18

The Edit Page

THE ECONOMIC TIMES | NEW DELHI | TUESDAY | 29 NOVEMBER 2011

Its Politics, Stupid!

Renewing India calls for a new breed of politics, and business must offer support

The World and Our Challenges

We must do what is within our capacity and prepare to deal with worst-case events elsewhere
rect, even inappropriate, to say that all their efforts will be to naught. But it is hard to forget that in 2007, many (including this author) felt that government refinancing programmes announced the first in end-August 2007 and a second in December 2007 for cushioning subprime borrowers, could stem much of the rot at the source. It may have had. But one overestimated the capacity of the agencies entrusted with the task. May be, despite the best efforts of Europes leadership, it is already too late to save the euro at least in its present shape and perhaps in any shape whatsoever. The editorial in the current issue of The Economist opens thus, Even as the eurozone hurtles towards a crash, most people are assuming that, in the end, European leaders will do whatever it takes to save the single currency . It then goes on to opine that this is so because everyone realises that the break-up will be more catastrophic than the crisis of 2008-09. I have doubts on that score, but that is not the point. There is certainly a widespread feeling, that somehow at the last moment, there will be a saving. Maybe, but also may be not. The rest of the world, including us, should prepare for that may-be-not situation. That then brings us to the Indian context. There was a rapid recovery in output (GDP) growth rates from early 200910, particularly in the industrial sector. But ever since the second half of 2010-11 and panies will be able to pay me my dues, given their own financial condition? When the answers to such questions are in the grey zone, investment decisions are deferred. If the answers are in the zone of clear light, they will on the contrary be likely to be taken , now. There is no scarcity in infrastructure services, be it power, roads, ocean ports, airports or urban municipal infrastructure. The market is there, but the business model must be seen as viable. In order to return economic growth to a higher and sustainable trajectory, we have to put investment back on track. For that, the perceived obstacles in the path of infrastructure investment, especially in power and fuel, must be resolved; as that process picks up steam, other investments in manufacturing will inevitably follow. Without this, not only will overall growth not recover, but quality jobs will not be created in adequate numbers to meet the aspirations of our youth and public financial resources will not be replenished to enable the state to provide adequate social services to our people. Finally financial conditions , have worsened significantly . As discussed in the opening section, it may turn worse. In this circumstance, the issue of how our infrastructure and other investments will get their financing has to receive attention. Especially so, since in recent years, European banks have played an important role in Indian enterprises obtaining term finance.
SAUMITRA CHAUDHURI
MEMBER, PLANNING COMMISSION

Cosmic Uplink

ne thing that came across clearly from the debate last Saturday at the ET Awards on the Agenda for Renewal that this newspaper has been debating of late was this: more than the merits of the individual items on the Agenda, what matters is the need to forge a new kind of politics to drive positive change. Indias politics is trapped in a paradigm in which, to paraphrase columnist Martin Wolf s comment on US politics, the Opposition would much rather see the country fail than see the government succeed. Yes, everyone is convinced India needs new and new kinds of universities, yet 13 Bills that would create those changes in education languish session after session without being passed. Yes, everyone will agree in private, India needs to migrate quickly to an integrated goods and services tax (GST). It was the BJPled National Democratic Alliance government that had kicked off the process of creating a value added tax, whose logical culmination is the GST. Yet, the BJP-led states have stonewalled introduction of GST. Yes, everyone will agree in private that political funding needs to change: Indian politics is funded, for the most part, by the proceeds of corruption, suborning administration, creating delays and inefficiencies and privileging ability to game the system over excellence; but these brave thoughts dissolve in the bright light of day We need urbanisa. tion, but do not touch agricultural land! Everyone will agree on the need to excise inefficiencies in the supply chain that links or, more appropriately in the Indian , context, separates the producer and the consumer, but we will oppose organised retail. The Opposition wants the fiscal deficit to be curtailed, but the moment the government so much as thinks of slashing wasteful fuel subsidies, it will cry foul and let slip the dogs of war. Politicians seem to lack the leadership to break out of this paradigm. Will Business take the lead? Business funds politics, both as victims of extortion and beneficiaries of patronage. It is time for Business to act decisively end both victimisation and patronage, and convert , funding clout into assertion for a positive turn in the nations politics. On that change hinges Indias prosperity .

The Path Less Taken

MUKUL SHARMA

he advanced economies (two-thirds of global income) never really exited crisis mode. Almost seamlessly they moved from one , caused by subprime mortgages and the castles of sand built upon them, to another that is powered by weakness in government finances. The US averaged fiscal deficit over 10% of GDP in the last three years, including that projected for 2011, while the economy is growing at about 2% in real terms and there is no credible plan yet to mend the fiscal path. The debt dynamics are dispiriting. However, all of this is overshadowed by the mess in the eurozone. Deficits in the eurozone as a whole, are much less than in the US, but they are a melange of utterly unlike economies, where several suffer from huge debt, deficits and eroded competitiveness, yoked with others that are quite unlike, by the gilded chain of a common currency . For the past two years, European leaders have been trying to put things together. One ought not to invoke Humpty Dumpty but that is the way it is unfortunately looking. It would be incor-

GEETANJALI

now in the current year, the data show deceleration. Why and how that has come about may be seen from what has happened to fixed investment. Gross domestic fixed investment as a ratio of GDP rose from 28% at the beginning of 2004-05 to over 34% in the middle of 2007-08. The annual numbers in these two years were 28.7% and 32.9%. During the crisis of 2008-09, investment expectedly fell. However, after the crisis, the fixed investment rate never really recovered. In the last quarter of 2009-10, it did top 32.5%, but with that exception, the slow slide has continued. In the first quarter of 2011-12, it was 28.4% and possibly at about that level in the second quarter as well. Thus, the recovery in output that we saw resulted from improvement in domestic consumption and export demand and some lift from continuing investments. But the pace at which new investments came

back was weak. Thus, the recent flagging in output growth rate primarily reflects this weakness in the return of investment buoyancy Where did this happen? . In all sectors: public, private corporate and household, which includes unincorporated business. Why did this happen? In the private sector, it was certainly driven by weakness in business confidence. In the public sector, it probably had at least something to do with the diversion of resources to subsidies. ew investment always means importing more risk into ones balance sheet. If conditions look uncertain and the general risk perception is adverse, the normal course is to defer the investment decision. For instance, how do I invest in a new inland coal-based power plant when tying up domestic coal supply is such a hard task? How can I be sure that the power distribution com-

Hold Fast on Retail

The Opposition is wrong to reject retail FDI, the government must stand up for it
n its second week this winter session, Parliament continues to be paralysed. The Opposition, which raised a ruckus in the first week over issues that ranged across corruption, the division of Uttar Pradesh and Telangana, has found a new horse to flog Monday . This is the governments decision to open up multi-brand retail to overseas investments. This issue is apparently so emotive and volatile that even UPA member Trinamool Congress has joined the protest. The BJP is opposed to it, as are Mayawatis BSP, Jayalalithaas AIADMK and Nitish Kumars JD(U). Yet, its unclear why each of these parties would oppose overseas investment in retail. The BJP claims to represent small traders whose kirana businesses, it says, will be threatened. Experience shows the opposite: big retail chains, which have been around for several years now, have seen themselves pushed to the wall by local grocers, who have continued to do quite well, with no help from the BJP. Nitish Kumar positions himself as a reformer: among other things, hes trying to boost farm yields in Bihar. To do that, in Bihar and Banerjees Bengal, the output and supply of vegetables and dairy products have to go up. Today farmers who culti, vate vegetables see 40% of their produce perish before it reaches consumers. It will be great when organised retailers build cold chains and transport network and acquire from farmers rather than middlemen. Many small and mid-size manufacturers struggle to build a distribution and sales network. The entry of organised retailers could provide them with a national presence. After lying supine for nearly two years, the government has finally acted boldly It should now exercise its new. found spine by holding fast to this eminently sensible decision. To all those who say that overseas investment in retail will kill small businesses, it should simply point out that organised retail has been in India for years and hasnt dented small retail. Why should overseas money in the same sector make any difference? If investors bring new technologies, storage and logistics strategy to the business, the whole economy will gain.

Through the Third Eye

pleted two rounds of meetings with Mamata Banerjee, where it was agreed the government will have its way and Trinamool its say. Incidentally , Sharma and Mamata go back a long way to their days in the Youth Congress of which he was the national president and she, the general secretary . As FDI dominates discourse and Parliament, many Congressmen are relieved that the corruption and policy paralysis tickers have stopped on the idiot box, for now at least. bite skirmishes. Well, no prizes for guessing how Dr Joshi who harks back to the bygone Atal-Advani-Joshi triumvirate feels at being pitted against an upstart Nirupam. But some BJP leaders just cant stop talking about this levelling act. ach. No wonder, soon after the incident, Pawar received phone calls from practically every top leader including Sonia Gandhi, Manmohan Singh, Sushma Swaraj, Sitaram Yechury and leaders of regional parties, expressing their solidarity Even Parliament took a . brief break from its rocking games to condemn the attack. The party which stood out was the Akali Dal, which was touchy about the Sikh identity of the Pawar slapper and perhaps thought that criticising, the erring Sikh youth might go against the party in the Punjab assembly polls! Prakash Singh Badal, of course, is a tall leader, but his partys pre-poll sense of insecurity is only growing taller, it seems.

What does a seeker desire? He wants to know how the universe was created and what its really like, how human beings came to exist, and why and, ultimately what hap, pens to us when we finally leave our bodies behind. To that end, all seekers down the ages have been willing to try almost anything in order to gain what has come to be known as enlightenment. Yet, says Jed McKenna, author of Spiritual Enlightenment: The Damnedest Thing, to the truly enlightened being, those are the very questions that dont matter any longer because such a person now sees no difference between himself and the universe. He has left behind the character that he used to be and is no longer playing the role of himself, so, all the things that seemed to be of supreme significance at one time are just not so any more. Whats going on here? Most people on a path to enlightenment go through the search for spiritual wisdom and many achieve an elevated state of consciousness like an inner high but, again, most do not take it further than that because enlightenment comes at a huge price and theres hardly any seeker who is willing to pay After all, who wan. ts to shed their most profound beliefs, give up the props that kept him going each day and , arrive at a place where his character doesnt exist and all importance is illusory? Instead, we want to hold on to the widely-held fantasy that enlightenment means freedom from suffering, the transcendence of pain and struggle, a state of perpetual love, bliss and peace. Who wants to realise its not a happy thing, this enlightenment?

Chat Room

Growing Insecurity
Soon after the slap attack, Sharad Pawar made a statement that was a true reflection of his political persona. Pawar reminded one and all that despite being in politics for over 50 years, he has no personal enemy in any party Even his . rivals agree that when it comes to cultivating personal friends/goodwill across the political spectrum, hardly anyone can match Pawars re-

Customers Choice
ministers from Tamil Nadu ensure a better Delhi deal for their state. The pressure was such that Antony finally had to issue a statement, reassuring people that every effort by him and the PM will be made to address Keralas concerns. This refers to Kirana RIP? Not Yet by Rama Bijapurkar (ET, Nov 28). Though written with a perspective of small retailers and less from consumers point of view, the article tried to remove the magnified and unfounded fears on the impact of the proposed Bill on small retailers. In the United States, where big retailers are operating, it can be observed that small retailers coexist with them, albeit on a smaller scale. They often not just survive, but thrive. Most of those grocery/convenience stores are owned by Indians. So why cant we survive in our own land when we can do so abroad so efficiently? If we look it from the point of view of our large consumer class, it is a win-win thing; you get better goods at a lower price. Let the customer be king in a true sense.
ASHOK KARIA

Solidly Behind FDI Levelling Act

Notwithstanding the Opposition/Trinamool-DMK warning against FDI in retail, what makes industry and commerce minister Anand Sharma exude cool confidence in putting up a spirited defence of the FDI push inside and outside Cabinet? A little bird says Sharma is armed with the full backing of the Congress Core Committee the de facto super cabinet comprising Sonia Gandhi, Manmohan Singh, Pranab Mukherjee, P Chidambaram, A K Antony and Ahmed Patel for this reform push. It was only after core committee endorsement that the government leaked the Cabinet note on FDI. In the meantime, Sharma, backed by senior party colleagues, had comAs Murli Manohar Joshi was using his position as PAC chairman to project himself as the most determined crusader against the UPAs corruption, Congress strategists felt compelled to devise a method to put him in his place. Dr Joshi holding PAC meetings, press conferences and writing letters, only added to the Congress urgency Now the Con. gress leadership has authorised its junior member in the PAC, Sanjay Nirupam, whose image as a loose cannon remains intact even after he defected from the Shiv Sena, to match Joshis firepower. So, now we have the spectacle of Nirupam shooting off regular letters to Dr Joshi and trying to engage him in sound-

Slippery Pitch
The Kerala-Tamil Nadu emotional politics over the Mullaperiyar Dam touches a new high as Malayali ministers at the Centre become the target of political discourse in their home state. Union ministers A K Antony Vayalar Ravi, E , Ahmed, M Ramachandran, K V Thomas and K C Venugopal have been accused by Kerala politicians/activists of being ineffective at protecting Keralas interests in Delhi. The critics projected a contrasting picture of how all central

Never Say Die

Vijay Mallyas Kingfisher Airlines serious problems might be looking for some political cure. In fact, just before the crises in his airline came into public domain early this month, MPs had received a personal Diwali greeting from Mallya along with a gift packet comprising a bottle each of scotch and wine. In short, Mallya persisted, despite some MPs protesting against such gifts from him in the past.

Softwares Other Cutting Edge

Guest Column
S SRINIVASAN

Citings

Mumbai, November 28

P Saved by a Whisker
Growing moustaches to spread awareness about mens health is apt
hoosing the moustache as a symbol for raising awareness on specifically mens health issues all through the month of November (dubbed Movember for obvious reasons) is a clever way of getting round a bristly topic. A century ago, when this masculine appendage was more and luxuriously widespread, the Movember movement would not have had the same effect; in fact, the opposite may have done the trick. Today, as the moustache has all but vanished from modern male visages, sudden facial germinations inevitably prompt curious queries, giving motivated moustachio cultivators a chance to expand on specifically male health issues like prostate cancer. Besides, by growing moustaches, campaigners and fundraisers literally put their money where their mouth is, as close shaves with serious ailments are so often due to lack of timely information. The looped pink ribbon has done wonders to raise awareness of breast cancer, as has the red one of HIV-AIDS. Understandably, men could be squeamish about sporting yet other coloured ribbon for their health cause. Moustaches, obviously, are the obvious cheap, no-effort option. The fringe benefit, of course, is that once the moustaches new raison dtre gains popularity, then all those who sport them even without knowing about the goals of the Movember movement will become involuntary ambassadors for the cause, particularly in some parts of this subcontinent. The downside, of course, is that unlike ribbons of all hues, this is one symbol that cannot easily be grown, acquired or worn by women; not without considerable effort and chutzpah, that is. Some suitable alternative for female campaigners for mens health evidently has to be found as the project, ideally, should not be gender-biased.

owered by the first technology wave, desktops and laptops, packaged software, legacy applications, email and internet have had a dream run over the last few decades in establishing their popularity and penetration. The next wave, covering cloud computing, collaboration, virtualisation, extended enterprise resource planning (ERP), software as a service (SaaS), governance, mobiles and the like, promises to transform processes and working styles more profoundly Excit. ing as it sounds, can this quantum leap be taken for granted? Will CIOs and CEOs enthusiastically ring in the new? Concerns flow predominantly from cost and, hence, tests must commence here. Hardware costs are continuously in a tailspin. At a fractional cost, even handheld gizmos now pack more power than the most powerful business machines of some decades ago. Software cost per se has not been a repellent as seen by the proliferation of expensive ERPs. Will technological obsolescence be a deterrent? No. Though every migration is stressful, who wants to revert to DOS? Also, current buyers welcome change. Would perceived vendor instability cause concern? Digital customers will painfully recollect being digested by Compaq and then by HP Since big-ticket . mergers and acquisitions have engulfed the brick-andmortar world as well, this is of

lesser concern. Rather than these, the larger issue could be tinkering with tariffs, and a few illustrations will throw light on this hypothesis. Normally applications were , and still are charged as a fixed cost per user-licence, giving unfettered usage by anyone across the organisation. Perhaps to shore up revenues, some vendors shifted the base to other parameters such as number of employees in the organisation. But organisations are thinning; why not the number of processors? With the focus shifting to processor cores, this became core-based. To deal with single-, dual- and quad-core processors, vendors devised processor factors, processor value units and multipliers to reckon charges. Virtualisation reduced physical servers and hence vendors swung from installation to instance-based charges. Some cloud vendors are either non-committal or irrational in their tariffs. ERP offers fertile ground for predatory pricing. Perhaps to add bang for their buck, some vendors have progressively restricted the capability of licences. In case an organisation requires additional licences for an existing activity they ,
The terms of software licensing could choke off the huge potential of cloud computing The larger issue on software licensing could be tinkering with tariffs IT must not short-change the customer or change the rules of the licensing game

must buy premium licences compared to earlier versions. A case of buying a second car with a condition that colossal charges will apply if brakes are required. Extrapolating this trend, an even more horrifying prospect is that through progressive restrictions, vendors may specify the exact role permissible to each employee at an atomic level. Thus, organisations that reengineer by integrating functions such as manufacturing and quality and small organisations with limited staff will have to subscribe to premium licences only Also, organisat. ions becoming lean and mean may end up buying more. Instead of enabling, IT may actually curtail business processes, and even routine processes may have to be performed based on what licences will permit, a grotesque case of cutting the foot to suit the shoe. Some vendors back this plan with compulsory access to systems, comprehensive audits, punitive levies in case of perceived violations and slicing licences shift-wise, job-wise, namewise, location-wise and server-wise, with stunning effect. While tariffs are becoming abstruse, equal complexity is

building up in general terms and conditions as these vary with new purchases at times. The task of understanding and monitoring licences purchased with kaleidoscopic conditions is worthy of being handled by a separate ERP . What is the upshot of the moves and counter moves in software licensing for new technologies? Gain on the swings is lost in the roundabout. For buyers, falling hardware prices may rock, but supercharged software will sock. This scenario may be contrasted with the explosive surge in mobile communications where both phone cost and tariffs have plunged. Business leaders face innumerable challenges in running their enterprises. Unwittingly IT vendors add to , this tension, through their grim assault. Clamour and claims of solutions for malicious malware, disaster drills and cyber shenanigans abound. Touching a morbid level, a recent ad for governance and compliance talks of a strategy for CIOs to avoid incarceration. To these, we must add turmoil in tariffs and third-degree threats. A far cry from ITs claims to relieve CEOs headaches. Great technology is available and customers need it. However, tech and tariff must ensure gain for the customer. Ignoring such basics may motivate customers to seek alternate solutions. IT must be a game changer for the customer. Not something that will either short-change the customer or change the rules of the licensing game.
(The author is a senior IT executive. Views are personal)

On Management
RANJAY GULATI

Wrong Enemy?
In the ongoing war of words between the Congress crown prince and UPs Behenji, the latter has declared the Congress the main enemy of her party in next years assembly elections. But does not the BSP swear by its impeccable secular credentials? In that case, the slot of adversary number one should go to the communal BJP! The Congress party, after all, has steadfastly adhered to its sacrosanct principle of secularism over the last few decades!
ARUN MALANKAR

Employees not connected directly to profit and loss can suffer from a collective I-amnot-strategic identity crisis. Managers need to allow socalled support function employees to become catalysts for change. Marketers, human resources managers, finance managers and other socalled support-function employees often have trouble defining their worth because their jobs are not directly tied to profit and loss which is how companies often gauge success. As such, they tend to view themselves as overhead, and they paradoxically try to justify their existence by falling into adversarial policing roles in an attempt to cut costs for the company. Business managers should encourage these employees to view themselves not just as support functions that police other departments but as catalysts for new ideas and company growth. Ultimately, we all have a sense of work identity. We talked about it in terms of DNA, but its really about helping people redefine their identity in a broader, proactive, impactful, result-oriented way. If youre tied down by your job description, you restrain your impact. Its self-limiting behaviour. It becomes a vicious, self-fulfilling prophecy. The stronger one identifies with ones function, the harder it is to collaborate with others.

Mumbai, November 28
Letters to the editor may be addressed to

editet@timesgroup.com

Blinkers Off by Salam