THE GREAT FINANCIAL MELTDOWN

The present financial crisis under which the whole world is reeling into has left everyone awestruck. The whole world economy is shifting towards recession & the fears about the situation getting even worse are increasing day by day as the real reasons behind this goof up are revealed. It seems like an abyss with its bottom not to be seen anywhere nearby.

It all started off with the disclosures of the defaults of the sub-prime loans doled out to not at all trustworthy clients. These people were encouraged by the US Govt. to buy houses & easy finance was made available to them & the loans were so designed so that they should get into the system. This led to a boom in the housing market as the property rates went through the roof.

Actually this all started off in 1970s when the Bretton Woods System was done away with by USA,& the USD(Int'l Currency) was debased. This led to creation of imbalances in the Balance of Payments account between the trading countries. The US also used this as an opportunity to utilise & take maximum advantage of the same by financing its fiscal deficit through printing more amount of dollars which in due course of time increased the Inflation levels in various countries across the globe. This problem was further accentuated by the increasing influence of globalization which essentially is a Zero Sum Game but was so modified by US in such a way that it looked like a WIN WIN situation.

All these manipulations continued over a period of over 2-3 decades till mid 1990s when Internet era came before busting in 2000-01 & followed by the Housing Boom which is sending tremors across the globe & are very severe. As per an estimate the overall size due to the MBS & CDSs size is around 62trillion USD & the housing loan market which grew from 4.8trillion USD in 2001 to 10.3 trillion USD. The US Govt. actually promoted this  by pushing the purchase of houses so as to bail out the economy which was reeling under the setbacks after the dot-com bust.

But, these short term measures are creating havoc in present times & the global leaders are working their way out of this carnage & let's hope something sustainable comes out..

Socio-Economic Impact of 11/26 in Mumbai

The evening of 26^th November 2008, on Mumbai’s Chhatrapati Shivaji Terminus marked the beginning of a renewed era of Terrorism which has left the India as well the entire world awestruck. This carnage started from CST where indiscriminate firing was opened to all the passengers who were boarding the trains in the peak hours back home. Simultaneously, at the same time terrorists(ISLAMIC  JEHADIS) struck at 3-4 other locations in the nearby locations, one of these unlucky places were the likes of India’s First FIVE STAR hotel THE TAJ MAHAL, APPOLOBUNDER & THE OBEROI. The inmates were held hostages & the a huge firing & the grenade attacks started off.

The entire drama ran over 62hours continuously only to end with the deaths of those terrorists & a huge number of Civilians (156 as per official estimates & 20 security personnel). A wave of terror spread like the jungle fire & engulfed the entire country & also drew huge attention of International community as well. This incident has offset the impact of the global economic slowdown of the world economy  for a while, though adversely impacting the attractiveness & risk profile of India as an Investment destination for the investors who have been treading a cautious path & are taking out their invested capital from the Indian markets thus creating another bloodbath in the financial territory. The FIIs ( Foreign Institutional Investors) who had  invested over  USD52bn into the Indian markets since year 2003 till date withdrew about USD12bn to fund their home country fund requirements. The recent attacks which were more focussed on the High Profile Society & Elite of Indian Society & to the Foreign visitors, Delegates & the tourists who were staying in the above facilities or were there when militants struck the town.

These attacks have increased the risk of India as a safe Investment Destination with Higher returns & having a moderate risk profile to Moderate to High Returns with High Geo-Political risk. The economy which has grown at an average GDP growth rate of 6.3% in 1990s & 6.2% in the new millenium has been looked up as a LAND OF MILLION OPPORTUNITIES.The markets which are mainly SENTIMENT driven will be adversely impacted. Thus, in this scenario the responsibility of the ex-chequer has also gone up dramatically as it has not been able to deliver on multiple instances. India has been reeling under terrorist activism for over 2-2.5 decades & we have not been able to develop the capabilities to counter such Terror strikes & stop them & ultimately weed them out through their roots. India’s defence expenditure has been always in the vicinity of 2.5-3.00% for over the past few decades , but was downgraded to a mere 1.99% this year in order to build & improve rapport with our neighbours which are none but a pack of GOONS & hooligans who have found solace by doing anti-social activities in India.

In an era of Technology , Indian Security forces are still fighting the AK-47s of the militants with the age old rifles & similar artillery & lathis at times. An average Indian soldier/commando who is willing to risk his life & put the aspirations of his dependants at bay earns a meagre amount as salary & has the age old facilities, protective equipments like Helmets, Shoes etc. This reduction in the Budgetary allocation has fuelled a huge debate on as to how can the GoI  leave the issue un-addressed & unattended . If we look at the statistics of defence expenditure worldwide(3% global average as a % of GDP), it is realized that the scale of allocations needs to be increased to much higher levels given the threats of similar magnitudes. 

This terrorist attack on Mumbai has already resulted into the loss of INR 4000crores in a single day apart from the loss incurred due to the closure of the stock markets for a day which have an average turnover of over INR 32000 crores. This loss can be replicated if the authorities don’t take a note of it right away & prevent the movement of money from Indian Markets & the foreign Investments in the Indian ventures by boosting the confidence of not just investors but also that of the Tourists & other foreign dignitaries. 

OBAMA & impact of his election on global economy & India in particular

When on the evening of 5^th November 2008, trends which started getting converted to the declared results brought about a sea change in the global perspective of millions of people across the world. A democrat candidate was elected who has all the dissimilarities wrt to most of the fellow Americans. He is a Black with a Muslim syllable in his name though has been following Christianity for years but believes in Lord Hanuman(keeps an Idol of HANUMANJI). Thus, a person with so much of conflicting traits & attributes in his personality has been looked upon with immense hope of revival of WORLD ECONOMY & various other burning issues. Obama since has hailed from a very modest background & thus has a strong belief in the equitable distribution of wealth in the masses which he plans to address through the differential Income Tax structure & other booties.

From the recent stats of an EXIT Poll done in US, more than 62% people voted for OBAMA because of the financial turmoil that has been thrown at them by the incumbent government. Just over 10% people responded that IRAQ war & the army deployment was the main issue for voting in favour of Obama. These statistics clearly indicate the change in world order which a common American has now starting accepting by choosing someone whose class/race was considered second to the Caucasians. The main issues before OBAMA are the following:

1.       Address the Global Financial Crisis

2.       Put an end to the atrocities meted to inmates of Guantanamo Bay Prison

3.       Address to the Climate change issues & behave in a more responsible manner.

These above issues as they say are most important & will be sorted out on top priority by the new administration at white house which will take control on 19^th January 2009. But, I think Obama has some other equally important duties & tasks to accomplish as in the liberal policy towards the WTO Regime & not switch to the PROTECTIONISM for which Democrats have been (in)famous for in the past. This broader mindset will indicate the respect for the merit & bring more transparency in overall decision making at the highest level. Obama has been prudent in saying that he believes in Con-census making by taking into account the viewpoints of all the stakeholders concerned. This clearly points to the shift in the Thinking of the West towards the emerging economies of the world,viz. India & China. The American markets have also started looking at these markets of India & China for determining the prices & thus making these Asian giants the PRICE SETTERs from the PRICE TAKERS in the past.

India’s position is a slightly different & better than that of China as India has come much closer to US in the past few years, thanks to the Bush Administration which helped in lifting of the Nuclear Aprtheid that India had been facing for last 34 years  & helped address its Energy Needs. India has also been given special status in the world forum  as Indian Premier was invited to the G8 summit for past few years continuously. Though there are a few issue on which Obama’s viewpoints seem adverse for India :              

1.       Kashmir issue & third Party Mediation

2.       Stern Stand on cutting down of Outsourcing of US jobs to Countries like India.

India has been a staunch opponent of any kind of 3^rd Party mediation to resolve out the Kashmir Issue & this comes as an adverse view on that note. Moreover, Indian outsourcing Industry which is worth USD 40bn & employs most of the Highly skilled inexpensive workforce is very difficult to ignore & if that happens then, it may spell out a disaster for the Indian Economy. But, Som Mittal NASSCOM Chief, “ Its very difficult to ignore India & the value addition done by the Indians in the IT space at a very competitive rates is unmatchable & thus is difficult to remove . This would be against the very Fundamental principles of Economics & the Comparative advantage theory”. 

But, let us wait & watch what all the future has in its store for the world & India per se.

Ancient Indian values & ethics & Modern Management Practices

 

The ancient Indian values & ethos have their basis & foundation rooted deep in SANATAN DHARAM which is eternal & has evolved  over centuries. These eternal & ever relevant principles focus on making the life of a common as fruitful & as relevant as themselves. These principles have been imparted to the masses through various channels viz. Scriptures, Guru-Shishya Parampara, Rites & Rituals to name  a few. The language of the scriptures has been predominantly SANSKRIT which has been termed as DEVBHASHA, & was spoken by the elite in the olden times & thus could sustain itself amongst the masses. Thus, these values were communicated to masses in their own dialect which happened to be the offshoot of Sanskrit( Awadhi, Hindi etc.) by various poets, writers such as Goswami Tulasidas, Surdas etc.  Since, most of the reasoning for the various methodologies & practices were beyond the comprehension of common man, they were incorporated as a religious ritual so that people would follow them which would ultimately help them only.

In Modern times, there has been furore over the relevance & application in the day-to-day life & management practices. These ancient values hold a great relevance & form the basis of modern management principles & have their scientific explanations. When the Indian Sages & Gurus called the rivers, animals etc. as  Mother ( GANGA MAIYYA, GAI MATA  etc.) , amongst myriad others they referred to the Sustainable development in hindsight. These are the natural resources which must be cared for & used judiciously. They meant for MILKING of these resources & not EXPLOITATION.

On the administration & taxation front, Indian ethos propound a very healthy framework by giving an analogy of Honeybees which suck the juices from the flowers in such a way that they are not harmed in any way. When Indian Culture talks of the lesser focus on the outcomes & more on the karma, & propounds that man doesn’t control the fruits & results, it essentially talks of Strategy being put to work. In modern management, there is a concept of Strategic Inflection Point which comes not due to the managers/management concerned but comes from external environment, thus the output is affected adversely whose control goes beyond the Management.

Srimad BhagawadGita , which is the song of the LORD himself is the gist of all ancient Scriptures, & has YOGA as its underlying theme. Yoga, in truest of its sense means Combination, Addition or culmination of various ethos. This also signifies the importance of Dexterity & Skill in all the actions undertaken by the man(agers). Perfection is the key to success, & must thus be practised with fullest of concentration. If we have a look at the learnings from each of the ancient Indian Texts the illustrations would be much more clear & lucid.

SRIRAM CHARITMANAS by Goswami Tulasidas

The above is a scripture which depicts the life of an able administrator, Team Leader, Manager & someone who knows his job very well. The very fact that Lord Rama, was able to form an army out of monkeys in the jungle & motivated  them to walk with him across the sea depicts the true leadership traits that a modern manager should have. Managers should be able to keep their team motivated which has been clearly reflected  in the epic. Management principles such as encouraging lower category of employees, rewards for good work, self-motivation, decision-making, recognition, market survey, market exploitation, time management and the art of communication are aligned with several instances in this scripture.

 

 

MAHABHARATA by  Bhagwan Vedvyas

 

This scripture is the longest epic ever written in the history of mankind. This encompasses a whole lot of knowledge in itself as in Vidura Neeti, SrimadBhagwadgita etc. are a part of the scripture only. The main learning out of the entire scripture is the Governance ,i.e. how should an administrator run his government efficiently by following the DHARMA & not resorting to unfair means which are not in the benefit of the stakeholders. Mahabharata offers valuable lessons in international diplomacy as well  as in management of public finance.

In today’s modern management when ethical judgment and importance of recognizing the

ethical dimensions is talked about, Mahabharat gives excellent analogies to identify the ethical  boundaries. "Rules of ethical conduct", dharmayuddha, for the war were framed by the supreme commanders of each side. Both sides broke most of these laws at least once.

 

BhagvadGita….the song of the LORD

 

Gita  explains the theory of non-attachment to the results of work as under:

If the result of sincere effort is a success, the entire credit should not be appropriated by the

doer alone. If the result of sincere effort is a failure, then too the entire blame does not accrue to the doer.

The driving forces in today's rat-race are speed and greed as well as ambition and competition. The natural fallout from these forces is erosion of one's ethico-moral fibre which supersedes the value system as a means in the entrepreneurial path like tax evasion, undercutting, spreading canards against the competitors, entrepreneurial spying, instigating industrial strife in the business rivals' establishments etc.

 

The main message that has been imparted through the Gita is that “ One should be very focussed while undertaking his mission, & should not rethink while executing the work. The mission should be well thought of before starting & managers should follow  the guidelines religiously.

 

 

 

 

The age-old wisdom of the Indian seers seems to have caught on today in the world of

management. It will only be a reclaiming of our own heritage if we in India return to our spiritual

lineage and reshape it, if need be, to suit the present claims. It is apparent that, we are well

placed to take advantage of this knowledge economy owing to our celebrated spiritual heritage.

Indian spirituality is waiting in the corporate corridors ready to serve the business community.

The need is for self-awareness of it.

A number of factors have brought the spirituality to the centre stage of discussions. A few of

them are:

* Corporate downsizing and retrenchment

* Luxurious lifestyles

* Balancing the personal and professional life

* Materialistic Business approach

* Role conflicts

Besides these spirituality has gained importance because of problem of survival in this hyper

competitive world where growth of education, social upliftment etc are common features.

Employees no longer are happy with professional success or material gains.

 

·         According to Kautilya, four elements that define management excellence are: gaining possession of non-possessed; protecting that which is gained; making the protected grow; and deployment of employees. These are very much relevant to the modern management though the roots are in ancient Indian ethics.

·         Enterprise management forms the basis of the science of ethics, as one learns in a chapter on rajya-niti.

·         Learning about competing enterprises is essential not only for collaborating, but also for `standing alone', reminds Kautilya.

·         To those who ask if materialistic pursuits deviate from virtue, a sutra clarifies that coveting wealth/resources is not counted amongst vices. A corollary is that wealth leaves those who are satisfied with resources they possess.  This implies that without working for growth, even maintaining the given level of performance becomes difficult to achieve.

·         Another sutra reminds that in law enforcement lies one's own protection. "Employment is sustained through enforcement," is a helpful clue to the HR department.

·         And the golden rule, that today's management gurus would also vouch for, is: "When the number of tasks is many, priority should be given to that work which is most fruitful."