O Country, My Country

In October this year we completed ten years of our return to India. Before this I had lived in India only for seven years. My wife and I had long agreed that when I stopped working we would move back to India. We did not consider any other option such as staying on in Hong Kong.  Now after a decade, we feel that our life in India has become like the volatile stock market  bouncing between hope and despair.

When we came back , India was shining. The BJP had just been voted out and Sonia Gandhi magnanimously handed over the job to Manmohan Singh. We were delighted. After all he had set in motion the liberalization of  the economy. As a renowned economist and a honest individual he would not only take the economy to great heights but set an example of a honest, clean government. He was the Prime Minister for two terms but unfortunately instead of scaling great heights, during his second terms he took us to the pits of corruption. While he was universally acknowledged to be personally honest, the same could not be said about the other members of his cabinet. Towards the end , there was a new scam everyday and corruption was rampant. What was depressing was that the amounts were not small. Each of them were in hundreds and thousands of crores and ran across the spectrum of the economy - from telecoms to coal mines, from agriculture to education, from  health care to social welfare. It was never ending. Persons involved ranged from politicians to police to businessmen to top government investigators.All the members of the coalition were involved one way or the other. Manmohan Singh put his hands up and said it was the compulsions of the coalition implying that he was held hostage by his partners. When the Prime Minister says that what can the common man expect ? So not surprisingly at  election time the Congress suffered a humiliating defeat.

As this was happening there emerged two stars on the horizon both non-members of  Delhi's Lutyens Club.  One was a seasoned but slightly controversial politicians whose pitch was not necessarily to vote for a BJP government, but  for Modi sarkar. The whole campaign was centered  around as strong "can do"type leader. The other was a "Jolhe Wala" IIT ex-bureaucrat,NGO activist Arvind Kejriwal.

Modi is the first Chief Minister to become  the Prime Minister. He has a track record of building up Gujarat, listening to investors, visiting China, Japan and other countries to see what they were doing right and what could be implemented here. The black mark against him were the riots in Gujarat where hundreds of Muslims were killed. However the courts absolved him. After his elections, he hit the ground running and flying, jetting from one country to another.Unfortunately  two of his ambitious plans, the modification of the Land Bill and the passing of the GST bill have run into a road block .The BJP while they have the majority in the Lok Sabha lacks it in the Rajya Sabha. The Congress party  "did onto BJP what BJP had done to them "when they were in power. BJP as the main opposition party  had blocked the passing of the bills during the previous government. The problem which Modi seems to be having is controlling the fringe elements in his own party. Almost every day someone utters some communal or controversial remark or comment which the media picks up and runs it twenty four seven. Opposition parties lead by the Congress quickly pick these up and use these as a stick to beat up on BJP.  It is ironical that Congress party members who  were responsible for the well planned killing of the Sikhs following Mrs. Gandhi's death are now trying to walk the moral high ground.

Similarly the other, Arvind Kejriwal of the Aam Admi Party after a false start made history by winning almost 97 percent of the Delhi State Assemble seats. Because of the way Delhi is governed the Lt.Governer controls most of the power with Aam Admi having  limited ability to implement many of the promises they had made during the campaign. Taking a leaf from Modi's political playbook Aam Admi has been running campaign advertisements extolling the Arvind Kejriwal government.Arvind Kejriwal the activist has morphed into  Arvind Kejriwal the politician who is trying to build a party around himself. 

What does this all mean for the common man ? Its pretty much business as usual. Corruption is still prevalent. Crime  especially against women and increasingly against minors continues. We are seeing no signs of Swatch Bharat. Garbage continues to be piled high. The traffic situation is getting worse.Delhi has been labelled as the most polluted city country in the world.

What does one do ? At the next election who do we vote for ? Of course one always has the option of the none of the above, but that does not help. There are some die hards (and to some extent so am I ) who  believe in TINATOM ( There is no alternative to Modi). Look at the other option and with your hand on your hearts ask your self whether you would really want to see any of  the opposition leaders as the Prime Minister ?

Apart from the bigger picture what bothers me is the issues we face on a day to day basis and what we see in our interactions.These are just a handful.

1. Over  the last  ten years I have been repeatedly been ripped off . It is now reaching a stage where I feel that out of every ten people about eight or nine people are dishonest or when ever they deal with you get the feeling that they are thinking "what is in it for me or how do I take advantage of you". Perhaps I am the sucker. I am reminded of the old Greek story about  Diogenes the Cynic who walked around Athens during the day with a lamp in his hand " looking for a honest man ".

2. In my dealings with the younger people ( not all )  I am amazed at how they have no qualms in taking oaths on their parents or if married on their children to convince you that they being truthful and then find out that you have fallen for it yet again. The sad part of this as I found out  is that their parents participate in their deception, hence it is no wonder that the children see nothing wrong with it. And here I am talking about kids who graduated  from some of the prestigious institutions in the country.

3. While the world's perception still continues of India being a poor country seeing the amount of money being spent on property including palatial houses and luxury goods, you are amazed. When we first came back , like all NRI's we felt that we were much better off than the average citizen in Delhi ( among the middle class ) and then were hit by the sticker shock ( of property , of clothes and increasingly for services ). There are a incredible number of people whose net worth is easily way above the equivalent of a hundred million dollars.

4. Initially upon my return whenever I sought an appointment I thought once I fixed a date and time I could just show up. Boy was I wrong. The person concerned was never there . There was always some reason. This was not confined to bureaucrats. Even professionals, handy men or electricians or the local patwaris , it is  always "acha muhe yaad kara dena ji" . In today's day and age with almost everyone now having a smart  telephone.  The onus is on you - I am a important person. If you want to meet me keep reminding me.

5. In my life whenever I am asked a favor , if I can do it I go ahead and do it without any one having to remind me a second time. In India that is a starting point. On an average you would have to follow up with the person (friend or relative is immaterial) at least three times before anything gets done or you just give up in disgust.

6. Everywhere you go there is dirt or garbage. In the  area where the " farm houses" worth the equivalent of millions of dollars,  the roads are pot holed , drains overflow and stink , but once you drive in you find fancy houses and manicured lawns maintained by an army of servants. If there is a empty lot next door it becomes the dumping ground for your daily garbage. There is no sense of social responsibility.

7. Delhi is now regarded as the most polluted city in the world and while a lot is being said, very little is actually being done.The Courts keep passing judgements as to what should be done, but no one seems to care.

8. The traffic situation in Delhi/Gurgaon  is going from bad to worse. What normally takes 30 minutes  on a public holiday takes sixty to ninety minutes or longer. Gridlocks are common because we cannot resist the temptation of going on the wrong side (because the right side is blocked) and so the entire traffic is at a standstill.

A couple of weeks  ago my wife and I almost got assaulted because  a idiot Sardar insisted that we reverse our car to allow him to come forward. We were locked in because there were a row of cars behind us.

9. What can I say about the television media ? The Fox channel was perhaps the role model and our channels built on it ( like we did on the British bureaucracy) . There are a couple of channels where the presenters feel that by screaming their utterances they get more eye balls. Like little puppies they do not let go a piece of news which they find salacious. They run it on a loop twenty four seven. Many times we read or see on BBC that there has been a train crash with 30 people killed or flash floods in Assam where twenty five villages have been washed away, but our  channels will focus on local politician shoes being laced up by senior bureaucrats or police officials  as that is more news worthy.

However balancing the above there are positive things happening as well.

1. There has been a tremendous amount of development. The average man on the street appears to be much better off , much better dressed and most likely carrying a mobile telephone if not a smart phone.

2. While it is not available all day the the electricity supply  is much better off.

3. Slowly but gradually the government department including land registry are all being digitized . Increasingly government related payments can now be made online.

4. Perhaps because of the lack of interference by the government, the technology sector is booming.

5. While still a long way from creating the right environment for all youths to gain employment, graduates are no longer just looking for jobs with multinationals. Their entrepreneurial genes are taking over and an increasingly large number from the top schools are now opting for start up's or setting up their ventures.New ideas and markets are being discovered With help now becoming increasingly difficult to get, now start ups are stepping into the space to provide these services.

6. Huge amount of wealth is being created legally by new ventures and start ups by young people.

I could go on and on but I think it gives you the birds eye view. Being the eternal optimist I still view the glass as being half full ( or that it can be refilled)  and am hopeful that by the time my grandchildren grow up India will have entered the ranks of developed countries and most of the problems mentioned above will have disappeared.We just need to have a tall jug to keep refilling the glass of hope. 


 

What the government should do about black money ?

During the last national elections , the BJP as part of its election campaign promised to bring back to the country , black money lodged overseas. It passed very stringent laws and penalties for people who do not declare their overseas holdings. Expectations were that billions of dollars would flow back. Unfortunately upon expiry of the deadline only about INR 7000 crores was declared. It was a good attempt even if it was with limited success.

While the overseas holdings makes good press, the larger amount of black money is within the country. In Delhi go to the Lajpat Nagar, Chandi Chowk, Chawri Bazar or the mandi's all transactions are cash based. Not all , but a large number of lawyers ,accountants,doctors  and other professionals prefer cash payments for their services. In addition all payments for greasing the wheels whether in the government, public or private sector are in cash. This is the same in every single city in the country.

However its not that the money is hidden under the mattress or buried in chests. A large portion  goes into real estate investments and  into conspicuous consumption such as jewellery, designer clothes or bags or overseas trips so it does circulate back into the economy. It is just that the government misses out in collecting taxes on this undeclared income.

Part of the problem is that the avenues are limited. Yes you can invest in real estate. . However there is no pportunity for investments in the capital markets particularly debt . I have attempted to buy corporate bonds but without success as the minimum trading lots runs into crores.

In my opinion the government should declare an amnesty with no penalty. However the holder should be required to invest the amount declared into government bonds. Fifty percent of the funds  should be required to be invested in government bonds with a maturity of five years, bearing interest at one percent below the prevailing savings rate. Another twenty five percent should be should have a maturity of seven years at the prevailing savings rate. The remaining funds should go into ten year bonds at a savings rate plus one percent. The scheme does not end there as this will no be incentive for the black money holder to declare his/her holdings as the funds will be locked up for a long period.

The government should then make some of the public sector and private sector banks to make a market with a restriction that the spread ( between buying and selling should not exceed one eight or one quarter) and that the trading lots should be in amounts of one lac.

The black money holder can then sell the bonds at a discount ( which would require him to take a loss ) but then it allows him to re-enter the funds into the legitimate economy. The government obtains a substantial amount of funds at below market rates and at the same time create liquidity in the debt market at the retail level. In my opinion a win-win situation for all.

The Ubiquitous Mobile Phone

There have been numerous articles about how  technology has changed and is continuing to change the world. I think it is the internet which has brought about the changes  by putting  in place the infrastructure  and setting in motion the disruption of many industries and lifestyles . It has totally changed the publishing,  retail , travel and the sex industry .It has also transformed  the entire information technology industry through software as a service and now the cloud based services.We are now entering phase two with the drop in prices of the smart  mobile phones and the supporting services including the use of apps. On a individual basis, I do not think anything has the changed our lives as much as the mobile phone - both for  good and bad.

I remember when  the first Motorola mobile phone was introduced to Hong Kong . It was sold for about Forty Thousand Hong Kong  Dollars.The traders in the bank  were among the first to acquire them and it was the senior guys in the dealing room who used to strut around with them. I remember going to lunch with my bosses and they would line up these brick sized contraptions reaching a height of almost fifteen inches including the antenna and weighing a a few pounds. It was a  status  symbol.

My life began changing when the Blackberry  arrived. At Citibank my job required me to frequently  travel across Asia and I had to lug around a heavy lap top. Reaching the hotel I then spend the next hour or so   responding to emails. With the Blackberry  I finished with the responses by the time I reached the hotel. With the decline in prices of the phone and the user services the mobile phone has become an indispensable item. Even though I am now retired I  feel naked without it. Short of the bathroom I carry the damn thing around with me almost everywhere. My wife asks me why -" in case the children call ".

However I am not the only one - increasingly I notice that the phones have become an extension of the house maid's ears and mouth during their waking hours. When we go for our walks regardless of the time we see our fellow walkers chatting away. I constantly wonder what is it that they have to say  that they can continue talking non-stop for hours ?

With the coming of the 3G and being able to access the internet on the go it has definitely increased the use of the mobile phone. I remember taking to the CFO of a Hong Kong based company which was about to introduce 3 G services on their network in the United Kingdom. He mentioned that based on a survey they had done, they expected the maximum usage would come from users for gambling and watching pornography.However I am sure that the mobile phone is being used in ways which he could not have imagined .

When the phones started coming out with a camera, my initial reaction was that it was  a dumb idea. Now that it has been around for more than ten years I have to confess that I was wrong.  It is a handy tool and convenient for shopping or trying to remember a particular flower or tree or some setting, not to mention taking photographs. Taking selfies appears to be very popular with politicians including President Obama and Prime Minister Modi. It is also very handy in using as evidence and identifying the perpetrator.In India almost every day the television shows clips of "stings" showing the mis-deeds of  politicians and policemen or bureaucrats.  Unfortunately it can also be misused. A few years ago a Delhi teenager took a photograph of his girlfriend while having sex and circulating it to his friends.It went viral and ruined the young girl's life. 

Over the last few years with the introduction of the app based services we are now entering the second phase of industry disruption. The Uber app has turned the city based taxi services on its head. It enables the taxi owner to make a lot more money. It enables the user  to get a taxi when needed.
According to a friend in Germany where these services are legal,  there is a Uber copy cat for call
girls. In India some online shopping sites have blocked desk top based orders and now accept only
 mobile based orders. Appears to be a bit extreme but perhaps they know  something which I do not.

With the  mobile phone the future is now here through the use of apps such Skype, Face Time and Whatsapp. It  has become a boon for the self employed whether it is the plumber or the electrician or the part time cleaning lady. With the help of applications  such as Whatsapp, they are able to send out marketing pitches or communicate free of cost  or talk to their friends and relatives in their villages and overseas. It has certainly reduced our long distance calling bills . The added bonus is that you can see them as well . Now the phone is replacing the desktop.You see young people looking at their tablet sized phone in the elevators and on the Metro sending out email or even working spread sheets. As has been said often enough your average mobile phone now has the same amount of computing power which was used to send Neil Armstrong to the moon.

The financial industry certainly on the retail banking side is seeing a lot of development in terms of online payments. Vodafone was one of the first to start mobile transfers through their MPesa services in East Africa. In Kenya where it all started  individuals use it to buy a single banana from a street vendor.

The mobile phone started out big then started to shrink and now has been gradually increasing again. However with the 3 G and now 4 G your phone is not just a communication device. It is your computer, your entertainment center ( audio and video ) , your credit card, your camera, your digital diary, your novel, your prayer book, your health monitor and the list goes on. Previously when you were traveling you had to carry these items separately. Now its just one device which fits into your pocket - almost.

The next item in my mind which is due for extinction is likely  to be the credit card. With biometric
identification now becoming more reliable there is no need to carry around a card with a magnetic strip or a chip and having to remember a personal identification number.

What has been holding back the development is the slow service. 3G  and now 4G is supposed to be faster but the problem is the service providers never deliver the speed which they promise. Apparently Korea is the most advanced and its internet allows you to download entire movies within seconds. IBM has just developed a processor  chip which is going to be four times faster than the fastest chip presently available.

Not sure whether this is suitable for mobile phones, but I am sure that it will be a matter of time before you will see a mobile version which will give you even greater computing power in your hands. The question is what will you do with it ? Will it be like the video player you used to have? We all were quick to buy the advanced versions which came loaded with features allowing  you  to record a year in advance, it tracked what programs you liked and then automatically recorded similar programs, but most of us used only three or four  features - play,record, fast forward or rewind.

 This time around  the mobile phone designers have been smart in a number of ways. Google, Firefox and now being followed by others started offering their operating systems for free. You do not have to pay royalties which reduced the costs. Secondly their architecture welcomes the use of apps by third parties which allows the users  to play games, make free video and audio calls, check the weather, check your map for directions,send you notices whether your son's flight is arriving on time and so on. The beauty of it all is that even for non-technological savvy persons like myself I can use a lot of these apps. However  with all the features and the thousand of apps which are available I wonder if the mobile phone is going the video player way to be replaced by another device ?

The Changing Economics Of World Trade

The dynamics of world trade could be changing in the next couple of decades due to technological changes. 

The Technology Quarterly of the Economist magazine dated May30th-June 5th ,2015  had an article as to how a robotic sewing machine could throw garment workers in low-cost countries out of jobs. At present it takes a human to stitch two pieces of material together. It had to be aligned and fed steadily through a sewing head to ensure that it did not slip or buckle. A company in Atlanta has now invented a machine which tackles this problem with software and high speed photography to create the alignment and tension as the fabric passes under the needle. Also Nike is using a technology called Flyknit to make the uppers for trainers. This combined with 3D printing technology will allow  shoes to be manufactured onshore in the United States. Divergent Microfactories in San Francisco  is about to show off a prototype of a high-performance, lightweight car designed to be built in small volumes in low-cost factories around the world. If all of this and other such innovations are successful it will have a major impact on employment in low income countries.

The first step in the development or industrialization of a country was the introduction of manufacturing garments, electronics  and trainers  for exports. This helped countries such as Japan, Korea and Hong Kong  to  industrialise  and increase their per capita income. The second wave led to countries such as  Indonesia, Malaysia , Thailand, Vietnam and China  . The third wave is  now happening in  Bangladesh and countries in Africa.

With new technology the whole dynamics of international trade will likely change. Countries such as China, Bangladesh and Vietnam primarily act as assemblers. The raw material is imported and processed elsewhere and the complex web of raw materials, parts and assembly is put together by middle men such as  Li & Fung from Hong Kong. The value added from even countries such as China is actually very small.

The goods are then shipped to the United States, Europe , the Middle East and Africa. What will change is that the role of China and Vietnam as exporters will decline as the goods will be manufactured closer to the markets such as  the United States, Canada or perhaps Mexico. The labor component will be become even smaller.

The basic commodities which will be imported from Latin America and Africa will  be processed in countries which have the ability. Some of this will be migrating back to countries such as United States as the cost of electricity has come down considerably due to shale oil and gas.

The new model will be intra country assembly and distribution  for countries with large populations such as the United States, China, India, Brazil, Mexico and Indonesia and intra regional for smaller countries within South East Asia. This will affect the smaller countries in Asia,Africa and South America. The impact will also be on shipping companies who are continuing to build ships with ever increasing capacity for carrying containers.

What will  increase is the trading of soft and hard commodities. As countries such as China and India continue to industrialize and with the population increase, their ability to grow enough to feed themselves will shrink and they will become more dependent on agricultural imports.

Obviously all these changes will not happen suddenly but will be over a period of time. This is of course a personal  and perhaps a simplistic view. I could be totally wrong and none of this might happen, but I would bet the odds are in my favor.