UPA Govt = Food Inflation?

Inflation is price rise , or is a rise in the general level of prices of goods and services in an economy over a period of time.

India uses WPI figures to gauge inflation trends , while world over CPI inflation data is used . It is but natural that the govt prefers this system, because it is far easier to manipulate wpi index than cpi index.

Inflation (WPI) that had turned negative, thanks to a fall in commodity and metal prices, is now positive and rising fast, thanks to galloping food inflation.

Though people, seeing throught the deceipt, are now calling the govt figures as bogus, they  have no real alternative as the BJP is hardly an opposition any more while the Commis are suddenly low profile thanks in turn to a solid defeat. Hey do Politicians ever care ?

Read Politics and Prise rise

World over CPI inflation has fallen/ is falling but in India it rules still in double digits. A simple look at the prices of a few commodities tells a tale of doubling of prices of most agri commodities during the first UPA term or Cidambaram FM term ,  Wheat from 16 to 25 a kg , Basmati Rice from50 to 110 a kg , Milk from 12 to 26 Rs a litre, Eggs from 18 to 36 a dozen, French beans/Peas  from 16/20 kg to 40 a kg. Potatoes from 8 to 12a kg, Onions from 8 to 20a kg.

International data shows a falling trend in food item prices. As per yahoo — Cpi inflation on food has been actually going down internationally – everything from pasta to cereal to olive oil — fell by 0.4 percent.

Politicians including the agri minister freight helplessness, and have postponed the fall in agri commodity prices to post rabi crop.

What amazes me however, is the Pre election dip in food prices that happens before almost  every election, especially in agri commodities in Mumbai. I was amazed at how the prices of fruits and vegis pre elections fell around the  Maharashtra state elections .

Two weeks post Maharashtra state elections, we still dont have a govt and some  food article prices seem to have trippled from the pre election dip .

Dals and pulses which have tripled are expected to go higher as demand has all but increased thanks in part to the deficit financed schemes such as NREGA and MSP.

Politicians  control mandis and love to put abnormal amt of controls on future trading at the MCX though this is turning out to be counter productive .  But in hindsight, i wonder… Are they in a deep nexus with market participant traders who anyways manipulate the arcaic system?

Eating out has seen a real sharp rise too and my dosa index says that a sada  dosa which costed Rs 10, costing Rs 20 pre elections , has gone to 24 now while a lunch plate costing 22/24 is costing Rs 36 to 40 pre is costing Rs45 ~50 post Mah elections.

The Inactive government.

While canvassing for the central election, the current govt has been taking credit both for the abnormal growth during its first term and for not liberalizing the economy and taking precautions to avoid the financial crises, while comparing India with the west. But has our govt really done a good job?

The truth is that the  abnormal growth during the first term of MMS was mainly thanks  to the steroid  economics of US fed, which kept interest rates far too low for far too long creating asset bubbles world over especially in Asia.

India whose post inflation growth during his first term was minimal was partially protected from the financial crisis thanks to Y V Reddys tight leash on the banks, not due to Chidambarams policys, some of which have been disastrous in some aspects.

Both previous and current Fm have been postponing their promised  fall in food prices at regular intervals.

Crude has gone up from $55 a barrel to between $75 and 80.

The dollar has fallen appx 20% against the euro, but the rupee has fallen against the dollar, euro and probably the yen . Eventually creative accounting and massive defecits are bound to show up somewhere.

Sugar prices are on a firm uptrend here and international prices are inching up mainly due to speculation based on  India’s shortfall.

Expect the powers to be to inflate their way through any future crises, and expect more price rise in rice,  sugar, dals and pulses.

Nov 3, 09 Markets and News

India just bought a whole lot of gold from the IMF auction,  200 tonnes to be precise. Though a step taken in the right direction, it seems to be a bit delayed as most BRIC and developing countries especially China seem to have already diversified their reserves away from the dollar.One also wonders if the price is right as the yellow metal is selling at $1086… Wonder if the perma bulls of gold have it right when they expect gold to double from here.

Secondly im rather uncomfortable with the FMs talk contrasting India’s strength with weakness elsewhere: “Europe collapsed and North America collapsed.” . He forgets, we have plenty of problems of our own. No wonder a  Livemint headline says Markets-bearish-but-FM-bullish

Agree with Chris Woods  view on markets.

I was just wondering when the interest rate cycle would turn and interest rates would go up.Consensus says Rbi might increase rates by March. But one always wonders how things would turn out especially when traders world over are jittery, inflation at the retail end is in double digits and still going up, and the govt is in no mood to usher in some fiscal prudence. All that the ministers seem to do is talk austerity, mostly from the confines or their mini palaces in Leutons Delhi.

Recently Salman khurshid talked about Class action suits. But as this article suggests there might be very little progress on it as it can open a can of worms both for the govt and for the corporates that fund parties running it.

Ihe IPO markets as expected have have remained dull and most IPOs have given negative returns.

 

 

Bikini Blue ?

When i saw the rushes of the new to be released movie Blue with Sanjay Dutt, Akshay Kumar, Zayed Khan and of course  Lara Dutta, it distinctly reminded me of Bessons much talked about   Le Grand Bleu which i had seen almost a yr ago.

Blue is touted to be one of bollywoods most expensive movies (130 Crore?). My initial impression is that it seems to be a repackaged desi story , far far away from the original based on real life free divers. The shots, camera work, styling and angles from all the promos and pre release materials remind me of many many a movies  including the original,  french movies inc B 15 and music videos  and our own DevD. Turns out it is a bollywood remake of Into the Blue.

So if u want to see some blue water fish and lots  of designer  bikini action, with an added kylie minogue, do watch Blue.

Else you can always watch discovery / planet and living etc for more substantial content.

IRDA Going the SEBI way?

When SEBI announced allowing direct applicants too apply for mfs without any load or cut, it was seen to be a revolutionary step much resented by agents and fund houses alike. Though a rare few do direct purchases the trend will take some time to catch on.

What most people wondered then was about why IRDA, an agency meant to regulate the insurance industry did not take similar steps to protect small investors, from the ulip and insurance swindles  involving misselling of ulip products by agents as safe bets with fancy market based returns assumptions, having a lockin of only 3 yrs.  The commissions and loads mfs paid out, was minuscule say 2.5% max in comparison to some first premium commissions especially in case of ulips (including or excluding other costs  and charges) that were between 40% and even to 75% in one instance if i remember right.

Thankfully Livemint reports

“Irda recommended in July that following the amendment of the Insurance Act, the regulator must get the power to make it mandatory for life insurance companies not to charge agent’s commission to a customer who buys a policy directly,” said the Irda official, who did not want to be named.

“There is a clear case that customers who apply directly to buy a policy should not be charged the same way as others who come through agents. Lowering the charges for direct customers will also ensure a healthy relationship between the customers and their insurance companies,” said R. Kannan, member (actuary), Irda. “The matter is before Parliament at the moment.”

Investments in Ulips involve several charges such as an initial administration charge or premium allocation charge, a regular administration charge, a policy administration fee and an investment management charge. Collectively these charges may eat up to 70% of the premium paid in the first year, including up to 40% of the premium as agent’s commission.

Hope it is implemented soon, as it will benefit the insurance companies the most , as most intelligent investors will start taking insurance seriously (sorry as things stand insurance is still an investment and tax savings vehicle).

Ipo Season Q2 2009

The current IPO season started with a few Ipos including Mahindra holidays and two talked about power listings NHPC and Adani power.

ADANI POWER BSE: 533096  |  NSE: ADANIPOWER

IPO ISSUE PRICE 100 1St Day close 100.10 Today  100.85

NHPC BSEId :533096    NSE Id :ADANIPOWER

IPO ISSUE PRICE 36 1St Day/ Today close 36.70

Both have barely given ANY returns to their investors as they were fully priced, thus most small and leveraged investors must be a disappointed  lot. Another Raj oil mills has been hammered well below listing price(27%).

The lead managers Enam have justified/defended the pricing by asking investors to take a long term view, that too in an edgy flippers market, when past experience has been mixed to negative.

It is common knowledge that both the management and managers to some issues use different tactics  from making/using unknown front companies to bit in the qib segment, to cultivating HNIs and renting demat accounts to offering grey market premiums to retail investors etc to make sure that the issue is oversubscribed .

What i have noticed in these ipos is that though the QIBs demand  is very high even on the first day(even after SEBIs new rules), the HNIs and the Retail subscription Eg NHPC  comes in very late.  Thank God, over subscription has become much more sane, especially in the retail category as most investors have seen through the game / not forgotten that they have made at least 50% losses on various ipos like Edelweiss , Reliance Power, Kolte Patil, Brigade etc.

NHPC IPO Oversubscription

Qualified institutional buyers (QIBs)  subscribed 29.16 times.
Non institutional investor category, was subscribed 56.70 times.
Retail investor category was subscribed 3.87 times.

I am still unsure as to why even after such high oversubscription 29/56  times why a solid psu script lacked demand  and languishes at almost ipo levels on day one .

All in all things will be very interesting as the Oil India IPO has been announced at Rs. 950 to Rs. 1,050 per share, that too when a fully valued secondary market (NSE 4700) is waiting to correct.

On Ganeshotsava 2009

Today is the 7th day, of the festivities and a popular day when some choose to immerse their idols. As i was returning from  my friends house after seeing his Ganpati, i decided to walk it down, due to the road blocks and the creeping traffic and poor BEST frequency.  I saw  a few people who went about doing the whole thing without the noise but with a lot of dignity. They stood out from the crowd, though they neither had nashik dhols nor bands with keyboards, but had the passion,  zeal and that true spirit of bhakti as they carried their idol in their hands and chanted Ganpati Bappa Moraya!   Somehow it reminded me of a bygone era when i accompanied my uncles for immersion puja. What comes close,  are the barefoot bhakts who are known to walk miles to offer prayers to Siddhivinayak and the dignity with which the Lalbaugs mandals go about their activities .

The zeal shown by many of the pandals and their bhakts especially  in collecting donations and in the immersion procession with the nasik dhols and the organ, the tamasha and the noise making,  along with the drinking and the likes, of course violating the 12pm deadline rather than attending/doing a proper puja of the deity during the 7/10 days,  makes me wonder about their true motives.

When i was discussing with my friend about the Ganpati at my uncles and friends house , the first question he asked was – so what was their choice Nasik dhol or band? just reinforces my belief that humans are very social animals.

Image courtsey Lalbaugcharaja

Hope the good lord Ganesh blesses us all.

Another building collapses in Mumbai

A day of rain and another building collapses in Mumbai, that too right next to D B Marg police station. The OB Vans of all the news channels are there, along with fire engines and  the crowds of the curious onlookers. The area is poorly manned, considering the crowds,  even thought  the police station is two buildings away.

Worse they have shut down the whole lamington road, blocking traffic and exit route even to pedestrians. Being Ganpati/Ramzan  time, most bylanes are choked or blocked up by ganesh mandals and blocking even pedestrian traffic is a step in futility, which i think is unnecessary and a total inconvenience especially to people who live there.

A bit more manpower and better organisation are all that was necessary, and they could even keep one side of the road open to traffic. Then again what can we really do? Nothing but curse our luck. We r no Politicians who get 100 + people for our ego or security.

At the end of the day the newspeople will get their time , public will get to do some tp ,  and politicians will provide some lip service near election time… come tomorrow morning things will be back to normal.

U must be wondering why im not talking about the casualties or people trapped under the rubble, and no doubt there will be some, but u see  ive become immune, as  such events are  as aam as the aam admi.

Why Indian PSUs dont succeed !

A PSU is a Public Sector Undertaking or a company promoted or majority held (51%+)  by the government using Taxpayers moneys.

Here is an interesting PSU Quiz that gives u a general Idea about PSUs.

Navratnas are the Creme de la Creme of Psus and are the list of the top 9 PSUs of the govt.

The main  defense for such poor performance is that  PSUs are for public service and not Profit. Is this the sole reason that private cos outperform them?

Sadly i think not

In comparison to the private sector, PSUs have failed to give a fair returns to minority shareholders even though they sometimes work as a Monopoly take for example our Oil PSU Navratnas like ONGC, HP, BP and IOC. When they are not monopoles they are failures and a constant drain on public funds ie  zombie companes take for example Air India

Read Turbulance in the Indian Aviation Sector.

The govt systematically skims profit in the name of subsidy burden and it is supposed to be fair just because it is in plain view.

Read ONGC falls after Goldman says govt took $20 billion

You can definitely blame India’s powerful bureaucracy, whose culture lacks accountability.You can also blame the method of selecting top  PSU managements, based on hierarchy and political connections, because most often then not PSU bosses come from unrelated fields and have no experience  on how to run that business, but then again are they really appointed to run firms efficiently or obey diktats and refurbish politicians houses one still cant really decide.

Dont forget that ex psu employees have played a vital part in the Laxmi Mittals success story . Read The Raja Of Steel

No wonder, Former PSU honchos lead the private sector

Political ego also plays a big hand … Subir Rahas ouster shows

To tell you the truth it all comes down to mismanagement and political interference, and a wanton disregard for  accountability of public funds to serve their own petty interest and  help/aid and benefit cronies and big business with deep vested interests.

The way the current UPA govt has been going about it, is simply ludicrous . No wonder frustrated shareholders have gone to court (never mind the brotherly spat and chote bhaiyas nudge)

Read Gas opera: NTPC shareholders file PIL

Also read :

Caught trying to pack oil PSUs with Cong men and women, Petro Ministry now fudges facts

No crony capitalism: Sitaram Yechury

SC issues notices in closure of vaccine producing PSUs case

Swine flu in India

Though Swine flus impact on India is rated as low, still things can go downhill thanks to a dense population a bad public health system, fear and especially ignorance. I see people wearing all sorts of masks and hankys covering their mouths, thanks to the fear spread by the media. There are people selling masks on the streets.

So people, be aware and be precautions, dont hoard tamiflu or nilgiri oil … try to be a bit more fit and build up ur immunity instead.

The Mayo Clinic has suggested personal measures to avoid seasonal flu infection which should be applicable to the 2009 pandemic: vaccination when available, thorough and frequent hand-washing, a balanced diet with fresh fruits and vegetables, whole grains, and lean protein, sufficient sleep, regular exercise, and avoiding crowds.

on Masks

The UK Health Protection Agency considers facial masks unnecessary for the general public and some experts feel it may lead to a false sense of security. In India especially with the humid conditions, unbranded masks can do more damage to ur immune system and normal respiration.

3M manufactured N95 masks are recommended only in case you have to be in close contact with a patient ie 1 meter or less by the World Health Organization and 6 feet or less by the U.S. Occupational Safety and Health Administratio

Who are the target group ?

People at higher risk of serious complications included people age 65 years and older, children younger than 5 years old, pregnant women, and people of any age with underlying medical conditions, such as asthma, diabetes, obesity, heart disease, or a weakened immune system (e.g., taking immunosuppressive medications or infected with HIV).^[202][205] According to the CDC, more than 70% of hospitalizations in the U.S. have been people with such underlying conditions.

Symtoms :

Symtoms are similar to flu symtoms, therefore ones  recent history is very important .

The signs of infection with swine flu are similar to other forms of influenza, and include a fever, coughing, headaches, pain in the muscles or joints, sore throat, chills, fatigue and runny nose. Diarrhea, vomiting and neurological problems have also been reported in some cases

A study concluded on May 5, published in the New England Journal of Medicine, found that 94% of confirmed patients had fever and 92% had cough

Finally in case you suspect flu or viral flu or swine flue Mahendra has posted all the necessary info.

Lots of info picked up from the swine flu wiki

How to win Elections in Mumbai

This is a routine affair and every 5 yrs governments have been routinely resorting to it to win elections. What is it ? Slum protection deadline Extension.

Slums are a way of life for 60?% of Mumbaikars and people from all walks of life have to live in slums out of necessity thanks to govt apathy and weird antiquated land laws and a total lacuna regarding formulation of any long term low cost housing policy. Govts of Maharashtra and Centre have been relatively incompetent and callous towards Mumbai’s development.

State enacted the Maharashtra Slum (improvement, removal and redevelopment) Act in 1971 The state has protected slums in 1976, 1980, 1985, 1990 and 1995 The Act was amended to provide identity cards for authorised slum dwellers in 1995 Stringent provisions were made to stop further encroachments in 2001.

Now Slums are one heck of a business, which involve everyone right from the BMC officers to Police and Politicians at every level, extending right up to No 10. They are vote banks that need caring and nurturing with free water electricity etc that can be reliably depended upon, come election time.

So i had little surprise when i read this in TOI
State cites UN agenda and Prez speech to regularise illegal slums
The Democratic Front government, which will be facing Assembly elections in a few months, has decided to take support of the United Nations Habitat Agenda, and a policy announcement by the President of India, to regularise illegal slums in Mumbai.
The DF cabinet which met on Wednesday at Mantralaya, decided to approach the Supreme Court with a request to allow them to issue an ordinance , that will protect slums come up between January 1, 1995, and January 1, 2000. The DF will therefore be able to fulfil its 2004 Assembly elections promise of protecting slums erected up to year 2000.

Never mind, how the govt expects to fund this largess, as Maharashtra  state is almost pennyess protecting the suger barrons with state guarantee.

Or that it has itself submitted an affidavit before the Bombay High Court against extension of the current deadline (January 1, 1995) before the Bombay High Court.

The only question i have is will the govt ever rehabilate those slumdwellers and who will pay the gigantuous bill ?