Envisioning the future of Tamil Nadu…

Tamil Nadu is clearly at a crossroads. 50 years of DMK/ADMK rule is coming to an end and there is a political vacuum. The political vacuum for over a year is taking its toll on the economy (http://www.theweek.in/news/biz-tech/amid-political-uncertainty-tamil-nadu-records-lowest-growth-rate.html),  jobs (https://timesofindia.indiatimes.com/city/chennai/political-instability-in-tn-takes-a-toll-on-jobs/articleshow/61971698.cms), finances (http://www.thehindubusinessline.com/news/national/tamil-nadu-revenue-receipt-growth-registered-five-year-low-cag-report/article9779019.ece), investment (http://www.thehindu.com/news/national/tamil-nadu/tamil-nadus-share-of-fdi-dwindles-to-29/article19290794.ece) and is beginning to cause unrest amongst the youth as evidenced during the Jallikattu protests, NEET protests, etc.

Most of the conversations around this topic are focused on the current spineless ADMK govt, the evil alternative of Sasikala/Dhinakaran, weakness of the DMK and the jokes that the remaining political options (BJP in TN, DMDK/Vijayakanth, NTK/Seeman, MDMK/Vaiko, Rajini/Kamal/Vishal, etc) have become.

I believe the main question should not be “Who leads the state?”. The more important  question should be “What do the people want?”. What direction should the state head in? What kind of Tamil Nadu do the burgeoning youth envision – 10, 20 and 50 years from now?

Before looking at the future, it makes sense to step back to a quick review of the past 70 years in Tamil Nadu.

After Independence, Tamil Nadu (Madras state) was a relatively backward state with many challenges left behind by over two centuries of exploitative British rule based in Fort St. George. The momentum of the freedom struggle kept the Congress in power with relatively clean leadership (Rajaji, Kamaraj, etc). But two decades of slow development and discrimination borne out of the deeply entrenched caste system meant that most people did not see significant improvement in quality of life and the promise of Independence seemed hollow.

Simmering discontent gave strength to the youthful Dravidian movement  and lead to the DMK capturing power in 1967. The DK/DMK was able to channel the aspirations and dreams of the people for an egalitarian society that provides that basics of food, clothing and shelter (which could not be taken for granted in those days). What followed was five decades of strong leadership of the DMK/ADMK parties who had a stranglehold on power using a combination of corruption and affirmative action on an unprecedented scale focused on the poor & lower castes. Though corruption has been rampant, the state’s socialistic policies focused on the poor and strong industrial development has led to significant improvement in the quality of life metrics compared to many other states of India that had started out with stronger economies after independence.

When the DMK came to power, literacy was less than 30% and the mostly uneducated masses looked up to their 3 main leaders – K. Karunanidhi,  MG Ramachandran and J. Jayalalitha – almost as Gods who knew the right direction for the state. But thanks to rapid growth in the state and improved education, today’s electorate is vastly different with over 90% literacy and almost 50% of the youth going to higher education. With the opening of the economy in the 1990’s , entry of large multinationals in Tamil Nadu and rapid global outlook brought about by IT boom, the younger generation has had much more exposure to the rest of the world and their aspirations are a lot higher.

Free TVs, mixers, grinders will not satisfy the younger generation any longer. There is no longer a myth that one “super star” leader will come and solve all problems. Anyone who tries to play that role gets trolled on the very active social media. What TN really needs is 1000s of strong leaders at all levels to achieve progress to meet the new aspirations.

The question remains – what does TN want to achieve/strive for? What are the people’s goals/aspirations for the state? How do the people want TN to be known in the world stage?

  • State with the highest GSDP, tallest towers in the world, 2 cars for each citizen (like the USA), fastest trains (like Japan, China)?
    • That is old fashioned thinking and it is not clear that is how TN people measure progress.
  • Place with Highest Happiness Index (like Bhutan)?
    • Given the number of temples, ashrams and philosophers, this is not unreasonable but the younger generation also likes basic materialism.
  • Focus on 100% employment, 100% equality?
    • While Tamil Nadu strongly leads to Socialism, this goal would make it a communist state and TN likes its capitalism as well.
  • High-tech hub like Silicon Valley?
    • TN (Chennai, Coimbatore) has already ceded the tech leadership to Bangalore & Hyderabad.
  • Healthcare hub of the world?
    • This could be a possibility given the well established hospitals, warm weather (or cooler hill stations), etc. But attempts in this area have not borne fruit yet.
  • Religious hub of India?
    • Though there is amazing history and incredible temples, not sure if we want to be seen as religious hub.
  • Just a simple place where basic facilities are available, people have food to eat, place to sleep and some work to do?
    • Given TN’s incredible achievements of the past like Chola conquests across south and south-east asia, Cultural & scientific contributions, this would be too depressing a dream to aspire to. But this is where things are headed at present.

Of course some of these are mainly random ideas to spur discussion. But unless there is an aspiration, dream of the future, the vacuum and uncertainty will continue.

 

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On 68th Independence Day – more ways to serve India…

68th Independence Day – there’s never been more opportunities for educated people to serve India. With the liberalization in the 90’s and rapid growth in the 2000’s, millions of people are driving India’s Economy forward leading to phenomenal progress in Communication, Transport, Healthcare, Industry, etc. Philanthropy, Job Creation, Education are of course common ways for educated successful people to serve the country as well. But for a long time from the 70’s until now, Politics and Government have been untouchable areas too dirty for decent, educated people to consider.

Lately, there is a renewed interest from young educated people in directly participating in the Political process. In the last year, I have travelled more than 30,000 Kms in India, met a few thousand young people and I see a dramatic difference in their view about Politics compared to even a decade back. A Delhi Arts College student that I met wants to be Education Minister one day, a Mumbai MBA student wants to be RBI Governor, a Coimbatore Engineering student wants to be a Municipal Councillor, a Bangalore Engineer wants to be a Public Policy Analyst.

The Aam Aadmi Party and Narendra Modi in their own ways have made Politics exciting again. People like Nandan Nilekani have shown honest, successful businessmen can enter politics and make a difference. Slowdown in IT growth, abundance of Engineering graduates and questions about RoI of MBA education has lead to more interest in Civil Services again. College students and IT engineers suddenly have aspirations to decide the future course of the country.

Following are some interesting new opportunities for people to get involved in serving India:

The future does look bright…

Rupee crash of 2013 – India’s downfall or a Global shift? Do we have a Solution?

India Economic Doom??While there is panic over the fall in Rupee value against the US Dollar, it is important to see the events in a global context.

With the Sensex crashing, politicians pointing fingers, some in the media calling it the end of the India growth story and discussion about recession in India, it is easy to miss the real details. Following is my assessment of what is going on and what we should do about it. I’m not an economist and would be glad to be corrected.

Three key observations:

1) Sudden Fall in Rupee is not just about India but part of a global phenomenon, caused by speculation about US Fed actions and its potential impacts.

2) India does have serious challenges to be solved and there will likely be short term decline. But the fundamental long-term potential for growth & poverty alleviation remains true and the next 6-12 months might be the best time to invest in India.

3) One solution to India’s present problem is deep in Indian psyche – Faith.

4) Don’t trust everything shared on Facebook or “popular” news websites.

More details:

1. Fall in Rupee vs USD – Global Phenomenon

As the chart below shows, currencies of most major emerging economies have fallen against the USD in the last year – Brazilian Real, South African Rand, Australian Dollar, Russian Ruble and Indian Rupee. Indonesian Rupaiya has also fallen sharply. For different reasons, Japanese Yen has fallen sharply against the dollar as well. Chinese Yuan cannot be compared as it is tied to the US dollar at a fixed exchange rate (that their Govt decides). You can look closely at this chart on Yahoo Finance here.

Image

There are lots of explanations & debates around why this is happening. We have to understand what happened since 2008 to understand the current events:

USA

When the 2008 Global Recession triggered by US Financial/Real-Estate crash started, US Federal Reserve Bank started “printing” massive amount of Dollars (a few Trillion) to pump money into US banks, automotive companies, etc to avoid large scale unemployment and economic meltdown. This was based on economic principles of John Maynard Keynes from his study of the devastating Great Depression of 1930’s. Note: Recession is broadly defined as 3 consequent quarters (3 month terms) of negative GDP growth. This easy-money policies have actually worked well for the US and starting from 2011 unemployment has started decreasing, companies are starting to make historic profits and stock markets are reaching their historic peaks.

Europe

As the 2008 recession spread worldwide, many European countries ran into severe recession with concerns about bankruptcy – including Greece, Spain, Ireland. European Union came together and pumped more money (less than US) into these countries to keep these economies from crashing. At the same time, EU countries & UK have been careful about Govt expenses and have kept money supply under control. One result being the Euro economies haven’t come back as strong as US economy.

Developing Countries

Meanwhile, most developing countries including China, India, Brazil, South Africa, Russia and also Australia continued growing (at a slower pace) and did not slip into a recession like the US or Europe. India’s GDP even grew 10% in 2010. Since the US interest rates were extremely low, US/Developed economies were growing at very low rates (1-2%) and there was massive extra cash (“printed” by US Fed as well as profits generated by companies), some of that money was diverted into these growing economies in search of higher return on investment. Even small countries like Colombia, Chile became hot investment destinations as the return on capital (capital created in US) was higher. Stock markets in India, Brazil & South Africa have all benefitted from this money.

The Present:

US economy and in general the global economy is doing fine after 5 years of easy money pumped at the rate of $80 billion per month by the US Federal Reserve Bank. Now, they have indicated they will slow down in “bond buying” – one of the methods of pumping money, global stock markets are suddenly panicking that there won’t be anymore easy money.

Hence speculator feel that money will be taken out of emerging markets and taken back to US for better returns. This is the fundamental reason the Rupee, Rupiah, Real, Rand and the Ruble are all crashing.

What will happen

Reality is – no one knows. But one thing is clear – the sudden devaluation of emerging market currencies (including the Rupee) is a knee jerk reaction. These countries and the billions of citizens are not wholly dependent on US Fed money. They are on a fundamental growth trajectory that will continue for many years.

India

India has very real challenges – energy, infrastructure, education & employment of large youth population, divisive politics. In fact, India’s fundamental dependence on crucial foreign energy sources (oil, gas) is a primary reason for the large import bill and large current account deficit (CAD). This large import vs export deficit is the immediate reason why Rupee is being devalued. The concern is that once US Fed money supply reduces, less money will be invested into India and it will not be able to pay for the large amount of oil-related imports. The deeper worry of investors is that this problem might cause India to borrow more money at higher interest rates using lower valued Rupees, causing a downward spiral and lead to recession/depression in India. Given the uncertainties, Indian economy might indeed see a sharp decline until the early 2014 elections.

The answer for India is to build confidence and rapidly control current account deficit (which is easier said than done) by doing all of the following:

– Increase exports to get more foreign exchange. Encourage Technology, Agricultural & other industrial exports. India needs to produce more products and deliver more services that are in high demand in the global market. We may even want to explore “exporting” entertainment by making truly global movies/music/art and taking on Hollywood. This can also be a good way of generating good-will with other growing nations.

– Decrease import bill. One way could be by directly paying in Rupees and not in Dollars. Now all oil is paid for in US dollars which means India cannot “print” them as needed. Presently only Iran accepts Rupees for Oil. Alternatively, India could use more indigenous energy sources (clean coal, natural gas), nuclear energy or renewable energy (Solar, Wind & others). Another way is also to reduce or stop gold imports by encouraging sales/exchange of the massive amount of Gold within India.

– Build confidence about India amongst rest of the world that India is a growing country and that they should invest in India. With elections around the corner, there is uncertainty – India needs to give a clear mandate & the leaders need to step up to the challenge.

There has never been a better time to invest in India:

– Rupee is at its cheapest today.  With a young country with the most working age population, rupee will certainly increase in value in a longer 5-10 year horizon.

– Interest Rates in India are extremely high (8-9%) compared to global standards.

– Indian Govt, Corporate Bonds provide massive returns 10-15%. Indian stocks have very attractive P/E ratios.

First, Indians have to firmly believe that they can build a stronger India and start investing in the country – not in unproductive things like Gold & Land but in productive Assets & Companies. Interestingly, it all comes to faith & belief.

The World Economy runs more on Emotions than on Dollars!!

Envisioning the post-iPad world of personal computers…

First, let me start by saying that I’m a big fan of my iPhone & iPad… Is it perfect? No! Not by far!

  • iPad is cumbersome. Holding it in one hand & reading is guaranteed to cause pain. Typing on the iPad for any length of time is sure to aggravate your carpal-tunnel syndrome
  • Viewing movies on iPad is far from satisfying.
  • But it is good enough for consuming small amounts of data regularly. And the iPad is a very capable computing device powerful enough to do most common personal computing tasks – browsing, emails, videos, docs.
So, what will the future post-iPad computers look like?
  • Display & the actual computer will be decoupled.
  • The computer will be the one that accompanies you all the time – your future superphone.
  • The display as well as the keyboard/mouse will be a separate device that is appropriate to the task at hand – either a TV or a projector or a tablet or a laptop or just a small phone display.
  • Your computer will always be connected – Wifi or 4G.
  • But the data on your computer will all come from the cloud –  or atleast be backed up there. So losing your computer wont be as traumatic.
To some extent, the Atrix 4G is a sign of what’s to come in the post-iPad world.

The Smartphone of 2011 – Can it be your Netbook, eBook reader, digital media receiver (Apple TV, Roku), Digicam as well?

The leading smartphones of 2011 are going to have the following hardware features:
      – Dual Cortex-A9 processors running at 800Mhz to 1Ghz.
      – 32 to 64GBytes of Flash storage and copious amount of RAM memory
      – WVGA (800×480) or larger touchscreen
      – Second Display at 1080p (1920×1080) resolution via HDMI
      – Dual camera support with HD Video recording
      – GSM or CDMA, WiFi, GPS, Bluetooth, USB, FM, mic/speaker/headphone features

The software features will include:
      – Touchscreen capable OS like Android, iPhone, Symbian or Windows Mobile 7
      – Key features: Phone, Internet (HTML5 with Flash), Email, Media player, Camera
      – Support for 3rd party apps via app stores

Chips and development platforms with these features have already been available to OEMs from TI (Blaze MDP), ST-Ericsson (U8500) and others as of late 2009. Early products with these features will likely hit the market for 2010 Christmas sale or many products will be readily available in 2011.

Given these features, can these devices not serve as your Netbook or eBook reader if you had an external display & keyboard like this accessory?
When placed in a dock with a HDMI cable (and perhaps a USB HDD), can these devices not serve as your AppleTV, Roku Netflix streaming player or Boxee Box?

Wouldn’t this “smartphone” become your real “Personal Computer”? Why do you still need a Netbook or basic digital camera or digital media receiver?

Of course, you might still need a Mac and iTunes player to “sync” these devices to your PC. 🙂

Schizophrenia of Wall Street

If you think about it, a good diagnosis for Wall Street’s “disease” might be Schizophrenia.

Think about the Stock Market and see if the following Wikipedia description is a good match:

“Schizophrenia
from the Greek roots skhizein (σχίζειν, “to split”) and phrēn, phren- (φρήν, φρεν-; “mind”) is a psychiatric diagnosis that describes a neuropsychiatric and mental disorder characterized by abnormalities in the perception or expression of reality. It most commonly manifests as auditory hallucinations, paranoid or bizarre delusions, or disorganized speech and thinking with significant social or occupational dysfunction.”

Here is one good example of a “split mind”:
        – Wall Street loves layoffs done by most well-run companies. Ex: “Microsoft layoffs would be good for stock
        – But, Wall Street wants to see unemployment rate decrease. Ex: “Job creation is fundamentally important

How do you (“Wall Street”) expect the economy to improve and stocks to go up, if you want companies to layoff employees to increase profits?

As soon as the current recession started, lots of companies immediately started huge layoffs to make the stock market happy. And now the stock market wants Jobs to be created magically so that stocks will increase !

On a related note, I was impressed when the Indian Govt (then-FM Chidambaram and PM Manmohan Singh) requested the large companies to “keep your market share, keep your loyal workers with you and take a price cut” and to a large extent major Indian companies did their best. I was surprised Obama never made such an appeal to the US companies to avoid layoffs and is only fighting in the Congress/Senate on a Jobs bill.

iPad as a Thin Client PC for personal or corporate use (via VNC or Citrix GoToMyPC)

I have my own gripes about the iPad launched today – lack of multitasking, front-facing camera, HD video, open APIs for USB/Bluetooth, etc – that would prevent it from being used as an alternate light-weight PC replacement. But I do think in typical Apple style, they would roll out some of these features in future revisions in the coming years.

But in a corporate environment (or personal use for techies), iPad could turn out to be a flexible Thin Client PC if there are good apps for the use case. There are already many VNC clients for iPhone which would probably get updated to iPad promptly. But an app that targets the corporate user with a virtualized desktop & storage on the server – intranet or public cloud – would make the iPad a really useful tool. It already has email, calendar, word, excel, powerpoint and can even support connection to projectors (with the awkward VGA connector). A well-integrated VNC or Citrix GoToMyPC app for the few custom corporate applications could nicely serve the corporate user. Webex already works for the iPhone and if the full features are supported for the iPad it could take care of meetings.

Now if only Apple could give me a nice iChat on iPad with front-camera – Jan 2011??

Update Feb 3, 2010:  Citrix and others are coming out with announcements related to this usemodel for iPhone and potentially for iPad. See this LinuxDevices.com article.