140 Years of a habit called “The Hindu”!

On the 20th of September, the very popular newspaper from the South – The Hindu completed 140 years since its first issue! In these “cash out and exit” times, one cannot but acknowledge and revere the newspaper for 140 years of sustenance and survival. For those from South India in general and Tamil Nadu in particular and for those who were born in the pre-liberalisation era, The Hindu is not just a newspaper but a habit!

I presently live in Mumbai and I don’t read The Hindu daily these days and my Hindu reading is limited to when I travel to Tamil Nadu. On and off, I do get to read some interesting articles from The Hindu which land in one’s social media timelines!  This week, my memories flash back to my growing up days when reading The Hindu daily was a karma one performed religiously.

I probably started reading The Hindu newspaper when I was in class 2 or 3. Initially it was just the last page which was the Sports section where one would catch up on the previous day’s action mainly of Cricket and later Tennis! I have vivid memories of writer Rajan Bala’s lucid writing on some of the test matches accompanied by some fantastic action pictures from the cricket field.  Once Rajan Bala moved on from The Hindu, the cricket column was taken over by R.Mohan. Both were extremely knowledgeable of the game and with their command over the Queen’s language, brought the nuances of the game in front of our eyes in the pre-TV era. The following day in the school, we used to discuss not just the game but also the style of writing and the language used. Such was the impact of the writing on us!

Gradually, we graduated from the last page sports columns to the first page political news and also the Sunday supplements. The Hindu those days had an impeccable reputation for being factual and accurate in News reporting. So much so, the joke those days was that even if a murder happens in broad day light right in front of its office at the Mount Road in Chennai and their reporters saw it with his/her own eyes, the news will get published only after the police FIR was filed and police confirmed that it was indeed a murder!

For many in Tamil Nadu, The Hindu was the teacher for the English language! The newspaper was seen as an ultimate authority on the language. One could hardly find a mistake in the spelling or the grammar those days. These days it is no more the case, I’m told. ‘Know your English’ – a weekly column which used to appear in the newspaper was extremely popular and as kids we used to read the same with immense interest and curiosity to discover unknown aspects of English!  If today, I am in a position to write this blog in half decent English, some credit certainly goes to The Hindu!

After being in the habit of reading The Hindu, whenever I used to travel outside Tamil Nadu and got to read other English newspapers, the difference used to be glaring! One, The Hindu those days was in the forefront of adopting technology, though from a very conservative and traditional ownership background. So the typesetting and page layoutting were top class. You will never find an article in the first page with “Continued in Page ….” line. I see this even today in papers like The Indian Express! The reproduction of photographs even in the B&W era was again of highest quality. Talking of adoption of technology, I clearly remember that The Hindu was the 1st to use “facsimile” technology to transmit and receive pictures from outside when reporting events outside of Chennai. Those pictures used to carry a line (received through facsimile technology!). That fax as a technology became very common place later is a different aspect altogether. When The Hindu adopted it, it was a pioneering effort.

As far as I remember, political reporting of The Hindu used to be pro-establishment. It never used to taken an antagonistic line. But, I reckon that this changed when N.Ram took over as the Editor. Ram as an individual is known to be unapologetically left leaned and since him taking over the reins, one can clearly say that the paper ceased to be neutral.

It was under Ram’s leadership that The Hindu broke one of the biggest corruption story of the country namely the “Bofors scandal” which broke the back of the Rajiv Gandhi government. Any pretensions of The Hindu being pro-establishment ceased after that. Somehow, for reasons not very clear, The Hindu didn’t pursue the Bofors story to its logical conclusion. In fact, journalist Chitra Subramaniam who was the architect of that story had to continue her expose in the Indian Express later!

When I moved to Bombay in the late 80’s, no filter coffee and not able to read the The Hindu every morning, meant serious withdrawal symptoms! The Hindu used to be available only with select newspaper vendors that too in select suburbs like Matunga! The day’s paper used to be available only by 4 pm. Initially for a few Sundays going to Matunga in the evening to have filter coffee and pick up the Sunday Edition of The Hindu was a routine that I did not miss. Slowly, one got weaned over this habit and started getting used to The Times Of India albeit very, very reluctantly!

Today, when I go to Tamil Nadu and pick up a copy of The Hindu to read, I do see it as a pale shadow of its former self! The language is no more engaging and the political reporting has clearly moved from being neutral to be clearly biased. And I notice that this is what many of my folks also felt.  Even those who were very loyal to The Hindu those days, talk of it with a tinge of irony!

Probably this is a sign of the times where not just The Hindu, but media in general have lost their moral compass and have started to pursue an agenda. Even amidst this, I do feel that The Hindu commands a sense of respectability among its peers. With Times of India invading into the South, The Hindu is no longer the dominant newspaper it used to be till the beginning of this decade. Still in these days of 140 characters of Twitter journalism, for The Hindu to chug along for 140 years, is no mean achievement. To the habit called The Hindu, here’s wishing another 140 years of a re-engineered future!

Postscript: While on the newspaper reading habit, please do read my humorous take –‘Paper Vandhaacha?’ (Read here) on how the newspaper is intertwined with the lives of a Tambrahm mama!

Pic Courtesy: The Indian Express!

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One upon a time, “the Nation wanted to know”!

The year was 2007. When in my erstwhile company we decided to go for a brand campaign on TV for the 1st time, being in the business of business and enterprise products, we had English News and Business channels in mind. Our original idea was to spend much of the budget on NDTV 24*7, then an established leader in the category and some money on CNN-IBN, a challenger. Our creative agency and its media buying arm strongly suggested to add to the media mix Times Now, an upstart which had gone on air a year ago in 2006. I was hesitant and my 1st question was “Who watched Times Now?” I was told that Times Now with its firebrand anchor and All in All Arnab Goswami had the fastest growing viewership. Over and above that were willing to give an excellent deal. I gave in and we decided to put some money on Times Now as well for the campaign. Till then I never used to watch Times Now and was basically an avid NDTV and at times CNN-IBN watcher. To catch up with the campaign on Times Now during prime time, I started watching Times Now on and off in end 2007, mainly due to work compulsion!

For most Indians though, their tryst with Arnab started probably a year later in November 2008 when the dastardly terrorist attack on Mumbai happened. With rival channels beaming the entire counter operation live much to the exasperation of those carrying out the operation, it was Indian News Channels’ worst face palm moment in history. Being head quartered in Mumbai unlike other English channels which beamed from NCR, Times Now could deploy the maximum resources during the 3 day non-stop coverage of the attacks on Mumbai and garner the most eye balls of eager citizens wanting to know what was going on. For Arnab and Times Now, the 26/11 Mumbai attacks did what the 1991 Gulf war did for CNN!

I reckon that during this period, Times Now  became a serious player on prime time and in fact started boasting of TRPs ahead of NDTV 24*7 and CNN-IBN. There was no looking back since. The heady days of UPA-II offered much opportunity for Arnab to take the Government to the cleaners with scam after scam. The CWG scam, the 2G scam, the mining scam and the “Anna movement” all came in handy for Arnab. From here on, it is my belief that he ceased to be a News anchor or a journalist and started morphing into being the very righteous and highly moralistic “vigilante” leader! And the Nation lapped him up!

At 9.00 pm every night, Arnab was no more reading news. He was not even anchoring a news show. He was actually giving his “Address to the Nation” to gullible Indians for few minutes followed by debates where participants were literally “pigeon holed” and harangued. Those not on his side were interrupted, insulted and were handed over sermons. He became the advocate, prosecutor and the judge every night.  But in all this, he was doing well for himself. Arnab became a brand. In fact, became larger than the channel itself. Times Now became an undisputed leader in its category. For the middle class English news watching public, he was a hero who could question and tear apart a politician on live TV without fear. They kept goading him with more TRPs and he became unstoppable. So much so, in 2014 during the election season, when Rahul Gandhi wanted to give an interview and the Congress party decided to go with NDTV and Barkha Dutt, Arnab challenged them with facts and figures and ensured that the only interview Rahul gave was “Frankly speaking with Arnab”. And we all know how much that interview contributed to the Rahul folklore on social media! In the same token, in the run up to the election, the only English Channel to which Narendra Modi gave an interview was Times Now for Arnab!

While being on top of the game and world, Arnab decided to leave Times Now and he started his own channel named Republic TV which went on air in May 2017.  Here again, he has continued his vigilante model – only that his vigilantism is being applied only against the opposition party! Republic TV continues to rake up scams supposedly pertaining to the UPA era and at times even of the Rajiv Gandhi era! The Bofors story keeps popping up, not surprising as the original Bofors story architect, Chitra Subramaniam is associated with the channel. With the channel being funded mainly by Rajeev Chandrasekhar who is now been given a Rajya Sabha ticket by the ruling BJP, Republic TV’s loyalty is no more a secret. It never was. But now even that translucent mask is off!

Arnab is today a metaphor for the aggressive, noisy, angry, rooting for nationalism type of journalism. And the success of Arnab has led to a spawning of Arnab Goswami wannabes in channel after channel! From Rahul Shivshankar to Navika Kumar to Bhupendra Chaubey to Rahul Kanwal to Gaurav Sawant to Anand Narasimhan we have a parade of angry men and women masquerading as news anchors in every channel!  And night after night one can see them howling at guests who for whatever reason choose to appear on their shows!

Similarly the success of Times Now and now the apparent popularity of Republic TV within a short span has led to every channel following the shouting match formula on prime time! Among channels, with the exception of NDTV 24*7 which has chosen to stay away from debates on prime time, there is hardly any product differentiation! In fact, Times Now seems very much a clone of RepublicTV in almost all aspects – the stories of the day, the editorial line they take, the boxed debates, the profile of guests, the doorstepping of reporters, the Arnab like anchors in Rahul Shivshankar (an Arnab protégé) and Navika Kumar and even in the harebrained hashtags they come up with every evening! No wonder Arun Shourie, known for his penchant for one liners, came up with the sobriquet of “North Korean channels” for both!

9 pm prime time news has been my every night fixation for years. Not anymore. I have stopped watching Republic TV.  Rarely do I watch Times Now. And more importantly, I just give a fleeting glance for not more than 5 minutes of even the other channels.  Results from unscientific polls conducted with my folks over WhatsApp reveal similar trends. That of die hard news consumers shunning Arnab and his ilk in particular and English news channels in general.  Now this trend is not reflecting on the viewership data at least for now. But then, methodology adopted for opinion polls and collecting viewership data in India are as unscientific as they can get and hence I treat them with the same contempt.

News today is more noise. And hence it is nothing but entertainment.  Soon news channels will fight for being classified under General Entertainment category. If a finger has to be pointed on one person for this degeneration of the News TV genre in India, it should be on Arnab Goswami. There was a time when the entire “Nation wanted to know” from Arnab. Every night. Not anymore.

Postscript:  Malayalis tend to pronounce “News Anchor” as “News Anger”! Time for the nation to follow Mallus on this one!!!

Nano – Tata’s and India’s miss!

Tucked in between the noisy and newsy headlines in India in the last week around Love Jihad, Rahul Gandhi’s religion, Ivanka Trump’s costumes in Hyderabad and other inanities, was a poignant news bit about the Nano car. Poignant, because it said that dealers have stopped placing new orders for the car and in the month of October, just a measly number of 57 cars were shipped. And this led to political jibes from Rahul Gandhi that the PM’s pet ‘Make in India’ project just died. He also tweeted that Rs. 33,000 crore of tax payer’s money and that too of Gujaratis’ turned into ash. Coming in the midst of a vitriolic election campaign in Gujarat, one can excuse politicians for spicing up their speeches without looking at the larger picture. The point is taking potshots at Nano’s failure is taking potshots at India. Failure of Nano is not just a failure of Ratan Tata or the Tatas but a blot on India.

Cut to year 2008, when Nano was first launched, it was the biggest story of India Inc. ever. When Ratan Tata initially announced that Tata Motors is working on a Rs. 1 lac (US$2500) car, it was met with excitement and skepticism in equal measure. So, finally when Tata did launch the car with a price tag of Rs. 1 lac, the world did look up and notice. Finally, here was a car which was conceived in India, designed and developed by Indians with indigenous technology and manufactured in India that broke all cost frontiers unimaginable by car manufacturers till then. Overnight, Ratan Tata was the toast of the nation.

Around the 2008-10 time period, whenever I met any foreigner from Japanese to Americans, our conversations invariably touched upon the Nano car and how this was pulled off. And those visiting India always wanted to see a Nano car on the road and take a picture in front of one. Selfies didn’t exist then! The Chairman of a well- known Indian group who drove a Camry, proudly told me that he was the first among to book a Nano in Mumbai and to get delivery as well. At that time, Nano was yet to be seen in big numbers in Mumbai. But on a visit to Colombo in 2011, Nano had already captured the “Budget Taxi” space there. Media was full of interviews of not just Ratan Tata but also of the R&D engineers who had designed the Nano.  Nano’s launch was the culmination of a series of stories in which India Inc. was part of then. It was believed that Nano would be a live case study for C.K. Prahalad’s “Fortune at the bottom of the pyramid” theory!

That was not be and the excitement around Nano soon started tapering. Unfortunate incidents of the Nano going up on flames on the road didn’t help at all. For a product which was expected to expand the car market by 65% or so, the sales was plateauing around 70,000 Units a year for 2-3 years before nose diving to what is a few hundred cars this year. The failure of the Nano car must be one of the most analyzed and discussed case study in B- Schools, I reckon. Most of what I have been reading, attribute its failure to the “positioning” of the car as the world’s cheapest car in the beginning.  The Quality failures adding “fuel to the fire”. Attempts to re-position the car as a “Cool Urban car”,… didn’t help either. I have a different view on the reasons for the failure of the Nano car. But will keep that for another blog.

In business, they say there is no room for emotions and decisions need to be taken based on just commercial considerations. The ousted Chairman of the Tata Group, Cyrus Mistry recently said that during his time it was decided to pull the plug on Nano as it didn’t make commercial sense, after attempts to revive the project failed.  As of now it hasn’t happened. The current Chairman Chandrasekhar has been more considerate, probably towing Ratan Tata’s emotional line. He has said that there is a need to take a more “holistic” view on the Nano project. And I tend to agree.

Nano was not a Tata story. It was and is an India story. Ergo, failure of Nano in a way is an indictment on the capability and potential of Indians. And as somebody said, “Nano was not an Idea. It was an ideology!” Ideas can fail. Ideologies need to linger! The failure of Nano soon opened up to “We told you so” and how can Indians pull it off” jibes. For a 3rd largest economy (GDP-PPP) in the world, India is yet to throw up globally renowned home ground brands. So far, it’s been the soft power brands like Ayurveda, Yoga, IIT and the likes which have been torch bearers for India globally. Let’s keep aside the Software brands like Infosys, Wipro,… aside for the time being. In one of my very early blogs (read here) on different styles of management, I had opined that for the world to recognise, acknowledge and adopt the “Indian style of Management”, we need stories of successful Indian companies and brands. Just like how the world adopted the American way or Japanese style when their companies were successful. And that opens the door for Indian companies, Indian products and we Indians in the global arena. Nano was uniquely positioned to be the 1st homegrown successful Indian product brand. There was an opportunity for India Inc. to have “arrived” in style. Not just that. Success of the Nano would have led to similar pushing of cost and design frontiers by other Indian companies in many other product categories. It would have opened the floodgates for Indian CEOs to apply the “frugal innovation” concept in other products. Hence my fervent hope that Nano should succeed.

So, when it failed as it has now, it has pushed back the India Inc. story by few years till we stumble upon the next Big Idea. In the meantime, Nano I believe, is slated to make a comeback in an electric avatar.  Will this avatar help Nano to claim the position of “the common man’s car” in Indian market that Ratan Tata originally envisioned 9 years ago? The world in no longer watching it with the same excitement of 2008. Away from the arc lights, the original billion dollar opportunity still beckons!

A quote alluded to Ratan Tata says, “I don’t believe in taking right decisions. I take decisions and make them right!” Nano might have been a glaring exception to this. For Ratan Tata’s sake, Nano-II should set the record straight. For India’s sake too.

A BMW formula for Indigo!!!

Earlier this week, a video clip of 2 staff members of Indigo Airlines manhandling a hapless passenger on the tarmac made news headlines and occupied Prime time news in India. As expected, the clip also went mega viral on social media quickly. Since then, there has been no end to various jokes and memes, all at the expense of Indigo Airlines.  Even the usually reticent Air India joined the party with their ads trolling Indigo for their high “handedness”! An ad on behalf of Jet Airways floated too which later was disowned by Jet Airways themselves as fake. In short, it was Indigo’s unfortunate “United” moment!

The response of Indigo to this incident which apparently happened in the mid of October seemed bewildering. They had sacked the employee who had shot the incident and probably released to the media. The media portrayed this as Indigo being vindictive of a whistle-blower! To be fair, they tendered a public apology to the wronged passenger. And submitted a detailed letter to the Minister of Civil Aviation giving their side of the story. The letter indicated the reasons as to why the two employees who were involved in the manhandling incident were let off with warning while the so called whistle-blower was sacked.  However, by this time the damage had already been done!  Whether this incident and the bad mouthing that followed will make passengers re-think about flying with Indigo is a moot question.  Flyers being fare conscious may still fly Indigo if their fares are lower than others.  But, everything being same, one may tend to tick another airline at least in the short run. So, the pressure will be on Indigo to keep their prices down all the time particularly with the year-end peak holiday season coming up.

I have been a fan of Indigo’s marketing for a while now. Their marketing messages have been crisp, humourous and quite creative. For a company which had a well-crafted, clean image thus far, this incident has lent a heavy blow.  Having said that, this can happen to any professionally run organization in any line of business. Companies, particularly in the service delivery business, do spend man hours in imparting training to employees to develop their soft skills. Still, a bad product or a bad mood or a moment of indiscretion of an employee on a wrong day can spoil the carefully cultivated image of a company.  Here’s where companies need to have a clearly laid out “Recovery” strategy whereby you not just contain the damage but also look to benefit from a bad episode.  A Recovery model which follows what I call as the “BMW” formula. Nothing to do with the brand BMW but meaning “Be repentant, Make Amends quickly and Wow the customer!

Let me narrate a recent example of my good friend Adinarayanan’s experience with ID Fresh Foods, a company which is a case study in itself for a successful startup in India these days. Adi purchased a packet of ID Parota and to his surprise found only 4 pieces instead of 5 as mentioned in the packaging.  He reported this to the company thro e-mail on the customer care id mentioned in the packaging. Within 2 hours, he got a response over e-mail, where they acknowledged the problem, apologized for it and assured resolution of the same.  And within a day or two, he indeed received a fresh packet of Parotas. The story didn’t end there. Along with this, he also received a packet each of other products of Id Foods!!!  So, my friend more than being just satisfied with the company’s gesture of making good his complaint, was now delighted. He wrote about this in a detailed post on Facebook (by which I came to know) which must have been seen my many of his friends as well!  Since he tagged ID Foods in this post, the post would have reached more than just his FB friends!  ID Foods also ended up doing a small publicity for their other SKUs by this gesture. Many birds with one stone! Not to mention of this narration in this blog post!

If you analyse this, ID foods followed the “BMW” model quite diligently. They responded with an apology, didn’t try to be defensive and hence were “Being repentant”. By sending a fresh product and that too within 2 days, they quickly Made amends. And finally by sending a packet of their other products, they Wowed the once disgruntled customer.

Going back to the Indigo episode, Indigo stopped with Being repentant. They didn’t attempt to Make Amends, forget trying to Wow the customer. As soon as the company learnt of this episode, its President Mr. Aditya Ghosh admittedly called and apologised to the passenger. Great gesture of Being Repentant. Now imagine if they had sent the staff who manhandled along with a senior manager to the passenger’s residence with a bouquet of flowers and a Sorry card. And for safety sake, got this video graphed. And imagine further what would have happened if the irate passenger gets a free travel voucher from Indigo the next day delivered at his residence?

Following the whole BMW Recovery formula would have costed less than Rs.5000 to Indigo but would have earned them an elated customer who probably would talk about what the Airline did later rather than the original manhandling.  Now in spite of all this, the original clip would have still been leaked to the media and would have still created havoc. But having followed the BMW formula religiously, I believe the damage would have been much less. The company in response can also use the same social media to release the clip of their visit to the passenger’s house to mollify him.

Having a well laid out BMW formula where the employees are empowered to take suitable calls I believe, is critical to handle unfortunate bad experiences of customers.  In this whole Indigo episode, lies another important lesson for companies – “To have satisfied customers, have satisfied employees first.”

Postscript: The topic of “having a recovery strategy” is also one which usually falls under “What they still don’t teach you in Harvard (any) Business School!” However, I clearly remember our marketing professor Mr. Tarun Gupta painstakingly talking about this while covering ‘Services Marketing” which till this day echoes in my mind. TG who is revered as a Marketing Guru in Pharma circles with a trail blazing career in companies like Glaxo, Ranbaxy,… passed away on the 31st October at the age of 78. This post is my humble tribute to him. May his soul Rest in Peace.

Pic Courtesy: Amul 

“Turmoil” Nadu needs a Naidu!!!

The once prodigious state of Tamil Nadu (TN) has in the past few weeks earned a pitiable sobriquet of “Turmoil Nadu” and not without reason.  The state has been in a state of incapacitation ever since it’s Ex- Chief Minister the late Jayalalitha, was herself bed ridden for multiple health problems around the same time, last year. From then on, TN has been limping from one crisis to another. If it was uncertainty over Jayalalitha’s survival for few months since September, it was the crisis of her death in December for few weeks followed by the now done and dusted Jallikattu controversy in January.

When one thought that “Thai piranthaal Vazhi Pirakkum”, it is was the “Amma” of all leadership wrangles which ensued, resulting in the unceremonious exit of O. Panneer Selvam (OPS) as Chief Minister. The subsequent sentencing of Sasikala, the 24*7 resort drama that followed and the many heart to heart discussions various leaders had with the soul of Jayalalitha at her Samadhi consumed the state for few more weeks till Edapadi Pazhanisamy (EPS) was installed as Chief Minister. When one thought that the worst for the state was over, then came the cancellation of the bye election in R.K. Nagar constituency following brazen distribution of cash even at the peak of Demonetisation!

For political parties, fishing in troubled waters comes easily. BJP at the centre has been no exception in fishing in TN’s muddled waters. With the spectre of a drought looming large, this fishing expeditions so far have not yielded much results. Yet, it has not stopped the BJP from trying. Throwing the hat into the circus ring or rather posturing to throw have been two ageing star actors – Rajinikanth and Kamal Haasan, who of late have found the voice to raise against the not so new ills of TN. As I write this, it is yet uncertain if these will remain dress rehearsals sans a final stage performance! In the meantime, there has been coming together of the OPS & EPS camps while isolating the Mannargudi camp which has been camping in one of the resorts in Pondichery. Or may be Coorg. Or is it Kerala?  With the judiciary intervening almost on a daily basis on conducting a floor test, on disqualification of the defectors and generally everything, one can be certain that the state is in Coma and governance in suspended animation!

The Tamil Nadu I grew up was never like this. Even today, in spite of the lack of any meaningful governance, the state does still rank high on many social indices. But this is living in past glory and milking the once healthy cow.  The seeds for today’s rot have been systematically sown by the two Dravida parties who have been ruling the state alternatively since the death of MGR. To be fair, till the beginning of this century, things were not bad.  Almost ten years ago, a foreign visitor after visiting few states like Maharashtra, Karnataka, UP, the then AP, and in the end TN asked me why things were looking better in TN compared to the other states. And like all Indians who never say “I don’t know” to any subject on the earth, I gave my own theory. Which was that TN was the only state where the economy was quite balanced between Agriculture (Rice), Manufacturing (Auto, Textiles and small machinery) and Services (SW). Unlike other states even when growing well, the growth was not balanced between the sectors and hence created its own problems. For example, Karnataka had a high share of Services and less of Manufacturing while Punjab had a high share of Agri and Industry but less of Services. But if I look at the statistics today, this is indeed the case for TN and this has certainly ensured a very equitable growth in the state and no other state comes close to this balance.

Again, what TN is today is a result of some far-sighted thinking in the 70’s and 80’s by the then Governments. In the last decade or so, the state has been drifting away. While TN has been sleeping and slipping, the other states have been catching up. And this catching up has happened mainly due to some strong political leadership in each of these states. The neigbouring state of Andhra Pradesh ever since its bifurcation has seen some frenzied action. Both Telangana and Andhra Pradesh are fiercely competing today to garner investments. And in the age of competitive federalism, one state’s gain is another state’s loss. When Kia Motors (a subsidiary of Hyundai Motors) decided to set up a new manufacturing facility they opted for Penukonda (Anantapur) in Andhra Pradesh. It is heard that the Chief Minster Chandrababu Naidu took personal effort in bagging the project for his state and ensuring painless and swift land acquisition. In his weekly Swaminomics column, Swaminathan Aiyar once hailed the AP model of land acquisition for developing the capital city of Amaravati as an ideal model for other states to follow. He wrote that “Other states must study Naidu’s example, and adapt pooling for their own use.”

In Telangana, K.T.Rama Rao, its IT minister and son of the Chief Minister, has been in the forefront of attracting investments in the IT sector. In my own resident state Maharashtra, the young and dynamic Chief Minister Devendra Fadnavis is focused on making Maharashtra the most sought after destination for manufacturing again. And he already has a few early wins. Among his other plans are big bang infrastructure projects like Mumbai – Nagpur Express way,… In Rajasthan, its Chief Minister Vasundara Raje has been the flag bearer for labour reforms for the entire country.

In the midst of such action, what has been TN up to?  Plunged in a serious leadership crisis ever since Jayalalitha went to jail in 2014, TN has been just a torch-bearer for sycophancy saddled between MGR/Amma anachronisms on the one hand and OPS/EPS/TTV acronyms on the other. So, for “Turmoil” Nadu to regain its past glory and become a “Thalai” Nadu once again, its needs a Naidu like leader! ASAP. No, as of yesterday!  Do you have any picks? I have none at the moment.

Cartoon courtesy: Surendran/The Hindu

Demonetisation and it’s after”math”!!!

Ever since the RBI released its Annual report 2 weeks ago, Demonitisation (DeMo) is back in the news. And with its eminent Ex-Governor Raghuram Rajan now in India to promote his book, DeMo continues to hog the headlines and Op-Ed pages. The analysis of DeMo swing from scathing criticism of being a “big mistake” by the likes of Ex-Economic Advisor Kaushik Basu to calling it a “huge success and a course correction” by the likes of Gurumurthy, the veteran commentator on public affairs. So, as it happens in most issues these days, “for every spin there is an equally effective and opposite counter spin”! And where you stand on an issue depends on where you stand on the ideological divide.  On social media, it was a hashtag war between #DeMomenisationsuccess and #DeMonetisationfailure!

Ten months on, based on all the data available (99% of DeMo notes coming back to the banks) it seems that DeMo has not helped in sucking out the black money. In retrospection, I wonder how the government expected anybody in India to give up their prized possession (currency notes in this context) at all in the first place. In my own experience, when coming out with marketing promotion programs for the trade, we usually take twice the time for foolproofing the program compared to conceiving the program itself. This is from the wisdom of previous programs over the years where, we found that the Indian brain works over time always to find loop holes/gaps in any program announced. So, in a sales promotion program for example the trade will end up earning the incentives while you never achieve the increased sales objectives!

This is what happened in DeMo as well. If you remember, the day DeMo was announced, the chattering class’ verdict on WhatsApp group and dining area discussions was that it was a “Master stroke”! While the middle class and upper middle class folks who didn’t have unaccounted cash had to just find ways of beating the lines to exchange their notes, the ones who had, started cranking their brains. The result was the everyday tweaking of the rules and adding more terms and conditions for currency conversion. The then Economic Affairs Secretary Saktikanda Das became a celebrity overnight, thanks to his daily media briefings on what else – change in rules!

By now, it is clear that notwithstanding the anti-DeMo commentary of economists, there was overarching, tacit support for the DeMo move from common public. Inspite of loss of business for traders, loss of jobs for casual workers and loss of income for farmers the Note Bandi didn’t evoke much unfavourable mood towards the BJP so far. I am not sure if it will, from now on. What explains this paradox?

Many of the commentators have alluded to the human trait of Schadenfreude to explain this. That the poor were happy because this was one move which affected the rich and privileged and that the Prime Minister Modi had the guts to do so. This is a good possibility. But there could be more to this as well.  Within days of the DeMo announcement, the initial despair among people who were caught unawares with a lot of unaccounted cash turned into a relief, when they found ways and means to deposit the same into the bank. Among many ingenious ways, one was to tap into their own staff and workers to distribute the cash and get them deposited into their bank accounts. A report said that by Dec, the deposits in Jan Dhan Accounts peaked to Rs.74,609 crore! As of Sep, it was just 4,273 crore! The number of Jan Dhan accounts itself went up 5 times in this period!  My guess is that, in this process of conversion through the conduit of using others’ accounts, there must have been a cost.  The government must have lost an opportunity to earn taxes on the unaccounted income but those who had a lot of unaccounted cash ended up incurring a “conversion tax”! And I am certain that those who were witness to the rich incurring this tax felt certainly happy that DeMo was an equalizer of sorts. And not just being a witness, there would have been many who would have benefited from the sudden largesse of their masters as well and got their share of the “conversion tax”. So, instead of the government collecting taxes from the haves and distributing to have-nots by way of welfare measures did DeMo make it as a Direct Benefit transfer from the rich to the poor without the government in between?  Probably.

It’s evident now that the DeMo move has been a rocking political success for the government. On the economic front, though the objective of sucking up the black money has not been achieved directly, certain fringe benefits have accrued. Like reduction in cash circulation, increase in Digital transactions, and increase in bank deposits,…  These may leave the country in good stead in the future.  In the short-term however, the country skipped its GDP beat.

So when one does the after”math” of DeMo, it may well be like the popular “Elephant and the Blind men” story. For some, it’s a failure. For some, it’s a success. For some, it’s a partial success and for some it could be a partial failure. I would like to go with Rajan’s assessment that the short-term economic losses far outweighed the long-term benefits.  In hindsight, one is always wise. Other times – otherwise!

Our Tryst with GST* – * Conditions apply!!!

GST – The Good and Simple Tax, as our acronym lover PM touted during the launch on 30th June is finally a reality after almost 11 years of intense labour. This along with FDI in retail must count among the most awaited reforms in India by India observers.

So, the advent of a single tax which subsumes, at last count, some 17 different taxes and myriad cesses certainly must count as the single largest Tax reform undertaken in India. Not to forget the application of tax only on value added in the chain. Along with this simplification, the fact that goods from one state can pass thro different states without wait, harassment and accompanying corruption portend a new beginning for trade in our country. In the pre-GST era, logistics and warehousing strategy of companies have been dictated by tax compliance rather than supply chain considerations. In the sense, the number of warehouses and their size would be driven by billing point concerns rather than geographical spread of demand. In the GST era, warehousing will depend on supply and demand equations and not taxation points. And hence like in most developed countries, companies will get to run larger, integrated and fewer of warehouses. Development of more efficient logistics hubs, warehouse consolidation and ensuing FDI will become a reality soon. This is a new dawn for retail, supply chain and logistics industry.

So with all the seemingly obvious benefits of the GST regime, why is it that there is still some cynicism and negativity from different quarters about the move? Why is P. Chidambaram once the prime mover of GST when UPA was in power, cautioning all of us to “Get Set for Turbulence”? The GST in the current form is nowhere close to the one which was originally conceived. Rolling stones probably gather no moss. But a rolling GST gathered whole lot of moss on its way from the wisdom of empowered committees to standing committees to GST council. The current version of GST is a product of what I call “co-operative federal bullying”. The result is instead of the One Nation, One Market, One Tax premise, what we have is One Nation, One Market, One Tax name, 3 Sub Tax names, Multiple Rates, Few Exceptions, Some flexibilities and with an *. * – Conditions apply.

Being part of the GST council, the states in their own wisdom, ensured that we as a country don’t get away with a simplistic tax which may throw many Chartered Accountants out of jobs. However, I understand that without having a set of different GST rates (in some cases different rates for the same category as per user segments) or without excluding items like Petrol, Alcohol, Real estate,.. consensus could never have been built in getting GST off the ground. UPA’s failure to make GST a reality during their regime stems from this. So the choice before the centre was to accept what the states demand and bring about a not so ideal GST or wait endlessly for a few more years may be decades before some major economic crisis forces all concerned to come to an agreement on the ideal GST. From that point of view I agree with the stand taken by the Govt. to bring in GST in its present form with its shortcomings, with a hope of ringing in the changes in the coming years. Kudos are in order hence.

The Congress party which at every opportunity reminded us that the seeds for GST in India were sown by the UPA, however, chose to be petulance personified and boycotted the GST launch. While rubbishing the GST in its present form its main “anGST” against GST was that it is being rushed thro and should be delayed by 3 months till September. We all in India know that in our country whatever may be the preparatory time available, things get accomplished at the last minute. If we get more time, we stretch our deadlines accordingly. That if we have more time, we will be more prepared and can do trial runs before actual roll out,.. exists only in theory. Don’t we see in our Indian weddings, folks tying up some loose ends literally till the baraat arrives and continue to do so as the wedding is in progress?  Finally when the wedding gets over, its smiles all over.  So even after the GST roll out, there will be glitches, teething problems and surprises which I am sure we will find ways and means of getting over. Pushing back by another 3 months is not going to make things any different.

It must be commended that this Govt. stuck to the date of July 1. It would have been very easy for the PM and the Govt. to throw in the towel and put off the launch by a few months. But then, there are other implications. Come Oct. it is the peak festival and hence business season in India. Does It help if the roll out happens when India is in the midst of its biggest Annual economic cycle? Will it help if GST is launched in Jan. in the final quarter of the fiscal year???

The ruling party, the BJP counts traders as its important traditional support base for the party. That the party still decided to go ahead with the tax reform which professes maximum disruptions for this group is a significantly courageous move.  In India economic reforms have always been carried out under duress; when push comes to shove. The heralding of GST must be the 1st major economic reform brought in when not under any kind of stress but just to ease up things for the future. This certainly conjures up the arrival of Acche Din for our country.

Still our penchant for complicating things comes to the fore here as well.  Though the GST collections have to be shared between the state and the centre, could it not have been done at the back using technology rather than coming up with 3 variants like SGST, CGST and IGST??? Does the Anti-profiteering clause make sense? Will not competitive economics eventually drive pricing??

GST is indeed a Good and Simple Tax. So there is nothing like a good or better time to introduce the same. But, we should not forget that this is India and we are Indians. So, conditions apply.