What Indian Kings and Leaders have in common - “Keep’m Poor!"

As I saw Sengar walking out of the court with a despicable smirk on his ugly face, his expression said “I might have committed the most heinous crime but this is a minor blip and I will soon be back – because in India “Sab Chalta Hai”. How I wish and pray someone had done a Hyderabad on him.

And that smirk has pretty much defined the character of this nation. Whether its corruption , conduct of politicians and citizens alike, getting away with proverbial murder or whatever…..

So as my dear friend, prolific and thought leader par excellence - Andy Mukherjee recommends article after article, ways to take this country out of an economic malaise through large spends on development, in all three scenarios of BC DC AC (Before During After Corona), I beg to disagree with his positivism and audacity of hope, as large part of every Initiative, Govt spending, Tax collection, Infra spend, gets diluted and withered away to land into the pockets of corrupt stakeholders at all levels thereby depriving every single citizen of India – A truly morally and ethically clean nation. And any strategy fulcrummed on a spend centric evolution is most likely to be withered away or land where the tax dollars mustn’t.

Abraham Lincoln s Gettysburg speech in 1863 has been a bedrock of ideology of every democratic nation on this planet, but few nations have been able to follow / imbibe it in its true spirit. Most have just lost the opportunity of implementing true democracy.

Societies that establish democracy on the bedrock of truthfulness and discipline (Singapore) – flourish, but societies that use democracy as a fundamental right to abuse the system and to get away with everything, neither deserve the luxuries of a democracy not would they be able to imbibe a degree of conduct that is expected for a democracy to flourish and function.

Let me endeavour to address a few points that frustrates a middle-class/educated Indian & that are reflective of the state of a nation. And how in the AC (After Corona) world the moral compass of humans and nations could change for the better. But that cannot happen if we don’t recognise and acknowledge the real virus plaguing the deepest innards of our character.

Corruption

In my mind corruption is the most debilitating virus that has embedded in the soul of the nation and if it drains an average of 10% to the Mr. 10 %’s of the nation we are looking at an average annual loss/leakage of approx. 200-250 Billion USD. I am still reminded of a gentleman named Madhu Koda many many years ago (I am not even sure whether he is alive or dead) who in a mere few months of being in power allegedly amassed thousands of crores of wealth through abuse of power. Compare that to an ignorable flutter when a few MPs in the British Parliament submitted a few parking tickets that were fake and had to resign instantly from their positions. An indiscretion like that would be considered a joke in India – maybe considered a fundamental right.

“If one can get away with something, one will most certainly get away” – and that’s the basic problem with democracy.

State of Infrastructure..

Nations have been judged on the strength of their infrastructure – which has catapulted cities/nations to become the global hub of finance and fulcrum of progress – London Underground and not any intellectual superiority,  is one single catalyst that has catapulted London to become the financial hub of the World.

It is believed that India has a total length of 4.3 million Kms of road network that’s managed by state / central governments. Each KM of road costs approx. 1.4 mill USD for a national highway and about 0.7 mill USD for a feeder road/state highway to construct. At an average of 1 mill USD per km, we are looking at staggering numbers that are being spent on infrastructure – primarily roads. A leakage of a few percentage points (at a general norm of 10%) we are looking at billions of dollars of leakage by junior officers, contractors delivering deficiency of service and quality. (rough estimates peg this at 3-5 Bill USD). Most roads across the country need to go through just one rainy season to get completely eroded. It was shameful in the global media, when a prankster made a video wearing a space suit and what appeared to be craters on moon were in reality a usual road in Bangalore.

And during my world travels, when I end up visiting same areas year after year, I haven’t seen any eroded road even on the usual routes that I travel because roads there – last for years without any maintenance. Why – Because they do their job right as per specifications and as per contract.

Enforcement of Contracts

In one of my jobs, I entered into a registered contract to provide some service to someone. And the other party used my service for a year and reneged on the obligation to pay me for it. Shame on our internal system of judiciary and enforcement of contracts that I, I the last 2 years haven’t been able to even deliver the summons to the other party inspite of all the technological advances of emails WhatsApp text-messages because we are still romanticising the systems of 1900’s of a court official delivering subpoenas and leaving all loopholes to be exploited. A nation where a registered promise cannot be enforced – has no real future and can never enthuse any degree of confidence either in an investor, or an entrepreneur – Because You one get away with everything.

State of PSUs

Someone rightly / clichédly said – Government should never be in the business of business. When Coal India launched its IPO, many many years ago, it was expected to become the most valuable company on the planet at that time. Afterall we were dealing with monopoly, infinite coal reserves (probably the largest in the world) some say enough for another 150 years. Yet Coal india is being operated at the lowest possible level of efficiency. Has destroyed entire shareholder wealth and has seemingly no future. Swaminathan Iyer wrote in the TOI many weeks ago about the inefficiency of Coal India Ltd and the key take away point was – Indian worker produces 0.8 tonnes of coal per man shift compared to Australia that produces 40 tonnes per man shift. In the name of socialism the much earlier Prime Ministers created and concentrated national reserves and treasures as engines of welfare for Politicians, officers and workers at large. If the extraction of coal per person per day cannot be linked to the compensation of the CMD of Coal India and every single of its 300,000 employees – the PSUs will continue to erode taxpayers money and shareholder wealth. It was also the same eminent Mr. Iyer who predicted in Jan 2010 that India will over take China by 2020. Alas it remined a dream that might not come true for another 2 decades….

Some 20 years ago as a 25 yr old manager of a small hotel (at the start of my life) in a small hilly town I would always desire my hotel to be full. I would do all that it took to ensure that every guest who ever checked in would always come back and never go anywhere else. At that time I was keen to get a confirmed business of an Oil PSU to be their designated-hotel for their visiting executives from all over the country. Only to realise, as I overheard during a social gathering, that that PSU has an emotionally watertight contract with a hotel far lower in class and service than mine, because the dealing officer gets approx. 2 lacs a year to renew that contract (Mind You I am talking of year 2000). That year he got a Maruti Zen (a popular car of that time). TVM (Time Value of Money) pegs that amount at about 30 lacs in todays value. Such is the quantum of leakage – All at taxpayers expense.

No wonder how hard You try – even though oil is floating and being thrown away/sold free across the planet, its still selling at over Rs 70 per litre in India. - Inefficient monopolistic OMC’s do churn a profit – But they could churn many times more.

Imagine this is just one instance of one PSU involving one city and one officer. Extrapolate it to the entire country. You would want to shoot Yourself in the head – if You complete that math.

Take the case of Oil PSUs, NALCO, NBCC, HUDCO, SBI, GAIL, BHEL, BEL, etc etc etc. If the respective Minister’s and MD’s salaries were directly linked to the EBIDTA of these companies and to global thumb-rules of performance of similar industries , they would have all done well. But the massive destruction of shareholder wealth slowly orchestrated by the inefficient stakeholders at large has truly eroded the incentive to perform and sowed the seeds of deep-rooted malaise that has seemingly no cure. And it’s ironical that the Govt wants to IPO The Life Corporation of India. Some quarters of financial whiz-kids are gung-ho on LIC IPO. Mark my words today. It’s the biggest disaster waiting to happen and biggest fraud on existing policy holders who are expected to partake in the growth story of Indian economy and its financial markets.

Spare a thought for an average tax paying Indian 

• 30-40% Income tax
• 18-28% VAT on everything
• Pathetic supply chain management resulting in inflation upwards of 6-8% (that’s the real inflation really irrespective of the statisticians claims)
• Most expensive Fuel in the world – despite of lowest crude prices
• Accumulated losses of PSUs such as Air India @approx 150 employees per aircraft compared to just about 70 employees per aircraft @indigo – the less said the better about the efficiency and hospitality of Air India
• Infrastructure worst than what human mind can possibly fathom or fragile human body can bear
• Public health and public education in shambles that has allowed the private participants (private hospitals and private schools) to emerge and charge obnoxious tariffs for rather mundane services.

If India has to survive the AC era where the likelihood of deflation and depression will hit it like an unexpected Tsunami soon and the futile narratives built around the demographic dividend (youngest population on the planet) have to remain relevant – the character of this nation must change.

Taxation

Social Security / Consistency of salaries and allowances cannot be secured for half the population (Government Employees) by the other half. The recent unsolicited advice by some IRS officers to increase taxes and subjecting incomes / profits to additional COVID cess is both obnoxious and thoughtless and eeks of fascistic mindset while masquerading as communistic in thought processes but sounding more proletariat.

Taxing the very few who are responsible through their capitalistic superiority by taking risks and putting their capital to work should be rewarded for adding economic value to the nation by generating millions of jobs and generating already high taxes that are withered away by inefficiencies at every level with abject neglect of accountability.

On the contrary, rather than taxing anything that moves, all that the Govt needs to do is to allow the corporates to draw a reverse Covid-Cess (from a national corpus created by the Govt to fight these unusual times) that is a percentage of the sum of average taxes paid by the business in the last 5 years or so.

Rather than juggling with a future stimulus that’s impossible to figure out in a complex country like India where the economic engine has come to a grinding halt – Why cant a % of annual taxes paid be returned to the tax payer to alleviate the economic pain.

GST has been a revolutionary reform that reflects the quantum of sale of an organisation. The Govt can easily make a reasonable assumption of the Operating Profit of respective businesses according to their industry and deduct that from the reverse calculation of the revenues and provide that liquidity to enterprises that allows these to survive.

It sounds mighty responsible while sitting on a high horse to say “Dont retrench and don’t enforce a paycut” But can an organisation print/create money? – NO!!

But Governments Can – That’s what Governments are supposed to do while being responsible in good times while collecting tub-full of taxes year after year. And this isn’t the time to worry about Fiscal Deficit as inflation is the last cause of worry when the entire nation is afraid to spend even for basic needs because of the underlying fear of the unknown.

With all the alleged discipline that our policy makers seem to be proud of, we could barely manage a BBB- on our sovereign, does anyone really care if it changes to Junk.??

The stimulus that will save this nation is elusive, and the little flutter that was created so far is 0.8% of the GDP of India whereas USA has already given a stimulus of 12% of GDP and an additional 2.6% of GDP in payroll protection. In rupee terms Indias stimulus amounts Rs.1307 per capita in comparison to approx. Rs 5 Lacs per capita in the US.

The greatest service that our politicians and officers can do right now is:

• Show up more frequently (great leaders are always there in form and spirit)
• Demonstrate that You feel the pain of the common man / businessman / taxpayer / who are going through severe economic compression
• Avoid frivolous, confidence draining statements (Ala IRS officer’s note to revive economy)
• Find simple ways to give much needed stimulus rather than inventing complex formulas (that will never be perfected). Corporations / Individuals have P&L’s and Balance Sheets – Find ways to just use existing declared data to reverse the debits from these statements
• Involve Industry leaders (who run real businesses and manage real situations) to tackle this vicious enemy
• Reach out to political opponents (who are experienced & educated) and shed the walls of partisanship in the face of such adversity
• And above all let the economic engine NOT STOP under any circumstance. Restarting it would take years
• And lastly build confidence among us 1.3 billion people. Loss of Confidence kills the spirit to work, aspire, travel, purchase and that deflates an economy like nothing else.

The AC world is going to be far far different than what we are imagining right now. Not one economist / chartist / thought leader has the mental / academic bandwidth to fully model the effect of Corona on our planet – as right now we are still in the middle of a global crisis that’s unravelling.

But Lets get real , lets get going before its too late.

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Hopelessness in 'God's Own Country'

Being attacked by a arms wielding mob of 150 and running for cover just to stay alive, isn’t something one imagines in ones wildest dreams, least of all see in reality. But the events of 23^rd Nov 17, have shaken me and my belief on the future of this nation.

The company that I work for is known to build and operate some of the finest wellness retreats in the country. A relatively young brand, we have won some rather prestigious awards for our art of delivering hospitality and for our wellness programs. We were smug at having created our third fine hotel, just 27 rooms, spread over 8-9 acres, kissing the Vembanad lake and were getting ready to welcome our first guest on the 5^th Dec.

75 odd crores (approx USD12 million) of spend over 5 years made it a rather well appointed upmarket hotel of global standards. We have always been proud of our business practices such as highest paymasters by industry standards, highest no of training hours imparted per employee and treating our guests as if we would treat our families and parents. We thought we are formidable force if we generate employment for approx 500 people.

We heard that a few local bodies alleged an encroachment by our hotel to the extent of .0044 and .0050 sq mts at 2 spots (a notice to this effect is with us now) and to protest this encroachment a march is being carried out by the local DYFI arm. I quickly relied upon my calculator to convert this astronomically large number into sq feet and discovered that we had allegedly encroached 0.053 sq ft and 0.047 sq ft of land at 2 places. For the readers of this blog, and to put things in perspective this area is just a tad bit larger than the area a shirt button would occupy.  And without giving us a chance to explain or to respond the militant arm chose to punish us by vandalising our hotel and setting us back by 6 months and destroying property worth 10 Crores.

Properties can be rebuilt, Monies can be recovered but the soul of an entrepreneur, confidence of employees and confidence in the state once broken can never be recovered.

A state/nation where you can get away with anything (as I mentioned in another blog), have negligible chance to be punished for a crime, and where on a working day, hundreds of young people can be mobilized and dangerously motivated to destroy and plunder an asset that contributes to taxes, employment and brand of a state that alleges to be God’s own country – that country and state has no/little future.

Our dependence on services contributing approx. 60% of our GDP up from 30% in 1950 and agriculture at 17% - down from 55% in 1950 might sound great from an empirical perspective, but is an utterly dangerous statistic. Just 30% of our population is contributing to 60 percent of GDP. This implies that the balance 980 million or say a billion people are contributing to a mere 30% of GDP (approx. USD 736 billion).

Do you get what I am getting to…

A billion people are contributing to just 736 billion USD of GDP or exactly 2 USD per day. A slightly deeper analysis (pls don’t curse me for confusing you with numbers) reveals that if amongst these billion, approx. 200 million are still making their 2 ends meet somehow by contributing approx. USD 2000 per year, the last 800 million Indians are merely contributing 336 billion USD in GDP (420 USD per person per year)

Doesn’t that explain why our hotel was so brutally plundered and destroyed for allegedly encroaching a piece of land literally measuring the size of a shirt button? Without even giving us a chance to show the legal land records and valid permissions in our possession.

This is God’s own country.

Artificial intelligence is scary and may it be damned – for it is threatening to put more and more people out of jobs. If the world has to be saved, more people need to get into farms and more factories need to start bellowing smoke. A greater percentage of the global population needs to contribute significantly to the global GDP’s rather than it getting concentrated just within the services sector.

Or else be warned that ours wasn’t the last hotel or business that got temporarily destroyed by the zealots pretending to be GOD. This epidemic where mobs can be mobilized to cause plunder and destruction at the drop of a hat could be a national/global problem in a few years.

We have failed the dream of Nobel Laureate Rabindranath Tagore for his vision of this country penned in 1910 in the epic poem…

Where the mind is without fear and the head is held high

Where knowledge is free

Where the world has not been broken up into fragments

By narrow domestic walls

Where words come out from the depth of truth

Where tireless striving stretches its arms towards perfection

Where the clear stream of reason has not lost its way

Into the dreary desert sand of dead habit

Where the mind is led forward by thee

Into ever-widening thought and action

Into that heaven of freedom, my Father, let my country awake.

Niraamaya Kumarakom will rise like a phoenix soon and we will welcome our guests in a few weeks, but lets not allow the nation and the democracy to fail.

Manu also writes in Huffington Post

Recipe of being a First World Country! Fix these, Fix India!

1.

In the silicon valley of the east – Bangalore, I have been to Manipal Hospital atleast 5 times in September to visit my close friends or their family members suffering from dengue. It is surprising and rather interesting that everyone I know between Delhi and Bangalore, knows atleast 2 other people down with dengue. I didn’t know whether to feel amused or sorry when parents of my

cousin, suffering from dengue, visiting Bangalore to tend to him caught dengue themselves and they laughed it off saying the entire family had a 7 day holiday at the hospital.

But what a shame.

Shame on the nation and its citizens (who are an equal party in keeping their country dirty) that while we cannot stop the chest thumping in self-praise on our intellectual, economic and scientific advancements, a significant population is just figuring out their dengue and malaria.

Simple math throws some startling numbers. Every dengue patient ends up spending USD1500 for a treatment in addition to a loss of productivity of about 10 days. Readers of this piece who are good in math would be appalled by the broad numbers if they choose to calculate the national and the notional loss.

2.

I spend an hour each day each way to work and this 2 hr commute gets reduced to a mere 40 mins on a Saturday or Sunday (if I ever have to visit office) 8% of my life and 30% extra fuel (because of traffic inefficiency) gets wasted in negotiating issues of traffic. Imagine 8% of your precious time that could be spent on filial bliss is taken away by traffic jams.

Approximates figures according to data available online pegs India’s daily fuel consumption at 4.4 million barrels per day. If traffic makes it 30% inefficient (wasteful burn) , we waste approx. 1.3 mbpd or 206.68 million litres per day. Staggering number translating to approx. USD190 million per day. Or 69.35 billion USD per year.

Let me remind you that’s just the wastage due to inefficiency, bad roads and traffic jams.

India imports a major part of its fuel using precious foreign reserves and it’s a pity that 70 billion USD gets wasted due to poor infrastructure and quality of roads and bad traffic jams.

3.

In India you can almost get away with anything. Whether its Mallya who is basking in the sprawling mansion of Hertfordshire, or JP associates who have duped 32000 home buyers of their life savings or top 50 defaulters of Indian Banking system who collectively owe close to 80 billion USD to the banks. All this is really just the tip of the iceberg. The collective loot by top 500 politicians, businessmen and officials could be upwards of 500 billion USD. The result is that markets are short of cash. Genuine businessmen don’t get affordable loans. Existing businesses cant expand and if at all - they get sicker by taking on un-affordable debt. I hear that some businesses in India are paying upto 10% in processing fees of commercial debt (even for fully collateralised loans) to financial institutions. One would wonder whether there is another major scam brewing in the banking sector or banks are funding sub-prime loans for superior upfront processing fees.

And irony – with 8-12% of stressed loan book, the outgoing chairman of SBI is still being hailed as a having left a legacy. Whereas I clearly remember that in her incoming quarter (As Chairperson) the profits dropped by some staggering 80% and the banking fraternity hailed her as cleaner of skeletons left behind by the previous leadership.

An this is just one bank!!

Hypothesis:

The Acchhe Din rhetoric resonated far and wide in every citizen’s imagination. The demonetisation and GST decisions required balls of steel and a pristine intent. The jury and naysayers are still criticising PM Modi (rightly or wrongly – I wont opine here) but no Prime Minister has stirred the imagination of a nation as much as Modi has. But the bedrock of any nation lies in the health of its citizens, the quality of life that a country offers and the corruption that rots the country like a rogue virus that has no cure.

Bharat wont become swachh by AmitabhBachhan talking about it on prime time or politicians grabbing every photo-op a few times in a year by holding brooms in a localised area. Bharat will become swachh by putting the 70 billion dollars wasted each year – just due to poor roads and infrastructure and traffic jams - to good use.

Infrastructure requires cement and steel and our nation can produce all of it indigenously and thereby easily improving the quality of life of its citizens in every respect and also generating millions of jobs - dramatically.

Any road that erodes within 5 years of being metalled – its responsible PWD engineer, its contractor, and the sanctioning officer should be subject to harshest punishment – perhaps capital. Vietnam recently executed an officer on charges of corruption. I smiled when I read this news. With a law like this India’s population would be reduced to half.

Similarly the bankruptcy laws are being seen as a parachute to the defaulters who have siphoned and stashed hundreds of billions of dollars. And now are declaring bankruptcy and will still continue to live lavish lifestyles beyond what a commoner can fathom. Why are all the sanctioning officers from all banks under whose signatures the defaulting loans were sanctioned not being pulled up in retrospect. How are we different in our approach towards our bankers compared to Fuld of Lehman who retained his bonuses and was still giving lectures to the wall street elite 5 years after the demise of Lehman.

India has dramatic beauty and locations better than some of the best visited places in the world – but foreign tourist arrivals hasn’t grown beyond 9 million per annum in a country as vast as India in last 70 years. Just the city of Istanbul gets more foreign tourists annually, than all of India. Its all because of a dirty nation – both to the eyes and in its soul.

Much is left to be desired in the 70^th year of our independence where on one hand we pride in having sent the cheapest rocket in first attempt to Mars and on the other we are just fighting a losing battle with the mosquitoes and spending a significant part of our lives in traffic jams and in ever increasing polluted and corrupt environment. And where most of the recent actions by the present leadership failed to demonstrate the intended results.

Manu also writes on huffpost
Twitter @manurishiguptha

The only one thing that matters in a Blissful Life

Lets start with a few numbers first to understand the significance of our existence on this planet. If life has been in existence for about 4 billion years, every 80 years there is a complete refresh of entire ‘human’ population and during these 80 years we are one among 7 billion, so by a simple calculation the significance of our existence in relation to life and humanity is about 1.142*10^(-17). Now all the serious mathematicians reading this – pls understand the sentiment and don’t start finding holes in the calculation.

If we don’t express this number in this scientific manner the simple representation is ZERO. Lets call it the state of ‘zeroness’

While each one of us gets his/her dose of philosophy wrt the conduct of life encompassing advice ranging from great health, selflessness, philanthropy, family time, wellbeing, wellness, simplicity, lessons on leadership, I have for the 40 years of my life and 25 years of fully conscious life strived to search for one thing that matters the most in life. That one catalyst that’s profoundly empowering.

That – in my hypothesis is ‘fearlessness’.

I am no Guru or saint or any philosopher. I am just a simple executive who works hard and tries to make two ends meet and make a difference to my small insignificant ecosystem on a daily basis but have come to conclude that fearlessness is THE most empowering  trait of life. A lot of gurus tell us about meditation, breathing, yoga, karma – but have you ever reflected that, that too is to fight the fear of something such as bad health, fear of failure, fear of something or the other. Every advice, every direction is to counter a fear. Become fearful and then take the medicine to counter it.

Why don’t we only work towards becoming fearless and this one thing, one trait, one goal is simply the solution to everything if one keeps the above mentioned math of inconsequentiality/zeroness in mind.

I believe life has 3 facets – Work, Family and External Ecosystem. Come to think of it our life revolves around just these facets. The biggest question is how do we empower ourselves to rise in fearlessness rather than die everyday in some form of fear. 

Lets address each one separately:

Work

In the backdrop of what’s happening in the IT industry and the expected downsizing, I write about work first, as this takes the largest timeshare of our life. At approx. 11 hrs a day this is 45% of our time.

As I walk into office each day I am excited and am keen to achieve more than what the system expects. Ability to deliver more than what people expect and become an outlier in each small way/deliverable is amazing. But what if you aren’t able achieve the best or aren’t able to demonstrate expected performance inspite of doing your best. The worst that can happen is loss of job. And really that’s all. When we give more importance to the employment rather than the result that we are paid to achieve we become fearful.

No job will last forever, No Annual Operating plan/budget will be achieved perpetually and not every month or quarter will be that of the expected growth. It didn’t happen with Microsoft, Google, Apple and Amazon and it wont happen in your company. So just chill and simply do your best.

No boss will be perpetually happy with you. But if you do the best that you humanly can in your job then God will orchestrate your success. And this belief is empowering. But if you lie, shun ownership and steal or indulge in corruption you will always live in a state of fear. In this above-mentioned state of zeroness what is it that you are trying to achieve or prove. You cant achieve anything or prove anything that will last forever. But if you do the best that you can you feel empowered and empowered human beings achieve extraordinary results.

Corruption debilitates and good character empowers. Corruption isn’t only hardcore financial corruption. Corruption is wrong/diluted intent. Intent has a smell, intent has a feel and its clearly visible. And if your intent is honourable then stop being fearless.

Human beings with great intent are guided by that invisible hand. Momentary failures are stepping stones to success. If your intent is good then don’t fear failure because failure is sometimes orchestrated for you by God to push you to a higher better state.

Your acknowledgement of your state of zeroness should empower you to carry that proverbial resignation letter in your pocket but don’t die everyday in the fear of being fired. That’s the worst that can happen and in the cycle of life its  meaningless. No one can fire you except your own self. And when this fear of being fired is out of the window you feel empowered and as said above - empowered human being achieve extraordinary results.

Family

For a major part of our life we ignore and take our families for granted only to make them secure for a rainy day and slog our life out because of some fear of an unknown chilly winter.

And we live in fear.

When we live life by the principle of different strokes for different folks life gets complicated. If we try and lead a life and treat our families as we would like to be treated life becomes less-complicated.

Agree or not we are constantly trying to prove a point. A point by buying/striving for a bigger better house / car / exotic holidays / clothes / gadgets. Nothing lasts a lifetime. Everything depreciates and eventually vanishes. But if – we lead a simple life where material things stop bothering us and we just strive for all necessary comforts without a pressure to demonstrate or win a race – you become fearless.

You become fearless when you lead a minimalistic life and there is little to lose. When there is nothing to lose you respect the relationships more than the material things of life. You find better joy in eating at home with family and laughing with them rather than suffering in the pressure of eating in a Michelin star restaurant, that you reach after negotiating in traffic and investing time on travel and then worrying about spending too much. How often have you celebrated a simple meal with the entire family and a good wine and just enjoyed each others company without proving anything to anyone and felt empowered because your need isn’t the need to spend and feel pressured but your need is the need to feel empowered in the joy of togetherness.

Wife, parents and children is all there is to a family. If you treat your parents as you would like to be treated when old, if you treat your wife as you would like your sister to be treated life cannot be simpler. Uncomplicated lives empower you. Complicated lives make you fearful.

When you gracefully accept life and the cards that it deals for you, You feel empowered. You are fearful when you cheat and when you lie and strive to acquire things that aren’t destined for you. We make much lesser effort to work on our immediate relationships but invest a far greater time catching up with inconsequential acquaintances – why – to further our social circle. And no one in the social circle matters except the immediate family.

Its surprising that divorce rates and instances of spouses cheating on each other are at a historic (evolution to date) high. And this is because we are striving for something that doesn’t belong to us or is meant for us. And that creeps in fear. Fearlessness is when you can look in each others eyes and smile with the greatest degree of confidence without even the need of saying – I Love You.

Live within your means, eat like a pauper and live like a king, don’t buy/spend to prove something but only spend on what you need and You and Your family will feel empowered and fearless forever.

  

External Ecosystem

This comprises of your friends and relatives. I have realised that there are only going to be 4-6 truly reliable people in this realm. And your true friends aren’t ever going to judge you by your possessions or by your lifestyle. Whether you live in a 500 sq ft house or 50000 sq ft house their behaviour and blessings for you will remain the same. The trick in life is to quickly identify these handful of people and ignore (get rid of) the rest.

People who judge you by your car / home / holidays / liquor that you serve are just pests (assimilatory) in your ecosystem. Keeping up with the Joneses is the most fear inducing and debilitating exercise. You feel empowered when you live within your means and give away to someone in need. Giving away brings joy and brings a sense of satisfaction. There is no need to talk about poverty eradication and global inequality in Davos. Just try and behave well with your maid, driver, security guards and try and make some difference to their life. It will empower you.

If you fund the deficit of these people who bring in the daily comfort to your life, its far more joyful than the momentary satisfaction that you get by spending a similar amount of money on an expensive meal that could be equal to your driver’s monthly salary. And when you make an effort to tune your thoughts in this direction you become fearless for there is nothing to lose but only to gain.

Live a comfortable life but spend on what you need and not what you want and you will live fearlessly for the rest of your life.

And lastly human beings are but a figment of their thoughts and character. As Thatcher said, Good thoughts lead to good words, Good words become good deeds, Good deeds become good habits and good habits become great character and character is everything.

Isnt it??

Manu also writes for Huffington Post

Twitter @manurishiguptha

The imminent crash of the Indian housing market and why buying a house is a stupidity

Two incidents moved me recently...

Firstly:

Just as I was about to tee off at the Milpitas Golf course this September I heard a ‘fore’ and was fascinated to see a fellow golfer tee off from the backyard of his home. I thought what a life/luxury.

I realized that this 7200 yarder golf course is inhabited by a mere 50 families and Zillow (the app that correctly dispenses info on real estate prices) indicated the price of each bungalow between approx. 1.1 – 1.3 million USD (approx. IRs 7.5 Cr)

One cannot ignore that US of A was built on the premise that the infrastructure (rail, road, bridges etc) are the bedrock of economic activity and the growth of any nation. And USA has by far the best infrastructure in the world.

Secondly:

The chief accountant of one of the top three builders in Bangalore visited me looking for a job and shared that the builder hadn’t sold more than 3 apartments amongst its entire national inventory in the last 4 months.

After my 4 week sojourn in the US, when I returned back to India, still in a state of daze, it took me a whopping  2.5 hrs to travel a distance of 30 kms from the airport to home and along the way in a traffic jam, I saw a larger than life hoarding of an apartment built by a top Indian builder offering a 4 bed apartment “starting at ‘only’ 6.5 crores” about a million USD.

This indicates and is reflective of a demographic – that there are a large number of people in Bangalore for whom a starting price of only a million USD for an apartment would be seemingly attractive. And ‘only’ is supposed to significantly enhance the value proposition of the apartment that’s built right next to a crematorium and on an illegally reclaimed land on a gutter that emanates more methane than a human body can tolerance or human mind can fathom.

Well this is a reality of this country that’s falling apart due to officer builder nexus/mafia, due to tier one and tier two cities choking to death because of rampant construction.

What a sham and ignorance on the part of a builder and the gullible home buyer respectively.

The lack of town planning and inherently corrupt city councils have made most of the cities un-habitable in India. God forbid if ever (once in a life) one has to transport an aged parent or a well-wisher to hospital, he/she will certainly be sacrificed along the way because an ambulance has no way/infrastructure to beat the traffic jams.

So that raises a question – what really is the right price of real estate and why that apartment in the eyes of that builder can be ‘only’ a million USD.

Every asset has an intrinsic value – the cost of replacement or the cost of building the asset is the intrinsic value. Add to it the profit of the seller/maker and that leads to the discovery of the fair market price.

For way too long (almost since the beginning of 2001) real estate prices have seen only one direction and that’s the way up. I have a few acquaintances in Gurgaon and Delhi and Chandigarh who gave up their jobs in order to deal in real estate. They have been found buying an asset in the morning and selling the same in 2 days at a neat profit. It was almost like the tulip mania when the Dutch thought that the world is going to run out of tulips.

India’s Black market economy helped. It is allegedly believed that the top 6 politicians in India have a combined net worth in benami property and assets that is equal or more than top 50 richest people in the Forbes list. For way too long corruption has siphoned off the nation’s and tax payers wealth to fill the coffers of people in the position of authority and an inherent lack of robust tax and tracking system has allowed a parallel black economy to mushroom and fuelled a bubble in almost all asset classes but above all in real estate.

The general cost of construction per sq feet (at standards that are followed in india) is about IRs 2000. Builders have a funny inexplicable formula of super built up. They sell part of all public areas to the buyer and add that to the area of the flat. Most say that the mark up in the area sold is only 25-27 %. That implies that if one is buying a 2000 sq ft apartment, he is likely to get 1600 sq ft of carpet area. Well if this is the norm and is legalised, its good too. But the truth is far from reality

My mother like all mothers on the planet wants to see her son own a house. The proverbial ‘one’s own roof over the head’ in times of a future distress. So a few years back I did start looking for a house but instinctively bought a laser area calculator (digital planimeter) to find the floor area of the house being sold. I used to carry the same during each visit to an apartment. Surprisingly most builders who claim to have a 25% attributed to super built up actually have 40% mark up in area. So a big fraud there.

House is an emotional investment round the globe and no one carries a planimeter when selecting a potential purchase. And the brokers have a knack of playing with ones emotion by painting the picture of a perfect home and actually talking about the location of the temple, the balcony , the virgin sun rays in the morning and generally making a customer believe that the said asset is being eyed by 7 other prospective buyers. And human beings are emotional gullible fools generally governed by cognitive biases.

Besides the 15% defraudment (unavoidable premium that one pays for other persons fraud) one has to pay for parking and floor uprise, etc etc. Talking of Bangalore in particular, a typical third grade apartment in a smelly location ends up costing about 20000 (300 USD) per sq ft of carpet area – and by the way you don’t own the piece of that land.

The recent demonetisation has taken the wind out of the sails of this ponzi scheme and the forthcoming RERA (Real Estate Regulation Act) is likely to bring some discipline but how will the builders make their infinite profits and make a charlie out of the gullible customer? They wont be able to………..

And that will start the big correction in the real estate market.

Today the monthly instalment over 20 years (if you own a house) is generally 3.5 times the present monthly rental of the same house. So if someone typically buys ones home between 35-40 years of age, he/she is likely to pay 3.5 times the probable rent of that same place in ones EMIs (equated monthly instalment). Can you imagine paying 3-4 times your monthly rent for the next 20 years of your life just to gloat in the feeling of owning the house – AND THEN BEING STUCK WITH IT.

The only certainty in life is the uncertainty around it. Imagine being retrenched in a downsizing exercise, or having to change your job. A house at present Indian valuations is likely to make you nervous not confident.

Imagine being unreasonably bollocked by your boss and that irresistible feeling once every few years to tell him to goto hell. But not being able to, because the payment of EMI is just round the corner.

Imagine that one desire to live one’s life fearlessly and meaningfully at one’s own terms and conditions is being quashed by the burden of one’s EMI.

The logic behind the ‘round the corner’ housing market crash is simple. Too much of easy money has flowed into this asset class and the present prices aren’t sustainable. Either the rentals have to double from the present levels (which they can’t because that’s a function of demand and supply) or the real estate prices have to correct by atleast 50% from the present levels.

Sadly, I believe my mom will never see a proverbial roof over her son’s head in the near future.

Manu also writes on Huffington Post

Goodbye Dr. Raghuram Rajan

Once upon a time there was a great manager in a great organisation who did wonderfully well. He was there on the basis of his competence and past track record. He had many great predictions to his credit and was a person respected for his knowledge and competence in his subject.

His boss though was a typical type A personality, rags to riches, rose to the top of the corporation, almost uneducated, but a man with amazing statecraft and could not bear the idea of an individual a many times more intelligent - reporting to him. This manager had the confidence to call spade a spade, could take all great actions in the interest of the corporation, was loved by all the customers and vendors of the corporation and also by all his colleagues.

But the boss, delusional and self-consumed in his hubris wouldn’t have any manager in his corporation who could look up in the Boss’s eyes, take rational decision, and challenge the usual.

The Manager quit. The Boss was happy. The corporation suffered. And it was business as usual.

While this is a story (with minor variations) of almost all corporations around the world but, If You haven’t been able to figure out by now what I am talking about/writing about at the expense of my sunday afternoon glass of Chardonnay you might as well close the browser.

____

I was having an idyllic drink with my dear friend Sundeep Sahni last Sunday on the 12^th June and were discussing the usual. A banter about the Brexit, Raghuram Rajan’s term, the state of the economy and the stress in the global markets that’s still hidden from the eye of the common man. Sundeep was so sure that Rajan would get a second term. Sundeep’s argument was:

• Rajan is too good and intelligent a guy to be consumed by petty politics
• India needs him
• He has brought in fiscal discipline
• He has exposed crony capitalism
• Forex reserves are at a life time high under his stewardship
• India’s respect as a meritocracy driven nation is highest in the international finance and business community
• And he can call spade a spade

My argument was:

Calling spade a spade is the biggest problem

Yesterday Sundeep called me and said – ‘My God You were right’

Modi would have never allowed Rajan to stay on and neither would Rajan have stayed on - and it has been so evident in the last 2 months.

Anyone reading this piece is educated enough to realise and acknowledge that…

• Subramaniam Swamy had no guts to raise an issue without the tacit permission from the top
• He is a drama master for the Government
• When the contents of our deep freezers have to be ratified by the religious zealots of the establishment, how could a man be allowed to take decisions on the interest rates and fiscal policies of the nation (no matter how good and beneficial they were)
• Rajan created a system that exposed the severe fault lines in the banking system. A system that was definitely used, it is believed, to siphon off over 100 billion dollars.

It’s a shame that Mallaya is being trolled beyond imagination because he defaulted on a billion dollars in business losses. Afterall everyone took a risk - the businessman and the lender as well. No one has raised a question on the massive debts that are lurking in the banking system. And this is what we know of. Mallaya’s only real fault – he kept walking around and getting photographed with arm candies by his side when the employees of Kingfisher were in dire straits.

Mallaya ran a loss making airline and banks kept funding it without adequate underlying security/collateral. And if they did, why the fuss now if he isn’t able to repay.

Try raising a small loan from a nationalised bank. They would want a collateral for a collateral. There is no way in hell that you would be able to default.

And Mallaya’s ‘Kingfisher’ brand was taken-in as collateral to the tune of almost half a billion dollars by State Bank Of India. Did they dream of rechristening State Bank India to Kingfisher Bank of India in-case Mallaya defaulted or did they plan to co brand Kingfisher with SBI on T shirts and souvenirs and turn it into a multi-billion dollar enterprise?

A guy like Rajan was dangerous. Utterly dangerous to this caucus. And he had to be removed.

So a nationwide drama was created to embarrass him and raise questions on his integrity and his patriotism. My God – Swamy called him an agent of the American Corporations or CIA.

Any self-respecting, educated, subject knowledge expert doesn’t have time for all this bullshit. For he/she knows that the corrupt system doesn’t deserve him/her. Remember the protagonists in Ayn Rand novels.

And then….

Rajan knew better as well.

He could see that the world is on a precipice of a serious financial meltdown. I have repeatedly said in my previous pieces that 1929 or 2008 would look like a walk in the park. When that happens and when the big bubble bursts no one knows. It could be 6 months or 6 years. But whenever it happens it will be far more painful than Sep 2008

And obviously Rajan wanted to leave on a high. He did what he did and did it beautifully. Only people with innate knowledge of economics would agree that controlling inflation by a few hundred basis points is far more important than a few hundred basis points of growth in GDP. And he did get a grip on inflation.

Rajan could foresee that rupee’s sharp decline is just round the corner and the cascading effect of global issues on Indian canvas of finance, growth and banking would have been huge and seriously difficult to manage.

And in the face of such degenerate pettyism by the so called patriots why would have Rajan sacrificed the comfort and respect of being a top academic on this planet for the corruption stained corridors of power in the North Block.

Lets see 'NOW' India achieve 10% growth in GDP and a strong Rupee – now that Rajan will be history soon.

If Chetan Chauhan can be the boss of NIFT the next RBI governor could well be Mohan Bhagwat.


Manu also writes on Huffington Post 

Sureshot failure of Ecommerce and its underpinnings in the Indian mindset

A few days back I was oppressively put off by a mountain of garbage on my way to work and this area is Koramangala – The fulcrum of ecommerce revolution in India, with highest per capita in the country,  home to dozens of startups, stone’s throw from the offices of flipkart and Accel partners (the posterboys of ecommerce and PE funds).

While my belief in Modi’s Swachh Bharat and Acchhe Din only sees a new low with each passing day of his PMship, I couldn’t help but draw a few correlations and predict with a degree of confidence that - E-commerce in India will never be a success story and the reason behind that is the basic Indian mindset.

I will tell you how:

The basic premise of the digital economy or E-Com companies is a change in peoples buying habits. Amazon has successfully demonstrated that they have changed the mental wiring of their customers and have made them habitual to buying online and when you induce this change, customers buy more and eventually these customers will pay a premium for  the convenience of ordering and returning goods from home and will pay for the entire spectrum of services (order, delivery, product, return, reorder) and still leave a penny or 2 on the table for the Jeff Bezos of the world.

And hats off - Jeff has swung it beautifully and successfully induced a change in the buying habits of Americans

But India is an exception. Because You just cannot change the habit of an Indian.

Kahneman’s theories on cognitive studies demonstrate that humans think and develop in a very linear manner. And same set of people cannot have different personalities for different situations.

CharlesDuhigg's (of the New York Times) studies demonstrate that Habitsare formed after a person has learned something new, like how to parallel park. This process engages the basal ganglia, or the part of the brain located in the prefrontal cortex that works to start and control movement and emotions. From there, it’s a three step process to a “habit loop.” There’s a cue, or trigger, which signals to your brain to turn a behavior into an automatic routine (say-throwing the garbage at a wrong place), followed by the actual routine of the behavior, and then the reward. The reward, Duhigg told NPR, is the brain’s own personal cue for when it should recall the automatic behavior.

Once that happens, the brain takes a break. "In fact, the brain starts working less and less," Duhigg said. "The brain can almost completely shut down. And this is a real advantage, because it means you have all of this mental activity you can devote to something else." For example, Wood cited one study, which found that participants in the habit of eating popcorn at movies would eat just as much stale popcorn as those who were eating fresh popcorn. "The thoughtful intentional mind is easily derailed and people tend to fall back on habitual behaviors," she said. "Forty percent of the time we're not thinking about what we're doing."

So whats the point:

When despite all the education and rising incomes and improved standards of living, Indians don’t hesitate to dirty their corner just outside their homes and continue to litter (and I saw someone throwing a big garbage bag straight form his Audi A-8 contributing to the record breaking height of this mountain of garbage) and continue to live in a pretence of oblivion and there is no evidence of evolution in the corrupt and inhumane character of an Indian by and large, thereby proving that education , income and habitation doesn’t change the inherent character, how can the half a dozen Bansals (Sachin Binny Mukesh et all) ever hope to change this personality when they eventually decide to stop burning an average of 10 mill USD per day (an approximate sum total of cash burn per day in the form of various discounts and schemes in the digital economy space in India).

The customers will simply stop buying when they stop getting discounts.

Because Indians cannot change....

Another disappointing character trait was demonstrated by the citizens of Delhi who worked hard to make the odd-even fail by simply buying the alternate numbered cars. An initiative that’s successfulin some of the most developed countries was virtually held hostage by selfish citizens who would rather live in one of the most polluted cities in the world and thereby putting their and their families life in harm’s way but would not allow a government initiative to succeed – which is a proven success elsewhere.

Because Indians cannot change....

And perhaps in a country where we allegedly assumed an infinite potential in the Ecom space, the harsh reality is starkly different.

The game of musical chairs is on in full swing and while all the players are dancing in the cacophony of this boom, assuming that there are enough chairs to grab – In reality there aren’t any at all.

You can write to : manurishiguptha@gmail.com