Monday 14 January 2008

Tata Nano: Why it won’t succeed

        Wow !! A car for just 1 lakh!! The Tatas believe it will be successful, since the potential market numbers in millions. But the, the same is true of a 35k motorbike as well. All those low-end motorcycles have failed miserably. Bajaj CT100 is probably the only exception. It failed to attract consumers after the initial euphoria. So, does the ‘cheap’ car really sell? I don’t think so.

        As Amitabh Bachcan says in the “India Poised” campaign, “there are two Indias”. One India is of the past, which was not only cost-sensitive but was seen as low cost business provider by the world. There’s another India, which is very successful, delivers the best quality of products and expects to consume the same. “The first India is dying, with more and more of its population crossing over to the new India” says Amitabh. It is this India That I expect to reject the new car. This India is keen on ‘Nano’technology, not interested in the old ‘iPod Nano’ or the new ‘Tata Nano’.

        If the economic superbia is not enough reason, consider Tata’s history. The first version of any of its cars – be it Safari, Indica, Indigo etc – have not been successful. When Indica was launched ten years ago, it couldn’t compete with ordinary cars like Santro and Matiz. It later made a resounding comeback – ala Ganguly – so much so, I compelled my father to buy Indica and nothing else!!

        That’s not all that history tells you. It also tells you that Tata Motors do not have any credible petrol engine product. The success of Indica has been driven by its diesel models, a popular choice for taxi operators. Tata Motors claim (on their website) to have 4 million vehicles running on Indian roads, but ask them how many of these are petrol vehicles (around 10%, that’s my estimate) and the answer wouldn’t surprise me.

        Despite such opinions, I have no doubt that the initial craze may create a large short-term demand for the car. Sooner or later, I will also buy the car, irrespective of public perception and quality, for it’s the most stylish car (from the pictures) since Maruti Zen.

        I adore the Tata group for following the fairest business practices. They have been striving hard to build a new India. I would be happy if my prediction goes wrong.

Boosting the Rural Economy. Incomplete, Dump of my thoughts

I happened to read the June 11th issues of the India Today. The cover story Grain Drain provides a gloomy picture of the nation’s food reserves and production capacity. Some of the issues ailing the agro sector are
i. Land holding of a typical farmer has decreased significantly over the years. This means a farmer today has a smaller piece of land, and finds it difficult to produce enough quantity (of crop) to get back his costs.
ii. In the past 6-7 years, all the regions of the country have witnessed atleast two droughts/floods, if not more. This means that for those two years, the farmer has not been able to repay his loans, and hence has a bleak possibility of getting further loan. This is the driving factor for farmer suicides.
iii. A critical problem is that around 70% of the population is dependant on agriculture. It is very difficult to deliver any benefits on such a large scale.
Given these problems, a primary school student will provide a solution like – increase land holdings of farmer, help him get enough money and reduce the size of farming community. What we need is a solution as simple as that!!
The government should allow, and mandate, large private companies to invest in agriculture. Obscure! Is it? Let me tell you the benefits for the parties involved.

It’s not a new idea for private companies to invest in agriculture. Tata has been doing it for its tea business, much like other tea companies.
The telecom revolution started initially in the metros and soon spread over to the large cities. Even as the telcos started growing in the cities, they had spread to the towns. Now that the telephone connections have stagnated in the urban areas, the growth is being driven by the demand in the small towns and large villages. You will surely witness the same pattern in retail. Now, have a look at the companies operating in the telecom sector – Reliance, Bharti (Airtel), Tatas, Birlas (Idea). You will see that these business houses are going to drive retail sector also. They need to build efficient procurement and delivery systems. Still not clear?
One of the biggest problems today’s farmers have is the scale of operation. The farmers more or less continue to operate on the same land for attractive salaries (yes, you read it right!) by Reliance (Reliance, as a synonym for innovative business practices). The Reliance, in turn, gets the right to dictate the farmer what crop to grow, collaborate with neighbouring ‘salaried’ farmer, share resources like well, bore-well, motors, tractors etc.
Long ago, my father was working for a nationalised bank and pursuing his law course as well. My grandfather, a businessman, took a promise from my father that he will not practice law, only because a bank job would guarantee a ‘known’ monthly income, irrespective of competence and other factors such as luck, business environment etc. Similarly, the farmer would be happy to take a salary, and get insured against drought, flood or any other natural calamity and be absolved of loan, buying seeds and fertilisers and so on.

Friday 4 January 2008

Happy New Year to all fans of reservation politics

Even as people were busy exchanging greetings for the new year, I was engrossed thinking about the some of the issues that will for sure make headlines in the year.
The year-end (of course, he may continue as a ‘dummy’ till mid-Jan 2009), will see the end of George Bush, atleast as President of USA. That could mean that the Indo-US nuke deal should be sealed by October or it would be lost forever. The Manmohan government will be under pressure to finalise the deal. That is enough reason for the Left to call for early elections( yes, they call the shots..not the centre or PM)!!
Whether or not this happens, reservation is going to be a sure-shot tamasha. No party got much mileage from the 27% reservation for OBCs in premier educational institutions. Much noise has been made about reservation in private sector, with more to come in 2008. But then, calm down, it wont be implemented, thanks to an ‘hyperactive’ judiciary, industry and the UPA , which ‘wishes’ to come back to go on with its unfinished job. Vote for UPA!! Vote for hunger!!
I truly believe that reservation can be an effective tool for uplifting the less developed sections of the country. But, I do not subscribe to the UPA school of thought. Such a system, over the last five decades, has not financially helped the underprivileged much. What it has achieved is to instil leniency in the so-called ‘backward’ classes and frustration in the so-called ‘forward’ classes. Let me share my experiences.
I was preparing for GATE 2005 with my friend, my namesake. A ‘backward’ classmate of mine told me he “pitied” us,” for you have to work hard to get decent scores like 95. If I get 80, I will be happy”. Knowing well that had irritated us a lot, he repeated that frequently, and laughed to get sadistic pleasure.
More than a year later, I had applied for MSc at 3 departments of IISc. I met him again, when I had been there for an interview. He came in atleast half an hour late and the first candidate had already come out to tell us the horror of 15-20 professors pouncing on the poor fellow with near-simultaneous questions. As soon as he came in, he saw me and walked towards me. I expected him to ask me about the procedures, the venue or just talk pleasantries, for we had met after a long time. Instead, he asked me who was in-charge of the interview, and I pointed to the person, sitting close to me. I was expecting him to ask the in-charge a similar set of questions. Instead, he asked about the travelling allowance that he was entitled to, only to get a rude reply!!
As he came back to the seat next to me, he asked “How many calls have you got?”, quite politely, I must add. “One, only this” I replied. “That fellow, the other Srivatsa?” he asked, rather audaciously. “Two, EEE and CEDT” and I had to stop when he started a long “Hhhheeeeeeeehhh”. “I got three” he said, with contempt clearly visible. This after the fellow was just happy, err got 80 percentile, while I managed around 96 and my friend around 98. Even a year after graduation, despite numerous attempts, he had not managed to get a job in Bangalore’s IT industry, where we jokingly say “trespassers will be recruited”.
Those were not the only time I was agitated about reservations. Immediately after PUC(12th), we had to take up an entrance test for getting admission into any of the engineering colleges in Karnataka. Any 3-digit rank was definitely considered good and I was happy to have ‘achieved’ it.
A good friend of mine, who attended tuitions with me and had a ranking of around 2400, could have utilised reservation to get into good engineering colleges. His father pestered him into getting a caste-certificate done. He was against it, saying he would get into a college ‘he deserved’. He said this to his father even after he got his results. Less than a month later, two days before my turn for selecting seat (on basis of our ranking, we were called to select the course and college),I called him, only to know that he had already finished his under the 2A quota. The same day evening, when I went to play cricket with neighbourhood friends, another person with a rank of 8500, told me that he had secured a seat in a top Mysore college. There were three main categories of seats, subsidised, general merit and payment (some kind of cross-subsidisation). Just to put things in perspective, while those two got seats with subsidised fees, I could not opt for the same courses even by paying a much higher fee, almost 5-7 times the fee they paid.
I have nothing personally against the two. I only envy them. They were born lucky (You will agree that it’s not my mistake that I was born in a particular sub-caste!!!). But then, I do complain about the system, for which I have my remedies.
As already illustrated, individual progress, and hence the progress of the society he/she lives in, is not determined by caste. Nor can economics be the sole determining criterion. If reservation has to be implemented, it should be based on socio-economic and regional factors. Just because some society is ‘backward’ in a particular geographical region, it doesn’t imply that the same community is ‘backward’ in some other region as well. Politicians have successfully marketed this fact as a majority-minority distribution issue, going on to suggest that minorities are ‘backward’.
We need to balance the adverse impact of reservation with merit, so as to ensure inclusive and sustainable social growth. To put it simply, reservation should not hamper the growth of any part of the society. For this, quantum of reservation (for a particular section) should be determined by the performance of that particular section in the recent past.
In Karnataka, during my years as a student, there was a common entrance test(CET), for admission into engineering and medicinal courses. That was hailed as a fair and transparent system. Based on performance in the CET and other academic, ranks were allotted to students. Of the tens of thousands of people who took the exams, consider only the top 5%-10% performing students. The social distribution in this set of students should determine the quantum of reservation of the community. So, no community can afford to be complacent, since if the students from that community do not much representation amongst the top performers, they do not stand to gain much. This will ensure that one group will not eat into another, more meritorious, group.
The drawback here is that if some section of the society has very small representation in the first (present) sample, they will take a long time to improve their position, or may even lose the battle completely. To ensure a fair chance for everyone, we should gradually move from the fixed reservation system (the Arjun Singh school of thought: 27% reservation for OBCs in IITs, IIMs and AIIMS, irrespective of whether or not they are inclined towards the kind of education) to the merit-based floating reservation system proposed above.
Having proposed the floating reservation system, I do not believe that any form of reservation is an effective means of achieving inclusive social growth. Though this can be a short-term solution, affirmative action remains the only long term solution. India, not only needs affirmative action, but can also afford to take the route. Over here, I am only seconding the views of the Constituent Assembly. Since India of 1950s couldn’t afford affirmative action as a means to provide good quality education, jobs and standard of life to all sections of the society, reservation was expected to be a low-cost alternative for a period of ten years. As a matter of fact, the concept of reservation has to be approved by the central cabinet for a maximum of ten years, with the last extension of ten years approved by the NDA government in 2001.
Wait for more suggestions on affirmative action….