MBA CLUB WISHES YOU A HAPPY AND PROSPEROUS NEW YEAR 2011!!!

Hi Readers!!

It gives me a great pleasure to share this post with you as this is my first communication with my readers. I have interest in a range of topics from management, marketing, business, economics, international and national politics, national issues and many others. I launched this blog in 2009, just to express my ideas and the other reason was that I have a passion for writing. I initially didn’t do any promotion or campaign for this blog, still I haven’t yet run a campaign though I plan to do so. I have not yet decided due to the time constraint, though most probably will start a campaign from the beginning of New Year. So this blog didn’t attract that many visitors initially, but slowly things changed, I got visitors and the number of visitors started increasing as I published more and more articles. The purpose of this blog is to create an interactive platform for those who are interested in the above mentioned topics; this is not my blog though I manage it. I consider this as a public platform where interesting people can come and share their ideas through comments and suggestions.

I in recent times notice an increase in visitors to this blog, as I track visitor statistics atleast once a week using traffic tracking tools. Many visit the blog, read my articles and leave. I would like people who visit this blog to register as followers (which I consider as membership or members) so that blog would look more of a public platform and all constructive comments, suggestions and criticisms regarding the topics or the blog are welcome, but usage of un-parliamentary languages/abuses are strictly not allowed and such comments would be deleted. This blog is also for those who mainly have a passion and deep concern for India and its people and one of the main purposes of this blog is to have constructive discussions about some core issues of this country though I sometimes write on other topics too.

I would request you to tell a word about this blog to your family and friends, and mainly students who can benefit from here as I write on a variety of topics and with a lot of statistical figures and information. I do a small research before I pen an article and take a lot of time. That is the reason why I am being able to post only an article per month and sometimes I miss the dates.

My sincere thanks to all my readers and followers as this blog exists because of you and for you. You are my inspiration and motivation which fuel my passion for writing. I wish you all a Happy New Year 2011. May the year bring Joy, Happiness and Peace into everyone’s life.

You can connect with me on Facebook and twitter

WHY WE SHOULDN’T BE AN ECONOMY DEPENDANT ON BPOs?

BPO (Business Process Outsourcing) a wave that stormed India, which played a major role in the India’s IT revolution. The super wave created thousands of jobs in a poverty stricken country like India; it came as a boon for the Indian middle class, especially for the youths who were desperate to earn some quick bucks to meet their needs and certainly lifted the standard of living of many lower middle class, but we shouldn’t be an economy dependant on BPOs.

BPO is a fad. It is a pain killer, not the remedy for the deadly disease called unemployment. As of 2008, around 0.7 million people worked in outsourcing sector i.e, less than 1% of Indians, and annual revenues were around $11 billion, around 1% of GDP. Around 2-5 million people graduate in India every year. Though comparatively, the ever increasing population of the workforce is much higher than the number of people employed in BPOs. 0.7 Million people working in a sector which contributes 1 % to Indian GDP is not ignorable, and increase in the BPO population is not good for future and long-term economic growth, stability and the long-term goal to end unemployment.

Why can’t we be an economy dependant on BPOs? Why BPO as a sector can’t be a permanent source of employment? And finally why BPOs can’t be a career option for Indian Youths?

The basic reason why we have been able to attract BPO jobs to the country is the ‘cost factor’, this is the major disadvantage of this sector, it highly instable, this sector is not a permanent source of Job creation, the sector grows, matures and vanish, these multinationals keep on changing their BPO base based on the ‘cost factor’. The day India loses its edge as an outsourcing destination all the jobs will vanish in no time leaving thousands jobless. This is the danger of BPO.

The same thing happening inside India, with skyrocketing real estate and infrastructural costs and salaries in Tier-I cities like New Delhi, Mumbai, Kolkata, Chennai, Bangalore etc, many BPOs are shifting their operations to Tier II cities like Nashik, Sangli, Aurangabad, Mangalore, Mysore, Hubli-Dharwad, Belgaum, Madurai, Coimbatore, Kochi, Hosur, Kochi, Trivandrum, Jaipur etc, but experts say though Tier II cities offer lower business process overhead compared to Tier I cities, they have a less reliable infrastructure system which may hamper dedicated operations. This is the nature of the BPOs; they keep on shifting bases as they find a better destination based on the ‘cost factor’.

When they can shift locations based on the ‘cost factor’ inside the country, it is very much possible that they can shift bases when they find better destinations out of India, which can provide them the cost benefit and better infrastructural facilities. Many analysts believe that the sector will slowdown in the future and it is extremely dependant on USA and if the US dollar depreciates can adversely impact the sector and the recent American financial meltdown has begun to take its toll on outsourcing business. Mr.Obama is already taking measures to curb outsourcing. Additionally countries like China, Mexico and Vietnam are also expanding outsourcing operations and often provide cheaper services. The worst is yet to come, many African countries are under extreme poverty today - acute hunger, diseases and lack of infrastructural facilities are obstructing these nations from moving forward and these economies are quite stagnant. A day will come, with the help of UN and other international agencies and rich nations, these countries will experience sustainable development, and once they start experiencing growth in terms of education, infrastructural facilities and other resources, they would be able to supply more cheap labors or workers than any other countries of Asia and these BPOs would be among the top sectors which would move forward to grab the opportunity and shift their bases to those nations.

How can we trust such a volatile sector, which might anytime collapse and leave thousands Jobless? The sector has created Jobs, no doubt, and something is better than nothing, it has provided jobs to thousands who otherwise would have remained unemployed, but this is just like a temporary construction under which we can take shelter for a while and the sector cannot be a permanent and stable source of employment.

Apart from the instability of the sector, the second major disadvantage is the skills of the employees working on BPOs and how it might affect the future prospects of the part of our workforce.

What is the basic qualification required to be a BPO employee? A candidate should be a 12th pass and should be able to speak fluent English and some computer knowledge. My intention here is not to underestimate the BPO work profile.

The BPO work profile requires very basic qualifications, thus the sector is continuously producing a lot of unskilled workers, the growing population of such unskilled workers would result in total dependence on the sector and when BPO Jobs would be no longer available in the market, these BPO workers would be left with no option as they are unskilled and incapable of doing any other work except BPO related tasks.

Many youths Join BPOs just for quick earnings and these people normally remain undergraduates or do correspondence courses which hardly have any value. How many such youths have already spoilt their careers? Except a few, many are not poor and not that they can’t afford to get education and incase they don’t have BPO as an option, they definitely would join a college, as these are mostly middle class. If the trend continues, in the future the number of graduates or PGs would start decreasing and youths would be more interested in earning those quick bucks than to join a college and get some formal education. This sector is likely to produce more and more unskilled, semi-literate, and half educated population of BPO workers. We need educated and talented youths and skilled workforce to take India forward. The situation today is worst in United States, says a report, the number of high school dropouts has been increasing. A fear has gripped United States that their youths should not remain semi-literate and less educated as they find students from other nations coming to united states to study, they get enrolled for masters and PhD courses when a section of their youths are busy doing Jobs which can earn them quick bucks. They find parent-sponsored Indian students at Harvard’s, doing their MBA, while there has been a growing trend among American youths to settle for such quick Jobs, and showing less interest to get education.

The BPO sector in India is creating such a trend here too, which is not good for long-term growth of India or for the future generation. Americans are still much richer and sophisticated than us and they can even do without education, make a descent income and can lead a good living as they get social and other securities from the government. Where as India as a developing country, cannot allow such a trend here, we need to focus more on quality education so that our youths/ the future generation should get formal education and acquire some skills and knowledge to be competent enough to be competitive in the global platform.

So what can be done to reduce unemployment and increase national income? How can we produce educated and skilled professionals?

We need to develop and encourage sectors which can provide platform for creating reliable jobs and generate sustained revenues. We can’t afford to depend on highly risky sectors and temporary Jobs like BPOs. We need sustained revenue generation, increase in national income and government revenue through developing lucrative sectors, exports, entrepreneurships etc. Government now mostly rely on debts and loans to fund various projects as well as to meet expenditure, the expenditure is more than revenue every year thereby mounting enormous debt burdens which will ultimately passed on the public.

One of the permanent sources of revenue is PSUs, well; these PSUs if run properly can be a great source of revenue for government and also permanent source of job creation. As per a recent report the net profit of PSUs has increased from 8% to 14.5% since the last decade on an average (But analysts say that this growth is insignificant considered the number of PSUs and when the economy is experiencing growth). Due pressure from the corporate lobby and west backed institutions like IMF , World bank, Government shows more interest in either to divest stake in these PSUs or sell them for uncompetitive prices. Many PSUs had been sold off, government slowly plans to divest stake initially and ultimately sell these units, leaving only a few units of crucial sectors which can’t be sold off. Now finally we have a total of 246 PSUs. 33 are yet to commence operations. Out of 213 functioning PSUs remaining, more than 50 PSUs are in losses and PSUs contribution to the GDP of the country is merely 6.5% (statistical source: B&E magazine. Why these PSUs can’t be run properly and efficiently to generate revenue? (You can read my earlier article about PSUs from my archives where I have explained about the reasons for the losses and a few suggestions how things can be set right). Many argue about Privatization as a solution, but privatizing is not an option, because government often privatizes profit making units and not the loss making ones and shows more interest in divesting stake of top performing PSUs. Bureaucracy, corruption and complacency have led many PSUs pathetic conditions. It’s high time that government does something to unlock the true potential of these PSUs.

We need to increase exports and also increase our global presence considerably by establishing Indian brands in the international markets. Many management gurus and experts have written, discussed and argued about this. We need to produce outstanding products/brands to establish ourselves in international business. It is a shame, that this nation has produced so much billionaires and so many Indian companies have emerged especially in the last two decades, but we haven’t successfully created a single outstanding brand which we can boast about in the international market. We can only increase our revenue through more and more exports and our businesses can expand and establish their strong presence abroad by producing quality Indian products and by developing global brands.

Even many Asian countries like Japan, Korea, and china are competing enough in the global market and have successfully developed global brands like Hyundai, Toyota, LG, Haier, Kodak, Panasonic and many more…. And these companies are expanded to global markets and set their strong foot hold and have been indirectly generating income for their respective nations.

To develop such global brands and outstanding products, we need to retain our highly skilled talents, we are not facing talent crunch but what we are facing is talent drain or brain drain by western companies and nations. For example, Pass outs from our premier and prestigious national institutes like IITs, IIMs and many other institutes mostly take Jobs abroad or work for foreign companies and government spends crores of rupees for providing subsidized education for these pass outs, they are not the ones to blame, it the flaw is in our policy and pay, firstly government provides such subsidized education without any pre-conditions ( for example, the Chinese government recently made a policy that those who enroll to join army would be provided free college education, thousands have responded , here youths get employment and education at the same time government has exploited the opportunity to attract fresh educated talents into the army as their army was facing acute shortage of educated officers) why can’t we make such policies to tap the talents that our national institutes produce? Secondly the pay, we need to definitely pay more to retain such exceptional talents, for example, an exceptionally talented Indian scientist would be more interested to work for NASA than ISRO, because of pay and opportunities (there can be exceptions like Abdul Kalam). If we want to retain our talents, we need to provide those adequate facilities, pay and opportunities.

Another important area where government should really focus is entrepreneurship. Government is doing and should do more to encourage entrepreneurship, everyone cannot be provided a Job in this tremendously populated country, but government can really create favorable environment to lift budding entrepreneurs who can grow, expand and contribute to the nation and can also create Jobs for thousands. Entrepreneurial talents are unique which should be encouraged. A thousand entrepreneurs nourished are sources of millions of Jobs; So much is the power of entrepreneurship.

These are few examples how we can set a permanent base for future growth, increase our source of revenue and build platforms to create millions of permanent Jobs and to attain sustainable development. Our policy makers should come up with more innovative ideas and concrete plans to attain development and create Quality Jobs as we cannot rely on temporary sources or dependant on instable sectors, and of course definitely not BPOs!

MR.BILL HATS OFF TO YOU!

You have set yourself as an example for the generations to come………..

Do you know what the biggest disadvantage of capitalism is? Unequal distribution of wealth and resources, capitalism provides opportunities not equality, opportunities that too only for the strongest, toughest, fittest, the intelligent, the highly qualified, and the rich. Other way to describe capitalism is ‘survival of the fittest’. Darwin’s survival of the fittest theory applies to the life in jungle. Capitalism is based on the same cruel theory; a capitalist society hardly cares for the sick, needy and the unfit.

Prof. Jeffery Sachs, The Director of Earth Institute, at Columbia university and former Chief economic advisor to the then UN General Secretary Mr.Kofi Annan and present Special advisor to UN General Secretary, Mr.Ban Ki Moon, writes in his book ‘The end of poverty’ – How can we make it happen in our time, that “we can eradicate extreme poverty by the year 2025 within the limits that the rich world (rich nations) has already committed (at United nations): 0.7 percent of the gross national product of the high income world, a mere 7 percent out of every $10 in income. All of the incessant debate about development assistance and whether the rich are doing enough to help the poor, actually concerns less than 1 percent of rich world income”. But he speaks about various prestigious international organizations like IMF, Word Bank etc and governments of the rich nations that don’t take much serious efforts to even fulfill their commitments.

In a situation like this when even international organizations and rich Government don’t stand enough for the cause of the poor. A man somewhere from a rich and powerful nation, the heart of capitalism, where most of the people enjoy good standard of living, stands up for the cause of the poor, he is not just an another ordinary man, but a billionaire, business tycoon, to whom the world listens to, the man is none other than Microsoft’s Founder Mr. Bill gates.

Generally, I don’t have a good opinion about the super rich, or respect them as they just mindlessly keep on accumulating wealth without knowing that nothing can they take with them when they leave the earth, and don’t have the insight to think that being powerful and rich they have a great opportunity to serve the poor and needy and make their own lives more meaningful. A few do some kind of charity for the sake of society and the charity that they do is nothing compared to the revenue they generate, thus nothing substantial is ever achieved to help the bottom of pyramid to raise their standard of living. You may ask, why should one help the poor, it’s their fate, doing charity is a choice not an obligation. It’s up to them, As Jeffery Sachs writes in his book how most of Americans thought that they couldn’t afford to help poor nations as they have to spend for the army to protect their nation. Well, a poor is poor not only because of his fate, but because of our system itself, which favors a few, a few become super rich only at the cost of the millions of poor, the system which facilitates the smart and intelligent and the strongest to drain all resources that could have been sufficient to feed millions and the system forces them to remain under poverty. Well, I don’t want to explain this fact in detail, as it would require a couple of economic theories to highlight and explain how the wealth systematically gets accumulated at the hands of few and that is not the subject of this article.

Coming back to the story, I would say that this man is exceptional and unique, stands up for a cause and sends out a strong message to the super rich of the word that ‘let me be the first, come and join hands with me, we will together make the world a better place to live’. Recently, this Gentle man, Mr.Bill Gates along with his wife Mrs.Melinda Gates and another interesting personality Mr.Warren Buffet, another billionaire and owner of Berkshaire Hathaway, has started a campaign in United States asking the nation’s billionaires to pledge to give at least half of their net worth to charity in lifetime or death. They have till now got tremendous response from the billionaire community in the United States. Thirty-Eight US billionaires have pledged at least 50% of their wealth to charity so far and Bill Gates, Melinda Gates and Warren Buffet have a combined net worth of around $100 billion have already committed most of their money to charity. There are around 400 billionaires in US and if all were to give 50% of the net worth of wealth away during the life time or death, which would be $ 600 billion. A charity campaign drive which is the biggest in the history of mankind and the US press claims would change the face of philanthropy.

These three (Gates, Melinda Gates and Buffet) probably would have thought and come to the conclusion that, the true meaning of life is to make others happy, In Albert Einstein’s words ‘a life lived for others is worth life.’ These two wonderful people (Gates and Buffet) have always been successful in life, passionate about it and business earned a lot of wealth and now they have decided to spend their wealth for the under privileged, diseased and the poor. I don’t think anyone can make his/her life better than this.

The Melinda and Gates foundation has been doing some wonderful charity work around the Globe by running so many projects (education, medical aid, aid for disaster victim etc) to help the under privileged and the poor mostly of the developing or under developed countries of Asia and Africa and most importantly there is no question of corruption in foundations run by such people, they keep everything transparent and clean and would ensure that the funds are properly utilized for the welfare of the poor.

There was news about Bill Gates planning to come to India extending this campaign to ask the billionaires of this nation to join them in this biggest charity drive run ever. Billionaires in India, are the most privileged not because they are billionaires but they are billionaires in a nation where most of the population depends on agriculture, and millions live under poverty line and the standard of living of the middle class of this nation (a strong 300 million which the economists say is a big advantage) is not up to the International Standards and these billionaires have always been tremendously favored by governments by either favorable policies, or by facilitating these people to buy or acquire controlling stake in profitably running PSUs and even if so called sick PSUs were sold, they were sold at a price much lower than the market price (Possible price the units would have commanded in the market) or by granting licenses for mining our natural resources ( which many corporate companies have misused in the past and even the recent times)all these factors have also helped them accumulate wealth. (Prof. Arindam Chaudhuri has written an article about how billionaires of this nation accumulated wealth and how government facilitated it, in one of his article ‘Blood billionaires, Scam Billionaires, Indians storm into the global billionaires’ list’). Now that a great charity campaign coming to India, it’s time for these billionaires to respond and show their loyalty towards their nation and some compassion towards the poor.

It’s not that Indian industrialists haven’t moved by the pathetic conditions of the poor in our country. In every case, there use to be exceptions and here again there are exceptional people like Narayan Murthy who has been sincere and straightforward and earned wealth by his hard work, intelligence and efforts. He has been said to be doing some great charity work already. Mr. Shiv Nadar, one of the founders of HCL has pledged 10% of his wealth for charity and his focus he said would be education, but still we need a lot of such Narayan Murthys and Shiv Nadars.

Now, it’s time for Indian billionaires to come forward and do something for the society and not just lip service, but charity in a true sense. When Bill Gates comes to India with such a campaign, he would expect the same kind of response and enthusiasm from the Indian billionaires as well that he got from the Americans. Is Corporate India Listening?

SO, YOU WANNA BECOME A SUPER POWER! LET’S START FROM THE BASICS.

‘The world respects India’ writes Mr. Chidambaram, the honorable Home Minister of India, in his book ‘A View from the Outside’. Oh! The whole creamy layer of this country tries to convey the message to the rest of India ‘the world respects India’. You might have noticed, right from the Government to Corporate organizations like FICCI, CII, and Big Corporate leaders to Economists and corporate backed media often making statements like ‘India will emerge as an important financial center in the world’, ‘India has the potential to become a developed nation one day’, ‘India will emerge as a super power’ ‘we are one of the fastest growing economies in the world’ and so on.

Well, of course, this is the dream of every Indian, one day he wants to see his country as a developed one. If not all, at least those who have some concern for this nation. It is good to be positive about India’s growth. There is nothing wrong in aspiring to become a super power. Every country in the world has the right to have such a dream.

India is experiencing growth in all the spheres and sectors, but this is an uneven growth which only benefits a few sections, though we believe that some day the benefits would flow to the bottom of the pyramid too. Thus, we aspire to become a super power, but the question is, are we prepared enough to become a super power? Even if the economic wealth increases in the future and say our GDP rate surges, imagine one day India scores well in all growth parameters. Will the world accept us as a super power? Why do I raise such a question? The problem is, we, majority of the Indians do not have the basic or fundamental qualities that many people (not all) have in the developed nations. Sounds harsh? It’s always better to accept the mistakes and rectify than being stubborn and not accepting them. Look! No body is perfect, I’m not questioning our status quo, I just say, we can change. Still confused, what I am going to discuss about?

Well, here are the basic qualities that we lack.

The first and foremost thing we need to focus is to clean our country, because cleanliness is a very good sign of a country’s development. We have to learn to keep our surroundings, streets and roads clean. Our successive governments till now after 64 years of Independence never had run a massive campaign for a cleanliness drive. we could have done this long back but civic bodies are the most corrupt, which hardly care about their assigned areas, even when some civic bodies miraculously do something to clean up areas, we the people, most of us don’t have the civic sense to keep our surroundings clean, we take pride in dumping garbage in our neighbor hood areas, throwing wastes anywhere and everywhere on roads.

It’s not a one-day affair, it is a long process, If we decide today, it will take a few months, may be a few years to create a clean, hygienic environment. Government being the top authority should initiate the campaign for a clean India. Let the message be passed on to people through various channels, by brand ambassadors. It’s important to create awareness among people about cleanliness. It’s a process involving the government to run a massive campaign and the civic bodies which should be monitored and regulated so that they come alive and start the real work of cleaning up their respective areas (again governments have the great role to play here). We need fixed dustbins every few hundred meters installed at least at metro cities first, gradually to small cities and towns and to villages and most importantly, we the people should realize and understand our responsibility to be good citizens. We care too much about the cleanliness of our home but what about the country? Is it our selfish attitude that is behind the problem? Don’t we have a concern for the country? If we do then we would not even think about throwing garbage or wastes on the roads.

The second thing that would irritate any good citizen is the habit of spitting. Many spit on roads, public places, on monuments and anywhere they feel like. There are uneducated people who do not actually know, they just think it’s quite natural to spit, mainly villagers. We should actually educate them, create awareness about cleanliness, about hygiene, they will definitely understand. But how can we forgive those irresponsible educated citizens who spit as they like without any shame?

The third basic thing we need to learn is to form lines and queues and to maintain them till the purpose of forming queues is solved. Have you ever watched how we form queues? We hardly form queues in public places, right from places like temples, railway stations, bus stands, schools, colleges or any public places. Even when we form queues, when the time comes to maintain them we fail to do so. When something is distributed anything like forms, tickets, Prasad, tokens or anything else, we rush and push each other and run as if we were in concentration camps for days without food and now that the food is being distributed we need to grab something to eat. Either you take it seriously or in a humorous way, this is a fact evident from many incidences. In the past so many incidences of stampedes and deaths have happened due the lack of this basic quality to form queues and maintain them.

Let me give you another example. We have a sophisticated Metro service at New Delhi; Metro has changed the lives of Delhites in a great way. The people at these metro stations form queues before the train would come, the person who would watch from a distance might think that, okay, people have formed queues, once the train comes these people would first let the people to de board the train and then these people would slowly move in, but what happens is just the opposite, once the train arrives, the people would push and pull each other, and rush inside like hell, while the passengers who would de board have to flex their muscles to really get out of the crowd. These people are not villagers, but we the people who live in the capital city of this country.

The fourth basic thing we need to learn is ‘the way to protest/strike’. We are in a democratic country we have all the rights to express our opinion or we have the rights to protest in a peaceful way or go for strike if law permits in a disciplined way. But for some anti-social elements strike/protest means damaging public properties (which are common man’s assets, it’s my money and your money), torching buses and engaging in all unlawful activities.

The fifth basic quality we should cultivate is to follow traffic rules. I read a comment made by a foreigner in a newspaper about our traffic system, he said “I couldn’t understand the traffic system in India” but, I don’t agree with him, we have a clearly defined and excellent traffic system in place, but the fact is that most of us (not all) hardly bother to ensure the smooth functioning of the system. Even if we follow rules we do out of compulsion when police men are seen around and in the absence of policemen a few who don’t see any point in following traffic rules would jump red lights and such people do all unacceptable things like over taking vehicles, over speeding, changing lanes etc.

The sixth basic thing is to avoid urinating at public places, here it’s not only the fault of few irresponsible citizens, it’s also problem with our local governments and civic bodies who should provide lavatory facilities at least at some important public places initially and later in other places. There have been a few initiatives taken in this regard, but the lavatories which are already in place are badly maintained by civic bodies and not fit to use, still a few responsible citizens use those lavatories instead of urinating at public places with their nose covered. In metro cities government has given the project to private hands who at least maintain some level of cleanliness in the lavatories

The seventh and basic quality we need to have is to respect each other. This is very much possible when we have the feeling that we are all Indians and we are all one. We might not express our concern and love for each other, even the people in most developed countries don’t do that and they don’t have time, but we can definitely maintain some discipline and have some manners while speaking with other people at public places. Often I have seen people unnecessarily quarrelling at traffic Jams, buses, counters and at various public places and start abusing each other like anything using words which we would never use at homes but at public places such people behave like uncivilized and act like goons remembering each others ‘mothers’ and ‘sisters’ during arguments. Just an example, a person driving to office quarrels at the red light signal for 30 minutes just because another motorist unintentionally caused a slight scratch to his car. What happens is a policeman intervenes after 30 minutes quarrel and once the traffic jams, takes both the parties to a side and take bribe from both of them and let them off and this guy reaches office 1 hour late. Does this make any sense? This is a very important thing of concern; we need to mutually respect each other.

These are some of the basic things/ qualities that we need to learn/ have, as we our country develops, as infrastructural developments take place, as industrial growth surges and as we aspire to become a super power we need to first get our basics right and become fit enough to become the citizens of a developed country.

From the heart of an Indian …………..

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I LOVE BAICHUNG BHUTIA….. SO SHOULD INDIA.

North East is a big asset for India; India should realize its potential before china takes advantage of the situation.

Baichung Bhutia, heard about him? Known as the poster boy of Indian foot ball today, Nick named sikimesse sniper because of his shooting skills in foot ball. A true Indian from the beautiful North east of India (Sikkim), is the first Indian to play professional foot ball in England. Has been an outstanding player at National foot ball championships and also contributed so much to the Indian foot ball. His valuable contributions in various crucial matches have won many titles for India, like SAFF champion ship 97, SAFF Champion ship 99, 2003 afro-asian cup runners-up, Nehru cup 2007, SAFF Champion ship 2005, SAFF Championship 2008 runners-up etc. He has also won various titles for individual performances like man of match awards, the most valuable player of the year, player of the tournament etc. He has emerged as a successful foot ball player against all obstacles, that too from a region which is often being neglected by the government when it comes to development, a very important territory of India which stands isolated when it comes to development, the beautiful, of course, Incredible North east of India. The Indian government recognized his achievements and awarded him Arjuna award and Padmashree award, which is appreciable. The important thing which should precede recognition is opportunity, provide opportunities, and then recognize achievements. There are thousands of youngsters from the region look for opportunities to rise and shine for their country, a pool of talent waits for opportunities.

India should realize the true potential of the north east, not only in terms of human assets, but also about various other unexplored revenue opportunities the region provides, at the same time, government has to lay the foundation of development work before this region could contribute something to the nation.

Since the beginning of the economic liberalization in the 1990s, studies have shown that this region is lagging behind others in terms of development, while many Indian states have improved comparatively better than these seven states. Why these states have been neglected? Is it because, these states are far away from the mainstream India, and we don’t bother about those people who don’t look like us, or do we just want those territories to be part of India, but never mind about the developments of those region.

According to B. George Verghese, one of the authors of Vision 2020, Northeast will have to grow by 12 to 13 percent every year in per capita income and basic social indices, if it were to catch up with the rest of India by 2020—assuming a 9 per cent growth rate for India. “Closing the gap,” he believes, “will not be easy but is doable.” However, the centre will have to make major investments. The popular opinion about north east is that the central government doesn’t allocate enough funds for the region.

But controversially, Dr.Ajai Sahni, Executive Director, Institute for conflict Management and the South Asia Terroism Portal; and Executive Editor, Faultlines and and Dr.J.George, Prof. George Jacob is Professor & Head of Department of Economics, and Disaster Management, at the Harayana Institute for Public Administration (HIPA), Gurgaon, and a founding member of the Institute for Conflict Management , have published a report about North East with a different perspective, the report titled ‘Security & Development in India’s Northeast - An Alternative Perspective’

An Excerpt from their report “The strife-riven States of India’s Northeast are a case in point. It is commonplace to say that this region has remained an area of neglect for more than five decades since independence. From the point of view of national political consciousness, this is, perhaps, a correct evaluation. In the context of developmental allocations and a wide range of economic and social indices, however, this is far from the truth.

The States of the Northeast are ascribed a "special category" status by the Government of India, and the National Development Council (NDC), the apex body for the approval of Plan funding, earmarks 30 per cent of total Plan allocations for special category States as central assistance for State Plans. Significantly, these States receive 90 per cent of Plan assistance as a grant, and just 10 per cent as a loan, as against the norm of 30 per cent grant and 70 per cent loan for other States. Favoured treatment is also given by the Finance Commission with respect to the sharing of Central tax revenues. Clearly, therefore, these States have not been made to suffer as a result of their resource endowments. The financial flow of funds to the Northeast, and the persistence of ‘underdevelopment’ against a backdrop of financial support from the Centre, consequently demand an examination of the decision making processes and patterns of resource allocation within these States.

In the first place, the financial support to these States from the Central devolution (Planning & Finance Commissions), accounts for over 80 per cent of the per capita revenue receipts in this region. Secondly, developmental expenditure as a percentage of revenue expenditure ranges between a high of over 72 per cent (Arunachal Pradesh) and 60 per cent (Nagaland). Thirdly, capital expenditure as a proportion of total expenditure was, on an average, at least 10 percentage points higher than the national average”.

If we go by the report published by Ajai Sahni and J.George, where do the funds go, in spite of so much fund allocation? By now North Eastern States should have been in the list of prospering states of India. Unfortunately, the situation is worse when it comes to Industrial development, Infrastructural developments and Jobs. This is proven by the fact that thousands of North Easterners migrating to various parts of the country, and social unrest and insurgency in those areas have further intensified migration, over the years. What the region lacks is opportunity, Otherwise, contrary to the general view about the north east, they are far better in various parameter as compared to national average, like literacy rate, the region tend to be significantly higher than the national average, while population densities are significantly lower and the population below the poverty line, at 33 per cent, is less than the national figure of 39 per cent. Even access to electricity, at 44 per cent of households, is marginally above the national average of 43 per cent; as is access to a health sub-centre / hospital within five kilometres of the village, which stands at 47 per cent of villages in the Northeast, in comparison to the All India average of 41.2 per cent and the ‘social backwardness’ that we ascribe to the tribes of this region is a heavily concept-dependent value judgement, says the report Indeed, the character and equity of local institutions for village and self-governance in tribal societies tend to be far superior to the caste riven, feudal panchayats in much of rural India, the status of women is certainly higher, and crimes against women dramatically lower than they are elsewhere in the country. The report suggests that the per capita income is better than the national average, but our national average is it self is a worst figure, means thousands still starve and the rest struggle to lead a descent living, except a few. That is the situation in north east too, North east faces all the problems that our nation faces, but what makes their life more terrible is that the lack of opportunities as mentioned above, the lack of industrial development, infrastructural development and Jobs, may be today they manage to earn some income and some support through aides, but for the long- term , you need substantial growth in order to sustain and raise the standard of living, because when we don’t create a platform for industrial growth and job opportunities, a majority of the future generation may slip into poverty.

Finally, the authors (Dr.Saini and J.George) write in the conclusion “the fact is that substantial development has flowed into the Northeast; its impact on target populations has been negligible because of the corruption and violence of the prevailing politics. Much of this investment, moreover, has indirectly ended up financing militancy through the enveloping economy of extortion and collusion.

What they say is, there is a total network of bureaucrats right from the central to state involved in the financial irregularities, and in many cases funds are being diverted to rebel groups by the local authorities, recently , a report about the arrest of Niranjan Hojai ( the commander in chief of the Dima Halom Daogah (DHD), was published in mail today delhi edition dated july 4 2010 by NIA (National investigation Agency), the rebel leader was wanted in various cases including siphoning off of part of the development fund – sanctioned by the centre for the North Cachar Hills district – to fund terror, further the report says, The NIA had found that bureaucrats, in connivance with politicians, including some state ministers had diverted huge sums of the DHD (J) for procurement of arms and ammunitions. The nexus came to light last year following the arrest of two DHD (J) linkmen carrying Rs 1 crore in cash. We see a few countries as our enemies, but what about the enemies within our country, the traitors, and the corrupt bureaucrats.

Whether there is a lack of fund allocation or the funds allocated do not reach the common people, both are one and the same, in the latter case the consequences are still worse, you are wasting nation’s resources, funds are not utilized properly despite of allocation.

If we go by the report of Dr.saini and prof.J.George, the immediate action needed from the government is a set up a regulatory body consisting of economists and IAS officials to scrutinize, audit, plan and facilitate the flow of funds to crucial areas of investment, and this body should also minimize corruption. What is the use of allocating funds when they don’t reach the common people or not being spent for development work? The problem in India is the planning commissions and committees come up with great plans and projects but most of the time successive governments have failed to implement the plans effectively and efficiently. A mechanism to facilitate the flow of funds to key areas of investment to promote industrial growth and ultimately creating opportunities in the form of Jobs is the first step government should take to restore the authority of democracy in the area.

Secondly, As far as North East is concerned the issue is not only about development, unlike the naxal affected areas, the north east region consists of those seven states have different culture, tradition, language and ethnicity, many groups have been fighting for separate lands for years, the struggles started long back during the British era itself, but development is a significant issue. Majority of the North East Indians, I mean Indians; have been raising their voice for years about the government’s lack of interest in developing those areas. We have been fighting those rebels for years, while many rebels groups of the regions have been suppressed and militancy level has been decreased to a considerable amount, still a few groups are active and operating with the help of china. China has been indirectly supplying arms to their comrades, for what they call as a war against India. China has been claiming a major part of Arunachal Pradesh as its own territory for years now. The common people of those regions still have belief in the government and electoral process, and play a crucial role in keeping democracy alive. It’s now government’s obligation to respond to the needs of those people to sustain their belief in the government.

The militancy level has been decreased to a considerable amount, I have myself talked with few people from those regions, they say, now it is far better than what it was earlier. Here we need to thank our paramilitary forces, which have been fighting our enemies from all fronts, they fight the rebels, in the thick jungle where the enemy has the advantage, and on the other side,they have the responsibility to protect the border from Chinese intrusion. But, most common allegation usually made by people in any insurgency affected areas is security force harassment. Government should take steps to ensure that, such kind of incidents do not happen, because the first step government could do for the people of the insurgency affected areas is this, a good relationship with the locals and government forces. They see security forces as representatives of the government, the face of the government, thus it is crucial for the government to ensure that the security forces do not harm people.

I have written a lot about development issues in my earlier of two articles title ‘Carry out operation green hunt’ and ‘the buck stops at whose desk’, the second immediate step governments (respective state and central government) should take is to restore law and order. ‘ The rule of law’ and ‘ rule by law’ need to be established, which cannot be restored only by force, that is what mainly earlier articles focused about, the two way approach to deal with militancy, government should carry out a coordinated offensive to suppress militancy and other notorious criminal gangs operating in the region and at the same time it should show it’s compassionate face towards common people by addressing their issues and agendas, development is the key and should be the top priority for the government.

Though the many parts of India need development, and governments need to ensure uniform development of all these regions. Why North East stand as an important region for development and why establishing the rule of law and restoring the authority of democracy is vital?

Here are a few reasons why government should take north east seriously and ensure the development of those regions and establish rule of law with immediate effect.

1. There has been a growing desperation among a section of North East People that the Central Government does not take their issues seriously and feel like isolated from the main stream of India. People’s dissatisfaction and lose in the faith of government and law is a dangerous sign of a law and order collapse.

2. The region has lot to offer to the rest of India, in terms of Human assets, as the literacy rate in this region is considerably higher than the national average, youths looking for opportunities in Jobs and Sports. A few Baichung Bhutias are waiting for opportunities and may bring a few gold and silvers from the Olympics for India as they are sports enthusiasts and in terms of revenue that we get like oil fields of assam, tea and for all those the region is famous for and future revenue opportunities like tourism which is now taken a back seat due to insurgency.

3. Thirdly, the strategic location of the region, near china, our undeclared enemy, who eye every opportunity to grab a pie of north east. Any social unrest, civil war, internal conflicts, law and order issues, revolt may become an advantage for china, in fact, they look for such dramatic event to take place to take charge of the situation. This is evident from the fact that they continuously try to enter our territory; claim a part of North east, a few months back issued separate visas for people for J&K, opposed to Dalai Lama’s visit to Arunachal Pradesh and a number of reasons. Now recently, china is helping Pakistan to build nuclear reactors. They look for right opportunity, I have written two article about china , one about how and why they are anti- Indian , title ‘ China’s dream of disintegrating the great Indian federation’ and the other one about China’s spreading influence in the world titled ‘why the red dragon is on the offensive mode?’.

So, it’s time of us, for India, for the government to take North East India seriously, no special treatment is required, but government should ensure that the region grows or develops along with rest of India. If the so called economic growth of India is true as claimed by economists, then North East also should be a part of this success story. Not only because North East region is important as a part of India, and for the source of revenue and for the people who are Indians like you and me but also strategically the region is very important for India.

THE TELECOM BATTLE INTENSIFIES, AIRTEL CHANGES GAME PLAN.

Neither the strongest of the species nor the most intelligent but the one which is more adaptable to change, survives said Charles Darwin. Change is important, change is crucial when your environment is tough, competitive, and dynamic.

Similar is the situation, in the Indian Telecom Market, midst of a hyper competition going on, while the players are facing a difficult time, managing their profits and margins, government has raised close to approx 68000 cr from the recent 3G auction which has furthered raised the attractiveness of the market, which is already attracting new players due to its potential. When we talk about the potential of the Indian telecom market, I need to mention a few points here, though experts feel that the on-going hyper competition may spoil the game (I too have written an article earlier regarding this), this is a short term crisis, but if we talk about the real long term potential of the market, here are some compelling facts and figures.

There are totally, more than 500 million phone users in India, and growing at a rapid speed, this number is expected to hit 1 billion by 2014. The Indian Value added services Industry alone is expected to touch a turnover of Rs 21000 crore by the year 2013. Apart from urban market, the rural India too is a potential market to explore for these telecom companies, the attractiveness of the market has been continuously attracting new players into the market, in order to grab their pie of the market share, the new players have triggered a price war, where the call rates have dropped to the extent that it has hit the margins. Many companies are now charging for calls by the second, rather than by the minute, with plans for as little as 0.50 rupee a minute and when the number portability comes into play, it would further intensify the competition.

As the domestic market becoming hyper competitive, and the market becoming more of a commodity market, what should be the company like Airtel’s strategy? Pioneer in the wireless market, with vast experience, resource and major market share, Airtel has always been a star player in the market, when it comes to quality of network, customer service, offers, marketing and promotions.

Despite having a strong hold in the domestic market, having a competitive advantage of excellent network and customer service, the crowd in the domestic market has driven Bharti Airtel overseas. Growth is life, Sunil Mittal, the super star of the Indian Telecom Industry knows this very well, an expansion plan will definitely workout at a time when all major Players are competing to keep their growth graph going up, Airtel plays the game safely, sensing that the telecom market is becoming more of a commodity market, Bharti Airtel had changed it’s game plan long time ago, though competing enough to sustain its competitive advantage in the domestic market and increase it’s market share, Bharti Airtel focusing more on overseas expansions through M & A deals, this is visible by the series of overseas deals that Bharti Airtel has done abroad till now. Bharti Airtel wants to expand it’s presence globally with in a short period of time, that is the reason why Airtel has been focusing on inorganic growth, though majority of the M&A deals have been unsuccessful in the recent past, even experts write and preach about M&A deals that they fail to create share holder value or destroy share holder value, but if you can do it right, in Jack Welch’s words “M&A deals give you a faster way to profitable growth, They quickly add geographical and technological scope, and bring on board new products and customers. All in all, successful mergers create a dynamic where 1 + 1 = 3 (Synergy), catapulting a company’s competitiveness literally overnight’s.

Now, coming back to the story, let’s have a look at the series of overseas deals done by Bharti Airtel in the Past few months. The company launched its mobile services in Srilanka last year and has more than 1 million customers there. It acquired the Abu Dhabi Group’s Warid; currently holds 70% of the stake, the deal enabled Bharti Airtel to enter the lucrative neighborhood market. Waird has more than 3 million subscribers. The deal gives the company a strong hold in one of the fastest growing telecom markets in the world, having more than 52 million mobile subscribers and the number is expected to touch 100 million by the year 2015. Airtel’s move came after its plan to buy a stake in South Africa’s MTN collapsed. Waird is the sixth largest telecom operator in Bangladesh.

Recently, Bharti Airtel acquired Zain’s African unit in a $10.7 billion deal, with the closing of this deal Airtel becomes the 5th largest telecom company in the world. The deal has given the company a strong presence in the potential African Telecom Market.

The series of deals have brought it total to 18 markets, a global foot print surpassed only by the large European operator groups and its new African rival, MTN. Bharti is also in talks with Tanzania’s government over its stake in Zain Tanzania. If materialized, the talk will make Bharti the second-largest African operator group behind MTN.

With the competition intensifying in the domestic market, at a time when players struggle to defend their market share, Bharti Airtel has been successfully dominating the market for years now, holding its numero uno position, and at the same time seeing the threat of price war affecting the current growth opportunities, Airtel changes it’s game plan, expands its global presence and will continue to do so to offset the pressure in the domestic market and also to fulfill it’s long-term goals of becoming an International Company.

But the biggest Challenge ahead is, how well it manages the M&A deals profitably in the coming months, and how it adapts itself and performs in the new market in spite of all challenges, the company which has handled all the challenges efficiently to reach the position it enjoys today… how well it would handle this new challenge is what is to look for…. Hey! Closely watching Bharti Airtel’s next move…..

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WELL DONE STEVE! YOU HAVE MILES TO GO……

Well, ‘you don’t have to be a fantastic hero to compete, you can be an ordinary chap sufficiently motivated to reach challenging goals’ said Edmund Hillary. The world is competitive and heading towards globalization where the fittest can only survive. You are left with two options in the competitive world, either be fit, if you are not, then have the attitude to fight against all obstacles, prepare yourself to face failures, stand up for what you believe in, don’t get despaired or discouraged, struggle, survive and excel, in this process you will eventually become fit enough to live and achieve in this highly competitive world of machines.

I would like to share with you about the life and achievements of one such personality, who fought against all the problems and resistance to reach the level that he has attained today. A born fighter, known for his quality of perseverance, much has been made of his aggressive and demanding personality. The man is Steve Jobs, the co-founder of the iconic company APPLE, the brand people love almost all around the world.

The Chairman and CEO of APPLE really had struggled in his life to achieve the position that he enjoys today. Failures and hardships helped him cultivate the excellent quality called perseverance. A quitter never wins and a winner never quits, his quality of perseverance helped him emerge as a winner in spite of failures and hardships. In fact I have been his admirer ever since I started learning Management, not for the level that he has attained, but for his ability to fight against failures, for his aggressive attitude, for his passionate approach towards life.

Let’s peep into Steve’s past, how he made a great come back after facing so much of hardships in life. Steve was born to an unwed graduate, who put him immediately for adoption; he was adopted by an American couple who had a low level of education. Jobs graduated from high school and enrolled in Reed College in Portland, Oregon.Although he dropped out after only one semester, he continued attending classes that interested him. He would sleep on the floor of his friends’ rooms and returned coke bottles to earn 5cents per bottle to buy food. Every Sunday night, he would walk seven miles across town to get a free meal at Hare Krishna Temple.The early part of his life and his struggle against problems made him more aggressive and made him try harder. He went on to co-found Apple in 1976, marketed it’s products aggressively. He was fired from his own company, by the Apple’s board of directors in 1985, failures made him more stronger, motivated him again to found Pixar and NeXT, in 1996 he became a member of the Board of directors of Walt Disney, in the same year Apple’s Subsequent buyout of NeXT brought Jobs back to the company he co-founded, and again regained his position, became the CEO of Apple in 1997. The star of the corporate world, has been leading his company year after year success around the globe in multiple markets and against brutal competition. What makes him special is the ‘never give up’ kind of attitude, a pancreatic cancer patient, even had a liver transplant in the month of January last year, nothing could stop this man, Jobs officially resumed his role as CEO of Apple on June 29, 2009.

Failures and hardships could never pull this man back, all along his life, he has been determined to achieve great things and passionate about life and business.

Now comes the important part of this story, under his leadership Apple has recently become the second largest company in the United States in terms of m-cap, ahead of Microsoft Incorporation, another mile stone crossed, yet another feather on Steve’s Cap. Well done Steve! You still have miles to go……

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THE BUCK STOPS AT WHOSE DESK?

Recently, there was a war of words between two prominent politicians of the country over the word ‘buck’. Before the argument ‘The buck stops at whose desk’ could end a tragic and horrific incident shook the nation, 76 CRPF Jawans were massacred by the Naxalites at Dantewada. The brutal attack on the CRPF shows the ugly face of Naxalism. Naxalism can get uglier, if the government doesn’t take some concrete steps to put an end to this serious internal threat. Naxals are not just a group of bandits involved in violence, I have written about this in one of my earlier articles ‘carry out operation green hunt’. Naxals fight with a purpose; they have a common agenda and ideology. Recently a national newspaper published a shocking report that Naxalism is a 1500 crore empire. They have a strong set up, with different layers of committees and cadres, a strong core committee to formulate plans of action, strategies; it is not just violence, but guerrilla warfare against the state, against democracy. On the other hand, government sends out troops to crush them, in fact the Naxals are very much threatened by the government offensive; it seems the recent motive behind the brutal attack was to slowdown the government’s offensive against them. The Naxals literally enjoy many advantages over the state forces at those areas, they have mass support, many believe in their ideology, the tribes support them either by choice or by force and believe that they can do some good for them. Most of the people of those areas have lost faith in the government which has been neglecting them for years and failed to meet their basic needs. The left ideologists have been propagating among them that the state wants to get the Naxals wiped off so that it can grab those mineral rich lands. Naxals are familiar with those areas, they are well trained, organized and they know how to operate in jungles, their safe hide out. Their areas of operation are very large, they can hardly be cornered like the Srilankan army did with the LTTE, and it was an island that went as a disadvantage for the LTTE. Naxals, when cornered they move out to other states, or they move into Bangladesh or Nepal or any other neighboring nations through porous borders.

So what should be the government’s strategy to fight these rebels? Simply deploying forces won’t serve any purpose. The government needs to adopt a two-way approach to deal with Naxalism, at one side; it needs to carry out a coordinated offensive against these rebels, at the other side it needs to show its compassionate face to the innocent tribes and poor of those Naxal infected areas. This is not the time to blame each other, or to fix some body for the recent attack or to argue ‘the buck stops at whose desk’. Well, I am not a defense expert, but the operation against the rebels can be successful only when there is a clear coordination between the state and central governments, in fact that is the major concern in the Naxal operation, absence of coordination among governments and difference of opinions. When the forces corner the rebels in one state they move into some other state, when the government of that state does not respond in a similar manner to fight the rebels and corner them the total effort goes in vain, this is what happens, lack of coordination. Secondly, forces need to be well-equipped especially when they are carrying out such difficult operations in the jungle, which is a permanent hideout for the Naxals, they know about the jungle very well. Thirdly, an active intelligence network which can provide precise and real time information regarding Naxal movements, operations and presence. Even the recent attack, experts say, happened due to intelligence failure.

On the other hand, how should the government deal with the innocent people of those areas, firstly, government should ensure that the state forces don’t harass them, most of time this happens, government forces pick innocent tribes or villagers for interrogation, suspecting them as rebel supporters or informers. Constant harassment from the government forces has resulted in hatred for the government among those people, a few months back there was a report in the Newspaper that the state police arrested a few tribal people suspecting them as rebel informers. In that group of arrested people, there was an old lady, who couldn’t see and speak properly, the old lady along with others was booked under waging war against the state act, can you believe this?. How will the people trust the government?, how will they believe that the government which has been neglecting them for years will take concrete steps towards development and that it will meet their basic necessity.

The primary objective of the government should be to win back the trust and confidence of the people of those Naxal infected areas not by making false promises, but by systematic development visible enough to convince the people that finally the government has taken their development issues seriously, development is the key. There was a news report recently, that NREGA scheme has been implemented effectively in the Naxal affected areas, this shows how people are desperate to see development. Along with the development, a clear communication between the concerned state government and the people need to be established through IAS officials appointed at various districts, they can play a vital role in providing the ground level information about these people, their needs and problems thus government can respond to them quickly, this will restore the faith of the people in the government and democracy.

The sacrifice of our precious soldiers who lose their lives in this bloody battle should not go in vain; the purpose of the offensive should not be to grab those mineral rich lands as the left ideologists say, but for the purpose of bringing real development in those areas and real changes into the lives of those poor tribes. At one side when our forces fight the rebels, at the other side, the top priority of the government should be to ensure the prosperity of the economic developments flows to those areas too and help these underprivileged people lead a descent life, so that their next generation do not take guns to fight against their own government and their own country, but become patriots and serve their country in one way or the other.

Naxalism is a lesson to learn for the government and the people, there are thousands of people in various part of this country, starving from poverty, suffering from diseases, lack of access to basic necessities, lack of education, unemployment, government should take more interest in the development of these people, rather than giving more and more tax exemptions to the rich, before these people too, become desperate and frustrated and take up arms against the country.

Long Live India, Long Live Democracy!

‘THINK BIG AND ACT BIGGER’- PRANABDA’S BUDGET EFFECT

Weeks after the Union Budget, after a month long, criticisms, praises and debates by experts, the storm has finally calmed down. Majority of the corporate people favored the budget, calling it a growth oriented and a budget for long term growth. This indicates that the budget has offered a lot for the corporate sector and on the other side opposition parties and a few intellectuals criticized the UPA for fuel hike, failure to contain inflation so on and so forth.

Let’s first see how a perfect budget should be, a budget should not be a short sighted one, like giving a lot of freebies to the People just to save vote banks and completely ignoring the long term goals, usually governments do during the election year. A budget should not be completely focused on long term growth only, ignoring the current problems and immediate requirements of the people. A good budget should be a balanced one focusing on the long term growth and at the same time the focus should also be in solving present crisis. The budget should provide favorable conditions for private sector investments, allocate funds for investment in long term infrastructural and human resource development ( education, health, nutrition, clothing, shelter, jobs) and short term needs like inflation check, smooth supply and availability of basic food items, efficient functioning of public distribution system etc. so overall budgeting is a balancing act.

Now keeping this theory in mind, let’s analyze the union budget. The objective of the budget is to boost public consumption, demand and private sector investments and a private sector led growth which the government believes, will create jobs and increase growth rate.

The macro economic strategy of the government is clear enough to prove the above said objective. The broadening of tax slabs will result in more disposable income in the hands of consumers and thus will increase consumption and demand. To exploit the opportunity, a favorable demand-led growth, the private sector needs more capital at a reasonable interest rate, government has a plan for that too, it aims to reduce the fiscal deficit from 6.9% to 5.5%, how? Government plans to raise Rs.75000 crore that it plans to collect from the sale of equity in public sector firms and the auction of third-generation telecom sector, this would keep it net market borrowing to Rs.3.45 trillion. So lower marketing borrowing by the government due to reduced fiscal deficit should keep the interest rate low, which should ensure availability of cheap capital for the private companies and a huge investment in infrastructure 46% including 25% to rural areas.
So a perfect platform for an investment led growth.

But what the finance minister, failed to see is the inflation, the inflation if not contained, will spoil the whole game, how? Firstly, a high inflation may discourage consumer spending on goods other than basic goods. Secondly, the RBI in an effort to contain inflation has already raised its repo rate to 5% from 4.75% and reverse repo rate from 3.25% to 3.50%, as a result banks will any time increase their lending rates. So, cost of capital for private sector will rise. Only hope is the fiscal correction, but industry experts feel that the governments target to raise 35000 crore through 3G auction is too high as the telecom companies who are already in too much of pressures because of hyper competition in the market will not be able to afford, and due to absence of any foreign players for the bid, the bid will be very conservative. The target of 35000 crore may not be possible. So, in such a situation, the success of the macro economic strategy of the government seems uncertain.

Now, coming to the corporate sector, let us see how the budget favors the corporate sector. Firstly, the broadening of the tax slab will rise consumer spending and boost demand, of course inflation will affect a section of the tax payers and discourage spending, but the top creamy layer of the tax payers will lead the consumption and demand. So this will favor the corporate sector to a certain extent. Secondly, if the government succeeds in reducing the fiscal deficit to the proposed level, will reduce government’s market borrowing and this can to a certain extent offset the rise in interest rates to contain inflation, otherwise, higher market borrowings from the government would further rise the interest rates and would definitely discourage private sector borrowings.

The stimulus package has only partially been rolled back; this step of the government really goes in favor of the corporate sector. The surcharge has been reduced to 7.5%.
The RBI’s consideration to issue new licenses to private sector players and NBFCs is a real boost to the companies in the finance sector.

Now, the reasons to worry for the corporate sector, the rise in excise and customs duties will make the consumer durables dearer. Some of the segments that are going to be affected by the duty hike are aviation sector, auto mobiles, consumer durables, Real estate etc (some products like mobile phones and accessories, medical equipments, micro wave ovens, CDs and DVDs will become cheaper). Rise in MAT (Minimum Alternative Tax) from 15 % to 18% will affect mainly affect IT and oil companies.

Now, what does this budget offer for the common man, now and for the future? In a common man’s perspective this budget has neglected some of his immediate needs, though funds have been allocated in some crucial sectors for future developments, yet considering the pathetic conditions of Indians below poverty line, the fund allocated for human resource development (Nutrition, Education, Health care, shelter and clothing) is considerably very low compared to the level of investment needed. But of course, the funds needed for human resource development cannot be provided in a single budget keeping fiscal deficit in mind, investment in HRD is a consistent and long process. So what are the immediate problems the government failed to solve? The obvious answer is inflation and fuel price hike. With an objective of drafting a perfect budget for a demand led growth. Government failed to check inflationary pressures which surged to 9.9% recently leaving the middle class and the poor to suffer, and the extremely poor, below poverty line people to almost starve and die. The inflation problem can not be solved only by raising the interest rates. Government should have taken concrete steps to stop speculation and most importantly should have immediately increased supply of food items by increasing production and imports, and it is not enough, building a strong public distribution system is essential, because of our inefficient public distribution system, food supply do not reach efficiently to the end consumers, a large quantity of food items are wasted in transportation and ware house storing. For a long-time now many experts in the field have shared their views about the same for an effective distribution system. Another serious concern is the existence of middle men in vegetable distribution channels, these middle men raise the Prices of vegetables 4 to 5 times before it reaches the retailers, there should be a mechanism in place to regulate the prices of the vegetables, to discourage gambling by middle men in the channels.

The hike in fuel prices further added to the inflationary worries, the fuel hike has resulted in high transportation cost, and further pushed inflation rate higher. But you may think, the broadening tax slabs will result in rise in disposable income in the hands of at least the middle class. The sad thing is that the broadening of tax slabs does not benefit the lower middle class; it only favors the sophisticated upper middle class and the well-to-do.

Assuming that you must have gone through the revised tax slabs, the taxable income above Rs.160000 and up to Rs.500000 would be taxed 10%, earlier taxable income for the range of 3 lac to 5 lac was 20%, now the people in the income bracket of 3-5lac bracket will pay less tax, who are the these people? the upper middle class whose income level is some where between Rs 25000 to Rs 40000 per month and having taxable income from Rs 500000 to Rs 800000 would be taxed 20%, a tax amount considerably less than what they were paying earlier, they are people whose income level is some where above Rs 40000 to above Rs 60000, the creamy layer in the middle class and for income level above Rs 800000 the tax rate is 30%. These people account for only 5% of the population who pay such taxes. These are beneficiaries of the tax measures, which will cost the exchequer, an estimated Rs 26000 crore, in other words, loss in tax revenue.

So, is this budget completely negative in a common man’s perspective? No, government has allocated funds for some crucial sectors like infrastructure. A huge investment in infrastructure (46%, including 25% for rural infrastructure) will give a boost to long-term growth. Funds have been allocated for Bharat Nirman ( Rs 48000 crore), for urban development ( Rs 5400 crore) and other social sector projects like education, health etc. Funds allocated for social sector projects are not sufficient enough. But, the investments made in these sectors will bring long-term benefits.

So, overall the budget is more of a long-term budget focusing on the growth rate which failed to solve short-term problems. The objective is to achieve an investment-led growth and the assumption is that economic growth will deliver more jobs. Funds allocation will not only be sufficient, the key to success is not only to invest in crucial social sectors and infrastructure but also to monitor that the funds are effectively used for the purpose and to ensure efficient functioning of social sector projects

WHY THE RED DRAGON IS ON THE OFFENSIVE MODE?

China has been in the news for a long time now for bad reasons like censorship issue with the Google, issuing separate visas for Indians flying from J&K, Chinese army entering Indian Territory; the latest is the news that the Chinese have hacked the mail accounts of Google user’s mainly human rights activists and they are allegedly involved in spying activities. Why china is getting aggressive and trying to establish its influence around the globe? It has recently warned the US president Mr.Obama, not to meet Dalai Lama.

China has a totally different political and economic setup, and it has its own advantages. China is communist at heart but capitalist at brain, unlike other communist countries which adopted complete communist policies and too much of bureaucracy leading these economies to become stagnant, this is what happened with the Soviet Union, post Lenin era and some countries which were socialistic in nature started to adopt capitalism and have become almost free markets, they are totally in a confused state, mixed economy hoping to achieve the prosperity that capitalism promises, still keeping a majority of its masses in poverty, unemployment and illiteracy.

But china on the other hand, is a complete communist regime, party is above all, but yet has adopted capitalist model of growth. These Chinese are crazy about foreign direct investments; they have provided entirely favorable environment for foreign investors, they are not only flourishing in exports but also serve as a great market for western companies. Even the Chinese have started learning English, and are attracting even BPOs to their country. The kind of policy they have adopted has helped them build adequate infrastructure, attract huge foreign direct investments and more importantly has created millions of jobs. The policy makers of this country have played a fantastic role in pulling out millions of people out of poverty over the years and steered the total economy to achieve tremendous growth rates and will continue to be one of the fastest growing economies of the world, but what seems interesting is that, though these communists have adopted a capitalist model of growth and allowed a plenty of corporate companies to flourish in their territory, they still control the economy at a large scale, it is not a free market, remember party is above all. Usually, in a free market or capitalist society, the corporate companies rule the country, they control government decisions, and this is an untold truth and hidden fact. But these communists are very particular about that, they never allow private hands to play at their will, there is a complete government control in the whole functioning of the economy.

This is where the capitalist societies of the west have the problem, they want free market every where all around the globe so that, their companies grow, expand and flourish and strengthen their already strong economies and the Chinese communists know this well, that’s why they play this capitalist game very cautiously, but the point is, china is a very attractive market like India, and the whole west knows that china has a great future, and impatiently waiting that one day this china will become a democracy like India, so that the exploitation of the market becomes easier. They basically hate communist regimes.

The Soviet Union, of course had its own draw backs, the economy was totally mismanaged post Lenin era, but the then western Industrial powers, especially, the US played a great role in facilitating the collapse of the Soviet Union and these Chinese Communists know history very well, they know how their comrades were felled by these western powers and they wait for another historic opportunity to crash their present regime too. So, it’s a situation of act or perish, grow or perish. They have decided to expand their influence now around the globe and got into the offensive mode, unlike the Soviet Union which was very much defensive, and tried save its power till then it was very late. These Chinese have decided to take on all their threats, that’s why it views India more of a competitor than as an ally ( I have already posted an article on this), that’s why it has started its spying activities around the globe to keep a check on all the western powers. China has emerged as an important financial center of the world and in the years to come will become a super power and will pose a real challenge for the whole western world and now the Chinese communists are preparing themselves for the challenging future and to make themselves capable enough to foil any possible attempts the western world can make to destroy their regime. The on-going tensions between china and US over the US president’s meet with Dalai Lama, the US government coming forward in support of Google, the western countries’ concern over china’s rapid economic growth and a possibility of becoming a world power, Multinational companies’ desperation to exploit the Chinese market, all these factors may contribute to a Cold war situation in the future, remember such a cold war existed between U.S.S.R and the U.S for years until the collapse of the Soviet Union in 1991. So, The Chinese probably see such a cold war in the future and thus the Red dragon has decided to fight all its threats including India and right now is on the offensive mode. Now, the time has come for India to be cautious about China, and needs to prepare itself in all possible way economically and militarily to defend itself from any Chinese threats in the future.

TRAI WAKE UP! THE REAL TELECOM GAME BEGINS NOW……

“I don’t meet competition, I just crush it” said Charles Revson, but as the Indian Telecom battle going on, it’s likely that a few players will get crushed. Yes, it’s about the hyper competition that is going on in the Indian telecom market.

India is the fastest growing telecom market in the world, having approximately 52 crore mobile users, account to more than 50% of the population and the expert forecasts show that by 2014, the number of mobile users will rise to 100 crores. India being a very attractive market in terms of its population and ever growing educated middle class, and potential unexplored rural market, apart from some strong existing players, more and more new entrants have been entering the market. As the competition is getting intensified, Michael Porter’s all the forces have become active, in the telecom industry, right from industry competition, new entrants, bargaining power of suppliers, bargaining power of customers, Threat of substitution. Well, as the number of phone users growing day by day, new entrants see the opportunity and have been entering the market and also giving tough competition to the early birds. As the competition intensifies the companies have started to bombard the market with offers like cheap connections, lower call rates and various other mixed offers to attract customers, and the biggest beneficiary of this intensified competition is the customer, the Indian mass have been benefiting from the offers offered by these companies. Competition is good for any industry; monopoly is bad, because it will affect common people.

But what is going on now is something very interesting, blistering growth has attracted new players like Japan's NTT DoCoMo Inc which formed a joint venture with Tata Teleservices Ltd. in June and sparked a race to the bottom over prices as companies rush to grab market share. The price war triggered by these new entrants have resulted in hyper competition, the price cut is huge and unimaginable, the call charges were dropped as low as 1p/sec, later MTNL’s MTN offered ½ p/sec, and companies like Virgin,Reliance offered 20p/min, now the last one to join the price war is Tata Do co mo offering 1p/6 sec (call charges, though similar but may vary from place to place).

Indian consumers at least have a reason to smile, despite the increased food inflation, that the telephone bills have come down drastically. But see what the companies are going through right now. The four month old price war has hit margins at a time when Indian telecom companies have little scope for cost-cutting, Macquarie Securities analysts said in a report. They maintain that the "price cut contagion" is likely to spread from retail rates to corporate, wireless data, international roaming and SMS rates as well. Midst of the price war, government has decided to rise the spectrum charge to 50% for the existing players recently.

The kind of price war that’s going on may lead to heavy losses and can badly affect the whole telecom industry, at least now, TRAI, our Telecom Regulatory Authority of India and Department of Telecom can intervene, not to control the market, but to take some measures to curb new entrants from triggering such kind of price war in the future. A price war that analysts say could turn India's telecom boom into a financial bust.

You may say, millions of people are benefiting from the low call charges, and price war is good, and after all who cares about the telecom companies. But the point is, we are part of a large system, an economy, a complex structure of sub-systems, where one sub-system gets affected the whole system is affected. You must be aware of such a price war that went on in the Aviation sector, which resulted in heavy losses for Airlines and companies were asking for bail out packages from the government. The telecom game that is going on now may result in a disaster; if the companies incur losses, this will badly affect the telecom sector and economy as a whole. Ultimately, government has to come up with bail out packages to save the sector, because the concern is not only about these companies which are pillars of the telecom sector but also about the thousands of employees working in these companies and the number of units like the intermediaries, suppliers, distributors etc. associated with the industry.