30th March

Global markets rally again

The article expresses optimism about the buoyancy that the stock markets all over the world but, at the same time, questions the sustainability of this buoyancy. It also talks about the opportunities for investors to tap the shares at the rock-bottom prices. 

Most of the markets have rallied in the range of 25% from their lows reached early this month. The major booster, besides the fiscal and monetary measures by governments all over the world, has been the US plan to buy all the toxic assets from banks. But the real question is how long would this rally sustain? Stock markets generally reflect the real pick up some six months in advance. Looking at the indications of revival US consumers spending has rose in the second successive month, housing market has recovered little, commodities are up sharply from their Dec ’08 lowest levels, manufacturing has picked up in China while in India steel producers claim to run their factories back at full capacity. However the litmus test would be the January-March quarterly results. If not improvement, even stability would provide some support. However any negative news would dictate a nosedive in the indices worldwide. 

The real opportunity here is for the investors looking for handsome gains over medium to long term period. With money in virtually zero interest money market ready to rush in is the first sign of recovery. 

Confusing Price Indices

The article tries to clarify the confusion that often emerges when an average person looks at different price indices like WPI, CPI etc that reflect paradoxical trends.

While WPI went below 6% this January year-on-year basis, the CPI reached a high of 10.4% for urban non-manual and industrial workers while more then 11% for agricultural as well as rural laborers. Looking at this one might see them contradicting. But the catch here is the items comprising these indices and their relative weightage. For WPI, primary, intermediate and manufactured items that aren’t directly consumed by an average person forms a major part while CPI consists of items that are consumed by end consumer. Like food, beverage etc constitute 49% of CPI for industrial workers but little more then 28% in WPI. On the other hand fuel prices account for little over 6% in CPI-IW but more then 14% in WPI. Another difference is the stage at which the data is captured. WPI reflects ex-factory price which excludes duties and excise while CPI captures retail prices at which the items are sold to consumers. So while WPI helps fiscal and monetary policy measurements by reflecting the cost push inflation, CPI is a better indication of cost of living. 

Thus in the nutshell, rather then being dragged by headline WPI numbers, the inflation analysis should take into account various components of the index.

Not quite an art

The article tries to find out whether science can answer the reason behind suicidal tendencies and that if it is a hereditary or not.

Taking an example of Sylvia Plath, one of the finest poets of 20th century, wrote once that “DYING/Is an art, like everything else/I do it exceptionally well” in Lady Lazarus. After several attempts she finally did it in her London flat in 1963 at the age of 30 while her two children were asleep the next room. However, an excellent observer would immediately point out at the genealogy of self-extinguishing tendencies of the family as her son, one of the two sleeping in the next room when Sylvia took the extreme step, Nicolas Hughes, aged 47, committed suicide in his home in Alaska a few days back. The family seems to have history in suicidal tendencies as Nicolas’ father’s (Ted Hughes, a distinguished poet) another wife also killed herself. This raises question in the scientific community whether suicidal tendencies are hereditary. Referring to some scientific journals, there is a possibility that there is a link, and ends with a talk of receptors and neurotransmitters in the brain which can adduce such grey matter tendencies. 

While the poet has the last words, “I have given my name and my day-clothes up to the nurses/And my history to the anesthetist and my body to surgeons”, it seems he knows better and before.

28th March

Sleepless in Mint Street

The article talks about the dismal state of government finances and the implications of recent borrowing announcements made by the government. RBI’s confidence to manage borrowing program is commendable but it’ll still give some sleepless nights to the governor.

The announcement to borrow 2.4 lakh crores in the first six months of the next fiscal year led the gilt prices fell over the fears of over supply. The yield on govt bonds have increased from 4.86% in January to 7.18%. Govt’s inability to manage its finances during boom time would cost them dear now. Not only in terms of high debt burden or debt servicing costs but also in terms of interest rates which are unbearably high even today. RBI interest rates are the risk free rates to which the final borrower pays the market risk premium. If risk free rates itself would be high then the final rate of borrowing ought to be high. This could jeopardize govt’s own effort to recovery besides inflicting capital losses to banks’ investment portfolios. RBI is confident about managing to borrowing program but there is a limit to what the bank can achieve especially when it wants to remain loyal to the fiscal reform process under which RBI keyed up the govt securities market. 

But given the quantum of the funds needed, and the prospect that it can grow larger when govt issues fresh freebies post-elections, RBI is in an unenviable position which could bring sleepless nights to the governor. 

A question of chemistry

The article talks about the emerging trend among the chemical companies to offload their pharmaceutical business. The article also discusses the reasons for the same.

Oil and gas major Reliance industries has gone low profile over its venture into the pharma space. In 90s however the trend was other way round when chemical majors ventured into the pharmaceuticals big time and into drug discovery and research-based growth. On the other hand, ‘big pharma’ also found it profitable to venture into the larger chemicals domain and sheer volume-based growth. However, the trend reversed off late since chemical companies plan to divest their pharma arm. BASF, Europe’s largest chemicals company, offloaded its Knoll drug division while DuPont sold its drug division quite recently. One of the major reasons for this is the difference in skill sets and the work cultures in the two businesses. While pharma industry is far more research intensive which 15% of the revenue going into R&D, for chemicals it’s no more then 1%. The challenge for pharma industry is to keep up their R&D in pharma business while running the cash-guzzling chemicals business. While for chemical companies, the research suggests, their pharma divisions often lack the scale of multiple products to offset the risk. 

Perhaps that is why the idea of Reliance Pharma to keep its large-scale formulation development on back burner makes a strategic sense. 

How to be Obama

The article talks about different faces of Obama that is seen almost every day ever since he took the seat for the first citizen of US. 

While he has been under the scanner for every action and speech he has delivered so far, some people are less convinced about his connectivity with his new community. People want to him to confine himself to White House and ponder about bringing out the country from recession instead of cheering and hooting for Chicago Bulls in basketball matches. His pre-election smile has withered away as his face now looks grim and tight in every press conference he arranges. While the next day he would go out for a nearby hotdog joint when people expect him to bother about banks, bonuses and bonds. It’s surprising how a President can be gourmet when all he should be worried about is innards of fast gutting economy. While all these must be making Obama tensed he must be learning how to face adversities. But what’s unnecessary is a cheerful face one day and churlish on the other. 

He should remember his unclenched fist metaphor he used on his inaugural and substitute his face there.

27th March

Moratorium on MTM

The article talks about the recent suspension of reporting of exchange rate related losses on forward contracts for 2 years ordered by National Advisory Committee on Accounting Standards. However, author argues the major flaws associated with the decision and demands rigorous debate over the issue.

The decision comes as a relief to corporates who have been reporting major losses on forex hedges since rupee depreciated over 20% last year and 4% in the current year. This could create a lot of difficulties for companies that are credit-starved and wants to raise funds. The decision seems fair since these are temporarily losses and once the market recovers, the rupee appreciation would increase the value of these assets back to normal. However, it should be noted that the same rule also helped the corporates to report inflated profits at the time when rupee was highly appreciated. MTM rule depicts the true picture of a company at any given point and worth of the company if it is to be liquidated immediately. This is very important information for shareholders and investors. Instead of suspension, corporates should be asked to report two sets of P&L numbers, one with MTM values and one without it. If not that, then at least they should report the key financial numbers where the rule can be applied. Also the MTM rule applies to the assets/liabilities of a corporate and so MTM should also be accounted in the balance sheets and not in P&L accounts. 

Thus, corporates should also produce set of asset-liability statement every quarter to inform shareholders about the corporate wealth. 

Tall promises as usual

The article talks about the season of tall promises that has flourished as elections come near and every party is busy with its election manifesto. However, less fulfilled then made, these promises only highlight the populist and politically correct schemes. 

This time, election manifestos are more focused towards populism or pro-aam aadmi debate given the current economic conditions. While Congress plays up with NREGS and basic food security schemes, BJP is also expected to play on the similar lines. As per Congress, the basic food security scheme would ensure a certain quantity of rice or wheat to every person below poverty line while NREGS would be extended to provide 100 days employment for a family to each individual. However, such extravaganza often invites claims of fiscal indiscipline further compounded by flawed PDS. With efforts to improve and streamline latter, PDS would continue to perform better in southern states. Besides populist measures there are promises on national security. While CPM promises to revoke the nuclear deal, if comes to power, BJP is expected to retell few the key Hindutva agendas. Empowering minority classes and other disadvantaged section forms the theme for Congress. 

However, such measures would only yield results if democracy is seen as centre to the issues of development and participatory politics.

Saurav and Aussie coaches

The author wonders why there is such a furor over removal of Saurav as a captain of KKR in the coming IPL. While T20 is considered youngsters game, it should also be led by young blood.

Had IPL-2 be played in India, Eden Gardens would have been crowded with ardent Saurav fans burning the posters of John Buchanan over his decision to remove Dada from captaincy just like they did it 40 months back for Greg Chappell, said Boria Mazumdar on Times NOW. While rest of India would have wondered on this, especially when the winning trio of Sachin, Saurav and Rahul opted out of T20 World Cup which India won in 2007, removal of Rahul Dravid as Bangalore Royal Challengers’ captain hardly invited any such reaction. So what is so special about Saurav and KKR? Why is it hard to believe that the removal has been done in good faith? Neither BRC nor KKR did well in the inaugural IPL under the captaincy of Rahul and Saurav. 

True, KKR might lose a huge fan base in absence of Dada but fan base cannot preempt performance especially when Buchanan can boast of two emphatic ODI World Cup wins for Australia in 1999 and 2003.

26th March

Don’t blame Nano

The article dismisses the argument that Nano would do nothing but clog the Indian roads like never before. The argument misses the point that it is not the Nano to be blamed but the abysmal public transport and road infrastructure that does the most damage.

Nano is actually a dream come true for every common man in India who aspire for a small, fuel efficient and environment friendly car. They have as equal right to buy the car as much as the urban elite has to buy those big luxury cars that take up significantly more space on roads. However, it is understood that a road full of cars would do significant damage to the urban environment. That is where an efficient public transport helps which has the potential to bring down the use of cars. Reservations about the use of Nano have more to do with poor road infrastructure, improper town planning and sad state of public transport. Even a city like Delhi doesn’t have a public transport that city car owners find worth considering. This precisely leads to increasing number of private vehicles on roads. A good public transport can solve this problem. Besides levies like congestion charges, heavy parking charges, increase in number of footpaths and cycle lanes can encourage public transport. 

Future cities must factor in adequate roads and parking space. Nano deserves the rightful appreciation while it is for the government to address the other issues.

IRDA should follow SEBI

The article insists that IRDA should slash the initial levies on direct investment in insurance policies, just like SEBI has done for mutual funds. The author talks about benefits of this step in increasing returns as well as financial literacy and at the same time the new role of agents.

While a huge chunk of first premium in policies goes towards meeting initial procedural expenses, another huge chunk goes towards the commission of agents. These changes make investors lose significantly if the policy is surrendered within three years. IRDA needs to provide a system where in the investor who goes for direct investment should be spared from these charges, at least the agent’s commission. SEBI has done the same for mutual funds. There is no entry load on direct investments, which can be as high as 2.25% of total investment. IRDA should pen down the cost and commission structure for the investors so that latter can seek better services from agents. After the commission-free investment, the investor should be encouraged to understand the insurance product better in order to be able to invest directly. 

The new found role for agents in this scenario would be to provide genuine advice to investors contrary to what they are doing presently – mis-selling the products i.e. products that fetch them highest commission.

Jaded images

The article talks about the new icon Britons have found in Jade Goody who recently passed away after being diagnosed of cervical cancer. The article finds similarities in the images of late Jade Goody and late Princess Diana and asks whether these images reflect the actual Britain.

There are many similarities in the two ladies like they both died young and in public eye, leaving behind two sons, similar struggles, hurdles they both overcome, their motherly attributes, and a raw deal they got from media and their families. It was after 12 years that Britain was looking for another martyr to cry upon. While the 27-year old single mother gave them the reason, this was it was overwhelming as not only the British PM commented somberly on her passing away just like his predecessor did for Princess Diana but 20% more Britons rushed to hospital to get them screened for cancer.

Although India has icons from sports to business and from politics to entertainment, but committed advocacy is something regarded by general public as rather amusing if not loony. But the question is that does Britain sees its reflection in these women: troubled, out of place, awkward and caught-out but eager to make up and most of all seeking acceptance and love from the fickle world? Is this the reason why each generation in Britain crowns a princess who cash in Britons by her sacrifice?

25th March

Don’t blame Nano

The article dismisses the argument that Nano would do nothing but clog the Indian roads like never before. The argument misses the point that it is not the Nano to be blamed but the abysmal public transport and road infrastructure that does the most damage.

Nano is actually a dream come true for every common man in India who aspire for a small, fuel efficient and environment friendly car. They have as equal right to buy the car as much as the urban elite has to buy those big luxury cars that take up significantly more space on roads. However, it is understood that a road full of cars would do significant damage to the urban environment. That is where an efficient public transport helps which has the potential to bring down the use of cars. Reservations about the use of Nano have more to do with poor road infrastructure, improper town planning and sad state of public transport. Even a city like Delhi doesn’t have a public transport that city car owners find worth considering. This precisely leads to increasing number of private vehicles on roads. A good public transport can solve this problem. Besides levies like congestion charges, heavy parking charges, increase in number of footpaths and cycle lanes can encourage public transport. 

Future cities must factor in adequate roads and parking space. Nano deserves the rightful appreciation while it is for the government to address the other issues.

IRDA should follow SEBI

The article insists that IRDA should slash the initial levies on direct investment in insurance policies, just like SEBI has done for mutual funds. The author talks about benefits of this step in increasing returns as well as financial literacy and at the same time the new role of agents.

While a huge chunk of first premium in policies goes towards meeting initial procedural expenses, another huge chunk goes towards the commission of agents. These changes make investors lose significantly if the policy is surrendered within three years. IRDA needs to provide a system where in the investor who goes for direct investment should be spared from these charges, at least the agent’s commission. SEBI has done the same for mutual funds. There is no entry load on direct investments, which can be as high as 2.25% of total investment. IRDA should pen down the cost and commission structure for the investors so that latter can seek better services from agents. After the commission-free investment, the investor should be encouraged to understand the insurance product better in order to be able to invest directly. 

The new found role for agents in this scenario would be to provide genuine advice to investors contrary to what they are doing presently – mis-selling the products i.e. products that fetch them highest commission.

Jaded images

The article talks about the new icon Britons have found in Jade Goody who recently passed away after being diagnosed of cervical cancer. The article finds similarities in the images of late Jade Goody and late Princess Diana and asks whether these images reflect the actual Britain.

There are many similarities in the two ladies like they both died young and in public eye, leaving behind two sons, similar struggles, hurdles they both overcome, their motherly attributes, and a raw deal they got from media and their families. It was after 12 years that Britain was looking for another martyr to cry upon. While the 27-year old single mother gave them the reason, this was it was overwhelming as not only the British PM commented somberly on her passing away just like his predecessor did for Princess Diana but 20% more Britons rushed to hospital to get them screened for cancer.

Although India has icons from sports to business and from politics to entertainment, but committed advocacy is something regarded by general public as rather amusing if not loony. But the question is that does Britain sees its reflection in these women: troubled, out of place, awkward and caught-out but eager to make up and most of all seeking acceptance and love from the fickle world? Is this the reason why each generation in Britain crowns a princess who cash in Britons by her sacrifice?

24th March

Proceed with caution

The article talks about SEBI’s move to introduce new products in the derivatives market, the OTC products and physical settlement in derivatives. It talks about its merits as well as the caution SEBI needs to take while introducing them.

While SEBI invited comments on the recommendations of the derivates market review committee, the initial reaction is bewilderment. The OTC products and physical settlement in derivatives is largely seen as the reason for western market turmoil. But this is actually the best time to discuss these products as India needs to develop its financial market albeit with some caution and stricter regulation. With a growing economy, there exists a demand for newer financial products and thus the recommendations address all issues w.r.t derivatives. Mini contracts would help to increase liquidity while elongated tenure of options would help long term investors. Bond indices and derivatives contracts on them, together with exchange traded credit derivatives would help to develop bond market. While the real concern is OTC products, physical settlement of derivatives is an agenda for long time. Regular insists on cash settlement for first six months as it sees exchanges don’t have the required capability even when physical settlement provides better linkages between cash and derivatives segment and check against manipulation.

In the nutshell, India has a chance to show the success of these products even under strict regulations. 

Not quite cricket

The article expresses disappointment over the fact that pecuniary issues have taken precedence over the human sentiments in shifting of IPL from India to a foreign soil.

If attack on Srilankan cricketers is the result of political turmoil in Pakistan, then shifting of IPL to foreign soil also reflects political and commercial interests taking precedence over sporting spirit. While BCCI made a crisis out of issue of holding IPL parallel to Lok Sabha elections, there was no connection between relative rigidity over players’ availability and elections. The case is neither country’s inability to provide security or spreading of sport overseas. But only commercial stakes of stakeholders have been taken into consideration while taking the decision disregarding the fact that the event is supposed to be attended by local audiences and it helps in developing loyalties among the city-locals. As states expressed their inability to host IPL, the Centre also after initial hesitation did offer some support, BCCI was in no mood to show any flexibility. 

The scene now is that IPL has become a political issue with each party trying to cash in on it in the coming elections. Besides an example of pity politics going on in India, it also helps setting external perceptions over India’s ability to host sporting events. At the end, the sufferer is an average Indian cricket fan, who has been completely sidelined. 

It’s a woman’s world

The article talks about the increasingly women dominated profession of teaching at the primary level while the other gender is seen more at the high school level classes. 

While in Britain, 4587 out of 17357 schools are devoid of male teachers, the teaching profession is becoming increasing skewed towards the fairer sex. Even in the teacher training colleges there are three women students to every male student while the latter goes to more ‘respected’ posts in senior classes. While India has similar gender imbalance but it hasn’t created that great consternation as in England. While there is no perceived difference in the quality of education imparted, there is a notion that children spend their formative years more under the female influence, given that many of them come from single-mother households in England. While there is no evidence that male teachers inculcate stronger discipline or orderliness but the new theory defies the suspicion that male teachers pose a threat to children being raised under the danger of paedophilia.

As poor career prospects at the primary level teaching may be the reason behind highly female dominated job, even the learning seems to have gone under the female influence as girls perform better then boys at these levels. The phenomenon is not restricted to only Britain!!!

23rd March

Hive-off at RIL

The article indicates the failure of oil sector reforms as the monopoly of the BIG THREE continues in Indian retail oil sector. RIL move to sell 51% stake to IOC just reinforces the fact.

The decision of RIL to hive-off its fuel retailing business is remarkable given the opaque regime of govt administered fuel prices. Thus it is in best interest for RIL to de-risk its fuel retail segment and at the same time get the benefits that PSU gets from the govt for running the show. Private oil retailers had tough time due to govt policies. They weren’t entitled to oil bonds like the PSU counterparts. As there is more scope for value addition in marketing the petro-products then in crude oil refining. Besides that concentrated refining capacity sans downstream marketing presence is a risky proposition. It is this asset value that RIL intends to unlock and clarifies its intentions not to exit fuel retailing. RIL fuel retail outlets are all on high-density traffic zones and so with built-in locational advantages. Shell was another frontrunner for the stake in RIL but the selection of IOC maintains continued monopolistic regime for most petro-goods.

What is needed is decontrolled prices and better allocation of resources instead of open ended subsidies on oil products.

Help regional airlines

The article strongly advocates the need for support to the regional airlines in order to improve the overall aviation infrastructure in the country. 

In spite of difficult times it is a positive sign that over dozen regional airlines want to start operations. These airlines have done well in the peninsular India but not in the Far East or the hinterland. Main constraint for them is the route dispersal norms which compels every airline in India to have routes to such regions. This is becomes a loss making proposition since major airlines use big jumbo jets in such regions from where they do not get much traffic. Small jets and turbo-props are better for such regions. Gradual withdrawal of route dispersal policy would help the regional airlines as it has helped them in US. Another issue for regional airlines is inadequate yet expensive infrastructure in the metros. Due to high turnaround times, it increases costs and reduces operational efficiency, something which is key to these airlines. Secondary airports in these cities should be built and these airlines can operate from there.

With 450 unused airstrips across the nation, there is a huge scope of spreading aviation to places where it not there presently. Govt can also considering increasing the FDI limit of 49% and help foreign airlines as well to cater to the huge market for regional airlines.

21st March

No hasty conclusions, please

The article warns against the possible misinterpretation of deflationary trend and the consequences of it on the investment and welfare prospects in the country.

As we saw WPI standing at 0.44% in the first week of March compared to 2.43% in the earlier week, it is very evident that soon we might see a deflationary trend. But a major reason for this is not the fall in prices but the higher base taken for the same week in the previous year. Inflation in the same week for last year was 7.78% and it reached close to 13% till August which is the reason why deflationary trend is evident in coming weeks. But if we look at CPI which reflects the consumer end prices, it is still in double digits i.e. 10.45% in January. Incorrect reading of numbers, especially deflation, can have serious consequences on policy response. Perception of deflation actually leads to demand shrinking as people hold back their spending in anticipation of further fall in prices. This reduces demand as well as overall economic activity. 

It ultimately leads to shrinking profits for the companies which in turn lead to layoffs and rising unemployment. 

Churning within BJP

The article talks about the recent churning that needs to be undertaken in the BJP to decide the second lead of leadership for the party after Advani.

BJP has been traditionally seen as a party with strong and united top leadership with hardly any clashes. However, the recent spat between Arun Jaitly and Rajnath Singh comes as a surprise. The issue is not new to BJP as Jaitly is unhappy over increasing dominance of “wheeler dealers” in party’s strategic decision making process. Previously Uma Bharti and many other Hindutva puritans in the party had entered in the row within the party over the same issue. But it is possible that Jaitly’s insistence on ethics could be on long term consequences. Besides the acceptance of Advani as the present leader, there is a feeling within the party to hunt for the second lead of leadership post-Advani. Narendra Modi is a potential candidate for this job with Arun Jaitly backing him, but pan-party acceptance is an issue. If BJP fails in the present elections, it would just speed up the churning process.

But looking at the present scenario the churning is not going to be a smooth process for the party.

Thrown to the wolves

The article tries to sympathize with Varun Gandhi on his innocence of his speech which, the author believes, were given out of his passion for his work and only the reflection of the ideologies his party has followed for decades.

While so many others before him have made careers out of such speeches, the poor boy was made victim for the same thing by EC notices and criminal FIRs and CDs and video recordings and what not. And all the more as a reaction to the issue, he was made to take a stand of “what’d I do wrong???” It seemed that he has become a part of greater conspiracy since he has been victimized for things that people before him has been saying for decades and even more forcefully. His attempt might just be to get the crowd into some enthusiasm and moving. What he said was just the ideology his party has been following since its inception and nothing more. 

Finally, author urges people to just pretend the case as just a youthful passion at work and give a second chance to the boy.

20th March

Global pharma consolidates

The article analyses Indian Pharma industry with respect to the ongoing consolidation in the global pharma industry with three large acquisitions this year and many more to come. 

Acquisitions are one way out for the companies suffering from rapidly declining new stream of drugs and expiry of the patented drugs in the coming 5 years. Pfizer acquired Wyeth in a $68b deal; Merck acquired Schering-Plough in $41.1b deal while Roche bought Genentech in a protracted saga. Pharma industry is not affected by the global business cycles. However, the major reason for acquisitions is search for future growth engines. Patents for some high-profile drugs would expire in next 5 years. Acquisitions help in acquiring possible future drugs. Thus scale is the deciding factor for the future Pharma industry. In contrast, Indian Pharma industry suffers from lack of scale and thus big pocket for acquisitions abroad. So far, low cost but quality manufacturing had been a core competency for Indian pharma companies. Drugs that would go off patent are a big opportunity but it is not the long term business model. Investment in R&D needs to be improved with clinical research sent to third parties. But that requires strong balance sheets which Indian companies don’t have.

What is needed for Indian companies is to go for inorganic growth or acquire niche skills. Attractive valuations and easier availability of capital in largely recession insulated economy is a strong backdrop.

Congress conundrum

The article speaks about the challenges Congress is facing in the Hindi heartland of UP and Bihar after being forced to go on its own in the two most crucial states for general elections.

Congress should make the best of this bad situation by executing an identity makeover in these states and regain its lost ground. The regional parties in these two states have used the caste based politics to their advantage, something which Congress has failed to do big time. The task is more then resolving the factional infighting or rebuilding organizational structure or nurturing local leadership. Congress has to look beyond the caste based tactics adopted by the regional parties to pull the string. It has to refashion itself in a way that every section of the society resonates itself in the party. Selective patronage and tactical alignment would be of little help. 

What is needed for Congress is a larger political refashioning in a way that it once again becomes a major player in the Hindi heartland. 

Arbitrary indeed

The article ridicules the move by government to hive off some 10% IOC outlets to BPCL and HPCL without any logic. It also points out the need for proper reforms in the oil sector especially the retail segment.

Since IOC is a publicly listed company with a significant amount of non-government stake in it, such move is totally illogical. The stakeholders would definitely ask for an explanation. Such move is said to be provoked on account of the strike by public sector oil workers earlier this year. Also IOC with more then 50% of market share, such move to shed off 17600 outlets to HPCL and BPCL would end its market dominance. Even if the move was intended to dissuade further strikes, it should have requisite provisions in law and improved governance norms. What is needed for government is to carry out the reforms with full gusto especially when the oil prices are low which leaves enough space for pricing reforms. Free pricing regime would take care of most of the problems that govt cite for taking such steps.

Finally, independent oil retailers and purposeful opening up of retail segment in petro-goods is what is needed.

19th March

Back to basics

The article talks about the revolution that is about to come in the Indian banking sector as RBI decides to waive-off the charges on customers for using foreign ATM network from April 2009. The first step comes up with ICICI selling off its ATM assets and POS terminals to a separate entity. 

Besides raising cash, this move would help ICICI bank to concentrate on its core banking business. With the latest RBI decision, large ATM networks are no longer a strategic advantage for banks. Same logic applies for Point-of-Sale terminals as well. In future, more banks are expected to follow the suit and it would give rise to a large independent ATM network operators. It will rationalize the ATM network management and help the banks to save costs. Most of the ATMs in the country are poorly used and third party network operators would help optimize costs by moving less used ATM machines to other areas. 

Such independent ATM operators would help reduce the costs and besides that they would be much more interested in their expansion then the banks itself who see ATM operations as non-core business.

Least Bad Option

The article talks about the tussle going on between ICAI and RBI over loan classification and the implication of bank’s relaxations on borrowal accounts over the banking industry at large. 

The tussle is an example of lack of agreement between accounting professionals and banks over the sanctity of mark-to-market rules. The relaxation in classification of borrowal accounts (as standard or sub-standard) is rightly opposed by ICAI President as it would lead to further turmoil in the banking industry. It should be understood that banks should take decisions on lending depending upon the situation of the market overall. Ventures that were perfectly feasible and profitable during boom time might not be so during the bust. Already the banks in India are seeing shrinking profit margins. At this time, large loan provisions could only harm their financial health and economy at large. Corporate debt restructuring and RBI’s recent relaxations are only the examples of these ground realities. 

ICAI is right for its apprehension, especially after the Satyam scandal, that its members would be held responsible if the provisions aren’t adequate. What should be done by ICAI is to share its apprehensions with RBI and talk about rolling back the relaxations on return of normalcy.

An antidote to recession

The article talks about the potential of elections as an employment generator and a booster to economy. 

Instead of five years, elections should be held every two years. Every election process guarantees a minimum of 90 days of employment to the people across India and boosts the revenues to number of sectors. First is the posters and banner making industry which gets real busy with their marketing business for various parties. Then the people who arrange for tents, loudspeakers and microphones for rallies. Print and media industry also gets a hell lot of masala from the election tamasha. There are also security agencies, bulk food suppliers, cooks and cleaners who benefit from the elections. From taxi owners to private jet companies, everyone get a boost by renting out the vehicle to the big shots of Indian polity. Then there are opportunities for videographers and CD owners who keep an eye on election campaigns and check for violations in EC code of conduct. 

As Rs. 10k crore is injected into the economy through this election war, it is almost half of the NREGS but still good enough to be considered as bi-annual booster shot. 

18th March

Hope Regained

The article expresses hope that the recent victory of lawyers in reinstating Iftikhar Chawdhry as CJ points to the willingness of Pakistanis towards the rule of law and remove autocracy altogether.

The victory all the more significant since it involves lawyers and general public, not military, asserts that the public will no longer tolerate dictatorial behavior of President. The current President has only invited notoriety with his actions. However, the vulnerable Pakistani polity is still prone to further crisis considering the fact that present resolution comes as a result of ‘deal’ cut between big players, which mean that Pakistani feudal political class still lacks consensus on issues of national importance. Zardari’s autocratic tendencies can be harmful to PPP at large but the same goes for Nawaz Sharif, who just might intend to take the battle further against his political rival. 

Post-Musharraf regime that was expected to prevent further institutional erosion has failed. That hope is now resurrected and given the current problems surrounding the nation and its impact on neighbors, one should expect no further decline in near future.

Premature NREGS verdict

The article thrashes the recent World Development Report 2009 which stated that concentration of economic activity should be limited to limited pockets and should not spread geographically. WB’s recommendation of the same to NREGS is highly flawed and should not be considered. 

The report stated that schemes like NREGS blocks free movement of labor and encourages people to stay back in villages with far less concentration of economic activity. In a country like India, where 65% of the population is living in rural areas, it is not possible to concentrate the entire population in one pocket. The success of NREGS reveals that people do prefer to work nearby their homes and if given an option would definitely move to urban areas. Bank’s one-size-fits-all strategy certainly doesn’t work here. Its experiments in Africa also didn’t yield much result except of more migration of millions to poverty. 

It should be understood that schemes like NREGS which is actually intended to improve rural infrastructure in some states like UP and Bihar, would certainly not harm healthy migration to cities. People would continue to move to places where they can find work and where there is shortage of labor. 

Top slot candidates 

The article talks about a long list of candidates India presently has for its top job, the PM hot seat. 

Among the two major national parties, Congress and BJP, former is trying to balance obviousness with little uncertainty through various means while the latter has redefined the term loh purush. For others it’s not so subtle to go for the top job. There are people from various states who want their local man to ascend for the top spot which, if fulfilled, we can see that in future there might be a rotational policy for PM from each of the state. There is Czarina from a crucial state which is believed to be our answer of Obama phenomenon. She is believed to be upfront with her allies, which is a reason to believe that she might make it to the top job one day. Left has vowed not to repeat its historic blunder. Then there is a lady from South who is known to keep her options open. There is also a former PM who is famous for caste based politics but still aspires to reach the top post.

So, in the crux, this election would see a long list of applicants for the PM job, far richer then those twin-choice countries. 

17th March

Right Way

The article talks about the reforms that are needed in the domain of Rights Issue as it provides a new avenue of raising the capital for the corporates in India who are currently dependent only on bank funds. 

Rights issue is the only option for the debt-heavy companies as bank would not provide funds for the company light on equity. Moreover, existing shareholders would be better able to appreciate the challenges and support the company for their existing investments. In the west, it is a huge market ($50b+ in Europe alone). However, in India it has not been successful mainly due to procedural reasons. The lengthy procedure to complete the rights issue made it difficult to realize the profit in the bearish market as by the time the rights issue completed, the price of the stock fell down to the issue price. Electronic trading of rights entitlement and rationalization of disclosures in rights can significantly improve the process and decrease the procedure time. Bulky disclosures are unnecessary since the shareholder already knows much more about the company through various mediums. It is better to give him concise quality information that would help him make better decisions. Rightly said by SEBI, disclosure procedure should be shortened for companies having a good compliance record. 

The proposed documentation still looks bulky but hopefully the regulator would be able to make the procedure lean.

Sterlite gains

The article talks about the recent acquisition of US based copper major Asarco by India’s largest producer of non-ferrous metals Sterlite and the benefits of the acquisition. It also advocates reduction in copper import duties.

The acquisition fills a part of the gap of copper ore deficiency India is facing. The deal seems perfect with $1.1b upfront payment and deferred payments of $600m over the period of 9 years. The NPV of deal is $1.1-1.2b which is way lower then the initial offer of $2.6b. But then copper prices have decreased from $3150 per tonne from its high of $8800. Biggest strength of Sterlite is its cash reserves which it used for the acquisition and no debt was taken, which is a good move, considering the present market scenario of weak prices and falling demand. Sterlite stock, however, lost price post-acquisition. It did the same when the company tried to hive off its aluminum assets but retreated under the investor pressure. Long term demand for ferrous and non-ferrous metals seems strong and reduction in duties of metallurgy imports has coincided with globalization and overseas acquisitions by domestic metal companies. 

But the import duty of 21% forms a huge cost for copper imports and needs to be reduced to boost productivity and efficiency. 

IPL versus IPL

The article talks about the present contest going on between the two IPL in the country. While the first one is very much known to everyone in the country, the second IPL refers to Indian Political League, i.e. the general elections.

As the dates clash between the general election and IPL, the security is not the only concern for the politicians to push for postponing the IPL. Rs.10k extravaganza on the political campaigns might loose all attention under the IPL show which has spend Rs. 5k on advertising and other benefits for its promoters. The first IPL ensures entertainment, action as well as glamour while the second IPL falls short on all these aspects. However, the parties have already started acting on the quote, “If you cannot beat them, join them”. More and more film stars and cricketers are joining in the election campaigns. While Sanjay campaigns from UP, Cheeranjeevi fights from AP. While Priety Zinta is being persuaded to fight from HP, Anil Kumble from Karnataka, Azharuddin from AP and Hema Malini from Delhi. Raju Shrivastava is reported to contest from Phulpur, once the centre for Jawaharlal Nehru. 

Thus, politicians plan to cash-in the popularity of Bollywood and Cricket stars to prevent themselves from the IPL storm.

16th March

Debate over MTM

The article depicts the fundamental difference in the debates over MTM rules in India and US. As the nature of the problem in both the economies is different, so should be the solution.

Over the last few weeks there is a demand from corporates, both in India as well as US, to provide relaxation in Mark-to-Market rules of accounting. Corporates in India have suffered huge losses on account of depreciating rupee which, if reflected in their balance sheet, could be harmful to the future of the company. In US, the Congress has forced that it will force the regulators to relax the rules if the latter fails to act. However, the corporates over there have suffered losses due to sudden evaporation of the mortgage-backed securities market. Marking such assets at non-existent prices has been a major reason of their losses. Thus, there is a need for change in valuing illiquid assets. For India, the corporates have failed on their bets on exchange rate which actually holds them liable for any losses occurred. While corporates argue that such losses/profits should only be reported at the time of contract maturation, fair value accounting proponents argue that MTM rules help investors know the financial position of the company at a particular instant and help them make more informed decision. 

It should be noted that MTM profits/losses are only notional and on the positive side they may also reflect inflated profits at times. 

An iffy opinion

The article contemplates on the issues currently faced by the Third Front regarding the stability and core agenda post-elections.

Third Front doesn’t have any single big issue at the core. The fragmented politics in the last one decade has accumulated a lot of regional parties with their own agendas and interests dear to them. The current coalition, even if manages to gain 150+ seats in LS and forms a govt at the centre with support from either BJP or Congress, wouldn’t last long owing to its leadership tussle. Mayawati has already said that she would support TF at Centre only is she becomes PM. Although CPI(M) leader Prakash Karat has tried to give direction to the front by saying that TF would fight for true decentralization of governance, it has been observed that there is already a good amount of decentralization presently. Several regional parties enjoyed a significant clout over Congress and BJP govt at the centre on various issues. The only common objective of TF coalition parties is to gain power. However, the previous non-Congress non-BJP has failed to provide stability with examples like H D Deve Gowda and I K Gujaral. 

What is needed presently for India is political stability in order to fight convincingly against the current global economic crisis as well as the political crisis currently in its neighborhood. 

Election largesse

The article advocates the handing out of gifts on festivals as Indian tradition and that EC should not consider it as electoral stunt. 

Indian polity has been always dominated by unethical ways to attract voters by politicians. Hooch, ladoos and even plain cash has been the modes through which the mai-baaps of Indian politics have tried to delight the aam-aadmi. When we see the cash appearing right in the Parliament, we do have sympathy for the minister who was accused of violating the EC code of conduct on handing out the cash to the poor on the occasion of Holi. Also the same for the minister in Rajasthan who was charged by EC for violation as mere 20k people turned up on a mundane ceremony-cum-feast of his grandson. It is to be understood that in states like UP, rich are obliged to hand out money to poor on festivals and to the large extent true for India as well. 

Festivals and ritually important days should be spared by EC from using its whip on ministers. This would help parties to convince that festive season is best for elections as some might even amend familial rituals to suit this time. Election time then would be a joyous coalescence of personal, communitarian and political.

14th March

Lock-in on stake sale

The article ridicules the attempt of govt to camouflage its mistake of selling away the telecom licenses at throw-away prices by a proposed three year lock-in period for the selling of promoters’ stake in these companies.

The idea is band-aid solution for the mistake govt has made by selling the precious govt assets at throw away prices to new entrants in the telecom sector. The lock-in solution proposes that promoters who have received licenses in the last year cannot sell their stake for the next three to five years. If it does, then half of the money received from the selling would go to govt while the other half would strictly go to the company. Even the fresh equity that is issued, the proceeds would go to the company and not to promoter. But this just delays the profit for the promoters. While the companies have paid around Rs. 1651 crore for the license, the stake dilution would fetch them Rs. 10K crore. Indeed, there is no hurry to sell the stake for them. Telecom sector is growing leaps and bounds without any effect of recession as it adds 9.2 million subscribers in last month. 

The mistake made by govt needs an explanation to public. Repeated calls for auctioning the licenses, which would have fetched the govt much more money, went unheard. The new proposal doesn’t solve the problem but increases the complexities for existing operators. 

On Knife’s Edge

The article comments on Paksitan’s self-centric political leaders that have never let the Pakistani polity evolve to work collectively. With Pakistan surrounded by four-sided crisis arising from political instability, rising militancy, US military offense and economic crisis, it is imperative for Pakistani polity to rise above individualism.

The euphoria of re-establishment of democracy didn’t last long as Zardari is once again fighting the political crisis. As PML(N) people goes for a long march against the autocracy of Zardari, the fact endorsed by his own party people, the attempts by the latter to prevent Nawaz Sharif from contesting the elections, prevent restoration of Justice Iftikhar Chawdhry as well as to assert his rule in Punjab province proved futile. Zardari might be pushed for another deal with PML(N) to solve the issues but given the history of Pakistani polity, it would only set ground for another crisis in future. Individualism has always been dominant in Pakistani polity, something which is a reason for every crisis in the past and the current crisis being just another example. 

Even as the coalition partners of PPP, the ANP and MQM, distances themselves from the agitation, it is clear that Pakistani feudal elite remains incompetent in solving national issues that require democratic consensus. 

Women on Top?

The article contemplates on the winnability of women in the Indian polity. The statistics show a dismal performance of women in Indian polity during elections compared to their western counterparts. 

With four women, Sonia Gandhi, Mamta Banerjee, Jayalalita and Mayawati, currently dominating the Indian political scenario and all aspiring for the top seat, it is important to note that women in general have been poor performers when it comes to elections. In LS, in the past six decades the women percentage has remained between 3.5-9.2%; in terms of numbers between 19 and 49. Compare it with highest women Senators in US 435-member House of Representatives being 75, while the same for British House of Commons being 128. In the last general elections women candidates performed pathetic mainly in the states of UP, West Bangal, Madhya Pradesh, Haryana and Andra Pradesh. The total of 44 women candidates won out of 177. 

The paradox between India and their western counterparts is ironical. While India has no qualms on having women at leadership posts at any level, but the latter fails when it comes to fight for the offices. On the other hand while women land up winning in elections in the western democracies, they are not preferred options for the top job barring Margaret Thatcher and Angela Markel. For India, currently all the BIG FOUR has potential to make it to the top seat. This should prompt a rethink on winnability quotient of women in general.

13th March

Agenda for G20

The article talks about the prospective agenda for the coming G20 meet on April 2 with respect to the global economic downturn and the role of governments, central banks and most importantly the IMF to fight the Great Recession, as called by Fund’s MD Dominique Strauss-Kahn.

As projected by IMF, the world economy would shrink to register only 0.5% growth this calendar year with a possibility of negative growth in the coming year, the first after the WW2. It could be detrimental to emerging economies like India whose prospects are linked to the world growth. However, the IMF MD calls it a Great Recession instead of Great Depression. Main reasons for this include, the proactive role played by the central banks all over the world by issuing stimulus packages which was not there during 1930s. Also we could see less possibility of protective trade practices but a move towards created a better balance or rather decreasing the current imbalance in the global economic order on a long term.

Thus, the main agenda for the upcoming G20 summit should be to bring out solution to get the world economy out of current comatose state and address long-term imbalances. 

Resilience at lower levels

The article tries to alley to fears over contraction in the industrial production, India has witnessed which is appears less drastic at the macro level but is severe at micro levels. However, there is a need to change the sentiments of consumers as the contraction is more sentiments driven then by decline in real income.

As the overall industrial production declines by 0.5%, it is not as bad as expected and especially when compared to other economies in the world. However, at the micro levels, the figures are discouraging with respect to Processed Food industry (-16%), Transport equipment and parts (-13%) are some of the examples. Even the exports have declined massively. 15.4% growth in capital durables, although on lower base, should nullify fear over decline in precipitous decline in new investments. Growth in consumer goods after three month downward rally is a positive sign. Even bourses have taken a break from its southwards stride and rallied 2% over positive global cues. Thus, the resilience at lower levels shows a sharp revival when sentiments improve.

Govt debt-financed stimulus could possibly crowd out private borrowers. RBI could soften it by reducing the CRR which is high currently at 5% of banks’ demand and time liabilities. Govt and RBI needs to ensure that credit needs would be met when economy recovers. Much of the decline is sentiment driven which changes rapidly. 

Michael Rocks Again

The article talks about the comeback of Michael Jackson on the international music arena with his proposed 10-concert tour, his first in 12 years, with the designer Christophe Decarnin of Balmain. At the same time he also attempts to stop the auction of some of his 2000 precious possessions in California this April.

The comeback would surely give a boost to Balmania brand. Christophe Decarnin has been known for his relentlessly wicked, defiantly counter-culture and unabashedly loud and sexy style which is inspired by metamorphosing a man with a Sparkling Glove. Thus, this concert comes at the best time for both Decarnin as well as for all those fashion lovers. Even if the Jackson is not able to stop the auction and the concert goes as a big flop, at least he would be satisfied to prove that there will always be takers for the Off the Wall genius. 

12th March

Lower Call Termination Rates

The article talks about the merits of lower call termination charges which would bring down the tariffs as well as encourage greater broadband penetration. It also talks about developing the rural telecom infrastructure with the help of USO funds as well as state supported infrastructure.

The decrease in lower termination charges would increase the broadband penetration and would be a boon for internet telephony. It’s time telecom should move towards IP-based networks and cheap internet telephony. Customers should only pay for broadband usage and any VAS. Presently ISPs provide only limited telephony which cannot be used to connect to landline or wireless phones. With lower termination charges, a free play in internet telephony would allow ISPs to offer services where the call originates from internet and terminates at regular telephone. However, telecom companies fear that lower tariffs mean lower revenues and also it would discourage telecom penetration in rural areas. However, with lower tariffs, the increase in volume should compensate for loss of revenues. Rs.20k in the Universal Service Obligation (USO) can be used to develop rural telecom infrastructure. State supported infrastructure could reduce companies’ investment in infrastructure and thus make it possible for them to reduce tariffs further. 

What’s needed for DOT and regulator TRAI is to use USO funds to establish fibre-optic network in rural areas which would help increase the broadband penetration as well as provide backhaul infrastructure for wireless services. 

More power in the offing

The article discusses about the recent steps to increase the power equipment capacity in the years to come. However, it is skeptic that with frequent power thefts and laxity of govt with respect to power sector policies, will this increase result in increase in power production and supply?

It is estimated that domestic capacity of power systems would grow four-fold in next five year. Currently annual capacity is about 10K MW. New capacities would boost equipment supplies as well as timely completion of power projects. With L&T joining hands with Mitsubishi for 4K MW of power equipment capacity to come up by 2010, Bharat Forge collaborates with Alstom for 5K MW power machinery capacity to come up by 2011 and the market leader BHEL itself planning to rev up its capacity by 50%, it points to a huge increase in market for power systems and a virtuous cycle of high power generation and dormant growth. But the question is whether this boost would result in increase in power production and supply? The lethargy of govt with respect to power projects and more then that inability to deal with power thefts has led to considerable revenue leakages in power distribution. 

What is needed at this point of time is a proactive power policy with no room for populism but for a free market where quality power is availed at competitive prices. Recklessness and populism has, for long, ailed state power utilities to coagulate funds for increase in speedy capacity addition. The increase in equipment capacity is needed to clear the investment backlog.

Anatomy of grey

The article talks about the increase in the grey hairs of the US President Obama and contrasts it with the Indian PMs who hardly experience such greyishness with their head with special case of Narsimha Rao.

The PM of 1991 in fact had bettered his eye-sight as well as overall health during his term as PM. However, it is seen that the US President Obama has seen the grey matter in his head ever since he took the position. As opinioned by some doctors, a single year as US President is equivalent to two years for less elevated individuals as far as wear and tear in the body is concerned. But for India, leading the world’s largest democracy and a greater challenge of leading a coalition of number of different ideologies has not deterred the politicians from going for the hot seat. With majority of Indian PMs above 60 with the oldest being Morarji Desai who took the PMship at 81 in 1977, there has been no significant decline in health of increase in greyishness on the head. The youngest of them, Rajiv Gandhi, however, showed a good increase in grey hair during his term of seven years which ended in unfortunate assassination. 

Thus, it cannot be more evident from the facts above that the high office does have an effect on everyone who takes it. The Obama example only highlights the importance of grey matter needed to take up the big job.

10th March

Tough Lessons

The article asks the corporates to take lesson from the recent losses they have suffered due to the exchange rate fluctuations and position themselves better in future to tackle such issues with sagacity.

For Indian corporates, the global economic downturn followed by steep rupee depreciation made them lose big time in the currency deals. As this was their first exposure to the globalized world, the learning curve has to be high. In pre-reform days, they were less exposed to the outside world and the exchange rates were relatively stable. But not anymore. Corporates who thought that the exchange rate is one way street and they would benefit indefinitely find themselves in a shock. Those who failed to hedge themselves against exposure are in a greater trouble and suddenly they find themselves shelling out more rupees to remit outside due to weakening currency. Even those who hedged suffered losses as they didn’t anticipate such a speed and scale of rupee depreciation against dollar – 15% since January. 

The wise thing to do for corporates now is to weigh their risk-return trade off and take only the risk they can bear. It is better for them to cut losses and exit rather then wait for the revival. Nonetheless, it is a lesson for them to concentrate on profits from their core business rather then treasury operations.

Setback for NDA

The article depicts the political cynicism that is currently underway in Orissa with BJD released the knot off BJP on the grounds of seat sharing issue while CPI(M) joins BJD in an attempt to create a third front at the Centre.

The separation of a decade long BJP-BJD alliance in Orissa marks the increasingly fragmented political landscape for the two nationalist parties and also strengthens the emergence of a third front at the Centre. Two major reasons that seem here for the parting besides the electoral conflict are the communalized politics played by the BJP in the state starting from the murder of Graham Stains and the recent church attacks and also the increasing popularity of BJD in the state which gave confidence to the party to reject BJP demands on seat sharing in the general and assembly elections. The alliance also enforced development plans in the state that left out Dalits and Tribals giving an excuse of Maoists threat that hindered the plans in tribal areas. 

However, CPI(M) alliance with BJD also marks the ideological compromises for the former and is reflection of its inability to refashion secular politics by joining ex-BJP ally and showing its dependence on electoral arrangements to keep BJP out.

A symbolic move

The article wonders whether the quest for designing a symbol for Indian Rupee would reach to its logical conclusion considering the diverse Indian history which cannot be represented in a single symbol as demanded by govt.

It could have been no better time to announce the competition for international symbol for Indian Rupee when it is seeing its historical lows against the dollar. However, the demand of the govt that the symbol should represent “historical and cultural ethos” of the country seems doubtful. The rupee came to existence since the time of Sher Shah Suri in 16th century and promoted pan-India by Britishers. While every country has a history or derivation for its symbol which is able to represent the nation in one single symbol; be it British pound, US Dollar or Japanese Yen. But the challenge for the designers of symbol of Indian Rupee is: to show India’s essence in one symbol; something which even the Indian polity has not been able to do. Just go to the election booth this general election and you will find numerous symbols on the voting machine.

Now the question is whether 2.5 lakhs and one month is enough for Indian designers to create a universally accepted symbol of India which has eluded Indian politics since past 50 years?

9th March

Countdown to Nano

The article talks about the present battle between the two largest auto-majors of the country, Maruti and Tata, after the latter is all set to launch the much awaited Nano and the former preparing its Alto for the price-war.

Pre-launch of Nano, Maruti was expected to pitch M800 against Nano, but considering the looks and technical superiority of Nano, M800 stood a little chance against it. Thus, Maruti decided to go with Alto by launching an all new low-price model of 2-lakh tag, quite near to the 1.2 lakh Nano and technically better and tested vehicle. Nano, carries a disadvantage of yet to be mass tested. 

Although Tata denies Nano to be in competition with anyone and thus rethinking of its launch with new Alto, the challenges remains the same for Nano. It has to generate huge volumes to recover the amount invested on its research. Volumes can be generated only if it adds value to every segment of society. For a city-dweller it is a good solution to parking problems. For some, a lifestyle, eco-friendly option while for the vast majority, an option to buy a modern car. The biggest advantage with Nano is the buzz it has created in the auto market. The new Alto would just add a Nano-drop to the already exciting Indian Auto Market. 

Paying for our sins

The article talks about why the southwards plunge of rupee against USD has still not raised alarms as it should. But this doesn’t discount the RBI’s duty to intervene to stop this depreciation stride.

There are three major reasons why the alarms haven’t raised despite rupee touching the all time intra-day low of Rs.52.2 as well as overall 15% dip since January. First is the allayed fear of high inflation which generally follows the rupee depreciation but at the current levels of 3%, it is all set to go negative while the oil prices are also currently very low at $45/barrel. Secondly, the exporters have been benefited as the depreciation comes as a boon for them. Thirdly, the depreciation is seen as more of a strengthening dollar then weakening rupee. However, the depreciation puts RBI at cross roads. Lowering interest rates would further aid the downfall. Although our reserves stand strong at $250b, but using them would reflect the losing faith in the currency. Strength in currency reflects the strength of economy and the state of its public finances. But our fiscal deficit of 12% of GDP defies it right away.

Once again India faced the impossible trinity i.e. discord between capital mobility, an independent monetary policy and dismal exchange rate. 

To bee or not to be

The article cautions over the rapid extinction of bees that are taking place all across the world which has raised alarms especially in US and UK. 

COLONY Collapse Disorder, not a word for current real estate downturn or the state of public housing projects, but refers to the rapid decline in the population of honey bees as reported by the beekeepers, both commercial and hobbyists. Apis Mellifera (Western Honey Bee) is a catalyst for a slew of agricultural products that require pollination. US beekeepers earn much more money from renting out bees for pollination then by selling honey. However, their decline is an alarm for the $15b worth of agri-products that depend on pollination. Primary reasons are cited from tiny bloodsucking mites to mobile telephony, GM corp to pesticides. UK govt has even blamed the unregulated practices of beekeepers for the extinction. Solutions like creating bee-friendly zones as well as encouraging beekeepers to keep variety of species have hardly answered the question of the reason for their extinction.

It is sad that the creature which has been an inspiration for management gurus for collective decision making, is facing the existential dilemma which nobody is able to solve.