Musings on new FY

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?

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!

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

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!!//