Why we are obsessed with money

What a way to exist!

For most of us, practically the whole day all we are thinking is about money and more specifically how to have more money!

As if money was the only thing in life. Unfortunately for most of us, circumstances just do not permit any other thought!

We are running behind money most of the time which is almost akin to have become obsessed with money. Everything that we are doing in life is centred around money.

Unfortunately, this is because we need money for anything and everything that we do. There’s nothing wrong and what are you doing, however the problem is that over time, it becomes a compulsive habit to keep earning more.

That’s where the danger is. The problem is that there is a point where from we chase money as an addiction, we chase money because we like to do so. If we did not chase money we would not know what to chase now because we get out identity from money and the amount of money we have.

Another thing is that right from childhood we are always taught and our minds are conditioned that everything that we are doing is going to be for the sake of earning money.

There is no one who told you that money is just a means, and then there is something greater in life to achieve. Some examples are legacy; building something, charity; to giving something / helping someone, passion; pursuing something and living; simply to enjoy life and your money

We have got addicted to this and how!

There are three reasons for this:

First, we are what we do. It is the human behaviour. I know I should exercise and I don’t. I know I should eat healthy and I don’t. I know I should spend time with my kids and I don’t. I know that, yes, money isn’t going to make me happy and I still keep trying to make money.

We live by the laws of inertia, in a pattern which is hard to break. But we have to break it. For ourselves and for the sake of people and reasons for which we are chasing money.

Secondly, we need signals of progress. Money is a measure of how far you have progressed in life. The more the money you have the more you can make sure your progress. It’s simply the logic of evolution. People need validation of their success. Bigger house, bigger car, branded goods and list goes on.

Thirdly, it’s the easy way out. It’s only human to avoid difficult things. Important things are very difficult to measure.  Have I been a good father or husband? Have I groomed my child well?  Such things take years to measure and we still don’t have answers.

So, should we not be focused on creating money for ourselves?

I’m not saying that. Definitely create. Take care of yourself for sure!! Use it to the maximum to make yourself happy!!! You need a certain amount and beyond that is extra.

The definition of their certain amount is naturally different from one person to another. If that extra is going to happen easily, without stress and without your involvement, then its fine. Basically don’t kill yourself for that extra. Be Smart.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a certified financial planner, wealth manager and financial freedom coach.

How the RBI actually helps you


Most of us in Mumbai, see this huge structure called the Reserve Bank of India and wonder what it really does. It’s also a tourist attraction!! It has so many other offices and again one wonders why they need to have so many offices. I’m going to try and highlight a very interesting part of RBI’s work and how it helps us directly on a day-to-day basis.

The RBI does a review of the monetary policy of the country at frequent intervals during the year. So how does the monetary policy help us investors to take smart decisions?

Monetary policy is a tool by which the RBI decides to raise interest rates or reduce interest rates or keep them steady.

In our country, as we’re an oil importing nation, this decision is very closely linked to Oil. Oil to a large extent contributes to inflation. We all know what happens when inflation keeps rising. We in India unfortunately do not see too much of inflation falling and things becoming cheaper.

Oil is Not Well

So when oil prices rise i.e. we see a rise in crude oil prices almost instantly we can expect rising food prices. This is because there is going to be a rising cost pressure for manufacturing & services. This rise obviously gets passed onto the retail consumers.

When this happens RBI adopts a hawkish stance, tries to pull money out of the system by raising interest rates. Now when interest rates rise no one seems to be interested in borrowing. This immediately puts a brakes on money circulation.  Less money chasing goods decreases the demand for money. This way it controls inflation.

There is yet another tool that the RBI has and that is known as the CRR or the cash reserve ratio.  This ratio in simple words means the amount of cash that the bank must maintain with the RBI as the percentage of the total assets. So when this increases banks are forced to park more with the RBI and this is also a way to control inflation.

On the other hand when things look dull, when there is a recession of sorts, the RBI comes to the rescue and gets into action to kickstart growth in the country. It does this by lowering the interest rates. This we all will understand quite easily because we see a direct benefit of this happening. We see a fall of interest outgo in our EMI’s for the home loan that we are carrying. New loans become cheaper.

Individuals are motivated to go out and make purchases, whether it is for a washing machine or a piece of real estate. Businesses are motivated to go out and borrow to buy more machinery, to expand capacity, to hire more staff and manpower and basically do everything that will add to the growth of business.

Economic growth results as a result of all this. It is also during this time that stock market rises, we see a rally in stock prices and mutual fund NAV’s jumping higher and higher each day. There is prosperity all around.

Critical Role

As you can see that the central bank of the country has a very very important role to play.  If it makes a mistake, things can go really wrong.  Imagine like the USA or Japan if our interest rates were very low; everyone would run to borrow, they would borrow more than they require because it would be cheap and easy to borrow. And that is very individuals would run into what is known as the debt trap, because someday you’ll have to pay back.

Each day the central bank attempts to make sure that everything in our country remains stable and financially there’s nothing that goes wrong dramatically.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

The year of the bond, once again!

We are not talking of James Bond, we are talking of investment bonds.

We are in a situation where the fixed deposit rates are at a general low and there is a lot of discontent among depositors of fixed deposits.

Whenever we see a situation like this, one way or the other, the bond markets come to the rescue. It comes to the rescue of smart depositors, who are agile to move their money from fixed deposits to bond funds.

Let’s understand what is happening and why.

What Exactly is Happening in the Bond Markets?

It is likely that in this year, investors of bond funds will make handsome gains. Bond prices may rise and there may be capital gains. Investors of bond funds not only earn the rate of interest, but also earn capital gains. So that way, they make more than the return they would make on fixed deposits. The returns could be a high single digit or sometimes as high as double digits.

Over three years, this will become practically tax free or the tax would be a very small amount. So, basically, I am thinking that a rally will happen in the bond market. There are three main reasons for this — reduction in government borrowing (which is favourable), recovery of trading losses (which is favourable) and no change in monetary policy (which is neutral).

A word of caution, however, that such bond market investments are also subject to bond-market volatility and should be considered ideally with the help of a financial expert.

Before proceeding further, let us, therefore, quickly explain a bond, bond fund and bond market. We need to do this because few people understand the bond markets and even fewer invest in the bond markets.

Bond is nothing, but a commercial transaction where the borrower is issuing a bond to the lender and the lender will earn a certain rate of interest. When interest rates fall, everyone becomes interested in owning that bond.

As a result, the demand for the bond increases, the price of the bond increases and the bondholder makes capital gains.

A bond fund is a fund where ordinary investors pool in their money and a fund manager buys them a portfolio of bonds.

Moving onto the Reasons For a Rally in Bond Funds…

Now, the fundamental reason for a rally is reduction in interest rates as it stimulates economy and growth.

Firstly, the government is a massive borrower of funds. So a reduction in government borrowing reduces the demand for money in the economy. As a result, prices of bonds rise and this contributes to capital gains for bond holders.

Secondly, the Reserve Bank of India (RBI) recently announced that the commercial banks and RBI, which are the largest lenders to the government, will have another year to offset losses they have incurred on account of buying government bonds in the past. This action will lead to a rise in the price of bonds and this contributes to capital gains for bond holders.

Lastly, on one side due to the rise in oil prices, there is more inflation and thus more money is needed for circulation in the economy. On the other side, many government bonds are maturing, which will provide money supply. So, it is likely that we see a neutralising effect and thus RBI will take no action. This inaction here will support capital gains as explained above. Hence, this year might be a year of good gains for the bond investors.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

Five new financial goals for you this summer

I am going to try and explain to you why the summer holidays of April and May are great months to get a lot of things started, financially speaking.

This time period in a way resets the financial clock. You also have the option to hit the reset button on everything you have done so far; financially speaking of course and hope to do better things better than you did last year.

Let’s look at some of the new and unusual things to do in April.

  • Make a learning budget

Learn something about money or anything you like. The best way to make money is to learn something about money. Just like if you wanted to learn cooking you will get into the cooking class. If you wanted to learn swimming you would enrol in the swimming class. If you find learning about money is too daunting task than learn something which is close at to your heart or related to your work. If you learn something new, there’s a possibility that you will use your new ideas to generate new income and in turn that will generate new wealth for you.  So make a budget, enrol somewhere and spend that budget. How about a % of your annual income? Spend it for sure!

  • Plan a unique holiday 

When you’re by yourself and without your mobile phone you will have the opportunity to think! When you have time to think, suddenly good ideas will come to your mind.  You may think this is silly but you can be sure that you will be amazed if your drivers experiment just once. So it might be a good idea to go for a holiday just by yourself. If you find that too intimidating, join a group of strangers. You can combine that with the adventures experience if you like.  Be extra careful if you’re going with your special buddies. Do this only if they are going to be in a position to help you discuss your idea and make it bigger. They must play the role of complimenting your thoughts. So make a schedule to do this holiday and obviously make a budget to make it happen. Think & create new ways of making wealth.

  • Make a prediction and make it happen

Be brave. Let’s aim to grow and multiply net worth by 50% by the time you come to the end of this financial year. This is not a joke and it is easier than you can imagine.  I’m speaking about NETWORTH and I’m not talking about return on investment. If your networth is Rs. 100 today, all I’m saying is that let’s aim to make this a 150 by the end of this year. This networth comprises of all your savings till date. This can be achieved by simply saving aggressively every month for the next twelve months. Just put this into a recurring deposit or liquid fund so you don’t spend it.  We just have to prove to ourselves that this is possible. Where and how we will invest this money will think about that later.

  • Eliminate a negative belief 

I want to give you an exercise here. Write down all your negative beliefs you have about money and wealth. Most people are not able to achieve the desired level of wealth because they think about wealth negatively. So even if you are earning a good amount of income you will never see yourself becoming wealthy. Examples are money causes problems, money causes a fight, managing money is complicated etc. Then for each negative thought, you have written down the positives i.e. the opposite for a few months. Soon negatively biased feelings will evaporate.

  • Make a new investment; something you have not done before

Again here you do not have to be a financial expert. The idea is to learn something new. There are hundreds of investment options. Our objective here is to learn something new. Talk to your advisor and seek his or her guidance. Just a word of caution here; don’t do anything which is speculative or is something that you just can’t understand. Do what do find easy you understand and do that then.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

Seeking financial freedom? The time is NOW!

John Lewis famously remarked, “If not now, then when? If not us, then who?” This is so appropriate in the current financial world that we live in.

That statement will leave to rest every other argument that is conservative and against the idea of wealth creation. We are often faced with the situation where there is no option but to create wealth. Read on to know why!

Interest rates are painfully low. For all those diehard fans of guaranteed investment returns, there’s hardly any place to go to. Thinking of fixed deposits? Feeling happy with 7%? And fully taxable? That period is over. Period.

That doctrine of investing into pure fixed deposits and similar instruments is unfortunately standing challenged. There is no option but to sprinkle it with a combination of a little something that will add to the returns earned from fixed income type of securities. In fact this category of investors are in a way, best placed in terms of the current tax laws.

They can earn about 9-10% with minimal or near zero tax over about five years and more. Starting to generate rate of return above the inflation level of 7% is starting to create wealth. So there it is; there is no option but to move in the direction of creating wealth.

For more evolved investors, who invest in equities and who and still sitting on the sidelines tend to run out of patience every now and then. They are sometimes waiting for the right time, sometimes waiting for correction, sometimes waiting for valuation and sometimes waiting for just nothing. Sometimes, just too busy to take action!

I totally understand not wanting to lose hard-earned money. But if the money does not move it will stagnate. That’s the problem with money.

Hit the Ground Running

Inaction and inactivity kills it. Makes it costly to hold. Makes us lose opportunities, sometimes small and sometimes significant. I know of many people including my dad, who just kept investing into equities and holding forever. No doubt they were hugely (big HUGELY) better off then the people in the same time zone. I think they could have done far better with some smart lessons on asset allocation. This is because if they compare the growth rate of their holding over a period of 20 or maybe 30 years the compounded rate of return earned is often not impressive.

It is just marginally better or a few percentage points above the fixed deposit rate. Hence the need for asset allocation, which simply put is not to have all eggs in one basket at any given point in time. These sections of investors anyways create wealth, and, asset allocation is the tool that ensures that the process of wealth creation continues uninterrupted. So again there it is; even for this section there is not option but to start enhancing their wealth creation activities, else returns will continue to remain forever mediocre.

Then there are skeptics and there is nothing much for skeptics of everything, except that they need a serious dose of financial education. Perhaps what if needed is a proof of concept and for that, which better country to live in other than India where financial transparency in investments is so high that I sometimes feel, it comes from another planet.

 Your Money Needs Action

Today, there is a whole lot of variety to choose from and we have never been more spoilt for choice. But the most important thing in all this is to understand that your money needs action. It needs activity and for that the time is now!

And furthermore, if you asked me this question 10 years ago; I would have said that, the Time is NOW. If you ask this question 10 years hence, I will still say the Time is NOW. Any time is the right time to start the process of creating wealth. All that is important is that you take your first step; then continue it all the way with zeal and determination… till you have the level of wealth that you desire. And if you accumulate more than you need, still do it and share it with the world.

If you want your financial freedom; then the Time is NOW!

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager and Financial Freedom Coach.

Young Turks: Here’s the success story of venture fund Aspada

Venture fund Aspada was co-founded by Kartik Srivatsa and Thomas Hyland in 2012 and has made 17 investments so far across Fin-tech, agriculture, health and edu-tech startups.

Young Turks takes a look at their investment thesis, their differentiated VC model and meet three of their portfolio companies – Capital Float that underwrites unsecured loans to startups and SMEs; Dunzo, a hyper local concierge and delivery player that is also Google’s first direct startup investment in India; WayCool, a Chennai-based agriculture-tech startup.

ICC Cricket World Cup Highlights: Bangladesh beat Afghanistan by 62 runs

Bangladesh’s Shakib Al Hasan, right, celebrates taking the wicket of Afghanistan’s Mohammad Nabi during the Cricket World Cup match between Bangladesh and Afghanistan at the Hampshire Bowl in Southampton, England, Monday, June 24, 2019. (AP Photo/Matt Dunham)
Afghanistan’s Najibullah Zadran bats against Bangladesh during the Cricket World Cup group stage match at The Hampshire Bowl, Southampton, England, Monday June 24, 2019. (Adam Davy/PA via AP)
Bangladesh’s Tamim Iqbal catches out Afghanistan’s Rahmat Shah during the Cricket World Cup match between Bangladesh and Afghanistan at the Hampshire Bowl in Southampton, England, Monday, June 24, 2019. (AP Photo/Matt Dunham)
Afghanistan’s Samiullah Shinwari hits a shot during the Cricket World Cup match between Bangladesh and Afghanistan at the Hampshire Bowl in Southampton, England, Monday, June 24, 2019. (AP Photo/Matt Dunham)
Bangladesh’s Shakib Al Hasan, left, and Bangladesh’s Mushfiqur Rahim celebrate after the wicket of Afghanistan’s Rashid Khan fell during the Cricket World Cup match between Bangladesh and Afghanistan at the Hampshire Bowl in Southampton, England, Monday, June 24, 2019. (AP Photo/Matt Dunham)
Man-of-the-match Bangladesh’s Shakib Al Hasan, centre, walks off the field of play after they defeated Afghanistan by 62 runs in the Cricket World Cup match between Bangladesh and Afghanistan at the Hampshire Bowl in Southampton, England, Monday, June 24, 2019. (AP Photo/Matt Dunham)
Man-of-the-match Bangladesh’s Shakib Al Hasan, 75, shakes hands with Afghanistan’s Samiullah Shinwari, second left, after they defeated Afghanistan by 62 runs in the Cricket World Cup match between Bangladesh and Afghanistan at the Hampshire Bowl in Southampton, England, Monday, June 24, 2019. (AP Photo/Matt Dunham)
Afghanistan’s Mujeeb Ur Rahman is bowled out by Bangladesh’s Mohammad Saifuddin during the Cricket World Cup match between Bangladesh and Afghanistan at the Hampshire Bowl in Southampton, England, Monday, June 24, 2019. (AP Photo/Matt Dunham)
Afghanistan’s Mujeeb Ur Rahman, second left, successfully appeals for the wicket of Bangladesh’s Soumya Sarkar, centre, during the Cricket World Cup match between Bangladesh and Afghanistan at the Hampshire Bowl in Southampton, England, Monday, June 24, 2019. (AP Photo/Matt Dunham)
Afghanistan’s Mohammad Nabi catches out Bangladesh’s Mushfiqur Rahim during the Cricket World Cup match between Bangladesh and Afghanistan at the Hampshire Bowl in Southampton, England, Monday, June 24, 2019. (AP Photo/Matt Dunham)
Afghanistan’s Rahmat Shah hits a shot during the Cricket World Cup match between Bangladesh and Afghanistan at the Hampshire Bowl in Southampton, England, Monday, June 24, 2019. (AP Photo/Matt Dunham)
Bangladesh’s Tamim Iqbal catches out Afghanistan’s Rahmat Shah during the Cricket World Cup match between Bangladesh and Afghanistan at the Hampshire Bowl in Southampton, England, Monday, June 24, 2019. (AP Photo/Matt Dunham)

Oil prices steady, US-Iran tensions remain in focus

Oil prices were steady on Tuesday, supported by worries over conflict between Iran and the United States but pressured by concerns about a potential decline in demand for crude.

Benchmark Brent crude futures were up 3 cents at $64.89 a barrel by 0034 GMT. They rose 0.5 percent on Monday.

US crude futures were down 3 cents at $57.87 a barrel. The US benchmark declined 0.8 percent in the previous session.

Brent rose 5 percent last week and US crude surged 10 percent after Iran shot down a US drone on Thursday in the Gulf, adding to tensions stoked by attacks on oil tankers in the area in May and June. Washington has blamed the tanker attacks on Iran, which denies having any role.

US President Donald Trump targeted Iranian Supreme Leader Ayatollah Ali Khamenei and other top Iranian officials with sanctions on Monday, taking an unprecedented step to increase pressure on Iran after Tehran’s downing of the drone.

Trump also said on Twitter that other countries should protect their own oil shipping in the Middle East rather than have the United States protect them.

But some said the threat of immediate military conflict had eased slightly.

“Traders have lessened their odds for an immediate US-Iran escalation in this forever smouldering hot spot,” said Stephen Innes, managing partner at Vanguard Markets in Bangkok. Meanwhile, hopes are waning for progress in Sino-U.S. trade talks at this week’s G20 meeting as investors await a meeting between Presidents Donald Trump and Xi Jinping.

Weak manufacturing data released on Monday by the Federal Reserve Bank of Dallas added to worries about slipping demand for crude oil.

Supply is expected to remain relatively tight, as the Organization of the Petroleum Exporting Countries and its allies including Russia, an alliance known as OPEC+, appear likely to extend a deal on curbing output when they meet on July 1-2 in Vienna, analysts said.

Russian Energy Minister Alexander Novak said on Monday that international cooperation on crude production had helped stabilise oil markets and was more important than ever. He also voiced concerns about demand.

Asian Market: Dollar falls with yields as more Fed talk awaited

Asian stocks were left adrift on Tuesday as expectations of more dovish talk from the Federal Reserve pushed down Treasury yields and the dollar while lifting gold to six-year peaks.

Equity investors are waiting to see if anything will come of Sino-US trade talks later this week.

US President Donald Trump is slated to meet one-on-one with at least eight world leaders at the G20 summit in Osaka, including China’s President Xi Jinping and Russian President Vladimir Putin.

Early trade was very light with MSCI’s broadest index of Asia-Pacific shares outside Japan up a minor 0.09 percent. Japan’s Nikkei was all but flat, as was the South Korean market.

E-Mini futures for the S&P 500 edged up 0.08 percent after a lacklustre session on Wall Street. The Dow ended Monday up 0.03 percent, while the S&P 500 lost 0.17 percent and the Nasdaq 0.32 percent.

There are no less than five Fed policy makers speaking on Tuesday, including Chair Jerome Powell, and markets assume they will stick with the recent dovish message.

“It’s always possible the chair could walk back some of the market’s dovish interpretation of last week’s FOMC meeting…but we suspect he will reinforce the message laid out last week,” said Kevin Cummins, a senior US economist at NatWest Markets.

“By the end of July, we believe the Fed will have seen enough to decide that action to counter downside economic risks and low inflation/inflation expectations is warranted, and so we look for a 25 basis point rate cut at the next FOMC meeting.”

Markets are running well ahead of that. Futures are fully priced for a quarter-point easing and imply a real chance of a half-point move.

A total 100 basis points of cuts are implied by mid-2020, a major reason two-year yields are well under cash at 1.745 percent.

Gold Soars

Yields on 10-year Treasuries have dived 120 basis points since November and, at 2.01 percent, are almost back to where they were before Trump was elected in late 2016.

The speed and scale of the latest decline has seen the dollar fall for four sessions on a row against a basket of other currencies to stand at a three-month low of 95.980.

“USD DXY is now looking it likely will break through the March low of 95.76 and below there 95.0,” said Tapas Strickland, a markets strategist at NAB.

“The drivers here continue to be heightened expectations of the Fed cutting rates – now 3.1 cuts priced by years’ end – while data surprise indexes show the US data flow is now disappointing more than for Europe.”

The euro has climbed to its highest in three months and was last holding firm at $1.1403, within striking distance of the March top of $1.1448.

Against the safe-haven yen, the dollar has hit its lowest since the January flash crash and was last at 107.33 yen.

The pullback in the dollar combined with lower yields globally has put a fire under gold, which touched a six-year top overnight. The metal is up 12 percent since early May at $1,1426.39 an ounce, with the next target the 2013 top of $1,433.

Oil prices consolidated after rising sharply last week in reaction to tensions between the United States and Iran.

S&P 500 slips as healthcare drags, investors eye G20 summit

The S&P 500 edged lower on Monday as losses by healthcare companies overshadowed gains in the technology sector, while investors awaited US President Donald Trump’s meeting with Chinese President Xi Jinping at the G20 summit this week.

The Nasdaq slipped but tariff-sensitive industrials, headed up by Boeing Co, led the blue-chip Dow Jones Industrial Average to a nominal advance.

While the bellwether S&P 500 ended the session in the red, it remained within a hair’s breadth of its all-time closing high reached last Thursday as markets reacted to a dovish statement from the US Federal Reserve.

Market players hope Trump and Xi will de-escalate the trade war that has been blamed for a global economic slowdown.

“Today’s very quiet,” said Bruce Monrad, chairman and trustee at Northeast Investors Trust in Boston. “People are digesting the Fed and looking forward to possible outcomes of the G20 and how that could in turn affect the Fed going forward.”

A Fed rate cut in July “may be locked and loaded but could be somewhat contingent on what happens at the G20,” Monrad added.

The Dow Jones Industrial Average rose 8.41 points, or 0.03 percent, to 26,727.54, the S&P 500 lost 5.11 points, or 0.17 percent, to 2,945.35 and the Nasdaq Composite dropped 26.01 points, or 0.32 percent, to 8,005.70.

Six of the 11 major sectors in the S&P 500 lost ground, with the biggest percentage drop for energy stocks as crude prices fell.

In the latest trade-related squabble, FedEx Corp apologised for mistakenly returning a Huawei phone to its sender, after misrouting packages from the Chinese tech firm last month. The move provoked the ire of Chinese authorities and raised the prospect of FedEx being added to China’s “unreliable entities” list. The package delivery firm’s shares slid by 2.7 percent.

Caesars Entertainment Corp jumped 14.5 percent on news that rival Eldorado Resorts Inc had agreed to buy the casino operator for $8.5 billion. Eldorado dropped 10.6 percent.

United Technologies Corp advanced 1.1 percent after Cowen & Co upgraded it to “outperform” from “market perform.”

Celgene Corp slipped 5.5 percent after Bristol-Myers Squibb Co announced that its planned $74 billion deal to buy the drugmaker was expected to close at the end of 2019 or beginning 2020, later than expected. Bristol-Myers fell 7.4 percent.

Declining issues outnumbered advancing ones on the NYSE by a 1.44-to-1 ratio; on Nasdaq, a 2.27-to-1 ratio favoured decliners.

The S&P 500 posted 35 new 52-week highs and 5 new lows; the Nasdaq Composite recorded 42 new highs and 82 new lows.

Volume on US exchanges was 6.31 billion shares, compared to the 7.05 billion average over the last 20 trading days.

On this day 44 years ago, Emergency happened; and it can happen again  

The intervening night of June 25 and 26, 1975 had woken up a generation of our people to whatever could be done to our Constitution and the rights it guaranteed. Morarji Desai, along with leaders of various opposition parties, had retired to bed after addressing a couple of lakhs people that gathered on the Ramlila Maidan that evening, served an ultimatum to the then Prime Minister Indira Gandhi to quit or be confined to her official residence.

A journalist had asked Desai what if Indira Gandhi sent all those who opposed her to jail; Desai replied that she will rather kill herself than that. A couple of hours passed since Desai saw off the Italian journalist from his Dupleix Road bungalow before policemen picked him up, put him in a car and drove him to a guest house in neighbouring Haryana. Desai remained detained there, all alone, for 19 months since then.

Indira Gandhi waited until early morning the day after to inform her cabinet colleagues that the Emergency was proclaimed and that a whole lot of leaders who opposed her were now in jail. Many more were picked up in the few days since then and the number of arrested was estimated by Amnesty International at over ten lakhs across the country. The newspapers were told not to publish anything that those in government did not want published.

To recall the Emergency, proclaimed 44 years ago to this day, is important as much as it is to remember that men, women and children, just because they were Jews were put to death by a government in Germany, headed by Adolf Hitler, in gas chambers. After all the gory deaths and a war that killed many more and destroyed nations across Europe, those Germans who survived went about setting up museums that reminded all that was bad.

The Auschwitz exhibition, important among those, welcomes visitors with this note:  It happened, therefore it can happen again: This is the core of what we have to say. It can happen, and it can happen everywhere. This statement by Auschwitz survivor Prima Levi perhaps will help us give a purpose behind remembering the Emergency too.

More than four decades after the proclamation means many things. Among them is that the generation that came of age in 1975-77 are now past their prime. A large number of those who resisted the Emergency were in the colleges and universities then; and they are touching seventy years of age or even more now. Those in colleges and universities now were not even thought of in 1975-77.

I did ask those in a class of mine, whom I happened to teach politics in India after independence as to what do they make of the word ‘Emergency’ and the refrain was something they were taught as part of the course in their Masters Programme. Otherwise, one said, they think of the Emergency ward in the hospital! It does not come to them that the Emergency meant annulment of the Constitution for a generation and a lesson that all the guarantees in terms of rights are so fragile that a regime could simply deny them to the people by a mere proclamation.

It is true that lessons were learnt by those who suffered the Emergency. The people, most of whom hardly went to school and learnt about the Constitution and the rights it guaranteed, learnt the lesson and defeated Indira Gandhi and her party in the elections in March 1977. Those who wrested power, being those who spent months in jail and including one, George Fernandes, who was charged with criminal conspiracy and would have been sent to the gallows if the charges were proved, went on to amend the Constitution and render invoking Article 352 a bit more difficult than it was for Indira Gandhi and also laid down an armed rebellion as condition precedent for declaring an Emergency.

They also changed the statute so that the right to life and legal remedy shall not be suspended, as it was until 1977, even during an Emergency. The Constitution (Forty Fourth) Amendment Act, 1978 ensured these. But then, Article 352 remains in the Constitution and thus it is possible that people can be jailed and free speech restricted as much as there can be Hitlers who emerge and lead the world into disasters that met with ours between 1939 and 1945.

The Emergency, as we opt to remember today, 44 years to this day in 1975, ought to be recalled as the culmination of acts by a regime desperate to stay on in power without responding to the demands of the people. It is to be stressed here that the early stirrings of protest against the Indira Gandhi regime were in Gujarat when students protested against steep hikes in the mess charges in an engineering college in Ahmedabad.

This, they perceived, was due to the rise in prices of commodities and the crisis compounded by a regime in Gujarat, headed by Chimanbhai Patel, that was also seen as corrupt. The Nav Nirman Andolan left the regime illegitimate. And soon came the Railway general strike of May 4, 1974; the brutal repression it was met with caused historians hold that the regime conducted a dress rehearsal for the Emergency to come. JP’s call for a Total Revolution, gathering forces in Bihar and Uttar Pradesh added to the challenge that Indira Gandhi was faced with and then came the Allahabad High Court verdict on June 12, 1975, that rendered her disqualified as MP.

We may not be witnessing such organised protests of the scale that was witnessed in the couple of years before June 25, 1975. But then, it is necessary to recall that Indira Gandhi too did not foresee things going the way it did when the first of the processions began from the KE Engineering College in 1973. India is certainly not on a combustible condition now; though it is sad that more than 100 children died due to a syndrome caused by malnutrition in Muzafarpur. Incidentally, it was from Muzafarpur that George Fernandes, who symbolised the resistance to the Emergency, won elections with the largest margin in March 1977.

But then, it is important to keep telling ourselves that the Emergency happened and it can happen again. The point is to ensure that it does not happen again and hence important to tell another generation that it happened and it can happen again; lest we forget.

V Krishna Ananth teaches History at Sikkim University, Gangtok.

Read Krishna Ananth’s columns here.

India’s infrastructure development: Here are some tips for the new govt to overcome hurdles

The importance of modern, efficient and sustainable infrastructure has been well recognised across the political spectrum in India. Successive governments, especially since the early 1990s, have placed strong emphasis on fostering infrastructure development. We can always debate how much progress we have made and how and why we could have done better. However, as the new government settles in for its term of office, it is clearly more productive to focus on the path forward as there are still vast, unmet needs for additional infrastructure.  And the urgency of this task is widely shared.

Infrastructure development is however a complex and challenging exercise for various well-known reasons. Fostering the rapid development of sustainable, efficient and competitive infrastructure in India requires a renewed focus on policy and executive actions on the part of the new government, which by far the most important stakeholder in this domain.

Given India’s vast needs for infrastructure, it is important for the new government to review and articulate its strategic priorities for infrastructure projects and sub sectors. This process needs to include a renewed commitment on already announced priorities and projects where substantial investment has already been made such as the Delhi Mumbai Freight Corridor, the Namami Gangey Project and so on. It is critical that these priorities are discussed and shared in a broad consensus by all stakeholders including state and local governments. Every effort should be made to build an ‘operating consensus’ to achieve project execution in the most efficient manner possible.

The government has announced and implemented many special programmes and initiatives over the years to support infrastructure development with special budgetary allocations for various forms of financial support. Such initiatives must be complemented by support at the relevant operational levels for project conceptualisation and design, development of contractual and regulatory framework, processes and capacity for evaluation and award of bids, improving capacity for regulatory oversight and contract management, as well as facilitation for various project-related permissions and approvals.

As India’s infrastructure needs grow and domestic execution capacity is stretched due to financial and operational constraints, policies relating to foreign sponsor participation in infrastructure projects need to be reviewed to explore ways to enhance international participation in domestic infrastructure projects. India faces considerable competition in this regard from other emerging markets keen to attract international developers with the best technologies and deep experience of specialised infrastructure sectors. Given the success India has had in recent years in attracting FDI in various sectors, it should be able to do the same for the infrastructure sector as well.

As both the government and private sector resources are constrained for new investments, a strong emphasis needs to be placed on monetising existing government assets through various programmes such as asset recycling and yield cos to free up resources for new investments in a non-inflationary manner. Steps need to be taken to encourage greater use of the INVITs programme which has seen some initial success but has yet to deliver on its full potential.

The new government will have the challenge of addressing the issue of handling many non-performing infrastructure projects both from a sectoral and service delivery perspective but also from the impact of such projects on the health of the Indian financial sector as the contagion effect of major project defaults spread across the entire financial sector. Addressing the issues created by the situation of IL&FS has become a particularly important priority in this context. Efficient implementation and further improvement of the bad debt resolution and insolvency frameworks will be critical in this regard.

Given the long duration and complexity of infrastructure projects it is quite common for disputes among various contractual counterparties to arise during the project life cycle. An efficient dispute resolution mechanism is critical to ensure that such disputes are resolved quickly, conclusively and transparently to give confidence to all counterparties and avoid operational and financial losses that occur when projects are locked in disputes over extended periods.

Renewing the confidence among debt investors in infrastructure projects should be high on the agenda of the new government as it seeks to revive the flow of long-term capital to the sector. This has become particularly important in the context of deteriorating sectoral risk perceptions among senior debt investors. This is a serious issue which needs to be addressed actively by effective measures including credit risk mitigation programmes if necessary, to bring such investors back into the long-term infrastructure financing space.

There are many estimates of the billions and trillions of dollars looking for
long-term infrastructure assets, but the reality is that such investments will not flow into the sector unless investors are assured of an acceptable risk/return profile for their investments. Several specific steps can be taken in this direction including:

1. Preserving the sanctity of existing infrastructure SPVs in the context of sponsor bankruptcy

2. Fast-tracking the development of a financial guarantee programme or institution to support strategic projects achieve high ratings to attract large volumes of debt investments

3. Development of credit enhancement programmes that enable efficient solutions for capital market investors such as construction risk guarantees, contract repudiation insurance and partial guarantees for long-term currency risk exposures

4. A renewed look at financial incentives for lending to the infrastructure sector including favourable tax treatment and a more flexible refinancing programme for banks against infrastructure exposures.

By pursuing such a path, the new Indian government can create the much-needed progress on infrastructure development in India.

Arun Sharma is a non-resident senior associate with the Wadhwani Chair in US-India Policy Studies at the Center for Strategic and International Studies.

I believe in empowering my employees — Yashish Dahiya of Policybazaar shares his management style

How do corporate leaders manage? Where do they draw inspiration from? CNBCTV18.com is publishing a series of interviews titled ‘My Management Mantra’ with experienced leaders who run major companies and oversee a large workforce. This one features Yashish Dahiya, CEO and Co-founder, Policybazaar Group of Companies.

What time do you like to be at your desk?

My day typically starts at 3.30 am with my daily workout regime. As a consequence, I am able to reach the office before most people punch in.

Where is the best place to prepare for leadership: at business school or on the job?

Leadership is not a trait one can learn at a business school. I feel that some people are born with excellent leadership skills and most acquire it on the job learning through their experiences and mistakes made in the past.

Describe your management style.

I believe in empowering my employees and giving them a freehand in accomplishing the task they have been entrusted with. I do not like to micromanage and believe in the ownership of work. I would also back my employee who has made an honest mistake because as long as work is happening mistakes will be made and it’s not fair to penalise them for those. Besides this, I like to lead by example and walk the talk because only then will I be able to inspire confidence among my employees.

In nutshell, my management style revolves around ‘walking the talk’ and ‘taking ownership of work’.

Are tough decisions best taken by one person or collectively?

It depends on the nature of the decision. When the decision affects you solely as an individual, its best to take a unilateral decision but when they have the potential to impact more people, collectivism is the best path to follow.

Do you want to be liked, feared or respected?

Honestly, I don’t want either of the three.

All I want to be remembered for is being someone who played a small role in weaving a safety net for each household in the country by ensuring protection against 3Ds – death, disease and disability.

What does your support team look like?

The success of Policybazaar.com can be solely credited to the support team I have.

In fact, out of the original group of 18 people who embarked on this wonderful journey 11 years ago, 14 continue to be with us today. We have a bond like none other and they are family to me.

Do you socialise with your team outside of work?

All work and no play make Jack a dull boy. So yes, I do socialise with my team outside work and it’s a lot of fun. As I said we go back a long way and are family.

What would your key management advice be?

For building a successful business I would advise the entrepreneurs to remember the following:

  • Don’t be in the rush to scale up operations by burning cash because investors are not doing charity. If they have invested in your business they are bound to expect returns. Remember that Rome was not built in a day. In fact, our own success can be attributed to the fact that we managed to earn back (on a daily basis) what we spent.
  • Place your consumer’s interest above all, always!
  • Don’t be afraid of failure: Trust your instincts and back them to the hilt.

Cabinet approves Airports Economic Regulatory Authority (Amendment) Bill

The Cabinet on Monday approved the Airports Economic Regulatory Authority(Amendment) Bill, sources said.

The Airports Economic Regulatory Authority (AERA) is a regulator that has the powers to set the tariffs charged at airports.

The amendment is likely to allow the AERA to bid out any new airport at a pre-determined tariff structure, sources said.

Currently, major airports with an annual capacity to handle one-and-a-half million passengers come under the purview of AERA.

If the amendment is passed by the Parliament, the definition of major airports would be changed to any aerodrome which has or is designated to have annual passenger capacity of three-and-a-half million.

The AERA (Amendment) Bill was last approved by the Cabinet during the Modi government’s first tenure in December 2017. However, it could not be passed in last year’s monsoon session.

As new Lok Sabha has come in place now, the older bill has lapsed. Therefore, the Cabinet approved the bill again on Monday so that it can be re-introduced in Parliament for passage.