Saturday, February 19, 2011


Metro work is on full swing, roads are being widened and construction of flyovers have started mushrooming all over the city - All in the name of providing better infrastructure to (of) the people, by the people and for the people, and of course to make Bangalore an international city.

It feels the city is being plundered! The soothing plush feel is gone. It's now hot and dusty while cranes dot the skyline. Couple this with power cuts and serpentine traffic queues, which seems to get longer and move slower with every passing day, and the metamorphosis of Bangalore seems to be complete.

And, this pains me no end to see my city being killed "slowly, silently and softly."

And, here in lies a point! Why not create a new city named as “New Bangalore”?

Bangalore's history shows that the city metamorphosed in two phases: First, during the late 1960s when the government decided to make the city as the hub of country's Research and Development activities sprinkled with pubic sector enterprises. And, the second phase was when technology companies drove to Bangalore in hoards to set-up their bases.

What it created other than jobs was demand for housing and goods!

While the first growth movement was planned and fuelled by public money, the second was "laissez-faire" or incremental growth fanned by private money in pursuit of profit generation.

Real estate developers cashed in on this second phase of growth. Towers of residential blocks along with sprawling tech parks started coming up wherever land was available leading to unplanned growth and infrastructure bursting at the seams.

Data by Bangalore Development Authority shows that the population of the city grew by nearly 40 percent to 8 million over the past decade to 2010. And, is expected to touch 10 million within the next decade.

So, what are the options?

Urban town planners say the government should try to bring a "marriage" between the two phases of growth. Which means create the space and hand it over to the private enterprises or in other words a "Public Private Partnership" or PPP venture.

Globally PPPs are involved in a wide range of social and economic infrastructure projects. And are mainly used to build and operate hospitals, schools, prisons, roads, bridges and tunnels, light rail networks, air traffic control systems, and water and sanitation plants.

The International Monetary Fund refers public-private partnerships as "arrangements where the private sector supplies infrastructure assets and services that traditionally have been provided by the government." And Standard and Poor’s defines PPP as any medium- to long-term relationship between the public and private sectors, involving the sharing of risks and rewards of multi-sector skills, expertise and finance to deliver desired policy outcomes.

PPP projects are already being executed in Karnataka in public-utility sectors such as sanitation and drinking water.

So lets take this partnership one step forward: Lets create the "New Bangalore" city, which is similar to New Delhi where everything was planned and executed.

Let the government aggregate land and plan the new city. And, then form ventures with various infrastructure and housing development companies to build roads, building, sanitation and et al.

What these public-private ventures will also do is reduce the financial burden from both the parties and at the same time accelerate delivery of projects while maintaining quality.

The World Bank says that over the last decade the number of countries including both developing and the developed ones has significantly relied on PPP projects as the preferred financing scheme for infrastructure projects.

Analysts, however, caution that PPP projects should not lose sight of their goal and that is to deliver better quality services for the same amount spent by the public sector.

"We need to constantly innovate regulatory and financial structures for PPP projects to be successful as these projects are also looked through a political glass and involves both public and private money," explained Prakash Mallya, former chairman and managing director of state-run Vijaya Bank.

Jane Jacobs, an activist in urban planning and communities wrote in the Death And Life of Great American Cities "the essence of urban life lies in the exuberant diversity...the planner, who in addition to planning the physical environment, also wants to plan the lives of the people who will live within it."

And, that is exactly where the modern day government comes to play. Let the government be our planner as it has been entrusted to shape our future and make our life better.

In the winter of 1863, US President Abraham Lincoln had famously said, "government of the people, by the people, for the people shall not perish from the earth."

Let’s hope that the types of government that Lincoln meant are still in existence. Otherwise, those words may well be the President's famous last seen in the context of Indians.

Monday, June 7, 2010


Another interesting read on the subject called ECONOMICS and the tribe that practices it!!

"Why they failed to predict the global economic crisis—and why their help is still crucial to a recovery?"

Have also dug out some striking similarities between economics and astrology -- one, most of the times astrologers like economists fail to predict an outcome ...two, both are good at explaining an event/outcome in retrospective even though two fellowmen will hardly agree on the way forward.

And, third, inspite of all their shortcomings..we still flock to them or seek their advice.

Enjoy the read..and yes, am back after a hiatus!

What Good Are Economists Anyway?
By Peter Coy

Economists mostly failed to predict the worst economic crisis since the 1930s. Now they can't agree how to solve it. People are starting to wonder: What good are economists anyway? A commenter on a housing blog wrote recently that economists did a worse job of forecasting the housing market than either his father, who has no formal education, or his mother, who got up to second grade. "If you are an economist and did not see this coming, you should seriously reconsider the value of your education and maybe do something with a tangible value to society, like picking vegetables," he wrote on

Take that, you pointy-headed failures! Go jump off a supply curve!

To be fair, economists can't be expected to predict the future with any kind of exactitude. The world is simply too complicated for that. But collectively, they should be able to warn of dangers ahead. And when disaster strikes, they ought to know what to do. Indeed, people pay attention to economists at times like this precisely because of their bold claim that they know how to prevent the economy from sliding into a repeat of the Great Depression. But seven decades after the Depression, economists still haven't reached consensus on its lessons. The debate has only intensified in recent weeks.

To fight the downturn, Federal Reserve Chairman Ben Bernanke, Treasury Secretary Timothy F. Geithner, and National Economic Council Director Lawrence Summers are attempting an unprecedented combination of massive fiscal stimulus and extreme monetary policy. If it produces a sustained recovery—and there are some early signs of hope—they will look like heroes. For now, though, it's disturbing that they've had to resort to policy measures that in scale and scope are way outside what the economics profession had studied or even contemplated in recent years.

The rap on economists, only somewhat exaggerated, is that they are overconfident, unrealistic, and political. They claim a precision that neither their raw material nor their skill warrants. Too many assume that people behave like the mythical homo economicus, who is hyperrational and omniscient. And they take sides in quarrels that freeze the progress of research. Those few who defy the conventional wisdom are ignored.

Critics are scathing. Nassim Nicholas Taleb, the scholar of rare events who wrote Fooled by Randomness and The Black Swan, says: "We have to build a society that doesn't depend on forecasts by idiotic economists." Says Paul Wilmott, a quantitative finance expert: "Economists' models are just awful. They completely forget how important the human element is."

In the face of such withering criticism, it's tempting to ignore the whole profession. But that won't do. For one thing, getting out of this mess and making sure it doesn't happen again will require the very best thinking of a generation. Macroeconomists—that is, those who specialize in business cycles and growth—have made important contributions. For example, research in the 1970s helped many countries eliminate chronic high inflation by highlighting the importance of having a strong, independent central bank.

Even now, progress is being made. Scholars of all stripes are belatedly getting up to speed in modern finance. Because they are trained to think of financial markets as efficient, most economists weren't primed to spot the dangers posed by lax mortgage lending, overleveraged financial institutions, and impenetrably complex derivatives. "The time is absolutely right for new ideas to come in, much as they did in the 1930s and the 1970s," says Roger E.A. Farmer of the University of California at Los Angeles.

Besides, even if you're suspicious of economists' value, they are impossible to ignore. Here's why: Every idea you can think of for coping with this crisis is based on some supposition about the way the world works. Whether you realize it or not, all of those suppositions come out of one school of economics or another. As the British economist John Maynard Keynes wrote: "Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist."

So we had all better hope that the profession can get its act together. It won't be easy, because this crisis is rubbing salt in old wounds. It is reopening debates about one of the most contentious questions in macro, namely, the ability of government deficit spending (i.e., fiscal policy) to stimulate demand and get people back to work.

In January the fight over fiscal policy broke out in public after then-President-elect Barack Obama made what probably seemed to him a safe claim, saying: "There is no disagreement that we need action by our government, a recovery plan that will help to jump-start the economy." Not long after, some 250 conservative economists, in an open letter published in major newspapers, wrote: "With all due respect Mr. President, that is not true." Middlebury College economist David C. Colander, who himself is suspicious of the stimulus package, says: "The debate is reasonable. What's unreasonable is that we're undertaking it at this time" rather than decades ago.

Economists' worst sin is hubris. In the 1960s, free-market economist Milton Friedman persuaded virtually the entire profession that the Great Depression was caused by the Federal Reserve. That seemed to imply that better policy by the Fed, guided by economists, would prevent a recurrence. Bernanke, then a governor of the Federal Reserve, said as much in a 2002 speech for Friedman's 90th birthday that acknowledged the Fed's role in the Depression. He told Friedman: "You're right, we did it. We're very sorry. But thanks to you, we won't do it again." Famous last words.

Believing in the power of the Fed, economists mostly stopped researching the use of fiscal policy to fight recessions or depressions. What's more, recessions had become rarer and milder—the so-called Great Moderation. So who needed stimulus? Says New York University economist Xavier Gabaix: "Up until a year ago, you would look very old-fashioned if you were talking about optimal fiscal policy."

Mainstream economists' adherence to orthodoxy was also apparent in their casual dismissal of worries about bubbles in housing and stocks. Former Fed Chairman Alan Greenspan denied that a national housing bubble was even possible, since housing was not a single national market. He also brushed off the dangers of Wall Street concoctions such as derivatives. Only last year did he concede he was wrong. In Senate testimony, he said he was shocked to have found a "flaw" in his ideology, adding: "I have been going for 40 years or more with very considerable evidence that it was working exceptionally well."

Politics compounded the trouble. As a rough first cut, you can divide macroeconomists based on how concerned they are about economic instability. One group, in the tradition of Keynes, worries about self-perpetuating economic declines that leave the economy in a deep trough it can't escape. Members of this group say government needs to break downward spirals with the kinds of aggressive policies the U.S. is following now—cutting interest rates and raising government spending. The group includes Paul R. Krugman, the Princeton University economist and Nobel laureate; NYU's Nouriel Roubini, who was early in predicting a severe recession; and Yale University's Robert J. Shiller, who predicted the housing bust and the tech-stock bust.

Other economists have more confidence that the economy is self-equilibrating. They believe low interest rates and heavy deficit spending will be ineffective while leaving the U.S. with a mountain of debt. Count Harvard's Robert Barro in this camp, along with Chicago's Robert E. Lucas Jr., Arizona State University's Edward C. Prescott, and the University of Minnesota's Patrick J. Kehoe and V. V. Chari. No surprise, the equilibrium school mainly leans Republican, and the interventionist school seems to be crawling with Democrats.

Before this crisis, it seemed that economists might resolve their differences. The oft-combative Krugman, in the first edition of his textbook Macroeconomics in 2006, wrote that "the clean little secret of modern macroeconomics is how much consensus economists have reached over the past 70 years."

The mood now is uglier. On the left, Krugman says: "This is really fairly shameful, that we should be wasting precious months as a profession retracing debates that were settled 70 years ago." On the right, John H. Cochrane of the University of Chicago dismisses those who advocate Keynesian stimulus, saying: "Professional economists, the guys I hang out with, are not reverting to ancient Keynesianism any more than physicists are going back to Aristotle when they can't understand how fast the universe is expanding." There are some middle-of-the-roaders, such as Columbia University's Michael Woodford, who argue that macroeconomists are converging on a methodology for asking questions. But even Woodford agrees that "recent debates don't particularly make the field look unified."

The easiest criticism of macroeconomists is that nearly all failed to foresee the recession despite plenty of warning signs. In early September 2008, the median growth forecast for the fourth quarter was 0.2%, according to a survey by Blue Chip Economic Indicators. The actual outcome was a 6.3% annualized decline. The Fed didn't do any better. In July 2008, Fed officials projected unemployment in the fourth quarter of 2008 would end up between 5.5% and 5.8%. The actual number was 6.9%. Their projection for the fourth quarter of 2009, done at the same time, was for a range of 5.2% to 6.1%. Today, with unemployment at 8.5%, most forecasters expect the rate to be nearing double digits by the end of 2009.

Now that fiscal policy is back on the table, economists are fighting over the size of the ripple effect—or "multiplier"—of increased government spending. Interventionist economists think multipliers are large when the economy is operating below capacity—and it certainly is now. According to a Fed report on Apr. 15, one-third of manufacturing's productive capacity is going unused, the biggest share on record back to 1948.

Obama Administration officials believe that their fiscal policy is on the right track. The stimulus program "is putting a little more energy into the consumer," National Economic Council Director Summers told Maria Bartiromo. "Two months ago you couldn't find anything positive." Christina D. Romer, Obama's chief economic adviser and a historian of the Depression, said in March that "at some point, recovery will take on a life of its own." Until then, she said, government should watch closely "to make sure the private sector is back in the saddle" before easing off.

Other economists say increased government spending may actually depress private employment. At a Council on Foreign Relations event on Mar. 30, Chicago's Lucas called the Administration's multiplier math "kind of schlock economics."

The truth is, even backers of stimulus can't be sure it will work. As World War II ended, many economists worried that growth would lapse as military spending fell. Sewell Avery, the CEO of Montgomery Ward, was so anxious about a postwar depression that he refused to open new stores. Economists still aren't sure why he was wrong, so they can't say reliably whether fiscal stimulus will end this recession or just interrupt it. "Is it possible to engineer a durable recovery with fiscal expansion, or are you just buying time?" asks Krugman, who favors coupling stimulus with drastic action to fix the banks.

What, then, is the way forward? Once this crisis is past, the next agenda for macroeconomists will be to help make the economy far more robust—enough to survive the blunders of politicians, bankers, and economists of the future. Taleb, the scholar of unpredictability, notes that nature achieves robustness through a redundancy that economists would consider wasteful: two hands, two eyes, etc. Blake LeBaron of Brandeis University suggests preventing huge crises by tolerating small disturbances, the way foresters use controlled burns to eliminate flammable underbrush. Perhaps out of the ashes of failure will emerge a better macroeconomics profession.

Tuesday, September 1, 2009


The website claims that Skype is being sold to an investor group led by Andreessen Horowitz. Also, involved in the deal making are Index Ventures and Silver Lake Partners.

The website also reports the cost of acquisition will be around $2 billion and that Silver Lake Partners will foot the majority bill. The Andreeseen Horowitz fund can make single commitments of up to $50 million.


1. Josh Silverman is currently the CEO of the company..although its unclear whether he will continue to lead the firm post acquisition.

2. Skype reported revenues of $551 million last year and expects to touch a billion dollar revenue by 2011. Earlier, eBay, the current owner of the tech firm had said it will spin Skype into a separate company for listing purpose supposedly in 2010.

3. eBay had earlier acquired Skype in 2005 for $4.1 billion, although about $1 billion of that, an earnout, was never paid.

4. Skype is now in litigation with a company controlled by Skype's founding partners -- Niklas Zennstrom and Janus Friisover -- over the key VoIP technology.


The Indian economy is probably on the last leg of the contraction curve i.e if we go by the latest government data. The New Delhi-based Central Statistical Organisation or CSO says the GDP grew 6.1 percent y-o-y and by 0.3 percent sequentially.

With the growth curve moving into the expansion phase...its a matter of time before the excess M3 supply in the system stokes inflation. Which, technically means going forward the RBI/government will be training its guns to tame inflation and hope that growth will ride on its own...or in other words RBI will look upto Bernanke to fuel expansion.

Historically, however, thats been the story...economic growth in India was more a fallout of a global story and been hardly driven or planned by the government/RBI. But, then thats another story for another day.

So, are the days of lower interest rates on consumer loans over? My guess is that we have seen the last of rate cuts, which means interest rates from here on will either be steady or on the upward curve. Interest rates will hold steady for the next six months -- any tinkering in rates might stifle growth -- and then a 50 basis point hike.

Having said that..lets review our interest rate curve over the last seven years (Jan 2002-Sept 2009), which withstood the cycle of boom-to-near-bust.

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2009 4.00 4.00 3.50 3.25 3.25 3.25 3.25 3.25

2008 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 5.00

2007 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00

2006 5.25 5.50 5.50 5.50 5.50 5.50 5.75 6.00 6.00 6.00 6.00 6.00

2005 4.75 4.75 4.75 4.75 5.00 5.00 5.00 5.00 5.00 5.00 5.25 5.25

2004 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.75 4.75

2003 5.50 5.50 5.00 5.00 5.00 5.00 5.00 4.50 4.50 4.50 4.50 4.50

2002 6.50 6.50 6.00 6.00 6.00 5.75 5.75 5.75 5.75 5.50 5.50 5.50

Between Oct 2008- July 2009 interest rates on advances has been cut between 125-275 basis points by public sector banks, followed by 100-125 basis points by private banks and 125 basis points by five major foreign banks.

While, the reduction in term deposit rates between October 2008 and July 20, 2009 has been in the range of 125-325 basis points by public sector banks, 100-375 basis points by private sector banks and 125-300 basis points by five major foreign banks.

Now let’s compare the reverse repo rate between Oct 2008-July 2009 period with the 19-month period starting Aug 2003. While, this rate are now at a historical low the same doesn’t hold true for bank interest rates. Consumer loans are now priced upwards of 9 percent (in some cases 8 percent) while the BPLR is between 11.75-12.25 percent. That’s almost 200 basis point upside of 2003-2005 rates when consumer loans were available at 7 percent and BPLR were at 10 percent.

Given these conditions no wonder we have the RBI guv claiming that banks are in a position to cut rates further. While, the banks in a bid to safeguard their Net interest margins doesn’t subscribe to that view. So, is the RBI just a regulatory body who can advise/set-up a roadmap but without any power to enforce??

I guess the devil lies in the government borrowing programs...

To instill life into the dying economy..the government had injected about $5.6 trillion rupees ($115 billion) in the economy. Add to this a 21 percent pay rise for 5 million government employees and a farm loan waiver of $17 billion as part of election bonanza. To fund all these the government plans to raise a record 2.15 trillion rupees -- a hike of 50 percent than initially estimated -- through issue of bonds.

So, the yield on the key 7-year government bond have hardened and are now at a nine-month high of 7.43 percent as against a 4.80 percent rate in 2003/04. And, Investors who subscribe to these government bonds -- primarily scheduled banks, FIs -- are already demanding a premium on the coupon rate to subscribe to the 10-year bonds over one-year notes.

So, with a bond yield of nearly 8 percent on the back of widening fiscal wonder the consumer loan rates or lending rates are stuck at 9 percent. And, herein lies the devil!!

Tuesday, August 18, 2009


We just celebrated 'HER' 62nd birthday!! And, every time I celebrate her b'day and sing her song…an eerie feeling overcomes me…as the feeling of 'I/ME' gives way to 'WE'...the feeling of patriotism engulfs me...the feeling of pride, love, affection, brotherhood!!!

As a nation we have arrived...Indians as a percentage of being global are higher in the pecking order than they were a decade back...and here am not talking of the PIOs and NRIs who have already conquered various shores in different aspects of life. Am talking of Indians based out of India!!

We have a stronger economy, higher GDP which means more consumption, intellectual powers, advanced scientific innovations and so on and so forth...But, amidst all these conquests we haven't been able to eliminate the very lacunae that had severed us many seasons ago...the lacunae that consummated many lives and left thousands homeless...Worse, i guess, we are breeding that lacunae to serve our purpose as and when we want to!!

Otherwise, how else would one explain the drama of a certain Mr.Hasmi -- a failing movie star -- to hog headlines on prime time national television. Exploit the minority card...whip up communal feelings...and lo and behold suddenly masses starts taking cognizance of a star...more like a certain Miss Shetty resuscitating her sagging career on the back of racial abuse!

But, there’s a difference – while, one rose trying to defend her motherland…the other wants to benefit by dividing her motherland…It’s akin to killing the lady who gave birth to you, brought you up, gave you an identity, respect and the most important of all LOVE.

And, yet!! At the very first opportune moment he does exactly the opposite... stabs HER and his majority brethren…EN TU BRUTUS!!

Has the Hasmis forgotten 1947 when the country was divided along communal lines…a country that was etched out on religion lines…are these Hasmis trying to repeat 1947??...stoke the same feeling, foment trouble to serve their cause?? Otherwise how does one explain his statement that confusion arose out of miscommunication when the world did hear whatever he and his uncle proclaimed only a week back. Trust our ears, Mr.Hashmi!!

I was wondering what to present HER!! I don’t think need to look around any further…the gift of ‘UNITY’…the resolve to join hands and boycott people like HASMIs…people who are selfish, petty and driven by ones motives and destructive desires…people who doesn’t see life beyond themselves.

Thursday, July 2, 2009


The LEGEND Lives on...

"There's A Place In Your Heart
And I Know That It Is Love
and this place could Much
Brighter Than Tomorrow

And If You Really Try
You'll Find There's No Need To Cry
In This Place You'll Feel
That There's No Hurt Or Sorrow

There Are Ways To Get There
If You Care Enough
For The Living
Make A Little Space
Make A Better Place...

Heal The World
Make It A Better Place
For You And For Me
And The Entire Human Race."

An extract from MJ's HEAL THE WORLD

Sunday, June 28, 2009


It pains me no end to see my city being killed 'slowly, silently, softly'. And, all in the name of providing better infrastructure for (to) the people, by the people and of the people. And, of course for the "Common Wealth" games.

So, the era of flyover constructions are still god its almost a decade since flyover started mushrooming all over of Metro is on full swing...and, to top the latest addition is construction of multi-level car-parking.

South Delhi has taken the mazimum brunt...lavish wide roads cut down to almost single width ones, the tree-lined green covered roads has been uprooted to give it a barren look...pockets of jungles/open spaces have given way to multi-level car parking.

I felt my city being raped...its hot, dusty, serpentine traffic traffic queues moving at a snail pace, power cuts, cranes dotting the skyline...that soothing, plush feel of south delhi is history. And, therein have a point:

South Delhi, developed because of the Asian Games. Why cant the government instill life into Greater Noida when half of the infrastructure is already there. Why not develop Gurgaon?? Or for that matter Faridabad?? Why, cramp south delhi?? True, the government is building a new games village across the yamuna but why not also have new stadiums built there???

Is it due to lack of funds or due to the perennial differences between the Mayawati-ruled UP versus the congress-led Delhi?? Or, that Faridabad & Gurgaon falls in Haryana?? Why, cant two states jointly hosts these meets given that international events are jointly hosted too??

Do i smell the burning smell of politics?? And, this is exactly what pains me...politics of for-the-people is fast turning out to be against-the-people even in Delhi...a place, where politicians of diff shades of grey and black converge... a place, which boasts of being the home to a number of 24-hours television station..a place, which have survived and flourished cutting across it the atrocious muslim rule or the slavery of British Raj.

My, guess, is we will survive even this period!! But, now we are a matured democratic society...and, we ourselves need to determine our future..whats good for us, whats benefits us and what gives us pride!

Lets raise our voices...lets involve ourselves...lets love our cities!!! Wherever we live..wherever we ARE!!