Chaitanya Patel

This short post-interview snatch from AK will go down as the Watergate scandal of Arvind Kejriwal that brought his character into question. 

Tens of people who know him well have alluded to his real character and I've personally experienced his arrogance and disinterest in learning anything useful for India. His hooliganism and that of his party members is now also well established.

But this interview shows a deeply disturbing side of Arvind's character, and such chicanery the voter will NOT forgive.

Just like the true character of Nixon led to his resignation and destruction of his entire lifetime legacy, so also (although not entirely to that extent) this CHICANERY AND MANIPULATION of the voter will jar those who see it. 

When my sons were children, I used to play a game with them called 20 questions. Most people will have heard of it, or played it. It’s not a terribly intellectual game. Once they grew up a bit, they lost interest. Asking a barrage of questions also lacks intellectual depth. It is like shotguns that were once used to shoot birds and small game. There is the hope that something sticks somewhere. But in the process, since power of the burning charge is distributed among pellets, the energy of any specific ball is low. You may need to aim less carefully, but you also lose force. I prefer one question at a time, so that you can probe better. Hence, let me focus on school education in Gujarat, something that has been in the news recently. I don’t want to bring in malnutrition among cattle, even if they are wandering around the schools. There are assorted indicators for evaluating state of school education and they don’t necessarily show similar trends. The one that’s been in the news is of single-teacher schools. How can a single teacher teach 5 classes? Fair point.

There is a new sampling technique that does the rounds now. Let me illustrate. I went out and asked the first 3 people I met whether they would vote for Congress in the general elections. All three said no. Am I now right in deducing that the Congress will get no votes in the general elections? That would be patently stupid. The sample isn’t large enough. That’s precisely the reason one uses sample surveys and censuses. One doesn’t arrive at conclusions on the basis of chatting to a few people, attractive enough though that anecdotal stuff may seem to be. There is a decent database I can access right here in Delhi. It’s called DISE and is produced by NUEPA. Unless I hope to get better power supply in Gujarat to access the Net, the visit to Gujarat isn’t quite necessary. The latest DISE tables are for 2011-12. For Gujarat, this covered 40,943 schools. I prefer to depend on this, because I can’t hope to visit 40,943 schools personally. What does this tell us about single-teacher schools? Schools are also divided into primary, upper primary, secondary, higher secondary. They don’t have the same numbers. Perhaps we should take the “all schools” indicator. For Gujarat, in 2011-12, the percentage of single-teacher schools was 0.81%. You can check this out yourself. It is Table 1.30 in the analytical tables for 2011-12.

Is 0.81% good, bad or ugly? The answer depends a bit on the perspective. The all-India comparable figure was 8.31%. But Gujarat is supposed to be a State where governance has improved. Why should we even have 0.81%? Fair point again. Therefore, let’s check out the similar analytical tables from DISE in 2004. This is now Table 2.32. In that year, in Gujarat, 2.73% of “all schools” had no teachers and 5.04% of “all schools” were single-teacher. 5.04% plus 2.73% is 7.77%. From 7.77% in 2004, it has come down to 0.81% in 2011-12. Sure, that 0.81% should also have dwindled to zero. However, given these numbers, I find it difficult to argue that there have been no improvements. This was only about the single-teacher indicator, picked by critics. But regardless of the indicator, you will find improvements. DISE also computes an Educational Development Index (EDI), aggregated across a range of indicators. But since that comes out with a time-lag, let me ignore that. You will find it on the website.

Finally, let me leave you with the following. Drop-out rates are a pretty decent indicator. At what level of education, shall we pick the drop-out rate? Let’s say primary education, defined as Standards I to V. Boys or girls? Perhaps both. In 2011-12, for that segment, the drop-out rate for girls was 2.08% and that for boys was 2.05%. In 2002-03, it was 19.14% for girls and 19.08% for boys. But like I said, one can always talk to the 2.08% of girls who dropped out and the 2.05% of boys who dropped out and create a song and dance out of it.

As expected, and as various satirists have documented, Angela Merkel, Ms Nein, is being Ms Nein. Germany, for historical reasons which not many outside of Europe understand, refuses to take the lead in punching above its weight in world matters.

The fact that Russian President Vladimir Putin would only take Germany seriously, which coincidentally happens to be richest, most powerful nation in the EU, isn’t enough to convince Ms Nein to take on Russia. No, Merkel isn’t going to intervene or put pressure on Putin, whatever US Secretary of State John Kerry may desire. She cannot. That’s her liability, and it’s also her strength.

A quick history lesson. The EU came into being to avoid a European war, precisely the kind that it is facing in Ukraine today. Look up its location on Google Maps. Germany, after World War II, abdicated its role as a political and military leader of Europe, although everyone quite understands that Germany is the one country that is able to actually push through any pan-European initiatives with both money and arms. But it won’t. Germany is too steeped in European politics to take its role as leader of EU. Or rather, Ms Nein won’t do so.

Russia’s Energy Stick

After the initial outpouring of baffled rage about the Ukraine crisis, the numbers are coming in. Europe has realised that if it attempts to economically isolate Russia, it has more to lose than Russia. According to an estimate from BBC, the UK alone has over £46 billion in investments in Russia, and exports more than it does to India, not to mention a more or less positive balance of trade. And then there’s what Russia’s oligarchs do for the City and premier league football. The standing joke in the UK is that Russian marines will paratroop into Kensington and Chelsea, if enough Russians yell for help. After all, those are as Russian-dominated as Crimea is. Germany’s exposure to Russia is even higher, given that it is a huge importer of Russian energy.

Merkel’s role in the whole eurozone crisis has been one of bunkering down and maintaining the status quo. While anyone with a clue about markets gives the credit to Mario Draghi at the ECB, Merkel has her electorate convinced that she’s a safe pair of hands. And she’s not about to drop the Russian ball. You cannot accuse her of imaginative or decisive leadership, but Merkel isn’t afraid to say nein.

In an unusual move, Poland, the Czechs, Hungary and Slovakia have already jointly appealed to the US to release its gas reserves, as they’re pretty much dependent on Russian energy; and worried they may be arm-twisted if they toe the American line.

And, of course, Ukraine is pretty much in hock to Gazprom. If the G7 — note there’s no discussion about G20s or G8s now — wants to impose economic sanctions on Russia, Russia has a much bigger economic stick to hit Ukraine with. Putin has proved he’s more than ready to use the energy stick to batten down his opponents.

So whatever the rhetoric of the West, both from its leaders and media, the situation on the ground is that Crimea has pretty much gone over to Russia. The US won’t put guns on the ground. Europe can’t. From sparse reports, China is, as usual, quite happy to back Russia. After all, it takes American focus off the Pacific region and out of their backyard.

Oh and since I’m sort of branded a doomsayer anyway, I’d stop celebrating all the gains the Sensex is making. It might have something to do with BJP’s prime ministerial candidate Narendra Modi, but please do pay some attention to the rest of the world. FIIs have fled Russia, and more are fleeing Eastern Europe as well. Where does that leave for the hot money to go? It won’t last. It never does.

So you have decided to buy a house! You have thought over it many times, you and your spouse can afford it, and now you are taking the plunge, right?

Let us look at some of the steps that you MUST TAKE towards that Big decision of your life:

1. Improve your credit score: Credit score has become important in India too. So if you have done anything to damage your credit score, go and correct it. It takes almost a year of good behavior before you clean up your credit. Get your score, and see how to improve your credit score. Now go about doing it!!

2. Create your balance sheet and be completely debt free: If you have any debt try to pay it off. In this category would be all the small time debt like personal loans, credit card loans, etc. See how much of your car loan is paid off, and reduce it to the minimum. Being debt free means you can now look at your assets – you will need all of this to make the down payment. Depending on the market conditions start withdrawing from your mutual funds, direct equities, etc. and get your down payment amount ready.

3. Make a down payment – MINIMUM down payment should be about 30% of the COST OF THE HOUSE. You also need to have money for brokerage, processing fees, registration, stamp duty, society entry fee, society membership charges, etc. So get a PROPER estimate of all these expenses and plan the size of your house accordingly.

4. Buy the size you NEED: If you are newly married, you maybe able to live for 3-4 years of your life in a 1 bhk, once you have a kid move into a 2 bhk. If your parents wish to stay with you for a long period, you may need a 3-4 bhk depending on how many kids you have..So do not be in a hurry to buy a big house…You can always upgrade to a bigger house later. Maybe in a better locality?

5. Shop around for a house as well as a mortgage: when you go to a mortgage company, remember they are sales people too! They may (mostly do) have some house son distress sales. Ask them about it. Ask them about builders, locations, ideal size based on your needs AND your ability to buy. Mortgages have to be considered very carefully. Hdfc charges a little more than State bank of India, but gives all services brilliantly. Your documents are preserved better. Almost everything can be done online or through phone. Consider all this before you choose your lender….

start home hunting! all the best…

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There is nothing right or wrong about using a credit card. I do not use one too much, but it has a role to play in life. YOU should use a credit card, but know the mistakes that we can commit or do commit…here is a check list.

The list is not in any particular sequence…but here it is!

1. The most important thing about a credit card is TIMELY PAYMENT: the day you get the credit card bill set up the payment mechanism. If you are confident of your credit card company, set up an automatic debit. Or just go online an make the FULL PAYMENT. Delays are EXPENSIVE.

2. Pay the FULL AMOUNT, ON TIME, EVERY TIME: Credit card companies send you a bill for Rs. 11,340 and in big BLOCK letters tell you MINIMUM AMOUNT TO PAY 1134 – which is about 10% of the bill. YOU NEED TO PAY 11,340 – the full amount on or 3 days before the DUE DATE. Always.

3. Do not use the card to the FULLEST every time: There is no need to use the card to its fullest.

4. Do not use the card for friends ESPECIALLY if you are not sure whether they will pay you, and when they will pay you.

5. If you have 2 cards, carry one around and leave one at home under lock and key…especially if it has a limit of Rs. 5L !!

6. Read the bills – and the charges. BFSI is not exactly the most trusted industry today, is it?

7. do not buy more just to get points. Makes no sense.

8. If you do run up a bigger debit balance than what you can pay, take a personal loan, beg, borrow from parents, spouse, friends and make the balance NIL. Interest rates of 42% p.a. are difficult to beat, right?

….

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This is of course a brilliant headline to catch people to come to any website, right?

Well I do not have an answer to this, but hey here are the caveats as usual:

I do not trust Indices in general. After all Indices present the average, and average means NOTHING if you do not know:

How is it calculated
Mean, Median, Mode, Standard Deviation of the data.

If I am commenting with just the mean, my comments could be as inaccurate as P Chidambaram’s estimate of the amount of black money in New Delhi.

Having said that I have only the Residex of NHB to go by and my comments are based on that.

The Residex says that Bengaluru prices of property has gone up by 11% from 2007 to 2014. Hold your breath. If you invested Rs. 100 in a RE it would be worth Rs. 111. In a bank it would have become about Rs. 190.

In Jaipur Rs. 100 would have become Rs. 105. In Hyderabad Rs. 93. In Kochi it would have become Rs. 85.

How many of you believe these numbers? When I walk into a personal finance class I am bombarded with Returns from 18% to 25% in RE. Sir my money doubled in 2 years…Sir….blah blah blah

So it means all my students are a) bluffing or b) they are mathematically challenged. Right?

Now go to the NHB site and see what has really happened. Not in your imagination, or your friend’s imagination. Or in your client’s imagination.

IN real life find out how much is the appreciation. Use excel sheets to see how much returns you got.

Use pattabhiraman’s free calculator. Jago builder ke ghulam. Jago.

http://www.nhb.org.in/Residex/Data&Graphs.php

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Today’s slide from Slide Share talks about business planning.

It has good points on

• SWOT analysis ( my favorite )
• Business Strategy
• A little bit of Project Management

Enjoy!!!

This presentation is by Richard Gabel

Satya Nadella’s appointment as Microsoft’s CEO was greeted with headlines such as “Why Microsoft and Everyone Else Loves Indian CEOs,” echoing Time’s 2011 lead heralding “India’s Leading Export: CEOs.”  But have Indians really risen to the top of many of the world’s largest corporations?  A systematic analysis of mid-2013 data on the world’s largest firms by revenue, the Fortune Global 500, shows that at that time only three non-Indian firms were led by Indian CEOs: Arcelor Mittal (Lakshmi Mittal), Deutsche Bank (Anshu Jain), and PepsiCo (Indra Nooyi).  That was exactly the same as the number of non-Brazilian firms run by Brazilian CEOs, and short of the 5 non-South African firms led by South African CEOs.

Does the paucity of Indians at the top of non-Indian Fortune Global 500 corporations mean that the late C. K. Prahalad’s assertion that “Growing up in India is an extraordinary preparation for management” was wrong?  Not necessarily.  Indians have indeed gone out and achieved great managerial success abroad.  The proportion of Silicon Valley tech startups led by Indians has risen from 7% in the 1980s and 1990s to at least 13% and by some estimates more than 25% (even though Indians make up less than 1% of the US population).  One estimate pegged the annual income of the Indian diaspora at about one-third of India’s GDP, with much of that coming from Silicon Valley.

The real myth is not the success of Indians abroad but rather that the world’s largest firms are so global that their national origins no longer influence who they select for CEO.  Only 13% of the Fortune Global 500 companies are led by CEOs who hail from outside the country where the firm’s headquarters is located.  Also, the foreign countries where Indian CEOs do lead Fortune Global 500 firms are illustrative of how openness to foreign CEOs varies widely from country to country.  European firms, on average, are the most likely to have foreign CEOs.  U.S. firms lie in between European and Japanese firms.

Firms’ propensity to hire foreign CEOs is also highly correlated with their home countries’ general openness to trade, capital, information and people flows as measured on the Depth Index of Globalization that I compile with my IESE Business School colleague Steven A. Altman.

India’s fame as a CEO exporter must be juxtaposed against the paucity of non-Indians running major Indian corporates.  After the untimely demise of Karl Slym, who briefly headed Tata Motors, none of India’s eight Fortune Global 500 firms is led by a non-Indian CEO.  In fact, only three of the 112 Fortune Global 500 companies based in any of the BRIC countries are led by a non-native CEO!  As firms from these countries seek to differentiate and build brands in advanced economies rather than competing mainly based on low home-country cost bases, the troubling signal this sends to foreign talent about their career prospects will become increasingly important.

Returning to Microsoft’s selection of an Indian CEO, it is interesting to note that one source estimates that more than one-third of Microsoft’s workforce is of Indian descent.  Microsoft also earns about half of its revenue outside of the United States.  The appointment of a non-native CEO of any origin is still an unusual occurrence, but Microsoft’s selection of an Indian was, all else equal, not entirely surprising.  And it sends a very positive message to high-potentials throughout Microsoft: this is a company where the best candidate, regardless of national origin, can rise to the top.

In the home stretch leading up to the 2014 Lok Sabha election beginning April 7, four political forces will come into play. First, the BJP and its expanding orbit of NDA allies. Second, the Congress and its shrinking UPA base. Third, the ragtag Third Front. And fourth, the equally amorphous Fourth Front. 

The following analysis factors in several key issues: one, the formation of Telangana; two, the entry of Ram Vilas Paswan’s LJP into the BJP-led NDA; three, the possibility of Raj Thackeray’s MNS not contesting the 2014 Lok Sabha poll; four, the unravelling of the AIADMK-Left alliance; and fifth, likely new alliances between the BJP and small parties in Tamil Nadu (DMDK, PMK, MDMK), Haryana and elsewhere.So what do the numbers throw up? 

Start with likely seats for the BJP. As frontrunner, BJP strategists should break up their seat target into three categories: Focus States, Challenging States andSmall States/UTs. 

Here are the projections: 

Focus states

1. Gujarat: 23


2. Madhya Pradesh: 25


3. Rajasthan: 22


4. Maharashtra: 18


5. Uttar Pradesh: 48


6. Bihar: 24


7. Karnataka: 15


8. Chhattisgarh: 8


9. Jharkhand: 8


10. Uttarakhand: 4

Total: 195  

Challenging states

1. Haryana: 4


2. Punjab: 2


3. Assam: 5


4. West Bengal: 1


5. Kerala: 1


6. Andhra Pradesh (Telangana): 2


7. Andhra Pradesh (Seemandhra): 1


8. Odisha: 1


9. Tamil Nadu: 2


10. Others: 2

Total 21 

Small states/UTs

1. Goa: 2


2. Daman & Diu: 1


3. Nagar Haveli: 1


4. Himachal Pradesh:3


5. Jammu & Kashmir: 2


6. Delhi: 3


7. Andamans: 1


8. Others: 1

Total: 14 

BJP: overall total: 230 

Turn now to the Congress: 

Assuming the TRS fights the general election in a seat sharing alliance with the Congress in Andhra Pradesh (Telangana constituencies), these are the likely numbers for the Congress: 

1. Gujarat : 3


2. Madhya Pradesh: 3


3. Rajasthan: 1


4. Chhattisgarh: 3


5. Maharashtra: 9


6. Karnataka: 12


7. Uttar Pradesh: 4


8. Bihar: 1


9. Jharkhand: 2


10. Uttarakhand: 1


11. Haryana: 2


12. Punjab: 1


13. Assam: 5


14. West Bengal: 4


15. Kerala: 7


16. Andhra Pradesh (Telangana): 4


17. Andhra Pradesh (Seemandhra): 1


18. Odisha: 4


19. Tamil Nadu: 1


20. Others: 7

Total: 75

How does the Third Front stack up?  

Third Front

1. Left (four parties): 25


2. SP: 10


3. BJD: 12


4. JD(U): 4


5. Others: 7

Total: 58 
The rupture in the AIADMK’s alliance with the Left parties could sound the death knell of the Third Front, especially with the BJD also turning sceptical. 

What about the Fourth Front, comprising parties antagonistic to the Third Front? Their likely numbers: 

Fourth Front

1. TMC: 27


2. DMK: 9


3. YSR: 11


4. BSP: 18


5. Others: 7

Total: 72

So we have our final math: 

NDA: BJP (230) + SS (15) + SAD (7) + TDP (12) + LJP (2) + Others/Independents (18) = 284. 

UPA: Congress (75) + NCP (5) + NC (1) +TRS (7) + RJD (8) + Others (8) =104. 

Third Front: Left Front (25) + SP (10) + JDU (4) + BJD (12) + Others (7) =58. 

Fourth Front: TMC (27) + DMK (9) + YSR (11) + BSP (18) + Others (7) =72. 

Likely post-poll governing combinations? Here are two: 

1. UPA + Third Front: 106+58 =164. Plus outside support from AAP (10)=174. Add mercurial  BSP (18) = 192 – well short of a working majority. 


2. NDA + post-poll allies: 284 + AIADMK (22) = 306. 

Jagan Mohan Reddy’s YSR (11) and others from the Fourth Front could join the NDA though their numbers would not be critical to forming a stable government. Is there a further upside for the NDA? With two months of campaigning to go in this 9-phase election, there clearly is. 

Follow @minhazmerchant on twitter

The run up to a General Election is an excellent opportunity for stock taking on the state of health and functioning of our democracy. Intense scrutiny of all institutions vital to the functioning of our democracy is currently in progress. The sharpest focus is on the political class. 

Notable exceptions notwithstanding, the politician is on the mat. The stench of corruption and airing of scams would be of serious concern in and of themselves. The lack of job creation, particularly in the manufacturing sector is fast diminishing the traditional tolerance for corruption and increasing disenchantment with the political ‘system’ and ‘class’ per se. 

The party in office for ten years at the Centre cannot escape responsibility for this. The drubbing at the polls in December 2013 has succeeded in driving home the perils of outright bad governance. The resultant toxicity provides perhaps the best explanation for the rise of political start ups like the Aam Adami Party (AAP), which got off to a good start but is now fast contributing to action-induced disenchantment and disgust. If present political trends persist and intensify, dismal showing in May 2014 will exacerbate the fault lines within the Congress. These are already visible and could result in yet another split. 

The political space that AAP so quickly acquired could not have been possible but for media attention. Media attention is, however, a double edged sword. The desire to fight entrenched corruption invariably provides an attractive flavour. Unrealistic poll promises like subsidized or free electricity and water are lolly pops which entice the gullible. Disenchantment, however, comes with equal ease and speed. 

The political class, by definition, is self-absorbed and arrogant. The arrogance of the debutante is circumscribed by inexperience and is more easily viewed as hubris resulting in mid-night raids, vigilante style. 

Name-calling and hurling wild allegations and invectives come easily to participants in our domestic political discourse. The existing framework of weak libel laws still provides sufficient scope for redressal of grievance.

AAP’s list of India’s most corrupt eminently qualifies under this category. Kejriwal is a quick learner. The summons from Metropolitan Magistrate, Gomati Manocha to appear as an accused in a criminal defamation case filed by senior BJP leader, Nitin Gadkari on April 7 should facilitate this. 

Political obfuscation and constant change of goal posts come naturally to the political debutante. In the end, AAP considered it wiser to abdicate responsibility than to stay the course and use the opportunity of being in power, even for a short time, to address issues of governance and corruption.

Who created AAP? It is entirely possible that the more politically inclined among Anna’s followers decided to establish the political start up on their own. There was, however, no way they could be in government for 49 days without Congress support. With only 28 MLAs, support of the Congress was crucial to survive a challenge in the 70-strong Delhi Assembly. The extent to which they were used by the Congress and, in turn, used the Congress also points to an interesting pattern. What happened to the CWG related corruption and all the other scams aired in the run up to the Assembly elections in Delhi in December 2013? Conveniently forgotten? 

People at different levels of subsistence ranging from marginal to the affluent are, by very nature, averse to risk and fear the dangers of destabilization. 

The dharna outside Rail Bhawan on 20 January brought Delhi to a standstill for nearly 36 hours and scared the middle class.

The use of the mob as an instrument for negotiations and social transformation all have one thing in common. They have the effect of scaring away the very sections of the support base that AAP initially attracted. The poor may well have been the intended beneficiaries of the experimentation initiated by AAP. The end result was confusion and destabilization. Even the lower middle class and those aspiring to that category are no longer sure.

Power is an aphrodisiac. Being in power, even for short periods, encourages media attention. High voltage announcements designed precisely for media attention do not, however, have a significant shelf life.

Political parties seldom, if ever, practice and project consistency and coherence. Inner party democracy in fact is a positive and internal debate healthy. A judicious balance between those regarded as sober and those who qualify to be called mavericks is understandable.

The AAP has two additional problems. Since the party is new, many of its members are celebrities in their own right with conflicting political and economic philosophies. Kumar Vishwas is not gender sensitive. For good reason, Mallika Sarabhai finds such views unacceptable. Madhu Bhaduri left the party precisely on that. Others like Prashant Bhushan spoke of a referendum in Jammu & Kashmir and encourage a soft development response to the Maoist insurgency. Meera Sanyal and Medha Patkar both candidates to the Lok Sabha from Mumbai have widely differing views on the corporate sector. The party high command espouses liberal economic policies at the CII and a luddite approach at other times. There has been advocacy for the government to assume full responsibility for providing health, education and free utilities!

A second problem with celebrities is that they join not necessarily to serve the party, which co-incidentally exists only in embryonic form, but enhance their celebrity status. They also leave more quickly.

The report of the Commission of Inquiry under retired Additional and District Sessions Judge, B L Garg, indicting Somnath Bharti will drive AAP to a further crisis point. The unwarranted and pre-meditated attack by AAP led by no less than a person like Ashutosh, its Lok Sabha candidate for the Chandni Chowk constituency on the BJP headquarters on the evening of 5 March is both unfortunate and tragic. It completes the picture and repeats a pattern. The attempt to use mob violence against BJP leader Arun Jaitley’s residence a few weeks ago, the holding of Delhi to ransom for 36 hours outside Rail Bhawan on 20 January and now the attack on BJP headquarters makes it absolutely clear that we are dealing with anarchists. This is planned destabilisation and violence as a standard operating procedure. Visual documentation establishes beyond any doubt how AAP supporters took the law into their hands, resorted to violence and then played the victim card. Even its own constituency is not gullible. Disenchantment is now almost complete.

The doctrine of unintended consequences will ensure that corrective action will have to be taken in the existing established parties even as AAP flounders and finally leaves the stage.

a long time back, when i was a young reporter at businessworld, i had written my first story on agriculture. that was on fixing the mandis. i had met sharad pawar for that story. it was 2004. he was new to the agriculture ministry. i was young and impressionistic. the story that emerged was technocratic and naive.

as things turned out, pawar stayed agriculture minister between 2004 and 2009, and then again from 2009 to 2014. that is ten years. the longest anyone has been agriculture minister in the history of independent india. even more remarkably, it has been an unbroken ten year stretch.

given the crises in india’s farmlands, the length of pawar’s tenure in the agriculture ministry, and his reputation as someone who understands agriculture, what has his stint been like? in the last few weeks, we have seen the odd news report and a flurry of ads saying that agriculture in india has flourished under him. these reports and ads have pointed at the jump in agri production, exports, etc, to support their claims.

in a story earlier this week, ET argues that while production numbers have gone up, this period has also seen an increase in market distortions like cartelisation and price manipulation. not to mention puzzling flux in exim policies. at the same time, long-standing problems in indian agriculture, like weakening soils, collapsing groundwater levels, etc, have remained ignored.

ps – for a more detailed look at some of the changes indian agriculture is seeing, click on these links.

1. in the last 15 years, India’s farmlands — countrywide — have seen a puzzling spike in prices.

For the longest time, the price of farmland in Vadicherla stayed below Rs 20,000 an acre.Ten years ago, that began to change. “In 2003, an acre cost Rs 25,000. By 2006-07, it had climbed to Rs 2 lakhs,” says Byru Veeraiah, sarpanch of this village in Andhra Pradesh’s Mehbubnagar district, “By 2010, an acre cost Rs 3 lakh. And Rs 12 lakh by 2012.” It was a puzzling spike. This village with its 700-odd families is nowhere near big cities. Warangal, the nearest big town, is 50 kilometres away. Nor is it close to any highway. The Vijayawada-Hyderabad highway is a good 15 kilometres away. Nor is any farmland in the village or its vicinity being acquired by the government or companies.

Vadicherla is not alone. In the last ten years, the price of an acre in Ramavarapadu, a village next to Vijayawada, has leapt from Rs 7 lakh to Rs 7 crore. Or take Mardi, 15 kilometres off Solapur, Maharashtra. The price of an acre in this village, says Prakash Arjun Kate, a local, has “climbed from Rs 20,000-25,000 ten years ago to Rs 10 lakh now.”

Ramavarapadu, Vadicherla and Mardi are not isolated instances. Microstudies and anecdotal information suggest almost all of rural India is seeing a similar climb in farmland prices. If the trend suggested by the villages — and the microstudies and other anecdotal inputs — is indeed correct, then a large change is playing out in rural areas — their farmland markets are getting activated.

And the question is: Why now? And why are markets across the country waking up at the same time? And what does this mean for food security, rural livelihoods, migration patterns, you name it?

2. given these myriad land transactions, how much land is leaving agriculture? we cannot say for sure.

due to the great rural land grab, how much land is leaving agriculture? that is hard to say. the government says there is hardly any change — but that is unlikely. some say enough newer lands are being brought under farming to make up for the loss of farmland. but there is little mathematical work to back those claims up. puzzling, the whole thing.

3. then, india’s agricultural soils are weakening fast.

In his fields, Badhia Naval Singh , a farmer tilling 8 bighas of land in the Bagli tehsil in Madhya Pradesh, has been seeing something strange for a while now. Earlier, if he pulled out a tuft of grass, he would see earthworms . “Ab woh dikhna bandh ho gaye hain (they don’t show up any longer),” says the 45-year old .

Also, he says, when he ploughed earlier, the soil would break into soft crumbs and fall along the long furrows the plough left behind. Now, the soil is harder and the plough uproots a succession of large clods – dheplas, in local parlance – from the earth. The changing nature of soils – for the worse – is a refrain with farmers in these parts, even across the country.

Ishwar Lal of Pandutaki village nearby does not see as many birds or frogs around his fields as before. Near Bhopal, farmers say traditional vegetable crops do not grow in their fields any longer. Across the country, farmers say yields drop if they don’t add more fertiliser every year. These anecdotes suggest dramatic changes in Indian soils in about 40 years.

4. and one reason they are weakening is india’s fertiliser regime.

Take NPK. In last year’s kharif, the NPK ratio was around 4.4:2.6:1. This kharif, it has worsened to 10.8:4.9:1… What about micronutrients? It’s hard to say. The fertiliser ministry simply does not collect data on micronutrient consumption. However, data collated by industry body Fertiliser Association of India (FAI) shows a puzzling trend. The consumption of zinc, ferrous and copper sulphates showed a modest rise over the last seven years, but that did not hold good for nutrients such as manganese sulphate, borax acid and molybdenum.

5. in other news, dryland areas continue to get ignored — in research, groundwater crisis, soil health…

The green revolution came in the sixties. Tasked with ensuring food security, it pushed high-yielding varieties (HYVs) of wheat and rice over jowar, bajra et al. It began in the floodplains of the north. Where, as canals came up, farmers, realising rainfall risk was a thing of the past, switched to HYVs. In the drylands, the story evolved differently. The green revolution came here in bits and pieces. The seeds and fertilisers reached. So did the exhortations to farmers to adopt ‘modern’ farming. What did not reach was water. Predictable water supply is something the farmers created for themselves. When electricity came, they invested in groundwater pumps.

What followed was transformative . In Malwa (MP), for instance , till the early-1970 s, farmers grew jowar during the rains and Malwi Ghehu , a local wheat variety, after that. Once the pumps came in, farming became a yearlong activity. Cash crops like soya displaced jowar. HYVs of wheat displaced Malwi Ghehu. Below the Malwa plateau, the same set of changes played out more recently, as groundwater pumps came just eight years ago. This is the story across India. Groundwater (tube wells) has been the mainstay of addition to irrigation resources.

It’s a fairytale that is winding down now. India’s dryland areas are seeing soils weaken, groundwater levels collapse and rainfall get increasingly erratic. Worse, farmers cannot go back to the old modes of farming that hedged risk far better than monocropping ever can.

6. and then, there are the market distortions. the story out on tuesday gets into some detail on those. but, last year, et did a quick and dirty story on the onion crises.

This January, the competition regulator sent an independent report to the ministry of agriculture on why onion prices spiked abruptly in 2010, a pattern that is playing out again today, with prices ruling at Rs 60-80 a kg for the last two months. This 86-page report, one of the clearest descriptions of how India’s agricultural markets function, made some stinging observations: traders colluding and acting like a cartel, the unequal relationship between traders and farmers and exports not being calibrated to domestic demand, all being perpetuated by loopholes in the rules.

While this report, titled ‘Competitive Assessment of Onion Markets in India’, studies a crisis that happeend three years ago, it warns of why, unless systemic change is not effected, the spike in onion prices will keep happening in the years to come, especially at this time of the year. This report—commissioned by Geeta Gouri, member, Competition Commission of India, and prepared by researchers at Bangalore’s Institute for Social and Economic Change (ISEC)—has remained in the ministry’s cold storage. “There has been no response from the ministry at all,” rues Gouri.

7. and then, there is agri credit. the puzzle here: in the last ten or so years, agri credit has boomed. but output has not risen proportionately. where has the money gone?

April and May are months of waiting and organising for Indian farmers. As they wait for the monsoon rains to plant a new crop, they are organising money to buy seeds and fertilisers. This suggests that bank loans to farmers should surge during this period. But data shows otherwise.

Between April 2009 and January 2010, for example, loans outstanding to the agriculture sector stood at Rs 3,00,000 crore, according to research commissioned by the National Bank for Agriculture and Rural Development (Nabard). This surged to Rs 8,00,000 crore at the end of March 2010, only to drop back to Rs 3,00,000 crore in April. “We expected farmers to take 50-60% of loans during the kharif (monsoon crop) season,” says Prakash Bakshi, chairman of Nabard. “But neither disbursement nor repayment have any correlation with the normal cropping season.”

There are several such anomalies in farm-sector lending. For instance, between 2000 and 2010, according to the Reserve Bank of India, farm loans increased 755% to Rs 3,90,000 crore. And Budget 2012 has increased the agri-lending target for 2012-13 to Rs 5,75,000 crore, from Rs 4,75,000 crore in the previous year. But productivity gains during the same period-18% growth in farm yields between 2000 and 2010-don’t suggest an increase remotely close to that. Neither do sales of inputs like seeds, fertilisers and tractors.

AAP is the newest goon squad hired by the Congress' dirty tricks department. A minor issue with Arvind Kejriwal in Gujarat has been blown up. Why? Simply because the practiced deception of Congress is to create diversion each time one of its scams starts unraveling. AAP is not a threat to BJP or Modi. They are not even a national party of any consequence.

Everything about them is murky including their funding sources. Their core team hails from Mrs. Sonia Gandhi's extra constitutional NGO called the NAC. Their legal luminary is a known separatist and many members have been found indulging in war against the Indian State.

This is AAP for you. Unleashing AAP is also a desperate effort to hide the miserable attendance at every rally of Congress party. This is also a sign of things to come for the Congress which will be reduced to double digits in the coming months.

In 2004, L K Advani (when he was Dy PM) was stopped by a Patna DM. LKA said: "I will abide by maryada (model code of conduct) by ending my speech at 10 pm." Earlier, in October in Patna, we have seen bomb blasts. Five people lost their lives. Did BJP resort to any vandalism? Compare this with today's drama of AAP. We abide by the laws of land and are not anarchists. When the model code of conduct was in effect, Kejriwal should respect it.

The Model Code of Conduct which governs election campaigning comes into effect immediately after polls are announced. The police and district administration become answerable to the Election Commission on all issues related to political and electoral activity. Further, there was no detention or arrest of Arvind Kejriwal. Nor was any case registered against him.

He was stopped to explain his roadshow and asked to get permission for his cavalcade as per the Code.

Also, why shouldn't police do its duty as per the law? Is it because the gentleman happens to be a 'khaas' former IRS officer? In fact, Election Commission drafts officers from all administrative branches including the revenue services.

Either he has never worked in the department so as to be familiar with the aforesaid legalities or he is aware and was pretending for cheap publicity in a sponsored programme of the Congress party?

Arvind Kejriwal is helping the Congress & its chief divert public attention from the $ 770 m Agusta Westland issue & many other scams.

Was yesterday's AAP drama aimed to remove focus from AAP dissenter Ashwini's expose?

AAP dissenter Ashwini Kumar Upadhyay held a press conference & disclosed a lot of skeletons. Ashwini, a member of the AAP National Council, suspects his party - or its leadership at least - has connections with the US Central Intelligence Agency (CIA). About 50 of the 300 National Council members are either sulking or have resigned he says. He made serious charges against Ford Foundation & some Indian NGOs and alleged that foreign funded NGOs are mobilizing people on caste, creed, religion & social issues and weakening the social unity & integrity of the nation. His letter said that many such people & individuals are contesting Parliament & Assembly elections as a part of major conspiracy of American CIA & Pakistan's ISI.

The letter also goes on to question the use of bricks and lathis. "The ideology they are propagating is a hoax, just lofty talks, not anything concrete to show except their anti national opinions on Kashmir, Naxalists, etc. My questions for people who have donated for AAP - Are you happy now on its actions - there are photos of Tilak Nagar MLA Jarnail Singh as a stone pelter - shame"

 Rachel Canning, 18, wanted $600 a month in support as well as tuition fees paid for her private schooling.  This report in Times of India on 6-Mar-2014 made me sit up and read the report again again.We in India could shrug off it as something that happens in US or West.  But can it not happen in India? What do children expect from parents I don’t want your rules but I want everything under the sun and you to pay for it? Why did this happen because the parent did not give good values or sanskar to her. It reminded me of the article I had written If only I had taught him..

From High school girl who sued parents loses first round  (some points have been highlighted by me not. they are not in the newspaper)

Washington: Whoever said parenting is a thankless task can cite this as prime evidence. In a case that has caught the even rebels in a litigious society slack-jawed, an 18-year old high-school girl in New Jersey sued her parents to force them to pay for her schooling and living costs after storming out of the home because she didn’t want to follow some basic house rules they sought to establish — like helping with chores.
Rachel Canning turned up in school uniform for the first day of hearing at a family court, but it didn’t go well for her. Judge Peter Bogaard scolded her and lamented the breakdown of the family after reading an expletive-laden message from Rachel to her mother, according to courtside reports. “Have you ever in your experience seen such gross disrespect for a parent?” he was quoted as saying. “What is the next step …are we going to open the gates for a 12-year-old to sue for an Xbox, a 13-year-old to sue for an iPhone… what about a 15-year old asking for a 60 inch TV?”

Rachel’s parents, Elizabeth and Sean Canning, broke down in court as details of how their family was torn apart were read out. But the high-schooler, on the cusp of going to college, stared ahead without remorse after the judge ruled that the parents did not have to pay her school fees amounting to $5,300 and denied her request for weekly allowance and additional financial support, including attorney fees of $13,000. He delayed a ruling on whether the parents must pay her college tuition from a fund they had set up, while asking lawyers to consider whether it’s wise to “establish precedent where parents live in fear of establishing rules of the house.”
Rachel Canning, from all accounts a bright student who wants to be a bio-medical engineer, says that her parents kicked her out of their home when she turned 18 last October. She has claims her mother called her fat and porky, insults that led her to suffering bulimia. “My parents simply will not help me any longer. They want nothing to do with me and refuse to even help me financially outside the home although they certainly have the ability to do so. … I am unable to support myself and provide for my food, shelter, clothing, transportation and education,” she said in court documents.
But her parents say she opted to leave because she didn’t want to follow their house rules that included being respectful, keeping a curfew, returning borrowed items to her two sisters, managing a few chores, and reconsidering or ending her relationship with a boyfriend the parents believe is a bad influence. “Private school, new car, college education; that all comes with living under our roof,” her father, Sean Canning, a retired police chief of the township where they live, told a local television station.
“We’re heartbroken, but what do you do when a child says ‘I don’t want your rules but I want everything under the sun and you to pay for it?” Canning told the local Daily Record, adding that his daughter’s college fund is available to her and not withdrawn or re-allocated, as she has alleged. “We love our child and miss her. It’s killing me and my wife. We’re not Draconian and now we’re getting hauled into court. She’s demanding that we pay her bills but she doesn’t want to live at home and she’s saying, ‘I don’t want to live under your rules’.”

Meanwhile, the twitterati has weighed in on the case in what some say amounts to a witchhunt.

• “Rachel Canning is a stupid idiot and her parents should kick her out! she is the daftest person on the planet #meanbiatch,” wrote one Twitterer.
• Another tweeted: “Rachel Canning is giving current teens a bad name, can we just ignore her already so she’ll crawl back in the bubble she came out of?”
• A third warned: ”Wondering if #RachelCanning realizes that every future prospective employer will Google her”

Rachel has reportedly been living with a school friend, whose lawyer father has been helping her with the litigation but not representing her.

CNN Student’s lawsuit against parents for support loses first round in court  has also video with the report.

Related Articles:

• If only I had taught him..
• What are you teaching your kids about money?
• Kids and Money Conversations, Kids and Money Talk
• Michael Jackson and Money Lessons
• President Obama and Money, Obamas Financial Struggle
• Lessons from finances of Queen of England

It is our job as parents to lead by example and set clear objectives and boundaries for our children .You either spoil them or you make them realize the value of money just like you make them realize the value of good health, family values, discipline. Often parents don’t want their children to go through the hardships they experienced growing up. But they fail to teach them there is more to life than fancy drinks, new toys and branded clothes. Our article If only I had taught him.. shows how not saying no to kids esp. related to money matters can come to haunt you later in life.

Are we, the parents, spoiling our kids? How are you making your kids aware of money, good health,values,disciple? What do you think we parents MUST teach our children? What should our child expect from us and till when. Do you think it will happen in India?

If Corporate Governance is supposed to protect the retail shareholder, it has failed COMPLETELY in the PSU. Not that it is great in the private sector, but in the PSU it has completely failed the minority shareholder. That means you and me.

1. Electricity thefts are a political problem but the economic impact of that is felt by the power producers like NTPC.

2. The inefficiencies of the state government’s ability to handle power is borne by NTPC, Bhel, and other PSUs which supply to the state government agencies. The private sector gets it payments by making necessary adjustments in the price of the end product.

3. The gas, petrol, diesel, and Kerosene subsidies hurt the oil manufacturing and distribution companies. Hence you do not see any private sector company wanting to be in the retail distribution game.

4. The way PSU directorships are offered is pretty shocking, and one cannot say too much in the public domain.

5. All PSUs go through 2 audits – statutory (Companies Act) and CAG (government companies) – and the end result is a clean audit report. I was a part of the audit team of a few PSUs long ago and I realise that even now there is not much change in what is happening.

6. Salaries cannot be linked to productivity, pricing is dictated to by the unions! In case of Coal India the Union made sure that the FPO is delayed/ stalled. Obviously this is bound to hurt the company in the short run at least.

7. The way PSU banks have been lending is so shocking, that one cannot believe it. Only when you do audits and realize the quality of NPAs. Many of these loans are NPAs right at the time of the sanction. Really the shareholder? chuckle, chuckle,….

If you think the biggest shareholder a.ka. President of India even knows what kinda resolutions are passed You would be surprised. PSUs are neither monitored nor supervised HONESTLY.

Look at the facts – do you see LIC selling good quality scrips to buy NTPC at 160 and Coal India at Rs. 320. All the prices are now way below..which means the policy holder gets clobbered.

Poor yields from LIC policies, negative returns from bank deposits, capital losses from psu IPOs, seem to be accepted by the middle class investor.

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Now that we are in March and have forgotten our January resolutions, let us look at some resolutions which are easy to stick to:

1. I will have my breakfast regularly – every day – too many people have already told you the reasons, right? I will skip the reasons.

2. I will snack: Yes, but snack smartly. Fruits – apple, orange, banana, guava, we are a very rich country with an abundance of fruits, Vegetables – cucumber, tomato, carrot, beet, cauliflower, cabbage, onion, yellow pumpkin, capsicum, dry fruits – all of them. God what a range!

3. I will build some activity into my life: climbing stairs, taking public transport, playing a game, walking, running,….SOMETHING maybe for 20 minutes a day, 5 days a week. Not difficult is it?

4. I will say good things about my body. I love all parts of my body, and am proud of it. Say this to yourself every day. A positive mind is necessary for a positive body.

5. I will start a SIP today, will understand term insurance, and read subramoney.com every day. It helps to tweet, does it not?

6. I will spend some time in the sun and collect my free quota of Vitamin D. This sunshine will keep me positive.

7. I will get sensible amount of sleep. I also know that the BEST time to sleep is between 10pm and 2am. If I STILL do not follow it….sigh that is how I am …

8. I will add a lot of raw and cooked vegetables to my diet. I will create Meatless Mondays. I will not eat meat outside the house. I will not eat meat for dinner…..some thing to reduce meat, sugar, salt, maida, white polished rice,….all these help towards your health.

9. I will open an account with www.myfitnesspal.com and track my eating and exercising. I agree with subra whatever is worth doing well is worth measuring. What gets measured gets done better. Virtuous circle.

10. I will track my earnings, savings, investments and financial goals too.

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At the core of the ongoing controversy over raising gas prices is the concern that a higher price of gas would mean excessive profits for the contractor (while ONGC, GSPC and others also stand to gain from higher gas prices, the focus of public attention is Reliance Industries Ltd), leaving the nation at large poorer.

Loot, of course, is the emotive term for a process that enriches someone at the expense of others. One way to address this concern is to introduce a windfall gains tax for all mineral resources, not just hydrocarbons.

In India, all natural resources belong to the people, with the state acting as custodian — says the law. This is why, if you suddenly discover gold while digging to lay the foundation for your dream house, the government would take away your land and your house, indeed, turn into a dream. In the US, the mineral wealth under the belongs to the owner of the land.

Untaxed Mineral Wealth In practice, though, India has a very shabby record in managing its mineral wealth, either to make it available for the economy or to generate revenues for the state. Royalty collections are paltry in all minerals save hydrocarbons.

People whose main talent lies in bribing babus and netas and hiring goons turn overnight into mining barons, buy private jets and fly themselves into membership of state legislatures and Parliament. The main reason is that India does not have a policy to tax windfall gains.

This is easily amended. The government’s take from minerals consists, at present, of licence fees for exploration, mining lease proceeds, cess, royalty, share in profits and tax on corporate profits.

It needs to be complemented with a sliding rate of windfall gains tax, so that the government’s share of the total value generated by any mineral deposit is three-fourths or thereabout. A quarter of the mineral’s value should be more than worth the contractor’s effort to locate and extract the mineral.

Making money from minerals is different from making money from, say, iPods. Nobody knew that consumers wanted something like an iPod, till Steve Jobs designed it in conjunction with iTunes. Apple’s creativity and skill drive the sale of iPods, iPhones, etc and it is not chance that drives its revenues and profits.

Normal Vs Windfall Profits Take oil. The cost of producing oil in a shallow field in Saudi Arabia is next to nothing. When global growth is good and the demand for energy goes up, so does the price of oil. It went up tenfold over 2000-10.

The price of oil also goes up when there is a terror strike, when war clouds gather over any part of West Asia, when Tsunami closes down nuclear reactors in Japan or when the US Fed prints additional dollars by the truckload to keep US interest rates extra low, sending speculative waves of cash into commodities.

The owners of oil wells reap the benefit of the rise in price without having done anything to deserve it. Such windfall gains should be appropriated by the government through a windfall profit tax. The UK has done this.

This policy does not rule out a contractor (the one who gets the contract to develop a mineral field) getting high returns over its investment. In fact, such returns are the only way to attract large companies to India, to explore and develop India’s mineral wealth. In the absence of such vigorous exploration and development of hydrocarbon resources, India’s dependence on imported oil and gas would grow to perilous levels.

Sharing The Gains However, even as the contractor gains from a price rise, the government would also gain, with a windfall gain tax. This would remove the fear of contractors looting the nation. Why does the government get into fixing the price of gas, while it lets the market find the price for crude oil, steel, cement, houses, computers and movie tickets? Because there is no real market for gas where demand and supply can do their normal job.

Only those along a gas pipeline can realistically express demand for gas. So until India builds an extensive gas pipeline network, demand will remain artificially depressed. India also lacks supply — too few terminals to bring in gas in its liquefied form (LNG) and no supply pipelines so far from Iran or central Asia or other sources of gas.

So, the government has to fix the price of gas. And adjust the rate of sliding windfall gain tax to ensure that the cumulative government take is something like 75% of the value. And above a range, all the gain can be taxed away.

If the government’s share is fixed, on what basis will oil and gas companies bid to take up exploration and development licences? The government’s share can deviate around 75%, depending on how difficult or easy it is to develop a field.

There is no shortcut to the government developing the needed expertise to vet complex costs in exploration and development, within its own arms or by hiring reliable consultants.

Such expertise is needed to assess allowable expenses and, therefore, taxable revenues. The same expertise can guarantee against cost padding as well, in a cost recovery regime where the contractor is allowed to recover costs before sharing revenue with the government.

The most obvious reason is if you do not teach money to your kids, nobody else will. So YOU must. And for all of us Children and Money both are very important. In fact the cost of having a child is so high that many people are wondering whether to have a kid and if yes can the afford the second kid!!

Here let us look at some more reasons:

1. Teaching them delayed gratification is one of the best things you can do for them! It will teach them patience, saving for a goal, thinking and re thinking about something before committing, …etc. This itself is immensely useful.

2. Good Financial Habits start early! -What you teach kids stays on with them till their grave. So when it is possible to mould their lives and thinking, putting in the nice seeds is very very important. Start early works here as much as it works for your money!

3. Kids influence YOUR financial decision making too! So teaching them Value for Money, Value vs Price, etc. may sound outlandish but is possible. All toys cost money – but that which gets used a lot acquires value!

4. They will learn to give AWAY – their own efforts, time, money, etc.

5. Kids can make their money grow when they understand compounding, equities, etc. So they tend to say…let me top up my Mutual fund – this is from a 9 YEAR OLD. Awesome early start, right?

6. Kids can learn budgeting and allocation of their own money. For e.g. I give my daughter a Rs. 5k budget for Diwali – she HAS to buy a dress – anything else is voluntary…So she has to make a choice of a hand me down I pad, an I pod, a hand me down Kindle, books, whatever. She skips crackers – which is FINE by me…..

sure there are more reasons..but this is a good beginning…

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I had done an article saying ‘Fixed deposits or Debt funds?’ a few months back.

Now I am asking a question again:

Bonds or Bond fund?

Recently there have been a spate of bond issues by PSUs and they all have been at attractive yields. When I argued in FD v Debt fund, the argument was for a tax free compounding in debt funds.

However in case of TAX FREE DEBT BONDS, that argument flies out of the window. So for a person with a net worth of say Rs. 20 million and wishing to invest say Rs. 2.5 million, the best thing is to invest Rs. 0.5 million in 5 bonds. Most of them pay interest on a six monthly basis, but at worst they could be paying on an annual basis!

As long as you want to use this money for your expenses or investing in say equity funds, you do not have to worry about the FLUCTUATION in price. It is safe to assume that these bonds do not have a default risk, but will fluctuate in price if the interest rate varies. Assuming that interest rates drop, the value of these bonds will go up, but if interest rates go up the bond prices will drop.

I would not worry TOO MUCH about interest rates going up too much. Sure, there is a risk that interest rates go up say 1% p.a (100 basis points) from here, but that could create a 20% drop in the value of the bond!! This is because these are bonds with a longish duration – and hence the dramatic impact. However if you are NOT PLANNING to sell these bonds in a panic, YOU should be adding more bonds.

Surely people need to understand the following risks:

1. Liquidity:

all these bonds are listed and are supposed to be traded, but the market may not have too much depth on the day you want.

2. Interest rates go up and remain there:

this is a big risk of hyperinflation – say it stays at 12% for 5 years – this will rip the value down.

3. Interest default, Interest delay and Principal default:

if the government changes some law somewhere by which the risk of these balance sheets are shifted from the government to the companies themselves, these bonds will become worthless.

The interest being at 9% p.a. I do think the risk is worth taking. However you should invest about 20% of your debt portfolio into such schemes. Your total debt investment would anyway be in Public Provident fund, LiC policies (do not buy new, but if you have them and are too emotional to surrender it!), etc.

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Third quarter GDP numbers released by the Central Statistical Organisation (CSO) last Friday have effectively demolished any hope that the economy has bottomed out. At 4.7% growth, quarter-on-quarter, not only has GDP growth clocked sub-five per cent for the fifth successive quarter, but the likelihood of the economy growing at even 4.9% in 2013-14, as projected by the CSO in its advance estimates earlier, now looks bleak.

A back-of-the-envelope calculation shows that the only way GDP growth could touch 4.9% for the year overall, would be if the economy were to grow at about 5.7% in the January- March 2014 quarter. In the present scenario that is near-impossible. Especially since this is also a period of heightened political uncertainty, given that the general elections are now only a couple of months away and most investment decisions will be on hold.

So in all probability we are set for another year of GDP growth in the region of 4.5 – 4.7%. The last time we had consecutive years of sub-five percent GDP growth was in the period 1984-85 to 1987-88 when growth averaged just four percent; something we have not witnessed in the post-reform period till now, after a decade of UPA rule!

Yet it was not so long ago, the government took every opportunity to point to how India’s GDP growth rate was amongst the highest in the world, next only to China’s. As recently as July 2013, the FM, P. Chidambaram, sought to assuage worries on the growth front. ‘People should remember India continues to be the second fastest growing economy after China. Even China's growth which was at 10 per cent has come down to seven per cent now, while our growth has slid to five per cent from nine per cent,’ he said, while inaugurating a branch of Indian Bank in his Sivaganga Lok Sabha constituency.

Today, the metaphor has changed completely. ‘Only a handful of countries were able to keep their head above the water, and among them was India,’ said the FM in his recent vote-on account speech in Parliament. There's no mention of India being the second fastest growing country in the world. Why? Because we’re not even among the top five or ten! A look at recent World Bank data on GDP growth in 2013 shows we've been overtaken not just by China, but by a host of other countries, notably Cambodia (7.3%), Philippines (6.9%), Indonesia (6.2%), Myanmar (6.8%), Vietnam (5.1) Sri Lanka (7.0%), and hold your breath, Bangladesh (5.8) and possibly Pakistan as well.

The first and most immediate fallout is that the numbers presented by the finance minister in his vote-on-account now look decidedly more suspect. The second is that the sectoral composition of GDP growth, with agriculture a key driver of growth along with relatively flaky sub-components of the services sector, raises serious doubts about whether we will be able to sustain even the present low growth rate. Farm sector growth remains subject to the vicissitudes of nature and early indications are that the next monsoon may be sub-normal; in which case agriculture growth is likely to revert to the familiar pattern of one year of healthy growth followed by anemic growth in the next.

Take the fiscal deficit. Tax revenues are the first casualty of slow growth. A comparison of the revised estimates in the ‘Budget at a Glance’ for 2013-14 with numbers released by the Controller General of Accounts for the period April- December 2013 shows the government assumed almost 40% of the tax revenues for the entire year could be collected in the last quarter. This looks like a pipe dream now. With growth slowing on a sequential basis, the only way the government can achieve the fiscal deficit/GDP ratio of 4.6% is with further expenditure compression – with all the attendant adverse repercussions on growth since the squeeze is invariably on capital expenditure. Alternatively, we will end the year with a much higher fiscal deficit, leaving the next government with virtually no fiscal space for any stimulus package to jump start the economy.

Am I being too pessimistic? What about the green shoots government spokesmen periodically claim to sight? A look at the disaggregated numbers scotches all hope on that front. Agriculture has grown a full percentage point lower than the 4.6% projected by CSO in its advance estimates. Worse, manufacturing, a key sector when it comes to providing jobs for our growing number of youngsters, has declined 1.9% during the quarter. The net result is that manufacturing growth for the period April-December 2013 is now back in negative territory, down to -0.7% as against 1.25% during the period April – September, suggesting the rot in manufacturing is not just deep-rooted but is getting deeper.

So what is the prognosis and is there a way out? Unfortunately not in the near future! For now we will just have to hunker down and sit out the pain. The usual levers of macroeconomic policy – fiscal and monetary policy – have been rendered inoperable, thanks to the persistence of high inflation and a high underlying fiscal deficit. The only hope is that the external environment will come to our rescue. If there is a strong revival of growth in the advanced world, that could provide enough thrust to lift the economy and give the much-needed fiscal space and hopefully, monetary too.

I recently swiped my husband’s credit card for an exorbitant amount. It was sale season and I could not resist myself. This was my first time, and he has revoked all my privileges. I am very upset; is he going to behave like this all the time? He didn’t even appreciate any of my purchases. He was never like this when we were dating. I had unlimited access to his wallet. How do I get my old sweetheart back?

Sid: I feel his pain and I am on his side.

Trisha: Tell him unlimited access to his wallet means unlimited access to you. C’mon, that’s only fair. Or else, start using your wallet.

Farhan Akhtar and Vidya Balan, who play Siddharth and Trisha in Shaadi Ke Side/Effects, were playing agony uncle and aunt to real-life couples in a special column in Times of India in Feb 2014 before the release of their movie.  The above advice was one of the  quick-fix solutions to relationship problems.

While I would like to write about the transition from girl-friend/boy-friend to spouse sometime.What I want to talk about is Money in marriage or issues of money between couples in Marriage. My cousins, colleagues, readers who are recently got married or are planning to get married asked me write about  How should a married couple handle finances? I am no expert on money or marriage. What I have written here is what I have seen,read and experienced.

Do we need to talk about Money in Marriage

Marriage, the sacred institution,changes an individual’s life brings a lot of joy  and responsibilities. It also comes with adjustments, for both husband and wife, family life, personal life or financial life.  What happens if the one blows all the money and the other one believes in saving ? What happens if one of them thinks he(or she) is entitled to a foreign vacation/expensive dates/gifts and the other one thinks  must visit his parents once in 6 months/think it is waste? What if one needs to send some money to the family? What if family starts asking about when you are having kid or when you are going to buy car, house, foreign trip? Family can be parents,grandparents,siblings,cousins,friends of cousin, neighbours,aunties  hmmmm….well sooner or later you need to talk about Money. Infact in Hindu marriage you make a promise about money during the third phera. From meaning of saath phera’s 

In the third step,Prosperity, the couple promises each one to earn and raise wealth by honest means and give comfort to the family. They also vow to share all the joy and sorrow together. The wife promises to be devoted to her husband and the man vows to respect and love his wife as the one and only woman in his life.

Marriage means sharing goals and aspirations as well as assets and liabilities. So, finances too need to be planned out together. For many newly-weds, the honeymoon ends when the bills begin to arrive.  “Always talk to your partner about their finances! You don’t want to be surprised!” But how many of us do. Any ways there are so much to plan and talk before marriage the shopping,venue,honeymoon! Differences in money management between spouses often become reasons for fights. In fact, couples fight about money twice as much as they fight about sex, according to a Money Magazine survey. Men and women think differently, communicate differently, and want different things from relationships. Just as there are laws of physics that are general, there are also laws of marriage physics

Marriage and Money : His Hers and Ours

In Earlier times life was simple, husband worked outside, wife took care of the house and kids.People lived in joint family where decision about money were taken  by elders. Now the times have changed there are  nuclear familie, husband and wife both working often earning similar amount of money. So the question gets complicated as there is my money,your money and then your expenses, my expenses, ours expenses, our investments etc. The answer here is for couples to come together and decide on how to spend their money.  Spouses need to maintain the mindset that they are on the same team; otherwise consequences just turn into angry retaliations and war tactics. But if they can maintain the we’re-all-in-this-together attitude, couples can take these steps to navigate the hazards they encounter

Understanding Each Others Money Personality, Money Background

If you are a saver and you are married to a spendthrift, who never saves a rupee, it’s easy to see how that can lead to some serious issues down the road.  The interpretation of one person is different from the other.  What one sees as waste,other sees as value for money The chances are that the boy and the girl come from very different backgrounds, so there perspective is different. For example I know of  someone who would live on Rs. 5,000 a month, and his spouse who can blow Rs. 5000  in one evening.  One coming from the background with a mindset that appreciates quantity over quality. Or For instance, one of my friends assumed she and her husband would have separate finances because that’s how her parents handled their money. This was a foreign idea to her husband, whose parents shared everything.( To compromise, they created yours, mine, and ours accounts)

We all come to the marriage with our own little money stories. Try to understand your differences and how to integrate different financial philosophies. Coming up with jointly held values obviously involves some give and take. Make sure you understand each other’s views about earning, spending, saving, investing, and borrowing. Does one of you like to save money, while the other prefers to spend it? Does one feel comfortable with high debt levels, while the other can’t stand the thought of paying interest? It helps to learn about yours and your partner’s financial personality as soon as possible.  It is better to know what one considers cheap and what one considers expensive.  Also different money issues will be more important at one stage of your marriage than at another. For example before the kids are born you may enjoy going out for parties, vacation but later the focus might move to saving for kids education, marriage.

Financial obligations before and After marriage

From education loans to car loans, credit cards to gambling habits, sister’s marriage, brother’s education most people come to the altar with financial baggage. If one partner has more debt than the other, or worse yet one partner is debt free, the sparks can start to fly when discussions about income, spending, and debt servicing come up. In many marriages, it’s till debts do us part.

Then there is also about family, for marriage is . His parents need a new car. Her brother can’t pay the rent. His sister’s husband lost his job. Now one spouse is giving the money and the other wants to know why that money wasn’t used to address needs right here at home or fund a vacation for US.  Well that’s exaggeration but marriage is just not between two people but also two families which may or may not be at at same financial level or have different expectations. For example boy might be sending some money home to his parent or a girl has to support her family. If a girl has to support her family not only the guy she is to marry or married to know but also his parents should know about it. Please talk about them preferably before the marriage and agree to the amount. I have seen and heard about many cases where one of them put the foot down but other  sent the money anyways  by not telling about the bonus or informing less increment. But if the other family or friend is taking one for a ride , please find a way to open the eyes of the other person.

Spending and Power Play

Many couples have some disagreements over how much money each person is spending, either on themselves or overall. There is peer pressure, parental pressure, and ease of borrowing which may lead to spend syndrome. It may take some time to find a comfort level of spending. The key is to discuss your spending before it becomes a big issue.  If spending in any area is perceived to be a problem by either spouse, then both spouses have to talk about it.  If one spouse is spending money on something without regard to what the other spouse is spending, then there needs to be a conversation about that item’s perceived value, and agreement about how to limit, balance or offset that expense somewhere else in the overall spending. Keep a limit below which you will not discuss or comment(other than it’s a good buy!) if she buys purse  for Rs. 1500 YOU will not say “you just bought one a month ago“. Keep a limit on how much can one spend maximum on an item and on maximum total amount too  For example If you like to upgrade mobile every year, which your spouse sees as frivolous  then jointly decide on a spending limit that you can agree on. Before you make a sizeable financial decision, you should both agree. But only the two of you can determine what sizeable means.

Power play often occur is situations such as  he work and she doesn’t, or he’s unemployed and she’s working, or one spouse earns more than the other, or one family has money and the other doesn’t. When these situations are present, the money earner (or the one who makes the most money) often wants to dictate the spending priorities. Although there may be some rationale behind this idea, it is still important both partners cooperate as a team. My article  Oh you are only a housewife! talks about housewife being  not given their due are thought of  contributing nothing of value but only spending her husband’s money.

Expenses : How to Divide and who will pay

Be very, very careful about how you are going to share the expenses. It does not make sense to say “I will pay the housing EMI you pay the expenses”  this hurts in case of a divorce. Sorry, but being ready for the worst makes sense, right? Usually Assets like bank account, Fixed Deposit,Mutual Funds are accounted in the name first holder even for Joint Accounts. For regular household expenses, Tracking expenses for a month or so should give you a good idea from which to craft a cost-sharing plan. For bigger expenses you need to sit and decide, What do you need and how will you fund it: Car, house, washing machine, foreign vacation, ….does not matter what. Will you buy today, on instalment or do you have enough money to buy outright?

Few ways to split expenses each with their own benefits and drawbacks are

• Divide all expenses 50:50 : Sure, everyone’s paying their fair share, but the person who makes less money in the relationship may be frustrated that they’re paying a higher fraction of their salary.
• Pay in a ratio according to salaries. If one partner makes Rs 25,000 and the other makes Rs 50,000, then all expenses would be paid in a one to two ratio.
• The breadwinner pays all. This is a good option if one partner stays home with the kids or has an artistic career with sporadic, unpredictable income.

One of you is prone to be better at day-to-day management of the domestic expenses. It’s better to designate one person as the bill payer, but the other person should be involved and should know what needs to be done and how to do it. Decide who should pay the monthly bills, such as rent or mortgage payments, utilities and credit card bills. With one person paying the bills, there is less chance of missing out deadline.

Children

To have or not to have? That’s usually the first question. To have one or two? If wife is working, will she take a break from work. As  Outlook Money article   in 1999 on cost for raising a child in India  says Little do we realise as we reach for our wallets for that Rs 150, handed over so eagerly for the pregnancy test, that that innocuous bill would soon assume gigantic proportions; it could even balloon to Rs 50 lakh! And that’s for just one child Add inflation  How much does a school education for a child costs? In 2011 it was Rs. 94,000 annually for single child as discussed in article Rising Education costs ! Does number seem high then sit down and calculate . Once you have them, you have to care for them in many ways other than being 24 X 7. Food, clothing, shelter,school, extra curricular classes, play station,gadgets, college , marriage are all part of a long list of child-related expenses. And they are our life’s biggest investment Right?

Financial Goals and Investing

You should also agree on your financial goals. Determine what those goals cost and prioritize them. For example, Will you continue for an advanced degree? Do you want to be an entrepreneur? When do you expect to buy a home? What about the big car or foreign vacation or saving for retirement. How much debt you will take, who will pay off loans,how many credit cards you will have? How much insurance, what type of insurance?There are advantages of taking joint loans such as joint housing loan, both of you can get tax exemption and simultaneously build up an asset for you. But Remember even though you are married your credit history is your own, your income tax return is your own(Unlike in US India there are no joint returns in India). Investment should be preferably in joint mode with first holder being the person who is actually putting the money and second holder being in Either or Survivor mode.  Keep in mind that in case of holding a joint account, both husband and wife are responsible for monthly loan repayments as well as credit cards payments Both of you will continue to have your own CIBIL report indicating your credit history.  If you and your spouse are finding it difficult to agree on your financial goals, you may want to speak to a financial advisor or a  neutral person. Our article Joint Ownership talks about joint ownership of Bank Account, Real Estate, Mutual Fund. Joint Bank Account and Joint Home Loan and Tax talk in detail about joint ownership in bank account and home loans. Clubbing of Income talks about when income of wife or child is clubbed with the husband.

The commonly held belief that men should handle the financial planning and investments in the family and the women should take care of the day-to-day finances may not fit every couple. May the best person for the job does it, informing other person and teaching other one.

Evolution of  Finances : Be Slow and Steady

Try to figure out what works for both of you and don’t rush into things.  After landing from honeymoon don’t start going all for together together . Give joining of your finances time too. Start slow and be steady. Don’t do what you are not comfortable doing . Try to set a money date atleast once a month where you talk (not fight) about money.

Related Articles:

• Rising Education costs
• Changing Name:What to do?
• Joint Ownership
• Joint Bank Account
• Joint Home Loan and Tax
• Clubbing of Income

There is no rulebook on how a couple should manage their finances. There is no one-size-fits-all answer. Since no two people are alike, some compromise is called for from BOTH THE SIDES . Trust is the building block as in any other aspect of the relationship and that includes trust about money.  Communicate with each other on important financial information. Getting married is a big step in your personal life. It is also a big financial step in your financial life Marriages are made in heaven, but its success depends on the people living on earth  .Happy marriages begin when we marry the ones we love, and they blossom when we love the ones we marry.

 What are your views on money in marriage? How do you handle your joint finances? What has worked for you? How have your finances evolved? What have been your financial mistakes in marriage? Please give your feedback, questions, comments.

The first three names doing the rounds put RBI in an unenviable spot

The Bimal Jalan committee has reportedly given the Reserve Bank of India (RBI) the green signal in respect of three of the 25 applicants for bank licences. Prima facie the three names doing the rounds – IDFC, India Post and Janalakshmi Financial Services – have been found ‘fit and proper’ in that there is no probe by any investigative agency pending against either the entity or its promoters.

But that is only the first step in obtaining a bank licence. It is now for the RBI to consider whether granting a licence will further the government’s declared objectives in issuing new bank licences – increase competition and ensure greater financial inclusion.

On the first, any increase in the number of players will increase competition. On the second, the answer is not obvious. None of the seven new private sector banks have anywhere near 25% of their branches in the rural areas though some of them have been in existence for close to 20 years. In contrast, the public sector banks have well over 25% of their branch network in rural areas.

So, if financial inclusion is the main objective, it is absurd to imagine private sector banks are the answer. Having said that India Post and Janalakshmi have an advantage in that unbanked rural areas have been their traditional turf. Hence, it might make sense to give them differentiated licences of the kind the Nachket More committee has suggested; although it must be mentioned here that the success with such licences, whether in the case of regional rural banks or local area banks, has been limited.

In the case of IDFC, however, there is an another problem. One of the major issues facing the country is the dearth of infrastructure (long-term) finance in a scenario where there is a crying need for such finance. ICICI, along with IDBI and IFCI, did some pioneering work in the area (IDFC is a much smaller player) before aggressive (imprudent?) lending severely damaged ICICI's financial position and it was allowed the escape route of becoming a bank. IDBI was allowed to follow suit, albeit after a considerable time lag. The net result is we are now down to just a few small players in the infra financing space.

The RBI must, therefore, mull over whether we should go down the same route with IDFC and further shrink the number of long-term financial institutions, given our dire need for dedicated players for such financing. Many of the problems with NPAs that banks face today are precisely because they were pushed into financing infrastructure projects by the government despite the fact that bank deposits are essentially short-term and should be used for working capital finance rather than long-term infrastructure finance.

To be sure institutions like ICICI and IDBI were allowed to become banks. But that is no reason why we should repeat the mistakes of the past.Two wrongs do not make a right - especially not when it comes to the banking sector.

Nobody I speak to, realizes how much FDI in retail is a sore point for small and big corrupt politicians. In fact, I have gone on record earlier stating that effective FDI in retail in India is capable of dealing a death blow to corruption in many areas.

Currently, our economy and society suffers from a deep malaise of disguised unemployment in the supply chain. There are too many people moving and earning from too little goods. I shall cite the most recent example I came across today.

On a weekday, I trudge up to the local fish monger to buy fish at leisure. Being a ghoti Bengali, I pride myself on my choice of fish and enjoy having it during mealtimes. Now, the Hilsa which is on top of the list of preferences of any Bengali has risen in price from Rs 250.00 a kilo to Rs 1,200 a kilo in a space of two years. Pabda was Rs 280 a kilo three months ago. Now, it touches Rs 400 a kilo. Surmai was Rs 350.00 a kilo. I rarely find it in shops now. However, whenever it is available, I have to pay Rs 650.00 a kilo.

Now, how did prices of fish rise 200 to 400 per cent and stay there? Have all our rivers dried up? No, they have not. Have all alternate sources of supply been banned? Not that either. So, what is the answer?

If we go and visit the wholesale market for fish and vegetables, we will notice that an additional tier for transportation and to the supply chain is added every six months. This adds to the mark-up in the price to the end consumer. All these tiers to the supply chain are controlled by local small-time politicians who hold positions of sarpanch to the trading community associations.

For instance, if the fisherman extracts prawns from the Ganges delta or the Tapti delta, he is paid Rs 20 a kilo from the local procurer who holds first right of refusal on the goods owing to his muscle power and connections with the local police.

These prawns are passed on to the owner of a tractor trailer or small transport vehicle who tows it to the local mandi or wholesale market. When he dumps them there he adds Rs 4 to the price and the wholesaler gets them for Rs 24 a kilo.

The wholesaler buys five to six trailer loads and passes them on to many merchants at Rs 35 a kilo. He has to pay his helpers and has to provide ready cash to the guy who pays the local constable. He also has to send his children to the school at the nearest town, which is some distance away.

After taking care of all expenses, this gentleman also has to pay for the ocassional bottle of rum or local brew and host his friends who look up to him. Hell! That costs money.

So these merchants who carry the loads that they have bought from the wholesaler to the larger mandis, take it upon themselves to distribute it to the highest bidder. Bidding takes place within limits and the winner of the spoils carries them to the territory he commands.

Now, I am deliberately being gender specific here and using a ‘he’ as I know that women do not work in this sphere. They start appearing only after the last tier has been breached where they sell and clean fish in the open marketplaces.

Now the more prices are hiked when they reach the consumer the more margins are available to hire more help at every level of the supply chain. So, now the breaks in the total supply chain from the farmer to the cook have more and more nodes every day in India.

This becomes easy money and the consumer in the city becomes easy prey for subsidizing the inefficiency throughout the supply chain. So if the truck driver in Maharasthra has to hire an extra cleaner, the tomatoes sold in New Delhi become three rupees extra.

If the tractor trailer engine starts coughing smoke and has to be serviced more often and guzzles more diesel than usual, the cost of cauliflower becomes dearer by Rs 5. This goes and and on with the end consumer not having any say in the matter.

These hanger ons who survive on the subsidy from the customer on the inefficient supply chain know that when FDI in retail comes in, so will the efficient supply chain. The efficient supply chain will disband this band of losers. The headman of this band of losers knows this too well and will attack and oppose FDI in retail tooth and nail.

Ad Rudyard Kipling wrote, “the history of development of man, is the history of the conflict between forest / village and the city.

This is a true conversation which happened to a friend

RM: Hello Sir Am I speaking to Mr. M C ?

MC: Yes

RM: Sir I am your RM from M….brokerage firm

MC: Yes

RM: Sir I see you have some Gold in your portfolio…Gold is not going to do well…s..blah…blah…blah…

MC: Please see properly I do not have any Gold in my portfolio…

RM : Sir this Goldman…

MC: Arre that is Goldman Sachs Nifty…..

RM: Sir Nifty is very high at 6200 – it is time to sell…

MC: But have you seen me ever sell?

RM: Exactly sir, you MUST SELL..I see you have bought the units at 5400, it is time to book profits…

What an amazing conversation! And so typical of a salesman.

The problem is MC is a very thoughtful long term investor with a small exposure to equity, but does not panic when the market goes down. Nor does he get excited when it goes up. He is a terrible client for the RM, and the RM keeps wondering how to make him trade!

Typical of a sales person to sell what they have. Exactly why? Hey their lives depend on that.

Recently met a lady who sells a lot of life insurance (apart from many other products) – and she was hard selling a short payment endowment plan. Obvious pitch?

Sir 9% return……

I said technically possible because of YOUR 40% commission (that number has not changed much especially in a 20 year product, no clue where the tweaking happens). She said of course possible..I have sold many products ….

So I said. Here I put in Rs. 5L as a premium, only Rs. 3L gets invested. She insisted that the commission was 15%. I said, fine, there are other costs….

So assuming 4L gets invested, the 10 year G sec is yielding about 8.5%, so assuming that you have a 2% Asset Management charge, at best you can give me about 6.5%.

She said: Yes sir.

So, I continued, In the second year assuming you get a 5% commission, only Rs. 95,000 gets invested. Now on this I get 8.5% – assuming interest rates do not fall. So again 6.5% FOR THE REST OF THE 18 YEARS.

Now from this you will deduct Mortality charges…

Yes sir…so my yield goes down even further, right?

By now she was panicking. She said ‘Sir Nobody has asked me such questions before, shall I get my Boss – the MANAGER at ……of india?

I said No girl, relax.

What I just did is a Reverse Engineering of the product, or breaking it threadbare to tell you why you cannot pay me 9% interest.

Most people will not do this. If you call 100 people 25 will give you an appointment. Our of that about 40% of the people will buy.

When you meet them tell them:

Sir this is a LIMITED PAY (only 5 years Sir!) and only Rs. 100,000 per year. On an investment of Rs. 5L (low voice) you will get Rs. 10 LAKHS (high voice) – and say ‘Sir it is GUARANTEED’

Client will ask “Is it a ULIP?”

As long as you say NO, THEY will buy it. Simple.

Sir my boss told me to tell all the clients ‘You will get 9% return’ – how is that true?

I said ‘No darling, that is not true. One way to make it true is to keep saying 9% – and it must be 9% of the Sum assured, and then, that number can be tweaked’.

Sir but the readers of your blog will not buy, correct?

No darling not true. Why do you think READING, and thinking are connected? Fallacy.

I know caustic mis sellers who sell this product while at the same time talking eloquently about mis-selling. It works.

MERA BHARAT MAHAN….

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The civil war that everyone wanted to avoid has already started in Ukraine

By the time you read this, it could be outdated. At the time of writing , Ukraine looks just about ready to go to war. That civil war everyone wanted to avoid has already started. It is not going to be business as usual, not in the foreseeable future.

Ukraine is a crucial geopolitical region; just google as to why. It could well become a flashpoint for the start of a new cold war or another European economic crisis. India has close trade ties, military links and a fairly large Indian diaspora in Ukraine; mainly medical and engineering students. Most critically, global markets are in wait-and-watch mode, but don’t blame me when traders wake up to ground realities in Crimea and start to panic, and the Sensex is in hysterics.

Between Vlad & IMF

Let’s do a quick recap. Late last year, the EU offered Ukraine trade ties with Europe; a take-itor-leave-it offer. Russia countered with an offer of $15 billion in hard cash. The now absconding president Viktor Yanukovych took Russia’s offer. Months of demonstrations later, clashes escalated into pitched battle in Kiev, coincidentally during the Winter Olympics, something that hasn’t escaped anyone’s notice. European leaders first decided on random “sanctions” and convinced the president and opposition to agree to a peace deal. Yanukovych agreed to restore parliament privileges, and hold elections.

The next day, the “demonstrators” stormed the palace, Yanukovych ran away, and the opposition set up a new government — with the enthusiastic support of the US and Europe. One of the first things the new government did was to ban Russian-speaking regions from using Russian as a second official language. Like they didn’t have anything else to do. Given that the current regime in Ukraine has been accused of being racist, I wonder what Indian students are thinking right now. Or what the Indian foreign ministry is doing.

I wouldn’t feel terribly secure if I was brown and in Kiev these days. In less than a week, Crimea, where the population is about 60% ethnic Russian, carried out what is effectively a coup detat, set up its own government, and still-unidentified militia (militant patriots or Russian troops, depending on where you come from) took over Crimea. Kiev started squawking that the Russians were invading — at the time of writing, Crimea appealed to Russia to protect it from the communalist and racist central government . They then did the smart thing of announcing a referendum for people to decide between Russia and Ukraine. Foregone conclusion: Russia. Crimea is a Russian ethnicitydominated peninsula.

It was gifted to Ukraine in the 1950s by the then Soviet president Nikita Khrushchev, himself a Ukrainian, and they’ve never felt very happy about it. And that brings me to the disinformation aspect of this whole thing. I may not agree with most of China’s foreign policy — other than the fact they have one, unlike us — but I do agree with their current attitude.

They say that the West is still stuck in its Cold War mindset. What’s amazing is how the West still believes in its own, well, deluded attitudes about world power and being the knights in shining armour. But the most rational commoners are aware that Crimea knows that Russia will support them with both arms and money, and all that the West will offer are platitudes and poverty, via the IMF. Who would you choose?

I don’t have any sympathy for Vladimir Putin, but he’s betting that US and Europe will waffle till kingdom come. Crimea is gone, unless Barack Obama deploys serious firepower. The EU won’t , because their electorates won’t let them, and they don’t have the money. Against stupidity, the gods themselves contend in vain.

In August, last year, Voyager 1 slid out of our solar system, hurtling ahead on its inter-galactic journey. Launched in 1977, this amazing craft is the first ever human made object that has gone into ‘outer space’. Lodged in the vessel is a document; a message of friendship from Jimmy Carter, the President of USA when Voyager 1 left Earth.

Even as we marvel the science of nearly four decades ago, there is a revolution underway; without doubt we are being digitally enveloped. A third of the planet is hooked onto the internet and every fourth person uses social media. In India, we have jumped phone connections by a multiple of beyond hundred over the last twenty five years.        

The technological transformation is evident in many ways. Investors have ploughed renewed faith in companies that mostly exist for and by the ether. The digital upstarts have out-performed brands that are household names across the globe.

Financial markets are driven by their lust for money. In turn, this is an incentive for business to drive innovation and growth. Money will rush towards the most promising opportunities. The recent riches of technology are creating increasing capacity for ongoing research and development. This can have a profound impact on lives, very quickly.

An organisation is implementing water ATMs across the country. In India, lack of access to safe drinking water is a catastrophic problem for its teeming millions. Water ATMs dispense water only if fit for human consumption. If the water is unsafe, the ATM shuts down and sends a report to a remote monitoring center. If possible, technicians fix the problem without visiting the problem location.

Increasingly, telephone subscribers, who may otherwise never meet a doctor, can now receive medical guidance from a phone based healthcare service. The UID scheme is helping hitherto ‘invisible’ people receive their due as citizens of the country.

If President Carter’s epistle to faraway aliens is translated into every language on Earth, it is possible almost one billion people would still not be able to read it. Unfortunately, a large number of these ‘illiterates’ will be found in India. Technology, that helps students learn to read, may soon make a telling difference.

Democracy and freedom lose meaning when people cannot find safe drinking water or access basic healthcare. Choice and equal opportunity are a mirage for the illiterate. Our problems are massive. Science has powered human progress for more than a century. However, the markets that boom may be sending us a message. This time they could be betting big.

To be invested in equities I normally look for the following characteristics in an individual. Will enumerate them here, but when I make such a statement, I mean really heavily in equities – like say 85% on a portfolio BELOW Rs. 5 crores.

Beyond Rs. 5 crores, frankly ratios do not matter. I know a 86 year old who has about Rs. 15Lakhs in bank FDs, about Rs. 1 crore in debt funds of mutual funds and about Rs. 13 crores in DIRECT EQUITIES. What I call asset allocation indifferent. Has enough dividend income to run his life and a son who looks after the portfolio.

If you do not have these characteristics, invest LESSER amounts in equities.

Characteristics:

1. MUST, MUST, MUST understand markets. Not so easy, but make an attempt damn it

2. Should have been in financial markets at some stage of his life. This helps knowing somewhere to check on whats happening in the market.

3. Understand enough maths to know Mean, Median, Mode and Standard Deviation.

4. Understand the risk of inflation, and that VOLATILITY is not risk.

5. Have a real LONG TERM VIEW (think in terms of life times and generations, in terms of 20 plus years). If you think 3 years is long term, you have been talking to your RM for too long. You need to de toxify.

6. You should really have short term RISK TOLERANCE. If you panic every few months while looking at your portfolio and buy put options to ‘protect’ your portfolio, you will damage your net worth because of your RISK INTOLERANCE.

7. The amount you wish to draw down should be in zero volatile assets like bank fixed deposits, liquid funds, low duration debt funds, etc.

8. Over a real LONG TERM a non hedged portfolio without ANY debt element gives the best possible return.

9. I would do this for myself, but DARE NOT RECOMMEND IT TO any client, or as a case study in my training(s).

10. Dramatic Calm Mind and Mental Peace is also a pre-requisite. Ask yourself what were you doing when the market came down from 21k to 9k? Did you sell at 10k and feel great at 9k? Then this is not for you. Think like a WINNER not as a person ‘who does not want to lose’.

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Most of us suffer from a big bias called Mental Accounting. We think we can do complex calculations in our head, keep track of expenses, compare it with the past happenings – but hey this is not true.

So break up your expenses into the following BOXES.

A. Absolute essentials: Food, basic clothing, shelter, electricity, basic travel

B. Term, Health Insurance, Pension contribution.

C. Telephone, Internet, Doctor’s visit

D. Business expenses like job hunting, re-tooling, training.

E. Hobbies, Travel, Luxury wear clothes, vacation, hobbies

F. Luxury

Once you do this you realize that your EMERGENCY MONEY is ONLY for A, B and c. Never for D or greater…

Once you start keeping track of this, you know where your money is going – and whether it is within your budget. It also tells you whether it is in alignment of what you THOUGHT you were doing.

Now repeat for your Investments……

ONLY when you tabulate on a monthly basis you realize how much is going into ‘trivia’ – no point in THINKING you are in control of your finances.

I see this happening with my EATING – I go on a sugar free diet for 4 months – and then say ‘Will relax it for a marriage..’ or something like that..and find that for 1 full month I have not been able to stop that chocolate, bread, butter, sugar tea, ….

Instead of killing myself over it, I just need to come back on track….www.myfitnesspal.com helps…and then you realise how much damage was done. Of course you come back on track.

Similarly if you go off track, just come back on track instead of saying “I am useless’ -I can never stop, etc. etc…..

Just be there and like Nike says ‘Just do it’ ….

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