Demonetization @India: The Great Move

On 8 November 2016, Shri Modi on national television around 8 pm, announced the demonetization of all ₹500 (US$7.80) and ₹1,000 (US$16) banknotes. Everyone was shocked by this masterstroke or power stroke by Shri Modi.

Recently the debate of pros and cons of demonetization of 500/- and 1000/- INR currency notes again surfaced. Almost 98.7% of 1000 Rupees Note has been submitted back in the banks during demonetization period as informed by RBI a week before. While I notice majority of players & institutes and political opposition parties continues to criticize the Govt. of India for this move and how GOI continues to defend its move.

Finance Minister and other govt. representatives put forward many arguments to defend this masterstroke of Shri Modi, the H’ble PM of India but fails to convince the ongoing attackers.

Some of the arguments are:

  1. Govt. intended to encourage cashless economy. IMHO its already a gradual process as time passes and one cannot justify extreme step of demonetization for this goal. That’s why this argument appears bizzare on first hand.
  2. Govt. intended to attack cash hoarders who mostly have unaccounted wealth. This is the most valid point and must be the intent of Mr Modi.
  3. Govt. wanted to attack fake currency in circulation. Again a valid point. Indian economy was suffering from massive counterfeit currency notes in circulation.
  4. Govt. wanted to bring back unused hoarded money back in system. Its a good point but my opinion is neutral towards this point for justifying demonetization.
  5. Govt. wanted to attack terrorist organizations’ source of income. Its also a good point but my opinion is neutral towards this point for justifying demonetization.

So out of total 5 major arguments I find only 2 points quite strong, 1 weak, and 2 neutral.

However how I put demonetization in simple terms is as follows:

You have a house in shabby condition from last many decades. You want things to be in order. So you need to get the white wash at first hand. And for the same, all the stuff of the house need to be temporarily moved out of the premise so that white wash work can be done. After the white wash, all the stuff is brought back. The house is now much better to live in.

Something similar was the Indian economy from last many years. The black economy was always the Elephant in the Room with no clue by anyone of its exact size. Moreover the trust for Indian Currency Note of 500 and 1000 was deteriorating rapidly in last one decade.

Hence extreme step was necessary. It hit the GDP and Small Scale Industries and Employment for a quarter or two but one cannot ignore the valid dangers looming on the overall economy had it been this step not taken.

We should congratulate Modi Govt. for the successfully implementation of demonetization decision. The impeccable execution with necessary extreme secrecy is incredible. All credit goes directly to Mr Modi. For sure, political opposition parities cannot acknowledge this fact but I’m surprised that many reputed financial institutes have not been kind towards the Govt. so far.

I hope so that fruitful results of “demonetization” shall be visible in near future.

My thoughts only.

God Bless!!

Advertisements

What’s now wrong with the feeling of getting into IIMs/ top B-schools

new-iim-bill

One decade is a long time. One decade back getting offer letter from IIMs could have made you jumped into sky. Sweets could have been distributed by your parents among your neighbors on this extraordinary achievement. I also get remind of winning and confident attitudes of the students at these premier institutes those days. There was the time how students used to attend the interviews in shorts and get selected with promise of fat paychecks. I also remember how newspaper front pages filled with unbelievable top salary figures (1 crore+ ) coming at IIMs and even at other B-schools such as ISB, etc.

It was also the time when Shri Atal Bihar Vajpayee ji led first BJP Govt. was at the center [1999-2004]. The then serving H’ble HRD Minister Shri Murli Manohar Joshi ji (incidentally who was friend of my late grand father) wanted to drastically reduce fees of mighty IIMs reasoning that fees is too high and probably not affordable. Fees that time was 3 lakhs for 2 year MBA programs. H’ble Minister wanted to bring it to 0.75 lakhs – a steep reduction by 75% in order to make it affordable to common class.

Ex HRD Minister Shri Murli Manohar Joshi along with present HRD Minister Shir Prakash Javadekar

However BJP did not returned to form the Govt. and Congress came at center. The issue got lost meanwhile.

IIMs planned to create their own endowment fund by then after getting nervous by this govt. plan. IIMs argued that their students are getting hefty packages and fees is too less against expenses. Hence they started hiking the fees incrementally or rather steeply. That time ISB was charging 20 lakhs+ fees while IIMs were charging mere 3 lakhs. IIMs also argued fees is substantially less than their global peers. (not very good argument when one looks at global per capita income vs. Indian per capita income). Following IIMs, even other B-schools got emboldened to increase fees by 4-5 times in a short duration of time.

Worryingly during last one decade: Fees at IIMs went up by leaps and bounds right from 3 lakhs to 25 lakhs. But avg. placements are almost stuck there only.

Lets take a case. A middle class family scene.

Father is briefed by his beloved son of his feat of scoring 99% CAT score and securing seat in several of IIMs and other leading B-Schools of India. His son also shares other details of offer letter including fees of the program close to 20 lakhs INR.

His father might not be even sure what expressions to bring on face. I assume in 90% cases he will react happily under hope some great fortune is on the way.

They (parents) are not aware/ realizing that their son or daughter is going to take an educational loan of 20 lakhs for his MBA program. This turns out to be 35000/- monthly installment for whopping 7 years.

Let me tell you, this amount (35000/- EMI) which you need to pay month on month for full 7 years is going to be a very heavy burden on your head and going to take a toll on your smile and rather carefree life.

Adding here, please realize a middle class family which hardly makes anywhere between 10000-30000 per month is entering into a loan of 35000 per month for 7 years. And your asset is tacit. You cannot touch it. It is a degree rather than some house or car. You cannot sell it even if you want. I might sound rude here but fact is fact. The boy or girl who is going to probably earn more than 50000 per month (please don’t assume that all IIM graduates earn more than 1.5 – 2 lakhs per month) is also walking a very risky and frustrating path. What if something happens to that boy or girl. He or she will further slip into loan trap and it will be very difficult for simple parents to rescue their son or daughter from a chronic tension of monthly installments. Don’t forget these sons/ daughters have moral duty to support their old parents / younger siblings financially as they are expected to come forward in this age group.

A fees of 20 lakhs in a developing nation India is highly unwanted when the applicant is already cracking some national exam (> 99 percentile) to earn his seat.

India has per capita income of some 2000/- INR per month. Imagine a son who is admitted to big institutes with hefty tuition fees tag of 20 lakhs coming from such a family.

Over the years admission procedures at IITs / IIMs have become highly skewed in favor of people coming from “well off” families rather than poor class.

Biggest irony is that in India prevailing Education Loan Interest Rate is 12-14% whereas Home Loan / Car Loan Interest Rates stands at only 10%/ 8% respectively.

Moreover, with such a hefty loan on your head drastically reduces your bargaining power with recruiting companies on campus. Which results in sub-ordinary packages cum job profiles. Over the years it becomes even more difficult to land in suitable roles.

Now compare this scenario that your son or daughter gets admit into IAS / NDA / PCS / PSUs, etc.

Scenario 1: your son gets into IAS (Indian Administrative Services)

  • Wonderful. He is getting admission to Lal Bahadur Shastri National Academy of Administration, Mussoorie. Also he will start getting monthly stipend / salary for one year of his training. After completion of training he is going to get close to 60-80k per month along with other perks.

Scenario 2: your son gets into NDA (National Defense Academy)

  • Great. He is getting admission to Indian Military Academy, Dehradun. Also he will start getting decent monthly stipend / salary for 3 years of his training. After starting his career as Officer of Army he is going to get close to 60k per month along with other perks.

Scenario 3: your son gets into PSU (Public Sector Units such as Indian Oil. etc.)

  • Good. He is again going to get close to monthly salary no less than 60k when service gets started.

In all the above scenarios, all 3 are permanent jobs with the Govt. Hence comparing it with your voluntary choice of getting into IIMs cannot be correctly compared.

While into permanent govt. jobs people are having a fix good pay structure but it was the trend people used to try for premier IIMs in order to get into top corporate jobs and aiming top salary packages which can be close to 200k per month.

But I don’t think this is happening any more. Firstly your salary has got reduced to mediocre 50k-100k per month on majority basis (not talking of few 10% who make it to 200k per month). Secondly which is more worrisome that you are having a loan with EMI of 35k for full seven years dear. Please note that you cannot even think of a break in these seven years supposedly (due to any reasons – start ups or something like that) even if you need/ aspire for.

More ironically IIT/ IIM graduates along with other top T/ B School graduates are expected to lead/ start their own start-ups (these guys have great potential for start ups). Which is again a noble move. But with above facts as I mentioned, at least for a middle class family background guy is simple “no-no”.

By very virtue of high fees structure IIMs are no longer attracting best of best minds from Indian Middle Class society. Rather they are only attracting / offering privilege convent educated kids from metros who already groom themselves for these elite institutes. Have a look at selection procedure and one can easily figure out how one stand no chance when one is from Hindi / Regional Medium school with “humble” (read poor) family background.

We should not forget IIMs are prestigious institutes set up by Govt. of India with vision of providing leaders to society. Citizens already pay Income Tax and all other applicable taxes. It is govt.’s responsibility to at least maintain affordable fees to their best institutes so that all segments of society can aspire to get into.

I hope present BJP govt. shall look into their unfinished agenda and have a good thought how justified is charging 20 lakhs fees from very those students who crack CAT 99% score and are invited to join these prestigious education echelons. This is also necessary if govt. wants their Start Up India initiative to succeed.

My thoughts only.

God Bless!!

www.rishabhagarwal.in

Rise of the Right Wing

Right Wing is on the rise. Globally.

I curiously watched US elections like almost everyone did.

Almost one month before the elections Trump was dismissed totally by the US media. Hillary was designated clear winner much in advance.

If someones is supporter of Trump it was difficult for him (or her) to speak freely in public as he might be ridiculed for his choice. I differ from this imposed thinking by the omnipotent media.

We all know how US Media Houses (>95%) were so much against Trump. And he win finally.

I recall India elections held in 2013. Almost all media in India was hell bound and harboring so much anger against Modi. He was called as a person with no values and respect for other religions and constitutional values. Despite his excellent administration of one major state of India i.e. Gujarat where he brought impressive growth, etc.. as its Chief Minister for nearly a decade, he was clearly untouchable for New Delhi elite echelons which always wanted to capture the political top seat by them in the name of various camouflage tricks such as “secular”/ “dynasty right”/ “socialism”/ etc.

Modi always advocated for Growth oriented policies. Trump is blunt and correct when it comes to call a spade a spade. The so called “liberals” disguised both these leaders in their country respectively.

Trump during the election campaign unambiguously stroke at numerous problems plaguing the society but somehow media just don’t want to admit it. It was simply the example of elephant in the room theory thought in larger public policy context.

It appears the media in every country is trying to hijack the public opinion by its own views and try to divert public opinion whenever possible to refrain them from choosing right wing. However people thwarted this attempt.

It is good to be liberal and advocate liberalism. But it is not wrong to be right wing either.

In India during Congress regime (which was marked by 10 years of plundering of national wealth under mega scams) it was unthinkable of any Indian Political Leader to visit Hindu Temple. God knows why they were so averse to follow their faith. Maybe they don’t wanted to tarnish their carefully created “secular” image.

Trump when hinted its tough plans towards ubiquitous problems such as job loss because of outsourcing/ illegal stay on US soil/ deteriorating US global influence/ and many others which I don’t want to write here, almost everyone was crying foul. The cry is still there on US streets after the results. Somehow liberals cant swallow his win.

Lets come to Putin. He is now veteran national leader who wants to restore glory of Mother Russia just as it was during Soviet time. Though there are indications that Russia is a retreating super power and one cannot do much in that regard. However with open endorsement of Trump and Putin for each other before the results, there is clear synergy that both these right wing leaders shall bring the relations to new heights which was at nadir during Obama presidency.

Shinzo Abe is again a popular face. Though his efforts to transform the GDP of Japan is somewhat still going lukewarm maybe due to ageing population and some other factors. Despite that he is certainly steering the country out of crisis and offering stability to the nation.

May is again conservative party leader whom UK people trusted with the job for BREXIT. Here also before the national voting media was showing how people are against leaving EU. But the results were opposite indeed.

Whatever all these trends are indicating but one thing is clear:

People are now hungry for the real growth and not some pseudo growth.

My thoughts only.

The “SamudraManthan” Strategy: inspired from one of the great episodes in Hindu Mythology

In my quest to understand Indian Mythological terms and relate it to present day Lifestyle or Corporate Strategies, herewith I’m writing an another point of view. Previously I blogged similar ones including “Vairagya”, an ancient Indian art of Dispassion, The “Agyaatvaas” Strategy, and Mahabharata Vs Iliad.

Above pic is of “SamudraManthan” art at the Bangkok Airport.

Now lets understand what is “SamudraManthan”. “Samudra” is Hindi word for Ocean. “Manthan” is Hindi word for Churn. There is detailed wiki page already on this topic https://en.wikipedia.org/wiki/Samudra_manthan. (it explains the origin of amrita, the drink of immortality.)

So what lesson it is imparting. (I won’t be going to write the story of this great saga which anyone can easily refer to numerous online available articles.)

My takeaway from this great saga is:

“even in our lives sometimes we are required to do samudramanthan and then venom (read “vish”) will come out first and nectar (read “amrita”) will come out last”.

Case 1:

Talk about Indian politics. What is happening currently in India. The whole nation is boiling it appears. It has become BJP VS REST. Almost all intellectuals in this country target the current govt. on routine basis with remarks intolerance; anti dalit; anti students; etc.

Why??

If we see these all intolerants were harbored by the previous Govt.s. Now instead of accepting the fact that winds of change has arrived under charismatic leadership of Shri Modi, these guys are coming out of their holes and getting exposed to their disadvantage.

Hence what Modi Govt. is doing is nothing but the great “samudramanthan” of India.

Now leave the politics apart.

Case 2:

Talk about Corporate Strategy. We all know what is Change Management. Taking hard decisions, lay offs on a big scale, closing of loss making factories, etc. in order to achieve growth, prosperity, and sustainability as a result.

So there also we are doing nothing but “samudramanthan” in a modern way.

Case 3:

Now consider personal lives of ours. In today’s honeybee life where majority are harboring big liabilities such as house loans, car loans, education loans, etc. and living a bovine life.

….sometimes we fail to do “samudramanthan” and then we fail overall….

Now instead of fear from change if we embrace it and get ready to take a big leap in our lives which is essential then probably we can have a better life as a result.

That what is taught as The Breakthrough Management. (Fortunately I studied this subject from Management Guru Prof. Shoji Shiba during my year at IIM-C). 

I feel that sometimes we all require to get ready ourselves for the breakthrough or adopt Resilience i.e. “bouncing back” with new zeal towards life. But of course one need not to do this churning of things on frequent basis. That is the caveat here. Better follow Japanese Zen after the “samudramanthan”. In my view we require “samudramanthan” once in a decade at max. Also “samudramanthan” can be done only on bigger stages of life. Not here and there.

For my foreign friends who does not know about this great saga, I briefly put some text here:

The legend goes like this that in ancient world a fight erupted between Gods and Demons. After mediation by Creator Vishnu Bhagwan, Devas formed an alliance with asuras to jointly churn the ocean for the nectar of immortality and to share it among them. The churning of the Ocean of Milk was an elaborate process. Mount Mandara was used as the churning rod, and Vasuki, the king of serpents, who abides on Shiva’s neck, became the churning rope. Even Creator Shiva Bhagwan swallowed the deadly poison in order to save living creatures on earth. (please read online articles for full saga)

Needless to say that SamudraManthan teaches us the road to purity and prosperity.

My thoughts only.

God Bless!!

www.rishabhagarwal.in

All India Voting (AIV)

In his historical Gettysburg Address Abraham Lincoln famously said that “government of the people, by the people, for the people, shall not perish from the earth.”.

We, in India, need to ponder whether we are doing adequate enough that govt.s which are getting formed in last few decades is truly representing the people of this great nation. 

Long back in Oct’14 I wrote a blog Voting via Internet!!, in which I argued the quintessential reason why Voting should be of paramount ease. I also wrote an another blog few months back BJP vs Anti-BJP and The Toothpaste Strategy, in which I tried to reason how its better that we have Two Party System like followed in United States rather than what we currently follow i.e. multiple party system.

I observed most of the political parties in India are nothing but “B” team of long ruling party here. Anyways I’m not here either to support or oppose any political party. My simple argument is that if we have multiple parties in India then they should stick to their national party ideology irrespective of the seats they gather during the elections and later should refrain from making an opportunistic alliance in name of coalition government only to fool the public.

Historically also we have only 2 major national parties in India which have so far been able to form the Govt. at Center. So why do we need multiple national parties only to confuse the public.

If we have only 2 parties in India with 2 separate school of thoughts, probably it could have been a justified way forward for the citizens that whichever party is winning is true representation of the people wishes. Not that you form an alliance after gathering seats in National or State elections and forms the Govt. much against the wishes of the people who wanted to remove the previous corruption ridden Govt..

The most clear example in this context was: how AAP in their first election forms the govt. in Delhi in alliance with Congress which public basically wanted to see removed from the Power.

It is also to be noted here that voting trend in India is mostly in the range of 50-60% only and seldom it crosses 80% in any region.

Its simply not possible for someone to travel from a far off city to his home constituency for casting the vote. With the ease of Technology available now, I’m surprised we still want registered voter to cast their vote physically and that too in his or her home state. Imagine, someone belonging to North of India is doing job in Bangalore (> 5 million Indian IT professionals must been working here) and election happens in his home constituency, what he is supposed to do? Its insane if he is expected to travel till there.

So this 50-60% voting is not true representation of people wishes. It is bound to be marred with corrupt and vote bank politics. Logic is simple. On one hand educated young professionals who migrate to major metros or abroad and who could have cast their vote in favor of development oriented political party. While on the other hand people who are left behind are more carried away easily by the Caste inspired Voting.

Can’t Govt. link Aadhaar Card and introduce Mobile or Web based Voting.

Why expecting every one to travel here and there for casting vote. The other major benefit will be safety of voters. It is common view in India that there is heavy presence of Police and Security Forces near voting stations.

There is one another huge benefit. Removing psychological fear. There are numerous cases of dominating psyche of voters with fear by local powerful political leader. His followers won’t be refraining from intimidating the voters. And then that particular political leader is winning continuously. This should be curbed.

By All India Voting (AIV), people should be given freedom to cast their votes by Mobile or Web. For sure it will bring voting surge (probably crossing 90%) which one can term True Voting. It will also ensure healthy growth of the nation and increase answerability of these parties towards THE PEOPLE.

My thoughts only. God Bless India!!

www.rishabhagarwal.in