Innovate or perish
by S N Chary
The tell-tale signs were already there. The recent figures on India’s industrial output showing a significant overall dip was not shocking news.
Whenever such hurtful news is received, the reactions are common: The government’s industrial policy is flawed, the manufacturing policy had been non-existent until very recently, the Reserve Bank’s monetary policies are highly restrictive of borrowing and investment, the domestic market has been slowing down, the foreign markets of the European Union and the US have fallen drastically slowing down our export activity, and rupee has dipped in value internationally. These are all numerous and predictable reasons under such circumstances.
However, the one fact that often slips from being mentioned is that India’s industrial competitiveness has been dropping. And that was not any recent news. It has been very low for several years now. It took some time for the nation to feel its repercussions. It was a major fault-line and some seismic activity was to be expected now or a little later.
Unido’s report prepared not long ago puts India at 41st rank in terms of industrial competitiveness, far behind China. But, even China is 26th in the rankings and several other countries, about whom Indians generally tend not to hear much, like Ireland, Slovenia, Finland, Belgium and Austria make the top 15 cut.
Singapore, known to Indians for its financial services might and less known to us for its industrial prowess, makes it to the top i.e. 1st position in these rankings. Malaysia is ranked 18; Canada is ranked at 22, Malta at 23, Mexico at 30, and Brazil at 39. Mexico and Brazil have taken to manufacturing in a big way and are the recent powerhouses of industrial activity. In fact, after China, these two Latin American nations seem to be the contenders in global manufacturing.
It is true that the present government at the Centre has not been able to function well for quite some time. Parliament is in a series of log-jams. UPA government is caught up in several alleged scandals involving its own members. Anna Hazare’s agitation is close on its heels. There are accusations – coming from Indian industry’s captains -- of a serious governance deficit on the part of the Centre. It is also true that RBI’s tightening of the credit lines has made investments that much more difficult for the industry.
But, all that is akin to putting the entire blame on someone else. Indian industry has not been looking inside its own house. This is, of course, an Indian habit of seldom indulging in introspection. If it is corruption, we do not first check ourselves; if it is a fall in industrial production, we do not check where we have been going wrong.
Vision of our leaders
It cannot be denied that India has an industrial base – that too in multifarious industries – thanks largely to the vision of our leaders in the early days after independence. Post the more-or-less forced liberalisation, we have taken advantage of the global market opportunities for cheap and less value-added services. We have produced diverse products for our domestic consumption from pins to planes, fertilisers to fine chemicals, and lamps to industrial lathes. But, none of the products and services made the top cut. None of these is a global brand.
We make good items of daily use, but these are nowhere near the internationally known brands. In fact, one is pained to see them abroad heaped in a basket of cut-priced items for sale. We make good textiles, but again most of these are to be found in stores that sell cheap wares or in some corner of a store. We do not make either machines, tools, large equipment, consumer durables, chemicals, biochemicals, or agricultural or horticultural items that have any international name or appeal. Our products are good enough for us, but not for the world at large. To be internationally competitive, one has to be not just good but be better, preferably be the best.
If we specialise in say being a BPO of the world, we must be the best BPO country. There cannot be any scope for an Ireland or Philippines or Poland to overtake us. If we are to be the software giants, we must be the best in writing new software and coming up regularly with new software products. If we are to be the best in bio-tech products, we must invent new biotechnogical products. This is true of all our industries. We cannot even afford to be the second rung. We certainly cannot be ‘also ran,’ which is what we have been doing starting from screws to ship-making.
Indian industry, whether it is the bricks-and-mortar old economy kind or the new sun-rise economy type, has been wary of research and innovation. Again, this has so far been a particularly Indian business trait of risk avoidance. Innovation is about going on a search for a new path. It is risk-laden. The results, if reaped, can only be available for the future, currently unknown. It is not about putting money today and getting rewards the very next day. The entire thought process has been short-term.
The industry that accuses the government of not planning enough for the future is itself quite myopic. Value addition, innovation and constant improvement are the mantras. Without these basics, an industry will always be on a flimsy foundation to be shaken up with every international or domestic tremor.
Moreover, why does the industry wait for help to arrive from the governmental quarters? Why should it always expect largesse in the form of incentives, tax breaks, import curbs, cheap land, easy credit, or in some cases even a bail-out? Self-help is the best help. It is the sign of a mature industry.
(The writer is a former professor at IIM, Bangalore)
source:Deccan Herald
Saturday, December 24, 2011
Morgan Stanley says sentiment on India is souring
Excerpts from India Business Hour on CNBC-TV18 Watch the full show »
ALSO READ
India is definitely not in the good books of brokerages as Ruchir Sharma, MD & global head of emerging markets at Morgan Stanley points out, the sentiment on India is souring.
In his book - Breakout Nations, Sharma says the focus must shift to other emerging economies beyond China and India. Sharma speaks to CNBC-TV18's Udayan Mukherjee who began by asking him if markets are going to capitulate before we see an upside.
“The operating assumption is that the bear market regime is still something on the ascendant here,” says Sharma.
He feels it is very important that the correlation between markets breaks down next year. "Only after it breaks down, can we say, a new bull market is about to begin," he adds.
Below is an edited transcript of his interview. Watch the accompanying video for more.
Q: Last winter when we spoke, you said that it’s just a matter of time when markets head into a bear market zone. We certainly seem to have done that in 2011. How deeply entrenched are we in this bear market would you say now?
A: The operating assumption is that the bear market regime is still on. I know that the popular thing to ask just now is will 2012 be any different from 2011 and the key thing to remember here is that markets don’t care about calendar years. So just because a new year begins doesn’t mean a new trend is about to begin.
This bear market has now really lasted a long while compared to any historical bear markets that we have seen, this has really gone on for a while. We have to now be on the lookout as to what can cause a turnaround. The operating assumption is that the bear market regime is still something which is on the ascendant here, but what can turn this around.
In this regard, there are a few markers that we are looking for. A lot of people will speak about Europe etc, but I find that that is sort of lagging data, that by the time the European situation begins to improve you will know that the markets have moved higher, so to me that is not a very good forward looking indicator.
From an Indian perspective, the most important thing that I am really looking for is that these correlations across markets need to breakdown. We have been seeing this since about 2005-2006, but the last few months has been extraordinary – that if you tell me what is the price of let’s say copper or the Australian dollar, I can tell you pretty much what’s happening across the world, it’s that formulae the sort of macromania that you know the price of one asset and you know where the risk is on and risk is off and everything moves accordingly.
Q: Do you think that runs the risk of breaking down next year?
A: It’s very important for it to breakdown but I am not sure if it does. We know the bear market regime is still intact but the moment that shows some signs of breaking down then we can be confident that a new sort of bull market is about to begin. It is very important for this cross correlations across different asset classes in the world to break down.
Q: When you talk about the bear market regime which is on right now, would you say it holds for all classes of equities, across the world or is it certain geographies that you are talking about?
A: This has really been where the conventional wisdom is starting to go wrong. The bear market regime looks most entrenched in emerging markets. The big surprise in 2011 is how resilient the US market has been and the fact that the Q4 of this year, the US economy in the midst of all this talk of a global slowdown is likely to post a GDP growth rate in the 3.5% to 4% range, which is an extraordinary performance because we thought this is a US problem that the rest of the world is suffering from.
However, the big challenge to conventional wisdom which is likely to persist for a while is that many emerging markets, which we thought were going to be the superstars, are being questioned. So, at this time last year, the big debate was that when will India overtake China as the fastest growing economy in the world, that debate is now being turned on its head which is that both India and China are slowing down and the question is which economy will slow down even more in 2012?
Q: Would you say that emerging market equities are in a deeper bear market than the US and the US which has been in the bear market for the longest time amongst many of these countries or all these countries, could it be the first to come out of it?
A: Yes, I think that could happen and these trend reversals take place just when the conventional wisdom becomes very strong. So, over the past decade, it became popular to say- the decline of the West and the rise of the rest. That trend could well start showing some signs of reversal, the two economies showing the maximum resilience at this stage are US and Germany in the midst of this entire turmoil.
In US and Germany even the expectations became very low and hence, those expectations are now being easily surpassed. At the same time, in the emerging markets expectations got too high, in terms of what they could achieve, and those are now being undershot. Markets trade at the margin, in terms of what the rate of change is and the rate of change seems to be more positive in those markets and more negative in emerging markets.
Q: Are you prepared to take this one step further and take a big call that may be we are at the cusp of a new bull market in US equities and the US dollar?
A: On the US equities, I am a bit doubtful but on the US dollar I feel much more confident. The US dollar over the past decade, on an inflation adjusted trade weighted basis has lost one third of its value. We were looking at some of our long term charts and it shows that the US dollar now is at the cheapest level it has ever been in its history.
So, it is competitive and a lot of the emerging market currencies have become quite expensive and so the big reversal is taking place. For many foreign investors a big part of the returns in emerging markets, over the past few years came from currency appreciation and that trend has exhausted itself. Hence, I think that in the US dollar today is quite likely that the bear market we saw in the dollar, over the past decade where it lost a third of its value is coming to an end and we are likely to see a higher dollar versus many currencies over the next few years.
Excerpts from India Business Hour on CNBC-TV18 Watch the full show »
ALSO READ
India is definitely not in the good books of brokerages as Ruchir Sharma, MD & global head of emerging markets at Morgan Stanley points out, the sentiment on India is souring.
In his book - Breakout Nations, Sharma says the focus must shift to other emerging economies beyond China and India. Sharma speaks to CNBC-TV18's Udayan Mukherjee who began by asking him if markets are going to capitulate before we see an upside.
“The operating assumption is that the bear market regime is still something on the ascendant here,” says Sharma.
He feels it is very important that the correlation between markets breaks down next year. "Only after it breaks down, can we say, a new bull market is about to begin," he adds.
Below is an edited transcript of his interview. Watch the accompanying video for more.
Q: Last winter when we spoke, you said that it’s just a matter of time when markets head into a bear market zone. We certainly seem to have done that in 2011. How deeply entrenched are we in this bear market would you say now?
A: The operating assumption is that the bear market regime is still on. I know that the popular thing to ask just now is will 2012 be any different from 2011 and the key thing to remember here is that markets don’t care about calendar years. So just because a new year begins doesn’t mean a new trend is about to begin.
This bear market has now really lasted a long while compared to any historical bear markets that we have seen, this has really gone on for a while. We have to now be on the lookout as to what can cause a turnaround. The operating assumption is that the bear market regime is still something which is on the ascendant here, but what can turn this around.
In this regard, there are a few markers that we are looking for. A lot of people will speak about Europe etc, but I find that that is sort of lagging data, that by the time the European situation begins to improve you will know that the markets have moved higher, so to me that is not a very good forward looking indicator.
From an Indian perspective, the most important thing that I am really looking for is that these correlations across markets need to breakdown. We have been seeing this since about 2005-2006, but the last few months has been extraordinary – that if you tell me what is the price of let’s say copper or the Australian dollar, I can tell you pretty much what’s happening across the world, it’s that formulae the sort of macromania that you know the price of one asset and you know where the risk is on and risk is off and everything moves accordingly.
Q: Do you think that runs the risk of breaking down next year?
A: It’s very important for it to breakdown but I am not sure if it does. We know the bear market regime is still intact but the moment that shows some signs of breaking down then we can be confident that a new sort of bull market is about to begin. It is very important for this cross correlations across different asset classes in the world to break down.
Q: When you talk about the bear market regime which is on right now, would you say it holds for all classes of equities, across the world or is it certain geographies that you are talking about?
A: This has really been where the conventional wisdom is starting to go wrong. The bear market regime looks most entrenched in emerging markets. The big surprise in 2011 is how resilient the US market has been and the fact that the Q4 of this year, the US economy in the midst of all this talk of a global slowdown is likely to post a GDP growth rate in the 3.5% to 4% range, which is an extraordinary performance because we thought this is a US problem that the rest of the world is suffering from.
However, the big challenge to conventional wisdom which is likely to persist for a while is that many emerging markets, which we thought were going to be the superstars, are being questioned. So, at this time last year, the big debate was that when will India overtake China as the fastest growing economy in the world, that debate is now being turned on its head which is that both India and China are slowing down and the question is which economy will slow down even more in 2012?
Q: Would you say that emerging market equities are in a deeper bear market than the US and the US which has been in the bear market for the longest time amongst many of these countries or all these countries, could it be the first to come out of it?
A: Yes, I think that could happen and these trend reversals take place just when the conventional wisdom becomes very strong. So, over the past decade, it became popular to say- the decline of the West and the rise of the rest. That trend could well start showing some signs of reversal, the two economies showing the maximum resilience at this stage are US and Germany in the midst of this entire turmoil.
In US and Germany even the expectations became very low and hence, those expectations are now being easily surpassed. At the same time, in the emerging markets expectations got too high, in terms of what they could achieve, and those are now being undershot. Markets trade at the margin, in terms of what the rate of change is and the rate of change seems to be more positive in those markets and more negative in emerging markets.
Q: Are you prepared to take this one step further and take a big call that may be we are at the cusp of a new bull market in US equities and the US dollar?
A: On the US equities, I am a bit doubtful but on the US dollar I feel much more confident. The US dollar over the past decade, on an inflation adjusted trade weighted basis has lost one third of its value. We were looking at some of our long term charts and it shows that the US dollar now is at the cheapest level it has ever been in its history.
So, it is competitive and a lot of the emerging market currencies have become quite expensive and so the big reversal is taking place. For many foreign investors a big part of the returns in emerging markets, over the past few years came from currency appreciation and that trend has exhausted itself. Hence, I think that in the US dollar today is quite likely that the bear market we saw in the dollar, over the past decade where it lost a third of its value is coming to an end and we are likely to see a higher dollar versus many currencies over the next few years.
In 20 years, India among top 3 countries for us
In 20 years, India among top 3 countries for us: Marriott International COO
by R. Ravikumar
India will see enormous growth in travel and tourism in the next 10 to 15 years, says Mr Arne Sorenson, President and Chief Operating Officer, Marriott International Inc. “Your Incredible India campaign is incredibly brilliant,” he said in his brief 15-minute interview to Business Line. He was on a whirlwind trip to India recently, for the first time after he took over as the company's COO a couple of years ago. He is also set to become the company's top executive once its long-time CEO Mr J.W. Bill Marriott Jr steps down in the next three months.
Excerpts from the interview:
Are the debt crises in Europe and the US taking their toll on hotel occupancy across the world? How's the hotel industry doing in India?
Markets are growing, perhaps, at slower paces in the US and Asia Pacific. Europe is the hardest market to predict – for now. But as I see it, by and large, business travel takes place, more meetings happen than in the last two-three years. We see comparable year-over-year sales across the globe are up in high single digits over the same time last year.
And specifically, in India, there was a growth of 15 per cent in supply (of hotel rooms) in 2010-11; demand grew by 17 per cent during the same period. We expect corporate demand to grow even faster in the months to come, as the sector resumed travelling.
As we see it, the global economy is still growing, but at a slower rate.
But, it has shrunk inbound tourism to India. Hasn't that affected your business here?
We are doing pretty okay. For us, almost 75 per cent of the business in India comes from domestic travellers. We are the fifth largest hotel chain in India – in terms of number of rooms. At the moment, we have 15 hotels here and 45 more in the pipeline.
More and more global hotel brands are increasingly looking at setting up hotels in India. Many have already made much progress. How is Marriott placed in the market here?
Our philosophy is to have one leading brand in each distinct segment of the marketplace. So in India, all our brands, from Ritz Carlton in the luxury space to Courtyard Marriott at the other end of the spectrum, are competing well with other brands in their respective categories. Our plan really is to grow with India.
In 20 years from now, India will be one of the top three countries we do business in. The country is bound to see enormous growth in travel and tourism.
Are you focusing only on the business travel segment or on the leisure segment too?
Though predominantly business, we will grow our leisure portfolio.
Marriott has been operating in India as an asset-light company. Would you invest in properties here?
No. Not in a big way. We recently formed a joint venture with SAMHI Hotels – in which we have a minority stake – to set up 15 Fairfield Inn hotels here. We have been an asset-light company not just in India, but globally… even in the US. Globally we have 3,500 properties. Of this, only eight are owned by us.
Is the tie-up exclusive?
No. We have tied up with a few other partners for Fairfield in India.
Where will the first Fairfield property be launched?
In the NCR.
Will your Fairfield in India be different from that in other parts of the world?
Yes. It will be different in India. Rooms will be bigger; they will have three F&B outlets and bigger public space. It will be a full-service hotel, and priced very competitively.
source:hindubusinessline
by R. Ravikumar
India will see enormous growth in travel and tourism in the next 10 to 15 years, says Mr Arne Sorenson, President and Chief Operating Officer, Marriott International Inc. “Your Incredible India campaign is incredibly brilliant,” he said in his brief 15-minute interview to Business Line. He was on a whirlwind trip to India recently, for the first time after he took over as the company's COO a couple of years ago. He is also set to become the company's top executive once its long-time CEO Mr J.W. Bill Marriott Jr steps down in the next three months.
Excerpts from the interview:
Are the debt crises in Europe and the US taking their toll on hotel occupancy across the world? How's the hotel industry doing in India?
Markets are growing, perhaps, at slower paces in the US and Asia Pacific. Europe is the hardest market to predict – for now. But as I see it, by and large, business travel takes place, more meetings happen than in the last two-three years. We see comparable year-over-year sales across the globe are up in high single digits over the same time last year.
And specifically, in India, there was a growth of 15 per cent in supply (of hotel rooms) in 2010-11; demand grew by 17 per cent during the same period. We expect corporate demand to grow even faster in the months to come, as the sector resumed travelling.
As we see it, the global economy is still growing, but at a slower rate.
But, it has shrunk inbound tourism to India. Hasn't that affected your business here?
We are doing pretty okay. For us, almost 75 per cent of the business in India comes from domestic travellers. We are the fifth largest hotel chain in India – in terms of number of rooms. At the moment, we have 15 hotels here and 45 more in the pipeline.
More and more global hotel brands are increasingly looking at setting up hotels in India. Many have already made much progress. How is Marriott placed in the market here?
Our philosophy is to have one leading brand in each distinct segment of the marketplace. So in India, all our brands, from Ritz Carlton in the luxury space to Courtyard Marriott at the other end of the spectrum, are competing well with other brands in their respective categories. Our plan really is to grow with India.
In 20 years from now, India will be one of the top three countries we do business in. The country is bound to see enormous growth in travel and tourism.
Are you focusing only on the business travel segment or on the leisure segment too?
Though predominantly business, we will grow our leisure portfolio.
Marriott has been operating in India as an asset-light company. Would you invest in properties here?
No. Not in a big way. We recently formed a joint venture with SAMHI Hotels – in which we have a minority stake – to set up 15 Fairfield Inn hotels here. We have been an asset-light company not just in India, but globally… even in the US. Globally we have 3,500 properties. Of this, only eight are owned by us.
Is the tie-up exclusive?
No. We have tied up with a few other partners for Fairfield in India.
Where will the first Fairfield property be launched?
In the NCR.
Will your Fairfield in India be different from that in other parts of the world?
Yes. It will be different in India. Rooms will be bigger; they will have three F&B outlets and bigger public space. It will be a full-service hotel, and priced very competitively.
source:hindubusinessline
Friday, December 23, 2011
Smaller brain size may signal Alzheimer's
ANI
People with smaller regions of the brain’s cortex may be more likely to develop symptoms consistent with very early Alzheimer’s disease, a new study has suggested.
"The ability to identify people who are not showing memory problems and other symptoms but may be at a higher risk for cognitive decline is a very important step toward developing new ways for doctors to detect Alzheimer’s disease,” said Susan Resnick, PhD, with the National Institute on Aging in Baltimore.
For the study, researchers used brain scans to measure the thickness of regions of the brain’s cortex in 159 people free of dementia with an average age of 76. The brain regions were chosen based on prior studies showing that they shrink in patients with Alzheimer’s dementia.
Of the 159 people, 19 were classified as at high risk for having early Alzheimer’s disease due to smaller size of particular regions known to be vulnerable to Alzheimer’s in the brain’s cortex, 116 were classified as average risk and 24 as low risk.
At the beginning of the study and over the next three years, participants were also given tests that measured memory, problem solving and ability to plan and pay attention.
The study found that 21 percent of those at high risk experienced cognitive decline during three years of follow-up after the MRI scan, compared to seven percent of those at average risk and none of those at low risk.
"Further research is needed on how using MRI scans to measure the size of different brain regions in combination with other tests may help identify people at the greatest risk of developing early Alzheimer’s as early as possible,” said study author Bradford Dickerson, MD, of Massachusetts General Hospital in Boston and a member of the American Academy of Neurology.
The study also found 60 percent of the group considered most at risk for early Alzheimer’s disease had abnormal levels of proteins associated with the disease in cerebrospinal fluid, which is another marker for the disease, compared to 36 percent of those at average risk and 19 percent of those at low risk.
The study has been published in the December 21, 2011, online issue of Neurology, the medical journal of the American Academy of Neurology.
ANI
People with smaller regions of the brain’s cortex may be more likely to develop symptoms consistent with very early Alzheimer’s disease, a new study has suggested.
"The ability to identify people who are not showing memory problems and other symptoms but may be at a higher risk for cognitive decline is a very important step toward developing new ways for doctors to detect Alzheimer’s disease,” said Susan Resnick, PhD, with the National Institute on Aging in Baltimore.
For the study, researchers used brain scans to measure the thickness of regions of the brain’s cortex in 159 people free of dementia with an average age of 76. The brain regions were chosen based on prior studies showing that they shrink in patients with Alzheimer’s dementia.
Of the 159 people, 19 were classified as at high risk for having early Alzheimer’s disease due to smaller size of particular regions known to be vulnerable to Alzheimer’s in the brain’s cortex, 116 were classified as average risk and 24 as low risk.
At the beginning of the study and over the next three years, participants were also given tests that measured memory, problem solving and ability to plan and pay attention.
The study found that 21 percent of those at high risk experienced cognitive decline during three years of follow-up after the MRI scan, compared to seven percent of those at average risk and none of those at low risk.
"Further research is needed on how using MRI scans to measure the size of different brain regions in combination with other tests may help identify people at the greatest risk of developing early Alzheimer’s as early as possible,” said study author Bradford Dickerson, MD, of Massachusetts General Hospital in Boston and a member of the American Academy of Neurology.
The study also found 60 percent of the group considered most at risk for early Alzheimer’s disease had abnormal levels of proteins associated with the disease in cerebrospinal fluid, which is another marker for the disease, compared to 36 percent of those at average risk and 19 percent of those at low risk.
The study has been published in the December 21, 2011, online issue of Neurology, the medical journal of the American Academy of Neurology.
CONTENTMENT
CONTENTMENT
If one was asked to define contentment, how would one do the same? A very simple and easy to understand, definition of contentment, is:
“At the present moment:
* wherever we are is wherever we are meant to be,
* whatever we are doing is whatever we are meant to be doing and
* whatever others are doing is what they are meant to be doing.
* whatever we get in life is what we are meant to have."
To experience constant contentment, we need to become aware of all the things that make us discontent (dissatisfied) and free ourselves from those things (ideas, opinions, objects, people, relationships,). We don’t have to reject them or distance ourselves from them, but a detachment from them or having dispassion for them at the level of the mind will bring back our inner freedom. Detachment or dispassion can come from discriminative analysis.
How to go about this analysis? We are affected by only those things and beings to which we have given some value. Those things and beings to which we have given zero value do not affect us. We give value to only those things and beings which appear to give us some kind of joy, pleasure, happiness or benefit and we have desire for these. Arising of the desire itself is the cause of misery. If we further analyse we will come to this conclusion that there is no inherent joy, pleasure or happiness in any of the things and beings of this world. If it were so, then a particular object should be able to give the same quantum of happiness to all, at all times and in all places and situations. But it is not so. The quantum of happiness varies from person to person and at different times, places and in different situations. Moreover an object which is a source of joy for one may be a source of sorrow for another and yet a source of neither joy or sorrow for another and boredom for yet another. Analysing thus, we come to the conclusion that there is no inherent happiness or misery in any things or beings of this world. Happiness and misery is the projection of the individual mind on the things and beings of this world according to his or her likes and dislikes due to vaasanaa-s or inherited tendencies. Thus we get attached to those things which seem to give us happiness. Attachment is the biggest cause of all our miseries.
It may appear that the objects do seem to give some kind of pleasure or joy while experiencing it. If it is not inherent in them where has it come from? When a desire arises we become miserable and when it is fulfilled we are happy. When a desire is fulfilled our mind becomes temporarily free of desire. This desire-less state of mind is the cause of happiness, which is projected on the object that is experienced. The desire-less state of mind gives a glimpse of the infinite blissful nature of our own Self.
Dispassion for the world of things and beings also comes from the understanding that nothing is permanent in this world. Everything is temporary and constantly subject to modification. All the experiences are temporary. The so called pleasure, joy or happiness is also momentary, fleeting and ephemeral. Moreover in every pleasure, joy or happiness there is inherent pain, sorrow and misery.
Detachment is then accompanied by the experience of a deep, inner awareness of satisfaction and stillness, because we stop being dependent on anything or anyone outside ourselves. Any kind of dependency is bondage and any kind of bondage is the cause of misery. Our essential nature is of infinite bliss. Therefore we need to discover it within.
It is highly unlikely that we will arrive at this deep state of fulfillment very soon--though we may touch it and experience it temporarily. It is only by understanding and accepting completely that everything is the way it is meant to be at every moment, both outside our minds and inside our minds that we move closer to being content and then go on to discover our blissful Self.
Said the Lord to his devotee: "I am weary of your never ending petitions. I shall grant you three requests. Make sure you chose them carefully because, having granted them, I shall grant you nothing more."
The elated devotee did not hesitate: "Here is my first request," he said, "I want my wife to die so I can marry a better women." His wish was immediately granted.
But when friends and relatives gathered for the funeral and began to recall the virtues of his wife, the devotee saw he had been hasty. So he asked the Lord to bring her back to life.
That left him with just one petition. He was determined not to make a mistake this time, for there would be no chance to change it. He consulted widely. Some advised him to ask for immortality. But what good was immortality, said others, if he did have good health? And health if he had no money? And money if he had no friends?
Years passed and he had still not made his choice: life or health or wealth or power or love. Finally he said to the Lord, "Tell me what to ask for."
The Lord laughed when he saw the man's predicament and said, " Ask to be content no matter what you get in life."
By Swami Avdhutananda
If one was asked to define contentment, how would one do the same? A very simple and easy to understand, definition of contentment, is:
“At the present moment:
* wherever we are is wherever we are meant to be,
* whatever we are doing is whatever we are meant to be doing and
* whatever others are doing is what they are meant to be doing.
* whatever we get in life is what we are meant to have."
To experience constant contentment, we need to become aware of all the things that make us discontent (dissatisfied) and free ourselves from those things (ideas, opinions, objects, people, relationships,). We don’t have to reject them or distance ourselves from them, but a detachment from them or having dispassion for them at the level of the mind will bring back our inner freedom. Detachment or dispassion can come from discriminative analysis.
How to go about this analysis? We are affected by only those things and beings to which we have given some value. Those things and beings to which we have given zero value do not affect us. We give value to only those things and beings which appear to give us some kind of joy, pleasure, happiness or benefit and we have desire for these. Arising of the desire itself is the cause of misery. If we further analyse we will come to this conclusion that there is no inherent joy, pleasure or happiness in any of the things and beings of this world. If it were so, then a particular object should be able to give the same quantum of happiness to all, at all times and in all places and situations. But it is not so. The quantum of happiness varies from person to person and at different times, places and in different situations. Moreover an object which is a source of joy for one may be a source of sorrow for another and yet a source of neither joy or sorrow for another and boredom for yet another. Analysing thus, we come to the conclusion that there is no inherent happiness or misery in any things or beings of this world. Happiness and misery is the projection of the individual mind on the things and beings of this world according to his or her likes and dislikes due to vaasanaa-s or inherited tendencies. Thus we get attached to those things which seem to give us happiness. Attachment is the biggest cause of all our miseries.
It may appear that the objects do seem to give some kind of pleasure or joy while experiencing it. If it is not inherent in them where has it come from? When a desire arises we become miserable and when it is fulfilled we are happy. When a desire is fulfilled our mind becomes temporarily free of desire. This desire-less state of mind is the cause of happiness, which is projected on the object that is experienced. The desire-less state of mind gives a glimpse of the infinite blissful nature of our own Self.
Dispassion for the world of things and beings also comes from the understanding that nothing is permanent in this world. Everything is temporary and constantly subject to modification. All the experiences are temporary. The so called pleasure, joy or happiness is also momentary, fleeting and ephemeral. Moreover in every pleasure, joy or happiness there is inherent pain, sorrow and misery.
Detachment is then accompanied by the experience of a deep, inner awareness of satisfaction and stillness, because we stop being dependent on anything or anyone outside ourselves. Any kind of dependency is bondage and any kind of bondage is the cause of misery. Our essential nature is of infinite bliss. Therefore we need to discover it within.
It is highly unlikely that we will arrive at this deep state of fulfillment very soon--though we may touch it and experience it temporarily. It is only by understanding and accepting completely that everything is the way it is meant to be at every moment, both outside our minds and inside our minds that we move closer to being content and then go on to discover our blissful Self.
Said the Lord to his devotee: "I am weary of your never ending petitions. I shall grant you three requests. Make sure you chose them carefully because, having granted them, I shall grant you nothing more."
The elated devotee did not hesitate: "Here is my first request," he said, "I want my wife to die so I can marry a better women." His wish was immediately granted.
But when friends and relatives gathered for the funeral and began to recall the virtues of his wife, the devotee saw he had been hasty. So he asked the Lord to bring her back to life.
That left him with just one petition. He was determined not to make a mistake this time, for there would be no chance to change it. He consulted widely. Some advised him to ask for immortality. But what good was immortality, said others, if he did have good health? And health if he had no money? And money if he had no friends?
Years passed and he had still not made his choice: life or health or wealth or power or love. Finally he said to the Lord, "Tell me what to ask for."
The Lord laughed when he saw the man's predicament and said, " Ask to be content no matter what you get in life."
By Swami Avdhutananda
Thursday, December 22, 2011
Tuesday, December 20, 2011
Needed: ‘Action tanks', not ‘think tanks'
Business Line N.R. Narayana Murthy, Chairman Emeritus, Infosys — K. Murali Kumar
There are some inspirational leaders you simply don't tire of. Infosys Chief Mentor N.R. Narayana Murthy's A S Deshpande Memorial Lecture at the Institute of Banking Personnel Selection in Mumbai last week was a tour de force on leadership attributes. Technology, said the man who is often referred to as the face of India's software revolution, is only an instrument.
“The primary ingredient for progress is innovation through the power of the human mind,” he added.
Courage is the most important leadership attribute, he said, requiring difficult decisions that often run opposed to popular opinion.
He also urged his hosts to work on a set of tests (using computer simulation) to evaluate the ‘courage' of candidates for leadership positions.
More NRN-speak:
Speed: You will need to act as if there is no tomorrow. You need a sense of urgency. Jawaharlal Nehru established half-a-dozen IITs, IIMs, the atomic energy establishment, the Planning Commission, dams, and other public institutions in a span of a decade from 1951. He was a man who acted with a sense of urgency. “Some decisions will go wrong. But that is okay. The media may criticise you; but if you get eight out of 10 decisions correct, that is a fine record.”
Innovation, among equals: Ask yourself three questions:
Can I do the job faster than yesterday (at the same level of excellence)?
Can I do it cheaper?
Can I do it at better levels of excellence?
That is all innovation is.
Executives must spend time with people across the organisation to get the best ideas about innovation. At the same time, don't talk down — talk as equals. It is not difficult to implement. Leadership is about creating a vision and enthusiasm so that others also feel they can ‘catch the rainbow'.
Execution excellence: We Indians think articulation is accomplishment. I had a recent conversation with an American CEO in Boston. The talk veered to ‘think tanks' in New Delhi. The CEO interrupted me to say that what India needs now is not more think tanks but ‘action tanks'. We need to quickly move from idea to action.
Openness to new ideas, fostering pride:I had an associate who was in charge of keeping the board room clean. I would make it a point to introduce this person to all our VIP guests to the Infosys campus, including the likes of Vladimir Putin. This gave the employee a sense of pride, which ensured that the room was always kept sparkling. Leaders need to create an environment where everyone can give ideas.
Living by values: Leaders must try and encourage the practice of values such as integrity, hard work, courage, and commitment to excellence among their colleagues. And leaders need to live by these attributes.
source:The hindubusinessline
Monday, December 19, 2011
Trounced Bollywood star Katrina, cricketer Sachin Tendulkar
Anna ruled the cyberworld in 2011: Search data
Bangalore, Dec 18, DHNS
Gandhian and civil rights activist Anna Hazare has been the most searched for man on the internet in 2011, with data suggesting that nearly 125 million people searched for him and his struggle to get a strong Lokpal Bill.
Google and Yahoo, two of the most used search platforms in the country, have named Anna amongst the most popular ‘searched names’ of the year, as they released the search data for India in 2011.
While Yahoo’s data suggests that Anna trounced Bollywood star Katrina Kaif and cricketing legend Sachin Tendulkar, Google’s annual “Zeitgeist” said that the Gandhian is amongst the fastest rising people of 2011 on the internet.
The Google’s list of fastest rising terms also included the IBPS (Institute of Banking Personnel Service), which suggested a widespread interest among Indians to apply for banking jobs. Indian Railways also emerged as fastest rising search term given the increasing number of online ticket reservations.
In a sign that internet is finding more users on the mobile and is making inroads beyond the boundaries of the metro cities, Google also said the number of searches in the country touched the 125 million mark, 70 per cent of whom used the internet from outside the metros.
“This data suggests internet usage in the country becoming truly mainstream in 2011,” said Lalitesh Katrigadda, Google India’s product head. “Over 70 per cent of the search happened in non-metros. A lot of the searchs happened through mobiles and we hit the 125 million mark. For the first time, the online world heard the views of the aam adhmi.”
According to Google’s Zeitgeist, Katrina continues to reign supreme amongst Indian searchers, while Salman Khan and Anushka Sharma took the next two positions as the most searched stars. Bodyguard and Ra one were the most searched Bollywood flicks of the year.
Information on Lokpal Bill, Aadhar cards, Japan earthquake and assassination of Al Kaida leader Osama Bin Laden, also found a place amongst top searches of the year. Yahoo’s annual search data names Anna the “newsmaker” of the year. “His 288 hour fast at Ramlila Maidan made him the face of India’s battle against corruption,” according to the internet giant, which also positioned little master Sachin Tendulkar and Katrina Kaif as second and third most popular persons based on its data.
“Some bizarre (news) stories like PETA opening a porn site, a woman giving birth to her own grandchild and kissing can cause cavities,” were also amongst the top list of Yahoo. It also highlighted interest for “cheeky numbers” like Kolaveri and D K Bose. Yahoo said it had analysed the data gathered from search terms for the selection of the most popular news stories, while Google said it had sliced and diced aggregated search queries which do not reveal individual profiles.
Anna ruled the cyberworld in 2011: Search data
Bangalore, Dec 18, DHNS
Gandhian and civil rights activist Anna Hazare has been the most searched for man on the internet in 2011, with data suggesting that nearly 125 million people searched for him and his struggle to get a strong Lokpal Bill.
Google and Yahoo, two of the most used search platforms in the country, have named Anna amongst the most popular ‘searched names’ of the year, as they released the search data for India in 2011.
While Yahoo’s data suggests that Anna trounced Bollywood star Katrina Kaif and cricketing legend Sachin Tendulkar, Google’s annual “Zeitgeist” said that the Gandhian is amongst the fastest rising people of 2011 on the internet.
The Google’s list of fastest rising terms also included the IBPS (Institute of Banking Personnel Service), which suggested a widespread interest among Indians to apply for banking jobs. Indian Railways also emerged as fastest rising search term given the increasing number of online ticket reservations.
In a sign that internet is finding more users on the mobile and is making inroads beyond the boundaries of the metro cities, Google also said the number of searches in the country touched the 125 million mark, 70 per cent of whom used the internet from outside the metros.
“This data suggests internet usage in the country becoming truly mainstream in 2011,” said Lalitesh Katrigadda, Google India’s product head. “Over 70 per cent of the search happened in non-metros. A lot of the searchs happened through mobiles and we hit the 125 million mark. For the first time, the online world heard the views of the aam adhmi.”
According to Google’s Zeitgeist, Katrina continues to reign supreme amongst Indian searchers, while Salman Khan and Anushka Sharma took the next two positions as the most searched stars. Bodyguard and Ra one were the most searched Bollywood flicks of the year.
Information on Lokpal Bill, Aadhar cards, Japan earthquake and assassination of Al Kaida leader Osama Bin Laden, also found a place amongst top searches of the year. Yahoo’s annual search data names Anna the “newsmaker” of the year. “His 288 hour fast at Ramlila Maidan made him the face of India’s battle against corruption,” according to the internet giant, which also positioned little master Sachin Tendulkar and Katrina Kaif as second and third most popular persons based on its data.
“Some bizarre (news) stories like PETA opening a porn site, a woman giving birth to her own grandchild and kissing can cause cavities,” were also amongst the top list of Yahoo. It also highlighted interest for “cheeky numbers” like Kolaveri and D K Bose. Yahoo said it had analysed the data gathered from search terms for the selection of the most popular news stories, while Google said it had sliced and diced aggregated search queries which do not reveal individual profiles.
Sunday, December 18, 2011
The coming financial tsunami
17th Dec 2011
Shareholder capitalism has gone overboard, and we are going to pay a heavy price for it. In the '80s the economies of both Japan and Germany had grown and were threatening the hegemony of the US. In early 80's 3 of the top 10 banks were Japanese, Sony bought Universal Studios, NTT DoCoMo was the most expensive stock in the world and Japan bought Rockefeller Centre. The German auto and engineerin industries were challenging USA
Their success impinged largely on the stakeholder capitalism model both followed, in which all stakeholders were given importance. To counter it, the US strongly promoted shareholder capitalism, which gives more importance to the interests of providers of capital, and less to other stakeholders such as employees or suppliers or customers. It worked, and, alongwith its other pillars, such as its system of higher education, its venture capital industry and its judicial system, enabled the US to grow faster than other economies. Its GDP is over $ 15 trillion followed by Japan's at $ 4 tr.
The reason for this is that of the four factors of production, men, material, machines and money, it is only the last that is capable of digitization. It can thus move much faster than others, thereby having a greater influence compared to others. The weight of a factor of production is its quantity multiplied by its velocity of circulation.
Modern finance has further enhanced this velocity by creating derivatives of financial products and then, through securitisation, enabling the sale of these derivative products to the public after slicing and dicing them. The sliced products are rated by rating agencies, to make them acceptable to the investing public. This is how the subprime mortgage mess was created. US (later others) banks lent to ninja (those with no income, no jobs or assets) customers to buy homes, with zero collateral, as they had no assets. These ninja loans were then sliced and diced, and some parts of them even got AAA ratings by agencies! Amazing! An article in the Economist talked about a review of ratings given by Moody's, a rating agency, to one type of security called Alt A. At the end of a 5 day review Moody's downgraded over 90% of its own ratings from AAA to junk, in one step! That's insane!
Last week we got news at 3iInfotech's rating was also similarly downgraded by CRISIL to junk status, barely four months after it had re-affirmed AAA rating in August. How can this happen? Rating upgrades or downgrades are in steps, not in jumps.
Almost all European banks are in trouble today because of inordinate and foolish lending to sovereigns. Again, sovereign bonds were rated AAA on the basis that countries can't default. This has been proved wrong. Thus countries like Greece were lent much more money than prudent norms would warrant and, if one were to read the excellent book "Boomerang" by Michael Lewis, no one in Greece was keeping an account of spending. It was the same with Iceland, which was lent money at 14% interest, which was untenable, but used by its citizens to acquire all sorts of assets. These bubbles, funded by loose money, ultimately burst. Just as the US housing market did. Just as Iceland did. And Greece will.
Not only have regulators permitted the creation of derivative products (and derivatives of derivatives!), and allowed credit rating agencies to be blasé in rating them, but they have further compounded the problems by legally allowing misuse! This legal misuse was what brought down MF Global. It is well explained in an article by Christopher Elias. The FSA (Financial Services Authority) in the UK permitted securities which clients had hypothecated to brokers, to be re-hypothecated by the brokers! The US also permits this, but upto a limit of a shortfall; the UK allows it upto 100%. Since it is legally permitted, apparently the clients don't have a right on their own asset pledged as security! As per the article "A loophole appears to h ave allowed MF Global, and many others, to use its own clients' funds to finance an enormous $6.2 billion Eurozone repo bet." The bet went wrong and MF Global went into bankruptcy. The cost was borne by clients who had given security as collateral but had no claim on their own assets! How utterly corrupt!
So now European banks have lent against all sorts of funny and fuzzy instruments, including credit default swaps, and, since a lot of these assets have been securitized, nobody can really gauge the size of the problem. It is a financial tsunami waiting to happen.
That is why the euphoria, if any, over the Eurozone deal, which struck by the EU leaders last Friday, was shortlived. The problems of one country, especially a large one like Italy, could easily become an uncontainable contagion. It will spread to the US. Interbank lending will freeze, as it did after the Lehman Brothers' collapse; only this time it will be much worse.
The financial problems are compounded by global warming problems. These are caused by an overuse and exploitation of depleting natural resources. The deal to curb emissions, reached at Durban, is going to be too little, too late. Already countries like Canada have backed out, so that they do not have to pay the cost of polluting the environment, and others will follow.
What are countries doing to curb emissions? China has sensibly hiked import tariffs on criminally gas guzzling vehicles such as SUVs, making them thrice as costly as in the US. Why doesn't India do the same? Using excise duties for local manufacture, and import tariffs for imports, our Government should discourage the use of gas guzzling and fossil fuel resource depleting vehicles. It has not even bothered to mandate fuel efficiency norms. Why has not our Government built up an alternative, efficient, public transport system, in anticipation of the day (not distant) when private transport will become unaffordable. One wonders if banks will provide EMI loans to buy petrol!
The Government's big bang reform, FDI in multi brand retail, which it sought to introduce, was politically stymied and had to be shelved. Its other good idea, of the unique id project, or UIDAI, was stymied by a Parliamentary committee on which its own members were asleep. The GST bill has got nowhere. Also going nowhere is the Governments efforts, or lack thereof, to obtain details of offshore bank accounts held by Indians.
Apparently some of the banks have provided such details. Perhaps an idea the Government may consider is to offer the carrot of another amnesty scheme, offering a clean chit on payment of, say, 40% tax on the amount brought in before March 31, together with a stick of penalising severely those whose names appear on such lists, by prosecution, penalties, fines, disclosures and also arrest. If it succeeds, as it ought to, the fiscal deficit would be solved in one stroke.
Indians also have the world's largest horde of gold. Why doesn't the Government offer to trade physical gold with paper, bearing a low interest rate, with a guarantee to return the gold of the same purity, when asked for? Then use the gold to raise funds for 1. Physical infrastructure such as roads, power plants and ports and 2. Social infrastructure such as schools and colleges, training institutes, and hospitals. And not for its recurring expenses.
In corporate news of interest, Fortis Healthcare is under fire from analysts for poor governance, as it acquired, for $ 665m. the assets of privately owned Fortis International. The feeling is that the price was too high, and investors have sold the stock which has fallen 25% since the purchase, more than the 3.5% fall in the market.
The promoters of some companies had issued themselves warrants to acquire shares in their companies at a future date. Security And Exchange Board Of Indian (SEBI) mandated that 25% of the exercise price be deposited upfront, at the time when the warrants were issued. Accordingly, the promoters of JSW deposited Rs 529 crores. With the stock quoting some 55% below the exercise price, the promoters would tend to lose that amount. Similarly, the promoters of Pantaloon have to decide, by year end, whether to forfeit the initial deposit of Rs 100 crores, or to exercise the warrants and acquire shares, wh ich are quoting some 69% below the exercise price. Warrants have become double edged swords.
The CBI has charged Essar groups Ravi Ruia, Anshuman Ruia and CEO Vikas Saraf, together with IP Khaitan and Kiran Khaitan (sister of Ravi) of Loop Telecom, in the 2G telecom scandal, though Salman Khurshid has publicly stated that Essar was not in control of Loop.
The Reserve Bank Of India (RBI) left interest rates unchanged, which disappointed the market, which dropped to a 2 year low. Investors were hoping that interest rates would start coming down, as the economy is being visibly affected. The IIP (index of industrial production) fell 5.1% in November. The Government has scaled down GDP growth forecast for this year. AM Naik of Larsen & Tarbo (L&T) feels that GDP growth would be below 6% next year, as there is little capital investment taking place (thanks to high interest rates).
The BSE-Sensex dropped last week, ending down 722 points, to close at 15491. The NSE-Nifty fell 215 to close at 4651.
The rupee is also falling, going to a low of Rs 54.20 per US$ before sale of $ by RBI pulled up the Rupee. A wag says the next report on currency management ought to be named after the Hindi film, 'Ab Tak Chappan'.
We are also in for more political skirmishes. The Government is struggling to introduce a Lokpal bill in this winter session of Parliament but it is uncertain if it will fully bring the CBI under the purview of the Lokpal. It has been able to (mis)use CBI for its own purposes and is loath to give away the advantage. Anna Hazare is threatening a renewal of agitation if the Lokpal bill introduced by the Government is not to his satisfaction. Other, opportunistic, political parties will jump in and stir the pot for their own ends.
Several states, including UP (the largest, with the most seats in the Lok Sabha), Punjab, Uttarakhand, Goa and Manipur go to the polls early next year. Till these elections are over there can be no bold economic reforms as the Government does not have the spine. The market would continue to drift downwards and if it goes below 15,000 it could fall sharply further.
At some point in the future, earnings would have fallen enough and would start to rise. So would the Indian rupee, versus the $. Foreign investors would, if they enter before these rises, get a double whammy of increased earnings plus a currency appreciation. Add to that a re-rating, and higher P/E, it would become a triple whammy. So at some point in the future, the markets would bottom out.
That time is not now.
by Shri J Mulraj
17th Dec 2011
Shareholder capitalism has gone overboard, and we are going to pay a heavy price for it. In the '80s the economies of both Japan and Germany had grown and were threatening the hegemony of the US. In early 80's 3 of the top 10 banks were Japanese, Sony bought Universal Studios, NTT DoCoMo was the most expensive stock in the world and Japan bought Rockefeller Centre. The German auto and engineerin industries were challenging USA
Their success impinged largely on the stakeholder capitalism model both followed, in which all stakeholders were given importance. To counter it, the US strongly promoted shareholder capitalism, which gives more importance to the interests of providers of capital, and less to other stakeholders such as employees or suppliers or customers. It worked, and, alongwith its other pillars, such as its system of higher education, its venture capital industry and its judicial system, enabled the US to grow faster than other economies. Its GDP is over $ 15 trillion followed by Japan's at $ 4 tr.
The reason for this is that of the four factors of production, men, material, machines and money, it is only the last that is capable of digitization. It can thus move much faster than others, thereby having a greater influence compared to others. The weight of a factor of production is its quantity multiplied by its velocity of circulation.
Modern finance has further enhanced this velocity by creating derivatives of financial products and then, through securitisation, enabling the sale of these derivative products to the public after slicing and dicing them. The sliced products are rated by rating agencies, to make them acceptable to the investing public. This is how the subprime mortgage mess was created. US (later others) banks lent to ninja (those with no income, no jobs or assets) customers to buy homes, with zero collateral, as they had no assets. These ninja loans were then sliced and diced, and some parts of them even got AAA ratings by agencies! Amazing! An article in the Economist talked about a review of ratings given by Moody's, a rating agency, to one type of security called Alt A. At the end of a 5 day review Moody's downgraded over 90% of its own ratings from AAA to junk, in one step! That's insane!
Last week we got news at 3iInfotech's rating was also similarly downgraded by CRISIL to junk status, barely four months after it had re-affirmed AAA rating in August. How can this happen? Rating upgrades or downgrades are in steps, not in jumps.
Almost all European banks are in trouble today because of inordinate and foolish lending to sovereigns. Again, sovereign bonds were rated AAA on the basis that countries can't default. This has been proved wrong. Thus countries like Greece were lent much more money than prudent norms would warrant and, if one were to read the excellent book "Boomerang" by Michael Lewis, no one in Greece was keeping an account of spending. It was the same with Iceland, which was lent money at 14% interest, which was untenable, but used by its citizens to acquire all sorts of assets. These bubbles, funded by loose money, ultimately burst. Just as the US housing market did. Just as Iceland did. And Greece will.
Not only have regulators permitted the creation of derivative products (and derivatives of derivatives!), and allowed credit rating agencies to be blasé in rating them, but they have further compounded the problems by legally allowing misuse! This legal misuse was what brought down MF Global. It is well explained in an article by Christopher Elias. The FSA (Financial Services Authority) in the UK permitted securities which clients had hypothecated to brokers, to be re-hypothecated by the brokers! The US also permits this, but upto a limit of a shortfall; the UK allows it upto 100%. Since it is legally permitted, apparently the clients don't have a right on their own asset pledged as security! As per the article "A loophole appears to h ave allowed MF Global, and many others, to use its own clients' funds to finance an enormous $6.2 billion Eurozone repo bet." The bet went wrong and MF Global went into bankruptcy. The cost was borne by clients who had given security as collateral but had no claim on their own assets! How utterly corrupt!
So now European banks have lent against all sorts of funny and fuzzy instruments, including credit default swaps, and, since a lot of these assets have been securitized, nobody can really gauge the size of the problem. It is a financial tsunami waiting to happen.
That is why the euphoria, if any, over the Eurozone deal, which struck by the EU leaders last Friday, was shortlived. The problems of one country, especially a large one like Italy, could easily become an uncontainable contagion. It will spread to the US. Interbank lending will freeze, as it did after the Lehman Brothers' collapse; only this time it will be much worse.
The financial problems are compounded by global warming problems. These are caused by an overuse and exploitation of depleting natural resources. The deal to curb emissions, reached at Durban, is going to be too little, too late. Already countries like Canada have backed out, so that they do not have to pay the cost of polluting the environment, and others will follow.
What are countries doing to curb emissions? China has sensibly hiked import tariffs on criminally gas guzzling vehicles such as SUVs, making them thrice as costly as in the US. Why doesn't India do the same? Using excise duties for local manufacture, and import tariffs for imports, our Government should discourage the use of gas guzzling and fossil fuel resource depleting vehicles. It has not even bothered to mandate fuel efficiency norms. Why has not our Government built up an alternative, efficient, public transport system, in anticipation of the day (not distant) when private transport will become unaffordable. One wonders if banks will provide EMI loans to buy petrol!
The Government's big bang reform, FDI in multi brand retail, which it sought to introduce, was politically stymied and had to be shelved. Its other good idea, of the unique id project, or UIDAI, was stymied by a Parliamentary committee on which its own members were asleep. The GST bill has got nowhere. Also going nowhere is the Governments efforts, or lack thereof, to obtain details of offshore bank accounts held by Indians.
Apparently some of the banks have provided such details. Perhaps an idea the Government may consider is to offer the carrot of another amnesty scheme, offering a clean chit on payment of, say, 40% tax on the amount brought in before March 31, together with a stick of penalising severely those whose names appear on such lists, by prosecution, penalties, fines, disclosures and also arrest. If it succeeds, as it ought to, the fiscal deficit would be solved in one stroke.
Indians also have the world's largest horde of gold. Why doesn't the Government offer to trade physical gold with paper, bearing a low interest rate, with a guarantee to return the gold of the same purity, when asked for? Then use the gold to raise funds for 1. Physical infrastructure such as roads, power plants and ports and 2. Social infrastructure such as schools and colleges, training institutes, and hospitals. And not for its recurring expenses.
In corporate news of interest, Fortis Healthcare is under fire from analysts for poor governance, as it acquired, for $ 665m. the assets of privately owned Fortis International. The feeling is that the price was too high, and investors have sold the stock which has fallen 25% since the purchase, more than the 3.5% fall in the market.
The promoters of some companies had issued themselves warrants to acquire shares in their companies at a future date. Security And Exchange Board Of Indian (SEBI) mandated that 25% of the exercise price be deposited upfront, at the time when the warrants were issued. Accordingly, the promoters of JSW deposited Rs 529 crores. With the stock quoting some 55% below the exercise price, the promoters would tend to lose that amount. Similarly, the promoters of Pantaloon have to decide, by year end, whether to forfeit the initial deposit of Rs 100 crores, or to exercise the warrants and acquire shares, wh ich are quoting some 69% below the exercise price. Warrants have become double edged swords.
The CBI has charged Essar groups Ravi Ruia, Anshuman Ruia and CEO Vikas Saraf, together with IP Khaitan and Kiran Khaitan (sister of Ravi) of Loop Telecom, in the 2G telecom scandal, though Salman Khurshid has publicly stated that Essar was not in control of Loop.
The Reserve Bank Of India (RBI) left interest rates unchanged, which disappointed the market, which dropped to a 2 year low. Investors were hoping that interest rates would start coming down, as the economy is being visibly affected. The IIP (index of industrial production) fell 5.1% in November. The Government has scaled down GDP growth forecast for this year. AM Naik of Larsen & Tarbo (L&T) feels that GDP growth would be below 6% next year, as there is little capital investment taking place (thanks to high interest rates).
The BSE-Sensex dropped last week, ending down 722 points, to close at 15491. The NSE-Nifty fell 215 to close at 4651.
The rupee is also falling, going to a low of Rs 54.20 per US$ before sale of $ by RBI pulled up the Rupee. A wag says the next report on currency management ought to be named after the Hindi film, 'Ab Tak Chappan'.
We are also in for more political skirmishes. The Government is struggling to introduce a Lokpal bill in this winter session of Parliament but it is uncertain if it will fully bring the CBI under the purview of the Lokpal. It has been able to (mis)use CBI for its own purposes and is loath to give away the advantage. Anna Hazare is threatening a renewal of agitation if the Lokpal bill introduced by the Government is not to his satisfaction. Other, opportunistic, political parties will jump in and stir the pot for their own ends.
Several states, including UP (the largest, with the most seats in the Lok Sabha), Punjab, Uttarakhand, Goa and Manipur go to the polls early next year. Till these elections are over there can be no bold economic reforms as the Government does not have the spine. The market would continue to drift downwards and if it goes below 15,000 it could fall sharply further.
At some point in the future, earnings would have fallen enough and would start to rise. So would the Indian rupee, versus the $. Foreign investors would, if they enter before these rises, get a double whammy of increased earnings plus a currency appreciation. Add to that a re-rating, and higher P/E, it would become a triple whammy. So at some point in the future, the markets would bottom out.
That time is not now.
by Shri J Mulraj
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