Expect nothing, live frugally on surprise.

Thursday, November 13, 2008

Ye hai India

Unitech for a litre of Pepsi When you are out shopping you may want to consider choosing between a bottle of Pepsi or picking up a share of Unitech. If you are into chocolates you could decide between a large bar or IFCI for Rs 17. When you drive up to the petrol bunk you could choose to fill a litre of fuel and buy a GMR share instead. If you are green in consciousness and are at the CNG station you may want to buy a Hindalco share instead of two kgs of CNG. A special Diwali treat for two could fetch you a Reliance share and two cups of latte at Costa could be exchanged for an NTPC share. If you are travelling the cab fare to the airport could get you an R COM share. Think about it!
Creating a Thackeray again…Those who travelled in suburban locals in the sixties would recall how passengers were asked to show their season tickets (monthly passes) and if the name was a Vaidyanathan or a Subramani the passenger found himself out of the train. Gujarati friends would remember the ruckus created by Jaywantiben Mehta with a passing remark about Maharashtrians. Now in the new millennia Raj Thackeray has invented a new phantom called the Bihari. That the new Thackeray has leaned yet again on a tired and failed formula (jettisoned long back by the senior Thackeray) shows the bankruptcy of political thought. But then that is politics. But what do you say to the fact that this kind of chauvinism finds takers even now among some of the "…kars".
…and the Congress is responsible again Not many would recall that the militant leader Datta Samant had all but finished the stronghold of the Shiv Sena in the industrial and textile belt. The party was struggling to survive post emergency. Then one fine morning for no other reason than to avenge his public humiliation by the Congress high command, Vasantdada Patil announced that he would not let Bombay be converted into a state. Fact was nobody quite asked for it or raised it. That one statement revived the chauvinists leading them to Mantralaya via the cash-rich Bombay Municipal Corporation. Now the Congress in its silent support is creating another monster.
But what about Biha rOn Monday the public and political faces of Bihar came together and presented a face of unity. They were united for the first time perhaps. And united in their demand for action against Raj Thackeray only due to the fear of a voter backlash. It was a bit tragic to hear them talking about criminals and lawlessness in Maharashtra when each of the parties sports an MP in a high security prison and Sadhu and Pappu are synonyms for criminalisation of politics. So how this "good innocent boy" who lost his life acquired a gun (most likely a Chinese Tamancha from Nepal) if Bihar was such a haven of law abiding citizens. The real tragedy is that they don’t even have a fig leaf to hide behind and are naked in their impotence to transform the state. If only they had united or are willing to be united in their quest for development Biharis wont have to leave home.
This can happen only in India On Monday the Securities and Exchange Board of India unveiled what could only be an Indian solution. It has allowed promoters to invest in their own shares to instill confidence in the market. The theory is after all if promoters show faith in their own scrips the market could be shored up. To start with it is questionable why the government should be concerned about the stock indices. Has the US government for instance been seen pursuing any such ideas? The more important issue is the absence of thought. Look at it carefully and you realize the scandal in the making. Should the promoters of DLF which listed its shares at Rs 600 plus be entitled to now buy the same shares at Rs 198 or so? It is not only DLF. It is public knowledge that the pre IPO process of book building and price discovery has been well used by promoters to list shares at unreal levels. Look at the optics of this: having milked the shareholders then they get to ramp up their holdings at rock bottom prices. That there was no check on this is a reflection of the sorry state of regulation. Now the regulator is offering a balm to promoters instead of shareholders. Is this the reverse repo of the pre-IPO rigging that we witnessed? Perhaps there is an issue of restoring sentiments but for God's sake use the crisis to clean the mess not make it murkier. For starters promoters of those companies which did IPOs should be disallowed. If at all ask them to do an open offer at least an average six month price level.
Don’t doctor the spin for Dr Singh That Prime Minister Manmohan Singh is a learned, globally acclaimed economist is no secret. That he perhaps understands what is transpiring across the globe better than most others too cannot be contested. But is it necessary for his spin doctors to go round dinner tables when he is abroad and brief journalists on how he is advising global leaders? Or how he is the most sought after by leaders ranging from Angela Merkel to George Bush. I am wondering what advice would the leader of an economy which is 1/15th in size of the US, has less than 0.5 per cent share of world trade, attracts FDI equal to the budgets of some universities in the US give George Bush. Indeed some enthusiastic official of the MEA even suggested to scribes on the way back from Beijing that the Chinese leadership too sought his advice (By the way the Chinese economy is said to have slowed down when it is clocking 9.9 per cent GDP growth)!!! I wonder if the PM is aware that the minions are at work to destroy the very credibility that distinguishes him from others.
But Pappu can’t dance sala! On that same overseas trip another journalist was fed the line on how the UPA would now collar the bear by its snout and pump prime the economy out of trouble. It may be now accepted wisdom to switch to the Keynesian choir but shouldn't one also know how to sing! To appreciate the octave look at this government's track record. Not a single steel plant (there are proposals worth over $ 100 bn for 60 mt) has been cleared for want of clarity in various policies. In power we saw 24000 MW added in the tenth plan and another 40000 MW may be added in the next five years. Compare this with one figure. China added 106000 MW in just one year and that is a little less than our total installed capacity. Since three years the government is talking about ultra mega power but barring one none are off the ground. The much acclaimed National Highways project has been completely run into the ground. Projects worth Rs 500,000 crore are languishing for policy clearances since 2003. So what pump priming are we talking about?
Missing the woods for the tree Since the beginning of the crisis, rather its implosion in September this government has done some peculiar diagnosis and prescribed seriously flawed policy. For instance it has relaxed borrowings under External Commercial Borrowing. Just a few months back these norms were tightened to control flows. That apart when nobody is lending anyone abroad what is the big idea of relaxing borrowing norms. Is it to open another chapter of ECB defaults? In this uncertainty can Indian corporates take the risk of borrowing at crashing currency rates? Unless of course the government knows something that we don't. Either promoters are bringing home their own money or the government knows rupee will appreciate. What's the truth. Ditto has been the stance on allowing Participatory Notes to build positions. As earlier either the government is asking promoters to bring domestically alienated funds or is blindly following i-bankers advice. In either case it is missing the woods for the tree.
Only way out is back to basics Not many people may remember this but when the UPA came to power Finance Minister P Chidambaram proudly announced that there would be no disinvestment and he is looking forward to be the investment minister. Indeed there would be an Investment Commission. To their credit they found three of the most credible faces – Ratan Tata, Deepak Parekh and former HLL chief Ganguly to put their heads together and come up with some ideas. They did but the ideas didn't quite match with those of the UPA mandarins. Result: not a single suggestion found its way into practice. Tata went back to his business and Parekh to his. If the PM and FM are serious about kick starting this economy they must call for a meeting of the Investment Commission. Ask them to list the ten best projects on their list. Once they have the list call all concerned ministers, bring the chief ministers to the table and get the ten top bankers into the room. The focus must be to clear these projects on day. Now that would really kick start the economy and domestic demand besides of course delivering a booster to sentiments. It is possible if they want to do it. Talk is cheap Dr Singh. Walk the Talk.


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