How about agri-tourism?

When my friends from France and Spain wanted to visit my village in Bihar, Niraj Kumar, faculty of Xavier Institute of Management, Bhubaneswar writes (Business Line, July 6, 2010) that he broke into a sweat. Why..?

Special harmony

Hummingbird came across an interesting article in Business Line (Life, September 17, 2010).  It talks about Tasleema who belongs to a family of musicians. She says that her interest in Shabad Kirtan took root when, as a six-year-old, she watched her father's Sikh students learning to play the tabla and harmonium for Shabad Kirtans. 

Tasleem Langoo sings (Source:  Business Line, Sep 17, 2010)

Some excerpts from the article -

Her high point was when she was asked to perform at the Golden Temple in Amritsar in 2007. Her sweet voice brought tears to the eyes of many. An old woman hugged her and kissed her hands, saying, “You are the voice of Sikh women and an honour to the Sikh community.” The woman then removed her gold earrings and gifted them to the stunned singer.

“That was so moving. It is one of the biggest compliments I have received so far,” says Tasleema. “But she didn't know that the girl she was praising was not a Sikh but a Muslim from Kashmir,” she chuckles.

Tasleema has never felt any conflict between her religion and her passion. “The basics of all religions are the same as they lead to one Supreme God,” she says and recites her favourite shabad — Kareema raheema Allah tu gani.

Hummingbird had visited Gurudvaras (Delhi & Ludhiana) and offered prayers without understanding one word of what was spoken there.  Hummingbird believes that all places of worship are sanctified by the presence of God and is happy to read about a soul doing something which appeals to her heart believing in the oneness of God even at a time when politicians/media are busy dividing people.

And we expect corporate governance...

Hummingbird (HB) came across this news item (Rush of IPOs to beat SEBI results norm, Business Line, Sep 18, 2010) that says there are 12 issues coming this month to raise Rs 4,000 cr.  The highlight of the news item is this -

A SEBI directive and a soaring secondary market have led to a flurry of initial public offerings aimed at making it before September 30.

Some Rs 4,000 crore will be raised through 12 IPOs that are being pushed through during this period. Since September 14, any given day of the month has seen at least two ongoing IPOs to date, and the rest of the month is going to be no different, at least until September 27.

"A big reason for this flood of offerings is because of the September 30 deadline set by SEBI," said Mr Sanjay Jain, Executive Director and Head of the Investment Banking Division at JM Financial Consultants. SEBI has said that if companies have issuances that hit the market after September 30, then they will have to publish their June quarter results. Those that enter the marker before that can file the DRHP with their March-end annual results.

What is interesting is that the June quarter results of many of the listed companies were below expectations, and that of yet-to-list companies are likely to be the same, said analysts. It is not a surprise then that they don't want to raise funds using their June quarter results.

The message is contained in the last sentence of the above para - companies don't want to raise funds using their June quarter results.  But why?  Because, the June quarter results of many of the listed companies were below expectations, and that of yet-to-list companies are likely to be the same, said analysts.

Corporate governance philosophy of Infosys is based on the seven principles, out of which the first two appear relevant in this situation -

1. Satisfy the spirit of the law and not just the letter of the law. Corporate governance standards should go beyond the law.
2. Be transparent and maintain a high degree of disclosure levels. When in doubt, disclose.

HB doesn't want to comment on any individual company which is raising funds.  But HB cannot help wondering about corporate governance... these are the companies which ab initio wants to do something wrong (though they are within the boundaries of law) and we the common man expect them to behave properly and follow good corporate governance practices post listing.  Are we day dreaming?

Future, tense..?

Sri V Anantha Nageswaran in his article "Can Asians exhale?" (Mint, June 14, 2010) says that a news item in The Times of India on the relentless rise in apartment prices in Mumbai caught his attention. The asking price for a 620 sq. ft apartment was around Rs44 lakh.  While buyers are turning away, the developers do not appear to be deterred. 

 

The price rise is unreasonable.  In a place like Bombay (or Mumbai, to be politically correct), the rise is spectacular.  People who bought flats in the range of Rs.15-20 lakh 4 to 5 years back are getting offers of Rs.80 to 100 lakh.  In an earlier flat where we stayed (on rent), after the owner promised that we can stay for as long as we want, within 6 months, we had real estate agents swarming the place as there was change of heart of the owner.  The offers he was getting was very good though the housing complex (where our flat was located) was considered as part of the forest land and it was anybody's guess about the final decision in the matter.  After months of uncertainty, we finally shifted to another flat, wherein again after 6 months, we ended up with same uncertainty, as the flat came up for sale.  

Today people are getting offers, which have no basis or economic rationale.  After twenty years of working, I ventured into buying a flat and that too with trepidation.  We are taking a huge risk with a long term commitment.  The key assumption is that our jobs would be intact - our companies would grow - our salaries would go up etc.  We are living in an uncertain world and these assumptions, age has taught me, is pretty dangerous.  Today, too many youngsters are in the job market and they have never seen a downturn / recession.  That's why I feel too many young people are out to buy flats... even if its only for investment.  Maybe the growth in the economy in the last few years, has made corporates loosen their purse strings.  Too many young people make money too quickly and they don't know what to do with that money.  As they have seen that the prices of flats have gone up (in the recent past) they believe that it will go up in similar fashion in the coming years and end up buying flats at whatever be the price.  The situation is unsustainable.  Often I hear people say that it is better to buy flat now, as it will be too late tomorrow.  Here again, people make the assumption that the rosy job / salary / income situation would continue in the future for an indefinite period.  Only time will tell, if such an assumption is correct.

Anantha Nageswaran says -  

.. a combination of interest rate increases, currency appreciation, capital controls, anti-speculative measures targeted at specific sectors and moral suasion with the financial sector and with the public have to form part of the policy response in Asia.

... the overheating is also being fanned due to the pursuit of short-term economic growth as an end-goal in itself. Asia is still anxious to catch up fast and to compress the two or more centuries that Western nations took to achieve their current status into a generation. That is neither desirable nor feasible. There is needless insecurity and breathless activity, consequently. The social, environmental and geopolitical costs of such a pursuit are eluding their grasp.

The point is that no one wants to rock a boat when it apparently is sailing smoothly.  Who will bell the cat?  Politicians, media, banks ... everyone seems to have a vested interest in not rocking the boat.  Why fix something that isn't broke?  That seems to be the thinking.  I only wish it doesn't become a tsunami in future and wipe off all the hard work of the past.  The inflation that is raging on every single item of day-to-day use has to be seen to be believed.  But it doesn't pinch the politicians.  It doesn't pinch the government employees, as they have something like Dearness Allowance, to take care of price rise.  What about the employees from the private sector and the unorganised sector who work for fixed salaries (or CTCs)?  Who talks about them, now-a-days?

As China is growing at 10+% for decades, Indian politicians feel it will be below our dignity if the growth rate goes down a bit and so loose money policy will continue.  In the process, we lose our fight against inflation and impose a cruel tax on the poor.  I am increasingly worried about the future.  Sensex may go wherever it wants.  It doesn't matter to me.  For the common man, it is important to know whether he/she would be able to service large loans taken for housing purposes over 15 to 20 year periods?  I think, today no one is thinking about that.  Everyone feels that the prices of flats would only go up and in case of emergency situation, they can always sell the flat and get out.  In the event of a worse case situation emerging, can everyone get out at the same time?  Will not the prices crash in that case?  Who will service the EMI in such an event?  How will banks manage a tsunami of defaults?  Do they have a macro model where such events are taken cognizance of?  I am not sure. 

Anantha Nageswaran quotes George Akerlof and Robert Shiller for their excellent description of overheating (page 65 of their book Animal Spirits) -

The term overheated economy, as we shall use it, refers to a situation in which confidence has gone beyond normal bounds, in which an increasing fraction of people have lost their normal scepticism about the economic outlook and are ready to believe stories about a new economic boom. It is a time when careless spending by consumers is the norm and when bad real investments are made, with the initiators of those investments merely hoping that others will buy them out, not feeling independently confident that the underlying real investment is sound. It is a time when corruption and bad faith run high, since they rely on trusting behaviour on the part of the public and of apathetic government regulators. This corruption, however, is mostly recognized publicly only after the fact, when the euphoria has ended. It is often also a time when people feel social pressure to consumer at a high level because they see everyone else doing so, do not want to be seen as laggards, and do not worry about such high levels of consumption because they feel that others don’t either.

To me, this definition would definitely hold good in the Indian scenerio and that makes the future... tense.  

Sri Ashoak Upadhyay in his biting article "False optimism, empty promises" (Business Line, June 28, 2010) points out the policy makers have been endlessly dishing out a rosy perception of the future to those who want to hear it endlessly. For the rest, the miseries of inflation and poor infrastructure are here to stay. 

Sri Upadhyay says -

SAME OLD CLAPTRAP

But the policy player seems to have advanced a step. The only way to connect India with modern infrastructure is to fill the funds gap — itself an endless incantation — with capital from the advanced markets that have it.

So the critical problem affecting the the Indian economy is both capital and the institutional mechanism to ensure its smooth flow into the sector. That sounds familiar, too.

So do a raft of assurances on everything that is wrong with India. Consumer prices have been riding high since mid-2008 — in their endless round of increases — and policymakers have never tired of assuring the nation, on television, in print, that their reversal is just round the corner.

How, one asks; what is the Ministry of Agriculture going to do? Crack the whip on hoarders? Boost farm productivity? Everyone is betting on rain, it appears. Last year the drought spoilt the kharif crop; then it was said the rabi would do the trick.

In April when prices soared (and even the Wholesale Price Index, or headline inflation defied North Block) policy players, from the advisor to the Finance Ministry to the Prime Minster himself, rushed to assure us that by year's end, December 2009 that is, prices would drop.

The Reserve Bank of India, for its part, magisterially pronounced its own time-table for deliverance —next March.

Even as policy makers repeatedly assured that inflation would go down, it has defied control.  It has not stopped policy makers from making one promise after another, as if to show that they are in control of the situation.  This graphic from Mint (June 22, 2010) throws light on this issue.

Somewhere down the line, we seem to have lost control over inflation.  Policy makers are caught between showing "better growth rates" so that capital markets don't tank and lower prices expected by the masses.  Today, elections are not there.  Thus, policy makers may think, that the masses can wait and may feel that keeping the capital markets happy is of paramount importance. Policy makers keep making announcements about how inflation is getting controlled or when it will be fully under control.  The media is swallowing and vomitting the policy makers' versions.  The inflation tiger has run away carrying the common man (and woman) in its mouth and the policy makers don't know how to get out of their growth tiger without getting hurt.  There is no satisfaction in knowing that other countries too are facing the same situation.  If I am hungry, I should have food to eat.  Knowing that ten others are also without food, is no satisfaction for me.  It is not going to satisfy my hunger.

Aparajita Sinha & Chandni Gupta point out in Mint (June 22, 2010) that there are indications that inflation is recently spilling over into the manufactured products sector. The big question then: Is the worst behind or ahead of us?  If the capabilities and intentions of the policy makers are any indication, our worst is yet to come.  Too many people are going to get hurt when the growth machine comes to an abrupt halt.  To me, future is uncertain and it definitely looks tense.

Bhopal: Lessons in governance

In a previous post "A riddle, wrapped in a mystery, inside an enigma" I had shared two articles on the subject of Bhopal.  Subsequently, I came across another interesting article "Bhopal: Lessons in governance" in Business Line (June 28, 2010) by Sri P.V. Indiresan, former Director of IIT, Madras.

Some interesting points from the article:

Do we prosecute Mr Patel, the Minister for Civil Aviation, for the disaster in Mangalore or Ms Mamata Banerjee, even though she has shown little concern for rail disasters?

If they can escape recrimination why do we single out Mr Anderson, that too after 25 years? Is he the culprit, or is it the government(s) that left matters drift for 25 years?

The solution to problems like Bhopal lies in taking away the control of the prosecution of offenders from the hands of ministers.

We need a different system of governance to deal with prosecution of the guilty. Sensitive departments should be overseen by all-party Parliamentary committees; appointments and transfers should be made professionally.

When matters of criminal prosecution are thrown open in this manner, decisions are more likely to be impartial.

Nobody has pointed out that the scale of the Bhopal disaster was a matter of geography; few, very few people would have died or suffered in case the plant had been in a village. It is possible that when the plant came up, it was at the outskirts of Bhopal.Unfortunately, the way it happens in all our cities, people were allowed, possibly even encouraged, to settle in large numbers around the plant.

Sri Indiresan concludes the article by giving 3 suggestions.

It appears that disasters of the type we had in Bhopal can be prevented only when we take three precautions:

1. We should have a political system in which ministers cannot ride roughshod over bureaucrats;
2. Our cities should not house dangerous industries and
3. Once a risky plant is established no population should be allowed to settle within a close distance.

Unfortunately, I am not sure whether any of them can be implemented in India.  Let us look at the first suggestion that ministers should not ride roughshod over bureaucrats.  First of all, I don't think there is a need for so many ministries.  But we do have ministries because politicians have to be pleased.  Once we have a ministry, then we need to have bureaucrats!  Thus, it satisfies the need for babus to grow.  Once we have a babu, he/she needs people under him/her.  Thus, a governmental machinery is established.  Once it is there, they need to justify their existence and so some rules are regulations are framed.  At the end of the day, they have to live!

Our cities should not house dangerous industries and once a risky plant is established no population should be allowed to settle within a close distance says Sri Indiresan.  Both are very sensible suggestions.  But cities have grown.  What was once a factory located on the outskirts of the city, is now found right in the middle of the city, as the city has grown on all sides.  How do we ask / ensure that the factory is re-located outside?  Unions (and politicians) would jump into the fray as it means people working also have to go out.  Whenever I go the Mumbai Airport, I see so many buildings/slums nearby - it is such a terrible security risk - still we are unable to do anything.  As a country we only "react" to events - however deadly it is and then after making the ritualistic noise, we settle down to our routine (of not doing anything sensible).  Does anyone remember the terrorist attacks in Mumbai today?  We will remember them after the next attack!  That is the unfortunate price of a democracy.

An excellent article, as usual by Sri P.V. Indiresan.  But we can be sure, nothing will come out it.  Politicians and the media are talking about Bhopal only because they are not getting anything sensational at this point in time.  If we wait for a few more days - everyone would forget it.  Something sensational would come up and media would latch on the "new" news and everyone would forget Bhopal.  After all, as a country, did we not forget it for 25 years?

A riddle, wrapped in a mystery, inside an enigma

Two articles on the Bhopal tragedy attracted my attention.  One is the article titled "Bhopal’s many betrayals" by Salil Tripathi (Mint, June 9, 2010).

Some excerpts from the article -

The betrayal of Bhopalis is older: It began when nobody warned the city’s poor not to live so close to a chemical plant.

The people of Bhopal were betrayed by factory inspectors who were lackadaisical in checking the plant’s maintenance, which permitted a culture where safety was nobody’s priority.

And then, on that night in December 1984, when political parties were busy fighting elections, the gas escaped from the plant, silently killing more than 2,000 people within hours

Those who survived were betrayed again by their own government, which argued their case poorly while pursuing it in the US. .... Judge J.F. Keenan was swayed by the company’s arguments, and he sent the case to India ... saying he was “firmly convinced that the Indian legal system is in a far better position than the American courts to determine the cause of the tragic event and thereby fix liability. Further, the Indian courts have greater access to all the information needed to arrive at the amount of the compensation to be awarded the victims”.

Right—and that compensation turned out to be Rs74,000 per death, and Rs26,500 per case of personal injury. For, back in India, while the government sued for some $3.5 billion in damages, it then settled for $470 million. The Supreme Court approved the deal, quashing all proceedings.

On Monday, Union Carbide was fined: $11,000. Indra Sinha, who has campaigned for Bhopal victims, and whose novel about Bhopal, Animal’s People, was shortlisted for the Man Booker Prize in 2007, calculates that at 55 cents per death. Sometimes life is that cheap.

Warren Anderson, former chairman of Union Carbide was arrested when he came to India in December 1984.  He was granted bail and he left the country, never to return. Why and how he left the country has remained a mystery.

B.S. Raghavan in his excellent short article titled "A riddle, wrapped in a mystery, inside an enigma" (Business Line, June 14, 2010) throws some light on how Warren Anderson escaped from India (or escorted out of India, depending upon how one views the incident).  

Some excerpts from the article -

Adil Shahriyar, the son of Muhammad Yunus, who was almost a part of the Indira Gandhi family, and a mentor of both Rajiv Gandhi and Sanjay Gandhi, was tried in a US District Court by a jury, and convicted on an indictment of five counts ( including trying to blow up a ship, illegal possession of firearms and carrying them across State borders and drug trafficking) and sentenced in 1982 to 35 years hard labour in prison.

He appealed to the 11th Circuit US Court of Appeals which rejected the appeal on November 21, 1983 saying, “We find that the evidence presented at trial was sufficient to support the verdicts and therefore affirm the district court's (judgment).”

When Rajiv Gandhi became the Prime Minister, it is not far-fetched to believe that he must have come under relentless pressure from Yunus to make the release of Adil from US jail his topmost priority, even if it be by using his position and broaching the matter directly to President Ronald Reagan.

It was just at that time — December 3, 1984 — the Bhopal tragedy shook the world. If Rajiv Gandhi's appeal to Reagan on Yunus' behalf were to succeed, it was imperative to make a gesture that would somehow make President Reagan deal with Rajiv Gandhi's request favourably.

Hey, presto! Warren Anderson is given VIP treatment and allowed to fly out of the country on December 7, 1984 and Adil Shahriyar is granted presidential pardon “as a goodwill gesture” and “for reasons of state” on June 11, 1985.

It certainly was a good bargain to exchange a convict undergoing a 35-year sentence for heinous offences in the US for an American corporate honcho, in order to oblige a long-time family friend.

And so that's how Warren Anderson escapes from India.  The Indian media suddenly woke up after the judgement.  Nani Palkhivala who was engaged by Union Carbide and who said it was gratuitous and slanderous to call the Indian legal system “deficient or inadequate” and who argued that the Indian system was capable of dealing with such a complex case, is dead.  So is Rajiv Gandhi who let Warren Anderson go.  Ronald Reagon who gave presidential pardon to Adil Shahriyar “as a goodwill gesture” and “for reasons of state” on June 11, 1985 is also dead.  Warren Anderson is too old to stand trial and in any case what purpose would it serve anyway after all these years of apathy.

Thousands died due to the tragedy and several hundred thousands were affected with ailments and died a multiple deaths day after day.  Life in India, is cheap, and to quote Indra Sinha it is 55 cents per death.. Other than shedding a few tears of sorrow and praying for the departed souls to rest in peace, we can't unfortunately do anything ...