A roof over the head does give security -- if it's your own. But taking on debt to fund that roof? In these times?
Gautam Chikermane
I’M BUYING a house.’ That’s my friend who, like me, would shudder at the prospect of using a credit card, leave alone taking a home loan. He’s not even looking at one of those EWS (economically weaker section) houses. The one he has in mind is worth Rs 24 lakh–a sizeable multiple of his salary. And his reasons are hardly original: the taxes and the rent I pay will get converted into a monthly instalment, though I could suffer for 15 to 18 months till I get possession. He reminds me of another friend, who just six months ago, moved from Mumbai to New Delhi, more specifically from a rented place in Bandra to a posh Rs 50 lakh apartment south of New Delhi. "I save taxes, I save on rent..." went the predictable argument, when I questioned her courage to take on such a huge loan.
They are not alone. If data is to be believed, amid the job losses and the recession and the business uncertainty and industrial slowdown, the one sector that has done well is housing finance. At a growth rate of about 35 per cent last year and an expected 50 per cent this year, this is one industry that seems oblivious of and untouched by the R-word plaguing the rest of India–from farmers and workers to entrepreneurs and bankers. As an industry, it is probably one of the safest in the financial sector-–individual households with so much of their wealth at stake in a single asset are least likely to default. Compare that to the Rs 75,000 crore of financial assets stuck with corporations, for which a new ordinance has had to be introduced. But I’m not interested in the profits or losses of companies.
Opinion in Outlook Money
Wednesday, August 14, 2002
Wednesday, July 31, 2002
Knowledge vs Money
Does a man who hasn't made his millions have the moral right to advise people on how to manage their money?
Gautam Chikermane
The man with the peaceful smile gazed at the two friends chatting next to him.
Doer: But how much money have you made?
Thinker: Not much.
Doer: Do you have a house of your own?
Thinker: No.
Doer: And you drive that rickety Maruti 800?
Thinker: Yes.
Doer: In what capacity, then, are you giving me financial advice?
Thinker: As someone who has some knowledge of finance.
Doer: That’s no good. If you want to advise people about money, you must be rich yourself. That is, if you want them to take you seriously.
Thinker: But my being poor has nothing to do with the knowledge I have or the advice I give.
Doer: Of course it does! If you’re really knowledgeable, you should be rich.
Thinker: By that logic, all finance ministers, fund managers, analysts, economists should be rich.
Opinion in Outlook Money
Gautam Chikermane
The man with the peaceful smile gazed at the two friends chatting next to him.
Doer: But how much money have you made?
Thinker: Not much.
Doer: Do you have a house of your own?
Thinker: No.
Doer: And you drive that rickety Maruti 800?
Thinker: Yes.
Doer: In what capacity, then, are you giving me financial advice?
Thinker: As someone who has some knowledge of finance.
Doer: That’s no good. If you want to advise people about money, you must be rich yourself. That is, if you want them to take you seriously.
Thinker: But my being poor has nothing to do with the knowledge I have or the advice I give.
Doer: Of course it does! If you’re really knowledgeable, you should be rich.
Thinker: By that logic, all finance ministers, fund managers, analysts, economists should be rich.
Opinion in Outlook Money
Sunday, June 30, 2002
Give us a break!
The new tax returns forms, running into 10 pages (and nine more of explanatory notes), make a travesty of the word Saral.
Gautam Chikermane
Mr Yashwant Sinha
Finance Minister
Ministry of Finance
North Block
New Delhi - 110001
Dear Mr Minister,
Thank you for convincing me that I’m no common man: I’m one of only 20 million taxpayers in this country, which makes me a very rare specimen of our species indeed. Someone the government ought to treat with samman–to borrow one of the many meaningless words in the dense tax lexicon –for thanklessly financing its profligacy. A man who, even as he bears the weight of the economy and pays for the sins of tax evaders, is at the rock bottom of the pecking order of political attention. Way below the various vote banks, money banks and muscle banks.
The list of injustices done to tax-paying citizens is long and unending, but the latest crude and insensitive joke is Saral ITS-2 and Saral ITS-3, a particularly warped variant of the form released in July 1999. These are forms individuals have to fill while filing their tax returns. A sample of disclosures we’re expected to make:
Column in Outlook Money
Gautam Chikermane
Mr Yashwant Sinha
Finance Minister
Ministry of Finance
North Block
New Delhi - 110001
Dear Mr Minister,
Thank you for convincing me that I’m no common man: I’m one of only 20 million taxpayers in this country, which makes me a very rare specimen of our species indeed. Someone the government ought to treat with samman–to borrow one of the many meaningless words in the dense tax lexicon –for thanklessly financing its profligacy. A man who, even as he bears the weight of the economy and pays for the sins of tax evaders, is at the rock bottom of the pecking order of political attention. Way below the various vote banks, money banks and muscle banks.
The list of injustices done to tax-paying citizens is long and unending, but the latest crude and insensitive joke is Saral ITS-2 and Saral ITS-3, a particularly warped variant of the form released in July 1999. These are forms individuals have to fill while filing their tax returns. A sample of disclosures we’re expected to make:
Column in Outlook Money
Saturday, June 15, 2002
More than meets the eye
Even before the dust has settled on the Enron-Andersen fiasco, we have the accounting misdeeds of WorldCom, Merck and Xerox in line. Can this happen in India? The idea is not as far-fetched as it might first seem. Readers are invited to write in with their views on the issue.
Gautam Chikermane
THE REVERBERATIONS of the accounting misdeeds of US companies have reached Indian shores. Even before the dust has settled on the Enron-Andersen fiasco, a series of new financial earthquakes, with their epicentres in the US, have begun to wreak havoc on international investors–WorldCom, which overstated profits to the tune of $4 billion; Merck, which did not account for $12 billion worth of sales; and Xerox, which claims it bribed Indian officials to get government contracts. The sheer scale of daring makes the Harshad Mehtas, the C.R. Bhansalis and the Ketan Parekhs look like petty pickpockets. Scams involving banks, stocks and allied regulators, RBI and Sebi seem like a waste of time, when so much more can be done by simply cooking the books.
Can this happen in India? Well, the idea is not as far-fetched as it might first seem. There are two institutions that participate in the publishing of balance sheets–the company’s management and its auditors. Once the balance sheet has been signed by the management, it is presented to all shareholders, and regulators like the Department of Company Affairs or Sebi (Securities and Exchange Board of India). The corruption of numbers, therefore, can be done by two sets of people–the management and the auditors. That is bad enough; what makes it worse is the ignorance of the regulators and the investors.
Opinion in Outlook Money
Gautam Chikermane
THE REVERBERATIONS of the accounting misdeeds of US companies have reached Indian shores. Even before the dust has settled on the Enron-Andersen fiasco, a series of new financial earthquakes, with their epicentres in the US, have begun to wreak havoc on international investors–WorldCom, which overstated profits to the tune of $4 billion; Merck, which did not account for $12 billion worth of sales; and Xerox, which claims it bribed Indian officials to get government contracts. The sheer scale of daring makes the Harshad Mehtas, the C.R. Bhansalis and the Ketan Parekhs look like petty pickpockets. Scams involving banks, stocks and allied regulators, RBI and Sebi seem like a waste of time, when so much more can be done by simply cooking the books.
Can this happen in India? Well, the idea is not as far-fetched as it might first seem. There are two institutions that participate in the publishing of balance sheets–the company’s management and its auditors. Once the balance sheet has been signed by the management, it is presented to all shareholders, and regulators like the Department of Company Affairs or Sebi (Securities and Exchange Board of India). The corruption of numbers, therefore, can be done by two sets of people–the management and the auditors. That is bad enough; what makes it worse is the ignorance of the regulators and the investors.
Opinion in Outlook Money
Money, sex and kids
By making money-talk taboo at home, we slow down our kids' progress towards financial literacy.
Gautam Chikermane
YOU MUST be out of your bloody mind. That’s the most perverted thing I’ve ever heard. Why do you want to corrupt the minds of these kids?" The shock was genuine, so was the anger. Not surprising when someone tells you that he wants to teach your children about money. "Money? For God’s sake, money is at the root of all evil... children must be kept away from it." But the same parents who so vociferously condemn this "misdirected enterprise" (to educate children about money) spend thousands of rupees– often dollars too–on them, and not just on necessities like their education, but on excesses like cellphones and ludicrously large libraries of video games. In their own lives, they certainly desire it. Lust for it. Worship it. Even fear it–perhaps because they don’t much understand it. Is that what explains this schizophrenic ambivalence about money: lust for it when you are an adult and do your damnedest to guard children from its "corrupting influence"?
Opinion in Outlook Money
Gautam Chikermane
YOU MUST be out of your bloody mind. That’s the most perverted thing I’ve ever heard. Why do you want to corrupt the minds of these kids?" The shock was genuine, so was the anger. Not surprising when someone tells you that he wants to teach your children about money. "Money? For God’s sake, money is at the root of all evil... children must be kept away from it." But the same parents who so vociferously condemn this "misdirected enterprise" (to educate children about money) spend thousands of rupees– often dollars too–on them, and not just on necessities like their education, but on excesses like cellphones and ludicrously large libraries of video games. In their own lives, they certainly desire it. Lust for it. Worship it. Even fear it–perhaps because they don’t much understand it. Is that what explains this schizophrenic ambivalence about money: lust for it when you are an adult and do your damnedest to guard children from its "corrupting influence"?
Opinion in Outlook Money
Thursday, May 30, 2002
A date with death
If it's not going with me when I say my final farewell to the world, what's the big deal with wealth creation?
Gautam Chikermane
THE NURSE walks in. Pricks my vein with efficient ease. Pain. But I don’t have the energy to protest. Slowly, life starts flowing from the bottle, drop by drop, into my veins. As I stare at the white ceiling above, with no distractions other than the thought of a near-death experience barely an hour ago, I wonder what the whole business of life is about. That’s when I notice him, hovering immensely near the ceiling. Mighty, majestic, mysterious. "Who are you?" I ask. "The God of Death," he answers simply. As clinically detached from his answer as the doctor seemed from his patient when he introduced himself. The blood that has begun to course my veins again is suddenly turning cold. "What do you want?" I mutter, almost knowing–and dreading–the answer. "I’ve come to take you," the voice rumbles. Chilled by the certainty in his voice, I mumble: "But I’m not ready yet... is there any way I can get some more time...?" "Yes..." followed by a pregnant silence. What’s the ‘but’? I wonder. What is he not telling me? I am frantic, and in that fleeting moment, I wonder if I’d sell my soul to the devil if that was the price for staying on. And, then, "Answer these two questions."
* What do you leave behind when you die?
* What do you carry with you after death?
This couldn’t be happening, but it is. He couldn’t be there, but he certainly is. With no way out, and apparently nothing to lose, I decide to give it a go.
Opinion in Outlook Money
Gautam Chikermane
THE NURSE walks in. Pricks my vein with efficient ease. Pain. But I don’t have the energy to protest. Slowly, life starts flowing from the bottle, drop by drop, into my veins. As I stare at the white ceiling above, with no distractions other than the thought of a near-death experience barely an hour ago, I wonder what the whole business of life is about. That’s when I notice him, hovering immensely near the ceiling. Mighty, majestic, mysterious. "Who are you?" I ask. "The God of Death," he answers simply. As clinically detached from his answer as the doctor seemed from his patient when he introduced himself. The blood that has begun to course my veins again is suddenly turning cold. "What do you want?" I mutter, almost knowing–and dreading–the answer. "I’ve come to take you," the voice rumbles. Chilled by the certainty in his voice, I mumble: "But I’m not ready yet... is there any way I can get some more time...?" "Yes..." followed by a pregnant silence. What’s the ‘but’? I wonder. What is he not telling me? I am frantic, and in that fleeting moment, I wonder if I’d sell my soul to the devil if that was the price for staying on. And, then, "Answer these two questions."
* What do you leave behind when you die?
* What do you carry with you after death?
This couldn’t be happening, but it is. He couldn’t be there, but he certainly is. With no way out, and apparently nothing to lose, I decide to give it a go.
Opinion in Outlook Money
Wednesday, May 15, 2002
A case for regulating real estate
The real estate market has to change from one that runs on 'trust' to one that runs via trustworthy institutions.
Gautam Chikermane
FOR MOST of us middle-class citizens of this country, the biggest asset we have is a house–four-and-some walls which become a place where we not only invest our hearts and minds and emotions and aspirations, but most of our money as well. I’d imagine that 70-85 per cent of our total wealth is invested in a house. The rest is largely confined to safe government-backed schemes and insurance, and a tiny fraction is either wasting away in savings bank accounts, earning a pathetic 4 per cent, or circulating among shares, mutual funds and other financial instruments. Unfortunately, the real estate sector, which houses most of the middle-class wealth, is the least regulated of all these markets. Witness the contradiction: our most valuable asset is the least governed and the least valuable asset the most regulated.
If our stock broker cheats us of Rs 1,000, we can report him to Sebi (Securities and Exchange Board of India) or to the stock exchange–and expect to get justice. But if a property dealer charges us a Rs 50,000 commission (2 per cent) on the sale of a Rs 25 lakh apartment, and the property turns out to be disputed, there is nothing we can really do by way of seeking redress. Of course, we continue paying our monthly instalments to the housing finance company. If the property dealer charges us one month’s commission (at an exorbitant 8.3 per cent, unheard of in any rational market) on an apartment we want to rent out for a year, and the tenant turns out to be a rogue, the dealer is simply not accountable. We can do nothing, get nothing, hope for nothing. Why? Simply because there is nobody to go to, no regulator to file a complaint with, no self-regulated organisation to report this mishap. Yes, we can appeal to the courts–and pray that at least our grandchildren get justice.
Column in Outlook Money
Gautam Chikermane
FOR MOST of us middle-class citizens of this country, the biggest asset we have is a house–four-and-some walls which become a place where we not only invest our hearts and minds and emotions and aspirations, but most of our money as well. I’d imagine that 70-85 per cent of our total wealth is invested in a house. The rest is largely confined to safe government-backed schemes and insurance, and a tiny fraction is either wasting away in savings bank accounts, earning a pathetic 4 per cent, or circulating among shares, mutual funds and other financial instruments. Unfortunately, the real estate sector, which houses most of the middle-class wealth, is the least regulated of all these markets. Witness the contradiction: our most valuable asset is the least governed and the least valuable asset the most regulated.
If our stock broker cheats us of Rs 1,000, we can report him to Sebi (Securities and Exchange Board of India) or to the stock exchange–and expect to get justice. But if a property dealer charges us a Rs 50,000 commission (2 per cent) on the sale of a Rs 25 lakh apartment, and the property turns out to be disputed, there is nothing we can really do by way of seeking redress. Of course, we continue paying our monthly instalments to the housing finance company. If the property dealer charges us one month’s commission (at an exorbitant 8.3 per cent, unheard of in any rational market) on an apartment we want to rent out for a year, and the tenant turns out to be a rogue, the dealer is simply not accountable. We can do nothing, get nothing, hope for nothing. Why? Simply because there is nobody to go to, no regulator to file a complaint with, no self-regulated organisation to report this mishap. Yes, we can appeal to the courts–and pray that at least our grandchildren get justice.
Column in Outlook Money
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