In a talk with Mr. Robin Roy, Business Line reports his views on financial sector especially Banking. As per him, the among the most eventful happenings in 2006 were RBI’s tight rope walking on CAC, moving from entity-based supervision to activity based supervision in case of NBFC, challenges for ALM, advent of vulture funds. And for the year 2007, he believes Basel II, Clause 49 and breaking down of conventional business models will be the most eventful happenings besides the turning upside down of the value chain by banks to join hands with retail stores, postal services and telecos. The most interesting thing was the reference to billionaires in India crossing the 100 mark and opening opportunities for private banking.

A small incident made me a bit sad but I ended the very genesis of that and the best part is that I will end up writing more frequently here now.

Anyway, coming back to my usual self, the wait for 7th Jan has intensified. The activity on the group is minimal and PGPX-II awaits an outcome with mixed anticipations.

There is an article in today’s BL by Mr. S. Venkitaramanan “Tasks for the year ahead”. He writes, “Output of capital goods is an indicator of the investment demand and business confidence. The Mid-Year Review shows that the capital growth surpassed manufacturing growth in 29 out of 30 months since Apr 2004. This is a good augury for continuing growth in the economy.”

This led me to think if a higher capital growth than manufacturing growth is really good? I get a feeling that a higher capital growth than manufacturing growth may lead to idle capital and eventually slowdown the supply in the economy besides creating excess capacities and blocking money in unused assets. Though, it will take a few more intense sessions of thoughts for me to come to a counter for my own such feelings, I think I should pose this to the man who initiated me into economics.

Today’s paper also carries a wonderful analysis by G. Srinivasan “World Bank in makeover mode” in which he talks about the proselytisation of World Bank from an avid supporter of Globalisation to an advocate of a “cautious” approach to globalisation. My feelings on the same is that the proselytisation was inevitable because at the time when globalisation took birth we didn’t have technology advancement as it is today. Owing to such advancements in technology from 80s to 2006, the effects of globalisation are much different from what it was assumed at its inception.

I never knew choices could kill!

Bound in a situation where I need to choose one from three options – IIMA/ISB/Cranfield, I am troubling my grey cells like I never did before.

To ease my perspective I tried to list down positives and negatives of both IIMA-PGPX and ISB-PGP. I ignored Cranfield as I am not too keen to leave
India despite the award of 50% scholarship.

IIM-PGPX (the new one-year MBA)

Positives:

1. Strong 60+ years’ history and a reputed brand;
2. Unmatched resident faculty;
3. Focused target on senior management positions post PGPX;
4. Built in mandatory exchange program at no extra cost;
5. Clear monetary advantage of 6lacs (including the exchange programme);
6. Strong alumni (but will PGP alumni gel with PGPX is a question).

Negatives:

1. Untested;
2. Comparison with PGP inevitable – may happen on 7 Jan;
3. The confusion for a PlaceCom strategy for PGPX vis-à-vis PGP will continue for initial few years;
4. Too academic;
5. With all students coming after 7+ work-ex, the mind sets are rigid and it may take some time before our thoughts, beliefs are shaken and reshaped. Initial few months could be very tough owing to ego clashes etc.;
6. I am told that for PGPX-1 the institute could not arrange a faculty for finance.

ISB-PGP

Positives:

1. Sans the “X”;
2. Pursues only one course PGP so efforts are well directed & coordinated;
3. On the high growth path;
4. Chance to interact with international faculty;
5. We old dogs get to learn new tricks with more of younger population around which also means lesser ego clashes;
6. More of student initiated activities;
7. I am awarded a fee waiver of Rs.2 lacs;
8. I stand to save Rs.3 lacs if I get 50% scholarship, and a Rs.10 lacs if I get 100% scholarship.

Negatives:

1. Too diverse a student profile – work-ex ranging from 2 years to over 15 years;
2. Point (a) must create confusion among recruiters;
3. Expensive and too royal;
4. International faculty is not resident leaving students to fend for themselves after they’re gone;
5. Nothing known about the resident faculty. Seems the school relies more on visiting faculty;
6. Alumni support not strong;
7. Despite the fee waiver, I may suffer a financial loss of Rs.3 lacs if I don’t get the scholarship.

DO I LOOK CONFUSED? You can bet!

Putting on table today’s BL…

Is the gaga that all are going on Indo-US nuclear deal required? How much of it does trickle down to improve the common man’s life is nobody’s concern. Just consider that it would only by 2050 that India will generate 25% of its electricity through nuclear means – another 44 years and just 25%!? And the hoopla over the nuclear deal! Don’t forget that India is richest in terms of thorium reserves in the world and do we know what US wants from us in return for its nuclear plans?

CRR has been hiked suprisingly. Seems YVR takes a lot of joy from throwing in surprises but he does it with care – rising it in Friday evening. That way he gives the markets time to cool and consider the rational and so he saves any abrupt changes in prices. I may not agree to the step of rising the CRR but i concor with his style.

Bengalooru though was always there on the world IT map, it now gets a formal stamp as Infosys breaks into the NASDAQ 100. Way to go, Infy!

The NDC (National Development Council) has come under a lot of talk for reasons of PM’s political remark and the talk shadowed the promising economic remarks that were made. The NDC endorsed the approach paper setting out an average 9% GDP growth beginning fiscal 2007. In the NDC, the FM, PC sought backing of all state’s CMs for early passage of pension, banking and insurance bills.

Will it prove to be yet another masterstroke from ICICI Bank – the taking over of Sangli Bank that gives I-Bank the much needed penetration in the rural India. The only shortcoming could be that the Sangli Bank has presence only in Maharashtra and Karnataka. But i believe I-Bank won’t take long before showing prsence in richer rural areas.

Legendary Ford must be turning in his grave – with the family inheritors planning to pledge family jewels to avoid bankruptcy.

Lets see what BL has to say…

Indian Bank has really bounced back from where it was some 4/5 years back to being at a position to come out with an IPO. Its an IPO of 8.6 crores equity shares. Dr K C Chakraborty must be a proud CMD!

India’s old friend, Russia is willing to offer India all the support in her energy sourcing. Sakhalin I is giving good paybacks and the same is expected from Sakhalin III, where India is again likely to get a good share.

West Bengal CM, Mr Budhadeb hosts a seminar on “Why not Bengal” to attract investments and his state concomitantly witnesses violent protests and culling of the same in Singur on Tata Motor’s plant under the issue of acquisition of land from farmers. Contrast this with the farmers of Pune who very judiciously pooled their lands to generate huge incomes from their lands by giving them on some basis to businesses like BPOs etc. Thus business is no social activity though society has all the benefits if both businessmen and social activists work together. But that needs to wash the eyes off suspicions.

Philippines could emerge a challenge to India’s aspirations in the BPO business as it rises its share in such market. The major advantage is the more of western culture being followed by the society there.

A recession in US is being feared amid Mr Nouriel Roubini, professor of economics at Stern School saying, “Expect a fullfledged recession by early 2007″. What could be the effects on India? How would WTO talks that are in the process of being revived shape after recession sets in US?

Soon, we’ll have some Wal-Mart stories taking shape in India – kind of stories we hear from the west. Bharti and Wal_mart shake hands and next year we will have the first such store – with front being managed by Bharti and the back operations being managed by the global giant.

Will the Zen Estilo from Suzuki shake the Indian market as did Swift?

So i too did the thing that many would have. Took up the option and the monetary risk with due care of my near ones comfort.

Lets see where i end up. Got only the Almighty to look up to.

With such thoughts i hold the TOI after a long time…

Almost everyone abhors politicians in India and they have themselves to blame. They may be feeling the pinch with the fact coming to light that bankers are not comfortable lending money to them. Now its a moot point that if a banker doesn’t trust these politicians with money, the citizens entrust in them their nation. The fall out of Indo-US nuclear deal is that our nuclear establishments are at a greater risk. It does call for a closer interaction with the US rubbishing the swadeshi gang and the leftists. How the Chindia shapes up is to be seen after China’s premier, Hu’s visit to India. Whereas farmers in AP/Maharashtra end their lives on account of debt, the farmers in Punjab end it owing to stress. Proves that both rich and poor are equally prone to kiss the death.

Maybe my decision is wrong. Maybe I fail in what i set out for. Maybe I derail the train of hope of self and others close by. But these fears should set me to tread the path more resolutely. Seeking blessings of the True One.

Being a SIKH

FM seems to be getting strict on HNIs, as he plans to axe capital gains exemptions and tax free bonds along with some other changes in the Finance Act.

Sealing going on uninterrupted in Delhi and raising queries of various dimensions. Though the sole responsibility lies with the government, the sufferers are hapless denizens.

Press note 1 of FIPB which requires a NOC from domestic partner in a foriegn-domestic JV to enable the foreign partner to set up independent business has been made a little unbiased by having a combined hearing by a core group of FIPB.

And now starts a wait that can give a sharper turn!

India has something to cheer about with Bush refering to his keenness in getting the India bill done (that too without a specific question). But India will definitely like to see it go through before Bush goes to polls again as the way recent elections have gone by with Democrats gaining ground, a new prez mayn’t be all that keen on India.

I long for the day when electricity will be sold as a commodity and people will be encouraged to consume it as it happens in NewZealand. MERC has decided to levy a fee if residents are not able to keep their consumption under check and the limit is 300 units. The fee is being referred to as Load Management Charge. We are still a long from the times where essentials are not luxuries.

Human Development Report (HDR) 2006 released by United Nations Development Programme (UNDP) hints at the point that reforms slow down human development. One will be at loss to comment on it till it becomes clear what points did the report refer to when calculatng the Human Development Index (HDI).

George Soros, the investor is eyeing India and may have a further impact on the markets. Such news and events could take the Sensex beyond 14,000!