Thought for the day
” When you have got an elephant by the hind legs and he is trying
to run away, it's best to let him run. "
-
Abraham Lincoln (American, 1809-1865)
Word for the day
Rusticate (v)
To go to the country
(Source:
Dictionary.com)
Teaser for the day
Is Modi relying too much on Japan? or Vice versa is also
true?
No free rides
Yesterday I called 50people randomly selected from my phone book
to ask "what if Google, Facebook, Wikipedia, WhatsApp, and Yahoo are not
available from tomorrow morning?". The reactions were unusually but expectedly
uniform. I could imagine that all of them had expression "are you
mad?" and "Do ya even realize what're you talkin' 'bout?"
Not surprised, I followed this up with a supplementary
"what is all these service providers start charging for their services?"
Now the silence was deafening. The unease was palpable.
No one could deny the critical role these services play in our
day to day life. The utility is unquestionable. But we are accustomed to enjoy
these services for free. We have never planned paying for these.
I am sure that if I have to directly pay for these services, I
will cut down the usage by at least 75%. The sense I got from the people I
called, most of them will be very discrete in using these services.
I believe that this "for free" attitude of ours has
introduced serious problems in Indian economy. Not only consumers, but
investors and industrialist are also often seen on the lookout for freebies.
We all appreciate that serious economic inefficiencies have
crept in the system due to schemes like tax Free zones, free food, free
electricity, free water, free air, free mines, free tickets/passes, interest
free, etc. These schemes invariably lead to misallocation of capital, regional
imbalances, lower productivity, misuse, wastage, leakages and various forms of
corruption.
The classic example is sudden rise in markets value of a company
which announces a bonus issue of shares. Theoretically, a bonus issue causes no
change in the intrinsic value of a company. In fact post bonus issue the
company has enlarged equity base to service, which in some cases could be
disadvantageous to shareholders.
The PPP model of infrastructure development in India also
appears to be an outcome of this "For Free" seeking mindset. The
projects are often undertaken under the model with 5:95 equity to debt ratio.
It is popularly believed that some promoters even avoid putting 5% equity using
scrupulous methods. In case project is successful, they make lot of money.
However, if the project fails, the loss is absorbed by the lenders (mostly
public sector banks) and tax payers.
I understand the Prime Minister call for reform of this
"For Free" mindset, has disrupted peace in many corporate board
rooms.
The independence day exhort of PM to shed "what's for me in
this?", "cleanup the filth around you", "focus on quality
and sustainability of your business", "make positive contribution to
society" clearly shows the intent.
But "Good Days" will come only when and if we are ready for that.
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