Demographic Dividend

                                                       Demographic Dividend

I don’t remember when I first came across “demographic dividend” but it must have been in the heady days of early 2000’s when the world seemed to have finally broken free of the brick and mortar and was soaring into the brave new millennium.  It was a cute little term which immediately assured all of India that things were under control and absolutely on track. We may have problems about food security, water shortage, power shortages, unemployment and poverty for the moment but we sure had a bright future ahead of us. That was karma, ordained in our national destiny.

One could almost hear a collective sigh of relief from the politicians. There it was. The writing was on the wall. No need to worry about those teeming millions clamouring for such mundane things like roti-kapdaa-makaan. It was beyond the teeming millions to imagine just what bounties were in store for them. They just needed to be patient (maybe for a generation or two) but we will surely feed them Mongini’s cakes, dress them in the finest of Raymonds and house them in New Cuffe Parade. Demographic Dividend, you see, would bring everything that everyone ever desired. So let the party begin. Achhe din toh aanewaale hi hai.    

Demographic dividend as a term seemed to be very very Indian, if you get what I mean. We Indians have always been good at making up these sexy sounding slogans and phrases. Take for example “mera Bharat mahaan”. While I would much rather believe in this concept, the reality seems to be somewhat different. As some wit proclaimed “sau mein se ninyaanbein beimaan, phir bhi mera Bharat mahan”. Or consider “satyameva jayate”; it may very well translate to “the Truth alone shall triumph” but little does one see Truth manifest itself and forget about it prevailing anywhere. The only ones perhaps to have benefited from this slogan satyameva jayate” are Aamir Khan and Star Plus who leveraged the phrase to make a successful TV show.

Surprisingly, demographic dividend turns out to have a non-Indian origin with no less than hallowed UN defining it. Demographic dividend, as defined by the United Nations Population Fund (UNFPA) means, “the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and 65 and older).”  In other words, it is “a boost in economic productivity that occurs when there are growing numbers of people in the workforce relative to the number of dependents.”  UNFPA states that, “A country with both increasing numbers of young people and declining fertility has the potential to reap a demographic dividend. 

Well, so far so good. But like all the attractive schemes that one comes across, this one also has a “terms and conditions apply” clause attached to it. So if one were to go through the fine print, like anyone with common sense should, one would immediately understand that in order for economic growth to occur the younger population must have access to quality education and employment opportunities. And therein lies the problem of the elusive demographic dividend.

In his latest book “The Rise and Fall of Nations” Ruchir Sharma has dealt with this issue in detail, citing numerous cases across a large number of economies and over a fairly substantial period of about 50 years. The conclusions and observations that he has drawn are fascinating to say the least.  

Obviously the first conclusion about demographic dividend is that the increase in population is in no way a sufficient condition for creating growth. It’s true that there have been a number of instances in last 50 years where a few countries did show a growth in GDP of more than 6% per annum and an increase in population of 2.7% per annum, but during the 60s and 70s many countries in Africa and China and India also had a similarly healthy increase in population but no matching increase in GDP. On the other hand these countries had to battle unemployment, famines and civil strife. In Arab countries, considered as a group, the population grew at a rate of more than 3% during the 20 year period between 1985 and 2005 but there was no proportionate growth in GDP.

In the countries that have reaped this demographic dividend, almost half the growth has come from the increase in population and the balance from improvement in productivity. This seems to be a rule of thumb applicable to the demographic dividend story.

But the world seems to moving into a low population growth zone. Many developed countries are already in the Zero Population Growth zone (ZPG) and countries like Japan are already in the negative zone. Even China which had followed the one-child per couple policy is now in negative zone. (It is true that China has now abandoned the one-child policy but the effects of this change are going to take a long time to materialize).

In 2005, the European Commission warned that “there never has been a growth without population increase”. In today’s world post-crisis of 2008, very few countries have a strong population growth that could be a possible precursor to generation of demographic dividend. For that matter even India is slowing down and for the first time since the census of India was instituted, the rate of increase of population has fallen to 1.64% per annum over the decade of 2001 - 2011. Moreover, the population in the age group 0-6 years is almost unchanged over this period which shows that the increase in overall population is due to decrease in mortality and therefore aging of population. True the population will still keep on growing for a few decades but it will do so at a diminishing rate if the present trend persists. But as the population ages the ratio of working to non-working population is going to deteriorate with time.

The second premise on which the concept of demographic dividend rests is the job creation for new entrants into the working age-group. Here too, we in India, are going to find that things have changed radically. Global growth itself is slowing down and no major country has regained the growth rates it enjoyed before the 2008 crisis. We have been hopeful of replacing China (at least partially) as the powerhouse of manufacturing since the Chinese are pricing themselves out with higher wage rates. But the recent trends have belied this hope. China is being replaced not by India but by Bangladesh, Vietnam and a few other developing countries which are fast getting their act together. After all we have not made much progress on making India a business friendly place. In short, there is not much on economic horizon which will create jobs for the 12 million of Indians entering job market every year notwithstanding the hype about “make in India”. A worthy concept no doubt but one which is unfortunately a couple of decades too late.

We Indians have been fairly used to things which run late. Train travelers routinely experience being stranded on a crowded platform waiting for a train which is long overdue and expected any moment. Everyone hopes that although the train is late, it will arrive soon and then it will somehow make up for the lost time. Today whole of India is on the platform waiting for the train. But the realist in me is afraid that suddenly the PA system will crackle into life and some announcer, in a hurry to close shop and go home, will announce “We are sorry to inform you that The Demographic Express going to Dividend Nagar is delayed indefinitely. We are very sorry for the inconvenience caused to the travelers.”      

Cheers   

LazyBee

7^th April 2017

Credits:

1.     As you would have no doubt realized the trigger for this article has been provided by “The Rise and Fall of Nations” - by Ruchir Sharma - Published by W W Norton & Co, New York – 2016 from where the past data of countries has been taken.

2.     The Indian demographic data  was obtained from the official site of Indian Government -  Office of the Registrar General and Census Commissioner, Ministry of Home Affairs,  www.censusindia.gov.in

3.     Any misinterpretations in above, if any, are solely mine.

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Break-Out Nation

Break-Out Nation? 

Ruchir Sharma is the Head of Emerging Markets and Chief Global Strategist Research at Morgan Stanley Investment Management at New York. He has traveled the globe many times over for identifying investment opportunities for the funds he manages. He is also a prolific writer who has over the years penned his thoughts on economic conditions in various countries and the trajectories   these countries are likely to follow in near and medium term. His book “The Break-out Nations” (2012) has been an international best seller not only because it has been sired by someone who is in charge of allocating billions of dollars across the globe but for the clarity of his thinking and willingness to look beyond the superficial.

 In 2001, Jim O’Neil of Goldman Sachs had coined the acronym BRIC (to include Brazil, Russia, India, China - South Africa was taken on board later in 2006) identifying the economies which are likely to do well in 21^st century. A decade of turmoil later the BRICS seem to be losing their steam and probably would not be able to live up to the hype that was built in anticipation of their performance. But the investment fraternity, not unlike nature, abhors vacuum and is already moving on trying to identify new (potential) winners.

The Break-out Nations analyzes a number of candidates who may outsprint their peers in near future and surge ahead in The Game…….the only game that really matters - to achieve a sustained growth in GDP in pursuit of betterment of its citizens. Turkey is one such candidate country that Ruchir Sharma has identified. Turkey is a very interesting model of economy for a number of reasons and we Indians, especially, will find a few points to ponder vis-à-vis our own politico-economical model.

I present the “facts” as presented by Ruchir Sharma and leave it to the reader to figure out relevance and applicability of these inputs to the Indian scenario in his or her own “image and perception of India”.  

         

Republic of Turkey, a country bridging both Asia and Europe was formed in 1923  and has a rich cultural history spanning more than a thousand years. For first six decades of existence of modern Turkey, it has been under a quasi-statist policies with government laying down planning and various developmental goals. The economy was opened up in 80’s. (Think India!)

Its constitution defines Turkey as a secular country and it had been dominated by secular parties although more than 99% population is Muslim and the political theatre has always had a strong presence of Muslim fundamentalist parties.

The secular parties drawn from the urban elite dominated the economy and occupied all the important positions in military, judicial and executive arms. The secular parties made sure that the fundamentalist parties were effectively kept away from power at all costs but unfortunately were not able to provide a stable government to the country resulting in a succession of unsuccessful short-lived coalitions. (Does this sound familiar? We hve been fairly lucky that coalitions have not been too short-lived but the damage arising from coalition politics is well understood)

Recep Tayyip Erdogan, who is the current President is the founder of the ruling party, Justice and Development Party (AKP) has been in charge of the country since 2002. Erdogan was a semi-professional footballer with an Istanbul club and became the Mayor of the city (in the nineties) as a member of a fundamentalist party and then formed his own party. The administrative capabilities he showed in his earlier assignment as the Mayor of Istanbul propelled him and his party to power in 2002 and successive elections thereafter. (A sense of déjà vu? Humble beginnings … conscientious work …. Disillusionment of voters with existing order……  )

AKP is very much a Muslim party but not a fundamentalist one. Erdogan has successfully kept the fundamentalists in check and concentrated on economic development. (Is there any other viable alternative?)

Erdogan has had to take tough stance against the fundamentalists and has frequently cracked down upon his detractors giving him an image of a dictator and a tyrant. He has been accused of developing his own native region and favouring industrialists from his region. (Again the same sense of déjà vu?)

On the other hand, the economy has shown a remarkable upswing. The GDP per capita has increased from USD 3,500 in 1980’s to USD 11,000 (2015) Turkey being a resource - poor country has had to depend upon manufacturing, export and tourism to drive its growth and has been able to achieve this. (Ah, what wouldn’t one give to be even halfway there? 2017 Indian GDP estimate at less than USD 2,000!)   

Today Turkey is among the 3 top nations (with China and South Korea) dominating the international construction market. Being a part of the EU Customs Union has given it access to a large market and the Turkish companies have successfully created their own brands in the EU market thus graduating upwards from being mere assemblers of finished products.

The social scene in Turkey is a vibrant one with none of the restrictions that other Muslim nations have. The discos and bars are open almost all night, liquor is not a taboo and hijabs are prominent by their absence. (Do we hear cries of “Hey Bhagwan” and “Tobah, tobah”?)

This nation, of about 80 million, today is one of the youngest with an average age of population being less than 25 years. It has been able to generate sufficient jobs for the new generation entering the job market and is one of the very few countries which can boast of reaping the much hyped “demographic dividend”. (The holy grail of development which can very well mutate into a “demographic millstone” around our national neck unless we shed our complacency and not take our karma for granted).

Ultimately as Bill Clinton - POTUS42 - famously remarked “It’s the economy stupid”. Break-out nation or a break-down nation, the choice is solely ours.

LazyBee

25th March 2017

The Unenviable State of America

The Unenviable State of America

The Universal Studio at Los Angeles has a number of rides which specialize in springing up the most unexpected shocks on unsuspecting visitors. No doubts the rides are exhilarating but they are surely not good for the health of the faint-hearted; Obamacare or no Obamacare.  In these days of “new normal” and “alternate facts”, the whole of USA has now become a giant universal studio.  Not a day goes by before some new ride is introduced making the past, well a thing of the past! Every now and then some ‘alternate fact’ gets introduced in the collective memory of the populace which makes one start wondering whether one is still living in the real world or has unknowingly migrated into the Matrix.

This time I landed here on 20^th January, the day the new CEO occupied the corner room of the headquarters of his vast conglomerate.  Today on the 20^th of February when the TV Talking Heads are talking their heads off listing the successes / failures of the new CEO, I can’t but resist taking a look (from an Outsider’s point of view) at just a few of the reality shows that have been aired on prime time with a great amount of fanfare in this one month. Their storylines in brief are provided:

To Russia With Love: Mystery. A four star General in charge of the security of a conglomerate is found playing games with a competitor raising doubts from the keepers of anti-trust laws. The CEO of the company feels confident that the Security Chief has not done anything wrong and that he (the CEO) would anyway have told him (the Security Chief) to play games if only he (the Security chief) had taken his (the CEO’s) permission.  Alas, the game the Security Chief was playing turned out to be Russian roulette. 

Not So Amusing. So Sad.

Quo Vadis?: Game Show. It’s a revamp of the age-old game played by Romans guarding the city of Rome. Since all the roads lead to Rome, anyone who set foot on any road, eventually found himself at the gates of Rome anyway. There were people who came from faraway places like Mesopotamia, Iran, Baghdad and Damascus too. Anybody who approached the gates of Rome was asked to name himself and then allowed to enter Rome if found suitable. Otherwise they were just fed to lions or given over to gladiators for their practice matches before the main one in Colosseum. It all depended whether their names were on the list prepared by Caesar or not. The revamped game now is made slightly more humane. After asking the names of newcomers, the guards grant or refuse entry to the newcomers based on one of the two questions which have been standardized. The question selected is solely based on the guard’s state of mind and not in any way dependent on the person seeking entry. The two questions are:

·         Spell the word “God”.

·         Spell the word “supercalifragilisticexpialidocious”

Persons spelling the word allotted to them correctly are let inside the game-show and those who fail the test are asked to try again after 90 days. 

So Humane. So Satisfying.

The Judgement Day: Beauty Pageant: The Finalists are asked to appear for a viva voce in order to decide upon the Winner. The Sole Examiner who interviews the Finalists has a rich experience of conducting beauty pageants and very likely the questions posed to the competitors are the ones which appeared in past versions of Miss World contest. Since all the rounds take place in camera, it is not known if exciting rounds like swim-suit round etc are included or not. Only hitch is the Finalists are all top jurists in the land. 

So Hilarious.

In his recent episode of GPS, Fareed Zakaria compared the current situation to a children’s toy which most of us must have enjoyed as toddlers - a “rocking horse”. The toddler riding the toy has a great sense of motion and exhilaration that accompanies his / her apparent motion, but an onlooker doesn’t see it (rocking horse or the toddler thereon) progress anywhere. In this case one is tempted to call this particular toy a “rocking ass” because sometimes in these days of alternate realities the distinction between rider and ridden can become a bit blurred.

But light-hearted banter apart, unless things improve more than just a bit, the next State of the Union address will be a short one: Unenviable, unimaginable and Un-United.

As a complete aside (not remotely connected with anything or anyone past or present) my friend  Guy Wise tells me the word “trumpery” as defined by The Oxford English Dictionary means ‘deceit, fraud, imposture, trickery’. The word is derived from old French ‘tromperie’ which means deceit and has its roots in the French verb ‘tromper’ which means to deceive.  The word was first used in 1456. Ahhh. What clairvoyance! And here I have been singing praises of Americans for being clairvoyant.  (The Clairvoyant Americans )

LazyBee                                                                                                                                    

20^th February 2017.

An Antakshari To End All Antaksharis

An Antakshari To End All Antaksharis

Antakshari is a typical Indian (I guess) game which almost everyone in India must have played at some time or other in their childhood. This traditional game which must have kept the folk songs alive through centuries received a great boost in past few decades as film music proliferated and provided the players of Antakshari a veritable treasure-trove of songs. This is a game which is a great leveler, anyone and everyone can participate on an equal footing, young ones with the recent trendy hits and the golden oldies with their khazana of old forgotten songs. 

The traditional form of Antakshari used to be like a timeless test which would go on for hours at end and I remember spending an entire train journey on a family trip spread over a few days battling (solo, that too) relentlessly against two very determined ladies who refused to give up. I had to bring out all my resources and managed just about to hang on.

But in these days of ODIs and T20s, the classic format has given way to a few modified versions which take into consideration the time constraint on players and exciting fresh variations. As a result the Antakshari has morphed into a totally different creature, a heady blend between the traditional form and a music quiz. As a result the Antakshari of earlier years which hardly required a referee, now requires a savvy organizer who can design interesting formats and provide the contestants with a far more complex challenge. The audio and video media have added new dimensions to the game and made the game infinitely more interesting. The variations it can take are only restricted by the imagination of the organizers.

So when a maestro like Manohar Iyer arranges an Antakshari, you can be sure that it is going to be a treat for the spectators and test the contestants to their limits. Manohar is a walking encyclopedia of Hindi film music. Throw any song at him and he comes up not only the film from which it is taken but also the lyricist, music director, the year it hit the theatres, the banner under which it was produced, the lead pair on whom it was filmed and quite likely tell you some notable incident which took place during the making of the film. Manohar runs an institution called “Keep Alive” formed and nurtured by him with a religious zeal for past 20 years now, for music is nothing short of a religion to him. 

Keep Alive, as the name suggests, has made it a mission to keep the old Hindi film music alive for the older generation and in the process also introduced the melodies from past to the younger generation. Keep Alive holds regular programs, each one with its unique theme, like songs by a particular singer or a music director or a lyricist or from a particular era in Bollywood filmi sangeet. Given his penchant for bringing out forgotten gems of past, each program of Keep Alive has at least 3-4 songs which very few (read probably no one) in the audience have heard before, googlies and bouncers that are totally unplayable.  

So one can only imagine what to expect when he organizes an Antakshari event and has to approach it with some amount of trepidation.

Look at some of the rounds in the last one he organized.

Round 1 : Geet Gaata Chal:

Normal traditional antakshari round with a twist - the older the song the contestant comes up with, more points he gets e.g songs from films released in:

 1931 - 40 : 30 points

                              1941 - 50 : 25 points

                               1951 – 60 : 20 points

                              1961 – 70 : 15 points

                              1971 onwards : 10 points

Round 2 : SHABD ne Kiya Kya Haseen Sitam :

Contestants to sing a song starting from a word picked at random.

Round 3 :   Hum CHAR Mein Jalnewalon ko Chain Kahaan :

The contestants are to guess a song given four words from the mukhda of a song in random order.

Round 4 : ANGREZI Mein Kahtaa Hoon Ki …..: (Buzzer Round)

The clue is the translation in English of a mukhda of a Hindi song for the contestants to decipher.

Round 5 : DHUN Saybaa DHUN :  (Buzzer Round)

Clue will be prelude music of a song played by artists on instruments – contestants have to guess the song  / mukhda.

Round 6 : Ek SHER Sunataa Hoon Main : (Buzzer Round)

Many songs are preceded by a couplet; contestants need to identify the song from this clue.

Round 7 : Hum Bane Tum Bane EK DOOJE KE LIYE :

The clue will be a star – pair and the contestants will have to sing a song from any of the films starring this pair.

Round 8 : CHHUPNEWALE SAMNE AA :

Mukhda of a song will be played for the contestants to identify names of films hidden in the mukhda.

                   

So you get the idea. No freebies here. The contestants have to really know their stuff if they have to get anywhere. Add to that the negative points to wrong answers on buzzer rounds and the teams can very well end up in negative territory (as did my team – in not one but two Finals). Manohar is also a strong believer in Prevention of MRTP Act (Monopolies and Restrictive Trade Practices) and tries to ensure a level field by insisting that the contestants are cast in teams of 3 members picked at random, so that the teams may be balanced to the extent possible.

He is organizing one this week for Girija Sharma Memorial Foundation on 26^th January at Mira Road.  Those interested in attending or participating, please contact sharmasheelkumar@yahoo.com or whatsapp 88981 79325 or 88981 75768. Some small admission fee shall be charged to cover refreshments to be served for all those attending. As a finalist in last two editions I would surely have loved to attend but alas I am about 13,500 kms away as the crow flies. (Given the distance I guess only crows from Krypton are likely to manage that!)

All Hindi film music lovers are welcome to participate or at least be a part of audience to savour the proceedings. Be warned that knowing Manohar, he will make a few changes to the format to make it more interesting. 100% Enjoyment guaranteed.   

 LazyBee

23^rd January 2017.

  

And The Darwin Award Goes To.....

And The Darwin Award Goes To.....

Charles Robert Darwin is known for his contribution to various fields such as geology, biology, biogeography, invertebrate zoology, and of course for his theory of natural selection which has made him a household name like Sir Isaac Newton or Albert Einstein.

His voyage on HMS Beagle which lasted for five long years (1831-1836) and took him around the world gave him insights for his famous book On Origin of Species. His work also won him the honour of having 120 species named after him (probably the most that any single scientist has) and a whole city, Darwin, the capital of Northern Territories in Australia, after him.  So if there is an award named after him one would expect that the award celebrates the one central point of his theory, “the survival of the fittest”.

Ironically, the criterion for the Darwin Award is stated as  "In the spirit of Charles Darwin, the Darwin Awards commemorate individuals who protect our gene pool by making the ultimate sacrifice of their own lives. Darwin Award winners eliminate themselves in an extraordinarily idiotic manner, thereby improving our species' chances of long term survival”. Well, in a way, it does fit the Darwinian hypothesis that only the fittest survive and thereby pass on their genes to the next generation, if only in a slightly oblique manner.

In keeping with the criterion laid down, the awards are given (mostly) posthumously and the requirements are also very clearly spelt out:

1.       Inability to reproduce: The nominee must be dead or rendered sterile by his actions so that he does not leave descendants (at least subsequent to the event). With current advances in science, this might become tougher in future as a survivor could possibly pass on his genes through IVF, cloning or some other technology, so Darwin awards use a test called “desert island” test which looks at whether or not the nominee would be able to reproduce if left alone on a desert island with a fertile specimen of opposite sex. I guess that settles it rather neatly.

2.       Excellence: The chosen method of self annihilation should be foolish, unique and sensational; common cause of accidental death like smoking in bed does not qualify, foolish it may be, but unfortunately not unique.

3.       Self-selection:  The cause of death should be chosen voluntarily by the person himself or herself. Accidental death due to someone else’s folly will not get you a nomination mind you.

4.       Maturity: The candidate must be above the legal age to get a driver’s license i.e. at least on paper be mature to make his / her own decisions. A mentally unstable person is also not eligible for the award.

5.       Veracity: The incident must be verified. A large number of historical incidents are therefore out of purview of the awards as they have not been adequately verified.  

There are a few provisos which make a deceased ineligible for a nomination. For example if the act of self-destruction also happens to kill a healthy by-stander who would otherwise have been able to reproduce, such acts are frowned upon and the deceased will lose his claim to a Darwin.

The awards website www.darwinawards.com is full of details of how creative people can be to (unwittingly) qualify for nominations or awards. A look at a few of the nomination winning feats will hopefully teach us what not to do to earn a nomination to a Darwin.    

 Top Gun?: In Illinois, a police officer accidentally shot himself to death. A colleague of his, a veteran with 20 years of experience was re-enacting the scenario for the benefit of other colleagues.  And guess what? He forgot to empty his service revolver before he set out to do the re-enactment and promptly shot himself in stomach. He died on his way to the hospital thus qualifying for a nomination to a  Darwin on his own.

Horseshoe for Goodluck? : Robert, a daredevil stuntman rigged up a homemade rocket-parachute contraption and sped on a jet ski over Horseshoe Falls at full throttle. His plan was very simple, fire the rocket as he went over the falls which would take him clear of the water, then pop open the parachute and gently float down to the river below where he would be picked up by the Maid o' the Mist tour boat. But Robert had not reckoned with the effect that excess humidity would have on his equipment. The rocket didn’t fire and the parachute failed to deploy; the only part of his plan which worked to perfection was the pick-up by Maid o’the Mist. The snag was he was quite dead by the time he was pulled out of the water. Robert was married but had no children, making him a perfect Darwin contender.

Trick or Treat? : A college student wanted to show up as Dracula for Halloween. To add a realistic touch, he put a pine board down the front of his shirt so he could "realistically" sink a knife into the board and pretend he was transfixed by a vampire-killing stake. He either overestimated the strength of the thin pine board or under-estimated the sharpness of the knife. He tried to hammer the knife in the board. So far so good, but the stroke of hammer caused the sharp blade to split the soft wood and bury itself in his heart. He staggered from his dorm room into the Halloween party. His friends carried him to the hospital where the medics treated him but that didn’t do any trick. He received a posthumous nomination for a Darwin. I don’t know if Count Dracula can count this the deceased among one of his many victims.

Tongue-Tied Teenager ?: Snakes have this peculiar habit of flicking their tongues out periodically which is actually their way of smelling. The snake’s tongue draws in a sample of air which would contain some of molecules of scent given off by a prey. This scent tells the snake where to find its next meal. One doesn’t know whether this particular teenager knew this for a fact or not but when he found a rattlesnake flicking its tongue at him, he (the teenager) took umbrage and wanted to get back. He picked up the rattlesnake by the scruff of its neck held him in front of his face and stuck out his tongue. It is not reliably known if this particular rattlesnake was totally rattled or if it is considered rude in accepted rattlesnake social etiquettes to stick one’s tongue out to an elderly rattlesnake, but the outcome was that this said rattlesnake bit the said teenager’s tongue. The results as far as the two parties engaged in this time-honoured kindergarten game of “ if-you-stick-your-tongue-out-at-me-I-will-stick-mine-out-you” were radically different. The said teenager dropped the said rattlesnake in a hurry and the rattlesnake which had had enough of this silly game anyway rattled away in even greater hurry.  The said teenager, however, found that his tongue which had been the recipient of a close encounter with rattlesnake had swollen to enormous proportions and which in due course of couple of minutes choked his windpipe and immediately put him high on the list of most promising nominees for a Darwin.

Big Bang Practicals 101: High among the high treason acts in history of the world is the Guy Fawkes plot to blow up the British Parliament along with King James I, in 1605. The plotters wanted to overthrow the protestant rule and ring in a catholic reign. Guy Fawkes, who was one of the 7 main plotters was caught with a pile of gunpowder right in the basement of Westminster. A few of his fellow conspirators escaped and were tracked down to an inn where they decided to make their last stand. They had a large cache of gunpowder with them and were hopeful of making a last ditch stand worthy of their religious zeal. Unfortunately the gunpowder was wet and needed to be dried properly. The masterminds laid down the pile near a fireplace so that the heat from fireplace would help them dry the powder a tad faster (remember they were shortly to be under fire from King’s men). They didn’t take into consideration the fact that fireplaces do sometimes splutter and throw up embers which essentially tend to follow some trajectory of their own. One such ember found a resting place on the top of the pile of gunpowder. That was the end of the last stand the plotters were planning to make. Unfortunately since Charles Darwin was born a couple of centuries after this incident, this event did not receive a citation for a Darwin but an honourable mention it surely deserves.       

LazyBee

8^th January 2017

NaMo And DeMo

NaMo And DeMo

Just back from IIT B campus where we had a very stimulating lecture by  Dr Kaushik Basu (former Chief Economist of  the World Bank and also former Economic Advisor to Government of India).  The topic was deliberately and most appropriately chosen as “The Economics of Corruption, Black Money, and Demonetization”.

Dr Basu was delivering the 3^rd Prof N R Kamath Chair Colloquium Lecture which is an annual event.  Prof N R Kamath was a well known Chemical Engineer and I was wondering what an economist had to do with chemical engineering. But I realized on second thoughts that what an economist does for a living, not unlike a chemical engineer, is just trying to put some of his recipes into practice. While a chemical engineer can manipulate the pressure, temperature, concentrations of various chemicals and pH of the solutions, an economist has variables like money supply, interest rates, exchange rates and other equally obtuse parameters to play with. But while a chemical engineer may quickly be able to ascertain the results of his “experiment” an economist can safely keep on arguing about correctness of his solution vis-a-vi s other solutions by other economists till the doomsday. 

This does not purport to be a report or a critique of Dr. Basu’s lecture but just an attempt to put down on paper what I gathered from an extremely balanced discourse about the topics under discussion. I am sure a lot of the points he made must have been made by different people over the past one month but they are worth mentioning here to present a coherent view of the subject.  The basic ideas are Dr Basu’s but failure to convey them clearly will be entirely mine.

Ø  Black money is just a small part of “black wealth” in the sense that whatever black money gets generated does not stay as “black money” which is the unaccounted cash held. A large part of the black money generated has got converted into assets both in India and abroad.

Ø  Black money and white money are sort of interchangeable in character and what is once “black” may mutate into “white” once it undergoes some monetary transactions and vice a versa.

Ø  Some economists do not consider black money as bad as it also spurs consumption.

Ø  He does not agree with those economists and considers that black money damages the moral fabric of the society and should not be encouraged. 

Ø  He did not fault the intention behind demonetization but felt that that step itself was not a proper one.  

Ø  He enumerated some  plausible reasons which have apparently led to demonetization

·         Removal of  Fake Indian Currency Notes (FICN)

·         Eradication of Black Money

·         Encouraging digital transactions

Each of these, he felt, had a very limited relevance.

Ø  Quantum of FICN was fairly small and anyway confiscating the fake currency would only penalize the current holder of the currency and not the actual perpetrators. The FICN printers would soon start printing the new currency. The solution would be to keep on upgrading the security features all the time making it more difficult for the forgers to duplicate. As per him this problem existed with every country including the US.

Ø  The estimates of black money vary from 20% to 25% of GDP (considering the GDP of India at US $ 1.877 trillion -  2013 figure and an exchange rate of INR 68 to a US $, the black money component of economy works between 3.7 to 4.6 lakh crores in 2013 rupees.  This is what has given rise to the expectations of how much currency may get extinguished. Calculations all mine). Black money can not be weeded out by such measures and even now new ways are being devised to circumvent the restrictions and convert “old” black money into “new” black money. Some amount of black money may get eradicated but considering more than 11 lakh crores of demonetized currency has already been returned, there is a good chance that currency not returned to RBI may be a very small fraction of 14.8 lakh crores of high denomination notes that lost their “legal tender status on 8^th November 2016.

Ø  As for the digital transactions, 98% of transactions in India are cash transactions. Even US and UK have close to half the transactions in cash so India leapfrogging to a cashless society is virtually an impossibility.

Ø  More serious, he felt, was the systemic shock the demonetization had given to the economy. He expected that the growth in GDP which was earlier estimated at 7.6% would fall down to maybe 6.8% -6.9% in this year and far worse in 2017-18.

Ø  Dr Basu observed that the economic systems (markets) had their own internal logic and it was difficult to predict their behaviour in case they were shifted radically from their existing (equilibrium) positions. He recounted the experience in Brazil where the current political upheaval due to corruption charges against top political leaders has pushed the markets into a negative growth rate of 3.8% (a contraction of economy or a deflation). India too had experienced a contraction in 1979-80 immediately after the last demonetization. He clarified that this does not necessarily mean that this current demonetization would lead to similar scenario as a lot of factors could be different this time. However he did not rule it out saying that it was not possible for anyone to predict accurately how the entire economic system would behave.   

Ø  He had one suggestion which he felt would reduce the pain and that is to partially roll back the demonetization process by retaining the “legal tender status” of Rs 500 notes.  (A suggestion which I felt would certainly negate the entire exercise and have a strong negative impact politically). He cited examples of S Korean President who would not hesitate to undo earlier directives if they were seen to be not working.  

Ø  During the lecture Dr Basu touched upon a lot of ideas from other disciplines which showed how economics has evolved over the years. Behavioral psychology, game theory and even biology have shaped economics over the recent past and should continue to add more tools in the economists tool-kit.

Ø  Dr Basu made a case for fighting corruption starting from top and by meting out stronger punishment to those in government who cause “corruption by harassment” which is quite often found where common people are forced to give bribes even after complying  with all the rules and regulations. He cited issuing of licenses or clearing export  / import consignments as the cases in point.

Ø  But he felt that societies as a whole could change and he gave examples of societies self regulating themselves by strongly objecting to corruption by their members for example trade association etc.  He cited a number of examples from the newly formulated “laboratory experiments” in economics where an individual willingly adapts himself to the norms acceptable to the group he is operating in, in spite of having different natural tendencies e.g. the corrupt peer group influencing the individual to be corrupt or vice a versa.

Ø  Even nations have transformed themselves over a few decades; for examples Sweden which was a notoriously corrupt country in 19^th century now scores very high on the “clean” list. Similarly the Japanese who were habitually lax people are now extremely punctual.  

The lecture was followed by Q&A session which brought out Dr Basu’s thinking on various points which was underlined by his candid admission a few times that he did not know much to offer his opinion. 

The observation about peer group should immediately strike a chord in all of us who have often wondered how differently we tend to behave when we are overseas. We seem to have no issues about forming orderly queues and following traffic rules like maintaining lane discipline and no honking when we are in US or UK and the same us will happily elbow our way to the top of the Immigration queue the moment we land here.

But the last observation about possibility of changing character of large groups of people, even nations, makes me hopeful that someday India may be reasonably free of petty corruption. A heart-warming thought but we must make a start somewhere. NaMo has made a start with his DeMo. And although it’s looking increasingly likely that the move may not get India nowhere close to where it was intended to, let us persevere and work out the best we can in the next couple of years which are going to be tough. At the same time we must pray that the ruling party also learns its lessons and does not try to over-correct the course by going in for stricter measures to achieve what it meant to achieve or by creating some diversionary “red herrings” because it is sure to antagonize the electorate so much that NaMo and party get DeMoted to Opposition benches again. We all should know what that would mean for India.

LazyBee

10^th December 2016

Cyrus The-Not-So-Great?

Cyrus The-Not-So-Great?

It’s quite tough to comment on something which is making so much commotion in the media that it becomes difficult to differentiate between meaningful information and pure background noise.  Take the mysterious case of aapro Cyrus and the Bombay House.  A case where everyone has strong opinion one way or the other  eg our cook who uses only Tata Salt, our gardener who swears by Tata Chemicals fertilizers and the corner tea-stall owner who is worried about the future of Tata Tea, all feel that Tatas can never be wrong.  On the other hand, my neighbor who was planning to buy a Nano for Diwali has decided that Tata or no, he would rather opt for a Maruti.  Luckily my friends are a pragmatic lot and can switch over to ITC or East India Hotels if they find there is some issue with Indian Hotels.

Normally the fights in Parsi community are restricted to Bombay Parsi Punchayet and Jam-e-Jamshed and involve heavy debates and editorials about weighty issues such as “how to define a poor Parsi?” or “whether the re-development plan of Cusrow Baug  should offer 3 BHK flats or 5BHK penthouses?” BTW, a couple of years ago, if I recollect correctly, a poor Parsi household was defined (by Parsi Punchayet) as one having a monthly income of less than Rs 90,000! So next time you invite a poor Parsi friend over for a dinner, please make sure that you have enough parking space for his 1920’s Silver Ghost. Poor chap hasn't had a chance to upgrade to a Nano!  Here I must state that an overwhelmingly high fraction of Parsis I have known are jolly good fellows and some of the gentlest of gentlemen and that’s why this ongoing tussle is all the more puzzling. Parsis as a rule are not parsimonious but I guess there is lots and lots of Parsi money involved in this case and that’s what makes the difference.

Normally while analyzing any topic a 360^o  examination is sufficient to show up all the relevant factors and facilitate formation of a reasonable opinion; but even after a 4Л steRADIAians inspection by the knowledgeable industry insiders, this topic is still just as clear as a Delhi morning on a typical December day and is getting murkier by the day. So having exhausted the 2D and 3D perspectives, LazyBee decided to take a look in the 4^th dimension to see if history can throw some pointers for the present.

Cyrus the Great was a legendary king of Persia in the sixth century BC. (Yes, some other countries do have well-maintained records deeper in antiquity even surpassing ours). It will be interesting to try and find some parallels between him and the Cyrus in limelight - and some divergences as well.  

Cyrus II of Persia was the son of Cambyses I who was a vassal to the King of Media. The King of Media was also Cyrus’s grand-father.  Cyrus was made the king by his father a good eight years before his own death. Cyrus first took over the Median empire (through a battle spread over 3 years) and then proceeded to build the largest empire known to mankind till that date by conquering the Lydian and the Neo-Babylonian Empires. His kingdom, the Achaemenid Empire, extended from Balkans in east to Indus Valley in the west.  He was also an able administrator and made special efforts to integrate the new territories he had won over into his empire. He was since then called Cyrus The Great.

There are some parallels and some divergences in these two cases.

Look at the parallels : Our  Cyrus is also a prince in his own right. Shapoorji Pallonji’s holdings in Tata group companies alone have been put at Rs 81,000 crores (that is around US $ 12 billion, give and take a few millions).  Pallonjis are also the single largest private individual share-holders of Tata Sons, the majority of the rest being largely held by trusts.

In case of Cyrus the Great, his father Cambyses I was very much alive for the first 8 years of his reign just like Ratan Tata being very much there to oversee our Cyrus take over the reins of his empire.

Now the divergences : While Cyrus the Great had to take over the Median Empire by military power, our Cyrus was selected and invited to become the Chairman of the Tata Empire. His battles seem to have started after he was anointed the Emperor.  Our Cyrus has had to contend with an active past emperor who was not content with advising the new emperor from the side-lines but actively plotted to dethrone the emperor at his whim and fancy.   

The biggest difference in the two situations is that Cyrus the Great expanded his empire by adding on territories but our Cyrus wanted to consolidate his empire by knocking off a few “territories” which he found to be too much of a drain on royal treasury. The emperors of old could finance their wars by a number of ways; levying additional taxes on their populace or striking new coins or debasing their currencies. One doesn’t know how Cyrus the Great managed it but he seems to have managed it quite well. Our Cyrus didn’t have these options and hence had decided to downsize (or rightsize) his empire. The old emperor, who during his reign had kept on adding new territories whatever be the cost of acquisition, found this difficult to digest. Nay, he found it downright ungrateful of our Cyrus that he (Cyrus) could even contemplate going against his diktats and start selling the family heirlooms.

The drama which is unfolding has a surreal familiarity about it. Once the palace coup gets executed, no efforts are spared to malign the deposed emperor, all the deposed emperor’s men are (ex)terminated. All sorts of charges are levelled to paint the deposed emperor as incompetent. (It also helps that in most cases the deposed emperors were conveniently disposed off to avoid any future comebacks).  In the days to come as old emperor tries to consolidate his hold on the empire more “inside stories” will find their way to the media, of which there will be no authentication or confirmation but each will add to the weight of “evidence” against the deposed emperor.  In the meanwhile all old blunders will get swept under the royal carpet waiting for the next economic upturn which will then be used to confirm the “rightness” of decisions taken earlier. It is another thing that the world has changed inexorably over the past decade and acche din may never dawn again, certainly not for everyone.

According to some scholars the word Cyrus means “annihilator of enemies in verbal contest”. If our Cyrus runs true to his name, Tata Sons have a long fight ahead of them and the media can look forward to periodic spikes in TRP as both sides take potshots at each other.

The ultimate question, a US $ 108 billion one at that, which seems to be on everyone’s mind : “Is our Cyrus,  Cyrus The Not-So-Great or is he Cyrus The Ingrate?”  Only one person knows the correct answer to that question and he is not telling. Perhaps it is time for Ms Radia to call him!!!

LazyBee

25^th Nov 2016