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| July 02, 2008 | | The myth about India's politicians
The reason for their silence is that the Ranbaxy deal has not hurt the interests of most sections of the voting community. Let alone farmers, even the urban voters are not bothered by the deal as it has no direct adverse impact on them.
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| June 30, 2008 | | The real reason why stock markets are crashing
Increased allocation to commodities by Index Speculators makes returns from such investments far more attractive than from stocks, and thus the markets are crashing, says .
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| June 27, 2008 | | How the <i>mallu</i>s of Kerala made it
The Kerala phenomenon -- of little work, high growth -- is best explained by the capabilities approach to growth. The rest of India has always tended to ogle at Kerala and the mallus.
India's inflation: A macroeconomic mess
The policy response to inflation has been somewhere between poor and awful. What does this imply for India? While it is convenient, but no less accurate for that reason, to ascribe the origins of recent problem to external forces, Indian policy-makers have to move on.
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| June 26, 2008 | | Ranbaxy deal: Let's look for a business model
The Ranbaxy sale marks the end of a phase for Indian pharma, with the need to evolve the next.
Salary boom? Here's a reality check
At a time when salaries continue to rise, ICICI Bank says it's important to keep economic realities in mind.
Indian economy: The darkening sky
The indicators of slowing growth proliferate in the daily papers. The government and RBI are in a small minority in expecting growth in 2008/9 to attain 8.5 to 9 per cent. The great majority of independent analysts expect the outcome to be in the 7 to 8 per cent range, with a growing number favoring the lower side of this band. Equity markets have tanked and stock prices are in doldrums. The really nasty surprise has come from inflation.
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| June 23, 2008 | | Why the US is an economic burden on the world
To put things in perspective, Americans constitute 5 per cent of the global population, but consume about 40 per cent of the global resources.
All about making retail work in India
A possible reason for the 'low' impact of organised retail is that organised retail in the country itself hasn't quite got its act together -- how many organised retailers do you hear of that can help cut, on a sustained basis, household budgets by 15-20 per cent more than kiranas can?
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| June 21, 2008 | | Are corporates bilking the shareholders?
Instead of being agents creating shareholder wealth, the corporations at the heart of this form of capitalism seem to have become instruments for enriching their managers by bilking their owners -- shareholders.
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| June 14, 2008 | | Family owned biz? Learn from Malvinder
If the operating principle is that all members of a family must be given an equal role in the business and that they will not make way for better managers who are not members of the family (in other words, the feudal principle), it is hard to see such a company prospering for long in a competitive market.
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| June 10, 2008 | | Is Bengal ready for re-industrialisation?
It is time to reform our schools and colleges, to impart marketable skills and to reorient the youngsters to harsh reality of private sector jobs.
Jaya versus FM: Advantage Jaya
What must be worrying the mandarins in the North Block is that the reply of the finance ministry completely contradicts the decision of the SAT in the Goldman Sachs case. Surely we are in for interesting political times.
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| June 06, 2008 | | The SMS (serial) killer idea
The "Serial SMS" is an idea waiting for imaginative minds to harness as a productivity tool, information and education tool, marketing strategy, incremental sales strategy or just an environment-friendly way to communicate.
Creative spark lights up telecom ads
The telecom segment is all flush with a burst of creativity. Interesting interpretations and insights are cropping up all over, so much so that even the weakest of these ads shines brighter than the advertising in other categories.
India's warped economic policy
The duty on buses which carry more people is the same as that on small cars, such is our warped policy.
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| June 03, 2008 | | A derivatives scam? JPC probe needed
To me, these are all characteristics of a scam. It is time that the derivative issue is christened as one. Given this scenario, it is time the RBI interfered in this matter. In the alternative a Joint Parliamentary Committee probe into the entire issue may well be in order.
How to excel at your workplace
Concepts and practices related to vision, strategy, entrepreneurship, business ethics, change management, corporate responsibility, seamless communicability and so on, which are quite important for today's businesses, remain under-emphasised.
High salaries attract people to PSUs?
There are many issues that will have to be resolved before the committee's recommendations can be translated into practice. First, the backlash from clubby bureaucrats from the elite all-India services will have to be dealt with. Then, the experiment with a more flexible system and variable pay based on performance should not be introduced across the board, but tried out in a dozen or two enterprises, to see how it works in practice.
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| May 30, 2008 | | Telecom: Where's the access code?
The wise men who formulated the National Telecom Policy 999 broke the vertically integrated National Telecom Network into three segments, i.e., Access (Fixed and Mobile), National Long Distance and International Long Distance.
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| May 29, 2008 | | Why India cannot sustain high economic growth
The high growth rate over the last few years has been more cyclical, than structural, in nature. And continued supply side bottlenecks will necessarily mean that periods of high growth will trigger inflationary pressures.
A good CEO may not mean good service
In markets like India where demand for a range of goods and services still outstrips supply, readers will readily be able to identify the disconnect between a CEO's reputation, the company's performance and the quality of customer service. There are, for instance, successful banks that deliver stunningly indifferent service even though their CEOs are stars on the corporate firmament.
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| May 28, 2008 | | Paradox of economy: To grow or not to grow
Organised retailers in India today are caught in a bit of a bind: on the one hand, they're raring to roll out new stores so that they can grab space and market share. But, on the other, lease rentals are prohibitive and footfalls don't seem to be getting converted into the kind of buying many thought they would. It's not easy anymore.
Oil crisis - bonds and subsidies won't do
We are in an era where oil will remain far above accepted norms of pricing. When oil is above $100, band aid solutions of bonds and subsidies are not sustainable.
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| May 27, 2008 | | Should the FM say 'Thank God it's not Friday'
The government's response to the price hike needs to be less panicky. The imposition of export duties, reduction in import duties, increasing the minimum export prices, restricting exports and raising the cash reserve ratio for banks have been among the measures that have resulted from this concern over inflation.
Tell people to consume less fuel
The first quarter of 2008 saw India's air passenger growth at 11 per cent compared to nearly 28 per cent for the first quarter of 2007. If you were to pick any airport, let's say Mumbai, traffic growth has dropped to single digit from double digits and forecasts are that it will fall further. So, the rising price of crude is already telling on air traffic consumption, as airlines are unable to hold on to rising fuel costs.
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| May 26, 2008 | | Inflation: Profit for the rich, patience for aam aadmi
The government is left with the only option of risking inflation and presumes that it can fudge figures and get away with it in the onrushing elections.
6-point strategy to stave off a staggering oil crisis
Raising the prices of petrol and diesel notionally is neither here nor there, and only puts off the evil day. Tentative tinkering will only mean the double jeopardy of the crisis continuing unabated and stoking the fires of inflation.
AAI's back in control
When the country's biggest and busiest airports at Delhi and Mumbai were privatised a few years ago, Singapore Changi Airport, ranked among the top two airports in the world by Skytrax for over six years consecutively, walked out of the bidding process, arguing it was unfair. Zurich, ranked number six, wasn't there, either. Frankfurt Airport was there, but as a minority partner of the GMR consortium, which won the bid for the Delhi airport.
How luck favours investors
RBI is already worried about the derivatives exposure of corporate India. That means many positions that could become lucrative may be closed prematurely and that's sheer bad luck.
Hollywood, here I come, says Anil Ambani
Sure, while Mumbai's tinsel town has made some attempts to break in (Aamir Khan's Lagaan made it to the 2002 Oscar nomination for foreign films), few Indians have managed to enter this exclusive club. Not anymore. The efforts of the threesome have finally paid off and the Anil Dhirubhai Ambani Group (ADAG) is set to put its imprint on Hollywood.
Growth okay but at what price?
Last November, he said he wanted SBI's balance sheet to grow from $150 billion (Rs 600,000 crore), at the time, to $250 billion (Rs 10,00,000 crore), in the next couple of years. By the end of the March 2008, SBI had already hit a balance sheet size of Rs 720,000 crore, which meant it had clocked a brisk 28 per cent growth in FY08. But, in the meanwhile the environment too has deteriorated.
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| May 24, 2008 | | Why crude oil could bounce back
Outside Saudi Arabia, there is no spare capacity. Sanctions on Iran have meant that no new outside funds have come to bolster the current production of around 4 million barrels a day. Outside Saudi Arabia, there is no spare capacity. Sanctions on Iran have meant that no new outside funds have come to bolster the current production of around 4 million barrels a day.
RBI: Waiting to exhale
It is striking how quickly the over-hyped optimism over the evolving India economic story has given way to a reality check in general and pessimism over the economic outlook in particular. Capital inflows into India were attracted by the increasing domestic and global acknowledgement of the favourable structural economic shifts.
Understanding food prices
While price volatility is not inherently bad, commodity futures markets and hedge funds operating on these markets will help reduce price volatility. While price volatility is not inherently bad, commodity futures markets and hedge funds operating on these markets will help reduce price volatility.
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| May 23, 2008 | | US's globalisation angst
There isn't much to prove the point that the problems of the US are because of globalisation.
Of the business of protest
From SLAPPs to hiring professional protesters, industry's working overtime to find new ways to attack.
Stop, watch and sell: New ad mantra
Today, as I watch my son-in-law handle my grandkids, balancing friendliness with discipline and not missing an iota of either, I realise that this middle path that he adopts, is probably the best of all leadership/parenting methods, says .
SBI erring on the side of caution
SBI's move may not have moved the farmers, who had stopped paying their monthly installments ever since Finance Minister P Chidambaram announced a Rs 60,000-debt waiver plan, but it did create a furore in political circles. Finally, Chidambaram, by his own admission, had to intervene and get SBI to roll back the move. For the 57-year-old SBI chief, who has earned an unprecedented five-year term, it proved to be a rare instance of being 'misunderstood'.
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| May 22, 2008 | | Textile sector, still a great opportunity
The sector has the best potential for employment generation (besides retail and healthcare) and hence garnering the support from the state governments for land and other infrastructural support should be easier.
Why oil bonds are not a solution
What is becoming increasingly clear is that they are an opaque and hugely inadequate response to the current problem of sustained increases (over the last five years) in global oil prices.
Free air tickets: Unfair trade practice?
The Delhi State Consumer Disputes Redressal Commission's decision to fine mobile phone firm Vodafone Rs 50 lakh (Rs 5 million) for offering prizes of gold coins and a Maruti SX4 as part of a promotional scheme is something all marketers in the country would do well to pay attention to.
India's agriculture at stake
The political exigencies are, unfortunately, likely to overwhelm the need for undoing the damage to the agricultural credit sector. At stake, therefore, is the much-needed resurgence of the Indian agriculture.
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| May 21, 2008 | | What IOC can learn from SBI
The apparent reason for this bold step is SBI's concern over rising defaults on loans for such farm equipment. The additional trigger for this may have also been the SBI top management's assessment that defaults on farm equipment loans will only rise in the wake of the central government's announcement of the Rs 60,000 crore (Rs 600 billion) farm loan waiver scheme.
IFRS: The magnificent obsession of ICAI
The latest passion of the Institute of Chartered Accountants of India (ICAI) is not selling blazers. Nor is it inauguration of residential courses. It is IFRS, IFRS and IFRS. Or International Financial Reporting Standards.
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| May 20, 2008 | | The inflation scare
The fear that the recent rise in the inflation rate will scupper their chances of re-election has led the United Progressive Alliance government to blame the usual suspects: hoarders, monopolists, and of course, foreigners. So bring back discredited policies: raid hoarders, torment speculators and ban export of agricultural products.
For entrepreneurs, it's all about execution
B-schools should try and add skills in their students through some practical experiences and lessons in superior execution and in establishing methodologies on identifying ideas that can provide value to customers and hence make a business successful.
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| May 19, 2008 | | What the Eco-Survey tells us
The Economic Survey 2007-08 has some interesting insights for infrastructure aficionados.
Food fright
The most important safety valve as far as food supply is concerned is the short production cycle.
Govt suppressing inflation rate?
Inflation is far too important a problem to have to rely on an inadequate and, ultimately, unreliable database for solutions.
Praful Patel's wrong, again
Aviation Minister Praful Patel's outburst against Planning Commission Deputy Chairman Montek Singh Ahluwalia is perhaps not difficult to understand since most people think it was actually Patel who should have been keeping an eye on the delays at the Delhi airport.
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| May 07, 2008 | | Oil, oil, everywhere
Today, the current spike is accepted as a long-term reality and has impacted all aspects of the economy in different ways
Losing the plot on inflation
The central bank should be made responsible for delivering on an inflation target.
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| May 03, 2008 | | Story of the assumed Great Depression
The world financial markets were close to breakdown just a month or so ago. While the rest of the world's central banks missed the big picture, not so the US Fed led by Prof. Ben Bernanke. His timely interventions, and a worldview of what works and what does not, has most likely helped avert a global financial meltdown; if such a meltdown had occurred, it would have affected all of us quite severely.
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| May 01, 2008 | | Tackling inflation: Govt on the right track?
The government has got down to tackling inflation with all the weapons in its armoury -- tariff cuts, export restrictions, physical controls, administrative measures to prevent stockpiling -- while the Reserve Bank has tried to squeeze out excess liquidity.
Dark side of the jobs boom in India
Studies have indicated that only one in four graduates from India's colleges are employable. This means till the time the quality of education improves, the other three will have to remain content with either door-door canvassing for savings accounts, or watching people's tea and toilet habits, or honing up their American accents in graveyard shifts.
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| April 30, 2008 | | India's forex story and rising external debt
Once you take into account the forex needs for four months of imports, NRI deposits, short term debt and FII flows, India's forex reserves of $300 billion don't look so large.
Nation building through great institutions
One such is the Foundation for Revitalisation of Local Health Traditions near Bangalore, which recently turned 15 and showcased a remarkable transition with founder and inspirational head Darshan Shankar handing over the executive leadership to deputy, engineer-turned- forester D K Ved.
RBI credit policy: Is this the right move?
The expectations from Tuesday's RBI package veered towards a hike in the repo rate, the stronger of the two instruments that the RBI has used of late, although there was a significant view that this would not be done in recognition of the concerns about growth. While this has surprised the markets, which have reacted with relief, the question is whether this is an appropriate response to the current circumstances.
Investors may sweat in May
The month has turned negative returns in eight out of the last 18 years.
Patent law: Is the US style right for India?
Intellectual Property is still a strange beast in this country. People eye it rather warily, uncertain of its temperament (how hard will it bite or is it the clawing sort?) and the hidden threat in its still unfolding contours. To familiarise businessmen with this creature, industry organisations have been doing a fair amount of spadework – organising seminars, workshops and talks by visiting experts.
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| April 29, 2008 | | How are ideas born? Tips from an ad guru
In my opinion, ideas are free-floating bodies in the ether space and one's sensibilities are the receiver -- the sharper the receiver, the easier it is for ideas to get attracted.
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| April 28, 2008 | | Is the IMF incompetent or...
What is galling to note here is that such serious systemic flaws have crept in undetected for over couple of years despite multilateral supervision and surveillance.
Will the RBI hike rates again?
A repo rate hike may hurt growth far more than it will help deal with an inflation rate that is already dropping.
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| April 25, 2008 | | Mobile service outages: Do brands matter?
Some zones in Mumbai like sections of Pedder Road, Western Express Highway, Dr E Moses Road, JJ Flyover, experience poor mobile network connectivity. With Virgin Mobile coming into India with a brand franchise agreement with Tata Teleservices, will it make any difference in mobile connectivity? Is brand becoming the biggest or at least a strong differentiator? Except some differences between CDMA and GSM, most service providers give similar kind of network services.
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| April 24, 2008 | | Paradoxes of UPA's farm policy
Is the BJP clearer on agricultural policy than the UPA? It appears to be worse off, actually.
When airlines' put looks before safety
Racism is rampant in the airline industry in India as all airlines prefer fair skinned people for their cabin crew. On some of the newer airlines, members of the cabin crew are among the most fair skinned people that you will find anywhere in India. A flight attendant performs two roles -- safety and service. But by selecting cabin crew on basis of skin colour & looks, the airlines are seriously harming the safety aspect of their duty. Cabin crew should be caring & commanding
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| April 19, 2008 | | Sins of omission, RBI style
Whichever side of the debate you are on, there is no getting away from the fact that difficult choices have to be made in a situation where you are asked to fight two contradictory problems at the same time. Investment and growth matter more to some people, but prices are a hotter political problem -- the walk-outs in Parliament are over inflation, not the slowdown. So it is not hard to guess on which issue the government will focus.
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| April 16, 2008 | | Declare an economic emergency?
The dilemma is more acute for Indian policymakers as the present inflationary bout is in good part made up of rising food prices, which deal a severe blow to the fight against poverty
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| April 15, 2008 | | Public loot since 1947: Let us bring back our money
Huge sums of public money have been stashed abroad by Indians in various tax havens. Our democracy and democratic traditions with all their pitfalls as explained above are incompetent to deal with the extant issue. And if we have to recover our money, it can be done through a direct action of the aam aadmi -- you and me. Are you ready?
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| April 11, 2008 | | A tough job for Air India boss
He's taking charge of a carrier which is in the midst of dealing with a new reality. The ink on the merger is not yet dry and the internal politics has led to groupism within the senior management. Predictably, management attention has been diverted to handling personnel issues rather than on the core function of running the airline.
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| April 10, 2008 | | How to provide best healthcare to government personnel
As a CGHS cardholder myself, frequently sharing experiences with many other beneficiaries, I can unhesitatingly testify to the sympathy and helpfulness with which the doctors and staff of dispensaries attend to patients.
The shadow of inflation looms large
The Iraq war marked the onset of high and higher oil prices. There was a steady rise in the prices of most commodities in the global markets including metals and food in the last three years for various reasons including substantially increased consumption in new markets such as China, Russia, India and West Asia. However, till recently, most economies were able to manage such price escalations through classic macro-economic management tools.
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| April 09, 2008 | | Why finance ministers fear inflation
Of the five years when Manmohan Singh was the finance minister, only in two years did the government manage to keep the average annual inflation rate below 10 per cent. The remaining three years were hit by an average annual inflation rate (based on the wholesale price index) of 13.7 per cent in 1991-92, 10.1 per cent in 1992-93 and 12.6 per cent in 1994-95. Yet, a comparison should be useful.
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| April 08, 2008 | | Property sale proceeds can be repatriated entirely
A N Shanbhag, the highly respected investment guru, and his son Sandeep Shanbhag, answer your questions on NRI investment.
Economy: How to deal with external shocks
The right policy response to global price increases is not straightforward. The draft report is wide-ranging in its scope, and it attempts to provide a coherent, integrated view of financial sector reforms that would equip India's financial sector to support growth, widen financial access and maintain stability over the next decades. The report is being released for public discussion at a critical juncture in both the domestic and global economy.
The real dangers facing Indian economy
Of course, we would still grow at 7-8 percent. We would still be smug in our achievement and say it is still better than most of the economies in the world. As for double-digit growth, let that remain only in paper.
Banks as casinos, corporates as gamblers
It is time to realise that both corporates and banks are playing with other people's money. And RBI has to intervene in the matter decisively and at once. It needs to set up a high power committee comprising eminent bankers, lawyers, media personnel, finance and foreign exchange experts to set right the matter.
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| April 02, 2008 | | Bangalore: From pathfinder to laggard
The politics of Deve Gowda and that of the bureaucrats who badmouthed and helped kill a remarkable public-private initiative like the Bangalore Agenda Task Force have been the city's nemesis.
How to solve the inflation crisis
The long-term answer lies in getting the central bank to focus on inflation.
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| April 01, 2008 | | Why Ratan Tata should not retire
Ratan Tata looks like someone who is just getting ready to take-off.
Govt and NGOs: It's a cold war
Governments have great power over NGOs through the laws they enact or administer. They can either 'help or hinder them'. The NGOs feel they have been left out in the reforms and they do not have a level playing field compared to other sections, which have been handed simplification and other benefits. A cold war is going on between the charities & the Government. Standing committee on finance expressed concern that many charitable institutions misuse provisions of income tax.
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| March 29, 2008 | | Why derivative contracts could be void anyway
A lot of the forex derivatives contracts were purely speculative wagers and are not permissible under Indian law which insists there must be a genuine underlying exposure.
The Dragon catches a cold
A slowing US economy, moderating Asia, and a government keen to cool the pace of growth may take their toll on the Dragon that has been seething fire since 1997.
Ads: Seeing it through a child's eyes
The 90-second Vimal Suitings ad in 1990 had just six exposures to make it one of the most recalled ads for that year in the industries rating. Clearly, recall does not hinge on repetition. It is what captures the imagination that gets remembered. This brings me to a question that has been haunting me these days -- won't the constant hammering of an extremely ordinary ad turn your customer away from your product? Why has media exposure taken precedence over imaginative work?
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| March 28, 2008 | | Affirmative action and 'non-identity'
An interesting variant of this approach is that slavery, for example, did not harm the descendants of slaves. Proponents of this view argue that but for slavery there would have been no descendants as they would never have been born. So the question of historic injustice does not arise.
India and its economic entanglements
How India engages with the world may have to change.
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| March 27, 2008 | | The threat of Board examinations
In the coming decades, India will see an unprecedented diversity of job opportunities, reflecting the expanded basket of consumption in India and a more multi-faceted economy as a whole. Further, the needs and the priorities of society will undergo a fundamental change in the years to come, thereby making many new categories of jobs more attractive than the current more traditional ones
Don't kill commodity derivatives
The previous fiscal year proved to be quite a contrast in some ways. While the year started with the banning of a few commodity futures contracts from the national bourses, it ended with the allowing of FDI/FII investment in the commodities sector and the amendment of the archaic Forward Contracts Regulation Act. Proactive measures were also undertaken by the government to give autonomy to the Forward Markets Commission.
More power to electricity commission
It has the discretion to adjudicate disputes by itself or send it to an arbitrator. The use of 'and' posed such a difficulty for the Supreme Court in a recent case and it ruled that 'and' is an equivalent of 'or' in a clause in the Electricity Act and 'or' could mean 'and' in some cases. The judges traversed the English decisions and the Mimamsa principles in Sanskrit texts to harmonise provisions in the Electricity Act and the Arbitration & Conciliation Act.
Fewer holidays, bigger challenge
If you add to this 52 Saturdays and 52 Sundays every year, when government offices are closed, the total number of holidays a central government employee can enjoy is 171days. That is close to half the number of days in a year. This context has to be kept in mind before judging what may well turn out to be the Sixth Pay Commission's most controversial recommendation. To be sure, the Pay Commission does not favour a reduction in the number of earned or casual leave.
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| March 26, 2008 | | Fraud survey: Will India Inc respond?
The report by KPMG, titled India Fraud Survey Report 2008, has effectively castigated India Inc, both at the employee and the management levels, suggesting a lack of morality at both levels. Strangely, India Inc seems to have swallowed these findings without any remorse or response.
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| March 24, 2008 | | RBI stand: Better safe than sorry
Those super-bright financial brains who created those wondrous hedging options, innovated away with structured products till no one knew or understood what was going on, and who thereby created massive value for their firms (the profits of financial firms in the US have grown to account for 41 per cent of all US corporate profits!) while earning fat bonuses for themselves, have to explain why they and their firms have to be saved by the American taxpayer.
What's in store for the Indian markets
The Sensex, which has been dancing with the same wide-eyed staccato uncertainty, will respond in suit, falling sharply - perhaps, 12xxx would be the bottom. But, once this bottom was hit, it would be one of the best buying opportunities ever anywhere.
Banking: Panic quelled, now rebuild trust
One is of resigned hopelessness and giving up; another is of naive optimism and remaining unprepared for the worst; and the third is of plodding on steadily towards the target without wondering about whether you will ever get there. In cricket it is called playing it ball by ball, over by over, session by session.
Move over Esteem, Swift Dzire is here!
The Swift gets the boot! We preview the new Maruti Suzuki Swift Dzire.
Why the boom-gloom cycle is inevitable
Among the many things that history teaches us is the fact, possibly the most important one, that in human affairs, very few things are completely new. It seems this is true of financial crises as well. They seem to happen with metronomic regularity, and they happen everywhere.
The insider's story
Everyone understands their industries better because of work experience, which can be converted into astute stock picking as well.
And we hurl abuse at India's airlines. . .
How justified are we when we routinely hurl abuses at Air India and Indian airports?
The new liquidity trap
The developments at Bear Stearns have left many people certain that more collapses are to follow.
The derivatives mess
Our corporate risk management culture doesn't appreciate the difference between risk reduction and cost reduction.
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| March 20, 2008 | | Is the US economy heading for a collapse?
Whatever it be, an official statement from you clearly defining the extent of the problem, would be in order. At least that in my opinion, sir, would put an end to the uncertainty that is plaguing the financial markets all across the globe. And, sir, as you know, markets abhor uncertainty, for lack of trust is highly corrosive.
Real issue about food in <i>anganwadis</i>
The controversy over whether the government should mandate cooked food or pre-packaged meals at child care centres (anganwadis) and for the mid-day meal scheme in primary schools under the Integrated Child Development Services (ICDS) misses the wood for the trees.
Will the Fed rate cut help the economy?
In today's circumstances, however, getting people to borrow more is the last thing on the minds of financial service providers. Most of them are reeling under the weight of assets whose prices have declined precipitously because nobody in his right mind wants to buy them.
Loan waiver: Will the farmers gain?
The finance minister has delivered a Rs 60,000 crore (Rs 600 billion) handout to farmers. How much of that will go to the farmers who are truly debt-stressed is a moot question. But is this the tonic that our farmers need in order to restore agricultural growth to the 4 per cent plus level that the Eleventh Plan wants? Are we addressing the right problems in our agriculture and food policy?
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| March 19, 2008 | | How to make farm loan waiver work
The farm loan waiver announced in the Union Budget is like a key crossroads from which major roads go out in different directions, each signifying opposite journeys and consequences. It is the biggest event of its kind, the fiscal payout of Rs 60,000 crore (Rs 600 billion) being virtually three times larger than the Rs 20,800 crore (Rs 208 billion) recapitalisation process that set Indian public sector banking on its feet.
A crisis or a mere recession?
The US economy is facing substantial difficulties. Housing prices have dropped. An increasing number of households are defaulting on home loans. Losses on home loan portfolios are affecting financial firms who hold derivatives on home loans. Some financial firms have gone bankrupt, and there is uncertainty about who else might be bankrupt. With finance in difficulties, the monetary transmission is malfunctioning.
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| March 18, 2008 | | Nothing equal about this trade
Issuing threatening calls with dire consequences is not something new in international trade diplomacy. Countries often resort to this stratagem to achieve their trade objectives.
Socialism and liberty are poles apart
The suppression of political and civil liberty is an essential part of socialism of various kinds.
Real problem of India's new airports
The real problem with the new airports in Hyderabad and Bangalore is neither the distance nor the higher costs. It's the abysmal condition of the roads that connect the new airports to the city.
Don't cut interest rates
The RBI is of course fighting tooth and nail to hold interest rates while every constituency, political, business and economic is baying for lowering them. So far, the RBI has held on admirably. Whether it will manage to hold on is a question mark. I strongly feel it should, because high interest rates are the last reason growth will be affected. The good news is that an economic slowdown may exert pressure on asset prices, both in the commercial and non-commercial space.
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| March 17, 2008 | | Is the Budget relevant to infrastructure?
Allocations for new projects have diminished in relative importance, but policy pronouncements continue to have an impact. To come straight to the point on outlays, the table shows that against the country's requirement of $100 million per annum (as per the 11th Five-Year Plan), the Union Budget is able to provide only about 5-6 per cent of the requirement in 2008-09. How does this 5-6 per cent come about?
Rupee - A turn in the tide?
More importantly, this period has seen a fairly major shift in market perceptions -- traders are reconciling to the prospect of medium-term decline in the exchange rate instead of dismissing any episode of rupee depreciation as a transient deviation from a path of continuous appreciation. A combination of local price impulses and these global pressures has pushed up domestic inflation. Wholesale price inflation for the week ended February 23 printed at 5.02 per cent.
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| March 15, 2008 | | Myth about economics & politics in India
The Opposition knows that the Congress- and RBI-led monetarist battle against food and energy inflation is foolish - it hurts economic growth, and the chances of a Congress win.
A bad year for the world economy
Confidence has dipped about the next set of announcements on quarterly corporate results -- so you have tech stocks going at the scarcely believable price-earnings multiple of 15.
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| March 14, 2008 | | Derivatives: The time bomb in our financial system
What has been forgotten is the fundamental characteristic of these contracts. What is trading in index numbers if not a wager? Is it not speculation per se packaged in sophisticated language, exotic terms and backed by legislation and regulators?
Sale proceeds of immovable property can be remitted
A N Shanbhag, the highly respected investment guru, and his son Sandeep Shanbhag, answer your questions on NRI investment.
Life in the cell phone age
Now the cell phone has ended boredom and solitude. You are never alone, never at a loss for not knowing what to do, so long as you have your cell phone next to you
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| March 11, 2008 | | No thanks for a myopic Budget, Mr FM
In Budget 2008, only one development, namely, the US sub-prime crisis has been given consideration. But this is a myopic view of the global situation. These developments are inter-linked, are already playing out in the world and will impact our lives. We will have to design for complexity and even uncertainty. Not only is the 'turbulence' of the financial markets explicitly mentioned in the FM's speech, his consumption-oriented Budget is designed to respond to this crisis.
Another setback for cotton farmers
Thanks to pesticide usage falling with Bt cotton, another pest is assuming menacing proportions.
Blackberry: A genuine concern?
To be fair, with the increasing terrorist threats, India's concern may not be unique. The United States, for instance, has always had the reputation of not allowing any email service provider to operate without it being able to break the encrypted code.
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| March 10, 2008 | | Why it is a trend-setting Budget
The government has made significant allocations to important developmental and social agenda, and yet provided enough stimuli for continued growth.
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| March 07, 2008 | | The dubious salary game
Any economy, which has to sustain a wage CAGR of 6-7%, slips into recession within 15-20 years.
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| March 03, 2008 | | Why loan waiver won't help farmers
The Rs 60,000 crore farm loan waiver will end up helping only a few, for most farmers take loans from moneylenders rather than banks
Chidambaram: Reformer or deformer?
In one stroke, by his proposal to treat the symptom instead of treating the disease (in the case of waiving farm loans), P Chidambaram, the darling reformer, has instantly turned into a dangerous deformer.
Reverse Mortgage: A failure in India?
Recent reports seem to indicate that less than 150 people have taken advantage of the facility since its inception, and it is, therefore, likely to be considered a failure.
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| March 01, 2008 | | FM's move on agriculture is good!
No amount of efforts and resources would be too much to ward off the grievous decline in agricultural production.
A good balance of economics & politics
First, from the fiscal perspective, the budget clearly took full advantage of the unanticipated revenue buoyancy to rein in the fiscal and revenue deficits while being quite expansive on expenditure and also reducing the basic rate of excise duty.
No move towards GST - no reform
This being the last serious Budget before April 2010, which has been announced as the cut-out date for GST, there could have been a positive movement towards the new system by introducing a comprehensive service tax, comprehensive goods tax (Central Excise and Cenvat), a convergence of rates towards 14 per cent, removal of exemptions and so on.
It's a case of tax rates vs tax compliance
Budget 2008 is overall a balanced budget to propel the growth in manufacturing sector, at the same time not losing momentum on corporate tax collections and the interest of common man.
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| February 28, 2008 | | Why the Budget won't do anything for you
Before we proceed further, let us broadly understand the constraints of the finance minister in preparing the Budget. Contrary to the popular belief, finance ministers usually do not have any great elbowroom to play Santa Claus.
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| February 27, 2008 | | The sustainability of Lalu's magic
Whether the Indian Railways' growth story is sustainable will depend on the ability of railway ministers of the next few years
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| February 21, 2008 | | 16 years and still waiting for garment complex
The garment manufacturing unit owners that supply and outsource readymade garments like salwar suits, shirts, nightgowns, skirts etc, to various known and popular brands of India and abroad at affordable prices are running from pillar to post to obtain land for the complex for the last 16 years.
The 'she'-change in employment
Workforce participation rates are twice as high for Chinese women as they are for Indian women.
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| February 20, 2008 | | Want to buy stocks in India? PINS a must
PINS -- or Portfolio Investment Scheme -- is the permission that a Non-Resident Indian requires to trade in the Indian stock market. Normally, the bank obtains this for you. An NRI can have only one PINS account current at one time.
RBI's currency policy: An 'inconsistent' policy
The RBI has embarked on doing currency trading through the forward market. This appears to be a good idea, because the forward premium is smaller than the cost of the market stabilisation scheme. In this article, I argue that there are deeper difficulties with this strategy. The international best practice involves central banks not trading on currency derivatives markets.
Boosting M&As: Laws need to change
Though there are various provisions under the Indian income tax laws which encourage M&A activities in India, some of these provisions need to be revisited to further step up the momentum. Further, the scope of some of the concessions needs to be extended to all sectors.
How to build 30 new Bangalores?
By 2026, India will add 220 million to its urban population. That is, about 30 Bangalores!
Commerce ministry worried only about exporters
Unlike the finance ministry which takes a larger view, the commerce ministry only looks at exporters' interests.
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| February 19, 2008 | | Why dreams are good for corporates
The CEO, therefore, needs to transform himself as a first. He should be able to dream and connect his dream to the dreams of both the organisation and the people within.
Doha talks: The devil's in the draft
Over the last 10 days, negotiators have burnt the midnight oil to study the revised draft modalities (parameters) issued by the chairs of the negotiating bodies for Doha agriculture and industrial products. After all, these parameters, which are essentially figures and textual language, will ultimately become commitments depending upon the final agreement among the 151 members of the WTO.
Biofuels: An assault on the world's poor
Western citizens want to use the limited land to produce ethanol rather than food for the poor.
A world-class Hyderabad airport? Not too sure
Given the existing airport is in the centre of town and there's no UDF, it's easy to see why passengers are up in arms. Indeed, if you think the goings on in the Delhi airport are a scandal, what's happening in Hyderabad is a lot worse.
Kuldip Singh: A name that politicians dread
Political heavyweights may be still recovering from the tectonic changes brought about by the Delimitation Commission headed by Justice Kuldip Singh after about six years' labour, but to those who have watched this barrister who came from Chandigarh to be elevated almost immediately to the bench of the Supreme Court in 1988, it was not a surprise.
Weaving costliest items, but earning nothing
Sadly, in India, wages for artisans never take into account their specialised skills.
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| February 18, 2008 | | India shining. Really?
While a lot of risk-factor writing has become a template activity, one is often tempted to reconsider if the depiction of Indian circumstances ought to change. After all, India has never seen such near-pristine times in its world standing. However, a reality check would be in order. And our polity never fails to provide such reality checks.
Sub-prime mess: Lessons to learn
Penetrating under-banked segments may have a fallout like the US sub-prime crisis.
Canteen for staff? Not related to business, says Tribunal
The Tax Tribunal has held that canteen/ catering services provided by a company to its employees are not eligible as 'input services' under the law.
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| February 16, 2008 | | It's worse than a bear market
Hectic investors' counselling at the beginning of the week brought home the extent of the loss suffered in this January-February slide. That made us go back to our desks and compare the dents received during this period to a full-fledged bear market from February 14, 2000 to September 28, 2001.
Independent RBI -- good policy!
For good policy, and good governance, it is necessary to provide full independence to the Reserve Bank of India.
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| February 15, 2008 | | Beefing up the nation's finances
The combined stock-taking of the economic and financial situation can be great use in determining the future course of action by the central and state governments.
Are top bankers highly overpaid?
In 2007, the average annual income for top international private equity and hedge fund managers was about $500 million.
Innovation best long term response
It's time the Indian IT-BPO industry asked itself -- has it given the world its Nano yet -- or are we at least planning something on those lines which can put our industry firmly in the spotlight?
Of ratings and regulators
One idea could be to have stock exchanges pay for ratings and recover the cost from a charge on trading fees. This would certainly be technologically feasible, would address the current conflict of interest, and could, indeed, lead to a new business opportunity for financial exchanges.
Is monetary policy blind man's buff?
In other words, central banks have to anticipate events and not wait for them to happen. The question to ask in the Indian context is whether the RBI has been doing this or not.
Dangers of airline emissions
The truth, however, is that total airline industry emissions have increased dramatically in the past decade as more flights have taken off due to the emergence of low cost air travel. ICAO predicts that airline emissions will rise to 3 per cent of total carbon emissions by 2050, if left unchecked.
Tough job for the new Sebi chief
The new Sebi chairman will have to work hard in institution building. This involves attracting high-quality people (who might often be young by government standards), putting them in a meritocratic workplace with open discussion, and establishing transparency and accountability structures so that Sebi becomes not a one-man shop but a genuine institution that will be a key player in India's GDP growth.
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| February 14, 2008 | | How India can gain from a slowdown
The stock indices are now touching lows not seen in the last six months. Industrial production growth has slipped to 7.6 per cent in December 2007 compared with 13.4 per cent in December 2006. The GDP growth rate for 2008 is itself likely to slide to 8.5 per cent or so, from the heady 9.6% of the previous fiscal, and probably to 7.5% in the coming year. At the same time, inflation seems to be stoking up again.
After Nano, what?
India will choke unless it modernises its city transport systems, and you can't blame the Nano for this.
RBI should cut rates now!
The case for a swift and sizable reduction in the repo rate rests on several pillars. First, and most importantly, there is mounting evidence that the five-year old surge in India's economic growth, especially industrial growth, peaked a few months back.
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| February 13, 2008 | | Learn from your mistakes, else...
If you're in the corporate world (and even if you're not), you will probably agree that while success may be its own reward, failure is certainly not its own punishment. You won't get away that lightly. There will be a price to pay, whether as a reduced bonus, an undesirable transfer or even -- worst case scenario -- outright dismissal.
'Indian IT has come of age'
What started as a "low-cost support industry", is now a sector specialising in knowledge-intensive processes. Recognising the specialised skill sets built up by the Indian IT-BPO industry in new and emerging areas such as engineering services outsourcing, remote infrastructure management and animation and gaming, Nasscom has released focused research reports on the potential opportunity in these segments.
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| February 12, 2008 | | Not the end of bull market but a correction
After a horrendous start to 2008, most emerging market investors are now extremely worried about the prospects for this calendar year. Forced out of their complacency by massive fund withdrawals from the asset class (dedicated EM funds had over $15 billion in redemptions in January, after $54 billion in inflows in 2007) and serious price damage, most investors are wondering what happened.
Next billion or the new Holy Grail
The next billion faces constraints that differentiate it from wealthier consumer groups. Perhaps the most critical one is of income -- not so much about the size of the paypacket as about its frequency.
Fed, ECB cut rates: Why India's different
While the Fed and the ECB slash and raise rates when needed, the RBI seems to move in just one direction.
Budget: What are the key concerns
From cutting interest rates to preserve the current investment cycle to finding ways to fix and augment the education system's capacity, the government has its hands more than full.
It's time to levy a flat tax
Apart from simplifying the tax system enormously, with some modifications in the tax regime, a flat tax will also result in higher tax collections.
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| February 08, 2008 | | Financial reforms precede crisis
"The majority of historical crises are preceded by financial liberalisation." Yet, no one learns the lessons.
India faces a huge urban crisis
India is facing a massive urban crisis, whose solution is nowhere in sight.
When the Internet plays agony aunt
I also find that most websites, beginning of course with big brother Amazon, are increasingly highlighting user experiences and propagating knowledge-sharing on the path to buying products.
GDP: Dealing with dodgy data
The Union government's numbers on its expenditure and receipt go through three stages before they become final. The first set comes almost a month before the year starts, along with the Budget that is usually presented on the last working day of February. These are called Budget Estimates.
What is China doing to its workers?
China, now has perhaps the lowest labour share of any major country in the world.
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| February 05, 2008 | | Budget, an opportunity to prepare for GST
The Budget should extend service taxation to all services and unify the rate with excise duty.
The SocGen controversy in India
The bank's foray into India hasn't been without its own share of controversy -- except in this case, the authorities have simply washed their hands of the matter.
How the CSO fine-tunes GDP figures
The Central Statistical Organisation, the government agency responsible for keeping track of how the economy is performing, goes through five phases of estimating how much India's GDP amounts to each year.
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| February 04, 2008 | | In God we trust, but in gold we invest
We may not have resolved all the pieces of the jigsaw puzzle, but we have defined the boundary -- the edges are known, says .
Of India and crazy airport rules
Someone needs to explain what makes some individuals more equal than others.
Investing? Plan well for the next 2 years
In the next two years, invest in leading companies in key sectors and buy more when prices fall further.
How scary is the recent US recession
The 'R' word is everywhere. It's being discussed at World Economic Forum at Davos and now we have clients calling in at Orpheus, asking us about "recession" and how bad it is. And, is there a chance that the global depression might be starting? Such worries, though, important and critical, do highlight the mass psychology and how it reads the Federal interest rate cut and subprime crisis as a start of something bigger and problematic.
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| February 01, 2008 | | Indian advertising uses the 'fear' factor
At an emotional level, brands provide a crutch - from making them feel better about themselves to getting them feel superior to others - actually tapping into a latent fear of feeling inferior in the social world.
The Americans have finally panicked
The BIS nannies the world's central banks, which are now scurrying around with pots and pans and plastic cups to save the sinking ship.
Who cares for the dollar? Not the Fed, surely!
For a variety of reasons it would seem that endangering the dollar is in the interest of the Wall Street at this point in time. The Fed has merely obeyed its masters at Wall Street. Good luck to the US dollar!
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| January 31, 2008 | | Why the US rate cut may kill the dollar
Unprecedented as it is, this steep cut in the interest rates effected by the Fed has the potential to dynamite the US dollar, the US economy and, by extension, the global economy.
Don't blame FIIs for the rupee
It was the actions of domestic borrowers and not FIIs that made the rupee appreciate.
The promise of the Nano
A Nano-like mission to provide good-quality, good-performance has the power to make an incredible positive impact on the Indian economy.
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| January 29, 2008 | | Why China is ahead of India
It is the failure of our policies that are responsible for our lack of growth and development. No wonder China produces 450 million tonne of steel and we are happy with 45 million tonne.
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| January 28, 2008 | | Sino-Indian trade: It's helping only China
While we are prepared to help the Chinese catch up with us in IT, they are not prepared to help us catch up with them in the engineering sector. They consider us rivals.
Merchant bankers are like movie stars
While investors' money is going down the drain, merchant bankers are drawing fat pay packages.
Why a rate cut is essential
The bottom line is that a change in the RBI's monetary stance by cutting rates is imminent. The choice is only one of timing. Recent global developments reinforce the signals from emerging domestic patterns, tilting the case of a rate cut now rather than later.
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| January 25, 2008 | | The misguided search for excellence
For the cult following that "excellence" enjoys among policymakers we have to thank Tom Peters and Bob Waterman and their 1982 book In Search of Excellence. They were consultants at McKinsey when they wrote this book, which went on to sell 3 million copies in the first four years of its existence and is believed to be the most widely-held book in libraries in the United States.
The Yin and Yang of markets
There are hundreds of learned papers and books on why markets drop precipitously. Recalling how the Nobel-winning physicist Richard Feynman had helped explain the Columbia disaster in 1986, in the last few days, I have read more than a dozen research papers to see whether economists would be of any help.
How about an Asian Investment Bank?
In an unscheduled meeting on January 22, the US Federal Reserve reduced the benchmark overnight interest rate by 75 basis points and more rate cuts and a fiscal stimulus package are anticipated to boost spending. Developing countries in Asia are in an absurd situation in which the bulk of their FX reserves are invested in low-yielding deposits in G-7 central banks and government debt securities.
Online video, the next big thing
A webisode is an episode of a serial that is aired as an Internet download or stream. Each capsule lasts roughly 3 to 5 minutes. A webisode could cost anything between Rs 10 lakh and Rs 50 lakh, according to industry estimates.
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| January 24, 2008 | | We can pay more tax only if...
Most of middle class India are okay paying taxes at current rates. At 30-odd per cent at the margin plus the myriad offsets and exemption, the average Indian's tax burden is not all that punitive -- by one calculation, not more than 10 per cent of taxable income actually goes to the national exchequer.
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| January 22, 2008 | | Tough to keep the Nano at Rs 1 lakh
The Tata Nano project has scored some amazing firsts in terms of technologies and material costs. The Rs 100,000 question everyone is asking for the past few two weeks and will ask in coming months is how long it will stay that way.
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| January 19, 2008 | | Spectrum: Why Reliance Comm has an edge
While GSM mobile phone firms Bharti Airtel and Vodafone-Essar remain locked in battle with the ministry of telecommunications for extra radio spectrum to run their operations, CDMA mobile phone firm Reliance Communications can finally expect to steal a march over them now that it has also been given GSM spectrum in all 22 telecom circles across the country.
The rupee rise benefits China
India's policy of rupee appreciation has had the unfortunate, and predictable, effects of not only hurting the Indian economy but also benefiting the Chinese economy.
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| January 18, 2008 | | New twist in the spectrum war
Trai chief Nripendra Misra's act of writing to the telecommunications ministry, saying it has distorted his recommendations on spectrum allotment, has given a fresh twist to the battle between the GSM-mobile industry and the ministry.
Why not have an expiry date for PhDs?
The suggestion is this: All PhD degrees must have an expiry date. The reasons for putting in an expiry date are so self-evident that they do not merit reiteration. We did not get the opportunity to discuss just how long the validity period should be. But I imagine 10 -12 years would do nicely.
Is the US going into a recession?
Now, economists are famous for having a wide array of views, with most of them being wrong, but it is difficult not to notice that economists working for companies that will benefit the most from -- and, in some cases, desperately need -- lower interest rates are the ones that are screaming most loudly about how terrible things are and how the US Fed needs to cut, cut, cut rates.
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| January 17, 2008 | | Unlocking value from demergers
It seems that it has resurfaced again in the 21st century in a morphed version that I would like to call as "financial alchemy" and define it as the practice of striving to discover/unlocking of stupendous financial value from some very basic business elements.
Reliance Power: Everyone wants a piece of action
And it goes without saying that it is a feather in the promoters' cap that the largest public share issue in India's history should be such a successful one.
What is in store for the Indian economy
The first, and perhaps the most important, "known" for judging economic prospects is the slowdown in the US economy with the fourth quarter 2007 GDP growth rate there coming down to below 2.0 per cent. US economic growth is expected to be sluggish in 2008 and so too in the Euro-zone and Japan. In fact most analysts are looking to continued high growth in China and India to maintain global GDP growth at 4 per cent or thereabouts.
Of cement, cartels and corruption
The Tamil Nadu govt's recent declaration of nationalising cement companies brought to fore several disturbing facts about the govt and the pernicious cement cartel.
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| January 16, 2008 | | NRIs: Fair-weather friends?
Today, NRIs are eager to reconnect with India because India is a growth story and it makes good business sense.
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| January 15, 2008 | | The 3 ingredients of success
If one were to take a look at some outstanding business leaders, they have an important quality in common. They are all exceedingly good communicators. People like Jack Welch and Tom Peters, to name just two, were great communicators.
Fact check, reality check? New GDP data
The World Bank's statisticians have changed the economic facts. Under these circumstances, Keynes, the economist, would have us change our opinions, while the great scientist, Einstein, would have us tamper with the facts especially if they clash with our theoretical priors. Which should it be? A little bit of both, it seems.
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| January 14, 2008 | | Why some US scribes slammed Tata Nano
The reasons why American journalism is against the Tata Nano are obvious. The Nano was 'not invented here (in the United States).'
It's not Tata, it's the govt, stupid!
In enlightened countries the world over, public transport is encouraged, subsidised and given top priority in various ways by policy guidelines. In India there are no such policies.
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| January 12, 2008 | | Ratan Tata, the ugly duckling
The creation of the Nano ranks with major pioneering attempts in manufacturing. It is thus fair to say that Ratan Tata has written himself into the history books.
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| January 11, 2008 | | Thank you, Mr Tata, for thinking of the common man!
For more than 900 million ordinary Indians, the launch of the Rs 1-lakh car is a rare moment when they feel like they are being taken care of by the rich and the mighty, says .
Decoding the Rs 1 lakh message
The real message of the Rs 1 lakh car is that in one stroke, it is showing the way to Indian managements that a new era awaits -- one where you compete on superior management capability leaving behind decades of attempting to compete on cheaper labour or cheaper natural resources.
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