Politics of Currency

This blog is not how good or how bad the demonetization move is. It is not an opinion about how the Prime Minister has killed growth and is reneging on his promise of “Achche Din’. This piece is about reading the tea leaves. In trying to do so, I am trying to post facts in a dispassionate manner with some opinions thrown in.

8^th November 2016 will be a watershed day in Indian history. On this day, the Prime Minister of India announced the withdrawal of Indian currency notes of Rs. 500 and Rs. 1000.

Since then life has changed for everybody. Right from a street vendor, to a senior corporate executive to a top notch businessmen, to a politician life changed for everybody. Across the spectrum, everyone has been subject to hardship. People who had little money, were scrambling to change notes. People who had too much colored money, were wondering what to do.

One thing is sure, the decision has been bold. I am sure it has been unpalatable even for the BJP. It is a known secret that the political machinery runs on cash. This move has just cut out the funding tap not only for other parties, but also for the BJP. There are accusations that BJP people knew about this beforehand, but these accusations are rubbish. Narendra Modi is too suave politically to commit this kind of error. In an operation like this, secrecy was the key, and there is a report in public domain that only 6 people knew of this and the cabinet were told only hours before the announcement, and were allowed to leave only after his television address ended.

The jury is out whether this is a good move or a bad move. You have one section of the opposition crying coarsely from rooftops about how it hurts the common man. On the other hand reports about the resiliency have started coming in. I have seen street vendors move to Paytm and turn cashless. Last week I was in Faridabad and spoke to a whole lot of people from taxi and auto drivers, waiters, daily wage earners etc. Everybody is happy about the decision and is backing the Prime Minister on this.  On the other hand there are reports about how people are suffering at the mercy of hospitals in rural areas. There are also reports about people willing to stand in queues for money, while there is another shocking report (unconfirmed) about people being hired to stand in queues and make them look longer in order to give an impression that the common man is suffering.

The most interesting response has been from the media. A lot of the English media is already predicting this as a Waterloo moment for Narendra Modi. 20 days after the event, media is still talking about unending queues and how if cash is not supplied fast, public patience will shift to anger. They talk about possible riots on the streets and one Chief Minister publicly warning about the same. On the other hand there are quite a few surveys which says that more than 70% of the public is backing Narendra Modi on the same. One of them is a survey by the PMO itself on an app which is called the Narendra Modi app. Do I see a hint of megalomania? The media response, is that the survey is not well designed and have criticized it from a technical point of view. As if the respondent cares!

There are three events that lead me to believe that the media lives in a cocoon of its own making. During the 2014 Lok Sabha elections, most predictions presented a BJP majority but very few predicted an NDA landslide with BJP getting a simple majority. In 2015, in UK even the Brexit vote was predicted wrongly. And the 2016 US Presidential elections took the cake. Nobody gave Donald Trump even a small chance, they predicted a landslide win for Hilary Clinton. Does the media hear and listen to only what it wants? Has it become so elitist that it cannot listen to the voice on the ground? I sometimes think so.

Now let us look at the timing of this decision by Narendra Modi. It is middle of his term and two and and a half years to go to the next general elections. Diwali is just over and no major festivals in sight. Christmas is 45 days away. Some economists are saying that this demonetization is at a time when the economy is in a take off mode. There is 7% growth, we have had a good monsoon and inflation is coming weaning. By demonetizing 86% of the currency, the PM has shot at speeding tyres. Here’s where the economists get it wrong.  A radical measure like this has to come when the going is good and there are shock absorbers in place. Imagine trying to do this when inflation is high and the economy is struggling for growth. The timing of the move is completely countercyclical which is good. If the pain subsides in three months and some good comes out of it, Narendra Modi will be an absolute hero. Remember public memory is weak and the recency effect is massive. I personally will give Modiji a 10 on 10 for getting the timing perfect.

A small voice tells me, that this is Narendra Modi’s defining moment and biggest political gamble. If he pulls this off, I am sure there are other tricks in his bag of a populist nature which he will unleash closer to 2019 General Elections. Something tells me, that 2019 is already in the bag.

Shattered Accountant

I qualified as a Chartered Accountant more than 20 years ago. At that moment it was a matter of absolute pride in qualifying in an examination, where the passing rate is in single digits. A long and bright career awaited me. The entrepreneurship bug bit early and I started my Chartered Accountancy practice. Fate however had other ideas. 

It is said that a lot of  juices flow in washrooms including the creative type.  In my case, that was the place where I chanced upon a great opportunity. While relieving myself, I found myself standing next to a person three years my junior. He casually mentioned that their college was looking for someone to teach them financial management. One thing led to another and next day I was in the B-School meeting the director, and in three days, started teaching. Not bad for someone who believed he had pathetic public speaking skills at that time.

It was a good way to get some money in to supplement the practice. I might have done a decent job, as now more colleges called me to be part of the faculty. I realized I was liking teaching and at one point of time was teaching 12 hours a day.  Life was co-existing as a faculty and as a Practicing Chartered Accountant.

One fine day, the pivotal moment happened. An Income Tax Officer asked me for a bribe and I had to pay to save my client. My client was right, however the ITOs argument was irrebuttable. I paid the cash and moved to the Pizzeria at Churchgate. At 4 in the afternoon, with a muddled head, I had a couple of beers and a couple of pizzas. Alone… looking at the Arabian sea. I asked myself the question, “Is this what I want to do? What use is education, if you are going to have a lifetime paying bribes? “ That evening on Marine Drive, the sun set simultaneously in the Arabian sea and on my Chartered Accountancy practice.

Twenty five years later, I am training a bunch of fresh Chartered Accountants in a technology company. I accompany a dozen of them to dinner and the news arrives. The Prime Minister has declared that notes of Rs. 500 / 1000 are invalid. The rest of the dinner conversation focuses on the appropriateness or otherwise of this move. Some of them are euphoric that this is a great move. One shows me a whatsapp message, where his acquaintance, has 5 cr. in cash and looking for options. One girl comes up to me and asks me for a solution. Being a lady, I have to maintain my composure and 

tell her that I no longer do this business.

There are multiple views about whether this move is right or wrong. There are talks about people not having bank accounts. Small traders are having very little or no business. Who is to blame? People have embraced technology for communication but stayed away from the same when it comes to financial dealings. The Government has been persuading people for financial inclusion. Do you know why financial inclusion is not successful? It is not due to lack of efforts by Government, it is due to people not wanting to transact through the financial system.

A lot of small businesses, who make a lot of money, have not switched to banking systems or credit cards. They do not want to get into the accounting system and pay the necessary taxes be it Service tax or VAT or Income Tax. They are happy to do business in cash.

Gentle persuasion, as a strategy did not work for more than two years. A ‘’Gun to the Temple’’ move was required and is good for everyone. People will suffer for a few days, but definitely the normal has changed. The economy will take a different shape from now on and there are really interesting things in store.

It has been a week now, and I have come across quite a few Chartered Accountants. Apparently they are busy advising clients how to save their ‘’hard earned’’ money from turning into smoke. The more I see these things happening around me, the more I wring my hands in despair. I have mixed emotions. On one hand I am extremely happy that the people with huge cash on their hands have been squeezed. On the other hand, I am sad to see, qualified, educated, people helping these people to work out ways to ‘’protect their losses.’’ Sometimes I feel that a prostitute’s job is more honorable than what these qualified people are doing.  When we educated people participate in the creation of black money, we should not complain if we have some hardships.

Today, twenty years after I left practice, I am ashamed by the behavior of some of my fellow professionals. A lot of them will say, that this service is the need of the hour. From their perspective, they are just meeting the client’s needs. I wonder whether they are trapped in their own success from which they cannot escape. Will these people participate in nation building by discouraging creation of black money, or advising clients how to avoid taxes? I have very little hopes.

Today in a true sense, I have turned into a Shattered Accountant. 

Lessons in Succession Planning – from Narendra Modi

(This piece was written during the run-up to the 2014 general elections. Suddenly looks relevant in light of the Tata-Mistry saga)


Over the last few days we have been hearing how Narendra Modi has been ruthless and shunting out the old guard in the BJP. People have been talking about how seniors deserve respect and Modi is not giving them enough of this.

While by no means is this a piece on BJP politics, one cannot but see similarities to Corporate world. Don’t know if Modi is picking lessons from Corporate or the Corporate world has to learn some stuff.

A lot of times, when the person at the top changes, so does the management structure at Level 2 or even Level 3. The CEO brings with him / her, his/her own set of people whom the CEO is comfortable with. It is extremely important for the CEO to have a free hand in this. While the organization is going through a change, it cannot change its stripes fast enough with older thought processes.

First of all let us understand why, this change is required. The earlier CEO may not have got the results or simply has resigned / retired due to age / tenure. In the first case, there is a need for new ideas and new processes. Each CEO will have their own protégés or trusted lieutenants. Change is the most difficult thing to accept and hence, these trusted lieutenants could cling on their older beliefs, which are not giving results. Thus there is “deadwood” in the system which needs to be removed or else the jungle will just not grow.

The new CEO sets about just doing that. In case a successful CEO moves on, he is replaced from someone within the system, generally who is a protégé. This person goes about on the same path as the previous CEO and hence faces lesser resistance. However this person faces different problems. This person is suddenly now asked to head a team, which comprised of peers. It is a very tricky situation and people are firstly unhappy of not having made it to the top. They believe that they should have been the chosen ones and hence starts the process of “sabotage”.

Hence in both cases, one finds that teams change with change of CEOs. A prime example is of a leading private sector bank in India, where, when a highly respected and successful chairman stepped down, the entire management team was shunted out (or moved out).

The new CEO needs a free hand to succeed. Does it mean, none of the old loyalists survive? Not necessarily. People who are “loyalist” to the person may get shunted out. People who adopt change and accept the new guard will survive in the new system. A prime example is another Advani loyalist, Sushma Swaraj. While she has accepted Modi’s leadership, she is making noises in the way some people are being treated. Why is she not being shunted out ( As I finish writing this she may be…)?

Remember the world at the top is very lonely. It is very easy to be surrounded by sycophants or yes men. Sometimes the advice can be everything the new person does is right and everything the old person did was wrong. This statement can be nothing further than the truth. Also one can be blinded by success or potential success. Jamie Dimon says, you need to be surrounded by people who tell you the truth. If Modi has to succeed, he needs a Sushma Swaraj, who will tell him the truth even if it is bitter. However there is a difference between “sabotage” and “constructive criticism”. While “sabotage” is a word from the world of espionage, it exists in all organizations (political as well as non-political). The perceived dividing line is very thin. As long as it is constructive criticism, Sushma Swaraj has an extremely strong role to play.

As a matter of fact, she could turn out to be Modi’s biggest asset. She is the “mirror” in Modi’s party and has her value in the entire scheme of things.

We could actually be seeing a great story of change management in an organization, where corporates have to learn from politicians!

Standards of Living

“Early to bed and early to rise, makes a man healthy, wealthy and wise.” This is one of the things that I had learnt as a child. Twenty years of Corporate Career have ensured that I do not have any of the three attributes mentioned above.

The first few years of corporate life are spent in proving yourself. 15 hour work days are the norm.  If you leave office at half past five or six, comments about leaving half day are normal. So the entire day is spent having endless cups of coffee networking and then working furiously after 5 to impress the boss and other colleagues. Of course there are fringe benefits like ensuring that your departure time ‘coincides’ with that of some interesting colleagues. Adds a little spice to a completely boring life.

Then when you start getting older, the ‘interesting’ colleagues lose interest in you. So now your late evening journey from office to home gets frequently interrupted at a watering hole. Inherited health, studied wisdom and earned wealth get sacrificed during the journey from office to home. The accumulated balance of all the three attributes is very limited. So one fine day, I decided to quit Corporate life and follow the above wisdom, which I learnt in school.

The time I used to leave from office, is the time I go to sleep today. The time I used to return home after a party is the time I wake up. But leaving corporate life ensures, that wealth of the material kind is a bit scarce.

In order to hoard and save on this scarce commodity, I decided to go to work by public transport last week. The first stop was a shared auto rickshaw which would take me to the nearest suburban railway station. I found myself in the company of two middle aged ladies and a young driver. While I was busy reading an article on my cell phone, one of the ladies shrieked. The auto had just avoided an oncoming car. I suddenly realized that we were in the wrong lane. Majority of the traffic was coming from the other side. It was directly out of the movie Octopussy, where Vijay Amritraj drove James Bond in an auto at breakneck speed through the streets of Rajasthan. Fortunately I was not on a secret mission, nor were we escaping from some gun toting villains.

The next stop was at a traffic signal. We were supposed to go right, and the signal for us was red. However red lights don’t stop daredevil auto drivers. At a speed which would put Lewis Hamilton to shame, he swerved left, cut through the traffic at 90 degrees, took a U-turn and then turned left to go coolly on his way. All the while listening to Bollywood music.

Finally we decided to protest and interrupt his music concert.  He was grossly irritated at listening to a sermon early in the morning. He squarely passed the blame on other commuters. Apparently, in peak hours, commuters pester him to go fast, break all kinds of traffic rules and ensure that they reach the train station quickly. He went on to add that this has been a phenomenon, since fingerprinting has been introduced at the workplace.

Fingerprinting ensures that the entry time is captured accurately to the second. Thus people coming late are easily identified. In an era of 15 hour work days, where performance matters, people are still being pulled up for punctuality. The person who introduced fingerprinting access as a security feature would never have imagined the risk it could bring with it.

In this race to survive, we are compromising basic safety. Apparently it is the educated class which is encouraging people the break the rules. Those of us who drive will vouch that there is no shortage of people driving on the wrong side of the road. I have had cases, where people are honking behind me when I stop at a red signal, making me wonder, whether stopping at a red light is an offence.

On a different note, when I see people in fancy cars throwing bottles, coffee cups and pieces of paper on the road, I wonder whether these people are educated. Education is supposed to make the world a better place. It is also making the world a competitive place. Is it this competition that is making us lose our basic civic sense? Or is it the power which gives people a sense of entitlement to do what they wish.  And where does power emanate from? Does it come from money or from position, status? Wherever it comes from, with a brash display of power especially in simple tasks like not following traffic rules and littering the roads, what kind of example are we setting for our children?

It is very clear that education does not make us wise. Is it the rat race that is making us lose our wisdom? The chase of greater profits, has led to better income, more and bigger cars, better standard of living. But wisdom is lost and we are chasing material benefits even by putting our lives in peril.

The standard of living has improved. The standards of living have fallen.

Junoon

A month ago, I did an author interaction session in a library in Mysore. When Crossword, who is my publisher tweeted about my book, Chitra, the manager of a library chain invited me for an interaction.

My initial thought was, you spend money on a flight ticket and a taxi and hotel stay and what do you get? I started analysing the invitation through an excel sheet. Fortunately for me, there was a work assignment in Bangalore, which ensured that the flight would be taken care of. Suddenly the colour on the excel sheet turned a lighter sheet of red.

Closer to the date, I started interacting with Chitra. I thought she was just a library manager or a franchise owner for whom the author meet is just a tick in the box. I asked her to read the book, and then decide about the audience. What she told me had me thinking. Apparently, she had read the book, even before she extended the invite. It was not just getting an author, but she had liked my thought process and hence wanted me to speak to members of the library. I was flattered, honoured and humbled to say the least. I felt sorry in my thought process in evaluating an invite like this on an Excel sheet.

As the event drew closer, Chitra invested her time in meeting corporates, inviting their HR managers, talking to business schools, sending books to the media and promoting the event in social media. When she learnt that my editor was from Mysore, she personally visited her house and invited her for the function. She even felicitated her, which I thought was a great gesture

 I am sure even a professional event manager wouldn’t have done as good a job. My friends mentioned that she would be the franchise owner. Turns out she was just an employee... with a lot of passion towards her job.

Today, a month down the line, I received the news that she had resigned from her job. I was sad to see her go and hence decided to speak to her and learnt her story.

Chitra was a practising therapist in Chennai who helped autistic kids. She had a roaring practise for nearly twenty five years. Once when she was visiting her in-laws to Mysore, she visited the library, which at that time was a franchise. The franchise owner was closing it down, as it wasn’t doing great business. On the spot she convinced the franchise owner to continue, closed down her practice in Chennai and moved lock stock and barrel to Mysore to work for the library.

Over the next few years she developed the centre, created a reading culture in Mysore. She recruited staff from various backgrounds, trained them, introduced them to reading, developed them in such a fashion, that the centre now functions independently. She would read every new book and promote it among the readers. A city where once library was closing down now has two libraries which Chitra manages.

Both the centres are doing well and hence now Corporate wants to take over the centre. They realise that the staff is well trained and centres can function independently. I am sure the Operations guys must have pressure from finance to cut costs, and hence what do they do? The ask Chitra to resign. Her fault? She created a reading culture, created two centres, staffed them well and made them independent. Her losing the job is not about money or losing income. It’s about Chitra losing a child. The work which she does passionately and likes doing, is being taken away from her.

It is like telling Gopichand, now that Sindhu has won a silver medal at the Olympics, she can train on her own and your services are no longer needed. Trust me, without leadership, Corporate will run the libraries into losses.

In this era of ecommerce, every third young person is opening an ecommerce company and looking at valuations. The key to evaluate is, whether the person is passionate about the product or about money. 95% of them are in this to earn money. Trust me they will never succeed. Only those who have conviction in their product / service and are passionate about their solution will succeed. Rest will fall by the wayside.

As I am writing this, I realise that the correct word is not passion. It is ‘Junoon’. A lot of times I mention about my inadequacy to use the English language to bring out the correct description of the underlying emotion. In this case the word passion is inadequate to describe the motivation behind Chitra’s actions. It has to be Junoon... to make a difference. I would think the English meaning of ‘Junoon’ will be Passion X Madness.

Business can be evaluated on Excel Sheets, but cannot be run using the same. You need one mad person with Junoon for every business to succeed.  As for Chitra, I am sure she will get back on her feet and find another Junoon. Thank you madam for teaching me the value of Junoon.

(Names have been changed on request)

Well Played

“Shooters misfire.” This was the headline in one of the major national newspapers of this country after some of our shooters did not make it to the finals of their respective events at the Rio Olympics.

Being a sports fan, I was following the qualification process live and was completely incensed at the senselessness of this headline. That the media has a lack of sensibility is being proved from time to time. There are a huge number of loose comments that flow after every performance in an Olympics or a World Cup which does not result in a medal. Coffee conversations flow from, how our sportsmen are underperforming, how a small country like say Vietnam can generate a  Gold medal, while India with it’s large population cannot do so etc. I am sure there will be jokes about how the Indians went to Rio for sightseeing etc. This piece is to ensure that we don’t lose our sensibilities by blindly following the media.

Take the case of the women’s 10 m Air rifle event. Apurvi Chandela and Ayonika Paul shot 411.6 and 403 to finish 34^th and 47^th in the qualifiers. The cut off for the finals came at 415.9. Let us understand the score in perspective. Each participant has to fire 40 shots in the qualifying round. The target is 10 mts away which is nearly 30 feet. I am sure half our cricketers will not be able to hit the stumps from 30 feet... regularly.

A bull’s eye is a score of 10. Chandela has an average score of 10.29 per shot and Paul has an average score of 10.075 per shot. This means that they are hitting bulls eye with almost every shot.  To do this for 40 shots in succession is completely inhuman. There is a small inner circle, absolutely at the centre, where you score more than 10 points. In the gold medal winning shot at Beijing, Abhinav Bindra hit a 10.8. A perfect score is 10.9.  So it is just a matter of how close to the centre your shot is which separates the best from the rest.

Yes I am disappointed that India did not get a medal. But for a moment, let me put myself in the shoes of Apurvi and Ayonika. The collective disappointment of a billion Indians will not match the individual disappointment that each of the girls have. None of them went to Rio, just to participate and make up the numbers. Each one of them is here to win. A collective effort of 4 years is judged in a matter of 45 minutes of performance and 2 seconds of headlines.

This brings me to another incident, which cringed me. India vs. Columbia, Archery team quarterfinals, Rio 2016. The match is tied and we are in the last set. The Columbian archer misfires and scores a 3, where most arrows score 8,9 or 10. This one bad arrow cost Columbia the match. I am sure that the Columbian archer did not put in practice for four years to shoot a 3.. something snapped at the last second. The Columbian archer was un-consolable. I don’t know how the Columbian media works, but if it was an Indian, the Indian media would have barbequed her. And so would have the 1 billion population.

Every negative comment that you make about the performance or lack of the same at the Olympics of our sportspersons is akin to shooting a bullet through their heart. My sincere request to you all... be cognizant of the sensibilities of the athletes... and just say “Well Played” irrespective of the result.

Happy Olympic viewing.

Smaash!!!

My love for sports has taken me to watch the Mumbai Super League held at the NSCI Worli, which is a local, IPL style league for Table Tennis. It is a ten team franchise based league, with each franchise bidding IPL style for players. Apparently this is the second year for the league; I came to know of the same, only because my batch-mate Samir Thakkar owns a team Kool Smashers.

While the IPL is a money spinning machine, there is no way any franchisee or anybody can make any money out of this event. The franchise owners are people in love with the game, who get a high from playing. They are investing money in a real sense to give it back to the sport. The total purse available for bidding for players is a princely sum of Rs. 80,000 which is to be used for buying 6 players.

I think it is a great move which inculcates team spirit in a sport which is largely individualistic. It was fantastic to see 70 players, the team owners, the coaches, parents of the players and a whole lot of people who are interested in the sport coming and watching. For me personally it was a great learning experience watching matches sitting with the team, speaking to the players, coaches and interacting with them.

What was heartening is there was no ugly rivalry, as everybody knew everybody. While there was aggression on the table, everyone was friendly. Rival teams sat next to each other, indulged in banter and technical discussions. It was extremely heartening to see a senior member from the opponent team, come and encourage the cadet – the kid who is less than 10 years. Every good point was cheered. It was great competition with camaraderie.

One thing that struck me was what happened after the end of the match. In an unwritten protocol, the winner; after shaking hands with the opponent and umpires, went to the opposition benches and shook hands first with the opposition coach and their team members, before being congratulated by their own team.

I am amazed by the values that this four day event is teaching people. During a side conversation, my friend Samir taught me a huge aspect, something which struck me very hard. He said, every kid should play a sport, as it teaches them how to cope with failure. The casual conversation had a deep impression on my mind. In a format like this, failure, bounce back and redemption is instantaneous. The junior team has to play doubles as their first match and half an hour later come back to play the singles. I was amazed, how the players were able to put back the defeat out of their mind instantaneously and come back motivated to play the singles.

In Corporate Life, one failure, one bad conversation with the manager spoils the rest of the day. Carpe Diem or Live in the Moment is really what sport teaches people. One bad shot, one mishit, one bad judgement, has to be put away instantaneously only to focus on the next point. Samir… thanks a lot for this, I am definitely going to ensure my son plays some sport.

While I am watching this over Wimbledon, a quote from Serena Williams caught my attention. For long there has been a debate about equal prize money for women in sport. In tennis the matches are three sets long for women, while five sets for men. Physically men are supposed to be better than women in any sport. With this aspect at the back of mind, an incident at the table tennis league, sparked my imagination, which led to this post.

For this league, the organisers have introduced an innovation – the power play. In doubles, the team can use the power play to change one of the players for two points… only to receive the serve. For example in a team of say Ajay and Atul, if Atul is to receive the serve, Ajay can call a power play, and get another member of his team to receive two serves in place of Atul.

In one of the mens doubles matches, Paresh Murekar called the powerplay. His team was up game point at 11-10. In a very close match the next point was very crucial. He asked the veteran player to wait and called the junior girls player to take serve. I personally was amazed at the decision. One, he was replacing a men’s player with a girl, in a discipline, which is inherently sexist. In any mixed doubles game, the women player is generally the weakest. Secondly, he did not call the women’s player, but the girl’s player, a junior. Whatever the outcome of the game, I thought it was a gutsy decision. If they won the point, Paresh would be a hero, if they lost it, he could be a villain in a tight game. Paresh Murekar take a bow, for taking such a decision on game point. If I was a recruiter, I would have hired Paresh on the spot. It is a different matter that they won the game.

I then look back at corporate, and wonder, whether when faced with a crunch situation, would I depend on experience or youth. 99 times out of hundred it will be experience, and then I wonder whether the corporate world can learn something from sport.

I am waiting for the day, when we form a team in companies which is an amalgamation of people with all levels of experience, and the best person leads it, and not the senior most. Till then.. Carpe Diem.