Skip to main content

Posts

Showing posts from 2011

Business No Longer As Usual

My Singapore-based economist friend put the whole corruption issue in an economic perspective. "Indian systems and structures have always been geared to manage the Hindu rate of growth – 3.5% between the 1950s to 1980s. What you are seeing is the inability to cope with 9% plus growth, economically, socially and politically.”

Well. More and more bigwigs are being chargesheeted and going to jail on charges of corruption. Unfortunately, many of us believe they will somehow extricate themselves, using money, influence or both. I will come to that in a moment. Lets take a look at Tihar’s well-heeled jailbirds. Presently, they range from accused in telecom spectrum allocation to Delhi’s Commonwealth Games (CWG) scandals.

There are four kinds of people in from the abovementioned crop. The first is founders of organisations, like realtors Shahid Balwa of DB Corp and Sanjay Chandra of Unitech. To understand their wealth in perspective, Shahid Balwa apparently asked Central Bureau of Inv…

The Devil That Is Corruption

The devil is in the detail, goes the old but appropriate cliche. It could apply to the reading of a contract or the framing of a cohesive strategy to combat corruption. Its the latter or the immediate lack of it that worries me. To the extent that we expect this television and social media fuelled movement to go to a next, logical phase.

We are basking in a post World Cup cricket victory glow. A well-timed Anna Hazare anti-corruption campaign appears to have satiated our innate desires for another win. After beating Pakistan and Sri Lanka, surely a corrupt politician was small change. Question is can we now prevent the movement from being a one-day win just like its cricketing predecessor.

At the outset its not easy. I believe corruption affects us worst in our immediate vicinity, in our day to day lives. A 2G telecom scam revolts us but only because it deeply affects our sense of values and the context we see ourselves as a democracy. Beyond that, what price Government-owned telecom …

The Zone

I was watching Indian captain MS Dhoni's eyes when he hit the sixer that catapulted India to victory at the ICC Cricket World Cup 2011 on Saturday night. Only someone with numbing focus and meditative concentration, oblivious to the utter mayhem and cacophony all around, can play a shot like that. It was the definitive, you-guys-can-take-this stroke from a cricketer wanting to leave a permanent stamp on the game.

To be fair, many such definitive shots have been played, match winning and otherwise. But it was one of the few I would categorize as belonging to The Zone. Spiritual expert Jaya Row who once defined the Zone to me. "Its your ability to disconnect totally from the world outside and be in total control of your mind and body for that moment," she had told me.

I have always wondered about the role of spirituality (secular) in our lives. Ms Row, a Vedanta expert, defined ita appropriately. "Think of Sachin Tendulkar when he is facing a bowler. Look at his face…

My Way Or No Way

(Daily Mail pic showing former British PM Gordon Brown)

In India, this is something we are used to and used to giving in, almost as we would bow to kings and queens in medieval times. With citizens of other democracies, the reaction can be a little different.

Former British Prime Minister Gordon Brown came under fire after his entourage tried to bump a heavily pregnant woman from business class on an international flight. It happened at Oman, when passengers on a British Airways flight were told they would have to move to a lower class because of an `overbooking' problem'. The story appeared on Daily Mail but strangely cannot be found on the newspaper's website anymore, at least when I last checked !

The pregnant woman's husband moved from business to premium economy and other passengers from premium economy were moved to economy and some, apparently off the flight altogether. The story came to light because the woman, seven months pregnant, refused to budge. She als…

Buffett Lesson: Unite In Philanthropy

Warren Buffett came to India. The closest I came to him is when my aircraft passed his (parked) private jet in Bangalore last week. Of course I was flying commercial. Thanks to a fairly trying schedule involving four cities in as many days I missed most of the media coverage surrounding his India visit. Which means, by deduction, I missed most of media too.

So why did we get so excited about Warren Buffet ? So one reason is the obvious one. He is the Sage Of Omaha. He is the most valued value investor. And for all the wealth his firm Berkshire Hathway generates, he himself lives the life of, well, a sage. Its perhaps the failing of my current assignment (or boon ?) that I only have time to browse a few reports and not take the full blast. It was in this context that I read T N Ninan's piece in Business Standard. I think it beautifully sums up the Sage's wisdom.

The second reason is the reason he came here. To invite India's rich (add recently rich) to part with their billi…

The Real Fear Of Flying

I have been mostly on the road for the last three weeks. Which means catching flights of various shapes, sizes and of course pilots. I am worried. Because neither the airline, India's regulatory body (Director General of Civil Aviation) seem to know whether the pilots flying the aircraft have earned their licenses honestly and didn't forge their tests. And till some 4,500 licenses are fully scanned, we will entrust our lives to pilots whose credentials are not re-established.

I was reading an insightful piece in the Business Standard which talks about how the pilots forged critical components of the tests required to become certified pilots. For instance, most of the now suspended pilots flunked papers on aviation meteorology, radio aids and air nagivation. How this escaped everyone's attention is a little bit of a mystery. Or not.

The matter picked up steam when the DGCA ordered an inquiry into an improper landing in January (on the nosewheel) by a pilot who, amazingly, …

The Forgotten Debates On Nuclear Power: Circa 2007

Three years ago, I wrote two articles for the Business Standard newspaper. The first, which appeared on October 30, 2007 was called, 'Dump Nuclear Energy For Renewables'. The second, called The Staggering Cost of Nuclear Power appeared three weeks later on November 17.

I am reproducing both articles because I am even more convinced now. Not because of the safety issues that Japan's earthquake has highlighted but the fundamental problems with setting up nuclear power plants that we haven't fully understood, or debated. Actually, I am quite amazed myself how little or nothing has changed. Including the fact that Kudankulam, which I refer to here, is yet to go on stream. Or is finally promised to go live now.

DUMP NUCLEAR ENERGY FOR RENEWABLES

Govindraj Ethiraj / New Delhi October 30, 2007

I visited the Nuclear Power Corporation’s Kudankulam installation, 25 km west of Kanyakumari, two years ago on a dazzlingly clear day. On paper, the project was impressive — 2,000 Mw of f…

Can Social Media Survive ?

Well that's the question many have asked already. The problem is not in social media's utility, its in the revenue model. Which again many have alluded to, particularly in reference to the $50 billion valuation figure placed on Facebook.  I was part of an interesting discussion last week in New Delhi where consulting firm Deloitte presented its Technology, Media & Telecommunications (TMT) predictions for 2011.

Usually, I find such predictions lacking in the kind of leap of faith which make them predictions to start with. I found this set a health departure. For two reasons. First, Deloitte says (among other things) firmly that social media is yet to become a real force, in revenue terms. For one,  advertising spend on social media  is still 1% of total advertising spend. Total advertising revenues for 2011 are  predicted at $4 bn for social media, a small amount compared to the investments perhaps going in. And surely the euphoria.

Second, television continues to grow furi…

The 1 Cee R Club

This morning's papers tell me that the residents of Chandigarh  are willing to `shell out as much as Rs 1 crore (twice the actual cost) to own a two-bedroom flat.' And this is a state government-run development ( Chandigarh Housing Board). So while it might be a competent build, it might not have the bells and whistles private developers throw in.

This is not to say the residents of Chandigarh cannot afford Rs 1 crore ($210,000) apartments, particularly for a Housing Board construction. Sure they can. A realtor taking me around in a distant north Mumbai suburb last  weekend told  to forget thinking about buying a good place if I had less than 1 Cee R in my pocket. What he meant is Rs 1 crore . The realtors/brokers say `Cee R', because they think its respectful  in case you don't belong to this exclusive club. Thankfully, the family was looking for a place to rent and not to buy.

The latest Economist has an interesting survey called Bricks & Slaughter, arguing that wh…

Why I Worry About Food Channels

A confession. This is less about a mid-day chef shootout amidst howling spectators and more about food, the kind that most of India finds it difficult to source daily. There are many indicators to measure governance. Usually, its access to food, shelter and clothing to start with. Then education, healthcare and infrastructure. In a country where elections are often lost on food in general and onions in specific, lets look on food.

Here is a table that I have taken from Time Magazine that's self explanatory.  It highlights  percentage of total household consumption expenditure  towards food.

Country                         % Of Income On Food

United States                                          7

United Kingdom                                       9

Australia                                                 11

Brazil                                                       25

China                                                       33

India                                                …

The Bollywood Formula Guide To Understanding Union Budgets

This one failed to deliver a Big Idea. Most annual  Budget exercises in India  actually don't.  Usually, they are  a combination of four or five  factors  in no particular order. And almost forumalic, like Bollywood cinema. Sixteen reels make a film, of which 6 reels must be songs, 2 reels must have action sequences and so on. Figures are approximate and you should allow for evolving social mores. Ditto with Union Budget exercises. Needless to add, the  formula will vary depending on the evolving political situations, among others.

So I thought I would look at this annual ritual (and shine the proverbial spotlight) from five  vantage points rather than embark on a deep economic analysis which no one (including self) would follow. And submit that you could use the same five  factors next year too.

1. Plumbing

Where existing policies are cleaned up, given finer shape and  initiatives  discussed in closed loops are showcased for mass viewing. Importantly, promises  are presented afresh,…

Invest Here Or The French Alps: Can Union Budget 2011 Fix ?

Ms Artha Property Real Estate  Services has today advertised luxury apartments starting at  Rs 1 crore (approx $220,000) in today's newspaper. If you live in any of the four or five big cities, you must be reaching for your cheque book. I almost did. Hold on. These properties are not in Gurgaon, Noida, Bandra or Andheri. Actually, perish that thought. These  properties, we are told, happen to be  in the French Alps (Viry). Oh, that's just  10 km from Geneva.

The  luxury apartments advertised range from 470 square feet to 870 square feet + balconies. Of course, 75% finance is available (from a Swiss Bank I would think) at 3.4% interest and monthly EMIs are lower than Rs 20,000. And  Ms Artha Property promises that possession is April 2013. Now that concerns me. But site visits are promised in March, so reckon you can go see for yourself. Which is doing better than many folks I know who bought properties without seeing anything in Mumbai. And they still are'nt seeing anything…

What If Oil Hits $200

I remember asking then Finance Minister  and now Union Home Minister P Chidambaram what would happen to India's economy if oil went to $200 a barrel as was being widely predicted towards end 2008. Since it was already $147 a barrel, that figure didn't seem impossible.

Modern history  was of course kinder to us. Not only did oil prices plummet, it brought down everything with it, including the global financial system. Actually, it was the other way round but, as many would argue, though it really does not matter.

Tensions in the middle east have pushed oil prices to $106 a barrel and analysts, I read in some reports, are predicting a return to the $147 regime. Perhaps that what oil speculators are waiting for and in some ways prepared for. The modus operandi is the same, the circumstances are different. This time its Gaddafi we are worried about. Last time it was Wall Street.

Fruits Of Growth

The Government here says the  key priorities for 2011-12 are controlling inflation, protec…

What The PM Should Have Done

I read, from the weekend newspapers, that a 90-minute interaction between the prime minister and television journalists last week didn't go too well for the former. Going by reports, Prime Minister Manmohan Singh  ducked questions and was not assertive enough. Though, as has  been amply pointed out by the few who know him and many who do not, I have never known him to be assertive.

The problem lies elsewhere. When someone invites you to an interaction of this nature, you presume he or she has a message to deliver. A politician in power has the luxury, some might say, of calling you over and then responding to questions that are uppermost on the mind, your's  mostly rather than his or hers.  Of course, politicians know only too well that media tends to pounce on them on issues uppermost on their  mind - the  agenda be damned.

So, its a Catch 22 of sorts. Do you, the politician, come prepared with a  thought out,  strategically important, introductory message that allows you to se…

Indian Venture Capital: Funding The Billions

Luis Miranda, presently Chairman of IDFC Equity and Sumir Chadha, presently MD of Sequoia Capital are veteran Indian venture capitalists. Both have been around for more than a decade. Both have `discovered' and nurtured entrepreneurs in different spaces. Luis can claim some credit for the initial success of infrastructure groups like GMR and Sumir, the likes of Cafe Coffee Day, JustDial and Carzonrent..which tells you something about the diversity.

Both were part of a panel discussion I was moderating last night at the VC Circle's  Limited Partners Summit  at the JW Marriott in Mumbai. We went through a brief history of  investing, including the challenges posed by  volatile markets and staying the course. Both admitted that the learnings had been tremendous, investments had gone wrong as had, more importantly, their judgement of some of the entrepreneurs behind  the ventures. The good news was that there seemed to be more rights than wrongs.

The discussion was wide ranging but …

Financial Inclusion Begins @Home

Out of personal curiousity and professional interest, I am constantly in conversation with the banking and financial system  trying to understand how they can (and will) play a greater role in spreading financial inclusion in India. While its fairly clear that financial inclusion does not end with opening a bank account, its a very important start because close to 70% of India's population does not even have bank accounts.

The Ministry of Finance, along with the Indian Banks Association has just  launched the  Swabhimaan initiative, aimed at taking banking to some 73,000 villages having a population of 2,000 by March 2012. Electronic banking (at least technologically) is now  accessible by most people in and parts of India. Combine this with the mobility of identity through the Unique Identitification Authority of India (UIDAIs) Aadhaar project and  someone who has been out of the system for all his or her life will now become part of it. And there are other benefits, like subsidy …

China Beats India On Black Money And Yet..

An economist from Washington-based think tank Global Financial Integrity (GFI) quoted in the Business Standard today says India lost $213 billion in illegal flow of money out of the country between 1948 and 2008. That would presently be worth $462 billion, assuming standard rates of return - all money should earn returns, shouldn't it  ? The other oft-quoted figure for black money stashed overseas  is $1.4 trillion.

The economist, Dev Kar, has an interesting point. He says that faster rates of growth in the post reform period have not been inclusive in that the income distribution is more skewed today, which in turn has driven illicit flows from the country. Thus, the result does not hold in the pre-reform period when growth rates were low and income distribution was more equitable.

This is an interesting point. And not surprising in some ways. All you have to look at China which has grown at 10% or thereabouts for some 30 years ! And leads the league tables for illicit outflows. Th…

China Railway Comes Closer, To India

Three months ago, I argued in an article that China's railway lines were inching towards the Indian border. The argument was of course based on reports of China's own plans to expand its railway network in the Tibet.

I also argued that towns like Tibetan towns like Nyangtri  (Nyingchi)  - which will eventually link to Lhasa - already boasted  swank airports. So, infrastructure investment had already flowed liberally into the region. The  railway line was following the initial thrust, not preceding, as would historically have been the case.

The Indian Express today reports with greater finality that China is to extend its Tibet railway network into the Chumbi valley area, next to Sikkim and the Siliguri corridor. The newspaper says the  China's Railway Ministry latest map shows lines extending from Lhasa to  Zangmu on the Nepal border, to eventually extend into Nepal and even Kathmandu. Another line will branch out midway at Shigatse, and end up at Yadong, which is on the oth…