Idea of India

What is India? Is it a geographical boundary? Does not it include the sky above this land? How about mountains and rivers? Or is it about people living here? Or is it about their culture? That is the question Nehru posed to common people before India had gained independence. About twenty years before him, Mahatma Gandhi had asked this question to himself and the idea of India was born. He got two more supporting personalities in Nehru and Patel who were equally committed to the idea of India. They struggled throughout their lives to realize their dream.

Today we are educated enough to say India is not just a geography or people alone but the culmination of all of it and the evolution of a civilization. But few decades ago before India’s independence, someone had to take the initiative to feed this idea of India into the people who were ruled by foreigners. That job was done by the trio – Gandhi, Nehru and Patel, who traveled all over India tirelessly and waited long enough until their idea was sold and created a momentum to prepare India to rule herself.

Long before them, couple of thousand years ago, foundation of was India was laid out and reinforced by many people ranging from Buddha to Emperor Ashoka, Gupta to Mughal kingdoms, Adi Shankara to Swami Vivekananda. There was no dearth of patriotic personalities in the history of India. But the idea of modern India had to be revolutionized and it was well done by Gandhi, Nehru and Patel. I don’t credit success to only these three people but there were lots of others who were fiercely loyal to idea of India like Bhagat Singh and Subhash Chandra Bose. But the protagonists or the successors chosen by history were Gandhi, Nehru and Patel. Two of them did not live long enough to see what they fought for. It was just Nehru who emerged as sole successor of every single freedom fighter’s struggle and ruled independent India long enough to hold the record which is not broken yet. All decisions Nehru and his colleague and mentor took and the compromises they had to agree to were necessary for the welfare of India. Without these three people, the idea of India would have been void. If you think Nehru’s socialism was bad for India, think again. If Govt. did not have a greater control, many of us who studied in Govt. schools would not have had access to education in case Nehru had preferred privatization over socialism. I don’t say we can’t criticize Nehru’s actions but before we do that we need to get back to those times and think how much of India’s population had access to education and entrepreneurship. Hope you get the reasoning behind making India a socialist country for few decades.

I strongly believe that Gandhi, Nehru and Patel were committed to idea of India than the ideology of a political party they belonged to. If Nehru was alive and in power today, he would have defined the foreign relationships of India like no one else of his contemporaries would have done. Similarly, if Patel was in the the helm, he would have been more efficient than today’s Modi.

Identifying these historic personalities with political ideologies and seeing them in wrong shadows would be a grave mistake. It is like ridiculing your own birth which is equivalent to doubting foundation of modern India. Hope we overcome that and celebrate the success of making of India.

A war on the horizon

The contest for the control of South China Sea started long ago, soon after the Second World War was over. But now it taking some form as an International Tribunal ruled against China’s claims but China remains adamant on its views.

Many things happened in the last six decades or so before this development took place. China being a trade partner with US for many decades is now finding that its relationship (with US) is strained. As China sponsored economically, its ambitions to become a global superpower had led to spend more on defense. It accumulated lots of weaponry which is giving a sense of confidence for it to say no to big brothers of this world. Going by U.N convention’s of 200 nautical miles limit on the sea water control, China is into the waters belonging to Vietnam and Philippines. But the mighty China has already built artificial islands in the disputed region. And it seems to have plans to develop into a marine base. Any one coming closer gets pushed out. See the below image wherein China coast guard pumps water cannon on Vietnamese ship.

Strategy of domination being a big and mean guy would have worked in other continents like Africa. But China is surrounded with neighbors who can challenge it. And that began diplomatically with the International tribunal rejecting China’s claims. While China does not accept it and goes on to prove its might, you know it will become a power show. While no one knows when and if the war will breakout, there are enough signs and there are preparations going on to face one if it occurs.

While China may get support from some its war longing friends, it still has to fight alone in the sea waters due to geographical barriers. Though countries like Vietnam, Philippines, Malaysia might not have the capability face China on their own but in the eventuality of a war, they would be led by US along with help from Japan and India. All countries in the geographic range from Japan to India may pose a defense to China’s moves.

If diplomacy fails, war will become imminent. If China loses it which would reduce China’s aggression and its economic progress will be undone to some extent. If China proves it’s right on the disputed sea waters, there begins a new era in the world with US taking a back step.

Going by history and what is at stake, it seems China may not have much to win, it would pay a higher price than the benefits of getting those tiny islands into her lap. But now it is in no mood to listen. It is not just for islands but to prove the world dominance. So I say a war seems to be on the horizon.

Rockstar is gone to make way for a political bandwagon

Rajan was a pleasing personality. He had his own views and opinions. He was loved by media and public in general. Surely that did not go well with the Govt. who does not want to share the credit of a good story. And in the closed door meetings of big public sector banks, they seemed to be unhappy with Rajan’s move to clean-up banks. All public sector banks had to act tough, write-off some of bad debt, put more money aside for provisions, and finally show losses in their P&L statements. It made those bankers look bad on the way they did their jobs. They secretly wanted Rajan to go. It is party time for them and their prime customers, big borrowers who wanted their loans to be recast. Crony or not capitalism is back in business with the exit of Rajan.

What changes one can expect in the policies after he is replaced with someone who will be obedient to Finance ministry and caring to big capitalists.  Here is a list of changes I expect to happen.

• Forex reserves to come down by $20 -30 B. This is to help pay those bonds maturing and not to put pressure on Rupee and banking system.
• Policy rates to come down 50 bps to 100 bps.
• Cash Reserve Ratio (CRR) to be cut up to 100 bps. This would quickly happen if the new Governor comes from banking background. They (Banks) think 4% CRR results in lots of idle money and affect their profitability.
• Regulations on NPA to loosen considerably. Infra and Power sectors to come out of the list of troubled sectors.

Immediate beneficiary of these changes will be:

• PSU banks as their profitability improves and theor management gets a considerably free hand in doing their business.
• Infra, power, real estate etc. sectors which had huge debts but had trouble in recasting their loans. Pressure on them would reduce to a larger extent. Some of them may get fresh loans too.
• Consumers in the short term as interest rates come down.

But the consequences of those policy changes would result in the following:

• Inflation catches up along with the liquidity increase so the trend in interest rate reduction will have to stop and reverse at some time.
• Undoing some of good things – banks will carry forward the bad loans and if they drop their due diligence, bad loans may rise further.

We like it or not, we have lost Rajan who was giving bitter pills which would improve the health of economy. After him, some of the changes would look like a relief or a good thing for economy in the short term. So those opposing Rajan will get ample opportunities to prove themseleves right. But history is going to be kind towards the efforts of Rajan.

Driverless cars, people-less factories and automated call centers

Man has evolved from generation to generation, from stone-age to modern age. He used different materials and developed new tools with every passing generation to ease his work. But the present evolution is aiming at replacing the man himself with machines. For example, take driverless cars which are already at advanced stages of testing phase. They have cameras to do the functions of eyes, sensors to replace the nervous system and a processor makes decisions and the car moves on without a driver.

Robots have been in use for many decades but the modern day robots are self-learning. They can be taught to do repetitive tasks which they will do tirelessly with same precision and produce quality output without exchanging stares with their production shop manager. Employers surely love these robots as they do not ask pay rise every year or won’t go on strike, so more and more robots are replacing the jobs previously done by humans. Many large scale factories are automated where robots do material handling, machining, welding, riveting, painting and packaging etc. tasks. These factories employ very lean human staff and getting close to be labeled people-less factories. These factories will rollout cars which won’t need drivers!

The recent advances in Natural Language Processing (NLP) and Artificial Intelligence (AI) has led to development of bots which can talk to (or chat with) customers, receive their complaints, provide information which were typically done by a customer care or call center employee. Not much time left for those in BPO industries before they are replaced with bots. The algorithms used in these bots understand the human language, the way we converse naturally along with our slangs. In the coming years you can employ a bot as your personal assistant, to schedule your calendar, to answer your calls and to plan your travel.

The corporate world will surely love these bots and robots as they improve business efficiency and improve profits. Will that lead to economic growth with fewer jobs? Probably so. And that is a bad news for half the world’s population which goes hungry and do not have a job to do. But the developed world would not care and the march of automaton would not stop. In the near future, most of those in developed world need not do physical work and they are reduced to just feel as all physical tasks are outsourced to a bot or robot. And the jobless will see that their chances of getting a job are further reducing.

Welcome to the new world of automation. You may think it is still far away in time before you face a bot/robot or interact with it. But in less than 10 years, they would have made inroads into your lives like how a cell phone made it into your pocket.

Not just Oil and Monsoon, Rajan and Modi too have done their bit too

We say thanks to low oil and not a bad monsoon for keeping inflation low. Many think that because of this situation Rajan and Modi are getting the credit. But I think they too have done their bit.

Absence of large scale corruption: First with Modi, lower price helped his Govt to get away with fuel subsidy and run the show with a lower fiscal deficit. True but there are other things to consider. Remember the days of UPA-2. None of the big scams like 2G or Coalgate which happened those days are not happening or at least so far. Larger scale corruption is not seen or seems to be cooking. That avoids the flow of balck money into the markets, especially the real estate. So real estate prices are in a check along with inflation. Avoiding the temptation to offer welfare policies helped to curb the fiscal deficit and thereby inflation. Many of his moves like ‘Make in India’ have remained a talk but even if a little progress is made in that direction, it would reduce import load for a large domestic consuming nation of ours. Even if he does not achieve much, he is surely not draining the national resources.

Fight against crony capitalism: Rajan (Governor of RBI) has put great effort in rebooting the banking system. Earlier Public sector banks mostly helped big businessmen; they gave big ticket loans and were never tough in recollecting their dues. But now they are forced to take tough decisions. It is surely a fight against crony capitalism. Apart from that he made the decisions and regulations transparent, linked the interest rates to CPI. His communications are consistent, policy stands have become predictable. More people know about the roles and responsibilities of a central bank now than before. Even if he leaves soon, he has already put a system in place which would help decisions of RBI in his absence.

So considering these factors apart from lower oil prices and a good monsoon forecast, are surely helping inflation to remain on the borders of 5%. Modi has three more years for him but Rajan’s continuity is in in doubt. If he too gets another three years stint, expect inflation too to remain in check and interest rates low. India’s economy would be in safe hands and may do consistently well too like the people at command.

I sincerely hope this good sport dos not get spoiled any time soon.