Indian Economy Status Update. Current Account Deficit Crisis.

Indian Economy Status Update. Current Account Deficit Crisis

Indian Economics and Politics:The Bihar Story

Ever since the Government of Nitish Kumar came to power, the State of Bihar has been on the path to progress. It used to be famous for kidnappings, caste wars and  lawlessness and its people started migrating out in large numbers leading to unrest in cities like Mumbai. Things have changed dramatically and with an improvement in law and order, the economy of the State has grown rapidly.
This link provides you with the details.
http://news.in.msn.com/national/article.aspx?cp-documentid=4483599

INDIA : THE RURAL BPO.

http://knowledge.wharton.upenn.edu/india/article.cfm;jsessionid=a830ab3a44fb5a82fbac91e3a12315017242?articleid=4450

With spiralling real estate costs in metros and urban centres and improved IT infrastructure, BPO's are shifting to small towns in India, where salaries too are much lower.

60 YEARS OF THE INDIAN ECONOMY

60 years of the Indian Economy
http://timesofindia.indiatimes.com/India/India-rising-falling-stumbling-speeding/articleshow/msid-5496684,curpg-1.cms

Economic Development in India and China vis a vis the UK and USA

 Hans Rosling on the rise of China and India over the years. Witty, interesting and a simple take on the linear data involving growth in life expectancy and per capita income. He manages to illustrate how political changes affected these two development indicators and how things are expected to pan out. The key points to be noted include the impact of war on the economy and how  skewed economic growth can be a dampener.
http://www.ted.com/talks/hans_rosling_asia_s_rise_how_and_when.html

India and China to launch joint study on the unorganised sector

The Institute of Rural Management Anand is collaborating with an institute in China to study and compare notes on the unorganised sector in both countries as it provides the key to generating employment opportunities to the bottom rungs of the pyramid.
Click here to read more

IN INDIA, YOU STILL GET JOBS

'In India, you'll still get a job'

James JoseSun, Jan 18 10:53 AM

New Delhi, Jan 18 (IANS) The 'India Shining' story may be under stress by the ongoing economic crisis, but some sectors and career options still hold promise for job seekers this year, according to human resource experts.

Leading advisory Boston Consulting Group says India will have a demand for 85-90 million people across various sectors, and the majority of the demand will come from high-growth industries like IT, outsourcing, banking, retail and healthcare.

Similarly, a survey by HR consultancy Manpower projects hiring to rise steadily by around 18 percent from this quarter in many sectors, signifying that jobs in India may not be entirely affected by the financial turmoil in rich nations.

'India poses a far more positive outlook as compared to what has been happening across the world,' said Cherian Kuruvila, director operations, Manpower India, adding that seven percent gross domestic product (GDP) growth for the country showed that the economy remained healthy.

'Employers in the mining and construction industries as also services sector are especially looking to scale up,' Kuruvila told IANS, but added that new jobs won't be distributed evenly through all regions and industries.

India has a work force of 484 million people, of which 273 million work in rural areas, 61 million in manufacturing and about 150 million in services, says the Boston Consulting Group that recently conducted a study on the country's services sector.

'Going forward, the Indian economy is likely to be overwhelmingly dependent on the growth of services. More than 70 percent of India's incremental GDP and 60 percent of new jobs over the next five years are expected to be generated by services.'

A survey across the Asia-Pacific region by TNS, a market research and business analysis firm, with Gallup International, a global human resource consulting firm, also threw up interesting findings.

Sixty-two percent of the Indians polled felt they would be able to hold on to their jobs in 2009 and the 57 percent who expected unemployment to rise did not not consider they would be the ones affected.

'It seems, despite the slowdowns and reports of downsizing, there is an overall confidence among the employed in India that 'My job is secure! Difficulties, if any, are for others, not me',' said TNS India executive director Chhavi Bhargava.

Experts concede that the present financial meltdown has raised doubts over the performance of some industries and its impact on salaries and perks, but hope Indian businesses will come out of the slump earlier than their counterparts overseas.

'The impact on salary was felt in 2008 and it may continue till some time. The payouts were significantly lower than the 15-200 percent bonus payouts in 2007,' said Absolute HR Services chief executive Kunal Banerji.

'Gone are the days of experimentation with jobs. I would advise employees not to be adventurous checking different jobs. Stability is the mantra,' said Confiar Consultants managing director Vivek Ahuja.

Apart from advising employees to keep their jobs this year, HR consultants also feel these are also the times when people will turn to age old values and ethics and play by the book.

'The old adages like no substitute for hard work and no short-cuts to success are back in vogue,' Banerji told IANS. 'Stay hungry for work or stay hungry is the mantra for corporate India.'

IPL vs ICL Why the first mover came last and a Business Man's Guide to IPL

I was pleasantly surprised to see that SOLUS, a magazine brought out by the Advertising Club of Mumbai,had carried my article on the relative performance of the Indian Premier League and the Indian Cricket League.This was initially published in June 2008.
Given that the next season the Indian Premier League is due this summer, it may make for an interesting read. The ICL had its second season this winter and the results could be evaluated against this backdrop.

CLICK HERE

The full article on the IPL which is a "Guide to the Businessman" is available on clicking this link

CLICK HERE

Vinod Natesan
Mayan Consultants International
natesanvinod@rediffmail.com

QUICK PROFILE:
Mr. Vinod Natesan, Proprietor of Mayan Consultants International, is a post graduate of the Institute of Rural Management Anand. In the 19 years in the industry, he has been associated as a marketing consultant with the World Bank and NDDB, has serviced ITC, Procter & Gamble Unilever and Telco accounts while working for FCB, Lowe and Leo Burnett. He headed the Mumbai branch of PSL McCann Erickson, winning numerous creative awards like the Clio for work done on the Guestline Hotels and the Mahindra brands. In 2000, he joined, JWT as Assoc Vice President & Strategy Planning Director on the De Beers account and was part of the team that won the Effies and the Subash Ghoshal trophy for the Nakshatra launch. In 2002, he shifted to the Middle East and has been handling marketing assignments with retail groups like the Landmark Group, with Tourism promotion bodies in Tunisia and with tourism related authorities in Kerala. His last stint was with the Emirate of Ras al Khaimah, where he set up the Tourism Office and the Media City and left it as the Head of Operations, RAK Investment Authority. He has also been a visiting faculty in most of the management institutes in Mumbai since 1996. He currently operates out of Mumbai and is involved with projects in Trivandrum, Hamburg, Jharkhand and Mumbai. These include project feasibility and appraisal studies, advisories on market entry into India, tourism infrastructure related surveys and diagnostics and also advertising and marketing strategy related assignments.
PUBLICATIONS:
http://www.agencyfaqs.com/perl/news/index.html?sid=17427
http://www.adclubbombay.com/index.php/solus/511-why-the-first-mover-came-last

BLOGS:
http://vinodnatesansportfolio.blogspot.com
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WEB SITE

www.vinodnatesan.com

POEM IN PENURY?

Christmas Carol For 2008

You'd better watch out

You'd better not cry

You'd better keep cash

I'm telling you why:

Recession is coming to town.

It's hitting you once,It's hitting you twice

It doesn't care if you've been careful and wise

Recession is coming to town....

It's worthless if you've got shares

It's worthless if you've got bonds

It's safe when you've got cash in hand

So keep cash for goodness sake,

HEY You'd better watch out

You'd better not cry

You'd better keep cash. I'm telling you why:

Recession is coming to town!

Finance products are confusing. Finance products are so vague

The banks make you bear the cost of risk.

So keep out for goodness sake, OH You'd better watch out

You'd better not cry.

You'd better keep cash I'm telling you why:

Recession is coming to town.
UNKNOWN AUTHOR - POSTED IN A LIST SERVE OF EX-NDDBIANS

DELLOITE ON THE GLOBAL ECONOMIC OUTLOOK

Deloitte economists offer more optimistic persective in Global Economic Outlook Q4 report

Written by five Deloitte global economists, it predicts that, although developed country economies will continue their serious downturns, the massive infusion of government money should restore activity to the credit markets and set the stage for recovery. Emerging countries will feel the negative effects of this downturn.

The report looks at the historical precedent of financial crises in Norway, Finland, Sweden, and Japan in the 1990s, as well as the United States during the savings and loan crisis. It suggests that bank recapitalization can be beneficial to economies and that the financial burden on taxpayers is not necessarily onerous. Yet the report also notes that economic downturns triggered by financial crises tend to be deeper and longer than those that start for other reasons.

'Unlike some past financial crises, this one resulted in a rapid and massive governmental response on both sides of the Atlantic,' said Dr. Ira Kalish, Director of Global Economics, Deloitte Research. 'Thus, there are reasons we can be cautiously optimistic about the medium-term outlook for the global economy.'

The report offers a long-term view, suggesting impacts in multiple business sectors. 'The credit crunch is part of a long-term restructuring of the economy,' said Dr. Kalish. 'The result will see a shift in the U.S. economy away from a consumer-driven import base to an export-based economy. Asia on the other hand, will develop as more consumer-based economies. This creates opportunities and challenges for business across industry sectors.'

'In the United States, recapitalization of banks will help to revive credit market activity,' continued Dr. Kalish. 'Eurozone banking consolidation will have a positive long-term impact on European capital market efficiency. Finally, the emerging economies of Russia, India, and China, while slowing, will remain important drivers of global growth.

'Once economic recovery resumes, inflation will be a significant challenge in many countries, with some like India and China already walking a tight rope. The longer it takes for countries like these to address inflation, the more difficult it will be to suppress future inflationary pressures.'

Omar Fahoum, Chairman and Chief Executive of Deloitte & Touche Middle East, commented on the findings of the study for the Middle East by saying: 'GCC currencies are effectively pegged to the U.S. dollar not to make their currencies competitive but to reduce volatility in their export receipts; their single biggest export, oil, is priced in U.S. dollars. When the price of oil went up, increased income resulted in asset bubbles especially in the real estate market. Saudi Arabia, U.A.E., Qatar, and Kuwait all have asset bubbles as well as high levels of inflation. The question now is whether countries that currently peg to the dollar will move fully to the Euro or to a basket where the Euro has a substantial weight. The former is highly unlikely because news of the demise of the U.S. dollar was premature as we are currently witnessing, and countries would have had to revalue their currencies causing their competitiveness to be hit. GCC countries will probably remain pegged solely to the U.S. dollar because they have the money to essentially buy themselves out of the situation'.

Offering a closer look at the impact of the volatile price of oil, Dr. Kalish said, 'A drop in oil price could partially offset the negative impact of the credit crisis. However, relatively elevated oil prices will negatively impact production.' The OECD predicts this impact on growth to be greater in the U.S. due to its high reliance on energy and weaker currency (at $120.00 per barrel, -0.21- -0.51 and -0.06- -0.2 percentage points in the United States and Euro Zone growth respectively).

Country findings:

• Brazil faces a slowdown in growth due to lower commodity prices and reduced demand for manufactured exports. The country will probably resume moderate growth once the global economy eventually recovers.

• In China, the outlook is hazy, with GDP slowing and the Chinese government balancing as best it can both rising inflation and slowing growth.

• India faces slower growth. Longer term, the outlook will depend on the government's ability to invest in infrastructure.

• In Japan, our best guess is that the downturn will be short-lived and the recovery will be relatively robust.

• Russia faces the perception of risk on the part of foreign investors. Excessive dependence on oil is but one of several factors that pose future problems for Russia.

'This report is meant to provide a strategic perspective about the economy for the business community,' explained Dr. Kalish. 'In the current environment, it is important for companies in both developed and emerging countries to understand the risks they face and the potential impact on their business strategies.'

LIGHT AT THE END OF THE TUNNEL

Light at the end of the tunnel

* PWC’s Sivarama Krishnan’s take on the economy is that ,there is enough liquidity with individuals and banks and that given the cautious sentiment , there is none being put to use, either as loans or as investments.

*The argument is that this “meltdown” and “crunch” for India is just a short run phenomenon, since most companies are focused on shoring up bottom lines by addressing costs. ( 71% of companies surveyed by PWC).

*Given that the fundamentals of the economy are robust (agriculture, industry), the industry belief is that the GDP growth rates would be at least 6% by the next fiscal. In the medium term therefore, there would be revival of demand for project finance. (50% of companies are looking at cheaper sources of funds for the medium term).

*Innovative methods like public deposits as also forming JV’s(40%) are being considered. Acquiring of competitors is likely to happen as the “consolidation’ phase happens and the “shakeouts” throw up the weak players.

*This seems to be true. While Foreign Institutional Investors have pulled out $12 billion from the Indian bourses this year, Foreign Direct Investment to India surged to $2.56 billion in September. FDI has come in from Mauritius ($5.27 bln, Singapore $1.72 bln, US $1.15 bln, Netherlands $580 mln. This reflects a growth of 259% over last year. “The target FDI of $35 billion will be met”, feels Kamal Nath, the Union Minister for Commerce.

* The Oman State General Reserve Government Fund has picked up 24.5% in the 2500 acre Ansal Township called Megapolis . The Value of the project is is Rs26,500 crores. The total investment made is reported at Rs 13000 crores . Warburg Pincus, a PE firm along with CitiGroup is eyeing a substantial investment in this.

The land acquisition price was reported to be Rs 40 lakh an acre.

*Struggling US auto major has not scaled back its investment of us$500 mln in India to increase capacity and manufacture a ’small car’ (read -low cost car).

*Toyota has doubled its investment in India by pumping in Rs 1553 crores into its Bangalore plant. Again this is for a “strategic small car”.

*However Tata Motors shut down its plants for 3 days to reduce build up of inventories and while blue collar workers ended up with a reduced pay for the period, white collar was not paid at all.

* Production has been reduced in all auto plants and this includes Ashok Leyland (26% reduction), Eicher (38%, in response to a slide in sales of 55%), Mahindra‘s figures are not available.

Consumer Durables have had a good season it seems. The season (sept –oct)

Accounts for 25% of annual sales. Apparently the growth was 50% over the same period last year. This could partly be because last year, Diwali was in November and this year it has come to be counted with the October sales.

The disbursements to Government employees was made prior to Diwali and with the revisions and arrears, there was sufficient liquidity to drive off take this year.

LG claims a 50% growth with LCD TV’s leading the pack. Samsung has had a 35% growth trajectory, here too LCD TVs is the driver. Refridgerators and Washing Machines are next in row. For Godrej, it was washing machines.

*Incidentally these Durable Mfrs have not used any discount schemes and most schemes offered were at the retail level. This probably explains why the primary sales to retailers is being slowed down this quarter. There is likely to be an inventory pile up with the retailer in the next two months!!!

THE BOTTOM LINE IS THAT THERE IS LIGHT AT THE END OF THE TUNNEL IN THE MEDIUM TERM.

p.s.

*Swaminathan Aiyar’s column this Sunday in TOI is a worthwhile read as also Shashi Tharoor’s take on Obama’s chances. To complete the list , add Shoba De on “Fashion” the movie, very incisive, intelligent and insightful.

TRACKING THE INDIAN ECONOMY -NOV 6TH ,2008

The Indian Economy as on Nov 6^th 2008

*The PM has requested the industry to ensure that there are no lay off’s. With the elections round the corner that is understandable. There is also talk of enhanced investments in infrastructure to expedite projects (read : improve liquidity in the system). Expenditure is social sectors would be enhanced. This will ostensibly be not done through the “smart cards” that have been used in some States and proved extremely effective in welfare projects but through the “traditional” health and educational projects. (grass root level politicians should be happy!).

*As if on cue, the LIC has pumped 15000 crores into non convertible debentures of private companies with AA ratings.

*While Mulri Deora will celebrate his son’s wedding to Manmohan Shetty’s daughter in an austere fashion, with due respects to the economic situation in the country, he might treat the country to a reduction of at least Rs 2 per litre on petrol given that crude has come down to the figure of 69$ per barrel.

*The calm on the surface however, belies the undercurrents.

* Kingfisher defaulted on lease payments for 4 jets. Given what happened to Jet, he may not risk slashing jobs, but salaries are likely to be cut .The “sons of the soil” argument is now being extended to “desi vs videsi” pilots. Cutting the salary of expats is now the clarion call. This has been heard at Jet and is likely to be the scenario at KF. “King of hard times” seems to be the best way to describe Vijay Mallya nowadays J

*The fall in crude and ATF has not seen a cut in prices from the premium airlines, but the budget airlines are expected to reduce prices. Some of them have introduced full service “value class” options. I guess now it is a case of “anything that flies”!!! There should be some downward migration of customers from the Mallya- Goyal Alliance.

* In the travel and tourism sector, it is learnt that web sites and agents are not likely to be given commissions as of yore and travelers may soon be getting better deals by dealing directly with airlines. Hotels may remain the bread n butter of these sites

*From 150 proposals every week for realty projects in BMC(Mumbai Muncipality), it has come to 15. According to the TOI Mumbai ( a couple of days ago)there is a list of real estate projects in Mumbai which are on hold. Real estate prices are likely to move down significantly in the next quarter.

* There is a reported freeze on new recruitments in most companies in all sectors. Spice Group has gone in for salary cuts and probably there are others too.

* News channels seem to have been the worst hit. Most financial services, realty companies which form the bulk of advertisers in these channels are “flighting “ their schedules and the channels in turn seem to be “grounding” variable costs and that now seems to include staff costs. There is no blood bath as yet but the chiseling has started according to news reports.

*PWC mentions that in the Rs 51,300 crores ,Entertainment and Media sector, the growth rates would come down from 17% to single digits. Sale of movie tickets and rights in India was estimated at Rs 9,600 crores for 2007(annual growth rate of 14%). This is not likely to be repeated in the next year though the closing figures for 2008 may not be alarming. The Rs 22,600 crore TV industry too, which had a 17% growth will see a slide.

*The sports industry too will show a decline with sponsors backing off and in case of the EPL , the precarious situation of a lot of Clubs were exposed with the crisis of the Iceland Bank. Australia and New Zealand , which are popular cricketing nations also have huge financial problems. The Australian Bank has cut interest rates and in new Zealand there are reports of financial companies going bankrupt. (The tourism industry in Kerala , which saw a spurt in inbound from Australia is likely to be hurt , more so given the overall dip in inbound from W.Europe and UK that it relies on)

*The only saving grace is the 6^th Pay Commission report which was disbursed to the Govt employees this Diwali (40%) .The next instalment (60%) is scheduled for next year.

*FMCG too, should hold fort. People will continue to eat and have a bath and brush their teeth J never mind the meltdown and the roll backs!!

GLOBAL MELTDOWN- IMPACT ON THE INDIAN ECONOMY

According to Percy Mistry who was writing in the Business Standard, the world financial crisis has turned into a global economic slump. Fear about future job and income security has spread more rapidly in all countries than anyone thought possible.

In a few days, people have reined in spending, more swiftly than central banks had contemplated. So have companies. Volvo reported that its total global orders for new trucks in Q3-08 were 115, vs. 42,000 for Q3-07, when things were turning bad. Auto firms are gearing for a 25-40 per cent fall in global demand. So, steel mills are shutting down furnaces across Europe.

The UK economy shrank by 0.5 per cent in Q3-08. The US economy has shrunk likewise. It would be surprising if numbers for continental EU and Japan did not look similar or worse. Contrary to expectations, China will be lucky to register a growth of 8 per cent in 2008-09. India will be fortunate to hit 7 per cent.

But the issue is not whether growth in OECD in the next few quarters is minus 0.5 per cent or minus 2.0 per cent, or whether Indian growth turns out to be 7 per cent or 8 per cent.

The Reserve Bank of India's [Get Quote] latest credit review suggests that the authorities are in denial about how rapidly unwinding could occur with a change in public sentiment, despite our robust domestic market.

The issue right now is whether governments and central banks realise the magnitude of the economic implosion they risk (through complacency or fright, even in relatively robust economies like India) without decisive action; even if it seems to traditionalists to be over the top.

The facts have changed dramatically. Governments and central banks must respond accordingly. Right now, perception and signalling are even more important than reality in ensuring that the public's fearful sentiments are allayed.

But governments and central banks seem in denial about the ineffectual impact of their Herculean exertions last month, which saw unprecedented financial rescue and liquidity pump-priming packages being put in place.

Yet, despite these efforts, which were necessary (if too little too late), the second shoe has dropped. The effects of that are likely to be large and contagious, as sudden concern about the vulnerability of ALL emerging markets suggests.

The financial crisis of 2007-08 required bank balance sheets to be propped up through measures unimaginable two months ago. But those rescues were based on harm done by sub-prime debt, toxic securitisation, and uncertainty about coverage in the credit-default swap market, which unzipped after the demise of Lehman Brothers and (virtually) of AIG.

With a full-blown global recession now under way for 2008-10, even prime loan portfolios will turn sour until economies turn around. That will result in increasing non-performing assets in portfolios that were until two months ago regarded as secure.

So banks will go into a second round of provisioning, write-downs and reserve accretion, requiring more capital. But government rescues have exhausted the ammunition available to fight this new scourge. The Brown Plan will make it more, not less, difficult to raise more bank capital.

National governments, having mutilated their budgets with financial rescues, are now talking up plans to launch counter-recessionary public capex programmes; even as demands on social security safety net financing increases with rising unemployment.

But, as Japan showed in 1990-2005, large public capex can be ineffectual, even counter-productive. What may be better is inducing private consumption through direct and indirect tax cuts, along with expenditure incentives, to ensure that private consumption does not fall through the floor.

But, with governments having stretched their fiscal deficits beyond tolerable limits, those measures seem counter-intuitive and dangerous. If a first-order problem has been created by spending and borrowing too much (whether by individuals, families, banks, companies or governments), can it be solved by spending and borrowing even more?

The answer intuitively is NO. But the consensus among global policymakers seems to be YES - at least until panic subsides and normalcy returns. Even if one agrees, it cannot be without deep concern about mortgaging the future.

The WORLD BANK takes a more optimistic view:

The World Bank report on "Global Financial Crisis: Implications for South Asia" released on Thursday shows that even as India is relatively more exposed to the contagion effects of global financial markets, risks associated with it are countered by a fundamentally strong macro economy including prudent foreign debt management, high savings rate, solid financial sector health, and a pro-active monetary policy management.

These steps will allow India to ride the crisis without destabilizing the financial sector. Further, the report indicated that the main effects of the global financial crisis will be to reduce the availability of funds leading to higher interest rates and lower public and private investment that will hurt growth.

According to the report, "The largest economy, India, is relatively more exposed to the contagion effects of global financial markets through adverse effects on capital flows from portfolio and direct foreign investments, and also through exposure of domestic financial institutions to troubled international financial institutions and to contracts-including derivatives-that have undergone large value changes. The evidence so far shows significant losses in the stock market and a reduction in the flow of foreign capital.

RBI has already responded by letting the exchange rate depreciate to stem the outflow on the current account, by providing extra liquidity to the financial sector, and by raising the limit on private foreign borrowing. The nature and depth of the global financial crisis is still evolving and there is a significant downside risk of further slowing down of net capital flows and a hardening of terms. But these are countered by an overall healthy banking sector with low non-performing loans and a comfortable capital base and a pro-active monetary and exchange rate management. Foreign debt and debt service is low, and reserve cover ($274 billion) is still substantial. The high domestic saving rate (34% of GDP) provides added cushion."

Given that an election year is around the corner, Government is pulling all stops to ensure that there is no "blood on the streets". The roll back of the Jet Airways layoff and the instruction to the Industry captains to avoid "pink slips" is aimed in this direction. LIC and public institutions stepping in to improve liquidity is part of the symphony being played by the Government orchestra. No wonder Karl Marx has suddenly emerged as the best ing author of the week!!!

Global Meltdown The Indian Impact .2008

I happened to run in to Nanubhai on Dalal Street. He was eating Khaman Dhokla in a farsan shop.
'Kame chho, Nanubhai?' (HOW ARE YOU NANU BHAI?
'Saru chhe.' (OK)
He was looking glum but gestured me to join him.

As I bit into the tasty dhokla with tangy chutney on the Friday afternoon, which was fast turning into a 'Manic Friday' as per Dalal Street lingo, hewas staring at the bull near the entrance, which overnight had become a Russian bear hugging everybody that passed the Street.

Nanubhai is a well-respected Dalal Street dada with an answer to every shareholder's query.

'What went wrong with Lehman Brothers?' I asked.

Lots of things. If the founder brothers, Henry, Emanuel and Mayer were alive this wouldn't have happened. Lehman Brothers were more than a 150-year-old company. But yet, it had no Lehman in the company. Such a situation can never happen in India.'

'Are you trying to tell me an Indian would have handled this differently?'

'Bilkul. If it was an Indian firm, Lehman Brothers would have fought as soon as their father died and divided in to three companies. They would have diversified into clothing, polystyrene, petrochemicals, vegetables, movie making, telecom, drilling oil, mobile phones, retailing, books, spectacles, gyms, wellness. In short, anything and everything under the sun. They would have made money for themselves and their shareholders.'

'But when there is massive failure there would be no option but to file for
bankruptcy?'

'Fail-wail chance hi nahin! Even if they encounter tough times, they would have friends like Mulayam Singh and Amar Singh to bail them out. They could finish off competition by befriending the finance minister and getting duties levied on the imports of competition. They would fund and befriend ruling parties. Unfortunately for Lehman Brothers in 2008, without a Lehman on the board or some Indian business brothers at the top, they couldn't openthe survival kit to stay afloat.'

As we were sipping double kadak chai, I asked: 'Did anybody anticipate this global meltdown?'

'Anticipate? Mazak chodo! I will tell you something. America has some 45 Nobel laureates in economics from 1970. From 2000 alone there are 15 Nobel laureates in econometrics sitting on company boards, treasury benches and in places like Harvard, Stanford etc. Kisiko kuch patha nahin tha! How come none of these had any inkling to the disaster awaiting the banking circles all over the world? Even the finance ministers of G-7 talked of strong 'fundamentals' of world economy around this time last year! Two months back the only topic they were discussing was the rise in oil prices.'

'What will happen if it goes all on like this?'

'Some American economist will study this, write a new a theory and get Nobel Prize next year, dekhna. Seriously, they forgot things like control, double check, systems-in-place etc and brought in vague words like Subprimes to give loans left, right and centre.'

'What will happen to the Indian market?'

'It's already having the Lehman Brothers' effect. Our finance minister seems to like the figure 60,000. While presenting the budget earlier in the year he pledged Rs 60,000 crore to write off loans given to farmers. Now he is pumping Rs 60,000 crore to help out the banks! I don't know what he will do next. He is again from Harvard!'

'What is the lesson to be learnt from the Lehman Brothers' episode?' I asked
as we were leaving.

Nanubhai took a spoonful of saunf and said: 'You know, we have an old elementary rule for keeping hisab-kithab. Divide a page into 'Left' and 'Right' with a line in the middle to denote Debit and Credit. In case of LB, as somebody said, nothing was right in the 'Left' and nothing was left in the 'Right',' concluded Nanubhai.

THIS WAS FORWARDED BY A MEMBER OF THE XNDDBIANS GROUP