Friday, November 30, 2012

Around the world in 10 days...

Indian festivals celebrated globally may help repositioning brand ‘India’

It would be an understatement and in fact a sin of sorts to just say that Durga Puja, Dusshera, Eid and Diwali [Indian religious festivals] are festive occasions for India and the sub-continent. Clearly, though the magnificent cities of Kolkata, Delhi, Mumbai and similar others grandiosely celebrate any occasion worth its time, the bigger festivals are celebrated with just about the same pomp and grandeur by large pockets of Indians across the globe too.

Interestingly, a bunch of students in Chicago organised a notable event of Durga Puja in the downtown area. Though the even was attended by only around 300 people, the related media and publicity hype that it generated out-beat some of the strongest tourism drives of the Indian Ministry of Tourism in the Chicago state. How important can a state like Chicago be, huh? Chicago’s GDP tops $475 billion as per various estimates, almost half of India’s GDP! Similarly, the Houston Durga Bari saw around 3,000 devotees assembling for the function. At the same level, the Frankfurt Sarbojanin Adi Durgotsav has been a constant since 1981. Places like Perth and Sydney, Africa, Hong Kong, China, Dubai, Malaysia, Tokyo, Britain, Mauritius, Fiji [where Diwali is a public holiday], Singapore and Jakarta also have Indians doing their tremendous mite to not only add to the religious fervour, but also ensuring that ‘mystical India, a land of snakes and elephants’, attracts many more tourists than what the Indian government could achieve in a lifetime. There clearly is a huge amount of learning. Rather than investing millions of dollars in organising events through typical event-management firms, the Indian government should necessarily have alliances with foreign based organisations set up by NRIs and people of ‘desi’ origin to have a tremendously better impact.


Source : IIPM Editorial, 2012.

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‘Litereal’ truth

Sarah’s effect; news is followed

The focus of the entire world shifts to arguably the greatest show on earth- the US presidential election. Depressingly, while a survey conducted last December on viewership of election campaign in the US showed only 25% of respondents below the age of 30 watching political news regularly, the figure in the age group of 30 to 49 years was 39%. But now, in the US, the pleasant surprise is that there is a significant jump in news ‘followership’, where surveys have shown 43% are following the news now compared to 36% in the last presidential election. Another survey by New York Times indicates that more than two third of the population is showing ‘some interest’ for the election. The American youths are interested in politics like never before, where 65% of them are glued to their TV sets compared to 36% in the last election. The survey also signifies an interesting side of the story, where there is more viewership among Democrat supporters than Republican ones. Amusingly, though the Canadian Federal elections are also around the corner, there is more interest in Canada for US elections than for their own. It was also found that 15% of Canada’s population would want to vote in the US election than have the right to vote in their own country.


Source : IIPM Editorial, 2012.

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Wednesday, November 28, 2012

HOW ECONOMICS CAN

What’s the dirtiest secret about corruption? Just how little we know about it. Treasuries are plundered and kickbacks are paid, but the nature and scale of the world’s shady transactions largely remain a mystery to us. Luckily, a little economic detective work is all that is needed to expose the smuggling, cheating and bribing that is hiding in plain sight.

 What little systematic evidence we do have comes from surveys by groups such as the World Bank and Transparency International. But we economists are skeptical of what people say about corruption. It’s called “cheap talk” for a reason. And we’re especially suspicious of what people say when surveyed on sensitive topics such as bribery and embezzlement. It’s obvious that responses to the question, “How much did you receive or pay last year in bribes?” are of questionable accuracy. So it’s hard to know where it’s really thriving, let alone figure out what to do about it. But all is not lost. The hidden underworld of corruption often reveals itself in unexpected ways – and in situations that allow us not only to measure actual corruption but to test different methods of preventing it. All that’s required, it turns out, is a little economics and a dash of ingenuity. To truly understand corruption, we must watch what people do, rather than just listen to what they say. And as we’ll see, damning evidence, like cash-filled suitcases, often leaves footprints in the data for those who know where to look.

Economics is fundamentally about how people respond to incentives. So, if we forensic economists want to unearth corruption, we must look for situations where incentives for crooked rewards somehow translate into actions that everyone can see.

Price of political connections

Whether through hefty campaign contributions or cushy jobs for former politicians, corporations are constantly accused of trying to profit through political ties. (just think Halliburton or Russia’s Gazprom). But what’s the real value of these companies’ connections? If you ask politicians or investors, you’re likely to hear lots of denials. To get the truth, we could ask insiders to put some money where their mouths are, making them bet some of their own cash on whether particular companies are making back-alley deals with politicians to increase their profits. Raw financial self-interest would lead bettors in the know to reveal their true beliefs about corruption.

Source : IIPM Editorial, 2012.

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Acid test for Yeddyurappa

Karnataka Chief Minister needs to quell Bajrangi hate mongers and ensure safety to minorities

Since leading the BJP to power for the first time in Karnataka, B. S. Yeddyurappa has faced a volley of accusations. Attack on churches is the latest in the list. The attack coincides with BJP’s 100 days celebration of power in Karnataka. It started in a church of Dakshina Kannada district and took little time to spread to neighbouring districts of Udupi & Chickamagalur. The attacks were triggered by Orissa incidents and the allegations of conversion. The peg for the attack was the alleged distribution of ‘Satya Darshini’, a write-up in which Hindu gods were shown in disrespect. Even Bangalore was not spared; two churches were attacked in India's IT capital; this, after Chief Minister, Yeddyurappa’s assurance of taking strict action to control the situation. In a span of a week, more than 22 churches were desecrated. According to the opposition party leaders Yeddyurappa has completely failed in his duties. Minorities in Karnataka continue to reel under threat.

The CM is under attack from opposition parties. R. V. Deshapande, KPCC President & a former Minister told B&E, “It was unfortunate that the BJP government failed in handling the situation. Bajrang Dal and VHP are trying to disturb the communal harmony in the peace loving state. Continuation of such a situation was sure to discourage prospective investors in the state.” Opposition leader Mallikarjuna Kharge too seconded Deshpande's views.


Source : IIPM Editorial, 2012.

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Tuesday, November 27, 2012

Acid test for Patnaik Jr.

It’s time for Naveen Patnaik to prove his ability as a mentor

When Naveen Patnaik entered Orissa politics a decade ago, leaving a rosy career as a writer, analysts discarded him as a person without any political experience. They also predicted that he would be a lame duck controlled by others. But he proved everybody wrong and became the Orissa CM twice, and that too consecutively. He also proved his mettle by kicking out 10 of his key ministers when they were charged with corruption. However, as the state goes for another round of assembly elections next year the question that emerges is, has Naveen proved himself as a good administrator? Does he have the true characteristics to lead the state to new heights? Will he be able to give a bright future to a poor state like Orissa?

Well, going through the series of past events, the answer definitely sounds negative. Be it the case of handling the recent violence that has erupted in the state after the murder of Swami Laxmanananda Saraswati, a Vishwa Hindu Parishad leader or enabling POSCO to go ahead with its huge investment plans for the state. That’s not all. While health problems have been an area of concern for the state; it has become a huge market for counterfeit medicines.


Source : IIPM Editorial, 2012.

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Monday, November 26, 2012

Fractured infrastructure?

Only an efficient public transport system can reduce the usage of personal vehicles

Statistics have been conspicuously crowned as the king of lies. But the fact is that there is no other logical way to prove truth other than the damn statistics. Figures don’t lie and they definitely don’t when we say that lack of proper public transit systems and infrastructure leads to high usage of private cars in India.

This trend is most visible in urban areas. For instance, Delhi has a very high rate of migration. While the population continues to rise, the city has seen a marginal rise in the number of buses in the last four years. Result: the rise in personal vehicles has been 100%. China was facing the same problem till 2006. To solve this, they came up with Bus Rapid Transit (BRT) lines in 2006. The system has been a run away hit and presently 50% of the all the trips in Chinese cities are done through public transport, majority of which are through buses. On the same lines, BRT has been started in India but is still in the trial phase and its future remains uncertain. Japan is another classic case of this trend. The market for new cars in Japan has shrunk from 7.78 million in 1990 to just 4.13 million in 2007. The reason for this is lack of proper parking facilities and the efficient public transportation in Japanese cities.

Not that high number of cars is a bad thing, but too many of them create problems. Pollution, accidents, jams are just to name a few. Indian city roads on an average occupy 12-14% of total land area. It’s 10% in Mumbai and 6% in Kolkata. The same roads carry more and more vehicles which lead to jams and accidents.


Source : IIPM Editorial, 2012.

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Saturday, November 24, 2012

The Dark Knight!

Of all the July 4ths that Bennett hates, he’ll hate July 4, 2008, the most. While the nation rejoiced on this day, he had already been sentenced to 16 years in Federal prison the day before... all thanks to his Dark Knight acts at Refco

“I knew failing to disclose these filings was wrong. I know I was wrong. I deeply regret it,” is how Phillip R. Bennett pleaded guilty, with eyes full of tears, before the US District Judge Naomi Reice Buchwald, on February 15, 2008. And what was his crime? Well he literally killed a company!!! Bennett, the former CEO of Refco Inc., a New York-based leading financial services company, earned fame having made millions for thousands of his clients (even US Senator Hillary Clinton was one!). But there was the dark side to this knight... he mismanaged Refco’s clients’ equity and disguised $430 million of bad debts. During its heydays, Refco was known as the largest non-bank US futures commission merchant of commodities and futures. The company was founded in 1969 by Lt. Thomas Dittmer and his stepfather Ray Freidman (who also had a criminal record!) as ‘Ray Freidman & Co.’ in Chicago. It was eventually relocated to New York. Its base had swelled to 200,000 customers and $4 billion in assets by October 2005. Then doomsday occurred. Many experts claim that Refco’s flameout was one of the most spectacular financial failures in US history amid civil and criminal investigations. Between its IPO in August 2005 and its October 18, 2005 bankruptcy filing, more than $1 billion in investor capital evaporated from Refco’s coffers. Beat this, it took just four days for Refco to transform from being the world’s largest commodities and futures brokerage to a company worth nothing, making it the fastest crash of a publicly listed company ever!

Born in 1948 in Britain, Bennett graduated from Cambridge University and joined Refco in 1981. He became its CFO in 1983 & subsequently its CEO in 1998. Under Bennett’s guidance, Refco advanced into the fast-growing unregulated markets and drifted away from its traditional business of dealing with agricultural commodities. Under him, the company acquired 16 smaller competitors and grew its revenue base by an incredible 24% annually through 2004. What followed however proved him a ‘dark knight’ for his stakeholders.


Source : IIPM Editorial, 2012.

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