The world desperately needs bright leaders, who deliver, across institutions. Chasers of sinecure assignments will be squeezed out. The new diktat in governments across the world will be “Deliver or ship out”
In 2012, Patricia and I plan to replace our dilapidated old car. High inflation in 2011 even in basic items like onions and tomatoes, threw our budgets out of gear. In 2012, we will skip our long-awaited holiday. Patricia is unhappy.
Elsewhere, Obama is very ardent to get a second term as president. Apart from the “got you” Osama bin Laden expedition, his report card reads poor for the last four years. Americans want jobs, prosperity and a return to the “good old times.” Mr Obama cannot deliver these. He may not win his job, in the second round. It is a touch-and-go scenario. So, he will be timid in dealing with economic and corporate disciplining. Stuck in the sinking sands of ensuing elections and an ailing economy, he will continue to be ineffective. Oratory will not rescue him. Audacity could.
America’s debt now towers at $14 trillion, i.e. size of the gross domestic product (GDP). Americans will have to tighten their belts, stop relying on credit cards and commence local manufacture to salvage their economy. American save an average 3%-4%, so frugality is in order. And, Americans need to commence local manufacture. No large economy can survive indefinitely by outsourcing production. Factories and mills create ancillaries and generate jobs. This is simple economics. How can the US ignore this axiom? It is distressing to see a global power gasp for growth.
The US and European thinkers will ponder whether globalisation benefits them. There will be talk of commencing manufacture in many countries to generate jobs. Perhaps politicians need to go back to school for mandatory classes in economic growth.
Europe will clobber together despite heart-burnings and quarrels between the UK and France, to rescue wobbling Greece. England will sparkle as it hosts the Olympics in London, the only silver lining in a dull 2012. Expect the British to put the best foot forward to welcome tourists. They are brilliant global event managers. The Royal family, music extravaganzas, theatre, parks will be hyped up to pander to visitors.
Russia’s Mr Putin will complete his elegant coup by becoming president, again in 2012. He should collar the oligarchies that mismanage the country and curb kleptocracy. Graft and kickbacks on a wide scale in Russia, will erode his popularity. Young girls will no longer be charmed by the czar’s face on their T-shirts or his photos riding bare-chest on strong horses. Greed rejoices, ideals languish in Mr Putin’s Russia. Perhaps, a “Russian Spring” lurks at a corner.
China will continue to rock. Its middle classes will shop Rolex watches and Mercedes cars. Its political ideologies will thwart global leadership aspirations.
The rejuvenation amongst Arab youngsters and middle classes will remain supple. Monarchs will continue to have sleepless nights, worried about the ramifications of the Arab Spring. If young Arabs seek more bread and jobs, the monarchs can deliver. If they seek democracy, then who will deliver? Expect more Arab dilemmas to surface in 2012.
Many eyes will be on Iraq, to see if peace holds on, as American troops sail home. Afghanistan, too, will have to gear up to the day the Americans depart.
Pakistan will continue to the global migraine, beset with terrorism, poor growth and self-seeking leaders. The country is becoming a valueless pit.
Hopefully Israel and Palestinians will continue talking and resolve problems, knot by knot. Painful it is, but it is the only way to peace in olive land. Retired presidents and prime ministers can only pave the way.
India will wallow in the sludge of corruption and greed. The hatred for corruption will become fanatical. In yesteryears, the most abhorred terms India were smugglers and the underworld. Politicians are replacing both these categories. The government will be haunted by unaccounted monies in foreign banks. 2012 could see the names of these account holders, tumble out of the closets. The revelations could spark unprecedented anger and violence amongst India’s poor. Anna Hazare’s biceps will become stronger, as the lone ranger battles a corrupt establishment.
India will drift rudderless. Mama Sonia will push sonny Rahul for prime minister, subtly and covertly. The incumbent PM, Manmohan Singh is safe, until his term expires. Mama Sonia dare not trust anyone else to keep the seat warm for Rahul. If the son does get anointed, with no other qualification except a family surname, he will usher a renewed era of mediocrity in India. Senior party leaders fume privately, but most of them are date-expired at the ages of 70 to 80. Over the years, the Congress party has little agenda left in it. It has become a family business of the Nehru-Indira Gandhi dynasty. In a country riddled with massive illiteracy and ignorance, old brands matter. In India, the Nehru-Indira Gandhi brand name is one of the oldest ubiquitous brands, even in rural markets.
India’s growth rate could sputter and fall to 5%. Millions of Indians toil hard in inhuman conditions daily, struggling to improve their lives in urban ghettos. Their enterprise and entrepreneurship will keep India afloat, despite the subversive corruption of spineless political leaders.
Greece’s debts could deepen the recession in Europe. Portugal, Ireland, Italy, Spain and Ireland will continue to stumble. Hopefully, they will bulldoze austerity measures. Bitter medicines are necessary. Currencies like the dollar, euro and yen will continue to be volatile. The US dollar survives as the universal peg for many nations, but wobbles.
In a fractured world, there will be little focus on Africa or global warming. If Aung San Su Kyi, starts running Burma, faith will be restored in human values in 2012. Alas, the wish is far-fetched.
Global economy will plod at 3%-4% in 2012. Developed economies will scrape growth at 1.5% to 2%. Emerging economies will bail out the world by growing at 6%-7%. Hopefully, we will recede from the edge of another recessionary crater.
Many in the world will continue to sleep hungry. About 25,000 people die every day of hunger and hunger-related causes, i.e. one person every 3.5 seconds, according to the UN. About 1.3 billion people will yet live below the poverty line of R. 60 ($1.25) per day for food, clothing and shelter. Another billion people are deprived of clean drinking water. The world waits patiently for remedies to two Frankensteins—cancer and HIV Aids. AIDS kills over 1.5 million people a year, i.e. a person every 20 seconds. We have moneys for guns and bombs, not for research and remedies.
Oil prices will hover between $80-$100 per barrel. There will be no surprise escalations, in a dreary global economy. Food will cost us more in 2012. In October 2011, the global population increased to 7 billion. There are mouths chasing food now. Expect wheat, rice and sugar to cost more by 8% to 12% despite better harvests. The poor will be under severe pressure, as usual.
Increasing rates of global unemployment threaten political stability across countries. The global unemployment rate according to ILO hovers around 6%. Amongst the young, 12% search for a job. Growing corruption and inflation, with poor governance and unemployment are recipes for violence and revolutions. There will be mounting anger against the rich elite, which manipulates the global financial machines. It emerges unscathed from every crisis, after creating it.
Invest in property. The global population touched 7 billion in 2011, and will spiral to 9 billion by 2050. Everyone needs a place to stay. So, land will increasingly get scarce. Buy it; then hold.
Stock markets could continue dipping. They are eroding credibility, have become backyards of greedy manipulators. So, invest in metals like gold and silver. Expect gold to cross $2,400 per ounce, from the current $1,700/$1,750 per ounce. Gold prices have risen by 550% in the last decade.
India is becoming a high-price economy. It will lose its competitive advantage in cheap skilled labour. Inflation in prices of daily living like onions and tomatoes will wound the poor.
Julian Assange of Wiki Leaks may raise the money to continue to expose shallow, pompous politicians. Hopefully, Tom Cruise, Matt Demon and Scarlet Johnson will shine in some sensitive movies. Expect a few films on the Arab Spring, particularly on Libya’s Gaddafi. Stars like Madonna, Britney have lost lustre. The stage awaits fresh, vibrant talent. Bollywood will dish escapist balderdash and indulge in extravagant shallow launches.
Tiger Woods and Roger Federer will battle to recover their lost thrones. Adoring fans will spur them. Cricket lovers breathlessly await Tendulkar scoring more centuries.
The world faces a desperate paucity of leaders who can pull our lives out of the current economic and political sludge. Recollect the global grief at the passing away of Steve Jobs, in an era where few political leaders are inspiring. Steve received global mass adulation because he added value to our lives through his “magical products”.
The world desperately needs bright leaders, who deliver, across institutions. Chasers of sinecure assignments will be squeezed out. The new diktat in governments across the world will be “Deliver or ship out”. Rightfully so.
Thus, the US and Europe will continue to be plagued by frail growth. The young will revolt against global inequalities and gold prices could rise tantalizingly; but the world will be rudderless. We desperately need new, brilliant leaders, who deliver growth amidst mounting expectations.
Back home, I will live frugally in 2012. I will use the savings to take Patricia to Rio de Janeiro. That will enchant her. Perhaps then, she will bestow a smile on me. Then 2012 will be happy for me.
Happy New Year to you also!
(The author is the managing director of a consulting group. He worked for Unilever in emerging markets in Latin America, Africa and Asia. He can be contacted at [email protected])
Any move to charge for spectrum beyond 4.4 MHz from new operators would send a wrong signal to the global investors as they have entered Indian market based on licence conditions and business models of incumbent players
New Delhi: In a move that will provide a huge advantage to old GSM operators and impact the valuation of new entrants in the telecom sector, spectrum allotment beyond 4.4 MHz will now be done through an auction, though older players were spared such additional charges till they had 6.2 MHz, reports PTI.
“Telecom commission has decided to charge new operators.
For additional spectrum beyond 4.4 MHz, telcos have to buy additional airwaves through auction,” according a person with direct knowledge of the matter.
Recently, new telecom operators such as Tatas, RCom (for foray into GSM services), Sistema-Shyam, Uninor and others have written a letter to telecom minister Kapil Sibal terming the proposal to charge new telcos for additional spectrum beyond 4.4 MHz as discriminatory, saying it will impact their sustainability and scalability.
Telecom Regulatory Authority of India (TRAI) has been mulling charging operators for additional 1.8 MHz (GSM)/2.5 MHz (CDMA) spectrum, beyond the start-up spectrum of 4.4 MHz/2.5 MHz respectively.
Any change to the already existing contractual arrangements with regard to allocation of additional 1.8 MHz/2.5 MHz will be highly discriminatory, against the level playing field and likely to derail business plans, the new operators had said.
Citing various Telecom Dispute Settlement and Appellate Tribunal (TDSAT) rulings and views of DoT and TRAI at various times, the operators said 6.2/5 MHz is considered the contractual minimum and the optimal quantity of spectrum for pan-India GSM operations.
The operators had said that such changes would be in violation of the present licence conditions.
Further, saying that any changes to the contract were not legally tenable, the operators have asked the government to re-consider the proposal and seek legal opinion on the same, before passing any final decision.
According to new players, they should be given more concessions in view of limited market as the old players have already cornered maximum spectrum as well as subscriber base.
Any move to charge for spectrum beyond 4.4 MHz from new operators would send a wrong signal to the global investors as they have entered Indian market based on licence conditions and business models of incumbent players.
Growth and inflation in the New Year will depend on several factors, including global developments, the flow of investment from overseas destinations and demand for goods in export and domestic markets
New Delhi: Combating the economic slowdown and arresting the rupee’s fall will remain the main priorities for the government and the Reserve Bank of India (RBI) in the New Year, though inflation, which remained a major problem throughout 2011, may cease to be an important issue in the months ahead, reports PTI.
As the economic woes, driven mainly by global factors, spill over to 2012, the government will also have to deal with the spectre of policy paralysis by promoting economic reforms and boosting the investor sentiment.
Although 2011 began on a positive note, with the economy recording a growth of 7.8% in the quarter ending March 2011 and the Economic Survey (February 2011) projecting an acceleration in growth to about 9% in 2011-12, the euphoria was short-lived.
The growth rate slipped to 7.7% in the quarter ending June 2011 and 6.9% during July-September from 8.8% and 8.4%, respectively, in the corresponding periods last fiscal. The figures for the October-December quarter are not yet out, but indications are that they would be no better.
Worried over slowing growth, a group of industry leaders, including HDFC chairman Deepak Parekh, wrote open letters to the government expressing concern over a “policy paralysis” and underlined the need for firm action to deal with the situation.
Their repeated outbursts, however, evoked a sharp reaction from prime minister Manmohan Singh, who blamed industry head honchos for spreading despondency by criticising the government.
“I must confess that it is a little disappointing to sometimes hear negative comments emanating from our business leadership or be told that the government’s policies are causing a slowdown and pessimism in the industrial sector.
Such comments have added to uncertainty and have emboldened those who have no stake in our economic growth,” Mr Singh had said.
However, the fact of the matter was that both the finance ministry and Reserve Bank of India (RBI) lowered the growth projection for the current fiscal to around 7.5% from 8.5 in 2010-11.
While the RBI had earlier projected a growth rate of 8%, the finance ministry in its Economic Survey had pegged growth at around 9%.
Industrial growth, as measured by the Index of Industrial Production (IIP), turned negative in October, experiencing a decline of over 5%. These signals do not augur well for economic growth in the coming months.
The finance ministry had attributed the slowdown to “global factors like the slowdown in the world economy, exacerbation of the Eurozone crisis, hardening of crude oil prices in the international market, as well as domestic factors such as the decision to battle inflation by tightening monetary policy and cutting back fiscal stimulus”.
With regard to the global factors, the sovereign debt crisis in Eurozone countries continues to pose a threat to the global recovery, which has been described by several experts as being in a fragile state. Problems are still there in countries like Greece, Portugal and Spain.
Despite the efforts of the G-20—a club of rich and poor nations—to contain the crisis, it has spilt over into 2012 and there will be no respite for global leaders grappling to find a workable solution to the sovereign debt problems of Eurozone nations.
The danger posed by the global crisis is significant, as highly indebted governments do not have sufficient resources to fund another bailout. They will have to focus on those confidence-building steps that do not involve the outflow of funds from government treasuries.
High crude and commodity prices in the international market also had a bearing on inflation, growth and the fiscal deficit.
Crude oil prices in the global market, which stood at about $89 a barrel in February, hardened in the following months to average around $106-$107. The crude prices remained stubbornly high despite the slowdown in the global economy.
For India, which depends on imported crude to meet 80% of its requirement, this was not a good sign. The oil marketing companies (OMCs) and the government had to raise retail prices of petroleum products in the domestic market.
OMCs increased petrol prices several times during the year, though sometimes it was lowered.
In addition to causing hardship to the common man and fuelling inflation, the rising prices of crude oil also impacted the fiscal deficit. Finance minister Pranab Mukherjee recently told Parliament that the central government’s subsidy bill for 2011-12 will rise by over Rs1 lakh crore above the Rs1.34 lakh crore provided for major subsidies like fertiliser, food and petroleum products in the Budget.
An increased subsidy bill will have implications on the fiscal deficit, which is high in comparison to the previous financial year. The government had planned to bring down the fiscal deficit to 4.6% of the GDP during 2011-12 from 4.7% a year ago, but the task seems impossible now.
A related issue that kept the government on its toes throughout 2011 was inflation. While food inflation has moderated on the back of declining vegetable prices, headline inflation continues to be a matter of concern.
Food inflation was as high as 16%-17% per cent in January and remained at elevated levels throughout the year. However, much to the comfort of the people as well as the government, it declined sharply to less than 2% in December, mainly on account of a moderation in prices of essential food items like potatoes, onions and other agriculture produce.
Headline inflation, however, continues to remain a matter of concern.
Headline inflation has remained above 9% and close to the double-digit mark throughout the year. In November, overall inflation was recorded at 9.11%. The figures for December, to be available in January, may show a decline.
In view of the declining trend noticed toward the close of 2011, inflation is likely to moderate in the New Year and may dip to 6%-7% by March-end, as has been projected by the finance ministry and RBI.
However, downside risks will remain and efforts would have to be made increase the supply of protein-based products like milk, fish and eggs.
The moderation in inflation, besides other factors, can also be partly attributed to the tight monetary policy followed by the RBI during 2011. In fact, the central bank, which began hiking the repo rate—at which commercial banks borrow funds from the RBI—in March 2010 maintained the monetary stance throughout the year.
The repo rates were raised several times during the year in a bid to contain inflation and inflationary expectations.
The RBI sacrificed growth to check price rise, arguing that it was more worried about maintaining the medium-term growth momentum.
However, toward the close of 2011, the RBI made it clear that it would not resort to further increases of key interest rates and might even reduce them, depending on the price situation.
As inflation is on the decline and may further slip to 6%-7% by March-end, it is likely that the RBI would start reducing the repo rate in 2012. The first policy review in 2012 is due on 24th January.
Besides other things, the year was marked by sharp depreciation of the rupee, which fell to historic lows against the US dollar. The main reason for the sudden decline in rupee value was the withdrawal of funds by Foreign Institutional Investors (FIIs).
Having declined by over 17% since July, the rupee witnessed a low of over Rs54 per dollar in December, making it the worst-performing Asian currency during the year.
Growth and inflation in the New Year will depend on several factors, including global developments, the flow of investment from overseas destinations and demand for goods in export and domestic markets.