Spiral of violence

If he hits you once, hit him twice. Hit him so hard he doesn’t get up. Hit to hurt. These were my words of advice to my gentle, eight-year-old nephew — who, if he progresses the way he is, may turn into a spiritual guru. He had been regularly bringing back bruises from school. Two boys were delivering them. This was my third or fourth such lecture. Earlier, I had told him to handle the attacks himself, then talk to the teachers, and so on. Didn’t work and that, in turn, brought out the hidden violence and impatience within me. His answer silenced me for good, and has since turned me into a family joke: “But mamoo, first he’ll hit me, then I’ll hit him, then he’ll hit me, then I’ll hit him. Then what?” It also accorded him a premature sainthood --- we’re waiting for him to start preaching!

Opinion in The Indian Express, December 17, 2007

Minding our business

Beyond markets, capital and labour; beyond history, culture and attitude; beyond politics, policies and regulation; for global investors to look at any country for doing business, there is one absolute that overrides all other organisation of infrastructural relativities: speed. Doing business --- from setting it up to closing it down and everything in between --- is all about conforming to global benchmarks of efficiency, costs and justice, at a pace that doesn’t lock resources.

Opinion in The Indian Express, December 11, 2007

What state govts can learn from de Soto and a market fundamentalist

If capitalism has to work in developing economies, including India, it has to become more inclusive, it has to understand and deliver property rights to more people. That’s what Peruvian economist Hernando de Soto, adviser to 40 governments, told me last week as we discussed the future of capitalism in India. For this, he said, governments need to first study the laws that govern property rights and then change them so as to reflect their country-specific realities. The conversion of squatter rights to legal ones, for instance.

Opinion in The Indian Express, October 29, 2007

‘Whether you are democrat or dictator, on the left or right, exclusion will sooner or later destabilise you’

The Left hates your ideas, the Right wants to smother them. You must be doing something good.

There are many people in my organisation who have Left leanings and many are with the Right. You are probably referring to the assassination attempts on me. Those were specific. They had to do with the fact that I wrote a book The Other Path. The Peruvian Marxist Terror group Shining Path had intellectual pretensions. The advantage for them in the country was that there was no challenge to them from the right or the centre. After the book there were a variety of organisations, which originally were trade unions, that created the ripple effect.

Interview in The Indian Express, October 27, 2007

Sebi may allow FIIs to register for good

Once the noise around participatory notes (PNs) gets over, Securities and Exchange Board of India (Sebi) will make another feel-good announcement: registration of foreign institutional investors (FIIs) with the regulator will be for good — they won’t have to renew it. According to a senior Sebi official, “Registration of FIIs will be till perpetuity, unless, of course, we have a reason to revisit them.” As of now, FIIs can be registered for three years, after which they have to renew the registration.

Opinion in The Indian Express, October 25, 2007

Many opportunities in the big discount sale, but is anyone buying?

The 1,499 point, 7.9 per cent fall in the Sensex last week hid the even greater 1,744 point, 9.2 per cent intra-day fall on Volatile Wednesday. The Wednesday fall followed Securities and Exchange Board of India’s proposed restrictions on participatory notes, a vehicle global moneybags not wanting to go through the process of registering themselves as foreign institutional investors (FIIs) use to get an India exposure. The week has seen enough critique, debate and discussion on how good or bad it is for such investors to enter through the “front door”.

Opinion in The Indian Express, October 22, 2007

You need not fear market volatility... the India story continues to be as stable as ever

I have always maintained that in the short term, stock markets are irrational. But yesterday’s 1,744 point, 9 per cent fall foxed even the most hardened among us. That the fall would come was expected, my rounded range was between 600 and 900 points. When the fall is double to triple of one’s estimate, it’s time to bow your head before the Lord of Volatility — the market itself — and exit as gracefully as you can. Just as I was doing that, the market changed direction and finally closed a statistically insignificant 336 points lower. Phew, what a day!

Opinion in The Indian Express, October 18, 2007

Prize for guessing

From Robert C. Merton’s and Myron S. Scholes’ methods to determining the value of derivatives 10 years ago, through Amartya Sen’s welfare economics in 1998 and Daniel Kahneman’s integrated insights from psychological research into economic science in 2002, it seems the Nobel Prize for Economics has gone back six years to 2001, when three economists George A. Akerlof, A. Michael Spence and Joseph E. Stiglitz got the award “for their analyses of markets with asymmetric information”.
Technically called ‘The Sveriges Riksbank Prize in Economic Sciences’, the troika that has won this year’s prize — Leonid Hurwicz of the University of Minnesota (and at 90 the oldest to get a Nobel); Eric S. Maskin, 57, of Institute for Advanced Study, Princeton; and Roger B. Myerson, 56, of University of Chicago — has got it for “having laid the foundations of mechanism design theory”. In English, for marrying asymmetric information with institutional design.

Opinion in The Indian Express, October 16, 2007

Why SEBI’s investment adviser regulation is great, but only the first step

I didn’t meet any Sakett there. I didn’t hear the state’s anthem, John Denver’s inspiring Rocky Mountain High on any radio station either. But hiking in the Colorado mountains, some three hours off the Mile High city of Denver, I could get a sense of Louis L’Amour’s outlaws, marshals, cattle drivers, drifters, no-accounts...all of who have been driven out by business tourists like myself and mansions of the wealthy. Still, the beauty of creeks, ridges and the sheer expanse of the Rockies takes your breath away.
But that was only a diversion. I was in Denver on a regulatory pilgrimage, to meet players and organisations that have made the city the financial planning capital of the world and its 53 square mile international airport, the country’s largest. The College of Financial Planning created the CFP certification in 1972; it was announcing its 100,000th graduate as I walked into its Greenwood Village building last month. In July 1985, the College later handed the CFP brand to Certified Financial Planner Board of Standards or CFP Board, which acts as an SRO (self-regulatory organisation), by creating and enforcing professional standards through education, examination, experience and ethics. Constitutionally, the CFP Board is not allowed to lobby, so I also met the Financial Planning Association.

Opinion in The Indian Express, October 14, 2007

India through Sensex

Nine months ago, it was a cautious market reacting to a Sensex 14,000 on January 3, 2007. But despite the caution the market expressed then (experts said don’t expect it to rise more than 15 per cent during the year), the Sensex has already risen 30 per cent. The same experts are now touting the 20,000 mark as touchable. I believe they need to be more confident about their forecasts than flitting around with volatility. The market has been mercilessly optimistic, reflecting the underlying companies that are ruthlessly cheerful. Moving towards a climax that’s still many years ahead.

Opinion in The Indian Express, October 11, 2007

India at 60 vies for all the attention in US

How do you get a $13 trillion economy interested in a $1 trillion economy?
Of the thousands of ways, the $20 million Incredible India@60 campaign seems one. “We are looking at creating a presence, a space for India,” said Nandan Nilekani, co-chairman, Infosys Technologies. “This is a major initiative. We intend to leave a very strong impression of India,” said Sunil Mittal, president, CII and chairman and group CEO, Bharti Enterprises.

Story in The Indian Express, September 24, 2007

Krishna in Vrindavan

...In Krishna’s country Braj, which includes Mathura (where Krishna was born), Gokul (where he was smuggled to escape Kansa’s tyranny), Vrindavan (where he grew up and met Radha) and Govardhan (the mountain he lifted) — there’s no Krishna to be seen or sensed. Poor city planning at Vrindavan has left neither ‘vrinda’ (tulsi) nor ‘van’ (forest). Garbage has expanded the small town’s periphery, providing a base for roads to run on, pushing river Yamuna (in which Krishna fought Kaliya) 70 metres or so away. The cowherd — a term Krishna was often called derogatorily in later life but one he was proud of as it brought back memories of Radha — his flute and Vrindavan, have been replaced by the goon trying to seek ransom from devotees, turning what could be one of the world’s most visited religious destinations into an experience that leaves faithless ashes in the mouth.

Opinion in The Indian Express, September 10, 2007

No load funds is a future that’s already happened, stop sabotaging it

A ghost called no-loads has been haunting the mutual funds industry. Things have reached a panic situation as the September 12, 2007, deadline (the day after tomorrow), comes closer — the last day to send comments to the Securities and Exchange Board of India (Sebi) on its August 22, 2007, proposal to waive load for investors buying mutual funds directly from asset management companies (AMCs).
What this means is, if an investor buys Rs 1 lakh worth of equity mutual fund units directly from its AMC, he won’t have to pay Rs 2,250 (it goes as high as Rs 6,000 for an NFO - new fund offer) as commission to some invisible distributor. The entire Rs 1 lakh will be invested and not Rs 97,750. Implications: roll that for 30 years at a compounded annual growth rate of 15 per cent and this investment grows to Rs 66,21,177 compared to Rs 64,72,201 in case he pays load — a difference of Rs 1,48,976. The moot point remains: why should an investor be forced to buy mutual funds through a distributor?

Opinion in The Indian Express, September 9, 2007

Myth of livelihoods, fable of organised retail, and the sad parable of governance

First it was the threat of large foreign retailers who would replace small Indian ones and so: No entry to foreign retailers like Wal-Mart. Now, it’s the threat of large Indian retailers who would replace small Indian ones and so: No entry to Reliance Fresh, and Spencer. Mayawati is not the first politician to fight organised retail outlets and she’s not going to be the last. When small traders and politicians, therefore, organised themselves into armies of violence, the new chief minister predictably ordered closure of the outlets and bought time by constituting a “high level” committee. She and Mukesh Ambani await its green signal.

Opinion in The Indian Express, September 3, 2007

To learn how to draft investor friendly regulation,IRDA should call on Sebi

The contradiction is telling. India’s youngest regulator in the financial services space, Insurance Regulatory and Development Authority (IRDA), born on April 19, 2000, in the age of transparency has been and continues to encourage opacity. It seems more concerned about the business and profits of insurance companies than in protecting consumers. Its actions seem more embedded in the second part of its mission statement (“promote and ensure orderly growth of the insurance industry”) than in the first: “To protect the interests of the policyholders.”
Titled “ULIP Products”, its August 18, 2007, rambling press release reflects this irony. The first para notes, “IRDA is keen to ensure that unit linked products are transparent and that customers (SIC) from every walk of life can compare features and charges across products and across companies.” Great — the regulator has finally woken up to the loot that has been happening in the garb of insurance over the past two to three years, and which we have been regularly highlighting.

Opinion in The Indian Express, August 27, 2007

Repricing of risk is a fig leaf. Or how the suits ravaged the financial markets --- yet again

Even as the reverberations of the financial earthquake that hit the financial markets on July 26 are still rattling the retirement plans of millions the world over, a new term has re-emerged, as if defining the problem would make it go away. Money managers, now exposed, are standing helpless before a market that like the serpent that ate its own tale is beginning to gnaw. As the fine clothes come off and the high tide of a global bull market recedes, we see just what’s lying beneath the Armani suits — a herd. They invested as a herd, and are now pulling out like a herd. Naked they stand but together as herd, hanging on to anything that can justify their irresponsible behaviour. The newest straw they’re clutching at is called ROR (repricing of risk).
Sitting halfway across the world, in a country where the currency is not fully convertible, where subprime borrowers or their lending banks don’t exist, where products like CDOs (collateralised debt obligations) aren’t seen, where rating agencies have not graded them triple A, and where investors, particularly, hedge funds have not bought them, investors are still coming to grips with this new animal, ROR. But the market is not giving them time - with the Sensex is down 1,400 points (9 per cent) in 14 trading sessions, experts are throwing new numbers (it can go as low as 9,000-11,000) and old advice (at 12,000 it would be time for bottom fishing). All because of ROR.

Opinion in The Indian Express, August 18, 2007

Towards a new Swarajya

The freedom we got six decades ago was the starting point for another imprisonment --- we, the nation, were under the custody of those who we saw as our own. And if we thought that a change in the colour of the skin really made us free, surely it was disillusionment of the worst sort. Around halfway through our false freedom, came real chains again, with the Emergency fettering us to our poverty and a self-perpetuating and dictatorial power elite. Another fight, another freedom. It took us another two decades before we tasted economic freedom. A higher freedom still awaits us.

Opinion in The Indian Express, August 12, 2007

Six decades later, it’s time to celebrate Financial Freedom Day

I don’t want to waste time talking about how inefficient, ineffective and invalid the pre-liberalisation thinking on matters of economics and personal finances of Indian citizens was --- millions of trees have been uprooted to tell those tales. That the methods didn’t work and its sole achievement was to ensure that the rich in the name of the poor, the powerful in the name of the powerless, benefited through preservation of their little empires that prevented an enterprising Indian to put a foot on their well manicured, well protected turf.
At a time when getting a job was a license to keeping it for life --- companies employing people were few and completely protected from even a whiff of competition --- a whole new culture was hammered into a people who had just delivered the biggest enterprise of all: Freedom. Fresh from the independence struggle, these risk taking soldiers of freedom returned not as soldiers of fortune but slaves of security. Here you have a man who risked his life, and definitely his career, fighting an imperial Government turned into one whose sole aim became financial security. A butterfly turning into a caterpillar.

Opinion in The Indian Express, August 11, 2007

How I got the girl, her money and learnt to invest in stocks

They weren’t easy times, but armed with a degree, a pair of Bermuda shorts and oodles of enthusiasm, I joined the workforce around the time when Sebi wasn’t born and when Harshad Mehta was becoming a phenomenon and his ‘buy-lists’ were the most sought after paper in the financial sectors — attitudes were turning, investors were winning, and the market was rising. The day I joined, the Sensex, which to me then was a mere number, rose 8.5 points. A good omen, I thought.
When I saw her, a humble wide-eyed trainee like me, I knew this was it. That made it three in one day - a job, a Sensex rise, the girl. But how do you woo a girl who apart from the flourishes also has a brain that questions? My editor — the first of many who would invest in my ‘potential’ — gave me the answer in the form of a dream assignment. “Take charge of investing pages for us,” he said. Before I could say, I don’t know the S of Sensex and the I of investing, he was gone.

Opinion in The Indian Express, August 04, 2007

Up, through highs and lows

July 27: 542 points down. July 30/31: 316 points up. August 1: 615 points down. The uncertainty has only begun, with the Sensex rising 50 points yesterday. This seesaw is here to stay and for investors who came in over the last four years, who so far have only met Mr High Returns, it is time to look at his shadow, Mr High Risk. Like it or not, Mr Risk accompanies Mr Returns. Sometimes investors think Mr Returns is their friend, and put in money as if the friendship will end if the increased investing stream ends — this is what has happened over the past four years, between May 2003 and today. At other times, investors feel close to Mr Risk and look to another entity, Mr Zero Risk, whose shadow is Mr Low Returns — the period between February 2000 and May 2003, for instance.

Opinion in The Indian Express, August 02, 2007

The agent may be mis-selling but why has IRDA allowed such an incentive structure?

There seems to be only one direction the insurance industry is headed: Down. Every other day we hear stories about how, in the pursuit of higher commissions, insurance agents are selling one investment product (ULIP) after another and not life cover (term policy). Households pay exorbitant upfront commissions that go as high as 40 per cent for a 20-year product, but the agent either disappears after three years or returns to churn the money into a new 20-year policy. Much has been written about this but most of the industry, regulator Insurance Regulatory and Development Authority (IRDA) and the Government have nothing to say or do.
What’s new is a two-day old email from an alert doctor. Here’s what he wrote: “I would like to draw your attention to a leading insurance company’s strategy. Recently, its agent offered to pay in cash if I disclose my diabetic patients’ names to the insurance company. Also, if anyone takes this insurance policy (offered to diabetics only), additional cash will be paid. And if more patients take the policy, other offers such as a Malaysia trip [are offered], according to slab.” He concludes saying, “Doctors are not expected to reveal diagnosis of a patient unless asked by court of law.”

Opinion in The Indian Express, August 01, 2007

Why Friday’s 540-pt fall won’t hurt much

It’s getting increasingly difficult to write definitive stories on markets in a flat world of 24x7 trading activity. Amid fears of a collapse in its housing market — an important, market moving financial indicator — the US market fell yesterday, leading to a contagion fall across the world. India followed too, with the Sensex falling 542 points or 3.4 per cent to close at 15,235.
But even as analysts were rolling their sleeves to buy some bargain basement stocks --- Reliance Capital, Tata Steel, Canara Bank and HDFC --- the US market got its aspirin in the form of its second quarter GDP numbers that rose to a healthy 3.4 per cent, the highest in the past 12 months.

Story in The Indian Express, July 28, 2007

What’s a company like NMDC doing in a category like Z-group?

Ever since the category was created on January 16, 2002, I have never looked at Z-group companies. These are companies that the Bombay Stock Exchange indicates are to be avoided like the plague, bottom of the investment barrel. A company gets the Z-halo if it violates three of seven listing criteria --- giving notice of book closure and record dates, submitting its annual report, submitting quarterly shareholding pattern, paying listing fees, publishing quarterly results, redressing investor complaints and implementing corporate governance practices.
So, what’s a company like National Mineral Development Corporation (NMDC) doing in a category like Z-group? A state-owned mining major, NMDC’s share price in 12 trading sessions has risen almost 70 per cent. Nothing shocking about that --- Z-group companies are known to be illiquid, with little or no investor interest, and thus ripe for manipulators, particularly in rising markets (in falling markets they crash, in indifferent markets they remain invisible).

Opinion in The Indian Express, July 21, 2007

Our gods, their gods

How dare you insult my god?
The keyword here is ‘my’. For, I don’t think we mortals have it in us to be able to insult someone or something like God. The entity we term ‘god’ would not be any good if he gets insulted by the mortals he created. And anyone who thinks otherwise needs to get his ideas about his god examined.

Opinion in The Indian Express, July 19, 2007

New world’s new faith

If it is indeed an African great-great-great-grandmother that all the people on this planet have as a common ancestor beginning some 50,000 years ago, it must mean — as Nayan Chanda argues in his brilliant new must-read, Bound Together — the Oneness of this planet that spiritualists and Darwinians claim to realise is probably truer than even they imagined. Blonde was black, tall was short, straight was frizzy and all were Africans who, in the Ice Age, went out in search of food.

Opinion in The Indian Express, July 15, 2007

Home truth index

Finance Minister P. Chidambaram launched the National Housing Bank (NHB) Index on Tuesday, which is India’s first housing price index to collect data and track fluctuations in the property market. How exactly will it work? What does this mean in terms of Government policy? What does it mean for you and me?

Article in The Indian Express, July 12, 2007

The new habits of the world’s wealthiest people

More than anything else India’s growing number of wealthy — in the World Wealth Report 2007, the number rose 20.5 per cent and crossed 100,000, making India the home to the world’s second fastest growing wealthy population — shows that in a country known and tagged as poor, prosperity is flowering. It probably has been for a longer time. The difference over the past few years is that there is larger chunk of Indians who are legitimately wealthy. That is, the number of high net worth individuals (HNWI), with recorded wealth of $1 million or more has jumped sharply. That should excite the taxman and it is for him to take it forward.
What should excite readers of this column and those who criticise it as well, is to understand the route to this wealth. The report largely talks about financial wealth, with real estate thrown in. It speaks to us with data what we know in the language of anecdotal evidence. That most of the wealth of HNWIs is stacked away in equities, a full 31 per cent, up 3 percentage points over two years. But the big jump in 2006 has been in real estate, the allocation to which rose 8 percentage points to 24 per cent. Do note that this allocation is ‘investment allocation’, that is, commercial property, RIETS and other investment properties, and excludes the house the wealthy live in.

Opinion in The Indian Express, June 30, 2007

PSB hijack and other stories

The Punjab and Sind Bank (PSB) fiasco is an issue that goes beyond the bank, the banking sector, the institutional processes by which private money is controlled by public authorities or even corporate governance. It, in a manner ironical, questions the issue of crony capitalism that Prime Minister Manmohan Singh raised last month.
True, it’s finally PSB that’s under fire, with Congress party thrust ‘independent directors’ slugging it out with the bank’s chairman R.P. Singh, trading charges in public. The independent directors, two of whom are likely to get marching orders anytime now with another three following suit, claim the bank’s management led by Singh is underselling the bank. Singh in an open press conference yesterday showed how these ‘independent’ directors are interfering in the day-to-day functioning of the bank and are currying favours for their political masters, colleagues, sympathisers. On the other hand, perhaps they’re only in the self-gratification mode. Truth is on its way out and we are tracking the story.

Opinion in The Indian Express, June 27, 2007

Regulate, before the big swindle

It was about time, but regulation always follows two steps behind. We needed the Bombay Stock Exchange brokers to create a completely opaque system of trading where the average person had no chance of knowing the price before Securities Exchange Board of India (Sebi) was born to regulate the market and National Stock Exchange was created as a competitor. We needed a Harshad Mehta to know that some loopholes in banking needed to be plugged before the securities trading infrastructure exploded in our faces. We needed Rupalben for Sebi to partially fix the IPO market and be confident enough to say that it won’t happen again. And so on.
Thankfully, a major scam hasn’t broken out so far, but as everyone in the financial community knows, the weakest link in the financial services chain today is the distributor, who in the 10 square feet of space between him and the client, is wreaking financial havoc. Distribution is the last mile in the delivery of financial services to households and this mile is full of potholes.

Opinion in The Indian Express, June 22, 2007

Sensex is hungry but it needs to look beyond earnings to feed itself

The results season has begun and the first signals are not encouraging. The tech and auto bell wethers, Infosys and Bajaj Auto, fell short of market expectations, signalling perhaps more disappointments going forward. And still, the market seems to be behaving as though it has drunk a new energy drink.
Up 2 per cent over the week, 4 per cent over the fortnight, 9 per cent over the month and 68 per cent over the year, the Sensex at 15,273 is hungry, no doubt. What it needs to satiate this hunger is earnings. The rupee rise has reduced the index’s prey — IT stocks and exporters are going to be losing flesh. That leaves telecom, commodities and increasingly real estate.

Opinion in The Indian Express, July 14, 2007

Cheques and IPOs

Initially I thought it applied only to small and upcoming builders — essentially, brokers who having ridden the high velocity of real estate transactions, churning a 2 per cent commission on Rs 50 lakh plus deals every other day for three years in a row, had turned builders. Their entire income in cash, there was not much they could do to grow. So, from buying small plots and building four cubby holes, their enterprises have grown into brands. Since the medium of transaction was cash, their businesses were relegated to the unaccounted backwaters of the economy. Statistically, they are out of the 6.1 per cent share that housing commands in India’s trillion-dollar economy. But Indian economic governance is soft on “livelihood” issues — a person with no education, no skills, no capital could only rely on enterprise for sustenance and the booming real estate sector provided that aplenty and towards whom the state turned a blind eye.

Opinion in The Indian Express, June 13, 2007

Is India’s largest IPO going to change the Sensex stakes?

Post-issue, the DLF stock is by all indications, set to join the Sensex. Its cousin Unitech (trading around Rs 550), is unlikely to be left behind. Their combined weight in the Sensex is expected to be around 2.27 per cent. This is based on the current price of Unitech and the higher of DLF’s Rs 550 price band.
The number could be higher - given the relative fundamentals of the two companies, I expect DLF to settle at a higher price. Comparing valuations, DLF’s price-earnings multiple, given its quality of land banks, the expanse of business and brand value, should come at a 20-25 per cent premium over Unitech’s, but we await the market for ‘price discovery’.

Opinion in The Indian Express, June 09, 2007

This circular is going to kill mutual funds. Really?

Fourteen CEOs of mutual funds. In one room. All dressed in the sharpest pin stripes --- blue-grey and nothing else. But the heads of companies that manage thousands of crores of rupees are all hanging as if there will be no tomorrow. And, if the rather late reaction to Securities and Exchange Board of India’s (Sebi) circular of April 27, 2007 is any indication, they actually believe that there isn’t any tomorrow for an industry that has just crossed the $100-billion mark. They’re probably right in the short term and definitely wrong in the long term.

Opinion in The Indian Express, July 07, 2007

Not an elitist growth this, there are beneficiaries galore

Just 60 basis points short of the 10 per cent mark, the Indian growth juggernaut, at 9.4 per cent in 2006-07 compared to 9 per cent in the previous year, refuses to even pause for breath as it touches the trillion-dollar mark, the 12th country to do so. Powered by the predictable services and not-so-predictable manufacturing, it is Indian enterprise that is converting opportunities into growth, growth into profits, profits into wealth.

Opinion in The Indian Express, June 07, 2007

Spiritual partnership

Between the unrelenting deification of Sonia Gandhi and the merciless death fatwahs on Salman Rushdie lies neither adoration nor hatred, only illiteracy --- or Ignorance. If it were adoration, the petty politicians would have done it through deeds rather than posters. If it was the head of Rushdie the Muslim extremist leaders had wanted, there are easier ways of getting it than making a bold and preposterous pronouncement. Both, I believe, are simply making crude attempts at getting their 15 seconds of fame.

Opinion in The Indian Express, July 01, 2007

Growth in Indian MFs among fastest in world

Led by a rising equity market and matching investor interest, growth of the Indian mutual funds industry, which recently crossed the Rs 350,000-crore mark, is among the fastest in the world.
Data released in a recent report shows that during calendar year 2006, the industry’s growth at 43.6 per cent made it the world’s eight-fastest. Sandwiched between the UK (43.8 per cent) and Ireland (40.5 per cent), India is way below Russia’s 134.1 per cent but above Brazil’s 38.2 per cent.

Story in The Indian Express, May 09, 2007

Here’s what Rs 50 can buy

Pankaj Razdan is not a man you link with the poor, or even non-rich. Razdan represents the under-40, highly-ambitious, highly-aggressive breed of new managers who are attempting to change the financial services landscape of India. As CEO of ICICI Prudential Mutual Fund, India’s second largest asset management company (AMC), Razdan’s track record of growth and customers has been anything but poor — institutional, corporate and high net worth clients remained the centre of attention; at best, the fund targeted the growing arena of middle- and upper-middle class.

Opinion in The Indian Express, May 01, 2007

Whodunnit Mistry

Fifteen top names in the financial sector switched off their cellphones and had hectic discussions spread over seven meetings that began at 9 am and ended at 6 pm, reaching 100 per cent unanimity in all recommendations. They represent the minds behind the ‘report of the high powered expert committee on making Mumbai an international financial centre’. If the title is a mouthful, the contents of the Percy Mistry committee report are somewhat formidable. For these 15 minds are really dreaming big.
It is one thing to announce the evolution of Mumbai from the financial capital of India into an international financial centre (IFC) amidst table thumping in Parliament as Finance Minister P. Chidambaram did on February 28, 2006. It is quite another to convert that aspiration into reality. You need grey hair, grey matter, a lot of organising power, ability to foresee the practical. But above all, you need to dream. This report lacks none of these and if three words were needed to define the big ideas in this report, they are: scale, reform, competition.

Opinion in The Indian Express, April 03, 2007

True gurus

You must meet him (a guru), a follower advised me. “He’s doing great work — and I’m part of that great work. We’ve uplifted hundreds in this village, thousands in that district, millions altogether. We’ve transformed convicts. We’ve changed lives, even souls. Meet him, write about us, give us publicity.”
I get to hear this monologue once a week or oftener. Couple of times, in my naivete, I even went out of my way to get some gyan, become a ‘better person’, learn to get in touch with my spirit. All in vain.

Opinion in The Indian Express, March 26, 2007

Feeling homesick?

The numbers are scary. As an Indian Express story on March 19 revealed, a person who 18 months ago had taken a 7.5 per cent 20 year loan for Rs 20 lakh to buy a house and would be paying an EMI of Rs 16,111, would have his future generations paying it in perpetuity if the EMI did not rise. Because of the sharp and steady increase in home loan interest rates, from 7.5 per cent then to 11 per cent today, and assuming this householder did not want to increase EMI, tenure rises from 20 years when begun, to 30 years at 9.5 per cent to 70 years at an interest rate of 10 per cent. Beyond this rate, the interest component of the EMI (which comprises interest and principal) rises beyond Rs 16,111. Meaning, unless the EMI is increased, he will be in a perpetual debt trap.

Opinion in The Indian Express, March 21, 2007

It’s a flat, flat world

The 541 point, or 4 per cent, crash in the Sensex on Wednesday coincided with P. Chidambaram’s fourth budget under the UPA administration. But that’s just where the coincidences end. The reasons for this fall lie outside the Budget, outside Parliament, outside the Indian economy — they lie in China, Philippines, Brazil, Mexico and, of course, the US.

Opinion in The Indian Express, March 01, 2007

Markets dive but why this could be an overreaction

NEW DELHI, FEBRUARY 28 : No big-bang reforms. No cut in tax rates. No major change in tax slabs. And barring the needless increase in dividend distribution tax (DDT), an impractical, inflation-contending strategic cut in cement, extension of minimum alternative tax (MAT), and an incentive-killing application of Fringe Benefit Tax to ESOPs (employees’ stock option plan), no major change worth writing home about.
Just the right formula for keeping a long-term household budget, riding long-term high economic growth, in place.

Story in The Indian Express, March 01, 2007

Good news aplenty, just don’t talk of inflation

New Delhi, February 27 : For anyone wanting to gauge the pulse of the Government today, Economic Survey 2006-07 would be a useful tool. All policy-defining keywords --- inflation, growth, special economic zones (SEZs), infrastructure and even pension reforms --- have been discussed, keeping the governing coalition’s priorities and achievements in mind. In short, this ‘economic’ survey has far more ‘political’ undertones than many in the past.

Story in The Indian Express, February 28, 2007

Profit his engine, Lalu cuts fares, keeps key reforms still reserved

New Delhi, February 26 : Sharp in short-term money making, strong in medium-term strategy, but weak in long-term vision, Railway Minister Lalu Prasad Yadav’s fourth Railway Budget 2007-08 chugs on the tracks he charted four years ago. It transports record-breaking profits and freight carriage; most importantly, it delivers the lowest-ever operating ratio. Lalu’s budget yearned for attention in the Lok Sabha — but he had to yell his way.
“Rs 20,000 crore,” he shouted. “We have made a record profit of Rs 20,000 crore,” as if this feat would silence an Opposition that had decided to let the Bofors gun drown his Budget. And if the Opposition didn’t dither, Lalu, the performer, didn’t yield an inch of the centrestage.

Story in The Indian Express, February 27, 2007

Infrastructure’s a 3-letter word

This month will see three important policy decisions being taken. As the Budget session approaches, the troika of Finance Minister P. Chidambaram, Railway Minister Lalu Prasad and Civil Aviation Minister Praful Patel could help pave the way to keep the India growth story on track. The keyword for this troika: infrastructure. The key expression of this keyword: public private partnerships (PPP).

The numbers are huge — $320 billion to be invested in India’s infrastructure, spread out over the next five years if we are to sustain the 9-10 per cent growth rate, says Chidambaram. That’s about Rs 14,08,960 crore, or 40 per cent of India’s GDP. Not an amount the Government can organise through taxes (public outcry) or borrowings (already standing at Rs 20,59,234 crore). Private capital is needed for which four big constraints have to be resolved: creation of bankable projects, introducing new financial instruments, regulatory framework for PPPs, development of managerial skill. The budget will reveal much on this front.

Opinion in The Indian Express, February 07, 2007

Tata OK, Buy-Buy

If there is one word that Ratan Tata has been working with long before he took charge as chairman of the Tata Group in 1991, it is strategy. As far back as in 1983, studying the then lethargic group under a controlled political economy regime (it sold whatever it produced), he wrote what he called a Strategic Plan. Under this, he wanted the group to embrace technology, to understand a competitive climate that was to come a decade later and give it a more consumer oriented thrust. Seventeen years later, he drafted the Vision 2000 document, again powered by strategy. Today, as the 1962 Cornell BSc graduate in architecture and structural engineering redesigns, restructures and re-engineers a new Tata Steel through India’s biggest-ever acquisition, the purchase of Corus, the keyword again is strategy.

Opinion in The Indian Express, January 31, 2007

Public in republic

Every time I see it, I feel repulsed — so perhaps, as the wise say, the germ lies in me, the problem is mine. But what else do you do when you see perfectly strong, perfectly intelligent, perfectly arrived people bow low and grovel before the khadi clad, who don the white cloth as Goliath or Duryodhana (or even David and Arjuna) may have worn their armour? Walk into any gathering and the politician chief guest, always late, always ready with a humorous line, expects the ingratiating masses to create around him an illusion of reverence, respect, power and fear. People stand up, bend over, ignore the person in front, try to catch the leader’s eye, create a smile...

Opinion in The Indian Express, January 29, 2007

Learning to learn

India will remain a low-income country for several decades with per capita income well below its other BRIC peers, says a recently-released paper by Goldman Sachs, simultaneously pointing out that it can become a motor for the world economy. But for that to happen, we will have to increase its efficiency or productivity. And there lies the key — the India of tomorrow can’t be built on foundations of yesterday. The one resource that needs to be given policy respect: Knowledge. It is the one word which the past week saw Prime Minister Manmohan Singh, President A.P.J. Abdul Kalam, and National Knowledge Commission (NKC) chairman Sam Pitroda stress. The Singh-Kalam-Pitroda combine is powering the bandwagon of societal change just as it is beginning to move: the creation and maturing of India into a knowledge society, a process that began in the early-1990s as Singh opened the economy sector by sector, clause by clause.
A decade and a half later, as captain of a ship with many sails to open before it cruises at double-digits, Singh is recognising that if the ship has to power ahead, its oarsmen at the bottom need to be empowered with muscles of knowledge. A social infrastructure has to be put in place, using which the marginal farmer or farm worker who moved as domestic help and physical labourer to the city then squeezed his way as a contract worker into a factory and signed into a union register as a permanent worker, can take the next step of becoming a skilled worker and as a collective transform India into a knowledge society.

Opinion in The Indian Express, January 25, 2007