NOTA, FTW !

A friend of mine recently drew my attention to a Frontline magazine article, albeit a dated one, in which Subash Kashyap, the former General Secretary of the Lok Sabha, talks about a few noted Supreme Court directives of that time. NOTA or None of the above option was one among them in which Mr. Kashyap dwells and expresses his views extensively.

NOTA, for the uninitiated, allows the disapproval of all the candidates in a voting list by the voter.

Though Mr. Kashyap has many valid points, he is not entirely convincing, at least to me. I am trying to list down the why.

NOTA helps to reduce Confirmation Bias

Confirmation Bias is the tendency to search or interpret information in a way that confirms one's preconceptions. So when I vote for a particular party in an election, I would probably not critically analyze their policies for the term they are in power. Thus I fail my duty as a citizen in my democratic right to elect without bias and arrive at a rational decision in the consecutive elections.

I had written previously too on confirmation bias and how we need to get rid of the concept of party membership. Probably shows my bias in continually supporting the existence of confirmation bias.

NOTA helps in a more informed, non-acrimonious electorate

This is linked to the first point on confirmation bias. A lot of people without confirmation bias means a lot of well informed people who tend to share their knowledge through debates and editorials making the overall electorate aware of their political masters and their shortcomings. Journalists, for example, can use NOTA while voting so that they are not swayed by party loyalty while covering news.

We see a lot of personality driven leadership in parties today. And when the leadership fails in its duty it falls on its followers to defend the indefensible. NOTA would help in easing such constraints and help enjoy and involve oneself in debates based on what one believes in rather than party or personality loyalty.

NOTA helps in bypassing compulsory voting

Mr. Kashyap made an important point in the interview that NOTA was already allowed even before its introduction. The voter can reject the candidates by simply not voting. However, with recent talks of introduction of compulsory voting by governments, NOTA would probably be the only option through which the voter can reject all candidates.

Moreover, in this age when pseudo-nationalists run amok in every street corner, an unstained indelible ink fingered individual post election date is sacrilegious. NOTA could very well save the voter from the self proclaimed nationalists.

NOTA thus is uniquely placed to provide certain benefits and hence I see it go FTW!

Did Britain already pay reparations to India as Cs?

The speech by Dr. Shashi Tharoor, Member of Parliament, on whether Britain should pay reparations to India at the Oxford Union debate was well received. Both by his supporters and detractors, which, is a rarity in Indian politics. Indian political leaders typically play to the gallery that cheers them and ignore the others but Tharoor is distinctive in that he is a Liberal who proved he can become a darling of the conservatives overnight.

While I agree with all the points he made and do feel that Britain does need to pay reparations, I am willing to play a little Devil's advocate here for my own benefit to get a better understanding on why I agree with Dr. Tharoor. I would like to counter Tharoor's arguments through my own theory - Britain paid back the reparations in full, with Interest, not in Pounds but in Cs.

This video of Dr. Tharoor's eloquent speech on reparations can give a little context to those who haven't watched this before.

C for Cricket

I am not a big follower of the game, however, I do get all charged up when India plays against any country and especially if it was Pakistan. Very few events have matched Cricket's ability to bring together the country of a Billion people of various religion, language, caste and creed. This amazing sport was not native to India and even India's national sport is Hockey (until 2012?!). However, it is likely that any random Indian would recognize an Indian Cricketer better than a Hockey player of the Indian team. There are probably more coaches, stadiums, events, recognition, even sporting accessory brands for Cricket than Hockey. However, these are points for a different blog post.

The point here is this amazing game which brings together a billion Indian together was brought here by the British. In the speech Tharoor makes a point on Railway and Road Infrastructure. He very rightly says that Colonialism cannot take credit for bringing these to the country as there are countries which were not colonized able to develop these on their own. However that argument might fall flat in case of Cricket. Because we don't see Cricket famous outside the commonwealth. The most followed sport in the world currently is Football and not Cricket.

So now that we have made a point let us try to quantify like Dr. Tharoor did. Well we have the richest cricketing board in the world. We have millions who would pay an arm and a leg to watch and take selfies with the Cricketers. That with one of the fastest growing middle class in world sounds rather profitable. We even hold the International Cricket Council Chairmanship currently.

For me, however, the fact that the game can rally together a billion people alone is priceless.

C for Comprehension and Conversation.

India is a land of many tongues. A great many languages were spoken and we didn't need one more to add to the confusion. However, we all took to learning English since the Britishers spoke English. And probably because they sounded horrible speaking our languages or they were dim witted or plain lazy to learn ours. This ability to comprehend and converse in the lingua franca of the World opened our economies in ways we never comprehended.

Not many people would remember the protest against Hindi as a national language that broke out in many states, especially Tamil Nadu in late 1960s. Language can trigger dirty civil wars is a known fact which is a topic for another Blog post. People were open to the idea of seceding from India to protect their language against the invasion of Hindi. And it was finally left to English to save the day. Till today English remains an official language along with Hindi.

The Information Technology and associated services revolution wouldn't have occurred if not for this ability. Russia and Ukraine had better programmers, China had cheaper programmers while only India and a few other countries of the commonwealth had better, cheaper and English speaking programmers. Today the GDP contribution of these services industries is out there to make quantifying easy.

For me, however, the fact that this language of the Britishers played a role in keeping India together, united, is priceless.

C for Crown

Before Cricket and before English the one thing that held the people together, galvanized an entire sub continent on a massive civil disobedience movement was the Crown. Or to make it more clear - a hate for the crown and its excesses. Before the crown, India was largely non existent. It was a bunch of princely states fighting each other for power and influence. Thanks to the crown and its excesses we were united to fight them off and decided to stay united.

That again is priceless.

So my arguments have largely stated that Britain had already paid reparations. Right?

No! Like Dr. Tharoor says, reparations are not about the money, it is about principles. The British must take the opportunity to atone for their past misdeeds.

SBI merged with subsidiary banks - A SWOT analysis!

A couple of days back the Ex Chairman of State Bank of India (SBI), Mr. O P Bhatt, irked a few shareholders by suggesting that the subsidiaries of SBI may be cut-off from the parent or worse, merged with other public sector banks as fit. As a shareholder of SBI and an ex-employee of one of the subsidiaries, I found the idea ridiculous. As I was contemplating on why I found it ridiculous, I found another intriguing news - TASMAC, the Tamil Nadu government's liquor cash cow is employing SWOT analysis to understand what is leading to fall in sales at its outlets.

Thus I came with this idea of a SWOT analysis of a hypothetical scenario - SBI merged with its subsidiary banks. Who said alcohol isn't a stimulant? : )

However, given that am both a shareholder and an ex employee, my words are to be taken with a pinch of salt. Let me start with a disclaimer - I may be biased in my views (you, the reader, are welcome to point them out in the comments)!

Strengths

• SBI and the subsidiaries as a single bank will be a banking behemoth with no parallels among Indian banks and few parallels in the International stage. Such a high standing might reduce borrowing costs in the overseas market.
• With the additional capital, a merged SBI can better compete with the JPMorgans and Goldman Sachs of the world.
• Achieve 'economies of scale' given its huge size. They will be big enough to dictate prices to vendors.
• Achieve unprecedented levels of financial inclusion given its reach and additional resources.
• The other subsidiaries (SBI Life, SBI General, SBI Mutual Fund, SBI Capital, et al.) can dip their beak into this huge pool of customer base and cross-sell their products.
• Given the customer base, a merged SBI's base rate would influence competing bank's loan and deposit interest rates next only to RBI's repo and reverse repo rates.

Weaknesses

• 'Too big to fail' tag might make them take riskier bets which might throw up nasty surprises.
• Human Resource challenges following a merger were quoted as the biggest risk by the current chairwoman, Ms. Arundhati Bhattacharya. When associate banks, which are more traditional in their approach to business are exposed to more modern ways of business sparks are bound to fly. Considering that certain staff unions are not keen on merger this is bound to get worse.
• The size of the bank might act as an obstacle to changes in the industry. A smaller, agile bank might quickly adapt to changes rather than a behemoth with its swelling customer base and overwhelming employee strength.
• An already stretched workforce may be thinned out further resulting in bad customer service. The same can also be said about physical and IT infrastructure.

Opportunities

• Implement global best practices in its merged entities and copy jugaad innovation from merged entities and taking them global.
• Leverage branch presence to deliver more targeted service. For example, a SBI branch and SBM (State Bank of Mysore) branch in MG road, Bengaluru can serve as one SBI branch for SMEs and one SBI branch for all other banking needs.
• Exposure to more modern banking facilities in place of traditional banking products.

Threats

• Losing traditional customer base to more traditional regional banks. SBT (State Bank of Travancore) merged with SBI might lose traditional customers to Federal Bank and South Indian Bank which are seen as Kerala based bankers.

Apart from the fact that the weakness and threats are minimal, they can be easily addressed. The public sector mentality will keep them off from the kind of risky bets entered by the MNC banks in 2008. Though HR will be a big pain, it would be limited considering that most of the manual work would be automated going forward and the Officers' union is supportive of a merger. Technological innovation and alternate delivery mechanisms would reduce the burden on staff. It is also highly unlikely that customers would make a switch to other banks considering the fact that many would hardly realize anything has changed. Everything from the symbol to most processes and systems are similar across the parent and subsidiary.

Considering all this it makes more sense to merge or remain as subsidiaries rather than break or merge with other Banks. Have a different opinion? Let me know in the comments below.

Cash on Nash to Lash at Communism but it's not making a Dash despite the Bash!

I haven't watched or read 'A Beautiful Mind' and hence when someone told me that John Nash and his wife met with a fatal car accident I just joined in a collective gasp. Only later did I learn that Nash was the genius behind the famed 'Nash Equilibrium'. My tryst with Nash's work was during management studies and my respect grew when I found the man's work helped various fields from economy to psychology. May their souls rest in peace and equilibrium.

John Nash won the Nobel memorial prize in economic sciences in 1994 despite his contributions primarily had to do more with mathematics than economics. He had very less interest in economics too. Then why economics? Well could be because Nobel prize didn't recognise mathematicians (Alfred Nobel supposedly lost his lady love to a mathematician) and hence economics, as a centrist would tell you. Or because Nash's work helped in economics the most than other fields as a conservative would tell you. Or because it was all a big fat conspiracy by the western world as a communist would tell you.

Why is it a conspiracy some might wonder? Well the reason is though the work itself was devoid of any particular politico-economic ideology it was used to further the 'capitalism is best' idea. 

The crux of the Nash Equilibrium in layman's terms can be defined as - when two or more person strategise rationally for his/her own benefit taking into account the others' decisions they are said to be in an equilibrium and would tend to achieve the most optimal result. Extending this to economics one might conclude that if each player is selfish and is after his/her own betterment then each would achieve optimal performance (wealth). Thus it was arrived that capitalism and free markets were good. Businesses compete in a free market for their own selfish goals and eventually making the market a better place to live in for all.

Uh huh but, Houston, we have a problem! Not all humans can be expected to be rational in this age. In today's cut throat competition, businesses employ hook or crook methods to make money. Bribes are freely given and taken, competing businessmen not companies are eliminated, cartels are formed, resources, environment and the unassuming, innocent, Homo sapiens are exploited. The term for all this in vogue is crony capitalism. But by definition it's a free market, no one is stopping the others from doing all the above and they are well within their right of being selfish!

And not just that! Inequality, a serious problem engulfing the world, is feature of this capitalism says a new age economist who has done some serious research. He has compiled his work into a book 'Capital in the Twenty-First Century ' which incidentally is a best seller (I keep falling asleep while reading it, promised myself to get back after finishing Gone Girl). He is a Frenchman with a very French sounding name, Thomas 'no not Friedman' Piketty. 

This video though dated gives a clear understanding of Inequality in the USA which sells the American dream

And it makes sense. Can someone start with millions or even billions of the green back from the best of Wall Street and aim to compete successfully against the likes of Costco or Walmart in their own game? They may disrupt them with an alternate delivery channel like what Amazon or eBay does but in their own game of brick and mortar behemoths? Not unless they have really shitty management. Even in the alternate channel the success of the disrupter lies in the failure of the disrupted. If Google waked up to the potential of a social network earlier, I doubt Facebook would even exist today.

Thus in a capitalist economy, the haves have a clear advantage over the have nots and some government intervention is needed to bring about a level playing field.

And Mr. Piketty isn't quite finished yet. He comes with his analysis on previous revolutions like the French and Bolshevik goes on to make a scary formula

Where, r is rate of returns from capital, g is the growth rate and boom is a boom - a revolution that could overthrow capitalism and in turn democracy as we know it.

It is high time we get something to replace Capitalism. Communism may not be the answer, but a hybrid socialism could very well be the optimal solution.

Are we entering a period of USA 'neutral' Superpowerdom?

When the 'Nobel' committee decided to award US President Barack Obama the Nobel Peace Prize in 2009, I was one among the many people who criticized their collective wisdom. Here was a man who was commander-in-chief of the most powerful army in the world, involved in two of the most deadliest conflicts in the 21st century and who has proved nothing with less than one year into his presidency. What I didn't know then was the almost psychic power of the committee to look into the then distant future.

In his two terms of presidency, the commander-in-chief has many peace initiatives as badges up his sleeves.

Troop Draw down was one of his poll promises and he made good of it, due to poll compulsions or not, and it has shown good results in security situation in Iraq and Afghanistan from the American perspective with less war casualties.

Iran was another bone of contention. At one point it looked like invasion was imminent and stories of 'leaked' battle plans doing the rounds. Then there was Stuxnet, a complex worm which disrupted fast spinning centrifuges, sending the Nuclear program of Iran back by several years. The president stood his ground against the hawks in the war department and chose financial sanctions instead of firing Tomahawks. Now it emerges a deal would likely be clinched limiting the Iran Nuclear program.

With Syria on the boil, it emerged Syrian President al-Assad used banned chemical weapons against his own population, a la Saddam Hussein. The policeman of the world was furious and calls for punishing the Syrian state was in the air. However, sense prevailed, largely thanks to the efforts of Russian Tsar President, Vladimir Putin.

When the Ukraine protest movement gained a critical mass resulting in its President Yanukovych fleeing to Russia and the annexation of Crimea by Putin, Obama did a balancing act of reassuring his allies and repudiate Russia through economic sanctions.

Finally the talk of lifting of the United States embargo against Cuba, a communist state right next door confirms USA has been making peace with most of the world.

Not just buying peace with enemies, the US seems to be cold shouldering its allies too.

Israel, the Jewish state on whom USA's middle east policy is based on and whose security it views as most important next only to its own has been cold shouldered off late. Be it the controversy surrounding Israel's expanding settlement policy or Iran Nuclear standoff, the Israelis weren't taken along.

Saudi Arabia, the next important US ally in the middle east had got a similar deal. Not being taken along in the Iran Nuclear deal, they have turned to Pakistan, a nuclear power. There are talks of how the Pakistanis have even pledged to deliver the Saudis, nuclear weapons, all for a price. Saudis also feel by not providing the Syrian opposition forces with more powerful weapons the Americans have let gone a golden chance to cripple the Saudi's regional rival duo - Iran and Syria. The Iran Nuclear Deal only cements the suspicion of the Saudis.

Japan is scrambling for defense ties with India and Australia to offset a possible US dormant position as China is asserting itself with new air bases and infrastructure in the South China Sea. United Kingdom the most trusted and closest ally, next only to Israel, recently went ahead and joined the China-led World Bank slayer, Asian Infrastructure Investment Bank (AIIB). Most European allies have joined AIIB. Eastern European allies are kept in the dark as well. Poland and Czech Republic were promised a missile cover which never came to fruition. Georgia and Ukraine still await their NATO membership.

All this seems to suggest that USA would enter a period of consolidation - economical and political. The shale reserves, favorable demographic situation, though shaken not flattened transparent markets, innovative and enterprising, highly skilled immigrant welcoming community, all allows for this consolidation to happen. This may not result in a multipolar world as envisioned by Putin but would result in a 'neutral' almost pre-WW2 United States.

Unless there is a Republican victory, which could change everything.

Is the Oil Rout a Russian Roulette?

Russian Roulette, is a lethal game of chance. It involves a person with a revolver and a single round. The round is placed in the cylinder and spinned into position. The muzzle is put against the head and the trigger pulled leaving to chance the outcome.

The Oil Rout (2014-2015), is an ongoing crisis in the oil markets. It has been triggered by the reluctance of the biggest oil producers (OPEC especially) to cut supply despite sagging demand driven largely by the slowing Chinese and European economies.

There are rational reasons as to why the Oil rout is happening. The United States of America is tasting success with the Fracking process in exploiting the Shale Reserves abundant in their country and is poised to overtake many existing Oil economies including Saudi Arabia in production. It is alleged that the OPEC members fearful of losing their market share have kept supplies constant.

Keeping the tap flowing serves dual purposes for OPEC. It enhances delivery mechanism and infrastructure with the client thereby strengthening the business relationship wherein the client won’t look for alternate oil exporters. The other sinister purpose is with falling prices, Fracking, a laborious and costly process, would lose some of its sheen, breaking the balance sheets of the companies involved. This would be the ‘sweet crude’ news the OPEC members would be waiting to hear, Pun Intended!

A few years ago the US would have lunged into the situation in the middle east, brought a war or instability about, constraining production of crude which would lead to stabilizing of price. They are not interested in stopping OPEC this time. The reason, they are happy to see their other, old adversary, Russia, suffer. Russia being a predominantly export economy with Oil and arms as major exports is hurt. Once seen as the solid wall in the BRIC, the Russian Bear is expected to post its first negative growth rate this year.

But what if all this was grand game from the country that once dominated Chess. Therein lies the conspiracy (albeit, a far fetched one)!

Islamic State or ISIS or ISIL, a Sunni militant group is involved in fighting Shia governed countries - Syria and Iraq. It is not a secret that ISIS enjoys some patronage from other Sunni nations like Saudi Arabia and UAE. Even NATO member Turkey was reluctant to let the Kurds fight ISIS even after USA designated ISIS a terrorist organization. The reason was simple, in order to play a regional power Sunni nations needed to have proxies like ISIS to keep Shia dominant Iran and Syria at bay.

In the earlier days of victory ISIS controlled vast swathes of land adjoining Iraq and Syria. They were able to sell oil in the black market at discounted prices to maintain their war machinery. It was said the revenue was in millions of USD. They looked indestructible and was seen achieving a critical mass wherein their expansion furthered their oil revenues which feeded their expansions. 

However, the wheels of fortune greased by crude changed. With fall in prices, the revenue of ISIS probably fell. They have lost territories they once held. They had demanded ransom of $200mn from Japan for hostages. It seems they are no longer the fearsome power they used to be. 

And mighty Russia might, just might, be silently celebrating their master strategy yielding fruit. They helped their allies, warned its neighbours, took possession of a leased port along with Crimea, tested NATO’s resolve and reassured its ethnic population all in one big game plan.

Hillary Clinton likened Putin to Hitler. I feel Putin might be playing a Stalin - initiating a Scorched Oil Policy, burn a little and return victorious!

Bent for Barack or Flexed for Fission?

As the Air Force One lifted off it was time for us, Indians, to ponder what has been achieved. Both Obama and Modi are 'charismatic' in their own right and were great orators who were able to rally people with their speeches and mesmerized them to vote for them. It was therefore imperative to read between the lines to see at what cost, deals were achieved, as the spell of the #NamObama bonhomie cleared.

The one thing that stood out was the Indo-US Nuclear deal. This was achieved on day one of the presidential visit. The main bone of contention was the Civil Liability for Nuclear Damage Act, 2010. The act supposedly holds not just the operator (in our case the Nuclear Power Corporation of India) but also the supplier of the Nuclear Plant (the General Electrics and Alstoms of the world) and the fuel supplier. Now this legal minefield has been completely bypassed by the Government of India establishing an Insurance Pool to the extent of INR 1500 crores of which INR 750 crores is expected to come from five Government owned Insurance companies viz. General Insurance Corporation of India (GIC), New India Assurance, Oriental India Insurance, National Insurance and United India Insurance and the rest from the Central Government. I am impressed with the brilliant idea, however, I am equally or more concerned about the impropriety of this decision. 

Not long ago India entered a specialized group of select nations for having sent the Mars Orbiter Mission (Mangalyaan) to Mars. Not many people know that India never insured this rocket launch. Not only this India didn't insure Chandrayaan either or the countless other launches made using Indian rockets. They only insured rocket launches made from other countries with New India Assurance. New India Assurance in turn would reinsure it with other Global Reinsurance companies (like Spaceco of the Allianz Group). The Indian Reinsurance Company, GIC, was said to be lacking expertise or capacity or both.

The logic as to why none of the rocket launches from India were insured was straight forward. Indian Space Research Organization (ISRO) which was responsible for launching the satellites was owned by the Government of India. Similarly, New India Assurance Insurance was also owned by the Government of India. So any premium paid and claim honored would just be funds moving from one Government coffer to another.

Now the questions in my mind:

• Going by the logic in case of satellites, is it right to use Taxpayer's money to insure and in turn absolve the liability of another country's supplier of Nuclear plant and fuel? The premium will be paid by the operator (Nuclear Power Corporation of India) to Indian Government controlled Insurance companies to absolve the General Electrics of the world from Liability.
• GIC, found wanting in expertise to do actuarial work for satellites, has expertise to assess Nuclear Power Plants? The last time I checked Nuclear Power Plant accidents killed more people than satellite launch accidents.
• The Fukushima clean up till date has cost approximately INR 120 crores and the whole decommissioning of the plant is expected to take 40-50 years after which the actual cost will be known. Considering this, will a corpus of INR 1500 be enough?
• Will the PMANE, who were accused of being incited by NGOs backed by western countries against Russia, raise these issues against US suppliers. They had often quoted the Fukushima disaster in the past and now, General Electric, the company behind the Fukushima plant looks to setup plant in India without liability it would be interesting to see their course of action.

I am a big supporter of Nuclear Power Generation mainly because of the 3Ds of coal mining - Deforestation, Displacement of Indigenous Population, Damage to Wildlife and the pollution caused due to burning of approximately 15000 tons of coal per day for 800 MW (heard orally from a private thermal power plant in Tuticorin I visited).

However, the above questions have questioned my wisdom. Bent for Barack or Flexed for Fission? Considering the fact that we gave the Russians (and probably the French in the future) a similar deal, we flexed it for Fission! Hope it is worth it!