GST council is musically challenged

11 09 2017

What absurd taxation policy this GST Council has come up with ?

The Indian instruments attract No GST and the western instruments attract the highest rate of 28 %

Apparently, damru is Indian and drums are western, sitar is Indian and guitar is western, pungi is Indian and saxophone is western.Can you imagine “Pukarta chal hoon main”  without the guitar or “O Haseena zulfon wali”  without the drums. The sound of “been” in the Nagin song may be Indian, but it was created by Kalyanji on a ‘western’ instrument called clavioline. Are they not Indian music ?

The best of Hindi film music of the  ’50s and ’60s had a lot of so called ‘western’ instruments. Then why this absurd classification. There are so many musical instruments, who in the GST Council knows which is Indian and which is Western.

How far back would they go to justify an instrument as Indian. Sitar is not Indian, it came from Persia in the 18th century. Guitar came to India in the 19th century via British. Just because guitar came later, is it less Indian than sitar.

A flat low rate for all instruments can be administered better.


Is ITC justified in paying Yogi Deveshwar Rs 1 Cr per month ?

7 09 2017

ITC has filed a defamation case for Rs 1000 crore in Kolkata High court against the proxy advisory firm IIAS. IIAS had written strongly opposing the ITC board resolution of paying Rs 1 crore pm to Yogi Deveshwar.

Yogi Deveshwar ceases to be CMD since April 2017 and is designated Non-Exec Chairman. Sanjiv Puri is the CEO and MD.

Despite his Non-Exec Chairman status Yogi Deveshwar’s package is way higher than the CEO’s. CEO’s package is Rs 1.65 cr p.a plus commissions max of 300 % of salary. Say Rs 6.5 crore p.a.

Deveshwar’s package is Rs 13.5 cr p.a plus perks. So it is over double the salary of his CEO. A Non- Exec Chairman gets a salary double that of his CEO, who has the full responsibility and accountability of running a large conglomerate I.e ITC.

In Corporates, it is often said that the one who gets paid the highest, his opinion counts finally. There is even a fancy acronym for it- HiPPO. ( Highest Paid Person’s Opinion ).

Does Yogi fear that if he gets paid less than the CEO, he would not be able to assert himself as a Chairman and his opinion will no longer count ? Or it is just the board rewarding their Chairman a cosy retirement package for years of leading the company ? Or it is Yogi’s greed at work, rewarding himself a tidy amount knowing fully well there are no owners with management control in ITC and the institutional investors are passive ?

I think IIAS is perfectly justified in opposing this. Hope institutions take their advice. But who are the institutions , LIC, GIC and SUUTI i.e Govt of India owned FIs own 30 % of ITC. These institutions are either passive or wait for the call from Finance Ministry. If Deveshwar makes a call to Jaitley, problem is solved. All opposition gone.

Whatsapp Help Groups for credit

7 09 2017

Consumption is growing a lot faster than household incomes. Net result personal indebtedness is growing rapidly among Indians. People are buying more and more items on EMI. Besides the usual cars and two wheelers,even mobiles and holidays are on EMI. Companies like Bajaj Finance and Capital First are making hay. Credit card cos have actually increased the interest rates, when overall interest rates are declining. No need for it, I guess, there is so much demand.

On the one hand the senior citizens are struggling with declining deposit rates, most banks give only 6.5 – 7 %. Credit card companies continue to charge 38 %. Wish peer- to-peer lending grows among Indian families, so that these card companies can be disintermediated.

The networks are already there, the Whatsapp family groups. Along with Good mornings, recycled jokes and fake news, young members who are paying huge interest on their cards can borrow from retired elders who are seeking higher rates. They would be happy with even 10 % p.a.

The digital wallets and UPI based digital payment systems make money transfers quite frictionless.The family structure creates enough peer pressure , not to default. In some practical families, it may be happening already. The Whatsapp help groups is an idea whose time has come.

Godmen- Who is duping whom ?

7 09 2017

Many of my friends are feeling angry at Godman Ram Rahim Singh, that he has duped poor people.

According to me, there is an unwritten contract between the 1 % ( rich & powerful) , the  Godman and the 99 % ( disenfranchised masses)..Godman plays the ‘beech ka bandar’ ( monkey in the middle ) beautifully, as long as it lasts, that is.

To the 1% ,overtly, Godman  offers peace , health and even road to God. But covertly, he offers the route to 99 % namely, markets and votes.

To the 99 %, he offers overtly identity, dignity, community and even livelihood. Covertly, the Godman is like Robinhood who steals from 1 % to feed the 99 %.

1 % is happy getting exploited economically by the Godman if the returns are good. 99 % adjusts to physical incl sexual exploitation as long as their other needs are met. Each is trying to dupe the other two.

Occasionally the equilibrium is disturbed and Godmen like Ram Rahim goes to jail.

As long as inequality exists in Indian society Godmen will exist.

Why Indian companies are so tied to their promoters ?

7 09 2017

Narayana Murthy says Infosys is his middle child, because it came into being in between the birth of his daughter and son.

He mentions this obviously to bring out the emotional attachment he has with Infosys, much like a parent with a child.

Not just a parent, an Indian parent. An Indian parent is in control of his child’s life, at least he/she wishes to, a lot longer than a western parent. Children are also comfortable depending on their parents a lot longer than a western child does.

Is that the reason why the western concept of promoters leaving the management control to a board is still not getting firmly established in the Indian corporate sector.?

Perhaps. Just like an Indian parent and his child’s bond is longer and deeper than a western one, the bond between founder and his company may be deeper, leading to such situations as seen in Infy and Tatas.

Promoters like Indian parents are unable to let go and the company just like Indian children are comfortable depending on their promoters. They accept them with all their faults.

Even where promoters are no longer alive or have no second generation to take management position Indian cos are looking at leaders who are more like father figures. Cases in point, AM Naik in L&T and Yogi Deveshwar in ITC.

Western concepts like fixed tenures for Chairman, retirement age are treated by most companies as just rituals. Asking a promoter Chairman when he would retire is as sacrilegious as asking a parent when he/she would die.

With rising life expectancy, even retirement ages get shifted higher and higher. When it reaches unreasonable levels say 75, then there is a brilliant idea increasingly adopted by many , Chairman Emeritus.

It is often said that the role of a parent is to give the child roots and wings. Indian parents often fail in giving wings to their children. Similarly, if the Indian companies want to be tied to the coat tails of their promoters, it is hard to expect them to develop wings and be global in size or make some world beating breakthroughs. They would be limited by the vision and capabilities of the promoter.

A Half-Dozen Ways to Look at the Unit Economics of a Business

3 01 2017



McCaw Cellular Communications sold to AT&T for $12.6 billion in September 1994. And yet the business did not show an accounting profit on its income statement until the second quarter of that year (after the deal was announced on August 17, 1993). The McCaw  Cellular example shows that you can create a tremendous amount of value for shareholders without showing any profit on an income statement. Or not. Here below is a picture of a real letter from Craig McCaw sent in July of 1994 which documents what I said above.


Amazon and Netflix are examples of the same value creation phenomenon as are many businesses that John Malone has created over the years. This post will try to help people understand why this is true.

The drumbeat of people (especially reporters) saying a that a business is “losing money” and is therefore doomed is constant. People with a…

View original post 919 more words

One Month Since #Demonetisation : Linkfest

11 12 2016

On December 8th, 2016, it is one month since the Demonetisation was announced. After 30 days, many columnists and commentators have written pieces to look at this rather disruptive event in Indian economic history. This topic refuses to leave the headlines, as India is struggling to get hold of cash to get on with their daily lives. The Government has gone on a overdrive to make India adopt digital payments and become a cash-less society.

  1. Twists on the road by T.N.Ninan in Business Standard
  2. India’s cash bonfire is too much too soon by Kenneth S.Rogoff in Financial Times
  3. Fifth column : Murmurs of trouble by Tavleen Singh in The Indian Express
  4. Demonetization will cause grievous injury to the honest Indian by Manmohan Singh in The Hindustan Times
  5. “‘Modi has intense desire to do something but lacks imagination”says Ashis Nandy in The Wire
  6. India’s demoetization debacle by Sadanand Dhume in Wall Street Journal
  7. India’s botched war on cash by Bhaskar Chakravorti in Harvard Business Review
  8. Modi’s attempt to crush the black economy is hurting the poor in The Economist
  9. April 2017: Earliest India will get it’s cash back by Sahil Kini in IndiaSpend
  10. War on black money : Demoentization is a courageous reform that will bring substantive benefits by Jagdish Bhagwati and others in Times of India
  11. A monumental disaster in offing by James Wilson in his blog
  12. Costs and benefits of the currency swap I and II by V.Ananta Nageswaran in Mint


Newspapers are conducting surveys to assess the impact of Demonetization in the ground

  1. Demonetisation: Consumption down, but cash ban gets a thumbs up in Economic Times
  2. Express survey : 41 % feel government did not plan well for demonetization in The New Indian Express

The link to the earlier Linkfest on Demonetisation is here.Link 

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