28th February

Get Real

The article talks about the recent incentives the Commerce Minister, Kamal Nath, has given on the wake of weakening exports but the real effort has to be put somewhere else which is gravely overlooked.

After the Finance Minister, Pranab Mukharjee, it was the turn of Commerce Minister Kamal Nath to provide his set of stimulus. Although the world trade declines for the first time after 1982, and govt missing its target of $200b exports for 2008-09, the minister retained the export target of $200b for the coming year. However, the hands were tight because of less fiscal space and 10% plus fiscal deficit of Centre alone. Most of the measures were non-fiscal like reduction of 2% in customs duty under Export Promotion Capital Goods (EPCG) and special incentive of Rs. 325 crore for sectors like handmade carpets, technical textiles and leather from April 1. Benefits under Duty Entitlement Pass Book (DEPB) can now be availed without realization of export proceeds. A person from gems and jewellery units can personally carry imported gold of up to 10kg. Duty of fulfilling obligations under EPCG scheme for sops availed during 2008-09 has been extended till 2009-10.

However, the real problem lies in the transaction costs where India lags behind its competitors. Improvement is needed in the cumbersome and time consuming procedures since exports is function of global economy and such short term prognosis wouldn’t help much.

Raising the bottom billion

The article talks about the benefits of building manufacturing facilities in the least developed nations and how this would help not only in eradicating the poverty in these nations but also help the developed world to fight recession. 

The latest UN Industrial Development Organization said that increased and sustained industrial development is the only way out of poverty for the poorest nations of the world. It suggested to make a list of “least industrialized nations” and to provide them trade preferences within the WTO framework. What is needed for the developed countries is to provide them technical assistance, establish manufacturing bases there and provide these nations a greater market access. More then the market access, what is necessary is to guide these nations about the right product to produce, meet the international quality and safety standards and upgrade the skills of people. Products from these developing countries would help raise the living standards in developed countries. More importantly as these developing countries grow the domestic demand of products and services from such countries would help minimize the impact of recession on the world. 

What is needed for the poor nations is to work together to ensure that the benefits of their resources not only reach to the people who control it, governments and private parties, but also to the people down the stream, what we call as “bottom billion”. Incentivizing investment in manufacturing activities is the best measure to do that.

The thrill of crime

The article talks about never ending charisma of Agatha Christie, one of the most translated writers in the world as her home turns into a tourist attraction after the $7.8m restoration by British National Trust.

Agatha Christie is one of the most translated writers in the history with 5,724 translations across all the continents as per Index Translatonium, the international bibliography of 1.8 million translations published in most UNESCO member nations. This speaks volumes about her persona and charisma. Even in India, our former Speaker Purno Sangma has named two of his daughters Agatha and Christy, one of which is the youngest MPs in this Lok Sabha. In September 2008, some 27 tapes of her surfaced in her country home, Greenways, which answered many questions like why her two greatest detective characters, Miss Marple and Hercule Poirot, never met in a single story. Greenways was finally opened to public after the $7.8 million restoration by British National Trust and attracts around 600 visitors daily during peak summer. She never wrote a single book there but three novels and two murders are set in there. 

Besides the murder mystery tours and theme events, it also allows visitors to rent rooms for $3600 per week and dine on Christie’s favorite meal of lobster along with Blackberry ice-cream. What else an ardent Christie fan would want? 

27th February

Obama’s protectionism

The article comments on Obama’s present level of protectionism which is reflected from his speech in his first speech to the joint session of US Congress. However, if the depression is prolonged, author feels that the protectionism may shift from low to medium.

The decision to withdraw tax breaks from US companies shipping job abroad has brought Indian exporters in a fix since no details have been mentioned. US media rather focused on his speech that focused on raising taxes, increasing healthcare and recapitalizing banks. Tax breaks given to the companies having subsidiaries abroad would encourage repatriation of the profits which was earlier not done to avoid double taxation of 35%. Although restrictions on H1B visa would affect India marginally, much worse would be stopping US companies from off shoring itself. Companies that do not outsource remain uncompetitive and die eventually which is self-destroying strategy. Politicians in US should differentiate companies that ship the job abroad and those 1000+ companies who have operations abroad. 

However, Obama dare not support outsourcing at the time of recession. At the same time Treasury Secretary Summers, who very well knows the implications Smoot-Hawley Act had during the Great Depression of 1930s, should prevent Obama from getting into the protectionist mode. However, if the depression continues, he might get into medium protectionist mode from low.

Sharifs disqualified

The article expresses apprehensions over the recent events that have unfolded in Pakistan which is once again giving rise to instability in the Pakistani politics.

Disqualification of Nawaz Sharif by SC in Pakistan to contest elections has added to rising instability. When the country is already in a fix on national security and economic front, this disqualification of PML (Pakistan Muslim League) leaders comes as another jolt. The disqualification is also the result of Zardari’s to establish control over Punjab even as the popular mandate in the province is of PML. The demand of Nawaz Sharif to restore the judges sacked by Parvez Musharraf renders the National Reconciliation Ordinance, a barter agreement between Late Benazir Bhutto, Zardari and Parvez Musharraf for the secure entry into politics of the former two, invalid.

The disqualification would only intensify Sharif’s demand for the restoration of judges and may even collate with anti-Zardari and anti-US movements. It will only add to the political turbulence and Zardari might end up damaging PPP, the only national party and a quasi-progressive democratic force in Pakistan.

Fine art of looting

The article expresses concern for the increasing difficulties on reclaiming the lost National artifacts by several countries across the world.

The most recent case being that of failure of a Chinese Group in reclaiming the two bronze artifacts looted by Anglo-French forces from the Imperial summer palace in Yuanmingyuan during the Second Opium War in 1860. Not only the Chinese group was denied the claim but they were fined with €1000 each as costs. This leads to serious implications in future. There are many other cases across the world which involves forceful possession of other country’s artifacts. The most famous being possession of “Elgin Marbles” or the priceless statues and architectural motifs from Acropolis in Athens, by the British ambassador between 1801 and 1812 and send to the Ottoman Empire, Lord Elgin. Several possessions of India origin are also currently at various places across the world. 

However, in the current scenario it is becoming all the more difficult to get the National treasures back to their original place. The only resort is to buy them back like Danilov Monastery bells which were bought back from Harvard University by the Russian billionaire Viktor Vekselberg last year. For India, it will have to let go the duty levied on the historic items if it want to follow the suit.

26th February

No easy answers

The article tries to explain the pros and cons of presence of foreign banks in the country and any decision regarding their presence should be based on the cost-benefit tradeoff rather then any populist belief.

Recently, the chief economic advisor to the finance ministry, Arvind Virmani, stated that opening of banking sector to foreign players is not the area currently under focus. The step seems very pragmatic in the current scenario where some of the biggest names in the West have failed or on the verge of nationalization. But RBI was severely criticized for its conservative approach by the free-market fundamentalists prior to crisis. Two months are left for the April deadline of the review of roadmap and there are no easy answers about the roadmap RBI should look for in future. While foreign banks have advantages like high financial intermediation, low cost of financial services and reduced solvency risks, they also bring in disadvantages in terms of increased credit risk and potential for capital flow volatility and cross border contagion. Besides this, there are other pros and cons of large presence of foreign banks. 

Thus, presence of foreign banks is a mixed blessing as concluded by the recent BIS conference paper. So, when the government decides for the future roadmap for the foreign banks in India it should be based on the cost-benefit trade-off.

Step up hydel power

The article talks about the merits of stepping up the medium hydel power stations on a large scale to harness the potential it has to solve the energy problems of the country. It advocates for a proactive policy for setting up several medium-capacity hydel plants.

Medium scale hydro-electric plants have several benefits like flood control, shorter gestation period and provide environmentally benign energy at very low marginal costs. They have 95% efficiency in converting the kinetic energy of water into the electrical energy. There is also a need to improve the hydel:thermal mix in the power generated in India. Hydel power stations have an ability to improve power system reliability and the generation cost, besides being inflation proof, declines along with time. However, still the hydel:thermal ratio is low which is why the NHPC-OHPC tie-up is a welcome step. Currently the medium hydel projects fall between two stools namely small-mini-micro hydel projects that enjoy high financial support while the large hydel projects in the North-East are viable and enjoy fiscal benefits. 

The medium hydel power projects are an attractive investment proposition since the national policy mentions that 56 sites for pumped storage schemes with potential capacity of 94k MW have been identified and only a tiny fraction of that has been harnessed. Thus, it is a time for some proactive policy.

Gastronomic Racism?

The article talks about the recent ban on foreign cuisine restaurants imposed by the centre-right coalition in the Italian city of Lucca near Florence and advocates openness to other flavors as the world diet becomes multinational in nature.

Rightly said by the left-wingers in Italy as Gastronomic Racism, mushrooming foreign cuisines is inevitable since the average diet of family all over the world is becoming multinational. But the situation becomes hard when the local cuisines feel that the “foreign” ones are swamping them. But the question here is that is it culpable to demand for a foreign cuisine anywhere in the world. The problem is that the economic downturn has forced people to buy “local” and also exposed the boom-inspired tendency of sellers of local cuisine to overprice their culinary offering and thereby enhancing the demand for inexpensive “foreign” options. 

However, what’s needed for Lucca’s leaders is to check the pricelist and quality of local restaurants and for rest of the world to look at the foreign influences in their own cuisine and be open to other flavors when travelling.

25th February

The right cut

The article welcomes Pranab Mukharjee’s decision to issue 2% cuts in the service tax and excise duty since the step was very much necessary to boost the ailing economy. The article also explains the political correctness of the step.

Although the cut would create an additional hole of Rs. 30k crores in the government revenue and put more pressure on the already burgeoning fiscal deficit but extraordinary circumstances demand extraordinary measures. With this rate cut the total relaxation in the form of indirect-tax cuts would reach Rs. 70k crores which is 1.5% of GDP. However, the present government had very few options to provide the boost since the general elections are on the way and the new government would be taking more measures to boost the economy further. Boost through cuts in direct taxes would require Parliamentary approval and provide the Congress allies a chance to bargain in the election time. Thus, indirect taxes are the safest bet.

Now the ball in central bank’s court to play some good game with monetary policy in the months to come as inflation marches southwards.

Bidding not an end in itself

The article argues in favor of allowing single bidding since it is the best way to get the projects done in the currently weak economic scenario.

Government is currently considering permitting single-bid projects to go through. Recently the railways sought Central Vigilance Commission (CVC) protection before allowing diesel and electric engine manufacturing projects to single bidders but then decided to do it in-house. This reflects the process of awarding projects becoming more important then the projects itself. This should not be the case. It is true that in case of single-bidder a project might not get its optimal cost but then completing project is more important. For a solution to this, government can either re-invite bids again after scrapping the first process but it will incur cost of delay as well as loss of opportunity or government can award the project to the sole-bidder itself which will only incur cost of probability of better price discovery. 

Thus, it makes sense to award the project to the sole-bidder after he agrees to pay above the reserve price since it would ensure the project will start on time and will get completed. In today’s weak economic scenario it’s important to get the work done rather then getting caught up in processes.

Slumming it out

The article talks about the hollow pride people in India have taken on the success of Slumdog. It also emphasizes to create cinema on our own terms rather than for the global audience because every country’s cinema has its own uniqueness without which there is no recognition for it.

Although the movie is based on Indian theme, with Indian star-cast, with the help in India technicians who got recognized on the international arena but one question we need to ask ourselves that is it really an Indian film? Will it really open the world to our talent that some of us has been envisaging? Is Hollywood, really our benchmark?

Every country has fastidiously been conservative while making cinema to make sure it reflects that particular country’s tradition and values and not necessarily caters to Hollywood or the global market. One doesn’t need a crossover movie to get accepted. Perhaps its our need to get recognized on international arena that makes us forcefully take pride on something which is not really our own.

24th February

Mega Fiscal Stimulus

The article favors the recent suggestion by Dr. Kelkar to implement a single GST (good and services tax) as a fiscal measure to stimulate the economy that is currently fighting the global economic crisis.

World over, the countries are fighting the downturn, so does India. Government is approaching various ways to stimulate the economy through tax cuts or increased expenditure. But the 13% center-state combined fiscal deficit leaves very less space to do something on increasing the expenditure fund. On the tax cut front, the recent suggestion by Dr. Kelkar to go aggressively to put single GST has received good response from Center as well as opposition. The logic here is to reduce indirect taxes since presently the total indirect taxes, including the local taxes and VAT, amounts to 13%. Post-implementation of GST, it would come down to 17%, a huge stimulus to the economy. Besides this, it would also bring a large part of unorganized business under the tax net and create a common market across the country.

The economic value of GST reform is estimated to be $500 billion with an employment potential of around 4-5 million and not to forget the improvement in productivity. 

Improvident Fund

The article talks about the recent increase in the rates of EPF and the financial implications of the decision on the Fund. 

The decision by EPF board of trustees to retain the rate of interest to 8.5% may be politically correct but not economically. The payout pressure would only be handled either by dipping into the corpus of using the contingency reserve. While the first makes the EPF Scheme akin to Ponzi scheme, ultimately to be rescued by taxpayers (includes unorganized sector as well), the second one would remove the cushion for any future contingency. EPF has to come out of pulls and pressures from interest groups and work logically in coherence with the market forces. Exempted PFs that manage their own corpus would come under pressure to earn unrealistically high returns and in that pursuit they might invest in riskier portfolios eventually defaulting leading to larger crisis. 

There is no reason the unorganized sector should pay for the organized one. It is the govt that should provide safety net to all workers. But EPF payouts should be determined by earnings potential and government should provide cover only for a certain threshold.

Slumdog nationalism

The article talks about the convergence of various nationalisms that the contemporary cinema brings to create world class entertainment for the audience.

The living evidence is the recent Academy Awards sweeper Slumdog Millionaire which has been claimed by three countries as its own film. India, for obvious reasons, claims the Oscars as recognition of Indian talent on the international arena. Britain thinks the movie and Kate Winslet’s award for The Reader as a comeback of British talent. US thinks it as a product of a perfect partnership of Hollywood skills and Bollywood radiance. However, all the three are true. But looking at the bigger picture the message the success of the movie sends is to build resources from across the world. The success of movie inspired by an India writer, made by a British screenwriter, producer, cinematographer, editor and director, filmed in India with Indian actors in Indian music and distributed world wide by US distributors is a standing example.

It also shows that the members of Academy of Motion Arts and Sciences are acknowledging a wider talent. Thus, it’s the adroit choices that make winning differences – as proved by Jamaal Malik.

23rd February

Pressure on wonder metal

The article talks about the building pressure on the aluminum major, Hindalco, to find growth opportunities in the merging markets, especially India, since the sales of developed markets like Europe and US have dried up.

The fifth largest aluminum major reported a quarterly loss of $1.8b in December. $1.5b of this was goodwill loss due to higher cost of funds and $472m mark-to-market loss in derivatives. Due to this Novelis, reportedly, plans to reduce output by 13-15%. More then half of Novelis’ $11.2b revenues comes from can products which is also showing revamp. However, the major growth areas for the company would be automotive, transport, building and construction domain where there is a rise in use of aluminum due to its high strength-to-weight ratio, corrosion resistance and malleability. Although good opportunities in US and Europe, the real market is in Asia which presently account about third of its US and Europe market size. Now, it’s up to Hindalco how it manages growth in these markets. 

It may not have to go that far since the growth opportunities are right here in India. Presently aluminum is used negligibly in wagons and cars in India. If used in trains, it could significantly improve the productivity of rails while for cars it could reduce the weight considerably and thus increasing the fuel efficiency considerably. Thus, while the main markets contracts, Hindalco needs to find new growth opportunities in emerging markets like India and China.

The other Satyams

The article commends government and SEBI over its agility to act in Satyam’s case and its efforts to bring the company back to track. At the same time the author talks about other such fraud cases that are pending before judiciary and seeking justice. There is also lethargy on the part of government on other legal and administrative reforms that need to be implemented as soon as possible.

While pleasantly agile in Satyam’s case, the government and SEBI has proved that, when needed, they can cut through the red tape and speed up the process. However, there are several such cases pending in courts that deal with frauds, mismanagement, bankruptcy, violations of trade practices and oppression of minority shareholders. Such cases need to be solved as soon as possible in order to allocate productive assets to profitable activities. Besides that there is Competition Commission of India which is yet to get its chairman and members and also National Company Law Tribunal (NCLT) which is yet to be formed. While Competition Commission of India was to replace Monopolies and Restrictive Trade Practices Commission, NCLT was to include Company Law Board, the Board for Industrial and Financial Reconstruction and jurisdictions of high courts over M&A. 

The case challenging NCLT is now with SC and CJI has assured a rapid hearing. The current govt cannot complete these tasks presently but the new govt should pursue the completion rigorously.

Nuanced sloganeering

The article tries to project reality that is being overlooked in the euphoria created by the slogan “J-A-I-H-O”.

The slogan hits the recession-hit world to create an illusionary euphoria among the masses, especially Indians who get elated too often on every single reason. While talking about the scene in the movie where Dev Patel and Frieda Pinto jive at CST, the author tries to fit various problems India is facing currently into the scene. Terrorist Kasab, with his gun, running behind Frieda instead of the villain; or malnourished children instead of Kasab; or parched land instead of kids or a pink-slipped guy instead of parched land and “Jai Ho” becomes meaningless, annoying and disrespectful. The song has a great impression on nation’s conscience but it does not fit anywhere in the current Indian scenario.

However, since the movie is running the final race in the Oscars, we keep our qualms aside and sing “Jai Ho!!!”

21st February

Aye, aye, Sir!

The article talks about the recent statements uttered by the Lok Sabha Speaker Somnath Chatterjee following the unruly behavior of MPs in the Parliament. The author expresses concern over the criminalization of politics. He expects middle class of India to force the reform in the political system just as it forced the passing of RTI Act in Parliament.

As from the recent incident in the Parliament, it is evident that a steady decline in the quality of our political class has been one of the major failings of our democracy. More serious is criminalization of politics. Around one-forth of the MPs in Parliament are booked under one or the other criminal offences some of which as serious as murder. However, they have power of vote. In present system, even if all the existing MPs lose, there is no hope that the next lot would be any better. Display of green currency as a bribe by some of the members last year during the vote of confidence was the lowest point of our democracy.

Electoral reform, primarily the electoral funding, cannot be left to the politicians who are the biggest beneficiaries of the present system. If something has change, it has to be lead by the great Indian Middle Class who played a vital role in passing of RTI Act in Parliament. However, the middle class seems to be indifferent on this issue. Thus, to some extent, even we deserve such leaders for our complacency.

Call for high import duties

The article asks for reconsideration in the recent hikes in import duties on some of the raw materials by the govt and argues that the interests of end consumers should be taken into consideration before protecting the interests of few domestic manufacturers.

Recently, domestic steel manufacturers urged govt to increase the import duty on imported cheap steel. The duty has already been increased from 0% to 5%. Govt is also in the process of increasing the safeguard duty of 20% on LAB (Linear Alkyl Benzene), a raw material accounting for 50% of composition in detergent cakes and powders. Talks are on to impose safeguard duty on soda ash. Such duties would definitely be a cushion for the domestic industries but government should also consider the fact that it would also increase the input costs of finished products or downstream industries to a considerable level. The sufferers would be the consumers. 

Thus, any protection to selected manufacturers should not be at the cost of economy. With arbitrary increase in the import duties, it also runs a danger of inverted duty structure – where duty on finished products would be less then inputs. This is dangerous as it discourages value addition to the economy. This is not good especially for the economy that is trying to come out of recessionary times.

Fashion Weak

The article talks about the effect of recession on the Fashion industry across the world that has taken set back in terms of exotic shows, high profile models and startling locations. With such times, the cutprice couture days are back.

As the recession hits the industry, the players are back to basics such as encouraging columnists’ comments and buyers’ approval of the product in a relatively small gathering. Talking about numbers, the NY Fashion week saw 25% drop in sales this season while 1.8% drop in retail sales was registered by top 50 retailers in Thomson Reuters Index. Luxury conglomerate LVMH reported a marginal $2.5b increase in yearly sales. Thus, ‘intimate’ shows, off-site venues, low price models, shared catwalk space (three designers presenting simultaneously at one-third price) are back in lime-light. 

Back in India, as the top names in fashion follow the international trends, Kolkata is another name on the fashion map along with Delhi and Mumbai. The big bosses of fashion industry this year has opted for stalls instead of full-fledged ramp displays. Thus, as we truly see cutprice couture is a byword now instead of an oxymoron.

20th February

Coalition Adharma

The article condemns the low level politics played by the political parties today on basis of their vote power to blackmail other parties.

As the election approaches the coalition politics reaches its apex with SP chief Mulayam Singh openly threatening Congress to join BJP if the CBI case against him is not withdrawn. Mulayam Singh openly expressed his intention to go with BJP if the later dropped its ideas about the Ram Mandir, Article 370 and a uniform civil code. The same SP supported Congress in nuclear deal hoping to combine Congress votes with SP to make unbeatable combination in UP. On the other hand Congress is also thinking on the lines of coalition with Mayawati after the later become powerful in UP by winning the last elections in 2007. 

The distressful thing is that coalitions, now, are not on the basis of ideologies at all but political benefits. Mulayam Singh has openly threatened to walk out of Congress if it is not able to withdraw the CBI cases against him on disproportionate assets. There are cases pending against BJP chief as well. Unfortunately, it is the UP that decides the next govt in the center.

All that glitters…

The article talks about the steady northward lift that is experienced in the prices of gold in the times when shares and real estate markets look weak. The author, denying the famous saying by Shakespeare, asserts that “All that glitters is gold”.

The gold price increased by 20% in less then a month as it broke the Rs.15k roof. With global meltdown very much there, the investors are considering the investment in the yellow metal as the safest, not so much in the normal times. World Gold Council estimated the world gold demand increase by 4% in 2008. India, being the poorest country with largest consumption of gold, is in an incongruous situation with import of 1000 tonnes of gold every year. Government has failed to lessen the demand of gold and in spite of steady price rises, in the last quarter of 2008 the demand shot up by 84% in terms of tonnes. 

Gold has also benefitted on the fears of high inflation as the countries boost money supply to stimulate economies. If the economic recovery continues to elude, then investment buying may even outpace the jewellery demand. Then it’s just a matter of time when the gold price breaks its old record of $988 per ounce of July 2008.

Osama spotting game

The author talks about the weird ways Americans tend to find to solve any problem which at times seem to be absolutely absurd and non-sense. The latest one being the theory developed by geography research team at UCLA that spotted Osama Bin Laden’s hiding place.

Using geographic analytical tools the team was able to narrow down to the building where Osama Bin Laden is likely to be hidden. This reminds, the author, theories of famous fiction detective Sherlock Holmes whose theory of elimination helped him to narrow down to the nearest possible solution to any problem or Shamrock Jolnes’ method of choice to proceed immediately to the solution. The latter becomes very handy to eliminate all unnecessary doubts and was in fact predominantly used in the US mission to find WMD in Iraq. 

UCLA teams used many theories to arrive at conclusion. One was “distance decay theory” which said that a person is most likely to be seen near the place where he was spotted last time. Another theory, “island biographic theory” said that a person is most likely to found where it can find life-sustaining resources. However, only time will say if Osama Bin Laden is hiding at the Pakistani border town of Parachinar or not.

19th February

Crowding Out

The article cautions the government against high fiscal stimulus the government is planning in the coming times since the combined Center and State fiscal deficit has exceeded the household financial savings. 

The combined Center and State fiscal deficit is currently close to 13% of the GDP. The total household financial savings in 2006-07 was 11.3%. Even if we assumed it increased to 12% in 2007-08, that is still lesser then the Center-State deficit. This is risky since the household financial savings are the only means for government and private sector borrowings and if that is lesser then there is virtually nothing left for the private sector. At such times, another fiscal stimulus, that government is talking about, would add to the damage. 

India should remember that it is not US, still the biggest economy and leading currency. If we go all out for fiscal stimulus in future, it will deteriorate several critical parameters like external sector and rupee-stability. Thus government should think twice before fiscal commitments.

Hard Times

The article expresses concern over the huge fiscal deficit government has piled up in recent times and contemplates on the possible solutions. However, the author warns that any extra-ordinary thinking should not be treated as license to fiscal irresponsibility. 

The total fiscal deficit Rs. 332,835 crores has raised concerns about how the government would go about financing this deficit. Following the agreement with RBI in 1997 to phase out ad-hoc treasury bills, bulk of govt fiscal deficit is financed through market borrowing. But even the gross market borrowing has already shot up by 41% then originally estimated. Any additional borrowing would increase the yield in government bonds since interest rates, if raised, could lead to damage in the economy, something the government would desperately try to avoid. 

One possible solution could be to use the funds received by RBI under MSS (Market Stabilization Scheme) by intervening in the forex market where it issued bonds to mop up surplus liquidity in the form of dollars when there was huge inflow of the currency in the local market. These funds went to separate account and the interest cost was borne by the exchequer. However, transferring these funds to govt means surplus liquidity without generating demand. But there is a catch. Access to these funds would not add to public debt but increase the repayment burden as the proceeds are currently ring fenced. 

Already our debt servicing costs is close to 100% of revenue receipts. So any more debt will add to huge cost in future. Thus, any extra-ordinary measure should first take into consideration the fiscal responsibility that govt carries.

Farewell, my concubine

The article talks about the recession effects on the love life of the people around the world with an example in China.

As today, the times are tough and everything that involves sleeping on the job can be dangerous. At these times, the leisure activities are more enticing given that there have been cutbacks in many jobs elsewhere. Even love is not alien. In a contest to prove the best mistress, a lady, after being eliminated, drove the businessman and her four competitors off the cliff to take the revenge. The women were to be judged on three parameters i.e. beauty, articulation and drinking prowess. Each of the five mistress cost the businessman 5k Yuan ($733) monthly and so he decided to “lay-off” four of them. However, the contest ended in a fatal incident.

The incident lightened the businessman by 580k Yuan ($84k as compensation to the parents of dead mistress), a wife (who divorced him after the incident) and other surviving mistresses. However, the man used his ingenuity by making money from selling the telecast rights of the incident. However, the incident proved that China’s flourishing “second woman settlements”, on which the ban was softened in boom years, is also affected by the receding economy. 

18th February

Satyameva Jayate?

The article welcomes the move of handing over the Satyam Case to CBI from the hands of AP State Police Department who were taking the case with light hands. The article also expects SEBI and SFIO to cooperate with CBI in filing a comprehensive charge sheet and bring the culprits to justice.

Handing over the case to CBI would ensure the investigation to be fair and thorough. AP CID created many roadblocks for SEBI and SFIO (Special Fraud Investigation Office) to interrogate Raju brothers before Supreme Court intervened. The time lost (40 days since Raju confessed about the fraud) in handing over the case to CBI could prove crucial. Such cases should at once go to the economic offences wing of CBI and should be investigated by the same until a more legally empowered body like SFIO intervenes. 

Right now the prime duty of SEBI and SFIO should be to help CBI to the maximum possible extent to file a comprehensive charge sheet against Raju brothers. As SEBI investigates the case in context of insider trading which is a criminal offense and SFIO investigating the case under Companies Act 1956, inputs from both the bodies to the CBI charge sheet could prove very useful to ensure guilty is punished properly for his crimes.

Faustian bargain

The article contemplates over the recent peace deal between Pakistan and TTP (Tehreek e Taliban Pakistan) that allowed TTP to establish Islamic laws in the Swat valley. The author believes the deal can boomerang on Pakistan and poses a serious threat to the democracy in the entire country.

The deal is like a pact with devil which will do nothing but empower TTP to take over the entire nation under its grip. The nature of Pakistan’s polity is at stake and it also questions Pakistan’s military’s commitment to fight against terrorism. To add to that is withered public opinion in Pakistan that denies Talibanization as a direct threat to the country. The failure of judiciary has prompted the public to give Taliban laws a try. Even Punjab is falling for tribal mode of politics and eliminating local state mechanisms. 

Sharia laws have been an issue in Pakistan since long and now with this deal it is difficult to contain the pro-sharia forces. Unfortunately Pakistan has failed to realize that there is no substitute to effective governance and inclusive democracy. This is becoming a great danger that the failure in the Frontier may lead to consequences in the heartland Pakistan.

Spirited Performance

The article talks about the difference between the western and eastern perception of drinking by politicians of the country, especially the cabinet level who often represent the country at international forums.

Recently, Japanese Finance Minister Shoichi Nakagawa was forced to resign after the allegations that he was drunk while attending the G7 meeting in Rome. However, in the western world such incidents does not result in serious consequences whether it is drunk Belgian Defense Minister Pieter de Crem in an official visit to New York or the Russian President Boris Yeltsin’s boisterous behavior for his fondness for knocking ‘em back while the Clintons’ or the first US President George Washington’s own distillery on his Mount Vernon estate.

Even in Australia, the public opinion resulted in 85% respondents cool over the PM Kevin Rudd’s drunken trip to the racy NY club few years back. In India, the politicians have always maintained distance from liquor but the recent Mangalore incident sparked one of the ministers to give a slogan “Pub Bharo” to the young Indians. Is this a change in attitude?

16th February

Irrational Policy

The article criticizes government for its sector-centric view on the issue of FDI policy making.

The recent all-of-a-sudden FDI policy change announced by the government clearly reflects that these changes are driven by sectional interest rather then a long term commitment to liberalization. The recent credit crunch faced by some companies in specific sectors made it inevitable to liberalize norms for FDI investments. However, the policy has not been conceptualized properly which is very evident from the fact that government has not been able to answer several questions that have been asked by even the ardent supporters of FDI liberalization.

A FDI policy, irrespective of governments at the centre, has been favored to one or the other sector at different times. Initially domestic telecom operators were given protection with strict FDI norms which were later liberalized on the insistence of the same telecom operators. Same was done for civil aviation and insurance. The problem is that policy issues, when succumbs to sectional interests, produces sub-optimal results. It may be helpful at micro-level but proves irrational at macro-level.

Relaxing the takeover code

The article praises SEBI for relaxing the Substantial Acquisition of Shares and Takeovers Regulations for the companies where the board has been superseded by govt or regulators. 

The decision would be good for it would give distressed companies a chance to continue as going concerns. Also the decision would end the criticism that a special treatment is being given to Satyam Computer Services. The insistence on competitive bidding would help find the best buyer for SCS. The 26-week rule, for small investors seeking exit with management change, has been the major impediment for genuine suitor for companies that have witnessed stock fall in a short span of time. With new provisions, the open offer price would be based on current market conditions. 

SEBI’s decision to restrict the relaxation to companies intervened by govt/regulators is again a good move as it would prevent abuse by buyers looking for a potentially good company cheap. With new rules, the govt appointed boards would have to act responsibly and wind up the task of finding a new management for distressed companies in a reasonable time. Satyam case should prove to be an example for future.

Quizzing the mirror

The article talks about the latest question running around the media, “Who’s the greatest Indian cricketer of them all?” and tries to find answers using different mirrors.

While the “records mirror” answers Sachin Tendulkar for a string of records he has on both formats of the game, the anti-Sachin lobby goes for “advanced records mirror” that says Rahul Dravid for his innumerable match-saving batting mostly in the forth innings, great innings specially abroad and runs scored in winning effort. However, the old generation talks about “quality mirror” which reflects Sunil Gavaskar for his fantastic batting at the time when there were no protection, uncovered pitches, best bowling attack etc. However, Gavaskar is often countered by “all round mirror” which portrays Kapil Dev as greatest of all for his batting, bowling, fielding and captaincy.

However, historians argue that to get the real picture, besides quality and numbers, one has to use “impact mirror” for some people by their actions, changed the course of the world we live in which reminds us Ranjitsinghji and C K Nayudu. However, all mirrors have their cracks and distortions and it is very difficult to say which one’s the best.

14th February

IR weathers the slowdown

The article contemplates on weather the IR would be able to pass the litmus test in the next year among the economy slowdown and prove that its turnaround story can withstand the test of time.

Recent surge in operating ratio, increase in expenditure on salaries due to Sixth Pay Commission directive and appropriation to the IR Pension Fund has lessened the gloss of Lalu Yadav’s IR turnaround story. The target of OR at 89.9% (currently 88.3%) seems unachievable among the slowdown. This also means fewer funds for track upgradation, expansion, safety equipments and passenger amenities. This has forced the Railway Minister to provide only marginal decrease in passenger fares and not at all in freight charges. No doubt, under Lalu Yadav, IR has cleared entire backlog of dividend liability with now in offering position, lessened the accidents, improved security and passenger facilities etc. 

But the true litmus test of turnaround story would be done in the year 2009-10. The question is weather Lalu Yadav would be there to answer the questions or not.

Pakistan’s step forward

The article emphasizes on keeping the judicious pressure up on Pakistan even as Islamabad responds to the Indian dossier finally with questions asked. It also emphasizes on a need for Pakistani civilian help to dismantle the terrorist infrastructure especially in the North Western province.

As Pakistan responds to the dossier, India needs to keep a balance of pressure and patience with respect to Pakistan. By responding, Pakistan has shown sagacity not to get into further denial or obfuscation. For India, it would be not easy to put further blame on Pakistan’s agencies since US interests go far beyond just 26/11; that is to win the war in Afghanistan. So New Delhi has to keep this thing in mind while keeping the international pressure on over Pakistan. Far more dangerous is a failed state in Pakistan since large population of Pakistan is right now disconnected from state and do not appreciate the fact that steadily encroaching Islamic terrorism is a primary threat. This is one of the reasons for the delay in winning the Taliban war for US.

Thus, besides judicious pressure, civilian dispensation is also necessary to dismantle the terrorist infrastructure in Pakistan, especially in the North-Western Province.

Plain expensive

The article criticizes Indian ministers for their populist approach towards Gandhiji’s ideas and to make his possessions and thoughts merely a museum piece rather then essence of life.

In the beginning, author quotes an example where, in May 1947, Gandhiji asked her grand niece-in-law how he could drink a four-mango juice of Rs.2.5 when the prices ran high and there was lot of distress in people. Recently some of precious possessions of Mahatma, namely silver pocketwatch, a pair of round, rimmed spectacles, sandals, plate and a bowl will go for an auction in New York in March at a floor price of $20k-30k. These items were collected by a collector, reportedly American, from various heirs. On this issue, one of the MPs in India objected saying that these possessions should come back to India to put up in Gandhi Smriti. The author censures minister saying that in the time of recession, none of the Indian MPs are ready to contribute a part of their salaries to create a fund to bring back those possessions. 

Gandhiji had very few possessions anyway and ministers should think about the sentiments of that collector as well. Instead of trying to forcefully get the possession of Gandhiji’s valuables and remembering them only on October 2 and January 30, MPs should try to imbibe the thoughts and values of Gandhiji in their lives.

13th February

FDI through backdoor

The article pushes for greater transparency in the government’s FDI policy and strongly advocates 100% FDI in all the sectors except some sensitive ones like nuclear energy, defense and media.

The government recently stated that an investment coming to a holding company majority owned by Indians would not count as FDI when invested in downstream subsidiary. This would help the Indian companies get greater then specified limit of FDI in their companies without breaching the law. Government should look for greater transparency and ease of rules in FDI since in these times foreign money is very difficult to come by. Government should allow 100% FDI is almost all sectors except a few sensitive ones.

Author quotes an example where the Indian investors in the telecom company received loans from a foreign telecom major in order to invest in the domestic company. However, they had to legally transfer the various rights associated with equity holding in favor of foreign investor. Such paperwork can be avoided if government simplifies and allows 100% FDI. After this, the issue of whether FII portfolios should be clubbed with FDI under a single limit would be redundant.

Well Begun

The article praises the US government move of passing the $789 billion stimulus package which was very important despite of its flipside and also emphasized on a coordinated global action to fight this depression.

The intent of package is to create millions of jobs and initiating projects in green technologies and rapid infrastructure development. The stimulus package is pretty vague in its details but in current scenario, the US Senate and House cannot afford to stall the process and cut down the flexibility of the package. However, there are apprehensions it will lead to huge scale damage to the government finances and a prolonged large fiscal deficit which would be very difficult to recover. But the demand of the moment compels these apprehensions to take a back seat. But only stimulus package wouldn’t do any good. In this globalized world, there needs to be coordinated effort from across the world. 

Presently the eyes of the entire world, especially the developing economies, would be on the forthcoming weekend meetings of finance ministers and central bank chiefs of G7 industrialized nations. Although G7 countries have announced packages, much more needs to be done.

Mental Stuff

The article tries to analyze the mentality of people involved in the activities of Sri Ram Sena and what exactly is the reason behind their activates.

The author tried to negate the notion that Sri Ram Sena is essentially anti-western. Actually they are more like Europeans who don't believe that there can exist a nation with multiple faiths, beliefs and customs. This theory is true for all the European countries and they adopted the same strategy in all their colonies as well, India included. Thus, all the rightists are actually Europeanized. 

Although psychologists may thrash this logic but many a times there comes a state when the individuals feel repelled from the very state that is dear to them. Thus, all those who are making an issue out of Valentine’s Day, had been deprived of some basic emotions in their childhood and not hoping to get the same in their later life as well. The real reason may lie elsewhere. Thus, it’s all mental stuff.

12th February

Debt deluge

The article contemplates over the recent increase in the borrowings government announced in an attempt to make a fiscal stimulus but the cost of such stimulus has been less thought over by the government.

Recently government increased its borrowing by Rs 46k crores (~21% of amount already mobilized till date) for the month between Feb 20 and March 20. Although assured by RBI that the borrowings would be conducted in non-disruptive manner, the market is less convinced about it. Already the centre’s program of borrowing has overshot by 41%. RBI can also now no longer participate in any government debt auction. At the best it can do is through open market operations is to ensure lowest rate of interest for govt debt. However, if bank doesn’t succeed in this, the interest rate will go up. Now, interest rates on government securities are, by its virtue, risk free and set the floor rate in the market for other borrowings. So, if the bond rates increase, it increases other borrowing rates and that is detrimental to the investments.

What government doesn’t realize that fiscal stimulus is good but it comes at a cost. However, in the election year govt often ignores the costs and focuses on populist benefits rather.

Companies count savers

The article talks about the recent trend of increase in the corporate bonds as banks refuse to lend to the corporates. However, the author warns the lenders to be conscious while lending and not get carried away by the high yield.

Recently there has been increase in corporate bonds that gives returns of 11-12%, much higher then the deposit rate that provide 8-9%. As banks go risk averse, retail lending is the only option left for the corporates. Banks have been putting more money in govt securities as the interest rates decline resulting in higher yield and more profit in mark-to-market terms. Retail borrowing is also cheaper for corporates even after adding intermediation charges. Also, bank loans are at floating rate while retail lending would be fixed. 

However, on the part of investor, s/he should not get carried away by the high returns and check the company fundamentals before lending. For companies like Tata Motors, the commitment stands doubtless but for small companies, it is possible that they may not be able to provide those returns. Lenders will eventually get the money back when the company goes bankrupt but that will be through a lengthy legal process. So effort costs count as well.

Strange clash of civilizations

The article is in context of recent pub attacks in Mangalore and the aftereffects of it in terms of clash between Shri Ram Sena and women activists.

Sarees v/s Pink Chaddis is of course a strange clash of civilizations. The issue is the choice of two items as extremities of civilizations when actually both can go compatible to each other. Unfortunate thing is that with this incident, pubs are now elevated as temples of modern India while Sarees have been projected as symbol of “backward” Indian women. However, if the pink panties can become a symbol of protest against anti-women activists it would be a good thing as it cans serve as a panty-dote to the regressive tendencies. 

But author, at the end, requests Mr. Muthalik and Consortium of Pubgoing, Loose and Forward Women (a community on Facebook) to keep Saree out of this clash of cultures.

11th February

Mark-to-market illusions

The author here discusses about the illusion that is created by Indian banks in the form of inflated profits because of the mark-to-market accounting method.

According to ET Intelligence Group, in a sample of 1,925 organizations, the profits in the third quarter slumped by 48.7%. However, surprisingly there was one sector that produced excellent results, namely, banks. One wonders that when the global counterparts are doing abysmally bad, how Indian banks show such great profits? The answer lies in their accounting rules that mandate to show mark-to-market value of their bond holding. Corporations have to show the market value of their external loans. For banks, when the central banks slash the interest rates, as happens in time of recession, the market price of the bonds rises considerably resulting in capital gains. However, 24% of these capital gains have to be cannot be liquidated however it is mandatory to show them in accounting reports which projects a rosy picture about the banks which is actually not.

As rupee depreciates against dollar, the rupee value of loans of corporations increase which they are obliged to show in their reports resulting in losses which is a gain for banks. One way is to mandate organizations to declare two sets of quarterly profits, one the standard one while the other with mark-to-market adjustments to project clearer picture to investors.

Bhel’s bulging orderbook

The article talks about the rising topline of the BHEL but not materializing in corresponding rise in the bottomline.

Although compared to last year, the orderbook of BHEL saw an increase of Rs 1.1 lakh crore but the corresponding rise in net profit has been only Rs 791 crore (2.4%). The main reason for this is deceleration in the power capacity expansion projects which were on completion spree in last year. This requires proactive policy and close monitoring of implementation. More then that, in a short term action, increased funding has to be ensured. PFC would be a good source for short-term but not sustainable on long term basis. Also the majority of current coal based power stations are in vintage status and highly inefficient. There has to be more emphasis on coal gasification and attendant clean-coal technologies in brown-field sites to improve overall efficiency. 

Finally, the power stations across the nation needs to critically check the commercial losses on account of power theft that keep the SEBs always cash-strapped, financially weak and unable to fast forward the project scheduling.

Post-modern pastiche

The article criticizes the current rootlessness depicted by the Indian movies and later on compares it with one of the previous “truly” post-modern movie. 

In the attempt to make post-modern celluloid, Bollywood today ends up making a rootless and baseless movie with an Indian spice of flashy locations, silly/soppy songs and dizzy and dystopian dances. As an example, author talks about how a hero reaches China suddenly from Chandni Chawk without the feeling of slightest twinge. Current Bollywood language is more of Punjabi, to be precise post-modern Punjabi. Current Cinema, as against Guru Dutt’s Pyaasa and Kaagaz ke Phool, is annihilation of Indian culture. 

Finally, author believes some filmmaker today should dare to capture true post-modern like the song: Seene mein jalan, aankhon mein toofan sa kyon he... which was truly post-modern; not an atyaachaar as we see today.

10th February

Range-bound Equities

The article talks about the tough choices equity investors face in the coming one year or so. It also provides some insights in to the possible alternate investment options like govt securities, debt investments etc.

Most panelists in the “Equity Outlook – 2009”, organized by ET, were of viewpoint that stock market in India would be range-bound in the coming year and would stay around 8k-8.5k till the end 2009. The recovery is expected in the beginning of 2010. Also India is expected to recover faster then the western countries. However, this recovery is expected to be preceded by much greater slump of around 20-30%. In this scenario, it is difficult for equity investors to decide whether to stay invested and wait for recovery or remove investments and invest instead into debt instruments, bank deposits or MFs. If they stay invested they would miss the initial rally but surely gain on a longer term. However, the short term risks in this case are really high.

Bank deposits are giving decent returns of 8% presently and debt instruments would give even more if interest rates decline further. With inflation expected to be further down, there would be significant increase in the yield. This would partly make for the initial rally missed by the equity investors. Although there is no prediction for the small-cap and mid-cap companies, a prudent mix of such companies along with large-cap in the portfolio would make up for the loss of initial rally.

Reassuring CSO estimates

The article comments on the recent CSO (Central Statistical Organization) estimates regarding the macro-economic forecasts for the present year. 

CSO has recently given the estimate of the GDP growth for the current fiscal to be 7.1%. This is exactly in line with the RBI (7%) and PM’s Economic Advisory Council (7.1%) estimates. This certainly reassures that the GDP growth for this fiscal would not go below 7%. However, less assuring is the examination of disaggregated numbers. Forecast of agricultural growth (2.6% from 4.9% last fiscal) and industrial growth (4.1% from 8.2% last fiscal) adds a lot to the human distress. Effect of slowdown is also expected in the services sector (6.5% from 10.1% last fiscal). However, “community, social and personal services” are expected to see dramatic increase (9.3% from 6.8% last fiscal) but on account of Sixth Pay Commission and NREGS payouts. 

However, there is a little silver lining for gross fixed capital formation (32.1% from 31.6% last fiscal). Although marginal, anything positive in this crisis is good news for sure.

Image and Reality

The article depicts the present picture of the political parties, mainly BJP and Congress, reverting to their earlier form as the elections stand on their head.

While the elections approach, there is a sense of nervous urgency that is clearly visible among the political parties. While Congress Prince, Rahul Gandhi, attempts to defy the age old charge on Congress of being a family party by spreading the word about the young blood infusion into the party, BJP attempts to mask its relationships with RSS. Modi, in an attempt to corner the UPA on Mumbai attacks, says that the attacks had a local help, without realizing that this is exactly what Pakistan wants. But everything is fair in election times. 

Talking about other parties too, SP is now friends with person who played a crucial role in Babri Masjid demolition. Election time is the time when anybody can be friend or enemy with anyone. This is our tradition and we do love our traditions!!!

9th February

Show must go on at Satyam

The articles talks about the recent change in the Satyam leadership and its commitments to continue the show on despite the mishaps that the company has encountered in past few months.

Appointment of A S Murthy as CEO and Kiran Karnik as Chairman of Satyam has finally filled in the leadership vacuum for the company. The appointment of an insider as a CEO, that has familiarity with the Satyam business processes and the clients, reflects the confidence of government in the company insiders to keep the show running. Kiran Karnik is the face of Indian IT industry and could prove to be a major force in retaining client confidence on Satyam. Despite the Raju family now out of the business, the current liquidity problems, key employee attrition and client desertion would be the major problems Satyam would have to face with. 

However, the developments in the past few weeks also mean that Satyam would concentrate on its core business instead of unrelated and unnecessary diversifications.

The right shade of saffron

The article talks about the current ideological confusions going on in the BJP as the post-Vajpayee leadership is in a dilemma over the effectiveness of the Hindutva trump card.

In the recent pre-poll national executive meeting of BJP at Nagpur, this confusion became evident as party maneuvers to project itself as a viable party for governance. The ideological differences are being tried to covered under the carpet of issues like price rise and terrorism as emotive electoral planks while balancing between the act the prove itself as center-right party and keeping Hindutva alive. However, this rebranding exercise has often proved futile and there still is ample space in the party to keep the Hindutva flame alive. The party has still not been able to reconcile from its 2004 defeat and act constructively as an opposition party in the lower house and is soon realizing that Hindutva might not work as much as caste based politics, development and local issues.

The latest attempt by the saffron camp is to refashion the Hindutva identity to involve even the lower castes. As the top management endeavors to play on image rebuilding, at the bottom level the Sangh Parivar is working on to alter the all-caste pan-Hindu identity.

Lage Raho Munnabhai Singh

The author mocks the all-of-a-sudden u-turn of BJP chief Rajnath Singh when he claimed that the Gandhian ideology is truly followed in Sangh parivar only in the recent BJP national executive meeting at Nagpur.

The author wonders what made this change after years of detestation to the Gandhian ideology both, in words and action. Has suddenly BJP started feeling that the blood of all men, irrespective of religion, is “red”? Or is it the declining vote bank, captured by Mulayam and Mayawati, which is making BJP sleepless? There is also some information flowing that BJP might seek Bollywood for help since the elections are nearing and the political parties are cajoling Bollywood’s biggest stars to campaign for them. Sanjay Dutt is a candidate for SP from Lucknow while Shahrukh Khan has already been approached by Congress to campaign for them.

Author believes, Rajnath is trying to engineer an identity makeover a la Munnabhai which might help this Singh to become King!!!

7th February

For Independent Directors

The article talks about the need to revive the laws regarding the essential qualifications of independent directors and audit committee on the wake of recent Satyam scandal and many other scams in the past in developed countries as well (Enron + Arthur Anderson).

The laws like Clause 49 of Listing agreement of the stock exchanges and the Companies Bill 2008 are quite outdated since it doesn’t speak about any qualifications for independent directors in terms of education or experience levels required. Also in the times where financial reporting has become more complex and sophisticated the same laws are outdated in terms of qualifications of audit committee as well. Industry should come out of putting celebrities in the independent directors’ list and instead put on people with varied expertise and experience to complement the board. Government and SEBI have to review the qualifications requirement of independent directors and audit committee members and specify their roles and responsibilities clearly. There should also be cap on the number of boards a person can be a member of at a time in order to make him/her some useful contribution to the board.

A stricter exit clause for the independent directors would make them more responsible as at the end of the day the onus of acting independent lies on the individual.

Don't ignore biofuels

The article addresses the issue of more aggressive policy measures for biofuels mainly ethanol blended petrol and biodiesel from jatropha plant.

Use of cane as a feedstock to distill ethanol and blend it with petrol makes it a very sustainable fuel substitute on a long term. Large scale plantation of jatropha plants in the waste lands would help make biodiesel which could be used on large scale as an automotive fuel. With oil prices to go up on long term, it’s preposterous to hold back on the national biofuels policy. Ethanol production chain also has greater employment potential then oil refinery. Besides that these biofuels are clearly green with less emission of harmful gases, toxics and sundry particulate matter. Government has already missed the 10% ethanol blending target (currently 5%). Policy needs to be defined to use ethanol as a stand alone fuel. Domestic production of cane has suffered backlash due to number of factors but overseas production possibilities needs to be explored. 

For biodiesel, although cut on all central taxes is welcome, but better processes for producing biodiesel from jatropha needs to be formulated and large scale production of the same in the wastelands also needs to be considered seriously.

Enduring Attraction

The author here talks about the all time famous movie Devdas that has engrossed the audiences since seven decades.

No other superhero in the history has been ever loved by the masses for such a long time. After the novel, written by Sarat Chandra Chatterjee, was published in 1917, the first Devdas was made by Late K L Saigal in 1935 and was loved by the generation at that time who was looking for a say on lifestyles and social pressures as much as politics and economy. 20 years down the line Dilip Kumar revived the same persona only to be repeated on the screen by Shahrukh Khan in 2002. The extravagant film by Sanjay Leela Bhansali was so lavishly shot and screened that it really didn’t seem that tragic to the youth. Anurag Kashyap’s latest flick Dev D, also on the same lines, portrays the very picture of young India that doesn’t see alcohol has its newly found nirvana. 

Perhaps that is why this drunken loser still manages to finds a loyal audience and has showed the most staying power on screen then any other celluloid script.

6th February

Unleash Internet Telephony

The article addresses the issue of current restrictions put by government on internet telephony and how liberalizing these restrictions would improve the broadband penetration in the country. It also talks about the futile issues raised by the telecom operators and its reasons.

TRAI has again urged the government to reconsider its August 2008 recommendations on facilitating faster growth of internet telephony. Internet telephony is dual ability to drive down tariffs and increase the much needed broadband penetration in the country. Government has to rethink over its restrictions on internet telephony particularly the one of connecting it with local numbers. The market is moving toward much optimum and efficient IP based networks that give improved voice quality but the end customers in India are still devoid of it because of restrictions.

Argument of telecom operators about the much higher fees for license compared to the ISPs is baseless since ISPs do not pay for spectrum that allows mobility while telecom operators avail mobility. Moreover, by the time internet mobility reaches the scale of voice services, the telecom operators would have moved to next generation of 3G data services. Thus, the idea of broadband penetration needs to be reformed to involve converged services through it like IPTV, mobile TV and internet telephony. This would help deliver maximum benefits to the end user through broadband penetration.

Riches to ‘rags’ story

The article talks about the recent decision by the US President Barack Obama on the salary cap of $500,000 for top level executives in the companies that have received the taxpayers’ money for bailout. Talking about the necessity of the decision, article also mentions the flipside of the decision.

It was certainly necessary for the President to put a cap on the lavish salaries and lifestyles of the top level executives after the Main Street’s anger over the Wall Street’s inefficiency. $35k commode by John Thain, ex-Merill chief, or $15k umbrella stand by Tyco boss Dennis Kozlowski, was certain to ire the common man after the companies’ abysmal performances on the account of irresponsible executives. Thus, the President had a very few options in hand, especially after knowing the fact that he would need substantially more dollars then estimated earlier, to revive the US banking system. 

But the flipside here is that such cap would lead to tougher retention of best talent in the industry, something which is much needed at the time of crisis. Public sector companies know this very well. However, as author says, we cannot allow a market where profits are private and losses are public. May be a lesson can be drawn from Japan where big company executives draw three times the average pay while in US, according to Institute for Policy Studies, the ratio is 44. But not anymore; at least not with the taxpayers’ money.

The morality play

The author here draws analogy between Indian and US political system on the grounds of dealing with morality issues. The language is a mix of sarcasm and humor. The article talks about the latest heart change expressed by former UP CM Kalyan Singh over Babri issue.

Recently the US President Obama lost out another key nominee namely Tom Daschle, shortly after Nancy Killefer, because of non-payment of $140k as income tax. In US, such acts have very serious implications and public figures are required to have a clean record. But in India, it is not required as happened recently in the case of Kalyan Singh, the ex-CM of UP, who expressed his regret over the Babri demolition to appease the local minorities. But this is not new as in India, it doesn’t take much time for anyone to become secular and anyway, ‘change of heart’ is integral to our moral/political DNA. However, SP is too busy in wiping out BJP that it hasn’t really cashed on the Kalyan’s Lodh votes.