Friday, October 30, 2015

Beleive what you see

"New markets could be created by rural potentials, which could lead to rise in the employment."
—A. P. J. Abdul Kalam (Indian, 1931-2015)
Word for the day
Sang-froid (n)
Coolness of mind; calmness; composure
(Source: Dictionary.com)
Malice towards none
Could IndiGo IPO do to the market what Reliance Power IPO did in 2008?
 First random thought this morning
Had a chance to meet to a secretary to the Government of Delhi. An average mind, was behaving like a big feudal lord. Treated his subordinate staff like pampered slaves. Had different assistants to hold his briefcase and drive his car. Had a traditional white towel at the back of his chair. When moving out, two people rushed in advance to call the lift and waited there for five minutes forcing the doors open with hands till this "gentleman" arrived.
I know this is a common description of the "Governments" in our country. The question is whether this "feudal attitude" is responsible for policies which are seemingly disconnected from majority of people, even though many law makers and administrators come from this very section of the population.

Beleive what you see

In recent past many experts have highlighted that the uncertainty and fear created by US Federal Reserve and its officials through their official and public utterances is causing more harm to the global markets than the eventual reversal of policy direction probably would.
Through its latest statement also, Fed has left the markets guessing. Giving people on both sides of the line some reasons to be excited, Fed admitted that "the pace of job gains slowed" but added that "the global economic jitters from the past three months are now well in the rear view mirror".
Specifically, the complete removal of the line that "recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term" and the addition that the fed is "monitoring global economic and financial developments", excited the market most.
What the Fed statement did not flagged adequately was the problem of secular stagnation in the industrial world despite aggressively loose monetary policies.
The vicious cycle in which slow growth in industrial countries is hurting emerging markets which have traditionally exported capital to the developed world and thereby slowing developed world's growth further. It has to be recognized and fully accepted that post 2008 the capacity of industrialized economies to bear another global shock has diminished materially.
The underestimation of the risks of a global recession when the rates are close to zero and public debts are at historic high levels, could leads to some nasty surprises. Remember, the potency of monetary policy in global context is poorest at this point in time with interest rates lowest and expected to remain that way almost permanently in Japan and Europe.
The scope for fiscal stimuli is also very limited in most of the industrialized and emerging world. With high public debt, moderating tax revenues, slowing income growth and adverse demography, the global economy is positioned precariously with virtually no margin for error.
In Indian context, the recent contest between FMCG majors and the research firm Nielsen is interesting. (see here) While the FMCG firms are confirming what I have been saying for past many months, Nielsen saw green shoots - casting doubts over veracity of data used by policymakers.
Nielsen data suggests the industry is experiencing a strong revival. It estimates that FMCG sales grew 11.8% in the 9M2015 compared to the 6.8% growth the industry experienced during the same months of 2014.
But CEOs of FMCG companies dismiss these estimates as faulty. The market researcher is overestimating growth and is not capturing price cuts accurately, they argue. "There are signs of improvement and the market is not supporting demand revival," said Sunil Duggal, CEO of Dabur.
"We are well into the festive season and two weeks away from Diwali, but there's no visible uptick in consumption. The outlook continues to look challenging," he added.
"Our sense is that demand revival is still a few quarters away," the chairman of another leading foods maker said. "Nielsen is over reporting growth."

Thursday, October 29, 2015

Bihar - 2015 elections may bring no change to the State

"In a democracy, the well-being, individuality and happiness of every citizen is important for the overall prosperity, peace and happiness of the nation."
—A. P. J. Abdul Kalam (Indian, 1931-2015)
Word for the day
Convive (n)
An eating or drinking companion; fellow diner or drinker.
(Source: Dictionary.com)
Malice towards none
In the eventuality of Grand Alliance victory in Bihar election, MISA Bharti might be Deputy Chief Minister.
The irony is that Ms. Bharti, whose name is a constant reminder of the atrocities perpetrated during emergency, will be sharing power with the Congress Party!
First random thought this morning
Small, rich and without any influence - the Marwari community in Bihar, which has traditionally controlled almost entire trade, industry (mostly food processing business comprising rice mills, oil mills and flour mills), healthcare and hospitality business in the state of Bihar, is a seriously worried lot.
Their traditional party of choice (BJP) is scaring them of Jungle Raaj, whereas the rival JDU/RJD are not assuring them a peaceful existence post elections. I wonder if someone has already booked one way ticket out of Bihar for 8th November!

Bihar - 2015 elections may bring no change to the State

Our team travelled to 27 (out of 38) districts of Bihar, covering all the nine divisions. During our 2week journey we spoke to over 4000 people in 460 villages and towns.
Our interaction with people was completely informal, extempore and unstructured. We discussed a whole lot of issues concerning their personal, community and economic life. Politics was surprisingly not one of the topics that people were eager to discuss; though everyone seems to have a strong political opinion. Despite all poverty, underdevelopment and pathetic civic conditions - people of the State have not given up on the politics.
The ongoing State assembly elections are tough to call. In the course of campaign NDA has lost the early advantage and appears to be losing further ground. After three rounds of elections, the advantage is with Nitish Kumar who is gaining at the expense of BJP. In our assessment, the grand alliance led by Nitish Kumar may comfortably retain power in the state.
The followings are some of our impressions about the ongoing elections in the State.
The campaign
Both the groups [NDA and the Grand Alliance (GA)] are running a completely different campaign.
We found GA having a distinct edge insofar as the effectiveness of the campaign is concerned.
NDA running an elitist campaign
The NDA campaign is technology & capital intensive, relies on blitzkrieg and lacks focus. The key issue of development is routinely diluted with references to regressive issue like caste, betrayal, religion etc.
The extremely poor population of the State is finding the campaign rather elitist and hence repulsive to some degree.
The blatant use of fear psychosis (Jungle Raaj) has also perhaps rubbed the Bihari pride the wrong way.
The communication line between the top to bottom is strictly one way. The strong army of booth level workers (mostly RSS volunteers) is disillusioned as the leadership appears failing in addressing local issues during the campaign. The middle and lower level local leadership, which is connected with voters, is mostly placed in the background at the public rallies and in posters.
NDA campaign appears unwittingly fallen into GA trap, inasmuch as it is mostly focused on misrule of RJD government during 1990-2005. Nitish Kumar who is ruling for past 10yrs and projected as the next Chief Minister by GA, is mostly accused of betrayal.
NDA is perhaps too overconfident about 41 seats which Congress is contesting as part of GA. The focus in these constituencies is also on Lalu Yadav and not the rival Congress Party.
GA's two tier strategy yielding good results
Unlike NDA campaign which is often getting confused about the issues, GA campaign is clear and focused.
Lalu Yadav's RJD is focusing on the traditional issues like caste polarization, secularism, personal attacks etc. Whereas Nitish Kumar is staunchly focused on the contemporary issues of governance, development, employment, and youth etc.
Nitish Kumar is also attacking hard on the (a) traditional Indian psychosis of supporting the challenger and the underdog; and (b) Bihari pride by highlighting the campaign control by "outsider" BJP National President Amit Shah.
Very smartly, Nitish Kumar has pushed the issue of anti incumbency backstage, by successfully projecting himself as a challenger rather than a defender. It is NDA which appears defending the policies of central government, views of fringe elements within BJP and the RSS.
RJD has also been partially successful in projecting Lalu Yadav as the king maker, who has sacrificed his dominant position to support a lesser mortal (Nitish Kumar) in the wider interest of the State and the country.
Issues
Both the principal groups have projected development and governance as the primary issues in this elections. The fringe groups are still appealing to the voters on caste and religious considerations.
However, the focus is often deflected by fringe and parochial issues.
On all such deflections, amongst NDA partners, BJP is left alone to defend their position. In many cases allies like LJP and HAM have even taken a stand indirectly critical of BJP.
Whereas in GA, the division of labor is clear. Lalu Yadav is addressing all the fringe issues, Congress is all out to attack PM Modi and Nitish Kumar is focused on core issues of governance.
Insofar as people are concerned, development is primary issue for a large majority. A section of upper caste feudal elements is though still focused on parochial issues of caste dominance  and religious superiority.
A majority of people, especially youth, will consider caste of the candidate only if they believe that he/she will take them forward in socio-economic terms. For so called backward caste voters, accessibility of candidates is primary criteria.
The leadership
The NDA leadership of campaign is perceived to be elitist, dismissive and playing omnipotent.
The GA leadership is perceived to be challenger, protector of Bihari pride, and playing underdog.
The assessment
In our assessment GA led by Nitish Kumar may retain power in the State, and nothing much will change in terms of governance and development in next few years.
Also Read:
 
 

Wednesday, October 28, 2015

Bihar - where all references lose their meaning

Thought for the day
"Small aim is a crime; have great aim."
—A. P. J. Abdul Kalam (Indian, 1931-2015)
Word for the day
Scuttlebutt (n)
Rumor or gossip.
(Source: Dictionary.com)
Malice towards none
The feeling "Nitish for PM in 2019" is already taking roots in Bihar.
In case, Nitish wins this election - the victory speech will resonate what we heard in Ahmadabad in 2012.
 
First random thought this morning

Bihar could be an excellent place for the student of history to understand how the caste system operates in oppressing the poor, and how the religion is used to make the poor accept their oppression and suffering as their fate.

No wonder, in the land of Buddha and Mahavira, superstitions and meaningless rituals dominate the day to day life of the "socially oppressed" and "economically redundant".

The references "Poor" and "Backward" as used in common parlance may not apply to a significant number of Bihari populace.


Bihar - where all references lose their meaning


If your body's internal immune system is very strong, a journey through Bihar is strongly advised. It is an once in lifetime experience.

The State and her people are full of countless contradictions. From 35,000 feet you may not see much social or economic disharmony in the State. However, a little deeper dive tells you the tale you may perhaps not get to hear anywhere else.

At every kilometer in your journey you feel as if Bihar is a massive puzzle with many pieces missing and many unrelated pieces that perhaps got exchanged with the other puzzles. It is therefore almost impossible to solve this puzzle.

Poverty, gender equality, religion, spirituality, nationalism, urbanization, feudalism - all these references lose their standard meaning in the context of Bihar.

Someone sitting in Delhi and Mumbai could never imagine what poverty could actually mean. How Rs32/day income could be a luxury. How 10-15 construction laborers we see cramped in a 10x10 tin roofed room in Delhi's heat/cold may actually be living a rather luxurious life.

It is also difficult to understand that how Brahmins could wield fire arms and perpetrate terror on the poor and the helpless.

While the aspiring Indian are talking about taking over the global giants like Alibaba, Facebook, Samsung, IBM, etc. - the Bihari aspirations are still stuck in the government jobs.

The Bihari laborers who are building swanky buildings and highways across the country and could even be key to building smart cities, have constructed Bihar in most haphazard way. The roads are messy. The new houses look dilapidated. Even in cities like Patna, the concept of town planning appears to have been completely ignored.

Land of countless contradictions

You are faced with countless contradictions at each step. The incongruence appears to be order for the State.

The following examples will make it clear what I am trying to say:

(a)   In this land of Buddha and Mahavira, the entire populace seems to be deeply engaged in superstitions, religious rituals (कर्मकाण्ड) that might have lost their relevance centuries ago. In fact these superstitions and religious illiteracy could be traced as one primary reason for the abysmal poverty and hopelessness in the State.

       A lot of local people do visit Gaya, the place where Buddha received enlightenment, but not to seek the light of knowledge, but to perform some rituals, which most of them are not sure why should be performed.

       Buddhism here is synonymous with radicalism and not identified with spirituality. Mahavira is considered mostly the god of rich Marwari.

(b)   To outsiders Bihar usually means a fragmented society - where poor people prefer caste over economic development.

       I found this to be little further from the truth. Prima facie, here the caste appears mostly a feudal weapon of socio-economic suppression. The rich, the landlords and the powerful of all castes use this weapon for social or economic discrimination and suppression. The poor, the helpless and the oppressed only use the caste to unite.

(c)    The great Maurya kings and the legendary seer Chankaya who together achieved the dream of United India (अखंड भारत) no longer belong here. In two weeks of stay in the State, we could not find a soul who talks or thinks about the Nation or Nationalism. Even the extreme right wingers' thoughts are parochial.

(d)   The populace which was in the forefront in the movement for Independence from British rule and movement from independence from the feudal rule of Congress Party is struggling with slavery. Very few raise voice against oppression; and many of those who raise voice against oppression - do so to become oppressors themselves.

(e)    The State leadership has always put strong emphasis on "Secularism" (सर्वधर्म सदभाव). However, as we could see, religion as a political factor is relevant only for the "upper caste" voters. The poor and backward people have almost no inclinations towards religious divide.

(f)    An average Bihari youth still aspires to be a government officer - mostly civil servant, law officer or police officer. The children from affluent families are opting for management and technical studies. But these are few and mostly leave Bihar for good once they get good job outside Bihar.

       The paradox is that the populace which aspires to be administrative, legal or police officer does not come across as the one having much faith in legal and constitutional framework.

       Non-compliance is the norm. Compliance is considered a sign of weakness and reason for ridicule and rejection equally by poor and rich.

(e)    Despite large scale male emigration from rural areas, the sex ratio is adverse in most parts of the State.

       Both urban as well as rural areas have adverse sex ratio. The areas bordering Nepal, the birthplace of Mother Sita, have the worst Sex ratio (appx 880 female for 1000 male).

       I have not heard this in any political discourse or economic package.

(f)    Also, no one has raised this point to my knowledge, a very conventional Bihari society perhaps comprises the largest LGBT community. Incest is not only widely in practice but also an integral part of folklores.

(g)    Humor is an essential ingredient of the Bihari folk arts (music, drama, songs, literature etc.) But an average Bihari today has a very stiff upper lip. They are silent and stressed. They look much older than their age.

(h)   The incidence of deadly diseases like cancer is rising disproportionately in the Gangatic plains of the State. Ganga Jal is no longer Amrut. It is in fact poison for poor Biharis. Nature is certainly not on Bihar's side.

Is someone listening?

Also read:

Tuesday, October 27, 2015

A visit to Bihar

"It means, people who are in high and responsible positions, if they go against righteousness, righteousness itself will get transformed into a destroyer."
—A. P. J. Abdul Kalam (Indian, 1931-2015)
Word for the day
Kakistocracy (n)
Government by the worst persons; a form of government in which the worst persons are in power.
(Source: Dictionary.com)
Malice towards none
The Grand Alliance victory in Bihar might compel the Congress Party to leave national leadership to "Allied Forces"!
So a loss in Bihar may actually be a step further for BJP in its Congress Free India mission.
First random thought this morning
Ganga Tera Paani Amrut - is one of the most popular Hindi film song. No Hindu ritual is complete without using Ganga Jal. Then why is that the Gangatic plains of Bihar have high incidence of deadly diseases like cancer!
A doctor in Balia say Ganga bring more toxins into the State's food plate than anything else. "Ganga Jal, Tobacco and Alcohol cause more deaths in Bihar than anything else", he said with a grim face.

 

A visit to Bihar

I'd travelled to Bihar in 2013, along with my team, as part of our Discover India tour. Traversing through this land of rich heritage, bountiful nature and brilliant people was a rather disappointing experience.
Abysmal poverty, poor social and physical infrastructure, completely fractured political establishment, disinclined administration and deeply divided society on caste lines ‑ we saw a little reflection of much acclaimed 10%+ growth beyond a few large and tier two towns. (read more here)
After two years, when InvesTrekk™ team traveled to this politically and economically critical state again, nothing seems to have changed. In fact it would not be untrue if we say that the things have changed for the worst.
The election campaign this time is aggressive, technology intensive, bitter and thoroughly confused.
The usual fervor seen during the election time in this State with high degree of political awareness was nowhere to be seen. The populace is generally stressed, skeptic and disenchanted. This is true for all sections of the society cutting across socio-economic divide.
We sincerely believe that if the last two rounds of growth spurts in Indian economy were driven by western and southern regions, the next round of spurt could come only from eastern and central regions.
These regions are rich in resources, account for a majority of young population and hence have higher propensity for consumption, have seriously underdeveloped social and physical infrastructure base thus higher investment appetite.
Therefore, the objective of our visit was not merely to assess the mood of electorate. The idea is also to assess the preparedness of this region to attract investment and likelihood of any material rise in consumption.
 
 
Key observations
This time we travelled through 27 of 38 districts covering all 9 divisions of the State. The key observations of our team are as follows:
(a)   The state of agriculture in this predominantly agrarian state continues to be pathetic. Frequent floods, uneconomical holdings, poor marketing and storage infrastructure, lack of formal credit, social biases, fragmented and inefficient food processing industry and high incidence of land related litigation are major reasons cited for lower agriculture contribution to the state economy.
(b)   Low agri income and miniscule industrial base has resulted in large labor migration from the state in past 3 decades. This is a strong vicious cycle which the administration is finding difficult to break despite sizable rise in social sector spending. Bihar economy therefore continues to be substantially dependent on the economic growth in the industrialized states like Maharashtra, Gujarat and Tamil Nadu, as a large component of the Bihar growth could also be attributed to the repatriated money by laborers working in other states
(c)    With rise in personal vehicle population, poor local road network has become a common complaint even in remote villages. However, inadequate power and poor water management continue to be the most regretted infrastructure bottlenecks.
(d)   In past few years the willingness to educate children has increased materially. The rise in public investment in education infrastructure is visible in most parts of the state. However, most teachers in schools and private coaching centers are unfit to be even high school students. Education is certainly leading to rise in aspiration. But the competitiveness and employability quotient of graduates remains very low. Frustration rather than knowledge & competitiveness appears to be the primary outcome.
(e)    Despite socialist regime in the state for past 25yrs, the socio-economic disparities continue to grow. While it is certainly a matter of extensive research, prima facie the higher economic growth in the State could be just an offshoot of growth in other parts of the country leading to higher remittances, higher social sector spending, and haphazard private construction activities in all 14 urban agglomerates.
(f)    The administration does not appear to be in sync with the government. People in general believe it to be highly inefficient and corrupt. Most block and district level officials we spoke to cited routine interference in their working by politicians and non-compliant elements supported by these politicians. Law and order machinery is found grossly inadequate, unresponsive, and corruptible.
(g)    The ongoing State assembly elections are tough to call. In the course of campaign NDA has lost the early advantage and appears to be losing further ground. After two rounds of elections, the advantage is with Nitish Kumar who is gaining at the expense of BJP. In our assessment, the grand alliance is heading towards a comfortable majority.
I shall be discussing these and many other aspects of our Bihar visit in detail in subsequent posts.

Monday, October 26, 2015

Nifty: At the tipping point

Thought for the day
"One of the very important characteristics of a student is to question. Let the students ask questions."
—A. P. J. Abdul Kalam (Indian, 1931-2015)
Word for the day
Schlemiel (n)
An awkward and unlucky person for whom things never turn out right.
(Source: Dictionary.com)
Malice towards none
Post Bihar elections, BJP may want to review its retirement policy.
Experience after all has "Value", in fact lot of value.
First random thought this morning
1,25,000 good teachers would do much more good to Bihar than Rs1,25,000 crore economic package.
The parents are more willing than ever, students are more enthusiastic than ever, the government is more supportive than ever, the money being spent is more than ever - the only missing piece perhaps is a the teacher! Given that Bihar can regain its glory in two decades.

Nifty: At the tipping point
Nifty has reached a critical level from midterm perspective.
On monthly charts, Nifty has successfully completed the bearish H&S pattern that began to form in October 2014. Nifty corrected 1000 points in this process from monthly close high of 8902 (February 2015) to monthly close low of 7948 (September 2015) in seven months.
At Friday close of 8295, Nifty is now poised at the falling trend line within a broader 8year channel.
The market momentum has slowed down considerably in past few weeks. The monetary stimulus by PoBC and anticipated further easing by ECB next week could prompt some dovish comment from US Fed next week (meeting on 28the October) could potentially create some momentum but closing above 8300 in November would critical for breaking the downward trend.
The more likely scenario in my view is that the falling trend line resistance will be sustained in November also.
Bihar election results would provide more momentum to market than ECB or PoBC actions.
 

Monday, October 19, 2015

Nifty: Reaching the tipping point

Thought for the day
" Look at the sky. We are not alone. The whole universe is friendly to us and conspires only to give the best to those who dream and work."
—A. P. J. Abdul Kalam (Indian, 1931-2015)
Word for the day
Shirk (v)
To evade (work, duty, responsibility, etc.).
(Source: Dictionary.com)
Malice towards none
Should the popular TV channel Zindagi that mostly shows Pakistani serials be banned and all those who watch it be termed seditionists?
First random thought this morning
Delhi's famous Raavan markets in Tagore Garden is facing serious slowdown in business. The demand for effigies of the supreme symbol of evil is down by 25-30% this year. The economics is not the only reason behind the slow down. Youths' indifference and question mark over the supremacy of Raavan amongst the evil could be some of the reasons.
A small survey of young people to find reasons has thrown some interesting questions. For example, a female DU student quipped "Raavan sounds like a saint in front of modern days politicians and religious gurus, why to burn this poor chap!" A young CA feels "where is Ram who will kill Raavan, we have Raavans only!" Some school students at a metro station feel the trouble of going to RamLila and Raavan burning is not worth taking. They would rather "sit at home and play Angry Bird".

Nifty completed the bullish inverse H&S pattern as expected a couple of weeks ago (see here), giving a decent exit to local participants as is evident from two weeks of continuous domestic outflows and fading momentum.
At 8238 weekly close, Nifty looks good for some more gains. However, fading overall momentum and peaking oscillators suggest that the gains may not be material from the current positions.
Absence of any major economic event and trickling foreign flows may keep the momentum slow but positive. Expect Nifty to gain 1-3% more from the current levels in the near term. The range for this week thus could be 8010-8470. A close below 8010 will confirm the completion of up move.
The short term (3-6 months) trend still remains downward.