Month: December 2015

All Things Considered, The Mumbai-Ahmedabad Bullet Train Is Still A Good Idea

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This column is essentially a follow up to the column titled In Defence Of The Mumbai-Ahmedabad Bullet Train which was published a few days back. In this column I will try and answer some questions that were asked by readers in response to the previous column.

One feedback that came through very strongly was that the Modi government has got its priorities all wrong and the bullet train is essentially a show-off project. This was very well summarised in a tweet in which I was asked whether I had ever tried taking a local train at the Parel station (one of the local train stations in Mumbai on the central line) in the evening? The short answer is yes, I have boarded local trains at Parel in the evening and at various other stations in Mumbai. And it’s a pain.

The point that the reader was trying to make was that taking the local train in Mumbai in the evenings (and the mornings) is very difficult. The trains are usually all packed and there is very little space to even stand properly. There are many more people packed into the compartments than these compartments are built to take in.

In fact, today’s edition of the Mumbai Mirror newspaper reports that ventilators on 80% of the trains don’t work. As the newspaper reports: “Over 400 commuters have died of heart attacks and other complications this year, triggered in most cases by suffocation. A majority of these deaths took place during peak hours.”

Long story short—forget standing properly, you can’t even breathe properly while traveling on a Mumbai local. Given this scenario, why are we interested in starting a bullet train between Mumbai and Ahmedabad? Why not use that money to try and improve the condition of the local trains in Mumbai? Has the government got its priorities all wrong?

This is a fair question. Nevertheless, it needs to be understood that we are not in an either-or kind of situation here. Most of the money to build the bullet train system between Mumbai and Ahmedabad is not coming from the current revenues of the Indian government or the Indian Railways for that matter. This means that the money is not being taken away from something else that the government could have done with that money.

This, further means that the money that will be used for the bullet train between Mumbai and Ahmedabad could not have been used to improve the local train system in Mumbai. It could not have been used for increasing the education, health, environment and road and highways budget of the government as well. It was available only for the bullet train.

So where is the money to build the bullet train going to come from? This money is being lent by the Japanese government at a highly concessional interest rate of 0.1% per year to be repaid over a period of 65 years (Yes, you read that right).

Why is the Japanese government lending this money at close to 0% interest? They are lending this money so that the Japanese Shinkansen Technology is adopted for the bullet train project. This is in the interest of the Japanese business which is currently going through a tough time. So the Japanese government is lending money to the Indian government to buy stuff from Japan. This money is not available for anything else.

Further, as the press release announcing the bullet train said: “Japan has offered an assistance of over Rs 79,000 crore for the project. The loan is for a period of 50 years with a moratorium of 15 years, at an interest rate of 0.1 per cent. The project is a 508 kilometer railway line costing a total of Rs. 97,636 crore, to be implemented in a period of seven years.”

So 80% of the money to build the bullet train line is coming from Japan. This loan comes with an interest rate of 0.1%, which more or less means that this is an interest free loan. It is to be repaid effectively over a period of 65 years. The loan comes with a moratorium of 15 years, which means that the repayment does not have to start immediately. It will start in 15 years time and will be repaid over a period of 50 years after that.

Given the long repayment period of the loan, the impact of inflation on the “real” value of the loan needs to be taken into account? As an editorial published in the Business Standard newspaper today (December 16, 2015) points out: “India’s average wholesale price inflation in the four decades between 1970 and 2010 has hovered at 7.6 per cent and consumer price inflation in that period has been estimated at an average of over eight per cent.”

At an inflation of 8% per year, by the time the loan repayment starts fifteen years down the line, the “real” value of the Rs 79,000 crore loan, in today’s money, would be around Rs 24,900 crore. At 5% inflation it would be Rs 38,000 crore. The broader point is that by the time the loan repayment will start the real value of the loan will be considerably lower.

This calculation does not take into account the fact that the loan will most likely be in Japanese yen. It does not take the currency risk into account. Currency risk is important because if the rupee depreciates against the yen, then the Indian government will need more rupees to buy the yen that it will need to repay the loan.

This was another feedback that I got in response to the last column. I was told that I did not take currency risk into account while putting forward my analysis. I did not do that because over a long period of time (65 years in this case), I think it won’t really matter.

In October 1996, one yen was worth 0.4 rupees (or 40 India paisa). Currently one yen is worth 0.55 rupees (or 55 Indian paisa). Since 1996, the worst situation came in August 2013(when rupee was rapidly losing value against the dollar as well) when one yen was worth around 0.69 rupees (or 69 paisa). Over the last twenty years, the general trend has been of the rupee depreciating against the yen except in the late 1990s when the rupee appreciated against the yen.

There have been periods of volatility where the rupee has rapidly depreciated against the yen, but over a two-decade period, the depreciation has happened at a very slow rate. Given this, even if the rupee were to continue to depreciate against the yen, it won’t really matter over a period of 65 years, especially once we take inflation and economic growth into account. The size of the loan by the time the Indian government starts repaying it, will be significantly smaller in comparison to the size of the economy as measured by the gross domestic product.

Another question asked by readers was that why is the train being started between Mumbai and Ahmedabad, which already has good connectivity? Given the nature of the project the train has to be run between Delhi and some place or Mumbai and some place (or Bangalore and Chennai). That is where the initial market of people likely to use the bullet train is, given that these cities have the highest number of air-travellers.

And given that among all India cities, Delhi tends to get the most money when it comes to building physical infrastructure, linking Mumbai with Ahmedabad makes immense sense. In fact, if the government has plans of a second bullet train, it needs to be between Bangalore and Chennai.

As far as the financing of the bullet train project is concerned, I don’t see any problems. The major problems will come in the implementation part. Getting the land required to build the track at a reasonable price and ensuring that the tickets are priced at a level, where the entire thing is viable and doesn’t just become a show-off project. That is where the real challenge is.

(Vivek Kaul is the author of the Easy Money trilogy. He can be reached at [email protected])

The column originally appeared on Huff Post India on December 16, 2015

Shale vs crude: Why oil prices are on a free fall even as Opec members suffer

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The latest price of the Indian basket for crude oil was at $35.72 per barrel. It has fallen by 16% over the last one month and by 33% since end December 2014.
Yesterday, the Brent crude oil was selling at $37-38 per barrel. Lower quality oil is selling at even below $30 per barrel. As Amrbose Evans-Prtichard writes in The Telegraph: “Basra heavy crude from Iraq is quoted at $26 in Asia, and poor grades from Western Canada fetch as little as $22. Iran’s high-sulphur Foroozan is selling at $31.”

What has led such low levels of oil price? Over the last one year, the Organization of the Petroleum Exporting Countries(OPEC), an oil cartel of some of the biggest oil producing countries in the world, has been flooding the market with oil in order to make the shale oil being pumped in the United States, unviable. Pumping shale oil is an expensive process and is not viable at lower oil price levels.

In fact, the oil ministers of the OPEC countries met in early December and they pretty much decided to continue doing things the way they have been up until now, over the last one year. In the past, any likely slowdown in oil prices was met with oil production cuts within the OPEC. That hasn’t happened over the last one year and isn’t happening now either.

As the International Energy Agency(IEA) points out in its monthly oil report for December 2015: “OPEC’s decision to scrap its official production ceiling and keep the taps open is a de facto acknowledgment of current oil market reality. The exporter group has effectively been pumping at will since Saudi Arabia convinced fellow members a year ago to refrain from supply cuts and defend market share against a relentless rise in non-OPEC supply.”

The rise in the supply of non-OPEC oil has primarily happened on account shale oil being pumped in the United States and to some extent in Canada, over the last few years. In order to make companies pumping shale oil unviable, OPEC has been relentlessly pumping oil. As the IEA monthly report points out: “OPEC supply since June has been running at an average 31.7 million barrels per day, with Saudi Arabia and Iraq – the group’s largest producers – pumping at or near record rates. Riyadh has held supply above 10 million barrels per day since March to satisfy demand at home and abroad while Iraq, including the Kurdistan Regional Government (KRG), is doing its level best to keep production above the 4 million barrels per day mark first breached in June.”

Also, as oil prices have fallen, OPEC and non-OPEC oil producing countries have had to pump more and more oil, in order to ensure that their governments have some money going around to spend. As the Russian finance Anton Siluanov told Ambrose. “There is no defined policy by the OPEC countries: it is everyone for himself, all trying to recapture markets, and it leads to the dumping that is going on.”

Further, sanctions against Iran are likely to be lifted early next year and more oil will then hit the international oil market. The Financial Times quotes an oil trader as saying: “It seems the Iranians are fulfilling the requirements for the lifting of sanctions faster than expected.” said one London-based oil trader.

The IEA monthly report expects the extra oil from Iran to add 300 million barrels to the already swelling oil inventories. In fact, the November 2015 oil report of the IEA had put the total global stockpiles of oil at 3 billion barrels.

So how long will this last? Given the number of factors that impact the price of oil, predicting which way it will head, has always been tricky business.  As Philip Tetlock and Dan Gardner write in Superforecasting—The Art and Science of Prediction: “Take the price of oil, long a graveyard topic for forecasting reputations. The number of factors that can drive the price up or down is huge—from frackers in the United States to jihadists in Libya to battery designers in Silicon Valley—and the number of factors that can influence those factors is even bigger.”

Nevertheless, it seems that one year down the line the Saudi strategy of driving down the price of oil, in order to drive down non-OPEC oil production seems to be working. As the IEA oil report points out: “There is evidence the Saudi-led strategy is starting to work. Lower prices are clearly taking a toll on non-OPEC supply, with annual growth shrinking below 0.3 million barrels per day in November from 2.2 million barrels per day at the start of the year. A 0.6 million barrels per day decline is expected in 2016, as US light tight oil – the driver of non-OPEC growth – shifts into contraction.”

Also, it is worth pointing out here that oil exporting countries are having a tough time balancing their budgets. The fiscal deficit of Saudi Arabia has touched 20% of its gross domestic product (GDP). Fiscal deficit is the difference between what a government spends and what it earns. As Evans-Pritchard puts it: “Opec revenues have collapsed from $1.2 trillion a year in 2012 to nearer $400 billion next year.”

Hence, it is safe to say that the OPEC strategy of driving down the price of oil is hurting the member countries. Given this, the price of oil cannot be at such low levels for much long. But at least in the short run, the oil price will continue to stay low.

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)

The column originally appeared on Firstpost on December 15, 2015

Why The Rupee Is Falling Despite The Oil Price Collapse

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As I write this one dollar is worth around Rs 67.1. The last time the rupee went so low against the dollar was sometime in late August 2013. Is this a reason to worry?

In August 2013, the oil prices were at a really high level. The price of the Indian basket of crude oil on August 23, 2013, had stood at $109.16 per barrel. As on December 14, 2015, the price of the Indian basket stood at $34.39 per barrel, down by 68.5% since then.

One of the reasons for the fall of the rupee back then was the high oil price. India imports 80% of the oil that it consumes. Oil is bought and sold internationally in dollars. When Indian oil marketing companies buy oil they pay in dollars. This pushes up the demand for dollars and drives down the value of the rupee against the dollar. This happened between May and August 2013, as the price of oil shot up by close to 11%.

Further, those were the days of high inflation. The consumer price inflation in August 2013 had stood at 9.52%. In order to hedge against this high inflation people had been buying gold. India produces very little gold of its own.

In 2013-2014(April 2013 to March 2014) India produced 1411 kgs of gold. In contrast, the country imported 825 tonnes of gold during 2013. Gold, like oil, is bought and sold internationally in dollars. When Indian importers buy gold, like is the case with oil, it pushes up the demand for dollars and in the process drives down the value of the rupee. This phenomenon also played out in 2013.

Hence, the high price of oil and the demand for gold, drove down the value of the rupee against the dollar, between late May 2013 and late August 2013. But these reasons are not valid anymore. The price of the Indian basket of crude oil is less than $35 per barrel. And the demand for gold is subdued at best.

So what exactly is driving down the value of the rupee against the dollar? In order to understand this, we need to go back to the period between May 2013 and August 2013. While gold and oil played a part in driving down the value of the rupee against the dollar, there was a third factor at work as well. And this was the major factor.

In the aftermath of the financial crisis which started in the September 2008, when the investment bank Lehman Brothers went bust, Western central banks led by the Federal Reserve of the United States, cut their interest rates to close to zero percent. Ben Bernanke, the then Chairman of the Federal Reserve of the United States, was instrumental in this.

The idea was that at low interest rates people will borrow and spend more, and economic growth would return in the process. While that happened, what also happened was that financial institutions borrowed money at low interest rates and invested it in financial markets all over the world.

In May 2013 just a few months before his term as the Chairman of the Fed was coming to an end Bernanke hinted that the “easy money” policy being followed by the Federal Reserve could come to an end. This meant that interest rates would go up in the months to come.

If the interest rates went up, the financial institutions would have had to pay a higher rate of interest on their borrowings. This would mean that the trade of borrowing at low interest rates in the United States and investing across the world, wouldn’t be as profitable as it was in the past.

This led  foreign financial institutions to start selling out of financial markets around the world including India. Between June and August 2013, the foreign institutional investors sold stocks and bonds worth Rs 75,291 crore in the Indian stock market as well as debt market.

They were paid in rupees when they sold their investments in stocks as well as bonds. They had to convert these rupees into dollars. In order to do that they had to sell rupees and buy dollars. When they did that, the demand for the dollar went up. In the process the value of the rupee against the dollar crashed. One dollar was worth around Rs 55 in middle of May 2013. By late August it had almost touched Rs 69.

In the end the Federal Reserve did not raise interest rates, the Reserve Bank of India got its act together and the value of the rupee against the dollar stabilised in the range of Rs 58-62 to a dollar.

What did not happen in May 2013 is likely to happen on December 16, 2015 i.e. tomorrow. It is likely that Janet Yellen, the current Chairperson of the Federal Reserve, will raise interest rates. This means that the financial institutions which have borrowed in the United States and have invested across the world, would have to pay a higher rate of interest on their borrowings. This may make their trades unviable.

Also, financial markets do not wait for central banks to make decisions. They try and guess which way the decision will go and make their investment decisions accordingly. It is now widely expected that the Fed will raise interest rates tomorrow. Given that, the foreign financial investors have been selling out of the Indian financial markets since November. Between November and now, the foreign institutional investors have sold stocks and bonds worth Rs 15,035 crore. In the process of converting this money into dollars, the value of the rupee has been driven down against the dollar.

At the beginning of November, one dollar was worth around Rs 65, now it is worth more than Rs 67. Also, as the rupee loses value, the foreign institutional investors lose money. Let’s say an investment is worth Rs 65 crore. If one dollar is worth Rs 65, then this investment is worth $10 million. If one dollar is worth Rs 67, then this investment is worth only $9.7 million. In order to prevent such losses, bonds investors are selling out of Indian stocks and bonds. And this is pushing down the value of the rupee. So after a point, the rupee loses value because the rupee loses value.

The trouble is that Indian politicians have turned the value of the rupee against the dollar into a prestige issue. But what is worth remembering here is that we live in a word where things are connected and given that the value of a currency is bound to fluctuate. Sometimes the fluctuation will be higher than usual. But that doesn’t mean that things are going wrong.

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)

The column originally appeared on Huffington Post India on December 15, 2015

Yellen led Federal Reserve will raise interest rates, but very gradually

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Up until now every time the Federal Open Market Committee has had a meeting, I have maintained that Janet Yellen, the Chairperson of the Federal Reserve of the United States, will not raise interest rates. The latest meeting of the FOMC is currently on (December 15-16, 2015) and I feel that in all probability Janet Yellen and the FOMC will raise the federal funds rate at the end of this meeting.

The federal funds rate is the interest rate at which one bank lends funds maintained at the Federal Reserve to another bank on an overnight basis. It acts as a sort of a benchmark for the interest rates that banks charge on their short and medium term loans.

So why do I think that the Yellen led FOMC will raise the interest rate now? Two major economic indicators that the FOMC looks at are unemployment and inflation. Price stability and maximum employment is the dual mandate of the Federal Reserve.

There are various ways in which the bureau of labour standards in the United States measures unemployment. This ranges from U1 to U6. The official rate of unemployment is U3, which is the proportion of the civilian labour force that is unemployed but actively seeking employment.
U6 is the broadest definition of unemployment and includes work­ers who want to work full-time but are working part-time because there are no full-time jobs available. It also includes “discouraged workers,” or people who have stopped looking for work because the economic conditions the way they are make them believe that no work is available for them.

U6 touched a high of 17.2 percent in October 2009, when U3, which is the official unemployment rate, was at 10 percent. Nevertheless, things have improved since then. In October and November 2015, the U3 rate of unemployment stood at 5% of the civilian labour force. The U6 rate of unemployment stood at 9.8% and 9.9% respectively. This is a good improvement since October 2009, six years earlier.

In fact, the gap between U3 and the U6 rate of unemployment has narrowed down considerably. As John Mauldin writes in a research note titled Crime in the Job Report with respect to the unemployment figures of October 2015: “The gap between the two measures [i.e. U3 and U6] is now the smallest in more than seven years, a sign that slack in the labour market is diminishing. And as the Fed weighs a potential rate hike, what may be more important is the number of people working part-time who would prefer to work full-time – that number posted its biggest two-month decline since 1994. Janet Yellen has referred to this number as often as she has to any other specific number. It is on her radar screen.”

In fact, Janet Yellen seems to be feeling reasonably comfortable about the employment numbers. As she said in a speech dated December 2, 2015: “The unemployment rate, which peaked at 10 percent in October 2009, declined to 5 percent in October of this year…The economy has created about 13 million jobs since the low point for employment in early 2010.”

Another indicator that has improved is the number of people who want to work full time but can’t because there are no jobs going around. As Yellen said: “Another margin of labour market slack not reflected in the unemployment rate consists of individuals who report that they are working part time but would prefer a full-time job and cannot find one–those classified as “part time for economic reasons.” The share of such workers jumped from 3 percent of total employment prior to the Great Recession to around 6-1/2 percent by 2010. Since then, however, the share of these part time workers has fallen considerably and now is less than 4 percent of those employed.”

On the flip side what most economists and analysts don’t like to talk about is the fact that the labour force participation rate in the United States has fallen. In November 2015 it stood at 62.5%, against 62.9% a year earlier. It had stood at 66% in September 2008, when the financial crisis started.
Labour force participation rate is essentially the proportion of population which is economically active. A drop in the rate essentially means that over the years Americans have simply dropped out of the workforce having not been able to find a job. Hence, they are not measured in total number of unemployed people and the unemployment numbers improve to that extent.

This negative data point notwithstanding things are looking up a bit. With the U3 unemployment rate down to 5% and U6 down to less than 10%, companies, “in order to entice additional workers, businesses may have to think about paying more money,” writes Mauldin.

And this means wage inflation or the rate at which wages rise, is likely to go up in the days to come. The wage inflation will push up general inflation as well as buoyed by an increase in salaries people are likely buy more goods and services, push up demand and thus push up prices. At least that is how it should play out theoretically.

As Yellen said in a speech earlier this month: “Less progress has been made on the second leg of our dual mandate–price stability–as inflation continues to run below the FOMC’s longer-run objective of 2 percent. Overall consumer price inflation–as measured by the change in the price index for personal consumption expenditures–was only 1/4 percent over the 12 months ending in October.”

But a major reason for low inflation has been a rapid fall in the price of oil over the last one year. How does the inflation number look minus food and energy prices? As Yellen said: “Because food and energy prices are volatile, it is often helpful to look at inflation excluding those two categories–known as core inflation…But core inflation–which ran at 1-1/4 percent over the 12 months ending in October–is also well below our 2 percent objective, partly reflecting the appreciation of the U.S. dollar. The stronger dollar has pushed down the prices of imported goods, placing temporary downward pressure on core inflation.”

In fact, the fall in the price of oil has also brought down the fuel and energy costs of businesses. This has led to a fall in the prices of non-energy items as well. “Taking account of these effects, which may be holding down core inflation by around 1/4 to 1/2 percentage point, it appears that the underlying rate of inflation in the United States has been running in the vicinity of 1-1/2 to 1-3/4 percent,” said Yellen.

In fact, a careful reading of the speech that Yellen made on December 2, clearly tells us that she was setting the ground for raising the federal funds rate when the FOMC met later in the month.

On December 3, 2015, Yellen made a testimony to the Joint Economic Committee of the US Congress. In this testimony she exactly repeated something that she had said a day earlier in the speech. As she said: “That initial rate increase would reflect the Committee’s judgment, based on a range of indicators, that the economy would continue to grow at a pace sufficient to generate further labour market improvement and a return of inflation to 2 percent, even after the reduction in policy accommodation. As I have already noted, I currently judge that U.S. economic growth is likely to be sufficient over the next year or two to result in further improvement in the labour market. Ongoing gains in the labour market, coupled with my judgment that longer-term inflation expectations remain reasonably well anchored, serve to bolster my confidence in a return of inflation to 2 percent as the disinflationary effects of declines in energy and import prices wane.”

This is the closest that a Federal Reserve Chairperson or for that matter any central governor, can come to saying that he or she is ready to raise interest rates. My bet is that the Yellen led FOMC will raise rates at the end of the meeting which is currently on.

Nevertheless, this increase in the federal funds rate will be sugar coated and Yellen is likely to make it very clear that the rate will be raised at a very slow pace. This is primarily because the American economy is still not out of the woods.

The economic recovery remains fragile and heavily dependent on low interest rates. Net exports (exports minus imports) remain weak due to a stronger dollar. Yellen feels that this has subtracted nearly half a percentage point from growth this year.

In this environment economic growth in the United States will be heavily dependent on consumer spending, which in turn will depend on how low interest rates continue to remain. As Yellen said in her recent speech: “Household spending growth has been particularly solid in 2015, with purchases of new motor vehicles especially strong….Increases in home values and stock market prices in recent years, along with reductions in debt, have pushed up the net worth of households, which also supports consumer spending. Finally, interest rates for borrowers remain low, due in part to the FOMC’s accommodative monetary policy, and these low rates appear to have been especially relevant for consumers considering the purchase of durable good.”

This again is a clear indication of the fact that the federal funds rate in particular and interest rates in general will continue to remain low in the years to come.

As Yellen had said in a speech she made in March earlier this year: “However, if conditions do evolve in the manner that most of my FOMC colleagues and I anticipate, I would expect the level of the federal funds rate to be normalized only gradually, reflecting the gradual diminution of headwinds from the financial crisis.”

I expect her to make a statement along similar lines either as a part of the FOMC statement or in the press conference that follows or both.

(The column originally appeared on The Daily Reckoning on December 16, 2015)

Nothing Succeeds like Success

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The headline for this column is pretty clichéd. But as you read along, dear reader, you will realise, why sometimes clichéd headlines work the best. This is also a sort of an extension to the column I wrote last week (The Halo Effect of Amit Shah, December 9, 2015).

During the course of last week I finished reading Ram Gopal Varma’s very interesting book Guns and Thighs—The Story of My Life. The book is clearly not an all-encompassing autobiography, but it does talk about Varma’s life as a film maker in bits and parts. And that is what makes it interesting.
Varma talks about how he sees success in great detail. This to me was the most interesting part of the book. And I learned more about success by reading Varma’s book than all the management gyan I have accumulated over the years.

In the book Varma talks about success at multiple levels. One of the points he makes repeatedly is that it is very difficult to forecast success. And it is just easier to write off people by raising doubts about what they are doing. As Varma writes: “[The] first-time director Shankar was making a film called Gentleman, which was based on the subject of capitation fee. The entire south industry wrote it off before the release, saying that capitation fee was too limited a subject to be made into a commercial film.”

The movie was a huge success and it broke all records (On a slightly different note it also introduced the dancing prowess of Prabhu Deva to the nation). The film was remade in Hindi by Mahesh Bhatt with Chiranjeevi in the lead.

On the basis of the film’s success in Tamil it was predicted that the film would do well in Hindi as well. The film bombed and the unanimous feedback was that “capitation fee was too trivial a subject to be made into a commercial film”. The point being that people will always come up with an explanation for success or for failure, depending on how things ultimately turn out.

Varma gives another example of Satya, which was perhaps the best film he ever made (He personally vacillates between Satya and Company). Satya was a very realistic portrayal of the Mumbai underworld. It was the first time a filmmaker had done so and it inspired a series of similar films that were made in the years to come. In Satya gangsters looked like real gangsters and not like Hindi film caricatures of gangsters.

But doubts were raised before the movie was released. As Varma writes: “When a well-known filmmaker saw Satya before its release, he told me that the background music was too loud and melodramatic, and also that nobody would want to see beardy sweaty faces.”

After the film succeeded, the same film maker told Varma that the film’s background score ensured that it did not remain a niche or an art film and made it a universal success. He also said that the realistic faces in the movie were a nice change from the usual chocolaty faces that Bollywood dishes out. The explanation for the success of Satya was similar to the reasons the filmmaker thought it would fail.

Varma calls people trying to predict success and then failure (or vice-versa) as the inbetweenists. These inbetweenists keep changing their opinion according to the outcome. As Varma writes: “[The inbetweenists] have to have an opinion on everything as they don’t want to feel dumb and incapable of predicting success or failure, and two is that they don’t want to be caught on the wrong side of success if their predictions go wrong. So they always have a theory ready, if their predictions go wrong.”

Hence, when people succeed explanations for their success are readily offered. But if these reasons were so valid why aren’t they first offered to forecast success in the first place? As the old cliché goes: “nothing succeeds like success.”

(Vivek Kaul is the author of the Easy Money trilogy. He can be reached at [email protected])

The column originally appeared in the Bangalore Mirror  on December 16, 2015