The modern thinking Indian

Part of the worries about global warming is about the loss of glaciers, with increasing melting and lower mass covered by the glaciers. Recent reports have confirmed the data, that glaciers are indeed getting impacted. Since glaciers are one of the primary source of water for the world's rivers, which are in turn are the primary sources of fresh water, water for irrigation purposes, and also energy generation through dams, such reports can only increase the alarm levels for the future of the world's population. Availability of fresh water is already problematic for huge chunks of the world's population, and these confirmation by scientists can only confirm that we are headed in for more trouble (link to article):

U.S. scientists monitoring shrinking glaciers in Washington and Alaska reported this week that a major meltdown is under way. A 50-year government study found that the world's glaciers are melting at a rapid and alarming rate. The ongoing study is the latest in a series of reports that found glaciers worldwide are melting faster than anyone had predicted they would just a few years ago. It offers a clear indication of an accelerating climate change and warming earth, according to the authors.
Since 1959, the U.S. Geological Survey, which published the study on its Web site, has been tracking the movements of the South Cascade glacier in Washington and the Wolverine and Gulcana glaciers in Alaska. The three glaciers are considered "benchmarks" for the conditions of thousands of other glaciers because they're in different climate zones and at various elevations.

The melting of the glaciers has both long term and short term problems. Along with the increase in water levels due to melting of polar caps and ice on Greenland, this melting of the glaciers will initially result in river levels going up, eventually contributing to higher sea caps; over a longer period, the glaciers will contribute lower amounts of fresh water and affect huge sections of the world's population. At the same time, the world's leaders cannot quit bickering, and take the steps required to reduce global warming.

Labels: Deal, Environment, Fresh Water, Future, Glacier, Global Warming, Melting, Ocean Levels, Politics, Reduction, Research, Scientific Study, Sea Levels

What does a deficit mean ? There are many terms such as fiscal deficit, monetary deficit, revenue deficit, but the differences between are them are relevant for people involved in the field of economics. For the normal person on the street, a deficit means that you are spending more than you earn. A normal person cannot do this without getting into serious money problems, but a Government can (and in almost every case the world-over), does do this. How can a Government spend more than it can earn ? A Government does this through means of a deficit, that it either finances by printing more money, or by borrowing funds from the market.
Both cases cause problems for the economy as such, since if the Government prints more money, this essentially means that more money is being put into the system. More money, but the same amount of production means in simple terms - if you wanted something, and many others want the same thing, then the thing you want gets more expensive. In terms of the economy, if more money comes into the system, then things get more expensive and inflation rises.
If the Government borrows more money from the market, that is less money that is available to private companies to get from their market to meet their funds requirement, or if they need loans for capacity repair or expansion. Such reduction in the availability of funds means that loans for companies get more difficult and has an effect on the ability of private sector to rise above these bad economic times.
Why did the Government need so many funds that it was willing to increase the fiscal deficit to a point where it would be pointed out by economists as a risk ? Well, these are bad economic times and it is at these times that Governments the world over are putting more money into the economy to try to get out of these struggling times. In addition, the Government realized that politically, it has benefited through such measures such as the National Rural Employment Scheme, and it wants to make sure that it is pumping money into the rural sector, the agriculture based sector.
Why did the market react negatively to the Budget, and why am I writing about it after so many days ? Well, the market had been expecting some relief measures, or at least token gestures such as the removal of the Securities Transaction Tax. Instead what it got was no new seemingly market or industry oriented measures and no removal of the STT. Instead it got a much higher fiscal deficit and a seeming reversion to populism. And hence the initial bad reaction to the budget.
However, every year, there are more voices gaining ground that industry should stop looking to the budget as an earth-shaking event, instead treating it as a simple Profit and Loss statement of the Government. In addition, the initial depression of the market has subsided as it looks like there are faint signs of revival, and the realization that the budget did not make things worse, and if rural consumers get more income, that is a new market.
What should you do ? Unless, there are some earth shaking events, the long term prospects look good and you should stay invested for the medium to long term in fundamentally safe companies. Avoid risky companies unless you know what you are doing and you know the risk involved.

Labels: Budget, Economy, Equity, Future, Growth, India, Indian, Market, Stock

When the results for the 2009 Indian Lok Sabha (Parliament) elections were out, everybody was surprised by the scope of the Congress victory. The Left would have been shell-shocked by the scope of their reduction in seats and dramatic bad run in both West Bengal and Kerala, but it was the BJP that was most badly affected. The BJP, which once ruled India for 5 years, had just lost its second general elections (and both of them were lost under the leadership of Lal Krishna Advani - this election was his last attempt to be the Prime Minister of India, since he would be too old the next time).
For the first few weeks after the election, it seemed like the BJP was literally in shell-shock, the party quickly resisted a half-hearted attempt by Advani to resign as the leader of the party (given that there is no clear demarcated second line leader - the presumed next generation leader, Modi, could not carry his state to a complete sweep (which was almost a rejection for him), and all the others are in full fighting mode, it would have been difficult for the party to select a new leader agreeable to all). Murli Manohar Joshi tried to stake a brief claim, but that was quickly thwarted.
Now the voices in the party are being heard loud and clear, and there is a demand for an accountability of the defeat of the party. After all, the party has lost badly in many of the states that were supposed to be good for the party (or had been in the past), such as Uttar Pradesh, Haryana, Rajasthan, Uttrakhand, Delhi. For a party that was called the natural party of the middle class and the urban section, not being able to make a mark in Delhi and Bombay shows how much the party seems to have swayed away from being an effective contender for power.
In the last 2 days, there has been a sudden jump in the demand for accountability, and this seems to be related to the recent movements of Advani retaining the leadership of the party, Arun Jaitely becoming the leader in the upper house, and Sushma Swaraj being the deputy leader in the lower house. Other leaders who have been left out and who are seen as having been left out such as Jaswant Singh, Arun Shourie, and Yashwant Sinha have been demanding for more accountability and also that people who had a leadership role in the elections should have to bear the cross for the defeat (targeted at Jaitely, since he was the de-facto head of the campaign and the election effort).
If the BJP wants to come back to being taken as a serious contender for power, it needs to focus more on being an inclusive party. People, even those who were attracted by the earlier Hindutva campaign, are repelled by the hard-line stances on many areas such as the attack on people in a pub in Mangalore, the attacks on churches, the utterances of Varun Gandhi (and their not being condemned). The party needs to show how it can be seen as having a vision for the future, and needs to focus on development (and they have 2 chief ministers who are still there on the basis of their development platform - Modi in Gujarat, and Raman Singh of Chattisgarh).
The party also needs to be more realistic and pragmatic on their policies, as being seen on the side of the Left parties in opposing the nuclear deal was an idiotic posture that disillusioned many of their supporters, and their refusal to cooperate with the Government on accelerating some of the reforms after the exit of the Left parties was also a policy doomed to showing them in poor light. The party can still make good, but it requires a lot of inner look, and self-effort. There is discussion going around about problems in ties with the RSS, but the party needs to fine-tune those ties so that they can use the committed cadre of the RSS while not adopting the reprehensible policies of many of the sister organizations such as the VHP and the Bajrang Dal.

Labels: BJP, Election, Future, India, Politics, Responsibility

What should a person look for when to invest in the stock market ? The stock market is always said to be a reflection of the economic future of the country, and in the view of many experts, seen to be an indicator of the next 6 months to 1 year. So what does the future say for the country ? You need to be cautious, monitor the sectors of the economy that are not so affected by the company, look at market value of companies as opposed to their book values, look at their future potential, and so on.
Well, the last few months have been a major shakeout. The world economy is projected to have an overall negative growth or zero growth with most developed economies contracting (in fact, China and India are supposed to be among the few countries that are still growing). Scratch the details, and you see how things are pretty bad. The United States is going through a recession not like what it has seen for decades, with consumer sentiment way down. Jobs are being shed on a huge scale, industries are down, and major corporations are reporting losses or sharply reduced profits. Obama is pushing huge packages in order to try and turn around sectors such as finance, housing, auto, etc, but the economy is very slow to respond.
The slow-down in these developed economies has had a ripple effect on economies that are export led, such as China, East Asia, and even India. Sectors such as textiles, IT, gems, etc have been impacted pretty badly. At the same time, the overall sentiment is badly negative, and this has impacted growth in sectors such as Finance, Realty, Construction, Auto, name it, and the sectors are impacted. Industry is looking at getting good encouragement from the Government, but in an election year, populism is the key. At the same time, since inflation is down below 4%, one can expect some key monetary steps such as reduction of interest rates to try and boost the economy. One needs to evaluate companies that are well run, fundamentally sound, and does not indulge in unsound practices.

Labels: Company, Economy, Finance, Future, India