Monday, October 28, 2013


Had a chance to visit three cities in Texas in eight days, so my observations in all probability be superficial but nevertheless it's useful to highlight some of the things I observed. 

Design of cities - in all the three cities - Austin, Houston and Dallas - the broad design of city is a concentrated downtown where all official and commercial establishment are located and residential places are spread out miles apart. The suburbs are connected via wide road networks that transport people mainly via car, usually just one occupant. Austin is trying to develop residential accommodation in downtown though. This is accompanied by near complete lack of public transport. 

For example I was staying at my friend's place in a Houston suburb, and I had to travel 5.9 miles to catch the only available bus from that place to downtown. Though people talked about traffic jam but I generally found that travel time is less than a minute a mile. My friend in Dallas picked me from Dallas downtown to his house in 35 minutes and the distance travelled was 29 miles if I am not wrong. 

In contrast it takes not less than 45 minutes to travel 24 kilometers from my flat in Delhi to Gurgaon. Often it takes more than an hour. A huge productivity loss. Imagine developing an efficient public transport system (end-to-end) so that people could travel a kilometer in less than a minute. I could save at least 60 minutes if i am commuting from Delhi and Gurgaon on a daily basis. And if million trips are made in the National capital region (NCR) then it's half million hours of time saved each day or increase in productivity. This would result in higher output, and more importantly make transport more accessible to all people. 

Only by making investments in developing infrastructure that will increase productivity of people, a long lasting impact on growth of the economy can be achieved. Of course, the best option is to have houses right next to commercial establishment. 

Wednesday, August 07, 2013

News in numbers - August 6

Forward Markets Commission (FMC), India's commodities regulator, asked the National Spot Exchange Ltd (NSEL) to settle first the dues of 7,000 small investors who have outstanding of less than Rs 10 lakh each. NSEL was engulfed in a payment crisis last week as government asked the exchange not to offer forward contracts for which it did not have permission. This article raises important questions: the settlement guarantee fund (SGF) shrunk from Rs 839 crore on last Friday to Rs 60 crore on Monday. NSEL showed margin money from brokers as SGF, when it should be "should be carved out of brokers' initial deposit, profit, fines and initial capital." Another key question is whether there is enough underlying commodities to meet Rs 5,500 crore outstanding payment. 

51 months
Incoming work for India's services sector, which account for more than half of India's GDP, contracted for the first time in 51 months even as the overall Purchasing Manager's Index (PMI)- which measures services sector output- fell below 50 in July this year. A measure below means contraction. Despite this, managers have expressed optimism for growth prospects over the next 12 months

8 daysToyota has decided to stop production for eight days in a month since last quarter to match its output with slowing sales. The company joins a long list of other manufacturers who too are facing low demand as customers are postponing purchase because of high finance cost or are preferring to buy few new models launched this year. As compared to capacity of 310,000 units, Toyota sold 190,000 units in April- March 2013 and this financial year's sales will be even lower than this. 

Rs 50 per kilo
A kilo of onion is now retailing at Rs 50 per kilogram in Delhi, just few months before state elections. Many reasons are being cited: higher exports to Pakistan, heavy rains in neighbouring states destroying the crop, and farmers taking up other crops this year. Fresh stocks are expected to arrive later this month and it might help bring down the prices. High onion prices is cited as one of the reasons why BJP lost the Delhi elections in 1998, since then the Congress party has won successive elections. 

That's the number of people who avail free medicines and basic diagnostics provided by the Rajasthan Medical Services Corporation (RMSC) each day. The implementation of this scheme has helped Rajasthan reduce poverty level by 10 percentage points between 2009-10 and 2011-12. 2.1 million people used to be pushed into poverty each year because of higher medical cost before this scheme was announced. 

Saturday, August 03, 2013

News in numbers - August 2

Rs5,500 crore
That's the amount of outstanding contracts which are not fulfilled in the National Spot Exchange (NSEL)- which suspended trading in many commodity contracts disapproved by the government. The payment crisis brought back memories of similar event at Calcutta Stock Exchange in 2001. The core of the problem is that a spot exchange was not supposed to sell forward contracts, but NSEL was selling 21-day contracts, which were not approved by the government. The fear now is there are no underlying commodities to support the forward contracts. The shares of Financial Technologies Ltd and MCX Ltd- the two promoter group entities- fell more than 20% on Friday. On Thursday, the shares of FTIL fell by 64%. 

Rs72,000 croreCentral government along with four northern states (Haryana, Rajasthan, Delhi, Uttar Pradesh) have formed a National Capital Region Transport Corporation (NCRTC) which will built 381 kilometer long high-speed transport corridor that will connect three satellite towns- Alwar, Merrut and Panipat- with Delhi at an estimated cost of Rs 72,000 crore. The four states and centre have agreed to finish the project in five years time once the land is acquired. 

15 million homes
A survey has estimated demand of 15 million homes at a price range of Rs 4 lakh to Rs 10 lakh for people earning Rs 10,000 to Rs 25,000 per month. This works to Rs 9 lakh crore opportunity for real estate developers and Rs 7 lakh crore worth of business for home finance firms. 

Indian government has made only one removal request with Twitter in the six months ended June 2013. Twitter received a total of 60 requests, with Russia leading the race with 17 requests. India also requested less than 10 user information requests in the first half out of 1,157 request from all over the world. 

Rs 4That's the price at which M & B Switchgears Ltd is selling solar power per unit to bulk customers directly, breaking the conventional wisdom that solar power is costly than power sourced from thermal or gas powered power plants. At this rate, it is 20% cheaper that what the local power utility charges customers. A tax provision of accelerated depreciation benefit is making investment of Rs 7.5 crore per MW attractive for entrepreneurs. 

Monday, July 29, 2013

News in numbers - July 29

Two fast moving consumer goods companies- ITC and Hindustan Lever- accounted for nearly a third of the 18% increase in Bombay Stock Exchange's Sensex in the last one-year. Measured in terms of index points, the two FMCG firms contributed 970 points to the total increase of around 3000 points. FMCG stocks are traditionally considered as counter-cyclical stocks- that is they perform relatively better even when overall economy is not doing well. Foreign institutional investors (FIIs) have increased their shareholding in these two stocks. 

14 million
That's the number of alcohol dependent drinkers who need 'help'. Though alcohol consuming group in India is lowest among- 21% of adult man and 2% of woman- but a fifth among them are alcohol dependent. This paper says that nearly 2% of all deaths are due to alcohol use, and more than 90% of such deaths are less than 60 years of age. 

19.6 million
Number of active credit cards increased by 2.6 million in the last one year to 19.6 million by May 2013. The average spend per card too increased from Rs 5,262 in 2012 to Rs 6,424 in 2013. HDFC Bank leads the race with 6.5 million active credit cards and accounting for Rs 3,727 crore worth of transactions. The penetration rate is 1.63%. But if one considers per household (assuming a family size of 5), the penetration rate is 8.16%. 

24,000 MW
Due to lack of promised supply of gas from domestic fields, gas-powered power plants with 24,000 MW of capacity is idle. This comes at a time when India experienced 4.1% (3,378 million units) power deficit in June 2013. 

Despite a government order prohibiting ministers employing an official as personal staff for more than 10 years, 87 officials continued to serve for more than a decade. Six officials are officers on special duty, three private secretaries, 29 additional private secretaries and 24 assistant private secretaries. 


Friday, July 26, 2013

Buying gold - inefficient use of money?

Today, the family had an evening outing, accompanying a friend to buy gold. The friend bought around 11 grams of gold at Rs 2,700 per gram. On top of that, making charges were 13% and tax of 1%.
Buying jewllery as an investment is clearly a waste of money. First, the price charged was Rs 150 higher than market price. And on top of that, 14% went off as making charges. A total of Rs 5,808 was wasted on a total spending of Rs 33,858. See the calculation below

weightPrice per gramTotal price 
Gold11 gramsRs 2,70029700 
Making charges (13% of gold price)  3861 
Tax at 1%  297 
Market price of gold Rs 2,550 per gram   
Excess amount1650(Rs 150 * 11 grams)  
Making charges3861   

News in numbers - July 26

Rs 62
Government is planning to declare anyone spending less than Rs 62 a day in urban areas as poor and will be eligible to get subsidised food as part of the proposed Food Bill. In rural areas, the line would be Rs 50 per day. It was only yesterday, the planning commission declared the poverty level came down to 22% of population assuming poverty line of Rs 32 in urban areas and Rs 27 in rural areas. At the proposed level, 65% (or 795 million) of Indians will be labeled as poor. 

Swedish cement major, Holcim will scoop out 92% of Gujarat Ambuja's Rs 3,700 crore cash after the proposed reorganization. In a two-stage deal, Gujarat Ambuja- which has 22 million tonnes of cement capacity - will pay Rs 3,500 crore to acquire 24% stake in Holcim's financial arm in India. Then, Holcim will merge itself with Gujarat Ambuja Cement. Market reacted negatively to the news with shares of Gujarat Ambuja fell by 10.6%- the sharpest drop in five years. 

For the first time, Apple CEO Tim Cook mentioned about sales of iPhone in the Indian market, saying it showed 400% growth in just ended April - June quarter. Though he did not divulge exact numbers, CyberMedia Research says iPhone shipments were 205,000 units in three months ended June 2013, as compared to 72,000 units in year-ago period. If Apple manages to sell 200,000 units every quarter, its smartphone market share in India would be still less than 10%.

That's the amount of interest the central government is paying while borrowing through the 91-day treasury bill (T-bill). This is the highest since 1996. For Rs 16,000 crore worth of T-bills, government would pay extra interest of Rs 140 crore as compared to last auction rate of 7.48%. India's central bank has taken steps to control liquidity in the market to arrest the fall of Indian rupee, but it has impacted the bond market. 

150,000The top 10 software firms will hire 150,000 engineers this year as compared to 200,000 hired in 2012. But only 40% of them will hired in-campus as compared to previous norm of 60-70% of total hiring. As software firms face uncertain demand from their primary markets- US and Europe - they are staggering the offer letter from once a year to twice a year to fresh graduates. 

Tuesday, July 23, 2013

News in numbers - July 22

109 million
That's the number of people who had come out of poverty in rural India between 2004-05 and 2011-12. As per latest estimate, 217 million in rural India live in poverty as compared to 326 million. And 52 million urban Indians live under poverty compared to 81 million in 2004-05. This means rural poverty fell by 17 percentage points to 25.8%. Together, there are 269 million (or 22%) people live in poverty. But its significantly lower than Planning Commission's earlier estimate of 407.4 million, which was submitted to India's apex court. 

Three-fifths of people living in rural areas have to travel beyond 5 kilometers to reach healthcare facility. And only 34% of hospital beds are in rural areas while 68.8% of India's population live there, highlighting the concentration of medical facilities in urban areas. Out-of-pocket expenses for medical treatment can be reduced by 40-45% if healthcare facilities is made accessible. 

Rs 1,300 crore
India Post, which recently applied for a bank licence, will get Rs 1,300 crore to meet capital requirement if granted license to run a commercial bank. State Bank of India- which is India's largest bank- is no match when it comes to branch network. India Post has nearly 150,000 branches as compared to 14,816 branches run State Bank of India. Only 58.7% of households avail banking services as per latest Census data, and India Post can be effectively used to expand banking services in hitherto unreached areas. 

Getting admission into Masters in Computer Applications (MCA) in Jawaharlal Nehru University (JNU) might be even tougher than clearing the Indian Institute of Technology's (IIT) entrance exam. Only 48 (0.61%) out of 7,800 applicants were admitted into MCA program this year as compared to success rate of 1.97% in IIT's entrance exam. Overall 62,000 applications were received for 1,750 seats in various post-graduate programs. 

Hourly wage of men who speak fluent English is 34% higher and 13% higher for men who speak little English as compared to men who do not speak English. This is after controlling for factors like "age, social group, schooling, geography and proxies for abilities", says this report. Recently, the leader of India's largest opposition party was reported saying rise of English resulted in loss of local language and culture. But he later clarified he was misquoted.