Economics

Long live THATCHERISM

End of 1980’s

Soviet Union of Russia under communism faced a severe shortages of basic food supply. This led to distribution of food like that of war time using food cards restricting each citizen to a certain amount of food only. State deficit grew from 0 to 109 billion rubles; gold funds decreased from 2000 to 200 tons

Mikhail Gorbachev the then president of Sovient union of Russia tried to liberalize soviet union from the clutches of COMMUNISM and to bring people out of  avert poverty but all his efforts was in vain.

Mikhail Gorbachev

During the same period, In East Germany where Russia colonized and imposed COMMUNISM went under adverse poverty. People in east Germany fled to west Germany where free market was followed.Both professionals and laborers fled out of east Germany and into west Germany.

To control this exodus Soviet Union of Russia built a huge wall which was famously called as BERLIN WALL.

Berlin Wall

In the late 1989 people thronged unto berlin wall and collapsed it.  And in a few years Gurbachov appeared in a national television and announced the break up of the sovient union.

Mean while China too faced severe crisis. The then china primer Deng Xiaoping it successfully shifted its focus from Culture revolution to development by bringing in free market policies., SEZ’s which were ideally against the principals of Mao. This act of Xen Xiapongg liberalizing china from the clutches of communism changed the destiny of China.

Deng Xiaoping

And In India, which was once a crown jewel of Controlled based economy, had to change track as it went under a huge BOP isssues. Reformist then FM and now PM Dr. Manmohan Singh and The then PM Narasimha Rao changed the idea of India, once and for all.

The end of 19th century gave a death blow to Marxism and communism across the world.

The fight against the communism all started with the IRON LADY Margaret Thatcher. Taking over a ailing Britain which was burning under trade unions she stood her ground,  broke the unions and brought back the entrepreneurial energy into Britain.

Privatizing loss making public sector companies showed the world the beginning of the end of Communism.

Her political philosophy was DEREGULATION, PRIVATIZATION, flexible labour market and reducing power and influence of trade unions.

Without this grocer’s daughter the world over would have been ailing under  communism.

Long live THATCHERISM.

(Today, India requires a leader with the calibre of Magret Thatacher. )

Standard
Economics, India

R.I.P – Small and Medium Enterprises, Tamil Nadu

Thanks to the rising power cut, most of all the small and medium industries in Tamil Nadu have already shut shop. This year, there has been a significant reduction in industrial output as well as agricultural output from T.N.

Kanchipuram the famous destination for silk sarees, Tripura the famous destination for T-Shirts et all are waiting endlessly for power.

NO CURRENT, NO MANUFACTURING

To add insult to injury, the activism against industries, factories, dieing units are ensuring the final nail is punched on the coffins of TN industry and put to rest once and for all. . My communists frineds who are all in the Facebook,  happily forgetting it as an AMERICAN CORPORATE and accessing it in their MADE IN CHINA laptops/ipads/iphones etc and who patriotically rise their fist against capitalism and target small and medium industries in Tamil Nadu and ensure nothing would ever be stamped with MADE IN TAMIL NADU/INDIA, please do listen – Already there are huge influx of products from china and pushed into the hands of all tamil people with the stamp MADE IN CHINA.

Have a look at the  ‘kosu ‘ bat, the mobile phones which are owned by poor tamil famers/people or even the smart phones like Apple and even cheap grinders, mixies, toys et all…ah forgot even the solar panels doesn’t have the tag MADE IN TAMIL NADU , they are all MADE IN CHINA.

MADE IN CHINA
Naanga Jaaychitommm!!!

I never mind Sterlite getting closed. Since Vendantta has enough acumen to shift their factory to china but do you think the small dieing units, the small power hand loom units have acumen to shift their factory to china or any where else in India for that matter ?. Dear Facebook communist friends..they have no where to go. ( A point to consider – Doesn’t Indian Railways often cause accidents and provide only ‘ compensation ‘? Shouldn’t they be asked to shut down?)

FREE, FREE, FREEEEEE
FREE, FREE, FREEEEEE

But then never worry. Tamil Nadu will now become famous for free TV, free mixie, free grinder, free laptop and all the more important free electricity(not kiddding its there in the promises). Coupled with 100 days of labour provided by the center with the most efficient PDS system, and forgot to mention the various ‘RIGHTS’ –  Right to food, Right to Education etc added with now famous  ‘ AMMA HOTELS ‘   will ensure every tamilan will now be given hand-to-mouth survival. Yes the future is here.

Govt shall give,  MADE IN CHINA Kanchipuram pattu sarree, MADE IN CHINA dindugal pootu for FREEE and we shall have 100 days of labor and eat to our full in AMMA Hotel.

Well, the govt promised that they would work on war footing but never imagined this was the plan.

So, the message :  R.I.P – SME, TN.

R.I.P – TN Industry

Hell!!, even the coffin would be MADE IN CHINA!!

Standard
Economics, India

The next biggest reform since 1991.

1991 – the year that changed the way we think, work, buy and sell once and for all . Scrapping up of the license raj and opening up of the economy was all spearheaded and executed by the duo – Manmohan Singh and  Narasimha Rao. But still MMS has been regarded as the God father of reforms and was called as the Deng Xiaoping of India. Today the Prime Minister MMS has been through a tough time and has been criticized across the spectrum. But he has silently scripted out a revolution that would change India once and for all – Direct Cash Transfer and Aadhar.

Aadhar and Direct cash transfer will create a new cash less economy in India. A new way of transaction is all set to be unleashed.  Aadhar which is linked to a bank account would help people to do transaction through their mobile phones itself. This would unleash a new unfound opportunities. There are huge number of people who are inaccessible,  after aadhar all those people would become available in touch of a button. This would create new opportunities, new business models would come up creating more jobs so on and so forth.

Along with it, FDI in retail has been passed through. And am so sorry for all the communists who have equated FDI in retail == Walmart. Well, they are missing the whole bus. With Aadhar and mobile,  e-commerce and m-commerce is going become more easier than ever before. This would throw in whole a lot of opportunities for companies like Amazon, Flip Kart and dozen other e-commerce firms. More over now they got the opportunity to raise funds from the foreign banks, foreign equity players et al. This would set up the tone for building cold chains, refrigerated vans, modern warehouses in India.

Second, there is a FDI in Pension and Insurance. Today the insurance companies face lot of challenges to reach the consumer. They have to do it, through lot of middle men who erode their margin and reaching the end user has been cumbersome. Now once your bottom of the pyramid people get empowered with Mobile+Aadhar it would  become easy for them to subscribe themselves to insurance and pension plans of their choice. With FDI allowed in it, you could now expect whole a lot of competitions in this segment which would open up new choices for the people.

And then today subsidies are given to the companies for selling their products under price especially in oil. This under pricing of a commodity seriously restricts people from innovating new products. Say if a litre of petrol is cost around Rs100 but because of subsidy it gets sold at Rs50 and you have a new bio diesel that costs only Rs70 but just because petrol is getting subsidy it would not get sold. So innovation gets hampered. More over, with DCT it would become possible to target people who are in need of subsidy rather than providing it to all creating a hollow in current account deficit.

More importantly Aadhar could give out tacit information about people in bottom of the pyramid like things they buy, when they get insurance and when they will get their harvest all based on their cash flow . This tacit information would give out the data using which analysis can be done for prediction etc.

And then the new National Investment Board which has been constituted for clearing big ticket investments is a reform in itself. This would help clear up the business proposals in quick way and thus help to make India a business friendly nation and an attractive investment destination.

//

Standard
Economics, India

Providing security is good economics.

Without the sense of security, people would not engage in buying/selling or do any  kind of meaningful, lawful activity that could drive up the economy. A business would not invest in a area that is prone to maoism/naxalism, people would migrate out of such lands and no economic activity would arise in such places. People live, breath, buy, sell and do activities putting their trust on hope and security. First, they trust that they are secure and second they hope that even if there are some issues, justice would be delivered unto them and they would be protected. But today,  the various rape incidents have shaken the very foundation of our security and safetyness. It has made many of our women to feel insecure. If our women and youth feel they are insecure they would not do any worthwhile activity and that would drive our economy down. Already there seems to be a mass exodus of women from Delhi.

There are 3 things that should be done to recover this .

Police – the people who are supposed to protect us have become the puppets in the hands of the government. Their transfers, promotions et al fall at the feet of our dear ‘corrupt ‘ politicians. This has led to greater security for politicians and no security for poor common people. In Tamil Nadu, poor people lands were abducted by politicians with the help of the police. And it no more breaking news to see the way police men step out of their profound duty under the pressure of political class. So the first step in order to provide proper security would be to free the police dept from the clutches of the govt.

Judicial – Our judiciary has been framed with the principal that JUSTICE DELAYED IS JUSTICE DENIED. But there are tons and tons of cases pending in our courts. Most of the privileged people find out loop holes in our law system and often escape out. There is absolutely no point in having too many laws and tough laws but nothing gettting executed. Prior to strengthing of rape laws et al, our judiciary should be reformed and the delivery of justice should be fast-tracked.

Technology – I guess preventing such heinious crimes from happening is far more important than having tough laws and fast-tracked judiciary. Had we had proper video-survelliance system with artificial intelligence that would alert the police, it might have saved a innocent girls life.  Today our police men are equipped with 19th century infrastrure and technology and have to prevent the crimes of 21st century. Thats a tall ask. Private sector should be encouraged to bring out state of the art technology through subsidies and low tax to help police prevent such crimes from happening.

Remember until and otherwise sense of security is provided people might not involve in any positive economic activity.

So proving proper security is always good economics.

//

Standard
Economics, India

2012- a year that went by.

2011 – A year of SCAMS, the year in which Anna Hazare became an idol, the year in which UPA bitted the dust, the year of policy paralysis, high inflation and low industrial outputs which left the whole economy in the doldrums.

India Inc entered the year 2012 with never ending woes, gloom and distress

2012 – The year got a head-start with the supreme court cancelling out 122 pan india telecom licence that was given away in a controversial way, putting the whole India Inc in a quagmire.

Political thinkers, economic intellectuals were pinning their hopes on Budget 2012. As it was coming after the (U.P) elections. Reason was that,  a win for congress would have sent out a positive wave across party cadre, which would have helped in getting a bold budget. Plus, it was the election in which Gandhi scion himself put his entire weight on.

But, every thing went awry. Rahul fell at the charm and grace of Akilesh Yadav. And the Budget 2012 had absolutely NOTHING for the industry to cheer about and worst GAAR was tabled and Vodafone was asked to pay tax retrospectively. This put the entire industry and investors to loose faith on India and India’s growth story was in danger. Meanwhile, Dinesh Trivedi was asked to step down as Railway Minister and the rail fare price rise was reversed. Policy paralysis continued.

PM Manmohan Sigh came under severe criticism for his failure to lead from the front. And even Time magazine carried a cover page citing MMS as an Underachiever.

RBI decreasing Repo rate and finance ministry postponing implementation of GAAR gave some breathing space for India Inc.Then on June 15th, Pranabha got nominated as a candidate for president post. The political think tank of congress came together and out maneuvered the dangerous Mamata and ensured the safe passage of Pranadbha into Raisina Hills. This win was almost manna from heaven as it came after series of scams and  embarrassments for the congress.

As soon as Pranabji vacated the North Block, MMS swung into action. He moved swiftly on GAAR and also gave specific instruction unto the then financial secretary to REVIVE THE ANIMAL SPIRITS WITHIN THE ECONOMY. This few words from the silent man, resurrected the hope on India.

But then hell broke loose in the form of Coal Scam. This time it was at MMS himself. And BJP didnt loose any time to attack MMS and demand his resignation. Almost the whole of the monsoon session was washed out. The hope of animal spirits revival was at the dock again. Something was needed to be DONE to ensure hope remained intact.

It was under such condition, on Sept 14 the cabinet under MMS cleared the following

1. FDI in multi brand retail.
2. FDI in aviation.
3. FDI in Insurance and Pension.
4. Increse in price of Diesel.

This sent out a clear message that the government was serious about reviving the animal spirits. This even made @namo to tweet that MMS became a Singham on a single day.

Lo and Behold, it was one more time MMS showed spine and spunk and stood his ground on FDI in retail, leaving tantalising Mamtha to walk out of the alliance.

This lead to the creation of this equation.

UPA 1 : Left : Nuclear Deal = UPA II : TMC : FDI in Retail.

The congress came together on FDI in retail and political think tank in the congress ensured it pass through the vote in both houses of the parliment.

And then even the Banking Bill and the Companies bill passed through the parliment. This was the ultimate best. Since it showed, that we got past the policy paralysis.

Yes!! animal spirits got revived certainly and even we withstood the mayan calendar dooms day.

But we had to close 2012 with a sad note on the Delhi gang rape incident. It sends out shiver into our bones on the audacity of the crime and the safety of our girls. It was even more sad to know that the girl passed away despite her brave fight. She was a fighter indeed.

As the year 2012 comes to an end and as the new year is beginning, here I am –

WISHING YOU ALL A PROSPEROUS, HAPPY AND A SAFE NEW YEAR

Standard
Economics, India

Makers economy and Manufacturing 2.0

Two decades before, researching on a topic would have taken up-teen number of visits to the library, taking more time and more cost. So consequently making new products / service too costed more and took more time. But with the advent of the computer and internet, trying to learn a new skill or to conduct a research isn’t a brainer any more. Consequently, making new products has become easy. Especially, the web based apps. Today, people with DIY spirits and with a meagre capital have created web apps which has disrupted industries and created products beyond our imagination.

And, today this revolution is all about to enter the Manufacturing sector. With the advancement of Robotics , AI programming and especially 3D printing, manufacturing is all set to undergo a sea change. Once 3D printing is in, it would provide an opportunity for ordinary people to produce new innovative products in no time and almost at no cost. This would surely set a MAKERS economy in the manufacturing sector creating Manufacturing 2.0.

Standard
Economics, India

Banks & Kingfisher

Poor people save their hard earned money in their bank accounts. Banks job is to multiply it at a said interest rate. To do so the banks, takes the money of the poor people and grants it as loans for commercial establishment or for personal uses at a higher interest rate. In the case of commercial establishment it is used for starting a business or to scale it up and produce value to the economy by generating more jobs. In case of personal use it used for personal upliftment and thus produce value to the economy. Then they are tied up with a moral responsibility to pay back their loan in the said time and at the said interest rate. Failing to do so, would put the banks in a quagmire. Its cash reserves would get depleted and its capability to provide further loans to needy and deserving people would diminish. So the banks are entrusted with a responsibility to provide loans to only needy and deserving people.

Today, Kingfisher is in absolute mess. Banks have lended more that Rs 7000 crore rupees. This despite after having 14000 crore debt written off.  It has made an operational loss of 1027 crore. This company has never seen profit since its inception. The loss since its inception would be around 6000 crores. It owes a sum of 900 crores to all its fuel suppliers. It has no assets to sell or to mortgage off.  To sum it up, kingfisher stands tall as a case study of total mis-management. Despite all this banks have lended money to this airline and the miserable fact is they have given by taking its ‘ brand ‘  as collateral which is an intangible asset.

Banks having given Rs 7000 crore as loan to this airline have seriously kicked away the opportunity of many deserving and needy small and medium companies to borrow. Had this Rs 7000 crore was given to deserving people, much needed services/ products / infrastructure would have been created which would have provided more value to our economy. Say if there are more such ‘KINGFISHER’ stories then our whole economy might come to a standstill. Since banks would face bankruptcy and would require govt stimulus (i.e) tax payers money.

Today, with globalization we are entering into a situation where lets say a management of “AASSS-HOOOLE” bank would be interested to enter a new business in health care/mining/services. So what it does? It influence’s the board of the bank to provide huge amount of money at a least possible interest rate for its new venture. While the rest of the world might have to go through stringent bureaucracy, have to provide a pile of documents, walk 1000 miles, wait 1000 hours only to be given a pittance at an unusually high interest rate – This is an absolute inequality. This is what happened in the history. When the PSU banks would provide huge sums of money to PSU companies and the rest of the country had to wait endlessly. And then they had to resort to the local marwari for credit.

So, it calls for proper regulation of the banking sector. Substantial amount of money should be set aside for SME’s, start-ups and to the credit demands of the common man. When substantial amount of money is given as loan it should only be given after a complete scrutiny.

And now coming to the kingfisher fiasco. Kingfisher airlines must be saved and Vijay Mallya need not and should not be saved. Banks should confiscate the shares of Mallya and terminate the existing management. And a new entrepreneurial management should be put in place who would be provided a free hand in creating a turn around. And then once the turn around is done the banks should sell off their shares and get their monies back.

This is the right time for us to say that our country is not a place where rich gets richer and poor gets poorer but rather a place that is ‘survival of the fittest‘ and it is the ‘ land of opportunities.

Standard