Thursday, May 31, 2007

Licence raj

The licence raj era is an era that we all went through when we were in India. Everything was controlled and regulated, for the hoi polloi, while the biggies got their way. Production was controlled, Imports were controlled, Supply was controlled - for reasons unclear they never thought of coming to our houses and controlling the water we drank or the food we ate. They did that by a funny method - cooking gas shortage sometimes ensured that we went without cooking gas for 30 to 60 days. Of course, everything was mysteriously, available, in black - no prizes for guessing how!

If you wanted to own a TV, you had to have - a TV licence. A radio, you guessed it, a radio licence. And mind you, this was a household level.

At an industrial level, you needed a licence for just about everything. It was a great time to be, if you knew which licence was going to be issued and when. So, the game was just about cornering a licence - and you know how that can be done (As the character of the same name in the movie Guru says - I have a gold slipper and a silver slipper and I give them to whosoever desires them) . Licences were in short supply, so if you had a licence, lo, you had a monopoly - never mind the quality. So, pressure cookers exploded, cars stopped mid way, phones could go dead, tyres burst - but people had to buy from you, no choice.

So, today, if we had the same situaion, we would have a licence for a broadband connection, licence to blog (only 5 licences available), licence for a website, computers, modems what not (I can write a ton here, perhaps later).

And, here, someone (aha) wants us to go back there. To think these dinosaurs still get votes, in one Jurassic Park in the west and one in the south - both of whom are enjoying "industrial alienation" even today.

Monday, May 28, 2007

Butterfly effect

If you are from Bangalore and you had observed that traffic is relatively lighter today and that it is an easy day to drive in Bangalore, you would be right. Can you guess why?

If you guessed that it is because of the long weekend in the US (Memorial day), then you would be right.

A holiday in US, makes it easier to drive down in a city halfway around the earth. Butterfly effect of outsourcing?

On opportunity, CFA...

Got this link via Ajay Shahs excellent blog; Bibek Debroy talking about the CFA, AICTE and ICFAI mess from the Indian Express. Perfect analysis...


...When regulators don’t know the difference between regulation and control, one is asking for trouble, especially in a country like India where control mindsets are part of the air we breathe. Everyone knows about our demographic dividend, with an additional trigger now, because China is greying faster than earlier believed. Labour force requires skills, distinct from what the education system delivers. Should Indian students head off to the US, Europe and Australia in search of these skills? Or, more pertinently, in the CFA versus AICTE instance, should they head for Nepal, Sri Lanka, Singapore, Thailand, Hong Kong and UAE? ...First, is AICTE’s action based on the issue of AICTE permission, or is there also an element of protecting the domestic provider? Manufacturing witnessed this battle during the Bombay Club days and the country ruled in favour of competition. But we seem to be fighting the battle again over services.

Read the whole piece...

From then to now...

Businesses need to constantly evolve with time and trends in order to be a successful. Some of the businesses which were leaders of yesteryears and forgot to listen to the customer or read the direction the wind was blowing have perished. Probably these were businesses which refused to provide better products, because ostensibly, there was no "market".

The examples India will never forget are the Premier Automobiles (makers of Premier Padmini) and Hindustan Motors (makers of Ambassadors) once the only two types of vehicles you could see in India, all over the country. Today, they can be seen as taxis in Mumbai and Calcutta respectively.

PAL (Premier Automobiles Ltd) had almost a lions share in the automobile industry in the yesteryears but had only two products in probably 2 decades of its existence (not including the JV with Fiat at a later stage, nearly the end). It probably milked every customer with almost a similar offering - the Premier Padmini (they did have a deluxe version with some cosmetic changes). When the 118NE was introduced - it was a roaring success since it was a "bit" different" (it looked like the Russian Lada). It had floor gears - but then for whatever reasons PAL decided not to provide more products through the market leadership it had. Perhaps it was denial, perhaps it was something else.

Its JV with Peugot fell by the wayside and probably its JV with FIAT (which eventually lead to FIAT taking over PAL) was also a failure. Same is probably true with the Ambassadors of Hindustan Motors. With designs and handling of 40s and 50s vintage, nobody wants them anymore, obviously.

Am sure there are lot more examples in every businesses. I remember by school days when "cut-piece" cloth was a great "hit" - pretty much the only way to get shirts! Babubhai Jagjeevan Das (how many of us can forget it signature tune on radios - it also shortenened its name to BJ for a while) was probably a pioneer in "cut-pieces" of cloth which you used to a tailor and get it stiched - they used to advertise on every media available in those days. So was SKumar's. There were many "local" leaders in cut piece cloth. Chembur had one too...

My recent visit to a suburban market saw the hustle bustle almost absent in one such "cut-piece" store. (Anands cut piece store in Chembur - he has a separate readymade store nearby, so he is not really affected). I am not sure if there is a large enough market for such products with the advent of branded clothes. Consequently what happens to the men's tailor with whom these "cut-pieces" were stitched? As the ready made industry matured, the cut piece went into two directions - one the lower end market and one which was the very high end market - which obviously Anand couldnt fulfil - since that was already occupied by the high end boutiques.

I guess some of these men's tailors moved into higher end stiching of suits - a lot don't like ready-made suits and shirts because of odd sizes and others "not-so-successful" are probably found outside a ready made garment store or have branched out into womens clothing, where they still do a roaring business. How long before womens clothing undergoes a similar change?

Saturday, May 26, 2007

On Freebies...

Heres some research, via Businesspundit

There is no free lunch in company giveaways of sandwiches, airline flights, hotel stays and other goodies. That's because there is a significant risk that the so-called "future rewards" will diminish in value when claimed - or the business might not last long enough to hand out the goodies, a new University of Florida study finds...

Interestingly in India low cost airlines have been falling over each other trying to offer free tickets. The IEB analyzed this sometime back...

Now we have Rcom trying the great free rope trick. This time it is offering free outgoing calls to select areas within its network.

Great marketing idea to get people into the fold, but very soon it has to be Freemium. Offering something free cannot be a sustainable business model, ever. It is one thing to get in customers, but customers who walk in for free, will not stay for paid, unless their experience with your free service is "amazingly good" that they like to pay for it the next time.



I was shocked to read this billboard, "Karnataka is now a Corruption-free zone" and I read the footnote and was relieved.

The footnote says, "If it happens, we will tell you."

Yes, we are ages away from that...

Friday, May 25, 2007

He said...

Economist prime minister with a socialist tone.

...the need to avoid high salaries for executives, discourage conspicuous consumption, even keep profits “within the limits of decency”

The time has come for the better-off sections of our society to understand the need to make our growth process more inclusive; to eschew conspicuous consumption; to save more and waste less; to care for those who are less privileged and less well-off; to be role models of probity, moderation and charity.


Can we start with our own elected representatives, please? They who wallow in crores? Those who claim to represent the poor?
And then once we do that, can we reduce the bribes your very own bureaucracy takes, right from securing a licence to a ration card to an electricity connection?

Four, resist excessive remuneration to promoters and senior executives and discourage conspicuous consumption. In a country with extreme poverty, industry needs to be moderate in the emolument levels it adopts.

At a very superficial level, let us assume this happens. Will India become prosperous? No. Some of our better executives will leave to work for another country, where they do not have a salary cap. Let us set up a salary committee that will decide on pay structures and meet once in five years (note to myself).

The edited speech, if you so desire...Thats it. More perhaps later, and then again perhaps not.

Thursday, May 24, 2007

Mumbai Locals - micromarket

Heres one more unique business model. Mumbai locals - however crowded they might be - are a lifeline to not only the commuters but also the small business ventures that thrive on it. One of the biggest chunk of the local afternoon daily, Mid-day, sales come from local train commuters. The ladies section of the mumbai locals are presumably churning out more business revenues than some enterprises. The local train is a hotbed of innovative business ventures.

Unique business models also survive in these locals - second hand sale of magazines - Femina, Stardust, Nat Geo, you name it - with top page torn (can you guess why?) - sold for Rs.10/- bucks (issues as new as the past week and are sold in this form !!) or coloring books are sold with the selling point, "chote baba bacchon keliye" (The ironical part being small kids sell these books !!). These are apart from the usual fruit sellers, groundnut "timepass" and other vendors.

Am sure these stories are quite frequently told, but what is interesting are the unique businesses which survive, like the magazines. Yesterday, I was being sold a "mobile-antenna" - that helps you "catch" signals when you are in villages - atleast that is the USP. The antenna costs all of 25 INR and it has to be stuck behind the cell battery. Either this model survives or the telecom signals improve.

Despite the crowd - the Mumbai Locals Rule for many entrepreneurs and commuters alike.

Wednesday, May 23, 2007

Ironwallah, raddiwallah

Retail? As I wrote this post, a thought struck me, by no means a unique thought. If proximity is the only thing that is going to drive Indian consumers to retail, then what is the differentiator between the ironwallah, raddiwallah and Indian retail?

The ironwallah, and the raddiwallah, are, for people in Bangalore a unique species. They are found in every cross road and are often replaced by another ironwallah or raddiwallah every now and then. They have no brand and a commodity business, yet a necessity. They get customers only because of their proximity. Some of them are known for better service than others and these guys get a little more business than others, but ultimately, theirs is not a very scalable model since people from very far will not give them clothes/junk.

In most Indian cities, public transport is not very developed - Mumbai perhaps being an exception. But even in Mumbai using public transport to lug your "shopped" articles back home can be quite an effort. Most shops, including ironwallahs and raddiwallahs offer home delivery. While Big Bazaars may be successful, it would be vital to remember that they attract just the tip of the total market. Those who are willing to drive down to shop. Which means, they are the people who shop in bulk, large families, families with cars, drivers by and large. The others would, in all probability, be browsers.

That leaves the bulk of the population untouched. For them these Big Bazaars are too far for regular shopping and good for an occasional purchase or two. The others would almost necessarily go by what I call as "proximity shopping." Unless there is a clear strategy to get this mass, retailers would have to follow the ironwallah, raddiwallah model. A shop in nearly every street.

Tuesday, May 22, 2007

The Sewing machine

Surprised by the title? Heard lately about the sewing machine? Once upon a time, it occupied the place of pride in many a home. Almost every home had a sewing machine when I grew up, which was not too long ago. I remember at one point, there were ads that used to be run on television for them. Atleast two brands used to advertise in the late 80s, Merritt from Singer and perhaps Usha, which was perhaps an attempt to revive the industry. These machines had it all, including embroidery and patterns and other things, but it did not click.

Today, try and track down a sewing machine showroom or a service center or if anybody really wants to sell sewing machines. There is a consumer boom alright, appliances are being sold in record numbers, but does anybody have time for sewing? Very few. There are tailors and readymade clothes, so nobody feels the need for having a sewing machine in their homes. Coffee grinders are a similar story. There was barely a home which did not have one - usually a small hand grinder.

How long before the mixer grinder and the wet grinder follow suite in an age of readymade chutneys, pastes and batters?

Monday, May 21, 2007

Retail, how do you differentiate

Finally, I had a look inside a Reliance Fresh store in Bangalore. True, I went in at a slightly unearthly hour of about 3 pm, but there were barely any vegetables. The fruit counter was well stacked, perhaps with good reason, all of them were exotic (read expensive). Most of the other products are products that you would find at other outlets. I am not finding fault with Fresh -a lot of thought has gone into the design including the design of the stores - clear labels - the tilted space to keep your basket so the person at the counter has a clear view, but my question is at a more general level.

Today, the difference between a Subhiksha and Reliance Fresh is simply space and ambience. Price wise, I dont see a big difference. Quality wise, I dont see a big difference. A niche retailer like Namdhari is more expensive and overall better in quality.

Would I drive down to buy vegetables to any of these places? Unlikely - which is the same reason I wouldnt shop for veggies at Food Bazar.

Unlike in the US, there doesnt seem to be a differentiating factor across retail stores in India. They all look the same. Perhaps as time goes by, they will find their feet and their niches, but today the only difference is the fact that one gives me a clear 10% off on something while another gives me a half kg pack of sugar free. Will that change my shopping habit? Will I go out of my way? Probably not. That means, that today one of the main factors to go to a "particular store" is its proximity. Unless someone has a store in nearly every street corner, it is tough to entice a customer to go and buy from another one. More thoughts on this shortly...

Sunday, May 20, 2007

Social networking

I happened to read Youthcurry on and I am surprised at the number of people that are trying their hand at it. Perhaps there is a small bubble waiting to burst here, as in travel portals. Apart from BigA, there are atleast two others Minglebox is one, Desimartini is another. I read that Minglebox is being funded by one of the VC biggies, Sequoia?

Today, most people are member of some social networking group or another, but beyond a point, especially if you are working, it is tough for anyone to be socially active on a networking site. When you are in college and if you have good broadband connections, it is fine, otherwise it is quite difficult to be active on it. Freshers in IT companies perhaps, but after a while either the company blocks the site or they move on in life. The time to get onto a social networking site is when you are in college or just starting work.

Once you are a member of orkut, perhaps Ryze, Linkedin (this site is really good - IMHO) how many more social networks can you really, seriously be a part of - unless all you do all your life is socially network?

Why would I join a network? Usually people join a network through word of mouth. You meet someone after a long time and you ask - are you on orkut - and thats how you link up. In India, as of now, social networking is mostly about not losing touch with friends. Social networking is also about how a particular generation thinks. So, a lot of the graduating class today is part of Orkut since many of their peers are. Most of those a few years back were members of a "Yahoo group" or similar thing. To get working people to be a part of social networking is difficult, unless there is exceptional broadband penetration and you come home the only thing you do is log onto a social networking site! And I have not spoken yet about online matrimony and job sites - if they get into SN, it is perhaps a better target audience...

And remember that youngsters are more hooked onto mobile phones today than the internet - really. Talking of SN sites, how far are we from a Twitter lookalike here? I leave you with this wonderful link I found at Doc Searls blog.

Saturday, May 19, 2007

Tata Novus

I noted that I have to visit the website of Tata Novus and get an idea of how much it really stands the test of "Made for India" The landing page proclaims thus: The Tata Novus Tipper appreciates that driver comfort is foremost, especially with the long hours of driving involved. This truck comes with unbeatable features that make the interior most pleasing and provide ample driver comfort.

That is saying something since driver comfort is not even a factor in Indian trucks, perhaps they are built for driver discomfort. Power steering was a rarity (and continues to be) until very recently. Airconditioned trucks? Perhaps the Volvos are, but I have my doubts there. I havent seen too many airconditioned trucks in India. After all, drivers are rarely owners and for owners, more than driver comfort ("If it is more comfortable, they will sleep.") it is the money that is important.

It is into this truck that the TrakIT system goes in. Also, the Novus comes from the acquisition of Daewoo. Tatas have often been pilloried for the fact that their trucks are quite basic. Novus should answer that. It may not yet be Volvo, but it can get there...

Friday, May 18, 2007

Truck graffiti... a subject by itself in India, as is truck art. The trucks in each part of India is distinctly different from another and the best examples are the ones from North India. (More on this diversity some other time.)

So, heres one with Buri Nazar Waale, Tera Mooh Kaala (Those who cast an evil on it, may your face be blackened) and on its diesel tank was Kam Pee Rani, Iraq Ka Paani (Consume less fuel, it is Iraq's water).

Delight on the road by reading these captions when you are stuck behind one of them...

Wednesday, May 16, 2007

Building their brand

Even as we see Accenture kick off a high decibel campaign on MTV and other media, the other biggie that we see advertising of late (it was silent until recently) is TCS and the branding around TCS is "certainty."

It is quite a powerful word to use since the service industry (take any one, including airline or hospitality or garages) is not really known for "certainty". Also, any IT work is far from certain and before you point the blame on the vendors, often it is a mishmash of unclear requirements, discounted complexity, changing needs and so on. To go with a "certainity" onslaught is quite tough.

But TCS is a late entrant into the public market space and my guess is it wants to make up for lost "mindshare". TCS, is truly the biggest of all Indian IT service companies, but its mindshare has been low, for a variety of reasons. Maybe this branding effort will change that.

What about the others? Havent seen any of them go for brand building of this sort, atleast in India. Infy did this when they launched (?) their Banking product Finacle, but then again apart from Finacle, they dont do much in India. For Wipro too, I don't recall a branding effort from an IT perspective, except when they changed their logo and such.

Tuesday, May 15, 2007

Jetting ahead on quality

Jet airways continues its dominance in the airline sector, reports Businessline. No surprise there right? Why Deccan is not a leader in the airline sector - the reputation Deccan has for quality and comfort is surely lesser than the experience that a Jet or a Kingfisher offers. (Also, it matters, that a lot of air travel is business travel).

In retail too, while Big Bazaar is well known for its cost platform, most of the people I know swear by them for food items only - most others are no longer about cost. Would you buy the cheapest shirt or bedsheet or camera or toy - in all probability not. The performance of Subhiksha has to be watched. Will people continue to patronise low cost stores (and a lower product spread) or do they want more choice and a better shopping experience?

Railways too - in the recent past there is a heavy demand for airconditioned coaches on almost all sectors. Railways have responded by putting in more AC coaches - but in the peak season, it is quite difficult to get a ticket. There is a big big market for premium railway service - I have said this before - high speed intercity services, overnight weekend trains. The premium bus service market is a hit too - perhaps at the cost of railways.

This wont surprise many, but in most markets, like here, low cost does not necessarily mean leadership. Take any sector low cost is only an entry point for new customers, new segments. Once used to a sector customers demand better quality and cost, though important, takes a back seat to real service. Whoever starts off on a low cost platform has to also have a significant high value selling point, otherwise, just low cost will not survive.

Sunday, May 13, 2007

The Halter Neck

Imagine a typical Tam Brahm wedding. The traditional welcome table with a sprinkling of rose water, sandal paste and some sugar candy. Flowers twined together in a smallish length of thread - only jasmine please, for all the women. The men get to taste a pinch of sugar candy if they so wish. The wedding is all about the maamis, the maamas are there only as a side show, a background, in their white mundu and shirts, except when they have to lift the groom and bride as part of the ritual.

A wedding in any Indian community is an earthshaking event. It is all about entire forests of family trees meeting each other. Like Ents in the Lord of Rings, entire forests congregate for the wedding of a branch somewhere in the world (usually South of the Vindhyas) and then disappear to their resting places, sipping Narasu’s (or ersatz) filter coffee, until the next wedding, nostalgically reminiscing the days gone by.

The scene is from one such wedding where crisp Kanjeevarams were enjoying their exposure to outside air after a long time. Long since having spent time mothballed inside cupboards, save the occasional airing, they were glad to have come back to the occasion that was the raison d’etre of their existence. Many of them had won stiff competition from their shelfmates before they were chosen to represent their owners in this particular wedding. No Kanjeevaram in their entire history has ever attended any two weddings consecutively. In the folklore of Kanjeevaram saree history that “unlucky is a Kanjeevaram which has to visit two weddings consecutively without a chance for its shelfmates, for it leads a lonely existence”. So, there you are. Picture the Kanjeevarams enjoying their day out, a day in which their fellow jeans, skirts, salwar kameezes were no competition. On any day which was a non event, the jeans and salwars were victorious, but these special occasions – festivals, weddings – the only ones which counted for Kanjeevarams, they won hands down. There were bottle green sarees, magenta sarees, sarees with a putta design, rani (green) coloured sarees, mampazha (Mango) colour sarees. Imitation? Bah. Only genuine stuff was allowed here. Anything other than a genuine silk saree stood out like a cactus in a desert on such occasions.

There were heads that were decked with a flower garland piece each, a place of pride very few flowers got on a day to day basis. The heavyweight necklaces and earrings and the vaira (diamond) thodu were there too, having won a day out against stringy 18 carat fancy pieces, platinum, white gold and other toy ornaments that are considered mere fancy trinkets in the dress code for a wedding. “The amount of gold in that necklace is less than what my saree has in the jarigai (border, usually woven), “ boasted a silk haired paati to the gujju sari clad granddaughter. The gujju style of saree, incidentally had made significant inroads and it was accepted, only in receptions though. The core function was still like the Gaul camp in the middle of the Romans. It was a show where one outfit shone against the other – they were ageless. The 1965 Kanjeevaram with pearl necklace was as much a winner as the latest design from Nallis embellished with a smart design from Ganjam. No Armani or YSL here. They wouldn’t even be offered recognition. As each of them preened their creases and lifted their borders from offending Kolams, one of them shrieked. Suddenly, everybody looked away from the 1965 Kanjeevaram – itself of good pedigree.

A pink chiffon was giving them competition and how. Suddenly, the 1965 Kanjeevaram found itself staring itself at a halter neck blouse and a pink chiffon. The heads decked with flowers turned towards the halter neck. They nodded in stern disapproval. The Kanjeevarams, the epitome of fashion and conservativeness looked away aghast in horror at the intruder in their midst.

Starched mundus and check shirts with gold bracelets and gold watches looked up and, in an instant, the Kanjeevarams that held them in thrall for centuries no longer did. The mundus were all eyes on the chiffon. “So much for our age old loyalty”, said the Kanjeevarams.

“How times have changed”, they lamented collectively even as some among them began to spell their epitaph in the face of competition in the shape of halter necks.

Coffee sipping short and longsighted eyes now turned towards the pink chiffon and halter neck which in the meantime had positioned itself in the middle of the crowd. They gazed towards the chairs, the decorations every few seconds, snatching an eyeful of the chiffon. The flower decked heads wafted their smells in their direction as did the coffee, but there was no distracting anyone from the attention that the chiffon enjoyed.

“Aha,” said one paati, “Her mother had worn a sleeveless blouse in my wedding, said one wizened old one who could barely see and cursed her shortsightedness and her son for not taking her for an eye check up. She managed it all in the same breath, which was found wanting too.

“Right,” nodded another kollu paati, who was preening her white tresses, “her grandmother has a bob cut – karmam

Newly returned You-yes-yeah mama and mami in their Walmart jeans and Boston Celtics Tee-shirt and Liz Taylor Bob cut looked as modern as blue Ambassador cars with metallic paint. Suddenly their conversation about how the Grand Canyon and Niagara have changed in the last few years had no audience. The 1974 putta jarigai which was the talk of the Kanjeevaram gang was left in suspended animation in the middle of a conversation. Forgotten branches of the same family trees were nearly coming together split apart like a thunderstorm had separated them.

A little coffee spilt everywhere, nadaswarams lost their buzz and the thavils missed a beat. The vadyar swallowed a few mantras and the muhurtam was hurriedly advanced by both the families lest the groom change his mind at the last minute. The videographer had to be cajoled to continue shooting the wedding even as he made a modeling offer to the halter neck. The photographer had, in the meantime, shot a portfolio of her.

The halter neck had nearly halted the wedding, but only just. In the meantime, a quick thinking maami offered the halterneck a readymade blouse and a new silk saree as a wedding gift. “Please wear it and be back for the traditional function”, she at once ordered and requested. The day was saved, but it is there in the video for all to see.

Very soon they were all back in the cupboard with the mothballs and mundus, “Today it is one halter neck, but tomorrow if there are many, I think we are powerless,” one of the Kanjeevarams lamented even as they came up a strategy to keep halter necks out of weddings.

“I think you should welcome change.” Started the gold bordered mundu even as they turned their backs to each other, awaiting the next wedding.

(An edited version of this made it print, in the Deccan Herald today, titled - Out of Cupboards)

Friday, May 11, 2007

Silver "Ticket"

Ticket Design, has won a Silver at the 2007 International Appliance award for its Advanced Telematics Tracking system for Tata Tele. (From Core77). It had also won the Businessworld award in 2006 for the same.

Ticket Design's process and development for the telematics product designed for Tata Motors paid heavy attention to user centered industrial design, ensuring an intuitive interface and user friendly approach for their target audience, Indian truck drivers. The device grants drivers access to lifesaving medical help in case of accidents and informs them about possible traffic jams. They can also speak to the base station, listen to music, and be accessible to their families at any give time. (Core77).

Do read this link at Tickets website: Advanced Telematics Tracking system.

I am no expert, but the best part of the interface I think is the ability of it to transcend language and literacy and keep it simple. This system will be part of every Novus (note to myself: Check it out.) truck rolled out by Tata Motors.

Wednesday, May 09, 2007

Looks whos there on MTV

Its Accenture. It is not often that you get to see corporate ads on MTV, but Accenture is doing it these days.

The idea I think is to build their brand for the MTV generation - those who will join it fresh from college. That is my thought. It is a smart move, though benefit wise, it is anybodys guess.

How long before we see others hop on? And secondly, from here to where?

Tuesday, May 08, 2007

Unique Business Models

I hope to make this a series sometime as and when I come across stuff like this. These business models are like the bee, which, in popular lingo is not supposed to "fly" as per aerodynamic laws, but it doesn't know aerodynamic laws, and hence it flies (and that is an urban legend). Likewise, some business models survive irrespective of low barriers to entry. Like the one shown here.

This metal contraption is used to transport people (not just kids) from one point to another- in the tourist destination of Mount Abu . Low investment required not sure if it has a high ROIC (Return on Invested Capital).

There are a few other models like a weighing scale/height measure in middle of the road used to check weights (seen in Mumbai as well). Wonder how such models (and their proprietors) survive?

Monday, May 07, 2007

Village network

I found this link from Future perfect, a must read blog for those who interested in 'culture' from a global perspective. The blog mentions a product being trialled in India, Nokia Siemens Networks, Wireless Village. [press release 0.2MB, PDF]. In her words:

It takes an existing and well known service setup - providing cellular connectivity and re-designs the task process signing-up customers, billing, invoicing, service support to suit local conditions. If, as expected the trial benefits all the parties involved (consumers, local entrepreneurs, micro-finance organisations, operators, my employer) this could have significant impact in connecting the next billion.

Nokia joins the big league of Reliance, ITC, HLL who in their interest for profit are doing (not necessarily, but creating more impact) more for the village than the government did through their altruism. This is the only way that the villages will progress, not misplaced altruism in the form of sops.

There is no such thing as a free lunch (sops have only benefited bureaucrats, contractors and politicians), certainly the medicines thereafter aren't free - a for profit lunch helps all the benefactors.

Rural prosperity

...doesnt win elections, says Swami Aiyar. Read the piece for some data that will throw light on how prosperity is, spreading, albeit slowly to the rural areas.

Agricultural growth has been very slow, and rural areas without connectivity have grown less than globally-connected cities. English-speaking urbanites have got high paid jobs while rural folks have not. Still, has prosperity bypassed villages?

Not at all, says the latest NSS survey. Between 1993-94 and 2004-05: lPer capita consumption of edible oils rose by 30% in rural areas, and 18% in urban India.

The proportion of rural households using cooking gas rose six-fold, from 2% to 11.7%, while the urban proportion doubled to 59%.

lThe proportion of rural households using electricity rose from 34% to 54%. The urban proportion rose from 74% to 94%. lPurchases of readymade garments rose by 75%, and of hosiery products threefold, in both rural and urban areas.

lRefrigerator use increased from 1% to 4% of rural households, and from 12% to 32% of urban households. lBetween 1999-00 and 2004-05, the proportion of TV households rose from 19% to 26% in rural areas, and from 59% to 66% in urban.

Clearly, rural areas lag well behind urban areas. But equally clearly, growth has not bypassed rural areas. Between 1999-00 and 2004-05, poverty declined from 26% to 22%. That is, 44 million people rose above the poverty line. This did not help the BJP electorally. Clearly, neither GDP growth nor poverty reduction wins elections. More than 80% of incumbents are voted out in India.

The NSSO has data on the poorest of the poor: those who say they go hungry in some or all months of the year. Between 1993-94 and 2004-05, the proportion of rural households hungry at some time in the past year fell from 5.5% to 2.6%. More than half the once-hungry in rural areas ceased to be so. In urban areas hunger almost vanished: the proportion of hungry households fell from 1.9% to 0.6%.

Food for thought? Heres the full report.

(Cross posted on The Indian Economy Blog)

Sunday, May 06, 2007

"Fine" OK Please

The City Palace of Udaipur is one of the most remarkable constructions of the Rajput rulers of Rajasthan. Located in the heart of the city of Udaipur and towering over the Lake Pichola, the City Palace unfailingly infuses a sense of awe in the hearts of its onlookers. It is the standing testimony of Rajput passion for art and architecture despite the fact that the exterior does not really reveal the grandeur of the interiors.

It is indeed a marvelous palace, I happened to visit the palace recently. Well, what do I pay in case I deface it? Just Rs.100 and perhaps, I must add, if caught. "Vijay loves Anu" on a priceless monument for rupees hundred. They might as well advertise it.

Defacing a national monument must have a stringent cost associated with it. A strong "punishment"cost of disobeying rules will lead to a disincentive.

Why is ticketless travel in Mumbai so uncommon? Because it is really not worth it. Between the probability of being caught and fined to the comfort of a free journey, there is very less margin. The fine for ticketless
travel in Mumbai suburban locals was Rs.50 + ticket fare. A couple of years back this was increased by a whopping 500% and a massive investment in ticket checkers (including perhaps the only place where there are women ticket checkers with women constables - more on that some other time).
That really makes people think twice before travelling ticketless, atleast deliberately.

Why not have a heavier penalty if you deface a 16th Century palace - including scrubbing the walls and floors? Or a picture on a roll of shame right there?

Saturday, May 05, 2007


Inspiring confidence, aren't they?

Thursday, May 03, 2007

Developing an IT city

Will you move to Hubli? or Madurai? or even Mysore?
Will you set up a branch of your company in any of these cities above? Companies are setting up offices in many of these cities today, but find the going tough. Unlike an Infosys which is really using its base in Mysore as a self sufficient campus - a siginficant number of employees live within- it is not easy to go to a place where there are no (or less) people.

It is all very well for a government to say, Go to Hubli (I have nothing against the city, just using it as an example, substitute it for whatever you want), but why will I as a company go there?
Are I getting unlimited power supply? No way.
Am I getting infrastructure. No guarantee.
Will I get more people than any of the current locations? Unlikely.

Apart from the above questions, will my employees shift? Thats a critical factor to think about. In a place like Hubli or Madurai or Meerut or Bhubaneshwar, people who are native to that city would like to go back, but then again not all of them would like to go. Why would a person who has lived his entire life in Bangalore or Bombay want to go to an unfamiliar place - unless there is a significant career perk - which could be shortlived since that sort of a career move to a city would be a cul-de-sac.

What would make people are likely to take the risk of leaving everything is only a better quality of life. Quality of life comes from a good living space, easy commute, good schools, power supply, community nearby - where the basics are taken care of. Today they are not. If the road , power, water situation in the capital Bangalore/Mumbai is bad, fat chance that Nagpur/Hubli will merit special attention.

If any government is serious about moving IT and other industries to any tier II city, the only way is to create great (not good) infrastructure (or let the biggies create it). The rest like restaurants, accomodation will happen through local private initiative. (Of course, you may have a question on the story of Navi Mumbai, but thats for another time)

Tuesday, May 01, 2007

On Microfinance

Microfinance is touted as the big thing that can alleviate rural poverty. I personally believe, like a lot of others, that it is surely one of the means for the same. It is one of those things which gives us hope. Businessworld has been covering microfinance for a while now and I found a few links. (An interview with the SKS founder, Businessworld - The way ahead). Kudumbashree is one of them which is making waves in this space. There are quite a few others, but some have come under the scanner for unethical practices (Business world - Blood money (must read). For banks, getting a good return from rural areas is quite something, so banks are lending heavily to these MFI's. Their rural lending targets are being met and there is little danger of losing the money.

Did you know the rate of interest charged by microfinance institutions? I checked with my maid who has enrolled in a similar scheme at her native village in Krishnagiri, TN. Rupees 2 per hundred per month, on an average (2% per month, 24% per year - as much as your credit card). You also have to pay a deposit of about 100 or 200 per month for 3-6 months before you are eligible to take a loan from the SHG (self help group). Now it turns out that many of those (like this maid) enrolled here take loans not because they want it, but because they think they might need it. (For a sudden spike in expenditure etc.) My maid takes an "advance" every now and then from us to pay for her SHG. Microfinance and SHGs are different, but in terms of the end users, I think the difference is marginal.

So, even with these kind of rates, why do people still go to MFI's? One, because the alternative, the village money lender typically charges a much larger interest rate. Second, the MFI is a more friendly "social" institution. It is a place that your friends- those who you know on a daily basis - are part of too.

In the end, sure microfinance is here to stay. If it can replace the money lenders great, but I think even if microfinance becomes the money lender of choice, it would have achieved a lot. Also, it should not end up, as credit cards often become, a tool to borrow ever more money. From an interest rate perspective, they really should be different from the credit card companies (at the current rates of lending, they are not very different). The rate of interest ceiling agreement is a good first step and perhaps as penetration increases it could go down still further.

(Cross posted on The Indian Economy blog)