Life was like a box of chocolates. You never know what you're gonna get

I turned 25 (by Tamil Calendar) past weekend and will be turning 25 day after tomorrow according to the English Calender. It has been a great 25 years, though looking back I have mixed feelings towards it. The one thing that comes to everybody at this stage is "I have done something, but is it enough? Am I on the right track? Am I doing well in comparison to my peers?" and it comes to me also. And I dont know the answers for it. 25 is a big milestone that I had for a lot of dreams but hardly anything matured :( - either I was too unrealistic in my dreams or was too lazy and gutless to pursue them. I'm particularly a tinge disappointed with the last 5 years, as I think I have lost the momentum that I was building towards the end of my teens. But, looking another way it is a comparatively calmer portion of my career where I spent good portion building the basics. I drive my dream car, work in a reasonably good company, live in a place i like a lot, have some money and got a few good friends. So, not too bad.

I feel like I have left the whole career dream of becoming a Professor/Researcher, as the life is taking me to a different path. But, I'm also moving more towards what I was dreaming all along in my childhood - Economics and Humanities. Till my 10th grade I was not that passionate about Science as I was with Humanities, and now after exactly 10 years and I'm yet again at the crossroads - which path to choose?

It will be too hard to put everything i have done in the last 25 years... but I want to recount for myself the last 5 years. There are no significant achievements, no resume grabbing stuff... 3 of the autumns were spent in applying for higher studies - one each for MS, PhD and MBA and only the former succeeded and the later two ending in wasted seasons. All the GRE, GMAT, Subject GRE, TOEFL and stuff took a bunch of my energy :(. Maybe this year will also be spent in a similiar pursuit. Apart from this two of the years were spent researching - one each for my undergrad and grad thesis. And a short while was also spent in getting a job in undergrad and the position here at Microsoft, but these didnt take a lot of energy.

But, there was some achievements in the order of priority :).

1. I finished all of Asterix series and most of Tintin :). I was a pretty slow reader till 5 years ago and spend most time with non-fiction. i was reading everthing from Vivekananda to Gandhi and I used to pull others leg that they were reading childish stuff. I guess I was wrong. So, i took a u-turn, put down all those spiritual and other stuff and read dozens of amazing fiction. Finished all of Ayn Rand, most of Crichton, Orwell, Sheldon, Archer.... I felt fiction greatly expands the mind and allows you to think better. In the next couple of years, i have a 100 book list to finish and will be done with most of them from Ulysses to Passage to india.

2. I finished most of Academy award winners since 1928. Movies is yet another thing where my opinions were wrong. I felt they were waste of time and had only entertainment value. Looks like I was watching the wrong stuff. Once I got into Citizen Kane, To Kill a Mockingbird and the likes, I felt a totally new world. Particularly in the last 2 years I made it a point to watch every great movie ever taken. I have still 150 more in my main queue, but atleast i got around to finish 300so far. I cultivated a taste to like the award winners, silent movies and black&white picture and I'm so happy that I have seen a lot of these stuff. Within the next 3 years, I will be done with my main list of 1000 movies. I will come up shortly with a big post on all the great movies I have seen so far.

3. Driving. I was a big bike lover and still I am. But, the last 2 years I feel a new passion towards driving. One reason is my Mustang convertible. For a very long time, I was dreaming of a Red Mustang Convertible and here I have it. Though, my eventual dream is to drive a Enzo Ferrari, I'm pretty happy with my car. I learnt driving myself 2 years ago, directly taking the car alone to the freeway after my friend gave me bit of intro to the mechanism. Ever since I have driven 10's of thousands of miles and it is one happy thing. Last May, I drove 5K miles in 3 weeks with my parents as a single driver and I long for such long trips. Now that it is summer, i will be using my affectionate bike (in the same color of car) more often... but still my car would retain the status of the lover...

4. Traveling. I was always traveling. But in this 5 years was a whole lot more. Had great trips around US and Canada, couple of good trips to Singapore and Malaysia and a trip to Europe. Lots of good memories. In the next 5 years, I plan to travel a whole lot more, particularly if I'm married by then.

5. Learning economics and finance. This is one thing that is pretty different from previous 5 years. I read a bunch of economics and finance stuff in the last 5 years and hopefully will be applying them in the next 5 years.

6. Academics. This was one thing that i didnt pay as much attention in college as I want to be. I had 75% attendance and was not a topper in the class. In Masters, I wanted to change this and got a 100% attendance for 2 years (first ever for me) and a 4.0/4.0 GPA. Though not as important as finishing Asterix series, still this brought some happiness to me.

In a lot of ways, this last 5 years is a bunch of building blocks that i feel will be part of my final construction. The construction is in a big mess, with a lot of heterogeneous stuff thrown in, and everybody close to me have decided that I'm a confused lot trying out too much. Hopefully I will disprove them and then show that even the unfinished projects (almost every project I started) will be a big part in my final goal. Only time will show who is correct. The investment in the last 5 years will be added with those in the next 3 years and hopefully, I will have my day using and applying whatever I learnt.

Let bygones be bygones. What is most important is the years to come. One should always remember the video of Randy Pausch:


Hopefully, i will be able to satisfy some of my childhood dreams like Randy. Maybe someday I will be able to set out to the place I'm dreamin for.

A blog post on Indian economy dated 2011

Recently I found out how to go in a time machine and going ahed 3 years, I got the following blogpost from http://www.theagni.com/ and I though I will publish it after coming back from the machine.

How to ruin a nation in few simple steps

New recipe from Mr. Chidambaram................................................. Dated March 13, 2011

There used to be a time (maybe >5 years ago) when I used to long for India getting mentioned in international media. And the day came, and India became a rock star of world economy. Everybody who was telling India-Pakistan, were just uttering India-China in the same breath. People were as excited as hell, and optimism run sky high. Even this author was so excited. So, far so good. But, when it gets to the head of rulers, optimism becomes arrogance and arrogance leads to misgoverning and misgoverning leads to downfall. As India started to progress, its rulers started to plot its own downfall. They prematurely curtailed the reforms process that gave a ray of hope to a dying Third world nation. They waivered trillions of rupees of loans made to unworthy borrowers (including some farmers) and destroyed the backbone of banking system at a time when the world financial system was hemorrhaging. It is no coincidence that the only two times that India went bankrupt in his history was following two loan waivers of the last 20 years. The first one in 1990-91's National Front's budget led India to bankruptsy in 1991 and second one in 2008-09's Congress' budget Indian went insolvent in 2010. Interestingly, Mr. Manmohan singh rebuilt from the ruins in the former disaster, while he led to the ruins in the latter disaster.

It also didnt help that they postponed a crucial opening up of banking sector to globalization and they maintained a highly fragmented Indian banking system saddled with big unions and highly inefficient process. Slowly the banking system started to collapse and by 2010 the banks didnt have any cash to lend, pushing everybody (including farmers) into the mouths of money sharks. Mr. Rahul Gandhi, who knew not a word to speak in the Parliament, suddenly woke up in his sleep on March 13 to deliver a 11 minute speech to a bunch of supplicants that increased the loan waiver by many times.

The opening up of retail (a sector that was once worth $300billion) was stopped in its rails by the "Big Mother" a symbol of a ultraPower (written in NewSpeak) who in the period from 2004-2010 cast a complete shadow on India and broke the nation to pieces before moving back to the Latin lands. A sector that once held hope to pull millions of poverty from an Indian quagmire called agriculture by streamlining and simplifying the process of good transfer was killed in cold blood, at the instance of few middle men (called kiranaKiller in Orwellian NewSpeak).

And as the government kept dancing in approving foreign investment and made business process even really harder by keeping the failing bureaucracy, the foreign corporations said "enough is enough" and put an end to their patience and packed home. Stock Markets that was once hovering around 20K (yes, it really was) before it went on a historic slide to the current levels of 200. 25 of the Sensex 30 companies have filed bankruptcy. No more foreign investors to fill in the gas balloon. :-(. India's oil subsidies due shot to $500billion before ONGC, Oil India and BP filed their bankruptcy. Now, people fill their automobiles, by scavenging stuff, inspired from the 2007 movie "Iam Legend". Same is the case of fertilizer and every other stuff that Indian people thought were free stuff to be misused. Water, Kerosene and every possible stuff was horribly subsided to the "poor" at the insistence of "Commies", some of whom returned back to their lunatic asylums (to the detriment of its rest of inmates) and some also made pilgrimage to Moscow, Cuba and Venezuela and singing songs daily. The once hopeful US-India nuclear deal was flushed in the toilet and the US President refused to reopen the deal summarily. So, there is no more electricity in India, now.

Manufacturing that was already dying to a woeful neglect of infrastructure and even present bullies in government bureaucrats died completely in 2009. The remaining performing members of the nation As the failing nation couldn't survive the outflow of money and without anything to import (save a few call center calls, and some software) the nation went once again begging to international agencies. But, this time Mr. Narashima Rao was no more there, and Mr.Singh has been taken along with the Pet dog, a parrot and a couple of cats grown by "Big Mother", back to the Latin lands (how can the Big Mother stay when India has problems). Her son went back to his date in UK and her daughter is happily enjoying hot sands of Mauritius. Mr. Chidambaram (who took "Deception 101", "Misleading 203" and "Misgoverning 404" courses in Harvard Business school with George W. Bush in 1975) has presented India's last budget in 2008 (later budgets were cancelled as there were no revenues to budget) and joined with Mr. Singh and rest of the pets and puppets of Big Mother. Its happy, happy time for all of them, running and picking up balls, and playing with water fountains. In the meantime, millions of Indian farmers are committing suicide (the number was in hundreds in 2oo8 when there were healthy banks) and there is widespread hunger and famine. there is no more employment, no more value for rupee and nothing anymore. Hey, but who cares. You didn't think about that when you voted, and didn't voice when government was misgoverning, so why now.

Some news articles that preceded the downfall:
http://afp.google.com/article/ALeqM5im8omrGzSBx4aeR8TQhDVmnKaz0g
http://www.forbes.com/fdc/welcome_mjx.shtml
http://www.economist.com/opinion/displaystory.cfm?story_id=10808493

Indian budget

One of the biggest financial events in India is its annual budget. What is supposed to be a dull event of displaying numbers and fact, has been colored by successive Indian governments who use it as a pulpit to throw out doles to the hungry public. So, it is an event that is well televised and watched by Indian public with as much intensity as they would watch if India were playing finals of a Cricket WorldCup.
Mr. Chidambaram, Indian financial minister, who has delivered some progressive budgets in the past has come with a horrible political budget this year that will increase the debt burden and slowdown the economy in the future. The idea is clear - the government doesnt want to repeat its previous government's mistake of not taking the fruits of development to the poor and thereby loosing the election. So, what Mr. Chidambaram tries to do is play a bunch of tricks and hoodwink the people into thinking that the development reaches poor. So, instead of using reforms, investment and development to reduce poverty, the finance looks to remove poverty by throwing out rupee notes from the air. It looks as though Indian government is counting that this past 2 years magic will continue forever and fail to realize that what works at the peak of a cycle doesn't work at the end of the cycle. Instead of leading into progress, this budget can lead it into darkness. Indian government seems to hace reneged its promise of cutting down fiscal deficit (gap between governmental borrowings and earnings) and will add further debt to an already indebted nation (public debt at 60% of GDP, compared to 18% in China) The government seems to gone back to its socialist era that has brought so much pain and agony and made India a third world nation that had horribly lagged behind its Asian peers.

One of the biggest features of the budget is a Rs.600 billion write off of debts to small farmers. Ostensibly this is to reduce the number of suicides that has increased to very high levels in the last decade. Why the writeoff is bad:
-- It mainly targets farmers with very small land holdings (around 1 hectare). However, suicides mainly happen among cotton farmers who have fairly bigger holdings (around 10 hectare).
-- There are hardly any cases of a farmer committing suicide due to the inability to pay a government bank. Most of the suicides come from taking loans from loan sharks, and they are not going to write off the loans. Given the shallow penetration of Indian banking system, writing off bank loans and freeing up process for them to take more loans might not change ground conditions of the farmers much.
-- Any kind of a write off is morally wrong. Those hard working honest people who repaid the loans will be punished at the cost of the dishonest faulters. In the future, even the honest people will be forced to postpone or not repay the bank loans, and deliquencies will raise. Already, most rural people see bank loan more as a charity than something to be repaid.
-- Principally this makes India more socialistic and that itself is wrong. Given how much India suffered due to socialism under Indira Gandhi and Nehru, government should have known better.
-- 600 billion rupees is a huge amount that could be better used by government for bettering Indian agriculture. It could improve irrigation, research newer seeds and usher in a second green revolution and permanently change the agonies of farmers.
-- This would weaken the banking system as they will take most of the burden of loan writeoffs. In an international climate of banks in bloodbath, this is the least opportune time for such a plan. Indian banks will suffer and their chance of going big and global will be nipped in bud. No modern nation has grown by screwing its banks and financial system. Banks are the fundamental nucleus of an economy and if u treat it badly, u r in for big trouble.
-- Lastly, by rewarding small farmers this would prolong the agony of Indian agriculture. It is time that Indian agriculture start consolidating and land sizes grow. India uses 600 million people in agriculture and this is a horribly big amount. No sane economist can work out a condition where India would reatain so many agricultural laborers and still become developed. Thre is absolutely no future for so many people. The government's focus should be to move the small farmers away from agriculture by creating more jobs in industry and service sector. Also, India should dramatically increase land productivity and move more lands away from Rice and Wheat and bring in more rewarding crops. That is how rural India can see more money from Indian growth. But, by rewarding the small farmers and prolonging their stay in agriculture the government is horribly skewing India's long term development.

The only way India can revitalize its rural economy is by bringing the long awaited industrial revolution. We have had an agricultural green revolution and a service revolution is already well in its way. But, only industrial revolution can absorb so many uneducated laborers and make India's economic bone. It could wipe out the trade deficit and dramatically reduce unemployment. Thus, the fundamental focus on Indian government should be bring a rapid Industrial revolution at the scale of China's and we need every possible resource to do that. Lots of money, open policies and a strong banking is needed for this revolution. Indian rural people need a chance and deserve a bright future. But, this budget will be a very very big backward step and the Indian media is deluded in praising this step.

Further Reading:
http://www.atimes.com/atimes/South_Asia/JC11Df01.html
http://www.economist.com/opinion/displaystory.cfm?story_id=10808493
http://www.economist.com/world/asia/displaystory.cfm?story_id=10809412

India's Aussie win: A fitting revenge to the goliaths of the game

If I say it was one of the sweetest of India's victories it would be an understatement. For, the yesterday's win by India in Australia was probably the best victory for Indian cricket in 23 years and the kind of celebration ensuing will be one of the greatest in history. When a billion people are in great celebration there are very few events in world history that could beat that in size and pomp.

I stayed awake till 4am for the match even though I had a doctor appointment and a bit of heavy work today, but I was nicely rewarded with some good entertainment. Missing entire night's sleep hurts a bit, but its ok :). This looks to be one of the best Indian sides in the last 15 years with a cool headed captain, a pace quartet, couple of discriplined spinners, fine fielding and deep batting. Sachin was in usual song and there need be no better sight in cricket that watching his game. Australians were comprehensively defeated in all quarters and it is a nice end to one of the most controversial series in recent cricket history.

The Davids of Cricket finally slayed the Goliaths of Cricket and it was a fitting revenge for a controversial series. There used to be a time, when Aussies mixed substance with arrogance. But, the former is totally gone, leaving them only with the latter. Australian cricket had a lot of nice gentlemen - Warne, Mark Waugh, Gilchrist and now all of them are gone, leaving them with only a bunch of bullies in Hayden, Symonds, Ponting and such. And the Australian spectators were trying to outdo their players, and the repeated allegations against the Indian player Harbajan Singh was disgusting. It looked like they all had a single minded pursuit of destroying India's most experienced bowler. It was really fitting that their spectators arrogance ended with a shaming defeat. Australians for too long gotten away being the Atilas and Genghiz khans of the game, and now they need to look forward to become normal players.

Bracing up for Recession

Looks like this is gonna be recession year in the US. Recession means a drop in economic activity and associated with drop in investments, company profits and employment rates. How this going to affect various people?

First, interest rates will significantly drop as a reaction to recessionary pressures, and couple with high unemployment rates and inflation, this looks to be bad for saving money :-(. However, this seems to be right time to take a look on basic things. Based on my readings I find the following to be the reasonable advice for people like me.

1. Dont leave secure jobs, as job market will go south this year.
2. This is not the best time to go to school for doing MBA and such, as markets might tighten up in the next year. But, a lot of experienced folks who can untangle the mortgage mess and stuff will find great jobs.
3. Maintain 6 month emergency fund that should take care of ourself even if we dont have job for a long period. This fund must be maintained separately in money market or savings accounts.
4. Reconsider the portfolio. While stocks do better in the long term, it is time to reduce the risk by taking bit more of bonds and other secure avenues. I moved mostly to secured investments last October, and could wither some of the drop in my retirement plan.
5. Rethink investments. As big ticket investments like starting companies or building houses will be hit during this recession, it is time to reconsider those things for now.

If we are able to maintain jobs and have savings cushion, recession could also be a great time. A lot of great investment opportunites will be available at the later part of recession when everybody else will run out of cash. Houses and companies could be got for dirt-cheap prices and the recession will also help the economy overall by cutting down wasteful expenditures and over consumption while moderating the prices (of oil, houses etc that had runaway inflation during the current boom).

In terms of countries, the expectation seems to be that China and India will cool down affording them to rethink their policies and priorites. China will be hit by drop in exports, while India will be hit by drop in investments. So, its time for China to put renewed focus on domestic consumption (including by appreciating Yuan) and India to start second wave of reforms. When India badly needs money it can no longer afford to keep sectors like Banking, Aviation, Retail stores under tight leash and might be forced to open these to foreign investments. Dollar looks to get weakened more as there is a substantial interest rate gap between India and US, and IT companies will be hit both by strong rupee and a drop in US economic activity. Its time to rein in the India's runaway salary growth and diversify beyond IT.

India can gain a lot. First, if IT weakens a bit and salaries start cooling down, other Indian sectors like Auto and manufacturing can pick up as they can get quality engineers at affordable salaries. It makes no sense for the nation to train a mechanical engineer only to lose to Infosys to do some payroll processing. Also, this recession could get the hell out of Ford and GM who would be forced to do a lot of offshoring and India seems to be the best choice. Already Tata Motors and Hyundai and have begun huge expansionary cycles. And healthy Indian companies can get great bargains with a weak western economy. I wont be even surprized if a group of Indian companies together buy up Ford in the next decade. Also, its time to realize our strengths in Finance and Banking. Its illustrative to note that almost all of the Citi's current top management are Indians and we have similiar loads of talent hidden in our moribund banking sector. Its time to get to Basel-II banking standards and open them to International capital and competition. Maybe, someday we could see a ICICI or a privately owned SBI could take on Citi or Bank of America in head on competition in international turf.

Second, Indian economy can also gain by cooling down of real-estate markets at home. Just like Americans, Indians seem to harbor the thought that house prices can never go down. Americans have learnt the lesson and Indians have still not. Just like any investment, house prices can as much go up as down. A lot of houses are priced at 100 times the annual per-capita income of Indians and the development looks unsustainable as a lot of them were made with unreasonable expectations of salary growth. Now, house prices can go down significantly in a lot of over-priced markets and this will improve affordability for common man.

Third, the market crash will make people rethink consumption. While too much dropping of consumption is bad, too much of consumption is even more bad. Indians are consuming rather too much for their salary levels and savings are not as great as Asian levels. This can hurt a lot of people in the forthcoming real-estate and stock crash, and if managed correctly this could lead to a long term balance between savings and consumption.

Third Wave of Cricket

I used to be a big fan of cricket and the last couple of years, I had not been watching much, not the least because of lack of access to Cricket Channels sitting at Seattle. And Indian team had a few debacles and Australia has become predictable. Now I started watching Cricket again starting with the current India-Aussie series and boy the game changed so much.

The 1990s look nostalgic to me, when every team had an equal probability to win. Back then, Australia was not so strong and West Indies was not so pathetic. South Africa and Sri Lanka were at their peaks, while India and Pakistan had extremely good players. New Zealand and England were getting as they always were, disciplined but not too threatening. In terms of fun - 1993 Hero Cup,1994 Wills Trophy, 1996 Wills World cup, 1996 Titan Cup and 1998 Sharjhah cup were so unforgettable and times seems to have change a lot. The atmosphere and celebration no longer seems to be there. Even the world cups like those in England (1999), South Africa(2003) and West Indies (2007) looked a lot sedate in comparison. Looking a bit deep, I see a pattern. I always wondered how cricketers world over seem to reach to the top in unison and get out in unison. At one point in 1996 almost the entire Indian team was 23-24 years old, all of them trying to cement their position. And like high school graduation, there seems to be a batch of people who come in at the same time and graduate at the same time.

The first wave took in the 1970s with the coming of Kapil Dev, Gavaskar, Viv Richards, and so on. The first wave of cricket ended after the 1992 when a ton a great players left the game. Viv Richards, Desmond Haynes, Krish Srikanth, Kapil Dev, Ravi Shastri, Javed Miandad, Imran Khan, David boon... all who made the first wave of ODI cricket were gone. Their age of ODI cricket was just a shortened version of the Test match. Bowlers were still at the top, batsmen tried to be cautious and concentrated more on techniques. At one point Desmond Haynes, 17 centuries and 7000 odd runs were insurmountable. But a new wave of cricket took place just before the 1996 world cup. With 15 over field restrictions and the retirement of many great bowlers, a new age of young cricketers took to challenge every possible batting record. Sachin, Jayasurya, Kirsten, Anwar, Ganguly and later Hayden and Gilchrist, totally changed the role of openers. Big hundreds were no longer the issue and once improbably 300+ scores on a 50 over game became the norm. Explosive people like Afridi made cricket look like baseball with a do-or-die hits for every ball. And the once improbable Hayne's record was beaten by almost every credible batsman of the era. In fact, Tendulkar has now 41 centuries and 16000 odd runs, something unimaginable 10 years ago.

Now all these greats of second wave seem to be going off at the same time, just like the first wavers did a 15 years ago. Kirsten, Wasim Akram, Lara, Walsh, Warne, McGrath, Srinath... have all gone. Soon, there wont be Dravid, Ganguly, Tendulkar, Gilchrist, Ponting, McGrath, Inzamam Ul Haq, Jayasurya and world cricket will look a lot different. As this third wave begins cricket seems to get more equalized. Australia dominated entirely during the late second wave with the peaking of all their greats - Warne, McGrath, Ponting, Gilchrist, Hayden, Symonds... Now, already with teh first two gone the bowling looks weak and with Gilchrist gone the top order and wicket-keeping will take a hit. And there is no credible alternative to the top three batsman. Clark, Hussey, Haddin look nowhere near the greats and with a weak bowling Australia looks to be beatable once again as India has shown. India seems to be positive with the third wave with the historic failures of Indian team like running between the wickets, pace bowling and fielding have changed the lot, while there must definitely be worries on historic Indian spin department. It looks the weakest in India's cricket history.

Time will tell how man of the current batch will replace the records set by the second wave guys like those of Tendulkar and Muralidharan. At school, we used to spend hours speaking of the great comparisons like batting of Mark Waugh-Sachin-Lara, spinning of Kumble-Muralidaran-Mustaq-Warne, fast bowling of Akram-Srinath-McGrath-Walsh. A lot of these people including Tendulkar, Kumble, Walsh and Akram were splendid ambassadors of the game with their exemplarily on-field behavior. Compared with those, the current behavior on the field looks uncouth and barbaric. When people Tendulkar, Kumble and Warne celebrated their victories there was a touch of grace. It was fun and even the appealing to the umpire was amazing. But, with the unrefined third wave, the appeals and celebration had to be restrained by ICC so much that the match looks sedate.

Are petrol prices in India cheap??

($1 = Rs.39, approximately)

Recently, I had been going through a number of articles in Indian media, claiming that oil companies are losing Rs.9/liter of petrol due to global oil price rise. The reports seem to convey the message that Indian motorists are somehow paying very low than what they should. Reality is otherwise, as I noted in one of the earlier articles here.

Indian motorists pay around Rs.52/liter ($1.3/liter or around $4.93/gallon). Do you think this is subsidized and cheap?? See what India's peers in far more wealtheir nations with greater purchasing power pay in CNN.com. I think the petrol subsidy debate is misguided, because of the absence of discussion of taxes. Are Indians paying less for Petrol than we living in the US? I fill my tank at $3.2/gallon (before getting 5% cashback with my credicard) because my state of washington has one of the highest sales taxes, but it is still equivalent approximately Rs.30/liter which is half what an Indian motorist pays in India. Does it mean 76, Chevron and other places where I fill gasoline from are making losses?? Looking at their stock prices doesn't make me think so. US oil companies are having windfall profits.

And Indian purchase basket of crude is about 8 dollars cheaper per barrel than international price and Indian refineries are more efficient. So, shouldn't Indian motorist deserve a much lower gas/petrol price than us in the US? So ideally the petrol prices could be in Rs.20s per liter and still the companies coulde make profits and government to earn taxes, if US prices are a guide.

Basically, Indian governments at various levels tax petrol and gain over Rs.35/liter and at the end they claim they are losing Rs.9/liter due to subsidies. With proper math, it would come to Indian government gaining Rs.25+/liter on petrol, after taking up a loss of Rs.9 loss per liter given to oil companies in bonds and other forms of subsidies. Simple. So, nobody is doing charity in India with petrol. Its just that government has odd tax policies that end up taxing much more than required and in the end share a part of spoils with oil companies by taking their losses.

For Diesel and LPG, if you factor out the taxes the government breaks even and only on Kerosene the government, loses overall. But, eventually the hope is that more of rural people would be moved to LPG. And since Diesel is more efficient and used mainly for public transportation there is a better rationale for selling it cheap. For LPG and Kerosene the rationale is that India should have its priority of moving people from highly polluting wood, cowdung and other materials that are burnt in rural places for cooking. So, having it cheap makes sense, though eventually I would prefer Kerosene to go around Rs.25/liter that would break even for the government at the current $100/bbl global prices.

I would prefer a more transparent mechansism in which government strips all its taxes - from excise duty to sales taxes on petrol and diesel, along with subsidies for marketing companies, align the prices to vary daily with global prices and then over it add some minor taxes that can vary based on international prices. This will be pretty transparent and allow people to see how much of the price rise is due to interntional prices and how much is due to their government, and unless the oil prices goes to extremes the government should not meddle with the prices. So, a gas filler can see his Rs.52 payment for a liter is due to Rs.25 for Saudi Arabia/OPEC, Rs.5 for refining and transportation cost, and Rs. 20 for government taxes, and the rest for the profit of the oil marketing company. Same with all other petroleum products and it will remove politics from pricing, and only simple economics will rule.

Here is one chart of global and Indian petrol prices in 2006: http://www.kshitij.com/research/petrol.shtml

HEre is another slightly older (2005) prices of gasoline around the world:
http://bigpicture.typepad.com/comments/2005/05/gas_prices_from.html

Again India was just below the European countries and much ahead of rest of the world in its prices.

India's retail revolution

This is regarding the retail article in IEB. Two of the things that are often missed in the road towards modern retail is the expansion of organized labor and the addition tax base. The fragmentation of current retail system makes it easier to evade taxes at various levels and almost all the labor belong to the unorganized sector with no mentionable rights. One of the goals for India is to move its massive unorganized labor into organized sector where they could get more rights and the same time there will be better accountability. Also, with bar-coding and automatic billing the modern retail aids in tax collection - sales, corporate taxes and employee income taxes.

In the end it would benefit everybody - farmers, investors, infrastructure developers, laborers and also the government would have more tax revenue at its coffers to spend on the people. The jobs of few middlemen are not worth to stop such a massive potential to change the contours of Indian economy. If the middlemen are enterprizing enough they could adapt to the new India that will enable the creation thousands of new opportunities for entrepreneurship - supply chain management, cold storage, back end data processing.

Crouching Dragon and the Hidden Tiger

Browse any newspaper or magazine discussing on Politics or Economics and China is spoken atleast 10 times as much as India. In fact, India has started to get mention only in the last couple of years and mentioned only in a few selected instances and in most contexts taken as a passenger in the sentence about China. But, Indians are far more aggressive and everywhere you see an Indian comparing China to India. This is a dramatic turnaround from our past, when India had an indifferent attitude towards the world. When Chinese, Arabian and European sailors came observed and wrote scholarly works, Indians were living in their own world. And we know the history, dont we? We paid the price of not knowing about our neighborhood. Now, we have made a 180 degree turn. We speak about other nations more than any other culture in the world. An average illiterate in a tea shop in rural India could talk about the politics of dozen nations and a cheap regional magazine could carry as much foreign news as some of the top newspapers in the US. We are in a constant state of comparison and China has taken most of our debate space. After all, it was a poor buddy of ours 2 decades back and now sits with rich nations. Thus, nothing moves Indian society or polity than a talk about China. Without China, it is doubtful whether we even could have got so many economic reforms in India.

Given that Indians have the highest sense of self-pride and over-confidence, most of the comparison between India and China specifies only three things - English language proficiency, Democracy and Demographic dividends. And all of them are tricky and India might not be strong in any of the three, compared to all hype. English can we well spoken and written by probably 10 million people - less than 1% of population, and the kind of politcal system in major states like Bihar and Uttar Pradesh can be anything but democracy. And the demographic dividends can do far more harm given the dozens of separatist organizations in India, unless it is handled with high care. But, with all that in future India can still grow substantially, not because of these 3 factors but that we are so low in every indicator that is there is no room to go further down.

So lets take other things into comparison with China and as usual for an Indian we will beat China down (!).

Looking at the overall numbers, China's GDP measure both in current exchange and PPP is only between 2 to 3 times as big as India. And given that it has 30% more population, 3 times more area, 13 year headstart in reforms and a history of never ever been ruled long by aliens, it is not that impressive. It is ok. In fact if India had slightly started early by around 80 and increased the growth rate by 2% in that decade, the GDP numbers wont be too different.

And Indian numbers were achieved with just 65% literacy and a miniscule share of world trade and investment. Given such a low baseline, there is an enormous headroom for India. Even If we manage to increase literacy by 10% every 5 years, we could still have 10% growth rate irrespective of what happens in global economy. And this is not such an impossible task given the technology and resources we have. One good example to see is the rise of telecom. 6 years back we had probably 1 to 2 % teledensity and now we are adding that many every month. So, we can attack our social problems like illiteracy with tools that no other advanced nation had the benefit of. And miniscule upper middle class could multiple many times over the next decade leading to an exponential growth in many other sectors.

And if the last 2 years is any indication, the share of India in world trade and investment has only one direction to move. And India has a lot more cards kept close to its chest. Most of the bigger sectors are still unopened and only the soup has come out so far. The meal is still in the kitchen. Retail, transporation, banking, agriculture education and dozens of major sectors are still locked and as they keep getting out of state control, growth could accelerate and may more than compensate for any loss in US slowdown or even if IT sector dies.

And more importantly India is still under the radar and treated as innocent observer. China with a percapita income 3 times less than a poor European country - Romania, is under attack from around the world, accused with tampering the world economy. No one has taken note of the threat India could possess. All the extremities - Iran & Israel, US & Russia, China & Japan have started enormous startegic partnerships with India and none of the major nations nowadays even criticize India openly.

In comparison, China has already started to face resistance in too many quarters and could threaten its future growth. It has done the simple things well - made its people literate and provide basic health care, but how about future challenges as a first world country. Given its current growth pattern, if China has to grow even to the economic level of Turkey, it has to completely take over world trade and investment and to keep yuan week it has buy the entire debt of whole world, that looks a tough task (!). So, it has to find new ways to grow and the old ways of low cost production, high foreign investment and bulging exports but may not scale to China's ambitions.

So, China is charting an untravelled territory and faces with questions on how sustainable its growth will be, given it has maxed out on most items. How many more toys can it produce or how much more foreign direct investment will get? How long will Yuan remain weak and withstand world pressure?

China is definitely ahead of India in most aspects, but can keep it that way?

Lead India

If nation's tastes and interests were determining its destiny then India is on the right track. The extremely popular Lead India Campaign by Times of India (the tabloid finally woke up to do finally something worthful) is really ennervating. The image is really powerful. And this is not at all impossible. If at all, it just reminds of Mahatma's struggle. The struggle of the rich and educated elite became a national freedom struggle by one man's lead. And as he lead, entire India followed like in the video below. And among them we found the finest of leaders who were previously trapped in their everyday trappings.

Will we shake up ourselves in this video's style? Chances are slim. But, it is still possible.



For a long time we have been cribbing on our environment. But as Sharukh and Amitabh say, we have no right to complain about the Traffic Jam. We are that Jam.
See Sharukh's and Amitabh's Videos below:




And here is an older nice video with the "Ye Jo Desh Hai Tera" song in Swades. So Nostalgic.