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Is There Hindu Terror?

Published November 10, 2017 by vishalvkale

Hindu terror {or similar terms like Extremism} – the buzzword of the past week or so. This is, at best, a topic that ensures passion – but we need to confront this allegation head-on as a society, for our own well-being. In the past week or so, two or three articles have appeared that open this debate; the author’s courage and forthrightness needs to be appreciated, that much is certain. Opinion is strictly divided into two camps – one says, with a marked lack of eloquence at times, what terror? The other side says, look around. As in much else, here too, I have a middle opinion – and no, I am not sitting on the fence on this one, as a couple of my friends and seniors have alleged in some cases


IS THERE HINDU TERROR?
So, we first need to examine whether or not there is Hindu Terror at all, in the first place, and then look at its dimensions. Now in this, sorry to state, there can actually be no debate : there is no terror so far as we know from what information is present in the public discourse. Terrorism means, in the words of Collins Dictionary, “Terrorism is the use of violence, especially murder and bombing, in order to achieve political aims or to force a government to do something.” Oxford has this to say : “The unlawful use of violence and intimidation, especially against civilians, in the pursuit of political aims.”
In the public understanding – using my own personal understanding of what terror / terrorism means, I can state that terrorism is organized large-scale violence meant to achieve some objective, religious or otherwise. I may be wrong, but the above might just be approximately correct. Now if the above three are generally correct for the large part, then I am very much afraid that there is no case for Hindu terror, of that there can be no doubt whatever
But does that mean all is hunky dory, as the Bhakt Brigade makes it out to be? Well, I am very much afraid, not so. All is not well in at least one way – and I don’t refer to criminal activities like hurting and beating up people due to Cow Vigiliantism. That is another matter entirely, one on which we had best remain silent, and not cause tension. Let that be. Having said that, those incidents are worthy of severe condemnation; and I hope the scourge is controlled and eradicated fast.
ARE THINGS PERFECT?
So what can we say of the point I allude to above – that things are not entirely right? Some people believe that there is no issue – I would like to think so; but, I regretfully admit that this is not the true reality, and I do not refer to any political aspect / censorship / defamation cases  and other cases filed as we have been reading. As I have repeatedly stated elsewhere, I am trying to be apolitical, a lover of democracy who keeps {or tries to} keep his political views a secret, not for public consumption.
I refer to my friends and family; to my associates, acquaintances, and other people – people like you and me. They are the reason I am slowly going silent on many issues; yes I do feel scared. I feel terrified, more than terrified. I feel scared of losing relationships, getting into arguments with those I care for, love; those I have to work with, socialize : arguments around politics & religion tend to sour relationships in the personal space, reduce efficiency & productivity in the workplace, and are manifest time-wasters, imho.  Given the harshly defined positions in the mindspace of the people, it is hard to convince either side; leading to hot talks, arguments, with neither side willing to concede.
CLEARLY DEFINED IDEOLOGICAL SPACES
The political space in India is rapidly evolving into two clear ideological spaces; far from this being a flashpoint of worry, this is actually great, as it promises the end of fragmented opinion, voter-groups, and will slowly over time evolve into a much stronger base for our already rock-solid democracy. So long as open free and fair discussion is encouraged, it will enable learning, evolution of national choices, with clear directives emerging over time. Let us all welcome this; that said – there are flashpoints for worry emanating from the extremely charged debates we tend to indulge in with those of us not on our side of the POV. I myself have been discussing, till the time I saw the light and disengaged in totality. On the aspect of religion, I have nothing to say. Perhaps, my silence will be more eloquent than all the words the English language can muster up on this matter. That says it all – Samajhne Waale Samajh Gaye Hain!
Each person is entitled to his or her opinion; let us all grant that space to everyone. So long as that opinion is not a physical, real harm to you, it shouldn’t matter. I readily admit that this rather grandiose statement is very difficult to actually achieve; given the ready availability of information, one or the other side is bound to be proven wrong at some point in time. I further admit that there is a manifest misunderstanding regarding some issues, perhaps on both sides – but our highlighting these will not work, as the beliefs are too deeply held, and will require deep seated change; which is never good when sudden. Change is best when gradual.
CONCLUSION
In conclusion, there is no real Hindu terror. I must also regretfully re-iterate that as of now, for me at least, it is just not feasible to openly discuss anything regarding my political views, or views relating to some aspects of Religion. This is deeply regrettable  – but is not terror; I have a fear in my mind, a fear of losing relationships. Yes, I have lost one or two good friendships, as have other people in my knowledge. And frankly, in retrospect, I see nothing gained from our discussions; in fact, in the one or two cases where I backpeddled and went silent, and let matters lie, I now have a great relationship.

I cannot speak for society; I am not an opinion leader, neither am I a known personality. I am just one person in a Billion, quite literally. I can only speak for myself. And speaking for myself – and only myself, I must admit a creeping distaste and phobia of indulging in charged discussions around Politics and / or Religion nowadays. What does this mean for free speech? Fine – you {metaphorical you} don’t agree with my views – cant we agree to disagree? That is what I have started practicing. There is no need to get personal, or get vicious with words, when we are discussing, is there? So, my call – let it be. I will now try and keep my political views limited to the secret ballot. It is between the ballot and me now. And Religion– is between me and God now… Silence is the best option in this scenario! Now the only aspect on Religion I feel comfortable sharing is quotes of Swami Vivekanand, and some Geeta or other  Scriptural learnings. Nothing else. 
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Inherent Risks Of Social Media Advertising – And How To Mitigate Them

Published October 28, 2017 by vishalvkale

I was enjoying my morning read of the Business Standard, when my eye fell upon a story – Facebook and Google helpedanti-Refugee campaign in Swing States, Business Standard, Friday 20thOctober. I  noticed this story, and marked it for later contemplation. The recent saga over Twitter usage by  Indian Politicians brought my mind back to this story – and its many implications. While the ethical & moral implications are also present – but most vital is the implication of this, and similar happenings we may or may not be aware of, for us the people as well as for democracy.
Image Credit – Google Search

It is one thing for a politician to openly come on Social Media – quite a few have done it quite successfully; they lay their views, attitudes, national plans, ideals, problems etc – like one Indian Politician. Others use Facebook, and especially  Twitter in their own names to further their own views etc. There is nothing wrong with that – in fact, that is actually welcome, as it helps a large number of people become aware of what that person stands for, as well as have a judgement of his or her potential. Used that way it is ethical, transparent, open and disseminates information.
TARGETED USE OF SOCIAL MEDIA BY INTERESTS
However, I would request that you open the link above and read it; the usage of – maybe even targeted usage of – the Social Media platform as described in the article, goes way beyond what has been described above, and indeed way beyond the scourge of fake news that is now a common phenomenon that we are seeing on Social Media nowadays.  “In the final weeks of the 2016 election campaign, voters in swing states including Nevada and North Carolina saw ads appear in their Facebook feeds and on Google websites touting a pair of controversial faux-tourism videos, showing France and Germany overrun by Sharia law.
This is quite frankly, extremely disturbing, worrisome and should cause unease and disquiet in most minds. The article goes further, showing emloyees roles as well as targeted advertising : “Unlike Russian efforts to secretly influence the 2016 election via social media, this American-led campaign was aided by direct collaboration with employees of Facebook and Google. They helped target the ads to more efficiently reach the intended audiences, according to internal reports from the ad agency that ran the campaign, as well as five people involved with the efforts.
FACTOR 1 : OUR ENTIRE LIVES ARE ON SOCIAL MEDIA AND THE INTERNET
In the modern world, those of us connected on Social Media have our entire lives on these platforms; it is easy to collate and study patterns for the SM companies – with a larger customer base meaning more defined patterns. It allows advertisers to target people specifically as per your individual tastes. Just think – you click on a site, and ads related to that site pop-up in your feed; used this way, it is legal, ethical as well as a powerful advertising tool, which can and does lead to win-win situations for the customers as well as the companies alike. But recall that we have our opinions, likes and dislikes etc all openly stated; it is easy to spot patterns and create interest groups on a large database.
FACTOR 2 : IMPACT OF AV MESSAGES & MODERN PREFERENCES OF PEOPLE
Secondly, the impact of Audio-Visual messages is known to be strong in both psychology as well as advertising. Further, add to that the increasingly short attention span of the audience combined with the sad phenomenon of lesser personal time / greater work stress, as well as the propensity to prefer easier to assimilate modes of information gathering {AV}, and short tit bits. These two sub-factors combine to create a situation that enables a mind to easily assimilate and accept messages that meet these criteria stated above.
DRAWING INFERENCES FROM THE TWO FACTORS
The two major factors above create a situation wherein a targeted message can be accepted with readiness and ease at least by one segment of the population. The abilities and concepts described in the first factor create a set of people with vested interests that enable the creation of ability and skill sets that can be put to use to reach the set of consumers identified for targeted messaging. In other words, to put it crudely, a set of people willing to accept, and a set of providers willing to use this acceptability of the people to get across a targeted message comes together to create confusion.
Let me explain – on one side, you have a set a data, voluminous, about people – their likes, dislikes, views, readership, viewership, opinions. We can use this to create sub-groups according to various tastes, opinions and what-have-you. This is the company-side skill. On the other side, you have a set of people with easy acceptance of AV or short messages, short content as told in the second factor. The companies can spot patterns among the people, can group them together. Thus it is becomes easy to make tailormade messages that can influence people with specific proclivities and propel their choices towards a targeted objective.
It is feasible to create patterns, extrapolate and draw inferences from Social Media activities. If one person has a habit of regularly visiting Food sites, specific to Chololates, Desserts, Cakes – one can draw the inference that this person may have a preference for sweets. Similarly, if a person regularly likes, tweets, gives opinion on one side of any view in the political or social spectrum, you can extrapolate that he believes in one POV. In large enough data – hundreds of thousands of respondents – this will enable the identification of a set of people predisdisposed towards a thought process. This may not hold true for all instances –  but in a large enough data sets of people, patterns will emerge that generally hold true; and remember, in Social Media we are dealing with live data sets, not snapshots of time.
As can be seen above – a targeted message {Anti-Refuge} was delivered through social media. And again, as we can read, there was direct collaboration of employees. Result was a strong message was delivered at a targeted audience, again as stated in the article.  And that is why the article above is so disturbing. While it is possible for this to happen even without the collusion of employees of SM companies, it becomes infinitely easier with their help; also, the data is also relatively error-free. Add to this the issue of Subliminal Advertising – of which currently there is no provable evidence in the public domain, and neither is it a legislated area.
COMING TO INDIA…
Can this happen in India? Has this happened in India? We do not know; I hope not. But we do know that now the political parties are using Social Media in myriad ways, as has been extensively reported. We also know of at least one book on trolling or usage of SM by one party. We have seen another getting smarter in its SM presence. This they should do – SM is an efficient way to reach audiences – be it politics or be it consumer goods. No issues with that whatsoever.
The problem is if this newfound capability is used to get across a targeted message – especially one of the fringe variety, towards a targeted audience. The biggest question is – where do we draw the line? And who is to judge what is the line specifically? If we have the capability to segment audiences as per tastes, I for one see no reason why that should not be used for mutual benefit. But – as I asked in my previous article as well – how far is too far?
It is we ourselves that are giving these parties and these companies this ability, by placing all our choices openly. This cannot be avoided in increasingly connected world – just not posting on SM is not the long term solution; other proxies can easily be developed, as so much is online in the modern world, that with time, money and capability drawing inferences from data sets is dead easy. This is the evil side, the negative side of the technology that drives our civilization. It really boils down to data security, and a question of simple regulation and ethics.
A QUESTION OF RULES & REGULATIONS
The Social Media companies need to have a strong set of internal rules &  regulations governing content that is accepted by their advertising departments; one that is specially rigorous for political parties or for messages that can be construed to have a political content, or indeed for social content. There has to be a differentiator clearly placed between product-service advertising, and cause advertising. This is doable and is frankly easy to do and operate. It requires an iron will within companies. It also requires strict regulation and a code of ethics so that pressure tactics are not used to pressurize companies.
CONCLUSION

Both the above are doable; we in corporate India need to wake up and smell the coffee. We need to open our eyes, and see the immense potential for good that technology holds as well as the immense potential for influence it holds – and the potential for damage. On a personal side, we customers need to be made more aware of privacy issues, data security and issues arising out of the above. It is not feasible to expect 500million people to stop posting opinions etc on SM; that is not going to happen.  Above all we need to understand the immense creative as well as disruptive power social media holds, its potential, as well as the need for regulation. This is a space that is not self-regulating. We need to wake up, and ensure that some borders are set in place. The US example should not be repeated… 

India’s NPA Problem 1 – 2001 to 2012

Published October 4, 2017 by vishalvkale

As the current dispensation reaches near midway in its 4th year at New Delhi, questions – hard questions – are beginning to emerge on its overall performance till date. The heartening thing in this is the surprising development of the main point at centerstage in the current public discourse, which is turning out to be the economic performance so far. Even some of its own party members and allies have come out against its policies or performance. For once, I can only say that it is nice that we are actually having a national dialogue around The Economy, which is very welcome.
THE NPA PROBLEM
There are several parameters of the Economy that we can discuss; here, I concern myself, in this article, around only one : The NPA problem that Indian Banks are facing. I would like to refer interested readers to the annotated article link in the Bibliography section, which is a report carried on the RBI Website wherein all the technicals are mentioned with data. My main driving concern in this article is the business side of the argument, rather than an economic side, which is only a secondary consideration for me as of now.


ARE WE PAST 2007?
I had earlier, in my analysis of Gold, asked the question, have we really emerged from the aftershocks of the Subprime Crisis, even now – 10 years later? A cursory glance at the numbers related to NPAs gives us a very interesting insight: NPAs were in negative territory in terms of growth in Gross NPAs in the run-up to the crisis {Look at the yellow line in the chart} – and then moved up after 2007, when the crisis hit home. Since then it hasn’t headed south. Bank credit also expanded at a much faster pace before than after the crisis {the blue line}; since then, till 2012/3, the numbers were subdued in comparison. I ask this question once again – are we fully out of the aftershocks of 2007? Stay connected with my blog as I attempt to answer that through my own self-study


GOING DEEPER
Moving on, in the period from 2003-2007, as seen in the next chart below, net additions to NPAs were in negative territory; but again, after 2007, they went north, way north – hitting all time highs by the year 2012. And it is from this point that my argument diverges; most pink journals, publications focus on the banks. The enclosed RBI publication makes several observations around the Credit Risk Assessment in Indian Banks, which can decidedly be a lot better; but that is beside the point. Examine this data once again – especially the breakup of NPAs between the priority and non-priority sectors. {Priority Sectors – Bibliography point 2 –  are Agriculture, MSMEs, Export Credit, Education, Housing, Social Infrastructure, Renewable Energy, Advances to weaker sections & Loans upto Rs. 50,000 provided the individual borrower’s household annual income does not exceed specified limits}.



It is the non-priority sector which has contributed significantly to the spurt in NPA growth. In fact, the rise in NPAs in the last2 years of the dataset – 2011-13 shows a sharp rise in NPAs in the non-priority sector of the economy; whereas the priority sector was almost flat in this period. Since the last decade, the share of priority sector in gross advances averaged at over 32 per cent, while its share in total NPAs remained much higher, averaging at around 45 per cent – Chart below. A deeper look at these numbers, in the next article, gives more clarity, with mid-corporate segment accounting for the largest growth in loans in one bank at least.
One side of the debate defends the Government saying this is a longer-term problem; the data bears this out faithfully, to be honest. However, we cannot pass judgement on that alone, as that would be cherry picking facts to suit a hypothesis; we need to look deeper, and at many other factors before we can arrive at that conclusion. For the other indicators do not bear out this hypothesis, as I looked at in one previous analysis. And yet, it is undeniable that this is a longer-term issue, with deep reasons underneath. We need to ask – why should these loans go bad? And the divergence in the MSME and other areas in terms of NPAs needs a deeper look as well!
WHY SHOULD THESE LOANS GO BAD?
Now, if a loan goes bad, and the borrower is unable to repay – provided there is no malafide intent – it clearly means that cash flows were not to the tune expected. Business is conducted only for the purpose of cash flows & performance.  This can arise from two or three reasons, {from the business perspective} namely :
1.     Either capacity has been generated but cash flow {sales} do not total cover costs, or
2.   Expenses overshot the plan
3.   Deep – seated structural issues
It is being said that the banks’ risk assessment can be improved; I don’t argue with that – but I humbly submit, in light of the simplified analysis in the above paragraph, that there is another side to it. And that is simply, firstly that these were business decisions that went bad, meaning that these decisions were taken on unsound business principles, or had no longer-term deeper thought in them, or that they were hit by unforeseen problems. Note – unforeseen, not unforeseeable. And that is the most significant aspect we should look at – the decision makers, and the borrowers. Lastly, it also could indicate structural issues; cyclicity of the business cycle is no excuse. And that is what I lay out in greater detail in the next part of this analysis day after tomorrow
FIRST PART SUMMARY
In the article above, I look at, firstly, 10 years longer-term NPA Performance, its bifurcation along priority / non-priority sectors, divergence in the trendlines between these two; and the business case for loans going bad. Reason to go deeper is to avoid cherry picking data just to prove a hypotheses, and get to the gist of the real problem. And the reason to study the NPAs is simply that these provide case studies of where we went wrong as an economy, as a leadership, as a people. These are national resources – and we can learn from our mistakes. Stay connected as I progress on this journey basis authentic data; let us learn together…

Book Review : India – Priorities For The Future By Bimal Jalan

Published September 10, 2017 by vishalvkale

India – Priorities For The Future is a book that can be best described as being at the cross-roads of politics and Economics, which makes it quite unique. It is a very thought provoking and deep analysis of this intersection of these two vital aspects of our nation, concerning itself with the Economy of the country, its performance through the years in numbers as well as Macro Factors; and the political aspects of this, that is – the decisions, involved decision makers, systemic weaknesses and plus points as they exist and what needs to be done.
Bimal Jalan


As can be seen from the short preamble above, this is quite wide a scope, and seems daunting. The best part is that the entire scope has been dealt with remarkable aplomb and sufficient depth, while at the same time not exceeding too many pages. This is a very short, {well – relatively short anyways, considering the topic and the scope – 180-odd pages} book, and all the arguments are presented in a superbly logical and yet delightfully succinct manner.
The book is divided into two logical sections – “India Then”, reflecting the period from 1980 – 2000; and “India Now”, reflecting the period from 2000 onwards till 2015. The first section highlights the initiation of the reform process that started in the 1980s, and the second section looks at the situation and strategies taken up from the 2000, till almost the present time, 2015. While looking at the economic side, the book also consistently looks at the political side as well, taking pains to analyse the impact of the political situation and the political aspect of economic decisions.
This approach is what sets the book apart, and elevates this into the realm of one of the finest books to be written on the Indian Economy, as it creates a complete picture in broad strokes of where we are, where our weaknesses lie, and where we need to go in order to develop and take the nation forward. In fact, in more ways than one, it highlights the politico-bureaucratic bottlenecks and problems, and looks at how these can be overcome. That is the main thrust; the arguments, however, are economic and developmental in nature rather than political.
THE FIRST SECTION- The 1980s onwards
It is the general impression that the Indian Economy was reformed from 1991; this book puts paid to that impression, and takes one into the reality: the reforms process which started in the 1980s, the reforms taken then with steps like loosening of direct controls especially in Industrial Licencing. Several committees were set up on trade policy, PSU Policy, and shift from physical to financial control. Several of their recommendations were implemented. The result was industrial growth averaged 8% from 1985-1990 as an example.
Despite all of this, by 1991, the situation was dire, and the Economy was in doldrums. This is where the book acquires a life of its own, so to speak – and does a hard-hitting fact based politico-economic analysis of the fall of the Indian Economy’s reasons in three hard hitting chapters. The stunning aspect is that this fall happened when the Agricultural production was at its peak, and Industrial production was showing good growth.  The fact that the Economy despite that is a wonder, and needs explanation – I recommend you read the book for that.
Also in this section is a superb analysis of the Economic Strategy of the 1950s onwards, with solid reasoning, proving how no other approach was feasible given the overall conditions then in presence. This is a welcome correction, given the public misapprehension regarding this. As it moves into the late 1980s, we run into the paradox of good Industrial and Manufacturing, good Agriculture, in the run-up to the crisis. Here, the impact of the Gulf War, Oil Shocks, BoP situation. Collapse of the USSR, combined with our export scenario and unstable internal political environment In 1989-1991 – and how these carried into the crisis is a lesson in MacroEconomics for all readers.
THE SECOND SECTION – 2000 Onwards…
In my opening remarks, I had noted that this book is right at the intersection of Economics and Politics; the second part is where this book comes alive to transform into one of the most pertinent blunt and factual take-downs of our approach it has ever been my fortune to read. The author has gone deep into the Indian Economic-Political scenario, pulling out problems that we all  knew existed – but no one wanted to talk about… until now. The first section was a build-up, analyzing how we got where we are today, and what has been done. The second one takes off from there, building a classic case for some hard reform, and tackling the issues head-on.
As early as in the 3rd chapter of the first section, the author has identified lack of exportable products, the systemic problems plaguing us and the problems in the Public sector as contributory causes. Che goes much deeper in the second section, building the case for strong systemic reform, outlined in the magnificent last chapter of the book. The erosion of quality in the Public Sector has been discussed at some length again, pointing out the inability of the Public Sector to generate surpluses for investment over the past. Also noted are the growing Private-Public debate.
The most significant part of the book is the longest chapter, the 6th one – Politics and Governance, which forms the meat of the analysis in the book. It goes deep into the system of governance- looking at the Judiciary and its relationship with the Executive, and Legislature; the erosion of the values {or conduct to be specific} of the political class, accountability of the Cabinet – the myth versus the reality, noting with candid clarity that the Parliament and the Legislatures generally do what the Government wants them to do, rather than the other way around. He identifies the 3 key impediments – Deadweight of the past, power of distributional coalitions and growing disjuncture between Economics and Politics; concluding with a stunning observation on Pg 112-113 : Alleviation of Poverty is not an important criterion in determining electoral outcomes!
The next chapter – the 7th – is the shortest; but deals with the most fundamental aspect – the myth of the separation of powers, and once again in typical candid and dispassionate form. This looks at Centre-Judiciary Relations, Collective Responsibility,  Lack of accountability, Problems in Parliament and its functioning, and the Politicization of Administration. As can be seen, each and every one is a deep, systemic and fundamental issue where we need to introspect… The last chapter – well, I recommend you read it for yourself.
CONCLUSION

In conclusion – this isn’t a book on Economics, or on the Indian Economy per se. The title says India – Priorities for the Future; and that is precisely what this book is all about. As the books notes candidly in our development record as on date, our performance has many deep seated issues. These issues – the most important ones – are on the intersection of Economics and Politics; or rather – squarely in the Political Zone. Economics enters into it as we measure growth in Economic terms. Administrative reforms, Decriminalisation of Politics, Federation, Subsidy Rationalisation, Ministerial responsibility – if made more efficient, can have a defined impact on our nation and its Economy… 

Indian Economy – Problems as on Sept 2017, and Way Forward

Published September 4, 2017 by vishalvkale

The enclosed article {Biblio. 1} by Mihir S Sharma, one of the few straight talking Economists on Indian Media, does raise some excellent questions. It is a superb analysis of the shoddy economic management – and also raises the fact that something is indeed broken. The economy requires deep seated reforms at core levels-  not vacant sloganeering grandiose plans. Quite correctly, the need of the hour is attending to the real issues that confront on the Business, Trade and Economic Front; as well as a straightforward analysis of what is wrong, devoid of Jumlaas and vacuous statements.
  



MACROECONOMIC BACKGROUND – OVERALL
All Macro-Economic Parameters are in the doldrums, as should be evident to all but the most devoted Bhakt; the time is now ripe for us to rise above narrow parochial statements, and try and get to the root of what ails our nation on an economic front. High NPAs, Low Credit Offtake, Slowing growth for 6 straight quarters, slow export growth and an economy on Government steroids… and many other parameters that we can assess – all point to the facts that this are not right, and there is something wrong somewhere that need correction. What is more, we are already at 93% of the fiscal deficit target for the financial year, and this is just the first week of September.
A glance at the Economy does not inspire much confidence; and this isn’t cyclical in nature. Sure it will turn around on its own – some parameter/s in the external environment are certain to get positive over time – allowing another burst of high growth, which will push the required structural changes into the background. It is just a question of time. Question is -we now have the opportunity, and a clear political mandate, to get some real reform going; can we take advantage of this? This does seem unlikely, as Media and public is once again focusing on the small good news of GST July Returns, which is like celebrating a 4 in an ODI when you require 22 runs an over to win!
MACROECONOMIC BACKGROUND – THE BIG BOYS
The Big Boys of the Indian Economy have no appetite for investment; neither do they have the required resources in their Balance Sheets to take further risk. The small boys, always under-represented in voice in Media, with little or no public imagination behind them, go unnoticed. Their performance, with both Profit and Revenue slippage in 16-17, is also rather worrisome; all in all, a bleak picture. Add to this  the rather unfortunate fact that access to Institutional Credit for these small players is still far from as good as it should be, a fact that goes woefully under-reported. Thus, we arrive at a situation where it is Government spending which is driving growth; rather a sorry state.
MACROECONOMIC BACKGROUND – THE SMALL BOYS
Another article, again by Mihir Sharma – kudos to him for a series of stunning analyses – points out : “A recent analysis of listed companies by the Reserve Bank of India showed that companies with paid-up capital of under ~50 lakh saw net profits fall by 23 per cent in 2016-17. Companies with sales of less than ~25 crore saw revenue fall by 44 per cent. This doesn’t look like a sector capable of reviving the supply of jobs. Nor is investment here going to be easy; commercial bank credit has slowed so much, and the government has been so slow to resolve the banking crisis that alternative forms of financing investment will be needed: Corporate bonds, for example. But, naturally, that helps only larger companies. If there’s a revival, it will come at the top end of the scale.” {Refer Bibliography}
GST
Sure – the GST will deliver its benefits over a period of time, be it tax base, regulated transactions, cost savings for businesses et al – but that does nothing the change the fundamental problem – low credit offtake, high NPA, declining sales and investments and so on. The problems of the SMEs will remain as they are – access to credit, low technology adoption, distributed ownership and operations, managerial skill issues and so on. That leaves us two choices – treat this as cyclical, and applaud GST… or push our sleeves and get to task of attending to what is wrong, avoiding grandiose statements and plans.
AGRICULTURE
To make matters more interesting, 233 of 633 districts are monsoon deficient as on date, and adding to this is other detailed analyses of precipitation distribution, making things uncertain, though not a cause for Alarm yet. One can only hope for a decent precipitation September month. Agriculture is just coming out of a long rut, and has seen a spate of loan waivers; further, it is a contributor to only 19% of GDP. Its issues are a debate unto themselves, and are far longer terms horizon solutions, which we do need to take – but that is another story, to be taken up later. The question in this overall backdrop – what can be done, firstly for immediate respite and secondly for longer term improvement?
WHOSE RESPONSIBILITY?
 At this point, the Bhakts get personal and state – why don’t you suggest a solution? That is a fallacious approach to take, as it  diverts attention from the issues, and shrugs off responsibility from the leaders we have in Parliament, in various think tanks, institutions, and other similar places. It isn’t my place, a part of the public voice, to suggest solutions which require data, and access, and power – neither of which I possess. We have these institutions for a reason – and I can only point out basis hardcore facts and data that things aren’t going smoothly, that a course correction is long overdue. I and people like me can only serve to try and direct public and Media attention towards the right path.
WHAT NEEDS TO BE DONE, AND BY WHOM?
On the longer term, one thing is clear – the SME sector needs to both upskill, upscale as well as get far better institutional support; some changes are being made in that direction, but far more is needed in various support terms from institutions. This is clearly a longer-term solution, and has further deep institutional process and structural reform that will be needed; not an easy thing to attempt, strong politician or not.  And thus, expecting an immediate revival in GDP, Jobs etc from this sector in the short term is expecting a bit too much.

That only leaves us with, as Mihir Sharma correctly points out, the larger boys – the ones who have scale, and established operations. In order that the NPA scenario gets clarified, credit offtake improves, and so on – it is essential we focus on these – or in other words, the domestic environment; rather than chase foreign money and investments, the need is to ensure local money gets mobilized for local investments, demand improvement steps be taken, private investment uptick starts post-haste; for, with the Government already at 93% of its fiscal deficit this year, it has little scope left in its balance sheets for any further activities – and last year, it was government investment that was a key factor in growth!

BIBLIOGRAPHY

GST & Subsidies – The Pluses, and how to mitigate the Minuses

Published August 6, 2017 by vishalvkale

In the midst of these seemingly hopeless times with nearly every economic parameter going down, it is heartening to see a small, tiny uptick in credit offtake from banks {Business Standard ,”All Eyes On RBI Today”,  2nd August Credit Chart – See Chart below}. I haven’t seen many people note this : but the chart is clear. There is a small uptick – this may of course be irrelevant, and unsustainable; but it is present. It is now for the Government to ensure this uptick is sustained; increasing Credit Offtake is a prerequisite for a sustained Economic Recovery. 



However, it is with regret that I admit my article isn’t about recovery prospects; as most of my readers will no doubt be aware – I don’t indulge in speculation; that requires detailed data trends which are not available to me, as well as tools. This present writeup is more about the risks that are facing us in the current situation, which taken individually or together can derail this small beacon of hope. The beacon of hope isn’t just the Credit Growth, but rather the GST as well as the increasing Tax Base; and of course, not to forget the welcome initiative of this Government to take some hard decisions. As to whether these hard decisions are enough or not, is another story, for another article. As I said, speculation isn’t my style, neither is it my current forte.
HARD DECISIONS
Lets us tackle this most prickly of issues straightaway. Article after article is claiming-  in the Pink Media {I freely admit I have stopped reading White Media, as I find them not upto the Mark. I count Livemint in Pink Media, as in Economic Media} – that the current dispensation is not taking hard decisions, or real reform moves. I respectfully submit that the reality is the exact reverse – they are not only taking Hard Decisions, they are doing so with a single minded determination. Let us give credit where credit is due.
The GST is itself a hard decision; fine – it is, well, let us say not upto the mark – but it is a start. {Libs, hold on please – will attend to GST in a separate section here}; yet, the Government went ahead, warts and all. This will unlock future potential, as I analyse in a strategic analysis of GST impact subsequently in another article. Next, the rather unfortunate tendency of this Government to target subsidies with a single minded determination and focus brings a new atmosphere in the country and among the people.
THE GST
Bhakts are over the moon over this reform; Libs are cautiously optimistic, while being wary of the downsides of this move – which are, quite frankly, way too many and way too technical to be stated in a short summary. Both sides are right. The news on the ground isn’t great; the move has choked the economy, as we can see in the trickle of information that is now coming out. While there is logic in the claim that these are temporary, this needs a careful look at.
Trucks – one article said 20-30% – are not getting loads; Chemists are not ordering some key drugs in sufficient quantity as they fear input credit will not be passed on; SME order books are empty, and they are paying a temporary price; Hotels business is down 20; Manufacturing sector took a big hit in July – which is the sharpest decline or hit in nine years; Housing and Real Estate is showing signs of stress due to RERA and GST; Textile Segment – esp the small units – is also showing stress due to GST. You can of course claim that these are short-term changes, but there is more to it, as we shall see.
SUBSIDIES & FACILITIES
The Government, at long, long, last – has shown some signs of attacking our crippling subsidy problem. We are a developing country, and the more we spend on Subsidies, the lesser we have for Development and Capital Expenses. In that light, it is beyond argument that this is one area that required attending to. At last, we are doing it – but is our approach right? There are some indications that the Government is thinking of tinkering with the kerosene subsidy, and the fertilizer & Gas subsidy.
On the face of it – this looks a great move. But go deeper, and problems emerge. The government has announced that the price of subsidised kerosene will be raised by 25 paise per fortnight until the subsidy goes. But look elsewhere – 40% of Kerosene is diverted, true. What of the balance 60%? That is used by those whom it was meant for. Second, cooking gas subsidy is being phased out. Third, railways – where catering and Blankets etc might be phased out.
THE KEY POINT
First of all, as all indicators point out – as I look at in this article of mine on my blog – The Indian Economy has not been faring too well. On top of that, demonetization created massive disruption particularly on the SME and Unorganised & farming sectors of the economy. Adding to this potpourri was a potent cocktail called The GST, which created further disruption. Point to be noted here – this was bound to be felt highest in the SME and Unorganised sectors, as the Larger players had the time, knowledge and the money to implement change processes as well as whither the short term storm. Also remember that the contribution of the Small and Unorganised sectors to the Indian Economy is to the extent of 40-50% of GDP as well as being the major contributor to Savings as well as employment
While the overall direction’s utility and benefits are actually beyond argument – the bhakts have it right there; the downside risks outlined above need to be taken into consideration. The Smaller players in various sectors, who together make a large segment – how long will it take for them to feel the benefits of the new regimen of the Economy? Do they have to ability to whether this storm? If not – what will be the impact? Joblessness – how many people will lose their jobs? {There is evidence of this, look in links enclosed} Or how many companies and operations will have to shut shop? And quite apart from the economic impact, what about the human side of the story? The two taken together, make a strong case for a more Human approach, for reasons of pure economics, as I look at in the next part..
The human side is what worries me the most, followed by the ability of the small sectors to engage with and emerge victorious over the challenges thrown at them. That they will win eventually is beyond argument – history is mute proof of that. But the process of change can be painful. It will require deep strategies, executed to perfection, to mitigate the impact, involving re-skilling, re-training, and a very soft handling. As on date, there seems to be no evidence of this happening. What will happen to the people who will get hurt in the interim is open to question; they will just have to cope on their own.
The other critical factor is the ability of the smaller players to weather the change. Take subsidies; sure – some of it is a waste. But large portions do reach the intended beneficiaries {read Kerosene article below}; to this category of people, people like you and me perhaps, the small amount of help through subsidies is actually quite large from their point of view. Instead of devising mechanisms to reduce misuse, the Government is doing away with them altogether. Similar is the case of the facilities example – instead of finding ways to improve, the Government might just do away with them.
CONCLUSION

Sure, these are hard decisions – some of them are bound to be beneficial, given they are based on solid logic. But does the on-ground reality in industry amenable to such gut-wrenching changes? If it isn’t, it doesn’t mean we don’t do the changes – all I am saying is that there is way to take hard decisions – and this isn’t it. Once again, it boils down to the most tricky of all things in life : implementation. Further, there is also a distinct feasibility of markedly improved strategisation as well as tacticalisation. I refer to strategic ways of mitigating the downside, and the precise tactical roll-out plan of such far-reaching changes; many, many methods are feasible, which given the audacity and correctness of the overall objectives and the strategy, will certainly lead to benefits for all… but is anyone listening? I fear not…

BIBLIOGRAPHY AND REFERENCED ARTICLES

And several others over the course of my regular readings… 

Wells Fargo Grilling – Why It Cant Happen In India

Published July 20, 2017 by vishalvkale

WELLS FARGO BACKDROP

One of the latest videos running viral on Social Media currently is the brilliant takedown of the Wells Fargo Top Man by a Senator, an excellent demonstration of interrogative skills, diligent and fair research, and deep domain expertise combined into one devastating argument. For the unaware, in very short, The Well Fagro account fraud scandal is an ongoing controversy brought about by the creation of millions of fraudulent savings and checking accounts on behalf of Wells Fargo clients without their consent. Various regulatory bodies, including the Consumer Financial Protection Bureau (CFPB), fined the company a combined $185 million dollars as a result of the illegal activity, and the company faces additional civil and criminal suits. You can read more on it here : Wells Fargo Accounts Scandal – Wiki
THE SITUATION IN INDIA – A REAL WORLD EXAMPLE – TRUE CASE
While I agree with the general contention of all who have voiced a regret that this is not the case in India, that such searching questions are not asked of corporations in India- one can offhand think of more than a few cases where such deep questions can be asked, and should certainly be asked. Let me state just one, and that too individual example, let alone the bigger cases. A very well known conglomerate, highly respected, once opened a division to sell corporate debt bonds, or FDs, to unsuspecting investors. My Dad invested quite a bit of his money in it, despite my ardent pleas not tom as my analysis told me to beware. The net result is that we defaulted on our final installment {we were paying in two parts} on our home, lost it – and my parents died without a residence. We haven’t seen that money since.
This is just one example – there are others. The above is quoted just to make a point; that enforcement and accountability in extremely lax in India. This is beyond debate – even in the above case, there was a lot of, aah, action. A lot of noise, a lot of so-called questions and what-not. But the long and short of it was that we never got to see our money again -and it has now been 20+ years. I haven’t forgotten – that company is responsible for a lot of pain my parents went through. Neither can I forgive myself that despite having the knowledge and the ability I was unable to prevent the catastrophy that befell us.
THE ISSUES IN INDIA
The point of relevance is that never have I seen such stunningly blunt questioning being asked of the top management as in this video; and never have I seen such transparency being at least asked for from the Government to the Corporate Top Managers. This does not mean all is well on wall street – that it assuredly isn’t; it is as bad, maybe worse – far worse, than Indian Companies. History is mute proof of that – and we don’t need to go beyond 10 years in that history for proof. Wall Street and/or The Oh-So-Great West hasn’t learnt, not by a long shot; but at least they are asking, or are beginning to ask, hard questions of the Top Management and trying to hold them accountable for their misdeeds.
What we need is a dose of the same – hard, searching questions asked in televised open debates from Senior Management, by Parliamentarians  & Regulators who have deep domain expertise in that area, backed by thorough solid investigation and research. Let us be honest and ask ourselves do we have the atmosphere in the environs that matter – Parliament & Regulators -that can allow such a move? Knowledge isn’t an issue; that is certain – there are experts with deep domain skills available even in the regulators and the Government. But is it feasible for us, given the current atmosphere that prevails, that can allow such sessions with Top Honchoes from Corporate India? Look around, and see who has defaulted, and got away; who has done scams, or has highlighted major shortcomings, and got away without deep searching questions in public. The list is long.
CONCLUSION – AND SOME SOUL SEARCHING
In most cases we get investigations running into years, court cases, but no top man is ever brought to answer his or her decisions, actions; not in my case above, and not in any other case in my memory. Contrast with this Wells Fargo video – this happened in 2012-2014/15; and already we have this brilliant takedown. Thus, it isn’t just a question of will or atmosphere or ability alone – it is the entire ecosystem that needs to evolve to that level of accountability and speed of execution. Hard fact is that in India, we don’t ask our leaders any questions, be it in Public Sphere or be it in the Corporate World.
Ask yourselves – do we have the requisite resources in each identified area to execute something like this? How many scamsters, corporate top guys etc have been grilled like this? What is more – can they be grilled like this in India? If no, why not? Bringing this here requires more than just will etc – it requires investigation, proper and fast response mechanisms to a crisis, people of domain expertise involved in this matter who can guide the investigators in the right direction; it requires a speed of execution, and relative independence in operation.  That requires deep seated reform at the central and state polity; it requires speed of execution and independence, and freedom from political-corporate nexus. That is what we need – can we make it happen? I certainly hope so; but I fear not… I hope I am wrong….