For more Olympic medals, need more Raghuram Rajans!

As I write this piece, the situation is slightly better. Only slightly. A tally of 2 medals – one Silver and one Bronze at the Rio Olympics for India. Just a couple of days ago, as a country it was all despair.  We were staring at a situation of returning empty handed and that was something for a proud and populous country like ours – ‘bilkul Shoba nahin deta’. The usual diatribes ensued. – “A country of 1.3 billion and just 1.3 medals!” “As long as we laud Cricket and applaud only Cricketers, there’s no hope for Olympic sports!” “So long as we keep praying for Engineers and Doctors in maternity wards, athletes will be hard to come by!” “As long as sports administration is in the hands of politicians, there is no chance for medals.” So on and so forth.  And these are nothing new. Every time our contingent returns with a modest performance it’s usually a repeat of the above template outrage.

Our rather modest performance in sports events historically could indeed be due to one or combination or all of the above causes. But I do believe there’s one more important bullet.  And that is the size and state of the economy. As we speak, USA is at the head of the medals table at Rio Olympics followed by Great Britain and then China. In terms of GDP, USA is at No. 1, EU of which Great Britain is a part as of now is at No. 2 followed by China. Russia which is at No. 4 has been a past economic super power.  The medals table at London Olympics looked almost similar.

olympics , gdp

China which has been at the 11th rank in terms of medal tally at the 1988 Seoul Olympics, has been at No.3 or better since 2000. Around the same time when China was deemed to have shrugged off the developing country tag and took guard as an economic powerhouse.

By this logic, we have hope. One would have thought that our good performance at the London Olympics in 2012 would be the tipping point as a country in so far as Olympic performance is concerned. However it seems that’s not to be. Drawing a parallel, doesn’t our economic performance mirror this?  A country which was on fire around 2011/Mid 2012 and gradually sort of lost its way and now seems to be on the recovery path once again.

While I am trying to draw a parallel here between the state of the economy and our sports performance, it could be just a coincidence.  But where I am coming from is, for a country to excel in sports and be at the top 10 of the medals table, it should be doing well economically.

Excelling in sports is today an expensive affair. It is not enough to have strong willed, talented and focused individuals. It calls for financial resources to be poured on infrastructure, training, coaches, equipment and the like.  And in a country like in India not just in cities but in fledgling towns as well which are now throwing up talent like never before. We keep hearing tales of talented girls stopping coaching sessions because of ill equipped toilets. Or those who give up when they cannot afford to spend money on professional coaches or facilities. And those who still cross all these hurdles and arrive at the National scene – need to be exposed at International levels for which you need to invest on foreign coaches or send them abroad for training for longer stints all which costs a lot of money that too when you need to do this not for 1 or 2 but 100’s of individuals.

An Abhinav Bindra did not have the need to fall upon the state or other sponsors to chase his Olympic dream. He was more than financially sound to acquire for himself the ecosystem required to win an Olympic Gold. But then all are not Abhinav Bindras. Ergo, you need the support of the state or private sponsors to adopt potential medal winners and provide all the support required without counting the last paisa.  Even for a noble movement like Olympic Gold Quest (OGQ) spearheaded by champs like Geet Sethi, V. Anand, Leander Paes, Padukone Senior,.. with a clearly stated mission “To Support Indian athletes in winning Olympic Gold Medals” the biggest challenge is to raise funds to achieve their mission. A fledgling economy doesn’t count the last rupee to sponsor a Sakshi’s stint abroad or a Narsingh’s 24*7 nutritionist. A struggling economy on the other hand will be hard pressed to focus on other priorities.

In much of our or water cooler or these days WhatsApp discourses, parents who think that their wards are better of chasing an Engineering / Medical dream than that of sports are at the receiving end. I do believe that in general, parents think of only the well-being of their kids. So if they do feel that a career in athletics is not remunerative enough to have a decent life, they can’t be blamed.  However this can change and it is changing. Olympic sports unlike in the past have started getting the attention from corporates who are willing to support athletes for a longer period of time. And just as we saw a few days back the bronze medal winner from HaryanaSakshi Malik is already a dollar millionaire based on the many announcements we heard. This kind of commitments are possible for both the Government and private players if their coffers are growing with tax collections and profits respectively.

So as a country as we transition ourselves from a “developing” country to a “developed” country in the next couple of decades our economy will be in a better position to afford to support the needs of churning out Olympic champions.  So we are back to Bill Clinton’s 1992 campaign theme – “it’s the Economy, stupid” here as well. Our country has to continue to grow as an economy, lift millions of people out of poverty, collect a lot of taxes which will help pour money on giving birth to Olympic champions. So, for more Olympic medals, we need more Raghuram Rajans to help steer the economy on a continued growth path 🙂 🙂

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Long lasting Budget Wishlist!!!

Tomorrow, on the 29th Feb 2016 as the finance minister “rises to present the budget of the Union for the year 2016-17”, he also raises a lot of hopes. In the media in India in the past 1 week or so, it’s been raining wishlists from the budget. As an Aam Admi, I also got tempted to join the bandwagon to submit my own wishlist though I know very well that it’s too late to incorporate even one from this (Wait a minute, may be one can be). But I still go ahead and here’s my list of 10 things which I would like to see change around the budget atleast in my life time.

Here we go:

  1. First up, do away with this archaic “Halwa ceremony” where the FM participates to prepare Halwa in the North Block office along with the staff who are going to be holed up for few weeks in isolation running upto the budget. What’s this Halwa got to do with the budget making? On the other hand, “Halwa Kudukarathu” (Giving Halwa) in Tamil is a euphemism for taking one for a solid ride😁😁! So unless the Govt. actually meant this only every year, they should stop this. And what’s this FM and team posing every year stirring up the Halwa😩
  2. On the day of the Budget, one familiar sight every year you can’t escape is the FM posing with a shining new “Brown Brief case” just as he enters the parliament. To me this brief case symbolizes extreme colonialism which we find it difficult to shrug off. In British parliament also same thing happens to date. (For more on the history of the “Budget Bag” pls click here).  For a country, which boasts itself as an IT behemoth and all that jazz why can’t the FM just walk in with a high capacity pen drive or a lap top instead of this antiquated brief case??? Won’t that be cool?

Budget pic3. And as the FM reads the budget speech, it’s usually from a huge bound document supported by a wooden stand crammed with facts and figures. How will it be if the same is presented as a power point presentation – with slides to the point with graphics? (something we could see in this year’s Economic Survey presented by Arvind Subramanian and team)

4. I don’t know when or who started this trend of sprinkling budget speeches with Shayari??? I do know that FMs like Manmohan Singh, Yashwant Sinha and now Arun Jaitley (Not to mention P.Chidambaram and his Thirukural couplets) get into shayar mode in the course of the budget speech but with limited effect. While it’s good to keep the speech which tends to get boring interspersed with some couplets, poetry,… more often than not it looks thrust upon and not in a flow. As if the British left that also as a rule! Some good self-deprecating humour could be a better option!

5. What is this thumping of the desks by the treasury benches for every outlay announced? It’s now obvious that outlay in itself doesn’t mean anything. Before the FM starts reeling out budgetary allocations, I would like to see the FM starting with the “Outcomes” from the outlays of the top 20 items in the previous year and explain how it benefited the people at large. That will give us some idea as how “our” money has been utilized and for the Govt. an opportunity to boast their report card. This can be followed by the outlays for the next year with clearly expected outcomes from the same.

6. And what is this “ranking” business the media resorts to by the Industry captains immediately after the budget? We have now seen that the devil is in the detailed explanations that surface later. So any ranking without understanding the fuller provisions according to me is an exercise dipped in frivolity.

7. And when is the last time you have seen industry captains giving a thumbs down to the budget?? It is generally a mega thumbs up or atleast a thumbs up with conditions attached. The feedback is always ‘right” and seldom “honest”. So why get into reactions from the Industry which are any way far removed from honesty?

8. Any why do the pink channels get excited and scream about the way the Stock market reacts to the budget?? We have now seen many times in the past that the Stock Market reaction to the budget is knee jerk and not borne out of any proper analysis of the after effects of budget proposals.

9. And why do the pink papers – The Economic Times in particular come out with a blockbuster issue the next day of the budget with the full budget speech and the myriad annexures??? Just upload on the net and leave it to the discerned to access if they need. Saving trees and the environment can just start here!

10. And finally, instead of the FM just making a once a year marathon appearance why not present a review of the budget and the progress made on outlays once every Qtr.? This will help us understand which ministries are performing and will aid PM to separate the wheat from the chaff!

I admit that my wishlist is more on the “method” and not on “matter” and “form” rather than “content”. One of my earlier posts (read here) delved on that a bit. Hopefully we get to hear something sweet in the leap year budget speech tomorrow which will leapfrog our economy. And are not dished out the greasy “Halwa” we Tamilians abhor.

Waking up “Make In India”!!!

In a week from now, Mumbai will host the “Make in India Week” – an event planned to give fillip to one of Modi Sarkar’s flagship program – Make In India. This was aimed at reviving the interest of domestic and MNCs in setting up/expanding manufacturing footprint in India – a sure shot elixir to tackle the unemployment malady and create millions of jobs. When this Govt. kicked off this initiative, one would have expected more cheers than jeers. However the reality was different. Leaving aside the noises from the opposition which anyway criticizes what the ruling Govt. does in India (this is irrespective of who is in power and who is in opposition), the naysayers included reputed economists and thinkers. They were of the view that it was too late for India to board the “Manufacturing” bus. China is already in the driver’s seat being the “factory for the world” and global companies are already heavily invested in China. Also the general view that with increasing automation in the shop floor, you don’t need much of low cost labour for manufacturing. So betting on manufacturing to generate millions of jobs may not be a cool idea any more. The session during the recently concluded World Economic Forum in Davos about “The Fourth Industrial Revolution” powered by Connected devices, 3D printers, Super Smart Robots and the like,… probably put paid to this idea of the critics. So instead of playing the catch up, the cynics’ view was that India should play to its strengths namely “Services” and invest further in developing soft skills to scale up further.

There is probably merit in this argument. However if one analyses the different states of India in terms of the economic condition it is clear that no state can hope to survive and grow by just focusing on services. For a diverse country like India with a huge disparity in income and social strata an even economic growth can be achieved only with a mix of manufacturing, services and agricultural activities. The top states in terms of GDP in India like Maharashtra, Tamil Nadu,.. have a very healthy mix as I noted in one of my earlier posts on “Car manufacturing” in Chennai (Read here). A fourth Industrial Revolution may augur well for developed countries with shrinking population, ever rising wages and diminishing demographic dividend but in India we still need to reap the benefits of the 2nd and 3rd.

So I think that this Govt. is right in pursuing the Make In India initiative particularly at a time when China is facing economic headwinds. The labour in China can no longer be termed cheap with wages ever-increasing to keep pace with the aspirations of the people. Many of the global corporations do not want to put all eggs in one basket that too Made in China😁😁. I know for sure that the Japanese are expanding into Vietnam in a big way for production. So could be other countries like the US, Germany,…,.. soon. So the moot question is are we positioned well to make them Make In India??

logo 2

As the logo of India’s Make In India program demonstrates, there are many cogs in the wheel for a country to be successful in manufacturing that too for the world. Cheap and Skilled labour, Vendor base, Access to cheap raw material, Quality awareness, Access to ports and logistic hubs (particularly for exports), flexible labour laws, Ease of doing business (which applies not just for mfg.) and above all a very efficient infrastructure (Roads, airports, ports, broadband connectivity,..,…) in short a “pro manufacturing eco system”. And for India while all the other cogs could fall in place over time, the biggest challenge is in infrastructure. One would argue that the eco system will be in place when growth picks up and factories are set up. Necessity is the mother of everything you know. For example wasn’t Gurgaon just a “Gaon” before Maruti?? Today it is a recognized Auto mfg. hub. Similarly there are many examples of PSU Units which were set up first which then turned out to be manufacturing hubs in course of time. Goes the argument. No argument can be more specious than this. Maruti was set up at a time when India was a protectionist state where the promoters (in this case the Govt. of India) can patiently wait for more than 10 years for the 1st car to roll out! Same is the case with many PSU units where the overarching mission was upliftment of the society rather than shareholder value or profits! Not in these “QSQT” (Quarter Se Quarter Tak) days!!!😁😁 And in these days of strict WTO regime the Government cannot slap high duties on imported goods to protect the local manufacturers.

So for Make In India to succeed India needs to get the Eco system right first up. While India has a natural advantage in some aspects like availability of not just cheap labour but also skilled, large Engineering pool,.. the road is long for areas like “Ease of doing business” and Infrastructure as I mentioned before. And fortunately the Govt. has rightly recognized these challenges. Its’ for the 1st time that a Govt. website has spotlight on “Ease of Doing Business” like in the Make In India home page, I reckon. See here. It was a pleasant surprise to see the list of initiatives already taken and ones on the way when I clicked on “Ease of Business” tab. And it is also great to see every day in Newspaper one state or the other hosting Investor summits to lure potential investors with Make In India being an important aspect. So while pitching for investments is all right, I think the state Govts. must also focus on getting the infrastructure in place in their respective states which helps not just manufacturing but in general fosters economic activity. Today inspite of higher labour costs if many companies are still outsourcing mfg. to China it is because of their fantastic infrastructure overall which helps to keep indirect costs lower. India’s labour costs is lower but the indirect costs due to poor infrastructure weighs us down.

I think now the world is quite convinced on the intent of the Modi Sarkar to promote Make In India. Now the time has come to morph the intent to reality by focusing on Infrastructure for which the states have to work in tandem with the Centre. That’s what will wake up Make In India and not the raking up of intolerance debate every other morning😩

Make in IndiaToon courtesy: Satish Acharya

Jugaad Vs Anti-Jugaad!!!

In the last 2 weeks, 2 TV ads for different products by 2 different agencies but surprisingly around the same theme of Jugaad caught my attention.  One is for Sulekha.com and the other for Exide Life Insurance. Jugaad is India’s contribution to management theory or so it appears. That the word ‘Jugaad’ has a Wikipedia page attributed to it means, it “has” arrived. And I think it had arrived a decade ago. When we started seeing this term being bandied about in management lecture circuits and HBR articles in the context of a Rising India. Yes the same time when BRICS broke into investment strategy discussions around the globe. For the uninitiated, Jugaad is a colloquial Hindi/Punjabi word that can mean an innovative fix or a simple work-around, used for solutions that bend rules. (Courtesy: Wikipedia). One of the very popular examples of Jugaad which has been trumpeted about is the use of old run down washing machines as giant Lassi makers in dhabas of Punjab😤

So what was new in Jugaad?? The concept of Jugaad I believe emanated from the Indian psyche of use first, then re-use, then repair and use and refuse (to throw i.e.). So when you have a problem in hand, as long as you can just do something and fix it and Chalaofy, its fine. These days for our kids, when their slipper snaps, Snapdeal delivers a new pair the next day. In our time, when a slipper gave way, a safety-pin first came to the rescue to pull along for few days. When that also failed, the cobbler under the nearby tree stretched the life of the slipper for few more days. So the immediate instinct was to do some Jugaad to get it going before we buy a new pair.

It was but natural that the word entered the workplace soon. At factories, warehouses, offices – if there was a problem the first attempt is to do some Jugaad and fix it. And in interviews – questions like “Are you a go getter?” gave way to “Are you a Jugaadu??”😜😜 A supposedly smart cookie who can think quickly and provide a cheap and quick fix for problems at work. So the underlying association for Jugaad was that the solution must be quick to implement, cheap and can be a short term compromise. Nobody expected a Jugaad to be a “perfect” solution.

Awesome-Shower-Jugaad

Now this runs antithesis to probably a Japanese way of thinking. In Japan, solutions are found after a lot of thinking (so not a quick fix), they need to be perfect (turn out to be expensive) and for the long-term.

So I guess the Jugaad instinct is all to do with the economic status of the country and its people. In countries like ours which is still aspiring to be a developed country, our priority is to have a fix. Not be a perfect fix. Need not be for long-term. But should be cheap and quick. While this approach has paved the way for eulogizing the concept of Jugaad as a means of “frugal innovation” in countries like India, it also has its shortcomings. As can be seen in our day today lives. For example in the way our municipality fixes potholes in roads. Just fill up quickly with metal and tar and level it only to do the same exercise again in a few months. A Jugaad solution can prove to be a long-term pain and an expensive proposition. In this context, I am uncomfortable with raising Jugaad to a global management technique and all that jazz.

Ergo, interestingly I notice that the same concept which till recently had a positive overtone is taking a negative innuendo. The liberalization and the Software boom have changed things and thinking. These days we deploy less Jugaad in our lives. And we it seems now need long-term, Quality solutions even if expensive. Now coming back to those 2 TV commercials. As can be seen in these 2 ads Jugaad has given way to Anti-Jugaad and the till now venerable Jugaadu is being loathed upon. In my last post “Writings on the walls” (Read here) I wrote about the aspirational India taking wings in the heartlands. I see this emergence of Anti-Jugaad as another instance of the emergence of Aspirational India where the expectations of people have morphed from being just satisfied to yearning for more.

So, are the days numbered for Jugaad in India? May be not. But the question is – As the country which popularised Jugaad is there a “Good Jugaad” which we can still retain and a “Bad Jugaad” which we will have to do away with?

Postscript: As I am typing this racing against the iPad’s battery life, is there a Jugaad for the iPad’s battery life??? Please call me😜😜

“Chinpressions” – Impressions from another of my China visit – Part 3!!!

It was about 3 years ago that I made my 1st visit to ChinaShanghai and wrote the 1st part of Chinpressions. Read here. In between that and my last visit this week, many more visits to China happened. Ergo, 3 years hence what are my impressions?

The visit this week coincided with Narendra Modi’s another foreign tour – this time to China. So obviously India was in the news. As is the wont these days in our PM’s abroad visits, he was in “Rock star” mode in China as well with local Chinese craving and crowding to take selfies with him. It’s obvious that in the last 1 year Modi has single handedly changed the perception of India for the better outside of India.

I had mentioned that in my last post that Shanghai was devoid of emerging market symptoms like touts at the airports,… I realized now that it’s not the case. There were the touts on arrival at the airport chasing you for taxi/hotels,… just that they were of the “suited and booted” types 😜 😜. Similarly I had the impression that Taxis were on meters always. Well, yes most of the times. But not always. This time much to our chagrin, we realized that beyond 10 p.m the cabbies were upto fleece passengers demanding 4 to 6 times the normal fare!!! While on cabbies, I couldn’t understand why the driver was always enclosed in a cubicle of sorts making it difficult to communicate with him/her even in sign language. (Trying to communicate in English is a horror left unsaid 😦 😦 )

For all the heavy duty infrastructure and the investment led growth strategy Chinese government has been adopting all these years with a fair degree of success, it is now clear that the growth is stuttering.  A 7% growth is being touted as the new normal. Print media is agog with articles questioning if the world’s 2nd largest economy is heading towards a protracted period of subdued growth.  China has now become the latest example to explain the Economics theory of the Middle Income Trap”

It’s clear that despite the pretensions of the Government taking China to being in the league of developed nations, it is still haunted by a few trappings of developing/underdeveloped countries. Which the people are yet to shrug off it appears.

  • Like the locals not caring about courtesy to others and smoking to glory in public washrooms.
  • Like the drivers continuing to smoke while driving in cars inspite of requesting them not to. (Blame the language)
  • Like invariably the noisy scenes you get to see in restaurants when Chinese get together to dine and drink. (Something like we Indians I must say).
  • Like the rounds of bargaining one has to do some times starting with 10% of the quoted price to purchase stuff mostly the imitations at the fake markets hawking branded stuff from I phones to watches to bags to clothes to everything. China’s tryst with IP regime may prove to be its Achilles heel sooner or later. Just couple of days ago while in China I read the news that top brands like Gucci were suing Alibaba the E-Com giant for sale of counterfeits through its marketplace.Like getting to see touts trying to sell I Phones at US$100 around to gullible passengers even inside the Shanghai’s Pudong airport terminal!!! I was surprised to see these guys inside the airports after the Check-in Area moving around looking for their customers!!! (This doesn’t happen in India even)
  • Like being amused to see empty chairs placed in sides of the road meant as parking lots. Something like placing the chair to reserve that lot. Reminded me of our Indian habit of placing towels/kerchiefs,.. in buses to block seats 🙂
  • Like for all the fascinating sights at “The Bund” at Shanghai (Clean, colourful, Hawker free,..,…) the urinals are still the old world style not seen even in towns in India these days.
  • Like finding grills in windows in residential apartments a la India type just that they were more uniform and still not spoiling the elevation of the building unlike in India where grills of all types and sizes spoil the frontage of most buildings.

Most of the above fall in line with the definition of “High Context Culture” as defined by Edward T. Hall in his seminal work – Beyond Culture, I feel. So not surprising.

But, these are just symptoms waiting to disappear soon I guess. Despite the current ills like ever rising labour costs, China continues to be the factory of the world. Global companies don’t have an option but to court the Chinese. Like Apple’s Tim Cook was attempting to do when he was in China last week logging on to “Weibo” – the Chinese microblogging site akin to Twitter. (Modi did the same on his run up to his China visit). The ever increasing aspiring class is a segment of the world’s largest population that just cannot be ignored.  But one thing which continues to amaze me in China even after being the world’s largest populous country is – Where are its people?? For example in Shanghai the world’s most populous city – you don’t get see crowds in the roads, in the malls, in super markets, in train stations,.. So where are they???

Let’s see if that mystery unravels in the next visits.

3 years hence, the impressions are still very good but may be the shine has worn a little bit.

 Postscript: Heard that the PM’s baggage on foreign tours will now have a “Selfie stick” 😜 😜

Sir, a Plus budget!!!

In India, come Feb, it’s time for the release of the mother of all blockbusters – “The Union Budget”. While even the blockbusters of the Khans are just in the vicinity of few 100 crores, this one flies in the space of thousands and hundreds of thousand crores. Isn’t it interesting, that the whole nation awaits with bated breath to find out how the Govt. of the day is going to spend “it’s collective” money in the next 1 year??? So too I was yesterday, when Arun Jaitley the Finance Minister rose oops sat down to present what I would think as one of the most significant budgets in recent years for our country.

budget

Since yesterday afternoon, we have been fed with hours and hours of programming in all current affairs channels with experts dissecting the budget. After having gone through these boiler plate stuff for so many years, I get a feeling that the reactions are mostly pre-determined irrespective of the content of the budget. As in, the verdict on the budget is along expected lines. Panelists from the ruling front sing panegyric paeans on the budget while those from the opposition usually sing the “disappointing” tune rather petulantly :(. Also for experts. For those with leanings towards the Govt. of the day, it is a transformational budget and for those in the other side of the divide it is “trashformational”!!! And for CII – any budget is a 9 on 10 budget!!! This satirical piece – Budget Criticism 101 from The Unrealtimes I feel is not a satire at all but the Annual reality 🙂 🙂 . So I thought why not analyse the budget through a normal aam admi prism devoid of any ideological/political tilt?

As a responsible tax paying citizen of the country, I look for the foll. In the budget:

  • Does the budget spell out initiatives which can fuel growth in the Indian economy? Overall Economic growth brings in investments, increases jobs for all, raises salaries,…,…
  • Is there any transformational/game changing idea (or is it Big Bang) which has longer term impact for the country? – Like De-licensing, Gram Sadak Yojana, Aadhaar, GST,…,…
  • India is notorious for its archaic regulations and laws. Is the Govt. doing anything to make life simpler for doing business – local or foreign?
  • What’s in it for the poorer sections of the people – which is still significantly big in our country?
  • Finally what are the signals being sent by the Govt. of the day?

Looking at the Modi-Jaitley budget from the above perspective, my sense is that they have presented a “Smart” budget. They know very well that the expectations of all sections of the people are very high and had to do the balancing act to appease everyone. At the same time, elbow space for tough decisions is only available in 2015 and 2016. Beyond that the Govt. gets into re-election mode.  It appears to me that, from whole lot of things they need to do (which they have promised) they clearly prioritized the ones which needed to be attended to in this budget. And put off a few for the future. And I feel that’s the way to go.

  • The budget indeed brings in focus back to economic growth without being apologetic about it. Focus on infrastructure, Corporate Tax cut, Job creation,.. signal that.
  • Though there are no new transformational ideas in this budget – to be fair to Modi – he didn’t wait for the budget to announce a few. Ideas like the Jan Dhan Yojana, Swachh Bharat Abhiyan and Make in India – all transformational ideas were kicked off last year itself. This is a welcome sign. Finally GST gets a final deadline.
  • Cleaning up gets a lot of attention. Whether it is Swachh Bharat, Clean Ganga or for that matter Black money cleansing!!!
  • The Universal Social security net for all Indians is an interesting initiative. That it is through the insurance route comes as a relief. Otherwise India could end up suffering like most of the European economies with very high long term liabilities.
  • The Govt. has clearly for this year atleast prioritized on domestic investors rather than foreign if one looks at the introduction of SETU fund …and no major FDI relaxations.
  • The pandering to salaried class interests with more income tax cuts or other gimmicks have been I guess postponed for years closer to 2019!!!
  • Again things like flowing money to Smart Cities, Digital India are on hold in this budget. Means could tap the private route for these initiatives or will be taken up in the coming years when tax collections are more buoyant with better economic growth.
  • I see a lot of critiques on the increase of Service tax rate from 12.6% to 14% which will overall shrink our wallets. But I think this is a clear attempt to prepare all of us for the introduction of GST which will be at a higher rate of may be 16%!

Any budget proposal will have its share of misses. And there were a few in this too. However overall, I think it is a Smart, Working, Balanced budget which sets the tone for the economy to grow in the coming years. Taking up a few important issues and implementing them is better than announcing a slew of initiatives and outlays and messing up the outcomes. So in that sense Sir, it is a Plus budget!!! And I guess the FM scored well if not a centum!!

Budget2

India has indeed reached a sweet spot. We must now be in a hurry to change its status from #WorkinProgress to #JustArrived!!!

Deciphering the cAAPital Verdict!!!

IMG_1357Modi loses capital” screamed the headline in The Economic Times the day after the historic victory of Aam Admi Party (AAP) in the Delhi state elections. Not only the ET, but across the board the post-mortem narrative in the media by and large has NOT been about AAP winning but Modi getting thrashed. It almost seemed like for a man who cannot do anything wrong since Sep 2013, suddenly it is rigor mortis. Since the ascent of Narendra Modi as PM, for the main stream media, even a local body election has been a referendum on Modi’s Central Govt.  Even after wading through the muddy waters in Haryana, Jharkhand, Maharashtra and even J&K fairly successfully, the “Blow to Modi” war cry finally returned when the AAP Tsunami hit BJP in Delhi.  There is no empirical evidence to show that Delhi voted for AAP as they didn’t like Modi’s performance so far at the centre. But then media’s narrative in India is seldom based on logic or ground realities. The only empirical evidence we have ( a post poll survey conducted by CSDS for India Today group) actually points to the fact that though Delhi voted overwhelmingly for AAP, more than 60% still gave a thumbs up to Modi as PM and his Govt..  For the media it is almost unfathomable that Delhi could vote smartly by opting for “Modi + Kejriwal Combo”!!!  In fact this sub text emerged during opinion polls in Delhi during Lok Sabha Elections as well, but that got drowned in the overall din. While all criticism of Modi and his Govt. of 9 months are not all misplaced, some of it are clearly over the top. Let us look at some of the uncharitable ones:

  • “This verdict is against “Hubris” of Modi and the Modi Govt.

In leadership, it’s only a thin line which separates arrogance and being decisive. In the last 10 years, we took our earlier PM, Dr.Singh to the cleaners for being an epitome of indecisiveness. If one reads Sanjay Baru’s ‘Accidental Prime Minister’ – a tell all tale of India under UPA-1, it’s clear why and how “policy paralysis” as a result of Dr. Singh’s tentativeness pulled the economy down to the rubble. In the last few months we have seen this Govt. taking a lot of firm decisions (like transfer of secretaries, calling off talks with Pakistan,…) and they if viewed through a cynical prism may seem arrogant. It’s still not clear on how many occasions Modi or the Govt. have taken decisions which were supercilious. If this conclusion is because of things like the ordinance route the Govt. took to pass some legislations, then there is another way of looking at it. This has also sent a strong message all concerned of the Govt.’s intent and urgency to get things moving on the mining sector and land acquisition,… which have been issues impending economic activity in the country. While on this, I would agree with critics that the Govt. could have been more benevolent and offered the Leader of Opposition post to Congress instead of being churlish and probably could have given the Hubris tag a miss!!!

  •  “Modi has been focusing too much on foreign affairs”

It is a well-known fact that since the slapping of the retrograde retrospective tax, India had fallen off the foreign investors’ radar.  Far from being a potential “Break out” nation, we suddenly became a “fallen BRIC”! So for any new Govt. seeking to put India back on a high growth path, it was imperative to turn around the sentiments and send a signal that “India Means Business”. And that can happen only if the top leadership is seen making the commitment. Critics also say that he should focus on getting the confidence of the Indian investors first rather than those outside. Once again, it will be worthwhile remembering that the flow of the Rupee follows the flow of the Dollars.  If foreign investors starts investing in India, the Indian ones start following the script.  For instance,when the Carrefours, Walmarts, Metros, Woolworths started pouring dollars in organized retail in 2007/08, all the Big Indian groups like Birlas, Ambanis, Tatas,.. followed suit.  So it made absolute sense for this Govt. to reach out to the bigger economies like Japan, China and the US with a sense of urgency to showcase the climate change. And to a large extent it has succeeded. At the World Economic Forum in Davos in Jan, the buzz around India was back after a hiatus.

  • “This Govt. is all about “Show-baazi”

If one is talking of the hype around programmes like Make In India, Swachh Bharat Abhiyan, Jan Dhan Yojana,.. then the critique is utterly misplaced.  Any programme has to be conceived well, communicated well and implemented well. Make no mistake. It’s just one word which separates “Hype” and “Hope”. From a positive hype, emerges a hope for results. And believe you me, the strong messaging around these programmes is what started giving hope of a Govt. which functions. It may well happen that some of the programmes may fail or may not yield all the desired results. But then you cannot blame the Govt. for not trying. At the end of the day, the Govt. has to function and more importantly it has to be seen as functioning.

It’s not my intention to turn this post to an unending paean on Modi and his Govt.. There indeed have been few false steps which could have been clearly avoided.

  • “Failure in controlling food inflation”

Though the head line inflation as per pink papers has come down, for the aam admi, price of vegetables and food items has never come down. And so far I have not seen any serious attempt by the Govt. to do anything about this. Supply side bottlenecks continue. In fact, the PM must have taken this as a mission and gone after this from day 1. In the coming days till the economy takes off, this will be a nagging issue in the minds of the public.  To give an analogy, in Tamil Nadu, inspite of the fact that the Govt. is being run through remote control, there is visibly less disgruntlement (atleast for now). One big reason being the opening of ‘Amma Canteens’ which disperse food at economic prices. I don’t think there is any other state in India today, where one can have a decent full day meal for under Rs.20. In TN, you can, if you choose to eat in Amma Canteens. So much so, the Saravana Bhavans and their ilk had to cut their prices in order to compete and maintain their market share. Some food for thought this.

  • “Ghar Wapsi of Kaala Dhan”

In the run up to the Lok Sabha elections, I tweeted – “We will ensure India wins the World cup in 2015 – The only promise Modi has not made so far”!!! Among the slew of promises Modi made in rally after rally, bringing back Black money stashed abroad was one significant and at the same time silly I reckoned.  This business of Black money stashed abroad in banks illegally,.. is mired in a complex vortex of Global Drug mafia, Arms trade, High level political Corruption, Tax evasion,…,… in which many countries and their Govts. are willingly complicit. So the SIT and Enquiry commissions will keep spending months together (as they have been doing in the past) without getting anywhere. On the contrary, the Govt. could have focused on the Black money racket within the country. I would be surprised if the people in the Govt. don’t know that the Real Estate business in India is a haven for black money! Why not a regulator for that sector in the lines of IRDA or TRAI or SEBI first instead of going after Ghar wapsi of Kaala Dhan in vain?

  • PM not reigning in the fringe elements of the Parivar

It was completely expected that when BJP came to power with a majority, it will see the emergence of the fringe elements sooner than later. What is surprising is that the PM who tactfully handled and silenced these in Gujarat didn’t anticipate and have a pro-active plan this time. Like for example, identify the louder elements and put them on some activity trap like “Spreading the values of Vivekananda”,.. in countries abroad using some NGO front organization. They will also feel important to roam around in exotic locales abroad and at the same time you are silencing them in the country. This will ensure that there are minimum distractions. Otherwise a distraction a day will keep the Govt. at bay! We saw this during the last parliament session.

Outside of the few blips I have outlined, there has been a lot going for the PM and his team. Like getting the right people in Key ministries unlike Dr. Singh who was constrained on this, being different and creative in his approach like getting the state CMs to attend the meeting of Mission heads recently pushing Mission heads to focus on getting Dandha for the country, setting up NITI AAYOG,…,…. So it is my opinion that it is utterly malicious for the commentariat to see the “cAAPital Verdict” as a manifestation of the dissatisfied voice of the Nation! This argument can’t get more specious!

When quizzed about this Govt. in Dec I think, Arun Shourie quoting Akbar Allahabadi said, ‘Plateon Ke aane ki Awaaz toh aa rahi hai, par khaana nahin aa raha!!!’ (The sound of the plates can be heard, but the food doesn’t seem to be coming!!!).  One hopes that in the Budget and the days after the Govt. puts the Delhi shock behind and stays the course on its Pro-Growth promises made so that people get to smell and eat the food as well.  That will keep the mouths of the critics busy in chewing the food rather than spitting venom on the Govt.!

Postscript: Same time last year, when Arvind Kejriwal resigned as CM, I wrote this piece – “The loud Wake AAP call”. Read here. Looks like both the aam admi and the AAP heard the wakeup call loudly that time and today are out of bed and on their way to office while the BJP, got up and hit the snooze button. Well, the Congress has not yet heard the wake up thud and has adjourned itself Sine Die!!!