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Don’t cap microfinance lending rates

Should lending rates of microfinance institutions (MFIs) — often 28-36 % — be capped? Some folk think so. Officials in Andhra Pradesh once closed down MFIs for usury, but the RBI came to the rescue, declaring there could be no cap on lending rates. Banning MFIs would only drive poor people into more expensive loans More >

Rahul is Indira’s real political heir

After his passionate defence of displaced tribals in Orissa, analysts have started talking about Rahul Gandhi’s left turn. Whoa!  Rahul is more pragmatic opportunist than left-wing ideologue. Remember Indira Gandhi’s left turn in 1969? Supposedly for Garibi Hatao, she nationalized banks, abolished privy purses and raised income tax to 97.75%. Leftist ideologues cheered deliriously. But More >

Global tenders for govt procurement, please

To project jobs, Ohio Governor Strickland has banned outsourcing by companies getting state government funds. This has raised a storm of protest in India, but it’s a storm in a tea cup. Our IT exports to the US federal and state governments are very modest. Anand Sharma, minister for commerce and industry, says he will More >

Nutrition is a bigger problem than hunger

Activists demanding food as a fundamental right view the state as saviour, unperturbed by pervasive state failure in sector after sector. The public distribution system (PDS) is a public scandal. Activists say if only all states create as good a PDS as Tamil Nadu’s, the system will work beautifully. This is like saying that if More >

Let’s not confuse entitlements with rights

Politicians and activists constantly propose new rights — the right to work, to education, and now to food. The word “rights” is being twisted to mean entitlements, and there is a big difference. Rights are freedoms from oppression by the state or by society (through ethnicity, religion and gender). These rights do not entail government More >

Will Anil Agarwal beat Mukesh Ambani?

Dear Anil Agarwal, The Indian media are agog you are set to overtake Mukesh Ambani as India’s biggest corporate promoter. You have made a massive $9.6 billion bid for 60% of Cairn India, which produces oil in Rajasthan and few other places. You will need to borrow heavily for the acquisition, but if you succeed More >

Aid flooded Pak by withdrawing Army

Pakistan is suffering its greatest human tragedy since Partition. The floodwaters of the Indus are an incredible 20 miles wide, sweeping away entire towns, villages and farms. Over 20 million people have been displaced, far more than the nine million displaced by Partition in 1947.  The immediate death count of 1,500 will soon increase hugely More >

Jugaad is our most precious resource

People ask me, what exactly is jugaad? Global management experts attribute India’s rapid economic growth to jugaad. In a recent survey by the Legatum Institute, 81% of Indian businessmen said jugaad was the key reason for their success. Many years ago, innovative Punjabis mounted a diesel irrigation pump on a steel frame with wheels, creating More >

Success despite govt, courtesy jugaad

No less than 93% of Chinese businessmen say the main reason for their spectacular success is network connections (guangxi), especially with government officials. Indian businessmen, however, have succeeded despite the government: 81% say the main reason for their success is jugaad, the ability to find innovative way round prohibitive rules and institutions. This is the More >

Expensive solar power can mean another Enron

What’s desirable is often not practical. The National Solar Mission has set a target of 20,000 MW of solar electricity by 2020. This may be desirable, but at today’s solar technology costs, it will be economic suicide. Remember that just 700 MW of high-priced power from Enron in 2001 was enough to bankrupt the Maharashtra More >

Microfinance — the banks of the future?

The Reserve Bank of India is preparing a discussion paper on new banks. Meanwhile, SKS Microfinance, India’s largest microfinance institution (MFI), has just raised a whopping Rs 1,600 crore through a public offering. SKS and other MFIs could evolve into banks. Bangladesh’s microfinance pioneer, Grameen Bank, is a regular bank. The RBI severely restricts bank More >

Disasters sow seeds of success

Great disasters occur constantly. The Asian financial crisis blasted the miracle economies of Asia. The Great Recession of 2007-09 led to the bankruptcy/rescue of the five top investment banks on Wall Street, the biggest bank (Citibank), the biggest insurance company (AIG), the biggest auto manufacturer (General Motors) and the biggest mortgage underwriters (Fannie Mae and More >

CSR can cloak irresponsibility

Corporate social responsibility (CSR) has long been a hot topic globally. Prime Minister Manmohan Singh has lectured companies on it. Some corporations have won acclaim and awards for CSR. Two of them were BP, the oil giant, and Goldman Sachs, the big investment bank. But BP has just created the greatest environmental disaster in history More >

Why grain traders will love Sonia

Sonia Gandhi has approved the National Food Security Act. This aims to deliver 35 kg of grain per month at Rs 3 per kg to every family in the 200 poorest districts, extend this as feasible to other districts, and provide 25 kg per month to families that aren’t poor. This is supposed to help More >

Climategate: Beyond inquiry panels

Two British committees, one Dutch committee and a US Senate committee have investigated Climategate — the disclosure from emails that scientists at the Climate Research Unit (CRU) of East Anglia University sought to withhold data from and sabotage research publications of other scientists questioning the conventional wisdom on global warming. The first three committees gave More >