Bengal's religious ritual for better business fortunes

At home on a Sunday after a hectic week, with another one all set to begin, I am quite amused to see a newspaper picture of industrialists based in Bengal conducting a religious ritual (yagya) to improve the business fortunes in the state. So now things have come to this where businesses need other-wordly help and not just entrepreneurial hard work and vision besides government support to move ahead. To be honest, I am not really aware of too much of  government support for Bengal-based businesses for long. In fact, bravehearts would be doing business there with the kind of labour and infrastructure situation that exists.

In the past, I used to find instances of people shirking work there and formed a certain impression of workers in the state. But that was corrected by many of my friends establishing and operating ITES businesses from Bengal. They found the employees to be serious and hardworking since they had to support their families unlike the fun-loving college pass-outs in many other states of India.

Anyway, the current scene in Bengal is a far cry from what things were before the Naxal days of 1970, when many of India's premier businesses such as Ballarpur Industries had their headquarters in Kolkata. That disturbance was followed by prolonged militant labour and other practices. Those must be among the chief reasons why things are so messed up now. In the last 10 years successive governments have tried to revive things but old habits die hard for politicians, Singur being the last major flashpoint. Being born in Kolkata and still having many family members, I do wish things were not so much at the mercy of gods.  

Beyond RBI's Rate Hike

I was in All India Radio studios last evening again as an expert to comment on news developments. As luck would have it, RBI raised the interest rates for the 13th time yesterday and most of the anchors' questions moved around the event. While asnwering the questions, one or two interesting things struck me. Apart from the usual things that a rate hike typically does, such as raising the rates for retail loans and fixed income options, which this move will obviously do, there are a few other things that are possible. First, if things get real bad on the global economic front such as a deeper mess in Europe and the US and there is a credit squeeze in India with forex moving out and back, the RBI could reverse the rate regime as an emergency measure. The state of government finances is such that instead on the fiscal side, fire-fighting might have to be done on the monetary side. Second, it is now quite clear that corporate earnings  will suffer for some quarters. This means that in the absence of increasing revenues and profitability, companies will try to cut costs. First, future investments, travel, promotion and advertising. Then, manpower. During a Diwali party, some people told me the kind of job losses taking place in the telecom industry. Of course, bloodletting on the manpower front in mutual funds and insurance industry is now known to all. What a reversal of fortune? Maybe a case of "what goes up.......".

Nouriel Roubini's latest article in Project Syndicate (http://www.project-syndicate.org/commentary/roubini43/English) touches a point that has been worrying me for so long: the relation between inequality and the current global economic and political situation. Many people call Roubini Dr Doom and many of his predictions haven't come true. But I do like the kind of analysis and facts that he brings to the public mindspace. We do need people who will keep us honest and not let us get carried away. Roubini's team, Roubini Global,  incidentally, has many Indians contributing. Talk about Indian brain trust contributing to far-reaching contrarian ideas    

Rogoff's interview in McKinsey Quarterly-Worth a look

Eminent Harvard economist Kenneth Rogoff's latest  McKinsey Quarterly interview (http://www.mckinseyquarterly.com/Economic_Studies/Productivity_Performance/Understanding_the_Second_Great_Contraction_An_interview_with_Kenneth_Rogoff_2871) on economic contraction is definitely worth a look. Rogoff has written a great book on the history of economic recessions and I had a great opportunity of interacting with him in June 2010 while researching for one of the Outlook Money Anniversary issue articles. It is amazing the amount of data he and his co-author went through to write the book. Ironically, he was in Spain when I interviewed him over mobile phone. The interview was definitely one of the high points of my journalistic career.    

An Export Scam?

It is difficult to be in Delhi and not to get to know whispers or chats about some scam or the other. More so if you are a journalist. Coming on the back of so many outbreaks of scams, I think now definitely it is a case of a scam overload. A recent short chat with a few journalist aquaintances and I come to know about something new. Apparently, there is a huge amount of unaccounted foreign money of India's big daddies and fat cats is coming into the country and then being laundered through export over-invoicing. Knowledgeable people, it seems, are all in the know. Of course, this only proves how dumb and ill-informed I am! The argument is that this is the reason for our recent rocking export growth figures, even in times of global slowdown. What about hard evidence? None. But anybody who knows how our export-import machinery and people function will not find it difficult to believe this allegation. But then other countries also do these things. Export and import figures of countries don't match with those of other countries--some people told me and they cite IMF on this. With stocks and realty markets down, this could be the new trick for money laundering. In this season of scam-exposing, I wouldn't be too surprised if some evidence got suddnely uncovered.        

Eurozone: Our Misplaced Hopes

Went to All India Radio studios on Tuesday as an expert in their stockmarkets programme to   comment on news developments. One of the anchors asked me what I thought of reports that European leaders wouldn't be able to hammer out a solution to the eurozone problem this weekend and whether it wasn't too much to expect something like that over a weekend. I agreed with the anchor and said that the problem was just too big and too messy for a weekend clean-up job. As in every economic crisis driven by a financial crisis, trust and faith become casualties. Somebody has to lend for the borrowers who can't pay. The job was done by financial insitutions for sub-prime guys before many of whom went broke. Governments then stepped in and some of them are now broke for that reason or general over-indulgence. Anybody who is lending now needs an assurance that the money will come back. When governments go broke just who gives that assurance and how? Just how much of your future income do you use to mend your today? You got to be kidding to think that this will blow over soon. How much more time will this take? Some more years? Perhaps.   

Euro Mess

Was at the radio station yesterday as an expert in a stockmarkets programme, commenting on some of the news developments. One of the anchors asked me what I thought of reports that European leaders wouldn't be able to hammer out a solution to the eurozone problem this weekend and whether it wasn't too much to expect something like that over a weekend. I agreed with the anchor and said that the problem was just too big and too messy for a weekend clean-up job. As in every economic crisis driven by a financial crisis, trust and faith become casualties. Somebody has to lend for the borrowers who can't pay. The job was done by financial insitutions for sub-prime guys before many of whom went broke. Governments then stepped in and some of them are now broke for that reason or general over-indulgence. Anybody who is lending now needs an assurance that the money will come back. When governments go broke just who gives that assurance and how? Just how much of your future income do you use to mend your today? You got to be kidding to think that this will blow over soon. How much more time will this take? Could be some more years.