Archive for August, 2012

Churn, don’t curtail consumption

Thursday, August 30th, 2012 August 30th, 2012 Joydeep Ghosh

It’s an interesting thought floated by a friend over lunch. As usual, we were discussing how India is floundering on everything, primary due to the so-called policy paralysis.

Everyone agreed that the government needed to do something to change things, and fast. The thrust of the conversation was that while everyone keeps harping about global problems impacting India, there is little we have done to address our own problems. But, then, what can be done? – Most of us were speechless, as except blaming the government, there were no answers.

Then one of us said – the solution lies in churn. What… churn? – An interesting discussion followed thereafter. Here’s what we journalists call the edited excerpts.

The argument is simple. Say, someone is selling a shirt for Rs 100. The profit: Rs 20. If he reduces the price to Rs 85 and sells two, his profit will increase to Rs 30. But two people would have bought those shirts because the pricing was attractive to a wider audience.

Extending the logic to other sectors, say a builder’s margin is 30 per cent on a property priced at Rs 50 lakh. If the same property is sold Rs 40 lakh, he will attract more buyers.

Importantly, those buyers will take a smaller loan to buy the flat leaving more disposable cash of around Rs 8,000 – Rs 10,000 in this case, in their hands. This is likely to lead to consumption of other goods, say even a car. The rest follows…more expenditure means more requirement of goods and services…more production and so on.

In the economic parlance, it is referred to as increasing the velocity of money and transactions, as more people participate in a competitive market leading to the economic well-being of a larger section of society. To quote Aamir Khan from Three Idiots… more people should say ‘Aal Izzz Well’.

But, many companies or builders are unwilling to take a cut on their margins. And the approach of squeezing the maximum out of a few is hampering growth by keeping potential buyers out of the market.  No wonder, most consumers think even discount sales are gimmicks. Imagine buying jeans for Rs 5,000 in a ‘sale’.

Recently, Analjit Singh, non-executive chairman of Vodafone was explaining that the approach that governments abroad have is quite different. Globally, governments ask companies to focus to top line growth, bottom line growth will automatically take place – something, we don’t focus on aggressively.

How to increase the churn? –Finance Minister P Chidambaram seems to have taken the first step by asking banks (reportedly) to put pressure on builders to cut property rates to encourage buyers. This action needs to be extended to many other sectors.

The builder community is in deep trouble because they have been unable to sell flats and repay banks. And they are finding it hard to sell because they are holding on to prices through help from investors and refinancing from private equity players, venture capitals and even same banks (sometimes, at mind boggling rates of 30 per cent a year). So, instead of selling property, they are busy servicing debt.

Till recently, banks used to charge a prepayment penalty to retail borrowers if they shifted to another bank and ‘did not pay from their own funds’ – a practice both RBI and NHB have stopped now. Why can’t the same logic of ‘refinancing through own funds or a penalty’  extended to corporate India? This will put pressure on them to deliver.

Banks hold the key here. Aggression on their part will help the economy. It will even help improve their books. Who will bell the cat?

Constitutional checks and balances

Tuesday, August 28th, 2012 August 28th, 2012 Tarun Chaturvedi

The CAG has done it again. Another series of reports castigating the government for its wrongdoings and causing a loss of hundreds (or maybe thousands or may be lakhs of crores) to the exchequer have been tabled in Parliament (CAG reports on allocation of coal blocks, mega power projects under special purpose vehicles and on the private public partnership project for Delhi’s Indira Gandhi International Airport). And yes, the government has responded in its own trademark manner, by either rubbishing the findings or remaining silent. The government has always responded in this manner to anything which is not in sync with its line of thinking.

The one response that is new this time is that the CAG has exceeded its brief and is now working beyond the powers vested in it by the constitution. This is what Narayanswamy (MoS PMO) meant when he accused the CAG of “exceeding his mandate”.  This is not a matter of joke and such a comment should not be taken lightly in any democracy. CAG is one of the few independent institutions deriving strength from the constitution - not from the government and any comment questioning the limits within which it can perform its duties is surely an attack on democracy.

This response is in line with the Government’s stand on judicial overreach which it is trying to counter by introducing the judicial accountability bill. What perplexes the mind is that is this government trying to champion the cause of independent constitutional authorities which form the bedrock of democracy or it is fast trying to bring all such institutions under its the control? In all probability, it is the latter which is the main intention of the government. If the government succeeds in this effort, it is going to be a disaster for the long-term survival of the democracy.

The constitution of India has developed a system of checks and balances to ensure the smooth functioning of the democracy. The CAG and the judiciary are two important constituents of these checks and balances. By lambasting them in public and trying to bring in laws to curb their work areas, the government is doing the nation a huge disservice. The ruling UPA should realise that the nation will not come to an end in 2014 (when it faces the electorate) and so should not try to respond to serious issues like scams etc. by undermining the authority and functioning of the independent authorities.

Tireless crusader, lost cause?

Monday, August 27th, 2012 August 27th, 2012 Nivedita MookerjiNivedita Mookerji

More than 10 years ago, when I was not in Business Standard, I got a visitor in the office one afternoon. The visitor introduced himself as an NGO person and told me that he was working on fighting corruption in the Income Tax Department and gave me a bunch of papers with survey findings and statistics on the subject. Since I found the data interesting, I pursued the story, which got published.

Ever since then, the visitor stayed in touch with me for various other things that his NGO was working on. I found him to be passionate about his work and made it a point to support him in all his endeavours. He even came home a couple of times to discuss issues related to either corruption in the food distribution system or the need to have an effective RTI system or some such thing, as he counted me as a friend and perhaps saw a streak of activism in me.

What I thought was striking about this man was that he was always looking for solutions to so many social problems, and that he was reaching out to people the hard way to convince them that his work needs to be recognized. There were times when I felt that the conferences or workshops that he was organizing may not draw many eyeballs, but had never had the heart to tell him that. I too wanted to encourage him when he was trying to do good.

Interestingly, after several months of knowing him, came a turning point. I still remember the day when I was escorting him out of my office after he had come to invite me for one of his events. He stopped suddenly to tell me that I should know his real identity. I thought it was some joke. But he introduced himself the second time to me—this time as Arvind Kejriwal. Earlier, I had known him by another name, which he didn’t want me to repeat…. He reasoned he had to hide his identity earlier as he was still in the rolls of the Income Tax Department while he was trying to expose the people there.

Today when I was watching him on TV agitating in the VVIP areas of the capital while police was using teargas to control the crowd, images of Arvind Kejriwal, as I had known him through the years, kept coming back to me in a rush.

Till his last big rally a few months ago with Anna Hazare at Ram Lila Ground, I had gone and supported him and also defended him and his cause in so many arguments with friends, colleagues and family. This time, I only watched him on the screen, not sure what future he’s looking for himself and whether he has changed from the time I had met him first years ago.

Library dreams

Friday, August 24th, 2012 August 24th, 2012 Sadiya Upade

I was really excited about Sunday. Not just because it was my weekly off but because I was going shopping, book shopping. So, I landed in a mall and headed straight to Crossword, ignoring the dozens of sales promotions that kept cropping up in front of me (With some difficulty, I must say). It would seem that I had taken the Crossword motto of ‘Wear the old coat and buy the new book’ to heart. But then I had not bought a book for long and was craving to pick up a nice one, putting my name on the front, caressing the pages, and settling down with it. I had built the happy ending in my head.

And then I entered Crossword.

Crossword had a sale going on too, which was why I was there in the first place. It turns out my money isn’t fond of books, only I am. Anyway, the sale was a disappointment. I couldn’t find ‘the’ book that I wanted and it went downhill from there. I was made to spell out Ray Bradbury’s name thrice and then had to enter it myself, only to be told his books were not in stock. I could have clubbed the staff with a bat at that point. My happy dreams were crashing down. But, I was not going to give in. I took the escalator downstairs and entered Landmark. This time my dreams were crushed. I couldn’t buy Bradbury and instead limped home with a single book.

Unhelpful staff and a handful of authors in stock that was the curse of the big bookstore. As Tom Hanks and Meg Ryan will tell you in You’ve Got Mail.

E-books are the next big change in the literary world, so much so that they are being called the fiery contender that could dethrone print from the mantle. And sure enough there are converts who are happily reading books on their e-readers, authors who have relented to having e-books published (J K Rowling), and publishers who are launching enriched e-books (mix of text, audio and video) to save sales. Even in India where e-books are at a pretty nascent stage, Penguin India recently announced launching an e-book range. Also, Amazon launched its Kindle store in India this week.

So, where does that leave the humble physical book?

Well, if you were to listen to publishers, physical books are going nowhere for decades. Yes, e-books are growing at a fast pace but they are being treated as a parallel economy to paperbacks and hardcovers.

I am no fan of e-books. What I don’t get about this e-book rage is how can one get over the joy of holding a book, of lining them up on your book shelf, of flipping through the pages. As John Makinson, CEO, Penguin Group, once said, “I think, and I think this is especially true in India, people have a very special romantic attachment with the book. They like to browse it, buy it, put it on their shelves, share it.”

I am definitely a romantic when it comes to books. It has been a dream of mine and many book lovers I know to have a library at home. I love rearranging books on the two shelves I have so far, it is such a joy. Don’t tell me I can build an online book shelf. What am I supposed to do with that, stare at the images?

And I am not really a technologically challenged person. I am a member of Goodreads and a plethora of other sites, and I read articles online, only I can’t read e-books.

It’s not that I don’t get the advantages of e-books. I know, I might not find physical books as easily and I may have to pay more for them, but Mr. Bezos it is not inconvenient to turn the pages of a book, it is more inconvenient to rub your eyes over and over while reading an online version.

So, if you are among those who like e-books, great. If not, don’t give up on that library just yet.

Perilous Journey

Tuesday, August 21st, 2012 August 21st, 2012 Praveen Bose

Most of us are very finicky about our food. It can be quite tricky when one is traveling. “Food on the train is not safe or healthy” is something I hear very often when I am having to travel.

The mother also has no trust in the water one gets to buy aboard a train, and the wife has no faith in the food sold on trains or on the railway platform either. It’s not hygienic, is the chief complaint.

It’s always a conflict between my resolve to not carry too much luggage, including food, and the wife’s resolve to carry food and water and other paraphernalia for a meal.
The wife’s resolve only got stronger after an acquaintance and the three companions, on an all-India tour, were sedated on a journey and robbed of all their belongings — not one piece of luggage or a single Rupee was spared. They were helped by policemen in Kerala.

Now I find that the wife is always fasting for a spiritual reason on a day-long train journey.
It’s OK to not buy anything from the train or the platform if you are making an overnight journey. But, what if you need to make a long journey. Or, if due to some reason you run out of food?
I am now planning a journey aboard the Vivek Express, the Dibrugarh-Kanyakumari train that travels 4278 km. For nothing, but just to test our resolves and the Railways.


A colleague had a harrowing experience a while ago, or do I call it “a near death experience”?

He was poisoned at a major railway station. He was in the waiting lounge and had left his water bottle along with the luggage and had gone out for a while. On returning to quench his thirst he drank the water from his water bottle.

He felt the whole room spinning around him and when he woke up it was a Sunday on the platform. He had landed at the station on the previous Friday to catch a connecting train!

Perhaps the wife has a point.

Shooting schedule

Saturday, August 18th, 2012 August 18th, 2012 Pablo ChaterjiPablo Chaterji

It is now exactly nine years since I first picked up a camera in anger for Business Standard Motoring. I mean that literally – the first frame of 35mm film that I shot for the magazine (during my first ever road trip, to various parts of Gujarat) was taken when I was in a very dark mood, having just lost an argument with a truck, which adopted the simple expedient of forcing me and my Fiat Siena off the road. Soon after that, I came across a lavishly-turbanned man walking his camel, not unlike one would a pet dog, and they became Frame No.1. To say that the nine intervening years, between that picture and today, have been a hell of a ride would be a masterpiece in the art of understatement.

I wasn’t a photographer to begin with – or not a full-time one, at any rate. Having studied the art as part of my curriculum at college, I discovered that I enjoyed it and that I could shoot a halfway decent photograph (‘Remember to take the lens cap off’, as one of my professors said); this came in handy when I applied for the BSM job, because if there’s one thing we value here, it’s a multi-tasker who can drive, ride, write, shoot pictures, fight with the parking attendants, play Beethoven’s 9th and eat five vada pavs, preferably at the same time. Soon, from merely taking photos on my road trips, I was press-ganged into shooting the cars and bikes that fill these pages.

It was a bit of a steep learning curve. My very first automotive shoot was at the Bajaj test track, with a colleague astride the second-gen Pulsar, and me panning frantically with an old 35mm film camera (I had, er, left behind our only digital camera in a taxi. Painful story. Steep learning curve et al). The moment Param, our chief snapper at the time, examined the film that came back from the lab and cocked an eyebrow, I knew the outlook was dark – so dark, in fact, that it looked like I had photographed the bike in a dungeon, with a shroud around the lens.

Thankfully, things got better – and brighter. A new digital SLR was procured, which made life considerably easier, since I could immediately examine the results and, crucially, spot the mistakes I was making. A familiar routine set in – wake up obscenely early (I hate that part), get to the shoot location, spend the next few hours hanging perilously out of the boots and windows of tracking cars, climb all manner of heights to get a bird’s-eye view, lie on the road to get a worm’s-eye view, make whoever’s driving/ riding do hundreds of drive-bys and then decide the first one was the best, have breakfast at McDonalds/an Udupi restaurant, head back to the office and fall asleep.

All right, so it’s not all as mundane-sounding as that. Photographing cars and bikes is a tough job, given the limited locations that we have access to, so the challenge is to make every shoot look different, even if we’ve already used the location multiple times. On other occasions, when we manage to get hold of an all-new location, it’s a very liberating thing to be able to let your imagination run free in new ways. Of course, there’s also the cars and bikes themselves – making an already gorgeous machine look even better (or a dud look good – much harder to do) is a very satisfying endeavour, and when you nail that perfect shot, all the early mornings become worth it. Well, almost – I still hate that part.

Sebi and the hypocrisy of geographical spread

Wednesday, August 15th, 2012 August 15th, 2012 Sundaresha Subramanian

The market regulator has somehow got attached to the idea of spreading mutual funds to centres beyond Mumbai and its metro sisters. In its next board meeting, Sebi is likely to announce measures to make mutual fund products expensive for these smaller towns under the pretext of incentivising distributors in these areas.

Is it going to help? Over a year ago, Sebi said distributors who bring in new investors will get a fee of Rs 150. When critics said the measure would not mean anything in big cities where this sum may not even cover the taxi fare, it was argued that this will enhance the reach in small centres. If this was indeed the intention, the measure did not yield the intended results. After a year of such incentives, the share of five metros (Mumbai, Delhi, Kolkta, Chennai and Bangalore) in total assets of the mutual fund schemes has remained a high 73.66 per cent at the end of June down from 74.75 percent in September 2011. But the share of next ten cities actually increased to 13.29 per cent from 12.96 per cent.

Within the metros, while Mumbai and Chennai showed a fall in share, Delhi, Kolkata and Bangalore showed an increase in share of MF assets.

While this data does not give a flattering account of the Sebi measure to increase the investor base, the loss of folios in droves simply demonstrates the inefficacy of such sales-bolstering efforts when the lacklustre market conditions have killed the demand.

But the lobbyists seem to have convinced the regulator to make another supply side effort.

But my crooked mind can’t but laugh at the hypocrisy of such measures. Just look at what is the geographical spread of the regulator that is prophesying reaching out to smaller towns?

Just a couple of weeks back it opened an office in Bangalore. No, it’s not a typo. I am not talking about Mangalore. Almost a decade and a half after they made it a verb and much after the silicon valley was Bangalored, Sebi has finally found it fit to open an office in the IT capital.

It would not be wrong to say 95 per cent of Sebi is present in Bandra Kurla complex.  It has four other regional offices in Ahmedabad, Chennai, Delhi and Kolkata.

What about the North-East? Are people not investing there?  Are people not being duped there? What about Hyderabad, where there are as many scams as there are Reddys?

I remember when Raju made his famous confession, Sebi had to send people from its Chennai office. I cannot overemphasise how much precious time would have been lost  in transit and how much more would have been lost in trilingual (Telugu-Tamil-English) translation.

The physical presence is important to gather intelligence. Intelligence is key to avert disasters. At present, Sebi largely relies on its Integrated Market surveillance system to monitor the market. It relies on investor complaints to take corrective action which are often post-mortems.But like the recent episode in the Deccan Chronicle case shows, a lot of the world is offline. It is not possible this through IMSS. If it has to attain the detterence that is a sign of all good regulators, it has to be close to the action.

If it does that, then  it can bring to book unregulated competitors such as collective investment schemes, realty schemes, Emu farms, retail products schemes and illegal debentures long before they become multibillon dollar monsters. It is this unfair competition that doesn’t allow well regulated products such as mutual funds penetrate these markets

Sebi should climb down its ivory tower in the financial megapolis, sweat around on the streets and get the hands dirty. It should lead by example. No better leader than the one who practices what he preaches.






Needed: Olympian attitude

Tuesday, August 14th, 2012 August 14th, 2012 J Jagannath

Sports Minister Ajay Maken feels India cannot expect to win more medals in Olympics as it has a poor Human Development Index (HDI) and low per capita Income. At six medals, it wasn’t a bad haul at all for us this time around. But before you join the deafening chorus of “Mary Kom, the Super Mom”, take a look at the medals table and you can’t not notice that North Korea is way above us with four gold medals.

Now, this is the same North Korea where half the population subsists on one-square meal, which might as well be nibbling the scrawny legs of rats. The thing is that even the hideous DPRK has a semblance of a sporting encouragement system in place. While our politicians, both at Centre and state, who are falling over one another to shower money on the medal winners, weren’t to be seen during the athletes’ trying times.

Maken’s remark is quite reminiscent of the point made in the the book Poor Economics, where MIT economists Abhijit V Banerjee and Esther Duflo attribute India’s dismal Olympic performance at least partly to very poor child nutrition. They document that rates of severe child malnutrition are much higher in India than in sub-Saharan Africa, despite the fact that most of sub-Saharan Africa is significantly poorer than India.

Let’s face it, even the healthier part of the country places far more emphasis on academic performances than sporting ones. We can crack the toughest of mathematical Olympiads, see through any IIT paper, solve the most unyielding physics problems but a hundred metre sprint is not within our DNA. Part of the blame lies with our obsession with cricket and another part is the fact that we treat athletes as freaks of the nature. Maybe this is why we still come up with occasional medals in individual events but come up a cropper in team events. If this attitude persists, we are doomed to be deemed by the world as one-trick ponies that can only provide back office support but have nothing else to show for themselves.

It’s not enough to goad the athletes from the comfy confines of our home through social networking sites. And I guess we’ll continue to be like this as long as we are served by governments that only care about destination but not the journey. For example, Maken needs to be shown this particular paragraph in a recent Grantland article written by Tyler Cowen and Kevin Grier, both academic economists: “Even the significant segment of the Indian population that grows up healthy is at a disadvantage relative to China. The Chinese economic development model has focused on investment in infrastructure; things like massive airports, high-speed rail, hundreds of dams, and, yes, stadiums, world-class swimming pools, and high-tech athletic equipment. And while India is a boisterous democracy, China continues to be ruled by a Communist party, which still remembers the old Cold War days when athletic performance was a strong symbol of a country’s geopolitical clout.”

My arguments might sound a tad lazy but then, lazy sporting attitudes and lazy sports managements probably deserve lazy commentary.

Why jobs come before higher education

Saturday, August 11th, 2012 August 11th, 2012 M Saraswathy

This placement season Avinash Iyer is playing it safe. The 23-year-old engineer from West Bengal had an opportunity to pursue his MS in the United States. But he chose to be a part of his college placement and is happy with a big IT job and a fat package. He has learnt from the experience of his elder brother in 2008-09,  who had opted for higher education in the US, only to find, on his return, that the job market was dry.

A recent trend in India is that engineering students this year have chosen to join companies with fat pay packages rather than go for higher education. They seem to have learnt their lessons from 2009-09, when students who had completed higher education found it difficult to get decent jobs. This time, they are playing it safe.

The protagonist in a popular Bollywood movie tells his friends worried about exams and placements, “Get educated, not for the degree that you would get at the end of it. Get educated, to learn, for the sake of knowledge.” However, the situation in the country is far from this scenario. Most students will openly tell you that they chose to join an A, B or a C institution only because of the attractive salaries that they would end up getting post their degree from this institute. Let me tell you, I am no exception to it. I too, joined a journalism school with a hope that this would help me secure a job in an easier manner.

The ongoing slowdown has also given an excuse to students to find a good paying job for themselves rather than pursue higher education. The students here are not at fault. The incentives for daring to leave a job and pursue further education and research are just not good enough. The meager stipends coupled with lack of sufficient grants make it ‘impractical’ for students to choose anything other than a job. Plus, the Indian ethos also allows us to question other fellows who have dared to step into the ‘other path’. “You are 23 years old and still studying? Don’t you want to take up a job and settle down?”–are the general remarks to these exceptions.

While it is not entirely fair to put the ball in the government’s court by citing lack of grants, financial inadequacy for research remains a concern. Picture this. As per the annual report for 2011 of the University of Texas at Dallas (United States), a whopping $93 million was spent on research. It is not even one-fifth of the amount in India. Though institutions have been trying their best to concentrate their efforts on research, a lot still needs to be done. Infrastructure is also a concern in some of them, which needs immediate attention.

According to reports, India contributes only 2.2 per cent to the total population of researchers, which makes it a country with one of the least number of researchers per million among developing nations. If all stakeholders come together and try to work out a solution, higher education would have the place that it deserves among the Indian community.

On a lighter side, this is not meant to dissuade anyone from going for a fat package. Of course, you need to show them what you are worth! But if you think you are capable (financially and otherwise) to take the ‘other path’, please go for it. We need more such people to brighten the temple of the international knowledge community.

Question Mark Media

Monday, August 6th, 2012 August 6th, 2012 Jyoti MukulJyoti Mukul

When YouTube and television channels beamed a hapless girl at Guwahati being molested by men looking into the camera, it did see a current of dismay and anger run inside me. At the same time, I suspected that the attack has been orchestrated by the one who caught the incident for million others. This suspicion stemmed not so much from the facts of the case but from instances of television channels provoking people to do something to build up their ratings in the past.

Though such cases are dangerous and counterproductive to the cause of restoring human dignity and deploring sexual assaults, what is more frequently witnessed are incidents of media creating issues when there are none. These could be in any form including corporates planting liners on television channels to push up their stocks or rivals bringing it down with equal speed. Naturally, a large section of people desist media and rightfully so.

Yet, sometimes the dislike for media gets carried too far. There is one incident that I particularly remember. As a reporter covering energy sector, I went to meet a director on the NTPC board some years back. It was a first meeting with him but he began the conversation with a usual disdain for media and how it was playing in the hands of Ambanis to deny NTPC natural gas which it wanted to source from Mukesh Ambani’s Reliance Industries Ltd. Well, this I thought was rude behaviour. First, you agree to meet and then all you say is that how media is the culprit, but as reporters we are used to this and I had an answer to it too. If one of his former chairman decided to go to court and readily play into the hands of one of the Ambani brothers and then subsequently join him, then isn’t his criticism of media misdirected, I asked him. Probably, media reports are not as harmful as such actions of the powerful that go unnoticed. Though I came out of his room with a terrible headache, he became a very reliable source of mine later.

There is media bashing of another kind as well, which reporters encounter both in their personal space and during news gathering. It often manifests in the form of `who are you to comment’. I do question myself on this very often and then I come out of it and say well, isn’t everybody entitled to her opinion? The advantage I have is that my opinion is based on the information which I gather after talking to more than one person central to a particular story and some research on the background. The other advantage I have is that I can write it. My opinion is published and voiced publically. And of course the most important point here is that just as a software engineer knows his job and yet can be criticized by a user for the flaws, I know my job yet I am not infallible. Media persons can indeed be openly criticized unlike many others—some of this is manifested in opinion writings that are contrary to our own and some of it through hate mails and media bashing from those who rely on media for all the information.