Existence

It is quarter to 10 pm and I am gazing out from the window. I don’t know what I want to see or what I am seeing? The western sky is red, as if telling on the Sun while it disappears in the depths of the horizon. The thin line of Moon, above in the sky, is assuring me of the existence of Universe. I try to find the stars but it is bit early for stars to grace.

The gentle air coming from the window, which I opened for the first time in many months, smells of summer. I look at the front lawn of my building. The foliage of grass has yet to turn green. For the time being, just happy to be relieved of weight of snow. There are few bushes shoved in the moist soil for them to blossom in summer. I also notice new set of garden table and chairs being kept there. The indomitable human spirit to welcome summer after each winter makes me smile.

It is absolute silence. No sound of traffic, no clutter of leaves from the leafless trees and no chirping of birds. The beautiful wooden row houses, each with a car parked in front of them stands still. I start the music player in the laptop. The faint melancholic music fills in. It is soothing.

I feel the serenity permeating my existence and the ambience engulfing me. Inviting me to be part of them and be nothing. To silently hear everything, blindly see everything, and to accept everything without protesting.

Chernobyl

Today is the 20th aniversary of the Chernobyl disaster. People are remembering their loved ones, whom they lost, in different ceremonies held all over Ukraine. Read the Reuters coverage on this.

Along with the memories, the radioactivity from this disaster, will remain for ages.

Creation of business for Indian post offices

If you are in a competitive business and want to make profit, then there are two ways.

1. Be the best service provider
2. Be the only player in the business.

It does not take to have a degree from Harvard to think of this. Most of the firms when faced with this situation, will choose the first way. It is impossible to eliminate others from the business. Not always. A government can indeed go for second step.

What happens when the shoddy, irresponsible, unaccountable and corrupt postal service of department of post, Government of India faces stiff competition from private courier firms? What happens when people prefer the efficient and responsible courier services over the ‘India post’ resulting in dwindling business; consequently no/less profit of India Post? The answer is simple. Government proposes to bring a bill which when turned into law will give exclusive rights to India post to carry letters up to 300 grams. It will be illegal for private courier companies to deal in it. One source estimates that letters up to 300 grams constitute 65% of the postal industry of India, which is around 1 billion USD. This change has been proposed in the new law which will replace the ‘Indian Post Office Act, 1898’.

Letters were always the monopoly of Indian post offices, but courier companies bypassed it by terming the letters as ‘documents’. The act will define letters as any communication produced by written, mechanical, electronic and other means (letter-card, post-card and all envelopes), documents and return answers. Now leaving no loop holes, it went and brought in the 300 gm limit. For rest, the courier companies can now deal in ‘letters’.

So the government found the easiest way to ensure assured business for its postal department. It decided to create a monopoly in the much touted liberal Indian economy. Forget one day delivery time, pickup service or certainty of your letter getting delivered. Prepare to make trips to your dingy local post office, wait for the mighty clerk to find some time to work between the tea/coffee breaks and then make a prayer to God for your letter to be delivered.

Now since government has some of the brilliant brains so it has to give some justification for this step. You think of one and you will get hundred. The private courier companies work only in the creamy sector where they make profit. The government has to fulfill universal service obligation (USO) and hence it needs money for it. So it wants to get all the business from the creamy sector to work in socially undeveloped sectors even if it comes at the expense of common man. This sounds so good and convincing, except for the fact that what happens to the revenue of the government which it gets from so many sources including number of taxes. Is that not sufficient?

Further when there is such a genius concept of USO why not put it to more use. For this USO, the private courier companies will have to part with 10% of their revenue. This 10% no courier company is going to pay from its own pocket. It will cascade down to end customers. What happens to the service tax, which we pay to government each time we use courier services? I am not taking any side but I can’t understand why to have this USO tax and monopoly both? If the business was made exclusive for India post, then why this USO? Or, if this USO surcharge then why the monopoly? What is the real purpose, to gather funds or have a monopoly?

I also don’t understand this recent spurt in USO tax or levy. The taxes which we pay to government are income tax, service tax, sales tax, excise tax etc. Apart from this we pay separate tax for education, highways, USO of telecom and now this USO for postal service. If we have to pay for everything separately, then, why the original taxes? Recently there was proposal to have 500Rs as tax on every flight ticket for this USO i.e. development of air services in smaller/non-creamy cities.

Across the world when governments are privatizing their postal services and opening up the sector, in India they are creating monopoly. What right India has to complain about the protectionist policies of other countries when it itself does the same things. Charity begins at home.

P.S – Since India is a democratic country, the department of post has put up this proposal for views from public. If any one wishes so, they can send their views which might be considered. Please visit this link of department of post for sending your opinion.

Convert the Capital !

Whenever I turn the pages of my passport, which of course is blue Indian one, I stop at a particular page. Now days when passports have latest RFID tags and biometric data, mine has this second last page where Foreign exchange transactions have to be recorded. I am sure most of the Indian passports, like mine, have this page blank. It serves nothing except to remind us of our old times when we had tough current account convertibility norms. There was limit to amount of Indian Rupees that could be converted to foreign exchange for travel and other such related expenses. Of course we have come a long way from then. We have a huge foreign exchange reserve(154.209bn US $ as on April 7, 2006). There is no limit to Indian currency that one can convert to foreign exchange for purpose of travel, educational, medicinal expense, etc. The current account is totally convertible.

The capital account is still not fully convertible. Recently the issue gained focus when Prime Minister & Finance Minister of India said that India is very close to capital account convertibility. When this happens then there would be no restrictions on converting domestic currency (Rs) to foreign currency and vice versa. Indians can convert their savings in rupees to some other foreign currency according to the return opportunities. They can also invest in shares and assets abroad (at present the limit is US $ 25,000 per year). Same is true for Indian companies; they can raise capital from abroad and invest in assets there.

So what is the debate over capital account convertibility? Is India mature and ready for it? Capital account convertibility, one of favourite and pet topic of international financial institutions like IMF, has always been aggressively pushed by them.

There are many benefits associated with capital account convertibility like cheap capital for investment and hence developmental activity, better investment and risk hedging options, imports becoming cheaper, etc.

The disadvantages can be easily summed up by the East Asian and Mexican crisis. They are perfect example of how capital account convertibility can go wrong. Of course we have one of the best central bank of world, Reserve bank of India. But is that enough? What essentially follows the regime of full capital account convertibility is Banks and other financial institutions starts to invest in risky assets or takes high exposure of short tem debts. A little change in currency rates can lead to a debilitating blow in such case.

The securities scam of 1992 for the first time highlighted how far Indian banks can collude in scams. With passing of years it was thought that both our banks and monitoring bodies have matured. But this proved to be short-lived and false with the recent IPO scandal which displayed glaring systemic weakness and exploitation of these by our financial institutions. With the propensity of Indian banks to go any length for profits and absence of mature regulatory and monitory bodies, can one be sure of the banks in the full capital account convertibility regime? The answer might well be the answer to India being ready for full capital account convertibility.

State Bank of India - for the employees.

Two countries, thousand of miles apart, had similar incidents in last few days. It was victory of the masses and the short sightedness which permeates it. In Europe, it was the French President Mr Jacques Chirac to bow down and repeal the labour reform law put by Prime Minister De Villepin. The other example was India, where central government capitulated before the shameless employees of the largest state run bank, the 'State Bank of India'.

I have talked a lot about France in my blog so for a change I would like to develop upon the indefinite strike by the employees of State Bank of India.

This bank is the informal extension of central bank, the Reserve bank of India. It has exclusive mandate for doing certain government related financial transaction. It is also a major player in the forex market and Indian government uses it to control the exchange rate. It boasts of having 9000 branches across country and 200,000 employees. It is this 200,000 employees who now have the infamous distinction of stopping the country’s financial transaction for a week. Their demand was to increase their pension.

For a week the common citizens, the customers of State Bank, had a harrowing time. They could not conduct any financial transaction. Since it was also paycheck time, they could not withdraw their own salary. Most of the government and other public sector undertaking, disburses their salary through this bank. Had no money to buy groceries, medicines or pay for the school fees of their children. The ATMs quickly went dry and account holders had to borrow money from their friends and other sources for their daily needs. The plight of customers was shown in television footages, but it had no effect on the employees or the management.

After a week, government intervened, accepted their demand of increasing pensions and strike was called off. Government was happy, management was happy and employees were happy but no one gave a damn for the hapless customer. Let alone compensation, not a single note of apology was released by the employees or the management for giving hard time to its very own customers.

State bank of India boasts of its figures, the number of branches, the number of employees and its huge deposit base. But why does it not publish the productivity per employee or profit per employee which is way below those of smaller private run banks. There has been lot of reports about the changing face and the growth of this bank. But could this bank become this huge without government policy of protection and conducting few transactions exclusively with this bank? Could it be the same if it other banks had the level playing field? The behaviour and attitude of State bank employees may have changed in big cities where private banks have presence. But it is same colonial attitude in other cities where private banks have no footprint.. So much for liberalization of economy.

Government has some serious explanation to do in this regard. It should explain why it took a week for them to accept the demands whey finally it had to accept them? It should also explain to citizens of India that how come it allowed one bank to acquire such proportion as to hold the whole country to ransom?

I don’t think there would be any answer, for no one ever answers to common citizens of India.

Why do I blog ?

Coming back after a break of one week, it only is proper to have a post about blogs. It’s now two years for me to have a blog and to write posts in it, but this past week was the first period of introspection. Why do people blog or more specifically why do I blog? I will not try to generalize in my quest for the answer. All sort of generalizations are debatable, and this time my endeavour is to have an answer on my own.

I don’t have much experience with main stream journalism but there is contrast between a piece coming up in newspaper and a blog. When someone writes for main stream media it is for a targeted audience, while most of the time a blog is for ‘oneself’. Since a blog is also in a public domain so it is available to readers as well. But the difference should always be factored. Now days, with increasing popularity of blogs, things are changing. Most of the big time writers, columnist and even newsperson have their own blog. But the difference remains. A blog is a place for informal discussions as compared to formal tone of main stream media.

A blog is about one’s affiliation, association, subscription, belief, disbelief, disenchantment and disappointment with some idea(s). The view presented in a blog can’t always be compared with Op-Ed pages of a newspaper. There can be several sources or websites which have better substances, but a blog is author’s personal substantiation. A piece coming in a blog might be summarization from five possible sources but that might be for the author to comprehend some idea(s). Most of the time the readers might have expert view of the subject matter discussed.

All being said, I still believe that a blog is mainly to serve a personal purpose and not to prove a point. Extrapolating this also means that a blog being used by a third party for some motive can’t be blamed on the author of the blog. The author could be held responsible for the views expressed in his/her blog but it does not confer recourse to any third party usage.

With these thoughts let me hope that I will continue blogging as before.

No change please, we are French

It is not what comes to our mind when we think of Paris. Huge number of youths on streets, tear gas, police using guns shooting indelible inks and closure of Eiffel tower. This was the last tuesday in Paris with live images beamed across the globe. It was the biggest demonstration by the French students, trade union workers and also employees of Air France after the May, 1968 revolt. This comes right after the suburban riots by unemployed immigrant youths couple of months back.

France seems to be hogging the European news space for one reason or other. The students participating in the student were spurting out vitriol for the government of Prime Minister Dominique de Villlepin. Those participating in the strike are comparing themselves with the demonstrators of 1968 riot. On a closer look there is nothing common between them except the demonstrations. Students and trade union workers were demonstrating for change in 1968 and the present one is to stop change.

The controversy started with Prime Minister De Villepin bringing a new law which would allow employers to easily hire and fire workers under the age of 26 years for two years. The labour laws in France are very rigid and each job comes with life time guarantee and loads of social benefits. It is impossible for any employer to fire their workers even if they go bust. This has made things so difficult for French employers, already under intense competitive pressure due to globalization, that they are not hiring new workers and so jobs are not created. The average unemployment in France is around 22% while the European average would be around 6 to 7%. This new law is supposed to allow employers have flexible labour policy which in turn will create more jobs.

The would be workers in France still demand life time secure job with all sort of benefits like under 40 work hours per week, health care and generous pension benefit. This was all made possible with the capitalism in France which made them one of the richest countries of world and housed many of world best corporations. The sphere of influence of capitalism which was extended from North America to Western Europe has shifted since then. This shift has put shining jewels of that era of capitalism of that era under intense pressure from agile enterprises of new era of capitalism. These enterprises have access to cheap labour, flexible labour policies and less focus on social sector spending. The student population of France is still not able to comprehend this important change and they are resisting it. They don’t understand that the present threat is not to the benefits but the very job which gives them these benefits.

All this has put much at stake for the political leadership of France which should rise to the occasion and not adopt an evasive approach as it has been doing. Prime minister should not capitulate to the demonstrators though it is not easy. If he backs off then France will have to face more problems in future.