Tuesday, April 21, 2015

Are we ready for Gen Y?

Thought for the day

"Only put off until tomorrow what you are willing to die having left undone."

-          Pablo Picasso (Spanish, 1881-1973)

Word for the day

Brio (n)

Vigor, Vivacity

(Source: Dictionary.com)

Malice towards none

In the national interest, the PM should start each day by publically apologizing to all aggrieved by sundry comments, remarks, tweets, writings etc. of all members of BJP, NDA allies and other friendly organizations.

Are we ready for Gen Y?

Historically, the Indian entrepreneurs have been constricted by the culturally strong agriculture mindset. The hard working and intelligent people missed the entire industrial revolution as a consequence. To some extent the colonial rule could be held responsible. But largely it was the mindset that was responsible.
Most entrepreneurs did not think long term, hence did not invested much in R&D activities. They would rather import technology and pay royalty for it.
Furthermore, most entrepreneurs were easily satiated. Complacency would easily meander through their enterprise. A few which had travelled, worked or studied abroad did only think big.
The governments also preferred less consumption over more production. You needed to pay annual license fee for owning a radio set and bi-cycle. Long queues for cement, sugar, scooters, telephone, cars, kerosene, diesel, passport, were order of the day and not much protested about.
The generation post Maruti 800 is not so constricted by this mindset. And particularly those born post 1991 have not seen experienced these queues. These people were born with color TV beaming many channels through satellite in their homes.
This post 1991 generation is now coming out of business schools. These young men are global in their vision, hungry in their stomach, and have resources to take risk. They do not stutter while talking about billion dollar. Their role models are likes of Jeff Bezos, Steve Job, Larry Page and Mark Zukerberg.
Anyone could see the change not only through Flipkart and Snapdeal, but through traditional businesses like Haldiram.
These are the people who will define the economic history of India in 21 century.
The question is whether our systems are ready to support these young entrepreneurs.
Capital markets are not yet ready
The primary function of the capital market is to provide an organized platform to entrepreneurs who have business ideas and want capital to fund the execution of their business ideas.
The secondary market for securities through which various entrepreneurs have raised money in past (popularly known as stock market) is an essential part of the capital market. It is this part that helps in discovery of current price of the issued securities and also seeks to facilitate trade in such securities.
Price discovery and liquidity are thus two primary functions of stock markets. These two functions usually supplement each other. Adequate liquidity is pre-requisite for an efficient price discovery. A fair price discovery mechanism on the other hand augments the liquidity through a wider and deeper participation.
An investor in corporate securities therefore needs to bother about two things:
(a)   Whether the entrepreneur in whose business the investors is investing is his money, has a viable business idea, is competent enough to profitably execute that business idea and economic environment is supportive to him.
(b)   Whether he will be able to liquidate the investments so made at a fair price, whenever desired, subject to any statutory lock-in restrictions.
Since 1991, the market regulator and government have played no role in pricing of the transaction between the issuer and investors. Despite an overwhelming number of issuer failing in achieving their business goals as stated in the offer documents, or even changing their goals altogether, the regulators have refrained from imposing any restrictions on pricing of public offer of securities. Caveat emptor is the rule followed in latter and spirit.
However, same is the not the case with secondary market operations. (a) Except for prescribing a minimum "25% public holding" norm, there is no market mechanism to ensure adequate liquidity for the publically traded securities; and (b) There are restrictions in fair price discovery in form of daily circuit limits.
Consequently, the stock market in India lacks depth and breadth. The skew in the traded volume at stock exchanges is worrying. Even at current elevated level of market activity, top 100 stocks account for over 75% volume at NSE. More than 50% of the listed securities do not trade on daily basis.
In an admittance of failure to control market manipulation and malpractices of "operator-promoter" combine, daily movement limits ranging from 2-20% are imposed on all stocks not traded in derivative segment.
Politicians are not yet ready
The Aam Aadmi Party (AAP) is reflection of this change. It has successfully demonstrated that the 1990's generation could defeat the traditional politician comprehensibly. Given the opportunity these people will show that they could assimilate the modern milieu much better and manage the affairs of the state accordingly. (It is pertinent to clarify that the author sincerely believes that Arvind Kejriwal is constricting the growth of the idea of AAP to service his personal ego and aspirations.)
Whereas the traditional politicians are refusing to even acknowledge the change. They are still stuck in medieval history and skeptical of anything foreign.
·         The debate over FDI is marred by this mindset.
·         The whole debate over secularism vs. communalism emanates from it.
·         The whole debate over gender equality, women security, social justice, and racism germinates in this mindset.
Feudal Giriraj Singh is pulling the maverick Modi back.
Feudal Digvijay SIngh will not let Rahul Gandhi set himself free.
Feudal Mulayam and his brother are constricting Akhilesh.
Trivia
Considering the communist leanings of Neta Ji, BJP's emotions for him raise doubts.
Is it a case of enemy's enemy my friend; or
It is just "let's try we have nothing to lose"!
The indications so far are that it is going to be hell of a mudslinging match that will leave all red faced in the end.
 
 

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