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Sunday, 13 September 2015

Understanding the current macro economic scenario - (Part I)

The government had recently released the Q1 performance of the Indian economy. This paper gives an overview of the macro-economic situation.

Is the Indian economy de-coupled?
Not until the financial crises of 2007 was it perceived, that the Indian economy was decoupled from the external market shocks. It was believed that the Indian economy was inherently so strong that a burgeoning middle class and a strong consumption driven domestic market would cushion the economy against any external volatility.

The scenario today has changed though; we are equally dependent on the external market as much as the internal. Oil prices fluctuations, currency volatility, FDI irregularity, all affect our economy today.

This is reflected in the changing structure of our GDP where services now hold a larger stake in the pie than the erstwhile agriculture. Where India still needs a push – investments by both the public and private sector – is the industry (manufacturing) sector.  
GDP growth:
The GDP in India expanded 7.1% in the first quarter of 2015 over the same quarter of the previous year, slowing from a 7.4% growth in the previous quarter and below market expectations. While services and manufacturing grew at a slower pace; mining and construction accelerated and agriculture reported expansion – While not much traction is seen on the ground, these sectors picked up owing to a lower base.

The core sector index that measures the output of 8 infrastructure industries grew by 1.1% reiterating the challenge the government is facing is turning around the investment cycle. The Gross Fixed Capital Formation (Investment Rate) in the economy has de-grown at 27.8% in current terms, as against the corresponding rates of 29.2% in Q1 of 2014-15.

Inflation:
Given the negative growth in (WPI) inflation over the past two quarters, the industry is expecting the RBI to reduce the policy rates.

It remains to be seen whether the central bank bows down to the industry pressure, or still continues to hold the interest rates steady given the volatile global macros – China’s slowdown, Yuan devaluation and the indecisiveness of the Fed’s monetary policy decision.

Many economists are now worrying that the country may enter into a deflationary cycle and with low interest rates, private sector might even more postpone investments.  The threat of India entering into a slowdown phase as that of China is still unreasonable, as 
  • India still has a lot of capacity under-utilisation as compared with China 
  •  Rupee is free floating as compared to Yuan – India does not face the impossible trinity challenge (the currency is free floating, the capital account is partially convertible and the monetary policy is independent of the government)

The WPI v/s CPI debate:
In a recent interview, the RBI governor mentioned that India today is moving away from tracking inflation based on WPI index to the CPI index – given the broader basket of commodities in CPI. Thus the wait for the interest rates decline continues as although the WPI inflation is in the negative today, we still have not reached the inflation threshold for CPI (3.5%). CPI inflation today is at 5.4% for June 2015.

Given this background the central bank therefore might continue to hold on to the policy rate reduction.

What needs to be done:
The onus now falls on the government to quickly improve the situation on the ground. Clearing policy log jams and political gridlocks over important policies such as Land Acquisition Bill, GST, among others is very important.
The industry is waiting to see action from the Governments side on:
  •  Clearing off policy logjams – Land acquisition bill, GST and
  •  Increasing investments in infrastructure sector and encouraging private investments – through PPPs
  •  Considering FDI in key sectors
  • Reducing the cost of capital – HDFC bank recently reduced its home loan rates to 9.25% in anticipation of a policy rate reduction from the central bank

Outlook:
Yet expecting India to overtake China in growth terms in the near future is being too optimistic. We still have a long way to go in terms of policies and ground level infrastructure investments. The long term outlook seems fairly positive given the socio-economic-political environment across the world:
  • India is consciously trying to improve its economic ties (trade) and its political ties with its neighbours – Myanmar, Bangladesh, China, Nepal, Pakistan and Sri Lanka. The various state visits by the PM in the recent past have been a testimony to this
  •  With the cost of the oil imports bill declining the current account deficit is manageable
  •  The rupee has depreciated against the dollar and is expected to remain in the range of 65 – 67 against the USD in the coming quarter (based on an ARIMA forecast model)

Summary:
This is a period of wait and watch on both the domestic and the international fronts. RBI’s decision on the interest rates will be revealed in its monetary policy announcement at the end of this month. The trickledown effect of the rate cuts will be a lagged one.
Some green shoots on the international front include the Dubai Expo 2020 and the Qatar FIFA World Cup 2022. Both these events will open up opportunities for Voltas in the space of HVAC and MEP.
The bigger picture that needs attention is:
  • A continued slowdown in the Chinese economy
  • The loosening of the Chinese monetary policy 
  • The delay in Federal interest rate hike and
  •  Macro economic situation in Euro Zone


Tuesday, 1 September 2015

Vengeance is sweet - a short story


Vengeance is sweet...


She sat in the Starbucks cafe, sipping her coffee and staring out of the window. The blood stained knife lay next to her handbag, covered with her blue silk scarf.

She sat stoic, and expressionless. Wondering what she should do next. She was free, free as she always wanted to be. Free as she had imagined herself to be. Suddenly she was reminded of all the things she had had thought she would do should this day dawn; ever. The cafe was playing Michael Jackson’s song – Blood is on the dance floor, blood is on the knife...

An unguarded moment and she had let herself smile. Drops of perspiration were slowly making their way on to her neck. Even in the cool cafe, she suddenly felt the burning sensation. The salt water had touched her wound gently, leaving her in agony. The smile disappeared and she was jolted back to the present. She stared out of the window on to the wet street. It had just stopped raining and the street was getting back to its din. Cafes were setting tables on the foot path and Delhiets were readying themselves for a packed late Sunday evening.

She had always wondered how this day would be. She had rehearsed each and every step from the house to the hardware store; from the hardware store to the park entrance (next to the security guard’s cabin); from the park entrance to Safdarjung’s tomb; inside the tomb; from the tomb to the lotus pond; from the pond back to the cabin out of the park to the cafe; from the cafe back home. Every step was well thought through and perfectly executed. She had spent exactly ten days planning this act. She glanced at her notes and with shaky hands turned the page to rehearse.

It was time to get up and get going to the library. Krishna the librarian would be resuming her second shift. The book she was reading was on horticulture by Professor Swaminathan. She had attended his lectures while at the Delhi University and had started interning under him for a handsome stipend. She had always been a bright student in horticulture and the professor had hoped she would study further. He had wanted her to attend her PhD at Cornell in the States. And she was all set. Till that fateful day when she met him.

He was dressed in tracks and a loose t-shirt. Nothing unusual for a gym trainer, except she just couldn’t take her eyes off him; his wasn’t a muscular built. He was lean and on the treadmill when she entered the gym. As she was making her way out of the gym, her phone rang. Her eyes were rolling in embarrassment as her favourite song blared as the ring tone, "O God, I forgot to put it on silent", she exclaimed. She could already feel eyes judging her, someone smirking, nodding their head in 'that's not expected from the patrons here' way. 

And then all of a sudden she bumped head first into someone. It was him. This was not at all the way she had envisioned it. The only situation that remained unchanged was that they were both sweaty! She fumbled for words. She wanted to say so many things, sorry being the first word of course! He looked surprised, she embarrassed, and the next thing he knew, she was running away.

Theirs was a love as love should be. He had followed her from the gym to her house and then again the next day from her house to her library and back home. He had waited under her building till she finally came down and asked him to come up for a cup of coffee. It was awkward the first time he entered her house for both of them. He was not used to such a clean ambience and she to anyone else other than herself in the house.

The coffee visits soon turned to more dinner outings and one day as he dropped her and as she was kissing him good-bye, he didn’t want to let go. She giggled and tried to loosen his grip on her waist. But he didn’t let her. He wanted to linger on. That was the first time she let had her guard down. He loved her deeply and caressed her enough to make her moan and scream in happiness. But that was also the only time she had screamed in happiness.

Soon these meetings increased and he only visited her for the pleasures. He stopped being emotionally involved in her day-to-day chores and it was as though she was only a physical toy, to be man-handled. She thought it was because he wanted to start a gym on his own and while she had asked him many times, he seemed reluctant to share any details. He just told her to stay off his business issues. The only way she could help him was by providing him access to her body and to her savings account. She sensed he was in desperate need of money.

She had read in herbology that even plants have a violent streak. When disturbed at an unwanted time, they too snap, and in case of insects, eat them alive. At one of her lowest phases in life, she had equalled herself to an insect whose inconsequential life was dependent on that insect snapping tree – in this case, him.

She knew he was misusing her bank account and withdrawing money from it every now and then; the very money she had saved for her university studies. But she didn’t let that bother her; she thought she was in love with him. This continued for months and one fine day she finally mustered up the courage to ask him why he had suddenly withdrawn a huge sum of two lakhs. She had not imagined what would follow next. All she could recollect was that she was on the floor and something had hit her head hard. When she woke up the next day, her head was pounding, she was wounded, and there was dried blood on the floor and marks on her wrists and her neck. She examined herself in the mirror and realised she was attacked by him the last night. She checked for her phone, there was no sign of it, she checked for her purse and keys, her laptop, no sign again.

She did not know when or at what time she woke up. Her throat was dry and parched. She looked at her watch for the time and date. She calculated she was asleep for an entire day. She searched her house found that most of her valuables were missing including her jewellery and laptop. All she remembered was that she had seen him scream at her in anger throw his glass of whiskey on to the floor and then she had blanked out and woken up only today.

As she was coming back to understanding her environment, a phone rang. She answered the call and was about to shout when his voice,” I need money and you better pay up. Of course if you refuse, the MMS that I shall be sending in a minute will go viral. You will get then details in the same message. You know what to do baby, remember I love you”.
She had read such horrid stories on facebook and had joked about how dumb women could be, but had never thought that she would be one of them! They were even planning to live-in. She started crying and felt very scared. The first thing she did was lock all the doors and windows of the house. She cried some more, till her tears had dried away. She waited for him to come back, or maybe not, for she was scared, what if he hit her again, what if he killed her this time. She stayed up the entire night to make sure he did not come back. The second night though she heard him outside her door trying to open it.

She was shattered beyond belief. Her world had gone topsy-turvy. And then her inner voice guided her. She spoke for the first time in days. Her voice was trembling with fear and anger. Then she sat down with a pen and paper and started writing down all that had happened to her in over the last couple of months - The fights, the bitter language, the breaking of glasses, the food being thrown around, and she being hit. She realised she was abused before by him through all these different means until she would let go and give him what he wanted sex and/or money.

As she started recollecting the horrible acts, she found an inner strength that pushed her to become strong. She calculated how much he had stolen from her – tangible things; like money, jewellery, laptop, expensive items and credit cards; and intangible things like her confidence, her soul, and her love. She was not going to let him get away with this so easily. First she thought of filing a complaint with the police of cheating, deceit and domestic abuse. Then she thought that would be too easy on him. She thought and turned around to her book shelf. As her eyes fell on the title, she smiled coy and impish, ready to take on the world, ready for her revenge. “Vengeance is after all sweet”. She planned each detail meticulously over a week.

She got up that day and went about with her daily chores. She went to the local hardware store and bought a chef’s knife. She called up the mobile phone company to report loss of her sim and requested for a new number. She also told them to cancel all outgoings and roaming facilities on a particular number immediately – she did not want him to stay connected with the outside world. She went to the bank post lunch and reported a loss of her credit cards and atm pins. She made a call from the bank to a local car-on-hire service to book a car for the weekend giving false details.

She went to the gym in the evening and was walking back home when she felt she was being followed. She walked faster to a busy street and suddenly stopped to turn around. She caught him unawares. When she saw the surprise on his face, she hugged him tight and told him how much she missed him. She kissed him long and made sure he went weak in his knees and someplace else. She held his hand and led him back home. She caressed his hair and kissed him again passionately. He saw her cooking dinner. He didn’t know what to make of the situation. He had imagined a fight, him beating her again, threatening her and what not. This was the exact opposite of that. She was submitting to all his wishes.

He asked her where she had been. But before he had finished his question, she said, “Baby, I was thinking, can we just go out for a drive? It will be a good change”. She handed him the car keys and told him she had hired a car on rent and that he should go ahead and get the car ready. It was raining by the time they left and she kept the bedroom light on. She called the watchman and asked him to check for the overhead tank water spillage. She saw him leaving his cabin and walking towards the building. She switched off her bedroom light and took the stairs to the ground floor.

As she sat in the car, he noticed she was dressed differently– a loose t-shirt over a vest and track pants, with her hair tied in a bun, a cap covering her head and her blue scarf covering her neck and she was wearing trainers. As they drove to the Lodhi Gardens, he complained that he was unable to make calls from his phone; she pretended to ignore it and instead put on some music. It was close to mid-night as they parked the car. It was still raining and she insisted that they walk without an umbrella. As they walked in, the guard at the gate reminded that the walking track would close in a less than 30 minutes. “That is all the time I need”, she thought. She nodded and pushed him inside the gardens. As they left the cabin’s vicinity, she pushed him for a run. “Let’s go lazy bones”. They ran deep into the park till they reached they reached Safdarjung’s tomb.

She climbed inside it and he followed her. She caught him by surprise when she hugged him tight and kissed him. As he was busy caressing her body, she removed the chef’s knife tucked in between her tracks and the tight vest covered by the loose t-shirt. He was unbuttoning her t-shirt when she struck him, one single, strong, deep cut on his throat below his ears all the way to his wind pipe cutting it off completely. He choked, but could not scream, he didn’t know what had just happened. His eye balls were growing big. She pushed him back and stood tall. She waited for all the reactions, the shuddering of the legs, the unsuccessful attempt at covering the throat and stopping the oozing blood, the desperate attempt to scream and shout, to call for help, to point towards her as if to tell people that she did it, et. al.

She stood over his body for ten whole minutes as he slipped into a coma. Finally when she was sure even medical help would do little, she executed the next stage. She removed the loose t-shirt and the cap and tied her hair in a pony tail, removed the scarf and put on her glasses. It was still drizzling as she went to the Lotus pond and rubbed the loose t-shirt, and the cap in wet mud, put both in a plastic bag with stones and dropped them in the pond. She allowed them to sink in the water. While she waited she tried to recollect if there had been a struggle between him and her and if she had left anything in the tomb or on him.

Finally when she felt it was time, she walked peacefully across the gardens, passed that security cabin and moved towards the Khan Market exit. She made her way to the Starbucks cafe. It was buzzing with people and she sat in the Starbucks cafe, sipping her coffee and staring out of the window. The blood stained knife lay next to her handbag, covered with her blue silk scarf.