- True globalization is not just free trade, but also free movement of labour (humans).
- There is a difference between secularism and pluralism. Hinduism is pluralistic in essence. So, technically Hindutva is not truly secular. However, pluralism embraces good of all participating religions to evolve a better society; it does not fight them. Therein lies the secret of peace, harmony, and prosperity.
- Hindutva (or Hinduism) (or, Indian religio-cultural system), nay, all Indic philosophies are essentially pluralistic, i.e. they believe that multiple paths exist to the same reality. That is why many philosophies could co-exist in this country. One could be polytheist, shamanist, monotheist, monist, agnostic, and even atheist and yet be part of the same religio-cultural system. Existing theories could be challenged, debated, modified, accepted, rejected because there was space for everyone.
- A pluralistic system mandates that all participating philosophies agree on the basic non-negotiable principle of pluralism, i.e. there exist multiple and equally valid paths to the same reality, or God.
- Philosophies that do not accept pluralism as a basic tenet cannot become part of a pluralistic system. Either such philosophies tend to overthrow the system, or are thrown out by the system. In fact, if all participating religions agreed on the principle of pluralism, there would be no need for 'conversions', because all religions would be equally valid. 'Conversions' imply rejection of pluralism.
- Religions that do not understand pluralism will be very uncomfortable with a pluralistic system. The Indian religious system had nurtured various religions to co-exist peacefully for thousands of years. Accepting pluralism goes against the fundamentals of most major non-Indian religions. It will kill those religions altogether. That is why they will be uncomfortable.
- Stupidity attracts more stupidity. Not ignoring stupidity gives it legitimacy.
- It is difficult to keep bias away from interpretation.
- Sometimes, a system deliberately chooses to allow Type 2 errors in order to avoid Type 1 errors. In this case, the system allows for later review and correction of Type 2 errors.
- Every time people talk about their rights, they need to be reminded of their responsibilities.
- The fundamental question about Uniform Civil Code is 'who decides what is right?' This code gives rise to the possibility for the Government to impose a certain system of morality on the population whether or not the latter agrees with it. Unless, the government draws the basis of Uniform Civil Code on some fundamentally non-disputable moral axioms, the code can be abused by the government, whether the current, next, or the future ones.
- When something becomes an article of faith, it is best to sit back and not argue over it.
- It is our responsibility to be not swayed by opinions of others, but to constantly seek the truth, howsoever uncomfortable it may be, and howsoever opposed to our inherent biases it may be.
- There is a difference between knowing the right things and doing the right things.
- It is impossible for human societies to eliminate differentiation. However, discrimination can and must be eliminated.
- When there is an equally valid shortcut to a certain path, people will always choose the shortcut.
- It is important to distinguish between design problems and implementation problems.
- Every prostitute was once a virgin too.
- हवस एवं घृणा की भूख कभी नहीं मिटती है।
- It is difficult to keep bias away from interpretation
- Victims of religious riots should never be identified by communities. For every story of a victim from one community, another story of a victim from another community will be spoken, and this leads to greater polarization and discord between the communities.
- One can question an intelligent person's ideas, but one cannot question the person' intelligence.
- 'Open Secret' is a wonderful tool to disguise and propagate speculations as truth.
- Easiest way to eliminate hardliners (or, for that matter any political opponent) from political space is to discredit them with stories, real or otherwise, of moral/ financial/ ethical corruption. Once discredited, it is easy to put them out of public memory.
At the same time, it is important to check any budding hardliners (or, political opponents) on the fringes before they gain a wider audience. - In the land of crooks, the first person to be hanged is the honest one.
- Unsolicited help, unsolicited information, and unsolicited advice must never be offered.
Wednesday, 30 April 2014
Musings
Thursday, 27 March 2014
Wednesday, 26 February 2014
Why PSU banks should not be merged?
Read this article on Swarajya Magazine
----
Recently, there have been some murmurs from some corners that PSU banks should be merged for reasons that include, among others, improved efficiency, greater coverage, increased competitiveness, and greater muscle to compete with private banks.
The reasons behind such suggestions, however well-intentioned, are fundamentally flawed. For one, the field of play is not at the same level for the private banks and PSU banks. Without such an equality established, the idea of PSU banks competing with private banks cannot be termed as fair. Let me enumerate the reasons.
PSU banks come from an era when Internet banking, Phone banking, and even ATMs had not yet arrived. These banks invested heavily in real-estate and established physical branches at different cities, sometimes at multiple locations within the same city. Each of these branches had to be staffed with people. When the age of Internet and mobile phones arrived, PSU banks had to add-on to their branch-heavy infrastructure with an equally heavy IT infrastructure. The costs of maintaining physical branches, staff, and IT infrastructure not only adds to high operational costs of PSU banks, but also leads to redundancy of resources.
Compare this to the private banks in India who have a substantially lower branch density which they augment with a large ATM network within the city to provide basic banking facilities to consumers. Additionally, phone banking and Internet banking reduces customers' need to visit branches very often. This gives private banks flexibility to rationalize on the number of branches and reduce costs of real-estate and wages.
Technically, it could be argued that PSU banks could also fashion such an optimal channel strategy to rationalize costs, but this is easier said than done. PSU banks are heavily regulated by the Government. They are mandated by the Government to open branches in rural and semi-urban areas where private banks rarely have a presence. Many of these rural and semi-urban branches are practically running in losses since the business generated by these branches is not even enough to cover the costs of operating the branches.
Moreover, with strong employee unions present in PSU banks, it is nearly impossible to lay-off people in case the banks decide to shut down the loss-making branches. Having a large number of redundant staff will not only lead to massive inefficiency in operations, but will also lead to a lot of negativity among the employees, thereby adversely affecting the banks' performances.
This is also the reason why PSU banks have not been able to utilize outsourcing options because it entails laying off redundant staff which the Unions will fiercely oppose.
Finally, every PSU bank worth its salt has a branch in the most important commercial areas of any city. These branches are, without doubt, responsible for a significant share of the banks' business. If two PSU banks are merged, then what happens to their respective branches in the same areas? Which branches will be shut down and which will be retained? Which set of staff will be laid-off and which ones will be retained? There will be many such insurmountable issues.
Unless PSU banks are given the same freedom and flexibility as private banks (or, are privatized), the idea of merging PSU banks is akin to pushing them down the path of disaster. This is a sure shot way to decimate them.
A more reasonable solution may be seamlessly integrate banking between different PSU banks so that customers are able to access banking services for their accounts in any PSU bank irrespective of the bank they opened their accounts in. This might also open opportunities for PSU banks to share a common ATM network, common Internet banking and phone banking platforms.
Unless the Government wants to deliberately bleed PSU banks to the point whether they can be put up for sale to private players at throw-away prices, the strategy of merging PSU banks is inexcusably ill-thought.
----
Recently, there have been some murmurs from some corners that PSU banks should be merged for reasons that include, among others, improved efficiency, greater coverage, increased competitiveness, and greater muscle to compete with private banks.
The reasons behind such suggestions, however well-intentioned, are fundamentally flawed. For one, the field of play is not at the same level for the private banks and PSU banks. Without such an equality established, the idea of PSU banks competing with private banks cannot be termed as fair. Let me enumerate the reasons.
PSU banks come from an era when Internet banking, Phone banking, and even ATMs had not yet arrived. These banks invested heavily in real-estate and established physical branches at different cities, sometimes at multiple locations within the same city. Each of these branches had to be staffed with people. When the age of Internet and mobile phones arrived, PSU banks had to add-on to their branch-heavy infrastructure with an equally heavy IT infrastructure. The costs of maintaining physical branches, staff, and IT infrastructure not only adds to high operational costs of PSU banks, but also leads to redundancy of resources.
Compare this to the private banks in India who have a substantially lower branch density which they augment with a large ATM network within the city to provide basic banking facilities to consumers. Additionally, phone banking and Internet banking reduces customers' need to visit branches very often. This gives private banks flexibility to rationalize on the number of branches and reduce costs of real-estate and wages.
Technically, it could be argued that PSU banks could also fashion such an optimal channel strategy to rationalize costs, but this is easier said than done. PSU banks are heavily regulated by the Government. They are mandated by the Government to open branches in rural and semi-urban areas where private banks rarely have a presence. Many of these rural and semi-urban branches are practically running in losses since the business generated by these branches is not even enough to cover the costs of operating the branches.
Moreover, with strong employee unions present in PSU banks, it is nearly impossible to lay-off people in case the banks decide to shut down the loss-making branches. Having a large number of redundant staff will not only lead to massive inefficiency in operations, but will also lead to a lot of negativity among the employees, thereby adversely affecting the banks' performances.
This is also the reason why PSU banks have not been able to utilize outsourcing options because it entails laying off redundant staff which the Unions will fiercely oppose.
Finally, every PSU bank worth its salt has a branch in the most important commercial areas of any city. These branches are, without doubt, responsible for a significant share of the banks' business. If two PSU banks are merged, then what happens to their respective branches in the same areas? Which branches will be shut down and which will be retained? Which set of staff will be laid-off and which ones will be retained? There will be many such insurmountable issues.
Unless PSU banks are given the same freedom and flexibility as private banks (or, are privatized), the idea of merging PSU banks is akin to pushing them down the path of disaster. This is a sure shot way to decimate them.
A more reasonable solution may be seamlessly integrate banking between different PSU banks so that customers are able to access banking services for their accounts in any PSU bank irrespective of the bank they opened their accounts in. This might also open opportunities for PSU banks to share a common ATM network, common Internet banking and phone banking platforms.
Unless the Government wants to deliberately bleed PSU banks to the point whether they can be put up for sale to private players at throw-away prices, the strategy of merging PSU banks is inexcusably ill-thought.
Tuesday, 7 January 2014
Life of (Good) Bye
“It’s important in life to conclude things properly. Only then can you let go. Otherwise you are left with words you should have said but never did, and your heart is heavy with remorse."
"I suppose in the end, the whole of life becomes an act of letting go, but what always hurts the most is not taking a moment to say goodbye."
- Life of Pi by Yann Martel
"I suppose in the end, the whole of life becomes an act of letting go, but what always hurts the most is not taking a moment to say goodbye."
- Life of Pi by Yann Martel
Friday, 3 January 2014
AAP's Delhi Government: How to reform reforms?
AAP has certainly caught the imagination of the popular media, and to a large extent, urban youth. It's image of being an honest party, with the advantage of having a clean slate, definitely is attractive to a number of people who are tired of waiting for India's Big moment.
With this promise of future, people voted for and then welcomed AAP to form the Government in Delhi. The party has not disappointed so far. Within the first few days of its coming into power, the new government introduced new water and electricity subsidies, ironically called reforms by their supporters, that provided free water and cheaper electricity to people with lower consumption of the said utilities.
While the idea to give something free to the deprived does appeal from a humanitarian point of view, there are some important points that AAP need to look into to ensure that its said reforms are indeed progressive and not regressive for the nation.
Firstly, cross-subsidization of a set of consumers by charging a higher price to another set of consumers is not unheard of in the history of economics and business. At the face of it, the new schemes of the new Delhi government appear to be following this principle but there is an important distinction. In case of cross-subsidization, there is an apparently inferior product or service that is offered at throw away prices the losses due to which are more than ably compensated for by those who aspire to purchase a superior product or service at a much higher price. It also puts in place an incentive for consumers of the inferior product or service to aspire for the superior product or service. In the current scheme, there doesn't seem to be any such evidently superior product or service for those paying higher prices. This therefore, contrary to the intended result, compels people to seek lower prices for the said product or service by cheating and other unscrupulous means.
Secondly, every subsidy scheme that is offered must clearly outline the intended results/benefits, a fixed time-frame within which to achieve the results, and a well-defined regular monitoring and periodic review processes. The results of the monitoring and review processes should be shared with the public. This would ensure that subsidy schemes do not become perennial bottomless dumping pits for tax payers' money.
Thirdly, the government of Delhi needs to eliminate corruption in distribution of water and electricity to ensure fairness in implementation of these schemes. Pilferage must be stopped, electricity theft must be eliminated, and tampered meters must be identified and corrected. Without these solid ground-level actions the schemes would remain good only on paper and the existing disenchantment may continue to persist, if not grow even worse.
Fourthly, the government of Delhi must ensure that the benefit of these schemes reaches the intended segments and reaches only them. As has been pointed out earlier by several other journalists, commentators, and politicians alike that a number of poor households in Delhi do not even have a proper DJB connection, let alone functioning meters, and therefore cannot avail of the benefits of the water subsidy being offered by the Delhi government. The intended benefit however accrues to those who have valid connections and meters even if they did not need the subsidy in the first place.
While the above points are important from an operational point of view, the Delhi government also needs to focus on the strategic aspect of these subsidy schemes, namely, the basic rationale on which the nature of the subsidies has been founded. The government needs to clearly define what is meant by high-usage and low-usage. It needs to share the set of criteria and analysis based on which it concluded that the limit of 667 litres of water a day and 400 units of electricity a month represent all and only the deprived sections of the society. Are these limits chosen arbitrarily? How many people actually consume less than this limit? What is their socio-economic profile? What percentage of consumers consumer under this limit? There is no point in announcing a subsidy if the percentage of population that consumes under the said limits is insignificant. The subsidy then only reduces to mere symbolism without any intended social benefits.
Finally, in all this, the Delhi government must ensure self-sufficiency of finances for itself and all its various departments. The government must share its plans on how it intends to fill the revenue deficit, either in the short-term or the long-term, that is caused due to these subsidies. Simply bleeding the State exchequer dry will not only defeat the purpose of a positive change that people of Delhi sought but will also put AAP in the unenviable club of other 'socialist' parties like SP, RJD, TMC etc.
The people of Delhi have high expectations from AAP. It is time for AAP to deliver and distinguish itself.
With this promise of future, people voted for and then welcomed AAP to form the Government in Delhi. The party has not disappointed so far. Within the first few days of its coming into power, the new government introduced new water and electricity subsidies, ironically called reforms by their supporters, that provided free water and cheaper electricity to people with lower consumption of the said utilities.
While the idea to give something free to the deprived does appeal from a humanitarian point of view, there are some important points that AAP need to look into to ensure that its said reforms are indeed progressive and not regressive for the nation.
Firstly, cross-subsidization of a set of consumers by charging a higher price to another set of consumers is not unheard of in the history of economics and business. At the face of it, the new schemes of the new Delhi government appear to be following this principle but there is an important distinction. In case of cross-subsidization, there is an apparently inferior product or service that is offered at throw away prices the losses due to which are more than ably compensated for by those who aspire to purchase a superior product or service at a much higher price. It also puts in place an incentive for consumers of the inferior product or service to aspire for the superior product or service. In the current scheme, there doesn't seem to be any such evidently superior product or service for those paying higher prices. This therefore, contrary to the intended result, compels people to seek lower prices for the said product or service by cheating and other unscrupulous means.
Secondly, every subsidy scheme that is offered must clearly outline the intended results/benefits, a fixed time-frame within which to achieve the results, and a well-defined regular monitoring and periodic review processes. The results of the monitoring and review processes should be shared with the public. This would ensure that subsidy schemes do not become perennial bottomless dumping pits for tax payers' money.
Thirdly, the government of Delhi needs to eliminate corruption in distribution of water and electricity to ensure fairness in implementation of these schemes. Pilferage must be stopped, electricity theft must be eliminated, and tampered meters must be identified and corrected. Without these solid ground-level actions the schemes would remain good only on paper and the existing disenchantment may continue to persist, if not grow even worse.
Fourthly, the government of Delhi must ensure that the benefit of these schemes reaches the intended segments and reaches only them. As has been pointed out earlier by several other journalists, commentators, and politicians alike that a number of poor households in Delhi do not even have a proper DJB connection, let alone functioning meters, and therefore cannot avail of the benefits of the water subsidy being offered by the Delhi government. The intended benefit however accrues to those who have valid connections and meters even if they did not need the subsidy in the first place.
While the above points are important from an operational point of view, the Delhi government also needs to focus on the strategic aspect of these subsidy schemes, namely, the basic rationale on which the nature of the subsidies has been founded. The government needs to clearly define what is meant by high-usage and low-usage. It needs to share the set of criteria and analysis based on which it concluded that the limit of 667 litres of water a day and 400 units of electricity a month represent all and only the deprived sections of the society. Are these limits chosen arbitrarily? How many people actually consume less than this limit? What is their socio-economic profile? What percentage of consumers consumer under this limit? There is no point in announcing a subsidy if the percentage of population that consumes under the said limits is insignificant. The subsidy then only reduces to mere symbolism without any intended social benefits.
Finally, in all this, the Delhi government must ensure self-sufficiency of finances for itself and all its various departments. The government must share its plans on how it intends to fill the revenue deficit, either in the short-term or the long-term, that is caused due to these subsidies. Simply bleeding the State exchequer dry will not only defeat the purpose of a positive change that people of Delhi sought but will also put AAP in the unenviable club of other 'socialist' parties like SP, RJD, TMC etc.
The people of Delhi have high expectations from AAP. It is time for AAP to deliver and distinguish itself.
Saturday, 31 August 2013
Thank you for all the fish!
There is an old saying: Give a man a fish and you feed him
for a day; teach the man to fish and you feed him for the rest of his life.
Evidently, the present day executives and members in the current
Indian parliament with an average age hovering around 60 do not believe in the wisdom of the old. The irony is telling!
However, I don’t write this to highlight the ageing
executive of a young country like India, or even remotely allude, accidentally or
otherwise, to the possibility of some of them being senile. Any such inference,
should you bravely venture to explore, is entirely at your own risk. I shall
offer no support – moral, legal, ethical, logical, or mathematical – to such a
misadventure. I may be spared for my new found selfish zeal to protect my
life, family, property, and career in the wake of the new IT act introduced by the
present incumbent in the Government.
My intention to write this piece is only to highlight the
apparent lack of scientific rigour in the process of policy formation in the
country. I don’t mean any disrespect to renowned economists like Dr. Sen or Dr.
Bhagwati, but I do demand in the spirit of scientific inquiry, and to ensure
that every rupee that I pay to the Government of India is utilized with utmost
discretion and efficiency, that there be a due diligence done before the government
starts investing money in any scheme.
What’s that got to do with fish, you ask? A lot, in fact.
Well, mostly indirectly.
Let’s take the example of a person who does not fish.
There could be several reasons for this and I shall illustrate a few below:
1.
There is no fishing cord/net
2.
There is no pond/water source
3.
There is no fish in the pond
4.
The person does not know how to use the cord/net to
fish
5.
The person cannot use or doesn't have access to the cord, or pond
6.
The person does not have the ability to fish
7.
The person does not have money to buy cord/net
8.
The person is too lazy to fish
9.
The person is a vegetarian (well, what can you do!)
Imagine if I were to take up a research on “How to feed fish
to everyone?”
Imagine now that at the end of my research, I submit a
report that has a single line solution to this problem – buy fish for everyone
and then sell it to everyone at Rs. 1. But in order to prevent people from
over-consuming fish at what I deem to be a cheap price, I also put a restriction on
the number of fish available to each person to 4 fish per day.
I guarantee you that in any self-respecting institute, and
that includes the likes of IIPM too, such a research will be tossed out of the
window, fed to a shredder, or be donated to a friendly neighbourhood vegetable
vendor to wrap his vegetables in.
The reason is simple. The solution is absurd. The objective
was never to personally feed fish to people, but to enable them to fish to sufficiently
fulfill their nutritional requirements. Moreover, the choice of the price – a rupee
per fish, in this case – and the quantity – 4 fish per person per day – is absolutely
arbitrary. What if someone has a higher or lower nutrient requirement or cannot
afford fish even at the price of a rupee? Does our solution achieve the
intended objective?
Here is a table that illustrates the different scenarios and
their possible solutions. There is an additional column with a solution that
the current incumbent may have proposed in the fish universe.
Factors whose absence may
adversely affect fishing
|
Possible solution
|
Incumbent’s solution
|
||||||||
Money
|
Tools (cord/ net)
|
Natural resource
(ponds / water)
|
Produce (fish)
|
Skill
|
Physical Ability
|
Access
|
Desire
|
Prefer-ence
|
||
X
|
Easy finance/
loans/ employ-ment
|
4 fish
per person per day
|
||||||||
X
|
Tool subsidies/ Tool rentals/ Tools sale/ distr.
channels
|
4 fish per person per day
|
||||||||
X
|
Altern-ate
sources / artificial ponds
|
4 fish
per person per day
|
||||||||
X
|
Cultivation techniques / pisci-culture technologies /
conservation
|
4 fish per person per day
|
||||||||
X
|
Training
/ educat-ion
|
4 fish
per person per day
|
||||||||
X
|
Machine aided-fishing / employ-ment in auxiliary
services
|
4 fish per person per day
|
||||||||
X
|
Better proprietary
laws / better infrastructure / pond-ownership reforms
|
4 fish
per person per day
|
||||||||
X
|
Provide incenti-ves to fish / social awareness
|
4 fish per person per day
|
||||||||
X
|
Awareness
on benefits of fish
|
4 fish
per person per day
|
||||||||
Absence of multiple factors would require several
combinations of solutions to be devised.
Ideally, a study on these lines would necessarily require a study of a large sample of the population to understand why some people fish and why some people don’t; draw up different factors and variables and their influence on people's fish eating behaviour; enumerate and rank solutions based on their effectiveness in improving fish consumption based after due market studies and pilot projects. The final recommendation would be implement a portfolio of solutions for maximum impact with a provision to monitor, review, and revise periodically.
Ideally, a study on these lines would necessarily require a study of a large sample of the population to understand why some people fish and why some people don’t; draw up different factors and variables and their influence on people's fish eating behaviour; enumerate and rank solutions based on their effectiveness in improving fish consumption based after due market studies and pilot projects. The final recommendation would be implement a portfolio of solutions for maximum impact with a provision to monitor, review, and revise periodically.
This brings us to the reality of our world. The Food
Security Bill (FSB) was passed in great hurry by the parliament in the current
session of Lok Sabha, and there has been a lot of noise in favour or against
the bill. But nowhere have I noticed the government presenting any study that
outlines the factors for starvation or under-nourishment of people in the
country. Nowhere were the causes outlined, nor a study on how the current FSB
was the best possible solution to alleviate those causes was presented. Heck, I don't even know what the original problem is that the current incumbent is trying to solve through FSB.
Almost everyone has referred to one’s ‘gut-feel’ to support or oppose the bill. Some have touched upon
the issues of money, funds, and inefficiency of government etc. in discussion
the merits of the bill, but where is the study of the most important variable
in this entire equation – the people?
Does the government claim that FSB guarantees to alleviate
starvation and under-nourishment from the country? If so, then in how many
years will it fulfill this promise? Does that mean the government hopes to not continue FSB after the guarantee period is over? Where is the study on how the
prices that were arrived at are the best prices? What if someone cannot afford
rice at a rupee a kilo? Will the government consider offering rice free of cost
then? Does the government guarantee that every poor person will benefit from
this scheme? If these promises are not fulfilled, then what are the penalties
for the government? Is there a scope for review of this scheme at a specified
time in future?
The sheer lack of scientific rigour in the formation of this
policy is horrifying. Should the executives of the Government not be subject to scrutiny and trial
under criminal law if the scheme that has such an enormous social, political, and financial impact turns out to be a dud?
Need a fish, you say? Go fish yourself!
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