Mind of a lost Economist..!!

Why the fuss about protectionism??

2009-05-27T09:38:00.000-07:00

Who isn’t mean??...you, me, our politicians or the beggar round the corner on the street? Animals are born mean and always behave in a way to maximize gains for themselves. All of us are hypocrites and will veto anything that goes against our interest. Governments are accountable to and responsible for people and have to always act in a way beneficial to their citizens. All of us have a chameleon inside us that changes color as per the changes in the surroundings. When the going was good, it made more sense for the developed countries to encourage globalization, source cheap raw materials from around the world, export finished goods and utilize their own talent for more productive higher paying jobs. Developed countries happily obliged their farmers and offered huge subsidies while asking developing countries not to subsidize theirs. Today China & other low cost destinations are the hub of manufacturing, India the Mecca of IT. Developed countries especially the US of A are heavily dependent on third world countries to get their backend work done and also to maintain the competitiveness of their companies. But in 2008 the tide turned, Outsourcing has now become the dreaded word especially in developed country politics; ‘bailout’ became the word of the year in 2008. Being protectionist is now not a choice but a political & economic compulsion for these once proponents of globalization. Developed countries have to be protectionist. They have to be mean and are aptly justified in being so. Chindia has no right to protest these protectionist measures because we are selfish as well. Aren’t we ignoring environmentally sustainable standards in lieu of our rapid economic growth, don’t we alter our foreign policies as per our own interests? Back home wasn’t DMK selfish in its demand for ministerial berths? It’s very simple, all of us take decisions, formulate strategies keeping the current realities in mind and what will be the most selfish i.e. beneficial thing in the scenario. That’s what is happening right now. We have no right to protest any mean policies of any country in the world.

Slumdog Millionnaire: India’s Pride or Shame??

2009-01-15T09:03:00.000-08:00

‘Slumdog Millionnaire’ a great Indian movie indeed by a non-indian director, an NRI playing the lead protagonist and a mostly non Indian backstage crew & technicians. The great film bagged 4 Golden Globe awards and occupied prime media space all over the world, especially in India. Indian media says that its a matter of great pride that an Indian (A R Rahman) has finally bagged the prestigious award and is in lead contention for the Oscars. The same fact also makes me proud, a pride that lasts for 2 seconds and ceases to exist beneath my skin.
Why are we so fascinated by external appreciation and applaud for our work? Why we always look up to outsiders to praise our work? Is this because of our perceived notion that people living on that side of the planet are superior to us? Why we attach so much importance to their opinion about our work? It feels good to be appreciated for one’s work and that goes a long way in propelling one to work harder and smarter and produce better results. But when we have the biggest movie watching junta back in our own courtyard ‘India’ than why we need outside appreciation for our work, appreciation from people who don’t understand our culture, our language. Such appreciation is great for technological innovations but for art...I seriously doubt that.
Although the SLUMDOG occupied breaking news status on news channels and made the front page news in all mainstream newspapers, I was surprised to find equally important news being delegated to small columns in far interior of the papers. The movie is great but why are we celebrating so much the fact that outsiders enjoyed the Indian poverty, the fact that outsiders celebrated the darkness that defines India and especially Mumbai. Why are we celebrating the slums that make up Mumbai, the financial and glamour capital of India, the so called next superpower? “Slumdog Millionaire” is a great movie which makes me feel ashamed, makes me realize the apathetic conditions prevalent not only in the interiors but right in the heart of India ‘Mumbai’. It makes me aware of the huge efforts needed to truly transform India into a global power. Unfortunately the underlying reality of this beautiful movie has got lost under the more glamorous reality ‘the reality that it won some outside award which goes as Golden Globe Awards. All of us the so called educated middle class enjoyed and appreciated the movie but grossly failed to understand the underlying message it conveys.

Is Alma-Mater a Modern Age Gentleman’s Only Identity??

2009-01-01T16:10:00.000-08:00

Alma mater usually forms an important part of a person’s identity but in recent times it has become one’s only identity. Sure some colleges like Harvard and IITs back in India have produced great leaders more than any other institution but isn’t it the deeds & actions of a person that make him great eventually and not his alma mater?
Ivy League college pass outs refusing or reluctant to work under someone from a lower rank institution is not a new phenomenon. People holding one in high regards or simply dismissing one to be just another chap based on one’s alma mater is nothing new either. But in recent times, such polarization has started to reach alarming levels which is beginning to threaten our social fabric.
Students from Ivy League institutions today hesitate to work with colleagues from institutions not so Ivy as theirs. Students refuse to join companies that also visit lower rung colleges and offer the same profile there. Students pay least attention to speakers who have studied at an institution lower than theirs, no matter how big achiever the speaker is or irrespective of his / her experience.
Why do people from Ivy League institutions mention their alma mater’s name every now and than even 20 yrs after they have passed out? Shouldn’t their achievements be a more important part of their introduction rather than their alma mater? Why successful people from not so big colleges hesitate to mention their alma mater’s name while introducing themselves to an audience.
Are other forms of discrimination not enough, that now we the educated class have brought in this new discrimination? Sure getting into a prestigious institution a big achievement but is that the only piece of identity we are left with. Does being an Ivy League pass out make a criminal not a criminal and a normal institution pass out honest person not so honest? Just because of some reasons a successful person who didn’t pass out from the so-called top college bear the stigma throughout his life?
Sure the alma mater to which an individual belongs is important and plays an important role in shaping one’s personality and success in life, but the same has been stretched way too far. It has resulted in a new form of discrimination / polarization of the world. An individual’s alma mater is being given way too importance when public opinion is formed about the person deviating attention from other equally if not more qualified perspectives.
Alma mater is important and plays an important part in shaping one’s personality and values but It should not become the dominant force shaping public opinion about a person. It should not become a new factor in the polarization of our society.

B-school placements in the aftermath of the Terrorists attacks & the Financial Tragedy (Part II)

2008-12-29T14:23:00.000-08:00

Not much has changed since part-I of this series was published. GoI is on the verge of announcing a second stimulus package, RBI is expected to further reduce key rates and oil has plummeted to record lows. All these factors together with the impending Obama stimulus package effect have created some but insignificant hope for the B-school students in India. Companies are revisiting their freezed hiring decisions and considering to go to selected campuses in order to acquire good talent at low prices. But this is clearly not sufficient.
Many top B-schools have their final placement week scheduled in mid January, only after which the clear effect of the current stimulus package on the total hiring plans of the industry will be visible.
Current Economy slowdown (I don’t call it a recession for India) has left everyone grumbling to gain the maximum possible at the cost of others. Companies regular at tier-II campuses have developed new found love for tier 1 B-schools whereas tier-1 regulars can be spotted at IIMs hunting for the very best in India. It’s an employer’s market and companies aren’t complaining. B-schools have been left at the mercy of the hiring companies with regards to slots and other modalities. B-schools on the other hand in order to achieve the majestic 100% placement figure coercing the regular companies to hire from their campus, at times even threatening to ban slots to these companies in future if they refuse to hire now.
In this circus, the students are suffering the most. Almost all B-schools students have huge education loans to repay and above all meet the never ending expectations of their dear ones. Top performers will definitely get through as there is always a demand for good talent but Its the back benchers who will find the going difficult.
B-schools have already begun to find ways to get rid of the back benchers from the placement process. High minimum CGPA requirements to be eligible for placements, unnecessary debarring of students from the placement process, wasteful job profiles at disgustingly low salaries etc are some of the tricks being resorted by B-schools to achieve the majestic placement figure. A prominent B-school in NCR has increased the minimum CGPA required for placements to such high levels that it effectively makes half the batch ineligible for placements. Not that the colleges are not trying to place these back benchers but just in case the placement efforts don’t bear fruit, these highly ranked B-schools have a reputation to protect.
Eventually, still three months are left for the current batch to pass out and hopefully by then most of the students will be placed. The current scenario reaffirms the age old Darwin theory “Only the fittest will survive, rest will perish”.

The Human Resources CEO

2008-12-14T02:46:00.000-08:00

Marketing in 1970’s, finance in 1990’s, But HR in 2000’s? Today media is flux with management surveys saying that the new breed of CEO’s will necessarily come from the HR department. Although the trend is clearly visible, but are we ready for the change? What is it that makes an HR guy the man-Friday for the top job? Let us look at a few reasons why an HR guy will be the chosen one in future.
In today’s increasingly complex world, a person can’t be a genius in everything. Even superman can’t be expected to match such high expectations. Resting on this reality, the modern CEO has a team of specialists to help him with different aspects of the job i.e. we have CFO, COO, CTO, CIO, CMO….the list just keeps getting longer. So what does a modern CEO actually do? The main job of the modern CEO is to keep his army of executives motivated and extract maximum productivity out of them. It is his responsibility to get the job done from various specialists, put the efforts together and deliver the final product. When Henry ford was asked by the US supreme court to step down from the chairmanship of Ford motors due to his lack of engineering expertise, his reply was that although he knew minuscule regarding the technicalities of building a car, he knew the ones who were experts at that and he was effective enough to get the work done from these people. This was the mantra behind Henry Ford’s success. The mantra can’t be truer than in Today’ world.
In the modern corporate world, tales galore of how successful CEOs like Jack Welch, Neville Isdell etc were first employee’s manager over anything else. They devoted the majority of their time in finding and nurturing the best talent and getting work done from them. This accomplished, the corporate results took care of themselves. So where does the argument leave us now? Although the trend has gained momentum, it is still premature to predict where the tide will turn. HR CEO’s will have to perform in their new role to prove their worthiness. HR will continue to be looked upon as an organizational support function till the new HR chief executive proves his mettle.
HR managers to get into the driver’s seat of their organization have to first equip themselves with critical non-HR skills in Finance, marketing etc. Clearly the trend is not visible here. HR managers have to prepare themselves before they can occupy the front seat.

B-school placements in the aftermath of the Terrorists attacks & the Financial Tragedy... (Part I)

2008-12-04T04:35:00.000-08:00

Financial crisis that has taken the world by storm had been in the making for some years now. It is ironical how the entire financial mechanism all over the world was unable to detect the looming threat at the right time. Add to this economic tragedy the ill effects of terrorism and the final mixture looks potent enough to blow us all.
It is now a known fact that 2009 is the worst year to past out of a B-school in India. Financial sector which accounted for roughly about 20% of B-school placements last year has seen business plummet to record lows. Although none of the Indian financial giants have gone bankrupt at the time of publishing this post but their fortunes have been severely affected by the current financial mess. The international Ivy League investment banks like Lehman brothers which to some extent were responsible for driving B-school salaries sky high have gone bankrupt. Many Indian Financial giants have already freezed fresh hirings and are currently revisiting their business strategies.
IT-ITes is another bread butter sector for the Indian B-schools. Rising IT exports had resulted in IT companies also absorbing about 20% graduates last year from the top rung B-schools in India. Rupee depreciation has affected the IT sector more than its appreciation did last year. Add to that the effects of the current economic mess, and the placement picture gets gloomier.
All sectors are interlinked and when the economy is in mess, only few sectors can look up. Automobile companies in India are already feeling the Pinch. Tata motors & Ashok Leyland have laid off thousands of temporary workers (Tata alone laid off about 4000 workers), closed their plants for short intervals to get rid of the excess inventory & Mahindra Automobiles reported a decrease of more than 40 % in profits . Tourism and hospitality are also down as people can’t spend if they don’t earn. Realty sector is the worst affected of all. Unitech in its bid to get over the current liquidity crisis and meet its financial obligations sold a stake in its telecom unit to Telenor of Norway, laid off hundreds of employees and is now planning to sell off a stake in the hotel chain it was developing. DLF, Omaxe and Prasvanath have also either laid off employees or resorted to huge salary cuts to tide over the crisis. Everyone is aware of the aviation sector mess and I don’t intend to elaborate further.
Now add to a already gloomy placement season, the effects of the terrorist attack on Mumbai. If investors can’t travel to India because of security reasons, will they invest in India? Will any investor put his money in a project, the security of which can’t be guaranteed by the local government? Experts say that the terrorist activities won’t affect the Indian economy in the long run but effects will be seen in the short run. So what future holds for the B-school batch passing out this year?
A prominent B-school in Gurgaon has opted for a roll-on final placement process this year as opposed to a week. A roll-on final placement process was completely unheard of till now among the top B-schools in India. Another famous B-school in Mumbai with an international campus has opted for two placement weeks against the usual one. The same applies to another famous B-school in Pune with affiliation to a prestigious group of Institutes. Another well known B-school in Ahmedabad which held its final placement week last month failed to place around 50% of its batch. The school has now opted for a roll-on process. All this was before the Mumbai Terrorist attacks, the effects of the attacks are yet to be seen on placements. According to some estimates, atleast 10-15% premier B-school pass outs of last year are either unemployed or being considered to be laid off. Companies which hired in bulk last year are non-committal about visiting campuses this year. Some companies have resorted to hiring only from their summer interns while many have completely freezed new recruitment.
However not everything is gloomy for students and companies. The positives and what students can do to tide over the current employment crisis will be discussed in the subsequent post.

Gujarat & China show the way…!

2008-11-20T11:40:00.000-08:00

Gujarat chief minister Narendra Modi recently announced major investments in the state. According to estimates, Gujarat has cornered about 22% of total investments lined up for India this financial year, the highest by any state. Gujarat Government has been able to achieve this feat on account of its good infrastructure and governance. Modi said that his government will continue to spend heavily on infrastructure projects and that the economic slowdown doesn’t trouble him. He said that the heavy infrastructure spending from the government coffers will stimulate growth and consumption in the state. He also announced a loan interest subsidizing scheme for infrastructure projects in the state rather than letting the private sector put them on hold.
China too recently announced a massive $ 576 billion bailout package for the Chinese economy. Looking into the nuances of the package, a major part of it is directed towards building infrastructure which was not planned earlier. The Chinese government surely sees this slowdown as an opportunity to build up on the areas it is already good at. Such a massive unplanned additional government expenditure on infrastructure will give necessary boost to the economy and also help build infrastructure for the future. The government is ready and willing to sacrifice short term fiscal targets for long term prosperity of the Chinese state.
Back to India, after cutting repo rate by more than 2.5 % and infusing about INR 1,45,000 crore in the Indian economy, we are still in the midst of a major economic slowdown. The measure has been effective but not had the desired effect. The government by reducing borrowing costs & making the required capital available to the industry is doing its bit in not letting the private infrastructure projects go out of stream. But the Indian & the various governments also need to gear up their own spending. Such measures will affect fiscal targets in the short term, but go a long way in maintaining the 8%+ growth rate for India apart from promising good infrastructure. Gujarat & China have taken the lead, now India should follow the path.

How Predictions fool us…

2008-11-14T03:49:00.000-08:00

India will grow in FY 08-09 at 9%...8%....!! Oil will peak at $ 200 / barrel by the end of this financial year. Indian aviation industry will continue to grow at 30% and will require around 900 new aircraft by 2020. These are just some of the many predictions reached after thorough analysis by some of the most prestigious institutions throughout the world last year. It’s hardly a year and we know how much has really turned out to be true!!
Sure, the economic conditions have gone through a sea change from the time these predictions were made but isn’t the risk supposed to be factored in while making such predictions?? This is truer especially when such predictions are the base upon which huge business and strategic decisions are made by the government, big organizations and also the investors. These organizations stand to lose billions because of decisions made on the basis of such faulty predictions. Most of this is taxpayers and investors hard earned money.

Is it that when the going is good, we tend to accept any rosy predictions that come our way without really contemplating over the basis of such predictions?? Why we don’t take such predictions with a pinch of salt?? Why we lose our rationality during such good times?? Its only know that all the previous predictions are being re-analyzed and new rational targets set, but the damage already done cant be repaired.

Obama inspiring a minority Indian PM?? (Part-II)

2008-11-10T04:40:00.000-08:00

In my previous post, I discussed about the agenda adopted by Obama in his election campaign and why India is still not ready for a minority PM or for an open public debate for the same. I also discussed about how media should be more responsible and not promote racial discrimination. In order not to be branded as a pessimist and also to present the other side of the story, let me now discuss the positives that have come out of the election of Obama as the president towards having a minority PM in India.
“If it can happen in US of A, it can happen here in India; if Americans can get over minority and discrimination, so can we and vote for a minority PM”. These are precisely the thoughts invading the minds of millions in India right now. If the whites in America can get over their chauvinism, put development ahead of race and vote for a black president than why can’t we do the same? The election of Obama as president has forced the majority not only in India but throughout the world to think so. It has influenced people all over the world to think beyond racism and to think of development. Since the events in US of A influence the entire world, every moment happening over there is keenly watched by majority all over. Having a minority President in America has definitely made the majority more open towards having a minority leader in their own backyard.
Speaking about the minorities, the election of Obama has given them hope. Obama has inspired the minorities around the globe that irrespective of their race or origin, if one is capable and has the right motives, he or she can & will rise above the grassroots. He has given the minorities the hope that they will not always be discriminated against. He has given millions the hope that change can happen and if there is the will, it will happen. If change can happen in America, it can definitely happen in one’s own backyard.
Finally having a minority president will make the minorities all over the world more receptive towards US of A, change public perception and gain positive image and better relations for America with countries throughout the world. The change is inevitable and the change has finally come.

Obama inspiring a minority Indian PM?? (Part-I)

2008-11-09T13:01:00.000-08:00

The announcement of Obama as the 44th President of the US of A, has fueled considerable debate in India about a minority Prime Minister. Coming on the heels of the successful stint of a minority President, Indians are aptly justified in dreaming so. But are we really prepared for a minority PM? Will the majority accept the same?
It is a known fact that Obama although a part of minority didn’t win US elections because of his race, origin or anything else that can be described even remotely discriminative. He also didn’t win because the minorities voted for him; he won because in addition to minorities, even the majority voted for him. For Obama, his race was never an issue. He fought the US elections on the development agenda highlighting the current economic crisis, the failed bush administration policies, and the two wars. Obama’s race definitely played a role in getting the blacks to vote for him but the whites voted for him because he symbolized hope, hope that the current crisis can be taken care of and US of A will again reign supreme in the world. Obama is also at ease discussing issues of racial discrimination out in the open as was demonstrated by him by comparing himself to a mutt in his very first press conference after being declared the president elect.
Coming back to India, have we really got over caste politics to have a minority PM? The very idea of having a minority PM shows how deep rooted discrimination is in our society. If it had not for the discrimination in India, we would have spoken of having the best candidate as PM rather than thinking of his race or caste or origin. In India, people still indulge in negative voting i.e. voting to keep a candidate / party out rather than voting for a candidate in (Muslims routinely vote to keep BJP out of power irrespective of the credentials of the candidates); people vote for their community candidates although they may be convicts; candidates frequently buy votes from public and honest candidates are forced to opt out of the election process. India may be the largest democracy in the world, but that doesn’t make India truly a democratic nation. Democracy means not only the selection of representatives by the electorate but it also implies that the voting should be fair and not based on any kind of discrimination. So is India truly democratic?
In India, politicians still plan their campaigns around the race or caste to which they belong rather than the development work they have done for the public. People are still discriminated against based on the part of the country to which they belong. In such a scenario, having a debate on minority PM is only fueling further discrimination. Also, media should be more responsible and promote developmental politics rather than discriminatory politics.
Speaking about the minority leaders in India, Mayawati leads the pack with her Dalit development agenda. Mulayam Singh Yadav calls himself the messiah of the minorities. BJP champions itself on its Hindutva philosophy. Congress calls itself secular and devoid of any discrimination but lets North-Indians suffer at the hands of MNS. Bihar politicians were quick to resign from Lok Sabha when Biharis were discriminated against in Mumbai, but were missing when atrocities were being committed against Christians in Orissa. These are a few examples of how discrimination is really deep-rooted in India. Till the time we get over such public show and acts of discrimination, even the idea of having a minority PM will add to further discrimination and encourage more negative voting. Our leaders need to make development the agenda for their election campaigns rather than indulge in any sort of discriminatory or hate politics. Media should also restrain from fueling such discriminatory thoughts in the minds of the India Public. Media should use its reach and influence to help their readers vote for the right candidate and not the caste candidate.

Obama: a hero or superhero for India Inc.??

2008-11-05T11:28:00.000-08:00

Finally the confusion is over, Barack Obama will be the new US president and the most powerful personality on this planet atleast for 4 yrs to come!! Love him or hate him, but one has to bear him. So what does it imply for India Inc.? for India Politics Inc.?? The questions are many and answers still many. One thing is for sure that the new president cant afford to ignore the mighty strength of the insurgent India. Mr. President for whatever reasons will be a good friend of India but the extent to which India benefits from this relationship needs to be seen...because the devil lies in the details. Although Bush administration was a global failure, it was big success for India..arguably the best US government so far for India. Apart from the Nuclear Pact, it was the Bush administration that in the name of countering terrorism, forced Pakistan to check the rampant terrorist activity on its soil. Bush administration took India-US relations to new heights.
It is quite evident that the current economic conditions will force Obama to adopt short term protectionist business policies in order to enable US Inc. to tide over the current recessionary pressures and also fight unemployment. Also more stricter regulations are in the offing. Indian companies dependent on US for business may suffer in the short term with uncertainty in the long term. Outsourcing will become the culprit once more and some regulations against it are also in the offing. but the finer print will decide the final implications.
For the time being, India Inc. should adopt a wait and watch policy, as even the Indian government will oppose any regulation that might threaten indian industries.