Managers like all of us are also suckers for easy answers. “Management as a discipline is in very early stages of development. The equivalent would be the subject of chemistry as it was in the fifteenth-sixteenth century when it was alchemy. For centuries people were looking for the philosopher’s stone which was some kind of catalyst which could turn base metal into gold. Management is a bit like that. So many managers are suckers for the guru who can provide the simple answer,” says Robert Grant. He is a professor of strategic management and holder of the ENI Chair of Strategic Management in the Energy Sector at Bocconi University in Milan, Italy. He is currently in India teaching a course on strategy to the first batch of students at the Mumbai International School of Business, an initiative of the SDA Bocconi School of Management in India. In this interview he speaks to Vivek Kaul.
You have talked about the fact that the knowledge and insight needed to make sound strategic decisions and guide the development of their organisations is best served by strategy teaching that is rooted in theory. What do you mean by that?
Some people would reject the whole notion of business education. Some would say that the best way to become a successful manager is to learn on the job i.e. there is no substitute for experience. Part of the whole notion of having a business school is to say that actually there are principles, and there are things that can be learnt from an analytical approach.
Can you explain this through an example?
You have individuals who appear to be successful managers and the question is what can we learn from them. Can we in anyway generalize about this? So you look at Apple and you say is Apple all about Steve Jobs? Then what was his leadership style? Here is a quirky individualistic, unconventional and a very autocratic management style. And you ask why has this worked? You look at a different company like IBM and its former CEO Sam Palmisano, who had a very different leadership style. You start looking at all these examples and say can we see patterns. Can we see something that we can generalize? Soresearch tries to generalise for this diversity of experience and then the teaching says that here are some principles that we can start applying.
You talked about Steve Jobs and Sam Palmisano two people with very different leadership styles. Which style works more often than not?
Palmisano fits in with a more observable trend you are seeing in large companies where leaders are becoming less the people who make the key decisions. The problem is that most organisations are so complex that the CEO knows maybe 2% of what is going on in that organisation. Also these days businesses have to respond so quickly that they can’t wait for the stuff to get to the CEO level before decisions can be made. So you have to have highly decentralized decision making. So what then is the role of the CEO? Increasingly the role of the CEO is to manage culture and manage the development of people within the organisation, rather than to take the role of the decision maker.
So where does that leave the likes of Jobs?
In many ways Jobs may well have been the one of the last of the old school. This was somebody who was very very hands on. In the early days he was the designer. At one level he was the Chairman of Apple Computers but he was also the project leader on the projects. He was very deeply involved in tiny details which he was incredibly emotionally attached to. So I think in terms of models of leadership probably companies are making some serious mistakes if they say the Jobs way is the way to go.
At some level he was also the biggest marketer of his company…
Yup. He was a great marketing guy because he was the founder of this incredibly successful company that was a major part of a social revolution that took computing, something that had been dominated by governments and large corporations, and taken it down to young people. He empowered young people.
So how do you see Apple performing now that he is not there to lead them?
The case with Apple is like all companies that have visionary powerful founders who go on to be their leaders. The key is can that intuition and vision of the founder, become embodied in the capabilities of the firm. The fact is that Jobs had from several years before his death increasingly distancing himself as the chief decision maker of the firm. This must mean that in terms of the culture of the company, the systems by which the products are designed, how they understand the market, technology, their users, and many of the intuitive level skills that Jobs had, have actually become embodied in the capabilities of the organisation. It’s the same with every entrepreneurial company. Can the company make the transition from a company which is entrepreneur led, family led, into an organisation which is professionally managed but has managed to embody those skills.
Does that happen?
It does happen. You look at Walt Disney. The values and the quest for quality entertainment orientated towards children and families is something that has become embodied in the set of capabilities at Disney. Wal-Mart has a culture where cost efficiency is almost like a religion. Avoiding all waste and looking for new solutions to keep costs down, was something that was a part of the protestant upbringing of Sam Walton. But it has been transferred into the company. So I think it does happen. And it has to happen if the company is going to make that transition.
In one of your research papers you write “I frequently observe a propensity to fall back on ideas and beliefs that amount to little more than folk wisdom.” Could you talk about that in a little detail?
Management as a discipline is in very early stages of development. The equivalent would be the subject of chemistry as it was in the fifteenth-sixteenth century when it was alchemy. For centuries people were looking for the philosopher’s stone which was some kind of catalyst which could turn base metal into gold. Management is a bit like that. So many managers are suckers for the guru who can provide the simple answer. Hence, all the time you have people coming up with the philosopher’s stone. These fads in management come and go. Go back to the late 1970s and the early 1980s market share was the in thing. If you need to get anywhere in business you need to have market share was the in thing. The way to get market share is penetration pricing. This is what the Japanese companies were doing. So that was the sort of thinking that dominated that era. It made sense but not in others. Since then we have had wave after wave of notions, typically given tremendous appeal by the fact that people espoused them are usually fantastic performers. People like Tom Peters for example.
I was about to take his name…
HaHa. To give them their credit most of them have a key value but it is all within a context. One of the ones that was most influential was CK Prahalad and his core competence of the corporation. For many business leaders this was a kind of a revelation that rather than going out there thinking about what does the customer want, it made more sense to start looking inside, what the hell do you well as a company? The article was written 22 years ago and now you look back and say, core competence, that is just one single thing. Now when you look at companies you say there is a whole network of things and the key is the way in which they all fit together. The tremendous danger is this belief that there can be a single idea that provides a universal solution.
How does folk wisdom prevalent in organisations at various points of time influences decisions made by senior executives in companies?
If you look at the lead up to the financial services crisis a phenomenon that you saw particularly among the retail banks was internationalizing. So nearly all the US banks, and major European banks said, we have to have a position in China. They bought minority stakes typically in Chinese banks. Look at Royal Bank of Scotland, which was a Scottish bank, and present only in Scotland. Then it acquired NatWest in Britain. Then they started acquiring banks elsewhere in Europe, in United States and Asia as well. Bank of Santander did the same thing. HSBC internationalized as well. Other banks like the UniCredit Bank started to say we need to get into the game. I remember having this executive seminar with one of the Italian banks and I asked them what are you doing right now? And I was told we are internationalizing. And when I asked them why? Because we are living in a global world, was the answer that came along. So what? This sort of notion of globalisation just takes hold of people and it almost becomes an excuse for not really thinking about what really makes sense.
So globalisation is the current fad…
It is one of the current fads. The question that needs to be asked is globalisation creating any value for many businesses? In the case of retail banking you acquire banks in different countries. Then you ask are there any benefits of having them under common ownership? For starters you have to put them under the same brand. But then the regulations in different countries are different. Hence banks in different countries have to be separately funded. They have to meet the reserve requirements specific to that country. The markets are very often different and so you can’t launch the same products. So you say, well hang on, does this make sense? The same is true about telecom. Vodafone is the most international company and yet in every country it has to acquire licenses, has to establish structure etc. So the question is where are the economies of scale? So they say, maybe the economies are in sourcing. And then you start sourcing phones on a global scale. But in Japan they want Japanese phones simply because those phones had higher standards than what consumers in the UK were happy with. So you start saying where is the value being added here?
Vodafone hasn’t been doing terribly well in India…
Another of the link to this globalisation is to say where do we need to be internationally? Emerging markets. Why do you need to be in emerging markets? Because that’s where the growth is. But growth doesn’t necessarily mean profitability. All those banks that went into China most of them have sold of their holdings now. The car companies are still rushing into China building plants. In China they growth of capacity in automobiles is faster than the growth of demand. So you have the same excess capacity that you have in Europe and North America and so most of these companies are not making money in China. When it comes to telecom the emerging markets are pretty much close to saturation. India has a brutally competitive market in telecom. This is not a market where France Telecom or AT&T can say hey if we move in we are going to make a lot of money. To a lot of extent there is this sort of naïve thinking that just because you are in a growth market you are going to make money.
What has been the impact of increased volatility and unpredictability of the business environment in the last few years upon the strategic planning processes of companies?
What this means that you can’t forecast. So you have to have a planning system which is based upon the notion that actually you don’t really know, what is going to happen next week, let alone next year. And that is a major challenge. Though you don’t know what the environment is going to be you still need to make investments. The oil companies are making investments in oil fields and majorly into gas fields. These fields aren’t going to come on stream for another six, seven, eight years and then they are going to last for another 20-30 years. But nobody knows what the price of gas is going to be in six month’s time, let alone in ten years.
So the companies need to function more and more like venture capitalists?
I think you are onto something here. What companies increasingly need to do is not so much as manage a portfolio of major businesses necessarily, but at least have a portfolio of options. So they are looking at the future and saying we don’t know what is going to happen. But maybe we can engage in some in alternative scenarios now and make relatively small investments, so that if the market develops in this way, we can expand on that base and really exploit that opportunity.
Can you give an example to explain that?
Some of the technology companies are quite good at this. If you look at Google and ask what is it doing, you realise that wow it’s all over the place. And yet it is doing things that make sense in an environment of uncertain change. It started Android its mobile device operating system with the realisation that even though it was dominating search within PCs, laptops and so on, the internet access was increasingly going to move to mobile devices in the days to come. So that was a threat to Google because the question was that would these mobile devices be compatible with the Google search engine? So they decided that maybe if we have our own operating system then we can ensure all our applications are going to run on it. Then of course RIM and then Apple became the dominant players in the mobile business. Apple likes its close garden. It likes to control its own applications through its own app store and so on.
So what happened?
Google exercised the Android option, which was basically an embryonic protocol operating system. It then said we are going to launch this, we are going to invest in this, we are going to talk to major handset makers and provide them with the necessary tools to support it and so on. This despite the fact that Android was free and Google wasn’t making any money out of it. But it became a way of ensuring that their Google search engine and other Google products could make their movement into the mobile sector. Then they start saying what are the threats that we face in terms of our desktop applications? We are dependant upon Microsoft because our search engine runs on the Microsoft browser, internet explorer. It also runs on the Microsoft operating system. So again they said lets introduce Chrome. It’s an option. It’s not a massive investment. But it’s their own browser. And then they came up with the Chrome operating system as well. And it becomes an alternative. In fact they haven’t had to make a massive investment in rollout because Firefox’s Mozilla has eroded Microsoft’s clout and Microsoft is no longer dominant in the browser business. That’s one way of interpreting what companies are doing.
This approach you talk about might be possible in technology because expenses are not huge. But what about other businesses?
You look at the oil business. Nobody knows what the price of oil is going to be. Nobody knows if the House of Sa’ud is going to fall. Maybe that could be next domino. Nobody knows if the Israelis are going to bomb the hell out of Iran. So there is all that uncertainty in this business. So companies are hedging their bets. They are making investments in shale gas. They are taking minority stakes. The Chinese are taking stakes in the oil sands of Canada. But most of those are just minority stakes. But it’s enough for them to say that if it looks like that we are going to lose a lot of our upstream oil reserves, if the price of oil is going to rocket, then we are in a position now to understand enough about this business either to expand it internally or acquire a majority stake. Just looking at the options approach it means that you are building flexibility. It is building your ability to adapt.
(The interview originally appeared in the Daily News and Analysis on August 20,2012. http://www.dnaindia.com/money/interview_many-managers-are-suckers-for-the-guru-who-can-provide-the-philosophers-stone_1730122))
(Interviewer Kaul is a writer and can be reached at [email protected])
Month: August 2012
Ek Thi Tigress: Why Mamata tilts at every windmill
Vivek Kaul
“Mamata Banerjee ko gussa kyon aata?” is an intriguing question.
Why does she brand people who tend to disagree with her as Communists and Maoists? Very recently Shiladitya Chowdhury was arrested under non-bailable sections when he questioned the West Bengal government’s policy farmers during a rally being addressed by Banerjee. As The Hindu reported “Eyewitnesses said that Ms Banerjee was heard giving directions to isolate him from the crowd, referring to him as a “Maoist.””
A few months back she had called some students “Maoists” after they had asked her uncomfortable questions during a television interaction organised by CNN IBN. “I must tell you that you are CPI(M) cadres, Maoist cadres … I cannot reply to CPI(M) questions,” Banerjee had said on that occasion before she walked out of programme. This happened in May.
A little earlier in April Ambikesh Mohapatra, a professor at Jadhavpur University had been arrested for posting cartoons of Mamata Banerjee on the internet. “They don’t do any work but think of ways to frame me,” Banerjee had said justifying the arrest and alluding to the CPI(M) being behind the cartoons.
And now she has taken on the judicial system in this country. On the occasion of the platinum jubilee celebrations of the West Bengal assembly she recently said “at times favourable verdicts are given in return for money. There are instances when judgments have been purchased. There is corruption among a section of the judiciary. I know there can be a case against me for saying this. But this must be said and I am ready to go to jail for saying so.”
Now why does the Chief Minister whose alliance has 227 out of the 294 seats in the state assembly want to go to jail? Even if we were to leave out 43 seats which belong to the other alliance partners, her party, the All India Trinamool Congress has 184 seats in the assembly.
Why does the Chief Minister of a state whose party has absolute majority in the assembly, bother about small dissent so much so that it forces her to label the dissenters as Communists and Maoists?
The answers to all these questions lie in the 42 years that she has spent in politics.
Mamata Banerjee entered politics in 1970. As Monobina Gupta writes in Didi – A Political Biography “As an undergraduate in Kolkata’s Jogmaya Devi College, she became active in Chhatra Parishad, the Congress’s student wing. The college union was then controlled by the Democratic Socialist Organisation(DSO), students wing of the Socialist Unity Centre of India (SUCI)…Her dogged fight against the DSO drew the attention of some Congress leaders, even though she did not known them personally then.”
By the late 1970s Mamata was at the forefront of the protests happening in Kolkata (then Calcutta). “Mamata was out on Kolkata’s streets defending Indira Gandhi after the latter lost the parliamentary elections…From waving black flags at the then prime minister Moraji Desai on his visit to Kolkata to getting into a bloody fight with the Left student activists in Ashutosh College, she was gaining a reputation for being a strong combatant of the CPI-M,” writes Gupta.
Mamatas big stroke of luck came before the 1984 Lok Sabha elections. Indira Gandhi had asked Mamata’s then mentor and Congress legislator Subrata Mukherjee to find a suitable woman candidate. As Mukherjee tells Gupta in her book Didi– A Political Biography “The elections were approaching. Indira ji suddenly asked me to find a woman candidate. The Congress was in a bad shape. Finding a woman candidate was a tough job. I suggested Mamata’s name, and she got her nomination from the Jadhavpur constituency.”
Indira Gandhi was killed by her bodyguards Beant Singh and Satwant Singh on October 31, 1984. In the sympathy wave that followed, Mamata Banerjee won, becoming a Lok Sabha member at a young age of 29. She defeated CPI(M) stalwart Somnath Chatterjee. The Congress party won 16 out of the 42 Lok Sabha seats in West Bengal.
This was enough to rattle the CPI(M) led ruling Left Front government . It unleashed violence across the state and attacked Congress workers. “This was the scene Mamata entered flush with the success of her maiden electoral victory…She had courted danger right from her days as a student activist. The first in a series of trips Mamata made in this period as to Magrahat in South 24 Parganas, where a Congress worker was brutally murdered and his wife gang-raped by alleged antisocials backed by the CPI-M. Media reports spoke of the horror of the incident – the assailants ‘playing football’ with the murdered worker’s severed head. Mamata’s visit and her meeting with the family of the deceased made front page news,” writes Gupta.
Her confrontation with CPI-M continued in the years to come. In August 1990, the Kolkata police was following her 24×7 relaying her activities to the higher ups. On August 16,1990, Mamata Banerjee stepped out of her Kalighat residence and walked towards Hazra junction to be a part of the procession she had called for. The atmosphere was tense and Mamata was attacked. As Gupta writes “The attackers had come prepared. Swinging his stick, Laloo Alam, a CPI-M worker, hit Mamata hard on her head, she (i.e. Mamata) writes in her memoirs. ‘The right side of my head (just a hairline away from where the brain is) had cracked open and I was bleeding profusely. I was still undeterred…When I saw them getting ready to hit me on the head with an iron rod, strangely in that grave circumstance, I covered my head with my hand,’ Mamata narrates.”
Covering her head with hand nullified the impact of the blow on her head, and broke her wrist. Over the next few days Mamata was at a nursing home fighting for her life. She survived and thus started the second phase of her political career. It took her 21years more to beat the Left Front and form her government in West Bengal. Along the way she quit the Congress party and formed her own party, the Trinamool Congress.
Mamata Banerjee was a leader of agitations who became the Chief Minister of West Bengal on May 20,2011. All the agitations over the years ensured that confrontation became an integral part of Mamata Banerjee’s career and her nature. As Nilanjan Mukhopadhyay writes at www.asiancorrespondent.com “The bottom line is that as a leader of agitations you require to be spontaneous and have the ability to cock a snook at your adversary.” (you can read the complete column here)
This is a trait that has become in-built in her and explains to a large extent why she has been spontaneously branding her dissenters as communists and Maoists. The aggression that came out in all the protests, dharnas and bands she called for against the CPI-M, still needs to come keep coming out, but in other ways. That explains to a large extent why she is hell bent on shooting herself in the foot and is needlessly taking on the judicial system by calling it corrupt.
What also does not help is the fact that she sees herself as having been betrayed time and again. “Much of the excess of Mamata’s emotional rhetoric stems from a lifelong sense of betrayal. The hurt and anger run through most of her writings. In school, the classmates she helped stabbed her in the back; the party she grew up ruined her chances of routing the CPI-M by striking undercover electoral quid pro quo deals with the communists,” writes Gupta. She concludes that all this has led to a situation where Mamata Banerjee is “haunted by a constant apprehension of persecution and conspiracy.”
Hence, this is a major reason where even a hint of dissent gets labeled as a communist or a Maoist conspiracy.
The traits that Mamata had developed over the years held her in good stead as she fought the CPI-M rule in West Bengal. And those are the traits that she can’t seem to get rid off now. As Mukhopadhyay puts it “I have long maintained among friends that she is the Uma Bharti of West Bengal. Meaning, both – and they are inherently well-meaning leaders – can lead an agitation to its logical culmination but cannot govern in their wildest dreams. In politics you require the chutzpah to ensure that the government – or people in authority – of the day bend before your agitation. But in governance you are required to listen, think, put one against another and act.”
“In governance you need to be routine (diligent if you prefer this word), ensure that the horse comes before the cart (meaning systems are followed) and above all grant the others, the right to disagree with you and agitate if they wish to exercise their democratic right,” Mukhopadhyay adds.
But this is easier said than done because for this to happen Mamata Banerjee will have to stop being Mamata Banerjee.
To conclude, let me put it this way. Salman Khan has been labeled a tiger only in reel life. Mamata Banerjee has been a tigress in real life. But its time she stopped being one because it’s hurting her more now, than ever before.
(The article originally appeared on www.firstpost.com on August 17,2012. http://www.firstpost.com/politics/ek-thi-tigress-why-mamata-tilts-at-every-windmill-420914.html)
(Vivek Kaul is a writer and can be reached at [email protected])
Of 9% economic growth and Manmohan’s pipedreams
Vivek Kaul
Shashi Tharoor before he decided to become a politician was an excellent writer of fiction. It is rather sad that he hasn’t written any fiction since he became a politician. A few lines that he wrote in his book Riot: A Love Story I particularly like. “There is not a thing as the wrong place, or the wrong time. We are where we are at the only time we have. Perhaps it’s where we’re meant to be,” wrote Tharoor.
India’s slowing economic growth is a good case in point of Tharoor’s logic. It is where it is, despite what the politicians who run this country have to say, because that’s where it is meant to be.
The Prime Minister Manmohan Singh in his independence-day speech laid the blame for the slowing economic growth in India on account of problems with the global economy as well as bad monsoons within the country. As he said “You are aware that these days the global economy is passing through a difficult phase. The pace of economic growth has come down in all countries of the world. Our country has also been affected by these adverse external conditions. Also, there have been domestic developments which are hindering our economic growth. Last year our GDP grew by 6.5 percent. This year we hope to do a little better…While doing this, we must also control inflation. This would pose some difficulty because of a bad monsoon this year.”
So basically what Manmohan Singh was saying that I know the economic growth is slowing down, but don’t blame me or my government for it. Singh like most politicians when trying to explain their bad performance has resorted to what psychologists calls the fundamental attribution bias.
As Vivek Dehejia an economics professor at Carleton University in Ottawa, Canada, told me in a recent interview I did for the Daily News and Analysis (DNA) “Fundamentally attribution bias says that we are more likely to attribute to the other person a subjective basis for their behaviour and tend to neglect the situational factors. Looking at our own actions we look more at the situational factors and less at the idiosyncratic individual subjective factors.”
In simple English what this means is that when we are analyzing the performance of others we tend to look at the mistakes that they made rather than the situational factors. On the flip side when we are trying to explain our bad performance we tend to blame the situational factors more than the mistakes that we might have made.
So in Singh’s case he has blamed the global economy and the deficient monsoon for the slowing economic growth. He also blamed his coalition partners. “As far as creating an environment within the country for rapid economic growth is concerned, I believe that we are not being able to achieve this because of a lack of political consensus on many issues,” Singh said.
Each of these reasons highlighted by Singh is a genuine reason but these are not the only reasons because of which economic growth of India is slowing down. A major reason for the slowing down of economic growth is the high interest rates and high inflation that prevails. With interest rates being high it doesn’t make sense for businesses to borrow and expand. It also doesn’t make sense for you and me to take loans and buy homes, cars, motorcycles and other consumer durables.
The question that arises here is that why are banks charging high interest rates on their loans? The primary reason is that they are paying high interest rate on their deposits.
And why are they paying a high interest rate on their deposits? The answer lies in the fact that banks have been giving out more loans than raising deposits. Between December 30, 2011 and July 27, 2012, a period of nearly seven months, banks have given loans worth Rs 4,16,050 crore. During the same period the banks were able to raise deposits worth Rs 3,24,080 crore. This means an incremental credit deposit ratio of a whopping 128.4% i.e. for every Rs 100 raised as deposits, the banks have given out loans of Rs 128.4.
Thus banks have not been able to raise as much deposits as they are giving out loans. The loans are thus being financed out of deposits raised in the past. What this also means is that there is a scarcity of money that can be raised as deposits and hence banks have had to offer higher interest rates than normal to raise this money.
So the question that crops up next is that why there is a scarcity of money that can be raised as deposits? This as I have said more than few times in the past is because the expenditure of the government is much more than its earnings.
The fiscal deficit of the government or the difference between what it earns and what it spends has been going up, over the last few years. For the financial year 2007-2008 the fiscal deficit stood at Rs 1,26,912 crore. It went up to Rs 5,21,980 crore for financial year 2011-2012. In a time frame of five years the fiscal deficit has shot up by nearly 312%. During the same period the income earned by the government has gone up by only 36% to Rs 7,96,740 crore.
This difference is made up for by borrowing. When the borrowing needs of the government go through the roof it obviously leaves very little on the table for the banks and other private institutions to borrow, which in turn means that they have to offer higher interest rates to raise deposits. Once they offer higher interest rates on deposits, they have to charge higher interest rate on loans.
A higher interest rate scenario slows down economic growth as companies borrow less to expand their businesses and individuals also cut down on their loan financed purchases. This impacts businesses and thus slows down economic growth.
The huge increase in fiscal deficit has primarily happened because of the subsidy on food, fertilizer and petroleum. One of the programmes that benefits from the government subsidy is Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The scheme guarantees 100 days of work to adults in any rural household. While this is a great short term fix it really is not a long term solution. If creating economic growth was as simple as giving away money to people and asking them to dig holes, every country in the world would have practiced it by now.
As Raghuram Rajan, who is taking over as the next Chief Economic Advisor of the government of India, told me in an interview I did for DNA a couple of years back “The National Rural Employment Guarantee Scheme (NREGS, another name for MGNREGA), if appropriately done it is a short term insurance fix and reduces some of the pressure on the system, which is not a bad thing. But if it comes in the way of the creation of long term capabilities, and if we think NREGS is the answer to the problem of rural stagnation, we have a problem. It’s a short term necessity in some areas. But the longer term fix has to be to open up the rural areas, connect them, education, capacity building, that is the key.”
But the Manmohan Singh led United Progressive Alliance seems to be looking at the employment guarantee scheme as a long term solution rather than a short term fix. This has led to burgeoning wage inflation over the last few years in rural areas.
As Ruchir Sharma writes in Breakout Nations – In Pursuit of the Next Economic Miracles “The wages guaranteed by MGNREGA pushed rural wage inflation up to 15 percent in 2011”.
Also as more money in the hands of rural India chases the same number of goods it has led to increased price inflation as well. Consumer price inflation currently remains over 10%. The most recent wholesale price index inflation number fell to 6.87% for the month of July 2012, from 7.25% in June. But this experts believe is a short term phenomenon and inflation is expected to go up again in the months to come.
As Ruchir Sharma wrote in a column that appeared yesterday in The Times of India “For decades India’s place in the rankings of nations by inflation rates also held steady, somewhere between 78 and 98 out of 180. But over the past couple of years India’s inflation rate is so out of whack that its ranking has fallen to 151. No nation has ever managed to sustain rapid growth for several decades in the face of high inflation. It is no coincidence that India is increasingly an outlier on the fiscal front as well with the combined central and state government deficits now running four times higher than the emerging market average of 2%.” (You can read the complete column here).
So to get economic growth back on track India has to control inflation. The Reserve Bank of India (RBI) has been trying to control inflation by keeping the repo rate, or the rate at which it lends to banks, at a high level. One school of thought is that once the RBI starts cutting the repo rate, interest rates will fall and economic growth will bounce back.
That is specious argument at best. Interest rates are not high because RBI has been keeping the repo rate high. The repo rate at best acts as an indicator. Even if the RBI were to cut the repo rate the question is will it translate into interest rate on loans being cut by banks? I don’t see that happening unless the government clamps down on its borrowing. And that will only happen if it’s able to control the subsidies.
The fiscal deficit for the current financial year 2012-2013 has been estimated at Rs Rs Rs 5,13,590 crore. I wouldn’t be surprised if the number even touches Rs 600,000 crore. The oil subsidy for the year was set at Rs 43,580 crore. This has already been exhausted. Oil prices are on their way up and brent crude as I write this is around $115 per barrel. The government continues to force the oil marketing companies to sell diesel, LPG and kerosene at a loss. The diesel subsidy is likely to continue given that with the bad monsoon farmers are now likely to use diesel generators to pump water to irrigate their fields. With food inflation remaining high the food subsidy is also likely to go up.
The heart of India’s problem is the huge fiscal deficit of the government and its inability to control it. As Sharma points out in Breakout Nations “It was easy enough for India to increase spending in the midst of a global boom, but the spending has continued to rise in the post-crisis period…If the government continues down this path India, may meet the same fate as Brazil in the late 1970s, when excessive government spending set off hyperinflation and crowded out private investment, ending the country’s economic boom.”
These details Manmohan Singh couldn’t have mentioned in his speech. But he tried to project a positive picture by talking about the planning commission laying down measures to ensure a 9% rate of growth. The one measure that the government needs to start with is to cut down the fiscal deficit. And the probability of that happening is as much as my writing having more readers than that of Chetan Bhagat. Hence India’s economic growth is at a level where it is meant to be irrespective for all the explanations that Manmohan Singh gave us and the hope he tried to project in his independence-day speech.
But then you can’t stop people from dreaming in broad daylight. Even Manmohan Singh! As the great Mirza Ghalib who had a couplet for almost every situation in life once said “hui muddat ke ghalib mar gaya par yaad aata hai wo har ek baat par kehna ke yun hota to kya hota?”
(The article originally appeared on www.firstpost.com on August 16,2012. http://www.firstpost.com/economy/of-9-economic-growth-and-manmohans-pipedreams-419371.html)
Vivek Kaul is a writer and can be reached at [email protected]
Will Ramdev succeed in politics? History isn’t on his side
Vivek Kaul
Some two and a half years back I had told an aunt of mine that Baba Ramdev was getting ready to enter politics. My aunt, who recently retired after nearly four decades of teaching in the Kendriya Vidyalaya system of schools, wouldn’t agree with me. “He just wants us to be healthy,” was her reply.
I had been following Baba Ramdev’s early morning yoga classes on television regularly for almost six months in a bid to control my ever expanding waistline. The aasanas that Baba showed over that period remained more or less the same. But the commentary that accompanied those aasanas had gradually become more and more political.
In that context, I am not surprised at Baba’s decision to take the Congress party led United Progressive Alliance (UPA) Government head on and ask his supporters not to vote for the Congress in the coming elections.
Baba Ramdev may not form his own party in the days to come. He may not even contest any elections but by asking people not to vote for the Congress he has more or less signaled his entry into politics.
So the question that arises now is that will he succeed at what he is trying to do or will he just be a flash in the pan and disappear from the limelight in a couple of years?
Babas and religious gurus have always been an essential part of the Indian political system. Dhirendra Bramhachari was known to be close to Indira Gandhi. Chandraswami was known to be close to PV Narsimha Rao.
Long time Gandhi family loyalist Arjun Singh was known to be close to the Mauni Baba of Ujjain. Mauni Baba even took credit for Arjun Singh surviving a massive heart attack in 1989.
As Rashid Kidwai writes in 24 Akbar Road – A Short History Behind the Fall and the Rise of the Congress “The doctors at Hamidia Hospital in Bhopal had almost given up on him( Arjun Singh) when a call from Rajiv Gandhi ensured a timely airlift to Delhi’s Escort Heart Institute. His spiritual guru, Mauni Baba of Ujjain, took credit for the miracle. The guru, who had taken a vow of silence, reached Delhi and shut himself off to conduct various yagnas for his health. As Union Communications Minister, Singh had given the guru two telephone connections. The act promoted a Hindi daily to run the headline, ‘Jab Baba bolte nahin, to do telephone kyun?’
Like Singh, the various politicians took care of their respective gurus. Indira Gandhi ensured that Dhirendra Bramhachari had a weekly show on Doordarshan to promote the benefits of yoga. Several politicians were known to be close to the Satya Sai Baba as well. His trust being a publically charitable trust did not pay any income tax.
So babas and religious gurus have always been close to Indian politicians and politics. They have been the backroom boys who have rarely come out in the open to take on the government of the day head on.
But there are always exceptions that prove the rule. One such person who did this rather successfully for a brief period was Sadhvi Rithambara. Her fiery speeches in the early 1990s were very fairly popular across the length and breadth of North India and Bihar. I remember listening to one of her banned tapes before the demolition of the Babri Masjid. It was full of expletives and exhorted the cause of a Ram Mandir being built at the site of the Babri Masjid in Ayodhya.
As Haima Deshpande writes in the latest edition of the Open “By the early 1990s, the Sadhvi was scandalising secular India with her rabble-rousing along a campaign trail to replace Ayodhya’s Babri Masjid with a Ram Mandir. At first, her anti-Muslim tirades were full of expletives, exhorting Hindus to reclaim what she said was rightfully theirs. After a brush with the law, she toned herself down, but her message was roughly the same. While the entry of Parsis to India was like sugar sweetening milk, she would say, that of Muslims was like lemon curdling the country (delivered with a certain inflexion in Hindi, that verb could sound rather crude).” The Sadhvi is now known as Didi Maa and runs a home for destitute women and abandoned children which was set up in 2002, Deshpande points out.
What these examples tell us is that Babas and religious gurus have never operated in the openly in the open sesame of Indian politics. And when they have they have not survived for a very long period of time.
At a broader level people who have been successful in other walks of life have rarely been able to transform themselves into career politicians. When these people have tried to enter politics they have either been unsuccessful or have retreated back very quickly.
Let’s take the case of Russi Modi, the man who once played the piano along with Albert Einstein, when the great physicist was playing the violin. Modi was the Chairman and Managing Director of the Jamshedpur based Tata Iron and Steel Company (TISCO, now known as Tata Steel). After retiring from TISCO, Modi fought the Lok Sabha elections from Jamshedpur and lost.
Amitabh Bachchan won the Lok Sabha elections from Allahabad in 1984 defeating H N Bahuguna. He resigned three years later. Dev Anand unsuccessfully tried to form a political party in the late 1980s. Rajesh Khanna and Dharmendra were also a one term Lok Sabha members. Hema Malini has achieved some success in politics but she is used more by the BJP to attract crowds rather than practice serious politics. The same stands true for Smriti Irani of the Kyunki Saas Bhi Kabhi Bahu Thi fame.
Deepika Chikalia, the actress who played the role of Sita in Ramanand Sagar’s Ramayana, was a one time member of Lok Sabha from Baroda. So was Nitish Bhardwaj who played Krishna in BR Chopra’s Mahabharat, from Jamshedpur.
The only state where film celebrities have successfully made it into politics and remained there is Tamil Nadu. Andhra Pradesh has the isolated example of NT Rama Rao who was successful at politics as well as being the biggest superstar of Telgu cinema. But more recently when the reigning superstar of Telgu cinema, Chiranjeevi, tried to follow NTR, he was unsuccessful. He had to finally merge his Praja Rajyam party rather ironically with the Congress.
Imran Khan Niazi, the biggest sports icon that our next door neighbour Pakistan ever produced formed the Tehreek-e-Insaf party in 1996. When Imran Khan started making speeches before the 1997 elections, his rallies got huge crowds. But the party failed to win a single seat in the election, despite the fact that Imran Khan contested from nine different seats. He lost in each one of them. But to Khan’s credit he still hasn’t given up.In India cricketers like Manoj Prabhakar and Chetan Sharma have unsuccessfully tried to contest elections.
The broader point is that people from other walks of life haven’t been able to successfully enter politics if we leave out the odd filmstar. There are several reasons for the same. Their expertise does not lie in politics and lies somewhere else, something Amitabh Bachchan found out very quickly. Politics also requires a lot of patience and money. This is something that everybody doesn’t have.
Also some of these successful people come with stories attached with them. Ramdev’s story was “practicing yoga can cure any disease”. Those who have seen his yoga DVDs will recall the line “Karte raho, cancer ka rog bhi theek hoga“. This story helped him build a huge yoga empire with an annual turnover of over Rs 1000 crore. The story was working well, until Ramdev decided to diversify, and enter politics.
As marketing guru Seth Godin writes in All Marketers Are Liars: “Great stories happen fast. They engage the consumer the moment the story clicks into place. First impressions are more powerful than we give them credit for.”
So Ramdev’s success now clearly depends on the perception that he is able to form in the minds of the people of this country. Will they continue to look at him as a yoga guru who is just dabbling in some politics? Or will they look at him as a serious politician whose views deserve to be heard and acted on? Also will Baba Ramdev want to continue investing time and energy in the hurly-burly world of politics? That time will tell.
But what about the all the people that Baba Ramdev has been able to attract, you might ask me? Crowds as Imran Khan found out are not always a reflection of whether an individual will be successful in politics. And history clearly is not on Ramdev’s side.
(The article originally appeared on www.firstpost.com on August 15,2012. http://www.firstpost.com/india/will-ramdev-succeed-in-politics-history-isnt-on-his-side-418952.html)
(Vivek Kaul is a writer and can be reached at [email protected] )
Why Chetan Bhagat sells, despite the mediocrity tag
Vivek Kaul
It was sometime in late 2005 or early 2006 my memory fails me, when I ran into Chetan Bhagat at the Crossword book store at Juhu in Mumbai. Those were the days when he was still an investment banker based out of Hong Kong. He was passing by the book store and had decided to drop in to check how his second book was selling.
One Night At the Call Centre had just come out and was number one on the bestsellers list. He hadn’t become a celebrity as he is now and people took some time to recognize him. He sat down and started signing books that fans brought to him.
I must confess that I was a fan of his writing back then and had loved reading Five Point Someone (On a totally different note I was even a fan of Himesh Reshammiya for a brief period). So I promptly bought his two books and got them autographed from him.
Bhagat’s first book Five Point Someone wasn’t a literary phenomenon but had broken all sales records. The story was set in IIT Delhi and had a certain charm to it. Bhagat must have borrowed a lot from his own life and that honesty reflected in the book.
But Bhagat had had a tough time finding a publisher for his first book. Bhagat had to do the rounds of several publishers before Rupa latched onto Five Point Someone. As one of the editors who had rejected his manuscript wrote in the Open magazine “He later went to a rival firm and became a publishing sensation overnight, and to this day, our boss complains bitterly that he missed out on the biggest bestseller of the decade because he went by the judgement of three Bengali women—a flawed demographic, if there ever was one!” (You can read the complete piece here).
In the CD that accompanied the manuscript of Five Point Someone Bhagat had also elaborated on a marketing plan. The M word did not go down well with the female Bengali editor and as she remarked in the Open “A marketing strategy that would ensure the book became an instant bestseller…If only he had written his manuscript with half the dedication he had put into his marketing plan! “
Hence, the so called “sophisticated” people at the biggest Indian publishing houses missed out on India’s bestselling English author primarily because his writing wasn’t literary enough. ,Bhagat eventually did find a publisher and the rest as they say is history.
The day I ran into Bhagat was a Sunday and I came back home and finished reading One Night At a Call Centre in a few hours. I found the book pretty boring and at the same time got a feeling that the author had decided to put together a quickie to cash in on the success of his first book. But then I was probably in a minority who thought that way. The book became an even bigger success than Five Point Someone. His next book was The Three Mistakes of My Life. I couldn’t read the book beyond the first twenty pages. His next two books, Two States and Revolution 2020, I haven’t attempted to read till date.
Very recently his sixth book and his first work of non-fiction What Young India Wants has come out. The book is essentially a collection of his newspaper columns. It is also an extension of his attempts over the last few years at building a more serious image for himself of someone who not only writes popular books but also understands the pulse and paradoxes of Young India.
As the Open magazine puts it “Years spent as a pariah in literary circles seem to have caught up with Chetan Bhagat, India’s largest-selling fiction writer. He’s excited that he’s moved on to some “meaningful” writing as well. “The charge against me is I’m too flippant,” he says. The author, who sees himself as a spokesperson for India’s youth, has just launched his latest book, What Young India Wants, a compilation of his essays on issues troubling the country, mainly corruption and discrimination based on caste and religion. He’s hoping that it will gain him some credibility as a writer.”
So what does Bhagat come up in his tour de force? Here are some samples.
On Pakistan:
“More than anything else, we want to teach Pakistan a lesson. We want to put them in their place. Bashing Pakistan is considered patriotic. It also makes for great politics.”
On Voting:
“We have to consider only one criterion—is he or she a good person?”
On Defence:
Money spent on bullets doesn’t give returns, money spent on better infrastructure does…In this technology-driven age, do you really think America doesn’t have the information or capability to launch an attack against India? But they don’t want to attack us. They have much to gain from our potential market for American products and cheap outsourcing. Well let’s outsource some of our defence to them, make them feel secure and save money for us. Having a rich, strong friend rarely hurt anyone
On Women: (Rajyasree Sen hope you are reading this):
“There would be body odour, socks on the floor and nothing in the fridge to eat,” writes Bhagat on what would happen if women weren’t around.
On Self Promotion:
“I had for years wanted to create more awareness for a better India. Wasn’t now the time to do it with full gusto?”
The book like other Bhagat books presents a very simplistic vision of the world that we live in and is accompanied by some pretty ordinary writing. “What young India wants is meri naukri and meri chokri,” Bhagat said while promoting the book. Bhagat also comes up with some preposterous solutions like the one where he talks about outsourcing India’s defence needs to America. Really?
At the same time the book stinks of self promotion. In interviews that Bhagat has given after the book came out he continues to refer himself as destiny’s child.
Thus it’s not surprising that Bhagat has come in for a barrage of criticism for his overtly simplistic views and his unabashed attempts at promoting himself. “Bhagat is not a thinker. He is our great ‘unthinker’, as sure a representative of heedless ‘new India’ as the khadi-clad politician is of old India,” wrote Shougat Dasgupta in Tehalka. (You can read the complete piece here).
The criticism notwithstanding Bhagat’s books sell like hot cakes. “His publishers, Rupa & Co., are counting on it. Rupa, which has brought out all of Bhagat’s novels since Five Point Someone in 2004, says that 500,000 copies of an initial print run of 575,000 were sold to retailers in a day, and booksellers have already begun to place repeat orders,” reports the Mint.
Given that there must be something right about them. The answer lies in the fact that the mass market is not intellectual. It’s mediocre. It would rather prefer the movies of Salman Khan than an Anurag Kashyap. It would rather go and watch a mindless Rowdy Rathore rather than a Gangs of Wasseypur, which demands attention from the viewer. It would rather watch a Kyunki Saans Bhi Kabhi Bahu Thi than the History channel.
The mass market likes stuff which is not too heavy. Chetan Bhagat fulfills that need. There has always been space for the kind of mindless and simple stuff that Bhagat writes. How else do you explain the success of the Mills & Boons series? Also in a country like India where people are just about starting to learn English, it’s easier for them to understand a Chetan Bhagat than a Salman Rushdie or even a much easier Jeffrey Archer for that matter.
Bhagat’s writing is thus initiating people into reading. And in that sense it’s a good thing. Let me give a personal example to elaborate on this. Recently I started listening to Hindustani Classical music, more than 25 years after I first started listening to music. My taste has evolved the years. I started with the trashy Hindi film music of the 1980s, moved onto the Hindi film music of the fifties and the sixties, then went into Ghazals (which had its own cycle. First Jagjit Singh, then came Ghulam Ali, then Mehdi Hasan and finally came the likes of Begum Akhtar) and so on. It took me almost 25 years to start listening to Hindustani classical music. Maybe I was slower than the usual. But the point is that nobody starts of listening to Hindustani classical music from day one. We have to go through our share of “crappy” music to arrive at that. If I hadn’t heard the crappy music of the 1980s, I wouldn’t be listening to Ustad Bismillah Khan today.
Similarly readers who start reading books with Chetan Bhagat are likely to move onto much better stuff over the years. In that sense Bhagat’s writing is a necessary evil. The entire market for Indian writing in English has expanded since Chetan Bhagat started writing. Before that Indian writing in English did not appeal to the average Indian. Now it does.
It would also help them reach a stage of understanding where they will be able to understand the following paragraph written by Shougat Dasgupta in Tehelka.
“Bhagat is adept at this sort of corporate speak, bland pabulum that appears to be reasonable, but is buzzword piled upon truism piled upon platitude, a tower built on the soft, tremulous sands of cliché. A Bhagat column makes a house of cards seem as substantial as the pyramid at Giza.”
(The article originally appeared on www.firstpost.com on August 14,2012. http://www.firstpost.com/india/why-chetan-bhagat-sells-despite-the-mediocrity-tag-417177.html)
(Vivek Kaul is a writer and can be reached at [email protected])