India: The Sab Chalta Hai Syndrome

Lokpal Bill stuck in the Parliament again. Yet another train accident claims many lives. Another RTI activist killed. The list is endless... Whenever we read such a headline, no doubt all of us feel enraged. We talk about it for a day or two and then we forget.

Last year, when Anna Hazare had hit the road asking the Lokpal Bill to be passed by the Parliament, there was a lot of support for him and thousands of people had rallied behind him. Now after two sessions of the Parliament, we seem to have forgotten all about the Bill.

Last year, several railway accidents took place in the country. There was some grief, some public anguish, a lot of blame-games and of course a bunch of enquiries!

There are numerous cases of infant deaths in hospitals of West Bengal and Jammu and Kashmir, several whistleblowers and RTI activists have been murdered, but we pay little attention to these.

Perhaps this behaviour of ours can be attributed to the Sab Chalta Hai syndrome. We have become so accustomed to the inefficiencies of the system that it hardly takes us a moment to dismiss the happenings around us by saying “Sab Chalta Hai”. We have been affected so much by this syndrome that things like trains getting late, poor services in hospitals and officers demanding bribes hardly have any impact on us.

Someone once said, “There’s a problem only if there is a solution”. So, what is the solution for Sab Chalta Hai syndrome?

If we observe carefully, in cases of Lokpal Bill, Jessica Lal murder case, etc, whenever we have been led properly, we have indeed come out against the faults of the system. Perhaps our country suffers from a severe crunch of leaders who can take a stand against the inefficiencies of the system. I feel that if a greater weightage is given to the personality of the candidates appearing for government services like the IAS, etc, we would be able to get more leaders into the system. No doubt, marks are important, but what is equally important is the person’s personality and his approach attitude towards problems and life.

Another antidote to the Sab Chalta Hai syndrome is framing of better laws and quick disposal of cases. Most of us are unwilling to act against the ills associated with the system because the laws are not strong enough to protect the whistleblowers and to keep their identities secret. Also, the entire process of enquiry, investigation and judgement is very long and takes a heavy toll on an individual.

Last, but not the least, proper education and guidance will help us successfully overcome the effects of the Sab Chalta Hai syndrome. If some leadership lessons and case studies are taught at the school level itself regarding how individual and community action successfully acted against some social malady, right from a young age we will have enough motivation and examples to take the initiative.

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Indian Premier League: A plethora of opportunities

The fifth edition of the Indian Premier League (IPL) concluded recently with Kolkata Knight Riders lifting the trophy. IPL has evoked mixed response, with the proponents calling it perhaps the best thing that has ever happened to cricket while the critics have constantly blackguarded the IPL, calling it a mere money spinner, likening it to a horse race, and what not.

The IPL has given rise to a number of opportunities on and off the field. IPL has evolved as a platform for implementation of ideas and technologies. The strategic time outs and the ultra motion run out cameras have taken the game to a new level and several of these technologies and ideas will soon be tested at the international level.

The IPL has provided a great opportunity for new players to evolve and understand the game in a better way. A few years ago most players representing local clubs and teams like railways could not even dream of playing alongside the likes of Sachin Tendulkar and Shane Warne and being mentored by the likes of Anil Kumble and Wasim Akram, which is now a common sight! A few years ago cricketing rivalry made sure that opponents did not see eye to eye, but today players get a chance to share the dressing room with their international opponents where they share ideas and develop new understanding, which is good for the game.

A large number of former players too have benefitted greatly from the IPL. They now play an active part in the management of the teams along with coaching and mentoring youngsters. Several former players who could not do well in their playing days have grabbed the opportunity provided by IPL with both hands and have played a great role in the successful turnaround of several teams. IPL has also evolved as a platform where the contributions made by some former players have been acknowledged and these players have been handsomely rewarded by the BCCI.

Off the field, the IPL has presented vast opportunities to advertisers, companies, broadcasters, etc. Advertisers and companies have come up with innovative ideas to market their products to get associated with brand IPL. Terms like “DLF Maximum” and “Karbonn Kamaal Catch” are classical examples of embedded marketing. The brand/company names have been prominently displayed on the jerseys of the players, making it impossible to overlook them.

The public at large has been thoroughly entertained with eclectic commentary during the IPL matches which has always been promoted as a medium of family entertainment. Conversations with players and coaches during the match and the recent management case studies based on IPL have helped us to develop a deeper understanding of the game and the way it is played in modern times.

It should not be forgotten that controversies have been a part and parcel of IPL. Critics often call IPL the “Indian Paisa League” and allegations like Spot-Fixing and FEMA violations repeatedly come up. Some critics have gone even to the extent of asking a ban on the IPL! We need to ensure that steps are taken so that the gentleman’s game maintains its sanctity and, in the mad rush to attain glory and money, young cricketing brains and talent are not polluted.

If the faults and ills associated with the IPL are taken care of, IPL will definitely emerge as a breeding ground for fresh ideas, talent and entertainment.

Budget 2012 update

Hello friends! There have been a few changes in the proposals in the Finance Bill 2012. Enumerated below are a few of the changes.

·        The rate of Long-term capital gains tax on private equity has been cut from 20% to 10%.

·        1% excise duty on unbranded and branded jewellery has been withdrawn.

·        1% TDS on property transaction has been withdrawn.

·        No tax will be levied on foreign banks converting branch operations into subsidiaries.

·        GAAR implementation deferred till April 2013.

·        The retrospective income tax amendment will not apply to 82 treaty countries and in those cases where assessment has been completed.

Hope this post was useful.

MBA interview Questions

Hello friends! Hope you all are doing well. Here I have prepared a list of questions that were asked to me in the interviews of institutes like IMT, NMIMS, IFMR, etc. I have not put in questions like Tell us about your background, why MBA, etc because these are questions that typically all of us prepare well in advance!

1.      Which Indian has scored triple century in tests and how many times?

2.      Name the Australians who have scored triple centuries.

3.      Who was the first batsman to be given out by a third umpire?

4.      What is the difference between direct tax and indirect tax?

5.      Give one example each of direct and indirect tax other than income tax and sales tax.

6.      Name two books that you have read recently and summarise them in one sentence.

7.      Who is the party president of Samajwadi Party?

8.      What is REPO rate?

9.      What is the difference between REPO rate and Bank Rate?

10.   What is arbitrage?

11.   What is Return on Investment?

12.   What is Internal Rate of Return?

13.   Explain the 2008 recession.

14.   What is the Euro crisis?

15.   What is debt securitisation?

16.   What is your opinion in the railway fair hike?

17.   Why is loss shown on the asset side of the balance sheet?

18.   What is public debt?

19.   Name two foreign organisations from which the government of India borrows.

20.   What is the controversy regarding Rajat Gupta?

21.   Why is the controversy that Iraq is currently involved in?

22.   What two immediate steps would you take if you would become the mayor of Delhi?

I hope that the readers found this post useful. All the best!

Budget 2012: Highlights

Hello friends. The 81^st Union Budget coincided with Sachin Tendulkar’s much awaited 100^th century and most headlines referred to the feat before coming to the budget part! Having done the same here, I now come to the Budget! The budget invoked a mixed response and the stock market was down 209 points. The highlights of the budget are given below. I hope the readers find it useful.

Old tax exemption limit (Rs.)	New tax exemption limit (Rs.)	Category
180,000	200,000	Men
190,000	200,000	Women
250,000	250,000	Senior citizens (those above 60 years and below 80 years)
500,000	500,000	Very senior citizens (those above 80 years)

·        Inflation rate of 6.4% expected for 2012-2013.

·        GDP growth for current fiscal estimated at 6.9%.

·        GDP growth rate of 7.6% expected for 2012-2013.

·        34% rise in service tax revenue.

·        51% higher than estimated subsidy bill for 2011-2012.

·        Aim to cut fiscal deficit to 5.1%.

·        With a 20% reduction, the new rate of Securities Transaction Tax (STT) is 0.10%.

·        A divestment target of Rs. 30,000 crores has been set.

·        Service tax to be hiked to 12% from 10%.

·        Health care, education, car parking, transportation and banking is not a part of the service tax net.

·        10% more tax on cigarettes longer than 65mm.

·        No customs duty to be levied on LCD and LED TV panels.

·        Gross tax revenue to rise to 10.6% of GDP in 2012-13 from 10.1 % in the current fiscal.

·        34% increase in allocation from NRHM (the spending would be Rs. 28,280 crore).

·        MNREGA spending to be down 17.5% to Rs. 33,000 crore for 2012-13.

·        Education budget allocation hiked 21.6% to Rs. 25,555 crore and defence budget allocation hiked 17% to Rs 1.93 lakh crore.

·        Debt to be 45.5% of GDP in FY 2012.

·        Overall expenditure to rise 13.1%.

·        New indirect taxes will add Rs. 45,940 crore to the government coffers.

·        The government woulf forego Rs. 4500 crore on direct taxes.

·        Award of highway projects to increase 20% to 8800 kms.

·        Existing customs duty of 5% on liquefied natural gas and coal to be withdrawn.

·        Foreign airlines to be allowed foreign borrowing of up to $1 billion for working capital.

·        Venture capital funds are exempt from tax on all investments.

·        Rs. 1758 crore allocation for UID.

·        18% increase in farm allocation and the new credit target is Rs. 5,75,000 crore.

·        Full exemption on duty for import of lithium ion cells used in electric and hybrid vehicles.

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Basic Banking Terms

Hello friends! In this post I have briefly discussed some of the common terms related to Banking.

Cash Reserve Ratio (CRR): A portion of the deposits made in a bank is required to be kept aside in the form of cash. This ratio of money kept aside and the Net Demand and Time Liabilities is called Cash Reserve ratio. CRR is extensively used to alter liquidity in the market. Recently, a 0.5% reduction in the CRR led an increase in money supply worth Rs32,000 in the Indian Econmomy!

Statutory Liquidity Ratio (SLR): Every bank is required to maintain a minimum proportion of their Net Demand and Time Liabilities as liquid assets in the form of cash, gold and approved securities. The ratio of liquid assets to demand and time liabilities is known as Statutory Liquidity Ratio (SLR). 

Bank Rate: The interest rate at which the central bank lends money to domestic banks is called the Bank rate. Bank Rates are altered to impact inflation and growth in the economy. Lower bank rates can help increase the money supply and thus they help to expand the economy. Conversely, higher bank rates help to reign in the economy, when inflation is higher than desired.

Repo Rate and Reverse Repo Rate: The term Repo refers to Repurchase Agreement. The banks borrow money from Reserve Bank to meet short term needs have to sell securities, usually bonds to Reserve Bank with an agreement to repurchase the same at a predetermined rate and date. This rate is called repo rate. In a reverse repo, the Central Bank borrows money from banks by lending securities. The interest paid by Reserve Bank in this case is called reverse repo rate. In India, the Repo Rate is always one percent higher than the Reverse Repo Rate.

If the central bank wants to reduce inflation, these rates and increased, while on the other hand if the central bank wishes to give some stimulus to growth, these rates are reduced.

Often we come across the term Non Banking Financial Institution (NBFC). NBFCs and Banks are perceived to have the same functions, but this is not the case. Some differences between Banks and NBFCs are:

Banks are formed under the Banking Act whereas NBFCs are formed under the Indian Companies Act 1956.

1. A NBFC cannot accept demand deposits (demand deposits are funds deposited at a depository institution that are payable on demand -- immediately or within a very short period -- like your current or savings accounts.)
2. An NBFC is not a part of the payment and settlement system and as such an NBFC cannot issue cheques drawn on itself; and
3. The deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available for NBFC depositors unlike in case of banks.
4. Also, it should be noted that NBFCs registered with RBI are classified as Asset Finance Company, Investment Company and Loan Company.

Before I conclude this post, I would briefly write on two more commonly used terms RTGS and NEFT. To keep it simple, I have discussed them in tabular form to make comparison easy.

RTGS	NEFT
RTGS stands for Real Time Gross Settlement	NEFT stands for National Electronics Funds Transfer
The minimum limit for RTGS is rupees one lakh.	There is no minimum limit for NEFT
Under RTGS, the settlement of funds is done on a real time and individual basis.	Under NEFT, the settlement of funds is done in batches.

I have tried my best to keep this post precise and brief. Some other technical terms like Non Performing Assets, Basel Norms, etc will be taken up later. I hope the readers found this post useful and feedback, as always, is welcome.

On the 17^th of March I will post a summary of the Union Budget. The highlights of the last budget are here.

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