Start afresh....

Well, yes it has been a long time since I wrote. This was driven primarily because of the fact that my pursuit for making money took the centre stage. However, unexpectedly that did not transpire as well as it should have been.

Though the debt markets have been kind to my company in the last six months or so with a downward bias, unfortunately I have not been able to make the most of it. It was quite disappointing to say the least as many mandates just evaporated before anything could happen. There were times when I questioned my own commitment and efforts on them, but sadly there was little I could do to influence them in my limited capacity. The "Bharat" inside me felt suffocated and frustrated over my inability to control the extraneous factors. There was a sudden & dramatic dip in my zeal and enthusiasm for work itself. Even when questions were raised over these issues in my interaction with senior colleagues, I had no answer. In fact any answer would have tantamount to a justification, and I hate giving one. There is no grey as far as results are concerned. Its like a P& L a/c. You either make a loss or a profit. In my case it was latter & I was quite prepared to take the heat for the same.

In all this confusion, my soul searching quests sadly took a backseat. Rightly or wrongly so , I may not be able to comment as of now. I spent quite a lot of time thinking on what should be the road ahead. I suddenly found myself drawn into a whirlpool where I was choking for survival. Initially when things were offering hope, I was brimming with confidence & was fighting hard. But then, when things went totally awry, I was left clueless. I tried to focus & concentrate hard, but then being emotional has its consequences. The whole idea of starting from scratch really scared me. Yes, I do not think that there is any shame in admitting that I was scared.

So, I was left thinking at the start of the race whether this race will result in a win or loss. As much as I would like to run on a separate track where either there are few people running or none, performance would still be benchmarked against those running on the real tracks. And the real track offers no mercy.

As the year has drwan to a close & the new year dawns on me, new targets will be set & the race shall begin again....or it has already started. Though its splitinto quarters, but its only for the sake of convenience. Each night as I lie on my bed, its the conscious that doesnt allow a peaceful sleep than anything else.

I still have to run nevertheless, and seriously the tracks dont matter. There are again things which offer hope and I only need to hang on to them. Yes, mistakes have been realised & correction may be possible in the coming months ahead.

Splitting the personalities

It had to happen one day. As I began to update my blog the other day, I realised that along the way, I had forgotten the very purpose of the blog. I was "Bharat". Bharat who was an average Indian walking on the street & discovering his country along the way. But somewhere that Indian wandered off.

Somebody pointed out that my thoughts were digressing. But I had also fallen in love with writing about Bharat - the person whose life was equally interesting.

Like a true businessman I have decided to diversify & maintain two separate blogs to cater to my alter egos as well. -

a) reformmybharat.blogspot.com - Bharat - the Indian
b) http://165ctimarpur.blogspot.com/ - Bharat - the person

Infact, I am also maintaining the blog of my batch as well. So, as of now there are three blogs that I have to live with. So, all those infrequent readers, I hope this little development will prove to be an inflection point.

Cheers

South Indian bride for US economy

Well, the other day I got a call from my friend in Hyderabad. She mentioned something about meeting her "just-friend-but-still-not- boyfriend"'s parents. Her excitement was clearly visible but there was a clearly a restrain to it. The Madrasi parents want a "Vadagalai-Iyengar" bahu for their son who was doting my friend. My friend listened patiently to their woes on their son's reluctance to get married. She herself being punjoo was wondering what was the fascination with madrasi bahus. I explained to her that it has little to do with caste than with the object of maintaining the conservative approach to life.

Its not too hard imagine how our economy has progressed from being an ultra conservative one to being a semi-market economy. By and large though people still criticise Nehruvian theory of planned approach & Public enterprise. The idea holds true in today's context of failing financial behemoth's being rescued by central government. We (me & my friends in financial markets) were already reeling under the pressure of rising interest rates & crude oil prices, but we were certainly fairly unaware of the mischief's of our American cousins. I remember in 2005, when I was just learning the alphabets of financial markets that I came across an article in bloomberg talking about the possibility of a recession led by housing market.

So, the last few days the pink pages have turned yellow & Udayan Mukherjee has become Dilip Kumar of financial industry. First it was the turn of Bear Stearns. Rescued by JP Morgan Chase bank piggy banking on Fed Reserve's assured financial support. In the last two days, it seems to have developed into a pattern of sorts. Its the turn of two of the biggest investment banks in US - Merill Lynch & Lehmann Bros. Closely followed by them is America's biggest insurance company - AIG. All strapped by over exposure to mortgage securities & associated derivative transactions. Questions are now being asked about the sustainability of the other two investment banks - Goldman Sachs & Morgan Stanley. As of now they seem safe. But that was the scene with the other two as well a few weeks back.

The three parties in question moved swiftly to the Fed seeking their support in rescuing them. While ML still managed to save itself by getting absorbed by BankAm, it was Lehmann which was the more desperate after failing to find a rescuer. Shunned out by the Government, LB now has filed for bankruptcy, leaving numerous shareholders with wet eyes. AIG, today managed to get support of the Government, given the ramifications of AIG's failure could have on the global financial industry. Introspection is now left for financial historians trying to reason out why a proponent of Free economy can resort to government intervention.

America for long has fought war on ensuring democracy across the world. Though most of these have been on a diabolical standard especially in the middle east, where puppet governments have been established to ensure US's oil interest. But by and large, they are the ones who seem to project themselves as upholding the rights of people & advocating freedom of speech & action. An American dream is that of fearlessness & of being a risk taker. The failure never matters but it is the reward of taking unprecedented risks that propels them to where they are today in the world. Driving the world's political & economic scenario. They seem to take decisions with an underlying assumption that they are after all the caretaker of the world. Thats not too far away from truth, but it is certainly not the truth. The double standard of US is not only visible in political scenario, but is also now evident in the manner they are handling the current economic situation in their country.

We cannot deny the fact that financial markets across the world are fairly integrated. No event can be viewed in isolation however small it be. So, the failing of financial behemoths in the US is sure to leave the financial world with a sufficient void. The question to be asked is that in the name of free economy you cannot shy away from the responsibility of being a regulator. That you allowed such entities to punt with minimum or no regulation is blasphemy. Given that it has happened in the past in Enron, the laxity shown in enforcing stricter governance standards is totally unforgiveable. Another point is that whether the US Government bails them out or they get bust, the cost of it has to be shared globally.

When these firms were reaping benefits from the regulatory body's blind eye, nobody bothered. But now that they were burdened by their own misdeeds, they rushed to the government to save them. Either the Federal Reserve should not be bailing them out or it should exercise greater control over the disclosures by the market participants. Financial operations like love is a two way street. But more importantly, these firms should not have crossed the lines given the leeway they were being given by the authorities in the US. Just like a South Indian bride exercising greater discretion in her actions...

So, I told my friend that Madrasis are very lenient people in terms of the norms of life, but its just they expect a great amount of restrain & discipline in return for the freedom of their lives.

Developing Municipal Bond Market & Mummy -3

Being an extremely peaceful organism in the cosmos, my altergo searches for frequent run ins with Aliens, Genetically Modified Beings, Hostile Extraterrestrials, Terrorist attacks and many such senseless action hallucinations which I thoroughly enjoy. I am a big fan of the "Mummy" series as well. Insane as people might want to refer me, But I guess we all have our share of weird choices. But the bottom line was that owing to my ill health I had to miss the premier of the Mummy - 3 as I did not want to take chances with my health.

So, while battling with my never ending fight with the "Jaundice", my boss called me up. He mentions very casually of a meeting being organised by the Ministry of Urban Development and the Ministry of Finance and I jump out of my seat. He asks me if I was fine enough to attend the meeting. I wanted to find out the agenda of the meeting else it would be like any other dead rubber on Urban Development discussions. The topic was on "Development of Municipal Bond market". Hmm, that sounded interesting. I just wished the discussion to be as good as the topic as I was going to risk my health for.

So all dressed up for the occasion, I arrived at the venue. It was quite a crowd. In a small room, we were a gathering of about 50 people. I knew most of them. But I cannot say that the rest of the junta knew me as well. ( What a stupid expectation Deepak) It was also heartening that members from the SEBI, RBI, IRDA, LIC and other participants of the capital market and urban Infrastructure experts were also present. Also present was Mr. K.P. Krishnan, Jt. Secretary (Ministry of Finance). And of course, it was chaired by honorable Secretary of MoUD Mr. Ramachandran. So, when the discussion began it came out with a bang. Initial comparisons were drawn with the US municipal bond market. But I (along with many others) found the whole argument rather ludicrous to begin with. They have a history of nearly 100 years of a Municipal Bond market(Quite interesting given that civilization in that part of the continent started a good thousand and half years later than ours). There are learnings, but drawing an exact analogy could be very impractical. Most wanted an answer to the eternal question of the "Bankruptcy". What if the Local Body fails to honour its annual and final commitment to the investors??? No one had a clear answer to that. It was a constitutional issue and was a separate discussion in itself. But really the one point that set the cats among the pigeons was that of giving "SLR" status to bonds issued by Local Bodies (SLR status to Bonds means that these bonds become eligible under a compulsory investment by Banks directed by RBI). It was not taken well by the RBI officials. According to them in the past they had burnt their fingers with granting "SLR" status to State Finance Entities. These entities with State Government guarantee had defaulted which had led to Banks going in for a one time settlement with them. With Corporate Governance being a gray area with Local Bodies, RBI is not willing to take chances this time. A representative from Life Insurance Corporation, presented this view from a different perspective. He mentioned that because of the aforesaid mentioned reasons, LIC was unlikely to risk insurance money into bonds issued by local bodies.

Nobody discussed the supply side at length, which remains fairly sluggish. Say's law of market will definitely not hold true in this scenario (Say was a classical economist who said,"Supply creates its own demand"). Questions on the supply side were conveniently sidelined on the grounds that the discussion was focussed on those 10%Local Bodies, who not only had the need and capacity to raise funds through the issuance of bonds, but also maintained a fairly satisfactory levels of Governance.

At the end of the intense debate, the august gathering zeroed in on the following issues -

A) Giving "priority sector" status to bonds issued Local bodies (For banks)
B) Inclusion of bonds issued by local bodies under the approved securities for Insurance Companies
C) Encouraging ULBs to issue Taxable Bonds & not be steadfast on Tax Free bonds
D) Shortening the approval time line for Tax Free Bonds
E) Including Bonds issued Local Bodies in the Investment Pattern for Retirement benefit trusts

I am not sure if I can take some credit (due to the lack of evidence), but the majority of facts presented as likely impediments to developing a vibrant municipal bond market were in close similarity to the ones we have been harping in every gathering of local bodies. Or may be they are really so generic that we might not really have unearthed a pot of gold when we first delved deep into the issue. I wanted to stay longer, but I passed out before the luncheon.

But my reward came a week later, when Reserve Bank of India asked a us (my company) to join a "Working Group on Local(Urban) Finance". That was a personal triumph in many ways. My little baby steps were going somewhere after all.

Does rating tantamount to borrowing for Local Bodies?

I have often wondered, how a small microbe can make life extremely difficult for a being much larger in size. I have jaundice and find myself extremely weak to conduct even my basic routine. Thanks to a certain count of "bilurubin", I look straight out of Sanjay Leela Bhansali's new movie called "Basant"(There is no such movie, I am just so yellow these days). But the fact is true for possibly every other thing that we do, I mean the "size and microbe" stuff that I just wrote.

So, JNNURM is going at its own sweet speed. Constant monitoring, mega project submission, Many projects cleared blah blah blah. Big Deal. People constantly ask me, "where are the bloody projects? When will it take me 20 minutes to cover a 20 km distance? When will I have 24 hour clean drinking water?" My replies are pretty banal, "Patience is a virtue that is good to have in a country like India." So coming to point. These days the newspapers are filled with news on the ratings of various cities. An elaborate exercise carried out by all rating agencies (thankfully the agencies werent allowed to tear off each other's clothes & amicably distributed the work amongst the four rating agencies..Pheww..), to rate the cities under JNNURM which will eventually help them to raise money from the market by way of issuance of bonds.

It is hard to understand the rationale behind this exercise (the reason is that the rating would anyways have to be done again for the instrument, in case the Local Body does decide for a bond issue).The exercise was given to the agencies somewhere towards the end of last calender year (I am being too liberal here of the time line), and it has taken them 7 months to come out with the ratings. Initially the thought was to keep them a secret(which was unfathomable to me again), but then eventually they decided to part with the ratings. Normally any rating exercise takes anywhere between 4 to 6 weeks. Imagine the extent of delay. Counterpoint could be that each rating agency had close to 15 ULBs, which could have delayed the process. The truth lies more in the speed of percolation of information than the number of ULBs assigned to rating agencies. By now most officials in the UDD must be patting their back for having carried out this really "PROFESSIONAL" exercise, but the whole point is that how many of them are really going to borrow from the bond market (Since the launch of JNNURM, only two local bodies have issued bonds). More so, how many are adept to keep up with the information requirements for a Bond Issue. Probably a handful. Even the bigger cities are yet unaware of the modalities of carrying out a bond issue. The easier answer is, "they can appoint consultants to do the needful". No consultant will be smiling at this opportunity, given the sham of having to keep up with "transparency" and the marketing of the "municipal bond" issuance together.

The timing of releasing these ratings couldnt have been worse with the interest rates at their peaks & the outlook for them for the coming 6-7 months being fairly negative. Most Local Bodies, which have a decent rating may be tempted to borrow given their project requirements and the grant tap from government soon to run dry. However, it is not going to be an easy path to tread on. We do not have a Municipal Bond market to be excited about. In fact our debt markets is still dominated by Government securities. There is hardly any secondary market to talk about as well. Under the circumstances Bank credit is the ideal option for these Local Bodies, where terms can be negotiated over the table. Having a rating and concluding a bond issue are mutually exclusive exercises and merely rating does not tantamount to bond issue.

My concluding remarks on the subject are negative enough for me to ignore them, however, I will not restraint from exercising my "Right to Speech". We have been very slow off the blocks as regards Urban Financing. There have been far too many case studies, but none have been replicated at a speed that could possibly result in far more vibrancy. This rating exercise is just another one of those meaningless exercises that has consumed important time, energy and possibly a good sum of money as well. But on a positive note, the schemes will not die out post Congress, but are likely to be continued given the gravity of situation in Urban Development. Mere continuance might not be sufficient, unless some positive action is taken in this regard.

Ignore my flat top & the world would be a peaceful place

Following a back pain due to long distance biking, I started to travel by Delhi Metro. Apart from metro, I also have to take an autorickshaw. It is not cost effective by any sense of imagination. But when you compare the long term cost of paying for medication on my back with my current transportation cost, the latter is far cheaper. To strengthen the back, I have started Yoga as well. Apart from relieving the pain, it has suddenly managed to multiply the limited positive energy within me. So, certain people whom I cursed when it was imposed on me have had the last laugh.

Metro Station is not close to my office. So, while commuting from my office to the nearest Metro Staion, I boarded an autorickshaw. I have just had a very short haircut. More suited to the summer. Not to deny, I hate being commented on my receding hairline & the flat top growing my head. I have never been too obsessed with my looks anyways. So, as I de-boarded his rickshaw, He says, "Saahab, ek suggestion hai aapke liye.."..I looked at him & guessed from his tone that he was about to embarass me to the best of his abilities, but still I said, "Bolo.."..."I will tell you what you do. Put some sarson ka tel in a container. Put some Magnet inside it & place the container on a magnet. By god, aapke saare jhadte baal ruk jaayenge. Maan ke dekho, mujhe yaad karoge..." he said. I looked upto him & was speechless. After thanking him, I left fuming. It was for the umpteenth time that I was listening to a suggestion on growing my hair back. My god, it is so irritating...

Is it not possible for a 26 year old to have a receeding hair line? Why are people so obsessed with perfection? I do not seem to fathom that from where do we get these ideas of perfection. Our constant struggle for perfection & comparison with the best. Striving for excellence. My Sister is constantly worried about the performance of my nephew in school. Her concern? My 3 year old nephew is not able to draw properly & hence will lag behind in life. Why cannot we allow people to be themselves? Of course sometimes course correction is imperative, but that does not mean that it becomes an obsession.

It is hard to understand the logic of God to have had so many parameters for making a man. If only the recipe had been simpler, the world would have been a peaceful place.

Randomness

I am not a science student. Been too lazy too understand it, but have always been intrigued by its findings. Sometimes even yearned the dream of being a science student. Anyways, there is this thing about atoms. Particles or whatever they are. They keep bouncing off each other and with other objects around them. If not disturbed, they have nowhere to go and nowhere to settle. Last few days have been like that. Bereft of all thoughts and feelings. Some thoughts kept connecting and disconnecting to each other like waves on a river. Must have been to do with my grandmother's demise. I never quite understood the melancholy surrounding death. Dont we all know that its inevitable? Whatever be the age. Never heard of atoms stuck to each other. May be there are some things science still cannnot explain.....