflation. The WPI-based inflation rate is far above RBI's (as well as common man's) comfort levels. And, it is a politician's nightmare, especially when elections are round the corner. For the time being, let us not think about the response - it is most likely to be a rate hike. What could have led to this sort of an inflation?

Basically, it's the primary food articles including wheat, rice and pulses whose prices have risen. As a World Bank study put it, the price rise is a global phenomenon and is due to a variety of factors, including higher demand from India and China...

What is ailing India's agri-sector? Everyone knows it and it has been very well-documented too.....but no action has been forthcoming from any quarter to reform India's 'core business'. The latest example of inept handling of agri-sector issues is the banning of exports of rice, except the basmati variety. Yes, to rein in domestic inflation, such a measure would be necessary, only as a last resort. Think for a moment about the farmer as a businessman. Would it be fair to dictate to a businessman not to sell his produce at a price it commands, wherever it is?

Even more ridiculous happenings are unfolding in Kerala. There is a bumper crop, but there are not enough farm workers available to harvest the same. The CPI-M- affiliated farm workers' union is opposing and resisting usage of harvesting machines. An unexpected and heavy summer rain came and the crop is literally in the water!! Bumper crop is now 'no crop'!!! A few farmers have taken their lives, but again, there are only empty promises. Blaming the summer rain, all ministers are happily attending the CPI-M party congress in Coimbatore and are proudly showing off to the media their latest member - director Mani Ratnam's son!! These are the real Neros of today........

The measures announced by the government, ostensibly to combat inflation, seem more like knee-jerk reactions. More concrete measures to set the supply side alright, or rather, to ease the supply-side constraints need to be there - till then, the problem of inflation will surely not go away.

When you look at the monetary policy response that is going to be out soon, as I said before, it may be a rate hike and some associated measures; whether it is going to solve it all, one needs to wait and watch. A rate hike will widen the interest-rate arbitrage and put more pressure on the INR. The problem may be compounded due to lack of a developed bond market. More curbs on ECBs are likely and it will affect the corporates adversely. Though the 'India Growth Story' is intact, it may drive down the stock prices.

As for financial reforms, it is best forgotten in the new FY. Those opposing reforms now have a 'point' - the reckless lending, complex financial engineering stuff and the consequent slowdown / crisis in the US are now a potent weapon in their hands. Also, elections are coming up and so, reforms, RIP for a year!!

The bottom-line is that strong fiscal measures are needed to avert a real slowdown in Indian economy; will they be forthcoming in an election year?

Budget 08-09 - What's the big !dea?

2008-03-05T15:26:00.000+05:30

And, Finance Minister P Chidambaram has presented the budget for the year 2008-09. Lots of bouquets and brickbats......yes, but what is the bottom-line?

The two things that dominated all discussions seem to be the farm debt waiver plan and the substantial relief for the salaried class..And, therein lies the big idea, at least to me.

Almost all people know that even as growth rates are moving up, agriculture continues to be the laggard. Yes, farmers are in distress, the farm sector employs more than 60% of our workforce and with each passing day the farmers are finding it more and more difficult to continue with farming. But, debt waiver is a patently wrong idea in that it sends out a wrong message to the borrowers - "do not repay; the government will waive it" - as well as the lenders (mostly banks) - "Give them loans; we will give it back to you". It may be OK with public sector banks, but what about the private banks? How can the government dictate to them how to lend and waive debts? What happens to the net worth of the banks and ultimately the country?

Again, who are going to benefit from the scheme as is proposed? Farmers' miseries are caused, inter alia, due to their borrowals from the informal sector, at usurious rates of interest. But, the waiver announced now does not cover these borrowings. Add to that, there are several "Conditions Apply" tags - you have to be small farmer, having the specified area of land, borrowals upto the specified date, and so on. Doesn't misery / drought strike uniformly? Why these restrictions, then? There is also the news that the bulk of the amount will go to the co-operative banks! We all know the set-up in co-operative banks - it's the petty politicians' goldmine. Rather than letting the money go down the drain, the Rs 60000 Cr estimated as the waiver amount (how did he arrive at that 'magical' figure, by the way?) could be better deployed in developing agri-infrastructure.

Again, surprisingly, no resources have been allocated for this plan. The Finance Minister says he is intelligent and that he will soon spell these out. One hopes he does it soon! What about raising the money through disinvestment in public sector undertakings? Go and list PSUs like BSNL, MTNL, LIC and further stake sale of other listed PSUs? After all, Economic Survey also suggests it. Left too will not oppose it! "Disinvestment for farmers' welfare" - this is the 'big idea' for me!!!

The income tax incentives, in my view, were long overdue. But, the FM could have hiked the savings limit u/s 80C to something like 1.5 lac. But, the FM seems to have an ace up his sleeve - he may be believing that what he gives away by way of raising the exemption limit and change of slabs, he is going to get it all back (and may be more) once the 6th Pay Commission submits its report and it is implemented!! Another 'big idea'!!

Timeless....but attempting to restart!

2007-10-21T15:12:00.000+05:30

There was a time when there was time in one's hands - one could talk for hours on end with friends sitting in front of you or at the other end of the mobile, one could listen to one's fav compositions without any fear of time being lost and most importantly, one could spend as much time as one wanted to dig out the necessary info for one's blogpost and post a post. Wah!! Kya times dhe woh!! But now, 3 months into the first job, yours truly is truly bewildered by the pace at which time is flying away. Yours truly is horrified to find no blogposts being made for a considerable period of time. Most importantly, this blog has completed a year, but there's no time to review and ruminate about the same either!

Rupee continues to rise, stock markets are dancing to some unknown tunes, inflation is low but still a threat, elections to ICWAI council are over with not much noise after that, the government is dilly-dallying with the N-deal, attacks against Reliance Fresh stores in some parts of the country, everything in Kerala is worse than ever, ARR's 'Sivaji' music continues to rock and he completed 15 years in the industry - but, this blog missed all those.....

But now, an attempt is being made from today - to rejuvenate this blog and to continue my ruminations on issues that interest me......

Book Review: Ignited Minds

2007-08-27T21:30:00.000+05:30

Being away, off the cyber world, resulted in my not being able to blog...The following is a book review that I was asked to do while being away from home.....At the outset, it needs to be disclosed that I'm not very good at reviewing books; again, the book that I got to review, fortunately (for me) and unfortunately (for the readers and the stature of the book as well as its author) is Ignited Minds, by Dr A P J Abdul Kalam - one of the finest sons of India. This is the first book review I did and yes, I'm loving it, too.....Read the review and give your valuable feedback....All mistakes and shortcomings are mine and mine only.......

//Born in 1931 in humble backgrounds, Avul Pakir Jainulabdeen Abdul Kalam rose to become the President of India in 2002. The post of Indian President got a new meaning during his incumbency. In many ways, he was a ‘hands-on’ President and thus came to be rightly called the ‘People’s Prez’. It’s not that Presidentship alone is his claim to fame; even before assuming the highest office in the country, he had held several high-profile posts in ISRO and DRDO and was also the Principal Scientific Advisor to Government of India, holding the rank of Cabinet Minister. He is the ‘missile-man’ of India and was the driving force behind India’s second nuclear test in 1998. He is also the recipient of the highest civilian award in India, the ‘Bharat Ratna’.

Ignited Minds: Unleashing The Power Within India continues the trajectory of thought taken up in two of his earlier works, Wings of Fire and India 2020: A Vision For The New Millennium. The object of this work, according to him, is to ignite young minds so that India turns into a developed nation by the year 2020. Dr Kalam places enormous trust on the power of India’s youth to make a difference and fulfil his vision of a developed India. The narration is in the first person and the language, simple and lucid for everyone to understand. The book is organized into nine chapters and is peppered with Dr Kalam’s own rich experiences, which makes it all the more delectable.

The book opens with the statements that Dr Kalam makes every youth he interacts with take as a sort of pledge: "Dream, Dream, Dream; Dreams transform into thoughts; And thoughts result in action". In a way, this is the essence of what he wants to convey to his readers and his countrymen at large. He talks about the power of dreams and says that spirituality has to be integrated with education, focusing on self-realization.In the second chapter, he recollects the interactions he had with children in different parts of India. He reiterates the need for the right kind of role models for the youth of India. A role model can provide answers to many questions children have as they grow up.

It is a vision that inspires minds and fires action. In the third chapter, Dr Kalam devotes considerable space to discuss the vision and achievements of illustrious sons of Mother India in fields as diverse as astronomy, mathematics, physics, space science and entrepreneurship. He briefly touches upon the lives of Aryabhatta, Brahmagupta, Bhaskaracharya, Ramanujan, Sir C V Raman, Prof S Chandrasekhar, Dr D S Kothari, Dr Homi J Bhabha and Dr Vikram Sarabhai. He also fondly recalls his association with Prof Satish Dhawan and Prof H A Yefremov and his meeting with the milkman of India, Shri Varghese Kurien. Certainly, all of these personalities have served as role models for Dr Kalam. In this exercise, he shows remarkable awareness about, and respect for all of them. In between, he also shares an interesting anecdote about how he and his team were able to get the necessary space to locate the rocket launching centre at Thumba in Thiruvananthapuram, buttressing the fact that science and religion are not mutually exclusive.

It is then a smooth take-off to the next chapter where Dr Kalam impresses upon the reader, the importance of spiritual development. An important observation he makes here is that the unification of science and spirituality is essential to take the benefits of science and technology to the mankind. He recounts his visits to, and meetings with, Pramukh Swami Maharaj of Swaminarayan Sanstha at Ahemedabad, Dargah Sharif of Sufi mystic Kwaja Moinuddeen Chishti, Mata Amritanandamayi, Ramakrishna Mission, Kanchi Shankaracharya and Sri Sathya Sai Mission and shares his learning and experience from all these visits and meetings. According to him, the vibes and mental peace one gets at these places is one and the same. Dr Kalam says that we must draw upon our heritage and wisdom to enrich our lives.

In the next chapter, Dr Kalam notes that unfortunately for India, historic forces have not given a common memory to all communities by taking them back to their roots a millennium down the ages and that not enough effort has been made in the years since independence to foster that memory. This has led to divisive forces rearing their ugly heads at times. He calls for a patriotic fervor that transcends politics and religion. He cites A R Rahman’s Vande Mataram as an example for this.

In the chapter aptly named ‘The Knowledge Society’, Dr Kalam puts up a strong case for India becoming a knowledge society and regaining the status it had enjoyed in the ancient past. He puts forward the idea of PURA (Provision of Urban Amenities in Rural Areas) for rural development, which is the need of the hour. In the next chapter, Dr Kalam lays down five areas for integrated action viz., agriculture and food processing, power, education and healthcare, Information Technology and the strategic sector. According to him, action in these five areas, properly integrated, would lead to food, economic, social and national security. The rest of the chapter is about how to align and co-ordinate action in these areas for the nation’s development.

The need for value-addition in the activities performed in our country is very well brought out in the next chapter, wherein Dr Kalam cites the case of beryllium diaphragms. This is relevant in current times too, where the rising Rupee has made the stakeholders realize the need for value-addition in our exports. Again, he calls for integrated efforts in mission mode for rapid development. In the last chapter, as in the first chapter, Dr Kalam urges us to dream and work towards making India a developed country. He prays to God Almighty to give us Indians the willingness and ability to toil hard. He ends the book with a Song of Youth, the theme of which is "Small Aim Is A Crime".

In this book, Dr Kalam laments the fact that despite all our skills, resources and talents, we Indians often tend to settle for mediocrity in everything. He also firmly believes that Indians have the potential and wherewithal to rise and realize the dream of a developed India. He has tried to show a way to fulfil this dream, by taking up different themes and tying them together with success stories to serve as motivation to everyone. Through this book, we see in Kalam the ideal Indian citizen – one who is proud of India’s glorious past and traditions and works in the present to make the future bright and exciting. Ignited Minds is a book that should be read by all self-respecting Indians, especially the youth who are the future of India and for whom it has been written. Definitely a must-buy!!//

Organised Retail - Again

2007-06-28T15:25:00.000+05:30

Yours truly had written about the sunrise sector of organized retail twice before (here and here). It wasn't a complete account in any case, but what has prompted this entry is the discussion on the same on the Management Accountant Blog and the strike on June 27 by the organization of small traders (the Vyapari-Vyavasayi Ekopana Samiti) in Kerala against the entry of retail giants [Interestingly, the processions by striking traders in Kochi were led by the same {leftist} politicians who inaugurated the new Reliance Fresh stores in Kochi; so much for commitment to a cause!!].

The grouse of small traders against organized retail, as outlined before, is this: the small traders will be forced to close shop due to low prices and once that happens, the big malls will start fleecing the customers by charging exorbitant sums. That the small traders will feel the heat of competition is a fait accompli; some of them will have to exit, as has been the experience around the world. The question is, is that a reason enough to resist the biggies. Let's look at it this way: the malls are not manned by robots; they too will be creating a lot of jobs for the burgeoning young population of India. And, more importantly, they will be working in a better environment. Why is everyone talking only of job losses and not about job creation?

Again, it is not that there is no way out for small traders - they can come together, form a single brand and put up a fight against the biggies [It has been outlined here and, therefore, is not repeated]. There were reports, some months back, about how some kirana-wallahs in Gujarat /Maharashtra were going about doing just the same. [How long will it take for all to realize that trade unions are not for confrontations with the government / people, but to serve each other for mutual benefit keeping in view the larger interests of the society?]

A pertinent point raised here relates to the low scope for tax evasion by organized retailers. Everyone knows that not many traders issue invoices and can well imagine the loss - of both indirect (sales tax)and direct taxes (income tax) - the government incurs due to this. Thus, the government too will be a big beneficiary of organized retail taking root. Also, since almost all big retailers will be - and can be only - corporate entities, there is scope for ensuring compliance with different regulations aimed at preventing defrauding the consumers. The pet peeve of critics - higher prices due to cartelization once the small players exit - can be addressed effectively through mandatory Cost Audit.

Forget the low costs to consumers, forget the benefits that will accrue to the agri-sector; one aspect sorely missed by all seems to be this: the unorganized retail sure provides a lot of employment opportunities, but at the end of the day, it is just that - unorganized. Remember, the trade unions cover just about 10 per cent of the total workforce in India. The rest - mostly in retail sector - are unorganized; not for them, the employee protection / welfare schemes like PF, Bonus, Insurance, etc. Don't we need to offer them these? Do they not deserve to receive such benefits? In a way, by opposing organized retail, the traders' unions and the politicians who support them are preventing the coming together of the unorganized workers (By aligning with the shop owners, isn't the Left betraying its own cause?). With organized retail, better employee treatment will result and this will help in covering an important step towards a social security cover - at least a semblance of the same, the kind which exists in India now - for all.

Finally, the kind of opposition seen now in Kerala carries with it a deep sense of deja vu. It was the same leftist politicians who waged a sort of war against computerization in the late 80s and early 90s, resulting in other southern states prosper in IT business; just a few months back, a bullet was seized from the laptop bag of CPI(M) state secretary - my point is not about the bullet, but the 'laptop'! The same vitriolic spirit was in full display when the previous government sought a loan from ADB; soon after coming to power, the present LDF government silently signed the dotted lines the ADB showed them! They opposed the 'Smart City' project when in opposition and a year later signed the agreement with the same people. Who knows, a few years later, we Keralites may even see a mall owned by CPI(M)!!!!

It Happens only in India

2007-06-08T19:31:00.000+05:30

I found a few of the recent happenings to be really amusing....In my view, these kind of things can happen only in India......Read on...

The Prime Minister Dr Manmohan Singh, in a speech made at a CII function, asked India Inc to have a check on CEO & promoter salaries. He feels that they are paid in excess of what they deserve! He also came down on conspicuous consumption. More importantly, he said that corporates should show moderation in their pursuit of profits. Really interesting and amusing views, coming as they do from the architect of reforms - L, P and G - which has made India achieve nearly 10 per cent GDP growth [9.4% in 2006-07], far far above the Nehru rate of growth of 3 per cent! The strong growth India is witnessing now was made possible only because of doing away with the licence-permit raj that was in vogue prior to 1990s. As an economist, the PM should well know that salaries in the corporate sector are a function of demand and supply. Money is a good motivator for most people and higher salaries are to be paid if the companies need to retain people. What is wrong with it? Then again, the message about profit maximization is clearly in line with those 1960s' ideology which totally screwed up India's growth and the ill-effects of which continue to haunt us even now.

The PM's message may be borne out of the realization that the 'trickle-down' theory is taking time to work in India. But, take a hard look and it will be clear that development has bypassed only those sectors where reforms were not initiated, most notably agriculture, which employs more than 60 per cent of India's workforce. In fact, no reforms have been undertaken where they are needed the most. And, this inability to call the spade a spade comes with a cost - that of losing elections - as people who are yet to get a taste of what reforms entail, will definitely be wary of them. Add to this the continuous barking by the Commies and their allies who believe in the equal distribution of poverty and it's no wonder that the reformer himself has to take a stance like this. In which other country can you see the PM putting forth such views? It is all the more ironic, since (I believe) the PM himself does not hold such a view!! It is also a pointer to the fact that even after three years in office, he has still not been able to assert himself (Just the other day, I saw on TV a clipping of some public function and you can clearly see that the PM sits down only after Sonia Gandhi is seated. Shameful!!). It's indeed sad to see a fine economist being made to dance to the tunes of petty Leftists and miserable scums like Arjun Singh and TN CM MK.

The second development is the Gujjar unrest in Rajasthan which held almost all North Indian states to ransom for 7 days. There were violent protests and it left many people dead. The Gujjar community - which is classified as OBC in Gujarat - wants themselves to be reclassified as STs, since they feel that recently-included-in-OBC-list Jats (who have more members than the Gujjars) will take away a good chunk of reservation benefits. But the Meena community - classified as STs - opposes any such move, as they are afraid they will lose out in the race. Even without going into the causes of this agitation or the merits of the arguments of both parties, it can be seen that this unenviable situation amply demonstrates the pernicious nature of reservation as is being implemented in India. As I have outlined before, 'Caste' is being equated with 'Class'. From Gandhiji's non-violence we have reached the other extreme of indulging in violence to prove a point. When one more caste is considered to be eligible for reservation (on the basis of their political power, what else?), those already in the list will face competition; it is perfectly 'logical', given the way reservations operate in India. Why should there be a hue and cry over that? When will people start appreciating the fact that it is in fact 'economic power' that is important these days and therefore, if at all reservations have to be there, it should be based on objective economic criteria? India will probably be the only country where people fight with each other to be called 'backward'!!

Then there is the curious case of a person becoming implicated and later being let off when there is a change in the government. The latest such instance is the one in the Taj corridor case. The case was registered on the directions of the Supreme Court which found there was a prima facie case against the accused. Look what has happened now: UP Governor has refused to grant permission to the CBI to prosecute Mayavati, since he believes there is not enough evidence against her! It is clearly a politically-motivated action, and it becomes even more evident when we read it together with Mayavati's statement about presidential elections. Presumably, to get her support in the race to Raisina Hills, the Congress has soft-pedalled her involvement in the case. Unfortunately, the Governor has again proved that he is just a pawn!!

All these happen only in one place in the whole world. It's our India, sadly!!!

Classmates Reviewed

2007-05-19T16:22:00.000+05:30

'Classmates' was the one of the biggest hits and the most popular of all Malayalam movies released in the year 2006. Even months after its release, the song 'Ente Khalbile...' was still on the lips of all Malayalees. The movie did very good business in all the centres. It was a bit surprising, since it had no superstars in it. The film, directed by Lal Jose, won praise from all quarters for its screenplay, songs, and not least, the performance of all the actors.

The film unfolds with the reunion party - after 15 years - of a batch of final year B Sc Chemistry students of a college, presumably in central Travancore. The reunion party has been organized in the memory of one of their classmates who had died tragically in the college. Each of the main characters has a lot of memories of their last year in college and they all are eager to meet their classmates after such a long gap. The story of their last year in college is told in flashback.

So, what is special about the movie? Lots of things, one would say. First, as mentioned above, the film has no superstar, which makes a grand opening near impossible. Yes, it would have been foolhardy and utterly unbelievable if Mammootty, Mohanlal, Suresh Gopi, Jayaram or even Dileep was cast as a college-goer. Malayalees are a lot less tolerant than Kannadigas or Tamilians in this regard; there will be heavy criticism even if the movie does well [A 60+ Rajnikanth being cast as a young guy or a 70+ Rajkumar being cast as a college student are all normal in TN and Karnataka and the films are guaranteed hits!!]. The absence of superstars itself is a big strength for this movie. All the actors - Prithviraj, Indrajith, Narain, Jayasoorya, Vijeesh, Kavya, Jagathi, Balachandra Menon and all newcomers including Radhika - have put in a power-packed performance that is convincing. Full marks to the director for the perfect casting. All of the younger actors now have a rightful claim to the baton held presently by the superstars. In fact, one can go on and on about their performances. The meatiest of the roles of course went to Prithviraj and Narain. As the leftist students' union leader Suku, Prithviraj truly lives the role; his mannerisms and dialogues are all typical of a leftist leader in college. The variations in his tones and body language as when he is leading a march and when he confesses his love are amazing. Narain, as Murali, the peacemaker, singer, the secret lover and the tragic hero steals the heart of all. This role has given him a big break in the industry. Though he'd been noted in his roles as the IPS Officer in '4 The People' and as Ijo in 'Achuvinte Amma', the different appearance he came up with, in this movie and the name change - from Sunil to Narain - seems to have worked magic for him. Indrajith as the college Romeo Pious is hilarious and natural. The chemistry in the movie between him and his real-life younger brother Prithviraj is something to be seen to be believed. Jayasoorya and Kavya too excel in their respective roles. It was truly a mind-boggling performance by debutante Radhika.

Coming to music, Alex Paul has done a decent job in the movie. The music is not, in my terms, outstanding; but, it blends well with the storyline and the songs have been picturised well too. However, background score is poor. Even when there is high drama on the screen, the BGM fails to make its presence felt, let alone matching the scene.

Editing is strictly OK; nothing to write home about. In fact, it could have been much better, to intensify the drama and its impact on the viewer. Similar is the case with cinematography - nothing much to appreciate; it's just good.

The real hero of the movie as such is the story and screenplay. That again is by a newcomer, James Albert. He has cleverly weaved in campus life, comedy, romance, action, tragedy and a murder mystery into the story. The liveliness of college life - student activism, campus love, bunking classes, welcoming junior students, etc - is shown without losing its sheen. The unfulfilled, subtle, unknown-to-others love of Murali and Razia is sure to move everyone, even as it is the high profile love of Suku and Tara that everyone will notice first.

For one, the movie can be appreciated better only if one is familiar with the background of the movie - the politically charged atmosphere in Kerala's college campuses, more so in the 1990s. The students unions in the state's colleges - especially the arts and science colleges - are dominated by SFI, KSU or ABVP. It's a no-brainer that the unions mentioned in the movie, SFK and DSU, stand for SFI and KSU respectively. If the DSU leader is shown as a manipulator, the SFK guys too score no better - they leave Suku to fend for himself, even as it was his humble background that led to his joining SFK as a natural choice. If you would notice, there is not even a single shot of these student leaders attending classroom lectures, but there are scenes showing them exhorting students to strike; it tells a lot about the nature of student activism in Kerala and about how the student leaders "study".

In my view, this movie is a powerful indictment of student politics in Kerala and the violence that is very much a part and parcel of such politics. Politics in college campuses serves the interest of only politicians; they use the students as pawns in their political game of power-grabbing. Colleges, or for that matter, any educational institution, are temples of 'Vidya' and no other activity should be allowed to thrive there. The earlier the students realize this, the better the future will be for them; nobody other than the students stand to lose from campus politics.

Moments when a smile flits across...

2007-04-29T15:18:00.000+05:30

A dear friend of mine wants me to come with a list similar to hers. I was initially horrified!!! This was something I never thought of and had never expected her / anyone else to ask me!! She persisted and I have to give in.....good friends have to yield to such pressures....

Yes, there are some things which result in a smile flitting across my face and what follows is a list of that. This is not exhaustive in any way, just a sample...

Getting up early in the morning and seeing darkness slowly giving way to light
Praying
Whenever I understand a new concept, whether or not related to my field of study
Being alone and sitting with eyes closed......love it if there is the pitter-patter of rain and any soft song of ARR in the background..
Watching and getting wet in the rain
Reading good stories / novels / non-fictions
Writing a good essay, with some effort put in, in collecting the data; the happiness multiplies if I post it on my blog
Whenever I'm praised for a good work done, by people whom I respect / hold dear to my heart
Long duration telephone calls / face-to-face real chat with people whom I consider special
Being near any water body - any pond, backwater, river, sea
Long distance traveling
Traveling along the Alappuzha-Changanassery road in late afternoons without rain
My M Com, B Com Final Year and 10th classes - even a mere mention of those well-spent years will do
Seeing a good song while casually surfing TV channels, only to know later that it's by ARR. (This used to happen before I had access to the Net; not any longer, as I get to know of any releases of ARR or any news related to him much before others including mainstream media do, through ARR Fans Group)
Watching / reading anything related to ARR - interviews, concerts, award functions
Catching tunes of ARR being used in other TV programmes / films or songs copied / inspired from ARR's
Flipping through the pages of my previous years' diaries
Whenever yet another politician is caught red-handed in his / her act

Guess this is enough!!! Also got to add that included in the above are things which occur far and between...that's gives them a special charm!!!

Reflections on the Rising Rupee

2007-04-28T14:36:00.000+05:30

The Indian Rupee (INR) has appreciated vis-a-vis the US Dollar considerably in the recent period. It has gained almost 13 per cent since July-Aug last year. Even as recently as a month ago, it was moving in the range of Rs 44-45 per Dollar; now it is between Rs 40-41. Who all are happy and who all are worried?

The government is obviously happy, for two reasons. One, politically speaking, it gets some bragging brownie points. Though Finance Minister P Chidambaram said, "The government has no view on exchange rates", the ruling class can afford to say that the stronger INR is all due to their 'efforts', especially when elections are on in the all-too-crucial UP. May be, just may be, the guilt of mismanaging the economy in the late 80s and early 90s and having had to devalue INR is still there in the minds of Congress people (Oh, yeah?! You sure?!!!) and the gains made by INR may help assuage such feelings! Second, the government has been able to tame inflation at least a bit: WPI based headline inflation has come down to 6.09% from 6.72%, but is still far too above RBI's comfort levels.

Besides all these, a Credit Suisse report released recently has said that the rally in INR has made India a Trillion Dollar GDP economy. India's GDP has been put at Rs 41,00,000 Crore, which at Rs 40.72/$ translates to a little over $1 trillion. With this, India becomes the 12th member of the Trillion Dollar Club, the others being the US, Japan, Germany, China, the UK, France, Italy, Spain, Canada, Brazil and Russia. According to the same report, the Indian stock market capitalization too is closing fast on the trillion dollar level. Music to stock brokers' ears!

Another set of people who are rejoicing are the importers, in general and oil companies, in particular. Rising Rupee will help improve their margins. It remains to be seen whether they will pass on the benefits to the consumers.

In this context, the role of the RBI is surely worthy of a mention. Though our exchange rate mechanism is said to be market-determined, it was an open secret that RBI discreetly controlled it. All along, RBI used to buy up all dollars coming into the economy and this used to get added to our forex reserves, which recently crossed the $2 billion mark; the Rupee that were issued instead were mopped up by what was called 'sterilization' using government bonds under the Market Stabilization Scheme (MSS). However, many questioned this intervention of RBI and the effectiveness of its sterilization operations. The recent bout of high inflation was at least partly due to this, it was alleged. What has happened now? Though the RBI maintains that there has not been any change in its external sector management policy, the RBI has been conspicuous by its absence from the market in recent times. Is it because it has not enough MSS bonds or is there an ace up its sleeve? No one knows. Also, the RBI has concerns about the quality of the money coming into the country. It is now acknowledged that at least part of the dollar inflows is speculative in nature, called by different names like 'carry trade', 'private equity', 'hedge funds', etc. In a recent interview, the RBI Governor Dr YV Reddy hinted at RBI's helplessness in controlling such inflows which arise from policy flaws.

Rising Rupee has implications for India's Balance of Trade (BoT) position too. Unlike most other Emerging Market Economies (EMEs), India has a significant deficit in its Current Account. Coupled with a surplus in the Capital Account, a substantial portion of which is a mere mouse click away from flying out, it presents a tricky situation. The need for export competitiveness cannot be overemphasized. Appreciating INR will make it difficult to achieve the export target of $160 billion laid down in the recently released Annual Supplement to Foreign Trade Policy. Naturally, the exporters are a worried lot. If INR gains, it will eat into their wafer-thin margins and many will be forced to down their shutters. Then again, the sunrise IT sector feels threatened as most of their clients are US-based. Bigger firms which have the professional competence and access to hedging tools are better off, but it is the smaller firms that will be hit hard the most. In this context, the RBI's move to allow companies categorized as SMEs to book forward contracts without any past records of forex trade or any underlying exposure, is commendable. The RBI has also taken measures to ease Rupee outflows. All these have to be supplemented with activities to educate the small and medium exporting units on using hedging tools effectively.

Finally, amidst all this is a report (by JP Morgan? I'm not sure) that the INR is overvalued by about 11 per cent at current levels. This complicates the situation. Is the appreciation temporary? Will the Rupee plunge below the 50/$ mark? Only time will tell. Another aspect that calls for immediate attention is the need for cost reduction in all sectors of the economy. Though cost control and cost reduction are essential ingredients for the success of any organization, its significance becomes manifold for export-oriented enterprises, especially in the context of a rising Rupee. It is both an opportunity and a challenge for Cost and Management Accounting professionals. There is this dire need to instill cost consciousness in our economy and the rising rupee is the perfect excuse to initiate a cost reduction drive in all industries and sectors. Cost reductions and innovations are necessary to stave off the challenge posed by other low cost destinations like Philippines.

Misinterpreting Indian Constitution

2007-04-26T20:18:00.000+05:30

'Yours truly' is not an expert in the complexities of Indian Constitution. However, that should not prevent him or anyone for that matter from airing one's views on the same. On the basis of this belief, the following is a take on the tendency on the part of some of the stakeholders of Indian polity to interpret the constitution to suit their vested interests.

First is about the controversial topic of reservation. The Constitution, of course, provides for reservations for the disadvantaged and backward sections. Take a closer look: does the word 'caste' appear anywhere in the Constitution? No! It speaks of only 'class'. Then who is the 'erudite a*****e' who decided that reservations should be based on caste? Some people say that 'Class = Caste' if caste excludes the well-off within. However, that is a mistaken notion. If the objective is to keep out the well-off, then why is not reservation given on the basis of economic status alone? Even after some 57 years of independence, the quota system appears nowhere close to being phased out. It is to be remembered that even the SC/ST reservations were supposed to last for just 10 years. It was intended that this practice will be reviewed and measures taken to set it in tune with the changing times. Every ten years, the Parliament decides that SC/ST reservations be continued for another decade. When will this stop? True, caste-based atrocities are reported even today from different parts of the country. But that signals the existence of a malaise entrenched far deeper in the psyche of some people. Does reservation remove it? Again, no.

It is time we scrapped caste-based reservations and came out with an objective mechanism that takes cognizance of one's social, economic and physical weaknesses to help them realize their true potential. A targeted 'Help & Nurture System' for such people should be put in place. To make use of an analogy, in a 100 m race, the weak people need not be given the option to run just 70 m; they have to be given extra training to run the full distance. More than anything else, it will do wonders to their own sense of self-respect.

Second issue is another hot potato, 'minority rights'. The term 'minority right' itself is wrong; it is 'minority protection'. The controversy over this issue has two aspects. First is the lack of a precise definition of the term 'minority'. It is generally agreed that minority-ism is of two types: linguistic and religious. However, the problem is with the level at which we are to assess it - at the state level or at the national level? A minority in a state may be a majority in another. Therefore, logic states that minority status should be assessed at the state level. Another aspect of the controversy stems from Article 30 of our Constitution which provides that minorities will be free to run and promote their own educational institutions, etc. This provision is made to ensure that minorities do not suffer any discrimination in running such institutions and are thus able to protect and promote their unique culture, practices and customs. It is to be remembered that this provision does not give them any special privilege which is not available to others, the majority; in other words, the intention behind the provision is to have the minorities treated at par - not above or below others. However, this Article has now been sought to be interpreted as giving some special rights to the minorities, as if they are free from all rules and regulations. This hots up as a big issue especially when the minorities are perceived to be economically and politically strong, as is happening in Kerala.

The bottom-line is that all special provisions made in the Constitution to benefit any group of individuals are ultimately aimed at their economic and social upliftment and preventing / ending discriminations against them. Once this objective is achieved, these are to be scrapped. Again, if the mechanisms to ensure this have not produced the desired results or are proving to be the divisive forces in the country, it is time we revisited them and made them work the way they are expected to. Unfortunately the courage / willingness to do so is terribly lacking in India's political class.

The Supreme Court strikes again

2007-03-29T16:03:00.000+05:30

The Supreme Court of India, in its interim order, has stayed the implementation of the reservation of 27% of seats in central government-run educational institutions including the IITs and IIMs. Basically, the SC has agreed to two of the points raised by the petitioners: One, how was the figure of 27% arrived at? In other words, what scientifically-gathered data is there which puts the figure of OBCs at 27% of India's population? Definitely not a 1930 census! Second, why should the 'creamy layer' be given the benefit of reservation? It has also made the caustic observation that the Central Government should not use votebank politics to divide the country. The Government has been given time to come up with supportive documents by August.

This interim order is sure to hog the headlines in the coming days. The HRD minister Arjun Singh, who was the man behind this Act, has expressed 'hope' that the final order will be in government's favour. The 'Mandal' man VP Singh has called for a referendum on reservations.

Now, a lot of questions remain unanswered. As the Left says, how can the SC which upheld reservation of 27% to government jobs now trounce this? Then again, as one student representative said on one of the TV channels, caste in isolation is not a criterion for determining backwardness. There are other barriers also, like the gender divide, the rural-urban gap, the inter- and intra-regional imbalances which all cumulatively determine backwardness. Just the reason that someone is born into a particular caste does not automatically entitle him to work less than others!

A crucial question that everyone conveniently skirts around is this: How effective is reservation / quotas as a tool for the amelioration of the sufferings of millions? Agreed, we need to have an inclusive growth. But, is reservation the only mechanism? No!! Reservation can at best be cosmetic. It does not treat the underlying disease. An analogy comes up in my mind. If two athletes are competing and if one belongs to a backward caste, do we say that he needs to run less distance? No, but we need to give the right kind of nurture and equip him to put up a better performance. One hopes that the SC will give due consideration to all these in its final verdict.

The world around us is marching ahead. Also, there are growing inter-linkages between the global affairs and what happens in India. We're no longer an island that we once were under the likes of Nehru and Indira Gandhi. The world does not tolerate mediocrity. It needs fighters. Need proof? Look at India's ignominious exit from the World Cup Cricket. We should not be resting on past laurels, but we need to keep achieving more, small or big.

Finally, why did I say that the 'SC has struck again'? Yes, the first time was when it ruled that all laws put under the 9th schedule of the constitution after the verdict in the Kesavananda Bharathi case (1973) are open to judicial review. The said schedule was being used as a mechanism to dodge uncomfortable questions in the form of judicial review. By asserting that all laws are open to question in the court, the SC only reiterated the 'basic structure doctrine'.

Budget 07 - A short note!

2007-03-19T21:14:00.000+05:30

A long distance travel followed by a bout of serious illness and a pre-occupation with an exam result saw to it that there was a break in my posts, extended to more than a month. In this intervening period, there were some significant developments on the economic front. Inflation is soaring, Economic Survey and the biggie, Budget 07 were presented, EASIEST was introduced, CRR was hiked, etc. Surely, my blog missed out on all the heat and action!!

It's been close to three weeks since the presentation of Budget 07. I'm still not ready for a full-fledged reflection on it; still two points are worthy of immediate mention.

First is the proposal to formulate a scheme of 'Reverse Mortgage'. "In the scheme, being conceptualized, a senior citizen of 62 years or more, who owns a house, can be given loan up to a fixed amount worked out on the percentage basis of the market value of the house owned and given on mortgage. They can, if they so desire, opt for receiving the amount in monthly installments also. In such a case, the amount admissible will be spread over in 15 years in the form of annuity....The loan amount need not be repaid in the lifetime of person / spouse.....In the event of their death, the institution will realize the amount through selling the property or their progeny can take it back paying the necessary amount." It surely does look good, theoretically, I hasten to add. The reason is simple: it's the Indian psyche! Our customs and mindset are against taking up a liability as we age. Moreover, the scheme applies only to self-acquired property and not ancestral property (that's as I understand it). Besides, the children of the loanees may be against foisting another liability upon them.

Second, "Finance Act section 83 made an amendment in Service Tax and now Central Excise Section 14AA is also made applicable to service tax provisions for the purpose of Audit. Now the Cost Accountants empowered to conduct audit in service tax also as referred in section 14AA Central Excise Act." This is music to the ears of Cost Accountants in practice, given the growing scope of service tax. This amendment is all the more heartening since the amendment (I was told) was made despite strong lobbying by ICAI. The crucial question, as raised by a member of the Chapter in my home town, is about how many Cost Accountants would be ready to rise to this. Hope there will be many....

Three burning problems..

2007-02-03T21:00:00.000+05:30

As I see now, there are three problems that require the immediate attention (and action) on the part of the Govt of India. If there is failure to act on these, the economic growth of the kind we witness now in India will surely lose its steam. And that, is bad news!

First of course is the rising inflation. The WPI based inflation rate is high and so are the CPIs too. The government has tried to bring it down by reducing the import duty on food items and the RBI has, in its Q3 Review of Monetary Policy, tried to strike at the demand side of inflation. The measures taken by the RBI officials especially are to be appreciated, as they have tried to target specific segments which, in their view, are fueling the inflationary pressures - like increasing the provisioning for segments like credit card outstandings, capital market exposures, real estate financing and personal loans. As Governor YV Reddy pointed out, inflation is always harmful to growth as it leads to volatility in the economy.

Second problem is the inadequate infrastructure. As correctly identified in the Mid-Year Review of the Economy by the Ministry of Finance, if infrastructure problems are not addressed properly and in time, it can prove to be the Achilles' Heel in our economic growth. So, what all comes under the generic term 'infrastructure'? It includes roads (highways), ports, airports, uninterrupted supply of power and water, housing facilities and telecommunication facilities. In the post-reforms era, we have seen tremendous improvement in telecommunication facilities and, to some extent, transportation facilities. It can easily be seen that whichever sector was opened up to private participation, with commensurate and competent regulatory mechanism, has shown good results. In fact, the single biggest factor behind the growth of IT & ITES sector, in my view, is the unprecedented improvement in telecom facilities resulting in the lowest charges in the world. It is mostly in the power sector that we have ended up laggards. And, that is the area where there have not much reforms and opening up. In recent times, there seems to be some improvement, what with the bidding for some mega power projects resulting in very competitive tariffs.

In PM Manmohan Singh's view, we need a whopping US$ 350 billion as investment to spruce up our infrastructure. Where will it come from? Of course, partnering with the private sector is the solution. For this, appropriate homework needs to be done and it may also be necessary that user charges may have to be imposed. A good way to raise at least a part of the funds is to revive the debt market segment. One hopes some concrete measures will be undertaken in this connection.

What is the third problem? It is agriculture. Agri-sector contributes around 22 per cent to India's GDP but employs more than 60 per cent of our population. But look at the growth rate: just about 3 per cent. And, farmer suicides are going on at an alarming rate. It naturally means that for growth to be more equitable, the fruits of reforms should reach the millions of farmers in our country. Only then will our dear politicians be able to 'sell' reforms to their constituencies. [More on agri-sector in a separate post, coming soon!]

Two composers I expect a lot from....

2007-02-02T19:05:00.000+05:30

I had, in one of my previous posts, talked about my music preferences. To the list of the composers I like, I would like to add two more names: GV Prakash Kumar and Rahulraj T.

GV Prakash Kumar probably needs no introduction to ARR fans. He has sung a number of songs for ARR. Perhaps more than this fact, it is this factoid that will pop some eyeballs: he is ARR's nephew. He started off singing with 'Chikku Bukku Raile' (Gentleman); he went onto sing a number of other songs for ARR. In the meanwhile, he took up Audio Engineering and has worked as programmer for a number of music directors, viz Vidyasagar, Harris Jayaraj, etc. He has worked as a programmer for ARR from Swades onwards. Meanwhile, he also sang the hit number 'Kadhal Yanai' (Anniyan). IMO, his most notable work as an assistant is the recently-released Hindi flick 'Jaanemann - Let's fall in love again'. Yes, the music was by Anu Malik, but it was GV Prakash's music arrangements that stood out. The songs ended up sounding like ARR's and till one newspaper highlighted the contribution of GV Prakash, everyone was under the impression that Anu Malik had improved! GVP has made his filmy debut as composer through director Shankar's production 'Veyil'. The songs were good and became hits too. Of course, he teamed up with ARR's crew (notably 'flute' Naveen and H Sridhar) and there are some who say his real skills will be on display only if gets a team of his own. I see promise in this guy.

Rahulraj too would require no introduction to the Mallu fans of ARR and to observers of music scene. He is the one behind the soulful theme of Amrita TV and also some programmes on the same channel. He has also given music to some album tracks, most notably Tom George's 'En Jeevane' and Sreenivas' 'Aaril Aaro'. He has composed some jingles too. His filmy debut will be the Mohanlal-starrer 'Chotta Mumbai'. He has a voice very much similar to ARR's and that's why I said he is no stranger to ARR fans; his rendering of the Amrita TV theme had many wondering whether it is not by ARR himself. I have had the good fortune to get in touch with this talented young man and it was a wonder to learn about his musical sojourn. I look forward to his works eagerly.

What is common to both GV Prakash Kumar and Rahulraj is that both of them are good singers, but with voices that are slightly different from what we usually consider normal. Another common factor is the ARR connection. They are both talented and no lover of good music will dismiss their works lightly.

Adieu, Sidney Sheldon.....

2007-02-01T20:04:00.001+05:30

Been and am a little too busy....after all, life is all about giving priorities to different things, right? So, naturally, the time I spend online, in general, and blogging, in particular, has taken a hit....However, this is something I want to type in a few words on......

Sidney Sheldon, the popular novelist, passed away. He's authored a number of best-sellers, starting with The Naked Face. I've been a fan of his ever since I first read If Tomorrow Comes. I then went on to read almost all of his works. In fact, his works, to some extent, rekindled my interest in reading; from his novels, I moved on to the more serious stuff and learnt to appreciate literature for what it is worth.

What was special about Sheldon's works? For a beginner, they offer decent thrill. Of course, some passages might seem to give a 'cultural shock', but once you are familiar with the milieu in which the stories are set, you are able to overlook these. Secondly, the language he used is simple and easy on eyes and brain. Yes, it's meant for leisure reading. The stories take you to different parts of the world and you feel you are actually seeing all with your own eyes.

However, there is something more to his works than what meets the eye in the beginning. That is the powerful characterization of the female protagonists. Be it Tracy Whitney (If Tomorrow Comes) or Ashley (Tell Me Your Dreams), they do what they do for a reason. They are not cowed down by the adversities of life, but take up the challenge of fighting the odds and seeking revenge. That is the specialty of all of Sheldon's works.

In Sheldon's death, we have lost a wonderful novelist....Sheldon, RIP!!!!

Indian Stock Markets - Who is the Fool?

2007-01-16T11:14:00.000+05:30

Stock exchanges are one among the various financial intermediaries. A stock exchange may be defined as a place or market where securities (ownership or debt) of joint stock companies and of government or semi-government bodies are dealt in. It is an essential concomitant of the capitalist system of economy. It is indispensable for the proper functioning of corporate enterprise. It brings together large amounts of capital necessary for the economic progress of a country. It provides necessary mobility to capital and directs the flow of capital into profitable and successful enterprises. It acts as the barometer of general economic progress in a country and exerts a powerful and significant influence as a depressant or stimulant of business activity. It is often the platform where one can obtain an accurate or near-accurate valuation of corporate enterprises.

For many years since independence, the Indian financial system was caught in the vice of narrow, inflexible regulations that made it tough to maneuver. Real change started when the then RBI Governor RN Malhotra kicked off a gradual deregulation in 1988. Matters came to a head on September 23, 1991 when India’s foreign exchange reserves touched rock-bottom levels of US$ 0.93 billion – barely enough to cover even 14 days’ oil imports. The nation suffered the ignominy of pledging 65 tons of gold with the Bank of England to raise US$ 445 million which helped it tide over the worst-ever forex crisis in its history. Eventually, the agreement signed with the IMF ushered in a wave of reforms and the winds of liberalization, privatization and globalization blew through the length and breadth of Indian economy and its financial system. Indeed, the financial system in India at present is a far cry from the regulated system in vogue in the 1960s and 1970s.

It needs to be highlighted that stock markets were in operation in India for a long time prior to the reforms. Stock trading began in India on July 9, 1875 when native brokers formed The Native Share and Stock-Brokers’ Association in the then Bombay. In fact, it was the first such exchange in the whole of Asia. However, it was only in the post-reforms era that stock markets began to get their rightful share of limelight. Today, the Indian stock market ranks among the best in the world in all respects – be it market capitalization, number of companies listed, regulatory framework or transparency. Again, India has the only-one-of-its-kind T+2 settlement system and steps are underway to move to real-time settlements. The Bombay Stock Exchange Ltd (BSE) and the National Stock Exchange of India Ltd (NSE) are the two primary stock exchanges in India. In addition, there are 22 Regional Stock Exchanges. However, the BSE and the NSE have established themselves as the two leading exchanges and account for about 80 per cent of the equity volume traded in India. Due to the existence of the Futures and Options (F&O) segment in the NSE, it tops in terms of the volume of transactions, though it is the BSE which has the largest number of listed companies. The two key stock indices are the BSE Sensex - for Sensitive Index, as coined by Deepak Mohoni - comprising 30 top stocks and the NSE's S&P CNX Nifty - for NSE Fifty - comprising 50 top stocks.

With the opening up of the economy and aided by stellar performance of the economy, the stock markets have wrested their rightful share of limelight, so to speak. The stock markets have set a scorching pace of growth. Also, there were the series of reforms unleashed, starting with giving teeth to SEBI, allowing foreign institutional investors to invest in India, introduction of rolling settlement, banning the badla system, moving to screen-based trading, introduction of new instruments, internet trading, and finally, demutualization of the exchanges. That today Indian stock markets are on solid grounds is borne out by the fact that within just two weeks of RBI allowing FDI & FII in stock exchanges, NYSE have acquired a stake - of 5 per cent, the maximum allowed for any single investor - in NSE. LSE and NASDAQ are in talks to acquire a similar stake in BSE. Even on the basis of stocks traded, there has been tremendous improvement. From around 1000 points or whereabouts in July 1991, the BSE Sensex is now at levels of 14000+. Then again, the market cap (of BSE stocks) is now more than Rs 35 Lakh Crore; but the P/E ratio has actually come down from 40 in 1991 to between 19 and 23 today.

That brings us to the issue of stock prices. What drives stock prices? Fortunately or not, and like everything else in this world, there is no crystal ball that can show the future price of any stock. Theories on stock price movements are galore and studies on the same can be grouped under three broad headings, viz. fundamental, technical and efficient market hypothesis. All the three together are able to explain away most of the price movements, but uncertainties still remain. It is now accepted that stock prices are a reflection of expectations of investors and changes in the same lead to changes in the prices. And, these expectations are based not just on a particular company's or even domestic economic fortunes, but also on global events. In a way, it can be said that the uncertainty surrounding stock prices is the charm of the game! However, too much of uncertainties is harmful and leads to violent fluctuations in prices. Here, Indian markets score badly - it is leader with respect to volatilities! And, that is the inadequacy of Indian markets...What is the cause for this volatility?

Unarguably, the Indian stock market saga is built on institutional funds. It is a show run by financial institutions. Foreign Institutional Investments in the Indian capital market, which commenced in January 1993, have shown significant increase over the subsequent years. Cumulative net FII investments increased from US$ 827 million at end-December 1993 to US$ 45.3 billion at end-March 2006 and further to US$ 46.9 billion as at end-September 2006 (Source: RBI). On a year-on-year basis, in the year-ended December 2006, FIIs pumped in US$ 8 billion on top of the US$ 10 billion brought in, in 2005. Domestic institutions are also not far behind. Domestic mutual funds, led by UTI and banks have been aggressive buyers all along. However, they have not been of great help when foreign funds are withdrawn, as has been demonstrated quite a few times in the past. A word also needs to be said about the role of Participatory Notes - freely transferable instruments issued by FIIs to its clients who are otherwise not eligible to enter Indian markets (like Hedge Funds) or who wish to remain anonymous. Many a time, RBI and SEBI have expressed their concerns over them and Tarapore-II Committee even recommended its phase-out. The fears expressed by these agencies about PNs - that it helps money-laundering and round-tripping of capital - cannot be dismissed lightly.

The sort of big ticket buying and selling by institutions keep retail investors away from the stock markets. Not that there is anything wrong in institutional investments, but the sheer enormity of the funds at their disposal makes retail investors jittery and gives them sleepless nights! Though the late Dhirubhai Ambani (now immortalized on the celluloid by Mani Ratnam's Guru, aided in no small measure by the riveting performance of Junior B, Abhishek Bachchan) is often credited - rightly or mistakenly - with encouraging the growth of equity cult in India in a big way, the fact remains that the retail investor base has not grown to attain that 'critical mass', the over 9.9 million demat accounts (as at end-Dec 06) notwithstanding. After all, according to the 61st round of NSS, 64.75 per cent of Indians are still illiterate and 52 per cent are unemployed. Low retail participation may partly be attributed to lack of awareness about the stock markets as an investment alternative. The tendency on the part of even educated Indians to derisively dismiss stock markets as 'gambling centres' is strange indeed! It points to the terrible gap in investor education and financial counseling in India. Then again, the cause of equity is not helped in any way by the tendency of some retail investors to enter and exit the stock markets at the wrong times and burn their fingers. Also, there are some too-ignorant-to-be-fit-as-MPs who raise a hue and cry whenever there is a stock market crash. The real fools are the ones who think they can make some quick bucks from the stock market! Add to that the scams - remember Harshad Mehta and Ketan Parekh - and it can be seen that low retail investor participation is both a cause and an effect of volatility in Indian stock markets.

What can be done to boost retail participation? One solution that seems likely to materialize soon is the spread and reach of internet trading. Since its introduction in February 2000, internet trading has grown by leaps and bounds. Data till November 2006 show that trading over the Net formed about 14 per cent of the total turnover. It's still small change when compared to South Korea's 75 per cent, but shows its potential.

Another solution lies in revitalizing the moribund debt market. It will address the concerns over regular returns. It can also, at least partially, meet the requirements of infrastructure funding. SEBI can simplify the trading rules further and at the same time needs to guard against the actions of vested interests. It also needs to take a final view on the fate of regional stock exchanges, which as of now do not seem to have any way forward.

If all these are done, there will be no stopping the Indian stock market zoom! Vrooooom!!!!

Plagiarism? No! Inspired? Yes!

2007-01-16T11:13:00.000+05:30

Well, it seems I need to emphasize that I scribble over here primarily to help me hone my writing skills - to take what I consider as two of my dream-exams, to enter the organization / set-up of my dreams. To that end, what I put here as 'Current Affairs Commentary' are not all of my own scholarly insights, but to a large extent, a reiteration of all that I collate from a diverse range of sources. If you may, it can be called 'inspired'; but it'll be painful if the word 'plagiarism' is used.....

Orgnaised retail - Challenges for the players

2007-01-12T17:26:00.000+05:30

Well, I have already given my take on the prospects of organised retail in India. Taking it a bit further, today let me look into the challenges for all the players involved.

For any serious player in the organized retail space - regardless of it being an Indian or foreign one - space is a serious issue. Yes, the kind of space that is required for setting up a mall is a premium in India, especially now as the realty sector is witnessing an unprecedented boom, amidst fears of a 'bubble in the housing sector'. Land prices are shooting through the roof, not only in Tier I cities, but also in Tier II and, to some extent, Tier III cities. Increased prices mean that the players will have to invest a lot more in land (if they want to own the space) or fork out more as lease rentals.

Then there are the much-talked-about supply chain deficiencies in the Indian agri-sector. Procuring all the necessary agri-products, grading them, and transporting them to the various cities can all be logistical nightmares for the players. Rural connectivity in India is, at best, literally a bumpy ride and at worst, non-existent. The players will have to invest heavily in all these support structures.

All these inadequacies can be reasonably assumed to find a reflection in the costs of operations of all players. Thus, higher costs to the end-consumer seems inevitable at least in the short-run, unless the retailer - with deep pockets - decides to bear it all (Highly unlikely, let me add!).

Next comes the biggest challenge of all - winning over the Indian consumer. Wal-Mart or Reliance or anybody else, will find this the most daunting task. Understanding the consumer psychographics and acting on them is a must to succeed. Indians are a discerning lot and cannot be taken for a ride. The footfalls have to be translated into sales. To assume that it is a cake-walk will be like lulling oneself into complacency. It is not to be forgotten that Wal-Mart had bit the dust in countries like Germany and Korea. Biggies like Reliance need to take caution, because this is a new business for them. Players like Shoppers' Stop and the Futures Group too need to tread carefully as they expand into new locations.

As outlined in an earlier post, local mom-and-pop shops are already feeling threatened by organized retailing. News reports suggest that some kirana-wallahs are up in arms against a Reliance store in Ahmedabad. There are also reports that prices of some grocery items are rising as the biggies are doing bulk purchases (As an aside, if that is indeed the case, it calls the bluff of all those who said India is self-sufficient as regards food; is the supply so short as to get exhausted on bulk purchases by someone?).

In my view, organized retail will have the immediate effect on a consumer state like Keralam. Here, very little production takes place and people will be ever-ready to switch over to a lower-cost alternative. What can the kirana-wallah do? A lot, if you ask me.

As with everything else, there is already a trade union for small traders in Keralam, viz. Kerala Vyapari Vyavasayi Ekopana Samiti. It is a cash-rich organisation. It can bring together all its members' shops and give them a new brand identity. With the cash available, it can contribute to sprucing up all the shops and endow them all with some distinctive features. It should try to replicate the operations of organized retailers in procuring materials and thus exploit the scale efficiencies. Quality has to be ensured and a new brand shop can be created. With the right ideas and will, sky is the limit and they can pose a veritable challenge to organized retailers. The office-bearers of the Samiti should realise that unionism is to be used for activities like these and not for downing shutters on every hartal day and on silly grounds!

If this succeeds, it can be replicated in other states too, right?

What a [cruel] way to end 2006!!!

2006-12-31T15:53:00.001+05:30

Yes, I'm talking about the too-cruel-to-be-true-yet-true hanging of Saddam Hussain, former President of Iraq. Well, he may have committed inhuman crimes on his own countrymen, been tyrannical.....yes, yes all charges stand. Yet, the way he has been dealt with - making a mockery of all internationally accepted judicial processes - just doesn't fit with the image the US is trying to project of itself. Alas, 2006 has to end on such a note - where the law of the jungle, an eye for an eye kind of retribution, has taken centrestage! Too sad!!

Hope 2007 will see more of good times......

The retail juggernaut and the hackneyed oppositions

2006-12-05T18:16:00.000+05:30

Finally, Wal-Mart is on its way to India thanks to their tie-up with Bharti. And, so soon after the announcement was made, there have been sporadic verbal protests from the usual cynics, the Left parties, against the 'back-door' entry of Wal-Mart even as they are yet to formally announce their model. Pray, what is the 'back-door' entry these Left are talking about? At present, FDI is allowed in logistics and wholesale business and logically speaking, it's only here that Wal-Mart will focus on. OK, for the sake of argument, we can assume that it will bent the rules once they enter. Is it so easy? Even if it's so, let's cross the bridge when we come to it. Isn't that the right attitude?

Retail industry in India is estimated to be worth Rs 1350000 Crore and organized retail forms just 3 per cent of this figure. Now, any level-headed businessman will be only too keen to make himself present there and this is exactly what people like Mukesh Ambani and Kishore Biyani have done. And, in today's globalised economy, it's not possible to keep out foreigners for a long time, where our home-grown businessmen operate.

One of the arguments against FDI in retail is that it'll spell the death knell to the local kirana (or mom-and-pop) shops. What about home-grown ventures like Reliance Fresh and Spencer's then? This point of argument against FDI would hold equally good for Indian biggies too. It can easily be seen that this argument is simply a manifestation of xenophobia on the part of these people.

OK, what then is the point against organized retail as such? It's the same - that of loss to the local small shops. It's sometime said that local small shops are a form of disguised unemployment. Even if this is true, it's still not a strong point against organized retail.

AFAIK, the shopping malls of today cater only to the upper class and the crème de la crème of the middle class. Shopping in these is a costly affair for those with not-so-deep pockets. As competition intensifies, it will lead to lowering of prices. Lower prices will also result from scale efficiencies and better supply chain management. So, a new set of people will move to these shops. But by then, with the trickle-down effect, those who were hitherto BPL will become the patrons of the local kirana.

In my view, organized retail will prove to be the deliverance for the beleaguered Indian farmer, helping him get a better price for his produce. No longer will Minimum Support Price distort cropping patterns. However, for real benefit to accrue to the farmer, it should be ensured there is no monopoly in the organized retail sector; we need some 9-10 national-level players. Transactions should be between a willing buyer and willing seller.

Local kirana shop's advantages, inter alia, are the one-to-one interaction between the customer and shopkeeper and the credit facility given to regular customers. Big shops will lose out on this count.

Another interesting point (as noted in the Swati CA column of The Hindu BusinessLine of Dec 4, 06) to be taken care of is that, with the lower prices in malls, a sort of arbitrage opportunity will arise, whereby goods bought from there can be taken to nearby villages to be sold at higher prices. Retail markets at the village-level, in the form of 'haats' - probably with government support - should be able to solve this problem.

In my view, even if there are chains of retail shops in Tier I, II and III cities, it will not be a problem for the local small shops. The Indian retail scene is big enough for all.

Does India need an ADB loan now?

2006-11-30T16:50:00.000+05:30

Just the other day came across this piece of news that ADB is going to grant a loan to India, to the tune of around Rs 4500 Cr. It is to help out with the agri-distress and will be disbursed through the co-operative banks. India will have to repay it in 15 years....

Now, I wonder whether this loan is indeed needed. We now have forex reserves in excess of $ 160 bn and our economy too, is clocking good growth rates (9.1% for the first half of 06-07 - news just trickling in), albeit agriculture being the laggard. I believe that we have enough domestic resources to meet all the needs of our poor farmers who are the victims of short-sighted and restrictive policies of the government (More on that in a later post). What we need is an efficient credit delivery system, along with policies that free agri-trade. Here, the problem, as I see it, is the involvement of co-operative banks. Anyone who has some idea of their functioning will testify that it's the place for the cronies and chamchas of corrupt politicians. All the money that will come from the ADB will simply vanish into their pockets! The intended beneficiaries will be left high and dry.

Any reform of agriculture will / should necessarily involve de-politicising the co-operative banks and bringing them under the direct control of the RBI. The dual control of urban co-op banks (1853 of them) - by Registrar of Co-op Societies and the RBI - in vogue today is doing no good.

Pre-IPO private placements

2006-11-26T20:34:00.000+05:30

Just some two days back read a report that Cairn Energy's Indian arm which is planning an IPO soon, has got a portion of its to-be-issued shares placed privately, for a disclosed, of course, amount. A similar pre-IPO private placement was also there for the shares of Reliance Petroleum Ltd, with Chevron. Following this, there was also an update published in newspapers.....My doubt is, is this a really healthy trend? Coz, the price at which these placements are done is known to all (it should be) and doesn't it serve as a signal to the primary market players for the bid price in the book-building process? In other words, isn't the issuer indirectly signaling the price it wants?

SEZs - A new dimension

2006-11-13T16:56:00.000+05:30

A totally new perspective on SEZs can be found in the Nov 13, 06 issue of BusinessWorld.

What this blog isn't

2006-11-10T13:48:00.000+05:30

Since I've posted on the areas I'll explore on this blog, let me also lay down what you can't expect in my blog. Of course, this is not an inflexible list; some of this may change later. Here goes:

Pics, links and such other geeky things that have now come to be taken for granted in any blog. The reason is known to you: I'm not well-versed in HTML!
Scholarly advice. Coz, I'm no scholar!! The primary objective in my starting to blog was, and is, to hone my writing skills. And, that was for a greater purpose; something you can call by the name 'career objective' or something similar! Therefore, most of the things I post here may be repetition of what you've already read. But, for me, it's like testing my writing skills. Critical evaluation (esp. of current economic situation) will take some more time to make its appearance here. Please bear with it.....

Well, I started typing thinking that there will be so many entries in my 'negative list'. Thankfully, there are only two!

Save Vizhinjam Port!

2006-11-07T17:03:00.000+05:30

Today, let me call your attention to the one infrastructure project that can change the face of Keralam and India - Vizhinjam Port.

Vizhinjam is a coastal village near Thiruvananthapuram district. It's a place that has no parallels in the world. Why, you may wonder. Because:

It's the only harbour with a natural depth of 24 m - far in excess of the needs of today's biggest tankers!
It's an all-weather port
It does not need any dredging anytime during its life.
It's as near as near can be to international shipping channels.

Thus, you can see that the Vizhinjam port has a competitive advantage over all other ports in India and the world. If it is commissioned, it will dwarf ports like Dubai, Singapore and Colombo. And, this is the reason, in my reckoning, why this project has been hanging fire for so long! Then there are the parochialist politicians of neighbouring states (read: Tamil Nadu) who will go to any end to scuttle any project that will benefit Keralam. Just a few months ago, the project seemed all set to be implemented with a consortium involving a Chinese company being awarded the contract and then the Central Govt raised the bogey of 'security concerns' and have withheld green signal for the project.

What next? The spineless, self-serving politicians of Keralam came out with some 'empty talk' and now everyone seems to have forgotten it. Now FRAT (Federation of Residents' Associations in Trivandrum) is running a signature campaign to get the project moving. Last heard, businessmen like Anil Ambani and Rajeev Chadrashekhar have evinced interest in the project. It's now up to the State Govt to come out with an alternative plan to get this implemented. In my view, the PPP model a la the Cochin International Airports Ltd. is the way out. The SEZ option should also be checked out.

I hope some action will unfold in the coming days......I hope.....and pray.

My music and movie favs

2006-11-03T15:49:00.000+05:30

I love music and movies.

This is what I'd written in my profile on Orkut.com. Thought I'd remove it from there and put it here...

Music:

A R Rahman - One and Only!!!
And, all fusion music artists

And, if time permits (strictly in this order), Shankar-Ehsaan-Loy, Vishal-Shekhar, Shantanu Moitra, Ilaiyaraja, Deepak Dev, Sandeep Chowta, Harris Jayaraj, Raveendran, RD Burman, MG Radhakrishnan, Himesh Reshammiya, Salim-Suleiman, and Pritam Chakrabarti.

Movies:

Generally, all those with good cinematography and quality story, screenplay and suitable CGs;
Particularly,

All those with AR Rahman's music

All those with cinematography by Ravi K Chandran, Santosh Sivan or RD Rajasekhar

All those starring Aamir Khan, Ajay Devgan, Akshay Kumar, John Abraham, Preity Zinta, Rani Mukherji, Suriya, R Madhavan, Vikram, Kamal Hassan, Mohanlal, Dileep and Meera Jasmine

All those directed by Mani Ratnam, Ashutosh Gowarikar, Rakeysh Mehra, Rajkumar Santoshi, Farhan Akhthar, Rajeev Menon, Gautam Menon, Shankar, Priyadarshan and Fazil

Any of the earlier films from RGV Film Factory - the contrarians

None having anything to do with Mahesh Bhatt, David Dhawan, Yashraj films and Dharma Productions unless any of the conditions from 1 to 4 above is satisfied.

All-time favs (not in order) - The Titanic, The Matrix trilogy, Roja, Lagaan, Swades, Rang De Basanti, Dil Chahta Hai, Lakshya, The Legend of Bhagat Singh, Kaakha Kaakha, Yoddha and Manichitrathazhu.

Happy Birthday, Keralam!!

2006-11-01T20:09:00.000+05:30

The state of Keralam [Kerala, for the international readers; and, 'Keral' for North Indians] turns 50 today. It was on Nov 1, 1956 that this state came into being, as a result of the reorganization of Indian states on linguistic basis by merging the princely states of Travancore-Cochin and the Malabar region. The language was Malayalam. When I look into the past, present and future of my home state, a few points are worth pondering over, I feel.

Swami Vivekananda had once described Keralam as a 'lunatic asylum' which pretty much summed up the social conditions prevailing then. It's a place where the most extreme forms of caste oppression prevailed. Yet, a few enlightened souls like 'Chattambi Swami', 'Sreenarayana Guru' and 'Mannathu Padmanabhan' were successful in reforming the system, of course with the active support of the royals, especially Travancore Kingdom. All these, coupled with the emergence of Communism has since ensured that all social ills were pretty much done away with, at least in the open.

Malayalees are well aware of the benefits education can confer on the individual and the society. The early work of the missionaries, the schools and colleges that were opened up to all by the royalty, and subsequently, by organizations like NSS and SNDP have all had a role in spreading this awareness. The govt.'s policy of letting the private sector into the primary education sector (whether or not by default) also helped. But, of late, this awareness has gone to the extreme levels, with everyone wanting to make their wards engineers / doctors. 'No other career is worth the while' is the general feeling. It does not stop there. All people who take up humanities / arts / commerce are looked down upon, not just by the common man, but even by the top faculty in the respective streams. Being a PG in commerce, this hurts and angers me no end.

Keralam has the unique status of being the first state where Communists came to power through the ballot. Yet, the question remains whether Communism has helped Keralam in a substantial manner? There has been a societal awakening, yes; but it has also resulted in economic backwardness. Communism made people aware of their rights, but none knew about their duties! This is the tragedy in Kerala society. Strikes and lock-outs became commonplace and today, no industry worth a name exists in Kerala. There is a Hindustan Latex and Travancore Titanium in Trivandrum, a FACT (now on the verge of downing shutters) and a Ship-building yard in Kochi.....what else?? Now IT is slowly becoming stronger, but the Communists are wavering on this. There was a time when Communists vehemently opposed computers, saying they led to loss of jobs! And that opposition cost Keralam dearly with neighboring states stealing march over it. Please, for God's sake, let this industry at least thrive on its own.

As for the agri-distress, here also I'll blame the Communists only. Land Reforms is touted as the major achievement of post-independent Kerala. What is the actual ground reality? It has turned the tables on the so-called upper castes. I dare say that the kind of feudalistic practices that still prevail in some other parts of India had been routed by the time Keralam was formed. The landlords here were far more lenient and generous. But, the govt. took their lands and distributed it to the farmers. The erstwhile landlords - 'Janmis', and that includes Brahmins and Nairs - became poor by the day. Not for them, things like reservation. They were left to fend for themselves in an increasingly hostile world around them. As for the people who got the land, for the majority, the holding was too small for viable cultivation. This fragmentation has ultimately led to Keralam being dependent on Tamil Nadu for its food grains and vegetables. Today, Wayanad is in the grip of a severe farm distress and the govt simply does nothing at all! I HATE COMMUNISTS FOR BEING THE PEOPLE BEHIND KERALA'S ECONOMIC BACKWARDNESS.

The decline in job opportunities, as outlined in the preceding para, for the educated youth - mostly upper caste - resulted in their migration to other states and countries. The professional got opportunities in the West. Similarly, the less-educated found a refuge in the Gulf. They have today earned a name for themselves. By God's grace, they have not forgotten their less-fortunate brethren back home. It's the money-orders and DDs that these overseas Mallus religiously send home that avert an economic disaster in Kerala. It's often commented that Malayalees work hard once out of Kerala. It's the flawed socio-economic model that has resulted in this sad state of affairs.

In terms of health-related parameters, Kerala has done a great job. But, there is the need to remove the sense of complacency here and work on the lifestyle diseases that are the new 'talking points' for the vainglorious. If not checked, there is an impending health disaster in terms of access costs and poverty. For personal reasons, I cannot elaborate more on this now.

When I look into the future, I see bright chances for Kerala. First and foremost is its educated youth that is raring to go places and make a mark of their own. The IT sector, if properly nourished, can do wonders. Another important area is the infrastructure sector. The Vizhinjam Port, if made a reality, can change the face of Keralam and India [More on this in another post]. Similarly, the Vallarpadam Terminal and Kannur airport are potential trailblazers. Tourism is another of Kerala's strengths. Its famed inland waterways can be revitalized and this will yield huge dividends [It's said that, in lieu of Palakkad region, the Kanyakumari region had to be given to Tamil Nadu. I still do not understand on what basis this decision was made. Had Kanyakumari been in Kerala, we could have developed it into a hygienic tourist destination. I emphasize 'hygienic' coz it's today one of the worst tourist spots in terms of cleanliness.]. There is an acute need for the right kind of political will to take Keralam to the big league. Will our political masters stop pandering to their own vested interests at least now? Let's pray for that......

How many SEZs? - A Correction

2006-10-30T16:14:00.000+05:30

I got a figure wrong. The estimated revenue loss over the next 5 years from SEZs is put at a staggering Rs 170000 Cr by NIPF.

Now if anyone gets an impression that I'm against SEZs, you're wrong. I'm all for SEZs. Just that we need to go a little slower and soothe the frayed nerves.

How many SEZs?

2006-10-20T18:25:00.000+05:30

How many SEZs? This is a question that's been puzzling me for sometime now. Every other day, a new SEZ is approved. As on October 10, 2006 the no. of SEZs with formal approval is 212 and the ones with in-principle approval, 158. What will it stop with? OK, OK, I agree SEZs are a way forward for the rapid industrialization of our economy (though not the only one, I dare say). The SEZ Act 2005 came into force on February 10, 2006. It is expected to facilitate large flow of foreign and domestic investment to the SEZs, and contribute to improvements in infrastructure and productive capacity, generation of additional economic activity and creation of employment opportunities. The important point is that there is enough flexibility built into the proposed system with respect to labour laws, taxation, etc.

Even before SEZs, we had EOUs, EPZs, (and so many other acronyms) etc. But the SEZ policy, in the lines of the Chinese model, has seen an unprecedented demand. The main incentive this time around is that there are tax breaks for the developers of SEZs as well. Almost all industrial houses worth its name has announced an SEZ. However, it needs to be highlighted that almost all SEZs announced are in states which are already in the forefront of industrial activity in India - Gujarat, Maharashtra, Haryana and Tamil Nadu, to name a few. That raises the question: if the incentives are available to everyone everywhere, why this scramble for the top states? Already the space available in such states is less. Where will the land for SEZs come from? This is one of the sore points - at least to the Left and the so-called activists: will it lead to eviction of farmers from their lands? Yet, the fact remains that only less than 10 SEZs have come into operation; and no farmer has been evicted for SEZs! Only one or two SEZs are proposed on farm lands. But that's enough to raise the hackles of the activists!

Another concern is to do with the fiscal impact of SEZs. The Ministry of Finance estimates that Rs 90000 Cr will be forgone in tax and other incentives. There is also the fear about a real estate scam. As far as I know, the first shot was fired by the RBI. The RBI had this to say on SEZs in its Annual Report for the year 2005-06, “The SEZs are envisaged to act as catalysts for growth. The simplification of the procedures for development, operation and maintenance of the SEZs and the fiscal incentives are expected to spur investment and promote industrial activity. At the same time, there are concerns that the SEZs could aggravate the uneven pattern of development by pulling out resources from less developed areas. Revenue implications of taxation benefits would also need to be factored. The revenue loss for the Government in providing incentives may be justified only if the SEZ units ensure forward and backward linkages with the domestic economy.” It has now advised commercial banks to treat SEZs on par with real estate projects and this will jack up the cost of funds for the parties concerned. Then there is the tussle between Ministry of Finance and Ministry of Commerce. The Left, which is on an all-out effort to woo big industrialists to West Bengal, too has joined the chorus demanding a relook into the SEZ Act.

As always, the absence of a good debate on the stakes involved is badly felt. Now we have two opposing sides: one, which has the activists and the Left which says that SEZs be done away with (well, almost there) and the other, which wants the status quo to be maintained. Some like Business Today (dated October 22, 2006) have ludicrously suggested that SEZs could be India's future metros! Talk of letting your imagination run riot! Not even one year into the implementation of the Act and you're talking of metros.

The bottom-line: As is with almost all acts and policies of govts in India, the SEZ Act too was passed without much thought going into it. The result is that there is absolutely no clarity on anything. The statement of ICICI Bank Chairman KV Kamat is pertinent: he's said that till everything is cleared up, his bank will not be joining the bandwagon of SEZ-financiers.

RDB Reviewed

2006-10-19T15:49:00.000+05:30

This is a review of the Hindi movie 'Rang De Basanti'. I wrote it soon after watching it. Publishing it here for a wider audience.

Rang De Basanti: A Gem

Considered just a movie, RDB is a gem. Everything about it is top class. To start with, the taut screenplay and editing and crisp dialogues. There's is not a single jarring sequence, not a scene that's irrelevant. Kudos to Prasoon Joshi (the scenarist) and the editor. Prasoon Joshi, as you may know, also penned the songs. Remember, he's the man behind many successful ads, like the 'Thanda Matlab Coca Cola', 'Log Chloromint kyun khate hain?' and the latest 'Happy Dent'. Surely, he's a man with multiple talents.
Then there is the cinematography by Binod Pradhan. I'd always thought that Ravi K Chandran was the best DoP in India. But, here's competition for him. The shots are all fantastic, to say the least. The use of sepia tone to show the portions of the documentary was a novel idea. The Digital Intermediate technology is put to the best use here. [Shankar can pick up a lesson or two from this one!]
And, now about the songs. Yes, the songs are special for me, cos it's by ARR. But, the integration of the songs into the narration makes a Himalayan difference - both to the movie and the songs themselves. When I first heard the songs, I'd formed some ideas about each of them, like sad, romantic, chill out, etc. But the songs are given a totally different treatment in the movie. Note that none of the songs have the characters lip-synching the lyrics. Instead, the songs are left to play in the background. This magnifies the intended impact. Also, you may feel that when the narrative goes in one direction, the song goes in another. E.g. 'Khoonchala' during the lathi charge, 'Roobaroo' after the confession, etc. Yet, the impact it leaves you with is phenomenal. Remember, in the usual lathi charge scenes, there'll generally be huge, rising violins and chorus. Look at the similar sequence here. It's a slow one [Khoonchala] with a slight romantic feel to it.
I should also mention the spectacular background score. At various points, it switches from silence to heavy-duty orchestra and takes you to a new world!
With this movie, Rakeysh Mehra has announced his arrival. Yes, his debut was with 'Aks', but to me it seemed to have a lot of violence. RDB is to him what 'Lagaan' is to Ashutosh Gowarikar. I'd say his brilliance is best shown in the scene where the commandoes burst open the door to the studio, where Siddharth and Aamir are chatting jovially. The scene is frozen immediately thereafter and what you hear are the gun shots. You watch with a heavy heart....
Rakeysh has successfully extracted the best performance from his cast and crew. The leading ones, Aamir, Siddharth, Sharman Joshi, Kunal Kapoor, Atul Kulkarni, Madhavan, Soha and even the debutante Alice Patten have all given their best. Now, imagine Shah Rukh instead of Madhavan and Hrithik instead of Siddharth....yes, they were the ones first offered these roles! Had they accepted it then, RDB wouldn't have been RDB! It'd have been crushed by the weight of these stars. Not that they aren't good performers, but they do not have the flexibility like Aamir to get into the skin of these characters....

That was about the movie as such. What about the message it tries to send out? If you recall, in recent times, there were a few movies which tried to convey a similar message, like Yuva, Swades, Anniyan, Hazaron Khwahishen Aisi, etc. But none of them succeeds like RDB in etching the message of 'Wake Up!' firmly in the minds of the viewers. Whereas Yuva and Swades seemed preachy at times, Anniyan's gloss and other aspects were distractions. I haven't seen 'Hazaron...' to comment on it. In my view, the key factor behind this success of RDB is the way it juxtaposed the past with present. It tells you that what happens today is just a replay of the yesterday. In other words, History Repeats Because You Failed To Learn The Lesson The First Time.
There's so much we, the youth, can do for our country. Violence, it may seem, is the answer. It's NOT. Instead, like Madhavan's character says, you can join the military, civil service...To expand that, let me add that being sincere in whatever you do makes the difference. And, don't forget about the down-trodden. Look at what the richest man in India Azim Premji is doing for them through his 'Azim Premji Foundation'. Look at the Murthys, the Tatas...whatever little community service you can do, do it...Let's make this country the Heaven on Earth.

Union Budget 06-07: A Review

2006-10-19T15:37:00.000+05:30

This is an article I wrote a few months back, on the Union Budget 2006-07. Thought I need to let it have some fresh air, after getting suffocated in my Hard Disk a tad too long!

Union Budget 2006: A Case of Missed Bus?

The Finance Minister Mr P Chidambaram presented the Union Budget for the fiscal 2006-07 on February 28, 2006. Reams have already been written on it and it has been dissected and discussed at length on various fora. Almost all are of the opinion that the FM played it safe. However at least a few have expressed the view that the budget left much to be desired.
Today the Indian economy is in a state of flux. All the sectors are doing well with the result that the economy grew at 8.1%, but there are pockets of poverty and there are incidents of farmer suicides. In this context, the general expectation was that the FM would initiate a host of measures to set right the anomalies. Of course, in the present-day market economy, the government does not enjoy the kind of flexibility to influence the economy the way it used to prior to 1990s. In FM’s own words, the days of ‘Big-Bang’ budgets are over. However, there are a few things that the FM left hanging in the air and this article takes a look at a few of them. This is not to gloss over the positives like the efficient fiscal management which has seen the fiscal deficit down to 3.8% of GDP and increased outlay to social sectors.
First of all, though there were no new taxes or levies, the hike in Service Tax to 12% (in effect, 12.24% including education cess) is sure to pinch – to use UPA Government’s pet term – ‘aam aadmi’. This is an increase that will be felt across the board as it is an indirect tax. The minister has failed to give any convincing reason for the hike. Again, the withdrawal of the exemption given to BPO units – they have provided jobs to many an educated youth – from service tax is really surprising. The FM seems to have forgotten that the low cost of BPO services in India is one of its core competencies. If this cost advantage disappears, the day China and Philippines come up to the expectations vis-à-vis quality, the BPO industry in India will go bust, unless of course, it gets a domestic clientele.
Another provision that has caused resentment is the increase in Minimum Alternate Tax (MAT) to 10%. There was no justification for this either, primarily because MAT in itself is a sort of penalty for efficient tax planning. [MAT was introduced to tax zero-tax companies i.e., those which had book profits but no taxable income because they availed of the various deductions and exemptions in the Income Tax Act]. The minister should have given serious consideration to the Kelkar Committee recommendations relating to doing away with all deductions and exemptions in the Income Tax Act. The continuation of Banking Cash Transaction Tax (BCCT) is another sore point because it sort of amounts to double tax.
The global crude prices are galloping and the partial pass through of these high prices has seen the oil companies sinking into the red (notwithstanding the views that some of the loss is notional). It was expected that the budget would provide a roadmap for reforms in petro-products taxation, especially a provision for moving over to quantity-specific duty from the present ad valorem structure. That was not to be. Not only that, even the Rangarajan Committee recommendations (on reforms in petro-pricing) were given a go-by!! Had these recommendations been acted upon, it’d have provided some respite to the ‘aam aadmi’. The reasons for inaction on this front is not far to seek. Successive Finance Ministers and state governments have viewed petro products as their milch-cow, with the result that India probably will be the only country where duties on a product exceed its cost of manufacture. Again, at a time when the Central Sales Tax (CST) is to be phased out (with the introduction of State-level VAT), the FM has sought to use it to control the price of LPG, by making it a ‘declared’ good under the CST. Surprising, to say the least!!
Just a few days before the budget, there was a revolutionary recommendation by an MPs’ Panel (on Widening Tax Base) for bringing agriculture income under the tax net. It will be worthwhile to recall that the Committee on Agricultural Taxation headed by Dr K N Raj suggested back in 1975 that the agricultural income of landholding classes should be taxed. Till date, the formula given by him is used to club agriculture and non-agriculture income under the provisions of the Income-Tax Act, 1961 in order to calculate tax liabilities of a farmer (subject to fulfillment of a few conditions). Surely, it is high time farm income is taxed in its entirety. In the present-day set up, we cannot subsidize one sector (agriculture) at the cost of two other sectors (industry and services). It goes against the principles of equity. But, it is to be seen how the legislation for bringing farm income under the tax net will see the light of the day overcoming the lobbying of rich rural farmers.
Many international and national economists and other commentators have lamented the infrastructure bottlenecks in India. The Jawaharlal Nehru Urban Renewal Mission (why do we always need a long dead Prime Minister’s name for any project?) and Bharat Nirman Project notwithstanding, the FM failed to give a significant push to infrastructure projects underway. On top of it all, he withdrew the exemption u/s 10(23G) of the Income Tax Act, which was available to income of infrastructure capital fund/company. This is a set back to many an infrastructure company because it’ll jack up the cost of funds for them.
To cut a long story short, though the time was apt for the FM to unleash a host of reforms to accelerate the pace of growth, he missed the proverbial bus. However, the stock markets have continued their bull run, prompting many to comment that the absence of any major negatives in the budget is itself a great positive. To what extent stock markets reflect the real state of the economy is in itself a debatable issue. The imminent elections in five states and the constant barking by the Left (which dare not bite, at least till the UPA Government’s completion of two years in office as only then the MPs will be eligible for lifelong pension!) probably played high on the mind of the FM. And, he has done a dexterous balancing act, by including so many ‘feel-good’ measures that the likely-contentious issues got swept under the rug. In fact, the Union Budget 2006-07 is an example for the saying that ‘Good Economics and Good Politics do not go together.’

Kochi - Growth out of control

2006-10-16T14:30:00.000+05:30

Been to Kochi for taking an exam. That trip afforded me an opportunity to see the 'growth face' of the city. Truly awesome, I should say, especially about the high rises coming up in the vicinity of Marine Drive. Of course, the city will still be a minnow in comparison with the other big cities in India and abroad [since I've not been to such cities, for the time being, Kochi is The Metropolis for me]; yet, it has the potential to rival biggies like Bangalore and Mumbai. It is the only landing site in India for two undersea communication network cables. The proposed Vallarpadam terminal can blaze a trail for the shipping industry. For all this and much more to take place - and that is the point I want to raise in this post - proper planning is absolutely essential. That is exactly what Kochi lacks today.

The city today is growing not because of any governmental action; it's growing on its own. A lot of plans and proposals are announced by the authorities almost on a daily basis. But, no follow-up action is taken on any of these. A case in point is the bus terminal proposed at Vyttila. Due to opposition from the agriculture department of the state govt., it has been held up. Another grouse is with regard to the traffic; the roads need widening for it to ease. There is the need for a couple of fly-overs at key points. It's high time a Mass Rapid Transport System - a metro rail or a sky bus - is introduced there. There is still a lot of confusion about the rail-road connectivity to Vallarpadam. There are many more such cases, but the bottom line is that if there's no proper urban development planning, we'll only end up choking the city's development down the line.

The GCDA can take a leaf out of what's currently happening in Thiruvananthapuram. About 42 kms of roads in the city is being developed / widened and the contract has been given to Punj Loyd Ltd. How efficiently are they going about the job! Their work is mostly done at night, without causing much inconvenience to the city residents. I'm not saying that the TRIDA is matching this efficiency of the company, but the buzz is that 'something is happening', which is a good feeling. Way to go, Kochi and way to go, Thiruvananthapuram!

Banning Child Labour: Will it work?

2006-10-12T13:28:00.000+05:30

So, the government has banned child labour in India. A good action; in fact, one to be lauded by all. But, I wonder whether any real thought has actually gone into this decision being made. What will happen to those children who suddenly find themselves with no income to take home? Send them to schools and provide them with food via the mid-day food programme, say the activists. Pray, where are good schools? How many government schools have proper infrastructure? How many teachers don’t play truant? What books, let alone other learning aids, do we have to give to these children?

It’s common knowledge that primary and secondary education in India is in shambles. But, we have the institutes of higher learning to focus our attention on, right – like the IIMs and IITs, where if reservation is not made applicable, the heavens will fall?

A write-up in The Hindu says eradication of poverty is not a pre-requisite for banning child labour and quotes the example of Kerala. The writer forgets that Kerala is a different ball game altogether. The people in Kerala are aware of the benefits education can bestow on their children and take great pains to send their children to the best ‘English Medium Schools’ they can afford, even overlooking the nearby government school. Such high levels of awareness are not there among the people of any other state in India. Until such awareness is created, banning child labour will only see more children out on the streets.

What this blog is about

2006-10-08T12:46:00.000+05:30

I'd wanted to start blogging in 2003 itself, but kept holding back myself coz I wasn't sure how I wanted to go about it. Another reason was the time constraint [which is there still now, but I'm taking lessons in time management ;)] and yet another was my ignorance of HTML. No, I've not mastered HTML yet, but then how long can someone hold back one's inner urge to give expression and an outlet to one's thinking and feelings about things around him?

Yes, as I'd said in my first post, I'll blog - about things I have a view / opinion about. The following are the likely areas that I'll cover in this sojourn of the Blogosphere:

Indian Economy & Current Affairs
Movies - Malayalam, Hindi, Tamil, English.
Indian Socio-political trends
Lifestyle trends
Music - generally film music of the above-mentioned languages and particularly ARR's

May be I'll have an audience...may be not...but I'll have the satisfaction of letting my views into the open..

Wishing myself all the very best!!!

Testing

2006-10-06T16:30:00.000+05:30

Just to test...

Manoj...in Blogosphere!

2006-10-06T16:04:00.000+05:30

Thus, egged on by a friend, I'm setting my foot into Blogosphere. This blog will serve as the point to give vent to what I feel about the things around me....It could be about anything and everything.
Owing to time and other resource constraints, I do not think I'll be posting regularly here, at least in the beginning....Still, this is an attempt and let me see what comes of this effort of mine....