Unreasonable Thoughts

Student suicides: A neglected issue

2010-01-18T07:07:00.000+05:30

I recently read (in the context of the release of a marathi movie which criticises education system) that between 2004-2006 there were 16000 student suicides, that's more than 10 per day.

If true that's a truly astounding and troubling statistic. I would guess this at least parallels the farmer suicides in terms of scale. And while it is possible at attempt to remedy the farmer suicides through tangible measures and indeed it has definately been attempted thru agri-debt waivers etc there is no such easy tangible solns for student suicides.

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New Year Resolution

2010-01-02T22:24:00.001+05:30

Think positive, eat healthy and stay alert...
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Are we a class oriented society?

2009-12-29T07:50:00.001+05:30

We have a lift in our office building which is reserved exclusively for directors. So even as lesser mortals queue up for lift, this lift will stay put.

And it is not as if this is a legacy issue (which it might for I have seen this directors lift in a few old buildings) as ours is a brand new building - less than a year old...

Am I generalising? I hope so...
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Capitalist temples?

2009-12-16T12:42:00.001+05:30

Does charging of differential entry fee (or any fee at all) and providing differential access to 'god' based on what denomination entry fee a devotee has paid make a temple a capitalist one? Does a capitalist temple become a profit seeking temple? Does the place remain a temple at all in the first place then?

Temples are meant to be institutions where all humans are equal. Rich or Poor, Old or Young, Beautiful or Ugly; God treats all his worshipers equally we are told or is it? Is it like all are equal but some are more equal type of equality that we are looking at?

I recently visited a temple (Golden temple at Vellore, click here for its website) where there were at least three types of entry tickets - Free, Rs100, Rs250. People who wanted free entry had the longest walk to see the idol those who paid Rs250 had shorter walks. People with no entry ticket did not get close to the idol, they could see the idol from around 20 feet away while those who paid Rs100 or Rs250 got to within 10 feet of the idol.

CNBC and Financial advice - this is really hilarious...

2009-03-09T18:38:00.000+05:30

The Daily Show With Jon StewartM - Th 11p / 10c

CNBC Gives Financial Advice

Daily Show Full Episodes
Important Things With Demetri Martin

Political Humor
Joke of the Day

My contribution to the literary world...

2009-03-03T09:06:00.001+05:30

"Dow Jones Index sat on a bubble

Dow Jones Index had a great fall,

All Bernanke's and Obama’s men,

Could not put Dow Jones together again…"

Anybody cheering me for the booker?

Rottenest Financial Institution - And the award goes to...

2009-03-01T00:10:00.003+05:30

AIG as per Joe Nocera of the NYTimes here with its sins listed here

US Budget...

2009-02-28T09:20:00.003+05:30

This is just so funny, I just can’t stop laughing. But it also packs a lot of meaning into it...

Government's fiscal profligacy - can't have heads I win, tails you lose

2009-02-27T09:16:00.005+05:30

Government recently announced another round of fiscal stimulus (indirect tax cuts) and it was followed by another round of criticism and concerns over spiraling fiscal deficit. Before the tax cuts, government was criticised for not providing any stimulus to the economy. Well, we cant have it both...

Either you provide stimulus to the economy (which would involve in varying degrees a combination of tax cuts or spending increases) or you worry about rising fiscal deficit. It cannot be a situation where if it provides stimulus (or attempts to) you criticise it for higher fiscal deficit and if it does not provide you criticise it for not doing enough for the economy.

The issue of fiscal deficit is important (I am by nature a fiscal conservative, would prefer very low or balanced government accounts) but we should not get uncessarily worried over high fiscal deficit. The problem of high fiscal deficit crowding out private investment or causing high inflation etc would arise only when the economy starts to recover.

If the basic hypothesis is that the current slowdown is very severe and unless the government provides the stimulus things will get far worse, then the current worry of slowdown precedes future worries of high fiscal deficit. The thought process then has to be lets first get out of the current crisis and worry about future crisis later on.

One can logically criticise the government on its state of finances only if the basis hypothesis is that either the growth deceleration is short lived and given the steps already taken growth will recover within a reasonably short time (3-4 quarters) by itself or that the growth deterioration is not severe enough to warrant the fiscal deterioration of the magnitude that we are seeing. Growth will slow from unsustainable levels (>9%) to more sustainable trend level and thus we should keep the house in order to be prepared for the next cyclical uptick. If this is not the basic hypothesis, criticism of the government on its fiscal profligacy is unjustified in my view...

A simple solution to end the retail fuel pricing mess...

2009-02-22T09:07:00.002+05:30

Domestic retail fuel prices (largely petrol and diesel) were to be deregulated (and made market determined) long back... But they haven't and have landed up in a big soup - the cost of subsidies on government finances is large, PSU oil marketing companies were on the verge of bankruptcy a few months back... And though in principle, everyone agrees that the subsidies on petrol and diesel prices cannot continue at this rate, there isn't a good alternative. So here's one simple solution...

Firstly, the objective of any domestic pricing regime (lets accept that domestic fuel prices cannot be completely deregulated for at least the next few years) is

1. Prices should correspond to international prices, but not be as volatile as international crude prices
2. Oil PSUs must realise a fair price for their product, lest we make them bankrupt...
3. The pricing mechanism should be transparent and not subjective prerogative of the government in charge or oil minister in charge.

So the solution i have is that domestic prices be linked to a 'moving average' of international oil price with domestic prices being rest weekly or monthly. The moving average could be a 30 day moving average or 60 day or 90 day or 365 day depending on the smoothening we desire. Obviously, the higher the period, the smoother the domestic prices relative to international prices.

Now, this moving average solves all problems. It makes domestic prices respond to rising or falling international price of Oil - but depending on the smoothening factor with a lag. So week to week or month to month domestic prices don't jump around in volatile manner and so consumers are protected from the volatility. It ensures that Oil companies recover a fair price, there will be a lag but it will work both ways, they will earn slightly less in an upcycle of oil prices and slightly more when prices correct. The mechanism is transparent in that the reset period and smoothening factor are both known ex ante and so not subject to whims and fancies of incumbent government or oil minister.

State of our (medical) education system...

2009-02-22T08:43:00.002+05:30

While, there can be 'N' number of stories of the state of our education system, one of the more harrowing stories is this:

My sister is studying dentistry. She has completed her Bachelors degree and wants to pursue her Masters in that field. But to her horrow, she finds that in the entire state of Maharashtra there are just 15 (yes fifteen) seats for Masters in government colleges. Of these 15, 7 are under various reserved categories so there are just 8 (eight in the whole state of Maharashtra) seats for doing Masters in Dentistry. Her friends in her current college (where she is studied for her Bacherlors) number considerably more than 15. So the available seats are not even enough to accomodate the bachelors output of a single college.

Now if my sister doesnt manage to occupy one of those 15 seats (8 actually as she belongs to open category), either she has to go abroad for her Masters which is extremely expensive proposition; take admission to one of the private colleges which are even more expensive (Fees in any decent private college are ~US$100,000; an MBA from Harvard is cheaper) or NOT pursue her Masters.

Given what I know of my sister, she is most likely to choose the final option in case she does not make it to the government colleges. Now that would be a very sad thing...

Growth is really scarce this year....

2009-02-19T10:17:00.007+05:30

It is remarkable how many countries are likely to contract this year. Of the 55 countries in the table below, 38 (almost 70%) are expected to contract. And it is not just Developed countries but many EM countries and many even in our own backyard – Korea, Taiwan, Thailand, Malaysia, Philippines are all likely to contract this year. (Though skepticism about these estimates is justified, in all likelihood these estimates are likely to prove optimistic rather than pessimistic…

The top 3 countries in terms of maximum contraction of their economy – Iceland (9.7%), Latvia (8%) and Singapore (7.2%). The top 3 fastest growing economies this year – China (6%), India (5%), Egypt (4.9%). (Egypt is very surprising given that it is almost entirely dependent completely on Suez Canal (global trade) and Tourism (global incomes) both of which will take a beating this year.)

Source: Economist

Slumdog Millionaire - Lesson in non-linearity

2009-01-24T00:29:00.000+05:30

Slumdog Millionaire offers a great example in non-linearity which is so prevalent in the world but so difficult to fathom or make ourselves come to terms with it.

Here we were believing that the only source of an Oscar for India is in the 'Best Foreign Movie' category and then came Slumdog (a good movie no doubt) a de-facto Indian movie with not 1 but a stagerring 10 Oscar nominations with three nominations for AR Rahman including one jointly with Gulzaar. It has already won 4 Golden Globe's including 1 for AR Rahman.

What a remarkable turn of events!

It is this non-linearity (life jumps; does not progress steadily in a linear manner) which is what I find most difficult to come to terms with. Non-linearity is everywhere, take financial markets (who predicted such staggering collapse of world economy), politics (see how the terrorist attack of 26/11 was a non-linear event in regional politics), sports (who predicted India of all teams would win the T20 world cup that too in bouncy grounds of SA).

Unfortunately our minds are by design extremely incapable of handling non-linearity; something we witness on almost daily basis - which causes a lot of problems and frustrations!

Some food for thought...

2009-01-23T00:22:00.000+05:30

Almost nobody predicted even a simple recession leave predicting a recession of this magnitude, but almost everyone is predicting a recovery beginning 2H of this year…

If I look up on Bloomberg's January economic survey, out of 60 respondents, just 11 expect US economy to contract in 3Q of this year and just one contributor expects US economy to contract in 4Q of this year (In contrast almost everyone expects US economy to contract in 1Q and 2Q of the year).

Similarly almost nobody predicted a fall in equity prices of this magnitude, but almost everyone now thinks that they have fallen so much, that we are close to the bottom if not already at the bottom. They however did not apply reverse logic. When equity markets rose sharply between 2004-2007, they did not expect equity market to fall simply because it had risen so much :)

What does that say about the skill of 'analysts' in forecasting?

Satyam saga...

2009-01-22T00:27:00.000+05:30

Firstly, what is NOT surprising about the Satyam saga is that an Indian company has acknowledged that it has cooked its books. What IS surprising is that it was an IT company (listed on NYSE and subject to SEC regulations et al) which sprang the confession.

What IS also surprising is the shock that has been expressed by investors and regulators et al. It is common knowledge that a whole bunch of companies employ aggressive accounting at the minimum and do outright fudging in some cases.

What IS surprising is the swiftness with which the central government has acted (leaving aside the laxity in the first couple of days; but that largely reflects not knowing what to do as they have never faced such a situation before.), replacing its board with a new board which carries significant credibility - Kudos to the govt for their actions so far.

The SEBI proposal to have a peer audit of all large companies (Sensex, Nifty) is welcome but that audit needs to be truly independent and it must be paid for by the SEBI or the exchanges. In fact this is a good time to revist the practice of annual audit being paid for by the company (the management effectively). Its also a good time to increase disclosures...

Overall this will obviously create a negative impact about India globally amongst investor community but the speed with which the situation is resolved and guilty punished and steps taken to reassure that other large companies' books are not cooked is crucial in determining how long lasting the impact would be...

the BUBBLE that wasn't

2008-11-16T00:16:00.000+05:30

Flash back to April or May of this year and consensus at least among the people I interact was convinced of a 'bubble' in commodities and especially Oil. Even amidst signs of a slowdown in global growth, Oil was scaling new heights coming close to US$150/bbl. It was argued that the rise in Oil amidst signs of slowdown in global growth was proof enough of Oil market being manipulated by hedge funds and speculators in general.

I have never been a taker of bubble in Oil market. Firstly, for technical reasons; One must differentiate between something being overvalued and something being a bubble. While in both cases, prices are significantly above what fundamentals justify but the key difference between the two lies in degree. Every bubble leads from over valuation but not every valuation is a case of a bubble. We should not use the term bubble lightly. Over valuation (as is under valuation) is very frequent in financial markets but bubbles are not so frequent. Two examples. Property bubble in Japan – after it collapsed, land prices fell year over year basis for 15 years in a row from 1991 to 2005. Six years after the dot com bubble collapsed, Nasdaq at its peak (of last year) was still one-half away from its peak during dotcom bubble.

However now that price of Oil has fallen 60% from its peak, I still do not believe that Oil reflected a bubble, largely because most assets have fallen significantly. Equities across the board are down over 50%; even some currencies are down 40-50%. Indeed as events have turned out, it was not Oil that was a bubble but the entire edifice on which the ‘modern’ finance was built was a bubble. It has burst, world economy is on the brink of a global recession so its only reasonable that equities and commodities alike fall.

However, being a believer in the concept of falsifiability, I my belief that Oil was not a bubble has to be falsifiable. I will concede that Oil was a bubble if as economic growth decelerates, Oil slides down to its previous cycle lows (it bottomed ~US$10/bbl) of late 1990s and when the recovery happens Oil as will other commodities will rise but they do not go anywhere close to the highs witnessed this year. In a way if Oil (and this is true for most other commodities) resumes its ‘normal’ cyclical behavior in the next cycle (range of say US$10-US$50), I would concede that Oil was a bubble…

Let’s wait and watch…

An Incovenient Truth - Its all about leverage

2008-09-20T00:14:00.000+05:30

"As to new financial instruments, however experience establishes a firm rule, and on few economic matters is understanding more important and frequently, indeed, more slight. The rule is that financial operations do not lend themselves to innovation. What is recurrently so described and celebrated is, without exception, a small variation on an established design, one that owes its distinctive character to aforementioned brevity of financial memory. The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version. All financial innovation involves, in one form or other, the creation of debt secured in greater or lesser adequacy by real assets. ...All crises have involved debt that, in one fashion or another, has become dangerously out of scale in relation to the underlying means of payment."

So said John Kenneth Galbraith in his famous 1990 book "A Short History of Financial Euphoria"

"We learn from history that we learn nothing from history."

So said George Bernard Shaw

Hath I say more?

Destination unknown - global financial crisis

2008-09-20T00:11:00.000+05:30

Conventional market logic argues that whether a stock is attractive or not is a function of price - at a given price any stock will be attractive for buying and at another given price the same stock would be extremely expensive to own.

However in the current environment, I would argue that this logic has been turned upside down (so far as it pertains to financial stocks in developed markets).

There have been many instances of a solid franchises falling 50% and then another 50% and in a few cases another 50% (Fannie, Freddie, Lehman, Bear, AIG, Merrill, HBOS, Morgan Stanley,UBS)... The inherent complexity of the situation is beyond the ability to fathom for even the most sophisticated investors. No one knows whats going on and no one knows where things are going to blow up next.

Thus the present situation is quite unlike a conventional economic cycle where things get bad but we know they will turn for the better. There will be a few years of disappointing performance but things will get better. Even now things will get better, but when established franchises go bankrupt (and more than one such franchises has met such a fate) in a matter of days things are unlike anything we have witnessed in recent past.

Trying to pick a bottom is crossing the thin line between being brave and being foolish. Its akin to shooting in the dark - we may hit the target but there can be little to take credit for. In this regard we are in the midst of a journey into the unknown - with too many unknown unknowns out there...

The dust will settle eventually, but it needs to settle before we can fathom the true scale of the crisis that has hit us. But as some guest mentioned on CNBC the other day, its too late to panic as well...

The Fate of Irrefutable Presumptions

2008-09-14T00:06:00.000+05:30

If I look back at the end of last year or start of this year, there were a many 'cannot go wrong' assumptions about how things will unfold through the course of the year.

Foreigners would continue buying Indian stocks - theydon't have any options in a slowing global growth environment (Oh the middle east guys are sitting on over trillion dollars of petro-dollar liquidity - where will it go?)

India is immune to slowdown globally - we will continue to grow around 8-9%

Interest rates in India are headed lower due to lower inflation and widening interest rate differential to global interest rates

If commodity prices correct, India would be a natural beneficiary from an equity market standpoint)

Valuations do not matter when you are swimming in sea of liquidity

Rupee is in a secular uptrend - reflecting robust capital flows, structural improvement in trade balance once gas discoveries come on stream etc...

One by one, all these assumptions have come crashing...

Foreigners have actually on a net basis sold over US$7bn of stock. Overall capital flows would likely be down 50% in FY09 over FY08
India's growth is slowing - and part of the reason for slowdown is higher commodity price led inflation leading to RBI tightening
India's interest rates have actually increased - and increased significantly. It was naive to argue that on one hand our growth is uncorrelated to global growth but our monetary policy is...
Commodity prices have corrected - Oil is down 30% from peak and from a market perspective we are less than 10% away from the lows of this year
Valuations do matter - the worst performing stocks are amongst the most expensive - valuations may not becorrelated to fundamentals on a day to day basis - but theydo cross paths every now and then...
Rupee is amongst the second worst performing currency amongst the major emerging markets and it has depreciated in the recent past even as oil has come off sharply - anyone who argues that in the short or even medium term currencies behave in accordance with trade flows needs to wake up...

What next? What are the current 'cannot go wrong' assumptions in the market? In my view, the following:

FII's have sold US$7bn in the first eight months of the year - rest of the year is unlikely to see selling anything close to that magnitude

All I would say is after pausing for July and august when FII'scumulatively sold under US$1bn of equities, in the first two weeks of September they have sold almost US$1bn. Even after the selling and market crash FII's own over US$150bn of Indian stock!

FY09 is a aberration - commodity prices will come down and so will interest rates and so in FY10 we will resume growth momentum with growth back in 8-9% range

In FY10 there is a real chance of growth slipping below 7% in my view - financial community is in denial mode over growth slowdown. If growth does not slowdown, you will get even higher interest rates to curb inflation. Growth has to slowdown.

Interest rates will come down; inflation is already showing signs of moderating as commodity prices moderate

It is absurd to expect RBI to even signal softer monetary policy when inflation (as measured by WPI) is running above 12% and growth still around 8%. Four weeks of inflation hovering around 12-12.5% does not imply inflation has moderated. Only caveat I would add would be a major overseas event which forces RBI to backoff purely due to 'liquidity' reasons.

In my view, as the rest of the year unfolds, even these three 'cannot go wrong' assumptions would come in question and fall apart like many others have done so far this year...

Flipside of corporate honeymoon

2007-09-10T15:53:00.000+05:30

I resigned from my current job couple of weeks back and that began my 30 day notice period otherwise known as corporate honeymoon.

During this period no one asks you what time you come in, what time you leave, since typically there is a handover involved you dump a lot of the work on the new guy. In mycase since my team is in a mess, there is no replacement for me and thus there is no handover involved (there is no work either).

Now a lot of people enjoy this period, why wouldn't one. You have no responsibilities and no deliverables and you still get paid! However, I have been wanting to get out of this place sooner and not because I am very eager to join my new job but I am finding the environment very frustrating and choking to be honest and this is not necessarily due to the fault of anyone - things just automatically would play themselves out this way.

The reasons for my frustration are straightforward - the very same people who would go out of their way for knowing what i thought or felt now no longer talk to you (don't blame them, they don't need to talk to me), the work I did and which was valued uptill now (apparently i must say now) is no longer acknowledged - they don't need too.

And partly this is my fault. I genuinely cared for my team and the work that we did. Now I am no longer part of it. In fact I am on my out to another firm (and team) which technically is a competitor. But I still want everyone to treat me as if I am still a part of my erstwhile team. That can't happen - no one has anything against me personally, this is purely professional stuff and I can appreciate their view point. It's just that I am taking time in gulping down the 'real world' consequences of my actions.

And it's not as if people are behaving strangely at a personal level. No, at a personal level I still mingle with everyone, we go out for lunch together. Will have a farewell party and I (and them) would be sad to see me part - but that is purely at a personal level.

I will get used to it the next time I am in this situation - but then again I won't be in that situation. I am much more likely to be on a gardening leave (yeah cutting grass on my lawn)! However at present I have to get through the last few days here, take a break and then I am live at Nariman Point!

That's it for now...

Free trade and Stephen Covey

2007-09-07T12:09:00.000+05:30

I find it surprising that people who otherwise are in favor of free markets go in defensive mode when it comes to free trade. I have interacted with quite a few people (who are well educated) who support markets and competition but when it comes to trade some how their nationalist feelings get activated and they go into protective mode.

In my view this arises due to a mistrust and a narrow view of trade. Somehow buying goods from a foreign country is bad but selling goods to them is good. Somehow an Ambani making crores more is considered preferable to a Walmart making a few crores - what difference does it make to ordinary Indians on whether Walmart makes money or Reliance or Mittal or Tatas or Birlas?

In my view this mindset can be explained from an analogy borrowed from Stephen Covey's Seven Habits of Highly Effective People In that he had argued that humans have 3 states of being - dependence, independence and interdependence with each being a higher/more effective state of being as compared to its predecessor state.

The fact that at a personal level, interdependence is a higher level as compared to dependence or independence is fairly trivial and easily acceptable to everyone the problem comes when you extend it to countries and trade.

Interdependence is at the heart of free trade and most people miss this point. They look at trade purely from a narrow dependence vs independence angle (completely missing the interdependence angle). If you are not independent then you are dependent is how most people view things and hence they chase self sufficiency. Self sufficiency is a mirage and a costly one at that...

There is no point chasing self sufficiency just for the heck of it - not even in food or oil. We should stop viewing America or Europe from the old imperialist angle and be proud of the fact that they are also dependent on us just as we are dependent on them - making us interdependent and intensify our interdependedness...

That's if for now...

Sports vs Soaps

2007-09-07T11:16:00.000+05:30

I have always considered myself as being a more 'intellectual' or 'forward' person due to my dislike for Soaps and preference for Sports as a choice of viewing on television. But is that really the case?

My arguments for my views has always been that sports is more action packed, its uncertain - so more excitement, it is a test of skill of the players and so on...

But when I think about it - ultimately both soaps and sports are designed for entertainment. Sports in fact is increasingly getting more and more entertainment oriented rather than skill oriented - 20/20 cricket for example. Skill etc is incidental.

Further these days soaps are also full of uncertainty with the directors responding (playing) to their audience views/expectations.

I am amazed to see how dramatic turns a particular soap takes just when everyone was expecting things to play out in a certain manner. It is this ability of the directors to change the script and respond to viewer fatigue that keeps interest in soaps going. In a lot of cases these soaps are more interesting than a boring one dayer between Australia and India wherein the result is a forgone conclusion or those boring F1 races when Schumi was winning 80% of the races from start to end.

I believe this superiority complex that i have is just my mental construct than anything tangible. The key take away for me from this discussion is to put things in perspective and not to mentally degrade the intelligence of people who are very much into soaps vis-a-vis sports.

That's it for now...

Our educational rat race

2007-06-24T21:18:00.000+05:30

This is going to be my shortest post till date.

This is results season (class XII results are out and class X results are out in a couple of days). Every year during this period I ponder over what our education system is doing to young brains. I wrote something last year (click here)

I am reading this book ‘Emotional Intelligence’ by Daniel Goleman (just started but very interesting so far). Therein I came across this statement attributed to Howard Gardner which struck a chord with me. Mr. Gardner is (was?) a psychologist at the Harvard School of Education.

“…We should spend less time ranking children and more time helping them to identify their natural competencies and gifts and cultivate those. There are hundreds and hundreds of ways to succeed and many many different abilities that will help you get there.”

I think this is a very profound statement and one which we (especially we) need to take seriously. Given this benchmark, our education (rather exam or evaluation system) is in a very very pathetic state.

I think its time we step back and pull our future out from the rat race where every young brains go over text books 14-15 hours a day just to get 1 or 2 extra points.

I don’t see us producing too many original thinkers from in the current process. It’s high time; Our future is at stake here.

That’s it for now…

How we systematically encourage corruption

2007-06-21T12:00:00.000+05:30

This is a true account of the state of things in my native place. The Municipal corporation there has constructed a central shopping place and it leases out shops for long duration (100 years or so) for a very nominal rent (about 1% or so of true 'economic' rent). The original allotment happened a few years (maybe a few decades) back and the way the system works now is like this: A person who already has a shop there and wants to close down has to return the shop back to the municipal corporation or find some other person who wants to do business in that shop and get the lease transferred to him. Now, there is no transfer fee charged by the municipal corporation, the rent remains the same and the original owner is not 'supposed' to charge any transfer fee either.

Now, the right to occupy that shop for a few more decades for a very notional rent is a very valuable asset that existing shopkeepers have. They are supposed to transfer that right/asset free of cost. Hello... are we living in utopia?

Now transactions between existing and prospective shopkeepers do take place regularly. It is anybody's guess as to whether they actually happen as they are intended or there is money involved. I know for sure that money is involved. I don't think it takes too much intelligence to imagine that money is involved. And why should it not? Existing shopkeepers own a valuable right and they have every right to profit from it. I don't blame the shop keepers at all. They are acting 'rationally' in demanding a price for transferring their asset. All we are doing through well intentioned regulations is encourage corruption. People respond to incentives and if incentives are strong enough they will cheat, deceive or whatever...

Now, if the municipal corporation needs to stop this black money transactions, it has two simple options.

Firstly, it can start charging 'economic' rent for the shops, this will automatically reduce the transfer price of the asset.

Secondly, it can legally allow the transfer for monetary consideration. this will bring the under the table dealings out in the open and the state can collect taxes on the capital gains that accrue to transferor shopkeepers.

Either way, the state ends up gaining more money and there is no change to how business is conducted anyhow. So why not do it?

Two reasons again. Firstly, vested interests. The clerk, the officer in the municipal corporation who approve of the transfer have a power and given their knowledge of money involved, it allows them to earn a commission.

Secondly, this denial. Our political leaders suffer from this socialism ideals wherein they simply deny that 'market' would work in a certain way irrespective of rules against it if there are sufficiently strong incentives (Gambling is illegal, but we have gambling of more than billions of dollars on cricket alone).

Don't fight markets. Regulate them and allow them to prosper. The solutions generated in a market environment are more likely to be optimal than solutions reached in parliament or legislatures (I am a die hard free marketeer, you see!).

That's it for now...

It's the PATH that matters not the LEVEL

2007-05-06T23:12:00.000+05:30

What a miserable time to restart this blog.

I am very miserable these days. Haven't quite felt so miserable in quite a few years and I am wondering why.

Analyzing my situation carefully, if I had presented to myself my current situation (at least the broad contours of it) say six months back - i wouldn't have been delighted but wouldn't have been surprised. In fact I would have said this is exactly how I expect things to pan out and would have taken the situation on balance. If so, why am I so very miserable?

The answer lies in the path things take to reach their current level. It does not matter where things are, what matters more is how things got there. When as in my case, you get very close to realising something very important and you get pulled down at the last moment you get miserable - notwithstanding the fact that six months back you did not really expect to achieve that goal. That is not important. What is important is that you were taken up and up by the situation and then brought down. It is that emotional roller coaster that you've had makes one (and that has made me) miserable.

To completely change field, I have often wondered why were investors so miserable when markets crashed May-June last year or late February-early March this year. If the market came down from 14000 to 10000 - so what? The market is still up more than 3 times from its low a few years back - i would have thought if you were told in say June 05 that the market would be at 10000 in June 06, most people would have gladly taken that - in fact put more money in. Then why do you hear stories of 'blood on the street' etc. Again, its the path that matters.

So how do I get out of the misery I find myself in? Simple, by making my heart focus on the level and stop thinking about the path. Sounds simple ain't it? Yeah it does sound simple, I have been at it for the past few hours and it sounds like any other theory!

As they say, in theory there is no difference between theory and practice, in practice - that's a whole different ball game!

That's it for now and it's good to be back!

Lifting the veil

2006-11-07T18:31:00.000+05:30

The almost global debate on whether Muslim women should wear their customary veil is another example of us confusing between what we think people ought to be doing and what people have a right of doing. It also illustrates lack of cultural sensitivity.

The reason the western world is so much up in arms against such explicit display of one's religion is because their religion does not have any such requirements. That being the case, they just cannot fathom things like Muslim women wearing the veil or Sikhs wearing the turban and growing beard. I am pretty confident that if christainity had any such explicit requirements, the western world would have been far more sensitive on these matters.

I do not think that wearing a veil is something any women ought to be doing. Hiding one's face to me is a sign of cowardice. At the very least it is reflective of socio-cultural conditions a few decades back (at the minimum). But that is my opinion and that is about it.

I also think that women have the right to decide what attire they ought to be wearing. They have a right to decide whether they want to expose their face or hands in front of others - its their personal decision and they have a RIGHT to make that decision. If they do decide to wear the veil, its not something I appreciate or like or support, but I certainly support their right to make that decision.

Now again, this right to wear or not wear the veil cannot be absolute. If the demands of work or things like security demand it, then one cannot be allowed to hide under the garb of religion. So one cannot possibly be allowed to teach to small children wearing a veil - it just does not make sense for example.

In the same light I firmly feel that in India we ought to have a uniform civil code. We ought to have a basic common framework governing individuals. It cannot be left to subjective interpretations by religious scholors of ancient scriptures. Nor should we have different sets of rules governing different individuals depending on their relious beliefs. There ought to be one single law applicable to Indians and within that legal framework, individuals are free to practise their religion.

That's it for now...

Need for personal bankruptcy law

2006-10-24T16:00:00.000+05:30

Lack of a personal bankruptcy laws is one of the many ironies of the state of legal system in India.

Picture this, if a company gets into a situation of too much debt (either because it takes on too much debt in absolute terms or because its repayment ability falls), it has many avenues to restructure its debt, to pay lower interest rate, to have debt waived off temporarily or permanently, fully or partly. The business gets protection from seizure of property/assets so that it can continue normal operations. Indeed the SARFAESI Act was passed a couple of years ago, because the bankruptcy law was too heavily skewed in favor of (commercial/corporate) borrowers.

However, if an individual gets into too much debt, he is doomed. He has almost none of the options mentioned above as being available to commercial/corporate borrowers available to him. Farmers are comitting suicides every day because of being in a debt trap.

Logic demands that if a company has the option of getting its debt restructured, interest and/or principal waived/reduced then so should an individual. But this does not happen in a formal sense. It needs the problem getting out of control (which means lots of suicides and lots of headlines) before the political class 'comes to the rescue' and a temporary 'band-aid' is put on. But this essentially is a one size fits all approach and the decision is 'forced' onto the lending institutions which is unfair. So, we a formal legal procedure that is put up once and for all, else this process is repeated almost every other year.

In fact I would argue that the need for having a bankruptcy law is even greater for individuals than for corporates. In case of invidiual it is often the question of survival. Secondly, a company getting into a debt trap can be put an end (be liquidated) - but you cannot do that with an individual. So, in case of an invidual/household getting him/them out of debt is the ONLY option. Secondly, once in a debt trap unless there is some structural mechanism available, it is almost impossible to come out of it thanks in no small way to 'compunding' the 8th wonder of the world as Einstein put it. Thirdly, in case of individuals, debt trap affects not just that person but his family - so there is collateral damage (Ironically, in case of corporate its employees may get laid off nor not get paid and it is then that they need help with their debts and it is precisely then that they do not get any help while their company continues to get benefits!)

Now, it is not my argument that banks/lenders in India are insensitive or unaware of this. Nor is it my claim that banks/borrowers are overly harsh all the time. But it is certainly my case that there is no formal law which lays down ground rules of how to deal with such a situation, the rights of borrowers (it cannot be the case that banks/lenders have all the bargaining power) and the various types of settlements which are possible so that borrowers can have a reasonable hope of getting out of the miserable situation they find themselves. We need a proper law which puts this and many other things in writing.

For example, the personal bankruptcy law (which incidently was tightened a year or so bank as it was perceived to be too lenient and favouring the borrowers!) covers things like who is eligible to claim personal bankruptcy, under what circumstances, what are the assets that cannot be seized, how and to what extent can debt be waived off or deferred etc etc etc. All these are fairly important issues.

Now, the immediate reason for writing this post is the farmer's suicides. But the need for this law will increasingly be felt as the 'credit' culture gets seeped in the soul of this country. Hitherto, since credit penetration at a personal level was very low, the need for this law was not felt (apart from to the extent individual businesses/farmers etc borrowed). However as increasingly almost every thing is brought on credit (remember credit card is nothing but a unsecured loan!) and as the marketing departments of all financial institutions work overtime in trying to get people take on credit - it will not be surprising to see more and more people getting into debt traps.

In fact another side benefit of this law would be that if banks have to take some losses under this law - either through deferrals or waivers etc, it will force their marketing managers to use a bit of judgement in extending credit.

That's it for now...

The irony of Belgaum issue

2006-10-05T14:00:00.000+05:30

Belgaum is a district south east of Maharashtra and lies at the centre of a border dispute between Maharashtra and Karnataka and has been so for more than 4 decades. The problem is this - the organisation of states in India was done on linguistic lines and in Belgaum the division between Marathi speaking and Kannada speaking people is almost 50-50 (well almost because Maharashtra claims it has more Marathi speaking people and Karnataka claims it has more Kannada speaking). The dispute has seen protests, court cases, strikes and even threats of arrests of major political leaders on either side.

I do not wish to get into the merits of the case but the issue does raise some interesting points

I find it ironical that here is a country which has border disputes within its states for more than 4 decades and it has not yet managed to solve them - and this country claims that we would find peaceful solutions to border disputes that it has with its neighboring countries.
What this dispute and especially its lack of resolution tells me is that there are vested interests (read: political parties) which have an interest in keeping the issue alive so that it can be appropriately stoked or calmed depending on what suits them at that particular moment.
Another point which this raises is how regionally divided we are/feel. It matters so much to people to be classified as belonging to a particular state rather than other, especially when since the region remains the same and on a day to day level, it will at the end of the day not make any material difference.
What this issue tells me is also how emotional some of these issues are and unless we really understand the moot emotional reasons and address them, we can never be able to reach a solution - unless we allow enough water to pass under by when the issue loses its very foundation. In this case it would be large scale geographical movement of people whereby the concept of being belonging to a state is no longer synonymous to being physically residing in the geographical borders of it. This is what is precisely happening here with Bangalore (capital of Karnataka) becoming the IT capital of India.

Finally, it raises a more fundamental question - what does it really mean to be a 'Maharashtrian' or a 'Karnataki' or for that matter an 'Indian' or 'American' or 'British'. For this I hope to write a seperate post.

That's it for now...

Full circle - Delhi sealings, Deja vu

2006-09-28T14:45:00.000+05:30

In January of this year I had a posted a note titled "The Demolitions Must Continue" arguing that the demolitions etc (Ulhasnagar and Delhi at that time) must continue. The logic being that unless the offenders are forced to pay a 'cost' for their actions, necessary change in behavior would not occur either with the affected people or the society at large. This is extremely essential when the problem concerned (illegal construction/occupation) is widespread.

However we have not learnt anything and the problem continues to surface again and again and will continue so, unless we set the right precedents and instil a degree of credibility in the laws that we make.

Lets take a look at what has happened since January - Illegal constructions in Ulhasnagar were regularised, Illegal constructions in Delhi were regularised, Illegal constructions in Dombivli are being regularised, the cut off date for slums in Mumbai extended from 1995 to 2000 (earlier extended from 1975 to 85 and 85 to 95!).

This is nothing but a band-aid over the systemic issues we have with respect to illegal constructions. The construction lobby is powerful and is in cahoots with the executive (the local municipal authorities in each respective cases). The message we are sending out to these people is that what you have/are done/doing is OK - if sufficient number of people start protesting then we will pardon/excuse your transgessions. Does this give them any reason to all of a sudden start respecting the law?

Edward Prescott and Finn Kydland were awarded the Nobel prize in economics for 2004. Part of their work focussed on time consistency of economic policy wherein they argued that what matters is not rules and regulations but the perception about credibility and enforceability of these regulations/rules. In other words what they are saying is that it is no use making all those rules and regulations if people at large do not belive that these rules will actually be enforced - they will not change/modify their actions to conform with the changed/new rules/regulations/norms.

And it is the powerful logic above which we have seen being played out time and again - be it illegal construction, illegal slums, tax evasion, licenses etc. In fact this very well typifies the 'chalta hai' attitude that is considered so prevalent amongst we Indians. If 'chalta-hai' does not indicate people's faith that law will not be implemented then what else?

And it is not necessary to have 100% implementation - but what is needed is implementation adequate enough to change people's perceptions. And for that we need to make a start and then make the system fool proof as we go along.

A simple example of how this can operate will help. I use the suburban railway train everyday to commute to office and I have my season ticket for that. But if I have to take a journey not covered by the season ticket (which happens rarely) I normally do not bother taking any ticket and travel without ticket. Why? I simply do not think it is worth my effort standing in the long queue to take the ticket when I see no ticket checker along - anywhere! But if I simply see a ticket checker once in a while or hear from someone that they are seeing ticket checkers nowadays, I perception of things would change and I would think twice before travelling without ticket - for what is at stake is not just the fine and ticket money but also my standing in society. I would find it extremely embarassing caught without ticket in a railway train or station (in front of 100s of people). This is how you bring credibility to your rules and regulations.

And so if we want to get rid of this 'chalta-hai' attitude, then the first thing we have to do is go about enforcing our laws - however old or ridiculous or 'painful' they may be. In some cases changing law may need to go hand in hand with enforcement - but enforcement at any cost cannot be allowed to lag.

It's about time, people are made to pay for their transgressions!

That's it for now...

Tale of two champions - a randomness perspective

2006-09-17T21:58:00.000+05:30

Past few weeks saw 2 great champions announce their retirements from their respective sports - Andre Agassi from tennis and Michael Schumacher from Formula 1.

Both of them are legends in their respective sports and will go down as one of the best not only their respective sports has seen but generally. But both are them are very very different and pure randomness has a lot to do with it. Let me explain

Andre Agassi won a lot of titles during his 20 year career. He is one of the very few players to have won all 4 grandslam titles in tennis. But he will not go down as one of the all time greats - inspite of him being immensely talented and hardworking. Why? bad luck. His career for almost a decade ran parallel with someone who was even better than him - Pete Sampras. Agassi was great but Sampras was exceptional. And the fact that Sampras had to have his career at the same time was Agassi's pure misfortune. But for Sampras, Agassi would have won a lot more titles and would have definately had a place in the all time greats of the sport (if not already).

Schumacher has almost every possible record to his name in Formula 1. I am a great fan of his but he was not as great as his records suggest. He is brilliant, but he is not the best to have ever raced Formula 1 (unlike what the records suggest). Schumacher during his career had no great rivals to race against. Senna died unfortunately just when Schumacher was establishing himself. And then except for couple of years when he competed against Mika Hakkinen (and now Alonso), Schumacher virtually had no competition - he and his car were way ahead of competition. Senna when he raced raced against multi year champions like Prost or Mansell. Not Schumacher. Not his fault though, you take what comes your way and you cannot decide what comes your way - you can only choose how to react to that. Schumacher made the most of his opportunities.

Curiously enough Agassi's wife - Steffi Graf had also had such good fortine. Now, I am a huge huge fan of Steffi Graf, but her career may have taken a completely different turn if something very very unfortunate had not happened to her most difficult competitor - Monica Seles. Monica Seles as proving a difficult nut to crack for Steffi when a maverick Steffi fan stabs Seles during a tournament. This threw Seles's career completely off track and she never fully recovered from this incident - what shape would their respective careers have taken if that incident had not taken place? Would Steffi have gone on and won so many titles that she did? And Seles, she would most certainly have gone down as a great champion - but instead she goes down as one of the most unfortunate players ever.

There would be numerous such examples in other sports (or same sports) in business, politics, academics etc etc etc. The simple point being that when you say someone is great, its not just down to the skill of that person or his hard work but also down to chance. And similarly (if not more) to someone who is the second best or third best - its not always their fault, but many times, just their misfortune that someone better than them had had his/her career to coincide with theirs.

Take womens tennis currently - no single player dominates it. Why? because a lot of good players are playing at the same time - Amelie Mauresmo, Justin-Henin Hardene, Maria Sharapova, Kim Clijsters just to name a few.

Merit is relative!

That's it for now...

We have come a long way...

2006-08-19T10:31:00.000+05:30

Not so long ago, the RBI and the government were cutting rates. And they were met with vociferous opposition. The opposition, the Left parties, trade unions and even sections within the ruling parties opposed the move. What about the common man who is a saver it was asked, what about retirees who depend almost exclusively on interest income was asked, the actions are purely meant to benefit the corporates and big businesses it was alleged.

The change from those days to today, could'nt have been more stark. Now, we are currently in the midst of rising interest rates and voila, the government is now being pressured to 'not' raise rates. Because the rising rates have hurt the 'common man' as his EMIs on loan's increase. The criticism has come from within the ruling party and apparently was so strong what government had to send advisories to PSU banks on getting board approvals for rate increases (rather than just routine decisions). Aside with this, there has been no welcome/praise for rate increases on the deposit side nor has there been no pressure to revise upwards rates on Post office savings schemes.

This is just an indication of how much water has flown under over the past 3-4 years and how we are moving from a saving oriented society to a 'relatively' more consumption driven. The definition of 'common man' earlier was that of a person who worked all his life, saved money - put that in FDs or Post office schemes, spent only when he had money etc etc. The 'common man' currently is someone who has a housing loan, a car loan, a personal loan, someone who goes to Big Bazaar's or Shopper Stop's of the world every other weekend etc etc etc.

And this is no cyclical change in response to lower interest rates or robust economic growth (read: higher salaries and higher employment) - its a structural change and one that has still got a long way to play itself out to full extent.

That's it for now....

Scarcity no indication of quality

2006-08-17T08:14:00.000+05:30

Telephone's were a scarcity few years back. Getting a telephone connection meant that you needed to wait for a few years. The same was true for car's, scooters, even to get government approvals. That indicated that there was scarcity and by implication there was a value (read: status) associated with it due to it. But no one would claim that those products or services were of particularly high quality.

Yet we seem to do precisely that with IITs, IIMs or AIIMS etc. Yes, these institutes are scarce and so there is a value (status) associated with that. But that is no indication of quality. The other day I was going through the interview of some IIT alumnus returning from US and he was saying how IIT entrance tests the conceptual knowledge of students and how only the best of the best students are selected and hence though more than 100,000 students apply only a fraction of them are selected - what crap.

My answer is simple, quality has two connotations - absolute and relative. Yes, on relative parameter, I am ready to accept that out of the sample available to them, they select the better one's but what on absolute level? If the IITs have to fill up 4000 seats, is it their claim that every year they manage to find exactly 4000 extremely bright (very bright) students? It may be that the first student to get into IIT is bright (very bright), but what about the last? Do they stop filling seats (keep seats vacant, if in a particular year, the crop is not quite upto standards?). And what about the first person to get rejected? Is he necessarily below their entry standards? A true test of the quality of students is an absolute criteron.

Let these institutes say that we have a particular benchmark (entry criteron) - anybody and almost everybody who crosses that gets in, rest are out. That is a far better measure of the quality of students (at least at entry level).

A good example of how this sort of system might work are the professional courses run by the Institute of Chartered Accountants or Cost and Works Accountants or Company Secretaries of India. Anyone can go and register - no limit on who can register. A set of very tough and demanding exams (mostly 3 exams - one at entry stage, one intermediate and one final) is what you need to pass to get certified (a measurable and fixed criteria for deciding who passes and who does not) and anyone and everyone who passess this exam gets certified. Thus once you control the quality of these exams, you automatically ensure the quality of students and quality of final output.

That's it for now...

The MBA 'bhoot' is in full ascendancy

2006-08-11T10:12:00.000+05:30

Over the past week I had been to visit my cousins. Now one of them is about to graduate and he wants to do an MBA - why? well, apparently if you do an 'MBA' then you make a lot of money, while if you do not then you probably do not! I am amazed. It took me a great deal of persuasion to talk my cousin out of this thought and show him the true picture of the 'MBA' phenomenon.

I had a strong belief that the MBA bhoot as I call it, was fairly widespread - but was amazed to see it in reaility. Being a part of the MBA fraternity I shouldn't be the one to spill the beans - but thats exactly what I am going to do. So here are a few MBA myths busted:

'MBA' is all that matters - Its not MBA that matters is 'MBA' from where that matters. So frankly, doing an MBA from only the top 10-12 colleges is what would make a difference, rest all is frankly - crap.
'MBA' pays you high salaries - True MBA gives you good salary (for most colleges), better than what most graduates might get otherwise, but what is often forgotten are the costs (explicit and implicit) that go in to getting that degree. Most colleges charge anywhere from between 1.5-3 lakhs per annum for an MBA course, so over a 2 year period that amounts to 4-6 lakhs (and this figure is increasing at 15-20%) per year. Add to this the opportunity cost of not working for 2 years (this includes both the salary and the experience) and the interest and the total comes to around 8-10 lakhs. That's a huge investment - and you need to compare the returns (that is incremental salary and growth prospects) with this investment. On doing this most people will find that they don't break even till well in their 30s (even assuming you complete MBA before 25) - not that attractive a proposition isn't it?
MBA salaries are high, even for not so reputed colleges - This is the biggest misconception. MBA salaries are high, but not as high as they are made public. Almost all colleges 'massage' (I do not want to use the word fudge, although that might be an appropriate word) their average salary figures. The figures stated publicly are way above what are actual figures. And since all colleges do it, no single college can back out and publish the 'true' numbers - because, the game is all about salaries!

But, I do not think this bhoot is coming off any time soon. Partly, because students and parents do not want to believe what I said above (if what you are saying is true, then how come so many students are doing this course? is a question I got repeatedly from my cousin and his parents). That's sad and yet not surprisingly. If you are into financial markets then this is the sure shot sign of a bubble - when people start justifying their actions based on what the others (read: crowd, herd) are doing.

But other than that there are serious forces at play to ensure that this bubble sustains itself for longer and longer and longer.

Firstly the colleges itself want more and more students to apply. Every college charges about 1000 rupees per application. Given that more than 160,000 students appeared for CAT last year -thats an annual revenue of a cool 16 crore (and growing at more than 12% p.a) and similarly for other colleges. eg. My college got about 17000 applicants couple of years back - that gives them a revenue of 1.7 crores - a tidy sum (the costs attributable to this revenue stream are essentially fixed in nature).
Further, this tide of applicants allows the colleges, media, coaching classes, 'career counsellor's' to attach scarcity value to the degree. A scarcity value is apparently an indication of difficulty of the exam/callibre of students who get in. Well, to an extent - but getting thousands of students to write this exam who otherwise should not - does not make the exam any tougher nor does it make the students who take the exam any brighter!
The coaching classes for the entrance exams for have an incentive in getting more and more students signed up for the test and by implication their classes. And the classes do not care what students sign up, as long as students keep on signing up - their cash registers are ringing. These classes will chase you - call you, write to you, invite you to seminars and tell you that how with hard work you can crack the CAT - if only that were the case, I could play cricket for 24 hrs a day and become Sachin Tendulkar.
Next in line is the media, which will trumpet the salary figures post final placements. It will spend entire day (news channels) on how top notch companies pay ridiculous amounts of salaries to Indian MBAs and other crap.

So, in conclusion - this MBA bhoot is about to get bigger before it blows. But blow one day it sure will. Look at what happened to the 'Engineer' bhoot. Once upon a time, a child growing up had to become an engineer and he was assured of a comfortable life - materially. Well, no its no longer engineering that matters (and even parents and students understand this) is what stream, what college and how well you did there. So the discrimination between colleges is underway. That will happen with MBA also (it is currently restricted to only the people in the 'loop'). Till then lots and lots of families will spend lots and lots of money and get lots and lots of nothing from that investment.

That's it for now....

Unfair comparison with Israel

2006-07-31T16:49:00.000+05:30

In the aftermath of the Mumbai blasts we again seen the never ending comparison with Israel. It's become almost a cliche to compare India with Israel (and given Israel's current operations in Lebanon, the comparison is even more widespread). The main argument being that India is not as harsh/stern in dealing with terrorism as Israel is, that a country as small as Israel surrounded on all sides by Arab states, deals with the mere kidnapping of two of its soldiers with such stern reaction. This apparently shows how much it cares for the lives of its ordinary citizens.

I wish to rebuff these charlatanism with following points

Even after being so stern with terrorism, it would not be anybody's argument that Israel has 'tamed' or 'successfully tackled' the problems of terrorism. It continues to be plagued by it. The resolution in sight even in its case seems to be dialogue and a mutually acceptable settlement to the Palestinian problem.
Secondly, it is very clear in case of Israel, that almost all terrorism is external in nature. In our case I am not so sure. Yes, it is very fashionable to blame Pakistan for every small bomb blast that takes place in this country. Yet there is very little evidence (at least in public domain). We should not lose sight that there are enough people in this country who are prone to indulge in terrorist acts. SIMI is a home growth organisation, so was the underworld of Mumbai (and though they get support both financial and political from across the border, its cadre very much consists of people who at least on paper are Indian nationals). The Naxalite movement (a highly under reported, understood and recognised risk) is entirely home grown and to date is not known of having any links with Pakistan. The Sikh militancy was home grown to a large extent. The militancy in North East (ULFA, Bodo) is again home grown to a large extent (though admittedly it has 'some' financial/political support from some border countries). This home grown nature of the militancy, changes the situation to a large extent.
Finally, even if we concluded that our neighbour on North West is to blame the issue of feasibility of our military actions deals fatal blow to all our ambitions of Israeli type tactics. The military superiority that Israel enjoys vis-a-vis its neighbours is overwhelming. Inspite of the aerial and land assault that Israel has launched on Lebanon (or Hezbollah), all that it seems to be able to retaliate with is a few rockets. The ratio of number of people dying on both sides is a stark reminder of this overwhelming superiority that Israel enjoys. India too does have military superiority over Pakistan, but it is no where as overwhelming. The kind of response we are talking here is not a full scale war, but a short and swift military action - and this is where the lack of overwhelming superiority hurts us. Pakistan has enough ammunition to make our payoffs appear too risky and not worth it. This is the single biggest reason why even if wanted to, we cannot launch the very kind of operations that we are fascinated by the Israelis.

Again, don't get me wrong. I am not for one moment suggesting that we go soft on terror. But we must appreciate the nature of the problem faced by us before we start going over board with our fascination of Israeli tactics. Making fruits of development and the judicial system reach all corners of the country by themselves would in my opinion go a long way in solving our problems. We need to look inwards for solutions - and get cracking!

That's it for now....

Mumbai blasts aftermath - Some thoughts

2006-07-23T09:09:00.000+05:30

Some of the events/acts in the immediate aftermath of the Mumbai blasts are really troubling. Here are my thoughts on some of them.

Firstly this intelligence failure business - Post every terrorist incident we simply jump around and blame the intelligence authorities for their 'perceived' failure in preventing the indcidents. But what we fail to understand is that this intelligence business is very tough. You need to be right every single time while the terrorists need to be right just once (and they can and they indeed do keep trying on and on and on...). So if an attack is foiled the intelligence agencies have done their job - but we are blissfully unaware of their success but even a single failure of them and they are chastised in full public glare. I am not suggesting that there was no intelligence failure or that there are no intelligence failures - but lets no rush to conclusion on the day after.
Secondly this business of the 'Mumbai spirit' - Firstly, its almost a cliche nowadays post any terrorist incident in any city of the world to praise that city's spirit and how that incident will bring the city together and how it will gather itself and bounce back and defeat the intentions of the terrorists etc etc etc. Part of this patting is necessary just to fill that 'josh' into the people. But beyond that lets not fool ourselves in believing that there is anything special called as 'Mumbai spirit'. Lets face it - Mumbai returned to near normalcy (as much as could be achieved physically) purely because its people did not have any other option. I myself was one of those who went to work the next day - afraid i was to some extent, anxious I certainly was - but I could not stay at home. Mumbaikar's have seen incidents like this happen every couple of years and thus it has become a part of their psyche. The incident has its 'shock' impact for a few hours but then it gets lost in the Mumbaikar's 'been there, seen that' attitude.
Thirdly the most sad part has been the (Central) government's response - The first thing it does is to blame Pakistan. Its one thing to blame groups based in Pakistan and other to blame the 'Pakistan'. By doing so each and everytime a terrorist incident happens and not coming up with any concrete evidence of the involvement of 'Pakistan' we degrade our credibility in the eyes of the International Community. Worse still its the people of the country who are being fooled, and the incompetence/inability of the investgative agencies brushed aside under the capet. The next step the government does is to call off talks with Pakistan scheduled to be held in a few days time. This is as foolish as it gets. The entire world expected us to respond in that manner and we just did! That says a lot about our diplomatic skills. We should certainly be more (and more) demanding of Pakistan in rooting out terror that is exported from its country - but such a feeble response does not take us anywhere. Instead, going to the talks and conveying to them in strong language what our exact demands are would have resulted in credit in the eyes of the international community. Yes, the pressure from domestic public was there to call of the talks and to do some 'hard talking' but that is precisely the reason why our not calling off the talks would have resulted in credit to us. We certainly need to be stern and demanding with Pakistan but in manner which reflects inaction on the part of Pakistan in curbing terror that causes a breakdown of talks rather than a knee-jerk response from our side. We need to be smarter
Fourthly its the reaction of the Samajwadi party in refusing the ban SIMI - This thing is dangerous on two counts - firstly because what it tells is that the government in Uttar Pradesh will not follow/implement the decision of the Central government to ban SIMI. IF the central government believes that a particular organisation is against national interest and indeed is accused of having terror links then its no business of the state government to do anything other than implement it in letter and spirit. Tommorrow the Tamil Nadu government may say that it does not believe that the LTTE is a terrorist organisation and this it will not implement the ban on it in letter/spirit. This sets a dangerous precedent. Secondly, the evidence is overwhelming that SIMI does indeed have terror links and that the actions/words of the Samajwadi party is purely driven by its perceived benefits in playing the 'Muslim card' in the forthcoming assembly elections. Going soft on a terror linked organisation for electoral benefits may prove disastrous for this country and its something that all sections of the society must condemn. May sense prevail in Mulayam Singh Yadav's mind - but I am not hopeful
Fifthly the so called 'Hardline Hindutva' organisations - I must admit that I was pleasantly surprised at the fairly cool response of these organisations to these terror attacks. May such sense prevail often at these organisations. This is certainly not the time to inflame religious feelings and thank heavens that these parties and their hothead leaders seem to have behaved in a relatively mature manner. But I did see one poster posted by VHP at Bhandup station and it was a fairly explicit in what its feelings were towards Muslims. I do not think any ordinary Muslim would appreciate (infact any feeling other than anger is unlikely) that. For some reasons, these organisations have a penchant for creating nuisance. Though they have been relatively quiet this time - I think that is down to mere chance rather than any deliberate attempt on their part. I don't think these organisations really appreciate the importance of preserving peace and harmony in the city. These organisations continue to remain a potential source of risk - although I have much more faith in the people of Mumbai than I had in the people of Gujarat in controlling (in fact not allowing) untoward situations.
Sixthly the question of cause - We must also address the question of what leads a human being to so hate something/somebody that he/she is ready to kill not tens but hundreds of people. And while the situation in Kashmir is an obvious thing to point at, we must also look inwards and point to our own systemic faults - our investigative and judicial process. They say justice delayed is justice denied - and if denial of justice happens in a systemic manner, hatred grows. We still have not punished the perpetrators of the Gujarat riots and those involved in committing the Godhra carnage. We still have not punished those involved in the 1993 blasts. We still have not punished those involved in the 1992 riots in Mumbai. We still have not punished those involved in demolishing the Babri Masjid. We still have not punished those involved in 1984 anti-Sikh riots. Is this not denial of justice? Does this not motivate people to want to take law in their own hands? I am not justifying their acts - but I am putting forth some of the grounds which may create the hatred. And this works for all the parties involved. Seldom do riots affect only one religion or one race. People of both sides are affected and if the involved are not punished adequately, publicly and efficiently; it sows the seeds of next riots, next terror attacks - taking the country down into another round of chaos.
Finally, we need to grapple with the reality that though not every Muslim is a terrorist, almost inevitably all terrorists are Muslims. Now simple logic demands that, that is where our intelligence agencies must concentrate their limited efforts - but doing that amounts to religious profiling, something which we ideally should not be doing. But can we help it? Can we afford to not do otherwise? I think we need to move ahead on this, yes its unfair on the large majority of the Muslim population of this country - but I think the larger interests of the country demand that. But at the same time, this very religious profiling can lead to more mistrust and more hatred, so we need to be discreet and smart. Maybe we take help of some foreign govenments who have had to deal with similar issues. But do something we must - but I am not optimistic on this front.

Well, thats it for now....

Zidane's head butt and Sachin Tendulkar

2006-07-16T00:53:00.000+05:30

Just a thought occured to me -

What Zidane did in the final against Italy was a very serious offence. There are no two ways about it. Even the French media and public admitted it and felt the punishment he received (Red Card) was well deserved. But at the same time, they still respect him for what he has achieved although this incident would go down as a blot on record of their national hero.

Few years back we had a similar incident (although some might argue not quite that serious) with our national hero - Sahin Tendulkar.

Sachin was shown on television to be doing something with the seam of a cricket ball - a punishable offence in the game. And although the player claimed he was just cleaning the seam, the offence nevertheless deserved to be punished (no player is going to go out and admit that he did wrong). The Indian media and public however were not ready to accept that what Sachin did was anything wrong and then there were cries of differential treatment and harsh puinishment being meeted out etc etc etc. There was a huge public outcry when punishment was handed out to him.

Now here's the difference - both Zidane and Sachin are national infact global incons in their own rights. But one is respected the other is idolized. One makes a mistake, pays for it and the fans accept the punishment as deserved and move on. Their respect for him is not diminished. However the fans of the other do not accept the fact (playing with the seam of a cricket ball is a crime in the game period) and make cries of partiality etc.

Its time we became more mature and stopped godifying people. If a person makes a mistake, he pays for it and life moves on. Everyone makes a mistake. Life goes on.

Let life go on..

Thats it for now...

The Mittal Saga

2006-07-15T23:17:00.000+05:30

I must say, I am very puzzled with the way the whole Mittal episode was handled not just by the media but the politicians and also public at large.

Yes, Mittal owns the largest steel company in the world and yes, he is an Indian. But let us get our facts straight

Mittal has lived outside India for more than 3 decades
Mittal has no business interests in India
His company is not an Indian company
His retaining Indian passport is also likely due to the tax status (I happen to know another 'Indian' who lived whole of his life outside India but retains Indian passport solely due to tax purposes!)
He has never publicly championed the cause of either India and Indian business
He is a very ruthless businessman (for which I respect him)

Yet, inspite of this the issue was talked about as if we were referring to a person next door - a person who is a national hero.

Sample this

We believed (rather convinced ourselves) that the hostility to his take over bid was his 'race', rather his being an Indian - without knowing that over the last few months there have been objections to take over of European companies by Europeans as well.
Our Commerce Minister (Mr. Kamal Nath) believes that it is his conversation with the Luxemburg head of state that ensured that Luxemburg did not oppose the deal - Who is Kamalnath?
We believed that Mr. Mittal is a shining of modern Indian businessman - bold, audacious, ambitious etc etc etc - what's the relation?

How convenient of ourselves? As the famous McEnroe saying goes, I wish to ask people - You are not serious.

Don't get me wrong, I have lots of respect for Mr. Mittal. But there is not need to eulogise him. I am proud of his being of Indian origin and I wish him luck, but I don't godify him.

Lets not go overboard..

That's it for now...

Reforming the education system - removing exam pressure

2006-06-18T22:28:00.000+05:30

The levels of pressure that students of class X and XII undergo is enormous and ridiculous. We need to do something about it and soon. I have some radical and some not so radical views on this topic.

Firstly abolish this 'fail' business at class X and XII (guess this logic can be applied elsewhere also). The logic behind 'failing' students in exam is to ensure that students who have not attained a certain level to move on to next level of studies. The intention is genuine and in the interest of the students. However in case of Class X and Class XII there is an implicit system of discriminating between students. A student has scored less marks does not get admission to the college he/she wants or does not get the choice of subjects he/she wants. So if a student has scored less marks which means that he cannot get either the choice of subjects or college or both has the option of taking the exam again to improve his score. Now that being the case, why should the administrative people arbitrarily decide whether a certain score is good enough for him to be eligible to apply to colleges and below a certain score he is not. What scientific logic exists behind that magical number of 35? None to my knowledge. So, lets do away with it. A student gets a certain score in the exam - the exam is the same for every individual and so each student can be compared to other, and now the colleges can decide the criteria for admission. If a student does not get what he wants with his marks, he can appear again. If scoring 20, does not do him any harm, then fine, let him get on with his life. What you are doing in the process is taking a huge stigma associated with 'failing' in exam. The best judge of whether a student has learnt enough is not a arbitrary score in an exam given on a particular day, but whether what he has scored gives him the opportunities he thinks he deserves, if not then clearly the student has 'underperforming' relative to his abilities and will want to take the exam again. But if '20' is at best what a student expects to score and at that score he gets a job or a certain course which hones whatever skills he has then let him get on with it, who are we to say that that student has 'failed' and must score 35. Stop this arbitrariness.
The second thing we need to do, is to stop this business of absolute marks. This is insane to my mind. Putting out a number that a student has scored 97% marks in aggregate and another student has scored 96.9% is to my mind a false precision that we give. The exams conducted are at best an indicator of how well/otherwise a student is compared to other. Giving such precise numbers creates false sense of superiority/discrimination which the exam is not capable of doing. Saying that someone who scores 550 marks in aggregate is a better student than someone who scores 549 is precisely the kind of precision our examination system is incapable of measuring but that is what we precisely end up doing. Admissions to colleges are gained/lost by a single mark. That difference could simply be attributed to randomness and not to skill or intellect. Certainly one can conclude that the student who has scored 550 has done better than a student who has scored say 450 but not 549 or 540. So the solution is to put grades where students in a certain range of scores are bunched together. This will stop the mad competition for marks that is currently plaguing our education system. How insane are things when a student scoring just a single mark less than other student gets rejected admission to a college - precisely because he scored 1 mark less than a student on one particular day on one particular exam. Its insane. We no longer want our students to learn, but simply to score marks. (And this should apply equally to the entrance tests also)
Another byproduct of introducing the grading system rather than absolute percentage system is that it will force colleges to give admissions after some thought. Currently colleges have the most easy task when giving admission. They just take the top x number of students (where x is number of seats) by marks scored. Now with the grades business, it would not be that simple. Certainly colleges have the right to choose the best possible students, but now choosing the best possible students would imply a bit more hard work on the part of colleges. They would ideally have to consider someother parameters also while giving admission to discriminate among students (many would argue, including me that they ought to be doing this even under current system of absolute marks). So they might consider his extra curricular activities, maybe conduct a personal interview, social background etc etc. This would (at least in theory should) result in a superior selection relative to the earlier 'pure' marks based selection process. This ideally ought to also result in a much more diversified bunch of students being selected enhancing the overall quality of atmosphere in the college.

How much of this gets done - I haven't the faintest of ideas. But one thing is for sure, the sooner we at least think of these or some other radical ideas to take the burden of 'scoring marks' out of students and put the burden on them of 'learning' and 'understanding' the better it is for us as a nation.

That's it for now....

Reservations - A simple problem of 'framing'

2006-05-28T11:14:00.000+05:30

The government want’s to increase reservation in higher education institutions and there are widespread protests against the same. The government proposes to reduce the impact of this move on general category students by increasing the overall number of seats so that the number of seats in the general category remains the same.

But the issue being protested is one of ‘merit’ and whether number of seats are increased or not – is not the issue at hand.

I myself have been aghast at the proposed move. I simply find it impossible to accept the fact that a bunch of people get entry into a college inspite of their poor performance in the entrance test – but because of their caste. It's outrageous..

But then this morning, I was watching telly (as usual nothing interesting ever seems to be on) and a thought came to my mind. What if the issue was framed differently? What if the government were to announce that they are going to set up new engineering, medical and business schools specifically for backward caste students. All of a sudden, I find that this move is not quite so abhorrent. Why? Both things ideas (reservation with increased seats or new colleges) tantamount to essentially one and the same thing – but the difference in reaction is stark. And although I have not explored this with others, but my sense is that there will be quite a few from the ‘opposition to reservation camp’ who would react in a manner similar to how I reacted.

Yes, when I think deeply I can find flaws with this idea as well – but the violent initial reaction that the idea of reservation generates in me was (almost) completely absent here. The difference in initial reaction could not have been starker.

If I think deeper as to why my reaction changes so drastically – the answer is simple. In the reservation idea, one gets a sense (at least I do) that something is being taken away from one section of the society and given to other (rightly or wrongly is immaterial). But in the second idea when the issue is being framed differently, one does not get a sense that something is being taken away. It’s just that something is being created new and given to a section of the society. While one may argue that in the same token something should also be created for the other section of the society – but not creating something for one section does not evoke the same negativity and strong views as when something is taken away from one section and given to other.

Does herein lie the solution for the current imbroglio? I do not know – its for the ‘guardian’s of our constitution’ to decide!

But, this has been a true eye opener for me. I mean I have read in books about the problems associated with ‘framing’ and how humans react differently to what is essentially the same problem if it is framed differently. Fine – but when you yourself experience it, it springs a set of completely contrasting emotions. Firstly there is disappointment – because you’ve just realized how gullible/irrational you are, and then there is elation – because you have probably discovered something new about yourself, something new on the issue at hand and somehow I felt as if I made a connection with the theory!

This incident is going to stay with me for some time.

That’s it for now….

Reservations : Betrayal, Opportunism and a Sly Human Resources Minister

2006-05-25T10:43:00.000+05:30

The decision by the Union Cabinet to implement reservations for OBCs in higher education institutions is without an iota of doubt a highly condemnable one. I do so not because I am from upper caste (which I am), but purely on logical-objective grounds. To my knowledge these grounds (many of which are in public domain) have not yet been disputed on objective parameters.

If anyone comes up with objective manner of disputing these objections or if later information contradicts any of the points made here I would be more than happy to reconsider my view points. Indeed there could even be a situation wherein I support reservations (which I am opposed to in principle), if data points out that the condition of OBCs (or for that matter SCs and STs) is even worse than what we think it is and that this is down in large proportions simply to their being of a particular caste rather than any other reason.

Here it goes..

What makes us believe that we need reservations for OBCs? The main justification given is that OBCs are disadvantaged lot. Does any data bring that out? We cannot go about taking such a decision based on our gut feelings. Indeed the latest government data (NSSO study in 1997) indicates that the OBCs - so far as education is concerned are not as disadvantaged as most of us think. If this data is thought to be incorrect or outdated - there needs a fresh study so that we have facts before us. This is common sense to me.
Even if the data points that in terms of education the OBCs are a disadvantaged lot, for them to enjoy reservations (if at all), that condition of theirs needs to be attributed to their caste rather than any other reasons. For example it may be the case that a OBCs are disadvantaged educationally - but that is down to their economic backwardness and the economically advanced amongst the OBCs are not educationally disadvantaged. Further, the data may show that the economic disadvantaged amongst the upper caste are equally disadvantaged educationally. Such a scenario clearly calls for a different course of remedies. But unfortunately, we do not have any data - we have not identified the problem, we are doing chemo without knowing where the cancer is (if at all!)
We have had reservations for more than 50 years now for SCs and STs. There has been no study on the efficacy or otherwise of this measure. What is sacrosanct is the objective - that of uplifting the socially disadvantaged sections (not castes), and not the remedy - reservations. One pointer towards the efficacy of the remedy is that even after 50 years, the SC and ST seats in educational institutions are not fully occupied. This prima facie points towards a deeper malaise or a wrong medicine, certainly (again prima facie at least) warranting the employment of a different medicine. Again continuing the same medicine without knowing for another section of the society without knowing its efficacy (indeed having reason prima facie to believe that the medicine has not worked) seems a bizarre thing to do.
Finally, there has been no national debate on the said topic. Last time this issue was brought up (in 1990), it had to be shelved due to widespread student protests. What made anyone presume that the objections students had or in general people had gone away? In fact given the fierce competition that exists for the fairly limited seats at institutions of higher education, the stakes are if any, considerably higher today than they were before. If the minister has/intended to address the concerns while bringing this proposal then the manner in which the concerns were going to be addressed needed to be highlighted - this was not done and as it now turns out the concerns have not been addressed.

Don't get me wrong - I am not against the upliftment of the socially disadvantaged sections of the society. I am all for it - my only point is that we identify exactly who the socially disadvantaged sections are and that we apply the right medicine. What we are currently doing sounds highly political to me. The fact that UP elections (a state in which the Congress party has for the last few years done very very badly) are round the corner where a significant portion of the population comes from the very section of the society to whom the proposed reservation (appeasement!?) policy is aimed at.

The opposition - well, no one can really dare to oppose this proposal. If anyone does, they stand to lose the OBC votes.

As a last ditch effort, even if we finally did decide to implement reservations I hope we do so in proper manner. What I think is a right way to implement reservations is mentioned here.

Thats it for now...

Banning the Da Vinci Code

2006-05-17T22:07:00.000+05:30

It is interesting tracking the controversy surrounding the release of the movie based on the book Da Vinci Code. Some people are understandably disturbed (to put it mildly) at some parts of the movie and are in favor of banning the movie.

For someone like me (and I am sure many more) this seems absurd. After all we live in a democracy and there is something called 'freedom of expression'. If some people are disturbed or aghast at some sections of the movie, they have the option of not watching the movie. But that is no reason to ban the movie.

But when I think deeper, it brings out the inherent hypocrisy in my thought process. I have no sympathies for Catholics whose feelings are hurt by the movie and I can make a general statement that most Indians do not - but I ask myself this simple question:

What would have happened in this world if something similar was said against Prophet Mohammed? Just some piece of cartoons are sufficient to have weeks of protests across the world. A statement as blasphemous as one in the book regarding the prophet and the entire Muslim world would have been up in arms and would have burnt for weeks.

Why go that far? How would I react if some similar statements were made about Hindu gods/goddesses in a movie? Would I be equally loudly trumpeting the cause of 'freedom of speech' - probably not. Already we have had examples of how people reacted against M.F. Hussain for his paintings of Hindu deities in what were perceived as being in an 'objectionable' manner. We all know how a certain political party's activists reacted violently to a book on Shivaji. We have instances of people protesting violently against movies which do not 'glorify' people like Mahatma Gandhi or Dr. Ambedkar or Subhash Chandra Bose. In most of these cases, my first reaction was also one of intense anger at what I considered to be exploitation of the right of 'freedom of expression' Even today, I do not think that a lot of these actions/expressions were justified and that the right of freedom of speech is not a absolute right under which all acts can be subsumed.

The very fact that most of the Christian world has just shrugged off this movie says a lot about the level of tolerance of these people to contrary views (and how contrary). As a society we brag about how tolerant we are. But are we really? I know that I certainly am not, certainly a long way from what would be considered to be a global benchmark in tolerance.

We have a long way to go... I have a long way to go....

That's it for now...

A sensible way to introduce reservations…

2006-05-01T22:45:00.000+05:30

In the midst of the debate about reservations in higher education institutes and private sector, I thought I should add my couple of words as well (for whatever it is worth…)

Firstly, let me put records straight by saying that I am completely against reservations of any kind (and most definitely where the basis of reservations happens to be caste). I do agree that ‘affirmative action’ is one of the solution to remedy the problem we have (and yes, we do have a problem on our hands) but more importantly I believe the solution lies in bringing the lower caste candidates to the level of the ‘more privileged’ upper caste candidates be it in terms of scholarships or infrastructure or extra tuitions etc – but ultimately people (irrespective of caste) have to come up with the goods to deserve selections.

However I must also disclose that I belong to the ‘upper caste’ and thus my views may be considered to be prejudiced accordingly.

Now let me come to what I think is a sensible way of introducing reservations (if the Indian society at large has made up its mind for doing so)

Limited time period – First and foremost the law which introduces reservations has to be with a limited time period and which is predetermined. Further it has to be the case that the law expires after the passage of the pre-determined period and if the law is to be extended, then it again needs to go through the process of parliamentary approval. The effect of this is that this thrusts the topic of reservations once again into public domain when the time for its lapse/renewal comes. As to what should be appropriate time period – society has to be the judge but suffice it to say that a couple of years is too less a time for the law to have an impact and a couple of decades too long.

Measurable criterion to judge effectiveness – Second thing (and this ought to be extended to all existing reservations) is that we should have measurable criterion to judge the effectiveness of the law. The quantifiable parameters could be in terms of social or economic parameters or a mix of both. But certainly we should have set parameters in mind the achievement of which shall establish that the law has served its purpose and it needs to go. Now irrespective of whether the parameters are social or economic or both, they ought to be in terms of dispersion of these parameters on caste and ought to be compared in a like to like manner (e.g. given similar economic backgrounds is it more likely that lower caste people are less educated? or given similar geographic background are lower caste people likely to be less economically advanced etc). Further we must have in place robust means to gather such data. If the census does not serve this purpose, it needs to be recalibrated accordingly for 2011 edition and onwards.

Measurable criterion to judge failure – Third thing (and this too ought to be extended to all existing reservations) is to be able to have measurable criterion to be able to determine that the law has failed to serve its purpose. After all it is no body’s claim that reservation policies are a panacea of all caste problems. It is just one of the measures being suggested to solve the caste problem (at least partially). Hence we must be able to judge and determine (and conclusively) whether the presumption is indeed valid. It may very well turnout that reservation policies do not solve the problem (for whatever reasons) and we must then move on and try something else. And once having turned our back on reservations never comeback to it unless there are sufficient circumstances which warrant that (and definitely not before we try other untried measures first).

Well, these are just some thoughts that came to my mind which unfortunately no one seems to talk about when discussing reservations. No one even those who favor reservations seem to have any clue as to what is the most efficient way of implementing the policy. Above points seem to me to be very fair and reasonable expectations from a ‘upper caste’ person who opposes reservations, in case the country does indeed decide to implement this policy.

May the persons concerned get some sense (no pun intended!)…

That’s it for now….

Effects have Effects have Effects....

2006-04-09T20:55:00.000+05:30

One of my finance professors taught me a simple fact - effects have effects. What I am doing here is just extending on it, because not only do effects have effects, but the downstream effects of these effects and their effects get magnified to humongous proportions somewhere else or sometime later...

When I think back to how I got to where I am currently, I find it astonishing that where I am today is largely down to a couple of purely chance events over which I had absolutely no control. Put it other way, had some other person had a chess board or some other person not made a fairly elementary mistake, I would not have been anywhere remotely close to where I am currently both professionally as well as academically. Let me explain in some detail...

When I was in school, just like with most other people at that point of time what I wanted to do/would end up doing was a function of how much marks I scored in class X. But in class VIII, one fine day our school decided to enter into an interschool chess tournament (if I remember properly, that was the first time our school was doing so). So to select the team, there was a selection process. The number of people making up the team was 4 and I was placed 5th in the process so ideally I should have been ought of the process. But, I was the one of the people having a chess board, while the 4th placed person did not have one so he opted out voluntarily and I got a look in (Pure chance event no.1).

Now at the actual tournament, in absolute terms I happened to do slightly better than other 3 (not necessarily in relative terms though as I was playing on 4th board - effectively meaning I was playing the weakest member from the other teams). But that meant that I got some appreciation from our sports instructor and other team members. Fair enough...

Then one fine day, we get the news that there is going to be another (school) chess tournament in our city - this time an individual event and not a team event. Having done well, in the earlier tournament and just for the heck of it I participated not really expecting anything. One round happened after another and I kept on winning all the games until I met this chap (who later became and is still a good friend of mine) who had played chess fairly seriously for his age, had taken professional coaching and was the hot favorite (all of which I would learn later on). As the game progressed (I don't have any recollection of what actually happened, but he claims, he blundered his rook - and I think that is probably true - Pure chance event no.2). Well, he promptly lost the game and I had won all 6 games played till that time. The expression on the face of people when I came out of the tournament hall was palpable. To stay that most people who knew him were stunned was an understatement. (Just as an indication of how 'rare' the mistake of that chap was (lets call him X), I must have played against him at least a couple of dozen times afterwards in either tournament level or at practice levels. But I do not recollect a single victory against him after that. I did manage a few draws, but even there, some of them were 'agreed' draws to achieve a greater common good (which is fairly common practice in chess, at least was). He would just out maneuver me from basically any kind of situation in which he would get in. He was simply too good to me.)

It is at that point that I realised that I could win this tournament and I promptly lost the next (and final) game but the way the tie break score is computed meant that I nevertheless won the tournament.

These events in class VIII (more than a dozen years before) kicked off my short 'chess career'. So impressed was I of this, that I took to taking professional coaching and I choose the stream 'commerce' post my class X results purely to pursue my ambitions in chess (and not withstanding some fairly stiff opposition from the family). However, I never really made any headway in that. And finally in class XII, I called it quits and decided to focus on academics - but I found myself in a completely different area of study to where I would have liked to be.

Had the 4th ranked person in our school chess team, had a chess board (and there is nothing so great about owning a chess board), I would't have played the tournament and in all likelihood I may not have played the next individual tournament. Had X not made the very very rare blunder, (in fact even after that most people would have expected to win the game, such was his perceived superiority) I would have simply not taken chess as seriously as I did take. Certainly I would not have taken up 'commerce' stream post class X. Which would have meant that I would have come no where close to where I am today. Far from being someone fascinated/captivated by financial markets, I would have been (in all likelihood) someone fascinated/captivated by stars and the planets and the esoteric subject known as physics.

I never wanted to be in the 'commerce' stream and even today if there is one thing I would want to change about myself is to go back and take a different decision post class X. How I wish at times that my parents were a bit more forceful and actually imposed their decision on me (like most other Indian parents I must hasten to add...) rather than give me the freedom. Alas...
A couple of small inconsequential events in my life more than a dozen years ago when I was not even 15, have had a fundamental defining effect on my life.

The point I am trying to make here is simple, events are completely beyond ourselves and which by themselves on the face of it appear completely irrelevant or inconsequential could actually turn into the defining moments of one's life. My life (till date!) certainly is a case in point.

Beware...

That's it for now....

The 'News' Business

2006-03-22T23:18:00.000+05:30

I am unable to make up my mind on this issue. Whether ‘news’ is a product which is to be ‘sold’ by news sites or news channels or news papers etc or not?

Actually to my mind there are three ways to classify the ‘news’ business

Firstly you could classify ‘news’ is just a product like any other and the medium disseminating is concerned with making a profit. This is view with which I would like to be most comfortable with, but I am least comfortable with at present

Secondly you could classify 'news' business as a business of reporting facts and nothing but the fact - what is the difference between this option and the first one may ask - but there is which I shall elaborate later on

Thirdly, ‘news’ is a business of reporting/disseminating one's opinion on events that happen. Although I would like to be least comfortable with this view, it appears that this is the best we can get.

Let me consider each option one by one now and explore it in detail:

‘News’ as a product
If ‘news’ were a product just like any other, then it should be sold just like any other. And the basic rule of marketing is to sell what the customer wants – and customise the product as much as possible so that what you are selling is as close to what the customer wants to get (in this case – read & hear). Now what does that mean? Something like a CNN/BBC having multiple editions of their channels – one for their domestic audiences, one for middle-east region, one for Asia etc. And what about the content on these channels – customisation of the content implies not just more stories from that region/segment – but surely at some stage it implies broadcasting what the people their want to hear.

We already get customisation based on tastes, age, needs etc. So some 'news' is targeted at youth, some at businessmen, some at investors, some at housewives etc. What is to prevent the customisation to go to the next level and take editorial angle. Today that might be regarded as taboo, but in future it might not me. Further what is to say that some of that does not actually happen today? For what you need is not a diametrically opposite statements on different platforms – but slight nuancing of the messaging. I am convinced that some of it actually happens. Let me illustrate:

Imagine a ‘news’ organisation has two media outlets (be it news papers or news channels or websites or a mix of them) - one catering to investors (business) and other catering to 'desi' type of audience. The government does not cut food subsidies in the budget - in the business channel the focus is going to be how bad this is bad for the country and how the subsidies are increasing fiscal deficit etc. There will be ‘so called’ experts explaining why this is a bad move and how the country is paying a high price for ’mis-targeted subsidies’.
On your desi channel, the focus is going to be how government spared lower class consumers of price increases and how this is good news for the poor etc. You will have so called experts arguing why this was the right thing to do etc.

Think this does not happen? – just observe a business daily cover page and a normal vernacular daily cover page (from the same publication house) on the day after government raises kerosene or diesel or LGP prices. One would say 'govt finally bites the bullet' other would say 'kerosene becomes costly, lower sections to get hurt'. Isn't this a case of customising news based on what your readers want to read. The middle or lower class people do not want to read why raising these prices is a good/necessary thing nor are the business class readers interested in knowing how hardly this is potentially likely to hurt the lower sections of the society and hence why this could actually be a not such a good move after all.

Another off-shoot of this customisation business is creating the perception of being ‘fair’ or being ‘objective’ is creating of debates. So for any given topic you will inevitably have two people each of who surprisingly seems to have diametrically opposite views who will come to studios (or write columns) and speak for a minute for or against the topic and we get 'both sides' of the story. What the media creates is an 'illusion of debate'. This is their way of ensuring objectivity or fairness.

Well, if this is happening, why do I think this is wrong or why am I unhappy with this. The problem I have with this, is that this is happening without it being acknowledged as such. I would have no problems with it if 'news media' were to do this but openly acknowledge that this is what they do - after all they are in the business of making money and they make money by selling 'news' and they tend to make most money when they sell what people want. It’s simple business logic.

Another problem with this way of looking at media is that then we accord far more importance to media than it ought to be. Any given reporting from the media should not be taken at face value but rather discounted as that report is probably what I wanted to hear - and so not necessarily the truth (assuming there's something called as truth in the first place - which itself is debatable).

Do I think this is how ‘news’ business should run – inevitably yes and do I think this is how news business is being run – its getting there, and do I think this is what people think of the way in which the news business is being run – absolutely NO.

‘News’ as a business of reporting facts
This is the more romantic version of the way we like to think news business is being run. Most of us like to think of ‘news’ business as a business of reporting facts – hard facts – straight into your face kind of reporting. But does I argue above, this is far from the truth. A lot of this has to do with the basic objective of a news organisation - which is to make profits (and nothing wrong with it - that's the measure we have adopted for deciding most things). So a news organisation wants to produce content which people will be ready to pay for and maximise the sum product of viewers x price.

Now, if you are publishing a single story globally – suppose (assume for the argument sake) that invading Iraq was the right thing – you tell this in middle east, no one is going to switch on your channel or read your news paper – but if you say one thing in middle east and other thing in US, you increase your profitability.

The other bigger problem with the notion of ‘news’ business as one of reporting facts is that its very rare that fact's can be reported in isolation. US invading Iraq is a fact - but that cannot be a news story. You need to tell the 'why, when, where, who and how' of facts and that's where the boundaries between facts and opinions get blurred. What is security for one is freedom for another, what is dictator for one is religion for another etc. there is hardly any middle line. How do you report what is happening in Kashmir and appeal or both sides of the borders – it’s incredibly difficult if not impossible.

Another problem with ‘news’ as a business of reporting facts is that news business is today in midst of sensationalism. Today’s all about creating sensation – its all about exposé’s. And what comes finally is fact all right – but fact that is distorted and blown out of proportion.

In a country like India, there are more than 365 rapes that take place every year. Now the media starts reporting every single rape that happens - so there's a rape story every day in the press and then we get debates on things crimes against women are increasing and blah blah blah... A person gets murdered on a highway - he happens to be from the IT industry, and news gets made and IT industry is on the spotlight - what the hell, people get murdered everyday in this country and given that a large number of people work in IT industry and they generally earn above average salaries - they are likely targets, what's the fuss?

A reporter goes to a minister and puts cash on his table and says its just a token – you don’t have to do anything – the minister accepts it (even I would, someone’s giving me free cash!) and the story then gets made – minister gets caught red handed accepting cash – he sure did, but that does not mean that he’s done any favours or he has promised to.

All these are examples of factual reporting – but of facts which are either blown out of proportion or facts which have been artificially created.

‘News’ as a business of reporting opinions
This is the ideal case and this is what I would want every media organisation to do – simply state its opinion and not bother about making lofty claims of reporting facts. And overseas this is actually what some newspapers do overseas – some newspapers openly back parties in elections etc. But most media is a mix of reporting facts and opinions. Reporting on government policies for example one has to specifically state whether it is good for the country or bad - so what the paper is reporting is its opinion. But that opinion has to go into the editorial pages - but it often slips into the cover pages.

But the bigger problem is that the opinion of the editor may not be what the reader would want to read (simply because he does not agree with it). What happens then? What happens when the marketing department and the editorial department clash? Should the opinions be modified to suit the reader's tastes or should the editor be changed or should the opinions of the editor stay as it is in the hope that in the long run, people will appreciate the quality of reporting? I am afraid what happens in India is the former.

And this is what makes me uncomfortable with this opinion way of looking at news. In this day and age of commercialism, it is very difficult for a news organisation to take a idealistic stance and report what it thinks is the right thing (when its own opinion is just an opinion and as likely to be incorrect). The marketing department would inevitably take over slowly but surely and the paper would get transformed into option 1 – customisation and segmentation – selling what the reader wants.

So in final analysis, what we are likely to get is a media business which reports/states what the reader wants to read/hear. So as a reader we ought to give considerably less importance to media than we do currently but this is unlikely to happen until people realise the true nature of this business. This business is not about reporting facts - its about reporting stories which most people want to read/hear (stories which appeal to the masses!)

That’s it for now…..

Commiting blasphemy - here's how

2006-03-16T00:10:00.000+05:30

If you live in India and if you didn't swore by any of the statements below, you would be deemed to commit blasphemy. Here's my list (arranged by topics)

Business

Birla group, Tata group, Bajaj, Hero group represent some of the best of indian entrepreneurship and reflect some of the most efficiently managed companies and the best in terms of corporate governance
Reliance settlement was very shareholder friendly and carried out in the larger interest of 'minority shareholders'
Companies like Infosys, Wipro are some of the most sought after companies to work and their HR practices are some of the best in the country
Corporate India is all for liberalisation, free trade, competition
Sensex is fairly valued and is likely to be rangebound for some time

Sports

Sachin Tendulkar is the best batsman in the country and has been so for few years, having proved his mettle through his service to indian cricket over more than a decade and a half
Cricket fans in India are very knowledgeable of the game
Narayan Karthikeyan was very unlucky not to get a drive in this year's Formula One World Championship

Entertainment

Shahrukh Khan is the best actor in the country
Karan Johar is one of the best directors currently
Bollywood is big overseas
Aishwarya Rai has broken into hollywood
Award functions are a means of recognising and appreciating talent and performances

Media

Times of India is the best newspaper in the country
The job of media is to report facts - hard facts
Media does not exist purely for profits

Politics

Politicians are not professionals - that cannot be their profession
Politics is a means to serve the country and its people and make a difference
India is served by some highly intellectual people in the government
APJ Abdul Kalam has been very good as a president

Social

Pre-marital sex is a taboo

Alas... I disagree with every single line said above.

I commit multiple blasphemies...

God save me...

That's it for now...

The Importance of English

2006-02-28T21:23:00.000+05:30

There are a lot of people in India, who dont' quite appreciate the importance of English. They consider English as a foreign language (which it certainly is) and a leagacy of the British rule (which again it certainly is). Then they go on to try and de-emphasize the growing importance of English in the country as a medium of communication and a medium of instruction.

The arguments of these people rests on two grounds - a) Children are best taught in their mother tongue's as that is a language which is natural to them and b) Continued use of english represents british legacy and it somehow is in conflict with our idea of sovereignity.

With regard to the first argument, I have not seen any evidence or do I believe that fundamentally there is any reason for a child to have better learning capability in one language over another. To me that sounds like a truck load of crap.

On the contrary, the second argument has some merits to it. There are a lot of people I know/have encountered who like to use English as a means on impressing people or some how proving their superiority over others. This to me is a sign of mental block. In fact many a times, I try and respond to these people in crude english or best in vernacular language.

Superiority/Command over english is no sign of one's intellect or social or economic status and
any move towards believing or assuming so is purely a reflection of one suffering from an inferiority complex.

However the point that we miss in the above discussion is how incredibly important enlish as a language is and how indespensible it is.

I recently was in a non-english speaking european country and boy, was I relieved that people there spoke english. How else do you communicate? If there's any one language today which is standard or benchmark accepted globally - it is english and thank god for it!

People who keep on harping about the adverse impact of growing importance of english in the country need to be dumped to a foreign country and asked to live without using english - that should wake them up nicely. And we are here talking about simple living - finding food, locating places etc. Then comes the complex task of actually conducting business - which calls for much more standardisation and structuring of things and that's when you realise how important it is globally to have a single common language which everyone understands. Infact on that parameter, we have a long way to go...

If there's one good thing that happened from the vast and long british empire is the spread of english. God bless them for that...

I feel like laughing when people say that just because the french president speaks in french when he speaks in public or the chinese president speaks in chinese when he is in public - that's a sign of how much pride they have in their language, and we should do the same. What crap.
If we are addressing a global audience, there is absolutely no reason why we should speak in Hindi. We should speak the truly global language - English. But, if you are addressing an indian audience by all means use the local language (again what language you will use even there is a question - use Hindi and you run the risk of annoying/not reaching the people in southern states!).

So, in conclusion English is important and more important than we realise (I just realised how under appreciative I was of this language) and thank god for it!

That's it for now...

The Objective of Life – II

2006-02-21T23:28:00.000+05:30

The reason for writing this part II is because part I does not explain fully my thinking.

Firstly, it leaves an impression that I don’t respect people who have succeeded in their life – people who are widely acclaimed to be amongst the top in their professions. Well, this is only partly true.

It is true in the sense that I probably don’t respect these gentlemen as much as the average person does. But it’s untrue in the sense that I do not respect them. I certainly respect these guys, these guys have done well (precisely how well, and whether actually well enough to justify the respect/money they command - thats another question).

You see there’s a huge amount of survivorship bias out there when we see at these so called ‘successful people’. The successful people are survivor's first, skills, talent etc comes later on.

Let me give an example – Imagine 2 cricketer’s (A&B) starting their career at the same time. At the end of 10 games their scores are like this:

A – 0,0,0,0,0,100,100,100,100,100
B – 100,100,100,100,100,0,0,0,0,0

Other things being the same, you cannot conclude which of the two players A or B are better – you just can’t. However how likely are you to see the scores of player A? Are they as likely to be as the scores of player B? the answer is simple ‘NO’. Player A after scoring five consecutive ducks is more likely to be dropped from the team than not and thus he never gets the opportunity to score the five consecutive centuries that he otherwise could have. While player B is overwhelmingly like to get the opportunity of scoring the 5 consecutive ducks.

Thus player B survives after game 5, while player A finds himself losing out (and recollect that we cannot definitely say which of the two is a better player - the pattern of their scores being purely down to chance).

I admit that this example is slightly exaggerated, but we see this survivorship in real life. Take cricket itself for example. A new player is selected,–he gets to play a series and if he does badly: he is dropped, else he survives to play another series. And once the player establishes himself, he can afford to have a few bad series without the risk of getting dropped (notice the difference – only if you have survived a few seasons). How many Saurav Ganguly or Marvan Attapattu’s of the world do we see in real life – not many. Both these players had pathetic starts to their careers - but they then went on to become some of the best cricketers of their time – such examples are very rare.

This logic applies to all other areas. A student has to do well in the entrance exam and if she survives that he gets entry into a good college – and even if he does badly there, that college badge ensures that he starts off his career with an advantage over a person who did badly at the entrance test but did exceedingly in the not so ‘well known’ college he went to. Same logic applies to your job, business etc…

Another problem (referred to in passing above) is that success breeds success. So given two people, one having survived for longer and another a fresher and both faced with the same situation, the survivor has a higher probability of further surviving than the fresher.

In business terms this is commonly referred to as network effect. A classic example of such is a company like Microsoft. The more windows OS it sells, the harder it becomes for its competitors to penetrate the market. However this effect is more prevalent that commonly understood.

In sports for example a bad year by an established player is passed off as bad-form, but a bad series by a lesser established player and cries for him to be dropped from the team get louder.

In business, an existing company getting into a new business has a better chance of survival than a new company entering the business world per se – simply because of the network of contacts it has developed, financial standing and credibility it commands etc. Thus even if a new company has a better product/service, it stands in a relatively unfavourable position when competing against a existing company vis-à-vis another new entrant.

Things are worse in a country like India due to its red tape and bureaucracy. The domination of large business families is a very good pointer towards it. Notice that the onset of reform process, unshackling of controls etc, paved way for more entrepreneurs entering the business space.

Children of better off parents get to go to better schools (irrespective of whether their children deserve to go their on merit), while children of financially not so better of parents are not that privileged. Indeed children of beggars don’t get to go to school at all. If your parents are successful, you have a better probability of success. Even if you are born with Einstein’s brain in a beggar’s family, there’s very little you can do about it. And of course, you don’t get to choose things like your gender, place of birth, your parents, their financial background etc – which make a hell of a lot of difference to where you end up in life. You may be born as mentally/physically challenged – that’s a stroke of chance as well.

So in conclusion, I would just like to repeat a quote which one of my professors used in one of his classes which aptly describe my views on this topic

“Success commands explanation, Failure permits none”

That’s it for now….

The Objective of Life - I

2006-02-18T01:11:00.000+05:30

This is one question the answer for which everybody wants but very few, if any, have it. What is few, if any, have it. Waybody wants but very few, if any, have it. What is the end purpose of life? Let me try and address this question from my view point – which in no way claims to be ‘the end purpose of life? Let me try and answer this question from my perspective. I must admit however that I do not claim my view to be complete or final in any way. It has evolved and will continue to evolve. Indeed it has undergone dramatic change over the past few years.

Firstly, let me say that there is no objective or end purpose of life. Life just exists because it exists. People who look towards some divine or supernatural reasons for existence of life are likely to be shocked by this – but that’s what it is, life did not appear on this planet with any specific purpose. Indeed when living beings procreate and give birth, the new born does not appear on this planet with any purpose.

However, human beings need some purpose to live. They need some goal in mind with which to carry on ‘living’. What is it that I want to achieve in life? – That’s a question I often ask myself. My answers to this question have been changing.

Initially I wanted respect in life. I wanted my name to appear in newspapers, magazines etc. I wanted to be interviewed on television. That to me was respect. Then my answer changed. I wanted to be rich. Until then I considered the thought of wanting to make money as perverse (I did have some communist inclinations few early on - no more!).

However off-late I find myself increasingly being sold by the randomness theory. Increasingly I believe that a lot (a hell of a lot) that happens to us is governed by pure chance (note the use of words – I say chance not fate or destiny). I distinctly remember a conversation that I had with one of my cousin a few years back where I had argued that there is no such thing as luck/chance. A man makes his own luck. If you are not successful in life (success defined in terms of respect/money as in above) then you have failed and that is because you are simply not good enough. How far I have come from that - seriously at times I laugh at the statements/views I had held a few years back. Indeed I today believe that it is to a large extent meaningless to look at the life of a given single person – it is largely a function of chance.

In the last few years I have seen lots of random shocks being subjected to people I knew which has pushed them back from achieving success in conventional terms or has taken them close to achieving it. I myself have benefited from such randomness in a positive sense. And a few of my friends have unfortunately been at the receiving end of chance.

It is but natural for many to think that I hold this view because I have myself failed in life (failed in conventional sense) – far from it. As mentioned above, I consider myself incredibly lucky. Today in a country of a billion people, I am on most parameters in top 5%. I cannot thank luck enough for that. But I equally know that this day shall pass and some day luck will not go my way – that’s OK.

So what do I think objective of life is? Well, my current view does not come from within me. I read it in ‘Fooled by Randomness’ and I immediately liked it. It said that given life’s nature – it being governed by chance, the objective should be to face that without losing dignity.

It is essential that irrespective of what chance delivers us, we keep our dignity. So if do not go bonkers if all of a sudden we are faced with grave incurable disease or you lose your fortune or you win a fortune.

I have seen my friend lose both his parents in a span of a year, having to leave his higher studies incomplete – but yet not lose his composure, not appear helpless (when in fact to a large extent he was). This to me is not losing dignity of life.

I have seen a someone coming from a not well to do financial background, not very highly educated, brought up not in city getting married into a financially well-off family - but maintain that humility that she had. that to me is not losing dignity of life.

I have seen a lady being bed-ridden for better part of 2 decades and that to in her late 30s early 40s – but always greet me with a smile, always enquiring about others, wishing them well, giving children sweets when they came. Was she helpless, yes she was, did fate deal a cruel blow to her, of course it did - but she maintained her dignity.

It was so easy for all of them to give up and lose dignity - but its to their credit that they did not. They are successful people.

Another important thing – maintaining dignity also earns you respect. Respect not in the sense that you are interviewed or you are covered in newspaper or magazine. But respect in a much deeper sense. Your word counts, your presence counts and is cherished. People listen to you; they want you to talk to them. That to me is real respect.

Well, I don’t know if I will be able to maintain dignity when chance deals a blow to me (sooner or later it surely will!) – but I will try

That’s it for now…

P.S - Part II to follow

Coaching Classes - A prisoner's dilemma this

2006-01-28T08:24:00.000+05:30

Seeing full page advertisements of various coaching classes in newspapers reminds me of game theory and how in a classic prisoner’s dilemma, players with no collusion (tacit or otherwise) end up in way below optimal equilibrium.

The way this coaching class business works is this, advertisements are released driving home the point of how crucial even a single point is in this competitive world. Poor parents, have no option to opt in to these classes as they see their neighbors’ doing the same. They can’t be seen to be the one’s who don’t invest for their child’s future. The fact of the matter is that when everyone around you is going into these classes, a given parent has no option as his child is the one left behind then.

However, the irony is that it is not the absolute level of points scored that makes the difference but the relative level. Given that number of seats available in a given college is fixed, if the average points scored by the students increases, that makes no difference to the possibility of a student getting admission. What matters is where he lies relative to other applicants. Thus if all the students go to coaching classes for increasing their score, it makes no difference as long as the relative ranking does not alter, however if only some of them go to these coaching classes then the relative ranking changes (assuming of course that coaching classes and marks are at least slightly positively correlated) and thus a given particular parent has to enroll his/her child into a coaching class – a classic case of prisoner’s dilemma

Now you may wonder why I am singling out coaching classes. Surely this logic applies to schools also and to quite simply students studying. If all students collude and decide not to study at all, then things become quite different.

Let me clarify, I am not against coaching classes. But I am someone who believes that incremental thinking/approach taken to far leads to ridiculous situations like the one with coaching classes. Imagine a child of class X or class XII. He spends the better part of 12-14 hrs of a day in school/college, coaching classes etc. Then he further has to take practice tests. So, on an average he is doing nothing but study for 15-16 hrs a day and he is 15-16 years old! And on top of that at the end of the day, this does not put him in any greater advantage than when all the students were spending only half amount of the time. There are far better and important things for a child of that age to do than read text books, take notes and write exams. What a waste of youth this, what a waste...

However we cannot do anything about this. Every incremental hour a child spends in a coaching class can be justified and it increases his/her chances of success (success not in life but in getting admission to a better college/university). However when we compare the situation we find we are in today with what the ideal situation should or can be, we can see how far we have come and how little good all this is doing to our youth.

What’s the solution? Well, there ain’t one. May be if we have plenty of very good colleges/universities we could control the problem slightly, but I doubt it. Regulation through legislative action or otherwise would do no good and in fact raise public outcry against the action. All I can say is that I am extremely happy to not to have found my selves in that situation when I was of that age. The credit certainly goes to my parents as well, who did not want to push me into that rat race (whether by design or accident is immaterial). And I am not in too bad a position professionally to think that I lost something by not being in the top colleges!

That’s it for now….

Naive People

2006-01-27T22:38:00.000+05:30

This continues to amaze me. Whenever I see any discussion or any talkshow or read any article, we seem so fixated in talking about how things should be, how people should behave. The talk always is that people should not do this, it is wrong or its immoral or its unethical or that it is not in the interest of society at large etc etc.

To me this sounds a lot like a bunch of zebras talking about deciding how/when/where tiger's should hunt or plants discussing things like how much sunlight they should get, how much rain should be there etc... (I agree that I am exaggerating things) but what we are doing is equally absurd.

I have found it ridiculous on the part of people to think in terms of how others should/should not behave. In fact people should think in terms of how a person is likely to behave and adjust one's behavior accordingly. It is far easier and efficient to think this way.

So, how do people behave? Simple, if there is an incentive to behave in a particular way, people would behave in a manner to exploit that incentive to their advantage - even if its immoral, unethical or not in society's interest. Sure there would be some people who would not behave in that manner as for them the ethical/moral consequences far outweigh the benefits of that action/inaction - but rest assured there will be a sizeable number of people who would behave the other way.

What are the implications of this? I don't believe or assume that there is anybody out there to do me a favor at his/her expense. People are out there to make ensure that their benefits are maximised and if in doing so, some good happens to others then thats fine. People are selfish, they are out there to further their aims/objectives at the expense of others and thats what I (and others need to) assume when evaluation any action of others.

The biggest lesson for us as a society is that whenever you are designing a system, you cannot leave anything to a person's goodwill or goodfaith. You have to either ensure that there are no incentives for him to not behave in a manner expected of him and if there are you have to make the costs of doing to exceed the potential benefits. You do so by having strong penalties and a strong detection rate (which is what we severly lack).

A simple example of how system can breakdown when we don't ensure this can be had in my previous post 'The Demolitions Must Continue'

That's it for now....

The Demolitions Must Continue

2006-01-15T20:22:00.000+05:30

Recently we have seen the courts order demolition of illegal structures in Ulhasnagar near Mumbai and in Delhi. The politicians (across party lines) as usual without going into the merits of the case are busy putting together ways and means to save these structures.

Firstly, let me admit that if indeed the court orders are followed (i.e. there is no appeal or there is no legislative process put in), then it would cause immense hardships to the people living/conducting business in those structures. Imagine one fine day someone comes and pulls down your house, its not a pretty situation to be in. Hence, the reaction of the politicians is entirely understandable.

However, notwithstanding the immense loss it would cause to lots (thousands of people, considering that in Ulhasnagar alone more than 800 buildings have been ordered to be pulled down) I think that these buildings be indeed brought down and not a single rupee in compensation be paid to these people in any sort by the government. Am I being harsh, insensitive, maybe - but thats what is needed.

Here is the way I see this situation. Illegal structures, encroachment on reserved lands, roads etc is not something unique to either Ulhasnagar or some areas of Delhi. It is common knowledge that this is a malaise which pervades the entire country. Given this backdrop the question to be asked is why are we in this situation?

And the answer is simple, most of the people involved in this menace know it perfectly well, that what they are involved is illegal. However they still proceed with their operations - why? becuase they assign a very low probability of their being caught and if at all they are caught, they assign a low probability to the actual costs they would incur. Thus simply, the benefits of violating the law exceed the costs associated with getting caught.

Thus the only way to get out of this situation is to increase the costs associated with this illegal operation. This involves, making detection of such people much more liklier and further having detected, making them pay more heavily.

And our experience in doing so is pathetic. We periodically see what happens with slum demolition. The cut off date for grandfathering existing slums gets pushed ahead every few years with the effect that allows new slums to be set up, a few years later and an agitation or two will get your slum grandfathered and you are protected.

A similar problem exists with black money. No one argues that there is tremendous amount of black money in the country. But every few years we get a 'Voluntary Disclosure of Income Scheme' or a clone of its where by evaders of tax can declare their black money and get away paying significant low amount of fines and penalties. What does this do? Well, its an open invitation for people to continue to evade taxes, hide their wealth and a few years later disclose it in some scheme and get way vietually scot free!

The problem lies not in the fact that we don't have laws, the problem lies in the fact that no body believes in their implementation. No body believes that when the law says that you should not do this, people who actually do so will actually be dealt with.

In my view, if there is a serious problem pervading in the country, then to get rid of that problem one needs to do two things. Punish the perpetrators of that crime disproportionately and secondly make the punishment as public as possible. What this would do is that it would raise the stakes of breaking the law in the minds of those others involved. Yes, it is harsh on those who get caught and get disproportionate and public treatment. It may be humiliating also, but thats a small price to pay at the country level to get rid of a problem.

Its game theory at work here and as protectors of law one is playing a simple game with those breaking the law. You have to play the game strategically and work on their mind.

However, in this case, just bringing down the structures will be just the beginning. The people who have built these buildings are in a sense at the bottom of the pyramid and are the least at fault. If the only way you could do business is by violating the law and thats the way everyone around you is doing business, then its 'rational' on your part to violate the law.

Thus the real people, the contractors, the architects and the politicians must be caught and treated in the similar manner described above - punishment must be disproportionate and public. Thats the only way you can raise the stakes of breaking law!

Thats it for now...

Here we go again...

2006-01-07T12:03:00.000+05:30

It's that time of the year again. Union budget is just under two months away and the pink papers have already started their 'crystal gazing'. I have observed over the last 4-5 years that leading into the budget the media (and pink papers in particular) go into a crystal gazing spree and try and predict the contents of the budget proposals.

Things go to such an extent that at times one finds two different newspapers carrying two opposing stories of what the finance minister is likely to announce. Almost all of the times these stories are carried prominently by them on the cover page and almost all of the times, they get it wrong.

The mad craze amongst the newspapers to publish these stories is really ludicrous. At times their stories contain proposals which I am sure the finance ministry would not even consider in their wildest dreams. A similar story appeared yesterday in one of the newspapers regarding exemption for interest on bank deposits etc. So the season has begun.

I have two possible explanations for this mad craze. Firstly, I don't believe that these stories are what they claim to be. The information I am pretty sure does not come from 'genuine' sources within the finance ministry. My first possible explanation is that the source is actually interested groups lobbying indirectly for/against a particular proposal under the garb of a news item and getting it published as such. The second possible explanation is that, the news stories appear based on incomplete information and are then exaggerated purely to make it attractive and make the publication/program sell. The logic would be that if they don't do this, other newspapers/media would and thus the newspapers/media are locked in this zero sum game in which every party publishes rubbish stories just because if they don't someone else might (by the way, this logic is not restricted to budget alone).

On my part, I do enjoy reading these stories; they are a good source of having a nice laugh early morning and start your day!

On a serious note, my advice to the newspapers is to just apply their mind (simple commonsense would do) before they carry such stories. In their haste to be first to inform the reader, they run the risk of losing credibility in the market place. And if that happens (it will not happen overnight, but it will over the long term), regaining credibility would be a very costly (both in terms of money and time) affair.

Remember that if you are reporting on non-frivolous matters (certainly matters pertaining to business, finance, government policy etc can reasonably be assumed to fall under this category), then credibility is everything and you will first lose it amongst your most profitable customers. Now, if you are a tabloid publication and not a serious media (nothing wrong in that, I am not at all implying one is better – both have their own places) even then, I am sure consumers in the long run would not want to read a magazine or paper which gets some of its most important stories wrong.

That's it for now...

The Rise and Fall of Television

2005-12-31T23:08:00.000+05:30

There was a time in India when people did not have television sets in their homes because they could not afford one. However, in the recent past I have seen 3-4 families from well to do backgrounds not having television sets (on purpose) in their homes. The reason? Simple, they do not need one! I hope there are many more homes like these...

Television is a wonderful medium (rather was when it started out). It served an important purpose of providing people with information and also entertain them. Who wouldn't want to be informed as well as entertained - all sitting in the comforts of their homes?

However often things go a bit too far, and the same has happened in case of television. Commercialisation has taken things to ridiculous levels. We now have contests on what babies should be named in one of the serials. We have a whole television channel asking (rather exhorting) people to send SMSes identifying names of famous people (the photos are a direct give away). We have a contest for practically everything. News channels are increasingly becoming tabloids and seem to live on sensationalising news stories. Everyday there is a new sting operation, new inside account of a celebrity etc.

Mind you, all this survives because there are viewers who want this. The same set of people (my family included) who used to laugh at people watching the so-called 'Sas Bahu' soaps on Hindi channels, are today devout fans of soaps of same kind on their vernacular language channels.

For me, television has become a bit like the shopping malls that we are seeing crop up at every other city. Whenever I go into a shopping mall, the urge to spend is so tremendous, that I find it almost impossible to come out of it without having spent at least a few hundred rupees. So what do I do? I tried to act 'rationally' inside a shopping mall - just go and 'only' if there is something which I really need, buy it, else come out empty handed, but to no avail. So the solution for me is to avoid going to these places as much as I can.

Same is the case with televison. If I am in the house and there is electricity (both things happening together is some rare event nowadays!), then I am inevitably sitting (and eating and reading and sleeping!) in front of a television watching practically anything that is being dished out. I am unable to rationally decide what is it that I 'need' to watch (be it for enterntainment or information) and what not (reasonable to presume that there are a fair few like me). So I have just stopped watching television. In fact like some of the families mentioned out, when I branch out into my own home, I like these families don't intend to own a television set!

I need to point out that whatever criticisms pointed out above of television, is not really of the television channels. They just reflect (may not be exactly, but they are a fairly good approximation) of what the viewers want to see. And this is a depressing state of affairs. The extent of dumbing down of people (inflicted by themselves collectively upon them) is astonishing. And I don't intend to join that party - even if this means that I am taking a slightly extreme stand.

Further, this dumbing down is not merely restricted to television but extends to press also. Its fair to say that in India, there is only one type of press - confused press. Globally (at least in developed markets) we have press clearly segmented - serious press, tabloid press etc. But here we have the same newspapers talking about poverty reduction and and stock markets and celebrity gossip etc.

Internet is however a wonderful reason. Why? simply because it gives me choice and control over my choice. When I want information, I can choose what information I want and I can directly get that. When I want entertained I can choose the exact manner. Its nice to have such freedom.

Finally, I admire above mentioned families for thinking out of conventional wisdom. Its easy to get dragged into thinking like everyone else and mimicking broad societal behaviour. It takes some strength of mind to resist it and thinking on your own and I like it.

Thats it for today...

The Awakening

2005-12-30T18:46:00.000+05:30

2005 has been a fairly eventful year for me. Its the year I received some academic recognition, its the year I got my first job and most importantly its the year I received some rude awakening.

I must admit here that I am not an avid book reader. But 4 books that I have read during the course of this year (4 is a huge number for me!) - Deep Simplicity by John Gribbin, Fooled by Randomness by Naseem Taleb, Surely You're Joking Mr. Feynman! by Richard Feynman and Innumeracy - Mathematical Illiteracy and its Consequences by John Paulos have had a significant lasting impact.

What it has made me realise is that although I have spent the better part of first quarter of my life studying, I haven't really learnt that much. Some of the more fundamental learnings that ought to have happened fairly early on in my learning period have not happened. I get swayed by emotion all too often, I get easily carried away by bouts of optimism and pessimism. I find it difficult to take a dispassionate view of things, do the numbers/arguments and come to a cold yet reasonably correct conclusion. I am now trying to learn things which I should have learnt (at least exposed to) long back. Its a very somber feeling to have. Alas...

However the 4 books above and my learnings from 2 very good professors whom I had the privilege to study under have changed me. I am increasingly becoming more and more a skeptical person. Increasingly find very little to read about in newspapers and television very boring.

However the one thing I am very much interested in and it continues to interest me is financial markets. I just love them. They are a huge fun and a great source of learning.

So as I go along, I plan to use this forum to take the contrarian view (or the non-majority view) of many a contemproray topics. Maybe dismiss some pretty idiotic beliefs or opinions that some people have.

To end, here's a nice quote to sum up:

"It is not worth an intelligent man's time to be in the majority. By definition, there are already enough people to do that" - G.H.Hardy

Thats it for today...