Archive for the 'General' Category

Trying to make sense of “FDI in Retail” discussion

I have been inundated with debates about allowing FDI in multibrand retail over past few days. Most of these started with a political anchor with criticism of AAP, but soon enough BJP’s withdrawal in Rajasthan has confused me and many friends about what is going on. I had requested for analysis on this subject and some friends were kind enough to point me to some. As someone who is quite ignorant about the merits and demerits of the same, it has been helpful to read this material. Again, with the handicap of my ignorance, I will make some observations. Before I do that, let me list out the few documents that present the case (for and against) well:

Now, few rhetorics that I would like to distance from on this debate (one on each side):

  • The discussion perhaps is more about organized versus unorganized retail, rather than FDI or no FDI. Most of the discussion in references above revolves around merits/demerits of organized retail. The FDI discussion seems to have what I believe are unfounded fears – Walmart could start controlling India politically (East India Co!), and so on. Kishore Biyani of Future group would like FDI in retail – that is as Indian an entrepreneur as you can get. Why deprive him of legitimate sources of capital? There is also an argument that foreign companies will make money from Indians – I think that train has left the station. It is entirely valid for us to define what we want in return, but restricting capital flows because “otherwise foreigners will make money of us” is ridiculous. If at all, RBI should allow Indians to make money off foreigners by easing investments in markets abroad!
  • From several friends, I heard the other argument of “Its a global world, how can you restrict FDI!” A friend also exclaimed at “A VC like you arguing against FDI!” IMHO, both of these are bogus arguments. I believe India has done a better-than-average job of opening up its economy in a calibrated manner, as is evidenced by its relatively better tolerance of the 90s asian currency crisis, as well as 2008 financial crisis. There is no reason why we should abandon that calibrated approach for sake of a rhetoric. The discussion has to get oriented towards whats better for us collectively as a nation.
  • Again, other arguments “for” have included issues like increasing competition (do any of us believe there is lack of competition in Indian retail!?), increasing innovation, and near non-acknowledgement of predatory pricing (for all of us who have seen ecommerce develop in India, it should be clear that disproportionate access to capital encourages predatory pricing to an extent where that can become the determinant of success, rather than innovation itself.) Of course, those predatory pricing mechanisms will last only as long as the competition dissipates.

Now, some observations on my understanding so far:

  • One key issue here seems to be perceived loss of jobs. As the PRS summary points out, this is not a settled debate. I do think that policy decisions can not be driven purely by what is economically more efficient – jobs are an integral element of discussion, and jobs and entrepreneurship (even of the small scale variety) are the best known mechanism of income redistribution. Especially in the short term, large disruptions in jobs market are undesirable. Indian retail and logistics sector employs 40 million people, and a large scale threat to any significant piece of that can be detrimental to our interests. Some reports on Walmart’s effect on employment points out a net positive effect on retail employment, but “net job declines in food stores and apparel & accessory stores”, as well as “that Wal-Mart seems to displace other retail establishments”. Whether we ready for that displacement is an important part of the debate, that unfortunately has not happened in the public space.
  • An even more compelling argument for organized retail has been to support supply chain investments – that large scale supply chain investments will not happen unless access to retail is allowed, because retail is the way returns on those investments can be made (alternately, presence of organized retail makes it viable to make supply chain investments). The need for supply chain investments is well documented, so I will not go into that. However, are there other models of enabling supply chain investments, without necessarily disrupting the retail trade in potentially a short period of time? Such as the cash and carry model that has been permitted for a long time now at 100% FDI levels. Or by guiding multibrand investments towards desired segments and geos. If investments in supply chain is really what we need as a country, should we introduce incentives to make that happen?

The argument above is not to oppose FDI in retail, or organized retail per se. It is to try and understand the concerns that underlie this opposition, and to motivate a discussion to address those. While we may blame political parties for the flip flop and irrational behavior, I believe they are smart entities, and ultimately represent a section of people (who are your and my uncles and aunts.) One thing that I do have growing conviction is that the first principle questions must be asked, rather than be taken for granted, because “it seems to have worked elsewhere.” There has to be a reason why an intelligent party like BJP initially champions FDI in multibrand retail, but then gets uncomfortable (presumably) with the lack of checks and balances. Their constituents are telling them something, which is equally important for you and me to hear. If its all false perceptions and fear, then those need to be alleviated.

As a grade 1 student of this topic, would love to be educated by perspectives from others, as well as any more research you may be able to point me to. Thanks!

Dear Arvind

Congratulations. For reinstating faith of people in a democracy. For painting a vision of governance in India. For redefining the politics of the country.

I still vividly remember my first meeting with you in East Delhi during your Parivartan days, about 7 years back, and your gracious acceptance of our invitation to come to Gurgaon and share your work. I remember your being a soldier in the Anna movement, and the brickbats that flew when you decided to lead a political party. I remember your decision to contest all 70 seats in the Delhi elections within 14 months of forming AAP. And I remember my refrain and caution every step along the way. Thanks for ignoring me. I am your aam aadmi.

In leading AAP to the highest votes in Delhi elections, you have brought about tremendous change. I also want to thank you for a few other changes you have brought about, which might be less evident, but certainly are equally profound.

Thank you for instilling self-confidence in the Indian electorate. We have been jaded by great people who showed a glimmer of hope, but failed to make mass impact. In my lifetime, JP from Loksatta would rank at the top of that list, but no less other people who captured the public mood and anger. By channelizing the anger of masses into a constructive movement, you have shown a path for change agents of the future. Movements come and go, beliefs persist. Thank you for reinstating our belief in democracy.

Few months back, as I started to speak actively to my friends about supporting AAP, I found a wide variety of objections. Within me, and outside. These ranged from differences in policy underpinnings, to allegations of appeasement politics, to sheer inexperience. For past many decades, the argumentative Indian has used these nuances to fall back into inaction. Your call motivated us to find common ground, rather than to focus on tactical differences. This has been a personal revelation as I myself have navigated these conflicts in my mind. Thank you for helping find common ground in a country as diverse as India.

I have believed that the real change that AAP can bring is not just in being a successful party, but by redefining politics and behavior of other parties. Signs of that are visible today. Even if the BJP forms the government in Delhi, we will have a far better CM than we were staring at 60 days back. Congress has promised to introspect, and I am sure somewhere someday, their internal voice will speak. Thank you for not just being a game player, but being a game changer.

As someone whose day job as a venture capitalist is to provide advise, and whose evening passion is to invest as an angel investor, it would be hard for me to stray clear of providing advise, even as I myself admit that you have done a great job by ignoring it in the past! Your humility, even when we met yesterday in euphoric circumstances, is a trait your must hold on to dearly. Power has a way of instilling arrogance. I also believe that just like you have redefined politics, and you seek to redefine governance, it seems that the immediate task you have been mandated by the people is to redefine “opposition” – and what better opportunity to do it in front of a party which has taken opposition to mean strikes for past two years. Please do not hide under the conventional politics of saying that you don’t have the mandate. You have a mandate, and you must fulfill it.

Once again, congratulations, and let’s get back to work.

Yours truly

Alok Mittal

Government For India

British government for India was devised not for development but for control.

Independent India carried on with the same structure of governance with little tweaking & lots bloating

Organisations are designed for desired outcomes. There is ubiquitous unanimity that governance in India needs to be far more effective & efficient.

Surely the colonial government design cannot be constitutionally cocooned. Independent India must design anew a governance organization to serve & not to rule.

A TQM methodology alongwith sound OD principles must be applied to evolve an administration structure that serves the nation & its citizens.

IAS replaced ICS. Motivation of IAS aspirants is largely Power & being close to power. Besides Security.

Corporations look for achievement as the prime motivation & only those who have it are successful in leadership positions.

Every IAS, IPS, IFS is in a leadership position without job knowledge, KRAs, objectives & accountabilities in place.

Seems the prime objective is promotions & postings at desirable locations. Secretary, Joint Secretary, DCP, et al are grades not functional designations. They are akin to GM, VP & such. Job Title must be based on responsibility & accountability not hierarchy.

But Hierarchy is paramount as deep down we have imbibed Raja culture. Till date school text books glorify royalty far more than achievers. There is an innate strong need to seek those whose feet one can touch.

Instead of intelligence, we have put king sized egos on pedestal & continue to do so. And the systems & structures support the same. We must alter the system to downsize egos. E.g. each IPS officer must do the beat, write down FIRs & directly interact with the public who pays his salary. On the minimum let an SHO be an IPS.

Change has to be concurrent at political, bureaucratic & worker layers. We are far too top heavy. The politician & the bureaucrat, both view themselves, as policy makers. Who then shall execute?

We have wonderful laws & keep on adding even more ambitious ones, far removed from the ground reality. It is illegal to be hungry, uneducated, give dowry, be a child worker or employer & what not.

All this actually makes our country a lawless land as the executors & enforcers don’t even know the law, those who do know are in ivory towers & do not wish to soil their linen or dirty their hands.

One can keep going but the case for need for change is already overstated. It is time we hire external OD experts to redesign governance structures.

Pro-life = Anti-Planet (as of now)

All life consumes Earth, our host planet

More life = More consumption

Population of species other than human is regulated by Laws of Nature

Human population has been burgeoning exponentially due to human intervention (http://www.nextindia.org/index.php/2009/08/18/natural-laws-human-flaws/)

This intervention is essentially Pro-Life

Morality & Religion want us to be ‘humane’

All subjects of Humanities – Civics, Politics, Economics, etc have been devised on the principle of Pro-life. Also, Medicine & Sciences.

All progress has been to protect & grow life – the human life.

Despite non-stop wars, diseases, poverty, hunger – the net outcome is that the planet is thriving with humans & growing.

Human over-population of the planet earth is the primary problem that needs to be tackled.

If we do not address this, Mother Gaia shall do so by making the planet un-inhabitable for us.

It is not the Planet Earth that is endangered rather the species of homo sapiens.

Planet shall survive, we wont.

That a paradigm shift in the way we conduct our affairs on the Planet is necessary – has been rather evident for well over a decade now.

Powers that can be change agents seem paralysed. Even Gore was ignored. Because of models that have worked well so-far but are innately faulty as they assume a limitless earth. Democracy needs voters & Economy needs consumers. Both devise populist strategies that encourage growth in number of people. To them simply – voters & customers.

Food Security Ordinance & earlier NREGA, are designed to win elections. That they are fundamentally faulty has to be known to at least some amongst the policymakers.

Earth has reached a tipping point. The warning signals are everywhere. Writing is clear on the wall that there simply are not enough resources to support the current levels of human population.

India would be the earliest to confront this bitter truth as it carries 20% of population on 2% of the planet (http://www.nextindia.org/index.php/2012/12/03/population-control-must-be-on-top-of-our-nations-agenda-seems-to-have-died-along-with-sanjay-gandhi/)

Most of us know BPR – Business Process Re-engineering. We need to re-engineer the way we live. That starts with the way we think. Social-re-engineering is the need of the hour (http://www.nextindia.org/index.php/2009/08/15/provide-feedback-on-right-to-sex-legislation/)

IRIS Report – Social media could swing Lok Sabha elections

IRIS has done an interesting research to quantify the potential impact of social media on forthcoming lok sabha elections. Specifically, they have identified 160 constituencies where social media commands greater than 10% share of voters, and hence could have a swing effect. Read on…

Mainland Lobster

I spent the last week in Gurgaon staying at a well known complex on the Golden Mile dotted will malls & swank buildings with Metro defining the sky line. It is an impressive sight, rare in India & supposedly aspirational to small town India where I reside. Is this visionary sight a delight only for the eye? What about sounds, smells, taste & touch?
No one shall argue that the Golden Mile is a perennial noise bomb – those who missed this probably never rolled down their auto windows or found a direct route from homes to glass encased malls & offices – where the option of opening a window – has long disappeared.
One can smell almost everything & vaguely misses what may be termed as aroma of ‘crisp & clean’. I wondered if the Adidas adorned joggers partaking Perrier or RO at least were aware of increased intake of a mix that came bundled with lots more than the intended O2.
The respirational filter worked overtime precipitating on the palate a thick coating that called for frequent use of a tongue scraper if one wished to experience tastes that are subtle. No wonder that the most favored cuisines are the ones with the strong flavors viz. Chinese, Italian, Mexican, Thai & such besides Indian – but not French as it will be hard to detect taste with a tongue that has an additional layer being continuously replenished with the act of breathing.
As most may be aware a lobster is lulled to sleep & eventual demise by slowly increasing the temperature of water in the cauldron in which it is placed. I wonder whether we in these cities are similarly being seduced by glitz & glamour that dazzles & titillates on the outside but leads to slow death.
Death is inevitable in both big & small towns but there is increasing confirmation of loss of fertility & libido – the essence of life force – & the suspect culprit is urban lifestyle.
Fact is that none of the major metros of India were built by Indians. Calcutta, Bombay, Madras, Delhi – had British, Portuguese, Mughal architects. Chandigarh – the first post independence city was envisioned by French & has inspired imitations all over India. Gurgaon is entirely indigenous – as are Kolkata, Mumbai, Chennai, South Delhi, Navi Mumbai, etc. Irony is also in names. While we Indianised the names of the cities created by invaders, almost all new complexes developed have Anglicized names. It is all part of an aspirational package. ‘We have arrived’ syndrome.
It is true that there is no place to go. The residents of Mumbai & NCR may have endless debates on which city is better but the cold hard fact is that both are increasing unfit for human habitation. Calcutta exists to provide nostalgia to its migrants elsewhere & Bangalore is gored already.
Don’t we all wish for a resurrection of a Howard Roarke, should he come by where is the clean slate that we could provide him to draw & build a new Metropolis?
Meanwhile, there is dignity in being a mainland lobster – or so we must tell ourselves.

Civil Society

The first time I attended Sunday morning Church was when a colleague invited me to spend a weekend with his family up in Catskill Mountains, New York. One passes through the venue of Woodstock though the destination was a quiet farming community up in the hills. A Walmart was not too far in a town called Delhi & plenty of weekend cottages in the picturesque surrounding woods owned by Manhattan Richie-richs.
It dawned upon me how the church played a role in community building, every one who attended was attired in formals wearing a smile & the best conduct. Later I saw quiet a few of the same faces at the Ball game & even though the demeanor was sporty, the aura of mutual regard evidenced at church was carried over. Church was the invisible binding force. Purportedly, it is required to instill morality though, in my opinion, it was more than adequate that it perforated the community with observation of etiquette.
The dominant religion in India, Hinduism, is so very different in this regard. It focuses on building individuals not societies. We have a one to one relationship with the ‘God’ & at one time had almost as many Gods as people, everyone can choose their own God or Guru – options are aplenty still though we have collectively outnumbered Gods manifolds. When we wish to pray in a group, we have the option of summoning the temple priest to our homes. Religion, to us is not a binding force in the social context of etiquette but a personal growth practice. Each individual is free.
VS Naipaul had observed that left to its own, concepts of statehood, governance & such would not have evolved from Vedic or Hindu thought. I know the myriad of objections that can be cited to such a statement – in general – it is true that whatever one states as a fact about India – its exact opposite also turns out to be true. The intent here is to isolate fundamental building blocks that have influenced the way we as a nation have evolved.
Years later, while consulting for a oil company in UAE, I used to hang out with a US educated Arab whose family had a share in the company & thereby he had an executive position. We had fun times together, he had lots of fancy cars & going to clubs with him was sheer indulgence, with him bankrolling the outings. Inevitably, couple of months later, the topic veered to religion. He proudly proclaimed that his religion teaches him to love God & be in his service on call. That explained to me the rushing screeching cars heading to mosque when the call came everyday twice/thrice a day. But more than the dictum, it was peer pressure – not responding to call was blasphemous with the fellow follower having the option of blowing whistle on you. Once again religion provided the building block to glue communities together though love & regard was perhaps substituted by fear. And I have little doubt that it is the fear that breeds fundamentalism but I digress.
The point of this posting is merely to portray that we are FREEEEEE , perhaps a bit too much. With each element going its own way, entropy is bound to breed. Thus far on the Indian journey, the binding forces have been freedom movement, Gandhi, Pakistan, Cricket & Bollywood. We have to devise a common thread that ties up our diversity. And it has to be at grassroots. I propose – Civility.
Ego divides, Love unites. Though Spiritualism – the essence of vedantic & Hindu thought – leads to love – its practice is ‘I’ centric. As much as we must evolve individually – we owe to our nation in building our society. Civic Sense can be a good beginning as the rules are simple & easy to follow. Litter not, stare not, smile instead, give way, shout or honk not, extend our cleanliness concerns from private spaces to public spaces, appreciate that natural resources belong to all, waste water & bijli not, etc, etc.
I hope that you all shall contribute. I urge you to do so. For God’s sake or Despite your God.

Population Control must be on top of our Nation’s agenda – seems to have died along with Sanjay Gandhi

Mumtaz Mahal, the muse of Taj Mahal, died while giving birth to her 14th child at an age of 38. She was born in privilege, got married at the age of 19, had a very loving & caring husband who was also a very rich king & provided her with all the comforts & security.
We, the humans, are borne of Mother Earth…We the Indians, of Mother India.
Mother Mumtaz with the best nurturing possible bore 14 offspring in 19 years. If she had at her disposal the modern medicine, arguably she may have continued bearing even more children. Nonetheless, even if her health permitted, she would have to stop at menopause, the end of her fertility. There was indeed a limit to number of children that she could bear.
This is true for all mothers, including Mother Earth & Mother India.
And what about nurturing of the offspring? Wealthiest of modern mothers, with all the help from the family & domestic staff can produce as many as 30 children as the age of fertility has stretched on both the minimum & maximum end. Also the lifespans have increased significantly.
But with education & awareness, the emphasis is on quality of life not merely quantity. So they probably mother 2-3 children.
In other words, though the carrying capacity for reproduction has increased, the intelligence dictates limited offspring to ensure that the child is raised healthy, loving, creative & productive.
In agrarian economy, more were indeed merrier, industrialization & urbanization has reversed that axiom.
Today, the health of Mother Earth is at stake. Besides humans, it supports millions of other species. Yet it is finite, its resources are limited. It is not growing. Barely 12% of Earth is suitable for human habitat. And 7 billion of us occupy that. How many more can fit in? Is there room?
All that we consume is produce of earth. It is not just food. It is also air, water & energy. It is also materials that we must extract from innards of earth to build shelters & construct infrastructure that is not an option but a necessity for ‘progress’ – as we understand the term.
The other species on Earth must follow Darwinian dictate of ‘natural selection & survival of the fittest’ thereby ensuring that only the strongest reproduce. In humans, it is quiet the reverse. It is our weakest who propagate the most. The phenomenon is explained by anthropological theory of ‘culture of hopelessness’.
As we move towards projected human population of 9 billion, the question that begs an answer is: can Mother Earth replenish itself & renew its resources at a rate faster than the rate at which those resources are being voraciously consumed by us humans?
It is not merely a supply-side problem. Earth also must process human excreta. Not merely the shit & urine but the pollution – the excreta of human activity. Earth has been doing so successfully for ages. Does it have the capacity to continue to do so? Even as the energy & bio needs increase exponentially? For 8 billion, for 9 billion…..what is that maximum number of human beings that Earth can support?
Many studies have tried to answer this question. Needless to say, that they are all theoretical. But we must pay heed. The only other way of finding out would be like Mumtaz Mahal. Her limit was found by her death. We cannot let Earth die. We have no other planet that will take us. Or that we can get to. Not as yet, anyway.
The best estimate is about 4.5 billion people. We are fast approaching twice that number. It is time to pause & ponder the big picture.
It is unfortunate though, possibly an irreversible fact that we humans have divided one planet into many territories. For us that territory is India. We are destined to be the most populous nation, as of now, that is an unalterable fact. No one but only us Indians can attempt to alter that. We are blessed with a land that’s highly arable & fertile, so very conducive to human habitation. That’s why such a diverse slice of humanity chose to settle here. People from all over the world kept coming to India. It was the California of yore. Still is in some ways.
But just like much loved Mother Mumtaz, Mother India has a limit to how many it can accommodate & nourish. Even after all the slicing & plundering, we are still the seventh largest country by size. However, the first largest is six times larger & even the sixth largest is more than twice as large as us.
Fact is Mother India with barely 2% of Earth’s surface shall support nearly 20% of Earth’s humanity. That’s commendable. But is it sustainable?
We take solace in knowing that “There is enough for everyone’s needs but not enough for everyone’s greed”. Perhaps, our spirituality evolved from this accommodative nature. We share by lessening our own needs & surely denounce greed. That was so. Today greed is unleashed & needs are on the rise. Fewer & fewer opt to live simply & frugally. Imagine if the rest of inhabitable Earth would be similarly populated to India – the world population then would be 200 billion & surely even the primal needs of each one would be impossible to meet.
Migration can evenly spread the population around the world especially when there are parts of the world where the populations are declining. However, at the current rates, less than 0.5 billion shall attempt migration across the world even when the total population reaches 9 billion. And the barriers to migrate to the parts of the world where more people can fit in without causing ecological strains, are on the rise.
USA has one third the population of India & three times our size. If lifestyles were to correlate to the per capita Earth only then a very simple corollary would be that India’s population ought to be one ninth to attain parity. Over the years we have mastered the efficient use of resources. Indians are by far the most pragmatic & know how to get the maximum bang for the buck. We recycle, reuse & waste not easily. USA, on the other hand, wastes excessively. Americans need lots more personal ‘space’s, we have evolved fine art of co-existence.
So factoring in a four fold frugality, India can support 600 million plus to attain the middle class existence for all under the care of Mother Earth.
Actually, population studies indeed estimate 650 million as sustainable population for India.
We shall soon be twice as many. All of us are keenly aware that we are bursting on our seams. Our land, air, water, energy, mining resources, infrastructure etc. are under severe stress. Our rivers are dying, large stretches are already dead. We merely revered our rivers, called them holy and attributed to them magical powers of rejuvenation. And simply dumped all waste of human activity into them. As if they were carrying all that excreta to another planet. We never understood that even the greatest of rivers have a limited, finite carrying capacity. Reverence is no substitute for discharge of responsible conduct.
The simple fact is that we are far too many. The resultant toxicity is fast spreading. The ecosystem & biosphere that supports the very life is infected.
Politics, Economics, Law, Religion, et al are all systems devised by humans to better this life. We are so entangled in arguments & quarrels within these humanities with myriad of ‘holier than thou’ groups, each desperate to prevail on another. We need to stop this cacophony and get back to basics before it’s too late. Let us objectively determine as to how many people can fit in the Earth space available to us. And then design our policies accordingly to achieve that number. Surely, there would be many disagreements in such a discourse. But it ought to be easy to agree that we have already exceeded that number. The evidence is overwhelming. We are shirking responsibility to face the facts. The reality is unpalatable, so we rather shut our eyes with the belief that Gods will rescue us. Prayers enhance action, not replace it. Ganga & Yamuna are awaiting action from us, besides poojas. On their own they cannot heal themselves. They have served us well for eons. We burdened them to limits of their carrying capacities. The root cause, undoubtedly, is overpopulation.
Yet our policy makers, after overzealous failed attempts to ‘plan the families’ simply seem to have given up. After a mini burst of riding on an economic boom that was worldwide, they seem to have rationalized that ‘more the merrier’. This rationalization stems from faulty economic & governance models. In the upcoming columns, I shall expound.
Talking about excess population has been tabooed by our moralists & politicians. Through this column I urge all readers to voice their opinions on the matter. The logic is straight & solid. There is a limit to how many of us can co-exist. The human habitat is finite & limited, not growing. We cannot simply keep on gnawing & digging earth. It needs time to heal & replenish itself. For the sake of our own well being, it must absorb & process toxicity that is a result of human activity. The signs are everywhere & glaring. Yet we keep ignoring them. If for now, we cannot slow down the growth of population, let us at least not encourage procreation & its growth.
We appeal to our Parliament, Party Heads, Prime, Chief & other Ministers, National Advisory Council, functionaries at Centre & States, Think Tanks et al to urgently recognize that Populism results in increased Population. The urgent need of the hour is to brake hard & stop growth of population. Please design and deploy policies that shall lead to achieving optimum levels of population. And that will necessitate decline in our numbers. It is a painful truth to swallow.

As is the wont of Truth – Bitter Before Better.

Please do opine. Agree, disagree, whatever – but please don’t choose to be quiet.
It is a matter of life & death.
Indeed!!

Demystfying CAG – courtesy PRS

PRS | Parliament Track | Primers | Making Government Accountable.

A primer on how CAG works. Puts in perspective the role and methods of CAG, and how reports are released. As a layman, government audit reports going back to government (finance ministry) is a bit weird – they will obviously reject whatever doesn’t suit them. Madhukar, are there any checks and balances, or does the fact that these are public reports act as a counterbalance? Also, how are appointments to CAG made – seems like this is one office that everyone discredits all the time?

Budget Session 2012 – Summary

PRS has a summary of the budget session 2012 here. Looks like the parliament did get some business done.