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!

For a better India...

“PM Modi wins the reader poll for the TIME Person of the Year” declared the message with a barrage of punctuation marks and smileys in the WhatsApp group. Within minutes came the reply “Damn! Still he ain’t THE Person of the Year” driving home the point like a cold dagger through the heart. This has been playing out for quite a while now given that the 2014 General Election was one of the most followed and fought election on the Information Superhighway in the history of India.

However, the point cannot be missed. This doesn’t happen when a Kailash Satyarthi wins the Nobel Peace Prize or an A R Rahman wins an Oscar. Even their staunchest critics and rival nominees applaud. But when the Minister, a leader of the masses, is winning a poll, trivial or not, they aren't receiving similar support from their own citizens.

I wondered what could be the reason and arrived at two ridiculous conclusions.

A few of Indian rivers are perennial so are elections in India. Being the democratic, federal structure we live in, some part of India is always facing elections or approaching elections and given the broad ideologies of the parties, left, right or centre, the federal government either align or are opposed to the Government of India. Given the situation and the campaigning involved someone with an opposing view of governance always sees the ministers more as a party ideologist and less as an approachable minister fighting for the common man’s well being. So the Prime Minister and his Cabinet colleagues must refrain from poll campaigning and exhibiting party affinity publicly. When the President, Governor or a Civil Servant can display neutrality while at work, the cabinet can definitely do it too.

When a stock broker buys a high conviction stock, he or she tends to follows news that reiterates his or her conviction. The same happens in an interview to an interviewer, once the candidate impresses him or her, he or she continues to question the candidate to reiterate his or her decision. This is called a confirmation bias in the psychological circles. Now when a person decides to become a member of a political party, he or she does so after a good amount of research. Now if the political party is making a mistake the confirmation bias kicks in and hinders the rational analysis of the situation. Rather, the mind looks for news that reiterates his or her belief that the party is somehow right which is exactly what the party propaganda machine would feed. So party memberships should be abolished and issue based support and volunteering by common people should be encouraged.

Brickbat or Compliment welcome at comments below.

'Amma' Economics

A few days back as I was scavenging my way through the thrash piled up on the information super highway I came across a beautiful story; a story of hope and brotherly love witnessed by the writer in one of the newly opened amma canteens in the city. The writer dwelled on how two boys, orphaned at a very young age, were able to fend for themselves, treating themselves to hot sambar rice from the meagre change they had on them. The story was heart rendering and eye opening to the fact that there are downtrodden people who would require a helping hand for their very survival. No wonder this scheme is being studied by many countries around the globe for replication.

 

On the same day I heard from another friend on how one of the stalls set up to distribute amma drinking water bottles gets a consignment of just 30 bottles a day. This would roughly translate to 300 bucks as revenue from sales per day and 9000 bucks in a month. The astute businessman’s son he was wondered aloud, how this will be sustainable by the government when it had to pay the employee in the stall somewhere around 12000 bucks as salary. While the math may not do justice given the fact that there are other stalls that might be eking out a profit, it is also a fact that all these services are subsidized by the state government.

 

Now should the government be doing this has been the question of many debates by eminent economists and Nobel laureates, the relatively recent one between Jagdish Bhagwati and Amartya Sen prior to the elections, what could be the alternative is the one in which our country’s best minds should be spending their time in.

 

One alternative is to spend the money on setting up regulators who could regulate prices of the food, water, medicines, salt, etc for those in the weaker section. Rather than adopting a collision course with the entrepreneurial class in the state, the government can take them along by giving them tax breaks and foregoing its revenues by offering other perks for every woman they employ, every self help group they embrace by buying their products and every common man they serve. This would open the gates to many new entrepreneurs as well. By competing with the entrepreneurs the government is only alienating them further, discouraging them from paying taxes and adding unnecessary weight to the government machinery.

Edward Snowden - the surprises that failed to surprise!

For the past month or so, Edward Snowden had become a household name. Most people I met had an opinion about him and his revelations. They shared theirs and demanded mine. There was a problem, I didn't have one.

The first time, I suppose, I heard about the National Security Agency (NSA) was in 2003 or so when I read Dan Brown's years old novel - Digital Fortress. The plot, which I vaguely remember, involved a renegade ex-employee of the NSA, ironically. I personally feel, not before a friend pointed it to me, that Michael Chricton was a better researcher than Dan Brown, not to mention the plagiarism charges against the latter, I take it that this news was an open secret atleast since 1998 when the book was first published. So I was sure that it was entirely possible to be snooped upon by one agency or the other and given the age we were living in, I was quite sure it was happening.

However, the whole episode had 'exposed' many other things that 'surprised' me.

To start with President Obama of the United States of America. Though personally I like the Republicans more than Democrats, Obama was hard to be dismissed. He won with his oratory skills - emphasizing on Hope and Change and his famous - 'Yes, we scan' slogan. He seemed to be a person of his word and his promise on transparency did intrigue me. But now he has proved he is just another actor in the World's stage after he authorized the witch-hunt for Snowden.

Another person who I admire for his nationalism and resolve is President Vladimir Putin of the Union of Soviet Socialist Republics Russian Federation. He had openly challenged the United States of America in many issues and called for a multipolar world. If there was someone who was expected to stand cold like the Russian Winter on the face of American diplomatic heat it was Putin. However, his recent statements that Snowden should stand down and stop embarrassing his 'partners' to gain asylum in Russia was a surprise of sorts.

Ecuador's earlier rhetoric and support for Edward Snowden and its sudden u-turn attributed to Julian Assange's statements suggesting that he was running the show rather than the Ecuadorean Government came in at a distant third in the surprises race.

Edward Snowden is like Steve Jobs, a prophet or messiah to a small or large crowd but to me he comes across as someone who took something old, polished it, smoothened some rough edges (rounded corners patent?!), gave a fancy name (PRISM?! How about iSnitch?!) and marketed it and became famous.

Systemic Bias.?!

The other day a friend of mine was asking me about Educational loans. Given my brief association with the Banking sector and the fact that my dad is still in active service with a Public Sector Bank, I have become some kind of a 'go-to-guy' for basic information regarding banking products. The friend's friend on whose behalf he was enquiring had aspirations to make it to a foreign university in a European country and my friend was quite excited, understandably, given that the aspirant was quite studious and well deserving. However, there was a problem. The aspirant's family was into agriculture full time and his dad, despite being quite successful, didn't possess any substantial assets other than massive farm lands.

Now that was bad news. The banking sector in India has been undergoing a silent crisis in the form of NPAs (Non Performing Assets) for some time now. A lot of corporate loans viz. Kingfisher have gone bad and many including Adani, GMR, et cetera are expected to go bad and not just that there has been a lot of delinquencies in the personal loans segments as well, especially Education, Home and Car loans, due to drying up of the job market. The picture was never green as far as Agriculture was concerned. It was almost a given that the Agriculture loans are either written off by the Banks or the Government at some point of time. Moreover, most public sector banks won’t accept Agricultural land as mortgage because they cannot go after it if the loan is defaulted as easily as they could with other property and also because in some states it’s illegal. If the banks were a little more cautious in extending credit earlier they wouldn't be so neck deep in trouble, the banks having realized that have pulled up their socks and in the process bringing untold misery to deserving loan applicants.

Recently a couple of news made headlines. Current Account Deficit (CAD) increases; driven mainly by Gold imports, Money Laundering by Banks expose by Cobrapost, Tax evasion and its impact on the fiscal deficit, Moneylenders, et al. I personally feel that the Banking structure in our country has directly resulted in such irritants in the system and I am going to follow the family and how their quest for funds for a legitimate and noble cause might come from unscrupulous and dubious sources.

There was a time not long ago when farmers can submit a proof of possession of agriculture land and Gold ornaments and collect nearly 75% of the value of the Gold as loan at a mouth watering interest rate of 7%. This was when Gold was at its all time peaks and there was a possibility that the interest rate might further go down to 5% with excess government subsidies. At that time the interest rates on Term deposits with the Bank was around 8% and technically if one invests the loan amount back in the bank they can earn up to 3% net interest margin (NIM). Just to give a perspective the NIM of popular banks during the same period hovered around the same figure give or take 1%. Now that gold has climbed down from its historic highs, the common man, especially small farmers, believing the trend would be repeated is trying to amass as much as they can, driving volumes up. Now RBI and Government had stepped in to douse the fire kindled by the passion for the fiery yellow metal which they could have done earlier and avoided the whole situation now. Now they blame the obsession of people with Gold, however, they were prima facie the reason for this obsession.

Turned away from the Banks and having already pledged all their Gold, the family might approach a Moneylender. These days’ moneylenders are exclusively servicing clients turned away from Banks and financial institutions and charge them interest which amounts to as much as the principle in many cases if not more. Over and top of this, since they aren't regulated, they take lands or other properties, even those banned from being mortgaged as security. None of the money that transfers hands goes through any bank accounts or anything, thus the whole transaction is as good as never happened, no taxes, nothing.

Now the family probably has enough money, however, he would have to wire a part of that money as college fees and other expenses. Now the Banks which had earlier turned them away due to systemic reasons will have to act intermediaries to transfer the amount. Call it strung by guilt of not able to help a hard working farmer and setting it right or to earn some precious commission from the wire transfer, the banks would give out some precious ‘advise’ on how to do it without arousing the suspicion of the Income Tax Department.

The money borrowed would soon be back doubled or tripled and end up with the money lender as black money. The banks might bend backwards to convert it to white counting on precious commissions, anyway, if not they some other bank would do it and the process goes on. If the farmer was able to get help through official channels easily this whole trail could have been avoided.

I have personally seen how farmers and small businessmen suffer because they don’t have proper banking access. RBI’s ‘Financial Inclusion’ through opening banks all over the country alone will not help achieve anything. Some prejudice against such debtors and systemic bias in the system should be corrected for real betterment of the society.

A new meaning of Ethics.?! Is Ethics really absolute?

Wipro, one of the largest and well recognized Indian company involved in Information Technology, Consulting, Business Process Outsourcing services and other product manufacturing in the non-IT space (which they have decided to demerge) has been named as one of the most ethical companies in the world by a leading think-tank, Ethisphere Institute in their annual rankings.

Immediately my thought went to an Economic Times report on IT companies spending substantial amount of money in Lobbying. Then my grouse was whether the employees whose jobs depended on such activities complain about corruption in India. 

Between January and March this year (2011), Wipro spent nearly $60,000 (Rs 27 lakh) to lobby lawmakers and other officials about restrictive visa rules and policies that favour local companies. - The ET report

However, many pitched in to 'educate' and 'enlighten' me that Lobbying was legal in the United States of America. But I couldn't take it - will a corporate bend back on its motto of maximizing shareholder's wealth to appease a stakeholder? I don't think so. Why then would a government bend back (fewer jobs at home for the general public) to appease the stakeholders (foreign/domestic investors/players)? And the process that assists this, lobbying, is legal? I can't buy it.

Ethics are absolute. 

The Ethisphere Institute's website on the World's Most Ethical Companies Ranking website starts with this line. I don't think so. If two countries, India and USA, can have two different take on something as simple as lobbying on whether it is legal (Radia tapes and Walmart controversies), and am not even comparing USA and Venezuela (Comrade Chávez, RIP!). How then can ethics be absolute?

I believe ethics or for that matter any trait can only be relative. And the award can at best be named World's Most 'Legally Compliant' Companies Ranking.

DISCLAIMER 

(I know the work ain't a 'Vishwaroopam' or as true and open about IIPM, still why take the chance in case someone brings it up as an Amicus curiae!)

• I have nothing against Wipro, in fact, I have become a fan of Mr. Azim Premzi with all his philanthropic activities and support for higher taxes and his choice of car (a Toyota Corolla 1.8 Petrol, I was told).
• I understand the pains and effort that has gone in putting up the list by the Ethisphere Institute. Really Commendable.
• I am an Indian and am proud an Indian company has figured in there.

There are two kinds of people in the world..

There are two kinds of people in the world, largely – the optimists and the pessimists, the rich and the poor, the healthy and the weak, the young and the old, et cetera. However, in my home state of Tamil Nadu in India I have seen three kinds of people as far as the Tamil issue in Sri Lanka is concerned – the good, the bad and the ugly. The first are the dangerous and hawkish people who staunchly defend a solution carved out with guns and bombs and sealed in blood, even if it is that of innocents. The second are the ones who don’t give a damn about the whole issue, the more dangerous ones, because going by The Right Honorable Edmund Burke – the only thing necessary for the triumph of evil is for good men to do nothing. The third is the category in which, I believe, I fit in. The people who have every feeling of comradeship with our brethren in Lanka, crying when they cry and withering in pain as the shells explode and shudder every time the mines go off, deep within our hearts. We are often dismissed as anti-Tamils, cowards, congress party agents and backstabbers by the people in the first category and as people-yet-to-get-a-life by the second category.

One of the justifications the central government gave the country when the government extended a quasi-support to the Lankan government on the operation against the Liberation Tigers of Tamil Eelam (LTTE) was to prevent the Chinese or the US getting a stronghold in India’s backyard by stepping in to fill the void left by India’s indecisiveness on an issue having a huge bearing on the emotions of countless Tamils and the security of the country. However, what we have witnessed ever since the end of the war is a Lankan government that is intoxicated having bathed and drunk on the successes of the war, an even more displaced Tamil population and more humiliation for India in the world stage with its weaknesses exposed as regard its policy towards Lanka with the latter cozying with China, faster.

It is beyond me why would India, a nation that can detain Italian marines for killing fishermen, even voice it out to Sri Lanka over similar incidents. The Chinese cooperation has extended into infrastructure building and offers of military assistance are also being heard. And the latest space cooperation, I think, is just an indication of what is yet to come. India may have pulled off many diplomatic victories but Sri Lanka is somewhere I think we messed up. Hope the irritant in the relation with Maldives doesn’t go the Sri Lankan way.