The Billionaire Raj

This is book review of The Billionaire Raj by James Crabtree published in India by HarperCollins in 2018

In his latest book, Of counsel, Ex-CEA Arvind Subramanian referred to The Billionaire Raj by James Crabtree while making a point on crony capitalism. The opinion from an outsider who has spent considerable time in India provides a very different and refreshing perspective than Indian intellectuals or outsiders with limited first hand experience about India. James Crabtree has spent five years between 2011 to 2016 in India as Mumbai bureau chief for the Financial Times. Going by his accounts, he seems to have travelled across India (Mumbai to dusty rural UP) and met cross-section of peoples (Tycoons to Politicians). He lived in India during interesting 5 years and put in lot of efforts to understand the complexities of such a vast and diverse country, which even us Indians don’t comprehend enough.

The central theme of the book is crony capitalism i.e. rise of Indian tycoon and the nexus between them and politicians to corner inappropriate share of wealth of the nation. It has 12 chapters structured in 3 parts taking reader on a journey from Mumbai high-rise (to showcase wealth of the few) to Indian States like UP, Tamilnadu and Andhra Pradesh (to establish nexus) and finally trying to make a sense of all of this in a new India which wants to be counted among US and China. The chapters and parts are well connected for readers to not get lost while author is taking them through the maze of politics, business, media, sports etc. The book tries to be as relevant for Indian reader as for outsider and therefore goes back and forth to establish links and historical perspective, though last few chapters divert from central theme. The chapters start with setting the context in dramatic way, language is fluid and keeps reader engaged. He met some of the key influencers in Politics, Business, Media, Sports and Intellectuals. Each topic covered has some of these characters playing up the main lead like in a Bollywood movie and his style of presenting them also has similar masala flavour which only an outsider like him with audacity can do (Checkout his description of Mukesh Ambani when he first met him – in his mid-fifties, he was shorter and chubbier then I expected with dark black hair swept back with oil). The openness and frankness appears all over the book which make these lead characters more human than Indians are used too.

He explains the book title, essentially India’s shift from British Raj to License Raj and to post 1991, which he termed as Billionaire Raj. But book is not restricted to these wealthy tycoons and how they built their empire by hoarding resources with help from politicians and bureaucrats but in the process walks his reader through India’s transformation, eco-socio-politico, since Independence. The book looks at India from multiple angle; right, left and centre. Unlike others who are either too optimistic or pessimistic on India, past or future, his is a balance narrative. While he agree to India’s potential but mentions all the headwinds which could stop it realising these potential. He acknowledge the steps taken to streamline many ills but list all where no action is taken.

Anyone who is interested to go through a quick flashback on India particularly between 2011-2016, this is a good book to flip through. James is currently in Singapore, not far from Indian shore and we should be looking forward to his follow-up story.


Welcome 2019

Happy New Year, another year landing at our shores bringing hope. Lets Welcome 2019.

Dear 2019

Welcome, we were so eagerly waiting for your arrival. To be frank, equally excited when your sibling 2018 came but what a disappointment her stay was. After a painful demonetisation in 2016 and equally troubling GST in 2017, Indians were hoping for some respite in 2018. But then she took all of us on a roller-coaster ride for her 365 days stay. Economics and Politics were her prime victims. When world economy was appearing set on track, She wrecked markets with US-China trade dispute, rising Crude Price, Volatile Currency market and whoa !! by end of the year, Asia alone lost $5trillion in market capitalisation. Her flirtation with nationalism and nationalist leaders meant world became a battleground for world leaders like Trump, Putin, Erdogan, Xi, Saudi Prince and so on. Suddenly the world and  India is back to square one, with politics means Migrant & Mandir and economy is Protectionism & loan waiver. It’s like one step forward and 2 backward.

Let me also give credit where it’s due to 2018. She helped in setting new milestone on personal freedom and women empowerment. “Metoo” movement gave voice to women around the world, LGBT community won legal battles in across globe including India where law against it got repealed. Saudi has allowed driving to women, India is getting its Triple Talaq scrubbed, Court has permitted women entry into temple and dargahs. There is worldwide lash back against Internet giants who are infringing into private lives and making mockery of privacy.

You have lot on platter dear, to reverse economic and political back to normal and keep the momentum on progressive social agenda. Get the climate change debate back on table. Realign nationalism with global good.

I wish you a happy stay. Let’s start the journey.

Yours truly

third person


Post Raghuram Rajan, RBI is no longer a staid and boring Institution which worked behind the scene with hardly any debate over its action or inaction. Suddenly RBI is in the middle of political discourse, they are no longer confined to business pages of National dailies but made to front page headline. And therefore the recent dispute between RBI and Government which led to Governor departure is discussed in office canteens, drawing rooms and dinner tables. But the problem is people are clueless. At first it looked simple, depending on which side of debate are you. On government side, there is excess monies lying with RBI which should be used to the benefit of Country and on opposition side, government is trying to loot RBI money.

And the common man is confused; RBI (Reserve Bank of India) and GOI (Government of India) has one thing in common, India. If there is excess capital lying idle with RBI, which is earning marginal Income to nation, why this is not used. Remember, this is not small change, it ranges between 4.5 lakh Cr. to 7 lakh Cr. as per various estimate. At higher range, its equal to 30-35% of the Union Budget (7 months of GST collection) and at lower end equal to NPAs of all PSUs put together. The discussion on channels or news article is not helping much as there are eminent politicians, economist, Intellectuals on both sides of debate and both seems to have valid points. But finally, we are all family and there is money, what to do. Let’s try to simplify;

If you are from traditional middle class family, did you wonder how our household finance works. Whenever there is crisis in family, and head of family is struggling to arrange finance, from nowhere lady of the house brings out the treasure chest. The so-called pin-money has come to rescue many times in our middle and low-income households (during demonetisation, this was actually a larger booty than known cash). And now substitute head of the family with GOI, lady with RBI and People, rest of the family. RBI is keeping the so-called excess capital for emergency. The problem is to agree on – What is emergency and how much money should be kept of that emergency. GOI and RBI differs on both. The lady thinks that head of the family is lying about emergency and going to squander away this fund and hence can’t be trusted. Head of the family thinks there is an emergency and lady is not coming to rescue of the family. While rest of the family is excited to get that money but wonders who among the family is going to get it (and if it’s not me that lady is right, he is wasting the resource). And the solution is similar to what is done for ages in our families;

Let the parents (RBI & GOI) discuss among themselves, aided by grand parents (MPC, eminent economist and Parliament) to frame a working guidelines to define capital required, end use of excess capital, process to transfer the capital and safeguard against squandering of the emergency funds. And rest of the family (Public) should go back to their work and as in the past, keep RBI policy out of political discourse and canteen debate.

Even real life Bond is anonymous, so be RBI governor.

Why large companies does not lead Innovation?

Why it’s always an unknown start-ups linked to every disruptive innovation in recent times and not large corporates. This malaise could be traced centuries back.

“Why large companies does not lead Innovation” may not be appropriate since they do innovate but it’s incremental. Innovations from their stable is like Version2, 3 and so on. Their innovations are rarely disruptive or game changer except in few cases. And this seems to inflict every company who starts with a Big Bang Innovation but as it becomes large, forget to how to be creative again. It was not established large IBM but off the block Microsoft to bring the best Personal computer operating system but then it was not large Microsoft but relatively start-up Apple, which got it right with mobile operating system. There are umpteen such examples where start-ups have beaten large companies in bringing about disruptive changes in their Industry.

It should not be the case. Innovation = Talent + Resources and who could beat these fortune 500 companies in hiring the best talent from campuses or managing all the resources needed. So what’s going wrong?

I just finished reading Simon Singh brilliant book on origin of Universe; Big Bang. It was surprising to note that even innovators / Scientists / astronomers were behaving like large corporates of todays. It takes ages even to acknowledge new Idea from a budding scientist by the renowned names thereby wasting precious human time and endeavour to move forward. Copernicus, first mooted the Idea of Sun and not Earth being at the centre of Solar System in 1514 but it took more than 300 years for the scientific community to accept this Idea. Almost 200 years after Galileo made observation to support Copernicus. This was not only because of religion (Church being against the change) but also due to well-known and reputed names in the field of astronomy resisting the new Idea. This has not changed in 20th century as well. It took almost 40 years for Einstein to be convinced that there is no need for a cosmological constant in his general theory of relativity as Universe is expanding. He out-rightly dismissed this new Idea from new kids and his dismissal means instant death to the new way of thinking about origin of Universe. Though later this was proved right and Einstein himself acknowledged that cosmological constant was the ugliest idea and he was never comfortable with it. Simon Singh has summarised this beautifully in his book;

The shift from one paradigm to another could happen only once the new paradigm had been fully discredited. The speed of the transition depends on numerous factors, including the weight of evidence in favour of the new paradigm and the extent to which old guard resists the change. Older Scientists, having invested so much time and effort in old paradigm, are generally the last to accept the change, whereas younger scientists are generally more adventures and open minded. The paradigm shift might therefore be completed only when the older generations have retired from scientific life and the younger generation has become the new establishment.

This is so true for an established large corporates as well. The do recruit the best talent from younger generation but hierarchy on the top always comes from older generation (more so now as average life span has increased and retiring age is moving north). This Older generation has tasted success albeit a long time back by doing things in a certain way. It’s impossible for them to understand why same way of doing things will not bring in more success. They only promote those new ideas / innovation which is only incremental, does not try to make paradigm shift and is predictable. Imagine how a 70 year old head of any large conglomerate would have reacted in late 1990s if one of his young recruit has presented a social networking Idea like Facebook. He will be lost to understand why people need to connect on Internet, they could probably connect over a dinner at Restaurant and therefore opening a restaurant is probably better business for him.

So how to make that leap from slow moving behemoth to nimble start-up. You can’t. But there is way out and some of them have already started doing. Remember, these behemoth has the best talent and resources. They could not only make disruptive changes but also mobilise resources to quickly get the acceptance.

First, Instead of trying innovation in the existing and tired corporation, support a budding start-up like any other PE / VC fund. The R&D fund given to these start-ups will provide better results than wasting on internal R&D, where any good idea will take eternity to come out of bureaucracy and gain any visibility.

Second, encourage entrepreneurs within organisation. Start-ups within conglomerate, divorce from any existing corporate hierarchy.

Third, move older generation out of the way. Let them lead and run established business, don’t let them take decisions on new Ideas. They should be driving at left lane and right lane should be cleared for new generation.

We need Innovations / New Ideas to fight against poverty, climate change, income disparity, gender inequality and so on. Start-ups ability to bring change at large scale is limited and takes time. Large corporates hoards all resources and it’s important that they become part of change. Otherwise it will take another 300 years for Sun to occupy centre of our solar system.

2017, a year of hope & despair

2017 was such an roller & coaster ride for Indian economy.

What a contrasting two years for Indian economy, 2016 started with hope and ended in despair and in contrast 2017 started in despair but ended with hope. Who could remember that 2016 calendar year first quarter started with India growing at 9.2% while 2017 at 6.1% which plunged to its lowest at 5.7%. That’s where it’s important to look at events which shaped up during this year and in spite of one of the lowest growth year for India in recent years has more of hope at the end of it.

Even before 2016 was hit by demonetisation of high value currency, GDP trend was already heading south, from Jan-Mar @9.2%, to Apr-June @7.9%, Jul-Sep @7.5% and Oct-Dec @7%. Demonetisation was the proverbial last nail. Young 2017 inherited the mess of demonetisation with business confidence at its lowest but ended up by helping markets to grow by 28% from 26595 to 34056.

Demonetisation hardship to public was expected to last beyond March but an early end to general suffering mitigated some of the fears. ATMs and banks were back to normal in dispensing cash which helped people and businesses to quickly get into recovery mode, though impact lasted well into Q1 of the current financial year, with GDP hitting the bottom at 5.7%. Next on card was Budget, with UP election round the corner, there was general expectation that government may go for charity and miss the fiscal deficit target. A budget which not only kept fiscal deficit target sacrosanct but kept in line with long term goals restored investors’ confidence in India story. Thumping UP election victory meant, demons of demonetisation was finally buried for the good. How could we miss our own Rexit story, our own RBI Bond, Mr. Raghuram Rajan was on his way out. There were concern around his replacement and the stance on banks NPA, monetary policy etc. By nominating Mr. Patel to the post was continuation of Rajan mandate (as actual architect was of this policy was Mr. Patel) and implementation of Monetary Policy Committee (MPC) ensured transparent way of setting inflation target (and therefore Interest rate – a continuous bone of contention between RBI & GOI). Under his watch, RBI referred first set of cases under Insolvency & Bankruptcy code (IBC) triggering the final act of clean-up and pushing government to shore up the PSU banks capital, which they promptly announced.

But mother of all was announced mid-night of 30June in the Central hall of Parliament. India was finally going to be a true single market economy with implementation of Good and Services Tax (GST). This was truly revolutionary and as it happens with any such gigantic disruption – Chaos followed. It disrupted in the way business was done till date. Not only people were not ready, it turns out government didn’t helped the cause. Thankfully, system were responsive and during last 6 months, through multiple pro-active interventions, implementation has been stabilised to a large extent albeit taking its toll with Q2 GDP growth rate struggled at 6.3%.

Still, the million dollar question is, was 2017 a glass half full or half empty and depending on your allegiance to government or opposition, there are enough arguments for both sides. If we go by markets, it seems they are on the half full side. Sensex has moved from 26595 to 34056 and rupee strengthen against dollar from 68.32 to 63.83. This has to do more with hope (than facts) reflected in trend. Unlike last year, after hitting bottom in Q1, Q2 GDP moved to 6.3 and with tailwind, this trend is expected to continue with better GDP numbers projected for Q3 and Q4. The increasing trend line is also supported by global growth rate of 3% plus and general positive cue from around the globe. Brexit seems to be on track after initial hic-ups, Trump has got his Tax reforms through, and China is doing well and so on.

While it’s not all great going into 2018. Domestically, there is lurking inflation and political drama unfolding with IBC impact yet to hit Banks in full. Globally, demise of ISIS is followed by Saudi – Iran problem, possibly hitting Crude Oil price.

All said and done, 2018 inherited a far better world than 2017 and as we welcome young 2018, let’s say goodbye to our old friend 2017 who helped us all to be more hopeful about our future.



US tax reforms – time for India

US tax reforms should help us to make changes to India direct tax code

Yesterday President Donald Trump signed sweeping tax reforms impacting Individuals as well as Corporates. The tax cuts are significant with peak corporate tax reduced from 35% to 21% and Individual highest bracket from 39.6% to 37% (important changes in 7 buckets for different category of tax returnees). Reform also include changes in components like standard deduction, exemptions, and tax credits and so on.

On 20th Dec, Indian Income tax department released a report basis FY14-15 income tax returns. Only 4.1 Cr. (Population – 130 Cr.) has filed returns of which 2 Cr. has declared NIL taxable income, which is less than 1.5% of the population. And surprisingly (not really), less than 10,000 Indians have taxable income of over INR 1 Cr. (2000+ cars sold by Merc, Audi & BMW in first 5 months of current year!). The growth in taxpayer has not been any great averaging at about 50 Lacs annually for past 3 years (could be higher in current year due to demonetisation). And therefore Tax-GDP ratio is at 5.6%, compared to say US which is at about 26%.

After long-awaited indirect tax reform through launch of GST, it’s time to look at direct taxes. Fact remains that given a choice none of us would like to pay a dime to government and hence a large number of tax payers are salaried who have no choice but to comply (TDS means government has taken its cut before it reaches our pocket; traders are learning it now). Most of them try all the trick allowed like fake LTA, Medical bills, rental deduction and so on. Post demonetisation, GST roll-out and initiative to link Aaadhar means there is likelihood of increase in number of people falling under taxable income. To ensure that all these people, instead of trying to figure out a way to avoid paying tax (and filing NIL tax returns), willingly pay their share of burden towards government expenditure – There is urgent need to rationalise our tax structure. GST will help government to increase their indirect tax collection and with subsidy being rationalise, it’s only right to provide some relief to honest tax payers and add fence sitters, who would like to change colour of their money.

US tax reforms provides a good benchmark. If a country with such high per-capita income is willing to cut down rates, why not India. Direct tax reforms should include lowering tax, increasing tax-slabs, increasing standard deduction, doing away with exemptions and cess, simple filing etc. The rumour mill is buzzing with such an expected reforms being announced in current budget. Let’s do it now than waiting for 10 long years, as we have seen in GST – 10 years has not helped to implement any better.


Prime-time is dead!

Sad demise of Indian electronic media.

9 PM, Prime time at news channels was my window to India and World. After a day’s work, since 1984, when television first came to my home (Delhi Doordarshan) and 1991, when private cable networks invaded, the newsreader was a friend, philosopher, teacher and guide who will not only let me know what happened during the day but also an honest and unbiased opinion on its impact; which was debated with family, friends and relative the day after.

Something changed once Gujarat Chief Minister, Mr Narendra Modi decided to contest for the post of Prime Minister of India. Suddenly we realised that majority of these news channels, their news anchors, owners and guests belongs to one fraternity, so called liberal, secular, centrist / leftist. Every channel was reeling out stuff after stuff with doomsday scenario, if this man is elected. First, we all believed. Than we started doubting when every action of this man was denounced even when our common sense was saying he is right on this. We wanted to know other side, which these channels were refusing to share; and then there came channels who started showing only other side of the story.

So, we did have 2 side of the story. But on different channels.

An action from government will have positive reviews / opinion on one set of channels having a set of guest panels and negative on another. We all started to know the affiliations of these channels and their anchors. I no longer trust any channel, any news anchor, and any guest; there is nothing called honest opinion.

9 PM is dead, long live Prime time.

I no longer watch 9 PM news. Check news apps to read relevant news (no opinion). It seems lot of my friends are doing the same; there is no debate in offices on topics discussed during last night prime time. It seems, people have not only lost interest in political debate but also non-political ones pertaining to economics, social and cultural. Why? because these channels end up giving political colours to all such debates. A rape victim is no longer a rape victim; but she is a religion, a caste, a state, a party, an ideology. So, if you happen to be on another side of caste, religion, state, part and ideology; victim no longer mater. And therefore no anger on the street; Media just lost the credibility to raise any issue.

It’s sad. Media did a wonderful job to mainstream issues which otherwise politicians and the government of the day would loved to put under the carpet. There will be no candle light march to show solidarity for Jessica Lal, which one news channel managed to get it into the conscious of so many people that it became an overnight people’s movement for justice. And she got the justice. Alas there will be no other Anna Hazare anti-corruption movement, which got the mileage only because media was trusted till then. There will no more Nirbhaya. We have already seen that; no uprising for Vemulla or Nazib. Media tried and failed to even get the justice for their own journalist friend from Bangalore.

We lost one pillar of the democracy.

USA has seen the repercussion.

India has to get back its vibrant and free media. Old generation has to go. They have sold their soul and trust, both left & right. New generation has to join, who can freely and honestly present both side of coin.

We badly want our 9PM back.