Stop the Belgaum nonsense

Enough bad blood has already flown in resolving the Belgaum issue and we see no solution to this problem in the near future. MES observing state reorganization day as black day and Kannada groups countering this behavior has only aggravated this problem. The current generation has very little or no real understanding of the problem. If you ask any person from south Karnataka belt the first thing that comes to his mind when he thinks about Belgaum its VTU and Marathi populatiom oppressing Kannadigas !!!! yes that's the sorry state of affair. 

Language policy has been a contentious issue ever since the states were divided on linguistic basis after independence. But in a country like India drawing borders is very difficult considering the sheer complex diversity of the country but somehow it was done to a satisfactory level. Not every one was happy about it as there were some looser and some gainers.Some bordering villages in northern parts of Karnataka that has large sections of Marthi speaking population was included in Karnataka and in the southern part of Karnataka Kasaragood which is predominantly a Kannada speaking town was merged into Kerala.

If given a chance to voice my opinion I am a strong proponent of 2 language policy in these areas. I would def encourage development of Marathi and Kannada in border villages and towns. If some body wants to display board in Marathi or study only in Marathi medium school so be it. Any business or education is always driven by demand and supply. Why would some body want to go to Marathi medium when there are much more opportunities in learning Kannada. Or to put it in a different way did we just miss the bus in capitalizing the advantage Kannada has in its own land. How ever there is a rider that I wan to add to this opinion of mine. We have to have clarity on the 2 language policy. This is applicable only in the border towns where the 2 languages exist due to their indigenous nature. The same argument cannot be translated to Hindi boards in Kormangala or Tamil boards in Frazer town of Bangalore city. We need to be discrete about the indigenous language and the migrated population. Indigenous people did not have a say in the division of state or deciding as to which state their territory belongs to but the migrated population definitely had a chance. 

We can understand the bad mouthing by Ka.Ra.Ve, MES and Shivsena as they are protecting their support base but why should eminent people like Dr.Kambar get involved in this. The national awards are not a license to  represent the people of certain region they belong to. National awards are only an acknowledgement of their amazing contribution to the world of literature. Such national award winners should raise above the caste,religion and regional biases and reach out to the entire nation. If they are interested in playing a bigger role in politics of regionalism and ideologies  they must stay away from these awards. We have earlier seen Dr U R Ananth Murthy unsuccessfully playing the Kannada card for obtaining a Rajya Sabha Nominations is an example to this. 

But one thing is for certain the current shape of the states are final and there is no compromise in that. Belgaum and its surrounding villages are part of administrative Karnataka and they shall continue to remain so. We have to protect Kannada as its is one of the ancient languages in India. But the energy for development of this is directed at the wrong places. 

Sky Jump Video

Wondering what is wrong....here is an example

This time an off shoot topic but a very close one to my heart.We have seen Anna Hazare,Akka Irom Sharmila etc go on hunger strike to correct the system in India but here we have a situation which clearly shows what is is wrong with India.

Recently popular Kannada actor Darshan was accused by his wife of indulging in domestic violence and also accused him of assaulting her under influence. The domestic laws in India are skewed  considering the fact that women needed utmost protection when the laws were formulated and has not be been revised owing to pressure from various groups.Police are called in who promptly arrest the actor and produce him before the judge for seeking bail. The bail is rejected on some clumsy technical grounds that the State did not have representation and bail is rejected!!!. Actor has to be lodged in a facility that lodges individuals with notorious crime ranging from as serious as terror plot to petty pocket picketers waiting from a date with court. Actor who has won various state level accolades does what he is best in doing pretends he is sick and is admitted to hospital sparing himself from the Jail facility. Mean while the reason for violence is suspected to be the actor's alleged extra marital affairs with an upcoming actress. Mean while invention happens and wife withdraws some charges and owes the 1st degree trauma she suffered on her arms and head to the slippery floor in her bathroom!!!. The ailing industry which has various cartels for actors, producers,directors etc pitches in a  domestic matter where it has very little expertise and bans the upcoming actress. Now here is the twist the ever fanatic fans of the actor who have their own cartels now jump in to demand the release of  actor and damage pubic property. The good for nothing tabloids aggravate the situation with some careless stories and observations.

The above story shows the flaws:

• The Police

Police is not professional enough to conduct independent investigation. They are often influenced by individual's personal stature ignoring the fact that he has no special rights. They fail to collect formidable evidence which could be used against the person in the court of law. They are either not trained enough to handle this kind of situation or some one in the top is passing orders to go easy on the case. Their main focus is on the accused and they often ignore that fact that collecting water tight evidence can stop victim from retracting the statement during the trial stage. 

• The Victim

Victim often scumble to pressure and retract the statement giving the individual a 2nd chance. They don't ensure the accused goes through some kind of corrective mechanism's like counselling etc there by paving way for being victim again. 

•  The film industry

The industry should be doing what it is best in doing. Simply make quality  films or influence government in making policies that favor the industry. But here we see an industry doing the above two mentioned as its parttime job and taking up cudgels for river water distribution,solving domestic violence etc. Seriously think about it would you be OK if your boss walks to your desk with a pink slip as he did not approve of your movie date last week ??? If you don't approve of the above please add the upcoming actress to the victim list as well. 

• The People

Because of the all the above reasons tax paying individuals are affected for no fault of theirs. Fans damage public property, Police impose sec 144 and the already low editorial quality of news papers stoop to a new low.  Yes please do add them to the victim's list. 

Corporate Cash Flow

I came across this wonderful blog by Aswath Damodaran where he provides an insight of the corporate cash flow.


The link to the blog is here : Link 1 


His profile is available here: Profile

Snap shot of the blog is here:

There are four reasons why cash may be trapped in foreign subsidiaries:

a. Operating reasons: To the extent that there are significant growth opportunities in foreign markets (especially in Asia), the cash is being held in abeyance to cover investment needs in these markets. 

b. Foreign restrictions: In some markets, the country in question has put significant restrictions on remittances from that country back to the United States. To be fair, these restrictions are sometimes tied to incentives or favorable tax treatment offered to the company for investing in the country.

c. US tax laws: Income generated by US companies in foreign countries is first taxed by those countries, when it is earned. However, it is not subject to US taxes until it is remitted back to the United States, with foreign taxes paid allowed as a credit. Thus, if a US company generates $ 1 billion in taxes in China, it will pay the Chinese corporate tax rate of 25% on this income. When that income is remitted back to the US, the income will be taxed at the US corporate tax rate of 35%, with the $250 million in Chinese taxes paid already as an offset. The net tax paid to the US government at the time of remittance will therefore be $100 million. By letting the cash accumulate in the foreign subsidiary, the company will be able to delay paying taxes to the US government. Since the US has one of the highest marginal corporate tax rates in the world, cash accumulation in foreign subsidiaries is a given, with the accumulation being greatest in countries that have marginal corporate tax rates much lower than the United States.

d. Accounting: Adding to the tax law is a GAAP accounting requirement that US companies with foreign income recognize the US taxes that they would have to pay on that income, in the period in which the foreign income is generated (rather than wait for remittance). There is, however, an exception. If the company makes the assertion that it never intends to bring the cash back home, it does not have to recognize US taxes. Not surprisingly, many US companies make this assertion to reduce taxes paid on income statements (and increase after-tax income).

Thus, there is both a cash flow and a reported earnings rationale for holding cash in foreign subsidiaries and the cost of remittance will increase over time, as the foreign cash balance increases.

Hot 'N' Cold

Anna Hazare has been successful in getting the arm chair patriots of India to the streets. People are protesting against corruption and believe JanLokpal bill will address the rot in the system. Well as usual I have a different take on this issue. Before that  let me clarify that I have not read any version of the Lokpal bill. My understanding of the bill is that there will be a chief ombudsmen who will will be vigilant enough to arrest corruption. 

Having said that lets me speak about a sector that is close to my heart and I have some fair understanding about. Lets go to the past and examine how long it took for you to get the Land Line phone connection? On an average I would say any where between 2-4 years!!! If you try to explain this to the generation of late teen and early twenties probably they will not understand it. A unique part of this sector is that the lower echelons of this sector has less corruption compared to upper echelons. Question is what what are we doing right and what are we doing wrong ?? 

When government was the sole provider of telecom services in India the gestation period was long. The BSNL had to jump hoops in government corridors to get budget and approval for expansion.Since government works on principle of running business with the intention of not making money BSNL did not realize the telecom potential. Now comes the era of liberalization and BSNL suddenly is competing with private players whose sole intention is profit making. The budgets gets approved fast, they do better marketing and BSNL is staring down the loaded barrel. BSNL decides to take some tough decision and decides to go lean hence mean on its employees. Many employees were more than happy to take a voluntary retirement entitling them for govt benefits and moving to a more lucrative private sector with better salaries. Private telecom operators were more than happy to get seasoned players who could turn their expertise to potential monetary gains.Over a period of time the gestation period went down for years to days mostly for Last Mile Cabling issues and people were happy. The era of bribing the 'line man' for maintenance of line, bribing the fat bureaucrat for expediting your order vanished over night. It gave us choice to pick the operator if the performance of my current operator was unsatisfactory. When govt was the sole service provider the bribing flourished as there was no competition.Here we did not need a ombudsmen like Justice Santosh Hedge but market by itself played the role of a vigilante group. People don't bribe since the system provides them ample  opportunity to get services at cheaper rate with other service provider. The lower echelons of this sector is suddenly free of corruption ( to a larger extent ) over night. Not only that people are not indulging in honest activities they are paying their due taxes ( sales tax ). But the upper echelons of this sector has seen some of the most spectacular corruption. since government still regulates the licenses for private operators. 

So the questions really is does more bureaucracy  like different version of lokpal propose resolve the problem of corruption or less bureaucracy like in case of lower echelons of telecom sector be more effective. 

Paradigm shift is the need of hour

India got its independence in 1947 and we got our constitution in 1950. India decided to be a secular,democratic republic ( what ever it means ) where government regulated every aspect of individual's life. Government controlled every thing from the toiletry soap we  use in morning to the bulb we turn off in night before we sleep. If you were an entrepreneur life was tough. Government dictated what you can manufacture,how much you can manufacture,where you can manufacture, how much of it you can sell and the worst part at what price you can sell it. That is the reason we don't have seductive success tales of  gaurage and backyards  entrepreneurs in India. Instead we have  tales of Indians who made their millions in distant land of USA or Europe with their sheer handwork and  intelligence. So India's equivalent of  baby boomer generation knew that the only way out for the future generation was in the distant land away from India. But the advent of  liberalization changed the  entire game. Indian markets opened up and that brought in barrage of foreign companies to the untapped Indian market. Every body from  soda peddlers to energy leaders like Enron entered India. Liberalization also brought in large scale disparities in income among urban and rural India there by triggering large scale migration to urban India  and clogging the large and badly managed cities like Mumbai and Bangalore.

In a country like India where less than 3% of population pays taxes and the income tax exemption is at a staggering 130,000 when the per ca-pita income is 50,000 it creates a harmonic situation for existence of   black economy. The same problem Anna Hazare is trying to address. It is these very tax exempted individual who are dependent on non-functional government hospitals as they don't have a life insurance or medicaid and the over crowded general  public transport to commute to work every day. Consider a household where there are 10 people of which 7 are in a perfectly good healthy condition to contribute to the household. Their earning income may vary but it would definitely make sense  for everybody to contribute to household  proportionality equal to their income. This will  have two effects :

1. Brings in more collective responsibility among the individual in house hold 
2. Brings in additional expendable income to household.

Co-relating this to the situation in the country if  the reason for 130,000 exemption is to leave more  money in people's pocket for food and other life essentials like clothing and  housing that makes sense. How ever that is not the case. The high tax exemption is leaving more money in pockets for people and is a root cause of inflation in country.This inflation will in turn reduce the value of the money and people look up to government to   increase the tax exemption and the viscous cycle continues. In addition to this government schemes like NREGA  and Farm Loan waiver puts in that additional free money in the pocket of  citizens who are  already tax exempted.                    

In addition to lean  governance and putting a check the  leakages in the  social programs government have to make some radical changes.

1. The region based tax exemption has be the norm. The taxes are to be based on the percapita income of the particular region as compared to a country as a whole.  Ex: An individual staying in a big city like Bangalore is given 130,000 tax exemption the same cannot be extended to an individual staying in say interior Punjab. The cost of housing and basic necessities  are higher in bigger cities than compared to interior rural region. This will not only bring additional revenue to government but will also check the feudal power that exist among the high income group in rural India.  
2. A clear list of basic necessities and luxury has to be formed based on the region's percapita income Ex: In a city like Bangalore which has a higher percapita income  apart from food,shelter and clothing the basic necessity list may contain internet and cellphone. The luxury list may contain annual vacation in an offshore location. Where as a cellphone may find a place in luxury list in a rural region where the percapita income is say 30,000. The taxes has to imposed on what items is in what list in that region. 
3. Accordingly the government's spending on improving medical care and basic primary education has to vary based on the percapita income of region. Rural India is more dependent on government for basic medical care like neonatal care than urban population. 
4. Since more people are included in the tax net that will leave additional  money with government to spend on much needed infrastructure projects and pay the government debt interest and government bonds. 
5. Now for the companies who want to enter India should be encouraged to penetrate rural markets with better incentive plan like tax exemption again based on percapita income of region. Ex: McDonald that opens shop in tier II city brings in additional employment  opportunity to the people of that region there by putting a check on large scale migration to urban India in search of opportunity. As the percapita income increases the city moves to a higher tier the exemption given to corporate will be withdrawn leveling the field. The corporate can now go to a new region as they are interested in expanding their business.    

The apathy of politicians towards the not so politically active urban population due to number game of our democracy and series of populist measures like cheap trains an rural loan exemption has to be checked to create inclusive growth atmosphere in country.

UPS trucks and the URBAN LEGEND

I had read about this but never ever had I believed it was a reality. My 1st reaction was  it has to be a URBAN LEGEND. But today I came across this video and well its not so much of an urban legend.   Its pretty amazing how some body even came up with this idea and its even more amazing some one accepting the idea and implementing it.