Mangalore incident is very shameful. What is even more shameful and worrying is the fact that only a few high end TV channels, are opposing using intricate language which the upper class or the so called educated people who fell visiting Pub is ok wants to listen. Other than this no one worth the name has come out openly against this atrocity.
A few goons enter a place which other wise they are banned from and ill treat, beat up women who in any other place would be more than a match for them and the entire government is pussy footing over this issue. As if on cue, politicians have quickly caught the event and have used it to come on national TV and deliver high moral sound bites, which they themselves do not believe in. All this with a hope that it will bring in the marginal 1 % additional vote which is enough to tilt the scale in their favour.
The entire Mangalore Pub incident was well choreogrpahed and the TV crew was readily available to record the Reality show and beam it on National Channels. What are the names of the people who were beaten up? Which college they belong to or belonged to? What are the current students of that college, their colleagues in the office campuses doing about it?
Are they all so scared that they do not want to come out in the open objecting to it? Or they feel that the treatment met out to their fellow students or colleagues is what they deserved?
Another aspect which is abhorring and I fell absolutely horrendous about, is that this is being done in the name of Hindu Religion. Hinduism gives equal status to women. The scriptures always encourage tolerance and pardons; never brutal public punishment.
Politics and religion are getting dangerously close and upstarts are enacting scripted plays surprising unprepared small segment of persons and getting public mileage to sway public opinion. If we do not get a clear minded leader quick enough, to steer clear of this kind of abysmally low level of politics, we may go the Taliban way soon and our freedom may vanish.
I have stayed and worked in Mangalore and I have always enjoyed the hospitality of Udpi and Mangolereans. I am shocked that such an incident has been perpetrated on them. My sympathies and I prey that one of the localite be it a Hindu or otherwise take this up on himself as a challenge and mobilise public opinion fearlessly to sub due and clearly condemn the so called morale brigades openly so that they don't dare repeat such atrocities in future.
Satyam Saga
I was discouraged in not writing about the Satyam Saga in the last few days, given my rather critical views and the impact it may create. But I can not hold on further - so here goes my views.
Satyam is a IT leader which has grown to this level through the sheer aggressive drive of its promoters, their commitment and the hard work of the many professionals whose dedicated effort also made this possible. Somewhere along the line, the same characteristics which made this company reach this level of operation, predominantly risk appetite, has gone awry. Instead of owning up the mistakes, and sharing the risk perception with the major share holders, the management had tried to save the situation and resorted to manipulative ways which drove them to cook up accounts.
The first major mistake which the promoters owners did was to continue to treat the company as their personal fiefdom in spite of becoming minority share holders. Employees and the many institutions which invested had implicit faith in the promoters who had brought fame and good returns to them in the past and were not cunning enough to think otherwise.
What the long term investors did not realise was that the promoters appetite for risk had moved on to more riskier avenues in which they had a belief for the future. May be it is still true; but legally and morally they were bound to take the larger stake holders in to confidence, especially the employees.
The fraud which has been done and is currently hurting the employees and other stake holders could not have been done by a select few and that too in a short time. Many of the 42 vertical heads, their vertical's financial controllers or accountants should have been aware of these. Similarly the HR group should be aware of the excess employee list or the fictional list and the money being drained out. Cash with drawal or miscellaneous accounting expenses (euphemism for political cash expenses) must also have been done with the knowledge of all senior officers of the verticals.
Such practises when not collated and viewed as stand alone events, tend to distort the overall picture. (Each one is doing only a minor bit and that too occasionally ; but put together it all adds up to a very large amount). Employees are caught between the devil and deep sea here. If these expenses do not take place, they may tend to believe that their prospects of revenue protection or statutory clearances do not come in as desired. Even when they know that the promoter is taking the money for his personal operations, they typically turn a blind eye as they believe they deserve it.
This perception should change. Executives with delegation of powers in organisation should oppose such moves, even at their risk of being in the bad books of management. They may loose their job or hurt their career growth; but by tolerating they are becoming criminally liable for false fully accounting and misleading the public.
Another major issue is that of inflating the receivables. This is a practice that typically bring down many an organisation. Any responsible officer can not and should not inflate the receivables quarter after quarter, year after year and continue to report inflated profits. Even when they book the orders at competitive prices, they would have known that the profits are not realisable. It is therefore clear that many in the organisations would have known for some time now that the game is over, but because of their own selfish interests and foolish approach, they continued to believe that they will some how overcome the follies for which they have also been responsible.
This is never done and such an approach can only come to this disastrous end as is seen here. There are many lessons to budding executives here in the Satyam saga and I wish they pick it up for their own sake and the interest of the country at large.
Satyam is a IT leader which has grown to this level through the sheer aggressive drive of its promoters, their commitment and the hard work of the many professionals whose dedicated effort also made this possible. Somewhere along the line, the same characteristics which made this company reach this level of operation, predominantly risk appetite, has gone awry. Instead of owning up the mistakes, and sharing the risk perception with the major share holders, the management had tried to save the situation and resorted to manipulative ways which drove them to cook up accounts.
The first major mistake which the promoters owners did was to continue to treat the company as their personal fiefdom in spite of becoming minority share holders. Employees and the many institutions which invested had implicit faith in the promoters who had brought fame and good returns to them in the past and were not cunning enough to think otherwise.
What the long term investors did not realise was that the promoters appetite for risk had moved on to more riskier avenues in which they had a belief for the future. May be it is still true; but legally and morally they were bound to take the larger stake holders in to confidence, especially the employees.
The fraud which has been done and is currently hurting the employees and other stake holders could not have been done by a select few and that too in a short time. Many of the 42 vertical heads, their vertical's financial controllers or accountants should have been aware of these. Similarly the HR group should be aware of the excess employee list or the fictional list and the money being drained out. Cash with drawal or miscellaneous accounting expenses (euphemism for political cash expenses) must also have been done with the knowledge of all senior officers of the verticals.
Such practises when not collated and viewed as stand alone events, tend to distort the overall picture. (Each one is doing only a minor bit and that too occasionally ; but put together it all adds up to a very large amount). Employees are caught between the devil and deep sea here. If these expenses do not take place, they may tend to believe that their prospects of revenue protection or statutory clearances do not come in as desired. Even when they know that the promoter is taking the money for his personal operations, they typically turn a blind eye as they believe they deserve it.
This perception should change. Executives with delegation of powers in organisation should oppose such moves, even at their risk of being in the bad books of management. They may loose their job or hurt their career growth; but by tolerating they are becoming criminally liable for false fully accounting and misleading the public.
Another major issue is that of inflating the receivables. This is a practice that typically bring down many an organisation. Any responsible officer can not and should not inflate the receivables quarter after quarter, year after year and continue to report inflated profits. Even when they book the orders at competitive prices, they would have known that the profits are not realisable. It is therefore clear that many in the organisations would have known for some time now that the game is over, but because of their own selfish interests and foolish approach, they continued to believe that they will some how overcome the follies for which they have also been responsible.
This is never done and such an approach can only come to this disastrous end as is seen here. There are many lessons to budding executives here in the Satyam saga and I wish they pick it up for their own sake and the interest of the country at large.
Power up Trading
Power sector being in the concurrent list has developed through the years with a state level bias and hence the developments vary significantly across the geography of the country. While the need for national level attention and need to frame policies from a national perspective was understood and action was taken as early as the late seventies, it was confined to Power Generation and Transmission of such power generated by these central plants. Only a few years ago, centre has provided funds and intervened directly for implementation of schemes at the distribution level.
It is now for the implementing agencies to come out in full force and provide the linkages which will help in interconnecting the grids and develop a national market for Power so that Power Traders can play a more active role.
This skewed thinking severely affected the Power market developing as a national one till the enactment of Electricity act 2003. The national policy and act of 2003 is an excellent guide and clearly envisages an integrated network where all key players have a choice which is the fundamental for any market driven approach to creation of a national asset.
It is now for the implementing agencies to come out in full force and provide the linkages which will help in interconnecting the grids and develop a national market for Power so that Power Traders can play a more active role.
However these linkages, as is now the practice, terminate at state level power injection / delivery points and from then on, it is the local network that provides the last mile connectivity even for large power consumers / demand centers. To free the market and Power up trading, it is this last mile connectivity which needs to be freed as envisaged under "Open Access".
To attract investments in this sector, the government has provided one major comfort namely a tariff based approach to guarantee investments, backed by a strong regulatory mechanism. There are severe execution risks posed by issues caused by non availability of right of way to environmental issues, which the promoters should grapple with. Such issues delay the project execution and increase the capital costs. These are beyond the reasonable control of the investor. Providing the incentive of long term cheap funds is one way of balancing these risks.
It is therefore essential that to increase cross regional power transfer capacity significantly together with last mile connectivity, government should identify sources of Long term cheap funds. It could be done by way of providing access to these investors to low cost Long term loans through the Infrastructure Funds being created with our foreign exchange reserves so as to reduce the capital costs of these projects.
The government, should do well to take these steps for bringing in the much needed integration of the grid and making the dreams of Electricity act 2003 a reality.
Credit Policy - Reddy has called it wrong
Reddy has called it wrong this time.
Indian economy is not leveraged asCredit Policy, Housing, much as that of the other developed economies and it is the supply side dynamics which is contributing to the double digit inflation. Some even argue that this effort of the central bank may further accentuate the problems caused by supply side dynamics due to the capacity addition being delayed mainly due to the steep increase in funding costs.
The policy initiatives of the nineties have dismantled the Long term Funding institutions, which has pushed India Inc to look at the global markets for raising long term funds. Having taken this route they are now forced to call correctly the exchange rate movement. The companies which are not capitalized adequately, or are afraid to go to the international market for want of loosing control, silently suffer. This in the long term, affects the economy as planned capacity additions do not take place. Policy makers have failed to acknowledge this void and take steps to correct.
At the other end of the spectrum, the needy do not have any access to institutional funds. Attempts to eliminate the usury rates charged by the middleman have failed miserably. With the so called growth in bank credit being fueled by indiscriminate lending to salaried and self employed persons for consumer durables and lavish spending, it is repaying time for these institutions, with even the central bank taking special interest in these advances. Defaults in certain locations are a staggering 40 % in this segment, if we are to believe unconfirmed reports.
For lending to the housing segment and make it robust, we have important lessons to learn from US. The Fed had openly issued government guarantees to Fannie Mae the share holder owned financial institutions with a public mission. These institutions are private in nature but backed by the government. Hence these banks could approach the international market to raise cheap funds and provide funds exclusively for the domestic housing market.
It is time we also did the same thing. The government should guarantee the bonds issued by say a division of ICICI or AXIS or HDFC bank or a combination of the divisions of the banks with a caveat that funds raised thus are exclusively used for a defined housing market.
In the last 3 years the housing sector saw a robust growth and provided the much needed overall growth in GDP. The current attempts by the central bank to chase the inflation is hurting these segments and will once again deprive many a citizen the chance of owning a home in his or her life time. Will the government at least intervene?
Oil Prices and Policy options for the Government
With oil prices zooming past US $ 130 and breaking new highs every week, policy makers have an issue at hand. Having relied heavily on prolific spending of the resources raised through indirect taxation of Petroleum products, the government is now being compelled to reduce the taxation to ensure that the recent spurt in the international prices do not hurt the economy and the poor alike.
This would mean that the government should look at alternate sources of revenue to bridge the shortfall in revenue generation as one can not expect the government in election mode to cut down on freebies / cutdown on salaries etc. The main options are Direct taxes from services and new segments. With large scale retail formatting taking off, it is necessary that the taxman look at ways of cornering the piece of the action. as after all large scale retailing does use more of the public resources.
Export of petroleum products should also be taxed and influential corporate houses can not be allowed to have their say on avoiding the taxation. If refining margins have risen up to US $15 from US $ 6 a few years ago, such company's can well afford to share some of the largesse. I am sure with the capacities available in India, international buyers cannot ignore us.
Two more initiatives need to be put in place simultaneously.
The first and foremost is to discourage the growth of private transport in cities and metropolis. To put in this practice the government should invest heavily in public infrastructure quickly. The other initiative is on natural gas and coal gasification process. Having identified huge reserves of gas we need to ensure that these are brought to market at the earliest possible dates and sold devoid of any subsidy from start. The deceleration of demand on foreign exchange which such locally available sources of energy can bring in, will have transformative impact on foreign exchange management of our currency and fuel the Indian growth engine to newer highs.
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