Wednesday, December 24, 2008

Time to bring on the shrinks

Gautam Chikermane
December 23, 2008
What do policymakers and politicians do when those whom they look to for ideas and solutions say that they don’t have them? Where do they go for intellectual solace when the world’s top economists and thinkers, three of them Nobel laureate, candidly confess their own intellectual failures? How do you react when you hear luminaries, whose words exemplify the cutting edge of knowledge, say that they may only know what to do once the ongoing credit crisis is over, but not how to end it? Bring in the shrinks, I would suggest.
A bystander at the high table of economics, I was dazzled by the sheer expanse and depth of knowledge reflected in the elegant arguments that reviewed, critiqued and took forward the work of Nobel laureate Amartya Sen at an international conference held in Delhi. There are simpler ways of wishing Sen “Happy 75th Birthday”, but characteristic of their profession, 77 of the world’s top-ranked economists, philosophers, historians, policymakers and social scientists got together to offer him their best wishes, by writing 58 papers, now bound together into two brilliant volumes titled Arguments for a Better World, released by Prime Minister Manmohan Singh last week — a must-read for policymakers.
Opinion in Hindustan Times

Thursday, December 18, 2008

All in the family

Gautam Chikermane, Hindustan Times
December 17, 2008
The unholy deal under which the board of Satyam Computer Services was unanimously ready to transfer the cash of the company to an unrelated firm, owned by its promoters that control 8.6 per cent of Satyam, raises issues that affect each and every one of us investors. While the deal has been withdrawn under investor pressure, the issue is no longer about a promoter gone bad or a blue chip, cash-rich company that carries a 2 per cent weight in the Sensex.
Opinion in Hindustan Times

Tuesday, December 9, 2008

(They can’t get no) Satisfaction

Gautam Chikermane
December 08, 2008

Should we call it policymaking by inertia — to do nothing until external conditions force a reaction? Or policymaking by habit — the wait-and-watch, one-step-at-a-time method in the ongoing economic madness? At a time when economic history is being written and when public policy is being forced to resonate and respond to global cues, are the sharp interest rate cuts by Reserve Bank of India (RBI) on Saturday combined with marginal tax cuts and increased government spending on Sunday enough to prevent a further slowdown?

Then there is the corporate sector that is able to organise ideas, entrepreneurship, material, money, and physical and intellectual resources under predictable conditions, overplaying the ‘Cry Wolf’ card. For, no amount of relief — fiscal or monetary — seems enough to this set of opinion-makers. Even before the packages were announced, the whining of their being ‘not enough’ or 'too little too late’ had begun. Sensing that the weekend package is only the first of many, the corporate, like a smart entrepreneur, has realised that the new currency for policy transactions is ‘dissatisfaction’. So, whatever the government does today will end up being ‘inadequate’.

Column in Hindustan Times

Monday, December 8, 2008

Sebi’s demand for transparency from itself a world’s first

Gautam Chikermane
December 07, 2008
Last week, CB Bhave, chairman, Securities and Exchange Board of India (Sebi), announced among many other things, the introduction of a new regime of transparency. Under this, we will get access to all behind the scene agenda papers of all Sebi board meetings.
Column in Hindustan Times

Sunday, November 16, 2008

Is Indian economy fundamentally sound?

Gautam Chikermane
November 16, 2008
How often have you heard these lines? "The Indian economy is fundamentally sound. Our banks are safe. Our economy will continue to grow. It may grow slower than last year but it will still be one of the world's fastest."
Following matters of economic policy as a profession, I have heard these or similar sounding words more often than ever during the past two months. How is it, I had been wondering, that when the whole world is collapsing, Indian policymakers can indulge in such talking up of economic sentiment.
At Planning Commission Deputy Chairman's late-night briefing in Washington DC, I had to get it out of my system. Why, I questioned him, do India's top three economic policymakers --- Prime Minister Manmohan Singh, Finance Minister P. Chidambaram and Ahluwalia --- keep giving us this one statement whenever we express any concern about the global meltdown.
Blog in, November 16, 2008

‘Power shift to new economies’

Gautam Chikermane
On board PM’s special aircraft, November 16, 2008
The meeting of heads of state of G-20 nations at the ‘Summit on Financial Markets and the World Economy’ in Washington DC was “a clear indication that the balance of power is shifting in favour of emerging economies”, Prime Minister Manmohan Singh has said.
While India had been invited earlier to G8 discussions informally, “our views were not really taken into account. This is for the first time that there was genuine dialogue between developed countries and major emerging countries,” Singh told reporters soon after leaving Washington.
Story in Hindustan Times, November 16, 2008

Saturday, November 15, 2008

India can borrow $39 billion from IMF, World Bank

Gautam Chikermane
Washington, November 15, 2008
To help tide over the credit crisis, India can avail of loans worth $39 billion from the International Monetary Fund (IMF) and the World Bank, Planning Commission deputy chairman Montek Singh Ahluwalia told reporters late on Friday night.
India can borrow up to $30 billion (up five fold) from the IMF to infuse short-term liquidity through low conditional loans. This will have to be repaid within nine months. “But with reserves of $200 billion, we really don't need this,” Ahluwalia said.
Story in Hindustan Times, November 15, 2008

Friday, November 14, 2008

World’s financial powers meet to fix economies

Gautam Chikermane
New Delhi, November 14, 2008
With an economic contraction looming, Prime Minister Manmohan Singh's trip to Washington DC to attend a global financial summit on November 15 seems a little odd. But when the epicentre of the contraction lies in the credit crisis of the US, that's the only logical destination.
Singh is one of 20 heads of state of the world's wealthiest countries and emerging financial powers — the G20 — getting together to fix their economies. But the Summit on Financial Markets and the World Economy that begins two days later will look beyond financial markets.
“I will put forward our views on the need for greater inclusivity in the international financial system, the need to ensure that the growth prospects of the developing countries do not suffer, and the need to avoid protectionist tendencies,” Singh said in a statement before his departure.
Story in Hindustan Times, November 14, 2008

‘Standards global, regulation national’: FM

Gautam Chikermane
On Board Prime Minister's Special Aircraft, November 14, 2008
New global regulatory standards, prudential norms, greater surveillance mechanism and reform of the IMF are among the key points that the Indian contingent will raise on November 15 at the Summit on Financial Markets and the World Economy in Washington DC, Finance Minister P Chidambaram told reporters.
Most important among these, in terms of having a widespread impact, will be the setting up of common regulatory and accounting standards across the globe or at least for G20 nations. “We must have convergence of accounting standards,” Chidambaram said.
But he dismissed the idea of a common global regulator saying, “I don't think regulation can be raised to a global regulator. That's too ambitious, and perhaps not possible in today's circumstances. Regulation must be national.”
Story in Hindustan Times, November 14, 2008

Monday, November 3, 2008

Dialectic mysticism

In just six weeks, as financial giants across the world revealed their capital hollowness, capitalism is being asked the most provocative questions ever. Are profits private and losses public? Do free markets mean unbridled freedom? Is government buying into private banks another form of nationalisation? Should taxpayers’ money be used to prop up free markets? If so, does it signal the rise of socialism? And with every passing day, as cries for government bailouts increase and get the label of legitimacy, the big one: is capitalism dead?

Opinion in Hindustan Times, November 03, 2008

Saturday, November 1, 2008

Buffett à la carte

It’s not his billion-dollar fortune that he’s built up entirely by investing that has forced me to follow each and every move the man has made since 1998. To me the money is incidental, a delightful by-product of the real thing — the simple, universal, disciplined method of making it. In the world of finance, Warren Buffett is the poet and the painter, the doer and the thinker. And Schroeder puts it together grippingly.

Review in Hindustan Times, November 01, 2008

Tuesday, October 21, 2008

A rotten joint venture

The late night air around the three-storeyed Kingfisher Airlines’ Vile Parle office in Mumbai on October 13 was thick with expectation. Reporters stood outside waiting. Five hours later, when the chairmen of Kingfisher Airlines and Jet Airways emerged, armed with their wide smiles, the “alliance” they announced — which experts termed ‘cartelisation’ — only served to cover their next day’s intent.

Opinion in Hindustan Times, October 21, 2008

Tuesday, October 7, 2008

Searching high and low for the law

There are two forces of physics acting upon a changing India today. On the economic front, as India expands into global terrains, a centripetal force is gathering momentum, best represented by the country’s 8 per cent growth rate. This force, however, is being pulled back, through an equally strong centrifugal force that looks inward, is fragmented and savage in its execution. Caught in between are the rest of us. If economic development and mass prosperity have to be delivered, the politics of violence that the centrifugal force represents needs to die. And there lies a political opportunity for Elections 2009.

Opinion in Hindustan Times, October 07, 2008

Tuesday, September 23, 2008


We need to explore the scope for acquiring energy assets abroad.
Prime Minister Manmohan Singh, September 20

I am delighted to formally announce the first flow of crude oil from the Krishna-Godavari basin.
Mukesh Ambani, Chairman and Managing Director, Reliance Industries, September 21

For those who think these two statements made in the past two days are intellectually slippery, here’s the bottom line. More than anything else, it is energy security that will drive India’s economic growth and help drill prosperity into the country. It affects the fortunes of countries and companies, investors and consumers and most important, it brings political stability.

Opinion in Hindustan Times, September 23, 2008

Tuesday, September 9, 2008

Land ahoy!

Between Tata Motors’ Singur face-off and your 250 sq m plot in Delhi that’s been under siege from builders for the past three years, there’s a single binding force: transfer of property. It is the process of transfer that differentiates the first from the last — you have a choice.
In the case of mega-projects dotting the country, owners of land don’t have that choice. Here, too, if the land is acquired by a private company — a DLF acquiring 2,500 acres in Gurgaon to develop a township, for instance — and landowners get what they feel is a market rate (or higher), the transfer is smooth. Sweetening such deals is also the promise of jobs, an equity stake in the project, equivalent land elsewhere and so on.

Opinion in Hindustan Times, September 09, 2008

Monday, August 25, 2008

Not a nano question

It is not about Ratan Tata or India’s largest auto company, Tata Motors —which is challenging assumptions of costs the world over. The Rs 1,500 crore that the company is ready to forego for employee safety is as generous a promoter as any worker can aspire for. The amount — 9 per cent of the company’s market capitalisation — has been taken in stride by the 309,530 shareholders. Between Tata’s exit threat and today, its stock has risen almost 5 per cent.

Opinion in Hindustan Times, August 25, 2008

Tuesday, August 12, 2008

Singh is Kinng is that many-splendoured thing: a great entertainer

There is a herd mentality that plagues fund managers — the top holdings of the funds they manage are frightfully similar. The Indian film critics seem no different. They kneel at the altar of Kurasowa’s Rashomon but there are no eight versions from eight critics on offer. They pray to De Sica’s Bicycle Thieves but there are no twists in their climaxes. They worship Ray’s Pather Panchali as a classic, but there’s nothing beyond black and white in their writings.

Opinion in Hindustan Times, August 12, 2008

Sunday, August 3, 2008

Pension tension

The decision by the Employees’ Provident Fund Organisation (EPFO) last week has unequivocally and irreversibly opened the gates for pension reforms. While the decision to open fund management to three private sector fund managers — HSBC AMC (Asset Management Company), ICICI Prudential and Reliance — and to the State Bank of India is rather simple, the fact that the EPFO’s powerful Central Board of Trustees felt the need for better fund management — and found private firms worthy of shouldering that responsibility — is a step that shows a new thinking in tune with changing times.
I am enthusiastic about this move not merely from the political or public policy perspective. The numbers thrown up as a result of this decision show a high level of economic efficiency, unseen so far. The charges bid by the three firms to manage about Rs 30,000 crore per annum are the lowest we’ve seen in independent India. At less than one basis point (100 basis points make a percentage point), HSBC, ICICI and Reliance are offering economies of fund management that scale allows them.

Opinion in Hindustan Times, August 03, 2008

Tuesday, July 22, 2008

Inflation! 11.91%

Tuesday’s trust vote was not merely about who governs the nation for how long, but also about tackling something much larger: a daily cash flow that’s gone awry ever since the inflation rate climbed to 11.91 per cent, double of what it was less than four months ago.
Regardless of how it ended, the debate about the future of the UPA government in the Lok Sabha was as dignified a discussion as we can possibly get in a political environment of ‘single-digit’ parties leveraging their presence to extract their pounds of flesh. The economic stage was set with both Prime Minister Manmohan Singh and Leader of the Opposition L.K. Advani agreeing that the nuances of signing the Indo-US nuclear deal is a non-issue when inflation has hit — and threatens to stay — in double digits, eating into the very vitals of Indian households. So what about the Real McCoy: double-digit inflation?

Opinion in Hindustan Times, July 22, 2008

Sunday, July 20, 2008

No matter who wins, you lose

Whether the government stays or falls, be prepared for hard times. That’s the message from beleaguered Prime Minister Manmohan Singh.
Singh believes a “non-issue” is occupying our minds at a time inflation is threatening to reduce living standards, a source, speaking on condition of anonymity on behalf of the PM, said on Saturday.
“This is possibly the biggest (inflationary) challenge since 1973,” said the source, referring to the days of the world’s first oil shocks: Indian inflation soared to about 30% and stayed there for over 18 months.

Opinion in Hindustan Times, July 20, 2008

Monday, July 7, 2008

Multi-armed with knowledge

When I see the cut-off percentages needed to get into any respectable college in Mumbai or Delhi today, I find myself cut off from all avenues of what we term ‘education’ and a traditional ‘career’.
With the marks I got in my Class 12 board exams, only a miracle got me a leg into a decent college through what the University of Delhi calls ‘Third cut-off list’. If I wanted to study my course (economics) today, I would have had to go to some other university as no college would give me admission based on my marks. if I wanted my college, the only course available to me with my marks would be Sanskrit.

Opinion in Hindustan Times, July 07, 2008

Monday, June 9, 2008

Why you should worry about the latest market crash

At a point when the Sensex has fallen by 5,000 points — that’s by 25 per cent — from over 20,000 in early January to 15,000 today, why should a 500 point fall make news? Because these 500 points bring out the first sentiments of investors: fear and greed.
History tells us that we’ve lost money in earlier falls, the greed years of the dot-com boom, for instance. Then, some of the tech shares that quoted at over Rs 1,000 could be picked up for a few paise. Many investors are still holding on to them, in physical form, waiting for them to rise to their previous levels — or at least to Rs 500 or thereabouts so that the investment can be salvaged.
The bad news is that that’s not going to happen in their lifetimes.

Opinion in Hindustan Times, June 09, 2008

Wednesday, June 4, 2008

The future lies in history

By raising the prices of diesel and petrol by Rs 3 and 5 per litre respectively and that of LPG by Rs 50 per cylinder, the UPA administration has shown rare courage. This is especially brave in these ominous times of political economy constraints. But beyond the petty politics of power-seeking and power-sharing lies one fact: the price Indians pay for petrol has no relationship with the usual demand-supply equilibrium under which any free economy operates. All developed economies pay more, few emerging economies pay less. Inflation, say political parties, will rise and wreak havoc on the household economics of the common man. There will be strikes by the Left; then by other parties; and, of course, criticism from the BJP.
It is coincidental that the price rise follows the the BJP’s electoral victory in Karnataka last week. Among the many reasons being cobbled up for the Congress loss is the rising inflation rate, which after yesterday’s oil price hike will go up by 0.5 percentage points. How much of this is a cause-effect relationship and which half is the effect leading up to ‘cause-seeking’, I’m not so sure. For, to stay afloat in this Age of the Sound-bite is not easy unless you have a short, snappy and easy-to-digest ‘analysis’ to offer. Hence the popular misconception that inflation was the prime reason for voters turning away from the Congress — and that this ‘morning’ will show the ‘day’ in other states like Madhya Pradesh, Chhatisgarh and Rajasthan.

Opinion in Hindustan Times, June 04, 2008

Wednesday, May 14, 2008

Eat the rich

Beyond falling profit margins, slowing industrial growth, high interest rates and voter uncertainty, there are two new beasts that high inflation, across the world, is unleashing — riots in poor countries and lifestyle changes in richer ones. Backed by a 39 per cent rise in prices over the past year, food riots erupted in countries as diverse as Egypt and Indonesia, Guinea and Mexico, Haiti and Uzbekistan, Mauritania and Yemen.
On the other side of the wealth divide, the rise in oil prices is going to change more than just diets; US citizens are going to see lifestyle changes. Under risk is the country’s suburban economy, where workers drive 100 miles to work on cheap gas. Will workplaces move to where the workers are or vice versa, will technology replace human interactions, these are questions companies and employees there are asking.

Opinion in Hindustan Times, May, 14, 2008

Monday, March 17, 2008

Can’t axe those roots

We may be Muslims, saab, but we cannot cut this peepal tree. His name is Rahim and his band of workers sound Muslim too. The carpenter --- Maulana saab. The painters --- Abdul and Ismail. The plumber --- Yaqub. I didn’t hire him because of who he was (or who he thinks he is) but because he’s a competent contractor. And among the many other jobs that a house needs, cutting the peepal tree on the terrace of our landlord’s apartment was one. The tree, like thousands on Delhi buildings and millions across north India, was a hazard to the building. My generally invisible neighbours brought it to my notice. The tree had to go. Period.

Opinion in The Indian Express, March 17, 2008

Sunday, March 9, 2008

Oye boss!

How do you deal with a bad boss? That’s a question a 25-year-old asked me last week. The worst thing anyone — individuals, organisations, countries — can tolerate today is a bad boss. It impacts teams, creates bad blood, generates disharmony and tilts the balance against work in a work-life balance where life drives work and work influences life. It seriously impacts the organisation, though most leaders, in an either-or, tend to favour the bad boss on the cold assumption of premium replacement value, not realising that it is generals in corner cabins that have to be retired, not soldiers on streets getting business.

Opinion in The Indian Express, March 9, 2008

Friday, March 7, 2008

Meet India's 53 Forbes billionaires: 19 newcomers, 28 'self-made'

Meet Sameer Gehlaut, 34. Engineer from IIT-Delhi. Self-made entrepreneur who launched online brokerage Indiabulls in 2000, diversified into real estate, picked up high-end land in high-end auctions in Delhi and Mumbai. And, almost as a by-product, is India’s youngest billionaire, according to Forbes which released its list of 1,125 wealthiest people today.

Story in The Indian Express, March 07, 2008

Thursday, February 14, 2008


When controversy convulses Mumbai and its social tensions are seen to be politically sharpened, it becomes so easy to forget its proven capacity to survive. The city became a commercial centre in the 17th century when Gerald Aungier, the second governor of Mumbai, invited and attracted skilled and trading talent — Gujaratis, Parsis, Bohras, Jews, Banias. On August 8, 1672, while inaugurating the First British Court of Justice he told the court: “The inhabitants of this island consist of several nations and religions, like English, Portuguese and other Christians, Moores and Gentoos, but you, when you sit in this seat of justice and judgment, must look upon them with one single eye as I do, without distinction of nation or religion.”

Opinion in The Indian Express, February 14, 2008

Wednesday, February 13, 2008

'It is not worth CAG’s while to look at Rs 100 telephone bills or Rs 200 staff car bills'

How do you define the holistic picture? How is it a step away from what the CAG has been doing so far?
I’m not saying that what the CAG has been doing is not right. No, I’m only saying, prioritise. Government budgets are expanding by leaps and bounds. Which means Government expenditures will increase. But the CAG staff is not expanding. We have limited staff and we have to do the audit in this limited staff. Hence the need to prioritise. We have to ensure that we get to those issues which have a larger impact on society. Maybe NRHM, NREGS. It is not worth our while going and sitting on a PSU, the sales turnover of which is Rs 400-500 crore.
Also, if audit comes up with some findings, it doesn’t mean the findings are malafide. It only means that somewhere some omissions have occurred, it’s not necessarily commissions all the time.

Interview in The Indian Express, February 13, 2008

Monday, February 11, 2008

Business of bliss

Whatever else the world may throw at him, there is no doubt that along with Osho (1931-90), Mahesh Yogi brought the second wave of Indian Spirituality to the US, which in turn offered both gurus the opportunity to re-export it to the rest of the world. Sitting on the crest of the first wave --- created by Swami Vivekananda (1863-1902) in 1893 with his speech at Parliament of Religions in Chicago and Paramahansa Yogananda (1893-1952) with his life changing 1946 work, Autobiography of a Yogi --- Mahesh Yogi and Osho discarded the simplicity of the first wave and embedded their spiritual messages with matter. If Osho’s outer signatures were his 93 Rolls Royce cars and sex (remember From Sex to Superconsciousness?), Yogi had the Beatles as his students, trademarked transcendental meditation (TM) and levitating techniques.

Opinion in The Indian Express, February 11, 2008

Wednesday, February 6, 2008

Have credit, will vote

Has Veerappa Moily lost his mind? Or, since he is only the chairman of All India Congress Committee’s media cell and hence represents the Indian National Congress, has the party lost its aam aadmi plot? Since I ask this question in the context of Moily’s statement underlying the importance of low interest rates in the economy, particularly for home loans, I would argue that the party has not forgotten its poverty-votes story, but has found a new chapter: homeownership-votes.

Opinion in The Indian Express, February 6, 2008

Tuesday, January 29, 2008

Reddy’s prescription for the credit fever

“If I aim for high growth and high inflation, I am sunk. I will not be politically in trouble if my growth rate slows down to 8.5 to 8 per cent. I will be in greater trouble if my Inflation rises to 6 per cent this year.” finance minister P Chidambaram at Davos on January 25.

Four days later, RBI governor Y V Reddy effectively told Chidambaram: “I won’t let you sink.” By doing nothing in the third quarter review of annual monetary policy for 2007-08, Reddy has changed RBI’s currency, from economics to politics. In a country that’s barely begun to understand the macroeconomic, strategic, financial and, of course, political implications of growth, Reddy’s prescription this quarter is once again yesterday’s pill.

Story in The Indian Express, January 29, 2008

Sunday, January 27, 2008

Faith and market

After five hectic days of going under the news and into the minds and acts of investors as they negotiated a 4,000 point fall in the Sensex followed by a 2,000 point recovery last week, the one thing I’m completely convinced about is that finally faith moves not only mountains, but everything in the esoteric, real and financial worlds. Of the esoteric we know enough, for faith is the currency through which we transact with the other side, using the instrument of prayer. But led by statements like ‘I’ve lost faith in the market’, last week opened up a whole new world of faith investigations for me.

Opinion in The Indian Express, January 27, 2008

Monday, January 21, 2008

Fallen, not broken

Seven trading days ago, on January 10, I got an SMS from a colleague who has an equity exposure that would have the Left parties deliver benign smiles of approval. “Should,” she asked, “I buy this stock (a global pharmaceutical major)?” My answer: No. Not because this person, in her twenties, doesn’t need the equity exposure --- she does --- but because I didn’t want to be the shoulder over which she would fire her first speculative shot. As I walked into office later in the day, I told our resident stocks expert that the market will fall.

Opinion in The Indian Express, January 21, 2008

Friday, January 11, 2008

Nano is beautiful

It’s a small car that’s carrying a big burden. As Ratan Tata announced and unveiled a concept that the world’s business press had been waiting for, global automakers had been afraid of, and governments in three continents had been inviting, he was, for a change, batting on the front foot. An aggression unseen so far in his generally humble and soft demeanour could be felt in his still humble and soft words. Over breakfast, speaking on behalf of Nano, his four-year, Rs 1 lakh dream, it wasn’t a defensive Tata any more. With less than three hours’ sleep behind him, it was an unusually forceful Tata.

Opinion in The Indian Express, January 11, 2008