Idiots vs The Book

The “3 Idiots” controversy seems to be dying down – this is evident from the declining column centimetres devoted to the issue and the reduced decibel levels in the television channels. So, in keeping with my predilection for lagged responses, I have decided to wade in when the brouhaha seems to be fading.

First, a disclosure. I have seen the movie but haven’t read the book. I don’t particularly admire Chetan Bhagat or his style of writing or even some of his ideas that seem to appeal to some youngsters. A recent piece he wrote for the Sunday Times of India (Don’t Fix History, Look At The Future, August 30) seemed particularly strange. Anyway, Bhagat cannot be denied his share of adulation. He has many fans across the country and, like every citizen in this country, he too is entitled to his views. And, if he finds support – as well as admiration for his work – then he is jolly well entitled to it too.
But, to come back to “3 Idiots”, my daughter has both read the book and seen the movie. She seems to think that the book is indeed the launch pad for large chunks in the movie. Sure, there are some dissimilarities and some deviations, but that’s cinematic licence. She seems to be convinced that the movie is based on the book “Five Points Someone”, and there’s very little chance that you can use ‘technicalese’ (such as, the legal agreement brandished by the movie director and purported to have been signed by Chetan Bhagat) or spin to persuade a 15-year-old to change her opinions.
Assuming that the book has indeed laid the foundation stone for the movie, then a larger Bollywood malaise seems to be rearing its head again – scant regard for intellectual property. The issue has plagued most musicians and producers over many decades now but Bollywood seems unable to shake off the indolent habit of copy-paste. Sure, there are directors like Vishal Bharadwaj who have juxtaposed famous plays from Shakespeare into a contemporary Indian setting, and acknowledged their true source of inspiration. But, as an industry, by indulging in its addiction for a regular fix of “lifted” tunes, plots and scripts, Bollywood is doing itself great disservice.
If Chetan Bhagat’s claim is indeed true, then it once again shows up a twin-faced Bollywood -- which doesn’t respect intellectual property rights but immediately gets into a huff when pirates hawk a copy of the latest release. If the makers of “3 Idiots” are indeed in the clear, then society should reflect whether it should continue endorsing a revolting persona who has been weaned on easy publicity.

Sea Linked Spasms

The Bandra-Worli sea-link has now become a regular fixture on my commute to work and back. Hence, my attention is drawn to any new development affecting traffic on that short stretch (such as the recent drive by traffic cops to discourage speeding).
But, somewhere in all the hysteria surrounding the two recent and rather tragic accidents that prompted the recent drive, commentators have forgotten to ask two basic questions. Here they are:
1. Why does the sea-link, despite the huge cost and time over-runs, still have only four lanes open to two-way traffic, against the eight lanes planned earlier? The bridge (because that’s what it actually is) was originally supposed to be constructed at a total project cost of Rs 400 crore but has finally ended up costing Rs 1,800 crore, and the bill is still mounting. Plus, the original plans envisaged opening eight lanes to traffic, of which only four were opened to the public initially. The remaining four were supposed to come on stream in November, but still show no signs of nearing completion.
2. Who thought up the crazy toll structure on the link? You need to pay Rs 50 if you’re travelling one way only. This climbs to Rs 75 for a return journey. Fair enough. But, if you’re planning on buying a monthly pass, you have to shell out Rs 2,500. This one beats all logic. If we assume 26 working days in a month, at Rs 75 per day, the total bill should not exceed Rs 1,950. Even if they decide to charge for all 30 days, the total works out to Rs 2,250. So, why Rs 2,500? Somebody tells me that the bureaucrats, who finalized this rate, wanted to take into account the possibility of somebody making multiple journeys across the link on the same day!!
Typically, the toll structure is the highest for a single journey, with concessions built into the return journey and the monthly pass being issued at a deep discount. The idea is to lure traffic – and committed upfront revenues -- to the facility. But, the toll structure proposed on the Bandra-Worli Sealink might make it difficult for the concessionaires to achieve their targeted IRR.

Caffeine Redux

Absence is supposed to make the heart grow fonder, or so said some smart alec. I have been away from this blog for a while now, primarily due to growing pre-occupations with my new day job and the associated travails of getting used to new timings. Add a dash of laziness and a reduced (as well as a changed) reading diet and this blog became the first casualty. I am back now and I hope (fingers crossed) to keep this fire burning regularly. Hope to see you guys often, and fervently hoping that you'll also be adding some fuel to the blaze on a regular basis.

If It's Tuesday, It Must Be Time To Run Some Errands

Last Saturday (Aug 8), I presented myself to the hospital sharp at 8 am in the morning, doggy bag in hand. As ordered, I had been starving for the past 12 hours. For the next six hours, a steady procession of staff from the hospital proceeded to do things to me -- smear my chest and abdomen with sticky (and yucky!) stuff, attach coloured wires to my body, jab me, poke me with scary looking instruments, pull different parts of my anatomy, press some painful areas, shine a light into the darkest recesses, extract blood, and so on.

But, what I couldn’t understand was why did all of this have to take six hours? Truth be told, a lot of time was spent waiting in some antiseptic foyer or grey ante-room (thank goodness for the back issue of New Yorker which kept me enthralled through much of this). A lot of this wasted time was used up in waiting for some doctor or specialist to see me, a complete farce and a clever con job pulled off successfully by the hospital staff. These docs were not interested in sparing time for patients who were part of the executive health check-up system. The catch: the money paid by out-patients is shared with the docs, which is not the case with executive health check-up. One doc even summoned me to the Operation Theatre, stepped out in the middle of a surgery on some hapless soul, flipped through my records and advised me to eat well and sleep well and rushed back in to stitch up whatever parts he’d left open on the operation table! Great!

When we complained, we were told curtly: “It’s Saturday! You should’ve come on a weekday!”

This is where I have a beef. Everybody – especially those in the service industry -- expects you to spare their weekends by investing your work-days. The school insists on holding its periodic parent-teacher meetings on a weekday, when it could be probably done on a Saturday. Once when I mustered up enough nerve to murmur a feeble protest, I was promptly silenced by a stentorian voice: “It’s your child; you can’t even spare a day for her?” I felt like a heel, with the other parents immediately fixing me with an accusing look.

The refrigerator repair chap, the disembodied voice at the numerous call centres, the local MTNL office, and many others do not want to service you on a weekend. They are appalled when you gently inform them that you won’t be available on Monday, Tuesday or even the next four days because you are working. The PSU guys in the service industry even feign offence when you suggest that they should keep their customer complaint operations open throughout the weekends because that’s when people really have time to pay their bills, register their complaints or even follow them up. Everybody wants you take one day off during the week so that they don’t have to work for you on a weekend.

Just a random thought: Can this be called an HR challenge?

Capital Dilemmas

The capital markets have a new kind of beast: QIPs, or Qualified Institutional Placements. As soon as the key indices started looking up post April, the market witnessed a deluge of issues. A lot of companies raised money from the markets because they desperately needed new capital to finish pending projects. But, then, some companies also raised cash because it was available. This is a dilemma that probably all companies face today: raise money when you need it or scoop it up only because it’s freely available, even if you don’t need it.

Capital market dudes from investment banks are back, casting a long shadow on the doorsteps of many companies. They are persuading managements to take advantage of the current downturn and scoop up truck-loads of capital from the system. The rhetoric intensifies when it is a bank, which is forever capital-hungry. The logic: you’ll never get capital in such abundance in a long, long time to come. Stock up and use it during the go-go days (which are bound to come back, never mind all this talk about brown weeds). The hidden logic: after a dismal 2008, time for some fee-generation and ensure some year-end bonus.

On the other hand, the broking guys are watching carefully – the moment you raise additional equity capital (through whatever form, whether it is warrants or convertibles), they ready to put a sell on your stock. Reason: any capital raising exercise dilutes the shareholding of every large shareholder, an event that is unlikely to go down smoothly.

What’s more, here’s the dilemma within a dilemma: even assuming you bite the bait, and you do pick up equity capital from the market today, then is your company in a shape to service this additional capital? So, should companies raise capital just because liquidity is sloshing around in the system or should they wait till they are ready to put to those funds to good use? Conversely, premium might be low today, than some unpredictable time in the future, making servicing of capital easier. In the end guys, here is what this column feels is necessary: don’t fall into the trap of the smooth-talking, silver-tongued, cloven-hoofed, snake-oil salesmen. Remember they sold derivatives of derivatives of derivatives...and see where it’s got us today. Raise capital only if you need it; if it has no immediate deployment strategy, it’s going to sit on your books and force people to ask questions.

The ICICI Itch

Being big is not always such a good thing. For starters, you become an easy target for peashooters who give expression to their envy through feeble pot-shots. But, there’s another danger: size also invests people and organisations with gratuitous arrogance which manipulates them to view all criticism through a prism layered with suspicion and contempt. ICICI Bank has been at the receiving end of two comments made by its rivals. Here they are:

• State Bank of India chairman O P Bhatt is a man not normally given to controversial public statements, unlike some of his other worthy predecessors. Yet, about three weeks ago, during the bank’s annual general meeting, he allowed himself one uncharacteristic wisecrack – call it a sarcastic side-swipe – that got picked up a grateful media and was reported with great relish. Mr Bhatt is reported to have said that ICICI Bank was an “unfit” candidate for acquisition and State Bank had no plans to acquire it. According to Chinese Whispers column (dated June 23, 2009) in Business Standard newspaper: “He said, tongue firmly in cheek, that his bank had no plans to acquire ICICI Bank as it was not advisable to take over the country’s largest private sector bank in its present state.” What does “present state” really mean, pray?

• The second instance is a comment allegedly made by Mandeep Maitra, head of human resources at HDFC Bank. In a story on HDFC Bank, Business World magazine wrote this: It (HDFC Bank) also has the people, managing to get nearly 900 ICICI Bank staffers every year over the past three years. In some places, almost the entire top brass of an ICICI Bank branch would walk in for interviews. “Of course, the first thing I ask is ‘how many of you are from ICICI Bank?’ I do not want that culture out here,” quips Maitra. Of the people hired in the past three years, about 40 per cent came from other banks.
ICICI Bank has responded by sending a legal notice to Maitra, seeking an apology for the statement.

What do these two stray, and definitely unrelated, incidents indicate? One, has ICICI’s phenomenal growth, or pace of expansion, left the banking and financial services industry with many green faces and are they venting their spleen at the first inopportune moment? Or, has ICICI’s supercilious behaviour really got everybody’s goat and a general industry-wide repugnance is now finding expression through every available public forum? You decide.

Two Big Bs -- Budget & Babu

Now that the media dust is beginning to settle on the Budget, here are some random thoughts and observations.

• The sleight of hand on Fringe Benefit Tax sucks. Making a grand announcement in Parliament (“I propose to abolish Fringe Benefit Tax”) while slipping in a proposal through the Explanatory Memorandum (to shift the burden to employees) not only stinks but reeks of traditional Congress behaviour – double standards and hypocrisy. It is also symptomatic of the party’s historical political culture. One would have expected the Ministry and the Finance Minister to be a bit more transparent. If this is how the government of the day behaves – surreptitiously, hiding behind opaque deals while making pious announcements in Lok Sabha – then one wonders what kind of example they’re setting.
• The market has come under heavy flak, and rightly so. It overplayed its hand and came up short. But, the market never seems to learn – this is a kind of behavourial pattern that keeps repeating itself. Many institutions published reports stating that the government was unlikely to accelerate its reforms programme from 0 mph to 90 mph in just a month after getting elected. And, that sounded pretty logical. But, markets never leave anything to chance – what in case Pranab-babu has a change of heart? What if Rahul-baba weighs in? Buy now or repent later. Interestingly, it may be instructive to read some of the Budget reports published by the broking houses – both foreign and domestic – the next day. Almost all of them have taken this holier-than-thou attitude and have roundly criticised the market for over-reacting. If everybody in the market is criticising everybody else, then who – in the name of the sweet lord -- sold? Somebody’s gotta come clean soon.

• Some governance rules never change. When not in favour of fast-tracking a proposal or an idea, set up a committee. Pranab-babu has announced a huge number of committees in his budget speech. Mocha Master’s pick from the many committees announced – an expert group “to advise on a viable and sustainable system of pricing petroleum products”. Which means: free pricing in petroleum products is unlikely till the Maharashtra Assembly polls next year.

• And, finally, this is what a friend and former colleague, who now lives in Hyderabad, had to say about the Budget: “Pranabda was doing more than just sniffling behind his hanky...he was playing hanky-panky..!”

Time For Another Spring Thunder?

Somewhere, something doesn’t seem to be adding up.

The zeal and alacrity with which the Centre has invoked the ban against the Maoists seems a little strange, leaving many questions unanswered. The Centre, on its part, seems to be maintaining a deathly silence on many of the prickly questions raised by civil society.

The questions being asked are:
• Was the centre left with no choice but the extreme step of banning CPI(Maoists)? Sure, violence cannot necessarily be the answer to all problems (unless the violent business model perpetrated by the lumpen elements of the fascist right-wing parties also appeals to the Maoists), but the Centre’s misguided development story seems to have provided a legitimate raison d’être for the Maoists.
• Wouldn’t dialogue be a better path to rapprochement? The Centre doesn’t seem to be listening to the high-decibel hints in this struggle.
• Why is it that the government has not shown the same promptness in banning certain political formations which destroy public property and kill people in the name of linguistic identity or religion?

But, this column has been intrigued by something quite isolated and seemingly unconnected. If you read the interview given by CPI (Maoist) politburo member Koteshwar Rao’s to Mint newspaper (http://www.livemint.com/2009/05/29001232/Mainstream-politics-not-for-us.html), there is a portion which makes an amazing allegation: Rao claims that the cache of arms with the Trinamool Congress party is in multiples of the Maoists’ arsenal. Here is what he says in the interview: “Majority of our weapons have been seized from the administration. In (West) Bengal, for instance, 60% of our weapons have been snatched from the police. We have bought only 10% on our own; the rest has come from other states. Yet, I would say we don’t even have a small fraction of the cache of arms and ammunition that parties such as the Trinamool Congress (it won a significant victory in the recent Lok Sabha polls and is a rival to the Communist Party of India-Marxist, or CPM, one of the ruling parties in the state) and the CPM have.”

The question is this: if the Trinamool and the Maoists cooperated against the Marxists in Nandigram (leading to Koteshwar Rao’s discovery of Trinamool’s munitions store), then the political equations are getting a bit blurred now with Trinamool partner in Delhi, Congress, rushing to ban the Maoists. Or, was Nandigram a one-night stand, so to speak? Strangely, nobody in Trinamool seems to be denying Rao's claims, unless there is great pride in owning such a arms hoard or people in Trinamool don't read newspapers.

There are other small niggling issues that also beg answers. For instance, the government has already individually banned the three extreme Left outfits – Communist Party of India (Marxist-Leninist), Peoples’ War Group and Maoist Coordination Centre -- which merged to form Communist Party of India (Maoist). There’s a lesson here: the ban seems useless since the executive action is only against a name, not against a political movement or aimed at addressing a socio-economic malaise. The ban might not achieve anything: the party will change its name and carry on with life.

There’s another side-story developing: A political drift seems to be developing between the CPI(Marxist) members of the Left Front who can win elections (which might need some pragmatism from time to time) and the ideologues trying to run the party from distant Delhi. This will be interesting to watch. Time for another spring thunder?

Fishing For Votes in Schools

It is common knowledge that Mumbai suffers from a serious infrastructure deficit. Actually, most Indian metros suffer from the same malady – haphazard planning, serious shortage of civic amenities, transport squeeze, and so on. But, Mumbai’s politicians probably take the cake – they have discovered ways of adding to the deficit rather than remedying the situation. Scraping the bottom of the vote barrel, they have dredged up a desperate scheme – reserving 90% of junior college (or institutions that offer Plus-2 courses) seats for students from schools affiliated to the local SSC board. This leaves almost nothing for students from the other central boards, such as ICSE or CBSE.

Why is this an infrastructure issue? Actually, unbeknownst to many, Mumbai has only a few good schools. Most of the other metros can proudly boast of a large number of good schools. And, among the few good schools that the “Maximum City” city has, most are affiliated to the central boards. It has also probably escaped everybody’s notice how the city has ceased to be attractive for new business investments. The reason? Among the many irritants that confront newcomers to the city (such as, traffic), lack of a wide choice of good schools figures pretty high on the list. In fact, one expat Citibank CEO opted to relocate to Delhi because his kids had a wider choice of so-called good schools in that city.

The hare-brained 90% reservation scheme has been challenged in court, as it should be. This column suspects that Maharashtra’s Ashok Chavan government may not even be serious about implementing it – make the announcement, allow the bile to rise, encourage protests, fight the court cases, sit back and see the brownie points roll in. First, the education minister announced this scheme and caught everybody by surprise. This was roundly pooh-poohed by his senior party colleagues. Then, suddenly -- one could almost see the bulb light up as realisation of the political dividends dawned -- even the chief minister parachuted into the controversy by expressing his approval.

But, this is a cheap stunt. And, parents of children in SSC-administered schools should be careful before endorsing the scheme. They should see the idea for what it actually is – a cheap vote-catching gimmick. If this government is really serious about SSC students, it should first improve the syllabus. It has now been established beyond any doubt that SSC standards have fallen way behind the central boards, or even some of the other state-run education boards. Most of the SSC schools are in a state of disrepair, and many of them are owned by the state government. The quality of teachers is dropping in all schools, but at a faster rate in the SSC schools. The SSC board needs a long-term fix, not band-aid and plasters.

Budget Badinage

First, my sincere apologies to all readers. Travel schedules and attempts to understand the vagaries of my new daytime job have kept me slightly busy. Promise to be more regular in the future.

The approaching Budget and speculation about its format is occupying the minds of most market observers. That is not surprising. Given the mandate won by this government, everybody is keen to see what form and shape this budget takes. Everybody also has his pet hypothesis. So, as all eyes converge on Pranab Mukerjee, here is this column’s take on the Budget (which is a bit of my own loud thinking and a bit of mish-mash from all that’s appeared so far in the media).

First, the man himself. Pranab Mukherjee is a seasoned politician and not an “economic technocrat”. This is sure to reflect in the Budget. Those hoping for a reforms blitzkrieg may be in for some nasty shocks. Those hoping for a totally populist budget without any market-friendly giveaways may also have got it wrong. The answer might lie in the way the political landscape has shifted.

First, the FM has to mend the gaping hole in the fisc. 'We have to deliberate on ways and means to bring back the economy to higher growth trajectory without fiscal profligacy,' Mr Mukherjee is believed to have told a conference of state ministers. So, out with all hopes of heavy tax cuts. Any substantial tax cuts would have to be substituted with increases in indirect tax rates, an utterly undesirable proposition. But, there are likely to be some tax changes – such as, some tinkering with Fringe Benefit Tax or Securities Transaction Tax which leave an okay taste in the mouth without upsetting the consolidation process.

He may also look at some new tax exemption schemes on a prospective basis to keep the household spending engine on track. Increasing the threshold level for tax breaks on interest paid for new home loans is something that’s already figured in the media. More of such similar schemes might worm their way into the document.

But, he also has to think of the forthcoming assembly elections in some of the states, such as Maharashtra. Therefore, food guarantee programmes, higher procurement prices for rice and other such schemes might find mention in the Budget document. Plus, given the way this monsoon is behaving, Mr Mukherjee might be forced to provide some rural handouts and concessions.

Think state-wise, especially about states that are likely to go to the polls in the next couple of years, when you read the Budget document. The Congress party, emboldened by its improved performance in Uttar Pradesh and some other states where it had reached rock-bottom, will want to consolidate its hold in many states before its current allies (Mamata or Karunanidhi) get too strong or some of the existing political opponents can regroup. See how quickly CBI has acted in arresting NCP man Padamsinh Patil. Or, witness the alacrity with which the Kerala governor has acted against Pinarayi Vijayan, supposed to be close to Prakash Karat. That should provide some clues about not only the shape of politics to come but also hold some pointers to the nature of this year’s Budget document.