Naice Quote by Will Smith

The Economics of Sex!

Economics works here also, but a little differently. For readers’ entertainment and disagreements

Most of the time, sex is a consumption good, do and get away. Sometimes it is an investment good. Invest today, returns after 9 months. Timing of investment is crucial. If it happens prior to marriage, DOOMED (volatile investments)! Post marriage no problem. Couples wish to invest once and consume rest other times, parents want at least twice. Governments distribute free contraceptives advocating invest less, consume more. Too much investment produces India and China, too much consumption produces France and Germany.

The system has evolved over time. During earlier times, people depended on barter, traditional “give and take” system. However, barter presume the rather improbable double coincidence of wants. Thus to smoothen transactions, financial markets evolved and money based services became available. Market takes care of the prices and quality. Today the market is so perfect that with your purchasing power, you can get your class of service.

Optimizing between service innovation(different postures) and scalability are the competitive drivers in this industry too. ‘Kamasutra’ is the quality innovation document, the most exhaustive, ancient open source, in fact the highest informally cited piece of work. An erotic piece of art with powerful visuals! Probably people were tempted to prioritize its’ translation in all societies. This is a classical case of where all four factors of production land(venue), labour, capital, entrepreneurial skills(ability to take on site risks) contribute to final price determination.

And last but not the least, its’ a PERFECT example of GLOBALIZED TRADE! 

Raising hues and cries over Gold import in pink papers won’t change ground realities!

Dear Finance Minister,

I would like to share my sincere concerns about your problem on high gold imports. I know the hazard of importing and storing gold for India’s economy. It is creating a toll on our Current Account Deficit, which is at its all time high. A thousand more people like me know this. But I think you wanted this message to reach out to the typical households who are engaged in buying of gold for consumption purposes like jewelry in marriages. Do we(me and other) who understand the problem buy gold? No. A normal house-wife buys gold but does she understand this peril? Again, NO!

One should use right channels to reach the right target group. Please understand the basic logic, if I have to buy vegetables, I will go out to a vegetable shop, not search online!

For God sake, take measures to educate them. Will pink papers, parliamentary budget speeches, business news analysis make them understand? I wonder! Please think out of the box. Use proper channels for different audience, like entertainment channels, social networking, alternate media, cartoons, visuals and so on showing the problems of storing gold in simple way. First reach out to them! 

You know, today when I told a female friend of mine that gold prices have come down, without listening second sentence, she responded emphatically, let me call mom to buy GOLD! This is the impact your policies are having, and will continue to have if policies will come without education!

Yours Sincerely,

A concerned citizen

10 Challenges before India in Medium Term

Yesterday, got a chance to listen to D. Subbarao, RBI Governor, at the IIT Kanpur Alumini Meet held at Dogra Hall, IIT Delhi. Subbarao nicely articulated the major challenges in front of India. These needs to be addressed, the sooner the better, so that India’s growth story can be smooth:

1.   Agriculture contributes 15% of the GDP and employs 55% of the population. We have to get people out of it, and provide them jobs. 
2.   Challenges of Jobs- Today India has primarily low level jobs and high level jobs(in services sector). We need to create a lot of middle level jobs, if we want to reap the benefits of demographic dividend. These middle level jobs will come from the manufacturing sector. 
3.   Skill improvement- Skill is considered as a merit good, in which only government can invest. Private firms do not have enough incentive in this because there is uncertainty of employee retention. We need to strengthen ITI system like IITs. A corollary of the above point.
4.   Managing urbanization- In 1991, there was 26% urbanization now it is 36%. Still it has to go a long way. The problems that we talk about urbanization, are our problems of managing it, we need to get rid of them. Urbanization is inevitable for exposure from a rural person’s angle. 
5.  Infrastructure Deficit- We do not have enough infrastructure in the economy to sustain a trillion dollar investment in next five years. Infrastructure creation is a long term financing which is undertaken by pensions and Provident Funds in developed countries. Due to their under-development in India, banks are involved in infrastructural creation, but banks role is to look into short term finances. 
6.  Improving social sector outcomes, rather than just talking about increasing their share of GDP. Sri Lanka spends less on health care, but has better outcomes. In education, we need enrolment, retainment and achievement. We have achieved first two, now it is time for third. 
7.  Globalization is anyways happening, we have to learn to manage it. 
8.  Providing stable and predictable macroeconomic environment to attract domestic and foreign investors. 
9.  India must become a knowledge society, innovation society. Then only we can, attract the benefits of globalization. 
10. Good Governance- Without it, no matter what we do, nothing will succeed.  

A Commentary on Budget 2013

There is a lot of hue and cry over the Budget 2013.  There are a lot of contentious articles blaming Finance Minister of putting huge burden on the middle class. I am just trying to think aloud of FM’s rationale behind this.

Let us start with the basic question, what comprises this “Middle Class?” A broad income based classification, brings forth three classes: lower class, middle class and upper class. As per Tendulkar’s Committee report, population below poverty line is 29.8%¹, say ambitiously assuming, 2% of population are rich, which in this case, earning over 1 crore per annum. This gives middle class share to be around 68.2%.

Our FM has put up a surcharge of 10% for this 2% rich population. Government is bound to undertake welfare programs for this lower 29.8%² segment because they are poor. So how righteous is it to say that he should also exempt this huge chunk of 68.2%, when tax collection is the major source of revenue for government to carry out various planned and unplanned expenditures. Of course being reasonable, he has further classified this middle class into upper middle class and lower middle class and has tried to take appropriate measures for liberalizing the lower middle class by giving them tax exemption of Rs 2000 for income below Rs 5,00,000 p.a. and has tried to rope in the upper middle class to compensate. Now isn’t his basis looks justified from an equity argument, which is the fundamental role of any government. Further, we should also think from a national interest, considering that country is under a fiscal deficit of 5.2%. 

The basis which FM has tried to undertake for selecting this upper middle class are those who eat in Air Conditioned hotels, those who travel in cars, those who use expensive mobile phones and accordingly he has tried to levy taxes on those fronts. Isn’t it reasonable?

¹These population figures are estimates from 2010.

²I am being too generous in saying, welfare schemes for only 29.8%, when World Bank report 68.7% Indian population earning less than Rs 40,000 p.a. based on purchasing power parity. 

Too Much Care is Poison

Excess care cripples the inner strength of the cared person. Reason is simple. Suppose I am caring guy, so I would like to provide as much care as possible to my loved one, many times eliminating the room for risk taking by her. Such actions, over time, prove hazardous for the cared person, as she loses the skill of taking decisions and being responsible for her decisions. It is also a form of slavery.  

Indian Society is full of numerous such families. Females are treated as objects of sympathy and care, starting within home. They hardly participate in decision making chores and mostly are advised. They are dependent on male members or elderly women, who try to play maximum safe. So to buy a pencil/grocery, a girl would consult within the family and may be her brother or father would buy it for her. One should understand that small things like these are ground bearers to face the real world tomorrow. Depriving girls of such initial opportunities, in the name of protection and too much care, obstructs gradual building of inner courage and could be a plausible reason of their fragile confidence. There is little stress situation and females panic, look helpless, seeking a helping hand. 

We all admire and praise a bold girl, but simultaneously one should also look at the attributes that led her grow like that. So, care should be of constructivist nature which brothers, sisters, husbands, wives, boyfriends, girlfriends, fathers, mothers and all responsible adults should understand. Excess care is Poison!