One of the great achievements of recent years has been the ability of Infosys management to consistently set and beat analyst expectations. Quarter after unfailing quarter, Infosys manages to do better than forecasts. This has as much to do with running a great business, as it is to do with setting expectations.
Whether Nandan Nilekani gets us a fool proof unique identity number as citizens of this country will be revealed as time passes. What is already visible however, is the lesson that the government has received from Mr Nilekani in managing analyst expectations. In my nearly two decades of watching the budget, never have I witnessed such perfect "expectation management" in the run-up. Most business channels and news papers were busy asking analysts if the two expectations that would lead to a post budget rally were - (1) 5.5% fiscal deficit (2) government borrowing not exceeding 4.5 lakh crores. When the budget was presented, lo and behold, these were both met, or bettered (in case 1 and 2 respectively). The market has rallied considerably since then, predictably with foreign investors in the vanguard.
The latest case of this expectation management is NDTV highlighting that the Prime Minister actually stood up to Madam! Given his track record, this resembles the claim of a hen-pecked husband - " I am the master of my house, and have my wife's permission to say so". A read of the linked news article offers a clue for this apparent show of spine. The RTI needs to be amended to avoid the Chief Justice of India from appearing before himself ! So while Madam is seen as doing the right thing, i.e advocating that the RTI act remain as it is, the PM cleans the poo left by an adamant CJI demanding that he remain above the law! Now the government will be seen to be doing the "wrong thing" but will be protected by the PM's reputation of personal probity. The master puppeteer will retain the moral high ground. A case of eating ones cake and having it too.
Friday, March 5, 2010
Thursday, March 4, 2010
Different Strokes
Two recent developments, completely diverse responses. This is what makes space for "hindu fundamentalism". I leave it to the reader to draw his/her own conclusions.
Incident 1 - M F Hussain purportedly takes citizenship of Qatar (later denied) because he has cases pending in Indian courts. These cases, filed by private citizens, were on account of his paintings of Hindu religious figures in the nude. The english press decries this as an assault on artistic freedom.The STATE is silent, while offering "protection" to the artist. So, did he get a raw deal?
Incident 2 - Jesus is depicted holding a beer can and a cigarette in a text book. The STATE confiscates the books and promises to take legal action against the publishers. There are calls for a "Blasphemy law" (fortunately, shelved). The Church bans all books by the publisher. No one questions if this is an assault on freedom of expression.
Incident 1 - M F Hussain purportedly takes citizenship of Qatar (later denied) because he has cases pending in Indian courts. These cases, filed by private citizens, were on account of his paintings of Hindu religious figures in the nude. The english press decries this as an assault on artistic freedom.The STATE is silent, while offering "protection" to the artist. So, did he get a raw deal?
Incident 2 - Jesus is depicted holding a beer can and a cigarette in a text book. The STATE confiscates the books and promises to take legal action against the publishers. There are calls for a "Blasphemy law" (fortunately, shelved). The Church bans all books by the publisher. No one questions if this is an assault on freedom of expression.
Monday, March 1, 2010
Budgeting for growth - but focus on the hocus
The latest budget of the UPA government cannot be faulted for trying fuel growth through lower taxes in the hands of individuals. At a time when private capital formation has been weak, and most of the growth of the current fiscal has been achieved through higher government spend, lower planned spend by the government has to be replaced by private consumption to keep the wheels of commerce moving.
Pranab da however gives the game away when he says that the budget is a political document. In a world where it has become acceptable for governments to fudge figures on a large scale, a la Greece, India is following suit. An example would clarify. Forecast for GDP growth for FY2009-10 estimates that "real growth" in agriculture is -0.2%. The economic survey states that Kharif crop production is lower by 15% over previous year, sugarcane by 9%, oilseeds by 15% and pulses 8%. To get to a 0.2% de-growth, we not only have to assume that the Rabi crop is normal, but that it is also 15% higher in terms of output. The survey also says "the index of area under rice shows negative growth (sic)". So where is the growth coming from?
Another way to look at this is the computation of "real GDP". The "real" growth is calculated by taking the nominal output and applying the GDP deflator. The deflator is supposed to have the advantage of reflecting the actual consumption basket in the economy (as opposed to a fixed basket used in calculating WPI or CPI). While the CPI in the current year is in double digits, the WPI is less than 2%. The survey uses 3.6% as the deflator.
Now the growth in agri prices is upwards of 18% on an average. However, if one uses 3.6% as the deflator, then a 15% de-growth in real terms, would show up only at a 0.2% de-growth since the price rise would take care of the rest. It appears that we are significantly over-stating the real growth in the economy.
On most parameters except growth, India is no different from Greece. With a fiscal deficit figure in double digits, an internal debt burden of over 80% and unemployment near double digit, the only reason India is not bracketed with the 'PIIGS" and "STUPID"'s is the supposedly higher growth the economy continues to register. When the growth itself is chimera, the consequences may be disastrous. SS Tarapore made the point in his column here.
We should ignore the warnings at our own peril.
Pranab da however gives the game away when he says that the budget is a political document. In a world where it has become acceptable for governments to fudge figures on a large scale, a la Greece, India is following suit. An example would clarify. Forecast for GDP growth for FY2009-10 estimates that "real growth" in agriculture is -0.2%. The economic survey states that Kharif crop production is lower by 15% over previous year, sugarcane by 9%, oilseeds by 15% and pulses 8%. To get to a 0.2% de-growth, we not only have to assume that the Rabi crop is normal, but that it is also 15% higher in terms of output. The survey also says "the index of area under rice shows negative growth (sic)". So where is the growth coming from?
Another way to look at this is the computation of "real GDP". The "real" growth is calculated by taking the nominal output and applying the GDP deflator. The deflator is supposed to have the advantage of reflecting the actual consumption basket in the economy (as opposed to a fixed basket used in calculating WPI or CPI). While the CPI in the current year is in double digits, the WPI is less than 2%. The survey uses 3.6% as the deflator.
Now the growth in agri prices is upwards of 18% on an average. However, if one uses 3.6% as the deflator, then a 15% de-growth in real terms, would show up only at a 0.2% de-growth since the price rise would take care of the rest. It appears that we are significantly over-stating the real growth in the economy.
On most parameters except growth, India is no different from Greece. With a fiscal deficit figure in double digits, an internal debt burden of over 80% and unemployment near double digit, the only reason India is not bracketed with the 'PIIGS" and "STUPID"'s is the supposedly higher growth the economy continues to register. When the growth itself is chimera, the consequences may be disastrous. SS Tarapore made the point in his column here.
We should ignore the warnings at our own peril.
More shame in Indo Pak talks
M J Akbar's view
Chandan Mitra's column
Varadarajan in the Hindu (the "official" spin?)
The outcome of the talks in Afghanistan
And an article in Pakistan Daily that seems to surprisingly, articulate a view that Dr Singh would find interesting:
"Manmohan Singh, despite his conciliatory nature, seems to be awakening to the realisation that the objective of those involved in terror plots against India is not simply Kashmir but the reversal of India’s growth story. They seek to make India unsafe for investments, by scaring away even international sports teams, they way they have succeeded in Pakistan. They have been funding agitations against industrial and other projects, so that vast regions of the country remain backward. Thus far, the Manmohan Singh government has adopted an ostrich policy towards this growing threat, hoping that it will disappear. Instead, it is becoming worse. India has always seen a cycle of inaction that creates a crisis, which is then met with overwhelming resources and – where needed – force. The Pune blast has been a wake-up call for Manmohan Singh. Unless he takes much more active steps to stop terror networks in India from killing innocents, he risks seeing the end of the Indian economic miracle. Much more is at stake for India than relations with Pakistan."
Chandan Mitra's column
Varadarajan in the Hindu (the "official" spin?)
The outcome of the talks in Afghanistan
And an article in Pakistan Daily that seems to surprisingly, articulate a view that Dr Singh would find interesting:
"Manmohan Singh, despite his conciliatory nature, seems to be awakening to the realisation that the objective of those involved in terror plots against India is not simply Kashmir but the reversal of India’s growth story. They seek to make India unsafe for investments, by scaring away even international sports teams, they way they have succeeded in Pakistan. They have been funding agitations against industrial and other projects, so that vast regions of the country remain backward. Thus far, the Manmohan Singh government has adopted an ostrich policy towards this growing threat, hoping that it will disappear. Instead, it is becoming worse. India has always seen a cycle of inaction that creates a crisis, which is then met with overwhelming resources and – where needed – force. The Pune blast has been a wake-up call for Manmohan Singh. Unless he takes much more active steps to stop terror networks in India from killing innocents, he risks seeing the end of the Indian economic miracle. Much more is at stake for India than relations with Pakistan."
Wednesday, February 24, 2010
India - the new US lapdog
Does personal integrity extend only to not taking bribes? or does it require the Prime Minister to stand upto power centers that are inimical to the interest of the nation?
Dr Singh has weakened India's position in international fora on more than one occasion. Sharm el-Sheikh is a case in point. Copenhagen was another. The recent shocking resignation of Shyam Saran on Feb 19 seems to point to a similar direction. Mr. Saran, the PM’s special envoy on climate change has been "permitted to demit office" from Mar 14.
What caused this? An attempt has been made to explain this in terms of protocol. Shivshankar Menon, his junior in the foreign service was elevated to Minister of State level, while he was not. This does not seem to be the whole story. Commenting on this, the Hindu writes:
“Whatever the trigger, Mr. Saran is the second high-profile climate negotiator to exit the stage after crossing swords with the United States. Last December, the Philippines government sacked its chief negotiator, Bernaditas Castro-Muller, in the run-up to the Copenhagen summit, a move civil society groups said was taken to please Washington.”
Within two days of Mr Saran quitting, Mr Dasgupta, one of India's top negotiator on climate change too put in his papers. Mr Dasgupta reportedly said:
“I find it shocking that (Jairam) Ramesh (Minister of state for environment) has asked US-based Arvind Subramanian to consider various options available to us so that we will have the new formula ready by the time the Bonn round of talks start in May this year. These options are not being discussed by Indian climate change experts, but are being referred to an international group. Is this how foreign policy on such a crucial issue is being addressed?” When asked, however, he refused to say if in his opinion this was being done due to pressure from the United States.
Clearly, India is giving up its well-grounded negotiating position to take up one that is suitable to the USA and one that will likely impose unjustified conditions on India.
An alternate viewpoint, expressed by MJ Akbar, postulates that the reason lay in the substantive disagreement between the PM and him. Shivshankar Menon was appointed NSA and not Shyam Saran, because the Prime Minister decided that Shivshankar Menon was, intellectually and temperamentally, closer to his line of thinking on Pakistan. MJ writes:
"Dr Singh knows he is taking huge risks. He has deliberately underplayed hard evidence from Indian intelligence that Pak-based, anti-Indian terrorist organisations continue to get active support from the Pak military, and that they are not non-state actors. Pakistan’s Army chief, Ashfaq Parvez Kayani has reiterated, in his latest doctrine, that India remains the pre-eminent threat to Pakistan, implicitly justifying the military’s support for the second arm of his country’s response to India, the terrorist network."
So why is the risk worth taking? It is not for any Indian PM, except if viewed from the eyes of US policy makers. Senator John Kerry has described the resumption of the Indo-Pak dialogue as “critical to the United States”, and suggested that the Indian initiative is an extension of the new India-US relationship.
So we dutifully troop off to "talk" to Pakistan, though no one knows about what!
Whatever the view you favour, it appears that India's position vis a vis the US is now similar to that of the British under Blair - that of the lapdog!
Sunday, January 17, 2010
Weak leader, weak response
This morning started with another report of an attack on an Indian in Australia. This time, four youngsters attacked a taxi driver from India while travelling in his cab. The Australian response would have been hilarious if it were not so tragic.
The Australians have claimed once again that this was not a "racial" attack - simply "opportunistic". I wonder what that means. I guess the Indian taxi driver gave the white Australian an "opportunity" to attack him since he took them in as passengers, and they were only using that opportunity to beat him and spit at him. Presumably, that is what all civilised passengers in Australian cabs are expected to do if given the "opportunity"! Poor chaps, we should not blame them. Does this remind you of the response to a recent rape case in Goa, where a venerable member of the assembly had accused the victim of "allowing" herself to be victimised?
The next question to ask is - how do the police know that these attacks are NOT racially motivated? Since they claim to have not yet solved any case - or made any arrests, where is this certainty coming from?
I came across a website with an interview with, seemingly, some Indian official. Both, the tone of the questions (suggesting Indian media were blowing up the cases without adequate information), and the Indian officials obsequiousness (suggesting that Australia was a better place than India) almost made me throw up. The only blog comment on the site is telling - the writer commends the Indian government advisory to students - since that would restrict Indian from taking away jobs!
The US, meanwhile, has issued a demarche to China - asking for an explanation wrt the hacking attempt on Google! Just goes to tell you how important it is for US to protect commercial interests. For the current Manmohan Singh government, on the other hand, a few Indian lives is not worth protesting over - Will someone please tell Shashi Tharoor that tweeting on visa issues is not the only job of a junior minister of foreign affairs. Writing out a demarche to Australia may be more workmanlike. But then who ever said that we had a government that wants to work.
The Australians have claimed once again that this was not a "racial" attack - simply "opportunistic". I wonder what that means. I guess the Indian taxi driver gave the white Australian an "opportunity" to attack him since he took them in as passengers, and they were only using that opportunity to beat him and spit at him. Presumably, that is what all civilised passengers in Australian cabs are expected to do if given the "opportunity"! Poor chaps, we should not blame them. Does this remind you of the response to a recent rape case in Goa, where a venerable member of the assembly had accused the victim of "allowing" herself to be victimised?
The next question to ask is - how do the police know that these attacks are NOT racially motivated? Since they claim to have not yet solved any case - or made any arrests, where is this certainty coming from?
I came across a website with an interview with, seemingly, some Indian official. Both, the tone of the questions (suggesting Indian media were blowing up the cases without adequate information), and the Indian officials obsequiousness (suggesting that Australia was a better place than India) almost made me throw up. The only blog comment on the site is telling - the writer commends the Indian government advisory to students - since that would restrict Indian from taking away jobs!
The US, meanwhile, has issued a demarche to China - asking for an explanation wrt the hacking attempt on Google! Just goes to tell you how important it is for US to protect commercial interests. For the current Manmohan Singh government, on the other hand, a few Indian lives is not worth protesting over - Will someone please tell Shashi Tharoor that tweeting on visa issues is not the only job of a junior minister of foreign affairs. Writing out a demarche to Australia may be more workmanlike. But then who ever said that we had a government that wants to work.
Pulling fewer punches
The start of a new year - though only a change of calendar, invariable leads to some amount of introspection and, sometimes, a resolve to make some course corrections for the future. One such resolve I have made of myself in 2010 is to pull fewer punches. Even in the past, I have tried to express my thoughts without trying to be "politcally correct". However, I have evaded a few topics that I thought would be too controversial. Not any longer. My apologies to people who may feel offended. These are my own thoughts and readers can chose not to read them.
The year started with the two stock exchanges engaged in a juvenile competition of "my (timing) is longer than yours". Clearly, the BSE now suffers from the same sense of irresponsibility towards its constituents that used to be the hallmark of NSE thus far. No one in the administration of either exchange bothered to explain WHY it was necessary to extend market timings. Despite the majority of members of the exchanges being against such a move, the change was introduced.
The exchanges called a meeting of "leading brokers" for "consultation" having already announced their intent. These brokers, predictably, and in contrast to the majority, came out with rhetorical statements in favour of the exchange move - adding one hour will make our markets "International" they said! Privately, people close to these "industry spokesmen" have told me that these spokesmen were themselves not in favour this extension. So why is it necessary to lie in public?
In India, where sycophancy starts from the highest political level, can there be any other expectation. Opposing the views of "the powers" serves no purpose - much better to create regulatory "goodwill". No doubt, this will lead to some quid pro quo at an appropriate time. This in itself is only a small example of "crony capitalism" - once the bane of Japan, then of South Asian economies, and now of the USA. Private gain again dominates general good. However, it is for these "leaders" to ponder on what example they are setting to the youngsters of the country by such blatant falsehood.. But then - they did not get where they are by worrying about such spiffy things! All the best - and look out for yourselves - your "leaders" are doing just that - looking out for themselves!
The year started with the two stock exchanges engaged in a juvenile competition of "my (timing) is longer than yours". Clearly, the BSE now suffers from the same sense of irresponsibility towards its constituents that used to be the hallmark of NSE thus far. No one in the administration of either exchange bothered to explain WHY it was necessary to extend market timings. Despite the majority of members of the exchanges being against such a move, the change was introduced.
The exchanges called a meeting of "leading brokers" for "consultation" having already announced their intent. These brokers, predictably, and in contrast to the majority, came out with rhetorical statements in favour of the exchange move - adding one hour will make our markets "International" they said! Privately, people close to these "industry spokesmen" have told me that these spokesmen were themselves not in favour this extension. So why is it necessary to lie in public?
In India, where sycophancy starts from the highest political level, can there be any other expectation. Opposing the views of "the powers" serves no purpose - much better to create regulatory "goodwill". No doubt, this will lead to some quid pro quo at an appropriate time. This in itself is only a small example of "crony capitalism" - once the bane of Japan, then of South Asian economies, and now of the USA. Private gain again dominates general good. However, it is for these "leaders" to ponder on what example they are setting to the youngsters of the country by such blatant falsehood.. But then - they did not get where they are by worrying about such spiffy things! All the best - and look out for yourselves - your "leaders" are doing just that - looking out for themselves!
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