The battle between various ministries continues on permissible levels of foreign direct investments in ‘sensitive’ sectors like defence or railways, but there is another battle on-going in the arena of foreign direct investments and it relates to transfer pricing.
An early resolution, via suitable amendment in the Finance Bill 2014 which will be tabled in next week, is what foreign investors are hoping for.
Issue of share capital by Indian companies to their parent or group companies has been embroiled in a transfer pricing controversy. When the news first broke out, more than a year ago, Zenobia Aunty was aghast. “Tax and accountancy laws clearly distinguish between a revenue item and a capital item. A revenue item is taxable, a capital item is not,” she had muttered. Her research findings revealed that no other country subjected income from share capital to tax.
A transfer of shares resulting in capital gains is taxable in the hands of the seller (the Vodafone matter when the buyer was held culpable for non-deduction of tax at source, is another issue altogether). However, issue of new share capital doesn’t result in any income in the hands of the issuing company; such receipt is considered to be capital in nature and not taxable.
Yet, issue of share capital has been brought into the transfer pricing ambit, here’s how: If the company in India, had issued share capital to its parent at Rs. 10, the tax authorities challenged and revised the valuation, say at Rs. 100. The difference of Rs. 90 was then re-characterised as a taxable receivable in the hands of the Indian company.
Former Finance Minister, P. Chidambaram in a reply to Lok Sabha last April had said: “In financial year 2012-13, 27 cases of undervaluation of share sale by Indian companies to their related parties were detected and subjected to appropriate transfer pricing adjustments, in accordance with the provisions of the Income tax Act, 1961.”
News-reports have in the past captured the ongoing cases filed by Shell, Vodafone, Essar group and a few others, which are currently in various stages of litigation. Cumulatively, the quantum of litigation runs into several thousand crore.
To illustrate: In 2009, Shell India issued 87.63 crore shares to two overseas companies at the par value of Rs. 10 each. The tax department using the discounted cash flow mechanism of valuation pegged the value per share at Rs. 183. The short receipt of Rs. 15,200 crore was sought to be taxed in the hands of Shell India. In case of Vodafone, the tax department challenged the valuation undertaken by Vodafone India Services private Limited while issuing shares, in 2009, to its Mauritius group company and the differential in this case amount to nearly Rs. 1,300 crore. Subsequently Essar group found itself facing a similar situation. Issue of shares by three Essar group companies to their parent companies were held to be undervalued by the tax department.
Noted advocate, Harish Salve’s plea in the Bombay High Court, while arguing the Shell and Vodafone matter, was avidly tweeted by tax professionals. He said: “When premium received is not taxable, how can premium not received be ever taxed?” In other words, how can the notional income – being the differential as computed by the tax authorities be subject to tax?
The Economic Times (March 19, 2013 edition) had reported the views of the Law Ministry (under the UPA government): TPOs are empowered to impute additional income, a process known as adjustments, if they come to the conclusion that shares of a local company have been transferred or issued at below market price.
Countries such as Singapore, in the best interest of their investors, have provided for safe harbour norms on disposal of equity shares. Understandably, safe habour norms, which lay down the range within which a price between related parties is considered to be at an arm’s length has not been provided in respect of issue of new shares, because it is not treated a taxable revenue incidence.
The government is keen to attract foreign direct investments. For India to be deemed as attractive, the issue of taxation of a notional differential on issue of share capital by the Indian company to its overseas parent or group companies needs to be put to rest once and for all.
“Time is of the essence,” quips Zenobia Aunty, isn’t she always so wise?
All eyes are on Modi's first budget next week. When anyone has time to talk about things other than FIFA, or Tour De France, or Wimbledon, they ask me what I think will happen.
If, like all those other conomists, I had a quick fix solution to the vast problems of the Indian economy, I'd not be a columnist.
Being one though, I consider it my duty to try and advise the man who's taken on the job of fixing the big mess that is India. It's the kind of thing pontificators do.
I'm not advising him on what he should do – but from where I'm coming, I can see the presentation as it should be. Everyone's being predicting his maiden budget will be tough, but will it be all hard knocks without at least some sweets?
Any manager worth his salt, and Modi has based his campaign on being an efficient manager, knows the value of employee morale. At the moment, morale is flying higher than high, and the last thing you want to do is puncture it.
So, assuming he's presenting his annual report, which is what the eco survey and budget is, the obvious structure is to first put out a director's report which tells you exactly how badly the previous management goofed up.
Then, to back up that grave shaking of heads, the plan on how the new management is going to fix it, though it will take years. Meantime, tighten your belts, because shareholders (i.e .voters) will have to grin and bear it for the management they appointed last.
There's no need for the BJP to soft soap the grim story, because even a ragpicker child knows how badly the UPA goofed. At that psychological moment, enter with some good news. Oh, Mr Jaitley will make all the right noises about efficiency, fiscal deficit and all the rest.
Since Mr Modi has hardly put a foot wrong since taking over, I can safely assume that he's worked out a formula that will keep FIIs, voters, his overseas interests, and those frowning economists happy.
It's also fortunate (or unfortunate) that he’s doing his budget in July, when we know monsoons are not being cooperative to happiness and downpour.
I would, like any good CEO, announce a couple of mega plans that will take 10 years to happen, and given the focus on infrastructure, I don't see that as a problem. Those of us who've lived long enough know exactly how long it took to build the Delhi Metro or Bandra Kurla sea link, that's all to the good.
Apparently, Mr Modi is not fond of gimmickry. I personally think he’ll need at least one gimmick – or in political terms crowd pleasing tactic to raise the cheers from the audience. My recommendation is a one-off emergency subsidy for importing onions (Of course we can afford it.
We're buying zillion-dollar fighter aircraft and subsidising rubbish employment schemes in crores). Forget diesel, there’s nothing like onions. Even potatoes will do. Whatever happens, the honeymoon period is not over yet. So what we'll get, despite analysis, is more careful kudos, whatever the budget brings up.
It is amazing how people can take some discrete data and come to completely wrong conclusions. Why does this happen? Simply because the human mind tries to draw a pattern in whatever they see. Many a times there is no pattern. Sometimes it is obvious, sometimes it is not.
Warren Buffet’s daughter says ‘he does not drink water, only drinks coke’. Really?
Assuming it to be true, what should I do with that data? dance? rejoice? buy shares of Coke? Frankly I do not know what to do. I do think Coke is harmful for all its consumers around the whole world. (the greatest proof is India’s rising importance in the Sales hierarchy of Coke and Pepsi – the developed countries are giving it up!)
As a consumer you should not be drinking it, the bottle is toxic, the sugar kills – and even assuming that the information is accurate, IT IS USELESS.
Dhirubhai Ambani was only class 8 pass: SO WHAT?
You should know the difference between people who are extremely smart BUT could not complete FORMAL education vs lazy and dumb people who are too lazy to get past 8th class. DA was OBVIOUSLY very very capable – so do not just pluck his ‘education up to class 8′ as a big thing in his life. Just like Sachin Ramesh Tendulkar or even Aliya Bhat – who did not go past school. SRT has proved himself as a world class cricketer who got the Bharat Ratna, Aliya is of course yet to prove herself.
I drink, I smoke and I am 200% fit – Winston Churchill.
For those that want the quick hit and don’t care about the underlying ideas, here is the main idea:
A vehicle holding assets may appear more liquid than the assets themselves, but that is only true in bull markets. When bad times come, the liquidity proves elusive, particularly for large trades.
ETPs are wonderful things, but there is one thing that ETPs can’t do. They can’t change the underlying assets that they own. Merely because you have the ability to buy or sell at will does not change the performance of the assets held. Like most investment products, the amount of assets invested expands in a bull market and contracts in a bear market.
People follow trends. As they follow trends, they tend to lose money, because they buy and sell too late. As such, average investors in ETPs tend to lose money relative to buy and hold investors.
In this sense, liquidity is not your friend. Just because you can trade, does not mean that you should. Speculators tend to lose to the longer-term investors, who hold for longer periods of time. Trading itself is a zero-sum game, but bearing risk is a positive sum game, if done with a margin of safety.
Also, if you are trying to do an institutional-size trade in an ETP, you will find that the market impact costs are significant. Just because there is an exit door in the theater does not mean that everyone can get out instantly.
Honestly, the easy solution is to disallow the accounting treatment of repos, and force those who do them to display them as a long asset and a short liability. Why?
Because in crises, the long assets are illiquid, and as such the value shrinks when liquidity is prized. The liquid liabilities still demand to be paid at par.
The accounting change would be better than what the Fed thinks that it might do. You can’t make long-dated assets liquid. The cash flows are distant. Yes, there may be some interest payments that are near, but ultimate repayment of principal is distant.
Let me suggest a better concept of liquidity: assets are liquid to the degree that you can turn the underlying into cash. When I say that, I do not mean trading big blocks of stock, but selling companies for cash. That is liquidity, and as such most risky assets do not have significant liquidity, though many trade every day during bull markets.
Liquidity is a scaredy cat, it disappears when it is most needed. That happens because people think they can sell at par when they can’t.
All for now, but remember this — liquidity is a bull market phenomenon. People are far more likely to trade when they have unrealized gains rather than losses.
While I agree with most of your views and understand where you are coming from are you not too harsh on the IAS? There are as you agree many great individuals- honest, dedicated, hardworking- but for some reason the bureaucracy is failing collectively. Is it is only to do with one particular service, or it is reflection of the society as a whole- its value system, its attitudes and what it prioritizes? Are we not the product of the same society- so to expect that just because one has cracked any particular exam one would be very different from the norm is expecting too much.
I have many (many!) issues with the IAS/ tenured services. Without understanding them it will be hard, if not impossible for someone to follow what I'm suggesting.
Therefore, in response I've compiled my writings on this subject to date (at least most of them – I keep writing on such matters in numerous places and don't have time to compile all such material).
I hope these writings are able to answer my batchmate's question and persuade him that India DESERVES GOOD GOVERNANCE. We simply can't keep doing what we did 65 years ago and expect different results. This is not about the PEOPLE in the IAS. That too (particularly after a point in their career), but it is mainly about the SYSTEM and incentives. People respond to incentives.
A visit to our avowedly Hindu home would definitely leave the esteemed Shankaracharya of Dwarka quite annoyed. No, we don’t have a gigantic photo or statue of his current bugbear, the Sai Baba of Shirdi in the living room, but like many a catholic Hindu - pardon the phrase but it is truer than it seems - I festoon my home with divine visages. And the irate seer may not be happy to hear that all those diverse deities actually reinforce my Hinduness...
There is a mother of pearl Mary and Jesus in my house, with “Our Lady” written in Arabic as I was presented the icon by a nun in Damascus. Three decades ago I was told to keep her in an elevated spot and she would forever bless and protect my home. I did and she has. And in another equally exalted spot is the image of Ma Kali, made out of scrap paper by a Muslim vegetable vendor’s wife. For me, both are (wo)manifestions of the same female force.
Besides these ladies, from Buddha to Nanak, every faith that can have a visual representation is present, all of them enhancing rather than hindering my prayers every day. Nor do they seem to be irked about being placed in such proximity all around my house. So it seems more than a little silly that a mere mortal - which is what the Dwarka seer also is, after all -- has been taking umbrage on behalf of a section of them against another!
The greatness of Sanatan Dharma is that people like me don’t have to listen to the diktats of the clergy, no matter how grand their self image. It’s entirely voluntary. Just as Uma Bharati is not obliged to heed the Dwarka sadhu’s admonition about “worshipping a Muslim”, it is certainly not blasphemous in my reckoning to equate Mary (the catholicism here is only partly thanks to a convent education!) with every Bengali’s Mother Goddess, Durga, and Ma Kali.
The absence of a uniform “church” and the multi layered styles of worship in Hinduism make it the most democratic and broad based “ religion” ever, actually. No baptism, bar mitzvah, no rites of passage really except for the Brahmins, who in any case are in a minority in the religion. For the rest, Hinduism is what you want it to be... With some heartening extensions, such as Bengal’s syncretic Satyanarayan Puja, which reveres a Muslim called Satya Pir.
Indeed, instead of targeting the Shirdi Sai Baba devotees for worshipping a human as a God the Dwarka Shankaracharya should actually draw a bead on Bengalis. There is scarcely a Bengali who does not have images of Sri Ramakrishna Parmahansa and Ma Sarada in her home, vehicle and workplace. Then there are Chaitanya Mahaprabhu, Sri Aurobindo, Baba Lokenath and more. The list of revered mortals is pretty formidable in Bengal.
Yet Bengalis are also equally devoted to Kali, Durga, Shiva and Krishna so calling us apostates would also not do. And excommunicating us -had Hinduism had such a convenient device - would seriously deplete the ranks of the religion, which would not be in the seer’s interest either. It is also supremely ironical that the Shankaracharya’s attempt to create a sectarian schism would probably be welcomed by the fundamentalist Islamic clergy, who have no love lost for Sai either.
If the Shankaracharya thought it through a bit more, he may have - or should have - encouraged the assimilative instincts of Hinduism rather than told them to batten down the hatches against outside influences. As caste barriers fall thanks to urbanisation and modernity, what better hope for a liberal, expansive common faith than the historical precedent set by Hinduism of coopting new gods, beliefs and philosophies? I shall pray to Mary and Ma Kali that he sees the light!
You start life and some relationships as a financial adviser but then you go beyond!
Many potential customers who are looking for financial advise sometimes go beyond finance. At age 24 or at 52 your financial personality is just a sum total of your financial foot print. You might just be AFRAID of money – it does happen. People who have seen parents, cousins, etc. fight or even crib about money may have a very mixed kinda feeling towards money.
I know parents who are JEALOUS of their own kid’s good financial performance. This is more true of control freak FATHERS who feel if they control the FINANCES of the child (and the child is dependent on the potential inheritance) they can control the kid!
I know of children who feel very insecure about investing in anything other than a bank fixed deposit.
So when a person walks in – he/she could talk about – their own past, marriage, spouse not seeing eye to eye on finances, children being irresponsible with money. Sometimes there is frustration (I had to support my parents who ran out of money in their 60s and they lived to their 80s – was the complaint of a 55 year old son), anger (why do I have to support my parents my sister does nothing, but tomorrow she will want a claim on the Santacruz flat), fear (will I outlive my NET WORTH), feeling of being a failure (I must be the ONLY parent in the world who could not afford to pay for IIT classes – Rs. 3Lakhs is too much!!), …..
When a client talks, as an IFA YOU HAVE TO LISTEN…
I've cited and even discussed aspects of the Singapore model from time to time. This blog post, a placeholder, is intended to help me continue researching the Singapore model.
Does this post mean I "recommend" the Singapore model? The answer is "yes" and "no". There are many elements of the model (particularly its focus on incentives) that I agree with. There are, however, many other elements of the model (particularly its authoritarian ones) which are deplorable. I DO NOT recommend those aspects of the Singapore model. In my view, the good things Singapore does should have been done in a classical liberal model, anyway. The West has chosen the social democratic welfare state. Its actions are not classical liberal.
SINGAPORE'S HUGE SUCCESS STORY
"Since independence in 1963, GDP per head has grown 80-fold, and now exceeds even that of Britain." [Source] – and USA – and Australia, etc.
EXTREME ECONOMIC LIBERALISM
"Low taxes, rule of law, respect for intellectual property rights, intolerance of corruption and a policy mindset to facilitate business and finance, rather than hinder them" [Source]
"The top personal income tax rate is now 20 percent, and the corporate tax rate is 18 percent (both roughly half the U.S. rates), while the value-added tax, at 7 percent, is roughly one-third the level of the typical European country." [Source]
"The Southeast Asian trading center was rated this year as the easiest place in the world for small and medium-sized enterprises to do business, according to a World Bank and International Finance Corporation report." [Source]
SINGAPORE AS "THE" ALTERNATIVE MODEL?
"In some respects, Singapore is free- market liberalism in its most classic form. In others, it is almost socialist in its outlook. The deputy prime minister, Tharman Shanmugaratnam, calls this mix of liberalism and interventionism a "paradox". In some European economies, he points out, "the social market economy has come to mean just state dependency". Yet Singapore believes there to be "an important space between the individualism of the free-market model and European- style welfare". Tharman characterises this approach as "active government support for self -reliance" – a paradox indeed." [Source]
==
''Since 1968, the People's Action Party has won consecutive elections and held state power for a long time, while ensuring that the party's high efficiency, incorruptibility and vitality leads Singapore in attaining an economic leap forward,'' writes Song Xiongwei, a lecturer at the Chinese Academy of Governance." [Source]
''For several years, Xi [now President of China] has led a team investigating the Singapore model and envisaging how it might be applied to China,'' reports Jonathan Manthorpe of the Vancouver Sun. His tyre-kicking included a 2010 meeting with the owner and builder of the Singapore model, Lee Kuan Yew, whose son has been entrusted with the keys and is now taking it for a drive as Prime Minister. [Source]
TEMASEK
The government owns Temasek 100 per cent which only top private sector CEOs manage. The government funds Temasek for commercial enterprises, e.g. telecom. Temasek creates 4-5 competing companies in the same sector as subsidiaries and lets them loose in a cut-throat competitive situation, to deliver the service. Managers of these subsidiaries behave JUST like private companies. Profits made (after competitive payments to managers) are returned to the government. This is a very profitable enterprise.
When Temasek runs utilities, the government sets if off against regulators who monitor it just like they would monitor a private company.
So the government operates a HANDS-OFF public company system which is ENTIRELY managed by the private sector, at great profit. The government independently regulates these companies, as well.
Temasek is often referred to as a ‘sovereign wealth fund’, but is never referred to as such by its government owner, despite being listed in Singapore’s constitution. Described on its website simply as “an investment company based in Singapore”, the 40-year-old company behaves more like a private firm, paying taxes and distributing dividends.
It is also one of the few companies in the world to have a corporate credit rating of AAA from Standard & Poor’s and Aaa from Moody’s, ratings it has held for 10 years [Source].
From the Temasek website:
Temasek is a commercial investment company governed by the provisions of the Singapore Company Act.
Our governance framework emphasises substance over form, and long term over short term, and put institution over self. It provides for accountability and a robust balance between empowerment and compliance.
We espouse the principles of commercial discipline, built on our set of MERITT values, namely: meritocracy, excellence, respect, integrity, teamwork and trust.
As an investment company, Temasek owns and manages its assets, investing and divesting with full commercial discretion and flexibility under the guidance of our Board, including investment, divestment and business decisions.
Our commitment to deliver long term value is supported by a philosophy and culture of ownership.
Under Singapore’s Constitution and laws, neither the President of the Republic of Singapore nor the Singapore Government, our shareholder, is involved in our investment, divestment or other business decisions, except in relation to the protection of Temasek’s own past reserves.
For further information on corporate governance, please see Governance Framework in the Temasek Review 2013.
"Singaporeans are considerably healthier than Americans, yet pay, per person, about one-fifth of what Americans pay for their healthcare. Life expectancy at birth in the United States is 78 years; in Singapore, 82 years. The U.S. infant mortality rate is 6.4 deaths per 1,000 live births; in Singapore, just 2.3 deaths per 1,000. But the United States has far more caregivers: 2.6 physicians per 1,000 people, compared with 1.4 physicians in Singapore. The United States has 9.4 nurses per 1,000 people; Singapore, 4.2. And it has six times as many dentists as Singapore and three times as many pharmacists.
The state, using taxes, funds only about one-fourth of Singapore’s total health costs. Individuals and their employers pay for the rest. In fact, the latest figures show that Singapore’s government spends only $381 (all dollars in this article are U.S.) per capita on health—or one-seventh what the U.S. government spends.
Singapore’s system requires individuals to take responsibility for their own health, and for much of their own spending on medical care. As the Health Ministry puts it, “Patients are expected to co-pay part of their medical expenses and to pay more when they demand a higher level of service. At the same time, government subsidies help to keep basic healthcare affordable.
Medisave, which covers about 85 percent of all Singaporeans, is a component of a mandatory pension program. Employees typically pay 20 percent of their wages into the Central Provident Fund (CPF), while employers pay 13 percent. (Since 1992, the self-employed have also participated.) At the beginning of 2007, CPF had over $1 billion in surpluses.
In Singapore’s system, the primary role of government is to require people to save in order to meet medical expenses they don’t expect.
Medisave accounts can be used to pay directly for hospital expenses incurred by an individual or his immediate family. Limits are in place on the extent of Medisave funds that can be used for daily hospital charges, physicians’ fees, and surgical fees. The idea is to cover fully the bills of most patients in state-subsidized wards of public hospitals. Beyond that, individuals dip into their own pockets or use benefits from insurance plans (see more on this below). Medisave can also be used for expensive outpatient treatments such as chemotherapy, renal dialysis, or HIV drugs.
Medishield, the second part of the program, is a national insurance plan that covers the higher cost of especially serious illness or accident, which in Singapore’s system is described as “catastrophic.” Singaporeans can choose Medishield or several private alternatives, some offered by firms listed on the Singaporean stock exchange. Premiums for the insurance plans, including Medishield, can be paid using Medisave accounts.
Medifund, the third part, was established by the government for the roughly 10 percent of Singaporeans who don’t have the means to pay for their medical needs, despite the government’s subsidy of hospital and outpatient costs. The fund was set up in 1993 with $150 million, with the budget surplus providing additional contributions since then. Only interest income, not capital, may be disbursed.
Finally, there’s Eldershield, an addition to the 3M structure that offers private insurance for disability as a result of old age. It pays a monthly cash allowance to those unable to perform three or more basic activities of daily living.” [Source]
TARGETED, NOT UNIVERSAL WELFARE
"Singapore therefore intends to avoid universal entitlements, and instead focus on targeted health care and pension assistance, especially for disadvantaged, elderly groups." [Source]
CHEAP DISPOSABLE LABOUR
"It has over 200,000 foreign domestic servants. In a population of 5.4 million, only 3.3 million are citizens. The number of foreigners on various types of employment pass now stands at 1.3 million. Some 336,000 of these are skilled people who have helped raise productivity. But 985,000, or nearly 30 per cent of the workforce, are low-skill employees with work permits." [Source]
SINGAPORE HOUSING
"80 per cent of Singapore's housing is controlled by the government's Housing Development Board. Though owners can sell, the board has many restrictions which make a nonsense of real private ownership" [Source].
SINGAPORE LOSING ITS BEST TO USA
"the best and brightest in Asia prefer to move to freer societies with the U.S. as the top destination, then Europe, and then Australia,” said Devin T. Stewart, Senior Fellow at Carnegie Council." [Source]
SINGAPORE'S DEPLORABLE RESTRICTIONS ON LIBERTY AND DEMOCRACY
Lee Kuan Yew is a shrewd character who created the appearance of a Western-style liberal democracy where, in theory, power is contestable but, in fact, one-party rule is protected. He's done this by altering a couple of key design details. When an opposition politician criticises a government minister, the minister commonly sues for defamation. Singapore's helpful courts award such crushing damages that the opposition politician is bankrupted and some have been forced into exile to avoid jail.
Singapore's media is closely guided by the government. Internet censorship and monitoring is highly developed. And the ruling party maintains a subtly coercive role in managing the value of the typical family's most valuable asset, the family home.
How? Most citizens buy flats in government-built and government-maintained apartment blocks. Blocks whose residents dare vote for the opposition live under explicit threat of having their essential upgrades put at the bottom of the work program.
Hey presto. A parliamentary democracy where no one is dragged away in the middle of the night by the secret police, yet one where few are brave enough to speak out and even fewer get away with it. Even today, the PAP holds an astonishing 81 out of the 87 seats in parliament. [Source]
Almost as if to say, enough about our leaky roofs, Mumbai Metro just tweeted out some good news. There’s going to be free wi-fi at stations. Free is not completely free though.
For the first 15 minutes everyday for a month, you don’t pay anything. Then on, it charges you.
Network problems while travelling? Not Anymore! The Mumbai Metro now has Wi-Fi! pic.twitter.com/jrtwSG7hOQ
The metro authorities were dissed pretty bad on social media when people found that the coaches were leaking when it rained. Now that’s pure play cloud computing. Like Vishva Bandhu (video) explains it.
As an investor, I am sure you have done something with your money. You have put your money in some or the other financial product – assuming it is going to help you in creating wealth or it is going to help you in some way or the other. The way some movies have flashback, you will have to go back in the past to get full value from today’ article. We just want to make you responsible in the area of money, because taking responsibility is the first step towards bringing any kind of change or transformation.
Lets go back in the past (Flashback)
Lets say five years back some agent or advisor or relationship manager approached you with the new financial product in market, the product features and benefits were explained, you trusted your advisor’s advice and bought the financial product. Now, before you purchased the product – Did you read the product brochure (completely) at the time of buying or even after that ? Most investors do not invest their time in reading product brochure or policy documents and this is a major mistake most investors are not even present to.
4 reasons, why Investors do not read Policy Documents
Reason #1 – They find it boring to read Policy Documents
A lot of investors think, that reading personal finance document is extremely boring thing (its just their assumption). Some investors start yawning the moment any policy document is placed in front of them. If you ask them for a movie, they are filled with enthusiasm – but if you ask them to read policy document or mutual fund scheme document they start avoiding the same.
In this process, you may miss out on some important information which you are suppose to know about some particular financial product and it will save you from disappointment later in future. We come across so many investors who dont know whether the money they have been investing from last 5 years is an endowment plan or a money back, the mutual fund they have been investing is an equity fund or debt fund. You carry boredom in your thoughts and it has nothing to do with any personal finance document. Come on – Its a one time job, which takes not more than 1 hour, thats all !
Reason #2 – “It’s not my cup of tea” Syndrome
A lot of investors think – “Personal finance is not my cup of tea” and they feel they have licence to NOT read policy documents. You may be into medical profession, Software or any other profession. You can’t escape from managing your financial life and reading your policy document is one core activity you need to complete.
If you think personal finance is not your cup of tea – then come to our Design your financial life 2.0 program which happening in 6 cities and we will train you as an investor and change the way you look at personal finance (trust me you will just love it). Stop hiding from doing the required work as an investor. Everything that happens with your money is your cup of tea and you have to put some effort to manage your money well.
Reason #3 – They over-trust their Advisor and prefer playing Blind Game
Some people trust their advisor much more than they trust their spouse or parents. They trust their advisor blindly. Their advisor will make cross marks on documents and then give investor the bulk offer to give their signatures, as if they are giving autograph to the crowd. And then this kind of fraud happens with investors.
These investors are playing blind game, they are taking risk with their financial future. Even when the policy document or any other financial product is purchased, they do not bother to read where they have invested their money. All they do is call their agent and take a monthly or quarterly report which gives them a fake feeling that they are serious about their financial life. You are getting reports, but for all wrong financial products which does not serve you as an investor. You can trust your advisor – but do not skip the homework that you are suppose to do from your side.
Reason #4 – They entertain the story called “Lack of time”
When we ask a lot of investors that why they did not read policy documents or product brochures the most standard reason that pops up is “Lack of time”. From morning till night, they slog for money, which they put into a financial product and then they do not have time to read about the financial products itself, where they have invested their money. Now how strange it that !
These people are found very active on social media platforms. By the way – I am not against use of social media, but the point I am trying to make is that, you should give time to your financial life and break the “lack of time” story. In the our workshop Design your financial life 2.0 , Manish is going to take a powerful session on How Investors can screen different financial products on some criteria’s (Trust me you won’t learn such things in any other program the way he explain things)
Conclusion – Never skip reading Policy Document
This insight or tip might look very simple, but it is applicable to majority of investors. As an investor you will make money only in those products – where you have the understanding. Your primary job as an investor is to understand basic mechanism of any financial product in which you are going to put your hard earned money. My invitation to all investors is read product brochure and make list of questions that arise in your mind and get 100% clarity on them. So, dust all your laziness and read the product brochure, before buying any financial product and if you have already made any purchase make sure you read the policy document in detail.
So, this weekend do the following
Place 2 hours on your calendar, in which you will read policy documents (put the reminder in your mobile at this moment itself.
While you read policy documents if you are not clear, make a note of them and discuss with your advisor or customer care
Share with us what was your experience in the comments section
Book your seat in Design your financial life 2.0 (Please do not over think about it)
NOTE: We want to meet more and more investors during our 6 city tour. The minimum investment to participate in our workshop starts at Rs. 3500/-. Come be a part of Design your financial life 2.0 ( You will have the most amazing time as an investor)
We have another mega-settlement for another mega-violation in banking. BNP Paribas has agreed to cough up $8.9 bn for violations of US sanctions against specified countries. An article in FT argues that the fines are disproportionate and that they hurt shareholders rather than bankers. Banks have no choice but to settle when American regulators come after them. This enables regulators to impose enormous fines and it also boosts the political fortunes of those who work for regulators:
These huge and disproportionate sanctions are the result of an unseemly competition between rival US regulatory agencies, each keen to mark its turf and get its teeth into the prey, while promoting the careers of political appointees. They are abetted by a legal system in which criminal indictment carries potentially fatal consequences. An institution that is accused of wrongdoing swiftly finds itself losing the confidence of investors and counterparties, making it impossible to do business. Its life saps away long before a case reaches trial. In these circumstances, banks have little option but to cough up.
The author argues that regulators in Europe are more reasonable in the fines they impose and that a better way of punishing the banks would be impose higher capital requirements. This would also reduce profitability and hence the incentives for top bankers to misbehave.
The article is right in saying that the sins of bankers should not be borne by shareholders; it is also right about disproportionate fines. But it misses the central point: bankers who violate the law must go to jail. Imposing fines on the legal entities called banks hardly punishes the bankers. Another article in the FT makes this point tellingly:
Indeed, institutions do not break laws – individuals do. Lest there be any doubt on this point Benjamin Lawsky, the superintendent of New York’s Department of Financial Services stated that “BNP employees – with the knowledge of multiple senior executives – engaged in a longstanding scheme that illegally funnelled money to countries involved in terrorism and gdeenocide.”
So there you have it. And the punishment? About a dozen employees have been dismissed and others will be demoted to suffer pay cuts. A number of senior executives are departing. It would be interesting to know on what terms and with what perks. But no individual who was cited for wrongdoing will go to prison.......If no one goes to jail and the fine does no permanent damage, the settlement becomes more a transaction tax than a deterrent. It is unlikely to be seen as justice in the eyes of the public – people who tend to go to prison when they break the law.
Reliance Industries' acquisition of control over Network 18 has generated some comment, albeit mostly on the Net, not the print media. There is concern over the implications of business houses or corporates owning or controlling the media, whether print or visual media. The Aditya Birla group has a substantial stake in the India Today group and the Tata house controls Tata Sky. As Vanita Kohli Khandekar notes in a perceptive piece in BS, there is little people getting worked up over business groups entering, well, another business. Many of the large newspapers in the country are controlled by those who came from a corporate background.
The point is that as long as there is diversity in ownership, we need not worry unduly. Some business house will support the Congress, another will support the BJP and a third group may root for some regional party. What we need to ensure is nobody dominates, that is, there is plurality and diversity and that all conduct the media businesses in accordance with norms, in others, a regulator that keeps an eye on the media as a whole. Khandekar has valuable suggestions to make:
One, an independent-of-the-government media regulator with powers a la Federal Communications Commission (US) or Ofcom (UK). They set the business rules, keep a check on ownership, prevent the formation of monopolies, stop bad practices and create a healthy environment for free media. Two, a law that forces any organisation in the news business to publish its accounts and every detail of who owns it, how it is funded, its revenues, and so on at fixed periods, online. This forced transparency will deter the "unsavoury" entrants, reduce hyper-competition and, therefore, the plummeting of standards. Three, a high-quality, independent, taxpayer-funded broadcaster. If Doordarshan was a world-class news channel, it would force the private ones to aim for better quality like the presence of BBC has done in the UK.
The last point cannot be over-emphasised. I have noted in my blogs that DD has improved quite a bit. (Rajya Sabha TV's Samvidan on Sunday, which is about the making of the Indian constitution, is a model of quality programming). One hopes that under the new government, DD gets the support it needs in order to provide the lead to private players.
Faced with rising prices of food, especially vegetables, the government has asked states to impose the Essential Services Maintenance Act (ESMA), on onions and potatoes. It won’t work.
The ESMA is a Central law, but its implementation is left entirely to states. In times of crises, like strikes or shortages, the law allows state governments to crack down and ensure that essential services, like railways, public transport or food supplies do not break down. The ancestor of this law, like many others, is legislation crafted by the British in 1941, as World War II raged in Asia and the Japanese invaded Thailand and Malaya on their way to India.
Today, the government wants states to crack down on traders who allegedly hoard onions and potatoes and tell them to limit their stocks, and release any surpluses into the market to ease prices. There are two false assumptions in this.
The first is that both the tubers have a very short shelf life. In the heat and humidity of the pre-monsoon season, onions will not last in un-refrigerated storage for more than a month. Potatoes will last roughly three times longer. So, these alleged ‘hoarders’ of tubers do not need the ESMA to tell them to release stocks – they will do so on their own behalf.
Second, six states, including BJP-ruled Madhya Pradesh, Bengal and Tripura, ruled by the Trinamool Congress and the Left, respectively, have asked for the imposition of ESMA. But history shows that few states have actually implemented this provision from its inception.
Why not? India’s largest onion producing state illustrates this inactivity best. The politics of Maharashtra is entwined with patronage to large farm traders in places like Nashik, who run wholesale markets and supply chains across the country. Will the Congress-NCP alliance in power, or the BJP-Shiv Sena combine that hopes to displace it later this year, dare to disturb this hornet’s nest now?
The Modi government can talk up ESMA, but it cannot talk down food inflation. Food price inflation can only be checked by reforming markets across a vast spectrum of subjects. Wastage can be checked by building cold chains. These will need power, so we need electricity reforms, as well as a properly functioning market for coal, now a state monopoly with a few captive players.
The farm produce market can be rid of its petty monopolist traders only by dismantling the APMC law. But each state has to do this. Modi sarkar can’t wish the APMC away. So, yes, food inflation can be tamed. But it’ll take time and a lot of reforms working together to get this done. The ESMA, sadly, is no solution.
The nation is waiting with baited breath for the maiden Budget of the Modi Sarkar. Like many others, I wish I could be the one to read out the Budget speech. But that is a dream and in reality, Mr. Arun Jaitely is the chosen one. It is not enviable to be in his shoes now. The nation is staring at a drought, and simply coffers. Sharp spurt in fiscal deficit (nearly 46% of the target in first two months) and negligible growth in revenues (3.1 percent) make his challenge tougher. Still, if given a chance I would read this as a part of the overall speech in my House:
Madam Speaker,
First of all, I want to bring respect and dignity to the way we manage our finances, by forsaking mindless populism and reckless spending. I want to solemnly commit to the fiscal roadmap that my predecessors Jaswant Singh and Yashwant Sinha had laid out. It’s time we got back onto the path of fiscal prudence as envisaged in the FRBM Act.
So, I will stick to a three-year time-frame within which we would be a near deficit-free economy. To achieve this I would take the following steps, some of which are painful. Exceptional times demand harsh and painful actions. I assure the nation that these harsh measures will take us to the good times, as per the promises in our manifesto.
To achieve accounting clarity, we will bring out a report card on fiscal consolidation and proper management of deficits to enable better inflation expectations and thus create a lasting room for reduction in interest rates. Because, inflation is the worst form of indirect taxation.
My targets are double-digit growth over the next three years which should help me bring down fiscal deficit to 1% in the terminal year of tenure and zero revenue deficit by the third year of my term.
Five mega ideas that I would propose:
Hereby all subsidies will be handed out through a DBT mechanism to ensure recipients are genuine and make sure that the subsidy is used for the purpose intended. The details are being worked out. Nationwide rollout of the same will be implemented from January 1, 2015, saving expected INR 1 million.
A programme will be announced shortly to close all pending tax litigations in a year. This will help us realise at least 25% of the disputed taxes amounting to over INR 1 trillion.
All listed PSUs will have public float of 25% by March 2016, one year before the SEBI mandate. The government will also exit from sick companies and those in which it holds minority stakes. This will be done through an e-auction process. Proceeds expected to be INR. 1 trillion.
I am also offering the last amnesty scheme to all black money hoarders to declare their assets and come down to a fair cost of 35%. I do this, even as I am pursuing with my Swiss counterparts for details of all accounts pertaining to our citizens.
To all tax payers, I offer to bring consistency, stability and certainty in tax laws. Henceforth, any amendment will be aimed only to simplify, clarify and further amplify the law in line with Supreme Court rulings. There will be no retro amendments to tax laws.
I can’t keep taking away and not give back! I am raising the income tax exemptions limit to INR 5 lakh and revising the tax slabs to INR 5-10 L, INR 10-20 L, and INR 20 L and above, and taxable at 10, 20 and 30% respectively. This will remain in place for the next five years. Senior citizens’ adjustments will be suitably enhanced.
Cess and surcharges have been easy revenue routes, but were misused. Mumbai residents still pay a 16-paise surcharge on their bus tickets, introduced during the Bangladesh war to rehabilitate the migrants! So, henceforth there will be no cess and surcharges from the Central budget and I urge my state counterparts to do the same.
Our expenses are growing, so to supplement that we need to improve our tax compliance. The best way available is to roll out GST. I am happy to inform this August House that GST will be a reality from April 1, 2015.
Our taxmen need more professionalism. You are in the job of making people pay tax on time and not chase them for many years. I am promising a recast of the entire tax administration to enable voluntary compliance and swift and exemplary punishment to offenders.
Sorry I am very old fashioned in this regard. I guess there are many things which people consider an investment, let me tell you the risk involved in the same.
1. Make a down payment and buy a house.
2. Commit to a target – and pay the money in installments
3. Do a SIP in a mutual fund (or buy equity shares every month).
All 3 look like investments, right? Well they are, but look closely, and the risk is very different in each one.
In the first case if you buy a house costing Rs. 2.5 crores – for which you have borrowed Rs. 2 crores, your EMI would be Rs. 2L per month. The house belongs to you when you pay off the 240th installment. Till then the house belongs to HDFC. IF FOR SOME REASON THE MARKETS ARE DOWN, AND YOU CANNOT PAY THE INSTALLMENTS, YOU WILL MAKE A VERY VERY PAINFUL EXIT. Not too many people appreciate this risk. Ask those people who lost their jobs while paying the installments, AND the property prices fell at the same time. You cannot even seamlessly move from a 3bhk to a 2 bhk and reduce the loan. People who have not suffered think there is no risk. Chuckle, chuckle.
2. Commit to a target – say you decide that you will invest Rs. 1 crore in a Venture Capital Fund over a period of 5 years, and this product has a lock in of 7 years. This means you will have to pay an instalment of Rs. 2 million a year. Assuming that you have paid for 3 years and you are now suddenly stuck with the ‘asset’. What can you do? NOTHING. Zilch.
The company will tell you ‘Sorry even the money that you have given i gone down the drain. What can you do? Nothing.
3. You are doing a SIP in a mutual fund: you have made a payment of Rs. 24L over a 2 year period. Suddenly you have a cash flow – the MONEY IS ALL YOURS. If the markets have done well you will get Rs. 27L and in a bad market you will get Rs. 22L…BUT your money is available to you. EVERY MONTH YOU ARE TELLING THE FUND HOUSE….’I have a surplus so please invest’. You can stop, increase, decrease, withdraw, ….to me THAT IS A GENUINE INVESTMENT, without any leverage risk…..
The ordinarily decisive George Washington was paralyzed by indecision. It was the summer of 1776, and the Continental Army was being routed by the British in New York. Sick from dysentery and smallpox, 20 percent of Washington’s forces were in no condition to fight.
Militia units were deserting in droves. General Washington had exhausted himself riding up and down the lines on Brooklyn Heights, attempting to rally dispirited troops. Prudence dictated retreat – to preserve the hope of fighting another day. At the same time, though, Washington viewed any defeat as damage to his reputation and a stain on his honor.
There are any number of good reasons to read Joseph J. Ellis’s splendid little book, Revolutionary Summer: The Birth of American Independence. Ellis is a wonderful storyteller. His prose is lucid and succinct. Revolutionary Summer is a riveting exposition of exploded myths and excruciating dilemmas. For one thing, Washington — while by no stretch of the imagination the “little paltry Colonel” the British constantly derided — was not the near deity we often read about in American history books. He only reluctantly accepted the advice of aides for what turned out to be a brilliant tactical retreat in August of that summer, and a turning point in the war.
Indeed, the Americans, writes Ellis, were frequently “improvising on the edge of catastrophe.” Which helps to explain why Ellis’s book is a such a terrific case study in leadership. Here are the lessons I take away from it for leaders today.
First, success often depends on a team with complementary skill sets, frequently involving different temperaments and work styles. As a leader you have to assemble the talent you need, and live with and mitigate the shortcomings of respective team members. Thomas Jefferson, drafter of the Declaration of Independence, was superb with a pen. He was a notoriously poor public speaker, however. John Adams was brilliant, courageous, and resolute. He also suffered extreme mood swings and could be dangerously hubristic. (Furious over desertion rates, Adams suggested to an aide that they execute in each regiment every tenth man as a lesson.) Then there was Thomas Paine, the perfect spokesman for their cause. “I could not reach the Strength and Brevity of his style,” remarked Adams, “nor his elegant Simplicity nor his piercing Ethos.” Yet Adams also contended that Paine was “better at tearing down than building up,” a reference to what would happen after British rule.
The takeaway? If you are clear about your objectives, and focused on precisely what you need to develop and execute the elements of your strategy, you can assemble an unbeatable organization. Hire for common purpose, yes. But don’t hire clones.
Second, leadership is tested most by a dilemma — a situation that requires a choice between two or more equally unfavorable options. It is leadership’s job to arrive at decisions, and to do so in a way that aids their implementation. Adams insisted on postponing deliberations on what the new nation would look like, fearing that early splits between advocates of a confederation of sovereign states and champions of a consolidated union would undermine the war effort. He also wanted to postpone discussion of the fundamental disagreement between the northern and southern states over slavery. Some 500,000 individuals, roughly 20 percent of the population at the time, were African American, and nearly all slaves. The institution of slavery was an appalling contradiction of everything the revolution stood for. But Adams was convinced that all other political goals would be lost if independence from Britain were not first achieved. (Adams also resisted his wife Abigail’s plea to advance rights for another disenfranchised group: the female population that could neither vote nor, if married, own property.)
Here, my takeaway is that essential to leading is being clear about priorities. Not all decisions will involve the profound moral dilemmas faced by Adams and his peers. However, every difficult decision has a downside and produces unintended consequences, some of which are simply impossible to foresee. Do your due diligence. Then plunge in and push ahead.
Finally, a gem nearly all of us ignore: good leaders need good sleep. There were many challenges that plagued George Washington. His soldiers were, writes Ellis, “a motley crew of marginal men and misfits, most wearing hunting shirts instead of uniforms, spitting tobacco every ten paces.” The array of considerations Washington had to make was daunting. To mention but one, there were roughly 15,000 cattle, sheep, and horses on Long Island. What to do? Leave them? Confiscate the livestock to prevent them from falling into British hands? If yes, how would confiscation impact the allegiance of the farmers? New York was already infested with loyalists. Washington was swamped by a thousand such details. One wonders, though, whether a chronic sleep deficit was as serious a challenge as any individual issue he faced.
According to Ellis, at one point Washington was so exhausted he was unable to file a crucial report to the Continental Congress. He told John Hancock that in 48 hours, “I had hardly been off my Horse and never closed my Eyes, so that I was quite unfit to write or dictate.” Was a lack of sleep at least in part responsible for Washington losing his customary discipline and control on the battlefield? At the battle of Kip’s Bay — between what is now 32nd and 38th streets in Manhattan — Washington “struck several officers [with his riding crop],” repeatedly threw his hat to the ground, and initially resisted his staff’s desperate efforts to get him to exit the field — as British infantry was just 50 yards away.
There’s nothing weak or wimpy about getting rest, even — and especially! — in crisis situations. Today we have the science to back this up. Sleep deprivation can produce myriad deleterious effects, including frustration, confusion, irrationality and indecisiveness. According to sleep researchers, sleep helps us with alertness, perception, memory, reaction time, and communication. Specifically, sleep deprivation diminishes regional cerebral metabolism in the prefrontal cortex, that part of the brain responsible for higher-order cognitive processes. The result: impaired judgment, and high-risk behaviors.
I myself recall managing the case of a kidnapped Iraqi journalist in Baghdad several years ago. Our team got the reporter out alive, with high marks in a review from the U.S. military hostage negotiators who had assisted throughout — except that I was criticized sharply for going two weeks on 3-4 hours sleep per night. That was a well-intentioned behavior that might well have put the entire operation in jeopardy, the de-brief emphasized.
The lesson should be obvious: Balance is key. Work like a maniac, if you will. But no matter the stakes, if you don’t rest your body and mind, something (or someone) will be jeopardized.
I’ll end with my most general (and perhaps obvious) takeaway from reading Ellis: leaders looking for insights on how to do their crucial work better will find them in the vivid accounts of past triumphs. We don’t read history because it repeats itself. We study history because it reveals and inspires.
And all the better if it sometimes amuses. When the commander of British forces, still hopeful for early surrender, told Benjamin Franklin that he would lament American defeat like the loss of a brother, Franklin replied, with a bow and a smile: “My Lord, we will do our outmost to save your Lordship that mortification.”
The Government Budget should not have any real meaning for startups. But startups - and here I mean small and micro enterprises - generate most of the employment in the country. They… (Read On...)
Much has been made of India's 'demographic dividend' - the large economic gains expected from the sharp increase in the proportion of the working age population over the next few years and decades. Between 2001 and 2011, the proportion of the population either working or looking for work, rose from 45% to 50%. However, the gender bias in the labour force remained, with 62% of men working or seeking work, as opposed to just 35% of women. Nevertheless, these numbers were higher than those in 2001, by about 3-4 percentage points.
But as the latest census data shows, the real challenge is for the Indian economy to generate enough jobs to employ the rising numbers of young people entering the workforce.
According to the Census 2011 data (see chart below), the proportion of unemployed population in each age group has jumped since 2001. with the sharpest increases concentrated in the prime working ages from the late 20s and across the 30s. In overall terms, the proportion of unemployed in the total population rose to 9.6% in 2011, from 6.8% in 2001. The unemployment rate for men was around 9% for men, and close to 10% for women. In the prime working ages of 15-59 year-olds, the overall unemployment rate is now 14.5%, up from 11% in 2011.
Further, the change in the unemployment rate was higher for women than it is for men. Thus, the Indian economy is generating jobs at a slower rate than the increase in the labour force.
sources: The B1 Economic Tables of Census 2011. Unemployment data covers both those out of work, and seeking work, and marginal workers (partially working) who are also seeking work.
The Economic Times reports that the IT ministry is looking to connect 50,000 gram panchayats through non optical fiber network this year followed by 2L gram panchayats in next 2 years.
Finolex Cables, which operates and is the leader in this space and which I have written about in my earlier posts (read them here and here) continues to do well.
With an IT savvy PM, I expect the broadband rollout plan to be aggressively followed through. The power cable business is also likely to pickup once the industrial cycle picks up.
I continue to be bullish and hold my previous opinion of the price target of between 240-360 and a FY15 EPS target of 16-18.
The good thing about writing a blog is that over time some relevant people – while searching for specific information, perhaps – get to read it and comment.
"Haren few days before his murder had told me that his life is in Danger from his political rival involved in controversy happened since last few months as he was knowing lots of political truth that might have turned the tables of the then ruler and the party."
As far as I can see, this is fully ACTIONABLE material by the Police – assuming they CARE.
There is absolutely no doubt – in my mind – based on strong evidence that Modi was the ONLY person personally threatened by Haren Pandya – particularly his disclosure to the Justice Iyer panel about what Sanjiv Bhatt was to confirm many years later: a meeting in Modi's house in which Modi asked the administration to go slow. Not only did Modi deny him an opportunity to recontest his seat in December 2002 (a seat he had held for 15 years), he tried to fully destroy his political career. Just when Haren was being politically rehabilitated by BJP in Delhi, Modi organised the killing.
And as Sanjiv Bhatt wrote on FB:
Modi is the ONLY man with mens rea, a motive. Haren Pandya's father has clearly pointed his finger at Modi.
I know that most police and CBI are fully bribed so there is no possibility of ever finding the mastermind behind the killing of Haren Pandya (he is now visible to the whole world in open sight!). Unfortunately for Modi, in this case even his fully bribed High Court could not accept the nonsensical theory postulated by the CBI (and here I'm leaving aside the issue of Modi locking up an innocent man in jail for nearly a decade).
Why has Haren Pandya's murderer not been found yet?
A method is one of the prominent keys in market to attain profitable trades. The better you sharpen your method, the better will be your trading. The market is not always in one phase: it is uptrending, downtrending and choppy or sideways. So we must also have a method which will work in one phase and does not hurt our capital when market change its phases.
For example, in an uptrending market, buying breakouts is one of the most profitable trades. But in an sideways or choppy market where market remain in range, buying support and selling resistance is key factor.If you are a breakout trader then you should have some way of identifying choppy markets, which will avoid at least some of the losses that sideways markets cause to breakouts.
Here are some guidelines to develop a simple trading plan.
The first work we should do is try to analyze market environment and what is the ongoing trend in market on monthly, weekly and daily basis.
Then, we should identify the time frame in which we want to trade. Maybe we want to trade as a swing trader, using hourly charts.
We should determine our preferred style of trading - breakout, pullback, support and resistance.
Finally, we should trade on our preferred time frame when market phase matches with our preferred trading style.
Education startup Hippocampus has raised an additional $2.4 mn from the Asian Development Bank and Khosla Impact. Existing investor Unitus Seed Fund also participated in the round.
Hippocampus, which provides school and kindergarten programs, is currently operational in four districts of Karnataka.
The plan is to scale up availability of its EnglishSTAR & MathSTAR tuition programs and expand to 700 learning centers in 10 districts by 2016.
The startup, based in Bangalore, sets up learning centers in villages with a population of 3,000-20,000 people where the average income of a parent is Rs 60,000 per annum.
At an average tuition fee of Rs 240, its English and other courses are pretty effective in these areas. The company was founded in 2010 and currently operates 128 such learnning centers. This year, it is expecting to teach 7500 children and employ 400 teachers.
When the stock price index goes up with indefatigable enthusiasm, everyone cheers, except for dour economists who worry about irrational exuberance. When the consumer price index goes up, however, there is gloom everywhere, even on the farm, whose output accounts for nearly 60% of the index. Only middlemen cheer.
What the consumer pays for, say, onions, is several times what the farmer gets. But don’t blame just the middleman’s greed. Blame also systemic inefficiencies that allow for huge delays and wastage of perishable foods, particularly fruits and vegetables, in the supply chain between the farm and the consumer. Ultimately, to tame food inflation, we need an efficient supply chain that will feed back the incentive of higher price to the farmer, inducing him to produce more. Of course, this will take time. And there is no getting away from the need to do some hard spadework to tame food prices on a permanent basis.
But in the short run, the government can indeed do a few things. One is to sell its hoard of grain, bigger than what any emperor in the history of humanity had accumulated, cheap across the country in a very large number of locations. If the number of such open market sales outlets is small, this might lead to hoarding of grain for sale back to the government at the procurement price.
The decision to increase the import duty on sugar from 15% to 40% was driven by political calculations -- once mills get a good price, they can pay cane farmers what they owe them and this would yield the ruling party and its allies additional votes when elections happen. But this increases prices and hurts consumers. It also puts upward pressure on the consumer price index, and prevents the RBI from lowering rates. The net benefit to consumers, growth and companies would be greater from allowing sugar prices to remain weak than from jacking up the import parity price of sugar.
The government has ordered a crackdown on hoarders. Ultimately tough enforcement of such laws is far weaker a tool than the laws of economics, when it comes to increasing food output to hold prices.
The law that prevents just about anyone from buying farm produce at a price mutually agreed upon with the farmer, the so-called Agricultural Produce Marketing Committee Act, needs to go or be amended to exclude perishables. This would allow large retail chains to procure directly from the farmer. Large chains have two advantage. Scale economies and just-in-time management of the supply chain to ensure minimal waste in storage and transport.
Like any line of business, large retail chains also gain from competition. This is where the government’s policy of opposing foreign direct investment in multi-brand retail makes no sense. Allowing FDI in retail is no panacea, however. This would have to accompanied by some supplementary steps.
Farmers have to be organised into cooperatives or, better, producer companies, to give them the capacity to deal with large buyers such as retail chains. Such producer companies can organise collection of fresh produce, wash it,, grade it and keep it ready, sorted and packed in plastic crates for easy loading on to refrigerated trucks.
The trucks can be part of the supply chain of a large retailer or further entrepreneurial activity on the part of farmer companies. Efficiency gains will automatically squeeze out not just waste but also some fat middlemen margins. Is this flab something the ruling party is willing to shed?
In fact, combating food prices can be a new area of contestation among political parties. For the BJP, the gains are obvious. For the Congress, the Left, the Socialist fragments that had relied till now only on identity politics and parties that are rooted amongst the people like the BSP, the task of organising farmers into producer companies is a major opportunity to build grassroots level support, revenue base and continued salience.
At one stroke, India would reap cheap food, healthy political competition and a more robust economic growth.
This post is not about size of the house, but dealing with kids who have grown up, but refuse to leave the house. How should parents deal with this situation? Is there a solution? Is it simple? I have seen a complete range of reactions (emotional and financial):
1. One set of parents absolutely thrilled with the fact that the son is not leaving them, not getting married, earning well (Rs. 3 million a year is awesome money no for a 28 year old?). The parents have a nice house in a nice Western Suburb of Mumbai. Father was in Senior Management, and mother has 6 years to go for retirement from a Government College.
2. In the second case there are 2 sons – and the parents are worried that the sons are not earning ENOUGH to buy a Mumbai house. They have compromised – they have bought a house in the far away suburbs – but chances are both the sons are not planning to leave. The elder son is about to get married – and wants the 2bhk to be re done to create a bedroom for himself.
3. Parents have bought a big huge flat for the son and daughter-in-law. Thanks to the parents indulgence the house is a big 3 bhk – by Mumbai standards huge house – 1800 sqft. The mother makes ‘dabba’ for son and daughter in law (ok there is a maid who is being supervised) which they take for lunch. She even makes some thing for dinner…and the d-i-l makes rice / roti…
THESE ARE ALL HAPPINESS EVER AFTER KINDA STORIES….
I am sure there are sad ones too…will write about it later..
I have repeatedly commented on this but I believe the time has come not just to speculate about the collapse of the USD but to plan for it.
The laws of economics are inviolable, and despite the advantage US has, with its reserve currency, nothing is for ever.
In particular, no country can expect to life off debt, for ever.
It is clear that the USD will collapse, sooner than later. Unfunded liabilities, massive increases in debt, lukewarm growth/ recovery, all point in one direction.
As USD has become a welfare state and veered steeply towards socialism, the writing is on the wall.
Yes, if the US manages to invent something hugely productive, and very soon, such as fusion energy, it might still escape this fate, but at this stage, there is more than an 80 per cent chance of the USD collapse in the next few years.
What will happen when the USD collapses?
1. Just before the USD collapses, China will try to buy out strategic US assets – else it will be left holding the lemon.
2. Americans will no longer be able to afford Chinese imports and poverty will rise dramatically in the USA.
3. Welfare payouts will fail to keep pace with prices, further increasing poverty in the USA.
4. Social unrest and violence will dramatically increase in USA.
5. Yuan will become a reserve currency.
BRAIN DRAIN WILL REVERSE
Indians (particularly those not fully settled in the USA) will return to India. Despite its miserable performance India is not going to collapse any time soon. This is good news, but these excellent people will revert to the low productivity of an average Indian. Ultimately, these people will have to leave for other countries.
Countries like Australia will be able to attract the world's top talent. creating a virtuous cycle – and boosting growth and the AUD.
WAR
If there is an extreme collapse of the USD, America could go to war as a way out of the mess. However, its currency will buy less of everything abroad, so its ability to win wars will be severely degraded.
The international body representing central banks is warning its members that record low interest rates are generating conditions for another global financial crisis that may be worse than the first.
In its annual report, the Swiss-based Bank for International Settlements (BIS) expressed serious concern that global share markets had reached new highs and the interest rate premium for many risky loans had fallen.
"Overall, it is hard to avoid the sense of a puzzling disconnect between the markets' buoyancy and underlying economic developments globally," the bank wrote.
The BIS says the disconnect is largely due to continued monetary stimulus in the form of money printing and record low interest rates by many developed economy central banks.
"Financial markets have been exuberant over the past year, at least in advanced economies, dancing mainly to the tune of central bank decisions," it observed.
"Volatility in equity, fixed income and foreign exchange markets have sagged to historical lows. Obviously, market participants are pricing in hardly any risks."
This has led to another run up in global debt, with private debt outside the banking sector now 30 per cent bigger than it was before the financial crisis.
Of even more concern to the BIS than the total size of the debt is where it has gone, with many signs that risk is again being under-priced and finances being misdirected to speculative asset booms – just as it was in the run up to what the bank calls the Great Financial Crisis (GFC).
"Tellingly, growth has disappointed even as financial markets have roared: the transmission chain seems to be badly impaired," the bank lamented.
It is a warning central banks and market participants should heed, as the BIS was one of the only major international financial organisations to warn of the GFC before it began.
'Window of opportunity' to raise rates
Given the roll of record low rates in generating financial risks, the BIS says that a recent upturn in the global economy is "a precious window of opportunity that should not be wasted" to start returning interest rates to more normal levels, while also putting other measures in place to temper booms.
The BIS accuses many of its major economy members for focusing on the short-term health of their economies, while failing to consider the long-term effects of their policies.
"Focusing our attention on the shorter-term output fluctuations is akin to staring at the ripples on the ocean while losing sight of the more threatening underlying waves," warned the bank's head of economics, Claudio Borio, in a briefing on the report.
The BIS warns that the fundamental failure of central banks and governments to deal with the underlying causes of the previous financial crisis is allowing the risk of a "bigger one down the road."
It says continued debt accumulation over successive business and financial cycles is at the root of the problem.
The bank argues that this debt accumulation has been largely caused by policymakers failing to lean against the booms but easing "aggressively and persistently" during busts.
The road ahead may be a long one. All the more reason, then, to start the journey sooner rather than later.
BIS 84th Annual Report
This growing mountain of debt is making it harder for economies to grow at higher interest rates, forcing central banks into a downward spiral of record low rates and monetary stimulus that simply encourages more borrowing, worsening the underlying problem – what the BIS labels "a debt trap" where, in effect, "low rates validate themselves".
"In contrast to what is often argued, central banks need to pay special attention to the risks of exiting too late and too gradually," the BIS report argues to its central bank members.
"The benefits of unusually easy monetary policies may appear quite tangible, especially if judged by the response of financial markets; the costs, unfortunately, will become apparent only over time and with hindsight."
These comments appear particularly directed at the US Federal Reserve, which just under a fortnight ago told markets that official rates were likely to remain near zero for "a considerable time" after it stops its bond buying stimulus program later this year.
The BIS also appears to take issue with such so-called forward guidance by the Fed.
"Seeking to prepare markets by being clear about intentions may inadvertently result in participants taking more assurance than the central bank wishes to convey," it warned.
"This can encourage further risk-taking, sowing the seeds of an even sharper reaction."
The BIS report may also be firing a shot across the bow of European Central Bank (ECB) president Mario Draghi, who is considering launching a continental version of the Fed's "quantitative easing" to boost the availability of cheap euros.
The bank played down the menace of deflation, the threat of which is the ECB's main justification for proposing further unconventional monetary stimulus.
"Few are ready to curb financial booms that make everyone feel illusively richer. Or to hold back on quick fixes for output slowdowns, even if such measures threaten to add fuel to unsustainable financial booms," the BIS bemoaned.
"The road ahead may be a long one. All the more reason, then, to start the journey sooner rather than later."
Australian warning and China threat
Even though Australia is a relative minnow against the Fed and ECB, it is an influential member of the BIS with one of the Reserve Bank's assistant governors, Guy Debelle, the chairman of its Markets Committee.
The BIS found some space in its report to give a special heads up to Australia and similar small, economically open, commodity-exporting developed nations.
"Countries such as Australia, Canada and Norway were in the upswing of a pronounced financial cycle before the crisis erupted. Since then, the cycle has turned in these economies, but the fallout was buffered by high commodity prices," the bank observed.
"Since outstanding debt remains high, the slowdown of GDP associated with a reduction in commodity exports could cause repayment difficulties."
The BIS says such a fall in the value of commodity exports is a real possibility, with such production so heavily reliant on China as a buyer.
It notes that China is "home to an outsize financial boom", and the ramifications would be serious if it were to falter.
The trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on.
BIS 84th Annual Report
"Especially at risk would be the commodity-exporting countries that have seen strong credit and asset price increases and where post-crisis terms-of-trade gains have shored up high debt and property prices," it warned.
Also shoring up high debt and property prices in Australia have been the Reserve Bank's interest rate cuts, which took the official rate from 4.75 to 2.5 per cent in the space of less than two years between November 2011 and August 2013.
This fall in interest rates has seen the average national capital house price rise 15 per cent since its post-GFC trough at the end of 2011.
This in turn has seen the Reserve Bank's measure of household debt to income remain locked around 150 per cent – roughly the same as it was before the financial crisis hit.
"Those elevated [debt] levels, and the prospect of even further debt increases encouraged by accommodative monetary policies, made these economies vulnerable to a sharp deterioration in economic and financial conditions," the BIS cautioned.
"In those jurisdictions in which house prices were high, the risk of a disorderly adjustment of household sector imbalances could not be ruled out."
The clear message throughout the report is that countries lucky enough to have escaped the worst of the fallout from the GFC should be active now in stemming debt-fuelled asset booms and other financial imbalances, even if it means growth is slower in the short term.
"Particularly for countries in the late stages of financial booms, the trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on," the BIS observed.
"Earlier, more gradual adjustments are preferable."
The Bank for International Settlements has warned that “euphoric” financial markets have become detached from the reality of a lingering post-crisis malaise, as it called for governments to ditch policies that risk stoking unsustainable asset booms. While the global economy is struggling to escape the shadow of the crisis of 2007-09, capital markets are “extraordinarily buoyant”, the Basel-based bank said, in part because of the ultra-low monetary policy being pursued around the world.
Leading central banks should not fall into the trap of raising rates “too slowly and too late”, the BIS said, calling for policy makers to halt the steady rise in debt burdens around the world and embark on reforms to boost productivity.
In its annual report, the BIS also warned of the risks brewing in emerging markets, setting out early warning indicators of possible banking crises in a number of jurisdictions, including most notably China.
“Particularly for countries in the late stages of financial booms, the trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on,” it said.
The BIS, the bank for central banks, has been a longstanding sceptic about the benefits of ultra-stimulative monetary and fiscal policies and its latest intervention reflects mounting concern that the rebound in capital markets and real estate is built on fragile foundations.
These tools have proved very helpful in increasing the resilience of the financial system, but they have been only partially effective in restraining the build-up of financial imbalances
The report comes days after the Bank of England became the first major central bank to raid its new macroprudential toolkit to stop a credit boom in the housing market from derailing the UK’s economic recovery.
The BoE hopes its restrictions on riskier forms of mortgage lending will tame any property bubble without damaging growth. But the BIS warned that deploying macroprudential tools, which central banks around the world have adopted, was a poor substitute for higher rates.
“These tools have proved very helpful in increasing the resilience of the financial system, but they have been only partially effective in restraining the build-up of financial imbalances,” the BIS said. “Failing to rely on monetary policy can raise even more serious challenges down the road.”
The BIS view on interest rates is at odds with the stance of the International Monetary Fund, which this month called on the European Central Bank to ease monetary policy by embarking on large-scale asset purchases, should the threat of a dangerous bout of falling prices persist.
Christine Lagarde, the IMF’s managing director, has dubbed the risk of a prolonged period of deflation as “the ogre” haunting the global economy, but the BIS said the risk of outright and persistent falling prices was low.
The government on Monday, June 24th, announced several measures to bail out the ailing sugar industry: While the rate of import duty was more than doubled from 15 per cent to 40 per cent, the mandatory ethanol-blending cap was increased from five per cent to 10 per cent. The notifications in this regard will be issued shortly after the industry assures of clearing farmers’ Rs 11,000-crore dues at the earliest. (Source: Business Standard)
While such measures could act as sweeteners for Sugar companies, it is also known that sectors like sugar undergo cycles of high and low performance. I feel it is time to review one of the seemingly promising stocks from the Sugar Sector right now, Bajaj Hindustan here:
If we look at its last 3 years chart, it is just shows the pain is has been undergoing, from Rs. 80 to around 10. But since last 6 months, that trend seems to be somewhat changing. Looking at its long term chart of 8 long years starting 2007, it shows the volatility it saw:
But to me, the most eye catching part is the base that the stock has been forming. Around Jan 2009, BajajHind took support at the price of around 37-38 twice and from it again reversed its trend then to touch around 250 levels. From there, it saw a one way down trend to around the price of 10, 37-38 now acting as a resistance. Also, it shows that BajajHind is seemingly forming a rounding bottom, and if it breaks above its long term resistance price of around 37-40, it may well imply breaking out of the rounding base, and also change in its trend. As Sudarshan Sir keeps telling us, no stock can change its longterm trend overnight. It first needs to form a base. That is exactly what this stock seems to be doing. May be too early to say, may be not! Time will tell..
Real estate in some part of New Delhi, India has finally hit the funny bone. Unrealistic prices being touted by sellers emanate from an uninterrupted boom for five years, which ended in 2010 and the bad phase continued thereafter.
The so-called property dealer is notorious for jacking up prices. He with his ceiling fan and his mobile phone traverses across Delhi’s bylanes in his bike or scooter and promises the seller the moon. With two per cent brokerage, his world used to be so rosy with higher prices. One deal and his semi-literate man who would not be good for anything else used to take a six month holiday or used to tout himself as a neta in local politics with the money he used to garner from such a deal.
Recent interactions with the practitioners of real estate have left me dumb founded. Apartments with as little as 1600 square feet as covered area are being show cased inaccurately to buyers as being of 1900 to 2000 square feet. The prices being quoted are laughable ranging from Rs 1.5 crore to 2.5 crore.
My understanding of any industry was that it supplied a need to legitimate buyers. The end objective of any legitimate industry is that it is created and serviced to satisfy the buyer. However, a visit to Dwarka, the sub-city in New Delhi has clearly shown that the registers being maintained by real estate agents list at least six sellers to every buyer who approaches them.
These buyers more often than not remain potential buyers as they go away dissatisfied and buy builder floors in south Delhi or east Delhi, which are considerably cheaper. Dwarka harbours a festering water shortage. It also suffers more power failures than south or east Delhi. However, many investors and not residents who had bought many apartments in Dwarka are desperately trying to at least recover their cost to no avail.
I looked at 42 apartments in one day and found only two owners to be occupants. The rest were all speculators who had bought the inventory at the hey days of the real estate explosion during the Congress rule where land prices were overtaken many times over by prices of apartments and brought to the obsence and unrealistic levels that they rest today. The result is nil buyers on the ledger. In fact, in the last 200 years, plots of land and independent houses in the same locality have always been at least five to ten times more expensive than apartments which do not lend themselves to expansion. Today, the property dealers and the moronic speculators have made a mockery of that truism.
The extent of ridiculousness that is show cased in this matter is evident from the prices expected by speculators. An apartment in sector 18B in an isolated apartment block, which requires the car if you even deign to buy a match box or a loaf of bread at any hour of day and measures 1550 square feet is labeled at Rs 2.4 crore. The four bed-rooms are so small that they will not house a six by six bed.
The living room is the only saving grace and the speculator wants such a price because he has drowned the apartment walls in expensive marble. One wonders at the level of intelligence of these little green men. Such an abode should not attract anything more than Rs 50 lakh for it is an impractical as a living space. The moron who had designed it and the other idiot who had decorated it with slabs of calcium carbonate must be mentally retarded.
Another apartment, which is located on the top and tenth floor of an apartment building heats up like a furnace during Delhi winters. It is supposed to command a price of Rs 2.55 crore according to the real estate agent. A buyer should not be asked to pay more than Rs 80 lakh for such a god forsaken hot house.
The agents have reduced their brokerage to one per cent from two in desperation but still have not managed to maintain the transparent system of a fixed amount of consultancy fees for every purchase made.
Such an arrangement would restore more faith to the buyer but they are still used to jacking up prices unrealistically and expecting more moolah at the end of a transaction.
It is time blind and stupid speculators faced the prospect of losing most of their cost of inventory they had stocked up to deny legitimate residents a home in their lust to make a killing – a killing that never came.
Jesse Lauriston Livermore (July 26, 1877 – November 28, 1940), also known as the Boy Plunger and the Great Bear of Wall Street, was an American stock trader. Born in Shrewsbury, Massachusetts, Jesse Livermore started his trading career at the age of fourteen. He ran away from home with his mother's blessing to escape a life of farming his father intended for him.
While working at Paine Webber brokerage in Boston, a friend convinced him to put his first actual money on the market by making a bet at a bucket shop. By the age of fifteen, he had earned profits of over $1,000 (which equates to about $23,000 today). In the next several years, he continued betting at the bucket shops. He was eventually banned from most bucket shops for winning too much money from them.
During his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. $100 million in 1929 would be over $125 billion today. Livermore first became famous after the Panic of 1907 when he sold the market short as it crashed.
He continued to make money in the bull markets of the 1920s. In 1929, he noticed market conditions similar to that of the 1907 market. He began shorting various stocks and adding to his positions, and they kept declining in price. When just about everyone in the markets lost money in the Wall Street crash of 1929, Livermore was worth $100 million after his short-selling profits.
Livermore was declared bankrupt in 1912 because of adding on to his losing positions and lost all of his money which he earned in 1907 crash. Through unknown mechanisms, he yet again lost much of his trading capital, accumulated through 1929 and went bankrupt again in 1934.
QUOTES:-
(1) All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical formations and patterns recur on a constant basis.
(2) The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.
I get lots of requests from people for equity / mutual fund / investment related answers. Here is a post saying why it is very very very difficult to handle them.
The typical queries are:
1. I have invested in IDFC Premier Equity fund. Should I book profits now?
2. I have a demat account with India Infoline. They are asking me to do FnO should I do it?
3. I have Rs. 20 lakhs to invest – give me 10 funds in which to invest Rs. 2L each – and not see it for 20 years.
4. My husband and I have retired – can you please tell us how to invest Rs. 1.3 crores which we have got from our retirement corpus. We wish to keep them in bank Fixed deposits – do you not think it is a good idea?
…I am sure you are getting the drift of the questions.
Please note that for a person like me to know how YOU should be investing I need to know much, much, more about you.
What is your networth? Age – you, your wife, your dependents – all the ages.
Your risk taking capacity – both ability to take risk and need to take risk
How comfortable are you when the markets are in the red – and there is blood on the streets.
Your education level, your past experience, your ability to understand equities, debt, etc.
Your job – the certainty of salary and for what period, your level of indebtedness…
So just asking me one question does not help.
I still need the full medical check up. You cannot tell me “My blood group is A+ – tell me should I take &*( NEW medicine or no….
I AM SURE THERE ARE PEOPLE WHO CAN ANSWER THAT QUESTION, JUST THAT I CANNOT.
I've long rued [e.g. this] the idea that technical (not even basic science – an intellectual pursuit) subjects like engineering and medicine are given so much prominence in India (basically these are pathways into subordinate technical roles in the West), at the expense of the study of economics and governance – which are CRUCIAL if a nation has to prosper.
Here's an extract from comment I made today, which I'm sharing more broadly. Not more than a handful of IIT/IIM products that have contributed meaningfully to India's governance. Even people like Nilekani are mere boot-lickers of the corrupt socialists.
There is no role for government in any educational institution, including IITs and IIMs.
There is absolutely no doubt in my mind that IITs and IIMs are relatively better than other institutions not because of their innate quality (which is quite ordinary) but because the attract some of the very best students of India. With the brightest from 1 billion people, naturally, there will be some quality in these institutions.
International rankings clearly demonstrate that third tier institutes in Australia (for example) provide equal or better education than IITs (IIT Delhi ranks at 350. In comparison, Queensland University of Technology – a third tier university in Australia – ranks at 276). [http://www.timeshighereducation.co.uk/world-university-rankings/2013-14/world-ranking].
Similarly, on another ranking system, Shanghai (http://www.shanghairanking.com/ARWU2013.html) except IISc, not a single Indian university figures in the top 500 whereas 19 of Australia's universities figure in the top 500.
Now, it could be argued that the methodology of these institutions is not OK, but that's beyond the point. The point is that most of these universites teach ordinary students and produce outstanding results, while IITs get some of the world's best students and produce ordinary results.
Without further education by IITians abroad (a vast majority have pursued higher studies abroad), they would not be able to contribute (to the West) as much as they have done.
And we can't forget that they are largely fodder for the growth and prosperity of the West. How many IITians in an average batch stay back in India? So in that sense very few have any sense of patriotism or repaying India for their (howsoever ordinary) education. You are an exception, not the rule.
Finally, let me say that there is absolutely not a single school of economics or governance in India that is comparable even to the most third rate schools in the West, a few feeble attempts in this regard by a few Indian universities notwithstanding.
On ALL measures of performance tiny nations like Australia with 1/50th of India's population, do better. Often FAR better.
Let's not be proud of anything unnecessarily, but be critical and demand to be the best. That's the only way to improve. And that means setting the incentives right – and definitely not being regulated by government Ministers. Let there be total independence and full privatisation of all higher institutions.
We have been fortunate in India to get a few IITians and IIM graduates with a liberal worldview – they are all associated with FTI, like Dipinder Sekhon, KK Verma and Kamal Sharma, but 99.99 per cent of the IITians and IIM passouts are socialist. I've met hundreds of them (both in the IAS and CEOs of top companies in USA, and tens of them in Australia), and almost all are totally confused about governance and public policy.
As I wrote recently, public policy is like quantum mechanics: totally counter-intuitive. Not for nothing can only a very few people understand Arthashastra or Hayek. It requires years of solid education and thinking to think "straight" about public policy. Just being an IITian or IIM passout means NOTHING to India. They may be good servants of the West (they are mostly living in the West) but they have little or nothing of value to contribute to India.
The arrogance (just like the arrogance of the IAS) of the average IIT/IIM passout stops them from learning anything new in life. They "know" everything without having spent years in world-class institutions to learn about the details of public policy. Consider the case of Arvind Kejriwal, for instance – the most foolish man on the topic of public policy.
Let's encourage people to speak out – for India can't be changed for the better by IITians and IIM graduates. They are mostly beyond redemption (a few exceptions may exist).
Education startup Hippocampus has raised an additional $2.4 mn from the Asian Development Bank and Khosla Impact. Existing investor Unitus Seed Fund also participated in the round.
