Vijay Kumar Gaba

Tuesday, April 23, 2019

Managing change - a political perspective

Some food for thought

"The first step on the way to victory is to recognize the enemy."

—Corrie Ten Boom (Dutch Author, 1892-1983)

Word for the day

Gabelle (n)

A tax; Excise duty.

First thought this morning

Travelling from Ghaziabad to NOIDA yesterday with a friend was a true revelation. The friend lives in Ghaziabad right on NH24, and works in NOIDA. He drives a total of 78kms to and from his office every day. His daily travel time ranges between 2-4hrs, besides 10-11 work hours. As I understood from him, there are more than 100 thousand people like him, who daily travel from Ghaziabad to NOIDA and Delhi. My friend does not have access to any mode of public transport from his home to office.

The conversation during our two and half journey covering 39kms was obviously about the current political landscape. To begin the conservation, I asked a staple question, "who would you vote for?" "None", he replied without a blink. "Why?" I tried to prod. "Wait till we reach NOIDA, and you'd find yourself", he replied sarcastically.

To make life easier for the people travelling daily from NCR towns like Merrut, Ghaziabad, Hapur, etc to Delhi and NOIDA, the government started the project to widen NH24. The construction work has transformed the 30kms drive from Pilkhua to UP Gate on NH24 into Temple Run (popular mobile game). In a hurry to meet deadline (revised many times) the work is being executed in a perilous and haphazard way. There are number of ominous diversions, dark spots, mud piles on the way. The operating lanes are narrow and unplanned. You find pedestrians, bikers, autorikshaw and large dumpers appear right in front of you, literally from nowhere. People unapologetically drive on wrong side to see eye to eye with the oncoming vehicles. To make the matter worse, stray cows, cranes and excavators used in construction stop at will in the middle of the narrow operating roads.

"I, and many like me, live by the day. We thank our stars if we reach home alive at end of each day", my friend quipped after showing me all this. "No politician thinks about us. They think, they are constructing this road to make our life easier; but by the time this road will get completed, many lives would have already been ruined. I have no family life. By the time I reach home, I just want to sleep. I have developed a back problem that perhaps will never be cured. My young child has got asthma. My father, who used to run a big bath linen shop in Pilkhua (a small town of weavers in Ghaziabad) is virtually out of business. And I am not alone in this mess. This road may get completed in 4-5years, but the damage to my life would be permanent", he lamented profusely.

The solution, of course is not stop building roads and other infrastructure for public good. The solution is to plan and execute these projects in more human way. Making a proper operating service road, deploying adequate number of traffic Marshalls and evacuation cranes, pre defining the time slots for moving construction material, prompt removal of waste material and debris, can relieve significant amount of pain. It may lead to 5-7% rise in cost of projects, but that would be totally worth it. Anyways, the cost overruns of 25-75% are not uncommon in infrastructure projects.

To assimilate fully what I am trying to say, please drive to Pilkhua from UP gate on NH24 between 5-8PM on any working day.

"Ease of Living", after all is not only a slogan to be put in election manifestoes. The politicians must know what does it actually mean. Next time someone digs a road near you, and leaves without restoring it to pre digging condition, don't suffer in silence. Raise your voice. Hold the municipal authorities, elected representatives and the contractors accountable for adding inconvenience and stress to your life. Please be intolerant.

Managing change - a political perspective

I am completely perplexed by the election narrative of Prime Minister Modi. I fail to understand why he has chosen to make "national security" and "nationalism" his primary election campaign, instead of the issues like faster development, inclusiveness, sustainability, probity in public life, equal opportunity, etc. which won him massive majority in 2014.

Have these issues lost their relevance? - No one would agree to this.

Have "national security" and "nationalism" issues become more pertinent and/or urgent compared to important socio-economic issues, than these were in 2014? - There is no material evidence to suggest.

Has the incumbent government failed in pursuing the agenda of development, inclusiveness, sustainability, probity in public life and equal opportunity etc., and hence it is using 'national security" as a distraction to retain power? - This is debatable. But in my view, terming the performance of the government in past 5years "a failure" would be totally unreasonable. "Partial success", in my view, is more appropriate grade.

Even more interesting is the fact that the report card of 5yr BJP is presenting to the electorate is mostly focused on the doles and subsidies (Free LPG connection, farm loan waiver, housing and toilet subsidy, Rs6000/yr cash dole to small farmers, etc.) The party usually refrains from mentioning abolition of planning commission, demonetization, changes in government procurement procedures, changes in defense procurement policy, changes in road construction model (from PPP to HAM), collapse in wind and solar power tariffs, etc amongst its major achievements. Even GST is mostly mentioned as a passing reference.

Searching for answers to my inquisition, I stumbled upon an article in McKinsey Quarterly Magazine, titled "The irrational side of change management". (Read here) I find it useful in analyzing the 2019 election strategy of BJP.

"In 1996, John Kotter published Leading Change. Considered by many to be the seminal work in the field of change management, Kotter’s research revealed that only 30 percent of change programs succeed." "In 2008, a McKinsey survey of 3,199 executives around the world found, as Kotter did, that only one transformation in three succeeds. Other studies over the past ten years reveal remarkably similar results. It seems that, despite prolific output, the field of change management hasn’t led to more successful change programs."

The article cites that McKinsey’s Emily Lawson and Colin Price provided a holistic perspective in “The psychology of change management. Applying their theory to current political conditions, I can say that the following four basic conditions that must be met for the voters to accept the changes introduced by the government:

(a) A compelling story, because public must see the point of the change and agree with it;

(b) Role modeling, because public must also see their leader and his team they admire behaving in the new way;

(d) Capability building, because public must have the skills and resources to adopt and the desired changes.

To analyze the performance of the incumbent government, and thus its 2019 election strategy, it is critical to ascertain whether Team Modi followed these principles in introducing the changes, it wanted everyone to accept......to continue tomorrow.

Tuesday, April 16, 2019

Food inflation conundrum

"Wishing all readers happiness and gaiety on occasions of MAHAVIR JAYANTI and EASTER."

Next post will be on Monday, 22 April 2019.

Some food for thought

"We have no firm hold on any knowledge or philosophy that can lift us out of our difficulties."

—Anne Sullivan (American Educator, 1866-1936)

Word for the day

Conlang (n)

An artificially constructed language used by a group of speakers, as opposed to one that has naturally evolved such as Esperanto and Klingon.

First thought this morning

Looking for some inspiring story for my story telling session in a municipal primary school, I came across this story of a brilliant woman, Ms. Krishna Yadav (see here).

Krishna ji, hails from a small village in Western UP. Daughter of a small farmer, she never went to school and was married to a man who dropped out of school in 3rd standard.

More than a decade back, economic stress and fate brought the family to Delhi NCR in search of job and a dream to give good education to two children. The couple started with leasing a small piece of farm land in Gurgaon and growing vegetables. Growing and selling vegetables however did not make them enough money to make two ends meet. Krishna Ji then decided to do something more. She attended a very short term course of pickle making run by Agriculture Department, and started making pickles at home. Her husband would sell the pickle made by him along with the vegetables he grew on a table put on roadside.

Krishna ji kept innovating new products while maintaining high standards of quality and hygiene she had learned during her training. Soon the business started with a capital of Rs3000, grew manifold. Though illiterate, she used all techniques of business management. She did backward integration by putting with her own mustard oil mill and spice processing unit, to manage cost and high quality.

Today she provides employment to 1500 mostly uneducated women and makes 200 varities of pickles, jams, juices, etc. Her daughter has completed BSc and BEd and aspires to be a good teacher.

The best part is that her pickles are amazing and her workshop & shop happens to be just 500mtrs from my house, and I never knew about this till I watched this YouTube video.

Food inflation conundrum

India has received below normal rainfall in each year since 2014. Some estimates suggest that even 2019 southwest monsoon could be below average. In past year the total food grain production has increased by just 2% CAGR. A substantial hike was also announced in minimum support prices (MSP) for various crops last year. Last five years have seen almost 50% jump in total personal disposable income of India. But all this has failed to impress food inflation that has mostly trended down in past five years.

I feel, this food inflation conundrum needs a much deeper study by experts of the subject.

As a common man what I could gather from speaking to other common man on street is as follows:

There are multiple reasons.

(a) Historically, the food prices in India have been controlled by hoarding mafia. After Demo the holding capacity of hoarders has been hit badly. This has resulted in persistently lower food prices, especially in popular items like pulses, onions, tomatoes etc.

(b) On the other hand, there has been significant improvement in supply due to better seed quality and improved irrigation facilities. However, this higher supply has not been met with equivalent rise in household demand. The reasons for this poor demand growth could be as follows:

(i) Decline in effective wages. Despite higher total disposal personal income, wages have trended down. This indicates that averages for per capita income and disposable income have got much more skewed due to rise in income inequality.

(ii) Rise in discretionary expenses, like telecom, transport, education and health.

(c) The most important argument is that though the rate of annual food inflation is low, the absolute prices of many commodities are high and unaffordable for many. We may need substantial rise in wages to correct this anomaly. Apples at Rs200/kg and Mangoes @Rs150/kg are unaffordable even for many middle class households, though their annual inflation rate may be close to zero.

(d) Liberal imports has led stabilization of pulse, oil seed and onion prices. Cartel led by some politicians and large business families appear mostly broken.

(e) Better regulation of commodities' future trading and closure of NSEL has also helped curbing excessive speculation, in view of some traders.

(f) Globally the crop productivity improvement may have peaked, but India has still long distance to go. The visibility of future productivity improvements is very high, and that may keep food inflation expectations anchored.

On the other side, all major political parties are promising material rise in farmers' income and social security net for urban poor, unskilled and unorganized workers etc. This will eventually lead to rise in demand for food items.

Moreover, the climate change is now reflecting ominously on weather and crop patterns world over. This may lead to supply disruptions and higher prices, rather abruptly.

It is therefore important that all policy makers and market participants take a holistic view of the inflation trajectory and plan accordingly.

For the time being, I am cutting weight of food inflation in my investment strategy matrix by 50%.