Message to media. Stop screwing up India's growth story

I am really angry. I knew this would happen. It had to happen....sooner or later. With the kind of scare the media has created over the last few months, today's story is not surprising. FIIs (Foreign investors) have started deserting India and the stock market has tanked to its lowest level in the last 5 years. Give it some more time and it will scale a new low shortly. Each one of us is responsible for allowing these irresponsible journalistic practices to continue.....because we dont speak in one voice against them.

Nothing has changed in India in the last 6 months. If anything, the economic scenario has only become better. India continues to be the flavor of the world. It continues to remain the 2nd fastest growing major economy. It continues to remain politically important to the world (especially the US and Japan) as a counter-weight to China and future heavy-weight in its own right. 

Nothing has changed fundamentally. However, as I mentioned earlier, if everything is going on smoothly, its terrible times for media. In a world when everything is going smoothly, people start ENJOYING themselves. They stop WORRYING. So they switch away from news TV to GECs. And this is what the news TV guys really hate. The newspapers are already facing heavy attrition in readership. Daily readership of newspapers has been falling drastically with every passing year. The young (confident, happy.....) are not interested in newspapers because they do not worry. Do you now see the plot? TV news channels and newspapers want to sensationalize so that they can get your attention back....

The growth story of India is being killed by media. And worst of all.....its being done under the garb of doing good for the country. After all, on the face of it, the media has been responsible for unearthing so much corruption. Every day, there are scams in the papers. One 80 year old family friend of mine was saying yesterday that the scams are all worth more than a lac crores. Really? Irresponsible journalism has made people believe that the 2G scam was worth 1.7 lac crores. I know my friends in media will say that they did not create this figure....that was done by the CAG. But media is responsible for trusting the CAG and not applying common sense to the subject. I have already argued in two of my posts before that the 2G scam was nothing like its made out to be. It was of a far smaller order.....maybe a few thousand crores. Its the same story with the other scams. The CWG scam was made out to be worth 70K crores.....that bullshit. It was no more than a few hundred crores....or at best a little over a thousand crores. But in today's times, a small scam with hardly attract attention. So make it look bigger than it really is.

I have already argued in the past that India has always had massive corruption. Its been a 10 or even 15% story since the beginning. Since at least the last 50 years. And probably for more than a few centuries. During the British era also, Indians were corrupt (whoever could be). So what's surprising us so much? I agree totally, this should be cleaned up. But is this the way to clean up corruption? Throw the shit around in the air so that it falls on everyone and everyone feels demoralized. Will that remove corruption? Or should one have handled it with more sensitivity? Its a failing that ALL of us are equally guilty of. Then why is media pointing out to corruption in this style and making it appear that its a new phenomenon? Why is media aligning with the opposition parties in this? Are the opposition parties not corrupt in states that they rule??? Just look at corruption in Karnataka. Isnt there more than adequate corruption WITHIN media? Havent media outlets been held guilty of playing power brokers themselves (Neera Radia tapes)? Havent they been accused of charging money to print political stories?? Or to hold them back?? Then how come we allow media to point fingers at others when they are themselves part of the racket?

The real truth is that EVERYONE who has power in India has abused it. In the past, it was the feudal lords who abused power. Today, that list starts with politicians and bureaucrats. It then extends to ALL government officials who have any power at all. So cops, IT sleuths, Customs officials and in general most government officials.....including sadly the morgue in a hospital when you go to pick up the dead body of a relative. The trick here is that they must have POWER. Hence having more laws is so important. More laws give more powers to the officials. Now you understand why there are so many laws in India? I recently told someone that the recent decision of the Maharashtra government to increase the fine for rash driving, drunken driving etc in Bombay would increase the standard of living of the cops. If you have to pay Rs 2000 for rash driving rather than just Rs 500 (say), the bribe to escape the charge will also increase proportionately. Maybe this is the equivalent of the 7th pay commission. The list then expands to include even private enterprises who abuse power. Media is foremost in this. ALL media outlets abuse power. ALL media outlets use their political connections to achieve financial gains. This is a well guarded but still well known secret. Even the most venerable of government institutions (so called "independent" institutions) are corrupt. The judiciary is accused of being part of the same racked by many. The CAG is equally driven by political compulsions.

Today, we have made it impossible for anyone to govern India. Which sensible person will want to rule India if the media and public at large dont even give him a chance? There ia huge political score that is being settled against Manmohan Singh. India has never had a cleaner and more smart PM. And that's why I hold all of us responsible for creating this fear psychosis. For derailing the growth story. For not giving this good man a chance to do good. We have not acted against the irresponsible behavior of media. We have lapped up TV stories which are totally unfounded.....and motivated them to do put out more such crap. We have lacked the confidence to believe in our own growth story. If India's growth goes down, WE ALONE will be responsible.

So put a stop to all the rubbish. Organize street protests against irresponsibility. Against abuse of power. Demand accountability from media as well. If you dont do that, prepare yourself to live in a poor India for the next 100 years and to see India losing its path. Losing its rightful position in the world. I sincerely hope, the citizens of this country are more responsible than the media has been.

BJP must stop the farcical Tiranga Yatra

The BJP's at it again. They always reach out to the most crude....the most extreme....the most basic of human emotions to exploit for political gains. They did this with religion in the past. They are now doing it with the spirit of patriotism. Their strategy is simple: an overt display of the emotion to be counted in as one of the "good" guys.....they are now asking us to wear our patriotism on our sleeves....to prove that we are adequately patriotic. And all this, blatantly for political gains. This is akin to Bush's "Either you are with us or you are with them" statement....and the American public showed the Republicans which side they were on.

Stoking extreme nationalistic feelings is not a new strategy. History is replete with similar approaches used by various leaders in the past. Most of them were dictatorial by nature....stoking nationalism with the clear objective of furthering their own ambitions. Hitler and Mussolini are examples that come readily to mind. What havoc these leaders created on humankind is well known. The BJP is up to the same thing now.

The immediate issue on hand is the flying of the Indian National Flag at the Lal Chowk in Srinagar. Now this is the kind of issue that is bound to exercise non-Kashmiri Indians immediately. Its like you are being asked a question that has to have a Yes/No answer: Is Kashmir a part of it? Which sane Indian is going to say No? Further, if you say Yes, you are expected to prove it. Prove that you are a true Indian. How do you prove that? By supporting the BJP. What kind of rubbish is this? What kind of a political party is this, masquerading as someone that loves India and wants its good?

The fact is that Kashmir is a disturbed area. Its a state in secession. The people of Kashmir do not want to be part of India. Whether they want to be independent or join Pakistan is immaterial as far as India is concerned. Rightfully (from India's point of view), the Indian state is holding on to Kashmir. Every Indian supports holding on to Kashmir. So far so good. Now, why would you want to test someone's nationalistic feelings by provoking conflict in a war zone? Why should I have to support the Tiranga Yatra to prove that I am a true Indian? Why cant I take a more moderate line: Yes Kashmir belongs to India. Yes, the authority of the Indian state should be total. Yet, we need to handle the matter delicately. Lets not precipitate anything that does harm to the people of Kashmir or to India's interests.

You want to know how the BJP's move will surely harm India's cause? Kashmir will be riddled with violence. The US and China will be forced to intervene. The UN will be forced to take note of the developments. The issue will become top of mind globally. No country can withstand international pressure of this kind. This is exactly what the Pakis have been trying to do for years. Internationalize the issue. And guess who has joined hands with the Pakis? The BJP. The BJP is helping Pakistan's cause.

But then, what else can one expect from a party that has had almost no time to rule India? There has hardly been a requirement for them to display a sense of responsibility. They are like a spoilt child.....always complaining about the parents. Always being a rebel. Yet when this spoilt child becomes a parent, it struggles. It doesnt know what to do. As soon as the shoe moves to the other foot, the BJP wont know what to do.

As responsible citizens of this country, we need to recognize the devious strategy that the BJP has adopted. We must understand that Kashmir is a conflict zone. India's interests are served best when Indian establishes its clout subtly. Its how China handles Tibet....it tries very hard to keep Tibet below the radar, even as it dominates Tibet militarily. That's why it hates Obama when he meets the Dalai Lama. That's why they get worried with Hollywood stars meet the Dalai Lama. They want to do everything to keep the matter silent. Like they say "Time is the best healer".....they believe (and I agree) that over time, most issues sort themselves out. Just last night came the story that the Naga movement has effectively died and Nagaland is ready to become a voluntary member of the Indian nation.

In politics, you need maturity. A modicum of decency. A lot of responsibility. Stoking basal instincts in the people, being personally rude in references to leaders, taking people to the brink over issues of extreme nationalism are all signs of immaturity and irresponsibility. The people of India dont want conflict. They want progress. They want to elevate themselves out of poverty. They want to give their children education. They want to buy all the shimmering goods that are displayed in the stores. They dont want to keep proving that they are nationalists.

The real truth is that the BJP doesnt really care for India. All it cares for is to get to power. The real truth also is that the BJP does not deserve to rule India. They are irresponsible in behavior. And my bet is that the people of India know this. They will make sure the BJP either changes its strategies or is booted out for ever.

BJP must sacrifice Karnataka to gain Delhi

The BJP first ran into a natural limit to its growth when it pursued the "hindutva" agenda. It just couldnt grow beyond a certain number. It's now finding itself limited by another boundary....one that challenges its national identity itself. Both these limits have been created out of voluntary choices that the party has made....and unless it can get itself out of this second self-created boundary, it will have to let go a golden opportunity to gain power.

After having got the Congress on the mat for some time now, you would expect the BJP to play the end-game with a flourish. Instead, they have chosen to get embroiled in an unnecessary situation. Their desire to protect their government in Karnataka even at the cost of the national opportunity speaks a lot about how the party functions:

1) The party is basically made up of a few strong regional satraps. Modi is a well known example of this. Modi rules Gujarat the way he wants to. What he does in Gujarat is not necessarily BJP's policies or politics. His focus on the economic agenda is not something that the BJP propounds nationally. If it did, why would it oppose so many initiatives proposed by the central government? Why would it oppose the nuclear power facility at Jaitapur? It's purely Modi's own choice, not the party's, and he does what he wants.
2) In Karnataka also, its now proven, that the central party has no control. Apparently, BSY has the backing of the Lingayats....a community that has brought the BJP to power for the first time in the state. I dont think the central leaders of the BJP like what's happening in Karnataka. It's a nightmare they would like to see the last of really quickly. Ideally, it would like to drop the CM there to protect the high moral ground it has taken in Delhi. However, it is UNABLE to do it. The party at the center is too weak to take chances with a regional satrap. I dont think the BJP itself supports such blatant misuse of discretionary powers.....or the associated corruption.....but it is kowtowing to the whims of a regional satrap out of a "majboori".

The Karnataka episode also shows that the BJP is no exceptional party. Its as prone to corruption as the Congress or any other political party. The only reason there are fewer scams associated with the BJP is because the party has ruled for fewer years. In the center, its ruled for just about 6 years (10% of the time)......and its share of corruption charges is perhaps about that. However, this is what happens in politics. A phenomenon which I call the "recency effect". In the "recent" past, its the Congress that has ruled nationally, and so its advantage-BJP on the subject of corruption. As soon as the BJP comes to power at the center, the recency effect will benefit the Congress the same way.

The fact is that ALL political parties are corrupt. They need money for the running of the party. In India, its politically unwise for anyone to donate to political parties. Being seen as donating to one party can put you out of favor with the other party. Donating to all parties would make the sum small for any one party. So, political parties use the states where they rule as the generators of cash. This makes the CMs powerful regional satraps. No one dares challenge the CM of a ruling state. Its like in the corporate sector - no one questions a target-busting business head!

But whatever the reasons, I feel that the BJP is losing a golden opportunity to claim high ground on corruption. In the world of Marketing, this high ground is called "positioning". The BJP could position itself in the minds of the people as a party which would stop corrupt practices. To develop this position, it has to practice a few things and it has to sacrifice many others. It's practicing a few of the right things:  cornering the Congress is an example. But its in the sacrifice that its failing. It should sacrifice Karnataka to strengthen its positioning. This will help it get Delhi.

The real truth is that the central leadership of BJP is weak. Just like the central leadership of the Left. It was always Jyoti Basu who called the shots in the Left. And recently Buddhadev Bhattacharya. The real question is whether the BJP will be able to garner the courage to sacrifice.....only time will tell.

Put the Left parties to sleep

Someone remind me exactly what the Left parties are standing for these days??? I thought they claimed to stand for the poor and all that. And of course, they hated the West. But these days, its difficult to understand if they have any stand on any matter at all!

Consider the petrol price hike. Now why would the Left oppose this? Petrol is consumed mostly in cars.....a mode of travel the Left considers too elitist! Some of it goes into 2-wheelers, which again is largely a metro phenomenon. A petrol price hike has a less than 1% impact on inflation. It wont increas the prices of vegetables and food grains because vegetables and food grains are transported in trucks which use diesel.

Why would the Left advocate that petrol prices should not go up? That instead, the government should cut duties so that the prices stay stable? Or that the government should absorb higher subsidies....thus eating into the funds that are meant to go to the poor?

I think the Left has been left bereft of any real issues. They realize that with their seat strength in the Lok Sabha down to some measly number, even the TV channels dont call them for interviews! Poor really-frustrated Prakash Karat and trying-to-look-intelligent Sitaram Yechuri (and of course the always-angry Mr. D. Raja!) are suffering from a loss of visibility. They need to be in the news! Arnab or Barkha or Rajdeep dont ever call them any more. This is not something they like!

So they are trying to grab attention. Even if its means forgoing their traditional pro-poor stand. Even if its means that they actually like a confused version of the BJP. I guess what they are relying on is their penchant to "always oppose everything"! That's the continuity with their own past!

They had demonstrated a similar behavior when they opposed the Nuclear deal with the US. They didnt understand the matter. A lot of the contracts are going to the Russians....their ideological friends. Their other ideological friends....the Chinese have always embarassed them. They support the Pakis and the Maoists! They have turned proper capitalists! They have both left the Left parties of India alone to fight for the poor! But the Left still continued to protest against the nuclear deal. They got a lot of TV those days.....and then they got the boot from the people!

The real truth is that the Left has outlived its usefulness. Someone should put them to sleep. I hope the people of WB do that this time in the elections!

2G scam to kill the radio medium

Exactly what I was worried about has happened. The Group of Ministers has cleared a policy for auctions for the 3rd phase of radio......auctions will be based on the e-auction model followed for 3G telecom.

I'll tell you why this is type of auction is a ridiculous concept.
1) E-auctions are a step-by-step auction method.....so the bid amount keep rising step-by-step and the bidder has to keep bidding till the time it emerges a winner. This is in contrast to the system followed for Phase II which was a one-step auction. Each bidder put in a bid that it thought most appropriate and the bidder either won or lost in a single step. In the new auction method, there is no doubt that the government will make more money. It's because bidders feel tempted by the "incremental nature" of each bid.....they think "its only a little more" and they keep bidding. As a result, the bids go through the roof. Eventually, the winner also loses!
2) E-auctions are OK for "premium" services....such as 3G.....because when the cost of bidding rises, the winner of the bid can pass on the higher prices to the eventual consumer. They are not OK for ordinary public goods.......3G rates are expected to be much much higher than 2G.....this is OK because subscribers of 3G are likely to be a smaller number and they can pay more. It would never be a good method for 2G where the costs have to be kept very low for a wider acceptance of the service. In radio, the eventual consumer of advertising inventory is the advertiser......the advertiser is not going to pay more simply because the cost of bidding went too high. The advertiser will simply shift his spends to TV or print. This will make radio totally unviable. And hence the same thing that happened at the start of privatization of radio in early 2000 is likely to recur - broadcasters shutting down soon after launching.
3) E-auctions favor the bigger broadcasters who have the money to keep bidding higher. Small broadcasters very often "get lucky" in a one-step bidding process, especially if they bid smartly. So good-bye small business!
4) Radio broadcasters will be heavily burdened with license fees yet again. Just for those who are not in the media business: ONLY radio broadcasters pay license fees to the government. TV companies pay a pittance, if at all. Print, Outdoors and internet companies dont pay at all. Radio is only 5% of ad spends.....yet it pays nearly 100% of license fees. What kind of policy is this?

E-auctions would not have been good for 2G auctions also just like I have argued in one of my earlier posts. They are not good for radio as well.

Please understand Kapil Sibal's trashing of the CAG report in this context. The government's priority in the radio space should be to encourage its growth all over the country. It should not be to maximize revenues. There should be 3-4 radio stations in each district.....hence about 3000 odd radio stations across the country. Radio is the cheapest form of entertainment for the aam aadmi. In vast swathes of land which dont have electricity for several hours a day, the radio becomes the only means of entertainment and communication. This government is  committed to the aam aadmi. Why does it not have the guts to do what it stands for? This is the adverse fall out of the 2G scam.

Does the government realize that the opposition will rubbish EVERYTHING it does anyway. It does not matter what the government policy is. So now the opposition will accuse the government of "crony capitalism".....favoring big industry! What will be the government's answer then? That we behaved like the British who only wanted to loot India even while the poor of India suffered at their hands? There is no getting away from this. The government has positioned itself on the aam aadmi....it should have had the courage to do what was right.

Radio will be the first case of collateral damage from the 2G scam. It's entirely possible that  radio broadcasters will again be shoved into the pathetic financial conditions that existed in the past. All the good done during the Phase II policy will be un-done in the future because of this licensing policy.

You wanna know the real truth.....the real truth is that the opposition has behaved irresponsibly. And the government has succumbed to pressure. Good strategies and priorities have been dumped to save the day. The government has become risk averse. It wants badly to portray that it is "fair".....even if what that really means is that it has become exactly the opposite. And no one wants to think of the aam aadmi......not the Congress, not the Left parties, and obviously not the BJP.

Stop watching TV news - read the paper instead

Do yourself a favor. If you want to get the real truth and not be misled, stop watching TV news channels immediately. Especially the English ones.

As I have mentioned earlier, TV news channels survive only on sensationalism. They are the natural allies of the opposition parties. The reasoning is clear: appreciating good work of government hardly gets attention. Cribbing and raising the pitch gets you attention (Just think: You CANNOT raise your pitch while praising someone, but you can while cribbing!). TV news channels are following a familiar path.....look at Hindi films or GECs....they have all gone down the loud, dumb-them-down path and they appear to be succeeding and why not? That's what the people of this country want. People want masala. Give them masala. Truth be damned!

Take the recent ministerial re-shuffle for example. The fact is that it did not matter what the nature of the re-shuffle was. It had to be panned. Only the specific headline needed to be crafted. The panel to put on TV shows was always ready. The PM himself had said that this was a "minor" re-shuffle. The big one was still to come. But can TV channels allow the PM to pre-empt their headlines? No way. So all TV channels went hammer and tongs about the "ineffective" re-shuffle!

Take the story about Julian Assange getting a list of 2000 Swiss bank a/c holders.....of which some 50 are supposed to be Indians. To the best of my knowledge, NO ONE has any specific information about who these Indians are. However, TV channels have already panned the government saying that some of the top Congress leaders are in the list. TV channels have always got their election forecasts wrong......now they are even getting their core content wrong! For the real truth, its better to read the papers. Or this blog! The papers named an unknown and small company which apparently has $80 million in some account in the bank. $80 million? That's it. How much of a party pooper is that? Did the TV channels apologize to the nation for misleading it? No way!

Take yet another example. Has any TV channel explained (or even understood) that we live in a time of coalition politics. That the push and pull of coalitiion politics will screw up governance. Almost all "scams" that have been tried (sorry brought out!) by media involved ministers from coalition partners - DMK (2G), NCP (rotting onions, food inflation) etc. The fact is that we the people have not been able to deliver a majority to one party....and so we will have to live with the consequences of that. TV channels appear not to understand this. But newspapers give a far balanced pov.

Since the English TV news channels have taken over the traditional Hindi news channels territory, I wonder what those poor souls are doing to survive now.....!

The sole exception to this general drift is NDTV 24x7. I find them to be a lot more balanced in their handling of affairs. They resist pressures to put up a panel that specializes in cribbing. (Interesting observation: the same Swapan Dasgupta is balanced on NDTV while he becomes cantankerous on the other channels....what all journos have to do to earn a living!) They do sometimes applaud good work done. They dont crib  all the time. And they appear mature enough not to sensationalize. Alas.....I am told it is because of this approach of theirs that they suffer on TRPs!

So do yourself a favor. Stop being a guinea pig for TV news channels. Stop watching them. Read the papers or this blog instead to get the real truth!

Petro prices just have to increase

Petrol prices have crossed Rs 63 per litre. There is widespread anguish because prices have increased some 28% in the last few months. What is surprising is that this anguish exists amongst the well-read and well-heeled people. There is also a feeling that the government is somehow responsible for this increase in petrol prices.

Nothing could be far from the truth. As everyone knows, the government levies stiff taxes on petrol sales. As a result, the government makes a pile of cash while the public has to pay a lot more. Somehow, people see this as extortion. They feel victimized. They feel this is bad policy. In my mind, this is very sensible fiscal policy. Everyone knows that petrol consumption is mostly in private vehicles. Even here, its mostly in cars. Car owners can surely afford to pay higher prices for petrol. The government does not (and should not) feel any guilt in charging more for petrol.....because everyone knows that usage of petrol should be discouraged. So why do we get some really angry responses from the people?

1) Some people say that government should lower the taxes they charge. Really? And thus pass on the burden to the poorer sections by collecting lesser taxes and having lesser development funds available?
2) Some people say government should keep prices low and absorb losses on its books. Why? Why should the government subsidize the well off segments?
3) Some people think its mismanagement of the government. Somehow they are responsible for the high prices. Why? Crude prices are touching $100 per barrel and surely the Indian government doesnt control crude prices?
4) Some other people feel that crude prices were nearly $100 two years back, but retail petrol prices were much lower. That's correct. But that's because the government was heavily subsidizing the well-off then. Its now subsidizing less. What's wrong with that?

Many other people simply dont understand the issue. The fact is that the government heavily subsidizes all fuel that affects the poor. So diesel still gets a subsidy of about Rs 8 per litre, kerosene about Rs 20 per litre and cooking gas about Rs 375 per cylinder. These three fuels have a high impact on inflation.....and also directly hurt the poor. We should cheer the government in the strategy it is adopting. And yet, most people I know complain about this strategy.

Maybe people dont realize that fuel prices are in the region of Rs 75 to 100 per litre in all countries that are not big oil producers themselves. In most of Europe, its nearly 50% more than in India. In Pakistan and Sri Lanka, its about Rs 75 - 80 per litre. In Hongkong and Taiwan, ditto. Its only in countries in the middle east, and some Latam countries that the prices of petrol are cheaper than in India.

Here's what I complain about. If the government seriously wants to reduce oil imports, it must work at lowering its demand in the transport sector. It must build extensive and efficient public transport systems. Take the Delhi metro for eg. It may take a decade or so, but eventually, the Delhi metro will help reduce petrol consumption (and pollution) in Delhi as more and more people opt for the comforts of a world-class service. Worldwide, governments start planning the metro when a city's population touches 1 million. The metro takes 10 years to make and by the time the population has touched 2 million, the metro is ready. Look at our cities. There is no metro - no matter how pathetic - in cities like Hyderabad, Pune, Ahmedabad and Bangalore (all cities above 6 million pop). The one in Kolkata hasnt had any capacity addition since it was first started. The one is Bombay adds capacity only by making the rakes longer! How long can this go on? Even our bus network is pathetic in most cities. And hence, no one likes public transport in India.

My demand therefore is that the government should dedicate the tax collections accruing from oil to development of transport infrastructure. It should spend the money not on services (bus, train, air), but on building the infrastructure (roads/railway tracks). Its should privatize the bus and train services and force competition to come in. Competition will help lower prices and improve service. Since transport projects dont make much economic returns, the government will still need to provide subsidies, but the subsidies will be lesser than what the government is shelling out now directly for fuel. The development of infrastructure will also help reduce pollution.

The real truth is that people have fuzzy logic. Fuzzy logic is good in machines, but not in humans! Well-read people shouldnt complain about the price of petrol. They should complain about the lack of investment in public transport.

Dont demolish Adarsh

Its crazy to think that in a resource and capital starved country, we are actually going to demolish and destroy real assets.

Agreed Adarsh is a symbol of corruption. It's been built in violation of several environmental rules. I also understand that its important to send a strong message to those others who are lurking in the dark waiting to do their own dirty deeds. But honestly, should we not explore other options?

Here are some reasons why demolition is not even ethically correct:

1) The government and powers that be were complicit in this act of treachery. The government cannot demolish and purge itself of all the guilt. It's important to correct the system that led to this treachery rather than go around un-doing everything that this system did. An example comes to mind. There is a provision in the Motor Vehicles Act which prohibits putting dark films onto car windows. This provision has been there since the beginning of the Act.....the authorities that be, ignored it forever......then they woke up suddenly one day and said all cars must remove the films. Now this is ridiculous. People spent money because the authorities were turning a blind eye for so long. Even in law, there is a concept that precedents can be treated like law, even if they are not part of the law. At the very minimum, enough time must be given to people so that people get a chance to get at least some returns on their spends. A future date should be set - maybe 5 years away - after which dark films may be disallowed.
2) There are many people who own flats in Adarsh and who have done nothing wrong. Not all occupants are connected to the powerful.....many of them are ordinary home-owners who have invested their hard earned money and had no way of knowing what was going on. I have bought a flat myself, but apart from the statutory legal check (which is done mostly by banks), there was no other way for me to know if the builder was upto some hanky panky. If something was wrong, the authorities should have blocked the plans before the building was constructed. Its simply not fair that the authorities choose to act after the crime is done.
3) There is a real practical problem with this decision. Why single out Adarsh for this treatment? Because its become a high profile case? Why not scrutinize every single building in this country? If you did that, you would have to demolish every single building in this country. Is it fair to let them continue to exist? Or will they also be demolished at a future date (maybe), if somehow that case became high profile?

I also feel that these are real assets. On the one hand, we do everything to encourage savings. High savings rates are required to have high levels of investments. And yet, here we are demolishing real assets. I simply cannot agree with this decision.

The key message to send is that the ones who made money are severely punished. For starters, let them lose their investments. Investors understand risk. No one ever will think of investing in similar plans if they know their investments are so risky. Second, criminally prosecute the wrong doers. No one should escape the punishment. Not only because these people have flouted the rules.....but because they have shamed our country and spread so much gloom and doom all around. That's the real reason they must be punished.

At the same time, we must have the maturity to protect the real people. We cannot throw out the baby with the bathwater. We cannot "over-correct". We must be able to find out who's benefitted wrongly and who's genuine. That's tough to do.....and that's why Jairam Ramesh just wants to take the easy way out.

The real truth is that the Congress wants to now appear "holier than thou". They want to somehow stem this tide of corruption charges that appears to be unstoppable. The real truth also is that they want to somehow make sure there isnt a wider investigation into the thousands of other similar cases that exist all around us and which may again lead to them. That's the real truth.

So what should be done? All the illegal floors should be taken away by the government and used for some social good. Maybe it can be given to a school.....this city is so starved for good school buildings. Maybe it can be sold afresh to a commercial hotel chain so that the government now realizes good money, which can then be put behind environment conservation.....there is so much that can be done.

But under no circumstances should real assets be destroyed. Its as criminal as allowing Adarsh to come up in the first place.

So much in common between the marathon and the economy!

As I ran the half marathon today (for the 4th time I might add!), I needed to churn something in my head to keep myself occupied. What better than to compare the marathon to the economy!

For starters, its tough to complete the half. Really tough. Just as tough as it is to grow the economy!

Its really tough to run at a fast pace. So also.....really tough to grow the economy really fast!

My excess baggage (around the waist) doesnt help me one bit.....and all the extra baggage we have as a society and history (ref: caste, religion, aaargghh!) doesnt help the economy either!

Completing the marathon needs great grit and determination. Ditto growing the economy!

Each runner has to play his own game. Cannot emulate the others running alongside. Likewise with countries....India cannot ape any other country's model!

There are ups and downs on the way to success. Also every incline is followed by a decline.....likewise in the journey of a country!

The environment matters a hell of a lot in getting a good timing.....so does it in building an economy! The only difference is that a runner cannot determine the environment, but those who run the economy surely can!

The cheering squads are crucial to completing the run......imagine if you had crowds booing people and cribbing about their slow pace, their style etc? That's how it is for the economy as well......the cheering squad here is the media! A cribbing media doesnt help matters!

You need to investment a lot of money in becoming a good runner.....on running classes, shoes etc etc. Likewise with the economy. Hence concepts such as savings rate, investment rates matter so much!

Foreigners add glamour and improve the competitive spirit in a marathon. Likewise in the economy.....FDI and competition with foreign brands and companies are a crucial part of economic growth! The only difference is that the marathon is dominated by the Africans....and the economy by the Europeans and Americans!

While individual success is important, what gives max joy is when all members of your team finish the marathon with their best personal timings. Likewise, when all sections of the society profit from a growing economy!

And lastly, those who win love to relate their success stories....check out the number of facebook updates today! Ditto with successful economies......their success stories are discussed everywhere!

Incidentally, Anil Ambani was next to me at the start of the race and I was tempted to tell him about my blog of yesterday. But then looking at his two body-guard (also runners!), I thought it best to stay away!

Today's post is just a normal write-up. There is no real truth to reveal. And that's the real truth!

Time for Anil Ambani to pause and think

(This piece is written in angst. Anil Ambani used to be one of my "icons". The kind of person I thought was the poster boy of modern India. He runs the marathon. He is smart. He is young. He is dynamic. But what has gone wrong?)

How can one of the top industrialists of India....Anil Ambani.... allow to get his companies into a situation where SEBI has to ban two of his companies and him personally from investing in the stock market? I know he has not "admitted" charges, but still what about the loss of reputation? Is not admitting charges, but agreeing to pay the damages, acceptable on the grounds that the case could have dragged on for many months or years? That its smarter to settle and move on? I dont think so.

As a shareholder in many of ADA's companies, I feel betrayed. I feel like I have invested in a group that doesnt care for ethics. Even earlier.....the TRAI has held his RCOM guilty of under-reporting revenues so that license fees payable to the government would be lower. There was under-payment of Rs 315 crores in license and spectrum fees to the government. It doesnt matter if this matter is right or wrong.....whether it is proven or not. Even before that, there was the case of masking international calls as domestic calls to avoid some payments to BSNL (BSNL levied a charge of some Rs 100 crores). In this case, the Supreme Court ruled against RCOM. Of course, this happened at a time with the Reliance group was undivided.....but in public memory, it was an ADAG company that got hit by the SC. Its not surprising then to see the situation RCOM finds itself in. Though it is the 2nd largest telco in the country after Airtel....with hardly a gap of 20% in subscriber base, its revenues are only one-third of Airtel's and its market capitalization is just about one-fifth of Airtel's. This means its ARPU is way lower than Airtel's. RCOM's revenues are smaller than even Idea's.....a much smaller company, but coming from a reputed group. Why is it that the better off subscribers have deserted RCOM? It cannot be because Airtel launched earlier than RCOM. In this industry, there is so much churn.....why didnt the better subs go to RCOM? Why have the investors started deserting RCOM?

Company after company in the ADAG has done similar things. In one infrastructure project after another, there are delays. There is huge cost escalation. Of course, they have a story too.....and maybe its correct. That government permissions are delayed and so on. But then, how is Reliance Infra any different from any public sector undertaking? They always bid the cheapest.....win the contract......and then much later, when many delays have happened, they increase the quotes. This is a steady pattern. In the past, when ADAG and MDA group were the two bidders for the Sewri-Nava Sheva sea link in Bombay.....MDA sought some 75 years to recover investments thru tolls. ADA offered to do it in just 9 years or so. ADAG won the contract. Those were the heady days of conflict between the brothers.....the success must have meant a lot to ADAG. But very soon, they must have realized that they would lose money. Suddenly one day.....the government announces that the project specs had been changed.....and that the sea link needs to be 6 lanes and not 4......and the contract awarded to ADAG was canceled. What a relief it must have been to ADAG. Or was it all just a very well orchestrated plan to get out of a difficult situation????

In the past, investors used to invest merely on the back of the reputation of Dhirubhai Ambani. The man had never let his investors down. I used to work in Mudra about 15 years back. I had heard stories of how office boys had been given loans by Dhirubhai Ambani to buy the stocks of RIL when the company first listed. And how they had become millionaires. That's what the word Reliance meant. This was the reputation that the two brothers inherited from their great father. I am not sure many investors feel that way about ADAG any longer.

In contrast, MDA has been a lot more careful. His group prefers to stay out of the news. I am not saying that there is no hanky-panky going on in that group.....I am just saying that in public perception, MDA group has stuck to the values that Dhirubhai stood for. For a lot of people in this country, trust is an important dimension in any relationship. That trust has not been broken by MDA yet. Today, the RIL group is valued at around Rs 3.5 lac crores (the largest private group in the country) while the ADAG group is valued just a little over 1/3rd of this.

Everyone manages the government. People know this. In fact, investors value this ability to manage government. Investors know that the two Ambani brothers do a very good job of managing policy making in Delhi.....but there is a difference in the way it is handled. Never have such accusations been levelled against MDA group......at least not in the public domain.  Nor against Ratan Tata or Sunil Mittal or Godrej. That matters to investors. Public perception is very important.....even if the facts are the same. I am happy to stay invested in MDA but not in ADA. So if you cannot be as clean as Narayanmurthy, at least be as smart as MDA.

I am making an appeal here to Mr. Anil Ambani. I want to be your fan again. Please do something. Please remember investors value reputations of promoters a lot. While returns on investments are important, reputations of big promoters like you are even more important. High returns only attracts short term capital......a good reputation attracts long term investments. It's so much like politics really. It doesnt matter if you are corrupt or not.....but what matters is what people believe. The truth seldom matters. That's the real truth

Privatize the Railways

Today's story shows how the airlines sector is booming and how things have changed with privatization.
Indigo placed an order for 180 Airbus A320 for delivery from 2016 onwards. The order size is worth $16 billion. This follows an order of 100 A320s they placed some 5 years back....worth $6 billion, of which some 40 odd planes have already been delivered. At present there are some 400 aircrafts in India....this number will double in less than 5 years. Funding is not a problem apparently. They made a profit last year.....apparently, all airlines are now expected to make a profit this year after a bit of a rough ride in the last few years. Apparently, shares of EADS - the European company that makes Airbus planes went up because of our order. Wow! Apparently, there are much bigger orders waiting to be placed by the other airlines! Wow! I am sure VIP Frenchie Sarkozy will be back here pretty soon!

All of us know how private airlines have changed the very meaning of travel in this country. Today, we have a choice of airlines, departure times, on-line booking options, seat preferences....we even get rewarded with frequency flyer points!.....and just 10 years back, things were not this cool.

And yet the joy of easy and comfortable travel is unavailable to 95% of India's population who use the trains. Why cant they get what a few of us are getting?

The story of railways is exactly the same as that of any other governmental service. Its in line with what I have mentioned in earlier posts.....anything to do with the government has suffered in this country.....most things to do with the private sector have fared well.

So here's a thought. Why cant the government privatize the railways? What this means is that the government allow the private sector to run their own private trains. They could charge higher amounts and provide better services. They would still use the same tracks that the Indian Railways currently uses....but to use the tracks, they would have to pay a fee to the government (just like airlines pay for airports etc). They would be willing to pay the government because private trains would also charge higher amounts from their customers. A lot of people would pay higher charges because they are willing to pay for better services. The government could then use that money to improve the quality of tracks and safety conditions. Also, the government could use the money to increase the number of trains run by the Indian Railways.....just like Air India increased its flights.....and hence they could provide more and better trains to the poor. Basically, whatever happened in the airlines sector could be repeated in the trains sector.

Here's the economic logic for this. Basically, railways suffer from extreme incompetency and inefficiency. So their costs are horrendously high and their safety standards really low (exact opposite of what it should be!). Because of political reasons, they are unable to charge higher rates from passengers. Hence no profits...no re-investments and so on. Now, this does not mean that there is no opportunity to increase prices, improve efficiency and start making the investments. Its not a problem of the sector....its a problem of the operator.

So if the government really cares for the poor, it should privatize the railways. Today, they will shout this idea down saying that its anti-poor. The real truth is that they (the politicians) are anti-poor! The real truth is that the Railways is a huge money making opportunity for the politicians. The Railways ministry is one of the most sought after ministries....because it has a budget of some 65K crores per annum. Isnt it interesting how government departments are always measured in terms of the costs they incur....never in terms of the revenues or profits they make? This is understandable. Money is made on costs, not revenues! The real truth also is that the Railways has become an employment exchange.....there are 14 lac Railways employees! Amazing isnt it? Here's another startling shocker......while the railways has an operational spend of Rs 65K, they were able to spend only Rs 1K on investments (they call it "development" plans). Now you know why the max speed of Indian Railways is just about 130 kmph when the rest of the world is scaling 300 kmph. This also explains why only about 180 kms of new tracks are being laid every year.......Can you imagine any large private sector company with such stats?! And this at a time when it has a monopoly?

The aad aadmi is getting a raw deal. The aam aadmi must demand better Railways. We all deserve better trains. Train journeys are more fun that flights. You dont have to arrive 1 hour before at the airport, and then hover around in the sky for an hour before landing. You get to see the countryside.....meet new people. I even love the chugging sound of the train! So many of my memories are tied in with trains. Besides, air travel is still way too expensive for most people.

So here's a thought before this year's railways budget is presented......let Mamta say that she wants to privatize the railways. Its not that difficult to imagine really......I think she can put an initial condition for this.....the headquarters must be in Kolkata!!

No One Killed Jessica.....the role media should play

I thought NOK Jessica was a fantastic film. It was a tough job for Raj Kumar Gupta as Director to relate a story which everyone knows already. I thought he did a fantastic job. Both Rani and Vidya played their roles remarkably well. There is a certain "new age" feel about the film.....no over-acting, easy language (foul language, but the type that you and I would normally use), new age music and a very modern setting.

What I liked the most in the film was the way media was portrayed. While Peepli Live showed the pathetic  (and very funny) downside of Indian media, this film shows how an alert media can make sure the powerful dont get away.

But first, let me give the highlights of the story (I can do it.....its not a suspense thriller!). When Jessica is killed, the killer's father (who is a big politician) makes sure that the witnesses are threatened or bribed.....and basically, what appears at first sight to be an open and shut cases is anything but. The accused is freed. All this happens before the interval. Rani Mukherjee plays the role of Barkha Dutt....she even works in NDTV (those days, there was no Times Now and CNN IBN!). She gets pissed off and takes things in her own hands. Basically, she traps various involved people and witnesses and makes sure that the case is re-opened.

Here's what I like about the role of media:
1) It plays an activist's role. When media realizes that the powerful have gotten away with murder, it steps in and makes sure that justice is delivered.
2) It energizes an otherwise disheartened junta and makes them take up the cudgels on behalf of the victim. Even ordinary citizens come out to fight for the cause. No one else can play this role except media.
3) It keeps the issue alive.....much against the wishes of the powers that be. At one time, the politician father tells the CM "This is a temporary wind and it will blow away soon". Media makes sure that that does not happen.
4) It ends with people feeling good......not depressed about where the country is going. It elevates the mood of the audience.

Here's what I found different with today's "sensationalizing" media:
1) Even though media knows that the politician is involved, it does not pronounce the accused guilty. Media does not play the role of judiciary. All that media does is ask questions.....get evidence by whatever means......and forces the authorities to take note. Even though there is a strong belief that the accused is guilty......there is never any "judgment" passed by media. The principle that "Everyone is innocent until proven guilty" is adhered to.....even as there is a strong determination shown to nail the bastard. At no point is Kalmadi declared guilty!
2) At no point is the coverage sensationalized to the extent that it is today. Even while the pressure is mounted on the authorities and  "evidence" presented, a certain decorum is maintained. "Liar Kalmadi", "Corrupt CM".....these kind of pronouncements are avoided. At the same time, it mounts unrelenting pressure on the judiciary to re-open the case.
3) Media empowers the people. A candle light morcha would be ineffective unless millions more watched it on tv. Media makes that possible. Its the collective might of the millions that politicians fear....not the court battle that the victim's family pursues.

There is of course also also credit given to the role of films. The candle light morcha shown in the film is credited to Rang De Basanti. This is what I like about this film. The easy way in which it gives credit to RDB....compare that with today's media that keeps shouting "Reported first by xyz...on pqr date". Pathetic.

In many ways, this is the role that media should play. Aggressive about its questions, unrelenting in putting pressure, determined in pursuing the matter, nailing the bastards.....yet never pronouncing the verdict. It never slanders anyone. It maintains a certain decency while handling very indecent people. It uses its power strongly.....but also lightly. Let me give an analogy.....its like the detectives in CSI v/s those in CID.....there is a certain polish and finesse with which the CSI detectives conduct themselves. Indian media must maintain those standards.

The movie also shows why India as a country has a bright future. Firstly, its a democracy, a benefit taken for granted and understood very little by most of us. Secondly, there is a strong media which wont condone the ill-deeds of the powerful....even though its becoming increasingly TRP-obsessed and raucous these days. And thirdly, there is (finally), an emerging consensus amongst the major political parties to stay focused on economic growth. This combination of factors will make sure that India will always be a better place to live in than China.....even if China's economy is 3 times the size of India's.

Why the Gujjus love Narendra Modi

Did anyone notice that Narendra Modi preferred to attend the Pravasi Bharatiya Event in Delhi rather than his own party's national executive meeting in Guwahati? Was it a snub to his political masters or was it just a natural preference for business that drove Modi to Delhi?

Everyone knows that NRIs are wooed in this country for the money they can bring back home. Everyone wants the NRIs to invest in their state. But very few politicians can be open about this. The Gujju on the other hand is focused clearly on business. This is what defines a Gujju. As someone who is a "naturalized Gujju", I feel proud to note the progress that Gujarat has made over the last 2-3 decades. For many years now, Gujarat's growth rate has been upwards of 11% per annum......higher than China's. Anyone who has traveled to Gujarat (and Ahmedabad in particular) will agree that the infrastructure in Gujarat is the best in India. The roads are outstanding. I once covered the Bby-Abad distance at an average speed of 81 km/hr. Very soon, the entire stretch from Bby to Abad will be an expressway. Roads are the lifeline of Gujarat.....and the good connectivity is one of the reasons that people prefer to operate from their own small cities and villages rather than migrate to Abad. This explains why Abad's population is only around 55-60 lacs......way too less for the premier city of an industrial state like Gujarat. The Gujarat government has also shown itself to be smart.....they were not the first ones to experiment with the BRTS (Bus Road Transport System).....but after Pune and Delhi failed miserably, Gujarat learnt the tricks and launched a very successful BRTS in Ahmedabad.

Modi knows that Gujaratis care largely for business. He knows that if he can make sure Gujarat keeps shining as it is right now, he is in a position to repeat in Gujarat what the Left has done in WB (ruled for 3 decades). But look at the difference in approach.....the Left ruled WB by perpetuating poverty (making everyone poor.....thinking that's a good goal to have!), while Modi will rule Gujarat by eradicating poverty and making everyone rich. On Gujarat Day (May 1 every year), the Gujarat government issues ads in the papers comparing Gujarat with Singapore....not with any other state in India! When Gujarat holds the annual Vibrant Gujarat mela, it routinely gets lacs of crores of investment commitments! When the Tatas decided to move their Nano car project to Gujarat, the people loved Modi for this. Modi knows this!

Modi also knows one other thing about Gujjus. Because He knows that because gujjus focus only on business, they suffer from a guilt feeling inside themselves. While doing business, they dont really care if the opposite party is a Muslim or a Hindu. The Kutchhi Bohris are muslims but in Gujarat, they are recognized as astute business people. Whoever has money is a good business partner! Deep inside, many Gujjus suffer a guilt complex arising from this. They fear they have not done enough to fight for the Hindu cause. To push back the Muslim aggression. Somehow their focus on business has made them "lesser Hindus". Gujjus are too mild mannered to get together and take out morchas and fight on the streets. Modi knows this. By following a virulent attack campaign on Muslims, he is exploiting this guilt complex. Gujjus love Modi for doing what they simply cannot do themselves.

It's this combination of focusing on business and taking on the mantle of protecting Hinduism that has made Modi the most lovable CM anywhere in the country. Yes lovable. Gujjus love Modi. In his 3rd term, Modi continues to enjoy the honeymoon that new CMs get only in their first 100 days of the first term. Their love and affection for Modi is so strong that they are willing to condone the several cases of corruption that have come up in Gujarat. Gujjus are rational about corruption. They know it exists. That's no reason to hate a CM! They are also willing to condone the suspected hand of Modi in several high-profile murder cases.....including the one of his own party-man Haren Pandya.

Somehow, if Modi could moderate his angularity about Muslims, and if he could focus on economic growth, there's no stopping him from becoming India's PM. As I have argued in the earlier posts, we Indians are hungry for growth. We want a way out of poverty. We want a good quality of life. Indians would willingly make Modi the PM......but if only he could shun his Muslim bashing.

I am sure Modi realizes that this is a hole that he has dug himself into. If he were to quit the BJP, no other party would touch him. And if he stays in BJP, he wont be able to grow outside Gujarat. Does he have the charisma to start his own party? Is this another reason why he did not attend the BJP's meeting in Guwahati? We'll know the real truth pretty soon!

Talent - the new mantra of a surging India

Here's a surefire proof of the surging economy in India. "Talent" of any form is in great demand today. The new and biggest beneficiaries of the economic boom are those who can call themselves talented.

Traditionally, its been the capitalists who have made the most wealth. You have capital....you invest and rake in the moolah. In an economy starved of capital, capitalists boomed. Capitalists also had another characteristic: they had the ability to take risks. This gave birth to a new generation of capitalists. Sunil Mittal, Narayanmurthy, Dilip Shanghvi, Phaneesh Murthy, Raghav Bahl and others are examples of this. But there is really nothing exceptional in capitalists accumulating wealth. Its plain obvious.

What is exceptional however is the way talent is attracting money nowadays. First lets understand what talent really means. Talent traditionally meant being "well" educated in India. An engineer was considered talented and that talent got him a job. Likewise, doctors and later MBAs were considered talented.......and for the same reason, basic sciences, arts, literature and even architecture were not considered talent because you couldnt get a job with such qualifications. As a result, every parent wanted his/her child to become an engineer or a doctor or an MBA.

But look how the world has changed today. There is a huge demand for a different type of talent now......all of it is in the nature of individual talent. Frankly, it does not matter what talent you have.....as long as you can do something unique and be the best in the business.....it's going to take you places. Of course, some forms of talent are valued more than other forms of talent. Generally speaking, if the stakes are high, that particular talent which secures returns, is valued high.

Lets look at some traditional forms of talent why they have been valued high:

Film stars: Akshay, SRK, Aamir.....all in the Rs 25-50 crs category (per film). We know that films ride on the popularity of the stars.
Bankers: The best bankers make crores for their clients......clients happy to reward bankers.
Lawyers: Best lawyers charge 10 lacs per appearance. But then corporate stakes are high. Likewise, criminal lawyers charge a bomb given the goods they deliver.
Doctors: Best doctors get away with murder (so to say!). But then who wants to take a chance with life.
Fashion Designers: Have always been considered a part of the "upper crust"

But lets look at some of the new forms of talent that have picked up a lot of value recently:

Cricketers: Largely because of IPL. And of course because of the success the Indian team has seen. Team owner stakes are high and relative cost of players is affordable.
Film Directors: Sanjay Leela, Ashutosh, Raju Hirani....all charge 15 crs + per film. Today, producers realize the role a Director plays.
Numerologists: Sanjay Jumani......If a small name change changes the fortunes, its worth paying him!
Master Chefs: Restaurant owners charge a bomb from their patrons.....celeb chefs draw in the crowds!
Personal Trainers: Again, the best trainers charge up to 5 lacs a year. But that's really cheap change!
Nutritionists: Same as Personal Trainers.
Singers: KK, Kailash Kher, Sonu, Sunidhi, Sukhwinder all make 15-25 crores per annum.....but then these are truly exceptional artists. I am calling this a new entry because they never made so much in the past.
Architects: Patrons spend 10-50 crs on a house.....they dont mind spending a few crores more on architects.
Wedding planners: Average cost of wedding in a wealthy family has gone beyond 10 crores...
TV anchors & Radio Jocks: Arnab, Rajdeep, Barkha, Udayan, Jeeturaaj, Anant & Saurabh, Mir and Dhvanit.....worth their weight in gold.

Today, wise parents identify anything unique that their child may have and develop that as a form of talent. Music and cricket are very popular. But "writing", "poetry", "scultpure", "painting" are increasingly being encouraged. Parent dont put their children through the usual rut of engineering and MBA courses any longer.

However, just having talent is not enough.

The real truth is that you need a lot more to be able to monetize that talent.

One important ingredient required is media. Once media joins talent, talent turns into a money making machine.  Media builds imagery for the talent. Media makes the name and face well known. Sometimes the imagery is more important than the real stuff you are made up of. That's why Suhel Seth runs from one TV channel to another (I have never heard of what Counselage does really)! Or Ashwini Nachappa who has never won an international sports pageant, but is still in demand. It makes the talent desirable. Everyone wants in on the talent. The value escalates and that's when the talent cashes in.

The other important ingredient is sex appeal. You have to have sex appeal. Yuvraj Singh, Sreesantha, Bhajji, Dr. Naresh Trehan, Sania and Saina, Sanjeev Kapoor......all have sex appeal. Sometimes, if you dont have sex appeal, a close substitute is a kinky look. Or talking style. For eg. Swapan Dasgupta is always out of breath. Suhel Seth is always fuming. Ravi Shankar Prasad is always grinning under his thick mush, Ashwini Nachappa always try to look coy......anything that makes you look different!

So, talent + media + sex appeal is the mantra for economic success in the new world.

Where does this leave poor CEOs like me? Ah ha.....To be called "talent", I better practice the same mantra. Must feature regularly on TV and print, even if it is to say the same thing again and again! I must work on a "style".....maybe go bald or pick up an American accent or wear dark glasses all the time! And finally, even if it is utter rubbish, pretend to be an expert of some sort! Else, I better be prepared for a world of total anonymity.....and poor pay!

Mr Sibal, looks like you read my first blog on 2G!

Finally, a good counter-argument was put out by Kapil Sibal today. Its based on exactly the same thoughts that I used in my opening post......the Real Truth behind the 2G scam!

Sibal has stated it brilliantly of course. Like a good lawyer that he is, he has found that the very basis of the case that the opposition has built is flawed. By stating that the government's policy was "public welfare" and not "making monies from telecom spectrum".....he has brought out an aspect of political strategy lost in the cynical minds of most people. By comparing it with "free land for infra projects", a practice followed even today (and one that all of us find acceptable), he has made his assertion more credible. By using the same CAG report's method, he has calculated the loss made during the NDA regime as Rs 2 lac crores......thus completely rubbishing the entire case built up the BJP and turning the tables on them.

Having interacted with the government on various issues related to radio license policy, I can state this from personal experience that the government (unbelievable as it may seem) does seem focused more on the aam aadmi than on raising revenues. With respect to the Phase III auction of FM radio licenses, the Minister of I&B has categorically expressed her opinion that the intention of the government was not to make money from radio licensing, but to extending the service to the widest possible population possible. The spectrum was to be given at a price which helped launch more and diverse programming services.....in smaller and smaller towns....so that people around the country could benefit from the entertainment provided by radio. In our cynical mindset, we simply cannot believe that such clean thinking is possible in today's dirty politics. It's not that the government is not doing good work.....its just that we......common citizens......simply cannot believe that's possible.

Its because of this cynicism that we have that we single out those CAG reports that seem to build on this pre-existing cynicism of ours. It is this same cynicism that TV channels exploit in building their TRPs. It's very similar in taste to the caste and religion-based politics that some political parties use to gain votes. It's as sinister in approach as exploiting a person's religious beliefs to get specific work done out of him/her.

At the end of the day, a question needs to be asked: How come no one doubted the CAG report itself? How come we implicitly assumed it to be correct? How come we question most other government agencies....the CBI for instance? How come we always believe that the cops do a bad job? There was once this TV channel which did a full show on the rape of a dalit woman in Noida, accusing the cops of rape.....it also accused the cops of high-handed behavior etc.....it put together 6 women's activists on the show, a breed very easy to locate because of its own need for publicity.....but later it was found that the cops had done nothing wrong.....the woman did have a history......this tv channel did not even report this later finding, forgetting apologizing to the people.

Isnt it possible that the CAG itself as a body made a mistake? That it came under political influence? The question is not about why the opposition took refuge under this CAG report (they will grab anything they get)......the question is why we, the people, bought into it. That's the real question to mull over. I think we have lost faith in government institutions. We believe the government does nothing good. While this may be true in many cases, we should not become cynical. A cynical junta only lowers the positivity in the country. It cannot help achieve progress. I also believe that an important reason for this cynicism is that the media has conducted itself irresponsibly. Under the garb of media independence, they have conduced themselves very poorly. The media never highlights the good work done by the government. The progress made in Bihar, Gujarat or Delhi is not highlighted. The 9% growth rate acheived is never discussed. These good stories do not generate TRPs......and as a reason of this constant badgering of the government, we have lost faith totally. We believe any and every damning news that's reported.

To end this post, I want to re-state what I wrote in my first post. a) That the low cost of spectrum enabled telecom companies to lower prices....and thus made this empowering technology available even to the really poor in the country. As a result of the telecom revolution, even unskilled labourers were able to generate work opportunities for themselves. Today, a plumber does not need an address....he just needs a phone number. b) That telecom companies have not made money because of cheap spectrum. The operating profit margins of Airtel are just about 30% and for all other telcos between 10-30%. This is the bare minimum requirement for an industry that has invested billions of dollars in rolling out their services. c) That this was the best possible way for the government to distribute public goods to the public. Imagine if the government had collected the Rs 1.7 lac crores extra through 2G auction......could it have used it as efficiently as it did through the private telecom companies or would it have lost at least 10% to pure corruption?

Does it mean that everything's clean in telecom? Of course not. Dont forget that we have become a 10% economy. Growing (soon hopefully!) @ 10% and corrupt @ 10% (since a hundred years)! We need to achieve the first and kill the second.

Good job done Mr. Sibal. Now make sure you push back hard! And keep reading my blog!

Hindu terrorism.....a trap for the BJP?

There seems to be some sort of disbelief.....at least in the BJP....that Hindu terrorism could even possibly exist in India. Why would the majority community need its own terrorists is their logic. But the real truth is that the BJP is struggling for an ideology and it still hasnt been able to find one other than Hindutva.

Aseemanand is a classic example of Hindu terrorism. The NIA has recently indicted him and its likely to chargesheet him for the attack on the Samjhauta Express in which about 70 Pakistani tourists (returning home) were killed. Aseemanand prefers to put the title "Swami" in front of his name.....clearly taking protection under a general public sympathy for that title. The Swamis have traditionally had a reputation of being peaceful god-loving people. What better way to protect oneself than by using that title? Or maybe, Aseemanand thought of himself as the only protector of Hindu culture.....just the way the Church has thought in the  Christian World. Who gave them this authority? I think its a misconception the BJP has about the power of religion in Indian politics. A belief that sticking to its Hindu ideology.....even to the extent of protecting terrorists.....would give it electoral dividends.

I think its been proven successfully around the world......with the possible exception of the Muslim world.....that free people generally like to keep religion and politics apart. Political parties are best positioned basis either their economic agendas (socialists, communists, right and left wings etc). So the Republicans have liberal economic views (lower taxes, reduce size of government) while the Democrats are more conservative. Likewise, the Congress and BJP are "rightists" (support free enterprise by nature) while the Left has the opposite ideology. There is of course also the religious dimension.....so Republics are conservative on religious ideology (attend Sunday mass, oppose abortion etc) while the Democrats are liberal. Likewise, the Congress and Left are liberals while the BJP and the Sangh Parivar are conservatives. But no where has a political discussion.....an office of power.....been won purely on the basis of religion.

The BJP tried this unsuccessfully for many years since Ayodhya. The highest number of seats it reached was 183 in the late 1990s. It continued with its religious ideology during its tenure in office till 2004. Thereafter, it has fallen to just 116 seats in the present House. One would imagine that the BJP would have learnt its lessons. However, the reality is different. It does not want to give up on its Hindu supporters. At the same time, it wants to attract the liberals in India. In Marketing terminology, the party has falled between two stools.

The BJP's rejection of the possibility of Hindu terror means several things. It possibly represents real politics. Catering to its core constituency....the traditional Hindus will improves its seats count. It could also represent poor political strategy. The BJP continues to be confused between its Hindutva positioning and its more liberal and urban imagery. Further, it could show that the BJP believes in different rules for different people.....Islamic terrorism is obvious to them and should be condemned but Hindu terrorism is simply not possible and should be ignored. None of this does the BJP any good.

The real truth is that the BJP is trapped in its ideology. They dare not complain about Hindu terrorism for fear of offending their core constituency. But every time they defend, they dent their own appeal to the people who want to go beyond religion. The BJP has had a good economic agenda in the past......Its time it realized the limitations of Hindutva and focused instead on its economic agenda. Till that happens, BJP will continue to suffer and Hindu terrorism will continue to grow.

The real truth: Bofors - the same distraction again

The real truth: Bofors - the same distraction again: "The Bofors story is back again. And the only purpose it will serve is to distract us from the one singular goal that we should all have ......."

Bofors - the same distraction again

The Bofors story is back again. And the only purpose it will serve is to distract us from the one singular goal that we should all have ...... high economic growth which lifts millions out of poverty.

I've never understood why we have been so coy about Bofors. Lets answer some of the obvious questions. Were commissions paid (of course they were). Were politicians beneficiaries (most likely). Were the commissions only 3% of the deal value? (No way.....they were more like 10% or 150 crores). Is there anything surprising in this (Of course not!).

And yet,  the Bofors matter has hit the front pages of all newspapers today. What's so interesting about the Bofors matter that it needs a front page coverage? The fact is that the Bofors scam arose because of the stupid laws that we have in India. We have a law which bans middlemen from defence deals. But think about this.....is it at all possible to have large defence contracts without middlemen? Anywhere in the world? Then why have such a law? Because we cherish lofty and unviable dreams of being a corruption-free country. And our people feel good to have such laws in place. Even if they are simply not practical. I think commissions are paid in every single developing country when it comes to defence deals. There is really nothing new about it. Even developed countries which have specific laws banning bribes (US: Foreign Corrupt Practices Act).....have intentional loopholes built into their laws. For eg., the FCPA allows "grease money".....money to "speeden" up decision making, but not "bribes" which may "influence" the decision! Ridiculous.

Want another evidence of our stupid laws? The recently passed Nuclear Liability law which puts the onus of running nuclear plants safely on the original equipment suppliers. This is stupid. When you buy a car, and if you have an accident, you cannot blame the car manufacturer (unless there are very specific design related reasons). Likewise, when you buy a TV set, the manufacturer only gives a 1-year warranty or so. Beyond that, its working depends on how you use it. Its the same with nuclear equipment. The manufacturer should at best be made to give a liability for the first few years. Beyond that, its the operator's liability. But no.....in India, we want to show how intelligent we are. So we pass the world's first law putting liability on the manufacturer. What's likely to happen now? Either the manufacturers wont supply the equipment.....and India will continue to remain a nuclear pariah. Or more likely, they will do a "side-deal"......they will overtly "accept" the liability and follow the law......and then do a back-to-back deal with the Indian operator (most likely a government company!) and pass on the liability back to the Indian government. The law does not prohibit this. So we all feel very happy.....but the problem remains exactly where it started!

This is the way we like to do things. We dont like to pay our ministers and babus well.....so we have corruption and we turn a blind eye to corruption.....then suddenly we wake up one day (almost ritualistically) and complain about corruption. Its the only way we work.

The real truth is that India has been a "10%" society for a long time. We cannot change it overnight. Hence my earlier suggstion that we set a new date.....1st Jan 2015 beyond which we wont allow new cases of corruption. In the intervening 4 years, we correct the ills in our current systems. We allow official funding of political parties. We correct salaries. Etc Etc.

Whatever we do.....lets not get distracted by a twenty five year old matter. Let no political party play games here. The BJP has rampant corruption of its own in Karnataka to contend with. Plus, it had several cases of corruption when it ruled in the Center. The Left is the most corrupt of all.....plus they are also a mafia party. Just see the state of WB for that.

I repeat: Lets not get distracted. Lets stay focused on getting our growth right.

Time to get back to business

The holiday season is over. After all those smses wishing each other a better 2011 than 2010 was, its time to get back to business.

Reports in the papers indicate that 2011 is going to be a challenging year. Many of the factors that helped India grow at 9% in 2010 are likely to work in the opposite direction this year. Unless we get our act together, our growth trajectory may be dented.

There are two primary hurdles stopping India from growing faster. One is the availability of monetary resources and the 2nd is governance issues. Lets focus on these.

With a recovery around the corner in the US, its likely global funds may prefer to go back to the US. The flight of capital that the US saw in the last 2 years may stop. India got 45 billion $ in the last 2 years in the form of investment in the stock market. That led to strong gains at the stock markets in India. The BSE is today the costliest market in the world today. Forward P/E earnings on the BSE are at some 19 times v/s 16 in China and lesser in Brazil. If equity in-flows slow down, it will affect the funding needs of corporates. THe government plans to allow infrastructure debt funds to start this year....with the intention of allowing foreigners to lend directly to Indian corporates and fund houses. Its critical we manage this well. We simply cannot afford to have a funds shortage during the 12th plan period (2012-2017).

The 2nd major constraint is governance. I have written about this earlier. Its time the opposition allowed the government to get back to business. Parliament must be allowed to function. Important bills need to be passed. The BJP and the Left parties must shun their political agendas and let the country function. They have made their point.....the government is going to be wary of corruption and corrupt practices. A lot of cleansing has already happened. There is no further gains in stalling the working of Parliament. Media must put pressure on the opposition on this matter.

There are many challenges globally. Commodity prices are rising. Oil is likely to hit $100 a barrel shortly. Europe remains in crisis mode. If a few more European nations go through a debt crisis, it could raise the cost of funds globally. Within India, infrastructure remains a major bottleneck. We need all hands on the deck to handle the situation at this stage.

Its a competitive world out there. No one is going to take care of India's interests if we dont do it ourselves. Its time we got our focus back. Its the only way to ensure 2011 is better than 2010!

New Year's mantra on tackling corruption

Several stories of corruption have been in the news lately. Frankly, while most people are aghast at the revelations, I feel they have no reason to be. Am I being soft on corruption? No!

Let me explain. The truth is that corruption has been a part of Indian life for the last 100 or maybe 200 years. All of us are corrupt. Each and every one of us cuts corners and bribes our way thru. I remember the many times I would have bought train tickets by paying off an agent. Likewise the traffic cops. Just because these acts were relatively innocuous does not mean that they should be considered as less dangerous.

Actually, I am not being corrupt here. What I should say is that each one of us who is affluent and well to do is corrupt. The poor are not corrupt. They are the ones who pay for our corruption.

Someone I met recently from PwC told me that 80% of corruption happens (around the world) because of "system failure". This is true about corruption here also. Take the example of election funding. If it takes Rs 5 crores per candidate per election, we need nearly Rs 1 lac crore every 5 years. Almost all of this comes from corruption. Next take the salaries of powerful bureaucrats. Leave the cost of housing out (because the babu cannot take the housing with him after retirement). The most powerful babu's salary would probably be less than Rs 1 lac a month. Even an ordinary MBA with 5-7 years experience in the private sector earns that much. So how do we expect this babu to conduct himself? But the problem is that if we have to pay decently, then we need to reduce the head-count. Can we do that?

So why cant we fix these system issues? Simply because society as a whole does not have the guts to accept the reality. Its good to talk about how Singapore pays its PM the market rates.....but its not possible to practice the same here. Imagine if the PM earned Rs 30 crores salary and the Ministers earned Rs 10-15 crores each? If we paid this much, we could rightfully demand professional service. We could sack them for under-performance and corruption. But today, can we really expect this to happen?

I am thus suggesting the following: Forget the past. Everyone was corrupt in the past. This New Year, lets set a future data.....from which point we agree not to tolerate corruption. Lets say that that date is Jan 1, 2015. In the in-between 4 years, lets work on correcting the faulty systems that exist. Publicize this date from which India will adopt a "no corruption" policy. This is where media should play a critical nation-building role. It must educate the people about what changes are being made. Let no political party take advantage of the changing rules.

The only reason I am suggesting we work from a future date is because like I explained, each one of us has been corrupt in the past. "Unearthing" past corruption (as if it needed to be unearthed) depresses the sentiment in the country. We cannot afford that. We need everyone to be motivated and driven to achieve growth. All that we need to focus on is hit a 12% per annum growth rate for the next 2 decades. Lets keep the moral up. And lets clean up as we go along.

Our past is a shame. That's the real truth. Let our future not be so.