Saturday, October 20, 2012

FAITH & MONEY: TAKE A TAILSPIN

Arguably, this must be the biggest bungle in recent history

In an effort to raise farm incomes, FDR forced up food prices by paying farmers to destroy crops when millions were hungry, and then he paid farmers to not to grow anything on a portion of their land. All this made food more expensive for the three-quarters of Americans (about 100 million) who weren’t farmers. The Anti-Chain Store Act (1936) made it illegal for chain stores like the A&P to buy goods in volume, get great discounts and pass savings to consumers.

Government thought that “universal” banks (engaging in both commercial banking and investment banking) had something to do with the Depression-era bank failures, so he signed the Glass-Steagall Act (1933) mandating the break-up of these banks into pure commercial banks and pure investment banks. Eugene White (Rutgers University) analyzed the failure rates of different types of banks, and he reported that universal banks – the banks broken up– were the strongest banks. Incidentally, FDR’s federal deposit insurance (the FDIC, launched in 1933) didn’t stop bank failures– it just transferred the cost of bank failures to taxpayers when there were any bailouts.


Source : IIPM Editorial, 2012.

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Thursday, October 18, 2012

Missing the Ambani touch?

The venture was flawed from the beginning in more ways than one

The Indian retail sector has grown at a stupendous rate and is touted to touch $450 billion by 2015 (as per McKinsey). At that rate, it is not surprising how major business houses have made inroads into the sector. But the chequered journey of Mukesh Ambani’s Reliance Retail in this sector merits analysis.

It was the winter of 2006 when Ambani announced the arrival of his Rs.250 billion retail gamble – Reliance Fresh convenience stores in India. Reliance Fresh had to face the wrath of all be it middlemen, small retailers or politicians. The company had to shut down shops across the country amidst vehement protests. Gibson Vedamani, ex-CEO, Retailers’ Association of India points, “Reliance Fresh failed because it was too aggressive with its strategies and wanted to capture the entire market without leaving any space for the middlemen and local retailers.” The company planned a number of formats viz. hypermarkets, supermarkets, convenience stores & specialty stores. This attracted unwanted media attention & got them into trouble.

With the looming spectre of economic slowdown, Reliance has had to cut down severely on its expansions. It merged the management of its hypermarkets, supermarkets and convenience stores last year to save on administrative, man-power and operational costs. However, the biggest blow came earlier this year, when Ambani, after deferring the launch of its wholesale market, finally scrapped its cash & carry (C&C) model and showed the door to the entire team of 36 professionals headed by Harsh Bahadur (erstwhile CEO of Metro AG’s C&C business in India).


Source : IIPM Editorial, 2012.

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Growing, growing, gone…

Aviators in India, in their race to get ahead, fell way behind

Circa 1997-98 –11.5 million passengers carried by four domestic aviation giants with a combined fleet of 25 – Indian Airlines (and Alliance Air), Jet Airways, Sahara Airlines and Archana Airways (yes, it did exist!). A kingly 50.7% share belongs to Indian Airlines. And profits? Well, that’s the only good news doing the rounds, with Rs.3.6 billion in operating profits flashing on their financial tablets! (Even Archana Airways with a fleet-size of just 2, made Rs.16.8 million in profits). The Indian domestic aviation sector ‘has arrived’! Or has it?

Circa 2002-03 – The number of airlines has been reduced to just three, with Indian Airlines, Sahara and Jet making merry with 53 aircrafts. Of course, Jet has the largest market share of 48.4%, with a fleet size of 41. Shamefully though, it becomes the only airline returning operating loss that year, of Rs.521.3 million.

Circa ‘the present’ – Six years back, some unknown face called G. R. Gopinath entered the Indian aviation sector with hopes of making the common Indian fly with the thoroughly untested ‘Low Cost Carrier’ LCC model, which had been a success in many First World countries.


Source : IIPM Editorial, 2012.

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...is a town dreaded by some, understood by few, and remains unknown to most...

Merely three hours north of Manhattan, Islamberg remained unnoticed for over two decades. It came into limelight after the attacks on the Twin Towers and the Pentagon. There have been accusations against members of this community for being in touch with Pakistani terrorist groups, though the truth according to a certain few remains that members of Islamberg have always helped locals in times of distress. There have been instances when families from Islamberg have come forward and volunteered to help people who suffered in 2006, when due to flooding many houses were ruined and the town Deposit was almost washed off the map. The volunteers cleared debris, cleaned basements, provided first aid, food and shelter to many.

It’s unfair when baseless accusations ruin the stature of a community all over the world. Individuals from all communities have faltered at some point or the other in their lives, but defaming their entire community or religion for their mistakes is unjust. Even in the present day scenario, there have been claims that gun shots can often be heard in the vicinity of Islamberg. But then there are also people who vouch for the residents of Islamberg and assert that they are a quiet lot and mind their own business. Also, the residents of neighbouring Columbia Lake vouch that the sound of gun shots does not come from Islamberg.

And so Islamberg’s citizens try building for their children a peaceful and prosperous future, and daily put up a fight against people’s prejudices and struggle to douse their neighbours’ fears...


Source : IIPM Editorial, 2012.

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Tuesday, October 16, 2012

Raj of the satraps

The elections this year is seeing a trend' parties vying for larger pie shun pre-poll alliances

The eleventh Lok Sabha was a defining moment for Indian politics. Despite emerging as the single largest party with 161 seats in 1996, BJP could not prove its majority. Who can forget images of Pramod Mahajan talking simultaneously on two mobiles, claiming confidently of having the required numbers? They were all false claims, as BJP simply did not have allies that could help it reach the magic figure. During the next two years, the party worked hard on stitching alliances. That heralded the era of coalition politics, which necessitated pre-poll alliances.

BJP again forgot this lesson in 2004, when it entered the elections with only five allies. The Congress by then had learnt from its past mistakes. Party Chief, Sonia Gandhi, quietly buried her party’s Panchmarhi resolution to fight all elections on its own and have no alliances. She personally visited regional satraps like Lalu Prasad Yadav and Ram Vilas Paswan, and forfeited own seats to have pre-poll alliance with their parties.

Cut to 2009: Both NDA and UPA are devoid of partners. Barring NCP, DMK and JMM, all UPA constituents are contesting against 'big brother' Congress. They were apparently irked by Congress’s political posturing refusing a national alliance and restricting itself to state-level alliances only. That put paid to ambitions of allies like the NCP to grow outside Maharashtra and of Samajwadi Party to grow out of UP.


Source : IIPM Editorial, 2012.

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The UPA has provided little more than lip service

India’s education system, be it the primary level or higher education, remains in shambles, the UPA has provided little more than lip service, says ANIL PANDEY

Out of the total budget allocated to the ambitious Sarva Shiksha Abhiyan and Mid Day Meal schemes, 70% is being paid from the education cess. To make education a fundamental right, a bill has been unsuccessfully presented six times in the Parliament during this government’s tenure. Dr. Ramakant Rai, Convenor, National Coalition for Education reasons with B&E, “Had this Bill been passed, then the government and administration would have been answerable to a lot of questions.”

Even in higher education, the UPA had made a lot of announcements, but just on paper. As per the Eleventh Five Year Plan, opening of 15 new universities, six new IIMs, eight new IITs, five new Indian Institutes of Science, Education and Research and two new SPAs was announced. But, in most cases, the government has not been able to even acquire the land. Interestingly, most of the higher education institutions have been opened in Madhya Pradesh. Of course, it’s just a coincidence that out HRD Minister, Arjun Singh hails from that state! Professor Praveen Jha of Jawaharlal Nehru University told B&E, “Neither the required infrastructure is in place nor are there enough teachers. In such a scenario, what’s the use of these institutions?” Even the Yashpal Committee, while criticising UGC and the government, has questioned the rationale behind setting up such institutions without the infrastructure. Also, there has been a substantial increase in the fees of the universities during the UPA tenure. Almost one and a half years ago, the National Assessment Councils report claimed that the quality of education in 90% colleges and 68% universities is of medium to very low levels. This goes to show that the quantity is improving but not the quality.


Source : IIPM Editorial, 2012.

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Sunday, October 14, 2012

Dare you waste it

Mind your wallet if you waste...

If you are planning to eat Japanese food at Hayashi Ya Japanese restaurant on the Upper West Side of the US, be careful not to leave even bits and pieces of it on your platter. Or else you may end up paying $27.75 instead of $26.95. Amazed! The Hayashi Ya restaurant charges 3% extra if there are leftover of food in your plate. This may seem very weird to most in West who make it a norm to waste much of the food they order for. And it isn’t a home-grown hypothesis. WCBS TV confirms that 27% of all food in the US finds itself in trash bin (works out to a pound of food every day for every American), while Stockholm Water Institute study extends this figure up to 30% or food worth around $48 billion annually. This amusing food-wasting habit of the West leads to annual wastage of 30 million tons of food. However, the UNEP 2009 report depicts an even more grim picture. Food waste in the US could be as high as 50% which means around one-fourth of all fresh fruits and vegetables is wasted between the field and belly. Among all the food-wasted, 15% are never opened in spite of being within expiry date.


Source : IIPM Editorial, 2012.

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