Book review: The Oxford India Anthology of Business History

This is a terrific collection of essays on Indian business history. It is edited by Prof. Medha Kudaisya of NUS.

This unique collection presents first-hand accounts by business people, trading organizations, merchants, and travellers, showcasing the remarkable dynamism and entrepreneurship of Indian business. In addition, scholarly writings draw attention to the multiplicity of forms, ethnic and regional affiliations, cultural practices, strategies, and types of organization in Indian business. Highlighting critical themes, personalities, events, and processes, this comprehensive anthology for the first time engages with debates that are central to Indian business history and points to the new directions in which Indian business is headed.

What are the big success stories of business in India? How did India make the transition from post-Independence regulation to liberalization and free enterprise? What socio-cultural and politico-economic forces constrained or propelled the rise of Indian business? How can the roots of modern business practices be traced to mercantile organizations and the bazaar? This anthology provides a fascinating account of the making of India Inc. and the leading role played by it in India’s social and economic transformation.

Economic history becomes really interesting when you throw firms and individuals in the discussion as well. This is where such books help as they help figure the developments in economy along with those in business firms as well. And business history has its own things on human behavior, personalities, society and so on.

The essays on business firms like Tatas, Birlas along with communities like Marwaris, Chettiars and so on make for an exciting reading. There are also essays on how businesses transformed post 1991 reforms.

Superb stuff.

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What’s the relationship between the economics blogosphere and academic economics?

A discussion on quora.com on the topic.

Alex Tabbrok of MR blog sums it up really well:

Bernanke joins the econ blogging world..

Bernanke joins the quorum of econ bloggers, was bound to be a splashy event.

The blog is here. The introductory post says:

When I was at the Federal Reserve, I occasionally observed that monetary policy is 98 percent talk and only two percent action. The ability to shape market expectations of future policy through public statements is one of the most powerful tools the Fed has. The downside for policymakers, of course, is that the cost of sending the wrong message can be high. Presumably, that’s why my predecessor Alan Greenspan once told a Senate committee that, as a central banker, he had “learned to mumble with great incoherence.”

On January 31, 2014, I left the chairmanship of the Fed in the capable hands of Janet Yellen. Now that I’m a civilian again, I can once more comment on economic and financial issues without my words being put under the microscope by Fed watchers. I look forward to doing that—periodically, when the spirit moves me—in this blog. I hope to educate, and I hope to learn something as well. Needless to say, my opinions are my own and do not necessarily reflect the views of my former colleagues at the Fed.

Civilian again is an important lesson for Indian policymakers. They either remain policymakers forever or join some university in US remaining in the news circuit. Most keep coming back into some commission/report.

Anyways, the second post is on low interest rates:

Why are interest rates so low? Will they remain low? What are the implications for the economy of low interest rates?

If you asked the person in the street, “Why are interest rates so low?”, he or she would likely answer that the Fed is keeping them low. That’s true only in a very narrow sense. The Fed does, of course, set the benchmark nominal short-term interest rate. The Fed’s policies are also the primary determinant of inflation and inflation expectations over the longer term, and inflation trends affect interest rates, as the figure above shows. But what matters most for the economy is the real, or inflation-adjusted, interest rate (the market, or nominal, interest rate minus the inflation rate). The real interest rate is most relevant for capital investment decisions, for example. The Fed’s ability to affect real rates of return, especially longer-term real rates, is transitory and limited. Except in the short run, real interest rates are determined by a wide range of economic factors, including prospects for economic growth—not by the Fed.

To understand why this is so, it helps to introduce the concept of the equilibrium real interest rate (sometimes called the Wicksellian interest rate, after the late-nineteenth- and early twentieth-century Swedish economist Knut Wicksell). The equilibrium interest rate is the real interest rate consistent with full employment of labor and capital resources, perhaps after some period of adjustment. Many factors affect the equilibrium rate, which can and does change over time. In a rapidly growing, dynamic economy, we would expect the equilibrium interest rate to be high, all else equal, reflecting the high prospective return on capital investments. In a slowly growing or recessionary economy, the equilibrium real rate is likely to be low, since investment opportunities are limited and relatively unprofitable. Government spending and taxation policies also affect the equilibrium real rate: Large deficits will tend to increase the equilibrium real rate (again, all else equal), because government borrowing diverts savings away from private investment.

If the Fed wants to see full employment of capital and labor resources (which, of course, it does), then its task amounts to using its influence over market interest rates to push those rates toward levels consistent with the equilibrium rate, or—more realistically—its best estimate of the equilibrium rate, which is not directly observable. If the Fed were to try to keep market rates persistently too high, relative to the equilibrium rate, the economy would slow (perhaps falling into recession), because capital investments (and other long-lived purchases, like consumer durables) are unattractive when the cost of borrowing set by the Fed exceeds the potential return on those investments. Similarly, if the Fed were to push market rates too low, below the levels consistent with the equilibrium rate, the economy would eventually overheat, leading to inflation—also an unsustainable and undesirable situation. The bottom line is that the state of the economy, not the Fed, ultimately determines the real rate of return attainable by savers and investors. The Fed influences market rates but not in an unconstrained way; if it seeks a healthy economy, then it must try to push market rates toward levels consistent with the underlying equilibrium rate.

Lot of mumbo jumbo here. If markets determine so called real rates why does Fed intervene?

A similarly confused criticism often heard is that the Fed is somehow distorting financial markets and investment decisions by keeping interest rates “artificially low.” Contrary to what sometimes seems to be alleged, the Fed cannot somehow withdraw and leave interest rates to be determined by “the markets.” The Fed’s actions determine the money supply and thus short-term interest rates; it has no choice but to set the short-term interest rate somewhere. So where should that be? The best strategy for the Fed I can think of is to set rates at a level consistent with the healthy operation of the economy over the medium term, that is, at the (today, low) equilibrium rate. There is absolutely nothing artificial about that! Of course, it’s legitimate to argue about where the equilibrium rate actually is at a given time, a debate that Fed policymakers engage in at their every meeting. But that doesn’t seem to be the source of the criticism.

The state of the economy, not the Fed, is the ultimate determinant of the sustainable level of real returns. This helps explain why real interest rates are low throughout the industrialized world, not just in the United States. What features of the economic landscape are the ultimate sources of today’s low real rates? I’ll tackle that in later posts.

Being a historian, he would obviously know that things did work without Fed/central banks around. With central bank not even knowing what the rates are and just guessing their way, most of the time things only go wrong.

Interesting posts to follow. ..

Book Review – The Birth of Plenty by William Bernstein

Finished reading this book by William Berstein. It is  one of those several books which tries to figure why the west grew in the last 200 years and others did not?

Bernstein has simplified the answers to four factor theory:

In The Birth of Plenty, William Bernstein, the bestselling author of The Four Pillars of Investing, presents his provocative, highly acclaimed theory of why prosperity has been the engine of civilization for the last 200 years.

This is a fascinating, irresistibly written “big-picture” work that highlights and explains the impact of four elements that when occurring simultaneously, are the fundamental building blocks for human progress:

• Property rights, which drive creativity
• Scientific rationalism, which permits the freedom to innovate without fear of retribution;
• Capital markets, which provide funding for people to pursue their visions;
• Transportation/communication, which allows for the effective transfer of ideas and products.

Meticulously researched, splendidly told, and featuring a new preface and introduction, The Birth of Plenty explains the interplay of the events, philosophies, and related phenomena that were nothing less than the crucible of the modern age. This is one of the rare books that will change how you look at the world.

Further

In the tradition of Peter Bernstein’s Against the Gods: The Remarkable Story of Risk, comes Dr. William Bernstein’s The Birth of Plenty. This newsworthy book sheds new light in the history of human progress. Bill Bernstein is no stranger to McGraw-Hill. He has written two successful investing books for us and both have exceeded expectations; The premise of Dr. Bernstein’s book is fascinating as well as provocative. From the beginning of civilization until 1820, mankind experienced zero economic growth (0% GDP). This basically means that life for the average individual was no better in 5 A.D. than in 1555 A.D or 1555B.C. But after 1820, the world rapidly becomes a much more prosperous place for the average individual. What happened in 1820? Bernstein contends that there are four conditions necessary for sustained human economic progress: Property rights. Scientific rationalism. Capital markets. Communications and transportation technology. Holland, and by 1820 they were securely in place in the English-speaking world. It was not until much later that all four had spread over much of the rest of the globe. Global GDP since then has consistently been around 2%. And that 2% of growth has allowed most of the world to live in a much better place than our ancestors. While the historical aspect of Bernstein’s story will appeal to certain history buffs. His book is also full of implications for today’s society. Bernstein asserts that the absence of even one factor endangers economic progress and human welfare. He uses the beleaguered Middle East as one example – where the absence of capital markets and scientific rationalism have deterred the quality of life from improving. And Africa is sited as a dire example, where tragically in most of Africa all four factors are essentially absent

The book is written in a very nice and simple way trying to connect the dots. The examples picked from history are quite informative and tell you quite a few things.

Now one is not disagreeing that these four factors are not important. But to say these four sum up whatever it is to economic development, takes the story too far. All these books for instance have no answer to Chinese growth in the last 30 years It neither had property right nor very great capital markets. Likewise many Asian countries which have developed have not really followed these recipes for growth.

Overall, the book is a decent read given the various stories and ideas the book gives. Mixing technology with economics is quite interesting. It clearly has lessons on how to write an ambitious book like this.

How do you define industry in today’s world?

Lucy P. Marcus, Professor of Leadership and Governance at IE Business School asks this question. There is not an easy way to define boundaries of industry:

Will GIFT city have a bar?

🙂 A question which did not strike me at all. Considering Gujarat is a alcohol free state (atleast on paper) and GIFT city aspires to be an international finance centre where chilling in the evenings/weekends is a norm, will the laws be changed/twisted for GIFT?

This BS edit raises this not so trivial q along with several others:

Indian cricket fan’s new low..

Indian cricket fan keeps hitting a new low. The swings in the mood go from over-optimism to over-pessimism and outright shamelessness. Both the heights and lows of the fan are way over the top.

Ever since India lost the semi-final in the world cup 2015, we have moved to a new low. All kinds of jokes about personal lives of players are being blamed for the loss. Humour is fine but it has become too crass. And this one on beefing security at Indian captain’s house is just too much to handle.

I mean India played really well through out the tournament and there is no reason for this kind of behavior. Even if the team does badly, one should not get into all kinds of abuses and personal targeting. People do not really play to lose and you can’t win all the time. Sometimes you have a bad day in the office and that is it.

The fans have forgotten how amazingly India won all its previous matches with such aplomb. No one gave us any chance to move beyond quarters and that too because of the format (though England showed the way). To get into such theatrics, speaks really badly about the tolerance levels of Indian cricket fan.

All this points to several lessons for Indian cricketers as well. There are some current crop of cricketers who love all this fan and media attention. They love to make their personal lives public and love all that hype. One should learn from the earlier players who just played cricket and kept all this hype away. They protected their private lives fiercely and did not allow any such talks. Even then they were not spared if we remember the 2007 World cup..

One should be weary of Indian fan’s over the top attitude all the time. There is no scope for tolerance here…

Arbitrage opportunity in Indian railway tickets..

Well, one can only do so much. The Govt recently hiked the price of platform tickets (allows to just enter the railways station, could be to drop or pick someone or any other purpose) from Rs 5 to Rs 10. I mean now we have stopped hiking prices by 1 or 2 Rs. It is straight double which become too much to handle. Why should someone pay that much right away?

Anyways, interestingly there is an arbitrage opportunity. It is not a strictly arbitrage in the finance sense where one can buy cheap and sell expensive without a fuss. Here, one can avoid buying the platform tickets as train tickets are cheaper. The cheapest travel ticket in Hubbali costs Rs 5. So someone can still just pay Rs 5 and get the platform ticket service:

Starting April 1, Rs 10 will get you entry to Hubballi railway station platform, while Rs 5 will take you to Unkal, 20km away. Or Kundgol. Or Kusugal. That’s the minimum fare on an unreserved ticket. People chary of paying up Rs 10 for a few minutes of farewells on the platform, have already found a way to get paisa-wise: buy a general ticket for Rs 5, spend time on the platform with family and walk coolly out of the station – Rs 5 saved. Such shades of Scrooge are apparent among our folk who are looking to take advantage of an option provided, wittingly or otherwise, by the railway ministry itself.

The railway ministry has decided to increase the rate of platform tickets from Rs 5 to Rs 10 from April 1. It has also allowed divisional railway managers to increase the platform ticket rate beyond Rs 10 for occasions like fairs, rallies and festivals, the intention being to control the rush on platforms.

Passengers have been quick to spot the irony of the situation – that the minimum fare for ordinary trains is Rs 5, 50% less than the proposed rate of a platform ticket. They also know that no one can object to them walking on to the platform, armed with a ticket for Rs 5 – it may be unethical but perfectly legal, and probably happens only in India. Receiving family members and saying goodbyes is a deep-rooted Indian travelling tradition which few violate.

A clerk at Hubballi station recalled that this was happening regularly till October 7, 2013, when the minimum journey fare was Rs 3 and the platform ticket rate was Rs 5. “When the minimum fare was raised to Rs 5, on par with a platform ticket, visitors started buying platform tickets. Now it will be back to square one,” he said.  A lady clerk, who worked at Bengaluru City station earlier, said this is common in the metro too. Passengers buy a ticket to Malleswaram, Cantonment or Nayandahalli stations for Rs 3 to evade paying Rs 5 for a platform ticket. “This was the general fare for ordinary trains then,” she recalled.

As unreserved tickets can be bought only an hour before the train arrives, passengers have found a way out of such tight situations too: they buy tickets for any ordinary train headed in any direction, at any time. Naveen Parapur, a construction worker in Hubballi, recalled that he often bought tickets to Unkal, Kusugal or Kundgol — stations on Hubballi’s outskirts but on different routes – for Rs 3 just to reach the platform. “I will do this now too. I will certainly not buy a platform ticket for Rs 10,” Naveen said.

Mahendra Singhi, member of the Divisional Railway Users’ Consultative Committee, said the ministry’s move lacks practical sense. “The ministry itself is promoting this unethical practice. Seeing off and receiving family is our tradition, the ministry should look on it as a service rather than as a commercial opportunity. It should maintain the same fare for platform tickets or reduce it,” he felt.

It has come to our notice that the minimum journey fare is less than the proposed rate of the platform ticket. As journey tickets are given one hour before the arrival of a particular train, visitors cannot buy such tickets all the time. If they do this to evade buying platform tickets, they cannot be prosecuted according to the existing guidelines.

Fascinating. And we keep thinking poor people are stupid. They are the first to spot such opportunities.

I mean more than just increasing the fare, one should ensure there is regular checking to ensure people buy platform tickets. Most of the time it is not the case. The government is more interested in random surprise checks which only leads to more illegal monies in the pockets of checkers. On being caught, people just pay half the fine as a bribe which is a win -win for both.

A simple check at the entry and exit point will ensure both, more revenues and less traffic on the platforms.

Village as ‘Class’ and City as ‘Mass’: Andhra Pradesh Capital Development Story

S Ananth is doing a terrific job telling us about what is going on Thullur, AP’s new designated capital. In an earlier EPW article he had showed how land sharks had taken control of the designated site. The prices were zooming as if there is no tomorrow.

In a recent picturesque piece, he says land price mania has declined. But the village continues to be developed into a city. The villagers are not sure where their lives are heading. Worse, agriculture priorities are changing:

Was Mahatma India’s first corporate agent?

Bhupesh Bhandari reflects on the recent comments to call Mahatma Gandhi India’s first corporate agent. Not sure about that. As there have been so many before. People call East India Company the world’s first corporation and there were quite a few Indian agents of the company as well.

Arundhati Roy recently called Mahatma Gandhi India’s first “corporate agent”. Ms Roy has never hidden her visceral dislike for “capitalists”. India allows full freedom to profess your economic philosophy, so there’s nothing wrong with that. But the bigger question is: did Gandhi really push the interests of businessmen?

Unlike the Left-leaning leaders, Gandhi did mingle with them freely. His closeness to the Bajaj and the Birlafamilies was well known. He often stayed with them for long periods – he even died in the lawns of Birla House in Delhi. Ever the practical man, Gandhi knew that the freedom struggle would require money, and the only people he could tap for money were businessmen.

Soon after Bharat Ram, of DCM, got married in 1935, he took his wife to meet Gandhi, who was at that time in Delhi, to seek his blessings. Gandhi was staying in a colony of untouchables. When the newlyweds came, Gandhi, who was at his spinning wheel, said: “Do you know that my thirst for begging is simply unquenchable? I do not mind taking ornaments either.” Shiela, Bharat Ram’s wife, got the message, took her gold bangles off and handed them over to Gandhi.

🙂

Further

as there a quid pro quo? It was said forcefully by his detractors that Gandhi’s call to boycott things made abroad helped Indian industry immensely, especially textile mills like DCM. It is difficult to say if that was the intended consequence of the boycott.

What is certain is that even his ardent followers in the business community, men like Ghanshyam Das Birla and Lala Shri Ram (Bharat Ram’s father), had serious differences of opinion with Gandhi.

Lala Shri Ram, having supported the Congress in the Swadeshi movement, expected the party to do something for Indian business. Instead, he was alarmed at the rise of the Leftists within the Congress and their disdain for businessmen. When Gandhi inaugurated the annual meeting of the Federation of Indian Chambers of Commerce and Industry, or Ficci, in 1931, Lala Shri Ram said in plain words that he felt let down by the party. “We would suggest you a sort of convention for the future that in all matters pertaining to the realm of economics, the Congress before making up its mind will allow us to offer it our suggestions and if necessary have discussions with our members.”

This is hardly the stuff today’s industrialists would dare to tell their leaders.

Gandhi accepted the suggestion graciously; in fact, he suggested that Ficci should go a step further. “I want you to make the Congress your own and we would willingly surrender the reins to you. The work can be better done by you.” But he imposed his terms. “If you decide to assume the reins, you can do so only on one condition. You should regard yourself as trustees and servants of the poor. Your commerce must be regulated for the benefit of the toiling millions and you must be satisfied with earning an honest penny.”

After that, Gandhi allayed the fears of the businessmen by saying that he did not agree with the Leftist worldview of them. “I do not for a moment believe that commercial prosperity is incompatible with strict honesty. I know businessmen who are absolutely honest and scrupulous in their dealings. It is, thus, easily open to you to take charge of the Congress.”

Gandhi and Birla, in spite of their well-publicised closeness, too differed – frequently and strongly. While both were nationalists, Birla, being a pragmatic businessman, felt uncomfortable about Gandhi’s confrontationist agenda. According to business historian Gita Piramal, Birla begged Gandhi to attend the Round Table Conference (1930), questioned his support for the hardliner Swaraj party (1931), advised him against a second civil disobedience movement (1932) and pleaded with him for the Congress to contest the provincial elections (1935). “By the mid-1930s, the wedge between Birla and Gandhi had jammed into place,” she wrote in her 1998 book,Business Legends.

To leverage the differences between the tallest leader of the day and his principal financier, the imperial government in 1932 offered knighthood to Birla, which he declined. So much so, in 1942, when it was time to launch the Quit India Movement, Gandhi, who was living at Birla House, moved out to the Congress office, lest it embarrass his host who had been making windfall profits in World War II. Birla, according to one account, had to cajole Gandhi to return to his house.

There is nothing in all this to suggest Gandhi worked like an agent of his businessmen friends.

Historically, politics, business and money have been really close friends and foes. Both have needed each other to prosper. It will be actually interesting to see the relation between these two actors – politicians and businesspersons – from a historical perspective. In the early years of Indian independence it was fashionable for politicos to remain distant from businesses. As times passed, the bridges were built and bridge distance also got shorter. Now, some might say the relations have become too close for comfort.

How has One Day cricket changed?

Kumar Sangakkara is not just about exceptional batting but also really good with expressing his views.

In this detailed interview he points what all has changed in one day cricket:

How have demands on one-day batsmen changed since you began?
Roles of batsmen have changed. When I started, for a long time they told me my job was to bat 40 overs and let everyone else bat around me. It was a case of just holding the fort and playing, playing, playing. That was basically my job at No. 3. But when the sides changed, when your role changed from being a guy who bats 40 overs to someone who could score quickly and bat for only 20 overs, and that’s still good enough for the side. Everyone is thinking about making an impact with their run-making.

Now when I go in to bat, if the situation calls for it, I’ve tried to keep my strike rate at around 100. I know that if I’m anywhere between 85 to 100 when the Powerplay comes, I know I can kick that up to 120-130 or even further. The mindsets have all changed. You don’t hold the fort for the rest of the guys anymore. The rest of the guys are capable of doing that.

How is your technique and mindset different now, compared to the start of your career?
With technique, I bat differently each game, probably. Sometimes I don’t tap the bat. Other times I change my set-up. What I realised is that in one-day cricket you can do all of that and sometimes need to do all of that to get yourself momentum, create pressure or get a better rhythm, depending on the stage of the innings. For example, I’d tap the bat and I’d keep it up if there’s a bit of pace around, and look for other areas to score singles.

“I admired the way Mahela Jayawardene manipulates spin, or the way Tillakaratne Dilshan hits the short ball, but I had to figure out what works for me”

More importantly, if there’s a weak link in a bowling attack, you’ve got to take advantage of it. If they are bowling a part-timer and you’ve had a good start, you take them on because that creates a lot of pressure. That attitude has been there for a long time from other sides, but for us it’s been a case where now, consciously, we’ve made the change to go after them.

Spinners also now have the extra fielder up because of the new rules. So you try and create pressure on the spinner by taking the boundaries on. It’s just a case of trying to reverse pressure. More often than not, it works.

If we see history of cricket from the different forms played, test matches have remained more or less the same. Test matches are only about the sport and hence players know its true value.

It is one dayers and T-20s which have posed questions as they try and balance entertainment with sport. Earlier it was ODIS which brought spectators to grounds and now T-20s. As T-20s have mushroomed and become popular, ODIs are struggling to fight for relevance. Infact, what ODIs did to test matches, T20s are doing to ODIs.

End result has been to make ODIs like T20s with flatter pitches, smaller boundaries, 4 fielder restriction and so on. The whole thing has been to make the game more and more batter friendly. To hell with bowlers who have to keep looking at ways to control batters with latter having all licences to kill. The shorter boundaries, flatter pitches have followed with broader bats, powerful bats and so on.

Any game balance is important. Just to draw more crowds, one cannot just make the game so one sided as cricket has become. The game is not just about hitting 4s and 6s but should test the overall skill level. I mean the thrill you get to see Wahab Riasz type spells has become such a rare thing..

Book review – Those Swiss money men by Ray Vicker

A really old book written in 1973 and not sure whether one can get any copies.But then these are the kind of books which have to be read.

It is not just about history of finance/money books written today but those written in the past as well. In money/finance, one should read as deeply a possible on history.

Ray Vicker was a European Editor of Wall Street Journal. He has done a great job explaining the mystery/secrecy of Swiss banking. How and why money became so important in Switzerland and the country became such an important financial centre. The book is centered around several Swiss banks and individuals who ran these banks.

The book is also written at an opportune time – 1973. The world monetary order was under a huge stress as US exited from the gold-dollar standard. The standard had operated since 1945 but was no more sustainable as US did not have enough gold reserves to pay the number of dollars. In a typical journalist way, the author goes onto the various important political characters which were behind the decision. In most books, the discussion is from a US perspective but this one is mainly European and Swiss which are usually ignored.

Then the book has discussion oon three financial centres in Swiss- Basel, Zurich and Geneva with each one having a different characteristic. Basel and Geneva are more traditional but Zurich is all modern. Zurchers were traders, Geneva a city of refugees.

There were 7 kinds of different banks – big banks, local banks, cantonal banks, savings banks, loan associations, private banks and other banks. There are two special kinds of banks for mortgage financing as well. Even in 1970s, Swiss had one banking outlet for every 1400 people, or more banks than dentists.

Why are Swiss so secretive about banking? The book does not get a lot into history of this. Just that it is their culture to be really private and no nonsense people. Keeping things private comes naturally to them. Swiss also believe  that it is not their problem if people bring money to their country. It is the problem of the other country whose lax rules allow funds to flow to Swissland.

Of course, one can question all this now. The book was written in 1973 and lot has changed since then.

What is price coherence and why it is surprisingly bad for consumers

Interesting research and surprising results surely.

Price coherence is when both the company (say Jet Airlines) and intermediary (say Yatra.com) sell the flight ticket at the same price. So what is the problem? Well, consumers prefer to book such stuff from the intermediary as it offers many other things (like planning a holiday and so on). This leads the companies to offer more freebies to intermediary. And who pays for these intermediaries? Consumers who else.

What is the secret of success in social inclusion? An example from Himachal Pradesh

World Bank has a new report on HP.

One of the author blogs on the findings:

A preview of Jammu & Kashmir budget

There is hardly any attention on State Budgets which needs to be corrected. State budgets matter more from its impact on local populations.

This blog has enjoyed several pieces written by Dr. Haseeb Drabu. Now he is the finance minister of the state (headed J&K bank as well), which is really interesting.

Here is a short article on the J&K budget presented recently:

Bengaluru municipality’s slogan — Dig it, widen/deepen it, forget it

Once Hero Honda came with this memorable ad slogan – Fill it, Shut it, forget it. The idea was to communicate the fuel efficiency of the motorcycle produced by the company. It was a huge hit with the bikers.

Taking inspiration, Bangalore Municipal Corporation (Brahat Bangalore Mahanagara Palike) has started its own slogan – Dig it, widen/deepen it, forget it. They could have taken inspiration from Nike and say Just dig it. But choosing HH was more Indian and gives a deeper signal as it is more than digging (deepen and forgetting is as crucial).

I mean it is amazing how BBMPO never tires to keep digging the old roads, newly laid roads, already dug roads, pavements etc. Just name it and they have managed to dig it. They just don’t dig them but create craters of sorts. Most of the time these craters are at critical spots like junctions and on really busy roads, disrupting everything. Once these roads are dug they forget about it and becomes a pool of dirty and stinking water. Suddenly someone will complain and remember, they will do a mess of filling the crater. By the time they do it, it is time redigging it again.

Worst is there is hardly any sign on the road to indicate that a crater has been created and one just ends up taking a free dive into the pool and enjoy the swim. At times they put a tree/bush on the site indicating the ditch which is like so funny. What times are they living in.

The entire mess BBMP pushes onto its citizens is appalling to say the least. It is like fighting a war everyday driving on the roads. You never know where you are going to land. If you cannot do good, atleast minimise harm..

Needless to say, but all this madness leads to several diseases and infections. Children are the biggest sufferers of this but no one really cares. Just garbage and carelessness everywhere. I mean it is so sorry, that a child actually wrote to the Bangalore commissioner — ‘Mr Commissioner, can you please save me? She was recovering from her second Dengue attack in 20 months!

And we should remember. This was India’s smart city, full of smart people. The sheer decline of the city is a result of really bad policy and complete ignorance and nonchalance. A terrible case of how to ruin what was once a pensioner’s paradise..

History of water supply in Mumbai and BMC’s bizarre policy

These are the sort of issues we need a much deeper understanding. Instead of obsessing over MPC, we need city wise WPCs (Water Policy Committees) informing citizens over what is going on. India’s water crisis is matter of time and we need to be really serious about it.

Here is a insightful article on Mumbai’s water supply and how policy makes a mess of things as necessary and vital as water:

How Zee TV started and changed Indian TV history..

Another great article from BS staff. It is a paper which believes in Indian business and keeps coming up with these great stories:

India’s yield curve stretches further.. GoI to issue 40 year bonds

This is an interesting development. Many don’t know how active and vibrant Indian government bond markets have become over the years. A process which started nearly 25 years ago following the 1991 reforms has moved from one strength to the other.

We have an automated anonymous market just like in equities, a high quality settlement system, vibrant money markets, a nuvation based repo lending in form of CBLO (which Western world is still discussing and struggling), a yield curve from 1 year to 30 year (yes there is illiquidity in many buckets which will even out in due time) etc etc.

The latest is a 40 year bond:

The long-term bonds of 40-year maturity to be auctioned by the central government for the first time in the next financial year are set to grab the attention of insurance companies, pension funds and provident fund players. The current highest maturity is 30 years. These longer tenure bonds will help to develop the yield curve beyond 30 years.

Finance Secretary Rajiv Mehrishi had on Monday said the government would use these 40-year bonds to borrow up to Rs 10,000 crore and the dates were yet to be finalised for the launch. According to the issuance calendar of marketable dated securities for the first half of the financial year (April-September), issued on Monday, for every week beginning April, the Reserve Bank of India (RBI) will auction a 20-year and above security for an amount in the range of Rs 3,000-4,000 crore. The government will borrow Rs 3.6 lakh crore in the first half.

“All insurance companies will be interested in these bonds because almost all of them offer annuity products. In these products, long-dated bonds are required,” said Badrish Kulhalli, head of fixed income at HDFC Life.

There are some concerns over whether there will be any demand for this which os overblown. It is just slated to be around Rs 10,000 cr which is not even a drop in the borrowing ocean. The limit will be increased only gradually.

Should help somewhat in the ever struggling corporate debt market..

Foundation of the American political economy are institutions built with ideas from Adam Smith..

Claude Fischer argues that Adam Smith’s ideas suited and fitted foundations of American political economy really well: