Friday, November 28, 2008

The endurance of my beloved country, India

History tells us how my country had endured bloodshed for more than 2000 years. My forefathers hoped that the pain would end in 1947. For most part of the last 60 years, it did. But it has come to haunt India again in the form of terrorism. Not a month goes by without any terrorist attack. India again endured, like it did for centuries and then came Nov 26, 2008. The day that would be etched in the history as one of the darkest. The day when scores of people were left at the mercy of murderous criminals. As I write this, the crisis is still going on. I begin to wonder if this great country has anything left to endure even more. Some say that this crisis will be the glue that would bring together India's already fractured social fabric while others insist that this crisis will create a communal divide beyond the tipping point and tear my country apart. In my opinion both are distinct possibilities. We should seize this moment to achieve the former. This day should be remembered as the day when the whole of India stood up and said in one word 'We are one and we will not give in to the machinations of these terrorists'. We should build the society again brick by brick. Yes, it is going to be a long arduous task but let me tell you, it is our only hope. If we let go of this opportunity, we would end up as a bunch of 25 regions trying to live together for no apparent reason. I hope that common sense would prevail.

I never thought I would cry watching a news channel. It happened today. Something in me tells me to give up what I am doing currently and strive towards rebuilding the society in some capacity. I do not know if this is knee jerk reaction but I certainly know that a thought has been seeded in my mind.

Before I end this, I would like to thank all those brave men who showed up for duty to protect their fellow human beings. India salutes you! I sincerely hope that all those politicians who were trying to divide us based on regionalism realize that the people who saved their city are indeed from other parts of the country. Jai Hind!

Tuesday, October 28, 2008

The global financial crisis explained.

'Global Credit Crunch', 'Global Economic Turmoil', 'Global Meltdown' are some of the most widely used terms now-a-days to reflect the current economic situation worldwide. So how did this crisis evolve? Who is responsible for this mess? Why has it effected the entire world and finally Who is going to ultimately pay for this? are some of the questions that I am hoping to answer in this post.

Before getting there, let me explain how any 'traditional' bank in India works. Banks like companies strive towards earning profit. Home loans sector is one of key contributors to its profits. An aspiring home owner goes to a bank for a home loan. The bank verifies his credit history and on being satisfied that the customer would be able to repay the loan, issues the home loan. The borrower(home owner) starts paying monthly interest on the principal he owes to the bank. To ensure that the borrower pays interest on a regular basis, the banks take the house as mortgage i.e., if the borrower is unable to pay the interest on a regular basis, the bank has the right to auction the house and retrieve the principal. In India, this is where the story stops. However in countries like the USA, the banks go a step further and sell all these mortgages to third party institutions such as the now infamous Lehman Brothers. There third party institutions, then convert these mortgages into financial products and sell them to investors on the Wall Street. This process is called securitization. Thus, a link is established between home loan and the Wall Street. Now what happens if a lot of home owners default on their home loans? This is precisely what happened in the USA. The banks lent money to a lot of people whose credit history was not good at higher interest rates(aka sub-prime lending). They banked on the rising real estate prices to secure their loans via mortgage. But when a lot of customers began defaulting, the bubble burst. Real estate prices plummeted and everyone from banks to the financial markets got effected.

The banks ran out of the cash as they were unable to retrieve their loans, either from the customer or from auctioning the mortgages(houses). There was a liquidity crunch. Banks also stopped lending to other banks over fears that the other banks might fail. So, a vicious cycle started. Now, we should remind ourselves that availability of credit is the key for the growth of any economy. For example, entrepreneurs need credit to start/run companies. When there is a credit crunch, the whole economy is effected and if that economy is US, then the whole world is effected as most countries rely on exports to the US. For example, the software, BPO service sectors in India are heavily dependent on the US for their survival or profits. If these are effected then the jobs of many young Indians are effected. As Indians begin to spend less and less owing to such fears, the Indian economy is effected. So is the case with China which exports most of the manufactured goods to US and EU.

Why did banks resort to sub-prime lending? As explained, one of the reasons was that they assumed that even if some customers default on the loans, they will be able to retrieve the principal by selling their mortgages. This assumption was fine as long as the real estate market was up. But as the market slowed down, it started hurting the balance sheets of the bank. One should also blame the Fed for not installing proper regulatory measures to arrest this whole process. All in all, it was a collective miscalculation on the part of banks, investment banks (those third party ones) and the US Fed (regulatory authority) that led to this crisis which is threatening the world in many ways.

So, what is the way out? Last month, most of the governments in Europe and the US have decided to directly pump money into the banks to ease the crunch. Will it work? Only time will tell because at present, there is a complete lack of confidence in the financial world. No one is sure if the money they lend is ever going to come back to them, let alone the profits. Even if the governments provide them cash, they may not be ready to lend. This crisis is also a crisis of confidence. In my opinion, it will take at least 18 months to gain back the confidence and for everything to fall in place. Until then, the markets will be volatile and people will spend nights in fear of losing their jobs and dreams.

Tuesday, September 23, 2008

Co-existence of agriculture and industry

Events taking place in Singur (West Bengal) have been dominating the news in Indian media for the past couple of months. To recap, West Bengal government acquired farm land totaling 997 acres from the local population and handed it over to the Tatas to setup an automobile industry. The Tatas hope to produce the world's cheapest car 'Tata Nano' from this plant. If and when they do so, it will be a proud moment for every Indian and it could very well transform India into a major low-cost automobile producing destination. That would eventually mean a complete transformation of the livelihood of people living in and around Singur. However, all these dreams are about to be gutted due to the agitation of the Trinamul Congress supremo Mamata Banerjee. She claims that most of the land (about 300 acres) has been acquired without the assent of their owners. She demands a return of this land. The WB govt cannot return this land without effecting the project. The Tatas need most of the 997 acres to setup the mother plant with all the ancillary plants coming around its vicinity. So, if the WB govt chooses to return these 300 acres, the Tatas would very well leave the state and setup the plant elsewhere.

All this brings to central question of whether industry and agriculture can co-exist without impinging on each other. In my opinion, it is not a question of one losing over the other. Both can and should co-exist for the prosperous future of our nation. All it needs is a central policy that lays down the approach each state govt should follow in allocating or acquiring farm land for industrial purposes. Each state government should develop a land use plan earmarking land for various purposes such as industry, agriculture, communications and service sectors. The Land acquisition act should be suitably amended to ensure fair compensation to all those farmers losing their land. The farmers must be engaged through the entire process of acquisition. Referendums such as the one held in Raigad Maharashtra could be held to guage the mood of effected farmers. Once the farmers accept the acquisition, they should be involved in the process that decides the compensation. And finally, the local population should be provided a stake in the industry through jobs or as shareholders in the company.

Industry will ensure non farm income for the rural population. Mass suicides could be averted if the farmers could be provided assured income and work security. When they lose a crop due to flooding and so on, they could resort to non farm labor in the local industry. China provides an excellent example as to how an all round human development is possible when work and income is assured. In the 1980's China launched a two-pronged strategy to improve the lives of their rural population. First, steps were taken to improve the yield of their crops by setting up good irrigation infrastructure and using latest technologies. Today, the average yield of Chinese farms is twice that of Indian farms. Second, Township and Village Enterprise(TVE) movement was launched to shift a 100 million farmers to non farm employment sector. This transformed China into the factory of the world. This strategy completely transformed the lives of their rural population. As a proof, the child malnutrition rates of China dropped to an impressive 7% while that of India is currently 46%.

Thus Industry and Agriculture should prosper together if we are to see a developed and hunger free India. We should not destroy the future of the young rural population by denying the fruits of rural industrialization. They will not forgive us if events such as in Singur take place on a regular basis. Diversification of rural employment is the key. It should be spread across all the sectors - primary, seconday and tertiary. Only then can we ensure quality life to the rural population.

Friday, July 25, 2008

Does India need a Jon Stewart?

Jon Stewart, the quintessential American political satirist, is known for criticizing any flawed government policies with mind blowing humor. His impromptu show, 'The Daily Show with John Stewart' which features on most weekdays on American Television has a strong base in the young American population vexed with their Government's all round failure. The young vent their frustration by tuning into his show night after night. Over time, he has become so influential that major politicians like Obama and Hillary have featured on his show. Some say that he had a role to play in Hillary's victory in at least one of the states (She featured on his show via satellite the night before that primary) during the Democrat primaries. His ease in dissecting the daily news and presenting it to the audience in a humorous way is outstanding. Regular performers on his show like Stephen Colbert have made it big once they left the show. I cannot but compare the frustration amongst the young Indians with those in America. Both are disillusioned by their scandalous politicians, more so in India. Do the young in India need a John Stewart who can criticize the the daily ongoings(bad ones) in the Government with no fear? I certainly think so. Somebody like him could easily galvanize the youth and generate awareness among them about all that is bad in the current Indian Politics. The youth of today has been criticized for not showing interest in Politics but we need to understand that most of them need an entertainment medium to dissipate information regarding politics. Nobody seems to have the time to listen to serious news (no...not the ones on Aaj Tak), let alone read a newspaper.

Assuming that we find one in the near future, will the Indian society give him the 007 license for criticism. Will the national parties be mature enough to take the criticism in their stride? Or, will they unleash their goondas for allegedly "hurting" their "sentiments"? Only time will tell but we need a Jon Stewart in the immediate future to save the country's youth from getting totally ignorant of what's happening around them.

Sunday, March 09, 2008

Tuesday, February 26, 2008

American Idol for sure!!!

I do not know if he will win this year's competition but to me he is the next American Idol. Period.

Saturday, February 23, 2008

Change of heart!

I am tracking David Archuleta, Danny Noriega and Alaina Whitaker this year and I strongly believe one of them is going to make it. Which one? My heart says David Archuleta for now. He is too talented for a 16 year old. The only threat I see is, can he hang in there when the going gets tough in the following weeks?

Tuesday, February 19, 2008

American Idol 2008???

Very impressive and he is my fav so far this year

Saturday, January 12, 2008

Bryan at Sacramento.

Bryan is releasing his new album titled '11' this March. Excited about that. What's even more exciting is that one of the singles from that album will be played around the world this Jan 28 on radio. I wish he releases the song to iTunes.

It goes 'I thought I'd seen everything'. There is a chance that he might sing this at his concert next month in Sacramento. I have plans to attend that. Let's see how it goes.