The Bright side of Indian Economics

Change Is Our Only Hope In The Next Decade

IN THE SEASON OF SCAMS AND PARLIAMENTARY paralysis, it is easy to take a glum view of the future. Ratan Tata proclaims India a banana republic; institutions of the state lack integrity; a community is on warpath demanding lower social status; a region wants to separate from a state; workers of the world unite only in killing one another in eastern India; insurgency and counter-insurgency shed innocent blood; and even vegetables make you cry.

Yet, there is much to be hopeful about, if only you lift your head out of the continuous present in which contemporary culture dunks you and keeps you submerged. This Limping out of the Asian crisis at the turn of the century, few would have thought that India would accomplish what it has over the last 10 years. If we could achieve so much these last 10 years, why should the next 10 be bereft of hope?

Change must come to a number of different areas. The potential exists, resources are aplenty, only the will to act is missing. Political funding must become transparent and accountable. Every rupee that a party or its functionary spends must be traceable to its source. The current non-institutional form of mobilising resources for politics is the root of corruption. Politicians make money for themselves and for their parties through loot of the exchequer, sale of patronage and extortion, all with the collusion of civil servants. Other democracies fund their politics, but without such comprehensive depravity. This can and must change.

The legal system cannot continue to be dysfunctional. What prevents us from appointing 100,000 new judges over the next 10 years, to clear up the backlog of cases that creates a perversion of justice called undertrial prisoners, and shrink the life expectancy at birth of any piece of legislation to 18 months till disposal of the final appeal? Our police forces are sadly undermanned, poorly trained and politicised. Overhaul them, we must.

India faces a desperate shortage of talent. We need a revamped, expanded education system, a parallel stream of clearly defined, certifiable skill modules that offer young people the possibility of continuous skill upgradation all the way to a professional degree. We need a political culture that stops patronising power theft, and instead, encourages payment of realistic user charges to transform all infrastructure deficit into a huge growth opportunity. And we need to shed our current fear of technology, to realise its full potential whether in inclusive banking or education or tele-medicine. Regulatory wisdom in India comes twinned with geriatric suspicion of technology, scuppering a universe of possibilities.

If there is one thing that we need to carry over from the decade that is coming to a close, besides the philosophy of inclusive growth, it is the slogan, Yes, we can!

Till next time, wish you the very best in the year ahead 2011.

- Prasad

Small economies, big headaches

Another financial storm, another bailout. In May, it was Greece. Now, it’s Ireland, an economy that accounts for just.0.3% of world GDP. Over the past few weeks, Ireland has been the central figure in an unfolding tragi-comedy . The EU was pressing Ireland to accept a rescue package. Ireland insisted it didn’t need one. It has finally settled for a bailout estimated to cost €80-90 billion.

The drama has not impressed the financial markets. There have been huge sell-offs in several markets, including India. You have to wonder how a country , which registers as a place where men sport skirts, can give the jitters to the world economy.

Ireland is being mentioned in the same breath as Greece. But the two situations are different. In Greece, the EU bailout was necessitated by the refusal of private investors to provide funds to the Greek government. Ireland contended that its government finances were fully funded until the middle of 2011. And yet the EU has pushed funds down Ireland’s throat. Why?

The immediate problem in Ireland is with banks, not with government finances . In 2008, at the height of the subprime crisis, the government assumed full or partial ownership of three large banks and guaranteed the liabilities of the entire banking sector until the end of 2010. The guarantee was recently extended up to June 2011.

But these measures have not stabilised the Irish banking system. Bank losses from real estate have mounted. Corporate deposits have been fleeing Irish banks. Ireland’s banks are on ventilator support — they now survive on liquidity provided by the European Central Bank.

The markets rightly believe this can’t go on. Today’s banking problem will become tomorrow’s sovereign debt problem . The banks will require massive infusion of funds. The funds will have to come from the government. With public debt at 100% of GDP, the government will find it difficult to borrow. Yields on Irish government bonds have gone up by over 200-basis points in recent weeks. That raised the spectre of a default on Irish government guarantees of bank debt.
Should this happen, two consequences will follow that could prove lethal to the world economy. One, there will be a run on banks in other troubled economies such as Portugal and Spain. Two, banks in UK, France and Germany will incur huge losses on the substantial exposures they have to banks in Ireland.

As with Greece earlier, saving Ireland is all about saving banks elsewhere in the EU. A more accurate analogy would be with the Iceland crisis in 2008. In Iceland too, banks went bust leaving other EU banks heavily exposed. The operative word is ‘contagion’

Any more bailouts anyone ?

Emerging economies as saviours ?

OVER the past two years, industrial countries have experienced bouts of severe financial instability. Currently, they are wrestling with widening sovereign-debt problems and high unemployment. Yet emerging economies (EEs), once considered more vulnerable, have been remarkably resilient. With growth returning to pre-2008 breakout levels, the performance of China, India, and Brazil is an important engine of expansion for today's global economy.

High growth and financial stability in EEs are helping to facilitate the massive adjustment facing industrial countries. But that growth has significant longer-term implications. If the current pattern is sustained, the global economy will be permanently transformed. Specifically, not much more than a decade is needed for the share of global GDP generated by developing economies to pass the 50% mark when measured in market prices.

So it is important to know whether this breakout growth phase is sustainable. The answer comes in two parts. One depends on EEs' ability to manage their own success; the other relates to the extent to which the global economy can accommodate this success. The answer to the first question is reassuring; the answer to the second is not. While still able to exploit the scope for catch-up growth, EEs must undertake continuous, rapid, and at times difficult structural change, along with a parallel process of reform and institution building. With government policy remaining on course, we should expect a gradual strengthening of endogenous domestic growth drivers in EEs, anchored by an expanding middle class. Combined with higher trade among them, their future is one of reduced dependence on industrial-country demand, though not a complete decoupling.

Distribution as well as growth matter. EEs still need to manage better their growing domestic tensions, which reflect rising income inequality and uneven access to basic services. A failure on this front would derail their strengthening domestic and regional growth dynamics. This's better understood today, with distributional aspects of growth strategy being firmly placed on EEs' policy agendas.

While EEs can deal with the slowdown in industrial countries, the financial-sector transmission mechanism is more challenging. Today's low interest-rate environment is causing a flood of financial flows to EEs, raising the risk of inflation and asset bubbles. The hiccups in western banks have served to disrupt the availability of trade credits, and, if amplified, could destabilise local banks.

These risks are real. Fortunately, several EEs continue to have cushions and shock absorbers. Having entered the 2008-09 crisis with sound initial conditions, they are nowhere near exhausting their fiscal and financial flexibility — and hence their capacity to respond to future shocks. Overall, EEs are well placed to continue to navigate successfully a world rendered unstable by crises in industrial countries. Yet, again, the decoupling is not complete. A favourable outcome requires industrial countries' ability and willingness to accommodate the growing prominence of EEs. The risks here are significant.

The flow of knowledge, finance, and technology that underpins sustained high growth rates in EEs is closely linked to an open, rule-based, and globalised economy. Yet this global construct comes under pressure in an environment in which advanced countries have stubbornly high unemployment and bouts of financial volatility. Hence, such continued openness cannot be taken for granted. Political and policy narratives are becoming more domestic and narrow, while the global agenda and the pursuit of collective common interests are having greater difficulty being heard. These challenges will grow.

Managing an increasingly complex set of transnational connections is an even bigger challenge in a multi-speed world that is being turned upside down. Such a world needs better global governance, as well as overdue institutional reforms that give EEs proper voice in global institutions. In the absence of such changes, the global economy may bounce from one crisis to another without a firm hand on the rudder to establish an overall sense of direction. The result is what economists call Nash equilibria, or a series of suboptimal and only quasi-cooperative outcomes. Where does all this leave us? EEs will be called on to play an even larger role in a multi-speed global economy characterised by protracted rehabilitation of over-extended balance sheets in industrial countries. Left to their own devices, they are up to the task. But they do not operate in a vacuum. EEs' ability to provide the growth lubrication that facilitates adjustment in industrial countries is also a function of the latter countries' willingness to accommodate tectonic shifts in the operation and governance of the global economy.

Let us hope that these global issues receive the attention they require.

A Pill For Bad Memories - Pop it, forget it

Its been a long time no action from my side...well work has kept its toll on me lately...but yes that doesn't mean I stop my thoughts to flow on the web. This thought is a killer which wont kill you but yes will surely get you outta of the mess.

Our mutual interaction tends, given that we are a species as complex and complicated as nothing else, to produce both feelings of euphoria and acute depression. The latter, however, may have a cure at hand: an antidote for bad memories. An international team of scientists, led by the University of Puerto Rico, has reportedly discovered a drug that can lessen the painful impact of bad memories. The protein called Brain-Derived Neurotrophic Factor (BDNF) works by ‘flooding the mind with feelings of security and safety'. A dose of the substance is supposed to reduce fear and anxiety making us all happy and contented human beings, dispensing with the services of spiritual gurus.

There are other benefits. The heartbroken, by way of amorous matters or otherwise, could find prompt relief. Then, it could help us, in India, get over several issues. The Partition, for example. All we need to do is get an Indian pharma company to make a generic version of the substance and produce it on a massive scale. The resultant pill or syrup could then be supplied, through all available private and public sector means, to the whole population. And, of course, we supply it in requisite doses to neighbouring countries.

Once it is consumed, we will be so full of the milk of human kindness, all mutual hostility so utterly forgotten, that we will be trampling over each other to shower kisses and hugs on our previously-hated ones. The fringe benefit will be that the fundos on either side, both the well-bearded and the saffron sort, will, in the Marxian sense of things, wither away and die. That, as some of us might aver, is a consummation devoutly to be wished for. Irritating sceptics, however, might try to point out that this whole culture of having a pill for everything is somewhat odd, or perhaps even undesirable.

They could be force-fed the pill on a priority basis. And then we can take another pill so that all of us can forget anything nasty happened.

Hahaha....

Till next time...let me pop the pill and tell you its feedback !

Finding true love

THE notion that finding a perfect match is a science, has been known to Indians for millennia.

Complex calculations of the relative positions of stars in the candidates’ horoscopes, even more convoluted research into their familial prospects and assets, besides of course, close scrutiny to assess personal attributes, have always been de rigeuer pre-nuptial activity. The cumulative information and practical wisdom that reposes in the heads of people traditionally charged with finding alliances in India, have proved to be convenient and speedy shortcuts for marriageable offspring and anxious parents alike, with classified matrimonial advertising adding a 20th century dimension. Now, after years of seeking true love via pop quizzes in lifestyle magazines, the west has finally caught on that the perfect mate can be obtained less by mastering the art of love than by analysing empirical evidence. It stands to reason. If Netflix can recommend appropriate movies for customers based on an algorithm that analyses previous choices, why can’t singletons find their possible mates using scientific markers? Online, that too.

While the idea of romantic chemistry via novel formulae devised by websites offering ‘focussed’ choices seems more dependable than singles bars, they do not come cheap. One service, for instance, that has based its USP on the ‘fact’ that women are attracted to the smell of men who have immune systems very different from their own, charges nearly $2,000 to bolster their subscribers’ chances, by taking deep background checks to a new level: not only credit and criminal records but also DNA profiles! Some sites delve into matching characteristics and traits, others compare and match family, social and educational backgrounds, interests and aspirations. The underlying principle is obvious — finding a mate has to be more exacting than finding a date.

Could this be the next lucrative outsourcing idea?

Why can’t we buy basmati for Rs 40/kg?

RICE COMPANIES are toasting a reported decision by the government last week to let basmati be exported at a reduced price tag of $800/tonne or close to Rs 40/kg. But if foreign consumers can be supplied this luxury food so cheap, how come you and I are paying through our noses for it? I'd help you join the dots. Logically, if basmati can be exported to Europe, Saudi Arabia, USA and Iran at just Rs 40/kg, we should be able to buy it for even less in local wholesale markets, right? Wrong. Because this price does not exist. Cheap basmati is an oxymoron. The cheapest basmati variety currently is Pusa and no rice mill in Haryana and Punjab is selling it for less than Rs 60/kg or $1100/t. Add retail margins and you have an MRP of at least Rs 75/kg, which is what we pay mostly. The top-end basmati variety Pusa 1121 is priced Rs 75/kg at factory gate or $1500/t, which makes it the world’s most expensive rice. Moreover, if Indian consumers are willing to pay two times more for what basmati fetches abroad, surely it would make more sense for our canny brands to concentrate on the more profitable domestic market instead of exports. But they are not. In short, India’s new rock bottom basmati export price is the stuff of consumer fantasies. There is no sign of it in the marketplace.

So why did the government agree to drop basmati’s threshold price in the world market for boosting business at a time when the country is short of 15 million tonnes rice? The answer to that lies in the magic word Pakistan. The rice industry has figured that “threat from Pakistan” is the easiest phrase to motivate or explain away any government decision. And it worked like a charm once again.

Basmati exporters say it is necessary to bring down the MEP to help them wrest back the global market share they lost to Pakistan. Exporters also argue that while some varieties such as Pusa 1121 are incredibly expensive, others such as Pusa Basmati can’t cross the $1100-barrier. But they omitted to mention three vital facts. One, though they claim to have lost market share, India’s basmati export has actually spurted sharply in the last six months. Two, Pakistan has always priced itself at a 20% discount to Indian basmati. So if the average price in Karachi is $900/t, India at $1100/t is par for the course. Three, there is no basmati available in India for $800/t. Meanwhile, the decision is certainly troubling for us taxpayers and consumers. For more than a decade now, we have been funding research, export subsidies and legal costs of protecting basmati in the world market all in the name of safeguarding a premium and heritage product. But now it seems the product has lost its premium positioning. At Rs 40, many other non-basmati varieties cut the grade too. So it’s time taxpayers question government spend on basmati. Availability of rice is an even bigger reason for worry in this drought year. Rice companies have often argued that exporting one tonne of basmati earns enough dollars to import 2.5 tonnes ordinary rice. Not any more. If the Rs 40 price is correct, then exporting one tonne basmati allows India to import less than a tonne long grain rice today. If India turns net rice importer, we won’t be able to make good the shortfall.

Consumers have a right to be upset with any export promotion scheme that allows food to leave the country at prices which are not available to them. At a time when parmal rice is retailing for Rs 40/kg in most metro cities, if the government is convinced basmati is also available at the same price, it has been horribly misled. Either that. Or basmati brands are charging us extortionate prices.

Foolish chaps....

Will post more interesting observations as and when I find some.

Cheers !

Prasad

An interesting Ad

The Budget and People Like Us

Ever since I started earning for myself, I have followed, at least attempted to follow, Budget proposals closely. And the one constant has been this: whatever the announcements, by whoever, it invariably never ever makes any positive difference to my own budget. I don’t gain a penny, but lose many.

Amazingly, whether it is Manmohan Singh, Yashwant Sinha, P Chidambaram or Pranab Mukherjee, after no Budget have I, or some People Like Us (PLU) that I know, rubbed two hands in glee and said, ``Wow, this year’s gonna rock for us.’’

Somehow, in the end, we end up spending a bit more than the last year. If LCDs become cheaper, the cable guy jacks up his rates. If tea becomes cheaper, milk gets dearer. If cars cost less, petrol costs more. If I save Rs 3,000 at the end of 365 days because the income tax exemption limit has been raised, I spend Rs 6,000 more because transportation charges have gone up and my subzi walla says he’ll have to take a little extra for that tomato, potato, bhindi and lauki.

For the bulk of PLU, especially those employed by others, which is almost all of us, the bottom lines, more or less, remain what they are and life goes on in exactly the same manner after the Budget as it did before it. If anything, you should be happy when the Budget guarantees status quo. Because, come to think of it, the Budget seldom has anything for the PLU.

So you peer close to the TV as the finance minister makes his grand speech, quoting from everybody under the sun – from Gandhi to Mandela, Kabir to Nanak, saint to scoundrel – to make the boring exercise sound interesting. And you look busy as hell as you turn away the kaam wali bai when she asks if the Budget will make any difference to her life. You don’t take the unimportant calls, and the important ones you try to cut it suitably short, making sure the sound on your TV is loud enough to reach the guy on the other side of your phone. You skip your breakfast and delay your lunch. And you discuss with everybody the various things that were announced by the FM but are actually of no use to you – like branded jewellery being fully exempt from excise duty.

But when you get out of your office at the end of the day – with most of your proposals on hold because your boss, too, was busy with the Budget – and hit the hard road home, you realize nothing has changed for the better. The edgy cab driver suddenly charges you more because fuel prices have gone up, the pirated CD you pick up is rented out at Rs 5 plus and the gardener you pass by makes a quick request for a wage hike because he’s just heard Budget se bhao badh gaya hai.

And so, what did I gain from Pranab da’s budget? Zilch. As usual. But then that’s always the story with the Budget and People Like Us. Why do I keep forgetting!

-Prasad

Watch out Wall St villains, here comes Obama!

A NEW administration is taking shape in the US. One of its first tasks will be to find ways of tackling the economic slowdown and ensuring the long-term survival of its financial system. Some of the steps taken so far by the current administration, represented by treasury secretary Henry Paulson, have come in for criticism for providing a lifeline to unrepentant and spendthrift financial institutions. So, what will the new administration do that’s going to be drastically different?

For one, do not expect anything radical too soon. The US system works in curious ways, but cuts across party lines when it comes to confronting national crises. Therefore, the Obama government is sure to continue with the work of implementing and monitoring Paulson’s $700-billion TARP package. But—and this is the best part—do not for a moment think that the Dick Fulds of this world have been forgotten or pardoned. Once the new administration feels the time for crisis management is over, it will go after all the people it thinks are responsible for the current meltdown—the guys who sold the mortgages to families that clearly did not have the capacity to repay, banks which then created virtual pyramids out of these simple loans, rating agencies that put their seal of approval on these instruments, bank CEOs who lulled shareholders into a false sense of comfort by repeatedly lying to them about their company’s failing health and impending demise. The compelling imagery of once-powerful CEOs in handcuffs (a la Enron, Boesky, et al) is all too potent and depicts in a single, two-dimensional frame the robustness of the American judicial system.

This kind of action will not only be expected but demanded from the Obama administration. There will be tremendous political pressure to go after the Wall Street villains because of two over-riding reasons. One, the popular vote seems to have communicated resoundingly that it does not view the Republican Party’s close links with the financial buccaneers too kindly. And, two, it does not like being weighed down by the uncomfortable burden of having to bail out their derring-do. Plus, and this is important, there is this uncomfortable vision of many CEOs landing safely with multi-million-dollar bonus parachutes while middle America hunkers down for an extended period of unemployment and lost wages.

Here is the most unsettling image: Lehman CEO Richard Fuld picked up a $22-million bonus in March 2008 even as the firm was struggling to stay afloat and would eventually go bankrupt six months later. There are some other CEOs who could be in the firing line too. Merrill Lynch CEO John Thain, who merged his bank with Bank of America, received a $15-million cash bonus on joining the bank in November 2007. Goldman Sachs showed $20.2 billion as payroll costs in 2007! Goldman Sachs chief Lloyd Blanfein earned about $68 million bonus in 2007, of which about $27 million was hard cash. Some CEOs read the writing early enough to forsake their bonus - Bear Stearns CEO James Cayne gave up his months before the firm was absorbed by JP Morgan Chase and Deutsche Bank CEO Josef Ackermann has also publicly declared that all top executives of the bank were surrendering their bonuses.

This could also lead the new administration down another possible, and interesting, path. There is already growing demand that the government re-examine the salaries of its regulators, who are supposed to keep a hawk-eye on the multi-million-dollar baggers. Part of the reason behind this call is that these lower salaries keeps the talent away from the regulators — guys who will be able to recognise a scam or a notice a danger signal before it becomes manifest to everybody else. Or, somebody who can understand the arcane and complicated instruments conjured up by highly-paid quants in banks and hedge funds. There is the also the question of motivation. A columnist recently wrote about how junior level officers from the US central bank (Federal Reserve Bank) and the markets watchdog (Securities and Exchanges Commission) would be completely overwhelmed by the complexity of the instruments they routinely had to vet and approve.

Some of the inequities come through when you juxtapose Fuld’s bonus with the salary earned by, say, Fed boss Ben Bernanke. According to a copy filed by news agency Reuters in October: “Ben Bernanke may be one of the most influential people on the planet right now as he heads the US Federal Reserve’s efforts to contain the crisis. But his $191,300 a year looks like loose change when compared with the near $500 million earned by Richard Fuld in his eight years in charge at Lehman.” The other powerful central bank in the world - European Central Bank - does not pay its top man Jean-Claude Trichet more than 350,000 euros (close to $440,965). And, at that, his salary is not necessarily the highest among all the European central banks. For instance, the Italian and Belgian central bankers earn more than Trichet. Even Bank of England’s Mervyn King probably earns just marginally more than Trichet.

One can only hope that some ripple waves from that action also wash up on Indian shores.

Path to nowhere leads to success...

I was a gung-ho liberaliser when economic reforms began in 1991. At the time, a sceptical politician asked me which sectors would benefit most. I replied it was not possible to predict the winners. In that case, he sneered, why embark on a path with no destination.

The answer is clear today, now that India has averaged almost 9% economic growth for several years. This success required a path which, by design, had no destination. The reforms tore down the planned road and opened entry into a million possible roads, facilitating ideas that no planner had dreamed of.

Before 1991, no planner visualised a future economy excelling in computer software, business process outsourcing (BPO), R&D, or brain-intensive manufacturing. But deregulation plus global connectivity created a million new possibilities, and innovative risk-takers did the rest.

India is globally famous for computer software. Yet government policy hobbled this industry for decades. Narayana Murthy of Infosys says it took almost two years in the 1980s to get a telephone connection and a licence to import a computer. Politicians and trade unions opposed computerisation as a threat to jobs. The 1993 bank-union agreement, two full years after liberalisation, nevertheless provided for bank branch computerisation at just 0.5-1% per year, meaning full computerisation would take 200 years!

Without widespread computerisation, software engineers could not develop high skills locally. But Indians who went to the US became the whizz kids of Silicon Valley. “Body shopping” followed — foreigners hired Indians to work on software projects in the US. India’s software skills were honed in Silicon Valley and then shipped back. No planner could have planned this: it was the spontaneous outcome of enterprise and global connectivity

Similarly, no planner could have created BPO. Nobody predicted in 1990 that thousands of foreign companies would move back-office and technical services to India. General Electric was the first to experiment with the idea. It succeeded so well that MNCs galore followed suit.
Initially, companies thought only low-tech jobs could be outsourced, but Indians quickly graduated to the most skilled tasks. Moody’s and Standard and Poor’s took a long time to upgrade India’s credit rating to investment grade, yet have shifted some of their own rating operations to India.

India has become a global R&D hub. Here too, General Electric led the pack. Renault-Nissan is partnering Bajaj to make a small car that can beat Tata’s Nano. The R&D has been entrusted by the Franco-Japanese giant to Bajaj. India’s boom in brain-intensive manufacturing was unplanned. Most people thought India would follow the path of labour-intensive exports pioneered by East and South-East Asia. India failed dismally here, thanks mainly to rigid labour laws. But, to everyone’s surprise, India became world class in brain-intensive industries like pharma and automobiles.

Indian pharma is now a global player, and all top companies have become MNCs, acquiring companies across continents. This was made possible after India agreed to international patent rules, something the government opposed tooth and nail and was finally forced to accept in the Uruguay Round of 1995. This failure of planned strategy was the beginning of Indian success. Indian pharma companies initially feared they would be wiped out, but soon found that integrating with the global economy was an opportunity, not a threat.

The auto industry has become world-class. Why? Auto companies need constant new models and improvements to compete. Auto MNCs in India found that Indian engineers could do this quickly and cheaply. An auto component giant like Delphi takes three months to go from a new concept to prototype to commercial production. Bharat Forge claims it can do this in one month. Such skills have made it global No 2 in auto forgings.

When the economy opened up in 1991, many predicted that Indian companies would go bust or be taken over by MNCs. Nobody dreamed that one day Tata Steel would take over Corus, which was six times as big; or that Tata Motors would acquire Jaguar and Land Rover; or that Hindalco would take over Novellis, which was several times its size.

How did Indian minnows take over global whales? By borrowing massively from abroad. But such massive borrowing was prohibited by government policy till recently. The curbs aimed to thwart irresponsible borrowing. No planner realised that the curbs also thwarted Indian takeovers of global giants. The government has long discouraged private initiatives in education, and education for profit is banned. Supposedly non-profit private engineering colleges have come up, often owned by politicians, and often collecting illegal fees under the table. Their educational standards are spotty at best. Yet, these unplanned colleges, warts and all, have driven brain-intensive manufacturing. Government colleges produce only 45,000 engineers a year. Private colleges produce nine times as many. For decades, telecom was a government monopoly. In the 1980s, the government vetoed proposals for cellphones, saying they were a rich man’s toy. No planner anticipated that after liberalisation in the 1990s, cellphones would be bought by everybody from rural shopkeepers to urban carpenters. Nobody foresaw that Indian companies would create the cheapest calls in the world, attracting 8-10 million new subscribers per month. No planner saw any comparative advantage in wind energy. Indian wind speeds are generally low. Yet Tulsi Tanti, a textile manufacturer, launched Suzlon to make windmills. He is now world No 5 in windmills. Essel Propack has become the world’s top producer of laminated plastic tubes (for toothpaste, drugs and cosmetics). Nobody planned this. Subhash Chandra, a rice merchant, was looking at an international fair for plastic packaging for rice. The plastics dealers told him, by the way, that laminated plastics were replacing aluminium tubes for toothpaste. This accidental discovery helped transform Chandra from humble rice trader to world No 1 in laminated tubes.

One of my favourite posters says, “Some people look at things as they are, and ask why. But I dream of things that never were, and ask why not.” India has succeeded by becoming a place where people can think of things that never were, ask why not, and then just do it...

Cheers till next time !

Upsetting Oil Pricing Conundrum in India

Indian Oil Corporation (IOC) calculates inter alia the landed import duty paid price of petrol and diesel every fortnight. This calculation is based on a formula that is linked to international prices. IOC’s landed price of petrol in Mumbai for the second fortnight of May was, for instance, Rs 38.1 per litre and for diesel Rs 48.8 per litre. The marketing companies had to, in other words, pay this amount to the refiners to buy the products. Next, the Central government imposes an excise and educational cess on the purchase cost. In May, this was Rs 14.4 per litre and Rs 0.4 per litre for petrol and Rs 4.6 per litre and Rs 0.1 per litre for diesel respectively. The total cash required by the marketing companies to purchase petrol and diesel in May was, therefore, Rs 52.9 per litre for petrol and Rs 53.6 per litre for diesel. The companies then sell these products at the ministry of petroleum mandated price of Rs 49.7 per litre for petrol and Rs 35.6 per litre for diesel (Mumbai prices). As such, they lose Rs 3.2 and Rs 18 for every litre of petrol and diesel sold respectively.

That, however, is not their total loss. They have to also pay sales tax to the state governments. In Mumbai, this tax is Rs 10.6 per litre and Rs 7.1 per litre for petrol and diesel respectively. Thus, the total cash loss suffered on account of the sale of 1 litre in Mumbai is Rs 13.7 and Rs 25.1 for petrol and diesel respectively. This is, in other words, the amount by which prices would have to be increased at the retail outlet for the companies to simply break even on a cash basis. Such a hike is, of course, out of the question.

Many in the public domain believe that the imbalance can be redressed by reducing the central and local taxes to make the public sector oil companies profitable. However, it is actually not about reducing the taxes to bring the prices down. That is just an indirect way of maintaining the subsidies. On one hand, the balance sheets of the oil companies might look healthier and higher profits might allow theme to disburse handsome dividends. On the other hand, the government revenues would come down and higher revenue deficits will bring the finance ministry into the FRBM dragnet. It is not a Morton’s fork but a Hobson’s choice for the government — to link the retail rates of petroleum products with the market rates.

In case of most other commodities, the high consumer price checks demand. This helps restore the supply-demand balance. As prices are not linked to the rising market rates, oil demand is not checked commensurate with the price change. It obviously creates an asymmetry in the supply-demand balance and can be only restored at much higher prices. By then, it might be already too late for the Indian economy.

Now let us look at two sensible, yet asynchronous, viewpoints on resolving this pricing conundrum. In the same piece, I prescribe the policy framework for a comprehensive petroleum policy. First, we should accept that high oil prices are here to stay. This does not mean we will not see sharp declines from present levels. What it does mean is that we will not see prices stabilising at levels significantly below a triple digit number. Second, we must create a mechanism that leads to a ‘graduated’ reduction in subsidies, an orderly alignment of domestic prices to international levels and a more efficient disbursement of financial support to the poor. Third, we must reverse ‘dieselisation’. And finally, we must recognise that the sine qua non of energy security is a robust and competitive domestic petroleum and energy sector.

One can only wonder if Rs 200,000 crore in oil subsidies, nearly 2% of India’s GDP, is not alarming enough for the government to pay heed to such sensible opinions.

Till next time, I better fuel up my tank before another bombshell price hike occurs !!!

Your Guide To Becoming The Ultimate DJ

Hi guys and girls...Its been a while since I posted....was a lil busy with my final yr exams.....so finally im done with them....

This post is up on public demand with many folks askin me to give them some tips and info on the basics of DJ'ing. So here it is a lil warm up for u to get into this field which offers u fame as well as a chance to earn a quick buck...but always remember there is a lot of hardwork which goes in the making of mixes. My guru's well they have been supporting me all this while...I love mixes by DJ Tiesto, Paul Van Dynk, DJ Aqeel For the unusual sounds ;) and also DJ Suketu....and my close buddy DJ Tarun...whoz name i always write for the help hez given me all this while. So lets begin...

Here in you'll learn how to set up your DJ equipment, add components, use different types of DJ equipment, how to mix, advanced beat mixing and beat making and more..
For the beginner DJ it can be a bit much to take on the wild world of DJing when you don't have a clue and even if you do you may be skeptical of spending so much money for something you may only do as a hobby. I put together some DJ gear tips to help ease your mind
There first thing you need to ask your self is how or in what capacity will I be using my DJ equipment? How much do I want to spend? Where will I buy all of this DJ equipment, and most importantly what DJ equipment do I need? I have DJ equipment tips to answer all of these questions and more.

Say you want to be an all-purpose DJ. Meaning you want to be able to be a club DJ and battle DJ. You allowed your self a budget of $600. (INR 24,000/-).But let me make this perfectly clear. There is no substitute for high end high quality DJ equipment. You'll only be kidding yourself if you think you can go pro on cheaper DJ equipment. If you want to pick it up as a hobby then this is a good place to start.

Two DJ turntables - Remember you need DIRECT-DRIVE turntables. They offer the best torque for cueing records. The Stanton T.60 Direct Drive Turntable has enough power to get you started.

One DJ mixer - Break in your mixer slowly. Learn all of its features to maximize you DJ skills as you build them. Later on you should try experimenting cutting the music in and out with different mixer settings. Try to develop your own unique style. As I mentioned before the reason why CD players have caught on is because of the versatility. Because they are digital they not only play music CDs but they also play MP3s. So if you have MP3s you have virtually doubled your arsenal of DJ music.

If you're a Mobile DJ you can have pre made mixes to play at your gigs while you sit back and eat and drink your way to a nice pay day. Because they're so small and light they are very portable. Which means instead of lugging around heavy turntables and crates of records you can cut your load by 2/3 while increasing your DJ music library not to mention saving time and money.

Having a set of Pro DJ CD players is a must for every Mobile DJ and an option for the Club DJ because Clubs still rely on vinyl. Before you purchase your first set you need to keep some things in mind.

1. Does it play MP3s and regular music CDs and CDRWs?
2. Does it have real time scratch capability?
3. Does it feel like you are spinning vinyl?
4. Can you cue the next track while the current one is playing?
5. Is there pitch control like a DJ turntable?
6. Is it shock proof?
7. Does it have memory points to save your cues of your favorite CDs?
8. Is there an S/PDIF digital output?
9. Is there a sampler and loop function?
10. Also, being able to burn a CD is always nice.

These are the basic features you need in any DJ CD player you purchase

One pair of DJ headphones - So now you have your turntables, your mixer, your amp and speakers. But you missed one small but crucial detail, headphones. There are ample number of headphones for DJs from Sony, Pioneer, and Technics which will help guide you in making the right decision.

Headphones have one important function. They help the DJ mix the beats together seamlessly. By monitoring one turntable in the headphones while the other turntable is playing for the crowd you can get the proper mix and proper transition from one table to the next.

There are a lot of people who would still like to lay their hands on the various softwares available.....so guys some useful info for you too....

DJ Software Programs - DJ software may be your answer if you don't have the money to spend on DJ equipment but you do own a fancy computer. You can become a DJ in the digital world with a little time and a little creativity. Creating DJ music on your pc can be fun.
Software for DJs is abundant. There are so many to choose from it's hard to tell who's who and each one has a specific purpose. Depending on your application, you can DJ using a laptop with Final Scratch, or create remixes with Cakewalk or master with Sound Forge. DJ software that is in-expensive could be your answer for recording and mastering that final mix. It will show you what you need to record and how to choose the right software. DJ software is not difficult to learn. I find that experimenting works best initially that way you get to learn where everything is and how it works.

After you get to understand how it works you should join a message board where other users post helpful information and documents to help you be more productive.
Fruity Loops is another DJ software program that is in high demand. The best thing about Fruity Loops is its ability to emulate so many of those famous sounds you hear from old school 70's artists to today's artists.

Sony Media Sound Forge v8.0 - Sound Forge by Sonic Foundry. For the price this DJ software is one of the best solutions on the market for editing music and mastering your final mix. Sound Forge offers its users the ability to easily create and edit music with a few simple clicks of the mouse. I have been using Sound Forge for a few years now and I have no complaints. It has a wide range of effects and processors and the help section has come in handy as well. It's a very user friendly product.

Traktor mp3 DJ - The Traktor mp3 DJ software program is another great product for up and coming DJs. It offers beat matching, pitch features and loop. A good package overall.
So I hope this tutorial will guide u for becoming a DJ. So get a funky beat and and cool song...and jus mix !

Happy mixing !

Make your own Powered Model Airplane!!!!

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It is madness...

Equations for life

SSC + HSC + BTech + MBA = UNEMPLOYMENT

An Idea + An Idiot = A Dot com

One Chinese gymnast = India's Gold Medal tally since 1896

Sushmita Sen - 1.2 feet = Salman Khan

Special Effects in Shampoo ads = Special effects in Jurassic park.

4 weeks in Switzerland + London + New Zealand + Canada = a 4 minute song in Hindi movie.

Ajay Devgan + cosmetic surgery + acting ability + personality + own production company = Kajol..

Rona dhona x Bewafai x Badle ki aag = Your mum's favorite serials.

Amitabh Bachchan + Jaya Bachchan - Talent = Abhishek Bachchan

Any actor + Any actress + many movies = David Dhawan

1 smile + 32 teeth = Govinda

1 person - shirt = Salman Khan

1 person + straight hair + un-straight walk = Sanjay Dutt

1 hand + 10 kg weight = Sunny Deol

One engagement + Two weddings + Three wedding songs + Four hundred Relatives + A house bigger than Buckingham Palace = One Sooraj Barjataya Film

Reading mails all the time + no replies = Silence of the Lamb!

Software Engineer, Qualified Employee + No Work = Forwards

I hope you enjoyed this post...so do comment...Well, till next time fasten ur seatbealts as there is a whole lot more to come...only at DJ Prasad's Blog !

Welcome

This is my first post on my newly created blog. Do let me know what all you would like to know and I shall try my best to help you..



Till Next time....
Happy Browsing.

~DJ Prasad~