Saturday, October 25, 2008

Financial Illiteracy – An Unaffordable Luxury

MONEY is the eternal elixir of life. It is power. It is energy. It is a passport to conveniences of life. It is the most powerful antidote to the crippling constraints imposed by poverty. Money is empowering and yes an obsession with money also brings in its wake misery – but that is besides the point here.

It is a fact that people spend the maximum time, first training themselves to earn and then earning money. The amount of effort put in getting good education and then getting a good paying job is almost Himalayan in dimension.

This is not the end of it. Once having entered in that never ending spiral, the person is completely pre-occupied in efforts to increase his/her income. This is normally done by working harder, working longer hours, opting for higher and specialized education and so on. The spiral continues and we are sucked deeper into it trying to earn more money.

The question that now arises is - How should one manage this money?

Isn’t is funny that so much effort is put in, time and resources invested to develop a high earning capacity but people are totally ignorant about how this money should be managed.

I call this “Financial Illiteracy”.

Life was simpler in the past. The choice was limited and one would place money in nationalized bank fixed deposits or small savings schemes managed by the Post Office or the popular Public Provident Fund. Of course, there was the mandatory insurance with Life Insurance Corporation (LIC) and units of UTI where you had almost assured dividends every year.

Stock markets were considered as “gambling dens” and avoided by a large section of the population.

Times have since changed. Many changes have taken place and India is slowly moving away from a tightly controlled and Government owned structure to a more market related structure.

This has meant

- Exposure to market fluctuations
- High fixed returns now becoming a thing of past
- Safety has become relative and capital is exposed to possibility of loss
- Element of risk is now an important factor to be taken into consideration
- Entry of private players in the financial markets
- There are now multiple choices and of varying complexity
- Smart marketing and product positioning has come to stay
- “Financial Advisors” is a new breed that will be part of the scene henceforth.
- Introduction of dematerialization has added a new concept of ownership.

It has now become imperative to understand how to navigate through this maze. It has become increasingly important that basic concepts are understood such that one is not taken for a ride. It has also become necessary to understand financial and other types of risk and accept it as a part of our life.

It shall be my endeavour to expand on this theme and attempt to de-mystify some of the so-called complexities.

Wednesday, October 15, 2008

Blog Action Day 2008 - Poverty

I get further drawn into the ways of the blogging world. First, it was tagging and now Blog Action Day 2008. It was only today, I realised that something like this exists and there seems to be widespread response to this. At last count the BAD site had about 12k sites participating.

Without debating on the merits of such collective action, I attempt to contribute my mite to a cause - to mitigate poverty.

This is an effort to lift "The Last, the least and the Lowest" from their deplorable existence to a more human level.

We equate poverty with a lack of basic necessities for the very existence of a person or a group of people. The state of deprivation is so acute that survival itself becomes a huge uphill task everyday. Typically, poverty evokes images of people who are hungry, naked, suffering from malnutrition, homeless and having no skills, jobs or vocations.

Logically, mitigation of poverty implies that groups of people blessed with a surplus would share a part of that with the deprived group and thus ease their burden. It pre-supposes a flow of some resource to the deprived group and their lack is removed.

At this point let me pause and think - What do we mean by eradicating poverty?

Based on our general and typical response, we would dip into our pockets and share a little money. A few would go through their wardrobes and dispose of old clothes, books, toys. Many others would take on the task of feeding the hungry. There could be symbolism in the form of fasting - so that you can empathise with the deprived hungry group. Established banners may carry out programmes to provide elementary housing and so on. There are a million ways to share what we have with our less fortunate brethren.

Each of these responses are worthy of applause and may their tribe increase - but - is this the solution? Will this eradicate poverty or even reduce it appreciably?

Poverty, if it has to be mitigated, has to be attacked relentlessly from all sides. This is a war in which the entire society has to participate.

A combination of short term relief measures are very essential but on the longer term, poverty needs to be tackled at a very different level.

We will have to

- Start with inculcation of self-confidence in these people,
- Ensure their inclusion in the education or skiling / re-skilling process,
- With these skills, facilitate absorption in a trade, profession or vocation,
- Encourage expansion of economic activity such that the deprived class has an
opportunity to generate a steady income for subsistence.

Only then will people move above poverty levels and sustain themselves without perpetual dependance on hand-outs.

These are transformations of an epic nature. It requires immense courage, confidence and extreme patience and undying support of a society eager to change. Progress will be slow but it is definitely possible to eradicate poverty in a generation or two.

Saturday, October 11, 2008

Indian Transformation - An Eventful Period

India is in a hurry. It has to catch up and keep its tryst with destiny.

India is also a place where chaos reigns supreme. Chaos made all the more intense with deep rooted transformation in progress. I say “in progress” because this “wave of change” that commenced about two decades back in slow and unsteady steps has begun to assume increasingly bigger and wider dimensions. However, this wave has yet to assume tidal proportions that will include all within its fold.

Grow it will and no power on this earth can stop an idea whose time has come.

This phase, of transforming a nation to a completely different level of existence, occurs but once in the lifetime of a nation. Perhaps, on a longer time scale this phase may be seen once in a couple of centuries.

We, the people of India, are blessed to be living our life times at this juncture in our nation’s history. We are witnessing history being made and many of us are actively contributing in our own way to its making.

Many things have changed dramatically, many for the better, some seem to have worsened, but, the vast majority feels that life seems to be the same and nothing seems to have changed.

Let me list and examine a few of these changes

This is the unsung sector of India. Our farmers' achievements have largely gone unnoticed. Our food grain production has increased from about 169 million tones in 1991-92 to about 230 MT in the current year and land used for this is more or less constant at 122 – 127 million hectares.

The total population covered by a telephone connection (fixed or wireless) has crossed 350 million. Almost 35% of the population is connected with some of the lowest tariffs in the world. This is a far cry from the dismal 4% about fifteen years back.

The conceptualisation and completion of the Golden Quadrilateral expressway network was a bold project which has had dramatic and far reaching impact on surrounding regions

Indian education system has gained much respect and much of home grown talent has proved its mettle in various spheres around the world. Surely, a lot has to change but it is also true that we are our own worst critics. Engineering and Management education is already accepted as amongst the best.

Indian entrepreneurial energy has been unleashed and world seems to be the stage. There are numerous instances of Indian companies setting benchmarks for excellence. Pharmaceuticals, IT, Engineering, Steel amongst others come immediately to mind.

World class facilities and expertise has become available. It has gained sufficient acceptance to be packaged for medical tourism. The challenge, however, is how to make this more affordable and accessible to all Indians.

Banking, Insurance and Financial Services:
This period has seen establishment of independent regulators, increase in transparency, expansion of market leading to increase in financial inclusion, use of Information Technology, a liberal tax regime, strong supervision and conservative incremental approach.

The intangibles
- Surge in self confidence,
- Ability to dream big and translate them to reality,
- Use of soft power,
- Freedom of expression has found new avenues and new meanings,
- Ability to evolve strategic thinking.

I understand that much ground needs to be covered. There are serious gaps in some areas like spread of universal education and healthcare. Socially we seem to have regressed. That should, probably, be the subject matter of another post.

However, it is also important to feel proud of what we have achieved. I am at a complete loss and I cannot understand
- Why are so many cynical?
- Why are so many pessimistic?
- Why are we so apathetic and disinterested?

On reflecting a little, I could think of so much to be positive about. I am sure, collectively, India can shake this world up and show an entirely new direction. (Cynics Please excuse)

What do you think, my dear friends?

Thursday, October 9, 2008

Should I or Shouldn’t I - A quirky dilemma

Just the other day as I was blog surfing, I noticed that IHM (Indian Home Maker) had tagged me. I would certainly have missed that tag had I not spotted it that day. This tag requires me to list my “Quirks” and “Addictions”. This was the first time I have been tagged and I was gaping at the screen thinking, "Quirks" - but I do not have any and "Addictions" - what is that???

I have seen this “tag business” a couple of times on other blogs. Many were interesting, some were quite amusing and a few tended to be bordering on the “outrageous”.

The next thing in my mind was “What is this – should I ignore this?” or “Hey come on – be a sport and play the game”. Then it went “But, my blog is not personal – I talk about everything else about India” and “Should I dilute this positioning”. The other side of the brain went “You speak your mind on various issues – Here the issue is yourself” and “What positioning – stop taking yourself so seriously” and so on till I realized a week had passed.

I woke up when Priyank sent “Blog Recession ka – Jara update kara ki” (Why this blog recession – Please update) I took it as a directive and shed all my vacillation.

Here we go (IHM – please note)

My first - is this great human quality of indecisiveness. I vacillate like an oscillator before I am forced to decide out of sheer exhaustion.

My second – is this amazing ability to sleep any time any where. A five minute nap whilst taking a ten minute ride is a piece of cake. After long years of traveling in Mumbai local trains, I have perfected the art of sleeping whilst I am standing (in the local train only).

My third – is this absolutely maddening ability to keep a straight face when some one has cracked a joke (a good joke that is) and stare through that person saying “So…”. This wet blanket is so infuriating that I almost expect a WHACK…on my face….

My fourth – is a “masti” or “keeda” (this is Mumbai Hindi) when driving my car. Drive slowly in the fast lane and induce road rage or do not start immediately when the signal turns green and watch people go hyper and get palpitations.


My fifth – is having a “puran-poli” which has been drenched in “Heated Ghee” (aka as “toop” – t as in “talwar”), taking an hour to finish it and then sit licking my fingers contemplating on “How beautiful Life is…..(for puran-poli eaters)”. This is my idea of heaven on earth.

I solemnly state that the above mentioned is the Truth – the Complete Truth – and Nothing but the Truth.

IHM – I chose not to ignore your tag. Cheers!!!

Who should I tag this on to? I will think and vacillate and oscillate and decide next week……..after all that is my first quirk.