This article was originally published in Postnoon on July 6th, 2012

http://postnoon.com/2012/07/06/rain-rain-pour-again/57623

Professor Nicky left for her native village in the Karimnagar district last week. She needed a break from Srikanth and his questions on Derivatives. Nicky loved the smell of the countryside and secretly harbored the desire to retire and live on the farms one day. It is the rainy season and the best time of the year to visit her ancestral farms. The soil is moist and the seeds are sown, the saplings are just sprouting from the soil at this time.

Nicky had heard that the Indian Meteorological Depart­ment (IMD) had predicted average monsoons this year, though slightly lower than their earlier prediction. For the sake of the country, she was praying for normal monsoons. The economy is as it is showing signs of a slowdown. A weak monsoon will push it further into lower growth path.

The Indian farmers are majorly dependent on the rainfall. They go to any extent to please Indra, the Rain God. In a village, they tie two frogs to a pole and get them married. They say that it brings good rainfall! On her farm, Nicky got into a conversation with Bhasker, the supervisor. Bhasker is more knowledgeable and well read than one would expect a rural farmer to be. Whenever professor visits the farm, he does not miss the opportunity to have a dialogue with her on the economy.

Bhasker: Professor, we farmers are worried about the monsoon. That is understandable. Why is everybody else worried about it? People come on the television and say that if it doesn’t rain, it’s going to be very bad for the economy. Why and how is that?

Nicky: Bhasker, the contribution of agriculture constitutes about 15 per cent of our GDP. In the last quarter of the year 2011-12, our GDP growth rate was only 5.3 per cent. If the monsoons are weak, the contribution of agriculture to GDP will go down further. And other industries like electronics and fast moving consumer goods will also experience a slow down since the rural demand for their products will go down if the farmers don’t make money.

Bhasker: Oh… so the impact is much deeper than what I though.

Nicky: That’s not just it. It’s in fact much more than that. Food inflation would also go up if the monsoon is weak. Lower yield will result in lower supply and hence higher prices. A few necessary food articles might need to be imported as well, driving up the demand for dollars, causing the rupee to weaken further. As it is in the last year, rupee has depreciated close to 25 per cent.

Bhasker: Hmmm…no wonder everyone in India so eagerly tracks the monsoon!

Nicky: Yes. It has a huge impact on the key economic figures like fiscal deficit, growth rate and inflation.

Bhasker: You just explained about growth rate and inflation to me. But what about fiscal deficit?

Nicky: The government has budg­e­ted Rs 43,580 crore as fuel subsidy for the year 2012-13. In the event of monsoon being weak, the gene­ration of hydro-electric power will go down and the use of diesel to pu­mp water into the fields will increase. Both of these will result in an increase in the import of fuel, causing the fuel subsidies to go up. This in turn will increase the fiscal deficit.

Bhasker: Professor I must run and tell my grandmother to tie two more frogs to the pole and get them married!

This article was originally published in Postnoon on June 29th, 2012

http://postnoon.com/2012/06/29/understanding-options/56222

Srikanth: Hi Professor! Hope you have some time because I have a ton of questions!

Srikanth: How would buying an option differ from buying a stock?

Prof Nikki: when you buy a call option, you own the right to buy the stock. But you do not own the stock and therefore have no right over dividends. Also, the extent to which the price movement of the option imitates the price movement of the stock depends on the strike price and the stock price.

Also, you own a stock till you sell it, but an option expires. It is an instrument with limited life.

Srikanth: What do you mean by the strike price?

Prof Nikki: Strike price is the price at which you will buy or sell the underlying asset. The current market price, on the other hand, is known as the spot price.

Srikanth: So when would you suggest I buy options?

Prof Nikki: There are several scenarios when buying options would be a good idea. The first case I can think of is when the prices of a stock you own are falling rapidly.

This is a situation that no one likes. And to protect yourself from potentially large losses, you can buy a put option to sell the stock at a certain acceptable price.

Srikanth: A quick question here Prof, can I buy options in such a way that I can make a profit by exercising it right away?

Prof Nikki: Hypothetically, by buying an in the money call, that is, a call with strike price less than market price, you should be able to make instant profit. But in reality, the options are priced to take into account the time value of money. Which means, factors like interest rates, time to expiration, volatility of the stock etc. are taken into account by the market, making it very difficult to make money by exercising the option right away.

Srikanth: Hmmm… so what are the other situation where buying an option would be good for me?

Prof Nikki: Like I said earlier, there are several situations. Before I tell you more, I really need you to understand that options are instruments that offer immense leverage because you are paying only a fraction of the money in the form of the premium. You actually pay for the stock or the commodity when you exercise the option. While this seems like a good strategy, you should always be careful and manage risk.

Srikanth: I understand Professor… Do you think it would be a good idea to buy call options on a stock that I am optimistic about?

Prof Nikki: You are learning fast indeed! It is a good idea. But please remember that if you plan to actually exercise the option, you will need to have enough capital to buy it at the strike price.

As a matter of fact Srikanth, there are several strategies that one can use with different combinations of options. But the more complex strategies need to be managed regularly. It is advisable to take help of a portfolio manager if you are serious about investing in futures and options.

This post is just a tongue-in-cheek outlook on the most happening Social Networking Portal- Facebook.

After a disheartening IPO the mania that used to be Facebook, is diminishing every succeeding day. Maybe people are just getting bored of Facebook, or maybe this is just another phase in the effervescent life-cycle of Facebook. Only time (and Mark Zuckerberg perhaps) can tell how the growth of this portal will affect our lives and how we connect with people.

Facebook is not without its flaws however, here are a few that irked me and I personally found bothersome.

1. “Dislike” is a heavily demanded for button.

Think about it.

X- I’m so happy with my life, my car, my wife, my bottle… and here are the pictures for you to see and like!!

Y- Dislike.

People are really craving for this button to materialize on Facebook. Everybody wants to share their discontent/displeasure regarding topics that crop up on their network. No need to give a lengthy comment to defend one’s stance on a topic, a simple click on the ‘Dislike’ button will do the trick.

If I was motivated enough I would have made an online petition, pleading people to like & share for the “Cause of the ‘Dislike’ button”. And include a false promise like “If 10000 people share this post, Facebook will incorporate the ‘Dislike’ button!” but, obviously, I’m not motivated enough.

2. “Comment” is an overrated button.

My parents always advised me against commenting on other people’s affairs. It’s intrusive to say the least.

My parents are terribly old-fashioned though and have no idea about how Facebook has changed the definition of the word ‘Comment’. It is however very interesting to notice how Facebook, through its many changes to the interface is encouraging comments. If you scroll down through your news feed, you will notice your display picture at the end of every post along with the caption ‘Write a comment…’.

The step of clicking on the ‘Comment’ button has been eliminated, thus enticing (the laziest) users to share their opinions regarding posts.

3. “Disable Comments” would be a lovely option to have.

Youtube has it. So why not?!

It’s a crude form of imposed censorship, but it does give people more control over their content and how they would like to share it. And let’s face it, this will help reducing the immense amount of spam that is being generated these days only through comments.

4. “Home” tab is inappropriate nomenclature.

Do I need to elaborate?

‘Home?’ In which twisted way? Agreed that every website has a ‘Home’ page and that it is important for the identity of the brand, but does Facebook need to call it ‘Home’?! Why can’t it just be called the ‘News Feed from Friends’ or ‘News’ if length is the issue! They say “Home is where the heart is”, well I sure don’t want my heart to be in my Facebook Home page, or anywhere else except for my chest cavity.

Isn’t the concept of home dedicated to a close nurturing group of people (Family) who help each other live & survive? ‘Home’ on Facebook, is slightly less pious than that.

5. “See Friendship”

Disbelief was what I felt the first time I chanced upon this tab.

Horror was the succeeding emotion, as I visualized a time in the near future, where everyone is connected and life is lived through the internet.

No more going out in public, no more chatting over a cup of coffee.

Every person’s whims and fancies will be catered to, online.

Every product as well as service, will be available online and tailor-made for each end user.

Isn’t this the web-based utopia we are heading towards as a community? To try and establish a perfect market on the internet? Well what happens to the human connection in this future?? Will all our conversations be online??

“See Friendship” would be a really useful button at that point of time.

Co-Author: AmulyaChirala

This article was originally published in Postnoon on June 15th, 2012

http://postnoon.com/2012/06/15/riding-the-leverage-tiger/53754

I had a strange dream last night. I saw a young lad sitting in front of a computer and it’s raining thousand rupee notes. He is soaked in those notes, enjoying every bit of it. I look closer to see what is on the computer screen. I wake up with a start as soon as I realised that the screen was nothing but a derivatives trading platform and the young lad was Srikanth.

I had explained futures to him a few days back. What has been bothering me is that I did not explain the downside risks of investing in futures as profoundly as I should have. Futures are extremely leveraged contracts. And if not used wisely, they can wipe out fortunes. Often people mistake them as magic wands due to this very property of leverage. Let me explain.

Leverage in finance is very much like the leverage we learn about in physics. It amplifies effort, or in this case, the impact of our investment. When one buys a futures contract, she does not need to pay the full amount. For example, if you were to buy 100 shares of Reliance Industries Limited (RIL), you would need to pay a total of Rs72,700 (Rs727 per share times 100).

On the other hand, in the case of Reliance Futures, one contract of 100 shares costs only a small percentage. This amount is known as the initial margin and is calculated based on a system known as Standard Portf­olio Analysis of Risk (SPAN).This system takes into account the volatility of the underlying stock.

Let us say that according to SPAN, the initial margin should be 10% of the contract value (Rs72,700). This would mean that you end up paying only Rs7,270 to control 100 shares of RIL. That means you are highly leveraged. Now if the stock price goes up, you gain as the price of RIL futures also go up and you can sell them at a profit.

Let’s say you sell them at Rs750 — your profit will be a total of Rs2,300 (750-727 times 100 shares). Hence your profit in percentage is 2,300/7,270 times 100, that is 31% on an investment of Rs7,270 Here is where we need to remember that leverage doesn’t always mean more profits, it merely amplifies things, so in case of a loss, the amount lost is also multiplied by the same factor.

Let’s assume that the stock price goes down by the same Rs23. That is you sell RIL futures at a loss. Once again, your losses are much higher than they would be if you had invested in the stock instead of the futures.

Unfortunately, people forget that the prices can go down. They feel that they can make huge profits with little investment in the case of futures. And I must explain this to Srikanth before he starts dr­eaming of big money and invests recklessly in the futures market. The exchanges do take measures to ensure that the risks are taken care of by adjusting the initial margin on a daily basis.

The investors get margin calls to top up their initial margin accounts in the case of a falling market. This keeps the investors informed of how much they are losing or gaining on a daily basis. The investors can close their positions or take offsetting positions before they end up losing a lot.

But this system of marking to market everyday also means that in addition to profit or loss at the end of your contract, you have to keep track of cash flows needed to stay invested. Otherwise, a sharp move can cause your position to be closed out prematurely when the contract would have been profitable at expiration.

Dear Friends, with technological advancement, stressed lives, heavy traffic and distances with in the city, social networking sites like Facebook , twitter etc are becoming the fastest mode of communication and expression. A decade ago mobile replaced greeting cards and telegrams and now these sites have replaced mobile phones, and reduced the personal touch to minimal.

Although these sites have helped in saving a lot of time, but where are we utilizing this saving? The time we save is either utilized at the work place or by surfing these sites slowly getting part of this perfect world.

What is a perfect World?

In economics markets are described as Perfectly competitive and imperfectly competitive markets.

As per definition, a perfectly competitive market is a theoretical situation in which

1) All the products are homogenous and abundant in supply, there cannot be a demand constraint.

2) There are abundant buyers and sellers and none has the capacity to control the market. In simple words people are good at heart.

3) No restriction on entry exit and 4) All the information is publicly available. To summarise, it’s a kind of ‘ RAMRAJYA AND PRAJA SUKHI” Or “ SATYUG’ kind of market. On the other side imperfect competition is just opposite to it (KALYUG).

In practice a perfect market never exist, we all live in a imperfect market.

Social networking space is like a perfect world.

1) There is abundant supply of contacts. Friends of friends and so on. Even School kids have hundreds of contacts.

2) All information is publicly available.

3) Everybody is homogenous Ie good at heart, LIKE’s your opinions, Patriotic, give importance to values and teaching of great people like gandhiji, Anna and others. Everybody is against corruption and feels that black money should come back to India etc.

4) As good and responsible citizens each of us use our right to LIKE and Right to SHARE honestly. After sharing Annas cause against corruption or writing against congress/BJP all of us feels that we have discharged our duties and a SHARE/LIKE/COMMENT Iis the solution to all problems

5) If there are differences, they should not be shared on wall. Everybody is well mannered.

6) From morning to evening everybody is busy pasting quotations copied from Google and
counting LIKE’s posted by others without reading and understanding the meaning.

In practice there is no perfect world. The people who run the system are elected by people who come from an imperfect world.

This new form of society has confined itself to like or dislike, I am afraid we are losing personal touch no matter we are 24*7 online. In coming years most of us will see our next generation only through a mobile upload.

Contributed by Rahul Singhvi  (Batch 2002, IBS Ahmedabad)

Since the last few years, there is a lot of fuss in India saying that Cricket is a very much hyped game and the only game in limelight in India. Many big names in the journalism industry keep on writing articles as to why not any other game and why only cricket?

According to me, what is wrong in Cricket being the only game in limelight in India? Cricket is a game which is easily accessible to each and every kid during childhood. It is a game attached with both the mass and the class. Ever seen a middle class or a lower middle class kid playing Tennis, Snooker or Golf on his society streets?

Cricket is the only game that a kid plays and as he grows up, his love for the game continues, hence he hypes or pushes this game into the limelight. Yes, there are other games also which are commonly played which include Badminton or Carrom etc. But ever seen TV coverage of these games as frequent as Cricket? No. Cricket has a connect with the lives of Indian audience.

Now if something is not covered on TV or in the print media, how would one be aware about the tournaments and schedules of that particular game or how will one have knowledge about that game itself?

Yes, I do agree that like Sachin Tendulkar or MS Dhoni in Cricket, we have other high performers and famous players also. For eg. Take Vishwanathan Anand, who recently won the Chess World tournament, but do you expect an average minded person to learn or develop interest in Chess. Its not at all possible.

Take Saina Nehwal, she recently won the Indonesian Open for the third time, but many of us who love watching or playing Badminton never knew the schedule of the tournament.

There have also been sporting legends in these games who have gained a lot of popularity and has given a brand image to their respective sport. Take Major Dhyan Chand or P.T. Usha for an example. There was a time during Major Dhyan Chand era that hockey was the most famous sport in India. But did hockey, hockey federation or players save this image of hockey? Of course not. There may be many reasons for the same but degradation of the sport has been there, which is a practical fact.

Cricket as compared to that has been always routed in the hearts of Indian fans since ages. Now if a sport is able to dominate the Indian sports viewer crowd, what is wrong in that??? Why do people have problems with that?

Another factor which keeps someone linked to the sport is the performance by the sportsmen. During the last hockey world cup which was hosted in Delhi, we had lots of awareness and promotions being done by private players also. This had in fact created hype about hockey as well as the tournament gained good viewership. But the Indian hockey team disappointed with just 1 win in the entire tournament and it was difficult to again gain the same viewership in the next hockey tournament.

Cricket as compared to this has good sportsmen, who perform better in their tournaments as compared to other sportsmen. Yes, we do have losses series after series in Cricket as well, but that is not the regular status which is the case in other sports.

We can not to blame the satellite television providers for this as; they are here to do business. They will telecast what has TRP or what can give them maximum revenues. If IPL gives them more TRP then Indonesian Open or the Chess World Tournament, no doubt they will telecast IPL.

If there is someone who can do something on this, it is the media. They can spread a word of awareness for other games which in turn would generate the interest of the Indian audience. But this group of people are busy in writing or showcasing what has maximum readership or viewership. Now a days, writing an article which has a headline “NO CRICKET” gains readership, hence authors and reporters who were once the most trusted and the most acknowledged, have turned into writing articles which excite people against cricket.

Even if there are people who are promoting other games there is no media coverage on the same. Just to describe a recent event,  Shah Rukh Khan has shown interest in purchasing one of the Indian Football club, but there has been very less coverage of this event as compared to what Shahrukh does during IPL matches, what kind of alcohol does he consume to celebrate the victory and things like that.

My message to such media content writers is that, by writing such articles you can fool us and make us non-cricket viewers but you might also turn down sports viewers. As after Cricket we would not have any other option in sports left.

Hence instead of turning down Cricket, why don’t you educate us about other sports and develop our interest in other sports also. If in case an interest is developed, we would surely start having satellite coverage for these sports. If in case there are satellite coverage, there would be investments pouring down in the sport which would further develop the sport and the sportsmen.

Hence, instead of turning down a sport, why is not another sport being promoted to build an option for the sports loving crowd of India.

Contributed by Chirag Vaishnav(Batch 2006, IBS Bangalore)

This post is No.3 in a 3 part series:

Read Part 1, Part 2.

The Way Ahead (Anna’s Way)

“I want to tell the youth of this country that this fight should not be stopped with Lokpal alone. We have to fight for removing the faults of the present electoral reforms. Because of the fault in electoral system, 150 criminals have reached Parliament.”

– Anna Hazare[1]

Anna Hazare, a of 74 years old Indian social activist[2] and former Indian army soldier from Maharashtra has showcased implacability of some valuable principles of non-violence by adopting simplicity of Gandhi to the world following which India can get rid of the repercussions arising out of corruption and its supplements. Widely recognized Anna Hazare has become a youth icon since he sat on 12-day fast in the year 2011 in order to persuade government of India to pass a stringent Lokpal Bill in both houses of parliament.[3] The government could somehow manage to bring a resolution in the parliament on the same to ensure that Anna’s efforts do not go in vain[4]. This success of Anna has brought considerable impact on the mindsets of millions of young Indians who directly or indirectly supported his efforts. He has become the only antonym against all the synonyms of corruption.

Mere generalization of the issue by saying that responsibility of combating corruption lies on all of us will not suffice. Attitude of challenging the wrong will only work. The time is to take some concrete steps in addition to the ways suggested by Anna. Firstly, it should be made compulsory for all the law students to do their final internship with any of the anticorruption body. It will be a win-win situation for both of them as law students will gain valuable experience and at the same time entry of young professionals in these organizations will improve their efficiency resulting in better performance. Secondly, inclusion of law as a compulsory subject at higher secondary level of school can serve the purpose of increasing awareness among the next generation. Thirdly, passing a strong Lok Pal bill can assure a proper and timely punishment to the guilty of taking bribe. Fourthly, there should be an incentive system in place to encourage whistle blowers in an organization. Their identity should be kept confidential and their efforts should be rewarded suitably in monetary terms. Lastly but most importantly, it is to understand that the people involved in corruption are not fools. They are clever enough to take undue advantage of the loopholes of a typical bureaucratic system. Therefore, mapping their brains can help in reducing bottlenecks of such other systems as well. It goes in line with the view which argues that diamond cuts diamond. In parallel, use of modern technology by making most of the processes online, proper utilization of Right to Information Act, active participation of youth in social activities, awareness among the youngsters towards not taking things for granted can act as a catalyst to the reforms.

Conclusion

It is to conclude that corruption itself is not a cause but an effect of indiscipline. The recommendations suggested might not be the only ways to take up the challenge. Anna’s philosophy and principles might not be the ultimate answer to it either. But such experiments are bound to increase the participation of youth in the subject of national interest. Above all, young blood of India can no longer afford to negate the severe consequences of corruption and in particular its own future thereof.

I have been under a lot of mental and emotional stress lately, and did not know the reason. But with a lot of introspection and a couple of very good reads, I was able to find the root cause of this and am in a much better state of mind. Ask my wife  I will like to share this to spread the good words that helped me.

So, what was wrong?

Personal Mission Statement

When I entered formal work life, my HR helped me frame my personal mission statement, or in fact how would I like to be remembered when I leave the world. It came naturally to me: “The Guy who made a difference.” and I try to live my life towards this goal – “Make a difference in every role I play”

Let’s first speak of the roles we play in life. Typically one plays several roles in life. A few play more, a few play less.

• Individual
• Family person – Child, Spouse, Parent, Relative
• Learning – Student, Teacher
• Working – Sub-ordinate, Co-worker, Boss, Mentor
• Society – Friends, Community member, Citizen

And the challenge is to maintain a balance between the roles; otherwise one of the roles dominates the others. This is called the ‘Work Life Balance’, which according to me is a misnomer. It is about balancing the importance you accord to each role.

The reason for discontent was that I was doing a good job at work and had been struggling to think of a way to make a difference in the community. I was trying to increase my circle of influence and was having a difficult time doing so. But more importantly, I was neglecting my other roles in pursuit of this singular role, especially the roles which got added after I started my career. I was not making a difference as a husband and later as a father. This caused a lot of internal turmoil and stress but I did not realise the root cause. Which in hindsight is obvious, I was not fulfilling my mission statement, my goal, and my reason for existence. When I realised this and also realised the many things under my control that I can do to make a real difference to my family, I was suddenly at peace.

I now have renewed energy, a renewed sense of purpose and actively looking at ways to justify my role as a family member.

Community will come next; meanwhile I am working at growing my circle of influence to get to a position to be able to make a difference to the community.

So let me ask you this:

• What roles do you play?
• Are you justifying all the roles or is one role far bigger than the rest?
• Would you like to be remembered as?
  • A great worker
  • A great spouse
  • A great parent
  • A great child
  • All of the above – and above all, a great person
• Are you spending your time to achieve the above?

Related Read:

This article greatly inspired me: http://steveblank.com/2009/06/18/epitaph-for-an-entrepreneur/

Contributed by Hitesh Sarda (Batch 2001, IBS Hyderabad). Find out more about him on Linkedin.

This post is No.2 in a 3 part series:

Read Part 1

Scenario in India (Major Scams so far)

The problem of corruption in India is so deep rooted that sometimes it becomes difficult to even identify when and where one gets involved in it. Below examples of mammoth corruption incidents in the recent years are sufficient enough to aggrieve an Indian patriot:

• 2G-Spectrum Scam (Rs. 1.7 lakh crore)[1]: Telecom companies were offered 2G spectrum band at nominal charges within a few minutes by A. Raja – the then telecom minister of India. This resulted in a huge loss of revenue amounting to lakhs of crores of rupees to the government.
• Cash for Vote Scam (Rs. 50 crore to Rs. 60 crore)[2]: It was alleged that the ruling party bribed members of parliament in order to survive a confidence vote in the year 2008.
• 11^th Commonwealth Games Scam[3] (Rs. 8000 crore)[4]: The games ran into controversies when Indian media covered various game venues where the work had been running with snail’s pace and the quality was poor. Such irregularities were shown as breaking news in the electronic media and as front page headline in the national newspapers which attracted immediate attention of government officials. Later, doubts were also raised on the unexpected increase in the budget of the games within a small period of time and Prime Minister had to intervene to make sure that the preparations get completed in time. Finally, a performance audit done by the CAG who found numerous irregularities like manipulation of prices, contracts with incompetent companies, unnecessary delays causing effect of inflation, use of poor quality material, over and above payments for products and services consumed etc.

Above are the examples to name a few. These depict the intensity of unjust competition prevailing in the country causing opportunity cost to those companies which are capable of doing a job but couldn’t get chance because of nepotism. Mention of corruption in the speech of the Indian Prime Minister while addressing people of India on Independence Day again evidences that the problem is far more serious than that of any other country.[5]

Many Bollywood movies like “Lage Raho Munna Bhai”, “Chala Mussadi Office Office”, “Corporate”, “Aarakshan”, etc., have already outlined the various aspects of the issue. Even advertisements like that of tata tea with slogan “jaago re” are constantly spreading awareness among the youth to bring a change in the system.

Present system to deal with Corruption

From the point of view of law, there are mainly two acts at present in India which shoulder the responsibility of exposing unfair practices going on in a concerned organization. One is Prevention of Corruption Act, 1988^[6] and the other is Right to Information Acts 2005.[7]

Plenty of regulatory and surveillance authorities like ACB^[8], CVC^[9], CAG^[10], CBI^[11], ICAI^[12], Income tax department^[13], Central Board of Excise and Customs^[14] etc., have been working as either an independent body or a government body. Unfortunately, independent authorities have not been given the power of arresting a guilty. They are hence toothless. Contrary to this, government agencies are extremely powerful in this regard but are indirectly driven by political interests.

Causes and Effects of Corruption on Young Entrepreneurs and on Economy

With one third of the total population being youth, India is certainly the youngest country in the world[15]. Many of these youngsters are either doing their own business or are on the verge of becoming future entrepreneurs. During this phase they encounter various legal formalities to be met with like filing of proposed name of company for approval of ROC, getting MOA vetted by the ROC and its stamping from superintendent of stamps, AOA, getting company seal, paying registration fee, obtaining PAN and TDS account numbers, following rules of taxation, complying with Shops and Establishment Act, taking care of various laws pertaining to employees etc.[16]

Amid utmost chaos in completing ‘n’ number of formalities, instances of demanding bribery surge. The more a procedure becomes complex and lengthy, the more cases of personal greed are likely to arise. It only furthers the sufferings of a common man. The attitude of compromise and adjustment is probably the first and biggest reason for the same. Weak laws, time consuming judicial procedure, inherent supremacy of politicians and lack of public awareness add fuel to the fire. Existence of such a system in India is a major cause of anger to the next generation.

“Baboos” have become a synonym of corruption for an “aam aadmi” who has to bear heavy fees of “dalals” to make them work on their requests. This black money is exported to tax heaven countries. According to the data provided by the Swiss bank, India has more black money than rest of the world combined. India topping the list with almost $1500 Billion black money.  It’s embarrassing for any country to top the list of black money holders. The money which belongs to the nation and its citizens is stashed in the illegal personal accounts of corrupt politicians, IRS, IPS officers and industrialists. Every year this amount is increasing at a rapid speed but the Indian government seems to be silent over this matter from a very long time. The total black money accounts for 40% of GDP of India, if all the money comes back to India then that could result in huge growth burst for India.[17] What can be a better example of tax appropriation than this? Another surprising fact is that at one end, India ranks at 65^th poor country in the world with an alarming global hunger index score of 23.9[18] and at the other end, it ranks 4^th with 55 billionaires in the list of countries with highest number of billionaires.[19] This proves that the there is a wide gap in between rich and poor people of the same society. It is both surprising and unfortunate.

Nepotism is yet another form of corruption which hampers job prospects for the right candidates and leads to unhealthy competition. It is also called as favoritism. It is well established in India. Examples of nepotism are visible in politics (Nehru-Gandhi family), in business (Reliance), in arts (Kapoor Family)[20] and in education (management quota). These all gather together to bring India at 87^th place in the Transparency International World Corruption Index.[21]

Nevertheless, Mr. Suhas Gopinath who was born in Bangalore, Karnataka, India and launched a web site at the age of 14, and incorporated his company at the age of 14, making him the world’s youngest CEO[22] has set an example for the upcoming entrepreneurs who are willing to make their dreams come true.

This post is No.1 in a 3 part series:

“Corruption and hypocrisy ought not to be inevitable products of democracy, as they undoubtedly are today”

-Mahatma Gandhi[1]

Aug 28, 2011: Who better than an Indian can state the significance of this date in his life? It was not the day of Diwali! India didn’t win any Cricket World Cup on that day! Yet the celebration was huge. After all, a 12-day long fast of Anna Hazare came to an end when parliament of India agreed to pass a resolution in favor of a stringent “Lok-Pal Bill” against corruption. Indeed, a history was written on the “paper of democracy” with the “quill of protest” inked in “non-violence” indicating that countdown to a corruption free democracy has finally begun.

 Background

 Today, when corruption has been gulping plethora of liquidity from the markets across the globe, economists are scratching their heads hard for unearthing new ways and means to combat the severe outcomes of black money. India is no exception to it. Government agencies, politicians, public companies, private companies, NGOs, trusts, judiciary and media related scams are too many in number to count and too much in monetary terms to summarize in the units available causing dent to its image of being the fastest growing biggest democracy in the world. A 74 year old person “Anna Hazare” has however lightened the torch of anti-corruption the way Gandhi did for the freedom of India in the year 1947. Their objectives might differ but the way to achieve them is one or the same i.e., “non-violence”. Its immense influence particularly on the youth has been energizing them to struggle for the good cause. It will therefore be interesting to discover how this age old remedy can cure the long lasting diseases of unfair practices noticed at every level of Indian society.

Understanding Terminologies Involved in Unfair Practices

“Corruption” can be defined as a wrongdoing on the part of an authority or powerful party through means that are illegitimate, immoral, or incompatible with ethical standards. Corruption often results from patronage and is associated with bribery.[2] It can also be defined as a type of strategic action in which two or more actors undertake an exchange relation by way of a successful transfer of money (material) or power (political or status) or promoting of gene (genetic), which sidesteps legality or morality or civility to regulate the relation. It is a strategic interaction or an art of nonviolent negotiation. As mentioned before, social action is strategic when it is aimed at the successful realization of personally defined goals. It makes distinction between “need driven” and “greed driven” necessity harder.[3]

“Nepotism” can be described as a practice of appointing relatives and friends in one’s organization to positions for which outsiders might be better qualified. Despite its negative connotations, nepotism (if applied sensibly) is an important and positive practice in the startup and formative years of a firm where complete trust and willingness to work hard (for little or no immediate reward) are critical for its survival.[4]