An interesting article by Rajeev Malik on why the mandarins of North Block should keep their mouth shut! But, then what happens to the journalists who cover finance ministry?
On a serious note..RBI has always been an offshoot of the finance ministry and not as a stand-alone entity. One, the corner room is a political appointment done by the finance minister in consultation with the powers that-be and two, most of the time RBI takes cue or signals from the finance ministry. Rarely (in the past decade) have i seen that RBI passing on cues to the ministry...be it on advances, interest rates, forex, markets!! FM almost has a say on each and everything.
The other intersting thing which amuses me no end is the appointment of chiefs of state-run banks. While, for almost each and everything the bank looks upto RBI...in the case of appointments of senior level staff including that of the CMD..FM committee takes the final call. No wonder...one always gets to see lot of cmds loitering, lobbying for postings!
Appointments are, however, a different story, which needs several posts with several skeletons waiting to tumble out of the cupboard! Will leave that for someother time...but, meanwhile, enjoy the read:
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Government is from Mars, RBI from Venus
There is a huge difference between speaking/writing and communicating.
And in the world of financial markets, policymakers should be engaged in constant communication in order to manage expectations. Indeed, the need for more effective communication is even more important in the current messy setting of global finance, where everyone is essentially flying in the dark with few working instruments.
Price discovery has to be left on its own within a framework of a clear policy framework. The underlying need for occasional handholding via communication is mainly to smoothen financial assets' price gyrations, if there is a sense that either the markets are on a wrong track or, if they are broadly on the right track, their expectations are becoming unrealistic.
New relevant information, especially about policy shifts, is precious but is often asymmetrical. It is policymakers' responsibility to nudge market expectations from time to time with formal and informal verbal and/or written comments.
There has been a lot of noise over how much market expectations were off-course over the recent vote of account in which the government preferred to follow convention despite the unprecedented nature of the current economic crisis.
In any case, there was little scope for doing much simply because the government had already announced some meaningful measures earlier, and the anticipated fiscal bleeding did not offer much flexibility.
But there was still some room for additional measures owing to the unprecedented nature of the current crisis. After all, former finance minister Jaswant Singh did not refrain from using the vote of account in 2004 to announce a slew of populist measures.
Clearly, the urgency now is greater than what Singh felt five years ago to deviate from convention.
Why were market expectations so far off-course, and why was nothing done to dampen that enthusiasm? Actually, the fact of the matter is that comments in the print and electronic media from some ministers, some unnamed ministerial officials, and those perceived to be close to policy decision-making apparatus only fuelled such wild expectations.
Indeed, Reuters in a February 10 dispatch quoted the head of the PM's Economic Advisory Council as indicating that the government may cut taxes and unveil further steps to stimulate the economy in its Interim Budget.
Asked if tax cuts could be announced, he reportedly replied: "That is likely". Note the choice of "likely", not "possible" or "probable" or "perhaps", or just "wait and see".
From financial markets' perspective, the ministry of finance and the Reserve Bank of India [Get Quote] are among the two relevant policymakers that frequently communicate with the markets. In recent years, the EAC under its former chairman, C Rangarajan, also emerged as a somewhat independent entity offering advice on some key macro issues that also contained some policy signals.
For example, it was the EAC that correctly brought the focus on and the increased transparency to the government's off-Budget subsidies via special bonds. In the absence of the EAC, perhaps the finance ministry would have been happy to avoid putting any number to these bonds, and the RBI would have been too much of a team player to say anything in public.
There is a lot that ministries in general and finance ministry in particular can learn from the RBI, even though the RBI is not perfect -- few institutions in India are -- it gets the job done despite the constraints it faces.
One, the RBI always offers one considered view, and differences -- and there are bound to be variations in opinion -- are for internal airing only.
In contrast, the finance ministry has often appeared to be engaged in mental gymnastics, relying on thinking-out-aloud in the media.
Two, there are almost no unofficial comments from the RBI, whereas going by the number and frequency of quotes attributed to unidentified officials (sometimes reportedly senior officials), the finance ministry appears to be dripping with unofficial commentary.
Three, the RBI makes sure that complete homework is done when presenting anything to the markets. By contrast, when the vote-on-account was presented, it was initially not clear where the additional borrowing was going to come from. Investors sold off bonds, and seemed placated only when it was hinted that the extra funds would come from the unwinding of Market Stabilisation Scheme bonds.
How do Indian policymakers fare when compared with others in the Asian region? Rather poorly, in my humble opinion.
From personal experience, Indian policymakers (including politicians) tend to over-promise but under-deliver, while in most other Asian countries, actual delivery is better than the targets set, partly owing to conservative targets. One simple conclusion of that difference is that, by over-promising, Indian policymakers suffer from a credibility gap that is of their own making and something only they can fix.
Differences over the economic diagnosis and policy prescriptions are there in every country, but in India the dirty laundry is washed in public (and is still not cleaned!). There are too many "official" people hogging the media limelight, sometimes making comments without appreciating the significance of their implications for market expectations.
Frankly, there is scope for the RBI to improve its communication and signalling even more. RBI governor D Subbarao seems to be building on the improvements put in place by his predecessor, YV Reddy, and has made a small start in the latest quarterly policy statement -- it is significantly shorter than previous ones.
However, it is still one of the longest monetary policy statements in the world, and continues to mistake the number of pages used with policy clarity and guidance. Not to mention that inaction in both October and January policies raises questions over the relevance of quarterly policies.
One of the key difficulties for the RBI in recent years has been an overly and overtly vocal finance ministry that has appeared to publicly interfere with monetary policy signals from the RBI.
This interference has come despite the ministry seemingly unable to do its own job of properly adding up the Budget numbers, and at times appearing unappreciative of the global pressure points for the broader macro-policymaking.
Essentially, the RBI often seems like a vacuum cleaner for the fiscal mess created by the government, even as it perhaps feels more constrained in its policymaking.
The bottom line is that, in contrast to the rest of the region, there are way too many people in the government talking of what the RBI is going to do, as opposed to what it might or could do. To undermine the central bank could also mean hurting investor confidence.
Perhaps, Prime Minister Manmohan Singh should have a teach-in to check the damage from the ongoing media diarrhoea of some of the stakeholders in the government.
The author is head of India and Asean economics at Macquarie Capital Securities (Singapore). Views expressed are personal
(This article was written before the government decided to cut excise and service tax levies across the board, eight days after it chose not to do anything in the Interim Budget)
Thursday, June 18, 2009
Sunday, June 14, 2009
FOR A CHANGE...!!!
And, for a change...
Let us soak ourselves into the strains of this wonderful tune...far away from the world of business, politics and war.
An ode to love and friendship... for all the wonderful times spent with such lovely people over the years.
TO all those...who stood by me even when my chips were down and inspired me to excel...to all those with whom i had differences of opinion and went separate ways...and an ode to my college-group, which broke-off for posterity..never to meet again!!!
The tune has been composed by Indian rock band Agnee for one of MTV program..
http://www.youtube.com/watch?v=JCNXt00fRJgThursday, June 11, 2009
WHO FUNDS OUR "EYES" AND 'EARS"
WHO FUNDS OUR MEDIA COMPANIES??
Here's a report from one of my sources. Dig deep if you want to!!!
NDTV: Funded by Spain-based Gospels of Charity, which champions the spread of communism across the world.
Reason for funding: Prannoy Roy's wife is Radhika whose sister is Brinda Karat. Brinda's hubby Prakash Karat is the General Secretary of the Communist party of India CPI(M).
CNN-IBN: Funded by Southern Baptist Church, a US-based organisation. The Church annually allocates $800 million for promotion of its channel. Run by Rajdeep Sardesai, Raghav Bahl and Sameer Manchanda.
Bennet & Coleman: (which publishes ToI and airs Times Now...on way to launch ET NOW
Funded by World Christian Council and by an Italian Robertio Mindo, who is also a close relative of Sonia Gandhi.
(Btwn, to be fair to B&C..they picked up a stake in our company)
Asian Age and Deccan Chronicle: Is owned by a Saudi Arabian Company with its chief Editor M.J. Akbar.
Gujarat riots which took place in 2002 where Hindus were burnt alive,
Rajdeep Sardesai and Bharkha Dutt working for NDTV at that time got around 5 Million Dollars from Saudi Arabia to cover only Muslim victims, which they did very faithfully... Not a single Hindu family was interviewed or shown on TV whose near and dear ones had been burnt alive, it is reported.
Tarun Tejpal ofTehelka.com regularly gets blank cheques from Arab countries to target BJP and Hindus only.
Here's a report from one of my sources. Dig deep if you want to!!!
NDTV: Funded by Spain-based Gospels of Charity, which champions the spread of communism across the world.
Reason for funding: Prannoy Roy's wife is Radhika whose sister is Brinda Karat. Brinda's hubby Prakash Karat is the General Secretary of the Communist party of India CPI(M).
CNN-IBN: Funded by Southern Baptist Church, a US-based organisation. The Church annually allocates $800 million for promotion of its channel. Run by Rajdeep Sardesai, Raghav Bahl and Sameer Manchanda.
Bennet & Coleman: (which publishes ToI and airs Times Now...on way to launch ET NOW
Funded by World Christian Council and by an Italian Robertio Mindo, who is also a close relative of Sonia Gandhi.
(Btwn, to be fair to B&C..they picked up a stake in our company)
Asian Age and Deccan Chronicle: Is owned by a Saudi Arabian Company with its chief Editor M.J. Akbar.
Gujarat riots which took place in 2002 where Hindus were burnt alive,
Rajdeep Sardesai and Bharkha Dutt working for NDTV at that time got around 5 Million Dollars from Saudi Arabia to cover only Muslim victims, which they did very faithfully... Not a single Hindu family was interviewed or shown on TV whose near and dear ones had been burnt alive, it is reported.
Tarun Tejpal of
Saturday, June 6, 2009
INFRASTRUCTURE: BACK ON THE SHELVES
Elections are over but it will be still sometime before the long, dry, parched season for our leaders that be will be over!!
With, corporate activities only focussed on consolidation and survival --"expansion" being a taboo word in the world of "recession"-- the bucket to collect the trickle down effect of expansion is lying dry, rusty and neglected in the corridors of power. (am tempted to write an autobiography of the 'bucket')
The going been bad for sometime..no fresh proposals for industrial licences, approvals...no real estate deals..no M&A transaction taking place..no corporate fights..Uffffffff!! whats happening to this world?? Its turning ugly!! and, to top it..the election blew a big hole!!
I have always erudited the virtues of infrastructure projects...It kills two birds with one stone!! The tap is always wet and everybody including the media are satisfied with the development work of a developing nation.
Now that elections are over and time to fill the bucket..infrastructural projects are flying fast and furious from the government shelves...Irrigation projects, housing for weaker section of the society, state roadways, power, layout development..its all up for grabs!!!
Ok!!! here's the key to get some projects:
Irrigation: size of the project: rs 1,500 crores. Kickback: 5 percent. 50% on getting the contract and 50% over running bills.
Housing: Size/rs 1000 crore: Kickback: 15% -- 5% before one gets the contract.5% on getting the contract and 5% over running bills. (Imgaine you have to part with 15% of your profit after all the hard work, sweat you have put in)
The rationality of the paybacks are on these lines: "The government pays a mobilization advance of 15 percent of the project against a BG. Which, means nothing comes from the pocket of the businessman. And, one is still left with abt 5 percent of the contract value to kickstart the project."
Was privy to a meeting where the person that be-in-charge explains: "We have devised it in such a way that you will make profit..whatever excess profit is there..thats for us. Am giving you work...where do you get contract these days. You know the situation in America..very bad!! "If you have done government contracts previously then you will understand and know how to make profits."
We now know why roads crumble just after a monsoon..why, theres a seepage in the monsoon...why driving a nail into the wall is so difficult these days...why drains are clogged!!! Blame it on 'QUALITY'!!!
With, corporate activities only focussed on consolidation and survival --"expansion" being a taboo word in the world of "recession"-- the bucket to collect the trickle down effect of expansion is lying dry, rusty and neglected in the corridors of power. (am tempted to write an autobiography of the 'bucket')
The going been bad for sometime..no fresh proposals for industrial licences, approvals...no real estate deals..no M&A transaction taking place..no corporate fights..Uffffffff!! whats happening to this world?? Its turning ugly!! and, to top it..the election blew a big hole!!
I have always erudited the virtues of infrastructure projects...It kills two birds with one stone!! The tap is always wet and everybody including the media are satisfied with the development work of a developing nation.
Now that elections are over and time to fill the bucket..infrastructural projects are flying fast and furious from the government shelves...Irrigation projects, housing for weaker section of the society, state roadways, power, layout development..its all up for grabs!!!
Ok!!! here's the key to get some projects:
Irrigation: size of the project: rs 1,500 crores. Kickback: 5 percent. 50% on getting the contract and 50% over running bills.
Housing: Size/rs 1000 crore: Kickback: 15% -- 5% before one gets the contract.5% on getting the contract and 5% over running bills. (Imgaine you have to part with 15% of your profit after all the hard work, sweat you have put in)
The rationality of the paybacks are on these lines: "The government pays a mobilization advance of 15 percent of the project against a BG. Which, means nothing comes from the pocket of the businessman. And, one is still left with abt 5 percent of the contract value to kickstart the project."
Was privy to a meeting where the person that be-in-charge explains: "We have devised it in such a way that you will make profit..whatever excess profit is there..thats for us. Am giving you work...where do you get contract these days. You know the situation in America..very bad!! "If you have done government contracts previously then you will understand and know how to make profits."
We now know why roads crumble just after a monsoon..why, theres a seepage in the monsoon...why driving a nail into the wall is so difficult these days...why drains are clogged!!! Blame it on 'QUALITY'!!!
Wednesday, May 13, 2009
SIMILARITY BETWEEN UP AND KARNATAKA
Whats the similarity between Taj Corridor, Ganga Expressway and the latest addition the 1,100 crore rupees hydel power project in karnataka??
All of them were initiated without the statutory environmental clearances!!
While, the fate of the first two (read: scam ridden) lies in a state of suspended animation...i mean confided within the four walls of the judiciary..i hope this Karnataka state govt initiative doesn't meet the illustrious fate of Taj and Ganga projects.
State govt officials (read ministers!) are hopeful that the project will soon be cleared by the environment ministry, which means "money" taken neednt be returned while more are on the way.
Infrastructure has and will be the cash cow for most ruling parties. While, i do understand the need of money to run a party...i fail to understand why earn in a dubious or controversial way, which gives the opposition a chance to point fingers or at worst call strikes and bandhs.
Karnataka, a mineral richdeposit state (iron ore, gold..), IT, real estate..am sure there are plenty of opportunities of this BJP-led govt to earn some cash.
Anyway, some key stats on the power project. Hope, the project fructifies to bring some respite during the scorching Feb-April period of namma bengalurus..am i saying that seven-eight hours of power cut during peak hours will be a thing of the past?? Lets see!!
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VITAL STATS
*** The first-phase of the 1,100 crore rupeees hydel power project in Gundia (Karnataka) was kickstarted yesterday (Saturday) by the state's chief minister B S Yeddyurappa.
*** the project is yet to be cleared by the environment ministry as it is still weighing the cons of the environmental impact.
*** The Gundia unit under the ageis of Karnataka Power Corporation Ltd (KPCL) will produce 613 million units of power yearly and is expected to be commissioned by 2013-14 financial year.
*** environmental ministry losing sleep over the project's impact on the already fragile eco-system of the Western ghats. AS:
**Villages to be affected: 12
**Land losers: 160 families
**Submersion area: 708 hectares
**Land acquired/required: 974 hectares
R K Laxman probably is correct! But, hopefully the project doesnt meet a similar fate.
All of them were initiated without the statutory environmental clearances!!
While, the fate of the first two (read: scam ridden) lies in a state of suspended animation...i mean confided within the four walls of the judiciary..i hope this Karnataka state govt initiative doesn't meet the illustrious fate of Taj and Ganga projects.
State govt officials (read ministers!) are hopeful that the project will soon be cleared by the environment ministry, which means "money" taken neednt be returned while more are on the way.
Infrastructure has and will be the cash cow for most ruling parties. While, i do understand the need of money to run a party...i fail to understand why earn in a dubious or controversial way, which gives the opposition a chance to point fingers or at worst call strikes and bandhs.
Karnataka, a mineral richdeposit state (iron ore, gold..), IT, real estate..am sure there are plenty of opportunities of this BJP-led govt to earn some cash.
Anyway, some key stats on the power project. Hope, the project fructifies to bring some respite during the scorching Feb-April period of namma bengalurus..am i saying that seven-eight hours of power cut during peak hours will be a thing of the past?? Lets see!!
----------------
VITAL STATS
*** The first-phase of the 1,100 crore rupeees hydel power project in Gundia (Karnataka) was kickstarted yesterday (Saturday) by the state's chief minister B S Yeddyurappa.
*** the project is yet to be cleared by the environment ministry as it is still weighing the cons of the environmental impact.
*** The Gundia unit under the ageis of Karnataka Power Corporation Ltd (KPCL) will produce 613 million units of power yearly and is expected to be commissioned by 2013-14 financial year.
*** environmental ministry losing sleep over the project's impact on the already fragile eco-system of the Western ghats. AS:
**Villages to be affected: 12
**Land losers: 160 families
**Submersion area: 708 hectares
**Land acquired/required: 974 hectares
R K Laxman probably is correct! But, hopefully the project doesnt meet a similar fate.
Tuesday, May 5, 2009
IDEAS OF ECONOMIC FORECAST
And, this is one of my best read in recent times!!! A manual by an ex-colleague of mine for all budding economists!! Kudos to Goldman Sachs and their likes
Fake experts, Faulty Forecasts
Will leave the comments for your take...ENJOY!!
Fake experts, Faulty Forecasts
Will leave the comments for your take...ENJOY!!
Saturday, May 2, 2009
ALL NOT CRICKET
Mr.FAKE IPL PLAYER has thrown up very interesting revelations...Cricketers of all hue and cry are enjoying the warmthness of South African petites!!! Not that it was a secret but information which was confided within the realms of the cricketing fraternity including the ubiquitous journalists!!
From Little John to Little Monster...from Mangal Pandey to Lordie...Bijlani to Roy...Nagma to Padukone...the list goes on and adds up too!!
What is it that makes this combo so potent...so hot??? Power!!! Or is it success??? Or is it a combo of glamour, power and the "need to arrive" that makes the bees swarm to mate!! What makes Lordie to marry a certain Bollywood star only to negate it...or a former Indian captain to fall in the laps of a certain Khan-ex??
What makes them put their hard-earned careers at stake...a career, which not only boasts of a short-shelf life but where people are waiting to usurp at the slightest possible opportunity!!
What makes a certain Mrs Sen -- and mother of two offspring -- to spend within the confines of Mr. Khan’s room??? Or a soap opera to derive a legacy from Mr. Jamaican calypso??
Is this what astrology defines as the conjunction of VENUS and MARS...Beauty in the realms of power or is it "power & success" hunting for devineness..or it that the "pressures of pull" are from all and sundry???
Can I explain this as a manifestation of success!! Recognition a by-product or rather a knock-on effect of success?? Isn’t Recognition is what drives people to "Citius, Altius, Fortius!!! From Ronaldo to Mr.Clinton to the mundane Auto driver..isn't that what drives people to excel..the need or the urgency to be recognized by the society at large!!!
So, why this indiscretion??? Is it over-confidence or is it arrogance which leads successful men and women to philander?? While, am not the first and surely wont be the last to speculate on the cause and the effect...common sense in me tells that the "Achilles tendon" is the "Methodology of dealing with recognition"...a miss, a slip and you have hit the highway of the Road to Hell!!!
Recognition, a sub-set of success is a functional dynamic process...its fickle and sitting on the edge of a precipie..Be in it's empathy but if are in it's sympathy..there are chances that one might lose its foothold!! Did i hear somebody purring "Monroe"??? Or a-la-desi-Kambli???
From Little John to Little Monster...from Mangal Pandey to Lordie...Bijlani to Roy...Nagma to Padukone...the list goes on and adds up too!!
What is it that makes this combo so potent...so hot??? Power!!! Or is it success??? Or is it a combo of glamour, power and the "need to arrive" that makes the bees swarm to mate!! What makes Lordie to marry a certain Bollywood star only to negate it...or a former Indian captain to fall in the laps of a certain Khan-ex??
What makes them put their hard-earned careers at stake...a career, which not only boasts of a short-shelf life but where people are waiting to usurp at the slightest possible opportunity!!
What makes a certain Mrs Sen -- and mother of two offspring -- to spend within the confines of Mr. Khan’s room??? Or a soap opera to derive a legacy from Mr. Jamaican calypso??
Is this what astrology defines as the conjunction of VENUS and MARS...Beauty in the realms of power or is it "power & success" hunting for devineness..or it that the "pressures of pull" are from all and sundry???
Can I explain this as a manifestation of success!! Recognition a by-product or rather a knock-on effect of success?? Isn’t Recognition is what drives people to "Citius, Altius, Fortius!!! From Ronaldo to Mr.Clinton to the mundane Auto driver..isn't that what drives people to excel..the need or the urgency to be recognized by the society at large!!!
So, why this indiscretion??? Is it over-confidence or is it arrogance which leads successful men and women to philander?? While, am not the first and surely wont be the last to speculate on the cause and the effect...common sense in me tells that the "Achilles tendon" is the "Methodology of dealing with recognition"...a miss, a slip and you have hit the highway of the Road to Hell!!!
Recognition, a sub-set of success is a functional dynamic process...its fickle and sitting on the edge of a precipie..Be in it's empathy but if are in it's sympathy..there are chances that one might lose its foothold!! Did i hear somebody purring "Monroe"??? Or a-la-desi-Kambli???
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