Thursday 22 December 2016

SARFAESI Act - Totentanz for Article 370

Supreme Court recently gave a judgement over applicability of SARFAESI Act in Jammu and Kashmir and Hurriyat is planning to start a protest over this. Well, may be, it won’t because of the double whammy of demonetisation and support of lawyers who will be staring at contempt of court. Let’s see how the things play out.
As to the issue in hand, SARFAESI act, passed in 2002 gives the banks right to seize the property of a loan defaulter and dispose it off in manner it feels fit through a dedicated tribunal. The background of the noise created is this - SBI moved to seize the property of a few defaulters in Jammu and they moved to the High Court stating that, SBI, being originated outside J&K, doesn’t have any right to hold property in J&K and that the notice issued should be trashed. Basically, what they said was, I will take a loan against a surety, I won’t pay the loans and I won’t let you have my property. In such a case, why would any bank be interested in giving loans in J&K? J&K High Court upheld the petitioner’s view that SBI can’t own any land in J&K and hence, can’t seize the land. It also said, the bank can approach to the problem using existing laws. 
SBI, naturally, went to Supreme Court. Well, Supreme Court royally trashed the High Court judgement. Some of them may be sourced from older judgements, but below is the main crux of what Supreme Court said - 
  1. J&K is an inalienable part of India and J&K Constitution is subordinate to Indian Constitution, not equal. J&K doesn’t have any sovereignty whatsoever.
  2. Any laws passed by Centre, if it clash with state government laws, the state government law will have to give way
  3. Anything which is not in the state list of J&K in Article 370 becomes the property of Central Government. Traditional view held is that anything which is in Centre’s list will become the property of state and that anything passed by Indian Parliament will have to be ratified by J&K Assembly.
Obviously, this will rankle Kashmiri separatists. It looks like, to mollify them, J&K government came up with a proposal to create an entity which handles loan defaults which will contain J&K Bank as the major shareholder. This makes the entity a J&K based one and it can seize the property in place of non J&K banks. How much support will centre give to such an entity, I seriously don’t know.
Now, look at the scenario. There is a defaulter and the bank seizes his property. As far as I understand, according to the act, it should be sold only to a person in J&K. This raises two questions -
  1. If there is no buyer ready to buy, what will the bank do? Can it say, since no person in J&K is ready to buy, I will sell it to an outsider? May be, the act, now, says the buyer should be a J&K resident only. What will stop the Parliament to modify it to open the property to the whole country?
  2. After all, a bank like SBI is a wing of Central Government. Can the bank transfer property to Central Government? Now, what happens if Central Government maintains a huge list of properties in J&K, mainly in the Valley and pump in Kashmiri Pundits which these separatists opposed tooth and nail?
Can these separatists accept either of these? Another interesting side effect of this judgement is that property ownership in J&K is cut down by loan defaults. Similar unrelated laws can be used by the central government to make Article 370 completely meaningless. May be, that’s from the geopolitical aspect, but the ground reality is that with banks having an option to address loan defaults, the incidence of loans in J&K will increase, and along with it, entrepreneurship and job creation potential.

Friday 16 December 2016

Bidi-Cigarette Divide as an Economic Indicator

I was going through an old article in Hindu over the statistics of liquor consumption and smoking in India. The data can be used directly to gauge the economic standing of every state in the country. I won't give much weight to liquor because toddy and mahua are not just a mode of inebriation, but are cultural aspects in areas like Telangana, Orissa or Chattisgarh. However, this data points to one aspect - more rural life and non availability of change. Looking at the comparision between bidis and cigarettes, this is more pronounced. Unlike liquor which is more to do with cultural background, this is an indication of poverty, backwardness and availability. As like always, we see that BIMARU states lead the bidi smoking India. If this is the real scenario, massive investment in correction of the way of life in those states is the only way of forward to take India forward.

Consumption per capita per week   Toddy &
Country Lqr (ml)
  Beer, Foreign Lqr &
Wine (ml)
  %Quality Liquor   Bidi (Nos)   Cigarette (Nos)   %Cigarette
Gujarat   53   3   5.36%   24.1   0.2   0.82%
Rajasthan   80   43   34.96%   49.8   0.7   1.39%
Uttar Pradesh   34   5   12.82%   26.1   0.4   1.51%
Haryana   89   43   32.58%   40.4   0.8   1.94%
Dadra & Nagar Haveli   2,533   498   16.43%   29.5   0.6   1.99%
Madhya Pradesh   133   12   8.28%   31.8   0.7   2.15%
Chhattisgarh   120   27   18.37%   9.6   0.3   3.03%
Uttarakahnd   38   43   53.09%   40.6   1.4   3.33%
Punjab   141   50   26.18%   14.5   0.5   3.33%
Tripura   163   2   1.21%   80.8   2.9   3.46%
Chandigarh   37   42   53.16%   22.5   0.9   3.85%
Himachal Pradesh   149   73   32.88%   42.9   2.3   5.09%
Daman & Diu   252   1,079   81.07%   4.3   0.3   6.52%
West Bengal   74   12   13.95%   41.4   3.2   7.17%
Odisha   146   20   12.05%   6   0.5   7.69%
Karnakata   23   102   81.60%   21.1   2   8.66%
Bihar   266   17   6.01%   2.6   0.3   10.34%
Assam   304   19   5.88%   11.8   1.6   11.94%
Delhi   55   86   60.99%   11.9   1.7   12.50%
Maharashtra   65   19   22.62%   4.7   0.7   12.96%
Tamil Nadu   20   85   80.95%   12.3   2   13.99%
Andhra Pradesh   561   104   15.64%   16.5   4.4   21.05%
Andaman & Nicobar Island   656   532   44.78%   12.1   3.3   21.43%
Meghalaya   74   49   39.84%   28   8.2   22.65%
Jammu & Kashmir   32   7   17.95%   14.3   4.7   24.74%
Nagaland   159   23   12.64%   12.7   4.2   24.85%
Arunachal Pradesh   749   346   31.60%   6   2   25.00%
Manipur   155   6   3.73%   10.5   3.8   26.57%
Sikkim   41   307   88.22%   5.3   2.3   30.26%
Jharkhand   320   14   4.19%   1.2   0.6   33.33%
Puducherry   154   144   48.32%   5.1   3   37.04%
Kerala   94   102   52.04%   8.9   6.4   41.83%
Lakshadweep   0   0   0.00%   9.9   8.3   45.60%
Goa   47   108   69.68%   1.4   1.9   57.58%
Mizoram   29   2   6.45%   9.8   28.8   74.61%

Sunday 20 November 2016

Demonetisation - Everything good, but what can be better?

Did the demonatisation gamble work? As what Arun Jaitley put, When currency replacement takes place, initial inconvenience takes place, but there is not a single major incident in the country, there are no riots in India which in itself is a proof of success of the execution. Did it achieve it's goals? May be. There are a thousand good things which can be said because of this - normalcy in Kashmir, lesser incidence of robberies, cash surplus with banks and projected lower interested rates. There were some pain areas like the stock market, market areas and real estate, but we will have to wait and watch to understand what's happening in those areas.
India is too huge a country to handle. Probably, never before in world history, people more than 100 million queued for anything which is not an election. This is a sort of scenario, which no amount of planning would have made it watertight in execution. The only thing is a decent execution plan and a steeper learning curve. But, is the curve steep enough? It's but a matter of conjecture. A few points below, would have made the life easier for the government and the people and have made the transition smoother. How many of them are practical and how many or not, how many I missed, it's for the more competent to decide.
1. The difference between 100 and 2000 is very huge. Making a transaction of say, 800 rupees is a very tough task for both the seller and the buyer. 500 should have been introduced before 2000 rupee note. Or is it that 500 is stopped to avoid any leakage of information?
2. The government should have thought about cross bank deposits. Had this been effected somehow, the lines would have been cut down drastically.
3. Instead of taking a paper form and updating the currency note numbers on that, every bank/post office should have been provided a portal to enter the details regarding the transactions. This will help reduce conversion multiple times and FICNs.
4. The government itself should have created an app showing the real time cash status of every ATM. This shouldn't have been a crowdsourced, private initiative.
5. Instant account openings and deposit should have been thought about. After all, what is needed is an Aadhar linked fingerprint scanner.
6. Cooperative Bank issue was unwarranted. When all the banks were closed on 8th, a sweep should have been initiated all over the country to collect all 500 and 1000 rupee notes stashed with the banks, counted and shredded at a consolidation point, may be in every district. When you force everyone to start with a clean slate, past dated transactions wouldn't have happened and we would have seen much more points for exchange.
7. Instead of forcing the hoarders to destroy their currency, a provision for anonymous donation to a select welfare funds like PM Relief Fund should have been provided. That will force governments to jack up the reserves without they being used anywhere.
8. Recaliberating the machines should have been done at a faster pace. Or rather, a plan for construction of new machines should have been initiated as a part of the same program since most of the ATM machines we have today needs to be replaced in the near future.
9. Is it worth investing effort to take down those who still hold paper currency in old notes? After all, it is going to be a scrap of paper if not deposited.

Wednesday 16 November 2016

South India vs BIMARU vs Rest of India

I was reading this article and was intrigued at how the region level units performed on a few development parameters. Well, as far as I see, there is no comparison whatsoever between South India and BIMARU whatsoever on development metrics. The data is for all to see. GSDP as % of India for UP + Bihar is around 10-15%(similar to tax revenue) and needs to be corrected in the table. I guess this data needs to be extended to BIMARU without UP and Bihar to check how the balance states are performing.


Some serious questions arise out of this -
1. BIMARU states, even though they have double the population as that of South, they contribute the same to India as that of South India. Then, why does the Southern states get a paltry 5% from centre while these states get 12.5%? Note that other states combined get 6.5%. Note that North East makes sense because of the security situation there.
2. Now, compare the same with Tax Revenue as a % of total revenue collected by states. South is way ahead of BIMARU and even worse, having a population same as that of UP+Bihar, contributes three times the money.
3. Even, the Human Development Indicators take a beating for these states vis-a-vis South India.

There is no issue in these states getting this much money. But, the real question is, is the money being used productively or is it going down the drain. This story is happening for more than a quarter century and it's high time we review minutely, why BIMARU states are still guzzling that much without even attempting to compete with South India. Also, something needs to be done seriously for North East as well.


Monday 14 November 2016

Real Estate Quandary - To Buy or not to Buy?

As an analogy to the current crisis in Indian Real Estate due to the Modi Effect, I asked someone if people migrate from Colgate to Pepsodent, what will Colgate do? This is in response to the assertion that property prices are going to increase after January because people will tend to move towards standard builders thereby creating a demand.
The real impact of Modi Effect is that any sector dealing with paper money crashed big time. Take, for example, cement. It’s not that JK Cement or Ultratech are dealing with black money. It’s their dealer base which is doing this, to some extent. Every company took a beating based on the number of dealerships which collapsed. The crash of cement share prices reflect this concern - less paper money and consequently, less sales. A big player who lost considerable market share, what will he do? This is one aspect of the issue.
Another is the much bigger one - the property deals itself. A builder thinks of constructing an apartment block and zeroes in on a property. He says, I will give 50 lakhs for the bit, but the deal should be written only for 30 lakhs. What does he save there? Let’s say that stamp duty of a property is 8%. If it is 50 lakhs, the cost of the property becomes 54 lakhs. If it is 30 lakhs, he will pay 2.4 lakhs as stamp duty - he saves 1.6 lakhs. May be, he will share a part of this savings to the seller and the end customer. This is more prominent in second hand deals. With the general sentiment of paper money prominence in real estate, everything related to real estate from raw material to finished product crashed big time.
With what Modi did, the builder will have the 2.6 lakhs as unaccountable income for which he will either pay a fine or will destroy it. If I buy a flat from such a builder and if the tax authorities catch him, what’s the guarantee that my investement will still survive? I would rather not buy from him and either cancel the deal or go for a better one. Now, who is this builder? Surely not the top notch one who does shady deals. This means that any small builder is going to see a market crash and a big builder will see a higher demand. Now, what will the small builder do? It’s here that the analogy of Pepsodent and Colgate come.
In both the case of cement and flat, they will reduce the rates to recover their market share. First case, with reduced raw material cost, cost of construction is going to go down and with that cost of an apartment. And with crashing sales, a builder will reduce the property prices. If we assume the gap between a top notch one and an average one is 10 lakhs before and 20 lakhs after the migration, he will increase it to 25 lakhs. He loses 5 lakhs but seeing the gap widening, people flock to the smaller ones. With a diminishing market, the big builder will be forced to reduce the gap to 10 lakhs again.
Synopsis? Cost of raw material will go down reducing cost of construction and cost of property will first go up by Jan and then go down, may be by March. So, what shall we do? Wait and watch, or take a risk?
Another related and much better one -
https://in.finance.yahoo.com/news/black-money-crackdown-land-prices-101426822.html

Sunday 13 November 2016

Invoiceless Sales - Why do we Indians encourage this?

Just today, I was talking to a friend of mine over demonetisation. He told that those running tea stalls outside his office are not happy at the demonetisation. I asked him, what does that tea seller get. The answer I got will make anyone blink. It’s 20000 per day. Taking 20 working days per month, we are staring at 4 lakhs per month and 48 lakhs per annum - all untaxed. And when his income suddenly falls from 48 lakhs to 32 lakhs, obviously, he will be angry. This is the real situation in India. A microminority of 1.25 crore pay the income taxes and rest all enjoy, either because they are exempted or they are unorganized. What Modi did was to prise open the private coffers of those who are not paying their taxes. A similar thing applies for tax on expenses - VAT and all.
This makes one think, why are Indians not intent on paying their dues correctly, even those paying taxes honestly. Someone will produce fake medical bills, someone else fake house rent receipts and another, always buys from a shop which doesn’t give him an invoice. By not taking an invoice, he and the shopkeeper are forming a nexus to share the tax money which the government gets. Now, what’s the genesis? Well, one theory is below.
Plucking the data directly from an India Today article,
In 1970-71, the personal income tax had 11 tax brackets with the tax rates progressively rising from 10 per cent to 85 per cent. When the surcharge of 10 per cent was taken into account, the maximum marginal rate for individuals was a mind boggling 93.50 per cent  In 1973-74 the highest tax rate applicable to an individual could have gone up to an astronomical level of 97.50 per cent! The Direct Taxes Enquiry Committee, 1971 attributed the large scale tax evasion to the exorbitant tax rates and recommended reduction in the marginal tax rate to 70 per cent. This change was implemented in 1974-75, when the marginal rate was brought down to 77 per cent, including 10 per cent surcharge. In 1976-77, the marginal rate was further reduced to 66 per cent. A major simplification and rationalization initiative came in 1985-86, when the number of tax brackets were reduced from eight to four and the highest marginal rate was brought down to 50 per cent.
Due to the warped socialist policy of our governments which killed investment and gave us nothing but something called Hindu Rate of Growth, a person is supposed to pay taxes as high as 97.5% at times over the income he earns. What incentive will he have to work? Besides creating a Lunch First Business Policy(lunch first, customer next, accountability last), this forces a person to be innovative enough to save a few extra bucks. What does he do? Produce fake bills on the income front. Anyways, the shopkeeper at the corner of the street doesn’t pay taxes. Why can’t I use him to save a few more rupees? Both of them decide not to declare the whole 100% of sales as sales. Government loses sales tax and the tax amount is distributed between the seller and the buyer. In such a case, does desperation to save more takes a priority or does being morally upright takes a higher priority? As and when time progressed, with the collusion of the authorities who again wanted some extra rupees, this would have been institutionalized. The outcome? A microminority takes the tax burden while the masses enjoy. Will this change even after the tax rates became rationalised?
Modi tried to correct this imbalance to an extent - all paper money stashing will have to start from scratch again. But, will this force people to move towards electronic payments, the only answer is wait and watch.

Thursday 10 November 2016

Monday Morning Quarterback - Lessons from Stock Market

First came the shock of Modi. Next came the shock of Trump. Consequence - BSE Sensex crashed by 1689 points. A part of this was expected because the world was expecting Hillary. My guess was always Trump and I know for sure that the Sensex is going to take a beating because of both Modi and Trump. But this much? I was ready for a crash going by the lessons learnt during Brexit but this time, there was much to learn. The final outcome was, Sensex crashed by 1689 points but recovered 1300, meaning, for one who invested at -1650, it’s a tremendous shoot up of 1300 points on a single day. It’s a no brainer generally and even here, had you selected your sector correctly, you will mint money.
Though Trump Effect was more pronounced, it’s Modi Effect which was more long lasting. Trump effect was, the complete world share markets crashed but recovered to some extent after accepting the reality that Trump won. Modi effect is different. Wherever there is black money, there is going to be a permanent bruise. I thought the impact to share market will be only to shell companies which are used as fronts to manage black money. I pumped in money(well, whatever I got)
Only today, when Mahindra and Mahindra didn’t pick up as I expected, I was able to realize what went wrong and what was the mistake I did - I haven’t considered the sectors where there is black money.
The main areas where Indians pump in black money are
1. Real Estate - The index crashed by -16.5%
2. Gold - TBZ fell by almost 15%
3. Automobile - M&M and Eicher Motors are yet to recover yesterday’s losses.
4. Bollywood
It’s not that these entities hoard black money, but the thing is that people use unaccounted cash to buy products from these sectors. There can be some other sectors which may have been impacted. Sifting these from Trump phobia would give anyone excellent returns.
Now, today. People started surrendering their currency to banks. It’s mostly government banks and less of private ones because private ones deal with privileged customers who generally operate in cash as an exception, not a norm. Since a projected amount of 15 lakh crore is expected to be injected into the bank systems, their share prices are going to shoot up - more money in bank, less NPA%, more liquid money to circulate and give loans etc. This is exactly what happened - Bankex rose by 3.63% while PSU bankex shot up by almost 9%.
The bottom line is that, either be proactive or be a monday morning quarterback. If you are proactive, use the early bird opportunity well. If you are a quarterback, wait for the next time, which may never come.

Saturday 5 November 2016

The Tatkal Tamasha - Can this be any Better?

There are three things on my mind now, one, vulture politics, second, the Tatkal Tamasha and the third, Home Loan Chaos. What shall I write over? Well, let me start with the Tatkal Tamasha and get over to another things later.
The concept of Tatkal is simple. It’s a last minute availability quota for trains. It gives a chance to people who don’t plan well ahead but will be forced to make a journey on the fly. Conceptually, it’s excellent. But, with the level of train seat availability in India, on critical days(Friday/Sunday) on over night journey routes with potentially heavy traffic, the trains are never sufficient. This leads to tremendous pressure on the Tatkal network and no one, literally no one gets a confirmed seat. Have a look at the number of Tatkal seats available between Hyderabad and Chennai


TRAIN NO.   TRAIN NAME(EXP/MAIL)   2A   3A   SL
12760   CHARMINAR EXP   24   32   302
12604   CHENNAI EXP   24   32   286
17652   KCG MS EXP   10   32   175
58   96   763

Are we seriously saying 100 3rd AC and 750 Sleeper Tickets are more than enough for a high traffic route like Hyderabad to Chennai? I tried to book a ticket in one of the trains today. below is the status
10:00 Available 28
10:01 Payment confirmation sent from bank to IRCTC
10:02 Request still processing - payment failed
10:03 Attempted to book the ticket again - W/L 25
10:05 Ticket Confirmed - W/L 22

There are three issues here.
1. Seats are not sufficient
2. Handover from banks to IRCTC is not smooth
3. Even if transaction failed, the ticket got booked. This means, to cancel the waitlisted ticket, I had to  shell out a margin of 65 rupees plus 10 rupees for transaction fee for the bank.

Now, the questions are these -
1. On what basis are new trains decided? Going by the fact that none of the major routes with heavy weekend traffic have sufficient trains, what can be done to add extra trains to handle the load?
2. I don’t know if any gateway can be built capable of handling Indian volumes. Rather than this, instead of getting a confirmation from the bank, it would be much easier if the ticket is locked once a request is sent to the bank, not based on the confirmation. By increasing a confirmation window to, say, three hours, everyone will be able to manage the load by releasing data in a staggered manner. After all, if there is no cash, the ticket will be cancelled and a waitlisted will get the ticket
3. Waitlisting in theory, is a failure from the government in providing services. If a ticket is waitlisted, there shouldn’t be any basis for deduction of the ticket amount from the customer - neither from the bank or from the railways. For a ticket which I don’t want, I lost 75 rupees today, and that too, for two transactions. 75 per transaction for a wait listed ticket may not be that big for me, but think how much money railways earns because of this dummy transaction. After all, if it’s a Tatkal ticket and if it is cancelled, you will get a refund minus service charge.

Indian Railways is one of the biggest entities in the world with respect to work force, revenue, number of transactions and it’s IT backbone. There is too much to wish for, but there are still avenues for improvement.

Saturday 29 October 2016

Ae Dil Hai Mushkil - What are we missing?

This is what transpired. A movie, Ae Dil Hai Mushkil by Karan Johar was about to be released. Due to the Uri attacks, MNS publicly declared that they are going to block the movie because the producer cast Pakistani actors in that. The Pakistani actor in question, Fawad Khan has already scooted away home with the money he got. The real problem is not that. He was ready to condemn Paris terror attacks but there was a deafening silence over Uri. After safely ensconed in home, he gave a half hearted statement.
After all, belly is more important than anything else for a human being. For Farad Khan, if he openly opposes Uri, he is going to see hell in Pakistan. For Karan Johar, a few lives lost elsewhere are nothing when compared to the crores which will go down the drain. There was an arbitration between Raj Thackerey and Karan Johar done by the Chief Minister, Devendra Fadnavis with the outcome that Karan Johar will pay 5 crores to army relief fund and will put a commemorative display highliting the Uri issue. All were up with cudgels, including the army against MNS for extracting a ransom, in effect, blood money for releasing a movie. My take is that, MNS tried to find a way out of the logjam. Recognizing the loss the producer is going to take and to mollify the angry ranks and common public, they have asked some money to be transferred to the army exchequer, not to his personal or party account.
The drama continues. As usual, people take sides, some supporting the view that in a war like situation, national interests come first and some, asking not to link art and terror. Anurag Kashyap, then jumps into the bandwagon demanding the Prime Minister to apologize for visiting Pakistan. And today, Farhan Akthar states he is not going to give 5 crores to the welfare fund because the army declared it doesn’t accept coerced money.
This raises many questions.
1. Let’s start with the cast, including Fawad Khan. Fawad Khan came to India on a work visa. Even if there are troubles, is it correct to give a retrospective punishment for whatever was done in the past? Block any future visas or participate in a boycott for anything which is going to come, but for whatever that is completed?
2. Take Karan Johar. In such a situation, is a contempt towards anyone and anything except the money he poured in, is it necessary? Why didn’t it strike his mind to donate voluntarily and offer a public apolgy for casting Pakistani actors? Why should someone remind him of his duty towards the nation? Rather than taking the way he took, asking a tax rebate in lieu of reshooting all the scenes casting Pakistanis would have made him a darling in the eyes of these nationalists. The same is more applicable towards Farhan Akthar who held his money even closer to his heart. Contrast this with how people donated their jewellery for 1965. These things, patriotism, social responsibility and the likes need not be taught by anyone. They should come from within.
3. Anurag Kashyap’s immature comment of demanding apology from the Prime Minister highlights another big issue. There is too much exposure to armchair pundits who have zero knowledge over a topic. A big zero in foreign affairs and realpolitik, the fault lies with the media for giving his comments exposure. Let all people blabber whatever they want. Doesn’t it become the responsibility of the media to sift the garbage from what is actually needed for public consumption?
The point here is simple. It’s high time we recognize what we are, what we are capable of and decide what are our priorities - is it fighting for the country’s interests or is it pulling BJP down without realizing that BJP is the sole representative of India today? Too much attention is given to non-issues and it’s high time the press and the country decides the correct priorities. India’s equals in the world are China and Russia, not Pakistan or Somalia. Remember what Hitler did to Emil Hacha. That is Pakistan’s status today before India and that’s what India needs to project. The news should talk about comparisions with USA or China or Russia, not Pakistan or ISIS or Somalia. 

Thursday 27 October 2016

Tata Empire - A Single Cohesive Unit or a Thousand Isolated Kingdoms?

I will write about Tatas, but not about the ruckus of the day. I don’t care about who heads the firm but what bothers is that even if Tata is a charade, it was a charade well maintained. Now, because of this, there are questions over Ratan Tata’s conduct as a gentleman, there are questions over the sophisticated way in which the company is run - Tata Mundra, NTT Docomo, Corus, Tata Nano are failures and $18 billion as write offs is not a number to talk about. Succintly put by someone, the single line tells loads. What is the Tata Group? A string of under performing companies, if you exclude TCS and JLR, but strutting around because of the value system it firmly holds. But yes, Cyrus Mistry didn’t behave as the gentleman he ought to be. He was wronged and he blurted out in anguish. But was he without blemish?
Well, the topic of discussion is one single complaint made against Cyrus Mistry - he looked at Tata Group companies as individual units and not a composite whole. Ironically, this is applicable to Ratan Tata as well, to some extent. I have got a few questions in this regard.
1. What did the management do to convert 6.5 lakh Tata employees to loyal Tata customers?
2. Are there any migrations happening from one Tata company to another? Will this not knit them more and help in sharing expertise?
And let’s look at a few things which the Tatas can do to turn around their loss making business. It’s surprising that none from the Tata hierarchy did anything in this effect(well, some may have been done).
1. TCS is based on a client-vendor model and requires extensive client visits. Is there a tie up between TCS and Taj Hotels?
2. If, say, a 10% discount is given to all Tata employees to all Tata products, how many will go to a different company other than Tata Motors, Croma or Westside/Landmark?
3. In sprawling Tata campuses like TCS Siruseri or Tata Steel Jamshedpur, do we have a Star Bazaar+Croma+Westside combine serving everything for the employees, with counters or even, kiosks for Tata Motors, Life Insurance and other products? How much business can you make for that?
4. Tata Power is a major player in Mumbai and Jamshedpur. How much percentage of Tata facilities are supplied power by Tata Power?
5. TCS, say, has clients as Lufthansa. Is it possible for TCS to operate as a mediator between Lufthansa and Tata Motors for sale of buses? What if they are offered an additional 5% discount on the final deal as coveted trade partners of TCS? Can TCS work as a front for Tata Motors or other Tata companies to boost up their business volume?
6. Tatas, can they venture into defence manufacturing or ship building or iron intensive industry? That in itself will create a huge market for their loss making Steel business.
7. How much percentage of Tata employees use Tata Indicom or Tata Docomo? What incentives can be given to employees to switch over to Tata Teleservices?
8. How much of Tata trust funding for research is funneled into Tata Motors, Tata Steel and others?
9. How many companies of Tata group have their IT managed by TCS?
This is the direction in which any Tata Sons chairman should think - form the complete group into a cohesive, single entity and not thousand independent units. That will give it a level of positive feedback boosting up it’s revenue. We Indians are proud of Tatas, let it be like that.

Wednesday 19 October 2016

Father, Tiger - High Time We Stop Playing Victim to a Highly Inferior Entity

There is a famous story in Telugu which goes by the name Father, Tiger. It says, a boy guarding his family cows, once thinks of playing a prank. Suddenly he shouts, father, tiger. His father comes running, he sees his son laughing. This happens a few times. Suddenly one day, a tiger really comes. How much he shouts, no one turns up. The moral is, there is an expiry date for everything.
This is exactly what the Modi government is staring at, today. Pakistan is the Ivy League of Terrorism, Pakistan is the Mother Ship of Terrorism, people liked it and clapped. India conducted surgical strikes across the border. People were supportive. Well, there were mischievous elements in power which questioned the veracity of Indian Government and Indian Army by questioning whether the strikes happened or not, opening a can of worms and a hell lot of political vitriol, but the world got bored of that as well.
There are two aspects of that - How judicious is it for a person in authority to question the strikes themselves? A line should be drawn somewhere differentiating party and government. If you don’t do that? Whether the strikes happened or not, the reality is that it has achieved it’s goal. India proved that Pakistan is a state sponsor of terror by killing mercenaries inside the country and broke the myth of Pakistani military invincibility and called the bluff of nuclear threat. It’s a great achievement and every government is bound to milk mileage over it. But, what did we do?
China has got it’s own reasons to support Pakistan and Russia it’s own to take a stand which doesn’t suit India. What is India expected to do? Crib? Complain? Show them the contempt they deserve? India complained and cribbed. It didn’t show it’s toughness in dealing with the issue. The world has accepted that Pakistan is a pariah state. What is India doing to keep it hemmed just there? What is India doing to cut down it’s support?
First mistake. India should decouple Kashmir and Pakistan. The government did it to some extent but still complains to the world over Pakistan perpetrated terror in Kashmir. If there is a cross border fire or a terror attack, respond in kind. A terror attack should be responded by destroying a few launchpads, a ceasefire violation by destruction of the whole sector. That will tell the world what India’s tolerance is breached.
Second mistake. Pakistan is not India’s equal. India has the third highest PPP in the world, second highest population, seventh highest area, third largest army, one of the highest defence spenders in the world, one of the only four countries capable of launching satellites and what not? It was an island of stability for the whole world when markets started crashing. What is Pakistan before us? With India, what can they compete with? They have a proven track record of losing every war they fought and a failed state where the civil government has zero say in the government. Is that the country we are supposed to compare ourselves with? India’s real comparision lies with USA, China, Germany, Japan and Russia. Where can we compete them with? That is what India should focus on - what are the strengths of these countries and how can India join their club, if not beat them?
But to do justice to the Modi Government, by blocking access to the NGOs, we have seen a steep fall in cases of human rights violations against the army, they have made Hurriyat inconsequential, the pinch related to manpower, firepower and money is felt day in and day out by the mercenaries, in a fell swoop, it arrested the instigators of stone pelting there by crashing the movement and if the same stranglehold is kept for a decade, Kashmir will turn peaceful. There is rioting in Baltistan, Balochistan and PoK against Pakistani atrocities and the army is having a hard time crushing it.
This needs a fundamental change in the country’s thought process. A few things which should be done are -
1. Relegate every news regarding Pakistan to the last page of a newspaper.
2. Any terror attack should be responded in kind. An attack has a few components - funders, executors and supply chain. The executors are terminated, and every attack should follow by dismantling the funders and supply chain. Any Pakistani military material captured on the terminated need not be shown as proof to the world, but should be responded with demolition of infrastructure in cross border fire.
3. Any cross border fire should be returned in kind. Though the government asked the military to respnond, the aim should be demolition of a sector or a part of it completely.
4. Threaten Pakistan publicly stating we are capable of killing your economy any day but we won’t do such because we are civilized people. One simple example can suffice what we can do. We will send a public notifier to everyone in the world stating any ship which is supposed to go to Karachi port, if it unloads it’s stock in Kandla, it will be paid 1.3 times the money it gets in Karachi. And all legal liabilities will be transferred to Indian Government. It is that simple for us to destroy you. But, the question is what will we achieve doing that.
5. Entry of private players into manufacture of simple ordnance like AK47s and magazines or mortars or LMGs. This will reduce the pressure on government sector, allowing it to focus on real research.
The focus of all these is to ensure that Pakistani military will not pose any threat to India.
Next is the isolation of Pakistan and increase it’s suffering. Note that the fight is against Pakistani establishment and not Pakistani populace. They can be the sufferers but not the targets.
1. Since MFN is reciprocative, think of scrapping it off.
2. A big no to subverting Indus water treaty because the people hurt will be common people. India should go extra mile to say that India honours it because farmers are farmers and is ready to sacrifice a part of it’s share. This should be followed by a propaganda blitz
3. No to jobs, cross border trade, religious and cultural tourism.
4. Scaling down the diplomatic representation and providing voice to Baltis, Balochs and all those suffering.
Next is Pakistani isolation in the global arena. The biggest of the supporters of Pakistan in the world is China. What are Chinese interests in propping up Pakistan? A strong and investor friendly India will pull out all manufacture from China into India which as a country, China can never accept. The consequence of this is that there will be a sudden rise in unemployment and discontent leading to a potential collapse. To ensure this doesn’t happen, China will have to show India as unsafe to invest. What more can be more apt than supporting Pakistan which will always be ready to blast a few bombs in strategic areas? And how are the world powers ranged? America will collapse if China pulls out all it’s investments from the country. From the terms of bilateral trade and weapons sale, China is too big to handle for Russia. Neither of them are going to take sides between India and China. India can break China simply because by violating it’s age old Mandala System, China added more burden to it and hence is more of an artificial country with faultlines clearly drawn. But, a friendly China is more in India’s interests than a broken one. There are two things India can do - scuttle CPEC which India already did, but it needs to complete the demolition. This will ensure that there will be no Chinese presence in that area. Every country has it’s own price. Ask China it’s price in return for China occupied Kashmir, recognition of Dalai Lama and a say in the election of next Dalai Lama. Instead of CPEC, what India will offer is a land route from China directly through India with multiple areas of entry and multiple ports of exit, at a negotiated price and if needed, open borders between both the countries, opening a two way trade relationship. After all, China is using Pakistan to maintain it’s position in the market. If India is ready to give that to China, what’s the need for China to be belligerent to India?
The bottomline is this. Pakistan is a minor irritant and it should be shown it’s place. India needs to compete with the economic and industrial giants of the world and not midgets. The change in outlook is what is needed desperately.

Monday 3 October 2016

Jio Mania

Its been a month almost Reliance Jio is launched. Shall we call it a failure or a success? Having a look at the standard three parameters - reliability, affordability and availability, its a flop on two counts and there is nothing to comment since it is free on the moment.
Let's go for the good points fist before bashing the world's largest startup. The primary aim was to scale up to 10 crore customers as early as possible. Assuming the network is reliable and speed is as proclaimed, people would want to migrate to Jio. This presents two kinds of problems for other service providers - since Jio operates on VoLTE and since data, for the time being, is free, we would see people making less calls from other service providers. On the other side, since this results in lesser patronage among customers, there is no reason for a dealer to continue his dealership. Meaning, after the end of three months, we would be seeing no one will be ready to sell an Airtel or Idea sim card or a top up. Getting that share of the market is going to be very hard. Next is the beauty of simcard activation - finger print authentication for the Aadhar Card. Just have your card with you and if it is genuine, your fingerprint will match. I dont know whether this is one of the main purposes of Aadhar, but this single act is going to revolutionize identity verification in India. Now, the other side of the coin.
Reliance Jio came into market with one single aim - kill the market and take its place. For that to happen, you need to flood the market with sim cards. Had you done that, we would have seen people migrate fast. But well, how many would want to stand in a line for long or how many would want to go to the stores day after day to get a sim? Did they misjudge the volume, did they misjudge the target audience, who will tell?
Next is the problem of reliability. The number of interconnects provided is far less than Jio actually wants. Even though this is beta testing and even though other companies are crooked enough to try to kill Jio illegally, will an average customer understand that?
Next comes coverage. Chennai, I got a full coverage. But, the speed is atrocious. Warangal, even though the signal strength is better, the signal doesn't last for more than two minutes. I will have to put the phone into flight mode again and again. And the speed, even atrocious than that of Chennai. I understand that the speed is dependent on number of parallel users. Was this heavy usage not accounted for?
Next comes the availability of sim cards itself. Shortages apart, there is another big problem with the sim cards. Sim card gets activated only if you use a sim card of that particular state. In a country where change is led by the IT corridors which constitute at least 20-30% people from outside the state, how justified is this stand? May be, its an attempt for load balancing. But, the impacted parties are those who use it the most. This is another Jio should think about. Now, what's the alternate? I can ask a local to get me a sim on my pphone number. An Aadhar card can fetch you nine in total. Fine. But, is it correct to hold an obliging friend accountable for my mistakes? Rather, it should have been that his Aadhar can be used as a reference for my Aadhar.
Next. When are we getting number portability? Half of those stuck with their numbers will hesitate to move to Jio even if it is a success just because of that.
The final bit is the cost part post free lunch. 299 for a 21 day package for 4 GB is OK. This is OK only if the the total phone bill for a person talking at least two hours a day fits under a GB, meaning it should be no more than 150 or 200 KB per minute. I will trust Jio only when I am confident on this single point. And I will hope that Jio will be a market killer in the home turfs of entities like Vodafone. A bit more responsibility and a bit more focus on what you have today can do wonders.

Friday 16 September 2016

Water Wars - Who is to blame - The Lazy or the Mighty?

Death of twenty is a tragedy. Death of twenty thousand is a statistic – Stalin
This is exactly the situation Karnataka is in, today. Tamil Nadu complaining it is not getting water for these many hectares is on one side and a particular farmer who will not get even a single drop of water if Karnataka releases water to Tamil Nadu is on the another. For him, his farm is more important than a distant Tamil Nadu getting his legal share of water. No individual, in this state, will allow release of water. He can even challenge the verdict with his life. And this single farmer is more potent a political force than whole of Tamil Nadu combined.
The background of the problem is this. Good or bad, there is an agreement between Karnataka and Tamil Nadu over distribution of Kaveri river water. By that, Tamil Nadu is entitled to get some water. Even, Karnataka’s picture is not that rosy. It’s not as if it has surplus and it is holding the water to torment Tamil Nadu. It is also starving for water there. But, Supreme Court has ordered Karnataka to release the water. Karnataka cribbed but it declared it will release water to the tune of 19000 cusecs per day. Bangalore exploded in violence immediately and the image the city had took a severe beating with companies shut down, violent protests and curfew all over. The gravity of the situation can be gauged from the fact that 10 companies of CRPF had to be rushed in to control the riots. Total losses in Bangalore – imputed, projected as well as real are pegged at 25-50000 crores. Tamil property was damaged, Tamilians were threatened and all sorts of noise was made. How much of this is for the forthcoming elections and it’s funding through ransoms, we will never know. Because Karnataka burnt protesting release of water, Tamil Nadu should burn protesting acts against Tamils in Karnataka. Who is to blame for this? Obviously, the one who is ordered to release water and the one who dared the Supreme Court. But, what is being done to enforce the judgement?
Looking at this, there are a few important points we need to ponder over.
1.     What is the water storage capacity of Karnataka and Tamil Nadu? What percentage of it is lost to silting of reservoirs and how much more can be trapped in tanks or whatever? What is the desilting policy?
2.     What is the percentage increase in water holding capacity of both the states post independence? Is it not time we buckle up and do something meaningful?
3.     What are both the states doing to trap flood water? Do they have any spill over or sort of lift irrigation scheme to remove a part of flood water to fill reservoirs in remote areas?
4.     The agreement was made ages before and a revision, unpalatable to both was provided. In this case, a scientific basis for calculation of the share should be established and should be revised every ten years. This should be done not based on the historic share, but based on the current usage – agriculture land, industries and cities, with any additional industries or farmlands in the last five years neglected. This will ensure that the data available will be real time and will iron out the issues even better.
5.     Today’s case is that Karnataka dared the decision to release water to Tamil Nadu. What is the recourse to bend Karnataka? One possible case is a fine of may be one lakh per cusec of water stopped. This will flow from Centre’s coffers directly into the aggrieved’s coffers. 120 crores per day is not a small amount for any state level entity. Either Karnataka releases water or it loses water. The financial pressure can handle the issues or in case it is ready to bite the bullet, Tamil Nadu can use the money to better it’s irrigation system
6.     Government of India’s data shows Tamil Nadu needs 4557 litres of water to produce one kilo of rice. West Bengal, on the contrary, uses 2169 litres per kilo. Even, West Bengal’s number is double that of China or Brazil. This can mean two things – there is too much wastage of water in Tamil Nadu or per hectare output of rice in Tamil Nadu is atrocious. Either case, it’s the fault of the government to let it happen. What did the government, then, do to educate the farmers and guide them in the right direction?

7.     25000 crores is the loss to Bangalore and insurance doesn’t cover property damaged during rioting. Who will compensate the individual who lost his property? Surely, not me, sitting in Chennai or Hyderabad and funding it through the taxes I paid. It’s a fault of Bangalore and people in Bangalore should hold collective responsibility for whatever happened there. There should be a riot levy imposed on the city based on a formula, may be as a surcharge on VAT. The number of days it should be imposed and the extra tax rate should be based on an automated formula but less than a month. Once it starts pinching the pockets of everyone in Bangalore, especially of those innocent or those from the silent majority who saw Bangalore burning without any intervention will then be proactive enough to boot out the ruckus creators.