The Yuppies Return

April 21, 2009

I am in grave danger of becoming as obsessed about my hippie-yuppie-lala theory as much as Skimpy is about his studs-and-fighters theory. But there’s now a new Madhavan/ Vidya Balan Airtel ad, and considering the original set of ads was one of the original inspirations for the theory, I can’t resist. Especially considering the new ad unleashes yuppieness far more than the original set did. It’s not on YouTube yet, but the Airtel website has a low-res flash version – click the My Airtel My Offer link. I’m thrilled about this – there had been no yuppie ads by Airtel for almost a year – only ones featuring Kareena Kapoor and Saif Ali Khan as themselves, therefore hippies.

In addition to all the yuppieness that was there earlier – the contemporary furniture and the clean haircuts – Vidya Balan is reading a pink newspaper (I can’t make out if it’s the Economic Times or Business Standard), and talking about slowdowns and cutbacks. As we know, hippies inhabit a non-cash economy and lalas inhabit a black-money economy, so slowdowns and cutbacks hardly register.

The new ad also raises a question – if yuppies are back on advertising, does it indicate that the recession is drawing to a close?

Devangshu Datta of Business Standard has a theory that RK Laxman notices the state of the stock market only when valuations are so unrealistic that the market can’t get any higher or lower. So whenever there’s a Common Man cartoon that has a punchline about the stock market, it means that it’s hit a peak or a valley and has to change direction – that’s when you buy or sell. Leading on from this, I naturally want to know if a similar pattern exists with advertising. Do ads that mention a recession get aired only when the recession is about to change course? Are they as exact as the Common Man, or do they lead or lag the actual turning point by some amount of time? Or is it just completely random? I appeal to the current batch of MBA students to run the regression analysis as a term paper.


Jet Airways

October 16, 2008

We now interrupt our current run of TV-blogging to abuse everyone involved in the Jet Airways fashla.

Jet Airways

What the hell went wrong? What were they thinking when they fired people overnight? The only possible answers are colossal stupidity or desperation.

Desperation – we know that they haven’t been paying their fuel bills for a while. And with eight months of running losses, banks were refusing to provide working capital. And with the financial crisis on, raising long term capital looks practically impossible. They’re bleeding cash, and firing their newest employees probably seemed like the quickest way to staunch the flow.

Colossal stupidity – is a stereotype that usually goes well with HR departments and senior managements. But in this case, it looks like they really weren’t thinking the consequences through. They now have Raj Thackeray, the CPI(M), and news channels baying for their blood. That will probably pass, but they’ve lost their reputation as a good employer. When the business cycle improves, they’ll have to deal with not being an employer of choice. (That assumes they’ll survive until then.)

Back in the last recession, there were a bunch of IT companies which made their layoffs/ salary cutbacks as painless as possible and got written up as case studies. I think Mindtree was one of them. Jet Airways didn’t learn. (But then Ajay Shah has written that nobody in India even understands that business cycles exist and a recession will eventually come along…)

Jet Airways Employees

OK, being told in the morning that you’re fired and you shouldn’t show up for work is definitely a shock. More so, if it happens to 1900 of your colleagues simultaneously. But if their sob stories are true and they are sole breadwinners who have taken out home loans and are worried about how they’ll pay their EMIs, then I have to say that they were idiots. They were on probation. They knew that they’d been hired for a one year period before being confirmed. They knew that house prices were higher than ever before. They knew that they were employed by an airline that was losing money and that job security apart, salary increases were probably not coming soon. And knowing this… they went into debt. FSM preserve them.

Hopefully, the ones shouting on TV about their EMIs were a small minority who the news channels picked to add to the drama.

News Channels

Dear news channels. This is not the largest layoff in India in the recent past. Banks have been shutting down their associated consumer finance/ small business loan NBFCs left right and centre over the past year, and the total layoffs in these have been much higher.

This is merely the largest layoff in India of attractive young people who speak good English. Please insert the appropriate disclaimers. And stop trying to project the temporary plight of young middle class Indians who are otherwise employable as the end of the world. Okay?

The CPI(M)

The CPI(M) is pretty much complicit in bringing Jet Airways to this state. All of last year, they sat in the way of price hikes for petrol, diesel and kerosene. So the oil marketing companies raised the prices of air fuel instead in an attempt to survive. And now Jet Airways is bankrupt and has to sack employees to survive. After this, Nilotpal Basu has the gall to go on TV and say that the CPI(M) won’t allow Jet Airways to operate from Kolkata.

Also, demanding reinstatement? Firing employees isn’t pleasant, but at least it does stem the cash outflow a little. If Jet Airways kept them on, then it would keep losing money until it couldn’t even pay the confirmed employees, who’d been on the payrolls longer. The CPI(M) seems more concerned about a thousand jobs today than twenty thousand jobs next year (and CEOs get abused for thinking in the short term!). (Related reading here.) Either the CPI(M) is (shock! gasp!) a run-of-the-mill political party, concerned only about the next election; or it doesn’t understand reality. Or both.

Oscar Fernandes

Because when he was asked for a soundbite, he smiled and said that he didn’t know anything because he had been at a junket labour ministers’ conference in Bali.

Praful Patel

OK, no abusing Praful Patel. Because he’s actually refused to bail anybody out, pointed out that this is to do with ATF prices, and has generally not played to the gallery.

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Dare I Make a Microbrewery Joke?

September 27, 2008

Yesterday, Skimpy forwarded me this link, and immediately changed his tagline to “2 dollars. Why didn’t I bid for Lehman Brothers?”. This sparked the following conversation.

me: Look at it this wat
*way
$2 = 93 rupees
3:26 PM
with that you could buy a hummus and pita bread
and have some change left over
would you be happier owning Lehman?

Karthik: 11 11

me: or having hummus and pita bread

Karthik: hummus

The original inspiration for using Lebanese fast food as a standard store of value came from this profound post by Kunal. Please read it.

Later on in that conversation, I brought up employee buyouts. But things quickly took a scatalogical and American-beer-bashing turn:

me: you know
4:30 PM
at two dollars, why didn’t the employees buy Lehman?

Karthik: agreer
would’ve beenfight to split the cost da
4:31 PM
2K people together put together 2$ => each guy pays 0.1 cent
how do they pay that to each other?
jai

me: in beer
4:32 PM
Karthik: dei you don’t even get half a glass of beer for 2$
so what? each guy contributes a drop or what?

me: or they can deduct it from their PF

Karthik: 11

me: axshully
American beer is piss

Karthik: 11

me: each Lehman Europe banker contributes one drop of piss

Karthik: hahahaha
that’s tough too
just one dro

me: sells it to Dick Fuld as Budweiser

It’s not that tough. They can use droppers or something.

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Another Unbottled Genie

September 20, 2008

Along with mobile banking, another sector got a little freer this week. Foreign news magazines can now publish Indian editions:

In a significant further opening up of the print media, the Union Cabinet on Thursday approved a revised policy that would allow Indian editions of foreign magazines in the news and current affairs category.

The review of print media policy permits Indian publishers entering into such agreements to include local content and carry domestic advertisements, both of which were forbidden under previous guidelines.

(Financial Express)

Because I am an impractical libertarian I will now find fault even with this welcome opening up. As the Financial Express also points out, FDI is restricted to 26%, which means that the true benefits of foreign money coming in and setting up professional news organisations will be limited. (At this point, my skeptical alter-ego intervenes and points out that what with the currrent financial crisis, and foreign media organisations not exactly sitting on mountains of cash, there wasn’t going to be a huge amount of money coming in anyway.)

Also, the requirement of five years of prior circulation of at least ten thousand copies means that if News Corp decides to launch a new magazine worldwide, they can’t do a simultaneous launch in India. Oy vey.

It’s a start, though.

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Is there a Cashback, NY too?

September 17, 2008

My learning for the day: Mastercard is headquartered in a New York town called Purchase. I suppose being headquartered in a town named after the service you offer counts as priceless.

A little Googling adds further information: the town was originally called Harrison’s Purchase, because it was established on land bought by a dude called John Harrison. His motivation in doing this is not clear. It is also in Westchester County whose most famous residents are Professor Xavier and the X-Men.

There doesn’t seem to be any information on whether MasterCard chose their headquarters on the basis of the name. Pity.

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The Outlook for MBAs

September 16, 2008

My laziness and writer’s block resulted in Gaurav beating me to it when it came to expressing schadenfreude about all the I-bankers who’re losing their jobs. (I am of course a retail banker of repute and thus less affected.) This is just the beginning, though.  What will MBAs do at placements time when their are no longer any investment banks to lap them up at Slot Zero?

My prediction is that ITC and UB will become the hot new Slot Zero recruiters. Now that we’re in for a depression, vice is where the money is. As this Financial Times article points out, recessions and depressions only have a positive impact on the demand for things like alcohol, tobacco and gambling:

The alcohol, tobacco, gaming, and defense sectors, in aggregate, are defensive in nature and tend to outperform the broad market in periods characterized by relatively low returns and periods with relative stagnancy, or worse, in the U.S. economy.

Tragically, there is no India-specific Vice Fund, or Satan’s Portfolio, or I would be heading over to my bank branch to start my SIPs now.


The Anandpur Sahib Resolutions

September 12, 2008
SVG version.Image via Wikipedia

Now that the snark is out of the way, let’s look at one of the most interesting documents in the history of Punjabi nationalism or secession: the Anandpur Sahib Resolutions.

The Anandpur Sahib resolutions were the Akali Dal‘s response to being wiped out electorally in 1971 and 1972. They decided to recoup by:

  1. Getting the borders of Punjab redrawn to bring in more Punjabi speakers and Sikhs
  2. Ramp up federalism in general so that the national parties would have less influence in Punjab, which would mean the Akali Dal would have a free run

The end result of this came in 1978, with a document called the Anandpur Sahib Resolution (ASR, for the rest of the post). It’s a fascinating mix of naked gerrymandering, federalism, religious fundamentalism, sound economic policy and terrible economic policy. You can read the whole thing by clicking through, but let’s look at the more interesting highlights.

First, the gerrymandering. There was this:

(a) Chandigarh originally raised as a Capital for Punjab should be handed over to Punjab.
(b) The long-standing demand of the Shiromani Akali Dal for the merger in Punjab of the Punjabi-speaking areas, to be identified by linguistic experts with village as a unit, should be conceded.

in the resolution itself. But the political resolutions preceding the ASR have this stunning stuff:

The fundamental policy of the Shiromani Akali Dal is to seek the realization of this birthright of the Khalsa through the creating of a geographical entity and a constitutional set-up of its own.

For the attainment of this aim:

1. The Shiromani Akali Dal is determined to strive by all possible means to:
(a) Have all those speaking areas, deliberately kept out of Punjab, such as Dalhousie in Gurdaspur district, Chandigarh, Pinjore, Kalka and Ambala Sada, etc. in Ambala district, the entire Ina tahsil of Hoshiarpur district, Shahabad and Guhia blocks of Karnal district, Tohana sub-tahsil, Ratia block and Sirsa tahsil of Hissar district and six tahsils of Ganganagar district in Rajasthan, merged with Punjab to constitute a single administrative unit wherein the interests of Sikhs and Sikhism are specifically protected.

But the political resolution also has a very strong and unambiguous call for federalism, which is practically revolutionary considering the Indian Constitution:

(b) In this new Punjab (as in all other stated) the Center’s interference would be restricted to Defense, Foreign Relations, Currency and Communications, all other departments being in the jurisdiction of Punjab (and other states) which would be fully entitled to frame their own Constitution. For the aforesaid departments of the Center, Punjab (and other states) would contribute in proportion to their respective representation in Parliament.

2. The Shiromani Akali Dal would also endeavor to have the Indian Constitution recast on real Federal principles with equal representation at the Centre for all the States.
3. The Shiromani Akali Dal strongly denounces the Foreign policy of India as framed by the Congress Party. It is worthless and highly detrimental to the interest of the country, its people and mankind at large. Shiromani Akali Dal shall extend its support only to such policies as are based upon the principles of peace and national interest. It strongly advocates a policy of peace with all neighboring countries, particularly those which have within their borders Sikh population and Sikh shrines. The Akali Dal is of the firm view that the foreign policy of India should in no case be one of playing second fiddle to any other country.

and look, gun rights!

6. The Shiromani Akali Dal is of the firm opinion that all those persons, including women, who have not been convicted of any criminal offence by a court of law should have the right to possess any type of small arm like revolvers, guns, pistols, rifles, carbines, etc., without any license, the only obligation being their registration.

Now the trouble with advocating federalism which is revolutionary in the Indian context is that if you have a ruthless dictator at the helm of things, she thinks you’re advocating secession. And the clampdown after that was so strong that secession actually became the nature of things. But I digress. The federal bits of the ASR itself are:

The Shiromani Akali Dal realizes that India is a federal and republican geographical entity of different languages, religions and cultures. To safeguard the fundamental rights of the religious and linguistic minorities, to fulfill the demands of the democratic traditions and to pave the way for economic progress, it has become imperative that the Indian constitutional infrastructure should be given a real federal shape by redefining the Central and State relation and rights on the lines of the aforesaid principles and objectives.
The concept of total revolution given by Lok Naik Jaya Parkash Narain is also based upon the progressive decentralization of powers. The climax of the process of centralization of powers of the states through repeated amendments of the Constitution during the Congress regime came before the countrymen in the form of the Emergency (1975), when all fundamental rights of all citizens was usurped. It was then that the programme of decentralization of powers ever advocated by Shiromani Akali Dal was openly accepted and adopted by other political parties including Janata Party, C.P.I. (M), D.M.K., etc.

As such, the Shiromani Akali Dal emphatically urges upon the Janata Government to take cognizance of the different linguistic and cultural sections, religious minorities as also the voice of millions of people and recast the constitutional structure of the country on real and meaningful federal principles to obviate the possibility of any danger to the unity and integrity of the country and, further, to enable the states to play a useful role for the progress and prosperity of the Indian people in their respective areas by a meaningful exercise of their powers.

Now all this sounds brilliant and federalistic. But that’s just resolution 1. The Akali Dal then issued 11 more resolutions which demanded that the Central government do a bunch of stuff, which sort of makes the whole demanding that it stay out of everything except Defense, Foreign Relations, Currency and Communications sort of worthless. But such is life. Some of the interesting demands were:

The Shiromani Akali Dal calls upon the Central government to make an international airport at Amritsar which should also enjoy the facilities of a dry port. Similarly, a Stock Exchange should be opened at Ludhiana to accelerate the process of industrialization and economic growth in the State. The Shiromani Akali Dal also desires that suitable amendments should be made in the Foreign Exchange rules for free exchange of foreign currencies and thereby removing the difficulties being faced by the Indian emigrants.

Capital and Current Account Liberalisation, in the early 1970s. Heh.

The Shiromani Akali Dal also calls for the rapid diversification of farming. The shortcomings in the Land Reforms Laws should be removed, rapid industrialization of the State ensured, credit facilities for the medium industries expanded and unemployment allowance given to those who are unemployed. For remunerative farming, perceptible reduction should be made in the prices of farm machinery like tractors, tubewells, as also of the inputs.

This was long before farmers were dying in Vidarbha.

This session seeks permission from the Government of India to install a broadcasting station at the Golden Temple, Amritsar, for the relay of Gurbani Kirtan for the spiritual satisfaction of those Sikh who are living in foreign lands.
The session wishes to make it clear that the entire cost of the proposed broadcasting project would be borne by the Khalsa Panth and its over all control shall vest with the Indian Government. It is hoped that the Government would have no hesitation in conceding this demand after due consideration.

I find this one particularly fascinating. It’s a mix of public goods financing, overwhelming licensing, and the inadequacies of technologies then – now, of course, this could be accomplished by just having a satellite uplink from the Golden Temple. Or even a webcast. The fact that technology, government control of broadcasting, and the particular politics of the period made this impossible is particularly poignant.

This mammoth gathering of the Shiromani Akali Dal strongly urges upon the Government of India to make necessary amendments in the following enactment for the benefit of the agricultural classes who have toiled hard for the sake of larger national interests:
1. Hindu Succession Act be suitably amended to enable a woman to get rights of inheritance in the properties of her father-in-law instead of the father’s.
2. The agricultural lands of the farmers should be completely exempted from the Wealth Tax and the Estate Tax.

Honestly, not sure how this would impact on the ground – I’m unaware of the debates surrounding inheritance law. But again – fascinating.

They had demands that make me cringe too:

The 18th session of the All India Akali Conference take strong exception to the discrimination to which the minorities in other states are being subjected and the way in which their interests are being ignored.
As such, it demands that injustice against the Sikhs in other states should be vacated and proper representation should be given them in government service, local bodies and state legislatures, through nominations, if need be.

The Congress government is called upon to vacate the gross injustice, discrimination done to Punjab in the distribution of Ravi-Beas waters. The Central government must also give approval for the immediate establishment of six sugar and four textile mills in Punjab so that the State may be able to implement its agro-industrial policy.

The Shiromani Akali Dal emphatically urges upon the Indian government to bring about parity between the prices of the agricultural produce and that of the industrial raw materials so that the discrimination against such states that lack these materials may be removed.

The Shiromani Akali Dal strongly feels that the most pressing national problem is the need to ameliorate the lot of millions of exploited persons belonging to the scheduled classes. For such a purpose the Shiromani Akali Dal calls upon the Central and State governments to earmark special funds. Besides, the state governments should allot sufficient funds in their respective budgets for giving free residential plots both in the urban and rural areas to the Scheduled Castes.

So the ASR as a whole is utterly fascinating. It starts out as a call for federalism – something I sympathise with hugely – but then reverses direction and starts demanding that the Central government do something. The two aren’t necessarily incompatible if you’re transitioning to federalism and still want to get Central support until you achieve ‘true federalism’ – but the ASR is a reminder of one of the biggest obstacles to federalism.

This is that states aren’t just competing with the Central/ Federal government for resources and power. They’re also competing against each other – for investment, for taxpayers, and for resources which the other states might have a hold on.  Which means that states are always going to have an interest in maintaining a federal government which they can milk. It’s comparable to the Prisoner’s Dilemma problem – everyone would be better off with no federal government interference whatsoever, but each state would be even better off if it manipulated the federal government into favouring it over the other states. This will play out in Tamil Nadu  – Karnataka disputes over the Cauvery, Punjab – Haryana disputes over Chandigarh, and Maharashtra – Karnataka disputes over Belgaum.

So states coming together and demanding power from the Centre will always be hijacked by one state which would rather have a powerful Centre to fall back on. And of course the Centre could cut quid-pro-quos; so that even something where there was no inter-state conflict like law-and-order could be bargained against infrastructure or tax sharing. Or plain old horse trading. So even if Narendra Modi is serious about making himself the saviour of the states and getting more power from the centre (can’t find the link anywhere, sorry), it’s not going to happen until a whole bunch of things get sorted out between the states first.

The gradual decline of the national parties will mean things will become even more complicated. Either things will be as they are now, even more so, with each regional party determined to prop up the centre in order to extract concessions from it, or a bunch of regional parties will get together and decide to emasculate the centre altogether and start transferring power to the states. I’m not sure how many regional politicians there are today in India who would actually think long-term enough to go after federalism – but it might just arise.


Dear Tata Motors,

September 5, 2008

What were you thinking in the first place by going to Bongland?


Microfinance in Pragati

September 2, 2008

I have an article in this month’s Pragati (PDF, 3.8 MB) about microfinance. I’ve written about how there’s more to microfinance than microlending, how broadening access to savings accounts and small insurance is much more important than lending, and how the most significant impact of microfinance so far is not necessarily the financial bits but the organisational bits.

If, as is likely, you find this incredibly dreary and boring, do read the issue anyway for Harsh Gupta’s excellent article on liberal solutions to protests in Kashmir.