Guru Brahma

           In Sanatana Dharma, a teacher is given the status of God. The sloka “Guru Brahma, Guru Vishnu, Guru Devo Maheshwaraha, Guru Sakshat Para Brahma,  Tasmaishree Gurave Nahamha”  means Guru is the representative of Brahma, the Creator of knowledge,  Vishnu, the Sustainer of wisdom and Shiva, the Destroyer of darkness, Guru is the Almighty to whom we bow before, the Para Brahma.  In the Skanda Purana, Lord Shiva tells Maa Gauri that enlightenment is possible only with the help of a Guru thereby pupil is shown as dependent on Guru and in Bhagvata Purana, Krishna says that Guru is one who provokes insight indicating the independence of the student. Both these highlight the importance of a teacher in our life for attaining knowledge that provokes thinking.

In today’s context, Guru could be a school teacher, university professor, sports coach, dance or music teacher, fitness trainer or coordinator in a short or medium term courses. He could be a teacher just for an occasion. Still, he/she deserves respect and devotion. Following incident from Ramayana clearly brings out how a student need to conduct himself with a teacher.

Lord Rama, after hitting Ravana with the arrow, asked Lakshamana to go to Ravana and obtain as much knowledge possible from him before he finally breathes. Ravana, son of a Rishi, is a well educated person and is a scholar of the Vedas and is considered as an expert in astrology and a great devotee of Lord Shiva. Obeying the orders of Lord Rama, Lakshmana visited Ravana standing near his head said “Oh Ravana! Before you leave for heaven, please share your knowledge”. But Ravana did not even look at him. Lakshman returned to his brother and said Ravana was not interested in sharing anything. After learning that Lakshmana stood near Ravana’s head, Rama told Lakshmana “If you want Ravana to teach, you better behave like a student”. Looking at the hesitant Lakshmana, Rama accompanied him to fatally wounded Ravana. Standing at his feet with folded hands, Rama said “Hey Brahmana Putra and King of Asuras, I have no ill feelings towards you. I fought with you to release my life partner from your custody as it is my royal, personal and moral duty to do so. I know you are a great scholar and have great regard for your wisdom and it would be my privilege and blessing if you could teach me and my brother something before you depart for heaven”. Enormously impressed with the conduct of Rama, Ravana proceeded to teach the brothers importance of avoiding things which are inherently bad, but attractive and of avoiding procrastination to do good things which are unattractive. Saying this, Ravana breathed his last. Rama dutifully bowed to his teacher.

This story underlines the importance of giving due respect to a teacher, even if he/she is bad for you. A teacher is the highest contributor in making us better human beings, helping us grow out mentally and socially. It is a teacher who guides and nurtures our talent.  Parents look up to the support of a teacher for shaping the future of their child. It is a great responsibility on the part of the teacher and they should do justice to this honorable position. Hitting and scolding of children in front of their friends should be avoided. New and improved methods of teaching should be adopted by them for the purpose of seeing better results.

Some people think that teaching is an easy and appealing job. However, a teacher’s actual effort, most of the time, is unseen to most of us. Sincere teachers prepare for hours together for taking an hour’s class despite their ease with the subject. Setting exam papers, evaluating them and then grading require lots of time and effort. While doing these things, they need to upgrade and update with the current happenings in their field so as to give the best and latest information on the topic to students. Dealing with rebel students and complaining parents is another headache and in higher educational institutions the menace of consumption of drugs and alcohol is adding to the woes of the teaching community. Lack of respect from students and the absence of support of managements make their jobs horrific at times. Talk to a teacher, they tell you how taxing the profession is.

Children, parents and society at large have a duty to keep this noble profession in high esteem. This is possible only when we suitably recognize and respect teachers so that their motivation levels remain high and continue to contribute meaningfully nurturing the destinies of our children at the schooling stage and focus on research at the university level. Motivated teachers can do wonders for the nation building.

Teachers’ Day is celebrated world over on October 5. However, we in India celebrate it on September 5, the birthday of a renowned scholar, teacher, writer, administrator, the first Vice President and the second President of the country and above all a great man Dr. Sarvepalli Radhakrishnan. A teacher of philosophy, when his friends approached him to celebrate his birthday after his appointment as the second President of India in 1962, he advised them that “Rather than celebrating my birthday, it would be my proud privilege if 5^th September is observed as Teachers’ Day”. He wanted this to pay tribute to the greatest teachers who made a remarkable contribution in the field of education. Dr. Radhakrishnan is born in a Telugu family. He studied at the University of Madras, taught at the University of Mysore and the University of Calcutta. He served as Vice Chancellor of the Banaras Hindu University, Varanasi and my alma mater Andhra University, Visakhapatnam. He authorized several seminal works on philosophy and religions. He is the brightest luminaries of Hindu philosophy and a champion of Sanata Dharma. He is the earliest recipient of our country’s highest civilian award Bharat Ratna in 1954. It is indeed a great privilege for all of us to celebrate his birthday as Teacher’s Day.

Happy Teacher’s Day!

Jalebi Flying

     Visiting Chandni Chowk is a gastronomic delight for food lovers.  Street food choices available there are known for their well-knownness.  Parathawali Gali,  Chaat Corners, Kachori Wala, Natraj Dahi Balle,  Old Famous Jalebi Wala the list goes on. Last visited the place was on a wintry Sundry afternoon in the third week of January when the redevelopment was in full swing. The mantra of staying home to fight the novel virus is keeping us away from these occasional privileges. Post Corona acquired culinary skills encourage one to try at home whatever one is missing otherwise. I found some home cooked dishes like kebabs, pulao, sambhar taste almost similar to those at regular eateries.

Eating one’s own cooking has a different charm and never spoils the stomach. That reminds what Winston Churchill once said “eating my own words has never given me indigestion”. The newly trained courage and the encouragement from friends made me try jalebis at home. After observing couple of You Tube tutorials and reading literature on the dish, I decided to take the plunge.

The batter was ready, its consistency appeared alright, neither thin nor thick. When I started dropping into the heated oil from the neatly cut small hole of a tightly packed pouch, trying to make circles, it started making its own rounded mini pancake shape.  Finally, I could feel the taste of jalebi but not the kick of having it at a roadside shop. One thing is clear that the batter is not in your control once it starts to dive into the hot oil especially when you happen to be a novice. A couple of attempts will surely give you the requisite experience to get the desired Jalebi shape. But that is not the case with airline industry. Despite acquiring nearly hundred years of experience in running the business of flying machines, commercial aviation industry’s woes see no end. Barring a few carriers across the globe, most of the companies went belly up after running for a few years.

        Aviation industry is always known for its failures than success stories. Even operationally successful companies do not make financial profits. Billionaire investor Warren Buffet once said “Investors have poured their money into airlines and airline manufactures for 100 years with terrible results. It has been a death trap for investors”. His own investments in US Airways in 1989 tuned unexciting. He told shareholders in a 2007 that “if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.” Kitty Hawk, a beach town in North Carolina State witnessed the experimental flight trials by Wright brothers in the early years of last century.

Investors tend to change their views on businesses when new facts and circumstances emerge, especially when the business’s ability to maintain competitive advantage over its peers in order to protect long term profits and market share. Warren’s restraint on the sector changed after 15 years. He tested his luck in the sector in 2016 when the airline sector in US consolidated after several bankruptcies and mergers and emerged as an oligopoly with four airlines namely American Airlines, Delta Air, Southwest Airlines and United Airlines grabbing two thirds of the market share in that country and declaring better numbers year after year. Berkshire Hathaway’s interest in the aviation industry was based on the sector’s overall improved financial performance of these four carriers declaring a combined profit of $22 billion in 2015 attributed to lower fuel prices, better labour relations and higher fees for check-in baggage and more importantly reduced competition due to consolidation. By 2019, Berkshire’s shareholding went up to nearly 10 per cent in these four airlines. Until end 2019, these four airlines were reporting healthy profits.

The pandemic induced lockdown has changed everything. Nearly 17,000 aircraft world over parked at various airports without maintenance and upkeep. By the middle of April this year the situation appeared rather alarming for the entire travel industry. Berkshire offloaded its securities in all these airlines by the end of April fearing a catastrophic impact on the industry.

The airline industry remains on edge at every event, whether an oil price hike due to shortage or war like situation, man-made or natural disasters, nothing to write about when a Black Swan event like the corona pandemic unfolds.

       In India, a lot of private airlines commenced services after permitting them to operate charter and non-scheduled back in 1986 by amending the Air Corporation Act, 1953 and then repealing the very Act from the statute book in 1994 for beginning scheduled services. Those entered the fray were Air Sahara, Damania Airlines, East West Airlines, Modiluft and NEPC airlines in early 90s.  All of them vanished after operating for a few years. Jet and Sahara Airways obtained licenses to operate scheduled services. Jet Airways continued till 2019 and is now at the mercy of competing bidders to take over it in the on-going Corporate Insolvency Resolution Plan under the aegis of a Committee of Creditors constituted by NCLT. Besides Interglobe Aviation (operator of Indigo), and Spice Jet, Jet Airways was one of the very few airline companies raised capital from the public through an Initial Public Offering.

Despite capturing nearly 50 percent of the market share in India, Interglobe reported a net loss of Rs.870 crore for the quarter ending March 2020, exhibiting the devastating impact of the pandemic on the air travel even before the imposition of lockdown. How the first quarter pans out is anybody’s guess.

            While praying for the virus to loose its potency, I will keep on my efforts at perfecting the art of getting jalebi in better shape.

Come on!

The Covid pandemic and the lockdown imposed to contain the virus spread have impacted businesses across the globe.  The degree of impact is largely uneven. Essential goods suppliers, services providers, medical and pharma companies are lucky to escape the hit. Several others are reportedly limping back and no credible news about many other outfits. Who are hit beyond recognition and who are sailing through is based on one's update on the current affairs and guess work. Publicly available information is perhaps insufficient to come to a clear view. The pandemic has caused distortion in the market due to gaps in information available about the business operations of various entities. 

True and fair disclosure of information is a sine qua non especially when a company gets itself listed on stock exchanges as it has statutory and regulatory obligation to furnish material information in a timely manner to the bourses for immediate dissemination to various stakeholders.

In the absence of certainty and predictability, it becomes extremely difficult for businesses to attract capital. Even optimists like Warren Buffet are finding it difficult to come to terms with the impact of the pandemic. This is clear during his virtual annual shareholders meeting he had earlier held. Though he remains bullish on America, his repeated answer “I don’t know” during question answer session and his cautious optimism on the performance of capital markets makes it realistic about the formidable challenges ahead.

Listed entities around the world have been making disclosures regarding the impact of the pandemic, including that on financial condition and on current as well as future operations. Regulators have also encouraged timely reporting as well as complete and accurate disclosure of the impact, as far as possible. 

The heart of good Corporate Governance is transparency, disclosure, accountability and integrity. Market confidence goes up significantly when a company voluntarily complies with the principles of Corporate Governance. Besides the management getting appreciated, company’s market capitalization could fetch fair valuation. In Indian corporate space, Infosys used to set high standards of fair disclosures in 90’s when the disclosure norms were still evolving and the regulatory compulsion on many corporate activities was minimal.

Post lockdown, companies have started to share information pertaining to disruption of operations at their various premises. However, the information furnished so far remained mostly cosmetic, sketchy and for compliance sake. Hardly any inclination is seen to make preliminary disclosure of evaluation of impact on operations, liquidity, profitability and ability to make debt servicing etc. 

SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 mandates every listed company to frame and disclose a ‘Policy on Determination of Materiality of Events’. One of the key considerations is the likely result in significant market reaction. Board of Directors is responsible for undertaking assessment on material events and their likely impact on the company and intimating that to market. There is, however, no enthusiasm on the part of most of the managements of companies to implement disclosure norms in letter and spirit. 

Though there is no such a regulatory obligation to update the market, Anand based Gujarat Co-operative Milk Marketing Federation, the owner of US 5 Billion dollar valued Amul brand, has been on the front foot in sharing their insights from day one on their practical difficulties in collecting milk, supply chain disruptions during the initial lockdown period and percentage of disruptions etc.. Such proactive sharing of information is not seen from the corporate world. Share prices of some prominent companies have been witnessing huge swings without any information available in public domain about their businesses recovering to pre-covid levels. Some have fallen nearly 100 percent and then recovered in V shape as if the pandemic has taken L shape.

Given the reluctance of the companies,  SEBI issued an Advisory in second half of May stipulating that all investors have access to timely, adequate and updated information,…..companies are encouraged to evaluate the impact of the COVID-19 pandemic on their businesses, performance and financials, both qualitatively and quantitatively to the extent possible and disseminate. SEBI further laid down an illustrative list on which companies need to report like estimation of the future impact of COVID-19 on its operations, impact on financial position, profitability, liquidity, ability to service debt, supply chain issues, demands for its products/services etc. It further says at Para 8 of the Advisory dated May 20, 2020 that companies should not resort to selective disclosures, keeping in mind the principles governing disclosures and listing obligations. Besides, they shall revisit, refresh or update its previous disclosures based on the peculiar circumstances of each company.

Government owned unlisted company Air India’s latest announcement that its Board of Directors approved a leave without pay scheme for its permanent employees for a period of six months to two years, extendable to five years is clear communication to understand the impact of the pandemic on the carrier’s state of affairs. This disclosure on the HR policy is indeed a disclosure of material impact issue. Such disclosures are the need of the hour. Newspapers report that private sector banking firms have put in cold storage their recruitment plans and reworking pay packages for existing employees in order to conserve cash. However, no banking company apprised the exchanges about these decisions. The unwillingness could be due to fear of bad news spoiling their image and market sentiment turning against them.

Post lockdown, large number of young professionals working from home have been on a demat account opening spree with various zero brokerage firms indicating their eagerness to enter the capital markets. Making price sensitive information public by publicly listed companies in time would surely help these budding investors take informed investment decisions and avoid risky bets based on speculative tips. 

Let’s hope the nudge from SEBI makes the Boards of listed companies throw light on their true state of affairs in the upcoming quarterly financial disclosures. After corona, glorious past performance is no longer a barometer for future prospects.

Virtual Meetings of Shareholders

Onslaught of novel Corona virus has changed rather forced us to remain home-bound for an uncertain period so as to contain the spread of the virus. But people and institutions across the world appear to be finding inventive ways to amuse themselves and transact business and commerce. Meeting friends over zoom and whatsapp group video calling has become routine feature and conducting birthdays, parties and other ceremonies has become the new normal. Thanks to the available technology, even quarantined folks are also able to carry on their activities from home with the aid of ICT tools.

In India and elsewhere, incorporated companies are mandated to conduct their shareholder meetings at the place/town/village where the registered office of the company situated. Besides complying with the provisions of the Companies Act, listed companies are supposed to abide by the SEBI laid norms and those in the listing agreements with the bourses where they are listed.

Raichur based pharma company Shilpa Medicare Limited was to conduct its Extraordinary General Meeting on March 30, 2020 at Raichur, Karnataka for seeking nod of the shareholders for a particular transaction.

Being a shareholder I was informed on March 7, 2020 by email of the meeting. After imposition of nationwide lockdown on the night of March 24, the company sent an email informing that the meeting would be held at the stated time but on virtual platform Microsoft Teams. In line with the motto of digital India and taking cue from the Hon’ble Prime Minister conducting video conferences with various dignitaries, the company had come up with this innovative idea of holding the generally body meeting via video conferencing.  Ministry of Corporate Affairs had earlier permitted conducting virtual Board meetings. 

The meeting went on live on March 30, 2020 and a large number of shareholders attended the meeting from the comfort of their homes making it a successful first of its kind virtual general body meeting in the history of corporate India.

When  Shilpa conducted the meeting, procedure was yet to be notified and there were no secretarial standards available for guidance. The company complied with all the mandatory guidelines of conducting a physical meeting for this virtual meeting, promptly communicated to shareholders, Board members, auditors, stock exchanges and other stakeholders of its intention to go ahead with the meeting.

Perhaps buoyed by its success and thoroughly impressive secretarial standards followed by the company and representations from various quarters, MCA has on April 8, 2020 come out with a Circular  permitting holding of virtual general body meetings for the time being in limited cases. But based on the experience in the next couple of months, such an easy, cost efficient, time saving procedure needs to be made permanent feature by making an appropriate provision in the statue so as to enable  wider participation especially minority shareholders who cannot otherwise reach designated venues which are more often located in distant places.

Management and secretarial team of Shilpa Medicare Ltd deserves a big applause for setting a novel way for conducting general body meetings in this challenging environment. Similarly, MCA needs to be appreciated for laying down guidelines.

Let’s hope ICSI  comes out with requisite secretarial standards based largely on the methods followed by Shilpa.

                                                    

Jobs and automation

Recently HDFC Bank has announced its accounting numbers for the financial year ending March 2017. As a matter of routine, it has again shown its capacity to deliver 20% plus compounded annual grown rate in its bottom line. Under the leadership of its founding CMD Mr Aditya Puri, son of an ex IAF officer, the Bank has maintained highest standards in its banking practices and customer satisfaction without compromising on the prudential norms. This year’s financial results caught my attention not because of its singular ability to deliver better numbers but for the report that its headcount dropped to 90,421 from 95002 at the end of December 2016 and further to 84,325 by end of March 2017. This is attributed to increased automation. The Bank expects the trend to continue as greater efficiency set in.

Earlier, L&T announced that it cut about 14,000 jobs. WIPRO also similarly reduced its manpower by about 600 jobs. Cognizant lay off 6000 employees. Such news items have become the order of the day. 

Market observers have been lamenting about the jobless growth in almost all economies over the last decade. The negative growth in employment generation is considered as one of the main reasons for rise of voice against globalization and adoption of protective measures by various countries. UK’s choice to go for Brexit and USA’s current inward looking policies after elections last year are developments arising out of failure of these economies to find suitable work opportunities to their citizens. 

Burning issue these days is that automation aided by artificial intelligence is taking away jobs from humans. In the words of Stephen Hawking "the automation of factories has already decimated jobs in traditional manufacturing, and the rise of artificial intelligence is likely to extend this job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining." He adds his voice to a growing chorus of experts about the effects that technology will have on workforce in the coming years and decades. The fear is that while artificial intelligence will bring radical increases in efficiency in industry, for ordinary people this will translate into unemployment and uncertainty, as their work would be taken up by robots.

Technological changes are not something new. These changes, rather rapid changes, have been happening for many years. As history tells us that the First Industrial Revolution moved jobs from rural homes to factories, created large organizations. Second Industrial Revolution witnessed the production of electricity and large scale production of goods, development of communications and mass scale engineering activities. The Third Industrial Revolution ushered in information & communication technology, automated machines and electronics. Each Revolution brought in enormous changes in the nature of jobs and the Fourth Industrial Revolution currently underway would be no different. 

The invention of driverless electrical vehicles, creation of robots for doing a range of routine jobs and bots for data analytics and processing Big Data all have potential to cause enormous agony to low skilled and medium skilled workforce. Their ability to find a job elsewhere will diminish with the increasing dependence on automated machine. The impact of technological advances on jobs is a major issue; however it is not in the interest of humankind to discourage investments in technology. 

Nature of jobs will change in the automated world but opportunities to work will continue to arise. New types of jobs, highly skilled jobs will rise in future. Besides, jobs which cannot possibly be by machines have the ability to survive despite technological onslaught. Textile industry is an example. Machine production of fabric has almost displaced the handloom weavers. But the demand for hand-made textile products continues to flourish and the trade figures for hand-made fabric show that the turnover in this segment has gone up multiple times with the advent of ecommerce. Similarly, workforce in other areas has to be ready to sharpen and upgrade their skills and to shift to newer areas to be relevant and beat the challenges brought in this disruptive and uncertain world where unknown unknowns have been rising.

Mandavyapuram

Hometown Mandapeta in East Godavari District, Andhra Pradesh was known  in earlier times as Mandavyapuram. Folklore story has it that the name Mandavyapuram was derived from the divine presence of  Sage Mandavya in this place. While reading Mahabharata written by Shri  Rajagopalachari, first Governor General of independent India, I came across the interesting story of Sage Mandavya. The story is reproduced below:

When Mandavya rishi was immersed in his penance, a thief, who had stolen valuables from the king's palace, entered his ashram thinking that it would be a convenient place to hid himself. The soldiers came to the ashram tracking his footsteps. They asked the Sage "Did you see the thief pass by? where did they go?" The sage who was absorbed in yoga, remained silent. The solider repeated the question. But the sage did not hear anything. In the meantime, they discovered the stolen goods lying there. They reported this to their commander. Later, they found the thief as well in the ashram. The commander thought" :Now I know the reason why the brahman pretended to be a silent sage. He is indeed the chief of these thiefs. He has inspired the theft". Then he orders his soldiers to guard the place, went to the king and told him that the sage Mandavya had been caught with the stolen goods. 

The king was very and angry at the audacity of the chief of the robbers who had put on the garb of a brahmana sage, the better to deceive the world. Without pausing to verify the facts, he ordered the wicked criminal, as he thought him, to be impaled. 

The commandeer returned to the hermitage, impaled the Sage Mandavya on a spear and handed over the stolen things to the king.

The virtuous sage, though impaled on the spear, did not die. Since he was in yoga when he was impaled he remained alive by the power of yoga. Sage who lived in other parts of the forest came to his hermitage and asked Mandavya how he came to be in that terrible pass. 

Mandavya replied: "Whom shall I blame? The servants of the king, who protect the world. have inflicted this punishment."

The king was surprised and frightened when he heard that the impaled sage was till alive and that he was surrounded by the other sages of the forest. He hastened to the forest with his attendants and at once ordered the sage to be taken down from the spear. then he prostrated at his feet and prayed humbly to be forgiven for the offence unwittingly committed. 

Mandavya was not angry with the king. He went straight to Lord Yama/Dharma, the divine dispenser of justice and asked him: "What crime have I committed to deserve this torture?"

Lord Yama, who knew the great power of the sage, replied in all humility: "O sage, you have tortured birds and bees. Are you not aware that all deeds, good or bad, however small, inevitably produce their results, good or evil?"

Mandavya was surprised at this reply of Lord Yama and asked: "When did I commit this offence?"

Lord Dharma replied: "When you were a child."

Madavya then pronounced a curse on Dharma: "This punishment you have decreed is in far excess of the mistake committed by a child in ignorance. Be born, therefore, as a mortal in the world".

Lord Dharma who was thus cursed by the sage Mandavya incarnated as Vidura and was born of the servant-mad of Ambalika, the wife of Vichitravirya, whose other sons were Dhritharasthra and Pandu. 

In "The Children of the Immortal : A Quest into Hindu Identity" written by Keshav Prasad Varma, it was mentioned that Sage Mandavya was able to convince Lord Yama that though his act as a child was misconduct, the punishment given was not commensurate given the fact that he as a child was innocent and not expected to understand the full implications of ethics, and therefore, the acts of a child ought to be dealt with leniency. He succeeded in obtaining a ruling from Lord Yama that an act committed by a child, even in mischief, would henceforth not attract Law of Karma.
Interestingly, jurisprudence of juveniles perhaps owes its origin to these insightful deliberations.
Proud to belong to Mandavyapuram which was once upon a time the abode of Sage Mandavya!

Meltdown

Last Sunday I was returning from CR Park around 1030 pm to my Blue Den in Sheikh Sarai. Auto drivers usually demand 50/60 bucks though the distance is little less than 3km. After hard bargaining they settle for Rs.40. However, to my surprise, this particular guy asked just 30 bucks. On the way, I enquired him how his auto business was going on. He sounded quite pessimistic. He says his daily turnover is steadily falling. He used to earn 500-600 rupees on an eight hour shift. But nowadays even though he remains on road for 10-12 hours, it is becoming difficult to reach his target turnover. He made an interesting observation that waiting time at the Chirag Delhi crossing on the BRT corridor is coming down. Given the slowdown in sales, falling incomes, and increasing lay-offs, traffic on Delhi roads will further come down. A blessing in disguise indeed!

Financial turmoil, which began as a subprime housing crisis in the United States of America last August has now blown out as a deep recession affecting the economic activities across the world. Today’s headlines read Citi Bank is mulling the option of auctioning off all or parts of it. Nobody would believe this piece of news had it appeared a few months back. Citigroup is a symbol of global capitalism. It is now affected by the financial storm that has changed the face of Wall Street, forcing the sale of giants like Bear Stearns, Merrill Lynch and bankruptcy filing of Lehman Brothers and insolvency of automobile behemoth General Motors.

The impact on the real economy is now clearly evident. Latest data indicate that the number of jobless claims in US hit 16 year high. Industrial payrolls have fallen 10-straight months, pushing the unemployment rate to 14-year high of 6.5% in October. Federal Reserve says that a forecast for the end of 2009 is 7.1% to 7.5%. Independent forecasters say it might go as high as 8%. This translates to lower consumption in coming months. Imports to US will further go down. The situation is no different in Europe. Some European countries like Poland, Hungary etc are entering recession mode. UK is no exception. Japan and Singapore are also slowly slipping into recession. Union Commerce Secretary states that there would be five lakh job losses in textile sector in India in the next five months due to sharp decline in apparel exports.

Occasionally I look at the Baltic Dry Index to see the trends of shipping prices. This index tracks the price of shipping bulk cargo. It is one of the oldest indexes in the world. The index is an unparalleled barometer of global trade in basic stuff like iron ore, coal and grain. It closed at 836 on November 21, 2008. It was 11,793 on May 20 2008. In six months, it is down by more than 90%. To put it simply, the cost of shipping has dropped through the floor. Transporting a tonne of iron ore, say from India to Brazil would cost you $110 in May 2008. Now it will just cost $9. The scale of change in rates is utterly shocking.

Wheels of international shipping are greased with ‘letters of credit’ issued to buyers of bulk cargo by their banks. These guarantee the value of the shipping once it is transit but before it is delivered. The credit crunch in the banking sector is taking its toll on the availability of these routine instruments. Cargos are sitting in dockside because the finance is not available to ship them. In some cases, the imported cargo is lying in ports unclaimed. Importers are ready to forego the advance paid and the collaterals mortgaged to banks for letters of credit. Banks have turned choosy in honouring letters of credit in some parts of the world, fearing default by the issuing banks. So far, the most significant problems have been confined to the bulk commodities trade. Manufactured goods have been less affected because there is less reliance on letters of credit. Trading has reportedly come down to standstill, because there is no cargo for the ships. There has also been no trading of vessels in the last few weeks. So there is no market value out there for companies' capital investment in their ships. Story of VK Sheth reportedly selling his stake in Great Offshore Ltd comes as no suprises.

Where will crude oil price head except down, when economic activities, be it shipping, aviation or surface transport, come to standstill?

Various estimates have downgraded India’s GDP growth to 6.5 from 9. Achieving this might be an uphill task given these developments. Government expenses are not coming down but tax collections are expected to fall below the budget estimates. There will be less money for asset creation. Private sector has already stopped/withdrawn from bidding for national highway projects. On-going projects have failing in obtaining financial closures.



IT and ITES have been badly hit due to the disappearance of financial giants from the US. With lay offs and salary cuts in certain sectors i.e. construction, textiles, aviation, tourism, capital goods, financial services, and some labour-intensive industries, there will be lesser disposal income with the households. The current turmoil is going to affect the incomes of every participant in the economic activity. The impact will be felt not only on Delhi roads but everywhere in coming days.