Tuesday, November 27, 2012

IRDA: INSURANCE REFORM

Allowing insurance companies to park investors’ money in VC funds will jeopardise their future

Performance of VC funds has always been under scanner. Kalpana Jain, Senior Director, Deloitte India (for those who do not know, Deloitte handles more than 50% of the PE deals worldwide) avers to B&E, “Only three out of every 10 PE deals turn out to be a success.” On the other hand International Finance Corporation in one of its working papers titled, ‘Commercial Discipline for Development Impact’ has mentioned, “Even well-performing private equity funds tend to have only 10%-20% winners.” That simply means when insurers will put investors’ money in VC funds, they will actually be betting on a less than 30% success ratio. So, now on investors must keep their fingers crossed while paying premium for the safety of their future.

However, supporters of IRDA may argue that the regulator has not allowed insurers to put in a large share of the investors money in VC funds. But then, when the government and the regulator are moving forward together to bring in the much needed reform in the sector, what makes them allow to experiment in an area where they cannot go big even in the future. This may be considered as a step taken by the regulator to add some momentum to the flow of funds. However, quite sceptical about it Prashant avers, “This will not have an immediate impact on fund flow as the customer does not understand this asset class fully as they have not been much exposed to it.” Thus even this purpose of IRDA is not going to be fulfilled with the step taken. Better than that IRDA must allow insurers to venture into other asset classes where they can invest higher amounts and still keep the investors money safe. Else, the healthy looking tan will soon engulf his future turning out to be a deadly cancer for the industry.


Source : IIPM Editorial, 2012.

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Posted by IIPM : Global B School in India at 2:43 PM
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Monday, November 26, 2012

OIL DRILLING: DEMS VERSUS REPUBLICANS

Obama encourages the formation of this team to debate US oil drilling

By government’s own admission, 18 billion barrels of crude remain untapped in America’s restricted hinterland. Yes, the Democrats claim they do not want to be stooges of oil behemoths, about which they often blame the Republicans. But beyond this, is the fact that there is little chance of cutting down on oil prices even if such drilling were allowed. Firstly, the actual output will take more than a decade to flow, and the cost is colossus. Secondly, America in all has only 3% of world’s oil reserves, whereas annaully it consumes 20% – another reason why, as the Dems argue, drilling might not influence the price of oil. On the other hand, Republican’s have a meaty issue for their flagging electoral cause. The gasoline price rise is hurting the US middle class, and this issue has got an immediate media attention, with Democrats on the defensive. Notwithstanding reality, studies now reveal that nearly half of the electorate believes in the fact that oil prices will subside if crude is drilled in their own country. Didn’t we tell you Obama is the bright spot in Dem county?


Source : IIPM Editorial, 2012.

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Posted by IIPM : Global B School in India at 1:49 PM
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Friday, November 23, 2012

Dial ‘C’...

..for ‘Cell’...a cancer cell!

As far as the accounts of history go, I don’t think that man has ever been more conscious about his health than he is today. This is to the extent, that if breathing wasn’t ‘it’, by now books like ‘10 ways to keep away from breathing on highways’ would have hit the bookstores.

So, for a change, there is another habit (not reflexive like breathing) that has hooked human beings of all shapes, sizes and attitudes – much more dangerous and addictive than the banal smoking – talking on mobile phones. Well, not that we weren’t aware that it could be harmful for the ears etc., but that it can cause malignant tumours in the brain in much lesser time than you could have imagined is but horrifying.

The results of a 14-month investigation by the Canberra-based top Neurosurgeon, Vini G Khurana, has got the world to rethink its way of living. In his report, he gives enough evidences to warn the governments, telecom industry and the users about the deadly effects of simultaneous electro-magnetic exposure caused by the radiations released from radio and TV towers, cordless phone base stations, wireless etc. The report clearly establishes link between long-term usage of mobile phones and some malignant forms of tumours in the brain. Unfortunately, this ‘long-term’ isn’t that long! Ten years is the time-period within which the cancerous growth may show up, making it an even bigger threat than smoking and asbestos, where the effects show up after a certain age.

Professor Challis, an experts on mobile phone radiation has enlightened the media by revealing that about 40% of the radio energy of the mobile or wireless phone is absorbed into one’s head. The exposure caused by mobile phone is 200 times more than sending an email using wi-fi technology. “The risk is even larger in children than in adults since their brain is still growing and the skull is thin. In fact, anybody using mobile phone for two hours everyday for a year is quite prone to catching an ailment in the next five to seven years,” tells Dr. Pankaj Kumar Jha, a practicing Neurosurgeon.


Source : IIPM Editorial, 2012.

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Posted by IIPM : Global B School in India at 1:24 PM
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Thursday, November 22, 2012

We thought only Elvis was doped

Argentina’s government grows bizarre; inflation, as per them, rocks!

Argentina is bleeding. The sky rocketing inflation is neutralising whatever benefit the high growth rate is giving its population. But surprisingly, to counter this problem, the government has taken bizarre steps to satisfy its electorates. It has doctored Consumer Price Index (CPI) to show inflation lower than what it actually is. The updated CPI (June 10, 2008) shows that each time the price of any product increases too much, it will be taken out from the list presuming that consumers will shift to other products. According to government statistics, inflation is just around 9%, whereas the real figure is terribly higher.

Alfonso Prat-Gay, former Central Bank Governor, estimates the inflation figure to be hovering around a whopping 32%. Dante Sica, Director of Abaceb, a consulting firm, opines that the figure would be 16% to 18%, while Poliarquia, a pollster, reveals the figure was 54% in February and 26% in May, 2008.
 
 
Source : IIPM Editorial, 2012.

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Posted by IIPM : Global B School in India at 1:29 PM
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Wednesday, November 21, 2012

Talking is dumb

Talking is dumb

It’s hilarious! While the NATO and US keep on accusing Pakistan for not being proactive and strong enough for anti-terrorism activities in Afghanistan and even in Pakistan; Pakistan blames Afghans for the same.

Despite their being many well-staged ‘peace’ talks between Pakistani and Taliban militants, and agreements being signed by Pakistan and the North Western Swat Valley, and even talks with pro-Taliban rebels in tribal groups around Afghanistan, there has been a sizeable death of NATO members and soldiers in Afghanistan. There have been numerous examples when the US led coalition and Afghan policemen have been killed during attacks. Militant attacks have only risen over the past few years at the Afghanistan-Pakistan border.


Source : IIPM Editorial, 2012.

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Posted by IIPM : Global B School in India at 12:03 PM
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Tuesday, November 20, 2012

RURAL INDIA: ELECTRIFICATION

Electricity is still a hope..

The Government had earlier pressed the CPSUs into service to assist State electricity boards in the work of rural electrification and distribution reforms. The scheme is being implemented by the state-owned Rural Electrification Corporation, which is providing 90 per cent of the capital cost of the programme on behalf of the Centre as grant for creating rural electricity distribution backbone.

Under the proposed rural electrification plan, States should have mapped and detailed the electrification delivery mechanisms (grid or standalone) on an urgent basic. For the purpose of rural electrification, a village would mean a census village.


Source : IIPM Editorial, 2012.

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Posted by IIPM : Global B School in India at 12:00 PM
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Monday, November 19, 2012

US: PROSECUTION

It’s amazing how US continues to execute ‘criminals’, blind to the fact that many convictions could be wrong

It further reveals that African-American defendants receive the death penalty at thrice the rate of white defendants (especially in cases where the victims are white). Moreover, killers of whites are treated more strictly than killers of the non-whites. In a survey of 1,788 male inmates by Human Rights Watch, about 21% claimed they had been forced into sexual activity and raped during confinement.

Clearly, Illinois’ Governor George Ryan’s statement in January 2000 was less hyperbole and more of pertinent argument, when he said, “I cannot support a system which, in its administration, has proven so fraught with error and has come so close to the ultimate nightmare – the state’s taking of innocent life... Until I can be sure everyone sentenced to death in Illinois is truly guilty, ...no one will meet that fate.”

Even now the Nebraska top Court’s ruling uses an electric chair that violates the state Constitution’s ban on cruel and inhumane punishment. Strangely, the US Supreme Court has repeatedly declared lethal injection to be ‘uncruel’ and humane, in spite of documented evidence that the cocktail of drugs used to execute criminals could cause severe anguish. Well, what more can you expect of a nation, whose people argue more about Paris Hilton’s dressing sense, and debate more about Britney Spears’ marital problems, than of severe human indiscretions.


Source : IIPM Editorial, 2012.

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Posted by IIPM : Global B School in India at 1:49 PM
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Thursday, November 15, 2012

Onboard spicejet

Why is aggression in fleet size increase and pan-India penetration ‘illogical’ for SpiceJet and other LCCs in the current times? B&E’s steven philip warner presents an insight...

“What the hell is going on? It’s a bloody godforsaken route… How can we fly with just five passengers?” shouted a SpiceJet official as we were waiting in the lobby of the carrier’s office in Gurgaon; words that gave us more than just an idea of the ‘discomfort’ prevailing in the LCC camps in the domestic aviation sector. Ten minutes later, we found ourselves seated in a ‘simple’ cabin which belonged to Siddhanta Sharma, Executive Chairman, SpiceJet Limited. There was just one photograph on the wall, that of Mother Teresa, perhaps a sign of what was missing in the hearts of many at SpiceJet and other LCCs – peace! Four cigarette buds snubbed on the ashtray revealed that the man on the desk (we were still waiting for him) had been extremely busy of late. And finally, the cup of black coffee on his table, silent & still… getting colder by the minute, perhaps symbolizing the half-hearted smiles flashed by LCCs who once dreamt of making it big; the only ‘big’ things they got were ‘big’ aircrafts & ‘bigger’ elusive dreams!

Domestic aviation is clearly at a crossroads. While on one hand, players are losing out on precious funds, on the other, rising fares are ensuring a fall in demand by the day for LCCs. Full Service Carriers (FSCs) on the contrary, are gaining lost ground; sad news for the middle-class Indians, is how we put it. Siddhanta justifies the thinning situation as, “As far as the fares are concerned, low cost does not mean that your fares remain low and constant. Also, one reason why market share has gone in favour of some fsc carriers is because they have been adding capacity as well.” If that’s so, why isn’t SpiceJet adopting an aggressive strategy to increase fleet size from the current 17? Explains a logical Siddhanta: “Today is the question of survival! You can’t be aggressive just for the heck of it! We just can’t go on adding capacity illogically. Given our philosophy of maintaining the same aircraft types, there are not many destinations you can go to where you can fill 189 seats every time.”


Source : IIPM Editorial, 2012.

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Posted by IIPM : Global B School in India at 1:35 PM
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Saturday, November 10, 2012

Time to take on the Dragon

US model of capitalism will take many countries like India nearer to China’s level of prosperity

Though there has been no formal cold war between two emerging Asian giants China and India, their growing economic and military presence raises many global concerns about geo-political stability which has become one of the most imperative agendas on the global stage especially for geopolitical interests of superpowers. In such circumstances, Bush’s growing interest towards Indo-US alliance seems to a very prodigious strategy in long term which also impliedly indicates India’s edge over the Chinese Dragon. Though, in many socio-economic indicators, including GDP growth, literacy, poverty eradication and China’s impressive performance in attracting FDIs, have taken China well ahead of India. India has been able to attract just half amount of FDIs, compared to China, and is far behind when it comes to really establishing world-class manufacturing facilities. But a deeper look assures that India has greater competitive edge over the Dragon in long run. It has succeeded to achieve almost equal economic growth rate as that of China, with less than half the amount of China’s FDI. It exhibits India’s greater efficiency in effective utilisation of limited funds. And those big manufacturing facilities that are engineering China to global economic power status, is mostly caused by massive foreign investments. So, wide range of products might be made in China, but not necessarily made by China, whereas in the case of India, made in India is more often synonymous to made by India.

China has been able to attract massive FDIs because of its faster economic liberalisation and introduction of privatisation in its agricultural industry. India has been slow and late in that respect. But what really is driving India and will take it ahead of China, is its strong and booming corporate sector backed by country’s rule of law and strong financial system. Democratic quasi-capitalism model and drive towards the US model of capitalism is actually helping India create more entrepreneurs and increasing competitive environment. Emergence of world-class Indian MNCs like Infosys, Wipro, TCS in software industry, Ranbaxy, Cipla in pharmaceutical industry, Mahindra in auto sector, and conglomerates like Tatas, Birlas and Reliance and there are many lined up to soar; is a sign of it. But business environment in China isn’t same. Businesses are frightened because of quasi-feudalistic rule of laws.


Source : IIPM Editorial, 2012.

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Posted by IIPM : Global B School in India at 12:20 PM
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Friday, November 9, 2012

BUDGET: INCREMENTAL BUDGETING

The budgeting process is planned as per changes forecast last year

The achievement of the economy will fall short of credibility if we do not address the endemic hunger, lack of education and low standard of public healthcare. Our per capita spending on education is $26 (annually), as against $8,900 in the US! Our health expenditure (per capita) is $24, while the US spends $6,096 per person per year! The rural housing programmes have not been successful either. The insurance cover is far lower than that in the West.

Despite its limitations, most rich nations follow Incremental Budgeting, whereas developing countries follow Repetitive Budgeting. India, with one-sixth of the world’s population, needs to urgently and massively increase its allocation in the social sector in order to rid itself of poverty, disease and illiteracy. Should not then this system of budgeting be taken into account?


Source : IIPM Editorial, 2012.

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IIPM : The B-School with a Human Face
Posted by IIPM : Global B School in India at 11:50 AM
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