Simon, Come back!

On October 30, 1928, a group of protesters led by Lala Lajpat Rai waved black flags and shouted 'Simon, Go Back' to protest the arrival of the Simon Commission. What started then still seems to go on as we blindly shout on the top of our voices to brush aside heavy money investors from the west. FDI in retail has been a hugely debated topic on the news and print media for more than a fortnight now and the age old attitude of sending all Simons back isn't perceived too well in the current scheme of things.

Why don't we have Harrods in Delhi? A simple question for a four year old who asked her dad while they came out of a shopping center in London. Though the question might seem simple, the answer to it is a tough nut for the dad to crack as he gapes for reasons. In my opinion, FDI in retail makes a lot of sense especially with a 51% limit to overseas stake. Here are the reasons:

1. With FDI in retail, we are attempting to organize and put in order one of the most unorganized and deeply corrupted sectors in the country.

2. Against a production of 180 million mt a year of fruits, vegetables and perishables, India has a capacity of storing only 23.6 million mt in 5,386 cold storages across the country. With overseas investment, we are moving towards a regime of optimal cold storage and superior logistic capability.

3. India has 1.2 billion consumers, 600 million farmers and 5 million traders. Should we save the penny for the 1.2 billion consumers and improve lifestyles of 600 million farmers by affecting the margins of 5 million traders? YES

4. Cauliflower is sold at the mandi Rs 5. a kg. After travelling a few miles to the vendor, the price goes up by 400% to Rs 25. per kg and what the farmer gets from the sale at the mandi is a meagre Rs. 3. There is something wrong with this system and it has to be addressed at any cost.

5. Naysayers say that FDI capital in multi brand retail has a tendency to multiply itself and could lead to an unthinkable application of 'capital for profit' and in the process deepen the gap between the rich and the poor. But how flawed is that argument? The government promises to keep an eye on the prices and hypermarkets would be introduced in only those cities which have a population of more than 10 lakhs. As of now only 53 cities qualify the aforementioned criteria. With a rural population of 70%, the 53 cities (a fraction of the remaining 30%) cannot contribute as much to a deep divide.

6. The proposal states – 51% stake in multi-brand retail with a minimum investment of $100 million of which about 50% has to be spent on back-end infrastructure.That translates to a good amount of job generation in unprecedented quarters especially in the supply chain arena. 

With so much to speak for the introduction of this long awaited reform, there is only one thing that is worrisome in my opinion. With the amount of capital and the power of foreign investors, it is possible that the ultimate aim of the game is defeated. The hypermarkets could hypothetically beat all competition from small traders and reach a stage of monopoly. With that they could fix prices for all commodities as they wish and book higher profits as they establish themselves in the long run. But as I have already mentioned, even that possibility arises from a hypothetical standpoint. More importantly, as per the proposal, the government promises to keep an eye on the prices.

What stops the reform from being implemented when it has the capability of addressing one of the biggest problems of our economy viz. food wastage? The reason is two pronged : Politics and Corruption. Opposition parties want to make a clear political issue out of this debate in an attempt to derail a government that is already in shambles. Also, the distance between the mandi and the vendor is filled by a well connected gang of goondas who inflate the prices and make undue profits. These goondas don't standalone, they are strongly backed by a nexus of political heavyweights. These political big names (un names) are not ready to forgo their illogical profits for the good of their voters.

Another reason why we are not able to debate this and enforce the reform is the fact that the people who argue against FDI in retail are a well organized group of traders. According to rough data released by the Ministry of Labor, trade unions had a combined membership of 24,601,589 in 2002. Contrastingly, there are too few organized farmer unions in the country that they are not able to raise their voices and stage successful protests.

All said and done, there is one thing to lift our spirits. Amidst complaints of parliament dysfunction and neglect of responsibility by politicians, our prime minister remains confident and positive about implementing this trend-setter bill. At the time of this writing, the Prime Minister spoke to the media from his private aircraft and expressed strong opinions about FDI in retail. He feels that we need to evolve a broad based consensus and he is committed towards it. His strategy is to wait until the elections to state assemblies (in the offing) get over and I believe that his very intent is a positive sign of things to come. I wish the proposal goes through when the time is right as it would help us lay the platform for many more reforms akin to the 1991 globalization.

Chasing the Capitalist

"I do not know of any book that describes the impact of India's economic policies on her growth as analytically, logically and vividly as this one" - N.R.Narayana Murthy on "India Unbound" by Gurcharan Das.

The socioeconomic transformation of our nation has been well documented in this novel by the much acclaimed writer and public intellectual. If one is looking for a perfect introduction to contemporary India, it is here. Something tremendous has been happening in our country right since the dawn of 15th August 1947. India had to go through various phases in this epoch that started after the spring of hope in 1947. There was the lost generation in the era of 60s and 70s which went through Caste based demarcations, licensing blues and a surge in inequality. And then came the rebirth of dreams in the form of the "Golden Summer of 1991" and then we had a new country. We are what we are today, solely because of all the things that happened in the summer of 1991. Financial reforms came out in unbelievable speed and efficiency and the country was starting to enter the limelight.

In 1947 we were a free lot and there was a lot of enthusiasm and energy in the air. Nehru stood at the fore and showed signs of able leadership. Everything in the country started to happen in an organized fashion. Bureaucracy was the order of the day. The License Raj was at the helm. Entrepreneurs were a titular lot. This was the era of socialism. And soon, economists started realizing the negative implications of Nehru's ideologies. Things became worse when Indira Gandhi decided to build upon what her father had laid. The war in 1971 and the emergency that followed didn't help things anyway.

Our nation, which once was prey to dogmatic colonists in search of riches and treasures was becoming a poor nation after all. Harvard graduates were coming of age and the Indian top brass needed a good overhaul, when Prime Minister P.V.Narasimha Rao gave powers to two such graduates Dr. Manmohan Singh and P.Chidambaram. And then, the rest is history. The economy began to grow leaps and bounds year after year after 1991. This was when the country went through a phase called liberalization. I would prefer to call this phase-"the quest of Capitalism". The west had proved a point which their capitalist methodologies and The tigers of Asia viz. Hongkong, Singapore, Japan et al. had followed suit by now.

The country allowed investment and gave powers to budding entrepreneurs. The bourgeoisie became a buzzword and reforms were underway to get its size soaring year on year. This growth was fueled by a variety of foreign investments mainly due to the abundance of highly skilled software professionals in the country and the open society that was on offer due to liberal tax regimes.

The book touches each of these eras and paints a clear picture of the Indian economy's trajectory over the past 60 years. Our economy has been one that should be placed right at the center of an imaginary line drawn between socialism and capitalism. The learned top brass that we have as our representatives today have carefully sketched the coordinates of the point on that imaginary line. Arguably, that has been the main reason for India's nonchalance and tactical brilliance in having avoided the traumatic consequences of the recent global slowdown.

Verdict: This book offers layman friendly discussions of economic theories of poverty and serves as a key guide to the country's recent past.

How about this one to beat the recession?

I was stumbling upon the internet on a lazy Saturday morning and i noticed this thing about a campaign in USA called the "Recession 101".

It was a little common sense on the Billboard. Those were a few i liked.

Thirty-30

Thirty things I would like to do before I am 30. This is yet another Tagged post (this time by one of my old school pals).

Ok here it goes....

1. Add a PGDM behind my initials.

2. Work for a consultancy firm and analyze a big thing like the Tata Nano Release or an RIL-RPL merger.

3. Complete the IMDB list of Top 250.

4. Read all of the 90 odd works by P.G.Wodehouse.

5. Start a Retail Chain of something really innovative-may be jewellery...lolzzz

6. Create and shoot an advertisement for Vodafone or Pepsi.

7. Play a protagonist in a documentary.

8. Win an All India Chess tournament.

9. Carry my bat in a 30 over a side domestic cricket match after opening the innings.

10. Taste Champagne.

11. Watch a United-Arsenal match at Old Trafford.

12. Watch a football match on boxing day at a pub in London.

13. Walk along the LOC in the kupwara sector or Poonch District.

14. Design my dream home from scratch.

15. Eat all possible chocolate varieties from around the world.

16. Cook an elaborate meal for a group of 10.

17. Build a Personal library of over 500 books I have read.

18. Give a lecture on Theology or Philosophy at some prestigious management school.

19. Go on a world tour with family.

20. Eat only chocolates from morning to night on a single day.

21. Spend a night on a star cruise deep in the middle of the seas.

22. Shoot 10 terrorists in a guerilla fight.

23. Serve the Indian Air Force for a short period.

24. Be a commentator alongside Harsha Bhogle for an India-Australia match down under.

25. Conduct a Sports quiz at the national level.

26. Own a super market in some hill station.

27. Write an article for the Time Magazine.

28. Dine with Warren Buffet on a moonlit night in Mexico.

29. Coach a Division II football team in England.

30. Officiate an international cricket match.

Winners in the Downturn

Recession has quite visibly taken almost everyone for a ride. From the stock market investor to the well-paid CEO to the lower middle class retail chain customers, everybody has tasted the bitterness of this downturn. Nonetheless it has been compared with the Great Depression of 1929. What is intriguing in this downturn is that there are many isolated winners amidst this chaos. Firstly, In any economic downturn, in every sector of the economy there will be businesses that fail. There will be businesses which struggle through and survive, and there will be businesses which grasp the upside of the downturn and emerge as winners. It is not a surprise that new age indian entrepreneurs saw an opportunity in this recession.

Bharti Airtel makes a good example to showcase how recession can be turned as an opportunity. A recent article in Business Today pointed out many reasons that made Airtel a run away winner in this downturn. But i strongly felt that only one of those many indicators was very critical in bringing profits to the Q3 and Q4 balance sheets. Airtel started the initiative to extend it's market share in the rural areas (commonly known as 'bharat'). Airtel did not resort to lower rates to attract customers. The focus was just to extend the market into the rural areas. The prime reason behind such an initiative, in my opinion, is that The buzzword (recession) was least heard in the rural areas. A strong belief about recession is that It´s all in your MIND! And we actually FUEL this recession much more than it warrants. And the rural market consisted of people who actually did not contribute to the "fuelling" process.

Challenging times are the true test of great leadership. Now is the time for owner managers to show the vision, determination, resilience and courage of the great leader. A lot has been talked about what caused this recession which is turning to prove a number of economic theories wrong. For instance, recession in economic terms is defined as a period of dull growth and plummeting GDPs for a period of 6-18 months. We are already crossing the upper threshold of 18 months. Federal agencies and governments are making almost vain efforts by introducing stimulus packages. But these are certainly not the solutions to the problem. These are just steps to reduce the impact on common man. The solution certainly should come from the consumer, from the common man. To be a winner in the downturn one has to be in control, be confident, be distinctive, be strong, be wise and be ready. If the consumer tries to be all those that i listed, We are definitely moving towards a strong bounce back.

Classic Two!!

Apparently, the two books that i am talking about were my latest two.

I can't read P.G. Wodehouse every day, nor would I want to. They are like a deliciously decadent and fattening dessert that you allow yourself to indulge in once every so often, except that Wodehouse's decadence lies in his luxurious, playful and masterful manipulation of the English language. A perfect day for me involves lounging on the deck of my best friend's family cottage with a Jeeves and Wooster book in one hand and a margarita in the other!

Aunts Aren’t Gentlemen by P.G. Wodehouse

As with most of the Jeeves and Wooster series, the plot of this novel isn’t as important as the language Wodehouse uses to describe the messes that Bertie gets into. Nevertheless, the long and the short of it is that Bertie leaves the city to improve his health only to find that Aunt Dahlia has other plans. An important horse race hinges on the presence of a certain cat and as usual, Aunt Dahlia wants Bertie to steal the cat so that a certain horse will lose the race and she will collect on her rather large bet. Bertie has also managed to get between a friend and his lady love and must convince the friend that he is not a threat and convince the lady that he is not the marrying kind. As usual, it is Jeeves who comes up with the cunning plan and saves the day.Lightest book that I've read till date.

Catcher in the Rye by J.D. Salinger

The novel relives the days following Caulfield's expulsion from Pencey Prep, a university preparatory school based loosely on either Ursinus College or Valley Forge Military Academy, Salinger's alma-mater. Caulfield tells his story in cynical and jaded language, frequently using disparaging language and profanity. In the end i felt i had just come across a new type of humour which is not much different than that of PGW's. But a thoroughly enjoyable book,i should say.