Tag Archives: Vijay Mallya

Leaking pipe, economics and politics

10 Saturday Jun 2017

Posted by in Business

≈ 2 Comments

Tags

, , , , , , , , , , ,

Recently I went to meet one of our relatives. We were generally speaking and his plumber came, I asked what happened? He said – Pravin, we requested our plumber to fix the leaking pipe. Later we asked him to put blocker from where the leaking pipe was having water inlet. I said why did you solve the problem of leaking pipe twice? He said the fixing the pipe with m-seal and other plumbing means was cheaper. But second time you had to put a blocker, isn’t it? It costs and your plumber might have charged you twice too. I curiously went to check the place – being an insider to this family it was alright. I repeated – you tried to fix a wrong problem and you did it twice! and also by putting blocker you made the pipe irrelevant too…

The same keeps on happening in our society be it bailout or loan waiver to farmers. Those who cannot get in such beautiful moral hazard go to UK or become part of crony capitalism.

I was speaking with my wife today, she said “loan waiver is not a permanent solution”. Yes she is right. This endemic was started by government of our own very famous economist Mammohan Singh and his another gem of an economist finance minister Chidambaram in 2008. It was a waiver of 60,000 cr, largely to win upcoming election. Manmohan Singh government won that election too, just to end up embroiling themselves in scam after scams. The scams resulted in public anger and protest – India Against Corruption. There are long lists of corruption under the Manmohan Singh government however the point of discussion currently is farmer’s loan.

The kind of waivers offered mostly result in moral hazard. Just imagine, if I am a farmer – this year monsoon is expected to be good – why would I care to pay my loan EMIs when everyone is getting sops? The other trouble is – even after 70+ years of independence of India we are more dependent on monsoon rather than our skills of farming! Connecting all the rivers was a dream project of Atal Bihari Vajpayee 10+ years back, yet it has to see light of the day. Furthermore, we ignore solving the problems we created ourselves such as depleting underground water level. Mostly, the reason is – we are individually smart but collectively dumb. We assume that I cannot control where the underground water goes – why should I?

Imagine, the amount of 60,000 cr farm loan of 2008 – had it been utilized in making canals and rainwater harvesting, educating farmers for better methods of farming and technology interventions in agriculture and post harvest we might have been able to solve the problem to some extent if not completely. The other thing to note is – how can we ascertain the benefits are transferred to the right people? Those who have small land holding may be taking loans from local private lenders, also they might not even have their credit ratings for bank to offer them loans. Where exactly does such huge amount go?

Now think again about where the government gets this huge amount from? Have you ever seen your bills? Did you see Krishi Kalyan Cess? Government generates parts of such sops from us when we pay taxes – indirect tax. This is a problem to worry for middle class only. They earn and pay income tax, they buy and pay Krishi Kalyan Cess and when farmer’s are on strike they pay exorbitant amount for buying vegetables too. Mostly this expensive vegetables are procured by middlemen at cheap prices – all cash business less or least tax with black money. A better option for middle class Indian is to either become a farmer and get loan waiver or become an industrialist take loan and leave India!

When I completed my sentence – “you tried to fix a wrong problem and you did it twice!… …The leaking pipe was old and rusting, you should have changed it at first instance. why don’t you fix it permanently? My relative said “why should I? It is a rented property? I may go next year, someone else will come, so I am fixing it temporarily.” Same is with the governments – they solve a problem as temporary fix – farmer loan waiver for winning next election and not solving problem which causes farmers to take extreme step of committing suicide or protesting for loan waiver.

According to the Bank of America Merrill Lynch the farm loan waiver will cost 2% to the GDP of India by 2019. This wrong precedence was set by two of the most knowledgeable economists of India – Mammohan Singh and Chidambaram. Go figure what it means to be subject matter expert!

Panama leaks, IPL & the rulers

11 Monday Apr 2016

Posted by in Business, Business to Buddha

≈ 3 Comments

Tags

, , , , , , , , , , , , ,

Kill! Kill! Kill! the arena was full with the viewers and they were shouting, it was horrific scene. The gladiator was looking at almost a corpus – the other gladiator – who had lost the battle. Fate of this gladiator was in the hands of winner or the king. People were giving their verdict ‘to kill the losing gladiator’. What was wrong with these people who were enjoying such brutal and life taking game? I suddenly woke up and started thinking about this dream.

The arena has changed, shouts for kill is changed too and now instead of the queen asking us to “eat cake, if we do not have bread.” The politicians are serving us IPL and other trifling stuff to divert our attention.

No wonder there is widespread corruption, Panama Leaks seems to be the tip of the iceberg. Can we doubt of existence of 100s of other law firms in Panama or any other tax heaven? If there are ten more such law firms worldwide, what number we are looking at – in terms of corruption or black money? The problem is in most countries, let me take India as a case in point (as I live in India), there may be parallel everywhere though.

Secondly, heard about few of the World Cup T20 matches were fixed. Vijay Mallya haggling with banks after eating thousands of corers for settlement. On top of this haggling RBI governor stating – Releasing defaulter names can ‘chill business activity’. We are fighting with each other on who should or must win, who is in your or my dream team and here the whole economy is at the ransom of those who are so powerful and mighty and yet in so much debt (and defaulted on debt) that if their names are made public economy of country will be standstill! At the same time, it is beyond doubt that those who have defaulted have a lot of money stocked in tax heavens. Otherwise how come Dr Vijay Mallya say that he can pay 4000 Cr in coming days. Why didnt he pay this amount before KFA becoming defunct?

It is not just about one man. It is about those thousands who have stocked money and poor people of their country are dieing of hunger or more recently of thurst (In Maharashtra India) or are jobless. Once again quoting – Mr Rajan governor of Reserve Bank of India Panama Papers: Dangerous to question the legitimacy of wealth! Seriously! If people have legitimate wealth why would they hide it in tax heaven? Well, its likely that the answer will be – according to xyz legal framework created by (many of the corrupt politicians as the law maker) the then Govt it is legitimate to under Liberalized Remittance Scheme to put your money out of the country.

It is like 1. making rules for your own and close clouts convenience and 2. than hiding behind the same to make your ill gotten  money the garb of legitimacy.

FarmerIn all these – we are trending on twitter about local teams matches as hashtags! Forget that, we are not even considering that people and their cattle are thrusty but we are enjoying the tamasha of IPL where a lot of water is going in drain. Again, what is the argument? Maharashtra Govt may lose crores of rupees if matches are moved out of state. What is the probability and assurance that Govt will use the revenue generated by IPL for 1. prevention that is providing water to drought hit areas and 2. correction that is taking steps so that in future we do not face drought like situation.

Governments (in effect rulers) earn most in the tragedies of citizen – be it flood in UP or earth quack in J&K or drought in Orisa or Maharashtra even floods! We’ll forget all the natural or man-made calamities and go back to our TV set or stadium and start shouting – six, or Kohli or slogan of a team. On parallel worldwide – for IPL in India, we’ve soccer in the Europe, NBA, NFL in USA and so on!

This time the shouts of KILL are changed that is it. This time rules don’t ask us to eat cake if there is no bread, they show us the revenue generated in Govt tax collection. But problem remains – Forget terrorist! who knows the french revolution this time may explode the whole world?

Image 1 source – http://famouswonders.com/wp-content/uploads/2011/12/Depiction-of-Gladiator-games-by-Jean-Leon_Gerome_Pollice_Verso-400.jpg

Note – Author referred to RBI Governor’s statements, but believes the rot in the system is political & crony capitalistic.

Kanhaiya to Mallya why lessons from Buddha Prevail!

13 Sunday Mar 2016

Posted by in Buddha, Business, Business to Buddha

≈ 4 Comments

Tags

, , , , , , , ,

Recently India saw two very poles apart events and both can make us learn – the Middle Path of the Buddha. One incident was of JNU – ultra leftist & anti establishment – and the other was bank NPAs (one example of Vijay Mallya) – ultra rightist & Crony Capitalistic. I did not write anti-national as those who read news or biased towards one side would find my opinion biased even before reading the post fully, so ‘anti-establishment’ was the word used.

The backdrop of Javaharlal Nehru University row is this – students union of JNU requested for a cultural event. Well, for those who do not know JNU is a University in Capital city of India. JNU students union is a leftist union. This event turned sloganeering against India. The slogans – besides anti India – included supporting terrorist who (in rarest of rare capital punishment in India) was hung during previous Govt. The previous Govt was run by the  parties currently in opposition – including left front. In twists of the whole drama a hero emerged named Kanhaiya Kumar. When I searched and heard one Professor of JNU, I came to know more about left front. They seem to support the whole drama where slogans were raised against India. This support goes deep down in the intellectual class sitting in news channel studios in Delhi.

Domestic helpThough anti-establishment word sounds weird because where was the class of Kanhaiya Kumar for last 10 years? Where were they when there were a lot of corruption cases? Suddenly that class is demanding Azadi (freedom), well freedom from whom and what? If you demand freedom from poverty – work! Isn’t it a better solution? Azadi from toot-phoot (breakup) – better you do not do it, isn’t it? Currently who is involved in toot-phoot (look at parts of India where Maoists are active & killing). Azadi from terrorism – better you support or join security forces isn’t it? Why were student’s slogan in support of Afzal Guru (a terrorist)? Azadi from Manuwad & Brahmanwad (it is related to caste system of India) – I too am against caste system. Would it be better to do something at a grass-root level instead of sloganeering ‘against India’? Azadi from suit boot (economically better off) – isn’t it good if you do any of the other things listed above you would get in suit boot? Perhaps someone else will raise voice against you! But does it mean you and the other economically better off should leave everything and become poor in support of you to have Azadi from suit boot? The logic of communism is at question here – to bring affluence or wealth to less privileged is a better approach rather than making everyone equally poor to bring equality. Isn’t it? Read about Aarti Amma here these people should learn from her.

Indian Big Corporations debtOn the other hand there is another class in India – capitalists. They are those who either mend rules or get rules created to favor themselves. According to some reports the amount of debt big corporate houses in India have goes in lacs of crores (of trillion INR). The example of top 10 debtors is below in image. These corporate houses are those who keep close relations with the law-makers (political parties – either in opposition or in power). So, these debtors enjoy the debt money lavishly. Once they kind of run out of money, they get debt restructured (happens to big companies only). There is a fancy word for that – Corporate Debt Restructuring. One such example in India is Dr Vijay Mallya of Kingfisher Airline. We’ve heard of his lavish birthday bashes and Calendars; he owes 7000 cr (70 Billion INR) to banks. His airline is defunct and he recently fled; banks has declared him willful defaulter a couple of months back.

So in recent times, India has seen extremes of both the sides – failure of overly capitalistic system where crores of rupees are usurped by organizations without remorse and there are overly leftist those who want to overthrow the establishment itself. We have seen an example of USSR failing and we have seen repeated recession / bankruptcy. These examples teach us same the lessons again and again. There is a middle path that we need to follow, No left or no right. There has to be a balance.

The solution? Once again it is the eight-fold path –

  1. Perfect Vision,
  2. Perfected Emotion,
  3. Right speech,
  4. Right action,
  5. Right livelihood,
  6. Right effort,
  7. Right mindfulness, and
  8. Right meditation

All of these have to come from within, outside perspective will contaminate these. Meditation is a one single solution, it may provide each one of us from Kanhaiya to Mallya ‘tranquility’ that will help reduce the fascination to revolt or predilection to cheat. Because if we start following this eight-fold paths we would realize – ‘we all are connected’, ‘we all are interdependent‘ and if we want Azadi, this azadi would be from whom? If we want to cheat the banks, it is in turn cheating with someone who is a family of ours.

Flawed business model

27 Saturday Feb 2016

Posted by in Buddha, Business, Business to Buddha

≈ 2 Comments

Tags

, , , , , , ,

There was a company Kingfisher Airlines which owed 7000+ Cr (70+ billion INR or well over 1B USD) to a consortium of banks in India. The company could not pay its debts; its owner/company recently was declared ‘willful defaulter’ by few banks. Now, the owner Dr Vijay Mallya is shifting to England with all funfair.

Indian Big Corporations debtThis event and the total debt (sourced from a LinkedIn post above) makes one seriously think – is it true that “The wall streets fraud” as Bernie Sanders US presidential candidate has said earlier? In India, we have very contrasting examples – one side there were many farmers who were committing suicide because they couldn’t repay loans and on the other side we have banks with NPA (Non Performing Assets) & professionals who do “Corporate Debt Restructuring” resulting in many if not all NPAs in future. At present Indian PSU’s NPA is more than their Market Capitalization.

Isn’t it “a subsidy transferring wealth from the rest of us to a select few” as the article rightly says?

Just imagine – the debts given above, tax evasion, Satyam case and many other cheating happening not just in India but in almost every corner of the world. For me ‘wall street’s fraud’ is just a metaphor, there are many more frauds we are confronting daily. I have written on a few earlier – Volkswagen & Toshiba, Rajat Gupta and Moral Markets! to name a few. Are we really maturing as human race? Or we have become more deceptive and satanic?

Just another example is the double speak of developed world on saving the earth – read Profit over the Planet.

The point, after lamenting so much is always – how do we solve these problems? Only way I see is spirituality – Paris attacks – solutions please moving towards being saint in suits rather than Thief in Tuxedo.

Related blogs – What are you searching for?

Image source – LinkedIn post of Mr Hariprakash Visant