Wake up India :Jim Rogers: Why I’m shorting India

Hedge fund manager and Rogers Holdings chairman Jim Rogers says the main reason for the correction in gold prices, other than the fact that it needed it, was on account of Indian politicians who suddenly blamed their problems on the metal. Photo: Bloomberg


Joji Thomas Philip : Tue, Aug 13 2013. 08 15 PM IST

The hedge fund manager on the financial crisis, his bets for the future and his decision to be extremely negative about India in his just-released book

Singapore: Hedge fund manager Jim Rogers, who moved to Singapore in 2007 because he thought the centre of the world is shifting to Asia, says India is set to miss out on the Asian century. The chairman of Rogers Holdings says that if there is one country an individual must visit, it has to be India for its “spectacular sensory feast, beautiful, food, colour and religions”, but it is also the worst country to do business in. Rogers also slammed the Indian government’s recent curbs on gold imports, saying Indian citizens had no choice but to buy the metal because they had very little faith in investing in other sectors of its economy. In an interview, Rogers spoke about the financial crisis and his bets for the future and defended his decision to be extremely negative about India in his just-released book Street Smarts: Adventures on the Road and in the Markets. Edited excerpts:

What lessons have you learnt from the financial crisis that started five years ago and how has your investment mantra changed since then? Can you tell us how your portfolio has changed over the course of this crisis?

Governments and central banks have reacted to the crisis in what they view is the correct manner, but, in my view, it is an artificial manner, and they are only making the crisis worse. The reason it is stretching out as a problem is that they never let the problem cure itself.

For instance, in 2001 and 2002, there were economic problems in the world and they hurt, but they were not that bad. The next one came in 2007-08 and it was much worse because the debt had risen by then. Central banks, especially the American central bank, started printing money and everything felt better for a while. Then the problem came again and central banks led by the Americans, and governments led by the Americans, again ran up even more debt and continue to do so. Many of us feel better, especially the ones getting the money, but, overall, it is worse now and the situation continues to deteriorate because the debt is so much higher now. The next time we have a slowdown, it is going to be a lot worse. In America, the debt quadrupled and a lot of it is garbage—we are floating on an artificial sea of liquidity, and it is wonderful if you are in the right boat.

Problems always come no matter what governments say and we have always had slowdowns in America after every six or seven years even in good times. Be very worried because the next time around, things are going to be much worse, especially in countries where the debt is much higher. In the 1920s and 1930s, the centre of the world moved from the UK to the US, primarily due to financial problems and mistakes made by the politicians. The same thing is happening now, and the centre of the world is moving from the US to Asia, exasperated due to the financial crisis and mistakes made by politicians. In the 1930s, US was a creditor nation, but it suffered badly, but not as badly as some of the European nations. Asia will suffer the next time around, but the West will suffer even more. I would rather be with the creditors than with the countries (that) have huge debts.

Any new reasons why you are shorting India? Have you ever invested in India?

I used to own tourist companies in India at a time. India should have had the greatest tourist companies in the world. If you can only visit one country in your life, my goodness, it should be India—it is an astonishingly spectacular place to visit. There is no place that has the depth of culture that India has. Yes, I have new reasons to short India—just read its newspapers everyday and you will see why.

The government goes from one mistake to another—no matter what the controls are, no matter how much the debt keeps rising, Indian politicians are only looking for scapegoats. Look at the latest thing with gold—Indian politicians want to blame the problems of their economy on someone else, and now it is gold. Gold is not causing India problems, but it is quite the contrary. Exchange controls in India are absurd, the regulations that India puts in place result in foreigners going through 70 loops before they can invest in India. Foreigners cannot invest in commodities in India.

India should have been among the world’s greatest agriculture nations—you have the soil, the people, the weather, but it is astonishing that you have not become one—it is because Indian politicians, in their wisdom, have made it illegal for farmers to own more than five hectares of land. What the hell—can a farmer with just five hectares compete with someone in Australia or Canada? Even if you put together the land in all your family, it is still not possible to compete. Much as I love India, I am not a fan of its government. Every one year, they (Indian government) come up with more reasons for me to be less optimistic about that country.

Do you think India’s democracy is a problem to its success?

I can only make some observations. Japan, Korea, Singapore, China were all one-party states and, in some cases, were very vicious one-party states, but, as they became more prosperous, their people wanted more, demanded more and got more democratic, and they say this is the Asian way.

Greek philosopher Plato in The Republic, says that societies develop from dictatorship to oligarchy to democracy to chaos and then back to dictatorship. Chaos develops out of democracy. This seems to be what is happening in some of the Asian countries.

In the Soviet Union, they did the opposite—they said we will open up and let all people complain and they did. The people there were poor and they complained about being poor and hated the government. When South Korea opened up, the people were rich and they decided to get rid of the government without ruining the place. Taiwan did the same. Democracy being a problem may have credence in some Asian countries. But, I am not sure if India has been really a democracy in the true terms—from 1947 onwards, the opposition has had just one full term at the centre. The first five decades of its democracy, the centre has only seen a government led by a single party.

Power corrupts. Singapore was lucky. There has been plenty of criticism of Singapore’s (founding father) Lee Kuan Yew, and some of them are probably valid, but look at the results. Congo had a dictatorship for a long time, but has nothing to show for it. Singapore had a strong central government and look around you—I did not move to Congo, but I moved to Singapore. So it can go both ways.

In 1947, India was one of the most successful countries in the world relative to others. Even as recently as 1980, India was more successful than China, but then you know how that story turned. It was more successful than South Korea, more successful than most places in Asia—but, for me, it is unfortunate that you have failed to take advantage of some of your most valuable assets. India has some of the smartest people in the world, but it does not have an education system to support it. Infrastructure is equally poor. So, I don’t know if India would have been better without a democracy, and some of the greatest periods in history have been without democracy. But these are just my observations, and it is the Indians who must decide what they want.

What do you think should change in India for it to attract investments? There are several multinationals that have been successful in India despite all its policy and regulatory uncertainties. They have adapted and changed their business practices to suit India.

Yes, but on the other hand, there are not many successful Indian companies, outside those that are associated with the government. Look around in Singapore and you don’t see many Indian products, except for some restaurants. There are very few Indian brands that you would recognize outside India.

In India, many of its companies are successful because of their links with the government. Apart from a couple of software companies, I literally cannot think of Indian firms who have made it big in the international scene. But there are many Japanese, Korean, Chinese, Taiwanese companies that are very big globally. All Indian companies that are successful there are because of their relationship to the government.

If I were an Indian politician, I would make the country’s currency convertible tomorrow and stop deficit spending this afternoon. I would take a chainsaw to government spending as you continue to run up debts, I would free up the economy, especially agriculture, to make India the greatest competitor in this sector. You know, to open a retail outlet in India, even for Indians it is so tough—but for foreigners, it will take years in the current system. You keep companies out of India citing national security—just go to China and there are foreign companies everywhere.

There are millions of entrepreneurial, driven and smart Indians, but most of them want to be abroad because they know that unless they are involved with the right people in India, they are not going to be successful. Fewer than 50% of Indians stay in school till their 12th grade . How many universities are there in India—nothing when compared to the population! There are very good Indian universities, but they are nothing compared to the qualified Indians who need good education. One reason you see so many Indians going abroad is to compete or to get education. It would be such an exciting country to do business, if it were opened up. Historically, it has been an economic power and I would try and restore it to that position. Oxford and Cambridge can fill up all their seats with Indians who would pay their own way.

In your latest book, you have been critical of the numbers put out by the Indian government. I’ll quote from your book: “All growth rate figures are unreliable. It is stupefying to me that India could claim to have a clue to what is going on even in India, much less in China or in the US” or “When it comes to growth rate, Indians base their numbers on what China is reporting, making sure that theirs are better than, or at least in line with, China’s”. But, institutions in India are pretty strong and the numbers, be it GDP or any other put out by the Indian government, are considered to be largely reliable.

All government numbers are suspect. Last week, the US government revised its economic statistics and added a whole economy bigger than the Swedish economy—so America just went up a level in a week because they revised the numbers. I don’t trust what any government says. The Soviet Union used to have great numbers, but they were all made up in offices in Moscow.

I was not just picking on India, but using it as an indicator. If you go back over the last few years, you will see the Indian economy, as per the numbers its government has put out—some of the numbers its government has projected—are comparable with those of China. Then you go see both countries and you’ll realize something is wrong. If India’s growth over the last couple of years was comparable to that of China, where are the schools, the highways, the infrastructure, the housing, where has it all gone?

I was using this to state that we should be very careful about what governments tell us. In one of my books, I’ve come down hard on Germany—the Germans who were supposed to be hardworking and disciplined were also found to be making up some of the numbers they had been reporting related to job creation.

Where is gold headed? When is the good time to buy it? Of late, India has taken a slew of measures to curb its import. Many say that if India were to steeply reduce its import of gold, it will be able to alleviate its current account deficit, which, in turn, would help its economy get back on track?

It is a great question because I too am fascinated with gold and I do own gold. Gold went up 12 years in a row, which is extremely unusual, and there has been no asset in history that has seen something like this. The anomaly in the gold market is how strong it has been—it has never happened ever—technically, gold was overdue for a big correction. But the correction should be different from most corrections because the rise was so different from most rises. I was expecting it to decline and it has.

In my view, the main reason for the correction, other than the fact that it needed it, was on account of Indian politicians who suddenly blamed their problems on gold. The three largest imports to India are crude oil, gold and cooking oil. Since they can’t do anything about crude and vegetable oil, the politicians said India’s problems were because of gold, which, in my view, is totally outrageous.

But like all politicians across the world, the Indians too needed a scapegoat. Is this the reason why gold started correcting? I don’t know. But, India is the largest importer of gold, and whenever the largest buyer cuts back, there will be a correction, whatever is the commodity. The correction may continue for several more weeks, months or even a year or two. A 50% correction is common for commodities, but if gold were to correct 50% before it made its final bottom, that would be between $900-1,000.

In my view, gold is in the process of making a complicated bottom that will last a while. I hope that I am smart enough to buy more near the bottom because gold will go much higher over the next decade, because as I had said earlier, governments across the globe are making mistakes of printing money. When gold went to $1,200, I did buy more. But don’t sell your gold. I am not selling my gold.

If India curbs its gold imports, will its economy be back on track? There is no question that if you have money, it is better to invest it than put it into a stagnant asset—according to this argument, women should not buy dresses or shoes, or we should not be buying houses...the one billion Indians are smarter than the market and also the government. If they see that they are better off putting their money in gold, that is what they will do—the solution is not a ban on gold (import), but to make the economy exciting enough to make people want to put their money into other things. That will be better for the economy, but this is putting the chicken before the egg or the cart before the horse.

In the BRICS (Brazil, Russia, India, China, South Africa) countries, the rising middle class appears to be angry with their respective governments and have been demanding changes, reforms and better living standards. Governments of most BRICS countries—including India and Brazil—are confronted with the youth taking to the streets in protests. Do you think this can derail the emerging markets story?

It could derail, or it could open-up these countries further. If the billion plus people in India demand more and say the current system that is going on since 1947 is absurd, then it might make India a whole lot better. Compared to many of the countries globally, India was on top in 1947, but relatively India has only declined since then. Remember that you move from dictatorship to oligarchy to democracy to chaos—may be they will throw out these absurd oligarchs who rule India and then it may have a vibrant democracy and regain its proper place, its historic place in the globe.

உலகமயமாதல் :ஏற்றத்தாழ்வு உண்டு; எழுச்சி இல்லை

By ஆர்.எஸ். நாராயணன்:DN

First Published : 19 August 2013 03:52 AM IST

கடந்த முப்பது ஆண்டுகளாக உலகமயமாதல் என்ற மாயமான் தோற்றுவித்துள்ள ஏற்றத்தாழ்வு வளர்ந்து செல்வதாக உலகளாவிய நிலையில் பல்வேறு பொருளாதார அறிக்கைகள் சுட்டிக்காட்டத் தவறவில்லை.

இந்த ஏற்றத்தாழ்வு வளர்ச்சியுற்ற வடக்கு நாடுகளில் சொற்பமாகவும் வளரும் நாடுகளில் மிகுந்தும் காணப்படுகிறது. இந்தியாவிலும் சரி ஏனைய தெற்கு நாடுகளிலும் சரி சொத்துகளிலும், வருமானத்திலும் ஏற்பட்டுள்ள ஏற்றத் தாழ்வுகளைத் துல்லியமாகவே கவனிக்கலாம்.

கடந்த நூற்றாண்டில் வருமானத்திலும் சொத்திலும் தோன்றிய ஏற்றத்தாழ்வு காரணமாக ரஷியாவிலும் சீனாவிலும் கம்யூனிசப் புரட்சி ஏற்பட்டது. இந்தியாவில் சோஷலிசக் கருத்துகள் வேர்விட்டன. என்ன பயன்? லெனின் பிறந்த நாட்டில் ஊழல் உண்டு. மா.சே.துங் பிறந்த நாட்டிலும் ஊழல் உண்டு. காந்தியும் நேருவும் பிறந்த நாட்டிலும் ஊழல் சந்தி சிரிக்கிறது. தொழில்புரட்சி ஏற்பட்டது பிரிட்டனில். தொழிலாளர் புரட்சி ஏற்பட்டது சோவியத் ரஷியாவில். இன்று தொழிலாளர் வருமானத்திலேயே ஏற்றத்தாழ்வு உள்ளபோது, தொழிற்சங்கப் பொருளாதாரம் எதுவும் சமதர்மத்தை ஏற்படுத்தும் என்பது மதியீனம்.

கருப்புப்பணமும் உலகளாவியதாக உள்ளது. வளர்ச்சியை மையமிட்ட வளரும் நாடுகளும், கம்யூனிச - சோஷலிச நாடுகளும் உலகமயமாதல் என்ற மாயமான் வலையில் விழுந்த பின்னர், கிடைத்த பலன் வீழ்ச்சியே தவிர வளர்ச்சி இல்லை.

 இன்று உலகமயமாதலுக்குப் பின் விளைந்த ஏற்றத்தாழ்வை இந்தியாவில் கவனிக்க எந்தப் புள்ளிவிவரமும் தேவையில்லை. இந்திய ஏற்றத்தாழ்வு பிரத்தியட்ச ரூபிணியாகக் காட்சி தருகிறது. இந்தியாவில் உள்ள 100 கோடி மக்களில் 50 கோடி மக்கள் வறுமைக்கோட்டில் வாழ்கின்றனர். சராசரி மாதவருமானம் இவர்களுக்கு ரூ. 2,000-ஐ விடக் குறைவுதான். மீதி 50 கோடி மக்களில் சுமார் 40 கோடி மக்களின் வருமானம் ரூ. 2,000-லிருந்து ரூ. 10,000 என்று கொள்ளலாம்.

 இந்த வரிசையில் விவசாயத் தொழிலாளர்கள், நிரந்தரமற்ற வேறுதுறைப் பணியாளர்கள் அடங்குவர். மீதி 10 கோடி மக்களில் சுமார் 9 கோடி மக்கள் கீழ்நிலை நடுத்தரவர்க்க அறிவுஜீவிகள், எழுத்தர்கள், எழுத்தாளர்கள். சிறு வியாபாரிகள் வருமானம் மாதம் ரூ. 20,000 முதல் 1,00,000 வரை வேறுபடலாம். மீதி 1 கோடி மக்களின் வருமானம் 1,00,000-க்கு மேல் பில்லியன் வரை என்று கொள்வோமானால், இதில் கீழ்வரிசையில் மேல்தட்டு நடுத்தர வர்க்கம் கார்ப்பரேட் எக்சிக்யூட்டிவ்கள், நிர்வாக இயக்குநர்கள், நீதிபதிகள், மாவட்ட ஆட்சித் தலைவர், மேல்மட்ட கெஜட்டட் அலுவலர்கள், நடுத்தரத் தொழில் அதிபர்கள் எண்ணிக்கை சுமார் 50 லட்சம். மேல்மட்ட அதிகார வர்க்கம் அபாரமாக, 1,00,000 ரூபாய் முதல் 10,00,000 வரை வருமானம் பெறலாம். மீதி 50 லட்சத்தில் அடங்குவோர் அரசியல்வாதிகள், ரியல் எஸ்டேட் முதலாளிகள், பெரிய தொழிலதிபர்கள், கருப்புப் பண முதலாளிகள். இவர்களில் அநேகமாக ஆயிரம் பேர் உலகப் பணக்காரர்கள் வரிசையில் வரக்கூடிய மில்லியன் பில்லியனர்களாக இருப்பார்கள்.

 வளர்ச்சி என்பது இந்தியாவில் 1 சதவீத மக்களுக்கு லாபம் வழங்கியிருக்கலாம். மீதி 99 சதவீத மக்களுக்கு லாபம் இல்லாதது மட்டுமல்ல அவர்களை இலவசங்களுக்கு ஏங்கும் மக்களாக்கிவிட்டது. இவ்வளவு ஏற்றத்தாழ்வு இருந்தாலும் மக்கள் எழுச்சி ஏற்படவில்லை.

 வறுமையை ஒழிப்பது ஏற்றத்தாழ்வைப் போக்குவது எல்லாம் ஒரு நாட்டின் பொருளாதார எழுச்சிக்கு அறிகுறி. உலக அரசியலில் கம்யூனிசமும் சோஷலிசமும் தோற்றுவிட்டாலும் முதலாளித்துவ அடிப்படையில் ஏற்றத்தாழ்வையும் வறுமையையும் ஒழிக்கும் எழுச்சி 1929-இல் தோன்றி 10 ஆண்டுக்காலம் உலகை ஆட்சி செய்த மாபெரும் வீழ்ச்சியை (கிரேட் டிப்ரஷன்) ஒழிக்க கண்டுபிடிக்கப்பட்டது. அதன் பெயர் ஜி.டி.பி. அதுதான் இந்தியாவில் ஆட்சி செய்கிறது.

 1930-இல் கடைந்தெடுக்கப்பட்ட ஒரு சொல்லாட்சிதான் ஜி.டி.பி. என்ற ஒட்டு மொத்த உற்பத்தி, பணி வருமான மதிப்பு. இது உயர்ந்தால் வளர்ச்சி ஏற்பட்டு வீழ்ச்சி மடிந்து நாடு வளம் பெறும் என்று நம்பப்பட்டது. 1929 முதல் 1940 வரை மாபெரும் பொருளாதார வீழ்ச்சி நீடித்த காலகட்டத்தில் ஹிட்லரின் நாசிசத்தை எதிர்த்து நிகழ்ந்த இரண்டாவது உலகப்போர் காரணமாக நிகழ்ந்த எழுச்சி பொருளாதார வீழ்ச்சியைக் காப்பாற்றியுள்ளது.

 இப்படிப்பட்ட போர் அரசியல் காலகட்டத்தில் பொருளாதார வீழ்ச்சியைப் போக்க ரூஸ்வெல்ட்டுக்கு ஆலோசனை வழங்கிய ஜான் மேனார்டு கீன்சை உலகம் அறியும். ஆனால் ஜி.டி.பியைக் கண்டுபிடித்த சைமன் குஸ்நட்ஸ் என்ற அமெரிக்கப் பொருளியல் மேதையைப் பற்றிப் பலர் அறிய மாட்டார்கள். இவர் ரஷியாவில் பிறந்தவர். கீன்சைப்போல் இவரும் வீழ்ச்சியைப் போக்கிப் பொருளாதாரத்தை உயர்த்த திட்டங்கள் வகுத்தார். வருமான ஏற்றத்தாழ்வைப் போக்க முதற்கண் தேசவருமானம் பற்றிய புள்ளிவிவரமும் சொத்து, பணிகள், தொழில் உற்பத்தி பற்றிய பணமதிப்பையும் கணக்கிட்டு ஜி.டி.பியை நிர்ணயித்தபின், வருமான வினியோகம் பற்றி திட்டமிட வேண்டுமென்றார்.

 ஜி.டி.பி என்ற கருத்து குஸ்நட்ஸýடையது என்றாலும் முதல் முதலாக உலகில் தேசவருமானம் பற்றிய மதிப்பீட்டைச் செய்தவர் தாதாபாய் நவ்ரோஜி (1868). பின்னர் வில்லியம் டிக்பி, பின்ட்லே ஷிர்ராஸ், (1900 - 1911) ஷா மற்றும் கம்பாட்டா (1921) ஆகியோரும் இந்திய தேசவருமானத்தை மதிப்பிட்டுள்ளனர்.

 குஸ்நட்ஸின் சமகாலத்தில் இந்தியாவில் வி.கே.ஆர்.வி. ராவ் மற்றும் ஆர்.சி. தேசாய் கணக்கிட்டார்கள். அமெரிக்காவில் குஸ்நட்சைப் பின்பற்றி வி.கே.ஆர்.வி. ராவ் விஞ்ஞான ரீதியாக  இந்திய தேச வருமானம் கணக்கிடும் வழிமுறையைச் செய்துள்ளார். அன்று ராவ் போட்ட கணக்கு முறையைத்தான் தேசிய திட்ட மாதிரி ஆய்வுகள் கடைப்பிடிக்கின்றன.

  1955-இல் சைமன் குஸ்நட்ஸ் வருமான ஏற்றத்தாழ்வைப் பற்றிக் கருத்துத் தெரிவிக்கையில், ""வளர்ச்சியின் தொடக்கத்தில் ஒரு சமூகம் விவசாயத்தை மட்டுமே நம்பியுள்ளபோது தனிநபர் வருமானம் குறைவாயிருக்கும். ஏற்றத்தாழ்வு இடைவெளியும் குறைவாக இருக்கும். தொழில் வளர்ச்சியும், நகரமயமாதலும் நிகழும்போது பொருளாதார வளர்ச்சி வேகமாகச் செல்லும். அதேசமயம் வருமான ஏற்றத்தாழ்வும் அகண்டு செல்லும். குறைந்த வருமானமுள்ளவர்கள் கொதித்து எழுவார்கள். அவர்கள் அரசியல் அதிகாரம் பெற்று ஏற்றத்தாழ்வு இடைவெளியைக் குறைக்கக்கூடிய சமூக முதலீடுகளான நலவாழ்வு, கல்வி, தொழிலாளர் நலன் என்று செலவிடும்போது, ஏற்றத்தாழ்வு இடைவெளி குறையும்'' என்று கூறியுள்ளார். அப்படி எதுவும் இந்தியாவில் நிகழவில்லை. குஸ்நட்ஸ் கூறியதைத்தான் அமார்த்தியா சென்னும் இப்போது கூறி வருகிறார்.

 தமிழ்நாட்டில் மண்வெட்டி, கடப்பாரை பிடித்து கடினமான வேலை செய்யும் ஒரு விவசாயத் தொழிலாளிக்கு தினம் ரூ. 400 வருமானம் உண்டு. 30 நாள்களில் 15 முதல் 20 நாள்கள் வேலைக்குச் செல்வதாகக் கொண்டால் மாதம் ரூ. 5,000 முதல் 6,000 வருமானம் என்று கொள்ளலாம். அப்படிப்பட்ட ஒரு விவசாயத் தொழிலாளி தனது பிள்ளைகளை ஆங்கிலப் பள்ளியில் சேர்க்க ஆசைப்படுகிறார். எல்.கே.ஜி. படிக்கவே மாதம் சராசரி ரூ. 800 செலவாகும். அவர் குடும்பத்தில் யாருக்காவது நோய் வரும்போது கிராமத்திலுள்ள ஆரம்ப சுகாதார நிலையத்திற்குச் செல்வதில்லை. அது அருகில் இருக்காது. இருந்தாலும் கவனிக்க மாட்டார்கள். ஆகவே, பணம் பறிக்கும் தனியார் மருத்துவமனைகளே கதி. ஜுரம், வயிற்றுவலி என்று சென்றாலே ரூ. 500-க்கு மேல் தனியார் மருத்துவமனையில் செலவு செய்ய வேண்டியுள்ளது.

 தனியார் ஆங்கிலப் பள்ளியும், தனியார் மருத்துவமனையும் விவரம் அறியாத அப்பாவித் தொழிலாளர்களின் பணத்தை அட்டை உறிஞ்சுவது போல் உறிஞ்சிவிடுகின்றன. பற்றாததற்குப் பற்றாக்குறைப் பொருளாதாரம், பணவீக்கம், விலைவாசி உயர்வு போன்றவை அடித்தட்டு மக்களுக்கு எவ்வளவு துயரம் இருந்தாலும், சகித்துக்கொண்டு கூட்டுவட்டிக்குக் கடன் வாங்கி வட்டி கட்டியே வாழ்நாளை ஓட்டுகிறார்கள்.

 சொத்துக் கணக்குக்கு வந்தால் நாட்டின் ஒட்டு மொத்த சொத்துகளில் சுமார் 50 சதவிகிதம் மேல்மட்டப் பணக்காரர்கள் வரிசையில் உள்ள ரியல் எஸ்டேட் அதிபதிகள், உலகப் பணக்காரர்கள் வரிசையில் வரக்கூடிய இந்தியத் தொழிலதிபர்கள், அரசியல் கட்சித் தலைவர்கள், மக்களவை மாநிலங்களவை அமைச்சர்கள், எம்.பி., எம்.எல்.ஏ.க்கள், ஊராட்சி, பேரூராட்சி, நகராட்சி, மாநகராட்சித் தலைவர்கள் அடங்கலாம்.

 நமது மதிப்பிற்குரிய நிதியமைச்சர் ஐக்கிய முற்போக்குக் கூட்டணி அரசுதான் வளர்ச்சிப் பாதையை உருவாக்கி ஜி.டி.பி.யை உயர்த்தியுள்ளது என்று ஒவ்வொரு கூட்டத்திலும் சொல்வதுண்டு. நிதியமைச்சரின் பேச்சில் இரண்டு தப்பெண்ணங்கள் உள்ளன. முதலில், வளர்ச்சியில் வீழ்ச்சியே கண்ட பலன். 2004 - 2008 - களில் 10 முதல் 13 சதவீதமாயிருந்த ஜி.டி.பி வளர்ச்சி 2011 - 12-இல் 6.5 சதவீதமாகக் குறைந்து 2012 - 13-இல் 5.4 சதவீதமாகக் குறைந்துள்ளது.

 இரண்டாவது தப்பெண்ணம், வளர்ச்சிக்கும், வறுமை ஒழிப்புக்கும் தொடர்பு இல்லை. எதிர்பார்த்த அளவில் வளர்ச்சி வேலைவாய்ப்புகளை உருவாக்கித் தொழிலாளர்களின் வருமானத்தை உயர்த்தவில்லை. ஏழைமக்களின் வருமான உயர்வுக்கும் ஜி.டி.பி வளர்ச்சிக்கும் தொடர்பு உள்ளதாக நிதியமைச்சர் கூறுவது, உண்மைக்குப் புறம்பானது.

 ஜி.டி.பி.யில் தொழிலாளர் சம்பளத்தின் பங்கு கடந்த 20 ஆண்டுகளில் 30 சதவீதம் குறைந்துள்ளதாக உலகத் தொழிலாளர் நல அமைப்பு கோடிட்டுக் காட்டியுள்ளது. ஏழைகளின் வருமானம் எப்படி உயரும்? ஜி.டி.பி. கணக்கில் வராத கருப்புப் பணம் உங்கள் கையில். அது வருமான வரியை ஏமாற்றிய பணம். எங்கள் பணம்  என்று சொல்லி 435 ரூபாயை ஆதார அட்டைப்படி எங்கள் கணக்கில் வங்கியில் சேர்ப்பித்துவிட்டு ரூ. 900 கொடுத்து கேஸ் சிலிண்டர் வாங்கச் சொன்னால் நாங்கள் எங்கே போவோம்? என்று ஒரு தொழிலாளி கூறுவது நிதியமைச்சரின் செவியில் விழுந்தாலும்கூட அவரால் பேச முடியாது - வாழ்க பாரதம்!

கட்டுரையாளர்: இயற்கை விஞ்ஞானி.

Failed in my dream of becoming pilot: Abdul Kalam in new book

Former President Abdul Kalam says that true nation building is not made by political rhetoric alone but should be backed “by the power of sacrifice, toil and virtue”. File photo: K. Ramesh Babu

PTI : New Delhi :18 Aug 2013

For former President A.P.J. Abdul Kalam, becoming a fighter pilot was a “dearest dream” but he failed to realise it by a whisker as he bagged the ninth position when only eight slots were available in the IAF.

In his new book “My Journey: Transforming Dreams into Actions”, published by Rupa, Mr. Kalam, who specialised in aeronautical engineering from Madras Institute of Technology, says he was desperate to pursue a career in flying.

“Over the years I had nurtured the hope to be able to fly to handle a machine as it rose higher and higher in the stratosphere was my dearest dream,” he writes.

Out of the two interview calls Mr. Kalam got, one was from the Indian Air Force in Dehradun and the other from the Directorate of Technical Development and Production (DTDP) at the Ministry of Defence in Delhi.

While the interview at DTDP was “easy” he recounted that for the Air Force Selection Board, he realised that along with qualifications and engineering knowledge, they were also looking for a certain kind of “smartness” in the candidate.

Mr. Kalam bagged the ninth position out of 25 candidates and was not recruited as only eight slots were available.

“I had failed to realise my dream of becoming an air force pilot,” he writes.

He says he “walked around for a while till I reached the edge of a cliff” before deciding to go to Rishikesh and “seek a new way forward.”

“It is only when we are faced with failure do we realise that these resources were always there within us. We only need to find them and move on with our lives,” says Mr. Kalam who went on to put his “heart and soul” at his job as the senior scientific assistant at DTDP.

The book is filled with stories of “innumerable challenges and learning” in his years as the scientific adviser when India conducted its second nuclear test, his retirement and dedication to teaching thereafter and his years as President.

Mr. Kalam has compiled life’s learnings, anecdotes and profiles of key moments and people who inspired him profoundly in the book, which will hits the stands on August 20.

He recounts “staring into the pit of despair” when he failed to make it as an IAF pilot and how he pulled himself up and rose to become the man who headed India’s missile programme and occupy highest office in the country.

While the 82-year-old, popularly known as the Missile Man for his contribution to the development of ballistic missile technology, had in 1999 brought out his autobiography “Wings of Fire” and followed it with “Turning Points”, a journey through challenges” in 2012 that details his political career and challenges, the latest book talks about the people who left a deep impression on him as he was growing up.

In the 147-page book, Mr. Kalam writes about his experience of watching his father build a boat, his early working life as a newspaper boy at the age of eight and even his first-hand experience of the way in their religious elders settled a religious matter in his school.

In a chapter “A brush with fire”, Mr. Kalam recounts the 1999 January 11 incident involving two aircraft which took off from Bangalore towards the Arakkonam-Chennai coastline and crashed, killing 8 men on board.

While Mr. Kalam immediately flew to Bangalore from Delhi and met the bereaved families, he says the grief of the devastated parents and the wailing of the infants remained with him even after years of the incident even after he moved from his office at South Block to Rashtrapati Bhavan.

The former President says that true nation building is not made by political rhetoric alone but should be backed “by the power of sacrifice, toil and virtue”.

“When grand plans for scientific and defence technologies are made, do the people in power think about the sacrifices the people in the laboratories and fields have to make?” he writes.

The book also contains a chapter detailing Mr. Kalam’s favourite books “which have always been close companions” who “were like friends” guiding him through life. Lilian Eishler Watson’s “Light from Many Lamps,” the “Thirukural”, Nobel Laureate Alex Carrel’s “Man the Unknown” have been listed.

Poetry says Mr. Kalam has been “one of his first loves” and poems by T.S. Elliot, Lewis Carroll and William Butler Yeats has “played out in my over and over again”.

In conclusion, Mr. Kalam writes his life can be summed up as “Love poured to the child... struggle... more struggle... bitter tears... then sweet tears... and finally a life as beautiful and fulfilling as seeing the birth of the full moon.

“I hope these stories will help all my readers understand their dreams and compel them to work on these dreams that keep them awake,” he writes.

Raghuram Rajan vs Lawrence Summers: Central difference between the two economists

By Stephan Richter :ET : 19 Aug 2013

What a difference in the reaction to two candidates slated to take over a key country's central bank. When Raghuram Rajan was appointed as the next governor of the Reserve Bank of India, the verdict was near universal: an extremely qualified person had been selected for the post. The biggest concern was, and is, whether — given India's challenges — the tasks ahead are too big for anyone to shoulder successfully.

At the core, though, almost everybody readily agreed that Rajan is a man with a proven track record when it comes to a central banker's most important virtue: the willingness to speak truth to power. Rajan showed that ability most prominently a few years back when he singled out the lack of stability of the US financial system, a call highly unpopular with most American elites at the time, although entirely on target.

Rajan's presumed US counterpart, Lawrence Summers, hasn't gotten the official nod yet, although he has received a lot of presidential blessing as the right man for the job.

And yet I wonder.

Sure, Summers as an economist is as brilliant as Rajan. Both were star professors in the US economics scene. But in complete contrast to Rajan, Summers has excelled almost exclusively as a propeller and enabler of vested interests. His speciality is not speaking truth to those in power, but rather most agilely further empowering those in power.

That is precisely what former US Federal Reserve chairman Alan Greenspan did, with known negative results. Does the US — and, indeed, does the world — need another round of such self-centred highhandedness?

Boys and Bias

When it comes to selecting the US Fed chairman, three criteria are important: professional competence, open-mindedness and the ability to rest in oneself. Unfortunately, Summers scores only 1.5 out of 3. Janet Yellen, the vice-chairperson of the Fed, will be close to 3 out of 3 in my book.

Unlike Summers, who has been smarting ever since he did not get the World Bankpresidency years ago, Yellen has no temperamental issues. Of course, that does not stop those who raise the "woman issue" and do their level best to insert the age-old stereotype into the equation. The bias in the US political system to award the top jobs to another guy is still formidable.

Summers, his supporters say, has the "respect" of the financial markets. More likely, he has their backs — which is not what the American people need.

Street Cred

The trouble with Summers is twofold. One, he believes he has all the answers. Two, while some of his answers are good and on target, he mostly presents them as newspaper comments and when he is out of power. Whenever he was in power — first as Treasury secretary under Bill Clinton and then as White House economic czar under Barack Obama— he was an ardent defender of the powerful on the Wall Street.

We would do well to remember that in 2008, the year before he joined the Obama administration, Summers made more than $5 million in compensation from the DE Shaw hedge fund — for a reported one day a week of actual work. In addition, he received more than $2.7 million in speaking fees from Wall Street companies that received bailout money.

Now, in a market economy, everybody is free to sell their skills to the highest bidder. But at that exalted pay level, there were always legitimate concerns that what Summers received was "pre-pensation" for future actions — rather than compensation for actual services. And that, in his two-year stint in the White House, he most certainly did.

Along with the then Treasury secretary Bob Rubin and the understudy, Tim Geithner, Summers was in charge of making the world safe for AIG and Citibank.

With that track record, all the efforts of his supporters fall flat. Summers has proved the old rule: supporters will be keen to attest that the person they want "back in" has nothing but the noblest of motives. The American people would be justified in having their doubts.

(The writer is publisher and editor-in-chief, theglobalist.com)

How good are our banks?

Tamal Bandyopadhyay :Livemint : Sun, Aug 18 2013. 03 03 PM IST

The banking industry is showing signs of severe stress due to deterioration in quality of assets and growing NPAs

Gross bad assets of at least one bank—Central Bank of India—exceeded 6% of its advances in the June quarter. For another six banks, four of which are majority owned by the government, they are above 5% of loans. Gross bad assets of five more banks, all of them are in the public sector, in June have been more than 4% of their loan books. After setting aside money for bad loans, net non-performing assets (NPAs) of one bank in June have been in excess of 4% and that of seven banks over 3%. Net NPAs of the State Bank of India and Punjab National Bank, India’s largest and second largest lenders, have been close to 3%. India’s Rs.80 trillion banking industry is showing signs of severe stress as Asia’s third largest economy is slowing for a variety of reasons.

In the June quarter, gross NPAs in the banking system grew by 12.02% to Rs.2.06 trillion and formed 3.85% of the industry’s advances. I don’t have the net NPA figures but even gross NPAs are a good indicator of the banking system’s health. It was 3.23% in March. Since March 2009, when gross NPA was 2.28%, it has been growing progressively every year barring fiscal year 2011, when both gross and net NPA ratios dropped. Between March 2009 and March 2013, net NPA of the banking system has risen from 1.06% to 1.56%. In the June quarter, it has risen further.

The bad assets in isolation do not reveal the gravity of the problem. They need to be seen along with restructured assets. The combination of gross NPAs and restructured assets in March 2013 has been 9.25%.

The deterioration in quality of assets can be assessed looking at the accretion of fresh NPAs, or the so-called slippages. In March, this ratio has been 2.72%, up from 2.05% in March 2011. The combination of fresh slippages and fresh restructured advances as a percentage of total advances in March 2013 has been 5.91%, more than double of what we had seen in March 2011—2.86%.

In each of these categories, the public sector banks are the worst affected. Their counterparts in private sector are in a far better shape. This tells us certain unpleasant truths about our public sector banks that account for around 70% of the industry—poor credit risk assessment, disbursal of loans and supervision.

Things can get worse for a couple reasons:

One, with the sharp depreciation in local currency, Indian corporations’ ability to repay foreign loans will be dented. They have exposure to foreign currency borrowing to the tune of $170 billion and between 30% and 60% of that has been hedged. The hit will be on the unhedged portion and there will be impact on companies’ balance sheets. Naturally, these companies will find it difficult to repay bank loans.

Two, though the overseas advances by Indian banks’ foreign branches rose by 15.03% in March, their bad assets grew by at least 43%. Gross NPAs in overseas loans have grown from 1.41% in March 2012 to 1.76% in March 2013 but they will swell as the borrowers are mostly Indian companies. How will they service loans taken from foreign branches of Indian banks when they are finding it difficult to service domestic loans?

As if these are not enough, there are problems in banks’ investment portfolio too. With sudden tightness in liquidity, bond yields have been on the rise. Prices and yields move in opposite directions. Till about a week ago, the impact was mostly on the shorter end and the yield on 91-day treasury bills was trading close to three percentage points higher than the 10-year bond yield but now the spillover effect has caught on.

On Friday, the benchmark 10-year bond yield ended at 8.895%, almost at its three-year high. Since 22 May, when US Federal Reserve chief Ben Bernanke first hinted at bringing to close monetary easing that led to the flight of money from equities and debt, the 10-year benchmark yield has risen 173 basis points (bps), from 7.167% to 8.895%. One bps is a hundredth of a percentage point.

The banks will have to make good the depreciation in their bond portfolio by setting aside money. Hardening of yield by 100 bps on banks bond portfolio which is not shielded from the depreciation—the bonds kept in the so-called available for sale (AFS) and held for trading (HFT) categories—is close toRs.30,000 crore. The banks do not take hit on the bonds that are part of held to maturity (HTM) basket even after their value depreciates. Bond yields dropped in April and the first half of May and, eager to take advantage of the falling yields, public sector banks increased the size of their tradable portfolio from 29% of their bond portfolio in March to over 34% in June. That has exposed them to interest rate risk and depreciation loss.

A Reserve Bank of India (RBI) calculation puts the depreciation figure for the public sector banks atRs.21,500 crore, based on their bond portfolio in June. Since then, yields have risen further.

The gross NPAs of Indian banks in March 1994 were 19.07% and for the next seven years, till March 2001, they remained in double-digits. If the banks could survive that phase, they would definitely come out of the current crisis too. But at what cost? They will have to set aside money both for rising bad assets and depreciation in their bond portfolio. This will hit profitability. As profits erode, they will need to infuse fresh capital if they want to expand assets. Under the global Basel III norms, that came into play in April, they would need Rs.5 trillion capital in next five years. Unless there is a dramatic recovery in quality of assets, they would need more.

Tamal Bandyopadhyay keeps a close eye on everything banking from his perch as Mint’s deputy managing editor in Mumbai. He is also the author of A Bank for the Buck, a book on HDFC Bank.

Online transfer of PF accounts service in last week of August

ET :PTI :18 Aug 2013

NEW DELHI: Retirement fund body is all set to launch online transfer of PF accounts on changing jobs by the end of this month, benefiting over 13 lakh subscribers every year who go through a time-consuming process. 

Employees' Provident Fund Organisation (EPFO) has got very encouraging results from the online testing of the service and will be able to launch the service during the last week of this month, a source privy to the development said. 

According to the source, the EPFO will conduct a live testing of service from Monday onwards whereby workers of some selected establishments would be allowed to file their transfer claims online. 

EPFO had started registering digital signatures of employers from July 25, which is a prerequisite for providing the facility and got an overwhelming response from employers particularly from the tech-savvy firms. 

As expected establishments which constitute 80 per cent of the transfer claims from sectors like IT, came forward to register their digital signatures. The body had managed about 6.9 lakh establishments in 2011-12. 

Once the service is launched, subscribers would be able to apply online for transfer claims through their employers. It has set up a central clearance house for the purpose. 

During 2012-13, 107.62 lakh claims were settled, of which 88 per cent were processed within 30 days, as prescribed by the body's citizen charter. 

EPFO expects 1.2 crore claims in 2013-14, including around 13 lakh PF transfer claims. It has planned online settlements of about 10 lakh transfer claims of tech-savy applicants from industries such as IT, this fiscal. 

The body has also planned to reduce the time for transfer of PF account to 3 days through this online service. 
However, according to its citizen charter, the transaction should be completed in 30 days.

Former Wipro CEO Girish Paranjpe emerges as frontrunner to lead iGate

 N Shivapriya, ET Bureau | 19 Aug, 2013, 06.49AM IST

BANGALORE: Former Wipro co-CEO Girish Paranjpe has emerged the frontrunner to lead technology services company iGate, which has been searching for a CEO after it fired Phaneesh Murthy in mid-May.

Paranjpe and one other backup candidate have emerged as the final contenders for the position in a search being undertaken by headhunter Russell Reynolds Associates. Several high-profile candidates, including former Patni CEO Jeya Kumar, and Infosys director Ashok Vemuri, have apparently dropped out. But Salil Parekh, who is currently heading Capgemini's application services and financial services business unit, could still be in the reckoning.

"Paranjpe is the favourite and will most likely take up the offer. But he is yet to accept it," said a person aware of the development.

The person aware of the development saidiGate is looking to close the search process soon.

After Paranjpe left Wipro in 2011, he worked as the managing director of international operations for US-based fuel-cell maker Bloom Energy. Before he became the joint-CEO of Wipro along with Suresh Vaswani, he was heading the finance solutions practice, which grew from about $50 million (Rs 310 crore) to $1 billion (Rs 6,200 crore) under his watch.

iGate said recently that it hopes to have a new CEO by fall, which is end-August or early-September. The company did not reply to an email seeking comments for this report.

Paranjpe said he "did not want to comment on rumour". Shares of the New Jersey-based company, which has most of its 30,000 employees based in India, have been rising steadily even after Murthy's exit. After sinking to $14 when Murthy was sacked for not disclosing a sexual relationship with an employee, the Nasdaq-listed stock has risen to $22 apiece. Unlike earlier, when most CEOs were from engineering or technical backgrounds, increasingly IT companies are looking for candidates with varied profiles as the nature of outsourcing market is changing.

"The premium is for leadership, which can work on demand generation and not so much supply management," said R Suresh, managing director, RGF India, part of Recruit Company, Japan's largest executive search and human resources consulting company. "A significant part of the leadership team in the big five IT firms has grown from the technical and supply sides and these are invariably overlooked by hiring companies."

Paranjpe is a chartered and cost accountant.

The new iGate CEO will have the challenges of retaining and growing business from the second-largest client Royal Bank of Canada, which contributes 12% of revenues. After allegations of flouting of Canadian visa rules, there were fears that iGate may be replaced as the service provider. Further, tying up the loose ends from iGate's leveraged buyout in 2011 of Patni Computer Systemsa firm three times its revenues then, will also be a key priority.

Founded by Sunil Wadhwani and Ashok Trivedi, iGate had a little over $1 billion in sales in 2012 and is backed by private equity fund Apax Partners. The company is aiming for $3 billion in sales in 2017.

Malayalam guide to financial literacy

BL:VINSON KURIAN :THIRUVANANTHAPURAM, AUG. 18: 2013

Inclusive banking may have moved to the top of the agenda in the country, but patronising a bank doesn't always mean that people escape the attention of moneylenders and other unscrupulous elements.

To avoid them, and the dangers they bring, calls for financial literacy. 

Financial literature in the vernacular could go an extra mile in reaching out to the rural poor and the unbanked at large.Inclusive banking may have moved to the top of the agenda in the country, but patronising a bank doesn’t always mean that people escape the attention of moneylenders and other unscrupulous elements.

SHARING EXPERTISE

This is exactly what set V. Prabhakaran Nair, general manager of Kerala State Cooperative Bank and a former assistant general manager of State Bank of Travancore, thinking in this direction.

He has 40 years of a full-time career to bank on. He thought that the best possible manner of meaningful intervention would be to share with the public expertise acquired from vast exposure to the field.

The result was a handy book in Malayalam, titled, Adhunika Banking Indiayil (Modern Banking in India), which is now going into a second print run.

BANKING SERVICES

Nair recalls that even after 66 years of Independence, as much as 60 per cent of the country’s population is still not able to enjoy the benefits from mainstream banking.

The excluded people do not know how a bank functions; different types of deposit accounts and how they can be opened; how to apply for credit and eligibility thereof, among others.

People also have the right to be informed of various banking services available and ways of registering complaints in case of their denial.

Those in the rural outback are mostly unaware of these, which calls for intensifying financial literacy drive in these areas.

LUCID STYLE

The book that Nair has authored, which runs to no more than 138 pages, should help authorities with the task in the State of Kerala.

Apart from dealing with primary banking functions, it deals with the latest developments ranging from internet/mobile banking; credit/debit/AT cards; right to information; to credit rating agencies.

It has got separate sections also on such issues of contemporary interest as bad loans, educational loans, and functioning of debt recovery tribunals as also an introduction to financial and security markets.

Banking ombudsman, cooperative banking, Islamic banking and regional rural banks are other useful topics dealt with in a lucid style and simple language.