What’s With Salman Khurshid?

October 10, 2009

In the past ten days Salman Khurshid has advocated a return to 1980s Comptroller of Capital Issues style pricing, and also done the headline-hogging complaint about Indian CEOs drawing too much pay. The CEO pay issue is truely bizarre and WTF, for a number of reasons, including:

  1. As Deepak Shenoy points out, Khurshid is currently getting free acco in a house that would rent out at 10 lakhs a month if it was on the market.
  2. US CEO compensation is an issue because half of Wall Street has been nationalised and so the government has a right to decide compensation policies. What the hell is the Indian government losing if CEOs are paid too much?
  3. As this Business Standard oped points out (link will decay eventually), it’s not even like Indian CEOs are paid obscene amounts (not only by global standards, but by Khurshid’s own standards). So what is the bogeyman of vulgar salaries that he’s raising? The true scandal occurs in the millions of small companies where the directors or majority partners siphon money out at the expense of minority shareholders and employees, as the Satyam issue showed us.
  4. And culturally, it’s not like Indians resent highly paid CEOs. They want to be highly paid CEOs. The mango man’s reaction to high pay is aspiration, not envy. So what vulgarity?

Forget all that. Even if Indian CEOs were paid obscene salaries, and Indians resented this, and Salman Khurshid wasn’t a sanctimonious arsehole living off the public trough, this is India, where we outperform the rest of the world when it comes to innovation in corruption and fiddling accounts. If there’s a salary cap on CEOs, does he really think companies won’t find a way to get the money to the CEOs off the books anyway? Gah.

Searching for a reason for this utter lunacy, I’ve come up with:

  • Salman Khurshid is a moron. This explanation has the benefit of fitting Hanlon’s Razor.
  • Salman Khurshid wants CEO salary to start getting paid out in black money and lots of manipulation in IPO issuing so that the amount of black money in the economy increases. After all black money is the lifeblood of the Congress party.
  • Salman Khurshid is trying to raise money from Indian businesses ahead of the Haryana and Maharashtra elections. “Nice salary package you have here. Shame if anything happened to it.”
  • The whole thing is not for the benefit of Indian CEOs, or the media, but for Sonia Gandhi, who Salman Khurshid is trying to impress by showing how quick he is to catch up with American trends.

Anything I’ve missed?

(Pssst: Sainath gets into the act too, and manages to not mention Vidarbha or the HDI. There’s hope yet.).


Customer Financed Projects

October 3, 2009

In F Scott Fitzgerald’s Tender is the Night, the main characters are an American couple called the Divers who are Page 3 People in the 1920s. They live on a hillside Villa over the French Riviera, where they throw parties for American tourists and expats. Unfortunately up to the 1920s Riviera hotels were open only in the winters and there would be no tourists in the summer. So they convince one particular hotel owner to keep his hotel open in the summer as well, so that the stream of guests for their parties never dries up. Eventually the hotel starts getting so many guests that the owner doesn’t even need the support of the Divers to make the summer season profitable.

When I read this, I was reminded of what the Adanis have done while constructing the Mundra port. The Adani steel plant isn’t viable without the port, so the steel company has become a part investor in the port project and is financing the rail link between the port and the existing Indian Railways network. Once the rail link is completed, Adani steel will benefit of course, but so will everyone else who wants to use the port (and of course so does the port).

Project finance epiphanies aside, Tender is the Night is one of the most disturbing books about adultery and breaking down marriages I’ve ever read. Now if only it wasn’t so indulgent of its main characters.


All India Radio

September 9, 2009

Samar Halarnkar is pissed off that Indian FM radio stations only play Bollywood songs and puerile PJs (a sentiment I share to some extent) and proposes a solution in the Hindustan Times – putting AIR on steroids.

AIR has found fans like me — though let me confess that before I ‘discovered’ AIR, I was quite addicted to a radio spot in Mumbai called ‘Kamla ka hamla’, the random outpourings of a fast-talking transvestite — not because of a grand plan to counter the explosion of private radio but because it is a public broadcaster that is not beholden to the demands of the mass market.

Ideally, public-service radio must give voice to and reflect the needs of democracy’s silent majorities and minorities. It cannot be left entirely to the whimsical flick of a few hundred million wrists. “Broadcasting,” as Tony Benn, a British socialist politician once observed, “is really too important to be left to the broadcasters.”

An AIR with vision and verve could lead India’s radio revival. Imagine if it became a National Public Radio, the wonderful public-radio network in the US. There are many like us, waiting for lively, intelligent radio.

So because Samar Halarnkar is too cheap to buy an iPod and download podcasts (or a Worldspace receiver for that matter), the taxpayers of India must shell out their money to revamp AIR and the brightest people in government must go build a vision and verve for public radio instead of, oh I dunno, fixing the university system or conducting police reform or something.

For this he gets paid to be a columnist?


Incorporating Heritage

August 6, 2009

Neel has a blogpost which talks about IIT-D designed board games that incorporate elements from traditional Indian stories into their design. He also laments that most Indian design and architecture does very little to showcase heritage, and picks on malls, airports and railways stations as being the worst offenders. I had some scattered thoughts about this which were too long for a comment, so here they are:

  1. One of the big problems with incorporating heritage into any venture these days is that you put yourself at grave risk of Rajan Zed issuing press releases that you are offending Hindu sentiments. In fact going by past experience it could be not just Rajan Zed but Rajput associations, Jain associations, Sikh associations, ad nauseum.
  2. Railway stations – depends on what you’re defining as heritage. When the British were building stations, they they built gorgeous facades which mixed up Mughal design elements (arches and domes), continental European decoration (the gargoyles at the station formerly known as Victoria Terminus), pre-Mughal construction (red sandstone), and some stuff which was entirely fresh from the architects’ perspective. I think that railway stations in princely states may also incorporate local architecture. It’s probably construction in post-independence India that gave us the horrible concrete blocks with no aesthetic appeal – the same applies to most of the airports.
  3. Airports – we seem to have moved from a situation where there was one single design of ugly concrete blocks being used for every airport to a situation where one single design of curved beams and glass walls is being used. Personally, I find the new one more attractive; but Neel’s point about it not having many Indian elements is valid. Delhi’s airport has made an effort with interior decoration for Terminal 1D, but this The Delhi Walla blogpost seems to suggest that it’s half-hearted.
  4. Malls – yes, these are the most egregrious offenders when it comes to cookie-cutter design and absolute lack of architectural imagination. I think that this is because somewhere there is a design handbook for malls which lays down points on laying out a mall to maximise retail sales which is being followed religiously without either any attempt to run local experiments to see what works better or imagination by architects on how to make it look cooler. [rant done] But even if architects did want to come up with cooler designs, would builders and tenants pay for them? Hm.

Another thing about heritage is that it’s desirable, but so are many other things (whether on pure functionality or for the wow-it’s-so-cool factor). So some of these are:

  1. Is it functional, innovative, valuable? Neel cribs about airports, but the fact that Delhi’s new airport has inline baggage scanning delights me so much that I hardly notice the lack of heritage design elements.
  2. Is it aesthetically pleasing? Everyone’s taste on what looks good will be different, so this is difficult to measure. But as an example, look at Jet Airways’ long-haul business and first class. Not much in the way of Indian design, but incredibly innovative and good-looking.
  3. Is it unique? This ties in with the crib about all malls and airports looking like each other. On the one hand, using a standard design brings down costs and I think China has built dozens of new airports just by reusing the same design over and over. Delhi’s new airport terminal might be standard curved beams and glass, but that standard design allows it to function on natural light throughout the day and not turn on electric lights until night – which has its own functional and aesthetic appeal. Of course, poor construction of that design is probably what led to the same terminal being flooded during the rains.
  4. Is it designed by Indians or an Indian company or even for Indian consumers? Even if it doesn’t reference existing heritage, if it’s iconic enough it could eventually become Indian heritage – like the Bombay Gothic buildings (good) or the Ambassador (bad). I know that Jagadguru has said that nationalism is the superset of religious fundamentalism which is itself the superset of terrorism, but I still think it is awesome if my national heritage is added to.

Another thing is that heritage doesn’t automatically provide quality. Air India paints Rajsthani chabutras on its aircraft windows but sucks as an airline. There have been so many animated movies about Krishna (Cartoon Network is running five this Janamashtami), but the dialogue and storytelling is usually terrible. 

So heritage is awesome, but only when the companies using it already have the capability to create great products; and also when designers and developers have the space to use their imagination.


Business Bestsellers

June 24, 2009

I am reading The Game Changer by the totally bonkers Ram Charan and AG Lafley, the (former?) CEO of P&G. (Once I finish, I’ll be done with my to-be-read pile, hooray.) So far it’s been totally uninspiring – they seem to have taken a bunch of different products and processes developed by different companies including P&G, Honeywell and LEGO and used these as examples for an innovation framework which Ram Charan must have come up with. To me, it just seems that they’ve taken random examples of innovation and force fitted them to a nice sounding framework.

Gaurav is doing a business PhD and will point out that actually the thinking behind those examples and the framework could be pretty rigorous and analytical, but there’s no evidence of that in the book itself. It just states that these particular things are examples of the framework, and doesn’t bother to explain why this is so. Now of course putting that kind of rigour into a popular business book will make it difficult to read and unpopular, so it makes no sense. But if you don’t have that rigour, the book is practically useless as a manual. This makes the popular business book the most futile form of writing ever.

Of course, that assumes that the point of the book is to be a manual. What if it’s advertising? Anybody who reads the book realises that there’s more to it and calls in Ram Charan for a full consultancy. But… Ram Charan bills 20,000 dollars an hour. There’s no way every chhappar who buys The Game Changer at an airport bookshop can afford his services.

So the only thing that makes sense is that the book is still an advertisement, but it’s not an advertisement targeted to its readers. Instead, the fact that it has so many readers is the advertisement, which is then targeted to Fortune 500 CEOs – the pitch is that Ram Charan is a consultant whose book on strategy was a worldwide bestseller.


The Chiranjeevi Metric for Success

June 19, 2009

I was reading the April 2008 issue of the Asian Institute of Transport Development’s Journal of Transport and Infrastructure yesterday. Yes, I am that far behind on my reading, and yes I do read journals on transport for fun. It was a special issue on Public-Private Partnerships, and had a paper on Hyderabad’s suburban rail system and its planned Metro.

Describing the efforts taken to design the MMTS network and the MMTS stations to make them as convenient and appealing as possible for commuters – bus bays for the feeder buses, seats on the station platforms, station beautification – it concluded with this line: Net effects of these stations and trains is validated by the fact that most of the Telugu movies have at least one scene shot in an MMTS station or train or both.

It was the first time in five years that inflight reading made me laugh out loud.


Some Public Transport Links

June 4, 2009

First up, the Times of India has a report on the Lajpat Nagar station of the Delhi Metro facing problems. While the station itself is being built, the Municipal Corporation of Delhi is refusing to give the Delhi Metro Railway Corporation land for entry and exit points. If this situation is not resolved, then come June 2010, the Metro trains will stop at Lajpat Nagar, but passengers will have no way to actually get into or out of the station.

In 2008 in Preview, I had written about the Bangalore airport being completed without a road to the actual city, and how passengers to Bangalore would have to take onward flights to Mangalore and then a Volvo to Bangalore from there. Now it looks like Metro passengers to Lajpat Nagar will have to go to Moolchand and take an auto from there.

Actually, metro stations that get built but where the trains that don’t stop exist/ existed in real life. Recently, there was Buangkok on the North-East line of the Singapore MRTS. The station was built, but not used for two years. Then, a chap had the bright idea of putting up cutouts of white elephants all over it. For his pains, he got hauled up by the police, shaken down and eventually let off with a stern warning. Singapore, eh?

The story doesn’t end there. The whole controversy meant that the station was finally opened to the public, and this was accompanied by a huge opening ceremony and party. Enterprising schoolgirls who were involved in social work decided to raise funds over there by selling ‘Save the White Elephant’ tshirts. They too were given a warning by the police:

On Friday, Jan 13, while preparations went into overdrive for the carnival to celebrate the opening of the $80-million station on Sunday, drama knocked on its doors yet again. This time, it was over some “Save the White Elephants” T-shirts that former Raffles Girls’ School (RGS) students were planning to sell at the carnival.

That day, the students and Punggol South organisers received a reminder from the police that they needed a fund-raising permit before they could sell the T-shirts to the public, in line with existing regulations. The 27 students were also told that they might break the law if the T-shirts were worn “en masse”.

Lawbreaking by t-shirt. Awesome.

Now, moving on to less bizarre matters, Governing magazine has a piece on proactive infrastructure planning (via). It makes the valid point that most transportation infrastructure planning is reactive, and consists of increasing capacity wherever there’s congestion. However, if you create capacity where none exists, the benefits to the places on that new route can lead to an economic boom there and change transportation patterns so that the old route gets decongested – everyone is going to the new places instead. The article uses the high-speed train line between Madrid and Sevilla as an example.

It’s an intuitively sensible concept, but the example given also made my inner skeptic sniff and ask the following questions:

  1. The Spanish economy has been having a general construction fueled boom for many years, right? So was the boom in Sevilla and Andalucia notably more than the rest of the country?
  2. What’s the boom in the region and city been? High-speed rail usually serves only commuters – and so the service industry. A manufacturing boom needs decongestion and faster speeds on cargo lines as well – did those get built or decongested too?

Also, the article doesn’t really give any pointers about which underserved route you should create your highway or rail line on. I mean, why Sevilla instead of say Granada or Valencia or Bilbao?

In fact (and this is where I come into disagreement with Atanu Dey), this is where small airports and low cost airlines score over high-speed rail – you don’t have to take expensive bets building an entire high-speed line only to find it doesn’t get utilised – just build a small airstrip and terminal, and let low cost carriers serve them. This was pretty much Captain Gopinath’s dream with Air Deccan, but unfortunately it didn’t work out for him personally. But he did use to make the point that the airstrips are already there – they just need to be served. And so the risk is entirely on the private parties who operate the routes – not on the government or taxpayers who have to build the rail lines.

Actually, making sure your new route is utilised isn’t as hit or miss as the last paragraph makes it sound. It’s been done successfully by the new ports in Gujewland – Pipavav, Mundra Adani, and Palanpur through private-public partnerships.

What has happened here is that the port operator has persuaded heavy industries to build new plants next to their ports and take advantage of dedicated terminals for iron ore or gas or finished products (don’t recall the details, sorry, and don’t have the paper this was described in on me right now). Then, the port operator, the industrial user of the port, and the Indian Railways set up a joint venture which is dedicated to linking the port to the existing railway network.

So merely building a route is not enough. You also need to ensure somehow that there are enough users for it. That is tangentially alluded to in the article when it talks about the Meteor line and the National Library in Paris, but never addressed explicitly. I know, the article probably had a word limit constraint, it only wanted to introduce the what instead of writing a thesis about the how, but I wish someone would address the how. Oh well.


Thatzwhy (Buffalo and Bangalore Edition)

May 30, 2009

The President of the United States, Mr Obama, recently announced that he would eliminate a notorious tax law loophole that rewarded companies for creating jobs in Bangalore and punished them for doing so in Buffalo. American corporations will no longer be able to get away with not paying tax on their income from foreign operations!

Unfortunately it turns out that the Canadians are determined to foil his plans. Toronto and Calgary have the lowest tax rates in G-7 countries, and American companies are expected reincorporate and shift their head offices over there. In effect, American companies will turn themselves into foreign subsidiaries of Canadian ones.

There should be strong regulations to prevent American companies from reincorporating themselves in other countries to run away from strong regulations.


Vot a Big… Castle!

April 30, 2009

This Dealbreaker story is awesome. Citi has very few profitable divisions right now, and the people who run them are demanding massive bonuses to stay on and ensure that they stay profitable. But after all the outrage over the AIG bonuses, Vikram Pandit is pre-emptively going to Obama to ask for permission.

The political palatability of giving out the bonuses is, alas, very low because one of the people doing the demanding owns a castle. Seriously. An actual 1000 year old castle outside Hanover.

You might be asking yourself what an investment banker does with a castle. In these times it’s excellent risk management. After all battlements are more reliable than presidents when a mob shows up with pitchforks.


Now S Gurumurthy Channels Jagadguru

April 22, 2009

The ever-insightful S Gurumurthy writes about black money in the New Indian Express:

That is, in just five years, Indian wealth amounting to Rs 6.88 lakh crore has been smuggled out of India. This gives a clue as to how much Indian money would have slipped out of India in the last 62 years, particularly during the Nehruvian socialist regime when the income tax (97.5 per cent) and wealth tax (almost equal to the income earned on investments) together constituted double the income earned.

It is undisputed that the Nehruvian socialist model forced huge sums out of India. So the amount of Indian black wealth secreted away in the last 60 years — estimated at from $500 billion (Rs 25 lakh crore) to $1400 billion (Rs 70 lakh crore) — does not seem to be wide off the mark. Economists call it flight of capital. This is the people’s money stolen from them.

Mr. Gurumurthy goes on to suggest that the solution to the problem created by Nehruvian socialism is outright communism, and siezing said black money deposits for the use of the government:

See the consequence even if part of it is brought back. A portion of it would make India free from all external debts which is now over $220 billion; India will transform into an economic superpower; some 10 or 15 Indian rupees could buy a US dollar which today 50 Indian rupees cannot; a litre of petrol on our roadside would cost Rs 15 or even less, against today’s 50 plus; the cost of imports in rupee terms would be down to a third or half; India’s entire infrastructure needs can be funded; India will become so energy efficient and costcompetitive that exporters may need no sops at all; India will lend to — not, as it does now, borrow from — the world; Indian housing can be funded at affordable cost; rural poverty can be wiped out… The list is endless.

If only earlier governments had siezed the black money directly before it even left the country, we would not be facing this problem today. Thatz why we need strong regulations.