Can you really help a fool

'Fool' is a strong word, and I don't use it lightly.

Prakash is about 50, and has worked with my family, off and on, for some 30 years now. He is a good manual worker, but has not acquired any skills beyond a dogged ability to clean the flat surfaces of our home, and water the plants. When he has taken leave, he has disappeared for months, and we have been forced to look for other help. For most of the last 20 years, we have been his fall-back employers, having him come in for a couple of hours in the morning, while he spent the day in a succession of other jobs.

When my mother passed away in 2011, she had willed him Rs. 30,000. My sister, Kanika, felt the money should be used to help him secure a home in Delhi, since Prakash owns no land in his village. When he said he could procure a 'jhuggi' for 1,50,000, Kanika said she would take the amount up to 1 lakh; I volunteered the balance. It turned out, Prakash was completely out of touch with the market, and there was nothing to be had for under Rs. 2.5 lakh. Eventually, I bought him a small piece of land in Sangam Vihar for just under 3 lakhs, on which he said he would build a room.

As the months went buy, it became clear that Prakash could not mobilise the money to build; our chauffeur interceded on his behalf, and I agreed to pay a mason for the construction. The space allowed for a single room 10 feet by 15 feet, with a small toilet tucked under the stairs leading to the roof. During the construction, Prakash decided he didn't want the loo in the space, so as to allow for more elbow room. "We'll use the fields" he said. Kanika and I suggested the loo would make for a more comfortable home, but the man was adamant. And it is his home.

A few months later, Prakash approached me for some more money, to build the loo on the roof. The amount was not significant, but I was concerned about whether the structure would handle it; he said he had spoken to the mason, and with a low brick wall and a tin roof, the load would be insignificant. I gave him the money.

Now, the roof has cracked with the load. I don't know whether the mason was involved in the loo retrofit, or whether it was a typical jugaad. Now, I don't know whether to feel responsible, and pick up the pieces, or walk away, having done 'enough'.

I typically get very angry when my wife says those poor remain poor who have bad behaviour patterns. I believe that it takes a couple of generations of interacting with the modern world to pick up rational decision-making abilities; I know that extreme poverty leads to short-term decision making. And yet, among the staff we employ between our home in Delhi and those in our mountain home - all village-born and bred - we see such a huge spectrum of behaviour.

Several of our employees set savings practices into play very early in their lives, and have now accumulated reasonable sums to deploy for their childrens' future and their own old age. Ironically, they probably won't need much of this money, because the children have proved to be responsible individuals, who've gone through school, groomed themselves for better lives, and will, I believe, look after their parents when they are old.

The very parents who have been feckless with their money have irresponsible children, who dropped out of school, can't hold jobs, and treat their parents as a convenience. The children have made no progress up the socio-economic ladder, and are extremely likely to be of any support to their parents in their old age. It seems as if you just can't trump genetics, even with a fair amount of will and a reasonably generous wallet.

India's economy under Modi

ONE YEAR ON…

The problem with hype is living up to it.

‘Ache Din’, Mr. Modi repeatedly pronounced in a victory speech last year, and vast swathes of Indians took him at his word. In India’s financial world, dominated by middle-aged Gujarati males, to express even the most tentative of doubts was to invite opprobrium, even derision:

“The Gujarat model in all of India, Boss!”.

“He works so hard - you will be amazed by the speed of decision-making”.

“These Babus - sab ko seedha kar lega.”  

I didn’t doubt any of these assertions; further, their cheerful - if dogmatic - optimism was a welcome change from the deep scepticism that UPA II had generated. My concerns stemmed from the nature of our economic woes, and the history of recovery from financial crises.  India’s crisis, as in most parts of the world, had followed an investment boom; born of cheap money from central banks, especially the US Federal Reserve, this gluttony of investment had caused some of India’s largest business houses to pile up balance sheets that were not able to deal with their own size.

These woes always feed back into banks. In India, the problem is compounded by the fact that public sector banks account for over  two-thirds of financial assets, and a broke exchequer has had little capital to inject into banks. Clearly, the repair of the largest balance sheets in the nation was going to take a long, long time. It is now 7 years since the global financial crisis broke in 2008, and RBI governor Raghuram Rajan warned just last week that we haven’t seen the worst of bad bank loans -  called NPAs, or Non-Performing Assets, in the jargon.

But I get ahead of myself: by May 2014, the Modi-believers had captured the imagination of financial markets; the exuberance began with the first opinion polls earlier that year, and through all of 2014, Indian stock markets were on a roll, putting on 30%. The reality check of Mr. Jaitley’s first full budget put a brake on this cheer, and since then, our markets have been less than cheerful - though one must attribute some of that caution to concerns that 7 years of cheap money from the US Fed may actually start reversing later this year.

Since I tend to view the economy through the prism of capital markets, I decided to look at the shifting perceptions of investors towards different sectors of Indian economic activity.

Given the optimism that a Modi government would revive investment, shares of companies manufacturing capital goods surged all of last year. The BSE Capital Goods Index began 2014 at 10,000, hit 14000 by the the BJP was voted in, and by early July, had recorded 16,600. Optimism about investment peaked in March of this year, and the sectoral index peaked above 18,000, But the reality check of the budget knocked some edge off that, and now the index is roughly where it was a year ago.

In contrast, prices of consumer goods shares moved up more moderately in the early Modi days, but kept going. Today, the BSE index for the category, the FMCG sector index, is a good 25% above where it was a year ago.

This is precisely the opposite of what the market expected in 2014.  The Modi effect was supposed to usher in a period of entrepreneurial optimism, and send the investment appetite soaring. Instead, investment-heavy sectors have been sluggish, and order books are seeing too few fresh entries. Consumers, on the other hand, are gradually picking up spending. By and large, factories are being able to cater to the revival of demand without installing fresh capacity, thanks to over-investment during the boom. During the slack years, some loans have been paid down, so finance charges for consumer goods companies have also been getting pared.

Companies producing goods for Indian consumers have also benefited from the recession in global markets. The Chinese slowdown, in particular, has meant that commodity prices have eased hugely. India has been a huge beneficiary of the drop in petroleum prices; but input costs have dropped across the entire spectrum of commodities, and the CRB Reuters Index for commodities dipped from a peak of 312 a year ago, to 210 in March of this year.

This mix of demand and cost factors suggests that the recovery in India’s economy will continue to be led by consumption goods, and the investment cycle will revive only gradually. Given the challenges in several sectors of our economy, I can’t bring myself to trust the sudden spurt in our recorded growth rate to over 7%.  If the number is real, our own poor mobilisation of savings, and the sharp drop in growth of bank deposits will make it challenging to fund this growth. Our government’s skills will be tested by its ability to attract global finance, especially if western central banks are in a tightening mode at the time.

Despite all the promises made by our Finance Minister, our tax authorities continue to play fast and loose with arbitrary demands. Indian tax-payers have to put up with their harrassment, but foreign companies have scores of shores to choose from. Moving the needle on our Ease of Doing Business - which is at the bottom of the global charts - is going to be a Herculean task; in the last year, despite the tall talk from podiums across the world, I see no evidence that Mr. Modi’s government has made compliance  easier for the Indian - or foreign - businessman. The mistrust of business runs deep in the veins of our government, and is matched only by its ability to inflict pain upon, and extract money from, from our entrepreneurs.

If Mr. Modi’s government wants to shift the trajectory of the Indian economy, it will have to show a great deal more resolve at every step of its engagement with the economy - in legislation, in tax administration, and above all, in speed of decision-making. Otherwise, our economic fortunes, ‘Ache Din’ or their opposite, will be dictated by Modi’s stars, not himself.

Cleaning out the junk - shares

When you have your home painted, all the junk stares you in the face.

In my case, this includes a dusty old plastic file, with paper shares of companies that are no longer traded.

Since I had converted all the family's shares to demat form in 2003, it is extremely unlikely that this paper is worth anything; nevertheless I google the first name of the company on the first bunch of shares that come to hand. This is Hada Steel products, and my father bought the sharesf from Shri G.R. Hada, the promoter, in 1976. 

(The shares had been allotted to Mr. Hada in 1971, with a first call of Rs. 2.50; he paid another Rs. 2.50 in May of 1972 and the balance Rs. 5 in November of the same year).

Mr. Google throws up a list of companies under liquidation* in Chandigarh. The commentary, dated July 2013 has this to say: "It is pertinent to note that the said list is updated only till 2008". 

And, I love this comment: "

 "apparently the Ministry is not in business thereafter". 

Further, "You will also notice that  considerable time has elapsed from the date of Liquidation of some of these companies but hardly any company has disbursed the Liquidation proceeds to the shareholders till date."

Hada was liquidated on the 14th of May 1987, liquidation proceedings were Rs. 1.96 cr. Of course we haven't seen 1 paisa.

Unfortunate as this as, and poorly though it reflects on the processes of the Ministry of Corporate Affairs, my wife will be happy with the outcome - junk the junk paper.

*https://junksharesindia.wordpress.com/tag/hada-steel-products-ltd/

My first triathlon

I woke up before 5 a.m., with a sense of anxiety whose locus I couldn’t immediately locate. Aah, this was Abu Dhabi, and I was worried about whether I would be able to complete my first triathlon. I tried to meditate, to rein in my racing pulse. It didn’t work, and my worried heart continued to feed its anxiety back to itself, and roll on at 72 beats per second, way higher than my normal resting rate of 52-54. I figured it would stabilise once I got onto the course, and there was nothing I could do about it, since my body was clearly not ailing in any way.

The water in the Abu Dhabi Corniche is a cool jade, and at 22 degrees in early March, it had me pull on my wet suit for the first leg of the race. At 8:20, to the sound of a hooter, I launched into the water, in a wave of some 100 athletes. The water was astonishingly clear, and seeing the sand at the bottom helped calm me, and settle into an easy stroke, made easier by the unaccustomed buoyancy of salt water and wet-suit. A hundred meters into the course, I slowed, and surveyed the scene - the massive yellow buoys that marked our course out towards the mainland, in the direction of the handsome silver and copper buildings of the business district; the safety kayaks that set up broad channel guidelines, with smiling paddlers to ensure we didn't bypass any buoys. 10 minutes into my swim, I pulled around the outer buoy, hung a left, and headed down the coast, for the long leg. I was stroking strong and clean, my body streamlined; perhaps a trifle too fast? Remember, you have a long way to go. I turned on my back, suspended the race from my mind, and the warm sun and cool air. Just for a bit, then I focused on the buoys again - two more before another hard left, for the home stretch. At the ramp that marks the end of the swim, 4 young men dressed in yellow and red hauled me on to the indigo synthetic carpet that marked the way to the bike racks. I had done the 1.5 km in 36 minutes, well within my target. I unzipped my wetsuit as I walked to my bike, juggled between eating a banana and pulling off my neoprene layer, drank some Electral, then pulled on a t-shirt and shoes, helmet, racing number. The transition took me far too long, and at 9 minutes, the race statistics showed I was by far the slowest in my age group (55-59).

The bike ride is along one channel of the Corniche Road, which was shut off to vehicular traffic. Cool air, occasional gusts of wind, and a warm sun made for excellent biking conditions, with really sweet, encouraging water-boys and girls. 10 k out and back, two loops for the 40km ride that constitutes the Olympic distance. I was slow on my bike, trying to conserve my energy for the run, and took 1:36, with 3 stops. My target was 1:45, but given the excellent surface and traffic-free conditions, I think I could have done it in 1:30. I was also being very careful about the 'Draft Illegal' on the cycle course, so every time someone passed me, I would slow down so they were more than 10 m ahead of me in well under 20 secs - I didn't want to be pulled into a penalty box for something I didn't intend!

The run was 2.5 km out and back, 2 loops for my distance. With the bikes still whizzing up and down the Corniche, the runners were steered onto the broad, tiled sidewalks, our lanes painstakingly marked with traffic cones, with knowledgeable guides at every turn. I had budgeted 1:15 for the 10 k, and 5 m for the transition. I racked my bike and helmet fast, and  turned around in 3, but headed for the wrong exit out the bike paddock, so I had to double back, and ended up taking  5 minutes to get back on the track.. By now it was getting warm, but not hot, so the running was not as enervating as I feared. I was loading electrolytes at every aid station, and the conservative cycling must have helped, because I finished strong, with the 10 k in exactly 1 hr. This is just a couple of minutes slower than my Delhi training runs, so clearly I managed my fatigue levels well, and was adequately trained.

Net-net, I did the course in 3:28, well inside my target of 4 hours. I was not in the least bit dismayed that this placed me 14th out of 14 finishers in my age group - much better that than joining the 3 who didn’t finish. At my current level of training, I could have clipped at least 11 minutes off my timing - 4 by cutting the swim-bike transition to the race average of 5; 5 by being slightly less paranoid about the draft penalty; and 2 by making sure I exited the bike paddock from the right corner. This would have still placed me at the bottom of the charts, as the next slowest man in my age group came in at 3:15. Clearly I need to hugely improve my cycling speed - firstly, this is the largest component of the time on the course; secondly, I was 11/14 on the swim, and 10/14 on the run, so the discipline in which I am a huge laggard is the cycling. Given how much I enjoy cycling, revving it up should be great fun, as I fully intend to do the same course in 2016.

The ethnic make-up of the triathlon community was most interesting - the event was clearly an expat job, with all the organisers being the colonials - the ANZ community especially, and some salty Brits. The ‘coolie’ jobs were almost entirely done by Filipinos, with the odd 'desi'. There were 2000 athletes from all over the globe, but again, largely from the 3 nations above. There were a couple of groups of young entrants from Russia and Italy. Quite a few strong young Arabs - from all over the region, but primarily in the Sprint segment  - that's 500 m swim, 20 k ride and 5 k run. We were a group of 3 Indians, but other than us, and despite the enormous Indian populace in these parts, NOT ONE other South Asian. Weird.

All extremely energising, and I’m really looking forward to  next year, when I will be in the next age category, 60+!!

Taxes will be lowered, but in the meanwhile, here's a hike.

BUDGET 2015

The annual Economic Survey, published a couple of days before budget day, provides the context against which the Finance Minister makes his proposals. This year’s document was uncharacteristically enthusiastic about our situation, “The changing fortunes of India have been nothing short of dramatically positive”, with a decline in inflation, the shrivelling of the current account deficit, and a sharp recovery in economic growth.

This last has most economy-watchers surprised, since it is not supported by corporate results or tax collections; worse, if it is a statistical quirk, emerging out of the new method for calculating the GDP number, it may endanger the revenue estimates on which Mr. Jaitley’s second budget is based. Taxes collected by the government depend on economic growth, and if economic activity is over-estimated by the budget, government revenues will fall short of projections, putting a stress on the fiscal deficit, and demanding greater borrowing.

The Finance Minister has, in any case, disappointed those who believe in fiscal discipline, in pushing out by one year the date by which he will reduce the government’s fiscal deficit to 3%. He also postponed by a year the introduction of two fresh commitments - the implementation of the GST, and a reduction in income tax rates for companies, from 30% to 25%. Meanwhile, he had no hesitation in raising from 12 to 14% the incidence of service tax, a hike required for it to converge with the tax levels on goods.

And, though corporate tax will go down, at a date and rate to be notified, for the time being, it will go up. The Minister's speech said ‘rich’ individuals, defined as those with stated incomes over Rs. 1 cr per annum will pay an additional surcharge on income tax. Currently standing at 10%, this got hiked to 12%; what the Finance Minister did not say, but stands in the fine print, is that there is an identical hike for companies, as well. This additional surcharge is estimated to garner Rs. 9,000 crore for the exchequer. The only consolation is that Mr. Jaitley has abandoned the wealth tax, since it has not yielded the desired revenue.

Other initiatives that could be significant were mentioned, but not fleshed out, and would seem to be statements of intent, rather than specific proposals: these include easier bankruptcy laws, and a simplification of income tax rules governing individuals. Vague promises like these belong in an internal discussion or brain-storming, rather than on the floor of the house, and speak of incomplete homework, rather like declaring that yoga will be a charity. Someone will have to explain the budgetary significance of that to me, preferably while doing a headstand!

I don’t want to sound entirely negative about the budget, since there were two proposals in it that I really liked

- the first was that the employee contribution to the ESI (Employee State Insurance) Scheme will henceforth be optional. Anyone who has visited an ESI-run hospital will welcome this move. Mr. Jaitley’s remark about employees being hostage to the scheme was spot on. So are companies, and I wonder when he will make the employer’s contribution optional, too.

- the second was allowing ‘pass-through’ in Alternative Investment Funds* (AIFs), such that gains in these funds are not taxed in the hands of the individual investors, much as for mutual funds. India needs diversified sources of financing for new business ventures, and AIFs are particularly active in private equity and venture capital deals.

On the subject of funding investment, the most startling gap, to my mind, was in the area of funding public sector banks. The Economic Survey had this to say about their performance, “the best public sector banks perform well below private sector banks on average, recognising of course that PSBs may be burdened with greater social obligations that places them at a competitive disadvantage relative to the private banks. The subtler problem with public sector ownership is that exit from debt difficulties is proving very difficult.” Given the fact that PSBs account for over 70% of the banking sector, and their balance sheets are hugely stretched, I anticipated a huge commitment to enhancing their equity base. The number, at just under Rs. 8,000 crore, seems piffling, especially for an economy which is projected to grow at over 8%.

My editor at Outlook asked me how I thought this budget measured upto the expectations of a Big Bang. “0 on 10”, I answered. However, I had no such expectations, so I needed to assess it against  

more muted norms. I find it long on hope, but short on substance, and, I suspect, pinning too much on favourable winds in the larger world, most especially continued global liquidity, and low oil prices.

Fingers crossed.

*here's the reaction of TV Gopal, Chairman of TVS Capital:
http://www.vccircle.com/byinvitation/2015/02/28/budget-2015-break-through-indian-pe-industry

What an aunt means

MASI

A eulogy to my aunt, who passed away on Feb 15th, aged 91

Masi

Ma - si

Like mother. What a lovely word!

Aunts - and if you want to be gracious to the other sex, uncles as well - are like the emotional bonus awarded to us by the cosmos.

“You have your parents’ love”, it says. “Now here is an aunt, or two, or three.”

“You have a home. Oh, take another, and a third.” Places of welcome, of refuge, of bonding; of quiet comfort and cousinly camaraderie.

For several months, when I was 3 or 4, Masi’s home was our home, when my father was away in the UK, and we moved, bag and baggage, to the Air Force station in Kanpur. My most vivid childhood memories date from then - push-starting Rattan Uncle’s car, then falling to the road as the engine caught and revved away; going into town to order a pink frock with lace inserts for Cuckoo’s birthday; and her birthday cake. “What shape do you want your cake to be ?” she asked Cuckoo. “Puss”, Cuckoo said, monosyllabic at best. “Puss!”, exclaimed Masi. “So it shall be - and so I shall call you!” The nickname stuck for several decades, till the shifting tides of politically and socially correct language dictated we jettison that name.

Words reflect the character of the times. “Doughty” is not a word you hear these days. Perhaps because people are not doughty any longer. But doughty was my Masi - Two days ago, we were recalling how Masi sat on a muda on the baked patch of land that was D 68, Defence Colony, and supervised the building of the Suri home, brick by proverbial brick. All the while, knitting us sweaters, stitch by stitch, or knit by purl - again words you hardly hear these days.

On these doughty foundations are our lives built, we who take material ease for granted, who only dimly appreciate a generation that fought the ravages of colonialism, partition, war, and

socialism  - and built our homes, our lives. Through those years, Masi lived with a chuckle and a strong sense of reality.

A quarter century ago, I took Masi a few balls of wool in a deep sea-green. “It may be the last sweater I ever knit”, she said without self-pity -  knowing her fingers were beginning to stiffen with age and arthritis.”You had better look after it”. I don’t know about looking after it, but I wore it on mountain treks and on jeep rides in deserts, in front of fireplaces and electric heaters - wore it till the threads unravelled. Sadly, the wool was not as strong as the hands that knit it.

Last week, I again encountered Masi’s acute sense of reality. Her surgery had gone well, her wounds had healed; Aarti and Kucchy had set up all the systems to look after her convalescence and physical rehabilitation. But in her eyes I saw a strong warning, an intimation that her flesh and spirit didn’t have the strength to survive. Messages are lost in translation, and in our lack of courage to accept  them, but I did share with Kucchy and Aarti

that now the only thing to do was to love her, like we would a child.

Sadly, we never love our aunts the way they loved us.

Maybe that’s the way of nature, and we are designed more to love in turn. To pass on the love and the tradition, and the sense of the past, to each succeeding generation.

In my Masi’s passing, I would like to dedicate myself to doughtiness, to reality, to family, and to our children.

And it’s such a pity, I’ll never be a loving Aunt! Better luck next time, Pia.

For my son

I wrote this to my son on his 13th birthday. Cleaning out my files, I found it today. I think I could as well have written it for him on his 16th, a few months ago.

As you grow, remember:

The World Owes You Nothing. 
You were born with enormous blessings – a healthy body, a fine mind, a family which is happy, wealthy and wise; and above all, with love. From the day you were born, you have been showered with love. Count your blessings every day of your life. Whenever you feel sorry yourself, just look outside your own little world, and remember how much you have to be grateful for.

You Can Be What You Want

Religious people say God made us in his own image. I don’t know, because I don’t know much about God and his image. But, what I do know is that we are blessed with the ability to shape our own lives. 
Want to be a dancer? 
Then dance - today, tomorrow, and the next 1000 days, and I promise you will be a good dancer. 
Put your all into it, and you will be a great dancer.
Want to be a Physicist?
Study physics - every day, for the next 2500 days, and you will know, really know physics.
Your Dadi had only one ambition – to have a happy family. She worked hard at it, and you know how that felt!
Above all, don’t look for excuses outside yourself.

Find Yourself

In your adolescence, you will want to ‘belong’ to groups or gangs. This is normal.
You will look for love and attention outside the family. This is hormonal. 
If the groups or people from which you seek attention don’t give it to you, you may go through periods of feeling low. You may, in turn, feel like rejecting the family. This, too, is normal.

But it is a mistake. 
Family ties give us an amazing amount of stability in our lives, and they are the ones that strongly abide. Home means “the place where, when you knock on the door, they have to let you in”. Whether we live in Delhi or Satoli, Bangalore, or Bangor, Maine, your parents’ door, and heart, will always be open to you, to your thoughts, and to your concerns. 
But the most amazing tie you have is to yourself. It is the one tie you carry wherever you go. Find joy in your own being, in the wonder of your own creation, in the inner workings of your own mind. Find satisfaction in your life, and you will never be lonely or depressed.

I am not suggesting you become a hermit. But remember, the most attractive people are those who cherish themselves. The most loved people are those who have found a way of living comfortably within themselves.

Find Good Friends

One of the great joys of growing up is the exploration of friendship and intimacy outside the family. Be free with the first, more discriminating with the latter. 

Cultivate discrimination. The Sanskrit word is ‘viveka’. It is one of the most valuable concepts I know. If we have viveka, we learn to tell good friends from hangers-on; true value from surface sheen, and the abiding from the temporary.

Good friends are an amazing strength – they are powerful mirrors into our life. They tell us what is best about us, and kick our ass when we are screwing up. Like every aspect of our lives, they need to be cultivated, nurtured, and valued.

But, when something excites you, truly grabs you, don’t feel scared to go it alone. Each of us is unique, which means that we will often have to walk alone.

ENJOY YOURSELF

Life offers amazing opportunities for discovery, enjoyment and abandon. Seize those chances, and grab the day.

Carpe diem