Friday, November 30, 2012

Internet & India begin with an ‘I’...

... and that’s where it will end – ‘I’. Will policy makers ever take technology to the ‘We’? Good question!

What’s the buzz word amongst the tech-savy in India (beside the internet and the iPhone) – it’s mobiles, and not to forget the long awaited 3G technology. Ten years ago, and not in the ice age (mind you), getting a black ugly monster landline dialer would have called for a wait of several years! But who could have imagined that just a decade later, one could surf the internet on high-speed broad band from inside a running train, or use a PDA, carrying all the informations relating to your business in one smalle hand-held device. Stranger thought, India becoming one of the IT hubs was unimaginable. But, it happened! In this era of information, India’s sustained growth depends on its ability to integrate skills into the production processes and everyday lives. Information and Communication Technology (ICT) is more than an essential tool to make sure that the continued level of opulence is present across societies.

But the sad fact is that this progress has been highly lop-sided. As per the 2008 World Economic Forum report, and also well accepted by India’s intellect, the concept of digital divide today is one of the biggest impediments to development of India. This is reflected in the fact that India’s ICT environment and readiness rank has slipped by 4 positions during 2008 (we ranked 50th amongst 127 countries this year compared to 44th out of 122 countries last year). Really, the deteriorating quality amongst the regulatory milieu and the low level of India’s readiness to change in this regard is widely visible. Even in 2008, when the world is going from the Wi-Fi to WiMax, India is still fighting with its rural-urban divide. Imagine, even with numerous broadband service providers at one’s door-step, just a mere 4 million users gain access to it, out of which, the majority live in urban areas. To make matters worse, Computer Industry Almanac Inc.’s report revealed that Internet usage has actually dropped down by 1% since 2005. We repeatedly fail to understand, why the Information & Broadcasting Ministry is not focussing on pan-India technology development and is only perennially focussed on urban parts.


Source : IIPM Editorial, 2012.

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Tuesday, November 27, 2012

How to improve the lives of the poorest people on the planet?

“The biggest change for me – and it’s a major change – will be to think about how to improve the lives of the poorest people on the planet, whether they need education, to increase their harvest, or to find better medical treatment...”

Q: And you don’t regret anything?
A:
Of course I can look back and think about some people I recruited, about certain times I acted naive, about acquisitions we made, or about things we could have launched sooner. But I wouldn’t change anything, because it’s a dream come true to have been able to play such an important role. We learned as we went along, including from our mistakes, because we were the first company to believe in the personal computer. The entire industry has expanded around our Basic operating system, then MS-DOS and, finally, Windows.

Q: But the PC isn’t the centre of everything now.
A:
I’m talking about software, not the PC, that incredible object, thanks to which the Internet emerged. We shouldn’t downplay the role of the PC, but here it’s a software question. Thanks to software, we are revolutionising TV, the way you drive your car, the way you use your cell phone. We stayed away from hardware on purpose, but when you see those new ultra-portable computers replacing school notebooks and many PCs in business, you can’t underestimate their importance.

Q: But the distribution of this software has evolved, upsetting your business model.
A:
Major breakthroughs have been made in graphic interfaces and the power of personal applications that allow you, for example, to exchange business plans remotely. A new language has been created that allows us to do things. Everything goes through fibre optics. That’s how Microsoft was created, on the idea that advances in hardware and software would allow us to be more ambitious. That’s why when we founded this company we said, “A computer in every home and on every desk.”


Source : IIPM Editorial, 2012.

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Monday, November 26, 2012

My last editorial for this lovely venture with which I started my media initiatives…

It was a dream to start a business magazine through which we (me personally and our entire group which includes the IIPM think tank) could take to the masses our thoughts honestly and fiercely to the world. When it began three years back it thus was a huge dream come true. With time however the vision changes. When we did covers like 'Paralysed Democracy' or on the 'Dysfunctional Judiciary' – things we have always been most passionate about – we felt that though our readers were enjoying it, yet there were far more people who deserved to read it, but were being left out by us purely because a magazine focusing only on business and economy was not something a common man would easily pick up. One dream leads to the other and we started nurturing the dream of a news weekly- that too in many regional languages as well – to take our vision that we passionately believed in to a larger audience to whom the thoughts mattered as much and those who made India. Thus the Sunday Indian was born. As most of our readers would be aware that it is already the only news weekly globally that comes out in fourteen different languages every week! And it is only fair to say that it is doing extremely well. I still don’t have figures to prove so, but I know that in at least half of the languages it is the leader already and in the other half of the languages a very promising challenge to the leaders.

Over the last few months I've been repeating the Sunday Indian editorials for my Business & Economy readers as well. The reasons are two fold. The first of course is that truthfully speaking I tried for quite long to keep writing two different editorials but I can't write when I don’t feel strongly enough on certain things. And feelings strongly every alternate week on two different issues is not always possible. The second reason is also most of the times I thought I was writing something that I would love if both my magazine readers read. However, on further thought I now feel Business & Economy deserves individual attention and respect. So its only fair that I concentrate more on writing better for the Sunday Indian and allow a specialist to write here in Business & Economy. Those who still want to read my editorials can always additionally buy the Sunday Indian as well – and the throwaway price that it comes at, I strongly believe every Indian should soon do so ? of course whenever I feel there is something strong enough to share I will continue writing in B&E, but in the inside pages as I think edit should have its distinct identity.


Source : IIPM Editorial, 2012.

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Saturday, November 24, 2012

KERALA: IPR POLICY, 2008

Kerala government envisages policy to give IPR to traditional knowledge

For the second category, the state will have the rights. The knowledge will be available to all for non-commercial use, but commercial use will be restricted to the existing right-holder.

But as per experts, all is not as well in the policy as it sounds. There are apprehensions that the policy is certain to open a confrontation with the Centre. Shamnad Basheer, Associate, Oxford Intellectual Property Research Centre, says, “Intellectual Property is specifically listed in the ‘Union List’ as Entry 49. The state cannot legislate on these.’’ The chief architect of the policy, Kerala Planning Board Vice-Chairman Prabhat Patnaik said, “Within any IPR regime, a range of specific problems arise for any state, which it has to resolve without infringing upon the domain of the Centre.’’ The policy reads more like an ideological statement than a coherent policy that is sensitive to the complex nature of the TK issues. State appropriation of TK is not a solution to misappropriation by others. In fact, it is a solution that is worse than the problem, as the holders of TK are deprived by the State in this policy.


Source : IIPM Editorial, 2012.

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Friday, November 23, 2012

He was good!

Mugabe actually did nice once...

Ok, Mugabe is bad! No issues about it! But the fact is, he wasn’t like this always. In the mid-80s, African states were integrated under Southern African Development Community (SADC) to wipe out the prevalent racism of whites throughout Africa. The man most pro-actively involved was a person called Robert Mugable. Sadly, the same movement took a violent turn with land reclamation from whites becoming a standard rule of both law and gun. Later, though SADC widened, it still remained a good platform to resolve complicated African problems.

Today, Mugabe’s protege has grown to oppose him. When former South African President Nelson Mandela criticised Mugabe, Zambia, Botswana, Tanzania and even Angola, in the recent SADC meeting, openly demanded a transitional government to replace the present Mugabe regime. Is this a start to a revolution? Oh please, let’s not kid ourselves. The reason is not far to find. Despite South Africa being a different country from what it was earlier, unfortunately, the present South African President Mbeki is a die hard Mugabe supporter and would help him and many who are joining them.


Source : IIPM Editorial, 2012.

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Thursday, November 22, 2012

India has gained in the past 15 years of growth

The current economic crisis threatens to destroy all that India has gained in the past 15 years of growth. Who is to blame?

This year alone, backdoor subsidies for the oil sector will amount to about a tantalising Rs.3 trillion! And there is virtual consensus that even if oil prices come down to about $100 a barrel, the huge subsidy bills for the oil sector will remain high. Fertiliser subsidies are slated to cross another Rs.1 trillion! Even despite the massive increase in the fertiliser subsidy bill, farmers across India face a shortage crisis during the sowing season. Add food subsidy to this cocktail and suddenly you realise that just these three items could account for almost a mind-numbing and a spine-chilling 10% of the country’s GDP – clearly an unsustainable position by any yardstick! Add the massive increase in expenditure on social welfare schemes like NREGA and Sarva Shikhsa Abhiyan and you start realising that fiscal discipline has been thrown out of the window. Such scenarios in the past have always led to an economic slowdown, hurting both the poor and the middle-class. Says Bidisha Ganguly, Head, Economic Policy, CII, “We are already facing an economic slowdown and the way things are moving this slowdown is expected to continue in near future too. This is also quite evident from the fact that the industrial production has gone down from 11.5% to 8.3%. Trade deficit has already increased and in the wake of current situation this too is only expected to simply widen.” There is yet another disturbing indicator that is an ominous sign for the economy: the rate of growth of the infrastructure sector has crashed to just about 3.6% in April and May 2008.

Many have started drawing disturbing parallels with the late 1980s era when huge rises in trade and current account deficits, unsustainable fiscal deficits, high inflation rates, signs of political instability and ad hoc measures had eventually led to the crash of the Indian economy in 1990. After Rajiv Gandhi became Prime Minister in 1984, the Indian economy suddenly abandoned its historic ‘Hindu’ rate of growth of about 3% and started growing at about 6%. This was unexpected and unheard of. After his widow Sonia Gandhi renounced the post of the Prime Minister in 2004, the Indian economy astonished the world by growing at 8% to 9% every year.


Source : IIPM Editorial, 2012.

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Wednesday, November 21, 2012

PROFILE: G. KENNEDY THOMPSON, FORMER CEO, WACHOVIA CORPORATION

How does it feel to be proudly called the ‘Man Friday’ of the company, then terribly blamed to be a gambler in a CEO’s disguise and finally dethroned being accused of gifting credit crisis to the bank…this man has taken it all!
 

Back in the late 1990s when Thompson took control of First Union (FU), the bank was pleading for a financial cure, and in 1997 the situation was aggravated by the merger with CoreStates Financial Corporation as FU paid $20 billion, a sum that was six times the then book value. Right before beginning his tenure as president and CEO, he proved his worth to FU through the significant purchase of Money Store, a subprime lender and produced sufficient revenue to maintain the bank’s profits at a reputable level, extenuating a crisis that could have been devastating. He is also credited to have acquired its North Carolina rival Wachovia Corp. in 2001 and we know the story of this rare merger’s reverberating success.

Furthermore, Thompson learnt from his predecessor Crutchfield’s mistakes and created a style and substance of his own differentiating it from Crutchfield’s. He made it very clear that he wouldn’t follow belligerent acquisition policies that had made Edward Crutchfield unpopular and led a conservative strategy emphasising on teamwork, cooperation and flexibility committing to develop FU by focusing on consumer service and retention. In 2002, another so-called bold and unorthodox acquisition was carried out by him in the form of Prudential Financial that made Wachovia Securities, the fourth largest brokerage firm on Wall Street. Even Business Week honoured him declaring him as one of the best managers for the year 2003.

Golden West may have ended his career at Wachovia, but Wachovia can’t thank him enough for his contributions. Can it? And just as Robbie ends, Thompson too wants to be known as a “better man”. He does, doesn’t he?! Do ask him when you meet him next...


Source : IIPM Editorial, 2012.

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Tuesday, November 20, 2012

STEVEN PHILIP WARNER analyses the hiccups and forces at play…

MDLR Airlines follows a standard model – small passenger groups, small jets & small cities. But how long will “Jupiter” continue its flight? STEVEN PHILIP WARNER analyses the hiccups and forces at play…

Fleet addition is another aspect that MDLR is paying attention to. The airline currently has the smallest on-board seat capacity in the country – of just 255! It has three 85-seater Avro RJ 70s and Gopal intends to add 7 more aircrafts over the next 2 years as Gopal reveals, “By the year 2010, we will have more than 10 aircrafts. Two more deliveries are expected by the end of this year (the same Avro jets).” So does that mean that the company will stick to only smaller machines for its pan-India operations? Well, not exactly. As company officials revealed, MDLR hopes to sign a deal or two with Airbus and Boeing for the supply of aircrafts. Surely, this is one aspect where MDLR deserves a pat on the back as other airline companies have suffered much in the name of infrastructural crunch. Thus a deliberate decision to not increase its fleet rapidly makes sense.

Going forward, with new airports sprouting up, the airline plans to use Russian aircrafts, hoping to take the total size of its fleet to about 30 by 2013. The company’s choice of small jets also gives it an advantage over many. For example carrying just 70 passengers, an MDLR airline would cover the Delhi-Dharamsala route in just 47 minutes, while an ordinary A320 carrier would take about 1hr 45 minutes – efficiency defined! 


Source : IIPM Editorial, 2012.

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Monday, November 19, 2012

Agriculture sector lagging behind

Nearly 60% of the country's rural population is into farming

The agriculture sector has been chronically neglected by the Asia and Pacific region of the world, leading to 218 million people - a third of the region’s poor and largely living in rural areas continue extreme poverty and broadening the gap between rich and poor. These are the conclusions reached by a 2008 survey conducted by United Nations Economic and Social Commission for Asia and the Pacific (ESCAP). Roughly over half of the population in the region depends on agriculture and as the survey says it provides employment to 60 % of the working population.

Therefore this sector needs a serious attention and revitalisation. “Governments must show greater political will to address decades of policy neglect and failure in the agriculture sector” Noeleen Heyzer, the Executive Secretary of ESCAP, said. The Survey says that growth and productivity in the sector have slowed down and the Green Revolution appears to have passed millions.


Source : IIPM Editorial, 2012.

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Thursday, November 15, 2012

R&D dilemma

When developed world’s agony is developing world’s consolation

The growing trend of internationalisation of R&D has put the world in dilemma. It is the dilemma of fear and hope. The fear is of the developed world and the hope is of the developing world. The reason for the fear is that the developed world is going to lose its competitive edge and that innovation as a major portion of R&D investment is moving mostly to developing countries. The hope for the developing world is that the growing influx of foreign R&D investment will boost innovation and product development in the long run.

As per the 2002 world investment report, although the worldwide R&D expenditure stood at over $677 billion and four-fifth of that amount is concentrated in the top ten developed economies, the same report has revealed the trend of R&D expenditure of 1991 to 2002 where the R&D share fell from 97% to 91%. On the contrary, that of developing countries rose from a mere 2% to 6% during the same period. In 1994, major developed economies or regions accounted for 90% of overseas R&D expenditures. This share decreased to 80% by 2001. Sweden, one of the most innovative European countries, is also losing its innovative edge owing to increasing trend of outsourcing R&D. According to Government statistics, the country was carrying out over 78% of their R&D projects within the country which has dropped to 50% in 2007. On the other hand, developing countries like China, Taiwan, Korea, Singapore and India are the hottest destinations for transnational corporations because of cheap and dexterous labor flux. However, the fact is that the developed world’s agony is becoming developing world’s consolation.


Source : IIPM Editorial, 2012.

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Monday, November 12, 2012

“The business of sports is very interesting and profitable...”

Bollywood superstar Shahrukh Khan discusses his IPL franchise in an exclusive with angshuman paul of B&E

He has ruled Bollywood for years together and now he is lending his phenomenal brand equity to cricket. In this exclusive with B&E, Shahrukh talks about his newfound passion for the game:

B&E: What role are you playing to generate the maximum ROI from IPL?

SRK:
I did it out of passion and the passion and zeal for cricket is still there, but yes, when I invested such a huge amount, I do expect a return. But that’s being taken care of by some other concern, I am focusing on the publicity and promotional activities as it’s required in a business of sports.

B&E: How do you plan to promote your IPL team?

SRK:
I personally will be present in each and every match as when I have invested, I should know what’s happening. I am also having a contract with Tag Heuer to make special watches for all team players. We will also launch a promotional website.

B&E: What are your long term plans with respect to the business of sports?

SRK:
Right now after IPL, I don’t have major money to invest. At this point, I am willing to do every possible thing for my team members (even taking water for them while they are playing) but I know that initially it won’t make a business for me and it will take me ten y ears to think of other businesses of sports.


Source : IIPM Editorial, 2012.

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Saturday, November 10, 2012

A monopoly at rock bottom!

BAA needs to sell one of its airports to cater to regulators as well as its alarming debt situation

ou would have heard for sure that one can have too much of a good thing. But rare are occasions for a company when good and bad can both mean ugly, which explains the quagmire faced by Spanish construction behemoth Grupo Ferrovial, ever since it took the plunge to acquire British airport operator BAA for $19 billion.

First the good thing. In BAA, Grupo Ferrovial has really struck gold in UK, as the operator owns seven airports in the UK, which also include Heathrow, Gatwick and Stansted, but landed itself headlong in a quicksand of conspiracy, as BAA is being investigated by the UK’s Competition Commission over market dominance, which might result in compelling BAA to sell one of its airports. When the Civil Aviation Authority announced that landing charges would be hiked at Heathrow by 23.5% this year and by 21% at Gatwick, players have immediately cried foul. A release by British Airways comments, “to allow BAA to ramp up airport charges significantly demonstrates conclusively that the airport regulation system has failed.” Surely the fireworks have just begun there!


Source : IIPM Editorial, 2012.

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Friday, November 09, 2012

HORIZONS

Increased outlays for NREGP will increase corruption

And what hope have they given us over the last 60 years or so that they just might stop looting the Indian exchequer in the name of the poor? And how many court decisions have you heard of, in the last 60 years or so where top bureaucrats, businessmen & politicians have been sentenced to spend days behind bars for corruption? So saying and hoping that tweaking the current system of delivery will ensure that the Rs.60,000 crores, going to be spent every year on NREGP will not be siphoned away by the criminally corrupt, is naive at best; and insidiously dangerous at worst. For corruption will not go away and more and more frustrated rural poor will give up on the system and join the Naxalite movement.

After 60 or so years, India has managed to be host to more than 400 million illiterate citizens. Tweaking the system hasn’t been of help. And yet, you have our pseudo-liberals insisting that allocating more funds for primary education will do away with the problem of illiteracy. Or that more funds allocated for health care will improve health standards of the poor in the country. There is nothing more sinister than defeatist statism.


Source : IIPM Editorial, 2012.

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Thursday, November 08, 2012

From subprime to ‘near prime’

Financial viruses spreads to the EU

After the US, it’s Europe, & in Europe, after Société Générale, it’s UBS, the largest Swiss bank is latest victim of the most dreaded & infamous 21st century financial shark, commonly identified as the ‘subprime’. UBS has recently announced writing-off $4 billion worth of securities as part of its plans to absorb subprime losses. Earlier in October, the bank had written down $3.6 billion in value of its mortgage-backed securities, & then, in December, it further wrote-off $10 billion. Now the problem will spread because of “near prime mortgages,” said Simon Adamson, Senior Analyst, CreditSights, a London based independent credit research firm, to B&E, adding, “UBS’ main trouble is with Monoline (bond insurance), ALT-A mortgages, Fico & CDO (Collateralised Debt Obligation). This is not end of the story, as banks are not coming clear about their exposure to such instruments; it’s difficult to forecast nature & amount of the crises.”

Both Swiss Federal Banking Commission & US Securities & Exchange Commission intend to ascertain if the UBS had booked inflated prices for mortgage bonds despite knowing their values had dipped. UBS, on its part, disapproves any special audit of itself.


Source : IIPM Editorial, 2012.

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Wednesday, November 07, 2012

Mortgaging losses

Is BofA being brave, or does it have a real strategy?

It’s time for financial analysts around the world to go back to their drawing boards. For the recent decision of the North Carolina-based Bank of America’s (BofA) decision to purchase Countrywide Financial Corporation (CFC) for $4.1 billion in stock has totally confounded them. Many call it a foolhardy decision, for CFC incurred a loss of $1.2 billion for the quarter ending September 30, 2007. Kenneth Lewis, Chairman & CEO, BofA said in a statement, “Countrywide presents a rare opportunity for Bank of America to add what we believe is the best domestic mortgage platform at an attractive price and to affirm our position as the nation’s premier lender to consumers.” For every CFC stock, the company’s shareholders will get 0.1822 share of BofA’s stock. Last year too BofA had invested $2 billion in CFC, for a 16% stake in the company.

What’s more, the gamble might actually pay off, as banking experts consider this deal as an important one to rescue the US’s largest mortgage lender. It will also help in expanding the empire of BofA, the nation’s largest consumer bank. With the buyout, BofA can become the largest mortgage lender and loan provider in the country. Victoria Wagner Director, Financial Services Ratings Group, Standard & Poor’s told B&E, “It’s neither BofA’s decision to prevent recession or for the rescue of CFC. It’s just BofA’s interest in CFC mortgage facilities.” Bart Narter, Senior Analyst, Celent says, “There’s still plenty of risk involved... he’s (Kenneth Lewis) brave to do it. But I think that it’s very likely down the road to be profitable, maybe not immediately, but in the long term.” According to Mortgagedaily.com, close to 150 mortgage lenders failed last year and 43 were acquired by healthier institutions. But Lewis is quick to point out, “We’re aware of the issues within the housing and mortgage industries. The transaction reflects those challenges.”


Source : IIPM Editorial, 2012.
An Initiative of IIPMMalay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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Tuesday, November 06, 2012

It’s not American!

Javier promotes a different brand of politics to deal with crises

This Spanish physicist turned strategist is a die-hard European. Having held the Secretary-General’s post at NATO from 1995-99, Javier Solana has been in the thick of security planning of the amalgamated continent. Now, as the High Representative (HR) for the Common Foreign & Security Policy (CFSP) of the European Union, he has an onerous task at hand of managing the inherent & emerging contradictions in a highly globalised world. From Tehran to Trinidad, Javier had been engaged is promoting the unique blend of EU’s way of dealing with conflicts & crisis in the 50th year of the European Union.

His astute diplomatic skills and his vast experience in handling vexed issues came to the fore during the year. “For the Europeans, the signature of the Lisbon Treaty in December is very important. It will give us better instruments to face new challenges. On the international stage, we will continue to work closely with our partners and the international community to contribute to peace in the world. Stabilising the situation in the Balkans and the peace process in the Middle East will be top priorities,” Javier Solana told exclusively to B&E.


Source : IIPM Editorial, 2012.

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