Anand Krishna’s musings

A friend of mine recently forwarded an SMS to me. I found it quite witty and apt and am reproducing the essence here. I do not intend any offence to anyone… so apologies in advance. Apologies also to the one who came up with this originally- I do not know who you are, so I cannot cite you. But I do wish to  unabashedly acknowledge your creative genius.

The Left parties might want to consider changing their symbol to a condom. Here’s why…

A condom allows inflation, blocks production, destroys the next generation and creates a sense of security when you are actually being screwed…..

Personally, I think the Left should focus more on the inflation issue- which affects “aam janata” even more than the nuclear deal- at least in the short term. I also think the SP support to Congress is an unholy alliance. The SP will demand its pound of flesh sooner rather than later. In my opinion, the nation (and possibly, the Congress as well) would have been better off taking the decision to go to the IAEA a couple of months ago, even at the risk of early elections. The Indian electorate is much savvier than it is given credit for. If any political party is cogently able to explain its stance (keeping aside emotions, election rhetoric and rabble rousing tactics), I for one believe that the voters will deliver the right electoral verdict.

I thought I saw on one of the news tickers of one of the TV channels earlier this evening a news item to the effect that SEBI has said it is not mandatory for government and court employees to have a PAN card (and by implication therefore, that these categories of our fellow citizens do not need to quote their PAN numbers while making investments).

To me, this concession seems very strange for a couple of reasons:

1. Black money is not the preserve of industrialists and businessmen. Several government and court employees too accept bribes etc. By granting government and court employees exemption from having to quote their PAN numbers, SEBI is only making it easier for corrupt officals to funnel their ill-gotten gains into the stock market etc.
2. What happens if a government official makes a huge investment without citing his/her PAN number and resigns a couple of months later?
3. Will this not encourage more “benami” transactions?

For several months now, Indian polity has been rocked on and off by the proposed Indo-US nuclear deal. While political parties of every hue know that India needs better technology for tapping nuclear power, every party pretends to be holier than thou and makes vague references to India’s “strategic interests” while posturing against the deal.

With crude prices predicted to touch $200/barrel in the next 6 months, Indians (politicians included) really worried about India’s (and the world’s) future had better take some bold decisions about alternative sources of energy- preferably, renewable.

Inflation is at its highest level in more than 12-13 years and the current oil shock will not cause a change in the inflation trend in a hurry. My personal guess is that by the time the world economy gets back on even keel, we’re looking at another 12-18 months. And who knows what else will happen in this time-frame?!

Coalition politics cannot be wished away in India for the near future. But pushing the country to elections even 9 months ahead of term will not serve anybody’s interests. Thus, rather than make political capital and adopt hard postures, now is the time for all right-thinking parties to unite and declare war on inflation and the energy crisis.

If Lok Sabha elections are held in say, 4-5 months and a new government comes to power by year-end, consider what it will inherit. Out-of-control inflation, crude oil and petroleum prices going through the roof, stock markets firmly in the grip of a bear hug, the world hurtling towards an environmental disaster…. need I list more? Will it not be a crown of thorns more than a bed of roses?

Go on, Dr Singh- resign and recommend early elections…. let us see how much spunk career politicians really possess?

As one trained in Civil Engineering, I cringe when I travel on Bangalore’s roads. I am not talking about just the potholes here. In pavement design, we were taught about camber, berms, designing for natural drainage of the road surface, proportion of bitumen in the mix, proportion of corase and fine aggregate, temeperature of the bitumen mix when it is to be laid, number of passes by rollers etc. But one look at most roads in Bangalore today (and I must confess I have not gone to the new airport or yet or travelled on the “NICE Road”- so no comments on them)- and I am convinced that the people responsible for constructing these roads either do not have the qualifications or have sold their professional pride (and souls) to the devil for a pile of cash.

Is it any wonder then, that road surfaces start disintegrating within a few months, if not weeks or days, of them being laid? Think of the incremental fuel being consumed because of poor road conditions. And then think about what poor riding comfort does to your car’s shock absorbers- and to your own skeletal system!

Although the initial cost will be an order of magnitude higher, I think it is worth concreting the arterial roads. Rigid pavements (to give concrete roads their technical name) will mean longer road life and lower maintenance cost over say a 20 year period. Of course, that too depends on the concrete mix used and curing techniques adopted.

Major contractors are either kept out or not interested or are seldom selected because they are expensive. Naturally, the contracts are awarded to smaller contractors who may neither have the technical expertise nor the wherewithal (or willingness) to use modern road construction techniques. Further, many of them would have paid hefty bribes to win the contract- and their main interest would be to recover several multiples of their “investment”.

Perhaps what is needed is for more of us (members of the public) to file a query under the Right to Information (RTI) Act about which contractor was awarded which contracts, at what price, whether the road was inspected and certified by the competent authority and finally, whether the bills have been paid. Quite a Pandora’s box, I would imagine.

For years, America produced more billionaires than any other country on earth. But now, that long-standing distinction is under serious threat. Last year, it was felt that Bill Gates had been unseated by Carlos Slim as the world’s richest man. This year (according to Forbes magazine), Bill Gates ranks third, after Warren Buffett and Carlos Slim. And right after these is a troika of Indians- Lakshmi Mittal and the two Ambani brothers. Mukesh is marginally ahead of Anil, but it is in fact, the younger Ambani) (Anil), who has seen his fortunes rise from a little under $6B in 2006 to over $42B in 2008.

The data below from Forbes magazine is very very telling: in terms of the world’s super rich, there is a clear shift away from the US to other countries- and India is a significant contributor to the new billionaires. Even money-making seems to have been outsourced to India!

Gurgaon has become the darling of real-estate owners there (not to mention DLF). From an unknown township that existed more on plans than in reality 25 years or so ago, Gurgaon is today one of the “most happening” parts of India, fuelled by its proximity to Delhi, the airport and the emergence of high-quality apartments and commercial office space. Possibly, Haryana’s policies too had a role to play.

But in the last couple of years, Gurgaon has become associated more with horror stories such as the kidney racket involving labourers, the Aarushi Talwar and Hemraj murder case two weeks ago and the Naini family murder case that has been unfolding over the past few days. Proving yet again that fame and notoriety are two sides of the same coin.

Last evening, some family members (myself included) were stuck in a huge traffic jam that was caused, in part, by heavy thundershowers. It took us over 3 hours to cover a distance of around 40 Kms- which, for the record, is the distance to Malleswaram (a Bangalore suburb) from Bidadi, which is on the Bangalore-Mysore highway. My brother-in-law and I started to talk about the impending hike in petrol/diesel costs. He looked around at the mass of vehicles and commented wryly that no matter how much fuel costs, the traffic jams in Bangalore will not reduce. That set me thinking.

If Bangalore had better mass rapid transit infrastructure that offered high-speed and good quality connectivity between various points in th city, wouldn’t more of the city’s denizens choose to use those facilities? In turn, wouldn’t the number of vehicles carrying one or two people come down? And in the process, would Bangalore’s fuel consumption- and hence demand- not drop? Ditto for the city’s carbon footprint.

I personally think that the air-conditioned Volvo buses run to/from the new airport is a great way to travel there. The buses are comfortable, quite frequent and best of all, you avoid having your car travel empty one way. If these buses are empty, they should allow other passengers to also use them- of course, by paying the higher fare. That way, the cost of running empty buses can also be defrayed to some extent.

The basic point I want to make is this: petroleum products are not renewable in the short term. Given the world’s demand, prices will only keep rising (given that production isn’t going to rise). Building infrastructure is not cheap- but is a one-time investment followed by annual operating costs. Creating such infrastructure will achieve multiple goals:

1. help ease congestion and pollution in cities such as Bangalore
2. speed up travel- and hence increase productivity of citizens (productivity is lost either due to time lost in jams and/or illnesses caused by pollution and/or a general absence of well-being that leads to road rage, accidents etc.
3. protect and even enhance real estate values
4. curtail consumption of petroleum products- and hence contribute to overall price stability/inflation control
5. provide tangible and visible evidence of our country’s progress

Crude oil is now selling for almost $135 a barrel. This is three times the $45/barrel price that prevailed only about 3 years ago. Not surprisingly, inflation is on the rise. Everyone seems to be focused on asking OPEC to increase production, so that prices will come down. Personally, I think that is the wrong approach. What is OPEC’s incentive to increase production? Even at current levels of oil prices, there seems to be no dearth of buyers- including countries like India and China- and of course, the US. The OPEC countries will naturally want to make hay while the sun shines. Known oil and gas reserves may not last for more than another 75 years- and if production were to increase, even this time horizon could reduce.

What is needed is for large consumers like the US, China and India to focus urgently on policies that will curtail consumption and hence demand. With the subsidy on diesel, petrol and cooking gas, what is happening is a forced redistribution (transfer) of wealth from the public sector oil marketing companies to consumers. In other words, Peter is being robbed to pay Paul. The current subsidy is uniform, and does not discriminate between someone who earns Rs100,000 per month and someone who earns say, Rs10000 per month. Both pay the same prices for fuel; for the latter, the rising fuel price makes a much bigger dent on his/her monthly budget than for the former.  Maybe fuel should be priced based on people’s income. If income is not something that can be practically tracked for such purposes, the cars that people drive can be a good proxy. It is reasonable that someone driving a Mercedes Benz, Toyota Corolla or Hyundai Embera is wealthier than someone that drives a Maruti Alto, Tata Indica or Hyundai Santro. Similarly, let someone  riding a Hayabusa or Ducati pay more for fuel than someone riding a lower-end motorcycle/scooter. Let the price of fuel be based on what vehicle you drive- the more expensive the vehicle, the more you pay.

Another critical element of demand management for oil is the creation of quality mass transit infrastructure at adequate service levels. For instance, the new airport at Bangalore is a good 35-50 Kms from most main residential areas of Bangalore. If people use their cars to get picked up and/or dropped, their cars will consume a good amount of fuel. If, on the other hand, they use the air-conditioned Volvo buses (the Vayu Vajra service) that BMTC has introduced, significant amounts of petrol/diesel will be saved everyday. And if bus fleets in large cities are converted to CNG, that too will save money in a couple of years (of course, there is the initial investment to worry about). And a major side-benefit will be reduced emissions from buses that run on fossil fuels.

Once can only hope that in the next decade or so, alternative fuels will become more mainstream and the world as a whole will depend less on conventional petroleum-based fuels.

The first phase of polling in Karnataka went of peacefully last week. Rural areas reported a much higher turnout than urban areas. There is hope that many more younger voters will exercise their franchise. While that remains to be seen, I sincerely hope that voters will cast their votes after giving due thought to the shenanigans that have marred the coalition government over the past 4 years. The coalition partners have spent more time sparring and trying to pull the rug from under each other’s feet than on governance. Not surprisingly, the state’s development has suffered. New investments into the state have slowed down. Infrastructure has not been given as much attention as necessary and Bangalore has palpably worsened.

Yes, the Metro is finally off the blocks- more than a decade after it was first proposed and the first feasibility report was done. But the new international airport has not become operational yet; connectivity issues to Devanahalli remain unresolved and I suspect that for the first 6 months after the BIAL airport becomes functional, it will take more time for passengers from neighbourhoods in South Bangalore to reach the airport and check in than it will to even fly from Bangalore to Delhi or Kolkata. And if the HAL airport remains open (as may well happen), the chaos will only amplify. Interestingly, Bangalore has become a key point on the election manifestos of both the Congress and the BJP- explicit acceptance that the previous governments have let the state capital down badly.

Irrespective of what exit polls predict, the calculus of coalitions and who finally gets to form the government and becomes CM will become clear only towards month-end, when all 3 phases of polling are done and the results declared. Politics makes for strange bed-fellows and my fear is that we may again end up with dirty coalition politics that further stymies Karnataka’s progress. I hope I am proved wrong.

A TV channel sting operation was the undoing of long-time IHF Secretary Jothikumaran. And soon after, KPS Gill has been eased out of his post as IHF President. If the IOA could do it now, why could it not have done it earlier? Anyway, one just hopes that at least now, the process of rebuilding Indian hockey can (and will) begin in earnest. A group of experienced hockey players has been chosen to select the team and one hopes that the collective expertise and experience this group has will enable it to efficiently discharge the responsibility entrusted to it by the nation. Now that there will hopefully be no more “instructions from the top” regarding selection, training, coaching etc., one hopes that Indian hockey will again see an up-tick. Obviously, things cannot change in a month ot two. The new dispensation will have to work tirelessly at strengthening hockey at the grass-roots level and at restoring public confidence and pride in the Indian team and the sport at large. And for its side, what the Indian public will need to do is trust the new establishment - at least give it a fair trial- at least for the next few tournaments.

Marie Antoinette and her family paid a very heavy price for her naive comment on the common people of France in around 1789. I shudder to think of the modern day equivalent in India- which is probably the Maoist/naxal attacks one reads about in the newspapers almost daily. Thanks to the drought in Australia, India is finding it hard to import wheat. And why should we import wheat? Simply because we are not growing enough of it at home in India. Thanks to the cartel (OPEC), which is not willing to increase production and hence supply of crude, oil/petroleum prices remain on an upward trajectory. Today, crude is selling for about $120/bbl- nearly 2.5 times the price it sold for a little over 12 months or so ago. Not surprisingly, inflation is on the rise. The official figures peg it at over 7% but if you consider the typcial urban middle class basket of goods, I am sure the figure is closer to 12%. High inflation means higher interest rates, which mean tighter credit availability, which means slower growth. And to top it all, elections in key states like Karnataka are just round the corner, with Lok Sabha elections also less than a year away. Consider the slowdown in the US and Europe and the effect this is having on the Indian IT/ITES sectors and you know why Dr Manmohan Singh and Mr P Chidambaram are worried. I just hope that for all our sakes, the monsoon is normel- and timely.

The Supreme Court’s recent judgement to uphold reservation of seats in educational institutions for OBCs (”Other Backward Classes”) has understandably stirred the pot. Opinions and arguments from both camps have been coming thick and fast, whether in private conversations or through the media. There is jubilation in one side, despondency on the other. I do not have anything against the need for some kind of affirmative action to ensure that a level playing field is created for the under-privileged millions in our country. However, where I do have a problem is the manner in which every government in the past 30 years or so has been trying to convert this important socio-economic issue into an issue of vote-bank politics.

So what are my reservations (pun intended) about the reservation policy? The underlying premise of the philosophy of reservation is that all members of the “backward classes” are disdavantaged, while all members of “forward castes” are deemed to be good enough to get admission under ther own steam. I do not think this is a valid assumption; neither is it fair. Economic considerations cannot be ignored in arriving at who needs extra care in our society.

1. A policy of reservation - especially in institutions of higher education- per se does nothing to promote access to primary education. Millions of children will still be denied access to even basic schooling- and it is this lack of primary schooling that often denies acces to future education and employment oportunities.
2. Reservation should explicitly include economic criteria. In my view, a rich person (irrespective of caste) can access and afford education for his/her children and does not need the protection offered by the reservation policy. It is the poor who need such protection- again, irrespective of their caste.
3. Does this policy not reinforce and ecnourage corruption? Rather than study and work hard, it will be tempting for people to spend a few thousands of Rupees on procuring a certificate that states that they are an OBC (or SC/ST for that matter). Again, those that have the money for this will benefit; genuine OBC aspirants without the financial resources will be denied.
4. Where does one draw the line on “reservation”? Why the furore when Raj Thackeray’s MNS is asking for 80% reservation of private sector jobs in Maharashtra for sons and daughters of the soil? And what gets precedence- son of the soil or caste? And how do you categorize someone that is a second-generation son or daughter of the soil?
5. Extending the above point, what happens when the products of a reservation policy enter the job market? Performance evaluation/management is part of every company’s HR mandate. Should there be reservation based on irrelevant, non-performance criteria such as caste? Should it be mandatory for 20% or 30% of the top-performers in any company to be determined based on caste? When the world is moving to ensure equal opportunity by legislating against discrimination on the basis of age, colour, creed, religion, gender, sexual preference and so on, why should we in India promote a culture of discrimination? And what will such policies do to our country’s overall competitiveness- say in a knowledge intensive industry such as IT, consulting or financial services? Should a client have to accept lower standards just because the work was done by someone who got the degre and hence job because of a certificate stating that s/he is of a certain caste, and not because s/he was the best the company could hire? Will you trust a doctor or lawyer if you knew that s/he got her/his degree simply because of her/his caste? This is not to say that everyone who benefits from the reservation system is not competent- but the odds are higher that someone using the policy will have it easier than someone who cannot. And that can cause distortions in professional competency and skills that in turn, can impact our society at large.

As I said before, I am all for leveling the palying field. My recommendation is to make primary education free for the econmically weaker sections of society, independent of caste. Those that come from economically backward sections of society (irrespective of “caste”) should be given additional facilities such as healthy food/nutrition, free books, extra coaching, access to extra-curricular opportunities and so on. Let there be a common “public” examination at the end of 10 years of schooling- and let those that qualify be awarded scholarships for higher education- again, only if they come from economically weak families. Rather than quibble about what constitutes the “creamy layer” and how it is to be defined, give everyone a chance.And may the best boys and girls, men and women be given opportunities commensurate with their performance in an otherwise level playing field. Otherwise, I fear that the much-hyped “India story” will only remain a pipe dream. Worse, a real opportunity for sustainable progress will have been squandered, nay sacrificed, at the altar of political convenience.

There will be many who will quote the case of Tamil Nadu with its ridiculously high % of reserved seats as an shining example of why the policy works. But look at the number of migrants from that state to other parts of the country/world just to pursue education. It is because of such policies that other states are now feeling the pinch and demanding reservation for sons and daughters of the soil. And while there is no official statistic, it would be an interesting study to find out how many thousands of bright students from Tamil Nadu have been denied the opportunity to pursue the field of their choice just because of pernicious policy.

Admittedly, the underlying problem of social oppression and inhuman denial of human rights is very real. It is a slur on our country and a solution must be found to redress those that have suffered. But if 50 years after such policies were first introduced, there is still huge disparity and the need is felt to perpetuate the policy, clearly something is wrong- or has not worked the way it was supposed to. Any which way, it’s time for a change.

Over the last decade or so, leading global executive search majors like Egon Zehnder, Spencer Stuart, Stanton Chase and many others have entered the Indian market, in pursuit of business opportunities created by two major trends:

1. MNCs setting up shop in India, looking for local managerial talent at the senior and middle level. It must be said that increasingly, MNCs are also looking for talent to run their businesses outside India as well.
2. Indian businesses globalizing, and consequently looking for talent from around the world- not just for their India operations, but also for business overseas.

But typically, these top tier executive search firms only work to fill the creme-de-la-creme of openings. They research their clients’ needs thoroughly, develop a list of attributes and skills expected and then research potential candidates- often from very different industries as well.  These firms develop a dossier on the candidates and that is then used by the client (in collaboration with the search firm) to arrive at a shortlist and thereafter, make the final selections. When done ell, the process is discreet, effective and increases the odds of finding a good match for the position on hand.

But like every other market in India, the market for search services is also fragmented and fairly well segmented. There are thus many smaller firms (many of whom are one-person operations) that adopt a different approach to sourcing talent. Not for them the finesse of research, dossiers and so on. Their modus operandi seems to be to search job portals like Monster and Naukri for resumes with specific key words and then simply shoot out e-mails or call. This is not to say that this approach does not yield results; however, it can have the immediate effect of annoying the recipient of the mail if the position is grossly not compatible with the experience/profile. I know how I reacted when I got a mail asking if I was interested in a BPO job that required working in shifts. If the sender of the e-mail had spent 2 minutes glancing over my resume, s/he would have discovered that I had 18 yeas of middle/senior management experience and was a far cry from what his/her client was seeking- graduates with less than 1 year experience!

Dear Placement Consultants- every resume in your database is an executive waiting to be placed- or better still, a potential customer. Please treat them with care. And please read through the resume/profile rather than just relying on whether the resume includes words like “experience”, “manager” and “industry”!

Inflation in India has been on the rise for the past few weeks, and now stands at 7%. Much has been said about the economic mpact of high inflation- i.e. interest rates will rise, access to capital will shrink and hence growth will sufer. Indeed, pundits are already talking about 7.5% GDP growth, compared to the 8.5% and 9% a few months ago.

But for politicians, there is an even bigger danger. In the past, price rises have unseated governments and the UPA  will not be immune unless inflation is brought down to half the current level. The government has initiated action, but for these steps to bear fruit will take time- perhaps as much as 6 months. But that is precisely the dilemma. Elections is key states like Karnataka are just round the corner (less than 2 months away), and the Congress can’t afford to lose. In 6 months, the entire country will start prepping for general elections, which will almost certainly be conducted in early 2009 at the latest. Inflation dents any government’s pro-people image like no opposition can. And the UPA’s “aam aadmi” protestations will fall on deaf years. The people will vote through their ballots and a change in guard will be the likely result.

But given that inflation is being driven by factors like the rising price of crude/petroleum, food imports like wheat, edible oil etc., there is perhaps only so much that the government can do. And even if the NDA or some other coalition comes to power, managing the legacy of high-inflation will not be easy; it will take up perhaps the first year or so. It is only by 2009 end or so that one can expect the world economy to come out of the current slowdown. The next 8 months will also see a new President in the White House. What policy changes occur as a result will be a major determinant of the global politico-economic dynamics- and hence inflation.

The more I think about it, the more I am convinced that Bangalore’s infrastructure crisis is the result only of a lack of political will, combined with public apathy. I moved to the city some 13 years ago- long before the IT industry struck roots here. In fact, I remember meeting the then Head Honcho of the Metro Rail corporation to discuss project structuring and so on- services offered by the Big 5 firm I worked for at the time. 13 years on, all we have to show is a series of dug-up roads across the city. If only the powers-that-be had moved decisively at the time, Bangaloreans could have been spared much of their daily agony. Even now, I am not convinced that projects like the elevated road on Hosur Road will do much to decongest traffic. It may have been faster and cheaper to develop other roads that connect say Sarjapur Road or Bannerghatta Road with Hosur Road. All it will take is one accident or vehicle break-down on the elevated carriage-way and all hell will break loose. The same thing is true of the “magic box” at the Cauvery theatre junction. Vehicles going towards Mekhri Circle have no choice but to make a left turn at Cauvery, then make a U turn before rejoining Bellary Road after making another left turn. Not only will this slow down traffic considerably, but this also creates a new choke-point at that place. Again, if a vehicle breaks down at the turn inside the maig box, think of the mess it will create. And right now, this is right on the main road to the new airport at Devanahalli!

As real estate prices in Bangalore sky-rocketed, supply became limited. Whether land was bought up by speculators, sharks or parties with genuine needs for a home/office etc., the fact of the matter is that each passing day makes it more difficult to acquire land for public purposes, such as roads and MRT programs. The longer we delay decisions around building expressways, peripheral ring roads and so on, the more it will cost us as citizens of Bangalore- not just in direct costs of fuel, time, wear and tear and stress/fatigue, but also in terms of productivity, health and overall environmental degradation. So many of Bangalore’s famous tree-lined boulevards have been denuded in the last few months. I understand that trees need to be cut to make way for roads. But can’t new trees be planted or existing trees be transplanted? It will of course cost more to transplant trees, but maybe that should go under the head of “intangibles”- after all, there is a certain joy and pride to having trees that are 50+ years old. Here, I am not talking about the Casuarina or Gulmohur trees; I am referring to Neem, Peepul and other such trees that are inherently strong in terms of resistance to rain & winds.

On a recent visit to Hyderabad, I was struck by how much that city has improved visibly over the last five years. Multiple flyovers, wide roads, swanky shopping arcades with bright neon signs…. the traffic snarls are still there in several places, but overall, Hyderabad arguably has better road infrastructure today than Bangalore. Of course, the new airport there will surely cause heartburn and chaos for a few months. After that, people will only remember the facilities offered by the new airport, and not worry so much about the 1.5 hours it takes to get there!

Bangalore Agenda Task Force (BATF), Bangalore Forward, Unlock Bangalore…. so many initiatives, but so little progress. I suppose we only have ourselves to blame.