What the heck is a double dip recession?

For the last several months, the phrase “double dip recession” has been doing the rounds. The expression continues to roll off the unctuous tongues of analysts and economists. It appears in articles authored by Nobel laureates on where the US and/or European economies are headed. But what is a double dip recession?

I had a vague idea that it had to do with two back-to-back recessions. But I wasn’t entirely sure. So I decided to educate myself. And having read up a little on the subject, I thought I’d do my bit to illuminate others.

A double dip recession is when there is negative growth in GDP (of a country) after a quarter or two of positive growth. Typically, the terms refers to two recessions separate by a relatively short recovery. Central banks in emerging markets are walking a tightrope between the need to keep inflation at a reasonable level (say 5%) and the growth imperative. In developed economies, interest rates are already near-zero- so capital is moving to economies where they earn a positive return. From a GDP growth perspective, the developed economies are almost stagnant (some are showing negative growth) so jobs are being lost while new ones are not being created. This leaves little wiggle room for taking hard political decisions such as cutting subsidies (and hence, deficits). And when countries like France and Germany themselves start feeling the pinch, their willingness and ability to support a Portugal or a Greece will reduce. The consequent unemployment unleashes a powerful socio-economic backlash that will also have political ramifications.

Economists are still not sure if even the US and Europe are going to end up in a double dip recession. But that is just a matter of semantics. Irrespective of the nomenclature, it is clear that the global economy is too interconnected for anyone to accurately predict how it will pan out. There are simply too many moving parts.

Reducing corruption or referendum on Lokpal Bill?

Over the past few months and weeks, the process of agitation begun by Anna Hazare has snowballed into a national movement. Across India, citizens are joining his team in the thousands. As a citizen of India, I completely support the need to act urgently against corruption. Robust debate on who all should come under the ambit of such a bill and how best to deter corrupt practices is not just desirable but also critical. But I fear that the ongoing gamesmanship between “Team Anna” and the government has lost sight of the central issue, viz. rooting out corruption from India. The movement seems to have morphed into a “my Lokpal Bill is better than yours” kind of campaign or referendum. This takes away attention from the central issue.

Looking for good quality content in English?

Cash remains king. But to get your customers to buy your products and services so that you generate those cash flows you need good content. You wouldn’t hire someone whose resume is full of errors, would you? After all, not only do you have to be good, but you also have to be seen to be good. Then why risk poorly written copy shape how customers and prospects perceive your company and its offerings?

If you’re looking for well-researched, logically organized and crisply written content in English (or just want a document proofread to keep the Gremlins away), send me an e-mail at anandkrishna65@gmail.com. We can also edit or rewrite your copy to give it more zing or make it flow better. Most general topics and business-related subjects are fair game. Our output will be in line with your preferred “tone” (businesslike, conversational, humorous etc.) and language preference (US, UK). And yes, we can blog and tweet on your behalf as well. Not convinced… yet? Try us out. Then decide for yourself.

Cassandra at work

The blame game for what caused India ceding its number 1 rank in test cricket to England will begin in real earnest very soon. So I thought I’d list down a few reasons and set the ball rolling…. I invite you to take this short poll to voice your opinion.

The downgrading of America’s credit rating

Financial profligacy can’t go on forever. Even in the world’s largest economy. That’s essentially the message that Standard & Poor’s has delivered to the world by downgrading US credit rating from AAA to AA+. It’s not the end of the world. But this action will mean that the US will have to pay higher interest rates on its borrowing. In turn, this means costlier funds for individual American borrowers- whether credit cards or home loans and so on. And because we live in an increasingly inter-dependent global society, this re-rating will adversely impact the cost of borrowing of countries that already are seen to be more risky than the US. And that very much includes India. On the flip side, though, it might make Indian instruments more attractive (or less unattractive) to foreign investors. And that might herald an inflow of foreign capital into Indian stock markets.

But S&P’s analysis may have been impacted by the $2 trillion “error” that the US government quickly pointed out. Therefore, how serious the impact of S&P’s action will be is also a function of whether Moody’s and Fitch (the other two major rating agencies) will also downgrade America’s credit rating.

Introducing the new me!

When I turned independent consultant and trainer two months ago, I was sure I’d have lots of time to blog everyday. Maybe write even 2 or 3 blogs a day. But I realize that it’s been more than two months since I wrote my last blog. I am appalled at my own sloth. They say if you make a resolve publicly, there’s a greater chance that you will stick to your intent. So let me announce my intent to blog at least 3-4 times a week. So help me God!

And if any of you is curious about what kind of “consulting” I do, well, it’s primarily in the area of marketing and brand-building. I also deliver training around topics such as:

building trust with clients
working in virtual, multicultural, globally-distributed teams
corporate etiquette
communication (and yes, that includes listening!)
developing a consultant’s mindset

While some of my sessions are targeted at the IT and ITES industries, most of the content is relevant to any business. If you’re looking for help in these or allied areas, leave me a comment with contact details. I’ll get back to you.

Kaboom, followed by gloom and doom in Karnataka?

Following the resignation of Mr B S Yeddyurappa, who remains indicted in the Lokayukta report on illegal mining, Karnataka has a new Chief Minister in Mr Sadananda Gowda. This action by the BJP leadership has given the party the opportunity to take a moral high ground in its continued diatribes against the UPA government at the centre. But will the change really make any difference to the aam aadmi in the state?

One must not forget that in politics, the king-maker is more powerful than the king himself. There is already much scepticism that the new CM will only be a puppet in the hands of Mr Yeddyurappa. To be fair to Mr Sadananda Gowda, it is too early to agree with this pessimistic view. But there are already signs that factionalism continues to rive what once claimed to be India’s most disciplined, cadre-based party. Mr Jagadish Shettar and his supporters did not attend the swearing-in ceremony. The state BJP President had no choice but to attend, although he too had cast his lot with Mr Shettar.

Unless the BJP is able to bury these internal differences and there is collective support for the new CM and his council of ministers in taking urgent and visible steps to put Karnataka back on the path to development, it is very likely that the Congress and JD will be able to make political capital of the mis-governance in the months ahead. That could well pave the way for BJP losing its first government south of the Vindhyas- just as the Congress and its allies are unlikely to be voted back to power in the centre, unless Dr Manmohan Singh and his ministers can work a miracle in the next year or so. Assuming, of course, that the government lasts its full term.

Clemency for Bhullar

I am worried by the growing demand for clemency for Bhullar being put forward by the Shiromani Akali Dal and even Congress politicians from Punjab. I worry because the “appeal” seems more like a veiled threat. The suggestion that commuting Bhullar’s death sentence to life imprisonment will at least partially assuage feelings among the Sikh community is scary. Where does one draw the line? Will a similar logic not be used to demand that Afzal Guru and Ajmal Kasab not be hanged? I agree that what Kasab did was far more serious than what Bhullar did (he bombed the Congress office and attacked Youth Congress leader Maninder Singh Bitta). But a precedent will have been set for a clever lawyer to use as defence in other cases.

The potential danger of using events for marketing

For years, sporting and other events have been used by marketers. The logic is that the event per se attracts thousands of their target audience and is therefore a great watering hole. The power of satellite TV means that the reach of an event is amplified hundreds of times. And because a sporting event like Wimbledon continues for a couple of weeks, using events to advertise also delivers “frequency”.

So why do I say there is a danger in using such events as a marketing channel? I say so because such events inexorably become a thing of the past at some time. And yet, I have seen many TV commercials (TVCs) continue to make mention of the event that is by now, a piece of history (Cricket World Cup, for example). Hyundai’s ads on Indian TV channels are but one example. A similar thing happens with content on web sites. While the context of the event is current and relevant (e.g. the countdown to the IPL or the six weeks of the tournament), milking the event for all it’s worth is fine. The trouble is that agencies and marketing teams don’t adjust the content after the event is over. This is something that good marketing governance must ensure.

Big IT in flux

It will be interesting to see how the impending changes in leadership at Infosys pans out. Arguably, the company has outgrown any one individual. But it is by no means assured that Mr Narayana Murthy’s retirement will be a non sequitur, coming as it will soon after Mr Shibulal takes over from Mr Gopalakrishnan as CEO (as is widely expected). And although Mr Premji has not given any indications of stepping down, recent changes in leadership at Wipro have stirred the pot. If media reports are to be believed, many of Wipro’s top executives are looking for jobs outside the company. Cognizant has been growing rapidly and before the end of the fiscal, there is a chance that it may replace Wipro as India’s 3rd largest software company. TCS continues to beat market expectations, but is probably not insulated from some of the more fundamental forces that are shaping “Big IT” in India.

Never mind the pace of US recovery or Europe’s troubles. One inescapable fact is that the current dominant model of revenues growing linearly with headcount cannot continue for much more. The cloud will force fundamental changes to how software is built and consumed. It will impact the global delivery model of Indian IT companies (and indeed, the IBMs, Accentures and HPs of the world as well). The question is whether these companies are prepared to embrace the change. Such change will impact how these companies position themselves, how they go to market, how they pitch their solutions to prospects and existing clients. Even the types of solutions they build and the investment patterns for developing and deploying these solutions will need to change. Of course, the cloud may not become all-pervasive as soon as some expect. Perhaps these companies still have another 3 years in which to transform themselves yet again.
It will be instructive to see how the different players evolve and assess their relative successes over the next few years.

Can RCB turn things around from here?

On paper, RCB has a pretty solid team. Dilshan, AB de Villiers, Virat Kohli, Zaheer Khan and Vettori are among the best in the business. And yet, in the first half of IPL 4, the Royal Challengers have disappointed. With only 2 wins from 6 games (admittedly, one match was rained out), fans are understandably morose.

Gayle won the match against KKR almost single-handedly. And if he continues with his form for the next 3 weeks, RCB is sure to make the semis. But Dilshan is leaving soon (although to be honest, he has not exactly set the stands on fire so far). And therein lies the problem. Kohli apart, RCB’s stars have not delivered so far. Zak has been leaking runs aplenty. And after the first match against the Tuskers, AB has not been among the runs. Also, with the majority of players being new to the franchise, they haven’t yet gelled as a team. While a similar situation exists with other teams, it is the inability of players like Saurabh Tiwary who played a key role last season that is hurting RCB.

It would be unwise to rely only on reputations. Unless everyone raises their fielding standards and RCB play as a team, we can kiss our chances of even making it to the top 4 in IPL 4 goodbye.

Will the Lokpal Bill deliver us from corrruption?

I have been watching Annasaheb Hazare’s Gandhian fast with mixed emotions. I am delighted that his obstinacy snowballed into a national “movement” (perhaps even a “revolution”, if some of our friends in the media are to be believed) and forced the government to accede to the demand to pass the Lokpal Bill. But what has been agreed to? As of now, a committee is being set up to examine the draft bill proposed and come up with a version that Parliament will pass.

Several previous governments (of different hues) have tried to establish a national ombudsman type of mechanism for at least the last 3 decades. But there has been zero progress. Corruption has continued, unabated. In fact, it has become far more insidious. CWG, 2G, CVC, Adarsh Housing, Sukhna land, Karnataka CM….. and these are only what I recall off the top of my head as I write this piece. Even India’s defence forces have not been exempt from the cancer of corruption.

But isn’t corruption really more about a mind-set? About accountability? Are not givers of bribes as guilty of perpetrating corruption as the takers of bribes are? After all, if there were no givers, there would be no takers, right? If we apply Marshallian economic principles to corruption (and I must admit that I am only recalling some basics I studied 20 years ago), then the “bribe” is really the supply-demand equilibrium point. The bribe could be to evade a speeding or parking ticket; it could be to obtain a sleeper berth on an overnight train; it could be for admission to schools and colleges. Why do we not need to “bribe” anyone at a popular restaurant to get a table ahead of others? Maybe we do- we just call it “tips”. But the point is about choice- or the lack thereof. Eating at a particular restaurant may be desirable, even a status symbol. But little more. On the other hand, ensuring that our kids get admission to decent schools is not as trivial. And when there remain huge gaps between the quality of education delivered by certain schools vis-a-vis others, we can’t, as rational human beings, remain indifferent. Till the underlying gaps are fixed and we as a nation offer consistent service quality across states/cities/districts/villages, expecting that bribes will go away is wishful thinking. Remember that a junior clerk in a government office who makes Rs10000 per month also has kids with the same aspirations as someone in the private sector who makes ten times that salary. Till there is greater equity (or should I say lesser inequity), the desire to make extra income (to fulfill his family’s aspirations) will not go away.

Let us also assume that the Jan Lokpal bill is passed by Parliament (even though the passing of such a bill poses the greatest of threats to corrupt politicians and officials). By making the PM, CM and other public servants (including government officers) accountable and culpable, will payment of Rs100 to escape a traffic ticket (when you are guilty) or Rs1000 to get property registered (even when you have all the necessary documentation) stop? Will we have the courage (not to speak of the time and willingness) to avoid the short-cut afforded by the miraculous lubricating power of money and follow due process? Those who have the money (and are short of time) will not. Those who do not have the money will try- even if they don’t have the time- but few will succeed. After all, that is the power of the system. Today’s newspaper quotes Mr T V Mohandas Pai of Infosys as saying how even Infosys had to escalate matters to the Chief Secretary to get necessary approvals etc. The Infosys name can open doors in the government. Do common citizens enjoy that same right? Justice Santosh Hegde, the Lok Ayukta of Karnataka is close to completing his term. His outbursts against the system are too well-documented to need repeating here. When a constitutionally-appointed Lok Ayukta is severely handicapped in weeding out corruption, what hope do others have?

Call me a cynic. And I hope I am proved wrong. But I fear that we will not see any huge change even if the Lokpal Bill becomes law.

Cricket trumps politics

I wanted to write this right after the India-Pakistan semi-final match at Mohali. But better late than ever, I suppose. Personally, I don’t expect much to come out of Dr Manmohan Singh’s attempts to reopen dialogue with Pakistan by inviting PM Gilani to see the match. At best, it is a symbolic gesture. At worst, a waste of time.

However, I was very happy to listen to Afridi’s comments after the match, as also his reported exhortations before the game to fans in both countries to treat the match as a game and not a war. I draw hope from this change in behavior in the “aam janta”. Even a decade ago, a Pakistani cricket captain would not have dared to make such a statement even for public consumption. Neither would anyone have openly acknowledged that they lost to a better team. In the Times Now-Geo TV simulcast of the day before the match, Javed Miandad was making the odd provocative statement. However, he also took great pains to point out that the Indian team was strong and that it would be a good game of cricket no matter who won etc.

I think people on both sides of the border have begun to realize that not being peaceful neighbors is patently “lose-lose”. And that, I believe, will accelerate the process of rapprochement, by strengthening people-to-people contact through trade, the arts and of course, cricket and hockey. It won’t happen in a matter of months or even a couple of years. But I believe the next decade will see the two sub-continental neighbors closer than ever before.

Soaking in the victory and thinking ahead

Congratulations to Team India for winning the 2011 ICC ODI World Cup. The culmination of a 6 week campaign characterized by some not-so-convincing successes (and a few slip-ups as well in the first round) was sweet. Bringing the Cup home after 28 years (an entire generation has gone by, hoping we will win it) has cheered the whole nation and millions of its cricket-loving diaspora spread around the planet. And why not? In a year that has already seen more than its share of ruinous scams and scandals, we as a nation are starved for good news. So this win comes as a restorative for all Indians.

Sachin is understandably delighted at adding the one medal that was conspicuously missing from his trophy shelf. For others too, this represents a great achievement (for example, Gary Kirsten has had an absolutely amazing run as India’s coach). But what should not be forgotten is that the triumphs in the quarter-finals, semis and finals in particular also represent the coming of age of India’s next gen cricketers. Indeed, this result is also a fine testament to India playing well as a team, rather than as a non-cohesive assortment of individuals. Dhoni has proved that leadership needs the courage of conviction to do what the leader thinks is right- but also the humility and honesty to acknowledge mistakes, learn from them- and move on. I just wish our more of our political and corporate leaders would demonstrate the same openness.

For team India, the hard part now lies in living up to the reputation of being ODI world champs as also the top test team. Rather like sustaining a brand once it has achieved some degree of success. Every selection, every result, every post-toss decision will be under the microscope of fans around the world. But with the right attitude (and of course the right “processes”), it can be done. All the best, team India!

Of prayers and chewed nails

We’re now less than 24 hours away from THE semi final in the ICC World Cup. India and Pakistan face off tomorrow at Mohali. The burden of expectations of two entire nations rest not-so-lightly on the shoulders of 22 men. Team India, under Dhoni, has been fairly protected from the media for the past few days. As, indeed, have Afridi and Team Pakistan. But Minister Rehman Malik’s comments about the match being fixed and the Pakistan establishment keeping an eagle eye on the cricket team’s performance strikes me as a tad jarring, no matter how well-meaning it was. These days, there’s always the spectre of matches being fixed (remember the rumours after Australia’s slow start against Zimbabwe?). But saying something like this publicly takes away from the joy of winning for whichever team does win tomorrow’s match.

As post-Partition generations come centre-stage in both India and Pakistan, there is a ray of hope for rapprochement. I therefore feel strongly that while media should bring and keep relevant issues in the limelight, it must not do so in ways that, for all practical purposes, transforms a game of cricket to nothing less than a war.

Just out of curiosity, I wonder how many prayers to various Gods would be made to influence the result of tomorrow’s match in the next 24 hours. Equally, how many kilograms of nails will have been chewed off people’s fingers between the start of the match in 23 hours from now and the time that the game ends.