My Understanding of 'Shining Dawn', called Gold.

With the ever watchful eyes , I have been following the yellow currency and its history from a long time...Right from the days of checking gold prices through SMS alerts during my classes to the days of waiting impatiently for Gold Reserves Value Data of every country... and then rushing back to my blackboard to analyze how would it behave...

Gold as in likewise with all trade-able assets, are more dependent on what your neighbour does rather then what it should do...

Consumer Prices and Gold have a been showing an amazing correlation off late... The international currency standard status has bestowed some properties other than the chemical ones on the yellow money. Or has it, really ?

In 2000, there was a crash in dot.coms. The whole magic of the tech bubble suddenly disappeared. And guess what? Gold went up.
In 2001, the War on Terror(or some say it was a pseudo war created to boost an dwindling economy, flourishing on debt[lets keep this for another time]) began. And guess what? Gold went up again.
And again in 2002. And 2003. And 2004.
By 2005, the world economy was in the throes of a massive financial bubble. Everything was going up. Gold went up too.
In 2006, the US had a major housing bubble on its hands. Gold went up.
In 2007, the housing bubble started to lose air. Gold went up.
In 2008, Wall Street stared into the abyss. Lehman Bros. went broke. The feds took over housing finance, auto-making, insurance, commercial lending...and gold went up.
In 2009, the feds went all out to try to engineer a recovery. The Fed ballooned its balance sheet by $1.2 trillion. The federal budget went into deficit by nearly one and a half trillion. Still, gold went up.

And what's this? The recession officially ended more than a year ago. Housing and unemployment are still limping. De-leveraging is still underway (David Rosenberg calls it a "depression")...and go figure. Gold is still going up.

Gold goes up with consumer prices. That's the most common notion... however if we stretch the periodicity chart on 5 year horizon. We find for nearly two decades - from 1980 to 1999 - gold went down while consumer and asset prices rose.

Now, consumer prices are stable. Yet gold hits new records.

All views on gold are with an exception.They say Gold has its own wacky behaviour. There's no line of thought on the subject that doesn't have a curve in it. Today, some bulls are loading up on gold because they see a recovery coming. Others are buying it because they don't. Recovery, they believe, will boost consumer appetites, resulting in higher inflation levels and a higher price for gold. The absence of recovery, say others, will cause the Fed to undertake more money printing.

Those who are supposed to sit on the fences are among the most aggressive buyers. Gold for them is a " safe haven bet " proposition. If the economy improves, gold rises naturally. If it doesn't improve, the Fed actions will force it up.

And if you come to believe that US days in financial supremacy are numbered, then the Chinese will take over. Gold makes up only 1.7% of China's foreign exchange reserves. China is supposed to be targeting a 10% figure. If so, then it would have to buy every ounce the world produces for two and a half years or more. Now given the kind of skewed relations it is building up, relying on its own production , (China is the world's largest producer) it would take nearly 20 years of steady accumulation to reach the 10% level.

The metal sitting pretty on the 79th place in the periodic table has many uses for the common humans. People make spoons, forks and bathroom faucets out of it. It's occasionally used as roofing, or even as a murder weapon;(history) a king had molten gold poured down his throat after being captured by his enemies. And Lenin said he would line the public latrines with it. But the best use ever found for it was as money - as a reliable measure of wealth.

My grandparents are on another set of people who do not let me forget the sway Gold has in our lives. They can't stop talking about how cheap they had brought gold at the time of their marriage and how undervalued it was even in the time of my parents marriage. But unaware of one amazing fact, The inflation meter sppeaks otherwise. The price of gold will have to almost double from today's level to reach its inflation-adjusted high of 1980.

But this is what makes gold very different from other money. Mr. Robert Mugabe should know, that, the trick is not in holding a trillion dollar note from Zimbabwe, he can hold onto that paper until hell freezes; its value will never return. Gold, on the other hand, will never go away.

Over the centuries, mankind has often experimented with alternatives to gold. Driven by larceny or desperation, base metal and paper were tried on many occasions. Paper was particularly promising. You could put as many zeros on a piece of paper as you wanted, creating an infinite supply of "money". People realized that money gotten at no expense was only gotten rid of at great cost. Given the ability to create "money" at will, a central banker will sooner or later create too much.

But one generation learns. The next forgets.

But Gold Stays on .... I trick which i have learnt is never trust Gold ... but at times of desperation... this metal can be of great value...

Market Labour Reforms and implications on Labour Development

Brooding over with a discussion with my friend Tuhin, on labour markets reforms and its deregulation status in PSU sectors in India, an thought stuck me as how to identify the labour and product market institutions affecting the labour market performance of a country.

In this context, factors such as the employment protection legislation, unemployment benefits and entry barriers for firms have been considered. Theory has generally predicted a clear impact of institutions on labour market performance. Empirical evidence from studies around are yet to conform the predictions of the theory(if any of my readers know any papers which prove it otherwise,please post the link). The findings fail both to distinguish the crucial from the less important institutions but also to determine whether deregulation lowers or raises unemployment ,while the inconclusive results can be partially explained by differences in the time period or the country selection, model mis-specification and the policy making body bias on such issues also seems to be an important source of error.

Institutional variables which I am taking the liberty to divide into five groups (what we as Indians understand):
Tax system (progressive.. but can and should be more simflified),
Employment Protection legislation (Not any research done to study the implementation and penetration of such legislation's in MSME sector),
Workers' bargaining power (we have come a long way... At least now we can lure our farmers to cities for boosting Infrastructure),
Product market regulation (Still a fiefdom of big names and business groups..) and
Unemployment compensation (oops... this is not applicable in India..oh !! NREGS..oh yeah, another way to fill pockets from coffers).

"Enough of you being cynical, Avinash"... if you are a staunch believer in the Indian Reform System.

Taxes on labour seem to affect the unemployment rate mainly by increasing the cost of labour and, thus, lowering labour demand.

Furthermore, the effect of a labour tax increase depends crucially on the degree of the workers' bargaining power. The stronger the workers, the more of the tax increase the firms have to bear. Hence, higher labour taxes only affect labour demand, if the workers' bargaining power is high(eg. Labour conditions in Bengal and Kerela). An important point is the utilization of the tax income by the government. If part of the taxes serve as funding for, say, qualification measures for unemployed workers to reduce the spell of unemployment, taxes can indirectly help to reduce unemployment, but this point is highly debatable in terms of Indian context.

Let me talk about something whose implementation is supposed to be improbable possibility "Employment Wages" or something which we will call as 'Employment Protection fund'. The replacement rate can be split up into the benefit payments for different states of unemployment, say, first year of unemployment or fifth year of unemployment. The bargaining system can be displayed by, for instance, both the union coverage and the bargaining co-ordination.

Providing employment protection in globally advanced countries is usually conducted by imposing severance payments on the firm or to exacerbate layoffs by legal regulations. Concerning unemployment, the effect of higher employment protection is assumed to be twofold. On the one hand, it lowers the flows from employment to unemployment since firms take the additional costs for layoffs in consideration when evaluating the productivity of a worker. Labour is allocated less efficiently what comes along with a fall in productivity and, finally, decreased labour demand. While the employment protection can be seen as an insurance against getting unemployed, the unemployment benefit system affects predominantly those who are already out of work. An increase of unemployment benefits on the one hand causes unemployed persons who are eligible to benefit payments to raise their reservation wage. On the other hand, unemployed who are not eligible to benefits will have a higher incentive to accept a job in order to get qualified for the benefit payments in case of future unemployment.

Furthermore, the fear of losing job-specific human capital can convince the workers to attach no importance to high unemployment benefits. In this case, unemployment benefits will not lower the unemployed workers' incentive to search a job.

The degree of product market regulation affects labor demand through adjusting the competitive environment in a market. Increasing competition in a market means more competition for labor if entry barriers are sufficiently low. Hence, the lower the governmental regulative intervention (e.g. barriers to entry or public ownership) the lower the unemployment rate.

Nevertheless, a certain degree of barriers to entry can also help to increase the firms' productivity in a market. This, in turn, can lead to an increasing demand for labor. Furthermore, a change from public to private ownership boosts the performance of workers and managers since monitoring is much easier to implement.

I think i am getting too carried away .. for more insight refer to my Labour Market Reform report .... C ya till the next update.

A Branding Joke ... played on the Disparate Indian Consumer.

Brands in Disparate India.

The marketer always tries to push the envelope always by adding a dimension to its scope of work. Invariably, doing it either by increasing the scope by volume or by upping its qualitative deliverables.

One of the biggest failures for him has always been in the area of brand building, specifically loyal customers. This happens in the Indian market, not because of the non-accessibility of the product but the range of disparate consumer,which it has to cater to.

The need for the Indian Marketer to be a visionary is not the need for the time, but the need of the evolution and sustainibility.The Indian Marketer has always failed to look beyond the Short term Vision, because of the pressure of deliverables in the Indian Market.His escape lines are something like this,” At the end of the day, I have to report numbers”.

Lets accept this fact.
We are a number driven country, intent only on performance and immediate ones. We don’t leave scope for Experimenters and the ‘also-rans’. We are an impatient lot because of the sheer competition and peer pressure of people waiting for one chance to perform. In India, do not leave scope for mistakes and thus are nipping creativity and growth in its bud, in the fear of conformity and certainty.

Oh !! Come on.If you are shaking that head in disagreement, Let me prove it.

Lets start with the best example you can imagine of.
The best consumer build up, reach, brand retention and brand building ad exercises have been made by the Telecom Industry. You name it and you would be in unison with me.

AIRTEL..Express yourself.. Building Relationships.. the list for these guys is endless..

VODAFONE.. the pug and then the zoo zoo .. they took the world by storm.

IDEA .. what an idea, sirjee!! ranging from a range of common social issues and giving smart ideas to solve them..

Amazing isn’t it . Success . The Telecom Sector wouldn't trade it for anything else to Redefine it better. Best distribution networks... Keeping all variable of marketing challenges in peak.

Ok , hold it right here. Now lets go back to basics.

BRAND
Brand is seen as a implied promise,the level of quality which people(consumers) have come to expect from a brand which will continue with repeated future purchases of the same product. Xerox.. Nirma in the 90's.. Parle G Glucose Biscuits.. Lifebuoy.. Given the options and competition, the consumer always goes for the product. This is the criteria for a LOYAL CUSTOMER BASE . It sums up the crux of our whole branding exercises in the Management corridors.

Is the Telecom Industry conforming with this pattern of product positioning with its portfolio.

I would say ,"This is not the case with telecom."

Though they have been excellent in selling and catering to customer base as wide as selling Blackberries to Rs. 5 Recharge Vouchers, but the they have failed miserably in creating a repeated purchaser.

The amount of churning happening in the telecom industry, doesn’t subscribe to the basics being right here. This flaw is making the telecom companies not allow the clause of number portability enter in India. Brand Confidence for this industry is so less and that these companies are still following a poach and acquisition customer strategy.

Indians with their inherent nature will never pay for what they haven’t still used , but still a statistics which goes to do so much contrary to the basic mindset of the folk. Just imagine, we still are in the phrase of such an evolution and growth, but we still see subscriptions in Postpaid area to be mere 20% and the Prepaid sector still a staggering 80%.
WHAT KIND OF BRAND ACCEPTANCE IS THIS ?

A sector which has been adding 20 million customers on a monthly basis, give or take plus or minus 1%, Imagine them adding this base with suppose 2% churning and yet we can only boast of a tele-density of 58% and the base of 650 million subscribers. Improbability can’t be more believed.

Now would you still say Telecom is the best branded sector.. .. The story has more dimensions to be revealed … for more insights look for my Telecom Sectoral Report.

One credit which I don’t want to take away from the Telecom Sector is the way it has branded itself.. Lets save the next story for the next update.

“It is greed to do all the talking but not to want to listen at all”

And thus the Light singed the Moth.....

Imagine this: there are over 2,400 b-schools in India of which 1,999 are approved by the All India Council for Technical Education and 400 function as unapproved private b-schools. Together, they have nearly 190,000 seats for a total pool of 3.5-4 lakh MBA aspirants who sit for the national and state-level MBA entrance exams.

If we hypothetically consider that the average fees charged by these b-schools is about Rs 300,000(which i can assure you is on the most conservative estimates), then the total potential revenue for b-schools in India = Rs 5,700 crores.

As the number of seats are fewer than the total pool of available students, getting students to enroll should not be a problem for these 2,400 b-schools, on the face of it.

Wrong. Every year, since the last 2-3 years, an increasing number of b-schools are finding it tougher to fill the complete intake capacity of their MBA or PGDM batches by the time they begin their sessions in the month of June. I am not talking about 100 of the best known (‘top 50', if you will) b-schools, which have enough pull effect to attract excellent numbers and thereby have the privilege of even providing a waiting-list for prospective students.

The worry is with the second and third tier and the sub-tier of b-schools. Almost all of them are privately owned and funded and many were set up with the noble intention to provide management education to those Indians who could not get through to the best b-schools. Some were also set up to provide education to a special section of the society.

However as of today, death looms large on these b-schools. The primary reason being that they have never figured out the changing dynamics of the market or the way MBA applicants have been choosing b-schools in the past few years.

Consider some numbers for example: in the year 2003, out of the 95,000 odd students who appeared for the Common Admission Test (CAT), the ratio of freshers to those with substantial work experience was about 60:40. Moving forward to 2008 and 2009, the number of CAT takers increased to over 250,000 of which more than 60% had work experience.

In 2003, freshers chose higher education due to the fact that the economy then promised them something really big if they spent two years arming themselves with more skills before venturing out into the job market. In other words, there weren’t many lucrative opportunities available for someone fresh out of undergraduate college. On the other hand, those who were employed for 4 or more years were already happy, or had families and never bothered so much with a 2-year fulltime MBA in India. There were fewer b-schools in the country, and filling up their intake capacity wasn’t that much of a challenge.

Seeing this trend, b-schools started mushrooming all over the country over the next five years, some even trying to replicate the Indian Institute of Management model by opening branches in multiple cities.

In the last couple of years, since 2008, things have been really bad for most of these private b-schools. They have found it tough to fill their classrooms with quality candidates. The student market response to their advertising and branding messages has been appallingly cold. Overall, things look very bad for them.

A deeper look into the trends gives a better idea: the 60+ % applicant pool with work experience has a better idea about what they want to do with their professional lives, and so are averse to settling for a b-school that is not in what is broadly perceived as the ‘top 50'. They have developed sharp expectations from the two years that they will spend at a b-school and the return-on-investment at the end of it. For them, joining any of the 2,000 b-schools at the bottom of the pyramid does not make much sense.

The freshers on the other hand, are always the confused lot. If they get into a ‘top 50' b-school, most will join it in all likelihood. If not, then they start looking at the next best options (driven largely by the kind of placements the remaining b-schools offer). This translates to a very slow decision process, as students try to make sense of the offerings of these schools, which don’t differ too much from each other.

This leads to almost a mini recession-like situation, wherein a couple of thousand b-schools have over 1.5 lakh empty MBA or PGDM seats on offer but no takers. Spending on advertisements in the print media and other publicity avenues (seminars, education fairs) has little or no effect in generating applicant interest. In order to break this standoff, several b-schools get hold of ‘leads’ (a ‘lead’ in industry-speak is the contact information of an MBA aspirant) from websites, coaching institutes or other sources. They then start calling up these freshers at least 30 times to get them to apply. That produces frustration on both ends. The aspirants feel that – “this college doesn’t get any applications and is therefore following up.” For them it doesn’t mean anything that the b-school is looking for genuine candidates to apply to them. Over time, some schools either resign to running on less-than-full student capacity or choose to admit almost anybody, much to the dismay and disillusionment of the good faculty (a rare species in the third and sub-tier schools{lets have more of it some other time}) in the school. The route down the regression road is thus laid out.

Add to that the growing trend of multinational companies recruiting undergraduates for the same jobs (analysts, sales and marketing executives,business development officers, jobs in KPOs, auditor firms, equity research, etc.) that one gets after a second-tier MBA.The only take away from this 2 years of investment of 5 lakhs is a tid better salary thsn graduates and post- graduate degree for marriage proposals.
This is further pushing more fresher applicants towards the experienced category, further reducing their availability to second and third tier schools.

If the b-schools fail to understand this, very soon they will lose their reason to exist, will become financially unviable and will have to shut down. Already, they have optimized their operational expenditures beyond limits (getting visiting faculty, optimized infrastructure usage, class schedules, etc). If they don’t take corrective steps right now, then they will surely be heading for a sad end.

There is still hope. These b-schools will need to look inward and ask themselves some very important questions:

1. What is lacking in them that they do not have a ‘pull effect’ like the top-100 do?

2. What have b-schools such as ISB Hyderabad or Great Lakes, Chennai done that has allowed them to gain a reputation in less than a decade?

3. Do the marketing and admissions teams in these schools have more members than the total number of fulltime faculty members?

4. How do these schools do when put to the scrutiny of the best academic standards and fora?

The trouble is that with the kind of ’sweatshop way’ of working that these b-schools internally have, it is difficult that they will see the light. Extinction is a big threat and sooner or later they will have to think of questions that matter, or perish.


These events will have a spin off effect of many kinds effecting the social fabric economically and socially going a long way in moulding the social mindsets of our people.
More to it as sson as i finish off my exams....

Is there a permanent solution except allowing private companies to milk money .. read on.

In the wake of Increasing Health Care Insurance Industry targeting the Bottom Of The Pyramid Structure ... Should we find a permanent solution which is self sustainable and regulatory ???

During the research of one of my projects in Microfinance industry for a Insurance Distribution Network called the D20 , headed by Mr. Mukut Deepak, I stumbled across some of the key alarming facts and solutions. One of them which has been around but have never been taken seriously by our government.

Health care financing in India is in a phrase of changing its page over. It can be considered almost unique in several respects.
One, the share of public financing in total health care financing in the country is considerably low--just around 1% of GDP compared to the average share of 2.8% in low and middle-income countries or even relative to India’s share in disease burden.
Two, the beneficiaries of this limited public health financing are not only the poor as one would expect in a limited public spending to be, but also the well-off section of the society.
Third, over 80% of the total health financing is private financing, much of which takes the form of out-of-pocket payments (i.e., user charges) and not any prepayment schemes.
Fourth, reliability on out-of-pocket payments is not only inefficient and less accountable than other methods of financing, it is also iniquitous to the poor on whom the disease burden falls disproportionately more, who are more susceptible to disease and who are much likely to be pushed into poverty trap.
The World Bank (2002) estimates that one-quarter of all Indians fall into poverty as a direct result of medical expenses in the event of hospitalisation.
Fifth, One of the important challenges facing the Indian health policy experts is: how to convert; While India contains one-sixth of the world population, its share in Disability-adjusted Life Years (a measure in which two-third weightage is given to mortality and one-third to morbidity, is used to quantify disease burden) make up 21 per cent of the global total. About one-quarter of world’s annual maternal deaths occur in India and 19% of total under five child mortality. The South Asia region contains the largest number of people living in poverty among developing regions, and faces a high burden of disease and under-nutrition associated with poverty. The largest country of this region, India, received negligible external assistance (0.7%) in 1990, unlike other countries of this region for whom external assistance is an important component of health spending, accounting for more than 10% of expenditures. In Sub-Saharan Africa as well external funding constitutes an important source of health financing.

Community based health insurance is more suited than alternate arrangements to providing health insurance to the low-income people living in developing countries.

Insurance sector reform can affect the poor through its effect on the provision of health services (i.e., cost, quality and access) used by the low-income people as well as through its access to financing of health care.

A significant proportion of government spending on health goes into supporting teritary care whose beneficiaries are mainly the non-poor. In the order of priority, public funding needs to be allocated primarily for promotive and preventive health care which benefits the poor the most. Another feature of public health spending is that total states’ spending on health, which accounts for three-fourth of the total public health spending, is more regressive than central government spending.
World Health Report (2000) estimates private spending in India to be 87% of total health spending. Of this, 84.6% is out-of-pocket expenditure, lower only to Cambodia, the Democratic Republic of Congo, Georgia, Myanmar and Sierra Leone.
The World Bank (2002) comes up with some other startling observations: that, on average, the poorest quintile of Indians is 2.6 times more likely than the richest to forego medical treatment in the event of illness; that more than 40 percent of individuals who are hospitalised in India in a year borrow money or sell assets to cover the cost of health care; that hospitalised Indians spend more than half of their total annual expenditure on health care.

Predominantly,private out-of-pocket spending into health insurance premium wherebythis amount is collected from a much larger group of insured individuals rather than from the limited number households affected by illness. Another important challenge is: how to provide health insurance to the people who cannot afford to pay (full) premium.
One of the unique solutions which seems to have started on its own is Community based health insurance because of its certain features like the, the voluntary participation of the people, not-for-profit objective in organising the scheme, scheme management by the community itself, and some degree of risk pooling, is more suited to insuring the poor.

We on one hand must applaud the new surge of capital, interest and participation by private companies and with the other must also make sure that the amount of money which can be milked by private companies in this field must be stunted b Govt. policies and schemes on the lines of Community Health Insurance Plan.

References Drawn from : World Bank Report,2000.
World Health Report,2002.
This is going to serve as a white paper for a detailed paper which i am planning to work on.Do mail me your feedback at avinash.aniket@gmail.com.

Deepti is a funny girl. Whenever some one tells her 'no, that's not possible', she makes sure she makes the 'impossible' a reality.

Deepti doesn't care about old-fashioned paradigms or hierarchy. Everybody is equal, and if she wants to talk to the prime minister of India or for that matter Her top bosses in organisation, she makes sure s/he sweeps his/her calendar for her.

And why the heck are only the huge international publishers 'allowed' to launch magazines? Magazines that are made out of old templates and seem to be clones of existing titles. No wonder the entire magazine and newspaper industry are crumbling. They refuse to deliver what we want.

Now the time has come for a new international cross-over media movement. Everybody loves facebook. Well, four hundred million people love facebook, and post lots of cool things there everyday. Still not a single magazine gives facebook any attention whatsoever. The same goes for Flickr. The material that is published there is top notch quality. Still, not a single established medium gives them a second glance.

How silly.

That's why the Blank Page is..Black. It is carte blanche BLACK for YOU! And YOU! And YOU!
You see no arrogant editorial staff standing in your way here. What YOU want in the magazine, will get published in it, unless a bunch of other co-creators happen to vote otherwize. This magazine is based on real democracy.

WELCOME To The www.BlackBracket.Com

An opputunity coming your way....

So please tell me, show me, let me hear what YOU want to come in the paper edition of the Black Page. A website to aid you, for us to fill with whatever you want. Doesn't it sound marvelous? On the website you can publish lots of other things too, like videos and your own music. In the paper edition you can refer to your online material.

Don't be shy, step out into the sun and show the world who you are!...

Grecian Urn ... who would have the luck to save it...

Markets across the world were rattled briefly after Standard & Poor's downgraded Greece's rating to "junk" while also cutting the ratings of Portugal and Spain, citing these nation's spiraling debt. Risk appetite tumbled, with commodities and stocks taking a beating while the dollar and gold gained. The cost of insuring against sovereign debt default by Greece, Portugal and Spain surged while the spread between the benchmark notes of Greece and Germany shot up. I really shuld be educated as to how the benchmark spread does weave its magic of economics ... (comments invited ... )

Sentiment across asset classes, markets and regions nose-dived as European leaders dragged their feet over a rescue package for Greece, stoking fears that the debt-ridden nation could end up defaulting on its obligations.On top of that Europe was excepted to grow at 1-1.5% at best , 2 % ... with this crises, and the way Greece has kept its balance sheet .. EU must have a real trouble convincing all to put the last straw of safety.

So, the EU and IMF decided to raise the aid package to €120bn over three years, up from an original plan of €45bn this year. The Financial Times (FT) reported that Greece has agreed the outline of a €24bn (US$32bn) austerity package. Final details of the measures, which are intended to slash the budget deficit by 10-11% of GDP over the next three years, were still being worked out, the FT added. A successful auction of Italian debt also helped soothe nerves. Global stocks also got a boost from strong earnings from major US companies, which lifted Wall Street and raised hopes that the world's largest economy was picking up steam, tempering some worries about Europe's debt problems.