Less than eight months ago when the Planning Commission set up a committee under Raghuram Rajan to suggest next generation financial sector reforms it could not possibly have envisaged how incongruous it would be to talk of reform when government is engaged in the very antithesis of reform: loan waivers. In such a scenario, the committee’s recommendations can be best described as an eloquent reminder of the contrast between ‘what is’ and ‘what could be’. Wire money online to India with Xoom.com for as low as $4.99. To its credit, the committee seems to have a keen awareness of the political economy considerations that govern any reform process in India. Hence, unlike previous committees on financial sector reform, the Gen-Next committee has taken care to suggest a broad macroeconomic framework within which its recommendations need to be anchored. This is important because many of the reforms needed to transform the financial sector into one befitting a 21st century economic powerhouse that India hopes to become will be pointless unless they are undertaken in tandem with more broad-sweep macro-economic reforms. Any attempt to develop the bond market, for instance, is futile as long as we do not have a risk-free yield curve. And a risk-free yield curve will not emerge as long as government borrowing is so large that it can only be met by mandatory preemptions like the statutory liquidity ratio (SLR) backed by some careful priming of the market. The reason is that corporate bonds are priced off the risk -free sovereign yield curve – corporates pay a premium over the sovereign (government) for comparable maturity, the precise premium being a function of their credit – rating. Hence the starting point for the development of a corporate bond market – the emergence of a risk-free yield curve – is that government must learn to manage its finances better (read, borrow less). In other words, the importance of a sound fiscal policy cannot be overestimated. If fiscal policy is important, monetary policy is no less so, as it has wide ramifications for the financial sector. Here, the committee’s suggestion that monetary policy should target inflation rather than the exchange rate is based on sound logic. The events of the past few months have shown, quite convincingly, that targeting the exchange rate does not work. Far better than to use monetary policy to deliver what it is best suited to deliver- [...]
Archive for March 29th, 2008
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BOLLYWOOD IS ENJOYING THE BOOM.
March 29th, 2008 
krishna It was the summer of 1988. A young man keen to become a writer and director was doing the rounds of producers in Mumbai, walking into offices that thousands had walked into before, and thousands would later. His name was Salman Khan and he was about to become one of India’s biggest movie stars. Not too far away in the same neighborhood of Bandra, Aamir Khan had just zoomed to new stardom. Two other New Delhi men, outsiders in Bollywood, were preparing to begin their journey as actors. They were called Shah Rukh Khan and Akshay Kumar. Years later, those four men are still the crown of the small clique of stars of Hindi cinema. But the whirlwind of change in Bollywood has not left these icons of entertainment – untouched. They are adapting as well. Actors are turning producers. Actors are turning directors. Actors are also writing films. They are turning businessmen – devising new, innovative ways to own the intellectual property of their films, from ownership of the film print to the ancillary rights like those related to the Internet and mobile phones. They are working with new directors and themes. “There was a time when we ourselves never used to watch bur own movies. But actors are now thinking – what to do next, what’s the kind of film I want. The game has become big … Audiences have changed. They have become impatient.” Salman Khan told in an interview. “For an average filmmaker, it is very difficult to get a hero on board,” said director and music composer Vishal Bhardwaj. Bhardwaj has no such obstacles though- he is part of Bollywood’s elite league of directors who most actors and producers are desperate to work with. That, too, is a reflection of the new Bollywood, with top actors keen to do unconventional themes with trend-setting directors like Bhardwaj. “Fees in Bollywood are slowly inching towards Hollywood levels – if a Shah Rukh Khan does a film he will take at least US$6 to US$7 million – in comparison, Johny Depp will charge US$20 million,” Bhardwaj said. “Every actor has his own production house and if you have to cast them, you have to co-produce or work for those production houses.” The top names – Amir Khan, Shah Rukh Khan, Suneil Shetty, Ajay Devgan, and most recently, Sanjay Dutt and Saif Ali Khan – all have or are [...]
A New Model for Sustainability
March 29th, 2008 krishna Milton Friedman wrote in the last century, “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits.” Since there are many global problems which are continuously growing to impact our living atmosphere like growing global population’ changing climate and mounting stress on natural resources, business leaders who continue to define social responsibility so narrowly risk leading their businesses and our planet – down an increasingly unsustainable path. There is completely new set of expectations in the 21st century. The earth is no longer sufficient to profitably provide a quality product or service. Thus, we need a new business model that puts business in a broader context. Beyond making a profit, serving a market and obeying the law, a successful business must, do three things at a minimum. The first thing, there should be a consistent support from the business for the sustainability of the communities it serve. A company of 21st century should understand that if the communities which it serves to are not sustainable. A company’s sustainability work, however, should be relevant to its core business, or it will lose the support of its shareowners. As has been the case in the past, it cannot be seen as a philanthropic effort related to the CEO’s personal agenda for example, At the Coca -Cola Company, water is the main ingredient in all our beverages. Lack of public access to dean water is a serious problem in many communities. Next on the second phase, there should be a collaboration between the businesses and the government and further with the civil society. Our planet is facing an urgent and complex challenge, which in fact is for government, business or NGOs to solve alone. Working together, however, we can create a multiplier effect that helps build sustainable communities and a more sustainable planet. The interconnected triad of business, government and civil society is key to accelerating sustainable development. Strong partnerships are already being formed around key social issues. On the third stage, the business which is in both- perception and reality- successful should be functioning as a part of every community in which it operates. By creating jobs and enabling business we contribute to alleviating poverty in the communities we serve. The health of living communities and the planet we live in has its future attached with the future [...]
