Global financial crisis: Isn’t it over yet?

In the famous Hindi movie ‘Darr’ there is a scene in which Shah Rukh Khan walks on the edge of a tall building with a flower in a hand and taking out a petal from it at a time and uttering in a staggered manner – “Kiran, tum meri ho (you are mine)” and “Kiran, tum meri nahin (you are not)”. Greece did the exact same thing with Euro zone but unlike in the movie scene, it ended with up with a different choice. Will it be out of Euro and does that mean a steep fall for them? Its banks are already closed for the week and all emergency funding seems to be drying up.  ‘Oh Greece, You are not alone!’ So says Puerto Rico as it is unable to service its debt. (http://www.cnbc.com/id/102794421). That means what we are seeing now would be tip of iceberg and it is difficult to size what is below the water.

Source: http://yalibnan.com/

While Greece is set to pay the price for its mistakes, what will happen to those who lent the money? They will have to take a haircut and write-off the loans as bad debt that causes their balance sheets to shrink too. So both Greece and the countries which lent to them will to have embrace austerity – cut in public spending. Since no economy operates in a silo, economic contraction will spread and it would affect global GDP too.

Source: MarketWatch.com

What is happening in China? Its stock markets are falling sharply. Its central bank reduced rates but it did not help to prevent the fall. If you look at last 20 days chart, you will see Shanghai Composite Index has fallen by 20%. Shanghai Composite Index Yes, it is significant. But if you see the yearly chart, you will notice that it had gone up from 2,000 levels to 5,000 in a relatively short period so a correction was due. But you should not fail to notice that interest rates set by its central bank are the lowest in the last 20 years.

All major economies US, European countries, Japan and now, China are at the mercy of their central banks for their economic revival. But going by history, it seems Central Banks can avert a crisis by choosing to spread the losses over a long term but it takes its own course of time for economic cycle to turn-up.

Japan lost a decade and now some of European countries are going that way. China is slipping into slow growth despite lower rates. Will it be India next? Probably not in immediate future, if we become disciplined with debt and monetary policy. We have the right man in RBI. But will he last? Rajan stays or not, going by global trend, economic contraction leads to inflation in India to slow down as well, triggering RBI to reduce rates again and again.

When the rates are low, savers lose. Borrowers who can use it productively stand to gain (at the expense of savers). If you can find avenues to borrow and use it productively, be ready as a lifetime opportunity is on your way in the coming year. Otherwise get into loans with floating rates now as doing so would become difficult next year. And do your math enough before jumping in as no asset class would hold water when deflation looms.

ಬೆಳ್ಳಿ ತೆರೆಯ ಬಂಗಾರದ ಹಾಡುಗಳು - ಅಂದಿಗೂ ಹಿಟ್, ಎಂದೆಂದಿಗೂ ಹಿಟ್!

ಅಂದೊಂದಿತ್ತು ಕಾಲ. ಅವತ್ತಿಗೆ ರೇಡಿಯೋನೇ ಐಷಾರಾಮಿಯ ಸಂಕೇತವಾಗಿತ್ತು. ಮೂರ್ಖರ ಪೆಟ್ಟಿಗೆ (ಟಿವಿ) ಬರುವುದಕ್ಕೆ ಇನ್ನು ಕೆಲವು ದಶಕಗಳು ಬಾಕಿ ಇದ್ದವು. ಅವತ್ತಿನ ಮುಖ್ಯ ಮನರಂಜನೆ ಎಂದರೆ ಸಿನಿಮಾ - ಬೆಳ್ಳಿ ತೆರೆ. ವಾರಕ್ಕೊಂದು ಸಿನೆಮಾ ನೋಡದೇ ಇದ್ದವರು ಅಪರೂಪ. ಚಿತ್ರದ ಪಾತ್ರಗಳು, ಮುಖ್ಯವಾಗಿ ಕಥೆ ಜನರ ಚರ್ಚಾ ವಿಷಯವಾಗುತ್ತಿತ್ತು. ಕೌಟುಂಬಿಕ, ಸಾಮಾಜಿಕ ಜವಾಬ್ದಾರಿಗಳನ್ನು ಎತ್ತಿ ಹಿಡಿಯುವ ನಾಯಕ ಪ್ರೇಕ್ಷಕರಿಗೆ ಮಾದರಿಯಗುತ್ತಿದ್ದ. ಹಾಡುಗಳ ಸಾಹಿತ್ಯ ಅರ್ಥ ಪೂರ್ಣವಾಗಿರುತ್ತಿದ್ದವು. ಆ ಹಾಡುಗಳನ್ನು ಮತ್ತೆ ಕೇಳಬೇಕೆನಿಸಿದರೆ, ಆಕಾಶವಾಣಿಗೆ ಪತ್ರ ಬರೆದು, ಅಭಿಲಾಷ ಕಾರ್ಯಕ್ರಮದಲ್ಲಿ ಬಿತ್ತರಿಸುವರೋ ಎಂದು ವಾರಗಟ್ಟಲೆ ಕಾಯಬೇಕಾಗಿತ್ತು.

ಮನರಂಜನೆಗಾಗಲಿ, ಸುದ್ದಿ-ಸಮಾಚಾರಗಳಿಗಾಗಲಿ ಎಲ್ಲರೂ  ಅವಲಂಬಿಸಿದ್ದ ಸಾಧನ ರೇಡಿಯೋ. ಮುಂಜಾವಿನಿಂದ ಮಲಗುವವರೆಗೆ ಸಂಗಾತಿ. ಬೆಳಿಗ್ಗೆ ಭಕ್ತಿ ಗೀತೆ, ರೈತರಿಗೆ ಸಲಹೆ, ಚಿಂತನ, ಸಂಸ್ಕೃತದಲ್ಲಿ ವಾರ್ತೆ, ಪ್ರದೇಶ ಸಮಾಚಾರ ಕಾರ್ಯಕ್ರಮ ಮುಗಿದು ಚಿತ್ರ ಗೀತೆಗಳು ಬರುವ ಹೊತ್ತಿಗೆಲ್ಲ ನಾವು ಶಾಲೆಗೆ ಹೊರಡುವ ಸಮಯ. ಸಾಯಂಕಾಲ ಆಟ ಮುಗಿಸಿ ಮನೆಗೆ ಬಂದರೆ ಆ ಹೊತ್ತು ವಾರ್ತಾ ಸಮಯ. ಹೀಗೆ ನಮ್ಮ ದಿನಚರಿ ರೇಡಿಯೋದ ಕಾರ್ಯಕ್ರಮಗಳೊಂದಿಗೆ ಹಾಸು ಹೊಕ್ಕಾಗಿತ್ತು. ನಿಮ್ಮ ವಿಷಯ ಹೇಗೋ ಗೊತ್ತಿಲ್ಲ, ಆದರೆ ನಮ್ಮ ಮನೆಯಲ್ಲಿ ಮಾತ್ರ ಟಿವಿ ಬಂದದ್ದು ನಾನು ಕಾಲೇಜು ಓದುವದಕ್ಕೆ ಮನೆ ಬಿಟ್ಟು ಹೊರಟ ನಂತರವೇ. ಅಲ್ಲಿಯವರೆಗೆ ನಮ್ಮ ಮನೆಯಲ್ಲಿದ್ದ ಏಕೈಕ ಇಲೆಕ್ಟ್ರಾನಿಕ್ ಉಪಕರಣ ರೇಡಿಯೋ. ಹಾಗಾಗಿ ನಮ್ಮ ಮನೆಯವರದ್ದು ಅದರೊಂದಿಗೆ ಭಾವನಾತ್ಮಕ ಸಂಬಂಧ. ಮನೆಯಲ್ಲಿ ಇರುವವರಿಗೆ ಮಾತ್ರವಲ್ಲ. ಹೊಲಗಳಿಗೆ ಹೋಗುವ ರೈತರು ತಮ್ಮ ಹೆಗಲ ಮೇಲೆ ಅಥವಾ ಸೈಕಲ್ಲುಗಳಿಗೆ ಸಿಕ್ಕಿಸಿಕೊಂಡು ರೇಡಿಯೋ ಕೊಂಡೊಯ್ಯುವುದು ಸಾಮಾನ್ಯ ದೃಶ್ಯ ವಾಗಿತ್ತು. (ಆ ರೇಡಿಯೋಗಳಿಗೆ ಬಳಸುತ್ತಿದ್ದ ದೊಡ್ಡ ಸೆಲ್ ಗಳು ಇಂದು ಕಾಣ ಸಿಗುವುದಿಲ್ಲ). ಇಳಿ ಸಂಜೆಯಲ್ಲಿ ಮನೆ ಹಿರಿಯರು ತಮ್ಮ ಮನೆಯ ಕಟ್ಟೆಯ ಮೇಲೆ ಅಥವಾ ಅಂಗಳದಲ್ಲಿ, ರೇಡಿಯೋನಲ್ಲಿ ಸ್ಟೇಷನ್ ತಡಕಾಡುತ್ತ ಕೂತಿರುವುದು ಇನ್ನೂ ಒಂದು ಸಾಮಾನ್ಯ ದೃಶ್ಯ ವಾಗಿತ್ತು. ಅದರಲ್ಲಿ ಬರುತ್ತಿದ್ದ ಹಾಡುಗಳು ದಣಿದ ಜೀವಗಳಿಗೆ ತಂಪನ್ನು ಎರೆಯುತ್ತಿದ್ದವು. "ಹೂವು ಚೆಲುವೆಲ್ಲಾ ನಂದೆಂದಿತು ..." ಎಂದು ರೇಡಿಯೋ ಉಲಿದರೆ, ಒಲೆ ಮುಂದಿರುವ ಹೆಂಗಳೆಯರ ಕೆನ್ನೆ ಕೆಂಪಾಗುತ್ತಿದ್ದದ್ದು, ಒಲೆ ಬೆಂಕಿಗೋ ಅಥವಾ ಹಾಡು ಹುಟ್ಟಿಸುತ್ತಿದಿದ್ದದ್ದ ಭ್ರಮೆಗೋ! ಮುಂದಿನ ಹಾಡು "ಕನ್ನಡ ನಾಡಿನ ಕರಾವಳಿ, ಕನ್ನಡ ದೇವಿಯ ಪ್ರಭಾವಳಿ ... " ಎನ್ನುವುದಾದರೆ ಭಾಷಾಭಿಮಾನದ ಜೊತೆಗೆ ನಮ್ಮ ನೆಲದ ಬಗೆಗಿನ ಪ್ರೀತಿಯೂ ಜಾಗೃತವಾಗುತ್ತಿತ್ತು. "ಯಾರೇ ಕೂಗಾಡಲಿ, ಊರೇ ಹೋರಾಡಲಿ ..." ಹಾಡು ಬಂದಾಗ ಕೊಟ್ಟಿಗೆಯಲ್ಲಿದ್ದ ಎಮ್ಮೆ, ಹೆಮ್ಮೆಯಿಂದ ತಲೆ ತೂಗುತ್ತಿದ್ದದ್ದು ಯಾಕೋ?

ನನ್ನ ಬಾಲ್ಯದ ದಿನಗಳಿಗೂ ಹಿಂದಿನ ಕಾಲದಲ್ಲಿ, ರೇಡಿಯೋ ಮನೆ ಮನೆಗೆ ಬರುವುದಕ್ಕೆ ಮುಂಚೆ, ನಮ್ಮೂರಲ್ಲಿ ಇದ್ದಿದ್ದು ಒಂದೇ ರೇಡಿಯೋ. ಊರಿನ ಹಿರಿಯರ ನೆನಪಿನ ಪ್ರಕಾರ, ಅದನ್ನು ಊರ ಮಧ್ಯೆ ಇರುವ ಬೇವಿನ ಗಿಡಕ್ಕೆ ನೇತು ಹಾಕಲಾಗಿತ್ತು. ಆಗ ಅದರಲ್ಲಿ ಬರುತಿದ್ದ ಜನಪ್ರಿಯ ಗೀತೆ "ನಾನೇ ರಾಜಕುಮಾರ ...". ಅಣ್ಣಾವ್ರು ಅವತ್ತಿನ ಕಾಲಕ್ಕೆ ಜನ ಪ್ರಸಿದ್ದ. ಅದು ಅರವತ್ತರ ದಶಕ. ಪಿ.ಬಿ.ಶ್ರೀನಿವಾಸ್ ರವರ ಜೇನಿನ ಕಂಠದಲ್ಲಿ ಬರುತ್ತಿದ್ದ ಹಾಡುಗಳು "ಆಡುತಿರುವ ಮೋಡಗಳೇ, ಹಾರುತಿರುವ ಹಕ್ಕಿಗಳೇ ...", "ಅಪಾರ ಕೀರ್ತಿ ಗಳಿಸಿ ಮೆರೆವ ಭವ್ಯ ನಾಡಿದು..." ಕೇಳುಗರ ಮೈ-ಮನ ಮರೆಸುತ್ತಿದ್ದವು. ಇತಿಹಾಸದ ತಿಳುವಳಿಕೆ, ಸಾಮಾಜಿಕ ಪ್ರಜ್ಞೆಯ ಜೊತೆಗೆ ಜೀವನದಲ್ಲಿ ಸಾರ್ಥಕ ಭಾವನೆಯನ್ನು ಮೂಡಿಸುತ್ತಿದ್ದವು.  

ಸಮಯ ಸರಿದಂತೆ ಟಿವಿಯ ಅಬ್ಬರದ್ದಲ್ಲಿ ರೇಡಿಯೋ ಕಣ್ಮರೆಯಾಗಿತ್ತು. ಅದರ ಜೊತೆಗೆ ಅದರಲ್ಲಿ ಬರುತ್ತಿದ್ದ ಹಾಡುಗಳು ಮತ್ತು ಅವು ಹುಟ್ಟಿಸುತ್ತಿದ್ದ ಮಧುರ ಭಾವಗಳು ತೆರೆಯ ಮರೆಗೆ ಸರಿದು ಹೋದಂತೆ ಭಾಸವಾಗಿತ್ತು. ಆದರೆ ನೋಡಿ "ಹಾಡು ಹಳೆಯದಾದರೇನು, ಭಾವ ನವ ನವೀನ ...". ಇವತ್ತು ಬೆಂಗಳೂರಿನಲ್ಲಿ ಎಫ್ ಎಂ ರೇಡಿಯೋ ಕೇಳುಗರಿಗೆ, ಹಳೆಯ ನೆನಪುಗಳನ್ನು ಮೆಲುಕು ಹಾಕಲಿಕ್ಕೆಂದೇ ಒಂದು ಚಾನೆಲ್ ಮೀಸಲಾಗಿದೆ. ಅದರಲ್ಲಿ ಕಾರ್ಯಕ್ರಮಗಳನ್ನು ನಡೆಸಿ ಕೊಡುವವರು ಮಾತಿಗೊಮ್ಮೆ ಹೇಳುತ್ತಾರೆ - ಕೇಳಿ, ಬೆಳ್ಳಿ ತೆರೆಯ ಬಂಗಾರದ ಹಾಡುಗಳು - ಅಂದಿಗೂ ಹಿಟ್, ಎಂದೆಂದಿಗೂ ಹಿಟ್!   ಅದರಲ್ಲಿ ಬರುತ್ತಿರುವುದು ಅದೇ ಅಣ್ಣಾವ್ರ ನಾನ್-ಸ್ಟಾಪ್ ಹಾಡುಗಳು. ಪುಟ್ಟಣ್ಣ ಕಣಗಾಲರ ಚಿತ್ರಗಳ ಹಾಡುಗಳು. ಅಷ್ಟೇ ಅಲ್ಲ. ವಿಷ್ಣುವರ್ಧನ್, ಶಂಕರ್ ನಾಗ್, ಶ್ರೀನಾಥ್ ಅಭಿನಯದ ಚಿತ್ರಗಳ ಮರೆತು ಹೋದ ಎಷ್ಟೋ ಸುಮಧುರ ಹಾಡುಗಳು. "ಗಗನವು ಎಲ್ಲೋ, ಭೂಮಿಯು ಎಲ್ಲೋ, ಒಂದು ಅರಿಯೇ ನಾ  ..." ಹಾಡು ನಮ್ಮನ್ನು ಹರ್ಷದಲ್ಲಿ ತೇಲಿಸದೆ ಮುಗಿಯುವುದಿಲ್ಲ. ಕಳೆದ ಅರ್ಧ ಶತಮಾನದಲ್ಲಿ ಜನ ಜೀವನದಲ್ಲಿ ಸಾಕಷ್ಟು ಬದಲಾವಣೆಗಳಾಗಿವೆ ಆದರೂ ಕಾಲದ ತಾಂಡವ ನೃತ್ಯದಲ್ಲಿ ವಿನಾಶಕ್ಕೊಳಗಾಗದೆ ಉಳಿದು ತನ್ನ ಇರುವಿಕೆಯನ್ನು ಕಾಪಾಡಿಕೊಂಡು ಬಂದಿರುವ ರೇಡಿಯೋ ಮತ್ತು ಅದರಲ್ಲಿ ಬರುವ ಸುಮಧುರ ಗೀತೆಗಳು ಚಿರಂಜೀವಿಯೇನೋ ಅನ್ನಿಸುತ್ತದೆ.

Welfare schemes and the argument of Sociology vs Economics

India, like many emerging countries with poor being majority population, doles out many populist welfare schemes. Govt. subsidizes many services from education to healthcare to transportation so poor can afford and the burden on them reduces. It is not just the Central Govt. who regularly launches new schemes; State Govt.’s too do not fall behind in this race. One such scheme offered by State Govt. of Karnataka, distributing Rice at Rs.1 per kg, has become a hot topic of discussion. A noted writer in Karnataka opined that, Govt. should rather provide jobs to its people than subsidizing food grains. Few others hit back saying that those who oppose this scheme do not understand what poverty is and have not suffered the hunger like poor. While everyone agrees ‘teaching how to fish’ is better, supporters of the scheme ask how do you protect the poor from going hungry? They want ‘Sociology’ to be made a priority over ‘Economics’. So is the subject of ‘Sociology’ works against ‘Economics’?

Definitely not as both subjects are completely interwoven and influence each other heavily. Social progress always comes with economic prosperity. And you spoil the economy, there will be social unrest. In statistical terms, they are positively correlated. They do not work against each other. Then why do some people argue of Sociology vs Economics? It is their myopia. They only see immediate impact but fail to see (or rather not interested in) what lies ahead. Promoters of welfare schemes which appear extreme have some other agenda. Political parties who announce such schemes are more interested in shaping the opinions of public in the short term to win elections.

Let us see why many welfare schemes (which are extreme) do not achieve their intention though they seem to be working in the short term. For that we need to see how Govt. finances the subsidies. Govt.’s have incomes in the form of tax collection primarily but there are other incomes such as divestment, profits from the Govt. owned enterprises etc. There would be no problem if a Govt. balances its income with expenditure. Then there is no fiscal deficit. But with the new populist schemes they come up with, they would need additional funds that would demand raising taxes. Any populist Govt. would not raise taxes as it affects their image so they choose to borrow to spend on subsidies. You very well know borrowing and donating would make any super rich a beggar in no time. The same applies to Govt.’s too. For the borrowed money, Govt. will have to pay interest the next year. That would mean effective money available to spend in the next year’s budget will reduce. But Govt.’s will not reduce subsidies. So they will require more funds to be borrowed to keep the schemes going. When our leaders think politics is more about managing in the short term, they do not care about the increasing debt load. They simply roll it over, year after year. But a time will come to repay the debt and if Govt. finds it tough to get new loans, it will go bankrupt. This is what is happening in Greece. When Govt.’s default, disaster strikes their economy. Govt.’s assets will be put for sale at bargain prices but there will be no takers. There will be no more subsidies and unemployment starts bothering even those who work hard. All citizens end up paying the price for the subsidies they had availed. They cannot blame their Govt. as they only elected them to power. After all Govt. is representation of its citizens in a democracy. Now you tell me, do you still think you can achieve social progress by borrowing and funding subsidies?

Let us assume we Indians are sensible than Greeks (in fact we are). And the public debt remains at manageable levels. But yet these subsidies hurt everyone in the form of an invisible tax which haunts the poor more than the rich. It is termed ‘Inflation’. When any money is spent, it should produce the economical equivalent in the form labor, service or physical capital. If those subsidies do not pay back the Govt. in equal measure, it causes deficit. All wasteful expenditures of Govt. causes inflation. As Govt. goes on borrowing spree, it reduces the monetary liquidity in the banking system. When Govt. borrows the most money available in the money market or from banks, there will be less money available in banks to lend to private. Capital costs (interest rates) raise when the demand for capital increases. To ease the liquidity situation, central banks will have to run printing presses. When new money is created without equivalent economic value-add, it increases inflation. If Govt. borrows for foreign land, it affects Rupee that makes imports costlier and flaring up inflation again. Higher inflation coupled with higher capital costs ruins any economy, see how India fared during 2010-2014. Our GDP growth rates halved in that time frame and bad assets increased.

Higher inflation in the last five years has taken the prices up of all commodities, food grains and vegetables. Inflation had supply side problems too but monetary expansion (increasing money supply) had its role as well. Rice which was available at Rs.15-20 a kg five years ago went up to Rs.35-40 a kg by 2015. Now Govt.’s subsidizes rice. But inflation will not spare us. It will make other things expensive. You press a balloon on one side, air moves to the other side. Similarly subsidies funded with debt offer temporary relief but they do not solve the problem entirely. If our house rents go up, will Govt. subsidize it? Is not it better for market forces to take control than Govt. intervention?

Subsidies are for those who are extremely poor and aged who either don’t have means or ability to work. Definitely they are not for those who have affordability. If you have read this post till here, I expect that you would join with me in avoiding buying in subsidized market but rather pay the full price in the open market wherever possible, be it cooking gas cylinders or solar panels. And we would elect those who are sensible with subsidy spending. Poor need not just survive today. They need to live longer too.

My personal library and thoughts on reading statistics

Book reading is a hobby for most and for those in the field of journalism it would be part of the job too. In the current times of multimedia, when one can watch movies on cellphone, when TV has hundreds of channels, travel is no more a taboo and photography is attracting many enthusiasts, book readers are becoming a minority community. Reading a book for time pass is almost a gone thing. Those who wanted to read are reading. Probably you understand why publication is not a lucrative industry.

Keeping the business aspects apart, I wanted to discuss with you how many books one reads? Though it varies from person to person, if we assume that one reads two books a month, he/she would read around 24 books a year. If the person keeps this interest alive for lifetime (let us say he starts reading from the age of 10 till he is 60; that is 50 years!), there would be more than 1000 books he would be done with. But there are few rare (like Shashi Tharoor) who have a history of reading more than 300 books a year. Even at that run rate, one would reach the count of 15,000 books in life time. If you think these numbers look alright, what do you think of the 52,000 books in the personal library of Shrikant Jichkar, the most educated person in India? (Link: https://en.wikipedia.org/wiki/Shrikant_Jichkar). What would be his reading speed? LK Advani, a senior political leader, who is 87, says that his personal library, which is already more than 15,000 books is growing now too. (http://blog.lkadvani.in/blog-in-english/let%E2%80%99s-all-make-our-lives-meaningful). Those who love books find it difficult to get drawn into some other passion; it sticks almost for their lifetime.

You might say, those building huge libraries for personal use, may not be actually be reading all of them. If you think so, you should watch this video of Osho (Link: https://www.youtube.com/watch?v=j1h8-WvzexY). He says he has read each one of the books in his very vast library (150,000 books). His was not a library in the house but rather a house in the library as he puts it. He says the book ‘The Brothers Karamazov’ has more insights to offer than the holy book of Bible. What a compliment to Fyodor Dostoevsky!

Now, let me come to my personal library. It has around 500 books now. Friends, relatives visiting my house give it a strange look. They need not necessarily share the same passion of mine. Some of my good friends have not read a single book after they have finished their studies but we have many other things in common. So they stare at my library for a moment and it does not interest them. But there are others who take interest, peep into it and say it has more fiction than non-fiction and reading novels is a waste of time. If I say there is more truth in fiction they may not appreciate, so I do not say it. Few tend to think reading books makes one a learned person but they ignore my opinion that reading does not always translate into knowledge, and it takes many other behavioral traits to be a learned person. (Einstein said ‘’Imagination is powerful than knowledge”, what a learned person he was). But yet, there are a very few who touch the right strings, understand that reading is a compulsion for a person like me (forget the purpose of knowledge and entertainment) and our friendship strengthens.

So in summary, how many books one should read or what should be the size of a

personal library? Now I say forget statistics. We do not buy books or read to impress others. (If that is the reason, interest would not last long). Even if we have a collection of handful number of books we cherish, we would keep them with us for lifetime. Quality scores over quantity. With whatever collection we have, we can create a  grand Dolby-Digital theater in our minds by immersing ourselves into the world created by the author. The extent of imagination is only limited by the creative ability of yours and that of authors.

There are lots of finer things in life. But many of them are meant for our physical senses. The world created by books or by any other creative art, touches the psychological and spiritual aspects of us. If not books, get to know any art better. You would know how fine life is.

India’s economy to overtake US in 25 years (??? !!!)

Somebody opined today that India’s economy will surpass that of US in the next 25 years.

Do you think it is stupid? Yes, many good ideas look stupid in the beginning. Do you say Indians dream too much? No, this was told by a Japanese. Does he know how money is made? He is a multi-billionaire, second richest man in Japan and is a self-made man. Does he have institutional backing? He is the chairman of Japan’s SoftBank. Now that sets you thinking? You should do being more than that.

All forecasts may not always come true but one need to see the merits of the arguments. Masayoshi Son, Chairman of Japan’s SoftBank has committed $30B funds so far in the India’s growth story. He said “India's economy is on the cusp of the "hockey stick" curve before takeoff, and has the potential to overtake the United States within 25 years”.   

Read more at:

http://economictimes.indiatimes.com/articleshow/47776228.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

One needs to observe that he is a banker and he could identify China’s hockey-stick moment (or J curve in the chart) in time. He made good money when Alibaba, a Chinese e-commerce company went public. He has his set of failures too. He was caught completely unguarded and lost big money during dot.com crash of 2000. Now he has set eyes on India. He has already invested in many start-ups including Snapdeal, Housing.com and Ola. He is visiting India to discuss on new investments. He is mostly focused on e-commerce and renewable energy sectors.

More than arguing whether Masayoshi Son is right this time or not, and whether it is right to benchmark with US or not, and if 25 years is sufficient timeline or not, I would like to bring forward the positive aspects in his views. 

India has transformed a lot since it got independence and a lot of growth has come in the last 15 years. Now, unlike few decades ago, we do not have a cow tied outside the house to provide milk rather we have it delivered and the milk-boy calculates the sum we owe him on his Nokia phone. That means two things – we understand the benefits of work specialization and the productivity gains it brings. And we are making use of technology in daily lives and taking part in globalization. See the data. India’s exports were 5% of GDP during 1980’s and now it is 25% of GDP!

India's exports as % of GDP. Source:tradingeconomics.com

No wonder our wages (incomes) have gone up a few hundred times in the same time. We have more stuff in our homes than our grandparents had during their prime. So when looked from a distance, with a wide chart covering 25 years span, it looks like explosive growth. But what Masayoshi Son expects is even a steeper growth led by the use of internet and the access to information for everyone.

Trade increases when whole of India comes on a single of platform. There would not be any unmet demand. Price differences across the markets would reduce and efficiency would go up. Snapdeal (or Flipkart or Amazon) can sell goods at competitive prices and boost consumption. Ola can make taxi ride affordable for the common man with the use technology improving the utilization of cabs creating a win-win situation for both the consumer and the service provider. Gaps in the trade will be bridged and consumption will see a new high. And those investing in such businesses (like Masayoshi Son) would hit jackpot. But one need to have patience until the market develops and a few companies would fail in the war of efficiency too.

As the information asymmetry starts disappearing, it does many wonders to the society. Consumption in India will see a new high, with its billion-plus people and their rising incomes. And the new trends in the business will find new ways to reach their target customers and making money for the likes of Masayoshi Son in due course of time.