Thursday, May 29, 2008
End of the 9% Growth Dream - Stock Market Crash
After four years of boasting of 9% GDP growth, and talking of overtaking China, Indians are reluctant to believe that the economy is headed for a serious fall. But the stock market has crashed, an indication of the pain ahead.
Western observers have been lavishing praise on India as a coming economic superpower. So, many Indians believe we have achieved 9% growth because we are so clever and resourceful. This is a delusion of grandeur. In fact, a global tide has lifted the whole world economy, and India along with all others. Now that the global tide is ebbing, India will fall with all others. Given our strengths, we will not suffer as badly as some others. But suffer we will.
After more than a decade of 6% growth, India accelerated to almost 9% in the last four years. But sub-Saharan Africa also accelerated, from 2.4% per year in the 1990s to almost 5.8% in the last four years, a stronger acceleration than in India!
Azerbaijan grew by a whopping 31% in 2006 and maybe 27% in 2007. Turkmenistan grew by 18% in 2006.
Sudan has a civil war and genocide in Darfur, but its latest growth rate is a staggering 12%. Rwanda, where genocide was made famous by the film Hotel Rwanda, is enjoying 8.5% growth. Liberia, site of the Hollywood hit Blood Diamond, is growing at 9%.
So, India's 9% growth in the last four years is not exceptional. All countries have been lifted by a global tide. What caused the tide to rise, and why is it now ebbing?
The core cause of the boom was huge overspending by Americans in the last decade, based on a long housing boom. Americans borrowed ever more billions against their rising property values, and went on a spending spree that greatly exceeded their disposable incomes. Overspending led to a record US trade deficit of $700 billion/year.
The mirror image of this was rising trade surpluses (and hence forex reserves) in other countries. These forex surpluses were used to buy US securities, depressing US interest rates and making borrowing even more attractive. Americans borrowed still more, spent still more, and imported still more.
This created a huge consumption-based growth cycle across the globe. The US consumer splurge was especially helpful to China, the most competitive exporter of manufactures, which grew rapidly through an export boom. India, which exported competitive services, also benefited. Other Asian countries from Vietnam to Pakistan also started growing at rapid rates.
But these Asian countries needed to import huge quantities of commodities, partly for conversion into manufactures for export, and partly to meet rising domestic needs. So, the global demand for commodities skyrocketed, lifting all exporters of commodities. These countries were mainly in central Asia, Africa and Latin America. All joined the great global boom.
Alas, no boom based on over-consumption can last forever. The US housing bubble burst, and prices started falling. This revealed the ugly fact that many lenders had made huge property loans to people who could not or would not repay. Banks and other mortgage lenders suddenly found themselves with hundreds of billions of bad debts. The consequent financial crunch hit the whole US economy. This now threatens a recession, which will lower consumer spending.
Less US spending will mean a big drop in US imports from Asia. When that happens, Asia will demand less commodities from Africa, Latin America and Central Asia. So, the very countries that benefited from US overspending will now suffer as US spending declines.
How bad will the impact on India be? It all depends on the pace at which the US reduces its overspending to manageable proportions. Let us consider three scenarios.
In scenario 1, the US will have only a slowdown, not an outright recession, and will recover in the second half of 2008. So, there will be just a small blip in overspending, which will soon resume. World growth will not be badly hit, and India can hope to achieve 8% in 2008. This scenario looks hopelessly optimistic.
More realistic is scenario 2, which postulates a recession for two or three quarters in the US, followed by recovery in 2009. This will hit the global economy significantly. Indian growth will decline to 7%.
In scenario 3, the US will suffer a prolonged slowdown-cum-recession for 18 months or more. This is very unlikely, given the ammunition available with the US Fed to revive the economy. Yet, a cold shiver is running down the spines of stock market experts, who feel there is a small but significant chance of a long, painful slowdown. That will translate into huge global pain.
In scenario 3, India's GDP growth will fall to 6%. That is no higher than in the 1990s! This does not mean that all recent progress has been illusory. India has raised its savings rate to 34%, and built up strong skills that are here to stay. But our sustainable long-term growth rate, in less-than-booming global conditions, may be only 7-8%. Let's not get carried away by the last four years.
Western observers have been lavishing praise on India as a coming economic superpower. So, many Indians believe we have achieved 9% growth because we are so clever and resourceful. This is a delusion of grandeur. In fact, a global tide has lifted the whole world economy, and India along with all others. Now that the global tide is ebbing, India will fall with all others. Given our strengths, we will not suffer as badly as some others. But suffer we will.
After more than a decade of 6% growth, India accelerated to almost 9% in the last four years. But sub-Saharan Africa also accelerated, from 2.4% per year in the 1990s to almost 5.8% in the last four years, a stronger acceleration than in India!
Azerbaijan grew by a whopping 31% in 2006 and maybe 27% in 2007. Turkmenistan grew by 18% in 2006.
Sudan has a civil war and genocide in Darfur, but its latest growth rate is a staggering 12%. Rwanda, where genocide was made famous by the film Hotel Rwanda, is enjoying 8.5% growth. Liberia, site of the Hollywood hit Blood Diamond, is growing at 9%.
So, India's 9% growth in the last four years is not exceptional. All countries have been lifted by a global tide. What caused the tide to rise, and why is it now ebbing?
The core cause of the boom was huge overspending by Americans in the last decade, based on a long housing boom. Americans borrowed ever more billions against their rising property values, and went on a spending spree that greatly exceeded their disposable incomes. Overspending led to a record US trade deficit of $700 billion/year.
The mirror image of this was rising trade surpluses (and hence forex reserves) in other countries. These forex surpluses were used to buy US securities, depressing US interest rates and making borrowing even more attractive. Americans borrowed still more, spent still more, and imported still more.
This created a huge consumption-based growth cycle across the globe. The US consumer splurge was especially helpful to China, the most competitive exporter of manufactures, which grew rapidly through an export boom. India, which exported competitive services, also benefited. Other Asian countries from Vietnam to Pakistan also started growing at rapid rates.
But these Asian countries needed to import huge quantities of commodities, partly for conversion into manufactures for export, and partly to meet rising domestic needs. So, the global demand for commodities skyrocketed, lifting all exporters of commodities. These countries were mainly in central Asia, Africa and Latin America. All joined the great global boom.
Alas, no boom based on over-consumption can last forever. The US housing bubble burst, and prices started falling. This revealed the ugly fact that many lenders had made huge property loans to people who could not or would not repay. Banks and other mortgage lenders suddenly found themselves with hundreds of billions of bad debts. The consequent financial crunch hit the whole US economy. This now threatens a recession, which will lower consumer spending.
Less US spending will mean a big drop in US imports from Asia. When that happens, Asia will demand less commodities from Africa, Latin America and Central Asia. So, the very countries that benefited from US overspending will now suffer as US spending declines.
How bad will the impact on India be? It all depends on the pace at which the US reduces its overspending to manageable proportions. Let us consider three scenarios.
In scenario 1, the US will have only a slowdown, not an outright recession, and will recover in the second half of 2008. So, there will be just a small blip in overspending, which will soon resume. World growth will not be badly hit, and India can hope to achieve 8% in 2008. This scenario looks hopelessly optimistic.
More realistic is scenario 2, which postulates a recession for two or three quarters in the US, followed by recovery in 2009. This will hit the global economy significantly. Indian growth will decline to 7%.
In scenario 3, the US will suffer a prolonged slowdown-cum-recession for 18 months or more. This is very unlikely, given the ammunition available with the US Fed to revive the economy. Yet, a cold shiver is running down the spines of stock market experts, who feel there is a small but significant chance of a long, painful slowdown. That will translate into huge global pain.
In scenario 3, India's GDP growth will fall to 6%. That is no higher than in the 1990s! This does not mean that all recent progress has been illusory. India has raised its savings rate to 34%, and built up strong skills that are here to stay. But our sustainable long-term growth rate, in less-than-booming global conditions, may be only 7-8%. Let's not get carried away by the last four years.
Wednesday, May 28, 2008
Brilliant Answers In a Interview
Question 1: You are driving along in your car on a wild, stormy night,
it's raining heavily, when suddenly you pass by a bus stop, and you see three people waiting for a bus:
An old lady who looks as if she is about to die.
An old friend who once saved your life.
The perfect partner you have been dreaming about.
Which one would you choose to offer a ride to,
knowing very well that there could only be one passenger in your car?
This is a moral/ethical dilemma that was once actually used as part of a job application.
* You could pick up the old lady, because she is going to die, and thus you should save her first;
* or you could take the old friend because he once saved your life, and this would be the perfect chance to ! pay him back.
* However, you may never be able to find your perfect mate again.
The candidate who was hired (out of 200 applicants) had no trouble coming up with his answer. Guess what was his answer?
He simply answered:
"I would give the car keys to my Old friend and let him take the lady to the hospital.
I would stay behind and wait for the bus with the partner of my dreams."
Sometimes, we gain more if we are able to give up our stubborn thought limitations. Never forget to "Think Outside the Box."
Question 2: What will you do if I run away with your sister?"
The candidate who was selected answered " I will not get a better match for my sister than you sir"
Question 3: Interviewer (to a student girl candidate) - What is one morning you woke up & found that you were pregnant.
Girl - I will be very excited and take an off, to celebrate with my husband.
Normally an unmarried girl will be shocked to hear this, but she managed it well. Why I should think it in the wrong way, she said later when asked
Question 4: Interviewer: He ordered a cup of coffee for the candidate.
Coffee arrived kept before the candidate, then he asked what is before you?
Candidate: Instantly replied "Tea"
He got selected.
You know how and why did he say "TEA" when he knows very well that coffee was kept before.
(Answer: The question was "What is before you (U - alphabet)
Reply was "TEA" ( T - alphabet)
Alphabet "T" was before Alphabet "U"
Question 5: Where Lord Rama would have celebrated his "First Diwali"?
People will start thinking of Ayodya, Mitila [Janaki's place], Lanka etc...
But the logic is, Diwali was a celebrated as a mark of Lord Krishna Killing Narakasura.
In Dusavataar, Krishnavathaar comes after Raamavathaar.
So, Lord Rama would not have celebrated the Diwali At all!
Question 6: The interviewer asked to the candidate "This is your last question of the interview.
Please tell me the exact position of the center of this table where u have kept your files."
Candidate confidently put one of his finger at some point at the table and told that this was the central point at the table.
Interviewer asked how did u get to know that this being the central point of this table,
then he answers quickly that sir u r not likely to ask any more question, as it was the last question that u promised to ask.....
And hence, he was selected as because of his sharp.
This is What Interviewer expects from the Interviewee. ....
it's raining heavily, when suddenly you pass by a bus stop, and you see three people waiting for a bus:
An old lady who looks as if she is about to die.
An old friend who once saved your life.
The perfect partner you have been dreaming about.
Which one would you choose to offer a ride to,
knowing very well that there could only be one passenger in your car?
This is a moral/ethical dilemma that was once actually used as part of a job application.
* You could pick up the old lady, because she is going to die, and thus you should save her first;
* or you could take the old friend because he once saved your life, and this would be the perfect chance to ! pay him back.
* However, you may never be able to find your perfect mate again.
The candidate who was hired (out of 200 applicants) had no trouble coming up with his answer. Guess what was his answer?
He simply answered:
"I would give the car keys to my Old friend and let him take the lady to the hospital.
I would stay behind and wait for the bus with the partner of my dreams."
Sometimes, we gain more if we are able to give up our stubborn thought limitations. Never forget to "Think Outside the Box."
Question 2: What will you do if I run away with your sister?"
The candidate who was selected answered " I will not get a better match for my sister than you sir"
Question 3: Interviewer (to a student girl candidate) - What is one morning you woke up & found that you were pregnant.
Girl - I will be very excited and take an off, to celebrate with my husband.
Normally an unmarried girl will be shocked to hear this, but she managed it well. Why I should think it in the wrong way, she said later when asked
Question 4: Interviewer: He ordered a cup of coffee for the candidate.
Coffee arrived kept before the candidate, then he asked what is before you?
Candidate: Instantly replied "Tea"
He got selected.
You know how and why did he say "TEA" when he knows very well that coffee was kept before.
(Answer: The question was "What is before you (U - alphabet)
Reply was "TEA" ( T - alphabet)
Alphabet "T" was before Alphabet "U"
Question 5: Where Lord Rama would have celebrated his "First Diwali"?
People will start thinking of Ayodya, Mitila [Janaki's place], Lanka etc...
But the logic is, Diwali was a celebrated as a mark of Lord Krishna Killing Narakasura.
In Dusavataar, Krishnavathaar comes after Raamavathaar.
So, Lord Rama would not have celebrated the Diwali At all!
Question 6: The interviewer asked to the candidate "This is your last question of the interview.
Please tell me the exact position of the center of this table where u have kept your files."
Candidate confidently put one of his finger at some point at the table and told that this was the central point at the table.
Interviewer asked how did u get to know that this being the central point of this table,
then he answers quickly that sir u r not likely to ask any more question, as it was the last question that u promised to ask.....
And hence, he was selected as because of his sharp.
This is What Interviewer expects from the Interviewee. ....
Tuesday, May 6, 2008
ASHES 2009 COMPLETE ITINERARY
May Australia arrive in England.
Fri 5 - Sun 21 June - World Twenty20
Wed 24 - Sat 27 June
Four-day game v Sussex (Hove)
Wed 1 - Sat 4 July
Four-day game v England Lions (Worcester)
Wed 8 - Sun 12 July
1st Test Cardiff
Thu 16 - Mon 20 July
2nd Test Lord's
Fri 24 - Sun 26 July
Three-day game v Northants(Northampton)
Thu 30 July - Mon 3 Aug
3rd Test Edgbaston
Fri 7 - Tue 11 Aug
4th Test Headingley
Sat 15 - Sun 16 Aug
Two-day game v Kent(Canterbury)
Thu 20 - Mon 24 Aug
5th Test Oval
Fri 28 Aug
ODI v Scotland (Edinburgh)
Sun 30 Aug
1st International Twenty20 (Old Trafford)
Tue 1 Sept
2nd International Twenty20 flood light (Old Trafford)
Fri 4 Sept
1st ODI day/night (The Oval)
Sun 6 Sept
2nd ODI (Lord's)
Wed 9 Sept
3rd ODI day/night (The Rose Bowl)
Sat 12 Sept
4th ODI (Lord's)
Tue 15 Sept
5th ODI day/night (Trent Bridge)
Thu 17 Sept
6th ODI day/night (Trent Bridge)
Sun 20 Sept
7th ODI (Durham)
Mon 21 Sept Australia depart
Monday, May 5, 2008
Words of Kalam - How to manage failure?
Let me tell you about my experience. In 1973 I became the project director of India's satellite launch vehicle program, commonly called the SLV-3. Our goal was to put India's "Rohini" satellite into orbit by 1980. I was given funds and human resources -- but was told clearly that by 1980 we had to launch the satellite into space. Thousands of people worked together in scientific and technical teams towards that goal.
By 1979 -- I think the month was August -- we thought we were ready. As the project director, I went to the control center for the launch. At four minutes before the satellite launch, the computer began to go through the checklist of items that needed to be checked. One minute later, the computer program put the launch on hold; the display showed that some control components were not in order. My experts -- I had four or five of them with me -- told me not to worry; they had done their calculations and there was enough reserve fuel. So I bypassed the computer, switched to manual mode, and launched the rocket. In the first stage, everything worked fine. In the second stage, a problem developed. Instead of the satellite going into orbit, the whole rocket system plunged into the Bay of Bengal. It was a big failure.
That day, the chairman of the Indian Space Research Organization, Prof. Satish Dhawan, had called a press conference. The launch was at 7:00 am, and the press conference -- where journalists from around the world were present -- was at 7:45 am at ISRO's satellite launch range in Sriharikota [in Andhra Pradesh in southern India]. Prof. Dhawan, the leader of the organization, conducted the press conference himself. He took responsibility for the failure -- he said that the team had worked very hard, but that it needed more technological support. He assured the media that in another year, the team would definitely succeed. Now, I was the project director, and it was my failure, but instead, he took responsibility for the failure as chairman of the organization.
The next year, in July 1980, we tried again to launch the satellite -- and this time we succeeded. The whole nation was jubilant. Again, there was a press conference. Prof. Dhawan called me aside and told me, "You conduct the press conference today."
I learned a very important lesson that day. When failure occurred, the leader of the organization owned that failure. When success came, he gave it to his team. The best management lesson I have learned did not come to me from reading a book; it came from that experience.
Friday, April 11, 2008
IPL- A grand kick off
The first edition of DLF Indian Premier League (IPL) is all set to become one of the richest domestic cricket tournaments in the world offering a whopping winners' cheque of Rs 4.8 crore and an overall prize money of Rs 12 crore.
The much-anticipated kicks off on April 18 and will live upto its tag of being a cash-rich tourney as even the runner-up will be richer by Rs 2.4 crore and even the last-place finisher getting Rs 40 lakh.
"The Rs. 4.8 crore winners' purse makes the DLF IPL truly one of the richest events for a domestic Twenty20 league anywhere in the world," IPL Chairman and BCCI vice President Lalit Modi said.
The prize money distribution is such that even the two losing semi-finalists will earn in crores (Rs 1.2 crore) for their efforts.
The prize money will then be divided among the other teams with the team finishing fifth collecting Rs 80 lakh, while the sixth finisher will earn Rs 70 lakh.
The team finishing seventh on the league table will get Rs 50 lakh.
The IPL will kick off with Shah Rukh Khan's Kolkata Knight Riders taking on Vijay Mallya's Bangalore Royal Challengers at the Chinnaswamy Stadium at Bangalore.
The inaugural season will will have 59 matches spread over 44 days.
The much-anticipated kicks off on April 18 and will live upto its tag of being a cash-rich tourney as even the runner-up will be richer by Rs 2.4 crore and even the last-place finisher getting Rs 40 lakh.
"The Rs. 4.8 crore winners' purse makes the DLF IPL truly one of the richest events for a domestic Twenty20 league anywhere in the world," IPL Chairman and BCCI vice President Lalit Modi said.
The prize money distribution is such that even the two losing semi-finalists will earn in crores (Rs 1.2 crore) for their efforts.
The prize money will then be divided among the other teams with the team finishing fifth collecting Rs 80 lakh, while the sixth finisher will earn Rs 70 lakh.
The team finishing seventh on the league table will get Rs 50 lakh.
The IPL will kick off with Shah Rukh Khan's Kolkata Knight Riders taking on Vijay Mallya's Bangalore Royal Challengers at the Chinnaswamy Stadium at Bangalore.
The inaugural season will will have 59 matches spread over 44 days.
Saturday, April 5, 2008
Tuesday, April 1, 2008
New IIT's and IIM's in INDIA
In a bid to give an impetus to the higher education sector, our Indian government has decided to upgrade some of the state universities to the status of central universities and to establish four new Indian Institutes of Technology and six Indian Institutes of Management. IIT's would be located in Orissa, Madhya Pradesh (Indore), Gujarat and Punjab, the IIMs would come up in Tamil Nadu, Jammu and Kashmir, Jharkhand, Chhattisgarh (Raipur), Uttarakhand and Haryana.
These new institutions would be part of the eight IITs and seven IIMs proposed to be set up during the 11th Five Year Plan.The government has already announced establishment of four IITs in Andhra Pradesh, Rajasthan, Bihar and Himachal Pradesh and one IIM at Shillong.The location of the new higher education institutions has been approved by Prime Minister Manmohan Singh, HRD Minister Arjun Singh told reporters in New Delhi. In addition, he said the government proposed to convert the Institute of Technology of the Banaras Hindu University into an IIT. Singh said it has also proposed to establish during the 11th five year plan period 14 Universities with world class standards and 16 universities in states, which do not have a central university at present. Singh said the establishment of new IITs, IIMs and central universities was subject to state governments offering adequate land at suitable locations, at free of cost. The 14 central universities aiming at world class standards would be located in Pune, Kolkata, Coimbatore, Mysore, Visakhapatnam, Gandhinagar, Jaipur, Patna, Bhopal, Kochi, Amritsar, Bhubaneswar, Greater NOIDA and Guwahati.
The locations have been decided keeping in mind the connectivity and the infrastructure which such universities would need, he said. The state governments would be requested to identify adequate land in or near the selected cities, Singh said adding the contour and shape of such world class universities would be defined shortly.
These new institutions would be part of the eight IITs and seven IIMs proposed to be set up during the 11th Five Year Plan.The government has already announced establishment of four IITs in Andhra Pradesh, Rajasthan, Bihar and Himachal Pradesh and one IIM at Shillong.The location of the new higher education institutions has been approved by Prime Minister Manmohan Singh, HRD Minister Arjun Singh told reporters in New Delhi. In addition, he said the government proposed to convert the Institute of Technology of the Banaras Hindu University into an IIT. Singh said it has also proposed to establish during the 11th five year plan period 14 Universities with world class standards and 16 universities in states, which do not have a central university at present. Singh said the establishment of new IITs, IIMs and central universities was subject to state governments offering adequate land at suitable locations, at free of cost. The 14 central universities aiming at world class standards would be located in Pune, Kolkata, Coimbatore, Mysore, Visakhapatnam, Gandhinagar, Jaipur, Patna, Bhopal, Kochi, Amritsar, Bhubaneswar, Greater NOIDA and Guwahati.
The locations have been decided keeping in mind the connectivity and the infrastructure which such universities would need, he said. The state governments would be requested to identify adequate land in or near the selected cities, Singh said adding the contour and shape of such world class universities would be defined shortly.
Scariest runways in the world
Tioman Island, Off the coast of Malaysia
Wake Island,Pacific Ocean
Macao International Airport
Interesting facts in English words
>'Stewardesses' is the longest word typed with only the left hand.
>'Lollipop' is the longest word typed with your right hand.
>'The quick brown fox jumps over the lazy dog' uses every letter of the alphabet.
>There are two words in the English language that have all five vowels in order: 'abstemious' and 'facetious.'
>'Typewriter' is the longest word that can be made using the letters only on one row of the keyboard.
>'Rhythm' is a rare six letter word in English with no vowels in it.
>'Lollipop' is the longest word typed with your right hand.
>'The quick brown fox jumps over the lazy dog' uses every letter of the alphabet.
>There are two words in the English language that have all five vowels in order: 'abstemious' and 'facetious.'
>'Typewriter' is the longest word that can be made using the letters only on one row of the keyboard.
>'Rhythm' is a rare six letter word in English with no vowels in it.
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