Sunday, June 19, 2016

YOU DECIDE

YOU DECIDE
==========

Raghuram Rajan's exit as RBI Guv is creating more soundwaves than even Dadri or Kanhaiya!!  All along, he has been hailed as a rockstar Governor.  And his "resignation letter" to RBI employees has apparently signalled Armageddon. The media and a few learned men are calling the end of the Indian Economy, already! The Indian media is now breaking into a dirge, something not seen even when Sachin Tendulkar retired! And even (!) Western media houses like CNBC are carrying this as their weekend headline news. The market pundits are already seeing daggers being pulled out from the sheaths, in anticipation of a bloodbath in Dalal Street.

So, how much of this is truth? How much is hype? Is it as black-and-white as it appears to be? Let us look at a few aspects. And then YOU DECIDE.

First things first. RR took over the helm of RBI at a time when the Indian Economy was in doldrums. Everything that had to go wrong, had indeed gone wrong. Every economic parameter was out of range. Inflation, credit, current account deficit, moribund Public Sector Banks(PSB)- you name them all. Let us look at RR's performance in these three years on some of these key parameters.

Inflation: Undoubtedly, a feather in the cap of RR for taming the official inflation figures.  Some pundits argue that during a good part of his tenure, global oil prices had crashed, and that made it very easy for them. Partly true. Global oil prices indeed helped. But then, dont forget the fact that India has gone through two consecutive years of drought. Inflation management, against a backdrop of parched lands, farmer suicides and hoarding by middlemen was never going to be easy. But RR stuck to his task like a missionary, and delivered on inflation.

There are enough naysayers who scoff at this and say " oh, BS!! Look at the prices of tomatoes and pulses in my street-corner kirana store. What low inflation?". This missive is usually directed at Modi, not on RR!! So, you give the credits to RR, and make Modi the punchbag!! Great, keep it, naysayers! For, you were the ones who complained the same, when previous governments occasionally reported low inflation figures occasionally.

But what these naysayers do not realize is the importance of official inflation figures. If you are a student of macro-economics, you will realize that inflation is one of the key parameters that go into deciding the credit rating of a country. A stable rating is only possible with low inflation figures. And a good credit rating means that the government and companies can borrow at much better interest rates in the international financial markets, than otherwise. So, what RR has achieved is the maintaining of the platform of lower borrowing rates, inspite of the adverse economic situation. This will definitely help over the longer term, as long as his successor does not end up with a U-turn.

The other area that RR has achieved big is forcing the banks to declare their doubtful debts, and getting them to provide for non-performing assets (NPAs). For those of us novices, a Vijay Mallya borrowing from a consortium of banks without proper collateral ( during the previous regimes), and not returning the money borrowed, would lead to NPA in the balance sheets of these banks.  Jaitley and RR have worked together to provide for a corpus for recapitalization of the PSBs ( more money may be needed for this in the next budget), and, along with provisions for NPAs that would ultimately clean up the balance sheets of these PSBs ( and some private bank like ICICI Bank, Axis Bank etc) have paved the way for better health of the banks, and the economy in future. Contrast this will the trillions of dollars of unrecoverable debts in the balance sheets of Chinese Banks, and the time bomb they are sitting on due to this, and you will appreciate the profound effect of this aspect of banking reform.

In addition, current account deficit is down to less than 1% and if it continues, perhaps for the first ever time in India's history, we may end up having a current account surplus.

So, is RR all goodness and with no misses? Let us see.

RR reformed banks' balance sheets alright. He ultimately reduced interest rates ( after much haggling between the govt and the RBI) , but RR has failed to pressurize the banks to pass on the benefits of lower Repo rates ( the rate at which banks can borrow form RBI), to the consumer - retail as well as institutional. Top marginal borrowing rates of Corporate has hardly moved. And if you, as individual have an EMI obligation for a home loan, you would have observed that inspite of the repo rates going down by as much as 1.5% over the last year, your home EMI rates have dropped only by 0.5% on an average. The banks have been pocketing the delta, and you are left wondering " where is the Acche Din?" ;)

Secondly, lending by banks has hardly gone up. Credit growth is one of the key drivers of economic growth in Keynesian Economics that all capitalist countries follow, and sadly, credit off-take has failed to take off.  Yes, part of the reason is the excess capacity that was created in the previous cycle of economic boom, and needs time to get absorbed before more investments can follow, coupled with rapidly slowing global economy. But then RR's hawkish stance on inflation control has made sure that banks are now loathe to lend more. This has ensured that the economy is not growing as fast as it is really capable of.

Thirdly, in spite of RR's rockstar status, the FDI inflows, though growing, have not been as big as expected - at least not as yet. Maybe they will pick up as the global economy picks up. And this will be the joint responsibility of RBI's policies and the government's ability to provide an investor-friendly environment. Maybe those vested interests from abroad, who were rooting for his second innings, had been waiting for even more sops.

So, should RR have continued, or is this the right decision to let somebody else take over? I am basing my arguments purely on his performance s RBI governor, and am choosing to ignore all his unwarranted rantings of " intolerance", " India is a one-eyed wonder" etc...   nor his alleged soft corner to P Chidambaram leading to a lot of bad blood on the Kathik Chidambaram saga. I will not venture into them, but will evaluate RR purely based the government's priorities and his performance thus far.

Let us take the big picture. Remember, Modi had come to power on the promise of Governance, creation of jobs, and laying the platform for a strong and sustainable economy that will ultimately make India a Global economic leader. It is amply evident that, notwithstanding his track record on Inflation and other achievements, RR's strategy of low inflation at the cost of muted economic growth, is clearly at loggerheads with the very mandate of the people on which Modi had rode to power - namely, a clear mandate for better economic growth and job creation. To me, it is clear that RR is not going to help this cause, even in his second term. Hence, the government is now forced move on, and try out someone else who can turn things around on the growth front. The message thus to RR clearly is - you did a great job, now time for India to move on.

Now, I am assuming that RR's "resignation" is with the explicit approval of the government. So far, I have not seen any response from Jaitley or any other government official, and things may yet pan out in favour of a return of RR. But I see very slim chances of that.

So then, will his successor make it any better for the Government's economic priorities? Only time will tell, but, to me, the time has come to make a move-on. To shift gears to a faster growth, even if inflation climbs back a bit. For, Modi surely would not want to be in a situation in 2 years' time before the next election, where he has to sheepishly defend a low growth rate, just because the RBI guv had ordained so. Modi's stakes, and the nation's stakes are higher than the rockstar cult that RR has managed to create.

So, what does this "REXIT" mean to you? If you are a stock trader or investor, then this week, will see dips due to the emotional factor. Use that to BUY BUY BUY - at least for short term gains. I am dead sure that beyond a few empty noises, nothing is going to change on the ground, and next week it may well back back to business. After all, the Indian Economy is not as fickle as it is being made out to be, as if it depends solely on the charisma of this rockstar Governmor of the RBI.


In the meanwhile, that million dollar question - should he, or should he not?

YOU DECIDE.  :)



Saturday, June 18, 2016

News Reporting techniques of today

News reporting techniques of today =========================== I chanced upon this very objective " news report" from Reuters today. I felt it was exceedingly fair. So fair, that it would have made Manuneedhi Chozan proud. (see this story of him in http://shortstories.co.in/manuneedhi-cholan/) The article is so objective, that it has dragged even Modi's personal religious faith into this Court judgement news. And has mentioned dime a dozen times the fact that Modi was CM of Gujarat when 2002 happened, how he practically managed to become PM even with hands " stained in blood" (notwithstanding a 2013 SC judgement that had completely absolved him of any complicity), and how he had dodged the US establishment, that watchdog of world peace and justice, into giving him a US visa etc etc... Very objective reporting, indeed. I then imagined how Reuters may well have reported the Orlando incident, with a president with allegedly Islamic connections, in charge, just along the lines of this "Modi" coverage. After all, unfounded rumours and conspiracy theories have been circulating in the media for years now, on this. (https://en.wikipedia.org/wiki/Barack_Obama_religion_conspiracy_theories) So, I let my imagination run riot. What if this gory incident were to be given a coloured twist, and drag Obama needlessly into it? It may well look like this" " A Muslim gunman, today, mercilessly gunned down 50 innocent people in a gay bar in Orlando. The shootout has shaken the nation, and got over before it started. The Muslim gunman was shot down in an ambush, by the patriotic police. The gay people, whose interests lie only in enlarging the circling of friends ( pun not intended ;) ) , had quietly gathered on a weekend evening, to make further inroads into their objective ( again, pun not intended ;) ) when they were attacked by the lone Muslim gunman. Though not proven, it is widely believed that his hatred for gays may have been the cause of this gory shooting of innocent christian gays. There is a section of the American people who believe that President Barack Obama may be surreptitiously practising Islam, though an online survey done in 2012 showed that only 17% of the people believed so. However, it may be recollected that Obama has openly declared that he is a practicing Christian, to scotch the rumours. It may also be recollected that Obama was a member of the Illinois senate from the 13th District when 9/11 had happened. Many people still accuse him of failing to stop the senate from functioning, in protest, in spite of 9/11. Some even suspect his rumoured religious affiliation to be the cause of this failure, notwithstanding his public pronouncements to the contrary. Obama has subsequently gone on the become the President of the USA, but the shadow of 9/11 still looms on his political career. It may also be recollected that Obama had won the Nobel Peace prize in 2009, though he himself had mentioned in his acceptance speech that he was not so sure on why he got it". https://www.whitehouse.gov/the-press-office/remarks-president-acceptance-nobel-peace-prize PS: This is purely imaginary and in jest. It is intended to portray the unlikely picture of Obama being needlessly dragged into controversies along the lines of what is happening to Modi, and not intended to hurt anyone's feelings.





Monday, June 13, 2016

Paris's gain is Orlando's loss


The gunshots have died. The shooter has died too. And with him, more than 50 innocent citizens of the USA. But in this gory process, the boredom of choosing between the Devil and the Deep Sea, in the US elections, has been relegated to the back-seat now. The media has got a new life, as it were, with this sensational news. And I am sure primetime TRP ratings are bound to go up. In the USA, and elsewhere. Orlando, that SunShine State , home to more than a dozen theme parks, has herself become the theme of the month.

The media is doing their job. Of drum-beating a disaster into sensational news. Of course, Western media is, like ( well, almost) all other  media elsewhere, is biased. They spare no efforts to turn the arclights, when blood of whites is shed on the roads. Rightly so. But then, when more than 200 innocent school kids in Rawalpindi, Pakistan are killed by similar terrorists, they " get on with it", after a brief mention. Or when thousands are killed by the LTTE, it fails to find even a passing mention in their headlines. Mumbai 26/11 was in the news for sometime, because a handful of Jews unfortunately caught in the crossfire- quite literally. But for those Jews, and the White guests staying the Taj Hotel, Mumbai 26/11 too would have been buried deep in the middle pages of Western media news. Much like the grave of Mumtaz lying in the underground of the Taj.  And as far as terrorism in Burkina Faso is concerned... hang on! Where is it in the map?

I can understand the vested interests of the media and the Western Governments. But what I can't fathom is the one upmanship of our so-called "intellectuals". FB has already been flooded with "I condemn Orlando killings" messages.

I find it concerning that their one upmanship borders on anxiety disorder. An anxiety to show the world that they care for lost innocent lives. " I will be looked down upon by the intellegentia, so let me hurry, before anyone else does", seems to be the driver.  What I still don't see yet, is the flag of Florida donning the FB profile pics of these intellectual beings. Mark Zuckerberg had made a brilliant business move of getting that feature of the French flag to "watermark" on one's FB profile pic. That was his business, and he perhaps had made a few more billions, riding on the anxiety disorder of this intelligentia. But it does appear that Paris's gain, this time, has been Orlando's loss. 

These intellectuals clearly don't care about any news of terrorist attacks that are " not popular" in the circuit. The London Bombings, or Madrid train attack evoke the strongest and most spontaneous outbursts. But there is hardly a whimper, when Naga rebels kill innocent villagers. Ask these intelligentia what the acronym LTTE stands for. And don't be surprised at the blank stare. Or, for that matter, the lives of those innocent Somalis and Ethiopians killed by carpet bombing by American Air Force, in the name of decimating Chemical weapons, that ended up unleashing unseen levels of misery on an already impoverished nations. Those thousands of innocent civilians, surely, are children of lesser Gods, as far as Western media is concerned.  I can understand that. But what about these so called learned intellectuals? Where is their conscience when such attacks happen elsewhere?

Make no mistake. I condemn any killing of human life. Whether it is Orlando, or Oslo. Whether it is Spain or Maine. The terrorist who attacked Orlando clearly had religious motive, since he attacked a Gay Bar. He may or may not agree with LGBTs, but they have a right to live, as much as he does, and he has no business to do what he did. 

But then to be selective in condemnation? Succinctly biased in Solidarity? I would not do it. 

Shame on you, my dear "intellectuals". If our response is " I can choose which incident to react to. I do not have to react to every human killing on planet earth. My focus is only on those that will give me the political mileage amongst my peers", then it exposes who you are. Or, if you say " I can only react to news that is sensationalized, and not to the other news that get buried in the last pages", then you clearly do not belong to the intellectual cadre. So, stop pretending to be one.

Either stand up and be counted for all atrocities that take human lives away by force. Or stop exposing your hypocrisy caused by anxiety disorder. Stop stepping over human misery in order to show-case your intellectual and liberal credentials. 


Wednesday, June 1, 2016

Save defence establishments, Mr. Parrikar

Save Defence establishments, Mr. parrikar.
=================================

Dear Mr. Parrikar, it is agonizing, to say the least, reading about the major fire that took place in the middle of the night, in Pulegaon, Maharashtra yesterday. Even before the raging fires could be doused, the cannons have already let loose on Modi, and the inability of this government to stop avert this disaster.

People conveniently forget that there have been a heap of similar incidents in the recent past , in our very own India.

Bharatpur depot in 2000
Pathankot depot in 2001
Jodhpur Depot in 2001
Kashmir ( I don't remember where) - 2007
And now, Pulgaon in 2005, and again in 2016

Without getting into politics, let me state categorically. I am NOT one of those who believe that callousness could have caused so many incidents. in a trot. I refuse to believe that negligence could have caused these accidents, on an incident-to-incident basis. I am sure that being army establishments, a thorough investigation would have been conducted in each of these locations after the incident. And whether it was indeed negligence, or sabotage or any other reason, I refuse to believe that the governments , this, or the previous ones, were dumb enough to release the findings in public domain. Defence 101 would dictate that the establishment quietly plugs any loopholes that may have found, without any drumbeats in the media.

Therefore, I find it very amusing, to say the least, that the so-called "experts" pronounce THIS government guilty of negligence. When this has happened so frequently in the past as well. When all "preventive measures" taken then have yielded nothing incremental, practically, going by the alarming regularity of such incidents. Nothing is more evident than the bias of the media against this government. And I choose to ignore it.

And yet, Mr. Parrikar, as a common citizen, I am distraught at such news. Not just for the loss of lives and property that such incidents cause. But from the larger issue of the nation's security. Let me explain why.

If these are caused by the so-called negligence of the defence establishment, then it is a shocker for any Indian. Because, it then becomes very evident that even small disturbances, knowingly or unknowingly, can cause a good portion of the country's ammunition to be destroyed. Imagine if this were to happen during war time. Where will we go for ammunition to defend the borders?

If these were sabotages, then it uncovers porosity in our defence posture, which can very easily be exploited by the enemy.

Either way, for an emerging superpower in the world horizon, this, to me, clearly is a chink in our armoury - quite literally.  And needs to be fixed on the cliched war-footing basis.

Sir, you have started saving the country billions of dollars, through renegotiation of defence contracts and through other programs like "Make in India". The results will be there to see, for all, over the years. But I would rather that you spend the money thus saved, in fortifying security of our defence establishments. I would rather that you give a strong message to the enemy that India is strong enough to protect it's borders, as well it's establishments that provide that protective cover - Pulgoan, Pathankot et al.

Let the fire be doused for good. Let any future fire be opened only in the borders - at the enemy.

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Three proverbs in Hindi that keeping ringing in my ears

शेर और बकरा एक ही घाट पर कभी पानी पि नहीं सकत है

अपने ही पानी में पिघल जाना बर्फ़ का मुक़द्दर होता है

तरबूज का रंग तरबूज आखिर पकड़  ही लेता है 

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